Innholdsfortegnelse for 26 March 2017 i Business Today

Till about a year ago, they looked invincible and unstoppable. Flipkart, Ola, Snapdeal, Quikr, Zomato... and a few others, had become the fabled Indian unicorns – start-ups boasting of valuation of over $1 billion. They were expanding like mad, starting new business lines, hiring engineers and business management graduates in hundreds from the premier institutes and generally proving a huge threat to their old-style rivals who had not embraced the digital marketplace as quickly. None of them was making any money. But, backed by seemingly unlimited capital, they were giving discounts galore to woo customers, burning cash hand over fist, and driving brick and mortar players into losses while they chased market share and gross revenues. Each time they ran short of cash, they would see a line of venture…

07 STEELING INDIA WHAT: Conference on Make in India, Make in Steel WHEN: March 7, Ludhiana WHAT TO LOOK FOR: The steel sector contributes nearly 2 per cent of the country’s GDP and employs over 6 lakh people. The industry has been growing at about 8 percent over the last decade. The CII conference will focus on how Indian steel makers can allay apprehension among the user industries on their ability to meet the expected quantity and quality requirements. 07 TIME TO BOND WHAT: National Conference on Bond Market WHEN: March 7, New Delhi WHAT TO LOOK FOR: Assocham in association with SEBI is organising a series of conferences in corporate hubs at Kolkata, New Delhi, Bangalore, Chennai, Hyderabad & Ahmedabad to discuss various nuances of the bond markets. The…

Some five months after assuming office in May 2014, the BJP-led NDA government cleared a cabinet proposal for the revival of close to two dozen unlicensed District Central Cooperative Banks (DCCBS). In the Union Budget 2017-18, Finance Minister Arun Jaitley further reposed trust in DCCBS. Jaitley talked about supporting NABARD (National Bank for Agriculture & Rural Development), also the regulator for cooperative banks, for computerisation and integration of all the Primary Agricultural Credit Societies(PACS) with the core banking system of DCCBS. The government’s positive moves however are at odds with the banking regulator, the Reserve Bank of India’s (RBI) lack of trust in the cooperative banking sector. In the recent demonetisation exercise, the RBI had prohibited DCCBs from exchanging old notes with new ones. The RBI had feared that the…

Overall Winner & Manufacturing ( 251-500 CRORE) MANPASAND BEVERAGES Even as a bulk of the Indian consumer product goods companies grapples with the demonetisation of the 500 and `1,000 currency notes, and the low demand thereof, father-son duo Dhirendra Singh and Abhishek Singh of Vadodara-based Manpasand Beverages claim their company has registered the highest ever growth in the past six months. “Consumption in rural India hasn’t stopped. Our beverages are priced below `10, and there has been no impact there. `500 and `1,000 denominations are luxury in these markets,” remarks Dhirendra Singh, CMD, Manpasand Beverages, which gets around 75 per cent of its revenue from rural, and tier 2-3 markets. The `557-crore company, which hopes to close this fiscal with a revenue of `803 crore, is gearing to double its…

OVERALL WINNER/MANUFACTURING ( 101-250 CRORE) LA OPALA RG LTD Company annual reports do not usually flaunt fancy book titles. Those of the Kolkata-based La Opala RG Ltd (LORL), makers of opal glass tableware, usually do. The latest annual report vaunts a stylishly-embossed legend, “The New Family Silver”. It is perhaps a metaphor for a new middle-class India where sleek is in, dowdy is out, something that excites Sushil Jhunjhunwala, Vice Chairman and Managing Director, La Opala. “We want people to stop using steel utensils,” he says. “Ours is an aspirational brand.” And it is happening. Opal glass tableware from La Opala, shortlisted as one of the “most trusted brands” in the 2016 Brand Trust Report, is being lapped up by buyers looking for low-priced branded crockery. “There is a shift…

MSMEs were the most affected by demonetisation. What measures did you initiate to solve their problems? The ministry has not conducted any independent assessment. But during the demonetisation phase, we had meetings with various MSME associations. These associations welcomed demonetisation. They gave us suggestions that were taken up with the Ministry of Finance. Digitising financial operations of MSMEs is a necessity for having a less cash economy. What is the role played by the ministry? Most schemes of the ministry are now online. The Prime Minister Employment Generation Programme has been online from July 1, 2016. There is an online application system for disbursement of Market Development Assistance to khadi institutions and artisans. We also have an online application system for khadi certification. All schemes of the Development Commissioner (MSME)…

1 Classifying the threshold for small and medium enterprises separately and increasing the respective thresholds in line with global levels. A separate policy and increased top-line threshold for micro enterprises, as issues faced by micro, small and medium are different 2 Simplifying the regulatory environment, which is currently wrought with multiple laws, regulators, administrative interactions, prolonged litigations requiring significant management bandwidth and business funds to be deployed in advance and disputed taxes 3 Tax rates for SMEs need to be significantly lower, in the range of 10 - 15 per cent, to enable them to reinvest their current earnings for growth. Higher tax rates may be applicable in case of profit distribution 4 Developing a better banking and financial system for the availability of equity and debt. Large banks’ approach…

To cope with growing uncertainty and volatility, most companies try to improve their forecasting and increase their agility. While important, both tactics have limitations. In times of rapid change, forecasts become obsolete almost as soon as the ink dries on them. And though responding quickly to market shifts is crucial, “perfect” flexibility and agility are costly to achieve – if not impossible. A complementary – and potentially more effective – approach for established companies is to use “strategic options” as a hedge against uncertainty. Just as financial options can shield investors from risk and help them profit from fluctuations in securities and commodity markets, strategic options can protect companies and allow them to thrive in the face of the unexpected: moves by competitors, disruptive advances in technology, the rise of…

UNDERSTANDING THE BLACK ECONOMY By Arun Kumar Price: 399 The country’s leading authority on the black economy shows us the way in which the problem can be rooted out, provided the government has the political will and determination to act. BUSINESS BESTSELLERS* Tools of Titans By Timothy Ferriss Random House Price: 799 Bulls, Bears and Other Beasts By Santosh Nair Pan Macmillan India Price: 499 The Target By Shantanu Guha Ray Shantanu Guha Ray Price: 409 Little Black Book for Stunning Success By Robin Sharma Jaico Publishing House Price: 250 The Unusual Billionaires By Saurabh Mukherjea Penguin Price: 499 *Top books by sales for Feb 13 - 26, 2017; Includes only books released after Jan 1, 2015; Information provided by…

Debt Riddance K.P. Singh and family, the promoters of real estate company DLF Ltd, are selling their stake in flagship company DLF Cyber City Developers Ltd (DCCDL) to Singapore-based private equity firm GIC. Although the company has not disclosed the financial details of the deal, reports suggest that the deal size is around 14,000 crore. At this price, the valuation of DCCDL comes to 35,000-40,000 crore. The proceeds from the sale would be injected back into the parent firm to reduce its debt, which stood at `24,397 crore as of December 2016. The family had, in 2015, planned to sell its 40 per cent stake in DCCDL by March 2016, but deferred it by a year. The development comes as a relief to the company, which has been trying to…

The Reserve Bank of India’s decision to keep the repo rate unchanged, in the latest monetary policy review, took many by surprise. Were you also anticipating a repo rate cut? The RBI had indicated in the previous two monetary policy decisions that it was maintaining an accommodative monetary stance. This suggested that the central bank would cut interest rates though, of course, the timing would be uncertain. Thus, the change in stance to neutral in the February policy was a surprise. How justified are the inflation concerns of the RBI ? Core inflation appears stable at just under 5 per cent, while it is the soft food inflation (1.3 per cent) which has led the overall inflation down to 3.2 per cent. In particular, it is the fall in fruit…

Do you know that only 1 per cent health insurance claims are above Rs 3 lakh? In fact, close to 85 per cent are just up to Rs 50,000. This holds true for most top insurers. Considering the small average claim size, does it make sense to opt for the ‘restore’ feature — which reinstates the sum assured if it is used up in any given policy year — in health insurance policies? While data show that the probability of people utilising this feature is quite low — according to estimates, it is less than 0.5 per cent, as it is generally activated above the Rs 2 lakh sum insured — this does not mean it is not important. Take the example of airbags in cars. They are costly and…

Need for Industry and Institution Interface This refers to your cover story The Best Companies to Work For (March 12). It was, indeed, a page-turner on all aspects of the employees and organisations. The organisational behaviour expert Keith Davis underlines – if you dig very deeply into any problem, you will get people – and this unquestionable truth has been vindicated and a message has been made by the Business Today team. It has shown that the competence of the Indian employees and their quality services are on a par with globally proficient human resources in other countries. The analysis has clearly conveyed that the HR theories are practically validated. It has also underpinned the increased need for industry-institution interface. In total, BT’s delicate task of churning out the best…

Nearly 12 years ago, Jawed Karim shot a 19-second video titled ‘Me at the Zoo’ in which he awkwardly described elephants to the world. It was the first video to be uploaded on the YouTube server, and there’s been no looking back since. The online video sharing platform today has an estimated 60 million monthly users in India alone. According to a report by FICCI and KPMG, digital advertisement spends in India are expected to cross 25,500 crore in 2020, from 6,000 crore in 2015. Video advertising currently claims 18-20 per cent of this, and is expected to grow further. YouTube, as per estimates, has 80 per cent share of this market currently. But a shake-up is imminent with several new players challenging YouTube’s supremacy. Platforms such as Amazon Video…

You may as well put the money in a bank, get a decent return, and go out and play golf…,” Sunil Bharti Mittal, Chairman, Bharti Airtel, said at the recent Mobile World Congress in Barcelona. He was referring to low returns in the telecom sector. According to estimates, Airtel’s return on capital employed was about 9 per cent last year, almost similar to bank fixed deposit rates (7.5 per cent) and far lower than the global average of 20 per cent. The biggest reason for the telecom sector’s troubles now is the aggressive entry of Reliance Jio, the $21-billion start-up backed by Mukesh Ambani-controlled Reliance Industries Ltd. Jio has been offering everything – voice, data and a bouquet of other services – free since its launch in September 2016, putting…

They are small, fragmented and unheralded. The majority are first-generation enterprises. Yet, over the years, small and medium enterprises, or SMEs, have emerged as the backbone of most economies. In India, too, SMEs provide the economy both mass and muscle – they account for 40 per cent exports and around 45 per cent manufacturing output, according to the Ministry of Micro, Small and Medium Enterprises. That’s not all. The 51 million SMEs employ over 117 million people – 14 per cent of India’s working age population. That’s why we at Business Today have been honouring the best of the lot for the past seven years. The Seventh Business Today survey of SMEs covered companies with a turnover of `1-500 crore. They were divided into three categories based on revenues: `1-100…

Overall Winner + Services( 101-250 CRORE) UTKARSH MICRO FINANCE Every Saturday morning, scores of young men—mostly high school pass outs—throng the main office of Utkarsh Micro Finance in the heart of Varanasi. Many travel from towns and villages nearly 100 kilometers away for the weekly round of direct walk-in interviews at the barely seven-year old microfinance company. The selected young men are trained to be loan evaluators – those who identify people in need of a loan and have a viable business case to repay later. Despite the low entry barrier, a fresher can earn 12,000 a month with incentives. An indicator of unemployment levels in Uttar Pradesh is that last year, the state government received 23 lakh applications – including 150,000 graduates, 25,000 post graduates and 250 doctorates –…

THE PROBLEM To cope with uncertainty and volatility, companies try to improve their forecasting and increase their agility. But these tactics have limitations. Forecasts quickly become obsolete, and perfect flexibility is costly to achieve – if not impossible THE SOLUTION Complement your efforts with “strategic options” that serve as a hedge against uncertainty. These include temporary organisations, exploratory acquisitions, and disposable or modular factories IMPLEMENTATION CHALLENGES Persuading employees that the long-term benefits of options outweigh their high short-term costs. Building skills – for instance, in acquiring and integrating acquisitions. Changing the forecasting culture and focusing more on understanding risks…

Devi, Diva or She-devil: The Smart Career Woman’s Survival Guide BY SUDHA MENON PAGES: 208 PRICE: 499 PENGUIN RANDOM HOUSE In the much-acclaimed Hollywood movie Million Dollar Baby, protagonist Maggie Fitzgerald (played by Hilary Swank) faces several jibes and unsolicited remarks – her own coach addresses her as ‘girlie’ and fellow male boxers question her femininity – as she invincibly pursues her boxing dream. Closer home and closer to reality, Olympic winner and five-time world champion M.C. Mary Kom did not have it easy either. Nor did Sharda Ugra, who became a sports journalist in the late 80s, breaching what otherwise was a male bastion. Sudha Menon’s Devi, Diva or She-devil brings to the fore stories of women who dared to break away from stereotypes, faced brickbats and challenges along…

Phased Out Google is shutting down its experimental group messaging app Spaces introduced in May 2016. The app will move into a read-only mode in coming weeks and will cease to exist by April 17, 2017. “We’ve decided to take what we learned with Spaces, and apply it to our existing products,” Google’s product manager John Kilcline said, in a post on Google+. Spaces helped groups organise conversations around specific topics and was seen more as a group forum than a messaging app. The app allowed the user to invite friends and colleagues into discussions, and would automatically pull in Google searches, images and YouTube videos. The move isn’t surprising as Google has often been criticised for introducing and then shutting down messaging services. Chats about Money Money exchange service…

The slugfest between large operators such as Airtel, Vodafone, Reliance Jio and Idea Cellular has resulted in a drastic fall in tariffs Vodafone, which has barely registered any profit since its entry into India, recently took a €5-billion writeoff on India assets Idea Cellular has reported net losses in the third quarter of 2016/17, first quarterly loss since listing. Market leader Airtel, too, reported a sharp drop in net profit The high spectrum charges over the years have led to a considerable rise in debt on books The operators have to keep investing in upgrading networks over and above the steep price they pay for the spectrum. Almost all foreign telecom players have exited India after suffering major losses. In the past few quarters, the regulatory environment has not been…

Mrs Bahl is an avid seller of her specialty biryani on Shopo, the consumer-to-consumer platform set up by Snapdeal on the lines of Alibaba’s Taobao. She also happens to be the mother of Snapdeal’s founder andCEO Kunal Bahl. In 2015, Snapdeal announced it will invest $100 million in Shopo, providing its logistics platform and the payment gateways free of charge to sellers like Mrs Bahl for a hassle-free experience. It hoped to make money through advertising. It never did. So when Snapdeal was forced to conserve cash, in February 2017, the axe first fell on Shopo. Next, it is believed to have put its payment wallet Freecharge on the block at between half to a quarter of the $400 million it paid to acquire it. About 600 Snapdeal employees have…

MANUFACTURING ( 251-500 crore) Ambuja Intermediates Manpasand Beverages BDR Pharmaceuticals International SERVICES ( 251-500 crore) Kakinada Seaports Satin Creditcare Network RS Software (India) AGRICULTURE AND ALLIED ( 251-500 crore) Tirth Agro Technology Nirmal Industries Agro Solvent Products MANUFACTURING ( 101-250 crore) Caplin Point Laboratories La Opala RG Encube Ethicals SERVICES ( 101-250 crore) Thirdware Solution Sunteck Realty Utkarsh Microfinance AGRICULTURE AND ALLIED ( 101-250 crore) Nath Bio-Genes (India) Apis India Zeal Aqua GLOBAL BUSINESS EXCELLENCE ( 251-500 crore) Bliss GVS Pharma Vaibhav Global Supreme (India) Impex GLOBAL BUSINESS EXCELLENCE ( 1-100 crore) SJ Corporation Brawn Biotech HP Cotton Textile Mills…

Agiculture & Allied ( 251-500 CRORE) TIRTH AGRO TECHNOLOGY Until a couple of years ago, a few multinational companies were selling hi-tech sugar harvesting machines in India for over `1 crore. While the machines were a big relief for the labour shortage plagued sugarcane grower community, affordability was an issue. Also, the hi-tech machines did not suit the requirements of Indian farmers. After sales service too was a problem. That was when Rajkot-based farm machinery maker Tirth Agro Technology came out with an Indianised, less tech-intensive and rugged version of sugarcane harvesters. The machine was priced at about `85 lakh. Soon the company was able to kill the monopoly of multinationals in the market. So far, the company has sold over 200 such machines across India. Indeed, Tirth Agro sells…

Agriculture & Allied ( 101-250 CRORE) NATH BIO-GENES(INDIA) For ages, the country’s tomato farmers had a peculiar problem. The thin peel of their produce meant lower shelf life and huge losses during transportation. Aurangabadbased Nath Bio-Genes (India), one of the pioneers in agribiotech research in India, came up with a solution. It altered the genetic code of certain tomato varieties to thicken their skin. Its ‘Abhiman – 1222’ tomatoes are now widely accepted for their size, shape and sturdiness; some say they are as good as a tennis ball. Similarly, the bajra crop in various parts of the country was facing Downey Mildew pest attacks during the blossoming stage. A few years ago, Nath Bio came out with a hybrid variety – Eknath -301 Gold – which has better protection…

Gender Medicine BY MAREK GLEZERMAN PAGES: 320 PRICE: 499 BLOOMSBURY PUBLISHING The Thalidomide tragedy shook the world in 1961. Thousands of mothers took this new anti-nausea drug to control morning sickness. It led to birth of 10,000 babies with absent or stump-like limbs along with other horrifying deformities. A decade later, girls born of mothers given a drug called DES in pregnancy were found to be prone to developing genital cancer. That was it. Researchers stopped enrolling women in clinical drug trials. Even today, laments Professor Glezerman in Gender Medicine, women are disregarded or misrepresented in medical research and data gleaned from a largely male cohort is irrationally applied in assessment, investigation, diagnosis and treatment of diseases among the women of the world. At the outset, the author clarifies that…

Always expect the unexpected. This is the lesson from the latest monetary policy review of the Reserve Bank of India (RBI). While most people were expecting that the RBI will continue its “accommodative” stance and cut the repo rate by 25 basis points or bps (100 basis points is equal to one per cent), the central bank decided to keep the rate steady at 6.25 per cent in its first monetary policy review of 2017. What surprised the market more was the change in the RBI’s stance from “accommodative” to “neutral”. It cited the sticky core (non-food/fuel) inflation, firming up of global commodity prices, especially of oil, and strengthening of the US dollar as reasons for the change in stance. This means the RBI has kept options open to move…

Hindustan Zinc, CMP Rs 303 Current dividend yield is 9.19 per cent; is consistent in high dividend payout Trading at a P/E of 17.3, CMP to Book Value of 3, RoE (return on equity) of 19.6 per cent Subsidiary of Vedanta Group; quality management along with some government control, it is likely to continue with consistent profit distribution over the medium to long term Hexaware Technologies, CMP Rs 208 Current dividend yield is 4.1 per cent Available at reasonable valuations and expected to distribute high income to shareholders Trading at a P/E of 15.1, CMP to Book Value of 3.4, consistently high RoE of 28 per cent over the past five years One of the leading IT companies with global presence, promoter holdings are on higher side (about 71 per…

The real estate sector has been going through a sluggish phase for almost five years. Prices may not have corrected drastically but have stayed at more or less the same level over the past two-three years. Experts were predicting a sharp dip due to cash crunch after demonetisation. This has not happened. The latest Budget tries to revive the sector but makes it clear that the government’s focus is only affordable housing. So, what should a home buyer do at this stage? Should he wait for prices to fall further or go ahead and make what will, in all probability, be the biggest purchase of his life? DEMONETISATION IMPACT The real estate sector was sluggish for three-four years due to poor sales. The ban on higher denomination notes worsened the…

Demonetisation has made cash dispensable to an extent most of us did not anticipate. Thirty-year-old Ravin Rawat, who works at a Noida-based infrastructure company, does not remember the last time he dealt with cash. He has switched to debit card, mobile banking, and installed mobile payment wallets such as Paytm and MobiKwik. He is not alone. The data from RBI and VC Circle pegs mobile banking transactions at Rs 3.9 lakh crore in Q4 2016 – a fourfold increase from the same quarter last year. The usage of cards has doubled at merchant outlets during Q4 2016 as compared to Q4 last year. Wouldn’t it be ideal if we could also invest our hard-earned money with just a few clicks as against getting caught up in arduous paperwork? Here are…