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Wednesday 19 June 2019

NEWSLETTER, 20-VI-2019











DELHI, 20th June 2019
Index of this Newsletter


INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC. 


1.1.  Together we will build a strong and inclusive India, says PM Narendra Modi
1.2.  How reforms in public transport affect women
2.1.  Opinion | Glimpses of the much-awaited National Education Policy
2.2.  Opinion | The new government must focus on structural reforms
3.1.  India inc. pitches for land and labor reforms to achieve double-digit growth
3.2.  Opinion | Start with schools to address the prejudices in our society
4.1.  Opinion | Focus on reforms that could help the poor earn more
4.2.  Unemployment on the rise among urban youth, finds survey
5.1.  ADB to provide USD 750 mn loan to India for railway track electrification project
5.2.  To cut imports, Oil India aims to raise output by over 7%: Utpal Bora


– AGRICULTURE, FISHING & RURAL DEVELOPMENT


6.1.  India is Nestle's fastest-growing key market, says Suresh Narayanan
6.2.  Spencer's to acquire Nature's Basket for ₹300 crore to increase footprint
7.1.  Make In India boost! Government recognises one start-up per hour In may
7.2.  SoftBank may serve up fresh funds to the tune of $300-500 million for Swiggy
8.1.  Microfinance industry posts 38% growth in FY19: MFIN
8.2.  Will exit 2019 with 25% share of US$ 4.5 bn online phone sales: Samsung India
9.1.  Fastags can now be purchased online through Amazon
9.2.  Warehousing sees surge in private equity investment and leasing activity
10.1. Plugging into India’s broadband revolution
10.2. Infosys sets up experience Design & Innovation studio in London


– INDUSTRY, MANUFACTURE


11.1. The end of an era as Azim Premji hands Wipro reins to son Rishad
11.2. Unicorns outpace technology companies in acquisitions
12.1. Ikea's partner Ingka buys minority stake in home design startup Livspace
12.2. Flipkart pitches its manufacturing prowess to major electronic brands
13.1. Infinix starts export of India-made mobile devices
13.2. Western Digital's investment in Indian markets at Rs 1,400 crore a year
14.1. Cipla finally delivers growth in the march quarter, all eyes on FY20 now
14.2. Addressable market for e-pharmacies in India to reach US$ 18.1 bn by 2023: EY
15.1.Tech Mahindra bags US$ 100-mn outsourcing contract from Vodafone New Zealand
15.2. Lenovo India bags order from Tamil Nadu for 1.50 mn laptops


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


16.1. E-com is fastest-growing channel for commercial transactions: Mjunction CEO
16.2. The Indian market is strategically important to us: Ogburn of HPE
17.1. What happened on Everest this summer
17.2. Oyo have become the second-largest hotel group in China
18.1. Dr Reddys to spend upto USD 300 million on R&D in FY 20
18.2. UPL: Arysta LifeScience acquisition done, focus now shifts to synergies
19.1. Low-cost carriers IndiGo, SpiceJet and GoAir to report record profits in 2019-20: CAPA
19.2. Spicejet adds 100th plane to fleet, 4th domestic airline to do
20.1. AI-Artificial Intelligence to more than double the rate of innovation in india by 2021: Study
20.2. IT services growth to remain at 6-8 % in USD terms in FY'20: ICRA


INDIA & THE WORLD 

21.1. Opinion | Global trade is important for India’s prosperity
21.2. Parag Milk foods launches premium milk brand In Singapore
22.1. Airtel looking to raise up to $1 billion with LSE listing of African unit
22.2. Tata Consultancy Services listed among top 50 US companies for diversity
23.1. Europe’s future and India’s relations with the Union
23.2. Government pursuing efforts to set up second airport in major cities
24.1. US-China trade war may hand India a bigger bite of Apple
24.2. Amazon pumps in Rs 2,800 crore into India unit after its exit from China
25.1. Reliance, BP to develop third gas project in India
25.2. India-China trade to cross USD 100 billion this year: envoy


* * *

DELHI, 20th June 2019

NEWSLETTER, 20-VI-2019



INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC. 



1.1. Together we will build a strong and inclusive India, says PM Narendra Modi 
Livemint, 24 May 2019, Anil Padmanabhan
  • The incredible performance of BJP in the East underlines the spectacular performance nationally 
  • The verdict has upended traditional electoral metrics and handed a drubbing to rivals, including dynasts 
NEW DELHI: The results of the 17th Lok Sabha elections are finally in: the Bharatiya Janata Party (BJP) won a landslide victory, with a record 303 seats. Incredibly, the exit polls were spot on. Most importantly, it has cemented Narendra Modi as the pre-eminent political voice and BJP as the principal pole of Indian politics. To put it succinctly, it is a tectonic moment.

The verdict has upended traditional electoral metrics like caste and religion, handed a drubbing to rivals—including several prominent dynasts—shown up political punditry, reordered regional groupings and delivered a BJP majority of its own for the second consecutive term. And in this, if there is one common factor, it is undoubtedly Modi.

Like in 2014, he tapped into the aspirations of a new India, which is overwhelmingly young: 65% of the population is less than 35 years of age. This time, he leveraged the compact he had cultivated with the electorate over the past five years. While critics mocked Modi for implementing demonetization of high-value currencies, the public saw it as an honest effort to combat rampant corruption. Exactly why the word “bharosa" crept into the voter lexicon, as opinion polls revealed close to the election.

This verdict, not a black swan moment as some commentators claimed after Modi’s audacious win in 2014, will rewrite Indian politics like never before. This process will become easier as the political opposition lost its heft, with various leaders and dynastic constituents suffering humiliating defeats in their strongholds. The emerging regional satraps will be unable to fill the vacuum in the opposition space. Only logical then that the opposition will also lose its clout, both within Parliament and outside. A regrouping of the political order, especially among the opposition, is waiting to happen. The Congress will now find it difficult to justify its claim of being the first among equals and stake claim to the leadership of the opposition.

Given this state of affairs, it is safe to assume that Modi 2.0 will use this mandate to front-load its agenda for change. In this, the economy will be top priority. The intent will be made clear with the choice of the person who will head North Block and also the Union budget for 2019-20, which will be presented in July. The Sensex, a bellwether for business sentiment, scaled a record 40,000 but failed to hang on to the peak. The verdict has already created a global buzz, with some of the biggest leaders including Russian President Vladimir Putin, Japanese Prime Minister Shinzo Abe and the German Chancellor Angela Merkel promising to turn up for the swearing-in of the new government—it is likely to take place on either 26 or 27 May.

The Modi factor
The BJP wave was fashioned around a carefully crafted narrative, sewing key alliances together and backed by committed and passionate party cadres—exactly why party president Amit Shah has to be co-credited for this incredible victory. At the core of the narrative were carefully chosen pro-incumbency metrics (little or no inflation, delivery of staples like cooking gas, electricity and toilets to the poor) to showcase the tenure of the BJP-led National Democratic Alliance (NDA) in office, the promise to resurrect the Hindu identity (demonstrated by the highly successful hosting of the Kumbh Mela, makeover of the Kashi Vishwanth temple in Varanasi) and stoking hyper-nationalism (coalescing around the air strikes against terror hideouts based in Pakistan). With the benefit of hindsight, the Balakot air strikes served as a sugar high for most of India, except in Gujarat and Rajasthan; elsewhere in the country, it was the promise of delivering development and willingness of the PM to risk his social capital on causes that swung the vote.

At the same time, Modi was careful to own and control the dominant narrative—which, in this case, was a referendum on his government’s record—and also never miss out on the missteps by the opposition (Sam Pitroda’s “hua to hua" is one such example). In almost every election that BJP has won, beginning the 16th Lok Sabha poll in 2014, the narrative has been set by Modi; the opposition has had to play catch-up. After having successfully framed the contest as presidential, it was a case of Modi versus the opposition.

The singular failure of the squabbling opposition in backing one among them reinforced the narrative—mahamilawat—spun by Modi. In addition, they had to contend with Brand Modi, which in five years had grown and appropriated every electoral metric: anti-corruption crusader, development, nationalism and certitude. Shouldering the BJP challenge, Modi travelled to 27 states, addressed 142 rallies and clocked 105,000km.

Immediately after it was clear that NDA was on course to winning a second mandate, Modi tweeted in conciliatory terms. His appeal for a “new" and “inclusive" India has stoked expectations that Modi 2.0 will see a recalibration.

Poor as a vote bank
For most of the last five years in office, the poor have been the primary focus of NDA. In this, the emphasis was on raising their standard of living by providing basic material staples like cooking gas, electricity, housing and toilets. This focus acquired a sense of urgency after Congress president Rahul Gandhi struck with his barb: “Suit-boot ki sarkar".

According to BJP, at least 220 million people received benefits from at least one flagship programme of Ujjwala, Saubhagya, Jan Dhan and Swachh Bharat. While the poor in general were appreciative of this unprecedented focus, the constituency of women was particularly grateful—in Odisha, beneficiaries shared how womenfolk in their households no longer had to do the 4am routine to collect firewood and do their toilet. The misguided elites of Lutyens Delhi (whom Modi derisively refers to as the “Khan Market crowd") and reform-obsessed policy wonks, who heaped ridicule on such programmes were lulled into ignoring the electoral coup that Modi-Shah were organizing.

At the same time, it enabled NDA to walk its claim of being pro-business and pro-poor (first enunciated by finance minister Arun Jaitley). Traditionally, the poor were as a vote bank of the Congress; even in this election, its biggest pitch was the populist NYAY, which guaranteed ₹72,000 to every poor household. Now, this vote bank has shifted to BJP. Not only does it add to its numbers, but it is also a powerful counter to the traditional challenge of caste and religion. Exactly why the chemistry of Modi prevailed over the caste-religion math spun together by the Samajwadi Party and the Bahujan Samaj Party (BSP) in the key state of Uttar Pradesh. At this point, one has to concede Shah’s claim that the new electoral metric in India is that of politics of performance.

The Organization
While Modi was indeed the big difference between the incumbent and the opposition, there is no denying the fact that the BJP party organization carried out the grunt work. Over the last five years, there has been a sustained effort by the saffron party under the leadership of Shah to step up recruitments. Consequently, the party’s membership more than trebled in the last five years from 35 million to 110 million in 2019—the foundation of the BJP vote bank. This kind of a landslide win can only stoke another surge in membership.

Besides providing the infrastructure support for the rallies, party workers were also deployed in outreach. In Delhi alone, including in the BJP control room on Akbar Road, about 14,000 party workers were deployed. The 161 call centres spread across the country were tasked with the explicit job of reaching out directly on behalf of BJP to the 220 million beneficiaries of the various government programmes. Taking the BJP membership and the labarthis or beneficiaries together, the party had put together a formidable potential voter base—something that explains how it has won 50% plus vote share in several states.

Eastern Surprise
The incredible performance of BJP in the East underlines the spectacular performance nationally. Not only has its performance here enabled it to more than make up for the reverses suffered in Uttar Pradesh, but it has also provided a much expanded electoral footprint to the saffron party. The saffron surprise in the East is akin to what it achieved in the 2014 general election in UP.

From an also-ran in West Bengal in 2014, BJP has eclipsed the Congress and the Left Front to emerge as a close second to the Trinamool Congress (TMC), whose leader Mamata Banerjee, was at one time being touted as a possible PM. The saffron surge ensured a direct fight and has led to an almost equal division of votes between BJP (40.2%) and TMC (43.29%), dealing one of the most devastating political blows to Didi’s persona and TMC. It will now have to be seen how TMC will regroup.

In Odisha, BJP may not have lived up to its pre-election claim of ending the record tenure of Naveen Patnaik. The veteran CM pulled off another one-sided win in the state elections, but had to share the spoils with BJP in the fight for the Lok Sabha. But in the process, the die is cast for the future polity of the state, with BJP emerging as the principal challenger.

In the north-east of India, BJP has in this election cemented its status as the principal party. Of the 25 seats up for grabs, BJP won 12 and its NDA allies three. Previously, NDA had won 11 seats, while the BJP count was eight.

The Congress
If the country’s oldest political party needed a wake-up call, then this was the moment. In 2014, it suffered its worst drubbing ending up with 44 seats; if people believed—especially after Gandhi underwent a makeover following his ascent to the post of party president—that a turnaround was possible, then it remained a pipe dream. The shrill negative campaign—chowkidar chor hai—and the lack of credible alternative ideas, except for NYAY, have left many red-faced.

The Congress suffered another humiliating loss ending up with 52 seats—a marginal improvement on its previous tally, but still short of the number to automatically claim the prestigious post of the leader of the opposition in Parliament.

Not only did Gandhi lose from Amethi, the party is now reduced to one representative, Sonia Gandhi, from Uttar Pradesh—one of the two states without which the Congress can never stage a revival. The bulk of its MPs in the next Lok Sabha will come from south India—including Gandhi, who won from Wayanad in Kerala. After drawing a near blank in the Hindi heartland, it risks losing its credentials of being a national party. More worryingly, it should recognize that over the last four decades, key constituents have deserted the party. First to leave were the Dalits, later followed by the OBCs; and now, BJP has completed the heist with its successful wooing of the poor. The Muslims in general continue to be loyal to the Congress, which, however, in the context of a rising Hindu consciousness, could be a political liability, especially in the heartland.

The Road Ahead
With the elections done and dusted, Modi is likely to refocus his attention on governance. One big challenge will be in putting together the union cabinet. If there was one drawback of this government, it was the lack of bandwidth in the union cabinet.

The second big test will be with respect to the economy. The containing of retail inflation and improved plumbing of the economy through measures like goods and services tax have no doubt improved the underlying basis, but there are concerns that cannot be ignored--obvious ones are farm distress, lack of job creation and flagging investment. With such a massive mandate, Modi will be under pressure to deliver solutions—though it is a fact that there is no shortcut. Undoubtedly, he has a task on hand.


1.2. How reforms in public transport affect women 
Livemint, 11 Jun 2019, Rukmini S

Subsidizing public transport can help cash-constrained female workers get access to better-paying employment opportunities, suggests research

The Delhi government’s decision to make public transport free for women has opened a debate about the ways in which women access transport and the barriers they face. Census data from 2011 revealed that 45% of women do not even travel for work, meaning that they work out of their own houses. As a result, India has one of the world’s most lopsided ratios of male versus female commuting, according to data aggregated by the Centre for Diet and Activity Research, a research unit at the University of Cambridge.

Most of the data on commuting in India comes from the 2011 census which collected data on commuting patterns of those people not employed in agriculture or in household industries. For both men and women across India, walking is the most common commute to work. For women, after walking, the bus is the most common mode of transport. This is in contrast to men for whom, after walking, cycling and riding a scooter or bike to work are the most common modes of transport. This could reflect both the lower rates of asset ownership among women and lack of finances for them to pay for their commute. But it could also reflect the fact that women simply travel much shorter distances to work.

Women travelling shorter distances to work - or the gender commuting gap - is a global phenomenon. A big reason for this is that women, rather than men, are more likely to be the primary caregiver for children. Data from the OECD Family Database shows that the time spent on the daily commute is higher for men with young children (defined here as before school-age children) than for the average man. However, for women with young children, the commute time crashes.
“This gender commuting gap may be linked to the gender wage gap, which also really opens up after the arrival of children in the family. If women take work closer to home because of caring responsibilities, they may be less likely to find a job well matched to their skills or with a high-paying employer," the Institute for Fiscal Studies suggested while analysing a similar drop off in travel time for mothers in the UK.

This is also happening in India where gender expectations of women working outside their homes and affordability of transport mean that women are restricted to jobs closer to their homes. For instance, a 2005 study in Delhi slums found that women spend more time travelling on slower modes of transport to access work since faster modes are more expensive. Similarly, women respondents in a 2011 World Bank study in Mumbai reported finding the bus pass prohibitively expensive and “pointed out that cheap bus travel would enable them to better access the local trains which in turn could connect them to better-paying jobs in South and Central Mumbai."

Across India’s big cities, buses are a key means of commuting for women. Mumbai is the exception where trains are equally important and where patterns of male and female commutes mirror each other most closely, indicating greater ease of access and fewer barriers for women.
Consequently, any experiment with subsidising public transport directly affects women commuters, as they are proportionately higher users of public transportation than men. In shorter commutes, women are more likely to be the ones walking, while men are more likely to be cycling or riding their bikes. When commutes are long, however, women are more likely to be the ones taking the bus or train. Whether it is public streets or public buses, women overwhelmingly use public transportation means, much more so than men do.
As for whether the Delhi experiment will bring more women into the city’s public transport system and make them feel safer, that is to be seen. Some evidence is promising - the Estonian city of Tallinn saw a leap in the share of women using public transport after it made it free.

Rukmini S. is a Chennai-based journalist


2.1. Opinion | Glimpses of the much-awaited National Education Policy
Livemint, 05 Jun 2019, Anurag Behar

Indian education finally has a real road map for improving the fundamentals of this vital sector

On 31 May, the draft National Education Policy (NEP) developed by a committee chaired by K. Kasturirangan was shared by the ministry of human resource development (MHRD) for public comment. A comprehensive education policy for India is on the anvil for the first time since 1986.
Many fundamentals of education are normative or are founded in human psychology. Changes on these are naturally gradual, if at all. But the transformative changes on almost all other matters in India and the world since 1986, and the fact that every aspect of education in India today demands urgent action, call for such a comprehensive national policy as a priority.
I am a member of the drafting committee of the NEP. This piece and a few subsequent ones will offer glimpses of the policy. This article is sort of a teaser or trailer.
There are eight highlights of the NEP below. These are selected to offer a sense of some key aspects of the document. But no such selection can give an adequate picture of the comprehensive and well-integrated document that it is.

One, early childhood care and education: High-quality early childhood care and education will be provided for all children between the ages of 3 and 6 by 2025. This will be done within institutions such as schools and anganwadis, which would have a mandate to take care of the overall well-being of the child—nutritional, health, and education. These institutions will also provide similar support to families for children younger than three years of age—within their homes. The criticality of brain development in the early years has become clear in the past few decades; this policy will result in a massive positive multiplier effect on society.

Two, ensuring foundational literacy and numeracy: Every student will start achieving age-appropriate foundational literacy and numeracy by 2025. A slew of programmes and measures are articulated for this purpose. This is aimed at the basic issue facing our education system today—of students not being able to read, write and do elementary math.

Three, transformed curricular and pedagogical structure for school education: The curriculum and pedagogical structures will be designed anew to be appropriate and effective, based on children’s cognitive and socio-emotional development. The curriculum will be integrated and flexible with equal emphasis on all subjects and fields. There will be no separation of curricular, co-curricular or extra-curricular areas—with all in a single category of equal importance. Vocational and academic streams will be integrated and offered to all students. Examination systems will be radically changed to assess real learning, make them stress-free, and aim for improvement instead of the passing of judgements.

Four, universal access and retention in schools: All Indians between ages 3 and 18 to be in school by 2030. The Right to Education Act will be extended from pre-school to class XII.

Five, teachers at the centre: The profession of teaching, and so teachers, will be at the centre of the education system, focused on the student and educational aims. All schools will be fully resourced with teachers—with working conditions for an energetic work culture. No “temporary" teachers will be allowed; all positions will be filled with competent and qualified teachers. A development-oriented performance management system will be put in place. The teacher education system will be transformed, with rigorous teacher preparation through a four-year integrated stage and subject-specific programmes offered only in multi-disciplinary institutions.

Six, new institutional architecture for higher education: India’s current 800 universities and over 40,000 colleges will be consolidated into about 10,000-15,000 institutions of excellence to drive improvement in quality and expansion of capacity. This architecture will have only large multi-disciplinary institutions, with significant investment. Three types of higher education institutions will be there: Type 1 universities focused on research but also teaching all programmes, undergrad to doctoral; Type 2 universities focused on teaching all programmes while also conducting research and; Type 3 colleges focused on teaching undergrad programmes. All types will grant their own degrees. There will be no system of university affiliations.

Seven, high-quality liberal education: All undergraduate education will be broad-based liberal education that integrates the rigorous study of sciences, arts, humanities, mathematics and vocational and professional fields with choices offered to students. Imaginative and flexible curricula will develop critical thinking, creative abilities and other fundamental capacities. Multiple exit and entry points will be offered, with appropriate certification after one, two, three and four years of study. There will be a four-year undergraduate programme available in addition to three-year programmes.

Eight, there will be a substantial increase in public investment to expand and vitalize public education at all levels.
Vibrant high quality and equitable public education must be the bedrock of Indian society.

Anurag Behar is CEO of Azim Premji Foundation and also leads sustainability initiatives for Wipro Ltd


2.2. Opinion | The new government must focus on structural reforms
Livemint, 27 May 2019, Narayan Ramachandran

The mandate lets it focus on a broad-based instead of project-based economic agenda

The electoral statistics related to the Bharatiya Janata Party (BJP)-led National Democratic Alliance’s win are only just being parsed, but they are impressive—from a 7-percentage-point increase in vote share overall for the BJP to a victory by over 200,000 votes each in 45 constituencies in Uttar Pradesh (despite opposition unity). A mandate this strong grants the new government an opportunity to focus on a structural, as opposed to a project-based, economic agenda. Here are the priorities it must go after.
Statistics: Even as he embarks on his new term, Prime Minister Narendra Modi must commit to making India’s economic statistics modern, world-class and immune to political interference. The first thing about “fixing" the economy is to measure it right and without “bias". During its first term, this government distinguished itself for all the wrong reasons related to jerry-rigging statistics. Hopefully, that will no longer be considered necessary.
India is home to many truly world-class statisticians, and this is one area where we could use significant lateral entry to upgrade our talent. The day after election results, the ministry of statistics announced the merger of the Central Statistics Office and National Sample Survey Office into a single entity, the National Statistical Office (NSO). I suggest that the new NSO organizes itself into high-frequency (weekly or daily), medium-term (quarterly) and longer-term (annual) specialist units and collects, parses and disseminates data related to employment, inflation, growth, earnings and productivity.

A powerful statement of this commitment to de-politicize economic statistics will be to have the NSO report to Parliament. An apolitical, high-quality NSO will serve as a strong foundation as we go about necessary structural reforms.

Employment: Jobs are the most significant economic and political priority for the coming decade. The two major foundational pillars for job growth for the medium and long term are (1) an industrial-strength apprentice and vocational training system in India and (2) a quantum jump in the quality of our school education. India’s vocational streaming and training system delivered primarily through a chain of Industrial Training Institutes (ITI) is broken. One way to cement his legacy of job creation would be for Modi to completely revamp this broken system—from streaming high-school youth into the vocational path to improving the quality and relevance of vocational education, and also creating an apprentice supply chain from these institutes into the workforce.
Beyond this long-term fix, it is time for India’s “Green New Deal". This New Deal should focus on employment generation for environmentally sustainable infrastructure projects funded by the government. Resources for this New Deal can only come from higher productivity and structural GDP growth, so undertaking structural reforms can become a self-fulfilling project.

Banking reform: Structural reforms require three forms of capital—talent/governance, equity and debt. Talent and governance must come from society at large in such a manner that it is held accountable through regulatory fairness, competitive dynamics and market transparency. Equity capital comes when the storyline and delivery on economic growth and productivity match. Debt capital comes from the fixed-income capital markets and from banks. While all three streams need improvement, credit from banks and public sector bank governance are the weakest links. The government cannot fully fix the problems of public sector banks with capital if it is not accompanied by governance reforms. That would be akin to cleaning up a lake but keeping the sewage lines open.
The government must immediately transfer its ownership in public sector banks to an empowered agency in the form of an exchange traded fund (ETF). This new agency must be empowered to delink these banks from all forms of governmental interference. To show its commitment to go down this direction, the government must fully privatize IDBI Bank—the only public sector bank set up as a private limited company. In a little noticed move, the Reserve Bank of India (RBI) reclassified IDBI in March this year as a “private sector bank" since it is now majority-owned by the Life Insurance Corporation of India (which itself is a government-owned entity). The government should complete its full transfer to private ownership. Thereafter, with the advantage of time and an electoral majority, the centre should insist on accountability in the governance of all public sector banks.

Agriculture reform: For decades, Indian governments have largely failed in their attempt to improve agricultural productivity and provide alternative occupational paths for rural households. With his electoral mandate, Modi can focus on structural fixes that include access to better seeds and technology, drip irrigation and crop planning for the farmer, an easier path from farms to markets for products, a steadier offtake of farm products and a reduction in middleman costs. As already envisaged, a direct cash transfer to the marginal farmer can and should cushion this reform process.
Modi and the BJP have an unprecedented mandate to transform India into a middle-income country with widely inclusive prosperity. Let’s hope they seize it.
PS “The future depends on what we do today," said Mahatma Gandhi.

Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns at www.livemint.com/avisiblehand


3.1. India inc. pitches for land and labor reforms to achieve double-digit growth
PTI, Jun. 04, 2019

New Delhi: With the Modi government beginning its second innings with a greater mandate, the industry on Monday pitched for a series of reforms, including in critical areas of land and labour, to take India's economic growth to double-digits in the next five years.
To target GDP growing up to 10 per cent by 2023-24, the total investment requirement is estimated at USD 5.74 trillion (around Rs 397 lakh crore) for the next five years, CII President Vikarm Kirloskar told reporters here.
Of this, the total investment required for infrastructure sector is estimated at USD 1.18 trillion (around Rs 81.72 lakh crore) for the next five years, while for non-infrastructure including agriculture and industry to be USD 4.56 trillion (around Rs 315 lakh crore), he said.

It is critical to continue with the same pace of reforms, he said, adding the kind of mandate this government has received from the people, "we wish the government will undertake reforms in the areas of land, labour and capital".
He said the private sector is facing difficulty in getting land for manufacturing units and the states have a huge role to play and there is a need to create land banks.
On labour reforms, he suggested for the formulation of national employment policy and encourage states to provide fixed-term employment besides incentivising companies for creating employment.
Besides, the government needs to bring in Direct Taxes Code (DTC) and the last leg of reforms in the GST.
Strong action to spur consumption, investments and net exports will take GDP growth rates much higher and this is the right time for India to think big and envision GDP growth rate of 10 per cent to greatly improve development outcomes, he said.

"With a landslide electoral victory and new Council of Ministers in place, we expect the government to engage strongly with industry to ideate and implement impactful policy solutions for double-digit growth," Kirloskar said.
India's economic growth in the January-March quarter of 2018-19 slowed to a five-year low of 5.8 per cent due to the poor performance of agriculture and manufacturing sectors.
With GDP growth moderating in the last quarter, the CII President emphasized four key drivers for reinvigorating the growth rate - boosting consumption, investments, public expenditure on social and physical infrastructure and net exports.
"Consumption will be greatly encouraged by reducing the personal income tax burden, adding more disposable income for consumers," he said.

He added that various government initiatives including PM KISAN to double the farmers' income by 2022 will help drive rural consumption and generate demand.
To boost consumption, CII also proposed a reduction in Personal Income Tax, rationalise taxes on equity capital and addressed delayed payments emanating from the public sector.
Commenting on rationalisation of taxes on equity, CII president-elect Uday Kotak said that equity is costlier than the debt due to the imposition of various taxes.
On concerns over shortage of liquidity, Kotak said it is available but at a higher cost so there is a need to increase the quantum and also ensure avoiding distortion or crowding out.
"In the last 24 months, the big success area of this govt has been the small saving schemes. A very large amount of money has moved into small savings which are financing the fiscal deficit. In most of these schemes, the rates are higher than 8 per cent. However, bank deposits competing for financial saving provides 7-7.4 per cent," he said.

The ability of banks to drop deposit rates are linked to the interest rate offered by sovereign schemes, he said, adding there is a need to move towards more linear and balanced financial savings across the economy that will make the price of the money more attractive for users which effectively can give a boost to consumption.
On headwinds faced by the Indian economy, Kirloskar mentioned slow down in consumption especially in rural areas and moderation in industrial growth, rising oil prices, global protectionism and trade tension among others.
With regard to fiscal deficit, Kotak said it is an important number and there is a need to ensure a reasonable control on it.
"We will have to work towards stimulus either at fiscal or at monetary or a combination for kick-starting economic growth...We should control it. Quality of deficit is more important than quantity," he added.
Elaborating on improving employment in the country, he suggested a triple-pronged approach for job creation, relating to employment intensive sectors, skilling, and labour reforms for enterprise creation.
He placed a strong emphasis on accelerating growth in job-creating sectors such as construction, hospitality, logistics, healthcare, and the financial sector, among others. According to CII, construction and healthcare alone can create 20 million jobs in the next five years.

Talking about India's external trade, he said India should target merchandise exports of USD 400 billion for 2019-20 from USD 331 billion now.
"We need to find alternative schemes compatible with WTO to support exporters. Trade facilitation must ensure seamless connectivity to external markets. Trade financing too needs immediate attention of the government as only 1 per cent of total commercial banks' lending goes towards trade financing," he added.
On free trade agreements (FTAs), Kirloskar noted that a better strategy should be in place to leverage their benefits as these have "not resulted" in significant export outcomes.
He suggested fast-tracking FTA negotiations with the European Union which are pending since 2013.
On the proposed mega trade deal among 16 countries RCEP (Regional Comprehensive Economic Partnership) agreement, he said, India should negotiate equal market access with all the member nations including China.

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


3.2. Opinion | Start with schools to address the prejudices in our society
Livemint, 22 May 2019, Anurag Behar

Ignoring the social aims of education deprives society of its most effective pathway for progress

Two little girls named Mary and Lakshmi, and a mazaar (tomb), protected by a great Banyan tree. That tableau in my column two weeks ago seemed so perfect in all its detail to some that they asked me if I had made it up. Perhaps just the names? Many more asked another question—how do you respond to such deep prejudice? They were referring to children in a school asserting that “you cannot be a Muslim because you are a good man".
Working with thousands of schools across the country, occasionally we come face to face with intolerable cruelty. But we encounter discrimination and prejudice more frequently. Overt or covert, mild or harsh, it lurks just beneath the surface. It is there among teachers and the communities surrounding schools. Also, in the culture of schools, which infects children. Every fault line of Indian society lies bare—caste, class, gender and religion.

So, what do we do?

First, we recognize this matter as central to our work. The aim of education is to create a just, equitable and humane society, and a vibrant democracy. To fulfill these aims, the cleavages of Indian society must be healed, bridged and eliminated in schools, which then play a significant role in doing the same for society. If our work is in education, developing constitutional values is at its core. Too many individuals and organizations working in education focus narrowly on “learning levels". For them, education is about language, math and other subjects. All that is important, no doubt. But ignoring its civic, social and human aims deprives society of its most important pathway for progress.

Second, to work on this core, we must be where education happens. This healing can only be done by teachers, which demands work with communities of teachers—with their beliefs, behaviours and perspectives. This requires building relationships of trust. It’s impossible to talk to strangers about such innermost feelings. Being an integral part of the communities that you work with is the only way for sustained engagement. Which is why my colleagues live in small towns and villages across this vast country.

Third, our team itself must have consonance on these matters. All of us are from the same society. We too carry the virus of prejudice, in some measure. Diffidence, even more. Therefore, explicit alignment with these values and a commitment to action requires systematic effort. Surely, those who join us to do this kind of work are self-selecting on these values. But experience suggests that while this innateness is important, it requires continuous reaffirmation and support.

Fourth, it requires capacity within our team to deal with these matters. What should we do upon encountering discrimination and prejudice? How does one engage on such matters? What are the philosophical underpinnings? How do we make it real and relatable? Why should anybody change at all? The requirement is of clarity, confidence and tenacity.

Fifth, when and how do we do this work? Training sessions targeted at “eliminating discrimination" have no chance of success. Integrating dialogue on these matters with daily life is far more effective. For example, in a math workshop, when a teacher says that girls just can’t learn math, an opportunity arises to confront gender biases. When in a school, children are fed the midday meal prioritized along caste lines, that is an opportunity to question this most intransigent of our cleavages. Occasionally it is possible to engage directly. For example, through developing an understanding of our Constitution. Theatre, music and literature are often very effective in animating and questioning what may not be touched upon by other methods. However, there really is no formula. Approaches and methods for each situation need to be devised, building on these basic blocks. And every instance of discrimination or prejudice must be seized as an opening.

Sixth, confronting prejudice requires courage. Challenging the deepest of beliefs within the communities that you live in and doing so persistently is very hard. Arguing for gender equity is relatively easier, though not necessarily any less complex. Caste and religion are a different matter altogether. These seem to bring out the worst demons of our nature; steadfast valour is needed.

Seventh, the energy for real change comes from empathy. However closed, senseless and bigoted the person in front of you may seem, progress happens only through dialogue. Sincere dialogue is possible only with genuine empathy. Perhaps we need inspiration from the theological notion of grace. Empathetic engagement is the only path to progress. Else you walk into one of the two traps—diminishing the person in front of you, or, fleeing from him into cliques of comfort. Both are completely dysfunctional.

Eighth, we do not work on our own. Teachers with the deepest reservoirs of humaneness, unflinching courage and fire to change this world abound in the nooks and corners of this country. We work together because this is our India.
Going back to the first question I was asked. I did not imagine that tableau under the Banyan tree. Every detail is real, as real as this India of ours that has made it so.

Anurag Behar is CEO of Azim Premji Foundation and also leads sustainability initiatives for Wipro Ltd


4.1. Opinion | Focus on reforms that could help the poor earn more
Livemint, 28 May 2019, Arun Maira

Small ventures provide more employment and will continue to provide most incomes

Prime Minister Narendra Modi has declared that the era of caste-based appeasement politics is over. According to him, there will be only two castes now: those who are poor and those who want to free them from poverty. Readers of national economic newspapers, such as this one, are not poor. They belong to the other caste that should want to free the poor from poverty.
Many economists are urging the Prime Minister to use his renewed mandate and make bold reforms to the economy. Though all would agree that a principal objective of the reforms must be faster alleviation of poverty, there are ideological differences among them. One side says that first, the size of the overall pie must be increased with the poor benefitting from the operation of an “invisible hand" in the market and the trickle-down effect. They advocate lower taxes and more incentives for private investment. The other side says that the invisible hand in the market is being manipulated by vested interests, the rich are getting richer, and the trickle-down is too slow.

Both sides of the ideological divide agree that incomes at the bottom are inadequate. Whereas “capitalists" propose a universal basic income given by the state, “socialists" say a better solution is state-provided public services and targeted subsidies. Both solutions require the state to have more resources. Which are hard to come by if, as the capitalist side demands, taxes cannot be increased, and the government must also reduce its fiscal deficit.
People are poor because they do not have adequate incomes. They do not have adequate incomes because they do not earn enough from the jobs they have, over 90% of which are in the informal sector, or from their tiny enterprises if they are self-employed entrepreneurs. Moreover, their earnings are uncertain, and with very little wealth to fall back on, they easily slip back into poverty. This is the plight of small farmers, small entrepreneurs and workers in the informal sector of India.

The problem with the Indian economy is not “jobless" growth. It is the inadequacy and instability of incomes for millions. The government cannot afford to put more people on its own payroll; and large factories, with more investments in machines and automation, will employ even fewer people in future. Therefore, the government is urging India’s youth to be job creators, not job seekers—to “stand up and start up". The vision is to have many more small enterprises. This is a good vision of democratic capitalism—a Gandhian vision—with more wealth being generated and accumulated at the bottom, rather than at the top. Small enterprises provide more employment than large ones and will continue to provide most jobs and incomes in the economy.
Those who want to free the poor from poverty must free themselves from ideological biases and focus on reforms that will help enterprises and workers at the bottom of the pyramid. Labour laws must be reformed for faster and more inclusive growth. The question is what reforms are required.

The most important is provision of universal social security. In a dynamic, market-based economy, in which enterprises will wax and wane and jobs will be insecure, citizens must have adequate social security to provide for various emergent requirements, especially breaks in income, health emergencies, and old-age pensions.
Second, the political economy must be reformed with stronger associations at the bottom, such as collectives of small producers and unions of workers. Collectives can provide resources that individual enterprises cannot afford, and associations and unions can give more bargaining power to people at the bottom to improve the terms of trade in their favour—the prices they get, and the wages they are paid.
Third, laws applying to small enterprises must be simplified and their implementation made easier. The burden of complicated and badly administered regulations is highest for small enterprises. However, excusing small enterprises from all regulations is not an ethical solution. Human beings who work in them must have decent wages, physical safety and channels for their needs to be heard. Therefore, labour laws and regulations are necessary, and their content improved and implementation eased.

Small enterprises do not require more freedom to hire and fire to become more competitive. Of the 44 million or so small enterprises in the country, 40 million employ less than five workers. They are well below the levels at which current “hire and fire" laws apply. Increasing these levels upwards to 100 or more employees, as some states have “courageously" done, does not make any difference to small enterprises.
Those who want to free the poor from poverty with reforms to help them earn more should listen to what tiny enterprises and workers at the bottom really need. In no survey of constraints on the growth and profits of small enterprises does a need for relaxing labour laws on hiring and firing workers appear among the top constraints. Access to finance, access to markets, access to technology, fair prices, and reduction of harassment from authorities are their principal problems.
The government will be wise to use the political capital it has earned in this election to carry out difficult reforms that really matter to poorer people, rather than waste it on the ideological preferences of others.

Arun Maira was a member of the erstwhile Planning Commission


4.2. Unemployment on the rise among urban youth, finds survey
Livemint, 03 Jun 2019, Asit Ranjan Mishra
  • Unemployment among youth in the Dec quarter was the highest in Bihar (40.9%) and the lowest in Gujarat (9.6%) 
  • The percentage of urban youth who received formal vocational training increased marginally to 4.4% in 2017-18 from 4.2% in 2011-12 
NEW DELHI: Nearly a quarter of young urban jobseekers remained unemployed during the December quarter of 2018, signalling widespread distress in the job market, according to the latest quarterly employment survey.

The figures mean bad news for the 1 million Indians, who enter the workforce every month. They also underscore a lack of vigour in the economy.


Unemployment among urban youth in the age group of 15-29 years, who are looking for jobs, has been consistently rising for three quarters and was at 23.7% in the December quarter, shows the Periodic Labour Force Survey (PLFS) data for 2017-18 and the December quarter released on Friday by the statistics ministry. This is despite the urban youth spending an average 11 years in formal education, compared with 9.3 years spent by their rural counterparts.

PLFS was launched with the objective of measuring employment every three months in urban areas and once a year in both rural and urban areas. The quarterly survey only captures data classed as current weekly status (CWS), while the annual survey measures both the usual status and CWS.
A person who is unable to get work for even an hour in the last seven days despite seeking employment is considered unemployed under CWS. Under usual status, the employment activity of a person is determined on the basis of a reference period of 365 days preceding the date of the survey.
When measured by the usual status for 2017-18, male youth unemployment rose to 18.7% from 8.1% in 2011-12, while for females it rose to 27.2% from 13.1% in 2011-12.

Labour force participation, or people working or looking for jobs in the age group of 15-29 years, has been declining and touched 36.9% in 2017-18 as more among them, especially females, enrolled for higher studies. The rising unemployment rate despite falling labour force participation for the youth is more worrying.
This is likely to raise questions about whether India is suffering from jobless growth. According to Census 2011, India has 333 million youth—a number that is likely to touch 367 million in 2021 and 370 million by 2031.
Youth unemployment in the December quarter of 2018 was the highest in Bihar (40.9%), followed by Kerala (37%) and Odisha (35.7%), while it was the lowest in Gujarat (9.6%).
“With this huge rise in youth unemployment, it is hard to reconcile this information with the EPFO (Employees’ Provident Fund Organisation) data that people keep talking about, because a majority of the new entrants to EPFO would be the younger people," said former chief statistician of India Pronab Sen. “A lot of scratching around needs to be done to find an answer."

A Mint calculation showed that during the October-December quarter of 2018, 1.1 million net new entrants joined EPFO in the age group of “below 18 to 28", out of 1.4 million total net new entrants across age groups.
According to the quarterly PLFS data, among regular wage/salaried employees in urban areas, earnings during the preceding calendar month ranged from ₹17,000 to ₹18,000 among males and from ₹14,000 to ₹15,000 among females.
The youth accounted for 28.2% of urban males and 27.8% of urban females. During 2017-18, among people aged 15-29 years, the share of the educated was 65.8% among urban males. It was 65.4% among urban females. Among people aged 15 years and above, 98.5% in rural areas and 94.3% in urban areas have no technical education. A degree in engineering, medicine, agriculture, etc. or a diploma/certificate in agriculture, engineering/technology, medicine, crafts, etc. was included under technical education.
The percentage of urban youth who received formal vocational training increased marginally to 4.4% in 2017-18 from 4.2% in 2011-12. In urban areas, among people who received formal vocational/technical training, 57.1% were employed, 11.3% were unemployed and nearly 31.5% were not in the labour force.
A higher percentage of males compared to females had received either formal or non-formal vocational training.


5.1. ADB to provide USD 750 mn loan to India for railway track electrification project
PTI, May 23, 2019

New Delhi: Multilateral funding agency Asian Development Bank (ADB) Wednesday said it has signed an agreement to provide USD 750 million equivalent in Indian rupee long-term financing to electrify railway tracks in India.
It is the largest single non-sovereign loan ever committed by ADB to Indian Railway Finance Corporation (IRFC) to fund the railways track electrification project, ADB said in a release.
As part of a broad modernization programme that will help India's railway sector transition to electric power and away from dependence on fossil fuels, it said.
Concurrently, with the loan agreement signing, risk participation agreements were signed with private risk participants for the project.

IRFC will use the proceeds from the loan to install electric traction equipment along about 3,378 kilometres of existing railway lines to enable migration of passenger and freight traffic from diesel to electric traction.
The electrification assets will be leased to Indian Railways, the country's national railway system, under a long-term lease agreement, ADB said.
"This is a flagship project demonstrating ADB's strategy of supporting key state-owned enterprises in strategic sectors," said ADB Vice-President for Private Sector Operations and Public Private Partnerships Diwakar Gupta.
It also reflects a major push by the private sector operations of ADB into transport infrastructure, and particularly railways, a sub-sector in which traditionally such operations have not contributed a great deal, Gupta said.

"ADB is adding value in this transaction by providing and mobilising long-term, non-recourse project financing for critical infrastructure development," said the Director General of ADB's Private Sector Operations Department Michael Barrow.
Barrow said as the aggregate funding requirement of Indian Railways is quite substantial, ADB is partnering with it to help tap into a diverse set of funding sources.
The Indian government has developed a five-year capital expenditure programme of USD 132 billion for modernisation of Indian Railways.
This comprises network expansion and decongestion, enhancement of safety and passenger amenities, development of dedicated freight corridors, station redevelopment, and procurement of rolling stock and other related assets.
The electrification of railway tracks is part of this master plan, which is critical for the movement of goods and people within the country, ADB said.

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


5.2. To cut imports, Oil India aims to raise output by over 7%: Utpal Bora
Business Standard, May 21, 2019

New Delhi: State-run Oil India is expected to see a huge increase in oil and gas production by 2022. Chairman and Managing Director Utpal Bora speaks about the company's planned role in bringing down the country's crude oil imports and the future of India's exploration sector in an interview with Shine Jacob. Edited excerpts:
The Open Acreage Licensing Policy (OALP) rounds are considered to be the next big thing. What is your take on it and what are your investment plans for the areas held by Oil India?
OALP will allow us to go for more exploration. The last round of NELP (New Exploration Licensing Policy) was almost a decade back. After that we didn’t have any chances for new mining leases for exploration.

We have won nine blocks in OALP-1. Most are in close proximity to producing areas. So, there are two advantages. One is from a geological point of view, as it may be extension of the existing structure, so the potential is high. Second is evacuation of oil and gas will not be a problem, as all our infrastructure are nearby. We should be able to monetise them within 2-3 years.
OALP investment will be phase-wise. We will have survey period, then exploration drilling, appraisal drilling, field development. Some of exploration drilling will be part of our normal exploration budget and spread over 2-3 years. Our capex has been of the order of ~3,500-4,500 crore over the years, including overseas acquisitions.

What are the further policy changes that Oil India is looking from the next government?
Main advantage of OALP over NELP is that of having no cess, reduced royalty rates, marketing freedom for gas and it is a revenue-sharing model. We can also choose our own areas. We are happy with the incentives that the government has provided. It is a big boost for Oil India and ONGC. However, enhanced oil recovery (EOR) policy needs further review.

What is your take on the rising crude prices globally?
Our cost of production including levies was around $33 a barrel in 2018-19. We are definitely comfortable with the current oil price, but it is a big concern for the country. We are importing around 82 per cent of our requirement, so lower oil prices are more beneficial to the country.
Over the years, oil and gas production in India has seen a declining trend. What are the reasons?
You must appreciate the fact that our fields are very old. Oil India fields are 45 years old on an average. The natural reservoir decline is inevitable. The accepted rate is 8-10 per cent across the world. If you look at giant fields across the world, including Vankorneft in Russia, the decline is very high. I would say that Oil India is at least successful in maintaining the production.
Any company can increase production only through new discoveries. If you see the history of ONGC and Oil India, at times when the production was declining, new fields were discovered. But in the past 10-15 years, no major discoveries were made by Oil India or ONGC. With OALP, we hope this problem will be solved. We go for EOR when oil fields decline. Through this we can recover 8-15 per cent additional oil. EOR from lab study to commercial rolling out takes minimum 5-6 years. We have done some lab studies and launching one pilot this year and one next year.
In terms of gas, we are seeing huge potential. Production is around 2.9 bcm (billion cubic metres) at present. By 2021, it may go up to 3.5 bcm. There are many potential areas where the gas is stranded.

What is the status of the country’s plans to reduce oil imports by 10 per cent by 2022?
To achieve the Prime Minister’s vision of 10 per cent energy import reduction target, Oil India has committed to increase crude oil production to 3.46 million tonnes and natural gas to 3.70 bcm, respectively, by 2021-22. The projected increase is 7.25 per cent in oil production and 30.4 per cent in gas production by the end of 2021-22 from 2015-16 levels.
Oil India is emphasising on increased exploration and development drilling activities, reducing decline rate in already-producing, matured and developed fields (redevelopment activities). We have engaged with renowned institutions from the country and abroad. Proven technologies like hydro-fracking, gravel pack, etc. shall also be implemented on a larger scale.
A number of infrastructure projects for oil and gas handling, more particularly for enhanced gas production and transportation, are in different stages of implementation, which will enable us to achieve the targets.

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. India is Nestle's fastest-growing key market, says Suresh Narayanan
Business Standard, May 20, 2019

New Delhi: Nestle India, the local unit of Nestlรฉ SA, has emerged as the fastest growing key market for the Swiss food and beverages major in 2018, said Suresh Narayanan, chairman and managing director of the company's India unit.
The Gurugram-based firm had posted a 10.8 per cent top line growth rate during the year. In 2018, its revenue grew to ~11,292.30 crore from ~10,192.20 crore year-on-year.
The India unit, which is now among the top 15 markets for Nestlรฉ, is also expected to improve its ranking in the coming years, he said. However, the local market’s contribution to the global conglomerate’s ~634,782 crore sales remains minuscule at 1.78 per cent.
Nestlรฉ India’s sales grew by double digit in January-March 2019 quarter backed by strong volume growth.
Nestlรฉ India’s domestic sales, which comprises over 90 per cent of its total sales (which includes exports), grew 10.2 per cent in value and 9.3 per cent in volume.

According to Narayanan, its cluster approach, adopted a year ago, has contributed to the firm’s healthy growth in the recent quarters. Products under the brand Maggi, chocolates as well as confectionery items posted double digit volume growth while beverages saw high single digit growth in volume.
However, in the coming quarters, Nestlรฉ’s growth may come down due to rising inflationary pressure and slowing pace of growth in rural markets may impact sales in the short-term.
Cost of materials like cereals, milk and packaging items are on the rise. “The cost of these items have gone up by 160 to 200 basis points in the last few months. If the monsoon remains below normal, as predicted initially, then the situation may deteriorate,” he said.
Moreover, a crunch in credit flow is impacting the wholesale channel that caters to rural markets in remote areas. The significance of the wholesale channel is immense for companies with higher share of rural sales. It usually caters to areas that are not covered by direct distribution. Nestlรฉ India gets a fourth of its sales from the rural market.

To keep its growth momentum intact, the firm is planning to launch close to 35 products this year. Currently, Nestlรฉ is getting 4 per cent of its sales growth from product launches. To capitalise on the superior growth of organic foods, Nestlรฉ has ventured into the space with organic breakfast cereals. It plans to expand the horizon with similar products in other categories.
In the past three years, Nestlรฉ India launched close to 40 products out of which 25 have been a hit so far, according to Edelweiss Securities’ estimates. “Success of launches, entry into new segments, proactive management and further margin improvement led by premiumisation” have improved the firm’s financial performance in recent quarters, it said.
However, the flurry of launches has led to a surge in its advertisement and promotional (A&P) expenses. In the January-March quarter, its A&P cost surged 22.5 per cent y-o-y and stood at 5.9 per cent of sales, compared to 5.3 per cent during the year-ago period.

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


6.2. Spencer's to acquire Nature's Basket for ₹300 crore to increase footprint
Livemint, May 20, 2019

New Delhi: R P Sanjiv Goenka Group-owned Spencer’s Retail Ltd is set to acquire gourmet retail chain Nature’s Basket Ltd for ₹300 crore, as it seeks to expand its footprint in the Western region, the company’s filings with the BSE show. The acquisition is subject to shareholders’ approval.
The deal will give Spencer’s access to 36 Nature’s Basket stores in prime locations of Mumbai, Pune and Bengaluru. The Kolkata-based retail chain will also get access to Nature’s Basket’s online platform.
On Friday, Spencer’s Retail shares rose 2% to ₹132.70 on BSE, while Godrej Industries Ltd, which owns Nature’s Basket, closed at ₹449.70, up 2.34% from the previous day’s close. “The board meeting held earlier today has approved a proposal for acquisition of the entire 100% stake held by Godrej Industries Ltd in its wholly owned subsidiary Nature’s Basket Ltd," the statement said.

Investment banker Lodha Capital Markets advised Nature’s Basket Ltd on the deal.
Natures Basket, which began operations in 2005, sells fruits, vegetables, fish and meat, besides fast moving consumer goods (FMCG) and staples.
The retail chain is known for stocking up on niche gourmet products, including imported food such as Italy’s Grana Padano Cheese, Blue Cheese, Parma Ham, and bluish-purple chips from the US.
It competes with the likes of Future Retail Ltd’s Food Hall, and Alibaba Group-backed Big Basket.
“Nature’s Basket has a strong portfolio of private label brands which has huge traction with its consumers. We believe there is huge potential to expand this to Spencer’s stores. It also has a strong e-commerce presence, and we believe that fits in well with our omni-channel strategy at Spencer’s," said Shashwat Goenka, sector head, retail and FMCG, RP Sanjiv Goenka Group. “We realized that to further unlock the immense potential of this brand and to grow it to even greater heights, we need to pass on the torch to owners who have prioritized retail in their portfolio strategy and have the relevant ecosystems to take the business to the next level," Tanya Dubash, executive director and chief brand officer, Godrej Group, said in a statement.

In 2017-18, Nature’s Basket contributed just about ₹291 crore to Godrej Industries’ consolidated revenue of ₹9,968.83 crore, the company’s annual report shows.
Spencer’s Retail Ltd, a separate listed entity, had earned total revenue of ₹1,051.81 crore in 2017-18, on a stand-alone basis, according to BSE filings. In 2018-19, it generated a total revenue of ₹2,214.98 crore. “Our key observation out of the Spencer’s-Nature’s Basket deal is that high-end grocery is very niche in India. It is also a very tough and loss making market. We also think that this consolidation is in favour of core retailers," said Abneesh Roy, an analyst at Edelweiss Securities. Nature’s Basket has been reducing its dependence on imports by adding private labels, including L’Exclusif, which offers savories, ice-creams and chocolates.

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


7.1. Make In India boost! Government recognises one start-up per hour In may
Livemint, Jun. 06, 2019

New Delhi: Recognition of start-ups is a formal acknowledgement of their inclusion in the start-up ecosystem
The government has reconstituted an inter-ministerial board to review applications from start-ups for tax relief
In a case of overdrive, the government in May recognised one start-up per hour that may be eligible for tax breaks and incentives.
“Since the beginning of Startup India Initiative, 18,861 startups have been recognized by DPIIT. In May 2019 only, 814 startups have received recognition. This is more than 1 startup every hour! These entities are spread across 513 districts of 29 States and 6 Uts,"
Department for Promotion of Industry and Internal Trade secretary Ramesh Abhishek tweeted.
Recognition of start-ups is a formal acknowledgement of their inclusion in the start-up ecosystem, after which if they comply with a series of criteria they are deemed eligible for tax breaks and other incentives.

The government has reconstituted an inter-ministerial board to review applications from start-ups for tax relief. The benefit under section 80IAC allows start-ups with up to รข‚¹25 crore in sales to deduct their entire income from eligible operations while calculating taxable income. This benefit is available for start-ups incorporated within five years starting April 2016.
In February, the government eased rules for granting relief to start-ups facing tax demands for selling shares at a premium to their fair market value. It also expanded eligibility of companies that could benefit from the move. The relief from the so-called angel tax was also extended to all eligible start-ups retrospectively, with the government deciding not to pursue such cases until their appeals were disposed off. That decision was aimed at encouraging wealthy individuals to invest in start-ups that receive capital at a premium on account of their innovative business model although the valuation is not justified by the physical assets they hold.

Abhishek said 1,87,004 jobs have been reported by 16,105 DPIIT-recognised start-ups, which was more than 11 direct jobs per start-up. “With each direct job leading to 3X indirect jobs, total jobs created by these startups are estimated at more than 5.6 lakh," he added.
From Fund of Funds, SIDBI has committed รข‚¹2570 crores to 45 venture funds catalyzing investments of more than รข‚¹25,000 crore. About 244 startups have received funding of รข‚¹1,561 crores so far.
Till now, 1,496 startups have received 80% rebate in patent filing fees, 2761 get 50% rebate in trademark filing fees. 389 avail expedited examination. 103 patents are granted. “The fastest patent was granted in 81 days," Abhishek tweeted.

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


7.2. SoftBank may serve up fresh funds to the tune of $300-500 million for Swiggy
Livemint, 04 Jun 2019, Salman S.H., Deepti Chaudhary
  • Food tech firm woos Japanese investor for mega $1 billion funding round 
  • Swiggy has stolen a march on rival Zomato, which too was in talks with the Japanese firm for a mega investment 
Bengaluru: Food delivery startup Swiggy is in advanced talks to raise as much as $1 billion from investors, including $300-500 million from SoftBank Group, stealing a march on rival Zomato, which was also wooing the Japanese firm for a mega investment, four people familiar with the development said.
If the deal goes through, it will be SoftBank’s first direct investment in a food tech business in India. It has been in talks with the two leading food tech rivals, Swiggy and Zomato, since August.
“SoftBank wasn’t sure who the clear winner was between Swiggy and Zomato (at that time). It found the valuation of both companies very high," said one of the people cited above, requesting anonymity. What probably tilted things in Swiggy’s favour was its fast ramp-up and an investment validation from Naspers in December.
While the talks have been on since the last quarter of 2018, details of the deal are emerging only now, one of the people cited above said on the condition of anonymity.

When contacted, a SoftBank spokesperson said: “We do not comment on speculation."
However, a person with direct knowledge of the transaction said: “Talks are on but many such talks are on that don’t come to fruition." Swiggy did not respond to a mail sent by Mintseeking a comment on the transaction.
Founded in 2014, Swiggy became a unicorn—a startup valued at more than $1 billion—last year. The Bengaluru-based firm has so far raised $1.5 billion from several investors, including Russia’s DST Global, South Africa’s Naspers, Accel and Norwest Venture Partners. Run by Bundl Technologies Pvt. Ltd, Swiggy raised a large part of its funding last year across three funding rounds.
In December, it raised a whopping $1 billion from Naspers in what was the biggest ever funding round in India’s food tech industry. At a valuation of $3.3 billion, it became the fifth-most valued startup in the country.
SoftBank’s interest in Swiggy highlights its interest in the consumer space at large. In India, it has invested in firms such as Brainbees Solutions Pvt. Ltd, which operates online-first baby products retailer FirstCry, grocery delivery firm Grofers, ride-sharing app Ola and hospitality chain Oyo, among others.

Globally, it has invested in San Francisco-based online retailer Brandless, South Korea’s largest e-commerce firm Coupang, sports e-commerce company Fanatics, indoor vertical farming company Plenty, Indonesia’s largest online marketplace Tokopedia and on-demand walking and dog care startup Wag, among others.
Those who have been tracking SoftBank’s investment bets in India say the Japanese giant has been keen on the consumer space since the very beginning as it offers scale and scope to grow fast.
“The scale that can be achieved in the consumer space is difficult to get in the non-consumer space. With the size of the fund (Vision Fund at $100 billion) that SoftBank manages, it makes sense for them to keep looking for scalable opportunities in the consumer space which can absorb large investments and offer a position of leadership with almost no scope for competition to come.
“Also, India constitutes almost 16-17% of the world population; hence with a large domestic market to serve, any opportunity they invest in offers big market to serve—be it Swiggy or Ola or Flipkart," said Anil Joshi, managing partner at Unicorn India Ventures, a venture capital firm.


8.1. Microfinance industry posts 38% growth in FY19: MFIN
PTI, Jun. 04, 2019

Mumbai: The micro-finance industry saw a 38 per cent growth in its gross loan portfolio at Rs 1.87 lakh crore in the 2018-19 fiscal, says a report.
Gross loan portfolio of the sector was Rs 1.35 lakh crore in FY2017-18.
Total number of micro-finance accounts stood at 9.33 crore as on March 31, 2019, registering a growth of 21.9 per cent over FY18, according to a report launched by Microfinance Institutions Networks (MFIN).
MFIN, an RBI recognised self-regulatory organisation and industry association, constitutes 53 NBFC-MFIs as members.
The members collectively disbursed 3.25 crore loans worth Rs 82,928 crore in FY19.
"In 2018-19, microfinance industry showed its resilience by growing steadily in spite of liquidity squeeze that all NBFCs faced in the third quarter and natural disasters like cyclones and drought," MFIN's chief executive officer Harsh Shrivastava said.

NBFC-MFIs hold the largest share of portfolio in micro-credit with total loan outstanding of Rs 68,868 crore, which is 36.8 per cent of total micro-credit universe.
As on March 31, 2019, aggregated total loan portfolio of NBFC-MFIs stood at Rs 68,207 crore, showing a growth of 47 per cent year-on-year basis.
Apart from the growth in loan size and loan accounts, the staff of NBFC-MFIs grew at 34 per cent, totaling to 1,04,973 people.
In FY19, NBFC-MFIs received a total of Rs 35,759 crore in debt funding from banks and other financial institutions, representing a growth of 63 per cent compared to FY18.
Total equity in FY19 grew by 42 per cent at Rs 14,206 crore.
In terms of regional distribution of portfolio, East and North East accounts for 38 per cent of the total NBFC MFI portfolio, South 24 per cent, North 14 per cent, West 15 per cent and Central contributes 9 per cent.

As of March 31, 2019, the banks had a micro-finance portfolio of Rs 61,046 crore, depicting a growth of 36 per cent over last one year while small finance banks (SFBs) showed a growth of around 25 per cent.
The report said the asset liability management (ALM) of all sizes of NBFC-MFIs are well placed in terms of ALM across various buckets.
The borrowings of MFIs are of longer term while assets are of shorter-term and as a result, they have a comfortable gap as on March 31, 2019 to manage their obligations for the upcoming quarter and up to the next 12 months, it said.

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


8.2. Will exit 2019 with 25% share of US$ 4.5 bn online phone sales: Samsung India
PTI, May 30, 2019

New Delhi: Korean handset major Samsung expects to garner over USD 1.1 billion from online sales of smartphones in 2019, driven majorly by its popular Galaxy M series that was launched earlier this year.
In February, Samsung had launched its India-first 'Galaxy M' series that it sells only through Amazon and its own website. The company had stated that the range would help Samsung clock double-digit growth this year in the hyper-competitive Indian smartphone market.
"The online phone market in India in value terms is about USD 6 billion and of this, consumer segment is about USD 4.5 billion. We aim to exit 2019 with 25 per cent share of the consumer segment," Samsung India Senior Vice-President Mobile Business Asim Warsi told PTI.
He added that the M series - which currently has three devices (M10, 20 and 30) and the new M40 slated to be launched in June - will contribute significantly to this share. Within four months of the launch, Samsung claims to have sold over two million devices in its M-series.

This would translate to sales of well over USD 1.1 billion for Samsung from online channels. Apart from the M series, most of its other smartphones are available across various e-commerce platforms.
Talking about the new M40, Warsi said the device will be priced around Rs 20,000.
The Rs 15,000-20,000 is an important segment of the market and growing at a strong pace and the M40 will further strengthen Samsung's position in this category, he pointed out.
"When we had announced the M series, we had said our intent was to double our smartphone business (in value terms) this year and we are in a good position to achieve more than 2X growth," he said.
Warsi said the company is confident of a "healthy double-digit growth" this year even though the industry is expected to grow at 6-8 per cent in the country.
Reports from other research organisations such as IDC and Counterpoint have positioned China's Xiaomi to be ahead of Samsung (in terms of units shipped) for many quarters now, while Samsung cites GfK data.
According to IDC, Xiaomi shipped 9.8 million units in the January-March 2019 quarter, compared to Samsung's 7.2 million units. Overall smartphone shipment in the country during the said quarter stood at 32.1 million units.

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


9.1. Fastags can now be purchased online through Amazon
Press Information Bureau, May 30, 2019

New Delhi: FASTags are now available on e-commerce platform Amazon. These were earlier launched by IHMCL, a company promoted by NHAI, in January 2019. NHAI FASTag is a ‘bank-neutral’ FASTag i.e. no bank is pre-assigned to the FASTag at the time of purchase by customer from a Point-of-Sale or Online and offers the flexibility to customer to link the FASTag with their existing bank account by using My FASTag Mobile app, currently available on Google Play Store.
The online NHAI FASTag has been conceived in a DIY (Do-It-Yourself) concept wherein a customer can self-activate it by entering customer and vehicle details in My FASTag mobile app. Thereafter, the customer will have to link the tag to an existing bank account of his/her choice. Currently, the bank linking facility is available for 7 member banks viz. SBI, ICICI Bank, Axis bank, HDFC bank, IndusInd Bank, Paytm Payments bank and Equitas Small Finance Bank. The online NHAI FASTag shall be available for VC-4 i.e. Car/Jeep/Van only for now.

IHMCL is focused on enhancing the user experience of FASTag customers and is constantly working on new strategies to ensure efficient and delightful tolling experience. FASTag is also available at selected petrol pumps in Delhi NCR and identified Common Service Centers (CSCs) and we are also in process of expanding the outreach to other Metros cities. This online sale initiative is an important achievement for IHMCL and will ensure easy availability of FASTag at the doorsteps of the customers.
Currently FASTags are also being issued by 22 certified banks through various channels such as Point-of-Sale at NH toll plazas, selected bank branches, etc. However, these FASTags issued by these certified banks does not offer option to customer for linking with existing bank account of his/her choice. The online availability of NHAI FASTag by IHMCL will eventually help enhanced adoption of FASTag program by increasing user convenience and offering seamless digital payments of toll and thereby saving time, money and fuel. Further, the digital payments of toll shall enhance transparency and promote cashless transactions, converting India into less-cash society supporting the Digital India Programme.

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


9.2. Warehousing sees surge in private equity investment and leasing activity
Business Standard, Jun. 10, 2019

Ahmedabad: Warehousing as a sector is witnessing rapid growth, with a surge in private equity (PE) investment and leasing activity. Institutional capital in the sector is estimated to grow to Rs 50,000 crore by 2020, says real estate consultancy Knight Frank India. “Of all the PE investments in India in real estate, 26 per cent have come into warehousing alone.
Also, the average ticket size of leasing activities have risen in 2018. This has led to organised warehousing leasing activity witness a growth of 80 per cent in 2018," said Balbir Singh Khalsa, national director at Knight ...

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


10.1. Plugging into India’s broadband  revolution
Livemint, 04 Jun 2019, Navadha Pandey

After many false starts, the plan to wire India’s digital future may finally take off with Jio GigaFiber’s entry

New Delhi: All through 2018, 58-year-old Ashok Kumar Rai’s Lucknow-based small architecture firm used to spend a princely sum of ₹11,800 each month for the privilege of a good broadband internet connection. “We used to send building walk-through files to clients every day and the size of each file could go up to 1GB (gigabytes)," he says. Doling out cash for reliable internet was a necessity. All that changed when a new player, Atria Convergence Technologies Ltd (ACT), came to Rai’s upmarket Gomti Nagar neighborhood in Lucknow. In the summer of 2019, Rai’s internet access speed has shot up from 4 to 150 Mbps (megabits per second). And the monthly bill has come crashing down to about ₹1,000.
For far too long, India’s internet action lay centered in its metros, leaving out even relatively big cities like Lucknow. The fledgling online access push into smaller cities and rural India happened primarily via mobile data transmitted over wireless spectrum. Home broadband was nowhere in the picture. But all that seems set for some dramatic change. If the country’s richest man, Mukesh Ambani, has his way, high-speed broadband will become a reality in at least 1,600 cities.

In the process, he aims to also leapfrog India from its current rank—134—in fixed-line broadband penetration to the top five with the help of Jio GigaFiber.
The dream of a broadband revolution, however, has its fair share of detractors. Bhaskar Ramamurthi, for example, who helms the Centre of Excellence in Wireless Technology (CWEiT at Indian Institute of Technology Madras (IIT Madras), says: “Fiber penetration will take a long time in India."
The logic is simple: unlike mobile towers, fiber needs to reach each home physically. China’s broadband boom happened because it has rebuilt nearly its entire housing stock in the last 15 years, fuelled by a construction-led growth bubble. “In India, initially only all the upcoming new buildings may get connected to fiber-based (fast) internet," says Ramamurthi.

But India’s untapped millions are about to set off a race. And this journey, which will clearly not be a cakewalk, has huge rewards in store. Sample this: India has 1.16 billion mobile subscribers but just 18.42 million wired broadband subscribers. And many of them, like Rai, are data hungry. There is an existing playbook: what happened to mobile broadband after 2014.
In 2014, the cost of one GB of mobile data was ₹270. Now, it is₹10 per GB. As a result, mobile data consumption has soared. In late-2014, an average user on Airtel’s network (India’s largest telecom operator back then) used 622 megabytes (MB) of data in a month. By late-2018, the number of users had tripled, but, despite a broader base, average data usage stood at 10GB a month.


First-mover advantage
The expansion in wired broadband access may have far-reaching implications beyond a mere spike in data usage. When Mukesh Ambani, chairman and managing director of Reliance Industry Ltd which owns Reliance Jio Infocomm Ltd, declared optical fibre based fixed-line broadband as “the future" last July, the real play was not on the infrastructure itself, but the services that would ride on top—from smart home experiences to new forms of e-commerce. The revenue and the first-mover advantage lie in who gets to tap into the “ecosystem"—of how a household connects to the wider world to buy, watch, and exchange.
Essentially, new businesses could emerge to feed the “ecosystem". And some existing small and medium-scale businesses may finally become viable enough to expand and go big. Netflix, for example, emerged as one of the world’s largest video streaming platform, riding on top of the US broadband boom. But India already has a crowded pack of 34 web video streaming entertainment platforms, most of which have cropped up to sustain the attention of mobile data guzzling Indians. With wired broadband following mobile usage expansion, unlike in most other countries, India’s new-age internet businesses are likely to be unique and different.

Home-based surveillance and security systems could be one space that could gain significant traction, says Sunil Abraham, executive director of the Bengaluru-based think-tank Centre for Internet and Society. “If there are 40 families (in a high-rise apartment) who have babies and need surveillance facilities, each apartment going for an individual connection from a telecom service provider would involve a huge amount of money. But a fibre-based intranet or peer network could connect all 40 flats for a much smaller price," he says.
There could also be unintended consequences for the country’s digital gender divide. Only 29% of India’s current internet users are women, according to a recent Unicef report. If the cost of wired broadband begins to crash—thereby increasing the number of homes which have access—women who will never get access to a phone (due to the cost of device and patriarchy) will finally be able to see things on the internet, says Nandini Chami, a researcher at IT for Change, a non-governmental organization. “How this negotiation will happen inside the house, we will have to wait and watch," she says. Household-level access would also confuse corporate entities trying to “hyper-profile" users since multiple people will be accessing the internet through shared devices at home, she adds.

But as internet access improves, making the digital economy more vital, Chami says, governments would have an important role in ensuring women get to use the internet “on terms that are empowering". “We can think of innovative models when fixed broadband becomes cheap. The household is not the space for this. It can be libraries which have special times for young girls or digital labs for women. We need to rethink the missed opportunity of the BharatNet and the national optic fibre network. Internet access should not stop at just the panchayat office. We must think of different points of access, particularly for women," Chami adds.
The possibility of many of these radical changes in both the social and business realms will, of course, entirely rely on the pace at which India goes broadband. Despite the rapid expansion in mobile internet, data originating from mobile devices still account for only 20% of India’s data consumption. That is why what happens in the wired broadband space will matter increasingly. And that is also why Jio is betting big on expanding the existing wired user base (18 million) to 50 million.

The Jio game plan
Jio is currently running beta trials for GigaFiber in New Delhi and Mumbai, providing 100GB of data at 100 Mbps for free, except for the ₹4,500 one-time deposit for a router. While the landline will come with unlimited calling facility, television channels will be delivered over the internet (Internet Protocol Television, or IPTV). The packaged trio of fast Internet, landline telephony, and television access will remain free for a while—similar to what had happened in the mobile phone services segment in 2016. After commercial launch, the per month cost is expected to be ₹600, roughly half of what similar services cost currently.
Jio’s rival Bharti Airtel Ltd has decided that it is not interested in the entire pie but just the creamy top layer. It will focus on premium customers and expand its broadband services across India’s top 100 cities, instead of copying Reliance Jio’s ambitious plan to create a fibre-optic network across the country. To achieve this, Airtel, which already has 2.36 million fibre customers, will stay focused on high-rise buildings rather than horizontal deployment, as this business model is more economical and logical.

The dark horse in this race is, of course, ACT with its existing 1.42 million customers. Its presence is much smaller with just 18 cities, largely in the south India and the newly expanded zones of Delhi, Jaipur and Lucknow. On the ACT fibre network, average data consumption per user is already at 130GB a month.
“We have seen a 150% increase in average consumption in the last 18 months," says Bala Malladi, chief executive officer, ACT. “People are now looking at higher speeds and the experience is taking precedence over cost. In fact, even in the hinterland, people want higher speeds and non-buffered experience," he adds.
But why hasn’t fibre penetration gone up if the demand is booming? Why did India miss the bus when other countries like the US have an 80% fibre penetration?

Policy paralysis
Firstly, fibre is expensive to lay, unlike a SIM card which can be given away for free. Moreover, India till a few years ago was mostly a voice calls market and not a data market. Secondly, municipalities in India have complicated right-of-way (RoW) procedures which act as a big hurdle for digging and laying fibre. This is one of the reasons why even government (such as the Delhi government) plans to set up citywide surveillance and Wi-Fi hotspots have failed.
“The centre has finally issued a very good RoW model, but now every state has to come up with its own policy modeled on the central guidelines. They are taking their own sweet time," says Rajan Mathews, director general, Cellular Operators Association of India (COAI).
The lack of forward movement on these fixable policy issues assumes significance given the government’s focus on fibre in its National Digital Communications Policy-2018, which has a target of attracting $100 billion worth of investments in digital communications.

The policy’s goals include universal broadband for all, creating four million jobs in digital communications, and raising the share of digital communications in India’s gross domestic product (GDP) to 8% (from less than 6% in 2017). Deployment of five million public Wi-Fi hotspots by 2020 through a National Broadband Mission is also on the agenda. The key goal, however, is to provide 1 Gbps (gigabit per second) connectivity to all gram panchayats by 2020 and 10 Gbps by 2022.
The sad reality is that the last five years were an absolute failure in laying fibre in the country. BharatNet, the flagship mission to connect 250,000 gram panchayats with broadband, which was being implemented by Bharat Broadband Network Ltd (BBNL), a special purpose vehicle set up under the department of telecommunications (DoT) in February 2012, has been a disappointment, to say the least.

The government has completed laying optical fibre cables across more than 100,000 gram panchayats in the first phase and had aimed to complete connecting the remaining 150,000 councils by March 2019. The second phase has seen “zero progress", according to government officials close to the matter. Pained by poor utilization of digital infrastructure, the Telecom Regulatory Authority of India (Trai) suggested auctioning BharatNet infrastructure on an “as is where is" basis after a meeting held in December at the prime minister’s office to take stock of the mission.
To start with, the DoT plans to monetize fibre assets built by the government under its flagship mission BharatNet through outright sale to private players or by leasing these assets for a 20-year period after a bidding process. If successful, it could boost connectivity in Indian villages, which have so far been kept out of the digital dividend.

Bigger cities, however, will have a different consumption story. With intra-city fibre coverage leading to improved penetration, wired broadband would not just offer an enhanced content viewing experience, but also open doors for internet of things, or IoT. “Home security is going to become a big business going forward, riding on fibre. Even gaming will see a lot of traction as you can enjoy a 4K game in real-time, thanks to low latency and high speed of an optic network," Malladi of ACT says.
The looming question, however, is how much investment can operators put in given the current low tariff environment in the telecom sector. Big players are stressed for funds and are diluting their non-core assets to generate funds to keep networks afloat. “If you are looking at what will happen in the next three years... I believe that there is a business case to be made and tariffs should sustain it (the investment)," Mathews says.
Whether that happens or not could become an important footnote in India’s growth story. The far-reaching implications of fast internet access pushed billionaire tech entrepreneur Elon Musk, chief executive officer of Space Exploration Technologies Corp. (SpaceX), to launch 60 internet-beaming satellites last month. The grand scheme is a response to the practical constraint of laying fibre, a concern which is more pressing in India’s vast landmass.
Unlike Musk, the country’s broadband dreams, however, still remain rooted to the ground—in the simple tech of optic fibre. And the success or failure of those dreams will be written by how fast the fibre network expands.


10.2. Infosys sets up experience Design & Innovation studio in London
PTI, Jun. 11, 2019

New Delhi: India's second largest IT services firm Infosys Monday said it has set up an experience design and innovation studio in Shoreditch, London.
The facility will provide space for Infosys and its clients to ideate, collaborate and innovate together by combining design and the latest technology offerings, including artificial intelligence, augmented reality/virtual reality, Internet of Things and 5G, Infosys said in a statement.
The studio is designed to enable co-creation and co-innovation between Infosys and its clients at both speed and scale, it added.
"The studio will hire and scale talent with capabilities in experience design, innovation strategy and customer-centric technologies, and will focus on the development of emerging technologies for use in a wide range of UK businesses, including those in financial services, manufacturing, retail and telecom," it said.

The studio, covering 20,000 ft with capacity for 250 employees, has a wellness zone, a usability lab and a range of creative spaces. It will also provide local start-ups the opportunity to showcase their products to clients.
In addition, Infosys also announced a new academic and research partnership with King's College London. The institute is already a partner with the IT major's InStep global internship programme.
"...with the new studio, the initiative broadens the engagement into academic training and research areas such as artificial intelligence, innovation and digital humanities," the statement said.
Infosys' design studios span the globe -- from New York, LA, Berlin and Melbourne to Bengaluru and Pune.
"Our global network of connected studios brings together the best of design and technology, knowledge, innovation and experience from across the world to drive the digital agenda for clients locally," Infosys President Ravi Kumar S said.
Infosys has invested in the heart of Silicon Roundabout in London because of the larger presence of entrepreneurs, innovative start-up ecosystem, proximity to some of the world's largest and most successful brands and the access to diverse talent, he added.

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


- INDUSTRY, MANUFACTURE 


11.1. The end of an era as Azim Premji hands Wipro reins to son Rishad
Livemint, 07 Jun 2019, Varun Sood, Sundeep Khanna
  • Azim Premji’s greatest legacy is laying the benchmark for philanthropy and showing the way for corporate India to give back 
  • Wipro announced that chief executive Abidali Neemuchwala will also be the managing director 
New Delhi: Wipro Ltd’s chairman, Azim Premji, on Thursday announced that effective 31 July he will step down from his current role at the company he led for more than half a century and devote more time to his philanthropic activities.
His elder son, Rishad Premji, chief strategy officer of the company, will be the executive chairman of Wipro, India’s fourth-largest information technology (IT) services company.
Azim Premji will continue as non-executive director and founder chairman.
During his time as chairman, 73-year-old Azim Premji, often considered the conscience-keeper of India’s hugely successful IT services industry, steered Wipro from a fledgling company with just $2 million in sales in 1966 to over $11 billion in diversified business, largely software services and consumer products.
“It has been a long and satisfying journey for me. As I look into the future, I plan to devote more time to focus on our philanthropic activities. I have great confidence and trust in Rishad’s leadership to steer Wipro in its next phase of growth," Azim Premji said in a statement.

Rishad Premji has his task cut out at Wipro.
While his success in steering Wipro, competing with the likes of Infosys Ltd and HCL Technologies Ltd, is open to debate, few will question his greatest legacy to India’s business culture, that of laying the benchmark for philanthropy and showing the way for corporate India to give back to society.
Often known to be frugal in his spending and austere in his lifestyle, Azim Premji donated two-thirds of his wealth worth $21 billion to charitable causes. As is his wont, he did so with minimum fuss and fanfare.
“He has been most successful in creating a very successful IT company. However, his greatest legacy that he has passed on to the corporate world is philanthropy. He does not throw his wealth around and has shown that wealth does not always have to go to the family and can be given to a charitable cause," said Anu Aga, chairperson of Thermax Ltd, a capital goods maker.

Wipro, which was earlier known as Western India Products Ltd, was founded by Azim Premji’s father, Mohamed Hasham Premji, in 1945. However, his father’s untimely death in 1966 forced Azim Premji to drop out of Stanford University to take over the reins of the company. In what can be described as his tenacity and a hallmark of his greatness, Azim Premji completed his bachelors of science degree in electrical engineering from Stanford 34 years later in 2000.
Over the next two decades, he steered the group from its vegetable oils business into a behemoth, comprising its flagship $8.5 billion IT services company and an over $2 billion privately-held consumer care and infrastructure engineering company.
Typical of his commitment to the company and its employees, Azim Premji’s statement added: “I wish to thank generations of Wiproites and their families for their contribution towards building our company to what it is today. I am grateful to our clients, partners, and other stakeholders who have reposed trust and confidence in us."

Simultaneously, Wipro announced that chief executive Abidali Neemuchwala will also be the managing director of the company, thereby separating the positions of chairman and managing director as required by the Securities and Exchange Board of India.
Rishad, who has thus far been chief strategy officer, has his task cut out. Wipro has lagged behind rivals such as Infosys and HCL Technologies.
Infosys, which ended with $11.8 billion in revenue last year, added $860 million in incremental revenue in the year ended 31 March. Noida-based HCL added $794 million in new business to end with $8.63 billion.
In comparison, Wipro, which is in the midst of a business restructuring, added $60.1 million in new business to end with $8.12 billion in revenue from its IT services business.
Tata Consultancy Services Ltd added $1.82 billion in revenue to end with $20.91 billion in revenue last year.
“Rishad Premji has impeccable credentials and has had wide-ranging professional experience as chief strategy officer of Wipro," said Kiran Mazumdar-Shaw, chairperson and managing director of Biocon Ltd. “He has demonstrated impressive leadership, including as chairman of Nasscom. A worthy successor who has the potential to steer Wipro to the next level."


11.2. Unicorns outpace technology companies in acquisitions
Livemint, 10 Jun 2019, Deepti Chaudhary
  • The M&A spree of unicorns will help the startup ecosystem of India, according to industry insiders 
  • While Quikr, the most acquisitive unicorn in India, has made 12 acquisitions since 2016, TCS has made just two 
BENGALURU: The top unicorns—shorthand for startups with valuations of $1 billion or more—in India are also the most acquisitive. Among other things, it indicates how many of these companies have used mergers and acquisitions (M&As) to scale up rapidly in a short period of time.
In contrast, among traditional technology companies in India, such deals are few and far between.
For instance, Quikr, the most acquisitive unicorn in India, has made 12 acquisitions since 2016, according to Tracxn, a technology data tracker. In comparison, India’s largest tech firm, Tata Consultancy Services Ltd, has made just two acquisitions, according to Crunchbase data.
Successful acquisitions are also more common among startups than traditional technology companies.
In 2014, when Flipkart bought Myntra for nearly $330 million, little did the unicorn know that its acquisition of the country’s largest online fashion retailer would bear fruit. Last year, when Walmart purchased Flipkart at a valuation of $21 billion, Myntra comprised $5.5-6.5 billion of the deal value, becoming one of the most successful acquisitions by a unicorn in India so far.

Over the past four years, unicorns have been on an acquisition spree even as they were busy raising capital. About 36 acquisitions have been made by five unicorns.
The difference lies in the size of the deals, where traditional tech firms take the lead. While there a few big purchases by the Indian unicorns, a majority of them are in the range of $40-50 million or just acqui-hires, where a startup is bought primarily for the skills or expertise of its employees and not the products or services it may be offering.
Experts say startups such as Quikr, Flipkart, Paytm and OYO Hotels and Homes tend to acquire more as their businesses are consumer-facing and depend on back-end technologies such as artificial intelligence, machine learning and data mining that help in boosting usage experience. Therefore, the appetite is to acquire startups that are doing innovative work in these segments.
“If you have the IP (intellectual property), if you have the human resources, which are perceived as beneficial for the acquirer, then it’s a win-win situation for both the acquirer and the acquiree," said Murali Talasila, partner and innovation leader at PwC India.

For hospitality firm OYO Hotels and Homes, a unicorn backed by SoftBank’s Vision Fund, the acquisition strategy is targeted at acquiring entities that help it in enhancing its core tech and business capabilities, and enable market share acceleration in key markets and segments by starting new businesses.
Since inception, OYO Hotels has completed four acquisitions, the latest being that of Amsterdam-based vacation rental company @Leisure Group for $415 million, which helped the company get a foothold in Europe by providing an inventory of more than 300,000 rooms.
“Our other past acquisitions include Novascotia Boutique Homes (a Chennai-based serviced apartment brand), AblePlus (a Mumbai-based Internet of Things technology company) and Weddingz.in (a wedding planning site) and all these businesses continue to play an extremely important role in growing our business across segments," said Maninder Gulati, global chief strategy officer and head of global homes business at OYO Hotels.

Unlike in the case of M&As by traditional tech firms, where post-acquisition synergies can play a big role in chances of being successful, in the case of unicorns, the transaction tickets are often not large enough to impact a firm too hard, according to experts. “Most of the time, the acquirer and acquired are cut from the same cloth," Talasila said. “The delta, which exists between both of them, is much narrower than in the traditional tech world. You will not hear nasty stories of an acquiree saying the company’s culture is so bad that they will walk out the next day."
But that’s not to say that all acquisitions by unicorns are successful. ANI Technologies Pvt. Ltd-owned Ola has suspended Foodpanda India’s food delivery business, nearly 18 months after it acquired the company. In 2016, Ola shut down TaxiForSure, a year after it acquired the smaller rival for $200 million to maintain lead over Uber.
Experts, however, said Ola might still be able to work something around Foodpanda. “Sometimes you acquire just for the sake of IP… to try things," Talasila said. “As a newborn unicorn, one wants to compete with their closest competition on every front. If Uber is doing UberEats, its closest Indian competitor cannot overlook it. They have the IP now and can launch the food services in other countries where Foodpanda is a more familiar name."
In the meantime, the M&A spree of unicorns is being seen favourably by industry insiders, who believe this will help the startup ecosystem.
“Acquisitions like these help in exits for both new entrepreneurs and investors, which encourage more innovation and dry powder to investors," said Harish H.V., managing partner at ECube, an environmental, social and governance fund.


12.1. Ikea's partner Ingka buys minority stake in home design startup Livspace
Livemint, May 21, 2019

Bengaluru: Online home design startup Livspace on Monday said Ingka Group, the franchise partner of furniture giant Ikea, has picked up a minority stake in the company.
Ingka Group operates 367 Ikea stores worldwide including in India, fetching 90% of Ikea’s sales. The investment was made by its arm Ingka Investments.
The company did not disclose the size of investment— Ikea’s first technology investment in India—but two people familiar with the matter said on condition of anonymity that Livspace received $10-15 million.
The company plans to use the money to develop new home interior solutions and products while expanding its offline presence, it said in a statement.
“While it is a minority stake, this is a significant investment for us," Ramakant Sharma, co-founder of Livspace said over the phone. “The idea is to collaborate on retail technology, supply chain, among many other things."
Both companies said in a statement that the strategic investment will enable knowledge sharing between Ingka, which has a strong global footprint, and Livspace, which has created an in-house home design technology platform.

It opens up opportunities for catalogue and marketplace integration, retail technology, and online-to-offline innovations, said the company.
“This investment gives us the opportunity to create one of the best omnichannel interiors and furniture purchase experience for homeowners," said Anuj Srivastava, chief executive of Livspace in a statement.
“On the other hand, interior designers and vendors can anticipate a richer design and supply experience," he said.
Ingka’s investment in Livspace comes less than a year after the Bengaluru-based company raised $70 million in a round led by private equity firms TPG Growth and Goldman Sachs. Existing investors Jungle Ventures, Bessemer Venture Partners and Helion Ventures had also participated in the round.

Livspace was launched in late 2014 by Srivastava and Sharma, former senior executives at Google (Alphabet Inc.) and Myntra Designs Pvt. Ltd, respectively. It offers a marketplace for customers to buy interior designs online from designers. It also offers software tools for designers to streamline their workflow. The company competes with Sequoia Capital-funded HomeLane, as well as bigger furniture e-retailers, Pepperfry and Urban Ladder.
An analyst tracking the space, who did not wish to be named, said this investment intends at cementing a long-term relationship between the two companies to leverage each other’s strong capabilities. While Ikea can pitch its own designs and furniture through Livspace, the latter will now have a backer with strong supply chain capabilities.

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


12.2. Flipkart pitches its manufacturing prowess to major electronic brands
Business Standard, May 15, 2019

Bengaluru: Flipkart, India’s largest e-commerce firm, has long yearned to replicate the success of Amazon Basics, the private label brand of arch rival Amazon.com Inc, in India.
Under a new strategy, Flipkart is wooing international original equipment manufacturers (OEMs) to create new product models in high-selling categories like electronics for sale on its platform.
The e-commerce major is pitching its manufacturing capacity — a network of contract manufacturers instituted for in-house brands MarQ and SmartBuy — to major brands to co-develop stock keeping units (SKUs) in a special partnership where Flipkart will build, stock, sell and service the new items.
The effort is being spearheaded by Flipkart’s private label team headed by vice-president Adarsh Menon. Menon is also the head of electronics and furniture categories.

According to sources familiar with the plan, negotiations have been going on for six-eight months with consumer electronics-makers Sansui and Nokia, Motorola, among others. Talks are at an advanced stage with Nokia and Motorola that plan to introduce television (TV) models in the Indian market by the next year. Sansui, on the other hand, is exploring getting into the small appliances category with a range of mixer grinders and other kitchen appliances.
Nokia and Motorola did not respond to a request for comment. Flipkart also did not offer comment. According to RedSeer Consulting, an e-commerce focused market intelligence firm, electronics as a category accounted for 18 per cent of the total overall e-commerce sales in 2018.
“For brands, this allows them to test the market for a new product without having to spend on building capacity,” said one of the sources. Electronic makers typically employ a mix of self-owned and third-party vendors to manufacture goods. For Flipkart, which has data on what products and price points work with Indian customers, it is an opportunity to put “desired” items on offer from reputed brands, as it creates a differentiated offering from Amazon. “Amazon does this in a few mature markets,” said a senior executive at one of the top consultancy firms.

Contours of the partnerships are being worked out on a case-to-case basis, sources said. They added that Flipkart will produce and market the products end to end and pay a cut per item on actual sales. The final product prices, as well as product specifications, will be decided by the two parties based on the sales promised by Flipkart.
Despite a striking similarity to brand licensing deals that are seen as internal, the actual contracts will be signed among OEMs, third-party contract manufacturers and Flipkart affiliate sellers, in compliance with local rules.
The commerce ministry’s norms for e-commerce companies that have majority foreign stake bar them from “exercising ownership of inventory” and “directly or indirectly influencing sales price of goods and services.” Rules also prohibit exclusive contracts between e-commerce firms and brands.
Flipkart is eyeing higher margins from product sales under these new partnerships – something that was the goal for private labels itself. According to the sources, private label sales at Flipkart were approximately ~500 crore in the financial year ended March 2019. Sachin Bansal, Flipkart’s co-founder, had launched the first in-house brand ‘Billion’ for smartphones in June 2017, but after his departure in mid-2018, Billion was scaled down and transitioned to focus on personal care items.

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


13.1. Infinix starts export of India-made mobile devices
PTI, May 22, 2019

New Delhi: Terming India as a "top priority market", Infinix said Tuesday it has started exporting India-made devices to nearby geographies.
Infinix, which is part of China's Transsion Holdings, is focussing on the sub-Rs 10,000 price category of smartphones in the country as it competes with the likes of Xiaomi and Samsung in the hyper-competitive Indian smartphone market.
Infinix Mobility (Global) Managing Director Benjamin Jiang said India is the "single largest market" for Transsion in terms of number of units. 
"Last year, things were a little difficult with changes in regulations. We are investing in India across the value chain, in manufacturing and building our own service network. India is a top priority market for us. We are in ready form and this year, you will see us in a bigger form," he told PTI.
Transsion - which owns other brands like itel and Tecno - has a manufacturing unit, including SMT line, in India. Jiang said the company has started exporting devices from India but declined to comment on the volumes. "India unit has started exporting recently to markets close to India," he said.
Infinix Tuesday launched its new smartphone - S4 - priced at Rs 8,999. It has a 6.21-inch display, 4,000mAh battery, 32MP front camera and a triple rear camera setup (13MP+2MP+8MP). 
"With S4, we aim to have a breakthrough in the below Rs 10,000-smartphone segment, which has great demand but experiences limited to non-existent competition till now," he said. 
The company has also unveiled a fitness band - X Band 3 - priced at Rs 1,599.

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


13.2. Western Digital's investment in Indian markets at Rs 1,400 crore a year
Business Standard, May 24, 2019

New Delhi: US-based data storage company Western Digital said its acquisition of SanDisk in 2015 had helped it build a significant presence in India, where it now invests close to $200 million (nearly Rs 1,400 crore) every year. Western Digital makes data technology products, including storage devices, data centre systems and cloud storage services, being one of the largest in the segment.
It bought storage company SanDisk for $19 billion and Hitachi Global Storage Technologies (HGST) for $4.3 billion in 2011. While the SanDisk name is a known one in retail and flash memory-based applications, HGST is a trusted one in data centres for large original equipment manufacturers.
“In the past four years from 2015, we have grown from 250 people to 2,500 people here (in India). We do not hire anything under a Master’s and PhD. You go to any large institution in India, we hire from there,” said Siva Sivaram, executive vice-president.

The Indian arm, he added, was made an independent entity that created intellectual property, products, marketed products and supported end-users, unlike an offshore centre.
The total addressable market for enterprise storage in India, according to research firm IDC is $480 million. According to CyberMedia Research, the client solutions storage or external storage devices space is $360 million a year in this country.
According to Sivaram, surveillance, smart cities, defence and communications are the big areas here where Western Digital sees scope for growth.
Given India's focus on data localisation or keeping Indian data in servers located in the country, would this translate to more business for Western Digital? “It would increase our sales in India,” Sivaram said.

Adding: “In the data localisation space, we are experts but are a neutral body. The governments we work very closely with include Brazil, Russia, China, the US, with the EU (European Union) and India. We closely monitor what they do, how they do — they talk to us openly as a trusted and neutral third-party, interested but not a biased party. From the government side, we can see why or what places it makes sense. Similarly, from a purely technical side, data is useful only when it flows. Stagnant data is of little use to anybody.”
The company also works with start-ups in India under its Innovation Bazaar programme. Which is aligned with the government’s ‘Startup India’ scheme. The idea is to provide a platform for start-ups to help address issues of national importance, by leveraging the power of data.

In choosing these, it received expressions of interest from over 600 companies, screened down to 200 and then winnowed to 40. Working on wide-ranging ideas, from agriculture to health care, and child rearing to automotives.
“So, we ran a little thing over here and then we picked the last 10 and we put them to a boot camp. We are teaching them how to make a company or firm and networking them with all the venture capitalists. Then, we are showing them how to protect their intellectual property and making sure they got legal help, and our own venture fund is looking at this as another opportunity. Western Digital Venture Fund has invested close to a quarter of a billion dollars in the last four or five years globally. We are bringing that group here and talking to companies,” Sivaram added.

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


14.1. Cipla finally delivers growth in the march quarter, all eyes on FY20 now
Livemint, 22 May 2019, R. Sree Ram
  • The beat was driven by its US business, where revenues jumped 41% from a year ago, due to new product launches 
  • What’s more, margins hit a multi-quarter high as limited competition drug launches in the US boosted profitability 

Cipla Ltd has exited FY19 on a positive note, after hitting unexpected bumps in the earlier part of the year. Revenues in the March quarter grew 19%, ahead of the Street’s estimates. The beat was driven by its US business, where revenues jumped 41% from a year ago, as the company benefited from new product launches. Cipla derives only one-fifth of its revenues from the US. Overall growth was supported by a return to growth for the India business.
Revenues in India grew by a respectable 11%, after decelerating for two consecutive quarters. Around 38% of its revenues are derived from India. So even as business in South Africa and emerging markets lagged the strong performance in India and the US, Cipla comfortably beat analysts’ estimates.
What’s more, margins hit a multi-quarter high as limited competition drug launches in the US boosted profitability.

Despite the positive news, the Cipla stock ended about 1% lower on Wednesday. “The stock had already priced in a positive set of numbers," said an analyst. Year till date, it has risen 6.5%, compared to a 4% drop in the Nifty Pharma index. Note that Cipla’s results come on the back of a below-par performance by larger peers Lupin Ltd and Dr Reddy’s Laboratories Ltd in the key markets of US and India. As such, the outperformance in the Cipla stock looks justified.
The company is fairly confident about sustaining the growth momentum in FY20. In India, it expects to grow faster than the 8-10% market growth. Scale-up of new products and a healthy product pipeline is expected to result in another year of double-digit revenue growth in the US. On the flip side, the company continues to face challenges in the tender and Middle East businesses.

Of course, for a stock trading at about 22 times one-year forward earnings, it will also be crucial to see how strong and profitable this growth is going to be. “For a company with a strong footing in the domestic market, just beating industry growth is not a big feat," said an analyst at a domestic broking firm.
The last two years have been difficult for Indian pharma due to changes in tax policy (goods and services tax) and weak demand. While inventories in the prescription drug business are showing signs of stabilization, the generic drug business continues to see destocking. Whether a sustainable growth rate emerges in FY20 remains to be seen.
Second, even though the company has a healthy product pipeline for the US, it is seeing competition from innovator and generic firms. Cipla has the cost advantage, but how well the competition reacts to its pricing will also determine earnings benefits.


14.2. Addressable market for e-pharmacies in India to reach US$ 18.1 bn by 2023: EY
PTI, May 30, 2019

New Delhi: The total addressable medicine market for e-pharmacies in India is likely to reach USD 18.1 billion by 2023, driven by increasing internet penetration through smartphones, healthcare spend and rise in chronic diseases, according to a report.
As per the report 'E-pharma: Delivering Healthier Outcomes' by consultancy firm EY, the addressable medicine market for e-pharmacies in the country stands currently at USD 9.3 billion and is estimated to grow at a CAGR of 18.1 per cent.
The key growth drivers for e-pharma market in India are increasing internet penetration and smartphone ownership along with the ease of ordering medications through an e-commerce platform, it said.
Besides, the increase in chronic diseases, rising per capita income and resultant healthcare spend will also aid to its growth.

Commenting on the findings, EY India Partner and National Leader - E-Commerce and Consumer Internet Ankur Pahwa said, "Today, India is adapting to e-commerce rapidly with mobile-first consumer behaviour and improving digital payments infrastructure, and online pharmacies, one of the verticals of e-commerce, are starting to gain momentum and have tremendous growth potential".
The e-pharmacy market is expected to grow at a substantial pace in the next four years on the back of the renewed focus of the government and households on healthcare spending and the faster adoption of internet amongst users, he added.
According to EY, at present 35 per cent of domestic pharmaceutical market relates to chronic medications and the remaining 65 per cent to acute medicines.
"Out of this, e-pharmacies are expected to target 85 per cent of the chronic market and 40 per cent of the acute medicine market by 2023 (up from 25 per cent in 2019)," the report said.
This expected rise in the acute target market by e-pharmacies, can be attributed to an improvement in last mile logistics through collaboration with local pharmacies and integrating into existing hyperlocal models, it added.

The report also pointed out there is a lot of cash burn in e-pharma industry, mainly for offering discounts to gain scale. Discounts have to come down to reasonable levels to achieve break-even and any meaningful profitability.
Commenting on the opportunities in the sector, Pahwa said, "In the near future, global e-commerce players will use their international experience and local omni-channel presence to make in-roads into the e-pharma segment".
Fintech and healthtech players can look to expand offerings by getting into the segment. Hyperlocal players (food tech, grocery, delivery only companies) can also add on this segment to their existing portfolio to build efficiency on the delivery side.
"Even Indian players with deep omni-channel presence especially in emerging tier 2/3 towns with growing healthcare spends can add this vertical stream and can make a deep impact in the e-pharma sector," he said.

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


15.1.Tech Mahindra bags US$ 100-mn outsourcing contract from Vodafone New Zealand
Business Standard, May 28, 2019

Bengaluru: IT services firm Tech Mahindra has bagged an outsourcing contract of $100 million from Vodafone in New Zealand as a part of which the Mahindra Group-owned company will absorb the telecom major’s 200 employees.
Sources said Tech Mahindra was rebadging these employees of Vodafone, as the latter went through business realignment recently. In the second week of this month, Vodafone’s New Zealand unit was sold to infrastructure investment firm Infratil and Canada-headquartered Brookfield Asset Management for NZ$3.4 billion ($2.2 billion).
According to reports, Vodafone NZ had offered all its employees, other than call centre and retail staffers, voluntary severance package. Tech Mahindra is learnt to be absorbing mostly the call centre employees for its business process management operations to serve Vodafone as well as its other clients in the region.

“The company has bagged this deal a few months ago in New Zealand. As Vodafone is an existing client of Tech Mahindra, the rebadged employees will continue to serve the telecom major in other geographies,” sources said.
In response to a query by Business Standard, a spokesperson of Tech Mahindra said the firm continued to maintain strong relationship, with Vodafone is planning to set up a centre of excellence on digital technologies in New Zealand.
In FY19, Tech Mahindra reported a total revenue of $4.97 billion, an increase of 5.8 per cent over the previous financial year in constant currency term. The communication business, which was the biggest vertical for Tech Mahindra, accounted for over 41 per cent of the company’s revenue in the fiscal year. “Projects in communication that have driven growth include optimisation initiatives, cloud migration and digital enablement and 5G labs and trials. Last year, it was almost flat. This year, the communication vertical should lead over all verticals in terms of growth,” Tech M’s MD & CEO CP Gurnani had said after the announcement of its earnings last week. According to analysts, revenue from the telecom-led business is likely to grow by 8-10 per cent. 

“Recovery in the telecom vertical continued for the third consecutive quarter, based on ramp-up deal wins. However, rising concerns over trade war, ban of Huawei products in the US and delay in 5G-related spend can derail the growth,” said HDFC Securities in a report.
IT services firms globally are betting big on 5G related investment from telecom majors to clinch bigger deals. According to a report by Mumbai-based brokerage firm JM Financial, the planned roll out of 5G technology by telecom companies offers at least $10 billion business opportunities for IT services companies over the next five years. Among the Indian IT firms, Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro and Tech Mahindra are seen as major contenders to clinch some of these deals.

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


15.2. Lenovo India bags order from Tamil Nadu for 1.50 mn laptops
PTI, Jun. 10, 2019

New Delhi: Lenovo India has bagged an order from the Tamil Nadu government for providing over 1.5 million laptops to students in the state, according to a company official.
"We have won a large order from the Tamil Nadu government for supplying over 1.56 million laptops for free distribution to students in the state. This entire order is expected to be completed over the next few months," Lenovo India Director (Commercial Named Account Business) Stephen Sequeira told PTI.
He, however, declined to comment on the financial details of the deal. Sequeira said state-owned ELCOT - the nodal agency for procuring electronic hardware and software for the state government and its schemes - finalised the tender where Lenovo outbid the other brands.
Talking about the other initiatives, Sequeira said, the company has launched the second variant of its 
ThinkShield cyber security solutions. ThinkShield is Lenovo's portfolio of secure 'Think' devices, software, processes, and services.
"ThinkShield goes beyond simple endpoint security, with solutions that create huge efficiencies, streamline IT administration, improve the end-user experience, and provide a platform for businesses to compete safely," Sequeira explained.
The latest version gives IT admins more visibility into endpoints, offer self-healing capabilities and one-click fixes, provide easier and more secure authentication, and use intelligence to assess risk, he added.

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. E-com is fastest-growing channel for commercial transactions: Mjunction CEO
Business Standard, May 17, 2019

Mjunction, a 50:50 joint venture between Steel Authority of India (SAIL) and Tata Steel, and now a major in e-commerce, has moved beyond its traditional strength in commodities trade to embark on new businesses. Vinaya Varma, its MD and CEO, speaks to Jayajit Dash. Edited excerpts:

You recently forayed into real estate, auctioning commercial plots. Beyond UttarPradesh, which other states are on your radar? Are you also looking at tie-ups with real estate developers?
We entered the real estate sector with Uttar Pradesh Awas Vikas Parishad and are currently customising the platform for Uttar Pradesh State Industrial Development Authority, where e-auctions will begin. After we consolidate our position in UP, we will target other states.

How do you intend to expand your sports solutions division? Beyond cricket, how do you aim to engage on other popular sports?
There is a large opportunity for sports federations to bring transparency and efficiency in several areas. We have a tie-up with Sporty Solutionz to create digital solutions for cricket, as well as other sports.

In the railways sector, what bigger deals are you looking to seal?
We have worked very closely with the railways and RITES for successful completion of projects like jungle clearance, inventorying, valuation and e-auction. E-auction yielded ~94 crore for the railways through disposal of various assets at Dalmianagar in Bihar. We are keen to partner with the railways and its subsidiaries for providing a customised platform to sell their idle assets and scrap.

What is the estimated size of e-marketplace in India and how is it growing? What is your share?
With rising internet penetration, e-commerce is India’s fastest-growing and most-dynamic channel for commercial transactions. The Indian e-commerce market is expected to surpass that of America to become the second largest market. The market is expected to reach $64 billion by 2020 and $200 billion by 2026, from $38.5 billion in 2017.

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


16.2. The Indian market is strategically important to us: Ogburn of HPE
Livemint, May 17, 2019

New Delhi: In an interaction with Mint, Chris Ogburn, Vice President, Worldwide Geography Marketing at enterprise technology company HPE (Hewlett Packard Enterprise) who was in Mumbai to address the company’s Discover More event, spoke about the importance of the India as a market for HPE, the next big opportunity in enterprise technology services and how the company’s latest marketing campaign has clicked with customers. Edited excerpts.

Q: How important is the Indian market for HPE? What are the challenges that you see here in building out your business?
Ogburn: It is very strategically important to us. It is the sixth largest country for us in the world in terms of our business. We only do media investments and brand investments in six countries around the world, and India is one of them, so it is a very strategic country to us and to our business. While it is interesting that you have a wave of these companies which are digital in nature right from the beginning, you still have some old line companies that have not moved quickly enough and that's where we are trying to apply our efforts.

Q: You mentioned that the ‘edge’ is the next big opportunity for companies like HPE. How big is that opportunity?
Ogburn: Of the data that is generated at the edge, 94% is either untapped or lost, simply because the challenge that we have is we can only accommodate, through our people, our time, our technology, capturing only so much data at the edge. That will get better over time, but today we use only 6%.

Q: Why do you think that HPE is better poised than competitors to exploit this opportunity better?
Ogburn: The reason we feel that we have got an advantage from technology perspective at the edge is twofold. One is we made an acquisition several years ago of a company called Aruba. So Aruba has extreme capability at the edge, in fact that is where they are majority deployed today. A lot of the IP (intellectual property) in the Aruba portfolio and some of the acquisitions that we made and tucked it underneath that drive security, they drive compliance. This helps you from the edge perspective, to manage and drive your business to deliver great experience.
The second solution that we have is Edgeline. We see compute moving closer to the edge and the reason we is a lot of decisions have to be made instantaneously. If you are on a factory floor, on a autonomous vehicle or an airplane, where you don't have the luxury of the latency that will be required to take that data, send it back to the cloud or a data centre and then wait for that to come back. So we have developed this technology, which puts the cloud at the edge with compute and that’s our Edgeline solution. It is ruggedized and it is able to withstand harsh environment. Some of the software and the IP that we have is unique. We can do things that other people cannot.

Q: Last year the company said that it will invest $4 billion over the next four years in edge technologies. How will we see that capital being employed and what does that mean for the future of the services and solutions that HPE offers?
Ogburn: We will invest in M&A. We will find tuck-in solutions to put into that business and we will also invest in R&D. You will find us looking to build more solutions at the edge that leverage the Aruba technology, but also building compute and storage at the edge because the amount and the scale of data that is being created will be far significant than what people are expecting it to be today. So the ability to manage that, store that, protect that, analyze it and act on it- is what we want to help clients do. You will see us do a combination of those things - driving compute and storage closer to the edge and driving more IP from a software perspective.

Q: You have been running an eye catching marketing campaign ‘Fear No Cloud’. How has that worked out for you?
Ogburn: This to me is my most favourite campaign that we have run in the past few years, it is the one which has got the strongest response. The ‘Fear No Cloud’ campaign resonates with people because that's the challenge they have. Many customers are still trying to determine where they best deploy their applications and their workloads and where their data resides and how much of that is private cloud and how much of that is public cloud.

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


17.1. What happened on Everest this summer
Livemint, 10 Jun 2019, Kamal Dev Bhattarai

The deaths this year flag a system under serious stress in the face of an increasing number of Everest aspirants


Kathmandu: Around 5am on the morning of 22 May, Keepa Sherpa (25), along with a group of four Indian mountaineers, made the final push towards the summit of Mount Everest. It was still dark. And the group managed to stay at the peak for a mere 10 minutes—a short window of ultimate exhilaration after months of preparation and waiting out adverse weather. But the real adventure was yet to begin. As they began to descend, the group of eight (four mountaineers and their accompanying guides) ran into the largest “traffic jam" the world’s tallest peak has seen in while.
The ridge that leads up to the summit is access controlled—by a one-way rope that makes the difference between life and death at the harsh, frigid heights of the Everest. The lane is used by those going up as well as by those coming down. And Keepa Sherpa descended on to a mass of people trying to go up.
“I have never seen (something like) this before," says Keepa, who has climbed the Everest three times before. “The wind was also strong that day… so, it was very risky."

Traffic jams on top of the Everest are unlike any other ordinary pile-up. Any altitude beyond 8,000-metre is called a “death zone" for a reason. At that height, an average person’s breath can take in only about 30% of oxygen, compared to how human lungs usually perform at sea level. Thinking straight is a luxury. Making swift decisions is hard. Prolonged exposure to the elements can be fatal. Nearly 300 people have died since the early 1950s while attempting to reach the summit of Everest, according to the Himalayan Database.
That is what Keepa was up against as he began to lose sight that day. He experienced stinging pain in his eyes. After finally managing to descend through the crowd that day, he got admitted to the Tilganga Institute of Ophthalmology and is gradually recovering.
“Due to the traffic jam, some climbers had to stand in the route for two hours," he says. “If climbers have to stand for long periods in the same place and cannot walk, there would be higher chances of frostbites, cold exposure, and other illnesses," he adds.

By the time Keepa’s team reached firmer ground, images from the morning of 22 May had spread far and wide. The “traffic jam" on top of the tallest peak had quickly become a meme. But for those who got stuck on Everest, on that day and the days which followed, the consequences were serious. In the short window of a few weeks in May when summiting Everest is possible, at least 11 climbers had died, including three Indian nationals, according to official data provided by the Nepal government.
While climate change has only steadily worsened the risk, serious human failures, which remain unacknowledged, put a question mark on all future summers and the fate of the unending line of people for whom summiting Everest is a life-long dream.
What these deaths highlight is a system under serious stress in the face of an increasing number of Everest aspirants, all of whom are chasing glory on top of a mountain that is in the midst of climatic flux.

Climate risk and commerce
The difficult task of summiting Everest is possible only over a few weeks in May every year. But the window of reasonable weather in May (before the monsoon arrives) is increasingly getting shorter, due to the effects of climate change and global warming. According to Sherpa guides, the weather in the month of April and May was somewhat predictable even 5-6 years ago, but now abrupt changes in weather patterns are common. When climatic flux meets the demands of commerce, it creates a potent mix of risk. The climbing permit to summit Mt. Everest is around $11,000 per person, though each climber ends up spending between $40,000-90,000 overall. Every year, the Nepal government collects around 500 million Nepalese rupee in royalties from the permits alone, giving it little incentive to cut back on the number of climbers, even if the number of days of clearer weather is changing. (Climbers have also long complained they receive little in return from the Nepal government in exchange for the steep permit fees).
In the spring of 2019, 381 foreigners took a permit to scale Mt. Everest (77 were Indian nationals). On most years, the highest number of requests for summit permits come from Indian nationals. Last year, 349 climbers had taken permission, but the death toll this year was unexpectedly high, pushing the mountain that is locally known as Sagarmatha into the glare of intense international attention.

The blame game within Nepal has already begun. There is heated talk of setting up a probe panel. But one early culprit for the turn of events this year is, strangely, a cyclone. In April, cyclone Fani had hit the eastern Indian seaboard and is now accused of partially affecting weather patterns in Nepal’s mountainous regions. It delayed the task of “rope fixing", which sets the route that climbers follow. If rope fixing was completed by the end of April or the first week of May, then, multiple weather windows would have been available for climbers, says Gyanendra Shrestha, a senior government liaison officer deployed at Everest Base Camp.
“From next year, we have to seriously think about completing the task of fixing rope in the month of April so that there would be sufficient time for climbing," he adds. “This year too, I had allocated a fixed number of climbers for each day, but it was not possible to implement due to a narrow weather window."
Shrestha acknowledges that the images which have gone viral depicting huge crowds on top of Everest are “true", but he immediately adds that the photos only convey a normal, annual occurrence. “Obviously, a crowd was seen in (the) photograph, but it is normal because climbers who are ascending to and descending from Everest use the same rope," he says.

Early warnings
In hindsight, the sequence of events which led to the traffic jam had left a trail of ample warnings. In between 14 and 16 May, there was comparatively favorable weather for climbing, but very few climbers had reached elevations from which they could attempt to reach the summit. And then, the weather turned fickle till 21 May. Early weather forecasts had put the brief period between 21 and 24 May as the best bet to make an attempt, but strong winds had forced the gathering group of mountaineers to stay at base camp-4 for one night. By the dawn of 22 May, base camp-4 was teeming with people. A big queue at 8,790m, which is known as the Hillary Step, was inevitable. But what the images didn’t show is this: there was crowding even at South Summit (8,690m) and the Balcony (8,400m).

On 22May, relatively calm weather lasted for 24 hours and, on that single day, 250 climbers made their final, frenzied push to the peak. “Above South Kol (the final campsite, base camp-4), neither the government nor expedition teams can do anything. Climbers themselves should coordinate and consult with each other before heading towards the peak," says Shrestha. “But they all left South Kol for the top at the same time. Some climbers should have waited for a few hours," he says.
The summer of 2019 is also not the first time that the Everest has witnessed a traffic jam. In 2012, there was a heavy traffic jam which also caused the death of a few climbers. In 2012, around 260 climbers made a final push on a single day but only 179 were successful. At that time, four climbers had died due to altitude sickness while descending from the summit.

While climatic change has only steadily exacerbated the risk, serious human failures, which remain unacknowledged, put a question mark on all future summers and the fate of the unending line of people for whom summiting Everest is a life-long dream, says Ang Tshering Sherpa, former president of Nepal Mountaineering Association (NAM). “To address the problems caused by adverse climate, there should have been better coordination among government officials, expedition teams, and climbers. But clearly, they failed," he says.
Ultimately, what the near stampede of 22 May shows is that the allure of the Everest is hard to resist for many. Cheap tour companies have sprouted to feed the intense fascination for the world’s tallest peak and many of them have a litany of quality concerns—from the type of equipment to the quality of advice. Currently, around 2,000 mountaineering companies offer Everest “packages", resulting in intense and unhealthy competition to provide services at a cheap price.

The type of equipment matters immensely. Being stuck in a crowd in itself cannot kill people because the real health hazard kicks in only when the oxygen tanks run out during the wait, says Kamiti Rita Sherpa, who has summited Everest 24 times. “The shortage of oxygen and other equipment means expedition teams are not providing sufficient logistics. This is not just about traffic jams... other problems could emerge while climbing, so they have to carry sufficient logistics."
“Climbers do not die just due to traffic jam," he adds.
Last year, the Nepal government had mandated that climbers should carry at least five oxygen cylinders. However, many instances of non-compliance have surfaced, primarily to cut costs—since high-quality oxygen cylinders are expensive.

The race for peak attention
Since its discovery in 1852 as the highest point on earth, the Everest has remained a towering, unconquered sentinel for the most part. But something changed in 1985, which perhaps has a deep resonance with the events of 2019. In the mid-1980s, the summit success of Dick Bass, a wealthy American businessman with limited climbing experience, forced many to believe that the Everest can be conquered by anybody with some guidance and adequate financial might. “(The) feat that brought him (Bass) worldwide renown, spurred a swarm of other weekend climbers to follow in his guided bootprints, and rudely pulled Everest into the postmodern era," wrote Jon Krakauer in his book Into Thin Air, a personal account of a 1996 disaster on the Everest which detailed how commercial climbing expeditions were sacrificing safety for the sake of summit scores. In the last three decades, the phenomenon has only gathered more momentum. The result: people with little training attempt to climb the Everest, resulting in slow-paced climbs that creates large crowds near the top on the final few days of good weather. Anyone wishing to climb Mt. Everest should have the experience of climbing at least 7,000m to ascertain the effects of high altitude, Nepalese government officials say.

But such rules hardly come in the way of the quest for Everest, which increasingly has appeal even for those who may not be able to readily afford the sky-high expenses. Besides, there is the race for records and recognition. Mingma Dorchi Sherpa, who climbed three mountains this year (Mt Everest, Lhotse and Makalu), says: “Foreigners climb the Everest to set a new record. We climb the Everest with a view that as a foreigner is keeping new record (sic), we want to break those records." An Everest summit has come to mean many things—national pride, social prestige, personal milestone, placing a corporate flag at the peak, among others.
Caught up in this intricate web of desires is a silent mountain and the crowds that it has begun to host every summer. This is why sweeping changes that Nepal brought in on the permits front in 2018—compulsory presence of guide with every climber, a ban on blind and double amputee climbers, etc.—will likely remain ineffective. And it is also why any cap on climbers is almost unthinkable. “I do not think it would be possible to limit the number of climbers. What will be the standards for limiting numbers?" Shrestha asked.

Given these realities, and the inevitability of climate change-related effects in future summers, Everest traffic jams may be here to stay. And the image of the traffic jam in one of the hardest-to-access places on earth will remain as a constant reminder of the human impact on a fragile landscape. In a Nepal government helmed two-month long clean-up of the Everest which just got over, over 11,000kg of garbage and four bodies were recovered. As the rate of snow melt increases every summer, more of that litter and frozen dreams in the shape of human bodies will surface.
The melting snows will also disintegrate the rocks of the mountain, causing several problems for future climbers, says Narendra Khanal, a retired Professor at Tribhuwan University.
A recent report by a multi-national group of climate scientists had warned that two-thirds of the Himalayan snow cover could melt by 2100. But even as south Asia’s water towers melt, there will still be enough itinerant travelers making their longing treks to the tallest peak in the world. Disintegrating rocks won’t stop them. Traffic jams might, briefly. But managing traffic on top of Everest may remain a perpetual problem.

Kamal Dev Bhattarai is a Kathmandu-based journalist and writer


17.2. Oyo have become the second-largest hotel group in China
PTI, May 23, 2019

New Delhi: Hospitality firm Oyo Wednesday said it has become the second-largest hotel group in China within 18 months of its foray into the country, with presence in 320 cities and nearly 10,000 Oyo-branded hotels with 450,000 rooms.
With second-tier cities at its core, Oyo Hotels' chain extends deep into China's tier-2 to tier-6 cities, the company said in a statement.
Oyo China COO Sam Shih said: "OYO Jiudian (Hotels) operates like a Chinese company and delivers better living for middle-income people across the country." 
Everyday, over 200,000 heads are on OYO Jiudian pillows in China due to the great experience at low cost, he added.

"Also, we have enabled jobs for over 100,000 young people due to the occupancy rise and, as more people stay in our hotels, more economic opportunities are created," Shih said.
Over 97 per cent of franchisee partners have come back and renewed their contracts, a testament to the impact the company has had on their business both at occupancy and revenue levels, the statement said.
To ensure asset owners have improved visibility on potential customers from around the world, Oyo Hotels is also exploring ways to collaborate with online travel agents such as Fliggy, Ctrip and others, along with other consumer traffic-building platforms, it added.
Oyo Hotels and Homes currently has footprint in more than 800 cities across 24 countries.

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


18.1. Dr Reddys to spend upto USD 300 million on R&D in FY 20
PTI, May 21, 2019

Hyderabad: Dr Reddys Laboratories is planning to spend upto USD 300 million on research and development (R&D) during this financial year, a senior official of the company has said.
President, CFO and global head (HR) of Dr Reddy's Saumen Chakraborty, during an 'earnings call', said the drug- maker spent USD 226 million during the last fiscal against USD 264 million in FY 18.
The R&D spend for the quarter (January-March FY 19) is Rs 366 crore, that is USD 53 million and EBIT 9.19 per cent of the sales for the quarter, he said.
The spend is lowered by 16 per cent year-on-year and is flat on a sequential quarter basis. The spend for FY 19 is Rs 1,551 crore. That is USD 226 million as against USD 264 million in FY 18, Chakraborty said.
"We expect the overall R&D for FY 20 would be in the range of USD 250 million to USD 300 million," he said replying to a query.

The company would continue to focus on R&D for some interesting pipeline of proprietary products. But, on an overall basis, the R&D spend would be lower in proprietary products when compared to previous year, he further said.
Speaking at the meeting, chief operating officer of the company Erez Israeli said, "Now that we made the R&D organization more efficient and could handle more products with less cost, we want to continue with this plan of productivity to increase the R&D in order to ensure no fallbacks and no differentiated products."
Replying to a query, Israeli said the company during FY 20 expects to launch more than 30 products in the US market.

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


18.2. UPL: Arysta LifeScience acquisition done, focus now shifts to synergies
Livemint, 20 May 2019, R. Sree Ram
  • The acquisition is estimated to bring revenue benefits of $100 million in FY20, with synergies rising to $350 million in its third year 
  • The current stock price pegs UPL’s valuation at around 14 times its FY20 earnings estimates, richer than some of its global agrochemical peers 

Size does not seem to worry UPL Ltd, which completed the acquisition of Arysta LifeScience Inc., bumping up its revenue base by 60%, according to analyst estimates. However, despite this, the expanded base is not coming in the way of its growth tempo.
The company has guided for 8-10% revenue growth in the current fiscal year, in line with what it has delivered in recent years.
It expects operating profit growth to rise 16-20%, driven by portfolio expansion and market reach benefits from the acquisition.
The acquisition is estimated to bring revenue benefits of $100 million in FY20, with synergies rising to $350 million in its third year (FY22). This is estimated to result in operating profit benefits of $120 million in FY20 and $200 million from FY22 onwards. Much of the earnings benefits are expected to accrue from manufacturing and procurement synergies.
Since UPL’s commentary was reassuring, the stock gained 5.5% in the last two trading sessions, taking the gains in the last one year to 44%.

Apart from the benefits of the Arysta acquisition, the stock’s outperformance also reflects the steady show of UPL. Turbulence in the domestic market notwithstanding, revenues in the last quarter grew 15%, while the full-year growth was at 14%.
According to analysts, the company implemented price hikes for the fourth consecutive quarter, indicating improvement in the international agrochemical market.
The current stock price pegs UPL’s valuation at around 14 times its FY20 earnings estimates, richer than some of its global agrochemical peers.
“In view of better growth visibility over the medium term, led by an articulate strategy emphasizing on synergies, cash flows and deleveraging, we raise our target PE multiples," Jefferies India Pvt. Ltd said in a note. PE stands for price-earnings multiple. Analysts at Antique Stock Broking Ltd concurred, saying the Street is not fully considering the synergy benefits of the Arysta acquisition.

Even so, investors should keep a wary eye on acquisition-related synergies as well as expenses, for they will determine eventual earnings.
Reported profit in the March quarter dropped 70%, due to the acquisition-related costs. According to Edelweiss Securities Ltd, UPL will see more such expenses in FY20.
Also, acquisition debt has driven up the company’s leverage ratios. Net debt-to-equity has risen to 1.8 times at the end of FY19 from 0.4 times in FY18.
But UPL plans to repay a portion of the debt (about ₹300 crore) in FY20. Acquisition debt can be repaid over five years if benefits accrue as per plan, points out one estimate.
If everything goes according to plan, the company’s Arysta bet may prove to be a rewarding one for investors.


19.1. Low-cost carriers IndiGo, SpiceJet and GoAir to report record profits in 2019-20: CAPA
PTI, Jun. 07, 2019

New Delhi: The three leading Indian low-cost carriers (LCCs) -- IndiGo, SpiceJet and GoAir -- are each expected to report record profits in 2019-20, airline consultancy firm CAPA said in a report on Thursday.
Moreover, the domestic capacity, which has been lost as a result of Jet Airways' closure in April, should be restored by the end of September, it said.
It added that the growth in domestic capacity would then resume in the second half of 2019-20.
"The three leading Indian LCCs - IndiGo, SpiceJet and GoAir - are each expected to report record profitability in FY2020," the Centre for Asia Pacific Aviation (CAPA) said in its report 'CAPA India Quarterly Market Insights'.
"IndiGo alone could be on track to report a profit of USD 400-500 million. Meanwhile the combined fleet size of Indian LCCs is expected to cross 500 aircraft this year," CAPA added.

Overall, the domestic traffic growth will be "muted", with full-year traffic growth expected to be below five per cent year-on-year, it said.
CAPA said that after Jet Airways' shutdown, "recovery in the international sector may take 1-2 years".
According to CAPA, the international traffic is likely to remain "flat at best", and could show a decline of up to five percent.
Jet Airways had "temporarily" shut down its operations on April 17 this year as it had ran out of funds. Since then, the lessors have taken back their planes from the beleaguered full-service carrier and its domestic slots as well as international rights have been given temporarily to other airlines by the central government.
A large number of aircraft, which were taken back by Jet Airways' lessors due to non-payment of dues, have now been leased to SpiceJet.

As a result, CAPA said, "SpiceJet is strengthening and emerging as the clear number 2 airline in the market. Within 12 months, its domestic market share could approach 25 per cent, a size that accords it strategic importance in the sector." 
"This is a tremendous achievement for an airline that was within hours of closure less than five years ago," it said in the report.
The closure of Jet Airways has left a notable gap in the international market, it said.
"As a result Indian carriers particularly IndiGo and SpiceJet, but also GoAir will increase their focus overseas," the report said.
Indian LCCs are expected to deploy 40 additional narrow-body aircraft on regional international routes in 2019-20.
"In the race to fill the space left by Jet Airways, decisions on some new routes may be rushed," the airline consultancy firm said.

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


19.2. Spicejet adds 100th plane to fleet, 4th domestic airline to do
PTI, May 27, 2019

Mumbai: No-frills airline SpiceJet Sunday announced the induction of a Boeing 737, taking its fleet size to 100 aircraft. SpiceJet is the fourth domestic airline to achieve the feat after national carrier Air India, now defunct Jet Airways and rival IndiGo.
Eight domestic carriers - Air India, IndiGo, SpiceJet, GoAir, Air India Express, Vistara, AirAsia and Alliance together have 595 planes in their fleet at the moment.
Spicejet in a release said it has added some 23 planes in the last one month alone.
"Who could have thought that from the brink of closure in December 2014, SpiceJet would have a 100-aircraft fleet in 2019," SpiceJet chairman and managing director Ajay Singh said on the induction of 100th plane in the fleet.
The Gurugram-based budget carrier now has 68 Boeing 737s, 30 Bombardier Q-400s and two B737 freighters.
The airline at present operates 575 daily flights on an average to 62 destinations 53 domestic and nine international, it said.

SpiceJet is a key player in the Union government's regional connectivity scheme UDAN operating 42 flights per day to and from various regional destinations, it added.
"SpiceJet has added 23 planes and over a hundred new flights, most of them connecting the key metros of Mumbai and Delhi, in just over a month's time," the airline said.
Of the 595 planes, IndiGo has 230, Air India 128 and SpiceJet 100.
Jet Airways, which ceased operations around mid-last month, had 120 planes in its fleet before going bust.
Besides, GoAir has 49 planes, Air India Express 25, Vistara 22 snd AirAsia India 21 planes in their fleet.
Alliance Air, which is the regional subsidiary of Air India, has 20 ATRs for operations.
SpiceJet had placed a USD 22 billion order for 205 aircraft with Boeing in 2015 and had followed it up with a USD 1.7 billion order for 50 Bombardier Q400 planes.

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


20.1. AI-Artificial Intelligence to more than double the rate of innovation in india by 2021: Study
Livemint, May 28, 2019

By 2021, Artificial Intelligence (AI) will more than double the rate of innovation at organizations and employee productivity in India, according to a Microsoft -IDC study released on Monday.
The study ‘Future Ready Business: Assessing Asia Pacific’s Growth Potential Through AI' underscores that while 77% of business leaders polled agreed that AI is instrumental for their organization’s competitiveness, only one-third of organizations in India have embarked on their AI journeys. Those companies that have adopted AI expect it to increase their competitiveness by 2.3 times in 2021.
Last year, organizations that have adopted AI saw tangible improvements in those areas in the range of 8% to 22%. They forecast further improvements of at least 2.1 times in the three-year horizon, with the biggest jump expected in higher margins, and higher competitiveness.

“Economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders. Businesses must now embrace a new culture, where innovation and continuous learning are core components of the organizational culture. It sets the stage for agility, adaptability and growth," said Dr. Rohini Srivathsa, National Technology Officer, Microsoft India.
The study evaluated six dimensions critical to ensuring the success of a nation’s AI journey. According to the findings, India needs to build upon its investment, data, and strategy in order to accelerate its AI journey.
The study also underlines the need for cultural changes and skilling and reskilling workforces to make AI work for the country. “Investment in this transformative technology has to be continuous for the long-term success. There is an urgent need for talents and tools to develop, deploy and monitor AI models, along with the availability of a robust data estate with the adequate governance," according to Ranganath Sadasiva, Director, Enterprise, IDC.
The survey was conducted with 1,560 business decision makers in mid and large-sized organizations across 15 economies in the region and surveyed 200 business leaders and 202 workers in India.

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


20.2. IT services growth to remain at 6-8 % in USD terms in FY'20: ICRA
PTI, Jun. 12, 2019

New Delhi: The Indian IT services sector is expected to register a growth of 6-8 per cent in US dollar terms during 2019-20, according to ratings agency ICRA.
Indian IT firms could also see higher wage bills and lower margins on account of increased onsite hiring as they tackle tighter visa scrutiny and reduction in H1-B visa approvals.
"As per available trends, ICRA sample set (13 companies) grew by 16.8 per cent in INR terms, while in US dollar terms, it grew by 7.5 per cent during FY2019... The Indian IT services sector is expected to register growth of 6-8 per cent in US dollar during FY2020," ICRA said in a statement.
It added that despite currency benefits as well as use of operating levers, the profitability has remained flattish in 2018-19 at 22.5 per cent.

This, ICRA said, was on account of higher onsite hiring and sub-contracting cost necessitated by visa curbs, pricing pressure, increased regulatory costs and wage inflation.
ICRA said increasing compliance and evidence requirements are adding to cost pressures, and coupled with fewer issuance of H-1B visas, Indian companies have ramped up onshore hiring in the US.
"As per ICRA research, this will culminate into approximately 10 per cent reduction in H1-B visa approvals for regular applicants...This will lead to higher onsite hiring which is associated with higher wage bills and lower margins," it pointed out.
The overall margins are estimated to decline from 22.5 per cent in 2018-19 to 21.5 per cent in 2019-20 (estimate) for ICRA sample companies, it added.
Despite the pressure on growth and margins, the credit profile of Indian IT services companies is expected to remain stable, underpinned by its ability to sustain free cash flows,it said.

The credit profile is also supported by net cash position with significant liquidity in the form of surplus investments generated out of past cash flows despite healthy dividend payout and share buybacks.
ICRA Vice President Corporate Ratings Gaurav Jain said the agency also expects consolidation in the industry, especially among small and mid-sized players, over the next decade.
He noted that geo-political issues restricting movement of skilled labour or increase in minimum salary requirement will have negative impact on the sector outlook.
Demand is being driven by scaling up of solutions built around digital technologies (mobility, social, cloud, analytics and automation), he added.

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. Opinion | Global trade is important for India’s prosperity
Livemint, 11 Jun 2019, Narayan Ramachandran

Embracing global trade can create a virtuous cycle of competitive dynamism and growth for India

The international, rules-based, multilateral trading system enshrined through the World Trade Organization (WTO) faces an existential threat. WTO accession played a major role in China’s rise to prosperity. China’s foreign trade rose 10-fold from $475 billion on WTO accession in 2001 to about $4.5 trillion today. India’s total foreign trade in goods and services of approximately $1 trillion in 2018 is roughly the same as China’s in 2003.
Can the multilateral trading system play a similar role for India as it did for China, but under very different global circumstances?

First, the background. The first wave of globalization spanned 1870-1914. This wave, triggered by the industrial revolution, was facilitated by the movement of goods on steamships and railways with financial intermediation centred in London. Exports as a percentage of global output rose to about 15% from single-digit numbers during this period. This phase was interrupted by World War I, the Wall-Street crash of 1929 and the economic depression that followed. In 1940-42, legendary economist John Maynard Keynes proposed a new global trade system based on a “reserve currency" called the bancor and a settlement system that would require an International Clearing Union. Neither of these were established since the dollar became the de-facto reserve currency under a pegged exchange rate system that the Bretton Woods Conference accepted after World War II.
The second wave of globalization began around 1950 and was facilitated by the rise of commercial aviation and telecommunication, and sustained towards the end of the 20th century by the rise of the internet. These technologies also facilitated a dramatic increase in global services trade. This second wave greatly benefited from the global institutions set up in the Bretton Woods Conference—the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (GATT), which subsequently became the WTO in 1994 after the Marrakesh Agreement. Exports as a percentage of global output have now risen to about 25% on an average, even as global output has grown materially in the 75 years since World War II.

The first globalization wave resulted in the developed world becoming prosperous and other countries remaining poor. The second wave of globalization has resulted in the developing world making rapid strides and, in the particular case of China, lifting an entire nation out of poverty. The distribution of prosperity both across countries and within countries has become uneven. This imbalance has led to significant domestic pressure on politics, in turn leading to policies such as “America First" and “Made in China 2025". Followed to the extreme, nation-first ideologies conflict directly with a multilateral trading system.
India too has brought a nation-first form of policy in “Make in India", even though it stands to be the biggest beneficiary of global trade for the next couple of decades . A WTO-like system helps countries most when they are lifting from about $2,000 in annual per capita income to about $5,000 with favourable demographics—this is the situation India finds itself in. Trade creates a virtuous cycle of competitive dynamism, employment and economic growth. China embraced this challenge two decades ago and has benefited enormously. Even though India finds itself in an increasingly protectionist world, it should become an enthusiastic supporter of the world trade system and make its voice heard.

Only last week, the new Indian government announced eight cabinet committees, including two new ones on investment and employment/skill development. To give it due importance, I propose that we should add another one for foreign trade made up of ministers from external affairs, commerce, petroleum, agriculture and finance, and led by the external affairs minister. This new cabinet committee should have the mandate to be much more proactive at the WTO. It should start with submitting a position paper on WTO reform (the US, Japan and China have done so already). India’s position should explicitly suggest reforms for rule-making, dispute-settlement and the restoration of the WTO appellate body. India has already taken a positive step saying it will not oppose the end of its special and differential treatment status. Over time, this will force the Indian export industry to be more competitive.

The key is for India to embrace this engagement with WTO fully, as China did in the late 1990s, for its own national interest. Before and after China’s accession to the WTO, it undertook structural and institutional reform to maximize its return. In the same way, India should use the opportunity for betterment. Unlike the prevailing American view, global trade is not a zero-sum game. For India, it can be a win-win proposition and a modernized WTO is its best chance. There are inferior choices like regional or bilateral free-trade agreements. These should be our least favoured choice only to be engaged if the multilateral system collapses. India probably does not realize it, but in the same way that China was seen as a success in the first 10 years after it joined the WTO, India can provide purpose and direction to the WTO for the next decade or two.
PS: “International cooperation is vital to keeping our globe safe, commerce flowing and planet habitable," said Nobel laureate Angus Deaton.

Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns 


21.2. Parag Milk foods launches premium milk brand In Singapore
PTI, Jun. 11, 2019

New Delhi: Dairy FMCG company Parag Milk Foods Monday said it has launched its farm-to-home premium milk brand 'Pride of Cows' in Singapore.
The company claimed to be the first Indian company to sell fresh milk in Singapore.
It is airlifting the milk from its dairy farm, located in Manchar, near Pune to Singapore.
Pride of Cows will initially be available through various home delivery platforms.
"A typical Pride of Cows consumer has an evolved taste preference and is brand as well as health conscious.
With an abundance of such consumers in Singapore, we have identified a huge opportunity for expansion there," Parag Milk Foods Chairman Devendra Shah said in a statement.
As the consumption of fresh and organic milk has increased in Singapore, consumers have become mindful of the source of the milk they consume and its nutrient content and we believe that there is a dearth of such products in the country, Shah said.
Moreover, for the affluent consumer, experiential luxury is what truly drives spending, and a brand like Pride of Cows epitomises those ideals, he added.
Shares of Parag Milk Foods closed at Rs 241.90 on the BSE, up 0.06 per cent from its previous close.

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


22.1. Airtel looking to raise up to $1 billion with LSE listing of African unit
Livemint, 29 May 2019, Navadha Pandey ( with inputs from Reuters )
  • Africa has proved to be a beacon of hope for Airtel, which is faced with a struggling India business as it battles Jio 
  • It is looking to trade on the main market of the London Stock Exchange, using its premium listing segment, and sell 25% of new shares 
NEW DELHI: Bharti Airtel Ltd has sought approval of the UK financial regulator for an initial public offering of its African unit in London as it seeks to cut debt and expand its network.
Airtel Africa Ltd, the continent’s second-largest mobile operator, is aiming to raise around $1 billion in a June equity offering, a person familiar with the development told Reuters.
In a filing made to the London Stock Exchange (LSE), Airtel Africa said it is also considering a listing on the Nigerian Stock Exchange. In London, Airtel Africa is looking to trade on the main market of LSE, using its premium listing segment.
The African unit has already raised $1.25 billion in October from six investors, including Temasek Holdings Pte and SoftBank Group Corp., Warburg Pincus and Singtel. In January, Qatar Investment Authority invested $200 million in the Africa arm.
As a result of these fundraises, the company’s net debt fell to $4 billion in the March quarter from $7.7 billion a year ago.

Airtel Africa is the holding firm for Bharti Airtel’s operations in 14 countries, including Nigeria, Kenya, Uganda, Rwanda, Tanzania, Zambia, Niger, Democratic Republic of the Congo and Seychelles. It has 100 million customers across the continent but Nigeria alone accounts for 36% of its total revenue.
Bharti Airtel established its presence in Africa in 2010 when it bought Kuwait-based Zain’s Africa operations for $10.7 billion. Over the past few years, it has been trying to expand in the continent through local acquisitions.
Africa has proved to be a beacon of hope for the company, which is faced with a struggling India business as it battles Reliance Jio Infocomm Ltd on its home turf. Bharti Airtel’s Africa operations posted a net profit of $83 million in the March quarter from a loss of $49 million a year earlier.
Airtel Africa’s total revenue grew 6% to $781 million in the March quarter from $736 million in the year earlier, while its earnings before interest, taxes, depreciation and amortization improved 12% to $344 million.

The company offers prepaid and postpaid wireless services in the continent, with an increasing focus on data and non-voice services through the expansion of its 3G and 4G networks, fixed-line telephone services, as well as mobile money services under its Airtel Money brand both nationally and internationally.
Mobile voice business is the largest component of Airtel Africa’s revenue, bringing 62.2% in the year ended 31 March. The mobile data business segment accounted for 22.2% and Airtel Money accounted for 7.6% of the consolidated revenue.
Airtel Africa’s network includes 30,000km of fibre, over 16,400 3G sites and over 9,200 4G sites.
“The 14 countries where we operate offer strong GDP growth potential and have young and fast-growing populations, low customer and data penetration and inadequate banking infrastructure. These fast-growing markets provide us a great opportunity to grow both our telecom and payments businesses," Raghunath Mandava, chief executive of Airtel Africa, said in the LSE filing.
Airtel Africa has hired JPMorgan Securities as sole sponsor; BofA Merrill Lynch, Citigroup and JPMorgan Cazenove as joint global coordinators and joint bookrunners; and Absa Group Ltd, Barclays Bank Plc, BNP Paribas, Goldman Sachs International, HSBC Bank Plc and Standard Bank of South Africa Ltd as joint bookrunners.


22.2. Tata Consultancy Services listed among top 50 US companies for diversity
IBEF, May 29, 2019

New York: Tata Consultancy Services (TCS), which is a part of the Tata group generated consolidated revenues of US$ 20.90 billion in the FY19. The company has been recognised in DiversityInc's "Top 50 Companies for Diversity" in the US. the company was selected out of 1,800 assessed organizations on the back of its sustained investments and efforts in diversity and inclusion. TCS provides business transformation services to all the states of US including Washington DC and has a diverse workplace consisting of 70 nationalities, and women making up 28 per cent of its headcount. The company has hired more than 20,000 Americans and has been one of the nation's largest job creators in IT sector since 2014. It company has also extended support to organisations like Million Women Mentors (MWM), the National Center for Women and Information Technology (NCWIT), STEMconnector, US2020, NPower and more.

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


23.1. Europe’s future and India’s relations with the Union
Livemint, 04 Jun. 2019, D.P. Srivastava

India should boost ties with the Vysehrad group: Poland, Hungary, Slovakia and the Czech Republic 

Theresa May’s resignation as Prime Minister of the UK on 24 May coincided with European Parliament elections. Holding elections for the European Parliament when one of its five biggest member states was seeking an exit was not a good augury. The tortuous debate in the House of Commons has shown that leaving the European Union is not easy. In her resignation speech, May stated that “the referendum was not just a call to leave the EU, but for profound change in our country". The British hesitation brings out the fact that the EU still has lot to offer it.
May made two turn-arounds in her Brexit position in the last days of Commons debate. She abandoned her “no deal" Brexit stance, and reached out to the opposition Labour party for support. Earlier, her negotiating strategy with the EU was based on a “hard Brexit" policy, under which the UK was prepared to walk out of the EU with or without a deal. This was part of a negotiating strategy to extract the best exit terms from the EU.

May’s resignation does not change the arithmetic in the House of Commons. Her Conservative party’s poor showing in the European Parliamentelections, where it finished fifth and the opposition Labour party ended third in terms of UK seats, means neither party can take any bold decision to break the logjam. The fact that Nigel Farage’s hard-Brexit party bagged the highest vote share would be a signal to EU leaders that concessions to a new government would not serve any purpose, as the Conservatives do not command popular support. Within their ranks, the balance is likely to move further towards a hard Brexit, while Labour members will exercise restraint in demanding a second referendum or fresh elections in the UK. This sets the stage for a second round of crisis as London nears its revised Brexit deadline in October 2019.
The EU voter turnout of 51% across its 28 member states was much higher than the 43% recorded in the last elections. President Donald Tusk of Poland, who holds the rotating presidency of the EU Council, interpreted this as a sign of the health of the Union. The message was different in Euro-sceptic Britain, where Farage’s party secured the largest share of votes (31%).

The EU election results have weakened centrist political groups in the European Parliament: the European People’s Party (EPP) and Progressive Alliance of Socialists and Democrats (S&D). These have alternately, or together as a coalition, led the European Parliament for more than four decades. Their combined share of seats fell from 54% to 43%. They fell short of the 376 seats required for securing a majority in the European Parliament. For that, they will need the support of Greens, a group that won 69 seats. Though this is less than 10% of the 751-member European Parliament, it gives them the capacity to swing the balance in favour of any coalition they join. Eurosceptic nationalists have also made advances, bagging 170 seats.
The political groups in Europe’s parliament are usually different from national-level political parties. Often, they are coalitions of ideologically-aligned national parties. This reflects the nature of the European Union, which operates like a confederation of independent states. A federal structure with a supra-national parliament remains unacceptable to the EU’s constituents. With the rise of euro-scepticism, the idea of “ever closer union" is likely to become an even more distant dream.

The European Parliamentelections are being seen as a reflection on the performance of national leaders. In France, President Macron’s Republic en Marche party came second after Marine Le Pen’s National Rally party. In Germany, the poor performance of Christian Democrats in the EU polls comes at a time of transition within the party. It has cast doubt on the suitability of Annegret Kramp-Karrenbauer to succeed chancellor Angela Merkel. At the same time, it has weakened Merkel’s negotiating leverage to push for the candidacy of her party’s candidate Manfred Weber for the Commission’s presidency. Weber’s candidacy is being opposed by President Macron. Once the UK formally leaves the Union, Germany’s weight within the EU will increase further. If this is combined with the election of a German candidate to the presidency of the European Commission, German salience will rise further.

Historically, among the three European institutions–the European Commission, EU Council and European Parliament—the last was considered the weakest. It has slowly gathered strength. It enjoys the power of “co-decision making" along with the European Council. It approves the budget. The EU Council’s choice of president has to be approved and ratified by the European Parliament. It thus has considerable heft.
While it is too early to speculate about the policy impact of the European Parliament elections, the success of the Greens will increase pressure for environment conditionality on trade with partner countries. In case Brexit takes place, this could weaken the northern block of countries within the EU that favour free trade.
India needs to deepen her engagement bilaterally with EU member states. More needs to be done to engage the Vysehrad group of Poland, Hungary, Slovakia and the Czech Republic. The EU will continue to be important politically and as a trading bloc, but will perhaps remain preoccupied with its internal issues for some time.

D.P. Srivastava is a former diplomat who has served in Brussels and is now distinguished fellow, VIF


23.2. Government pursuing efforts to set up second airport in major cities
PTI, Jun. 10, 2019

Seoul: To meet rising passenger demand, the civil aviation ministry is pursuing efforts to have a second airport in major cities and requesting state governments to reserve land for building the aerodromes, according to a senior official.
Airports Authority of India (AAI) Chairman Guruprasad Mohapatra said second aerodromes are required in major Indian cities, considering the way the aviation sector is growing.
State-owned AAI manages 125 airports, including 11 international aerodromes.
Noting that land acquisition is a problem in the country, Mohapatra said at least 2,000 acres of land is required for construction of an airport.

"We have been writing to state governments from the ministry and the AAI to reserve land somewhere in the vicinity of the city for a second airport and use land restrictions so that structures do not come up," he told PTI in an interview.
While Mumbai and Delhi are set to have a second airport, Visakhapatnam might also have a second aerodrome.
"We are (also) trying for Kolkata, Chennai, Pune and other places," Mohapatra said while speaking on the sidelines of a conference here recently.
India has been one of the fastest growing domestic aviation markets in the world. However, passenger traffic growth turned negative in April in the wake of crisis at full service carrier Jet Airways, which subsequently suspended operations due to cash crunch.

In April, all operational airports handled 26.70 million passengers and 2,75,150 tonnes of freight, as per latest AAI data.
Global airlines' grouping IATA has said that India and China are projected to account for nearly half of the air passenger growth worldwide over the next two decades, with travellers coming from all walks of life.
Responding to a query on Jet Airways, Mohapatra said there has been no impact on the finances of the AAI.
"We took back all the money that Jet had to pay (as dues). We monitor airlines' dues very seriously in a structured manner and we have recovered whatever dues they owed to us," he noted.
However, Mohapatra also said suspension of operations by Jet Airways had a significant impact as around 700 slots at airports fell vacant.
A significant number of slots vacated by Jet Airways have been awarded to other airlines on a temporary basis.

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


24.1. US-China trade war may hand India a bigger bite of Apple
Livemint, 12 Jun 2019, Bloomberg
  • Foxconn is now running quality tests for the iPhone XR series in India and plans to begin mass production at a facility in the suburbs of Chennai 
  • Older iPhone models are already assembled at a Wistron plant in Bangalore 
Taipei: Apple Inc. has a backup plan if the US-China trade war gets out of hand.
The Cupertino, California-based company’s primary manufacturing partner has enough capacity to make all iPhones bound for the US outside of China if necessary, according to a senior executive at Hon Hai Precision Industry Co. The Taiwanese contract manufacturer now makes most of the smartphones in the Chinese mainland.
China is a crucial cog in Apple’s business, the origin of most of its iPhones and iPads as well as its largest international market. But President Donald Trump has threatened Beijing with new tariffs on about $300 billion worth of Chinese goods, an act that would escalate tensions dramatically while levying a punitive tax on Apple’s most profitable product.

Hon Hai, known also as Foxconn, is the American giant’s most important manufacturing partner. It will fully support Apple if it needs to adjust its production as the US-Chinese trade spat gets grimmer and more unpredictable, board nominee and semiconductor division chief Young Liu told an investor briefing in Taipei on Tuesday.
“Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the US market," said Liu, adding that investments are now being made in India for Apple. “We have enough capacity to meet Apple’s demand."
Apple shares were up less than 1% to $194.40 in New York Tuesday morning.
Apple has not given Hon Hai instructions to move production out of China, but it is capable of moving lines elsewhere according to customers’ needs, Liu added. The company will respond swiftly and rely on localized manufacturing in response to the trade war, just as it foresaw the need to build a base in the US state of Wisconsin two years ago, he said.

It’s unclear if India will ever become a major production base for Apple’s marquee device. Foxconn is now running quality tests for the iPhone XR series in India and plans to begin mass production at a facility in the suburbs of Chennai. Older models are already assembled at a Wistron plant in Bangalore.
Foxconn has also agreed to build a 13,000-worker facility in Wisconsin in exchange for more than $4.5 billion in government incentives. But that project has since come under criticism for low-paying jobs, sudden dismissals and ever-changing goals. On Tuesday, executives reaffirmed that employment goal, saying construction remained on schedule and that it will hire as many as 2,000 Americans by the end of 2020.
It will also start making networking and server products for the US market by the end of next year, on top of LCDs starting next year, Liu said.


24.2. Amazon pumps in Rs 2,800 crore into India unit after its exit from China
Business Standard, Jun. 07, 2019

Bengaluru: Online retail giant Amazon has stepped up its investment in India and pumped in Rs 2,800 crore into its marketplace. The fresh investment comes at a time when the Seattle-headquartered firm has signed off from China. In December last year, Amazon invested Rs 2,200 crore into its Indian entity.
The investment was made into Amazon Seller Services (Amazon.in), which runs a marketplace that assists sellers to sell their products online. The funding is expected to help Amazon take on its rival Walmart-owned Flipkart with whom the company is in a fierce battle for dominance in India’s online retail market.
Amazon India allotted 2.8 billion equity shares of Rs 10 each aggregating to Rs 2,800 crore at par on rights basis to the existing shareholders of the company, according to the regulatory documents filed by Amazon, which were sourced from business intelligence platform Paper.vc. The resolution for this capital infusion was passed by the board of directors of Amazon Seller Services on May 21.

The investment also comes at a time when Amazon had to face downtime in India owing to recent changes in the country’s e-commerce regulations. However, Brian T Olsavsky, senior vice-president and chief financial officer of Amazon, had said that the company had to make structural changes to comply with all the new regulations in India.
The revised e-commerce policy, announced last December, had barred e-commerce players from selling products through entities in which they own a stake. Vendors were also not allowed to have more than 25 per cent of their revenues coming from a single platform.
The new rules, which came into effect from February 1, 2019, also stopped online retailers from selling goods exclusively on e-commerce platforms. Jeff Bezos-led Amazon has so far made over $5 billion investment in India. Some reports suggest that the company may have invested an additional $2 billion on top of that.

Like in the US, Amazon is pitted against Walmart, which acquired a majority in Flipkart last year in a $16-billion deal, to dominate the e-commerce market in India. This market is expected touch $200 billion by 2028, from about $30 billion last year.
This year during April-May, Walmart President and Chief Executive Officer (CEO) Doug McMillon and Judith McKenna, president and CEO of Walmart International, visited India to assess the progress made by Flipkart. They also met the senior leadership of Flipkart and group companies — Myntra and PhonePe — and is learnt to have discussed strategy to take on Amazon.

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


25.1. Reliance, BP to develop third gas project in India
Livemint, Jun. 12, 2019

New Delhi: Reliance Industries Limited (RIL) and its exploration and production partner BP Plc on Tuesday announced the sanction of the MJ project (also known as D55) in Block KG-D6, a deep water gas field off the east coast of India.
MJ is the third of three new projects in the Block KG-D6 integrated development plan and its approval follows sanctions for the development of ‘R-Series’ deep-water gas field in June 2017 and for the Satellites cluster in April 2018.
"Together the three projects are expected to develop a total of about 3 trillion cubic feet (tcf) of discovered gas resources with a total investment of circa รข‚¹35,000 crore ($5 billion). These projects together, when fully developed, will bring about 1 billion cubic feet a day of new domestic gas onstream, phased over 2020-2022," RIL said in a press statement on Tuesday.

Mukesh Ambani, Chairman and Managing Director of RIL, said: “Bringing these three discoveries to production, as promised in 2017, by leveraging the existing infrastructure has been the primary objective of the Reliance-BP Joint Venture. The gas will satiate the increasing demand for clean fuel in the country, save foreign exchange and reduce dependency on imported gas...and help strengthen energy security while moving towards meeting India's Climate Change Goal."
MJ is a gas condensate field and is the third field under development as part of the KG-D6 integrated development campaign. The project is in 700-1,100 metres water depth, with a well depth of 4,200 metres below mean sea-level in a high-temperature and pressure environment.
It comprises of wells connected to subsea production, with tie-back to a Floating Production Storage and Offloading (FPSO) vessel to process and separate liquids, and gas which will be exported to the onshore terminal through one of the existing 24-inch trunk pipelines.

Bob Dudley, BP Group Chief Executive, said, "We are building an important upstream business in India, helping to supply the country’s growing gas market. Working closely with Reliance, we are efficiently developing discovered resources, with focused exploration to give options for the future,"
India today consumes over 5 billion cubic feet a day of natural gas and aspires to double gas consumption by 2022. RIL said gas production from KG-D6 integrated development is expected to help reduce India’s import dependence and amount to over 10% of the country’s projected gas demand in 2022, thus benefiting the country and domestic consumers at large.
The first of the three KG D6 projects under development, the R-Series project, is in the execution phase. First gas from this project is on schedule and expected by mid-2020. The second project, the development of the satellites cluster, is on track with all major contracts awarded to deliver first gas by mid-2021. The MJ project will draw on execution synergies with the R-Series and Satellite projects being developed concurrently.

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


25.2. India-China trade to cross USD 100 billion this year: envoy
PTI, Jun. 07, 2019

Beijing: Bilateral trade between India and China is set to cross USD 100 billion this year, India's Ambassador to Beijing said Thursday as he inaugurated an Indian oleoresin extraction firm's 3rd manufacturing facility in the country to expand its business in the Chinese food market. 
Kochi-based Synthite Industries 46,000 sqm facility at Wucheng county in Dezhou in Shandong province was inaugurated by Indian Ambassador to China Vikram Misri along with local Chinese government officials.
The company is said to be the world's largest producer of value added spices and extracts.
In his address, Misri said the informal summit between the Prime Minister Narendra Modi and President Xi Jinping in Wuhan last year was a milestone and has been instrumental in taking our relations to a new height.
Since then the leaders had met four times on the side-lines of various summits last year.

He said the economic and commercial engagement between India and China constitutes a major component of the bilateral relations with bilateral trade, which crossed USD 95 billion last year, is set to cross USD 100 billion this year.
"Chinese investment in India and Indian investment in China have also seen robust growth in recent years. Chinese companies like Xiaomi, Haier, Oppo, etc, have become household names in India. I am also proud to inform that there are around 125 Indian companies operating in mainland China in various sectors like information technology, manufacturing, textiles, food processing," he said.
Synthite's new facility in Dezhou is intended to cater to its growing demand for their various products across the food, beverage and healthcare segments globally, Viju Jacob, Managing Director of the USD 250 million Synthite Industries told the Indian media here on Wednesday. 

From a humble beginning of starting with pepper oleoresin in 1972 the company came a long way fast expanding footprints in India, China and in a number of other countries in the world, he said. 
Oleoresins are the concentrated form of spices where you get the wholesome flavour and aroma of the spice. Most oleoresins are used as flavours and perfumes. Some are also used medicinally.
The new facility in China has the capability to extract and process Indian chilly, black pepper, ginger, garlic, and marigold in addition to Chinese sweet paprika. Further spice blends, curry powders and seasonings are also being planned.
Also plans are afoot to set up an application lab at Shanghai for curry powders and seasonings to customers catering to Chinese food industry, he said. 
"We are delighted to flag-off this state of the art facility in Shandong in line with our long-term strategic growth plans for the region and it demonstrates our commitment towards our valued customers in China," Jacob said.

He said from very humble beginnings in China, "where we started with a two man sales office, we are currently at 150 employees and growing".
Considering the success of oleoresin products, Chinese firms are now trying to make forays by establishing factories in Andhra Pradesh and Telangana, he said.
Jacob said India has lost the status of being the largest producers of pepper to Vietnam, which now produces about 2.5 lakh metric tonnes (MT) per annum. 
India, which is now importing 5000 MT of pepper should reorient its agricultural policy to cut down the imports, he said.

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

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