Money Indices August 2013

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VOL 1 ISSUE 2

IT’S ALL ABOUT BUSINESS

AUGust 2013

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Meet SIB’s Growth P38 Sentinel What couldn’t be accomplished in 70 years has been attained in just 10 years. SIB has a national reach today!

End of sheila’s winning streak?

Poll-bound Delhi may see the end of Sheila Dikshit’s decade-long rule P21

You can’t innovate alone

Gijs van Wulfen tells how to up the game of innovation with team spirit P26 Dr V A Joseph MD & CEO, SIB

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CONTENTS

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38

Meet South Indian Bank’s Growth Sentinel

Too hard to stomach the Food Bill?

Will the Food Security Bill change the electoral fortunes of the Congress in the 2014 General Elections? Analysts say that populist measures will only lead to economic complications

South Indian Bank (SIB) has acquired a national face today, thanks to the phenomenal growth over the past ten years.

Be it rural or urban banking, lower NPAs, credible resources, or sustained growth practices, the man at the helm, Dr V A Joseph, knows his game pretty well

48 the art of personal makeover Digital marketing, personal branding, technical landscaping, and creative designing evangelist Pravin Thakur tells us about the growing importance of personal image makeovers

60

56

A ‘B school’ for rural women

Shoe Laundry

A humble ‘B school’ called Mann Deshi Udyogini is rewriting the destinies of rural women in Satara, Maharashtra

Sandeep Gajakas is the man behind India’s first professional footwear laundry and refurbishing service

Regulars 10 ECONOMY WATCH 16 PHOTOSPEAK 18 BRIEFINGS 19 LIMELIGHT

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MONEY INDICES

29 30 46 62

voices insights financial brands classroom

August 2013

63 64 66 82

event mentoring funding investment

84 sebi regulation 94 GLOBAL INDICES 96 TECHnOLOGY 98 Entrepreneurial Notes

Expert Talk POLITICS 21

End of Sheila’s winning streak?

Poll-bound Delhi may see the end of Sheila Dikshit’s decade-long rule

US WINDOW 34

Motown Detroit breaks down

Saddled with debts to the tune of $18 million, Motown Detroit declares bankruptcy, even as experts say there will be more such crises in the US

Social Entrepreneur 58 light for the blinded poor

Dr R V Ramani’s Gift of Vision programme reaches out to thousands of blind people in 69 districts spread over 11 states of the country

Media 73

26

you can’t innovate alone Eminent innovation expert and Founder of the Forth Innovation Methodology Gijs van Wulfen tells us how to up the game of innovation with team spirit

Success story

70

$5 history of a logistics empire T S Kaladharan is a successful businessman, heading the multi-million dollar Consolidated Shipping Services

Checking the media’s pulse, with e4m

Annurag Batra, Chairman, exchange4media Group, talks about media buying, selling, and planning

MSME 89

Small is big in manufacturing

India is the third largest market for small businesses looking to import new products from abroad

Entrepreneurial notes 98 meet the ideators

Varun Agarwal and Rohn Malhotra of Alma Mater, an online brand for customised merchandise, share their thoughts on entrepreneurship

52

corporate

77

shuffle in leadership The Tata Group and Unilever have brought in new field gurus to make a turnaround in their growth sheets. Let’s take a look at what Nirmalaya Kumar and Nitin Paranjpe bring to the table

currency trends

86

Two facets of the sliding rupee Just when the rupee has become one of the worst performing currencies in Asia, we take a look at what’s good and what’s bad in the given situation

Riding on wings of steel Helmet manufacturing major SteelBird has been riding the crest of success, with MD Rajiv Kapur continuing to explore newer horizons

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August 2013

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MI INB

Direct selling is a business for tomorrow!

This letter is in response to the cover story published in the July issue of Money Indices. The story on direct selling is an excellent analysis. The direct selling industry has a bright future. A clear distinction between Ponzi schemes and direct selling schemes is the need of the hour.

Dr Manohar B Murge, Owner, Sai Shraddha Wellness Clinic, Pune The cover story on direct selling was really good and relevant. Direct selling is not just a business meant for today’s needs; it’s a business for tomorrow.

Unnikrishnan Nair, Cochin The cover story was excellent. Great job, Vishnu!

Keep up the good work.

Shivaraj Swamy Malemath, Bengaluru

X become the Prime Minister of India.

The 2002 Gujarat riots made Modi a suspect. Had there been no Godhra train carnage, the riots would have never taken place.

Modi, accused by slain former Congress MP Ehsaan Jafri’s wife Zakia of not acting against rioters, has already been given a clean chit by the Supreme Court-appointed Special Investigation Team in the Gulbarg Society massacre case.

Modi is a much misunderstood man. Some people have tried to demonise him while others have belittled him by some manipulated or distorted campaigns. It is a matter of great achievement that he has been elected thrice as the Chief Minister of Gujarat.

It had been reported that he was denied visa by the US government due to his alleged complicity in the Gujarat riots. The actual fact is that he did not even apply for a US visa, and the then US Secretary of State Hillary Clinton found it hard to explain the imaginary incident. If Modi is responsible for the Gujarat riots, then Jawaharlal Nehru is accountable for communal riots during the Partition. Gujarat is the most developed state in India, and Modi is its torchbearer. It won’t surprise me if he becomes the Prime Minister of India in the not so distant future.

S Raghunatha Prabhu, Alappuzha, Kerala

‘Modi is the best PM candidate’ This letter is in response to an article on Narendra Modi in the July issue of Money Indices. Narendra Modi is the best Prime Ministerial candidate, and projecting him as such would be beneficial for both the BJP and the NDA. When Atal Behari Vajpayee was 26 years old, a time when there was no effective opposition to the Congress, Jawaharlal Nehru had predicted that the young lad of Jan Sangh would

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August 2013

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EDITORIAL

Thank you, readers

Appreciations, compliments, and enquiries over phone, emails, and one-onone business meetings are still pouring in, engendering faith, belief, and confidence that there’s always an interminable market for feel-good content.

We couldn’t have taken on a bigger role for ourselves in the business news world without you

Dear reader, You have helped us make a good harvest once again. This time, with Money Indices (MI)! The first edition of MI has been well received by a cross-section of people from India’s cosmopolitan cities and our overseas markets, especially the Middle East. Appreciations, compliments, and enquiries over phone, emails, and one-on-one business meetings are still pouring in, engendering faith, belief, and confidence that there’s always an interminable market for feel-good content. We couldn’t have taken on a bigger role for ourselves in the business news world without you. As before, we welcome your suggestions, ideas, criticism, and straight speak for consolidation of MI’s very foundation. On that count, let us tell you what we have for you in the second edition.

Everything in our fast-paced world is based on cultured opinions, well-nurtured belief systems, hardnosed judgments, informed choices, and well-articulated verdicts. And what ultimately matters is how we meet our bottom lines without being fatigued or underplayed. The Indian economy presents a worrisome picture as of today, thanks to the current account deficit, fiscal shortcomings, lower private capital spending and investments, free-fall of the rupee, inflationary trends, slump in manufacturing, and a tight liquidity situation. But then, it’s never been about coming to a standstill or staying put just because the weather is not right. It has always been about finding your right step and mustering the courage to tough it out. That’s where you learn to see the shortfalls in good news and the wake-up calls in bad news. We have lined up something for you on these lines.

So, we have started with the basics first, breaking financial and economic jargons into digestible nuggets of information for those who often find business as a dry, tedious subject. You’ll find useful editorial pieces touching upon the idea of a startup, the essential first few baby steps into mentoring yourself, the emerging trend of personal branding, the big trade potential of small and medium-sized enterprises, the success story of a leading helmet manufacturing company, the five-dollar ride of an NRI into millions, the enterprise of rural women passing out from a unique social version of a B school, the free eye care revolution of a Tamil Nadu-based medical evangelist, and much more.

We have something serious as well for those who love to keep track of politics, the market economy, and of course, new products that make good investments. In the end, everyone loves a good growth story, particularly when the protagonist belongs to an era that shaped up Independent India. You can trace the journey of South Indian Bank into newer horizons in our Cover Story this time.

Bank on us. We’ll only get better from here!

Ravi Deecee Editor

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MONEY INDICES

August 2013

ECONOMY WATCH UAE

LMVH’s big buy for 2 bn euros

DOHA: Another big ticket global acquisition has cleared the decks with Louis Vuitton Moet Hennessy (LVMH), the French luxury goods conglomerate part owned by Qatar, taking over 80 per cent of Italian luxury cashmere clothing brand Loro Piana for 2 billion euros ($2.57 billion). The deal gives Loro Piana an enterprise value of 2.7 billion euros, more than 3.8 times the company’s expected 2013 sales of 700 million euros. Loro Piana, also known as an integrated manufacturer of fine yarns, has been posting average annual sales growth of 17 per cent over the past three years. This, according to analysts, will compensate the sluggish growth at other LVMH brands such as Louis Vuitton.

Dubai’s new ‘desi’ bull run

DUBAI: Now, the Indian Bull run will generate widespread interest among traders and investors in the Gulf region, with the Dubai Gold and Commodities Exchange (DGCX) announcing the launch of SENSEX Futures. This is the firstever Indian equity index futures contract to be listed on an exchange in the Middle East and North Africa (MENA) region.

DGCX SENSEX Futures is a futures contract based on the S&P BSE SENSEX, the blue-chip stock index of India’s leading bourse, the Bombay Stock Exchange (BSE). This presents a great opportunity for international investors as well as a large number of NRIs residing in the Middle East region for high volume trading in SENSEX Futures.

Spanish firm bags $387m contract

RIYADH: Spanish firm Dragados has won a $387 million contract from Saudi Basic Industries Corp (SABIC) to design and build a new 50,000 tonne-per-year polyacetal plant.

Dragados will start work on the project in August. The project for SABIC’s National Methanol Co is due for completion in the first quarter of 2016, the chemicals company said in a statement. National Methanol, better known as Ibn Sina, is 50 per cent owned by SABIC, one of the world’s largest chemical companies, while Celanese Corp and an affiliate of Duke Energy Corp each have a 25 per cent stake. China National Chemical Engineering Co (CNCEC), Taiwan’s CTCI, and South Korea’s Hanwha Engineering had also bid for the contract.

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MONEY INDICES

August 2013

UAE

Free Arabic movie platform

ABU DHABI: EGM Worldwide, the official digital partner of Rotana Media Group, unveiled RotanaCinema.com, giving Arabic movie fans worldwide access to the largest free and on demand platform. The destination covers over 100,000 hours of entertainment with full-length movies, television series, theater plays, and original programming. At a time when all Arabic movie platforms are moving to a subscription based or pay-per-view model, RotanaCinema.com remains 100 per cent free. “It is our belief that Arabs from around the world should have the ability to connect not only with Rotana’s vast entertainment library but also with greatest ease to its heritage,” said a news report quoting Andreas Roell, CEO of EGM Worldwide.

KFH to start dollar sukuk fund

KUWAIT CITY: Kuwait Finance House KSC will start a US$100 million sukuk fund as a sluggish run in global bond markets offers a chance to invest at higher yields, says a report quoting the chief executive of its Malaysian asset management unit.

The fund will buy investment-grade sovereign and corporate dollar notes that comply with Islam’s ban on interest from the Middle East, Indonesia, and Malaysia, KFH Asset Management Sdn, CEO Mushthaq Ahmad Ibrahim said. The average yield on Shariah-compliant notes touched 4.17 per cent on June 25, the highest since May 2011, the HSBC/Nasdaq Dubai US Dollar Sukuk Index shows, after Federal Reserve Chairman Ben S Bernanke said that the bank may taper its monthly debt purchases this year and end them in 2014.

BMW on a good run in Middle East ABU DHABI: BMW Group Middle East has announced that its sales rose by 22 per cent during the first half of 2013 as compared to the same period in 2012. The regional unit of the German car maker said it delivered a record 12,657 vehicles to customers across 13 Middle East markets. The UAE remained the highest volume selling market in the Middle East, accounting for 49 per cent of BMW and MINI regional sales in the first half of the year, followed by Saudi Arabia, Kuwait, and Qatar. Markets which showed strong individual sales increases included Kuwait, which grew 47 per cent, Bahrain 44 per cent, Qatar 27 per cent, Dubai 23 per cent, and Jordan 20 per cent, the company said in a statement.

August 2013

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ECONOMY WATCH wORLD

A royal boost to UK biz

Britain’s Prince William and Kate Middleton, Duchess of Cambridge with their baby

LONDON: The birth of Britain’s royal baby, Prince George, has come as a boost to business in the United Kingdom. Big and small enterprises have been trying to cash in on the royal birth in a big way. According to UK’s Centre for Retail Research (CRR), a total of £250 million will be spent by British consumers over the royal birth. It is estimated that about £25 million will be spent by consumers on food for small-scale celebrations, such as garden barbecues this month and in coming months. UK consumers are set to spend an estimated £56 million on commemorative items such as mugs, plates, and tea towels, while the increased expenditure on toys will account for about £24 million. Books on the royal birth are estimated to generate £40 million and video online products such as DVDs and downloads will add another £36 million to retailers’revenues, according to estimates.

Japan bets big on SE Asia

Going bullish on Indonesia

TOKYO: Growth trends in the Southeast Asian region have sprung the hopes of Japanese Prime Minister Shinzo Abe as well as some Japanese firms. Abe’s visit to Malaysia, the Philippines, and Singapore has to be seen as a testament to how the PM now puts members of the Association of Southeast Asian Nations (ASEAN) in the priority list. Japanese companies have also begun to divert their investments from China to Southeast Asia. It has even set a record high this year with mergers and acquisitions, more than five-fold as compared to the previous year’s total spending. According to global investment banking major Advisers Dealogic, Japan has spent $8.2 billion in Southeast Asia this year.

The last time Japanese firms had shelled out extensively on M&A was seven years ago, with $7.6 billion. In 2012, their investment was a meagre $614 million in comparison.

JAKARTA: Indonesia remained the most bullish consumer market, according to research by polling group Nielsen.

Southeast Asian countries figured prominently in the top 10 rankings during the second quarter. Southeast Asia’s biggest country had an index of 124 to top the rankings, well above the world average of 94. Indonesia was followed by the Philippines (121), and India (118). Indonesia’s economy expanded by 6.02 per cent in the first quarter, according to official data, and is likely to grow 6.2-6.6 per cent this year.

The survey said people in Southeast Asia also have strong confidence about their personal finances. Nielsen’s consumer confidence survey measures the consumers’ economic outlook,the job market situation, the status of personal finances, and readiness to spend.

Power woes for Filipinos MANILA: The cost of power is soaring in the Philippines and hurting the industrial sector. Since the cost of power in the Philippines is believed to be the highest in Asia, industry supporters have asked the government to look into the issue immediately.

Philippine Employer-Labour Social Partnership, Inc has written to the National Economic and Development Authority, asking it to look into the power tariff problem that made the Philippines uncompetitive in manufacturing as well as other areas of the economy. Due to its stagnant industrial and agricultural output, the Philippines, the second most industrially developed country in Asia in the 1960s, had been left behind by other Southeast Asian neighbours.

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August 2013

wORLD

Asian leaders push for FTAs NEW DELHI: Leading sentinels of business from a host of Asian countries have decided to promote new free trade agreements (FTAs) and consolidate current market arrangements for creation of a Free Trade Area of the Asia Pacific (FTAAP).

According to a joint statement issued after the 4th Asian Business Summit, economic partnership agreements and FTAs will bind Asian economies together and promote greater regional cooperation for expanded trade in goods, services, and greater cross-border investment flows.

The Summit, organised by the Confederation of Indian Industry, has emerged as an important forum for leading business organisations across Asia to meet and deliberate upon issues that confront them. The joint statement said that the Asian business community also called for deeper regional fiscal and monetary cooperation, and dismantling of non-tariff barriers.

Eurozone on revival path BRUSSELS: The eurozone is finding its way back to growth, generating positive sentiments among global investors. A recent survey shows that the business activity in euro area is back to normal for the first time in the last 18 months.

The Markit Eurozone Composite Purchasing Managers Index (PMI) logged 50.4 points, signalling growth. It is considered a bigger than expected rise after PMI scored 48.7 points last month. Chris Williamson, Chief Economist at Markit, said that the PMI reading for the last one-anda-half years provides encouraging evidence to suggest that the area could pull out of its recession in the third quarter.

According to experts, recession in the eurozone is generally believed to be the main reason behind sluggishness in the global economy.

G20 backs corporate taxation MOSCOW: The recent G20 deliberations in Moscow have emphasised a “fundamental” rethink of the rules on taxing multinational corporations. There were allegations that some companies like Apple and Google were using the loopholes of the system to avoid billions of dollars in taxes. The group of leading economies released an action plan drawn up by the Organisation for Economic Co-operation and Development (OECD) that said the existing system didn’t work, especially when it came to taxing companies that trade online. France’s Finance Minister Pierre Moscovici hoped that the move would bring in a sea change, and will be a major breakthrough in the corporate world. Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy, said the existing rules, which date back to the League of Nations in the 1930s, had led to a “golden era” of tax avoidance.

August 2013

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ECONOMY WATCH INDIA

SEBI gets more teeth

C India invests, London profits

I

ndia has emerged as the second largest investor in London, after the investment fervour generated by the 2012 Olympic Games. Infosys led the charge of inward FDI by a total of 28 Indian companies, and generated 429 additional jobs for the British economy in 2012. India brought in an astounding 2.5 billion-pound additional foreign investment into the UK. Information and communications technology was the key sector in terms of Indian FDI, followed by financial services and retail. The US remains the biggest investor into London, with 1,694 jobs; China is third with 365 jobs.

Record pulse production

A

ccording to reports from the Ministry of Agriculture, India has produced 18.45 million tonnes (MT) of pulses in the year 2012-13. When compared with the 18 MT figure in the third estimates released in May, the record pulses production bode well for the country, which has been relying on imports to meet the shortfall of around 3-4 MT. However, foodgrain output fell by 1.5 per cent to 255.36 MT. Analysts say that the lower output of foodgrain is largely due to poor monsoon in Maharashtra, Karnataka, and Rajasthan. Among oilseeds, groundnut output fell significantly to 4.74 MT from 6.96 MT last year. It’s the same with sesamum, negerseed, and linseed.

apital market regulator Securities and Exchange Board of India (SEBI) has earned more powers, with the government allowing it to pass orders on search and seizure, attachment of properties, arrest and detention of defaulters, and recovery of wrongful gains made in contravention of laws. At the same time, the government has also given a green signal to SEBI to seek information from foreign and Indian regulators even in cases pending for over 15 years.

To tackle the mushrooming Ponzi schemes, being floated as Collective Investment Schemes, rules have been amended.

This enables it to put any money collection activity of above `100 crore mark under the CIS category.

Berkshire Hathaway bids adieu

B

erkshire Hathaway Inc, the investment firm led by US billionaire Warren Buffett, has decided to pull out from its online insurance broking business in India.

Berkshire had forayed into the Indian non-life insurance sector as a corporate agent of Bajaj Allianz General in 2011. Although the reason behind the withdrawal of the online model of selling insurance is still unclear, Bajaj Allianz General Spokesperson said that customers sourced by them would be provided seamless service by an exclusive team. The withdrawal comes at a time when India has unveiled plans to open up the economy as never before to foreign direct investment.

On course for revenue target

U

nion Finance Minister P Chidambaram has reiterated that India will attain its overall budgeted revenue target in the fiscal year to March. In order to raise revenue and plug widening fiscal deficit, the Finance Ministry had recently stepped up enforcement of tax collections. The federal budget document shows that Asia’s third largest economy is expecting to clean up `13,300 crore ($2.25 billion) through direct taxes and `4,700 crore through indirect taxes in the year 2013-14.

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August 2013

INDIA

FDI hike to boost economy: CII

T

he Union cabinet’s approval for a series of foreign direct investment (FDI) in key areas of defence, insurance, and telecom has been well received by policymakers from various parts of the world. The US was the latest to praise the Indian government’s move to increase FDI. Acknowledging that India’s economic reforms are important, a senior official of the Obama administration promised that they would continue to work with the UPA government to enhance American investments in India.

Chandrajit Banerjee, Director-General of the Confederation of Indian Industry (CII), said that the reform is good news for India, and that it is a very bold and significant step. He added that announcements of reforms have come at a very important time, because the country is facing various challenges in terms of growth and deficit. “This would really help in terms of improving our revenue and our investment, and in terms of helping Indian companies grow,” he added.

According to sources, the telecom sector will be the major beneficiary. The government’s decision to fully open up the telecom sector is expected to renew interest among foreign players in the upcoming spectrum auctions.

6.5 per cent growth hard : PM

W

ith the global economy not doing well, the current fiscal growth target of 6.5 per cent may be impossible to achieve, according to Prime Minister Manmohan Singh. Earlier, Union Finance Minister P Chidambaram had said that the country will see a growth of over 6 per cent in the current fiscal, over 7 per cent in 2014-15, and above 8 per cent in the year after. Echoing the government’s stand on this, Singh said, “We had targeted 6.5 per cent growth when the budget was presented. But it looks as if it will be lower than that.” Stating that the government is taking all steps to boost investments, he hoped that the economy will bounce back. “We had good rain and it will help revive demand in rural areas, which would contribute to a much healthier industrial performance in due time,” he said.

Cloud over Jet-Etihad deal

T

Jet Airways Chairman Naresh Goyal and Eithad CEO James Hogan

he proposed `2,058-crore Jet-Etihad deal, which would make the Abu Dhabi carrier a stakeholder in the former, is facing more turbulences after the Securities and Exchange Board of India (SEBI) expressed reservations about the arrangement. In a letter to the Foreign Investment Promotion Board (FIPB), SEBI asked the manner in which the deal was struck. There were reports that the deal will ultimately result in Jet Airways losing its control over the airline, thereby enriching a foreign investor.

As per the deal, Etihad is set to acquire 24 per cent stake in Jet. However, there have been growing apprehensions in India over Etihad getting more powers and voting rights; There are also concerns about certain vague rules that allow a foreign airline to pick up stake in a carrier where there is already NRI investment (technically treated as FDI). The Department of Industries Policy and Promotion has suggested that the issue of ‘effective control’ be sorted out through FIPB and that the matter of FDI limit be referred to an inter-agency group. However, the Commerce and Industry Ministry is believed to be in favour of taking a liberal view on FDI cap in the sector, so that the much-hyped transaction goes through quickly.

August 2013

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ECONOMY WATCH PHOTOSPEAK BURJwORLD KhALIFA

engineering marvel: Located at Downtown, Burj Dubai is the tallest tower

ever built in the world

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MONEY INDICES

August 2013

B

urj Khalifa, a skyscraper in Dubai, United Arab Emirates, is the tallest man-made structure in the world, at 829.8 m (2,722 feet). The building was officially opened on January 4, 2010, and is part of the new 2 km2 (490-acre) development called “Downtown Dubai” at the ‘First Interchange’ along Sheikh Zayed Road, near Dubai’s main business district. Skidmore, Owings and Merrill of Chicago, with Adrian Smith as chief architect, and Bill Baker as chief structural engineer, produced this architecture and engineering marvel. The total project cost is estimated at $1.5 billion.

Unparalleled records Burj Khalifa is the tallest free-standing structure in the world and has the highest number of storeys in the world. It holds many other records as well: highest occupied floor in the world; highest outdoor observation deck in the world; elevator with the longest travel distance in the world; and the tallest service elevator in the world.

Burj Khalifa

Photo: Suranga Weeratunga

BURJ KhALIFA

Burj Khalifa is the Arab world’s tribute to the art and science of modern engineering and design.

Burj Khalifa symbolises the aesthetic unison of many cultures from Arabia and the rest of the world - Mohamed Alabbar, Chairman, Emaar Properties

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bRIEFINGs CORpORATE

Biggest FDI pullout

W

orld’s largest steelmaker ArcelorMittal has scrapped its $12 billion plan for a steel plant in Odisha over inordinate delays and problems in acquiring land and securing iron ore linkages. Steel baron Lakshmi Mittal-headed ArcelorMittal’s proposed plant in Odisha was among the biggest foreign direct investments (FDI) that India had attracted.

Two other plants, the `52,000 crore steel mill of Posco in Odisha, and the `50,000 crore steel mill of ArcelorMittal in Jharkhand, are among the largest FDI plans that India has attracted. Both these projects are also facing inordinate delays.

In 2006, ArcelorMittal had signed a memorandum of understanding (MoU) with the Odisha government to set up a 12-million tonne steel plant in four phases at Keonjhar, entailing an investment of $12 billion. The MoU has been due for renewal since December 2011.

ITC’s `26,000 crore push

Hudson’s Bay to snap up Saks

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igarettes-to-hotel conglomerate ITC will invest `26,000 crore over five years with an aim to turn the group’s businesses into global brands.

ITC Chairman YC Deveshwar said brands had a big role to play in the country’s economy. “Every developed country has its own brand of products for daily use in its domestic market. Such countries also have global brands with which it earns wealth for the country through royalty for intellectual property rights,” adds Deveshwar.

ITC’s investment would be spread across all sectors, but cigarettes will become a small part of its business in the near future. Meanwhile, the company targets to invest `6,000-7,000 crore in FY ’14.

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anadian retail conglomerate Hudson’s Bay Company (HBC) is set to buy upscale American retailer Saks Fifth Avenue, including its iconic Fifth Avenue flagship store in Manhattan, for $16 per share in an all-cash transaction valued at roughly $2.9 billion, including debt.

With this new deal, HBC plans to expand the Saks brand to Canada via full-line stores, outlet stores, and online. The acquisition is expected to close before the end of the year. Saks Inc currently operates 41 Saks Fifth Avenue stores and 67 OFF 5TH outlet stores.

Panasonic eyes $1.65 bn

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apanese electronics major Panasonic has set a revenue target of $1.65 billion in India for this fiscal and will invest `1,500 crore towards expansion in the next three years. With a studied focus, strong plans, and timely expansion, Panasonic is aiming revenue of $3.66 billion by 2015-16. “We have seen very good growth in the last few years and we had revenue growth of $1.3 billion in FY’1213. We expect it (revenue) to be $1.65 billion during this fiscal,” says Manish Sharma, MD, Panasonic India. “The key strategy for fuelling even more aggressive growth in India is: to accelerate new product developments, reform the business structure through local production and consumption, and pursue autonomous management,” adds Sharma.

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LIMELIGhT

Amartya sen Downgrades Modi

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rominent economist and Nobel laureate Amartya Sen recently hit out at Gujarat Chief Minister Narendra Modi. Sen said that the BJP leader should not become India’s Prime Minister since he does not have secular credentials. The prominent economist also criticised Modi’s model of governance, saying he did not approve of it.

“As an Indian citizen, I don’t want Modi as my PM. He has not done enough to make minorities feel safe.

He could have first of all been more secular, and he could have made the minority community feel more secure. We Indians don’t want a situation where the minority feel insecure and could legitimately think that there was an organised violence against them in 2002,” said Sen. According to Sen, physical infrastructure in Gujarat may be good but Modi has not done enough for minorities or for the majority. “The Gujarat model needs to do much more on the health and education sectors and bring equity. Modi could have also taken both of the facts that Gujarat’s record in education and healthcare is pretty bad and he has to concentrate on that... as much as he is concentrating quietly as it has happened on physical infrastructure.”

Sen’s criticism comes in the wake of the BJP’s recent anointment of Modi as the chairman of its election campaign committee.

KIRAN KUMAR Grandhi is GMR Infra’s MD

T

he board of GMR Infrastructure has appointed Kiran Kumar Grandhi, the youngest son of GMR Group Chairman G M Rao, as its Managing Director. Grandhi will take over with immediate effect from B V N Rao. The decision to appoint Grandhi as the MD of the `10,000-crore infrastructure developer follows a move by GMR Holdings Board to bring in Grandhi as the Corporate Chairman of the board, which gives him control over corporate strategies and finance.

B V N Rao, a close associate of G M Rao, will be made Business Chairman (Urban Infrastructure and Highways). He will be responsible for highways, EPC division, special economic zone (SEZ), and GMR Varalakshmi Foundation, apart from corporate, legal, and procurement affairs. The highways and SEZ business contribute around 5 per cent to the Group’s revenues.

The move to bring in Grandhi, 38, as the Corporate Chairman of GMR Holdings Board and MD of GMR Infrastructure comes at a time when the company is grappling with high leverage of 3.7 times, under a debt of close to `40,000 crore.

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AsIAN FINMIN TALKS

Slowdown is no body blow: Chinese FM Chinese Finance Minister Lou Jiwei agrees that his nation’s economy will fall short of its growth targets, but denies that the world’s second largest economy is entering a crisis period

hina’s Finance Minister Lou Jiwei says that his country expects to post a growth of 7 per cent this year, giving credence to reports that it cannot achieve the official target of 7.5 per cent. His comments come at a time when the growth rate in the second largest economy of the world is showing signs of slowdown, indicating that its leaders are prepared to tolerate this predicament.

Lou, who became China’s Finance Minister in March this year, was recently quoted in the international media as saying that 7 per cent growth should not be considered as the bottom line, and that while the economy was slowing, that wouldn’t lead to the Lou Jiwei prospect of a hard Chinese Finance Minister landing.

Lou’s remarks come as worries mount over China’s growth prospects following a slew of weak data on manufacturing and exports. China’s official 7.5 per cent growth target, which would be its slowest in 23 years, was announced at a Communist Party parliamentary meeting in March. Experts think the growth rate is already below the government’s target, and they don’t see a bright future for the economy in 2014.

China’s economic growth was at 7.8 per cent in

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2012, racking up its worst performance in 13 years.

Despite optimism that this year would be better, the first quarter growth slowed to 7.7 per cent. Leaders are stating that they want to wean the country off reliance on exports and investments as growth drivers for the economy and make domestic demand the primary engine in a bid to help consumers enjoy the fruits of the country’s decades of strong expansion.

Chinese Prime Minister Li Keqiang had earlier said that the nation should keep restructuring the economy as long as growth and employment stay above unspecified limits, even as a second quarter slowdown in expansion increased risks that China will miss its 7.5 per cent goal for the year. However, Lou sees no cause for worry. He says that the ‘structural reform is paying off’ and that China’s efforts to fix its broken financial services industry are making progress. “From a policy perspective, China won’t roll out large-scale fiscal stimulus policy measures this year. Instead, it will promote economic growth and job creation and fine-tune policies, while keeping the fiscal deficit size unchanged, adding to signals that the government will tolerate a slowdown in the economy,” he says.

China GDP from 2008 to 2013 20 GDP Growth Rate

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BY Sarath vasudev

15 10

9.64% 9.21%

10.45%

9.30%

7.80% 8.04%

5 0

2008

2009

2010

2011

2012

2013*

Source:IMF

pOLITICs

End of Sheila’s

winning streak?

Delhi is bound for assembly elections this November in what seems like a threecornered fight that could bring the decade-long Congress rule in the national capital territory region to a definitive end just before the 2014 General Elections. This time, the election fever is sure to reach a new crescendo with Gujarat’s maverick Narendra Modi batting for the Bharatiya Janata Party and debutant Arvind Kejriwal’s Aam Aadmi Party making an earnest attempt to strike a chord with the much-hassled common man. Unlike the past, Delhi’s poll issues have gone much beyond anti-incumbency, scandals, and corruptions this time, touching upon the embers of the 1984 anti-Sikh riots, hollowness of pseudo secularism, and dangers of a visionless growth plan

By Vishnu Rageev R

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pOLITICs

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en Pakistanis came on a boat and took away our dignity because you, Mr Politician, are incompetent, illiterate, selfish, and corrupt,” screamed a poster of demonstrators at India Gate on a day of protests shortly after the Mumbai terror attacks on November 26, 2008. Despite the public castigation of the Congress-led UPA, Delhi voted Sheila Dikshit back to power, giving her a third consecutive term in office.

Today, Dikshit’s style of governance has come under a cloud, with a host of corruption scandals haunting the Congress, and the emergence of social crusader Arvind Kejriwal’s Aam Aadmi Party (AAP), and the regrouping of the Bharatiya Janata Party (BJP)-Shiromani Akali Dal (Badal) (SAD) (B) combine only give the voters a wider choice. For now, it seems quite tough for Dikshit to make a historical comeback in 2013.

Real issues Issues like the recent power tariff hike, unavailability of water in many pockets of Delhi, poor law and order situation, flaws in the public distribution system, alarming poverty rates, non-functional schemes, and problems with the slum redevelopment legislation and the Mahatma Gandhi National Rural Employment Guarantee Act are building the election tempo.

Dikshit’s style of governance has come under a cloud, with a host of corruption scandals. the emergence of social crusader Arvind Kejriwal’s Aam Aadmi Party (AAP), and the regrouping of the Bharatiya Janata Party (BJP)Shiromani Akali Dal (Badal) (SAD) (B) combine only give the voters a wider choice “People opt for the Congress simply because they don’t have a political alternative in India,” thinks Ramachandra Guha, senior political analyst and Columnist. “Delhi’s educated electorate’s confidence in Dikshit was exhibited when they voted her back in 2008, a time when the nation had many burning issues to attend to. Dikshit was given a third term with great hopes, but she failed to deliver and went on to cite some bizarre reasons for the same, things that have never been heard of from a Chief Minister before. So, this time, it would be difficult for her.”

Out of the total 69 seats in

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The Indian Parliament the Delhi Assembly, the Congress won 42, while BJP bagged 23 seats in 2008. This year, the poll demographics may see drastic changes with the emergence of Arvind Kejriwal’s AAP. Interestingly, the bureaucrat-turned-social activist-turned-politician will take on Dikshit herself from the New Delhi constituency.

“There is a wave against the Delhi Congress and its Chief Minister which we are capitalising,” Manish Sisodia, senior leader, AAP, told Money Indices over phone from New Delhi. “AAP is not a party which was born just overnight. The development of India has suffered due to the Congress and its corrupt fundamentals. The BJP has never been an alternative to the Congress because of which people never had any option but to choose corrupt Netas. The BJP was always supporting the Congress by fielding poor candidates in Delhi. Both of them have joined forces in many fields as well. The media may be judgmental in projecting us as a major political force. But yes, we, AAP, would make a major impact in the upcoming Delhi polls,” says Sisodia.

The Food Security Bill, which will be unveiled this September, is aimed at regaining the Congress’ face value.

However, it may not be enough to lure the middle class, which has been finding it difficult to meet the daily living cost escalations. “It would be a herculean task for the Congress to make the Food Security Bill deliver goods to the needy,” says Vishal Duggal, a senior

Vijay Goel

DELhI

In the 2008 Delhi polls, 91 candidates had criminal cases pending against them, while 27 went on to win the elections to become lawmakers. The AAP is forcing political aspirants to reveal their antecedents in their applications, while a screening committee will vet the candidates before it finalises names gress’ vision of progress among everyone. I believe the Congress will make an easy comeback this time too under the leadership of Sheilaji.”

Lamba refutes the AAP and the BJP’s corruption allegations against the Delhi Congress. “These are baseless allegations. They are nothing but political stunts. People of Delhi understand it better and would show them the door this November. Wait till then.” journalist. “Logistics and availability of warehouses are still major issues in India. We have seen foodgrains accumulating in Food Corporation of India’s godowns across the country. Many times, those are being drained at sea for a balance in the financial equation. The Food Security Bill may be historical for Rahul Gandhi. But I just hope it doesn’t turn out to be another historical blunder.”

Other than this, there is a host of daily issues that make the going tough for the Congress this time. Recently, the Delhi government had introduced major hikes in the power tariff, antagonising the middle class all over again. The government’s misery doesn’t end there, as the price of natural gas is set for a revision in April (from $4.2 MMBtu to $8.4MMBtu). This would lead to more expenditure on piped-gas and CNG in Delhi. The fact that a major portion of Delhi’s economy runs on CNG only makes it a perplexing situation.

But then, politics is a hot pot of contentions and contradictions, and it is difficult to judge the voters’ mindset that easily until the ballot boxes are opened. The Congress still believes that Delhi is with Sheila Dikshit. On her part, the Delhi CM, too, is quite confident of herself.

But she stumbled a bit recently while asking the media to name one political party which is corruption-free. Hopefully, Congress loyalists will pardon her for that, as they seem to be busy focusing on her successful rule of Delhi so far.

“Delhiites would never forget the contributions of the Congress and Sheilaji towards the development of Delhi,” says Alka Lamba, Secretary, All India Congress Committee. “Few political rivals are criticising Sheilaji for no reason. Delhi has progressed immensely over the last decade. See the infrastructure that Delhi has today, it is at par with global cities. Delhi Metro, for example, is India’s pride. Sheilaji has always focussed on working for the elevation of the common lots. Sonia Gandhiji’s dream (the Food Security Bill) will further enhance the Con-

Batting for honesty Unlike other political outfits, Kejriwal is fielding an array of candidates known for their honesty and good deeds.

AAP is taking a more grassroots approach to the problem by weeding out the bad ones much before they stand a chance to become candidates. Anyone can hope to be an election candidate of the AAP if he/she is endorsed by 100 potential voters from the constituency they hope to represent.

“Issues raised by Kejriwal continue to attract the masses, which has been questioning Dikshit’s inflated developmental arguments,” informs Vishal Duggal. “So, for obvious reasons, we have a three-way battle this time. The BJP will be the main achiever as Kejriwal’s gains would be the Congress’ loss. The Congress is not

Arvind Kejriwal

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pOLITICs

considering Kejriwal as a major challenge, which only indicates its miscalculation. The elevation of Modi will have some impact in the Delhi polls, but Kejriwal’s campaign strategy is bringing more damage to the Congress.”

In the 2008 Delhi polls, 91 candidates had criminal cases pending against them, while 27 went on to win the elections to become lawmakers. The AAP is forcing political aspirants to reveal their antecedents in their applications, while a screening committee will vet the candidates before it finalises names. The AAP has already declared over 30 candidates, while screening is being carried out on other candidates.

But even the AAP has not been able to insulate itself from the vulnerabilities of an election. A group of AAP members, disgruntled with ticket distribution and lack of transparency, formed a splinter group called “BAAP”. BAAP President Rajnish has, however, clarified that it was not a rebel party. “Several members of the AAP were unhappy with certain procedures within the party and realised its limitations. So, we formed this parivar, which is a social front.”

Modi’s unacceptability Lack of helmsmanship in Delhi’s BJP unit makes the situation bleak for the saffron party even while the Congress is struggling to regain its credibility among the public. At a time when even a senior political leader like Lalu Prasad Yadav has visibly understood

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the Modi-effect, leaders within the party are not happy with Modi’s rise in the party.

“BJP Delhi Chief Vijay Goel is trying hard to convince partymen who feel that the party has been disloyal to LK Advani over the Modi issue,” says a senior BJP leader from West Delhi, on condition of anonymity. “Modi’s elevation with the sidelining of Advanji was unwarranted. Although things have settled now, some differences in opinion still persist. I don’t think Modi’s elevation has anything to do with the upcoming Delhi polls, though we may get to see some turnaround in the 2014 General Elections.”

While the whisper campaigns against Modi is still continuing in the Delhi BJP unit, there are some minority workers who chose to part ways by defecting to the Congress.

At the same time, the BJP has been trying hard to downplay the recent resignation of its Delhi unit VicePresident Aamiz Raza Hussain.

Other than the internal issues, the BJP is faced with shortage of influential leaders. But senior party leader Shatrughan Sinha rubbishes all such observations about the party. “Nobody within the BJP is divided on its decision to make Modi the party’s poll chief.

Unlike the Congress, the BJP is a democratic party that upholds the democratic process while elevating any individual in the party. There is neither dissimilarity nor unlikeness amongst party leaders and cadres over the party’s decision on Modiji. The Congress is already shaken with the BJP’s move. Modi mania would definitely work in the Delhi polls as well. People will vote out Sheila Dikshit this time. We are working towards a Congress Mukt Bharat. And Modiji would lead us.”

While the whisper campaigns against Modi is still continuing in the Delhi BJP unit, there are some minority workers who chose to part ways by defecting to the Congress The bogey of 1984 is back Another big threat the Congress is facing is from the Sikh community. In 2009, the Central Bureau of Investigation (CBI) granted a clean chit to Congress leader Jagdish Tytler in a case connected to the 1984 antiSikh riots. Similarly, Congress leader Sajjan Kumar was also acquitted in the same case. But the bogey of 1984 riots is back to haunt the Congress, and a lot will depend on who the Sikh community will vote for.

Earlier this year, SAD (B) swept the Delhi Sikh Gurdwara Management Committee (DSGMC) elections, clinching 37 of 46 seats. SAD took the control of the Gurdwara management from the Congress-backed Paramjit Singh Sarna of the Delhi Akali Dal by putting an end to his decade-old rule.

DELhI

Sikhs protesting against the acquittance of Congress leaders Jagdish Tytler and Sajjan Kumar in 1984 anti-Sikh riots “DSGMC elections were a rehearsal to the upcoming Vidhan Sabha Polls in November,” adds Manjeet Singh, Chief, SAD (B), Delhi. “The Congress never stood with the Sikhs. Delhi’s over 12 lakh Sikhs and eight lakh voters understand the fact that it was the Congress that shielded the real culprits behind the 1984 anti-Sikh riots. The developmental issues being highlighted by the Congress are over-inflated. Delhiites want a change in governance.

They don’t want somebody like Dikshit who blames the Central government for every crisis even when they (the Congress) are also at the Centre.”

As for the limitations in certain areas of governance, Dikshit has expressed her dissatisfaction over her lack of power as far as policing and urban development is concerned. In fact, the Delhi Police reports to the Central government, unlike their counterparts from other states.

Dikshit has been citing this issue of authority over Delhi as the main reason for most law and order problems that the national capital has been witnessing of late.

Dikshit, Goel, or Kejriwal?

Out of the 20 people, including a few political analysts, we had approached for comments, 11 suggested that the BJP stands more chances of emerging as the election winner, while six asserted that the Congress will come back. Three persons pointed out that Delhiites would experiment with someone outside the political realm, like Kejriwal and his AAP. Undoubtedly, all agreed that India’s national capital would witness a three-cornered fight for the first time in its history.

“Chances are more for the BJP than the Congress this time,” says T R Ramachandran, a New Delhi-based political analyst. “There is a wave against the Congress across the country and Delhi is not behind. Governance-wise, Delhi went down historically during the last four years.

Coupled with that, there are few verdicts which are really working against the Congress in Delhi. Tell me who is happy in Delhi? In elections, what matters is numbers. If they think the Food Security Bill will bring them power, one can only sympathise them.”

“The Congress has never been out of problems, but Dikshit is the most distinguishing face in Delhi circles,” says a senior political commentator from Delhi, requesting anonymity. “During the last election also, the media had ruled out another chance for Dikshit. But the opposite happened.

Dikshit continues to remain in the minds of Delhi’s public as the best CM it ever had. Her proximity with the Gandhi family is also known to the public, which is another reason for voters to give her another term.”

“It is true that people are fed up of games played by both the BJP and the Congress,” informs Sanjay Kumar, another senior political analyst from Delhi. “Everyone would probably be thinking that Kejriwal would not win. his move to take on Dikshit is very smart as he is not projecting himself as a power-hungry politician. One has to finally see what would happen at the end of it. It is politics, so anything can happen. I am not writing him off.”

Let us wait for the November rain to unwind the questions. But whatever the answer is, this show will go on!

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EXpERT TALk

You can’t innovate alone In a candid interview with Money Indices, eminent innovation expert and Founder of the FORTH Innovation Methodology Gijs van Wulfen talks about five success factors that go into the making of innovative concepts

By Dipin Damodharan

Do you think there is a need for continuous innovation in today’s business culture?

Customers change. Competitors change. Technology changes. If you don’t do anything new, competitive products and services will catch up and overtake your products and services. A study by Arthur D Little has shown that the life cycle of products has shrunk by an average of 400 per cent over the last fifty years (AD Little as cited in CF von Braun, The Innovation War

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(Upper Saddle River. NJ: Prentice Hall PTR, 1997)).

Innovation, therefore, is essential.

Could you tell us about your recently published book, The Innovation Expedition, A Visual Toolkit to Start Innovation?

My new book, The Innovation Expedition, is written to inspire you with practical tools on HOW to start innovation effectively. It gives you practical and visual

GIJs VAN WULFEN

My new book, The Innovation Expedition, is written to inspire you with practical tools on HOW to start innovation effectively.

It gives you practical and visual tools

tools. The remarkable stories of how great explorers overcame unexpected setbacks will inspire you. (It’s about) How Columbus discovered America, how Hillary reached the summit of Everest, and how Neil Armstrong got to be the first man on the Moon. With 240 pages full of exploration stories, quotes, charts, cases, checklists, formats, and innovation maps, The Innovation Expedition is an inspiring visual toolkit to start innovation successfully. It’s written for innovators: managers, consultants, entrepreneurs, and organisation leaders. It contains the FORTH Innovation methodology, which is used in Europe by a lot of companies successfully. You can download the map and 20 checklists of the FORTH expedition at forth-innovation.com. I have just certified the first FORTH Innovation facilitator in India. Akash Chander, Founder of the Orange Academy, completed last week the intensive training with great success. I am looking forward to my visit to India in November 2013 to lecture about my methodology.

a lot of fathers and mothers, only then will it survive internally.

2 Solve a relevant customer friction. Effective innovation provides simple solutions for relevant problems or dreams of the target group.

3 Use the voice of the customer. I learnt that there are huge differences in how people from within the company perceive new ideas and how their potential customers perceive those same ideas. Use the enthusiastic voice of the customer also to convince others that it’s a wonderful concept.

4 Bring back new business, not only ideas. The reason you went on an innovation journey often stems from a need to grow the business again. So don’t bring them ideas, bring them business, and growth potential! That’s why I am a big fan of a conservative way to present your innovative idea: the mini new business case. This is a clear, strategic, commercial, professional, and financial plan for new initiatives.

What is important in terms of ideating innovative 5 Show them how it’s feasible. Be sure to think outside concepts? the box on one hand and to present your There are at least five success Innovation is all about getting idea inside the box on the other. I see factors for ideating innovative in practice most CEOs and Innovation new ideas for simple solutions directors choose the ideas they can concepts: 1 Ideate with your relate to and they can imagine to be to solve relevant customer management and not for produced (with some investments). So, problems or needs them. A new concept needs show them how it’s feasible.

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EXpERT TALk

Which, according to you, were the most innovative products last year?

What’s your advice to budding innovators?

The wise lesson I learned as manager is that in In Gijs’ 2006 practical an organisation, you I do not consider innovation bestseller in cannot innovate alone. myself a specialist Dutch,Creating New Products, You need an awful lot of assessing the most he presents the FORTH colleagues and bosses innovative products. innovation method. FORTH to share your vision In fact, I am quite is an effective and structured before a big change conservative myself. method for ideating innovative can truly take place.

And as innovation products and services. It is an Therefore, you have to facilitator I should. inspiring innovation method give them a chance to Why? Because I must in five steps to create new discover for themselves, be able to relate to products and services within 14 what different paths the most conservative weeks after the project kick-off. are possible, what people in a company.

See the below picture can be developed, and If I succeed to let them what is realistic. If you run faster, the whole want to be an effective company innovates innovator, look for the faster. right moment to involve top management. And let How do you define innovation? them participate in your innovation expedition.

My definition of innovation is a practical one.

Give all the credits to your innovation team. They Innovation is all about getting new ideas for simple will honour you for facilitating that they can be solutions to solve relevant customer problems or innovative! Wishing all budding innovators lots of needs. success on their innovation journeys.

Forth Innovation

Gijs van Wulfen is the Founder of Forth Innovation Methodology. He was chosen by LinkedIn as one of their 150 thought leaders, and listed on the International Top 40 Innovation Bloggers of 2012. He is the man on a mission to spread, train, and facilitate the FORTH innovation method to ideate new products and services. Creating New Products, the 2006 bestseller, has created fresh waves in the innovation circles of Holland

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VOICEs

There are 116 legislations pending in Parliament. The passage of at least some of the crucial bills will enable India to get back to an 8 to 9 per cent growth trajectory

The Congress has done in the last few days what it shied away from doing in the last nine years - to work overtime on a decision over Telangana Narendra Modi, Chief Minister, Gujarat

Deepak S Parekh, Chairman, HDFC

In no dictionary is immigration defined as including temporary relocation of knowledge workers ... Yet the immigration bill has a clause that seems to erect nontariff barriers on temporary relocation of knowledge workers P Chidambaram, Finance Minister, India

It is a fantastic experience working with him (Ratan Tata), although I have not gone to bed with him

I just want to be master of my own time. It is ironic that someone in the watch business should not be in control of his own time Johann Rupert, South African Billionaire, Chairman of Richemont, Swissbased luxury goods company

Tony Fernandes, Group Chief Executive Officer, AirAsia

August 2013

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Secret of creativity:

INsights

Honing an experimental mindset

By Pavan Soni

Automation and technology proliferation do not necessarily lead to increased intelligence, let alone creativity

O

ne of the most vital, yet underutilised faculties of humans is creativity. Creativity, as I understand it, is the ability to generate useful ideas. The widespread automation of our work lives, and systematisation of our personal lives have cornered creativity to a very large extent. We have survived for a large part of the history, and have proven to be one of the most resilient and intelligent species of the nature. There is little doubt that the nature that once tamed us, is now under a real threat of being tamed, thanks to our imagination and persistence. Whether it be the genesis of the Renaissance Era, or the Industrial Revolution, or more recently the Space Age, what has consistently proven to espouse creativity is desperation. In extreme case, it might be the sheer survival instinct, and in other instances, it is the quest of surprising oneself and the enemies on what all could be achieved with minimal resources. As the proverb goes, “Necessity is the mother of invention.” By corollary, lack of necessity would lead to lack of invention, and hence application of creativity.

By the logical extension, if we are increasingly leading a life of comfort, and away from the elements of nature, the avenues for exercising creativity are obviously fewer. And as we know, what we don’t use, we lose. So, are we really running into a real and near threat of being less creative?

Automation and technology proliferation do not necessarily lead to increased intelligence, let alone creativity. Let me explain. For most of the last century and one before that, automation

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was mainly intended to reduce physical labour.

From the classic invention of the steam- engine to the more recent advent of electric cars, these inventions have transformed the meaning of productivity. The advent of computer and then the Internet did something more profound.

It not only lowered human labour, but also connected humans more efficiently than ever before. This apparent seamlessness across timezones, and demographics, led to the age we are in. However, the inventions which were meant as substitutes of human labour are substituting human intelligence. A simple example is the spell-check on a word document which allows me to type wrong spellings, and never bother to learn the correct ones. Google adds to the lethargy by allowing me to key-in the wrong text and then prompting me with ‘did you mean….’. For some, this might be an excellent piece of technology, but my concern remains that we are becoming dumb, courtesy such innovations. Little doubt that the doomsday possibility of machines taking us over might not be so remote, as machines are growing intelligent and we are not! The relegation of tasks to smarter machines are making us free our memories and efforts from apparently trivial tasks, and making us think less smartly. Of course, there are people who design machines and who have to be a few notches smarter, but for most part of the human kind, the intelligence is just about using the machine, and not knowing how it does it. This only highlights the trend that machines are growing intelligent at our cost, and hence we need to devise ways of remaining resilient and intelligent.

One of the consistent traits of creative individuals and innovative firms is their ability to perform experiments. Remember the excitement you used to share with your friends while heading

for the physics or chemistry lab during the school days.

The experience used to be unparalleled. It was never a failure at the end of an experiment, as the intent always remained to ‘learn’ something new. Fast forward to our lives today. Do we experiment sufficiently?

Certainly not, as compared to our childhood. Is it that we know it all? Again certainly not, as the knowledge base keeps on expanding? So why have we stopped experimenting? One plausible explanation could be that we are complacent of what we know and what we do. Another is that we have grown wary of

failures. None of these are good for learning or self development. If our lives don’t throw survival issues on to us, let’s push ourselves into situations that demand a creative response. One such way is to hone an experimental mindset. By an experimental mindset, I mean an ability to form a priori hypothesis on what works and what doesn’t, and under certain conditions, and then try it out in a quick and easy attempt. The learning could be vital, and the losses manageable.

Here is how I feel that an experimental mindset could be honed in a professional setup.

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PAVAN SONI

are revised without changing the direction significantly, year on year. Imagine if our yearly goals and objective look something like this. 70 Often people cite that firms like Google and 3M per cent of your objectives are ‘volume’, 20 per have allocations of exclusive time-out for their cent are ‘value’, and the remaining 10 per cent employees to work on hobby projects. But what’s are ‘experimental’. The volume objectives are less understood is that even if such allocations the ones you are good at doing, or have done are made, the actual utilisation of such time-outs well in past, but this time, they are to be done is subjected to one’s initiatives. Which means faster, cheaper, and better. The value objectives that if one were to take time out to experiment, are adding to those volume objectives something one needn’t be an employee of Google or a that’s not being well articulated yet, in terms 3M. It’s a personal discipline after all. These of ‘more’ value add for your firm or the endexperiments have to be so small enough that you customers. The experimental objectives are the don’t bet the firm or your ones which are entirely job, but significant enough unrelated to your job, that you get an insight but still you think as a result. Some of these that these would be experiments could be like vital three years from Management by objectives is learning a new presentation now, and you chose to becoming the cardinal aptechnique, trying out a new invest your time and method of report writing, proach of managing firms and efforts in converting connecting with new people those into reality. In individuals alike in a profesonline, reading new blogs or terms of evaluation, sional setup. Sometimes, the magazines away from those there is a heavy defined by your job. This penalty for not meeting way our goals and objectives might call for investing in volume objectives, are defined is a reflection of some money, but be happy but this is offset by that it’s an investment for a heavy reward for what we have been good at your future, and not present, working well on value in past, and not what we are which is surely more valuable. and experimental The inherent understanding objectives. With this capable of doing in future has to be that one is always kind of incentives capable of doing more than in place, the human what’s mandated by a job! resources teams in Choice remains where we organisations would wish to challenge the status be well-placed to quo or live with it. In any case, you will die one encourage an experimental mindset in the day, then why die mediocre! employees.

Apart from these practices, it’s always a Set specific goals for conducting good sign to pick up new hobbies, new places to experiments visit, and new people to meet. Conferences and meetings should not only be to close deals, but Management by objectives is becoming the more importantly to ‘open minds’. Let me iterate cardinal approach of managing firms and that you are indeed capable of doing more than individuals alike in a professional setup. what you are currently doing. Continuing with Sometimes, the way our goals and objectives an experimental attitude would keep us young by are defined is a reflection of what we have been heart, and clever by brain. We still have an onus good at in past, and not what we are capable of to support our species with a brighter future, for doing in future. It’s like driving a car looking our ancestors did that to us. at the rear-view mirror. Mostly, the milestones

Take time and money out for trying out new things

Pavan Soni is an Innovation Evangelist by profession and a teacher by passion. Currently pursuing his doctoral studies at IIM Bangalore, he also offers consultation to leading organisations, helping them promote a culture of innovation.

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US wINDOw DETROIT

Motown

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DETROIT

Detroit

breaks down Detroit’s historical Chapter 9 bankruptcy filing has raised apprehensions about Barack Obama-led US government’s ability to contain the growing financial mess

By Vishnu Rageev R

O

n July 18, the US Motown Detroit surprised the whole world by filing the largest municipal bankruptcy in the US history with $18 billion debt and setting the stage for a costly court battle with creditors. with this, Detroit has opened new chapter in what is being perceived as the beginning of a long struggle to revive the city.

Financial think tanks were quick to connect Detroit’s financial quagmire with the fall of Lehman Brothers, believed to be the trigger behind the US economic recession of 2008. And the big question doing the rounds was: Is there another recession in the offing? Let us not answer it yet as it is a hypothetical question.

However, the Detroit predicament is a human error. If the collapse of Lehman Brothers in September 2008 was a combination of fraud, mismanagement, and unsound investment practices, Detroit’s current vulnerability is the result of continuous bad decisions taken by the US Federal government in collusion with powerful trade unions.

Unlike Lehman, the effects of Detroit’s fall will continue to haunt the US financial sector for a long time.

Although US President Barack Obama’s focus on the economy has brought about

a small degree of success, it is widely articulated that Washington has often kept its eye off the ball on some of the country’s most critical issues.

If a private company fails, the stakeholders, investors, and staffs, too stand affected. On the other hand, when a city like Detroit goes bankrupt, it means bad time for all Americans, says Mehul Kamdar, an NRI businessman located in the US. “American economy has not been doing well for some time now. Detroit is not the last city bankruptcy that the US will see, although it is the largest reported so far. There are several other cities that are teetering on the brink. Chicago, the second largest US city, has many similarities with Detroit.

So, expect the most unexpected news in the coming months.”

Dave Bing, Mayor of Detroit, adds: “We may be one of the first. We are the largest, but we absolutely will not be the last. And so we have got to set a benchmark in terms of how to fix our cities and come back from this tragedy.”

Although Detroit is not looking for federal bailout to clear its $18 billion debt, it must be noted that the same government has infused (taxpayer money) over $80 billion to rescue General Motors and Chrysler from the brink during the global financial crisis in 2008-09.

Risen to fall Detroit’s affluence grew along with the emergence of the US auto industry during the post-World War I era.

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US wINDOw

to nearly $15 billion in unfunded liabilities for the city.

Government officials are presently struggling to carry on the municipal services within the 142-square mile city. In addition, Detroit has an unemployment rate of roughly 18 per cent, one of the country’s highest violent-crime rates, and about 80,000 blighted or abandoned buildings.

According to Kamdar, Detriot has a history of corruption that has led to its financial problems, including Mayor Kwame Kilpatrick’s resignation in a 2008 sex-and-perjury scandal that cost the city almost $9 million from a lawsuit and legal fees.

Pensioners’ nightmare

The trend continued with the city’s population peaking as a metropolis with over 1.8 million in the early 1950s, making it the fifth largest US city.

Further, Detroit entrepreneurs started looking beyond city limits to develop plants and offices to feed their expansion plans. Also, there was a steep rise in the migration of blacks into the city, which was followed by an exodus of whites for city suburbs. Later in 1967, a deadly racial riot brought down the city’s growth momentum considerably.

Detroit has lost about a quarter-million residents during the last decade alone. The collapse of the US auto industry during the 2009 recession further pulled down the city.

Its current population of roughly 700,000 is about 83 per cent black. The city’s current efforts to provide and maintain such basic services as law enforcement and trash removal were further complicated by the costs of paying union contracts and benefits, which have Kevyn D Orr contributed

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Detroit’s pensioners are in a big dilemma. Pension shortfall accounts for about $3.5 billion of the $18 billion in debts.

Union contracts, primarily generous pension packages, granted by Democrat mayors in more prosperous times have now come back to haunt the city’s halls, where 9,500 people still work. The city has 20,000 pensioners who may take serious cuts, according to media estimates.

Kevyn D Orr, the city’s emergency manager, has called for “significant cuts” to the pensions of current retirees. His plan is being fought vigorously by unions that point out that pensions are protected

by Michigan’s Constitution, which calls them a contractual obligation that “shall not be diminished or impaired.”

Thousands of retired police, firefighters, and city workers have been given assurances that their incomes will not be affected for the next six months, but after that “there are going to be some adjustments”, adds Orr. I don’t think it’ll ever come back to the city it once was, says Kamdar. “The bankruptcy is not in itself a solution. It will presumably clear the debt. Something will have to happen for it not to repeat this pattern five or 10 years from now. Hopefully, this will make life livable in this city. I think it’s doable. But I’m not sure there’s the will to do it.”

Taxes hurt Federal taxes are the same across the

DETROIT

country, while state, county, and city taxes are often resorted to for high tax locations like Michigan State and cities like Detroit. The reason cited is that the pensions and perks demanded by unions have to be paid. Politicians often agree to these demands in exchange for votes. As a result, the entire system becomes inefficient and companies relocate from high tax locations.

Detroit has lost car plants to states like South Carolina, Indiana, Tennessee, Alabama, and the like, when US companies moved operations out. Even foreign companies which built car plants in the US chose the low tax Southern states instead of moving to Detroit.

One of the biggest beneficiaries of this relocation has been the state of Texas, which has zero state income tax. The city has attracted so many companies that it now counts for 50 per cent of all the US exports.

We may be one of the first. We are the largest, but we absolutely will not be the last. And so we have got to set a benchmark in terms of how to fix our cities and come back from this tragedy

“I do not think that Obama or anyone else could have done anything to save Detroit,” adds Kamdar. “People get the government they deserve.

Detroit’s residents voted in politicians and supported the same continuously failing policies for 60 years. Had the US been doing well, it would have been able to pump in money to keep Detroit afloat for some more time with a stimulus of some sort.”

Detroit is an extreme case of problems that have afflicted every major old industrial city in the US, adds Thomas Sugrue, author of The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit and a history professor at the University of Pennsylvania.

“It’s been 60-plus years of steady disinvestment, depopulation, and an intensive hostility between the city, the suburbs, and the rest of the state.

We all live on hopes. Things may look up, let us hope so,” says Sugrue.

Dave Bing, Mayor of Detroit August 2013

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SOUTH INDIAN BANK

Investing in a

bankable friend South Indian Bank (SIB) started as a community development bank in the freedom movement days and blossomed into one of the country’s finest banking organisations. While it is aiming to cross the `1 lakh crore business mark by the 2014-15 fiscal, Money Indices weighs its financial credentials, balance sheet statistics, risk portfolios, NPAs, expansion module, and growth targets to present a balanced equation

By Vishnu Rageev R

August 2013

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S

outh Indian Bank (SIB) is not just another south Indian bank. It has acquired a national face, an accomplishment that even the 44 originators of SIB, who contributed `500 each for garnering a seed capital of `22,000 to shape the entity in 1929, would never have dreamt of.

On July 15, 2013, when an MI team visited SIB’s plush headquarters in Thrissur city of Kerala, SIB Managing Director and CEO Dr V A Joseph, 58, was going through a news clipping that was sent to him by his crew. On that Monday, the top headlines included the RBI’s action penalising 22 private and public sector banks for

violation of KYC/anti-money laundering norms. Of course, SIB was not among the violators.

The SIB Chief had a guarded reaction to the breaking news. Some of these are India’s wellreputed financial bodies, he said, adding that they cannot be blamed for miscreants within the system.

“Boundaryless expansion could bring bad reputation such as this to banks. That doesn’t mean that SIB has not expanded or is not pursuing further expansion.

What matters in banking is: ‘sustainable expansion with credible resources’; that is our modus operandi and we are successful in it.”

SIB’s 45 per cent shares are held by FIIs, three per cent shares are with NRIs, and the remaining with over two lakh shareholders.

We never dream of becoming a big bank overnight. We want to grow slowly and steadily by sustaining the growth momentum. Even in the normal course, if we keep up the present momentum, we will easily touch the `2 lakh crore business mark by 2020

V A Joseph

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SOUTH INDIAN BANK

Sustainable expansion

Impactful years

SIB plans at least 1,000 ATMs and 800 operational branches across India, endeavouring to cross the `1 lakh crore business mark by the end of the 2014-15 fiscal. Is this a model of sustainable expansion? “Yes, of course.

We are very much comfortable and are growing as per our targeted projections. We never dream of becoming a big bank overnight. We want to grow slowly and steadily by sustaining the growth momentum. Even in the normal course, if we keep up the present momentum, we will easily touch the `2 lakh crore business mark by 2020,” asserts Dr Joseph.

What do the experts have to say to this? “I don’t want to comment on individual banks, but the banking sector as a whole is triggering a new economic revolution in India,” Arvind Panagariya, a Professor of Indian economics at Columbia University, told MI over phone.

“The Indian banking industry must learn how to tackle the challenge of managing people and risk to become a success. A lot of new generation banks are creating a huge impact by developing sustainable business practices in Indian economy. This practice will help India’s GDP and economy excel.”

So, what’s SIB’s plan of action? SIB requires RBI licence for opening metro branches. However, there is no restriction on the number of rural branches that can be opened. Therefore, the bank is mulling over big expansion in rural areas. The RBI says that every bank must allocate at least 25 per cent of the total number of branches proposed to be opened during a year in unbanked rural areas, says Dr Joseph. “The stipulation is only on the proportion of metro-rural branches. The opportunities in rural areas are at par with that of a metro region. Rural people are as rich as urbanites. Infra and operational expenditure would be minimal. We are identifying rural places across India, and you would see some serious action very soon.”

SIB grew at a snail’s pace until the dawn of the millennium because of the South India-centric limitations in its model of operations. However, during the last decade, from 2003 to 2013, SIB has performed exceptionally well, leaving the dust behind.

When I joined SIB as Executive Director in December 2003, the bank had completed its glorifying 75 years, says Dr Joseph. “The total business of the bank was less than `14,000 crore, on my joining date. From that point, the business of SIB had crossed `75,000 crore last fiscal (2012-13). Over a 10-year period, we were successful in accomplishing targets that the bank could not in the last 75 years.”

SIB’s profit was merely `8.7 crore, when Dr Joseph took over the reins as MD and CEO in 2005. Further, the bank grew five times business-wise, when it declared a profit of `500 crore in 2013 March. The NPAs of the bank, which stood at 3.8 per cent in 2005, are below 2 per cent as of today. While the average age group of SIB employees was 49 in 2005, it is 34 today.

It was during the past decade that the real business turnaround happened in SIB’s banking history, says Prince George, MD and CEO, DBFS. “If you analyse the Indian economic cycle, economic activity was at its zenith between 2005 and 2007. And it wasn’t just SIB or pure banking enterprises. Every form of finance-related businesses, including real estate, flourished. There is nothing unnatural in SIB’s growth figures. They utilised the available market resources in the best possible way and succeeded,” reasons Prince George.

Interestingly, SIB bought as much real estate as possible for opening up new branches during the 2008-09 economic recession. It also made maximum recruitments during the same period. “My policy has always been simple: every bad time has some good thing for us to take advantage of,” opines Dr Joseph. “If you are running a business, you must not wait for the right opportunity to take the right step. We were on an expansion mode during the bad times. We hired good human resources, took up good hoardings space, and bought excellent real estate to open branches across India.”

How did the SIB makeover happen?

Much of SIB’s makeover has been driven by the ambitious expansion plans that Dr Joseph had pursued with dogged determination. As a first strategy, SIB, which was prominent only in South Indian states, opened new branches across India. Today, but for two states, the bank has presence all over India. “Brand building and expanding base were my biggest challenges,” recalls Dr Joseph. “Making a lesser known banking brand visible to customers in other localities is a daunting task. During those early days, nobody in Mumbai or Delhi-NCR knew SIB. Those days, South India Cooperative Bank, which had 13 branches in Mumbai, was more popular than SIB.

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With a judicious mix of loan products and pricing, SIB is also able to keep net interest margins (NIMs) over 3 per cent. The bank hopes to keep it at around 3 per cent in future as well, which would be a healthy mix Today, three trains plying in Mumbai feature our logos.

We have a national image now. We are an Indian bank.”

The change of logo was one of the critical things to happen as it helped SIB with excellent brand visibility, ensuring quicker customer connect, says Sumeet Mehta, CEO, Paradigm Advisors. “In this competitive world, what matters most is to get connected with your customers on a day to day basis even when they are not transacting business with you. I would say SIB successfully launched their logo and campaigns.”

On the recruitment front too, SIB keenly adopted various methods to rope in more qualified and competent professionals to steer the business to newer heights. At present, SIB has over 6,700 employees on its direct payroll. The future of any organisation is in the hands of its workforce, says Dr Joseph. “I always tell my team members that you must be the best brand ambassador of SIB. It is your value that brings back customers. I am very satisfied that they had outperformed my expectations, which is why you are here to interview me.”

The timely upgrade of its technologies (core banking system) also helped SIB sail along with corporate banking giants. Today, SIB is like any global bank with the most updated technology on offer for its customers. “Yes, we have received the IDRBT Banking Technology Excellence Awards three times consecutively,” avers Dr Joseph, with a smile. “We are being recognised as one of the best banks in the private sector. See, interest rates on deposit and loan schemes are more or less the same across banks. You must ask yourself why a customer comes to you. I think better technologies and extraordinary services are what drive customers to banks. And we excel in both.”

What do the account holders have to say? “I am very happy with SIB’s services these days,” says Rajender Gupta, an SIB account holder from Najafgarh, Delhi. “They are addressing our concerns quickly than ever before. One thing I would like to emphasise here is that they must recruit more people locally than people from their home state. I am happy speaking to a local guy than someone from Tamil Nadu.”

With a judicious mix of loan products and pricing, SIB is also able to keep net interest margins (NIMs) over 3 per cent. The bank hopes to keep it at around 3 per cent in future as well, which would be a healthy mix.

Also, SIB keeps its credit offtake percentage

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August 2013

between 20 and 25 per cent on both deposits and advances. As a matter of policy, the bank had never let credit offtake cross the 25 per cent mark.

Ctrl, Alt, Delete SIB’s present chieftain had many reasons to paint a beautiful picture while eyeing huge, sustainable growth targets. However, the road ahead may not be as rosy as he thinks. Dr Joseph retires in 2014. It is necessary that SIB gets a successor who can carry forward the growth vision of his predecessors, says Dinesh Shukla, Senior Banking Analyst, Sharekhan Brokerage. “Achieving a target is the combination of many factors. The `1 lakh crore business target may be achievable as Dr Joseph understands the banking dynamics. However, the `2 lakh crore business target by 2020 may be difficult to achieve as much would depend on the abilities of his successor.”

This July, SIB reported a 6.5 per cent fall in the third quarter net profit at `115 crore. The reason for this fall is attributed to SIB’s `150 crore loan to the National Agricultural Cooperative Marketing Federation of India (NAFED). The account had turned into a bad asset requiring a 100 per cent provision for credit exposure as per the RBI norms. SIB had provided `30 crore each for three consecutive quarters, starting from Q2, FY’13.

SOUTH INDIAN BANK

“We are asked by the government to lend to priority sectors. Since NAFED has government backing, we thought it would be a safe bet. But it turned negative.

The matter is nearing settlement. Whenever it happens, we would have better results. See, we could have just spread it (loans) to show better results this quarter. But we don’t want to postpone bad things. Instead, we do it first,” says Dr Joseph.

As of March 31, 2013, SIB has provided `90 crore to NAFED. It will be providing the balance `60 crore in 2013-14. “It is good that SIB does bad things first,” comments a Senior Analyst at India Infoline Ltd. “SIB is one of the best mid-size banks in India. They could have easily covered this up. Those who understand the banking dynamics would appreciate it. But one pertinent point is that they must be careful in future if they are keen on their growth targets.”

SIB, which has been growing at 20-25 per cent over the years, continues to boast itself as a medium-size bank. The bank is not aspiring to become one of India’s leading private lenders. While it projects its `500 crore profit as a Himalayan accomplishment, it is not taking cues from other banking success stories. Maybe this is where the bank should listen to the experts.

“Sometimes risking your business would be too vital, and it could help you reach bigger heights,” says Bibek Debroy, a noted Indian economist. “You name one

This July, SIB reported a 6.5 per cent fall in the third quarter net profit at `115 crore.

The reason for this fall is attributed to SIB’s `150 crore loan to NAFED noteworthy risk which SIB had pursued since its opening.

They were always happy with what they had at regular intervals (announcements). It is sad that they still continue to be a player with presence across India with very less domain impact.”

One will surely wonder seeing the client portfolio of SIB. The bank has very few corporate clients. Most of its top customers are small to mid-size business people, entrepreneurs, farmers, and general public. “There are positives and negatives to this,” adds Dr Joseph. “Yes, the ticket size of a corporate client would comparatively be larger than a mid-size entrepreneur. It could be `100 crore at a go, which is good business-wise. However, there are risks associated with it. Kingfisher airline is an example. We traditionally lend very carefully. Yes, we have corporate clients as well and we will not shy away from lending to them.”

Unlike earlier years, SIB has decided not to raise any money for expansion this year. The reasons are unknown.

The bank has no diversification plans because it believes in the theory “whatever you do, do it well!” “Banking methodologies to help customers will increase but we don’t want to go for big diversification using our money,” reasons Dr Joseph. “Today, banking is more or less a complex equation. We may have critics but we stick with whatever is right in the present economic cycle. If you enter so many fields with limited resources, it would be problematic later. So, we will continue to focus on what we were doing first.”

There’s more to the SIB story than Dr Joseph’s growth years. “Former SIB chief A Sethumadhavan’s contribution to the bank must not be forgotten here,” says an ex-board member on condition of anonymity. “It is quite natural for the bank to grow after it went public in 2002. Dr Joseph is executing Sethumadhavan’s plan and vision post his retirement. Here, my intention is not to be critical. But I would like to remind you about Sethumadhavan’s contribution to the bank as well.”

Sethumadhavan joined SIB as its Chairman and CEO in June 1999, adds a Senior Manager at one of SIB’s Kochi branches. “We achieved remarkable growth in business, profitability, and expansion of network during his six-year term. He pioneered a massive, pathbreaking technological upgradation plan for the bank by introducing the core banking solution, in 2001, in partnership with some IT majors. Our bank is lucky to have people like Sethumadhavan and Dr Joseph who have contributed immensely to its growth.”

Interestingly, Dr Joseph sees no threat from upcoming banks. He says that any bank will take time to

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gain the customers’ trust. “Banks were nationalised in 1969. Yet, even after 44 years, 50 per cent of the Indian population has no bank accounts. The government’s basic idea is to take the new players to rural areas since it doesn’t have space in urban areas.”

Sethumadhavan pioneered a massive, pathbreaking technological upgradation plan for the bank by introducing the core banking solution, in 2001, in partnership with some IT majors The banking sector as a whole has been quite a non-performer during the last few months. Shares of SIB have been trading between `19.50 and `30.65 of late. Still, share analysts are bullish on SIB. “SIB shares have got certainty,” says Shukla of Sharekhan.

“I recommend you to bet on SIB, as the bank has been performing well in recent times. You can’t expect too many returns, but it’s a safe bet. I think there won’t be any drastic change in its price level.”

No plans to go global About 20 per cent of SIB’s business clients are NRIs. However, the bank has chosen to stay away from pursuing big global expansion plans. “Presently, we don’t have plans for direct expansion in global markets. SIB officers are available at each branch of the exchange for banking assistance such as instant money transfer, and opening of NRE accounts and deposit accounts at any branch,” says Dr Joseph.

The bank has a tie-up with the UAE-based Hadi Express Exchange. There are seven branches as of today, and three more are being planned. SIB has been providing managerial service to Hadi Express Exchange since 2006. Instant credit to SIB account from the UAE is facilitated by the exchange.

SIB GROWTH CHART

44

Year

Profit

Dividend

2005

`8 crore

No

2006

`50 crore

18 Per cent

2007

`100 crore

25 Per cent

2008

`150 crore

30 Per cent

2009

`190 crore

35 Per cent

2010

`230 crore

50 Per cent

2011

`280 crore

60 Per cent

2012

`350 crore

65 Per cent

2013

`500 crore

70 Per cent

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August 2013

“It is a good move by SIB as it will minimise the risk of losing money,” says Prince George of DBFS. “Operation of financial institutions in the global market is a risky ball game. The banking model, culture, and activity are entirely different from that of domestic markets. Backup of NRIs may not guarantee target achievements. On the whole, it is an expensive affair,” he says.

Competition to be harder Twenty-six institutions have applied to the RBI seeking an entry into the banking segment. While three government organisations, including India Posts, Tourism Finance Corporation of India, and LIC Housing Finance, figured in the list, many branded companies, too, are in the fray. Once the RBI gives the nod, the Indian banking sector will receive yet another boost, making it one of the most competitive markets in the world.

“Healthy competition has always been there,” says Dr Joseph. “It is to be seen how many of these banks would exist in the long run. Several banks such as Bank of Punjab, Centurion Bank, Times Bank, and Global Trust Bank, which started operations a few years ago, don’t even exist today. Be it even Reliance or Tata, it takes at least a decade for banks to get established.

People always follow a ‘wait and watch’ policy towards new banks. I am not bothered about any new comers.

India has enough room for all.”

The aspiring brand names include Aditya Birla Nuv, L&T Finance Holdings, UAE Exchange India, TATA Sons from Mumbai, Bajaj Finserv from Pune, and Shriram Capital from Chennai.

Meanwhile, exuding confidence that it would get a banking licence in India, global forex remittance major UAE Exchange has already initiated work for an 800-branch network in the country. It would focus mostly on rural areas. UAE Exchange has about 700 branches across the world, nearly half of which are in India.

“Competition would be the new buzzword in

SOUTH INDIAN BANK

one slogan, ‘Experience The Generation Next Banking’.

His tenure is coming to an end along with that of SIB’s present MD and CEO. “Mammootty was roped in during our initial years,” says Joseph. “He carried forward our message to the masses. He had that special connect with customers. And I think we have already achieved our target because we are everywhere in India now. We tied up with him for a longer time, up to 2014. I don’t know the future of our association as I am also preparing to move on next year.”

Annually, SIB spent `5 crore on advertising and marketing initiatives.

Impressive CV Indian banking,” thinks economist Panagariya. “It is a revolutionary step. All existing banks will face the music once the RBI gives its go-ahead to the new applications.

We have to see how brands like Tata, Aditya Birla, and Bajaj are going to capitalise on their brand equity. The customer is you and me, and we would only go for the best.”

At present, there are 26 state-owned and 22 private sector lenders. Only 35 per cent of India’s adult population has accounts with banks and other financial institutions as compared to the global average of more than 50 per cent.

The RBI move will definitely bridge the gap.

Takeover rumours Before 2010, SIB was touted as a prime takeover candidate by banking analysts, given its balance sheet strength and low valuations. Kerala-based Lord Krishna Bank was recently acquired by banking behemoth HDFC. “These stories that have been released by media outlets are based on the grapevine,” smiles Dr Joseph.

“During my stint, I never had come across any such offers from any quarters. You must understand how banking takeovers actually happen. Factors like insolvency, inability to raise capital, continuous losses, or some mismanagement at the top level result in buyouts. Why would we sell a bank that has been doing well, and why would someone buy it? Even if someone is keen, we are a Himalayan target.”

Mammootty may retire Cinestar Mammootty has been the face of SIB for the past many years. It is very much evident that the Mollywood hero has played a big role during SIB’s transformational phase. It was he who travelled beyond boundaries with

Dr Joseph, who has spent 31 years with public sector banks, started off his banking career as a probationary officer with Syndicate Bank. He was a General Manager before joining SIB in 2003. He holds a Doctorate in Human Resource Development, MCom, LLB, CAIIB, PhD, (HRD), MPM. “When I was fresh out of college, I joined Syndicate Bank. I worked as a brand manager in Thiruvananthapuram, says Dr Joseph. “As part of my job, I have travelled and worked in most of the Indian states and metros, including Delhi and Mumbai. The tenure in Delhi was a good experience as I had the jurisdiction to oversee states like Punjab, Haryana, Himachal Pradesh, and Jammu and Kashmir. After Delhi, I joined the Ahmedabad office on January 18, 2001. On January 26, 2001, Ahmedabad witnessed a devastating earthquake. The memories of dead bodies all over still haunt me. The SIB offer came when I was working in Mumbai as the General Manager.”

The banking veteran plans to spend his post-retirement life in Kerala. “There are no concrete post-retirement plans. I have to see.

I have been navigating the ship through proper channels.

Now, my only wish is that we get a better captain than me,” says Dr Joseph on a positive note.

Mammootty has played a big role during SIB’s transformational phase. It was he who travelled beyond boundaries with one slogan, ‘Experience The Generation Next Banking’. His tenure is coming to an end along with that of SIB’s present MD and CEO

bRANDLINE FINANCIAL bRANDs

financial brands

take a look at the top global financial banking institutions globally in terms of brand value. The data is based on the brand strength of each institutions, calculated using a range of quantitative and qualitative measures by Brand Finance. The analysis is based on the brand’s financials, security/risk, and brand equity

Headquartered in San Francisco,the multinational banking and financial service holding company is the fourth largest in the USA. According to the company, one in three households in America does business with them. Wells Fargo has $1.4 trillion in assets and more than 270,000 team members in more than 35 countries across our 80+ businesses.

Brand value (USDmn) 2013

2012

2011

26,004

23229

28994

2013

2012

2011

1

2

2

Rank

Brand value (USDmn) 2013

2012

2011

23408

18964

19150 Rank

2013

2012

2011

2

5

5

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Chase is the US consumer and commercial banking business of JPMorgan Chase & Co.. The bank was earlier known as Chase Manhattan bank but it merged with J P Morgan Chase & Co in 2000. Headquartered in Chicago, the leading global financial services firm has assets of $2.3 trillion and operations in more than 60 countries.

FINANCIAL bRANDs

Brand value (USDmn) 2013 22865

2012

2011

27,597

27,632

It is British financial and banking service company headquartered in London. After opening its door in Hong Kong in 1865, in order to encourage finance and trade between Asia and West, it now serves 58 million customers through 6600 offices in more than 80 countries and territories. The name is derived from the initials of its parent company, The Hong Kong and Shanghai Banking Corporation. It had total assets of $2.693 trillion as of 31 December 2012.

Rank 2013

2012

2011

3

1

3

Brand value (USDmn) Earlier known as the Bank of Italy, the financial institution was renamed Bank of America in 1998. After its acquisition of Merry Lynch in 2008, Bank of America is the world’s largest wealth management corporation.

Headquartered in Charlotte, North Carolina, it has a customer base of 57 million with global presence. Its total assets equal to $ 2.209 trillion as December 2012.

After Chase and Bank of America, Citi is the largest bank holding company in US. It works in more than 160 countries globally. It originated as the Citibank of New York on June 16, 1812, and it holds a history of 200 years. it has 200 million customer accounts globally. Its headquarters is at Sioux Falls, South Dakota.

2013

2012

2011

22397

19537

30619

2013

2012

2011

4

3

1

Rank

India’s Top Financial Brands Top Five

Rank

Brand Value (USDmn)

2011 2012 2013 2011

2012

2013

1 SBI

34

39

38

5670 4687 5995

2 ICICI

70

102

99

2501 1495 1820

Brand value (USDmn) 2013

2012

2011

21,667

18639

17133

2013

2012

2011

5

6

9

3 HDFC 157 134 126 913 1018 1228 Rank

4 Axis

203 168

175

652

657

742

5 PNB

197 170

189

675

640

652

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BRANDLINE pERsONAL bRANDING

Pravin Thakur is a digital marketing, personal branding, technical landscaping, and creative designing evangelist with over 15 years of experience and rich exposure to onshore and offshore projects across industry verticals that gave him a chance to engage with clients from the United Kingdom, the US, the UAE, Australia, and the domestic market. A visiting faculty at Mumbai-based B D Somani Institute of Art & Fashion Technology, Thakur loves to counsel people about the emerging concept of personal branding through his power-packed lectures.

In an interview with Money Indices, he deconstructs the concept of personal branding

Branding

BY Archana Nair

1 Could you give us an educated view about the concept of personal branding?

Personal branding is about understanding what makes you unique and making it relevant to your target audience. It is definitely not about becoming a celebrity and being known to the masses by creating a false image of yours. It is about achieving the goal of making your target audience think of YOU when they think of YOUR industry vertical, or personal qualities, or BOTH. It is about using that goodwill to contribute to any corporate brand i.e. (employer) or for self. A strong personal brand is a combination of your offering/services associated with trust,

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reputation, and ability to stand out from the competitive clutter. It is neither a celebrity concept nor a motivational topic, as it was misinterpreted in the beginning stage in India.

2 Could you tell us a bit about the culture of personal branding in the Indian scenario?

Over a period of time, while practising personal branding and trying to promote it, I noticed that the subject is gaining visibility in the Indian market due to its online presence. Since it is a fascinating subject, other players were entering the market as individual trainers or in form of companies talking about the topic. The subject also started gaining

PRAVIN ThAkUR

a personal makeover attention from the corporate world as they wanted their resources to benefit from personal branding, which, in turn, could benefit the corporate organisation itself. To a small extent, personal branding in the current scenario is still misunderstood and incorrectly promoted through its (unwarranted) comparisons with soft skills development, English communication, etc.

These may be the elements of self-development, but they are still not all about personal branding. People are still a little reluctant to invest time and money in their self-branding and also are not educated to use the free resource on internet appropriately for personal branding. Individuals are more inclined towards social networking just for fun rather than creating a balance between social and professional networking to build personal brand image.

3 What’s the relevance of a personal brand in the current competitive scenario? Why personal branding is considered so important in professional life?

image is an advantage to entrepreneurs willing to launch themselves in business as they can capitalise on their goodwill to make the new business successful.

4 When and how should we start on personal brand building?

Whether we like it or not, we are branded each day of our life since early school days till we die. So if we don’t brand ourselves consciously, people around start branding us. The concept is about constantly working on your brand image and making it stronger.

To start with personal branding, I will mention two key factors: 1 Personal Brand Discovery: It is about knowing what makes you different, your strengths, and weaknesses.

2 Personal Brand Communication: Having a consistent personal brand statement in all your interactions, be it a casual meeting or a professional meeting, or even if it’s about your presence in any media, both online or offline.

The mass of qualified academic crowd with good percentages is increasing at a tremendous rate, leading to an increase in the clutter of talent pool.

Recruiters have a tough time selecting a candidate for a respective opening as a lot many people fit into the criteria.

Hence if people self-brand themselves appropriately, it will create a visibility for them while getting employed.

During the economic crisis, corporate brands don’t wind up their business but layoff jobs to cut the cost for sustaining in business. In such adverse situations, an organisation selects and retains their best and efficient team. So, a strong personal brand in an organisation certainly brings the advantage of job security. A good personal branding strategy leads to network expansion of professional as well as personal audience. Today, finance plays a pivotal role in the success of business startups. Similarly, a strong network plays a key role.

Hence having a good personal brand

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nal branding

o Tips on pers

nal g your perso e of creatin rs cial u fi ti co ar e d th 6 In te fake an o m ro p n ’t ai n m Do e the brand, do main name. elf to inflat ing personal do about yours st lt in gs ve su in in re th ke ly li 1 Have a re ique. It is it will su n u as e is ty ar it ri r. la If te es u la nam pop space. ner or te in online randing soo urchase b p e working to iv et y n at it e n eg in real esta in u n ess in offl the opport en ’t ab ar n gr , aw ca le g u b n to ensure availa sold, yo 7 Creatin mmunicatio ause if it is co ec b e iv e, ut your ct m fe sa the by ef t know abo le again. ee b m la u ai if yo av n r is ise you cards even own till it every perso ame, optim ge business n r an u h yo xc E r m . u o gs offerin lated to yo 2 Apart fr keywords re udent. not gines. en website for you are a st ch owledge is ar se in n ai d m n r domain kn o u ra d b st of the yo t ry re re st en te u su st d in n si in 8 E diminish , and con l il sy w as it cl , t as p en is outdated g consist 3 Have cr mmunicatin audience. with ner collateral co stency can be created priate man prospective , si f in an appro es n tude, el o n ti li C rs . at u g , ge ta yo ts , sa si ry es vi es ar m 9 C of imag ns. Your ge io sa as u , cc o ts . t n n al fo e casu colours, for releva n’t always b ace tire should sp at your al d l it al etc. an ig h d it y w ur name file in ever yo ro g, e p in at e rk ci at o o d ic w p net d serv es.

4 U 10 Ass art ch as social products, an in job s, n es o ti m ea su ld always st available, su cr re uction shou etworking, d the n o tr by al n in ed io al w ss n o profe 11 Perso main, foll o d ry st c. u an d et out nation d sites, blogs with your in r and desig is not just ab is ye g lo p in d n em e ra b name of th the time. It 5 Personal a. yourself all rsing o d en promoting not vice vers and get into business d an moting ff ro o p p t rs u m o ee ju p ab ’t al n also ile meeting 12 Do rofession p d an right off wh . al n n n o io ti at n rs te ve re common n rk your perso co ng netwo ith areas of f w o ro st rt ea ta to ar S s r u e. ad n . as it le someo osted in yo relationship in events h st to build a wledge and o re te kn Participate in s se ea on. It incr specialisati networking. in s p also hel

5 What is your advice to young business professionals on establishing their personal brand?

Young business professionals may not necessarily be young in terms of their experience. For example, a person may have significant experience and start his/ her new business. It is obvious that people like to do business with people they know or with persons they have been referred to by their known network. The reason is simple: presence of trust and expectation of security, as they know the person. First of all, create a consistent personal brand image in the mind of consumers, which should make them think of trust, quality, and service. Secondly, promote the quality and not just for competitive price. They need to adopt a strategy that can make the consumers think of their name when it comes to a product/service. If their product or service is a success and if they go on to launch/offer a new product/service, the chances of the success of the second launch also increase as the consumer market knows the promoter. Moreover, young business professionals should have presence in online space with a personal website. Above all, they need to ensure their presence in Google search by being among the top 10.

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For example, whatsapp.com is a great success in the market, but many people don’t know the person behind it. If people know the promoter, his/her ongoing product will receive the same mileage. The conclusion is that when people think of a product or service, they should be able to relate that product/ service with the creator. Hence let the creations be known to the world with their name, not just corporate/product brand alone.

PRAVIN ThAkUR

thy, ana Moor N R Naray Infosys r of Co-founde ochhar, Chanda K f ICICI Bank Oo MD and CE

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h 8 s s l u l . tu t e a e r i i n a r t u e i n m e ti ll cial ess v m yo do in 3 Ga l life all the and so r for a busin res fro s awareness , u s t e c a i k i i p l c so he dis ood eate h him/ le of g o. It cr pproac a coup nal portfoli a h sio in touc profes omain. eeping hould d k r y l u t o n y a s of f const etwork, one tead o 4 Ins an existing n with

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person

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51

ENTREpRENEURshIp INNOVATION

Riding on

wings STEELBIRD FORAYED INTO THE HELMET MANUFACTURING INDUSTRY AS AN AMATEUR. BUT IT SOON TURNED A PRO BY CONSISTENTLY SLUGGING IT OUT SINCE INCEPTION TO COME ON TOP EACH TIME, DESPITE TOUGH COMPETITION FROM INTERNATIONAL BRANDS AND UNORGANISED MARKETS

BY Gagneet singh

Rajiv Kapur

STEELBIRD

of steel

T

sq ft rented building at Ganesh Nagar, Delhi. It all began he concept of helmets has changed with a fibre glass shell, a furnace, cutters, and paint over the years. From a headgear to sprayers. Now, we call ourselves the premium brand of a fashion statement, the transition the industry,” he says. of helmets is a story worth telling.

Rajiv, who always draws inspiration from his father, And there is no better person to says it’s easy to walk off the beaten path of success narrate the story other than Rajiv only when you are being led by a visionary. “My father Kapur himself, the Managing is my idol. I have been following him since childhood.

Director of the pioneer helmet I knew his vision and mission behind this venture. I manufacturer, Steelbird Hi-Tech followed him rigorously. That’s why I’m here today. I India Limited (SBHT). had started working at my father’s company at a very Indian roads aren’t the best. Records show that a motorcyclist dies in India every three minutes. This was early age. I started out as an employee and went through the very reason why Subhash Kapur, rigorous training like any other employee. After starting out Chairman of Steelbird company, My father is my idol and have as a management trainee, I thought of making affordable been following him since had worked hard to reach the helmets for Indian motorists. His of managing director. I visionary idea and uncanny knack to childhood. I knew his vision and position stay the course have transformed the want my children to follow the mission behind this venture same process.”

Steelbird group into India’s largest But it was never an easy helmet manufacturer that produces journey for Steelbird by any standard, says Rajiv, “It took 9,000 helmets a day. us a lot of time to understand the market sentiments Rajiv Kapur, who catapulted the brand to the global and create products fulfilling international audit stage in a short span of two years, credits father Subhash Kapur with this success, saying nothing was achievable parameters at affordable costs.” He admits that the raw material and logistics issues and absence of stringent without his sweat and foresight. “With little savings and laws only made their journey tough. a lot of dreams, we began our journey in 1964, in a 4,500

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ENTREpRENEURshIp INNOVATION

tie-up with Indian Oil Corporation The Indian helmet industry Be honest to your has blossomed over the years.

Limited (IOCL) to sell our ISI-certified work and never helmets in the outlets of Indian Oil Although unorganised markets petrol pumps was one such initiative, have mushroomed these days, take shortcuts says Rajiv. “The wide network of IOCL Steelbird has maintained its in life, success also helped in making our products market share of 35-40 per cent in the `1,000 crore segment. The available at every nook and corner of will automatically India. This has reinforced the trust company now has presence in the come to you and awareness of consumers. We have riding gears business as well with given utmost priority to R&D. We a retail outlet called Riderz Shop have a state-of-the-art R&D centre in Delhi. “This is a new concept dedicated to innovation, style, and strengthened among Indians. We anticipate a three-time jump in sales with the riding gear business. Besides tapping safety factors,” he adds.

Rajiv admits that a joint venture with BIEFFE, a the increasing demand for riding gears, the store helmet manufacturing company, was a master stroke also deals with ISI marked helmets, jackets, suits, in improving the quality and reach of Steelbird gloves, shoes, and other allied products. We aim to products. “We have collaborated with the BIEFFE. be a `100 crore player within the next two years. We We are the first company in this segment in India for are also exporting products to 50 countries, mainly having an international joint venture. This helped the Middle East and Africa,” says Rajiv. us open a new horizon in producing world class In comparison with other big players in the products in India,” he says. market, Steelbird has established its own brand Steelbird has introduced several products name in the corporate sector with its quality, using advanced technology to make cost-effective innovation, and promotional activities. “Our product products for Indian consumers. But Rajiv feels that is a need for people, right from the metros to remote the public’s growing liking for low-cost spurious villages. Hence our communication and marketing products is a cause for concern. “Our last two strategies are concentrated in every area. The

For a safe drive

Ensure a proper, snugly fit helmet, the helmet. It should not be loosely fit

As you wear the helmet you should hold it with its harness stretched in opposite directions and put on adjusting your face to ensure proper vision

if you meet with an accident and your helmet takes a hit on the road, you should replace the helmet, even if the outer surface seems fine

After six months, you must replace your visor to ensure optimal vision and lessen the stress on your precious eyes

Ensure that the helmet is safety hooked before you start to ride your two-wheeler

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STEELBIRD

is working perfectly. However, a larger decades have been spent on educating We are a closely display and education constitute the need people about the importance of held company of the hour for betterment of the industry. quality helmets. Many people don’t realise We wish to be known as Asia’s largest that. to save `200-300, they are ready and most of the selling ISI helmet brand,” he says. to compromise their life safety. We were finances have The company is preparing to make it big the first to raise voice for a complete ban in coming years by increasing production on such products.” Steelbird has now been managed distribution. About Steelbird’s future initiated many on-ground activities such as through internal and seminars on safety, campaigns, exhibitions, plans and targets, Rajiv says, “We are ahead accruals and interactive events etc to reach out to the of set targets. In the last three years, we niche audience, especially the youth. As bank borrowings have increased our manufacturing capacity over three times to make 9,000 helmets part of a marketing strategy, the company a day. We are on our way to increase this is equally available on new age media and to 18,000 helmets per day. We have set up a fully youth-oriented TV shows.

Steelbird is aiming to cash in on emerging markets automated robotic visor manufacturing line, and there are more in the pipeline. We also plan to open over 200 like Sri Lanka, Bangladesh, Africa, Indonesia, and Hong retail outlets across the country in the next two years.

Kong, where there is a high demand for two-wheelers He has an advice for aspiring entrepreneurs: “Highs and helmets. Rajiv says that the riding gear business and lows are all valuable experiences. The lows give can flourish in such markets and feels that they have you a chance to learn how strong you can be, and reasonably done well in reaching small pockets of India. “We have a three-tier distribution system: Trade see what you’re capable of; they make you look at your life differently and find different ways to live it.

Distribution, Exclusive Retailing tie-up with Indian Manoeuvring around the lows gives you a way to be oil, and Steelbird Exclusive Stores. Steelbird has over creative, and that is very empowering. The ups are just 45 super distributors who distribute products to over ups, the rewards for being the person you are.”

10,000 retailers in the country. For helmets, this model

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ENTREpRENEURshIp STARTUp sUCCEss

The gentle strides of a

shoekeeper The inception

T

Sandeep Gajakas belongs to a different school of thought.

After trying his luck as a fashion choreographer, an event manager, and a call centre employee, he went on to become a Fire Engineering graduate. Today, he is well-known for his unique entrepreneurial venture, Shoe Laundry, India’s first professional footwear laundry and refurbishing service

By Aditya Singh

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here are thousands of stores in India selling branded shoes, but there is an obvious absence of professional footwear care and maintenance service: this fact disturbed Gajakas since his college days. He says, “During my college years, and later days in the corporate world, I had noticed people using branded and expensive shoes, but they weren’t maintained properly. This was due to the lack of a service provider who could offer the level of expertise required to clean and repair these shoes. The only option was a roadside cobbler with his primitive tools and techniques, irrespective of a brand.”

In 2003, Gajakas started his unique venture, Shoe Laundry, with an initial investment of `7,000. It was his bedroom which was turned into a work area in his initial days. He continued his research and developed standardised methods to repair and clean footwear.

When he started it, people hadn’t even heard of it.

So, he decided to go slowly without much investment till the masses accepted this service. As every shoe was a different case, a lot of learning was needed and new methods had to be developed every day. He scaled up very slowly and the income from the service sustained the business.

Gradually, he secured public acceptance. Gajakas says, “People have become more conscious about the brand and also about its hygiene over the last 10 years. Luckily, we managed to become the knowledge centre of footwear hygiene and refurbishing.

“It gets more unique by the kind of repairs we do. For the types that weren’t possible before, we invented and standardised our methods and techniques that only our franchisees are privy to.”

Shoe Laundry now works like this: “In one phone call or SMS, your footwear will be collected from the said spot and returned in a good condition, with all necessary repairs and cleaning at a nominal price,” says the man behind the billion dollar idea.

ShOE LAUNDRY

The services include washing, repairing, de-silting, deodorising, sterilising, stain removal, colour touchups, pasting, resoling, lace and insole replacement, pickup and delivery service.

The cost for washing ranges between `150 and `200 per pair. Customers are charged extra as per the nature and extent of repairs. The cost ranges between `20 for minor repairs and `300 for a complete sole replacement.

About Franchising More and more people are realising that there is a need for this service. Having proved its viabilities, Shoe Laundry is willing to start the same in the cities.

So, Shoe Laundry is on the look-out for a franchising mode of expansion. It is also the first to introduce a franchisee network in the segment through a systematic franchise programme, both in India and abroad.

Shoe Laundry holds its uniqueness in its franchise model too. Gajakas notes, “There are several challenges related to logistics, manpower, maintenance of the quality of service, advertising, execution, payments,

revenue management etc. But a good franchisor takes care of these things and ensures it does not occur over and over.”

To do complete justice to his business, he stopped his service in Mumbai and focused completely towards creating a franchisee model and imparting training to the new franchisee staff. “I want to ensure the best set up and training for each franchisee and I personally imparted training to every franchisee and its staff,” says Gajakas.

“We will resume our service in Mumbai by appointing franchisees for various territories. It was a very difficult decision to stop the service but being the knowledge centre of this trade, I had to remove myself from the daily running of my business to reinvent my concept,” he says.

A piece of advice from Gajakas “Don’t try to do too many things at once. Also, don’t launch a half-cooked product. Manage your funds properly and avoid wasteful expense on nonperforming assets. Set your standards higher than your most demanding customer. Compete with yourself.”

Quick Facts The Business: cleaning and refurbishing footwear.

Initial funding: `7,000/Share in Indian market: 95 per cent Wow factor: The first of its kind in India

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ENTREpRENEURSHIP sOCIAL

Light for the blinded poor

Dr Ramani and his social enterprise Sankara Eye Care Institutions – India (SECI) exemplify that entrepreneurship is not just about creation of wealth alone, instead it’s a means to bring light into the lives of the poor BY prashob K P

P

achayappan didn’t mind toiling for his daily earning of `40 even at the ripe old age of 75. This sparse amount helped him support his family until he was blinded in a freak accident. Survival suddenly seemed out of question for Pachayappan. Darkness lurked in his life until the Gift of Vision programme, an initiative of Sankara Eye Care Institution (SECI) aimed at helping patients from the tribal belt, restored Pachayappan’s vision. Now, he is back to work.

Many such good-hearted interventions of SECI have brought smiles back to the faces of poor.

This brainchild of Dr R V Ramani has

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DR RAMANI

given entrepreneurship a new meaning by making it known that it’s not just about selling things for profit. Thousands from rural Tamil Nadu are now the beneficiaries of high quality free eye care treatments.

The birth of SECI Dr Ramani says, “In 1970s, my wife Dr Radha and I were practising as general physicians in Coimbatore, following the footsteps of my late father Dr A Ramanathan. As years passed, I thought of doing something different. In 1977, I came to know that the administrators of Kamakshi Temple had been planning to provide free primary health care to the needy people.

That was a godsend for me. Soon, we gave shape to a medical centre catering to the needs of the urban and rural poor. Within a span of five years, the centre set up nine primary health units with the support of industrial organisations.”

Recognising the country’s deficiencies in eye care treatments, Dr Ramani shifted his focus to this specialised medical field of eye care in 1985.

Soon, he set up Sankara Eye Centre at Coimbatore under the aegis of Sri Kanchi Kamakoti Medical Trust, which he had established in Coimbatore with the help of likeminded trustees. Now, SECI and its networks conduct over 500 free surgeries every day.

Its community eye care programme, “Gift of Vision”, reaches out to 69 districts spread over 11 states through 12,000 action-packed weeks. The results have been phenomenal, with SECI successful in endowing more than one million patients with the power of vision all over again.

Rural focus “India’s record in rural eye care is below par. There is an urgent need to address this problem. I never wanted to involve myself in piecemeal exercises like a one-day medical programme. With the help of some village youths, we conducted surveys and identified people affected with blindness. Then we followed them up with necessary treatments and free surgeries. We arranged transportation, food, and all other facilities for these patients,” says Dr Ramani.

Visually challenged people can’t sustain themselves. They always need support from others.

Knowing this well, Dr Ramani came up with his model of community ophthalmology, which is cost-effective and of high quality, and readily available eye care at the doorsteps of Rural India. He also provides preventive eye care services for children, diabetic retinopathy

programmes, and a boost to eye donation activities through Sankara Eye Bank.

The Financial Plan A quick glance at the achievements of SECI shows that if the intent is noble, there’s a way to get around costs.

All Sankara Eye hospitals work on a 80:20 ratio, where 80 per cent of the beneficiaries are rural poor who receive totally free eye care and the balance 20 per cent are the rich and affordable sections of the society, who pay for their treatment, thereby cross-subsiding free eye care. Thus, he has successfully created a replicable and sustainable model of community eye care. The cumulative benefit to the rural poor is treatments worth `44.33 crore as of today, with each surgery costing `3,913. This surgical cost is low as compared to other eye hospitals. SECI has 1,000 full-time paid professionals as well as an honorary team of 75 who volunteer for fixed hours a week.

Revenues 2012-13: `52.64 crore Donation: `11.91 crore Total no. of hospitals: 9 hospitals Entire group’s annual expenses: `61.20 crore Capital required to set up new hospital: `24 crore Cost per surgery: `3,913 Cumulative benefit to the rural poor: Treatments worth `44.33 crore.

No. of eye surgeries conducted each day: 500 surgeries on an average.

No. of transplants per month: 90-100

As the benign doctor says, “this is a movement that has evolved from a cause and benefited a million who never expected succour from any quarter.

Humanitarianism isn’t a show business for serious health establishments such as SECI. I used to tell my team that the corporate hospitals may give you a decent pay and all other luxuries, but there’s no way to measure the joy you will have once you take part in a mass medical movement for the sake of the needy.”

As an ending note, Dr Ramani quotes Mother Teresa, “It’s not how much we give but how much love we put into giving that matters.”

According to the World Health Organisation (WHO) 2000 statistics, the cost of blindness globally is `1,89,000 crore per year, and it is expected to touch `4,95,000 crore by 2020. In India, a WHO-sponsored study of 1989 showed that blindness costs the national economy `20,700 crore a year.

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ENTREpRENEURSHIP WOMAN

A

‘B school’ for rural women

They are the new age management professionals.

They don’t work in plush blue chip companies.

They work in fields and community development organisations. School drop-outs until yesterday, they are the shapers of their own destiny. They haven’t gone to topnotch B schools. But they know business management better than even the learned students. They all come from a humble B school called Mann Deshi Udyogini, which has been helping the rural women of the povertystricken Satara district in Maharashtra learn the art of self-sustenance

MONEY INDICES

The journey

Started by Mann Deshi Foundation with an aim to educate rural women, Mann Deshi Udyogini transformed itself into a mini ‘B school’ with the assistance of HSBC Bank. This institution made a humble beginning by giving school dropouts a new lease of life in education through their self-designed vocational training programmes that were crafted from in-depth surveys and analysis on the condition of rural women. Unlike management education, women students here learn how to become vegetable vendors, goat rearers, tea sellers, tailors, and the like and make their lives self-sustaining.

In 2010, Mann Deshi Udyogini launched a programme called ‘1000 Deshi Entrepreneurs’, an initiative that soon acquired the face of a flagship programme with a ‘mini MBA’ curriculum. Now apart from teaching, the foundation runs a bank called Mann Deshi Mahila Sahakari Bank to provide financial assistance to women who aspire to become self-employed, and a community radio station for Mhaswadians.

More than 46,000 students have graduated from this institution since 2006 and more than 10,000 agribusinesses have taken shape with this school’s assistance. The school now has five branches and two mobile units.

The curriculum Mann Deshi B school offers about 20 skill development and vocational training courses for women. This includes courses on veterinary science, goat-rearing, bag-

By Payal Momaya

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M

eenakshi, 33, is a spunky entrepreneur who runs a mess and canteen for college girls. She also takes catering orders for small parties and festivals and makes a profit of about `25,000 per month. There are several other industrious young women in the remote Satara district of Maharashtra who broke free from the shackles of poverty and curse of drought a few years back.

They all owe their new life to Chetna Gala Sinha, a social activist.

Founded by Sinha in 2006 as a heart-felt endeavour to educate the women of Mhaswad in Satara district, Mann Deshi Foundation has turned into a B school with an unusual curriculum to empower women.

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ChETNA GALA SINhA

making, weaving, fashion designing, agriculture, beauty therapy, etc. The institute offers training in computers and communicative English, and financial literacy and personality development programmes. The way of teaching is very unusual as classes are often supplemented by practical works in fields. And to make the students fully armed, the school even teaches them how to prepare resumes, face interviews, and make presentations.

“It’s not simple training. We aim to make our women confident and self-sufficient,” says Vanitha Shinde, Chief Administrator, Mann Deshi Foundation. Every course has four segments that take care of technical skills, financial literacy, marketing skills, and confidence building. “Technical training occupies about 60 per cent of the courses. After this, there will be a customised financial training, through which students are taught about essential business strategies, working capital management, marketing strategies, and establishment of distribution channels. It would help them take decisions and run the show on their own. Finally, there’s a motivating session,” Shinde continues. While the duration of different courses varies, there is flexibility in terms of criteria, and the fees ranges from `50 to `1,000.

“We not only give hopes to women, but also an opportunity to bring about a difference in society,” says Vanitha. “The ultimate aim is to make them independent,” she says. The foundation had set up Mann Deshi Mahila Bank with the intention of providing small startup loans to women for their micro enterprise.

Mann Deshi had trained over 20,000 women last year. It plans to spread wings to other states, including Gujarat, Jharkhand, and Assam. “Our mission is to create one million women entrepreneurs,” says Shinde. “The only challenge is to educate women who stand to lose a day’s income in the interest of education. We are willing to make suitable changes in our plans to accommodate each of their concerns,” concludes Shinde.

Tie-ups and initiatives Mann Deshi has tied up with Yashvantrao Chavan Maharashtra Open University to relocate women who have had to quit their studies due to several reasons.

For reaching out to women in the remotest areas, the institute had set up a Mobile Business School. “An equipped van goes from one village to another to give women lessons on computers, tailoring etc,” explains Shinde. The cost for this initiative has been borne by Bonita Trust, Godfrey Philips, and Vitol Foundation.

Three out of the five branches of this B school have been sponsored by Accenture. Organisations like Global Giving and HSBC have also supported many of the school’s initiatives. The teachers here are trained by renowned companies like Accion Micro Finance, Dasra etc. Mann Deshi has also attracted foreign interns from Yale B-School, and Harvard and Columbia universities, given their abiding interest in developmental studies and microfinance.

The foundation holds an exhibition-cum-sale every year in Satara. Known as Mann Deshi Market, it is an excellent platform to sell products made by rural women. This year’s sale was held during the International Women’s Day.

Radio station and bank Mann Deshi Tarang is a community radio station launched by the foundation in 2010. It broadcasts several informative programmes on finance, marketing, family welfare, healthcare, and workshops. It is also a platform for the people of Satara to voice their concerns, unleash their creativity, and preserve their culture.

Chetna Gala Sinha

We not only give hopes to women, but also an opportunity to bring about a difference in society

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ENTREpRENEURshIp CLAssROOM

Crowdfunding: An innovative source of funding

By VSM Nair • The US offers fertile soil for the sprouting of such ideas as crowdfunding. It originated as a way to raise money for creative projects presented on websites. Initially, a typical project raised $5,000 with the support of 85 people. Now, it could raise a figure as large as $10.3 million, by Pebble, a watch that uses electronic-ink technology.

• Interest in crowdfunding exploded after the JOBS (Jumpstart Our Startups) Act relaxed securities regulations in the interest of encouraging crowdfunded investments in startup companies of all sorts in return for an equity status – a democratised form of venture capital.

• Kickstarter, the most popular website engaged in crowdfunding of new ideas, launched 28,718 projects (JanuaryAugust 2012) involving pledged funding of over $200 million.

• Many websites now offer small investors the opportunity to earn interest from lending money either to individuals or businesses while others allow people to invest as little as $20 in return for an equity stake.

• Worldwide crowdfunding touched $2.7 billion in 2012; the US accounts for bulk of it.

(The first crowdfunded project in India is for an offbeat film. It raised `5.1 million, little over $90,000, within 10 days through a Facebook page and blog.)

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What is crowdfunding?

According to Wikipedia, crowdfunding is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organisations.

It is also known as crowd financing, equity crowdfunding, crowd-sourced fundraising.

ENTREpRENEURshIp EVENT

into action MI Bureau

I

NK, a physical and digital platform for people from diverse fields to share their innovative ideas and paradigm-shifting work, has announced that the second edition of ‘INK Live’ would be held at the JT Performing Arts Centre in Kochi from October 25 to 27, 2013, under the aegis of INK Conference, in association with TED. Conceived specially for the youth, INK LIVE 2013 will witness a confluence of renowned artists, entrepreneurs, technologists, designers, and scientists. The event, which will be telecast live, would entail simultaneous workshops on areas such as the future of 3D printing through Autodesk, interactive sessions by INK Fellows, contests, and speaker interactions. Expected to attract about 600 attendees from India and different parts of the world, the event would give participants an opportunity to explore the ethnic, social, and professional diversity of the world.

INK first burst onto the scene in 2010, a year after Lakshmi Pratury (Founder, Host, and Curator of INK) brought the influential TED Conference to India. Since then, the INK Conference has been convening a multidisciplinary gathering every year. Speakers have included household names like film director James Cameron, new age guru Deepak Chopra, and Simpson’s creator Matt Groening, as well as many unknown names that are quietly making a difference in their respective fields. The

unique stories that inspire and create today’s leading thinkers take centre stage at INK. As INK serves as an essential medium to express thoughts, it strives to be an essential medium through which individuals can voice and act on ideas. INK pushes the geographic boundaries of nation-states, encouraging a network of connections worldwide – striving for intellectual renewal and inspiration on a global scale. The Conference converts speakers’ talks into the familiar 3-18 minute format for online viewing at www.inktalks.com, free of cost.

The INK Conference, in association with TED, is a coming together of a diverse set of people for three days of complete immersion in ideas. It has been often compared to a ‘brain spa’; the stories, ideas, and perspectives shared here challenges your thinking and what you know.

“India is in dire need of not just new imagination but also an ecosystem to turn this imagination into impact. INK is a community that is dedicated to discovering new role models, thereby playing the role of a catalyst in incubating and developing the change agents of tomorrow,” Lakshmi Pratury, Founder, Host, and Curator of INK told Money Indices.

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mentoring

Are you ready for a startup?

BY Sajeev Nair

I

t is quite exciting to see a number of youngsters trying to start their own business. It would be interesting if we can take a count of the number of startups happening every day in India.

Even college graduates venture into businesses as soon as they complete their course, some even do it during their studies.

As I personally coach and mentor many entrepreneurs, and as our business consulting firm ‘Bramma business insights’ works in the domain of systemising businesses, I get many mails and phone calls from such startup enthusiasts. As it is my passion to see success in others, I spend time and energy with these youngsters so that I could share with them my experiences as a first generation entrepreneur and also what I and my consulting team learn from various clients in different industries. I thought of starting my column in ‘Money Indices’ on this topic itself as the most exciting thing in anybody’s life is to start something new.

Do something!

Many graduates think there is a perfect opportunity out there, and they want to wait for it. The truth of the matter is that even if that opportunity does exist, you wouldn’t recognise it by just waiting.

The key is to do something, ideally in a field you are interested in, and start to learn. By doing something, you will realise your real interests and uncover the perfect opportunity to pursue. This is the only way you can find out new ideas and explore possibilities.

Learn to implement You can be the best big picture thinker in the world, but if you can’t implement, your ideas are worthless.

Taking action is the key and for which you need guts. It can be finding the right people, registering a company, etc. I would tell every graduate to think about how he/she can begin to implement on the smallest scale possible, validate, and scale up. Inch by inch everything is a synch. How do you eat an elephant? One bite at a time!

Find a lesson in every experience

You need to have an idea where you want to be and how you can see yourself five years from now or even 10 years from now You need a dream It all starts with a dream. I have never seen great success stories from people who came into business by default; means just to carry on what their father or forefathers have started. You need to have an idea where you want to be and how you can see yourself five years from now or even 10 years from now. You also need to find out what really drives you in life; money, positions, creativity, innovations, reputation, family, service…. nothing is bad or good, but it is important to find what are the driving forces within you, what really interest you.

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I’m a firm believer that you can learn from every experience you have - good or bad. Whether you’re working for a gigantic corporation in a cubicle or travelling the world as a freelance travel blogger, pay attention to what’s happening around you and see how it can apply to your own life and career. As Dhirubhai Ambani said, “To become successful, you need to observe all the things happening around you.” As a first generation entrepreneur having ventures in diversified fields such as hospitality, education and IT, I always found learning from every experience is the best learning for an entrepreneur.

Appreciate the power of marketing Peter Drucker said, “Marketing and innovation produce results; all the rest are costs.” History is littered with superior products that never made it to mainstream commerce because no one ever knew

SAJEEV NAIR

about them. Marketing is the most important function of business. Never underestimate its importance.

Be transparent

Think long and hard about what makes your idea unique. It doesn’t have to be new, but it has to be innovative or have a twist from what is in the market.

We live in a world where it is easier than ever to start up, so what makes you so special?

Share as much information as possible. No one is going to steal your idea. The feedback you receive is well worth the risk of sharing your idea with others. Be transparent with both your potential clients and employees.

Transparency builds trust and loyalty. Don’t be afraid to make yourself a little vulnerable. Be real, be yourself, and people will respect and appreciate your approach.

Interview people who have started up before

Reach out to alumni

Come up with unique ideas

Take sometime out to do informational interviews with anyone you admire. Learn from other people’s career paths. Connect with them to develop your network. Ask them if there’s anyone else you can connect with to help with your exploratory career journey. We all know what it’s like to face big questions like the ones people face after graduating. For that reason, people are willing to help you.

Reach out to alumni who are entrepreneurs and have started their own businesses. It doesn’t matter how big or small their businesses are. Connecting with them will be extremely valuable. Experience is the best teacher, it is always better if it is somebody else’s experience, so that you don’t need to learn from your own mistakes.

They are an instant support system.

It’s good to have corporate job experience

Paul Zane Pilzer, noted economist, Nobel Prize nominee, and advisor to two American presidents, defines an entrepreneur as a problem solver. Whatever you decide to do as a business, always start with a problem that a specific category of people have or one that you have experienced. Do not start up because market research states great potential for your industry or because you feel you can do a better job at what others are doing. Go the extra mile in finding out what is troubling people, and then build your product to address that.

I always recommend a graduate to take up a corporate job before he ventures into own business. I spent a good seven years in the corporate world before I ventured into business. However, I learned a lot more in those years than I did in the management school. A traditional job will give your insight into what you don’t want your company to become and teach you skills to navigate real-world situations. Think of it as training on someone else’s dime.

idea should be a solution to a problem

Sajeev Nair is a highly successful entrepreneur having businesses in hospitality, information technology, and business consulting & training industries. He is an internationally sought after business coach, motivational trainer, and an author of four bestselling books. To know more about him, visit www.sajeevnair.com. Mail him on mail@sajeevnair.com

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ENTREpRENEURshIp FUNDING

Private Equity

Is a good financing option?

V

by Smitha Hari

enture Capital (VC) and Private Equity (PE) finance have become increasingly popular financing options over the past decade in India. Most small companies are family-run businesses with substantial personal funds invested into the company. Promoter equity is limited, and when debt lines from banks have been fully utilised, PE becomes an attractive option to raise capital. PE means raising monies from private parties and institutions by giving up a part of the existing stakeholders’ stake. Let’s look at the advantages and drawbacks of a PE investment:

Advantages of PE This form of funding is treated as equity, which is a good avenue to open up debt from banks, as lenders would prefer to lend to a company with comfortable levels of equity in the capital structure.

Most companies, which receive PE investment, opine that the biggest benefits of it are the visibility, networking benefits, and the recognition received. This is because when a small company receives money from a PE fund of national or global credit, the company’s credibility increases in the eyes of customers, suppliers, creditors, and other stakeholders.

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PE money is long-term capital, the money staying with the company for at least five years. This helps promoters to take a long-term view on the capital raised, giving ample time to strategise without being pressurised to return the capital. It also helps in improving cash flows vis-à-vis debt, as this does not entail interest payments and principal repayment on an annual basis.

Funds raised from private parties help in increasing the valuation of the company for further rounds of fundraise. Companies receiving PE investment also improve their corporate governance policies. PE investors invest across companies and sectors, and come with a rich experience. This helps them guide the investee company in strategising as well as in improving day to day operations. An entrepreneur benefits immensely from such valuable inputs from experienced PE investors.

A partner in both the risks and rewards of the company, a PE investor’s upside and downside is directly related to the upside and downside of the company’s performance. As a shareholder, he is interested in growing your business at all stages; thus resulting in allied interests. It is seen that PE-backed companies generally demonstrate quicker growth as compared to non-PE-backed peers.

But PE is not a complete bed of roses. There are many drawbacks and challenges that need to be considered by a company looking to raise funds through the PE route. Let’s see the disadvantages of the PE option.

FUNDING

Drawbacks and challenges of PE A PE investor is a shareholder of your company and holds a minority stake or a majority stake depending on the company’s valuation and the funds invested.

Remember that he is also an owner of your company, which means you must sacrifice a part of your stake in the company. This also means that you sacrifice a part of your future profits, because of his shareholding.

Equity is costlier than debt as PE investors generally look at returns upwards of 25 per cent every year.

PE investment results in you losing control over your business to some extent. As most PE investors ask for a board seat, every important decision of the company will have to get the approval of the investor.

This can cause delays in carrying out important decisions and such interferences may not be very welcome in many cases. This is especially true of family-run businesses where even professional decisions are taken at a personal level. When differences of opinion become a regular practice, it can result in increased conflicts, leading to a stress in your relationship with the PE investor. It is also important to avoid situations of conflict in order to retain the motivation levels of your employees. Keeping your employees’ motivation levels strong is of paramount importance to help you retain your staff.

Most small businesses do not have sophisticated internal and bookkeeping processes, thus making it a challenge to provide timely information in the due diligence stage before receiving the PE investment. Due diligence takes place in various areas: financial, legal, and business. Due to the intricacies involved in the diligence stage, a PE investment takes longer time to complete as compared to other forms of fundraising.

Even after the investment comes in, PE investors demand regular information like submitting regular Management Information System and tracking different financial parameters. Although this is good for the business in the long run, you must be prepared to invest management time and effort in this exercise.

PE investors also require streamlining various areas of the business. This may require a complete change in different aspects, including changing your company’s auditor according to their preference. As an

entrepreneur, you should be prepared to agree to certain conditions before and after the funds come in.

So, is PE a good financing option?

Many entrepreneurs are faced with the dilemma of whether or not to opt for a PE investment when they need money. If you need short-term financing, it may not be wise to choose a PE investment, as financing short-term objectives with long-term money does not make financial sense. Despite the challenges and drawbacks in the PE option, you can consider it if you need long-term finance due to the multitude of positive aspects, to take your company to the next stage of growth.

Smitha Hari is the founder-partner of THINK Financial Advisors & Consultants, Mumbai, a financial consulting firm offering business research services, feasibility studies, business plans, valuation services, and fundraising services to SMEs.

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credit rating

Credit Information

Reporting turns crucial

BY Harshala Chandorkar

Making head and tail of Credit Information Reporting a Guest Column by Harshala Chandorkar, Senior Vice-President – Consumer Relations, CIBIL

C

redit Information Bureau India Ltd (CIBIL) is the country’s first and largest Credit Information Company.

It is also referred as Credit Bureau. CIBIL maintains a databank of payment records of individuals and commercial entities against their loans and credit cards.

Banks and lenders submit these to CIBIL on a monthly basis, which, in turn, are utilised to make Credit Information Report (CIR) and Credit Score, enabling lenders to evaluate and approve loan applications.

Facts about CIBIL: • CIBIL Consumer Bureau was launched in 2004 with four million records. Now, it maintains more than 270 million records • CIBIL Commercial Bureau was launched in 2006 with 0.7 million records, and now, it has more than 14 million records • CIBIL has a strong member base of over 900, including banks, financial institutions, nonbanking financial companies, and housing finance companies.

Today, a credit score is one of the most trusted indicators of the borrower’s credit risk and repayment capability. The CIBIL TransUnion Score is a three-digit numeric summary, ranging from 300-900, of a borrower’s credit history.

Your credit score and credit report not only determine whether or not you qualify for a loan, but it can also have an impact on the terms and conditions you can avail on the loan. The higher the credit score, the better may be your chances of availing the loan faster and on favourable terms. It is advisable to check your CIBIL report and score

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before applying for a housing loan. It may also give you better bargaining power with the lending institution.

In developed economies, every individual’s CIR and score are critical reputational collateral used for several purposes like for recruiting, renting out a property, assigning limits for telephone connections, etc. India is also witnessing an environment in which the CIR and score are gaining increasing relevance in the lives of consumers, not only for availing credit, but also in other sectors as mentioned below: • Investments & securities: Now, Securities and Exchange Board of India (SEBI) investment advisers need to have a good CIBIL credit report and satisfactory research capacity to secure permission to provide advice to investors in stocks and other capital markets.

SEBI feels that regulations need to be robust enough to safeguard the interest of investors in the capital markets and including the requirement of a credit report or score from CIBIL would ensure further strengthening of these regulations.

• Retail financing: Now, finance companies and banks also check creditworthiness of consumers, who are seeking to buy televisions, computers, and other electronic products on Equated Monthly Installments to provide them instant financing at the store itself. With the help of DecisionCentreSM, an automated decision-making platform offered by CIBIL & TransUnion, finance companies can check a consumer’s credit score instantly and offer them easy EMIs for purchase of the product on credit. They use this instant decisioning solution to check whether the consumer who desires to avail of this credit facility would turn out to be a good re-payer or not. This helps

HARshALA ChANDORkAR

back loan dues on time. Remember, failure to do so now may have adverse implications not only on your financial health but otherwise as well.

Here are some ways for maintaining a good credit history and score: • Make regular and timely re-payments of your loan to maintain your credit level • Never fail to pay the minimum payment on your credit card. It is advisable to make full payments on your credit card every time.

• Do not apply for loans or credit cards if not required.

• Use some of your savings to repay some of your debt.

Always plough back extra income to reduce your debts.

• Avoid going in for settlements. Although you make payments for your purchases, in a settlement case, it would bring down your score level. And never get into a write-off scenario. This means not paying your dues at all.

• Review your credit history and credit score frequently, throughout the year them make faster decisions at the front end counter.

• Telecom: Telecom service providers are using the CIBIL TransUnion Score for making instant decisions on post-paid mobile phone limits. When a consumer applies for a post-paid telephone facility, the service provider will pull her/his credit score and credit history on the basis of the information provided in the application. This will enable them to assess the consumer’s financial standing and assign an appropriate credit limit on the post-paid connection on the basis of their policies.

• Insurance: Insurance companies are using CIBIL credit reports - CIBIL Locate Plus, which provides them with updated contact information on their consumers. This information helps them contact and follow up with their customers and enhance outreach.

• Stock Broking: Stock Broking firms use reports to increase their customer contractibility. They are also using a credit information solution called CIBIL Bureau Credit Characteristics, which provides them with data on the credit exposure on their clients.

This enables them to gauge the extent of net worth of their client.

• Asset Reconstruction Companies (ARCs): ARCs use the CIR and solutions like CIBIL Portfolio Review and CIBIL Bureau Credit Characteristics to enhance the efficiency of their collection processes. This information gives insights into the consumer’s overall credit profile and exposure and formulates their strategies accordingly.

Thus, with the growing relevance of these two tools across areas other than lending, it is essential for every individual to maintain a good credit history and pay

Even if you have a low credit score today, don’t be disheartened. The credit system always gives scope for improvement. You can start improving your credit score by simply paying off your debt and not opting for more until your score improves. Better late than never!

Shareholding patterns: Shareholding: 14 entities, including TransUnion, leading banks, and financial institutions hold a stake in CIBIL Trans Union International Inc – 27.5 per cent

Sundaram Finance Ltd – 2.5 per cent

State Bank of India - 10 per cent

Indian Overseas Bank – 5 per cent

Housing Development Finance Corporation Ltd – 5 per cent

Standard Chartered Bank – 5 per cent

ICICI Bank Ltd – 10 per cent

The Hong Kong and Shanghai Banking Corporation Ltd – 5 per cent

Bank of Baroda – 5 per cent

Citicorp Finance (India) Ltd – 5 per cent

Bank of India – 5 per cent

Union Bank of India – 5 per cent

Central Bank of India – 5 per cent

Punjab National Bank - 5 per cent

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SUCCESS STORY

$5 history of a logistics empire, walking alongside kala T S Kaladharan built an empire from oblivion. His Business acumen backed with sheer determination has placed him in the league of great achievers in the logistics industry today.

Money Indices traces his humble beginnings…

by Sarath vasudev

A

s renowned writer Thomas Fuller rightly said, “An invincible determination can accomplish almost anything and in this lies the great distinction between great men and little men.” This very determination is the cornerstone of Kaladharan’s success, making his life a fairy tale of sorts.

In the mid 1970’s, a dreamy eyed 19-year-old from a small village called Thrikkunnapuzha in Alleppey district landed in Bahrain with just 5 dollars in his wallet.

Strategic diligence and relentless hard work have transformed that 19-year-old to today’s Thamarapappallil Sreedharan Kaladharan, Chairman of the multimillion dollar logistics empire, Consolidated Shipping Services (CSS).

“I came here with a few dollars in my pocket, and it was my ambition and neversay-die attitude that worked to my advantage.

I never got bogged down by failures in my life. I was always determined to handle any challenge in a way that will only make me grow,” says Kaladharan.

As the Chairman and Founder of CSS Group, Kaladharan has transformed the company into one of the largest integrated freight forwarding solutions providers in the Middle East. It is one of the leading non-vessel operating common carriers (NVOCC) in the region today. It caters to freight forwarding

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CSS GROUP

requirements, by sea, land, and air. Headquartered in Dubai, CSS Group has more than a thousand experienced and dedicated professionals, across its 20 offices in the Middle East and the sub-continent. CSS has entered into yacht and marine logistics recently.

Affectionately called ‘Kala,’ the man from a serene village of Kerala has already created his own space in the Middle East. With a capital of Dhs 3,50,000 and a meager number of employees, CSS has grown into a global player in freight forwarding and logistics solutions, since its inception in April 1995.

As the Chairman and Founder of CSS Group, Kaladharan has transformed the company into one of the largest integrated freight forwarding solutions providers in the Middle East

walk out of the company, when the company decided to refrain from business in Dubai, during the Kuwait war in 1991,” says Kala.

“When the world says, ‘Give up’, hope whispers, ‘Try it one more time!’ This mantra worked for me. During that difficult phase, I met a foreigner at a Dubai hotel, and the meeting culminated in a deal that got me a break as a freelancer in freight forwarding business.

I was quick to pounce on the offer, and within days, I found myself running truckloads of cargo for the US Army,” recalls Kala.

Kala candidly admits that the journey to success was not at all a smooth sail and winning the confidence of the new clients was all the more complex. “Building trust was the biggest challenge we came across at the

Kaladharan began his career as a front office assistant with DHL at its Bahrain office. He worked for 10 years with the courier company in the cargo forwarding division. His skills and proficiency in typewriting gave him an instant reckoning and a promotion as cargo supervisor.

Pursuing better application of his contacts and expertise, Kala moved to Dubai and joined Masteg Freight Services as its export manager. “My decision to move to Dubai was an easy one, because Dubai was then considered a transit haven for growing markets. But I faced an early setback, and had to

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SUCCESS STORY

Learn first, experience, and be honest in business, and do support the people around you

employee welfare measure, the company serves a daily start, given the type of business we were into. In such a niche market with high-end clientele, we have to be lunch to the entire workforce. We also share our plans and perspectives with the employees through our bisuperimposing,” says Kala. monthly publication, Lighthouse, which is quite popular Regarding the industry and current market among the shipping fraternity world wide. It’s a team scenario, Kala stays confident. “The logistics and game, right?” freight forwarding business is here to stay; it has bright The dynamics of the logistics industry are everprospects in the years to come. But we are faced with changing and vibrant. So, how does CSS meet the tough competition from others in the field. In fact, we growing necessities within the company? Kala says are competing with multinationals that have 50-60,000 that keeping pace with the industry needs is one big employees. Their deep pockets pose a challenge.” A challenge. “Meeting the growing demands of the major change that has to be brought about in the sector, industry is not that easy. We have he says, is the reduction of surcharges to be open to any bit of information associated with shipping goods, from investment in quality people and which comes at you. I am open to which the consumers can benefit. criticism. I even listen to newcomers.”

Kala is of the opinion that the the ability to work as a closeAsk Kala about his affection for his team spirit has done a world of good knit unit have delivered rich homeland and his social commitment for his firm’s success. According to for his native place, he turns him, investment in quality people and dividends emotional, “My country means a lot to the ability to work as a close-knit unit me. I am deeply in love with my hometown. Seventy per have delivered rich dividends. Attributing the success cent of our employees are from my village. I haven’t said of his company to the dynamism and competitive spirit no to any person who has knocked my door for a job.” of his colleagues, he says, “I am a strong believer of A philanthropist, Kala extends support to schools team and teamwork. No organisation in this world has and other educational institutions for betterment of the ever succeeded without a good team effort. We should underprivileged children. Not just that, Kala and CSS have faith in our employees, and we should instill are into many Corporate Social Responsibility (CSR) confidence into them for better performances. CSS does initiatives in the Middle East, like supporting medical it this way and the result is there for all to see. As an causes and other charity events.

Having emerged unscathed from the rough seas of economic recession, Consolidated Shipping Services sees a bright future ahead. “We are in for good times and are keenly looking forward to the 2020 Dubai Expo.

It will be a great event, and we are sure that it will turn out to be a landmark in our business,” says Kala.

Just as a committed businessman, Kala is very much a family man. He lives with wife Devika, twin daughters Chandrakala and Sasikala, son Krishna Kaladharan and son-in-law Arjun Bose in Dubai. He likes barbecue, cooking, and travelling. A passionate animal lover, he owns an elephant too. A boat race enthusiast, he has one snake boat (Devas) and one Thekkan Odi (a boat smaller than a snake boat with 40-60 rowers) race boat in Alleppey.

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MEDIA

Checking the media’s pulse, WiTH E4M d asone e s , r neu dealrepre d t e n t e a l ic a Natur st, sophist advertising li a t, journ edia exper ed into ,m ll maker t, or all ro Chairman, ar ra, it to stalw ag Bat up, leaves r u to Ann ro one? edia G ney Indices k m 4 e g o c n excha retion of M up to unlo s c s s the di im as it ring skills, view h ip n define epreneursh he explosio t tr his en n media and Arnab f ia on Ind went, rise o ore r m e it und , and much mi Goswa hnu

By Vis

ev R

Rage

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MEDIA

B

ritish novelist and journalist Eric Arthur Blair, known by his pen name George Orwell, once famously said, “Journalism is printing what someone else does not want printed.

Everything else is public relations.”

However, it needs to be examined which media outlet in the world follows Orwell’s journalism theory, Annurag Batra, Chairman and Editor-in-Chief of exchange4media, one of India’s leading media buying, selling and planning platform, tells MI over phone from Room No. 2512 of ITC Sonar, Kolkata.

“Well, I am not saying such principles are passé in the media world. Those outlets, which have clear editorial, PR, and advertising policies, tread ahead of competitions. The victory of a media vehicle primarily depends on successful branding and strategic content; combined with effective distribution elements.”

Big Bang theory The Indian media industry, which was worth $3 billion during early 2000s, has seen an explosion over the last decade. The total size of it is presently estimated at over $7 billion.

Indian media underwent a revolution over the last ten years, especially TV and digital, says Batra. “In 2000, when we set off our journey, we just had five media clients. Today, we render services to over 350 media brands across verticals. We were also lucky to be a part of India’s changing media landscape.”

The victory of a media vehicle primarily depends on successful branding and strategic content; combined with effective distribution elements Annurag Batra

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It was earlier projected by few media observers that newspapers will extinct in ten years. Contrary to such views, newspapers continue to prosper, although there is pressure for few English dailies revenue-wise.

“Yes, televisions lead business volume-wise. TVs will soon account for more than twice the size of print, the second largest media sector. In the case of digital media, the impact of it has been huge lately,” informs Batra.

Birth of e4m The e4m founder blames his bad luck while commenting about the first entrepreneurship opportunity he had missed. In less than six months, luck once again ran in his favour. It was when Batra along with Amit Agnihotri, a colleague at JWalter Thomspon, who also shared similar values, started contemplating on an idea, to offer a unique platform for media buying and selling in India.

“One of the reasons why I believe in destiny is because I was fired from the job at the right time

MEDIA

when our business or decision-maker, the idea was really chances of business In India, people do business face-to-face. It taking shape in conversions are high. is purely the functional aspect. When you mind. I had no So, our b2b platform other option but to started picking up after meet the owner, CEO, or decision-maker, the take a raw plunge. restructuring of the model. chances of business conversions are high.

We managed to The real breakthrough raise `70 lakh seed came when e4m.com So, our b2b platform started picking up capital to give birth began a daily newsletter for after restructuring of the model. The real to our new born. connecting our patrons,” he My partners Amit clarifies. breakthrough came when e4m.com began a Agnihotri and e4m group has become daily newsletter for connecting our patrons Nawal Ahuja stood a single-stop information as pillars along platform for the media world with me. Even today. The publication house, my wife had full which is headquartered in confidence in me.

Delhi, has bureau offices in That was the time when I got married and didn’t have Mumbai, Kolkata, Bangalore, salary or enough money,” remembers Batra. and Chennai. It publishes five titles that make up the Batra and his partners were first generation portfolio, namely, Impact, Pitch, Franchise Plus, Realty entrepreneurs. Like all startups, e4m also had its share Plus, and flagship portal www.exchange4media.com. of setbacks. They tried to solve the problem of buying Exchange4media.com is widely accepted as and planning media, which was very insufficient those the portal that presents breaking news and fresh days. And one of the biggest challenges was that they perspectives in the broadcasting, media, advertising, were really ahead of time. Mainstream media brands and marketing domains. Over the years, the site has (Branded Inventory) had the resources and didn’t want grown exponentially to become one of the most credible to experiment their time and money with a startup and large sources of media, advertising, and marketing like e4m. information in the country.

“You must understand that we were a farm Pitch is a monthly advertising, marketing, fresh startup,” reasons Batra, “Our pursuit broadcasting, and media magazine. The to push brands like The Times of India magazine takes a closer look at the evolving (ToI), Sony Entertainment, Outlook advertising, marketing, broadcasting, Group, Zee Network, Hindustan and media paradigm and provides Times (HT), Star TV, India Today, incisive, in-depth reports, surveys, and the like for association analyses, and expert views on remained unaccomplished a variety of subjects. Impact initially. To be precise, is a weekly single-point bigger advertisers were source of intelligence interested only in for today’s business bumper deals. managers, leaders, Their logic trendsetters, and was simple: opinion-makers. they wanted to Franchise Plus wait and watch is a bi-monthly our performance. magazine that focuses Confidentiality of data on franchising, retailing, on inventory was another distribution, retail real big issue.” estate, and licensing industry.

Initially, e4m’s idea of A monthly magazine, Realty Plus exchange was not working in provides information pertaining to the way Batra and his team had real estate. planned it. It took three years to Besides magazines and portals, e4m convert the business into a workable as has successfully launched over 20 important well as profitable model. “In India, people industry events. Its present revenue tally is: do business face-to-face. It is purely the 40 per cent from print, 45 per cent from online, functional aspect. When you meet the owner, CEO, and 15 per cent from events. “Revenue share from

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MEDIA

events would increase as we are planning more and more niche categories. In the media business, frequency makes the difference. If you have a daily product, then the opportunity to earn on that product is much more than a weekly or monthly product. So, exchange4media.com will remain our best milk cow.”

Voicing choices Batra writes a column titled ‘Media Mantras’ on the Impact weekly that debates bluntly on every other thing related to the media. Batra has always advocated his concerns over Indian media companies run after the so-called breaking news phenomena.

Breaking news has been overstretched because you know you can’t have five breaking news at a time, explains Batra. “Although customers are not forced to watch breaking news, it is still diluted and there is no question of it. Of course, because of which the news audiences have even shifted to general entertainment channels (GECs). Most of the advertising, 50-60 per cent, is in GECs. News channels must live up to the customer expectations to retain viewership.”

Ask him about the best business news daily brand in India, and he is quick to point at Economic Times (ET). He cites a few reasons for that: “In the era of digital, internet, and business news channels, ET still breaks more news than any other media brands.

The length and breadth of analysis is the best. ET publishes so many specials, which are again best of its

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Today, you don’t need to be a big brand to make an impact. You don’t need a licence from the Information & Broadcasting Ministry to post news content on your portal or on a small internet platform. Anybody can create the impact in today’s world. So, the media industry will see further boom” kind. I genuinely believe that the quality of writing and treatment of news and analysis is much better than its peers. ET is world class in what they do. It is as good as any pink paper across the world.” Similarly, Batra recommends UK daily Financial Times, claiming that they bring out the best from the finance world.

Batra has unsurprisingly witnessed the evolution of Arnab Goswami as India’s best TV anchor and journalist. “I know Arnab, so I can tell you how sincere and loyal he is to his audience. He steps into every Indian’s shoes and has a style of delivering news. He asks tough questions, yes very shrill. The questions which I and you wanted to ask. Which journalist in this country has the guts to remind a top Shiv Sena leader that he is not sitting at a Shiv Sena rally but at Times News Hour?” asks Batra.

Batra also seconds ToI as the best editorial product, which vehemently continues to champion many social changes. “What do you expect from a media house? First and foremost, you expect that it acts as the fourth estate and would champion social change. Through campaigns like Teach India, Lead India, ToI is trying to be an agent of social change.

The reason why everybody wants to be in ToI is because it is the best editorial product in the country.

Most importantly, it is a profitable media venture. If you are profitable, you can invest back in editorial development. Also, it has got the best quality of saleend in the media industry.”

About an edit comparison between The Hindu, HT, and ToI, Batra clarifies, “Lot of people in Delhi read The Hindu. The Hindu is a very good editorial product, but it is unfair to compare it with ToI. HT in the last seven to eight years has done exceptionally well. They launched Mint, which was a success. Mint is a differentiated product. They launched HT Mumbai.

However, they are nowhere close to ToI.” Today, you don’t need to be a big brand to make an impact, continues Batra. “You don’t need a licence from the Information & Broadcasting Ministry to post news content on your portal or on a small internet platform. Anybody can create the impact in today’s world. So, the media industry will see further boom,” concludes Batra, chanting his favourite mantra ‘Aum Sai Ram’.

CORpORATE TATA GROUp

Tata gets

a new game changer The Tata Group has taken one big stride with the appointment of Nirmalya Kumar, as part of its renewed efforts to consolidate its global footprint

T

BY Sarath vasudev

ata Chairman Cyrus Mistry knows the power of brand recall for sure. Or else, why would he rope in the world’s most-sought-after marketing strategist Dr Nirmalya Kumar for Tata Empire’s all-new push for its brands? The young Turk will be responsible for Tata’s strategies at the group level and will report to the Chairman. In addition, Kumar will lend his expertise in bringing customer centricity to the fore, across the group companies. The high-profile appointment has already created a buzz in the corporate world.

Kumar’s association with the Tata Group comes at a time of transition. He not only has to recapture Tata’s markets in India, but also sustain rapid growth at its overseas units. Specifically, he is expected to devise tactics to revive the fortunes of Tata Steel and Tata Consultancy Services. According to marketing gurus, Kumar’s appointment is ‘one big stride’ of Tata Group to enter the world market it caters to, with full force.

Kumar was the professor of marketing and co-director at London Business School. A prolific speaker, consultant, coach, and author, Kumar graduated from the Calcutta University in BCom before doing his MBA from University of Illinois, Chicago, and PhD in marketing from the Northwestern University, USA. He has taught at the Harvard Business School, IMD (Switzerland), and the Kellogg Graduate School of Management. He has also served on the Boards of several top companies. He is still a member at London Business School.

The top-notch marketing strategist is considered to be one of the world’s leading thinkers on strategy and marketing. He was included in Thinkers50, the biannual listing of the top 50 management thinkers in the world.

He was also honoured with the “Global Village Award” for contributing the most to the business community’s understanding of globalisation and the new frontiers established by the emerging markets.

Kumar’s international stature is not just limited to his flamboyance in studies; he has also shown his grandeur with six bestsellers: Marketing as Strategy (2004), Private Label Strategy (2007), Value Merchants (2007), India’s Global Powerhouses (2009), India Inside (2012), and Brand Breakout (2013). He has also authored articles such as “Have You Restructured for Global Success?”, “How Emerging Giants are Rewriting the Rules of M&A”, and “Kill a Brand, Keep a Customer” (Harvard Business Review). He has been awarded with the Honorary Fellowship by the School of Oriental and African Studies, University of London, in recognition of his patronage and promotion of South Asian art.

The Tata Group’s decision to induct Kumar seems to be a masterstroke, after Mistry took over the reins from Ratan Tata. Mistry had formed an Executive Council Group to replace two group-level units that reported to Tata. Kumar is the fourth appointee to the wing in the past two years. Chief Human Resources Officer N S Rajan, Tata veteran and Group’s brand custodian Mukund Rajan, Business Development Chief Madhu Kannan are the remaining members of the Executive Council Group.

The marketing whiz kid’s appointment is being closely watched by many industry observers and analysts.

Experts feel that many more such appointments will be made Dr Nirmalya Kumar soon.

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CORpORATE HUL

THE TURNAROUND MAN Challenging the tough economic environment, Nitin Paranjpe brought Hindustan Unilever back on its growth track over five years of his stint as the CEO and Managing Director of the company

By Dipin Damodharan

T

he global consumer giant Unilever rejigged the top leadership of its Indian arm in July last week, elevating Nitin Paranjpe, one of India’s most successful and celebrated management professionals, to the Unilever Leadership Executive (ULE).

Paranjpe, currently the Chief Executive Officer (CEO) and Managing Director of Hindustan Unilever (HUL), will be taking on the role of President, Home Care, from October 1, 2013. At the same time, Sanjiv Mehta, currently Chairman, North Africa and Middle East, Unilever, will take over as the CEO and Managing Director.

The company is pinning great hopes on Paranjpe as the Home Caredivision is gaining market share in Europe, China, and South Africa. “The changes reflect our strong commitment towards leadership development and our tradition of leveraging experiences and synergies of talent across markets. I wish to take the opportunity to express my deep appreciation for the significant contribution that Nitin

made to the business in India and his leadership in driving the growth agenda. I would like to congratulate him on his richly deserved elevation to the ULE,” Harish Manwani, Chairman, HUL, said.

When Paranjpe became the chieftain of HUL in April 2008, at the age of 46, he was the youngest to head the Indian arm in its history. Being at the helm of the Anglo-Dutch consumer conglomerate’s Indian arm wasn’t easy for Paranjpe as the company had been losing market share in all segments. The share price of HUL stayed around `200 for eight years. It was not fine for a company that claimed to touch the lives of two out of three Indians. With his fine management skills and farsighted vision, Paranjpe has come out with stunning results. Under his leadership, the company’s market capitalisation has steeply risen from `51,283.69 crore in 2008 to `143,394 crore in 2013. What makes him the real turnaround man?

In a 2012interview with Forbes India magazine, Paranjpe said, “If you have to fail, fail early, before it becomes too expensive. If you have to fail and not make the same mistake again, then the failure is well worth it. But we don’t encourage failure. I encourage winning.” He has explored all the

HUL is valued at US$ 25.1 billion in the US$ 13 billion consumer goods sector

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HUL

early years in the company, Paranjpe worked as Area Sales Manager (Detergents) and then Product Manager (Detergents). In April 1996, he became the Branch Manager in Chennai, and in February 1999, he was appointed as a member of the Project Millennium Team.

Paranjpe moved to Unilever London in 2000. He was also an Executive Assistant to the Chairman and Executive Committee in Unilever London. As the Category Head (Fabric Wash) and Regional Brand Director (Asia) for several Laundry and Household Cleaning (HHC) brands, he returned to India in 2002. In 2004, he became VicePresident, Home Care (Laundry & HHC) India. He was appointed as the Executive Director for the Home & Personal Care business in March 2006.

HUL announced the appointment of Paranjpe’s successor with the June quarter results. The company said its net profit rose 4 per cent to `8.85 billion. During the quarter, the Domestic Consumer business grew competitively at 7 per cent with 4 per cent underlying volume growth ahead of market. According to experts, the company faces a difficult choice between raising prices and retaining market share.

rnaroun u t e

d

Th

possibilities of digital media to strengthen HUL’s brand position in the minds of consumers.

The makers of country’s popular consumer brands like Fair and Lovely, Clinic Plus Shampoo, Dove Soap, and Lipton Tea, HUL is now valued at $25.1 billion.

Over five years of his stint as the CEO, Paranjpe has added more than `10,000 crore in HUL’s revenue. The company’s net profit has jumped to `3,828.98 crore in the 2013 fiscal. Sales have increased from `20,457.95 crore in 2008 to `27,003.99 crore in 2013.

A Mechanical Engineering graduate and an MBA holder from Jamnalal Bajaj Institute of Management Studies, Mumbai, Paranjpe joined the company as a management trainee in 1982. Heavily influenced by the principles of management guru C K Prahlad, Paranjpe had a childhood dream to work at HUL. A man of strategy and hard work, he transformed into a hardcore business executive, taking up various leadership positions at HUL. In his

In five years as the CEO, Paranjpe has added more than

`10,000 crore to HUL’s revenue

e

il Fact f

ranjpe Nitin Pa Age: 50 r in Bachelo : n io t a Educ ring, Enginee l a ic n i a Mech Mumba , S M I B mJ MBA fro UL oined H nnai 1982: J ger, Che a n a eam M ranch nnium T le il M t c 1996: B Proje re ember, M : 9 ome Ca 9 H 9 , 1 t n e id ice-Pres 2004: V India & HHC) y r d n u (La re D & CEO ome Ca H , t n e 2008: M resid 2013: P r e b o t c O

Unilever R&D centre in Bengaluru

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MUTUAL FUND

Ease your investment

Scripbox

Online platform Scripbox.com is an out of the box thought envisaged by two senior bankers, Atul Shinghal and Sanjiv Singhal, to make investing simple and convenient

BY Viraj Desai

S

cripbox.com is a virtual kart offering four scientifically chosen mutual funds for investors. It is a Bengaluru-based startup that gives options for single or regular investment in their ‘best performing funds’ every year.

Spark of the idea “Being from a banking background, we know many people who have had bad experiences in investing.

This happens mainly because of misleading by agents, non-availability of advice, and poor selection of funds. There are also large numbers of people who keep themselves from investing in mutual funds because of the fear of losing money or inability to take a decision as they are confused by the options available. Besides, it is difficult to get an unbiased option nowadays. Also, many do not have the time to actively track or pursue it. All these led us to conceptualise Scripbox,” says Atul Shinghal, Chief Executive Officer.

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Scripbox addresses these problems of retail investors by initiating a scientific selection of mutual funds and an easy one-click method for investing in them. All an investor has to do here is to sign up.

Scripbox does the rest of actions like the selection and monitoring of funds, processing of instructions, and providing all the information in one place.

Investment through scripbox In Scripbox, the initial investment amount is `20,000 and for any subsequent investments,

SCRIpbOX

Atul Shinghal and Sanjiv Singhal

it is `4,000. This is because all mutual funds have minimum investment criteria. The entire amount is invested in the mutual funds and there is no consultancy fee. “We earn a commission from the mutual fund companies for investments made through us. This amount varies and is transparently disclosed on our website,” says Sanjiv Singhal, Chief Operating Officer.

Future of mutual fund investment There are primarily two issues affecting mutual fund investment in India. The first is that people are unaware that equity investing is necessary for them to beat inflation. The so-called safe investments actually lower the value of your savings over time. Secondly, mutual funds are the best way for retail investors to participate in the equity markets. They provide the lowest cost option for professional management. This has come about with a series of proactive steps taken by the regulator and the industry. However, penetration of mutual funds is still extremely low in India with only two per cent of households when compared with 47 per cent in the US. We believe that simple products and professional advice will help increase the adoption of mutual funds by retail investors. But as commissions on mutual funds have had a recent dip, many distributors are pushing ULPs.

Future plans Scripbox is a self-funded company. Initially a considerable amount of the investment went into

this, for things like technology and foolproof security.

About expansion, Atul says, “We define our business goals in terms of customer value rather than number of customers or turnover. We are looking at multiple options to reach the customers including tie-ups with companies for their employees.”

Adding to Atul, Sanjiv says, “We rely on multiple platforms including a good thrust on social media to spread our name. We believe that as our product and process are very simple and it addresses the needs of lakhs of investors, we should get positive viral publicity, especially in social media.”

To future entrepreneurs “We believe that every entrepreneur chooses his or her own path because there is a burning desire to do something on their own. We know people as young as 15 and as old as 60 who have built successful businesses.

The most obvious challenge is lack of regular income and losing the comforts of a monthly pay cheque. This makes people think twice before stepping in. Therefore, managing your finance is key to building a successful business,” says Atul.

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pERsONAL FINANCE INVEsTMENT

FD or FMP?

Check your risk appetite!

Talk of investments that promise a fixed income, and people automatically opt for the good old fixed deposit (FD), a traditional investment avenue that has always been popular with the common man. So, what makes FDs popular? There’s a simple logic: bank FDs are considered infallible. Much like FDs, many people veer towards another category of investments, called the “Fixed Maturity Plan” (FMP). But the fact that both these instruments carry the promise of “fixed” in them only confuses a majority of investors, making them unsure of what makes a perfect choice. So, let’s understand various aspects of both these forms of investments to make an informed investment

by Smitha Hari

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A

n FMP is a mutual fund, which invests in debt and money market instruments, such as treasury bills, commercial papers, certificates of deposit, government bonds, and corporate bonds. The maturity of the underlying instrument is the same as the stated maturity of the plan, meaning a 90-day FMP will invest in instruments which have a 90day maturity, like a three-month Commercial Paper or a three-month Certificate of Deposit. An FMP is a closed-end fund, which means you can apply for this only through the New Fund Offer and redeem on maturity.

As in the case of any mutual fund, returns from an FMP are not fixed and are only indicative. You can look at the general trend of how FMPs are performing, but the scheme in which you want to invest will not guarantee returns to you. This is the major difference between an FMP and an FD, where you know the interest you will earn for the period invested.

Tax treatments Tax treatment of income from an FMP is different from that of an FD. Interest earned from an FD is taxed as per the slab you fall in. So, if you are in the highest tax bracket, you will have to pay 30 per cent income tax plus surcharge and cess on the interest you earn.

Taxation on FMPs depends on the period of holding and also your choice of fund (growth option or dividend option).

For example, if you opt for a dividend scheme, then you will have to pay Dividend Distribution Tax (DDT), which is 13.52 per cent.

On the other hand, if you opt for a growth scheme, then Capital Gains Tax

INVEsTMENT SCRIpbOX

FD (CGT) will be applicable. So, if you invest in an FMP of less than one year tenure, you will incur shortterm capital gains, which will be included along with your other income and taxed at the marginal rate of tax applicable to you.

In case you invest in a growth scheme for more than one year, long-term capital gains are taxed at 10 per cent plus surcharge and cess (without indexation) or 20 per cent plus surcharge and cess (with indexation benefit).

If you wish to invest in an FMP of more than one year tenure, then opt for the growth option, if you are in the highest tax bracket. You can invest in a 13-month FMP, which spans across two financial years, to benefit from the double cost indexation.

On the other hand, if you wish to invest in an FMP of less than one year tenure, then a dividend option will give you higher post tax returns, as the DDT is lower than the CGT applicable.

FMP or FD? Before you consider what to invest in, make sure you have the risk appetite for the former. As an FMP does not guarantee returns, and sometimes can result in an erosion of the principal as well, you must invest in it only if you can take a high amount of risk.

FMP An FD, on the other hand, is safer. A bank FD is also a guaranteed repayment of `1 lakh by the Deposit Insurance and Credit Guarantee Corporation of India, in case of a default by the bank. This benefit is not there for a company FD. Having said that FDs are safer than FMPs, when it comes to post-tax returns; FMPs are far superior, as seen above.

So, the decision of opting for an FMP or an FD depends largely on your risk appetite. As mentioned earlier, an FMP is a high risk-high return investment avenue. An individual at a lower tax bracket is better off sticking to an FD as returns are safe and guaranteed. On the other hand, an individual at a higher tax bracket can stand to gain from an FMP, if he has the risk-taking capacity.

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sEbI REGULATION

Reining in investment advisors

T

BY Babu S

he financial markets are overloaded with products and investment platforms today, and in the coming days, it is only going to be in an upward trend. This will leave investors baffled as to which product to choose for their investments.

So, as a natural outcome of this, investors will rely more on investment advisors for reliable services and advices.

On the other hand, it will also lead to mis-selling and over selling of products by investment advisors for more incentives and commissions as offered by different companies.

In addition, investors are likely to come across advisors who sell third party products with less knowledge of the market or product features. In order to put a control on these and to maintain an order, from January 21, 2013, India’s capital market regulator Securities and Exchange Board of India (SEBI) issued a few regulations for investment advisors.

All investors should be aware of these changes and

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appoint investment advisors only if they comply these new regulations.

Registration with SEBI An investment advisor has been defined as “an entity or a person who is engaged in providing investment advice in exchange for a consideration”. It has been made compulsory for investment advisors to get registered with SEBI and obtain a registration certificate. SEBI’s certificate will be valid for five years from the issue date.

Any company seeking registration as an investment advisory should have a net worth of at least `25 lakh. If it is an individual or partnership firm, they should have assets of at least `1 lakh.

Compulsory certifications and qualifications Any person practising as an investment advisor is required to have certain minimum qualifications and experience in the field. A certification on financial planning is also made mandatory now for all those who practise as investment advisors. For those who are already practising with this compliance, a period

sEbI REGULATION

of two years has been allotted to get the required certifications.

Disclosures Apart from the above mentioned rules, SEBI has also brought out regulations with respect to disclosures to be made by investment advisors. This implies that all investment advisors are required to disclose all their material information including their firm’s to clients before getting into an association. They must also disclose all terms and possible conflicts of interest involved in their service of advising the client. This means that “the investment advisors must disclose any consideration received by them or their company for any product or service in respect of which investment advice is given”. In addition to this, details of disciplinary actions taken against him or his company in the past and association with other intermediaries must be disclosed.

case these entities offer investment advice as well.

Further, the regulator has mandated proper risk profiling of the client to be done by the investment advisor. This should be communicated to the investor after the completion of the assessment, and the investment advice should suit the client’s risk appetite, age, objectives, income etc.

Investor impact Investors can now expect quality and reliable service and advice from investment advisors as they have more accountability and responsibility. The investors can verify the guidelines while they appoint investment advisors and if the advisors fail in any of these, the association can be terminated or a legal proceeding can be taken. These guidelines will also help increase confidence levels of investors, as investment advisory is set to become more responsible.

Other important provisions Another important provision in SEBI’s new regulation is that banks, NBFCs or companies offering financial product distribution services that also operate as investment advisors, should keep their investment advisory services separate. Any fee charged for distribution service is required to go directly to the service provider and not to the investment advisor, in

s S E B I’ r om f d e e ss lud n p r oc e e xc T hos ments r atio ral com tered e r e gist n e g gis ives who g cts, IRDA re ension erson u p p d y o y r n n p a s, a d nt estme broker A, registere , on inv e agents or D te R a F c o P v nc ith ad insura egistered w funds, any rr al ides adviso ors of mutu o prov ts h w t u b m i distr aw fir o their clien embers or or l t solicit ent advice ctice, m gal pra untants of m e t l s r e i v e n i th cco aries ntal to ered A incide ute of Chart pany Secret m it ks of Inst stitute of Co ost and Wor ty n C I l Socie te of India, nstitu dia, Actuaria okers I , a i d of In of In ub-br rs rs or s anage ntants Accou stock broke portfolio m under I, ia, red of Ind d under SEB registe l fund, s e r r e e t k s n ba utua regi chant ager of a m r any other r e m I or an do ith SEB nt fun und m SEBI, f ve investme registered w ent stm ati ity altern or ent es inve e ediary who provid ased outsid m r e t b n in s o t s r n clie y pe and an clusively to x e e c i adv India.

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CURRENCY TRENDs

E

Two facets of the sliding Rupee

by Akshatha Sajumon

arlier this year, it was the turn of gold, and now, it is the rupee. While the sliding gold brought in some relief to the Indian economy, rupee on a slope is not doing so. Being an import dependent country for major requirements like oil, electronics, automobiles, food products etc, India is facing a huge challenge. The rupee has slid 13 per cent against the dollar since May, reaching a level of `61.2 on July 8, and has improved marginally, yet becoming one of the worst performing currencies in Asia.

Already grappling with a condition of high current account deficit reaching five per cent of the GDP for the year ended 2012-13, which was much above the acceptable level of three per cent, increasing gold imports and the mandatory oil imports are making the situation worse, just when the rupee began its downfall, exacerbating woes in the Indian economy.

What led to the slide?

Strengthening US economy Weakness in the US economy led the Federal Bank of America to go in for Quantitative Easing (QE) in tranches, which aimed at pumping money to prop up the economy. This led to large swathes of money flowing into the emerging markets, which hosted high interest rates. However, the recent signs of recovery in the US economy led to the Fed chairman remarking the tapering and gradual ending of the QE programme. Adding strength to the recovery was the creation of almost 20,000 new jobs in the United States this June.

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MONEY INDICES

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Per cent Depreciation in currencies Indian Rupee

12.57 per cent

Brazilian Real

15.90 per cent

S African Rand

22.66 per cent

Japanese Yen

27.62 per cent

Thai Bhat

0.80 per cent

Russian Rouble

7.17 per cent

Philipeno Peso

2.82 per cent

Malaysian Ringgit

3.24 per cent

Indonesian Rupaih

6.09 per cent

British Pound

6.48 per cent

Euro

0.26 per cent

Chinese Renminbi Turkish Lira

-2.81 per cent 8.57 per cent

Source: World Bank & X-rates Percentages represent change between the average rates of 2012 and the current rate as on July 9, 2013

US benchmark interest rates, last recorded at a low level of 0.25 per cent, are expected to increase sooner than later, going by the yield on 10-year US treasury bonds. It rose to cross 2.7 per cent, the highest noted in the past two years.

A recovery in the US would mean investors in the emerging markets are pulling out money to invest in assets in the US that would benefit from the growth in the economy.

Vanditaa Dar, an economist, says India is not the only emerging market economy experiencing a currency depreciation. World over all emerging markets’ currencies have slid against the dollar. (See table).

CURRENCY TRENDs

Existing weakness in the local economy As we see impact on almost all emerging market currencies, the magnitude of impact has not been uniform. This would be due to the strength of the individual economies. Indian economy has not been on a strong foot over the recent past and has struggled with issues of current account deficit, slowing growth, steady inflation, and slow movement in strong economic reforms. Vanditaa Dar said that the fiscal deficit, too, is likely to worsen on account of a higher oil import bill, and thereby the oil subsidy bill, which is borne by the government. With the General Elections scheduled in 2014, populist measures like the Food Security Bill are likely to be pushed through, which will only result in increasing subsidies and increasing fiscal deficit too.

How does it affect the common man?

Increase in fuel prices: Fuel prices are directly impacted by either increase in crude oil or currency movements. The cost of a barrel of crude oil to the Indian refiners stands at $103. However, the converted cost in rupees is said to be at an all-time high of `6250 a barrel. Oil companies are facing huge losses and are pressing for fuel price increases. Petrol, diesel, ATF, LPG cylinders, and other fuel-related costs like transportation are likely to go up.

Inflated travel costs: People travelling abroad will have to shell out more for their travel-related

expenses. The manager of a leading travel portal said that there has been a dip in travel package bookings to the extent of almost 20 per cent in just a period of two weeks. He associated this with the increasing airfares and the overall cost of travel packages. Airlines would see a major impact on their bottom lines as most of their expenses towards operational cost is payable like ATF, and the airport charges abroad is payable in dollars. Geeta Jacob, a resident of Gurgaon, said that they had to overshoot their budget by more than `75,000 on their recent trip to Europe. She says they had to shell out more for everything, be it food, transport, and even water for that matter.

Expensive study abroad: Expenses related to study abroad is also set to inch up. The cost of an MBA course in the US would cost $50,000 and upwards, with a slide in the rupee; the same would cost another 12 per cent more. If there is any improvement in the exchange rate, fee for the semesters to come may be lesser. Or paying upfront the entire fee may earn some discounts. A manager with a leading forex company said that parents are delaying remittances towards living expenses or fee unless it is immediately needed.

Prices of electronics and automobiles to go up: Electronics like mobiles, televisions, washing machines etc and automobiles have either inputs imported or sometimes the entire piece is imported. Many consumer durable companies like LG and Samsung have already announced hikes in prices to the extent of

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MONEY INDICES

87

CURRENCY TRENDs

two to five per cent and many may soon follow suit.

The effect on trade and economy is also bound to be there. With crude prices firming up after softening till the middle of this year, the rupee depreciation spells gloom for the trade deficit, which is set to rise as India imports over 70 per cent of its oil requirements.

With overall costlier imports, the inflation is set to rise too, leaving little room for the Reserve Bank of India to lower rates to revive an already sagging economy, opines Vanditaa.

Bright side of the story It may not be as gloomy for all sectors. Inward remittances from Non Resident Indians (NRIs) have increased. Sugatha Kurup, a resident of Dubai, says that they have increased their remittances to India.

She added that NRIs are also resorting to borrowing abroad and remitting the same back home, to make best use of the opportunity presented by the fall in rupee. Cecil Sunder, a Quality and Analytics leader at Level 3 Communications based out of Denver, USA, said that he is not only increasing his remittances but also looking forward to acquire real estate in India,

making good the opportunity presented by the falling rupee.

Exporters are also at the gaining end. For every dollar earned in export earnings, they would be able to get more in rupee terms. Vivekanand Venkataraman, based out of Coimbatore with over 15 years in the garment export business, says that the fall in rupee value does help the factories a lot, especially those who have not got into a forward contract. He also added that during the next set of enquiries/ negotiations, the prices are reconsidered upon, which means that average freight on Board will be coming down. The exporters also have to take into consideration increased cost of imports.

The government and the RBI are trying to arrest the slide. In fact, some steps like banning of proprietary trading by banks in currency derivatives and a gag order on currency forecasts have already been taken. These measures have shown some effects, and the RBI reference rate for rupee stood at `60.15.

However, unless the fundamentals of the economy improve and growth revives, appreciation of the rupee versus dollar may be difficult.

Akshatha Sajumon is a Bengaluru-based Chartered Financial Analyst.

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MSME

Small

is

big

iN MANUFAcTURiNg A US-based survey has identified India as the third largest market for small businesses looking to import new products from abroad

By Dhanya Menon

E

ven in the face of a rough economic climate, India has been able to steadily position itself as a global hub for reliable manufacturing, materialssourcing, and experienced talent pool. The importance of India’s presence in global trade is not insubstantial as the country’s imports and exports amounted to 43 per cent of the GDP in 2012. Its slow but steady growth in the recent past has helped build strategic bilateral partnerships with countries across the globe.

A US-based December 2012 survey, conducted by Alibaba.com, Vendio, and

Auctiva among 600 small businesses, identified India as the third largest market for small businesses looking to import new products from abroad.

According to the latest US Department of State report (December 2012), the US-India bilateral trade in goods and services has increased four-and-a-half times over the last decade. “The world’s largest economy and India, one of the world’s fastest growing economies, have committed to work together to stimulate a global economic revival, and strengthen global economic and financial institutions. According to the US-India Business Summit 2012, bilateral trade between the US and India is growing explosively, and is likely to triple in the next five years. This larger economic environment between the two

August 2013

MONEY INDICES

89

MSME

countries has also been felt in various sectors,” tells Khalid Isar, Country General Manager, Alibaba.com India.

This growing preference for India is mainly because of some unique capabilities that Indian manufacturers and suppliers possess. Indian manufacturers can offer quality products at more competitive price points that attract buyers looking to source from abroad and for this, there is a low linguistic barrier. According to latest search results on Alibaba.com, international buyers are recognising India mainly for products in categories like agriculture, machinery, apparel, and food and beverages.

“Today, India is poised to be among the top ten economies of the world. The Global Manufacturing Competitiveness Index (GMCI) 2013 Survey, based

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MONEY INDICES

August 2013

on responses from 550 senior manufacturing executives from around the world, shows that India ranks fourth in manufacturing competitiveness, behind China, Germany, and the US. The survey also predicts that in five years, India will be closing in on China, rising to the second place in manufacturing competitiveness, ahead of Germany, the US, South Korea, and Taiwan. And the country’s GDP, for a large part, is fuelled by the enormous Small and Medium Enterprises base of 26 million, which, if encouraged to expand their businesses abroad, could buoy India’s exports, thereby bolstering the Indian economy,” Isar adds.

Role of SMEs in this growth SMEs have always been considered the engine of economic growth in both developed and developing countries. They assist in regional and local economic growth and accelerate rural industrialisation as well.

India is poised to be among the top ten economies of the world

Khalid Isar, Country General Manager, Alibaba.com

MSME

According to the National Manufacturing Competitiveness Council (NMCC), India seems intent on growing its global competitiveness and productivity in manufacturing, suggesting that manufacturing will make up 25 per cent of the GDP by 2025, a nine per cent increase from the current contribution. Much of this manufacturing boost will come from the 26 million-strong MSME base, and the recent Union Budget announcement ensures committed efforts towards encouraging this growth.

Then why are many SMEs still lagging behind? Isar answers, “Indian SME owners continue to believe in the common misconception that only large, established companies have the capacity to export globally. However, with advances in technology, communications, and logistics, businesses of any size can now participate in this competitive race, with less capital and resources than previously thought. Another critical element for India for realisation of its export targets is to boost the country’s broadband infrastructure, so that SMEs from all corners of the country can stay ahead in the international market.”

The manufacturing sector is expected to make up 25 per cent of India’s GDP by 2025, a nine per cent increase from the current contribution have helped export-oriented economies like ours a lot.

“Taking into consideration the current market scenario and various government initiatives, we expect the export of products to elevate and further narrow the trade deficit through the course of the year,” Isar adds.

How can our SMEs fill these gaps?

E-commerce allows SMEs to reach out to the world and showcase their unique talent through products and services. SMEs exploiting the power of the web now will benefit immensely by attracting foreign buyers in the future. The government is also strengthening the National IT Policy to take Internet to the villages of rural India and facilitate access to local business owners for global trade through e-commerce.

According to Isar, this move will have a significant impact on the SMEs and help them leverage the benefits of e-commerce to take their business to the global stage. Those SMEs that are already participating in e-commerce should develop a successful export strategy in order to survive and emerge as a winner in the current trade scenario.

Thanks to economic and trade liberalisation and persistent globalisation efforts, there has been a boost to international trade. According to the latest report

by CRISIL Research, India’s exports recorded a growth of 4.2 per cent on a y-o-y basis in February 2013. “It is the first time since February last year that export has grown at this pace. Improvements in the environments, especially that of the US and Eurozone to some extent,

August 2013

MONEY INDICES

91

FOOD sECURITY bILL

Too hard to stomach food Bill?

THE FOOD SECURITY BILL CAN BE A GAME-CHANGER FOR THE CONGRESS IN THE RUN-UP TO THE 2014 GENERAL ELECTIONS. BUT EXPERTS FEEL THAT IMPLEMENTATION OF THE BILL MAY SPELL DISASTER AND BECOME AN ECONOMIC ALBATROSS FOR THE NATION IN THE LONG RUN

BY Sarath vasudev

92

MONEY INDICES

August 2013

I

f you know how to feed empty stomachs and prompt the well-fed common man to vote for you, you have mastered the art of blending economics with politics.

The Congress seems to be in the process of mastering this art as it is set to roll out its flagship social welfare scheme through the National Food Security Bill, as envisaged by party president and UPA Chairperson Sonia Gandhi herself. And the party clearly wants to make it a grand launch, having chosen August 20, the birth anniversary of former Prime Minister Rajiv Gandhi, for its rollout.

President Pranab Mukherjee’s nod for an ordinance on the Food Security Bill early in July enables the government to provide threefourths of the population with five kg of rice, wheat, or coarse cereals a month at the subsidised rates of 1-3 per kg.

The Bill is expected to be a game-changer for the party ahead of the assembly polls in five states and the 2014 General Elections. The Congress believes that the right to food law will fetch rich electoral dividends in the 2014 General Elections, just as the Mahatma Gandhi National Rural Employment Guarantee Scheme did in 2009.

The ambitious Food Security programme will be the biggest ever exercise in the world. It is estimated that the government will have to spend `1,25,000 crore annually on supply of nearly 62 million tonnes of rice, wheat, and coarse cereals to 67 per cent of the population.

However, about 2.43 crore poorest of the poor families covered under the Antyodaya Anna Yojana (AAY) under the Public Distribution System (PDS) would continue to get 35 kg of grains per family.

If the Congress spokespersons are to be believed, this is a pathbreaking attempt to eliminate poverty. “The scheme will help in the battle against malnutrition and hunger. It could be a lifesaver for the poor,” says former Union Minister Ajay Maken.

Political gimmick But all this hasn’t gone well with the Opposition parties. According to them, the “scam-tainted” government’s tom-tommed Food Security Bill is a mere extension of the PDS that has been in operation since the late 1970s. They allege that it is a political gimmick, aimed to garner votes in the upcoming General Elections.

Taking a dig at the Congress’s ambitious food security programme, BJP President Rajnath Singh says, “When the UPA came to power, it

FOOD sECURITY bILL

said it will get the Food Security Bill passed within 100 days. But they are bringing it as a lollipop now, after being in power for nine years, when polls are drawing near. This is a cruel joke on the poor.”

BJP’s poll mascot Narendra Modi says that merely bringing in the Bill doesn’t mean that the food would reach the needy. “The government in Delhi thinks that just by bringing in the Food Security Bill, there will be food on your plate,” he says.

We are so powerful, we are moving ahead, we are developing. The fruits of development should trickle down to the poor people.

That is the commitment of our party. We are a propoor party. we always go for schemes which will help the downtrodden

Inept public distribution system Even though the Bill promises a lot, experts feel that the programme won’t fetch desired results, unless and until the government checks the existing logistics and leaky Food Corporation of India-driven PDS. Records show that 20 per cent of the foodgrain stock with FCI is falling prey to sub-standard storage environments and rainwater seepage. About 40 per cent of rice and wheat earmarked for the poor is being pilfered due to rampant corruption and incompetence at local transport levels. Roughly 45-50 per cent of what goes through the PDS doesn’t reach the intended beneficiaries.

Farmers up in arms

K V Thomas, Minister of State for Food and Consumer Affairs

They believe that the government will have to bear a substantial burden in the fiscal year 2015.

According to a report by Japanese financial services group Nomura, the Bill is likely to cause economic ramifications like inflation and imbalances in the agriculture sector. It also expects the Bill to cost the exchequer a whopping 1.8 per cent of the GDP over the next three years. And that will put a severe dent on the fiscal scenario for the next few years, considering that India’s GDP is a dismal 6.2 per cent.

Speaking on the subject, Sonal Varma, Executive Director and India Economist at Nomura, feels that the Bill would have a tremendous fiscal consequence on the macroeconomy. “I think the fiscal implications are quite significant. It means that the ability of the government to continue to give subsidies on other items is clearly going to get diminished. We will have to look for newer sources to finance the food subsidy burden,” says Varma.

Other than the political fraternity, the farmers’ groups are not too excited about the food law. According to them, the government is taking away the incentives of small and marginal farmers by offering grains at heavily subsidised rates. They say that the food law may hurt the farmers badly in the long run and will increase food insecurity, shortages, and fuel food inflation, in a way similar to MGNREGS, which has only added to the labour cost without contributing meaningfully towards increasing agricultural productivity.

Samajwadi Party President Mulayam Singh Yadav had also slammed the government, calling the Bill Projected Cost of National Food Security Bill Over 3 Years “anti-farmer”. He indicated that his party would support Total EC of Grain: 5,12,427 Total Outflow from Govt: 6,82,163 the proposed food law only if the government incorporates necessary changes in the Bill.

Total Sale of Grain

Economic disaster Considering the huge amount needed for its implementation, economic think-tanks are sceptical about the food security programme. They say that the Bill will result in inflation and slump in the GDP. The government has budgeted about `90,000 crore. That figure could potentially go up by another `10,000 crore.

62,044

2,31,780

Total Other Expenditure Subsidy

4,50,383

Subsidy 4,50,383

Figures In ` crore, Note: EC= Economic Cost

Source: Commission for Agricultural Cost and Prices

August 2013

MONEY INDICES

93

GLObAL INDICEs

Canada

S&P/TSX 12745.38

Uk FTSE 6620.43

Germany DAX 8,379.11

United States S&P 500 1692.39

France CAC 3,962.75

Nse Market Statistics Segments Capital Market Equity F&O Currency F&O TOTAL

24.06.2013

24.07.2013

Switzerland

change

Smi 7,923.07

10313

11622

1,309

198966

244958

45,992

Mexico

36835

14,340

-22,495

IPC 40790.16

246114

270920

24,806

Spain IBEX 8,216.70

Italy MIB 15549.23

Performance of various indices in the end of July 2013 (in per cent) 1 month

3 month

6 month

1 year

CNX Nifty

-2.4

2.81

-1.07

10.67

CNX 500

-3.64

1.63

-4.9

8.16

CNX DEFTY

-7.64

-6.44

-9.37

3.72

CNX Nifty Junior

-6.22

2.89

-6.43

14.33

CNX Midcap Index

-6.13

-13.67

-0.13

-0.8

Brazil

BOVESPA 48819.52

Argentina MERVAL 3,462.06

CNX IT Index

2.5

-8.1

10.11

7.97

CNX Bank Index

-6.88

2.25

-6.87

12.35

CNX 100

-2.98

2.82

-1.9

11.19

-10.06

-14.15

-31.66

-13.77

Cnx Infrastructure

-3.68

2.05

-12.76

-6.65

Cnx Energy Index

1.86

5.92

0.9

6.03

Cnx Fmcg Index

-4.69

8.92

9.97

Cnx Mnc Index

-3.84

10.73

-2.71

CNX Realty

Cnx Pharma Index

31.1 7.87

0.4

13.49

11.95

29.53

Cnx Pse Index

-5.05

-1.15

-6.05

-6.56

Cnx Psu Bank

-9.6

-9.98

-25.31

-15.83

Cnx Service Sector

-3.22

0.08

-1.16

11.61

94

MONEY INDICES

August 2013

Us and Asian Market Indices 24.06.2013 Dow Jones

14,659.56

24.07.2013

change

15,542.24

882.68

Nasdaq Composite

3320.76

3579.6

258.84

Shangai Composite

1963.23

2033.32

70.09

Hang Seng Index

19813.98

21968.93

2,154.95

Nikkie 225

13062.78

14731.28

1,668.50

Straight Times Index

3074.31

3274.76

200.45

Kospi Composite Index

1799.01

1912.08

113.07

GLObAL INDICEs Russia

RTS 1,358.12

South Korea KOSPI 1,912.08

Japan NIKKEI 14731.28

China

hongkong

SHANGHAI COMPOSITE 2033.33

HANG SENG INDEX 21,968.93

Thailand

india

THAI SET INDEX 1,481.59

BSE 20090.68

Saudi Arabia TADAWUL 7,773.99

South africa JSE 36,219.05

New Zealand NZX 4,599.20

australia

Prices and Returns of Top 10 shares by Market Capitalisation Company Name

TCS

Price (25.07.2013)

1793.35

Price (25.06.2013)

% change

52 wk

1394.05

0.6

1793.35

High

52 wk Low

1220

Market Cap

ALL ORDINARIES 5021.8

(`cr)

350998.23

FII and DII Statistics (in crores)

Reliance

890.85

803.8

-1.95

954.8

721.9

287694.05

ITC

358.8

320.2

-4.57

380

257

283517.77

ONGC

305.15

310.2

-1.1

354.1

254

261070.78

293.4

-1.36

386

284.65

185953.77

Jun-13

-11,425.41

8,427.42

0.29

3010

2101.65

167441.52

May-13

14,465.90

-12,052.43

Coal India Infosys

294.4 2915.9

2378

HDFC Bank

654.2

634.3

-0.9

727

579

156270.92

HUL

686.5

587.6

-3.21

725

443.05

148453.72

Bharti Airtel

336.7

295.4

-0.18

370.4

238.5

134592.46

HDFC

801.45

822.65

-0.17

931

675.45

124555.86

FII net purchase/sales

DII net purchase/sales

Apr-13

4,641.57

-2,998.27

Mar-13

9,423.07

-7,872.45

Feb-13

9,533.03

-8,818.50 *Data as on 24 July 2013

August 2013

MONEY INDICES

95

TECHNOLOGY APPS

The

daily use app MOXTRA APP PROVIDES USERS WITH FULL MOBILE SOLUTIONS, ENABLING THEM TO KEEP TRACK OF THEIR DAILY WORK AMID A FAST-PACED LIFE

M

oxtra has launched its latest application, Moxtra App, the next generation mobilecentric social collection and collaboration application. It is now available in the App Stores for iPad and iPhone users. With rich multi-functional solution suite, Moxtra is an ‘all in one app’ that enables its users to collect any type of digital content, access remote files on desktops, personalise content with voice, and share content on social media, or collaborate selectively. This fully customisable app relates to our day to day life activities such as weddings, home improvement, art and design, and travel.

Here’s how you can use the all-new Moxtra app: Home improvement is one of the most interesting features of the Moxtra app.

With this feature, one can track the daily work that one has to do according to the timetable preloaded in the app. It will help you keep track of updates of other members just like the newsfeeds in Facebook, making it more user-friendly.

The weddings feature of the Moxtra app helps you manage marriage ceremonies, expenses, etc. One of the most interesting and useful features this app provides is the opportunity to meet designers, caterers, etc.

The photos and memories option in this app helps you file all of your photos and videos in a directory for future reference. Through Moxtra

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MONEY INDICES

August 2013

binder, you can easily share your pictures and videos with other members, and your dashboard can help you manage all your data as well as that of the members, just like the “Home” interface in Facebook.

The presentation and group planning feature is for professionals. This feature enables you to plan virtual meetings, design presentations, and consult experts in a given field.

The cooking and recipes option dishes out lessons on Indian as well as international cuisine. Moxtra app helps you search for any recipe you wish to make.

Moxtra note feature enables users to create their own documents and personalise them. The note created by a user can be shared via email, Facebook, or simply through SMS, thereby extending a full social network support to the user. You can also create a Moxtra meet and invite the members to view your content through any browser, not only via the Moxtra app.

Bookkeeping is another feature that enables users to track their daily documents. You just have to store all your documents, like bills, receipts, etc, in your device with the Moxtra app and then use them as the original printed documents.

download @ https://itunes.apple.com/us/app/ moxtra-your-binder-share-selectively/ id590571587?ls=1&mt=8

Pr od uc

GADGETs

t

Aimed at enterprise markets

w vie e r

Popular Personal Computer maker Lenovo has launched its ThinkPad L430 laptop in India. Priced at `42,000, the product aims to cater to the needs of the enterprise and small and medium business market.

The Lenovo ThinkPad L430 is powered by third generation Intel core i3, i5, and i7 processors. It is equipped with third generation ThinkPad docking and comes with a host of built-in ports – 1 VGA port, 1 USB 3.0 port, 3 USB 2.0 ports (1 always-on). This ThinkPad sports a low-light 720P HD webcam with face-tracking capabilities.

It also comes with an Express Card reader. The ThinkPad L430 laptop comes with a three-year onsite warranty. Its specifications include 14.0-inch HD (1366 x 768) LED Backlit AntiGlare display, Windows 7 Home Premium OS, Intel HD Graphics 4000, 4GB, 8GB (DDR3), Bluetooth 4.0, 3.5 mm combo mic/headphone Jack, and 6-cell Li-Ion TWL 70+ battery.

Unique features, awe-inspiring interior

High heat emissions

Lenovo ThinkPad L430 laptop

Price: `42,000/-

SAY CHEESE...

Panasonic has unveiled a new ‘compact superzoom’ camera, a format also sometimes described as a ‘bridge camera’. The new camera, Lumix DMC-FZ70, features a 60x optical zoom, equivalent to 20-1, 200mm, which is the largest zoom lens available in a consumer compact. The expected price of the camera is `23,000.

FZ70 offers users an extremely long 60x optical zoom ranging from the very wide 20mm equivalent to 1,200mm. Over this zoom range, the maximum aperture falls between F2.8-5.9. The FZ70 has a “new 16.1-Megapixel High Sensitivity MOS Sensor” (1/2.3-inch) and uses Panasonic’s Venus Engine image processing chip. The camera is capable of 9fps full resolution burst shooting.

Amazing audio capture ability Price: `23, 000/-

Soft Focus cannot be used in video recording

Panasonic Lumix DMC- FZ70 with 60x optical zoom

A `27 lakh viewing experience

enhanced clarity with rich colours

price

Samsung has launched its first Ultra High Definition (UHD) or 4K television, Samsung UHD 85S9, in the Indian market for `27, 00,000. The 85-inch television was first showcased at Consumer Electronic Show earlier this year. The television sports a minimalistic design with the screen appearing to be floating within a frame that holds it. It has a native resolution of 3840 x 2160 pixels, four times that of a full-HD television.

Powered by a quad-core processor, the new 4K panel is a smart TV and comes with support for installable apps as well as built-in Wi-Fi. A full web browser is also included.

The TV also comes with a camera for using video communication apps such as Skype.

Samsung UHD 85S9 television

August 2013

Price: `27,00,000/-

MONEY INDICES

97

ENTREpRENEURIAL NOTEs

Shapers of big ideas

Varun Agarwal and Rohn Malhotra, Founders, Alma Mater

We believe entrepreneurship is about having a great idea and executing it with will and passion irrespective of the risks. The spirit of entrepreneurship comes from within. It is not something that can be taught. A true entrepreneur is someone who eats, breathes, and lives his business idea.

It is the entrepreneur who plays a key role in the success of every enterprise because he is the one who comes up with the idea, nurtures the business, and manages it.

Besides, most venture funds invest in the entrepreneur rather than just the idea.

Everything rests on action

We never saw ourselves as entrepreneurs. We had this idea of merchandise for schools and colleges and we really believed in it. We knew we had to make the idea work, and in the process, we had to become entrepreneurs. So, it’s really the idea that inspired us, nothing more.

Making good use of savings

We started Alma Mater with a capital of `2 lakh. These were the personal savings that my partner and I had. For two years, we never took a single loan or an investment. It was only around October 2012 that we got funded by Indian Angel Network.

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MONEY INDICES

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aGE 26 Alma Mater Alma Mater is a Bengaluru-based online brand for customised merchandise and alumni memorabilia primarily focusing on schools and colleges

Future plans To work with as many schools and colleges as possible, and make Alma Mater a brand for anything to do with schools and colleges in India