Money indices emagazine july 2013 by MK Menon

VOL 1 ISSUE 1

4 3 P

AN N H S KRI

PAL O G IS

T N I E SIV U L C EX

KR : W E ERVI

CONTENTS

Finance Minister P Chidambaram details on the new Financial code and need to fill regulatory gaps in the financial sector

DIRECT SELLING IS HERE TO STAY

QUICK FIX REGULATORY GAPS

Direct selling business has today become an entrepreneurial revolution poised to cross the 10,000-crore mark. However, non-regulation and policy paralysis could hamper its growth prospects in India

21 CEO, THE ULTIMATE BRANDKEEPER American marketing guru Jack Trout shares his ideas on new marketing and branding strategies

BIG FAT INDIAN TAKEOVERS

TAILOR MADE

Quick glance over the global takeovers by India Inc in the recent times

Unravelling the brand building technique of Chennai-based Basics Life

Regulars 10 ECONOMY WATCH 16 BRIEFINGS 17 LIMELIGHT 18 PHOTOSPEAK

MONEY INDICES

20 VOICES 24 INSIGHTS 33 POLICY 45 SOCIAL MEDIA

July 2013

56 SOCIAL ENTREPRENEUR 65 OPINION 71 SPECIAL FEATURE | GUJARAT 74 MSME | CURRENT EVENTS

87 88 90 92

CURRENCY TREND GLOBAL INDEX STOCK WATCH TECH | GADGETS

POLITICS 30

BJP CHANTS NAMO NAMAH Narendra Modi’s power roots have penetrated deeper in the party

WOMAN ENTREPRENEUR 54

VENTURING PROFIT, NON-PROFIT Unique story of Sarika Bhattarcharya who spearheads both profit and non profit ventures simultaneously

DIGITAL MARKETING 62

‘INTERAKTING’ EXTERNALLY AND INTERNALLY Redicka Subrammanian, Founder of Interakt, shares new trends and challenges in digital marketing

MSME | EMERGING ENTERPRISE 75

MEDIUM-SIZE TEXTILE FIRM MAKES IT BIG Textile dyeing and processing MSME, Zenitex, is grabbing global eyeballs through innovation and expansion

AGRIBUSINESS 78

EXPERT TALK INDIAN ECONOMY IN FOR GOOD TIMES A one-on-one chat with Kris Gopalakrishnan on India’s recent economic developments

STARTUP INDIAN ECONOMY IN FOR GOOD TIMES An innovative startup by ecopreneur Priyanka Amar Shah is promoting sustainable urban farming through novel ideas

COIR GOES FOR A MAKEOVER Indian Coir Industry has kickstarted its next phase of expansion

WHAT MONEY TAUGHT ME 94

LEARNING IS MONEY Anirudh Dhoot, Director, Videocon Group highlights the lessons money has taught him

FINANCIAL INNOVATION THE POOR’S ASSET HUNT How Boston-based Doorways to Dream Fund helps low income groups save money through asset building

REALTY WATCHdog

MATCHLESS MATCHMAKER Murugavel Janakiraman’s out of the box thought to start an online matrimony site was no short of a million dollar idea

REINING IN REAL ESTATE The proposed Real Estate Regulatory Bill is likely to change the way real estate business is carried out in the country

editorial@moneyindices.com

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July 2013

MONEY INDICES

Volume 1 Issue 1 | July 2013 Founder & editor Ravi Deecee

Executive Editor Ratheema Ravi DC MEDIA - OPERATIONS

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Senior Managers Kainakari Shibu Rajasree Varma Anu P M Biju P Alex Vijimon P B M K Haridas Vinod Joseph Rohil Kumar A B Managers Febin K Francis Siju Thomas special projects Devika Venugopal DC Media - MARKETING SENIOR Manager Sabu Varghese Mathew Assistant Managers Priya P A Mobin E Mathew Liju P John Abhilash G Krishnan Sunilkumar P S Maya Murali Sales & accounts Josy John Personnel Dept Reshma Bejamin support team Athul P M Sone Varghese Vishnu P M

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EDITORIAL

We Are Off To A Good Start

Today’s global businesses are getting intractably complex and are often fraught with dangers and controversies. Money Indices would strive to help entrepreneurs and businessmen stave off potential dangers they might encounter on their way to achieving successes

MONEY INDICES

July 2013

Money Indices (MI) is a new member to the DC Media Family. A bold new vision, dreamt and thought up by a band of hard-core and fiercely determined individuals who are hell-bent on unravelling the growing complexities of global and regional business in India and abroad. Despite its intimidating moniker, MI is not ‘just a money magazine’. After extensive market research, deliberation and brainstorming, MI has thoughtfully intertwined well-researched, thoughtprovoking and motivational topics on entrepreneurship, finance, business, economy and politics – the entire gamut of business cycle – to give it a fresh 360-degree purview. As you might be aware, today’s global businesses are getting intractably complex and are often fraught with dangers and controversies. MI would strive to help entrepreneurs and businessmen stave off potential dangers they might encounter on their way to achieving successes. It would also seek to help them unfold new opportunities in an emerging New India. We start off with our Cover Story on ‘Direct Selling’ on Page 34 where you will read how nimble, new-age marketers leverage new ideas to sell their products and services through direct marketing. Direct selling fuels entrepreneurship with little or less investment, while contributing to the country’s GDP. In an industry-driven world, unlike earlier wherein farming was most preferred, we believe that such simple entrepreneurship models and businesses must be supported by the Government. Elsewhere, we have AirAsia’s ambitious plans to bring Indian skies within the reach of the common man – Aam Aadmi. Air Asia’s head honcho Tony Fernandes’ business mantra is founded on Tier -II and Tier-III cities in the country. For now, he has diligently kept the crowded metros like Mumbai and Delhi out of his flight path. Along with his airline venture, Tony also eyes a fare share of India’s

burgeoning insurance sector, while announcing the launch of Tune Money. We will be following up his ambitious plans in the future editions of MI. Modern global businesses are powered by an infectious spirit of entrepreneurial rush. And, India too has spawned off a veritable number of internet entrepreneurs. In this debut issue, we are featuring Murugavel Janakiraman of bharatmatrimony.com who pioneered matchmaking through his Web portal. His roaring success tells us how a fertile mind can leverage the power of technology and Web 2.0 innovation to taste success. In an exclusive chat on Page 26, Kris Gopalakrishnan shares many of his deep insights into what is expected of the head of an important industry body like CII, though he politely declined to comment on Infosys and its leadership changes at the top. I am a big fan of the Infosys scion, Murthy, who gingerly built Infosys from scratch and nurtured it into one of India’s software bellwether. What’s wrong if he decided to come back and pilot the ship through troubled waters? After all, Murthy knows better than anyone to take care of the baby he gave birth to. On Page 94, we have Videocon’s Dhoot signing off on a positive note. He says it is not money that matters; it is the learning that does. While wishing you a happy read, I would like to remind you to ‘inbox’ us with valuable suggestions, feedback and comments, which would help improve Money Indices in the coming months and years.

Ravi Deecee Editor

ECONOMY WATCH wORLD

Obama picks Furman Washington: US President Barack Obama has picked seasoned economic adviser Jason Furman as his new chief economist, describing him as “one of the brilliant economic minds of the generation.” Furman will replace Alan Krueger as the Chief of White House Council of Economic Advisers (CEA). Furman was the frontrunner for the post considering that he was the core contributor in advising Obama on the economic stimulus package, healthcare reform act, tax policy, and budget talks with US lawmakers. He has also played a key role in warning the Government that the $1.2-trillion in automatic spending cuts could be horrible for the economy. Furman, 42, a Harvard product, holds a PhD in Economics. He has worked at the Brookings Institution

as a senior fellow in Economic Studies and as director of the Hamilton Project. In 2009, he became the principal deputy director of the National Economic Council. Obama praised Furman for helping translate economic data and trends into government policies and said that he has worked tirelessly on major economic challenges the country faced in the last five years “from averting a second depression, to fighting for tax cuts that help millions of working families make ends meet, to creating new incentives for businesses to hire, to reducing our deficits in a balanced way that benefits the middle class.” Furman has served as special assistant to President Bill Clinton at the National Economic Council from 1999-2000.

economic adviser Jason Furman and US President Barack Obama

MONEY INDICES

July 2013

China’s GDP to rise BEIJING: World Bank has forecasted a growth of 7.7 per cent in GDP growth for China, amidst investment pullout and decline in commodity prices. The Government’s official target was 7.5 per cent. The latest report from the premier financial institution says that the figure will grow to 8 per cent in FY14 and 7.9 per cent in FY15. Hans Timmer, chief of World Bank’s Development Prospects Group, says China is a resource-rich country, and it shouldn’t really care about declining commodity price. The prices would become significantly lower as new mines and energy sources enter the market. Considering the recent hiccups in the AsiaPacific region, the economic growth of this region is expected to reach 7.3 per cent this year, but the risks cited by World Bank include gradual reduction of investments. Japan’s quantitative easing policy, rising credit levels and asset prices also present risks to this region. According to World Bank, the global GDP is expected to grow by 2.2 per cent this year, and will brace to 3 per cent and 3.3 per cent in 2014 and 2015, respectively. It predicts a growth of 2.8 per cent in Europe and Central Asia; and 2.5 per cent in the Middle East.

wORLD

Dubai’s fashion plans Dubai: Dubai recently revealed its plans to create ‘Dubai Fashion 2020.’ It was reported that the General Secretariat of the Executive Council of Dubai has signed an MoU with the Dubai Technology and Media Free Zone Authority (DTMFZA) to develop Dubai as a global fashion hub by 2020. The plan is closely aligned to the recently announced Dubai Design District, which is designed to become a full-service community for design industry-related organisations, brands, and supporting enterprises. The strategy will support the design and fashion industry in Dubai and the Middle East, the official news agency reported. The report said that Dubai Fashion 2020 was expected to boost the emirate’s economy and would have a significant impact on

employment across the manufacturing, retail and designing sectors. The proposed project would provide support in hosting fashion events to attract specialised global fashion enterprises. It will also offer development and training programmes to help local designers. The new plan aims at increasing the role of contemporary regional fashion and Islamic fashion as well as identifying regional and global markets. With the growing demand for brands and luxury goods across the region, Ahmad bin Byat, directorgeneral of DTMFZA said: “The trillion-dollar fashion industry is poised for more. We believe that Dubai is well-positioned to enhance its role in the global fashion industry.”

Japan for N-energy Kyodo: Considering the growing energy demands of the country, the Japanese Government has said that the nuclear power will play a crucial role in its economic growth strategy. By 2017, Japan’s electricity needs are expected to rise at least by 40 per cent. This new strategy of Japan comes at a time when the world is going for greener energy; there have been reports of Germany planning to shut down all their nuclear power plants by 2020. The Japanese Government is planning to move ahead with its resumption work once its nuclear reactors clear new safety requirements. These 50 now-offline reactors, which had met 30 per cent of the country’s electricity needs, are set to undergo the Nuclear Regulation Authority’s safety assessment from this month. Japan has been pushing for the restart of idled reactors after the 2011 Fukushima Daiichi nuclear power plant disaster. After the incident, the Government had published a White Paper confirming that the country’s dependency on nuclear energy would be

reduced as much as possible in the medium-to-long run. Japan has a full fuel cycle set-up, including enrichment and reprocessing of used fuel for recycle. The Fukushima plant had suffered damage following an earth-

quake and the subsequent tsunami, on March 11, 2011, causing a nuclear accident. There were no causalities, but over 100,000 people were evacuated from the site to avoid radioactivity sickness after the incident.

July 2013

MONEY INDICES

ECONOMY WATCH wORLD

G8 to fight tax evasion Enniskillen: The 39th G8 summit has concluded in the icy town of Enniskillen in the Netherlands, and the leaders of the US, Russia, the UK, Germany, France, Italy, Canada and Japan have unanimously agreed on the declaration to tackle tax evasion and promote free trade around the world. The declaration vows to fight the bane of tax evasion by ensuring automatic exchange of tax information between the countries and changing the rules to stop multinational companies shifting profits across borders, to avoid paying their fair share. British Chancellor George Osborne welcomed the deal saying that it is ‘a real concrete move.’ He said that the world is about to see concrete achievements on changing the international rules on taxation, so that individuals cannot hide their money

offshore and companies would not be able to shift their profits away from where the profit is really made. On free trade, the US and European Union members agreed to open negotiations in July 2013 in Washington on a broad trade agreement to slash tariffs and other barriers that restrict exports and competition. The full summit rejected efforts to protect domestic markets and urged ‘driving forward free trade’ under the central role of the World Trade Organisation, a forum where countries can settle their trade disputes. However, British Prime Minister David Cameron’s 10-point plan to tackle global tax evasion met with a hostile reception from campaigners after the Prime Minister failed to persuade his G8 colleagues to make any new binding commitments.

G8 leaders and officials at the summit

ASIAN Currencies to dip Singapore: The Indonesian Rupiah, Thai Baht and Indian Rupee are expected to be the worst-performing Asian currencies in 2013. According to the latest reports, these currencies are expected to weaken further by 3 per cent to 4 per cent. The weakening currencies come at a time when big Asian economies like China, India and Indonesia face an uncertain growth outlook and inflationary pressures. Economic think-tanks are not ruling out the possibility of a sharp change in currency trends in the coming months. The Indonesian currency fell as much as by 0.7 per cent even after the Government put a brave face by paving the way for a fuel price hike to improve investor-confidence. According to Indonesian Government data, foreigners in the country have sold nearly US$1 billion in bonds between May and June 2013, during which their holdings declined to 32.6 per cent from nearly 34 per cent. Malaysian Ringgit and Philippine Peso fell by 0.8 per cent. Constant guessing about ending Fed’s stimu-

MONEY INDICES

July 2013

lus programme has added concern to this period of global uncertainty. Ashtosh Raina, head of forex trading at HDFC Bank in Mumbai, said that Fed’s action to narrow Quantitative Easing (QE) could result in dollar outflows from India and other emerging markets, putting pressure on the currencies.

wORLD

Philippines economy roars MANILA: The economy of the Philippines has transformed into a roaring tiger by registering a 7.8 per cent growth in gross domestic product (GDP) in the first quarter of 2013. It has managed to outclass even the Asian giant China (7.7 per cent). The growth has been buttressed by low inflation rates (affordable goods and services), low borrowing rates (to finance purchases), and better purchasing power. Philippines is rapidly becoming a tiger economy after a good performance in the industrial and allied sectors during the first quarter of the year. The coun-

try’s industrial sector achieved a marked 10.9 per cent growth, while its service and agricultural sectors scored an impressive 7 per cent and 3.3 per cent, respectively. The stock market reached 7,200 in the last few weeks from the 1,712-level in 2008. The country’s capital formation soared to 47.7 per cent in the first quarter, as the private sector invested heavily to expand capacity. The industrial sector saw an astonishing growth in the construction (32 per cent) and manufacturing sectors (9 per cent). Other than the industrial sector, the Government is banking on the tourism sector to find the pace.

Hong Kong tops millionaire list HONG KONG: Outsmarting other Asian giants, Hong Kong topped the list to become the home of the largest population of High Net-Worth Individuals (HNWIs) in the Asia-pacific region, according to World Wealth Report 2013 of RBC Wealth Management and Capgemini. According to the report, the number of HNWIs in Hong Kong reached 1,14,000 people, with wealth of US$489 billion. The increase was largely driven by relative reduction in conservative investing behaviour among the superrich and strong equity markets. After remaining flat in 2012, investable wealth of HNWIs grew by 9.2 per cent worldwide. The report also said that the world HNWI population also increased substantially by one million individuals to reach 12 million. North America is the largest hub of HNWIs, with a market share of US$3.73 million; and Asia-Pacific is the second, with US$3.68 million. The number of dollar-millionaires in India grew up by 22 per cent – from 1,25,000 to 1,52,750 – and this is largely attributed to positive trends in equity market capitalisation, gross national income, consumption, and real estate.

In another sign of strength in the region, the Asia-Pacific countries of Indonesia, Australia, China, New Zealand, and Thailand, too, posted double-digit growth rates in their HNWI populations. Global HNWI investable wealth is expected to grow to US$55.8 trillion by 2015. By 2014, the Asia-Pacific region is expected to reclaim its position as the region with the highest HNWI population and register the highest level of HNWI wealth.

July 2013

MONEY INDICES

ECONOMY WATCH INDIA

India falls-back in Global Innovation Index GLOBAL INNOVATION Index rankings Rank 2012

Rank 2013

Country

Switzerland

Sweden

Netherlands

Finland

Hong Kong (China)

Singapore

Denmark

Ireland

India

NEW DELHI: India dropped two places from its last year’s position of 64 in the list of most innovative nations, according to the Global Innovation Index (GII) 2013 report. The study was based on 142 economies across the world on their innovation capacity and efficiency. The GII 2013 was published by Cornell University, European Institute of Business Administration (INSEAD), World Intellectual Property Organisation (WIPO) and Confederation of Indian Industry (CII). India did relatively good in areas such as computer and information services exports (rank 1), gross capital formation (rank 9), investment in new business (rank 20), industrial cluster development (rank 29), growth rate as a percentage of PPP

FDI cap review New Delhi: The Union Cabinet is likely to take up the proposal for a cap on foreign direct investment (FDI) in various sectors, by the third week of July 2013. On the Government’s take on raising FDI ceilings, Finance Minister P Chidambaram said: “FDI cap review may come up before Cabinet in the third week of July.” In an attempt to revive the investment climate in the country, the Finance Ministry had proposed extensive changes in the FDI regime, favouring higher sectoral caps in multi-brand retail, defence, and telecom. A committee headed by Economic Affairs Secretary Arvind Mayaram had recommended that the FDI limit be raised to 49 per cent in almost all sectors through automatic route. The committee suggested FDI cap hike to 74 per cent in multi-brand retail, 100 per cent in air transport services, 49 per cent in defence, and 100 per cent in telecommunications. Broadly, the panel has proposed the caps, which are at 26 per cent to be raised to 49 per cent; 51 per cent to 74 per cent; and 74 per cent to 100 per cent. The Government is considering opening up media sectors like non-news channels, and direct-to-home (DTH) services, and FM radio.

MONEY INDICES

July 2013

GDP/worker (rank 14), creative goods exports (rank 11). But its slip is largely to its poor rankings in terms of political stability (rank 123), ease of starting business (rank 128), school life expectancy (rank 109), pupil-teacher ratio (rank 108) and knowledge absorption (rank 122). The Global Innovation Index is calculated on two sub-indices, the innovation input sub-index and the innovation output subindex. It includes key factors that contribute to a national economy such as institutions, human capital and research, infrastructure, market and business sophistication. Switzerland topped the chart, and is followed by Sweden, United Kingdom, Netherlands and USA.

INDIA

Fine-tune financial inclusion NEW DELHI: Recently Reserve Bank of India (RBI) has adopted a structured and planned approach towards financial inclusion (FI). This planning by the bank is not just focussing on improving access to financial services but also encouraging demand for financial services, through financial literacy initiatives, said RBI Deputy Governor K C Chakrabarty. India has a long way to go before it ensures that its 1.2 billion population has access to banking services. In rural areas, against a population of 830 million, only 210 million have savings bank accounts. Chakrabarty says that FI will provide an opportunity to recalibrate India’s growth strategies to ensure that the benefits of future economic growth are shared by all sections of society, particular-

ly, the poor and excluded groups. “We have adopted a bank-led model for FI, but have permitted non-bank entities to partner

banks in their FI initiatives. And also we have encouraged banks to leverage technology to attain greater reach and penetration while keeping the cost of providing financial services to the minimum,” says Chakrabarty. The self-sustainability and commercial viability of the FI initiatives are important if banks have to scale up their operations to cover more unbanked areas. Chakrabarty says that there is a need for banks to develop new products and design new delivery models that are customised to the unique needs of the financially excluded population both in the rural and urban areas. RBI has advised banks to adopt innovative business models and delivery channels to expand their FI efforts.

Economy to harvest monsoon NEW DELHI: India is largely depended on the success of monsoon and a good rainfall would be the perfect antidote for an economy hit by economic slowdown. It’s also critical in determining monetary policy for coming months. Monsoon, which has covered almost all parts of India, is reported to be the wettest in the last 12 years. Asia’s third-largest economy and the second-biggest producer of rice, cotton and sugar cane heavily relies on a good monsoon. According to the meteorological department, the country has received 216.3 millimetres (8.5 inches) of rain in June, which is 32 per cent more than a 50-year average considered normal for the period and the highest since 2001.

The North West region, which produces wheat, rice and sugar cane, recorded 120 per cent more rain. More than 235 million farmers depend on a good monsoon rain for irrigating crops. According to ministry of agriculture, farmers have planted crops including rice, oilseeds and cotton in 25.1 million hectares so far this year. Com-

pared to last year, it’s 80 per cent more. Analysts say that an average rainfall in July and August can make a good harvest and also can boost agricultural output and hydro-electricity production. Heavy rain in country’s western region (which saw the worst drought in four decades) has helped the drinking water shortage.

July 2013

MONEY INDICES

BRIEFINGS CORPORATE

GET SET, FLY M

alaysian budget carrier AirAsia Bhd’s plans to fly into Indian air space is now one step closer for a take off as it appoints TCS Vice-Chairman S Ramadorai as its Chairman,Tata Group patriarch Ratan Tata as Advisor and young rookie Mittu Chandilya as its Chief Executive. AirAsia India, a JV floated by AirAsia Bhd, Tata Sons and Arun Bhatia of Telestra Tradeplace with 49:30:21 holdings, respectively is awaiting nod from the Ministry of Civil Aviation to begin India operations. The proposed low-cost airline venture is the first international investment in India’s struggling airline industry.

Phanindra Sama

Charan Padmaraju

redBus SOLD

RAJ JAIN QUITS WALMART

outh Africa multimedia firm Naspers Indian arm ibibo has acquired popular online bus ticket firm redBus in a deal worth US$137.2 million. However, redBus will function independently and management team will continue with the firm. Co-founded by Phanindra Sama, Sudhakar Pasupunuri and Charan Padmaraju in 2006, redBus has grown to become the country’s largest bus ticketing service, selling tickets worth more than `600 crore during last fiscal.

n a surprising turn of events, Raj Jain, MD& CEO of Bharti Walmart has called it a day. Raj’s exit comes at a time when the company is mired in controversies. There were allegations that Walmart invested US$100 million in retail business of Bharti Enterprises, way before the Indian government permitted FDI in multi-brand retail. It also saw a deep slump in operations in India and failed to open a single store, since October last year. Ramnik Narsey, Senior Vice President for Walmart International has been appointed as interim head.

ROLLED INTO ONE I

n one of the biggest takeovers in India’s automotive history, Gurgaonbased Apollo Tyres bought American tyre manufacturing company Cooper Tire for a whopping US$2.5 billion. Cooper Tire presently has eight plants globally including Serbia, Mexico and China, giving Apollo an edge for expansions globally. The deal is expected to be complete by October making Apollo the seventh largest tyre maker in the world.

MONEY INDICES

July 2013

LIMELIGhT

Carney to govern Bank of England

Coco Cola Elevates Atul Singh

ormer Goldman Sachs banker, Mark Carney took charge as the new governor of the 319 year old financial institution, Bank of England recently. He is the first non-British citizen to lead the prestigious bank. Carney was the governor of Bank of Canada from 2007 for a term of seven years and simultaneously was the chairman of the Financial Stability Board of G20 for a three-year term from 2008 to 2011. He had also served as the senior associate deputy minister of the Canadian Financial Department for three years. The Harvard educated economist was the co-head of sovereign risk, executive director of emerging debt capital markets, and managing director of investment banking. He is also the best paid central banker and is known as “the outstanding central banker of the generation.” He gets a pay equal to US$1.3 million even though he is starting with a Herculean task.

orld’s largest beverage maker Coca-Cola Co has promoted its Indian Chief Atul Singh as Deputy President, Pacific group, to oversee operations of the beverage major at China, Korea, Taiwan, and Mongolia, Hong Kong and Macau, besides India and the South West Asian countries. Singh, 53, has led Coca-Cola’s Indian and south-west Asian operations for around eight years. He joined Coca-Cola in 1998 from Colgate-Palmolive Co and worked in various roles, including in China, before heading the Indian operations in 2005. Singh focused on innovation to boost the sales of Coca-Cola products in smaller Indian markets where electricity supply is a challenge. In order to ensure uninterrupted supply of chilled beverages to customers in the hinterland, Coca-Cola installed solar coolers in outlets in such markets. Under his leadership, Coca-Cola’s market position in India has improved significantly. India is now the seventh largest market for the multinational.

July 2013

MONEY INDICES

PHOTOSPEAK ThE LAS VEGAS STRIP

WORTH SEEING ONCE: Sunset at Las Vegas Strip, US. Out of the 25 largest hotels in the world, 19 of them are here

MONEY INDICES

July 2013

ThE LAS VEGAS STRIP

nown as one of the most popular tourist destinations in the world, the Las Vegas Strip is a 6.8 km stretch of Las Vegas Boulevard South in Clark County, Nevada. The Strip passes through the towns of Paradise and Winchester, which are south of the Las Vegas city limits. The worldâ&#x20AC;&#x2122;s most luxurious hotels, casinos and resorts are on the strip. Acclaimed as the city of unusual attractions, the Las Vegas Strip has redefined the standards for entertainment, dining and luxury. Recently, casino giant MGM Resorts International and entertainment company AEG have decided to build a privately financed 20,000seat indoor venue on the Strip. The completion of $350 million arena is expected by 2016.

62,000

Hotel rooms are on the strip

$149

Hotel rates are relatively low in Las Vegas. Hotels like Venetian charges $149 a night for a large standard room

Famous hotels Bellagio, Wynn, Venetian, The Cosmopolitan, Caesarâ&#x20AC;&#x2122;s Palace, Hotel 32, Nobu Hotel

July 2013

MONEY INDICES

VOICES You donâ&#x20AC;&#x2122;t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ Warren buffet, Chairman & CEO, Berkshire Hathaway

India has the potential to grow at 10 per cent over the next two decades Jim Oâ&#x20AC;&#x2122;Neill, Chairman, Goldman Sachs Asset Management

To use the analogy of driving an automobile, any slowing in the pace of purchases will be akin to letting up a bit on the gas pedal as the car picks up speed, not beginning to apply the brakes Ben Bernanke, Chairman, Federal Reserve, United states

Our assets walk out of the door each evening. We have to make sure that they come back the next morning Naryana Moorthy, Executive Chairman, Infosys Peace and tranquillity are essential for development. There is a need to instil confidence among the people and ensure their involvement in development and administrative affairs Manmohan singh, Prime Minister, India

MONEY INDICES

July 2013

CLOSE RANGE JACk TROUT

CEO, the ultimate brandkeeper

laims of difference without proof are really just claims... You can’t differentiate with smoke and mirrors. Consumers are sceptical. They’re thinking, ‘Oh yeah, Mr Advertiser? Prove it!’ You must be able to support your argument,” says America’s marketing strategist Jack Trout in his internationally acclaimed book ‘Differentiate or Die’. Author of half-a-dozen bestsellers, Jack is President of Trout & Partners Ltd, a global marketing consultancy based in Connecticut, USA. Jack has been consultant to Hewlett-Packard, Southwest Airlines, Merck, Procter & Gamble, and Papa John’s Pizza, among other leading global corporate players. He has even advised the US State Department on how to sell America in a better way. In 2006, he had helped Democrats regain leadership in the US Congress. He continues to advise the Barack Obama administration on strategy. In an interview, Jack shares a few of his ideas on marketing and branding strategies

by Dipin Damodharan

Message to young marketers

CEO

Get better at marketing. Understand competition better. Avoid a competitor’s strength. Exploit their weakness

The CEO is the ultimate keeper of the brand. He/ she must be involved in implementation of the strategy. They also must get better at marketing

Best quality of a marketer A good sense of strategy

Challenge Increasing competition coming at you from all over the globe

Brand-building

Companies with best marketing strategies

BMW with their driving machine. Titleist golf balls with their leadership strategy. Bajaj Motorcycles in India. Apple, of course, with their product innovations.

Strength of a brand The name of a product that has a clear position in the minds of a marketplace

Marketing research I haven’t noticed any (marketing research tool) of value with the exception of using the Internet as a way to reach markets with a questionnaire

It comes in four parts: (1) Understanding your competition in terms of strengths and weaknesses; (2) Finding your point of difference; (3) Having the credentials to support that difference; (4) Communicating that difference by constructing your story

Jack Trout is an acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands Big Trouble, A Genie’s Wisdom, Trout on Strategy, Repositioning: Marketing In An Era of Competition, and Change and Crisis

July 2013

MONEY INDICES

POLITY

‘Quick-fix regulatory gaps’ A new legislation to fill the regulatory gaps of India’s financial sector is put into action by Financial Sector Legislative Reforms Commission (FSLRC) headed by Justice B N Srikrishna. If implemented, the unified legislation is sure to bring repercussions in Indian financial sector BY Sarath vasudev

MONEY INDICES

July 2013

POLITY

ontroversies over collective investments and Ponzi schemes have exposed the regulatory gaps of Indian financial sector. Multiplicity of Institutions and Regulators, which have come up from time-totime, has potentially created regulatory overlaps, gaps and ambiguity in the sector. The inefficiency in addressing critical emerging issues in an increasingly dynamic, complex and interconnected financial world have hampered the growth of India. Efforts are on to frame new legislation to look into the existing financial code in the country, which can protect investors from fraudulent investment operations. Commenting on the report submitted recently by FSLRC headed by Justice B N Srikrishna, Finance Minister P Chidambaram says that the present laws are not specifically or comprehensively designed to meet some key objectives relating to the

sector. “The present arrangements have number of gaps, where no regulators are unambiguously in-charge to oversee diverse ponzi schemes.” Chidambaram admits that the root cause for fraudulent operations can be attributed to the outdated rules and regulations of the sector. “The present financial architecture of India is governed by rules & regulations that are formed in 1930 and 40’s. Even though a large number of amendments have been made to these Acts and regulations at different points of time, it is ill-equipped to meet the present-day requirements.”

Chidambaram admits that the root cause for fraudulent operations can be attributed to the outdated rules and regulations of the sector Referring to the recommendation of FSLRC, he adds that the current Indian laws are based on a sectoral approach, which have been organised around subsectors of the finance like banking securities, insurance or payments.

The Commission has advocated a non-sectoral and a principle-based approach, which will articulate broad principles that generally do not vary with financial and technological innovation. This will leave it to the regulators to write subordinate regulations. Minister cautions the challenges in passing the proposed code in to legislation. “Passing legislation in India is not easy with coalitions and the legitimisation of obstruction as a parliamentary tactic.” However, Chidambaram says that the elements of the FSLRC recommended legal processes are not repugnant to the present laws, “I suggest the Ministry of Finance and the regulatory agencies may look seriously at operationalising some of these elements at the earliest even within the scope of the present laws.” As part of its efforts to spread awareness on the proposed Financial Code, Finance Ministry has conducted seminars and discussions in Hyderabad, Mumbai, Delhi and Patna. The Ministry has also sought comments and suggestions on the report from various stakeholders.

July 2013

MONEY INDICES

INsights

Honing capabilities for innovation

A three-point agenda By Pavan Soni

he corporate India has come a long way since independence and through the years of liberalisation and internationalisation. From an era of state protectionism to global competition, the marquee firms adapted themselves and adopted newer management practices, and others fell by the path. So far, it was about competing largely on quality, services, and scale, but now these factors have become ‘hygiene’ and competition has shifted to newer paradigms. The growth trajectory of most Indian firms has three phases. First was the building up of production capability, and importing technologies for achieving capacity, scale and availability. The second wave was the investment on building capabilities around quality, much imbibed from the Japanese rigour, and adopting best practices and certifications for ensuring standardisation and predictability. The third was the scope of expansion, while moving downstream, and developing capabilities around services management. With every stage of capability enhancement came growth in profit margins and prominence, to an extent that firms started becoming similar to each other. With firms possessing baselevel capabilities, how do they compete from now on? The answer is – innovation. Innovation has been used, overused, misused, and even abused in the media, and a quick clarifica-

tion is in order. It needs to be differentiated from a similar concept – creativity. I define creativity as ‘an act of coming up with novel and useful ideas,’ while innovation is ‘implementation of novel ideas in profitable means.’ The intent of this article is not to advocate one-off innovation but innovations in a sustainable and broad-based manner, and this calls for building up of capabilities for innovation. Capability for innovation is ‘an ability to come up with newer products, services, and business models in a predictable and repeatable manner.’ While building capabilities for innovation is the next frontier in garnering a sustainable competitive advantage, the good news is that such capabilities can be built. Here is my three-point agenda on how Indian firms can build capabilities for innovation:

Have an Office of Innovation Innovation is too important a function to be left to the R&D department. Many Indian firms have an R&D department where ‘R’ happens and not just ‘D’, and, even if there are, one needs to understand that innovation is not just in products. Innovation is equally applicable in business models, human resources, marketing, sales, supply chain management, and financing, among other domains of business. An ‘Office of Innovation’ is a dedicated function that would offer a strategic focus to innovation. Such an Office, headed by Chief Innovation Officer, would be responsible for shaping the right mindsets, and measures for cultivating innovation in various facets of the business. The Officer would have dedicated experts on

Innovation is ‘implementation of novel ideas in profitable means’

MONEY INDICES

July 2013

PAvAN SONI

Innovation has been used, overused, misused, and even abused in the media recently, and a quick clarification is in order. Innovation needs to be well-defined and understood, and, further, must be differentiated from a similar concept – creativity

dimensions of innovation, ranging from ideation, to prototyping, financing, and go-to-market activities. Innovation(s) would be programmemanaged in a portfolio approach, with regular reviews done by the top management team.

outcome. Interventions are also needed in team building, experimentation and rapid prototyping, budgeting and financing, and selling an idea, but it all starts with a mindset, and hence I impress upon creativity.

Train people on problem solving

Measures that promote risk taking

Firms that treat innovation as a science and an art are more successful than those treating innovation as just an art. The first step towards innovation capability building is to build competencies for problem solving at all levels of the organisation. Such a competence starts with defining the problem, and then moves on to solving it to arrive at as many unique ideas as possible. Being a researcher, and consultant on innovation, I always impress upon tools and techniques of creative problem solving, or methods that can be taught and practised with demonstrable impact on individuals’ and team’s creative

The goals and objectives of the organisation are set in manners that promote certainty, and keeps risks to the bay for as long as possible. But, that is not conducive to encouraging creativity, for, this journey calls for taking risks. If the measurement matrix in a firm does not reward people for taking risks, they sure won’t. Hence, here is for the HR personnel to craft goals and objectives, and incentive mechanisms that promote risk taking among the employees. Remember, risk taking does not mean that you bet the company; it, instead, refers to taking small chances to learn quickly to know what works and what does not.

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 in promoting a culture of innovation.

July 2013

MONEY INDICES

EXPERT TALk

Indian economy in for good times Senapathy Gopalakrishnan (Kris Gopalakrishnan), of Infosys, who is also the president of Confederation of Indian Industries (CII), airs his views on economic reforms, GDP trends, top-performing sectors, India-China Relationship, growth of Indian MSME, and disinvestment targets in an exclusive interview with Money Indices By Vishnu Rageev R

MONEY INDICES

July 2013

KRIS GOPALAkRIShNAN

this is a continuing process.

name the sectors that you are bullish about?

What is your outlook on the Indian market? Do you sense any immediate turnaround in the economy?

Our outlook on the Indian market remains critically hinged on the pace of economic reforms pursued by the Government. With the likelihood of the aforementioned trend, growth in agriculture sector, buoyant services sector and pre-election spending, the Indian economy is expected to make a turnaround in the ongoing fiscal itself. At CII, we are expecting the GDP to grow in the range of 6.0 per cent-6.4 per cent in the current fiscal, underpinned by some improvement in the global economic prospects, coupled with an easier monetary policy. In addition to that, the declining trend in inflation is likely to pave the way for lowering of interest rates by Reserve Bank of India, which, in turn, shall aid the pick-up in domestic demand drivers, including private consumption and investment. However, there are significant downside risks to growth in the form of widening project implementation gap and risk from a deficient monsoon. Despite likely pick-up in growth, average wholesale price index (WPI) inflation is projected to be lower and lie in a range of 5.5 per cent-6.0 in 201314, down from 7.3 per cent in the last fiscal. Expectations of a normal monsoon will help keep food inflation under check in the current year. Low inflation and crude oil prices will be of great help in the turnaround of the economy this year.

What is your view on Standard & Poorâ&#x20AC;&#x2122;s negative remark? Is there any reason to worry about the ongoing economic situation?

The negative outlook affirmation by S&P for Indiaâ&#x20AC;&#x2122;s sovereign rating appears to be unwarranted at this point of time. I do believe that India can move faster on reforms. Over the last eight months, a number of measures have been taken by the Government, which have clear directional value in terms of reforms, and

Among the broad sectors, agriculture sector is expected to grow in a range of 2.5 per cent- 3.5 per cent, aided by a low base and the likelihood of normal monsoons in the current fiscal. The industrial sector growth is expected to be supported by the turning of the interest rate cycle, lifting its growth to a range of 5.0 per cent-5.5 per cent in 2013-14. In the bellwether sector of the Indian economy, the services sector, the growth is expected to climb to 7.2 per cent-7.5 per cent in 2013-14 from expected 6.6 per cent growth in 2012-13. The sector is expected to benefit from the improved growth prospects in the agricultural and industrial sectors. Additionally, being a pre-election year, increased government spending is also expected to boost services sector growth, especially its sub-sector of community, social and personal services.

What is the state of the manufacturing sector?

The manufacturing sector in India has exhibited a sluggish output growth. As against a desired growth of 12 per cent-14 per cent, it has been able to record a growth of merely seven per cent a year since 1991, even in the backdrop of several initiatives on economic reforms. As the share of agriculture shrinks, it is incumbent on the manufacturing sector to create job opportunities for less skilled workers who cannot be easily absorbed in the services sector. Secondly, a healthy growth of manufacturing is critical for creating a large production and consumption base within the economy. Further, as productivity of manufacturing is higher than in agriculture, facilitating the shift of workers to the sector will result in better use of resources.

Could you give an account of the major challenges that the Indian industries face today? What are your proposals to the Ministry of Commerce and Industry to infuse growth in various sectors?

The Indian industry is faced with multitude of challenges. Sluggish demand prospects, coupled with high interest rates, have adversely impacted the growth prognosis of India Inc. In the short to medium term, the major challenges faced by the Indian industries are poor/inadequate infrastructure, high cost of capital, high tax compliance costs, lack of labour reforms, non- availability of land, shortage of skilled manpower, and lack of procedural reforms, among many others. To bring industrial growth back on track, the Government must ensure fast-track implementation

July 2013

MONEY INDICES

EXPERT TALk

of the National Manufacturing Policy. Notification and implementation of the Mining Policy is another need of the hour, as it will help the sector bounce back from its current lows. Bringing reforms in labour laws are also important to boost the manufacturing sector’s growth. Another aspect is sustainable growth. Units manufacturing products without harming the environment must be encouraged by the Government. In this respect, CII recommends providing 250 per cent weighted deduction for investments in manufacturing sector ‘Going Green.”

The

negative outlook affirmation by S&P for India’s sovereign rating appears to be unwarranted at this point of time. Over the last eight months, a number of measures have been taken by the Government, which have clear directional value in terms of reforms, and this is a continuing process What are the reforms under your initiative that CII has undertaken to supplement industrial growth?

Industrial growth first needs to be revived and then taken to a new growth trajectory of 12 per cent14 per cent a year. We have already suggested a number of measures that can help meet both the objectives. For revival of growth, we have stressed the need to expand the implementation of mega projects, softening of interest rates and attracting new investments. CII is happy to note that many of our recommendations have been considered by the Government. For taking industrial sector to a new growth

8 7 6 5 4 3 2 1 0

How are you addressing the concerns of micro, small and medium enterprises in India?

The Micro, Small and Medium Enterprise (MSME) sector has emerged as the engine of growth for the Indian economy as the sector contributes around 9 per cent to the country’s GDP, accounting for close to 45 per cent of its manufacturing output and comprising 43 per cent of exports. Besides, SMEs have the inherent capability to use resources efficiently and satisfy local needs. The sector has been instrumental in promoting inclusive growth by providing jobs to a large section of India’s population, by employing nearly 73 million people. However, the growth of MSMEs in India are dampened owing to certain common issues like accessibility to finance, availability of skilled manpower, access and implementation of global technologies, and availability of cheap and quality power. CII has been working with MSMEs across the country in the areas of competitiveness development and technological upgrading through its Centres of Excellence and also through its network of offices. CII, through its state offices, has been working with all the state governments concerned in addressing the issue of availability of quality power for the MSMEs. CII has also taken up a new initiative in 2013 called ‘Golden Top Companies 100’ wherein CII would champion in transforming 100 small-scale and medium-scale companies to become medium and large companies in a span of four years, which would help in creating the roadmap for development of MSMEs in India. The Government has formed to find solutions to leverage the exports from the MSMEs and on accelerating the growth of MSMEs in manufacturing. CII is working with these committees closely, and

India’s expected growth in FY14

2012-13

2013-14

aGRICULTURE sECTOR

trajectory, we have laid emphasis on many critical reforms, including those in the area of land, labour, taxation, subsidy control, and fiscal consolidation.

MONEY INDICES

July 2013

2012-13

2013-14

INDUSTRIAL sECTOR

2012-13

2013-14

SERVICE sECTOR

KRIS GOPALAkRIShNAN

India and China can benefit from their relatively healthy growth prospects in terms of leveraging each other’s comparative advantages in trade and investment

we are very confident that the recommendations of these committees, once implemented, will enable further growth of the Indian MSMEs.

What steps has CII taken to end corporate frauds and corruption at the industry-level?

CII has been at the vanguard of the movement on corporate governance in India. India is the only country that I am aware of where the industry association (CII) created the first guidelines on corporate governance, which was much later made mandatory by the regulator (SEBI).

What is your opinion about achieving the divestment targets of the Government? Will the Finance Minister be able to control the financial deficit in the next fiscal?

The Government has set a target of disinvestment to the tune of `40,000 crore for the current year. If the Government starts the process of disinvesting early in the fiscal, achieving the target may not be difficult. It is important that, along with fixing the target for disinvestment, the Government clearly spells out a timeline for the same during the year. The reduction in the fiscal deficit in the current year critically hinges on achieving the revenue growth target of 23.4 per cent, which, in the current macroeconomic environment, could prove to be challenging.

Chinese Premier Li Keqiang’s India visit and the announcement of the India-China economic cooperation have been widely welcomed. Do you see any threat from China as far as our economy is concerned?

I see no threat from China as far as our economy is concerned. India and China can benefit from their relatively healthy growth prospects in terms of leveraging each other’s comparative advantages in trade and investment. Over the last decade, a series of top-level political visits between India and China have established a new paradigm of engagement. A conducive atmosphere for bilateral economic cooperation has been created and strengthened. Trade between the two Asian giants has soared from just over US $7 billion in 2003-04 to US $67.8 billion in 2012-13. Indian companies have entered the Chinese economy with cumulative pledges of over US $1 billion. Chinese investments in India aggregated US $657 million by October 2012. The scope for further investments in both directions is high, and the industry of the two countries should leverage the strong direction shaped by the governments to take our multidimensional economic engagement to a new level.

What are your expectations on RBI’s next credit policy?

In view of the continued slowdown in growth and moderating inflation, we expect the RBI to cut repo rate by 75 bps over the course of the year, which should be accompanied by a reduction in Cash Reserve Ratio (CRR) by the same measure. If this happens, industries could raise funds and achieve an economically stable position. The Central Bank has been accommodating our requests, and has already reduced headline rates by 125 bps in the last one year.

July 2013

MONEY INDICES

POLITICS

BJP chants

Narendra Modiâ&#x20AC;&#x2122;s popularity has gone beyond the boundaries of Gujarat. His elevation as poll campaigner shows his powerroots are penetrating deeper in the party BY Sarath vasudev

MONEY INDICES

July 2013

BJP

NaMo Namah

ven though Gujarat Chief Minister Narendra Modi has not yet been declared the prime ministerial candidate of the National Democratic Alliance (NDA), his ‘coronation’ as the BJP’s master campaigner for the 2014 Lok Sabha elections has to be considered a giant leap for the top job in Delhi. The party has vehemently backed Modi to attain 180-200 seat mark despite differences in the NDA. While the NDA’s major ally, the Janata Dal-United, has opted out from the alliance for ‘ideological reasons,’ other key constituents such as the Shiv Sena and the Shiromani Akali Dal have welcomed the move. In the midst of dissent and differences within, Modi’s appointment as the poll campaign chief will mark the emergence of a new era in the Bharatiya Janata Party, after Atal Bihari Vajpayee and Lal Krishna Advani.

Star value Modi’s star value has risen over the years. Even his detractors know that Narendra Modi has the potential to add more seats to the BJP’s tally in 2014. NaMo, as Modi is popularly called, was the obvious choice of the BJP considering that he is the most popular BJP chief minister in the country. As the Chief Minister of Gujarat, Modi has steered the state to peace and development after the Gujarat riots. Announcing Modi’s elevation, party president Rajnath Singh said: “The country is looking up to the BJP. We need to get prepared for the elections, and Modi is the most appropriate person to lead the party. He is the most popular chief minister.” Former Union minister O Rajagopal told Money Indices that Modi has shown how a state can prosper under a good leadership. According to Rajagopal, “Narendra Modi was the pivotal force in changing Gujarat to what it is now. With such leadership creden-

tials, he is sure to guide the country to prosperity if he becomes PM.” Gujarat now contributes over 7 per cent to India’s GDP. The state’s agricultural and allied sectors have registered an average annual growth of 11 per cent compared to the all-India average of 3 per cent.

Assembly polls, a litmus test Modi’s role will be crucial in the run-up to the 2014 polls, after BJP’s divorce with JD(U). He will be a decisive factor in determining a grand alliance in Delhi, but he has his task cut out in setting things right in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan, where Assembly elections are due.

Baby steps Narendra Damodardas Modi was born into a grocer’s family in Vadnagar of Gujarat on September 17, 1950. In his teenage days, he ran a tea stall in Ahmedabad. Modi’s journey to the top post was not far from a rollercoaster ride. Here are the main milestones in Modi’s political career: Joined the Akhil Bharatiya Vidyarthi Parishad (ABVP) as volunteer Joined the Rashtriya Swayamsewak Sangh (RSS) Joined the BJP in 1987 Became general secretary of the BJP’s Gujarat unit Appointed national secretary of the party in 1995 Promoted as general secretary in 1998 Chief Minister of Gujarat from 2001 to present Appointed the NDA’s chief poll campaigner in 2013

Modi’s appointment as the poll campaign chief will mark the emergence of a new era in the BJP, after Atal Bihari Vajpayee and Lal Krishna Advani

July 2013

MONEY INDICES

POLITICS

BJP President Rajnath Singh congratulates Narendra Modi on his appointment as the Chairman of 2014 Lok Sabha Election Campaign Committee

Even though BJP has formed government thrice, model’ of development has made him the darling of it has never won an absolute majority. In the last Lok corporate India. Business tycoon like Ratan Tata has Sabha elections, the party won a mere 116 seats, far praised Modi for the ease of doing business in Gujafrom the halfway mark of 273 seats. rat. Tata had said: “Investors look for locations that On the contrary, the Congress terms ‘Brand Modi’ are investor-friendly to make investments. Gujarat as a ‘non-starter’ in other states. “Narendra Modi was stands out distinctly in the country and the credit for a flop in other states where he campaigned; he can’t it goes to Modi.” do anything outside Gujarat,” a Congress Pareshbhai Patel, chairman of spokesperson said. South Gujarat Chamber of Commerce Modi’s first task would be expandand Industries, shared the same ing the party’s support base, especially opinion with Money Indices when he after the party got sunk without a trace in said, “Gujarat is the only state which Karnataka. The party has also weakened in has surplus power and an excellent Uttarakhand and Himachal Pradesh. infrastructure for industry. Hence Uttar Pradesh has always been the Narendra Modi should be the Prime gateway to New Delhi. Modi’s confidant Minister.” Amit Shah has been given the responsibilWhen the national economic ity to woo the voters in Madhya Pradesh, growth plummeted, Modi’s Gujawhere BJP is struggling to reach a doublerat achieved a double-digit growth. Niranjan Hiranandani digit mark. The other stiff challenge that Compared to other states, Gujarat Modi would face is to ensure peace and has provided uninterrupted supply of unity within the party after hostility from electricity using renewable resources. the Advani camp. Gujarat grew under Modi. “Can he do wonders in India?” is the question Modi can do Business-friendly that Niranjan Hiranandani, managing it in Gujarat, Modi, generally believed to be businessdirector of the Hiranandani Group, friendly, has transformed Gujarat to an rightly raised in a conversation he could do the investment haven, making it easy to do with Money Indices. Hiranandani assame in India too business in the state. His rapport with serted: “If Modi can do it in Gujarat, India’s top industrialists and his ‘Gujarathe could do the same in India too.”

MONEY INDICES

July 2013

POLICY

CBI autonomy, a pipe dream? the affidavit is in the apex court and now its time for the verdict

BY Sarath vasudev

amouflage, it is... an illusion The government affidavit will come up for by replacing political execuhearing on the 10th of this month, same day of tive with its proxy instituhearing on the coalfield scam. BJP is not amused tion,”, is what the leader of by these recent developments and it questioned Opposition in Rajya Sabha, the recommendations to appoint retired judges to Arun Jaitley said after oversee CBI investigation. ”Retired judges are an cabinet approved Group of unaccountable institution and don’t inspire confiMinisters recommendations dence among people, says Arun in an article. on CBI autonomy. “The deCBI misuse cision taken at the meeting Opposition alleges that Congress has conveniof the cabinet does not in any way immunise the ently used CBI to control BSP, SP, Trinamool leadCBI from political interference,” he says. ers for its political gains. In this context, Defence The recommendations of GoM in the affidavit and Strategic Affairs Analyst, Brigadier (retired) submitted to Supreme Court, include constituting Hemant Mahajan tells Money Indices a panel of retired judges to monitor investigations that the CBI’s inhibition in inby the agency, greater financial powers to the vestigating political cases raises agency, and provision for time-bound questions on the credibility of the sanctions to investipremier investigating body. gate government r Mahajan says: “The CBI has officials. It has e n n a m in any e c n e done remarkably well in nonalso recommendu infl will not BI C political cases, but its lethargy ed a panel for the y b • Centre d be nducte ctor is to e in cases involving political big appointment of CBI ir probe co d I B of a C ister fishes has to be questioned. As Director comprising ime Min intment r o P p p d a n a e m • Th ittee far as the CBI’s autonomy is the Prime Minisa collegiu e comm made by c hairman of th e c concerned, I believe it should ter, Chief Justice of ffi e o th m e o ed fr will b e remov be given full autonomy, but India, Leader of Opb ll a h s ident irector s d e r I P B can’t say how practical it is, position and Speaker. e C • th not order of post for considering that the same is Opposition say ld only by o h e ill th ansthe case with other bodies irector w and cannot be tr itthat the Cabinet d I B C • The comm e o years th tw f like judiciary and the police decision will in no way o n a sent more th t the con u o force.” help CBI from political h it w ferred P C Cyriac, Chairman d by PM interventions as was e d a e h tee of Anti-Corruption People’s sought by Supreme Movement, believes that, for a true result, the Court, after it found that agency should be completely free from political former Law Minister and interferences. Cyriac says: “Giving full powers to Prime Minister’s Office the CBI could be disastrous. What the country doctored CBI report on coalfield allocation scam needs is an autonomous CBI under the ambit of status. Court had earlier called CBI a “caged parrot the Lok Pal.” with many masters.”

July 2013

MONEY INDICES

COvER STORY

MONEY INDICES

July 2013

DIRECT SELLING

Direct selling

is here to stay The direct selling business â&#x20AC;&#x201C; which began as a small movement in India when Eureka Forbes initiated direct sellers (white-collared doorknockers) to push the sales of its vacuum cleaners in the early 1980s â&#x20AC;&#x201C; has become an entrepreneurial revolution poised to cross the `10,000-crore-mark (over US$2 billion) by 2014-15. However, nonregulation and policy paralysis, if not worked upon by the government, could hamper the growth prospects of this globally acknowledged multi-billion-dollar business that has paved the way for thousands of Indians to create self-employment opportunities

By Vishnu Rageev R yoti Verma, 38, of Delhi, a journalist by profession, sells beauty products of a direct-selling multinational company to make a few extra bucks. Factors like professional freedom, easy start, less investment, quick returns and work flexibility are driving professionals like her into this business. Like Jyoti, the Indian direct-selling industry employs over 5 million entrepreneurs across business genres, of which over 60 per cent are women. This industry, which has registered a year-onyear (Y-o-Y) growth rate of 20 per cent in recent years, is likely to reach `10,000 crore by 2014-15. If the same momen-

tum can be maintained in the longer run, then the market size is expected to reach around `21,690 crore by 2019-20, according to a recent research report released by the Indian Direct Selling Association (IDSA) and PHD Chamber of Commerce. Meanwhile, direct-selling major Amway India, a subsidiary of the US-based $11.3-billion Amway Corporation, has set a $1-billion-revenue target by the same period. In many countries (both developed and developing), direct selling has become a game-changer and is seen as a major contributor to their GDP growth, Bibek Debroy, a noted economist and Re-

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MONEY INDICES

COvER STORY

search Professor at the Centre of Policy Research, says. “Everywhere in the world, it had happened and there is no reason why it will not happen in India. All we want is a regulator to supplement its growth.” The study, titled Direct Selling in India: Appropriate Regulation is the Key, has been authored by Debroy. While the history of direct selling in India dates back to the 1980s, the industry officially came into being in 1995 following the opening of the economic windows. The concept evolved along with economic development and growing consumerism. “Most of what had happened in direct selling has been happening in the nature of diversion from the existing sales channels. Economic liberalisation opened the doors for direct selling to flourish in India,” according to Debroy. At present, direct selling is one of the fastest growing channels of distribution, which ‘give millions with limited means a legitimate tool to earn a decent living and develop marketing and management skills.’ The industry has also made significant contribution towards the country’s socio-economic development, including economic growth, education, health, women empowerment, etc.

many countries, direct selling has become a game changer and is seen as a major contributor to their GDP growth. There is no reason why it will not happen in India. All we want is a regulator to supplement its growth Bibek Debroy

Growth corridors

India has seen a large influx of direct selling companies lately. Business enquiries from direct selling majors wanting to set up or expand operations in India are at an all-time high. Since 2010, around 25 new direct selling companies have begun functioning in India, out of which few are global majors like Nu Skin, Burlington, Salad Master and Golden Warp. Chavi Hemanth, secretary-general of Indian Direct Selling Association (IDSA), says that there is a rising interest among the global majors which are looking for a share from the Indian market pie. “We are answering a dozen enquiries from across the world seeking information about India market, workable business models, feasibility factor, consumer trends, agent’s selection and the like.” The New Delhi-based IDSA, formed in 1996 to protect the ideals and opportunities of what was then a sunrise industry, at present has 18 member-companies representing over a million independent salespeople. Traditionally, the success story of directselling companies was scripted more in the South Indian market. States like Karnataka, Kerala, Tamil Nadu and Andhra Pradesh were the most favourite markets (in terms of revenue) for majors, including Amway, Oriflame, Herbalife, and Tupperware, followed by the West, East and North, respectively. “Organised retail boom was spearheading the North and West markets compared to the South and the East, so, the South took the lead in the expansion of the direct selling businesses,” Hemanth explains. South India helped many of the direct selling majors grow with the lion’s share of revenue generated from there initially. However, a majority of the industry experts we quizzed claimed that the South story assumption is passé, and Mumbai and Delhi would lead. “The social atmospheres in Mumbai and Delhi markets have changed for sure for these companies. The West is likely to be the golden quadrilateral for direct selling companies in the coming years,” they said.

Game changers Launched in 1998, Amway India retails products through ‘Amway Business Owners’ or ABOs, and has provided income-generating opportunities to over 1.5 million active, independent entrepreneurs. The company runs 149 offices and has 65 warehouses with a strong distribution network reaching out to over 10,000 PIN codes across 4,000 cities/towns in the country. Amway India posted a turnover of `2,228 crore in the last fiscal.

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July 2013

DIRECT SELLING

Europe, 16%

Other, 24%

Africa / Middle East, 1%

44%

Global Scenario

United States, 19%

Germany, 2% Russia, 3% Malaysia, 3%

Japan, 14%

Mexico, 4%

China, 12%

Korea, 8% Brazil, 9%

Regional Sales

Top 10 Global Markets

Source: WFDSA

France, 3%

Americas, 40%

According to an Amway India official, the company successfully introduced 140 products across five categories, namely, nutrition and wellness, beauty, homecare, personal care, and

fiscal, Amway recorded a turnover of `2,130 crore, while adding up to over 20 per cent CAGR over a five-year period. The company, which entered India in 1995, began commercial operations in 1998. Globally, Amway has over 450 products and 1,000 patents. Another direct selling behemoth, Avon India, a part of the $11-billion Avon Corporaare answering a dozen enquiries from across tion, started in 1996, the world seeking information about India has seen a CAGR of 42 per cent over the market, workable business models, feasibility factor, past 16 years. Avon consumer trends, agent’s selection and the like has presence across 16 states with the Chavi Hemanth ability to serve 70 per great-value products. cent of the Indian population. The company sells “We had an edge a wide range of products in the colour, skin care, over our competihair care, personal care, fragrance, jewellery and tors because of accessories. product diversiUjjwal Mukhopadhyay, general manager of fication. That is Avon India, says that the company has always the reason why used the strength of the direct selling channel we had grown with innovative and aspirational products to help from a mere recruit and retain the Avon representatives and `99-crore drive consumer purchase. “Our business model is revenue based on one-to-one relationships with women, in 1999 recommending and spreading their fondness of to a a product. This is particularly important with whopbeauty and personal care products, which make ping the direct sales channel ideal.” turnoBy 2020, Avon India aims to become a signifiver of cant contributor to its global revenue, which is `2,288 currently pegged at less than 5 per cent. crore in the Indian direct selling major Modicare, a part of 2012-13 fiscal.” K K Modi Group, was started in 1996 and curIn the 2011-12 rently has 50 centres across the country that

July 2013

MONEY INDICES

COvER STORY

Avon boutique supply products to over 2,700 cities. Modicare offers products across nine categories of skin care; colour cosmetics; personal care; home care; laundry care; nutrition, health and wellness; food and beverages; agriculture; and auto care.

Our

business model is based on one-to-one relationships with women, recommending and spreading their fondness of a product. This is particularly important with beauty and personal care products, which make the direct sales channel ideal Ujjwal Mukhopadhyay Manisha Amol, vice president (marketing and communications) of Modicare, says that, “as a company, we have seen double-digit growth in the past two years. We are expanding our product portfolio by adding new products on a month-onmonth basis. We expect a much higher growth in the coming years. We are striving hard to reach `500 crore by 2015.” Modicare provides opportunities for over 1.5 lakh people in India by marketing over 200 products. Eureka Forbes, which pioneered direct selling in India, recently struck a major

MONEY INDICES

July 2013

deal to buy a majority stake in the Swiss direct selling multinational firm Lux International. Eureka Forbes already owns a 25 per cent stake in Lux, bought in 2010. The increase of its stake will help Eureka Forbes expand its global footprint and achieve its goal of becoming a billion-dollar company, Shapoor P Mistry, chairman of Eureka Forbes, says, “Both companies should enjoy significant synergies from this proposed transaction, resulting in the realisation of the ambitious goals that we have set to increase our combined gross sales turnover from the current US$500 million to over US$1 billion by 2017.” Eureka Forbes continues to hold a major share of the Indian market, roughly estimated at 10 per cent-12 per cent, by selling a wide range of products. Around 150 active direct selling companies contribute 85 per cent growth to the sector, while 15 per cent comes from various unorganised players. Though the product offerings are growing, beauty, cosmetics, personal care, wellness, healthcare, consumer and household durables remain the cornerstone for direct selling companies in India. Future beckons in the agility of directselling companies like Amway, Avon, Modicare, Tupperware, Oriflame, Hindustan Lever, Nuskin, Herbalife and the like to enter unexplored areas by offering products not well-captured by the retail bandwagons.

Challenges Direct selling companies face a number of challenges in the Indian market, which curb the industry’s growth. The major challenge is that the concept of direct selling and regulations related to the industry are not clear, and the operations of direct selling companies are often mistaken for fraudulent schemes. Hemanth, of IDSA, says that the lack of legal framework creates uncertain situations, hampering the smooth operations of direct selling companies. “Many foreign direct selling companies, which are looking at investment, are discouraged by such unclear policies. Import duties are high, and the process is slow and cumbersome, which is

DIRECT SELLING

Top 15 Direct selling companies Globally

Avon’s jewellery range

Source: WFDSA

Rank

2012 Revenue

Country

1 Alticor (Amway)

$11.3B

USA

2 Avon Products, Inc.

$10.7B

USA

Herbalife Ltd.

$4.1B

USA

Vorwerk Co. KG

$3.3B

Germany

Natura Cosmeticos SA

$3.2B

Brazil

Mary Kay Inc.

$3.1B

USA

Tupperware Brands Corp.

$2.6B

USA

Nu Skin Enterprises, Inc.

$2.2B

USA

Oriflame Cosmetics SA

$2.0B

Luxembourg

Belcorp Ltd.

$1.9B

Peru

Primerica Financial Services, Inc.

$1.2B

USA

11 Pola

$1.2B

Japan

Miki Corp.

$1.1B

Japan

14 Ambit Energy, L.P.

$930M

USA

$892M

another factor that blocks further investment in this sector.” Very little has been done by the state governments as well as the Central Government to distinguish genuine direct sellers from those duping consumers through illegal money/pyramid schemes or chit fund companies, laments Satender Singh, a Mumbai-based direct selling agent. “We are expecting that the Government would come up with an amicable resolution to put an end to this crisis.”

Company Name

Telecom Plus

The Kerala Government is currently inquiring into the factors that led to the controversial arrest of Pinckney. “We stand together against the continued harassment because of the row between the fraudulent financial pyramid schemes and the direct selling companies. IDSA will present suggestions, including draft guidelines to the parliamentary committee which is looking into the matter,” says Hemanth.

Action against Amway chief Unexpectedly, Amway India chairman and CEO William Pinckney was recently booked by the Kerala Police under the Prize Chits and Money Circulation Schemes (Banning) Act (PCMCSA) of 1978, based on complaints by distributors in 2011. Emphasising concerns over the arrest, Corporate Affairs Minister Sachin Pilot cautions that such events (like the Amway arrest) must be avoided as it would send out negative signals into the world, which sees India as an attractive investment destination. “The Government is committed to removing the legal ambiguities that apparently blurred the differences between fraudulent investment schemes and the ‘reputed law-abiding’ firms.” Amway India’s contribution of taxes in 2011-12 amounted to `500 crore.

Pinckney after being arrested by Kerala Police on May 27, 2013

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MONEY INDICES

COvER STORY

Modicare’s product range However, an industry analyst from Mumbai, the PCMCS (Prize Chits and Money Circulation on condition of anonymity, says that the arrest Schemes) Act. could be the result of hard lobbying by a rival Clear laws needed sector. “Pharma majors have been lobbying Clarity in regulatory aspects is vital for the against the direct selling companies as the latter growth of any industry, says the Amway India have brought down their market share and profit. official. “India, which is ranked 11th among the I believe that the Amway episode would be the countries having top direct selling busiresult of it.” It is to be noted that Amway Corporation is against bribing officials concept of direct selling and its regulations are for smooth run. not clear, because of which operations of the A senior official at Amway India, direct selling companies are often mistaken for fraudulent on condition of pyramid, or ponzi schemes. Therefore, there is a strong anonymity, said: “If we bribe in need for a regulation in this sector for survival Kerala, we will Manisha Amol sometimes be behind bars in nesses, must quickly frame USA. I don’t know whether money could have rules and policies in support of used to shield Pinckney from getting arrested. the industry and reputed compaWhatever the case is, it is good that we do neat nies that are abiding by the law, work and abide by the rule of law in the countries while acting against fraudulent we operate.” companies running dubious Avon’s Mukhopadhyay condemns the arrest. investment schemes.” “IDSA must pitch in and work with the governSharing similar ment to develop a regulatory framework that proviews, Amol, of vides the necessary consumer protections without Modicare, says impairing the ability of organised players in the that the biggest direct sales industry to operate freely.” challenge to the IDSA claims to have sought from the Governdirect selling ment a clear policy framework and exclusion from

The

MONEY INDICES

July 2013

DIRECT SELLING

Amway center at New orlando, Us business in India is lack of legislation. “The concept of direct selling and its regulations are not clear because of which operations of the direct selling companies are often mistaken for fraudulent pyramid, or ponzi schemes. Therefore, there is a strong need for a regulation in this sector for survival.” Reports suggest that taxes to the exchequer from the direct selling industry are in excess of `600 crore. Government departments – consumer affairs, corporate affairs and financial services – along with three different inter-ministerial groups (IMGs) are said to be working at various levels to end the shortcomings in the system. An official at the Ministry of Corporate Affairs said that the state governments must be consulted while brining amendments to the PCMCSA because it is formed by the states despite being a Central Act. “Market dynamics in each Indian state differ. I think there has to be one Central Act for the direct selling companies, and the states can follow it along with other similar versions suited locally.” Most developed and developing countries – USA, UK, Japan, France, Russia, Italy, Canada, Germany, China, Thailand, Malaysia, South Korea, Indonesia, Vietnam, Taiwan, and Singapore – where this industry flourished have statutes that regulate and facilitate the direct selling industry. If India wants to be at par with fast-growing East Asian and South-East Asian economies, we must formulate a new policy for the direct selling industry.

Future According to estimates, some 91.5 million entrepreneurial-minded direct sellers managed to achieve $153.7 billion in sales in 2011. While the US-led global retail direct sales stood at $29.8 billion, Japan ranked the second at US$23.8 billion. The Indian direct selling business was estimated

at `6,300 crore (US$1,149 million), and accounted for 35.8 per cent of non-store retail sales, 4.41 per cent of organised retail sales, and 0.07 per cent of GDP in 2010-11. The number of direct sellers is estimated to have crossed 4 million during the period, according to recent studies. The Indian market is largely unorganised. Hence it is difficult to ascertain its exact size, says Debroy. “Though there are debates on the size of the market, we are blessed with a huge one, which gives enough space for any number of players. If the Government acts upon timely, it will start showing some results soon.” Unlike other business segments, which spend some percentage of their profit on marketing, advertising and opening new stores, the direct selling companies largely rely on mouth-to-mouth publicity. The companies are increasingly using social media platforms for spreading the word. They have a control on their marketing budgets and that is one reason why they are mostly successful, says Sumeet Mehta, CEO of Paradigm Advisors. “Postrecession, we have seen the winding up of many retail businesses because they have outspent on marketing and expansion. Companies like Amway or Hindustan Lever, which rely simpler methods, have smoothly sailed across the troubled waters.” Amol, of Modicare, hopes that the growing Indian market will attract a large number of Indian and foreign direct selling companies in times to come. “The growth of the industry varies across different segments – organised and unorganised sections. However, overall, the industry is slated to grow at an average of over 20 per cent in the next four years. We will see many new players here.” The Amway India official concluded: “Considering our journey so far and India’s market potential, we aim at reaching the US$1-billionmark by 2020.”

July 2013

MONEY INDICES

insights

app to beat autism BY Sramana Mitra

From massive online open courses to iPad apps, education technology market is seeing progress. I will introduce you to another innovation that is positioned for rapid adoption

lectrical engineer Ajit Narayanan was in the right place at the right time, poised to welcome the impending tablet revolution. But it wasn’t until 2008, when Ajit was approached by the special needs-focused NGO Vidya Sigar that he began to consider the impact the technology might have on special education. Tracking the development of assistive technologies for children who cannot speak, Vidya Sigar noted an increasing prevalence of tablets in use for assisted learning in USA. However, they feared that a price tag of over US$5,000 would be an insurmountable obstacle for most Indian families. They hoped that Ajit’s expertise might provide the Indian market with an affordable equivalent.

MONEY INDICES

July 2013

Ajit was attracted by the possibilities, and in 2009 presented his business partners with his tablet: Avaz. Initial introduction proved a challenge; though the product was widely successful both commercially and critically, it ultimately proved to be too niche a product in a growing market. Upon release of the iPad and Android tablets, Ajit quickly shifted focus to producing an app version of his product. Avaz was released in Android form in 2010, with the iPad version on the market in 2012.

How Avaz Works Avaz today is an app designed to assist children communicate non-verbally by addressing their difficulty in processing information such as letters, words and sentences. The app reworks the information into easy-to-understand pictures, rerouting through visual pathways rather than verbal ones. Avaz is prescribed through therapist evaluation for purchase by the child’s parents or through the school’s therapy programme. Gradually introduced, the software becomes a part of the child’s life as it helps him or her to communicate in both academic and social environments. Taking a holistic view of the language development process, Avaz teaches the child underlying patterns of language while seamlessly integrating with existing methods of speech therapy. Moreover, the app is very easy to customise, allowing users to add a new phrase in just 15 seconds. And it’s available on the App Store for US$99. While several apps available on the App Store target communication development, Avaz is the only one to focus solely on autism, incorporating additional audio and visual reinforcement to combat common sensory difficulties. The app also supersedes competitors in aesthetics, as Ajit took a strong stance on the need for the app to be visually appealing as well as functional.

SRAMANA MITRA

Addressing a Growing Problem Avaz addresses a problem that has grown in recent decades: one in 88 children are diagnosed with autism in USA and numbers are even higher in less developed nations. But despite a matching trend toward developing assistive technologies for use on tablets and smartphones, Ajit must also combat cultural resistance to technological intervention and therapy. India, for one, is against its use for assistive speech development, as some feel it creates a false hope that the child in question will regain normative patterns of speech. In such a new market, building awareness is crucial and combating myths and misconceptions essential. But Ajit and Avaz are not without support, as the site of their headquarters, Chennai, is at the forefront of special education in India. Avaz receives substantial assistance from the IIT Madras Research Park there, in addition to sharing their Rural, Technology and Business Incubator. And Ajit has only to share some of his daily experiences working with

his technology to prove its power to change lives. Avaz has helped a young Indian boy move out of his special education class as he gained the ability to participate and communicate, such that he will soon graduate among his peers. Ajit and his business partners dream that Avaz will bring him to college, and give him a job and a life ,which was never possible before.

Receiving Recognition and Plaudits Across the World Rated as the #1 speech assistive device/app in India, Avaz is quickly gaining traction with speech therapists in USA, Europe and Australia. User and expert reviews are overwhelmingly positive, and it is the only app of its kind to receive a five-star rating in the App Store. Whatâ&#x20AC;&#x2122;s more, by providing previously speechless children with the ability to communicate, Avaz relieves frustration on both sides. It also alleviates the behavioral issues often associated with the condition. Ajit receives international emails

July 2013

MONEY INDICES

INSIGHTS

For

his work, Ajit was nominated to the MIT Technology Review global list of 35 young innovators. He hopes to use Avaz as a starting point and build a repertoire of technology-based solutions for the autism community, as well as expand into applications for other communication disabilities

on a daily basis that validates the results of the technology. Stories such as a mother who could hear for the first time what her child wanted for dinner and of a child picking out his own books at the library and reading them with his therapist. Such stories are what ‘dreams have come true’ type. For his work, Ajit was nominated to the MIT Technology Review global list of 35 young innovators. He hopes to use Avaz as a starting point and build a repertoire of technology-based solutions for the autism community, as well as expand into applications for other communication disabilities. We are hopeful for Avaz’s future as a major innovator in the learning disability app category. It is not at all a stretch to imagine that Ajit Narayanan’s vision of becoming the premium vendor of learning disability apps worldwide will bloom into reality.

Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs globally to reach US$1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, she writes the blog Sramana Mitra On Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, Mitra was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma

MONEY INDICES

July 2013

SOCIAL MEDIA

The

next wave of connectivity US-based businessman Stilianos Roussis has bet big on the possibilities of social media with his human coach machine Hukoma. This personalised social media platform could be a new wave of connectivity in the future By Dipin Damodharan

he expanded reach of internet and the boundless possibilities of social networking sites have started to attract new entrants into tech world. One of them is the US-based Hukoma. But unlike the existing players, it has something really new to offer. “The idea of Hukoma came from the need to manage my own personal activities and the need to actually share them with my family members and my close friends. When we talk about personal activities and interests we include things like health, finance, and personal decision making that we all need to deal with on a daily basis. We also include things like personal favourites, likes, and dislikes,

things that we don’t want to share with the entire world,” Hukoma founder Stilianos Roussis tells Money Indices. As we already have dozens of well-performing social networking websites, with Facebook leading the charge, will Hukoma survive? But Stilianos is upbeat. “Facebook and the other social media tools serve an excellent purpose in connecting people in general and satisfy innate human needs such as connectivity, curiosity, entertainment, etc. However they do not address other aspects such as the need for coaching as needed in serious personal matters. In that case, you don’t want the entire world to know about your personal issues at hand, and of course you want and accept advice and encouragement only from family members and a few very close and trusted friends. Hukoma offers this per

July 2013

MONEY INDICES

SOCIAL MEDIA

The idea of Hukoma is to enable the interaction of individuals at the personal level sonal connectivity,” he says. According to Stilianos it is the personal aspect that Hukoma addresses. Google and other search engines offer an excellent venue to find professional help and advice. But when you need the personal touch and encouragement on serious matters in daily life, Hukoma is the engine that provides the connectivity for personal touch and encouragement from your mother, father, brothers, sisters, daughters, sons and the few trusted extended family and friends. Meanwhile Stilianos says that Hukoma does not compete with Facebook and the other social media tools. “Facebook offers an excellent “collective” consciousness that represents the current “acceptable” norms of the global society. And of course this is extremely good and positive because it allows the people of the entire world to connect and oblige by the global expected norms and standards. At the same time however, it is very well known that the individuality and greatness of the traditions and ways of individual nations, tribes, and smaller groups of people with unique character and originality will provide the diversity and opportunity needed for future greatness by sharing with the rest of the world their own unique individual skills and ideas. It is very important for people to keep their unique individuality in order to be able to contribute to the global needs in their own way,” Stilianos explains. Hukoma enables and strongly promotes the next

MONEY INDICES

July 2013

wave of connectivity, which is that of the individual at the personal level. It is a platform that allows the individual to use it as a hub for connecting all the digital areas of interest to him or her. It can be the hub of all his/her health-related activities/events; it can be the hub of his/her financial activities, entertainment, education, work, and so on.

Plans and challenges As technology progresses, Hukoma has plans to interface with future mobile devices that save time and money, increase security, and enhance the overall quality of life. Stilianos believes that the individual will become the main focus for the creation of customised products and services will be built to meet the unique needs of each individual. Initiated in USA, Hukoma is available on a global basis. Anyone can register and create a profile and start using it as soon as he completes the registration. “The natural development will be to base ourselves on the existing technology and infrastructure and develop Hukoma as needed and as technology creates new opportunities. At the current stage we are experiencing a new revolution in the ability to interface with the digital world. Mobile communications have brought us the ability to carry with us the connectivity to the global information at the change of each micro-second. We expect this trend to continue to the point that the humans will take for granted the physical dimensions of the machine,” Stilianos tells Money Indices. Social media leader Facebook has about 30,000 servers to back up its operations. Does Hukoma

hUkOMA have the resources to build a vast online infrastructure when more users come in? Stilianos answers, “Certainly there is a high cost associated with the use of servers and all social media tools like Google and Facebook faced the same problem as they were starting in their growth curve. At the same time, this is a relatively old problem that does not present a main technology issue. We are in talks with investors that are interested in providing technical and financial support to Hukoma to address the needs of new servers and software development.”

Revenue As the most obvious and common approach of monetisation is advertising, Stilianos also banks on this. “We have seen this with Google, Facebook, etc. Membership is another approach for monetisation, and we have seen this recently with LinkedIn. Membership can be specific to various optional features of Hukoma that the basic user may be not interested in, at least not initially. Added monetisation may involve additional features such as the availability of particular services (e.g., expert resources/consulting, etc) or products (e.g., individual customisation). The users would decide for these features and specify the type of customisation required. The features are free of charge to the users,” he explains. Hukoma is also tapping the interests of Fortune 500 companies in migrating to a personal yet official-cum-social networking platform for their growing business needs. Stilianos thinks that it is the next big area for Hukoma. “We have been in talks with a few major manufacturing- and sales-based companies that are interested in exploring the personal aspect of interactions for closed-system networks. You can see that closed-system networks are very natural for commercial entities that depend on the privacy and proprietary nature of interactions. With Hukoma, each event and activity are private, confidential, and limited to the closed-system network. At the same time, Hukoma is a natural system that enables the management of projects and people based on practical business approaches. Hukoma can be configured to manage projects, goals, and performance. The personal connectivity approach in the commercial space is naturally enabled by Hukoma, which can be highly customised based on the specific needs and requirements of each firm, in a closed-system environment,” he adds.

“At the end of the day, each one of us has to use the bathroom, and take care of important personal matters such as health, money, and family affairs, on practically daily basis. Life cannot be fast-paced for these matters. So on that account, we see that each person is a potential Hukoma user” -Stilianos Roussis, Founder, Hukoma

The coaching machine Stilianos calls Hukoma a coaching machine where the coach is the human. He explains how it works There are at least three potential levels of coaching. Level one involves the direct and simple coaching between members of the same personal network. For example, I can ask for help on a difficult subject involving my decision with regards to selecting a specific doctor; should I consider this expert or the other? Is it simple matter; can I postpone it or do I need to act immediately? I need some suggestions from my brothers and my parents. Do I feel comfortable in sharing with all of them or only with one of my brothers that I feel more close to? The same thing is with my financial affairs, and so on. Also, my parents can still offer me suggestions on different aspects, whether I like it or not. They can propose new neighbourhoods for me, schools, restaurants, diets, etc. I can do the same thing for them or for my own children. I can propose potential schools for my daughter. What does she think? What do the other people in my family think? The system provides for comments, links, etc. Level two involves coaching from personal information derived automatically from Hukoma based on shared information from my contacts. The system can propose actions or reminders to me for different events or affairs involving each of my contacts. It is then my decision on how to act and/or use any of these. I can interact with the available shared information in Hukoma to enhance my personal interactions with my loved ones. This automated Hukoma feature is of particular usefulness as we are all busy and tend to forget things and most importantly about people that we are not that close to. The programme has actual metrics to track our activities toward all our contacts and remind us to increase our interactions with the people we have least interacted with over a period of time. Level three involves the interaction of subject matter experts with validated credentials and license to provide expert consulting through Hukoma. This would involve substantial scrutiny and be available through membership only. July 2013

MONEY INDICES

ENTREPRENEURShIP INNOVATION

Matchless

At first it seemed like a utopian idea, but the out of the box thought of techie Murugavel Janakiraman to start an online matrimony site was no short of a million dollar idea. His innovative thoughts have now made him the CEO of matrimony.com consortium, which accounts a share of about 65 per cent in the online matrimony market. As the company is hoping to go public next year, Money indices traces the strenuous path taken by trailblazer Janakiraman to matchmake success with his Bharat Matrimony BY Sarath vasudev

BhARAT MATRIMONY

atchmaker

hings have section generated significant interest, I changed since the seized the opportunity for leadership in days when people this space because competition didn’t used to rely heavexist.” BM has 200 outlets ily on newspaper Strenuous start across India and matrimonial clasIt was strenuous for him to venture in sifieds to find their multiple channels the late 1990’s, when internet was a spouse. for payments and luxury and people were scared of making It is interesting payments online. Use of credit card was to note that, today, collections, which low and online matrimony had not yet out of the millions of matchmakings that makes transactions gained credibility. Building trust was the take place every year in India, 10 per cent are happening online. The `1, 000-crore fast, easy and reliable first challenge. “In the beginning, we had the challenge of educating people and online matrimonial industry is growing for the customers working to build trust. We were pioneers at a rapid rate, and no one knows it betin doorstep collections in India. We ter than the bellwether of the industry, are a C2C business; our USP is a large Murugavel Janakiraman, Founder and database of prospects and a robust and CEO of Bharat Matrimony Group. secure platform to connect to each other. Started in 1997, Bharat Matrimony (BM) has pioWe are the only company in the world offering 100 neered online matrimony and single-handedly changed per cent mobile-verified profiles. Today, Matrimony. the way people approached matchmaking. From simple com Pvt Ltd is the most trusted global brand in this matchmaking, BM has ventured on a range of matrisegment, with 70 per cent of market share across segmony services and allied services like India’s first-ofments,” asserts Murugavel. its-kind return-gift stores, Tambulya, and matrimonydirectory.com, which offers the contact details of caterers, banquet halls, jewellers, florists and more. With robust technology, innovation and new features like Matchboard, AstroMatch and Express Interest, Murugavel’s brainchild has redefined the making of marriages in India. From a humble middle-class family, Murugavel completed his Master’s degree in Computer Science from the University of Madras and began his career as a software professional at the Chennai-based Nucleus Software (now Polaris). He started BM as a hobby. Murugavel says: “The idea was to build a simple site to connect to the Tamil community, basically a news site, forum and a little section on matrimony. After the matrimonial

July 2013

MONEY INDICES

INNOVATION

He believes that satisfying customer needs is the golden rule. “Solving customer’s problem and providing better solutions is our winning strategy. BM has 100 per cent mobile-verified profiles, safe and credible services, exclusive services for different audiences, customercentricity, robust technology and a strong leadership team which caters to the need of the people.”

BM Vs BM BM comes with a basic service rate of `3,290. About the competitors within the industry, Murugavel says: “We compete with ourselves. Geniuses like Sachin Tendulkar, Roger Federer

800 million mobile users and increasing smartphone penetration, there has been a sea change in the use of technology. According to Murugavel, “we are a very agile and openminded company. We try various mediums, including social media, TV, radio, newspapers and magazines. For brand building, I think TV is the better medium. We also conduct matrimony meets and workshops for customers.” Murugavel’s entrepreneurial journey was not far from mistakes and that mistakes are part and parcel of every successful business story. “Without establishing the matrimony services, we ventured into diverse

BM was the first to offer features like Verified Profiles, Assured Contacts, 15 region-specific portals, and Mobile Alerts in the online matrimony space

The online matrimony market is valued at `510 crore

2.2 million Profiles are being uploaded every month

There are 35-40 million online registered profiles

10 per cent of registrations end

in marriage

and Usain Bolt raise the bar every time they perform, and they only excel themselves. Excelling ourselves is a daunting task. And, our focus is to grow fast globally. We will continue to invest in innovation, technology and new services to create a marriage ecosystem for perfect weddings.” Bharat Matrimony, one of the biggest online hubs in the world, has never hesitated to try out new mediums like social media. With over

verticals like India Property and Click Jobs a bit too fast. Thankfully, India Property was a success. Secondly, we did not focus on financial aspects, but we have now learnt to manage things really well,” he says.

Advice to aspirants Murugavel believes that business is all about innovation and risk and he has a piece of advice for aspiring entrepreneurs. “Do not be risk- averse, never follow the beaten path, learn

from failures, and be unrelenting in the pursuit of success. Entrepreneurs must have purpose, passion, perseverance and also a revenue model for their business.” Leveraging the strong base laid by flagship Bharat Matrimony, he owns other online matrimony platforms such as Elite Matrimony, PrivilegedMatrimony, Assisted Matrimony and Popular Matrimony. It has also launched services in Pakistan, Bangladesh and Sri Lanka.

Murugavel credits his success to his Guru Mahatria Ra and his teachings on Infinitheism

MONEY INDICES

July 2013

ENTREPRENEURShIP STARTUP

‘Greenvamping’

urban lives

Imagine getting gardenfresh tomatoes, chillies and other vegetables from your limited premises in your city. ‘iKheti’ is there with you to give life to this thought. The innovative startup project by ‘ecopreneur’ Priyanka Amar Shah focuses on services in promoting sustainable urban farming and encourages individuals and communities to grow healthy, consumable crops BY Archana Nair

MONEY INDICES

July 2013

ndian urbanites are now opting for a healthy lifestyle and searching for greener pastures. Envisioning the idea that good health, innovation and productivity will become the inherent part of urban life style, 26-year-old hardcore nature-lover Priyanka Amar Shah launched iKheti, a startup venture offering services and guidance in urban farming. It also helps to ‘greenvamp’ urban premises. Ranging from seeds to garden accessories, it is currently a one-stop shop for customised services and personalised designer products for urban farmers. The team provides a range of innovated services from consultancy to waste management. It also conducts workshops for educational institutes, corporates, societies, etc. According to the ecopreneur, “our workshops introduce a larger audience to the urban agriculture movement by simplifying the diverse world of gardening and providing them with basic information. This move will act as a steppingstone for the user to become a participant in the urban agriculture movement. ” iKheti has also ventured into beautification and ‘greenvamping’ of rooftop and patio gardens.

Why the name iKheti Priyanka explains: “The letter ‘i’ stands for ‘innovation’ with an eye on eco-sustainability, and ‘Kheti’ means agriculture. In the broader sense, ‘I’ denotes the ‘intention’ of keeping societal needs at the core of the business and to bringing benefits to society.”

The onset The origin of iKheti project happened during a B-School Concept Show that opened a platform for students to present their ideas to venture capitalists from different sectors. Priyanka’s idea was well-appreciated, and was later selected as one of the best five entrepreneurship ideas in a Business Reality Show by a popular media house. About the start, Priyanka says: “It was during a family dinner that my brother, an entrepreneur himself, suggested to take the concept of urban farming to a community-level and

IKhETI

so the inception of the idea, which is now iKheti, took place.” By 2011, iKheti was upgraded into a startup venture with immense growth potentiality. Priyanka’s most cherished moment in her journey so far was her meeting with Pratibha Patil, former President of India, and receiving her encouraging words about taking this innovative idea forward. The ecopreneur holds a high academic profile, including two Master’s – one in Commerce and Business Management from Mumbai University and the other in

Nature is the biggest motivator for me Priyanka

Business Administration from Wellingkar Institute of Management.

Hurdles For any unconventional startup project like iKheti, initial fundraising is sure to raise challenges. Recalling the initial days, Priyanka says: “After receiving much appreciation and encouragement for the innovative idea, I was able to convince some private investors to help me with the initial funding. Along with it, I worked as part- time IT consultant to be able to support my business.” She continues: “My family believed in me, and so I took the risk of taking this unconventional idea forward rather than opting for a 9-6 job. Now I have my husband Sharad Shah as well supporting me with the functioning of iKheti.” On the challenges of the industry, Priyanka says: “Organising this unorganised market is the biggest challenge I have faced so far.” The enthusiast comments on the issues of starting a unique enterprise with a social impact: “The money starts coming in fast when you are riding the tech wave. Innovative concepts like ours raised a lot of questions and doubts in the mind of people before adapting to it. But, society as a whole is changing, with the youth today becoming more environmentally conscious.” The young entrepreneur strongly believes that today’s youth have the added responsibility of working towards the betterment of society as a whole. “commercial activities and ventures should leave the planet a better, safer and more beautiful place for the generations to come,” adds Priyanka.

Plans Priyanka is on her mission to expand iKheti on an all-India basis. The company will soon be extended to other big metros and then it plans to move to the smaller cities. She says: “We have already begun diversifying into corporate landscaping and soon wish to imbibe edible landscaping in other areas too.”

Advice to successors Here is Priyanka’s piece of advice to innovative startups: “I would tell them to stay there and hang on, bringing about a big difference with time. As Victor Hugo famously said, all the forces in the world are not so powerful as an idea whose time has come.”

July 2013

MONEY INDICES

ENTREPRENEURSHIP WOMAN

Venturing profit, non-profit As an entrepreneur, Sarika Bhattacharyya is unique because she spearheads a profitbased venture Altavis and a non-profit one Biz Divas simultaneously. While Altavis looks at broader and diverse aspects of talent management, its CSR initiative Biz Divas aspires to empower woman entrepreneurship in India

BY Archana Nair

MONEY INDICES

July 2013

arika Bhattacharyya, a Master‘s degree holder in Business Administration, began her career as an investment banker. A decade of experience with Merrill Lynch and short stints with ICICI, IIFL Wealth, acted as a baby-walker for the zealous spearhead during her baby steps towards entrepreneurship. In 2011, Sarika started a talent management firm Altavis Pvt Ltd with her friends Ranjana Deopa and Priyanka Awasty, both hailing from a similar banking background as Sarika. This, in turn, made the company’s inception much easier. “The basic motto of our business is to create value through collaboration. Our strategy is to keep it simple and highly executional. The mission of Altavis is to be a growth centre for balanced leadership and to bring optimum diversity in organisations at all levels,” explains Sarika. Simultaneously was the launch of Biz Divas Foundation, the child of the passion of these three young women to contribute in the space of woman empowerment, both economically and socially. The team expanded when Rashmi Mandloi, Shilpi Singh and Dinakshi Arora, who contributed their diverse experience and passion to drive the collective vision and create huge synergies.

Profit venture Altavis had an outstanding performance in its maiden year itself, but Sarika, the Director humbly calls it ‘beginner’s luck.’ Expansion started in the second year, and the firm continues its drive to success with an appreciable portfolio of projects and clients within a short period. It now offers a number of diverse services in talent management like outplacements, executive coaching, and diversity consulting. The Gurgaon-based Altavis sets a model by proffering flexible work options for women and helps them balance both work and life priorities. Sarika says: “It is important that we not only attract diverse talent but also engage and retain them. Our vision is to help in creating build more diverse and inclusive organisations in India.”

a woman, an entrepreneur The entrepreneurial journey was not a smooth one for the Altavis team. They had to cross many hurdles ranging from accessing funds to hiring talents. “But, as a woman entrepreneur, maintaining a work-life balance along with creating a social impact with our ventures was really difficult. I could not even discuss this need with many of the male counterparts,” recalls Sarika. On woman entrepreneurship, she says: “It is extremely important for women to let of their inhibitions and increase their risk-taking ability.

Creating collaborative networks is something women are good at and should take advantage of the same Sarika Bhattacharyya

The biggest obstacle for women is their own inhibitions and limitations. It is essential for women to be comfortable being uncomfortable. Creating collaborative networks is something women are good at and should take advantage of the same.” According to Sarika, women need to live with uncertainties, yet should have clarity. She explains: “I am approached by many women who have great ideas but have no clarity on execution. Ideas when not executed are at best self-hallucination. It is not the passion, but executing it is more important.”

Originated during a small meeting of 11 women held in July 2011, Biz Divas has grown to three chapters in Mumbai, New Delhi and Gurgaon with a membership strength of 1,000-plus in 2013. The activities of Biz Divas include roundtable discussions on the issues of women leadership, diversity awareness and gender sensitisation in corporates and industry bodies, and expert-talks by woman officials from different industries through a Corporate Networking Group initiated for the purpose.

Non-profit venture

Tapping women’s talents

Sarika Bhattacharyya is keen to share about the inspiration behind Biz Divas India. She says: “Many a time, I have come across highly educated and skilled women confining their dreams owing to life’s priorities. I noticed that our economy could gain more if this pool of talent is brought back. The vision of Biz Divas is to increase women participation in India’s economy, be it in the arena of business, corporate, politics, or the social sector.” She continues: “Women are a force for driving economic, political and social change. Divas works with transformative leaders to advance economic and social empowerment for women via mentoring and skill training to achieve their true potential.”

Biz Divas plans to launch a Women Leadership Programme, to mobilise distinguished professionals as mentors of hundreds of talented emerging woman leaders from all walks of life, for the next seven years. At the end of the mentorship, mentees reconvene in a common location to reflect on their experience and discuss future leadership opportunities. The programme brings in senior CEO-level mentors signed up from organisations like Convergys, Capgemini, Deutsche Bank, and Google among many others. “The programme draws on Biz Divas’ commitment to provide critical support for woman leaders in India, and reinforces our passion to increase the participation of women in the growth of Indian economy,” Sarika concludes on a positive note.

Biz Divas

July 2013

MONEY INDICES

ENTREPRENEURSHIP SOCIAL

rejuvenating rural india Grameen Financial Services, a non-banking financial company, focuses on improving rural lives through its financial products and developmental projects

M BY Archana Nair

anjula had a life similar to other rural womenfolk in India. Orphaned at 14 and becoming a single parent at 20 was not anything unusual in her world, but she wanted to educate her daughter and create a good environment. For this, she started working as a garment labourer, but soon found it difficult to make ends meet. Life took a turn for Manjula when she got a loan from Grameen Financial Services Pvt Ltd (GFSPL) to buy a sewing machine. She worked overnight to increase her income. Then she took a second loan and bought a zigzag machine to do artistry work on clothes, and she started getting tailoring orders from shops. Thus, her world started to change. Today, she provides employment opportunities for others in her village. There are thousands of Manjulas in the history of GFSPL, the micro financial organisation functioning in rural India. Started in 1999 with seed capital from Grameen Trust, the social business firm continues its journey focusing on rural uplift with its financial products and developmental projects.

Beginnings Vinatha M Reddy, founder and chairperson of GFSPL, started her career as a trained Montessori teacher who was actively engaged in the field of education and women empowerment. Her exposure to the activities of Professor Muhammad Yunus’s Grameen Bank, through the book Give Us Credit, by Alex Counts, inspired her to start GFSPL. The journey of GFSPL was the materialisation of Vinatha’s dream. Her mission is to transform and uplift the lives of poor and low-income families with micro finance and other developmental activities. In 2007, GFSPL crossed the one-lakh-client mark. Today, there is a satisfied smile on Vinatha’s face when more women from rural households stand on their own feet and lead successful lives. GFSPL man-

MONEY INDICES

July 2013

aged to change the lives of four lakh people during its journey through the states of Karnataka, Tamil Nadu and Maharashtra. Since its inception, GFSPL has already disbursed up to `3,000 crore to rural India. At present, its employee strength is 1,260, spread across its 161 branches in three states.

Activities About GFSPL’s activities, Suresh K Krishna, co-promoter and managing director says: “Our services include client education on health and sanitation, a mobile academy named Buzz (through which entrepreneurial education is imparted), and supply of smokeless stoves. Quality medical consultancy at lower rates and cashless in-patient treatment in network hospitals are also provided to improve healthcare. We install waterpurifiers in rural India to ensure safe drinking water.” Being committed to rural uplift, GFSPL has helped build 16,782 toilets and have provided clean drinking water connections to 12,000 people in 2012-13. “GFSPL’s vision is to create economic and social change in over 2 million poor and low-income households by 2020,” says Suresh.

My mission is to transform and uplift the poor Vinatha M Reddy

BRANDLINE

tailor-made Every brand has a story to share. Let us listen to the story of Basics Life, the popular menâ&#x20AC;&#x2122;s apparel brand, which crossed the 100-store-mark recently. The theme is, of course, the basics of success BY Archana Nair

MONEY INDICES

July 2013

BASICS LIFE

n the latter half of 1980s, two young brothers started, in a Chennai street, a company that manufactures fashionable readymade shirts for retail stores. The next five years were enough for them to get the pulse of the fashion industry. Driven by mere confidence in their craft of tailoring, they opened their first tailoring-cum-private label retail store named Genesis. In a couple of years, they went a step ahead with the launch of a casual clothing brand Basics. Meanwhile, Genesis remained the formal wear brand. Gradually, a third store from the company, which housed both formal wear and casual wear came, and was called GenesisBasics. The name continued till 2008, and, as a part of rebranding the entire retail experience, GenesisBasics was rechristened and the brand Basics Life was born. The brothers are Hanif Sattar and Suhail Sattar, the people who spearheads Hasbro Clothing. Hasbro is an acronym; H for Hanif, S for Suhail and bro for brothers.

Though the brand has had humble beginnings, it currently holds a yearly turnover of `135 crore. The creators simply define Basics Life as a unique, standalone, exclusive branded outlet catering to lifestyle clothing and accessories for young men. Recently, Basics Life’s journey to success was through the express highway without speed limit. Though it took 18 years for them to cross the 50-storemark, the next three years was more than enough to open their 100th store, in June 2013. At present, they have three international locations in Asia. The fourth one, in Dubai, is in the pipeline. Hanif says: “The growth in this retail concept in the last three years is reflective of the trust that the consumers have placed in the brand Basics Life. Launching 50 successful stores, which are a combination of company-owned and franchised stores, would not have been possible otherwise. Also, the franchised shops are entirely funded from within the organic growth by the company. Most consumers believe to this day that Basics Life is an international clothing brand.”

Suhail Sattar and Haneef Sattar July 2013

MONEY INDICES

BRANDLINE

brand still remain however in different forms.” The emergence of digital technology in marketing was a boon for Basics Life. Suhail says: “Today’s youngsters are digital natives. Digital is the primary source of information Building a brand and entertainment destination for is like building them. We have sensed this shift over Building a brand the last three years and succeeded in one’s character. “Building a brand is a lifetime work; it is building a large community of fans The more you always, or, for the most part, one step at and brand loyalists on the internet.” a time. Patience is a much-needed trait. Haneef substantiates the statechase building the Emotional connect is an absolute must ment: “Basics Life was one of the core strengths for a lifestyle fashion clothing and acfirst brands to become truly multicessory brand layered with a large dose channel, which gave the consumer of the brand, of cool quotient. A consumer will only the power to choose where he wants the stronger the display the brand proudly if and when to initiate and close a purchase decihe connects with the brand,” says the sion. We have managed to pull off brand becomes brandmaker brothers at Hasbro. overwhelming positive responses on “Relevance is very important for a the social media platforms where we brand to survive and, of course, growth are present. Digital marketing has especially in the fashion space with all also contributed to the perception its dynamism. A constant reinventing of Basics Life as a progressive brand. of the wheel is required. The product We have a slew of innovative digital has to deliver season after season on all initiatives in the pipeline. ” facets starting from aspiration, product At present, the brand has high values all the way to the environment in which it is visibility through digital channels and holds a fan sold. Most of the challenges that we faced building a base of over a million in Facebook.

There are more feathers in Hasbro’s cap. It is the first brick-and-mortar retailer who already has a significant presence of 100 standalone stores to have bustling e-commerce website as well. The brand extends itself to a national one through high-trafficking e-commerce website.

and Tips for br

builders

Behind the tagline e brand f what th and will o n io is A clear v nd what the br ra stands fo nd for d ta s r e nev tch bran must ma e c n ie ts r pe oin Brand ex various touch p t a e eris m o pr lear und have a c omise t s u m s r e Employe f brand and its p o standing

MONEY INDICES

July 2013

“Basics Life’s punch line purely came out of our focus behind the brand and product. In a cluttered marketplace, this has proven to be a huge asset, apart from helping us in creating a niche for ourselves. It is important for the brand to communicate that Basics Life understands the fashion needs of men. Out of that was born a simple but powerful thought that says, ‘Shop like a man.’ It’s a call to action for all the men in this world.”

BASICS LIFE

Brands from Hasbro Genesis ge asbro’s voya inning’ of H eg ed b ch e n h ‘t au d L It marke e suggests. as the nam clothing to success, style formal fe li es d est u cl tagline is ‘B in 1992, it in r men. The fo es ri o ss and acce ’ Kept Formal

Probase

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Basics Lif

Basics 029 s, age group across all art ts sm u c d d n a n l The bra to forma c ifi 4, it c e 9 1 sp re hed in 9 irts but is mo ear. Launc h w -s T n o to si a ts casual occ duct line from shir thing n pro ‘029’ is o x ffi su e has got a h T nai where to cargos. ce in Chen la p and jeans e th f code o ness but the PIN their busi d e rt they sta

Hasbro, brand of il ta re s. The ship The flag esisBasic ld n e G s a re so nown brands a earlier k clothing across le d a ty s re p fe s stores three li e et if L s a ic Bas cent m rk through a 48 per h it w , y tr the coun tro cities me share in

July 2013

MONEY INDICES

DIGITAL MARkETING

Interakting externally and internally The ‘digital marketing’ landscape is fast expanding with marketers adopting and allocating significant budget share towards digital marketing channels year-on-year. Redicka Subrammanian, founder and chief strategist of Interakt, a Singapore-based digital communication company, shares the new trends, opportunities and challenges in this field and speaks about the importance of balancing external and internal brand communication BY Archana Nair

MONEY INDICES

July 2013

he traditional concept of external brand communications consuming the lion’s share of resources has undergone a change with the digital age demanding a balanced approach of external and internal communications. Interakt is the first global network focused on achieving the balance between the two by internally enabling the organisation to recognise and respond to customer expectations and externally positioning the product, service, or campaign in ways the brand can actually deliver. It aims to be the world’s first and largest “Communications Inside Out” group by 2020 and the ‘k’ in Interakt is deliberately used to say ‘spread knowledge through communication.’

Journey so far Started in 2005, Interakt continues to help global brands realise the importance of ‘Communications inside out’ which bridges the gap between brand promises and customer expectations. It has worked for at least 20 industry verticals, including telecommunication, banking, financial services and insurance (BFSI), retail, fashion, technology, and services. The founder of Interakt, Redicka Subrammanian, who holds an Executive MBA from Suny Baffalo University, New York, is also a trained classical dancer for the last 17 years. A worshipper of art, she has an out of the box story to share about starting a communication agency to establish her potential. Redicka says, “my inclination towards art along with my love for reading, knowledge and words were probably the reasons why I am in design and communication. I started my career in advertising as a copywriter, and then grew to be a client account manager before moving onto the world of multimedia in 1995. My last stint before starting Interakt was at a large IT services brand INTIQUA where I gained lot of exposure in this field.” At present, Interakt maintains an impressive growth rate of 125 per cent year-on-year. The company recently opened three offices in New York, Chicago and San Francisco to

INTERAkT

support its growing portfolio of US clients. The client roster of the company includes names like Citibank, The Estée Lauder Companies, Etisalat, Nalco, Ecolab, Levi’s® and Lenovo.

Tough times Redicka believes that choosing to stay as an independent agency was a great decision. She recalls: “Remaining independent in the Asia-Pacific market, an environment where most small agencies get swallowed up by bigger fishes, was especially challenging. We turned down some acquisition offers in favour of staying true to our company, its vision and purpose. After facing some tough times, we came out stronger than we started.” Even the US market crash and the global economic turmoil hindered the company’s growth and there were times when key members worked without salary, expressing their commitment. “In those days,” Redicka says, “we kept ourselves completely engaged so that a single negative thought would not wear us down. Our sales pipeline was almost drying up during times of global recession; we had the toughest times during 2008-09. It was in one of that crucial days when I felt hopeless that we had landed the Hewlett Packard UK account for our Engaged Learning practice, which later became the breakthrough for the company. And, my philosophy ‘Grudge no toil, withhold no sacrifice, count no cost, seek no sordid gain and fear no foe’ clicked”. Redicka was keen in maintaining the financial balance throughout Interakt’s later journey. She says, “When the US economy seemed sluggish, we sustained our operations through work from the Middle-East. When the Middle-East went through a slump, our Indian operations shored up our profits. Working across markets has not only given clients the cost and time arbitrage but also helped us pass through tough times.”

The pros On the advantages of digital marketing, Redicka says: “Digital has transformed marketing from a function that addresses a mass audience to one that offers a customised and an almost personal experience to every individual customer or prospect. The growth of mobile

Digital has transformed marketing from a function that addresses a mass audience to one that offers a customised and an almost personal experience to every individual customer or prospect Redicka Subrammanian

phones offers the opportunity to make this communication timely, relevant and contextual – very specific to an individual’s needs at the point of time, his location and even preferences.” “Moreover, digital has also opened up the floor to many other aspects of business such as field sales, retail in-store marketing, online purchase, post-sales support and customer servicing. All of these departments can now work hand in hand to deliver the most memorable experiences to customers globally.”

The cons Redicka shows the other side of digital marketing. “While it has its share of advantages, it also comes with certain pitfalls that could harm or damage a brand if they are not listening and totally aligned in how they deliver. Digital has essentially made branding a twoway street. Organisations using this channel now need to necessarily guard against any negative impressions or impact in public forums, whether they are caused by small slip-ups, unconfirmed reports from unnamed sources, the unreasonable expectations of dissatisfied customers, or just troublemakers who want to make the headlines. Brands need to have a clear strategy on what they address, ignore or amplify in digital, to make it an effective platform for them. Moreover, they need to know what would work for them and not.”

DIGITAL MARkETING

Interakt wants to set standards that will demystify marketing and enable CMOs to leverage the power of big data to truly understand who their consumers are Three fascinating trends Of the three fascinating trends of digital technology, the first one is, as a consumer, we are faced with multiple channels of information from various sources. This brings in the difficulty of choosing to listen over the noise in a selective fashion. It is inevitable that consumers will want to filter out the wants from their needs. Secondly, the rise of mobile phone has opened up a new phase in communication. It offers the kind of access and immediacy that other digital channels cannot compete. We have to innovate to leverage the advantages of this medium and extend its benefit for the betterment of brands and consumers. Thirdly, the world produces about 2.5 quintillion bytes of data everyday through our smartphones, tablets, PCs and other connected devices. That is a lot of information that needs to be consolidated, digested and made sense out of. As a brand, how you wade through these to establish a relationship with your customer that are quantifiable and contextual is the real skill.

MONEY INDICES

July 2013

On Indian market According to Redicka, the Indian market is maturing fast with brands beginning to explore new ways of leveraging the digital medium. While the US and UK markets use a lot more interactivity and incites greater social participation, the Indian audiences are more restrained by nature and still remain in the observant stage. On the contrary, marketers are slightly more conservative, with a wait-and-watch attitude when it comes to adopting new strategies, technologies and methods. As a result, they might lose the first-mover advantage, and, instead play only the catch-up game. Redicka has a few profound advices for people who follow her path. She says: “Love what you do; learn to live dangerously; never give up; and stay resilient. Resilience is a much-needed trait to survive in startup world. Hold fast to your convictions and damn the consequences. After all, it is about realising your dreams and making a difference.”

More in future “We have a product in the pipeline, which will be launched in 2014 and is expected to change truly the game of marketing as a whole. Interakt wants to set standards that will demystify marketing and enable CMOs to leverage the power of big data to truly understand who their consumers are,” says Redicka. Relating to her philosophy, she dreams to create something that leaves a mark behind.

OPINION

Bet on capital goods, IT, banking Jagannadham Thunuguntla, Head of Research, SMC Global India, highlights growth possibilities for the Indian economy amidst its hampering factors â&#x20AC;&#x201C; political unrest, weak GDP growth, fiscal deficit and CAD By Vishnu Rageev R

July 2013

MONEY INDICES

OPINION

all in crude and gold prices, normal monsoons and hopes of further cut in the Repo rate by RBI have made a perfect case for strengthening the domestic economy and bring investor confidence back in the stock market.

Market’s main challenges Market lacks confidence because of political uncertainties, fiscal deficit and CAD. India’s high CAD of almost 5 per cent in the 2012-13 fiscal and ballooning inflation is a big challenge for the economy. However, the recent inflation data shows a contraction. Meanwhile, global rating agency Standard and Poor’s (S&P) has restated its negative rating outlook on India’s credit rating. S&P warned that, if the Government failed to carry out reforms to boost the economy, it might further downgrade India to junk status. If that happens, it will convey an inappropriate message to the domestic market participants as well as foreign market participants. Now the government has to act. It is the Government’s responsibility to take the necessary steps to keep India on a stable, sustainable, and strengthening growth path. I am not denying the fact that disturbances in the global economy also had impact on the Indian growth story. If foreign currencies like the euro, Japanese yen and the US dollar stabilise, then Indian exports are sure to grow, which will definitely have some positive impact on CAD in the months to come.

Market forecast Though the Indian economy is slowing, Foreign Institutional Investors (FIIs) have kept firm faith in the market, and we have seen good inflows. That means optimism is still there in the market. However, we may see a slight slowdown in FIIs ahead of the general election in early 2014, as FIIs hate political uncertainty. Positive IIP data, shrinking consumer price and headline inflation to 9.39 per cent and 4.89 per cent, respectively, for April, normal monsoon forecast and hopes for further cut in Repo rates are good indicators for the market.

Nifty, Sensex The Indian stock market is likely to move northward in the coming months. Nifty is expected to touch 7,200, while Sensex will reach 23,500 levels.

Leading sectors Capital goods, information technology and banking are expected to lead the next market rally and perform well in the coming months. Sectors like

MONEY INDICES

July 2013

power and real estate must be avoided. Stocks of City Union Bank, South Indian Bank, Dena Bank, and National Mineral Development Corporation look bullish. Considering the current market trend, it is advisable to invest in fundamentally strong companies at every fall.

Divestment targets Encouraged by the response from foreign investors, the Government has expressed that it will try to meet the disinvestment target of `54,000 crore in the 2014 fiscal. It has a target of divesting at least 10 per cent in 44 public-sector undertakings (PSUs) by August 2013. The Union Budget has also set a disinvestment target of `40,000 crore for the 2014 fiscal. Additionally, another `14,000-crore target has been set for disinvestment of government equity wherein the Government is the minority shareholder. The Government raised `18,000 crore from disinvestments in January

S&P

has warned that, if the overnment fails to carry out reforms to boost the economy, it may further downgrade India to junk status. If that happens, it will convey an inappropriate message to the domestic as well as foreign market participants. The Government must act now

2013 through offer for sale in National Thermal Power Corporation, Oil India, and Rashtriya Chemicals and Fertilisers. At present, in order to meet single-handedly half of this year’s disinvestment target, the Government is looking to launch a `20,000-crore share sale by divesting 10 per cent equity in Coal India. This is a good move because the Government can utilise the money raised for developmental purposes and control our fiscal deficit.

Fiscal deficit, GDP growth Along with other reforms to boost the economy, the Finance Ministry has cut down Plan Expenditure sharply to meet the fiscal deficit target. Also, to encourage exports, the Government has announced a host of steps, including extension of the zero-duty export and Export Promotion Capital Goods (EPCG) scheme beyond March 2013. Besides, it has announced incentives for Special Economic Zones (SEZs) to encourage exports. With all these measures in place, I think

JAGANNADhAM ThUNUGUNTLA

the Finance Minister will be able to check the fiscal deficit this financial year. The domestic economy is expected to grow by 6 per cent in the 2013-14 fiscal.

Invest in gold

In the current scenario, one should avoid investing in real estate and should wait till the land Bill gets passed in both the Houses. The proposed land Bill will bring transparency to the land acquisition process, help clear investor uncertainty and hopefully improve the supply of land.

One

should avoid investing in real estate and should wait till the land Bill gets passed in both the Houses. The proposed land Bill will bring transparency to the land acquisition process, help clear investor uncertainty and hopefully improve the supply of land

Of all the precious metals, gold is the most popular as an investment. Any serious investor is advised to have a certain percentage of investment in gold to hedge inflation.

Best investment options Some of the best investment options available now are Fixed Deposit, New Pension Scheme (NPS), Equities and Mutual Fund. Birla Sun Life India GenNext Fund - Growth, Canara Robeco FORCE Fund Reg - Growth, and Axis Equity Fund â&#x20AC;&#x201C; Growth.

Retail investors In the current market situation, I think every retail investor should participate in the market at every dip, which, in the long run, may help them earn good returns. However, the investors should do proper research and homework in positioning quality companies with good managements. Over the last few years, the market has not fetched the desirable returns, which have adversely affected the investment sentiment of the retail participants. Once the confidence is back, we may see a good number of retail market participants.

July 2013

MONEY INDICES

FINANCIAL INNOvATION

the poorâ&#x20AC;&#x2122;s asset hunt

Doorways to Dreams (D2D) Fund, a Boston-based non-profit, helps low income group people save more through asset building. Its innovative projects, including the much-hyped US$1, 00000 FinCapDev Competition, have brought about a remarkable change in the financial behaviour of average Americans By Dipin Damodharan

MONEY INDICES

July 2013

D2D FUND

ow can low-income people achieve their financial goals? The question seems to be a puzzle for social cientists, but innovations in technology have made asset building a possible task for the low-income people. Asset building is crucial for wealth creation, economic security, financial discipline and social mobility. According to its founders, the convergence of financial innovation and asset building was the defining moment for Doorways to Dreams (D2D) Fund. D2D can be simply described as a financial advising firm for low-income people that helps those with few assets to make more savings and makes the low-income group jubilant. D2D has been focusing on making technologies that keep the costs of financial advising and savings low. Peter Tufano, co-founder and chairman of D2D Fund, explains: “D2D intends to make the mass market viable and attractive to serve, designing appealing financial products that break down traditional barriers to access and participation. At the core of this

approach is innovation, such as reduction in costs to serve working families, imaginative new products and delivery channels, subtle changes in public policy, and new tools to help inform and motivate consumers.” Tufano, who is also Peter Moores Dean and Professor of Finance at Saïd Business School, Oxford University, founded D2D Fund in 2000 with an aim to set a new standard and model in financial innovation. “I co-founded Doorways to Dreams over a decade ago to strengthen the financial opportunity and security of low-income families through innovation,” Tufano tells Money Indices. When over 92 million Americans admit that they are financially inept, Tufano’s D2D Fund assumes great significance. “We are an R&D lab working with partners in the public and private sectors to design, test and stimulate new financial products and policies to improve the lives of everyday families. Our work ranges from innovations in savings products – such as combining savings and lottery play in Prize-Linked Savings products – to delivering financial education through entertaining video games such as Celebrity Calamity, where the players have to take on the roles of the financial managers of out-of-control celebrities,” says Tufano.

When over 92 million Americans admit that they are financially inept, Peter Tufano’s D2D Fund assumes great significance July 2013

MONEY INDICES

FINANCIAL INNOvATION

D2D games It was in 2008 D2D developed the game Celebrity Calamity. Breaking the conventional notions, the game is an effort to help adults understand credit and spending. Celebrity Calamity makes one as the manager of a celebrity’s credit cards. D2D’s library of games include Groove Nation, a unique game that combines dancing and budgeting; Bite Club, a game to save for retirement while running a vampire ‘day’ club; Farm Blitz, a game that helps manage farm resources to build savings and survive financial emergencies; and Refund Rush, a game that helps clients split tax refunds and save during tax time. These games are a part of D2D’s project, Financial Entertainment (FE), an innovative programme to teach the youth important financial education lessons. FE is now recognised as a powerful tool for improving financial knowledge, and it was awarded the ‘AFCPE Financial Education Program of the Year’ for 2011.

D2D’s other programmes come under the following five projects: Mobile App Challenge: An initiative to develop the best mobile apps to help low-income-group Americans make good financial choices and better access to financial services Prize-Linked Savings: A programme to help and motivate ndividuals to save by rewarding smart savings behaviour Tax Time Savings: As of 2012, this policy has generated over $40 million in savings for 100,000 Americans Household Risk: An initiative which help families address financial emergencies Prep for Change: To upgrade financial skills in young people D2D, with its innovative projects and using the power of technology, has become a solid support for people with few assets. After over a decade, it has succeeded, to a great extent, in developing a new culture of savings among the low-income group people who thought they could not do it.

MONEY INDICES

July 2013

FinCapDev contest It is an attempt to develop the best mobile applications that help low-income Americans make smart financial choices. According to the organisers of this project, FinCapDev is cultivating a network of American innovators, software developers, financial service firms, investors, and non-profit organisations by innovating next-generation mobile tools to help the consumers shape their financial futures. FinCapDev is a joint project of D2D and the Centre for Financial Services Innovation. The website fincapdev.com says that contestants whose proposals progress through the initial qualifying phase will receive startup cash ($100,000 distributed among all teams), expert advice from financial services and technology luminaries, and access to a robust network of investors, non-profit organisations, leading product designers, and software developers, from some of the most innovative organisations in the world. The total prize purse to be distributed among the winning teams is $100,000 – including a $50,000 grand prize. Proposals are due on December 10th. For more information, visit FinCapDev.com Who can participate? Anyone above the age of 14 can participate in the competition, but at least one team member must be a US citizen or legal permanent resident. The competition primarily targets students, engineers and designers. betterhaves On June 18, 2013, the latest FinCapDev winner, betterhaves, was awarded a $50,000-prize at the Capital One 360 Café in San Francisco. Betterhaves is an app that helps couples build and use a household budget together.

OPINION

Gujarat’s exports mission The state’s proposed five-year export policy may take its fortune to greater heights By Vishnu Rageev R

July 2013

MONEY INDICES

SPECIAL FEATURE GUJARAT

he last lap towards clearing a five-year export policy, aimed at strengthening Gujarat’s dwindling export basket, has gathered pace. India’s most controversial politician Narendra Modi-led state is targeting to achieve US$400 billion (21.74 lakh crore) worth of exports by 2020. A team under Gujarat’s Finance Minister Nitin Patel is addressing critical issues, which have been plaguing its key export sectors such as textiles, agriculture and dairy, with focus on expanding the global trade through diversifications and value additions. Gujarat expects that this first-of-its-kind policy initiative will increase its export share from 25 per cent to 35 per cent yearly in the short run, while putting its economy back on track, and make its GDP cross the double-digit figure. The whole idea is to build Gujarat as a global export hub, says an official in Gujarat’s Finance Ministry. “We have been working hard to increase our percentage share of global trade. Over the next few years, our export basket would be worth `2 lakh crore. We are aiming to reach US$400 billion by 2020. The new export policy proposal is going to be historic as it would definitely substantiate our growth targets.”

As far as export is concerned, controlling freight charges is the most daunting task, says the Gujarat Finance Ministry official. “We are considering various market-related and product-related schemes, which would primarily check freight charges and attract more and more players to join the export business. It is important to choose and promote products, which have high-export density.” Some of the top exporting states after Gujarat include Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Haryana, Uttar Pradesh, West Bengal, and Orissa – in that order. However, none of these has an exclusive export policy. At present, 46 per cent of India’s exports revenue comes from Gujarat and Maharashtra alone. According to the Socio-Economic Review released by the Gujarat Government, gross state domestic product (GDP) at constant prices grew at 8.5 per cent in 2011-12 over the previous fiscal. This is a substantial dip in growth over previous years, which saw an increase of 10 per cent in 2010-11 and 11.2 per cent in 2009-10. This export policy is crucial for Gujarat as Modi’s growth expectations have dropped off in the recent times, says Jagannadham Thunuguntla, Head of Research at SMC Global. “If Gujarat decides to go by its projections of US$400 billion by 2020, it would be a very healthy composition. However, we need to

Exports of top 15 states ($m) State

2009-10

2010-11

2011-12

Gujarat

38775 61694 31426 24.6

Maharashtra

43356 53788 33140 21.4

Tamil Nadu

16085

Karnataka

9093 13603 8509 5.4

Andhra Pradesh

8559

Haryana

5679 8554 4240 3.4

Uttar Pradesh

5524

8208

6529

3.3

West Bengal

4197

7111

3970

2.8

Orissa

3230 6990 2075 2.8

23378 12567

MONEY INDICES

July 2013

14179 8533

9.3 5.0

Kerala

5843 6547 3717 2.6

Delhi

5187 6051 4038 2.4

Rajasthan

3339 5214 2626 2.1

Punjab

2732 4099 2645 1.6

Madhya Pradesh

2357

3112

1637

1.2

Goa

2841

1642

774

0.7

Source: Department of Agriculture and cooperation

Share [%] in total exports

GUJARAT

see its new policy remixes and acceptance globally before commenting on whether it will achieve it or not. Exports-wise, Gujarat is leading and will continue to lead.” Gujarat is working on various modalities to boost the business of top-performing sectors. The state plans to offer incentives like exemption from value-added tax (VAT) and attractive market schemes to lure exporters. Jewellery and textiles sectors play a major role in expanding Gujarat’s export tally. In India’s total exports figures last year, Gujarat contributed around 70 per cent in the gems and jewellery sector, 30 per cent in pharmaceuticals, 20 per cent in textiles, 12 per cent in engineering, and 18 per cent in chemicals. “Everything is in double-digit, which gives us confidence that Gujarat can attain the vision of achieving US$400 billion by 2020,” according to Rafeeque Ahmed, Federation of Indian Export Organisation (FIEO) president. “Gujarat must arrest and reverse the decreasing trend in exports and provide additional support to the sectors worst-hit by global recession. Through product diversification, Gujarat can look for export gains from jewellery and textile sectors. Another key strategy lies in shifting from the existing lower-end markets to value-for-money markets for healthy returns,”he adds.

India’s total export figures last year, Gujarat contributed around 70 per cent in the gems and jewellery sector, 30 per cent in pharmaceuticals, 20 per cent in textiles, 12 per cent in engineering, and 18 per cent in chemicals More prosaically, Gujarat has to make over its existing formulas of exporting raw materials to foreign markets. The state must invest in setting up global R&D facilities for innovation and manufacturing global-standard products. At present, very few export units have an export house or upward status for special benefits. It is the United States and Europe that decides the destiny of India’s export, says Ajay Sahai, director general and CEO of FIEO. “If the US and European economies perform, then chances

India’s trade basket Top Export Items (FY12) US$ billion Petroleum products

Gems & jewellery

Pharma products

Transport equipments

Machinery & instruments

Readymade garments

Manufacturers of metals

Electronic goods

Rubber, glass & products

Cotton yarn & fabrics

are more for Gujarat to achieve its export goals. Though challenging, Gujarat must look for new growth corridors if it is aiming at reaching the US $400-billion-mark.” The state must also diversify export destinations and minimise various associated trading risks while trading with emerging market economies. “Non-traditional markets need to be tapped to reduce the dependence on the US and European markets,” adds Ahmed.

Indian export scenario In 2009, India had set a policy objective of achieving an annual export growth of 15 per cent with an annual export target of US$200 billion by March 2011. Because of the slowdown in global economies, exports from India have contracted by 1.76 per cent in 2012-13 to US$300.6 billion, compared to US$306 billion the previous year. Commerce and Industry Minister Anand Sharma’s measures to lift the export sector are yet to see light. Sharma says that the long-term policy objective for the Government is to double India’s share in global market by 2020. “India may lag far behind in achieving its export target of US$350 billion for the current fiscal, and, what is more disturbing is that overseas shipment may not even reach last year’s level of a little over US$300 billion.” Now all eyes are on Gujarat whether it will achieve its 2020 export mission or not.

Everything is in double-digit, which gives us confidence that Gujarat can attain the vision of achieving US$400 billion by 2020 Rafeeque Ahmed, president, Federation of Indian Export Organisation

July 2013

MONEY INDICES

MSME CURRENT EvENTS

Boost for MSMEs A high-level government panel has called for a slew of changes to boost India’s MSME sector

By Vishnu Rageev R arge companies must compulsorily source 30 per cent of manufactured products from Micro, Small and Medium Enterprises (MSME) is one of the key suggestions made by a government panel headed by MSME Secretary Madhav Lal. The panel also recommended formulating a comprehensive strategy to tackle non-tariff barriers, while negotiating free trade agreements with other nations. The MSME Ministry must consider the option of sourcing 30 per cent of manufactured products from MSMEs by larger enterprises, according to the panel. However, it rules out any fiscal incentives to companies for mandatory sourcing by maintaining that such a condition already prevails for foreign multibrand retailers setting shops in India.

MONEY INDICES

July 2013

The MSME Ministry is looking into suggestions made by the panel and would come up with measures to boost the sector, says K H Muniyappa, Minister of State (independent charge) for MSMEs. “The MSME sector is an integral part of the Indian economy and must be supported. The Government would consult all key stakeholders before taking a final call on it.” The MSMEs contribute 8 per cent to India’s GDP and 45 per cent to manufactured output, while providing employment to over 8 crore people engaged in over 3.6 crore units, producing over 6,000 products. Besides, the panel wants the scope of the law to be extended to private enterprises with enhanced sourcing requirement. It also suggested that the MSME suppliers who import raw materials add sufficient value to it to ensure it originated from within the country. This is very critical as far as different industries are concerned, says Muniyappa. “The idea is to make Indian MSMEs

involve in areas where they can fit in easily. If we all work in tandem, I think we can break any hard ice.” According to HSBC purchasing managers’ index, India’s manufacturing sector output dipped to a 50-month low in May 2013, its first decline since March 2009. The index- an indicator measuring changes in output, new orders, employment, supplier delivery times and stocks of purchases – fell from 51.0 in April 2012 to 50.1 in 2013. “Those were mere indicators, and our economy is riding fast,” according to an official at CII’s Delhi chapter. “Globally, manufacturing sectors are underperforming at present. Performance of Indian economy, exports, manufacturing sector and the like are closely linked with the performance of global economies. Such policy measures can bring our core areas back on track.” However, the panel recommendations received mixed response from industry. Imposing compulsory procurement from MSMEs has merits as well as demerits, says S Gandhikumar, president of the Federation of Indian Micro, Small and Medium Enterprises. “This procurement policy will enhance the production of MSME sector. However, there is no legitimacy to whether it would be a workable model or not. At present, we have seen many larger enterprises sourcing products from MSMEs. All are responsible, and I don’t see there is any need for government compulsions.”

MSME EMERGING ENTERPRISE

Medium-size textile firm

makes it big Crossing a modest `10-crore revenue mark is one among the many achievements of Zenitex, a Gujarat-based textile dyeing and processing MSME. Be it innovation, market expansion, social responsibility or global reach, this medium-level textile player-turned-energy conservation firm is grabbing eyeballs even at the time of global financial turmoils

By Vishnu Rageev R

enitex Private Limited, started at Sachin in Surat in 2003, is making many heads turn with envy as it bagged a host of state and national awards for conserving energy. Maintaining an yearon-year growth rate of 20 per cent, this medium-level textile firm, which processes about 100,000 metres a day, posted a turnover of `10 crore in the 2011-12 fiscal, though it faced tough competition in the domestic as well as overseas markets, besides the overall global meltdown. With the expansion ball rolling, the company,

which quietly diversified into the energy conservation domain, is currently striving to become a `100-crore brand by 2022. Viral Sudhirbhai Desai, CEO of Zenitex, says that they are realistically ambitious and are making all efforts to make it a `100-crore brand over the next decade. â&#x20AC;&#x153;From a medium-run textile firm, we have grown ourselves to become one of the best energy conservation firms in Gujarat. We offer technology and expert advices to many companies. Further, we are diversifying our businesses, which would justify our target of achieving the `100-crore-mark over the next decade. When I talk about this target, I re-emphasise that I would do business in the way I have been doing business.â&#x20AC;?

July 2013

MONEY INDICES

Viral Sudhirbhai Desai, CEO of Zenitex Pvt Ltd, receiving National Energy Conservation and Painting Award from President Pranab Mukherjee

CSR initiatives But what does Desai mean by saying ‘the way he has been doing business?’ Zenitex, which flagged off its business journey with a seed capital of `6 crore, always believed that ‘a business that makes nothing but money is a poor business. So, the company embarked on different routes to serve society through its corporate social responsibility (CSR) initiatives, which include rehabilitation of jobless diamond workers, spreading awareness during the World No-Tobacco Day, organising free cancer screening camps, observing the Pink Ribbon Day, conducting tree plantation programme and the like. Hence, the company’s CSR programme ‘Hearts@Work Foundation’ is receiving overwhelming applause globally. To put it in Desai’s words, CSR, to them, is like striking a good business deal. If our business volume grows, our CSR activity also will grow,” says Desai. “Yes, I mean to say that we will have a stronger financial war chest for taking up global social issues. My sole belief is that, while it is important to deliver the results, delivering them with a conscience matters more.” Through ‘Go Green’, a novel CSR idea, Zenitex claims to have put an end to the pollution menace in Surat. It also invested heavily in employing energy conservation techniques that serve both its internal and external environments with integrity and efficiency.

Joint venture Zenitex’s recent joint venture announcement with Metalube, a leading UK-based manufacturer of industrial lubricants, to set up a research and development centre at its facility, has caught the

MONEY INDICES

July 2013

attention of international players operating in the energy and environment conservations domain. Nihar Saraswala, president (international operations) of Zenitex, says it has had a win-win deal with Metalube. “In future also, we would continue to explore global markets for strategic tie-ups with MNCs, which have similar interests.” Zenitex is currently considering foraying into other areas – like pharmaceutical and real estate – where it has little or no expertise. The company is said to be evaluating a few offers available, and may soon take the plunge. Initially, it plans to partner with pharmaceutical and realty players to offer energy-conserving methods and technologies. However, it has no plans to get into direct real estate or pharmaceutical businesses.

Diversification Desai says: “As we grow, business diversification becomes a necessity. Other than offering techniques to textile firms, pharmaceuticals and real estate are two areas where we would like to have our focus on. We would provide industry-best energy-conserving solutions to companies in these domains. That is from where a lion’s share of Zenitex’s income is going to come from in the coming years.” Besides, the company is looking to venture out into the international market by starting exports or inviting JVs from foreign countries. “We would use our strengths in industrial land, management expertise, local market knowhow, cheap labour, and, of course, our hard-earned goodwill for a healthy win-win business deal,” according to Desai. Zenitex would sit, wait and finally make very calculative move, says Mahendra Katargamwala,

ZENITEX

vice president-elect of Southern Gujarat Chamber of Commerce and Industry (SGCCI). “That is how it had evolved out to become one of the most-respected business addresses in Surat. Pharmaceuticals and real estate are two sectors which need good expertise to conserve energy at all levels. I think Zenitex’s expertise, which is the best, can be of great help to many players in both the domains.” According to a Mumbai-based domain (energy efficiency market) expert, opportunities in the Indian energy efficiency market are roughly estimated at over US$150 billion. “Zenitex would be entering a deadly competitive market. The competitors’ list would feature some prominent names like Siemens, Mitcon Consultancy Services, Johnson Controls, Honeywell Automation India, Transparent Energy Systems, Feedback Infrastructure, etc. The big question is: how prepared is Zenitex to sail in the rough seas?” However, Saraswala disagrees with the expert’s finding. “Quality, service, innovation and cost-effectiveness are the areas in which we excel. We do this through the combination of product design and development, process innovation and cost controls in our manufacturing and supplychain operations. We have a very good team in place. So we would take this competition as a challenge and will sail ahead.” It may be seen as an out of the box move by the decade-old textile processing firm. However, one has to wait and watch for the results.

Global acclaim A team from Zenitex was recently invited to visit Mauritius by the University of Mauritius and the Board of Investment of Mauritius for in-depth understanding of the technical expertise it has on energy conservation and sustainability. “We have our own mastery in the environment protection systems, which are now being talked about around the world. In fact, companies across the world want us to share our expertise to them, and they are inviting us for the same,” claims Saraswala. Zenitex is also receiving various offers for national and international projects, not only in the field of textiles but also in energy conservation like sludge disposal sites, environmental conservation and sustainability. The company said it is open to MoUs, sourcing deals and mergers with reputed international textile firms for better prospects.

Gujarat is emerging as a preferred place to live in and to do business, not only for the rest of India but also for global investors. In fact, Chief Minister Narendra Modi is trying his best to encourage industrialists who are keen to start business in Gujarat Achievements, accolades The company has won three national awards so far, one for ‘Outstanding Entrepreneur (2010)’ and ‘National Energy Conservation Award (2011 and 2012)’ consecutively two times. In 2013, in the Vibrant Gujarat Summit, the company made a hat-trick by winning the ‘Best Industry Award (Quality & Environmental Protection) for the third time in a row. The Gujarat Government recently signed an MoU with Zenitex and picked the company for Entrepreneurial Training of 600 ITI students. At present, the company has around 650 employees under its direct payroll. As the expansion gathers pace, the company plans to go on a hiring spree across India. Is the ‘Made in Gujarat, India’ brand-status doing wonders for this SME outlet, little-known earlier? “I am proud to be called a Gujarati,” Desai asserts. “Gujarat is emerging as a preferred place to live in and to do business, not only for the rest of India but also for global investors. In fact, Chief Minister Narendra Modi is trying his best to encourage industrialists who are keen to start business in Gujarat.”

July 2013

MONEY INDICES

AGRIBUSINESS

COIR INDUSTRY GOES

The story of coir exemplifies that tomorrow’s scheme of wealth may arise from yesterday’s junk! The Indian coir industry, which has seen huge developmental leap in the last three years, is pulling out all stops as it enters the next expansion phase By Vishnu Rageev R

MONEY INDICES

July 2013

COIR

FOR MAKEOVER

he 200-yearold Indian coir industry is currently betting on new product line that it had finetuned from coco wastes, as it aims to enter the elite `1,500-crore export club. With four key marketing aspects – modernisation, mechanisation, commercialisation, and diversification – in place, Coir Board, which is functioning under the Government of India, has already set the expansion ball rolling with an eye on larger market share in domestic as well as global space. G Balachandran, chairman of Coir Board, says: “The turnaround (in coir) just began a couple of years ago. We are still running late by at least 25 years owing to lack of timely modernisation. At present, our primary focus is on expanding business volume via commercialisation and diversification. The Coir Board is currently considering a mega expansion spree to increase its revenue substantially to `1,500 crore this financial year.”

Retail business Running into the 60th year, Coir Board, which so far focused only on the promotion and marketing of coir products, will enter the retail business in a big way through franchise model. The Board will rope in C&F agents with plans to roll out franchisee-run stores panIndia in the next two-three months. Expanding retailing business is very critical for the Board to maintain its current Y-O-Y growth momentum. However, success of the model will depend solely on its execution, taking into account the nature of geographies they are going to have presence in,” according to Arvind Kumar Singhal, Chairman and Managing Director of Technopak.

July 2013

MONEY INDICES

AGRIBUSINESS

Diversification is the only solution to stay in this business for long-term. Our R&D team has been developing new products on a regular basis. Besides contemporary lifestyle products, we have also produced geotextiles from coir fibre that can be used for constructing village roads. Likewise, coir pith, once treated as waste, is giving us revenue in excess of `200 crore from the export market

At present, the Board owns over 30 showrooms across the country, selling coir produces like mats, ropes, baskets, bags, jewelleries, sandals, jackets, garden articles, doors, curtains, utensils and brushes. The Board’s Research and Development (R&D) cell has developed geotextiles, organic manure and coir pith (that can be used for sandless farming), which are growing in demand in the market. “Diversification is the only solution to stay in this business for long-term. Our R&D team has been developing new products on a regular basis. Besides contemporary lifestyle products, we have also produced geotextiles from coir fibre, which can be used for constructing village roads. Likewise, coir pith, which was treated as waste a decade ago, is giving us revenue in excess of `200 crore from the export market,” points out Balachandran. The domestic coir market, which is currently pegged at `2,000 crore-`3,000 crore, is likely to

G Balachandran

cross the `5,000-crore-mark this fiscal. Kerala and Tamil Nadu account for a majority of the coir produce in India. The Board is planning to set up two new manufacturing units – in Bengaluru and Alappuzha, Kerala – to support its growth plan. Highlighting on the new product, geotextile Balachandran asserts, “Cultivable soil worth crores of rupees is eroded every year. The husk fibre of coconut produce tough but biodegradable netting that anchors the soil on sloping land as well as river banks, protecting against erosion while encouraging the growth of vegetation.” When used on soft soil, coir geotextiles perform well as reinforcement, filter, drainage and separation material in comparison with the conventionally used materials like synthetics, cement, lime, etc. It is also a popular solution for erosion control, slope stabilisation and bioengineering. Besides, it promotes new vegetation by absorbing water and preventing topsoil from drying out.

Export of coir & coir products from India for the last 10 years (value in crore) `1116 `1050 `800

`800 `625

`600

`610

`600 `450 `400

2012-13

2011-12

MONEY INDICES

2010-11

July 2013

2009-10

2008-09

2007-08

2006-07

2005-06

2004-05

2003-04

COIR

Exports galore In addition to India, Indonesia, Thailand, Malaysia and Vietnam are the other emerging coir markets globally. Exports of coir and coir products from India had hit an all-time high record of `1,116 crore in FY 2012-13, an increase of `64 crore from the previous year. In the previous year, the total exports of coir and coir products stood at `1,052.6 crore. About 4, 29,500 tonnes of coir and coir products were exported in 2012-13 as against 4,10,854 tonnes during the preceding year. There was a five per cent increase in the quantity and six per cent increase in total value, according to data released by Coir Board. While coir fibre, tufted mat, coir matting, coir geotextiles and coir pith registered a positive growth of two per cent from 19 to 21 per cent, coir yearn, handloom mat, powerloom mat, coir rope, rubberised coir, curled coir, coir rugs and carpets and other items recorded a negative growth of three per cent from 90 to 87 per cent. According to Balachandran, “about 76 per cent of the total exports were contributed by non-traditional products, whereas handloom products like mats, mattings, and coir geotextiles put together contributed only 24 per cent of the total exports.” Coir products were exported to 112 countries, out of which the share of USA was 22.8 per cent in value and 13 per cent in quantity. China continued to be the largest importer of coir fibre from India, and contributed 19.4 per cent in value and 33.8 per cent in quantity. “Indian coir, coir fibre and coir products have a good market globally. We are continually expanding our reach offering highquality products at reasonable rates. Now our major thrust would be on innovation according to the needs of various geographies. Products that can conserve energy will have a major place in our export kitty,” avers Balachandran. Kerala’s share in total exports was 71,284 tonnes valued at `636.84 crore, which is 16.6 per cent in quantity and 57 per cent in value. Total exports from Tamil Nadu works out to 3, 53,533 tonnes, valued at `474.92 crore comprising coir fibre, coir pith and other coir products. This is 41.7 per cent in value and 82.3 per cent in quantity of the

total exports. Contributions from other states put together were `14.27 crore worth of products in 4,682.66 tonnes; 1.28 per cent in value and 1.1per cent in quantity of total exports.

Challenges, road ahead While pricing, wages and competition were some of the challenges seen in the past, the bigger challenge today is to attract new entrepreneurial talents in coir business, though the venture always turns out to be profitable. Coir Board is flexing its muscles by offering subsidised loans and other incentives to attract new business aspirants. Alongside, it is reinventing methodologies to attract new customers in the domestic market. “New entrepreneurs,” Balachandran says, “are hesitant to take up coir business for their livelihood owing to various apprehensions. The Board is always supportive and coming up with new measures to attract talents. We are offering subsidised loans. For example, a tiny unit will get `5 lakh in remote areas with 40 per cent subsidy, while `2 crore-loan in a cluster comes with 75 per cent subsidy. Around 70 per cent subsidised loans are also allowed on `10,000 offered to Kayar Mahila Yojanas.”

New entrepreneurs are hesitant to take up coir business for their livelihood owing to various apprehensions. The Board is always supportive and coming up with new measures to attract talents Value-added products At present, Coir Board is banking on new, valueadded products to thwart competition from similar products made out of jute, plastic and the like. It is working on developing energy-conserving products as well as products which have fireresistant properties (to be used as auto-components). “We are developing, and will soon commercialise some fireresistant auto parts like dash board of cars, panelling, seats and the like. We have a huge young customer base in India. We have to educate and change their mindset. Our success simply depends upon how quickly we can drive them into our store for purchases,” concludes Balachandran.

July 2013

MONEY INDICES

TAkEOvERS

THE BIG FAT INDIAN TAKEOVER Tracking Growth & Development India Inc has started witnessing innovations at product levels and services in the corporate world by the post â&#x20AC;&#x201C; liberalisation period. Corporate leaders initiated expansion plans of companies and this resulted in many Capex programmes, mergers and acquisitions both at the domestic and international levels. Slowly Indian companies got listed on American stock exchanges such as NYSE (New York Stock Exchange) and Nasdaq. Thus their growth reached a level where some of the top companies entered international rankings. India Inc has shown tremendous improvement in turnover for the last 10-20 years. Here we are listing eight companies which exceeded the annual turnover mark of one lakh crore. Many are in the queue to enter this prestigious list.

Imperial Cooper

Zain Apollo

APOLLO TYRES Apollo - `12794 TOTAL TURNOVER Cooper - `24780 `37574

MONEY INDICES

July 2013

Airtel

AIRTEL-ZAIN Airtel - `41603 TOTAL TURNOVER Zain - `21240 `62843

ONGC

ONGC ONGC - `165849 TOTAL TURNOVER Imperial - N/A `165849

TAkEOvERS

Apollo Cooper Airtel Zain ONGC Imperial Tata Auto Jaguar Hindalco Novalis Tata Corus Corus

CHAIRMAN

MD/CEO

Onkar Kanwar

Neeraj Kanwar

India

118

Roy Armes

155

Sunil Mittal

India

S Gegenheimer

Kuwait

Asa’ad Al Banwan

ORIGIN

PRESENCE

Sudhir Vasudev Sudhir Vasudeva India

N/A

Prem B Pandey Britain

Cyrus Mistry

N/A

118

Ratan Tata

Dr. Ralph Speth Britain

177

Kumar M Birla

D Battarcharya

India

Kumar M Birla

Philip Martens

115

Cyrus P Mistry

H M Nerurkar

India

Dr Karl Köhler

Europe

India

* ENT. VALUE TURNOVER 12794.53

2.5

$4.2 bn

$10.7 bn

41603.80

PERIOD June 2013

Feb 2010

$3.6 bn

165849

$5 bn

Nov 2012

N/A

44766

$2.3 bn

March 2008

$2.28bn

27212.57

$6.2 bn

$1.05 bn

$12.11 bn

37725.46 $12.87 bn

Feb 2007

Jan 2007

* Ent Value of takeover. * Period - period of takover

Novalis Jaguar

Land Rover

TATA-JAGUAR Tata `44766 TOTAL TURNOVER Jaguar `13452 `58218

Hindalco

HINDALCO Hindalco `27212 TOTAL TURNOVER Novalis `6195 `33407

Corus

Tata Steel

TATA CORUS Tata - `37325 TOTAL TURNOVER Corus - `75991 `113716

July 2013

MONEY INDICES

REALTY wATChDOG

eining in ealtors

The Union Cabinet’s nod for creating a real estate regulator will bring relief to homebuyers and remarkably less action in the sector

By Vishnu Rageev R

nough is enough; be accountable’ is the loud and clear message from the Union Cabinet to the real estate developers, while giving nod to form a real estate regulatory body to administer realty business. The Real Estate (Regulation and Development) Bill, which is most likely to be passed by both Houses of Parliament in the monsoon session, will take one year to get implemented. The reason cited is: real estate is a state subject. It is widely discussed as a part of the reforms the Congress Party is commissioning in its bid to go populist ahead of the 2014 general elections. What makes real estate developers enraged

MONEY INDICES

July 2013

is the fact that this bill has the provision to put even K P Singh, chairman of DLF, India’s largest developer, behind bars if he dupes investors or end-customers via misleading advertisements about projects. This bill, which has been hanging fire for far too long and now approved by the Cabinet, seeks to provide a uniform regulatory environment to the Indian real estate sector. It is not practical to comply with the bill if you are running a realty business, says a senior official at DLF, on condition of anonymity. “This bill tends to send out a very wrong signal that the real estate companies have no accountability, to which I disagree. We contribute to India’s GDP, employment, FDI, stock market, and the like. We have our own platforms to address customer rights, which are quite successful. Any bill passed by the Government must be a balanced one.”

REALTY wATChDOG

Mandatory clearances The new bill makes it mandatory for developers to get all statutory clearances from relevant authorities before launching a project, while the relevant clearances for projects have to be submitted to the regulator and displayed on their website before commencing construction. This bill will put an end to the socalled pre-launch, post-launch and official launch, which the developers adhere to increase prices steeply. This provision in the bill is a real threat to the developers, says Vinod Behl, editor of Realty Plus. “I don’t think any real estate company in India would buy this thought. The developers’ key revenue sources are pre-launches, post-launches and official launches and also

Vinod Behl, Editor, Realty Plus

The

developers’ key revenue sources are pre-launches, postlaunches and official launches and also schemes which ask the customers for upfront payment of 20 per cent, 25 per cent or even 40 per cent of the total cost. Bringing in accountability over such activities will clean up the sector, while the real estate companies’ revenues would decelerate schemes which ask the customers for upfront payment of 20 per cent, 25 per cent or even 40 per cent of the total cost. Bringing in accountability over such activities will clean up the sector, while the real estate companies’ revenues would decelerate. Ultimately, it is the buyers who have to be protected because they keep them and us alive.” Realty Plus is India’s first consumer magazine on real estate. Historically, the Indian real estate sector never had a regulatory mechanism in place. Similarly, there were no entry barriers into this money-spinning business. Anybody and everybody could become a real estate man overnight and fly away tricking the public worth a few crores. “If the Government would have considered such a bill a few years ago, it would have saved the country’s exchequer worth crores of rupees,” says Behl. It must be noted that RBI and the Finance Ministry’s regulatory

wings have learnt a big lesson from the 2008 disaster. During those days, real estate companies bought land in plenty, which resulted in the property burst. The Government seems cautious and do not want that splash of money anymore in the sector.

Heavy penalty Interestingly, if this bill is made into law, the real estate companies would start hiring more layout designers than civil engineers to ensure that they are carrying photographs of their actual sites on their websites, because, failure to do so would attract a penalty which may be up to 10 per cent of the project cost. A repeat offence could land the developer in jail. Also, they have to deliver the promises that are being circulated in the brochure to lure customers. This bill proposes to create a regulatory tribunal and an appellate tribunal that will act as a watchdog for the housing

July 2013

MONEY INDICES

sector, primarily aimed at protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise, says Karan Khetan, senior analyst, Research & REIS, JLL India. “The bill demands greater disclosure from the developer community and a higher level of project accountability to remove the information asymmetries from the housing market. Effective legislation, judicial activism and a regulatory mechanism together would lead to a vibrant industry with greater emphasis on protecting consumer interests,” says Karan. According to a highly placed source in the Union Cabinet, Congress Party president Sonia Gandhi has supported the bill’s clearance. “This bill was deliberated by the Cabinet on April 2, 2013, but was put off owing to differences between members. However, Union Minister of Housing and Urban Poverty Alleviation Ajay Maken made extra efforts to get the bill approved by the Cabinet because Sonia Gandhi stood by it.”

Politicians’ nexus It is widely said that real estate is the first choice for routing unearned wealth of most Indian politicians, and so Parliament is unlikely to pass this bill. “I personally support such a resolution, but do not know what its future would be,” says CPI leader Gurudas Gupta. However, if adopted by the states, the proposed law will allow for creating a real estate regulator in each state (real estate being a state subject). The bill also seeks to make it mandatory for a developer to maintain a separate bank account, Escrow Account, for every project to ensure that the money raised for a particular task is not diverted. The proposed legislation provides for clear definition of ‘carpet area’ and would prohibit private developers from selling houses or flats on the basis of ambiguous ‘super area.’ Finally, the Union Cabinet has put an end to the disarrays surrounding the Indian real estate sector, says Vishal Duggal, a real estate columnist, who lives in Delhi-NCR. Duggal has paid an advance

MONEY INDICES

July 2013

to buy a new home in Noida. “I support the Cabinetsanctioned real estate regulatory bill because nobody listens or follows rules when they are not made strict. It is like a traffic junction without policing. Legalities must be mutually resolved. I think this will help the sector to improve.”

The

bill was deliberated by the Cabinet on April 2, 2013, but was put off owing to differences between members. However, Union Minister of Housing and Urban Poverty Alleviation Ajay Maken made extra efforts to get the bill approved by the Cabinet because Sonia Gandhi stood by it

Restraints Under the proposed bill, the developers will be able to sell property only after getting all necessary clearances. They will also be barred from collecting money from buyers before completing all necessary permits to start construction on the project. The bill will also make laws on transfer of property other than agricultural land, registration of deeds and documents, contracts including partnerships, agency contracts of carriage and other special forms of contracts. However, this will not include contracts related to agricultural land. The bill does not apply to commercial construction. The real estate regulator will ensure fair practice, accountability and speedy dispute redress in the real estate sector, says an official at KPMG. “This bill is not developer-centric. While passing such strict bills, the Government must ponder over the real estate companies’ contributions to the country. Without DLF, what would have been Gurgaon? Where is the provision to sue a default customer? Such topics remain still debatable.” It is believed that the government would discuss the aspects with the key stakeholders to protect the interest of the buyers and investors, before implementing the law in 2014.

CURRENCY TREND

The

2013-Jan

2013-Feb

2013-March

2013-April

2013-May

2013-June

big fall of W

hen the rupee falls into new lows, how it will affect the Indian economy in the long run? The weakening rupee has made crude oil, medicines etc costlier, and no doubt, in short term it will be having a negative effect. As the rupee has touched record low against dollar, exporters like software services, jewellery exporters etc have the benefits. Their customers pay in dollars and it is converted into rupees by Indian firms. But for an economy like India that has high current account deficit and high inflation, the fall in the currency will have a positive impact.

The long-term impact The long-term effects of rupee depreciation should be positive for the Indian economy. 1991 and 1996 are

Reasons Who benefits:

Who Suffers:

Exporters, IT, ITeS, NRIs, Pharmaceuticals

Importers, Oil Companies, Manufacturers, Middle-class Indians, External borrowers

examples. But in short term, it will have negative effect. Because of the higher cost of imported raw materials, fast moving consumer goods will become more expensive. Also there will be more FII and FDI inflow. Foreign education and gadgets will get expensive.

Economic recovery in the US and immense strength of the Dollar Index Eurozone back in recession Huge import bill High current account deficit High inflation Increase in gold import July 2013

MONEY INDICES

GLOBAL INDEX

Canada

S&P/TSX 11,995.66

Uk FTSE 6,116.17

Germany DAX 7,789.24

United States S&P 500 1,592.43

France CAC 3,658.04

Switzerland

Prices and returns of the top 10 traded securities price Company name 27.5.2013 SBI Reliance Ind ICICI Bank Infosys L & T Tata Steel Tata Coffee Tata Motors HDFC Bank HDFC

price 27.6.2013

up/down

2161.6 1912.5 828.25 830 1219 1030.55 2366.35 2482.8 1465.4 1350.4 317 264.15 1518.15 984.15 294.45 270.3 715.05 646.5 927.85 837.15

down down down down down down down down down down

difference

Smi 7,421.06

Mexico Spain

IPC 38,036.46

-249.1 1.75 -188.45 116.45 -115 -52.85 -534 -24.15 -68.55 - 90.7

IBEX 7822.1

Italy MIB 15549.23

Brazil

BOVESPA 47,056.04

Performance of various indices as of end May 2013 (in%) CNX Nifty CNX 500 CNX DEFTY CNX Nifty Junior CNX Midcap Index CNX IT Index CNX Bank Index CNX 100 CNX Realty Cnx Infrastructure Cnx Energy Index Cnx Fmcg Index Cnx Mnc Index Cnx Pharma Index Cnx Pse Index Cnx Psu Bank Cnx Service

1 month

3 month

6 month

1 year

Argentina

0.94 0.86 -3.13 2.24 0.04 7.02 -0.68 1.14 -11.4 -3.63 -1.05 4.12 0.82 2.73 -1.93 -7.7 1.37

5.14 4.55 1.21 7.46 3.73 -8.93 8.6 5.49 -16.88 1.8 0.3 19.97 15.07 16.46 0.28 -3.24 3.63

1.8 0.13 -1.9 4.42 -3.91 3.33 2.61 2.19 -19.81 -10.96 1.44 12.58 1.68 14.64 -0.51 -8.71 2.08

21.56 19.64 20.37 28.74 13.39 7.71 32.14 22.58 2.76 7.08 11.01 50.34 17.08 33.31 7.56 -1.54 22.26

MERVAL 3070.86

MONEY INDICES

July 2013

FII& DII statistics in crores Month

FII net purchase/ sales

DII Net Purchase/ Sales

May 14465.9 -12052.43 Apr 4641.57 -2998.27 Mar 9423.07 -7872.45 Feb 9533.03 -8818.5 Jan 19197.88 -16207.32

GLOBAL INDEX Russia RTS 1245.72

South Korea KOSPI 1,822.83

Japan NIKKEI 13,230.13

China

hongkong

SHANGHAI COMPOSITE 2,073.10

HANG SENG INDEX 20,263.31

Thailand

india

THAI SET INDEX 937.44

BSE 18,774.24

Saudi Arabia TADAWUL ALL SHARE INDEX 7526.26

South africa JSE 35199.29

New Zealand NZX 941.86

australia ALL ORDINARIES 4,723.8021

Nse market statistics Segments

Turnover (Crores) 13-Apr

Percentage Average daily change turnover monthly

13-May

CM 210,798 244,392 15.9 10,626 WDM 93,397 97,976 4.9 4,453 Equity F&O 3,010,163 3,503,801 16.4 152,339 Currency F&O 441,682 578,460 31 26,294 TOTAL 3,756,040 4,424,629 17.8 193,712

Us and asian market indices World Indices

21.06.2013

21.05.2013

Change

Dow jones Nasdaq Composite Shangai Composite Hang Seng Index Nikkei 225 Straight Times Index Kospi Composite Index

14799.40 3357.25 2073.10 20263.31 13230.13 3124.45 1822.83

15,387.58 3502.12 2305.11 23366.37 15,381.02 3443.90 1981.09

-588.18 -144.87 -232.01 -3103.06 -2150.89 -319.45 -158.26

*Data as on 21 June 2013

July 2013

MONEY INDICES

STOCk wATCh

Stocks resisting market current The markets are showing high volatility in recent times. Money Indices lists here five safest stocks, investors can confidently turn to

By Rajendran

he single one factor affecting our markets is foreign money through foreign institutional investors (FIIs). Foreign institutions till date in the current calendar year have bought US$15 billion (`81,000 crore) worth of Indian equities. Recently, we are seeing a slowdown in their buying activity, and, in certain days, some selling is also seen. This is the reason for market volatility. FIIs are worried about the future of the quantitative easing (QE) programme in USA. To revive its economy, US Federal Reserve is currently

MONEY INDICES

July 2013

buying 85 billion worth of bonds every month under QE. Since the US economy is showing signs of recovery, there are fears that US Fed may reduce the bond-buying size, which may impact the available liquidity for FIIs. Similarly, FII commitment may have been affected because of depreciating Indian rupee, which touched an all-time low of `60 to 1US$. In this uncertain condition, technically Nifty has strong support of around 5,450-5,500 and is unlikely to fall decisively below these levels. Hence our markets are likely to be volatile in the coming days, and will move in line with FII flows. The five stocks that we recommend here have high-quality management and strong balance sheets, which can withstand any time of uncertainty. They are:

STOCk wATCh

KPIT Cummins (CMP 114) KPIT Cummins is a global IT consulting and product engineering company focused on co-innovating domainintensive technology solutions for corporations specialising in automotive and transportation, manufacturing and energy, and utilities. The company partners with 180-plus global corporations, including original equipment manufacturers (OEMs), and Tier 1 companies. Their information technology solutions help customers run their businesses more efficiently, while their product engineering solutions enable the customers to build products that are energyefficient, safer and yield more comfort for their end-customers. KPIT Cummins is one of few mid-cap IT company that have met its guidance despite volatile currency environment. The company has given a decent outlook for FY 2014, and. with currency tailwind, the performance is likely to exceed its own guidance.

Pfizer (CMP 1086) Pfizer is a multinational pharmaceutical company, established in India in 1950. The company has a state-ofthe-art manufacturing plant at Thane in Maharashtra. The company owns top-ranked branded products and has 6 brands that feature among the Top 100 pharmaceutical brands in India. Two of its brands, Corex (cough formulation) and Becosules (multivitamin), continue to rank among the Top 15 pharmaceutical drug brands. Currently, in the Indian stock market, there is a premium for multinational companies stocks since the available free float is shrinking owing to delisting and open offers. The company hopes to achieve decent growth in the current year. Cash-rich, decent valuation and strong parent make Pfizer a decent bet in current uncertain environment. Investors wishing to buy an IT company in mid-cap space can safely consider KPIT as one of the preferred bets.

Jammu and Kashmir Bank (CMP 1211) Jammu And Kashmir Bank Limited, based in Jammu and Kashmir, started commenced its business operations in 1939 in Kashmir. The bank was the first in the country as a state-owned bank. It functions as a universal bank in state of

Jammu and Kashmir and as a specialised bank in the rest of the country. The bank scores well in most of the key banking parameters like CASA ratio, Credit Deposit Ratio, Provision Coverage Ratio and is comparable with top-quality private banks in the country. However, valuationwise, it trades at substantial discount to private banks. Investor willing to buy a quality banks at reasonable valuation can consider buying J&K Bank stocks.

FDC (CMP 92.85) FDC is fundamentally a strong pharmaceutical company with huge cash on its balance sheet. Currently, the company is partly using its cash for buyback from secondary market. The company has a good product profile starting with â&#x20AC;&#x2DC;Electralâ&#x20AC;&#x2122; which is the market leader in the ORS segment. The company is likely to grow around 10% in future. It generates free cash flow from operations every year, which may be used for further buyback or for acquisitions. Under the current uncertain environment, FDC makes a good defensive bet, and secondary market buyback from the company will support the stock from major downside risk. Investors can consider buying FDC stocks at the current price for a decent return with medium-term perspective.

Sundaram Finance (CMP 537) Sundaram Finance Limited, belonging to the reputed TVS group, was incorporated in 1954 with the objective of financing the purchase of commercial vehicles and passenger cars. It has grown today into one of the most trusted financial services groups in India. Sundaram Finance is one of the wellmanaged companies in the NBFC sector with clean management. The company has grown organically in the past and has rewarded longterm shareholders with decent dividend payouts and bonus issues. Throughout its history, the company has grown with very low NPA (nonperforming asset). The stock appears cheap, taking into account of stake in the general insurance, mutual fund, and housing finance subsidiaries. The company is likely to get re-rated as most of the good quality-listed companies are enjoying higher price earnings multiples.

July 2013

MONEY INDICES

TECh GADGETS

The

smarter phones

he sweetest problem a mobile shopper face today is the â&#x20AC;&#x2DC;problem of plentyâ&#x20AC;&#x2122; when it comes to choosing one. With hundreds of fresh cellphone models flooding the market on a weekly basis, consumers are left in confusion when it comes to picking the right one. If you are planning to buy the best-selling smartphone, these are some products you could add to your wish list. Here are the top five smartphones for the month.

Samsung Galaxy S4 5-inch, with 1920x 1080 resolution 1.6/1.2GHz quad-core Android 4.2.2 Jelly Bean 2 GB of RAM 16GB,32GB,64GB Internal Memory variants, expandable up to 64 GB 13 MP rear camera, front: 1.9 MP Full HD Weighs 130 gram Price `41,500/-

MONEY INDICES

July 2013

GADGETS

Apple iPhone 5

HTC One

• • • • • • • •

4.7-Inch display with 1920 x 1080 resolution 1.7 Ghz quad-core Android 4.1.2 Jelly Bean 2 Gb ram 32 Gb or 64 gb internal storage rear camera is 4 ultra pixel Weighs 143 gram Price `42,900/-

• • • • • • • •

Sony Xperia Z

• • • • • • • •

5-Inch display with 1080 x 1920 resolution 1.5 Ghz quad-core processor Android 4.1.2 Jelly bean 2 Gb ram 16 Gb internal storage, expandable up to 64 gb 13.1 Mp rear camera Weighs 146 gram Price `37,990/-

4-Inch display with 640 x 1136 resolution 1.2 Ghz dual-core processor ios 6.1.3 1 Gb ram 16/32/64 Gb internal storage 8 Mp rear camera Weighs 112 gram Price `44,500/-

Nokia Lumia 925

• • • • • • • •

4.5-Inch display with 1280 x 768 resolution 1.5 Ghz dual-core processor Windows 8 1 Gb ram 16 Gb internal storage 8.7 Mp rear and 1.2 Mp camera Weighs 139 gram Price `39,000/-

July 2013

MONEY INDICES

WhAT MONEY TAUGhT ME

Anirudh Dhoot Director, Videocon Group

I began my career at 21 when I became the part of my family business overseeing our manufacturing unit. Then, money was not the only aspect I laid emphasis on; learning was more important to me. But, as career flies, every individual existing in the world realises the value and power of money. The thought of investing money had already got its roots fixed in my mind. When I say investments, it does not only mean merely monetary gains but also intangible assets. I have been investing in human resource; people with excellence are a force. I was lucky to lead Electrolux India as CEO after we took over its India operations. I was one of the youngest CEOs of India Inc then. While my idea of investing in people started bearing fruits of gains, what stole my attention was the money that was made! After that, I never turned back. I moved on to looking after the sales and marketing of Videoconâ&#x20AC;&#x2122;s Consumer Electronics Division along with some of the important power projects. As the years flipped, just like the pages of a book, I proudly stand as the director of Videocon, a conglomerate worth US$5 billion.

MONEY INDICES

July 2013

aGE 35 Game CHANGER As Director of Videocon Group, Anirudh Dhoot has played a critical role in transforming Videocon Industries into a multi-billion-dollar global business powerhouse

Learning Is Money Money has taught me how to make it and how to multiply it with the right efforts and right sources

likes Favourite holiday destinations are Goa, Turkey and New Zealand. Has a zest for sports, especially table tennis. Likes watching movies and travelling, he is also fond of Indian and Italian delicacies