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Saturday, November 2, 2019

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


How close is Modi's plan to get India clean energy by 2022?

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India has come a long way in renewable energy in the past decade. The country's installed capacity has risen sixfold to nearly 83 gigawatts (1 GW = 1,000 MW). And in the past 5 years, solar power, which is set to become bigger than wind energy within renewables, has seen its capacity grow around 12 times to over 31 GW, according to the Central Electricity Authority (CEA). So for the majority of Prime Minister Narendra Modi's first term, his government's target of having 175 GW of installed clean energy capacity by March 2022 did not seem unrealistic. Of that, 100 GW was to be in solar energy, 60 GW in wind projects (the current capacity is 37 GW) and the rest in small hydel (up to 25 MW) and biomass plants. However, questions about India's ability to reach that milestone began to be raised last year, when a spate of issues related to tariff caps, land acquisition and an import duty on solar cells and modules slowed the pace of solar capacity addition. Now it seems almost certain India will fall short of its target, as delays in payments by utilities, Andhra Pradesh's decision to renegotiate tariffs of solar and wind projects and a liquidity crunch caused by problems in the shadow-banking sector have plunged the clean energy sector into its worst crisis in recent years. 71870211 "Investors and IPPs (independent power producers) are quite concerned about the current environment in the renewable energy sector," says Gaurav Sood, chief executive of Sprng Energy, a solar and wind power devel- oper. The optimism in the private sector about India's clean energy prospects a couple of years ago is hard to find now. 71871894 Rating agency CRISIL in a recent report said India would not have 100 GW of solar capacity and 60 GW of wind capacity even by 2024, leave alone 2022. CRISIL said it expected India to only have 59 GW of solar plants and 45 GW of windmills by March 2022. The government, not surprisingly, rubbished the report and said India would not only meet the target but exceed it. 71870223 Renewable energy accounts for under a fourth of India's installed power capacity but contributed only a tenth to the electricity generated in 2018-19, according to the CEA. Clean energy is crucial to India's commitment under the Paris Agreement on climate change to reduce its carbon emissions relative to the gross domestic product by a third by 2030 from 2005 levels. India, the world's third-largest emitter of greenhouse gases, wants 40% of its total installed power capacity by 2030 to be in renewables, up from the current 23%. India's wind power potential has been pegged at over 300 GW and its solar power potential at nearly 750 GW. 71870231 But, unfortunately, wind and solar energy developers are running into some of the same problems as their counterparts in thermal power a few years ago, chief among them being outstanding dues from utilities. As of July 2019, distribution companies across India owed renewable power producers Rs 9,736 crore, according to CEA data. Around three-quarters of that were owed by four southern states — Andhra Pradesh, Tamil Nadu, Telangana and Karnataka. Acme Solar Holdings, the country's largest solar power developer, is waiting for payments totalling Rs 210 crore from Andhra and Rs 386 crore from Telangana. Payments have been delayed between three months and a year. "We only factor in a delay of 1-2 months," says Shashi Shekhar, vice-chairman of Acme, "There is a significant loss in return on capital because of these long delays." 71870239 State-run distribution companies have for long been under financial strain and the Union government in 2015 launched a programme to revive them. Complicating matters further, the Andhra government, under its new chief minister YS Jaganmohan Reddy, on July 1 said it was going to review power purchase agreements (PPAs) signed with wind and solar power producers in an effort to lower tariffs. The state government even threatened to cancel the PPAs, sending the renewable energy sector and the Union government into a tizzy. Reddy justified his move by citing alleged irregularities in the signing of the PPAs during his predecessor N Chandrababu Naidu's term. 71870244 RK Singh, Union minister for new and renewable energy, urged Reddy not to revisit PPAs "only on the basis of apprehensions of irregularities." In a letter to Reddy in September, he added that it was for the state government to "see and establish whether in any particular case capacity was awarded due to mala fide intentions or in violation of procedure or by adopting corrupt practices, and take further action as per laws of the land against the guilty." Singh did not respond to ET Magazine's questions and Balineni Srinivas Reddy, Andhra's energy minister, was not available for comment. 71870251 Vibhuti Garg, senior energy specialist with the International Institute for Sustainable Development, says if Andhra is allowed to renegotiate PPAs, it might set a bad precedent for other states. The renewable energy companies approached the Andhra Pradesh High Court against the state government order. The court asked the state utilities to pay interim tariffs of Rs 2.44 per unit of solar power and Rs 2.43 per unit of wind power. It also directed the power producers to go to the state electricity regulatory on tariff issues which, it said, should be resolved within six months. But the interim tariffs are roughly half of what were originally agreed upon and six months may be too long for power developers. ICRA, another rating agency, earlier this month downgraded 1.9 GW of solar and wind projects, citing liquidity concerns caused by outstanding dues. Kameswara Rao, partner at PricewaterhouseCoopers India, says the payment delays by utilities have already impacted the ability of renewable energy companies to invest in growth. "If it continues, they will find it hard to service their loans and some may even go insolvent." Also, could PPAs be revised? Sumant Sinha, CEO of Goldman Sachs-backed ReNew Power, does not think so. "If you do that, then there is no sanctity of contract and that will have an impact across sectors." Even if power distribution companies pay up, there is still the problem of tariff caps. Central and state agencies cancel bids if companies quote tariffs higher than the caps. Cancelled renewable energy projects were a tenth of all tendered projects in 2018-19, compared with 2% in the previous year. "Though tendering is robust, subscription is low with several tenders seeing multiple extensions to deadlines," says Miren Lodha, director of CRISIL Research. 71870256 Besides the tariff caps and pending payments, there are also abrupt policy changes that worry companies. For instance, Rajasthan — which accounts for 15% of the country's renewable energy potential — has proposed an additional annual charge of Rs 2.5-5 lakh per MW in its new draft solar policy. The money will be put in a state renewable energy fund. Moreover, solar power developers are yet to be compensated for the goods and services tax (GST) and safeguard duty on imported cells and modules they paid on projects they won the projects before either of the taxes came into effect. The Central Electricity Regulatory Commission has ruled in separate cases that these amount to a change in law and developers have to be compensated for the payments. But companies say they do not know when they will be reimbursed, either as a one-time payment or in the form of increased tariffs. "I don't know if some other duty will be imposed tomorrow," says Acme's Shekhar. Acme has around Rs 800 crore stuck in GST and safeguard duty payments. Shekhar adds that because of its liquidity constraints, Acme, which has a portfolio of 5.5 GW, has not bid for any new projects in the past seven months. The fund crunch of renewable energy companies has been exacerbated by the shadowbanking crisis, which began with the collapse of Infrastructure Leasing & Financial Services in September 2018. "There is a huge liquidity crisis," says Sunil Jain, CEO of Hero Future Energies. "Public sector banks are really wary of lending to renewable energy projects and only a few private banks are lending." Clean energy companies have seen the interest rate on their long-term loans climb by up to 100 basis points in the past 8-10 months, according to Girishkumar Kadam, vice-president of corporate ratings at ICRA. This comes at a time when CRISIL has estimated the sector would require around Rs 2.4 lakh crore in investments over the next five years. Both lenders and private equity firms, which have funded a lot of the solar and wind developers, will closely watch the sector over the next six months or so. If no solution is found to clear the dues from utilities or on the proposed revision of tariffs in Andhra, in addition to making land acquisition easier and easing tariff caps, global investors is likely to look for opportunities in other economies, which could lead to a consolidation in the industry, and banks and non-banking financial companies will further tighten their purse strings. Then, India's bold clean energy targets will remain just that.(Additional reporting by CR Sukumar in Hyderabad)

The 'reality' behind Saudi-India ties

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By: Harsh V PantPrime Minister Narendra Modi's visit to Saudi Arabia last week — his second in three years — was important both symbolically as well as substantively. Ostensibly, this visit was about Modi delivering a keynote at the high-profile Future Investment Initiative Summit, dubbed "Davos in the desert," an initiative of Saudi Crown Prince Mohammed bin Salman. But the visit turned out to be about much more. There is a substantive shift happening in India's approach to the Middle East policy and this visit further reinforced those trends. Since coming to office in 2014, Modi has pushed an aggressive strategy of partnering with key regional powers like Saudi Arabia, the United Arab Emirates and Israel in a bid to attract investments and forge deeper security partnerships. In doing so, he has largely ignored Iran and broken with India's Cold War-era legacy in the region of merely "balancing" between key actors. Despite the complexity of governing a country the size of India and navigating its dizzying domestic politics, Modi has managed to visit eight Middle Eastern countries and territories since 2014, more than his four predecessors combined. As so often is the case in the Middle East, the big driver is oil. India is likely to overtake China as the top driver of growth in oil demand by 2024. During his maiden trip to New Delhi in February, Saudi Crown Prince Mohammed bin Salman said he saw over $100 billion worth of investment opportunities in India over the next two years. India has also shored up its energy investments in the region. India's ONGC Videsh has acquired a 10% stake in an offshore oil concession in Abu Dhabi, UAE, for $600 million. The new interest comes against a background of historical indifference. Despite large volumes of trade and a massive presence of Indian expatriates in the Arab monarchies of the Gulf, cross-border investments between the Gulf monarchies and India have remained low for decades. With Modi in office, however, things seem to be changing. Over the past four years, he has built close bonds with young Gulf leaders, including with the crown princes of Abu Dhabi and Saudi Arabia. India is also showing signs of finally overcoming its reluctance to forge security partnerships with the Gulf states whose security apparatuses had long been closely associated with Pakistan. Such efforts seem to be paying off. In 2018, the UAE extradited three individuals wanted in India on corruption charges. In 2018, India signed a pact with Oman that allows the Indian Navy to use the strategic port of Duqm, overlooking the Arabian Sea and the Indian Ocean. During Prince Salman's visit to New Delhi earlier this year, Saudi Arabia promised to share more intelligence to boost counterterrorism cooperation with India, a powerful message considering the then ongoing India-Pakistan confrontation over a militant attack in February that killed 40 paramilitary troopers in Kashmir. Modi's visit to Saudi Arabia last week happened against the backdrop of India's decision to abrogate Article 370 in Jammu and Kashmir and Pakistan's desperate attempt to internationalise the issue. Unlike Turkey and Malaysia, Saudi Arabia has taken a positive approach vis-a-vis India and has cautioned Pakistan against escalating the crisis. Despite Pakistan Prime Minister Imran Khan's visit to Riyadh and the traditionally close Saudi-Pakistan ties, Saudi Arabia has signalled that it understands Indian concerns and sensitivities on the Kashmir issue. Pragmatism is dictating Saudi posture as the very future of the kingdom's economic model is at stake. It needs new partners like India. It is not without significance that within a week of India's move in Kashmir in August, one of the biggest foreign investments in the country was announced. Reliance Industries' decision to sell a 20% stake in its oil-to-chemicals business to Saudi Aramco at an enterprise value of $75 billion made it one of the biggest foreign direct investment deals in the country. India's trade ties with Saudi Arabia have been growing and the relationship is no longer merely a buyer-seller one, though energy remains the driver of the engagement. Saudi Arabia is India's second biggest supplier of oil after Iraq. It is also now India's fourth largest trading partner with bilateral trade at $27.48 billion in 2017-18 and Saudi investment of around $100 billion is in the pipeline in areas ranging from energy, refining, petrochemicals and infrastructure to agriculture, minerals and mining. This is a partnership which is becoming truly strategic as Modi himself underscored in his remarks in Riyadh. During Modi's visit, two important pacts were signed: while the first was a preliminary agreement between Indian Strategic Petroleum Reserves Ltd and Saudi Aramco that will result in a greater Saudi role in setting up a second fuel reserve facility in Karnataka, the second was between Indian Oil's West Asia unit and Saudi Arabia's Al Jeri company for downstream sector cooperation. Modi also announced the formation of the India-Saudi Strategic Partnership Council that will be led by the leaderships of both the countries to "help India address its expectations and aspirations." As New Delhi and Riyadh reassess their foreign policy options in a world that is rapidly evolving, Modi's energetic engagement with Middle Eastern states will enhance India's footprint in a region critical to the country's vital interests. The writer is director-studies at Observer Research Foundation, New Delhi, and professor of international relations at Kings College, London

What India should do to boost infrastructure

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By: Taponeel MukherjeeThe recent news that India plans to open 100 new airports by 2024 is both ambitious and commendable. That said, large-scale infrastructure push whether in airports or any other sector will have to overcome challenges that are being faced across the infrastructure horizon in India. More importantly, common pitfalls such as retroactive contract changes must be avoided in the process of infrastructure creation. It needs to be underscored that the challenges that Indian infrastructure must overcome are neither new nor exclusive to India. But, a re-examination of the problems is critical to further looking for solutions that can exacerbate infrastructure creation.Firstly, issues around contract enforcement such as Power Purchase Agreements (PPAs) must be reduced to the minimum. Litigations resulting from retroactive changes in contracts that have been signed years back seriously affect the capacity of the infrastructure sector to attract the required capital. The recent problems that renewable energy companies in Andhra Pradesh have faced once again bring to the fore the issues around contract enforcement in India.While litigations in business in general, especially in complex infrastructure projects, is a concomitant of normal proceedings, the revision of existing PPAs that were assigned via open auctions creates serious impediments for capital sourcing for Indian infrastructure. Not only are such issues negative for the existing investors in the projects, but also send wrong signals to prospective investors who are contemplating investments in India. Such contract enforcement issues significantly reduce the "bankability" of infrastructure projects, an outcome that militates the aim of rapid infrastructure creation in India.Secondly, it is essential for India to ensure that infrastructure and infrastructure-related businesses have ease of access to inputs at appropriate price levels, so that the businesses created can deliver the infrastructure service sustainably and at prices that reflect the real value of the asset. This point applies across the spectrum from land acquisition price for highways to spectrum auction prices in telecom.The appropriate input prices for infrastructure requires balancing a multitude of factors such as a fair price for the inputs (such as land and spectrum), a price that allows a sustainable business, a price that will enable customers access to a service at charges deemed reasonable, profits to the entrepreneurs, sustainable projects especially for lenders and the long-term prospects of the sector. At the least, one must realise that the different objectives cannot all be improved upon concurrently. However, all are critical and, more importantly, in the long-run aggressively pursuing one aim at the cost of the others renders the projects in distress, thereby putting at risk the interest of all stakeholders. Balancing the various objectives will be even more vital going forward as all stakeholders need to get a fair deal.Thirdly, a renewed focus is needed on the "pricing" of the infrastructure service to the end-user. Once again, the "appropriate level" of user charges will require balancing the interests of the various stakeholders. The "pricing" refers to the toll-road charge, electricity charge, airport user charges etc. While the charges are essential for specific projects to deliver returns, the charges must be sustainable from a long-term perspective and reflect to a large degree the economic value the end-user derives from the usage of the asset. Most importantly, if infrastructure services are intended to be provided free of cost, with significant subsidies or with full user-charges, then the government must plan for financing for the project with clarity around what components are to be financed by the budget and what components are to be funded by investors. Determining the appropriate level of user-charges is essential for the financial sustainability of the projects.Essentially, "price" for the infrastructure service rendered is the core value that determines the cashflows of any project. Therefore, a precise evaluation of the risks and issues that the cashflows face is critical for long-term infrastructure creation. For instance, for a toll-road, the toll-tax paid must be evaluated on a variety of benchmarks including but not limited to the convenience of the toll-road relative to alternatives, the long-term sustainability of the toll-charge, a reasonable estimate of toll-charge hikes priced into the future etc. While determining the appropriate level isn't an easy task, a lack of focus on the long-term financial sustainability of projects runs the risk of rendering projects to suffer once the asset is operational.Most importantly, it is vital to note that contract enforcement, right price of infrastructure inputs and the appropriate user charges are all intertwined and contribute significantly towards the availability of financing and rapid infrastructure creation. The eventual aim is to create bankable infrastructure projects that can financially sustain themselves over the life of the asset to create value for all stakeholders involved.(The views expressed in this article are personal and that of the author. The author heads Development Tracks, an infrastructure advisory firm.)

How one family rode housing boom to dizzying heights

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Sindhi Colony, Mulund, MumbaiThe once-sprawling chawls of Mulund have mostly made way for skyrises. This neighbourhood, however, home to many Punjabi refugee families who came to India in the wake of the bloody Partition of 1947, has remained a quaint middle-class settlement with a clutch of standalone houses. Nearly everyone here has an account with the local branch of the Punjab and Maharashtra Cooperative Bank (PMC), which stands less than a kilometer away.On Thursday evening, when all of Mumbai was still bedecked in Diwali lamps, basking in the cozy overhang of festivities, this colony felt like an island of misery. "Forget celebrations, we haven't lit a single diya," says Bina Bhagtini, a 58-year-old retiree who lives with her mother and two siblings. She had to get an ulcer removed from her stomach. She had to borrow Rs 1 lakh and raise another Rs 50,000 from family for the procedure. She has Rs 20 lakh in deposits at PMC Bank, but is unable to access it, as the banking regulator has restricted withdrawals from the fraud-hit bank.A few houses from hers, mourners have lined up outside the residence of Murlidhar Dhara, an 83-year-old PMC customer whose family says they couldn't raise money for his heart surgery in time due to the restrictions. Dhara is survived by his wife and children. His heartbroken family is occupied with the rituals surrounding his death. They aren't hopeful they'll ever see their money. 71871010 "What's the point in joining these protests? We have already lost our loved one and managing the daily expenses will itself be an uphill task," says his daughter, dressed in a white salwar-kameez as she garlands her father's picture kept on the ground in the centre of their living room, where visitors have gathered to pay respects. Dhara's is one of the six deaths in the city that have been attributed to PMC depositors' inability to access their life's savings.PMC Bank has 1.6 million such depositors. The Economic Offences Wing of the Mumbai Police says Rakesh Wadhawan and his son Sarang Wadhawan, aka Sunny Dewan, promoters of realty firm Housing Development and Infrastructure Ltd (HDIL), defrauded the bank to the tune of more than Rs 4,500 crore, in collusion with bank officials.Worli, MumbaiOnce a middle-class Mumbai neighbourhood dotted with textile mills, Worli is now an upscale enclave with sunny, windswept promenades dotted with some of the city's most sought after apartment complexes, home to billionaires and movie stars.Along the seafront here, not too far from the revered Sufi shrine Haji Ali Dargah, is a plot of land that is at the heart of a high-voltage investigation into underworld financing by the Enforcement Directorate. Investigators are focused on three buildings that stood here in the 1990s—Sea View, Marium Lodge and Rabina Mansion. These belonged to Sir Mohammad Yusuf Trust, named after the early 20th century Kutchi Memon businessman whose family is one of Mumbai's largest private landowners. It was, however, illegally occupied by Iqbal Memon, a notorious drug smuggler also known as Iqbal Mirchi, because his family owned a spice business. He was a close aide of Dawood Ibrahim Kaskar, India's most wanted terrorist and the alleged mastermind of the 1993 Mumbai serial blasts that killed 317 people. 71871104 71871116 ED is interested in how Mirchi was compensated by a company that later developed the plot of land where the buildings stood. This money, it believes, might have been used to fund underworld activities. Investigations led them to the door of a company named Sunblink Real Estate, which had negotiated a deal with Mirchi with the help of a middleman named Ranjit Bindra, according to the agency's submissions before a magistrate. A deal was apparently struck for Rs 225 crore and Bindra was paid Rs 30 crore for brokering the deal.The little-known Sunblink was funded by Dewan Housing Finance Ltd (DHFL) via a loan of Rs 2,186 crore. According to an official who spoke with ET Magazine on the condition of anonymity, the agency believes Sunblink was a front propped up by DHFL's Dheeraj Wadhawan, known in Mumbai's social circles as Baba Dewan.The underworld-related investigation has added to the woes of DHFL, once counted among India's largest housing finance companies, which has fallen on bad times and now represents a systemic risk to the financial system, with plummeting asset value and more than Rs 80,000 crore in debt. Since September last year, the company has lost 97.3% of its market capitalisation. DHFL was a deposit taking shadow bank. This means quite apart from lakhs of stockholders whose investments have evaporated, the its troubles could potentially affect lakhs of customers who have fixed deposits with them and holders of bonds and debentures, apart from banks that have lent very large sums. State Bank of India, for instance, has an exposure of Rs 11,000 crore to DHFL.A draft forensic audit into the books of DHFL by auditor KPMG has made disturbing revelations. The company has made large loans to entities related to promoters and it has no system to track repayments on those loans, leaked portions of that report says. A fund diversion amounting to Rs 20,000 crore is suspected, ET reported last week.A septuagenarian depositor from Bardhaman (west) in West Bengal, says he rues the day he decided to deposit a large sum of money (more than Rs 20 lakh) with DHFL fixed deposits in 2016. The retired metallurgist, who asked not to be named, feels he has no options but to wait, after the company said it will have to stop paying out interests following an order of the Bombay High Court. "I do not know what to do and how to manage my finances. Neither do I know how to approach the courts for relief," he says. He says he draws solace from a recent Kapil Wadhawan interview where he has promised to pay back all depositors. "My advisor here says the court may lift its stay on November 10 and I hope and pray he is right."Moment of ReckoningDHFL and HDIL are realty and housing finance businesses run by two branches of a family. Rakesh Wadhawan of HDIL is the younger brother of the late Rajesh Wadhawan, whose children Kapil and Dheeraj now run DHFL. Their father Dewan Kuldip Singh Wadhawan, who came to Mumbai from Lahore after Partition, started the business and built the foundations of a vast realty development and housing finance operation. The two sides of the family split in 2008 and a 2010 agreement formalised their separation. 71871300 Just how the two companies, run by families that loved the high life — Bollywood stars for party guests, a phalanx of luxury vehicles, private jets and yachts, vaunted thoroughbreds to signal status, and Russian and Israeli body guards to avert harm — plunged lakhs of ordinary depositors into despair and ruin, is a familiar tale that inspires a sense of déjà vu. We have seen this movie before. The location and principal actors change. But the plotline and characters stay similar— collusion, inept regulators, mute board members, celebrities in bit roles, court cases that drag on and vigorous passing of the buck. The climax is usually the same—the small guy loses.Office of the Economic Offences Wing of Mumbai Police, Crawford Market, Mumbai Please keep us in your custody, Rakesh Wadhawan requests Rajvardhan Sinha, head of the Economic Offences Wing (EoW). The request has a logic. EoW premises have centralized air conditioning. Whereas in police lock up, mosquitoes gave him and his son Sarang sleepless nights. The duo is currently lodged in the high security Arthur Road prison in Mumbai. 71871351 This exchange, relayed to an ET Magazine reporter by a witness, is a far cry from the more combative relationship that Wadhawans once shared with Mumbai Police. A few years ago, as part of a security review, Mumbai Police axed the name of the Wadhawans from a list of builders who had police security.The Wadhawans, for whom the police escort was a key insignia of their political capital, secured a court order to restore their security, claiming there was imminent threat to their lives. Mumbai Police appealed the order, and got it quashed. Not to be outdone in a staring match, Wadhawans got creative. They got a jeep painted with blue and yellow stripes to resemble a Mumbai Police vehicle, loaded it up with beefy private guards clad in safari suits, and got the vehicle to drive ahead. The onlooker would never know they no longer had police security.This tendency to outfox and find a way is now evident in the circuitous transactions being probed by various agencies in both Wadhawan groups. In the case of PMC Bank, police says that HDIL management colluded with bank officials to create 44 fraudulent borrowers (companies with crisscrossing shareholding pattern and a common pool of directors) who in turn funneled money to HDIL promoters through 21,000 fraudulent accounts.In the case of DHFL, agencies as well as auditors are finding numerous companies linked to one another doing little business but making and receiving loans, creating a maze of shell businesses that seem designed to cloak the source, origins and destinations of funds.Speaking on the probe, EoW chief Rajvardhan Sinha told ET Magazine that the city police is in the process of gathering evidence to file a 'solid' chargesheet that will stand the scrutiny of the courts. "Services of a forensic auditor has been engaged to help us in gathering evidence against the arrested accused (in the HDIL-PMC case). The audits will reveal the larger game of how the red flags were not raised by the erring directors, auditors and even the regulators. This will become the starting point to connect to the evidence we have gathered on the larger criminal conspiracy between the arrested promoters and the accused bankers, which will be detailed out in the chargesheet," Sinha said.Social ElitesIt's not unusual for Mumbai's elite social circles to discover that a friend has defrauded a bank. It has happened before. But the Dewans' troubles, especially on the HDIL side, indeed have inspired disbelief. Nobody is willing to speak on the record, and there's an eagerness to underplay links.When India Couture Week started in Mumbai in September 2008, a day after Lehman Brothers collapsed in the US in the throes of the sub-prime crisis, Sunny Dewan and his wife Anu were the cynosure of all eyes, as sponsors and hosts. The four-day event saw Anu wearing designer clothes from labels such as Alexander McQueen, Dolce & Gabbana and Oscar De La Renta, pairing them with Bottega Veneta and Louis Vuitton clutches. In the off chance that you are not closely familiar with them, know that these brands offer fabulous fashion products that cost a small fortune."Sunny and Anu fashioned themselves as an 'it' couple. They wanted to be seen as a core part of the Bollywood circuit, without being a part of the industry. Their home in Alibaug was almost built exclusively to entertain their filmi friends. They would ferry these 'friends' on sail boats, fly them there in choppers—anything to get them there. In fact, the Dewan house in Alibaug was available to their Bollywood friends 24/7. If someone wanted to throw a party, the venue was ready. All you had to do was make the call and Sunny and Anu would take care of the arrangements," said a well-known Mumbai-based socialite, familiar with the circuit, speaking on the condition of anonymity."It's common to see glamorous wives of rich businessmen hang out with Bollywood actors today. But Anu may be the one who kickstarted the trend more than a decade back, throwing lavish parties, hanging out with everyone from Abhishek and Aishwarya Bachchan to the Kareena Kapoor-Karishma Kapoor girl gang. She is a predecessor to the current crop of rich housewives snuggling up to Bollywood starlets," said another source.Anu Dewan's verified Instagram account chronicles her fabulous life and proximity to Bollywood idols. She hasn't posted since August 19. Rakesh Wadhawan was into horses and was an influential thoroughbred owner till about 2013, when he owned about 150 horses, according to people familiar with the racing scene in Mumbai. Between 2008 and 2012, several of his thoroughbreds registered first-place finishes and even won derbies. Wadhawan filly Moonlight Romance won the Indian Derby in 2011, while stable compatriot Ocean & Beyond finished second."For a long time, he dictated how Mumbai's Royal Western India Turf Club (RWITC) is run... He would throw tantrums at management decisions that were not favourable to owners," recalled an influential member of the RWITC. On the DHFL side, Kapil is the professional, sober face of the company, and can be seen fielding questions on business television and analyst calls. Younger brother Dheeraj Dewan is well known in Mumbai as Baba Dewan, for his close friendships with Bollywood stars and among auto enthusiasts for the fabulous cars he is seen in, also flanked by body guards.Baba Dewan's parties — for Diwali, New Year and his birthday, typically—were attended by a galaxy of Bollywood heavyweights. "Baba has come for Baba's birthday," a smiling Sanjay Dutt is heard telling a reporter at one such party, in a video of the celebrity coverage on YouTube. Dutt is also known by the moniker Baba.The related development that has also surprised many affluent Mumbaikars is the arrest of Ranjit Bindra on charges that he brokered the property deal between Mirchi and Sunblink. Bindra is the promoter of one of Mumbai's most trendy restaurants—Bastian— a chic haven loved by actors and models who post photos of the establishment's mud crab benedict or bulgogi bowl on Instagram. Actor Shilpa Shetty and husband Raj Kundra bought an equity stake in the restaurant earlier this year. ED questioned Kundra for nine hours last week about his transactions with Bindra and Wadhawan companies. Bindra's brother-in-law is the influential Mumbai politician Baba Siddique, who has been elected as MLA from Bandra West thrice.Housing CrashThe graph of the housing demand in Mumbai is closely tied to the graph of Wadhawans' fortunes. HDIL, for instance, was born a year after Maharashtra government changed its approach to the long-standing problem of Mumbai slums. These settlements took up space in prime land and proved politically volatile to vacate. In 1995, the state changed its approach, brought in new legislation and created a new body called the Slum Redevelopment Authority.HDIL was born the very next year and plunged headlong into slum redevelopment. This means resettling slum dwellers in an apartment complex built elsewhere, usually in the outskirts of the city, vacate the prime land the slum occupied, and redevelop that area. The scheme proved successful and HDIL came to be counted among the top 5 listed real estate developers. It raised nearly Rs 1,500 crore through an IPO in 2007. The company says in the last decade alone, it has completed 100 million sq. ft of construction across various real estate verticals and has rehabilitated 30,000 families.Its problems started when the real estate market started falling and demand for its redeveloped properties vanished. For HDIL, the slowdown meant it could not sell the higher-end residential units it built, while it had to go on building smaller units for resettling slum dwellers. Its need for funds went up, after it was unable to see through the Mumbai Airport slum resettlement programme. Pushed into a debt trap gradually, it resorted to fraudulently seeking PMC funds. 71871371 The company has been facing the wrath of homebuyers and its consumers for the last few years even before the emergence of recent Punjab & Maharashtra Co-operative bank scam. After approaching various forums including the Maharashtra Real Estate Regulatory Authority (MahaRERA), some aggrieved homebuyers of HDIL have even sought intervention of Prime Minister Narendra Modi to get possession of their apartments in various stalled projects across the Mumbai Metropolitan Region (MMR).These homebuyers are of the view that the chances of the company delivering their already delayed homes are bleak now given the promoters' involvement in the PMC Bank matter. DHFL on the other hand was at the other end of the spectrum. As a deposit taking housing finance company, it had access to money sources through fixed deposits, non-convertible debentures as well as bonds. A look at DHFL's lending shows only 57% of its loans were retail home loans, the rest being loans against property and 'others'. The 'others' add up to almost 22% of the loan book and this is where DHFL seems to have got into trouble, lending to dubious entities linked to its own promoters and other related parties. A draft forensic audit report by KPMG indicated that much of the repayments could not be traced.DHFL's troubles started after a Cobrapost sting operation alleged in January that the company had siphoned off money to related entities, and credit rating agencies started downgrading its paper in June 2019. DHFL started defaulting on its repayments in July. So far a couple of cases have been filed against DHFL by depositors. One was filed by IAS officer Ashok Khemka on behalf of his wife at the Chandigarh High Court while the other one was by Edelweiss AMC in Bombay High Court, with the latter asking DHFL to temporarily stop repayments of its deposits. A tussle between banks and other creditors of the company is on the cards. Both companies have denied wrongdoing. Neither responded to questions sent by ET Magazine for this story."DHFL had funded certain projects of various companies," the home financier said in a filing with the stock exchanges. "Due to market conditions, the borrowers had streamlined their internal operations whereby they have, by certain corporate actions undertaken recently, merged certain of their companies into Sunblink. As a result, as on date, Sunblink is mentioned as a borrower." A source close to DHFL told ET Magazine that it was confident about a successful debt resolution. "DHFL is positive about successfully closing the resolution process at the earliest with its proposal of no principal haircuts to creditors and conversion of partial debt to equity offered to permissible classes of secured and unsecured creditors. This will greatly benefit not only the housing finance industry but the economy as a whole."HDIL's lawyer Subir Kumar, who also represents Rakesh and Sarang Wadhawan, told ET Magazine: "We have already given consent for the sale of depreciable assets immediately to protect the interest of the depositors of PMC Bank.We have repeatedly said there is no fraud and all the loans from PMC Bank are fully secured. In fact the title deeds of the assets are also with PMC bank. There is no intention of the promoters to run away from obligations. In fact, before their arrest, the Wadhawans were coming up with a resolution plan."The developments, coming as they are a year after the collapse of IL&FS, has cast a shadow on the NBFC sector and the state of financial regulation. Nirmal Jain, chairman of financial services firm IIFL Finance, said he was hopeful the NBFC sector will emerge unscathed. But regulations need to change."Many of us may not have realised that there are more than 5,000 cooperative banks, 15,000 NBFCs, and an uncounted number of chit funds in the system. All of them should be brought under the RBI's regulatory rein. However, to make them viable for RBI to regulate, the tiny ones need to be shut down. Even a minimum capital requirement of Rs 500 crore will reduce the number dramatically. Once the storm blows over and the dust settles, the NBFC sector will emerge stronger," he said.(With additional reporting from Shailesh Menon and Manish Yadav)

Andhra has put a big question mark on Modi's big power plan

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India has come a long way in renewable energy in the past decade. The country's installed capacity has risen sixfold to nearly 83 gigawatts (1 GW = 1,000 MW). And in the past 5 years, solar power, which is set to become bigger than wind energy within renewables, has seen its capacity grow around 12 times to over 31 GW, according to the Central Electricity Authority (CEA). So for the majority of Prime Minister Narendra Modi's first term, his government's target of having 175 GW of installed clean energy capacity by March 2022 did not seem unrealistic. Of that, 100 GW was to be in solar energy, 60 GW in wind projects (the current capacity is 37 GW) and the rest in small hydel (up to 25 MW) and biomass plants. However, questions about India's ability to reach that milestone began to be raised last year, when a spate of issues related to tariff caps, land acquisition and an import duty on solar cells and modules slowed the pace of solar capacity addition. Now it seems almost certain India will fall short of its target, as delays in payments by utilities, Andhra Pradesh's decision to renegotiate tariffs of solar and wind projects and a liquidity crunch caused by problems in the shadow-banking sector have plunged the clean energy sector into its worst crisis in recent years. 71870211 "Investors and IPPs (independent power producers) are quite concerned about the current environment in the renewable energy sector," says Gaurav Sood, chief executive of Sprng Energy, a solar and wind power devel- oper. The optimism in the private sector about India's clean energy prospects a couple of years ago is hard to find now. 71871894 Rating agency CRISIL in a recent report said India would not have 100 GW of solar capacity and 60 GW of wind capacity even by 2024, leave alone 2022. CRISIL said it expected India to only have 59 GW of solar plants and 45 GW of windmills by March 2022. The government, not surprisingly, rubbished the report and said India would not only meet the target but exceed it. 71870223 Renewable energy accounts for under a fourth of India's installed power capacity but contributed only a tenth to the electricity generated in 2018-19, according to the CEA. Clean energy is crucial to India's commitment under the Paris Agreement on climate change to reduce its carbon emissions relative to the gross domestic product by a third by 2030 from 2005 levels. India, the world's third-largest emitter of greenhouse gases, wants 40% of its total installed power capacity by 2030 to be in renewables, up from the current 23%. India's wind power potential has been pegged at over 300 GW and its solar power potential at nearly 750 GW. 71870231 But, unfortunately, wind and solar energy developers are running into some of the same problems as their counterparts in thermal power a few years ago, chief among them being outstanding dues from utilities. As of July 2019, distribution companies across India owed renewable power producers Rs 9,736 crore, according to CEA data. Around three-quarters of that were owed by four southern states — Andhra Pradesh, Tamil Nadu, Telangana and Karnataka. Acme Solar Holdings, the country's largest solar power developer, is waiting for payments totalling Rs 210 crore from Andhra and Rs 386 crore from Telangana. Payments have been delayed between three months and a year. "We only factor in a delay of 1-2 months," says Shashi Shekhar, vice-chairman of Acme, "There is a significant loss in return on capital because of these long delays." 71870239 State-run distribution companies have for long been under financial strain and the Union government in 2015 launched a programme to revive them. Complicating matters further, the Andhra government, under its new chief minister YS Jaganmohan Reddy, on July 1 said it was going to review power purchase agreements (PPAs) signed with wind and solar power producers in an effort to lower tariffs. The state government even threatened to cancel the PPAs, sending the renewable energy sector and the Union government into a tizzy. Reddy justified his move by citing alleged irregularities in the signing of the PPAs during his predecessor N Chandrababu Naidu's term. 71870244 RK Singh, Union minister for new and renewable energy, urged Reddy not to revisit PPAs "only on the basis of apprehensions of irregularities." In a letter to Reddy in September, he added that it was for the state government to "see and establish whether in any particular case capacity was awarded due to mala fide intentions or in violation of procedure or by adopting corrupt practices, and take further action as per laws of the land against the guilty." Singh did not respond to ET Magazine's questions and Balineni Srinivas Reddy, Andhra's energy minister, was not available for comment. 71870251 Vibhuti Garg, senior energy specialist with the International Institute for Sustainable Development, says if Andhra is allowed to renegotiate PPAs, it might set a bad precedent for other states. The renewable energy companies approached the Andhra Pradesh High Court against the state government order. The court asked the state utilities to pay interim tariffs of Rs 2.44 per unit of solar power and Rs 2.43 per unit of wind power. It also directed the power producers to go to the state electricity regulatory on tariff issues which, it said, should be resolved within six months. But the interim tariffs are roughly half of what were originally agreed upon and six months may be too long for power developers. ICRA, another rating agency, earlier this month downgraded 1.9 GW of solar and wind projects, citing liquidity concerns caused by outstanding dues. Kameswara Rao, partner at PricewaterhouseCoopers India, says the payment delays by utilities have already impacted the ability of renewable energy companies to invest in growth. "If it continues, they will find it hard to service their loans and some may even go insolvent." Also, could PPAs be revised? Sumant Sinha, CEO of Goldman Sachs-backed ReNew Power, does not think so. "If you do that, then there is no sanctity of contract and that will have an impact across sectors." Even if power distribution companies pay up, there is still the problem of tariff caps. Central and state agencies cancel bids if companies quote tariffs higher than the caps. Cancelled renewable energy projects were a tenth of all tendered projects in 2018-19, compared with 2% in the previous year. "Though tendering is robust, subscription is low with several tenders seeing multiple extensions to deadlines," says Miren Lodha, director of CRISIL Research. 71870256 Besides the tariff caps and pending payments, there are also abrupt policy changes that worry companies. For instance, Rajasthan — which accounts for 15% of the country's renewable energy potential — has proposed an additional annual charge of Rs 2.5-5 lakh per MW in its new draft solar policy. The money will be put in a state renewable energy fund. Moreover, solar power developers are yet to be compensated for the goods and services tax (GST) and safeguard duty on imported cells and modules they paid on projects they won the projects before either of the taxes came into effect. The Central Electricity Regulatory Commission has ruled in separate cases that these amount to a change in law and developers have to be compensated for the payments. But companies say they do not know when they will be reimbursed, either as a one-time payment or in the form of increased tariffs. "I don't know if some other duty will be imposed tomorrow," says Acme's Shekhar. Acme has around Rs 800 crore stuck in GST and safeguard duty payments. Shekhar adds that because of its liquidity constraints, Acme, which has a portfolio of 5.5 GW, has not bid for any new projects in the past seven months. The fund crunch of renewable energy companies has been exacerbated by the shadowbanking crisis, which began with the collapse of Infrastructure Leasing & Financial Services in September 2018. "There is a huge liquidity crisis," says Sunil Jain, CEO of Hero Future Energies. "Public sector banks are really wary of lending to renewable energy projects and only a few private banks are lending." Clean energy companies have seen the interest rate on their long-term loans climb by up to 100 basis points in the past 8-10 months, according to Girishkumar Kadam, vice-president of corporate ratings at ICRA. This comes at a time when CRISIL has estimated the sector would require around Rs 2.4 lakh crore in investments over the next five years. Both lenders and private equity firms, which have funded a lot of the solar and wind developers, will closely watch the sector over the next six months or so. If no solution is found to clear the dues from utilities or on the proposed revision of tariffs in Andhra, in addition to making land acquisition easier and easing tariff caps, global investors is likely to look for opportunities in other economies, which could lead to a consolidation in the industry, and banks and non-banking financial companies will further tighten their purse strings. Then, India's bold clean energy targets will remain just that.(Additional reporting by CR Sukumar in Hyderabad)

Indiabulls Real Estate sells London property to promoters for 200 mn pounds

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New Delhi: Indiabulls Real Estate on Saturday said it has sold its property in London to a promoter group firm for 200 million pounds (about Rs 1,830 crore) as part of its plan to focus on the India business and cut debt. At its annual general meeting (AGM) on September 28, the company's shareholders had approved a proposal to sell its London property to promoters for 200 million pounds. In a filing to BSE, Indiabulls Real Estate said the "company's wholly owned subsidiary has divested its entire stake in Century Ltd, which indirectly owns Hanover Square property, London to Clivedale Overseas Ltd, an entity owned by the promoters of the company". With this, Century Ltd ceases to be a subsidiary of the company. Earlier, the company had disclosed its plans to focus on its India business and pare debt. "In light of continuing Brexit related issues and uncertainty around it, the London property market remains sluggish. The Great Britain pound has also had a sustained depreciation from around the time of Brexit referendum result," the company had said in the notice for the AGM. Indiabulls Real Estate had said that a further loan of about 133 million pounds was needed to complete the ongoing construction at 22, Hanover Square property in London. However, it would not like to incur this additional debt on its own balance sheet. "To reduce debt and to focus more on Mumbai and NCR (National Capital Region) markets, the board, had on earlier date authorised and approved divestment of the company's direct or indirect stake in London property," it had said. Promoters of the company came forward to acquire the London property for an aggregate consideration of 200 million pounds against the cost of its acquisition at 161.5 million pounds, Indiabulls had said. In June this year, Indiabulls Real Estate promoters had sold 14 per cent stake in the company through open market transactions to Embassy Group for Rs 950 crore as part of its strategy to focus on financial services and exit the realty business. However, last month Indiabulls Group faced a setback when the RBI rejected the proposed merger of Indiabulls Housing Finance with troubled private sector lender Lakshmi Vilas Bank. Speculations were rife about the fate of the merger, announced in April this year, after the Reserve Bank of India (RBI) imposed restrictions on Lakshmi Vilas Bank due to its weak financial health. To enter the banking space, Indiabulls Group has been selling various completed commercial properties to US-based private equity firm Blackstone.

Decade-long bull mkt heating up again as yearly gain hits 22%

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By Jeremy Herron and Claire BallentineIt's old, but it's not slowing down.A bull market that traces its lineage to the depths of the financial crisis is revving up again, notching its fourth straight weekly gain and pushing its advance in 2019 past 22 per cent . After wavering at mid-year amid a US-China trade war and recession anxieties, American stocks are back in melt-up mode, ending three of the past five sessions at records.While nobody knows if it's getting late for this decade-old rally, gains like these have been common at the tail end of bull markets past. A study by Bank of America Corp. on equity peaks since 1937 shows that being uninvested in the last year of an advance meant foregoing one-fifth of the rally's overall return. The S&P 500 powered to a fresh high Friday after an unexpectedly strong hiring report offered hope that the labor market can propel consumer spending and extend the record-long expansion despite weak business investment and trade tensions. Stocks got a brief boost and the dollar pared losses after China's Ministry of Commerce said trade negotiators had achieved a "consensus in principle" with the U.S.The latest economic data come after the Fed lowered rates Wednesday and signaled it is unlikely to make further changes, up or down, any time soon. That sent stocks to a record, before a batch of weak economic data and renewed worries over trade weighed on the measure Thursday. The S&P 500 is up 1.5 per cent in the week. Fed Vice Chairman Richard Clarida reiterated in Bloomberg Radio interview that monetary policy is "in a good place" and the consumer is strong. 71864163 NEW RECORDS The jobs report "reinforces the thesis that the economy is hanging in there with steady growth thanks to the consumer, jobs, low rates, strong housing and that the global picture is weak," said Alec Young, managing director of Global Markets Research at FTSE Russell.Friday's good news on the trade front follows a tough Thursday session that saw markets rattled as Chinese officials cast doubts about reaching a comprehensive long-term trade deal with the U.S.In earnings news, Exxon Mobil and Chevron reported solid results, while Alibaba Group Holding Ltd. rose after its report. European bonds slipped. Oil edged higher though headed for its biggest weekly loss in a month on swelling American stockpiles. Earlier, risk sentiment got a boost from better-than-expected Chinese manufacturing data, even as uncertainty remains over an interim trade deal. Gold fell after a 1 per cent rally Thursday."Markets participants, as well as maybe even the Fed, have been very optimistic" on the trade truce, Tiffany Wilding, chief US economist at Pacific Investment Management Co., told Bloomberg TV. "We can see some more deterioration there."These are the main moves in markets:StocksThe S&P 500 Index rose 1 per cent as of 4 p.m. New York time.Th Dow Jones Industrial Average added 1.1 per cent .The Stoxx Europe 600 Index gained 0.8 per cent .The MSCI Asia Pacific Index gained 0.3 per cent .The MSCI Emerging Market Index advanced 0.7 per cent .CurrenciesThe Bloomberg Dollar Spot Index fell 0.1 per cent .The euro rose 0.1 per cent to $1.1167.The British pound was flat at $1.294.The Japanese yen fell 0.1 per cent to 108.178 per dollar.BondsThe yield on 10-year Treasuries gained two basis points to 1.71 per cent .The two-year yield added three basis points to 1.55 per cent Germany's 10-year yield gained three basis points to -0.382 per cent .CommoditiesGold futures was flat at $1,510.70 an ounce.West Texas Intermediate crude gained 3.5 per cent to $56.10 a barrel.

Sunil Subramaniam on SIPs & demographic dividend

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Marrying a financial goal to a time band and then cutting your exposure and parking it in a safer less capital market risk-oriented asset, is probably the best way to ensure that you have a happy investing experience, says Sunil Subramaniam, MD & CEO, Sundaram MF. Excerpts from an interview with Nikunj Dalmia of ETNOW. Everybody in the markets want the meat, but nobody wants to feel the heat. Last one year has been all about the heat.The consequence of heat is that a burnt child dreads the fire! And that will probably be the way to express what investors are feeling. But the key is that the heat can also be used to warm it and slow cook your meat to the right tenderness so that you can enjoy a hearty meal. The heat is a good lesson in the journey. The goal is the end of the road and the fact that the road has potholes and speed breakers, may slow down the pace, but if the end goal is in sight one can , stick to the journey. That is where unlike a normal journey of a truck or a car going and losing steam because of the speed breakers and hence reaching its goal later. The stock market has this wonderful vehicle called SIP which makes one benefit from everything and end up buying more when there is difficulty. There are two things which I want to point out to people. Let's say there is a smooth road and a bumpy road. If at every bump, somebody gave you one rupee, you would rather prefer a bumpy road. So treat a SIP like that because the smooth highway will give you a smooth journey but the end result will not be as great because you have lost out on that one rupee which you would have got on every bump. The second thing which I want to say is that there are two years' SIPs which are negative. Maybe some five-year SIPs are also negative. People are saying oh you sold us this great mantra of SIPs being that Eldorado solution. Why is it negative? One basic rule when we talk about the power of compounding and its growth is that a SIP like buying rupee cost averaging, buying a little every month, buying more when it corrects pays off ,when the end point is higher than the starting point. I mentioned a road full of bumpiness. Suppose your goal is to reach Delhi from Mumbai. Kota comes in the middle and there is a bump there. Now if you leave the train in Kota, your experience is of bump. My point here is that whatever you have chosen as a goal, yes there is off chance that the goal determined by you might be a time when there is a bump. Yes that is a point, how are you going to deal with that?The key point is that when you set a goal, there is going to be a time goal and a value goal and what I would generally recommend is that when you reach the value goal, even if it is ahead of your time goal, you should move it into a less volatile asset, because that has been the value that you want. Most people looking long term, cannot pinpoint an exact time. Say daughter's marriage. We will give you two to three year bandwidth in which your daughter would get married. Then there is education. That will have generally a good bandwidth and even if there is a specific date and you know your son is going to go into college and you want to send him abroad in say 2030. Your planning should not be 2030, it should be 2028 to 2032. So when you give yourself a band and then set yourself a financial goal, the achievement of that financial goal should enable you to take that money out because it is fraught with the risk if you stick only to that date goal. Neither you nor I know what the world scenario will be in 2030. So given the fact that in a SIP, the end point has to be higher than the beginning point, I would say marrying a financial goal to a time band and then cutting your exposure and parking it in a safer less capital market risk-oriented asset, is probably the best way to ensure that you have a happy investing experience. The challenge with a SIP investor is that markets are volatile. The challenge with the debt market investor now is that they have realised that debt is also not safe. When you see headlines which are talking about slowdown in autos, problems in NBFCs, India's growth coming down, it shakes you. It shakes your basic thesis and you think: A) I have gone wrong, B) the news has not moved as per what I thought and C) I have lost money. I think that is a very fair state of emotions. Broadly there are two emotions which drive investing – fear and greed. Now you can say if you are fearful, you will put your money in safety-oriented assets. If you are greedy, you will put in risk-oriented assets. The issue that most investors have to grapple with is that only when the greed comes, their past results show themselves. But one should analyse the breakup of the returns. For example, the Sensex has gone since its inception, over a 37-year period to 40,000. If you can believe that 80% of the returns were made on 40 days out of 7,400-7,500 days, because it is on those days when everybody was fearful, that the maximum money was made. So what I would like to say here is that one is emotion of fear versus greed but there is also the right brain versus the left brain. If the left brain drives the emotion, right brain drives the logic. The logical thinking in the human being, what separates us from animals is animals work purely on emotion. When they are hungry, they go and attack. When they are fearful, they run away. The logic tells you that smartness lies in buying when others are fearful. So what people should do is not to go into investing purely from an emotional grab, but to overlay it with logic. The second thing you mentioned, near term news is the one which scares us but the winner is always the person who looks beyond the pothole in the short term to the pot of gold at the end of the road. So you are saying that if we take the graph forward which is 2025, we will not be able to identify the blip of 2019?Absolutely. From here, the moon looks very smooth. You can see the craters only when you are close to the moon. Otherwise, you only see the perfect, round moon. That is a very valuable point. All I am trying to say is if you take the 15-year returns (most goals got to be 10-year, 15-year plus), even today at a time when you feel the markets are not at their best of conditions, a 15-year Sensex and Nifty have delivered 14% return and the midcap index has delivered 17.8% return. Today, we are at a reasonably uncertain volatile phase of the market. If this had been booming, those would be two percentage points higher on a compounded annual basis. My point is if you are long enough up there, in the beginning there could be a blip, but at the time of your exit, if your financial goals are likely reached. But the point is even if you do not do that, if you stayed long enough, your wealth would have grown multiple times because ultimately all of us are fighting the big dragon called inflation. The softness of crude prices over the last few years has kind of softened us to inflation as a risk but bear in mind that over a long term, 7% has been the average annualised inflation and your fixed deposit -- be it through banks or a private sector, even if it gives you 1% alpha post taxation, you are actually going to destroy real wealth by putting money in a fixed deposit. The only asset class guaranteed over the long term to beat inflation, is equities. By 2022 or 2023, we will be a $5-trillion economy. So, the best way to participate in India's growth is that you buy in good times as well as bad times. This is a bad time, you will buy more. In a good time, you will buy less. But if you are buying in both good and bad times, you will average out beautifully.Correct. I think you are putting it very simply and very correctly and the reason India's is good is a very simple fact and it is the demographic dividend. Can you explain that?Thanks to the productivity of our elder brothers and sisters, today India is in a unique spot. Between 2017 and 2027, China which is the main competitor and which has become the manufacturing capital of the world, is going to lose 21 million people in the 18- 55 age group, from their workforce. In that same period, India is adding 117 million people to its workforce. We have a young population who will start adding to the economy and as a result, economy will do very well.Not only do they add to the economy, they get jobs and they start buying. They are not only contributing from a supply side of helping India manufacture for the world but they are also going to buy and make India the marketplace of the world. This is an inexorable reality because nothing is going to wish away those people. If you bought at the peak of the bull market, next two-three years you may not make great returns. You buy at the peak of bear market, your return potential increases. Given where we are in terms of valuations, and the benchmark we use for the mid and small cap indices is BSE 500. Is this a good entry point where the margin of safety lies with long-term investors?You have put it very correctly because today we are seeing between 18% and 20% discount in valuations of the broader market to the top end of the market. Now if you say discount, the broader market should deliver 18% to 20% higher EPS growth than the larger market. You are talking about a 30-40% discount if you were to say that broader market tends to be a victim of fund flows. But the broader market is essentially a correlation to India's GDP growth because that is what translates into the business. So the valuation story may help you to protect yourself or make some decent returns from the larger than the market. But you take a broader BSE 500. The fact is Indian economic growth translates directly into order books and valuations and earnings growth. As we say, the market is slave to earnings and from a purchasing point of view, for the next three to five years'perspective, you are probably at the best purchase point. I would say that starting an allocation now is very right. We are at the ideal takeoff point from an economy and the valuation perspectives to buy the broader market. A lot of people say we are in our 50s, and we want to buy stocks. My first answer is do not because you do not have the time and the risk appetite. Do you think somebody who is in 50s, nearing retirement age, should think of buying stocks at all? Are they too late to start a SIP?So one interesting fact which we do not realise is that over the last 30 years, India's average life expectancy has touched 70. When you say average life expectancy, you are including the poor man on the street, who does not have access to medical facilities to the rich man who can go abroad for the best possible treatment. So if you take the normal middle class, the average life expectancy is closer to 75-77. Even if you are close to retirement, bear in mind that the chance and the probability is that your post retirement life could be longer than your working life. Second, we are in an age, where depending on our children to take care of us is an idea we have to dilute because while we took care of our parents, we all agree that we do not want to burden our children with taking care of us. So building that independence is necessary. At a retirement stage, if you are going to put your entire corpus into an annuity and eat it off, the likelihood that your money will be over before your life is quite a real possibility. It is most likely that you are going to live for at least 25 years after retirement and you have to take care of the rest of your life. So you have to hedge against inflation even when you are a 50 plus. That is the fundamental reset due to improved health quality and the sooner we recognise the reality the better. It is never too late to use equity as a performing asset class to achieve goals. The second point is because our per capita income has gone up, and we are better off than our parents, one fundamental thought process which has happened is that we want to leave a legacy for our grandchildren. So when you do an SIP, assuming anything unfortunate happens, the fact as you do a nomination, taking your grandchild's life as 50 year extension to it, starting a longer term SIP makes sense. Even if you do not enjoy the benefits, it gives you a great value addition that you are leaving something for your grandchildren to enjoy and benefit from equity as an asset class.

You can build solutions on development platforms at TechGig competition

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Bengaluru: The fifth edition of TechGig's coding competition – Geek Goddess 2019 – this year will encourage participants to build solutions on development platforms such as Automation Anywhere and JetBrains. The competition will be held in Bengaluru on November 8.Geek Goddess 2019 will host six themes, based on technologies such as Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA) and Cloud.For instance, Cloudify Everything would need participants to provide a data science-based solution leveraging Azure ML services or AWS Sagemaker.This hackathon theme has got more than 4,403 registrations.TechGig, a Times Internet-backed platform for IT professionals, conducts the annual coding challenge to find the best women coders in the country, in a bid to improve representation of women in the field of technology, it said in a statement.Times Internet is part of the Times Group, which also publishes The Economic Times.The other theme, RPA Hackathon, received more than 5,824 registrations. This would test participants' skills on RPA by using AI to build a bot which can make a ground-breaking contribution for social causes."This year, we added a unique opportunity of trying out a bouquet of technologies like AI, ML, Cloud to formulate solutions and the contestants try these with much enthusiasm. We have got a good response for progressive technologies (such) as RPA, which are being widely used in the industry today," said Ram Awasthi, vice president, Technology, Times Internet. "The problem statements for different themes have been posted by companies (such) as Automation Anywhere, Hexaware Technologies, American Express and others. The participants here are getting to work on business challenges."