Innholdsfortegnelse for July 17, 2016 i Business Today

What a fortnight it has been. As we go to press, the United Kingdom has voted in a referendum to exit the European Union. It was a remarkably close vote, practically split down the middle. The markets around the world are going crazy, and in India, the rupee and stock indices are plunging. I think the markets are overreacting because the implications of Brexit will only be clear much later. If it triggers a global financial crisis, it will obviously affect our economy, too. If the markets calm down in a few days or even weeks, India should not be very badly affected. Indeed, it may even gain. On page 26, we look at the short-term impact of Brexit. Meanwhile, the government announced a major initiative on FDI. Prime Minister…

30 FAIR & SQUARE WHAT: Trade Frauds, Trade Elasticities and Non-tariff Measures WHEN: June 30, Kuala Lumpur WHAT TO LOOK FOR: The series invites leading researchers in development economics and public policy to present their work on the role of burdensome non-tariff measures in inducing large trade frauds and affecting trade flows. 07 HOLD WATER WHAT: Water Conclave 2016 WHEN: July 7, Jaipur WHAT TO LOOK FOR: The interactive session organised by the CII and Rajasthan government will have representatives of the government, industries, society and social groups to chalk out a sustainable plan on water conservation and recharge of ground water by industries. 07 - 09 - 15 - 16 KNIGHTS IN ARMOUR WHAT: Familiarisation Programme for Indian Army’s Armoured Vehicle Requirements WHEN: July 7-9 & July 15-16, Ahmednagar…

Breaking News A new study by Columbia University and the French National Institute claims that six in every 10 people who share links from news websites on networking site Twitter do not read them. The research, which studied 2.8 million shared links from news websites BBC, CNN, Fox News, The New York Times and The Huffington Post, found out that around 59 per cent of these links have never been clicked by users, though they were shared many times. The study also revealed that users are more likely to click on a link shared by an individual than a media outlet. Considering news is the main topic of discussion on Twitter and trends are decided based on these shares, the findings could be worrisome. Rise of the Bots Bots have…

I think increasingly the job of (a central bank) governor in a modern economy requires somebody with, if not training in economics, but a very good understanding of economics and finance and banking. They (governors) have to have a sense of the whole thing. If you are a macro economist, but don’t understand finance and banking, you could be out of your depth very soon on the regulatory front.” Raghuram Rajan, 23rd governor of the Reserve Bank of India (RBI), was explaining what was required to head a central bank to Business Today. He had completed about two-thirds of his term as governor. And it was his second meeting with the magazine, the first having taken place six months earlier. His candid opinion on a range of subjects, which would…

WE ARE ALSO THINKING OF AN RBI COLLEGE OR INSTITUTE, WHICH WILL PROVIDE ADVANCED TRAINING Outgoing Reserve Bank of India Governor Raghuram Rajan spoke to Business Today Editor Prosenjit Datta and Deputy Editor Anand Adhikari on how he was positioning the central bank as a knowledge insitution to manage the change in monetary policy framework, and banking and finance. Edited excerpts from an interview that was conducted months before his decision to leave RBI for academics: On RBI as an institution RBI is a very professional organisation. It has a reputation built up over 81 years of integrity and capability. It is a hierarchical organisation. So, the governor does set the tone, but it is not as if…

Rewards are individual gain. Linking individual success to collective gains can weed out huge inefficiencies in the system American psychologist, behaviourist and social philosopher B. F. Skinner devised one of the oldest theories of motivation, the reinforcement theory. It explained why we do what we do. The theory also known as Behaviourism or Operant Conditioning – possibly still taught in psychology today – states that an individual’s behaviour is a function of its consequences, also known as the Law of Effect. His concept posits that by applying motivation through various stimuli – negative or positive – business, government, education and rehabilitation centres, etc. can gain broader understanding of human behaviour. His idea laid less emphasis on personal intentions or goals, and environment played the most important factor. This was in…

There’s a shift under way in large organisations, one that puts design much closer to the centre of the enterprise. But the shift isn’t about aesthetics. It’s about applying the principles of design to the way people work. This new approach is in large part a response to the increasing complexity of modern technology and modern business. That complexity takes many forms. Sometimes software is at the centre of a product and needs to be integrated with hardware (itself a complex task) and made intuitive and simple from the user’s point of view (another difficult challenge). Sometimes the problem being tackled is itself multifaceted: Think about how much tougher it is to reinvent a health care delivery system than to design a shoe. And sometimes the business environment is so…

CYCLORAMIC: 120, iOS Almost all smartphones allow you to capture panoramic images with ease, but keeping hands steady so that you don’t end up losing the frame can be a task. The Cycloramic app gives iPhone users a hands-free way to capture panoramic photos and videos. The Cycloramic app makes the various inbuilt sensors on the iPhone rotate automatically when the camera is in action. The iPhone when kept on a smooth surface rotates 360 degrees to capture the image. Once done, the app automatically stitches the image together and saves it. The image can also be viewed in 3D mode. In a similar fashion, the app can also record videos and convert them into Panoramic videos. It is compatible with only iPhone 4, 4s, 5 and the recently launched…

If you are interested in learning the history of India’s optical lens industry, Mansion of Glass: The GKB Story is a book you would want to flip through. It is easy to read and alternates between the family history of author K.G. Gupta, the promoter of the 120-crore GKB Prime Group, and the evolution of the organised optical products manufacturing and marketing sector in the country. When Gupta and his brothers floated an optical lens enterprise under the GKB brand in Agra in 1960, the industry was in its infancy. Like any other business set up during the pre-liberalisation era, GKB also weathered the licence quota raj storm to establish itself as one of the leading brands in the ophthalmic lens business. The Gupta brothers were the first ones in…

Indian MNC with Global Footprint This refers to your cover story on Larsen & Toubro (The New L&T, July 3). An excellent piece. The saga of L&T is a fine example of how Indians can build world class businesses at home provided they get the right opportunities. Indeed, L&T has clocked a stellar performance across diverse sectors as its Chairman A.M. Naik has pointed out. The immense contribution of L&T to India’s economic development merits special mention. Its alacrity in retaining profitable business ventures and entering newer verticals such as defence, nuclear and aerospace in an effort to garner substantial revenues is highly commendable. The HR initiatives of L&T, too, deserve special mention. The company has focused on infusing fresh talent, retaining seasoned professionals, reducing attrition, and building a strong…

The incentives are intended to create over one crore jobs in three years and generate exports worth $30 billion. At present, India exports garments worth $17 billion whereas Bangladesh's exports are about $36 billion The Central government’s decision to provide a `6,000 crore special package for the textile and apparel sector is a welcome move. It will boost exports and benefit the workers. The incentives are intended to create over one crore jobs in three years, attract investments of $11 billion and generate exports worth $30 billion. Our industry has a clear disadvantage due to our main competitor Bangladesh’s least developed nation status, which makes overseas buyers exempt from import duty. India used to be the leader in garment exports but Bangladesh and Vietnam overtook us in the past few…

With just two months in office, Raghuram Rajan got a perfect setting at the 81-year-old central bank’s off-site in Udaipur to kick-start organisational change. A paper presented by the senior management on ‘possible synergies’ in the organisation, was quickly lapped up by Rajan, who formed three committees to create a blueprint for organisational restructuring. Two senior executive directors — B Mahapatra and Deepak Mohanty — were put on the job to prepare a plan for better synergy and domain expertise in the organisation. P. Vijayabhaskar, another executive director, was asked to suggest improvements in training and development facilities. R. Gandhi, who is now the deputy governor, was asked to relook at HR issues like incentivising people, skill gaps, lateral hire etc. A year later, when Rajan met the senior management…

The very phrase “monetary policy” sounds technical and sleep-inducing, but it is an extremely vital issue that impacts the lives of everyone, particularly the poor, because of its immediate effect on inflation. It also affects the very structure of society due to its longer term impact on resource allocation. In a true sense, control of money is the control of society. Raghuram Rajan’s philosophy is fundamentally different from the Bernanke-Yellen-Draghi-Kuroda consensus of “activist” or “solve all the world’s problems” monetary policy that has wreaked so much havoc in the world. Rajan’s monetary policy is far more intellectually humble, focused on narrow goals of (a) keeping the value of the currency stable and inflation low; (b) keep the debt level in the financial system manageable. In contrast, activist central bankers, who…

Shiva Kumar is a cheerful 24-year-old accountant, who works for a rice merchant in the narrow congested lanes of Balepete in old Bengaluru. A first-generation graduate, Kumar hails from Yadiyur, located 100 kilometres north-west of the state capital. Kumar quickly realised that living in a city like Bengaluru on his 22,000-a-month salary left him with only limited savings, in spite of his frugal habits. Indeed, when his mother fell sick and needed 10,000 for treatment, Kumar faced a dilemma. His merchant boss refused to lend him money again, having helped him out once earlier. If only he could get a loan, Kumar was confident that he could repay it within a month or two. “When I approached a nationalised bank where I had opened an account, they asked me for…

THE CHANGE Increasingly, corporations and professional services firms are working to create design-centric cultures THE REASON Many products, services, and processes are now technologically complex. People are not hardwired to deal well with high levels of complexity. They need help THE IDEA People need their interactions with technologies and other complex systems to be intuitive and pleasurable. Empathy, experimentation, design smarts, and other qualities help create those kinds of interactions. Those qualities need to spread from the product design function to the whole organisation…

What clearly shines through the book is the quality of insights in every story I’ve known Anisha for a while now and have always admired her massively innovative yet measurement-driven marketing mind. I was one of the first people who read her book Storm the Norm and as a reader of business books by the dozen, did something I normally never do – read it cover to cover in one day. What grabbed my attention at first was the perfectly poised premise of the book – “market storms aren’t purely accidental, there is a method to the magic”. The book delves into why and how some businesses do it differently and break fresh ground as leading innovators in their respective industries. No blanket suppositions and ethics lessons, but straight out…

YES Bank's Global Foray Eyeing other Asian markets, private sector lender YES Bank plans to set up an international branch in Singapore amid plans to raise $1 billion (nearly `6,652.75 crore) from international markets, its founder, Managing Director and CEO Rana Kapoor said. YES Bank aspires to expand into growing Asian economies. Once RBI approves its application, YES Bank aims to get a full banking licence in Singapore. Kapoor described Singapore as YES Bank’s springboard for expansion into the Asian markets, especially focusing on Indian and global Indian businesses. Calling It a Day S. K. Roy, who had taken up the chairmanship of state-owned Life Insurance Corporation of India (LIC) in June 2013, has resigned two years before his term ends. News reports also claimed that Roy had put in…

If trends in pledging of shares indicate the financial health of promoters, India Inc. is showing early signs of deleveraging. If we look at the data of top 25 companies that account for 58 per cent pledged shares by value, 11 showed a decline between March 31 and June 21. This means the promoters paid the lenders and got a part of their shares released. The list includes TCS, Zee Entertainment, JSW Steel, Reliance Power, GMR Infrastructure and Apollo Hospitals. Seven showed an increase while the other seven showed no change. For instance, TCS saw pledged shares fall from 3.15 per cent to 2.90 per cent. The value fell from 11,490 crore to 11,119 crore. This was despite a 5.2 per cent rise in the company’s stock price during the…

You may not have heard of Shigetaka Kurita but you have him to thank for the smiley – and other emojis you use to substitute putting your feelings into words. Emojis have been around since the late 1990s, but they became ubiquitous only in the past few years. Now brand strategists and marketers are beginning to use them in their communications as well. According to a paper published in the Social Neuroscience journal, the brain processes emojis the same way it does real faces. Emojis, says Rajiv Dingra, founder of WATConsult, help brands define the emotions they want to be associated with and evoke specific responses from users. They enable brands to add an element of fun and personalisation in their communication. “Brands that target consumers in the 13-25 age…

1-3 lakh crore Private contractors’ money stuck with the government due to delays/disputes 4.5 lakh crore The total annual output of the infrastructure industry 5,000 crore The money the Central government owes to the software industry 21,741 crore Value of projects awarded by the NHAI in 2014/15 22,426 crore The amount pending with the NHAI as of July 2015 (in 113 arbitration and 83 court cases) 8,16,000 crore The stressed assets of Indian banks. This is 14.5 per cent of their total advances Last year, in a television interview, former Infosys Chairman N.R. Narayana Murthy said there was not a single government project where his company had not lost money. He was talking about issues faced by private companies that work on government projects. Among the problems he highlighted was…

When Raghuram Rajan landed at RBI headquarters, the bad loan problem was already biting. His options were limited. The existing infrastructure of DRT and SARFAESI was inefficient. Similarly, asset reconstruction companies (ARCs) were not the best option before banks as they would pay only 5 per cent as upfront cash; the balance was in security receipts where realisation was long-drawn. So, Rajan started tweaking with all tools in his armoury. • JANUARY 2014 / EARLY RECOGNITION Rajan put in place a system of early recognition of stress by asking banks to classify loans where interest or principal is due for 30-90 days. After 90 days, the loan becomes an NPA. That way, banks could take early corrective measures. He also set out to create a database of large borrowers across…

MINIMUM DOCUMENTATION Unlike conventional banks and financial institutions, they seek minimum documentation TURNAROUND TIMES Could be as low as 15 minutes to a maximum of 3 days LOAN SIZE From Rs 10,000 to a maximum of Rs 10 lakh for personal loans. For SMEs, could be as low as Rs 25,000 to Rs 1 crore APP-BASED 85 to 100% of the processes and documentation are just through an app. No need to visit a brick and mortar branch UNSECURED LENDING Lenders examine psychometric data using social networks and public databases to assess eligibility TARGET SEGMENT Mostly young customers and those whom conventional institutions don’t, won’t or can’t reach RATE CAP: Interest rates vary from 12 to a maximum of 36% DURATION: Typical loan is borrowed for just a few weeks…

All over the world, tax authorities have put their energies into simplifying tax systems, making tax payment as easy as possible, and taking harassment out of the system A man of inexhaustible energy and enthusiasm, the Prime Minister has asked the central tax departments of direct and indirect taxes to double the number of taxpayers. He has an enormous following across the country, but it is doubtful whether his admirers are going to thank him for his bright idea. He seemed to be of the view that his revenue officers are lazy: he told them that there were 42,000 income tax officers, but that their scrutiny of income tax returns brought in only 8 per cent of the revenue. He showed his familiarity with internet: he worked out that many…

Small Data By Martin Lindstrom Price: 259 The author shows how mining and matching technological data with up-close psychological insight creates the ultimate snapshot of who we really are and what we really want. BUSINESS BESTSELLERS* The Rise and Fall of Nations By Ruchir Sharma Penguin UK Price: 799 ELON MUSK By Ashlee Vance Virgin Books Price: 699 The Z Factor By Subhash Chandra Harper Collins India Price: 699 Nawabs, Nudes, Noodles By Ambi Parameswaran Pan Macmillan India Price: 599 Warren Buffett's Ground Rules By Jeremy Miller Profile Books Limited Price: 499 *Top books by sales for June 6 - 20, 2016; Includes only books released after Jan 1, 2015; Information provided by…

How is the alcohol industry contributing to the government’s ‘Make in India’ idea? It is a great idea, but the foundation of that is predictability. You cannot have laws coming in left, right and centre constantly. That makes investments too much of a gamble. India is one of the most complicated markets in the world; a bit like managing all of Europe before 1972. To uncomplicate, we concentrate only on a few key cities. We pick a state in India and treat it with a piecemeal approach. How has the prohibition in a few states affected the industry? How do you counter the clamour for a complete ban in more states? Prohibition has not helped in curbing alcohol consumption. If you make things difficult to access then the ‘forbidden fruit…