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