Innholdsfortegnelse for 15-Jul-2018 i Business Today

CEO COMPENSATION debates in India and abroad are always contentious and have grown more contentious over the past couple of decades as better reporting norms of executive pay have come into effect, as have newer ways of compensating CEOs. The general feeling among lesser mortals is that CEOs are vastly overpaid. There is some basis to that feeling – CEO salaries have gone up even in bad years for the economy and have gone up much faster than average compensation. According to a Bloomberg study, listed Indian company CEOs earn 229 times more than the average worker in their company. (The gap is even higher between the CEO salary and salary of the entry-level executive.) Similarly, another study shows that in the past few years, the wage bill of the…

7% Rupee depreciation from 63 levels in January this year to 68 levels. THE LIST OF NEGATIVES for rupee value against the US dollar is increasing by the day. it all started with higher crude oil prices and now there are talks of an imminent trade war with the US where india enjoys a trade surplus. Where is the Rupee headed? in just six months it depreciated by over 7 per cent from ₹63 levels in January this year to ₹68 levels. This sharp depreciation places the indian Rupee among the worst performers in emerging markets. With yields up in the US market, the resultant outflow of US dollars from emerging markets including india, compounded by weak domestic macros, india faces a perpetual trade deficit. a trade war with the…

THE BOOMING primary market has got a boost from the Securities and Exchange Board of India. The financial disclosure requirement for companies going for IPOs has been reduced from five years to three years. The grading of IPO has also been done away with. For broad-basing investor participation and better price discovery, it has also broadened the anchor investor category by including insurance companies, private equity and venture capital funds. The new regulation for making price band announcement two days before the issue from the earlier five is also in line with global standards. These guidelines will go a long way in boosting the confidence of issuers and investors.…

WHEN MALAYSIA-based streaming service iflix wanted to increase its user base, it studied the behaviour of their most loyal customers. The finding was interesting – their best customers had one habit in common, which was sharing viral content, trailers, celebrity news and showbiz gossip with peers through messaging apps. Iflix then targeted more such users with this behaviour and was able to convert one million to paid subscribers within six months. In doing so, its brand awareness grew from zero to 25 per cent and the cost of acquisition fell from $25 to $3. Traditionally, digital media tools track metrics from shares on forums like Facebook and Twitter. But iflix identified and studied the behaviour of customers who share content on private messaging apps such as WhatsApp, Line, chat forums,…

KALANITHI MARAN Executive Chairman, Sun T V Network PAWAN MUNJAL Chairman, MD & CEO, Hero MotoCorp MURALI K. DIVI Chairman & MD, Divis Laboratories ONKAR S. KANWAR Chairman & MD, Apollo Tyres H. M. BANGUR MD, Shree Cement JAYADEV GALLA VC & MD, Amara Raja Batteries ARVIND M. PODDAR Chairman & MD, Balkrishna Industries SANJAY AGARWAL MD & CEO, AU Small Finance Bank* SUNIL BHARTI MITTAL Chairman, Bharti Airtel S. P. OSWAL Chairman & MD, Vardhman Textiles Total remuneration 2016/17 (₹ crore) Ratio of remuneration of director to median remuneration of employees This list includes only the promoter executive heads of the company for the year 2016/17 within BSE 500 companies; Total remuneration includes salary, perquisites, commissions, bonus, performance pay, contribution to PF, etc. and stock options in some cases;…

Executive remuneration has been, and continues to be, an important issue. Therefore utmost care has been taken to cull out the data. We have sourced the data from Prowess, a CMIE database but to make doubly sure the data was further verified from published annual reports of companies. We have considered the total remuneration for our analysis which includes salary, perquisites, commissions, bonus, performance pay, contribution to PF and stock options in some cases. A universe of BSE 500 companies was evaluated to zero in on the list of top 10 highest paid executives which was further divided into promoters and professionals. We have 10 each in promoters and professional CEOs category. We have considered only the executive heads of the company, for the year 2016/17 within BSE 500 companies,…

HONCHOS OF TWO FMCG BEHEMOTHS, Proctor & Gamble and Unilever, have sparked off a global debate on the safety and efficacy of digital advertising. Marc Pritchard, Chief Brand Officer at P&G, recently called it “murky at best, fraudulent at worse”. He admitted his company had succumbed to the “latest shiny objects” without realising that the digital media buying chain lacked transparency. Pritchard pointed out that more consumers are installing ad blockers on personal devices due to “crappy advertising” and contested the claims of Facebook and Twitter, which offer their own measurement metrics. Keith Weed, Chief Marketing Officer at Unilever, in his keynote address at the annual meeting of the Interactive Advertising Board (IAB), said earlier this year: “Unilever will not invest in platforms or environments that do not protect our…

How are you preparing for a future where the internal combustion engine would be a minority in your overall portfolio while hybrids and electric powertrains would enjoy a majority? This is something we have to prepare for and that is what we did. For many years we have kept investments very high in electric mobility. Not many people know or realise that Bosch is already the market leader in the largest electric vehicle market in the world – China. So, we do everything to prepare ourselves for the electrified future and we believe in an electric future. We also entered new markets in this area like two wheelers. From bicycles to scooters, we have been very active since many years. We believe in the electric future. But we are also…

THERE WOULD BE A PLETHORA OF SAFETY CONCERNS IF AN AIRCRAFT WERE TO GO ENTIRELY WINDOWLESS MY FAVOURITE journey is looking out the window,” said American writer Edward Gorey. And most will agree with him. A window is a pathway to new light and new truths. Everyone loves a window. What, then, will it feel like to be stuck in a metal tube up in the sky, knowing there are no windows? First-class passengers on the Emirates’ Boeing 777-300ERs are about to find out. No more beautiful sunsets, no fluffy clouds flying by, no gazing into the horizon where the earth meets the sky. At least not for real. The Middle East carrier is set to have a go at virtual windows. What passengers get to see could be just…

HOW MUCH DO we understand the world around us? Who do we believe? Are things getting worse or better? The late Hans Rosling, doctor and data whiz, contends we are being misled. And we are being misled, he says in his seminal book Factfulness, because reporters and journalists – among others – are being misled too. Rosling builds this argument about our ignorance by focussing on a theme he has consistently done, across his book and in many TED speeches. That things are fundamentally getting better or improving, but we do not seem to know or pay attention. So, chin up and feel happier about life in general. Consider these examples: · The number of new HIV infections per million people has dropped from 549 in 1996 to 241 in…

PERSPECTIVES Why an Escalating Trade War with US Will Further Weaken the Currency Value Against $ The rupee has been depreciating for quite some time now because of trade deficit and higher current account deficit businesstoday.in/US.tradewar-rupee Airtel Row: Emotional Intelligence over Artificial Intelligence The customer care teams need to be sensitised about the issues that can cause irreparable damage to the brand businesstoday.in/airtel-customer Is the Patanjali Phenomenon Fading Out? Industry experts point out that Patanjali has to be more focussed. Instead of carpet bombing the market by entering into every possible category, the advice is to select high-growth and highmargin segments and focus on them businesstoday.in/patanjali-growth How Decline in New Product Launches Is Impacting Indian Pharma Industry Domestic market sales of new product launches now is about 2-2.5 per cent…

The global trade wars have widened with India joining the EU and China in imposing retaliatory higher tariffs on imports from the US. India raised duties on 29 products from the US, including American apples, almonds, walnuts and stainless steel products after the US hiked import duties on steel (25 per cent) and aluminium (10 per cent). India is the largest importer of almonds from the US. As far as India is concerned, during the first nine months of FY2018, iron and steel exports to the US were $ 309 million while articles of iron and steel exports amounted to $1.35 billion. However, India’s biggest export item is petroleum products, followed by ITeS. The US accounted for 57 per cent of India’s total ITeS exports of $111 billion in FY2017.…

URBANISATION AND POVERTY WHAT: 5th Urbanisation and Poverty Reduction Research Conference WHEN: September 7, Washington DC WHAT TO LOOK FOR: The World Bank event will bring together academics and development practitioners to discuss questions relating to the spatial organisation of cities and economic growth. In particular, the conference will be focussing on effective land and transport policy in cities and the implications of urban development for national growth. THE BLOCKCHAIN ADVANTAGE WHAT: Blockchain Innovation Summit WHEN: July 11, New Delhi WHAT TO LOOK FOR: Blockchain technology is likely to find applications in a wide range of areas. It is expected to help businesses bring about greater transparency, enhanced security, increased efficiency and speed in transactions, reduced costs and removal of intermediaries. The FICCI summit will debate the potential of blockchain…

C. P. GURNANI, MD & CEO, Tech Mahindra A. M. NAIK,^ Group Chairman, Larsen & Toubro ADITYA PURI, MD, HDFC Bank OM PRAKASH MANCHANDA, CEO & Whole Time Director, Dr Lal PathLabs GUENTER BUTSCHEK, MD & CEO, Tata Motors SAUGATA GUPTA, MD & CEO, Marico VIVEK GAMBHIR, MD & CEO, Godrej Consumer Products Ltd. ARVIND UPPAL, Chairperson & Executive Director, Whirlpool Of India AL RAJWANI, MD, Procter & Gamble Hygiene & Health Care SANJIV MEHTA MD & CEO, Hindustan Unilever Ltd. Total remuneration 2016/17 (₹ crore) Ratio of director remuneration to median employee remuneration This list includes only the professional executive heads of the company for the year 2016/17 within BSE 500 companies; Total remuneration includes salary, perquisites, commissions, bonus, performance pay, contribution to PF and stock options in some…

1 RAISING A RACING CRAFT C.P. Gurnani MD & CEO, Tech Mahindra ₹150.70 crore (2016/17) ₹ 45.36 crore (2015/16) I DON'T BELIEVE this is a sinking ship. No longer. This may not be a racing craft yet. But it is our task to make it one,” remarked Anand Mahindra, Chairman of the Mahindra Group, at his first press conference in Hyderabad in 2009 after acquiring troubled IT giant Satyam Computer. The man tasked with the job was C.P. Gurnani, who rose to the occasion. His biggest contribution was taking over the scam-tainted Satyam, fixing its problems and successfully integrating it with Tech Mahindra. In a decade since they acquired Satyam, Gurnani grew the top line almost six times and profits four times. And he has been richly rewarded for his…

SHYAM KUMAR SINGH lived in a single-room tenement in Mumbai when life took a turn that seemed to be straight out of a Bollywood script, and he struck it rich. A poor migrant from Uttar Pradesh, Singh was an office boy, and the first employee of CitrusPay, which began operations in 2011. In September 2016, he got a windfall payment of ₹50 lakh, when South African online payments company PayU acquired CitrusPay for ₹860 crore. Singh’s returns on his Employee Stock Option Plan (ESOP) were part of the ₹43 crore paid to 50 employees who cashed in their stock option compensation. At least 15 employees were rewarded with over ₹1 crore each. In January this year, Paytm sold shares to Canada-based VC firm Discovery Capital in a secondary sale, valuing…

THE purported leak of personal details of 27 million members of the Employees’ Provident Fund Organisation (EPFO) earlier this year – confirmed by some stakeholders but denied by others – has sharpened concerns around digital privacy all over again. At the start of the year, the revelation that all the information provided by individuals to get their biometric Aadhaar identification numbers was being accessed by unauthorised agents, had caused a furore. These are only the most visible examples of the vulnerability of personal data that accumulate online – IT industry insiders are convinced that many more leaks take place, but to save face, organisations do not report them. Global digital security firm Gemalto has estimated that 3.24 million records were stolen, exposed or lost in India in 2017, a 783…

Advertisers struggle to fathom the intricacies of digital advertising They don't have adequate transparency around their programmatic media investments to make the most informed business decisions Lack the necessary knowledge of programmatic media costs, agency/trading desk fees and performance details Need tools and guidance to manage and optimise their programmatic supply chain They are more successful with clear programmatic key performance indicators, aligned incentives, roles and responsibilities across all parties…

MORE THAN A CENTURY ago, the department store magnate John Wanamaker famously complained about his inability to gauge the effectiveness of the money he spent on advertising. Since then, technologies such as radio, television, and the Internet have given companies new venues for self-promotion, but the age-old problem persists: How to tell whether ad dollars are really boosting sales? That question is one factor driving firms to shift ad money to digital media. Not only are people spending more time online, but advertisers believe that companies such as Facebook and Google, which track people’s online habits, can put the right ads in front of the people most likely to buy (and the companies can measure what results). According to data from Accenture, digital media now account for 41 per cent…

SEVERAL smartphone apps purport to see for anyone with a visual impairment. But none does it as well as Microsoft’s new Seeing AI, which is currently available on the iOS App Store for free. The ‘channels’ are lined up at the bottom of the app’s screen and users can either memorise them or use the iPhone’s accessibility features to speak out the button being tapped. It can read short text such as the writing on a sign. For a whole page, there is a Document mode, which seems to have a problem as it incorrectly believes that the phone is in silent mode. Seeing AI can also look at currency notes and recognise the denominations, read a barcode and tell the user what the product is, describe the ‘scene’ in…

IN THE FACE of widespread criticism over its decision to tax petroleum products heavily, interim finance minister, Piyush Goyal blamed the UPA and its mismanagement of finances. Under UPA 2 petro products were heavily subsidised. And, when funds proved quite inadequate the exchequer issued oil bonds (that had long-term maturity commitments). Goyal says the NDA inherited ₹1, 30,000 crore worth of oil bonds that will start maturing in the next four years. The NDA regime, he said, had already paid ₹40,226 crore as interest on these bonds. What the minister refrains from discussing, however, is how the NDA missed its chance to recoup losses. When crude oil prices were subdued, the NDA regime managed to clean up the books of oil companies, but didn’t do anything about the oil bonds.…

FOR AIR INDIA, the situation might turn from bad to worse. In the recently-concluded disinvestment process, the government could not find a single buyer for the national carrier. It is now reviewing its strategic sale process in the light of changes in the aviation sector. According to reports, the government has asked the airline officials to submit a revival plan before seeking fresh funds. AI has delayed salaries of its employees for over three months. It posted operational profits of ₹298.03 crore in 2016/17, but due to high interest cost, reported net losses of ₹5,765.16 crore. But as the market situation gets tougher – high fuel costs, forex fluctuations and rising competition – there are chances that it might report operational losses in the current financial year. That means it…

US TRADE SPATS WITH CHINA, EU HEAT UP The US-China trade war intensifies as President Trump wants to draw up a list of Chinese goods worth $200 billion for an additional 10 per cent tariff. Earlier, $50 billion worth of Chinese goods were subjected to 25 per cent tariff, following which China said it would raise tariffs on $50 billion worth of U.S. exports. The EU is also taxing US goods worth $3.25 billion in response to new taxes on its aluminium and steel. GOOGLE TO INVEST IN CHINA’S JD.COM Google will invest $550 million in Chinese e-commerce firm JD.com as part of its strategy to build online retail business and expand in Asian markets. Now Google can leverage the Chinese firm’s logistics prowess while JD.com will benefit from Google’s…

A PALPABLE MYSTIQUE and aura pervades the corner office. Its occupants are at the wheel, often biting the bullet and taking paramount decisions. They take the flak for failures but also walk away with the honours when things go as planned, sometimes acquiring cult status. Think Jack Welch, Bill Gates, Steve Jobs. And, at home, Dhirubhai Ambani, N.R. Narayana Murthy, K.V. Kamath, Deepak Parekh. Superstar CEOs spawn fast-growing and hugely profitable corporations, racking up immense wealth for their shareholders. They are rewarded handsomely for their efforts and waltz into the league of the super rich. Business Today’s 'India’s Highest Paid CEOs' survey tosses up several such success stories. Head honchos, both promoters and professionals, who have assiduously built profit-spewing businesses over the years and are raking in mind boggling remuneration.…

Aggregate Total Remuneration Aggregate based on top 100 companies by market capitalisation Source: Figures in ₹ crore Aggregate Total Income Aggregate Profit After Tax In ₹ crore; Aggregate financials based on standalone numbers; Total remuneration includes salary, perquisites, commissions, bonus, performance pay, contribution to PF and stock options in some cases Source: CMIE Aggregate Market Capitalisation…

1 KING MARAN Kalanithi Maran Executive Chairman, Sun TV Network. ₹77.9 crore (2016/17) ₹ 71.5 crore (2015/16) KALANITHI MARAN'S annual remuneration at ₹77.9 crore may seem a whopping amount but the fixed component (₹13.14 crore), like most business leaders, is a small fraction of that number. The variable component added up to a hefty ₹64.79 crore (ex-gratia/bonus) in 2016/17. Under Maran, Sun TV Network has posted robust earnings in recent years. It clocked a total income of ₹3,002.10 crore in the year ended March 31, 2018, a rise of 11 per cent over the previous fiscal. The company’s bottom line expanded 11.6 per cent to ₹1093 crore in the same period. Sun takes pride in being “one of the largest television broadcasters in India operating satellite television channels in Tamil,…

Negotiating and finalising the compensation of a Chief Executive Officer is probably the most interesting task, yet it is probably also the most challenging one too. For all stakeholders – the company, the search firm, and the candidate – to converge and reach agreement is perhaps the most complicated and least publicised process in any company’s functioning. Over the last decade, even in India, the CEO compensation design is slowly converging to global (Western) practices. For listed and (or) board managed companies, a nomination and remuneration committee is asked to drive the process. As the search consultant executing a given mandate, Hunt Partners, in most cases, drives the structuring of an offer, followed by handling negotiations with shortlisted candidates. We routinely advise clients to avoid direct negotiations with candidates. In…

Definition of ‘sensitive and private’ information Levels of sensitivity of such information What constitutes ‘legitimate interest’ allowing parties to access such information Whether thrust of the law should be ‘rights-based’ or ‘protection-based’ Whether the law should be principle-based or rule-based Limits of access and use of data by companies even after getting ‘consent’ rights Whether encryption of data should be mandatory and the level of encryption needed for different sectors Whether servers storing Indian data should be stored only in India Powers of the regulator likely to be set up to monitor data privacy…

EVA NEVER SLEEPS. Since she joined HDFC Bank about a year ago, she has been a super performer, having dealt with six million customers so far – answering their banking queries and helping them pay their bills. Eva (electronic virtual assistant), a chatbot which uses artificial intelligence (AI) and machine learning to process and understand language, was created by Senseforth, a financial technology (fintech) company with which HDFC Bank collaborates. Eva, with a success rate of around 85 per cent, which has also recently been integrated with both Amazon’s Alexa and Google’s Assistant, is not alone. Her counterpart at ICICI Bank is iPal – devised by a number of local companies and a global tech player working together – which answers customer queries and enables bill payments, fund transfers and…

If you type “Mexican restaurant” into Yelp’s search field, the results will include the highest-rated and the closest options – but the first two listings will show restaurants that paid to appear at the top (labelled “ad”). Those are examples of search ads, which are gaining ground on other forms of digital advertising. Matt Halprin, Yelp’s Senior Vice President for business operations, spoke with HBR about the effectiveness of search and other ads. Edited excerpts follow. Q: Why are advertisers migrating from display ads to search ads? A: Display ads are a terrible user experience. Search ads are far more relevant to consumers. Even though they delivered significant revenue, we eliminated display ads from Yelp at the end of 2015. What have you learned about search ads’ effectiveness? Not surprisingly,…

Every time you visit a website, you leave behind a digital footprint. These traces of information might include search history, social media account information, and much more. Some of this is stored in the form of cookies, text files that contain two pieces of information — the name of the site and a unique user ID. Some of these cookies help you remain signed into your e-mail accounts, some remember your site preferences and some even present you with locally relevant content, improving the browsing experience. These are first-party cookies created by the websites you visit. A LARGE NUMBER OF COOKIES ARE CREATED TO TRACK YOUR PROFILE OR SURFING HABITS. OFTEN, THESE ARE THIRD-PARTY COOKIES However, there is a flip side too. A big chunk of cookies is created to…

Senior Vice President & CEO, American Express Banking Corp., India “EVERY CHALLENGE PRESENTS AN OPPORTUNITY. HOW YOU RESPOND AND WHAT YOU LEARN FROM IT WILL DEFINE YOUR PATH TO PROGRESS.” Q. The biggest challenge you faced in your career A. Every challenge presents an opportunity. How you respond and what you learn from it will define your path to progress. About 10 years ago, I set up a company with close to 800 employees and gave it my best shot. It did not succeed and my lifetime savings were gone. But I have also learnt that it is important to have aspirations, it is okay to take risks and one must cut losses at the right time. All these help you bring in entrepreneurial thinking in a corporate setting and…