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India Business Journal September 2017
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SEPTEMBER 2017, Rs 35 EDITOR
AMIT BRAHMABHATT ASSISTANT EDITOR SHRIVATSA JOSHI CONTRIBUTING EDITOR SHARMILA CHAND ADVERTISING MANAGER WILLIAM RUMAO GRAPHIC DESIGNER RENUKA SAWANT ADVISORY PANEL SHASHIKANT PATEL JITENDRA SANGHVI REGISTERED OFFICE 102, RAJASTHAN TECHNICAL CENTRE, PATANWALA ESTATE, GHATKOPAR (W), MUMBAI 400 086. INDIA PHONE: 6703 0250/6703 0251 FAX: +91 22 6703 0251 EMAIL: [email protected] BUREAU CHIEFS AHMEDABAD: B D RAWAL CHENNAI: G JACINTH KUMARVEL R J (Special Projects) DELHI: RANJANA ARORA JAIPUR: PRASHANT DUBEY KOLKATA: DIPANKAR SEN
Printed and published by Amit Brahmabhatt for Issues Analysis and Research Pvt Ltd and published from 102, Rajasthan Technical Centre, Patanwala Estate, Ghatkopar (W), Mumbai 400 086 and printed at Graphtone (India) Pvt. Ltd., A1/319, Shah & Nahar Indl. Estate, Lower Parel, Mumbai 400 013 Processed at Graphtone (India) Editor: Amit Brahmabhatt Volume XIII, No 3 Issue date September 1-30, 2017 Released on September 1, 2017 EDITORIAL ASSOCIATE
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COVER STORY A RAW DEAL Even after 25 years of economic liberalisation, Indian farmers continue to be let down by governments, policies, prices and markets. 22 Viewpoint ..........4 Economic Survey Volume-II News Round-Up A brief on news, tie-ups, appointments and awards
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Face To Face ..........12 "We Want To Be A Global Company": Deven Mehta, Chairman & MD, Smart Card IT Solutions Automobiles ..........14 American Plans: With auto, IT and more, the Mahindra Group is aggressively rolling out its billion-dollar projects in the lucrative US market. Corporate Report ..........16 Packing A Punch: Uflex's newlylaunched plant in Gujarat further strengthens the company's competitive edge in the flexible packaging industry. Straight Talk
..........18 "Our Next Focus Is On Goa": Kuldip Singh Bhinder, CEO, The Golden Palms Hotel
Guest Column ..........20 The Power Of Apps: By leveraging technology, the Ministries of Power, Coal, New & Renewable Energy and Mines usher in transparency and rebuild people's trust in government.
Defence ..........30 Expanding Base: The government fine-tunes its procurement policy and pushes for private sectordriven indigenisation of defence Trade ..........32 Worrisome Slide: A rising rupee and uncertainty over GST take a toll on exports which continue to post slower growth month after month. Textile ..........34 Handholding Handlooms: The government's recent measures are aimed at reviving the rich heritage of handloom sector and enriching its weavers. Management Mantra..........38 "Dream Big, Do small": Saahil Goel, CEO & Co-Founder, BigFoot Retail Solutions Global Wrap-Up ..........40 A quick round-up of news and current affairs across the world Readers' Lounge ..........44 Catch up with new book launches - Advice & Dissent - Boom Country? - The Future Of Indian Economy
Star Talk ..........46 Forecast by Bejan Daruwalla Knowledge Zone ..........48 - Sanjiv Singh, chairman, IOCL - Shell Company - Spiritual Corner: Science of Karma Hot Seat Ganesh Babu, Director, IDE Consulting Services
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INDIA BUSINESS JOURNAL
SEPTEMBER 2017
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VIEWPOINT
Addressing Short-Term Pains
T
The survey predicts that growth would be lower than 7.5% in FY18.
The last three years have seen significant reforms, whether in GST, digitisation, tax compliance, direct benefit transfer, inflation targeting or bankruptcy resolution. These will no doubt yield fruits in the medium and long terms. But ensuring growth in the immediate term is no less important. 4
SEPTEMBER 2017
he Volume-II of the Economic Survey 2016-17 is out. And the prognosis, as expected, is not too rosy. There is gloom in the short term, but there are sparks of hope in the medium and long terms. The latest survey predicts that growth would be lower than 7.5 per cent in the current financial year. With global growth picking up, inflation at record lows and interest rates starting to trend down, the environment appears to be more than encouraging. However, a clutch of factors are queering the pitch, from lower real farm incomes and farm loan waivers - an exhaustive cover story on the farm sector in the ensuing pages would deal in more detail on this subject - transitional troubles from the rollout of the GST, a strengthening currency and profitability pressures in the telecom and power sectors. The Survey attributes most of the stress in the power sector to large additions to capacity and the welcome drop in renewable power prices. The hard reality is that continued power theft and paucity of the political will needed to make people pay for the power they consume are at the core of the crisis in power. The Survey estimates that around half of the generation capacity in the private sector is unviable since it operates at a PLF of below 60 per cent. And with a host of discoms looking to renegotiate tariffs, unmindful of reneging on existing PPAs, there could be more trouble. Unless there is a way to enforce contracts or rework them in such a manner that neither buyers nor sellers lose out too much, more capacity could end up becoming unviable. The bigger worry is that there is little sign of private sector capex picking up. Since States that write off farm loans will need to prune expenditure to ensure they stay fiscally prudent, this could hurt investments. Moreover, not only will the expenditure cuts depress demand, States with fiscal room will end up borrowing more which, in turn, will crowd out private sector spending. This means that the Union government must continue to spend more. Between April and June, the Central government’s capex has more than doubled year on year, and the tempo needs to be maintained. Indeed, corporate results for the June quarter reflect how pre-GST destocking has hurt sales across a host of consumer goods and pharmaceutical companies. However, the re-stocking process seems to have begun and inventories should normalise in the next few months. But, as the survey points out, for a larger revival, the twin balance sheet problem - high corporate indebtedness and banks' rising bad loans - needs to be addressed before banks start lending again. Without strong balance-sheets, banks will be severely limited in their ability both to lower interest rates and to lend. The process of setting right the twin balance sheet problem has been kick-started, and banks have now referred a dozen big companies to the insolvency court. Meanwhile, growth is important, simply because there can be no jobs and incomes without it. If growth, investment and job creation show no visible signs of pick-up, the economy, polity and society too will face serious troubles. The last three years have seen significant reforms, whether in GST, digitisation, tax compliance, direct benefit transfer, inflation targeting or bankruptcy resolution. These will no doubt yield fruits in the medium and long terms. But ensuring growth in the immediate term is no less important. Hence, a larger set of reforms will be needed than those that are in place right now. The Modi government only needs to get the wise suggestions on the pages of the survey on to the ground. INDIA BUSINESS JOURNAL
MISCELLANEOUS
NEWS ROUND-UP
Panagariya quits, Kumar new NITI Aayog V-C Noted economist Dr Rajiv Kumar has taken over as the new vice-chairman of the NITI Aayog. Dr Kumar, who was earlier a senior fellow of the New Delhi-based Centre for Policy Research, has replaced Arvind Panagariya at the NITI Aayog. Mr Panagariya had earlier said that he had discussed with Prime Minister Narendra Modi, who is also its chairman, and requested Mr Modi to relieve him of his duties by August 31 as he was not getting an extension of leave from the Columbia University.
New Rs 200 currency note launched A new denomination of Rs 200 currency notes entered the banking system last month. In a communication late last month, the RBI said the new currency denomination and design would help in bettering transactions, replacing soiled banknotes,
New biofuel policy on the cards The government is planning to bring a new policy to promote use of biofuels in transport fuel that will catalyse huge investments in the entire value chain. "We will soon take to the Cabinet a biofuel policy that will provide for investment climate, incentives, government role and commercial returns for developers. The policy will help develop a biofuel economy worth Rs 1 lakh crore in the next two years," revealed Petroleum Minister Dharmendra Pradhan. battling inflation as well as combating counterfeiting. The new note is yellowishorange in colour. For the visually impaired, the new note will have an intaglio or raised printing of the Mahatma Gandhi portrait, Ashoka Pillar emblem and
the raised identification mark H with micro-text Rs 200.
Government sets up 2nd ETF 'Bharat 22' The government has announced launch of its second exchange-traded fund (ETF), Bharat 22. The ETF will
comprise 22 stocks, including those of Central public sector enterprises, public sector banks and its holdings under the Specified Undertaking of Unit Trust of India. The fund will have a diversified portfolio of companies from six sectors with a 20 per cent cap on each sector and a 15 per cent cap on each stock. The government has raised Rs 8,500 crore through its first ETF launched in March 2014.
COAI seeks equal rules in telecom policy The new telecom policy in the works should ensure equal policies for competing technologies, an advance yearly road map for spectrum allocation and cut levies for operators, the Cellular Operators' Association of India (COAI) has said. COAI Director General Rajan Mathews has said that the policy should have some "permanent fixes" for the failing financial health of the sector, and the industry cannot be treated "as a place to go for revenue". The COAI has sought level playing field between mobile operators and over-the-top players.
Medium-term expenditure plan unveiled The MediumTerm Expenditure Framework Statement (MTEF) was laid in Parliament last month. The MTEF Statement sets forth a three-year rolling target for expenditure indicators with specification of underlying assumptions and risks involved. The MTEF is essentially a vertical expansion of the aggregates of the expenditure projections in the fiscal framework presented along with the Annual Financial Statement and Demands for Grants. The MTEF provides a medium-term perspective to the fiscal management and
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INDIA BUSINESS JOURNAL
CMYK
Verbatim...
Nod for Make In India metro policy The Union Cabinet gave its nod for a new metro rail policy last month. Framed by the Urban Development Ministry, the policy is expected to promote Make In India initiative in metro rail projects. The policy will help meet the metro rail aspirations of various cities. Apart from financial returns, the policy lays emphasis on intangible benefits on the environment and safety fronts. For approving projects, the Centre will take
into account an economic rate of return of 14 per cent instead of financial rate of return of 8 per cent.
SUVs, luxury cars to get dearer on cess hike SUVs and mid-sized, large and luxury cars that had become cheaper after GST rollout on July 1 will cost more as the GST Council has approved a proposal to hike cess on them to 25 per cent from 15 per cent earlier. Under the GST regime, cars attract the top tax rate of 28 per cent. The cess of 25 per cent is levied to create a corpus to compensate States for loss of revenue from GST implementation.
"Demonetisation was a very big mistake, and it has had big negative fallout on the economy. The GDP growth, which would have crossed 8 per cent this year, slowed down to 6.1 per cent and will remain low for a while."
Kaushik Basu EX-CEA, FINANCE MINISTRY
"You should let certain banks die. You should have the boldness to cut flab and reduce staff and branches."
OBITUARY Pushpa Mitra Bhargava (1928-2017) One of India's top scientists and founderdirector of the Centre for Cellular and Molecular Biology (CCMB), Pushpa Mitra Bhargava, died in Hyderabad last month after a brief illness. He was 89. Born in Ajmer in 1928,
Mr Bhargava did his PhD in synthetic organic chemistry from Lucknow University. His pioneering vision and efforts led to the founding of CCMB in Hyderabad in 1977 as an institution for research in basic biology. Mr Bhargava had also served as vice-chairman of National Knowledge Commission constituted in 2005.
APPOINTMENTS
Central Manufacturing Technology Institute, while Sanjay Kirloskar, the chairman and managing director of Kirloskar Brothers, has been named vice-president of the institute.
MISCELLANEOUS
furthers the government's commitment to fiscal consolidation.
Duvvuri Subbarao EX-GOVERNOR, RBI
"While in the 20th century, oil was the most valuable resource, in the 21st century, data takes its place. Unlike oil, however, data is unlimited."
Nandan Nilekani
Sanjaya Baru, the former media adviser to former Prime Minister Manmohan Singh, has taken over as secretary general of industry body FICCI. Ashwani Lohani, the former chairman and managing director of Air India, has taken over as chairman of the Railway Board. V K Saraswat, a member of the NITI Aayog, has been appointed president of the
TIE-UPS Public procurement portal GeM and industry body CII have joined hands to create awareness among suppliers about purchase of goods and services by government agencies and departments.
CHAIRMAN, INFOSYS
"Interconnect usage charge is important in the current situation where traffic asymmetries have increased to unprecedented level, with RJio terminating just one call at its end to 10 calls it sends to competing operators' network."
Kumar Mangalam Birla CHAIRMAN, ADITYA BIRLA GROUP
INDIA BUSINESS JOURNAL
SEPTEMBER 2017
CMYK
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CORPORATE
NEWS ROUND-UP
Rosneft, partners take control of Essar Oil The
Berger Paints firms up Rs 200-cr capex Berger
Essar Oil-Rosneft deal closed last month, with Russia's Rosneft buying 49.13 per cent in the Indian oil company, and its partners, Trafigura and Russian fund United Capital Partners (UCP), purchasing a similar stake for $12.9-billion (over Rs 82,500 crore). The remaining 1.74 per cent stake continues to be held by retail shareholders. The deal will give Rosneft and its partners control over 20-mtpa Vadinar refinery in Gujarat and more than 3,500 petrol pumps. Essar Oil CEO Lalit K Gupta resigned after the deal. B Anand, the CFO of Trafigura India, and Tony Fountain, a former RIL executive, were appointed CEO and chairman of Essar Oil respectively.
Paints India will be pumping Rs 60 crore in West Bengal's Rishra plant out of a total Rs 200-crore capex plan in FY18. The remaining amount of the capex will be shared by the company's other plants. The company is setting up an emulsion plant with capacity of 44,160 tonnes in phases and also setting up its first colorants unit, a vital ingredient for manufacturing paints, with capacity of 2,640 kl per annum. Berger Paints will be bringing the technology for construction of green buildings in India.
Indian Hotels lines up Rs 3,000-cr capex Indian Hotels Company has assigned a capex of Rs 3,000 crore for the next five years, of which Rs 300 crore has been allocated for next year. With plans of having 21 new properties between the Taj and Ginger brand of hotels, the Tata Group company is also raising a Rs 1,500- crore rights issue to reduce its debt levels and use the proceeds for refurbishing and developing new and existing properties. The company is also looking to monetise its domestic properties, like the Sea Rock property in Mumbai.
Birla Corp plans Rs 2,400-cr cement plant Birla Corporation, the MP Birla Group flagship company, will invest around Rs 2,400 crore in its proposed new cement plant in Mukutban near Nagpur. After the completion of the new plant, the total cement
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Major shake-up at Infosys, Nilekani is chairman Nandan Nilekani returned to Infosys last month after he was unanimously named by the board as its non-executive chairman in a widely anticipated move. Mr Nilekani returns to the Bengalurubased software services company a decade after he stepped down as its CEO. Mr Nilekani's appointment is considered as a significant victory for co-founder N R Narayana Murthy in his battle against the board on corporate governance issues. Vishal Sikka, who was appointed vice-chairman after he resigned as CEO last month, stepped down after Mr Nilekani returned. Chairman R Seshasayee and Co-Chairman Ravi Venkatesan also quit their posts, while U B Pravin Rao will continue as Infosys' interim CEO. production capacity of the company will touch 20 mtpa from the present 15.5 mtpa after acquisition of Reliance Cement. The project will be funded through a mixture of debt and internal accruals. Birla Corporation had acquired the cement plants of Reliance for Rs 4,800 crore. It had taken a loan of Rs 1,000 crore to fund this acquisition.
Spencer's eyes online delivery in 10 cities Spencer's Retail is steadily expanding its omni-channel presence and planning to cover 10 to 12 cities in hyper-delivery model for online orders. The retail chain had launched its online channel in 2016, which is available across Hyderabad, Chennai, Kolkata, DelhiNCR region and Vishakhapatnam. Currently, Spencer's operates some 125 stores, including 38 largeformat ones in 35 cities in
India, and the company will leverage these physical stores for online order deliveries. Spencer's did not mention sales from the online platform but added that the response was encouraging.
Route Mobile enters US market Route Mobile, a global communication service provider, recently announced its foray into America. The Mumbai-based company's newly-inaugurated office in Virginia will cater to businesses across the continents. "We are very excited with the opening of our new American office. It is a promising start towards our aim to strengthen and expand Route Mobile's global presence in the mobile communication business," said Route Mobile Global CEO Rajdip Gupta, following its US foray. Route Mobile has registered rapid growth on its strength of over 150 direct connections.
DHL opens integrated warehouse in Bengaluru DHL Global Forwarding has inaugurated its first integrated warehousing site in Bengaluru, which will provide both Customs bonded and domestic warehousing solutions to its customers. The site has been built with an investment of Rs 7.5 crore. The GST-ready
APPOINTMENTS Cisco has appointed Sameer Garde as president of its operations in India and the SAARC region. Venkat K Narayana, the executive director of Prestige Estates, has been promoted as its CEO.
TIE-UPS Bajaj Auto has tied up with Triumph Motorcycles of the UK to make mid-capacity motorcycles for emerging markets. Titan has partnered with Amazon to enter the US market.
INDIA BUSINESS JOURNAL
Essar Ports bags Mozambique deal Essar Ports has won a deal to develop a 20-mt, coking-coalloading terminal at Beira Port in Mozambique. This is the first overseas venture of the port operating unit of the Essar Group as it looks to ramp-up third-party cargo handling. New Coal Terminal Beira (NCTB), a subsidiary of Essar Ports, has signed a concession agreement with Mozambique's Ministry of Transport and Communications for developing the greenfield, multi-user, coal terminal at Beira Port. The terminal will be developed in two phases of 10 mt each.
Bridgestone rolls out Rs 1,950-cr expansion The Indian arm of Japanese tyre manufacturer Bridgestone has announced an expansion plan with an investment of $304.3 million (over Rs 1,950 crore) in both its plants in Chakan, near Pune, and Kheda, near Indore. This investment will enable Bridgestone's Indian plants to meet increased tyre demand, owing to growing vehicle population and production. Production capacity is expected to increase by an estimated 15,000 tyres per day, bringing total daily production from both plants to approximately 41,000 tyres by 2022. It is also expected to create 450 jobs for skilled manpower. INDIA BUSINESS JOURNAL
CORPORATE
site will allow importers to import their goods and reexport them or process the goods for domestic consumption. China is the only other place where the company has such a facility. The warehouse will help meet the demands from customers owing to a lack of bonded facilities near Bengaluru airport.
operating expenses from the sale of gas before sharing profit with the government. Disallowing costs will result in government's profit share rising. RIL's output has continued to drop in subsequent years and is now below 4 mmscmd.
ICEX launches world’s 1st diamond futures Indian Snapdeal calls off merger, Flipkart gets funds Beleaguered online marketplace Snapdeal last month called off talks for its merger with rival Flipkart, India's biggest e-commerce player. The Gurgaon-based Snapdeal said that it wanted to pursue an "independent path". Snapdeal said that it expected to be financially self-sustainable by selling certain non-core assets. Last week, Axis Bank agreed to buy mobile payments wallet provider FreeCharge from Snapdeal for Rs 385 crore. Meanwhile, Japan's Softbank, the largest investor in Snapdeal, pumped in $2 billion (around Rs 12,800 crore) in rival Flipkart. The Japanese conglomerate, which was pushing for a Snapdeal-Flipkart merger, now seems to be betting on Flipkart to take on US rival Amazon in India. Jubilant spices up Rs 100-cr expansion Jubilant FoodWorks, an exclusive India franchisee of Domino's Pizza and Dunkin' Donuts, has embarked on a significant product revamp strategy for Domino's Pizza with an investment of Rs100 crore. The expansion is aimed at sustaining growth momentum of Jubilant's pizza business. With a focus on softer crust, bigger toppings and herbier sauces, the company's all-new Domino's Pizza launch will be backed by an aggressive advertising strategy, and it will also sport new packaging. The company operates about 1,125 Domino's Pizza restaurants and plans to add another 50 stores this year.
HZL to be underground mining company Vedanta Group's Hindustan Zinc (HZL) is on its way to becoming a fully underground mining company by early
next financial year. The leading zinc producer is also expanding metal production capacity to 1.2 mt by 201920 from around 1 mt at present. HZL plans to convert its Rampur Agucha block, which contributes 75 per cent of its output, to underground mine by shutting all open-cast operations. The company has already expedited expansion at other mines to ensure that the overall mine production is not impacted.
RIL, partners face fresh Rs 1,700-cr penalty The government has imposed a new penalty of $264 million (about Rs 1,700 crore) on Reliance Industries (RIL) and its partners BP and Niko Resources for producing less than the targeted natural gas from eastern offshore KG-D6 fields in 2015-16. The production sharing contract allows RIL and its partners to deduct all capital and
Commodity Exchange (ICEX), a screen-based, online, derivatives exchange for commodities, went live with launch of diamond futures last month. ICEX has a rare distinction of offering the world’s first derivatives contracts in diamonds. The diamond contracts launched by ICEX will initially be in the size of 1 carat with compulsory delivery. The exchange is expected to result in efficient price discovery and provide an effective hedging platform for all stakeholders of the diamond industry. The inaugural event of ICEX was graced by several prominent dignitaries.
Hindi news channel INH goes on the air Indian News Hope (INH), a fastpaced, vibrant and dynamic Hindi news channel was recently launched in Chhattisgarh. The media house plans a ground-zero approach to explore the sheer depth and variety of analyses to enrich its viewers’ perspective by presenting them a multiplicity of viewpoints. “We aspire to become the mostpreferred source of information for the youth and want to create our own niche with new parameters for journalism – breaking news, breaking news grounds and breaking convention,” notes INH Managing Director Mohit Garg. SEPTEMBER 2017
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FINANCE
NEWS ROUND-UP
Alternative mechanism for PSB mergers Setting the stage for more mergers, the Union Cabinet last month approved an alternative mechanism to oversee proposals of amalgamation of public sector banks (PSBs). "The proposals received from banks for in-principle approval to formulate schemes of amalgamation shall be placed before the alternative mechanism," said Finance Minister Arun Jaitley. He added that the decision would be based only on commercial consideration by the boards of the banks involved. The alternative mechanism will include a panel of ministers, whose members will be decided by the prime minister.
Max India, HDFC Life shelve merger plan Max India has shelved the proposed merger plan between Max Life and Max Financial Services with HDFC Standard Life Insurance. HDFC Standard Life, which had decided to come out with an IPO, put on hold the merger plan last month in absence of regulatory approval. The merger plan did not go down well with the IRDA as it was in contravention of the Section 35 of the Insurance Act, 1938, that does not allow merger of an insurance business with a noninsurance company.
BoI to pare stake in STCI Finance Bank of India (BoI) is planning to sell its partial or entire stake in STCI Finance. The proposed sale is a part of its strategy to unlock the value of its investments in subsidiaries, associates and joint ventures. The public sector bank holds 1,13,83,781 equity shares, representing 29.96 per cent stake in STCI. STCI is a
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SEPTEMBER 2017
99% of value of banned notes returns to RBI The RBI’s annual report has finally revealed that as much as Rs 15.28 lakh crore of the Rs 15.44 lakh crore high-value currency that was demonetised in last November returned to the central bank. The latest RBI data show that 98.96 per cent of the value of withdrawn Rs 500 and Rs 1,000 currencies was deposited with the banks. The data put a question mark on the efficacy of demonetisation in tackling black money. The central bank was under intense scrutiny since January after the window for depositing the withdrawn banknotes had closed for details on the extent of currency that was returned to the RBI. systemically-important, nondeposit-taking, non-banking finance company (NBFC),
APPOINTMENTS Mohammad Mustafa, a 1995-batch, IAS officer has taken charge as chairman and managing director of SIDBI. Mr Mustafa was joint secretary in the Department of Financial Services before this appointment.
TIE-UPS Bank of Baroda has entered into an MoU with Finolex Plasson Industries to finance farmers through its network of branches across the country to install micro-irrigation system in their fields. Airtel Payments Bank has tied up with HPCL, whose over 14,000 fuel stations will act as banking points for Airtel to boost digital payments.
providing loans against shares, corporate loans against properties, construction finance and corporate loans. The NBFC has two wholly-owned subsidiaries, STCI Primary Dealer and STCI Commodities.
Banks woo customers with offers, discounts State Bank of India has announced waiver of up to 100 per cent processing fee on car, gold and personal loans ahead of the festive season. Of late, banks have been introducing various offers and discounts to attract customers. Last month, ICICI Bank had announced launch of instant credit cards. In July, Punjab National Bank had waived processing fee and documentation charges for new housing and car loans till September-end.
Indian insurance lags in digitisation Global average investment in digital technologies is increasing over the years, while the insurance industry in India is
lagging, both in its level of digitalisation and its ability to realise financial returns on its digital investments, notes a CII-PwC report on the Indian insurance industry. With increasing smartphone penetration and internet access, insurance companies will need to strategically adopt the technological infrastructure required to launch products that meet customers' needs, the report adds. Leveraging low-cost, digital, distribution channels for sales and service will help insurance companies deepen market penetration, it notes.
PSBs more focused on NPAs than lending Public sector banks (PSBs) in India are more focused on limiting losses from previous bad debts rather than seeking new lending opportunities, notes the mid-term Economic Survey. The Economic Survey Volume II 2016-17, tabled in Parliament, further adds: "The problem is that public sector banks are in damage-limitation mode rather than seeking out new clients and opportunities. So, how can they regain their true function of providing credit to support economic growth?"
10% rise in wilful defaulters in FY17 Public sector banks (PSBs) reported a 20 per cent jump in outstanding loans by almost 9,000 wilful defaulters in 2016-17. The outstanding loans by wilful defaulters rose to Rs 92,376 crore at the end of 2016-17 as against Rs 76,685 crore in 2015-18, registering a jump of 20.4 per cent. During the same period, there was close to 10 per cent increase in number of wilful defaulters from 8,167 in FY16 to 8,915 in FY17, according to data collated by the Finance Ministry. INDIA BUSINESS JOURNAL
Bharat Petroleum Corporation (BPCL) is planning to venture into gas business, which will be the company's next value chain. The oil marketing company is looking at Rs 1 lakh crore of capital expenditure (capex) in the next five years for costcompetitive acquisitions, marketing, technological upgrades and refinery. "We want our market cap to reach Rs 2.5 lakh crore. That is 2.5 times increase of what it is now," notes BPCL Chairman and Managing Director D Rajkumar. The company has bought 2 million barrels of oil from the US recently.
Indian Oil to buy 50% in GSPL LNG The board of Indian Oil Corporation (IOCL) has given its inprinciple approval for acquiring up to 50 per cent equity in GSPL LNG. The latter is setting up a 5-mmpta LNG terminal at the Mundra port in Gujarat. GSPL LNG is a joint venture of Gujarat State Petroleum Corporation and Adani Enterprises. The oil refining company will pay approximately Rs 5,040 crore for 50 per cent in GSPL LNG. The LNG terminal will be commissioned in the fourth quarter of FY18 and have receipt, storage and regassification facilities.
Singareni plans solar plants near mines Singareni Collieries, a State-owned mining company, is considering setting up solar photovoltaic power projects in the mining belt where its collieries operate. Singareni Collieries Chairman and Managing Director N Sridhar recently outlined plans to set up these solar power plants in some of the areas where it is operating coal mines. During a recent meeting with INDIA BUSINESS JOURNAL
Cochin Shipyard steals the show on bourses Cochin Shipyard made a dazzling debut on the BSE and the NSE last month, listing at a premium of over 20 per cent to its issue price of Rs 432. The Rs 1,468-crore IPO of the State-run shipbuilder, which had manufactured the iconic INS Vikrant, had earlier been subscribed by over 76 times. The company will use the proceeds from the public offer to set up a new manufacturing facility besides general purposes, according to its prospectus. After the IPO, the government's stake has come down by 10 percentage points to 75 per cent. senior management of the company, Mr Sridhar called upon officials of Singareni
Thermal Power Plant to explore possibilities of establishing 50- or 100-mw solar plants near its mines.
APPOINTMENTS
SAIL draws up plans to cut costs Steel Authority of
Rajiv Bansal, a former director in the Union Ministry of Civil Aviation, has been appointed as chairman and managing director of Air India.
India (SAIL) has charted a roadmap to turn around. In an official statement, the State-owned steel-maker has said that it will soon set an EBITDA target for the next two to three years. The turnaround goals were recently spelt out by SAIL Chairman P K Singh to company employees. He said: "Market conditions are volatile and we have to adapt to them fast, matching the world standards." The company is planning to reduce procurement and finance costs and focus on cutting operating cost of old and new assets.
Rawneet Kaur, a former joint secretary in the Department of Industrial Policy and Promotion, has taken over as chairman and managing of India Tourism Development Corporation.
TIE-UPS Bharat Sanchar Nigam has unveiled its mobile wallet in partnership with MobiKwik to enable onetap bill payment for its over 10 crore subscribers. The digital wallet can be used at more than 15 lakh merchant outlets across the country.
MRPL unveils portal for start-ups Mangalore Refinery and Petrochemicals (MRPL) has launched a Start-up India web portal to support promising start-ups. Accordingly, MRPL will
PUBLIC SECTOR
BPCL lines up Rs 1-l cr capex for gas business
support and fund projects in the energy sector and nurture an ecosystem conducive for innovations. Some of the focus areas for start-ups include automation and robotics in hydrocarbon area; development of device for cracks and leak detection in pipelines; low-cost model for waste to energy; biofuel manufacturing; low-cost process for desalination of sea water; innovative waste disposal; and other open areas related to petroleum refining and alternative energy.
ONGC to double gas output to 100 mmscmd Oil
and Natural Gas Corporation (ONGC) is planning to raise its natural gas output by over 53 per cent from about 65 metric million standard cubic metres per day (mmscmd) to 100 mmscmd by 2017-18 as new fields start off the west and east coasts. The newer gas finds will help turn the tide for ONGC, which has seen oil and gas output stagnating in recent times. The incremental output will come from fields off both east and west coasts, the company has said in a communique.
EESL to procure electric sedans Energy Efficiency Services (EESL) will procure 10,000 electric sedans in a bid to increase popularity of such vehicles in the country. EESL has called for an international tender to aid in price discovery. The company will procure 1,000 cars in the first phase. To begin with, these cars will be used by government officials in New Delhi and the National Capital Region. EESL plans to charge government officials 90 per cent of their monthly cost of the current vehicles to replace them with the electric ones. SEPTEMBER 2017
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FACE TO FACE
"We Want To Be A Global Company"
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ast year was quite a bonanza for Smart Card IT So- sure how to handle the situations. I travelled the whole lutions (SCIT). Demonetisation-driven push for digi- world to understand what is happening in this industry tal transactions and a new entrant in the telecom and what is not. I am an aggressive entrepreneur, and I space helped the Mumbai-headquartered smart card manu- always believe that whatever business I get into should facturer grow rapidly. Deven Mehta, the young and enter- become the largest one. So, we set up a professional team, prising chairman and managing director of SCIT, is cer- got some fantastic people on board and developed the tainly pleased with his company's performance even as he business slowly. Then one thing led to another, and we draws up big plans for coming years. began getting orders. The 47-year-old ace investor - whose big bets in cherryWhat would you consider as the turning point for your picking and handholding start-ups have earned him name, smart card venture? fame and riches - has steered SCIT to become one of the Demonetisation was a major gain for us. We realised country's largest smart card-makers. With two world-class that demand for credit and debit cards would go up subplants in Shirur near Pune and an upcoming one in Turbhe stantially because of the note ban measure. In fact, since near Mumbai with annual production capacity of 55 crore November 2016, the company has expanded capacity in smart cards - churning out 2.5 crore smart cards per month, the banking vertical alone to 1 crore cards per month, makthe company is a market leader in the telecom vertical and ing SCIT the largest banking card company in India. New a major player in the banking and entrants in telecom sector has furgovernment identity verticals. SCIT ther pushed up our sales in the is now geared up to make a splash telecom vertical. The market is across overseas markets, reveals growing, and demand for smart Mr Mehta, as he shares his cards is rising. Anyone with a large company's big plans with capacity like ours will certainly Amit Brahmabhatt in an engaging benefit from these developments. interview. How is SCIT minimising the People know Deven Mehta more risk of technological obsolesas a strategic investor. How did you cence, a major challenges for get into manufacturing? smart card manufacturers? As a strategic investor, I used SCIT has complete in-house manufacturing This is not a technology that to meet a lot of promoters who had capabilities across the entire width of smart gets obsolete. For instance, those card design and delivery. ideas for me to invest in. However, manufacturing magnetic cards beI had never invested in anything greenfield. Then sud- fore they became obsolete could easily migrate to chip denly, a greenfield project came by. Somebody from Pune card technology. They did not have to throw away the approached me to become a working partner in a smart magnetic card machines as new modules could be added card manufacturing venture. My immediate reaction was to the existing machines. So, the issue with our technolnegative. But then, after a lot of research about the indus- ogy is only a question of some monetary outgo and defitry, which is worth about $58 billion globally, I finally got nitely not a huge loss. into the venture. How was the going for your company in the last finanWill you take us through the exciting journey tra- cial year? versed by SCIT to become one of India's largest smart Last year (FY17), on an average, we were able to churn card companies? out around 2.5 crore cards each month. The telecom vertiSCIT was set up just as India was on the threshold of a cal cornered a major share of our total revenue of Rs 275 gigantic jump to a chip-based world of identity and trans- crore last year. We also ramped up the banking segment actions. The greenfield project was conceptualised in 2010, capacity after demonetisation, especially between Januand we started commercial production in 2011. The first ary and March of 2017. Last year was indeed great as our year was tough as the business was new, and we were not revenue rose by Rs 100 crore over the previous year's 12
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INDIA BUSINESS JOURNAL
“Last year was indeed great as our revenue rose by Rs 100 crore to Rs 275 crore. We are targeting around Rs 650-crore turnover this year, and SCIT is set for bigger revenue growth in the next three years.” DEVEN MEHTA Chairman & MD, Smart Card IT Solutions
(FY16) revenue of Rs 175 crore. We are targeting around Rs 650-crore turnover this year (FY18), and SCIT is set for bigger revenue growth in the next three years. What factors would you attribute to the company's rapid growth? When I say that we make 2.5 crore cards each month, that is a lot of quantity. At the same time, we are very quality conscious about our products, and the industry knows that very well. By far, we are the best in the country in terms of quality, and we have rarely had a complaint of any nature at all. Besides, we are very customer friendly and proactive to customers' demands. A very small number of companies in India have end-to-end capabilities in this industry. SCIT is perfectly placed in all the segments to capture a lion's share of the market. As you aim to make SCIT a Rs 2,000-crore company by 2020, would you share with us some of your ambitious plans in the near future? The target is a bit too ambitious. But three years from now, the target is possible to achieve because the industry is growing at an amazing speed. We are ready with our vision document, Vision 2020. In India, we are already doing well. Now, there is an opportunity in the global markets, and we want to become a global company. SCIT has already entered the overseas market, and we have set a joint venture with a company in Dubai. We are going to do large-scale projects in Africa. INDIA BUSINESS JOURNAL
In 2014, you had said that you wanted to take the company public in three years and retire in five years. How close are you to your plans? I have worked for 32 years now, having started off very early at the age of 16. I am a very active person, and when I say retirement, I do not mean retirement in the literal sense. I will be working for another three to four years, and once SCIT achieves a certain scale of business, I would think of going for an IPO, or selling a stake in the company to a private equity investor or a strategic partner. I have worked a lot all these years, and it is now time to manage the assets built over these years and do some philanthropy. As an ace investor, how would you read the current market rally, and is it sustainable? The market rally is very good and sustainable from an investor's perspective of two to three years. However, nobody can say anything in the short term as we are so intricately locked in with several global factors today. When not scouting for hidden gems to invest, how do you spend your pastime? I love to travel overseas, see different countries and different cultures and get immersed in those cultures. There is so much to this world beyond working. I have worked enough, and there is only so much one can do. I need to enjoy this world now.
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AUTOMOBILE
American Plans With auto, IT and more, the Mahindra Group is aggressively rolling out its billion-dollar projects in the lucrative US market. MUNISH SHEKHAVAT
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he Mahindra Group plans to invest $1 billion (around Rs 6,500 crore) across business verticals in the US over the next five years. With this investment, the diversified automobile company aims at doubling revenues from the American market to $5 billion (about Rs 32,500 crore). The Mumbai-headquartered group, which currently employs around 3,000 people in the US, also plans to double the headcount over the next five years as it looks to expand operations. "We have so far invested around $1 billion in the US among all the businesses, and we should invest another billion over the next five years," reveals Mahindra & Mahindra (M&M) Managing Director Pawan Goenka. The quantum of investment, however, will depend on various factors, like market conditions and success of various projects that are currently underway in the US, he adds. Elaborating on various strategic projects, 14
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Mr Goenka discloses that the company has bid for a US postal service contract, and if it comes through, it will help the company grow exponentially in the country. The $19-billion (nearly Rs 1,22,000 crore) group currently generates around $2.5 billion (around Rs 16,250 crore crore) from its seven business verticals in the US. The major group companies active in that country include IT major Tech Mahindra and
Tech Mahindra plans to add around 2,200 people in the US, its biggest single market in the world.
Mahindra USA, which sells tractors and utility vehicles. The group is also present across various other verticals, including aviation, electric two-wheelers and supply chain. Mr Goenka adds that the company's growth will be led by various factors, like launch of a new offroad vehicle by its subsidiary Mahindra North America Technical Centre (MNATC), besides other group entities. He elaborates that the growth will be led by Mahindra USA and Tech Mahindra. Auto, IT, etc The automobile company is targeting huge success of the Mahindra brand in the US as this accomplishment in the USA will mean recognition in various other geographies. "Building the Mahindra brand in the US is very important for us because it is the place everyone looks up to. The brand which gets successful in this market gets automatic recognition in so many places," points out Mr Goenka. He admits that Tech Mahindra, like all other Indian IT companies, faces visa issues and is working on resolving the matter. "Other than IT business where there are both locals and people brought in from India, none of our other businesses has huge number of Indians (brought) to the US for work," notes Mr Goenka. He further adds: "The company's objective has never been to bring in people from India. We have invested here, we have employed people here, and thus, we have not really been impacted by the new polices." After being nudged by the Trump administration, Indian IT companies, including Tech Mahindra, have now been focusing on local hiring. In fact, Tech Mahindra has been recruiting from colleges in the US, and this year, it plans to add around 2,200 people in the country, which remains its biggest single market in the world. M&M chief denies facing any discrimination in the US. "There is no discrimination that I can think of in INDIA BUSINESS JOURNAL
Anand Mahindra Calls For E-Vehicle Sops
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he government needs to incentivise buying electric vehicles (e-vehicles) in order to bring down the cost and thus push their sales in the country, according to leading industrialist Anand Mahindra. The Mahindra Group Chairman points out that there is still reluctance on the part of consumers to go for electric cars as a result of very high battery cost. "In order to create the push, the
government, therefore, does need to create incentives, whether they come through the Central or the State governments, to provide a lower sticker price for cars," adds Mr Mahindra. He further adds: "The incentives could be by lowering taxes of other kinds, but you do need some incentive to lower the upfront price. This can be transitioned down because battery prices are also coming down dramatically."
conducting business in the US. Laws and taxes are the same for everyone. I don't see any kind of disadvantage for Indian multinationals here," clarified Mr Goenka. High-end strategies The company is readying two new models by the end of the next financial year as a part of its plans to consolidate its position in the Indian passenger vehicle segment. M&M, which sells utility vehicles, ranging from compact KUV100 to XUV500, also has plans to introduce a new electric vehicle in the next two years. "We have two products coming in the next two years. One is the U321 (code name) multi-purpose vehicle (MPV) which has been developed on the new global platform developed here in Detroit. It will come out during this financial year," discloses Mr Goenka. The new vehicle is expected to compete with the likes of Toyota Innova and Tata Motors Hexa in the Indian market. The second vehicle is codenamed S201, which is based on the SsangYong platform Tivoli. It is likely to come out in the next financial year. Both the vehicles are set to be launched in India first, and the company could consider introducing them in other geographies as well. M&M sells nearly 18,000 passenger vehicles per month in the domes-
tic market, and its market share has been consistent at around 8 per cent for the last few years. "In the last couple of years, we have not grown market share, but similarly, we haven't lost either. Clearly, every company will wish to grow its market share, and for that, we need to ensure that our current products continue to do well and bring in volumes," points out Mr Goenka. The Mahindra Group is looking at establishing four models it currently has in its portfolio of electric vehicles before bringing in a new product. The group does not have any plans to launch passenger vehicle operations in the US, where it has faced various
INDIA BUSINESS JOURNAL
"Building the Mahindra brand in the US is very important for us. The brand which gets successful in this market gets automatic recognition in so many places." PAWAN GOENKA Managing Director, M&M
Mahindra Group Chairman Anand Mahindra
issues in the past. The company had to face some lawsuits in the US, which have all been settled now. In 2010, its exclusive American distributor had filed a lawsuit against the company "for taking too long" to launch a pickup truck in the country. Currently, M&M is focusing more on off-road vehicle in the USA rather than going in a big way to launch on-road utility vehicles. The automobile company has also redrawn its strategy on its twowheeler business. "We are changing strategy as far as the two-wheeler business is concerned. We are moving away from the commuter segment to high-end premium bikes, and we are working on bikes based on BSA and Yezdi brands," adds the M&M chief. He, however, has declined to give a timeline for launch of new products. The Mahindra Group has consolidated its position in the Indian market as a leading automobile company. With growth in the domestic market accelerating at a rapid pace, the diversified automobile company is looking beyond Indian shores, focusing especially of the US market. With auto, IT and more, the Mahindra Group is aggressively rolling out its billion-dollar plans in the lucrative American market.
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CORPORATE REPORT
Packing A Punch Uflex's newly-launched plant in Gujarat further strengthens the company's competitive edge in the flexible packaging industry. IBJ BUREAU
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flex, India's largest multinational flexible packaging materials and solutions company, has recently added another feather in its cap. The company recently unveiled Asepto, its aseptic liquid-packaging brand. Derived from the word aseptic, meaning sterile, Asepto ensures that food remains free from bacteria and other harmful micro-organisms for at least eight months under room temperature. Uflex has operationalised first-ofits-kind aseptic packaging plant in Sanand, Gujarat for packing liquid products with an initial capex of approximately Rs 580 crore in the first phase. This new facility has been designed for a maximum capacity of 7 billion aseptic packs per annum, offering packaging solutions for nonaerated drinks, liquid dairy products, juices and other beverages. The aseptic packaging market in India is majorly classified into three segments - juices, dairy products and liquor. Packaging of flavoured milk, other dairy items and liquor in aseptic packaging material will play a key role in propelling growth of aseptic packaging in the coming years both in India and overseas. Uflex's aseptic liquid-packaging manufacturing plant has already been commercially operational. Global reach Over the last three decades, Uflex has earned an irreproachable reputation by defining the contours of the packaging industry in India and overseas alike. Since its inception in 1985, it has turned into a billion-dollar company, 16
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focusing on trust, value creation for customers, quality innovation and customer satisfaction. Headquartered in Noida, Uflex has state-of-the-art flexible packaging material manufacturing facilities at multiple locations in India with installed capacity of around 1,00,000 tpa and has polymeric film manufacturing facilities in India, the UAE, Mexico, Egypt, Poland and USA with cumulative installed capacity in excess of 3,37,000 tpa.
"The financial year 2017-18 has started off on an assuring note." R K JAIN President (Corporate F&A), Uflex
Promoted by Ashok Chaturvedi, who is fondly revered as the father of the Indian flexible packaging industry, Uflex has grown from strength to strength with large manufacturing capacities of packaging film and other packaging products, providing endto-end solutions to clients across over 140 countries, where it enjoys a formidable market presence. Name the product, and Uflex offers a packaging solution for it. The company offers technologically superior packaging solutions for a wide vari-
ety of products, such as snack foods, candy and confectionery, sugar, rice and other cereals, pharmaceuticals, contraceptives and engineering components, among others. Winning strategies With over three decades of rich experience, Uflex has been setting benchmarks of success and innovation to become a part of modern daily life. The company has clocked 8 per cent bottom line growth year on year during the quarter ended June 30, 2017. The consolidated net profit stood at Rs 93 crore as compared to Rs 86 crore during the first quarter of FY17. Consolidated total revenue for the first quarter of the current financial year was Rs 1,624 crore as against Rs 1,516 crore in the same quarter of the last financial year, registering 7 per cent top line growth year on year. The total sales volume also grew by 5 per cent as compared to the first quarter of FY17. "The financial year 2017-18 has started off on an assuring note. We expect to close the year with 15 to 18 per cent growth in our top line and around 20 per cent growth in the bottom line. Our confidence derives from product innovations launched by us in the recent past and also commencement of our new manufacturing plant in Sanand. This has completed our product offering bouquet in its entirety. This feat will further strengthen Uflex's competitive edge in the flexible packaging industry," notes Uflex President (Corporate F&A) R K Jain. Innovation to create value-added differentiation is the cornerstone of Uflex's business strategy. The company's focus on developing and launching newer films and packaging products that contribute to the overall financial growth will continue to keep the packaging major way ahead of the competition. INDIA BUSINESS JOURNAL
STRAIGHT TALK
"Our Next Focus Is On Goa"
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uldip Singh Bhinder has seen the best of both the worlds. The CEO of The Golden Palms Hotel and Spa relishes those memorable years of working with renowned filmmaker Sanjay Khan, the former owner of the sprawling, 150-room Bengaluru property. Mr Bhinder is equally happy with the new promoter of the luxury hotel, Industrial Investment Trust (IITL) - a leading Mumbaibased investment company with interests in financial services, insurance, real estate and hospitality - which took over the property in 2010-11.
in India. Bengaluru alone has 25-plus five-star hotels, and so, the competition is immense. But I think that competition is good as it has helped improve standards. Besides, tariffs have been rationalised as a result. How does Golden Palms stand out in the overcrowded and highly competitive hospitality sector? Golden Palms has its own charm. For instance, our Bengaluru property is away from the city and spread across a vast expanse of 15 acres. The swimming pool there is a major draw as it is bigger than an Olympic pool at
(meetings, incentives, conferences and events) segment, are our major focus area. Besides, weddings and the day-out segment - a large gathering of corporate entities for their teambuilding exercises for a day - make up the remaining part of our business. Has the GST impacted your business in any way? Like every other industry, we too felt the impact of GST for about two months when our business was slightly low. But there is already a rebound. Many corporate entities that had panicked about the new tax are coming back in a big way. In fact, we began August on a very good note. The hotel industry which was accepting a lot of cash earlier will stop dealing in cash, thanks to GST. Once that stops, that segment of the industry "When you enter Golden Palms in Bengaluru, you can feel the grandeur, and you realise that only a filmmaker can think of such a large canvas."
A veteran in the hospitality industry with over 24 years of experience, Mr Bhinder was also associated with the Sahara Group and Club Mahindra. Golden Palms, with two more properties - a 45-room hotel in Mussoorie and a 50-room property in Delhi built from scratch - is a leading player in the leisure, resort and business segments. In a wide-ranging interview with Amit Brahmabhatt, the Golden Palm CEO shares his views on the hospitality industry and reveals his company's expansion plans.
130 metres. Filmmaker Sanjay Khan, the original owner of the property, had designed the spa on the lines of spas - called hamam - in the Gulf countries, which are very spacious. Being away from the city may be a disadvantage at times. However, this distance has helped us not to get into rate-cutting fights that city hotels are into. Our property in Mussoorie has a rich heritage. Mahatma Gandhi used to stay in the house - which once stood on this plot - whenever he visited Mussoorie.
How has the growing competition changed the dynamics of the Indian hospitality sector? There is a sudden influx of many new hotels, especially international brands which think that the future is
What are the focus areas of your business? We have modelled our business around the conferencing segment, and that has really helped us grow. Conferences, particularly the MICE
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comes into the tax net, and the wheels of the economy will start turning. Once that happens, as the finance minister has already indicated, the tax rates will be revisited and revised. High attrition seems to be a major challenge for the industry... Attrition as a result of high competition is certainly a challenge. But we have ourselves to blame for this level of attrition. It often happens that most new hotels poach employees from existing hotels. Most often, the only motivation to attract employees is money. So, employees are offered very high salaries that they may not be worthy of. Finally, these people will end up in positions where they have to take major decisions, and hence, many of the hotels find their middleINDIA BUSINESS JOURNAL
level management to be weak. But this is not the case with the Taj or the Oberoi. These hotels may not be the best paymasters in the industry. Yet they look after their employees so well. Naturally, attrition rates at these hotels are as low as 2 to 3 per cent. How has the experience with attrition been at Golden Palms? We have been quite lucky in this matter. The top management of Golden Palms has been around for a long time. Our chef in Bengaluru has been there since the hotel started. I have been with Golden Palms for 11 of the 14 years since the hotel started in Bengaluru. My sales team has been around for about 10 years. Mr Khan "We have been slow, but steady, in adding new properties as we want each of them to be self-sustainable. Most of the brands today boast of a large number of properties, but their debt ratios are too high. On the contrary, we don't have any borrowing." KULDIP SINGH BHINDER CEO, The Golden Palms Hotel used to look after his staff as his family, and even after IITL took over the management, the benefit for the staff have remained the same. In fact, a lot of members of the staff - about 250 of the 400 employees in Bengaluru - have been picked up from nearby villages and trained. So, they seem to have an obligation to the hotel for providing them an opportunity to grow in life and have been with us for a long time. Would you share with us some of your expansion plans? We are planning to expand our Bengaluru property from 150 to 200 rooms to cater to the growing demand. There are also plans to take properties on management contract. Accordingly, we have put in a team to look for hotels that can be taken on manINDIA BUSINESS JOURNAL
agement contracts. Our next focus is on Goa as it is a major international destination. We are already in talks with promoters of two hotels there to take them on management contract. We have been slow, but steady, in adding new properties as we want each of them to be self-sustainable. Most of the brands today boast of a large number of properties, but their debt ratios are too high. On the contrary, we don't have any borrowing, and we are a debt-free company. Finally, would you recount some interesting experiences of working with Mr Khan? Only Mr Khan could have built a hotel like this because he was not a hotelier. There was no commercial angle involved, being a filmmaker, he
wanted the property to be larger than life. When you enter Golden Palms in Bengaluru, you can feel the grandeur, and you realise that only a filmmaker can think of such a large canvas - the expanse of the property, the size of rooms, the way the lawns have been made and the trees planted. The vintage furniture has been handpicked by Zarine Khan (Mr Khan's wife) and so are the beautiful interiors, conceptualised by her. Two of the residential suites, named as Dewan Purnaiah and Tipu Sultan - the famous TV serial that Mr Khan made - reflect the glory of the bygone era. Mr Khan is a gentleman, who would personally greet his guests at the hotel, and it was very nice to work with him.
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GUEST COLUMN
The Power Of Apps By leveraging technology, the Ministries of Power, Coal, New & Renewable Energy and Mines usher in transparency and rebuild people's trust in government. PIYUSH GOYAL
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very government comes to power with the promise of serving the people and making their country a better place to live in. When this promise is broken by inefficiencies and corruption, people's trust in their leadership is shaken, and they demand answers. In elections then, the people give their own answer to the government, and expectations are transferred to the next government. It is in such an atmosphere of anger and expectation that the Narendra Modi government came to power. Before the 2014 election, India saw the fight against corruption become a people's movement. This momentum towards honest governance found its conclusion in India electing Mr Modi as their prime minister. People placed their trust in him, seeing that his words were backed by action and conviction, and the task was set for our government: clean up the past, deliver on promises, and reignite people's trust in institutions. In May 2014, people rejected a situation where decisions took place behind a smokescreen and were allowed in the public eye only through a Rightto-Information (RTI) procedure. The RTI didn't allow citizens to monitor government's work and instead of being a right, it became a privilege, outside the reach of many citizens who are not well versed with the nittygritty of the process. What was needed wasn't a post-facto privilege, but a round-the-clock right to transparency. Under the guidance of Mr Modi, the Ministries of Power, Coal, New and Renewable Energy and 20
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Mines have been digitising our decisions, progress and goals in the form of apps and delivering upon the PM's promise of the Right to a Transformed India.
How Apps Empower People GARV: Shows villages yet to be electrified in a district MERIT: Informs price being paid by a power utility for electricity URJA Mitra: Sends intimation of power cut in advance TAMRA & TARANG: Track status of projects and clearances UJALA: Tracks rollout of LED bulbs across the country MSS: Allows reporting illegal mining Coal Mitra: Identifies the most efficient thermal power plants ARUN: Provides a DIY guide for solar rooftop installations
Transparent Tools Among other means, we've brought transparency through user-friendly apps that broadcast all our major operations to people's mobiles. Want to know the villages yet to be electrified in your district? Just log onto GARV. Want to know the price being paid by your power utility for electricity? Try MERIT. Worried about the next power cut? Don't worry, URJA Mitra will send a notification intimating you in advance. TAMRA and TARANG track the status of projects and clearances, enabling people to hold the government accountable for bottlenecks. It's a fact that while there was a
near shutdown of mining auctions before 2014, 29 mining blocks generating revenue of more than Rs 1.22 lakh crore over the lease period of the mines for mineral-bearing States have been auctioned in the past three years, and TAMRA will help further enhance this. By ensuring timely execution, the TARANG app played a role in rapid expansion of our transmission network. Value of projects commissioned between 2014 and 2017 is 83 per cent more than that commissioned between 2011 and 2014, and there has been a 40 per cent increase in India's transmission capacity between 2014 and 2017 alone. PM Modi's 2015 Independence Day speech aroused in people's minds a deep care for India's energy-deprived citizens. As he set the task of electrifying India's remotest villages in 1,000 days, public interest was high in the progress of this Herculean task. GARV fulfilled the need for a platform with village-wise progress reports, and GARV-II surpassed this with habitation-wise data down to the households. Transparency has helped us immensely as people's scrutiny further energises the speed-skill-and-scale mantra. We greatly value all inputs we receive from the people and the media. With GARV, public funds were saved as journalists highlighted uninhabited villages. Making data more meaningful, GARV goes beyond listing and gives an impact study on villages. While power purchase by discoms was earlier mired in corruption, the MERIT app and Vidyut Pravah have eliminated discretion and reduced costs. Over the next five years, MERIT is expected to save Rs 20,000 crore in power procurement costs, reducing consumers' bills. UDAY and URJA go a step further by ranking performance INDIA BUSINESS JOURNAL
COVER STORY
A RAW DEAL Even after 25 years of economic liberalisation, Indian farmers continue to be let down by governments, policies, prices and markets. IBJ RESEARCH BUREAU
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t was yet another bountiful, but bitter, harvest for Indian farmers last year. The 2016-17 crop year (July 2016-June 2017) threw up an all-time high foodgrain production of 273 million tonnes (mt). Last year's rich harvest was further pushed up by a spurt in output of perishable horticulture crops, like fruits and vegetables, to 287 mt. During the same period, production of pulses, oilseeds and sugarcane grew to 22.14 mt, 32.5 mt and 306 mt respectively. Ironically, the bounty across the country's farmlands only brought misery to farmers as prices of most crops crashed severely. Early this year, prices of pulses, including tur (pigeon pea), moong (green gram) and urad (black gram) plummeted below their respective MSPs - minimum support prices (the floor prices fixed by the government for 25 crops, including cereals - like rice and wheat - and pulses, among others, to protect farmers against price crash). The gloom was not limited to pulses alone. The year 2017 began on a shocking note for growers of horticultural crops, especially volatile tomato and onion. Tomatoes and onions plunged to unbelievable lows of Re 1 and Rs 5 per kg respectively briefly at the beginning of the year. Reasonably good monsoon in 2016 - though it was yet another dry year for most parts of south India - after back-to-back droughts in 2014 and 2015 pushed up farm output. The inevitable law of demand and supply 22
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did play its part in diminishing prices of crops. However, other factors were responsible for pushing prices of pulses and a few perishables, like fruits and vegetables, to abnormally low levels. It was fairly clear to those closely connected with the farm sector - such as farmers, traders and government officials related to farm production and procurement - as early as mid2016 that 2017 would bring in a bumper harvest of pulses. Good rains in 2016 and attractive MSP had buoyed farmers to take to cultivation of pulses in a big way. By mid-2016, the acreage under cultivation of pulses had risen considerably. Strangely, the government continued to import pulses through the first few months of 2017. Continuous shipments of pulses from abroad added to huge domestic output, leading to a glut and woefully subdued prices. Farmers who had responded to the government's call for increasing production of pulses naturally felt betrayed. A similar, curious government policy squeezed the fruit and veg"In the current APMCcontrolled system, farmers may typically get as little as 25 per cent of the price that consumers finally pay." ASHOK GULATI Ex- Chairman, CACP
etable market in the first few months of this year. The government's demonetisation last November, aimed at flushing out black money, had an unintended consequence on the perishables. The largely cash-driven vegetable and fruit market was left high and dry as over 86 per cent of cash in circulation was pulled out of the system. With traders and consumers drastically cutting down their purchases in the wake of cash crunch, farmers were forced to offload their produce at rock-bottom prices. Farmers across the country - most of whom are heavily indebted - were naturally livid that they had to suffer huge losses even during a bumper crop year. Then, the Yogi Adityanath government's Rs 36,359-crore farm loan waiver - an electoral promise made by none other than Prime Minister Narendra Modi - following the BJP's thumping victory in Uttar Pradesh in March triggered a similar demand among farmers across India. In April and May, New Delhi witnessed a unique protest by farmers INDIA BUSINESS JOURNAL
from drought-ravaged Tamil Nadu. They tried hard to draw attention of policy-makers in the national capital to their plight by carrying human skulls and holding dead mice in their mouths. Farmers' protests soon spread to other parts of the country. Farmers in Maharashtra staged protests by dumping vegetables and spilling large quantities of milk on the roads. In June, a farmers' rally in Madhya Pradesh took an ugly turn as six people were killed after the police fired on the protestors. Farmers across the country had two main demands - a total waiver of farm loans and better crop prices, amounting to 50 per cent higher than their cost of production. In fact, their second demand stemmed from a similar recommendation made by the National Commission on Farmers, headed by eminent agriculture scientist M S Swaminathan, in 2006. The cost-plus 50 per cent MSP was also pitched by Mr Modi during his campaigns for the general election of 2014. As the protests grew louder and INDIA BUSINESS JOURNAL
Bitter Harvest 273 mt RECORD HIGH FOODGRAIN PRODUCTION
...........................................................................
287 mt VEGETABLES & FRUITS OUTPUT ...........................................................................
22.14 mt PULSES PRODUCTION ...........................................................................
32.5 mt OILSEEDS PRODUCTION ...........................................................................
306 mt SUGARCANE PRODUCTION ...........................................................................
...But price crash erodes farmers' earnings Prices of pulses plunge below MSPs. Demonetisation squeezes vegetables & fruits market for 3 months. Farmers' protest spreads across the country.
gained wide public support, four more State governments waived off loans of small farmers. The Tamil Nadu government was first off the block, writing off loans worth Rs 5,482 crore of small farmers' borrowings from cooperative banks. This was followed by Maharashtra's Rs 34,022-crore, Karnataka's Rs 8,165-crore and Punjab's Rs 10,000-crore farm loan waivers. The combined farm loan waivers across the five States account for Rs 94,028 crore. Meanwhile, pressure is mounting on other States, especially the BJPruled States of Madhya Pradesh, Rajasthan, Chhattisgarh, Haryana, and Gujarat to emulate Uttar Pradesh and Maharashtra. Many of these States will go to the polls in the next two years and are likely to write off farm loans to score electoral dividends. Superficial measures For years now, farm loan waivers have been the sought-after weapon to battle agrarian strife. Around Rs 89,000 crore of loans of about 4.9 crore farmers have been waived by the Central and various State governments in the past decade. The nationwide, Rs 52,000-crore loan waiver announced by the previous UPA government in 2008 occupies the bulk of this figure, notes a study by IndiaSpend, a Mumbai-based website focused on public interest issues and investigative journalism. The study further adds that the past loan waivers have done little to redress agrarian distress. The waivers have been primarily meant to discourage suicides by farmers, apparently caused by widespread indebtedness. However, IndiaSpend's analysis shows that farmers' suicides have continued unabated despite writing off loans in the past. Suicides by farmers have surged by about 42 per cent from 5,650 in 2014 to 8,007 in 2015, according to the latest data released by the National Crime Records Bureau recently. Around 33 per cent of small and SEPTEMBER 2017
23
COVER STORY
marginal farmers across India with farm holdings of less than 1 to 2 hectares rely on informal sources of credit. Naturally, waivers of institutional or bank credit hardly matter as most of small farmers hardly get any relief from their moneylenders. This explains the rising rate of farmers' suicides. "Loan waivers, though temporarily necessary for revival of farming, do not provide conditions for a secure credit system in the long term. The waiver of loans implies that banks will have to be compensated by the government for the amount involved. This means that large sums of money which could have otherwise gone to strengthen the agricultural infrastructure and research will not be available," points out Mr Swaminathan, the scientist who triggered the country's Green Revolution of the 1960s. Farm sector crisis is not new to India. But unfortunately, successive governments have responded with the same old stock of solutions every time the country is up against an agrarian crisis. For farmers, there have often been loan waivers during crisis,
"When governments compensate banks for loan waivers, large sums of money that governments could spend on strengthening agricultural infrastructure will not be available." M S SWAMINATHAN Agriculture Scientist which have hardly benefited them. During normal times, there has been a more-than-necessary focus on agricultural credit even as other fundamental problems have remained unaddressed. Farm credit, which has grown by almost ten-fold from Rs 1,25,000 crore in 2004-05 to Rs 10,00,000 crore in 2017-18, has done little to address the deeper malaise of the sector. Governments continue to pay lip service to farmers' well being. However, most farm-related policies are biased in favour of the urban con-
Credit & Debit STATE
LOANS WAIVED (Rs cr)
Uttar Pradesh
36,359
Maharashtra
34,022
Punjab
10,000
Karnataka Tamil Nadu Total
8,165 5,482 94,028
Around Rs 89,000 crore of farm loans waived in the past decade Farm credit up by ten-fold from Rs 1.25 lakh crore in FY05 to Rs 10 lakh crore in FY18 But spurt in farmers' suicide unabated from 5,650 in 2014 to 8,007 in 2015 Farm credit cornered by large farmers No gains from loan waivers for 33% of small farmers dependent on moneylenders
24
SEPTEMBER 2017
sumer rather than the farmer. For instance, the recent policy of continuing with duty-free imports of pulses even amid a surge in domestic output clearly accords priority to urban consumers over farmers. There is so much of hue and cry in the country, which certainly is justified, when prices of onions or tomatoes surge past Rs 100 per kg. However, not a word is uttered when prices of the same vegetables hit rock bottom and hurt farmers. This often goes unnoticed unless, of course, farmers dump their produce on the roads. When prices of commodities go up, the same set of solutions, including arbitrary ban on exports, duty-free imports and stock control, are promptly imposed and no opportunity is given for farmers to maximise earnings even in good years. The governments sadly do not act with similar promptness when prices plunge and hurt farmers' interests. Fixing infrastructure It is time that the government machinery attuned its policies and addressed farmers' concerns with as much importance as it attaches to those of consumers. More importantly, there is an urgent need to invest heavily in the agriculture sector and boost farm infrastructure. Low investment in the farm sector and inadequate infrastructure have made farming expensive and prices volatile. Good rural roads increase farmers' access to markets and facilitate in raising agricultural income. In recent years, there has thankfully been better progress in building rural roads. Moreover, the Modi government has made big strides in improving rural road connectivity. However, India fares poorly when it comes to other vital farm infrastructure, such as warehouse and cold storage facilities. Roughly 7 per cent of the country's total grain output, 10 per cent of its seeds, around 30 per cent of its fisheries and about 40 per cent of its fruits and vegetables are wasted every year INDIA BUSINESS JOURNAL
for want of enough storage and supply chain infrastructure. The annual wastage works out to mind-boggling over Rs 92,000 crore, according to the Central Institute of Post-Harvest Engineering and Technology. India has over 6,500 cold storage facilities with an installed capacity of 35 mt. But most equipment in use in the cold chain segment are outdated and the facilities are also generally designed to store a single commodity. The market is, however, gradually getting organised, and focus towards multi-purpose cold storages is rising. The warehousing sector in India is currently a hotchpotch of Central and State government-owned and privately-owned warehouses, altogether numbering a little over 1,200 with a total capacity of 127 mt. The sector is gradually stabilising following enactment of the Warehousing Development and Regulatory Authority Act, 2007. Sector regulator Warehousing Development and Regulatory Authority (WDRA) has come out with rules for standardisation of these facilities, and so far, over 1,200 warehouses have registered with the regulator. India is the second-largest producer of vegetables worldwide. Yet its share in global export of vegetables is around a negligible 1.3 per cent. Besides, the huge wastage of food products in the country can easily be averted and provide better earnings for many impoverished farmers if more warehouses and cold storages with better facilities come up across the country. Improved storage facilities can actually guard against price volatility of commodities, especially perishables, by enabling farmers to store their products until prices stabilise and then offload them in the market for better prices. A renewed focus on the food processing industry and more food parks across the country can prevent farm produce going down the drain and enrich farmers. Similarly, a well-developed irrigation system across the country can INDIA BUSINESS JOURNAL
Farm To Fork
6,500
127 mt
NO. OF COLD STORAGE UNITS
WAREHOUSING CAPACITY
35 mt
9
COLD STORAGE CAPACITY
OPERATIONAL FOOD PARKS
1,200+
42
NO. OF WAREHOUSES
UPCOMING MEGA FOOD PARKS
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
India second-largest producer of vegetables worldwide But share in global vegetable exports negligible at 1.3% Annual food wastage at mind-boggling over Rs 92,000 crore More warehouses and cold storages with better facilities needed to halt wastage Need for renewed focus on food processing to boost farmers' income
benefit farmers, most of whom are left to the mercy of monsoon, immensely. Unfortunately, only about 48 per cent of the country's farms are irrigated at present, leaving rest of the fields heavily dependent on rains. The government's Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), launched two years ago, has identified 99 projects that were pending for almost two decades for early comple"When the output cost is strictly controlled, and when farmers don't have a say in input cost, where is the question of profit?" P CHENGAL REDDY Chief Adviser, CIFA
tion. The government has begun well by identifying the long-pending irrigation projects. But these projects need a cumulative investment of Rs 3,00,000 crore in the next five years as against both the Centre and States together investing a little over a Rs 1,00,000 crore last year. Time for a new deal As farmers try to wriggle out of their current crisis, the Modi government has sold them a new dream of doubling their income by 2022. During his Budget speech last year, Finance Minister Arun Jaitley had said: "We need to think beyond food security and give our farmers a sense of income security. The government will, therefore, reorient its interventions to double income of farmers by 2022." By far, quite an audacious target, the government is up against a formidable challenge as it moves ahead to double farmers' income. However, acSEPTEMBER 2017
25
COVER STORY
cording to experts, the basic precondition for doubling farmers' real income (adjusted for inflation) is a 14 per cent annual growth in agriculture for the next five years. In the past three years of the current government, the farm sector shrunk by 0.2 per cent in FY15, grew by a meagre 1.2 per cent in FY16, and, according to advance estimates, is set to rise by 4.1 per cent in FY17. The government has to think really out of the box if it wants to reach this next-to-impossible target by 2022. The Indian agriculture sector is peculiarly poised with a number of inherent problems. Firstly, the sector contributes only around 16 per cent to the country's GDP but provides a livelihood to a little over half of the country's population of 130 crore. This huge mismatch of so many people depending upon a sector whose fortune is rapidly dwindling has forced a majority of Indian farmers into subsistence farming. To make matters worse, nearly 85 per cent of the total operational farmland holdings in India are less than 2 hectares and cultivated by small and marginal farmers. These tiny plots of land, divided and passed on from generation to generation, further make it difficult for farmers to turn farming into a profitable venture. The government needs to bring structural changes in Indian agricul-
"In the entire farm cycle, farmers take the biggest risk but are the least beneficiary. In case of drought or crop diseases, farmers' crop fails, whereas in case of glut, they are not even able to recover the cost." RAJIV TEVTIYA CEO, RML AgTech ture, and it has begun in right earnest. While it is impossible to reverse small land holdings, the concept of cooperative farming - entailing pooling of small farms into larger, voluntary cooperatives to achieve size and scale is gaining ground these days. It is also imperative to strengthen the current framework of farmer-producer companies (FPCs), the cooperatives of farmers that function as a commercial entity. There are already more than 3,000 FPCs functioning across the country. Meanwhile, Ramesh Chand, a member of the NITI Aayog, has proposed a model land leasing law that provides legal backing for small landholders. With the legal backing, these small farmers, who have inherited their lands but have no legal records to prove the
Daily average rural road construction has jumped to 130 km in FY17 from 73 km in FY14, providing better market access to farmers.
28
SEPTEMBER 2017
same, can access formal credit and insurance. They are also able to enter into lease agreement with tenant farmers to cultivate on their land. Madhya Pradesh is the only State that has adopted the model land leasing law so far. As the government gears up to execute these new ideas, it cannot ignore farmers' long-pending woes. "In the entire farm cycle, farmers take the biggest risk but are the least beneficiary. For instance, in case of drought or crop diseases, farmers' crop fails, whereas in case of glut, they are not even able to recover the cost," notes Rajiv Tevtiya, the chief executive and co-founder of RML AgTech, a company that creates technology-based products for farmers. There is an urgent need for the government to create a better ecosystem for risk-taking farmers. The government should focus all its time and energy to eliminate the anomalies in farm produce pricing and market access, the two basic issues that have made farming an unviable venture. Over the past few years, output prices have been rising slower than input costs, and it has severely eroded farmers' earnings. "The government can increase the price of pesticide and petrol, but a farmer cannot increase the price of a produce above a specified rate. When the output cost is strictly controlled, and when farmers don't have a say in input cost, where is the question of profit," asks P Chengal Reddy, the chief adviser of the Consortium of Indian Farmers' Associations (CIFA). The so-called MSP, in the meanwhile, has failed as an effective pricing mechanism. Quite often, the MSP or the floor price has dropped way below the cost of production. Besides, only a handful of foodgrains, 25 to be specific, are guaranteed an MSP, which often ends up only benefiting large farmers. For the rest of the crops, the farmer is expected to become a capitalist and depend on INDIA BUSINESS JOURNAL
market forces. The idea of a price-risk mitigation fund for fruits and vegetables, which will allow to hedge losses in market fluctuations, has remained a non-starter so far. Last year, India celebrated 25 years of economic liberalisation. Over these years, almost all sectors have been opened up and have free access to markets at home as well as abroad. Unfortunately, even after two-and-ahalf decades of liberalisation, Indian agriculture is still highly regulated. Farmers are bound by many outdated laws which restrict them from accessing markets even in the neighbouring State. Agriculture as such comes under the Central government. However, marketing of farm produce falls under the purview of respective State governments. The Agriculture Produce Market Committee (APMC) Act of the 1950s, which has undergone quite a number of modifications in each State, restricts farmers from selling their produce outside the jurisdiction of their respective local mandis (marketyards). Farmers have to sell their produce through auctions in these regulated markets, which are most often controlled by cartels of licensed traders or commission agents. These cartels fix low purchase prices, extract large commissions and delay payments to farmers. "In the current APMC-controlled system, farmers may typically get as little as 25 per cent of the price that consumers finally pay," notes Ashok Gulati, a former chairman of the Commission for Agricultural Costs and Prices (CACP), the agency that recommends MSP for crops. The Centre has, in the meanwhile, put out a model APMC Act, which provides for selling produce directly through contract farming; permits private persons, farmers and consumers to establish agricultural markets; and levies a single market fee on the sale of a commodity. Many of the States have agreed to amend their INDIA BUSINESS JOURNAL
Doubling Farmers' Income: Food For Thought Time to correct pro-consumer, anti-farmer policies 14% annual farm sector growth needed for next 5 years from current single-digit growth Moving beyond MSP and ensuring smooth, timely and adequate procurement by government and private entities Expediting price-risk mitigation fund for non-MSP produce, like fruits and vegetables, to protect farmers during price crash Getting States on board over model APMC Act, allowing private players to set up markets and removing outdated curbs on farmers Boosting e-NAM, which has already linked 585 of total 6,750 APMCs, to improve market access for farmers Pushing cooperative farming to address unviable small farmland holdings, pegged at 85% of total farmland Strengthening farmer-producer companies, currently over 3,000, to enrich small farmers Model land leasing law set to provide farmers access to formal credit and insurance
"We need to think beyond food security and give our farmers a sense of income security. The government will, therefore, reorient its interventions to double their income by 2022." ARUN JAITLEY Finance Minister respective APMC Acts based on the model law. The Union government has also launched the electronic National Agricultural Market (e-NAM). Created as a national electronic platform for farmers to sell their produce across the country, e-NAM promises to provide free access to markets. Karnataka's Rashtriya eMarket Services (ReMS), a joint venture between the Karnataka
government and NCDEX e Markets, has gone a step ahead and put its entire APMC system in the virtual world. However, a few rough edges need to be smoothened in both e-NAM and ReMS to usher in modern, national, online markets in the country. It is indeed a pity that 70 years after independence and 25 years since economic liberalisation, Indian farmer continues to be shackled by archaic regulations. The Indian farmer is no less than any start-up or an entrepreneur. He takes immense risks against all odds, even when government policies and market forces go against him. Yet he is given a raw deal, which makes his life miserable and, at times, drives him to death. This government has set out to improve his condition and double his income by 2022. It should now seriously ensure that the 2022 target does not end up as yet another fancy non-starter.
SEPTEMBER 2017
29
DEFENCE
ARUN JAITLEY
C
an a nation aspiring to be a super power continue to depend on import of defence equipment and ignore development of its indigenous defence production or defence industrial base? Definitely not; indigenous defence production or defence industrial base is the essential component of long-term strategic planning of a country. The heavy reliance on imports is not only disturbing from the perspective of strategic policy and the role India has to play in the security of the region, but is also a matter of concern from the economic point of view in terms of the potential for growth and employment generation. Though all the aspects of power constitute a super power, the military power is a key to a nation's rise to great or super power status. Evolving policies Going back into history, the Indian defence industry has a history of more than 200 years. During the British period, ordnance factories were set up to manufacture guns and ammunition. The first ordnance factory was set up in Cossipore (currently Kashipur, a neighbourhood in north Kolkata) in 1801. A total of 18 factories were set up before independence. At present, India's defence industrial base comprises 41 ordnance factories geographically spread across the country, nine defence public sector undertakings (DPSUs), more than 200 private sector licence-holder companies and a few thousand medium, small and micro enterprises (MSMEs) feeding to the large manufacturers and DPSUs. More than 50 defence laboratories of Defence Research and Development Organisation (DRDO) are also a part of the entire eco-system of defence manufacturing in the country. Till about 2000, most of our major defence equipment and weapon systems were either imported or were pro30
SEPTEMBER 2017
Expanding Base The government fine-tunes its procurement policy and pushes for private sector-driven indigenisation of defence production.
Many of India's defence systems, such as Akash missiles and Pinaca rockets, have more than 60% indigenous content.
duced in India by ordnance factories or DPSUs under licensed production. DRDO, being the only defence R&D agency in the country, actively contributed to the technology development and supplemented the efforts of indigenisation to a large extent. As a result of the efforts of DRDO and DPSUs in R&D and manufacturing, the country has reached a stage, where we have developed capabilities in manufacturing of almost all types of defence equipment and systems. Today, according to a rough analysis, out of our total defence procurement, 40 per cent is indigenous production. In some of the major platforms, a significant amount of indigenisation has been achieved. For example, T-90 tank has 74 per cent indigenisation, infantry combat vehicle BMP II has 97 per cent indigenisation, Sukhoi 30 fighter air-
craft has 58 per cent indigenisation, Konkurs missile has 90 per cent indigenisation. Apart from the indigenisation level achieved in platforms being manufactured under licensed production, we have also achieved success in developing some of the major systems indigenously through our own R&D. These include Akash Missile System, advance light helicopters, light combat aircraft, Pinaca rockets, various types of radars such as central acquisition radar, weapon locating radar, battlefield surveillance radar and so on. These systems also have more than 50 to 60 per cent indigenous content. With the above progress made through the State-owned manufacturing companies and DRDO, the time was right to expand the defence industrial base by including the private sector in the fold of Indian defence INDIA BUSINESS JOURNAL
that period, only 214 licences were issued. Private push Defence being a monopsony sector, where the government is the only buyer, the structure and growth of the domestic defence industry is driven by the procurement policy of the government. The government has therefore fine-tuned the procurement policy to give preference to indigenously manufactured equipment. To further promote manufacturing of strategic platforms, namely, fighter aircraft, helicopters, submarines and armoured vehicles, the government has recently announced Strategic Partnership Policy, where shortlisted Indian companies can form joint ventures (JVs) or establish other kinds of partnerships with foreign original equipment manufacturers (OEMs) to manufacture such platforms in India with transfer of technology. The policies and initiatives taken in the last three years have started showing results. Three years ago, in 2013-14, where only 47.2 per cent of the capital industry. In 2001, the government allowed entry of private sector into defence manufacturing, along with foreign direct investment up to 26 per cent. It is our endeavour to harness the potential of the entire spectrum of the industry and expertise available in the country in our journey towards building our own defence industrial base, ultimately leading to self-reliance. Though the entry of private sector was opened up in 2001, growth of private sector participation in defence manufacturing was insignificant till about three to four years ago, and it was largely limited to production of parts and components to be supplied to ordnance factories and DPSUs. With liberalisation in the licensing regime in the last three years, 128 licences have been issued for manufacturing of various defence items, whereas in the last 14 years before INDIA BUSINESS JOURNAL
Procurement from Indian vendors has shot up from 47.2% in 2013-14 to 60.6% 2016-17.
procurement was made from Indian vendors, in 2016-17, it has gone up to 60.6 per cent. To promote indigenous design, development and manufacturing of defence equipment within the country, the government has undertaken a series of policy and process reforms. A number of steps have also been taken to revitalise the working of DPSUs. All DPSUs and the Ordnance Factory Board (OFB) have been man-
dated to increase their outsourcing to SMEs so that an ecosystem for manufacturing develops within the country. The DPSUs and OFB have been given targets for export and for making their processes more efficient by cutting down costs and removing inefficiencies. Our defence shipyards have achieved a significant percentage of indigenisation in shipbuilding. Today, all ships and patrol vessels are being ordered by the Indian Navy and the Indian Coast Guard from the Indian Shipyards. Gradually, disinvestment in DPSUs is also being pursued to make them more accountable and bring in operational efficiency. In the last three years, the value of production (VoP) of DPSUs and OFB has increased by approximately 28 per cent and productivity by 38 per cent. We are at a crucial and important phase of our journey towards self-reliance as far as defence production is concerned. After independence, while we started with primarily imports, then gradually moved towards licensed production in the '70s, '80s and '90s and now have started moving towards indigenous design, development and manufacturing. Like other sectors such as automobile, computer software and heavy engineering, among others, I am hopeful that with the constant policy push, efficient administrative processes and handholding, the Indian defence industry would rise to the occasion, and we can witness design, development and manufacturing of major defence equipment and platforms in the country in near future. The process of reforms and the ease of doing business is an ongoing process, and the government and the industry will have to work together to create an ecosystem, which is required for growth and sustainability of this sector. This would be in our long-term interest of national security. (The author is the Union Minister for Defence, Finance and Corporate Affairs.) SEPTEMBER 2017
31
TRADE
Worrisome Slide A rising rupee and uncertainty over GST take a toll on exports which continue to post slower growth month after month. RAJESH RAI
H
ave the country's merchandise exports come out of the woods? This question eludes a straight answer even after 11 consecutive months of growth in the country's shipments. Moreover, going by the Commerce Ministry's data, it is quite evident that India's exports are not in the pink of health. In March this year, the shipments recorded growth of 27.6 per cent year on year. The robust March figures seemed to clarify that the country's exports were firmly in the positive zone after languishing in the negative territory for two successive years. No sooner had the good news brought cheer that the export growth began losing steam in the following months. The country's shipments grew by a lower 19.77 per cent in April, further slowing down to 8.32 per cent in May, 4.39 per cent rise in June and 3.94 per cent in July. 32
SEPTEMBER 2017
Exports during April-July 2017-18 increased by 8.91 per cent over the corresponding period in the previous year to $94.75 billion, while imports during the same period grew by 28.3 per cent to $146.25 billion. Non-petroleum and non-gems and jewellery exports during this financial year so far jumped by 9.05 per cent to $94.75 billion. Oil imports during April-July 2017-18 saw a 20.87 per cent jump to
India's Export Growth Losing Steam 27.60
Growth Rate (%)
19.77 8.32 4.39
3.94
MAR'17 APR'17 MAY'17 JUN'17 JUL'17
$31.02 billion. Non-oil imports during FY18 increased by 30.46 per cent to $115.23 billion. Dismal July Goods exports in July registered meagre 3.94 per cent year-on-year growth, growing at the slowest pace since November 2016, when shipments rose by a mere 2.56 per cent. Data released by the Commerce Ministry show that major commodity groups of export showing positive growth in the month under review include engineering goods (15.16%), petroleum products (20.27%), organic and inorganic chemicals (20.67%), cotton yarn, fabrics and made-ups and handloom products (5.39%) and marine products (30.53%). Non-petroleum and nongems and jewellery exports in July increased by 6.93 per cent. Meanwhile, goods imports in July recorded 15.42 per cent growth, the slowest pace of growth since 1.13 per cent growth registered in January this year. This led to trade deficit of goods narrowing on a month-on-month basis to $11.45 billion, the lowest since $10.5 billion recorded in March this year. INDIA BUSINESS JOURNAL
Major commodity group of imports showing high growth in July were petroleum products (15.02%), electronic goods (22.5%), machinery, electrical and non-electrical goods (7.34%), pearls, precious and semiprecious stones (6.86%) and gold (95.05%). Oil imports grew by 15.02 per cent in July, while non-oil imports rose by 15.55 per cent. Cause for concern T S Bhasin, the chairman of the country's apex engineering exports body EEPC India, notes that growth in exports has certainly slowed, with rising value of the rupee against the US dollar, adversely impacting the bottom line of exporters. "This is quite evident from the trade data that show that while exports for July grew by 3.94 per cent in dollar terms, in rupee terms, the growth has turned negative. In rupee terms, exports have shrunk by 0.32 per cent in July to Rs 1.45 lakh crore," points out Mr Bhasin. He further adds that while engineering exports have still been growing at a respectable pace, it is due to pick-up in base metals. But the rupee value is a cause of concern for exporters. There is another factor that has put brakes on export growth. According to exporters, implementation of the Goods and Services Tax (GST), the new indirect tax regime that came into force from July 1 this year, will further impact growth of the country's exports. "We would not be able to reach the $300-billion figure this year," stresses an exporter, who did not wish to be named. However, the exporters' body, the Federation of Indian Export Organisations (FIEO), emphasises that the country's goods exports will reach $325 billion in 2017-18. Apart from the bullish number put out by the exporters' body, the FIEO is concerned over rising liquidity crunch among exporters. The FIEO has time and again raised the issue of blockage of about Rs 1,85,000 crore annually with the government with the INDIA BUSINESS JOURNAL
"The trade data show that while exports for July grew by 3.94 per cent in dollar terms, in rupee terms, the growth has turned negative and shrunk by 0.32 per cent." T S BHASIN Chairman, EEPC India
"We are worried with the liquidity issue as the refund mechanism would require payment of GST first and its refund subsequently. On a rough estimate, the sector would be losing export competitiveness by about 2 per cent." GST coming into force. Unlike earlier, exporters now have to pay the duties first and seek refund later after exporting the goods. In the pre-GST regime, they were getting exemptions from paying of taxes ab initio. "We are worried with the liquidity issue as the refund mechanism would require payment of GST first and its refund subsequently. The additional cost of credit to manage the liquidity should be borne by the government, if the present exemption is not brought forward in the GST. On a rough estimate, export sector would be losing export
competitiveness by about 2 per cent, and the same needs to be offset to the export sector," adds a statement from the FIEO. Amid concerns of bleak export prospects in the near future, merchandise export growth of 8.9 per cent in April-July 2017 is quite heartening. It should be recalled that this positive, long-term growth in shipments follows two consecutive years of shrinking exports. What seems to have helped lift exports this year so far is the uptick in commodity prices. This is reflected in the turnaround in petroleum and ore and minerals exports. Engineering goods and gems and jewellery, which account for 38 per cent of India's exports, recorded growth rates of nearly 11 per cent each in the April-July period against (-)4.8 per cent in the yearago period. With agriculture and marine product exports also showing a sharp jump after shrinking last year, it would seem that the export turnaround this year has been broad-based even as labourintensive sectors, such as textile and leather, besides drugs and pharmaceutical, registered negative growth. The growth has been geographically dispersed as well with exports to Europe, the US and China up by 5.5 per cent, 5 per cent and 13.1 per cent, respectively in 2016-17. However, the slowing pace of growth of exports this year is indeed worrisome. The positive numbers should be seen in the context of the base effect of export figures when shipments were in the negative last year. Another plausible factor at work here is the execution of earlier orders. No wonder, improvement in exports should have taken place amid sluggish trends in world trade. Meanwhile, the rupee continues its strong rally even as exporters remain clueless in the transition phase of GST. Amid these setbacks, one only hopes that exports do not slip back into the negative zone. SEPTEMBER 2017
33
TEXTILE
Handholding Handlooms The government's recent measures are aimed at reviving the rich heritage of handloom sector and enriching its weavers. K V VENKATASUBRAMANIAN
A
riot of colours, eye-riveting designs, scintillating hues and entrancing interlacing of warps and wefts give these fabrics a distinctive appeal. From the NorthEast and Kashmir to the southern tip of the country, these fabrics have distinguishing features that impart a unique exotic appeal. Through centuries, handlooms have been associated with excellence in India's artistry in fabrics and providing a source of livelihood to millions of crafts-persons in almost every State. Despite sweeping changes, the tradition of art and craft has been kept alive due to continuous efforts of generations of artists and craftsmen. They have weaved their dreams and visions into exquisite handloom products and transferred their skills to their progenies. From ancient times, Indian
handloom products have been identified by their impeccable quality. These include muslin of Chanderi, silk brocades of Varanasi, the tie-and-dye products of Rajasthan and Odisha, the Chintas of Machhlipatnam, the Himroos of Hyderabad, the Khes of Punjab, the prints of Farrukhabad, the Phenek and Tongam and bottle designs of Assam and Manipur, the Maheshwari sarees of Madhya Pradesh and the Patola sarees of Vadodara. Furthermore, the skill involved in producing these special handloom products - such as the Kancheepuram and Benaras silks, the Kosa and Moga silk from Chhattisgarh and Assam respectively, or the Jamdhani from Bengal, the Bhagalpur silk, the Chanderi from Madhya Pradesh and the Tussar and Ikat of Odisha - is a part of a special cultural capital. Though the lighter, Western clothing is preferred today, most of us still do
About 95 per cent of the world's hand-woven fabric is produced in India.
34
SEPTEMBER 2017
not miss the most intricately-woven traditional clothing on special occasions, like weddings and festivals. Tough times After Independence, the government introduced many safeguards to preserve the Gandhian legacy of valuing Khadi to protect handloom weavers and the cultural heritage of this industry from encroachment by the powerloom and mill sectors. The Handlooms (Reservation of Articles for Production) Act, 1985 set aside 22 traditional cloth items, such as sarees with borders, dhoti and lungi, among others, for exclusive handloom production and put them outside the purview of the powerloom sector. But, when this Act took effect after eight years in 1993, after a protracted litigation by the powerloom sector, the reserved list had only 11 items. In the late nineties, production suffered due to a combination of factors, such as customers' changing tastes, trade practices and duty-free import of Chinese crepe yarn. Weavers became labourers. Slowly, trends changed and traditional crafts-persons found it difficult to sustain their livelihood. However, since 2015, the saree has revived people's interest in handlooms like never before. The second-biggest source of employment in rural India, next only to agriculture, the handloom sector provides employment to 43.3 lakh from diverse communities engaged in 23.8 lakh looms across the country. It contributes nearly 15 per cent of the cloth production in the country and also to export earnings. About 95 per cent of the world's hand-woven fabric is from India. Enabling policies Recognising the glorious history of the industry and its relevance to present times, the government is committed to resurgence of hand-woven INDIA BUSINESS JOURNAL
textile and also its weavers. In 2015, Prime Minister Narendra Modi declared August 7 as the National Handloom Day to mark the day the Swadeshi Movement was launched in 1905 and dedicated the day to the weavers of the country, making good on his poll promise of the 5Fs: farm to fibre, fibre to fabric, fabric to fashion and fashion to foreign. The prime minister also launched the India Handloom Brand (IHB) on the same day to endorse the quality of the products in terms of raw material, processing, weaving and other parameters besides social and environmental compliances for earning customers' trust. The IHB soon made its presence on the social media to connect with customers, especially the youth, to promote high-quality handloom products, help build customer awareness and carve a distinct identity for it. Since assuming charge of the Union Textile Ministry in July 2016, Union Minister Smriti Irani has led by example with her I Wear Handloom campaign on the social media, which was started last August. The government has also initiated several steps to revive handlooms. It has laid stress on increasing weavers' earnings, which would in turn attract the younger generation to this profession. These include organising weavers in clusters and providing basic infrastructure by setting up common facility centres. To boost handlooms, the textile minister recently brought together leading designers in a unique publicprivate partnership. More than a dozen of them were assigned handloom clusters for product development and training weavers to upgrade their skills. The other measures include encouraging weavers to sell products through e-commerce; promoting educated youth from weavers' families as weaver entrepreneurs, who will get market information, produce and marINDIA BUSINESS JOURNAL
Promoting Handlooms
August 7 declared as the National Handloom Day India Handloom Brand launched by prime minister India Handloom Brand connecting the youth via social media 'I Wear Handloom' campaign further boosting the sector Focus centred on increasing weavers' earnings Weavers being organised in clusters and provided basic infrastructure Weavers encouraged to sell products through e-commerce Educated youth from weavers' families being promoted as weaver entrepreneurs Efforts on to upgrade hand-weaving technology
ket cloth directly; linking handloom with fashion and tourism to expand the market and increase earnings; and involving the private sector in design development and marketing. The Textile Ministry is making concerted efforts to pitch India as a global sourcing centre for all fabric, making handloom India's niche contribution to the international fashion industry. Efforts are on to upgrade hand-weaving technology in terms of weavers' comfort, productivity and quality. To ensure continuity of the hand-weaving heritage, nine Indian Institutes of Handloom Technology located across the country impart specialised training in handloom weaving to the new generation. Responding to the changing consumer demand in the modern world, handloom weaving in India is evolving each day. Several characteristic innovations like heavy casement, re-
cycled rugs and jacquard woven fabrics in thick cotton and silk fabrics are a popular choice today. Hand-weavers offer a vast range of decorative and furnishing fabrics for homes in cotton and silk. More than 50 per cent of hand-woven exports comprise home textile products. Celebrities and designers continue to make fashion statements around Indian handlooms globally. The decentralised nature of handloom production and its nonpolluting effect on environment make it a preferred sector in coming years. With a low capital-to-output ratio, this sector's strength lies in its uniqueness, a wealth of tradition, flexibility of small production, openness to innovation and adaptability to suppliers' needs. (The author is an independent journalist and columnist with four decades of experience across various media streams.) SEPTEMBER 2017
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MANAV INFRA PROJECTS LTD
Big Gains From Infrastructure Boom
W
ith focused workforce and committed to timely execution of projects, Manav Infra Projects is a leading company catering to construction and infrastructure industries. Formerly known as Sai Baba Constructions, Manav Infra was established in 1995 and has been at the forefront of many landmark infrastructure and construction projects.
commercial contracts, commercial excavation, hiring and lease rental of earth-moving machines, cleaning and grubbing and soil-control measures, among others. Over the years, Manav Infra has built a strong client base, including major corporate houses, such as Kanakia Spaces Realty, J Kumar Infra Projects, ACC, JP Infra Constructions and Nirmal Lifestyle, to name only a few. It has successfully executed projects for the thermal power plant of Shapoorji Pallonji & Co in Bhavnagar, Gujarat.
The company has earned a name for itself in segments as diverse as piling, excavation and transportation. It has played a vital role in diverse inMahendra Narayan Raju, frastructure projects in areas, Managing Director, Manav Infra Projects such as, civil and structural enThe company is expanding geogineering projects and road and excavation contracts. graphical reach by entering new markets for growth The company is also a leader in rental of construction opportunities. It is also planning to penetrate into other equipment and power generators, which it supplies major infrastructure projects and increase its market for large-scale projects around the country. share substantially. The company is seeking acquisi"We have started from scratch in 1995 as a small company, and today, we have strong expertise and modern machinery in the construction industry. We have acquired a fleet of construction machinery that help us undertake contracts for all kinds of civil works, especially in earthwork contracts of excavation in soil, soft rock and hard rock. Excavations are carried out in all kinds of soil and rock conditions for foundation, trenches and drains, landscaping and piping," explains Manav Infra Projects Managing Director Mahendra Narayan Raju. Apart from piling, excavation, transportation and hiring of machinery, Manav Infra is involved in residential and
tion targets and joint venture partners, whose resources, capabilities, technologies and strategies will enable it to penetrate new geographical locations. "The core purpose of Manav Infra Projects is to innovatively make every impossible thing possible in any field we associate with and help the nation to grow. We provide services of advanced technology to our clients, who are well satisfied with our association with them. Manav Infra Projects has always striven to be ahead of the curve by anticipating the market's needs and will continue to do so by working closely with clients. We believe in team work and have an efficient team with us to work," adds Mr Raju. India's infrastructure market is the third largest in Asia and expected to be in the leading position with the Modi government's commitment to the infrastructure sector. The government is targeting Rs 25,00,000 crore of investment in infrastructure over a period of three years. This includes Rs 8,00,000 crore for developing 27 industrial clusters and an additional Rs 5,00,000 crore for road, rail and port connectivity projects.
The company with presence in 29 States has so far completed more than 100 projects for 300 clients.
The government's big infrastructure push is set to benefit companies in the construction sector, like Manav Infra Projects. In fact, Manav Infra has made good progress in the recent past with its turnover increasing from Rs 12 crore in FY13 to Rs 18 crore in FY17. Its earnings per share work out to an attractive Rs 5.16. Manav Infra Projects is well poised to make big gains as India embarks on a massive infrastructural drive.
MANAGEMENT MANTRA
"Dream Big, Do small"
S
aahil Goel, the CEO and co-founder of BigFoot Retail Solutions, always likes to better himself every time. An entrepreneur with strong confidence in himself, Mr Goel believes in moving forward quickly even if it results in a few mistakes. Of course, the BigFoot chief does not advocate being rash but taking calculated risks to achieve goals. It is this work philosophy of Mr Goel that has turned Kraftly, an e-commerce platform, owned and managed by his New Delhi-based BigFoot Retail Solutions, into a thriving online marketplace. Fondly referred to as the de-facto CPO, given his passion for products, growth hacking and technology, Mr Goel, has been questioning everything that impacts business, breaking existing barriers and practising and developing unconventional solutions from the ground up. Along with overall management of the company, he actively heads product strat-
"As entrepreneurs, nothing is off limits. No work is small, no opportunity is bad. However, having clear goals and staying focused on delivering those each day, month and quarter can help you prioritise which projects you pursue and which ones go on the backburner." egy, user experience and growth initiatives at BigFoot. With an MBA and MS from University of Pittsburgh, USA, Mr Goel started his career as a business analyst at Max Life Insurance. Soon, he was working as a technology and process consultant for SDLC Partners. He was also a part of the founder's teams of Kasper Consulting. Mr Goel loves to play the guitar and has been a part of music bands in his school and college days. He is also an avid traveller. A philanthropist at heart, Mr Goel had worked with Habitat for Humanity in the US during his college days. Sharmila Chand chats up with Mr Goel and finds out that the startup CEO 38
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wants to give back to the community through Kraftly, which has several NGOs as sellers on its platform. Ms Chand also gets to understand the management theories and practices that has kept Mr Goel excelling in his entrepreneurial venture. Your five management mantras Hire smart: Don't just hire smartly, but hire people smarter than you. I always gauge people on whether they will bring a new perspective, skill sets and thought process to the company rather than just go with the flow. Keep your eye on the ball: As entrepreneurs, nothing is off limits. No work is small, no opportunity is bad. However, having clear goals and staying focused on delivering those each day, month and quarter can help you prioritise which projects you pursue and which ones go on the backburner. It also helps keep your team aligned and working as one welloiled machine. Quick and final decision-making: There are too many times (especially, later in the life of a start-up) where we start to mull over each possible outcome and try to make the best decision for the business. Many times, this is driven by a need to avoid failure. While risk mitigation should be a big part of decision-making, it should be balanced well with speed. Moving forward and making mistakes are synonymous in my view. The biggest failure is not trying. Dream big, do small: It's important to have a dream of where you want to take your company, and it's important to make this vision as large as you can fathom. However, we often get bogged down by how one can reach there. I've noticed that by focusing on the next logical step and going one step at a time, you get closer to your ultimate objective. It's important to focus on the current set of tasks or projects and not worry about the million tasks that lie ahead of you. Don't give up: Running your own company brings with it many ups and downs. There are many moments when you just want to throw in the towel and move on. What I've realised is that it's important to look at each day as just that - a day. Tomorrow is always a new day and INDIA BUSINESS JOURNAL
"It's never a wrong time to roll up your sleeves and dive in. Speed of execution should always be important, even if it results in a few mistakes." SAAHIL GOEL CEO & Co-Founder, BigFoot Retail Solutions a new chance to make it work. Ignore that inner voice that creates self-doubt, and keep doing it till you win! Your philosophy of work It's never a wrong time to roll up your sleeves and dive in. Speed of execution should always be important, even if it results in a few mistakes. Starting projects is good, but delivering them is the key. Be relentless with delivering your work, and everything else will work itself out. Turning point in your career life I guess my current stint as an entrepreneur is the biggest turning point in my career. Running your own business brings with it a great degree of freedom to pursue what you want INDIA BUSINESS JOURNAL
and how you want it. It also brings with it a great degree of responsibility. I don't think my previous jobs allowed me to learn this. A game that helps your career I'm not big on sports, but I like running and swimming. Working out in the morning helps me stay centred throughout the day. Secret of your success There is no secret. Just believe in yourself and your dreams. A person you admire I don't really follow role models. I like to be better than the past me and learn from my mistakes. Your favourite books I love reading The Peaceful Warrior by Dan Millman. It is one of those books which compelled me to be proactive and live in the moment. Your fitness regime I try to work out at least three times a week and go running in winters, swimming in summers and supplement it with light activity in the gym. SEPTEMBER 2017
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GLOBAL WRAP-UP
Volvo to share tech with Geely Volvo Cars and its parent, Geely Holding, have formed two entities to share existing and future technologies to help accelerate the development of electrified vehicles for Geely vehicles in China and for Volvo cars. Geely Holding, which acquired Volvo Cars in 2010, signed the agreements with Volvo executives in Ningbo, China. Joint venture GV Automobile Technology Company will operated from a China headquarters with a subsidiary in Gothenburg, Sweden. The entities will also form Lynk & Company, which will be responsible for a car line. Amsterdam is RBS' new EU base Britain's State-rescued Royal Bank of Scotland (RBS) has picked Amsterdam as a postBrexit EU base. The troubled bank has revealed that it was preparing its Brexit contingency plan by engaging with the Dutch central bank to use
its existing banking licence in the Netherlands. This development is set to see RBS employing 150 people in Amsterdam. "We have to be in a position to serve our customers," RBS Chief Executive Ross McEwan has said. The lender needs EU's "passporting rights" to continue operating its NatWest Markets investment banking division across the bloc. Iran cos sign big deal with Renault Two Iranian companies IDRO and the privatelyowned Negin Group - have signed the country's biggestever car deal with French multinational automobile manufacturer Group Renault to produce 150,000 cars beginning in 2018. The $778million deal follows the lifting of international sanctions after Iran's 2015 nuclear agreement with world powers. It is expected to create about 3,000 jobs for the two companies. Renault has a 60 per cent partnership
USFDA campaigns against e-cigarettes
in the deal. Last year, French car-maker PSA Peugeot Citroen had reached a deal with Iran Khodro to produce 200,000 vehicles annually.
departure is a particularly sharp rebuke to Mr Trump after he had earlier generously praised the US president.
Top US Inc chiefs quit Trump's council
Mazda unveils new engine technology Mazda Motor Corp has said it will become the world's first auto-maker to commercialise a much more efficient petrol engine using technology that deeppocketed rivals have been trying to engineer for decades. The new compression ignition engine is around 30 per cent more fuel efficient than the Japanese auto-maker's current engines and uses a technology that has eluded the likes of Daimler and General Motors. Mazda, with an R&D budget a fraction of those of major peers, plans to sell cars with the new engine from 2019.
Intel Corp's Brian Krzanich joined Under Armour's Kevin Plank in becoming the latest chief executives to quit US President Donald Trump's council of business leaders. The membership on the panel has become enmeshed in the country's volatile politics after violent riots in Virginia last month. The moves came hours after Merck & Co's Kenneth Frazier first stepped down from the business council. Mr Plank's
Shell to slash 400 jobs Royal Dutch Shell plans to cut more than 400 jobs in the Netherlands, mainly at its major projects and energy
Tesla eyes bonds to fund Model 3 Tesla will be raising about $1.5 billion through its first-ever offer of junk bonds. The US luxury electric car-maker is seeking fresh sources of cash to ramp up production of its new Model 3 sedan. The move to issue junk bonds - lower-quality investments that offer higher yields - represents a bet by Tesla Chief Executive Elon Musk that bond investors will be as hungry as stock investors to back the company on expectations that its Model 3 will be a hit. So far, Tesla has been raising money only to pay its bills.
The US Food and Drug Administration (USFDA) has announced plans for an education campaign to discourage use of electronic cigarettes (e-cigarettes) among youth. The plan follows the agency's proposal last month to both lower nicotine in combustible cigarettes and extend by four years the date by which e-cigarette manufacturers will be required to apply for authorisation to sell their products. The new policy aims to strike a careful balance between the regulation of all tobacco products and the opportunity to encourage development of innovative tobacco products.
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technology operations. The job cuts take place as the oil giant shifts its business model in response to lower oil prices. The world's second-largest oil company by market capitalisation has said in a statement that "approximately 400 employees are potentially at risk of redundancy during the last quarter of 2017 and first half of 2018". The job cuts represents around a quarter of the roles at the division. Lenovo warns of cost challenges Chinese personal computermaker Lenovo Group has warned of higher costs and margin pressure due to shortage of components, like memory chips. Lenovo, which gave up its title as the world's largest PC-maker to HP in June, has said that the outlook for the rest of the year is challenging as component shortages will drive costs higher, possibly forcing the company to raise its selling price to protect margins. PC-makers around
pharmaceutical players, sources familiar with the company opine. The world's largest generics drug-maker is saddled with debts amounting to some $35 billion, mostly from financing its $40.5 billion purchase of Actavis, Allergan's generics business, last year.
the world are struggling with lower earnings as consumers switch to mobile devices. Buffett divests stake in GE Warren Buffett's Berkshire Hathaway has sold its stake in General Electric (GE) as of the end of June, according to a regulatory filing last month. The conglomerate had previously held 10.6 million shares of GE. Berkshire, however, reported a 17.5 million share stake in Synchrony Financial, the financing arm of GE that was spun out in a 2014 initial public offer. Gates donates shares worth $4.6 bn Bill Gates, the world's richest man, has donated $4.6 billion in the Microsoft founder's biggest gift to charity since he set up the Bill & Melinda Gates Foundation. The recipient of the gift was not specified, but it is expected that the money will be directed to the foundation he and his wife
China to run world's fastest train
set up in 2000 with $5billion funding to improve global healthcare and reduce extreme poverty. The shares donated represent about 5 per cent of his current $90billion fortune. Bill and Melinda Gates have donated $35 billion since 1994. Teva seeks partners for new drugs Teva Pharmaceutical Industries is looking to team up with other drug-makers to fund some of its development pipeline as it struggles with debts and expiring patents. Israel's Teva needs extra financial firepower to develop new drugs and has few options left other than striking alliances with big
Fiat joins self-driving car alliance Fiat Chrysler will join an alliance led by BMW to develop self-driving cars. This intensifies a race by carmakers and technology companies to develop "robotaxis" which can be called up via smartphone. The market for such selfdriving cabs could be worth $2 trillion by 2030, according to McKinsey, as younger customers abandon car ownership in favour of a pay-per-use mobility service. Fiat Chrysler has said that it plans to put autonomous car technology into production by 2021, matching a timeframe shared by rival companies.
Foxconn to build 3 units in USA Foxconn has saidthat it plans to build three facilities in the US State of Wisconsin for operation as early as next year. These facilities are a part of a campus housing a $10-billion liquid crystal display (LCD) factory due for 2020. The three facilities will require combined investment of under $1 billion. The Taiwanese electronics manufacturer, which makes electronics under contract for clients, such as Apple, had announced its $10-billion plan in July, adding that the LCD plant would occupy 1,000 acres in the State's south east.
China will run the world's fastest bullet train, the Fuxing, between Beijing and Shanghai at 350 km per hour, covering the 1,250-km-long distance in just 4.5 hours from September 21. Currently, it takes six hours to travel from the Chinese capital to the country's business hub - the distance equal to that between Jammu and Bhopal. China began running its first 350-km-perhour, high-speed train between Beijing and Tianjin in 2008. But it reduced the speed between 250 and 300 km per hour after a major accident in 2011.
INDIA BUSINESS JOURNAL
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READERS' LOUNGE
An Insightful Memoir This book is an insider account of India's policy-making and the RBI's restrained role in containing the crisis of 2008.
A
ny governor of the Reserve Bank of India (RBI) must walk a tightrope. He must seem to be independent but without offending the government of the day. He is not equal to the government but must convince others that he is not subordinate to it either. And if he can do all this with the right policies in place, he may leave behind a career as illustrious as that of Dr Y V Reddy, the governor of ADVICE & DISSENT the RBI from 2003 to 2008, a time of high growth, low inflation, an appreciated rupee and a robust banking system that withstood the global financial crisis. Dr Reddy's book is an account of his life and his career from a young IAS officer to RBI chief and the chairman of the Author YAGA VENUGOPAL REDDY 14th Finance Commission. This book is an insider account of Publisher India's policy-making, but there HARPER BUSINESS is no pulsating drama or revelaPages: 552 tions. It is a remarkably rePrice: Rs 799 strained account as Dr Reddy does not believe in gossip and hearsay, but it is gripping because of his storytelling ability. His sense of humour is fairly well known. His famous quote on the RBI's autonomy is quite a legend: "I am very independent. The RBI has full autonomy. I have the permission of my finance minister to tell you that."
From his college days, Dr Reddy was a camp follower of communism, becoming disillusioned with it in 1982, when, in Leningrad, he saw long queues of people hoping to buy a broom. Nevertheless, his public policy stance was towards State action, and he remained a market-sceptic. In the post-liberalisation era, he published interesting works on the privatisation of public enterprises. Most importantly, his stints in the district taught him the art of withdrawal and compromise, which made him a brilliant negotiator. He was cautious about court prosecutions, arguing that court cases were too heavy a burden for a weak administration. His crowning achievement was, of course, keeping India out of the global financial storm of 2008. His correct reading of the global economic situation was aided by his innate market scepticism, and he was able to take early steps against the overheating of the economy even in the face of political opposition. The author writes about the "creative tension" between him and then finance minister P Chidambaram. He recounts that once on a Sunday, the then prime minister Manmohan Singh had called him to Delhi to his residence to tell him that Mr Chidambaram was very upset with him, and that the prime minister did not know how to sort it out. Dr Reddy further adds that he rushed to Mr Chidambaram's house. There was widespread speculation that he would resign, but he did not do so and instead offered an unconditional apology to Mr Chidambaram as he did not want to let down the prime minister. Dr Reddy details another interesting account of his years at the RBI thus: "In the case of Mr Chidambaram and I, both were known to go into excruciating detail (sometimes excruciating to each other), and we had a reputation (entirely well earned) of being stubborn. In this spicy mix, we also had a prime minister who was both a former RBI governor and a former finance minister and knew the tricks of the trade of both sides. I sometimes wondered if the prime minister would have a quiet chuckle to himself while observing the back and forth between Mr Chidambaram and me. Recounting similar such episodes and more, this book throws light on the lessons of Dr Reddy's fascinating professional life as on the politics of his years in public service.
About the author Dr Y V Reddy is a former IAS officer of the 1964 batch who served as the governor of the RBI from 2003 to 2008. He was awarded the Padma Vibhushan in 2010.
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World Of Start-Ups
I
n this book Alan Roslingan, entrepreneur and strategic advisor in India for over 35 years, explores an unmistakeable and profound change that is underway in the Indian business landscape. A fresh wave of enterprise and start-ups; rapid advancements in technology; government reform and recently developed pools of risk capital, he holds, are contributing increasingly to a massive expansion in new business - all of it underpinned by a deep social change, a willingness to do things differently, especially among the young. Drawing upon his own experiences and more than 100 interviews with Indian entrepreneurs - representing traditional leading business houses (Tata, Mahindra, Birla and Godrej), established first-generation entrepreneurs (Sunil Mittal, Kishore Biyani and Narayana Murthy, among others) and new-generation start-ups (including Sachin Bansal, Bhavish Aggarwal and Vijay
Shekhar Sharma) - as well as forces of the government, Mr Rosling provides an inBOOM COUNTRY? cisive and in-depth analysis of the opportunities and challenges of doing business in India. Yet the growing uncertainty of global trends and India's own record of underAuthor performing despite its masALAN ROSLING sive potential, lead him to Publisher one vital question: Can the HACHETTE INDIA current upsurge in entreprePages: 312 neurial activity - imperfect Price: Rs 599 and early as it may be - really reshape India's economy and propel it towards becoming a true boom country for new enterprise?
About the author Alan Rosling has been senior advisor and operating partner at Navam Capital since 2014. He also serves as strategy development director of United Distillers and CEO of Piersons, a division of Courtaulds Textiles.
Reforms & Politics
I
n 1991, when India faced a major economic crisis, the government asked the International Monetary Fund for a bailout loan. To prevent a repeat, the government introduced reforms in the economy in accordance with the international trend of privatisation and globalisation. This was a milestone as it changed Indian markets and the financial sector in the country. Foreign direct investment was encouraged, public monopolies were restricted and service and tertiary sectors were developed. Since then, all sectors of the economy have changed their approach. The economic reforms have completed 25 years, and this book debates on the achievements and failures of this policy. It draws upon the research insights and opinions of academicians, scholars and practising managers who, apart from the analysis, also offer their views on the corrective measures needed. In his essay, Are Economic Reforms Accepted in India? Mr Sinha notes that politics will always dominate economics in India, at least in the foreseeable future. He writes: "Politicians and political parties are risk averse, especially as far as elections are concerned. They would
THE FUTURE OF never like to put the existence INDIAN ECONOMY of their government or their political future at stake for the sake of economic reforms. Economic growth has never been an election issue in India." Mr Sinha adds: "Sometimes, I feel that I may have been largely responsible for the defeat of my party in the 2004 elecEditors YASHWANT SINHA & tions" and adds that he can VINAY K SRIVASTAVA never forget the lessons he Publisher learnt in that election. Mr Sinha RUPA PUBLICATIONS notes that as finance minister, INDIA he had raised the prices of keroPages: 376 sene oil from Rs 2.50 to Rs 9.50. Price: Rs 795 When he went campaigning in a remote village in his constituency and asked an old woman for her vote, the old woman held him responsible for raising kerosene prices which had made her life difficult. Such nuggets make this book an interesting read.
About the editors Yashwant Sinha is a veteran politician and senior leader of the Bharatiya Janata Party. He was Union finance minister between 1990 and 1991 and 1998 and 2002 and Union external affairs minister between 2002 and 2004. Vinay K Srivastava is currently working as dean and associate professor at Raffles University in Neemrana. INDIA BUSINESS JOURNAL
SEPTEMBER 2017
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STAR TALK
LEO
ARIES
Mar 21-Apr 20
You will look for new ways to save money and enhance revenues. You will seek avenues of investment that can give you good returns. The stars will guide here. At the beginning, Mars shifts into Virgo in the sixth house. Saturn posited in the ninth house may disclose some promising opportunities that will bring job satisfaction as well as lucrative income. Ganesha advises against being extravagant to save for the future.
TAURUS
Apr 21-May 21
This month, you will look for some simple yet effective ways to earn extra money. You will be keen to make some clever moves to push ahead your growth prospects. Businessmen and professionals will try to seek outstation, high-worth customers to enhance opportunities and earnings. With Mercury direct in motion, you may just find luck around the corner. You could also go ahead and make some judicious investments now as planets seem favourable, informs Ganesha. The second week is expected to herald joyful times with exalted Moon passing through your sign.
GEMINI
May 22-Jun 21
You will look for new avenues to invest to get superior returns. Risk-free investment that will create quick momentum will be your goal. This seems possible at the beginning as there is no important planet in retrogression, and time appears supportive for furthering development process. Another auspicious sign is Mercury becoming direct that will bolster progressive forces to work effectively. Around the second week, the smooth run could be interrupted by the influence of Mars and Saturn.
CANCER
Jun 22-Jul 22
Working to boost your career and financial prospects will keep you engaged this month. You will want to take a few simple steps that will make you happier professionally and personally. Good news here is about Mercury becoming direct in motion. This will activate progressive forces in your favour. You will be able to make intelligent moves to enhance your financial prospects. In the second week, some issues in a close relationship may crop up. Be careful, and do not get into any confrontational situation. 46
SEPTEMBER 2017
Jul 23-Aug 23
Money matters and your fluctuating fortunes will be your key concern in September. At the beginning, it is the movement of Mercury that influences your world. Mercury is linked to finances for your sign. As it becomes direct in motion, it paves the way for increase in inflow of money. You will be ably assisted also by Mars here. Mars shifts into Virgo, the second house from your sign. You are amply blessed here as Venus posited in your sign is also favourably tilted in your direction. Businesspersons and professionals can expect to gain during this phase, predicts Ganesha.
VIRGO
Aug 24-Sep 23
You will enthusiastically seek the path to wealth and prosperity. You are eager to build a strong and secure future for yourself and your family. The beginning of the month may be fraught with personal and incidental expenses as four planets are posited in the 12th house, but with Mercury becoming direct in motion, you will be more in control of your money. Businesspersons will gain from efforts put up earlier, though those employed may still be left wanting for something more challenging. Planet Mercury will put you on track once again.
LIBRA
Sep 24-Oct 23
Long-term growth prospects will be your target. At the beginning, stars will be benevolent and help you assemble and organise your thoughts and actions effectively. With three important planets, along with Rahu, in the 11th house from your sign, you will get opportunities to gain monetarily. However, be prepared for some hiccups along the way. Mars and Venus in company of Rahu could present distractions and illusions. You will manage your expenses judiciously. Steer clear of legal issues.
SCORPIO
Oct 24-Nov 22
You will spend a good part of your time in pushing for excellence in your field of activity. You may even deploy funds to achieve desired results. However, looking at the position of Saturn and Jupiter, it is not advisable to undertake any major financial ventures for the moment. Mercury becomes direct in motion. Mars moves into dual-natured Virgo. Jupiter, being a natural benefic, is likely to help you manage you expenses comfortably. Businessmen may be eager to spread their wings and seek high-worth partnership. INDIA BUSINESS JOURNAL
SAGITTARIUS
Nov 23-Dec 21
You will focus on what you do best and keep developing. You will be determined to keep moving ahead and better your chances at business, job, relationships or family matters. The stars look supportive at the beginning. Mercury becomes direct in motion. This means that the road forward is cleared at a major level, though time still does not seem ripe to take the big plunge. There is influence of Mars to deal with. You may get tempted to flaunt your wealth, achievements and seemingly-sound financial position. Refrain from going overboard.
CAPRICORN
Jan 21-Feb 18
You will be eager to try out something new to make meaningful progress. You will be eager to put your foot on the accelerator and race ahead. Mercury becoming direct in motion heralds good news. Those in business may find the going smooth to speed up development process and expand base. The coming together of Mars and Virgo may goad you to experiment with new ideas to overcome your shortcomings and hasten up matters. Those employed will be keen to shift jobs. But before you jump, introspect and evaluate thoroughly.
PISCES
Feb 19-Mar 20
You will be determined to increase productivity to move towards your goal. You will work on an effective road map, some winning strategies and relentless commitment to fulfil your accomplishments. Unfortunately, not everything appears encouraging this month. At the beginning, crafty Mercury becomes direct in motion, clearing the way for progressive measures. Though, Mars and Virgo coming together in the seventh House may bombard you with ideas that may get confusing. You will be unsure about your choices and decisions. Venus will provide some hope and help thwart obstacles. INDIA BUSINESS JOURNAL
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he Indian economy is fuelled by big corporate giants, like Oil and Natural Gas Corporation (ONGC). Based in Dehradun, Uttarakhand, ONGC is one of the largest oil and natural gas organisations in Asia and produces around 72 per cent of India's crude oil and around 48 per cent of natural gas. Ganesha does an astrological analysis to find out the future of ONGC's stocks.
Dec 22-Jan 20
You will be keen to innovate and experiment with new ideas to scale up your prospects. Moon in Aquarius will prompt you to think of new schemes and proposals that help you see sunshine days. Here, you also have Mercury to help you. Mercury becoming direct in motion paves the way for lady luck to lend you a hand. However, be prepared for some boulders along the way. One of the biggest hurdles you are likely to face here is a lack of effective connections with influential people. This will prevent you from forging new contacts and opportunities, warns Ganesha.
AQUARIUS
ONGC Stock Gets A Boost From Mercury
The ONGC scrip is likely to perform well between November 2017 and January 2018.
Astro analysis In the natal chart of ONGC, Saturn and Moon are placed in the eighth house. Consequently, the company will always face challenges when it comes to speculative activities, stock markets, capital gains tax and charity work-related policies. There is also a possibility that in the months to come, the government may impose some restrictions in the form of increased duties, which may erode the profits of the company. This may have a detrimental impact on the company's performance. However, an important positive point for ONGC is that the lord of finances, Mercury, is posited in its own sign in the house of gains in this chart. This gives a somewhat different dimension to the prospects of ONGC. Thus, ONGC is not likely to see a major disruption due to government policies. The ONGC stock can perform better than Reliance, but it is not a very good stock. The selling ratio will be higher than the buying ratio in coming months. This indicates the future trends for ONGC stocks. The soft side will be seen in this stock from August 2017 until the second week of October 2017. There is also a possibility of the ONGC stock moving positively in November and December 2017 and January 2018. These three months can turn out to be better for the ONGC stock.
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KNOWLEDGE ZONE
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here is a change of guard at the country's largest oil refiner. Sanjiv Singh, the former director of refineries of Indian Oil Corporation (IOCL), has assumed charge as the refining company's chairman since June this year. A chemical engineer from IIT Roorkee with a diploma in management, Mr Singh has spent over 35 years in various capacities at IOCL. Joining the State-owned refining company in 1981, Mr Singh has spearheaded many refinery operations as well as mega greenfield and brownfield projects in IOCL's refining and petrochemical divisions. With extensive experience in the refining sector, the new IOCL chief has played a key role in setting up, commissioning and stabilisation of two of the company's biggest greenfield refineries in Panipat and Paradip. He also steered the successful implementation of Panipat Refinery's petrochemical projects, including paraxylene or naphtha cracker units. As director of refineries since July 2014, Mr Singh took a number of ini-
AT THE HELM
SANJIV SINGH tiatives to improve the operation of IOCL's 11 refineries by revamping, debottlenecking and modernising their process units. He was instrumental in improving their yield and profitability as well as undertaking their low-cost capacity expansion. Innovation and technology have
F A C T S F O R SHELL COMPANY
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ast month, the SEBI's directive to stock exchanges hammered down share prices for almost a week. The stock market regulator had ordered bourses to initiate action against 331 suspect shell companies and ban them from trading. It took some days for the market to stabilise as the Securities Appellate Tribunal stayed SEBI's order in case of a few companies that appealed to it against the market regulator's direction. So, what are these shell companies in the first place? Unfortunately, there is no clear definition of shell companies in India. In the US, however, the Securities Act defines a shell company 48
SEPTEMBER 2017
Y O U
as one that has no operation or nominal operations and assets. In other words, a shell company should not have active business operations or assets. It is important to note that not all shell companies are illegal entities. They are often created to avoid taxes, and many big companies and corpo-
Many shell companies park black money and carry out illegal transactions.
been the focus areas of the new IOCL chairman throughout his distinguished career. He has been a strong votary of harnessing indigenous technology for enhancing the company's profitability. Mr Singh has time and again supported commercialisation of indigenous technologies and led to many such firsts in Indian Oil's refineries, such as Octamax for production of high-octane fuel and IndSelect for gasoline desul-phurisation; among others. A champion of clean and green fuels, the new Indian Oil chairman was one of the key members in ensuring the on-schedule rollout of BS-IV fuels across the country in April 2017. His business acumen and peoplecentric leadership have enabled the company to reach some of the tough targets well before schedule. Mr Singh has widely travelled across India and abroad and presented papers in several important national and international forums. Two months since taking over as the IOCL chief, Mr Singh has been
rations create shell companies to avoid taxes without attracting legal actions. In short, shell companies are deliberate financial arrangements to avoid taxes, and tax avoidance is not illegal, though it is not desirable. But many shell companies park black money, carry out illegal transactions and sometimes act as facilitators of money laundering. Often, shell companies remain untraceable and happen to be the vehicle of choice for money launderers, bribe-givers and takers, tax evaders and financiers of terrorism. Given the umpteen instances of individuals and corporate entities abusing shell companies, either to avoid tax or use them as conduit for money laundering, these are generally viewed as dubious and questionable enterprises. The SEBI has asked exchanges to verify credentials and INDIA BUSINESS JOURNAL
steering the oil refiner to achieve big targets. The refining company, in the meanwhile, is in the process of implementing many big-ticket projects worth over Rs 40,000 crore, including Rs 15,000 crore of projects in the refineries division alone. Mr Singh's stress on technology could facilitate early commissioning of some of these projects. Besides, IOCL is setting up the country's mammoth 60 million tonnes per annum refinery on the west coast. Incidentally, Mr Singh was a vital member of a crack team that conceptualised this giant refinery. Now, heading the refining company, Mr Singh will be overseeing the setting up of the huge refinery, which will play a crucial role in transforming India into a refining hub of South Asia. Indian Oil has also set a huge target for its refineries to meet the tough deadline of introducing BS-VI-grade green fuels in the country by April 2020. Mr Singh's rich experience and expertise could help Indian Oil wrap up its big projects well ahead of time.
fundamentals of suspect companies by appointing an independent auditor. If exchanges do not find appropriate fundamentals about existence of the company, the stock can be delisted. The Centre has been cracking down on shell companies in recent months. The Corporate Affairs Ministry has cancelled the registrations of over 1.62 lakh companies for not filing financial statements for the immediate two preceding financial years. Some of these are shell companies possibly used for money laundering or tax evasion, or other fraudulent activities. So, will the government be able to track these shell companies and unearth huge amounts of unaccounted wealth? That would certainly be a big achievement for the government that is committed to trace and confiscate ill-gotten wealth. INDIA BUSINESS JOURNAL
Spiritual Corner
Science of Karma
Mother-in-Law: Daughter-in-Law - Both Faultless Questioner: I have a lot of conflicts with my mother-in-law, how can I be free from them? Dadashri: You should become free from each and every karma. Each time your mother-in-law gives you trouble, you should find freedom from that karma. What should you do for that? You should think of her as being faultless. Ask yourself why she would be at fault. Tell yourself PUJYA DADASHRI that it is because of your own karmas that you have encountered her. She is merely instrumental in giving your effect to you. This is how you will achieve freedom from karma. On the other hand, if you look at her faults, you will increase your own karma. When you see fault in others, you bind karmas (cause), and when you look at your own faults, the karmas leave. We should live our life in a way that does not bind any karma. You should remain detached from this world. It is because of the karmas we have bound that we encounter the people we do in this life. EDITED BY DR NIRU MAA Who are all these people in our family? We have bound a karmic account with them, which is why they are around us. Even if you were to decide that you do not want to speak to them, you would be compelled to speak anyway. This is all a result of vengeance created in your previous life. Questioner: That is all you see everywhere. Dadashri: That is why I am telling you to move away from all that and come to me (The Gnani Purush and His Gnan). I will give you whatever I have experienced, so that you too will become free. There is no freedom otherwise. I do not place blame on anyone, but I do make a note of what this world is about. I have seen the world from all aspects and in every possible way. When we see faults in others, it means that we ourselves are still at fault. At some point in time, you will have to see the world as faultless. Everything around you has arisen because of your own account. It will be extremely useful to you if you understood just this much. If you had bound sticky (difficult) karma, the results will also be sticky. Such karmas unfold to give you the opportunity to be free from this stickiness. Everything is your own account. If a person starts cursing you, is his conduct improper? No, this is exactly correct, it is the effect. Whatever it is, it is a worldly interaction, a causeeffect relationship. The difference between the one who knows the Self and the one who is ignorant of the Self is this: The one who knows the Self would be glad if someone were to insult him because he sees that this is freeing him from the karma. A person who does not know the Self will retaliate and bind more karma. When someone insults you, it is nothing but the effect of your own karma, and he just happens to be instrumental in it. With this awareness, new karma is not bound. Every effect karma brings with it its own nimit (instrument). It has already been decided through which instrument, the effect will occur. Dharma is where there is no attachment or abhorrence during the karma effect. (To be continued...)
For more information on Dadashri's spiritual science, log on to www.dadabhagwan.org. Also visit kids.dadabhagwan.org
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HOT SEAT
A People's Person
G
GANESH BABU Director IDE Consulting Services How do you define yourself? A people's person, extremely enthusiastic about work - an ideator
Your strength… Patience, passion to achieve, handling responsibility, enjoy it and leading by example
What is your philosophy of life? Live, laugh, love, luxury
Your weakness… Work-life-society balance
What is your passion in life? Cricket, bikes, cars, Poker, Snooker; in the process of finding more..
Your kind of music… EDM, Fusion, Bollywood and regional music
What is your management mantra? Connect with your people. Inspire them, and then empower them.
Your favourite holiday destination… Dubai, Amsterdam and South Africa as of now
What would you like to say about your work? An arena where I play the game, therefore, I love and worship this arena; and hence, I enjoy working and making it count.
Formal suit or casual attire… Formal suit
A business leader you admire the most… Warren Buffet, Donald Trump, Jamshedji Tata, R M Dhariwal, just to mention a few...
What do you enjoy the most in life, generally? Experiencing those wow moments of life both personally and professionally
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SEPTEMBER 2017
You are a tough, serious boss or… A cool boss
anesh Babu loves living life in the lap of luxury. The director of IDE Consulting Services, the Bengaluru-based B2B consulting and dealfacilitating company, is also fond of cars and bikes of high-end, luxury brands, of course. Mr Babu comes with an extensive knowledge across event conferencing and B2B initiative industry. Extremely passionate about creating a sense of trust within his professional circles, the IDE director is a people's person who is often seen inspiring his team. In a lively conversation with Sharmila Chand, Mr Babu talks about his likes, dislikes, strengths and weaknesses.
Golf or Bridge or… Poker How do you de-stress? Spending time with my loved ones, friends, spa, Poker and drives that will get me closer to nature Your mantra for success… (I strongly believe in the quote: "When you want to succeed as bad as you want to breathe, then you will be successful.") Your dream… Building a dream home, turning IDE into India's largest conglomerate, owning a Ferrari, Bugatti Veyron, Harley-Davidson Night Rod and a Ducati bike and travelling around the world Ten years from now, where do we see you? As a role model to many
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