Innholdsfortegnelse for 27-Jan-2019 i Business Today

AFTER DENYING IT stoutly for a couple of years, the government has finally gotten around to admitting, grudgingly, that many of the Micro, Small, and Medium sized Enterprises (MSMEs) are struggling to survive. The big problem now is that the government thinks that allowing the MSMEs to restructure their loans or giving them more time to pay, and also increasing loans to them will solve the problem. Former Reserve Bank of India governor Urjit Patel apparently did not agree with that view. He has resigned and been replaced by Shaktikanta Das who is more sympathetic to the financial woes of the MSMEs. He has allowed banks to do a one-time restructuring of small loans not exceeding ₹25 crore of MSMEs. Meanwhile, the government has tried to spur its own banks…

THE MODI GOVERNMENT has apparently decided not to fall prey to temptation and outdo the Congress in announcing and initiating even bigger loan waivers. (Strictly speaking, it also cannot do so because agriculture is a state subject). Farmer loan waivers are no solution. Apart from the moral hazard it creates – people may not repay if they expect a loan waiver announcement, and people who have paid dutifully may feel cheated – it is also no solution. Besides burdening state budgets and banks, loan waivers don’t solve the farmer’s root problem. One idea for farmer distress the government is toying with currently is to offer some sort of minimum income guarantee to the poor farmers or compensating those who have not managed to sell at the minimum support price (MSP)…

AT A TIME when the taxman is slapping 'angel tax' notices on start-ups on premium valuations, the government’s repeated assurances promising there will be no coercive action, is comforting. Numbers aren't only how early age investors value start-ups; they bet on intangibles such as passion, innovation, and goodwill. Explaining their idea of high premium to tax officers is tough, since it is subjective (and based on their own calculations of future growth). Since the onus is on start-ups to justify valuations, and the law allows the taxman discretion in arriving at the FMV, this will only deter innovation and kill early age investment. Initial judgment doesn’t always prove right; and valuations may slide due to unforeseen business circumstances. In that scenario it’s draconian to retrospectively tax start-ups on funds invested…

The downward correction in global oil prices and US dollar/interest rates from their highs offered a reprieve to emerging markets, particularly India, in the final quarter of 2018. Asset markets are, however, far from breathing easy. Regional data points to an impending growth slowdown this year, led by weaker exports and magnified by the US-China trade skirmish. The Indian markets are also on tenterhooks, at a time when domestic catalysts are gaining importance. In this column, we will address five crucial questions facing the Indian economy this year. Lower oil prices, alongside a softer but stable growth environment, has added to the disinflationary spell. Policy tightening expectations have fizzled out, but the fiscal outlook and politics still bear watching. Gains from Lower Oil Prices The Indian basket of crude oil…

What is our level of preparedness in infrastructure, and where do we stand in terms of the drone ecosystem? India is on the path to having the world’s leading drone ecosystem. I came to the aviation ministry about two-and-a-half years ago. That time, there had been a number of discussions but there was no formal drone policy. It was not that people were not using drones. Even then, if you went to a wedding, you would see people using drones for photography. People were making ads using drones. There was surveillance, too. It was clear that this was going to be a huge industry because of the range of possible applications. We had a series of meetings with security agencies, home ministry, Air Force, other stakeholders, and on the basis…

Solar projects in select states that are stalled between 2016/17 and 2018/19 Source: Central Electricity Authority Punjab CAPACITY AUCTIONED 500 MW CAPACITY STALLED 375 MW REASONS Legal disputes with Today Group Haryana CAPACITY AUCTIONED 2,000 MW CAPACITY STALLED 2,000 MW REASONS Slow land clearances, high cost of farmland, transmission issues and lack of clarity in policy for sale of power Madhya Pradesh CAPACITY AUCTIONED 300 MW CAPACITY STALLED 150 MW REASONS Canadian Company SkyPower is selling India assets amid legal tangles Rajasthan CAPACITY AUCTIONED 420 MW CAPACITY STALLED 230 MW REASONS Not known Maharashtra CAPACITY AUCTIONED 450 MW CAPACITY STALLED 170 MW REASONS 100 MW stuck in legal tangles Karnataka CAPACITY AUCTIONED 1,160 MW CAPACITY STALLED 600 MW REASONS No clarity on wheeling and transmission charges Telangana CAPACITY AUCTIONED 1,680…

BOARD MEMBERS of Indian enterprises often ask us how they can focus more on corporate strategies instead of merely complying with newer recommendations of regulatory bodies. This is particularly significant as most of the boards do not have a process in place to oversee such strategies and stay aligned with these to help companies achieve their goals. Shifting a board’s role to aiding and governing strategy from its current vague responsibilities demands some doing. But making strategy governance part of board competency is possible if the exercise is done step by step. If there is a well-defined strategy, the board should know its salient features. Quite a few companies have policies which, at best, cover only specific areas while many have no strategy statement to their credit. Even with a…

FROM AGE OLD RECIPES like idli, dosa and vada batter to samosas, fresh juices, yogurts and fresh meat, food start-ups in India are redefining the way of life for new age consumers. Food start-up founders, mostly with no prior exposure in this space, are making their own rules. Rohan Mirchandani of Drums Food International, is one such founder. When he visited Mumbai for a week in 2012 to take a class in ‘Marketing for Indian Consumer’ as a part of his Wharton degree, he attended a lecture by Shripad Nadkarni, former marketing head of Coca-Cola, which opened his eyes to the opportunity that India held for consumer brands. Mirchandani was convinced and he bought a one-way ticket from the US to India in January of 2013. In 2014, Mirchandani co-founded…

Pasta, hummus, shawarma, sausages, khao suey, sushi and more – Indians love to experiment with international cuisine. Of course, fresh home-cooked meals remain a staple. But millennials and Gen Z are not averse to trying new dishes. Then there are pok choy, galangal, kale, chia seeds, almond milk and wasabi – ingredients from across the globe are now available at the local supermarkets. While convenience is essential for the millennials, a fresh, organic and healthy meal or snack best complements and seamlessly aligns with their lifestyle choices. National brands do enjoy a strong fan base, but the evolved consumer also seeks quality, integrity, variety, authenticity and value for money when walking down the store aisle, thus creating a viable and thriving market for private labels in the Indian food and…

SMARTWATCHES are no longer a fancy piece of gadget, fetching notifications and tracking step counts. They have quickly evolved into on-the-go fitness guides, monitoring workout progress and heart rates in real time. They also operate as smartphone facilitators, answering/rejecting calls and quickly responding to e-mail, text messages, WhatsApp and more. Plus, they help you access the latest news, alerts you about daily water intake, and provides calendar notifications and map directions. These timepieces have become trendy too with changeable watch straps and watch faces that award them a new look to go with every occasion. But buying a smartwatch is not as easy as picking up a regular one. Smartwatches run on the specially designed operating systems (OS). The popular ones include Apple’s watchOS, Google’s Wear OS and Samsung’s Tizen…

THE BAJAJS are business royalty. The group founder, late Jamnalal Bajaj, was both an astute businessman and a social reformer. He was so close to Mahatma Gandhi that he was often called the fifth son. Apart from trading, Bajaj set up a sugar-making company in 1931, which would later become Bajaj Hindusthan. The automobile company came later, just before Independence, in 1945. Though the third generation of the family, nominally headed by Rahul Bajaj, also had interests in steel, sugar, electricals and others, it was known for Bajaj Auto, the maker of the ubiquitous Bajaj scooters (modelled on the old Vespa scooters of Italy), which had a waiting period of decades during the bad old days of controlled economy. After the economic reforms of 1991, when the animal spirits of…

THE GOVERNMENT says it isn’t seeking the RBI’s surplus capital to fund fiscal deficit. Point accepted. A bulk of the ₹10 lakh crore reserves in the RBI books are actually revaluation reserves in gold and currency reserves. These have to be sold to be actually realised – something that is not advisable. So exactly what will the six-member committee headed by former RBI Governor Bimal Jalan deliberate? The crux of the matter is the contingency reserves of over ₹2.3 lakh crore. The government feels that contingency reserves are far higher than the RBI might ever require. Battle lines were drawn when the RBI transferred some ₹10,000 crore to the contingency fund in 2016/17. With this committee, the government is hoping to settle the matter, get more annual surpluses without any…

WITH THE SEBI stipulated one-year moratorium coming to an end in December 2018, market analysts expect India’s second largest IT exporter Infosys to announce a share buyback to boost investor sentiment. The announcement could happen alongside the third quarterly results of the company. At the beginning of the year, Infosys had committed to returning 70 per cent of free cash flow and outlaid $2 billion to be returned to shareholders, of which $400 million is to be paid as special dividends. Last year the company announced its first ever buy back and repurchased over 110 million equity shares totalling around ₹13,000 crore. Given Infosys' conservative nature and with no prior history of a billion dollar acquisition, most analysts believe that a buyback is the best option to return cash and…

AQUACULTURE WHAT: Aquaex WHEN: Jan 31-Feb 2, Hyderabad WHAT TO LOOK FOR: AquaEx India is South Asia’s premier fisheries and aquaculture event, aimed at catering to the needs of every stakeholder of the industry — farmers, buyers, suppliers, scientists, consultants, professionals, enthusiasts and prospective entrants. INDIA ENGINEERING WHAT: IETF 2019 WHEN: Feb 3-5, Delhi WHAT TO LOOK FOR: The biennial flagship event of CII since 1975 is now a comprehensive international B2B event. It covers clearly demarcated technology sections of engineering, manufacturing industry and services. CARGO WHAT: LOGISTICS 2019 WHEN: Feb 3-5, Delhi WHAT TO LOOK FOR: The objective is to promote and provide technology-based knowledge sharing among stakeholders of various logistics segments. The conference highlights the expanding role of emerging technologies, global industry trends and functionality with emphasis on…

1926 Bajaj Group was founded by Jamnalal Bajaj as a trading company in Mumbai 1931 The Hindusthan Sugar Mills set up (later named Bajaj Hindusthan Sugar) 1938 Radio Lamp Works, the former name of Bajaj Electricals, began operation 1945 Bajaj Auto came into existence as Bachraj Trading Corporation 1972 Chetak scooter launched 2001 Dispute between brothers Rahul and Shishir Bajaj became public and the latter sought a business separation 2001 Forayed into insurance business in partnership with German insurer Allianz 2001 Bajaj Auto launched its premium bike Pulsar 2003 Pulsar with Digital Twin Spark Ignition (DTS-i) launched. Bajaj Auto holds the Indian patent for DTS-i technology 2005 Discontinued Chetak 2008 Family split. Sugar business Bajaj Hindusthan and Bajaj Consumer Care went to Shishir Bajaj’s group 2008 Bajaj Auto demerged into…

As we usher in the new year, the economic outlook is cloudy. But these clouds have shades of dark, grey and silver. One can sum it up as cautious optimism – a glass half-filled rather than half empty. Despite several challenges, India continues to be the fastest-growing large economy, with an expected growth of around 7.5 per cent. First, a look at the dark clouds. Stock markets have taken a big beating, especially in New York and China. The December rout in the U.S. stock market was the worst since the Great Depression of the 1930s. It is all the more remarkable since 2018 was a year of record corporate profits, thanks to the tax cuts announced by President Trump. To top it, more than $1 trillion of those profits…

Drone Regulations 1.0 All flights require digital permission under the new Digital Sky – no permission, no takeoff – regime Operator permits to be issued within seven days Maximum altitude of 400 feet. Flying limited to visual line of sight during day time The regulations provide parameters for minimum manufacturing standards Insurance required for all UAV operators, including the nano-category ones Drone Regulations 2.0 Payload delivery likely within specified air corridors Permit for flying beyond visual line of sight Automation of air traffic management to the extent possible Drone Regulations 3.0 Flying taxi services expected Payload delivery to be allowed for delivery of goods to consumers in densely populated areas Drawbacks of the Policy Import and purchase of drones can be done for specified purposes, which is restrictive Insurance products…

Global CP TOTAL FUNDING ($ MN) 60.63 TOP INVESTORS Goldman Sachs, Mitsui & Cobrandcapital.co.in Paper Boat TOTAL FUNDING ($ MN) 45. 86 TOP INVESTORS Sequoia Capital, Hillhouse Capital Group, Sofina, Trifecta Capital, Catamaran Ventures TOTAL FUNDING ($ MN) 31.1 iD Fresh Food TOP INVESTORS Premji Invest, Helion Venture Partners, Brand Capital Raw Pressery TOTAL FUNDING ($ MN) 30.4 TOP INVESTORS Alteria Capital, Sequoia Capital, Saama Capital, DSG Consumer Partners, InnoVen Capital Southern Health Foods TOTAL FUNDING ($ MN) 28.6 TOP INVESTORS Morgan Stanley, Fulcrum PE Source: Tracxn…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India PERSPECTIVES Why the Parliamentary Panel Is Angry with Domestic Airlines The 41-member standing committee report carries a series of recommendations that highlight the problems with the current aviation ecosystem businesstoday.in/airlines-panel A Dark UP Seeks Light from Prime Minister Modi The state not only requires a massive ramp-up of the transmission facilities but also of the distribution companies businesstoday.in/up-power.transmission Government May Extend GST Compensation Period for States The current GST targets are too steep and almost unachievable businesstoday.in/gst-compensation.period RBI’s MSME Restructuring Scheme a Lesser Evil for Banks Than Taking Them to Bankruptcy Without such a relief, the MSMEs would have landed at the bankruptcy court businesstoday.in/rbi-msmes NEWS Time to Becoming a Unicorn Is Shrinking, Says Rajan Anandan The number of unicorns or companies with over…

THE GOVERNMENT’S revenue shortage has begun to impact expenditure. Data shows that the Centre has tightened spending. Its expenditure as a percentage of Budget Estimate (₹24.42 lakh crore) has crossed just 66 per cent until November 2018 compared to 69 per cent last year. This may not appear substantial but the government has realised that meeting its revenue targets will be tough. After all, it could collect 50 per cent of the budgeted revenue target of ₹17.25 lakh crore, three per cent lower than before. The Centre is going slow on revenue expenses (including salary, pension, and other administration costs) than capital expenditure specifically in the Commerce, Corporate Affairs, North East Affairs, Housing and Urban Affairs ministries. It would be interesting, however, to see if it can keep its revenue…

THE SHOCK and awe effect of the Press Note on FDI in e-commerce by the Department of Industrial Policy and Promotion (DIPP) has truly stunned the e-tail industry. It was the large players in the sector who had got so used to the government looking the other way, who never saw it coming. From the very beginning, the FDI in e-commerce law permitted foreign investment only in e-commerce platforms, not in inventory-based e-tail. Yet every platform found a way around the law by setting up separate companies to hold inventories and influence pricing. And successive governments overlooked it. Finally, the Press Note said it in black and white. It’s a huge disruption for those caught unprepared for compliance; but will surely level the field for brick and mortar players. Just…

BIOCON’S BIOSIMILAR (reverse engineered version of biotech origin drugs), Ogivri (Trastuzumab), was recently approved for its EU launch. A year ago it was approved for the United States. Jointly developed by Biocon and Mylan, Ogivri is the biosimilar version of Swiss drug maker Roche’s Herceptin, a breast cancer and gastric cancer drug with sales of $6.9 billion a year worldwide. It has over $2 billion sales in the EU alone. In the US, Ogivri was the first approved biosimilar for Herceptin. Companies like Pfizer Samsung and Amgen have also developed biosimilars for Herceptin and others are also chasing a similar line but Biocon will have the first mover advantage and is yet to launch the drug in both the geographies. Biocon chief Kiran Majumdar Shaw has all reasons to be…

TRANS-PACIFIC TRADE DEAL TAKES OFF In stark contrast to growing protectionism, the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force on December 30, 2018, creating a free trade area that accounts for 13 per cent of the world’s GDP and covers an economic bloc of 500 million people. A revised version of the Trans-Pacific Partnership, the deal enables members to scrap tariffs on agricultural and industrial products for mutual advantage and ease investment norms. TPP negotiations started in 2010, but the US pulled out in 2017, days after President Donald Trump took office. Japan, Singapore, Australia, New Zealand, Canada and Mexico are the first six members to ratify the pact. Vietnam will soon follow suit. Four other nations are yet to ratify while efforts are on…

1) The Founders Sanjay Chakrabarti, a Chartered Accountant, and Alok Sheth, a B.Tech. and an MBA. Both worked as management consultants at EY before Sheth came up with the idea. Chakrabarti was doubtful as he had never lost any stuff. But on that very day, he lost his smartphone and it convinced him that the idea would work. 2) How It Works The company is in the business of securing valuables, from passports, keys and gadgets to luggage and even eyewear. It sells secure tags with tracer codes that customers can attach to their valuables. The tags also carry the message, “If found, return for reward” and mentions how the person can reach out. The company also arranges a doorstep pick-up to retrieve the item and returns it to the…

RAHUL BAJAJ, 80, the patriarch of the Bajaj Group, cherishes the iconic moments in his 53 years of illustrious professional life while talking to Business Today. “There were challenging moments,” he says, pulling up the sleeves of his shiny off-white kurta. He is less involved in the day-to-day business now but watches every business move his sons Rajiv and Sanjiv make, and shares his critical opinion. When Rahul Bajaj had joined Bajaj Auto in 1965, its sole plant was in Akurdi (about 19 km away from Pune city), which was totally isolated then. But he left behind his life in South Mumbai (then Bombay) and moved to Akurdi, building a house inside the plant area, where snakes were regular visitors to his home. “I told my Bombay friends who asked…

It would be fair to call the just-concluded 2018 a year of recovery as the economy rebounded from demonetisation and glitches in the levy of Goods and Services Tax (GST). A moderate pick-up in growth and low inflation despite spiralling crude prices also helped. But inflation was low mainly due to weak food prices, which meant farmers were – and are – in pain. Plus, the country did not escape the global tailspin in equities. The sell-off in emerging market bonds also hurt currencies of countries with current account deficits and India was no exception. So where do we go from here? Given that the external environment will remain stormy, with the US interest rates higher and protectionist winds still threatening growth and trade, India will have to lean on…

To call it the new government is perhaps too daring. Bharatiya Janata Party may well return in the coming general election. But its majority may be smaller – perhaps small enough to make it seek partners. If it loses and the Opposition forms the government, it is bound to be a coalition. This will be the biggest change after the election: The government will be less decisive, whatever its composition. In his Q&A session on New Year’s Day, the Prime Minister gave a long list of his government’s achievements. Others may not see all of them as achievements; in any case, there were many that were not significant. India, for instance, has over half a million villages; giving electricity to the last few thousand was a marginal feat. The list…

Power and Utilities Remotely inspecting towers Detecting corrosion of tower equipment Creating 3D models of the site before construction begins to optimise layouts Agriculture Enhanced video feeds to assess crop health Use of videos and images for training farmers Highways Real-time visibility to remote engineers to assess road conditions Sending information to engineers highlighting areas identified for maintenance Monitoring the progress by calculating the length of the road built Mining 3D models to access and monitor sections of the mine Use of 3D models for blast planning Drones can act as first responders to an accident site and transmit real-time information to rescue agencies Railways Site engineers can use AR headsets to consume information like broken bolts, etc 3D models can help engineers determine the exact section of a hill…

GOOGLE and a research group from the University of Oxford have been working on an AI system that can read lips, apparently with better success than humans. Lip-reading is not a common skill. But people with hearing impairments often learn it and, along with hearing aids, manage to understand what others are saying. Now things could be a lot easier if Google provides access to the technology. Interestingly, a deep learning system was exposed to 5,000 hours of BBC television shows. It involved 1,18,000 sentences, according to a study titled Lip Reading Sentences in the Wild, and results have shown that the system is outperforming humans at this skill. The study envisages applications such as dictating to a phone in a noisy environment, translation and transcription, redubbing films, resolving multi-talker…

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Q. The biggest challenge you faced in your career A. When I joined the business in 2006, we were hit by the perfect storm – rising costs, labour strife, heightened competition, talent attrition, financial stress and irate customers. Together, they posed a potential crisis that lasted for two-three years. So, I had to get into the nuts and bolts of our operations. With hard work and determination, we were able to pull through, and that has given me immense confidence to face similar situations in the future. Q. Your best teacher in business A. Adversity is one of the best teachers. Mike Tyson once said everyone has a plan till they get punched in the mouth and that is true. Adversity makes us question what we are currently doing and…