Innholdsfortegnelse for 29 January 2017 i Business Today

Two years can make all the difference. If start-ups – especially those with Internet business models – were riding the crest of the roller coaster till early 2015, they are now nearing the trough in early 2017. During the heady days of 2014 and early 2015, many start-ups had got accustomed to raising money from venture capital (VC) funds at ever higher valuations. In turn, VCs hunted out start-ups beginning to gain traction and practically begged them to take more money. The easy funding environment had set off its own chain reaction. First, every start-up was expected to scale up exponentially in double quick time. It did not matter how much cash they were burning up or how much red ink they were accumulating on their balance sheets. What mattered…

13 AS ONE WOMAN WHAT: BIMSTEC-SAARC Women Economic Forum WHEN: January 13, New Delhi WHAT TO LOOK FOR: The Ministry of External Affairs and Assocham conference will address women’s issues through training, information and participation in decision-making and advocacy, and debate gender inequality in South Asia, despite the changing social norms 18 SAFETY NET WHAT: Securing the Cashless Economy WHEN: January 18, New Delhi WHAT TO LOOK FOR: The Assocham event will debate whether India is ready with a full-proof infrastructure and adequate measures for cyber security as the government’s demonetisation initiative is expected to speed up deployment of digital services and enable transition towards a cashless economy 20 A NEW DAWN WHAT: Renewable Energy Summit WHEN: January 20, New Delhi WHAT TO LOOK FOR: The conference organised by CII…

BANK OF THE YEAR: HDFC BANK ( Private Sector) and STATE BANK OF INDIA (Public Sector) BANKER OF THE YEAR: ARUNDHATI BHATTACHARYA, CHAIRMAN, STATE BANK OF INDIA BEST DIGITAL BANK: AXIS BANK BEST IN FINANCIAL INCLUSION: BANDHAN BANK The country’s bankers have been battling one challenge after another ever since the 2008 global financial meltdown — deteriorating asset quality, digitisation, disruption from new financial sector players and, now, demonetisation. It wouldn’t be wrong to compare them to performers juggling balls in a circus. “You are bound to drop some eventually,” says a FinTech player. “Or, you may end up focussing too much on the juggling and lose sight of things around you,” he says. Despite juggling to the best of their ability, most of the country’s banks are not in…

Yes Bank, India’s fifth largest private sector bank, has steadily built its business edifice on three pillars – corporate, retail and SMEs. Over the past six years, the bank’s advances have grown by a compounded annual growth rate (CAGR) of 24 per cent, deposits rose by 21 per cent and total assets grew by 24 per cent CAGR. In the past three years, its advances grew even faster at 27.85 per cent CAGR, while in 2015/16 it grew by 29.99 per cent, according to BT-KPMG study. Growth in deposits clocked 18.61 per cent CAGR in the three-year period, but picked up pace in 2015/16 to 22.53 per cent. The bank’s fee income and operating profits rose by 25.23 per cent and 32.40 per cent during the past three years and…

Till five years ago, the use of technology at RBL Bank was nil. It had no treasury/foreign exchange operations. Today, technology and partnerships are the biggest drivers, giving it 45-50 per cent a year growth in assets and profits and making it the fastest-growing small bank in 2015/16. “The year 2015/16 was an important transitional year, as until the previous year, we were putting the building blocks in place,” says Vishwavir Ahuja, Managing Director and CEO, RBL Bank. The bank is now at a stage where it can expect high growth when the economy picks up steam. Ahuja , earlier with Bank of America, attributes the success to the strategies adopted by the team, which had the experience of handling big businesses in foreign banks. The bank's strong areas include…

Bracing for the Storm In letters issued on New Year’s Eve, Azim Premji and Vishal Sikka, the heads of India’s two largest IT companies, Wipro and Infosys, respectively, warned employees about the challenging times ahead. “I must say that the year 2016 seems to have raised questions and obstacles, on the path to a better world, which cannot be ignored,” Premji said in his letter. He asked employees to increase their commitment to others, and find a common ground rather than focusing on conflicts. Sikka evoked a similar sentiment in his letter. “We must remember that operational excellence is an imperative for each one of us,” he said. He urged employees to focus on delivering the best solutions in the smartest, fastest way possible, and “not give up or give…

For a Better India This refers to your 25th Annivesary Issue of Business Today (Jan 15). It was a compendium of smart ideas, smarter concepts and smartest presentations of grand strategies and pragmatic solutions for a better India. The editorial sheds light on contemporary economic history, weak economic growth of India in the past, scope for sustaining high growth rates in future and challenges emerging from technological disruptions. The successful industry captains have placed their unequivocal views based on their personal experience. The entire exercise was highly commendable. Indian policy-framers must extrude an inclusive plan to take the nation forward. Even Niccolo Machiavelli has ruled that nothing can be more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order…

While the whole banking industry was grappling with stressed assets for over two years, Kotak Mahindra Bank had no such worries. The bank’s wholesale, commercial and retail arms contributed equally to its total business. However, of late, it has faced some merger pangs following the acquisition of ING Vysya Bank last September. In the past years, acquired Pinebridge BSS - finance, and believes as long as acquisitions add value, it is ready to consider opportunities. Although Kotak Mahindra emerged as the Fastest Growing Mid-Sized Bank of 2015/16, its “primary objective is not growth”. “Banking is a business of trust and trust essentially builds up over a period of time. So it is extremely important to do it cautiously and progressively. I think we have grown cautiously,” said Dipak Gupta, Joint…

Clear focus on growth, profitability and returns has derived immense benefits for Barclays India. The bank posted an operating profit of `840.14 crore and had deposits of `15,149.73 crore with a balance sheet size of 32,532.23 crore at the end of 2015/16. Barclays balance sheet is not in the league of the big four foreign banks – Citi, Standard Chartered, HSBC and Deutsche – but the bank surpasses competition in terms of CAGR on deposits, advances, fee income and operating profits. The bank is also on top in terms of capital adequacy ratio and asset quality. “Growing our top line was no doubt critical, but we have done so while maintaining a close watch on our costs. During the year, even as our revenues grew, our operating expenses declined,” says…

Kamal Kaushik has been running a mobile shop in Jaipur’s Shastri Nagar area for over 15 years. After Prime Minister Narendra Modi announced demonetisation of high-value currency notes on November 8, his business was hit. Daily sales dipped from `20,000 to `12,000. In late November, when Airtel launched its payments bank — the first such bank in the country — in Rajasthan, he got a leg-up. His outlet can also act as a branch of the new bank. Now, he can offer something extra to his customers, who are still cautious about spending money on phone recharges and mobile devices. The account opening is free and quick. Customers pay him cash, the amount is deposited into their savings accounts, and they can spend as much as they want to. The…

Demonetisation caused widespread distress, which the media covered profusely with stories of how common people suffered, and uncommon rulers revelled. It is only now that we have some basic figures about what happened to money supply. Money consists of currency and bank deposits. There was 124.2 trillion of it on October 28 – `17 trillion in currency, 10 trillion in demand deposits, and 96 trillion in time deposits. On November 11 – three days after demonetisation – it was 383 billion less. That does not sound much; but currency was 1.75 trillion or 10 per cent less, while banks had `1.37 trillion more in deposits. People had rushed and deposited a lot of demonetised cash in banks. By November 25, 17 days after demonetisation, the picture was very different. Money…

 The Millennials: Exploring the World of the Largest Living Generation The author’s voice is sorely missed in this reportage of ideas and happenings By Subramanian S. Kalpathi PAGES: 256 PRICE: 299 Penguin Random House This book has a lot of scattered nuggets of information about a lot of things that are in themselves interesting and useful: stories of how new-age businesses (let us call them millennial businesses) came into being, novel business practices that they have invented and adopted, useful expositions of old and new management ideas and theories, and biz speak from millennial start-up stars on how they see this new world of theirs. As you read it, you are likely to think “Really? I didn’t know this before” or “Why didn’t it occur to me before” or “Thank…

 Jean-Francois Beaudoin, Senior VP, Asia Pacific, Alstom, talks to Anilesh S. Mahajan about the scope India offers for the freight industry. “India and China driving growth in mainlinem arket” How have Europe, China and North America, fared vis-a-vis freight and passenger traffic? North America has traditionally been a freight market, given the oil prices in the region. As per UNIFE 2016, the market has declined over the last year. China also has a large freight market. Globally, the freight market has registered a decline driven by these two large markets. The Indian freight market in comparison has seen a steady growth of 2.4 per cent compared to the previous year. Europe is more driven by passenger/ mainline traffic rather than freight, which has increased marginally. Maximum growth in mainline market…

570 croregross earnings for Aamir Khan-starrer Dangal. The film in its second week is closing in on Salman Khan’s Sultan, which grossed 584.15 crore since its release last July. In the domestic box office Dangal earned `410 crore and `158.7 crore from international theatres, according to indiatoday.in $61.44bn, or about 4 lakh crore, was the worth of merger and acquisition (M&A) deals in India in 2016. According to a News CorpVCC Edge report, the deal value is not only at a five-year high, but is 159 per cent more than the $23.71 billion witnessed in 2015 GST DELAYED The rollout of the goods and services tax (GST) is likely to be delayed by at least two months. The government will, however, be well within the mandatory deadline of September 2017…

WHAT FLIPKART DID » Flipkart has controlled growth of its sales and general expenses » Manpower rationalised (according to former CFO) WHAT SNAPDEAL DID » Snapdeal stocks goods closest to where they sell, reducing transport costs » 80% of the goods go through Snapdeal ’s own fulfilment centres; cuts down incidents of incorrect shipping WHAT SHOPCLUES DID » ShopClues tries to avoid air shipping , far more expensive that road transport » Shipping costs have dropped 20-25 per cent per unit WHAT GROFERS DID » Pivoted to a next-day delivery model from an on-demand model » Operational costs in 2015 were at 100 per cent of sales; close to 25 per cent now WHAT OYO DID » Cost of customer acquisition has halved versus 2015 » Processes now built to…

ICICI Bank has ruled as the largest private bank for almost two decades but now its dominance is under serious threat. Rival HDFC Bank is fast catching up and has actually overtaken it in the current fiscal in terms of balance sheet size or total assets. Indeed, HDFC Bank has closed its balance sheet at `7.88 lakh crore in the second quarter of 2016/17 while ICICI Bank was lagging behind at Rs 7.51 crore. It is likely to maintain its lead at the end of the financial year. But Aditya Puri, MD of HDFC Bank, says he doesn’t believe in making balance sheet comparisons. His focus in on ensuring that the bank serves its customers better over time. “If in this process, size grows, good for us,” he says with…

BNP Paribas, the second oldest foreign bank in India, has been on a rapid expansion pace since 2012/13. Its thrust on wholesale banking has paid off and by 2015/16 its deposits had grown over four times to `22,087 crore while balance sheet size (or assets) rose by over three times to `36,761 crore. It makes BNP the fastest growing foreign bank in India. “Development of local balance sheet is our focus,” says Joris Dierckx, CEO and Country Head-India, BNP Paribas. However, BNP Paribas does not see itself in the big three in terms of assets – Standard Chartered, Citibank and HSBC occupy the top three slots. “We will stay at number five or move up to number four in terms of assets. A lot will depend on our nearest competitors’…

Rising corporate debt and higher default rates have led to a continuous increase in distressed loans in the Indian financial system. The situation has worsened in the last five years with the stressed asset ratio rising from 7.6 per cent in March 2012 to 11.5 per cent in March 2016. This accumulation of bad loans in the banking sector is not the doing of corporates alone. Poor credit appraisal, collateral-based lending, lack of corporate governance and accountability and ambitious credit growth targets led to unwarranted lending by banks. Aiming to clean up stressed balance sheets of banks by March 2017, the Reserve Bank of India (RBI) mandated stricter provisioning requirements under Asset Quality Review, which led to identification of elevated non-performing asset (NPAS) levels in the past 12-18 months. According…

In many ways, online marketplaces are the perfect business model. Since they just facilitate transactions between suppliers and customers rather than take possession of or full responsibility for products or services, they have very low cost structures and very high gross margins – 70 per cent for eBay, 60 per cent for Etsy. And network effects make them highly defensible. Alibaba, Craigslist, eBay, and Rakuten are more than 15 years old, but they still dominate their sectors. Little wonder that entrepreneurs and investors are rushing to build the next eBay or Airbnb or Uber for every imaginable product and service category. In the past 10 years, the number of marketplaces worth more than $1 billion has gone from two – Craigslist and eBay – to more than a dozen in…

Learning Leadership By James M. Kouzes Price: 499 The book offers a concrete framework to help individuals of all levels, functions and backgrounds take charge of their own leadership development and become the best leaders. The Rise and Fall of Nations By Ruchir Sharma Penguin UK Price: 799 Shoe Dog By Phil Knight Simon & Schuster Price: 599 The Unusual Billionaires By Saurabh Mukherjea Penguin Price: 499 Alibaba: The House that Jack Ma Built By Duncan Clark Ecco Price: 599 Originals: How Non-Conformists Change the World By Adam Grant WH Allen Price: 699 *Top books by sales for Dec 19-Jan 1, 2017; Includes only books released after Jan 1, 2015; Information provided by…

Parents, the world over, willingly shun luxuries to pay for a good education for their children. And with the cost of education growing at a fast clip it only adds to their woes, but that can never be an excuse to give up on it. Says Suresh Sadagopan, Founder, Ladder7 Financial Advisories: “Children’s education is a costly affair today. It makes sense to start early. Also, it pays to be pragmatic. Parents may get sucked into funding more and more ambitious and costly education that can jeopardise their finances. It makes sense to be realistic and prudent, and ensure the funding is only up to a certain level. If education costs go above that level, one should consider loans and self-funding by the student (for post graduation and higher courses).”…