Innholdsfortegnelse for 19-May-19 i Business Today

The great executive pay debate started many decades ago and it has become more heated over the years. One reason is that despite all the discussions and noise, the gap between the CEO’s (and other top management) compensation and that of the average worker has only widened over time. The late management guru Peter Drucker, in his writings and speeches – in the 1970s and 1980s – had advocated no more than a 25:1 or 20:1 ratio between the top executive’s compensation package and what the average worker drew. Today’s remuneration committee members would probably laugh at Drucker’s naivety. A 2017 Economic Policy Institute report suggested that the average compensation of the US CEO was 271 times that of the annual average wage earned by a typical worker. Averages hide…

UNDER THE Members of Parliament Local Area Development (MPLAD) Scheme, each MP can suggest to the District Collector works to the tune of ₹5 crore per annum to be taken up in his constituency. Most projects are in priority sectors. One big hurdle, though, has been the increasing size of pending fund installments. In the 14th Lok Sabha, the unspent balance with district authorities was ₹173.4 crore. It grew to ₹552.86 crore in the 15th Lok Sabha. In the just ended 16th Lok Sabha, it touched ₹1,641.21 crore, close to 15 per cent of the total sanctioned amount of ₹11, 232.50 crore. The political and social cost of such delays can be immense, especially during election time.…

THE RBI BOARD-appointed Bimal Jalan panel is likely to peg the central bank’s surplus capital around ₹1-3 lakh crore out of the ₹9.5 lakh crore sitting in its books. The government had earlier asked RBI for return of surplus capital (not to bridge fiscal deficit as the finance minister said), though the then RBI Governor Urjit Patel had flatly refused. Reserves are needed for emergency and contingency as RBI is the lender of last resort. RBI will oblige if the Jalan panel puts its stamp of approval. But how does the government plan to utilise the surplus funds? Experts suggest recapitalising state-owned banks or financing infrastructure. There are also fears that the new government will use the funds to finance programmes like Kisan and NYAY. While there is a view…

GOING BY THE minutes of the monetary policy committee (MPC) meeting, along with latest industrial production data, it seems the Reserve Bank of India (RBI) will go for a rate cut for the third consecutive time in June. MPC minutes clearly reiterated focus on growth, emphasised by Governor Shaktikanta Das. The industrial output – at a 20-month low in February – indicates slowdown in the economy. GDP growth was 6.6 per cent in the December quarter, the slowest in five quarters. Economists expect a further dip in the March quarter. A surge in crude oil prices above $75 per barrel and a depreciating rupee could push inflation higher. CPI inflation rose to 2.86 per cent in March after hitting a low of 1.97 per cent in January. Deputy Governor Viral…

GATHER AND GROW WHAT: Business Opportunities Show WHEN: June 9, Hyderabad WHAT TO LOOK FOR: The event will connect emerging brand owners in rural pockets, Tier-II and Tier-III cities with franchises and industry experts. It will enable them to have one-to-one meetings and learn more about franchise opportunities currently available in India. PASSING THE BATON WHAT: South-India Family Business Summit WHEN: June 21-22, Chennai WHAT TO LOOK FOR: The event will bring together family business owners to discuss issues they face in growing their businesses and building a legacy for next generations. Entrepreneurs from multi-generational businesses will come together, network and regroup to plan their future. BUILDING BLOCKS WHAT: Earthcon Expo WHEN: June 14-16, Ahmedabad WHAT TO LOOK FOR: The event will provide construction and infrastructure industry with the opportunity…

GUENTER BUTSCHEK, the CEO of Tata Motors, draws an annual basic salary of ₹2.5 crore. But his perks and allowances total about ₹13 crore. With incentives and retirement benefits, his remuneration adds up to a little over ₹26 crore. That’s not all. In case the company initiates termination of his service before the end of his term (for reasons other than the violation of the Tata Code of Conduct), he will be entitled to severance pay for 12 months or the balance term of the agreement, whichever is less. HUL Managing Director Sanjiv Mehta’s annual salary is ₹6.96 crore but he received profits of ₹5.6 crore in lieu of salary in 2017/18, besides other perks worth over ₹1 crore. He also has stock options valued at ₹5.43 crore. In all,…

IN THE WORLD of extreme business complexities, non-executive directors (NEDs) protect the interests of shareholders. Independent directors specifically represent the interests of minority shareholders along with other stakeholders and are true custodians of corporate governance. Although executive compensation is most talked about nowadays, independent directors bring their expertise and commitment to the table and should be compensated for the same. The structure of their compensation varies across countries and is influenced by local laws. In India, compensation to independent directors has two broad elements – sitting fee and commission. However, some companies offer a fixed retainer within the limit of 1 per cent of the net profit as specified by the Companies Act. It is interesting to look at the nuanced differences in payment for the value they bring to…

For most Indian companies, succession planning is a difficult and at times a painful process. In the last few years, the topic has often grabbed headlines, be it the bitter battle for supremacy between the founders and the then CEO at Infosys, or the protracted fight between Cyrus Mistry (former Tata Group chairman) and group patriarch Ratan Tata that is now playing out in courts. There are a few exceptions to this, none bigger than Dabur, the 134-year-old company that is the country’s leading Ayurveda-based health care firm. “Dabur has always been ahead of the curve, be it in planning CEO succession or restructuring family shareholding. Our survey of NSE-listed companies last year found over half had not identified successors for their CEOs. So, Dabur is an outlier in this…

IF THERE IS ONE FIELD OF technology that requires acceleration, it is assistive robotics. There are many ethical considerations to wade through in other areas of robotics research, but the one that would meet little opposition from watchdogs is assistive technology that helps people who need it and make their everyday life manageable or even bearable. Siddhartha S. Srinivasa, the Boeing Endowed Professor at Paul Allen School of Computer Science and Engineering at the University of Washington, is developing a robot to help those who are ill, elderly or differently abled and cannot feed themselves. Being dependent on others for such a basic function often leads to an acute sense of helplessness and loss of dignity. However, a specially designed assistive dexterous arm, or ADA, is set to address this…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India PERSPECTIVES Maruti’s Decision to Phase Out Diesel by April 2020 May Hasten the End of the Road for the Fuel The company, however, will remain open to rethink if there are enough takers for that variant even after the prices go up after the BS-VI roll-out businesstoday.in/maruti-diesel How the Business of Chowkidars Is Changing Exponential technologies such as drones and IoT are expected to change how companies protect their assets and people businesstoday.in/corporates-chowkidars Why Ayushman Bharat May Stay Irrespective of Election Outcome Ayushman Bharat, which covers hospitalisation and diagnostic expenses of every major illness, has both public and private health-care providers within its ambit businesstoday.in/ayushmanbharat-benefits NEWS IBC Delivering Results; A Reform Modi, Jaitley Should Be Proud of Despite its flaws and constraints, the insolvency law has…

BOEING TAKES A BIG HIT Chicago-based Boeing, the world’s largest aircraft manufacturer, is facing one the biggest crises in its 103-year history. The company said that slowing production due to the grounding of its troubled 737 Max jets had cost it $1 billion. Consequently, it delayed the outlook for 2019 and halted share buybacks. However, the stock rose slightly as chief Dennis Muilenburg insisted there was “no surprise or gap” in safety precautions. Boeing also booked unspecified charges for pilot training and developing a software fix for an antistall system that played a role in two fatal crashes, one on Lion Air in Indonesia and another on Ethiopian Airlines, killing a total of 346 on board. According to a Reuters report, Boeing is targeting FAA approval of its software by…

Sunil Mittal THE PAST three years have been rough for Bharti Airtel. The telco, with a market capitalisation of ₹1,66,552 crore, has lost its numero uno position after almost 15 years to Vodafone Idea. Its consolidated revenues and net profits have tanked 13.4 and 60.2 per cent, respectively, between 2015/16 and 2017/18. Between September 2016 (when Jio was commercially launched) and February 2019, Airtel’s subscriber base has grown a mere 80.4 million in comparison to Jio’s 297.2 million additions. In fact, most of Airtel’s new subscribers have come from the inorganic route – through acquisition of smaller telcos like Tata Teleservices. Yet, all this does not seem to have deterred the telco from giving a pay hike to its promoter and Chairman Sunil Mittal for the past two years. His…

WHEN ANIL MANIBHAI NAIK joined the engineering and infrastructure behemoth Larsen and Toubro in 1965 as a junior engineer, his ambition was to earn at least ₹1,000 a month before he retired. Naik’s first monthly salary in the company was ₹670 and he had no idea then that he would retire from the company 52 years later as one of its most celebrated top bosses and as one of India’s highest paid CEOs. Naik breached the ₹1,000 per month mark in his first year itself and by the time he retired, his remuneration had risen to ₹137.24 crore. His leave encashment alone was worth ₹32.21 crore. A regular on the list of highest paid CEOs in the country for the better part of the 17 years that he was the…

THE CLOSE TO ₹3 CRORE basic salary of Shikha Sharma, the Axis Bank CEO who quit last year, kept growing steadily even when the fortunes of the bank were sinking. In spite of a sharp deterioration in asset quality, profitability and valuation, thanks mostly to her bets in the infrastructure space, the bank’s board did not see merit in tinkering with her compensation structure. It was only in April last year, when 60-year-old Sharma’s fourth term was due for renewal, that the Reserve Bank of India, or RBI, put its foot down. Sharma, who had come from an insurance background, having built ICICI’s life insurance subsidiary, decided to call it a day. Sharma’s colleague at ICICI Bank, Chanda Kochhar, who was earning almost the same as Sharma, also didn’t match…

THERE IS A HEATED DEBATE in the country not only about how the economy is performing but also the credibility of numbers that measure economic progress. Right from gross domestic product (GDP) data to unemployment numbers, everything is under scrutiny. At times, even the government has rejected the data – such as the Periodic Labour Force Survey (PLFS), which apparently did not paint a good picture of the jobs scenario – put out by the Central Statistics Office (CSO). To discuss the issue of data credibility, Business Today organised a roundtable that was attended by Pronab Sen, former Chief Statistician of India; P. Mohanan, former Acting Chairperson of the National Statistical Commission (NSC) who quit after the government refused to publish the PLFS data; Sudipto Mundle, Professor, National Institute of…

Foam Home’s journey began 42 years ago when it forayed into the commodity foam market as a trader. With time, as competition began tightening its noose with malpractices, finding suppliers of genuinely good foam became a task. It was then that Foam Home started its own manufacturing unit for producing Pure Polyurethane Foam without any adulteration; something it produces till date. Over the years Foam Home has created a brand that is way ahead of its time and one that is proudly recognised in the Global Bedding industry too. We are a dynamic brand that tread with changing times and has launched several new technologies year after year. Memory foam and the Gel technology were the first to come to India through Foam Home’s partnerships with its European Principals. In…

A lot of countries are closing borders, and there is a mood of anti-globalisation. There are right-wing attacks. How does this effect business? It is not just right-wing attack but a populist attack from both sides of the extreme. They are seeing loss of control. In developed countries, they fear losing factories, and jobs. Overall, we have gone through a very positive development across the world, which has reduced poverty, increased life expectancy. More children are going to schools than ever before. Fewer people die than ever before in civil wars and (national) wars. This does not mean that we want to diminish the suffering that people in Syria and other places are going through. However, we should not forget that enormous progress has been made. A lot of it…

We experience extreme weather conditions throughout the year, be it a blazing summer, a humid monsoon or a freezing winter (at times, intense air conditioning will freeze you as well). A sudden drop in temperature or rise in humidity will always lead to condensation on glass surfaces. Normally, we are not too worried about it, but a sudden fogging up of eyewear, car windshields, rear-view mirrors and car windows due to temperature and humidity changes can be outright dangerous. The solution? Catch a sunbeam with some gold. Well, almost. Scientist Christopher Walker and his research colleagues at ETH Zürich have developed a coating to reduce fogging significantly; and what it relies upon is sunlight. The coating used is nanometres thick and made up of gold nanoparticles embedded in nonconductive titanium…

SMARTWATCHES TRACKING health and fitness are must-have gadgets but do pared-down versions work equally well? Versa Lite is the most affordable iteration of the US-based company’s 2018 best-seller Fitbit Versa but skips a few features although the omissions may not matter much. Externally, the design remains the same – a 1.34-inch LCD touch display with round edges and attractive bands. Unlike other watches which have buttons on the right, this one has just one button on the left and you need to get used to it. The Lite is available in five colours and comes with two bands, a small and a large one, for a perfect fit. My review unit was mulberry, which looked too bright, but just like Apple Watch, the bands are super easy to change. The…

Q. The biggest challenge in your career A. I like challenges. I do not like maintaining status quo or going into an organisation which is already on track and stable. It is boring. I believe that upholding your values is the biggest challenge. When the business was in difficulty, I was asked to sign a project that I knew was not right. I was told we would get funding for the organisation if I would do it. But I did not do it because, in my world, it was wrong. We were risking investors’ money. Q. Your best teacher in business A. Our parents shape a lot of our thinking. I started work when I was 14 and joined my family business. Every night, our dinner felt like a board…

NOW THAT THE US has refused to extend the waiver on oil imports from Iran, Indian oil companies have been asked to reduce oil imports from Iran to zero by May 1. India has worked out supplies from Saudi Arabia, Kuwait, the UAE and Mexico to bridge the gap. However, that is not the end of the problem. Brent crude has already touched $75 a barrel. It hit $84 a barrel when the US first announced pulling out of the nuclear deal with Iran. In November, prices dipped to $50 a barrel on the Trump regime’s decision to grant waiver to eight countries, including India. The scenario may lead to a rise in international prices of petrol and diesel. Since April 21, oil companies have stopped correcting prices. There is…

A COMBINATION of moderation in interest rates in the US in the last one year and lower oil prices had lifted the sentiments on Indian equity markets, creating the basis for the current rally. This tailwind is likely to come to an end as 10-year bond yields in the US are up nearly 20 basis points from their lows in March. Higher bond yields reduce attractiveness of Indian equity and could dampen incremental inflow of foreign portfolio investments. This could put a ceiling on rise of benchmark indices. Also, an increase in oil prices will result in higher current account deficit (CAD) for India, besides increased input costs and lower margins for companies. Higher CAD means the rupee could once again come under pressure, much to the dislike of foreign…

WITH AN ASTRONOMICALLY high compensation of ₹146 crore, C.P. Gurnani, CEO and Managing Director, Tech Mahindra, was India Inc’s highest paid professional CEO in 2017/18. Gurnani was followed by A.M. Naik, Group Chairman of Larsen and Toubro (L&T), who took home a pay packet of ₹137 crore. At a distant number three was HDFC Bank’s Managing Director, Aditya Puri, who earned ₹41.10 crore in the same year. While Gurnani earned a massive 3,151 times more than the median pay of his company’s workforce, Naik’s salary was 1,725 times higher than the average salary in L&T. He surely would have never imagined that he would be among the highest paid Indian CEOs when he joined L&T as a junior engineer way back in 1965, and took home a salary of ₹670…

THE FOUNDER of a leading Indian retail company interviewed two candidates for CEO’s role at one of his retail verticals. The first interview took more than an hour but the second lasted just 10 minutes. The bigger surprise for the CEO search company — the founder decided to send an offer letter to the second candidate. Later, he told the search firm what triggered his decision. When he met the second contender, he was convinced within the first five minutes that the person was passionate, had a crystal clear vision about how to take the business to the next level and came across as a risk-taker. The first candidate had a more distinguished background, but the founder preferred the second. In today’s uncertain times, CEO hiring is no longer short…

A Different View RAJESH RAMAKRISHNAN is sure that photography isn’t his hobby but passion, a part of his daily life. He thinks of photo concepts during his daily morning walk or even while he is on a flight. The possibility of one great click is sufficient for him to wake up at 4 a.m. or visit Vrindavan during the colourful holi or — in spite of his fear of heights — go on a trek to Mount Kilimanjaro. An engineer by education, he never considered himself a creative person. But after he attended a photography workshop on the insistence of a friend, he was hooked. What appealed to him was how photography allowed him to see things from multiple perspectives. Everyone takes a photograph of Jama Masjid with pigeons flying.…

CEO INDULGE IS ALL ABOUT SHOWCASING THE BEST OF PRODUCTS AND THE IDEA BEHIND GETTING THESE PRODUCTS WITH THE BEST QUALITY AND SERVICES OUT IN THE INDIAN MARKET FIT FOR AKING WHOSE USAGE DEFINES THE STATURE AND SUCCESS WHICH ACEO DESERVES. One of the greatest entrepreneurs of our country has once said, "Ideas are no one’s monopoly. Think big, think fast, think ahead." We at GM adhere to this philosophy and understand the need to be ahead of time. One not only needs to think first, but also faster. Likewise, one has to be creative, innovative and ought to have a bigger vision. Also, every time one does something new, there’s nothing like being better than before. The beauty of our wonderful world innovated our visions, inspired us, to create…

WHEN ATHLETES want to improve, they typically spend hours reviewing video of their performance. In the white-collar workplace, it’s hard to get such vivid feedback. But in recent years researchers have learned to mine a unique set of data that serves as a slow-motion replay of how an organisation and its people function: the company’s e-mail, which shows who talked with whom, why, how, and how often. Academics call this kind of investigation social network analysis. It has largely focussed on internal communications aimed at learning how colleagues can collaborate most effectively. A new study uses e-mail analysis for a different purpose: to examine how employees interact with clients. Organisations can learn what patterns and behaviours affect client satisfaction and use the results to coach employees on more-effective communications. The…

ORGANISATIONS NEED to invest in the development of their leaders to build and sustain competitive advantage in the fast-paced environment of the 21st century. Well-nurtured and empowered leaders help create vibrant teams of achievers who are capable of accomplishing organisational goals in spite of gusty headwinds. While some of the public and private sector enterprises have institutionalised mechanisms to train their leaders, the majority pays scant regard to this vital requirement. Creating and preserving a culture of learning, where professional growth and excellence are consistently encouraged and rewarded, is fundamental to the success of any enterprise. Organisations which have ignored this function have stagnated, and some of them have gone into a downward spiral. AS TIME IS ALWAYS AT A PREMIUM, THE LEADERSHIP DEVELOPMENT PROCESS SHOULD BE GOAL-ORIENTED AND DESIGNED…

WE ARE GENERALLY over-whelmed by the number of technology features available on our smartphones. Or often wonder at the frequent use of jargons such as AI (artificial intelligence) and IoT (Internet of Things). However, unknown to many of us, technology has quietly invaded our kitchens, impacting what we eat and who we become as a result of that. But first things first. The popularity of delivery apps means the general impact on restaurants and cloud-kitchens is expected to be positive. The benefits are manifold. For one, we can bring down the production cost of every meal by combining the positives of on-demand and sharing economies. The millennials, they say, are three times more likely to ‘order in’ compared to their parents. And the click-happy Gen Y and Gen Z have…