Innholdsfortegnelse for 2 July 2017 i Business Today

For some time, economists and corporate analysts have talked about India’s twin balance sheet problem. On the one hand, some of the country’s biggest corporate names are struggling under a mountain of debt, which is putting their businesses at risk. On the other hand, most of the public sector banks – and a few private sector ones as well – are trying to deal with huge bad loans in their books. Our cover story this issue looks at one of India’s prominent business houses struggling to retain control of its empire as lenders clamour for their pound of flesh. The Essar Group has not been short of ambition – over the years, it has got into steel, oil refining, telecom, power, and half a dozen other sectors with companies in…

Last year, global consultancy PwC did something it would have never done a decade ago. It acquired a drone company and added a commercial drone services division in an attempt to position itself as a technology-driven company. This transformation is being done because technology is a bigger disrupter than globalisation for countries, corporations and societies, PWC’s global Chairman, Robert E. Moritz, tells Business Today’s Joe C. Mathew & Rajeev Dubey. Here are the edited excerpts: Is the idea of globalisation under threat? It is under threat depending on the angle you take. Globalisation has brought billions of people out of poverty. Has it done enough to reduce income inequality? No, there is more to be done there. But let’s not blame globalisation for that (inequality). When you look at employment, and…

THE IMPACT of the introduction of GST will be manifold on the telecom sector, especially telecom service providers and handset manufacturers. Apart from higher taxes that telecom service providers will have to pay, GST is expected to substantially increase their regulatory compliance and data management requirements. Telecom services will now be in the 18 per cent slab, higher than the current 15 per cent service tax. While the higher tax rate is expected to have a marginal impact, the way GST is designed means telcos will need to completely overhaul their processes It is complex because while India has 29 states and seven union territories, there are only 22 telecom circles. Many circles cover more than one state and union territory. The Delhi circle includes Delhi, Ghaziabad, Faridabad, Noida, and…

THE GROWTH STAGE 1990-92: Essar enters steel and power business 1995: Launches mobile phone services in Delhi (Essar Cellphone) with Swiss PTT THE FIRST FALL Jul 1999: Essar Steel defaults on Floating Rate Notes worth $250 million issued to foreign investors Oct 2002: Essar Steel goes into CDR BACK IN ACTION Apr 2003: Hutchison and Essar Tele merge operations to create a $2-billion mobile telecom company Nov 2003: Essar acquires US-based Aegis Communications Jun 2006: Essar Steel comes out of CDR Mar 2007: Vodafone and Essar agree on telecom partnership after Voda buys out Hutch stake May-Jun 2007: Essar Global acquires Canada’s Algoma Steel for `7,000 crore Jan 2008: Essar acquires 50% stake in Kenyan refinery from Shell, Chevron and BP Oct 2008: Essar Telecom Kenya launches services under ‘Yu’…

Target for biosimilars in next three to four years $200mn GV. Prasad, the Co-chairman and CEO of Dr. Reddy’s, is more comfortable discussing weather and climate change than the heat his company is facing from the US drug regulator. To a small group of journalists who were a bit early for the 2016/17 results press conference, Prasad, an avid photographer, instead of discussing the ongoing inspections of plants by the US Food and Drug Administration (USFDA), chose to show the pictures he had shot of the aftermath of the intense hailstorm that had hit Hyderabad a week ago. The pain of seeing a dead bird seemed easier to handle than discussing where the USFDA inspections were headed. Those who know Prasad say he has been personally disheartened by the reversals…

FINTECH Faster loan processing. The process, from origination to disbursement, is digital Addressing a new class of borrowers, the underserved market, with small loans Reliance on multiple data points, including social media clues, data analytics, and behavioural aspects Automated underwriting process and risk management Lower operational cost, heavy use of technology Mostly present in metros and big cities Insignificant in terms of volume and value of lending; scaling up is a huge challenge Yet to see an economic cycle of boom and bust TRADITIONAL BANKS Loan processing takes weeks, even months if there are queries Happy to lend to those with regular income and good repayment capacity Rely mostly on credit bureau scores; there is not much analysis of these reports Rely on human judgment High-cost model with people and…

Clash of Ideas RBI Governor Urjit Patel and Chief Economic Advisor Arvind Subramanian are at loggerheads over policy rates. In its recent policy review, RBI kept the repo rate unchanged at 6.25 per cent. Subramanian, who believes that the current economic conditions warrant policy easing, was not pleased with the decision. “Headline inflation has been running well below the target so far. Core inflation has also declined sharply. In this view, inflation forecast errors by the RBI have been large and systematically one-sided in overstating inflation,” he said. The statement is being seen as a sign of dissent between the government and the Central bank. Earlier, while announcing the monetary policy, Patel had said that the Monetary Policy Committee, an independent panel set up by the government last year to…

TAX GAINS INFLATIONARY BENEFIT Debt investments are a part of most portfolios. These work as a shock absorber for investors by delivering stable, though not very high, returns. Among the debt instruments available, debt mutual funds are one of the most recommended, especially when interest rates are falling -- they have delivered double-digit returns in the past two years and are tax efficient (see Tax Gains). However, a few recent incidents have got investors worried. Those who had invested in four debt funds of Taurus Mutual Fund were in for a shock when net asset values, or NAVs, of their funds fell 7-11 per cent in a single day in February this year. Such losses are difficult to digest even for equity fund investors. The reason for the fall was…

Surpassing the Challenges of Robotics This refers to your cover story Going, Going, Gone (June 18). It was an unambiguous study of automation and its impact on jobs in global scenario, and on Indian industrial canvas, without any exaggeration. Many reports have only terrified about job loss in countries and in certain industrial segments. But your article has really essayed to prescribe probable solutions, calling for pragmatic views and suggestions from economists to industrial experts to HR professionals to people-management consultants. The fast inclusion of robots in all aspects of life is quite impending. Robots will radically affect employment patterns and will drastically encroach upon social, economic and political inclinations. The policy-makers must buttress the industrial progress on a par with global systems. Original job retention will be impossible with…

Divergence Reasons Norms are for minimum provisioning Higher provisioning for standard assets under stressed sector Timely identification of high-value accounts and not all accounts Erosion in collateral value attracts higher provisioning No funding of interest or principal through fresh facility or additional funds Regularisation of account near the balance sheet date Two years ago, the Reserve Bank of India (RBI) under the then Governor, Raghuram Rajan, carried out the first-of-itskind asset quality review to dig out the hidden stressed assets in the banking system. This was over and above the annual inspection/audit. To bankers’ surprise, the RBI handed them a list of 150 accounts for 15 per cent provisioning — 2.5 per cent each for the next six quarters till March 2017. For many banks, these 150 accounts were standard…

AKBAR KHAN, the store manager of Barakah Beauty Solutions, a beauty products wholesaler and retailer in the busy Crawford Market of Mumbai, is a worried man. One can see customers swarming into the shop and making bulk purchases, but Khan is complaining about shrinking sales. “These are retail customers. The bulk of our business is wholesale, and that has dipped significantly ever since the Goods and Services Tax (GST) has been announced. Retailers, too, have nearly stopped buying or they are buying just what they need,” he says. Khan, a wholesaler dealing in brands such as Lakmé, Nivea, Lotus Herbals and Shahnaz Husain, has also reduced his inventory by 20-25 per cent. Most of the beauty products, especially cosmetics and skincare goods, now fall under the 28 per cent slab…

As the deadline for the GST rollout approaches, the government and GST Council seem intent on making it more complicated than it already is. The original GST idea was to have a single rate for all goods and products. The government complicated it by making four different rates – 5 per cent, 12 per cent, 18 per cent, and 28 per cent – plus a 0 per cent rate for some goods, and multiple surcharges and cesses for different goods. Then it created one new rate – 3 per cent – for gold and precious gems and then another one – 0.25 per cent for uncut diamonds. If that was not bad enough, it has also created multiple GST rates for the same good or service depending on its price,…

The Essar group plans to reduce debt by $10 billion with the sale of its oil refinery, related assets and BPO business. Prashant Ruia, Director, Essar group, tells Business Today’s Nevin John that the group will be able to generate revenues of $15 billion even after selling the oil refinery by full utilisation of assets in steel, power, ports and the refinery in the UK. Excerpts: Where do you see the group after the Essar Oil deal? Our assets are now operating at 75-80 per cent capacity. All our core sector businesses – steel, power and ports – have registered strong operational performance in 2016/17. We are focusing on better utilisation of assets, ramping up production and increasing operational efficiencies. Over the last six years, we completed an $18 billion investment programme in…

OSTALGIA hung heavy at the re-launch of the once-ubiquitous Nokia 3310 in May. With many new features and marketed by a different company, HMD Global Oy, it was not quite the same model that had taken the country by storm in the early 2000s, but the look and feel were similar, and that was all that mattered. “It is not a comeback as Nokia never left India,” says Arto Nummela, CEO, HMD Global. “Nokia branded feature phones have been selling in India all the while, but now we will be scripting a new chapter. Nummela may be factually correct but in fact, given the upheavals Nokia underwent in the last few years, its products had practically disappeared in India. It was a sorry comedown for a company whose handsets were…

Byju Raveendran Founder of Byju’s, which could be India’s next unicorn, a term used to refer to start-ups valued at $1 billion or more 7 million students on the platform 330,000 paid subscribers 7.5 million app downloads in 19 months THE VIDEO footage shows thousands of youngsters thronging the Indira Gandhi Stadium in Delhi and a clean-shaven, muscular young man in a tight black tee standing centre stage. He speaks in short, clipped sentences, with the practised ease of someone doing it for a long time, as six giant screens catch everything he says and does. On the face of it, it looks like a massive youth forum, but the man on the podium is talking numbers, logical reasoning and analytical ability. Meet Byju Raveendran, 36, in the midst of…

ANDY RUBIN, the creator of Android, left Google a couple of years ago to start his own technology company called Essential. And now he has launched the first smartphone from the Essential stable – the PH-1 Phone. Expectations are bound to be sky high since Android is unarguably the most popular mobile operating system. But Rubin is playing it rather simple. Unlike other manufacturers that ensure the logo and brand name are conspicuous, there is marked simplicity and lack of branding on this phone. Essential’s PH-1 Phone has been crafted from a combination of titanium and ceramic, with Corning Gorilla Glass 5 cover glass, to make it robust enough to survive dents, scratches, bends and even falls. It boasts futuristic aesthetics with an almost edge-to-edge 5.71-inch display with only a…

Full interview at businesstoday.in/AnshumanMagazine Anshuman Magazine, Chairman, India and South East Asia, at real estate company CBRE, tells Chanchal Pal Chauhan why the sector is on an upswing in India. Q. Do you think the realty sector is in revival mode? Yes, India is among the top three fastest growing economies in the world. Global investors are bullish on India’s real estate sector, especially the office market due to the growth trajectory over the past decade. Steady lease rentals and high absorption levels continue to breathe life into the commercial real estate sector. Q. Will recent reforms bring consumers back? The government has made concerted efforts to bring back both consumer and investor confidence. The infrastructure status to affordable housing is attracting interest from developers in the segment. Besides, the…

Harish Chandra, 44, stays in Delhi with his wife Jyoti Uniyal, aged 42, and two children – 11-year-old Ujjwal and nine-year-old Udita. Harish runs an electronics manufacturing unit and jointly operates an events advertising agency with his wife. Jyoti also works as a freelance content writer. The Delhi-based couple is looking to plan their finances to make sure they are on the right track. The family wants to vacation in Europe in the near future and buy a luxury car by 2018. Financial planning starts with a review of their overall financial profile. Cutting down on expenses and maintaining a contingency fund are a few good moves that the couple has adopted. However, paying high interest on loan and not investing to fulfil future goals are bad decisions (see Table:…

$22 Million Earnings of Indian cricket captain Virat Kohli, according to the 2017 Forbes list of ‘The World’s Highest Paid Athletes’. This includes $3 million from salary and winnings and another 19 million from endorsements. Kohli is the only sportsperson from the country to feature among the world’s 100 highest paid athletes UBER FIRES APAC BUSINESS HEAD Uber has fired its Asia Pacific Business Head, Eric Alexander, for allegedly accessing medical reports of a woman raped by an Uber driver in India in December 2014, says American tech portal Recode. The action came as part of a probe into widespread sexual harassment and mismanagement at the company that has seen the departure of 20 other top level employees. NSE TO SETTLE CASE The National Stock Exchange (NSE) is considering the…

Rajesh N. is a senior developer at a US-headquartered multinational product company. A decade-old veteran in the IT industry, he now spends most of his free time boning up on labour laws of the country. There is a reason for that. Rajesh is a spokesperson of the Bangalore chapter of the Forum of IT Employees (FITE), a Chennai-headquartered union of technology industry professionals. FITE says it is fighting for the rights of IT industry professionals and has nine chapters across the country, including Hyderabad, Delhi, Mumbai and Pune, cities where the IT industry employs a large number of people. FITE is part of a trend where IT industry employees, fearing job losses, are joining hands to form unions to safeguard their interests. The reasons are obvious. With India’s $153-billion IT…

ROM HIS 19th floor office at Essar House in Mumbai’s Mahalaxmi, the world would seem vastly different to Essar group director Prashant Ruia by the end of 2017. It may remind him of a statement in William Shakespeare’s Hamlet: “Neither a borrower nor a lender be; for loan oft loses both itself and friend”. Caught in a debt trap, Ruia has been forced by lenders to sell and restructure to pay off hefty loans it is struggling to service. By the time Ruia concludes the painful exercise, the Essar group will shrink to a third of its peak revenues of $27 billion in 2014/15. At $8.6 billion (`55,000 crore), it would be down seven notches to become the 10th largest business house in the country. Based on the 2015/16 numbers,…

45,733 CRORE RCom’s debt in 2016/17 Brookfield to acquire 51 per cent stake in Reliance Infratel for 11,000 CRORE The last week of May was full of unprecedented developments for Reliance Communications, the seventhlargest telecom service provider in the country, starting with its first-ever yearly loss of `1,283 crore. The losses, coupled with high debt – ` 45,733.40 crore as on March 2017 – prompted banks to raise a red flag on the company. To make matters worse, ratings agencies ICRA, CARE and Moody’s downgraded RCom over debt concerns. The panic-stricken investors reacted; in seven trading days, RCom’s stock tanked 33 per cent. Compelled to allay fears about the telco’s future, RCom Chairman Anil Ambani called the media at Reliance Centre in Santacruz, the new global headquarters of the Reliance…

Amit Kumar, 36, is a salaried professional working in Bengaluru. He wants to open a fixed deposit (FD) to save for his child’s education but keeps delaying it. The reason: Last time he was at his bank to seek advice on saving/investment options to buy a house, he was sold a highcost insurance policy. “I was told it works just like an FD. But when I wanted to withdraw the money, I came to know there was a lock-in period and I could not draw it immediately. I do not trust them with my finances now.” Much like Kumar, most of us made have made at least one investment that we regret later. It is especially true if you are young and uninitiated – without much knowledge of the increasingly…

The writer is a best-selling author Mandate of Indian Grameen Services was to test out diff erent models of development every year It is a truth universally acknowleged fact that a hungry man in possession of a good appetite, must visit ‘Sarafa’ in Indore. Jewellery bazaar by day, street food paradise by night – catering to locals as well as tourists. On this visit, it’s the same fabulous Joshiji ke dahiwade and Vijay ki kachori, washed down with a tall glass of shikanji. But something is different. There is no leftover food, no dirty plates, no garbage to be seen – anywhere. I am witnessing with my own eyes what the Swachh Sarvekshan Survey had declared on May 4, 2017. Indore is now ranked the cleanest city in India (a…

Under The Skin of the Indian Consumer BY DAVID ABIKZIR, PAGES: 314 PRICE: `499, BLOOMSBURY India has entered a new consumerist era where consumers don’t ‘buy to live’ anymore, but ‘live to buy’. With e-commerce, consumers have evolved once again. They are less credulous and more demanding. These new behaviours, the author argues, necessitates marketers to evolve their ways of marketing – of touching consumers, interesting them, shocking them, shoving them, but also delighting them, and giving them, what they ask for. Deep Thinking: Where Artificial Intelligence Ends and Human Creativity Begins BY GARRY KASPAROV PAGES: 304 PRICE: 599 HACHETTE The author, one of the greatest chess players in the world, reveals all about his landmark defeat in the 1997 chess match with the IBM supercomputer Deep Blue. The realisation that machine…

Not so long ago, your money-related transactions used to be between you and your bank. It was a closed loop with everything happening in the premises of the bank. The scope for frauds was limited. Over the last few years, as technologies such as internet and mobile banking spread, thousands of people can fall victim to one cyber attack or fraud in a matter of minutes. And with the arrival of third-party financial service providers, such as mobile wallets and UPI, the scope for attacks has expanded, requiring additional efforts from financial institutions to protect their networks and systems. Last month, when malicious ransomware (in which the attacker locks down your computer and demands money to unlock it) infected hundreds of computers in different countries, questions were raised on how…

Seeing your children grow up healthy and happy is one of the best experiences of life. But too many of us have seen them struggle, weighed down by money problems or personal trauma such as a parent’s death. A recent study by Aviva Life says that Indians are better dreamers but poor planners; out of 100, only 24 people plan in India and 81 per cent of Indian parents do not even know what will be the cost of higher education in future. In case you are not sitting on a vast cash pile that fund your little ones, it is time to chalk out a comprehensive financial plan and invest systematically to secure your child’s future. You will find several investment options, but do not buy these products at…