The battle over its shortage will impact India`s social and economic

Transcription

RNI No.35850/80; Reg. No. MCS-123/2015-17; Published on: Every alternate Monday; Posted at Patrika Channel Sorting office, Mumbai-400001 on every alternate Wednesday-Thursday
POWER PSUs
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CRUDE OIL
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INDIAMART
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QUESS CORP LTD
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atercr
May 9-22, 2016
n
`40
The battle
over its
shortage
will impact
India’s social
and economic
growth
From the Publisher
B u s i n e s s I n d i a u t h e m ag a z i n e o f t h e c o r p o r at e wo r l d
Publisher Ashok H. Advani
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Our water crisis has not come upon us suddenly. It has been years in the
making. And every few years, we seem to slip a notch further down.
As in many other civic areas, it is largely a result of bad management. One
just has to remember that other places, ranging from California to Israel
to Dubai and the island city of Singapore, have very much fewer natural
water resources. But they effectively manage what they have, providing
everyone more than enough water. Ironically, even in areas of high rainfall,
ranging from Cherapunjee to Bombay, we suffer basic water shortages.
To think that even the great cities of Mumbai and Delhi cannot provide
clean water 24x7 to all, in the 21st century is a matter of great shame and a
monumental collective failure. There is no issue of technology either. The
Romans were transporting water by aqueducts not hundreds but thousands
of years ago. And at home, hundreds of years ago, even in water scarce
Rajasthan, enlightened Rajas executed public works, which till today are
important sources of water. Our problems are simply a question of terrible
management. Yet we pride ourselves on our managerial abilities, proudly
pointing out the success of our it companies in handling the outsourcing
of all kinds of tasks. And we boast about Jugaad and frugal engineering and
management of industrial processes.
The harsh reality is our governance structures, deny local control and
decisions over such issues. The citizens of our “best run” cities of Mumbai,
Kolkatta, Bangalore and Chennai have limited say over their own civic
issues. Control is firmly in the hands of State governments, which in turn
often look to the Centre or institutions like the World Bank for aid! In the
rural areas the local bodies have even less say, where all decisions are taken
in distant state capitals. Over the years the general public is lulled into a
state of dependency, looking to the government to deal with all issues. And
the states in turn depend on the Centre. The tragedy further is that several
governments have created “missions” to tackle the issue of water, but we
seem to be no closer to a satisfactory outcome.
And yet there also pockets of success, where the local people have taken
matters into their own hands, applied age old techniques and have shown
remarkable performance.
Basic and common sense issues, of pricing and control of essential services
like water and sewage (even should the government choose to bear all
charges) are inadequately thought through, creating a no man’s land, and
hence dwindling supplies and services. One only has to compare the case of
telecoms, where once the legal and financial structure was righted, telecom
services soon became available to the poorest, and at a price that all are
happy to pay. Why should water (or sewage) be treated any differently. And
the world over, the experience over the last 100 years has been that these
can be offered to all, city dwellers and rural folk, at an affordable price.
If the Modi government is able to rethink the issues, and not hesitate to
learn simple lessons from other countries, then apart from alleviating the
misery of millions water could become another “growth area” also creating
thousand of jobs right across the country.
This is not only a challenge, but an issue on which this government, or any
government, deserves to be judged.
We Are On www.businessindiagroup.com
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M ay 9 -2 2 , 2 016
Contents
•
No. 995
u
sanjay borade
COVER FEATURE
28
Muddying the
waters
Water, the life
resource, appears
to be draining out
of our very being
F O C U S u
u
CO R P O R AT E
R E P O R T S INDIAMART
42
IndiaMart
focusses on
expanding its
e-commerce
platform
QUESS CORP
46
Quess Corporation
enters newer
geographies and adds
brands
RUSAN PHARMA
50
Rusan tackles
challenges head on
Losing its sheen
Falling, steadying, stagnating – where is crude oil heading?
38
u4u
MAY 9 -2 2 , 2 016
u
No. 995
•
Contents
R E P O R T
u
Powering growth
52
psus rise to meet the
current challenge thrown
up by the energy sector
u
22
Infotech
66
• T hree rollbacks leave
government red-faced
• A midst drought, Pawar
makes his move
• U P polls beckon politicians
with sops
u
A&M
dlf Retail has set its
ambitions high with the
newest mall
61
Aviation
70
Club One Air plans to double
its capacity
F&B
Editorials
u
8
• E asing entry norms would bring a banking
licence within reach of an aspirant
• It’s time the government acted for the
benefit of industry and the economy
• Disclosures should be such that they help
in taking investment decisions
Business Notes
•Bauxite miners/exporters demand
duty exemption
18
Aviation
70
Books
87
Business Notes
18
Businessmen in the News
14
Column 27
Corporate Reports
42
Cover Feature
28
CSR
73
Editorials
8
Enterprise
76
Executive Focus
82
Executive Track
81
F&B
68
Finance
60
Focus
38
Government & Politics
22
Guest Column
62,72
66
Interview
90
CSR
Letters to the Editor
73
74
Lindstrom launders uniforms
for factory workers
Enterprise
76
68 The founder of YatraGenie
chases a childhood dream
Market News
Uncertainty clouds market movement as
investors wait for positive cues
u
61
Infotech
71
•T
he domestic baby care market
witnesses traction
u
Advertising & Marketing
cam establishes itself in
patient care and education
Niche Business
pico caters to gourmet
consumers with a variety
of products
I N T H I S I S S U E u
71
Health
Smokeless villages are among
Indian Oil’s many initiatives
u
u
Health
u
Mojo Networks launches an
industry-first business model
u
u
sanjay borade
uGovernment &
Politics
palAshranjan bhaumick
S P E C I A L
u
Interview
u5u
11
Market News
78
Newscast
12
Niche Business
74
Panjus Page
26
People
88
Portfolio Talk
80
Selections
84
Special Report
52
Talking to
64
Issue No. 995 for the fortnight May 9-22, 2016.
Released on May 9, 2016
90
MAY 9 -2 2 , 2 016
Listening Post
78
. Dattatreya,
B
minister, labour,
maintains that the
government is
pro-worker
• T he cotton spinning sector finds the
going tough
6
Printed and published by Ashok H. Advani for Business India.
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Letters to the Editor
organisation and the need
to lift it out of the quagmire
of organisational dysfunction. And ‘Challenge before
Mehbooba’ (Editorials, 11-24
April) crafted a practical template for transforming J&K
into a progressive state by
addressing the social maladies and offering economic
remedies for them.
However, governor Rajan’s
focus this time shifted to
liquidity management and
he has introduced a slew
of positive surprises to provide durable liquidity infusion, thereby creating a more
enabling environment for
better transmission of monetary policy by banks across
the markets.
B . RA J ASE K ARAN
SRINI V ASAN UMASHAN K AR
Bengaluru
Nagpur
u
u
Inspiring
‘Tatas’ big move’ (Cover Feature, 11-24 April) was informative, as also timely. The
greatness of India is that it is
able to stand up to pressure
and overcome it. We have to
grow and be able to compete
with rivals like China and
win over them, to become
the greatest and the best economic power in the world.
And, articles such as these can
certainly inspire the nation
to achieve its aspirations.
J ACO B A . SAHAYAM
Thiruvananthapuram
u
Biased, but…!
Appropos ‘Tatas exit’ (Cover
Feature, 11-24 April), permit me to complement you
for the excellent and topical
coverage of Tatas’ exit from
Corus. However, I feel there
was a bias, as reflected in the
total absence of Tatas’ version
on issues raised. There were
bytes from a broad spectrum
of ‘experts’ – all singing in
‘chorus’ that the acquisition
was ill-timed – but, then, by
hindsight, everybody is wise.
Perhaps, a word from Ratan
Tata would have helped. Nevertheless, your presentation
was mature and balanced.
Mumbai
u
Proactive
‘Tatas exit’ (Cover Feature,
11-24 April) was a proactive
commentary on the delicate issue of Tata Steel’s debacle in the UK. It reflected
your concerns for an Indian
u
P . G . K RISHNAMURTHI IYER
A getaway
In “Don’t go overboard’ (Editorials, 11-24 April), it is
stated that lrs was conceived
to enable Indians to remit
money abroad. But I feel it
provides a safe gateway for
money launders.
u
Mumbai
u
Are we ready?
With reference to ‘A new
hunting ground’ (Column,
11-24 April), the threat from
cyber criminals ranges from
vandalism to theft and extortion. Cyberthreat has wide
implications affecting many
aspects of our daily life in
this age of ‘Internet of all
things’. So, the question for
us: how prepared is India to
neutralise a cyber attack?
Bengaluru
This refers to ‘It’s a material
world’ (Special Feature, 11-24
April). Following the meteoric
rise of Baba Ramdev’s fmcg
business, other gurus and faith
leaders are also fast catching
the entrepreneurial bug.
G . K . GARG
Mumbai
Astute
With reference to ‘Setting
the tone’ (Credit Policy, 11-24
April), the cut in the key policy repo rate by 25 basis
points was on expected lines.
A general feeling earlier was
that there was a headroom
available for central bank
to cut the key policy rates
by at least 50 basis points.
Delhi
u
A niche
Apropos ‘Millennial sensei’ (Corporate Report, 28
March-10 April), in the context of doubts raised in
the employability of general, management, science
and technology graduates, I
feel the Globsyn group has
found a niche area in skilling for employability. Wellknown corporates have set up
their own institutes to groom
their in-takes but the rest of
the employers require trainers providing requisite skills.
This is a fertile start-up area
to explore in a growing India.
K . U . MADA
H . N . RAMA K RISHNA
The bug
MAHESH K UMAR
DAYANANDA K AMATH
Kochi
u
SWATI MAYE K AR
Wrong move
With reference to ‘Tatas exit’
(Cover Feature, 11-24 April),
I would say that the taking
over of Corus Steel in the
UK by Tatas itself was a mistake, which the management
realised too late. And, ‘New
dynamics of oil’ (Cover Feature, 28 March-10 April) contained useful information
on exploration, refining, etc,
which the common man
could benefit from. Also,
‘Investing for the future’
(Guest Column, within the
Special Report, 14-27 March)
hit the nail on its head with
the statement that only
social and economic factors
like, education, healthcare,
sanitation, employment, etc,
determine the real growth.
compared to what they were
a few years earlier.
u
Unfair
Mumbai
u
More to be done
The Union minister for consumer affairs deserves appreciation for his directive to
print essential information
on the front and back of
packs of food products from
July 2016 onwards. It was an
anti-consumer practice to
print such essential information in small words/letters
that too many-a-times on top
or bottom of the pack, which
usually went unnoticed/
unread by consumers.
MADHU AGRAWAL
With reference to ‘Interest on small savings slashed’
(Newscast, 11-24 April), I feel
the interest rate cut in small
savings schemes and ppf is a
blow to the common man,
especially senior citizens. The
safest mode of investment
for them is Post Office Savings Schemes, ppf and bank
fixed deposits. And, already,
their interest rates are low, as
Delhi
u
A boost
The fact that home and auto
loans are becoming cheaper
is welcome news! The bold
stance taken by the central
bank is seen as a move that will
boost the slowing economy.
C . K . SU B RAMANIAM
Navi Mumbai
Please address your letters to:
The Managing Editor, Business India
14th floor, Nirmal, Nariman Point, Mumbai 400021.
Fax: (91-22) 2288 3940
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M ay 9 -2 2 , 2 016
Please mention your full name and address
Editorials
Changing financial landscape
Easing entry norms would bring a banking licence within easy reach of an aspirant
R
aghuram Rajan, governor, rbi, needs
to be lauded for coming out with draft
norms permitting banking licences to
be available on tap. True, there are several
conditions to be fulfilled before the licence
is finally received. Also, some of them are
pretty onerous – like the requirement to
have 10 years track record, H500 crore initial
capital requirement, diversified shareholding, screening to be done by a external advisory committee and the three-year hiatus for
the unsuccessful applicant to reapply. However, the guidelines are in line with the earlier guidelines proposed in 2013, which in
turn were based on the recommendations
made by the Financial Sector Reforms Committee, chaired by Raghuram Rajan himself
way back in 2009.
While the committee had debated over
whether the ownership of a banking institution really matters for dispensing credit and
ushering in financial inclusion, the rbi in
the current draft norms has allowed even an
individual having experience of 10 years in
this sector to apply for a banking licence. Of
course, it is a moot question as to how many
individuals would be able to stake claims to
put up H500 crore initial capital. nbfc s, albeit a few, have shown enviable performance in face of adversity. Their
conservative approach has allowed them to
build up sizeable asset base, in many cases
well over H25,000 crore. rbi’s condition of the
group having 10 years experience and a asset
base of at least H5,000 crore would be easily
met by groups such as Murugappa’s Cholamandalam or Sundaram Finance, Larsen &
Toubro or Bajaj. Some of these groups would
also meet with the condition that the nonfinancial business of the groups should not
account for more than 40 per cent of the
total assets/total income of the group. The
last condition would, however, debar some
of the bigger groups.
The conditions of having a non-operating financial holding company, compulsory
listing of shares of the bank within six years
and bringing down the promoter holding,
albeit gradually, to a level of 10 per cent are
reasonable. Of course, these are draft norms – and
the final version may well take some of the
suggestions of the industry. However, the
mere thought of having a banking licence
on tap will remove the halo enjoyed by
some of the existing players. It is true that
some of the existing psu banks may not be
able to cope with the growing competition
from the new entrants and may well have to
embark on overhauling the way in which
business is conducted.
While there will be challenges galore for
existing banks as the new entrants will not
be coming with any baggage and starting
afresh on a clean slate, with the backs to their
wall, some of the psu may well embark on a
transformation drive, quickly. There will be
a lot of whining from the psu banks and the
unions that completion may well spell the
death knell of the ailing banks. But Rajan,
if allowed to continue for another term,
is capable of resisting all pressure, political
or otherwise.
However, the new draft norms could possibly lead to a re-rating of the banking sector as
a whole. The sector which has not been able
to attract the best of talent from the private
sector could see more professionals opting
to make banking as a career of choice. However the need to groom fresh talent will be a
mammoth task by itself. And not many new
aspirants would like to poach talent from
existing banks or get enough response from
entrenched bankers, who are traditionally
trained to look at downside risks rather than
take meaningful risks!
One thing which the rbi however needs
to do is to jettison its thinking that all big
industrial groups are unworthy of running
a bank. The rbi has to realise that there has
been a sea-change in the way business was
done, in the pre-liberalisation era of 1991
and now. Size does matter. And big houses
like, say, Tatas or Mahindras are a lot more
concerned about their reputation than individuals. Using banks as an extended captive financial arm is far more difficult in this
era than it was earlier, thanks to higher
scrutiny by shareholders and heightened
regulatory oversight.
These are, however, small irritants
in
the
context
of
the
changing
financial landscape.
u
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MAY 9 -2 2 , 2 016
[email protected]
Editorials
No more lip service, please
It’s time the government stops thinking and starts taking decisions
T
he 5x20 norm, brought in by Praful
Patel, the civil aviation minister in the
upa regime in 2004, is an ill conceived
rule. Yet it continues to rule the air. It mandates that domestic airlines build a fleet of
20 aircraft and gain five years of domestic
operational experience, before commencing
international operations. The rule has not
only delayed the international flight plans
of domestic carriers such as, Vistara, Air Asia
and GoAir. The same rule would also apply
to any startup airline from India. Yet this
rule doesn’t apply to foreign startup airlines,
like FlyDubai. What is also an open secret in
the trade is that it has put Indian carriers at a
huge disadvantage. The biggest beneficiaries
have been the Middle East airlines like Emirates and Etihad, and of course Singapore Airlines, which have captured 60-plus per cent
of India’s internationl traffic.
At present, industry is divided on the rule.
The incumbents, such as Jet Airways, IndiGo,
SpiceJet and Go Air, all of which (except Jet)
had to wait to start flying internationally,
are fighting for its retention. They argue
that since they had to wait newer airlines
should also qualify under the existing rule,
or they would get “an ufair advantage”. New
entrants Vistara and Air Asia are demanding
its removal. Air India, too recently dropped
its resistance to the rule.
In the coming weeks, the civil aviation
policy is expected to be announced. While it
should have been on the 5x20 rule, strangely
enough, the draft policy has remained
ambivalent about the rule. Perhaps it is not so
strange, after all. This is just another example of slow decision making! Prime Minister
Modi promised to bring back all the black
money, stashed away in overseas accounts,
in 90 days! Then why could this rule not be
abolished in 90 days? This is an executive
decision, in the hands of Cabinet and minister and for which no parliamentary approval
is required. Clearly, the government is in the
grips of bureaucracy, continuously studying
all angles, but not acting on any!
Sure enough, relaxing the rule will lead to
increased competition in the medium term,
especially for incumbents like Jet Airways
and Indigo. But that cannot be a bad thing.
The rule is utterly irrational and serves no
purpose. It cannot be a safety issue, as surely
lives are as precious on domestic routes as
international routes. And the longer term benefits of flying overseas including lower tax on
fuel, improved utilisation of aircrafts, reduction in operating costs and the establishment
of an international presence, will help build
stronger Indian carriers with stronger balance sheets. It is also pertinent to note that
all the carriers from the Gulf and Singapore
also rely heavily on recruiting Indian pilots
and cabin crew. If startup carriers from the
Middle East can fly in with Indian crew, then
surely startup carriers from India can fly out.
Also business should be left free to take its
own decisions. It is no different from saying
that startup companies should be allowed to
export for five years.
Equally bad is that Ashok Gajapathi Raju,
minister, civil aviation, always sounds as if
he is stuck in a time warp. He mouths the
same slogans and homilies that aviation
ministers have been uttering for the last 30
years. Compare his statements with what
Madhav Rao Scindia, as aviation minister
under Rajiv Gandhi, said and they are not
different! Earlier governmens had tried it all.
They have appointed top rate managers from
the private sector like Yogi Deveshwar as
managing director at Air India. And best
chairmen were appointed like Ratan Tata at
Air India and Rahul Bajaj at Indian Airlines.
But inspite of all this experience, Raju, like
all before him, has promised to make Air
India profitable again, despite H40,000 crore
losses. Contrast this with Vijay Mallya’s Kingfisher losing H9,000 crore including interest
on loans!
In the case of all radical governments,
from Margaret Thatcher to Ronald Reagan,
changes were brought about in short periods of time. Manmohan Singh too brought
sweeping changes as finance minister – for
which he is still being praised – within days
of being sworn in! Why can’t pm Modi do
the same, not just in aviation, but in every
other field?
It’s high time the government stops paying
lip service and take decisions for the benefit of
industry and the economy. Or else, we will still
be waiting for change till the next elections. u
u9u
MAY 9 -2 2 , 2 016
[email protected]
Editorials
The ‘disclosure’ conundrum
While disclosures are more than welcome, they should be such that they help in
taking investment decisions
D
isclosures are invariably good; more
so, in the investment world, where it
can help investors to make the right
decision. However, what happens when disclosures, which serve practically no purpose,
are forcibly extracted? Take the case of the latest norms, which came into force from 1 May,
where the mutual fund industry has been
asked to disclose to its unit-holders, the names
of employees, who are drawing annual salaries
of more than H60 lakh per annum. The objective is to let the investors know how much
money amc employees are making. One fails
to understand how this would help investors
to take investment decisions and in what way
this would benefit them. sebi, apparently, is
confused over the issue.
One invests in mutual fund schemes to
generate higher and better returns. The normal practice is that one invests in the fund
that, one believes, will give higher returns
over a period of time. Now, if the fund has
given higher returns, how does it matter
what salaries the fund managers have drawn,
as these returns are given only after the salaries have been paid to the fund managers
and other employees of the amc. Does sebi
think that the amc, which charges the least
fees, is better equipped to manage the funds?
Such information elicited from amcs serve
little purpose.
A fund manager who manages X amount
may be drawing Y as salary. On the other hand,
a fund manager managing 10X funds may be
drawing 2Y salary. However, the way sebi has
asked amcs to disclose the information seems
to imply that the person who is managing X
is doing a better job. Instead, sebi should ask
mfs to give other information – such as the
amount an average fund manager has managed in the previous year and the kind of
returns he has generated, as also the risks he
may have taken. Salary figures, without other
relevant information, do not serve any meaningful purpose. Right now, the mutual fund
industry is disturbed by the fact that it has
been asked to disclose this information.
But, of course, this is more of a knee-jerk
reaction. One will soon get used to this and,
going forward, this may not be the information many investors would seek. Nowhere in
the world have asset management companies
been ask to disclose details of salaries being
paid to a company secretary or a member of
the support team. In some of the developed
countries, voluntary disclosures do exist,
about the fund managers’ remuneration but,
even there, the members of the support team
are spared.
In India, historically, under the Companies Act, we also make disclosures about
salaries being paid, on the ground that ordinary shareholders have a right to know how
much the company they own is paying.
But it is not clear how many shareholders
even know what salaries are being paid? Nor
do they make investment decisions based
on the salaries drawn by the top management. What investors want is information
on the growth of the companies; and those
companies, which report higher growth,
become investors’ favourites. This should
be the case with amc s too. Also, investors in a mutual fund do not really have
the same rights legally, as the shareholders
of a company.
While sebi wants more disclosures and
transparency, even two decades after the
industry has been opened up for the private sector, we still do not know how many
unique investors in mutual funds there are
in the country. In the era of technology and
kyc, this basic information should be handy.
Instead of giving this basic but important
information, which can help the industry to
grow, sebi is going after disclosures which are
meaningless. Recently, the government of
India had disclosed the details of it payers,
along with the income slabs they fall into.
Similarly, it’s high time sebi disclosed the
tally of unique investors in the country and
which part of the country they come from.
While amcs are being asked to disclose
the salaries of their staff, the same rule is
not being applied to insurance companies
and even the pms industry. Shouldn’t there
be equal provision for disclosures for all asset
classes? While disclosures are more than welcome, they should help in taking investment
decisions rather than burdening investors with information that is not relevant. u
u 10 u
MAY 9 -2 2 , 2 016
[email protected]
Listening Post
B U S I N E S S I N D I A ◆ T H E M AG A Z I N E O F T H E C O R P O R AT E WO R L D
Floodgates open
Integrated
approach
Investors/bankers are quite enthused
over the recent draft paper, involving the issue of licences to set up
universal banks. While Raghuram
Rajan has fulfilled his earlier promise of permitting bank licences to be
virtually on tap, bankers feel that
the high initial capital requirement
of R500 crore will see more companies tapping the capital markets
soon. Some they feel are likely to tap
the markets in 2017 include Ujjivan,
Dhanlaxmi and NBFC KU Finance.
Some payment banks could also be
looking at shoring up their capital,
by accessing capital markets soon.
Boost in value
Abhay Soi has a reputation for turning around hospitals. After uplifting
Delhi-based B.L. Kapoor Hospital,
Soi has been managing Mumbaibased Nanavati Hospital over the
last two years.
Based in the
suburbs, this
hospital
has
seen
marked
improvement
after Soi took
active interest
in it. Rumours
are that Soi is
now contemplating raising
R500-700 crore from private equity
investors. Given the rich valuations
received by Hyderabad-based Quality CARE, a group which was earlier
in the year acquired by Dubai-based
private equity group Abraaj at an
estimated valuation of about R1,700
crore, analysts expect a similar
valuation for Nanavati Hospital too.
Spreading wings
Patanjali Ayurveda, Baba Ramdev’s
R5,000 crore, FMCG empire, which
sells everything from wheat biscuits
to bars of soap, and from ayurvedic
medicines to muesli, is planning to
foray into the dairy business, to capture a share of India’s R40,000 crore
dairy industry. According to reports,
the company is setting up a dairy
facility for cow’s milk in Ahmednagar, Maharashtra, and is in talks to
set up facilities in other states too.
On the other hand, dairy product
maker Amul, is believed to be foraying into the biscuit segment and is
test marketing the product in Gujarat. It is expected to eventually market the product on a pan-India basis.
Paper, no more
Century Textile & Industries, once
considered a bell-weather stock on
the BSE, is contemplating the sale
of its pulp & paper division, says a
banker. The division has two units –
one, at Nainital in Uttrakhand and
the other, in Bharuch, Gujarat, both
of which produce pulp, writing paper,
tissue paper and multi-layered packaging board. It accounts for roughly
one-fourth of the company’s total
income of R8,034 crore. In 2016-17,
the division was the largest contributor to the parent’s EBIDTA (R192 crore
in a total R517 crore). One of the reasons for the divestment, according to
the banker, is to pare the company’s
huge interest burden, which stands at
R568 crore. After the divestment, the
company will be left with the textile
division, cement (where it has a significant capacity of nearly 13 million
tpa) and real estate divisions. The
problem, according to the banker, is
not so much the valuation, but the
task of finding the right buyer. Currently, save for TNPL, there are no
other likely bidders, who would take
more risks to raise capacities.
u 12
◆
11 ◆u
m AY
ay 9 -2 2 , 2 016
M
The
Mumbai-based
WestCoast
group, which started its aquaculture
journey way back in 1997 with a single shrimp hatchery in Gujarat, has
emerged as an integrated player with
a presence across the value chain
from hatchery to farming and processing. The R600-crore company,
growing at a CAGR of about 15 per
cent in the last five years, is aiming
to double its turnover in the next
four years. It boasts three shrimp
hatcheries (two in Gujarat and one
in Karnataka) and does shrimp farming in Gujarat, Maharashtra and Karnataka, using the contract farming
model. It also has three processing
units (two in Surat and one in Kakinada, AP) with a total capacity of
18,000 tonnes per annum.
Currently, it exports almost 98
per cent of processed shrimps to
overseas markets such as the EU,
the US and Japan. Besides, the company is also engaged in the trading of fish feed, where it represents
a Thailand-based company in India.
Lately, backed by 2,000 employees, it
had also ventured into a path-break-
ing project – the cage culture. The
company started the practice last
year at a 1,200-hectare water spread
area at Varasgaon reservoir in Maharashtra. It breeds Tilapia and Pangasius species in this reservoir. The
company plans to scale the project
to 2,000 cages by 2018, which will
provide it with the much-needed
enlargement of its portfolio and help
it enter into the potential domestic
fish distribution business in future.◆
[email protected]
Newscast
G O V T. & P O L I C Y
US keeps India on
watch list
The US has retained India
on its priority watch
list for lack of sufficient
measurable improvements
to the ip (Intellectual
Property) framework, despite
engagement on intellectual
property protection and
enforcement by the Indian
government.
DGCA releases draft
guidelines
In its efforts to regulate
operations of unmanned
flying devices like drones,
which are increasingly
posing challenge to
regulators and personnel
manning airspace, dgca
(Directorate General of Civil
Aviation) has come out with
draft guidelines for civil use
of such machines.
on cutting down greenhouse
gas emissions.
Fresh norms for PSU
buybacks
The Department of
Investment and Public
Asset Management (dipam)
is likely to issue fresh
guidelines this year for
dividends, buybacks,
bonuses and restructuring of
state-owned companies after
a notification, issued by the
government, gave it wideranging responsibilities.
EPF interest rate
increased
The finance ministry
has agreed to increase
interest rate on provident
fund deposits to 8.8 per
cent for 2015-16 from
the 8.7 per cent decided
by it earlier. The Central
India could end up
as importer of sugar
India could end up as
a net importer of sugar
in 2016-17 (crop year).
The current drought-like
conditions are expected
to reduce sugarcane yield,
thus affecting sugar output
in Maharashtra, the largest
sugar-producing state in the
country. Maharashtra, along
with other states in India,
has been badly affected
by the El Nino weather
conditions. Many small-scale
sugarcane growers in the
state are unable to cultivate
the crop for the next sugar
crop year that starts
in October.
Smallest coffee crop
in 19 years
Coffee production in India
is set to tumble to a 19-year
SC for setting up of
bad loans panel
The Supreme Court has
asked the government to
come up with a proposal
for the appointment of a
committee to look into the
issues raised regarding bad
loans and huge write-offs
by public sector banks. The
court was hearing a public
interest litigation petition
filed in 2003 by the Centre
for Public Interest
Litigation against hudco,
which has since been
widened to include rbi,
banks and other financial
institutions.
Paris climate
agreement to take
time
The government has sought
time to implement the Paris
climate agreement, saying it
should not be done in haste
and all countries should
be allowed to follow their
national processes. India
has signed the deal along
with more than 170 nations,
marking a significant step
that has brought together
developing and developed
nations for beginning work
as against 645,000 tonnes in
2014-15. Imports in 2015-16
stood at 454,000 tonnes,
compared to 442,000 tonnes
in 2014-15.
Drought may
impact coconut
production
The prevailing drought
conditions are likely to
affect domestic coconut
production, which is
expected to fall by 5 per
cent this year. According to
the Coconut Development
Board, the estimated figure
of production in 2015-16
crop year (July-June) would
be 19.44 billion nuts, against
20.44 billion nuts procured
in 2014-15.
Cotton output seen
at 34.1 million bales
Production of cotton for the
2015-16 season (which began
on 1 October) is estimated to
be lower at 34.1 million bales
(of 170 kg each), according
to the Cotton Association of
India (cai). For 2014-15, the
cotton output stood at 38.28
million bales.
Centre to release
pulses to check
price rise
Board of Trustees of epfo
(Employees Provident Fund
Organisation) had decided
on 8.8 per cent even earlier,
but the finance ministry had
approved only 8.7 per cent
interest on pf deposits citing
lower earnings. Labour
minister Bandaru Dattatreya
announced the decision to
raise interest rates on the
day employee unions had
called nationwide protests
against fixing interest rates
lower than the 8.8 per cent
decided by the retirement
fund body epfo as well as
8.75 per cent paid for the
previous fiscal.
low due to dry weather.
The output will decline
at least 30 per cent in the
harvesting season starting
from October. Coffee crop is
estimated at 245,000
tonnes – the lowest since
1997-98 – according to
Coffee Board data.
Natural rubber
output falls
Natural Rubber production
in 2015-16 has dropped by
13 per cent, while imports
are up by 3 per cent, says the
Rubber Board of India. The
total rubber production in
2015-16 was 563,000 tonnes,
u 12 u
MAY 9 -2 2 , 2 016
The government has decided
to release 10,000 tonnes of
the staple, mainly tur and
urad, from the buffer stock,
to ensure its availability
at reasonable prices. The
decision comes days after
the Wholesale Prices Index
reported close a to 35 per
cent rise in the prices of
pulses.
BBB to start
selection of PSB
MDs soon
The newly-constituted
Bank Board Bureau ( bbb)
will soon start the process
of selection of managing
directors for public sector
banks, a task handed out to
it by the government for fair
and transparent selection
of top level banking
positions. Besides helping
the government select
the heads of public sector
Newscast
banks, the bbb is also tasked
with helping lenders in the
capital raising plans.
India appeals
against WTO solar
ruling
The government has
appealed to the World Trade
Organisation’s highest court
– the appellate body – to
dismiss a lower panel ruling
that effectively struck down
the government’s local
content requirements for
solar cells and modules for
promoting renewable energy
following a dispute raised
by the US.
Dumping duty on
Chinese tyres called
for
The Automotive Tyre
Manufacturers Association
(atma) has renewed its
call for imposition of antidumping duty on tyres
from China, which are
flooding the Indian market.
“The government needs
to take urgent measures
to halt the sharp surge in
imports of these cheap
tyres,” said K.M. Mammen,
chairman, atma. “Tyre
manufacturers in India have
made major investments
towards greenfield and
brownfield projects for the
manufacturing of stateof–the-art radial tyres, but
indiscriminate imports
from China are queering
the pitch for domestic
manufacturing”.
Exports fall 16 per
cent in 2015-16
Exports have fallen by
15.85 per cent in 2015-16 to
$261.13 billion, from $310
billion in 2014-15. It stood at
$314 billion in 2013-14. The
Commerce Ministry said the
continuous fall was due to
the global slowdown in trade.
R E G U L ATO R S
Peer lending under
regulation soon
The Reserve Bank of
India (rbi) has said that
it will soon come out
with a concept note on
peer-to-peer lending
(p2p) and the contours
of its regulations will be
finalised in consultation
with market regulator,
Securities Exchange Board
of India. p2p lending is the
practice of lending money
to individuals or businesses
through online services that
match lenders directly with
borrowers. p2p lending has
been engaging the
attention of financial sector
regulators globally for quite
some time.
Level playing field
sought for high
frequency trades
sebi has sought an
explanation from the
National Stock Exchange of
India (nse) on a report by
the regulator’s constituted
expert panel, which had
recommended action against
the exchange for violating
norms of fair access. The
issue first came to light when
a whistle-blower wrote to
the regulator, alleging the
nse’s systems were being
misused, and that some
people consistently enjoyed
advantages to the detriment
of others.
TRAI for auctioning
entire 70 MHz
The Telecom Regulatory
Authority of India (trai)
has reiterated its views
on auctioning spectrum
in the 700 mh z band,
suggesting the Department
of Telecommunications
(DoT) put the entire
available spectrum under
the hammer. The DoT had
asked trai to reconsider its
recommendation regarding
SEBI to seek help to
frame rules for HFT
sebi plans to hire an external
agency to advise it on ways
to mitigate risks arising from
the increasing use of high
frequency trading ( hft) in
the stock market. According
to data available with sebi,
the turnover from hft,
as a percentage of overall
turnover in the cash equity
segment, has gone up from
25 per cent in 2011-12 to 42
per cent in 2015-16.
Telcos accused of
running cartel
To prevent possible
manipulations in trading
activities, sebi has said
that there should be a
level-playing field for
high frequency trades and
cautioned that strict action
will be initiated against
violations.
SEBI seeks NSE’s
reply
the auctioning of the entire
available quantity of
70 mh z spectrum in the
700 mh z band.
trai has told the Supreme
Court that telecom
companies were running
a cartel with scant care
for customers facing the
problem of call drops. The
regulator also told the apex
court that the firms were
not upgrading infrastructure
to ensure disruption-free
calling and justified its
decision to impose
a penalty.
CO R P O R AT E S
First small finance
bank kicks off
operations
Jalandhar-based Capital
Small Finance Bank, India’s
first small finance bank,
has commenced operations,
initially with 10 branches.
The bank has been set up
by converting the erstwhile
Capital Local Area Bank. It
was one of the 10 applicants
to be given approval for
setting up small finance
banks by the Reserve Bank
of India in September last.
Reliance Jio cable
gateway opens in
Chennai
Reliance Jio has set up its
own gateway in Chennai as
part of a new undersea cable
consortium that includes
Sri Lanka’s Dialog Axiata,
the UAE’s Etisalat, Oman’s
u 13 u
MAY 9 -2 2 , 2 016
u
L A N D M A R K S u
Appointed Pratyush
Kumar, president, Boeing
India, as chairman,
American Chamber of
Commerce in India.
u Silvia Tallon, as Reebok
India chief.
u Sunil Kumar Thakur, as
country manager, bmc
Software India.
u Kingshuk Basu, as new
ceo, Conscious Food.
u A shok L avasa (ias: 1980),
as secretary, department
of expenditure, ministry
of finance.
u R ajeev Sharma , as
chairman & managing
director, Power Finance
Corporation.
u
Omantel, Malaysia’s Telekom
Malaysia and the UK’s
Vodafone. The consortium’s
8,100-km cable system has a
landing station in Chennai,
operated by Reliance Jio and
another one in Mumbai,
operated by Vodafone.
HDFC to divest stake
in insurance arm
Housing Development
Finance Corporation ( hdfc)
has said it intends to sell up
to 10 per cent stake in its
life insurance arm by way of
an initial public offer. hdfc
holds 61.3 per cent in hdfc
Standard Life Insurance Co
at the moment. It also said
that it intended to retain
the life insurance arm as
its subsidiary even after the
public offer.
Power PSUs to raise
funds through
bonds
Power sector companies
ntpc, Neyveli Lignite
Corporation, Power Finance
Corporation, Power Trading
Corporation and Rural
Electrification Corporation
will launch masala bonds
worth $1 billion in the UK
to fund renewable energy
projects. Masala bonds
are rupee-denominated
debt instruments issued to
overseas buyers.
u
B u s i n e s s I n d i a u t h e mag a z i n e o f t h e c o r p o r at e wo r l d
A
irtel Business and gbi,
a global service provider
that owns and operates a multilayer carrier neutral network
connecting the world to the
Middle East, have announced
a strategic partnership which
will increase Airtel’s direct
reach to multiple new countries in the Middle East and
will offer gbi’s partners better connectivity. “We are
committed to providing the
best in class service experience to our customers in
the region and globally. This
new partnership with gbi
is a significant step in that
direction. gbi being a key
network asset for the region
will not only improve our
customers’ experience and
reach but would also enable
gbi’s customers to experience a seamless extension
on the Airtel global network
spanning across 50 countries
across five continents,” said
Ajay Chitkara, director &
ceo, global voice & data business, Bharti Airtel Ltd. The
partnership is in line with
the long-term strategy of Airtel Business, considering the
long-term potential for the
Middle East market. u
S
audi Aramco, Princess Nourah University
(pnu) and Wipro Arabia Limited, a subsidiary of Wipro Limited, a leading information technology, consulting and business
process services company, recently inaugurated the Kingdom of Saudi Arabia’s first all
women Business & Technology Park. The
project is expected to create nearly 21,000
jobs for Saudi women over a period of 10
years. “Wipro has always extended support
to the cause of women empowerment and it
is our endeavour to foster an environment
that encourages and enables more women
to participate in business and tap their
leadership potential,” said Azim Premji,
chairman, Wipro. “We are happy to be a
partner in this initiative which strongly
aligns with our values”. The park will be
developed in the iconic pnu premises, and
will include entrepreneur incubators, daycare centres and a one-stop co-ordination centre for government transactions. u
A
fter a decade since its
inception, Parle Agro’s
Appy Fizz has been repositioned as a very bold, memorable and a cult brand. It has
also associated with Priyanka
Chopra as its new brand
ambassador who comes on
board to highlight the brand
values of the new Appy
Fizz. “Today consumers are
increasingly becoming conscious of what they are consuming and Appy Fizz has
always maintained an aspirational imagery. Keeping
this in mind, we have repositioned the brand to up its
attitude and become edgier,
bolder and sexier! Priyanka
as a brand ambassador seamlessly fits this persona. We
strongly believe that this collaboration and the new look
of Appy Fizz will help reinforce the drink’s command
and remain a leader in what
will be an approximately
3000cr fruit-based carbonated category in five years,”
says Nadia Chauhan, jmd
& cmo, Parle Agro. The new
image is personified with a
new campaign imbibing the
values of being mysterious
and intriguing, exuberating
confidence and the right attitude which is highlighted in
its visual identity, communication and packaging design. u
u 14 u
M AY 9 -2 2 , 2 016
h
&m, the international
fashion retailer, known
for fashion and quality at the
best price in a sustainable
way, celebrated the grand
opening of its 4,000th store
across 61 countries at dlf
Mall of India. “This is truly a
landmark moment for h&m,
to have the 4,000th store
launch in India, the biggest
flagship that the country has
seen yet, at a good location.
We are determined to bring
a unique fashion experience
with every store opening and
are confident that our customers will enjoy shopping
at h&m in dlf Mall of India,”
said Janne Einola, country
manager, h&m. Spread over
37,000 sq ft, the new location
has four floors, with each
floor dedicated to apparel
and accessories for ladies,
men, teenagers and children
respectively. The flagship will
also feature sections for lingerie, h&m Sport, h&m Mama
(for expecting mothers) and a
plus-size collection, h&m+. u
G
lobal shipping and logistics firm Maersk, which
has already invested about
$800 million in India, is looking at expanding its footprint
in the country. “We are keen
to invest and to grow. We
invested $1 billion in acquiring a group of 11 ports based
in Spain... that is illustrative
of our appetite for growth...
We have just announced an
$800 million investment
in Tangier... We are keen to
do something like this over
here,” said Julian Michael
Bevis, senior director, group
relations, South Asia, Maersk Line India Pvt Ltd.
India, especially with its
recent focus on infrastructure, is a strategic market for
the group and it is scouting
for ‘strategic opportunities’
at the right time with a market driven tariff regime, said
Bevis. Also, it was for the first
time that the government
was so keen to address the
problems of the private players, investors and others. u
improving life for the communities we serve and by
promoting management of
an individual’s health and
wellness,” said Mohammad. “The two organisations also share a common
interest in providing coordinated,
high-quality
healthcare for their patients,
whether they are residents
or visitors. This pilot gives
us an unprecedented opportunity to better understand
how we can coordinate the
continuity of care for these
patients and dramatically
improve their health outcomes – contributing significantly to their increased
health and wellness and
making a positive difference to the health system
as a whole.” This agreement
is viewed to be significantly
beneficial in view of the rising burden of chronic disease in both countries, and
will enable transparent and
seamless healthcare delivery in both countries. u
funding and aims to impact
people not only in India
but also Africa and South
East Asia. In a short span of
time, the company backed
by its packaged solutions,
has managed to run 14 projects involving a total funding raising of around `1.4
crore. “The market in India
is still unorganised and the
very concept of crowd-funding is nascent. At FuelADream, we are focussed on
the developing markets and
look to both disrupt the traditional ways of raising funds
here and create an alternative
mode of funding,” says Ranganath Thota, founder
& ceo, FuelADream.com,
which raised $250,000 in
an initial round of funding
from individual investors. u
A
N
o doubt online travel
agencies have made
travel planning much more
convenient. However, often
standard travel packages
offered fail to meet our personalised needs and expectations. In an attempt to bridge
this gap, the New Delhibased Trans India group
has launched a travel portal, Bigbreaks.com recently.
Through this online venture, the 25-year old group
which owns two successful
brick and mortar travel entities, Trans India Holidays and
Trans World Travels, offers
customised travel packages
within India and from India
to exotic international destinations. Bigbreaks.com has
begun as a b2c portal, but is
soon going to be launching
its b2b services as well. Also,
keeping pace with the increasing usage of mobile technologies, the company has
recently launched its Android
App. “Having a robust brick
and mortar presence to support online, allows us to
provide a level of customisation that no other online
travel site can provide. This
will assist clients seamlessly
when it comes to requests for
visas and such other ancillary services,” says Kapil
Goswamy, ceo & managing
director, Trans India group,
which is looking to double its revenue to `200 crore
during the current fiscal. u
pollo Hospitals and
the
Ontario,
Canada-based William Osler
Health System have signed
an historic MoU, formalising a unique partnership
between the two organisations that aims to positively
impact the health and wellness of the patients they
serve. The agreement, signed
in Delhi recently by Anupam Sibal, senior consultant
and group medical director
of Apollo Hospitals and Naveed Mohammad, vp medical
affairs, William Osler Health
System and lead physician
of Osler’s Global Health Program, brings together two
leading healthcare organisations in efforts to improve
health outcomes across the
world. “We share a vision of
C
rowd-funding is becoming an increasingly popular way to raise money for
innovative ideas and social
causes. After showing an
exponential growth in the
US and the EU in the last few
years, the $34 billion global
market for crowd-funding is
making its way to Asia. Incorporated in June 2015, Bangalore-based
FuelADream.
com is a crowdfunding platform and marketplace for
people and organisations
that aim to raise funds for
creative ideas, causes, charities, events and community
led activities. However, the
initiative has recently been
focussing on the ideas and
charities segment of crowd-
u 15 u
M AY 9 -2 2 , 2 016
Visiting
L
ast fortnight, sap, the €20.8
billion enterprise application software giant, celebrated
its 20th anniversary in India
in style. It announced its apj
(Asia Pacific Japan) Q1 financial
results from India instead of its
apj headquarters in Singapore.
Explaining the move, Adaire
Fox-Martin, president, sap, Asia
Pacific Japan, said, “To acknowledge sap ’s 20th anniversary in
India and the contribution of the
6,500-strong India Labs organisation in particular, who have
D
anish
wind
turbine
blades maker lm Wind
Power commissioned its second manufacturing facility in
India at Halol near Vadodara
with an investment of €25
million (about €190 crore).
“We are very optimistic
about the growth of the wind
energy sector in India with
the government setting a target of 60 gw by 2022. We
have over 20 years of experience of operations in India,”
said ceo Marc de Jong. With
the commissioning of the
new plant, lm Wind Power’s
total installed capacity in the
country has increased to 1.6
gigawatts (gw) per annum,
which includes 1 gw from
its existing facility at Dabaspet in Karnataka. Buoyed by
the government’s emphasis
on renewable energy sources
for
generating
electricity, the company has set an
ambitious revenue target of
€1,200 crore for 2016 against
€760 crore in 2015. u
M
contributed not just to sap ’s success but to customer outcomes.
We have huge intellectual property here. This is an opportunity
for them to engage with the customer-facing field team which is
at the other end, thereby helping them understand the outcome of what they develop here,
their little role and how that
role contributes to creating the
whole customer outcome.” apj
notched revenues of €704 million, contributing 15 per cent of
sap ’s global revenue of €4.7 billion in Q1. sap surpassed €3 billion in revenues in apj in 2015
due to strong growth in cloud
and software revenue. u
G
ermany-based
ceramics company
Villeroy & Boch is eyeing the
Indian market. The company
will start selling its products
online in India in the next
12-18 months. Set up in 1748,
Villeroy & Boch, sells bath &
wellness and tableware products. It has been operating
in India through a joint venture arrangement with Genesis Luxury for the past three
years. “We are considering
ondelez India, part of
Mondelez International
Inc which makes Cadbury
chocolates, recently inaugurated its plant at Sri City in
Andhra Pradesh. This is its
seventh plant in the country. This is the largest facility
in the Asia Pacific region and
will produce 60,000 tonnes of
Cadbury Dairy Milk Chocolate. Daniel Myers, executive
vice-president, integrated supply chain, Mondelez International, said the facility,
apart from catering to domestic demand, will also export
products to the Asian market
once all phases complete. “We
have already invested in 40
efficient and flexible manufacturing ‘Lines of Future’ globally and are building our ‘Sites
of Future’ at strategic locations like Sri City to accelerate
growth around the world.”
Maurizio
Brusadelli,
executive vice-president and
president, Asia Pacific, Mondelez International, added:
“India is a priority market
for us and we continue to
invest in our brands, routes
to market and people to drive
sustainable growth.”
u
the option of selling online
in India, and will do so in
12-18 months, or maybe earlier,” said Nicolas Luc Villeroy, head of the tableware
division of the company and
the seventh generation member of the Villeroy family.
“We are analysing the two
options of selling through
our own Website and through
other online companies, and
the better one would be to
go with specialised portals
u 16 u
M AY 9 -2 2 , 2 016
A
ndhra
Pradesh
Chief Minister N.
Chandrababu
Naidu
last fortnight inaugurated Japanese automaker Isuzu Motors’
new `3,000 crore factory at Sri City in Chittoor. It rolled out Isuzu’s
first vehicle, the new
generation Isuzu D-Max
V-Cross – which is India’s
first adventure utility
vehicle, “India is a key
part of Isuzu Motors’
global growth strategy.
This new plant in India
will not only cater to
the requirements of the
growing Indian market, but in future it
will also serve as a key
manufacturing hub for
Isuzu’s global operations,” said Masanori
Katayama, president,
Isuzu Motors. The initial
production capacity of
the plant is 50,000 units
per annum which can
be scaled up to 1,20,000
units
eventually.
u
here.” Contrary to Europe,
he said, the actual traction
of the brand would not be
strong enough to attract consumers directly. “It’s a new
market and it will make more
sense to go with a partner
who is able to attract people who are not familiar with
the brand.” Villeroy said the
company is looking at developing other channels of distribution in India besides its
own three stores. u
Visiting
C
isco is gearing up for
major
transformations in talent acquisition
and leadership development. “hr is undergoing
a massive change. Today,
companies must differentiate themselves in order
to effectively compete for
talent. Cisco India is one
of our leading centres,
where innovation forms
the basis of everything
that is done. Our India
centre is one among those
leading when it comes to
patent filing – Cisco was issued 1,100 patents globally, of which 100 were from India
in 2015. Our global ‘Time To Give’’ programme, under which employees donate 40
hours of their work-time annually to charity, has seen the highest participation from
India. This shows that the team at the India
A
dobe recently held its
Symposium 2016 in
India. One of the main
topics discussed was the
A
mazon’s latest device,
the Kindle Oasis, was
recently launched in India.
Kathryn Abel, principal
product manager, Amazon,
was in the country last fortnight to kick-start sales. “We
have grown 200 per cent
year over year in India and
the growth is driven by three
things – Book Selection, Kindle Unlimited and Kindle
Direct Publishing. We have
over 3 million books in the
Kindle India store in the past
3 years. In comparison, the
US Store has been around for
over 7-8 years and they have
4.4 million books, of which
centre is passionate about
giving back to the community,” said Francine
Katsoudas, senior vp and
chief people officer, Cisco
Global, who was in the
country recently. About
Cisco India’s effort to hire
and retain female talent,
she said, “It is an unfortunate industry trend that
many women end up leaving the workforce midway through their careers.
Under its initiative ‘Project Athena’, Cisco India
has been very proactive in following up with
female employees who take breaks for various reasons, helping them with their return
to work and prioritising them for different
roles. We also have programmes available
for early-career women to accelerate their
path to promotion.” u
importance of being an
experience-centric
business in the digital era and
how transformative digital
strategies can help brands
stay ahead in India’s highly
competitive market, and
win domestic and global
customers in its mobile-first
market landscape. “First
came back-office software,
followed by the next wave
of front-office technology
that helped business streamline data to better interact
with customers,” said Paul
Robson, president, Adobe
Asia Pacific. “Now, we see
the arrival of the third wave
of enterprise software, making possible fundamental
changes to how businesses
deliver customer experiences. Adobe platforms are
the powerful enablers helping companies deliver personalised, compelling and
connected customer experiences at each relationship
touchpoint, from Websites and social networks to
mobile apps, and all the way
through to real-life transactions and interaction.”
Adobe also launched its new
Adobe Digital Index report,
Best of the Best India, at the
symposium. u
a million has come in the
last year. India is really on
track to catch up to the
same or similar selection
to the US,” she said. The
device is currently available on the Amazon India
marketplace at `23,999
(Wi-Fi) and `27,999 (WiFi+3G). The company has
also made an improvement to the Indian payment method wherein
customers
can
now
directly purchase a book
from their Kindle devices
using the payment methods saved on their respective accounts. u
u 17 u
M AY 9 -2 2 , 2 016
L
os Angeles Tourism
& Convention Board
( latc), president & ceo,
Ernest Wooden Jr was in
Mumbai recently to announce
the latc’s Indian representation by Sartha Global Marketing. “We look forward to
welcoming more Indian travellers to LA which will help
us achieve our goal of reaching 50 million visitors by
2020,” said Wooden. In 2014,
92,000 Indian travellers visited LA, accounting for nearly
$73 million in direct spending. Under Wooden’s leadership, Los Angeles has enjoyed
a record-breaking 45.5 million
visitors in 2015. Tourism is a
leading industry in Los Angeles, supporting 464,000 jobs
and contributing more than
$19 billion in visitor spending to the local economy and
$30.6 billion in local economic impact. Wooden was
here to sell the many charms
of LA, and will build awareness among tour operators and
potential visitors. While LA
remains home to Hollywood
and tv stars, it also boasts of
more cultural institutions than
any other major city in the US.
It has stunning beaches, picturesque mountains and great
weather. The shopping can be
both, eclectic retail and highend fashion. “The dynamic
nightlife along with diverse
culinary options makes LA a
must visit, the LATCB would
also facilitate and help Indian
movie makers get the requisite
permissions and access to the
desired shooting locations,”
said Wooden. u
Business Notes
Seeking sops
Bauxite miners/exporters demand duty exemption to achieve level
playing field
I
ndependent bauxite ore miners and exporters have urged the
government to exempt the aluminium raw material from export
duty. Though the export duty on
bauxite was reduced by 5 per cent to
15 per cent in the last Union budget,
the duty continues to be high, making Indian exports uncompetitive
in global markets. The average price
of bauxite in the international market is in the range of $26-30 (f.o.b),
whereas Indian bauxite is priced at
$32-35 due to the 15 per cent duty
levied on the ore. It is pertinent to
note that, in the last budget, the government had exempted low grade
iron ore and chromium ore from the
export duty of a uniform high level
of 30 per cent.
“In the last budget, customs duty
on export of iron ore lumps and chromium ores was reduced from 30 per
cent to ‘nil’ but the same on bauxite
was only reduced from 20 per cent to
15 per cent,” says C.K. Joshi, chairman, Gujmin Industry Association,
the representative body of mineral
excavators in Gujarat. “This relief is
too little, too late, to rejuvenate the
bauxite export industry, which is
already battling headwinds from the
meltdown in the global commodity markets. Therefore, customs duty
on export of bauxite ore should be
reduced to ‘nil.”
“The reduction in export duty
is inadequate,” feels Vijay Kalantri,
president, All India Association of
Industries (aiai). “Bauxite continues to attract heavy customs duty
and, as a consequence, the price of
Indian bauxite is not competitive in
the global market. This has resulted
in a decline of nearly 11 per cent in
exports and thus adversely impacting several small- and medium-sized
enterprises engaged in mining, processing and exporting of bauxite”.
u 18 u
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Disadvantage Kalantri is of the view
that the authorities should relook
into the issue as the bauxite, which
is being exported is primarily nonplant grade, low-density bauxite,
which cannot be used in local refractories and is mined from the west
coast of the country. Also, domestic aluminium producers refuse to
source material from the west coast
even to tide over their rare and temporary raw material disruptions and
so from a domestic point of view,
this bauxite is waste-ore and hence
should be allowed to be exported at
nil duty.
Over the last 10 years, small mine
owners and exporters have taken the
initiative to mine and export these
inferior ores and have succeeded in
developing a sustainable bauxite
industry. It now generates direct and
indirect employment in the mining
sector of more than 50,000 labourers
only in Gujarat and Maharashtra.
China is one of the world’s largest consumers of bauxite. Being
resource-poor, it needs to import
bauxite for its huge quantities of aluminium requirements. Also, Chinese refineries are programmed to
use a variety of bauxite combinations regardless of its quality, energy
potency or its consequence on the
ecosystem. Indian bauxite comprises
only 14 per cent of Chinese bauxite import requirements and is on a
weaker wicket, as compared to other
competing countries, mainly on
account of a disproportionate export
duty and dwindling quality.
China also imports bauxite from
Malaysia, Australia and Guinea,
which levy nil duty on the ore.
Australia has increased its bauxite exports to China by 27 per cent
from 15.04 million tonnes in 2014 to
19.14 million tonnes in 2015, while
Malaysia has increased its exports to
China by 700 per cent – from 2.82
million tonnes in 2014 to 22.36
million tonnes in 2015!
India has 3 billion tonnes of bauxite reserves. With about 2 million
tonnes of annual aluminium production and remote chances of further
significant addition in production,
due to the subdued price trend and
huge cost involved, the known
Business Notes
bauxite reserves are estimated to last
for more than 300 years. Production
of one tonne of aluminium normally
requires 6 tonnes of bauxite ore. More
than 80 per cent of India’s bauxite
reserves are located in Odisha and
Andhra Pradesh, which explains why
nearly all of the integrated alumina
and aluminium plants with copious
captive bauxite reserves are situated
in the east and central regions of
the country.
The west coast of India is peppered with non-contiguous deposits of bauxite, none of which have
the quality or the critical mass to
support an alumina refinery or an
integrated smelter. Hence, the government should bring down the duty
to facilitate exports of these deposits,
says aiai in a statement.
However, the domestic aluminium industry doesn’t subscribe to
this view. According to the Aluminium Association of India, it won’t be
an appropriate move to allow exports
of bauxite ore without any checks.
Instead of exporting raw material,
there should be measures to convert
them into semi-finished and finished
products indigenously and thereafter
export them. “These are our natural resources and we should be prudent in using them. Moreover, we
should focus on value addition that
is something the government is also
promoting under its ‘Make in India’
initiative,” says Abhijit Pati, coo,
Vedanta Aluminium Ltd.
u AR B IND GUPTA
[email protected]
Textiles
Trying times
E
xports of cotton yarn from the
country have been languishing
for the last couple of years. The average monthly exports of the commodity have plunged by almost 29
per cent to the current level of about
100 million kg per month, from
about 140 million kg per month two
years ago. China, whose share in the
Indian cotton yarn exports accounts
for about 48 per cent, has seen its
imports from India coming down
considerably, ever since it decided to
end its three-year-long programme
to stockpile raw cotton.
With the Chinese government’s
decision to offload its raw cotton
reserve stock under its new policy
in April 2014, spinning mills there
have access to cheaper cotton from
the local market, thus reducing their
dependence on imports. Besides,
China has been moving out of the
upstream products due to rising production costs. The share of China
in Indian cotton yarn exports has
come down to about 27 per cent.
India exports about 28 per cent of its
total cotton yarn production of, say,
351 million kg per month (installed
capacity of 380 million odd kg).
As if that was not enough, in
2013-14, the Indian government
decided to withdraw the export
incentives (2 per cent incremental
export incentive, 2 per cent interest subvention and 3 per cent focus
market incentive) provided to textile
items. As these incentives were withdrawn one after the other, cotton
mills found it difficult to compete in
global markets, where one of its major
competitors, Pakistan, is enjoying
zero duty accesses (as against 6-12
per cent duty earlier) to the EU after
it signed a trade agreement (gsp-plus
status) with the 27-nation bloc in
January 2014. As a consequence, cotton yarn exports from India slipped
u 19 u
M ay 9 -2 2 , 2 016
to below 100 million kg per month
during 2014-15 and the trend continued through the recently concluded fiscal year of 2015-16. India
exports cotton yarn to China, Bangladesh, Sri Lanka, the EU, the US
and Vietnam.
It may be noted that India and the
EU are also negotiating to enter into
a Free Trade Agreement (fta). The
proposed agreement (between India
and the EU) which could have a multiplier effect on the overall exports
of textiles and garments (has the
potential to more than double the
exports of garments to the EU in a
short period of three-four years) has
been pending for a long time, even as
the agreement has undergone more
than a dozen rounds of negotiations
between 2007 and 2013.
Surplus “Since our competitors are
enjoying duty concessions, we need
to bring back the exports incentives
that our cotton yarn exports would
get a couple of years ago,” says K.
Selvaraju, secretary general, Southern India Mills Association. “Without a level playing field, it is difficult
to increase exports and hence we
urge the government to look into
the matter on a priority basis”. The
association has already made representations to the Union government, stating that, unless measures
are taken quickly and the exports
Business Notes
ramped up, the entire domestic cotton spinning sector will have to face
a tough situation.
The recent decline in cotton yarn
exports has adversely impacted the
country’s spinning industry, which
has added massive capacity in the
past few years, following various
incentives announced by several cotton-growing states recently under
their newly-announced textile policies. In order to woo investments,
these states – Maharashtra, Gujarat,
Madhya Pradesh, Rajasthan, Punjab and Andhra Pradesh – have come
up with policies providing incentives such as interest subsidy ranging
from 8-10 per cent, vat exemption,
power subsidy, et al. In the last two
years over 2 million spindles have
already been added to the currently
total spun yarn installed capacity of
about 51.7 million spindles (cotton
yarn capacity accounts for some 74
per cent of this).
Besides, the spinning sector has
invested over `85,000 crore under
the Centre-sponsored Technology
Upgradation Fund Scheme (since
1999), accounting for 31 per cent of
total investments made in the industry, and created 18 million spindles additional spinning capacity.
Though interest subsidy provided
under tufs has now been completely
discontinued for the spinning sector, the incentives by the state policies are more than compensating for
that. In fact, the sector is expected to
add at least 2 million spindles more
in the next 12-24 months, even as the
process is now seeing some degree
of moderation.
“There is definitely an over-supply situation in the industry at present,” says B.K. Patodia, chairman,
gtn group of companies. “On the
one hand, we are adding the capacity
relentlessly, on the other, domestic
consumption has not seen commensurate increase. On top of that, there
is a decline in exports. All this has
made conditions quite tough for the
spinning industry which has been
running on 70-80 per cent capacity utilisation at present”. Patodia
believes that the situation has also
worsened due to the fact that there
have not been matching investments
taking place in downstream segments like weaving and garmenting,
which continue to be the weak links
in the textile value chain.
Selvaraju is of the opinion that,
unless the exports of cotton yarn are
not brought back to the earlier levels
of 140-150 million kg per month, it
would be impossible for the domestic
market to absorb the surplus capacity. The exporters in the last couple
of years have diverted a large quantity of export surplus to the domestic market where the consumption
stands at about 230 million kg per
month. This, along with the overall
increase in the capacity, has created a
glut like situation, putting huge pressure on the yarn prices, which were
seeing some improvement during
the last three weeks, due to a surge
in raw cotton prices, after a sluggish
spell in the past.
u AR B IND GUPTA
[email protected]
childcare
On a role
T
he domestic baby and child care
market has continued to gain
momentum. In fact, the last few
years have been quite eventful for
this `10,000 crore market, which has
expanded at a cagr of around 20 per
cent for the last five years. Backed by
the country’s changing demographics and lifestyle as also increasing disposable income, the market catering
to children aged 0-4 years with products including toys, baby cosmetics,
wipes, food, apparels and accessories/
merchandise, is well placed to maintain its impressive growth march
going forward.
Served traditionally by unbranded
products, the market currently has
brands like Chicco, Brevi, Combi, Lilliput, Mom N Me, Mothercare, Simba
Toys, Johnson & Johnson, p&g, jl
Morison, Fisher-Price, Hasbro, Infantino, Kiwi Baby, Peg Perego, Dorel
Industries (Dorel Juvenile), and others. There are more brands which are
planning to enter the fast-growing
Indian market.
u 20 u
M ay 9 -2 2 , 2 016
“The market for baby care products in India has undergone a massive transformation in the last
decade. Gradually, the market is getting organised. Even as there has
been and unprecedented jump in the
demand for various product categories, we have seen the entry of larger
players who are trying to bridge the
demand-supply gap both in terms of
quantity and quality,” says Naresh
Khatar, chairman and managing
director of baby and mother care retail
chain Me N Moms. The `150 crore
retailer, which entered the domestic
market way back in 1994 with a single store in Mumbai, currently boasts
60 stores across the country, with a
major presence in western and south
India. It is looking to double its revenue in the next three years and is
planning to set up 30-40 more stores
by the end of this fiscal year. Despite
a strong offline presence, the company is at present generating 25 per
cent of sales online.
“The Indian baby care market is
still in its infancy. The market is primarily confined to major cities. However, going ahead, we are expecting
huge growth coming from geographical expansion to smaller locations.
Overall, the Indian market presents
huge potential,” states Amit Bagthalia, ceo, Safilo Healthcare, which
recently entered the baby care market with its diapers and wet wipes
under the brand name Champs. This
Rajkot company (from the stable of a
group with interest in manufacturing
of papers, chemicals and mining &
minerals) has invested `100 crore to
set up a manufacturing unit (capacity: 750,000 pieces per day) in Morbi,
Gujarat. After a successful launch in
Gujarat, the company is in the process of expanding its presence to other
states including Punjab, Haryana, UP,
Uttrakhand and Himachal Pradesh.
New players Under its healthcare
vertical, Ajay Piramal-promoted
Piramal Enterprises’ consumer product division is building up a product portfolio to tap the opportunities
emerging in the fast-growing baby
care market. Last year, the company acquired three-decade-old Little’s India, the country’s oldest baby
Business Notes
care products brand. Little’s has a
wide range of products (0-3 years)
across six categories including feeding accessories, baby skin-care, baby
grooming accessories, travel, baby
toys and bath and bed time. “We
are planning to broaden our present
port-folio by adding more categories. We are looking to leverage our
existing distribution network for
expanding our presence in this new
segment of business,” says Swati Joshi,
assistant brand manager, consumer
products, Piramal Healthcare.
Last year, even fast-moving
consumer goods company Dabur
announced that it was setting up
a new sub brand, Dabur Baby. The
company said that it wanted to be a
part of every segment of the country’s growing baby care market.
Dabur, which already has a handful of products like Dabur lal tail,
Dabur gripe water and Dabur janma
ghunti, is aiming to increase its
footprint in the sector with
new introductions.
Herbal
healthcare major Himalaya
Drug Company is
also ramping up its
baby care portfolio.
A couple of years ago,
the company, which
already had products
like Himalaya herbal
baby massage oil, entered
the baby diapers category by launching diapers enriched with a blend of
natural ingredients like aloe vera
and yashada bhasma, that form a
protective anti-rash shield.
“The baby care market is expanding at a brisk pace. The whole landscape has undergone a big change in
the last decade or so and we expect
these activities to progress unabated,” says Pankaj Shende, portfolio director (Jewellery and cbme) of
ubm India which recently organised
its fourth edition of cbme India 2016
in Mumbai. The global exhibition on
child, baby and maternity products
and services saw the presence of 104
exhibitors up from 80 exhibitors the
previous year.
Robust growth “India is one of the
most promising markets for baby care
products in the world. The high birth
rate in India, coupled with the ever
growing middle to upper income class
will ensure that this industry keeps
growing at a rapid pace,” says Rajesh
Vohra, ceo, Artsana India, an Indian
subsidiary of Italian health and wellness products major Artsana group,
which entered the Indian market
in 2010 with its premium baby care
brand Chicco. The $1.4 billion company’s Indian operation has grown
at a remarkable
cagr of over 30 per cent in the last
five years. The company, with a presence in India through 60 stores, is also
evaluating the possibility of putting
up a manufacturing unit in India.
Global major Dorel Juvenile, a
part of $2.8 billion Dorel Industries
also forayed into India in partnership with Mothercare one and half
years ago. The company, a worldwide
leader in child safety mobility for
home and on-the-go, has introduced
its quality products (baby car seats,
strollers, etc) under its brands such
as Maxi-Cosi, Quinny and Safety
1st. The company is in the process of
opening an office in India. “India is a
rapidly-growing market and nobody
can ignore it. We are currently assessing the market and are in the process
of firming up our future plans which
u 21 u
M ay 9 -2 2 , 2 016
may include having some kind of
manufacturing facility as well,” said
Marcel van Delden, director, international
business
development,
Dorel Juvenile.
Singapore-based Oribel pte Ltd from
the 30-year old Meiban group (one of
the best molding and mold making
companies in Singapore catering to
sectors like consumer products, oil &
gas, automobile, defence and juvenile
products with 15 product sites in Singapore, Malaysia and China) is also
planning to enter the
Indian market with its
high quality and innovative products such as
child stools, convertible
activity centres (tables)
and chairs. “Our innovative products are well
accepted in the US market and other markets.
We are aiming to target
the Indian high-end
market. We are looking for the right kind
of partner to enter this
market,” states Cindy
Goh Su Min of Oribel,
which was participating for the first time in
ubm’s cbme India event
in Mumbai.
Currently, the baby
care market in India is driven
by multiple factors. With robust
gdp growth in the last decade, there
is significant per capita increase in
disposable incomes among consumers who are more willing to buy luxury goods, such as baby accessories
and cosmetics. A booming organised
retail scenario at the back of a surging
e-commerce segment has provided
the much-needed support to further
invigorate the whole setup. Increase
in urbanisation is also expected to
boost the market growth considerably. Besides, India has the one
of the largest populations of children in the world with more than 20
per cent of the global population of
children in the age group of 0-3. All
these factors make India one of the
most attractive destinations on the
global map.
u AR B IND GUPTA
[email protected]
EPF fiasco
Three rollbacks leave government red-faced
T
he Modi government’s three
successive
rollbacks
on
Employees Provident Fund in
the last three months have led many
to wonder whether it really has the
political will to push change. Conversely, it also made the salaried
class suspicious of what it is up to.
In the absence of universal oldage income and health protection
schemes, epf is considered a life
saver, particularly for the elderly
and infirm entering the threshhold
of retirement. Reducing this capacity through the proposed changes
looked an unkind cut. Since its introduction in 1952,
the epf has largely been a tax-free
savings vehicle. Over the years, epf
has expanded significantly and been
instrumental in bringing individuals within the social security net.
The epf has provided 3.7 crore subscribers a platform to save and invest
in a risk-free manner, assuring them
and their dependents a secure future.
Being exempt from tax at the stage of
deduction, deposit of salary, annual
earnings and payout, the epf is popularly termed as an eee (exemptexempt-exempt)
scheme.
The
announcement by finance minister Arun Jaitley in his budget speech
to tax 60 per cent of the provident
fund withdrawal from 1 April ignited
protests by trade unions and created
anxiety amongst crores of salaried
employees. The move aimed to convert the epf into an eet (exempt-exempt-tax) scheme. But the protests
forced the government to rollback
the proposed amendment in the epf.
Another decision which got flak
and forced the government to beat
a hasty retreat was the announcement restricting the withdrawal of
the entire corpus of epf till the age
of 58. epf subscribers were restricted
to withdrawing only what they (the
employees) - and not the employers – had contributed, limiting their
access to their own savings in the
Jaitly: causing suspicion among employees
case of unemployment, and raising
the retirement age from 55 to 58 years.
By altering a norm in practice since
inception, the political message that
went out again was that government
was suddenly taking away a huge portion of subscribers’ lump sum retirement benefit. The government was
also forced to reverse yet another
decision to lower the interest rate on
the provident deposits to 8.7 per cent
for 2015-16 from 8.8 per cent.
Plugging inefficiencies
The reason for taxing the epf was
attributed to the need to bring parity between the National Pension
Scheme (nps) and the epf. The government believed that this would
push individuals towards pension
security available throughout retirement rather than a lump sum withdrawal at the time of retirement.
Some economists feel that the government should have instead considered extending epf tax benefits
u 22 u
M ay 9 -2 2 , 2 016
to nps in an effort to expand enrolment. Rather than forcing people
to change their preferences, providing them with the freedom of choice
would encourage better decisions
and benefits.
The political criticism of the move
was based on the premise that making epf taxable and unattractive is
bound to drive salaried employees to
schemes such as the nps. It exposes
people to market risks and the volatilities of the stock market, as the
nps allows for investment in equityrelated schemes and the stock market. “In epf, there is a sharing of risk
between the member, the fund manager and the government. In nps, all
the risk has been transferred to the
member, with the government and
the fund-manager going scot free –
a very unfair arrangement. Worse
when seen in the context of the fact
that all the investments are at the
disposal of the government as nontax receipts through debt instruments or as a means to support the
development of the capital market
in furtherance of fiscal policy,” says
Kalikesh Narain Singh Deo, mp of the
Biju Janata Dal.
The criticism against nps is that
publicly-managed pension systems
have an administrative cost lower
than 2 per cent. Privately-run systems
like nps, on the other hand, run up
much higher administrative costs of
maintaining and servicing individual pension accounts for each member. Added to this is the huge cost of
buying an annuity plan – nearly 10
to 12 per cent in India.
Most political parties feel that
the government must instead focus
its energy on plugging the inefficiencies of the epf. The epf is yet to
make mobility of salaried employees
easier. Change in employment, for
instance, results in a change in epf
number and accounts are not consolidated. This has led to a large number of accounts being inoperative.
The answer is registering employees directly by epf and ensuring ‘one
number-one employee’. The ongoing
programme to do this was stopped
mid-stream in 2004.
u RA K ESH J OSHI
[email protected]
Sugar daddy
Amidst drought, Pawar makes his move
T
he move to impose a ceiling on sugar stockholding to
curb rising prices has run into
political opposition, with former
agriculture minister and ncp leader
Sharad Pawar threatening that cane
growers will come out on the streets
to protest if the government takes
steps to depress retail sugar prices.
This has put the Maharashtra unit
of the Bharatiya Janata Party, which
shook the monolith of the Congress-ncp clout in the sugar belt
in western Maharashtra in the last
assembly election, in a dilemma.
The region accounts for 58 seats.
With back-to-back drought years
drying irrigation channels and ravaging cane fields, the sugar output
in Maharashtra, the country’s biggest producing state, is likely to drop
by 40 per cent this year. Sugarcane
farmers have been badly hit and the
ncp hopes to make a comeback by
espousing their cause.
Even sugar millers in the state are
expected to take a hit because of low
sugar recovery from the cane that is
available. To bail them out, Pawar
has proposed that retail prices should
remain around H40 per kg so that mills
can repay their debt as well as pay the
cane price to farmers. As an aside, he
maintains that this retail price will
not hurt the consumers too.
Retail sugar prices have been rising since October due to estimates
of lower production at 25.6 million
tonnes (mt) for 2015-16 marketing
year (October-September) as against
28.3 mt a year ago. Retail prices
crossed H40 per kg at the beginning
of April compared with H30 per kg
last October. At present, prices are
ruling at H44 per kg, according to government data. This has presented the
Modi government with a first-rate
dilemma: how to balance its political
interests in Maharashtra with that in
the rest of the country?
Sugar regulation
In order to check the inflationary tendencies in sugar and to reduce hoarding by wholesalers and retailers, the
Modi Cabinet recently felt an immediate need to bring the commodity
within the purview of stock limits.
It has empowered state and central
agencies to impose stock limits and
regulate supply, distribution, storage and trade of sugar to bring down
sugar prices to a reasonable level by
curbing unscrupulous trading. There
has been a 37 per cent rally in sugar
prices since last year.
The Cabinet decision followed
a proposal by the consumer affairs
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ministry seeking approval to empower
state governments to impose stock
holding limits on sugar traders to
check hoarding and black marketeering. Recently, the All India Sugar
Traders Association made a presentation before senior officials of the food
ministry and the Prime Minister’s
Office, proposing scrapping of the
export subsidy and calling for stock
limit of 1,500 tonnes for Kolkata and
750 tonnes for the rest of India. The
stock limits on sugar traders were last
imposed during 2009-2011.
Despite being the world’s second-largest sugar producer, India is
expected to harvest the smallest crop
in seven years. Output will probably
drop 7 per cent to 23.5 metric million tonnes in the year beginning
October 1, from an estimated 25.3
mt this season. That would be the
lowest since the 18.9 mt produced
in 2009-10, as per Indian Sugar Mills
Association data. Maharashtra’s production could drop below five mt
from the 8.5 mt it has been producing. Domestic consumption is pegged
at around 26 mt.
This would result in India likely
to become a net importer of sugar in
2016-17, with this development likely
to support global prices that have
already been rising this year. It would
also give rival producers such as Pakistan, Thailand and Brazil the chance
to boost shipments from their ports.
The government maintains that India
will have 30-31 mt of sugar available in 2016-17, including 7.3 mt of
stockpiles from the previous season
and that would be enough to meet
demand. “There is therefore likely to
be no shortage of domestically produced sugar in India,” a government
spokesman recently said. Of course,
the June-September monsoon rains
are crucial to crops, including sugarcane. Rainfall is forecast to return
to above-normal levels this year after
recording shortfalls of 14 per cent
and 12 per cent in the previous two
years, according to the India Meteorological Department. But till then,
Pawar and the politicians who dabble in sugar politics will have the
field open to them.
u RA K ESH J OSHI
[email protected]
Freebie time
UP polls beckon politicians with sops
T
he coming months will see the
Centre showering a number of
pre-poll sops on Uttar Pradesh,
where assembly elections are due
this year. Narendra Modi’s decision
to launch the Pradhan Mantri Ujjwala Yojana (pmuy), which promises
free lpg connections to five crore bpl
families in the next three years, from
Ballia in eastern UP was the first such
event aimed at garnering support for
the Bharatiya Janata Party. Under the
H8,000 crore pmuy, the government
aims to provide lpg connections
to nearly 10,000 to 50,000 households in each Lok Sabha constituency across the country. Women in
bpl households will be now able to
replace their chulas – cooking stoves
that use firewood or coal – with gas
cylinders. The subsidy transfer of
H1,600 per lpg will take place in the
Jan Dhan account of the family’s
woman head.
During the launch function, Modi
claimed that selecting Ballia district for
the launch of the pmuy was not aimed
at political gains in the upcoming UP
polls. But party insiders admit that
this ambitious scheme may indeed
benefit the party in the run-up to the
2017 UP polls, particularly in the eastern region. With only 41 members in
the UP assembly at present, increasing the seats in the House is essential
for the bjp to increase its numbers in
the Rajya Sabha to push its important
bills in Parliament. Of the 403 assembly segments, around 80 constituencies fall in eastern UP but the bjp has
only a dozen seats there. Most of the
others were won by the Samajwadi
Party (sp) in the 2012 Assembly polls
with the Bahujan Samaj Party (bsp)
coming in second. In Ballia district,
from where the scheme was launched,
the bjp has only one mla while sp
holds five seats.
In Ballia district, only 8 per cent
of households have lpg penetration,
one of the lowest in UP. The pm had
also attacked previous governments
for doing little for the poor in the
state. The bjp holds 17 out of the 18
Lok Sabha constituencies in eastern
UP – Azamgarh is held by sp supremo
Mulayam Singh Yadav. As per the
the bjp ’s calculations, at least 8,000
households in every assembly segment will get lpg connection under
pmuy very soon.
Courting the poor
That means nearly 40,000 people
(four members in each family on an
average) in each assembly constituency will benefit from the scheme.
These beneficiaries will be from the
poor, backward caste and Dalit sections of society. lpg connections will
bring a change in their daily life – and
thereby improve the bjp ’s prospects.
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As of now, nearly 33 per cent households in UP have lpg connections
and most of them are in urban areas.
As the pmuy scheme will provide
lpg connections to the bpl in every
district, it will strengthen the bjp ’s
appeal in rural areas as well.
However, merely launching the
scheme is not going to get votes for
the bjp. In response to the pm’s visit,
Chief Minister Akhilesh Yadav turned
up in Ballia the next day. Targeting
the Modi government, he said that
while the Centre was going to provide
lpg connections, the beneficiaries
would need money to refill lpg cylinders. This is where the Samajwadi
Pension Scheme of the state government will play a part. “lpg cylinders
have been arranged. But the poor will
be able to purchase the fuel only with
the help of H500 Samajwadi pension
which the government will give to 55
lakh women,” Yadav said.
Also, even though pmuy has
been launched in Ballia, awareness
about the scheme is clearly not widespread. According to a survey, bpl
and Antyodaya card holders in the
district remain unaware that they
have been eligible for a H1,600 waiver
in charges for a new lpg connection for the past year and a half. In
Agra district alone, only 4 per cent of
those eligible under the scheme have
applied for this benefit. While getting a new lpg connection bpl card
holders don’t have to pay the cylinder and regulator security charges
of H1,600. The district has 15,877
bpl card holders, but only 700 have
applied for the benefit. All India
Indane Distributors Association secretary Vipul Purohit said: “bpl and
Antyodaya card holders have been
getting a discount on new gas connections for some time now. But very
few people have applied for it. Under
pmuy, the bpl family will get a support of H1,600. Women from bpl families will be getting the discount and
a stove. The scheme provides facility for meeting the stove and refill
costs.” So clearly, awareness about
scheme is important for people to
avail the benefits – and for the bjp to
reap the political advantage.
u RA K ESH J OSHI
[email protected]
Panju’s Page By Panju Ganguli
WE TOOK EIGHT MONTHS TO DEVELOP BISLERI
POP AFTER STUDYING the MARKET CAREFULLY. IN
A MARKET WHERE THE INCUmBENTS ARE STRONG,
THE CHALLENGE WAS TO CREATE SOMETHING
THAT COULD STAND ON ITS OWN FEET.
OUR GOAL IS TO GET REVENUES OF $16.5 BILLION
THROUGH RENEwAL OF OUR EXISTING BUSINESS,
$2 BILLION THROUGH NEW SERVICES AND $1.5
BILLION THROUGH INORGANICS. EVERY DAY THAT
GOES BY I CONTINUE TO FEEL COMFORTABLE
THAT WE WILL GET THERE.
RAMESH
CHAUHAN,
Chairman, Bisleri Intl.
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VISHAL SIKKA,
CEO, Infosys
Column
A matter of concern
Whether he wins the presidency or not, Donald Trump’s rise has shaken up the system for good
M
any Indians, as also others around
the world, are transfixed as in a horror movie at the seemingly irresistible
rise of Donald Trump to the Republican Party’s
candidacy and perhaps election to the White
House after Barack Obama. Trump elicits dismay
in any case because of his total ignorance about
India and most of the world, but his triumphs
in so many state-level primaries have raised new
causes for apprehension about directions being
taken by the American people.
There is much cause for consternation at the
sight of voters in New York, America’s most cosmopolitan city and state, with close historic ties
to Europe and Asia, being so enthralled by Trump.
The point about his rise is that Trump as an individual is not important. The power lies with the
mass of people who support him so unconditionally as to have raised him to the current pedestal
and put him in sight of the Oval Office.
If good sense prevails among American voters
and Trump loses, sharp damage will still have
been wrought on the way US democracy and
politics operates in future elections. ‘Trump-ism’
will not die with Trump’s defeat in November or
at the Republican Party convention.
The radical right-wing Tea Party was a marginal force ignored by political analysts less than
two decades ago. It rose to central power in the
Congress and may be in slight decline currently
but it has significantly changed Republican and
American politics.
The angry and disillusioned constituencies,
which Trump represents, will not simply evaporate even if he fails to capture the Republican
ticket or the Oval Office. Indians and others can
correctly expect that anger to be reflected in
changes to US foreign and other policies regardless of Trump’s fate. This is the key cause of
growing dismay.
The White House, the State Department, the
Commerce Department and the Pentagon pride
themselves on policies that carry forward American ‘values’ around the world. The apprehension
now is that Trump’s rise will alter those values in
line with the weight of those who support and
vote for him, even if his presidential bid fails.
In all countries, allies as well as enemies,
governments and foreign offices closely study
American politics especially elections. This
time, a prime contender is a person who outsiders know almost nothing about and whose
Brij Khindaria
public statements and rhetoric indicate that he
is an empty vessel when it comes to knowledge
of the world that surrounds America.
This would matter little if the US were less
powerful. Concerns arise because its mighty
military is present in all nooks of the globe and
its voracious multinational corporations are
never satiated. Both the military and corporations want more control and power wherever
they go. Therefore, Trump’s rise and his nationalistic rhetoric of ‘I will always put the interest
of Americans first and penalize foreign freeloaders’ merits unease.
t the top count, Americans are about 330
million out of the world’s more than seven
billion people, while the US economy is about
20 per cent of the $75 trillion global economy.
So, how outsiders react to the political phenomenon, driving voters to support him, is not
without peril for America’s influence in the family of nations. But such considerations are lèse
majesté for Trump.
A chief cause for dismay is the almost wanton destruction of the Republican Party. The gop
establishment has shot itself in the foot. It has
been so engrossed in its own infighting – among
the right wing, Tea Party and the centre-right –
that it failed to notice how far a powerful swathe
of voters has moved away from its traditional ideals. Unless the gop leadership pulls a miraculous
rabbit out of its hat in the coming weeks, Trump
may actually become the Republican candidate
against the Democrat’s Hillary Clinton.
Analysts say Trump is propelled by people
who think the next president should be from
outside the establishment. Such people are angry
with the US government and the partisan paralysis in Congress.
For America’s consistent friends in India and
elsewhere, Trump’s rise is caused by a surge of
anti-elite and anti-establishment feeling among
Americans. This surge is disturbing because
the establishment generally reflects stability
and predictability, which means that changes
happen slowly and thoughtfully.
Thus, Indian and other politicians who support US values at the cost of criticism, have
continued to trust that American policies
will not stray too far from the establishment’s
ideas. Whether he wins or not, Trump’s rise
should shake up this complacency for good.u
A
The author is
an international
affairs columnist
for Business India.
He can be contacted
at brij.khindaria@
businessindiagroup.com
u 27 u
MAY 9 -2 2 , 2 016
Cover Feature
Muddying
the waters
Yopa mayatanam veda ayatanam bhavati
He who knows the source of water, becomes established in his Self
– from Taithreeya Aranyakam (1.22) of Yajur Veda
ater, the life resource,
appears to be draining
out of our very being.
Recurring monsoon failures in India have delivered one of the worst
droughts in 30 years,
blighted the earth, scorched the
crops, spelt ruin and death for
the farmers, and threatened the
country’s water and food security.
India is a water-stressed nation.
One in two persons has no access
to safe drinking water. Severe water
shortages are causing conflicts
between farm and industry, and also
within the domestic sector. Even
in urban India, piped water supply
caters to only 63 per cent of the population and sewerage networks to
less than half.
Pertinently, chairing a National
Water Resources Council (nwrc)
meeting in New Delhi a year ago,
Prime Minister Narendra Modi had
said that water security was an issue
on which the country would swim or
sink together.
Life-giving water assumes lethal
extremities in India’s capricious climate. While the terror of drought
has gripped 330 million people – a
fourth of India’s population – in 259
districts across 10 states, torrential
rains are smiting the northeast, with
Assam, Arunachal and Meghalaya
reeling under floods.
Rainfall distribution in India is
uneven in terms of time and space, and
while Bihar remains the most floodprone state with 76 per cent of the
population in its north living under
recurrent threats of flood, the southern city of Chennai experienced its
worst floods last December.
Mumbai city too buckled under
a 944-mm deluge over a 24-hour
period in July 2005. The state of
Uttarakhand, battling devastating
forest fires because of dry weather,
was convulsed by cataclysmic floods
in June 2013. The cold desert of
Ladakh was swept under a cloudburst in August 2010.
The primary responsibility of
flood control lies with the states,
which
plan,
investigate
and
implement all schemes for flood
control, while the role of the Centre
is technical, advisory, catalytic and
promotional in nature.
Predictions of an above average south-west monsoon have been
made by the Indian Meteorological Department (imd). But a widespread drought that lasted for two
long years could have been mitigated
to a great extent by timely and judicious state investment in, and promotion of, water conservation and
management, soil health management and monitoring, proper seed
selection and distribution, adequate
crop insurance, and timely disbursal
of insurance relief to farmers, apart
from the upgrade of urban water
and sewerage supply, and mandating
of sustainable norms like rainwater
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harvesting and wastewater recycling
in the construction industry.
In his 23 April speech to the
nation, Modi had called for a ‘save
water’ movement. Water resources
minister Uma Bharti is slated to visit
Israel in June, in search of technologies that could address India’s acute
water stress. “The government’s focus
and aim to cleanse our water reserves
and rivers will have a positive longterm effect,” she said. “Coupled with
Cover Feature
dat ta k edek a r /lok m at
technology to expedite our efforts,
India can be a world leader in water
conservation.”
Water unavailability and poor
management practices have led to
dismal sanitation facilities, posing
a major environmental and social
challenge to the country. Every
week, some 42,000 deaths – of
mostly children under five – occur
from preventable diseases like diarrhoea and dysentery, caused by
unsafe drinking water.
The high cost of water for the poorest households – nearly 15 per cent of
their annual income – is because of
low access to water as also exploitation of the situation by the water and
tanker mafia.
India has done precious little to
conserve water for off-season use
beyond building rigidly centralised
capacities that store only relatively
small quantities of its fickle rainfall.
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All of India’s dams put together create only 213 cubic metres of per capita storage, which is far lower than
the storage capacities of Russia, Australia, and the US, and less than half
that of China.
The crisis is, alas, as man-made as
it is natural. Though Indian courts
uphold the Right to Water and Sanitation as fundamental to the Right to
Life as guaranteed under Article 21 of
the Constitution, both Central and
Cover Feature
state governments have
trampled upon human
rights with impunity and
without
accountability.
Successive governments, at
the Centre and states, the
more workable community-level water conservation
and watershed management practices.
Worse, the country, as
a consequence, confronts
calamitous food shortfalls
and a shrinking agriculture base that will reduce
yields even further as farmers abandon their barren
farmlands and gravitate
to the cities where they
are reduced to a menial
existence.
Water is the lifeline
more in India than anywhere else, because its deficit can ravage agriculture
that consumes the largest portion of our fresh
water resources. According to government statistics, the farm sector has a
17.4 per cent share in gdp
and contributes one tenth
of all exports. Net per capita per day availability of
foodgrain has risen only
feebly to 436 grams today
from 395 grams in 1951,
a pathetic record over 65
years. Per capita annual
production of cereals is at
174 kg, down 9 per cent
since 1994-95 and at a
level that prevailed in the
1970s.
S
ignalling a “crisis of
stagnation in agriculture” in 2006,
the then Planning
Commission (now niti
Aayog) had postulated a
growth path of 4 per cent
for agriculture. But the sector actually contracted by 1 per cent in the
October-December quarter of 2015
and hobbled to an overall growth
of 1.1 per cent in 2015-16. With the
weightage of agriculture in India’s
gdp, it is clear that the lack of water
can hinder social and economic
growth.
Astonishingly, even Cherrapunjee, in Meghalaya, that was once
credited to be the wettest place on
earth, is referred to as the wettest
desert on earth. Though the town
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is drenched with a mean
annual rainfall of 11,619
mm, the rainwater simply drains away as there is
no system in place to harness it. This ‘water shortage’ has been dubbed the
‘Cherrapunjee syndrome’
as the town suffers a drinking water scarcity that it
views yearly from behind
sheets of rain. Perennial
springs that held abundant
water till quite recently
are on the verge of drying up due to large scale
destruction of forests.
Though irrigation is critical to sustaining food
security, brazen corruption has thwarted its augmentation. Only 45 per
cent of India’s net sown
area is irrigated, though
a
staggering R3,51,000
crore has been expended
on Major and Medium
Irrigation (mmi) projects
from the Ist Five Year Plan
(1951-56) – when 22.6 million hectares of farmlands
were irrigated – to the
XIth Plan periods. A government study cites huge
time and cost overruns,
especially on the major
projects where the average cost overrun has been
as high as 1,382 per cent.
The government launched
the R50,000 crore Pradhan Mantri Krishi Sinchai
Yojana (pmksy) in 2015 to
increase the irrigated area
and reduce risk in agriculture, but it is clear that
the problem of irrigation
can no longer be solved by
throwing money at it.
Signs of the extreme
venality in a sector as vital
for the public as water supply have, however, emerged in the
industrialised state of Maharashtra where the previous Congress –
Nationalist Congress Party (ncp)
ruling alliance has been charged with
swindling R70,000 crore from irrigation and lift irrigation schemes. The
Cover Feature
case filed before the Bombay High
Court in 2012 by voluntary organisation Jan Manch has the Anti-Corruption Bureau (acb) investigating
those involved, including then Deputy Chief Minister Ajit Pawar, a powerful politician from the ncp, headed
by his uncle and then Union agriculture minister Sharad Pawar, and partyman Sunil Tatkare, who now heads
his party’s state unit.
Tatkare succeeded Pawar as the
irrigation (subsequently renamed
water resources) minister and both
are charged with favouring select
contractors by clearing major projects in haste and at grossly inflated
costs, without the mandatory clearance of the governing council of the
Vidarbha Irrigation Development
Corporation (vidc). As the concerned ministers, they were its ex-officio chairmen. Pawar, for instance,
is accused of clearing projects worth
R17,700 crore in three months
between June and August 2009, just
weeks before the state election code
of conduct came into force. Thirtyfive of the projects had been granted
approval in just four days, while
costs multiplied. The resultant per
hectare cost of irrigation was computed as R9.81 lakh, far in excess of
the limit of R1.5-2.5 lakh mandated
by the Central Water Commission.
A performance review of the vidc
by the Comptroller and Auditor General (cag) had found contractors
having been unduly favoured and
canal and field channel work not
even begun in 12 of the 27 projects
selected under the Prime Minister’s
Special Rehabilitation Package. To
secure approval, proposals for irrigation projects are routinely forwarded
with unrealistic projections.
Marathwada’s largest dam of Jayakwadi was envisaged with the capacity
to irrigate 2,72,000 hectares of land
when it was conceived in 1965. This
was subsequently scaled down to
1,42,000 hectares, but the dam now
irrigates not more than 28,000 hectares. The Gosikhurd project too was
planned to irrigate 2.5 lakh hectares,
but its potential has not gone beyond
40,000 hectares. Although Maharashtra has 1,845 large dams, 40 per
cent of India’s, with 252 irrigation
projects supported by the Accelerated Irrigation Benefit Programme
(aibp) – again more than any other
state – the efficiency of these works
is a poor 23 per cent. A fraction of
the state’s tilled land is irrigated
and water reaches less than half the
intended recipients, the irrigation
potential created being less than half
that targeted, and that utilised being
even worse.
T
wo successive years of
drought have left only 16
per cent of water in the
state’s dams, compared to 27
per cent at this time last year. Water
Resources Department data indicates
that eight of the 11 major irrigation
dams are at dead storage level, meaning water from the dams has to be
lifted as it cannot flow out. Only 2
per cent of water stock is available
in the Marathwada region, which
is undergoing the fourth year of
drought over the last five years. The
Manjara and Lower Terna dams have
run dry and the region’s district city
of Latur supplied 25 lakh litres of
water on each of the nine trips till
now by a 50-wagon water train.
With the water crisis deepening
further, the government plans to ban
digging of borewells below 200 feet
to check further depletion of groundwater. Many such wells had been dug
in desperation by the drought-affected, though most of them yielded
no water.
While the weather is obviously
beyond control, the state governments in these years could at least
have devised programmes on a warfooting to mitigate the impact of
drought. Beset with failed crops and
unpaid loans, as many as 3,228 farmers committed suicide in Maharashtra in 2015, the highest since 2001.
The state government has responded
by identifying 1,841 of these suicide
cases as being eligible for ex-gratia payments of R1 lakh each. It has rendered
a further 903 cases ineligible and is
still assessing 484 cases. The Farmers’
Only 45 per cent of India’s net sown area
is irrigated, though a staggering R3,51,000 crore
has been expended on major and medium
irrigation projects from the Ist Five Year Plan
to the XIth Plan periods.
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Cover Feature
Distress Management Task Force,
appointed by the state government,
blamed the deaths on the “collective
failure of government officials”.
As the Opposition leader in Maharashtra, the Bharatiya Janata Party’s
Devendra Fadnavis had promised
stern action against those involved
in the irrigation scam once his party
came to power, which it did in October 2014 with him becoming the
chief minister. But curiously, as his
government is being viewed as going
slow on the inquiry, he has petitioned the Centre for assistance in
completing 26 ‘priority’ irrigation
projects by seeking even more monetary help than the amount estimated
to have been swindled.
His government should have been
rehabilitating these projects at levels closer to their original, more realistic, cost estimates, but has instead
quoted the “realistic cost of completion” as R36,299 crore. It is besides
looking at funding of R75,000 crore
to complete 400 pending irrigation
projects, even while suggesting R1
lakh crore as their “updated costs”,
citing increased cost of land under
the Right to Fair Compensation and
Transparency Act, 2013.
Owing largely to such omissions,
the efficiency of irrigation in India,
measured as the actual land watered
as percentage of capacity created,
dropped from 84 per cent during the
VIIth Plan (1985-90) to 29 per cent
during the XIth Plan. This is in contrast to 45 per cent in Malaysia and
Small is workable
A johad, or check dam
S
ince drought is manmade, it can be reversed.
And instances of this abound
in many a village across our
land where local initiatives
have transformed the lives of
the inhabitants, and the environs they inhabit.
Anna Hazare rose to his
heights as a social crusader
on the basis of his perseverance and commitment
that lifted his village of Ralegan Siddhi in Maharashtra’s
Ahmednagar district out of
despair and drudgery. On
his annual visits to his village on leave from the army
where he drove trucks, he
found that the scant rainfall
of 400 to 500 mm received
by his village located in the
rain-shadow ran off almost
completely. The village could
thus cultivate only one crop
on about 350 acres out of
a total 2,200 acres of land
available and most families
learned to survive on one
square meal a day.
While some of them
trudged 5 to 6 km each day
in search of work in nearby
villages, some others started
brewing liquor to earn their
livelihood. The village soon
had 35 breweries and alcoholism became rampant. Hazare
was inspired by late Vilasrao
Salunkhe’s experiments in
Morocco, and 50 to 60 per cent in
Israel, Japan, China and Taiwan.
The Economic Survey 2015-16 attributed this decline in irrigation utilised
to “improper operation and maintenance, incomplete canals, violations
in cropping pattern, and diversion of
irrigated land for other purposes”.
The XIIth Plan (2012-17) prioritises the completion of ongoing projects, counselling for new projects to
be taken up “only where there is a
demonstrated need of an outstanding character”. But in an ambitious
move, the government is promising
to create far more irrigation capacity over the next five years than the
64 million hectares created in the 69
years since Independence.
The Union budget for 2016-17
watershed development and
water management started
in some villages near Saswad in Pune district in 1972.
He called on the then district director of agriculture,
to have him visit Ralegan Siddhi with a team of officials
where they ascertained its
topography.
Hazare started supervising the work once it began,
without any remuneration.
He used the experience and
knowledge that he gained
on this sector in constructing
many more water harvesting
structures with people’s participation. He built 48 nulla
bunds, five cement check
dams and 16 Gabions – rockfilled gravity retaining walls
– over the years, enabling all
the rainwater to be conserved
and the groundwater aquifers
to be recharged.
Ralegan Siddhi now harvests two crops across 1,500
acres of land. With rising
prosperity, distress migration
stopped long back and farmers now hire wage labourers
from other villages for various farm operations. Alcohol,
smoking and tobacco have
been given up by the villagers for the last 13 years. And
u 32 u
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Anna Hazare: bringing hope
to villages
while earlier only 300 litres
of milk were sold from the
village every day, today the
purchase by cooperative and
private dairies of the 4,000
litres produced earns the village about R1.5 crore annually, apart from the income
agriculture now provides to
the unemployed youths of
the village.
Hazare replicated Ralegan Siddhi’s success in watershed development in four
other neighbouring villages
and the movement has now
spread to 85 additional villages of Maharashtra. u
Cover Feature
projects an investment of R86,500
crore for generating 80 million
hectares of irrigated land by
2022. This amount will be disbursed under the aibp to assist
state governments in completing irrigation projects conceived
and implemented by them, irrigation being a state subject. In comparison, a total R72,000 crore was
hitherto spent in the 19 years of
the aibp, and, according to the
Economic Survey 2015-16, only
a third of the irrigated farmlands created by the aibp during
2007-11 actually got water.
It is this growing value of water,
globally, imperilled by climate
change and other factors, that is
making the 21st century increasingly recognised as the Century
of Water, just as the 20th century
was that of Oil. Water-stressed
India has been embroiled in several conflicts over the resource, at
both the inter-state and international levels.
India has disputes with China,
Pakistan, Nepal and Bangladesh
that it shares its borders with.
Treaties have been signed to manage these conflicts and negotiations have taken place, yet
disagreements erupt repeatedly
or remain unaddressed. India is
particularly alarmed by China’s
grand plans to harness the waters
of the Brahmaputra by constructing hydro-electric power projects on it as well as by diverting
its flow. Beijing is going ahead
despite protests by India, which
fears repercussions for water flow,
agriculture, ecology, and lives and
livelihoods downstream.
Originating in Tibet, where it
is known as the Yarlung Tsangpo,
the 2,880 km-long Brahmaputra
flows eastwards to enter India’s
easternmost state of Arunachal
Pradesh, where it is called Siang. It
draws the waters of several rivers
as it enters Assam as the mighty
Brahmaputra before meandering on to Bangladesh, where it is
known as the Jamuna. There it is
joined by the Meghna and Ganga,
which is known as the Padma in
Bangladesh, and together these
A village solves its
problem
T
he 1,300 habitants of Hiware Bazar, also
in Ahmednagar district, too started scripting their destiny differently since the 1990s
when Popatrao Pawar took over as the village sarpanch. Sensing the potential of rainwater harvesting and tree-plantation, Pawar
realised he could solve both the problems of
water scarcity and joblessness that his village
faced by having the gram sabha start out
with a van kshetra (local plantation) initiative
that reimbursed farmers through the state’s
employment guarantee scheme for planting
saplings of lemon, custard apple and tamarind. Spurred by the success, the gram sabha
then marshalled the villagers in building
trenches and earthen bunds, which transformed over 1,000 hectares into a watershed
of sorts. All initiatives were funded through
various government schemes.
In 1994, the villagers chose to ban private borewells, a measure that helped conserve the groundwater table, and three
years later, decided upon cultivation that
shunned water-intensive crops like sugarcane and bananas. This enabled them to
turn from rain-fed crops such as bajra and
jowar to cash crops like onions and potatoes. At a time when drought-hit villages
elsewhere find themselves in dire straits,
Hiware Bazar boasts an annual R1 crore yield
of onions, a daily milk collection of 3,000
litres and two percolation tanks brimming
with water. In fact, a delegation of farmers
from the village toured 20 parched districts
in the Marathwada region from mid-March
on a mission to spread water literacy.
u
u 33 u
M ay 9 -2 2 , 2 016
rivers form the world’s largest delta before they drain into
the Bay of Bengal. The six hydel
stations China is building on
the river are designed to generate 2.5 billion kilowatt hours of
electricity annually, the first of
them, the $1.5 billion Zangmu
Hydropower
Station,
being
already operational.
India and Bangladesh share 54
rivers, including the Ganga, Brahmaputra and Meghna (gbm), the
total catchment area of which
is 1.75 million sq km. India
accounts for 63 per cent of the
gbm river system, Bangladesh 7
per cent, Bhutan 3 per cent, Nepal
9 per cent, and Tibet (China) 19
per cent. The Ganga river basin
has been the most contentious.
It is also the most densely populated basin in the world, with
a total dependent population of
about 600 million, almost a tenth
of the world’s.
The dispute over it was caused
by India’s construction of a barrage in West Bengal in 1975,
known as the Farakka Barrage,
17.6 km from the borders with
Bangladesh, which was then East
Pakistan. India’s damming of the
Ganga reduced its flow into Bangladesh and affected agriculture
there owing to the resultant rise
in soil salinity. This forced millions of Bangladeshis to relocate
over the decades, their migrations
transforming the demographic
composition of vast tracts of
northeast India, especially Assam
and West Bengal, and triggering
serious ethnic strife and insurgencies there. There is apprehension that a similar reduction
in the flow of the Brahmaputra
may inflame conflicts already
simmering in the region.
In India, many inter-state disputes have also arisen among
riparian states that are guided by
the Inter-States Water Disputes
Act and River Boards Act, both of
1956. The most long-lasting such
disagreement has been the one
between Karnataka and Tamil
Nadu over the waters of the Cauvery. Maharashtra, Karnataka and
Cover Feature
India’s watery history
T
he erstwhile Planning
Commission questioned
the penchant for building large dams – “temples
of modern India”, as Nehru
extolled them – that have
been the mainstay of the irrigation effort in the country,
but which are now recognised to be limited in providing
economically viable additional
large water storage.
India need only look to
its past to draw on the viable
and sustainable water conservation practices that had
evolved in those times. A system to channel water to various settlements had been
developed as far back as
the Indus Valley Civilisation
(3300-1700 bc).
Irrigation, or the managed application of water to
crops, is time-tested in India,
in many parts beginning
with tilling of the land itself.
It flourished during the Vedic
period (1500-500 bc). The
large numbers of tanks found
in the Deccan have been in
existence for ages. The Cauvery delta canals date back
to the 2nd century and the
Yamuna canals were constructed originally about the
4th century.
India’s first agrarian economy was established by the
Nanda Dynasty of Magadha
(424-321 bc), the first empire
builders in the recorded history of India, with the building
of an effective irrigation system through canals and
inland waterways that gave
rise to crop cultivation-oriented agriculture. The need
for water has also shaped
exquisite architecture and
engineering in India, as with
the ancient stepwells, or baori,
that first appeared between
the 2nd and 4th centuries
and then grew across the
country’s arid areas.
There are also any number
of parks and gardens established by various rulers that
had fountains and water circulation systems for cooling the environs. Among the
numerous artificial lakes that
were created is the 36 sq km
Jaisamand Lake, the largest artificial lake in Asia, built
near Udaipur by Maharana Jai
Singh in 1685. The splendid
Keoladeo Ghana bird sanctuary in Bharatpur, Rajasthan, is
a 29 sq km lake and wetland
created by Maharaja Kishan
Singh that has a system of
small dams, dykes and sluice
gates to control the water levels. The area was declared a
national park in 1982 and a
unesco World Heritage Site
in 1985. By 1850, large numbers
of irrigation works were conducting water to almost 1.2
million hectares of land. These
works were in the nature of
u 34 u
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small tanks in southern India,
inundation canals in northern India and reconditioned
canals like the Cauvery delta
system in Madras and the
Yamuna canals. About two
million hectares were under
well irrigation at that time,
mostly in northern India.
The country’s first major
irrigation work was the
Ganga Canal in Uttar Pradesh,
opened in 1854 and followed
by the Upper Bari Doab canal
in the Punjab and the Godavari and Krishna delta systems in Madras. Then came
the Sirhind canal in the Punjab, the Lower Ganga and
Agra canals in Uttar Pradesh
and the Mutha canal in Bombay. The total irrigated area
nearly doubled, from 12 million to 23 million hectares, in
the half century from 1896
to 1945.
The human need for proximity to water has spawned
some of history’s greatest
civilisations on ancient river
valley systems, such as the
Mesopotamian in the TigrisEuphrates
valley
(33002000 bc), the Egyptian in
the Nile valley (3200-1000
bc), the Chinese in the Yellow River valley (2000-200
bc), and the Harappan in the
Indus valley.
Almost all world religions
have gods, angels or spirits specifically designated for
protecting our water sources,
such as Varuna, the presiding deity in Hinduism over
water, oceans and aquatic
animals, and Indra, the
Hindu god of rain and thunderstorms. The traditions of
Indian hospitality – and culture – enjoin the hosts to
offer drinking water to the
guest upon his arrival. Such
an offering is especially a precious tribute in the arid areas
of the country where water is
overtly cherished.
u
Cover Feature
Andhra Pradesh are locked in a dispute over the Krishna; Punjab, Haryana and Rajasthan, over the Ravi and
Beas; Orissa and Andhra Pradesh,
over Vansadhara; Delhi, Haryana
and Uttar Pradesh, over the Yamuna;
and Goa, Karnataka and Maharashtra, over the Mahadayi/Mandovi.
With a view to effectively resolve
these riparian disputes between states
and tackle the issue of water scarcity,
the Modi government now plans to
bring the subject of Water under the
Union List of the Constitution from
the Concurrent List (which in its
current form is limited to shipping,
navigation and the rule of road on
inland waterways). Announcing this
in Parliament recently, Bharti, who
holds the first ever portfolio of ‘minister for water resources, river development and Ganga rejuvenation’,
agreed with Janata Dal (U) leader
Sharad Yadav, who had suggested the
shift; with water becoming an issue
of great dispute, a “civil war” over it
was not unthinkable unless adequate
steps were taken.
However, the Parliamentary Standing Committee on Water Resources
that was gauging the groundwater scenario in the country had last December sought a national consensus for
bringing water in the Concurrent List
so that a comprehensive plan could
be prepared for water conservation.
The Panel deemed water to be dealt
with in a consultative manner, with
the country on the brink of an acute
water crisis, especially of groundwater. The Constitution lays down the
legislative and functional jurisdictions of the Union, State and local
governments regarding water. It qualifies water as basically a State subject,
concerning the Union with only the
case of inter-state river waters. Bharti
added that she was yet to constitute a
committee on the question of bringing water under the Union List as it
was a sensitive issue.
Her ministry is also pursuing the
ambitious scheme for interlinking
of rivers across the country. While
detailed project reports (dpr s) have
been prepared for a few of the links,
many concerns have already been
raised about how far the initiative
can be taken. The comprehensive
proposal to link the Himalayan with
the Peninsular rivers for inter-basin
transfer of water is estimated to cost
R5,60,000 crore, though land submergence and relief and rehabilitation
(r&r) packages are expected to add
to this cost. There are also no firm
estimates on the running costs of the
scheme, such as the cost of power
required to lift water. Besides, owing
to dependence on the monsoons, the
periods when rivers run dry or have
‘surplus’ water are generally synchronous across the subcontinent.
A major problem in planning
inter-basin transfers is how to take
into account the reasonable needs
of the basin states, which will grow
over time. Given the topography of
India and the way links are envisaged, they might totally bypass the
core drylands of Central and Western India, which are located on
elevations of more than 300 metres
above mean sea level.
Linking rivers can also well affect
the natural supply of nutrients
through curtailing flooding of the
downstream areas. All major peninsular rivers along the eastern coast
have extensive deltas and damming
these rivers for linking will hinder
sediment build-up and cause coastal
and delta erosion, destroying the
fragile coastal ecosystems. But with
so many states already at loggerheads
over water, a natural interbasin transfer will be a pipedream of planners
On paper, India has its share of
codified guidance on water issues.
There are both a National Water Policy and a National Water Mission and
often the charter of one cannot be
distinguished from that of the other,
each tasked with bringing the water
resources available to the country
The comprehensive proposal to link
the Himalayan with the Peninsular rivers
for inter-basin transfer of water is estimated
to cost R5,60,000 crore, though land
submergence and relief and rehabilitation
packages are expected to add to this cost.
u 35 u
M ay 9 -2 2 , 2 016
Cover Feature
within the category of utilisable resources to the maximum extent possible.
S
uch an approach is
understandable
in
a context where the
availability in India
of surface and replenishable
groundwater is but 1,869
billion cu m, even as the
country receives a bountiful precipitation, including
snowfall, of 4,000 billion cu
m. But even of this truncated
availability, only about 1,122
billion cu m – 690 billion cu
m of surface water and 432
billion cu m of groundwater – can be put to beneficial
use because of topographical and other constraints.
Precipitation is besides confined to only three to four
months in a year and varies from less than 50 mm
in western Rajasthan and
Ladakh to over 11,500 mm
in Cherrapunjee.
Calling water one of the
most crucial elements in
developmental
planning,
the latest National Water Policy, of 2012, notes: “As the
country has entered the 21st
century, efforts to develop,
conserve, utilise and manage
this important resource in a
sustainable manner have to
be guided by the national
perspective.”
Anticipating
huge
demand for work across the
drought-distressed
areas
where farming activity has
halted, the ministry of rural
development (MoRD) is
releasing R21,000 crore, or
55 per cent, of its annual
budget of R38,500 crore
under the Mahatma Gandhi
National Rural Employment
Guarantee Act (mgnrega)
scheme already by June this
year. The ministry has urged
drought-affected states not
to stop providing work under
the scheme and to ensure
that no applicant for work is
Water man
of India
There are compelling reasons why 57-year-old Rajendra Singh is known as the Water Man of India. As he
wandered through his desert state of Rajasthan in the mid1980s to set up health clinics, he was told by villagers that
their greatest need was not healthcare, but water. As wells
dried up, crops wilted, and rivers and trees disappeared,
many able-bodied villagers left for cities in search for work,
leaving behind women, children and the elderly.
Singh set aside his quest for clinics and instead galvanised support from the villagers in building a series of
johads, or traditional earthen dams. Within the next two
decades, he and his co-workers in Tarun Bharat Sangh
(India Youth Association – that he set up), had built 8,600
johads and other water-holding structures, re-introducing
water to 1,000 villages across the state.
Greenery has been brought back to these areas and
with it, wild birds and animals as well. Their efforts have
also restored several rivers across Rajasthan. “This work of
ours is a way to solve both floods and droughts globally
and we, therefore, believe the impact of this work is on
the local, national and international level, but above all at
the village level,” said Singh in his award acceptance speech
in Stockholm.
Villagers of Gauna, in Almora district, Duarab, in Nainital district, and some other villages in Uttarakhand have
proved that rooftop rainwater harvesting is a reliable,
economic and a sound way of ensuring self-sufficiency
and dignity.
In initiatives taken up since 2003 and part-funded by the
ngo, Central Himalayan Environment Association (chea),
these mountain-inhabitants have been following two
approaches: harvesting rooftop rainwater; and harvesting surface runoff. The former method involves conducting rainwater from the roof through horizontal channels
and vertical down-take pipes to a closed tank, often built
of brick and plaster. This water, close to the house, is used
for drinking and washing.
Harvesting surface runoff involves channelling the water
that runs across the land into open tanks constructed in pits
by the villagers. These stone tanks smoothened with clay
and cow dung can last for decades, if de-silted and maintained well. The water collected is used mainly for irrigation
and for livestock. There are now 155 such rainwater harvesting tanks in Gauna and its neighbouring villages.
u
u 36 u
M ay 9 -2 2 , 2 016
turned away.
The MoRD also extended
the work entitlement to
150 days from 100 days
for this financial year, but
the finance ministry is
yet to make a corresponding budgetary increase. As
several states stopped registering demand for work
unless they had enough
funds at hand, only 1.8 per
cent of the total households
employed under mgnrega
in drought-hit regions have
been provided their full
entitlement for 2015-16. The
Central government had
earlier been reprimanded
by the Supreme Court for
delaying payments of wages
in excess of R8,000 crore
under mgnrega. It charged
the government with reducing the effectiveness of the
mgnrega scheme by delaying payments, after grandly
proclaiming the extension
of employment days.
mgnrega, which started
as nrega in 2005, “aims
at enhancing the livelihood security of people in
rural areas by guaranteeing
100 days of wage-employment in a financial year to a
rural household whose adult
members volunteer to do
unskilled manual work”. But
the millions of field channels, dug wells, tanks, farm
ponds, etc, built over the
years under this programme
failed to raise the country’s
water reserves, as the intention had not been to overcome drought, but only to
provide employment. “The
structures were not designed
to hold water,” finds a study
by New Delhi-based Centre
for Science and Environment
(cse). “In most cases, they
were holes in the ground
that quickly filled up with
soil by the next season.”
Traditional wisdom flowered in India as people dwelt
close to nature and evolved
Cover Feature
pa l A s h r a n ja n b h au m i c k
practices that suited their requirements and that of their environment.
There was thus as much practicality as
harmony in these imaginative, community-level methods of water husbandry that emerged, including the
diverse mechanisms to catch, store
and use water according to the topography of the region, the climate, and
the types of needs. Though today’s
existence has drawn us away from
nature, the advantage lies in our position to combine simple scientific concepts with local knowledge.
The call is not for “back to
nature”, but for establishing sustainable means that benefit us as well as
our environment. Priorities should
shift from medium and large dams
to multiple micro-watershed development and in-situ rainwater harvesting projects. If the soil is kept
well, it can hold up to 40 per cent
of rainwater.
It is imperative to effectively utilise, rejuvenate and manage degraded
lands and wastelands by public and
private investments, there being an
estimated 46.7 million hectares of
wastelands available in the country.
Such reclamation of degraded lands
for sustainable intensification of agriculture and horticulture will help
enlarge the arable areas in which
crop yields can be increased without
adverse environmental impact and
without reducing forest cover.
It has been shown that the adoption of drip irrigation can result in
substantial savings in water for horticulture crops and vegetables. Sprinkler irrigation has saved irrigation
water in the cultivation of groundnut and cotton in Gujarat, Karnataka
and Andhra Pradesh. Gujarat has also
been successful in developing farmer-friendly ways of delivering microirrigation subsidy and changing
subsidy norms to foster more competition among suppliers. Rajasthan
and Bihar have besides been successful in capitalising on the declining
costs of solar panels to make irrigation
more affordable to their fruit and
crop farmers, with solar pumps leading to increased yields and cropping
intensity, and allowing the sowing
of paddy even in a drought year. It
has also been seen that greater public
policy focus on innovative financing
mechanisms, rather than high subsidies, helps promote adoption of solar
technology in agriculture.
R
ecent times have seen a
range of localised efforts
where innovative experiments have transformed
societies by fulfilling their requirements for the most basic, and vital,
commodity that water is (see box:
Small is workable). These need to be
replicated wherever appropriate, the
underlying aim being to recharge
groundwater reserves.
It is relevant to understand the
hydrogeology of a region to determine levels of groundwater contamination so as to focus on its quality
besides quantity. The deeper the levels at which groundwater sinks, the
higher the risks to human health
as the waters at those depths get
The call is not for “back to nature”, but for
establishing sustainable means that benefit us as
well as our environment.
u 37 u
M ay 9 -2 2 , 2 016
contaminated with trace metals and
chemicals as arsenic, fluoride and
nitrates. India has no regulations for
extraction of groundwater and its
coordination among competing uses. Local communities will need to be
increasingly involved in the management of water, for they know their
own requirements and limitations. It
could also enforce a multi-pronged
programme for efficient and sustainable water use, one way being by
incentivising campaigns to augment
supply locally and by promoting rainwater harvesting, as also by opening
up the sector to private players for
increasing investments, improving
management and ensuring metered
services at staggered prices.
Water supply must be treated as
an essential element of urban infrastructure, on par with roads or
power. It must be treated as a common property resource and managed as a community resource held
by the state under a public trust doctrine to achieve food security, livelihood, and equitable and sustainable
development for all.
The Vedas never falter. We collectively need to know the source
of our waters. The choice stands
starkly before us: to swim together or
sink together.
u SAROSH B ANA
[email protected]
Focus
Losing its sheen
Falling, steadying, stagnating – where is crude oil heading?
T
he price of crude oil surged by
20 per cent in April – the highest monthly gain in the last
seven years. This sudden rise has
come as a surprise, as many thought
that the price of crude, which has
been on a constant decline for the last
two years, would continue its downward journey further. But, since February 2016, the price of crude oil has
been going up – by more than 75 per
cent to $45 per barrel from a low of
$26 per barrel. Some research houses
like Morgan Stanley and Goldman
Sachs have come up with reports in
January and February 2016, suggesting that crude oil could settle at $30
per barrel in 2016. Even the economic
survey, published by the ministry of
finance, had suggested that the average price of crude in 2016-17 would
be in the region of $35 per barrel, as
Oil price forecast
50
Monthly average in 2016
WTI ($ per barrel)
44
36.8
38
32
26
20
1 Apr – 2 May 2016
Source: www.eia.doe.gov
u 38 u
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44.7
against an average price of $45 per
barrel in 2015-16. Hence, this spike
took many by surprise.
For India, the surge in the price
of crude oil is not happy news, as it
impacts the country negatively on
many fronts. It disturbs India’s fiscal deficit; it pushes the inflation rate
higher; and even more important, it
weakens the rupee against the dollar,
as India has to spend more dollars
to buy the same quantity of crude.
If this surge continues, then the government will have one more headache to deal with.
No one knows for sure where the
price will be heading in the mediumto long-term. Experts are now divided
in their opinion, unlike at the beginning of the year, when there was a
consensus that oil prices would have
a downward bias. While one school
Focus
of thought believes that the price of
crude can rise to $55 per barrel, the
other group feels this surge in price is
technical, as it has fallen from $110
per barrel to $26 and, hence, this
bounce back rally. This group also
believes that fundamental factors do
not warrant a rise in the price of crude
oil. According to longforecast.com,
a Website that makes predictions on
various assets, crude will peak in July
at $55 per barrel (see chart: Monthly
predictions on crude).
Business India believes that the
price of crude oil may not surge
from here on, the way it has in the
last two months. Gains, if any, from
here onwards would be marginal. We
see a good probability of the crude
price settling around $40 per barrel
in the next couple of months. However, U.P. Singh, cmd, Oil India, has
a different point of view. While putting a disclaimer that he is not an
expert on crude oil price movements
and, hence, does not know how the
price of crude would move in the
short term, he feels the price of crude
would settle in the region of $50 per
barrel in the medium term. But he
rules out the possibility of crude
reaching $100 per barrel again in the
next five years.
Why do we believe that prices will
correct themselves? Crude oil is a
global commodity and, hence, price
is a function of international demand
and supply. This, we feel, should
define the price in the mediumto long-term. Right now, the supply of crude exceeds daily demand.
This gap may increase in the coming months as, by June, Kuwait may
pump more oil in to reach 3.5 million barrels per day. Kuwait has seen
a decline in its output in April, due to
an oil workers’ strike, which reduced
its daily output to 1.7 million barrels
per day. At the same time, Iran too
is likely to ramp up its supply to its
pre-sanction level of nearly 4 million
barrels per day, as against the present
3.3 million barrels per day. In fact,
Alexander Novak, energy minister,
government of Russia, had recently
made a statement that oversupply in
crude may last till the middle of next
year. It’s worth remembering that
Russia is a key player in the international crude oil prices.
Oil tracking
On 17 April, many were expecting
that opec members, along with Russia, would announce a freeze in output to keep prices at a decent level.
But that talk did not result in a deal,
as Iran refused to be a part of it, as
was demanded by Saudi Arabia as
a pre-condition to freeze production. The meeting had taken place
in Doha, Qatar. On the other hand,
US shale gas production has been
curtailed partly because many of its
plants are not competitive enough to
produce oil profitably at these prices.
In April, US crude oil production fell
by 2 per cent to about 8.90 million
barrels per day, after touching a high
of 9.6 million barrels. It’s estimated
that US shale production cost $45-50
per barrel and so, any surge in the
price of crude from here on would
make the US units viable, increasing
the quantum of production again
and pushing the prices down.
According to one report, many of
Price summary
WTI crude oil
Brent crude oil
Gasoline
Diesel highway retail
Heating oil*
Natural gas*
Electricity*
Un
U
Unit
niitt
($ per barrel)
($ per barrel)
($ per gallon)
($ per gallon)
($ per gallon)
($ per ‘000 cubic feet)
(Cents per KWH)
2014
93.17
98.89
3.36
3.83
3.72
10.94
12.52
2015
48.67
52.32
2.43
2.71
2.65
10.36
12.67
2016
34.6
34.73
1.94
2.11
1.97
9.64
12.61
*US residential average. Source: EIA. Gov
u 39 u
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2017
40.58
40.58
2.00
2.33
2.18
10.05
12.91
Oil price forecast
Monthly average in 2016
52.9
55
50.7
50.4
48.2
44.7
Apr May Jun
53.4
46.7
48.1
Jul Aug Sep Oct Nov Dec
Source: longforecast.com
the US oil frackers have ‘drilled but
incomplete wells’ that can come on
stream soon, if the prices remain at
the present level or surge from this
level. It’s worth mentioning that the
US domestic production of oil has
nearly doubled in the last few years.
Also, as NYtimes.com estimates, US
stockpiles are at their highest levels
in more than 80 years. The developed world has 3 billion barrels of
commercial crude and refined products in its inventory, says iea. All this
data suggests that a crude rally has
either peaked or is about to peak.
Also, a recent imf prediction has
lowered the world’s gdp growth rate
from 3.4 per cent to 3.2 per cent, suggesting that the world economy is
not yet out of the woods. And, that
would mean lower demand for oil.
What comes as a surprise in April
is the fact that opec has produced the
highest quantity of crude in recent
history, pumping 32.64 million barrels per day, as against 32.47 million
barrels per day in March, when many
thought that it would curtail its oil
production. Meanwhile, even as US
oil production has declined, other
oil producing nations have ramped
up their capacities to reduce the
impact of any shortfall. Also, there
exists spare capacity in the region
of 2 million barrels per day, which
is equivalent to 2 per cent of the
global demand.
Another indication that oil may
have fallen to a larger level structural
fall is the fact that Saudi Arabia, one
of the largest producers of crude, is
beginning to look at life beyond oil.
It wants to reduce its dependence on
oil – dropping a hint that crude oil
Focus
prices may not see $100 per barrel in
the near future. In an interview with
Bloomberg, the 30-year-old Deputy
Crown Prince Mohammed bin Salman, second in line to the King, had
said: “So, within 20 years, we will
be an economy or state that doesn’t
depend mainly on oil.”
Even the long-term trajectory
for crude looks a little shaky. There
are reports that, by 2023 – that is in
the next seven years – electric vehicles will gain increasing acceptance,
due to which, demand for oil will be
reduced by 2 million barrels per day.
British Petroleum in its report: Outlook to 2035, reveals that the consumption of liquid fuel is largely
driven by the global vehicle fleet,
which may double, from 1.2 billion
to 2.4 billion, in the next 20 years –
say, by 2035. But, at the same time,
bp believes that cars would be more
efficient and would run 50 miles per
gallon, as against 30 miles per gallon as of now. In the same report,
it also predicts that oil consumption in oecd economies will have
a secular decline, while China and
India would account for half of the
increase in demand.
So the oil industry is facing challenges on two fronts – first, technology developments like acceptance
of shale as a substitute is making oil
supply easy to ramp up in the shortest possible time, putting the surge
in prices under check. Secondly,
electric vehicles are likely to substantially reduce demand for oil.
But these are long-term predictions, which are known to be fickle
and likely to be wrong at times. Who
would have predicted in 2000, that
crude would trade above $100 per
barrel by 2008? Similarly, none could
have known in 2009 that crude
would be available at less than $30
per barrel in 2016. Crude is one commodity which has proved many pundits wrong and, hence, one should
always take these predictions with a
pinch of salt.
Price factors
How does one then explain the
recent surge? There are a couple of
factors that have pushed the prices
up. The first is the inverse relationship the dollar has with crude oil
prices. Whenever the dollar falls
against other currencies, the price of
crude has surged.
So, in the recent past, when the
dollar declined against many other
currencies, many believed that a
meeting of opec and Russia in April
would result in an oil production
freeze. It was this expectation that
led oil prices to firm up. But as no
deal was reached, prices remained
at an elevated level. Some experts
Average monthly prices of various metals
($)
Primary
Aluminium
Aluminium
Alloy
Copper
Lead
Nickel
Tin
Jan
1479.09
1563.96
4462.30
1646.54
8479.88
13768.88
Feb
1535.23
1556.94
4594.96
1771.20
8306.43
15647.38
March
1530.21
1560.36
4947.04
1807.48
8700.95
16989.17
April
1563.95
1549.81
4850.55
1728.40
8849.64
17059.52
5.7
-0.9
8.7
5.0
4.4
23.9
% Gain
feel this could be more a long position, created in the futures market,
because of which the pressure on
crude did not unwind.
Soumyajit Niyogi, associate director – credit and market research,
India Ratings, believes that this rally
is also due to the China factor. He
gives three reasons for the recent
rally in the price of crude oil: “The
data from China was better than
expected. Second, there was fear
that crude production from opec as
well as non- opec countries would be
restricted; and third, there was overall global stability.” While Niyogi is
not allowed to give future predictions
on crude oil to the media, he suggests
that the future trend of the price of
crude will be decided by economic
data from China. In the meantime,
in the first few days of May, the price
of crude has started getting light.
Crude decides the price of other
international commodities too. Most
of the time, when crude oil prices
surge, other international commodities’ prices have also surged, as is
happening now. In the last two
months, steel prices are up by 30
per cent, while iron ore prices have
risen by 28 per cent. On the other
hand, prices of non-ferrous metals like aluminium as well as copper
are also up by 5.7 per cent and 8.7
per cent respectively since January.
The price of tin has also gone up by
23.9 per cent between January and
April (see table).
The effect of the surge prices of
commodities has also pushed up the
share prices of companies whose fortunes are linked to these commodities – such as Tata Steel, Hindalco,
Cairn Energy, etc. But, in all probability, when these commodity prices
take a beating, these share prices too
will tumble.
Speculative bids appear to be at
the highest level on iron ore. As and
when these speculative positions get
unwound, there would be pressure
on share prices too. Maybe those
who expect the commodity rallies
to get extended are in for a surprise.
It’s time to take some money off the
table from these commodities.
u SUNIL DA M ANIA
*US residential average. Source: EIA. Gov
[email protected]
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Corporate Reports
E-catalyst for SMEs
photos: sajal bose
Online marketplace major IndiaMart focusses on
expanding its e-commerce platform
I
n today’s digital age, running and
looking for a business opportunity has become easy. But it was
not so till the late 1990s when Small
and Medium Enterprises (sme s) used
to depend on physical wholesale market places, trade exhibitions, business
directories and referrals for sale/buying products in India and overseas.
The introduction of internet services
in the country brought about a sea
change. The business directory has
been falling out of favour ever since
the online era began to set in. The
closely-held, Noida-based IndiaMart
InterMesh Limited, the largest online
marketplace, was in the forefront to
make these changes that has grown
with the huge demand over the past
two decades. Now, it has a vision of
Dinesh Agarwal:
‘We have changed
the business
ceo, IndiaMart. The bootoutlook of smes’ strap start-up, which began
taking the company to a new level.
IndiaMart, which serves as a b2b
product discovery platform for sme s,
is the first and largest player in the
country, founded with a mission to
make doing business easy. It is an
online directory that connects buyers with suppliers and generates business leads. Buyers gain access to a
wider marketplace and diverse product portfolios to choose their specific
requirements from industrial plant
and machinery, electronics and electrical goods, building construction
materials and equipment, engineering products, surgical and healthcare
products, chemicals, etc. “We have
successfully changed the business
outlook of sme s in a gainful manner,” says Dinesh Agarwal, founder &
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in 1996, has grown rapdily
and, celebrates 20 years.
Agarwal was born in a business
family at Nanpara, a small town in
UP near the Nepal border. His grandfather was a freedom fighter. The
family was in fertiliser trading and
also owned a petrol pump. He says
he got his eureka moment while listening to a speech of the then Prime
Minister Rajiv Gandhi. “I was moved
by his speech and his vision of the
country’s development through
computers. I felt I have found my
calling,” reminisces Agarwal, who
is now 47. He holds a B Tech degree
in Computer Science & Engineering
from Harcourt Butler Technological
Institute, Kanpur.
Agarwal joined cmc Limited
in 1990 as a systems engineer to
maintain software for the railway
Corporate Reports
reservation system in Delhi. In 1991,
he moved to the Centre for Development of Telematics (c-dot), which
was set up by the government with
the help of Sam Pitroda. Agarwal
was part of the team working on
rural automatic exchanges. “It was
the best place to work for learners,”
says Agarwal. “In c-dot, I remember
using e-mail for the first time”. In
1992, he took a job in hcl in the US,
where he gained experience in networking and systems development,
as also consulting. But his determination to start his own venture
involving the internet and his zeal
for entrepreneurship pushed him to
quit the cushy job and comfortable
life abroad and return to India in
1996 – a year after the internet was
launched by vsnl here.
After exploring several business
ideas, Agarwal finally set up IndiaMart as a b2b digital platform in 1996
from his flat at East Delhi, with an
investment of H40,000. He remembers how he almost finalised the
company’s name as Business India,
while looking at the available list of
domain names but had to abandon
the idea, because of a magazine by
that name, and settled for IndiaMart.
(His office is now set up in a sprawling high-rise on the Noida highway.)
He was joined in the venture by his
cousin Brijesh Agrawal, who is eight
years younger. In late 2000, the company raised funds from Intel Capital
and Bennett, Coleman & Co to grow
the business.
In the beginning, IndiaMart faced
several challenges. The number of
internet users was low. Besides, the
internet was slow and computers
were expensive. IndiaMart used to
receive all enquiries from exporters
on their own computers, because the
sellers did not have pcs. So, the company sent them printouts of such
business enquiries. Gradually, the
business volume grew and the sellers
started buying computers. “It took
me about seven years to convince our
customers to buy computers for ease
of doing business. It is now history,”
Dinesh Agarwal recalls. A workaholic, sharp yet humble, Dinesh has
grown the company from scratch. It
was one of the few companies that
Brijesh Agrawal: ‘Tolexo is set to grow bigger’
survived the dotcom bust and managed to make profits. “We do things
that are right for business, with a
long-term view,” he says.
Growing base
Today, the company has 25 million buyers search from over 30 million products and get connected
with more than 2.1 million suppliers. From 10,000 paying customers and a revenue of H6 lakh in 1997,
the company has grown to a paying customer base of more than
100,000 and revenue of H300 crore
at present. IndiaMart earns its revenue from subscription fees from its
paying customers and selling business leads. It controls over 70 per
cent traffic in online marketplaces in
India, of which about H30,000 crore
worth of merchandise value turns
into transactions. Tradeindia, the
other significant player, which came
into being in 2001, is way behind
IndiaMart, “which is the early
mover in the industry,” says Bikky
Khosla, founder, Tradeindia. “Its
recent venture into e-commerce is a
good move.”
IndiaMart has over 3,000 employees, located across 60 offices in the
country. Its platform receives over 50
per cent of its traffic on mobile and
its app is among the top business
apps across Android, iOS, Windows
and Blackberry platforms.
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“To expand our marketing activities, we came into the fold of IndiaMart
last year,” says Ruediger Schroeder,
managing director, Karcher Cleaning Systems, Noida. “We received as
many as 1,200 enquiries in the last
one year through it and the quality
of these enquiries has been encouraging for our business. We have converted many of these into confirmed
orders and have seen substantial
increase in our business volume”.
Reliance, Mahindra, Grasim, Tata
Steel, Ultra Tech Cement, Idea and
Indian Oil are amongst some coveted
customers of IndiaMart. “IndiaMart
has a vast supplier network,” says
Akash Kumar, assistant manager,
l& t, Punjab, a corporate customer
of the company. “We get fruitful and
immediate responses from the suppliers regarding our requirements.
We appreciate the current services
offered by IndiaMart.”
The IndiaMart story is remarkable for its ability to stay evergreen
in the digital platform. After retaining the leadership position in the
online marketplace for two decades,
in August 2014, it forayed into b2b
e-commerce and set up tolexo.com
as a wholly-owned subsidiary with
an investment of H100 crore. It is a
full-fledged e-commerce site for sme s
dealing with industrial items for
manufacturing and tooling industry, construction, hospitals and
Corporate Reports
laboratories. It keeps on adding items
to its product listing to cater to more
sectors of the b2b segment. “This is
a natural extension from the IndiaMart business. Through our experience, we discovered that there are
a large number of customers who
desire to have a payment option on
the IndiaMart platform, so that they
can buy small quantities quickly for
their business needs. Tolexo was conceived to supply these customers,”
says Brijesh Agrawal, ceo, Tolexo.
The subsidiary makes buying simple for its customers through its interactive website and thrust on delivery,
besides product price comparison
and buyer feedback. b2b customer
focusses on convenience rather than
the pricing. It is a threat and substitute for offline wholesale markets.
The biggest advantage of Tolexo is
that it has access to IndiaMart’s large
database. However, “We did not
incorporate Tolexo into the IndiaMart platform, because a large number of high-value industrial items
cannot be sold through Tolexo,” says
Dinesh Agarwal. “Buyers like to see
them physically and test the products before they invest in them.”
Tolexo is growing at above 10
per cent month on month. At present, it offers one million products
from 9,000 sellers in over 1,000 cities
across the country. “For a wide variety of tools we had to contact 10-15
suppliers in and around Bengaluru,”
says Nagaraj S, senior manager, electrical, Ashok Leyland, which buys its
tools through Tolexo. “Tolexo’s single-window solution has come in
handy. It is hassle-free, there are no
logistics headaches and most of the
goods are from leading brands.”
“Tolexo was launched at a time
when the b2b space in India was set
to grow,” says Brijesh Agrawal. As per
Walmart reports, currently, the b2b
e-commerce opportunity in India is
$300 billion, growing at 20 per cent
year on year. And, it is likely to touch
$700 billion by 2020.
“We are playing a huge role in the
growth of smes through our platform,” says Dinesh Gulati, director,
IndiaMart. “Tolexo is a forward integration of IndiaMart. Now, we offer
an end-to-end solution for smes from
Gulati: ‘We offer end-to-end solutions
for smes’
discovery to the e-commerce platform.” There are 45 million plus smes
in the country and only 25 per cent
among them have access to the internet, as against 70 per cent in China
and 95 per cent in the US. The opportunity for growth is enormous, Gulati
adds. There are many start-ups now
crowding in, to take the opportunity of the large market in b2b e-commerce. Alibaba and Amazon too are
planning to enter the segment in
India. “Tolexo will possibly leverage the IndiaMart name,” says Rahul
Gupta, ceo, Industrybuying.com, a
competitor in the segment. “The challenge for any player in the segment is
to make constant technology upgradation and innovation for survival”.
Impressive growth
Technology plays a major role for
product improvement and IndiaMart
has always stayed current. There are
400 software experts continuously
working for innovative technology
for the IndiaMart and Tolexo platforms. “We spend 15 per cent of our
revenue on product development
and r&d,” says Gulati.
IndiaMart kept its balance sheet
healthy. “We are a debt-free, cashpositive company. For the past seven
years, our cagr is 39 per cent. Our
revenue has grown from H30 crore
in 2009-10 to H300 crore in 2015-16.
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The customer base has been growing 100 per cent year on year,” says
Prateek Chandra, chief financial officer, IndiaMart. The company’s revenue has increased by 40 per cent over
the previous year’s H214 crore and it
is exploring possibilities of acquiring
a b2b company in Europe. “We are
talking about it internally,” admits
Gulati. “We will share the details
when something emerges.”
To scale up Tolexo and further
strengthen its leadership position,
IndiaMart raised an undisclosed
amount in March, in a series C funding round, led by Amadeus Capital,
with Westbridge Capital; the Accion
Frontier Inclusion Fund (managed by
Quona Capital); and Intel Capital (the
existing investor in the company) also
participating. “As pioneers in this field,
we understand that there lies a huge
untapped opportunity with Indian
msmes as well as big corporate buyers,” says Dinesh Agarwal. “Also, given
the socio-political and environmental
forces in the country, we foresee larger
strides being taken by msmes in the
coming years”. The present shareholding pattern reveals a promoter holding
of 56 per cent and an employee-cumesop holding of 16 per cent, with the
remaining 28 per cent in the hands
of the investors. “We are planning an
ipo in the next two or three years,”
informs Chandra.
IndiaMart has built several platforms for sme s like IndiaMart Emerging Business Forum, in association
with Zee Business to raise the concerns of sme s. Till last year, the company had participated in Leaders of
Tomorrow Awards in association
with et Now to give due recognition to sme s for their contribution
towards the industry. The company
has Bollywood actor Irrfan Khan as
its brand ambassador.
The company’s move into e-commerce has been well-timed, as the segment is opening up in the country. Its
road map for the next four years is to
achieve a revenue of H2,000 crore, of
which 50 per cent would come from
Tolexo, even as IndiaMart continues to expand its role in the online
marketplace.
u SAJAL B OSE
[email protected]
Corporate Reports
Merge to surge
O
n 26 April, the Bengalurubased Quess Corp Ltd (qcl),
a subsidiary of Thomas Cook
(India), announced the completion
of the acquisition of the Colombo-
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sa n jay bor a de
Quess Corporation
enters newer
geographies and
adds brands
the terms of a share purchase agreement that was entered on 14 October, 2015. qcl has also entered into
an agreement with cpi Engineering
Services sdn bhd in February 2016,
to set up a joint venture entity in
Malaysia, wherein qcl will hold 49
per cent shareholding in the entity,
and expand its industrial asset management business. In addition, in
January 2016, qcl has also increased
its shareholding in mfx from 49 per
cent to 100 per cent.
“The Randstad Lanka acquisition
lends heft to our people and services
business segment and to our presence in Asia Pacific,” explains Ajit
Isaac, cmd, qcl . “More importantly,
it gives us a strategic beachhead in Sri
Lanka, which can be used for launching our offerings in integrated facility management, managed services
and other businesses in Sri Lanka”.
The `2,567 crore (15 months ended
March 2015) qcl is an integrated
business services provider, organised
under four verticals – Global Technology Solutions (gts), People & Services
(p&s), Integrated Facilities Management (ifm) and Industrial Asset Management (iam) – through multiple
brands. Isaac hold 25 per cent in
qcl’s equity.
Over the years, qcl has largely
grown through acquisitions. In less
than a decade, in tranches, it has
accomplished eight such take-overs
(not including the latest: Randstad
Lanka and Transfield Services Qatar),
for an aggregate consideration of
`146 crore. “The inorganic
growth is through strategic
acquisitions of entities either
Isaac: strategic
to supplement business verbeachhead in Sri
ticals or to diversify reveLanka
nue streams, and thus we
integrated the acquired businesses to further strengthen the
service portfolio,” adds Isaac, whose
appetite for inorganic growth has
spread qcl’s operations across eight
countries, with a strong presence in
the Asia-Pacific region. A hardcore
human resources ( hr) person, Isaac
based Randstad Lanka Pvt Ltd has been with various industrial
(which offers staffing and human groups in his over-two-decade workresource solutions in Sri Lanka) from ing career. He started as a manageRandstad India Private Limited. The ment trainee with Godrej & Boyce,
acquisition was closed, pursuant to and then moved on to Essar, tisco
Corporate Reports
Robust revenue growth
($ million)
sa n jay bor a de
and idfc, to name a few.
During his stint as head, corporate hr, Essar, Isaac was selected
for the British Council Chevening
scholars – The Managers for leadership programme – of Leeds University. “Here, I started understanding
the opportunities that lay in the hr
domain,” says Isaac candidly. He
hails from a middle-class, non-entrepreneurial background and began to
dream of becoming an entrepreneur
in the early 1990s. It was during this
time that the private equity market
in India was booming.
Isaac quit idfc and, with a $1 million loan from jp Morgan, he set up
Peopleone Consulting, which was a
first-of-its-kind private equity investment for hr activity in India. “The
idea of staffing really came from a
trip to the US in 2001, where I realised that companies were using temporary staffing for positions like
clerks and secretaries and there were
many players providing this service.
There was nothing like this in India.
We saw the opportunity and created
an offering around staffing, recruitment and executive search to cater
to all the needs of sourcing people”.
This was at a time when telecom
operators were building new circles.
Peopleone Consulting’s first client
for staffing was Airtel. Isaac continued to manage and lead the company
until 2004, when he decided to sell
a controlling stake in the company
to Zurich-based company – Adecco.
He continued his association with
Adecco as a member of its executive
committee till 2007.
Two years later, he bought a
Nag: dreaming big
minority stake in ikya Human Capital Solutions, which focussed on
executive search, recruitment solutions and staffing services and provided value-added services to a broad
range of sectors, besides acquiring
the Delhi-based Coachieve Solutions,
offering recruitment services to it
and ites space. The momentum continued with the acquisition of Magna
– India’s largest professional staffing
company. Slowly, he mastered the
art of M&A and built the company by
striking deals.
Huge growth potential
Today, qcl offers comprehensive
solutions, including recruitment,
temporary staffing, technology staffing, it products and solutions, skill
Improving EBITDA margin profile
($ million)
5.3%
396
4.6%
4.5%
21.1
h
t
row
g
.2x
9
155
236
98
FY11
11.4
3.5%
155
4.5
43
4.8%
4.2%
7
6.4
FY13
CY13
9M
1.5
FY12
FY13
CY13
9M
FY15
15M
H1
FY16
FY11
FY12
u 47 u
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FY15
15M
H1
FY16
development, payroll, compliance
management, integrated facility management and industrial asset management services. According to a Frost
& Sullivan (F&s) report, 2016, titled
Assessment of outsourced services
market in India, qcl is one of India’s
leading integrated business services
providers, focussed on emerging as
the preferred partner for handling
end-to-end business functions of their
clients. It is the largest it staff augmentation provider in India, based
on the number of employees, and the
third largest general staffing company
in India, also based on the number of
employees, the report adds.
The company is among the leading industrial asset management and
integrated facility management service providers in India. “Our clients
include large, reputable global organisations, including some 35 companies ranked in the 2015 Fortune
Global 500 list,” says Isaac.
“Quess is in the outsourcing space
of skilled resources, a greenfield
business in India with huge potential for growth; also, we believe in
Issac’s vision and his excellent track
record,” says Madhavan Menon,
md Thomas Cook (India), which
acquired control in Quess in 2013.
“We continue to believe in the management of Quess, as well as Issac’s
vision to build Quess into a leading
Corporate Reports
FY 2014
Bought out residual
stake in Magna &
Avon FMS
FY 2015
Acquired
HofinconsEngineering services
player in the outsourcing space. We
believe the growth potential of the
company is huge. We came in when
the existing shareholder of IKYA
wanted an exit and acquired 76 per
cent,” Menon adds.
Learning opportunities
During the last five years, qcl’s topline
has logged a cagr of 65 per cent, with
the global technology solutions (gts)
standing out as the vertical contributing the most to the operating profit
(ebidta). On a revenue of `737 crore
(28.66 per cent of total revenue) for
March 2015 (15 month period), it
made an ebidta of `64 crore. This segment provides it staffing, it product
solutions and services in India, North
America and South East Asia, under
Acquired 49% in
MFX- Integrated
offering in IT
Acquired
BrainhunterStaffing Intʼl
the Magna Infotech, Brainhunter,
Mindwire and mfx brands. qcl owns
and operates offshore delivery and
development centres in Chennai
and Bengaluru, with more than 200
full time employees. “Our sophisticated data centres at Ridgefield Park,
New Jersey and Roanoke, Virginia are
ssae 16 soc1 Type II compliant facilities, and are strategically located in
different regions in the US to ensure
disaster recovery protection and meet
applicable regulatory requirements,”
says Vikram Gulati, president, gts,
since November 2014.
Gulati holds a bachelor’s degree
in electrical engineering and a master’s degree in Business Administration from University of Bombay.
Prior to joining qcl, he was ceo &
One of Indiaʼs leading integrated business services providers
67.83%
69.55%
Global Technology
Solutions (GTS)
People Services
and Logistics
(PS&L)
Integrated Facility
Management (IFM)
Industrial Asset
Management (IAM)
IT Solutions,
Services & Products
Recruitment,
Staffing, RPO & Skill
Development
Integrated
Maintenance of
Facilities
Industrial Asset
O&M & Managed
Services
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FY 2016
Acquired
Aramark IndiaNiche FM capability
Merger of Avon,
Magna & Hofincons
into Quess.
Acquired residual
stake in MFX
co-founder, Happiest Minds.
The second largest contributor to
the operating profit is the People &
Services (p&s) segment, reporting an
ebidta of `41 crore, on a revenue of
`1,403 crore (54.56 per cent of total).
It provides comprehensive staffing
(excluding it staffing) services and
solutions including general staffing,
recruitment and executive search,
recruitment process outsourcing, as
well as payroll, compliance and background verification services under
the ikya and CoAchieve brands. Also,
it provides training and skill development services through 64 centres
spread across India under the Excelus brand in partnership with the
government of India. “I joined Quess
(known as ikya then) when it started
operations in a three-bedroom apartment,” explains Guruprasad Srinivasan, president, p&s. “I was part of
everything that a budding business
needs, as I had wanted in my career
at that point”.
Srinivasan has been with Quess
since October 2007, after a one-decade stint with mncs. “While a
start-up environment is challenging, it provided a tremendous learning opportunity,” adds Srinivasan.
“The challenges of running the
company are unlimited and at
every step we need to constantly
prove ourselves. It’s like shooting
a film without retakes; you have to
get it right the first time”, His clients
include Amazon, Bata, fmc, Hindujas, pnb Housing Finance, vf Brands
and several large multinational
conglomerates.
“The Hinduja group has worked
with ikya Search Partners (a division of Quess Corp) for a long time
in senior talent acquisition, as we
have successfully built the group
human resources for our diversified businesses,” observes Sudhanshu Tripathi, group president, hr,
Hinduja group. “We have seen it
grow professionally over the years
Corporate Reports
FY 2008
Investment
by IEP
FY 2009
Acquired Avon FMSEnters facility
management
in their domain of attracting some
of the best Indian and international
talent for our different businesses
across the country and acknowledge
their consistently professional service levels, sharp focus and delivery
every time in sometimes complex
requirements”.
The third largest contributor
to the top line and profit of qcl is
the integrated facility management
(ifm) division. In 2015, on a revenue of `302 crore (11.74 per cent of
total), it made an operating profit of
`19 crore. The ifm segment provides
solutions to corporates and other
organizations, such as hospitals and
schools across India, covering the
entire range of facility management
services, including janitorial services, electro-mechanical services,
pest control, as well as food and hospitality services. These services are
provided under the Avon and Aravon
brands. “When I met the leadership
team, I found synergy in our thought
process and a common mission,”
says Vivek Arora, business head, ifm
Services. “I was coming from one of
India’s largest business conglomerate and it was a difficult choice; but
then, the role discussed with me was
new and something that I hadn’t
done in my past”.
Arora has been with the company since January 2009. Under his
fold, this division has clients including engineering companies such as
Robert Bosch, several large financial
institutions in India, Fortune 500 real
estate services companies and private
airport management companies.
The fourth division which took
shape in 2015 is industrial asset management (iam), which provides industrial operations and maintenance
(O&M) services and related asset
record maintenance services under
the Hofincons brand. For the year
ended March 2015, this division’s
revenue was `127 crore (4.95 per cent
of total); it also made an operating
FY 2010
Acquired
Coacheive Solutions
RPO company
FY 2011
Acquired MagnaIndiaʼs largest IT
staffing company
profit of `18 crore. This highly profitable business caters to various industries, including power, energy, oil &
gas, chemicals and ferrous and nonferrous metal industries across India
and the Middle East.
Prime services
In addition, it also provides technology and consultation services
focussed on the oil and gas industry. “Further, we provide managed
services for utilities (meter reading
services) and telecom companies
(tower maintenance and network
deployment services) under the Maxeed brand to clients like L&T Special Steels and Heavy Forgings,” says
Rajeswara Rao, president, iam. “Focus
will be on current portfolio and taking advantage of the manufacturing
thrust through ‘Make in India’ initiatives in the country. Internationally,
we hope to exploit opportunities in
South East Asia and the Middle East
too”. iam operates for the core manufacturing sector in India, with an
international footprint in specialised
asset management services. Prior to
joining Quess, Rao had held positions at tvs Srichakra, Sundaram
Industries, Tube Investments of India
and Parry & Co.
“We believe our business model
has benefited from certain inherent
operational efficiencies,” says Subrata
Strong receivables management
Day Sales Outstanding
87
67
57
48
33
FY11
FY12
FY13
CY13
9M
FY15
15M
40
H1
FY16
FY 2012
Selected by MoRDGoI to train 8,000
youths
FY 2013
Fairfax backed TCIL
acquired 74% stake
in Quess. IEP exits
Nag, executive & whole-time director-cum- cfo, qcl . “Given the fixed
nature of our investment in infrastructure and technology in most of
our business segments, there is substantial operating leverage benefit
to us as the business scales up and
we increase the number of associate
employees we place”. Nag has striven
to improve the operating margins
through a range of initiatives, including metric-driven improvement in
client service, application of consistent processes, leveraging scale to
improve recruitment efficiency.
“We have also made significant
investments in technology infrastructure over the years, including
leveraging our domain expertise,
implementing sap across our operations in India, centralising common
administrative functions, developing customised applicant tracking, and automating the associate
employee life cycle,” adds Nag. “We
also provide some of our clients with
customised dashboards to monitor associate employees placed by
us”. Nag is responsible for the overall finance and accounts functions of
the company. He has been a director
of the company since July 2013.
With many firsts under his belt,
“We look at being the first hr company to go public,” says Isaac. “We
believe we have the horse power, scale
and financials to take it to a public
offering. We intend to continue our
strategic expansion plans through
inorganic growth opportunities in
underserved markets and geographies that complement our existing
operations. Through strategic acquisitions, we intend to increase our
market share, enable access to new
clients and enter high-growth geographies in a cost effective manner,”
he adds, looking at exploring strategic high growth potential geographies such as Africa.
u LANCELOT J OSEPH
[email protected]
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Corporate Reports
Riding on innovation
Rusan Pharma navigates through the highly regulated
opioid market
Culling out a niche
Regulatory difficulties and problems
photos: sa n jay bor a de
W
here would you go for hard
core drug addiction treatment in Mumbai city? Let
alone smaller cities and rural areas,”
asks Dr Kunal Saxena, 32, managing
director, Rusan Pharma Ltd, Mumbai,
rhetorically. The question underlines
the difficulties faced by manufacturers of opioids – medicines derived
from controlled substances, such
as morphine that are used to treat
extreme pain or drug dependency –
areas that Rusan specialises in. Globally, the opioids market stood at $34.9
billion in 2015, according to a study
by research firm Persistence Market
Research, with the US consuming 80
per cent of the drugs.
India, ironically, is one of the largest opium growers in the world, but
few people have access to opioids for
medical purposes. Dr M.R. Rajagopal,
a palliative care physician & founder
of Kerala-based Pallium India, an
ngo that provides palliative care to
patients, ‘guesstimates’ that a mere
“1-2 per cent of the needy get access to
opioids” in the country.
This grim situation is the result of
India’s Narcotic Drugs & Psychotropic Substances Act (1985), which was
put in place to curb the use of illicit
drugs, but also ended up restricting
the use of drugs for medicinal purposes. “Under the law, even a minor
clerical error in stocking or prescribing opioids led to imprisonment,” says
Rajagopal, of the difficulties faced by
drug makers and doctors alike. “As
a result, morphine simply vanished
from the market. People could not get
an opioid painkiller even when they
were dying of cancer.” The law was
amended in 2014, and since then the
situation has been improving, but still
“much needs to be done,” says the
doctor-cum-advocate.
Navin Saxena: helping those in pain
in access notwithstanding, Dr Navin
Saxena, 63, established Rusan Pharma
in 1994 by manufacturing commercial scale buprenorphine – a powerful
opioid used in the treatment of de-addiction and pain management. “One,
we had to find relevance. The treatment is required,” says the soft-spoken yet firm founder and chairman,
explaining the motivation behind
Rusan’s specialisation. “Second, we
had to find a concentrated area. We
don’t have 10,000 medical reps and
we don’t have money to go big on otc
and television. We had to go for tender products in a niche area, where
our minimum manpower could get
the business.”
Third, the area has strong barriers
to entry, so competition is staved off.
“All the products in the area of palliative care or dependence are controlled
products – narcotics – so first 99 per
cent of the companies will either not
be able to get the licence to manufacture, or then they are highly technical
products that require highly qualified people,” he explains. Buprenorphine, for instance, has a very long
and complicated synthesis, and the
Indian process patent for it is held in
the senior Saxena’s name. Moreover,
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because India’s domestic opioids market is “largely unaddressed”, it presents a “huge opportunity for both
domestic and international pharmaceutical manufacturers” according to
Rodrigo Gutierrez, managing analyst
at GBI Research, who expects India’s
opioid market to grow to $24.8m by
2021, up from $19.5m in 2014.
Today, Rusan is a privately owned
H300 crore-turnover company, making apis, finished dosage forms and
intermediaries in the areas of chronic
and acute pain management, as well
as drug, alcohol and tobacco addiction. 60 per cent of the company’s
sales come from international markets such as the UK, Europe, Russia,
Ukraine, Uzbekistan, Kazakhstan,
South Africa and South East Asia. At
H300 crore in revenues for 2015-16 (as
against H227 crore in 2014-15), Rusan
might be a small entity by pharmaceutical industry standards, but it
is a key player in the global opioidbased drug market. It is the second
largest manufacturer and marketer,
worldwide, of oral substitution therapy drugs, including buprenorphine
and methadone, after specialty drugmaker Indivior – a British listed
entity spun off Reckitt Benckiser’s
pharmaceutical division in 2014.
Moreover, last month, Rusan inaugurated the Navin Saxena Research
and Technology centre (nsrt), as well
as a clinical research unit in partnership with QuestCare near its existing
manufacturing units in the Kandla
sez. H200 crore, funded through internal accruals and bank loans, have
been earmarked for the two-phase
development slated for completion in
2017, of which H100 crore has already
been invested. Research into newer
drug delivery platforms, orphan diseases as well as contract research will
be undertaken here.
Small beginnings
Navin attributes his training and keen
business sense to the pharmaceutical industry pioneer Amrut Mody,
whom he worked under at Unichem
Corporate Reports
Laboratories for a decade before setting up Rusan. “In those days, there
were a lot of dye companies which had
gone bust or were not functioning at
capacity. I would undertake reactions
over there, instead of the Unichem
factory, and ended up producing more
than the production people of the
company. So they made me the head
of production,” he smiles, reminiscing
of the late 1980s, when he returned to
Mumbai after earning a PhD in Synthetic Organic Chemistry from Russia. In order to sell his production,
Navin leveraged his Russian contacts
– “technical, not political” – he clarifies, to export to the Soviet Union.
The high-volume business soon transformed Unichem from a struggling
upstart to a blue chip company. Across
the industry, he came to be known as
someone who could “do business
without money.”
“We are first generation, and we
are research people. We are not business people so that skill was crucial
for me to learn,” Navin rationalises.
It also explains Rusan’s conservative
approach to finance. “We haven’t
opted for an ipo or venture capital
so far. Whatever you see, our factories and units are from our internal
accruals,” he says matter-of-factly.
By 2018, he plans to double Rusan’s
turnover to H600 crore with technology being a key driver.
Thrust on innovation
Rusan is the first Indian company
to have launched trans-dermal skin
patches in India – adhesives that allow
the active ingredients to be absorbed
through the skin. “Instead of someone
popping a pill every six hours, we try
to bring in a lot of convenience for the
patient with user-friendly, high-technology products,” explains Malvika
Saxena, Kunal’s wife, who handles the
marketing of Rusan’s over-the-counter
nicotine trans-dermal patch, 2baconil.
The patches provide a measured dose
of nicotine through the skin, reducing the withdrawal symptoms experienced by those who stop smoking. The
patches come in varying strengths to
help patients gradually wean off smoking. Rusan recently announced a $20
million per annum agreement with
the Health Ministry in Brazil for the
Kunal Saxena: innovating in India
supply of 2baconil, to assist in the
government’s smoking cessation programme. The transfer of technology
will follow after five years. “It is one
of the most prestigious bric country
contracts,” says Navin, adding that
the South African and Kenyan governments are also in talks with Rusan.
On the pain management front,
Rusan manufactures fentanyl transdermal patches, which it has been
supplying to the Indian army, navy
and air force for the last year, under
a three-year contract. Sun Pharma,
India’s largest pharmaceutical company by revenues, and Rusan’s competitor on the pain management side,
also manufactures a fentanyl-based
pain relief product, but in the form
of an injectable, rather than a patch.
According to doctors, patient compliance is higher in the case of the latter, because of the ease of use. Even
so, Sun Pharma has been quietly fortifying its positioning in the opioid
market space, with four acquisitions
to boot so far. Most recently, it completed the acquisition of British
drug-maker GlaxoSmithKline’s opioid manufacturing sites in Australia.
According to Piyush Nahar, analyst,
Jefferies India, “gsk Australia is one
of the largest suppliers of medicinal
opiates with a market share of 25 per
cent. Tasmania, where one of the facilities is based, is a key producer of poppies from which opiates are extracted.
This deal provides vertical integration and strengthens Sun Pharma’s
controlled substances business.”
Johnson & Johnson, on the other
hand, sells similar pain relief transdermal patches in India, however, at
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a significant premium (H2,130 for a 50
mcg patch) to Rusan’s indigenously produced H795 patch. “Make in India concept,” Kunal is quick to point out. “In
fact, not just make in India, but innovate in India,” he emphasises, referring to their api facility in Ankleshwar
and three finished dosage facilities in
Dehra Dun and the Kandla sez, as well
as the newly inaugurated nsrt. Rusan
also has two manufacturing facilities
in Portugal set up as joint ventures with
local partners.
“We see this area of trans-dermal
patches (tdp) as our future. They say
tdp delivery was a $25 billion dollar
market in 2014, which will go on to
become $40 billion in 2018,” Navin
notes, referring to a printout of a
pharmaceutical publication lying on
his desk. However, even as the prospects look ripe, challenges remain.
For instance, Rusan has developed a
naltrexone implant to tackle alcoholism. “A small incision is made on the
skin and the tablet is placed inside.
The effect lasts for three months.
Plus, the person needn’t be bound in
a rehab centre, so the cost to the state
goes down,” he explains, comparing the product to a $1,000 US-based
injectable that lasts only for a month.
However, while the UK’s regulatory
body, the mhra, is currently conducting clinical trials on the product, the
Indian government has been slow in
its uptake. Navin hopes the government’s stance will change in another
three to five years.
While, on the one hand, India faces
an acute shortage of opioid-based
medicinal drugs because of “ill-conceived drug regulations and irrational
fears surrounding their use,” as Rajagopal puts it, the US faces the problem of plenty. Recent reports suggest
that more Americans have been killed
from drug overdoses, more than half
of which have been attributed to prescription painkillers and heroin, than
car crashes. According to Rajagopal,
“a ‘principle of balance’ needs to be
maintained. While it is the duty of
the government to prevent abuse and
addiction, people in pain must also
be granted relief”. Rusan Pharma too,
will heave a sigh of relief in that case.
u V ARSHA MEGHANI
[email protected]
Special Report
Powering growth
PSUs are rising to meet the current challenge
thrown up by the energy sector
S
uccess will meet vision. It is an
opportunity for them to rank
among the biggest energy
companies globally.
India’s energy sector has witnessed
a complete makeover owing to both
progressive changes at the policy level
and active execution of stringent
directives. While these developments
promise to throw up a wide range of
opportunities for all the stakeholders,
it would be worthwhile to step back
and introspect. A relook at the longterm impact of regulatory and policy interventions will go a long way
in ensuring a strong and sustainable
development of the sector.
The need for this introspection stems from the fact that even
though India’s per capital consumption of electricity has surpassed
1,000 kilowatt-hour (kWh), it is still
woefully short of the global average
consumption.
On its part, the government has
been instrumental in initiating several key measures to improve the
output of the power sector. The
Deendayal Upadhyaya Gram JyotiYojana, the proposed amendment
to the Electricity Act, coal auction
and allocation, and Integrated Power
Development Scheme, among others, are some of the notable actions
taken by the government.
With the right policy measures,
it’s a given that the economy will
continue to grow. India’s growth in
population, industrial activities, and
urbanisation is bound to increase the
per capita energy consumption, The
crucial role of power is restricted not
only in the economic growth but is
strongly felt on human development
parameters such as employment generation and poverty reduction.
Given the assumptions of an
annual gdp growth of 8-9 per cent
per year for the next few years, it
won’t be wrong to assume that per
capita electricity consumption could
rise to 2,000 kWh. However, the maximum theoretical generation that can
be achieved from the current system,
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assuming there are no bottlenecks,
would be approximately 1,500 billion
units ( bu). At the current population
levels, this translates to a paltry 1,200
kWh of generation per person.
In spite of serious efforts by the
government of leveraging multiple
sources of energy, there has been a
gap in the demand and supply. The
demand for power is expected to surpass 300 gw over the next 10 years.
However, it will be a challenge to
meet this number as it entails a five
to ten-fold ramp up in capacity addition. India not only needs to add more
generation capacity, it also requires
a matching investment on distribution and transmission, which have
come across as major pain points.
To say that the power sector in
the country is at the cusp of a transformation would be an understatement. According to a recent report
released by wef, in collaboration
with Bain & Company, “India’s
power sector is at an inflection point,
given the government’s conviction
Special Report
Goyal: talking about challenges
that electricity is a critical enabler
for economic growth.”
The report titled ‘The Future of
Electricity in Fast-Growing Economies Attracting Investment to Provide Affordable, Accessible and
Sustainable Power’, further says,
“Even with the huge investments in
renewables, most of the electricity
consumed in India over the next two
decades will be generated by burning
fossil fuel, and India can do much to
improve the efficiency of the existing power infrastructure.”
Having reached a tipping point,
it would be worthwhile to examine the top issues and challenges
that are impacting the power sector; get insights into what some of
the top psus are doing to maximise
the impending opportunity; and do
some crystal gazing to know what lies
ahead for the sector in the country.
Contentious issues
The challenges in the power sector
in India are as complex as the sector
itself. The minister of state for power,
coal & new and renewable energy,
Piyush Goyal, recently talked about
some of these challenges.
In a written reply to a question in
the Lok Sabha, Goyal said some of
the key issues faced by the government included delay in land acquisition,
geological
uncertainties,
natural calamities, environment and
forest issues, law and order problems,
rehabilitation and resettlement issues,
local issues, delay in material supply, contractual problems, extreme
weather conditions, fund constraints,
force majeure risk, difficult terrain and
poor accessibility, Right of Way problem (RoW) for transmission lines, etc.
While most of the issues mentioned by the minister were external,
there are some that are internal and
specific to the power sector.
Fuel friction
As of 31 March 2016, the country’s
utility electricity sector had a total
installed capacity of 298 gw: thermal (69 per cent), hydro (15 per cent),
renewable (13 per cent) and nuclear
(2 per cent). Although thermal adds
most to the overall capacity, the
uncertainty with respect to fuel has
adversely impacted any addition in
this category. The supplies of coal
by cil have been capped at 65 per
cent of the total requirement from
the coal-based thermal power plants.
This has led to enhanced reliance on
imported coal, thereby resulting in
increased costs.
Coal production in the country has hovered in the range of 530550 mt per annum for the last five
years which is practically stagnant.
As a result, the gap between demand
and supply for coal is expected to
reach 200 mt by the year 2017. Critical issues that need urgent response
from the government include inadequate supply, unequal contractual provisions, and poor transport
logistics.
Similarly, a huge gas-based capacity is non-functional because of
unavailability of gas. The answer
to overcoming this issue lies in
catalysing both the private and public sectors for increased coal production in a time-bound manner.
Grid congestion
Open access is dubbed as a catalyst for a competitive power market.
Although all states in the country
have notified open access, only 19
of them have calculated the various
charges (wheeling charges, cross-subsidy charges, transmission charges,
etc) associated with it. To promote
widespread adoption of open access,
u 53 u
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Overview of Indian
power sector
Peak handled
141
GW
E n e r gy h a n d l e d
949
billion units (BU)
P e a k s h o r tag e
4.7
per cent
E n e r gy s h o r tag e
3.6
per cent
AT& C loss e s
~26
per cent
Grow th
6-8
per cent
P e r - c a p i ta u s e
~1,010
kWh
1.25
billion people
3.28
million sq km
200
1
million consumers
national grid
Special Report
transmission constraints need to
be removed. To illustrate this with
an example – in FY14, 15 per cent
of available power could not be
transacted at the two main power
exchanges of the country because of
grid congestions.
Besides removing technical barriers, it is also important to remove
the existing conflicts of interest of
the discoms on account of their losing bulk consumers (migrating to
open access).
Open access could get a shot in
the arm if the physical infrastructure (distribution) is separated from
the service (retail supply). Segregating the two has the double
advantages of avoiding conflict of
interests and enabling growth of a
competitive market that is based on
consumer choice.
Discom distress
Discoms are sitting on enormous
outstanding debts. Mounting at&c
losses, populist tariff schemes and
operational inefficiencies have taken
a toll on their finances. This situation
has emerged as one of the most complex and critical issues in the power
sector. Some have been impacted
more than the others. Discoms from
11 states account for as much as 80
per cent of the total losses with three
among them accounting for 50 per
cent of the damages.
These are just some of the problems. There are many more such
as under-procurement of power by
states and an unfriendly financing
environment.
Aggressive strategy
To meet the growing demands and
match steps with India’s growth,
the government has chalked out
an aggressive strategy. The strategy includes easing the issues plaguing the sector on the one hand and
aggressively ramping up capacity on
the other hand.
As part of the XIIth Plan, the target of adding an additional capacity of 88,537 mw was fixed. This
excluded the 30,000 mw of renewal
energy source. Against this target, a
capacity addition of 84,990.7 mw has
been achieved as on 31 March 2016.
5 Steps For a Highly
Successful Power Sector
The Economic Survey 2015-16
enumerates steps which have a
profound impact on the sector
1
The year 2014-15 saw the highest
ever capacity addition. From an
annual average of around 19 gw in the
last five years, FY15 saw an addition of
26.5 gw.
2
Strong capacity addition has
reduced peak power deficit to 2.4
per cent, which is the lowest ever.
3
Indian Railways is in the process of
shifting to open access for power
purchase.
4
Renewables have received a
major boost with targets getting
recalibrated from 32 gw to 175 gw by
2022.
5
Clear indications of the shift
towards one market.
Source: PwC
Timely completion of projects has
been the proverbial ‘Achilles heel’ for
the power ministry. Projects have time
and again slipped on deadlines. To
ensure timely completion of delayed/
ongoing projects, the government
has undertaken several measures. The cea (Central Electricity Authority) has been mandated to keep a
tab on the construction progress of
power projects. The Authority visits
the sites regularly and interacts with
the stakeholders (equipment suppliers and developers) to identify and
overcome issues that are crucial for
commissioning of projects.
The ministry of power, Cabinet secretariat and the ministry of
heavy industries also undertake frequent reviews to identify bottlenecks
and enable their faster resolution.
The power ministry has also set up
a Power Project Monitoring Panel
(ppmp) to keep a close watch on ongoing hydro and thermal generation
projects that are to be commissioned
during the 12th Plan.
Whenever required, issues are
also raised and addressed in pragati
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– Proactive Governance and Timely
Implementation – the monthly conference call of Prime Minister Narendra Modi with secretaries and chief
secretaries of the Union government.
The government has also approved
a proposal that makes it easy to utilise
domestic coal for bringing down the
cost of generating power. Speaking
during the Question Hour in the Lok
Sabha, Goyal said the step will instil
flexibility in domestic coal utilisation.
The move could cut power generation
costs by 40-50 paise a unit, leading to
H25,000 crore being saved annually.
Goyal also wants to stop import of
coal within the next 2-3 years, and in
the process, save as much as H40,000
crore in forex. “We want to completely
stop the import of thermal coal in the
next two to three years,” Goyal said
at the recently-held Maritime India
summit in Mumbai. The minister
said his ministry was open to tying
up with the shipping ministry to ink
long-term contracts to shipping companies for transporting coal.
Other proactive steps to provide the desired thrust to the sector
by the government include separation of non-agriculture and agriculture feeders to help restore supply
to respective rural consumers, and
augmenting and strengthening of
distribution and sub-transmission
infrastructure including metering of
consumers, feeders and transformers.
The ambitious National Smart Grid
Mission (nsgm) has also been kickstarted to plan, monitor and implement programmes and policies
related to smart grid development in
the country. Under the XIIth Plan,
an outlay of H980 crore has been earmarked for nsgm. As per the mission, 30 per cent of the funds will go
towards the development of the Smart
Grid, in the shortlisted Smart Cities, and Micro Grid infrastructures.
Indian psus have strongly contributed to nation building ever since
India became independent. The psus
engaged in the power industry have
been no different. Leading from the
front, these entities have chalked
out robust strategies to not be
left behind.
Coal India (cil), which has a
virtual monopoly in its domain,
Special Report
Swarup: setting up washeries
accounting for over 80 per cent
domestic coal production, is aiming
to produce one billion tonnes of coal
by the year 2020. Its aggressive stance
has had some impact as coal imports
in the country have seen a decline.
On the back of strong domestic production, in September 2015, coal
import dropped for the third consecutive month by 27 per cent to touch
12.6 million tonnes in comparison to
the same period in 2014. Coal secretary, Anil Swarup, says, “India is well
on its way to achieving the 550 million tonnes coal production target,”
referring to the current fiscal.
By October 2017, Coal India
would have set up 15 washeries to
wash coal with more than 34 per
cent ash content and supply to customers. “The process of setting up
the washeries is well on track. Construction has started at several locations,” says Swarup.
In line with the government’s coal
mine auction policy, 34 blocks have
already been auctioned or allocated
and are either in production or achieving production soon. According to
Swarup, all outstanding issues such
as stamp duty, necessary clearances,
and handing over of assets have “fortunately been resolved on the intervention of the prime minister who
himself reviewed the projects”.
To give a big push to capacity
building, ntpc, India’s largest energy
conglomerate, has come up with a
long-term corporate plan. The end
goal of the strategy is to make the psu
a 128,000 mw behemoth by the year
2032. Towards this end, the company is robustly adding capacity.
The power generator is also planning to set up the country’s biggest
power plant. To be built in a joint
venture (jv) with the Jharkhand
state utility, the plant will boast an
annual capacity of 6,400 mw. ntpc
is also ready to start production at
its Jharkhand (Pakri-Barwadih) and
Chatti-Bariatu coal blocks this fiscal.
Meanwhile, the ministry of coal
has suggested allowing bridge linkage to ntpc’s super thermal power
plant in Odisha. The 1,600 mw
project coming up at Darlipalli in
the Sundargarh district at a cost of
H12,000 crore is at an advanced stage
of commissioning.
Besides developing domestic coal
mines, the power generator is also
open to acquisitions. Eyeing inorganic growth, ntpc is exploring the
option of picking up stakes in mines
abroad to shore up the availability of
thermal coal in the country.
ntpc is focussing on adding thermal capacity but its growth plans
are not ignoring renewable energy.
According to the company, non-conventional energy sources now contribute 310 mw to the company’s
total capacity. The ntpc group and
ntpc have a total commissioned
capacity of 47,178 mw and 40,212
mw respectively.
The Gurgaon-based power utilities company, Power Grid Corporation, commissioned H30,300 crore
worth of transmission projects in
FY16. About 50 per cent of the total
power generated in the country is
transmitted on Power Grid’s transmission network.
According to I.S. Jha, cmd, Power
Grid, the company was on track to
commission projects worth over
H30,000 crore in FY17, which would
further improve revenues. Jha is confident the company will exceed its
investment target of H1.1 lakh crore
for the XIIth Plan as it has already
achieved H80,000 crore.
For Bharat Heavy Electricals Limited, FY16 couldn’t have been better.
“Bharat Heavy Electricals Limited
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Sarraf: well planned projects
( bhel) has recorded the highest-ever
commissioning of projects in its history and the highest order booking
in the last five years in FY16, ending
the year with significant traction in
growth drivers,” a release from the
company said.
“Enhanced focus on project execution has resulted in bhel creating
history by way of commissioning/
synchronising an all-time high
15,059 mw of power generating
equipment during the year. With
this, the worldwide installed base
of power generating equipment supplied by bhel has exceeded 170 gw.”
“This includes the highest-ever
power generation capacity addition of
13,061 mw to the Indian utility segment, a quantum jump of 59 per cent
over the previous year. Notably, the
capacity addition of domestic utility
sets is 23 per cent higher than the target set by the government for bhel.
With this, bhel has already achieved
94 per cent of the capacity addition
target for the XIIth Plan in the first
four years,” the release said.
Dehradun-headquartered
multinational oil and gas company,
ongc, is planning to increase output from its onshore fields and also
boost overseas assets. Last year, the
company gave approval to five projects for developing fields in the
western region. These projects were
worth H25,000 crore. “All these projects are well-monitored. Even a day
Special Report
of slippage has to be explained,” says
Dinesh K. Sarraf, ceo, ongc.
In addition, by 2018-19, ongc’s
gas output is expected to rise 70 per
cent. The company intends to give a
go ahead for H60,000 crore worth of
projects between April 2016 and June
2017. It is also scouting for acquisitions as falling oil prices have thrown
up several opportunities. “ongc has
committed an investment of over
H8,600 crore towards the Daman
Development Project and C-26 cluster Development Project to enhance
production of natural gas and condensate from its Daman Block in the
Arabian Sea. The production from
these two projects is expected to
start in second quarter of the current
financial year, 2016-17, with an estimated peak production rate of about
11 mmscmd of gas and over 11,000
barrels of condensate per day,” said a
release from ongc.
“The construction of 10 well head
platforms, one riser platform, subsea
pipelines and other associated facilities are in progress for Daman and
C-26 Development Projects. Drilling
rigs have been earmarked for drilling of 36 wells. Now, with the availability of the Tapti Process platform,
the necessary modification and construction works will be carried out
expeditiously and gas production
can be started from these projects as
per schedule,” added the release.
Meanwhile, India’s largest stateowned natural gas processing and
distribution company, gail, has
floated a $7 billion tender to hire
nine ships to transport lng from
the US. With a cargo capacity of
150,000-180,000 cubic metres, the
ships will ferry lng from Cove Point
and Sabine Pass in the US. The transportation is expected to begin from
December 2017.
What’s next
India is progressing steadily on the
journey to meet its energy needs. As
with any other sector, continuous
reforms would have to be brought in
to sustain growth. The power market being very dynamic, there is no
room for complacency.
Enhanced focus on improvements
in technology and processes will help
in keeping fuel costs under control.
Measures such as an accurate and
stringent data monitoring system,
optimisation, utilisation of existing
resources, and improvement are some
of the ways by which rising costs can
be curbed. While monitoring systems
are in place, they need to be empowered to take immediate and urgent
actions as and when needed.
Any deficit in the availability of
power in the country will prove to
be a serious threat to the growth
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and development of the economy. To
bridge this demand and supply gap,
humongous projects are being taken
up across transmission, generation
and distribution. For such projects
to be successful, project execution
capabilities have to be beefed up. A
weak and inadequate project management framework that doesn’t take
into account all the key aspects can
jeopardise a project. The government
will have to move fast and expedite
the clearances and approvals related
to the power sector.
India is irrevocably and undoubtedly assimilated into the global
energy market. As the country is to
a large extent dependent on foreign
sources for meeting its energy needs,
the need of the hour is to reduce vulnerability arising out of fluctuations
of energy prices.
An adequate and reliable pipeline of clean and modern energy is
imperative. The Indian psus are all
geared up and are confident of participating in ushering in yet another
economic miracle. If they are successful, more than a billion people’s
lives would be impacted for the better. It would also give rise to some of
the biggest energy companies globally. Those companies that have a
vision will emerge triumphant in
India’s power sector.
[email protected]
Finance
The air pocket
ICICI Bank blocks GVK Power and Infra’s sale of its Bangalore
airport stake to Fairfax
P
rivate sector icici Bank filed a
suit against Hyderabad-based
gvk Power and Infrastructure
in the UK courts last fortnight, and
an injunction has been passed, preventing gvk from selling its stake
in Bangalore International Airport
to Prem Watsa’s Fairfax India, a deal
that is valued at R2,149 crore and had
been cleared by the company’s board
on 28 March.
Both icici and gvk have confirmed the injunction, which comes
as a fresh blow to the debt-laden
company, it having said at the time
of the sale that the deal was subject
to customary closing conditions and
third-party consent, including an
agreement with creditors.
The stern measure from icici
Bank was triggered not by gvk’s
unpaid loans towards Bangalore airport, but by a larger unlinked loan
to the company dating back to 2011,
when it acquired coal mines in Australia’s Galilee basin from Hancock
Prospecting, through Singaporebased subsidiary gvk Coal Developers and another subsidiary, gvk
Natural Resources.
At a cost of $1.2 billion, that deal
included a 79 per cent stake in an
Alpha Coal project, 100 per cent stake
in Kevin’s Corner Coal, and a 100 per
cent stake in a proposed rail link till
the Abbot Point port, along Australia’s eastern shores. It was a leveraged buyout secured by the acquired
assets, and financed through icici
Bank’s UK subsidiary.
icici Bank provided bridge finance
and syndicated the loan, but is said
to continue to hold an over $1 billion
exposure to the Hancock project. A
covenant in the loan agreement at
the time, however, requires gvk to
acquire consent from icici Bank prior
to selling any of its group assets.
A fresh delay in the sale of the
Bangalore airport has the potential
to put on hold gvk’s payments to
Watsa: sale has been blocked
other creditors that have loans linked
to the Bangalore airport – including
Srei Infrastructure, hdfc and Yes
Bank. The financiers Business India
spoke with, however, were confident
that their loans are ring-fenced from
any such adverse development.
Over the last six months, lenders
have added pressure to highly leveraged Indian companies, linked to
a Reserve Bank of India (rbi) quality review exercise, and favour a partial sale of their assets to recover
their dues. The more penal Strategic
Debt Restructuring measure (which
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allows the bank to acquire the majority shares in a company, change
management and trigger a sale) has
proved ineffective thus far.
Reeling under high debt, gvk has
been trying to monetise assets and
raise capital that can lower its overall borrowings and interest payments linked to them. Its subsidiary,
gvk Airport Developers, has been
considering an initial public offering or a sale of shares to private
equity players.
Still in the woods
At the annual general body meeting
in August 2015, the company’s managers took permission from shareholders to raise equity of R1,000
crore through a fresh issuance of
shares. The company’s stock trades
at R6.5 a piece (face value R1), against
a full market cap of R1,000 crore. For
the financial year 2014-15, it posted a
loss of R1,136 crore against total revenues of R3,136 crore.
But progress in developing the
Hancock acquisitions over the past
five years has been slow, the company having had to battle appeals
from anti-mining activists through
courts in that country. The Alpha
Coal project, for instance, received
an Australian Supreme Court ruling
endorsing the grant of the country’s
Environmental Authority only in
September 2015.
gvk had sold a 51 per cent stake
in the rail company to Australia’s rail
freight company Aurizon in 2013.
But the Alpha Coal project has not
been granted a mining lease yet, let
alone it being able to execute coal offtake arrangements or finalise financing arrangements and commence
construction. Meanwhile, Australian thermal coal prices have halved
to around $60 per metric tonne over
the last five years.
In its October 2015 House of Debt
report, Credit Suisse identified gvk
among the 10 companies in India
that was still in the woods and under
high stress. “Fifteen to 16 per cent of
their debt being in foreign currency,
their debt servicing outlook continues to be of concern,” it stated.
u RYAN MA X IM RODRIGUES
[email protected]
Retailing
R E TA I L I N G
4,000th store in the world.
Khattar admits that retail requirements of Indian consumers have
changed rapidly in the past few
years, a trend that is likely to continue. Which means this mall, work
on which started about six years
ago, has made upgrades such as digital walls, and plans new signages to
keep abreast the latest trends. E-commerce, also rapidly impacting brick
and mortar in the last couple of
years, will not be such a challenge as
it is expected to take 6-8 per cent of
the market, both say.
Is bigger better?
DLF Retail has set its ambitions high with the largest mall in India
W
ith 2 million sq ft of retail
space, it overtakes the
erstwhile largest mall in
the country – Kochi’s Lulu Mall –
by about 300,000 sq ft. Also positioned as a ‘destination’ mall, dlf ’s
most recent opening, The Mall of
India, located in Sector 18, Noida,
just southeast of Delhi, has set high
targets in an effort to carve space in
a crowded Delhi NCR retail space.
The mall is trying out many new
concepts, points out Pushpa Bector,
executive vice-president & head, dlf
Mall of India. This includes mall interiors designated into five zones. “We
are trying to appeal to a wide audience here, because there are multiple
malls under one mall,” says Bector.
She also reports a high tenancy rate –
about 95 per cent leased already, and
80 per cent brands with doors open
already. “Our focus is on minimum
guarantees and revenue share,” she
explains about the return in investment, adding market sentiment
dictates that floor rates are no
longer applicable. Built at an investment of about
H1,700 crore, the mall is equal to
all the existing dlf retail spaces
elsewhere in the country in size,
reveals Sriram Khattar, ceo, dlf ’s
rental business. “Once you create
the base, the brands will automatically come,” he says. The mall has
six anchor stores, including a fourlevel flagship h&m, also the brand’s
Where to zone in
Market Place
Located on the lower ground level;
houses a hypermarket and a home
furnishing area.
International Boulevard
Located on the ground and first levels;
focus on international brands, including
flagship stores for some.
The High Street
Located on the second level; will host
Indian designer brands and handpicked brands from the high streets
of India.
Family World
Located on the third level; has two
sections – one for the kids with toy,
book and apparel stores and another
section with a select bunch of casual
dining options.
Leisure Land
Located on the fourth and fifth level;
has a cinema complex (dt Cinemas), an
ice-skating zone and a food court that
will offer 20 local and global cuisines.
This level would also host India’s first
kids-only movie theatre.
Different segment
dlf Mall of India houses over 330
brands, and about 100 kiosks. The
High Street level brands are not
usually found in malls, and could
draw an entirely different segment than the youth and upwardly
mobile that usually dominate India’s
malls. There are 75 food and beverage outlets, most on the same level,
but many spread out in each zone,
points out Bector. Among the differentiators justifying its size is the
top floor which houses Ski India,
usually at a temperature of minus
15 degrees.
The mall unusually also has some
green credentials: the first leed gold
certified mall in North India. It has
an energy efficient air conditioning
system with 20 per cent less energy
consumption, solar power plant of
40kW for using solar energy, among
other steps for a more environment
friendly experience – a step that
might take a while to register with
Indian shoppers though.
dlf has struggled with the perception of its mall, usually seen as second best to its neighbouring malls
in other locations. With this mall, it
aims to change that. The mall is promoting itself as a destination where
Indians can shop and enjoy a ‘Malliday’, at home instead of in Dubai or
Singapore. And yes, dlf will collaborate with established neighbours to
make a ‘City 18’. Whether the catchment, a perimeter of about 20 km,
buys into the proposition, remains
to be seen.
u SUMAN TARAFDAR
[email protected]
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Guest Column
Honest to God
What makes Salman the No. 1 Khan?
H
2016 is very very different from the Salman of
onest to God, the Khans … Shahrukh,
a decade ago.
Aamir, Salman, Saif … even Irrfan and
How did this transformation come about? The
Imran … and now Fawad (of Kapoor &
current controversy of Salman Khan being choSons, and No. 1 in the Times Celebex report this
sen as the brand ambassador for the Rio Olymmonth) have been the flavour of Bollywood for
pics is actually a fine example of how adroitly
the past two-and-a-half decades. In the 15 years
Salman’s brand has been managed over the last
that I have been tracking the celebrity hit-pafew years. Salman’s forthcoming movie Sulrade, the Khans, bar Amitabh Bachchan on
tan was perhaps the reason his image managers
occasion, and Sachin Tendulkar and Dhoni even
Sandeep Goyal
swung the tie-up with the Indian Olympic Assomore occasionally, have dominated the top slots
ciation (ioa). That his choice has become somein the rankings. Shahrukh led from the front for
many years, a trend from the end-1990s, changwhat controversial notwithstanding, Salman
ing places with Aamir every once in a while.
has been managed with much thought and stratSalman trailed at No. 3 amongst the Khans,
egy as a brand. Salman’s brand got into negative
with Saif, a poor fourth. Salman remained in
territory with the ‘hit-and-run’ case in 2002.
the shadow of The
His break-up with
Big Two. Thums
Aishwarya in the
Up was the most
same year further
thanda he got with
sullied his image.
Trustworthy
Dynamic
Best Brand 45
brand
endorseIn 2006, he got
40
Unapproachable
Progressjve
ments, and his tv
involved with the
35
black buck huntdebut 10 ka Dum
30
Traditional
Distinctive
25
ing case. His career
was, at best, a
20
High Quality
Up-to-date
too was in the dolmediocre hit.
15
drums post 2000.
The year 2010
10
Straight
5
But then his
changed all of
Authentic
forward
9
spin doctors took
that. Salman, who
charge. The first
strode to stardom
Stylish
Innovative
masterstroke
with mega hit
Different
was the visibility
Hum Aapke Hain
Good Value
around his philKoun? in 1994,
Unique
Tough
anthropic endeahad his fair share
Prestigious
Original
vour
–
Being
of success with
Arrogant
Reliable
Human.
From
films like Karan
selling T-shirts for
Arjun, Kuch Kuch
charity to minting Being Human Gitanjali Gold
Hota Hai and Biwi No. 1 but it was Dabangg that
Coins and supporting Being Human Art, Salaccelerated him to superstardom. Bodyguard, Ek
man has done his bit for the underprivileged,
Tha Tiger, Kick and finally Bajrangi Bhaijaan catand that too with much pomp-and-show. His
apulted him far far ahead of any of the other
maiden film production Chillar Party in 2011
Khans – in fact, all of Bollywood. Salman is the
won three National Awards, including one for
only actor in Hindi film history to have nine of
Best Children’s Film. In 2012, Khan offered to
his films cross the magical `100 crore mark, and
pay `40 lakh, via his ngo, for releasing about
is the only actor to star in the highest-grossing
Bollywood films of nine separate years! In my
400 prisoners from some 63 prisons in Uttar
study of Human Brands, at the end of 2015, SalPradesh – a purely humanitarian offer to help
man topped the rankings. And he did that with
those behind bars for small offences. In 2015, he
a big nice margin over the No. 2, Virat Kohli.
offered to donate the profits of his most successThe author is ad-man,
Brand Salman shows high scores for trustworful film Bajrangi Bhaijaan among the poor farmserial entrepreneur
thy, straightforward, good value and tough (see:
ers all over India. All wonderful pr strokes!
and chairman, Mogae
brand map). He is also seen to be very approachMedia. He can be
able; and his low score on arrogance shows that
reached at sandeep@
ut nothing would have worked if Dabangg
he is seen as friendly, and nice. The Salman of
goyalmail.com
hadn’t happened. And then his other super-
brand sallu
B
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Guest Column
duper hits, culminating in
the phenomenally successful Bajrangi Bhaijaan! Salman was playing tough,
yet he was playing soft. Salman’s deliberate choice of
roles was designed to project him as the goody-goody
guy with muscles of steel.
A successful hosting of
Big Boss further enhanced
Brand Salman.
All the Khans are getting
old. Even Salman (at 50+ he is Bollywood’s most eligible
bachelor boy). But with Bajrangi, he has made the kind of
transition to a character role
that has eluded Shahrukh or
Aamir. Meaty. Mass-appeal.
High on empathy. Loved by
all. The rest of the well-orchestrated Salman-surround
has further embellished his
brand goodness.
My only quarrel, however, with Salman – Sultan of Bollywood, after such
smart brand strategisation,
is that he cannot be seen
dancing and prancing in commercials for Relaxo Bahamas hawaii chappals! u
Obituary
I
t’s something he himself denied.
“There’s no such thing as a selfmade man,” said Pralhad P.
Chhabria, who died after a brief illness in his adopted home town Pune
last fortnight at the age of 86. In his
2008 autobiography, There’s No Such
Thing as a Self-Made Man, Chhabria
has only credited circumstances
and an ‘external guiding force’ for
his success. Born in Karachi on 12
March 1930 as the fifth of 10 children, he had moved to India as a
12-year-old after he lost his prosperous businessman father and his
family fortunes plummeted.
In what was then the British cantonment town of Poona, the young
Prahlad had to live with his father’s
sister, with “my role as a domestic
employee clearly defined”, he recalled
in his book. “The family provided me
board and lodging, and a monthly
wage of H30 which was kept aside to
send to my mother and brothers.”
Then came Partition, but even
though he was 17 years old, he had
no clue what it meant. He could
make nothing of the concepts of
Independence and so on: “I could
barely read,” he explains in his book.
But the nation’s freedom was also to
bring him his own, after “many years
of subservience amounting almost
to slavery” – his family fled to India
two-and-a-half years after he was sent
here, and he could join his mother,
brothers and other sisters again.
“Today I understand the trauma that
my family and thousands like them
A self-made
man
A pre-Partition immigrant
from Karachi started from
scratch and built up a H10,000
crore manufacturing group
went through,” he wrote.
Having left his menial job, he
decided to start his own business.
Beginning with trading in cloth and
then electrical accessories including
cables, he moved on – against his
elder brothers’ advice – to manufacturing the latter. He then diversified
into pipes and went on to become
the leading name in both fields,
u 63 u
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so much so that his brand Finolex
became almost synonymous with
both pipes and cables. Along the
way, he executed a backward integration project in poly-vinyl chloride (pvc). In all this, his younger
brother Kishan was his right-hand
man in the business, followed later
by son Prakash and nephew Deepak
– who now head the two group
companies, Finolex Industries and
Finolex Cables, manufacturing pipes
and electrical cables, respectively.
Chhabria, a simple, spiritual man
with deep roots in culture, practised
his own style of business: throughout his life, he never broke his rule
of repaying every instalment of any
loan on the date it was due. He also
set up a foundation that runs educational institutions and programmes.
His Hope Foundation, which he
established originally to help children with cancer after he lost his
own daughter Sonali to the disease,
has an engineering college as well
an international information technology institute. Hope Foundation
& Research Centre and Mukul Madhav Foundation are also active in the
fields of medical assistance and social
welfare for the underprivileged.
Finolex Industries Limited is today
India’s largest pvc pipe manufacturer
and second-largest pvc resin manufacturer. As supercomputer pioneer
Dr Vijay P. Bhatkar said his foreword
to the book: he was a ‘karma yogi’.
u SE K HAR SESHAN
[email protected]
Talking to
‘We are performing well’
Competition is heating up in the 35,000-strong luxury car market.
However, Audi, a relatively late entrant, having come to India only
in 2007, is an entrenched player, with a share of 30 per cent. In
2015, it was untrenched from its pole position by Mercedez-Benz.
Unruffled by this setback and growing competition, Audi plans
to stick to its proven business model – new models and a robust
distribution system, which allows existing dealers to participate in
its growth story. Joe King, country head, Audi, speaks to Daksesh
Parikh and S.M. Boothem on the exciting journey to the top and
the challenges ahead
Are you satisfied with Audi’s
progress in India?
We are in a fantastic position, with
a market share above 30 per cent.
That is one of the strongest market
shares anywhere in the world. And
that means two things. One, we are
performing extremely well in a fairly
small luxury market. Secondly, anyone considering a luxury car will
consider Audi. I think that’s a solid
position to be in, moving forward.
Does it really matter whether you
are number 1 or 2?
No, when I look at the business case,
we are 40 per cent ahead of where
we were when we planned to come
into India. In six years, we are number one in the market. But at the end
of the day that’s not the only goal.
You have to be number one in all
elements. We were awarded the best
brand from a service perspective by
jd Power in 2015. That, to me, is a
big tick. We have the best invested
dealer network in the country. They
are profitable, they are investing. All
our dealers/investors are looking to
grow the market within their areas.
We’ve got a strong and robust product portfolio. So, I think there are
the things that you need to focus
on. And the results will take care of
themselves. And I’m confident that
we will return to number one.
Every auto majors has announced
plans to bring new models. What
are your plans?
We have 14 models in the market,
with 30 odd variants. We will have
10 launches this year. Out of that
two we did at Auto Expo.
What is your strategy for the
dealers’ network?
The rapid growth has come on the
back of our product and network
expansion. We have a clear investment path with our dealers. We
look for the best in business and we
offer our dealers the opportunity
to expand. For example, in Gujarat, there is the fourth outlet for
the investor. But, beyond that, we
look at going to where the customers are, from a service perspective
first. I think that’s a really important
strategy for India. We can’t just continue to put showrooms up everywhere. It needs to make sense for the
customer. Soon, we’ll open a small
workshop concept in Jodhpur, Hubli
and Thiruvananthapuram.
business grows, we expand the workshop and, later, the car facilities.
How is it progressing?
Used Cars is also a strategic important element for us. Our car park has
been growing, we have now got more
than 50,000 customers. The rapid
growth has come in the later years,
where these customers are now looking to potentially change their cars
and we are providing a good outlet
for them to trade in their cars and
purchase a new one, and also open
up the market for other new buyers
who probably want used cars. We go
through proper certification.
What is this workshop concept?
The concept is basically for an investor to expand in the states. So, in the
case of Rajasthan, the investor there
has a full-fledged dealership in Jaipur
and Udaipur, with Jodhpur being the
next city where there is already quite
a customer car park. So, there is an
existing base of customers. We are
coming to them with the idea of service facility first. And, as the market
then grows and develops, it can be
adapted to other showrooms, onto
the workshop. So, rather than what a
lot of manufacturers do, setting up a
nice showroom, in our workshop, we
go the other way around – we go with
our workshop first and then, as the
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How do you plan to leverage?
We see good expansion. We plan to
put up another three used-car outlets
this year. We’ve got probably the largest in India, in Gurgaon near Delhi –
a dedicated used car facility. And it
opens up another market for those
people, who perhaps want not a new
car, but a quality used car – one that
goes through a proper check and has
a proper warranty along the lines of
a new car warranty. And that’s the
idea behind the concept. It’s doing
well and we see that as a huge potential, moving forward.
How does this work?
Talking to
But beyond a point, you have to do
something more…
I take the view that we don’t want
to push the market. The market will
grow. The market is now 1.2-1.3
per cent of the total passenger market, the luxury market. So it’s small.
When you look at more mature markets, it’s 10-15 per cent plus. So, there
is a lot of organic growth that will
come in the market. We will grow
with the market. Our fundamentals
are well in place. That means you
have the right dealer network, you
have the right product mix, your
people are well trained and the best
in the industry. And then as the market grows you will be able to maximise that market growth. But while
the market is fairly flat at 35,000, you
have to push a little bit more and
that is not really the end game. The
end game is to make sure you’re perfectly positioned.
We now offer a buy-back scheme
through Audi Finance, so that people can take a contract, where they
will simply hand back the car at the
end of the three years and, therefore,
you need to have the used car facility to do that. Luxury is all about
making things easy too. So, the ability for them to drive in, in their current car and drive out in a new car
and everything being taken care of
is something that customers really
appreciate. We take those used
cars, put them through a full refurbishment, through the workshop,
through the body shop, little nicks
and scratches and things like that.
And we are able to present the car as
a top quality used car for people to
buy. We have a strong resale value.
business case behind it. We are not
here for the short term – that let’s
just throw something there and see
how it goes. We want to understand
what the market is. We have more
than 3.5 million Facebook fans,
120,000 Twitter followers. These are
platforms for us to engage with the
general population and then things
like the Audi Club, which is a club
of owners that is about 8000 or 9000
and we engage actively on that platform. Auto Expos are also important
for us. We showed the Audi A6 All
Road at the Auto Expo. For some of
the more future products it’s a great
opportunity to garner some feedback
from the market.
Are there any specific pockets of
high growth in the country?
Our model strategy has been good.
Certainly, the Audi A3 has done phenomenally well for us. The Audi Q3
too has been a sensation since we
launched the car and we have got a
good model range at the moment.
And, in some of the fbus such as
the Audi A8, we maintain the idea
of fbu because, again, in the luxury
segment, it is about choice – giving
people the choice and the ability to
customise the cars is important in
that segment.
We see it stably spread across the
whole country. The premium market is really growing a little bit slower
than the total passenger market
and this year I think it will be relatively flat, with some of the impact
of Union budget and also because of
the ongoing topics in Delhi/ncr.
How do you select a centre like,
let’s say, Ranchi or Jodhpur?
Are you planning to lower the
entry barriers to ramp up sales?
Look, everything has to have a
What are the other factors
impacting growth?
I think the biggest impact from a
luxury market this year would be
two main things. One – the Union
Budget wasn’t kind to the auto industry. I understand the perspective that
there is a broader picture there than
just the luxury car industry. The ban
in the ncr is causing a lot of confusion in customers and dealers. They
have invested a lot in their businesses. We really welcome the idea of
moving to bs vi.
You have been optimistic on India?
I think there has been a lot of strong
fundamental changes for the better.
But, there is still a long way to go. I
think the short term will still be a little bit uneasy. But the long term looks
positive on several fronts. One is, from
our point of view, the luxury market
still is at 1.3 per cent of the total market; so, there is going to be growth
there – particularly, the young population, the optimistic culture, the people who will drive this country ahead.
And what the government is doing
will only help to streamline that and I
think we will start to see a rapid effect,
but it takes some time. The next big
thing will be gst. u
[email protected]
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Infotech
photos: sa n jay bor a de
Deshpande
& Bhagwat:
making access
points
available
Redefining Wi-Fi
Mojo Networks launches an industry-first business model
I
n the last week of April, the
Pune-based Mojo Networks (formerly AirTight Networks), which
started as a Wi-Fi security product
company has launched the Wi-Fi
platform for delivering connectivity from the cloud, an industry-first
business model for Wi-Fi that will
empower customers with enterprisegrade networking at a fraction of the
cost of traditional Wi-Fi vendors.
“After implementing the new model
with global 2000 customers over
the past year, Mojo is now making
access points available to the market
without the traditionally expensive
hardware mark-up,” explains Kiran
Deshpande, co-founder & president,
Mojo. Prior to forming this company
in 2003, Deshpande was md & ceo,
Mahindra British Telecom (mbt). At
Mojo, he oversees sales & business
development for India.
In a year since it started, in 2004,
then AirTight Networks, it had set
a base in California and Pune and
a year-and-a-half later it raised a
Series-A round of funding of $10 million from Trident Capital, Walden
International, Granite Capital and
Blueprint Ventures. By 2009, the
team had made Wi-Fi securities a
profitable business (as a privately
held company they did not share
the numbers), and had raised three
rounds of funding. However, the promoters realised that while everybody
will be using Wi-Fi, only a small segment was willing to pay for Wi-Fi
security. This included the people
who are in defence or in high security zones. Although the security
product is being used in high security areas in the US, Mojo’s other corporate clients range from the food
chains McDonalds and kfc in the US
to Time Warner Cable, fda, Hilton,
Overstock and adp. Just like wired networks, wireless
networks need to be monitored to
proactively detect vulnerabilities to
accelerate mitigation and to quickly
detect security incidents to support
rapid incident response. Also, while
the basic Wi-Fi technology is mature,
what Gartner calls the ‘consumerization of IT’ is driving demand for
increased use of employee-owned
devices with wireless access, such as
iPhones and iPads. “This increases
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the need for WLAN monitoring
to support network access control (NAC) functions for allowing wireless access to users who are
allowed to use unmanaged devices”,
adds Deshpande.
So, what is this new offering?
Mojo is making its access points
available directly from its hardware
supply chain partners with Mojo’s
access point software pre-loaded.
Basic Wi-Fi functionality is widely
available on standard chipsets, while
networking functionality is hardware-independent. Virtualised management in the cloud enables Mojo
to bring this business model to the
wider market. Already, computing
and storage have been virtualised to
reduce costs and offer greater choice.
Mojo is driving Wi-Fi networking in
that same direction to better meet
customer needs.
“Open platform initiatives such as
Open Compute leverage the power of
collective minds to drive new ideas
and significant cost reductions,” says
Pravin Bhagwat, co-founder & cto,
Mojo. “However, traditional Wi-Fi
has lagged behind in this area, clinging to proprietary hardware and controllers, despite the fact that software
virtualisation and the cloud has rendered them largely unnecessary. This
direct-to-market model results in significant cost savings for the end user
Infotech
of up to 50 per cent over traditional
vendors who stack significant markups on access point hardware.”
Bhagwat, an unlikely entrepreneur, after his PhD he began work at
ibm Research and was part of a team
that actually built the Wi-Fi. He was
a member of the first team at ibm
Research, which invented Wi-Fi in
1998-99. It was at this time that he
saw most of his peers and colleagues
moving to Silicon Valley to start their
businesses. He later decided to come
back to India and joined iit Kanpur to
teach and research. Bhagwat received
the 2005 Global Indus Technovator
Award for engineering the world’s
first massively large scale outdoor
wlan network connecting two cities in North India. Around 2003, he
teamed up with Deshpande to set up
the development facility at Pune.
“We are seeing a major industry
shift in infrastructure toward open
networking and standardised Wi-Fi
hardware,” observes George Tchaparian, ceo, Edgecore Networks. “And
Mojo Networks is paving the way for
enterprises and service providers to
start adopting this approach. Following our own recent launch of open
hardware designs for access points,
we are thrilled to see Mojo promoting the benefits of standard designs,
and eventually open-source hardware designs. The wide availability of these hardware platforms will
accelerate software innovation, as
also lower capex, and give freedom
of choice to the customer.”
Unified cloud
“Companies are frustrated with
enterprise networking, because it’s a
hindrance to accelerating their business,” says Rick Wilmer, ceo, Mojo
Networks. “The proprietary nature
of Wi-Fi solutions is a clear, and significant, example of this problem.
We have seen proprietary hardware
standardised for computing and storage, and it’s time for this to happen
in Wi-Fi. This new business model
is a direct response to the impact
of the cloud on wireless networking
and where, in today’s world, access
point value is actually being created.
Software and virtualised cloud-managed Wi-Fi is fundamental to this
Mojo: providing greater value and flexibility
revolution. It allows us to achieve
what was previously impossible: fast
scaling to meet demand, rapid enterprise-wide software updates, more
flexibility for it organisations, and
better business agility for our customers. Our new business model provides Mojo’s purpose-built unified
cloud, along with our access points,
without mark-ups, thus eliminating
Wi-Fi as a capital expenditure.”
“Currently, Mojo is sourcing
access point hardware from the
world’s original design manufacturers (odms) and pre-loading Mojo’s
access point software to bring customers the Mojo-branded access
point hardware,” adds Deshpande.
“Mojo’s solutions deliver unified
access, security and engagement features which are all managed from
Mojo’s secure cloud platform. Mojo
uses major global distributors such
as Ingram Micro in the US for delivery, and local value-add resellers for
local support.” Bhagwat concurs. “All
this is made possible because Mojo
access points can be managed from a
purpose-built unified cloud that can
scale to manage millions of devices,”
he says. “Mojo’s secure multi-tenant architecture brings tremendous
simplicity, ease of use, scalability,
and value-added features that are
fully integrated across various access
points.” Basically, Mojo is redefining
the modern Wi-Fi platform. Imagine
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the scalability to set up thousands
of access points with a few clicks, all
from your smartphone!
According to Nolan Greene,
research analyst, network infrastructure, idc: “We see cloud-managed
Wi-Fi as the fastest growing sector
in the Wi-Fi space, with the combined infrastructure & services market poised to reach $2.5 billion by
2018. That includes an increased
focus on the network being delivered ‘as-a-service’ as companies look
for greater value and flexibility. The
move to software-driven solutions
is suggested by the increased interest in sdn, open networking, and
network virtualisation approaches
for the enterprise. The historically
hardware-centric approach to enterprise campus networking will be
challenged by disruptors.”
According to a report by Markets
and Markets, the Wi-Fi market is set
to be worth $33.6 billion by 2020.
The Asia Pacific and Latin American regions are expected to grow at
a cagr of 22.6 per cent and 20.2 per
cent respectively. The reasons cited
are growth of Internet penetration,
increased usage of smart devices and
more purchasing power parity. Apart
from Mojo, some of the top global
players in the space include at& t
and Cisco.
u LANCELOT J OSEPH
[email protected]
F&B
Sauce of the matter
PICO caters to gourmet consumers with a wide variety of products
I
t may sound like a strange recipe. On one side, you have Abhay
Jaiswal, co-founder & ceo, Nilgai
Foods, who was a management consultant at PricewaterhouseCoopers
in London, focussing on clients in
the financial services industry, particularly in the capital markets area.
His area of expertise was helping Fortune 500 client leadership execute
boardroom strategies. On the other
side is co-founder & president, Arjun
Gadkari, a hardcore travel enthusiast
and passionate food lover, who has
travelled to Eastern Europe, Southern America and several parts of
Central Asia, building on his knowledge about various cuisines across
the world. During his travels, Gadkari had also grabbed the opportunity to work as a sous-chef in one of
the finest Alpine restaurants in the
ski resort of Bormio.
So how did this concept of setting up Nilgai Foods (which has
pico sauces as one of its products)
come about? “While there are certainly a couple of established brands
in the market, we felt that there was
still tremendous opportunity in this
country. A closer inspection of our
competition reveals that, considering the size of this country, there are
actually very few established brands.
Our vision for pico is to become the
go to condiment option for the middle class, urban India,” says Gadkari.
pico is not your ordinary brand.
Today, pico focusses on a sauce category that is underserved in India,
namely hot sauce. According to a
PricewaterhouseCoopers study, this
category is worth $20 billion globally. While India may be one of the
largest consumers of chilli and spicy
food, its consumption of hot sauce
is negligible. Despite the established
brands having chilli sauce in their
repertoire, none of the mncs ‘own’
the category and keep it at the centre
of their portfolio.
So, pico realised that there is an
opportunity to become synonymous
with the word ‘hot sauce’ over the
coming years. Hoping that once that
happens the potential for its products will be enormous, especially as
50 per cent of US households buy hot
sauce. And, in a country like India,
spices dominate cooking.
India’s table sauces market is predicted to increase at a cagr of 18
per cent over the next six years, says
India’s Table Sauces: Market Outlook
2021. Nestle’s Maggi, Kissan, Heinz,
Ching’s, Fun Foods, Remia, Del
Monte, Sil, Tops and Tabasco are driving the organised table sauces market today. Tomato ketchup and sauce
dominate the table sauce market, followed by Chinese sauce, along with
its variants. Metros in India account
for a considerable market share in
the sales of table sauces.
Nilgai’s product development
team is headed by Nicole Gonsalves,
who trained at Le Cordon Bleu in
London and worked with Gordon
Ramsay at The Savoy Grill. pico is
available on Vistara Airlines, Mahindra Holidays and numerous restaurants, bars and quick serve
restaurants across the country, while
another product, cocofly (a 100 per
cent natural packaged coconut water
with no added sugar and no preservatives) is available in over 50 hospitals
across the ncr. cocofly is particularly useful for the hospitality industry, where coconut water is a desired
product but cutting each nut individually is a time-consuming and messy
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job that requires a lot of storage and
refrigeration space. cocofly, on the
other hand, offers the same great
taste of coconut water but in a much
more convenient packaging that has
a shelf life of five months.
pico is available in over 2,000 stores
across cities like Mumbai, Delhi,
Bengaluru and has recently entered
Kolkata and a few smaller cities like
Pune and Nashik. The company sees
great potential in Tier II cities, and is
looking for ways to expand the distribution network. While the company has its own online store, pico.
co.in, that retails all of its products,
it does not have any physical stores.
So, it is expanding its physical network of retailers through a growing
salesforce and leveraging its reach
through online grocers to distribute
beyond the metros. Sales have grown
month on month since it was listed
with Amazon, and several other e-retailers including Bigbasket, Snapdeal
and through its own Website making
deliveries in over 24 states in India.
Nilgai is looking to expand its
physical distribution through a new
arrival of e-distributors like Just Buy
Live and its newest brand, cocofly,
is priced at H30. “Our factory focusses
on a few signature sauces that our
brand is known for – that is where
we can add the most value,” admits
Jaiswal. “While we have had to turn
down potential business in the past,
I believe that running an efficient
back end is critical while establishing
ourselves in the fmcg world.”
So far, just over H20 crore has been
invested into the fmcg venture,
F&B
where the company is partially
funded internally and the founders raised a round of high net worth
individuals funding in 2014. While
pico products’ price ranges from H65
to H145, it sells a family pack of five
signature hot sauces for H300. Over
the next few months, the company
will be introducing its first range of
chutneys – and eventually pickles –
that will be at a lower price point as
the products will target larger and
more mainstream customers.
Brand building
During this quarter, the company
will send its first shipments of both
cocofly and pico to Europe. The
duo sees a huge international opportunity for both brands, just as coconut water has become a $1 billion
industry globally in just 12 years
since it took off in 2003. While there
are many coconut water brands out
there, the industry is so young that
there are still many untapped niches
and many countries have not been
saturated yet. They will be starting
their international expansion in Italy
this summer. They believe that there
is no other Indian brand that captures the fun, vibrant spirit of India
and presents Indian flavours in an
international context to non-Indian
communities overseas, as pico does.
So, Nilgai is starting with the UK,
where the management sees a good
opportunity for its hot sauces, which
will be positioned as one of the first
hot sauce brands that offers Indian
flavours. The company will focus on
Europe and North America as its target markets over the next few years.
Jaiswal & Gadkari: tremendous opportunity
In India, the duo plans to expand
the product range. The vision is to
become the ‘go to’ condiment, which
will require them to move beyond
hot sauce. They believe that the chutney category offers the biggest opportunity because competition here is
weak, and unlike pickles, most chutneys are still made at home. They
are banking on the increasing number of nuclear families and double
income households to boost demand
for ready-to-use chutneys over the
coming years.
While they have launched
cocofly only in Delhi, they see
a lot of interest all over north
India. pico, meanwhile, is the strongest in Mumbai where the company has the biggest presence. The
cocofly campaign has involved a
combination of traditional advertising mediums - print, outdoor,
radio, etc, with online and innovative on-the-ground activations at
sports clubs, gyms and malls. pico
has been more under the radar and
has focussed more on pop-up events,
farmers’ markets and in store btl
and sampling. However, they have
always believed in digital as a powerful tool to engage with customers
and increase loyalty. Because, “Digital allows you to focus on the right
audience and spend money only on
those who have the greatest potential,” says Jaiswal. “It is therefore a
preferred route, when the brand is
new and distribution does not justify city and nationwide advertising.
However, with pico, we will be shifting to citywide advertising shortly,
now that we have reached more than
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2,000 stores in Mumbai alone.”
Right now, the company is in the
process of raising its next round of
funding because the management
believes that it has taken both its
brands to a point where there is proof
of concept and confidence about customer acceptance. At this point what
Jaiswal & Gadkari require is enough
funding to generate a lot more inter-
est and awareness through marketing and increase their distribution
significantly.
“We see innovation, product
development and brand building
capabilities as our biggest strengths,”
says Gadkari. “While there are no
plans to tie up with other companies,
there could be opportunities to work
with compatible fmcg companies to
leverage their existing distribution
network. This has the potential to
rapidly grow our own revenues. This
however is not something that we
are pursuing at the moment.”
u RO B IN A B REU
[email protected]
Aviation
Smooth take-off
Club One Air plans to double its capacity
C
lub One Air – India’s largest
charter operator – is gearing
up to increase its present fleet
of 9 aircraft to 19 by 2019 and to 20
in the following year. “Our present
turnover is R75 crore, but we are optimistic of more than doubling it in
the next four years,” says Bhupesh
Joshi, director & ceo, Club One Air.
“We fly a minimum of 90-100 hours
per aircraft every month and, with
a steady increase in fleet strength,
we intend to easily achieve our
projected turnover.”
Joshi joined the air charter company three years ago. His three
decades of experience in aviation
have helped him bring the company
to its present position. He has worked
for Air Canada, Kingfisher and gmrled dial Airport, Delhi.
Club One is run by a group of
12 companies under the banner of
ar Airways. One of the largest stake
holders in it is the Uflex group. When
the carrier became operational, it was
initially meant to function as a fractional ownership operator. However,
since this wasn’t permitted by the regulator, it converted itself into a charter operator. The company’s fleet at
present consists of one crj-100, with
a capacity of 18 luxury seats (traditionally a 50-seater aircraft, but customised for consumer needs); three
Falcon 2000 aircraft, with 8-10 l
uxury seats; and five Cessna
Citation planes.
On taking charge, Joshi first
worked to boost the efficiency and
morale of their 150 employees. He
gave them training, got them new
uniforms and also moved the establishment to a swank office at the
Radisson Blu, near the airport in
Delhi. “The efficiency of our employees has improved; so did our bottomline,” says Joshi. “When I took over
in 2013, our turnover was R35 crore
and, now, it has more than doubled
to R75 crore. We were flying 9001,000 hours annually in 2013-14 and
Joshi: achieving targets
could touch 22,300-22,500 hours
annually this year.”
In India, business is growing and
taking a charter is less of a luxury,
this being the best option to circumvent lack of connectivity and save
time. The cost of chartering a Citation aircraft today is R1.4 lakh per
hour for a minimum of two hours
(with taxes and other charges the
total comes to about R5 lakh). These
include taxes and ground handling
charges, as also airport tax. For a bigger aircraft like crj, the hourly rates
are R3.75 lakh, for a minimum of two
hours. With taxes this would go up
to R9 lakh.
Emergency services
The company’s list of clients includes
top corporates, such as hcl, jcb. It
has been adding nearly 20 clients
every year. “We also cater to political parties during elections – be they
bjp, Congress, sp, aiadmk, or any
other,” Joshi adds. “And, our payments do not get stuck. We don’t
fly individuals from political parties. We are also being noticed for
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our medical air ambulance services.
During the floods in Uttarakhand,
we evacuated thousands of stranded
people. We were engaged by the
state government”.
The airline also provides air ambulance services to crpf in Naxalite
areas, such as in Chattisgarh. It has
also served paramilitary forces like
cisf. “All major hospitals like Max,
Fortis, etc, also utilise our services as
air ambulances,” he says.
Club One Air has also performed
evacuation exercises in strife-torn
areas such as Afghanistan and Iraq.
These services are mostly contracted
through insurance agencies. In India,
it flies to about 100 airports, including even remote places, which have
no access to scheduled carriers.
Several clients come from the
fields of sports and entertainment
too. “A few months back, a production team, while making the movie
Drishyam, had opted for our charter for their promotional activities.
We have also ferried players for ipl,”
Joshi elaborates.
A team of 20 pilots and about
10 flight attendants serve the airline at the moment. An investment
of R200 crore has been made during the past three years – all through
internal accruals. The company has
been ebidta positive during the past
two years and has also made a marginal profit of R2.64 crore in the last
financial year. The reduction in the
price of atf has helped improve its
bottom line.
Club One Air has two bases in
India – one in Delhi and the other
in Surat. Its activities in the international sector cover the Middle East,
the Far East, China and Europe.
“We are opening f&b and airport services under the brand name
Club One Class and Club One Concierge, which will contribute R7-8
crore of revenue by the end of this
fiscal year,” says Joshi, commenting
on the company’s expansion plans.
“It will also help us to achieve a turnover of R100 crore by the end of the
current financial year. The opening
of these services is purely to increase
our footprint in the industry.”
u YESHI SELI
[email protected]
Health
B U S I N E S S I N D I A ◆ T H E M AG A Z I N E O F T H E C O R P O R AT E WO R L D
For body and mind
A hospital-cum-medical college establishes itself in patient care
and education
R
unning the Charutar Arogya
Mandal (CAM) at Karamsad
near Anand in Gujarat is like
‘swimming against the tide’ in every
way, says Amrita Patel, chairman,
CAM & former chairman, National
Dairy Development Board (NDDB).
“This is the most difficult of all my
responsibilities so far, but I won’t
give up in my effort to change many
of the old policies!” While Amul
was a co-operative institution, she
points out, Sardar Patel University –
of which CAM, a Trust, is a part – is a
home of teaching.
“Fortunately, people are generous,” says Patel – whose father, former finance and home minister H.M.
Patel, set up CAM 38 years after retiring from the Indian civil service.
“Karamsad village gave him 40 hectares to set up a medical college and
hospital. Everything we have has
been donated; there is absolutely no
government support.”
Beginning with a nursing school,
the fledgling organisation found that
it had to give the local girls stipends
as an incentive to study. After the
first batch passed out a year later in
1981, Shree Krishna Hospital made a
small beginning with 130 beds. The
complex also included an atithi griha
for the relatives of patients. Raising
money to expand it to a 550-bed
medical facility, with separate wings
for poor patients and those who can
afford to pay, took time despite the
generosity all around. It took another
two years, and four attempts, to get
government recognition, because
CAM would not pay a bribe. Today, it
is one of the few in the country with
NABH (National Accreditation Board
for Hospitals & Healthcare Providers)
accreditation.
Pramukhswami Medical College, which came up in 1987, has a
‘good’ student-faculty ratio, Patel
says, “though it is difficult to get
faculty, as the doctors find practice
Patel: unstinting effort
more profitable than teaching”. The
financial problems continue even
today: though the education-related
expenses are by and large recovered
from the fees collected for the various courses, the patient care activities require considerable support
year after year. The hospital charges,
if recovered fully, would be adequate to meet the costs; but there
are many patients who cannot afford
to pay for treatment. The hospital
does not charge for outpatient registration and consultation or bed and
diet; and everyone from a BPL (below
poverty line) family gets a flat 60 per
cent waiver on treatment charges.
For women and children, it is totally
free. Overall, the concessions are
close to H7 crore a year – which needs
to be raised through donations.
“Our capital expenditure is only
about H15 crore a year, but operational expenses go up to about
H107 crore annually,” explains Sandeep Desai, CEO, CAM. “Of this, our
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M
revenues are only about H100 crore.
Even in the college, Patel adds, CAM
can’t make any money because the
students – 100 undergraduates and
65 post-graduates - pay the fees that
the government fixes.
Personalised healthcare
“Our management group discusses
the illness and treatment with the
patient’s family and assesses the concessions,” Patel explains. “We also
administer government programmes,
which too bleed us!” Among these
is the Chiranjeevi programme,
under which pregnant BPL women get
institutional delivery care at H3,500.
“This causes us a loss of H20-25
lakh a year, because only the complicated cases come here and need
ICU treatment.”
CAM also holds saasu sammelans,
to train mothers-in-law how to provide basic care to their daughters-inlaw, as well as health workers in the
village around Karamsad. The area
being a tobacco-growing one, these
health workers – typically women
who have passed school, and some
ASHA s (accredited social health activists), says Desai – are taught to visit
homes and identify early-stage cancer. “Beyond radiation treatment
and chemotherapy, we are adding a
bone marrow transplant facility,”
Patel says.
CAM’s current chairman has realised her late father’s vision: to offer
comprehensive and personalised
healthcare, delivered with commitment, compassion and at the most
affordable cost to all those in need
of it. It has become hospital policy
not to deny treatment to even a single patient because of the scarcity of
funds. The trust stands firm in this
vision, despite the commercialisation
of the medical profession all around
– though, as she admits, the journey
over the past three decades has been
challenging.
Overall, Patel says, the experience
of staying in hospital needs to be
made easier; and there needs to be a
louder voice for ethics in health care.
CAM is trying to fulfil both these
objectives.
◆ SEKHAR SESHAN
[email protected]
Column
Shades of duplicity
Saudi Arabia hits shale producers hanging on for a price reprieve
C
ollapse of the Doha talks aimed at curbing further oil price decline took everyone by surprise. While the ostensible
blame lies at the door of the hapless Iranians, in
reality, the Saudis have subtly inflicted a deeper,
more enduringly painful wound on America,
crippling its biggest rival for leadership in the
global oil sweepstakes. Despite ample hints
of a gentlemen’s agreement to freeze production, the talks broke down undoing months of
negotiations, crashing oil futures and crushing
those who entered long into the weekend little expecting a bloody Monday morning. All
that was agreed after a gruelling 12-hour session was that nothing was agreed!
If everything was set beforehand, why did
the Saudis suddenly pour cold water on opec
members’ aspirations, risking all-round alienation? Was it simply the well-known Saudi
enmity toward Iran? Not really! The real reason for the volte-face is the US and shale. Used
to dominating the oil world for decades, suddenly since 2014, Saudi Arabia has been losing
out to US shale oil drillers, ever surprised by
their resilience. To cripple this contender and
send them packing out of business, prices had
to be sent and kept lower for as long as it took a strategy which worked with US oil production
now at new lows. By keeping oil prices sustainably below $40 per barrel, more and more shale
oil producers will fall by the wayside. But, if
crude prices rise above $50 per barrel, the shale
producers will be back in business.
A Doha consensus would have pushed oil
prices beyond $50, extending a lifeline to the
US shale oil industry, allowing prolific pumping, swelling the glut and pushing oil prices
back south - permanently denting Saudi Arabia’s reputation as the world’s top oil gun. Iran’s
return post-sanctions, is already threatening
Saudi leadership in opec . Scuttling the Doha
Summit has reasserted Saudi Arabian supremacy, reaffirming who calls the shots, thereby
not only simultaneously keeping both contenders – the US and Russia – at bay, but also blunting the Iran challenge.
In addition to punishing Iran, Riyadh does
not want too early a price recovery as that could
allow rival producers, especially in America, to
resume production growth, delaying a rebalancing of the market beyond 2016. Global oil
prices first started plummeting in late 2014,
Darshan S. Desai
after Saudi Arabia deliberately increased production volumes to drive higher-cost producers such as US shale producers out of
business. Once again, the Saudis have delivered a
hammer blow, administering the final nail
in the coffin for shale producers and their
lenders, who were awaiting a short-term price
respite to survive.
The Saudis recognise the host of economic and
geopolitical realities staring them in the face.
On the economic front, they realise the reducing global dependence on oil and the advent of
US shale has wrecked the existing crude world
order in just five years. On the geopolitical front,
the Saudis perceive the Iran nuclear deal as the
latest blow to their esteem, fearing a detente
between Washington and Tehran with consequent decline in their regional heft. Iran, meanwhile, is naturally eager to sell every additional
barrel it can produce, now that sanctions are
lifted. Saudi and Iran’s oil strategy during
this downturn reflects a deep-seated geopolitical antagonism expressed in myriad ways:
from the proxy war in Yemen, taking opposite sides in Syria and, now, competing for
opec leadership.
T
The author is founderchairman, first
euromax, a cross-
border deal boutique.
He can be contacted at
[email protected]
u 72 u
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hough taken longer than Riyadh expected, its
goal of weeding out higher-cost oil producers
is imminent. There was simply no incentive at
Doha for the Saudis to give up now, using the
opportunity instead to show opec it can entertain the idea, while ultimately putting the blame
for failure squarely on Iran. If Riyadh sent a clear
message to Tehran by scuttling talks, it also sent
a message to Russia about the price of its support
for Iran and Syria, drawing a line in the sand
regarding Moscow’s role in the oil freeze talks,
reminding the Kremlin who remained the final
arbitrator of opec oil policy.
Saudi Arabia is about to immediately increase
production by an additional million barrels
per day, which, while significantly disrupting
the near-term oil price fundamentals, might
actually improve them in the long-term.
Though initial reactions to a Saudi production
increase will be negative due to exacerbation of
oversupply without any immediate offsets, such
lower oil prices will accelerate the process
of taking some of the supply out of the
equation, in turn paving the way for longer-term
fundamentals
to
improve.u
CSR
Pioneering initiative
Smokeless villages are among Indian Oil’s many initiatives
T
oday, the world is striving
to achieve three sustainable
energy goals – universal access
to energy, doubling of renewable
energy share and doubling the gains
of energy efficiency. Access to clean,
efficient cooking fuels and devices is
one of the main priorities of the push
towards universal energy access.
Nearly 2.9 billion people worldwide still use polluting fuels like
firewood and coal for cooking and
heating, at a huge detriment to society in terms of health as well as
environmental and economic costs,
estimated at over $123 billion every
year. These numbers underline the
urgent need to accelerate the adoption of clean, efficient cooking fuels
that can improve the life of millions, prevent premature deaths and
help reach sustainable energy goals
by 2030, according to a new report
released at the second Sustainable
Energy for All Forum (SE4All) in New
York on 19 May 2015.
One of the many ways to achieve
the global target of providing universal access to energy is by transitioning to the use of Liquefied Petroleum
Gas (lpg) as cooking fuel in kitchens.
Clean cooking cuts across sectors,
such as health, gender, environment,
technology, poverty and energy.
Conceptualisation
B. Ashok, chairman, Indian Oil,
who is also vice-president, World
lpg Forum, Paris, has reaffirmed the
commitment of Indian Oil to fulfil
women’s rights to sustainable access
to clean energy, leading to the creation of ‘Mission Smokeless Village’.
In an exclusive brainstorming session
held on 2 November 2015, on Rural
lpg penetration: indoor pollution – lpg,
a solution, he addressed a team of 20
lady officers of Indian Oil who have
been looking after the lpg function
at the state offices, area offices and
field locations and shared the idea of
formulating a mission to spread the
Disappearing sight
use of lpg in rural markets.
The brainstorming session was
steered by Kirk R. Smith, professor,
global environmental health, University of California, an expert, known
for his work on fighting indoor air
pollution. The idea of adopting a village and making it smokeless by promoting the use of lpg was floated
by the group at the end of the programme. This idea was firmed up
and conceptualised on 20 November
2015, during the chairman’s panel
meet, attended by a significant number of Indane lpg distributors from
across the country. This was how
‘Mission Smokeless Village’ commenced its journey on Indian soil.
Execution
On 28 November, Indian Oil declared
the first smokeless village in Karnataka. “My compliments to the residents of Vychakurahalli village,
which is declared the first smokeless village in India,” tweeted Dharmendra Pradhan, minister of state
(independent charge), mopng. “All
the households in the village have
lpg connections, a great example set
by the villagers on the eve of cop21
global summit on climate change;
we need many more such villages.”
u 73 u
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Ever since, Indian Oil’s lpg group
and its lpg distributor network have
been promoting this initiative with
missionary zeal. After Vyachakurahalli, it was the turn of Govindpura, under Indian Oil’s Ahmedabad
area office (ao), to become the first
‘smokeless village’ in Gujarat, followed by Kazi Basai village (under
Gwalior ao), Madhya Pradesh state
office. Field officers, along with distributors, visited the adopted villages
to assess the lpg penetration and the
level of effort required to convert the
villages to 100 per cent lpg usage.
Under Patna ao, 10 villages have
been adopted by Indian Oil officers. Two villages have been turned
smokeless - Purakothi in Kaler block
of Arwal district and Panrepur, Shahpur block, Bhojpur district. The concept received wide coverage in Bihar
and is special for the state, due to the
fact that the overall industry penetration for domestic lpg is only
about 35 per cent in the state. Bihar
state office has already put in place
plans to bring more villages under
the ‘smokeless’ status by the end of
the financial year and is targeting a
village panchayat (covering a population of more than 8,000) to make
it smokeless.
At Indian Oil’s Karnataka state
office, a WhatsApp group was
formed, named ‘Hogerahita Grama’
meaning ‘smokeless village’ in Kannada. This was the platform for sharing and exchanging information
about the adopted villages. It was a
huge success, because Team KaSO
could stay tightly connected and
its members could share their experience and exchange notes on the
progress in real-time, which helped
in fast-tracking the campaign process significantly. On 15 December 2015, KaSO declared about 60
villages smokeless.
Adoption of a village for making
it ‘smokeless’ is a voluntary initiative. The scheme encourages lpg officers as well as distributors to adopt a
village and work towards rendering
it ‘smokeless’. By the end of March
2016, more than 3,400 villages
across India have benefited from this
voluntary effort.
[email protected]
Niche Business
Keeping it clean
Lindstrom India supplies companies with freshly laundered uniforms
I
s there something in common between a mobile phone
company in Chennai, an electronics giant based in Bengaluru,
the automobile majors in Chakan
(Maharashtra) and the numerous
pharmaceutical factories in Andhra
Pradesh, Gujarat, Maharashtra, Punjab and Himachal Pradesh? Other
than workers’ unions, that is? If you
are stumped for an answer, you are
probably not alone.
The correct reply is Lindstrom, a
Finland-based company with a Swedish name, which supplies freshly laundered uniforms for about 350,000
factory workers each and every working day. Lindstrom India is based
in Mumbai but has business units
in 10 locations in different parts of
India – from Mumbai and Hyderabad
to Tinsukia in Assam.
For the longest time, hundreds
of companies across the country
would buy uniforms for their workers, often making the latter pay for
them, and then depend on them
for keeping the uniforms in proper
condition. In many other institutions, the management would buy
them in bulk and handle the laundry aspect in-house. A vast number
of Indian companies continue to do
so even today. According to a 2008
estimate, the work-wear business in
India was worth a stupendous $2.8
billion; now it must be substantially
higher, with most large textile companies having a separate division for
workers’ uniforms.
However, as company after company sought ways to outsource their
non-core functions, such as housekeeping, staff canteens and laundry,
it made sense for them to farm out
the business to companies like Lindstrom, Klopman, Tavoy and Cintas.
While most of these are based in
Europe, Cintas is based in the US and
several of them set up their Indian
operations sometime in 2008-10.
Lindstrom has also been in India
since 2007, with its first unit being
located in Chennai. This was quite
likely because their first client was
a mobile phone company based in
that city.
The business models of these other
companies often vary according to
customer demands. Thus Cintas
offers both a rental uniform service
(like Lindstrom) where they take care
of the laundry, etc, and levy a service
charge, and uniforms for purchase.
Klopman mostly targets customers who prefer to buy the uniforms,
rather than take them on rent.
“The uniforms are designed
according to the needs of each industry,” says Anupam Chakrabarty,
u 74 u
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managing director, Lindstrom Service India. “In pharma, food processing, and others, the primary
requirement is hygiene and cleanliness while, in automobile companies,
the main issue is safety. Lindstrom
also devotes a lot of attention to ecofriendliness and constantly strives to
use less water, detergents, etc.”
To do this, Lindstrom and its
competitors have to make a substantial up-front investment that starts
with some research into the design
of the uniforms, keeping in mind
the unique requirements of the client. For example, where the client is
a pharmaceutical company, special
attention is needed for the colour
and pattern, as well as a lot of effort
in maintaining the garments in spotless condition. This is because workers’ uniforms are often subjected to
additional scrutiny during inspections by the US drug regulatory
authorities, without whose clearance
the Indian company cannot export
its medicines to the US.
In fact, these companies at times
request for special tracer mechanism such as rfid (Radio-Frequency
Identification) tags that help find
out how many days ago a particular piece of clothing was laundered!
As these inspections from the regulatory authorities of various countries became more frequent and
more stringent, the manufacturing
Chakrabarty: considering clients’ needs
Niche Business
companies found it was better to
hand the task over to the experts in
the field.
There are some other advantages
too. While the client companies are
able to reduce their own fixed costs
by farming out these tasks, and
ensure availability of high quality
uniforms on each and every working
day, a spin off benefit is lower absenteeism among workers. With the traditional approach, the workers would
buy just two sets of uniforms and get
them washed and ironed at home
every day. Any disruption in their
domestic situation, which meant
that the uniform was not washed on
a particular day, forced the employee
concerned to skip a day’s work. If
this happened frequently and in
large numbers, the factory’s output
would eventually be affected. The
Lindstrom service ensures that a
complete set of cleaned uniforms for
the entire week is placed in the individual worker’s locker in the factory
premises and the excuse that he has
no uniform to wear is taken care of.
Standardised equipment used by Lindstrom across the globe
the fact that it has set up 10 business
units in different parts of the country,
handles 350,000 uniforms each day
for about 1,000 clients, requires laundry facilities for all of them, suggests
that the company possibly infuses
at least `20-50 crore in each new set
up. All this involves a lot of people,
because of which Lindstrom employs
about 330 people directly or indirectly, while Electrotek, Bengaluru,
which has been making uniforms
for Lindstrom for the past several
years, has grown from 22 people to
140 this year.
Hence, being part of a €300 million conglomerate helps to a great
extent, particularly because Lindstrom’s largest establishment outside
Finland is in India. The parent company therefore shares its best practices with the Indian arm, including
research into ways and means to
reduce the consumption of water,
detergents and other resources. Lindstrom also operates in 24 other countries, the latest of which is South
Korea. Of its global turnover, about
€165 million came from within Finland, while about €114 million came
from subsidiaries in Europe and Asia.
The Asian operations began with
China, and later expanded to India,
Turkey and South Korea.
Saving time
According to Lindstrom InternaThe most important thing that works
tional’s 2015 sustainability report,
in favour of Lindstrom is that it
the global corporation has reduced
offers: hassle free work-wear manageits water consumption from 7.6 litres
ment including handling wear and
to 6.7 (per kg of garments washed)
tear of garments; repair and replacebetween 2011 and 2015. Likewise,
ments; stocks and storage; smooth
its consumption of detergents has
and efficient transition and start-up
dropped from 12.43 gm to 10.61 gm
of services. There is also a locker ser(per kg) during 2011-15. Given that
vice for employees that enables sortLindstrom handles 630 million kg of
ing of individual sets of garments,
garments throughout the world, the
so that minimum time is wasted at
total savings in water, detergents, etc,
the start of each workis clearly a huge amount.
360° End
to End Workwear Service
ing shift. “Even 15 minApart from its regu360 End to End Workwear Service
utes spent by each worker
lar business, Lindstrom
DESIGN AND PURCHASING
at the start and finish of
has also partnered with
OF THE WORKWEAR COLLECTION
each shift adds up to a
unicef (United Nations
eLINDSTRÖM
huge loss of time by the
Children’s Fund) in RajFITTING AND SIZE
end of the year,” explains
asthan and other places
MODIFICATIONS
Chakrabarty.
through its wash (Water,
OF CLEAN
Since it needs to make DELIVERY
Sanitation and Hygiene)
WORKWEAR, LOCKER
AND PICK UP
large investments on SERVICE
programme. This effort,
OF USED WORKWEAR
behalf of each manufacfor which Lindstrom has
PERSONAL GARMENTS
turing client, it enters into
been the main sponsor
open-ended
contracts
since 2007, has made a
with its clients, the minhuge difference to more
WASHING, FINISHING AND
STORAGE AND
QUALITY CONTROL
FINAL DISPOSAL
imum period being five
than 10 million Indian
years. While Chakrabarty
children over the years.
REPAIR AND REPLACEMENTS
was unwilling to reveal
u SUMIT GHOSHAL
the scale of investment,
[email protected]
u 75 u
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Enterprise
Travel time
The founder of YatraGenie chases a childhood dream
W
hen Renil Komitla was
growing up in a village in
Andhra Pradesh, he had
a dream: making it easy for people to book bus tickets for long-distance journeys. After earning a BSc
from Bangalore University in 1997,
he went to the University of North
Carolina (unc), Charlotte, on a full
scholarship for a Masters in Computer Science. His father, a rural veterinary doctor, could give him only
20 dollars when he left. So the young
Renil had to earn a living while he
was at unc, working for a little over
a year as a software consultant for
the Charlotte-Mecklenburg Police
Department’s information technology division, creating a database for
their crime laboratiories.
Graduating two years later, he
did what most other Indian students in the US did: he got a job in
the information technology industry, working in it companies including Cisco Systems. In 2008, he went
on to do – again – what many others like him do: he set up a business:
services company Paxterra Software
Solutions. And then he decided to
follow his childhood dream - and
came back to India. He and his wife
Rama Kini, whom he met and married in the US, settled in Bengaluru.
Here, Kini – a Masters in Computer
Science from Osmania University in
Hyderabad and a PhD from the US grew the company, while he set up
YatraGenie.
Why did he come back even after
spending so much time in the US
and acquiring American citizenship?
“It was a dream!” he repeats simply.
“I had thought of entering the bus
ticket booking business way back in
2008, even before Redbus was started
– but I didn’t have the resources to
do it. I had identified the gaps in the
travel business as local transportation, buses and economy hotels. But
I couldn’t afford to get into everything – so I had to decide which to
do first within my limited budget.”
This simplicity is what rules his
life, he says: despite his affluence,
the only thing that has changed in
his lifestyle over the last 16 years
is that he has a bigger house and a
car. “I still wear the same brand of
shoes, the same type of clothes... I
even go to the same biryani centre!”
he grins.
Paxterra Software Solutions Pvt
Ltd, with Kini as its ceo, has grown
to 750-plus employees, most of them
in the Bengaluru headquarters; it
also has offices in San Jose, California and Richardson, Texas. The company, which works with customers
to help them with their engineering
needs so that they can in turn focus
on their core business, has a strong
portfolio of customer engagements
from the telecom, manufacturing,
semiconductors,
transportation,
insurance, retail, oil and gas, sports,
travel and tourism, hospitality, banking and entertainment industries.
Paxterra, which describes itself
as a world-class it company with
diversified workforce in six different locations, operated and managed
by seasoned industry veterans, provides the backbone for the travel portal. This company operates in three
different business segments - engineering/software development and
product support, strategy and it, and
cloud and SaaS (Software as a Service). It has grown multiple times
in just seven years and added worldclass networking companies like
Juniper Networks, Aruba Networks,
Ericsson, Cisco, at& t, Cable & Wireless, as customers and partners.
YatraGenie.com, for its part, has
grown since its establishment in 2013
into one of India’s leading online bus
ticketing and cab booking platforms,
offering a one-stop travel solution
for budget travellers. With a gross
revenue of H125 crore from a million unique users, who make about
5,000 bookings a day, it works on a
u 76 u
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commission-based business model to
give its customers the best service at
the best price, and is known for its
hassle-free, low-cost ticketing service. “We make about 12.5 per cent in
the bus and cab business combined,”
Komitla says. “We hope to increase
this with our hotels and bring up the
average to 15 per cent.”
His company not only books tickets on other bus operators’ routes,
it also runs some buses of its own.
After buses came city taxis. In March
2015, it launched its city and outstation taxi rental services in its headquarters, Bengaluru. But this was
only the metro premiere of its cab
operations – it already has cabs in
40 towns, mainly in Andhra Pradesh
and Telangana, as well as Karnataka. The towns covered are in Nellore, Tirupati, Gudur, Kavali and
Vijayawada. Next on the list are Guntur, Rajahmundry and Vishakhapatnam. “Coastal Andhra is my home
region,” Komitla points out. “We
began in small towns, at the rate of
Enterprise
one every five months.”
oday, YatraGenie is one of the
few government-licensed radio
taxi operators in the country. It is in the process of introducing 100 cabs within Bengaluru and
50 for outstation travel to start with.
In the coming months, it will partner with other operators to increase
these numbers to 1,000 and 500,
respectively. “The growing demand
for city taxi and outstation taxi services in Bengaluru prompted us to
venture into this market,” he said at
the launch. “The taxi service market
is projected to significantly grow in
the coming years. Clearly, it is underserved and there is still room for new
players who can innovate and serve
customers better, not just in metro
cities but also in two-tier cities. By
the end of 2015, we will be operating
in 65 cities and towns with an inventory of 25,000 cabs.”
Bookings can be done on the
online portal www.yatragenie.com,
as well as through Android-based
T
company, with a focus on technologies specifically related to the job
market. “We at kini believe that a
strong foundation lasts a lifetime,”
his LinkedIn profile says. “We measure return on investment in terms of
the group of young professionals that
we shape and send off into the corporate world after successfully completing our training programme.”
Another company in which he
is a partner is rrk Holdings llc, an
Angel investment firm he set up in
July 2015 in Richardson, Texas. rrk
works with early-stage technology
companies “looking at contributing
to a better world”. An even newer
interest is Medkumo Software India
Pvt Ltd in Bengaluru, in which he
invested and became a Board Member in September 2015. Medkumo,
his wife explains, is a stealth-mode
start-up, working on innovative solutions in the medical field that will
touch every Indian life.
Komitla says all that he is aiming at is to ‘touch lives’. “I want to
touch 50,000 lives
in whichever way
E N T R E P R E N EU R
before I retire,” says
Renil Komitla
the
40-year-old.
“I’ve touched about
B US I N E SS
mobile devices using the
3,000 so far.” ExpanBus bookings, taxis
YatraGenie app. Apart
sion will be systemfrom web and app bookatic, beginning with
CO M PA N Y
ings, customers can reach
Tier II towns: 100
YatraGenie
out to the call centre.
in south India, then
Commuters can now book
Odisha and MahaB O O K I N GS
a mix of cab and bus serrashtra, “where peo5,000 per day
vices for home pick-up
ple already know
and destination drop at
YatraGenie because
LO C AT I O N S
home.
our buses go there;
Taxis in Bengaluru,
Komitla is also the
so, we will have a
Andhra Pradesh,
chairman of Komitla Serlower spend to create
Telangana and
vices, which he set up at
awareness”.
BuildKarnataka; buses all
his home town Nellore in
ing a network as a
over India
2004 as a diversified busichain is best because
ness conglomerate with
it makes it easier to
FOUNDED
ventures in transportation,
spread, he points
2013
travel, tourism, logistics,
out, adding: “It has
T U R N OV E R
been an interesting
it/ites and retail, with a
journey of two-plus
vision of providing global
H125 crore
years. Our growth
and international experihas been slow, but
ence to the Indian service
sector and customers. Additionally, good - I belong to the old school of
he is a director and board member business, where I only want to make
of the Bengaluru-based kini Pvt Ltd, a penny at the end of the year.”
established in 2008 as the ‘first of its
u SE K HAR SESHAN
kind’ networking, it and ites training
[email protected]
u 77 u
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Market News
OVERVIEW
Sensex
The May mirage
27000
25750
Uncertainty clouds market as investors wait for positive cues
T
guidelines, by the rbi for universal
banks. Governor Raghuram Rajan,
true to his word, has virtually made
banking licences available on tap. The
only caveat was that the big industrial houses will not be able to set up
banks – probably a reaction to the
goings on in the past, where some of
the industrial houses used the banks
as their captive arm to expand their
own fiefdom. Nevertheless, once the
draft agreement becomes official
with or without documents, there
will be some serious ramifications –
one, as to how many companies will
actually be able to put up H500 crore
upfront; and, second, concerns about
the talent pool.
Earlier, it was easy enough for
newcomers to tap the existing panel
of bankers from the psu banks.
Co m pa n i e s i n t h e n e w s u
V-Guard Industries (m-cap: H3,478
crore) saw a surge in buying interest
following the company’s excellent performance. The Kerala-based company,
which has a broad assortment of products ranging from voltage stabilisers,
solar heaters, inverters, fans to mixergrinders, reported more than a 50 per
cent rise in its stand-alone pat to H112
crore on a modest increase of just 7 per
cent in its turnover of H1,862 crore. The
V-Guard
1000
25262
24500
he last fortnight has been
something like a ‘who-dunnit’ thriller. All the action was
bunched towards the closing of the
fortnight. Of course, the annual results
and, more importantly, the prognosis
for 2016-17, held the interest of the
regular investors. As expected, some
were in line with the expectations of
the general market, while a few others
sprang surprises – some good, some
nasty. For the most part of the fortnight, however, the market moved in
a narrow range, with the Sensex ranging from 25500-25800. It breached
the 26K level just once, before sliding downwards. Since the beginning
of the year, it has gone down by over
3 per cent.
The biggest surprise of the fortnight was the release of the draft
26161
company crossed the H100 crore pat
mark for the first time. The shares made
a 52-week record high of H1,186 on 5
May, rising by nearly H180 in a single session, soon after the announcement of
the results a day earlier.
Cholamandalam
Investment
(m-cap: H13,800 crore) saw a sharp
surge in its share price last fortnight.
The H10 paid up shares of the Murgappa
24000
945
18000
890
835
780
4 Jan– 4 May 2016
22000
1 Jan– 5 May 2016
But, will the current lot of bankers
be sufficient and more important?
Will these new sector banks want
to become clones of psu banks with
some degree of change? Or, will the
companies look at developing a new
set of bankers?
While the details and fineprint
are being studied, the immediate
reaction of the markets is the concern with the psu banks. Will the
proliferation of new banks change
the way in which banking has been
traditionally done and, if so, will
group company, which had been rising
steadily since the beginning of the year
( H650 on 1 January), touched a 52-week
high at H892 on 4 May, as the company’s
performance was better than expected.
While its total income rose by 13 per
cent, its pat went up by over 30 per cent
to H575 crore. The group, which is largely
into vehicle finance and home loans with
aum of over H25,500 crore, has a small
exposure to other sectors also.
Parry’s Sugar (m-cap: H101 crore)
another Murguppa group company, and
Cholamandalam Fin & Invst
900
Share price
(`)
u
23250
Turnover
(` lakh)
Parry's Sugar
5000
54.0
800
3750
45.5
30
12000
700
2500
37.0
20
6000
600
1250
28.5
10
0
500
0
20.0
Share price
(`)
Turnover
(` lakh)
4 Jan– 4 May 2016
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Share price
(`)
Turnover
(` lakh)
40
0
4 Jan– 4 May 2016
Market News
the psu banks be able to cope with
the change? The banking sector is
already going through its own problems and the Bankex has dipped by
more than 15 per cent over the last
17 years, with some of the bigger
banks like sbi, icici, Axis Bank, pnb
and BoI, losing significant ground.
sbi and icici Bank are down by nearly
H100 each from their year ago levels –
at H182 and H216 respectively. Axis is
down to H461 from H450.
Top league
Bank of Baroda and hdfc Bank
are amongst the outliers and have
improved their market cap. Kotak
Mahindra Bank, which is also considered in the top league after its acquisition of ing Vyasya Bank, is also up by
H50 to H700 a year ago. Post the release
of the guidelines, idfc Bank was the
only one, which looked up over speculation that the guidelines may facilitate a re-merger of the bank with
the parent once again, in case the
management decides to hive off the
mutual fund and securities business. The other development, which
a subsidiary of eid Parry, which holds a
65 per cent stake, also saw its share pricesshooting up to a yearly high of H50.50
on 5 May, despite the company reporting a loss of H26 crore in 2015-16. This
was the fifth consecutive year in which
the company had reported a loss. In
2014-15, the company’s total reserves of
H100 crore were wiped out, with the net
worth of the company being H15 crore
(share capital: H115.5 crore). Investors
were, however, enthused by the company reporting a pat of a little under H20
crore in the quarter ended March 2016.
also happened on 5 May, was the
smooth passage of the Bankruptcy
Bill in the Lok Sabha. While the fate
of the bill being transformed into
an act will only be known once the
Upper House too passes it, the general perception is that the members
of the Opposition, led by the Congress in the Rajaya Sabha, may also
support it in the current Parliamentary session. The passage of this
bill will empower banks to speedily
recover their dues.
There were also reports about the
earlier Ranbaxy promoters being
fined $385 million by an arbitration
panel in Singapore. The fine was levied allegedly for non-disclosure of
material facts to the Japanese pharma
major, Daiichi Sankyo Co prior to
its takeover of Ranbaxy. Malvinder
Singh and family had sold off their
34 per cent stake for $2.4 billion in
2008, subsequent to which the Japanese company had come out with
an open offer. The total deal size was
$4.6 billion and was touted as one
of the largest deals at that time. Daiichi had in turn sold off its holdings
to Sun Pharma.
While the fine was levied by an
arbitration panel comprising three
members, it is not an unanimous one,
as one of the three arbitrators had dissented. The order of the arbitration
committee did not, however, make
any significant impact on the share
price of Religare Enterprises, the financial arm of the Singh brothers. While
the fine based on an international
arbitration award, can and is likely to
be appealed against, it will be some
time before it is enforced in India, is
one view held by the markets.
Currently, however, company-specific news is influencing investors’
decisions. And there is a lot of action
being seen in midcaps and small
caps (see box). For the next fortnight,
however, the factors to watch out for
will be the action in the Parliament,
reports about the onset of the monsoon and results of the stragglers. It
may be better to get some more clarity on the proposed policy announcement before placing large bets.
Being a thinly-traded company, however, it exhibited volatile movement.
banking sector has capped gains in this
sector. The bankex has gone down by
3.7 per cent since January 2016. Since
the beginning of 2015, the erosion has
been to the extent of 15 per cent.
axis Bank has reported stressed assets
of H22,000 crore in its watchlist. This
accounts for 4 per cent of the bank’s
total assets as on 31 March 2016. As per
the bank’s assessment around 60 per
cent of these assets, comprising funds
lent to steel and energy amongst other
sectors have the potential of turning
into npa s over the next eight quarters.
Its eps for 2015-16 was H34.5 – a little
better than last year. The stress in the
Axis Bank
500
BASF
120000
1000
465
90000
925
450
430
60000
850
300
395
30000
775
150
0
700
Share price
(`)
Turnover
(` lakh)
360
1 Jan– 5 May 2016
Share price
(`)
Turnover
(` lakh)
600
0
1 Jan– 5 May 2016
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u DA K SESH PARI K H
[email protected]
basf, a specialty chemicals company,
also into crop protection sector, had
reported losses for 2014-15, because of
the execution of a new project in Dahej,
Gujarat. Higher depreciation and interest charges were the major factors
contributing to these losses. With the
gains from the new capacities coming through, the company is back on
the profit track in 2015-16, declaring a
pat of H4.54 crore on a total income of
H4,750 crore. The modest eps of H1.03
for the full year has, however, boosted
the confidence of investors and the
shares, which had been rising in anticipation, have gone up to nearly H 950,
from a low of H700 in December 2015.
The fall in crude price has also been
instrumental in a re-rating of other speciality chemical companies like NavinFluorine, Balaji Amines and Supreme
Industries amongst others.u
Portfolio Talk
‘Focus on urban and rural revival’
Everyone is surprised that some
commodity prices have spiked.
Do you see this rally sustaining?
Would this benefit companies in
the sector?
Rather than just looking at what
happened in the last two months, we
need to look at what has happened in
the last two to three years. Crude oil
price has fallen from $110 all the way
to $28. If you look at the last twoto-three months, prices may have
moved, but they are still low. Now, the
question is whether the recent trend
in commodity prices can sustain?
We continue to have doubts because
global growth is still sluggish. China’s overcapacity is mindboggling.
We are currently in a period where
production capacity is low, inventory
is low, and there has been a bounceback effect in commodity prices. The
fundamental demand and supply
issue has not been addressed fully in
the global scenario. The demand will
continue to be sluggish. So, given all
these factors, the commodity space
will continue to face pressure.
As a fund manager, how are you
playing this volatility?
We are focussing on two themes –
revival in urban & rural consumption and revival in state and Central
government expenditure in the
infrastructure space. Any sector or
segments linked to these two themes
are our focus areas now. These
are opportunities when there
is higher volatility.
You have allocated a large portion
of your portfolios to the banking
sector. Is it because it occupies
a higher weightage in the
benchmark or is it by design?
We are overweight on private sector
retail-focused banks and underweight
on public sector and corporate-focused banks because corporate credit
growth has been lack-lustre, all the
sa n jay bor a de
Harsha Upadhyaya, cio, equity, Kotak Mahindra amc, who
manages a `6,000 crore portfolio, is bullish on the cement business.
He tells Sunil Damania that consolidation will drive valuations
growth coming from the retail segment. Retail-focussed banks do not
have similar asset quality issues and
have sufficient capital for growth.
This will lead to incremental growth
in retail-focused banks.
One school of thought believes
that all the negatives have been
priced in the psu banks and that
the base effect may come
into play...
We are not sure whether all the negatives have been priced in. Even if
you assume so, the only comforting factor is valuation. The outlook
is still not clear. Though there is a
limited downside, there is no fundamental factor to show that a trigger
is around the corner and they may
start to perform.
Your asset allocation shows you
are bullish on cement.
As I mentioned, we are positive on
infrastructure revival in the country.
The road sector is seeing increased
activity with the number of new
awards growing. Execution of new
roads is also picking up speed. We
have also seen investments in the
freight corridor. Everybody attaches
importance to railway equipment
and wagon manufacturers but,
before you actually lay the track, you
require a significant amount of concrete to lay the slab and we see significant demand coming from there in
the next 12-18 months. We also see
demand coming in from the affordable housing sector. All these could
help demand for cement. Its incremental supply is much lower than
the incremental demand because
most of the capacities that were
planned have come or will come in
the next two quarters.
Your view on corporate earnings?
Domestic-focus companies have a
decent set of numbers. We are in
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the first half of the earnings season
that is generally better; so, we are a
little sceptical. If you look at overall earnings growth, they have been
negative because of the many drags.
Going forward, these will create a
lower base and the drags itself will
start to wane. We also believe that
there will be a positive effect as the
transmission of the interest rate cut
happens in the economy. Thus earnings growth could be 10-12 per cent
in FY17. FY18 could be much better,
depending on the monsoons.
How do you see a re-rating of
India’s price-to-earnings ratio?
Currently, the market is trading at
a slight premium to long-term averages. To that extent, further re-rating
would depend on corporate earnings
and monsoon. If there is a negative
in any of those, the market will again
fall back on lower valuation range.
Where do you expect the nifty50
in May 2017?
There are two things – pe re-rating and earnings growth. pe movement will be difficult to predict, it
is dependent on flows and sentiment. Assuming that the current
valuations, which are in line with
fair valuations, continue to grow,
the market will move in line with
corporate earnings.
u
[email protected]
Executive Track
New role
After a successful mnc career of over
30 years, Jaspal Bindra, former Asia
Pacific ceo at Standard Chartered
Bank, takes on a new entrepreneurial role as executive chairman of the
at Edelweiss Tokio Life Insurance, as
listed out by the Insurance Regulatory
Authority of India (irda). He has over
24 years of experience in life insurance and started his career with lic
across various functions before moving into the actuarial function, for
the last five years of his stint there.
Nurturing growth
Wonder Cement, a part of the rk
Marble group, has announced the
appointment of Jagdish Chandra
Toshniwal as its managing director.
Toshniwal takes over the reins from
D.P. Somani who was with the company for over seven years and was
instrumental in setting up the entire
plant and its expansion in the shortest amount of time. In his new role,
Toshniwal is tasked with accelerating
the growth journey and building a
futuristic organisation, retaining its
endowing culture for young leaders
to nurture and grow.
Building
partnerships
Bindra: tremendous knowledge
Centrum group, a major financial services provider in India. Bindra had
joined StanChart in 1998; he rose to
the parent board as director in January 2010 and served in leadership
roles in Mumbai and several cities in
Southeast Asia. His knowledge and
experience of treasury, capital markets, investment banking and consumer banking is tremendous. Bindra
serves on the boards of several companies like Reckitt Benckiser and is on
the board of governors of xlri Business School. His early career years
were with ubs Investment Banking
and Bank of America.
Top position
Edelweiss Tokio Life Insurance, a
joint venture between the Edelweiss
group and Tokio Marine Holdings of
Japan, has appointed Subhrajit Mukhopadhyay as the chief actuary. Mukhopadhyay will be responsible for
all actuarial processes and controls
Hitachi Data Systems Corporation
(hds), a wholly owned subsidiary of
Hitachi, announced the appointment
of Raghuram Krishnan as director of
partners and alliances, India. With
over 20 years of industry experience,
Krishnan has successfully developed
and executed channel strategies for
some of the leading it companies
in India. In his current role at hds,
he will be working closely with the
partners, to grow the business with
existing partners and manage alliance members across markets in
India. Krishnan will be accountable
for identifying and recruiting new
partners to help hds grow in the
identified key areas.
Well-connected
hotelier
The Aethos Consulting group recently
promoted Georgianne Fsadni to managing director, Asia Pacific. Based in
Melbourne, Australia, Fsadni joined
the Aethos team in 2015 with three
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decades of experience under her belt
in hotel operations with Accor, consulting with e&y, and asset management with Dubai Holding. Fsadni
is a well-connected hotelier who
is devoted to the industry, and has
quickly become a trusted advisor to
clients in the areas of talent management, asset management, and
business strategy.
Additional role
Realigning its senior management
team, IndiaCast, the domestic and
international distribution arm of
Viacom18 and tv18, has promoted
its chief financial officer Sanjay Jain
to the additional role of international
business head. He will continue to
be the cfo of the company. All the
international business heads, along
with outbound sales and international operations teams, will report
to Jain. He will continue to report to
IndiaCast group ceo Anuj Gandhi.
Strategic move
Leo Burnett recently announced the
appointment of Dheeraj Sinha as chief
strategy officer. Sinha will be based
out of the agency’s Mumbai office
and will be responsible for planning
across South Asia. In a career spanning 17 years, Sinha has worked with
McCann Erickson, Euro rscg, Bates
and Grey. In his last role, he led the
strategic planning function for Grey
in India, South and Southeast Asia.
Sinha has also authored two books
on the Indian consumer market: India
Reloaded – Inside the Resurgent Indian
Consumer Market and Consumer India
– Inside the Indian Mind and Wallet.
New head
Fabindia, the private platform for
products that are made from traditional techniques, skills and handbased processes, recently announced
the appointment of Viney Singh as
director and ceo. In the past Singh
has worked with companies such as
Max Hypermarkets India and Reliance Communications. At Fabindia
he succeeds Subrata Datta who had
been the ceo since 2013.
u
Executive Focus
Hello, how may I help you?
W
hen Sanjay Mehta joined
the now $3.7-billion Teleperformance group in 2001,
he came with what he describes as “a
wealth of experience from good and
not-so-good things in the past”. His
17-year career till then had spanned
a variety of disciplines, including
sales, marketing, customer service
and general management, though
in only one area, office automation,
and two companies: the Modi group
and Jumbo Electronics. bpo (business
process outsourcing) was a new area
– not only for him, but in the world.
“bpo began as a huge opportunity
riding on the success of the information technology (it) industry,” he says.
Only a voice service till a couple of
years ago, it was driven first by regulatory authorities, till the dynamics of
the booming it market took over and
e-commerce came into its own along
with a ‘device explosion’. Mere ‘customer service’ was transformed into
‘customer experience’, which evolved
into ‘satisfaction’ and ‘delight’.
The business was projected to create about 20 million jobs in the US,
while there would be a
similar number of ‘invisible opportunities’ for economic development. But
MANAGING DIRECTOR, TELEPERFORMANCE
while the bpo business in
INDIA
that country was mainly
Date of Birth: 8 June 1963
in remote locations, 95
per cent of it in India
Education: ba (economics honours),
was in five metropolitan
Shri Ram College of Commerce, Delhi 1984;
centres. That, as Mehta
LlB, Delhi University 1988; Executive
says, was quite an anomprogramme, strategic marketing management,
aly. Teleperformance led
Harvard Business School 1999
the change when it came
here in 2007, setting up
Career: Regional Manager Sales – North, Modi
a large centre in Indore;
Xerox 1984; Manager Sales: Office Automation
four years later, the situProducts, Jumbo Electronics, Middle East 1994;
ation had been reversed
Executive Director, Modi Corp 1996; Managing
and only 5 per cent of
Director, Teleperformance India 2001
the bpos in India too are
in non-metro centres.
And now, they have gone down the service in the decade he spent with
tiers even to taluka-level towns.
mx and, later, another four years at
Mehta, who joined Modi Xerox in Modi Corp. “It is a customer-cenDelhi fresh out of college after his ba tric organisation,” he says. “No sale
at Shri Ram College of Commerce in was ever made without ensuring that
1984, learnt the ropes of customer there was a service point nearby.”
Sanjay Mehta
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It was what he describes as ‘interestingly accidental’ that he had a
chance meeting with Teleperformance’s then global chairman and
ceo, who was looking at India. “It
was not a job interview, but a discussion about a pure-play service industry entry opportunity for them.”
But that turned out to be a ‘life-
Executive Focus
changing experience’, as he discovered the “energy of working with lots
of young people” – and the opportunity to create jobs. After 15 years on
the job, the 53-year-old still finds it
an exciting business. “Our ongoing
training and development is a big
commitment, a key part of our customer experience life-cycle,” he says.
So the employee care – hr, or human
resources – team is comprised of
people who come from operations,
“because they need to empathise”.
They are always available, on intranet or phone if not in person, and
ensure problem resolution within 24
hours. This is then followed up with
a call to ensure that the employee
concerned is satisfied.
Stressing that bpos offer the “largest skill development programme in
the country”, the industry veteran
points out a majority of the youngsters – nine in every 10 are men and
women under the age of 25, who join
call centres as a first job – move on in
a couple of years after learning the
finer aspects of customer service. The
experience demanded is the ‘lowest’,
practically the only basic requirement being fluency in English for an
international bpo; but they deliver
the highest value of work, which
translates into what he says “creates
100 per cent revenue”.
“This industry is the biggest contributor of skilled employees to the
service industry!” he says. “It is
unique in the fact that it offers multidisciplinary training to a million
people, at a cost of R5,-6,000 crore
every year on their development.
The capital and infrastructure it represents are humongous.” And the
quality of life it offers the work force
– which he says “is important to us” is far superior to other similar industries, with perquisites including two
hours’ travel time each way on the
company’s clock.
Another unique aspect of Indian
bpos, Mehta explains, is that it is
the largest English-supported industry of its kind in the world: “Even if
the caller speaks Tamil, the system is
in English.” Having led Teleperformance India into a number of costbased opportunities, including lots
of frugal and smart innovations, he
sits back noting with pride that the
whole industry went “the way we
led”. After four years of foreign domination, the Indian company showed
that it could handle both international and offshore business, setting
up another centre in Jaipur along
the way. He himself sits in Gurgaon,
which houses the company’s third
centre in India.
With domestic business going farther into the hinterland, the employees – who live in the area, and need
to commute only 15-20 minutes to
and from their offices – deliver much
higher productivity even at the same
salaries, because their work week
is 48 hours instead of the 40 hours
in the cities, with a six-day working
week instead of five days. “We can’t
do anything like this in the big cities,” Mehta says. “And, for the client,
we are 15-40 per cent more competitive. It’s a win-win!”
H
e himself leads by example:
he is available on the telephone 24x7. “There is no
question of a client being told, ‘The
boss is sleeping’ even if it is two in
the morning,” he explains. “This is
a back-office business, where nobody
meets the end customer, so we
have to be there for them to talk to
at all times.”
Mehta is, however, critical of the
fact that India still has no bpo policy, even though the industry is the
highest economic multiplier, providing a million jobs and accounting for
$24 billion in revenues. And as much
of 80 per cent of this is spent in the
same city or town by the employees
who take it home as their salary package. “This kind of money can selffund 100 ‘Smart Cities’!” he says.
Describing India as a ‘fascinating’ country where a large number of multinational corporations
want to set up their base operations
to offer world-class service to their
customers, he says the biggest challenge he faced here was to make
Teleperformance an employee-centric organisation. “My guiding principle has been kiss, ‘Keep It Stupidly
Simple’. Every meeting in the office
begins and ends with the same question: what can we do better for our
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employees?” Things evolved over the
years. Today, even the junior-most
employee can send an SMS applying
for leave just two hours in advance –
it goes straight to the server, and no
questions are asked.
Mehta himself spends 10 per cent
of his time being what he calls ‘Chief
Employee Officer’ with a pre-fixed
schedule. Every week, he holds a
90-minute ‘open house’ – physically
as far as possible, or on a call if he
is travelling. Over the past couple of
years, he has halved his other meetings to devote himself to this differently-described ceo role. “There are
no rules at these sessions. Employees feel it’s a great connect!” he says.
“Every issue is answered immediately or, at the most, in 48 hours.
Most of the solutions to our problems
come from the open house. We
never say No; we may not have an
immediate solution, but we are
candid about it.”
Most of the issues raised are about
transport or food. If a cab collecting
employees comes with nine instead
of eight, a notice is immediately put
up on the board, along with an apology to those inconvenienced. Food
wastage is another area of concern,
but it has been brought down by 70
per cent thanks to employee education. Under Teleperformance’s global
‘Citizen of the World’ programme,
the work force here is also encouraged to – and enthusiastically does
– work with ngos to provide education to the underprivileged. “About
70 per cent of them are engaged in
it voluntarily, and contribute money
and time every month,” Mehta says.
“There are 3,000 people in the cotw
programme, and slum children in
the three cities where we operate are
beneficiaries.”
He is proud of the fact that he
has led a major change in life for so
many people. Even employees who
leave Teleperformance start similar
work in their new organisations to
benefit society, he says: “The notion
of giving that they inculcate here
is very strong. And youth today are
very passionate in everything that
they do.”
u SE K HAR SESHAN
[email protected]
Selections
Basho’s Resort on the banks of serene Mulshi Lake, is 45 mins from Chandni Chowk, Pune
A place to meditate
Sitting quietly, doing nothing,
Spring comes, and the grass grows,
by itself.
Matsuo Basho
W
hen successful restaurateur and Oshoite Prithviraj Chitnis wanted a place
to get away from busy Pune, the
banks of serene Mulshi Lake, 50 km
away, seemed like a great idea. Unfortunately, the chaiwalla next door
turned out to be a nuisance, noisy at
all hours, disturbing the peace. Even
the wild deer, wolves and boar heading for the lake in the late evening
and dawn avoided the direct path to
the water. After much cajoling, the
raucous chaiwalla agreed to sell to
Prithvi and Basho Resort and Restaurant was launched about a year ago.
The local farmers seeing the restaurant thriving asked Prithvi to
conditioned and with high end fittings – is a unique combination of
stone floor and natural soft interiors, with a well laid-out ensuite bathroom – worth a visitor’s every penny.
The adjacent restaurant is a gastronomical delight, offering something
for every palate. With a capacity to
host over 100 guests, Basho Restaurant is ideal for corporate or private
parties. The resort can take 32 people. The ambience is a winner.
The resort is an embodiment of
Zen as expressed in the poems of
Japanese poet Basho, after whom it is
named. Basho’s poems express deep
meanings of simple moments in
life, bringing awareness of simplicity in nature. A weekend at the resort
turned out to be just such a zenlike experience for me. Early morning walk on the shores of the lake, a
quiet moment on the private verandah, a little meditation in the open
air area overlooking the lake and a
dip in the small sleepy pool – a fantastic treat for the body and soul in
the lap of nature.
The resort has positioned itself
not just as a weekend family getaway
but also as a corporate conference,
yoga retreat and wedding destination for near-by cities such as Pune
and Mumbai.
Prithviraj and Kalpana: creating an oasis
lease their adjoining low-yield land,
on which were built four cottages
and four tents.
Old dark sleepy pool...
Quick unexpected frog
Goes plop! Watersplash!”
Great ambience The rustic looking
accommodation – though fully air-
The beds in all rooms have enchanting views of the lake
Chilling in the outdoors
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Matsuo Basho
u bertie d’souza
[email protected]
Selections
R a mp u r ’ s c h e f s r e v i v e f l a v o u r s , s o f t a n d t e n d e r
Flavours of old Delhi
T
he Trident in bkc, Mumbai,
has revived traditional flavours for the city. It invited
Rampur’s food connoisseur, chef
Jalali, who, naturally, brought along
his mother and wife to run the kitchens and present the delicious results
at their Maya restaurant. Any efforts
to revive old methods and present
good food are to be devoutly appreciated! This time, the Trident offered
old Delhi’s flavours brought by Rampur’s chefs. ‘Old Delhi’ reminds one
of myriad bhallas, ginger and tamarind topped chaat and rich parathas!
Rampuri food shows some of our
collective history. The Rajput Katheriyas, whose origin and rule is a
mystery, began establishing their
kingdom in the Rampur area. They
saw a large bird flying away: it proved
to be a garud, Vishnu’s vehicle, holding a great snake in its talons. A most Gastronomic delight
auspicious sign! From the middle of
the XIIth century, the Katheriyas Mughal courts arrived in Rampur,
established themselves here and for bringing tradition and gradually
about 400 years they fought success- adding Hyderabadi and Kashmiri
fully against Delhi’s rulers but lost flavours. The nawabs’ chefs crewhen they revolted against Akbar ated Rampuri cuisine and their recand when Aurangzeb sent in the ipes use cinnamon, sandalwood,
Rohilla Afghans. Tradition has it that local yellow chilies and their RamJagat Singh Katheriya founded Jagat- puri kebabs, milk cooked biryani and
pur in 1500 and today, a mohalla in adrak ka halwa are loved today. Surprisingly, curry leaves, more typical
the old city still has that name.
Rampur, then called Kather after of the south, are popular! Were they
its rulers, originally consisted
of four villages. On 7 October 1774, in the presence of
the British commander, colonel Champion, Nawab Faizulla
Khan established Rampur.
The Nawabs of Rampur had
sided with the British during the First War of Independence in 1857 and remained
their ally. They, with the
United Provinces, shaped some
of the politics and culture of
this part of India and Rampur
became a centre for the arts,
with a distinct cuisine.
After 1857, artists, chefs
and khansamas from defeated A simmering Shorba
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brought by the Marathas when they
ruled? Rampur avoids the fragrances
typical of Lucknow or the Awadhi
flavours redolent with our beloved
ghee and opts for earthenware and
khada or raw, whole spices.
Varieties This cuisine is not as fragrant as Awadhi food, remains
less known than Mughlai cuisine
and avoids delicate, milky sweetness. Rampur masalas are simpler
and include gullar (figs), pineapple and amla, while gilawat or raw
papaya for tenderising kebabs is
essential. Khamiri Roti too is typical and desserts may actually include
mirchi/ capsicum, aloe vera or
ginger halwas!
Vegetarian food includes kathal
kebabs. For some reason, kebab chefs
think vegetarians miss meat and,
hence, lovingly offer jackfruit which,
to them, is similar
in texture! Other
dishes
include
dry, white urad
and a light yellow
toor dal boiled in
milk, tempered
with ghee. We
are told khansamas in the royal
kitchens incorporated melted gold
coins and added
them to the dal!
Actually, many Indian foods are
embellished with gold or silver work
and this is making a comeback worldwide, even atop coffee. Slow cooking on a low flame for hours is
characteristic: a shorba may be
simmered for 18 hours.
Then there is royal Rampur’s badam roti, made with
almond flour and the Rampuri khichdi made with carved
almonds and pistachios. The
nawabs seem to have loved
nuts in many things! The Bandra Trident and Rampur’s chefs
have brought the flavours of
old Delhi here, soft and tender - some cooked slowly with
simple masalas, others fiery
hot and fierce.
u SWAPNA V ORA
[email protected]
Selections
P o s t e r g u l ly. c o m a l l o w s a m a t e u r a r t i s t s t o pr e s e n t t h e i r w o r k s w o r l d w i d e
Art of the matter
contributors to our business.”
Intuitive tech However, the initial
I
t all started when Bharat Sethi, of expansion. After our Series A, we
founder and ceo, PosterGully. will focus on going international.
com, realised that “I wanted to Our global presence can certainly crebe at the helm of an emerging move- ate ripples in the international marment to find individualised, curated kets where we have a significant cost
shopping experiences and churn out advantage namely in shipping and
products supported by communities manufacturing combined.”
PosterGully is a curated marketwith like-minded interests”. Globally,
buying affordable art on the Internet place that enables artists, designhas improved in the last five years. ers and anyone with original visual
One can now find quality work from content and unique merchandise
great unknown artists who may not designs to seamlessly contribute
have been found otherwise, as well and sell a variety of products, such
as prints of well-known established favourites. “So we simply wanted to catch this wave
and give easy access to Indian
artists and designers.”
In 2014, Sethi started with
his own savings of `1 lakh,
realising that he had the
right opportunity but needed
to solve the classic chicken
and egg problem. He needed
buyers to attract designers,
and designers to share as
much authentic artwork to
attract buyers. So PosterGully
decided to focus on getting
more buyers and increase Sethi (inset): selling art online pays off
traffic to the Website every
month. PosterGully started with as phone cases, art prints,
about 10-15 carefully approached home décor, clothing,
artists, names such as Raj Khatri, etc, to consumers globRJ Artworks, Inderpreet Singh, Adil ally. They produce these
products on-demand ‘just
Siddiqui, etc.
Simultaneously the designer net- in time’ through vendors
work grew. It helped about 850 con- across India. All a contributributors with over 8,000-plus designs tor needs to do is upload their
cash in on their artworks, resulting artwork and consumers can buy
in over 60,0000 stock keeping units. a wide range of merchandise of that
Sethi’s vision is to grow this authen- design which is checked for origitic community to hundreds of thou- nality through reverse image engisands of artists who have no means neering and the profile of the artist
to currently monetise their artwork. is also verified by the moderation
And PosterGully aims to go beyond team. And those who do it well, end
their current 20 categories to include up raking anywhere between $800footwear, furniture, kitchenware and 4,000 every month. “The current
upholstery in a 12-18 month time- market is quite vibrant and more
line. “We’re looking at a 12-month customers are pouring in. The growtimeline to raise our next round of ing web connectivity is emerging as
funding, which I estimate to be about a silver lining for the business. It is
R10-15 crore, depending on our speed catering to both customers as well as
u 86 u
M ay 9 -2 2 , 2 016
stage was not easy – especially finding exceptional talent. Sethi had
trouble with his on-demand just in
time model, as there is no inventory involved in his business. Furthermore, it was difficult to lubricate
the supply chain with new categories. Another problem was to find the
right vendors as the increasing bulk
of orders was not at hand. However,
he tackled these problems through
intuitive use of the technology platform and by leveraging a wider network of suppliers and vendors.
With 22-plus product categories currently, PosterGully
adds a new category every two
weeks. This includes wall art,
home decor, furnishings, tech
accessories, vinyl and decals,
kitchenware, etc. With an
expanding online art market
in India, PosterGully is not
just seeing changes to how
art is sold, but also changes
to what is bought, at what
price point it is bought, why
it is bought and by whom.
Sethi accepts all creative work like
digital art, photography, illustrations, pop
art, sketches,
paintings,
fine
art,
anime, doodles, line art
and more, with
about a 5-10 per
cent of its designer
base being international. The idea is to build the largest gathering of indie designers. It
started shipping worldwide in February 2016. And as Sethi says: “One
thing is for sure, globally there is a
lot of investor money being poured
into online art marketplaces right
now. The online market for art-related products is growing and there
is sufficient evidence of its success.”
u RO B IN A B REU
[email protected]
Books
preferring instead to spend scarce
resources on private doctors and
medicines. The reason might be that
Gupta has depended largely on government documents and interviews
with government officials for his
material. There is not much discussion or reportage on the actual endusers of these public health facilities.
Scathing indictment
The title of the volume is really a misnomer
Healthcare
Reforms In India
Rajendra Pratap
Gupta
Reed Elsevier
India Pvt Ltd
Pp 456
Price: Not
mentioned
E
verything that could go wrong
with India’s public health establishment has already gone
wrong, with very little chance of
things being set right in the near
future. From inadequate budgets
to unrealistic targets to hopelessly
incompetent execution of health
plans and policies across the decades,
the situation is as dismal as it can be.
Hence the title of the volume under
review is really a misnomer; the book
is not at all about healthcare reforms,
but rather how reforms have failed
the Indian public at each and every
stage since independence. In fact, the
subheading ‘Making up for the Lost
Decades’ is a much better indicator of
what the author has set out to do!
Rajendra Pratap Gupta has had a
ringside view of the changing landscape of global healthcare, including the growing impact of electronics
and information technology, over
more than two decades. He is therefore in a unique position to comment
on India’s failures over half a century
and more, and he has done so with
telling effect. The timing of the book,
of course, makes one wonder whether
there is a hidden agenda, given that
Gupta is closely associated with a
number of health-related organisations of the current government.
Some of the important points that
he has highlighted include the fact
that quite often the actual spending
on major healthcare programmes is
even lower than the inadequate budgets allocated for them; as much as 50
per cent of the financial allocations
in most five year plans are “leaked
because of corruption” and most
of the so-called healthcare reforms
instituted from 2005 onwards are
inspired or controlled by multilateral
funding agencies!
Besides, there is very little genuine
effort in drafting the Five Year Plan
documents; so much so, that entire
paragraphs are carried over from
one Plan to the next. This is shocking to say the least, but helps explain
the depressing state of affairs where
public health in India is concerned.
Moreover, the book takes note of the
fact that people often have to travel
as much as 20 km to find a doctor,
and sometimes a lot more. It also
points out that there are too few doctors and hospitals, spread too far
apart to be of any use.
What it does not add however, is
that whether in big cities or in semiurban settlements where state-run
health centres are to be found, people go to great lengths to avoid them,
u 87 u
M ay 9 -2 2 , 2 016
Many flows
There is also something wrong with
the way the book is structured. The
scathing indictment of the public
health scenario, which he himself
describes as “a disorganised marketplace” rather than a healthcare system, actually begins from page 286
or so. The next 120 pages are a solid
analysis and substantial comment
upon the flaws of the establishment
that reflects Gupta’s intimate knowledge of how healthcare works. This
is the meat of the book, and should
really have been the entire book,
rather than Chapter Five!
In Chapters One to Four, or the
first 286 pages, we find long and boring lists of numerous committees that
have studied the healthcare situation
in India, various national health programmes, the details of the National
Rural Health Mission (nrhm) and
the National Urban Health Mission
(nuhm), etc. These should really
have been placed in the Appendix
or as Annexures, so that the reader
is not forced to wade through twothirds of the book before reading
anything worthwhile.
Besides, the entire book – from
beginning to end – is replete with
errors of grammar and usage, with
articles (the, an, etc) missing in
almost every paragraph throughout the book. This is a great disappointment given that it is published
by Reed Elsevier, a global leader in
medical and scientific publishing,
which brings out prestigious journals like The Lancet. It also conveys
yet again that those who do not
have a total mastery over the English language should seek help from
professional writers, who can be
found through the Internet without
much difficulty.
u SU M IT GHOSHAL
[email protected]
People
Raising the ‘liquid’ level
T
Shaping up
I
n this gender equality era, educated wives of rich industrialists
are out to establish their identity
as individuals. They set up restaurant, designer boutique and
event management companies, as
also get into charitable work and
manage both family and work.
Meet Ritu Agarwal. After managing responsible positions in her
husband’s company wpil (formerly
known as Worthington Pumps),
Ritu, a fitness freak, had decided
to set up Rush Fitness, a gymnasiums and wellness destination in
Kolkata. She has a strong passion
for fitness and says: “Kolkata was
lacking scientific and innovative
fitness and wellness centres. In
Rush Fitness, we offer a 360-degree
solution to health and fitness in a
luxurious ambience through customised programmes by experienced trainers.” From one in 2013,
Rush Fitness has moved to five
centres today, with a total workout
area of 50,000 sq ft, and is the leading chain of luxury gyms in the
city. All centres have top-of-theline equipment, including the spa
with steam and massage rooms,
to rejuvenate the body and mind.
There is also Rush Cafe, a lounge to
relax after workouts with a choice
of health food and energy drinks.
It is also the first fitness studio
to introduce an indoor running
track and rock climbing wall in
the city. Rush Fitness is now managing 2,400 members, including
celebrity actors, designers, players and corporates. “We are now
planning to go national. Our first
centre in Delhi is to open soon,”
Ritu says. u
he All India Liquid
Bulk Importers and
Exporters Association
(ailbiea) recently celebrated
its 15th Anniversary
by presenting Nadir
B. Godrej, md, Godrej
Industries, with a
Lifetime Achievement
Award, for his role in
bringing up the country’s
liquid bulk business to
its present status. “It has
been my pleasure to work
hand in hand with ailbiea
to facilitate India’s global
trade over the last 20 years;
I am honoured to receive
this award. ailbiea, under
the leadership of Jayyannt
Lapsiaa, has played an
excellent role in bringing together trade,
service providers and the government,”
said Godrej on receiving the award. India
is set to become a major importer of a wide
variety of liquid bulk commodities such as
bio-fuels like ethanol and biodiesel in the
near future. The occasion also discussed
the urgent need to upgrade the country’s
ports infrastructure with state-of-the-art
technology – changes in infrastructure,
along with change in the mindset of
process owners is equally important.
ailbiea, an association of traders,
manufacturers, importers, exporters and
service providers, is responsible for most of
the liquid bulk cargo that passes through
various ports of India. It has hit over 200
million tonnes this year. u
The best medicine!
S
tand-up comedy and
improve(isation),
says
Sumendra
Singh, are part of
a niche field, which
is still in its nascent
stages, but has started
gaining
momentum
in India as an alternative means of entertainment. “People are
thirsty for intelligent
humour, but there are
few platforms for them
to enjoy live comedy,” explains Singh,
a founder and director
of the Bengaluru-based
Comedy Wagon. “I
hope to make comedy a regular feature
in their lives. No matter how stressful life
gets, Bengalureans can now
get away for a few hours of
laughter and enjoyment any
day of the week at our ‘That
Comedy Club’. I also hope
to encourage budding comedians.” Adds co-founder
Adeel KQ, a veteran with
u 88 u
m ay 9 -2 2 , 2 016
over a decade of experience in co-ordinating
and promoting events:
“The event scene in
the city was getting
quite staid with people being given similar kinds of events and
a limited type of entertainment to choose
from. I was waiting to
take things to the next
level. When Sumendra came forward with
this innovative initiative, I jumped at the
chance to make a difference by introducing
something so engaging and entertaining.”
Located in the infotech
capital’s
downtown
Church Street, the club
premiered on Labour Day
with a line-up of stand-up
comedians from around the
country.
u
People
Of trysts broken
V
eteran journalist and author
Tavleen Singh launched
her new book India’s Broken
Tryst in Mumbai on 26 April. In conversation with fellow
journalist Jerry Rao, Singh
revealed that the book explores
why the Indian state has not yet
met the most basic needs of all
its people. Her disappointment
has deep roots: “It was only
after I became an adult that I
began to ask questions about
that famous ‘tryst’. Why was
the speech made in English?
Was Nehru just a romantic or a
real leader?,” she asked referring
to the then Prime Minister’s
speech made on the eve of
India’s independence, and the
promises made, but not kept.
India’s Broken Tryst, published by
HaperCollins India, is Singh’s
fifth book.
u
Proud moment
T
he
Maharashtra Tourism
Development
Corporation
(mtdc) recently received the Best
State Tourism’ Award at India’s
No. 1 Brand Awards 2016, hosted
by International Brand Council
(ibc) Infomedia. Satish Soni,
director, tourism, government of
Maharashtra, and joint managing director, Maharashtra Tourism Development Corporation,
and Chandrashekar Jaiswal,
deputy general manager, Maharashtra Tourism Development
Corporation, accepted the award
at the hands of
Hemant
Kaushik,
chief executive officer, ibc Infomedia.
“Today is truly a
proud moment for
us as Maharashtra
is yet again recognised as a Top Indian
Brand in the Tourism sector,” said
Soni, who was also
the Chief Guest of
Honour at the ceremony and presented
the award trophies
to key industry stalwarts. This
award is the reflection of our hard
work, persistence and meticulous
planning at mtdc to establish
this state as a best tourist destination in India. It is our responsibility to maintain the highest
standards of product integrity
and brand development and thus
we strive hard to offer the best to
our end consumers, our tourists”.
India’s No 1 Brand Awards is a
known platform which salutes
all the selected Top 100 Brands
of India. u
u 89 u
m ay 9 -2 2 , 2 016
High-rise
achievements
U
zma Irfan has been
on the receiving
end in recent times –
of a slew of awards, for
both the Bengaluruheadquartered Prestige
group, of which she is
director, and her own
achievement in carving a niche for herself
in the predominantly
male-dominated building industry. The H3,518crore group, which is
rated India’s second largest developer, won in
a staggering, sweet 16
awards categories at this
year’s Asia Pacific Property Awards in Kuala
Lumpur last fortnight.
Dedicating the awards
to the numerous happy
and satisfied clientele
of the Prestige family
and to all its dedicated
employees, Irfan credits
the “love and loyalty of
our patrons that give us
the motivation to strive
harder to create new
benchmarks within the
industry”. Among the
awards the companies in
her group bagged were
for best condominium,
best residential development, best new hotel
construction & design,
best golf development,
best development – marketing and best developer website. In her own
stead, Irfan was lauded
as the ‘Woman Achiever
of the Year’ at the Global
Real Estate Brand Awards
2016, for being “one of
the foremost and most
enterprising
women
in real estate in South
India”. Having worked
with Prestige for 10 of its
30 years, she looks after
marketing
communication, corporate communication, branding
and all image-related
initiatives. “I hope to
encourage more women
to foray into the realty
sector,” she says. u
Interview
‘We have to compete
with other countries’
Bandaru Dattatreya, minister, labour & employment, is a
senior bjp leader from Telangana, who had served as a minister
in the Vajpayee government too. Dattatreya maintains that the
Modi government has been working in workers’ interest
On recent workers’ protests on EPF
It was lack of awareness and a
misinformation campaign. Workers
should think coolly. In this
changing scenario, government is
trying its best. We wanted social
security (for workers) at the time
of retirement and it was only
about 3.67 per cent of the total pf
contribution. Who lost because
of it (rollback)? Ultimately, it was
worker’s loss. We have taken many
positive steps for workers, even with
the Parliamentary hurdle. We are
even issuing executive orders and
not waiting for the Parliament to
pass bills. We can’t wait if we have
to compete with other countries.
On epf interest spat between
labour, finance ministries
There is no dispute between us. The
Finance Ministry advises us. They
send us a circular or note. In turn,
our ministry interacts with them.
This is the general process. We take
decisions for the government of
India. The labour ministry is also
part and parcel of the government
of India. After consultations with
the finance ministry, we issued the
notification. So where is the dispute?
As for the interest rate, when
interest rates are coming down, if
you provide 8.70 per cent interest
rate your cushion will be greater.
Your resources will be more.
On ctus’ threat to go on a
nationwide strike
I don’t see any reason. We have
increased the bonus, minimum
wages, enhanced social security
coverage enormously and tripartite
communication is regular. There is
no gap between the labour ministry
and trade unions. We are in a
position to solve their demands
then why go on a strike? But I think
workers understand that we are
forthcoming.
On tu protests overshadowing
his achievements
Trade unions are politically
motivated. They are unable to
digest the speed with which the
government is going ahead. Congress
is more worried as all the labour
reform initiatives were started during
the upa regime, but they were unable
to do it. There was no political will
but this government has and we
are going ahead with it successfully.
Decisions are swiftly taken and there
is no policy paralysis.
Worker prosperity is important for
our government. For that, providing
adequate working conditions, wages,
medical facilities and social security
are crucial. Also, there should not
be any child or woman abuse.
The protection of workers’ right is
paramount and our Prime Minister
Modi says labour is shrama yogi,
meaning someone who has devoted
entire attention to work. The workers
should work in the interest of nation
and the government and trade
unions should work for the workers
decent wages and living.
On hiking workers’ wages
For the first time, this government
has taken a decision to increase
minimum wages for contract
workers to R10,000 per month. With
this, there will be increase in wages
u 90 u
MAY 9 -2 2 , 2 016
by up to 200 per cent in some states.
This is the biggest step taken by the
Modi government.
The Minimum Wage Act will
be amended. Labour is under
concurrent list and each state has
its own wage. Centre only issues
advisory. We definitely want to
increase the wages of workers
keeping in view the consumer
price index, variation of dearness
allowance and guidelines by
Supreme Court. We are coming
out with a formula to increase the
minimum wages for all workers with
all these parameters in mind.
Focus area in labour reforms
Since independence, the major
initiatives were taken only in the
organised sector. The unorganised
sector was neglected and my main
focus will be the labourers in the
unorganised sector. We want to
give them better wages and bring
them under the social security net,
particularly construction workers.
We have already allowed esic
benefits for them.
On pension benefits to workers
Earlier, the minimum monthly
pension was only R350. After the
Modi government came to power,
it has been increased to R1,000 in
perpetuity. We give R850 crore every
year towards pension. Now, workers
are demanding a minimum pension
of R5,000 per month and some
mps have demanded it to be fixed
at R3,000. We are also thinking of
increasing the minimum monthly
pension amount. u
[email protected]

The battle over its shortage will impact India`s social and economic

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