4.2. HAM - Hybrid Annuity Model road projects are in jam as land acquisition issues persist
Livemint, 04 mar 2019, Vatsala Kamat
Almost 34 of the 100-plus road projects awarded under the hybrid annuity model (HAM) are stuck
Dilip Buildcon, Sadbhav Infra and MEP Infra are the top three bidders in HAM road projects
It looks like the much-hyped hybrid annuity model (HAM) adopted for road projects is running into rough weather. The delay in announcing the “appointed date" for nearly one-third of the HAM road projects has been a cause for concern. Appointed date is the date fixed after the tender is awarded from when the scheme comes into force.
To be sure, the HAM model is an improvisation on the erstwhile BOT (build-operate-transfer) format. The National Highways Authority of India (NHAI) had hoped to circumvent project delays due to the hurdles in land acquisition and environment clearances. These hurdles had sounded death knell for some of the best infrastructure firms during the early 1990s, leaving gaping holes in investors’ pockets.
However, it seems like the government is facing challenges in land acquisition yet again. Almost 34 of the 100-plus road projects awarded under HAM are stuck, unable to increase pace of execution as the mobilization advance is not given by the government until the appointed date is fixed. The date is announced only after the government secures 80% right of way for a project.
Does this mean history will repeat itself? Will infrastructure firms once again be caught in delays, high working capital outlays, cost overruns and low rates of return?
Dilip Buildcon Ltd, Sadbhav Infrastructure Project Ltd and MEP Infrastructure Developers Ltd, are the top three bidders in HAM road projects. Along with Ashoka Buildcon Ltd and PNC Infratech Ltd, they account for about 60% of total contracts awarded under this format. These firms have large order books, amounting to about two-three times their annual revenue.
According to Icra Ltd, the pace of financial closure for infrastructure projects had improved by 50% between FY16 and FY18 from 430 days to 194 days, which gave investors the comfort to back these firms.
Sadly, in the last few months, delays in announcing the appointed date even after financial closure by banks, has become a concern, and stocks have mirrored the sentiment. This, despite the high order books and revenue growth in the nine months of FY19. Shares of Dilip Buildcon tumbled 55%, while that of NCC Ltd, Sadbhav Engineering Ltd (the engineering, procurement and construction or EPC) arm of Sadbhav Infrastructure) and IRB Infrastructure Developers Ltd were down 35%, 52% and 41%, respectively, in the past year.
The delay in mobilization advance paid by the government (which happens after the appointed date is fixed) has increased the working capital outlay for some firms. This is not a good sign. It implies higher interest cost, which in the final analysis, affects the rate of return on the project.
That apart, "although private sector banks have taken the lead in funding HAM road projects, delays in financial closure are resurfacing given the recent stress in banking system. This could be a problem for new developers (many tier-II developers) who are taking high exposure to HAM projects," says Rajeshwar Burla, associate head (corporate ratings) at Icra Ltd.
Even for EPC contracts, about 80% of the debt on the developers’ books is to meet working capital requirements. As a result, balance sheets are expected to deleverage at a slower pace, compared to the last two years.
Besides, the tightness in liquidity has also been a challenge. Prospects of these firms hinge on the return of liquidity to the system and faster land acquisition for projects. On the contrary, if the challenges persist, it may not be long before the firms’ revenues and profitability run aground in spite of an attractive pile of orders.
5.1. Opinion | How the mobile industry can make the most of 5G
Livemint, 28 Feb. 2019, Tim Sherwood
If stakeholders work together to identify commercially viable solutions, 5G can deliver its vast potential
The World Economic Forum predicts that by 2023 there will be a staggering 9.1 billion mobile subscriptions. According to telecom-focused technology company Cisco Systems, by 2020, connected mobile devices will produce 30.6 exabytes per month and annual global mobile data traffic will reach 366.8exabytes (one exabyte is one quintillion bytes).
5G is designed to meet this demand. It not only represents a generational leap in connectivity speeds, the new network standard will also introduce lower latency (for improved response) and the ability to connect more devices at once.
So, after much 5G hype and excitement, we are finally seeing progress—proof of concepts, field trials, buildouts and early deployments, and 5G is on the cusp of becoming a reality. The question is, what will it deliver?
With traditional telecom revenues in decline, connectivity fast becoming a commodity and customer-trust diminishing, much of the focus (and hope) is on delivering new revenues for mobile network operators. Despite the many recognized advantages of 5G, mobile network operators are still looking for concrete evidence of return on investment (RoI). The investment isn’t a small one. In fact, it will likely amount to a collective investment of billions of dollars in new network equipment, licences and deployment. So what difference will 5G actually make?
Avoiding the obvious temptation to simply say “Internet of Things" (IoT), here are five 5G-powered use cases—Industry 4.0, mixed reality (MR) applications, which is augmented reality (AR) plus virtual reality (VR), sports and entertainment, fixed wireless access, and autonomous vehicles—that mobile network operators must prepare for.
Like many others, the manufacturing industry is going through a digital revolution. Within the context of Industry 4.0, manufacturers are becoming more efficient through the application of automation and data exchange to their existing factory processes to enable better integrated workflows and smarter manufacturing. Industrial IoT technologies are streamlining and simplifying many manufacturing processes in revolutionary ways. For instance, production robots now have sensors or software that send information to remote teams; some apps can gather real-time feedback and send alerts on defects or damaged goods; and other apps can help track working schedules of factory workers. 5G plays a vital role in this transformative process, especially as the use of AR and VR applications continues to grow in manufacturing to support the realization of manufacturers’ Industry 4.0 goals.
This is followed by MR applications that are likely to be a key driver for 5G. Beyond the consumer market (think Pokémon Go), interesting applications are also likely to be found in industrial and medical contexts. Remote medical procedures, engineering, public safety and field-service applications are all strong use case opportunities for the application of low latency 5G services.
5G will also deliver a significantly enhanced experience for audiences at sporting and entertainment events. A combination of VR and AR with ultra high-fidelity enabled by 5G could transform the way fans interact in these events. Motorsports is ideal for VR in particular: equipped with their mobile device or headset, fans could be served information like lap or technical information about cars as they race on the track in a sport like Formula 1. The opportunity lies in more than just providing connectivity. Mobile network operators can create partnerships with broadcasters and sports organizations to deliver entertainment services directly to customers through their self-service applications.
Fixed wireless access could also be used to bring high bandwidth digital services to under-served rural areas. Mobile operators will then be able to compete with wireline, satellite and cable companies, offering new revenue streams and faster RoI.
Last, arguably the most 5G-centric use case is autonomous driving (level four and above). This is the idea that much of the car, if not all of it, is controlled not by the driver but by technology. 5G is critical to realize this as it will offer the connectivity and speed needed to deliver vast amounts of data to one another as well as other objects simultaneously.
A robust 5G mobile network will enable more decentralization, but for autonomous cars to really thrive, a completely seamless mobile experience is a must so that cars can stay constantly connected. The challenge will be to design IT architecture that can be deployed globally, while still allowing for localized technology to cater for different regions. Coverage, reliability, and scalability must be optimized and seamless mobile networks will require a unified management policy to ensure consistent standards.
5G provides a powerful opportunity for the mobile industry to reap the benefits of cooperation. However, it is vital that collectively, the mobile ecosystem appreciates the limitations associated with frequency allocation, network investment, regulatory restrictions and the availability of funds for investment.
If various parties, including the government and network equipment companies, work together to identify commercially viable and desirable customer solutions, 5G can fulfil the vast potential ascribed to it these past years.
Tim Sherwood is vice-president, mobility and IoT, Tata Communication.
5.2. Uttar Pradesh to get Highways Projects Worth Over Rs one Lakh Crore
Press Information Bureau, Mar. 2019
Shri Rajnath Singh to Inaugurate and Lay Foundation Stones for 80 Projects Including Lucknow-Kanpur Expressway Tomorrow
Will Also Inaugurate/ Lay Foundation for Namami Gange Projects Worth Nearly Rs Two Thousand Crore in The State
New Delhi: Union Home Minister Shri Rajnath Singh will inaugurate and lay the foundation stones for National Highways projects worth Rs 1,10,154 crore in Lucknow in Uttar Pradesh tomorrow. He will also inaugurate/lay foundation stone for several works under Namami Gange programme worth over Rs 1969.57 crore there tomorrow. The Minister will be accompanied by Union Minister for Road Transport & Highways, Shipping and Water Resources, River Development and Ganga Rejuvenation Shri Nitin Gadkari and UP Chief Minister Yogi Adityanath.
The National Highways to be inaugurated include four-laning of Lucknow-Sultanpur section on NH-56, four-laning of Kursi Road–Ayodhya Road section of Lucknow ring road, four-laning of Ghaghra Bridge to Budhanpur section on NH-233, widening to two-lane with paved shoulders of Sonoli-Gorakhpur section on NH-29E, widening to two-lane with paved shoulders of Barabanki-Jarwal Road Junction on NH-28C, widening to two-lane with paved shoulders of Rudauli-Basti section on NH-233, widening to two-lane with paved shoulders of 55 kms section on NH-730A, widening to two-lane with paved shoulders of Pilibhit-Puranpur section on NH-730, widening to two-lane with paved shoulders of Puranpur-Khutar section on NH-730, and reconstruction and upgradation of Sisiya-Nanpara section on NH-730.
Shri Rajnath Singh will lay the foundation stone for construction of Lucknow-Kanpur Expressway. Other projects include construction of flyover at IIM crossing, construction of Ghazipur-Phephna-Majhighat road on NH-31A, construction of flyovers, bypasses, FOBs, underpasses for road safety on different highways, construction of four lane Mathura-Hathras-Badaun road on NH-530B, construction of four lane Aligarh-Kanpur road in five packages on NH-91, construction of four lane Unnao-Lalganj road on NH-232A, and widening to six lanes of Chakeri (Kanpur)-Prayagraj road on NH-2. He will also lay the foundation stone for construction of Amethi Bypass and widening and construction of important sections of highways in the State. Detailed Project Reports (DPRs) for various projects will be initiated on the occasion.
The Minister will also inaugurate several projects under Namami Gange programme, including laying of sewerage network of 214.88 km in Prayagraj at a cost of Rs 260.86 crore, laying of sewerage network of 69 km including 2 STPs of 9MLD capacity in Garh Mukteshwar at a cost of Rs 46.51 crore, laying of sewerage network of 98.5 km and 13 MLD STP works in Kannauj at a cost of Rs 80.66 crore, and laying of sewerage network of 21.03 km and 4MLD STP in Bulandshahr at a cost of Rs 48.45 crore. In all these projects, sewerage will be collected from households and will be lifted to STPs directly.
Foundation stones will be laid for many projects on the main stem of river Ganga, Yamuna, Gomati, Ramganga and Kali. These include interception and diversion (I&D) of drains and 17 MLD STP in Mirzapur, I&D of drains and 17 MLD STP in Ghazipur, and I&D of drains and 35 MLD STPs in Farrukhabad on river Ganga with a total STP capacity of 73 MLD and project cost of Rs 419.36 crore. On Yamuna, the projects include I&D of drains and 21 MLD STP in Etawah and I&D of drains in Ferozabad with total STP Capacity of 21 MLD and project cost of Rs 191.68 crore. At Gomati, I&D of drains and 30 MLD STPs in Jaunpur, I&D of drains and 7 MLD STP in Sultanpur and I&D of drains and 40 MLD STP as well as rehabilitation of 42 MLD STP in Lucknow with total STP Capacity of 87 MLD and project cost of Rs 568.93 crore. Apart from these, foundation stones will bew laid for I&D of drains and 63 MLD STPs in Barelli along river Ramganga and I&D of drains and 15 MLD STP in Kasganj along river Kali.
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. Nestlé India serves up a profit miss as selling expenses mount in Q3
Livemint, 18 Feb. 2019, Clifford Alvares
- Sales have been particularly strong in prepared dishes, beverages, chocolates and milk products
- The pleasant news is that the company’s revenue growth continues to be in double digits
Nothing energizes more than a cup of joe in the morning, and for many, that would be courtesy Nestlé India Ltd’s Nescafe coffee powder. But, such a gratification has been sadly missing from the company’s latest quarterly figures.
Its December quarter (Q3) net profit rose a mere 9.6% to ₹341.7 crore, the lowest in the past four quarters. To boost sales and volume growth, Nestlé India has been incurring higher other expenses. After a string of launches, it has been vigorously promoting its chocolates, confectioneries and beverages. This has pushed up its advertising and promotion costs.
Although this is typical after product launches, this has dragged down the Ebitda margin by 210 basis points. Ebitda is earnings before interest, tax, depreciation and amortization.
There’s some more not-so-good news on the cost front. Raw material prices are beginning to inch up. Skimmed milk and wheat prices have increased about 12% in the past two months, according to analysts. That can continue to put a cap on margins in the coming quarters.
The pleasant news is that the company’s revenue growth continues to be in double digits. Revenue has been growing and has even met analysts’ forecasts, rising 11.17% year-on-year in Q3. Average revenue growth in the past eight quarters has been hovering at these levels. Analysts also mention that Nestlé India’s quarterly revenue growth has increased from single digits to low-teen levels on average.
Some of the company’s product launches have received a good response in the market. The management highlighted that almost all its product categories experienced double-digit growth. Sales have been particularly strong in product categories such as prepared dishes, beverages, chocolates and milk products, thanks to its strong brands.
The good news is that analysts are once again raising the optimism bar on Nestlé India’s revenue growth due to its string of product launches. The company has been focusing on increasing market share over profitability. “We like the improving execution of Nestlé and the focus on driving volumes and top line. Although margins would see an impact in the interim, we believe it is necessary for creating new growth drivers and increasing the overall share of growth from new categories," said Jefferies India Pvt. Ltd in a note to clients.
Shares of Nestlé India, though, have taken a whipping lately due to the lower margins. Some analysts have even lowered their target prices for the stock after its significant run-up. This past year, the stock zoomed 40%, driving valuations to 64 times trailing earnings.
As things stand, Nestlé India may have to whip up a tastier performance to maintain its past upward trajectory.
6.2. Opinion | Spotlight on clusters a welcome step for agri-exports
A VISIBLE HAND
The AEP promises, at the very least, a stable export regime that will refrain from interference
It’s election time in India. Politicians know that the agricultural household voter still holds the key to the ‘vote bank’. Most farm-related election posturing takes the form of loan waivers or an increase in Minimum Support Prices. Between elections, little is done to increase agricultural productivity or foster a transition from the farm sector to services and manufacturing. Elections come and go, but the life of the marginal farmer stays largely the same.
A small step in the right direction was taken with the recent cabinet approval of an Agriculture Export Policy (AEP). The policy aims to double India’s agricultural exports to $60 billion a year by 2022. It aims to diversify India’s agricultural export basket, widen the footprint of destinations and boost high-value and value-added agricultural exports.
First, the facts. India produces about 280 million tonnes of foodgrain every year. China, US, Brazil and India are the four largest foodgrain producers in the world, each producing more than the combined output of the European Union. India leads the world in the production of basmati rice, millets, pulses, chickpea, ginger, chilli, okra, banana, mango and papaya. For dairy, marine, poultry and meat products, India is a significant player in the global market.
Much of India’s production is retained for domestic use, and agricultural trade policy has been used in an ad-hoc manner to curb domestic food inflation. India’s agricultural export market has grown meaningfully only in the last two decades. Today, about half of India’s exports comprise rice, wheat and marine products.
Basmati rice, non-basmati rice, wheat, vegetables, fruits, peanuts and shrimps top the exports basket. While agricultural production in many states is varied, basmati is grown principally in Haryana and Punjab, wheat in Uttar Pradesh and Punjab, bananas in Tamil Nadu and Gujarat, mangoes in Uttar Pradesh and Andhra Pradesh, and shrimp is primarily harvested in Andhra Pradesh and Tamil Nadu.
As of now, India does not make it to the top ten countries in terms of agricultural exports. The AEP put out by the union ministry of commerce and industry seeks to tap this opportunity. Even though the objective of doubling exports in four years (implying an annual growth rate of 19%) is unrealistic, it is a welcome development for several reasons.
First, the policy has been developed in close consultation with states recognizing the geographic diversity of production and states’ constitutional role in nurturing agricultural development. Second, it is a nuanced approach by geography and products rather than the previous approach of simply increasing inputs. And finally, it tackles the entire ecosystem related to enabling market access and acceptability based on the introduction of agricultural clusters.
The idea of clustering is well-known in industry, and to some extent, in agricultural products—wine being a classic example. What France has done for wine—by clustering, branding and promoting—has been followed by others such as Japan (Kobe beef), Colombia (Juan Valdez coffee) and New Zealand (Manuka honey).
Clustering is at the root of branding agricultural commodities (like coffee and beef) and value-added products (like wine). A working definition for a cluster is: “geographic concentrations of inter-connected companies and institutions in a particular field" (Michael Porter, 1998).
A Food and Agriculture Organization (FAO) definition extends this to the agricultural sector to include vertical relationships among suppliers of raw materials and production inputs, agricultural producers, processors and exporters, as well as horizontal relationships among producers such as through cooperatives or producer companies, and by supporting relationships between producers and facilitating organizations like government export promotion agencies, research institutes and business service providers. The entire value network works to reinforce efficiency, quality, market acceptance and sustainability.
For the average farmer who holds a small plot in India, clustering is a very good idea and can bring great benefits. The most famous example of a successful cluster in India is that of the Gujarat Cooperative Milk Marketing Federation (branded Amul). The grape cluster in Maharashtra situated in the Pune area is a lesser known success. Mahagrapes was formed specifically to reduce the transaction costs of marginal farmers and to increase their incomes. It succeeded in doing so by providing common facilities for pre-cooling, cooling and storage of grapes, and by reducing the cost of market linkage for all members of the cooperative. Importantly, by using transparent standards of quality, a mutually-owned insurance system provides risk mitigation to all members.
The AEP proposes to nurture and build many such clusters for products like bananas, pomegranates, mangoes, tea, coffee and marine products. Even though it stops short of guaranteeing this, it promises, at the very least, a stable export regime that will refrain from interference. The policy brings a comprehensive yet nuanced approach to agricultural product development by involving the states.
Time will tell if this promising policy will bear fruit.
P.S: “If we should be blessed by some great reward, it’s the fruit of a seed planted by us in the past," said Gautama Buddha.
Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns
7.1. DBS Bank lays out India plans, to open 100 branches, kiosks in 12-18 months
Business Standard, Mar. 05, 2019
Mumbai: Singapore-based DBS Bank plans to open 100 touchpoints, a combination of kiosks and branches, in 25 cities over the next 12-18 months, as part of its India strategy.
The lender, whose book mainly comprises of corporate loans, plans to focus on consumer and small and medium enterprise (SME) lending in order to increase market share in the segment.
“Unlike a lot of other players who want to stick to the top-end of the market, we intend to go deep. In order to be successful long term in this country, you have to go beyond the creamy layer. You must be a SME player and have retail presence and footprint,” said Piyush Gupta, group chief executive of DBS.
The group has invested Rs 7,700 crore into India till date, of which Rs 1,800 crore was invested last year.
DBS Bank India CEO Surojit Shome said the bank plans to see a marginal profit this year, as opposed to the loss in the previous year and that the profitability of the Indian business will be on the rise. The group will continue to infuse capital into the Indian subsidiaries till it becomes self-sustainable, said Gupta. The bank’s loan book comprises mainly of corporate with around 10 per cent comprising retail and SME each.
The Reserve Bank approved the merger of the foreign lender’s India business with its wholly owned local subsidiary, making it the second bank to take the wholly owned subsidiary route after the State Bank of Mauritius. DBS Bank in India will function as branches of DBS Bank India with effect from March 01, said the RBI.
Shome said the bank had a balance sheet of around Rs 50,000 crore with advances around Rs 20,000 crore and deposits of around Rs 30,000–Rs 35,000 crore. He added the bank might see a lower interest margin due to the higher cost of funds, since their current and savings ratio, which stands at around 18 per cent, is lower than the other players. The bank has cleared up its loan book, and its net non-performing asset ratio would be less than 0.4 per cent at the end of March.
This month, the bank will open nine new branches and extend its reach to Hyderabad, Ahmedabad, Coimbatore, Vadodara, Indore, and Ludhiana.
Also, it will expand within cities where it is already present in, opening branches in Andheri in Mumbai, as well as Gurugram and Noida in the National Capital Region. It will also open five branches in unbanked rural centres and currently operates in 12 cities.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
7.2. Agri, MSME, other sectors to benefit from NABARD's institutional loans: Gehlot
PTI, Mar. 07, 2019
Jaipur: Rajasthan Chief Minister Ashok Gehlot Wednesday said various sectors including agriculture and MSMEs would benefit from the institutional loan scheme of NABARD in 2019-20.
Gehlot was speaking after unveiling of NABARD state focus paper for the year 2019-20.
He said the state government was continuously working for the welfare of farmers and NABARD's support will give strength to its efforts.
NABARD Chief General Manager Suresh Chand said the bank has estimated to disburse institutional loans of Rs 1.94 lakh crore in the coming financial year 2019-20.
As per the state focus paper, the bank aims to disburse loan of Rs 1.35 lakh crore in agriculture, which is 69.39 per cent of the total loans to be disbursed under the scheme.
For MSMEs, loans worth Rs 36,032 crore would be disbursed, he added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
8.1. U'khand announces interest free loans of Rs 1 lakh to farmers in 2019-20 budget
PTI, Feb. 19, 2019
Dehradun: The Uttarakhand government announced interest-free loans of up to Rs 1 lakh to poor and small farmers in the Rs 48,663-crore budget for 2019-20 presented in the Assembly on Monday.
Interest free loan up to Rs 5 lakh to self-help groups engaged in agro-related activities was also announced in the budget which focuses on agriculture and allied sectors, and rural employment.
Tabling the state's budget, Finance Minister Prakash Pant said it was a balanced budget which took care of education, health, agriculture, employment generation in rural areas, infrastructure, housing and urban development.
The total expenditure for the Financial Year 2019-20 is estimated to be Rs 48,663.90 crore while total receipts for the period are pegged at Rs 48,679.43 crore which means it is a surplus budget, he said.
The budget size is around 7 per cent more than the one passed last year, Pant told reporters at a press conference after tabling the budget in the House.
"Though it is a balanced budget which takes care of all sections including farmers, women, the unemployed youth, rural economy and development of rural and urban infrastructure our focus has been agriculture and the allied sectors,in this budget," Pant told reporters.
An interest waiver will be provided under zero interest rate for loans up to Rs 1 lakh for poor and marginalized farmers besides providing loan up to Rs 5 lakh at zero interest rate to self-help groups engaged in agro-related activities to promote agriculture, he said.
A provision of Rs 1,341 crore has been made for agriculture and horticulture in the budget while a provision of Rs 3,141.34 crore had been made for rural development and Panchayati Raj department, he said.
To check migration through employment generation in rural areas and to double the income of farmers by 2022 an allocation of Rs 100 crore has been made through the cooperative sector in the budget.
A provision of Rs 2,545.40 crore has been made for medical health, family welfare and Medical education while an allocation of Rs 1,073 crore has been made for the education sector, Pant said.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
8.2. Total gross loan of microfinance industry grows 6 pc to Rs 65,090 cr in Q3
PTI, Feb. 22, 2019
New Delhi: Total gross loan portfolio of the microfinance industry stands at Rs 65,090 crore at the end of the third quarter, showing an increase of 6 per cent from the previous quarter and an annual growth of 37 per cent, according to a report by Sa-Dhan.
The report is based on data provided by 124 microfinance institutions.
Combined microcredit portfolio of all lenders as on December 31, 2018, was Rs 1,57,497 crore of which NBFC-MFIs are leading with Rs 60,117 crore and 38.17 per cent market share, followed by banks with Rs 52,556 crore and 33.37 per cent market share.
It also said the combined microcredit disbursement of all players during the quarter was Rs 50,942 crore. Of this, banks are leading with Rs 19,618 crore and 38.51 per cent share, followed by NBFC-MFIs with Rs 19,426 crore and 38.13 per cent share.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
9.1. Over 30 pc funds for agri-schemes targeted towards woman farmers: Govt
PTI, Mar. 08, 2019
New Delhi: The government has allocated more than 30 per cent funds under various schemes in order to bring women in the agriculture mainstream, Agriculture Minister Radha Mohan Singh said Thursday.
A special emphasis has been given on the role and contribution of women in doubling the income of farmers by 2022, he said on the eve of the International Women's Day.
Besides, women-based activities have been started to reach the benefits of different beneficiary-oriented programmes and missions to women, he said in a statement.
Singh said the participation of women in the decision-making bodies at the state, district and block levels under the ATMA scheme has ensured their involvement in the planning process.
Along with this, changes in reporting proformas have been made to maintain the statistics of benefits reaching women, he said adding that a book showing the norm of fixed aid for woman farmers is also being published.
That apart, a National Gender Resource Centre in Agriculture has developed a women sensitisation module to bring about change in the mindset and behaviour of male programme operators, he added.
The minister further said in the team of committed extension personnel under the revised ATMA scheme in 2014, the position of a women coordinator in every state was also created.
In addition, a special emphasis is being given to women development activities to ensure their participation in the economic and social upliftment in the field of cooperatives.
Regular cooperative education programmes of women are being organised by the National Cooperative Union of India (NCUI) through the state cooperative societies.
As a result of these efforts, during 2017-18, 31.47 lakh women have been benefitted by training from the NCUI in the field of cooperatives.
Similarly, 6.07 lakh and 7,000 women have benefited through Krishi Vigyhan Kendras (KVKs) and skill training respectively. A total of 8.62 lakh women have benefitted in 2017-18.
Highlighting other measures taken to promote women farmers, the minister said women farmer empowerment projects under the National Rural Livelihood Mission have benefitted more than 34 lakh women through 82 projects across 22 states and one Union Territory.
In addition, appointment of one woman scientist has been made mandatory in 668 KVKs established across the country.
Apart from this, October 15 is being celebrated as "Rashtriya Mahila Kisan Diwas" since 2016, he added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
9.2. Houses 560,695 sanctioned under Pradhan Mantri Aw. Yojana (Urban) in the 43 CSMC
Press Information Bureau, Feb. 26, 2019
Cumulative No of Houses Sanctioned Under PMAY(U) Now 79,03,674 Lakh
Uttar Pradesh Gets 1,79,215 Houses,Andhra Pradesh– 1,10,618, Maharashtra-1,01,220, Karnataka – 48,729, Madhya Pradesh – 26,587 Gujarat – 25,861, Manipur – 13,715, Tamil Nadu – 12,174, Bihar – 10,084
New Delhi: The Ministry of Housing & Urban Affairs has approved the construction of another 5,60,695 more affordable houses for the benefit of urban poor under Pradhan Mantri Awas Yojana (Urban). The approval was given in the 43rdmeeting of the Central Sanctioning and Monitoring Committee held here today.The cumulative number of houses sanctioned under PMAY(U) now is 79,04,674.
The number of houses sanctioned for Uttar Pradesh is 1,79,215, Andhra Pradesh1,10,618, Maharashtra1,01,220 while Karnataka has been sanctioned 48,729 houses. The houses sanctioned for Madhya Pradesh is 26,587 houses and Gujarat 25,861. The number of houses for Manipur is 13,715 while Tamil Nadu has been sanctioned 12,174houses. Bihar has been sanctioned 10,084 houses while the houses sanctioned for Odisha is 7,472. The number of houses sanctioned for Chattisgarh is 7,067 while the sanction for Kerala is 4,194 houses. Haryana has been sanctioned 4,019 houses, Rajasthan 3,601, Jharkhand 2,165and Assam 1,419. The number of houses for Meghalaya is 1,397 while the houses sanctioned for Puducherry is 1,158.
A total of 1,243 projects with a project cost of Rs 33,873 crore with central assistance of Rs 8,404 crore has been approved in the meeting held under the Chairmanship of Shri Durga Shankar Mishra, Secretary, Ministry of Housing and Urban Affairs.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same
10.1. Mukesh Ambani to make e-commerce debut during Diwali's bumper deal frenzy
Business Standard, Mar. 07, 2019
Bengaluru: This festival season, online deals could get much bigger and deeper as Mukesh Ambani-led Reliance Industries (RIL) is set to time its e-commerce debut with Diwali, when up to 30 per cent of the annual sales are clocked.
RIL is preparing to launch the e-commerce venture ahead of Diwali, two sources in the know said. While so far Flipkart (now owned by Walmart) and Amazon India have been competing fiercely through their Big Billion Day and Great Indian Diwali Sale, respectively, the Ambani venture will make the fight tougher, analysts pointed out.
During October-November 2018, e-commerce firms made $4.3 billion in total sales, according to RedSeer, a consultancy which tracks the sector.
RIL is setting up infrastructure for a full-fledged horizontal e-commerce offering — internally called the New Commerce — to simultaneously launch pan-India by October-November, sources said. Pilot tests are underway in six cities, including Mumbai, Kolkata, Chennai and Bengaluru. A spokesperson for RIL declined to comment on this development.
The company has carved out a dedicated team at Reliance’s corporate park in Ghansoli, Navi Mumbai, to work on the new business spearheaded by Manoj Modi, a close Ambani aide.
RIL plans to stitch together its retail network that includes Reliance Digital, Reliance Fresh and Reliance Trends, and hundreds of unorganised retail stores to power online shopping on Reliance Jio mobile platform. As a first step, RIL is installing Jio-branded point-of-sales machines at local mom-and-pop stores and certain outlets of large organised retailers in a bid to bring the transaction data online and integrate with Jio systems, one of the sources said.
RIL announced its e-commerce plans last month. “Reliance Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 1.2 million small retailers and shopkeepers in Gujarat,” Ambani had said at the inaugural function of the Vibrant Gujarat Global summit in Gandhinagar.
With this, RIL is looking at a convergence of telecom, media and commerce. This is something that’s causing worry to the incumbents. While Amazon has committed $5 billion for the India business, Walmart acquired a majority in Flipkart last year in a $16-billion deal. RIL could get an advantage in the foreign versus domestic battle too.
For instance, RIL could sell its own inventory online, something foreign-owned players cannot do. Globally, the inventory model works because of the control a company has over what it sells. Reliance will leverage its retail presence — a network of over 10,000 stores in 6,500 cities selling everything from clothes to consumer electronics to packaged goods — and the telecom business to reach out to 280 million internet users.
RIL is present in e-commerce in a limited way. It runs an e-commerce experience operation AJIO.com, a fashion site launched in 2016, and online store-front of electronic chains Reliance Digital. Analysts have cited the disruption caused by Jio in the telecom industry to argue that a repeat of such a scenario was likely in e-commerce too. On the mobile front, RIL has already spent $40 billion building a 5G ready telecom service. It also has an array of content and entertainment through JioTV, JioCinema and JioMusic (through the acquisition Saavn).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
10.2. India's First Semi High Speed Train, "Vande Bharat Express" to be flagged off by PM tomorrow
Press Information Bureau, Feb. 15, 2019
New Delhi-Varanasi train journey to be covered in just 8 hours Train will Run on all days Except Mondays and Thursdays Speed, Scale and Service-Hallmarks of Vande Bharat Express A Make-in-India Success Story
New Delhi: The ‘Make in India’ effort of Indian Railways has culminated into India's first Semi High Speed Train, "Vande Bharat Express".
Prime Minister Narendra Modi will flag off the maiden run of the train on New Delhi-Kanpur-Allahabad-Varanasi route train tomorrow morning from the New Delhi Railway Station. He will inspect the facilities in the train and address a gathering on this occasion.
Union Minister of Railways and Coal, Shri Piyush Goyal will lead the team of officials and media persons aboard the train on its inaugural run tomorrow. It will stop at Kanpur and Allahabad where it will be received by dignitaries and the people.
Vande Bharat Express can run up to a maximum speed of 160 kmph and has travel classes like Shatabdi Train but with better facilities. It aims to provide a totally new travel experience to passengers.
The Train will cover the distance between New Delhi and Varanasi in 8 hours and will run on all days except Mondays and Thursdays.
All coaches are equipped with automatic doors, GPS based audio-visual passenger information system, on-board hotspot Wi-Fi for entertainment purposes, and very comfortable seating. All toilets are bio-vacuum type. The lighting is dual mode, viz. diffused for general illumination and personal for every seat. Every coach has a pantry with facility to serve hot meals, hot and cold beverages. The insulation is meant to keep heat and noise to very low levels for additional passenger comfort.
Vande Bharat Express has 16 air-conditioned coaches of which 2 are executive class coaches. The total seating capacity is 1,128 passengers. It is much more than the conventional Shatabdi rake of equal number of coaches, thanks to shifting of all electric equipment below the coaches and seats in the driving coach also.
Adding up the green footprints, the train has regenerative braking system in the Vande Bharat Express coaches which can save up to 30% of electrical energy.
Speed, Safety and Service are the hallmarks of this train.Integral Coach Factory (ICF), Chennai, a Railways Production unit, has been the force behind a completely in-house design and manufacture, computer modelling and working with a large number of suppliers for system integration in just 18 months.
In keeping with the vision of Prime Minister’s vision of "Make in India", the major systems of the train have been designed and built in India. Impact of this train, matching global standards of performance, safety and passenger comfort and yet costing less than half of global prices, has the potential to be a game changer in the global rail business.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
- Industry, Manufacture
11.1. Aditya Birla Fashion delivers the goods, but at a cost
Livemint, 28 Feb. 2019, Clifford Alvares
- New brands, store expansions are resulting in better same-store sales growth for Aditya Birla Fashion and Retail
- Some of its businesses such as the "fast fashion" segment, though, have been reeling under competitive pressure
Some bricks-and-mortar retailers, it appears, are delivering the goods quite well. This has set the cash box ringing for companies such as Aditya Birla Fashion and Retail Ltd. The stock has scaled a 52-week high, gaining 47% this past year.
Efforts on costs rationalization and business expansion have been paying off for the company. New brands introduction and store expansions are resulting in better same-store sales growth. This has led to a better revenue growth of 23% year-on-year to ₹2,281.5 crore in the quarter ended 31 December (Q3).
Same-store sales growth is the comparable sales growth of stores that have been operational for over a year.
Some of its businesses such as the "fast fashion" segment, though, have been reeling under competitive pressure. This segment continues to suffer, although operating losses have narrowed to ₹12 crore in the December quarter from ₹24 crore in the year earlier. Analysts at JM Financial Institutional Equities say losses at "fast fashion" are an area of concern.
Costs remain elevated on promotion and brand expenses. For instance, Aditya Birla Fashion has been making higher promotion spends in categories like innerwear. While its inner wear segment reported 89% growth in the December quarter, losses more than doubled to ₹19 crore. But higher promotion spends has been a big reason why the firm managed to ramp up the innerwear segment to a ₹100-crore business over a two-year period.
The other business arm, Pantaloons, has revamped its pricing strategy to adapt to a wider set of customers. The brand has also been adding stores, and some are breaking-even faster. Pantaloons operates 302 stores, while the other business—Madura Fashion and Lifestyle—runs 1,959 stores.
Still, analysts report that the apparel industry is intensely competitive. Store operations can get unwieldy if real estate and rental costs rise. Further, online and e-commerce platforms can pile pressure on margins.
For all its revenue growth, therefore, the margin growth in the business has not been much, dragged down by impairments and marketing costs. In Q3, Ebitda (Earnings before interest, taxes, depreciation and amortization) margin expanded a mere 20 basis points to 7.6%. The quarter also witnessed an extended festive season.
One basis point is one-hundredth of a percentage point.
The good news is that the business is not anywhere exhibiting the high cashburn rates of online operators. Bricks-and-mortar retailers are seeing greater growth traction, and analysts see a steady sales and revenue growth yet. Same-store sales growth has been on the rise, too, in all the divisions. Analysts say Aditya Birla Fashion will have to rein in costs. Nevertheless, as the stock has had a good run last year, investors in this counter may have to go slow on their shopping.
11.2. Small towns and value fashion a perfect fit
Livemint, 05 Mar 2019, Saumya Tewari
Online retailers have played an important role in raising awareness about the latest fashion trends in small-town India
Internet access, higher disposable income and a desire to look good have fuelled growth of value-fashion brands
NEW DELHI: Shalini Sharma, 33, has her pulse on the latest fashion trends but is averse to splurging on expensive clothes. The Indore resident has long since ditched her churidars for straight pants and finds floral patches on sweaters, as well as suede jackets, trendy.
“I prefer buying from value-fashion stores because they offer the latest design options at a reasonable price," she said. Sharma and a new set of consumers emerging from small cities, having been exposed to the latest fashion trends on the internet, are demanding the latest cuts and designs from apparel makers.
Taking a cue from the changing preference of consumers, value-fashion brands such as Max Fashion, Reliance Trends and Pantaloons are tailoring their collections and even store formats to woo them.
Retail analysts say online retailers have played an important role in raising awareness about the latest fashion trends in small-town India. “They made consumers aware and created demand by making the merchandise available to them," said Ankur Bisen, an analyst who leads the retail division of Technopak Advisors. “Value fashion is an approach where the supply chain of fashion is appended to deliver fresh fashion at a low value, focusing on consumers who are looking to wear branded apparels," he added.
Brands are responding to it by changing the collections frequently, offering the latest designs at competitive prices, while opening more stores in markets where there’s an affinity for branded fashion. Internet access, higher disposable income and a desire to look good have further fuelled the growth of value-fashion brands in small-town India.
“The value space is exploding because even at the lowest end of the pyramid there’s an obsession to wear brands. The youth will not mind spending 50% of their salary on branded clothes and shoes," said Kulin Lalbhai, executive director of Arvind Ltd. Arvind Fashions Ltd, the recently created entity after the demerger from Arvind Ltd, is targeting ₹2,000 crore in revenues by 2022 from Unlimited, its value-fashion brand.
“There’s a huge opportunity coming from small towns and we are ready for it," said Rajesh Seth, chief operating officer of FBB. “Five years back we actively started working on the product category and merchandise. Three-and-a-half years back, we started transforming our stores from the design and presentation perspective." The Kishore Biyani-led Future Group’s value-fashion venture plans to invest ₹350 crore to open about 140 exclusive outlets as it aims to double revenue in the next two years. “Ethnic wear has become contemporary, with Indo-western dominating our collections. Athleisure is growing rapidly among the youth."
Women customers have been identified as the key growth driver for value-fashion brands. Unlike globally, where women’s wear led the branded fashion market growth, in India branded fashion was always dominated by men’s wear. However, liberalization, nuclear families and more women entering the workforce have changed the pattern. Women are now buying clothes for office, fitness and lounge wear, among others.
Design leads the conversation at Max n, according to Jiten R. Mahendra, vice-president for marketing. “Our 50-member design team travels across international to look for trends and styles keeping the aesthetics and Indian body type in mind," he said. “In the last three years, we have also started taking cognizance of Bollywood fashion."
Popular ethnic wear brands such as Biba and W are also pushing their value brands Rangriti and Aurelia, respectively, as they see a bigger play in the value space. Last year, these brands hired actors Parineeti Chopra (Rangriti) and Disha Patani (Aurelia) for marketing promotions.
Rangriti launches new collections every three-four weeks and its design team constantly reviews the latest trends. “New range launch maintains freshness and excitement in our stores, encouraging repeat customers to browse in," said Sanjeev Agarwal, chief executive of Rangriti. “This is also important as the purchasing customers are limited in number in smaller cities." Currently, there are 64 stand-alone stores of the brand and it is looking to add 10-15 stores every quarter.
“Value fashion in the ethnic space is going through the roof, with multiple private labels growing," said Technopak’s Bisen, adding that consumers were looking for fresh styles at discounted prices. “The onus is on brands to be present where the consumer is, else they will opt for other brands," he said.
12.1. Opinion | Titan’s success casts doubt on the conglomerate model
Livemint, 06 Mar. 2019, Sundeep Khanna
THE CORPORATE OUTSIDER
Titan’s present market cap at ₹90,000 crore outweighs that of revenue giants like Tata Steel & Motors
In a $110 billion group, comprising 30 companies scattered across such diverse areas as steel and software, who would have thought that a small watch company would emerge as the second largest in terms of market capitalization and the fastest growing over the last three years?
Yet, this week, as a Business Standard story pointed out on Monday, Titan’s market cap scaled ₹90,000 crore, well below that of software heavyweight Tata Consultancy Services (TCS), but nearly 60% more than that of revenue giants Tata Steel and Tata Motors.
Titan’s success is the story of steady and sterling leadership by two men, Xerxes Desai and Bhaskar Bhat, who helmed the company for all its 34 years in business. Desai, the man who wanted to be an Oxford don but came back at J.R.D. Tata’s bidding to set up a watch company, presided over the company’s first decade and a half of growth, in which time it established itself as India’s leading watch brand. Under Desai, the humble watch—till then symbolized by public sector entity HMT’s mechanical products or imports from abroad—became a fashion statement, a symbol of class best exemplified by its signature tune, an excerpt from Mozart’s 25th Symphony, personally picked by Desai.
However, by the end of the last century, as the watch business slowed, the company’s diversification into the jewellery business in 1995 was weighing heavily on its overall performance, already dragged down by debts following an ill-advised blitz into several European markets.
Enter Bhaskar Bhat as managing director in 2002. Tasked with engineering a turnaround of sorts, he faced a baptism by fire as a large-scale layoff was followed by a lockout at the company’s plant. After dousing those early fires, Bhat proceeded to execute a well-honed strategy of entering unorganized segments of the Indian market and gentrifying them. With this came crafted watches, jewellery, youth accessories such as bags and belts, eyecare products and, later, fragrances and saris.
The results have been spectacular. Titan is today one of the two jewels in the Tata crown. And, therein lies the problem, since its continuing success casts a questioning shadow over many of the other companies that are a part of India’s largest conglomerate and have, for years, been sucking up resources without really delivering results.
The conglomerate model, as rolled out by the likes of Harold Geneen and Jack Welch, was a consequence of the low interest rate regimes in the US following the Second World War, which in turn, helped finance a spate of leveraged buyouts. Conglomerates made sense till such time as capital markets lacked the depth and sophistication needed to back businesses at various stages of evolution and growth. They lost steam once those markets evolved to serve all comers.
Through the 1960s, Geneen made hundreds of acquisitions across a diverse collection of businesses ranging from telegraph equipment to insurance and hotels, to build International Telephone and Telegraph Corp., the company he headed, into a $17 billion conglomerate by 1970. Today, some four decades later, all that remains of that diversified portfolio colossus is a $2.5 billion business making specialty components for the aerospace, transportation, energy and industrial markets.
By the 1990s, most US corporations had come around to reaffirming their faith in specialization and focus, prompted in large measure by the teachings of management gurus like the late Coimbatore Krishnarao Prahalad, who in 1990 co-authored an article for the Harvard Business Review titled The Core Competence Of The Corporation, in which he urged executives to identify their organization’s core competencies that could foster growth.
It wasn’t as if the conglomerate idea fell off the cliff overnight. A 1994 study showed that for each of the years 1985, 1989 and 1992, over two-thirds of the Fortune 500 companies were active in at least five distinct lines of business.
Late last year, United Technologies, one of the best known industrial conglomerates after its acquisition of Otis Elevator in 1976 and Carrier Refrigeration in 1979, announced that it would spin off both those divisions into separate companies and focus on its core aerospace business.
This, coupled with the struggles of General Electric—once the world’s largest industrial conglomerate—as it looks to sell off pieces of its operations indicates that the era of conglomerates seems to have ended in the US.
In India though, conglomerates still rule the roost, accounting for nearly 50% of the corporate sector’s revenues. Yet, the success of focused companies in newer businesses such as IT, telecom, banking, auto, aviation and e-commerce shows that the conglomerate premium may be declining even in India. A study by Bain and Co. last year concluded: “Conglomerates in India and Southeast Asia no longer hold an advantage in total shareholder returns over pure plays and have begun to underperform in revenue growth and margin improvement."
Significantly, the study’s list of conglomerates in the region that have continued to thrive despite the odds had a number of Indian groups, including Bajaj, Wadia, Murugappa, Lalbhai, Godrej, Emami and Torrent, but not Tata.
Sundeep Khanna is an executive editor at Mint and oversees the newsroom’s corporate coverage.
12.2. Made in India Citroen car to launch in India by 2021
Livemint, 26 Feb 2019, Malyaban Ghosh
- Apart from manufacturing cars, Citroen parent Groupe PSA plans to set up a component manufacturing base in India
- Groupe PSA has a joint venture with AVTEC Ltd, a subsidiary of the CK Birla Group, for making cars in India
New Delhi: French carmaker Groupe PSA on Tuesday announced its plans to enter the Indian market with a locally manufactured vehicle that will be launched in 2021 under its Citroen brand. The company, apart from manufacturing cars, is planning to set up a component manufacturing base in India for local and global operations.
Groupe PSA will set up manufacturing base in Tamil Nadu, like its peer Renault SA.
The India plan was announced by Groupe PSA chairman Carlos Tavare on Tuesday, while presenting the financial results for 2018.
“We are very proud to launch Citroen in India, one of the fastest growing markets in the world. Building on the brand's success in Europe with five consecutive years of growth, I am convinced that Citroen’s selling proposition of unique styling, and ecofriendly and comfortable cars at the heart of the market, has the potential to satisfy Indian customers," said Citroen’s chief executive officer Linda Jackson.
The French carmaker will manufacture vehicles and powertrains in India under a joint venture formed with AVTEC Ltd, a subsidiary of the CK Birla Group. In late 2018, both companies announced the setting up of a greenfield plant in Hosur district of Tamil Nadu. The plant has a capacity to manufacture 300,000 powertrains and 200,000 BS-VI-compliant engines a year. The total investment for this plant will go up to ₹600 crore once it is complete.
The Bharat Stage-VI emission norms will kick in from April 2020.
“This project means to be fully integrated in India with a comprehensive ecosystem, including local production of vehicles and powertrains, distribution of vehicles and services as well as procurement for the whole group. Today’s milestone represents a significant step to meet customers’ expectations in India soon," said Emmanuel Delay, executive vice president and operational director (India-Pacific), Groupe PSA.
The India project, announced as part of Group PSA's ‘Push to Pass’ plan, was launched in 2017 with the signing of two joint venture agreements with the CK Birla Group.
The group’s aim is to “be Indian in India", to manufacture vehicles and power trains in Tamil Nadu and to bring in state-of-the-art technology for an ecofriendly new product range, said the company in a press note.
Unlike a lot of other manufacturers, Groupe PSA will invest in India with an aim of manufacturing vehicles with high levels of localization in order to reign in the cost. It is also very evident that the company will use India as a manufacturing hub for vehicles and related components.
13.1. Bata India sprints as margin expansion springs a surprise in Q3
- Bata India's strategy of introducing many high-end and premium brands are clearly bearing fruit
- Bata India stores are seeing greater walk-ins, with more millennials increasingly opting to purchase its merchandise
Lately, the image of Bata India Ltd has changed from one of sauntering to that of sprinting. The firm’s strong Q3 results sparked a rally, taking its share price to an all-time high of ₹1,283 on Wednesday.
A fleet of initiatives undertaken in the recent past are bearing fruit. A key strategy has been to introduce many high-end and premium brands. This has not only helped increase same-store sales, but also helped the brand increase visibility. Analysts contend that Bata India stores are seeing greater walk-ins, with more millennials and youngsters increasingly opting to purchase its merchandise.
In fact, the revenue mix is now further tilting from wholesale sales towards retail. Retail sales rose to 88% of revenue, and registered strong 18% growth, year-on-year. Little surprise then, that third quarter revenue increased 15.5% to ₹778.7 crore.
Also, the company topped the high revenue growth with an expansion in Ebitda (earnings before interest, tax, depreciation and amortization) margin, even surpassing many analysts’ estimates. While analysts were anticipating about a 90-200 basis point Ebitda margin increase, Bata India delivered a stellar 450 basis point increase year-on-year in margins to a decade-high of 21% in Q3.
One hundred basis points equal percentage point.
Bata India's revised strategy has resulted in better growth rate at expanded profit margins.
There were several reasons for this. The company kept a tight leash on rental costs, which have held in the same range for about two years. It negotiated six-month contracts with its suppliers, against three-month contracts earlier. This shaved off about 200-250 basis points in input costs.
In terms of geographic spread, Bata India has been increasing the number of stores, adding retail outlets in malls and high-street locations. The management expects to add about 150 stores in FY19 to take its total reach to about 1,525 outlets.
“We anticipate the healthy revenue trajectory for Bata to sustain, driven by its enhanced focus on fast-growing categories such as sports, youth and women, and the swift pace of store additions. Furthermore, the scaling-up of premium products, which are now 30%, and controlled operational cost structure are key triggers for steady margin expansion," said analysts at ICICI Direct in a note to clients.
It is worth noting that a significant price rise in the Bata India stock has stretched valuations. The stock has, in fact, zoomed 72% this past year. Even assuming that the company meets its future growth estimates, stock valuations are stretched to quite high levels. At the ruling price of ₹1,260, it is quoting at what seems to be a lofty price-earnings multiple of 35 times FY21 earnings. If Bata India’s profits keep on sprinting, perhaps the valuations make sense.
13.2. Yogesh Chaudhary: On the red carpet
Livemint, 01 mar. 2019, Arun Janardhan
The director of Jaipur Rugs speaks to Mint about opening new stores, working with siblings, and why they took so long to start selling in India
When Chaudhary started working at the company in 2006, Jaipur Rugs was not selling in India; it was exporting everything
When Yogesh Chaudhary returned to Jaipur on a break from his sophomore year at Boston College in 2006, there was a dramatic upheaval at home. A theft at the office had pulled the rug from under their feet and some key people in the organization had quit.
His father, N.K. Chaudhary, founder of the family business Jaipur Rugs Co. Pvt. Ltd, was under pressure and young Yogesh decided to stay back to lend a helping hand. Even though he was to return to the US for an internship, he reckoned he could skip a semester, maybe a year.
The technology-loving, computer-making Yogesh Chaudhary, though, never went back to college to complete his management undergraduate degree (with a specialization in computer science) because he fell in love—with carpets. Today, the director of the company is propelling an expansion drive in the family business. Their third India store—after Jaipur and Delhi—opened in Lower Parel in Mumbai on 20 February.
The lean 32-year-old scion, dressed in a full-sleeved white shirt and dark trousers, is sitting in a conference room that also serves as an area for prospective customers to check colour combinations and carpet styles. We are seated at a conference-style table that’s placed on top of a red carpet, hand-knotted in wool, in a room that is in the middle of the 4,000 sq. ft store. An employee waters potted plants behind Chaudhary, and around us are carpets, neatly stacked in piles or hanging off the walls—511 in total.
When Chaudhary started working at the company in 2006, his two elder sisters, Asha and Archana, were managing the business in the US, which accounted for over 90% of the sales. Jaipur Rugs was not selling in India at the time, it was exporting everything.
There was no sales or marketing team in an office of barely 25-30 people. On a whim, Chaudhary decided to enter a local exhibition (in Jaipur) and applied for 64 sq. m of space, without knowing how big that was. He took six mats to the show, only to realize that they would fall woefully short in the allotted space. So they closed a part of the booth, put three rugs on the wall, three on the floor—“That was one of our best shows ever", he beams. “We got so many new clients—and that was our first exhibition. It got me hooked—so I got tempted not to go back to college."
Even as his mother and sisters encouraged him to return, Chaudhary took baby steps at work. He had childhood memories of bouncing on sacks of wool or rolled-up carpets. During his first year of work, he says, not one carpet was shipped out of their facility without him doing the final quality check.
He struggled initially to understand the intricacies of carpet making, but he realized he was in love with the business when he started selling them. No sooner, however, had Chaudhary made inroads into work that the financial crisis of 2008 hit—Lehman Brothers filed for bankruptcy, and the buyers of carpets dwindled.
The slowdown helped them address every grey area: They were not planning well enough, had large amounts of raw material and finished goods inventory, were not conscious of cost, and there was a lot of wastage and pilferage. “We had always been a company low on margin. Nobody in the family cared about margins. We had to become more financially sustainable," says Chaudhary.
The company is expected to touch a turnover of ₹150 crore this year, Chaudhary says, up from ₹18 crore when he joined.
Jaipur Rugs started selling in India only in 2016. “I don’t know why," he says, laughing. “We were a design-led company and a lot of people started copying our designs, so we became a little fanatical about not selling in India. Also, we thought our carpets were expensive (for instance, Rs1,100-6,600 per sq. ft for hand-knotted rugs) and no one would buy them here. In two years, I have realized we are well-priced," he says.
The decision to enter the domestic market was triggered by a chance trip to Bengaluru. He visited some carpet stores as a customer and realized how ignorant the businesses were, how they were over-charging and cheating customers. Angry and sad, he felt compelled to shake things up.
The company, founded in 1999, now has an online presence—its own website, and e-tailers like Amazon and Pepperfry, account for 35-40% of their overall sales. They produce 12,000-15,000 hand-knotted carpets a year on average, besides a few hundred thousand pieces of dhurries.
They were always focused on working with artisans, says Chaudhary, cutting out the middlemen so that workers’ profits would increase. The roughly 40,000 artisans—over 85% of them women—they work with across 600 villages and six states today have benefited in other ways too. The company started a design label, Manchaha, or artisan originals, which allowed the skilled workers to come up with their own designs.
“We serviced the weavers like customers," says Chaudhary, who often uses the words “super" and “humongous". “We are also a women-centric organization—receptiveness is higher among women."
The Jaipur Rugs Foundation, started in 2004, trains new artisans and upgrades the skills of existing weavers to ensure efficiency and speed. “In villages, homes are referred to by the name of the male member. In a lot of places where we work now, the homes are known by the women’s names because they are making more money than the men," says Chaudhary.
It helped that they modernized designs. Rug patterns cannot remain traditional because young homemakers are open to “crazy designs, from abstract to modern to plain to jute to interesting fibres". His third sister, Kavita, who joined the company at the same time as Chaudhary and is the creative one among the five siblings, spurred the movement by modernizing the designs, bringing in a younger sensibility.
The siblings have their disagreements, but there is a clear dividing line between who handles what and therefore has the final say in the matter. “It’s good to know when a person will always be there for you," Chaudhary says about working with his sisters and brother Nitesh, the youngest, who has just joined the business. “In business, that’s super critical. The challenge is when you don’t agree on what needs to be done, and that happens often. My father watches the game and makes sure everyone is in place."
“He is traditional in the way he works, but his thoughts are completely modern. Even before we (the children) got into business, we had walkie-talkies in Gujarat (where the family lived for eight years) before cellphones existed and our own tower for walkie-talkies. So when we moved to Jaipur in 1999, we still had them, so the police never stopped us," he says, laughing.
While he may have left tech education far behind, he continues to engage in the field, combining a hobby with a sound business. Chaudhary likes to invest in start-ups, proud of having put in money in over 40 ventures and exited only one. He talks excitedly about two in which he has invested—Chakr, which converts diesel soot from generators into inks and paints, and Betterindia.com, a media organization that publishes only positive stories .
Their own company’s plan is to have a presence in at least 15 cities in the country by the end of the year, besides focusing on the South Asian and European markets. They are looking at starting a few more stand-alone stores, with the next one probably in Bengaluru.
I wonder if people still buy carpets, and Chaudhary is ready with a quick sales pitch. “As the Persians say, a carpet brings the home together," says Chaudhary, who has about a dozen at home, including four in his room. “In functionality, they reduce the echo in a place. If you vacuum-clean it regularly, it helps with allergies by holding together all the pollen and dust that may otherwise flow in the air.
“They can be repaired and restored," he adds. “Over the next 50 years, our hand-knotted will have value—like a piece of art that will appreciate over time."
In a lot of places where we work now, the homes are known by the women’s names because they are making more money than the men.
***
Biggest carpet sold
A 30x40ft piece with 14 million knots, individually tied. The most expensive (amount undisclosed) was the one sold to the royal family in Saudi Arabia.
Weekend wildlife destination
Jhalana Dungri, “15 minutes from home in Jaipur, that has 27 leopards".
Favourite sportsperson
Roger Federer
Favourite band
The Beatles
Last movie seen
‘Uri: The Surgical Strike’
14.1. Samsung eyes USD 4 bn sales from Galaxy A series in India this year
PTI, Feb. 15, 2019
New Delhi: Electronics giant Samsung Thursday said it aims to garner USD 4 billion (around Rs 28,000 crore) in revenue from its Galaxy A series of smartphones in India this year, as it expands the range aimed at millennials.
The company, which is locked in a battle for leadership in the hyper-competitive Indian smartphone market with Chinese player Xiaomi, will line-up new devices between March-June, priced between Rs 10,000-50,000.
"Last year, our mobile chief DJ Koh had announced that we will bring innovation across our smartphone range to mass and mid-price phones and not limit them to premium flagships. This year, we will have a strong lineup under our Galaxy A series to offer the features that millennials are looking for," Samsung India Senior VP (Mobile Marketing) Ranjiv Singh told PTI.
He added that the company will launch a new device every month between March and June - priced between Rs 10,000-50,000.
"Previous Galaxy A devices have done extremely well in the Indian market and with the new line-up, we are confident of getting USD 4 billion in revenue from the series (Galaxy A) this year in India," Singh said.
According to reports, Samsung India saw its net revenues growing by 10 per cent to about Rs 60,000 crore in FY18. Of this, the mobile business accounted for over Rs 37,000 crore.
Last month, Samsung has launched its new online-only 'Galaxy M' series of smartphones in India and said the series would play a key role in helping the company clock double-digit growth in 2019.
Citing GfK data, Singh said Samsung had 42 per cent share in the Rs 20,000-30,000 category, and 76 per cent share in the Rs 30,000-40,000 segment in value terms in December.
However, reports from other research organisations like IDC and Counterpoint have positioned Xiaomi to be ahead of Samsung (in terms of units shipped) for many quarters now.
Xiaomi has a dominant position in the online smartphone sales and has been aggressively expanding its offline presence over the last many months.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
14.2. After smartphones, Xiaomi now targets Samsung in home appliances segment
Livemint, 27 Feb. 2019, Suneera Tandon
- Xiaomi, which launched Mi TVs in 2018, aims to launch washing machines, refrigerators and water purifiers in 2019
- Xiaomi has dethroned Samsung as India's largest smartphone maker, commanding a market share of 28.9%
New Delhi: The local arm of Chinese technology company Xiaomi Corp. has fine-tuned its strategy for the home appliances category and aims to launch washing machines, refrigerators and water purifiers for the Indian market.
“This year we will probably enter big categories such as water purifiers, laptops, and washing machines. Additional launches will include two to three small categories as well," said Manu Jain, managing director, Xiaomi India.
Last year, Xiaomi introduced its range of TVs in India, which are being locally manufactured. It hopes to get a bigger share of the country’s ₹1 trillion consumer durables market, with the proposed launches, as it seeks to grow beyond smartphones where it already holds the top spot. The Beijing-headquartered firm became the market leader in smartphones jointly with Samsung Electronics Co. Ltd in the third quarter of 2017 and has been a clear leader since then.
According to data from International Data Corp., Xiaomi had 28.9% share of India's smartphone market in the fourth quarter of 2018.
“We now have nearly 30% market share in smartphones, which was till now our fastest growing business. However, if we launch categories such as washing machines, fridges, and water purifiers, we can disproportionately grow that and capture a bigger market share," Jain said.
For the year ended 31 March 2018, Xiaomi India posted a turnover of over ₹23,060 crore, up from ₹8,379 crore in the year-ago period, according to data from Tofler, a company research platform.
Smartphones still account for a bulk of the company’s turnover in India, which sells products such as audio sets, smart scooters, drones and powerbanks in China.
Analysts tracking the sector feel Xiaomi products will benefit from the large business it has built online for its smartphones. The company retails its products in India through Amazon, Flipkart, and its own Mi website, apart from selling them through offline stores.
“How consumer electronics are being sold in India will further change because of online sales. E-commerce companies such as Flipkart and Amazon have already helped push the sales of large appliances online. With Xiaomi having a strong presence on these websites because of its smartphone sales, it makes sense for it to extend its Chinese product range in India and leverage that network," said Shubham Anand, retail, e-commerce, and omnichannel lead at consulting firm RedSeer.
The shift of Indian consumers to “smart electronics" will help a brand such as Xiaomi, which already sells such products in China, Anand said. Some of these products could be launched by December this year, said Jain. “We are working on each one of them but I do not know which one will be ready first," he said.
The company will take a call on imports and local manufacturing once the new product range is finalized. “We may think of importing a small quantity in the beginning and then move to local manufacturing soon. Or we can start from local manufacturing from day one," Jain said.
Xiaomi already sells through a network of retail stores in India under Mi Home stores (over 50) and 5000 Mi preferred partner stores, which are small multi-brand shops that stock a large inventory of Xiaomi smartphones apart from other phone brands.
It will leverage both online and offline retail formats to push the sale of its white goods.
“Our Mi preferred partners, which are small mobile shops sized 200-600 sq. ft, are already selling Mi TVs," said Jain.
The company is also working on increasing its offline presence across small towns and rural India with a planned expansion of 5,000 franchised stores over the next one year.
15.1. Govt eyes Rs 26-lakh cr ($400 bn) electronics manufacturing ecosystem, 10 Million jobs by 2025 under new policy
PTI, Feb. 20, 2019
New Delhi: The Union Cabinet Tuesday approved a new national electronics policy with an aim to create a Rs 26-lakh crore electronics manufacturing ecosystem and generate 1 crore jobs in the country by 2025.
"National Electronics Policy came in 2012. Now, we are revising it completely as National Electronics Policy 2019. We are targeting USD 400 billion (ecosystem) by 2025. It will give jobs to 1 crore people," Law and Information Technology Minister Ravi Shankar Prasad said after the Cabinet meeting.
The overall target will include production of 100 crore mobile handsets by 2025, valued at about Rs 13 lakh crore, including 60 crore mobile handsets valued at nearly Rs 7 lakh crore for export.
Our government came in May 26, 2014. in 2014-15, electronic production growth in country was 5.5 per cent.
In 2017-18, electronic production growth increased to 26.7 per cent as compared with 5.5 per cent in 2014-15, when the current government came into power, Prasad said. "Now, we want to take it to 32-33 per cent," he added.
The government plans to provide interest subvention and credit guarantee scheme to ease financial burden on domestic manufacturers, he said.
The policy proposes to push strategic electronics ecosystem in the country that is critical for sectors such as defense, medical, and aviation and promote trusted electronics value-chain initiatives to improve national cyber security profile.
It promises special package of incentives for mega projects which are extremely high-tech and entail huge investments, such as semiconductor facilities display fabrication.
The National Policy on Electronics 2019 proposes creation of sovereign patent fund to promote the development and acquisition of intellectual property rights or patents in the electronics sector.
Besides the new electronics policy, the Cabinet also granted ex-post facto approval to the memorandum of understanding between India and Vietnam for cooperation in the field of communications.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
15.2. Jobs 7.16 lakh created in Dec, 72.32 lakh in last 16 months: Payroll data
PTI, Feb. 21, 2019
New Delhi: Employment generation in the formal sector almost trebled to touch a 16-month high of 7.16 lakh in December 2018 compared to 2.37 lakh in the year-ago month, according to the latest EPFO payroll data.
Around 72.32 lakh new subscribers were added to social security schemes of the Employees' Provident Fund Organisation (EPFO) from September 2017 to December 2018, the data showed. This indicates that these many jobs were created in the last 16 months.
The EPFO, however, revised downwards its payroll data for November 2018 by 23.44 per cent to 5.80 lakh against the earlier estimate of 7.16 lakh released last month.
It also revised the cumulative job addition data from September 2017 to November 2018 downwards 11.36 per cent to 65.15 lakh from earlier forecast of 73.50 lakh.
The sharpest revision was for the month of March 2018 in the latest report which showed net addition of 5,498 subscribers against 55,831 subscribers in the last month's estimate.
The EPFO data statement explained that March 2018 figure is low due to large number of exits reported in the month of March, in view of it being the closing month of the financial year.
During December 2018, the maximum number of 2.17 lakh jobs were created in the 18-21 years age group followed by 2.03 lakh in the 22-25 years age bracket.
Since April 2018, the EPFO has been releasing payroll data covering the period September 2017 onward. The data of exited members is based on the claims submitted by the individuals/establishments and the exit data uploaded by employers, whereas number of new subscribers is based on the Universal Account Number (UAN) generated in the system and have received non-zero subscription.
The EPFO said the data is provisional as updation of employee records is a continuous process and gets updated in subsequent month/s.
This is age-band wise data of new members registered under the EPFO where the first non-zero contribution received during particular month. For each age-wise band, the estimates are net of the members newly enrolled, exited and rejoined during the month as per records of the EPFO, it added.
The estimates may include temporary employees whose contributions may not be continuous for the entire year. Members' data are linked to unique Aadhaar Identity, it added.
The EPFO manages social security funds of workers in the organised/semi organised sector in India and has more than 6 crore active members (with at least one-month contribution during the year).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
- SERVICES (Education, Healthcare, IT, R&D, Tourism, etc.)
16.1. Oyo Rooms may join the food fight with FreshMenu stake
Livemint, 22 Feb 2019, Varsha Bansal
- Lightspeed Venture Partners, a common investor in Oyo and FreshMenu, plays key role in initiating deal talks
- Oyo is said to be building a food team, which will help FreshMenu expand to more cities under the brand name of Oyo
Bengaluru: Oyo Rooms (Oravel Stays Pvt. Ltd), India’s third most valuable startup, is in advanced talks to buy a significant stake in cloud-kitchen startup FreshMenu, according to two people directly familiar with the matter. If the negotiations are successful, Oyo will add the online food delivery business to its portfolio, complementing its budget hotels business.
Discussions with FreshMenu come just months after Oyo raised close to $1 billion, boosting the hospitality chain’s valuation to nearly $5 billion.
“Oyo is building a food team, which will help FreshMenu expand to more cities under the brand name of Oyo," said one of the two people cited above, requesting anonymity. “The idea could be more about adding the element of food to further build the hospitality business rather than getting into food delivery entirely."
Mint could not immediately ascertain the value of the transaction.
Ritesh Agarwal, founder of Oyo Rooms, run by Oravel Stays Pvt. Ltd.
When contacted for comment, an Oyo spokesperson said: “We do not comment on industry speculation and, therefore, cannot comment on this. As the largest hotel chain in India, operating franchised and lease assets, we do have an active play in the F&B business with over 25% of our revenue coming through the kitchens we operate in our hotels and, hence, culinary design and good food experience are valuable to us."
FreshMenu did not respond to queries by Mint till publishing of this story.
Lightspeed Venture Partners, a common investor in Oyo and FreshMenu, played a key role in bringing the two to the discussion table, said the second person cited earlier.
The food-tech sector has become hypercompetitive as companies such as Swiggy, Zomato, Uber and Ola battle it out for leadership. This makes it difficult for smaller companies, such as FreshMenu, to compete with deep-pocketed incumbents, which offer deep discounts to win market share.
Rashmi Daga, founder at FreshMenu.
“At the end of the day, FreshMenu is just a brand selling on aggregators such as Swiggy and Zomato," said one of the investors in the food-tech space, requesting anonymity. “They would just end up being one among the many brands on the platform—which makes it difficult to compete."
FreshMenu raised $5 million in a Series A round from Lightspeed in 2015, followed by a $17 million round in 2016 that was led by Zodius. The last round valued FreshMenu at $40-50 million. Oyo, on the other hand, flush with funds from SoftBank Group Corp., has been aggressively expanding outside India.
“Oyo now has immense amount of cash and a strong backing of SoftBank. It will surely try to use this money to enter into multiple verticals," said another investor in the startup space, requesting anonymity.
16.2. Tourism alone created 14m jobs in last 4 yrs, claims Alphons
PTI, Feb. 22, 2019
Ahmedabad: Union tourism minister KJ Alphons Thursday claimed that the tourism sector alone created around 14 million jobs during the past four years.
The country has climbed from seventh slot in 2017 to the third rank in 2018 in the world travel & tourism council's power and performance index, he told the second meeting of the reconstituted National Tourism Advisory Council here.
Without offering more details like state-wise or anuual break-ups, he said, "employing all sections of the society, the tourism sector alone has created nearly 14 million jobs across the country in the last four years alone".
It can be noted that BJP rode to power in the 2014 polls promising 10 million new jobs every year but the latest official data, whcih was junked by the government later, showed that unemployment rate touched a 47 year high in 2018.
Private think tank CMIE also said as many as 13 million jobs were lost in 2018 alone, as an aftereffect of the note ban and hasty GST rollout, leaving lots of red faces in the government.
Alphons expressed his hope that the country "will achieve a better growth through tourism with the fast developing infrastructure and connectivity" as per an official PIB release.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
17.1. Opinion | Skilling workers is a public good, needs bigger thrust
Livemint, 26 Feb. 2019, Ajit Ranade
There’s plenty of room for private initiative in profitable provision of skills. This is one sunrise industry
The definition of a public good is that it is something which is both non-rival and non-excludable. These are two technical words with precise meanings. The former means that if one person is consuming it, it does not deplete the quantity available to another. Think of clean air, or satellite television signals. The latter means that if one person is allowed to consume it, it is usually not possible to exclude others. An example of an excludable good is direct-to-home television signal, which is available only if you pay for the subscription but whose consumption is non-rivalrous. Encryption makes it an excludable good. Older economics textbooks had the example of a lighthouse that helped incoming ships with navigation into a harbour. Their light signals were visible to all and hence not excludable. It was a pure public good. But technology changed, and the light flash was replaced by invisible encrypted radio signals. So what used to be an example of a public good no longer qualifies as one. Thus, the example of a public good can vary with time and technology, but not the concept itself.
There is of course a continuum of goods which are between purely public or purely private goods. Access to a beachfront may be a public good, but with sufficient congestion, is no longer non-rival. Because of the non-rival nature of a public good, it can be “infinitely consumed", which means that ideally, one should just pay a price close to zero.
However, how would one pay for the cost of producing it? For instance, reducing air pollution benefits all people, even those who did not pay for it. Indeed, the marginal consumer would be willing to pay a low or nearly zero price for it. Free market economics dictates that price equals marginal cost. Then the price of such a public good would fall to zero. This means that a private market economy would not support production of such goods (of reducing air pollution). This is why it falls upon governments to fund and provide public goods, paid for by compulsory taxation and often enforced with coercive laws.
This brings us to skilling. India has a huge skills shortage and skilled workers command a huge premium. Despite the shortage, there are not enough suppliers of “skill formation".
The National Sample Survey Office’s 68th report says that only 4.7% of the workforce had formal skill training. Most workers acquire skills due to on-the-job training. However, their employers under-invest in the training. That’s because once a worker gets adequate training, his market value increases tremendously and he can be poached by another competing employer who did not have to “invest" in that worker’s skilling. As a result, collectively, the entire industry ends up under-investing in skilling, leading to an aggregate skills shortage and low productivity. Why can’t industry chambers come together and agree to train and skill their own workers, and also have a non-poaching agreement?
This does not happen because such cartels cannot sustain. Why can’t the workers themselves acquire skills through private skilling academies, since return to such education gives them a high premium? That’s because most workers cannot afford the fees that such private academies would charge. Besides, student loans for such skilling programmes are not easily available (unless prodded by the government). Such loans would have no collateral and can lead to large defaults and non-performing assets for banks. And there would always be a shortage of good teaching faculty, since they would be underpaid.
It can be argued that acquiring skills and benefiting from it is a private good, as the benefits are mostly enjoyed by the person who gets the skills. However, as is obvious from the argument above, there is an element of market failure in the provision of skills, and the nation as a whole is a loser. Human capital formation is suboptimal in the aggregate.
In a world of automation and robotics, it is vitally important to be equipped not only in the skills of today, but more importantly of tomorrow. When the average level of education and skills in society increases, it results in better quality of jobs, incomes and standard of living for all, not just the skilled persons themselves. This is the positive externality from skilling. The two-and-a-half-decade boom from software exports, resulting arguably from earlier public investment in engineering education, benefited not just the individual workers but also the country at large in many ways. Similarly, the continuing labour export to West Asia too benefited from investment in skill formation, whether it was nursing, masonry or electrical work. Of course, the primary benefit is to the skilled person, but a much larger secondary benefit is to the society. That’s the nature of this public good.
That is also why we need a much bigger thrust on skill formation, with the backing of the state treasury. The setting up of the National Skill Development Corporation in 2008, or the relaunching of the Pradhan Mantri Kaushal Vikas Yojana with substantial funding is an effort not too soon, and not overstressed. Even with substantial public funding, and support for accreditation and standardization, there is plenty of room for private initiative in profitable provision of skills. Indeed, this is one of India’s sunrise industries.
Ajit Ranade is an economist and a senior fellow at the Takshashila Institution.
17.2. Deloitte to provide education, skills training to 10 mn girls, women by 2030 in India
PTI, Feb. 25, 2019
New Delhi: Professional services firm Deloitte Sunday said it will provide education and skills training to 10 million girls and women in India with an aim to equip them to find a meaningful work.
The exercise will be carried out under its global initiative WorldClass, Deloitte said in a statement.
The initiative aims "to support 10 million girls and women by 2030 through education and skills development," it said.
It said that globally, the WorldClass initiative seeks to prepare 50 million people to be better equipped for the future of work, in line with the United Nations' Sustainable Development Goals (SDGs).
Deloitte's WorldClass programme in India will focus on improving girls' retention rate in school, higher educational outcomes, and skills development for women to access employment, it added.
Under the initiative, partnerships will be launched with organisations such as Katha and Pratham. These organisations are working to improve the learning outcomes of millions of children and young people in schools and communities across India.
Our goal with WorldClass is to empower 50 million people globally by 2030, by providing them access to the education and skills required to find meaningful work in the new economy," Punit Renjen, Global CEO, Deloitte said.
The world is on the brink of a seismic shift with the emergence of the Industry 4.0 wave, and to thrive in it, "we must work together so that no one is left behind, he said.
Across India, he said, almost 40 per cent of girls aged 15-18 years drop out of school and college, and only 26 per cent of women are employed.
As one of the emerging economies on the world stage today, India's demographic dividend forms an integral component of its growth story. The task of harnessing its power has to be fuelled by the private sector," a Deloitte India spokesperson said.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
18.1. Low tariffs in India not sustainable, says Vodafone CEO Nick Read
Livemint, 25 Feb 2019, Navadha Pandey
- Pricing in India is the lowest in the world; ultimately, prices will go up, says Read
- Vodafone India and Idea Cellular completed their merger in August 2018
Indian telecom companies need to end the tariff war that has roiled the industry and agree to keep prices at a level that will restore the health of all operators, said Nick Read, chief executive of Vodafone Group Plc.
“This can’t be a sustainable position going forward and therefore, at some point, pricing needs to return to a more normalized level. That requires all players to ultimately sit back and say what is a healthy industry level," Read told reporters at the Mobile World Congress in Barcelona.
The entry of Reliance Jio Infocomm Ltd in September 2016 sparked a race to the bottom, squeezing revenue streams of rival operators and prompting Vodafone India Ltd and Idea Cellular Ltd to announce a merger in March 2017.
A few months later, in September 2017, the telecom regulator slashed interconnect usage charges from 14 paise a minute to 6 paise, angering incumbent operators, who said this hurt their revenue streams.
Interconnect usage charges are what an operator pays another for landing calls on the latter’s network.
“We only ask for a level playing field. I think it’s fair to say that for the last two years we have had many regulatory outcomes that have worked against everyone in the market except Jio," he said.
Vodafone India and Idea Cellular completed their merger in August 2018 and are currently integrating their operations to create synergies and pare costs.
However, the merged company continues to incur huge losses as pricing pressure continues unabated. Vodafone Idea posted a loss of ₹5,004 crore in the December quarter. Its earnings before interest, taxes, depreciation and amortization (Ebitda) from wireless operations in India at ₹1,136.8 crore is the lowest among all operators. Jio, in comparison, posted an Ebitda of₹4,053 crore, while Bharti Airtel recorded ₹1,949.8 crore.
“Pricing in India is lowest in the world. The average consumer is using 12GB data at price points you don’t see anywhere else. Ultimately, pricing will go up; that does not mean it jumps, it will moderate. Right now, heavy discounting is going on," said Read.
The fall in revenue of operators has also hit the revenues collected by the government in the form of licence fee and spectrum usage charges. According to data from the Telecom Regulatory Authority of India released last month, the licence fee revenue declined from ₹2,929 crore in the June quarter to₹2,889 crore in the September quarter of 2018.
“Even from the government’s perspective... its own tax revenues have been suppressed as well. And then on top of that, are you going to have a healthy participation in 5G auction if operators are in a very challenged economic environment? So, I would encourage the industry to obviously get into a healthier place," he said.
Vodafone Idea last month said that its board had approved a rights issue of ₹25,000 crore to existing eligible equity shareholders in line with the recommendations of a capital-raising committee it had set up in November.
“That raise is going well. I would anticipate that closing in the coming months," Read said.
The writer is at the Mobile World Congress in Barcelona at the invitation of Huawei.
18.2. Naresh Goyal agrees to step down as Jet chairman
Livemint, 28 Feb. 2019, Gopika Gopakumar, Rhik Kundu
- Etihad Airways, which owns a 24% stake in Jet Airways, is however still to agree on several proposals put forward by a group of lenders led by SBI
- Naresh Goyal’s stake in Jet Airways will drop from 51% to around 22% once the lenders’ debt is converted into equity
Mumbai: Jet Airways (India) Ltd’s founder Naresh Goyal has agreed to step down from the airline’s board as its chairman as part of a plan to secure a rescue deal for the cash-strapped company, a person familiar with the matter said.
Etihad Airways, which owns a 24% stake in Jet Airways, is however still to agree on several proposals put forward by a group of lenders led by State Bank of India (SBI).
The lenders have secured approval from shareholders to convert their unpaid loans into equity and infuse funds after the company defaulted on interest payments. The airline has also failed to pay dues to aircraft leasing firms for months and lessors have grounded 18 of its planes, according to industry sources.
Once the loans are converted into equity, Goyal’s stake in the airline will fall from 51% to around 22%, while that of Etihad will halve to 12%.
At a meeting held in Mumbai on Wednesday to discuss the future of Jet Airways, lenders led by SBI and Etihad failed to agree on several issues, said two people familiar with the matter, including the person cited above.
The issues included Etihad’s refusal to pledge shares in Jet Airways and Jet Privilege Pvt. Ltd (JPPL), the company that runs its frequent flyer programme, the first person said on the condition of anonymity.
“Etihad has also not agreed to provide bridge funding of ₹750 crore," the second person said.
“Discussions are still on between the stakeholders," the first person said, adding that a date for the next meeting has not been finalized.
Goyal has agreed to reduce his shareholding in Jet Airways from 51% to close to 22%, the first person said, adding that the current promoter of the airline has also agreed to pledge his shares in JPPL.
Etihad owns a 50.1% stake in JPPL, while Jet Airways holds 49.9%.
Jet Airways, Etihad and SBI did not immediately respond to queries.
A senior Jet Airways executive said on the condition of anonymity that the management hopes that the banks-led resolution plan is implemented at the earliest.
“Once the resolution plan is implemented and fresh funds are infused into the airline, we can expect it to stand back on its feet again and perhaps take advantage of the lower oil prices to turn around operations," the executive said.
The airline had a gross debt of ₹8,411 crore as of September-end, including aircraft debt of ₹1,851 crore.
Shayan Ghosh contributed to this story.
19.1. IT is the only sector with multi-decadal growth visibility: TCS CEO
Livemint, 04 Mar 2019,Varun Sood
- In conversation with TCS CEO Rajesh Gopinathan, who in many ways is like the company he leads
- The talk on death of IT outsourcing is gibberish, he says, while sharing the road ahead for TCS
New Delhi: In many ways, Rajesh Gopinathan is like the company he leads.
Tata Consultancy Services Ltd (TCS) does business without much fanfare and is set to record $20 billion in revenue in the year ending 31 March. Yet, few people outside the company understand the secret sauce of India’s largest information technology (IT) services company.
Unlike what most management gurus will prescribe, TCS believes in building tech and grooming talent in-house rather than acquiring firms or hiring people from outside for senior roles. Gopinathan, who took over as chief executive in February 2017, lacks many traits of what is expected from a leader of a large firm. Unlike most CEOs, Gopinathan is shy and soft-spoken, and his conversation is not laden with declarative statements.
Gopinathan credits the company’s fastest growth (TCS will grow more than 11% in constant currency terms in the current fiscal year) in four years to his team for helping him execute the strategy fashioned by his predecessor (and current boss of Tata Sons Ltd, Natarajan Chandrasekaran).
Last month, Gopinathan, in an interview in Mumbai, argued why talk of the death of IT outsourcing is gibberish and shared the road ahead for his company. Edited excerpts:
Nasscom has done away with the practice of giving a forecastand rather shared a CEO survey. Do you agree with Nasscom’s commentary for FY20?
I haven’t gone through it. It is too early for us to comment on how the next year will look like. There is no negative overhang. Neither is there any gung-ho spirit. All the negatives are known. The reality is that macro is very difficult to call. We are no longer considering macro as an input to make decisions. There is nothing, for now, that tells me that we have to re-prioritize. I don’t think that we will get into the scenario, where we have years which are very positive or years which are very negative. This kind of environment will continue for the foreseeable future.
Are we at the cusp of the golden age of tech spending, with digital becoming mainstream?
I don’t know if I should characterize it as the golden age but definitely we are well into a period where technology will be a primary component of the value chain in multiple industries. Let me explain. If you take a longer-term horizon, say over 25-30 years, tech spending has consistently been faster than the economic growth.
Now, about 10-15 years back, technology spend of a client was part of the Selling, General and Administrative Expenses (SG&A). SG&A is traditionally about 15% of the revenue of a company in most industries. And depending on the industry, tech spend was some percentage of this 15%. Over the last five years, technology spend is part of the cost of revenue. For any company, the cost of revenue is 50-60% of the total revenue. So that is an upside.
Does this shift mean tech spending for most companies, across industries, on a blended basis doubled?
The real world is more complex. If you take banking and retail, then these industries have shrunk over the last few years. However, their technology spends over long term has been outstripping their growth or even GDP growth over a long-term duration. Now, overall retail spend has been negative over 10 years. But overall technology spends in retail has been growing. So it should not surprise you that business from retail used to be about 3-4% of our overall revenue 15 years back. Now, retail accounts for about 12-15% of our total revenue.
Does this shift in tech spending offer an opportunity for firms like yours?
Huge addressable opportunity for firms like us. This is because of the contextual knowledge that TCS brings. I’ll explain.
When it was about creating a web front or creating an app or creating a social media strategy, that initial spend may very well go to a digital or new age firm. But once you have 50 apps, and then you need to connect them with the supply chain or stock-keeping systems in the back-end, then you need to make sure the apps are built in a manner in which they can handle the supply chain systems. It should not be just the cool feature of the app alone. That is where competency shifts to a firm like us which can understand the functionality aspect.
A great example is in banking. Core banking systems are huge systems. So, for example, you create an app, and in the app, there is a feature of instant balance look up. Earlier, people used to look up their instant balance once a month. Now, people use this feature 10 times a day. The load on the back-end is going to be such that it doesn’t matter how good your app design alone is, the app will crash if you can’t fix it as a joint solution between the back-end and front-end.
So does this mean that a client’s tech spending has become de-linked or decoupled from economic growth?
Yes and no. At one end, you have an example like retail, where because of the industry is in a difficult situation, the technology spend has been definitely decoupled from economic growth. Then there are other industries like utilities. Here, because of the inherent resilience in their business models, because of their natural monopolies, although the regulators have been trying to break these monopolies, the tech spending is still tied to economic growth.
Let me ask you about your two-year stint. What are your thoughts?
The magnitude of transition at a personal level was much higher than the transition of an organization. This was because the team at the organization remained constant and the strategy remained the same. For me, it was more of a personal transition as there was a sudden change in my role.
What was the toughest thing about this job?
Chandra told us long back that the toughest thing of any job is to make sure that you leave your last job behind and don’t do it. Because the natural tendency for you is to do your previous job, and the toughest thing is to have the discipline not to do that previous job. The temptation to continue doing your earlier job is the toughest thing to let go. And the success for me personally has been that I have been able to make that transition.
This year, TCS will be ending with over $20 billion in revenue. At this size, if you don’t have an aggressive acquisition approach or unless you enter new service lines, how do you expect to grow at double-digit and incrementally add over $1 billion every year?
In 2012, we crossed $10 billion in revenue. Eight years later, we have crossed $20 billion. For years now, the narrative still continues, that we are nearing saturation, our largest industry segment banking industry is doing badly, our core verticals are seeing a slowdown, technology is changing, and our competitors are acquiring. But we have grown and transformed through this period by staying focused on staying and staying close to our customers and relentlessly investing in retraining our people. So just because we are now $20 billion, I don’t see a need to suddenly adopt an "aggressive acquisition approach".
What according to you is the future of the IT industry?
As long as you are disciplined, you’ll keep on growing. It’s a beautiful industry. There is no other industry that has multi-decadal growth visibility. All we have to do is execute well and to make sure our capabilities are in tune with where the opportunity lies. And we cannot be complacent. The thing that can derail us is complacency.
19.2. Top-tier Indian IT firms lose market share to Accenture for the first time
- Top-tier IT firms have also underperformed their mid-sized Indian peers, and even some other global firms
- Top-tier IT firms, instead, will now have to focus on automation and pricing improvements if they are to protect their margins and their competitive turf
Global information technology firm Accenture Plc. has always given top guns in Indian IT a run for their money. However, given the company’s large revenue base, its percentage growth rates have lagged those of Indian firms, who have always seen an increase in market shares.
However, the company’s fortunes seem to have turned in the 12 months ended December 2018. Indian Tier I IT firms lost market share in dollar terms to Accenture, shows an analysis by Nomura Financial Advisory and Securities (India) Pvt. Ltd.
Accenture grew its revenues by 13.37% in the 12 months till December. Indian Tier I IT firms, in contrast, increased their revenues only by 8.54% in the past year.
“Market share gains have been coming off over the past four years," said Nomura in a note to clients. “We expect around 8% constant currency (CC) revenue growth for tier 1 IT in FY20 (vs Accenture’s guidance of 6-8% in constant currency terms for FY20)."
This heralds a tough fight for Indian firms to retain share this year as well.
Tata Consultancy Services Ltd, the best performing company among large Indian IT firms, grew revenues by around 10% in the 12-month period, which is lower than Accenture’s growth rates.
Analysts attribute the slowing growth to the lower digital exposure of Tier I companies, which is leading to slower revenue growth, despite strong spending in the US. The digital revenues of Tier I IT companies comprise just 30% of their overall revenue pie, compared to Accenture’s 60%.
Top-tier IT firms have also underperformed their mid-sized Indian peers, and even some other global firms. Mid-sized IT companies grew 14% in the December quarter, whereas second-rung global IT firms grew 17%, Nomura’s analysis shows. This was much higher than the growth of 8% reported by the top-tier firms for the quarter.
Besides, a string of top Indian IT companies have also undershot analysts’ expectations of margins. This is because there have been increases in on-site wage costs as a result of the new immigration policies in the US.
Pricing pressures were also seen in the legacy business. The coming quarters could continue to be a challenge for the top IT firms. Analysts see traditional operating levers such as labour arbitrage and softer rupee slowly fading.
Top-tier IT firms, instead, will now have to focus on automation and pricing improvements if they are to protect their margins and their competitive turf.
20.1. India puts 42 non-scheduled cancer drugs under price control
Livemint, 28 Feb. 2019, Teena Thacker
- Govt caps trade margins of 42 cancer drugs at 30%, seeking to curb profiteering on these medicines
- The move is expected to reduce prices of cancer drugs by 85% and will cover 72 formulations and 355 brands, says NPPA
New Delhi: The government capped trade margins of 42 cancer drugs at 30% on Wednesday, seeking to curb profiteering on these vital medicines. The move is expected to reduce prices of cancer drugs by 85% and will cover 72 formulations and 355 brands, India’s drug pricing regulator said in a statement.
The National Pharmaceutical Pricing Authority (NPPA) approved the formula which restricts the trade margin of the selling price by up to 30%.
These are in addition to 57 cancer drugs already under price control. “42 non-scheduled anti-cancer medicines have now been selected for price regulation by restricting trade margin of the selling price up to 30%," the NPPA said.
Manufacturers have been asked to recalculate prices and inform NPPA within next seven days.
NPPA chairperson Shubhra Singh told Mint that the step gains significance in the government’s attempt to provide affordable healthcare. “The authority has noted that despite the fact that India is the pharmacy of the world, out-of-pocket expenses on medicines is the largest cause for pushing families beyond poverty threshold, which itself is a great contradiction and therefore we have invoked extraordinary powers under para 19 of the drug price control order (DPCO)," she said, indicating that the move is a pilot for more drugs and medical devices in the future. “This is being rolled out as a pilot for the proof of concept which means that it will be upscaled," she said.
The NPPA currently fixes price of drugs on the National List of Essential Medicines under schedule I of DPCO. So far, around 1,000 drugs have been price-capped through this mode. Singh said self-regulation by manufacturers would usher in a new price regulation regime. “It’s going to be a game-changer because once it is established, then for the first time, you are making reasoned foray into price regulation of non-scheduled drugs and medical devices."
The move is likely to face resistance from the pharma industry, a pharma lobby expert said, requesting anonymity.
Malini Aisola, co-convenor, All India Drug Action Network (AIDAN) said, “The margin is equivalent to 43% mark-up for the price to stockists which is a break in convention of the DPCO and done as a concession to the industry. Because of the prohibitive prices of cancer drugs, discounts are a common part of sales strategies. Retail prices are not likely to be significantly affected through this move. However, through mandatory margin caps, patients will benefit in hospitals which were undoubtedly indulging in profiteering by taking massive cuts". Calling it a significant decision, Sunil Attavar, president, Karnataka Drugs and Pharmaceuticals Manufacturers’ Association said, “We could see a significant reduction in MRPs and this will benefit patients. The margin of 30% on sale price seems to be in line with the existing margin of 20% to retail and 10% to wholesale".
Kanchana T.K., director general, Organisation of Pharmaceutical Producers of India (OPPI) said, “OPPI members are committed to the interest of Indian patients. We note the government’s intent is that they are using the initial anti- cancer selective drug list as a pilot proof of concept, but we would expect a universal implementation for all non-scheduled products as a follow-through."
The move could impact pharmaceutical companies like Sun Pharma Laboratories ltd, Glenmark Pharmaceuticals Ltd, Zydus Cadila, and Biocon Ltd. Emails sent to these companies remained unanswered. With the price rationalization extended to 72 formulations and 355 brands, NPPA expects the net savings to the consumer at a minimum of ₹105 crore. “Price reduction across brands would vary from 86.79% of MRP to 0%," said the NPPA in a statement. According to the price regulator, five brands will see price reduction of about 70%, whereas 12 brands will see 50-70% reduction in prices. The maximum of 45 brands will see prices coming down by 25%.
20.2. India offers world's cheapest mobile data packs: UK report
PTI, Mar. 06, 2019
London: India offers some of the world's cheapest mobile data packs, with the US and UK logging among the highest prices, new research in the UK revealed on Tuesday.
Price comparison site Cable.co.uk found that 1 gigabyte (GB) of data cost USD 0.26 in India, compared to USD 6.66 in the UK. The US had one of the most expensive rates, with an average cost of USD 12.37 for the same amount of data. The global average came in at USD 8.53 for 1GB in the study, which compared mobile data pricing in 230 countries around the world.
"A country whose young population has a particularly high technological awareness, India offers a vibrant smartphone market, with strong adoption and many competitors. Data, therefore, is quite staggeringly cheap," Cable.co.uk notes in its research.
While India (USD 0.26) topped the scale of cheap mobile data, Kyrgyzstan (USD 0.27), Kazakstan (USD 0.49), Ukraine (USD 0.51) and Rwanda (USD 0.56) completed the top five countries offering the cheapest data packs.
"Despite a healthy UK marketplace, our study has uncovered that EU nations such as Finland, Poland, Denmark, Italy, Austria and France pay a fraction of what we pay in the UK for similar data usage. It will be interesting to see how our position is affected post-Brexit," said Dan Howdle, the website's telecom analyst.
The cheapest mobile data in Western Europe was found in Finland with an average price of USD 1.16 for 1GB of data. Denmark, Monaco and Italy all offer packages below USD 2. There were 15 countries in Western Europe which had cheaper prices than the UK, Cable found in its study.
In Eastern Europe, Poland is the cheapest at USD 1.32 per GB, followed by Romania (USD 1.89) and Slovenia (USD 2.21).
On the other end of the scale, Zimbabwe is the most expensive country in which to buy mobile data with an average cost of 1GB coming around USD 75.20. Asian nations make up half of the top 20 cheapest countries, with only Taiwan, China and South Korea charging more than the global average.
The research concluded that the reasons for the vast differences in prices around the world were complex.
"Some countries have excellent mobile and fixed broadband infrastructure and so providers are able to offer large amounts of data, which brings down the price per gigabyte. Others with less advanced broadband networks are heavily reliant on mobile data and the economy dictates that prices must be low, as that's what people can afford," explains Howdle.
"At the more expensive end of the list, we have countries where often the infrastructure isn't great but also where consumption is very small. People are often buying data packages of just a tens of megabytes at a time, making a gigabyte a relatively large and therefore expensive amount of data to buy," he said.
The research looked at SIM-only deals and included a range of packages from all the providers in each country.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
INDIA AND THE WORLD
21.1. Argentina seeks Indian investments to boost economic cooperation
PTI, Feb. 19, 2019
New Delhi: South American nation Argentina Monday sought investments from India in areas including renewable energy and tourism with a view to boost economic bilateral ties.
Argentine President Mauricio Macri said his country is investing heavily to create world-class infrastructure.
"You are most welcome in Argentina. If we work together, then potential is endless. I invite you," he said here at India-Argentina Business Forum meet, organised by CII.
Macri said there is potential in areas like agriculture, renewable energy and tourism.
Speaking at the forum, Commerce and Industry Minister Suresh Prabhu said there are huge opportunities in both countries to increase bilateral trade.
Argentina is a leader in agriculture sector and "we look forward to increasing cooperation in this," he said adding India has huge expertise in IT and pharma sectors.
In agri sector, he said India can seek collaboration in post-harvest technologies.
India can get natural resources from the South American nation as India is focusing on boosting manufacturing sector, Prabhu said.
Talking about the India-MERCOSUR preferential trade agreement, he said going ahead, both countries can think of alleviating this pact.
MERCOSUR is a South American trade bloc comprising Brazil, Argentina, Uruguay and Paraguay as full members.
The bilateral trade between India and Argentina stood at USD 2.94 billion in 2017-18 as against USD 3 billion in 2016-17.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
21.2. Afghanistan launches new export route to India through Iran
IBEF, Feb. 25, 2019
Kabul: On February 24, 2019, Afghanistan shipped 57 tonnes of exports to India through the Chabahar port in Iran, marking the start of a new export route for the country. As the country tries to reduce its trade deficit and grow its economy, this healthy cooperation with Iran and India will help in this endeavour as the port provides easy access to the sea to Afghanistan without going through Pakistan. India is already the largest destination for Afghani exports, with exports reaching US$ 740 million in 2018.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
22.1. India startup playbook
Livemint, 21 Feb 2019, Staff Writer
- Saudi Arabia's PIF wants to tap into India through investments in startups by way of the SoftBank Vision Fund
- Oyo Rooms, Delhivery, FirstCry aren’t just SoftBank investments in India, but also vehicles for Saudis to understand Indian market
New Delhi: Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF) of Saudi Arabia, has put in $45 billion into SoftBank’s $100 billion Vision Fund, which, in turn, has already invested $10 billion into Indian startups.
Ergo, the Saudis already have a significant interest in the Indian startup ecosystem, besides direct investments in other traditional areas.
So, when Saudi Crown Prince Mohammed Bin Salman Al Saud flew into Delhi for a strategic state visit, it was almost mandatory that the two partners in the fund too demonstrate proof of their intent in India.
Putting aside reports of differences of opinion on investment valuations, PIF managing director and chief executive Yasir Al-Rumayyan and Rajeev Misra, CEO of SoftBank Investment Advisors, met selected journalists for a brief glimpse into the playbook of the largest agglomeration of capital in the global venture capital business.
The Saudi interest is clear. It wants to tap into the vast Indian markets, not directly with products and services, but through investments in home-grown startups by way of the SoftBank Vision Fund, even while it looks for other such strategic partners.
As Al-Rumayyan explained, the criteria for investments is potentially double-digit returns, especially in areas that allow the country to diversify into newer revenue streams beyond its conventional holdings.
Thus, Oyo Rooms
, Delhivery
and FirstCry aren’t just SoftBank investments in India
, but also vehicles for the Saudis to understand the Indian market, as well as platforms for expanding into the country.
With $300 billion of assets under management, and looking to deploy an additional $100 billion, the PIF boss is keen on what he described as “one of the most promising markets" in the world.
After a flurry of investments, SoftBank is now looking at creating what Misra calls “an ecosystem of tech companies", which will feed on each other’s strengths and leverage synergies across the world. A case in point is the synergy between prized investee Oyo, a hospitality company, and work spaces sharing company WeWork, for co-living spaces. Besides, SoftBank is now pushing Indian startups to get into the Saudi market as the kingdom opens up to businesses from abroad.
With $70 billion already deployed and another $30 billion in the kitty, the company is also well poised for an early entry into new ventures, especially after its successful exit from Flipkart and Nvidia Corp., which gave the fund a return of nearly 25% in less than two years, with an average investment period of just nine months.
Come 2020, SoftBank sees a flurry of exits, mostly through initial public offerings (IPOs). That may be just what the moribund Indian IPO market needs to get investor interest back.
22.2. Kerala govt okays e-vehicle policy; to procure 6,000 buses by 2025
Business Standard, Mar. 07, 2019
Mumbai: The government of Kerala has finalised an electric vehicle (EV) policy for the state. The Cabinet approval came with some changes in the draft policy. One aim is to procure 6,000 electric buses for the state road transport corporation by 2025. In the first phase, EV buses will ply in Thiruvananthapuram. Other vehicles powered by electricity are to be progressively phased in. Charging stations will be set up.
Use of e-rickshaws is to be expanded through state-owned Kerala Automobiles. Subsidies and other incentives would be given, from both central and state governments. The state Budget for 2019-20 has proposed to ensure a rise in the number of EVs to a million by 2022.
An e-mobility promotion fund is to be started, with Rs 12 crore allocation. Around 10,000 electric autos will be given a subsidy from this year. The Budget also proposes a 50 per cent concession on road tax for five years to newly registered e-rickshaws. For other EVs, a 25 per cent concession for five years.
Charging stations will be established with help from private investors. Gradually, only electric autos will be permitted in major towns.
The government has also started discussion with a Swiss company to manufacture electric buses, as a joint venture.
When the state road transport body turns to e-buses on a large scale, the supplier company might be asked to start a manufacturing centre in Kerala. Allied industries will be developed, says the Budget document.
Under the new policy, the state will promote the setting up of factories for making EVs, ancillary units and research facilities.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
23.1. Threads that bind
Livemint, 08 Mar. 2019, Sohini Dey
- Shrujan, a Kutch-based NGO, works with over 4,000 craftswomen from 12 communities
- The region's crafts are displayed in the Living and Learning Design Centre museum, a space founded by Shrujan
The Mutwa community of Kutch migrated to India from Sindh about 400 years ago and settled in a cluster of seven villages in Banni, close to the Rann of Kutch. Their main occupation for centuries has revolved around rearing livestock and horses, but a new skill generates a bulk of the community’s income—embroidery. Mutwa embroidery, done by the women, is distinguished by its dense design and exceptionally fine stitches and mirror-work. Mutwa women rarely, if ever, step out of their homes even for festivities and weddings, yet their crafts tradition has transformed them from homemakers to breadwinners.
The community’s tryst with embroidery as a means of income started when the late Chandaben Shroff, founder of Shrujan, a non-profit organization working with craftswomen in Kutch, visited Banni in the early 1970s looking for Mutwa embroidery. The village was struggling in the aftermath of a severe drought, and the women were eager to take up embroidery to support their households.
Today, intricate panels and costumes embroidered by Mutwa women find place among museum exhibits in Living and Learning Design Centre (LLDC) in Ajrakhpur village, 15km from the town of Bhuj, a space founded by Shrujan in January 2016 to preserve and showcase the region’s diverse crafts. The museum is a culmination of many decades of work between Shrujan and the crafts clusters of Kutch, starting with a few women of the Ahir community in 1969. Today, the organization works with over 4,000 craftswomen from 12 communities spread across 130 villages.
Shrujan has come to be known for showcasing Kutchi embroidery and crafts, but its impact has been far greater. Chandaben started Shrujan with the aim of financially empowering rural women in the region. Patriarchy is deeply entrenched in many of the communities, but according to Ami Shroff, managing trustee and daughter of Chandaben, the organization has found new ways to intervene. “These women may not leave the house, but they have been (financially) empowered to the extent that they definitely call the shots in the household," she says.
Crafts to museum exhibits
“The Rann of Kutch is a vast, lonely desert, almost impossible to cross", Keki N. Daruwalla wrote in his short story Love Across The Salt Desert. In 2019, the white desert may seem less lonesome, with the thousands of tourists who arrive here, especially on full moon nights and during the annual Rann Utsav, held in the relatively cooler months of November to February. Many of the communities that live around the salt pans, like the Mutwas or nomadic tribes like the Rabaris, remain secluded from the rest of the world.
In contrast to the stark landscapes and frugal lifestyles of these communities, their crafts are vivid. While Ahir embroidery incorporates flora and foliage motifs referring to their agrarian lives, the nomadic Rabaris’ embroidery abounds in desert motifs—thorny foliage, blazing sun, snakes—and mirrorwork in varying shapes. The Sodha and the Jadeja women practise two forms of embroidery—pakko and neran.
Pakko—which translates to pukka in Hindi, referring to the sturdiness of the embroidery—is a dense technique showcasing curvilinear and geometric motifs. Neran, meaning eyebrows in Gujarati, is characterized by the repeated use of eye-like motifs. Soof and khaarek embroideries are practised by the Meghwad Maaru women, who don’t create stencils but conceptualize the design by counting the threads of the fabric and stitching directly on it. The kambhiro and khuri-tebha techniques used by Meghwaad Marwada and Haalepotra women are also done without stenciling and used mostly in furnishing and upholstery.
The museum’s current exhibition, Living Embroideries Of Kutch, showcases 16 of the most popular embroidery styles. Also on display are artefacts from homes of these communities, records of folk music and personal histories, and other crafts of the region. “With LLDC, we are talking about design intervention in things beyond embroidery," says Ami. “Over here, we are also able to offer intervention in pottery, two types of weaving (bhujodi and mashru), and discharge printing." Since 2018, the LLDC has also begun organizing an annual folk festival on its campus, showcasing performances by local artists and setting up booths for artisans to sell their crafts.
The Living and Learning Design Centre in Ajrakhpur
Breaking barriers
The embroideries exhibited in the museum also feature on Shrujan’s branded garments and accessories. The products are retailed in their stores in Ajrakhpur and Ahmedabad, and through custom orders and exhibitions across the country. Shrujan’s women artisans are not employees of the organization. As independent artisans, they work on a commissioned basis with Shrujan, with complete autonomy on the number of designs and the deadline. “In some areas, the women need money every month, so they take the pieces accordingly," Shroff says. “But in areas where the farming is good, it depends on the season and rainfall. If the rains are great, the women will not work (on embroidery) for up to five months."
Shrujan works directly with 3,000 women, says Shroff, while another 1,500 women work indirectly, working only if there’s a drought or if they receive pieces of fabric to embroider via the artisans who work directly. “We recently found that our products go as far as Barmer (in Rajasthan) to get embroidered because some of the daughters have gotten married and gone away," she adds. In order to maintain quality, Shrujan has devised a grading system to categorize the artisans’ skill. “It’s easy to maintain (quality) with people we meet directly. In turn, they send the fabric to others and tell them what to do," Shroff says, adding that smartphones too have been greatly helpful as artisans can click photographs of their work for feedback from supervisors and production teams.
Once the artisans complete the embroidery work, the fabrics are tailored and finished by Shrujan’s in-house teams in Ajrakhpur into a variety of products, from small bags and wall panels to dresses, kurtis and lavishly embroidered saris. According to Shroff, the payment structure is also flexible. Artisans can quote and negotiate their fees, which are usually calculated on the number and scale of motifs to be embroidered (for saris, the border measurement is also included). Small designs are paid for immediately, and for elaborate designs that can take a few months to over a year, artisans can choose to be paid in quarterly instalments or in a lump sum on completion. “A young woman will usually take bulk payment, because she may be saving money for jewellery (for her wedding) and doesn’t want to burden her parents," Shroff explains. “Married women with children prefer quarterly payments." Small items will yield a fee of ₹500-800 but a top-graded artisan can earn up to a lakh for embroidery on a single sari.
Empowering rural women financially, Chandaben also paved the path for emancipation in other ways, from taking them out of their homes on excursions to fairs and encouraging the education of girls. Over the years, the birth of a girl child has become cause for celebration in local households. They have also started sending girls to school, though it has led to an unfortunate side-effect. “By the late 1980s, we realized that they understood only one thing—educate the girl child, do not educate the boy child," Shroff says, adding that they also want to focus on men and ensure they don’t remain uneducated. Shrujan’s other achievement has been to cut across caste divisions. In the early years, Shroff recalls, her mother appointed Dalits as supervisors and seniors.
Chandaben’s work earned her a Rolex Award for Enterprise, established to recognize the work of social entrepreneurs, in 2006, and Shrujan has come to be associated with high-quality artisanal embroidery. Shroff aims to take the organization’s work further, validating these crafts for their brand value. “Things have improved drastically in the last four years, but the awareness that these things are hand-crafted needs to increase," she says. “Be willing to pay for them. You don’t bargain with brands, why would you bargain with artisans? This needs to change."
The writer was in Kutch on invitation from Shrujan to attend the LLDC Folk Festival 2019.
23.2. Female chefs and the stars on their plate
Livemint, 08 Mar. 2019, Diya Kohli
- Michelin winner Garima Arora is now Asia’s Best Female Chef
- She follows in a line of legendary chefs who have won the award and paved the way for the rise of female chef
Garima Arora is just adding to her growing list of accolades, the most recent being the elit Vodka Asia’s Best Female Chef 2019 award. Her Bangkok-based restaurant Gaa earned its first Michelin star within less than a year of opening, making 32-year-old Arora the first Indian female chef to win the honour.
Arora follows in the footsteps of other trailblazing women chefs. In 1933, the first year that the Michelin guide gave out three stars, chef Eugenie Brazier of Lyon, France, became the first female chef to helm two restaurants, both of which won three Michelin stars each. Brazier even mentored Paul Bocuse before he became a legendary chef. The early years saw other female chefs who were awarded three Michelin stars—but that trend changed over the decades.
Anne-Sophie Pic; Clare Smyth
Ironically, Bocuse was the man who went on to say, in a later interview in the 1970s, “I prefer my women to smell of Dior and Chanel than of cooking fat." This attitude percolated across the industry, and cooking came to be regarded both as a male bastion and a blue-collared job. With only one woman grabbing top Michelin honours in the 1990s, the list seemed to reflect the trend of the abysmally low number of female chefs helming restaurants around the world.
When Anne-Sophie Pic won her three Michelin stars in 2007, she became the first Frenchwoman in 50 years to do so. Clare Smyth became the first female chef in the UK to retain three Michelin stars. These female chefs showed the way for other women and Guide Michelin reports show that the balance improved over the 2000s with a higher number of women across the world being awarded one, two or even three Michelin stars. The 2018 French guide was accused of being sexist, with a vast gender disparity between the awards that led to its own hashtag #MichelinToo. In 2019, Michelin France released a list where an unprecedented number (11 in all) of female-led restaurants were awarded stars. As the balance tips in favour of female chefs in Michelin guides worldwide, one can only hope this marks the award’s early promise of recognizing talent—irrespective of gender.
24.1. India providing greater mkt access to US goods; trade gap narrows
PTI, Mar. 08, 2019
New Delhi: India is providing greater market access to American goods which is reflected in the declining trade deficit between the two nations, official sources said.
The US trade deficit with India has dipped to USD 21.3 billion 2018 from USD 22.9 billion in 2017 and USD 24.4 billion in 2016.
The commerce and industry ministry is also conducting an internal assessment to explore options to deal with the situation arising from the US decision to withdraw import duty benefits to about 2,000 Indian goods under its Generalized System of Preferences (GSP) programme.
The declining trade deficit figures clearly reflects that the US exports to India are increasing. It increased to USD 33.12 billion in 2018 from USD 25.7 billion in 2017.
"With this kind of rise in exports, the US claim that India is not giving reasonable market access is not correct," the sources said adding the US companies in all the sectors including goods and services are market leaders in India.
The US has claimed that India's import duties are high and American companies from sectors like medical devices are not getting adequate market access.
The market share of US firms in coronary stents and knee implants in India too is over 80 per cent.
The sources added that India would not take any knee jerk reaction and would decide on its next course of action only after concluding internal assessment.
The GSP duty benefits which US provides to developing countries including India are non-reciprocal. Currently, about 121 developing countries including India, Brazil, Afghanistan and Botswana are availing these benefits.
The US decision could impact India's exports worth USD 5.6 billion under this scheme. Removal of the benefits would result in imposition of duties by the US on these 2,000 products, making them uncompetitive in the American market in terms of pricing.
The US is one of the top trading partners of India. The bilateral trade between the countries has increased to USD 74.5 billion in 2017-18 from USD 64.5 billion in 2016-17. The US is one of the few countries with which India has a trade surplus, which stood USD 21 billion in 2017-18.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
24.2. Opinion | A bumpy road ahead for India-US trade relations
Livemint, 05 Mar. 2019, Abhijit Das
The two countries should continue to talk and explore ways of resolving their knotty issues
The sword hanging over India’s preferential access for its exports to the US market has finally fallen. On 4 March, US trade representative Robert Lighthizer announced that the US intends to terminate India’s designation as a beneficiary developing country under the generalized system of preferences (GSP) programme. According to the United States trade representative, India’s termination from the GSP programme follows “its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors". What would be the impact of this action and how should India respond? Also, is there any significance in the timing of this action?
The termination of GSP benefits is likely to adversely affect about $5 billion of India’s annual exports to the US. This amounts to 10% of India’s total exports to that country. At a macro level, the termination of benefits under the GSP would wound the country, but would not prove to be a fatal blow to India’s export ambitions.
Of course, the specific sectors that benefitted from access under America’s preference regime would face the brunt. The loss of the associated benefits would raise the price of exports of these sectors, thereby posing challenges to them in competing with other countries in the American market.
So, what are the options available to India? Let us examine them.
First, the sectors likely to be adversely affected by loss of benefits under the preference regime need to enhance their cost competitiveness. This will help offset the erosion of the GSP tariff advantage and facilitate the retention of their market share in the US. If need be, the government could provide some financial support as an emergency measure to these sectors. However, this should not be in the form of export subsidies.
Second, in July last year, India had announced its intention to impose retaliatory tariffs on the US for the latter’s steel and aluminium tariffs, allegedly for protecting America’s national security. So far, India has refrained from imposing those retaliatory tariffs. With the preferential benefits at the verge of being terminated, there should be no trade-related reason for India to hold back these tariffs.
Third, under the rules of the World Trade Organization, tariff preference schemes such as America’s GSP are required to be non-reciprocal. In other words, the US cannot demand reciprocal market access for its exports to India in return for granting benefits under the scheme. As such, the reason stated by the US for terminating these benefits to India—India’s supposed failure to provide equitable and reasonable market access to American goods—falls foul of World Trade Organization rules. New Delhi must move fast and challenge the termination of these benefits under the organization’s dispute settlement mechanism. This would signal India’s intention that it expects America and other countries to play by multilateral, not unilateral, trade rules.
Fourth, it is no secret that the US wants India to lower tariffs in many sectors, particularly dairy products and wheat. Cheap and highly subsidized imports from the US in these sectors would result in severe loss of livelihoods in India. It is, therefore, not surprising that India has stood its ground and not given in to this particular demand by Washington.
However, can the Indian government identify products where it can provide additional market access to the US, without there being a large-scale negative fallout on employment levels in the country? This engagement should be accompanied with a list of products from India on which it could request the US to lower its tariffs.
Why has the US chosen this moment to terminate India’s benefits under the generalized system of preferences? Two reasons can perhaps explain the move.
First, in the current security environment, India needs the backing of the US, which has chosen a time to strike on trade when India is vulnerable in its international relations. Perhaps the US calculus is that India will succumb on trade issues, in exchange for its continued support of India in geopolitical and strategic matters. India’s policymakers and political leaders need to have ample clarity on how to strike an overall balance in the country’s interest in different spheres. They need to keep in mind the reality that anything which makes the country economically weaker will also reduce India’s heft in the global political arena.
Second, at this juncture, the prospect of a deal between the US and China to lower the heat on trade war appears to have brightened. The message that the US is trying to convey to India is the following: If it can extract concessions at the negotiating table from China, then what chance does India have to resist the US? This is clearly a part of the mind game that Washington seems to be playing and which Indian policymakers need to be cautious about.
Overall, termination of India’s benefits under the generalized system of preferences presages a bumpy road ahead in bilateral trade relations between India and the US. It is essential that the situation does not spiral out of control. The best course for both countries would be to continue to talk and explore ways of resolving their knotty trade issues.
Abhijit Das is head, Centre for WTO Studies, Indian Institute of Foreign Trade.
Views expressed are personal
25.1. Goods and services exports to cross USD 500 bn this fiscal: Prabhu
PTI, Feb. 26, 2019
New Delhi: The country's goods and services exports during the current financial year would cross USD 500 billion despite challenges being faced on the global trade front, Commerce and Industry Minister Suresh Prabhu said Monday.
Prabhu said that exports are recording healthy growth so far and this financial year, "we will record the highest-ever growth rate".
The country's exports for goods and services will "cross USD 500 billion" this fiscal, he said here at Rising India Summit 2019.
He said the ministry is working on identifying new products and new markets to further push the shipments.
During the April-January period of the current financial year, exports grew 9.52 per cent to USD 271.8 billion. India export services worth about USD 130-150 billion per year.
Talking about proposed new industrial policy, Prabhu said everything is ready including the implementation part of the policy and "only Cabinet's approval is required".
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
25.2. Suresh Prabhu inaugurates 'Aviation Conclave 2019' with theme of "Flying for All"
Press Information Bureau, Feb. 28, 2019
‘Aviation sector has the potential to add to the growth of Indian economy’ —Suresh Prabhu
Jayant Sinha calls for policy innovation to sustain growth; Says drone ecosystem can make India a global leader in the field
New Delhi: Shri Suresh Prabhu, Union Minister of Commerce, Industry and Civil Aviation has said that aviation sector has the potential to add to the growth of Indian economy. Inaugurating the Aviation Conclave 2019 with an overarching theme of “Flying for All” here today, Shri Prabhu said a growing aviation sector can carry along many other sectors to spur up the GDP. He said that to achieve growth in the sector, there must be a clarity in policy dynamics, a sync between the ‘Macro’ and the ‘Micro” and explained that it will mean clear long-term strategy with immediate actionable plans. He said, Drones offer a Greenfield opportunity for the aviation sector. The minister outlined roadmap for aircraft manufacturing, aircraft leasing and financing for long term asset creation, cargo policy and financial services, optimization of resource utilisation with technology input as some of the areas of high importance for the aviation sector. “We strive to keep the system efficient, fair and approachable”, he said.
Shri Prabhu stated that realizing Government’s vision of making “Flying for All” a reality underpins the government’s commitment to bring about a veritable revolution in the Indian aviation sector. “This Conclave is about the future of Indian aviation – it is bringing together industry leaders, government and regulators for setting the tone and propelling us to realize our Vision-2040”, he stated.
Shri Jayant Sinha, Minister of State of Civil Aviation, in his special address, said that “focus is now on PPP model for 6 more airports. We need Industry to take risks, invest to scale up sector”. He called for policy innovation to sustain the growth and said drone ecosystem can make India a global leader in the field.
A ‘Passenger Charter’ was released on the occasion.
Over 30 industry leaders participated in 5-key sessions covering the Drone-Ecosystem Policy Roadmap, Roadmap for Manufacturing Aircraft and associated equipment, including Regional Transport Aircraft, in India, the Project Rupee Raftaar- Aircraft Financing and Leasing from India, the National Air Cargo Policy, and the Mission to transform Indian Airports into Next-Gen Aviation Hubs. The deliberations are expected to throw up key catalysts to fast track the holistic and broad-based growth of the passenger, cargo and MRO sectors. Over 200 delegates took part in the discussions.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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