Monday, February 11, 2019

ITC has found a way to beat Baba Ramdev in the FMCG game - economic news of india - world economic news - economics news for students - indian economy news

ITC has found a way to beat Baba Ramdev in the FMCG game - economic news of india - world economic news - economics news for students - indian economy news
ITC has found a way to beat Baba Ramdev in the FMCG game
ITC is set to become one of the first frontline FMCG companies to start its own e-commerce operation for premium and niche products as it seeks to expand market share in the fast growing online sales segment and ensure wider availability of products, executive director B Sumant said.A recent report by Nielsen says e-commerce share in total FMCG sales in India has tripled over last two years with 98% of Indian consumers with access to internet having made an online purchase. The conglomerate will sell both food and non-food FMCG products from the recently launched e-store, itcstore.in, where it is currently undertaking a pilot to sell gourmet chocolates, Fabelle. Sumant said ITC’s online store will be limited to metros that account for the largest share of consumption of premium and niche FMCG products for now. The store will complement its efforts to sell through online channel partners and marketplaces. ITC has also launched an e-store and an app for stationary products.“ITC plans to sell premium and niche FMCG products to discerning consumers through the e-store. Based on the success in major metros, we may scale it up later to other cities,” Sumant said. The online store will initially sell in Delhi-NCR, Mumbai, Chennai, Bengaluru, Hyderabad and Kolkata.ITC intends to sell its premium skincare range Dermafique, Sunbean Gourmet Coffee, blended atta sold under Aashirvaad brand and products which are currently sold in limited markets or have a niche appeal, such as ghee, rice and protein biscuits.The company will also sell a range of functional food such as products targeted at diabetics and those with metabolic disorders and health food such as millet and ragi flour, which it will launch in the next few quarters. The fulfilment of orders will be done by a distributor, while ITC will tie-up with third-party logistic providers who are already operating in the ecommerce space.ITC currently sells through trade partners on platforms like Amazon, Flipkart, Grofers and Big Basket. The move to expand into direct online sales is not due to the recent disruption in operations in large e-commerce marketplaces, but to expand its reach and ensure products are never out of stock for online shoppers.ITC also runs direct e-commerce operations for its lifestyle apparel business, WLS and John Players. It has recently started online sales of Classmate notebooks and other stationery products with the pilot operational in Bengaluru, Chennai and Kolkata. This platform allows consumers across the country to customise the covers of their Classmate note books, which are then printed and delivered to them, said Sumant.ITC is aspiring to become India’s largest pure-play FMCG firm by 2030 across products like packaged food, personal care and stationary which account for Rs 1 lakh crore in revenue. In 2017-18, the non-cigarette FMCG business revenue was Rs 11,328 crore, while the business gross profit nearly quintupled to Rs 164 crore.
Source: ET

Big Bull reveals who made him what he is - economic news of india - world economic news - economics news for students - indian economy news

Big Bull reveals who made him what he is - economic news of india - world economic news - economics news for students - indian economy news
Big Bull reveals who made him what he is
NEW DELHI: Many look up to Rakesh Jhunjhunwala for investment tips. The Big Bull himself learnt the tricks of trade from a handful of mentors who helped him learn how to tackle vagaries of the stock market. His father was his first mentor, who taught him the basic values of life and the sense of independence and being daring, Jhunjhunwala said, who is considered India’s wealthiest stock investor and whose wealth as per Forbes stands at $2.8 billion.He was speaking at the FIFA Annual Meet. Jhunjhunwala counts Radhakishan Damani and Ramesh Damani as his guides, too.Radhakishan, a media-shy billionaire stock investor and businessman, is the owner of the listed retail chain D-Mart. According to Bloomberg Billionaire index, he is the world’s 176th richest individual and sixth richest Indian with a fortune of $8 billion. Known to be reclusive, he hardly gives media interviews or attends market-related events. He is known to be even more restrained in disclosing his funding of charity projects, an ET report suggested.Ramesh Damani, a BSE member, is a prominent investor. Since Damani got into stock market in 1989, the BSE benchmark Sensex has gone up 50-60 times from the 800 level.Often called the Nawab of Dalal Street, Ramesh in a recent interview to ETNow said one should not get fixated on macro events but on great businesses at an attractive price. “All kind of events have taken place in the last 30 years which had negatively impacted the stock market -- from Kargil to demonetisation to the global financial crisis. But the index always finds its way higher,” Ramesh told ETNow. Kamal Kabra, another investor, features in Jhunjhunwala's mentor list.“I also had a friend who passed away at a very young age, called Rajiv Shah. All 5-6 of us always thought of doing right and we were paranoid about success and never took it for granted,” Jhunjhunwala said at the event.“We never extrapolate: In 1988, my net worth was Rs 1 crore and 1993, it was Rs 200 crore, this does not mean that in 2000, it is going to be Rs 800 crore. In 2002 also, my net worth was Rs 250 crore. We cannot extrapolate things. You take success with paranoia and it is always transient and temporary,” Jhunjhunwala said. The ace investor revealed that he keeps aside usually 5 per cent of his portfolio towards debt. "But between September 2001 and September 2003, I carried debt which was at least 40 per cent of my portfolio," Jhunjhunwala said further.
Source: ET

Will you be tax-free? Budget relief explained - economic news of india - world economic news - economics news for students - indian economy news

Will you be tax-free? Budget relief explained - economic news of india - world economic news - economics news for students - indian economy news
Will you be tax-free? Budget relief explained
Anjali Behl has not been able to hide her excitement since the Budget was announced on 1 February. “My net income after all deductions will be below Rs 5 lakh, so I won’t have to pay any tax next year,” chirps the Delhi-based assistant manager. She is not alone. The full tax rebate for incomes up to Rs 5 lakh a year will put an estimated three crore taxpayers out of the tax net in 2019-20.Or will it? Articles in the media and analyses on TV seem to suggest that even individuals earning up to Rs 8-9 lakh a year will not have to pay any tax if they claim deductions by investing in specified instruments. If an individual invests Rs 1.5 lakh under Section 80C, pays Rs 2 lakh interest on a home loan, contributes Rs 50,000 to the NPS and buys a health insurance plan for Rs 25,000, his total deduction will come to Rs 4.25 lakh. Add the Rs 50,000 standard deduction and even an annual income of Rs 9.75 lakh can be tax free. In other words, someone earning Rs 81,250 a month will not have to pay any tax.However, these are hypothetical numbers that do not reflect reality. Someone earning Rs 9.75 lakh a year will find it difficult to claim all these deductions without drastic cuts in the lifestyle.“Ensuring that your net taxable income stays within the magic figure of Rs 5 lakh will not be an easy task,” says Archit Gupta, Founder and CEO of tax filing portal Cleartax.com. For one, if one pays an interest of Rs 2 lakh on a home loan, the total EMI burden works out to more than Rs 3 lakh a year. If you add the burden of tax saving investments and medical insurance, the individual will be left with less than 50% of his gross income for running the household and other expenses. 67911813 If banks share the names and PANs of FD investors, lakhs of individuals could come in the tax net: M.K. Agarwal Senior Partner, Mahesh K. Agarwal & CoUsing tax-free allowancesRejigging the pay structure is one way an individual can get into the no-tax zone. Last year’s Budget had removed the tax exemption for medical reimbursements and travel allowance. But several other perks are still available. The leave travel assistance and reimbursements for fuel and car lease are among the tax-advantaged perks that companies can use to bring down the taxable component of their employees’ salaries.Of special interest is the NPS benefit under Section 80CCD(2). Under this, up to 10% of the basic salary contributed to the NPS on behalf of the employee by the employer is tax free. Now that 60% of the NPS corpus has been made tax free on maturity, it makes more sense to invest in the low-cost pension scheme. “Employees should negotiate with their companies to offer the NPS benefit which can cut their tax significantly,” says Gupta of Cleartax. 67911825 Keeping the net taxable income within the magic figure of Rs 5 lakh will not be easy: Archit Gupta, Founder and CEO, Cleartax.comHowever, even if the taxpayer manages to squeeze out the maximum deductions by tightening his belt, he may still miss the rebate. There are a lot of misconceptions among taxpayers about what constitutes their total income. “Taxpayers rarely estimate their annual income correctly. Most have a rough estimate based on their cost-to-company (CTC) figure. But the CTC may be different from what you actually earn,” says Gupta. For instance, interest from bank deposits, recurring deposits, corporate FDs and National Savings Certificates is fully taxable. Even if it is a cumulative fixed deposit and the investor doesn’t receive interest till the deposit matures, he will be taxed for the interest accruing every year. The interest is added to his total income and gets taxed at the marginal rate applicable to him.Who can claim rebate and be tax freeHigher deductions can bring down the net taxable income to a great extentIf income is up to Rs 8 lakh reaching the threshold won’t be difficult 67911837 But if taxpayer neither has home loan nor pays rent, income will exceed But Rs 5 lakh limit and he won’t get rebate.Even if income up to Rs 9 lakh taxpayer can claim rebate if deductions are high 67911841 But if taxpayer is not able to save more or has high income from other sources, total income will exceed Rs 5 lakh limit and rebate will vanish.Above Rs 10 lakh it will not be possible to claim rebate 67911846 But rebate possible if taxpayer cuts other income by investing in tax deferred options and claims more for medical insurance.Don’t forget interestHowever, most taxpayers do not report interest income in their tax returns. “Almost nine out of 10 taxpayers don’t report any interest income when they file returns,” points out Sudhir Kaushik, Co-founder of tax filing portal Taxspanner.com. This is surprising, since many people (including Anjali Behl who has about Rs 11 lakh in fixed deposits) have bank deposits and Post Office investments. Besides, all taxpayers have bank accounts and the balance earns interest. This interest is tax free up to Rs 10,000 a year under Section 80TTA but any amount beyond that limit is taxed as income.The Budget has also proposed to raise the TDS threshold from Rs 10,000 to Rs 40,000 a year. If an investor earns up to Rs 40,000 on deposits in a year, there won’t be any TDS. This proposal is being wrongly construed as an opportunity for investors, which in turn has spawned the misconception that no tax is payable if bank has not deducted TDS. Keep in mind that whether the bank deducts TDS or not, your tax liability does not end there. Interest continues to be fully taxable and you will have to pay tax on interest earned even if there is no TDS. 67911851 Interest is fully taxable but 90% taxpayers don’t report any interest income in their tax returns: Sudhir Kaushik, Co-Founder and CFO, Taxspanner.comBanking on debt fundsIs there a way to prevent interest from pushing up your taxable income? Instead of paying tax on interest every year, investors can go for tax friendly instruments such as debt funds and fixed maturity plans (FMPs). Here, an investor is taxed only when he sells the funds and realises the gains. If he holds the investments for less than three years, there is no difference in the tax treatment. The gains from the sale of non-equity funds held for less than three years are treated as short-term capital gains. They are added to the income of the taxpayer and get taxed at the marginal rate.But if he holds for over three years, the gains are treated as long-term gains and get taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and accordingly adjusts the purchase price upwards to bring down the tax liability.Beware of clubbingAnother common mistake which can push up your taxable income is investing in the name of a non-working spouse or minor children. Money gifted to a spouse or a minor child does not attract tax. But if that money is invested, the income it generates is clubbed with the income of the giver and taxed accordingly. If a husband has invested in fixed deposits in the name of his wife or minor child, the interest will be taxed as his income.Mutual funds and Ulips can rescue the taxpayer from clubbing. Income from Ulips is tax free so it will not affect the tax liability of the investor. If you invest in mutual funds in the name of a minor child and withdraw only after he turns 18, the gain will be treated as his income, not yours. 67912045
Source: ET

How Chinese phone brands outsmarted India cos - economic news of india - world economic news - economics news for students - indian economy news

How Chinese phone brands outsmarted India cos - economic news of india - world economic news - economics news for students - indian economy news
How Chinese phone brands outsmarted India cos
Once popular across smartphone users, homegrown Indian companies have lost out in the race to Chinese brands, which today account for six out of every 10 devices sold in the country. Indian brands such as Micromax, Karbonn, Lava and Intex - which used to lord over the burgeoning smartphone market till just four years ago - are just a pale shadow of their dominant self, finishing 2018 with a single-digit share against 43% recorded in 2015.Chinese brands such as Xiaomi, OnePlus have been witnessing massive growth as they introduced new models, packed them with latest features, and backed it up with aggressive pricing. Having harnessed the online sales channels through an intelligent 'flash sales' mode to create a buzz around their highly affordable devices, the companies have now started to target the offline - or brick-and-mortar - market through 'Made in India' devices, even unsettling Korean behemoth Samsung from the top position in the process.The exception to this sorry state of affairs of Indian brands has been Reliance Jio, but only in features phones, which are mostly bundled with its mobile telecom services. Jio dominates feature phones market with a share of nearly 40%. Second-ranked Samsung is estimated to have a share of 12%.So, what led to this fall of Indian brands? "The Chinese brands had been very aggressive from the very beginning. They were very strong when the transition from 3G to 4G devices was happening," says Tarun Pathak, associate director at Counterpoint Research. "Indian brands - such as Micromax - were busy clearing large pile-up of 3G inventory, which was clearly outdated."Also, Indian brands failed to read larger consumer trends. As Chinese companies expanded their portfolio and brought in new features, Indian companies were slow to react, lagging in introducing features such as 4G, dual camera, finger-print sensor, or glass-back. For example, Counterpoint estimates that glass-back - which gives a premium feel to devices - is already on 26% of smartphones, and is expected to have a 60% share by end-2020.The Chinese companies' decision to initially target the online model really worked in terms of keeping costs under check and reaching buyers faster. Also, their focus on highpitched marketing and advertising campaigns - even an expensive cricket sponsorship -helped them gain visibility very fast. "Indian companies were not in touch with reality, and had lost focus," says Mohan Shukla, a telecom industry veteran and CEO of consulting firm FinXPros.According to Ashok Gupta, whose company Optiemus had an Indian phone brand Zen, the Chinese have "literally killed" local brands. "Our homegrown industry stands nowhere… Selling smartphones means suffering losses," says Gupta. "Earlier it was entry time for people in smartphone, now it's time to exit. I am not pessimistic, but if I face certain death, then I will save myself," says Gupta, whose company now does contract-manufacturing for other brands, apart from making Blackberry phones.It is time to have "champion Indian brands" to counter the trend, says Pankaj Mohindroo, chairman of India Cellular and Electronics Association. "We have sought a special dispensation from the government for creating global Indian companies. It is the need of the hour. Fighting Chinese brands is like fighting a nation."
Source: ET

Housing sales in southern cities higher than north and west India in 2018: Anarock - economic news of india - world economic news - economics news for students - indian economy news

Housing sales in southern cities higher than north and west India in 2018: Anarock - economic news of india - world economic news - economics news for students - indian economy news
Housing sales in southern cities higher than north and west India in 2018: Anarock
NEW DELHI: Housing demand and supply were higher in Bengaluru, Chennai and Hyderabad as compared to sales and new launches in the north and west regions, property consultant Anarock said.According to a report, housing sales in the main southern cities collectively rose by 20 per cent as against 18 per cent rise in the north and 15 per cent in the west.New housing launches increased by 77 per cent in 2018 to 67,850 units over the previous year. National Capital Region (NCR) saw an increase of just 16 per cent in new supply while the main west Indian cities of Mumbai Metropolitan Region (MMR) and Pune, together, saw a mere 17 per cent jump in new residential supply.Anarock also found out that the collective unsold stock in these southern cities is a mere 19 per cent of the total 6.73 lakh unsold units across the top seven cities. NCR alone has nearly 28 per cent of the total unsold stock.“This clearly indicates that the housing markets in the southern cities are exceptionally resilient, and were quick to recover from the overall slowdown in the Indian real estate sector,” said Santhosh Kumar, Vice Chairman of Anarock Property Consultants.The housing market in southern cities are driven by end-user demand, particularly from people working in IT/ITeS sector, while the NCR market is backed by investors, he said.During all the ups and downs that the Indian real estate market has witnessed in recent years, the southern cities have displayed remarkable strength and resilience even in the worst phases.“Year 2018 was a mixed bag of highs and lows for the Indian real estate sector. The initial pangs of policy alterations seemed to fade away with each region seeing visible signs of recovery across segments,” Kumar said.Not only housing, Anarock said the retail and office segments of the real estate sector also increased activities in southern cities.As per company data, the main southern cities saw collective office space absorption of nearly 21 million sq ft as against just 6 million sq ft in entire NCR.“All in all, the southern cities had a very clear edge across sectors in real estate activity in 2018. Their inherent advantage stems from the more professional and organised approach to real estate - not just post RERA (new realty law) implementation but also in the pre-RERA years,” Kumar concluded.
Source: ET

Hotels across the board plan hike in room tariffs - economic news of india - world economic news - economics news for students - indian economy news

Hotels across the board plan hike in room tariffs - economic news of india - world economic news - economics news for students - indian economy news
Hotels across the board plan hike in room tariffs
NEW DELHI: Customers will have to shell out more for their hotel rooms this year as hotel chains across the board are looking at an increase in average room rates owing to improved occupancies in the market and favourable demand supply equations.Chains such as ITC, Accor Hotels and budget brand Sarovar said revisions are expected across brands and rates could go up between 8 and 10% this year.“Across ITC Hotels, trends in financial year 2018-19 have been very positive in terms of increased demand demonstrating an approximately 20% growth in yields. With the inclusion of ITC Grand Goa, ITC Kohenur in Hyderabad and the soon to be launched ITC Royal Bengal in Kolkata, the overall average room rates of the chain are likely to be higher than the corresponding period of the previous year. Most markets are likely to see some sort of rate correction,” said Dipak Haksar, chief executive at ITC Hotels & WelcomHotels. Mandeep Lamba, president, South Asia, at HVS Anarock said the Indian hospitality industry’s operating performance has been largely encouraging and has maintained a slow but upward trajectory over the past two years.“We feel that 2019 could see a significant growth in rates across most key cities and we expect double digit growth which will put the performance on a firm upside as demand outstrips supply by a large measure,” he said.The Indian hotel sector is inching closer to the 70% average occupancy mark and the nationwide average occupancy rate of around 66% in 2017-18 was the highest the industry has witnessed in almost a decade as per various industry estimates.A sector report by HDFC Securities in October last year said demand in the near term is projected to outpace supply, thereby improving occupancies to 68-70% which will drive a healthy average room rates growth over financial year 2019-21. For Sarovar Hotels, rates could rise by around 8% across its hotels, compared with about 5% last year. "Rates could rise more in the larger city markets like Delhi, Mumbai, Bengaluru and Hyderabad. The downturn happened in 2008 but occupancies have gone up over the past few years. Our occupancy rates in 2018 were about 70%," said Ajay Bakaya, managing director at Sarovar Hotels. Brij Bhushan Chachra, VP, revenue management and distribution at IHCL said the company witnessed an increase in average room rates across markets last year. "Good occupancy levels gave confidence to increase average rates and this trend is expected to continue in the coming year," he said. Accor Hotels said it is expecting average room rates to increase by about 10% this year on the back of improved air connectivity and better distribution systems.“In cities where there is no new supply and especially in high demand markets such as Bengaluru, Pune, Hyderabad, Delhi and Mumbai, average room rates will continue to increase. We have achieved greater rate parity between offline and online pricing and availability. Such integrated approach helps to block leakages of rates from offline to online," said Arif Patel, VP, sales, marketing, distribution and loyalty at Accor Hotels. Chalet Hotels, which went public this year, said in its draft red herring prospectus that average daily rates in markets such as Mumbai are expected to grow at a faster pace than in the recent past years, arising mainly from high occupancies and moderate new supply.
Source: ET

Naveen Kulkarni’s top midcap picks in IT and banking - economic news of india - world economic news - economics news for students - indian economy news

Naveen Kulkarni’s top midcap picks in IT and banking - economic news of india - world economic news - economics news for students - indian economy news
Naveen Kulkarni’s top midcap picks in IT and banking
The foreign institutional investors might stay away for a bit due to political uncertainties and the time of entry 67939103 67938223 67912822 will still be uncertain, Naveen Kulkarni, HoR, Reliance Securities, tells ET Now. Sonata Software, Cyient, Majesco are the top picks among IT midcaps and DCB among midcap private banks. Edited excerpts: What is the expectation from Eicher Motors? We are expecting the margins to contract. The launch cost and increased input cost could hurt the numbers. Is there anything that you are factoring in? This is a stock that we currently do not have under our coverage but overall from the automobile space, we are not positive on the two-wheeler category as a whole. We are slightly more positive or optimistic on the four-wheeler category. But we see a lot of challenges with regards to channel inventory movement. Second, competitive intensity is continuing to rise. Demand also is not that great. There are much more challenges on the two-wheeler side rather than the four-wheeler side. We are not very optimistic at this juncture on the auto space especially on the two-wheelers. Would there be a similar view when it comes to passenger vehicles as well? Across categories, one has the impression that other than Tata Motors because of JLR, even a domestic market leader like Maruti has been hurting on volumes? Maruti’s play is slightly better because the channel inventory is not so high and has been on a decline. There is pressure both on the margin front as well as on the demand scenario. It will take a while for the base to become a little more favourable for the auto companies. That is when optically the growth will start improving, but the real growth rate also has to improve. That will probably take around three to six months. We will be in a little bit of a wait-and-watch mode for even the four-wheeler passenger vehicles. We are quite negative on the commercial vehicle (CV) play. I would say that among passenger vehicles, Maruti is slightly better placed, but even then, we will be in a wait and watch mode. Let us talk about the overall liquidity. While quite a bit of support came in from the DIIs, FIIs have definitely been steering clear of Indian markets. Do you think that with the big election event around the corner, that kind of a position is likely to continue for the foreign investors? Yes, it seems more likely the foreign institutional investors may not invest so much, but again it is very difficult to gauge when foreign institutional investors would start looking into the Indian market as a whole. The global liquidity situation has been tightening for a while and I would believe that this year might be year of little bit of respite but it remains to be seen when that scenario actually changes. To be specific on the India front, I would believe that foreign institutional investors might stay away but it will depend on what the news flow will be on the political front. In a couple of months, we might start getting some of that opinion polls coming through, where if the political scenario emerges as a little more constructive, then we might start seeing some bit of flows coming through. It is going to be a tricky situation because the news flow might continue to remain volatile. From that perspective, for now, the foreign institutional investors might stay away for a bit and the time of entry will still be uncertain.Let us understand the outlook as well on the sectors that you are bullish on. What is the earnings growth that you are expecting from IT? Which are the stocks that you like within the space? IT again has been our favoured sector for a while now. We like both the largecaps and midcaps. From an earnings perspective, we are looking at 12-14% kind of an earnings growth coming through for next year. The stocks that we like in the largecap space are TCS and Infosys. Infosys has been our top pick in the largecap IT space. The stock has done quite well now and so that continues to be one of our bullish picks. In the midcap space, we like Sonata Software. The results that the company reported last week were pretty decent. The earnings growth has been good. We are looking at an 18% kind of CAGR for the next two years. The earnings growth is likely to remain pretty stable and good for Sonata. So, that is the stock that we like in the midcap space for IT.Across the midcap category, anything else that you like beside the stocks that you just talked about?I would say that the IT midcap space looks attractive. The only challenge with the midcap IT space is that the earnings can be a little volatile. In some quarters, there might be misses but what we are seeing right now is a gradual improvement in earnings for the midcap stocks also. So, Sonata Software is the top pick in the midcap IT space. Apart from Sonata, something like Cyient might do better in the forthcoming quarters. We also like Majesco. Overall, the midcap space looks quite interesting to us at this point in time and earnings growth is more likely to pick up in the midcap space from here on. Within the private banking space, what is catching your eye among the corporate retail lenders ? Banking as a space has been one of our favoured allocation area. I have been talking about Axis and ICICI Bank for a fairly long period and Axis has done pretty well in the last couple of months. We even continue to like ICICI Bank at current levels, I believe the stock is quite reasonably valued. There is a lot of room for the stock to rerate even from the current levels. The overall operating performance has been pretty good. So ICICI Bank is another name that we like in the private banking space. Among the midcap names what we like is DCB. That is another stock that we like in the midcap space from the banking sector.
Source: ET

Aditya Narain on how ESG will be next growth theme in India - economic news of india - world economic news - economics news for students - indian economy news

Aditya Narain on how ESG will be next growth theme in India - economic news of india - world economic news - economics news for students - indian economy news
Aditya Narain on how ESG will be next growth theme in India
Aditya Narain, Head of Research, Edelweiss Financial Services, talks to Ajaya Sharma of ET Now, ahead of their Annual Conference the theme of which this time round is investing the ESG Way. Here is curtain raiser of the conferenceWhat is the focus and the theme of the conference this time?First of all, it is a very large one. We have about 190 companies and 8,000 plus meetings scheduled. We have 500 plus institutional investors with a huge set would be offshore investors. The second bit is we are actually focussing on the ESG (environment, social & governance) theme. Our theme title literally is ‘Seeking Growth the ESG Way’ which we think is going to be the next leg of growth as far as both businesses, markets and investing are concerned.It already is globally and it is yet to begin in India yes.Many sense is yes. If you were to look at the stats, there is almost $23 trillion of money that is ESG benchmarked in terms of global assets. That is like over a quarter of global assets. Those assets have been growing much faster than overall equity assets. Not surprisingly, at some level, the returns have actually tended to be much higher with ESG high companies.Some of the themes that are mentioned in the note that you touched upon are affordable housing, healthcare and digitalisation. How can one capture these opportunities best and what really is the outlook here, what are you looking forward to?There are two things. Firstly, typically a lot of ESG investing is still based on benchmarks and matrices and cut-offs. What is very interesting in India is that some of these businesses might not actually qualify for typical or traditional ESG investment opportunities but we think these businesses are phenomenal in terms of the value of growth that they get, the social system that they have, the governance that they support and the environmental push that they actually provide. In many senses, these are unique opportunities for us in India where you can actually be very high on the ESG metric even though at this point in time you would not necessarily get the tick marks that you effectively require for it. That is one part. The second bit in terms of your specific questions of how does one play it and we have listed in this note a lot of companies which are very much in this space and you could have a few businesses that focus only on this.You will have a lot of businesses which have this as an integral part of their business and so you can effectively afford higher valuations which are very widespread. It is very unique to India in terms of these opportunities and they have really come about over the last couple of years. I think they are hugely scalable. Who are the key speakers? As I said, it is full of stalwarts. We have about 190 companies. We have over 75 CEOs speaking there. The who’s who from the investing side is there. We have a panel which has all key CIOs that invest in the market place. It is actually very large. It would be unfair to single out one person. It is very wide, very vast and very high profile. The conference is also coming at a very interesting point. We are just done with the interim budget. The market is looking little wobbly. Four-five names holding the index up. What to your mind is the market construct which is going to be a key discussion point?The market construct, I would say is a little shaky at this point in time because you are in the midst of a lot of things. You have actually seen a lot of change. Over the last three-four years, you have seen a fair amount of corporate restructuring which should actually play out very well. Very interestingly, you have had a push from both the fiscal and the monetary side and you actually had a differentiation in terms of valuations which has been much sharper than it has ever effectively been. So, at the tailend of a lot of change that is happening, it sets itself up very well into the second half of the year.Once you got past some of these uncertainties around the elections and issues, the flux will still play through and the market is going to be a little nervous over the next couple of months.To talk about the overall macro setup as well, how do you think things stand at this point in time based on what was spoken about on the overall fiscal deficit, the targets that we are looking at and inflation as well? Where do you see India standing? Our call has been that given where you are on the business cycle, you effectively require an external push or a stimulus of some for or the other to actually get things moving. Otherwise, as I ,said you have had a certain amount of restructuring, earnings have started moving up a little bit but you just do not have the excitement of things actually getting and extra fillip or an extra kick-start. That is what to some extent has effectively been provided and to that extent, the macro is reasonably enabling for a decent bout of growth. But it will be a little back-ended rather than upfront. I would argue that this credit policy has been very interesting because in our view, this is where you have had a structural recognition of the fact that inflation has moved to a lower band. It is not about inflation being low for now. So, I cut interest rates a little bit. It has been a while since inflation has been low, it has been soft and it should have actually moved to a lower framework, which is what this policy has precipitated. Fundamentally, this gives you a lot of flexibility in terms of monetary policy going forward and it also dampens some of the risks that might exist because you have had a little bit of a fiscal stimulus.Since we are at the fag end of earnings, what has been your reading of how corporate India’s report card has been so far? Where do you see meaningful growth coming in Q4? The report card remains mixed. To some extent, at the aggregate, it has really been in line with expectations. You remove a couple of the big outliers, ex of that, it has really been in line with expectations. It has been a little bit short in terms of those who are expecting a material bounce back or a reversal or an acceleration. For those, who are very bullish on earnings I think it probably keeps getting pushed out a little bit. But our overall sense is you have got to look at the economy. Over last quarter or two, we have seen volumes starting to look reasonably good. What you are not seeing is pricing and for the bulls they are extrapolating that mix of pricing and volumes coming back, we would actually like expect volumes to come back. Pricing will be a taller order for the economy. We have been more muted in terms of how rapidly earnings come back. We also need to step back a little bit to get a sense of how earnings have effectively panned out. We have had this earnings slowdown for six to seven years and what that means is that the cycles in India have actually become longer. Historically they have been for three, four years and that is why for the last two years, people have been expecting them to come back. What has really happened is as cycles have got longer, they have become shallower also. In the six-seven year period, you never had negative earnings at the aggregate, but going forward, the bounce back will also tend to be shallower but it is going to be longer too. The challenge with expectations at the moment is everyone expects a sharp cyclical recovery. We would not get sharp cyclical recoveries. We will get a structural recovery where the positive surprise will be in the duration of it, the negative will be in the amplitude of it. And this is why if you are sitting back and looking at it, you should be comfortable with earnings. If you are looking at it very closely, in terms of looking at it from a quarterly perspective, it will tend to fall short and I do not see that changing one or two quarters down the line. What is the outlook for this year? How important is the election going to be as a market moving event? Very simplistically, from a 12-month perspective. the elections will make very little difference. We actually have just a single target of 11,700 on the Nifty at the end of the year. In the interim, you will definitely get much more volatility and the opportunity will be where the markets come off a lot. If the market stays very comfortable where it is and then you have an election and everyone starts believing there is a lot of return after that, if the market is not really attractive enough from a valuation perspective, it will be very muted returns. But overall, it will matter less and less. The hype is more short term. In many senses, you have got the structure in reasonable position. The acceleration is the challenge both because the cycle is longer and because I think the risk appetite is little dimmed.
Source: ET

Chinese phones mute Indian brands - economic news of india - world economic news - economics news for students - indian economy news

Chinese phones mute Indian brands - economic news of india - world economic news - economics news for students - indian economy news
Chinese phones mute Indian brands
Once popular across smartphone users, homegrown Indian companies have lost out in the race to Chinese brands, which today account for six out of every 10 devices sold in the country. Indian brands such as Micromax, Karbonn, Lava and Intex - which used to lord over the burgeoning smartphone market till just four years ago - are just a pale shadow of their dominant self, finishing 2018 with a single-digit share against 43% recorded in 2015.Chinese brands such as Xiaomi, OnePlus have been witnessing massive growth as they introduced new models, packed them with latest features, and backed it up with aggressive pricing. Having harnessed the online sales channels through an intelligent 'flash sales' mode to create a buzz around their highly affordable devices, the companies have now started to target the offline - or brick-and-mortar - market through 'Made in India' devices, even unsettling Korean behemoth Samsung from the top position in the process.The exception to this sorry state of affairs of Indian brands has been Reliance Jio, but only in features phones, which are mostly bundled with its mobile telecom services. Jio dominates feature phones market with a share of nearly 40%. Second-ranked Samsung is estimated to have a share of 12%.So, what led to this fall of Indian brands? "The Chinese brands had been very aggressive from the very beginning. They were very strong when the transition from 3G to 4G devices was happening," says Tarun Pathak, associate director at Counterpoint Research. "Indian brands - such as Micromax - were busy clearing large pile-up of 3G inventory, which was clearly outdated."Also, Indian brands failed to read larger consumer trends. As Chinese companies expanded their portfolio and brought in new features, Indian companies were slow to react, lagging in introducing features such as 4G, dual camera, finger-print sensor, or glass-back. For example, Counterpoint estimates that glass-back - which gives a premium feel to devices - is already on 26% of smartphones, and is expected to have a 60% share by end-2020.The Chinese companies' decision to initially target the online model really worked in terms of keeping costs under check and reaching buyers faster. Also, their focus on highpitched marketing and advertising campaigns - even an expensive cricket sponsorship -helped them gain visibility very fast. "Indian companies were not in touch with reality, and had lost focus," says Mohan Shukla, a telecom industry veteran and CEO of consulting firm FinXPros.According to Ashok Gupta, whose company Optiemus had an Indian phone brand Zen, the Chinese have "literally killed" local brands. "Our homegrown industry stands nowhere… Selling smartphones means suffering losses," says Gupta. "Earlier it was entry time for people in smartphone, now it's time to exit. I am not pessimistic, but if I face certain death, then I will save myself," says Gupta, whose company now does contract-manufacturing for other brands, apart from making Blackberry phones.It is time to have "champion Indian brands" to counter the trend, says Pankaj Mohindroo, chairman of India Cellular and Electronics Association. "We have sought a special dispensation from the government for creating global Indian companies. It is the need of the hour. Fighting Chinese brands is like fighting a nation."
Source: ET

Students get average salary of Rs 25.36 lakh in IIM Calcutta placements - economic news of india - world economic news - economics news for students - indian economy news

Students get average salary of Rs 25.36 lakh in IIM Calcutta placements - economic news of india - world economic news - economics news for students - indian economy news
Students get average salary of Rs 25.36 lakh in IIM Calcutta placements
IIM Calcutta has completed placements for the 441-strong 54th batch of its flagship PGP programme with an average salary of Rs 25.36 lakh and a median salary of Rs 23.5 lakh. The average and the median salary increased by Rs 1.16 lakh and Rs 1.5 lakh respectively.In a release, the institute said that the placements closed by Day 1 Afternoon which corresponds to the second day of making offers in the placement week. 123 firms from diverse sectors participated in the placement process making a total of 501 offers, translating to 15 per cent of the batch receiving more than one offer. 50 per cent of the batch accepted offers in Consulting (29 per cent ) and Finance (21 per cent ) sectors.AT Kearney, Bain & Co., The Boston Consulting Group, and McKinsey & Co. were the leading recruiters. Other prominent names include EY-Parthenon, Alvarez & Marsal and PwC amongst others. Accenture was the largest recruiter with twenty four offers accepted.In the finance sector, recruiters such as Goldman Sachs, Bank of America Merrill Lynch (BAML), Citi, JP Morgan Chase, Deutsche Bank and Avendus made offers to the students.New age firms in e-commerce, operations and product management also attracted a large chunk (16 per cent ) of the class of 2019 with 68 accepted offers. Amazon, Uber, Udaan, Media.Net, Flipkart, Microsoft and Salesforce were some of the recruiters in the sector.General management (14 per cent ), sales and marketing (12 per cent ) and IT-analytics (8 per cent ) also hired in large numbers from the campus. Companies included Aditya Birla Group, Mahindra, Wipro, Adani, L’Oréal, Mondelez, Hindustan Unilever, Samsung, Coca Cola, Bajaj Auto, EXL, American Express and Cognizant.
Source: ET

Sunday, February 10, 2019

A recap of RBI's fateful February circular and the turbulent year after - economic news of india - world economic news - economics news for students - indian economy news

A recap of RBI's fateful February circular and the turbulent year after - economic news of india - world economic news - economics news for students - indian economy news
A recap of RBI's fateful February circular and the turbulent year after
Come Tuesday, the Reserve Bank of India’s circular on resolution of stressed assets revised framework — commonly known as February 12 circular — will turn one.It was just one of the 192 circulars issued by the central bank last year. Yet, the anniversary bears significance. After all, the circular forced stressed companies to declare bankruptcy and was also a reason that added to the rift between Mint Road and North Block.“I was in the banking industry for 36 years,” says Ashwani Kumar, former chairman and managing director of Dena Bank. “But I don’t remember a single circular being as powerful as the one issued on February 12, 2018. According to the circular, even one-day default leads to NPA (non-performing asset).” Kumar retired from the government-owned bank in December 2017, two months before the controversial circular was put in place.Banks on the BrinkAccording to the circular, lenders had to classify a loan account as stressed if there was even a day of default. The bankers had to mandatorily refer all accounts with over Rs 2,000 crore loans to the National Company Law Tribunal (NCLT) or the bankruptcy court if they failed to resolve the problem within 180 days of default. Lenders, said the circular, had to file an insolvency application under the Insolvency and Bankruptcy Code 2016 within 15 days of the completion of the 180-day deadline. The circular also withdrew the loan resolution mechanisms the RBI had implemented, such as Corporate Debt Restructuring and Strategic Debt Restructuring.The move caught banks unaware ahead of the 2017-18 result announcements. All government-owned banks except two highly conservative ones — Indian Bank and Vijaya Bank — posted losses for the year. Punjab National Bank and State Bank of India posted net losses of Rs 12,283 crore and Rs 6,547 crore, respectively. Banks were in the red as they had to account for higher NPA provisioning, as mandated in the circular.The circular also hit infrastructure, power, iron and steel and textiles, among others, as most non-performing loans were in these sectors. Within that segment, the stressed assets of the power sector stood out. The outstanding loan of scheduled commercial banks to the sector was Rs 5.65 lakh crore as on March 2018, according to RBI data. 67920569 67920576 Thirty-four stressed coal-based thermal power plants became the talking point, as the ministry of finance furnished their names to the parliamentary committee on energy, which in turn submitted its report on the sector in August last year. The outstanding debt in these stressed project was of Rs 1.74 lakh crore as of June 2017, based on RBI data. The ministry said the accounts of seven of those projects, corresponding to an installed capacity of 7,620 MW, were resolved, the report said. There is no clarity on what has happened to the rest of the accounts.“The RBI did the right thing in cleaning up the system. This one-time prescription was required. But all stressed assets are not finding buyers now. For example, bankrupt steel companies are attracting buyers; similar companies in the power sector are going unsold,” says Ajay Dua, former Union industry secretary.There is no data on the size of the NPAs after the circular and how many companies have actually turned bankrupt. In a written reply to ET Magazine’s query, a spokesman of Chennai-based Indian Bank said the impact of the circular on the bank was of Rs 1,275 crore in 13 loan accounts. He did not name the defaulters.The circular was challenged in the courts as well. In the Allahabad High Court, Independent Power Producers Association of India argued their members were by no means wilful defaulters, as the defaults arose because of extraneous reasons such as lack of availability of coal and gas, delay of payment by distribution companies, lack of power-purchasing agreements with the states and tariff-related disputes, among others. It was also argued that if the circular was implemented, projects of about 30 GW (gigawatts) would find their way to bankruptcy courts, leading to a mammoth erosion of enterprise value of the companies concerned.The high court, in an order dated August 27, 2018, refused to grant any interim relief to power companies. The case then moved to the Supreme Court, which has so far ordered a status quo on the implementation of the circular.Year of FlashpointThe year 2018 was unusual in the central bank’s 85-year history. It saw government versus central bank bouts.The February 12 circular was one of several flashpoints of the tussle — the others being diamond merchant Nirav Modi engineered Rs 14,000 crore PNB fraud and the Centre’s continuous prodding of the central bank to release some foreign exchange for an upgrade of the nation’s core sector.But the RBI refused to budge an inch on its circular, calling it a necessity to clean up banks’ books and also to create a robust credit culture. The entire government machinery indirectly put up its might behind independent power producers, who dragged the banking regulator to the court.The tussle with the RBI ended when Urjit Patel resigned as the governor. His 27-month tenure was the shortest by any RBI chief since 1992. Patel, however, had said he was resigning due to personal reasons.In a press conference held in Mumbai on Thursday, new RBI Governor Shaktikanta Das said there was no proposal to modify the circular. Irrespective of what happens, the February 12 circular will always be the one that shook India Inc.
Source: ET

The disaster in making in India's scrapyards - economic news of india - world economic news - economics news for students - indian economy news

The disaster in making in India's scrapyards - economic news of india - world economic news - economics news for students - indian economy news
The disaster in making in India's scrapyards
In May 2018, Harsha Udupi and his neighbours in a residential colony in a western suburb of Mumbai got together to discuss how to bring some key civic issues to the attention of local authorities. One of the top priorities was finding a way to get rid of abandoned cars in the streets outside their housing complex. “Many of the cars don’t belong to our area. They were either trafficked or abandoned here. Sometimes, the owners just got rid of them here. They’re absolute junk,” says 59-year-old Udupi, who spent more than three decades working in information technology companies.These cars were used to dump empty liquor bottles or doubled as storage space for street-side vendors. The abandoned vehicles ate into public parking spots, too. The group had had enough. In August, it decided to do a count of the cars and take pictures. There were 52 cars in all, and after its efforts were reported by Mumbai Mirror, the municipal corporation removed half the cars within three months. But when the residents did another survey last month, they found that more cars had been abandoned in the locality. The count now was 45.Cars or bikes on the side of roads, with missing parts and covered in an inch of dust, are a common sight across Indian cities. As more vehicles becoming obsolete in the coming years — partly due to stricter government regulations on emissions — the number of vehicles being abandoned like this would only increase. 67919127 One major reason for the problem is that India does not have a scrapping or recycling policy for vehicles, even though the country is the world’s fourth largest car and light commercial vehicle market by volume and also the largest two-wheeler market by volume. Nearly 25 million vehicles were sold in India in 2017-18, more than 80% of which were two-wheelers and 13% were passenger vehicles, according to the Society of Indian Automobile Manufacturers. In 2016, India had 230 million registered motor vehicles, according to the latest data from the ministry of road transport and highways. The number of vehicles per 1,000 persons has tripled since the turn of the century to 167.According to an estimate by the Central Pollution Control Board (CPCB), GIZ, a German development agency, and Chintan, an NGO, there were 8.7 million obsolete vehicles, also called endof-life vehicles (ELVs), in 2015. That figure will increase 2.5 times to 22 million in 2025, given that the average lifespan of a vehicle is 10-15 years. 67919133 Some used vehicles end up in scrap yards. But even at these yards, workers use crude and unscientific methods to dispose vehicles. Such practices pose a danger to health and environment. The sector needs to be regulated if India wants to avoid a disaster.There have been efforts to increase vehicle ownership. But steps to improve infrastructure to support a growing fleet or a sustainable method of junking have been inadequate. Older cars, despite being more polluting and less fuel-efficient than their new counterparts, still find buyers. For every new car purchased, one used car is sold in India, says a Mordor Intelligence report published in May 2018. The market for used cars in India is expected to reach $75 billion by 2023, recording a CAGR of 15.2% during the period, it added. This gives a magnitude of the problem that the country is set to face if a relevant policy is not put in place soon. 67919138 Obsolete vehicles not abandoned haphazardly make their way to scrap yards in places such as Mayapuri in New Delhi, Kurla in Mumbai and Shivajinagar in Bengaluru. There, the vehicles are taken apart. It takes just half an hour for two guys to dismantle a two-wheeler and four hours to dismantle a car. Valuable parts — like the engine, battery, tyres, wipers and clutch plate — are sold. These parts can fetch a profit of 30-70%, according to a 2012 study by Chintan, an NGO, and GIZ. Steel and plastic scraps are also sold to recyclers of those materials.Hollowed-out cars and skeletons of bikes are common sights at scrap yards like the one at Kurla. Workers hammer away at cars with no protective gear and toss the parts into a corner. Whatever does not find takers is just dumped indiscriminately. For instance, according to the CPCB report, non-functional switches, brake shoes and rubber parts are usually thrown away carelessly — releasing asbestos, mercury and several other pollutants. Liquids like coolant, brake and hydraulic fluids are just drained on the ground. These contaminate groundwater and the air. 67919140 A vehicle has around 3,000 components. Around three-quarters of a vehicle are metals and the rest are plastic, rubber, glass, etc. “About 25% of the waste material coming from an ELV poses a potential environmental threat, due to the presence of heavy metals, waste oils, coolants, ozonedepleting substances, etc,” adds the CPCB report.A lot of these materials can be reused if there is proper salvaging. The auto recycling industry in the US and Canada provides enough steel each year to make nearly 13 million new vehicles, says Advanced Remarketing Services, a technology company focused on the remarketing and automobile recycling sector.Ravi Batra, who works as an intermediary between vehicle owners and scrap dealers in Mayapuri, says the vehicles that land there are often not deregistered. These vehicles are sometimes sold to buyers from other states. “While the owner in, say, Delhi thinks his car has been scrapped, it might be in use in Punjab or UP. The owner will come to know of this only when the car is involved in an accident or is linked to a crime.” 67919175 Even if conscientious car owners do not want to send their old vehicles to Mayapuri or Kurla, they have little choice. That could change with Cero Recycling. A joint venture between Mahindra Accelo, a step-down subsidiary of Mahindra & Mahindra, and state-owned MSTC, Cero is the country’s first organised vehicle recycler and started operations at its five-acre Greater Noida facility around June 2018. Unlike the traditional scrap yards, the process at Cero is automated, where all the liquids are sucked out into separate containers and then sent to authorised recyclers. Airbags are blown up and engines bored to avoid reuse. Cero recycles around 100 vehicles a month and will open a facility in Chennai next month. Other cities on its radar are Bengaluru, Hyderabad, Kolkata and Mumbai. “We have designed this to be sustainable and profitable,” says Sumit Issar, managing director of Mahindra Accelo. He adds that Cero is looking at recycling 70-80% of a vehicle.Cero claims to offer rates comparable with those offered by scrap dealers. That could be a big factor in convincing car owners to choose Cero, considering that for most people, money could trump environmental concerns.The Union government has been working on a scrappage policy for a while. Questions sent to Nitin Gadkari, minister for road transport and highways, were unanswered.The Delhi government had in August 2018 announced guidelines for vehicle scrapping. Among the requirements is a scrap yard of at least 9,000 sq ft in a non-residential/commercial area, and equipment for depolluting vehicles, which makes the scrap dealers of Mayapuri and such places ineligible. 67919189 The existing scrap yard hubs will anyway not able to handle the sheer volume of ELVs in the coming years. “The biggest problem in recycling is space. It now happens in the heart of cities. Recycling scientifically needs space,” says NS Mohan Ram, advisor to TVS Motors and author of a book on vehicle recycling. He believes automakers should issue dismantling instructions soon after the launch of a model.Owing to Delhi’s alarming pollution levels, the Supreme Court in October banned the plying of diesel vehicles older than 10 years and petrol vehicles older than 15 years in the National Capital Region. The order was in line with a National Green Tribunal directive of April 2015.These are city-specific norms, says Anumita Roychowdhury, executive director of research at the Centre for Science for Environment, and obsolete vehicles will be taken to other cities to bypass the rules. Central to the scrappage policy should be norms on the recyclability of components, which is the first step in sustainability. “We should close the entire loop for it to work,” adds Roychowdhury.India could learn from the recycling policies in the European Union, Japan, China and Korea. The EU mandates that 95% of the weight of an ELV should be recycled, while Japan has specific requirements for recycling of airbags and automobile residue. Vehicles owners in Japan also have to pay a recycling fee while buying a new car.The government should mandate that every manufacturer sets up one or two recycling facilities, says Shekhar Viswanathan, vice-chairman of Toyota Kirloskar Motor. “Then the pricing of vehicles will encompass that cost.”This is one way to enforce extended producer responsibility (EPR). India introduced EPR in its Plastic Waste Management Rules, 2016, according to which plastic producers, importers and brand owners like fast-moving consumer goods companies will have to assist in the collection of plastic waste they introduce into the market. It is still a matter of debate if auto companies should get into recycling themselves or supporting recyclers.A Hyundai Motor India spokesperson says a well-defined scrappage policy “will help us explore opportunities for safe disposal of old vehicles.” Bajaj Auto and Tata Motors declined to comment for the story and Hero MotoCorp and Maruti Sukuzi did not respond to our queries.Once a scrappage policy is in place, vehicle recycling is sure to attract entrepreneurs, given the sheer size of the market and the growth potential. But the bigger challenge is what happens to the unorganised sector — Mayapuri alone has 3,000 shops, according to one estimate — where there are thousands of jobs at stake. They do not have space or technology to be authorised recyclers, which means the policy will have to balance environmental sustainability and livelihood.
Source: ET

The thing about unicorns people often miss - economic news of india - world economic news - economics news for students - indian economy news

The thing about unicorns people often miss - economic news of india - world economic news - economics news for students - indian economy news
The thing about unicorns people often miss
Billionaires are widely seen as undeserving exploiters. Thomas Piketty, author of the bestseller Capital in the 21st Century, says the global system is rigged in favour of old wealth, so inheritance rather than productive work begets great riches. The 2008 global financial crisis created huge public mistrust of financial giants like Goldman Sachs, seen as cronies that flourished even as economies withered. New technologies with network effects have created a small clutch of new companies (Facebook, Google, Apple, Amazon, Netflix) so dominant that they are now feared.Many critics like Oxfam claim India too is sinking into terrible inequality. They cite Piketty to claim India’s system is rigged in favour of inherited wealth, while cronyism favours a few unfairly. They say talented people without political, financial or business contacts have little chance of success.I have contested this earlier on many grounds. Today, let me argue that the rise of “unicorns”— start-up companies that have risen meteorically and are worth over a billion dollars — shows we have a new, fairer capitalism that enables talented newcomers to thrash influential but less talented oldies.Inherited wealth is a huge advantage for acquiring capital and political influence. Families like Tata, Ambani and Birla dominated great wealth till the 2000s. Economic reform brought in new billionaires, notably in computer software, even as many old giants faded into oblivion (Hindustan Motors, Premier Automobiles, DCM, JK Synthetics, NOCIL).Today a completely new set of unicorn billionaires has arisen. Globally, there are almost 300 unicorns today. India had at least ten in 2018, including e-retailer Flipkart (worth $21 billion), mobile-wallet company Paytm ($15bn), hotel aggregator OYO Rooms ($5bn), ride-sharer Ola Cabs ($4bn), learning apps company Byju’s ($3bn), and food deliverers like Swiggy ($3.3bn).All these were started by bright young Indian entrepreneurs with no links to big business or politicians, no access to inherited wealth or cronies. In the old days, you could not start a business without lots of your own money. Persuading banks to lend to newcomers was a Herculean task. Today, private equity funds and venture capital funds have come up across the globe, anxious to pour money into promising start-ups, eager to help them scale up exponentially to become the next Google or Uber.Once, businesses needed a track record of profitability for several years before raising money from banks or stock markets. Today venture capitalists will pour millions into firms that have never made a profit but have the potential to expand ultra-fast, using the internet and smartphone.Once, billionaires made high profits and were therefore viewed as exploiters of consumers. But most unicorns lose money, since they use low prices to gain market share, and are willing to run at a loss for years. As users of Flipkart, Ola or Swiggy will tell you, unicorns bring down prices, not up. For the first time in history, losing companies can be worth billions of dollars, because they have great prospects. Anybody with a good idea can attract angel investors and venture capitalists. Some start-ups even raise money through crowd-funding, advertising their idea on the internet and waiting for individual contributions to flow in.This is a much fairer form of capitalism than the old model. You do not have to be born with a silver spoon in your mouth or golden political connections. You do not need to part of an old-boy network, caste network or religious network.Many start-ups sell out at a huge profit (as the founders of Flipkart have done). They then use their capital gains to get into venture capital, mentoring new entrepreneurs. Never before has so much free technical and managerial advice from top-notchers been available for newcomers.There is a dark underbelly to the new system. Because of network effects, a few companies may end up with gigantic tentacles spread over the personal data of billions of people. This can be dangerous for privacy, national security, business ethics, and much else. A stage may come when the new tech giants have to be broken up. But that does not diminish the value of the system in enabling a million new ideas and entrepreneurs to bloom.Critics will say that the creation of hundreds of new billionaires increases inequality. So what? I cheer the unicorns for the same reason that I cheer the rise of 3,000 Dalit millionaires who have formed the Dalit Indian Chamber of Commerce and Industry. Rags-to-riches stories are a sign of a fair, healthy society that is excitingly mobile, where talent and productivity triumph over inherited wealth and cronyism. Bravo.Views expressed are personal
Source: ET

End of road for Honda Brio in India - economic news of india - world economic news - economics news for students - indian economy news

End of road for Honda Brio in India - economic news of india - world economic news - economics news for students - indian economy news
End of road for Honda Brio in India
Japanese carmaker Honda has stopped production of its entry-level hatchback Brio in India, cutting short the vehicle's over seventeen-year long stint in the country.Honda Cars India, the company's wholly-owned subsidiary, plans to maximise sales and visibility of its compact sedan Amaze which would now be its entry-level offering in the Indian market."Our entry car is now Amaze. We have stopped production of Brio and as of now we do not intend to bring next generation Brio into India," Honda Cars India Senior Vice President and Director (Sales and Marketing) Rajesh Goel told PTI.Customer preference has started to shift towards comparatively bigger models, a trend similar to other global markets."A sedan was the top seller in India last year. It is a typical motorisation cycle followed in every country and it's just that in India the upgradation pace is much slower than other countries," Goyal said.Theoretically, this change should have happened 6-7 years earlier, he added.When asked if the company would like to bring in any new entry-level model in Brio's place, Goyal said: "Amaze is gong to be our entry model in the Indian market."Jazz and WR-V are other two models which would cater to the small car requirements, he added.Honda had launched Brio in September 2001 and has sold around 97,000 units till date.In 2017, the auto maker had stopped selling its multi purpose vehicle (MPV) Mobilio in the country due to poor demand. Launched in July 2014 in India, Honda had sold a total of 40,789 units of Mobilio in the country.
Source: ET

SBI, Oriental Bank put on sale stressed accounts to recover dues of Rs 5,740 cr - economic news of india - world economic news - economics news for students - indian economy news

SBI, Oriental Bank put on sale stressed accounts to recover dues of Rs 5,740 cr - economic news of india - world economic news - economics news for students - indian economy news
SBI, Oriental Bank put on sale stressed accounts to recover dues of Rs 5,740 cr
State-owned State Bank of India (SBI) and Oriental Bank of Commerce (OBC) have put on sale various financial accounts to recover dues of around Rs 5,740 crore.The country's largest lender SBI has invited bids from asset reconstruction companies (ARCs) and financial institutions (FIs) to recover an outstanding of Rs 4,975 crore.The bulk of accounts up for sale by SBI are of small and medium enterprises (SMEs) that have dues amounting to Rs 4,667 crore.OBC wants to sell 13 accounts with a collective outstanding of Rs 764.44 crore, according to the bid document placed on its website.As many as 281 SME accounts are up for sale by SBI, belonging to those firms that have dues of up to Rs 50 crore. The collective dues on these SMEs are Rs 4,666.50 crore."In terms of the bank's policy on sale of financial assets, in line with the regulatory guidelines, we place these accounts for sale to banks/ARCs/NBFCs/FIs," SBI said in an auction notice.Also, SBI will sell three accounts -- Dennis Steels Pvt Ltd with outstanding of Rs 258.73 crore, Shiva Speciality Yarns (Rs 37.90 crore) and Bansidhar Spinning & Weaving Mills Ltd (Rs 11.73 crore).Inviting expression of interest from ARCs and FIs, Oriental Bank of Commerce said it proposes to sell its stressed financial assets comprising 13 accounts with principal balance of Rs 764.44 crore.Among the major loan accounts invited for sale by OBC include Mittal Corp Ltd (Rs 207.17 crore), Jayaswal Neco Industries Ltd (Rs 157.03 crore), NCS Sugars Ltd (Rs 106.60 crore), Mahalaxmi TMT Pvt Ltd (Rs 77.61 crore), Kohinoor Steel (Rs 45.06 crore), Sova Ispat Alloys (Rs 37.99 crore), Atlantic Projects (Rs 33.36 crore) and Sova Ispat Alloys (Mega Projects) Ltd (Rs 31.28 crore).E-bidding for SBI accounts will take place on February 27. For OBC, the e-bidding is scheduled for February 25.
Source: ET

Hotels, accommodations to contribute around 70% of total business by 2022: MakeMyTrip - economic news of india - world economic news - economics news for students - indian economy news

Hotels, accommodations to contribute around 70% of total business by 2022: MakeMyTrip - economic news of india - world economic news - economics news for students - indian economy news
Hotels, accommodations to contribute around 70% of total business by 2022: MakeMyTrip
Online travel firm MakeMyTrip said it is looking at the hotels and accommodations segment to contribute around 70 per cent to its overall revenue by the end of 2022.Currently, hotels and accommodations account for around 54 per cent of the company's total revenue."By the end of 2022, 70 per cent of our revenue will come from the hotels and accommodations segment," MakeMyTrip founder and Group CEO Deep Kalra told PTI.Currently, around 33 per cent of revenue comes from air travel and the rest is roughly from redBus, travel insurance and experiences, he added."Going forward, the hotels and accommodations will contribute a bigger share of revenue, as there is still a lot of headroom in hotels. Still, only around 15 per cent of hotels are booked online, so there is a big market to be tapped," Kalra said.On the trend of more Indians opting for overseas travel, he said: "The big focus area for us and where Indians are going right now is overseas. Middle class has the money and is travelling overseas as it is aspirational."The growth in international travel will be higher and it will grow faster than the domestic segment, he added.The company has recently posted its third-quarter results with a growth of over 30 per cent.When asked about the growth road map, Kalra said: "We are looking to moving on to twin path of growth and at the same time of reduction of losses."He, however, did not provide any future guidance on growth numbers.On the issues raised by hotel and restaurant associations, including the Federation of Hotel and Restaurant Associations of India (FHRAI), regarding commissions and pricing with MakeMyTrip, Kalra said: "Out of our 60,000 hotel partners, around 99.9 per cent are still with us."MakeMyTrip provides access to all major domestic airlines operating in India and all major airlines operating to and from India, over 60,000 domestic accommodation properties in India and more than 5 lakh properties outside India, Indian Railways and all major Indian bus operators.
Source: ET

Development cannot win you an election in India: Ruchir Sharma - economic news of india - world economic news - economics news for students - indian economy news

Development cannot win you an election in India: Ruchir Sharma - economic news of india - world economic news - economics news for students - indian economy news
Development cannot win you an election in India: Ruchir Sharma
Any dramatic reform will only take place when we have our back to the wall as 1991 and even late 2013 showed 67833072 65920585 67844118 , Ruchir Sharma, author, Democracy On The Road, tells Supriya Shrinate of ET Now. Edited excerpts: If there was one person who could have written a political travelogue of India, it should have been you. I do not think too many people know that this journey is for elections -- whether it is state assembly or general elections -- throughout India. You want to talk a little bit about that before we move forward on why Democracy On The Road and why a 25-year journey. It is great that you are asking me because it was in February of 1998 that I put this entire concept together or at least it started to evolve then. Who knew then that we would do 27 trips after that? But to understand the context of this is very important. In 1996, Narasimha Rao was standing for re-election as the prime minister. Most foreign investors then really were rooting for Narasimha Rao to be re-elected and they almost believed that he will be re-elected. I had just started my professional career as an investor back then. I was watching this from the sidelines. Back then, I was in early 20s, watching these very senior investors going around convinced that Narasimha Rao was going to get re-elected because that is what they really wanted. And they were totally shocked when the results came after that and what followed. So when the next general election came up in February of 1998, I said if you really want to understand what is happening in India, you need to be on the road. I formed a group of five people including Swaminathan Anklesaria Aiyar, Ajay Kumar, veterans of the Times Group. These are the people that I had known because I used to write for The Economic Times those days. So, we put this very short trip together where we said okay let us go out and see what is happening on the campaign trail. I still remember the date, it was Valentine’s Day of 1998 that we landed up in Muzaffarnagar because Sonia Gandhi was making a maiden speech in Uttar Pradesh in Muzaffarnagar. That was the origin of this trip and there was so much excitement. It was a short trip. It was only a two-day affair. But in those two days we got to see so much about Indian politics because at the same rally ground in Muzaffarnagar the following day, Vajpayee came and also made a speech. And what happened in those 48 hours stayed with me for a long period of time. Look at a Sonia Gandhi rally. It was her maiden speech in UP so she came on stage. And in some sense, those were defining moments for Indian politics. But not too many people know it is a much longer trip now. There are many more people who come on board. Now predictions are made with your trips in there. But I do want to ask you the one question because you say this is democracy on the road, in some sense you have been called Limousine liberals and all of that. So, you make this fascinating trip across the heartland. You go to the south. I am told this year you are going to the south. Has voter behaviour changed, expectations changed? One of the favourite lines in my book which I sort of say in the closing chapter is that changes after changes, India remains the same in so many ways. That is what really captures it. Because what I find in most parts of India is that we still vote along caste lines, that has not changed in 20-25 years and the only way that will change is as India becomes more urbanised. That process is taking excruciatingly long to happen. But this is a reality I feel that many people in corporate board rooms or sitting in Delhi and Bombay almost want to deny or almost want to sort of have a setting look about it. But this is the reality of India. This is a caste system that goes back 3,000 years or something like that. So yes, some of the raw discriminations that we would see, has sort of ebbed but the political bloodlines are very much formed along caste lines. You started with 1998 and 1996. What really egged you on? It is a pattern that reformist prime ministers have never been re-elected -- whether it was Narasimha Rao or Mr Vajpayee. Six months back, many would have said it is Modi’s election to lose and now suddenly it seem there could be a surprise in a way we do not know yet. Is the economy a non-issue for elections? Yes and that is a great point because what I say in the book is this that development is at best, one of the six factors that may matter for a candidate. I would not say that any reformist prime minister does not get re-elected. India’s electoral history, at least since it became a multi-party democracy, is that most prime ministers do not get re-elected. So, just to say that reformist prime ministers do not get re-elected, is not right. But you need many other factors to come together. The classic case is Bihar. The one place where we have seen the most radical transformation in all the trips we have been so far, has been in Bihar. We have been to Bihar five times and look at the radical transformation that Bihar has seen over the time period and yet Nitish Kumar cannot win an election today in Bihar on his own because his caste Kurmi is accounts for only 3% to 4%. He has built a broader caste coalition which maxes out at 20%. In order to come to power, you need more than 30-40% of the vote. so he needs to be in a caste coalition. That is the reality of India. We are talking about six-seven factors which work and not just development. You cannot win an election in India based on development platform alone. You mentioned that a Karnataka politician said that six tests that you need to pass for a win are – caste, religion, welfarism, money spent, corruption and development. Let us for a moment presume and let us tweak this a bit, let us for a moment presume you tick all the six boxes. Doe that ensure victory and which of these six factors has to be the most important? As I said, caste for me is a necessary but not a sufficient condition to win. So by if you get that equation wrong… And you mean caste not just in the Hindi heartland, but everywhere… Everywhere. Apart from maybe some very cadre-based states like Tamil Nadu, Kerala, maybe West Bengal. In those states, you can argue that caste is not as important in politics as in other parts. But the caste and the caste discrimination which exists in places like Tamil Nadu and Kerala is very strong but the politics for some reason because of the cadres has sort of divorced itself from the other part. So, that for me is a very important factor. You get that wrong and it is a non-starter. But the other factors, you have to get a lot going for you. The default option in this country is anti-incumbency… And in a multi-party democracy that is…. It does not take much. In a multi-party democracy, it just takes 2 or 3 percentage vote swings to dramatically change outcomes.No you are right. In 2014, 282 was with the 31% vote share and there was a large 69% that was never really on board. But you speak about many factors. Is 2019 going to tick the biggest box on religion? At this stage, caste still dominates and there is increased polarisation in this country. When I went back to Bijnor to write the closing chapter of my book, I found that some of the raw discrimination when it came to caste had eased somewhat but when it came to religion, it was as pronounced as ever, if not more, you can argue. So yes it will play a role but within the 80% Hindu voters, trying to unite them under one umbrella is very difficult because you end up marked. One action for one constituency ends up causing a lot of heartburn in other constituencies. That is what India is really about and therefore nationalism in India has its limits. You can argue for the good or bad but nationalism in India has its limits. It is not a pan-India phenomenon… Yes because of the sub-national cultures which exists in India whether it is on caste or regional lines. So many people think of themselves first as a Gujrati, first as a Bengali, as a Marathi and then as an Indian. To try and put them all together is not possible. It is one of the things which I focus a lot in my book and something which in Delhi in particular, we tend to be very insensitive about is how much the south of India resents the Hindi imposed on them, north Indian values imposed over them and even their form of Hindutva in many ways, as I have argued in the book, is a bit of a softer sense of Hindutva than in north India. It is very different from the north… In the north, even though they are very religious, in Tamil Nadu, it is like as if you are on a temple tour all the time. But it is a very different strain of Hinduism compared to what we have in the north. We have to be very careful about that. I tell my foreign friends that only 40% of this country speaks Hindi. You have said in your interviews and I think you make a mention of this in book that India is not one country, it is almost like a continent and it is very difficult to understand India if you are only going to focus on the Hindi heartland. But there is a lot of Hindi influence on policy making right now. Do you believe that could be a factor in the south? You are hitting on a point which not many people tend to pick up is the resentment in the south against Hindi. I have this anecdote in the book where we went to Karnataka last year to watch the Karnataka election campaign and we were having dinner. It was hosted for us by Nandan Nilekani at his residence and he called a bunch of Bangalore intellectuals and other people to speak with us. I was surprised to see the amount of resentment they have for the north in general. And this was an educated sort of an evolved community. And this is Karnataka. In Tamil Nadu, it is a lot worse in terms of what is there. In Tamil Nadu also, when we went in 2016 trip, it was almost like Modi who, Rahul who? And we speak in Hindi almost as we are speaking to like a French person in English in the country side. That is very important. We went to this place called Tumkur, which is about a couple of hours north of Bangalore to see a rally of Modi. What happened was he got up on stage to speak and the first few lines he tried to speak in Kannada. He connected. You can make out the crowd was very enthusiastic. But obviously he could not take it much further. Then he moved to Hindi with a Kannada translator and the crowd enthusiasm completely collapsed compared to what it was before. He just did not have that much of an impact and you could see the difference between his impact in Uttar Pradesh and in south Indian campaign. This is one of those real mistakes we have been making by not covering the south enough in this election. Mr Modi was riding a wave of hope in 2014. He was everything that hope stood for, whether it was development, whether it was changing the face of India, whether it was the institutions and all of that. Many will say perhaps hopes were running too high and they were bound to crash. As we step into 2019, where are those things? Do you believe how many jobs have been created, what is the rural stress like these will be issues? If you objectively look at it, a lot of those hopes and expectations in 2014 have not been met and that was natural because the expectations were unreal. In 2014, when we were travelling in Uttar Pradesh such were the expectations out of Modi which we could sense that every time we hit a bump on the road, the joke in the car will be Modi will fix it because you just thought that everything Modi would fix. That was the kind of expectation. But what I find remarkable today is this is that a lot of the people are voting along caste lines and how they view Modi’s performance is completely governed by the caste that they are from. You ask an upper caste person what they think of demonetisation, most upper caste people would tell you accha kiya (he did right). You speak to the Muslim and Dalit workers and they will tell you about how much their business has been hit. The carpet weavers in Mirzapur will tell you about how much their business has been hit, etc. I find that this is very difficult to objectively analyse, but in terms of what performance has been, what is more important for me is to understand that when people ask what are the issues, I am saying that do issues really matter when peoples’ minds have been made up along caste lines? I am not even sure how much issues really matter? We want to still think almost in this western mindset that okay how is economic performance? But that is a very alien mindset to Indian politics. Like how will be the economic performance and how is the political outcome going to be is the pocket book theory of American politics. It just does not work in India. It is maybe one of the six factors that may be at play, but for us to keep having these debates about Modi’s performance in 2019, referendum, etc, when so much is happening along these caste lines makes no sense. Had there been a dramatic transformation in India, maybe it would have been different, maybe people would have suspended their caste lines and said okay because something really dramatic has happened here, let us try and focus on that. Unfortunately in India, nothing dramatic ever happens. It is all incremental in nature and the interphase with bureaucrats is difficult for the people. But the referendum can never really be on the prime minister or the people in power. How does the opposition stand vis-à-vis Mr Modi right now? Is the coming together of opposition parties really going to hold forth against the very well-oiled political machinery of Bharatiya Janata Party? The heterogeneity of India is such that it is very difficult for one party to completely dominate and therefore the narrative has changed. In 2018, the entire discourse was about how we are about to head towards BJP hegemony that 2024 may be the next chance? Till six months back… Yes exactly. But today what has really happened is that it has become a very competitive race. It is an open election. It is 50-50. I first said that it is a 50-50 election nearly a year ago, I got so much push back and blow back. Today when I say that, it appears as if I am uttering conventional wisdom. Tell us something new. Have you moved the needle on this? Now, I do not have to move the needle, but I am going to figure it out. I feel that if there is anything the Modi government could have done differently even from a political standpoint, is possibly to have taken a few more people together because even though he is still in the pole position and the strongest player, the fact that so many people have got antagonised in the opposition and therefore have made it a mission to stop him is not something which is advisable in this country, given the fact that all of these people have a pretty set vote base. So, to dismiss that and think that everyone is going to revolve around one person is very difficult. He just made the challenge much harder for him. Many will say it is not just antagonising members of the opposition but also some within his own federation and his own politics as well. In 2014, at 282, he had a magical number. This was the first full majority government in economically liberalised India and the expectations were high. Do you believe the government did justice to its political capital? When are we going to give up this notion that a strong majority government is really usher in economic reforms in this country? There is no history of that in this country. Rajiv Gandhi came in with a majority where he could have changed the constitution and yet we know what happened in the following years. The first couple of years maybe some economic reforms happened and after that it was back to populism. He went to the polls in 1989 and we had the crisis in 1990-1991. I used to be in a very naive way in my first interactions even in the late 90s and early 2000s with leaders where I would see so much hope in Chandrababu Naidu, where I would try and go meet Sonia Gandhi telling her about the benefits of free market reform. So the notion that in this country a strong stable government would be able to usher in free market reforms, does not hold. I have learnt it very early that the fundamental nature of the big politicians in India is socialist that is really in the DNA. It is statist. Do you believe that is in the DNA of the country as well? Possibly, in terms of the fact but there is no constituency in this country for the kind of free market reform or even the kind of reform that took place in China. We have this notion out here that China got these great reforms because the government was good. The main reason China did so well for 30-40 years was that government kept getting out of the way. The government’s share in the economy when China began its entire reform process in the late 1970s was more than 90%. By the time the reform momentum really came to an end by the end of last decade, that share had dropped to just about 30%. So the government kept getting out of the way in a very sensible way and kept spending more and more on infrastructure. Here we are spending more and more on welfarism. The money which is left to spend on infrastructure is obviously squeezed out from somewhere and therefore this notion that we are going to get strong government and therefore good economic reforms is something which is just a myth. But is it time that we make a peace with the fact that we will perhaps not see the free market reforms that you and I would wish for. Absolutely. I think especially at a national level. At a national level. if there is a risk of anything, it is that competitive populism is increasing. Just look at the way the narrative has shifted in the last few months. Even Mr Modi when he first came to power … He spoke about the bitter pill… Yes, in terms of the bitter pill and it is an insult to give people these dole-outs/ The Congress was so heavily criticised. I remember covering the Rajasthan campaign in late 2013 when we went there and Ashok Gehlot basically giving a handout for everybody. BJP just took him on in terms of how can you be doing this? This is an insult to the people and stuff like that. Modi’s campaign in 2014 was almost as if he was the new Ronald Reagan of India in terms of the minimum government maximum governance kind of stuff! It is just not the way, but I think, in the end, the reality is very different but the only positive news in this context here is that some of the state chief ministers, who are closer to the ground, they have become much more development focussed than what they possibly used to be. That is possibly because they are able to get more done directly on the ground. But at the national level, to expect any government to come into free market reform in this country is something which I cannot see happening and the only time it has ever happened in India like 1991 is when you are facing an economic crisis. Is it because today capitalism is stigmatised? It is a taboo to be in business and it is a taboo to be a successful businessman and a lot of our narrative is being built around that because India has a socialist mentality if not a mindset. Will we have reforms only when we have our backs against the wall? Any dramatic reform will only take place when we have our back to the wall as 1991 showed. Even in late 2013, whatever Chidambaram started to do as corrective measures came only after runaway populism was leading to a lot of fiscal excesses and other problems in this country like when the rupee went into a tailspin. But the important point I am going to make here is this that attitude in the country is one of live and let be. So, in this country it is very difficult to bring about disruptive change and as we speak about capitalism being stigmatised, one of the most fascinating observations as I tried to summarise the last chapter was the fact that we have travelled a distance now which is literally like a lap around the earth. I mean 27 trips multiplied by a 100 to 1500 kilometres per trip, that is how much you come to and what I find really remarkable is the fact that we never felt unsafe and that for me is such a telling statement about this country. In any part of India. Yes I mean there was some pockets like we went to Lalgarh which is a Naxal infested place. You feel unsafe a bit there for a while, maybe in Bettiah in the dark days of Bihar. Maybe some pockets, but generally in India, remember that some of the people travelling in our group look pretty well heeled. So, it is quite surprising that we never felt unsafe. I cannot say this about South Africa, Brazil, other developing countries I go to. In those countries, I would be very careful about stepping outside my hotel and the class warfare is such that even the rich people do not like to travel in very fancy vehicles because they fear what could happen in terms of class repercussions. In this country, it seems there is a real acceptance of this at some level that we can all travel and you still come back home safe in general.
Source: ET

In high-yield battle, Indonesia grabs upper hand over India - economic news of india - world economic news - economics news for students - indian economy news

In high-yield battle, Indonesia grabs upper hand over India - economic news of india - world economic news - economics news for students - indian economy news
In high-yield battle, Indonesia grabs upper hand over India
67845661 67803927 By Kartik Goyal In the battle between Asia’s two highest-yielding major bond markets, Indonesia once again appears poised to gain the upper hand over India.Global money managers are increasingly shunning Indian securities as Narendra Modi’s government hands out billions of dollars in tax cuts and subsidies to boost the prime minister’s appeal ahead of elections, blowing through the nation’s deficit target in the process. In contrast, Indonesia’s improving fiscal status and aggressive monetary policy stance in the face of global headwinds have burnished the nation’s assets in the eyes of investors.Comparison between two of emerging Asia’s two biggest economies are common given their similarities, and that’s especially true this year. Both run current-account deficits, are highly sensitive to shifts in U.S. interest-rate policy, and face key elections in 2019.“Indonesian bonds look more attractive given that yields are high, the economy is likely to do well and finances may be on a better relative positioning than India,” Manu George, Schroder Investment Management Ltd.’s director of fixed income, said from Singapore. 67924725 Assets in both countries will be tested this week as India reports key inflation and factory output figures, while Indonesia releases trade data.The yield on India’s widely traded 2028 bonds surged 13 basis points on Feb. 1, the day Modi’s administration announced plans to sell a record 7.1 trillion rupees ($100 billion) of securities to finance the fiscal deficit for the year beginning April 1.Not even a surprise interest-rate cut by the nation’s central bank last week has been able to fully stem the losses, as supply concerns weigh on investor appetite. Yields on similar-maturity Indonesia notes have declined 13 basis points this month.Even with their recent rally, Indonesian 10-year securities still pay about 7.88 percent, the highest in Asia. That’s helped lure about $2 billion in foreign portfolio investment this year, compared to outflows of around $743 million for India, according to data compiled by Bloomberg.Investors are also avoiding Indian bonds amid increasing political uncertainty ahead of April-May elections. While Modi remains the odds-on favorite, his grip on power has looked more tenuous following regional defeats for his party late last year. In Indonesia, President Joko Widodo looks well positioned to secure a second term when voters head to the polls in a little over two months.“On a risk-reward basis, Indonesia probably looks more interesting than India going into elections,” said Timothy Ash, a strategist at BlueBay Asset Management in London. A “better public finance profile and very orthodox monetary and fiscal policy setting” bodes well for Indonesian assets.Indonesia has forecast a fiscal shortfall of 1.84 percent of gross domestic product for 2019, while India this month widened its deficit target for the current and next fiscal year to 3.4 percent of GDP.Throw in rebounding natural resource prices -- Indonesia is a net commodity exporter, while India is an importer -- and the Fed’s dovish pivot, which is largely seen as more beneficial to an Indonesian economy that was highly susceptible to capital flight in 2018, and you have a recipe for Indonesia outperformance in the near-term.“Given the complex nature of Indian politics, investors are more worried about election uncertainty in India than in Indonesia,” said Vivek Rajpal, a rates strategist at Nomura Holdings Inc. in Singapore. Rajpal said he’s overweight Indonesian bonds given the benign global backdrop fueled by the Fed’s change in tack and falling U.S. real yields.Below are key Asian economic data and events due this week:Monday, Feb. 11: China foreign reserves, Malaysia industrial productionTuesday, Feb. 12: Australia business conditions, Japan money stock, India CPI and industrial production, Singapore retail sales and Philippines tradeWednesday, Feb. 13: New Zealand rate decision, Japan producer price index, Australia consumer confidence, South Korea unemployment, Taiwan GDPThursday, Feb. 14: Japan GDP, BOJ bond purchases, Australia inflation expectations, Malaysia GDP, India wholesale prices, China trade figuresFriday, Feb. 15: China CPI, South Korea current account, Singapore GDP, Japan industrial production, Indonesia trade data and Thailand FX reserves
Source: ET

Here's why Indian companies are betting big on AI - economic news of india - world economic news - economics news for students - indian economy news

Here's why Indian companies are betting big on AI - economic news of india - world economic news - economics news for students - indian economy news
Here's why Indian companies are betting big on AI
In the past two years, Swiggy, the Naspers, DST Global and Bessemer Ventures-funded restaurant aggregator, has been on a tear. The number of interactions on its platform since October 2017 has gone from 2 billion (across consumers, riders and restaurants) to 40 billion in January 2019. In that time, Swiggy has gone from a business working with 12,000 restaurants to over 55,000; from seven cities to 70; from delivery staff of 15,000 to 120,000. The Bengaluru-based venture has become far more valuable, too — from $700 million in February 2018 to $3.3 billion by the end of the year. This dizzying growth has meant that Swiggy, a firm founded as recently as 2014, has to look beyond human intervention to keep pace.Swiggy is leaning on technology, specifically artificial intelligence (AI), to help its systems keep pace with this rapid growth. “AI is critical for us to sustain our growth,” says Dale Vaz, who heads engineering and data science at Swiggy. Over the past 12 to 18 months, Swiggy has been expanding this team, putting more resources behind it. The firm has also intensified its focus on building a strong data repository, thanks to the explosive growth of interactions, to catalyse the adoption of AI. A lot of the necessary back-end work in tagging and classification is increasingly done by code that improves itself over time.The company can today use machine learning to train its systems to distinguish between vegetarian and meat dishes from images, and also to vastly expand the languages, colloquialisms, words and strings customers could use to obtain accurate results. For instance, the words ‘chicken’, ‘murgi’, ‘murghi’, ‘koli’, ‘kolzhi’ will all be recognised by the app as a craving for poultry. Swiggy offers users different app interfaces, depending on their individual preferences. The new AI-enabled features will add more meat to its offerings, so to speak. In February 2019, the firm acqui-hired (when you buy a company for the skills of its founders or the team) Kint.io, a developer of image recognition solutions, for an undisclosed amount. “We continue to scout for deals to strengthen our presence in this field,” says Vaz.67919799 For a company like Swiggy, winning a competitive tech advantage with AI is a high-stakes necessity. It is in a heated duel for market share with arch-rival Zomato, but sees Uber Eats, Food Panda and even Dunzo as looming rivals.In India, Swiggy is hardly the first techstar to bite the AI apple. Previously, Google, Walmart Labs, Flipkart, Paytm, Oyo and several other global and homegrown players have all invested in and acquired companies to boost their presence in AI. For much of the past few years, startups and large companies have been running relatively small experiments with AI. Now the momentum in the space is accelerating, as evidenced by a flurry of deals as well as by in-house budgets at unicorns being diverted in this direction.Like all technology hype cycles, there’s a lot of posturing. AI votaries are pushing CEOs to invest in it, but the challenge is to make sure these investments generate good returns and not get lost in bureaucracy, especially when integrating an acquihired company. “AI is past this hype circle,” says Sasha Mirchandani, founder of Kae Capital, an early-stage investor in tech startups. “Now larger contracts are being offered and old economy giants are committing themselves to this emerging field.”67919803 67919807 67919861 67919869 AI refers to the ability of a computer or system to interpret external data and take decisions based on this information. As a field of study, it has been around since the mid-1950s, but technological advancements over the past decade have seen it leap rapidly from the lab to mainstream applications. Several factors have pushed the growth of AI globally, including availability of massive data sets, the leaps in processing capability with the emergence of GPUs (graphics processing unit), improvement in cloud technology and the growing sophistication of machine learning and self-improving algorithms.AI has, of course, been in use among consumers for a few years. For example, on mobile phones, digital personal assistants such as Siri, Google Now and Cortana all try to learn from the usage and behaviour of the phone’s owners. Games such as Far Cry and Call of Duty lean on these technologies. In the world of business, retailers such as Target and Amazon have used AI to predict consumer behaviour, as have banks, media ventures and music streaming services. AI has become something of a magic wand to wave at all tech problems, even as there’s widespread debate around its utility and optimal applications. Startups focusing on niche areas in AI are receiving investor backing, ventures with strong AI capabilities are now beginning to win deals and customers beyond early pilots and, most notably, specialists in the field, especially data scientists, are in high demand. “At least 25-30% of the proposals we now get involve a significant element of AI,” says Girish Shivani, executive director at YourNest, an early-stage venture capital firm with interest in so-called deep-tech startups. Kris Laxmikanth, CEO of Bengaluru-based HR firm Headhunters, says that the market for talent with AI-linked skills is becoming overheated. Salary jumps of 100-150%are becoming the norm to lure away an established data scientist. There are also instances of Indian AI startups relocating to Silicon Valley in the US for want of relevant talent here.“AI is a hot skill today. I will even call it super hot. It is hotter than what SAP was in its heyday. In Silicon Valley, an AI engineer can get between $135,000 and $160,000. This is the highest paying skill today. In India, a fresh engineer with AI skills starts at Rs 8 lakh per annum in top software services companies such as TCS and Wipro. After one year, they can command 50-80% increase if they have the exposure to right projects like chatbot building. At global tech companies such as Google, these salaries are higher,” says Laxmikanth.Structural SupportThere’s evidence of broader support for AI from big tech and, as announced in the Union budget, from the government. Tech behemoth Google acquired Halli Labs, then a four-month-old startup, in July 2017. However, beyond Halli’s expertise in machine learning and natural language processing (the ability of a computer to understand language as spoken by humans), Google is making deeper inroads into the Indian market.“... for entrepreneurs, we are working on an accelerator programme, based in India, focused primarily on AI/ML technologies. Our global accelerator programme has already supported over 30 Indian startups of which six are focused on applied AI/ML innovation,” Google India noted in a blog post in March 2018. The interim finance minister, Piyush Goyal, announced the establishment of a national AI programme, in the budget. A national centre for AI is envisaged and a portal is expected to be established, too.According to an estimate in a study by tech giant Accenture, AI has the potential to add $957 billion, or 15% of current gross value added, to India’s economy by 2035.India ranked third among G20 countries in 2016, measured by the number of AI-focused startups, which have increased since 2011 at a compound annual growth rate of 86%, higher than the global average.67919909 However, some limitations in the Indian market could yet slow the momentum. For one, the quality of data in India continues to be an issue. The diversity of demographics, languages and use cases limit the ability of consumer applications to learn on the go. Second, despite some changes, India’s startups focused on AI continue to be under-invested by risk capital providers, compared with their rivals in China and the US.But, on the ground, companies that have laid their foundations are starting to see some traction. In June 2016, when ET Magazine spoke to the founders of SigTuple, a provider of AI-driven healthcare diagnostic tech, it was conducting early pilots. Today, its products are much more established and the firm has expanded its business overseas. It raised $28 million from investors, including marquee VC Accel Partners, and according to bankers, will soon announce a fresh raise of $50 million in the next few months.CEO Rohit Kumar Pandey told ET Magazine in November 2018 that the firm was expanding its manufacturing line and the reach of A100, a new product that digitises different body fluids such as blood, urine and semen. It is also pushing for more global certification for Manthana, its AI diagnostics platform. “We want to build a global AI-driven healthcare venture out of India,” he said.Niki.ai’s prospects seem similarly bright, although in a diametrically different approach, it’s focusing on India. The venture, founded in 2015, has over three million users of its chatbot service and counts HUL and HDFC Bank among its customers. It has raised funding from Ronnie Screwvala’s Unilazer Ventures, Ratan Tata and German enterprise software giant SAP. “We are focusing on building our products for Bharat,” says Nitin Babel, cofounder.To do this, Niki is focused on building its capabilities in vernacular languages and wants the next wave of India’s internet users, who are native to mobile phones, to be able to comfortably use its chatbot.Babel says the firm is profitable on a perorder basis and expects to see gross merchandise volume go from Rs 200 crore in 2018 to Rs 1,800 crore in 2021. While the firm’s business has grown ten-fold in the past 12 months, Babel believes the best is yet to come.Then & Now: How Some AI Startups Have Faredniki.aiFOCUS: Chatbot that helps users discover services and productsFOUNDED IN: March 2015BACK IN 2016: Helped with bill payments, cab bookings, recharge, home services and food orderingNOW: Early pilots have led to customers such as HUL and HDFC BankSigTupleFOCUS: AI-based medical technology solutions providerFOUNDED IN: July 2015BACK IN 2016: Shonit, an automated solution for complete blood count test, completed a comprehensive clinical validation study at a reputed diagnostic laboratory in Bengaluru.NOW: Business has boomed, with the company’s technology being used overseas too. It is in the market to raise at least $50 million in fresh funding.arya.aiFOCUS: Building developer tools to help enterprises build their own complex AI-based systemsFOUNDED IN: October 2013BACK IN 2016: Working with large companies in the technology and financial services sectors to build these productsNOW: Customer traction is growing with the likes of ICICI Lombard using its tools to hasten insurance claim processingSnapshopr/ ArtifaciaFOCUS: AI-based marketing solutionsFOUNDED IN: June 2015BACK IN 2016: Was focused on imagerecognition technology NOW: Has pivoted, rebranded and focused its technology to help companies monetise their user-generated content
Source: ET