Innholdsfortegnelse for 30-Jun-19 i Business Today

THE PROBLEMS IN India’s financial systems started showing up in 2015, shortly after the then RBI governor Raghuram Rajan forced banks to go for the Asset Quality Recognition exercise. The bad loans given by banks, which were hidden by the process of ever-greening till then, came to the fore. It was found that many public sector banks did not even have enough capital to continue lending. The government hoped the problem would be fixed by the Insolvency and Bankruptcy Code, which allowed lenders to take the defaulting borrowers to the National Company Law Tribunal and sell them off to recover money in a time-bound manner. In practice, it turned out that the banks had to take a huge haircut in the process – they had to write off 90 per…

THE ASSET QUALITY deterioration in India Inc has made the Reserve Bank of India (RBI) a bit conservative. The apex bank has decided to reduce banks’ exposure to single as well as group borrowers. Group borrowers exposure has been capped at 25 per cent of capital, while single borrower exposure limit is 15 per cent. The bank’s exposure to a single NBFC has also been restricted to 15 per cent of the capital base. The RBI is actually talking about more stringent exposure limits for certain categories of NBFCs. In fact, it has capped exposure to a group of connected NBFCs to 25 per cent of the capital base. There is relief, however, for government companies. They are allowed to borrow more as they will not be considered part of…

GO GREEN WHAT: Green Power Conference and Exposition WHEN: July 23-24, Chennai WHAT TO LOOK FOR: Organised by Godrej Green Business Center, over 400 delegates will attend the 17th edition of the conference to discuss innovations in renewable energy technologies and issues around policy and finance. Performance excellence awards will be given for solar and wind plants. LOOMING CHALLENGES WHAT: Current Policy Challenges Facing Emerging Markets WHEN: July 24-25, Santiago WHAT TO LOOK FOR: The event, jointly organised by the Central Bank of Chile, the International Monetary Fund and the IMF Economic Review, will focus on issues such as trade war, weak commodity prices and monetary policy normalisation in developed countries that have affected emerging markets. DIGITAL POWER WHAT: Conference on Digital and Cashless Economy WHEN: July 26, Delhi WHAT…

IN THE NEXT FIVE YEARS, the Indian banking system will probably have fewer public sector banks (PSBs) from the current two dozen as the consolidation drive accelerates to create a few large banks. There would also be some serious effort to delink the government, or most specifically the finance ministry, from PSBs by making the existing Bank Board Bureau (BBB) more autonomous, and also to push for Bank Investment Company (BIC) to house government stake in PSBs. There would also be less burden of recapitalisation on the government exchequer as the surplus capital of the Reserve Bank of India (RBI), estimated to be in the region of ₹1-3 lakh crore, is deployed. Last but not the least, the fine tuning of the Insolvency and Bankruptcy Code (IBC) with additional infrastructure,…

India’s fintech ecosystem has wit-nessed rapid growth. Fintech firms saw a fourfold increase in investments, from £276.21 million in 2015 to £1.39 billion in 2018. The number of VC deals rose by 61.1 per cent in the first quarter of 2019 compared to the previous quarter as India is now home to over 2,000 fintech start-ups. The country has excelled in fintech adoption and leads the charts with China. Until now, this growth has been largely triggered by successful government initiatives such as India Stack, UPI, Digital India and Pradhan Mantri Jan Dhan Yojana. At the state level, the likes of Maharashtra have come up with a comprehensive policy while others like Andhra have signed MoUs with Maharashtra to leverage its learning and experience. Regulatory Gaps The regulatory bodies have…

Huawei has been under attack since 2012 when the U.S, government banned companies from using its networking equipment. Huawei is battling allegations of spying on behalf of the Chinese government through its equipment, especially 5G gear. It has been banned in five major economies and the threat of more bans looms large. The U.S. government claims that Huawei equipment has backdoors that transmit critical data to the Chinese government. But the company maintains that the alleged router backdoor is a standard tool used by all vendors to carry out maintenance and diagnosis of the system/device. Leading chip designers (Intel and Qualcomm), memory chip makers (Micron Technology and Western Digital) and Google’s Android operating system have practically cut off ties with Huawei, which has forced the company to build in-house capabilities…

*Includes JetLite Source: DGCA Just around the time Jet Airways halted operations in mid-April, the aviation sector was abuzz with speculation that Air India is going to be the biggest gainer from Jet’s misery. Nobody realised that the national carrier was itself struggling due to shortage of funds, and its 17 aircraft stranded for months, as it did not have money to pay for maintenance. As it turns out, private players – IndiGo, SpiceJet and Vistara – are benefitting the most. But this gain has come at a cost. For instance, IndiGo, which plans to hire about 300 Jet pilots, is offering joining bonuses of ₹20-30 lakh per pilot, which translates into ₹60-90 crore of extra cost. SpiceJet and Vistara plan to hire 100 pilots each. Some of Jet’s planes…

Most of Ajay Piramal’s moves, since he took charge of the Piramal Group four decades ago, have greatly benefitted it. One such was the deal to sell Piramal’s pharma formulations business in 2010, then worth around ₹2,000 crore, to Abbott for a whopping $3.8 billion (₹18,500 crore at the time). He has been investing the vast cash pile earned from the sale prudently – targeting over 20 per cent annual profit, exiting with handsome earnings whenever he felt the time was ripe. He bought an 11 per cent stake in Vodafone India, for ₹5,856 crore – in two tranches in August 2011 and February 2012 – and exited in April 2014 with ₹8,900 crore. Another of his major investments, a total of around ₹4,500 crore, was in the Shriram Group’s…

STRATEGIC LEADERS, being at the highest level of an organisation, are responsible for charting its path to success. They visualise an ideal picture of their enterprise in a futuristic environment, capture it into a pragmatic vision and translate it into goals and objectives with specific timelines. To realise their vision, strategic leaders formulate strategy and create an ecosystem conducive to its implementation. Research evidence, however, suggests that not all leaders at the helm rise to the level of strategic leaders. Most of them fail to put up with the unique leadership demands of the 21st century’s strategic arena, which is marked by very high levels of volatility, uncertainty, complexity and ambiguity (VUCA). Interestingly, a study undertaken by PwC in 2015 revealed that out of the 6,000 senior executives who were…

t is a common practice for many companies to be concerned about their employees’ health and offer annual or bi-annual healthcare checkup plans. Most of these are in the range of ₹10,000-25,000, and are offered through tie-ups with corporate hospitals or diagnostics chains. However, their utility is limited. “It is sad that most executives who come to us for basic blood tests and other sponsored health checkups do not bother to consult a doctor or a health adviser for follow-up once they receive the reports (which in most cases indicate that all is well and indices are within the parameters). Slowly, they go back to their sedentary lifestyles and become unhealthy,” says Dr Peeyush Jain, Head, Department of Preventive Cardiology, Fortis Escorts Heart Institute, New Delhi. Moreover, such packaged tests…

India stands tall for its unbridled potential and is well poised to be a leading economy very soon. However, an insidious enemy is lurking – the looming threat of non-communicable diseases (NCDs) – and we need to work together to strike it down. A report by the World Health Organization estimates that cardiovascular diseases, cancers, chronic respiratory diseases, diabetes and other NCDs account for 60 per cent of all deaths in India. Moreover, NCDs account for about 40 per cent of all hospital stays and roughly 35 per cent of all recorded outpatient visits. Also, 20 per cent women and 27 per cent men aged between 30 and 70 also run the risk of dying from one of the four major NCDs. According to a World Economic Forum study, the…

SCI-FI LEGEND ISAAC Asimov used the word robotics for the first time in his 1942 short story Runaround. Ever since, Asimov and many of his ilk have imagined agricultural worlds where superintelligent machines carry out farm production. Make no mistake – machines used in agriculture are an old story. Mechanisation and automation have been here for decades in areas such as seeding and harvesting of crops in the US and elsewhere. But there are certain areas like picking delicate fruits and vegetables which still require human intervention. After all, harvesting strawberries and raspberries is not easy as one has to make sure that the berries plucked are ripe enough, have their skins intact and are packed neatly before reaching the market. The same goes for tomatoes. Machines are challenged in…

If you care about timely software updates to keep your devices working without a hitch, Apple is bound to be your choice. The company rolls out major improvements every year but has not abandoned the earlier versions. For instance, the current iOS 12 supports the iPad Mini 2 tablet, iPad Air and even the iPhone 5s, all of them launched in 2013. However, you must have enough space to accommodate the new features if you want to update your iOS device without slowing it down. It is easy to instal any app on an Android device via Android Package Kit of APK files (the package file format used by the Android OS for distribution and installation of mobile apps), but Apple does not support thirdparty installation and you have to…

The Made in India Manager By R. Gopalakrishnan and Ranjan Banerjee Publisher: Hachette India Pages: 216 Price: ₹499 BUYING A GAS CONNECTION, bargaining with vendors, living in a joint family, navigating traffic, getting admission to a good school/college or securing a job – the Generation X who grew up in India had experienced them all and also witnessed their parents struggling with the same. Chaos and contradictions, competition and perseverance often rule people’s lives in this country, and they mostly manage to deal with those. This is the environment that the authors, R. Gopalakrishnan and Ranjan Banerjee, have written about, weaving a meaningful narrative to explain why India-made managers succeed globally. Terabytes have been published about India’s English-speaking population (leading to a multicultural mindset), jugaad economy (read resourcefulness in a…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India Trade Wars: Bigger US Retaliation Could Hurt Indian IT Industry Policy watchers think the US has kept its powder dry. If India does not step back now, more retaliation could follow businesstoday.in/us.tradewars-india PM Pushes for Big Labour Reforms; 43 Crore Unorganised Workers to Benefit Given the Modi government’s resolve to bring changes to the lives of the masses, labour reforms are sure to continue businesstoday.in/modi-reforms IndiGo, SpiceJet Stare at Tough Times with Vicious Fare War Ahead Though the fourth quarter results paint a rosy picture, it is not going to last long with the kind of new capacity expected to be added in the market over the next one year businesstoday.in/farewar-indigo.spicejet NEWS Hyundai Venue: ‘Baby Creta’ Strikes Right Notes At a killer price tag…

SEBI’S DISCUSSION paper on FPI regulations does a good job at harmonising related circulars and clarifications at one place, while addressing the core concerns that restrict FPI participation. The market watchdog has recommended simplifying the registration process, easing of KYC norms and widening the scope of FPI investments. If things go as they seem, the 10 per cent FPI limit on investment in listed stocks could be hiked; sectoral caps could also be revised. FPIs will be allowed to invest in unlisted companies ahead of their initial public offerings. Besides, regulations could be relaxed to invest in real estate investment trusts, infrastructure investment trusts, and alternative investment funds. Besides, FPI classification across three categories could be rationalised. For one, pension and other well-regulated funds will be moved to category-I and…

PRODUCTION of Solar power, the most preferred renewable energy, increased only 4 per cent to 1,737 megawatt (MW) in the first quarter of 2019. More than 800 MW of solar power auctions were cancelled due to lack of interest from project developers as the government brought in tariff caps. Payment delays in states like Andhra Pradesh, Tamil Nadu and Telangana are worrying those who have projects on ground. Apart from this, lending is an issue for new projects. In the first quarter, solar investments were lower by 12 per cent to $2.8 billion compared to investments during the same period a year ago. Rooftop solar, which was witnessing good growth over the past few years, also had negative growth during the period. A recent Mercom India Research study estimates that…

JUST ABOUT A year ago, the non-banking financial sector (NBFC) was on a tear. It was also the darling of stock markets. NBFCs were growing rapidly – in many cases faster than banks – and their chiefs were feted like star bankers. A year later, things couldn’t be more different. As the IL&FS scandal brought things to a head, banks, mutual funds and others who had been happily subscribing to NBFC commercial paper and other debt realised there was something rotten in the sector. Since then, the troubles have been multiplying. Some of the biggest names in the NBFC universe, including Dewan Housing Finance Ltd. and Reliance Capital, have seen their reputations getting hit after debt defaults. The reason is simple. NBFCs depend on short-term funding sources such as commercial…

NITIN GADKARI Ministry of Road Transport and Highways Ministry of Micro, Small & Medium Enterprises Increase spending on infrastructure projects to push up growth that has begun to sag. Create a policy framework that will spur private investments in roads and highways. Devise solutions for credit at suitable rates for long gestation projects to avoid NPAs and restore investor confidence. Oversee passage of the long-delayed Motor Vehicles Bill to curb road deaths in the country. Draft a holistic electric vehicle policy with subsidies and incentives MINISTRY OF ROAD TRANSPORT AND HIGHWAYS (₹ cr) MINISTRY OF RAILWAYS (₹ cr) PIYUSH GOYAL Ministry of Commerce and Industry Ministry of Railways Tackle increasing trade protectionism in key export markets like the US. Stand up to the mounting pressure from global trade partners against…

A PROPER DISASTER WARNING SYSTEM THAT HELPS MINIMISE LOSS OF LIVES IS CRUCIAL, BUT HAVING A DISASTER RESILIENT INFRASTRUCTURE HELPS PREVENT LIVELIHOODS FROM DEVASTATION: Have stringent standards and protocols to build infrastructure Ensure that these standards are implemented rigorously and governance mechanisms put in place for accountability Creating awareness is important so that everyone understands and implements the rules while constructing homes and factories Any new infrastructure has to take into account weather hazards of that area and also prepare for unprecedented weather events Ensure that the development project, while addressing one problem doesn’t add to another problem or create new problems such as urban floods…

Ludhiana-based IOL Chemical, the largest maker of ibuprofen active pharmaceutical ingredient (API) in the world with annual capacity of 12,000 metric tonnes, is in a sweet spot, a rarity these days in a segment such as API manufacturing, where China has taken a lead over India. “We are noticing shortage of products from China and rise in prices. This is a big opportunity for the companies in India to build global capacity to take advantage of the trend. For instance, we have – over the past one year – more than doubled our ibuprofen API capacity from 5,000 metric tonnes per annum to 12,000 metric tonnes,” says Vijay Garg, Joint Managing Director, IOL. The company has “33 per cent world market share for the product as against 10 per cent…

Shriram’s business has been under some pressure from new NPA rules, after-effects of demonetisation and GST and, of late, the liquidity crunch after the IL&FS crisis Shriram was seen as a cultural misfit – Piramal’s lending is confined to the safer upper segment of the business, while Shriram’s success was based on lending to micro, mini and SME sectors There are differences in work culture between the two groups; sources say Piramal did not get a free hand to implement what he wanted to There were some governance issues at Shriram Transport as well…

The existing wellness and nutraceutical market in India has an issue. Most of the products are solution-driven, which means when people fall ill, they take medicines and nutritional supplements to get well. But compared to the West, the preventive healthcare market at home is at a nascent stage. In fact, we are looking at reactive solutions and are not proactive enough to embrace a preventive healthcare regime. Our awareness of preventive healthcare is on the rise, but it is minimal, and until now, it is restricted to certain sections of the society. Therefore, most of the wellness or nutraceutical products which consumer goods firms or pharmaceutical companies sell are meant for solving healthcare problems. Take the case of young children going outdoors in the summer. Most of the times, we…

Throughout the world, marketers are becoming more focussed on health. Be it energy, auto, chemicals or food, the focus is shifting to health and sustainability. Greater thrust on non-fossil energy sources, or cola majors moving from traditional beverages to health-based foods and beverages, are visible signs of the shift. Pharma companies the world over, as also in India, are not far behind. Most are diversifying from chemical-based medicines into nutraceutical and wellness products. Today, most major Indian pharma companies have a nutraceutical or wellness division that produces supplements, ayurvedic & herbal products, fortified foods & beverages, functional foods, probiotic foods, energy drinks, etc. Research has shown that nutraceuticals are good for prevention of diseases, post-disease recovery, curbing deficiencies, supplementing nutrients and minerals, and better management of lifestyle diseases such as…

THE HUMBLE MICROPHONE looked much the same over decades and got scant attention from tech wizards. However, someone was needed to solve the problem of the ushers at live events – you always find them running around and handing over the mics to people during audience interaction. But the helter-skelter dash might be over soon as an app called Crowd Mics turns iOS/Android devices (both smartphones and tablets) into wireless microphones for seamless participation. So, how does it work? One has to create a dedicated Wi-Fi network so that all attendees, speakers/presenters and moderators (if any) can join the system via the app downloaded on their smartphones or tablets. If audience members want to say something, they can send requests via the app and will be notified by the person…

BEWARE of the silent killers. You could be prone to severe health risks but might not be aware of them until you are on the watch and paying attention to subtle early signs. In India, non-communicable diseases such as diabetes, heart conditions, high blood pressure (BP), cancer and neurological disorders take a heavy toll, accounting for 60 per cent of all deaths, as per a WHO report. But the good news is that a wide range of home health technologies and healthcare tools are now available to support multipurpose and multi-generational goals, from staying fit to AI/IoT/robot-assisted therapeutic aid/geriatric care to monitoring health conditions for diabetes and cardiac issues that ensure timely alerts and save lives. Most of these health gadgets cost less than round-the-clock in-clinic check-ups. However, self-monitoring is…

THE AGE OF AWAKENING: The Story of the Indian Economy since Independence BY AMIT KAPOOR WITH CHIRAG YADAV PUBLISHER: Penguin Portfolio Pages: 304 Price: ₹599 WHEN YOU PICK UP A BOOK on ‘the story of the Indian economy, and the political drama behind it’, the foreword of which has been written by Bibek Debroy, Chairman of the Economic Advisory Council to the Prime Minister, and the epilogue by Amitabh Kant, CEO of the government think tank NITI Aayog, you expect it to be the usual criticism of Nehruvian Socialism and a glorification of the economic approach adopted by the Narendra Modi-led NDA. But Awakening, penned by Amit Kapoor, an academic and the Honorary Chairman of the Institute for Competitiveness, and Chirag Yadav, a Senior Researcher at the institute, turns out…

THE CHARGE SHEET filed by the Serious Fraud Investigation Office (SFIO) in the IL&FS default case points to a criminal conspiracy by the top management to hide the worsening financial health of the company as well as its many subsidiaries and delay the inevitable (the series of defaults) through a web of unscrupulous transactions. The charge sheet enlists a number of violations, whichincludehiding the real picture of the company’s financial health, non-compliance with norms on loans to group companies, non-maintenance of capital adequacy requirements, non-disclosure of directors’ interest in borrowing companies and use of vendors to reroute money to subsidiaries. All these activities were carried out at the connivance of the top management and the statutory auditors, it says. The charge-sheet also admonishes the auditors for knowingly looking away while…

AMIT KUMAR, Co-founder, Galaxy-Card, a digital credit card start-up, had just gone live with a non-banking finance company (NBFC) when the IL&FS default crisis erupted in September 2018. The NBFC, which had started discussions with GalaxyCard in January 2018, had big plans but changed its mind. “Nine months of integration, legal paper work and banking transactions went for a toss in just 10 days,” says Kumar. Many NBFCs that had tied up with fintech firms or were in the process of doing so are not even willing to talk, says Kumar. As a result, a lot of fintech lenders are finding it difficult to raise funds. Some are even closing down. The liquidity crunch has put a spanner in the works for such firms despite the fact that the potential…

No majority buyer likely after the deal with the Hinduja Group got stuck following a Dutch court order declaring Jet Airways bankrupt One of Jet’s biggest assets is its 766 slots at domestic airports which it stands to lose by the end of July Jet’s liabilities are nearly ₹17,000 crore, including around ₹8,500 crore owed to banks. Vendors and trade partners are set to lose more than banks. Lookout notices for Naresh Goyal, Anita Goyal and Vinay Dube have turned potential buyers cagey due to fears of being dragged into cases Lack of will in the leadership, and near-absence of public backlash over Jet’s job losses, have stopped the government from rescuing the airline…

You started your career as an investment banker but now are in retail… I started in corporate finance and M&A. So, I did a lot of IPO work. Then, I transitioned to consumer product and retail. I covered many consumer product, retail and FMCG companies. After that I joined Siam Makro in Thailand and worked out of there for a year and a half before moving to India. Why did they choose a different name – LOTS – for India rather than going with Makro, which is well known? We wanted to come into India with a new identity, a new brand, while keeping the essence of the host business, which was wholesale. In Thailand, we are in wholesale, so that’s why we called it LOTS Solutions, so that the…

For more than 20 years, Bob Williams, CEO of Burns Entertainment, has matched brands with celebrity endorsers. (Among his deals: securing the actress Mila Kunis for the liquor brand Jim Beam and signing the NBA star Steph Curry with Degree antiperspirant.) Williams spoke with HBR about how companies react when an endorser is caught up in a scandal. Edited excerpts follow. How much do companies worry about endorser scandals? Twenty years ago, the level of worry was one on a 10-point scale. Today it’s eight. I mark the change at 2003, when Kobe Bryant was charged with sexual assault. [Editor’s note: The charges were dismissed; Bryant publicly apologised and settled a civil suit.] Until then A-list celebrities had an aura of invincibility. Afterward advertisers began looking differently at the endorsement…

THINK ELON MUSK, Satya Nadella, Sergey Brin, Mukesh Ambani, N. Chandrasekaran, Anand Mahindra. They, and a few other top honchos of India Inc., have all redefined stamina, which reflects in the long hours that they manage to put at work, hours that show up in their productivity and success of companies that they head. While their entire focus is on the businesses they run, they all are conscious about the need to maintain good health. So, what differentiates these leaders from, shall we say, the lesser mortals who, too, log in long hours at work? Consider Dr. B.S. Ajaikumar, Founder-CEO of HealthCare Global, who spends most of his time treating cancer patients and whose thin frame and quick strides on stairs (he avoids the elevator) belie the 13-plus hours that…

Sitting at the office desk at least eight hours a day, five days a week, staring at all sorts of displays most of the time (PCs, phones, tabs or even televisions) and gorging on wrong foods and drinks make it difficult to stay healthy. Artificially lit, air-conditioned cubicles or open plans do not help either as there is little exposure to natural light and fresh air. Depending on the workload, many people would not even venture out for a much-needed lunch break, neither do they spend time beforehand on preparing a healthy mid-day meal. What we see is minimum movement along with a great deal of slouching, slumping and straining in front of our screens – a sedentary routine that will soon lead to health hazards in the form of…

LET US ADMIT IT. There is nothing more frustrating when our smartphones, laptops or tablets (yes, even the premium Apple products) slow down, freeze and start crashing. Life in the slow lane is unenviable when the world is getting ready for super-fast 5G devices and tech giant Google is reportedly developing a ‘never slow’ mode for its Chrome browser. One way out is to replace your old device with a new one, but even flagship gadgets with the best processors are not immune to lagging, especially when you are using too many apps or storing too many files. Before you give up on your current device because its speed and performance have gone down, try our tips to find a suitable fix. Clean up: Make it a habit to clear…