Innholdsfortegnelse for 14-Jun-20 i Business Today

Reforms cannot have start and end dates. They are a continuum. But often, depending on what’s keeping the government at the Centre busy, that continuum tends to slow or stall. This regime has also had its moments of excitable bursts such as IBC, RERA, a hurried GST, and long stretches of distraction. India needs dream reforms to crack open the ossified corners of the economy. In financial services, to realise the ₹100-lakh crore infrastructure spend, there is need for development financial institutions and a robust debt market. Overdependence on banks, who borrow short term to fund 25-30-year-long infrastructure projects, causes massive asset-liability mismatch and is fraught with danger. This is evident from banks’ NPA pile in areas such as power, telecom and real estate. If India has to fulfil its…

The road to fiscal consolidation is never easy. It is, in fact, fraught with serious economic consequences. For instance, the Centre’s fiscal deficit was 2.5 per cent of gross domestic product (GDP) just before the global financial crisis hit the world in 2008. Government stimulus pushed it to a high of 6.5 per cent in FY10. It took almost a decade to bring it to sub-4 per cent – it was 3.33 per cent of GDP in FY20, far higher than the 2.5 per cent in FY08. And there is no likelihood of it coming down to 3 per cent any time soon. Similarly, the Uday bonds scheme for the power sector — state governments took over 75 per cent of discoms’ debt and pay back lenders by selling bonds…

If you thought Mukesh Ambani and Mark Zuckerberg sat across a table, assisted by a battery of experts, to frame the Facebook-Jio deal, you are mistaken. Ambani’s twin children Isha and Akash led talks for sale of a stake in Jio Platforms (JPL), flying down multiple times to Facebook headquarters in Menlo Park, California, for negotiations. The senior Ambani was given the minutes of the negotiations by the children. The details were shared often at dinner time in Antilla. The stake sale is a step towards transforming the business empire founded by late Dhirubhai Ambani as a yarn trading company in Mumbai’s Masjid Bunder about 63 years ago. One aim is to rid Reliance Industries (RIL) of a bulk of the massive ₹3.36 lakh crore gross debt accumulated to fund…

GOVERNANCE SANJEEV SANYAL, PRINCIPAL ECONOMIC ADVISOR, GOVERNMENT OF INDIA Ensure contract enforcement and rule of law. Government and judiciary will have to work in partnership. The government, in partnership with judiciary, has to make the judicial system work, especially lower courts, where 80 per cent of cases are stuck AGRICULTURE DR. ASHOK GULATI, INFOSYS CHAIR PROFESSOR FOR AGRICULTURE, ICRIER Abolish Essential Commodities Act for all commodities barring rice and wheat Suspend APMC Act for at least two years, if it cannot be done permanently. Arhtiyas (commission agents) exploit farmers and buyers FINANCE ABHIJIT SEN, ECONOMIST AND MEMBER, 14TH FINANCE COMMISSION Putting conditions on states to borrow more is a bad idea. Most have to do with ease of doing business, which are so difficult to measure. There will be so…

It’s a fight for survival now and I hope youngsters don’t lose heart,” says a leading angel investor, who has been spending a lot of time these days “trying to boost the morale” of start-up founders of his portfolio companies. Last year, the government released a report on how India has the potential to create $1 trillion of economic value from the digital economy by 2025, up from the current $200 billion. Nearly 50 per cent is expected to come from new digital ecosystems in sectors such as financial services, agriculture, healthcare, logistics, e-governance and others. The virus outbreak has, however, thrown a spanner in the country’s growth story. Though $1 trillion looks like a distant dream, timely changes in policy and subsequent implementation can still do some damage control.…

What has been the impact of lockdown on the Indian pharmaceutical industry? The industry is not at pre-pandemic levels of capacity utilisation. On an average, we are at the 60-70 per cent mark at the moment. We continue to maintain adequate inventory, despite the challenges in import and export due to delays at airports and ports across the country. Did IPA member companies see a surge in business? How has the industry tackled lockdown-linked disruptions? There has been increased demand for active pharmaceutical ingredients (APIs) and sales in a few markets such as the US, Europe and Russia have been good. Demand in India has dropped a bit due to the lockdown. Several companies have innovated to tide over the crisis – one example is the readiness kit we have…

Top large-cap, mid-cap, small-cap funds giving one-year returns of -8,09%, -2.31% and -7.62%, respectively Bottom large-cap, mid-cap and small-cap funds giving one-year returns of -29.26%, -27.52% and -36.06%, respectively Worst-hit sectors are banking, NBFCs, services, capital goods, real estate and automobiles NBFCs with heavy exposure to SMEs and personal loans to underperform Sectors to outperform include pharma, FMCG, stock exchange, TV media, mobile telecom, cement & steel, hcvs and specialty chemicals Even within sectors, performance of companies varies widely…

G.V. Prasad, Co-chairman and Managing Director of Dr. Reddy’s, is a passionate nature photographer and loves nature-watching. “I like to watch nature, particularly bird watching,” says Prasad. Even the lockdown has not proven to be a hindrance as some of the regular visitors to his verdant garden at his home in Hyderabad’s Banjara Hills include the Indian robin, coppersmith barbet, sunbird, golden oriole, black kite and sometimes a kingfisher. His Sony Mirrorless, armed with 200 to 600 zoom lens, ensures they stay back. Photography piqued Prasad’s interest for the first time as a 12-year-old when he was gifted a Kodak camera. Eight years later, he was the proud owner of his first professional camera, a Nikon EM. He learnt the nuances of photography on his own and by experimenting. But…

As a banker and finance professional, risk has been an integral part of Mahesh Misra’s career – whether it is lending to individuals and companies or underwriting risks of insuring a person. At first glance, his passion for wildlife photography would seem to be an extension of his risk-taking ability. But Misra — CEO, India Mortgage Guarantee Corporation — does not attribute his passion to his risk-management skills in professional life. Instead, he says, his “inherent interest in photography led him to wildlife as a pleasurable means to use lens work productively.” A passion for that one perfect frame and desire to shoot wildlife at its natural best has taken him to several national parks and sanctuaries such as Ranthambore (Rajasthan), Corbett (Uttarakhand) and Pench (Madhya Pradesh). He has also…

The Centre has raised the borrowing limit for states from 3 per cent to 5 per cent of gross state domestic product This gives states an additional borrowing headroom of ₹4.28 lakh crore The extra borrowing will be linked to specific reforms undertaken by states States can borrow up to 3.5 per cent, or ₹7.5 lakh crore, unconditionally The next 100 bps borrowing amount has been linked to four reform measures The next 50 bps will depend on states' achievements in three of the four reform areas…

One of the problems that agri-business major ITC faced during the initial weeks of the Covid lockdown was labour shortage and limited availability of trucks. Instead of waiting for the situation to improve, the company carried out new supply chain interventions such as multi-point rake movements, loading containers directly from villages and mandis and coastal container movement. Even bag-less supply chain (loose grains) was tried out, says S. Sivakumar, Group Head, Agri and IT Businesses, ITC. For the company, such a crisis might have been temporary, but for Indian agriculture, it remains one of the biggest perennial problems. The ability to ensure remunerative prices to farmers, handling of post-harvest produce with minimum losses, maximising value addition and transporting fresh produce and processed food seamlessly within the country and abroad have…

SP Jain Institute of Management is conducting entire sessions online; students are sent the material in advance, which is then analysed in class; A project evaluation based on video submission of project has also been tried by a professor IIM Bangalore has set up an in-house digital learning committee to train faculty and support staff; it is launching an online synchronous delivery model (students and instructors are online at the same time) for two of its programmes IIM Udaipur is experimenting with a hybrid teaching model, offering sessions combining instructor-led online teaching with a self-learning programme on online learning platform Coursera Education technology firm TalentSprint is working with different IITs and other institutes to develop disruptive programmes in new technologies such as digital health, artificial intelligence and machine learning for…

On April 23, US-based Franklin Templeton announced a decision to wind up six debt mutual fund schemes in India owing to the liquidity crisis in the wake of the coronavirus outbreak. The news rattled investor confidence and, on April 28, five days later, credit risk funds witnessed one of the biggest single-day redemptions – the process of selling units – with assets under management (AUM) falling by ₹5,223 crore. The episode busted the myth surrounding safety of debt funds. A debt fund invests in fixed income instruments such as bonds, corporate debt securities and money market instruments. In fact, credit risk funds (debt funds that mainly invest in low-rated securities giving high returns) saw a 36.53 per cent fall in AUM during April 23-May 20, the latest data released by…

Time to review investments to figure out if you should exit from certain MFs Large-cap and large-mid cap funds are relatively safe bets in long run Look for MFs whose AUMs fall in the mid-segment as these are ‘focussed and nimble’ Small-cap funds may play out over the next two-three years due to past underperformance Identify well-diversified funds with consistent mandate; let fund manager take sector calls SIP best route to invest in MFs; invest lump-sum in staggered manner…

Earlier this month, when billionaire entrepreneur Elon Musk announced the name of his baby with partner Grimes, people were left wondering what it meant, and more importantly how to pronounce it. An alphanumeric code – ‘X Æ A-12’ – pronounced as ‘X Ash A Twelve’ did not exactly seem to be a name anyone would give their child. But with Elon Musk nothing has ever been usual, including his interests. Even as a self-confessed workaholic, Musk’s interests are unique. Space exploration, colonisation of Mars, underground capsule transport and artificial intelligence (AI) hold his interest. As a design maverick, he leads all product designs, engineering and global manufacturing of Tesla’s electric vehicles. His “The Boring Company” fuels his dreams of building public transportation systems, Loop and Hyperloop, through underground tunnels. A…

Has India pressed the accelerator on reforms? On May 12, Prime Minister Narendra Modi set the ball rolling by announcing plans for an Atma Nirbhar Bharat (ANB) or self-reliant India. Over the next five days, in daily briefings, Finance Minister Nirmala Sitharaman explained the broad contours of the plan – a mix of immediate assistance to vulnerable sections of society, easy credit, interest subvention, extension of tax compliance dates, new legislation proposals and more. One word which resonated throughout was the “reform” agenda. What are the reformist components in the ANB plan? In the PM’s own words, self-reliant India will stand on five pillars – a fast-growing economy, infrastructure push, technology-linked systemic changes, young population and a fifth element connecting all the above to revive the cycle of demand and…

RECOGNISE AGRICULTURE AS AN ENTERPRISE Adopt NITI Aayog’s Model Land Leasing Act Make cultivators farm managers by outsourcing services REDEFINE MANDATE OF AGRICULTURE Go beyond food and nutrition security Include generation of raw materials to feed industrial enterprises ADOPT MARKETLED CROP GEOMETRY AND PRODUCT MATRIX Preference to nutrition yielding, job creating and income generating crops Change from only farm activities to farm + on-and-off farm activities (primary + secondary agriculture) ALL POLICIES AND STRATEGIES MUST ADOPT ‘FORK TO FARM’ APPROACH, NOT ‘FARM TO FORK’ APPROACH New market architecture comprising GRAMs (Gramin or rural agriculture markets) and alternative wholesale and export markets Target 2022: 5,000 GRAMs, linking of 1,500 markets onto online platform, $100 billion agri exports REVITALSING OF EXTENSION SYSTEM BY BLENDING MANPOWER AND ICT Transition from government-led to partnership-based…

Neeraj Dubey, a labour law expert, recalls how one of his clients was once issued a notice for not putting spittoons at designated places in his factory. In another case, a factory inspector issued a notice to a businessman for not having enough plants around his factory. “These are the kind of issues over which employers are harassed,” says Dubey, a partner with law firm Lakshmikumaran & Sridharan Attorneys, while arguing for overhauling the Factories Act, 1948. The law is one of the over 200 enacted by the Centre and states that deal with safety, health, efficiency and well-being of people in a factory or production unit. Complying with complex provisions of each of these is nearly impossible. That is why, for decades, businesses have been demanding repeal of most…

SETTING TRANSPORT MODAL-MIX RIGHT The logistics wing under the commerce ministry is set to kick off inter-ministerial consultations for finalising the logistics policy. It aims to optimise the modal mix – roads, rail and water – to bring down transport costs. as against the current share of various transport modes – road (60 per cent), rail (31 per cent) and waterways (9 per cent), the government is aiming at global benchmarks of 25-30 per cent (road), 50-55 per cent (railways) and 20-25 per cent (waterways) WISDOM FROM LOCKDOWN TO TRIGGER CHANGE One of the key findings of the covid-19 empowered group on logistics is the need for eliminating the role of multiple authorities to keep tabs on goods vehicles. this will be incorporated in the proposed policy RELIANCE ON TECHNOLOGY…

With zero revenues for almost three months, and 50 per cent after that, five lakh restaurants are expected to lose up to ₹80,000 crore in 2020 Industry body FHRAI says that without stimulus, there will be a definite closure of at least 70 per cent restaurants and hotels Only four-five large players like Jubilant FoodWorks, that operates Domino’s Pizza and Dunkin' Donuts brands, have reserves to stay afloat beyond three months Even at 20% closure level, over 1.5 million people will lose jobs The restaurants association, NRAI, expects the business to stabilise in 9-12 months after the lockdown is lifted The players are particularly miffed with the government not releasing ESIC funds despite requests…

More online lectures, hybrid models that combine instructor-led teaching and self-learning Roping in nonvarsity instructors on platforms like Coursera for parts of the curriculum Using chats and voice to assess how well thre students are absorbing the content Sharing preparatory material and post-lecture content through short videos and webinars Investing more in new softwares and tracking tools to conduct online exams Investing in faculty training and strengthening it infrastructure at homes of students…

The Mutual Fund Sahi Hai campaign has helped draw hundreds of crores into equity mutual funds (MFs) over the last couple of years. A market downturn coincides with rising retail investments in MFs – something market-men associate with a maturing investor class. However, a consistent fall in MF net asset values (NAVs) after the coronavirus-led market crash has left investors wondering if they have made the right decision. NAVs of equity MFs have plunged up to 36 per cent over one year up to May 19. Should one exit, hold or invest more in the current scenario? Given the virus-led disruptions, many schemes with high exposure to the worst-hit sectors may be in for more pain going ahead. This calls for a review of your investments. We have compiled lists…

MANSI TRIPATHY, VICE PRESIDENT, LUBRICANTS, ASIA PACIFIC MIDDLE EAST REGION, SHELL Q: What was the problem that you were grappling with? A: In my previous organisation, I had taken on a global role for the Gillette-P&G integration, one of the biggest in the FMCG world at $56 billion. “People integration” became an important focus area for me, in addition to getting the acquisition economics right, getting processes integrated and having a road map of next 10 years, to name a few. This involved looking at what the new organisation design will look like, which roles can be scaled, which can be optimised, and the most difficult, who will stay and who will not. I realised I was spending lot of time talking to each individual and prioritising it versus other…