ContentTeam

KashishKhanduja|MBA4|2022-24

ManthanJain|MBA7|2022-24

Silicon Valley Bank (SVB) is a commercial bank founded in 1983 and headquartered in Santa Clara, California. The bank provides a range of financial services to clients in the technology, life sciences, venture capital, and private equity industries Some of the services offered by SVB include corporate banking, investment banking, wealth management, and payment solutions

Silicon Valley Bank was presumably the type of business that would never require a government bailout – until its backers spent three days on social media demanding one and immediately received one following the bank's stunning collapse last week.

Eight years ago, the bank's CEO, Greg Becker, personally lobbied Congress to exempt SVB from post-2008 financial reform regulations, citing the institution's "low-risk profile" and role in assisting "job-creating enterprises in the innovation sector "

Almost fifteen years after the global financial crisis, the "too big to fail" reasoning still prevails. The economic distress of student debtors and underwater homeowners is private, whereas the losses incurred by IT and finance titans are an urgent matter of public concern. Moreover, SVB's rapid ascent and fall serve as a warning that many of the safeguards constructed after the last crisis have been removed at the insistence of banks like SVB and with the assistance of lawmakers from both parties subservient to entrenched financial and tech interests

Before becoming the second-largest bank to fail in U.S. history, SVB had become a formidable influence machine, both in northern California, where it became the goto lender for startups and on Capitol Hill, where it spent nearly $1 million over five years lobbying for the deregulatory policies that ultimately led to its demise

WHAT CAUSED THIS?

Silicon Valley Bank (SVB), which historically made significant profits by investing in tech start-ups and US Bonds, has now experienced financial difficulties The Federal Reserve began increasing interest rates last year to bring down inflation rates, causing the value of bonds to decline.

Additionally, due to the onset of the COVID19 pandemic, start-up funding began drying up, resulting in many withdrawal requests from SVB's depositors.

The bank was obligated to honour these requests, forcing them to sell bonds at a loss, as their value had decreased in the market SVB announced it had sold $21 billion worth of bond assets, resulting in a loss of $1.8 billion. The bank's share price plummeted as a result, leading to its shutdown by US regulators The US Federal Deposit Insurance Corporation (FDIC) has taken over the bank and now holds nearly $175 billion of customer deposits.

The FDIC has established a new bank, the National Bank of Santa Clara, to manage SVB's assets, and depositors will have access to their insured deposits This is the first FDIC-insured institution to fail this year, with the last being Almena State Bank in Kansas, which closed in October 2020.

Impact Across The Globe

The collapse of Silicon Valley Bank has significantly impacted global markets causing instability in major economies around the world Bank shares have been particularly affected, with many experiencing sharp drops in value Wall Street's top indices have turned red following the collapse of SVB

In the United States, several banks, including First Republic Bank and Comerica, have been hit hard, with their shares slumping significantly Larger banks such as JPMorgan Chase and Bank of America have had mixed performances. Meanwhile, in London, shares of major banking giants like HSBC, Standard Chartered, Barclays, and Lloyds have all seen significant drops in value The situation has been similar in the eurozone, where Deutsche Bank and French lender Societe Generale have also experienced sharp declines in their share prices

The impact of the collapse has also been felt by Indian investors and SaaS startups, who are closely monitoring the situation Many have started moving their deposits out from SVB, while newer lenders like Mercury and Brex have emerged as the preferred platforms for early-stage SaaS startups

TIMELINE OF BANK'S COLLAPSE AND KEY EVENTS

February 24: KPMG, an auditing firm, issued a report stating that SVB Financial, the parent company of Silicon Valley Bank, was financially healthy for the year 2022. However, deposits declined by $25 billion in the following months due to the Federal Reserve's interest rate increases

March 8: Silicon Valley Bank announced a $1 8 billion loss and plan planned to raise $2 25 billion by selling stocks to cover increasing withdrawals as client cash burn remained high. Moody's downgraded SVB financials credit rating on the same day

March 9: SVB financials’ stock plummeted, and venture capital firms began withdrawing their funds from Silicon Valley Bank, leading to panic among depositors, who attempted to withdraw $42 billion

March 10: Federal regulators took control of Silicon Valley Bank before it could open, making it the secondbiggest bank failure in U S history banks.

March 11-12: Over the weekend, tech startups scrambled to find alternative funding sources for payroll and other daily operations Federal regulators took control of Signature Bank, the thirdlargest bank failure in U S history, and announced a new lending program for banks to stem the fallout from Silicon Valley Bank's failure.

March 13: President Biden sought to restore confidence in the financial system in a televised address.

March 15: European bank stocks also took a hit, and S&P Global Ratings downgraded First Republic's credit rating to junk status due to its elevated risk of deposit outflows and profitability pressures. Credit Suisse announced it would borrow up to 50 million Swiss francs from the Swiss central bank to shore up its liquidity

March 16: Credit Suisse's shares improved after the loan announcement, and it was reported that the biggest U S banks were discussing a joint rescue of First Republic's liquidity. Federal regulators announced that 11 banks had deposited $30 billion in the First Republic.

3 Reasons Why The Crisis Could Be A Blessing In Disguise

The bankruptcy of Silicon Valley Bank (SVB) has wiped out Rs 10 lakh crore from the pockets of Dalal Street investors and reduced the Sensex by roughly 2,500 points in the four days following the news's release.

March 14: Investigations by the Justice Department and Securities and Exchange Commission were reported, and the Federal Reserve began reconsidering its rules for midsize

The ripple effect is evident with FIIs withdrawing more cash from India following the consecutive failure of three U.S. banks, including Signature and Silver gate However, in the aftermath of the Silicon Valley Bank disaster, market insiders have begun to notice a silver lining in the black clouds hanging over the U S financial sector

These are three of them:

Controlling the Federal Reserve: The financial crisis could compel the U.S. Federal Reserve to terminate its ratehike cycle This is the single most significant effect of the situation Nomura predicts that Powell may decrease the benchmark interest rate by 25 basis points and halt the Fed's balance sheet reduction at its March 2122 meeting. Goldman anticipates that the Fed will maintain its current monetary policy The Federal Reserve needs a signal to stop raising interest rates Even a status quo will rally stock investors as money will flow into equities, particularly in higher-performing markets such as India A more significant FPI inflow will guarantee a broad market surge. As a result of the Fed's decision to suspend its rate hikes, we anticipate a swift and considerable rally A Fed pause will also encourage the Reserve Bank of India to retain the status quo at its April meeting. In addition to monitoring inflation data, the RBI can pause the rate-hike cycle

Decrease in crude prices: The SVB incident has raised fears of a financial crisis resulting in a decline in the price of crude oil Brent fell to its lowest level since early January, while WTI fell to its lowest level since December. Considering India imports most of its oil needs, a decline in crude oil prices is viewed as beneficial for India. Given the uncertainty around the decision to raise interest rates and the likelihood that inventories will remain elevated, crude prices are anticipated to continue under pressure.

Bond returns: The two-year and ten-year U S bond yields have decreased from their levels before the SVB event. In three days, the U.S. 2-year rates experienced their largest slide since the 1980s, falling more than one percentage point Long-term investors' concerns will be alleviated by a shift from a hawkish to a neutral monetary policy.

National Logistics Policy

Ayushi Sharma I MBA 5 | 2022-24

Jaykaran Mehta I MBA 6 | 2022-24

The National Logistics Policy of India was launched on September 17, 2022, by Prime Minister Narendra Modi The policy aims to improve the efficiency and competitiveness of the logistics sector in India by reducing logistics costs from 14% to 9% of GDP, creating a single window e-logistics market, and improving India's ranking in the Logistics Performance Index The ultimate goal is to make Indian goods more competitive in both domestic and international markets

The policy recognizes that logistics is a critical component of the economy and impacts the competitiveness of the manufacturing and agriculture sectors The policy also acknowledges that the logistics sector in India faces challenges such as inadequate infrastructure, high costs, inefficient logistics processes, and a lack of skilled manpower.

The National Logistics Policy proposes a set of measures to address these challenges and promote the growth of the logistics sector. One of the key initiatives is the development of a National Logistics emarketplace, which aims to bring together all stakeholders in the logistics value chain and facilitate the exchange of information, services, and goods. The e-marketplace will provide a single window platform for logistics service providers, cargo owners, and regulators to interact and transact

The policy also proposes the creation of a National Logistics Council, which will serve as a platform for public-private dialogue and collaboration on logistics-related issues. The council will have representatives from the government, industry, academia, and civil society and will provide recommendations on policy formulation, implementation, and evaluation.

To address the issue of inadequate infrastructure, the policy proposes the development of multimodal logistics parks, which will serve as hubs for the integrated movement of goods across different modes of transport such as rail, road, and waterways. The parks will be equipped with state-of-the-art facilities such as warehouses, cold storage, and container yards and will also provide value-added services such as packaging and labelling.

Enhance interoperability, minimize handling risks, undertake process optimization, and improve ease of doing business, through standardization of physical assets and benchmarking of service quality standards in logistics.

Another key initiative proposed by the policy is the establishment of logistics excellence awards to recognize and incentivize logistics service providers who demonstrate excellence in service delivery, innovation, and sustainability The awards will encourage service providers to adopt best practices and improve the quality and efficiency of logistics services

The policy also recognizes the need to promote skill development in the logistics sector and proposes the creation of a National Logistics Skill Development Board The board will facilitate the development of a skilled workforce by identifying skill gaps, designing training programs, and providing certification and accreditation

The Policy will be implemented through the Comprehensive Logistics Action Plan (CLAP) The interventions proposed under CLAP are divided into 8 key action areas:

Integrated Digital Logistics Systems: To link multiple data sources and develop cross-sectoral use cases for logistics stakeholders by creating a system of unified logistics interfaces

Standardization of physical assets & benchmarking service quality standards:

Logistics Human Resources Development and Capacity Building: Line ministries to develop action plans to address skill development-related and internal capacity-building challenges in the respective sector by developing an overarching logistics human resource strategy under its guiding principles

State Engagement: Provide support for setting up an institutional framework to take action at the city/state level, development of state/city level logistics plans, measure and monitor action by states and rank them.

EXIM (Export-Import) Logistics: Creating an efficient and reliable logistics network, and addressing infrastructure and procedural gaps in India’s EXIM connectivity, with transparent and streamlined cross-border trade facilitation, for improved trade competitiveness and greater integration of India with regional and global value chains

Service Improvement framework: Enhancing the regulatory interface to encourage formalization, standardization, and interoperability, decrease fragmentation in documentation, formats, and liability regimes, and close architectural gaps in the regulatory framework Sectoral Plan for Efficient Logistics: Sectoral Plans for Efficient Logistics (SPEL) aligned with PM GatiShakti, will be developed for each sector with underlying philosophies of interoperability, resiliency, sustainability, and innovation. Specifically, SPEL would (i) address logistics issues pertaining to infrastructure, processes, digital improvements, policies and regulatory reforms, and capacity building for a better workforce, and (ii) prioritize cross-sectoral cooperation to complement and not duplicate efforts and focus on optimization of the modal mix.

Facilitation of Development of Logistics

Parks: Logistics parks (eg Multi Modal Logistics Parks, Air Freight Stations, Inland Container Depots, Container Freight Stations, cargo terminals, etc ) are hubs for intermediary activities (storage, handling, value addition, inter-modal transfers, etc.) in the supply chain connected by a transportation network It is envisaged to take the following steps to facilitate the development of logistics parks: • Draft framework guidelines to facilitate the development of Logistics Parks in the country with a focus on encouraging private investment • Create a network of logistics parks by mapping them on the PM GatiShakti NMP, for enhanced visibility, improved logistics efficiency, optimum utilization, and connectivity.

Source: Economic Times

Impact Of The Policy

The National Logistics Policy of India has the potential to transform the logistics sector a make it more efficient, competitive, and sustainable The policy proposes a comprehensive set of measures to address the challenges faced by the logistics sector and promote its growth The implementation of the policy will require close collaboration between the government, industry, and other stakeholders and will require significant investment in infrastructure, technology, and human resources

The policy's emphasis on infrastructure development, including the construction of logistics parks and warehousing zones, can improve supply chain efficiency and reduce transportation costs. The creation of a singlewindow e-marketplace for logistics services can help reduce transaction costs and promote transparency in the logistics sector

Fmcg Sector

SamyakTripathi|MBA1|2022-24

SiddhartSuman|MBA3|2022-24

Overview

With a market size of around US $110 billion in 2020, FMCG is India's fourth-largest sector. By 2025, it is projected to reach around US $ 220 billion at a CAGR of 14 9% Weathering the storms brought on by lockdowns and COVID19, the Indian FMCG sector grew by 16% in 2021, a 9-year high

The FMCG industry is optimistic about at least 20 percent growth in 2023 after an 'exponential growth' in 2022 It accounts for close to 5% of all factory employment in India and employs about 3 million people.

Outside the major companies in the market like HUL (Hindustan Unilever Limited), ITC Limited, Nestle, Dabur, Marico, and more, a number of D2C-focused startups have experienced rapid expansion and are now in direct competition with the big names Examples include Mother Earth, Sugar, PeeSafe, and others.

The FMCG sector is classified into three different categories, with food and beverages having 19%, Healthcare having 31%, and Household and Personal care having 50% of the market share

Food And Drink

Health beverages, staples/cereals, bakery goods, snacks, chocolates, ice cream, processed foods, and veggies are all included in this category. HUL, which owns brands including Horlicks, Lipton, Knorr, and Cornetto, and has a 14% market share in this industry, is the leader, with Nestle coming in second with a 5% share

Healthcare

OTC products, including syringes, bandages, plasters, and other items, are included in this sector This industry has seen significant growth as a result of people's heightened attention to health and wellness following the Covid-19 outbreak

Personal And Domestic Care

Oral care, hair care, skincare, cosmetics, deodorants, perfumes, paper goods, fabric wash, and domestic cleansers are all included in this category. In this market, Godrej, Dabur, and Marico are the major players

Growth Drivers

Over the past two decades, the FMCG sector has seen a spectacular transition. The following are some of the key reasons that have significantly contributed to the expansion and development of the industry:

Digitization

As a result of the coronavirus pandemic's various waves, supply and distribution experienced severe difficulties. With the use of digital technologies, FMCG companies are

Integrating distributor management, inventory management, and suppliers into a single ecosystem. Modern shops can safely make contactless orders with the use of a straightforward ordering app. FMCG firms are increasingly using AI, Big Data, and Predictive Analysis to precisely forecast client behavior, enabling them to understand better what their customers are interested in People in rural areas are also finding it simpler to shop online at different e-commerce websites as the use of smartphones and the Internet rises

Sources: IBEF, The Economic Times, Invest India, Groww

D2C (DIRECT TO CONSUMER)

Brands are more tempted by the profit margin involved with selling directly to consumers.

They have been establishing independent websites and online shops, as well as direct digital sales channels on different internet marketplaces. The majority of FMCG companies have already benefited from the trend by supplying goods right to customers' doorsteps.

Government Initiatives

The government has made important moves to promote more investment in the industry and to open up new prospects for international businesses India's FMCG industry received $18.19 billion in 2020 via foreign direct investment (FDI) The sector has benefited massively from government incentives and FDI funds in building a strong supply chain, bolstering employment and improving visibility for FMCG brands. The government approved the Production Linked Incentive Scheme for the Food Processing Industry (PLISFPI) in FY 2021-22, with an outlay of Rs. 10,900 crores (US$ 1.4 billion) to assist Indian food brands in international markets The government has also revised GST tax slabs for certain products to boost sales. Future development efforts by the government are anticipated to include more enticing investments and activities

Key Players

There are multiple significant players in the sector, including Domestic and multinational corporations. To name a few:

A subsidiary of the British-Dutch conglomerate Unilever, HUL is India's oldest FMCG firm which was founded in 1933 and is based in Mumbai HUL has more than 35 brands in 20 different categories, including soaps, detergents, skincare, cosmetics, tea, and toothpaste. Famous brands include Surf, Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel, Sunsilk, Knorr, Axe, and others HUL also concluded its Rs 3,045 crore merger with GlaxoSmithKline Consumer Healthcare (GSKCH India) in April 2020. ITC Limited: The company has thrived in Indian markets for over 110 years, providing them with a thorough understanding of the Indian consumer. Its products include Bingo, Sunfeast, Aashirvaad, Fiama Di Wills, Vivel, Savlon soaps, Papercraft, and Classmate, and they have been able to enter even the most rural areas through various retail outlets. ITC has a 77% market share in Indian cigarettes and sells brands such as Wills Navy Cut, Gold Flake, Silk Cut, India Kings, Bristol, Classic Menthol, and others.

Nestle India

Nestle is a Swiss-based multinational food and beverage corporation that has been in operation for more than 150 years worldwide. It began operations in India in 1912. Nestle deals in beverages, bottled water, milkshakes, morning cereals, instant foods, performance, health care nutrition, and so on, with brands like Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, and more

Sources: IBEF, The Economic Times, Invest India, Groww

Britannia Industries

Britannia was founded in 1892 in Kolkata with an initial investment of Rs. 295. Its products are sold in over 5 million retail locations The FMCG is known as the country's first Zero Trans Fat Company Good Day, Tiger, Milk Bikis, Bourbon, Marie Gold, Cake, Cheese, Milk, and Yogurt are among their products In the organized bread market, the firm is the largest brand

PORTER’S FIVE FORCES MODEL

Bargaining Power of Buyer

The buyer's bargaining power is moderately strong due to a high number of purchasers, availability of close substitutes, and no switching costs. Customers would move to a different brand due to an increase in prices or the availability of cheaper alternatives

Supplier Power

Minimal because large FMCG corporations may control prices by purchasing locally from a small set of key commodity suppliers Backward integration is particularly important in this sector to boost profit margins and enable the selling of goods at competitive costs while minimizing dependency on raw material suppliers.

Threat of Substitutes

The following elements influence the threat of substitution:

1. The presence of close substitutes

2 Switching Cost

3. Substitute's cost and performance

Some brands have a narrow product difference. Businesses that enter a category or fight for market share compete on pricing, which enhances product substitution because switching costs are low. As a result, the FMCG industry faces a high risk of substitution.

Threat of New Entrants

There is very limited room for new companies to enter the industry unless and when they bring something new to the market. Because the distribution network is so crucial in this market, emerging firms find it difficult to spend much in Capex; hence they are typically acquired by larger companies

Competitive Rivalry: The industry is highly fragmented, with both organized and unorganized competitors, as well as various multinational corporations (MNCs) entering the market. Companies compete on the basis of product differentiation and switching costs due to low-involvement products. Additionally, the higher competition is leading to lower company margins Businesses in this industry rarely acquire monopoly status; therefore they focus on specialty items and aim to maximize their market share.

Outlook

After recovering from the Covid-19 outbreak, the FMCG sector has demonstrated resilience to evolve in ways that produce more value for the entire chain in the future The FMCG sector's revenue growth is predicted to double in the coming fiscal year due to reasons such as recovery in urban demand and discretionary categories, as well as price areas The Internet has made a significant contribution by providing a less expensive and more convenient means of expanding the sector's reach.

Sources: IBEF, The Economic Times, Invest India increases implemented to offset the impact of rising raw material prices Rural consumption has increased as a result of rising income and stronger aspirations In rural India, there is a rising demand for branded products On the other hand, with the unorganized market's proportion of the FMCG sector declining, the organized sector's growth is predicted to expand with enhanced brand consciousness, augmented by expansion in modern retail.

Another key driver of demand for food services in India is the expanding youth population, particularly in urban areas. Online portals are projected to be critical for companies looking to expand into rural

TapanShah|MBA8|2022-24

SakshiPandya|MBA2|2022-24

Company Overview

Oil India Limited a Mid-Cap, publicly listed oil and gas exploration and production company based in India The company was founded in 1959 and is headquartered in Duliajan, Assam, India. It is a subsidiary of the Oil and Natural Gas Corporation (ONGC), which is India's largest oil and gas exploration and production company

Oil India has diverse exploration and production activities, including crude oil, natural gas, and liquefied petroleum gas (LPG). The company has a significant presence in both onshore and offshore areas of India It also has international exploration and production activities in countries like Libya, Gabon, Iran, and Nigeria. Its strategic partnerships with other companies in the industry, including ONGC and BPCL, have helped it to expand its operations and maintain its competitive edge.

OIL has consistently been at the forefront of embracing new concepts and technologies to open up new vistas and make progress toward the nation's sustainable energy security For the past few years, OIL has diversified into the alternative (renewable) energy sector as part of its strategic objective, focusing particularly on the wind and solar divisions With a total investment of Rs. 1,230 Crore, OIL entered the renewable energy sector in the fiscal year (FY) 2011–12 and has since constructed 188 MW of commercial-scale renewable energy projects, including 174 MW of wind and 14 MW of solar energy. Up until 2021–2022, projects utilizing renewable energy will have brought in a total of Rs 870 Crore

Shareholding Pattern

Source: Screener

As of 31st December 2022, Oil India’s shareholding pattern comprised of promoters holding 56 66% which remains unchanged since December 2021. The holding of FIIs in December 2022 has increased compared to December 2021 but, it has decreased since the last quarter of September 2022. The holding of DIIs in December 2022 has decreased compared to December 2021 but, it has increased since the last quarter of September 2022 There was no government holding in the company till December 2021 but then the government showed confidence in the company and now has a 9 87% holding The holding of the public has been constantly decreasing in the company.

Financial Analysis

Source: Screener

The revenue for Oil India for December 2022 was INR 9302 crores compared to INR 8259 crores for September 2022 which means there is a 12.62% increase in the total revenue of the company At the same time, the expenses of the company have reduced from 5555 in September 2022 to 5394 in December 2022. The company has been showing growth since its last two quarters as its operating profits have increased by 44.58% and EPS has increased by 3.58. Since the government lowered the windfall profit tax imposed on domestically produced crude oil as well as on the export of diesel and ATF, shares of the companies ONGC and Oil India recently increased by 5%. Recently, OIL acquired majority shares in Numaligarh Refinery Limited from Bharat Petroleum Corporation Limited, thus making Numaligarh Refinery Limited a subsidiary of OIL.

Key Drivers

Oil India's manufactured or productive capital is the primary source of value. Their objective is to continuously and strategically expand their value through improved operations, a diverse and more extensive portfolio, and a more comprehensive range of products

It drilled 38 wells in FY 2021-2022 Spud-in (the process of beginning to drill a well in the oil and gas industry) 1st well in OLAP block in Rajasthan

There have been two discoveries (1 oil and one gas) in the Dumduma PML area in Assam in FY 2021-2022

The company has an in-house 2D seismic team and a 3D seismic crew. Now, the company uses 19 drilling rigs, 25 workover rigs, and ten logging units to ensure that several operations can be carried out simultaneously on a site.

OIL invested Rs 4,367 crore in FY 2021–2022 to develop upstream and downstream assets and capabilities. They now have eight projects in various phases of development that cost more than Rs 100 crore

OIL contributed to around 10% of India’s crude oil production during fiscal 2022 and is the second-largest national oil company in the business of Exploration and Production of petroleum and natural gas, transportation of crude oil, and production of LPG.

Outlook

For the past 50 years, OIL has played a crucial role in India's oil, gas, and energy industries The Firm has developed its core competency of operating mature assets in India and abroad while exhibiting technical stewardship. By 2030, OIL hopes to be the world's top operator of Exploration & Production (E&P) mature assets.

During the past ten years, OIL output has consistently remained over 3 0 MMT annually. The company has now established a lofty goal of significant production growth.

This has gained momentum due to numerous policy-level measures by the GOI, including the Enhanced Recovery (ER) policy, the Open Acreage Licensing Policy (OALP), and other Policy Dispensations

As per the above table, we can see that ONGC is a market leader with revenue worth 38583 29 Cr for the latest Qtr OIL follows it with sales worth 5376.16 Cr. We can also see that in terms of net profit, again it is the leader, but OIL is at the top with a net profit margin of 32 48%

Future

In Jorhat, Assam, OIL launched the nation's first pilot facility for the production of green hydrogen, with a 10 kg per day capacity that can be expanded up to 30 kg per day A study on mixing green hydrogen (GH2) and natural gas is being conducted.

The bid for three New Geographical Areas for city gas distribution has been won by the consortium of OIL (49%) and AGCL (51%), one in Assam and two in Tripura

Water injection and other improved oil recovery/enhanced oil recovery technologies are continuously being deployed in the Upper Assam Basin to improve recovery from its mature fields.

Source: IIFL Securities

The company intends to conduct thorough exploration programs in Mahanadi Onland, Andaman Offshore, and Kerala-Konkan Offshore in search of establishing hydrocarbon reserves, in addition to the northeast and Rajasthan, where the company has a significant presence