Finly April 2021

FINLY

APRIL 2021 | Issue No. 100

Bitcoin without Monetary Ambition is just another Ponzi Scheme?

SECTOR ANALYSIS

INTRIGUING INDEED

PERSON IN FOCUS

Metal and Mining

The Blue Economy Policy

Jane Fraser

CONTENTS 01

MENTO R 'S N O T E

05

04

TEAM F INL Y

EDITO R IAL

06

10

C O VER ST O R Y

EC O SEC TIO N

Bitcoin without monetary ambition is just another Ponzi Scheme

How rising inflation could disrupt the world’s Economies?

13

17

SEC T O R ANAL YSIS

C O MPANY ANAL YSIS

Metal and Mining

Balaji Amines

22

27

I N TR IGUIN G IN DEED

GR EEN F INAN C E

The Blue Economy Policy

The Green New Deal of USA

32

PER SO N IN F O C US

Jane Fraser

37

C ALL F O R AR TI C LES R UN NER UP Nandini Choudhury KJSIM, Mumbai

34

C ALL F O R AR TIC LES WIN NER

Akshay Pai SCMHRD, Pune

40

ALUMNI INSIGHT

Lokesh Dash ( 2014-16) Yash Parikh (2016-18) Mayank Dharewa(2018-20)

| MENTOR'S NOTE

DR. PANKAJ TRIVEDI Aakanksha Agarwal | MBA C | 2020 - 22 Dr Pankaj Trivedi is currently a Dean, Faculty

In a very candid interview, Dr Trivedi talks

of Commerce & Business Studies with

about his association and journey with

Somaiya Vidyavihar University, Mumbai. He is

Finstreet over the years, transitioning from

also an Area Chairperson of Department of

offline to online mode and views on Finly.

Finance & Law, Programme Coordinator of MBA Program at K J Somaiya Institute of

Q. How has your journey and association

Management and the Faculty Coordinator of

been over the years with Finstreet as faculty

Finstreet - the Official Finance Committee at

coordinator?

K J Somaiya Institute of Management. He has nearly 16 years of academic experience at K J

Finstreet

is

an

Somaiya Institute of Management. He is a

committee as all the competitions, events,

recognised PhD guide at Somaiya Vidyavihar

verticals etc., are managed by students.

University, University of Mumbai, and SNDT

Almost ten years ago, a Finance Forum was

University.

established

under

entirely

my

student-driven

guidance

which

focuses on finance as its core domain. Over Dr Pankaj Trivedi was awarded a PhD for his

the years, the Finance Forum established

research in 'Business Strategy to Improve

itself

Profitability and Operational Efficiency of

economics, and business topics. I feel the

Public Sector Banks in India' from the

students are diligent and hardworking. My job

University of Mumbai in 2000. He is also a

role has been reduced from a faculty

Certified Associate Of IIB&F from the Indian

coordinator to a mentor to approve various

Institute of Banking and Finance since 1992.

activities, panellists and events. Year on year,

Dr Trivedi has a dual Master's degree - M.Com

my experience with Finstreet students has

(Banking and Finance) and M.A. in Economics

only enhanced, which has given me an option

and Political Science.

to impart them autonomous rights to make

as

Finstreet,

covering

decisions and explore the plethora of

finance,

1

| MENTOR'S NOTE opportunities available.

The

committee

members

have

worked

proactively to conduct their events and Q. How efficient have the students been to

organise various departmental events. They

run Finstreet in both online & offline mode,

took

and has there been any challenges?

designing zoom backgrounds to efficiently

care

managing To reiterate, my experience with Finstreet has been excellent. As we were functioning in the offline mode, there were more frequent interactions with the committee during conferences and competitions. Additionally, the events were designed to allow maximum people to participate and learn from the industry stalwarts and promote a peer-topeer learning atmosphere. The members also organised Knowledge Sharing Sessions among themselves to equip each other with all the required skills.

When the lockdown started and the entire institute shifted to a virtual platform, I had many apprehensions w.r.t the committee’s day-to-day work. I was concerned about how the events will occur, how other activities will be conducted and how the prospective audience will adapt to the new atmosphere.

Amidst a challenging atmosphere, all the Finstreet Members had put in their best efforts to run the events successfully. The events were as good as in the offline mode, but I will go a step further and proudly say that they’ve been even better in comparison to the offline format. The events being organised on a virtual platform attracted participants from across the country. We saw a huge turnout ratio during panel discussions and events conducted by FINSTREET under Melange 2021.

of

the

tiniest

breakout

rooms

details, and

from

inviting

industry stalwarts.

Honestly, in my opinion, there have not been any significant challenges that we faced apart from some issues while distributing eCertificates. Everything has been so smooth during the transition from offline to online mode

due

to

the

persistence

&

determination of the Finstreet members.

Q. In your opinion, how has the launch and establishment of Finly helped students over the years?

Let me tell you that the committee transmits knowledge through three initiatives - social media posts, TFJ - the weekly journal and Finly - the monthly magazine. The work done across

all

three

fronts

has

been

tremendously awesome. But as we are celebrating the 100th Edition of Finly, I would like to talk about it at length. I want to thank the students for being punctual every month and

publishing

the

magazine

on-time

without fail. The articles published in the magazine cover the contemporary global issues related to finance, economics and business. The best aspect of the magazine is that it appraises the readers with the ongoing events across the globe within the domain of Finly. As we know that the authors of Finly are students, the language is elementary and lucid, which helps in easy

2

| MENTOR'S NOTE and enhanced understanding of the concepts

language with good examples will help the

for the readers. Over the years, Finly has

readers develop a more comprehensive

been conceptualised and written so well that

understanding of the topics. Along with

it has helped me learn so many new

these, the students also use statistical data

concepts and expand my knowledge. To

and good graphics that enhance the learning

recall, a few impactful articles that have been

quotient.

published are on Brexit, Gamestop Short Sqeeze, Vaccine Diplomacy, Green Mortgage,

I wish the Finstreet members all the best for

Re-assessing the world’s dependency on

all their upcoming endeavours. I genuinely

China and Vulture Funds. I love the concept

appreciate their efforts to run the committee

of Finly that I have preserved a few printed

with the utmost efficiency and excellent

editions in my college cabin by pinning them

coordination.

to my bookshelf. I am eagerly waiting for the 100th edition of Finly, and I’m looking forward to the special efforts that the students are undertaking. Briefly talking about TFJ, the weekly newsletter is a knowledge

capsule

covering

all

the

contemporary issues. It also helps the students

coming

from

non-financial

backgrounds to develop a strong domain foundation.

Together, all three initiatives provide a learning opportunity for students with and without finance knowledge and faculties.

Q. Since, Finly is completing its 100th edition in April, how has it evolved over the years?

More than just a monthly magazine, Finly is a legacy that has been established over the years.

It

is

an

outstanding

learning

experience for the students from K J Somaiya Institute of Management and students in other business schools. As I mentioned above, the simple and easy to comprehend

3

ISSUE NO. 100, APRIL 2021

Dear Readers,

Editor's Note

8 years, 100 issues and thousands of insightful articles. The spectacular journey of Finly achieves another milestone. It gives us immense pleasure to bring to you the 100th edition of Finly.

Purely in terms of age, these are still early days. However, we have displayed maturity throughout and have, over the years, presented our readers a wide range of information-packed content to help them informed and updated with financial news and updates in the Indian and global economy.

For this edition, we have a lot of great content that we are really excited to share with our loyal readers. This edition’s Cover Story incorporates the analysis of the trending crypto currency- Bitcoin. The Eco Section covers the potential implications of the rising inflation that could affect the economies of the world. In the Sector Analysis, the authors inspect metal and mining industry with an in depth analysis of market structure, competitive environment and challenges faced by the sector. This edition also covers articles on the Blue Economic Policy and the Green New Deal of USA. We’ve also introduced a new section- Person in Focus- where the authors have written about Jane Fraser- the current CEO of Citicorp.

Team FINLY has always been a strong set of focused individuals who put in a lot of efforts and dedication to stitch together this magazine and we can’t thank them enough for their constant support and initiative.

We have received an overwhelming response for this month’s “call for article” competition, with some high-quality content from some of the best management colleges of the country. We thank all the participants for their sincere efforts. This month’s winner and runner-up articles are a recommended read. We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, Finstreet) for providing the much required mentoring, support and backing to the Finly team.

We thank all our readers and faculty members for their valuable reviews and feedback.

HAPPY READING!!!

STAY HOME STAY SAFE!!!

Akshitaa Bahl |Editor-in-Chief| PGDM FS

Nilomee Savla |Editor-Finly| PGDM FS

4

ISSUE NO. 100, APRIL 2021

TEAM FINLY Faculty in-charge

Editor-in-chief

Editor - FINLY

Dr. (Prof) Pankaj Trivedi

Akshitaa Bahl

Nilomee Savla

Team Coordinator

Akash Pawar

Conceptualization & Design

Aakansha Agarwal

Anant Maske

Saurabh Dubey

Praneet Sisodiya

Content Team

Devansh Mehta

Mohit Kansal

Kaushal Daga

Krisha Sanghvi

Mehul Parwal

Nishi Kumari

Prakhar Gupta

Riya Shah

Rohan Bhakkad

Sahil Mankotia

Srishti

Vaishnavi Badaya

Karishma Lalwani

5

| COVER STORY

BITCOIN WITHOUT MONETARY AMBITION IS JUST ANOTHER PONZI SCHEME What is Bitcoin?

Defining bitcoin can be tricky. To some, it is just a commodity. To others, it is a form of digital cash. However, bitcoin's most concrete definition is that its software is designed to allow people to exchange value directly. It was created by Satoshi Nakamoto, unveiled in 2008, and launched the following year.

Mohit Kansal | MBA-FS | 2020-22 Vaishnavi Badaya | MBA-FS | 2020-22 “Bitcoin” is nothing, and it has absolutely no intrinsic value because it is not more than digits in a computer program.

Moreover, the price of Bitcoin is determined by the market forces, that is, the demand and supply.

What bitcoin does have, in abundance, is volatility. For a certain kind of investor,

What makes Bitcoin unique is that it run

usually risk-takers, it is a very interesting or

across a network of linked but independent

attractive type of investment as they believe

computers. In this way, no single party has

in “higher the risk, higher the return”. Based

control over the network. Neither the

on its price history, bitcoin has been a

central bank nor the government can

winning investment. In January 2009, it had

dictate the currency’s value. A bitcoin

no value; 12 years later, in February 2021, it

transaction is recorded in a ledger, and the

surpassed

technology behind it is known as “the

However, it can move violently due to high

blockchain.” Bitcoin’s technology is trusted

volatility. Unlike traditional markets, there

due to its ability to prevent counterfeits

are no closing bells to stop trading.

and hacking. The currency’s database has

Example - It was up 350% in 2020 but fell

not been hacked once since it went live in

64% in February and March 2020. While the

January 2009. Thus, it brings transparency

economic collapse drove the drop because

to the table.

of the coronavirus pandemic, the selloff

$50,000

for

the

first

doubled the plunge's scale in stocks.

time.

6

| COVER STORY What is the Ponzi Scheme?

A Ponzi scheme is a financial scheme where a fraudulent promoter promises a very high return in a brief period of time to investors.

They have no business model to earn this money to deliver returns.

Source: Google

Indian Government Banning Bitcoin There has been much talk around about the Indian government banning bitcoin and other cryptocurrencies. In fact, as the finance minister Nirmala Sitharaman recently told the Rajya Sabha: “A high-level InterMinisterial Committee (IMC) constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to virtual currencies and propose specific actions to be taken in the matter recommended in its report that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India.”

A Ponzi scheme's basic structure is as follows: first, money is collected by a set of investors, promising them high returns. The money being brought in by the second set of investors is used to pay off the first set. As the news of high return spreads, more and more investors get sucked into the scheme, with the greed of earning potentially very high returns driving their investment. And the scheme collapses only when money brought in by new investors is not sufficient to pay off the older set.

Bitcoin without monetary ambitions is exactly like that. Newer investors bring in money pushes the price up, given the limited supply, and prices go up very quickly, allowing existing investors to benefit. As long as

In layman's terms, it’s saying that the government will ban all cryptocurrencies, including bitcoin. They also plan to issue Indian cryptocurrency after banning Bitcoin, which will be the only allowed cryptocurrency.

However, this government action will leave all the bitcoin brokers, through which investors trade, unemployed as they will have to shut down.

money being brought in by fresh investors is higher than money being taken out by existing ones, bitcoin keeps going up. When the equation changes, just like in a Ponzi scheme, the bitcoin price crashes.

Also, if we see, when an investor buys a company’s stock, the investor is buying a share in the future earnings of the company.

In mutual funds, the investor indirectly buys stocks or other financial securities issued by

7

| COVER STORY companies or even something like gold.

When an investor buys gold, he buys gold.

When an investor buys derivatives, it is for either hedging against price fluctuation or speculating on a particular commodity's price. When an investor buys real estate, the investor buys a home to live in or as a physical asset to profit from in the years to come.

What does one get when one buys bitcoin as an investment asset? Nothing. It would be fair to say that if we take out bitcoin's or, for that

matter,

any

other

cryptocurrency's

ambition to emerge as a parallel form of money, it simply becomes a Ponzi scheme.

Unlike typical Ponzi schemes, there is a technology and thinking behind bitcoin and other cryptocurrencies. However, that does not make them any less a Ponzi scheme.

transfer fiat currencies into and out of the cryptocurrency world. In March 2021, Citi Business Advisory Services Transfers were enabled by either transferring money from a bank account via wire or national payment systems such as automated clearing house (ACH); or by linking a credit card or a debit account to a digital wallet provider or centralized exchange. A different user request triggered each fiat currency movement into and out of the cryptocurrency ecosystem.

Gradually, payment networks that would automate the exchange of payments between the fiat and crypto world began to emerge.

Another case is of PayPal; the company’s decision to add Bitcoin to its platform in 2020 is an example of this evolution. A user on the PayPal network can now use Bitcoin to make a payment to any of the 345 million users in the PayPal network, and PayPal will automate all of the exchanges needed to occur in the background to ensure that the merchant can receive payment in fiat currency. The user is then required to choose to pay in bitcoin, and PayPal will handle the rest of the transaction.

This is one of the marked improvements in the ability of money to move between the two ecosystems.

Source: Google

Moving from Traditional Payment Rails to Payment Networks When Bitcoin and other cryptocurrencies were initially developed using blockchainbased

networks,

they

operated

independently of the fiat currency system.

Traditional payment rails were used to

Source: Google

8

| COVER STORY Mapping the Future: Bitcoin May Benefit from Broadening Use of Blockchain Technologies Bitcoin's development is happening across multiple fronts. It is increasingly being used as a payment option. It is finding investor interest due to its digital scarcity and is being explored as a new type of digital gold.

Furthermore, it is also acting as the inspiration and North Star for an entire emerging crypto ecosystem. Bitcoin's future, however, may wrap back around to its earliest roots. Though the perception of Bitcoin is broadening, it will always be inextricably linked with the introduction of blockchain. The original intent of Bitcoin’s creator was to provide a new type of payment system that combined cryptographic tools and a distributed ledger.

This point is critical because a growing set of use cases are emerging that look beyond cryptocurrencies. These efforts are leveraging the blockchain in new ways. Such efforts are working to validate blockchain and bring it into the mainstream. Innovations provide a growing set of on and off-ramps between the fiat and crypto ecosystems, allowing for the emergence of a new hybrid operating model.

As this gradual joining of the two systems occurs, there is an increased chance of Bitcoin’s role in that future economy may expand once more, becoming potentially the currency used to facilitate global trade.

improve and offer a plethora of alternatives.

New versions like – bitcoin cash, bitcoin gold, and bitcoin diamond – keep splitting off.

Technology overlays allow small transactions to take place off the blockchain, reducing costs. Moreover, companies operating wallets can act like banks by netting off transactions between their customers. However, for the moment, bitcoin's best hope looks like attracting more and more buyers who want to shift their savings onto the blockchain— and speculators willing to bet that those savers will arrive. The soaring price of bitcoin shows how the demand by buyers and their expectations are high in the market.

Nevertheless, as currency historian and Berkeley economics professor Barry Eichengreen said: “Expectations can change.”

Conclusion Bitcoin technology and other cryptocurrencies have the potential to

9

| ECO SECTION

HOW RISING INFLATION COULD DISRUPT THE WORLD’S ECONOMIES What is Inflation?

Inflation can be defined as the decrease in a currency's purchasing power over a certain period of time. What it means is that you can now purchase lesser quantities of the same good with the same amount of money.

Inflation is generally denoted by one of the following two indexes: the Consumer Price Index (CPI) and Wholesale Price Index (WPI).

Inflation can be a boon or a bane depending on whether you have been invested in assets or sitting with cash.

Mehul Parwal | MBA - FS | 2020-22 Rohan Bhakkad | MBA - FS | 2020-22 living, making it one of the most widely used calculations to determine times of inflation.

Wholesale Price Index (WPI) WPI is another popular measure of inflation, which measures and follows the change in commodity prices in stages before the sale rate. While WPI items vary from country to country, they mostly include items in the product or at the wholesale level. For

Consumer Price Index (CPI) CPI is a measure that assesses the average price of a basket of goods and services that are the primary consumer requirements. It includes transportation, food, and medical care. CPI is calculated by taking each item’s price in a pre-determined basket of goods and measuring its weight in the whole basket. Predictable prices are retail prices for each item, as they are available for purchase by each citizen. Changes in CPI are used to evaluate price changes concerning the cost of

Source: investopedia

example, it includes the prices of raw cotton, cotton yarn, grey cotton goods, and cotton clothes.

While

many

countries

and

organizations use WPI, many other countries, including the U.S., use the same product

10

| ECO SECTION called product price index (PPI).

In India, the retail inflation rose to 5.03% in February this year from 4.06% in January. This

What leads to inflation?

was 6.58% in February 2020. Also, food inflation has gone up to 3.87% from

More and more money in the market, i.e., an increase in the money supply, is the most fundamental reason for inflation. Money supply in the market can increase due to the Central Banks' monetary policy decisions or by printing and giving away more money to the economy's individuals.

Inflation driving mechanisms can be classified into three categories Demand-Pull Effect This occurs when the increase in the money supply and the credit stimulus for all the economy's goods and services is faster than the actual rate of the economy’s production rate. This increases demand and hence increases in the prices.

1.89% in the month of January 2021.

In the United States of America, the annual inflation rate for the last 12 months ending in February 2021 was 1.68%, up from January‘s 1.40%. The current monthly inflation rate is 0.55%, for the month of January, it was 0.43%.

At 1.68%, the inflation rate is inching towards the FED’s target of a 2% rate.

Why there is a fear of Inflation?

The worries of inflation reflect an opening of economies, rapid business expansion and fading of the pandemic. Millions are still unemployed, and large scale lay-off remains high. But for the workers with secured jobs, higher spending power will get out of their homes after the vaccination, deploying their

Cost-Push Effect

savings, which they built over the last year.

This occurs when there is an increase in the cost of production, and to compensate for this, the burden is gradually transformed on to the consumer, which leads to a rise in the prices of the goods and services.

The USA alone announced a stimulus package

Built-in Inflation This is related to adaptive expectations that the current inflation rate will continue in the future. To maintain the standard of living, the prices of goods and services are increased.

of $1.9 trillion, which is about to give around $1400 to almost every citizen. According to Jamie Dimon, chief executive of JPMorgan Chase, $1 trillion in savings piled up during the pandemic among the US population remains unspent. With all the market liquidity, few goods are being chased by excessive money supply, which acts as a catalyst for inflation. According to Mr Dimon, who is tracking the inflation threat, "There's an excellent chance you’re going to have a gangbuster economy for the rest of this year

11

| ECO SECTION and easily into 2022, and the question is Does that overheat everything?” he said in an interview with Bloomberg Television last week.

Over the long term, inflation is a concern for everyone because it hurts many financial assets, mainly bonds and stocks. It makes everything more expensive for consumers, from necessity like milk and vegetables to fuels. If there is no equal hike in salary, it leads to lower purchasing power than earlier.

And once the economy is entrenched in inflation, it can be hard to come out of it.

Effect of Inflation Higher inflation could cause a ripple effect on the USA's monetary policy, where faster economic rebound and inflation expectation mean price rise is likely to be prevalent. The Federal Reserve has promised to keep the interest rate low and keep buying bonds worth $80 billion every month because it wants to overshoot the target of 2% inflation.

Eventually, the central bank will want to raise the interest rate to bring the inflation rate down.

The faster the price rises, the sooner the restrictive measures come into existence.

Richard Clarida, the Fed's vice-chairman, has said that "the central bank will make up only for inflation shortfalls that have occurred over the preceding year, meaning the point at which catch-up is complete could come surprisingly quickly".

secretary, tried to reassure critics of Mr Biden's stimulus by saying that America has the tools to deal with inflation. If the Federal Reserve raises the interest rate, then there would be consequences, and if it tries to cool off the over-hot economy, then another recession is coming.

A higher rate also holds profound implications for the markets. Almost everything in today's financial landscape is based on the central bank's promise to keep the interest rate low. Cheap money is behind the government's idea to spend. However, it wants on the infrastructure and various projects; skyrocketed valuation of the stock market and credit availability. An abrupt change in monetary policy can result in a "Taper Tantrum" like 2013 when there was a sudden change in interest rate, which was very painful for the market.

On Wall Street, the higher rate would be a shock. In emerging markets, it would be excruciating. A higher interest rate in America means a see off to inflation, resulting in a stronger dollar and capital outflow from the emerging, like Taper Tantrum in 2013. This would

make

it

harder

for

developing

countries to fight against pandemic as their finances would be at risk. There is always a fascination from escaping the low inflation and low-interest rate paradigm of past decades. But higher inflation exposed the world economy and financial markets to a roller coaster ride.

On February 7th Janet Yellen, the Treasury

12

| SECTOR ANALYSIS

METAL AND MINING

Overview

Nishi Kumari | MBA FS | 2020 - 22 Kaushal Daga | MBA FS | 2020 - 22

The metal and mining industry provides input to various other industries, including infrastructure, automotive, power, cement, and many more, and directly contributed 2.2% to 2.5% of the GDP in 2019. India has 1531 operating mines and produces 95 different types of minerals - four fuelrelated minerals, three atomic minerals, 23 non-metallic minerals, ten metallic minerals, and 55 minor minerals. India's major mineral resources are coal, iron ore, manganese ore, mica, bauxite, chromites, natural gas, diamonds, limestone, and thorium. The production of these commodities has been increasing since 2015, but the imports are simultaneously increasing due to increased energy demands.

Promotion of Industry and Internal Trade

Key subsectors Iron ore

also attracts high foreign direct investments.

(DPIIT), FDIs in the construction development sector

(townships,

housing,

built-up

infrastructure, and construction development projects) and construction (infrastructure) activities stood at US$ 25.78 billion and US$ 17.22 billion, respectively, between April 2000 and September 2020. The logistics sector in India is growing at a CAGR of 10.5% annually and is expected to reach US$ 215 billion in 2020. The Government of India launched the National Infrastructure Pipeline (NIP) in 2019, wherein it invested about INR 102 lakh crores on infrastructure projects. Of the total INR 102 lakh crore worth of projects in NIP, 42% are under implementation, 19% are under the development stage, and about 31% are in the conceptual stage currently. This core sector

Bauxite

According to the Department for India ranks 5th in terms of bauxite

13

| SECTOR ANALYSIS production globally at 3.65 MT in FY20 and

Lignite Corporation India Limited.

has an estimated reserve of 590 MT. Bauxite is an ore that is mainly used to extract

Market structure

aluminium. It is the second most used metal after steel and is used by the electrical and

India’s steel consumption rose 7.5% Y-o-Y

electronics sector, followed by automotive,

and 7.9% Y-o-Y over the last two years. Tata

construction, packaging, and defence.

Steel, JSW Steel, and SAIL have 20%, 18%, and

16%

market

share.

Aluminium

production declined by 2% Y-o-Y, whereas consumption

declined

by

6-7%

Y-o-Y.

Hindalco Industries Ltd., Vedanta Ltd., and National Aluminium Company Ltd. have 40%, 36%, and 24% market share.

Source: DGCI&S

The country reached US$ 18.24 million in FY20 (till January 2020). Some of the market's major players are Hindalco, NALCO, PG Foils, and Hind Aluminium.

Source: Ministry of mines

Coal India is the 2nd largest producer of coal in Coal is the most abundant fossil fuel in

the world. It grew at a CAGR of 4.6% from

India.

Coal

FY14-20 and is expected to grow 6-7% Y-o-Y

Resources globally, contributing to 10% of

over FY21. Coal India Ltd. has an 84% share

the global share. However, it is endowed

in total coal production in India. Y-o-Y steel

with less than 1% of the world’s coal

production in India rose by 3.7% from 2017.

India

ranks

5th

in

Total

resources. The overall production of coal for 2019-20 was projected to be 810 million tonnes, but the actual production was 729 million tonnes. Coal produced is dispatched to

different

sectors

like

power,

steel,

cement, CPP, and others. It is expected to grow at a CAGR of 4.5% by 2025. The major market players are Coal India, Singareni Collieries Limited, and Neyveli

Source: PIB

14

| SECTOR ANALYSIS expenditure. And Public Sector Units have a significant chunk in the market share in Mining and Metal Industry.

Substitute Products Amid the rising environmental concerns, the threat of substitution of coal is high as there Source: Systematix research

are many renewable options like solar energy, wind energy, etc., available today at competitive prices. Consumers are switching to plastic from Aluminium because of their weight.

Bargaining Power of Suppliers It isn't easy to get mining permits and

Source: Company annual reports

PORTER'S FIVE FORCES MODEL Competitive Rivalry Prices of commodities are set internationally; therefore, individual players do not control it. So, industry players are trying to minimize the cost to gain a competitive advantage. Metal industry players are trying to focus on optimizing technology to increase process efficiency.

Therefore, the competitive rivalry is moderate.

licenses in India as it is a highly regulated industry. Strict rules, regulations, and costs increase the supplier's powers. Hence, the bargaining power of suppliers is high.

Bargaining Power of Customers The price of the commodities/ metals is determined by the demand and supply forces in the market. The primary customers usually negotiate the prices based on prevailing

market

prices.

Thus,

the

bargaining power of buyers is moderate.

CHALLENGES

Threat of New Entrants Financial Costs The threat of new entrants in the mining industry is low as mines' exploration and

The steel industry is highly cyclic in nature

development require much investment

which implies volatile earnings and periodic balance sheet stress. Industry margins for

15

| SECTOR ANALYSIS the same is driven by low-cost capacity addition, which is possible for set players and lowering costs. Coal plants also have higher operational and maintenance costs because of strict regulatory issues.

Price fluctuation of raw materials The raw materials' price is constantly fluctuating, and various metals' weak market prices have put significant pressure on their margins. Hence, the manufacturers have to become competitive in other ways, like being cost-efficient, optimizing technology for process efficiency, R&D, etc.

Monopoly Market Conditions PSUs have dominated the Metal and Mining industry for more than four decades, Coal India Limited in the case of coal, SAIL in the Steel Industry, and so on, which has shown monopoly-like tendencies.

Environmental Concerns The CO2 intensity of crude steel needs to fall by 1.9% annually, but it has only fallen by 1.4% on average to align with the sustainable development scenario (SDS). Vast quantities of waste material are produced by several

Road ahead The Ministry of Steel aims to increase the production capacity to 300 MT by 2030-31, indicating an opportunity for growth in the sector. Iron and Steel make up a core component for the real estate sector, and demand for the same is set to grow, considering strong growth expectations in residential and commercial buildings. and aluminium.

Such infrastructure projects also continue to drive the growth of other metals such as zinc Packaging and power sectors also helped in the demand for aluminium which will help push India’s consumption of 2.7 kg/capita towards the global average of 11 kg/capita.

Due

to

low-cost

renewable

energy

alternatives, the demand for coal has dropped and will continue to drop. India also commits to reaching its renewable energy targets set in the Paris Agreement, which further hampers coal demand since it is a significant CO2 emission source. The Metal and Mining Industry is expected to see a major change in the future due to robust growth

in

various

industries,

different

government initiatives, and environmental concerns.

mining activities in the coal-mining region.

The waste disposal method affects land, water, and air, affecting people's quality of life in adjacent areas.

16

| COMPANY ANALYSIS

BALAJI AMINES LIMITED

Business overview Balaji Amines Ltd., India is an ISO 9001: 2015 certified company.

It specializes in manufacturing Methylamines, Ethylamines, Derivatives of Specialty Chemicals, and Pharma Excipients. Additionally, it also has facilities for the manufacture of derivatives, which are downstream products for various Pharma /Pesticide industries apart from user-specific requirements.

Karishma Lalwani | MBA - IB | 2020-22 Sahil Mankotia | MBA - D | 2020-22 closely guarded process globally, with only a few companies having access to such technology. BAL is the pioneer in India for testing an indigenously developed technology and developing it further.

Tracing back its history, Balaji Amines Limited (BAL), currently, one of the leading manufacturers of Aliphatic Amines in India, was set up in 1988 to cater to the growing requirements of value-based Specialty Chemicals. In 1989, it started manufacturing Methyl Amines and then added facilities to manufacture Ethyl Amines and other Methyl Amines and Ethyl Amines derivatives.

Today, BAL's products have gained acceptance in international markets. It has achieved a distinct export quality status, making it one of India's few companies that can match the stringent international quality standards. It has been awarded ISO9001:2015 Certification apart from appreciation and continuous orders from global majors for its product range. The Company's strength is to identify and develop the technology indigenously and identify its raw material and undertake the R&D to develop the same in India.

BAL has adopted a cost leadership strategy

BAL

by consistently adding capacities and fine-

facilities/plants at Tuljapur and Chincholi

tuning processes to provide quality products

in

at the lowest cost. Amines technology is a

Telangana. BAL owns a Five Star Hotel in

has

its

Maharashtra

two and

manufacturing one

at

Medak,

17

| COMPANY ANALYSIS Solapur, Maharashtra. BAL has a CFL lamps facility at Medak, Telangana, which was acquired via Balaji Greentech Products Limited's amalgamation with BAL in the FY 2017-18.

Presence of Balaji Amines Ltd. Balaji Amines Limited is currently having its exports in 51 countries. 19.11% of its Total Revenue for FY20, i.e., ₹ 177.56 Crore, is generated from exports spanning across continents.

Product range BAL mainly operates in three segments, i.e., Speciality Chemicals and Amines, Hotel, and CFL Lamps. Balaji Amines Limited has a proven product portfolio with few products manufactured for the 1st time in India.

Their product range includes Amines - Under amines, the Company manufactures

Monomethylamine,

Dimethylamine,

Trimethylamine,

Monoethylamine,

Diethylamine,

Triethylamine, Dimethyl Amino Ethanol, Diethyl Amino Ethanol, And Mono Methyl Amino Ethanol.

Speciality Chemicals - Under speciality chemicals, BAL manufactures N-Methyl Pyrrolidone,

Morpholine,

Diethyl

Hydroxylamine, and 2-Pyrrolidone.

Derivatives - The Company manufactures Di-Methyl Acetamide, Di-Methyl Amine Hydrochloride, Hydrochloride,

Tri-Ethyl Benzyl

Amine Tri

Ethyl

Ammonium Chloride, Mono Methyl Urea, Di-Methyl Urea, Choline Chloride and New 25.

Natural

Products-

Camptothecin, Forskohlii,

10

Calcium

BAL Dab

manufactures III,

Sennosoid

Coleus and

Solanesol.

Source: Investor Presentation

18

| COMPANY ANALYSIS SHAREHOLDING PATTERN

Out of 10 Directors, 5 Directors are Independent

Directors,

including

one

woman Director. The Chairman of the Board is an Executive Director.

The Board of Directors met five times during the year 2019-20, on 15th May 2019, 26th July 2019, 30th October 2019, 30th January 2020, 9th March 2020. These meetings were well attended. The 31st Source: Bloomberg Quint

The promoters are the majority shareholders in the Company, with a 53.7% stake. FII/FPI have decreased holdings from 1.67% to 1.64% in Dec 2020 quarter.

The shareholdings have been reduced from 0.23% to 0.02% in Dec 2020 quarter by the Mutual funds.

Annual General Meeting was held on 26th July 2019.

Financial analysis The

pharmaceutical

sector's

revenue

constitutes about 55% of your Company's revenue, followed by the agrochemical sector at 20%. Other segments like dyes,

Corporate governance

textile,

animal

feed,

water

treatment

chemicals and refineries contributed about Balaji Amines Limited appreciates Corporate Governance's system and has been following fair, transparent and ethical governance practices and believes it to be essential for enhancing long-term shareholder value and retaining investor trust. The Company believes that Corporate Governance is about best practices of business imbibed into the organization's culture and comply with the value systems, ethical business practices, laws, and regulations to achieve the company's main objectives through best practices.

5%.

Revenue Distribution among its three segments is as follows:

Source: Annual Report

The Company's board consists of 10 Directors as of 31st March 2020.

19

| COMPANY ANALYSIS

Ratio Analysis

Due to COVID-19, they saw good demand for some products like NSE, BMA, TEA, Acetonitrile, etc. These go into drugs that are used to treat patients.

Due to lockdown, BAL lost ₹ 30-35 Cr of turnover in the last year. As lockdown eased, the Company ramped up capacity utilization levels and has sustained to original levels. During June 2020, they

Source: Annual Report

touched pre COVID levels.

Key Highlights The Company reported revenue of ₹ 935.77 crores in FY20.

The Company reported an EBITDA of ₹ 185.76 crores in FY20.

Profit Before Tax (PBT) came in at ₹ 131.10 crores during FY20.

The Company reported a Profit After Tax of ₹ 97.47 crores in FY20.

Total Capex spends during FY20 is ₹ 70 crore. The CAPEX has been towards constructing Unit IV plants (Greenfield project) and the construction of Morpholine and Acetonitrile plants.

Future outlook China's chemical industry structure is changing due to stricter environmental norms, tighter financing, and consolidation.

While these shifts may benefit select prominent players in the long run, they could cause uncertainty for international players that source chemicals from China.

That could create opportunities for India's chemical companies in certain value chains and segments, especially in the short term.

There is a trend of increasing demand for

Impact during covid

Balaji

Amines'

products

as

there

is

sustained growth of the Indian pharma Balaji Amines is engaged in the production

industry on account of the 'China Plus One'

of essential goods and is operating at 70%

business strategy adopted by western

capacity utilization. The capacity utilization

companies. The price realizations have also

was affected owing to varied factors like

continued to remain healthy. The company

non-availability

disrupted

exports products like EDA, DETA from its

supplies of packing material, delays in port

subsidiary, and Morpholine to China, which

clearances, limited availability of trucks

previously used to get dumped in India.

and tankers for the movement of raw

Dimethyl Formamide (DMF) prices have

material and finished goods.

risen sharply because of supply-demand

of

labour,

mismatch, leading to improved capacity

20

| COMPANY ANALYSIS utilization of its DMF plant.

As part of Phase 1 of the Greenfield Project, it is likely to commence manufacturing of Ethlylamines by the end of FY21. It plans to start the manufacturing of Dimethyl Carbonate (DMC) by the end of Q2FY22.

Currently, the subsidiary company - Balaji Specialty Chemicals - which primarily caters to the end-user industry of agrochemicals, is gradually ramping up production and has an improved sales runrate of about Rs 12.50 crore per month till Q3FY21.

Agrochemicals' prospects looked robust because of improved overall dynamics for the agriculture sector in terms of highest water storage across reservoirs for the last five years and increased acreage under cultivation. The Company plans to expand its portfolio of crucial derivative products alongside

entering

newer

speciality

chemicals to gain vertical integration and operating

efficiencies.

It

is

steadily

expanding its reach in the export market over the medium to long-term, given global companies' eagerness to reduce their exposure to Chinese sources of suppliers.

21

| INTRIGUING INDEED

THE BLUE ECONOMY POLICY LITIGATION FINANCING Riya Shah | MBA - B | 2020-22 Srishti | MBA- FS | 2020-22

Introduction India, with nearly 7500 km of coastline, has a unique maritime position. With 9 out of 29 states being coastal and the nation's geography comprising 1382 islands, India has vast maritime interests. The coastal zone comprises nearly 199 ports, including 12 major ports that handle approximately 1400 million tons of cargo. Not only this, but this coastal economy also sustains over 4 million fisherfolk and coastal communities. This leaves the Indian Blue Economy in a vital position concerning economic growth as it could be the next GDP multiplier and improve well-being.

To put it, the Blue Economy is a subset of the national economy comprising the ocean resources

system

and

human-made

was enunciated in February 2019 highlighted the Blue Economy as one of the ten core dimensions of growth.

While this may add billions to our GDP and create new jobs, the threat of destruction still prevails. Putting resources to use will inevitably lead to pollution. However, the Blue Economy is not what this is about. The 'Blue economy' definition by the World banknotes down sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the ocean ecosystem's health. This implies the Blue economy policy will improve the nation's GDP and do so while keeping sustainability and social-economic welfare at the centre-stage.

infrastructure in the marine, maritime and onshore coastal zones that fall within the nation's legal jurisdiction. The Blue Economic Policy refers to the vision and strategy adopted by the Government of India to utilize its marine resources. The Government of India’s Vision of New India by 2030, which

The ocean as a resource Oceans are claimed to be the last frontiers of growth and development, but their potential remains untapped. This potential

22

| INTRIGUING INDEED needs to be harnessed in such a balanced manner that Oceans' preservation and health are

not

compromised,

and

there

is

adherence to the United Nations Sustainable Development Goal 14 that states, "Conserve and sustainably use the oceans, seas and marine

resources

for

sustainable

development."

The Indian Ocean Region is rich with resources,

particularly

in

fisheries,

aquaculture, ocean energy, sea-bed mining, and minerals, and provides tremendous economic opportunities to develop marine tourism and shipping activities. Among these resources, fisheries and minerals are the most commercially worthwhile industries.

Additionally,

the

Oceanic

Region

is

of

strategic importance to India's economic growth as most of its oil and gas are imported through the sea. Further, this dependency is expected to increase by 2025 exponentially.

cables and tourism. Besides these areas, other emerging industries such as aquaculture, marine biotechnology, etc., have the potential to create jobs and stimulate worldwide economic growth.

India India was among the first to create a Department of Ocean Development in 1981, now the Ministry of Earth Sciences (MoES). It has launched new programs such as ‘Deep Ocean Mission,’ ‘Oceanography from space’ and ‘Launching of the data buoys’ along the Indian coastline. These initiatives have enabled satellites to transmit data on various oceanographic features, including weather, for scientific analysis.

MoES joined the United Nations on the ‘Clean Seas Programme’ to develop strategies for estimating and reducing Marine Litter/Plastic in the oceans, which is also a part of SDG-14.

Additionally, MoES has signed two contracts with the International Seabed Authority (ISBA) for deep ocean exploration of minerals (Polymetallic Nodules and Hydrothermal Sulphide) in the Indian Ocean.

Nonetheless, to reap the benefits of growth in these sectors, India must develop a sustainable policy for upstream and downstream activities.

Source: Google

Objectives and approach of the policy

In the era of advanced technology, oceans will become a new centre of economic activity.

Oceans

already

account

for

The essential components of the Policy will cover the following subjects in its ambit.

significant trade and commerce in shipping, offshore oil and gas, fishing, undersea

23

| INTRIGUING INDEED A national accounting framework for the Blue Economy and Ocean Governance.

A new vigorous mechanism would be developed to generate and collect reliable data on the Blue Economic. Periodic studies on specific sectors of the Blue Economy would be undertaken to assess the composition, growth, and trajectory. Scientific collaborations with leading countries/institutions would be pursued to develop scientific tools and technologies to measure and manage the Blue Economic.

An apex body called the National Blue Economic Council (NBEC) is proposed to be set up, responsible for the holistic planning, implementation, coordination, and operationalization of the policy in a coherent manner.

An environmentally sustainable national coastal marine spatial planning framework.

For integrated coastal and marine spatial plans, scientific and accurate mapping of India’s coastal zones would be done. An expert group would be constituted to suggest modifications required for our national and local needs. This would require close coordination between the Ministries of Earth Sciences and Environment, Forests and Climate Change, and other related departments/institutions.

To

address

menace,

marine

especially

pollution's from

growing

plastics

and

microplastics, a vigorous Plastic Elimination

and Marine Litter Policy would be implemented in a time-bound manner.

Implementing the Sustainable Development Goal (SDG-14) will also be a part of the Blue Economic policy.

A vision to develop marine fisheries, aquaculture, and fish processing.

Under this policy, the Blue Revolution would be further expanded by promoting aquaculture, cage culture, seaweed and algae harvesting, and sustainable marine culture by adopting an ecosystem approach to fisheries management. Extensive use of technology, telecommunication, digital, and remote sensing applications would be used in all aspects of fisheries and ocean management. However, the major focus would be on the sustainable use of fishery resources in the coming years.

A vision to enhance domestic manufacturing, emerging industries, trade, tourism, technology, services, and skill development connected with the Blue Economy.

A quantum and qualitative boost would be given to ports' development by improving logistics, fisheries, shipbuilding, and coastal and cruise tourism by suitable systematic initiatives and attracting private investments in new business opportunities. These have a vast potential for economic growth and employment. New and emerging areas such as Marine biotechnology, deep-sea mining, and ocean energy would be promoted. For the development of R&D and innovation, forward and backward linkages between

24

| INTRIGUING INDEED scientific institutions and industry would be created in the coastal states. Blue Trade and Blue Manufacturing will be pursued to maximize employment generation and export potential.

An integrated plan for developing logistics, infrastructure, and shipping (including transhipment).

Marine clusters that are critical for port development would be given impetus through enhanced focus and funding. The Indian shipbuilding industry would be promoted and modernized with a 30-year plan focusing on Make in India and Atmanirbhar Bharat.

A National Master Plan for a Multi-Modal Network and Digital Grid would be launched to reduce the logistics costs. A holistic approach to enhance logistics and connectivity will improve the ease of doing business and efficiency by harmonizing the tax regime. A National Maritime Policy would also be enunciated for integrated planning of the maritime sector.

A framework for coastal and deep-sea mining, new and renewable offshore energy, and research and development.

exploration of cobalt-rich Sea Mount FerroManganese Crust in the Indian Ocean.

Suitable policies for prospecting and mining, along with environmental impact audits, would also be evolved. The creation of a National Marine Resources Database has been proposed so that an inventory for our marine resources, including seabed resources, is undertaken expeditiously.

An integrated framework for ocean security, strategic dimensions, and Internal Engagements.

India will holistically engage with all relevant parties and platforms, which will help India achieve blue growth, protect marine biodiversity and safeguard its strategic interests. India acknowledges an important emerging economic and strategic axis that spreads from the East Coast of Africa to the Western Pacific Ocean called the SeychellesSingapore-Samoa (SSS) axis.

The security in the Indian Ocean would be enhanced through domestic manufacturing and procurement. Coastal and marine security would be strengthened, and a comprehensive plan would be formulated and implemented for the same.

Conclusion

Under this policy, it has been visioned to launch a National Placer Mission, which would help explore workable deposits and evolve a roadmap to extract precious metals and minerals.

India is also planning to take the lead in the

The draft policy aims to enhance significantly the contribution of the Blue Economy to India’s GDP in the next five years, improve the lives of coastal communities, preserve our marine biodiversity and maintain the security of our marine areas and resources.

25

| INTRIGUING INDEED Today, the Blue Economy holds the promise of being the next multiplier of economic growth and well-being, provided that the strategy places sustainability and socioeconomic welfare at the centre stage.

Therefore, the proposed roadmap for evolving a Blue Economy Policy would be a crucial step towards unlocking the potential of economic growth and welfare.

26

| GREEN FINANCE

THE GREEN NEW DEAL OF THE USA

What is the Green New Deal?

The Green New Deal is a congressional resolution that sets out a grand plan to address climate change. Introduced by Representative Alexandria Ocasio-Cortez of New York and Senator Edward J. Markey of Massachusetts, both Democrats, the resolution calls for the federal government to wean the United States from fossil fuels and reduce greenhouse gas pollution throughout the economy. It also seeks to ensure the creation of new high-paying jobs in the clean energy sector.

It is built on the vision that our struggles — from climate change to systemic racism to unemployment are all interconnected. By entirely harnessing the federal government’s power to create an inclusive, renewable energy economy, we have the chance to navigate various crises all at once.

The deal’s primary goal is to bring U.S. greenhouse gas emissions right down to net-

Prakhar Gupta |MBA - A | 2020 - 22 Krisha Sanghvi |MBA - C | 2020 - 22 zero and meet 100% of power demand within

the

renewable,

country and

through

clean,

zero-emission

energy

sources by 2030. The Green New Deal conjointly incorporates the creation of innumerable

jobs

to

provide

a

job

guarantee to any or all Americans coupled with access to nature, clean air and water, healthy food, a sustainable environment, and community resiliency. This Deal does not levy a carbon tax or a cap and trade program. These programs lead to a rise in the cost of carbon fuels, such as gasoline which

could

hamper

lower-income

families, especially those in rural areas who rely on an automobile.

It is a four-part program for moving America quickly out of the climate crisis into a secure, sustainable future. Green New Deal (GND) proposal calls for public policy to address climate change and achieve other social aims like job creation

27

| GREEN FINANCE and reducing economic inequality. In 2021,

Decarbonize, repair, and upgrade the

President Biden has taken lead action in

nation's

climate activism, such as re-joining the Paris

transport.

Agreement.

Fund

However,

Biden's

plan

also

infrastructure,

massive

in

particular

investment

in

the

includes a prominent role for Carbon capture

collection and capture of greenhouse

and storage technology. Carbon capture and

gases.

storage

(CCS),

or

carbon

capture

and

Adopting these targets will make "green"

and

carbon

control

and

technology, manufacturing, skills, goods,

sequestration, capture waste carbon dioxide

and services a significant export to the

(CO2), transport it to a storage site, and

United States. As a result, America could

deposit it where it will not enter the

become

atmosphere.

helping other countries move towards

sequestration

an

international

leader

in

entirely carbon-neutral economies.

Green new deal's economic implications Adopting Green New Contract goals would assist businesses in gaining a profitable competitive advantage. Nations are working hard to meet the Paris Climate Accord goals.

Companies that use renewable energy will be able to outperform those that do not

Source: SystematicAmerican.com

when the cost of wind and solar energy falls.

Details of the plan

By financing initiatives including solar panel construction,

coastal

infrastructure

Representative Alexandria Ocasio-Cortez and

retrofitting, and electric car production, the

Representative Edward Markey presented the

Green New Deal creates new opportunities.

House

It

with

resolution.

a

It

five-page

contains

non-binding

seven

objectives

previously set by Ocasio-Cortez: Switch

100%

of

national

power

calls

for

implemented

new

trade

to

avoid

laws

employment

and

emissions

countries.

has

the

It

to

be

outsourcing

power

to to

other bring

generation to renewable energy sources.

universal health care to fruition. It also

Build a "smart" national energy-efficient

supports a universal basic income. This is a

grid.

government-mandated minimum wage for

Upgrade all buildings to make them

all citizens. It pays well enough to cover

energy efficient.

living expenses.

Decarbonization of the manufacturing and agricultural sectors.

28

| GREEN FINANCE Four pillars of green new deal

Street and address and put the real working American class in the driver's seat. Key areas

Economic Bill of Rights

of this initiative will be to relieve the debt overhang holding back the economy by

The green new deal starts with an Economic Bill of Rights that guarantees all people the right to work in a Full Employment Program.

This initiative includes the right to a living wage, a safe workplace, fair trade, and the ability to organize a union at work without fear of being fired or retaliated against. It also includes the right to quality health care, tuition-free, quality, federally funded, local controlled public education system, the right to decent, affordable housing.

A Green Transition The Green New Deal's second goal is a Green Transition Program, which will turn the current, grey economy into a new, sustainable economy that is environmentally sound, economically viable, and socially responsible. This will be achieved by investing in green business by providing grants and low-interest loans to grow green businesses and cooperatives, with an emphasis on small, locally-based companies; Prioritize renewable science by redirecting research funds away from fossil oil and other dead-end sectors and into the wind, solar, and geothermal research; create green jobs by enacting the Full Employment Program, which would effectively create 16 million jobs.

Financial Reforms Financial reforms support the bank and Wall

reducing homeowner and student debt burdens, democratising monetary policy, and

establishing

additional

taxes

on

bailouts to banks.

A Functional Democracy Introduce a new curriculum of democracy where

the

above

initiatives

could

be

adopted. This includes revoking corporate personhood by amending the constitution and so on.

Source: World bank

Impact on employement More conservative $25 carbon tax will raise employment in the United States by 1.4 million workers each year between 2020

29

| GREEN FINANCE and 2030, representing an approximately 1%

increase

over

the

reference–case

Statistics' Green Jobs Initiative to monitor green employment growth accurately.

projection of 160 million jobs in 2030. If the economy grows and taxes rise, employment creation

from

the

GND

will

Workforce Development and Job Training

intensify,

generating 3.4 million new jobs each year

There is a disparity between the number of

between 2040 and 2050, an approximately

green workers expected under the Green

2% increase over the 182 million jobs

New Deal and the market's existing supply

expected for the United States in 2050. It is

of qualified labour. As a result, the Green

projected that a $25 carbon tax will generate

New Deal’s core aspect is workforce growth

72 million job-years over the next three

and career preparation to enforce each

decades.

industry’s target and provide Americans with full-time, long-term jobs in these sectors.

In three new ways, a Green New Deal improves Job Growth -

The Green New Deal would boost support and initiatives for instruction, certification,

Private Sector Growth

and apprenticeships. Such services support employees in receiving training that can

The Green New Deal has the potential to

improve

have a multiplier impact, meaning that any

incurring debt. They often relieve employers

dollar of federal investment stimulates

of the responsibility of finding and training

more than one dollar of local economic

sufficiently skilled employees.

growth.

The

Green

New

Deal

their

earning

power

without

would

stimulate tremendous demand for new

A Green Job Guarantee

goods and services that the private sector will supply. This covers, among other things,

Career security is more than just overt hiring

renewable energy technologies, energy-

by the federal or state governments, and it

efficient

appliance

is more than an entitlement scheme such as

installation systems, zero-emission vehicles

unemployment benefits. A work guarantee is

and charging facilities, building construction

a fundamental right that mandates the

and retrofits, environmental remediation

federal government to give a job to anyone

and

forestry,

who demands one and to pay a livable

tourism, and recreation. The Green New Deal

salary. The further states and cities that join

sends out messages that allow private

a federal employment guarantee program,

capital

the more public works programs can be

materials

regeneration,

to

invest

and

agriculture,

in

these

new

and

developing economies, and new industries

completed throughout the world.

can increase demand for more jobs. This also entails reactivating the Bureau of Labor

30

| GREEN FINANCE A vast workforce is needed to construct, maintain, and administer programs under the Green New Deal. A federal employment guarantee scheme will ensure that there are enough jobs to fulfil that requirement.

Conclusion Change is never easy, and it often does not happen until it’s too hard to stay the same.

America cannot continue this unsustainable course. The time for discussing the realities of climate change, environmental and public health challenges, and a lack of justice has passed. The time has also passed where we could achieve our objectives by gradual reform. It is time to return to long-term thought and preparation and avoid wasting time before acting on the scale and urgently solving them. Anything less than that is inadequate. The positive news is that there is evidence that a radical agenda can build jobs and expand the 21st-century economy while

solving

our

most

urgent

environmental and social challenges. There is also proof that people, especially in the Democratic Party, want this.

31

| PERSON IN FOCUS

JANE FRASER Jane Fraser is the Chief Executive Officer of Citi, the world's most global bank, serving millions of consumers, businesses, and institutions across 160 countries and jurisdictions. She is the first woman to helm one of Wall Street’s four major banks, including Bank of America, JPMorgan Chase, and Wells Fargo. She is the first female CEO in the firm’s history. In September 2020, Citigroup announced that she would replace Michael Corbat as CEO of the entire corporation in February 2021, becoming the first woman to head a major Wall Street bank.

In 2015 Fraser was ranked #41 on Fortune's list of “The 51 Most Powerful Women in Business”, up from #48 on the 2014 list.

American Banker named her the "Number 1 Woman to Watch" both in 2014 and 2015.

Devansh Mehta |MBA - FS | 2020 - 22 she led Citi’s Corporate Strategy and M&A division. She led Citi’s Global Private Bank, U.S. Consumer and Commercial Banking, CitiMortgage, Citi Latin America, and the Global Consumer Bank. In many ways, Jane helped shape Citi into the company it is today.

In 1994 she joined McKinsey & Company, aiding the financial services and global strategy arm, eventually rising to partner. For the first six years, she worked in New York and for the last four years in London. She worked part-time while raising her young children.

She wrote articles on globalization and was a co-author,

with

three

other

McKinsey

employees, of the 1999 book “Race for the

Jane has deep experience across Citi’s

World: Strategies to Build a Great Global

consumer and institutional businesses. She

Firm”. As part of her research for the book,

joined Citi 16 years ago, after McKinsey, to

she travelled to China, Hong Kong, Indonesia,

run Client Strategy in the Corporate and

Singapore, and India to interview McKinsey

Investment Bank. During the financial crisis,

clients about their global challenges. After

32

| PERSON IN FOCUS hearing her speak about the book, Citigroup executive Michael Klein spent several years encouraging Fraser to move to Citigroup, which she eventually did in 2004.

Economic Club of New York, and the council; on Foreign Relations. Jane has an M.B.A. from Harvard Business School and an M.A. in Economics from Cambridge University.

She has also been a member of the board of the Touch Foundation since 2006. She is married with two children.

Source: Google

Before becoming CEO in February 2021, she was President of Citi and CEO of the Global Consumer Bank, responsible for Citi’s Consumer businesses, including Retail Banking and Wealth Management, Credit Cards, Mortgage and Operations, and Technology in 19 markets. Before that, she was the Chief Executive Officer of Citigroup Latin America from 2015 to 2019. From 2013 to 2015, she was the Chief Executive Officer of the U.S. Consumer and Commercial Banking and CitiMortgage. From 2009 to 2013, Jane served as the Chief Executive Officer of Citi's Global Private Bank. Prior, Jane was the Global Head of Strategy and Mergers & Acquisitions for Citi from 2007 to 2009. She joined Citi in 2004 in the Corporate and Investment Banking division.

She is Vice-Chair for Partnership for New York City and a member of the Harvard Business School’s Board of Dean’s Advisors, the Stanford Global Advisory Board, the

33

| CALL FOR ARTICLES -WINNER

THE TECH EMPIRE STRIKES SPAC – HAVE SPACS BECOME THE MAINSTAY ON WALL STREET FOR STARTUPS TO AVOID THE IPO ROUTE. PART 1: ‘ExSPACto Patronum’ How SPACs became the silver bullet spells for start-ups to go public on Wall Street Like the silvery guardians summoned in the Harry Potter franchise to eliminate soulsucking, depression causing ‘Dementors’, financial instruments like Special Purpose Acquisition Companies (SPACs) have risen to combat

the

demons

of

COVID

19

led

depression plaguing Wall Street in 2020.

SPACs and Bitcoin, and $GME were the most talked-about

keyword

among

financial

enthusiasts in 2020 for good and bad reasons. Like all revolutionary (but not perfect)

financial

instruments

and

innovations before it, SPACs have divided Wall Street exactly down the middle with an

Akshay Pai | 2020-22 SCMHRD, Pune the 20% of total float which is issued to the SPAC as a part of the deal). A SPAC is in essence a shell company set up with a bigname investor or group of investors at the helm with the aim of raising money through IPOs to eventually acquire other companies.

This makes a SPAC an evolved hybrid of IPOs and reverse mergers, that offers a faster (not necessarily more secure) route for a private entity to go public. A textbook example of a SPAC is the Diamond Eagle Acquisition Corp. which went public as a SPAC in December 2019 with no pre-set targets.in April 2020 it announced a reverse merger with DraftKings which then began trading as a public company.

equal number of backers and opponents.

Most unicorn start-ups think of SPACs as a

The main advantage of a SPAC for the target

deliverer from their IPO woes and the best

company is the acceleration of the process of

idea since sliced bread, but most analysts

going public, shaving off almost 4 crucial

and value investors have panned them, citing

months that would be required in the

unfavourable returns and hidden costs (most

conventional IPO method per a white paper

target companies overprice shares to offset

on SPACs. For the SPAC retail investors, the

34

| CALL FOR ARTICLES -WINNER advantage is bottom floor entry into unicorn

PART 2: SPAC to the future – The beginning

start-ups that may take off exponentially

of the end; can SPACs outlive the COVID

once they receive the funding from going

pandemic era.

public. The SPAC owners gain about 20% of the shares of the merged entity as their

The Jury is still not out on whether the wave

reward. The SPAC exists for the sole purpose

of SPACs in 2020 is a COVID related ‘here

of acquisition and has no operational

today gone tomorrow’ exigency or a natural

history or commercial operations – the

evolution of the IPO that is here to stay and

capital raised from its IPO is locked in a

eventually replace the IPO. Experts are still

trust account to be returned to investors

divided over the sustainability and longevity

with interest if no suitable acquisition is

of what is essentially a legitimate form of a

made within a set time limit – typically 2

blind check acquisition. There is a good

years.

reason

why

SPACs

have

increased

exponentially over the last year – and that is This sped up process is not without its risks.

the very reason why experts doubt the

In finance, trade-offs are the norm and not

longevity of SPACs. The reason is the

the exception – for every instrument that

volatility and uncertainty caused by the

offers a higher return, the investors must

COVID pandemic and its resulting economic

also bear a higher degree of risk. The speed

downturn that caused several companies to

of the SPAC process comes with due

pull back offerings that had been months

diligence and propriety as casualties of the

and years in the making. Despite the

trade-off norm. The investors are also

pullbacks, there were 194 traditional IPO

headed blindly into the investment since

deals in 2020 with $67 billion in value raised,

they do not know which company the SPAC

but SPACs were neck and neck with IPOs.

will acquire and trust the promoter’s

From a decent start of 59 SPACs in 2019 to

judgement. Transparency also takes a hit as

over 200 SPACs in 2020, raising $64 billion,

the SPAC process is not as rigorous as

SPACs seemed more than equal to the task

traditional IPOs, this combined with the fact

of shouldering some of the fund-raising

that SPAC managers are incentivized to find

burdens from the lengthy IPO route in

a target company to acquire within the time

volatile markets. The statistics for 2021 are

limit, can limit their consideration for value

even more shocking – in just the first 6

accretive acquisitions. These factors can

weeks of the year, 145 SPACs have gone

combine to provide a worst-case scenario

public, raising over $46 billion with over 46

where retail investors may be left holding

weeks to go.

the bag if an acquisition goes sour.

But doubts remain whether SPACs can do the heavy lifting to make IPOs redundant. From an

average

market

capitalisation

of

$200-$400 million in the 1990s before the dot-com bubble, the IPO threshold is now

35

| CALL FOR ARTICLES -WINNER more than $2 billion for well-managed enterprises with tier I investment banks.

While there are SPACs that have breached this threshold – with air taxi inventor Joby Aviation announcing a $6.6 billion deal – the large majority of SPACs raised funding at values below the $1 billion thresholds.

While this gives SPACs room to operate under the umbrella of IPOs, it also means that SPACs can replace IPOs only for the superstar start-ups with elite C-suites already in place, with business plans that rate the steep funding requirements.

Doubters are also quick to point out in the absence of the pandemic driven volatility, the main advantages of the SPAC – speed and low-cost won’t seem worth the risk for investors compared to a traditional IPO. In the end, the main determinants of the

In the end, SPACs may find long-term acceptance by a mere act of repositioning themselves not as competitors for IPOs but by complementing IPOs by acting as funding outlets for fringe companies, cutting edge tech start-ups, and other enterprises like 23andMe with no comparable business models for traditional valuation. The best value SPACs may end up offering is to not meddle with the IPO process but by going one step down the funding chain to improve the VC process by marrying funding from retail investors with the expertise of the VC and the idea and entrepreneurial drive of the target enterprise. It will be interesting to observe how IPOs, VC funding and SPACs adapt to the digital realities of the post COVID era to stay relevant and value additive.

SPACs longevity will neither be the SPAC proponents or the target companies (both of

whom

are

reaping

disproportionate

rewards) but the lowly investors. For now, the investors are happy to take part but the promote feature is already causing target companies to bloat the valuations, and there have been accusations of a trigger friendly ‘acquire anything’ mentality among SPAC promoters due to the 2 year ‘use it or lose it’ clause behind most SPAC IPOs. Unless SPAC managers develop innovations such as performance-linked and delayed promotes or greater transparency in target selection, the SPACs will bleed investors back to the regular old IPOs where investors get to choose where, how and how much to invest.

36

| CALL FOR ARTICLES -RUNNER UP

ONLINE RETAIL LENDING IN INDIA-WHAT DOES THE FUTURE HOLD? Nandini Choudhury | 2019-21 CHANGE is the only CONSTANT

K J SIM, Mumbai

Digitization is changing various industries across the world, and banking is no exception. Thanks to the digital disruption, the way people bank and the ways banks interact with their customers has changed over the years. Intensified technology development and rising customer empowerment fuelled players' range to enter the financial services sector and compete with traditional banks. The digital approach to address customer needs completely new.

financial needs, such as buying a house, paying for a college education, owning a vehicle, and personal loans short-term in nature.

The Promise of “BUY NOW, PAY LATER" The message of BUY NOW, PAY LATER was constantly inculcated during our growing years, where a quick run to the nearby Kirana store for an ice popsicle on Uddhar (Credit) was the easiest and a favourite habit.

Disruptors are competing on convenience and

customer

focus.

Post-Pandemic,

aggregators are seen primarily in lending and investment services, edging against a regular financial institution. These aggregators don't have

to

requirements

follow yet

standard service

banking customer

relationship end-to-end. the umbrella of retail loans covers the credit given by financial institutions to consumers for their

Even though the goal was to work mainly in cash and not pile up too much credit(customers), these retail outlets formed a base for retail credit creation. These Kirana store owner’s right across every street and fall under the untapped market of digital credit space. How? These retail shop owners demand credit to

37

| CALL FOR ARTICLES -RUNNER UP tock up during peak season. Due to the lack

growth over the past few quarters. There

of well- established creditworthiness, small

have been job losses across sectors like

retail businesses were coerced to look

automobiles, but the growth outlook in the

outside the formal financial system. This not

retail segment looks promising. Why?

only restricts them from financial inclusion by availing credit lines from the informal

Even with the drastic fall in consumption,

sources of credit such as friends, family or

India's

moneylenders

them

companies are expected to experience a

vulnerable to falling prey to exorbitant terms

growth in retail lending over the next five

and conditions for credit borrowed.

years. As per a report by ICICI Bank and Crisil

but

also

makes

banks

and

non-banking

finance

in December 2019, the estimation of Digital The 2021 Global Payments report provides us

lending in India is around 16% of the total

with empirical data to show that the

Retail loans by 2024, a 10% increase from the

pandemic year has accelerated the digital

current share of only 6 % digital retail

payments industry's growth. Among other

lending.

digital payment methods, a relatively new entrant, the Buy Now Pay Later (BNPL)

LEAPFROG GROWTH in the Digital Retail

method, seems to be gaining steam. It also

Lending Sector

projects BNPL to grab 9% of the total market share by 2024. BNPL services are post-

Preeminent institutions of our country are

purchase payments allowing consumers to

adopting end to end digital platforms to

make payments in interest-free instalments

acquire customers. More critical information

or pay off the invoice after a determined

is available to banks now on a customer's

period.

creditworthiness, which takes care of the retail lending risks. Not to mention the

Digital INDIA 2.0

reducing

cost

of

retail

loans

due

to

intensifying competition. Furthermore, the The new normal of the pandemic led the

Government of India has taken significant

financial institutions to adapt from face-to-

measures such as the payment ecosystem

face interactions and the traditional models

and Federated Consent Architecture, which

to overnight digital credit creation. The first

are

quarter of 2020-21 saw a decline in private

processes.

enablers

for

digital

led

lending

for

Fintech

consumption by a third than its pre- COVID level of ₹32.5 lakh crore in the third quarter

A

of 2019-20.

Companies

India

is

currently

undergoing

a

sharp

economic slowdown with its slowed down

window

of

Opportunity

According to the Fintech Market in India Report 2020, India's fintech market is

38

| CALL FOR ARTICLES -RUNNER UP expected to reach INR 6,207.41 billion by 2025.

investor outlook towards the sector looks

India is home to approximately 1,263 digital

bullish. However, that does not mean that

lending start-ups, out of which over 147 are

the

backed by venture capital funding. Further,

Contradicting the growth, most digital lending

India harbours 338 lending start-ups which

products catering primarily to new-to-credit

aid as alternate platforms for eKYC and

customers is full of risk as defaults are rising.

unified payments interface (UPI) platforms to

Part of this is due to the lack of credit history

offer credit scores & quick background

for these customers, but job losses have

checks, which serves as a stimulus for instant

become

loans to the urban & rural populations. These

defaults.

industry

is

another

without

major

its

challenges.

factor

in

loan

FinTech’s are now targeting borrowers who now want credit on tap that is sachet-size,

Thus,

ubiquitous and contactless instead of being

digital lending, while most like a "phygital" or

at

hybrid approach to lend, a unification of

the

mercy

of

credit

score-focussed

early

adopters

prefer

end-to-end

traditional lenders.

physical and digital strategies.

To name a few, fintech players such as

The pandemic has accelerated most banks'

InCred, MoneyTap, True Balance and Vivriti

digitization initiative, but it is about real

Capital are working relentlessly to customize

change for which the phygital strategy may

their offerings based on the evolving needs

work.

of a pandemic-struck nation to grab a larger piece of the retail loans cake.

Bottom Line As India moves towards a more digitally equipped economy, both at the banking institutions and the customer-level, the new normal for retail loans shall be based on trust and the receptivity to accept changes.

Thus, it is perfect for financial institutions to evaluate how technology, data, and credit decisioning

tools

can

accelerate

future

growth and competitiveness in the Retail Lending sector.

Lending tech start-ups are innovating with sachet credit and buy now pay later products for the Indian consumer. On all accounts, the

39

| ALUMNI INSIGHTS

LEADERSHIP FORUM | EXECUTION Lokesh Dash First

and

foremost,

I

would

like

to

congratulate the FINLY team and the larger Finstreet community, past and present, to

Convenor, Finstreet (2014-16) Lessons learnt at finstreet

have reached the landmark of the 100th edition of our magazine, delivering quality

While Finstreet has played a pivotal role in

content every month to its readers. I would

shaping me as a person and gave me enough

also like to thank the team for allowing me to

experiences, I would want to call out a few

pen down my thoughts on this exceptional

universally acceptable traits.

edition.

First of all, leading almost a 40-member team I joined SIMSR with clarity to build a finance

would mean dealing with 40 different thought

career and was fortunate enough to be a part

processes, everyone with a different set of

of Finstreet.

priorities, working style and key strengths.

Getting even half of them to work coherently

What was finstreet to me?

towards a common goal and resolving conflicts timely only helped me raise my EQ.

To me, Finstreet was not just another

That was also when I discovered “building

committee of the college. It was a forum to

beacons around turbulence to help others

contribute and shape the Finance agenda for

navigate” gives me immense motivation to

existing students and the batches to come. It

keep going. I also learnt how a high

was a platform to learn life lessons, practice

engagement level with a sense of ownership

leadership traits and make memories to

brings the best out of a team essential for a

cherish for a lifetime. I firmly believe that

high performing organisation.

whatever I do, Finstreet will always be a part of me wherever I go.

40

| ALUMNI INSIGHTS Being a part of the committee ensures you

a company. And don’t forget to enjoy the rest

get to practice many leadership traits early in

of

your life with full responsibility of the team

connections. These two years will never come

but without fear of failure, which tunes you

back. And while I conclude, let me leave you

for the corporate life to follow. You also get

with a stock market analogy:

to

network

and

learn

the

time

and

make

meaningful

stakeholder

management (both internal with faculty

Generic liquidity in the market bumps up

mentors

with

stock prices like it’s now, but there are few

sponsors & industry professionals), both of

stocks that command a very high PE either

which are crucial for a later stage of the

due to high earnings growth, consistency in

career. Being the flag bearer also means you

performance or monopoly even in stagnant

would have to continuously step out of your

macroeconomic conditions. Similarly, if we

comfort zone to represent the committee and

continue to grow, be consistent and develop

its interests in various forums at a time when

capabilities difficult to replicate, we will stand

the majority of your peers would be only

out from the crowd. Be a high PE stock!

&

council

and

external

taking care of their own interests.

Lastly, with many events (contests, quizzes, lectures, and war games), you will develop ideas basis theories learnt and put structures around those unstructured ideas. That’s where you understand that execution is the key differentiator.

I would say Finstreet made me accountable for my actions – a key trait every manager must possess. It developed me from a person to a professional.

Advice to students Question on everything being taught. Try to deep dive into all theoretical concepts learnt.

Challenge the status quo. MBA is about having the ability to solve real-life issues and not just learning theories. Take financial management insights from business articles and learn about the stock market by tracking

41

| ALUMNI INSIGHTS

PLATFORM | TRANSFERABLE SKILLS Yash Parikh From day one, I was sure that I would pick finance when choosing the stream. Finstreet was thus the obvious choice for me to develop further in the field and, therefore, my top priority when it came to committees. I didn't know how it would develop some of my other skills far more than finance, which came to me as a surprise and which I am really thankful for.

Finstreet, to me, was a platform. A platform to grow both knowledge and networks. This platform flourishes under the student-driven setup, but for this to happen, the real person to thank was Prof. Dr Pankaj Trivedi. I still remember how his vote of confidence was so simple yet inspiring. He said to us in his cabin –“You guys are young and in charge.

You have one year. If you ever need guidance or support, I am always there. My doors are always open, you can walk at any time.” And he was really true to his word. He was always giving us his support throughout the way.

Every permission and signature he gave with a smile. With lesser rules and more support

Convenor, Finstreet (2016-18) from

the

team,

we

could

explore

opportunities that don’t normally come to you easily at a Bschool. Ours was the first batch in Finstreet history to get Live projects on Equity and Mutual Fund research for the entire 40 person team from reputed broking houses. I still remember going for a meeting with a colleague and pitching to the Director of a broking house for these live projects.

Such experiences allow you to understand that even the executives sitting in their high chairs are willing to lend an ear to someone who reaches out.

At this point, I would like for you to think about what my professor asked me one day when we were talking after class. What are you going to gain from this MBA? What are we really here for?

A diploma, a job and a decent network, I answered. He said to me – Trust me, this is an extreme case of shortsightedness. What you

42

| ALUMNI INSIGHTS must gain from here are skills, And not just any

skills,

TRANSFERRABLE

SKILLS.

Transferrable skills are skills you can apply to any job/role/situation once you acquire them. What we must acquire is Critical thinking, Logical reasoning, Leadership, Team building, Resilience.

I think this conversation made me rethink my education altogether. It has helped me come a long way from where I was as a student and person. The B-school is a safety net, and it must be used. It is an opportunity to try, and it is okay to fail. Better fail and learn when you are paying rather than at a time when you are getting paid to work.

It’s never easy to ensure everyone is on board when any decision is made. With a group diverse in its thinking, it wasn’t always easy to steer the ship in a particular direction.

A

good

core

committee

and

supportive teammates with a lot of open communication/WhatsApp

group

debates

and, at times, even voting enabled us to move forward swiftly and in a way where the entire team stayed involved.

At Finstreet, I made some great friends, bonds and memories which will stay with me for a lifetime. And every time I think of how amazing KJ Somaiya was to me, I always think of Finstreet as it was one of the biggest parts of this experience. My B-School education was complete because of this committee, and I would always like to go back and revisit my time as the Convenor of Finstreet for 2017-18, and it will always bring a smile to my face.

43

| ALUMNI INSIGHTS

PEER LEARNINGS | NOSTALGIA Mayank Dharewa It's all about peer learning, which is what matters when you do an MBA". I had heard about this a lot from when I started preparing for the entrance exams until I joined college. So being a part of one of the committees was the best option and on top of it, the finance committee! What else would a person who wants to do an MBA in finance think of?

Convenor, Finstreet (2018-20) committee,

than

the

entire

two-year

classroom sessions!

It was a very proud feeling of being a part of Finstreet and wearing that committee t-shirt.

From being a team player to the leader of the team,

from

giving

interviews

to

taking

appraisals, from organizing the events to watching our juniors conducting the events, from writing the MoMs to taking meetings, from being a mentee to becoming a mentor, from writing articles to sharing our insights and experience, the two years of my journey with Finstreet has been the best time of my MBA. I have learned a lot more from being a part of Finstreet, leading the finance

44

CROSS WORD

45

7. Financial products that offer a guaranteed income stream, used primarily by retirees.

8. The Indian Bank becomes the 3rd company to cross the $100billion mark.

10. An accounting technique used to lower the book value of an intangible asset periodically 13. advertisements that announce a public offering of securities.

14. Pieces of a pooled collection of securities that are split up to be marketable to different.

3. It is a period of rising inflation but falling output and rising unemployment.

4. The practice of a broker conducting excessive trading in a client's account mainly generates commissions.

6. The decline of the purchasing power of the given currency over time.

9. a product whose value is derived from the value of one or more variable called bases.

11. A risk-free operation that earns an expected positive net profit but requires no net investment.

12. Financial derivatives give buyers the right, but not the obligation, to buy or sell underlying.

Crossword Solution:

5. An intangible asset that accounts for the excess purchase price of another company.

2. A cryptocurrency that originated from a meme.

8. HDFC 9. Derivative 10. Amortization 11. Arbitrage 12. Options 13. Tombstone 14. Tranches

1. Share of profit paid to shareholders.

Down

1.Dividend 2.Dogecoin 3.Stagflation 4.Churning 5.Goodwill 6. Inflation 7.Annuity

Across

46