Innholdsfortegnelse for 7 May 2017 i Business Today

The good news about the non-performing asset (NPA) crisis is that in the past two years, the Reserve Bank of India (RBI) and the government have forced public sector banks to recognise bad loans and make provisions for it. And the government has, in the past couple of years, tried to tackle the problem through a slew of measures, like the strategic debt restructuring mechanism (SDR), to throw out existing management and the newly enacted bankruptcy law. Unlike in the past, no one is trying to brush the mountain of NPAs under the carpet, or turn a blind eye to the problem. In the latest economic survey, Chief Economic Advisor Arvind Subramanian devoted considerable space to the bad loans and “twin balance sheet” problem (the fact that balance sheets of…

10 lakh Is the rise in the number of shops accepting card payments since demonetisation on November 8, 2016. The number rose from 15 lakh to 25 lakh during the period, according to the National Payments Corporation of India. QUOTE "There are 20 to 30 large accounts where people have to realise that banks have to be repaid. If the current promoters are not in a position to repay, they have to develop alternative corporate strategies so that the companies pay back" Finance Minister Arun Jaitley in Parliament A POWER-FUL BLOW In a blow to Adani Power and Tata Power with respect to their projects at Mundra, the Supreme Court has set aside the appeal for compensatory tariff filed by the companies with the Appellate Tribunal for Electricity. This will…

Per se, there’s nothing wrong in a government running a deficit. They do as a norm, to finance revenue and expenditure mismatches and also to finance investments. The problem arises when the deficit level become too high and chronic, leading to an explosive debt-to-GDP ratio and eventual insolvency. To prevent governments from falling into such a debt trap, fiscal responsibility legislation are enacted. The fiscal responsibility legislation also promote transparency and accountability while reducing wiggle room for populist policies. The Fiscal Responsibility and Budget Management Bill (FRBM) Committee, chaired by N.K Singh, emphasises the importance of fiscal discipline when it notes in the opening paragraph of the report: “The maxim that ‘you cannot spend your way to prosperity’ is now widely accepted. Fiscal policies must, therefore, be embedded in caution…

THE SUBTLE ART OF NOT GIVING A F*CK By Mark Manson Price: ₹599 This is an antidote to the coddling, let’s-all-feel-good mindset that has infected American society and spoiled a generation, rewarding them with gold medals just for showing up. BUSINESS BESTSELLERS* Little Black Book for Stunning Success By Robin Sharma Jaico Publishing House Price: ₹250 Tools of Titans By Timothy Ferriss, Random House Price: ₹799 Know Your Worth: Stop Thinking, Start Doing By N.K. Sondhi , Vibha Malhotra General Press Price: ₹295 Bulls, Bears and Other Beasts By Santosh Nair Pan Macmillan India Price: ₹499 The Undoing Project By Michael Lewis Penguin UK Price: ₹799 *Top books by sales for March 12 - 26, 2017; Includes only books released after Jan 1, 2015; Information provided by…

Telecom War: Now It Is a Fight to Finish This refers to your cover story on telecom (The Battle for India, April 23). It was a colourful presentation of battles with eyes for their market supremacy. Though telecom is a sunrise industry, the effect of new generation mobile telephony services has not permeated strongly on economies due to policy aberrations, and scandals. While there are enough reasons against Reliance Jio for its present business pattern as it stands to subsume other competitors and restricts their industry share – resulting in merger of Vodafone and Idea and pushing down the ranking of Airtel, the blame cannot be apportioned only at the doors of Reliance Jio, as other operators prior to this evidently indulged in cartelisation and forced the users to unwillingly…

18 SPOTLIGHT ON SERVICE MSMEs WHAT: Seminar for MSMES in the Services Sector WHEN: April 18, Noida WHAT TO LOOK FOR: MSMES in the services sector are flourishing and account for over 30 per cent of the national GDP. In fact, over 68 per cent of all working MSME enterprises, both in the formal as well as informal sectors, are engaged in service activities. Against this background, the Ministry of Commerce and Industry, Government of India; the Services Export Promotion Council and CII are jointly organizing the Global Exhibition on Services to provide a fillip to the Indian service enterprisers. 20-21 FOOD FOR THOUGHT WHAT: Made in India - Food Importers Meet 2017 WHEN: April 20-21, Gurgaon WHAT TO LOOK FOR: The FICCI event will focus on the road ahead…

DISCUSSION TO ACQUIRE SNAPDEAL APPEARS A DESPERATE ATTEMPT TO KEEP ITS NOSE AHEAD IN ‘MARKET SHARE’, COME WHAT MAY Sheer desperation of losing the No.1 spot, and the anxiety of cash burn, have driven Flipkart into two incredibly bad M&As: acquisition of eBay India as part of $1.4 billion funding from Tencent, Microsoft and eBay; and the ongoing discussion with Snapdeal for a merger. The acquisitions may help Flipkart retain its No.1 status among Indian e-tailers, but, only just. It is a temporary reprieve in the face of a marauding rival like Amazon that has been nipping at Flipkart’s heels and has already taken all the mindshare (if not market share) in this bitter rivalry. Amazon has consistently outfoxed competition in the domestic market with its customer- centricity and groundwork…

Adedicated site with large LCD screens displaying analytics and live streaming of social media platforms, global heat maps and people facing them typing hurriedly on the keyboards of their dual-monitor computers. It might sound like a war room, but we are talking about a social media command centre -- a dedicated state-of-the-art facility used by brands for monitoring conversations, customer service, tracking marketing efficiency, market research and much more. The concept is not new and brands like Dell and Gatorade had established command centres abroad as early as 2010, but the trend seems to be catching up in India now. Recently, many FMCG, BFSI, telecom and hospitality brands in India have either introduced a command centre in-house or have outsourced one. "Can a brand afford to ignore chatter, whether negative…

Vijay Prakash Jain, 75, a trader and national general secretary of a traders’ association, the Bhartiya Udyog Vyapar Mandal, has not let his physical frailties weaken his resolve to fight for traders. Jain, who trades in groceries, chemicals and dry fruit, and also runs a travel and tourism business from the narrow lanes of Daryaganj in old Delhi, is gearing up for another battle – adapting to the Goods and Services Tax or GST. GST provisions, he says, are so complex that even though all the processes are online, he will not be able to file returns on his own. He will have to hire a chartered accountant. “Our compliance cost rose during the shift from sales tax to VAT (value-added tax). Now that we are going from VAT to…

Rothschild & Co. has been in India since the mid- 90s, actively participating in the nation’s growth story. One of its biggest contributions was advising the Department of Telecommunications on its spectrum sales, including the first 3G spectrum auction in 2010. Of late, it has advised Mahindra & Mahindra on acquiring Pininfarina from 14 Italian banks, handled Intas Pharmaceuticals’ and Accord’s £603 million acquisition of Actavis from Teva, and further advised the consortium of Indian Oil Corporation, Oil India and Bharat PetroResources on acquiring 29.9 per cent stake in Rosneft-run Taas-Yuryakh oil and gas project and the $2 billion acquisition of 23.9 per cent equity in Vankor from Rosneft. It also advised on United Spirits’ £430 million sale of Whyte & Mackay to Emperador. Business Today’s Rajeev Dubey talked to the investment…

Warren Buffett may not know it, but a diamond trader in Mumbai follows his advice very closely. Ashwin Singhania, a meticulous planner, has allocated 25 per cent of his earnings into equity, breaking away from the tradition of investing in just gold or real estate. He is among the few who abide by Buffett’s words: “It’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.” Singhania is a happy man today, reaping a CAGR of 15 per cent at the end of 10 years. NUMBER OF SIPs HAVE INCREASED TO 1.25 CRORE IN 2016 FROM 58 LAKH IN 2012 “I have regularly invested my money in SIPs since 2007. Initially…

INDIA’S BEST BANKS Business Today, with an eminent jury from diverse backgrounds, selected banks that flourished despite the odds. We raise a toast to those that are the best in class The ‘Best Banks’ study identifies institutions that have flourished despite the odds. The four-member jury panel selected the winners for the Bank of the Year (both public and private sectors), Banker of the Year, Digital Banking and Financial Inclusion. The eminent jury came from diverse backgrounds. M.D. Mallya, former chairman and Managing Director of Bank of Baroda, represented the banking side. Alok Agarwal, Chief Financial Official at Reliance Industries, brought in the voice of the industry, which works very closely with banks. Vimal Bhandari, Chief Executive Officer and Managing Director of Indostar Capital Finance, provided his insights as a…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday @BT_India NEWS India’s Next President and VP: Who Will Be BJP's Choice? The choice of the President and VP may help the BJP in building a pan-India footprint before the 2019 general elections businesstoday.in/presidentialrace-contenders GST Bill: Six Issues May Haunt Taxpayers, Consumers The procedural issues, if not addressed properly, would lead to litigations businesstoday.in/gstbill-taxpayers Bank Charges That Most Have No Clue About Banks normally charge clients for a plethora of services – PIN generation, demand draft, and even account balance updates via SMS on phone – to recover their costs businesstoday.in/bankservice-charges Solar Tenders, Auctions Slowing Down in India: Report Many states complain that DISCOMs are resorting to power cuts instead of buying power on the exchanges to save on costs businesstoday.in/solarpower-auction Securing Your Data…

On April 13, 2017, Sandeep Nayak, Chief Executive and Executive Director at Centrum Broking, was wrapping up his work before partying with his team ahead of the long weekend. The reason: The firm's wealth management arm had recorded the highest ever sales for the month of March (2017), the first time since 2011, when the company started the wealth management business. Today it manages assets over ₹10,000 crore. “Thanks to the buoyancy in the equity market, we have been able to amass highest-ever assets under management (AUM) in a single month,” says Nayak, who real- ises that investors do not have any other avenue to invest except in equities. With real estate and commodities going through a slump, and post-tax returns of bank fixed deposits being around 5 per cent,…

No exemptions: At present, the threshold for VAT registration is ₹20 lakh turnover; for excise duty, it is ₹1.5 crore turnover; and for service tax, it is ₹10 lakh turnover. These will not be available under GST – the threshold for exemption is ₹10 lakh for north-east and ₹20 lakh for other states. Auditing of accounts: Budget 2016/17 increased the turnover threshold for calculating presumptive tax from ₹1.5 crore to ₹2 crore. A person adopting the presumptive taxation scheme can declare income at a prescribed rate and, in turn, is relieved from the tedious job of maintaining books of account. This benefit may go away. The GST law makes it mandatory for MSMEs to get their accounts audited. Spike in compliance cost: Under GST, each entity will have to file…

Ever since the former governor of the Reserve Bank of India (RBI), Dr. Raghuram Rajan, introduced the Asset Quality Review in 2015, India’s banking sector has been continuously in the news, and mostly for all the wrong reasons. The review has brought to the fore significant amount of stress in the banking system, especially in the public sector banks (PSBs). The asset quality has been on a downhill journey over several quarters now and the gross non-performing assets (GNPAs) ratio of Scheduled Commercial Banks (SCBs) stood at 9.1 per cent as on September 2016, pushing the overall stressed advances ratio to 12.3 per cent, as per the Financial Stability Report (FSR) released by the RBI in February 2017. In addition, banks are capital starved. It has been estimated that Indian…

The $90-100 billion Indian real estate sector has faced two major challenges over the past four years – unaffordability and slowdown in sales due to lack of trust among customers. Consumers still aren’t ready to trust developers due to fear they may not deliver on time. So, while they are avoiding projects under construction, they are comfortable picking up homes that have been built. Still, the demand is largely in the top sixseven cities. So, while developers struggle due to heavy debt and slow sales, financiers want them to sell inventory. Developers do not have much of an option but to listen to them. The courts have also sent some developers to judicial custody for not adhering to commitments. Of late, prices have remained flat, with Delhi- NCR even witnessing…

Last week, I was invited to speak at the Gem & Jewellery Trade Fair regional networking meet. As I walked through the exhibition hall, it struck me that jewellery is an inherently female product. But the owners and exhibitors present were all men. They had to come to Kolkata from as far as Bangalore and Indore, Udaipur and Akola. Demonetisation had hit them all hard but was now a done deed. What worried them even more was the future. “These days if a man asks his wife what do you want for your birthday, she will say iPhone.” 60,000 bucks which could have been spent on jewellery, diverted to an electronic item with a life of 24 months and little resale value. How to get the young generation to buy…

$uperHubs: How the Financial Elite & Their Networks Rule Our World BY SANDRA NAVIDI PAGES: 289 PRICE: ₹599 NICHOLAS BREALEY PUBLISHING Consider a very elite, global club which controls financial systems around the world. Membership is limited and exclusive. The elite members are capable of bankrupting nations, or helping them come out of bankruptcy. How do you become a member of such a club? Where do the members gravitate normally? And even within the club, how do you move up the strict hierarchy? Sandra Navidi’s book, $uperHubs: How the Financial Elite & Their Networks Rule Our World, is a close examination of the most exclusive global club of all – the financial elite’s club. You need to be very rich to be a part of this club, of course. Almost…

Fiscal 2017 has seen a record number of buyback offers from cash-rich Indian businesses. As per the latest estimates by Prime Database, as many as 41 companies announced buybacks amounting to Rs 29,398 crore till February 2017, the highest ever in the history of Indian capital markets (See Record Buybacks). Share buyback is not a recent phenomenon, but as a retail investor, you must have wondered why a company wants to buy back its shares and what you should do to reap maximum benefits. Here is a low-down on buybacks and the ground realities. HOW IT WORKS In a buyback, a company repurchases its shares from existing shareholders, usually at a premium to the existing market price. This is done either through a traditional open-market purchase or through a tender…

The mutual fund industry’s assets under management, or AUM, rose from Rs 10.8 lakh crore to Rs 12.3 lakh crore between March 2015 and March 2016. Equity funds’ AUM went up from Rs 3.8 lakh crore to Rs 4.4 lakh crore. This was despite the fact that the S&P BSE Sensex delivered a negative return in 2015/16. Equity funds saw net inflows of Rs 82,748 in 2015/16, the highest since 2007. This clearly indicates the rising popularity of mutual funds. With bank fixed deposits offering only around 7 per cent, people are looking for alternatives. HOW WE CHOSE Value Research was our knowledge partner for selection of winners on the basis of their risk-adjusted rating score. The data taken is as on March 31, 2016. The Value Research fund rating…