Finly January 2018 by FINLY

From the Editor’s Desk

FINLY| NOVEMBER 2017 | Finstreet | SIMSR

Dear Readers, With budget around the corner, 2018 is ready with its Economic challenges and opportunities. This year India will strive to become the fifth largest economy in the world in dollar terms. We are sure our readers are also striving to achieve their individual goals. In your pursuit to achieve your goal of enhancing financial knowledge, we bring to you yet another edition of your beloved magazine Finly. In this edition we have covered all the strategically important themes for India in the year 2018 in our cover story titled as “India in 2018”. The Eco section takes you through the economics behind the Video on demand providers like Netflix. The Sector analysis explores the opportunities in the food processing industry and the Fintech section shares information about NPCI, the guiding force in the digital revolution of our country. Last but not the least, there is news buzz trivia to update you with latest happenings around the world. I am thankful to Prof. (Dr.) Pankaj Trivedi for providing the much-required mentoring and support to the Finstreet team. I extend my gratitude to the entire Finly team for all the hard work and contribution towards making our magazine a success. I would also like to thank all our readers, faculty members and sponsors Finacue Research & Education for their constant love and support. We thank each and every participant for their sincere efforts for call for article competition, with this I would like to declare Vikram Chouhan from IIM Udaipur as the winner and Vivek Kumar Pudur from IIT Kharagpur as the runner up for this month's call for article competition. Congratulations and we wish you all the very best for all your future endeavours. Madhur Saxena PGDM 2016-18 KJ SIMSR

Team FINLY

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Table of Contents

FINLY| JANUARY 2018 | Finstreet | SIMSR

INDIA IN 2018

Cover Story

Ankita Sinha (PGDM) Aadi Gala (PGDM IB)

Previous year, saw India roll out its most ambitious reform since independence in way of GST. However, the creeping issues in its implementation, added with an increased compliance burden and discontent among the SMEs for the same led the GST council to harmonise tax rates, give relaxation to small businesses and many procedural changes all in a short period of time. The previous year also saw India giving away its fastest growing major economy tag back to China due to twin shocks of demonetisation and de-stocking in lieu of GST. The banking sector witnessed another year of rising NPAs and it affected the bottom-line of almost all PSBs, thus compelling government to step in through recapitalisation bonds which will help banks free up the cash required for credit offtake to industries and give impetus to private consumption. Let us now see major

events and their effects which will shape up the coming year and reflect in the Indian growth story. Rollout of E-way bill: The rollout of E-way bill for all interstate movement of goods worth more than Rs 50000 is due on February 1, and will be rolled out nationally for all intra-state transport of goods from 1st of June. The government is hopeful that its successful implementation will help arrest the trend of declining revenues, by checking tax leakages prevalent currently. Some experts fear though, that it will act as a hindrance to seamless transport of goods as was envisioned by rollout of GST, however a standardised format and issuance of same in electronic form with various remedies in place will surely help businesses to function in this post-GST era.

Cover Story

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Economy: The year 2018, will witness India overtake UK and France in real money dollar terms to be the fifth largest economy as per the report released by London based Centre for Economies and Business Research. At the same time, India's growth rate is forecasted to accelerate to 7.3% in FY 18, which will help it reclaim the tag of fastest growing major economy from China, as per the World Bank's Global Economic Prospects report. This increase in growth rate is mainly attributed to stabilisation of corporate sector with GST rollout, strong private consumption and growing services sector. Resolution of PSBs balance sheet problems with the introduction of recapitalisation bonds is expected to help free up much needed cash to support the private sector and lift investments. At the same time, India needs to control the rise in

headline inflation, which can spiral out from the target of average of 4% over a medium term by RBI and can lead to hike in repo rate by 25-50 bps in the latter half of 2018. Crude oil prices have started heading upwards, and a growing distress in rural markets can make things worse for the central government as it presents its last full budget before entering the national elections. This has led to many speculate that an increased rural spending and incentivising youth to get skilled in making them job ready will be key elements of the budget. But, the fears of government diverging from the fiscal consolidation plan have never been as high as before. As a result, there is a lot to do with limited resources for the finance minister when he presents his budget. Indian Stock Markets: The stock markets BSE and NSE both rose roughly 30% in the previous year and if

Cover Story

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most global brokerage firms are to be believed, the Bull Run is expected to continue and rise 10-15% in 2018 with support of both domestic and improved global markets. Top global brokerage firm Goldman Sachs expects NIFTY 50 to touch 11,600 by December 2018. The rise in share sales signals a much needed revival in the corporate investment as the Indian economy rose for the first time after 5 consecutive quarters of decline in growth rates. This year's IPO share sales were mostly due to founders and private equity funds offloading their stakes, but this year it is expected that businesses will enter markets to raise fresh capital for business expansion. A price-to-earnings ratio of 22 in the benchmark S&P BSE Sensex, makes India one of the most expensive markets in Asia, driven mainly by domestic investors trusting stocks to give a much better return in an environment where returns from gold and property have been paltry. Real Estate to get a boost: The previous year saw this sector change drastically from the fading away

from the shock of demonetisation which brought the industry to a standstill, and then the implementation of RERA and GST, forcing industry players to function and transform to work in a new environment of greater compliance and new standards for delivery and enhanced transparency with accountability. Entering into the year 2018, it is expected there will be a consolidation of products and services in the sector as all the policies start taking shape.Completion of existing projects over launching of new projects will be the priority, thus helping in increased supply of houses across major cities. Getting Equipped with the tag of “infrastructure sector” in the previous budget has helped open it up to a string of tax benefits and incentives coupled with the government's push for affordable housing as part of “Housing for All” scheme by 2022, there is little doubt about the upturn of this crucial sector. Also, if a few reports are to be believed, we can see inclusion of Real Estate under GST in the coming months. The listing of Real Estate Investment Trusts (REITs) on the stock markets will become a reality and the industry is hoping for relaxation in

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Cover Story

taxation norms for the same, so that funds start flowing in seamlessly in this labour intensive sector, thus increasing the job opportunities for many. FRDI Bill: The Financial Resolution and Deposit Insurance Bill, 2017 has led to a rise in concerns in the mind of depositors because of some of it provisions. This bill primarily deals with addressing the distress arising in all types of financial institutions including insurance, pension funds and Indian branches of foreign banks. It envisages setting up of a body called Financial Resolution Corporation and will have roles of both oversight and supervision to keep in check the viability of institutions. A critical feature of this bill is the provision of “bail-in” which can convert the depositor's money in liquidating institutions into equity, which experts

feel can lead to a ‘distrust in the bank’ deposits which has been primary instrument of savings for many due to its perceived zero risk. This has lead the government to clarify that consent of depositors along with creditors will required and the bill is more deposit friendly than many other jurisdictions. To disperse all the apprehensions, the government has also referred the bill to a Joint Committee of Parliament whose report may be tabled in the upcoming budget session and may lead to India becoming able to adopt another major structural reform. Bharatmala Project: A good transportation system is one of the pillars of the whole structure and c o m m e r c e i n t h e c o u n t r y. T h e development of any nation depends on its infrastructure and transportation

Cover Story

network and India being a country with such a huge population, it is of utmost importance that there should be continuous improvement and maintenance of the infrastructure. So, the government of India gave a massive infrastructure push by approving the Bharatmala project.

·Under this project, the government has

The Bharatmala project is a mega plan with the objective to build 83,677 km of highways by March 2022 at a cost of about Rs 7 lakh crore. 34,800 km of highways will be constructed which would cost around Rs 5.35 lakh crore, this will be done under the phase 1 of the Bharatmala project

considered building 3300 kms of Border Roads of strategic importance along international boundaries and 2000 kms of International Connectivity roads to promote trade with neighbouring countries such as Nepal, Bhutan, Bangladesh, and Myanmar. In the Phase-I, around 2000 km will be taken up at an estimated cost of Rs 25,000 crore.

“Bharatmala project is a flagship program for the highways sector that focuses on optimizing efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps through effective interventions like development of Economic Corridors, Inter Corridors, and Feeder Routes, National Corridor Efficiency Improvement, Border and International connectivity roads, Coastal and Port connectivity roads and Green-field expressways.” Key features of the scheme: ·With the Bharatmala project, there will be 50 national corridors as opposed to the existing 6.

·The 44 new economic corridors include Mumbai-Kolkata, MumbaiKanyakumari, Amritsar-Jamnagar, AgraMumbai, Pune-Vijaywada, RaipurDhanbad, Ludhiana-Ajmer, Surat-

Nagpur, Hyderabad-Panaji, Jaipur-Indore, Solapur-Nagpur, Sagar-Varanasi, RaipurV i s h a k h a p at n a m , D e l h i - L u c k n ow, Chennai-Madurai, Delhi-Kanpur, SagarLucknow and Sambalpur-Ranchi among others.

· There

will be enhanced focus on improving network and connectivity in North East and leveraging synergies with Inland Waterways as well as emphasis will be laid upon use of technology & scientific planning for Project Preparation and Asset Monitoring

·The

newer roads are expected to decrease supply chain costs from the current average 18 per cent to six per cent. This project will help to improve India's capex cycle and boost the growth of the Indian economy. Seaplanes: The future of transportation sector is envisioned in the form of Clearwater bodies dotted with 10,000 seaplanes, 'floating cities' in the form of ocean cruises and electric vehicles zipping on dedicated highway lanes. The Indian Government is preparing to boost

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air connectivity to remote and unconnected destinations, in order to improve the infrastructure of India. With the advancement of technology, there is a lot of potential for seaplanes in the country and domestic production could bring down manufacturing costs. Seaplanes are already operational in countries like Canada, Japan, South Africa, Maldives, USA, and Alaska. In 2010, the first seaplane service in the country at the Juhu aerodrome named 'Jal Hans' was launched by then Minister of Civil Aviation Praful Patel. Under the ambitious Regional Connectivity Scheme (RCS), seaplanes have got the permission to fly in the country. The RCS, also known as UDAN (UdeDeshkaAamNaagrik) has the objective to connect remote and underserved airports as well as make flying more affordable. With this initiative, the government is trying to make efforts to overhaul transportation in order to reduce crude imports of Rs7 trillion by at least half and provide jobs to at least 50 lakh youngsters in related industries. The Government is planning to bring cost-

effective, import substitute, pollution free and indigenous fuel. Gradually, India is moving towards electric transportation system, ethanol, methanol, bio-diesel, bio CNG and other such means. With the successful trial runs of the firm's aircraft, under the 'Make in India', J a p a n e s e f i r m S e to u c h i w i l l b e manufacturing seaplanes in the country. And to bring this dream come true, the low-cost airline SpiceJet is working for the cost-effective business plan. SpiceJet is going to buy around 100 Kodiak planes. These aircraft can land on water, open fields, and even gravel. The whole deal is valued at around USD 400 million or around INR 25.8 billion and it banks on the current government's idea to connect more of India by air without actually upgrading its airports and airstrips, many of which cannot handle large aircraft. OPEC: OPEC (Organisation of Petroleum Exporting Countries) is a cartel of oil exporting nations which accounts for more than 40% of the world's oil supply. As of now it has 14 members and it aims to

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coordinate and unify the petroleum policies of its member countries to stabilise oil markets. The main player of the group is Saudi Arabia accounting for more than 30 per cent of OPEC's production as on October 2017, followed by Iraq and Iran (12 to 13 per cent) and then by UAE and Kuwait (8 to 9 per cent). India is one of the major consumers of oil, with the grouping accounting for 85% and 94% of India's crude oil and gas imports. Technological advancements have enabled shale oil exploration and production on an industrial scale in the U n i te d S ta te s . R u s s i a ' s a c t i ve involvement in the oil market and economic slowdown in the China and EU has brought significant changes in the dynamics of the oil industry. The prices cut by OPEC to maintain market share had immensely helped Indian economy to boom and rectify the current account deficit and also control inflation in the economy.

But the recent mid collaboration of Russia with Saudi Arabia had caused a cut in the production of oil which had again caused a surge in the price of the oil. The recently concluded meeting of the OPEC nations and Russia had extended this deal of production cut till December 2018. So, the oil prices are gradually rising and have first time crossed $60/barrel mark in the last two and half year. According to a recent note by Nomura, every $10 increase in oil price increases consumer price inflation by 0.6-0.7 percentage point. It also estimates that a similar rise worsens India's current account balance by 0.4% of the GDP. Since the government raised excise duty when prices were falling, it could come under pressure to reverse the hike if prices continue to rise. Further, it can also cause an increase in the inflation, suck money out from other areas and hamper the overall economic growth of the country. India needs to invest more in developing alternate forms of energy so that our

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dependency on price fluctuation of the oil is reduced. This would also help reduce carbon footprint and meet the INDC targets. Conclusion: Over the last couple of years, the government has taken multiple steps to revive the economyâ&#x20AC;&#x201D;from the ease of doing business to controlling inflation, from reining in fiscal to the revival of the manufacturing sector, and so on. The increased foreign direct investment inflow is a reflection of the pragmatic decisions taken to open up various sectors for investment. The rollout of the GST could be decisive tax- reform which could help Indian economy in the long run. Government policies and investments are aligned to make the country a favourable destination for doing business. Insolvency and bankruptcy code is one of such examples. The Bharatmala Project is the strategic investment through which government is trying to boost our defence at the border as well as increasing trades along the corridors. Although the main focus seems to be the economic development yet we cannot undermine our environmental responsibility. If India invests more in Green technology, the impact of volatility in the oil market won't impact the growth much and it is also needed for the environmental commitments. There is no doubt that the government is trying to take a number of initiatives and economic reforms to spur growth and make Indian economy attractive for investment.

The chronicles

Article of the Month - Winner

of DeutscheThe Bank chronicles of Deutsche Bank

Vikram Chouhan IIM Udaipur

In April 2015, Deutsche bank was handed a penalty of $2.5bn from US department of Justice as part of sector wise probe into the rigging of the LIBOR. This came after IMF identified Deutsche as “the most important contributor to systematic risks in global financial systems”. Other banks were also fined but Deutsche earned maximum penalty for being “uncooperative”. Its shares hit a new low, falling more than 65% of their value in April, by July 2015. Market value of the bank came down to less than a half of what it was before, from around $50 billion to $16 billion. Balance sheet for that quarter showed a decline in net revenue by 21% compared to the same quarter last year. Reports were suggesting that the bank's parent company German government

won't be helping the ailing bank. Deutsche bank is a big player in global financial institutions, so some investors feared a larger financial crisis such that of 2008. In a case like this, if the government refuses to rescue such a big financial player, it leads to a situation of bankrupcty where people try to withdraw all their money from the bank but it is natural that bank would never have the cash to meet the needs if everyone decide to withdraw at the same time. However, the situation didn't deteriorate to this extent. What went wrong? All the major crisis or scams have a common reason behind it, which is the greed of the promoters. . Even if we look at the Sup-Prime crisis of USA or the Satyam

Article of the Month - Winner

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scam of India, it was when the people became greedy that the things went awry. The decline of the bank began around 20 years ago, when in a 1994 meeting, the then Deutsche Bank chairman of the board, Hilmar Kopper, resolved to recast the concern into a globally operating investment bank. It was, in fact, a sound decision given that the bank's old business model, focussed on corporate loans, wouldn't earn enough on the long-term without the addition of more lucrative business segments. The problem, however, was that Deutsche did not have the right employees to make the change at that time. In 1995, Deutsche Bank poached an aggressive Edson Mitchell to lead the group's still lacklustre trading operations in London. He had left his previous employer Merrill Lynch because he was declined a position in the senior management due to his abrasive leadership style. His chutzpah could be gauged from the striking quote accredited to him: "If you don't have $100 million by the time you're 40, you're a failure." He was quite popular at ML and brought along 50 of his best co-workers from ML to Deutsche Bank. Mitchell was a brilliant trader and an inspirational manager who, in five years, transformed the German lender into a Wall Street dynamo. Along with these, Deutsche's investment bank arm became bonus-hungry and so bent on growth that regulatory relations were pushed to the limit and integrity was sacrificed. The aggressive beginning gave little regard to risk assessment methodologies, which culminated into

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deep-rooted problems within the bank's system and corporate culture. The bank's rapid growth and success blinded the top leadership, leading to the complete loss of control of the company during the period between 1994 and 2012. Deutsche Bank started colluding with other banks, traders, and analysts and started quoting fraudulent interest rates to LIBOR. LIBOR is world's most widely used benchmark for deciding on shortterm interest rates for giving loans. Now when Deutsche Bank and its supporting banks quote a lower interest rate, it is supposed that they are more stable and also more credit-worthy. Eventually, other banks also have to offer loans at that lower interest rates. This way LIBOR is manipulated by these banks. LIBOR being widely used benchmark, many of the US's and Europe's derivative market depended on LIBOR. Hence these banks also could control these derivative markets. Cost management and technology investment were neglected in the race to expand, and so were the bank's financial foundations. There were years in which the bank absorbed more than 80% of its revenues, double the tally prevalent in the industry. Deutsche was unparalleled in its use of borrowed money (which was generally inexpensive due to the global low rate regime of central banks), as opposed to shareholder's equity, to support its growth. There was an acute mismatch in the bonus culture and performance. Over the 1995-2016 period, shareholders earned a net â&#x201A;Ź17bn from owning Deutsche, and the bonus paid was â&#x201A;Ź71bn over the same time period.

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Article of the Month - Winner

The difficult path to resurrection In July 2015, John Cryan was appointed as the CEO with the task to bring order back to the bank. He has stripped back high-risk business and slashed bonuses. Cutting costs has become one of his biggest priorities. The firm is actively embracing technology to reduce the massive workforce of 97000, which is double to that of the comparable firms. The bank has committed a job cut of 15000 as a part of 5-year restructuring plan. Deutsche bank is trying to fix on a sustainable model for the future, and do away with its foundation of precarious financing and abusive behaviour. Cryan has also been trying to put an end to the bank's slew of legal and regulatory troubles.

Robert Mueller, the special counsel who is probing possible collusion between Trump's campaign and the Kremlin.

The bank has set up a plan through to 2020 to revive profits and generate a return on tangible equity of 10 per cent, compared with 4 per cent now. A flotation of the asset management division is slated for early 2018. The bank has clearly defined payments and collateral lending as the essence of its future ambition. Deutsche has retreated from investment banking businesses which were questionable and low-margin. However, that has also resulted in collapse in investment banking revenue by fifty percent from an average of â&#x201A;Ź6bn a quarter in 2015 to about half of that today. In the midst of all these, Deutsche has go t e m b ro i l e d i n yet a n o t h e r controversy. The bank's long-time role as a key lender to US President Trump a n d h i s p ro p e r t y - d eve l o p m e nt businesses is under investigation by

Article of the Month - Runner Up

Berkshire Hathaway without Buffet

Vivek Kumar Pudur IIT Kharagpur

The wizard of Omaha, philanthropist and a classic representation of the word 'investor' does not need much introduction. Warren Buffet who is the Chief Executive Officer of Berkshire Hathaway has numerous accomplishments under his portfolio. According to Bloomberg reports Mr. Buffet is worth more than 87 Billion US dollars.Warren Buffet currently owns around 37% of the company shares. He pledged that 99% of his wealth will go to charity once he expires. He has been a visionary in seizing businesses which are undervalued and turning them into gold mines. Though criticized for his lack of initiatives towards investing in tech firms, his vast knowledge in other fields such as railways, insurance to name a few, and continuous perseverance made him the man he is today. Partnerships were his initial way of raising funds. He used the money to buy

undervalued stocks and later sold them at a premium. Similarly, he bought the stock of Berkshire Hathaway a textile company at that time. He gradually regained control of the company and made it a conglomerate which has investments in diverse businesses. The primary objective of Berkshire Hathaway is to invest in companies which paid good dividends, such as Coca-Cola, IBM, and American Express. The company is registered on the NYSE; it trades in both class A and Class B shares. The class A stocks increased almost 4410% (Current value is 320,238 USD) since its listing. On a contradictory note to their investment strategies, Berkshire Hathaway does not pay dividends to their shareholders. The class 'A' share value is too high for any investor to buy. Berkshire Hathaway says that a high share value displays the confidence the company has in it.

Article of the Month - Runner Up

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The Board of Directors at Hathaway is aging and in dire need of new leaders who can replace the existing ones. The wizard of Omaha is 87 years old. The vice chairman of Berkshire Hathaway, Charlie Munger is also 92 years old. Mr. Buffet cannot run the company endlessly and the board of directors of Berkshire has retirement plans in order as well. Berkshire Hathaway has always considered of planning a successor after Warren Buffet but as long as Mr. Buffet stays healthy and is willing to work, he is the boss. The thought of Buffet not being the CEO of Berkshire Hathaway is disheartening. The charming man has his own way of doing business and that too successful business. Investors put their money in some stocks just because Buffet said that the company has a better growth in the future. Mr. Buffet is a Public figure and his powerful influence is spread all over the world. Buffet made his intentions clear regarding selecting his successor. Mr. Buffet is a huge admirer of the values such as integrity, smartness and passion. He wants someone who has the core values of the Berkshire Hathaway imbibed in him and whose personal goals lie according to the vision of the company. This clearly shows that the next CEO of Berkshire will be someone who spent his majority of time creating and adding value to the organization. In the 2015 annual letter of Berkshire Hathaway, Mr. Buffet mentioned that they now have the exact person to succeed him as CEO. Some of the choices that they have are

Ajit Jain, Vice Chairman of Insurance Operations and Greg Abel, CEO of Berkshire Hathaway Energy and vice chairman of non-insurance operations of Berkshire Hathaway. The two emerging leaders have been promoted recently as executives to the company board and are in prime position to land as the next CEO of Berkshire Hathaway. A deep dive into the profiles tells us how they function and what they can bring to the table once they succeed the ‘oracle of’ Omaha. Ajit Jain is aged 65 and is of Indian descent heads Berkshire Hathaway's Insurance business. People define him as a risk taker and a box of innovative ideas. He is the prime protagonist in devising some of the insurance policies which generated tons of income with premiums on the insurance. Buffet wrote in one of the annual letters that "Ajit Jain has created Billions of value for his Berkshire Shareholders and if there were ever to be another Ajit and you could swap me for him, don't hesitate. Make the trade!” On the contrary, Gregory Abel aged 55 who hail from Canada, looks after the energy business. As with the most of the employees of Berkshire Hathaway, he also avoids the limelight of media and social presence. He shares the quality of integrity as is with Buffet. Buffet told to an alum magazine that "Abel brings in innovative ideas and is always creative in his business approach". Charlie Munger the Vice-chairman also speaks highly of these two people. He says that in taking some business decisions

Article of the Month - Runner Up

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each is a better business executive than Buffet. This shows that both are competent enough to be the successor of the Oracle of Omaha. But industry stalwarts suggest that Berkshire Hathaway can go for someone who is younger, in this case, evidently Gregory Abel.

Analyzing the after-effects of Buffet stepping down is a difficult one. Company shareholders might lose

confidence in Berkshire Hathaway and sell the shares of the company in the short run, once buffet steps down. The chosen one must show his appetite for creating lucrative businesses and attractive propositions so that he gains the confidence of the shareholders. However, Buffet assures his shareholders that he is healthy and enjoys going to the office every morning and there is no other place in the world he would rather be, than in his office.

HOW DO THEY MAKE MONEY?

ECO Section

Aarzo Doshi (PGDM) Vaibhav Bhanushali (PGDM)

Media consumption across the globe is increasingly happening in digital formats. The increase in the number of devices capable of supporting digital media along with increasing internet access speed, has provided consumers with an option to access the media content of his choice be it information, entertainment or social activity anytime, anywhere. The smartphone market has seen an unprecedented growth in the last 5 years. Smartphone devices across the globe grew at a CAGR of 17% as compared to 9.5% growth in all mobile devices. Smartphones crossed 2 billion mark in 2014 and are expected to reach 4.6 billion by 2019

platforms on which a user can stream audio and video content. Netflix share of internet traffic in North America increased further and accounted for 34% of data flowing to consumers during the peak times in first half of 2014. Over-thetop (OTT) service providers like YouTube and Subscription-based digital content providers like Spotify have also acted as a catalyst in the growth of audio/video data streaming. The global audio and video traffic combined is expected to reach 82% of all internet traffic by 2018. Figure: Video and Audio will generate 89% of Consumer Internet Data Traffic by 2018 (Exabytes per month)

The devices used to access digital content have evolved in the last few years that have increased the array of

ECO Section

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Source: Report by Delloite Business Model of Video On Demand Service Providers:

for the duration of subscription. SVOD comes with a flat fee and platforms cannot normally decide different pricing for different content pieces. However, SVOD can be easily clubbed with pay-perview or Ad models and can be further monetized. 2. Transactional Video on Demand (TVOD) or Pay Per View (PPV)

1. Subscription Video ON Demand Model : This is the most common revenue model many online video streaming businesses use today. Consider Netflix or Hulu Plus as an example, where users pay a fixed subscription fee once a month and access a variety of video content available on that platform unlimited, So it is once play and enjoy

Transactional model works exactly like those rental stores, however here we buy/rent movies (also any other videos) online. It is like a transaction where viewers pay for accessing each piece of content they consume from your online store. Buying lets them own that particular piece of content and keep it with themselves either on your platform or downloadable to their personal devices. Whereas, renting lets them use a piece of content for a particular period allowed.Pay per view also works with special events and live programming,

ECO Section

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where viewers purchase a particular programme to view and the broadcaster streams the same event to all those who have purchased the event at a particular set time. Pay Per View is the best revenue model for various sporting events and streaming buzzing live sports. WWE has been doing PPV streaming for ages and has been very successful at it! 3. Advertisement-supported Video on Demand (AVOD) Here you make your content available to be viewed for free but insert some advertisements in their viewing, earning revenues from the advertisers. Here your viewers pay with their eyeballs rather than credit cards. Ads are powerful and advertisers will pay huge for streaming their ads on your ondemand platform. You can even choose your pricing depending upon the type of content to be chosen for the ad and your platform's popularity. YouTube is the best example of Advertising video on demand model.

4. Hybrid of SVOD-TVOD or any other such combination When you think you have a big library of videos and your platform is getting hotter day by day, you certainly need a hybrid of different revenue strategies that can help you monetize your videos the right way and make the most out of this business. You can choose to monetize through the way of ads-inserted into a Subscription model or into a Transactional model or even have pay-per-view (PPV) working with Subscription. Current Scenario with Netflix: Recently Netflix had to cancel two of its original series owing to poor return of investment, it is evident that Netflix is responding to the situations where they have to built the cash flows and this companies can no longer withstand cash burning .Content obligation as seen in Figure 1 have increased more than the revenue, os Netflix needs to work on original content And stand apart as differentiated product. Figure 1: Content Obligation Growth Outpaces Revenue

ECO Section

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At the end of 1Q17, content obligations totaled $15.3 billion and have grown faster than revenue YoY in six of the past seven years. Netflix chief content officer Ted Sarandos recognized this issue when he stated â&#x20AC;&#x153;a big expensive show for a tiny audience is hard, even in our model, to make that work very long.â&#x20AC;? The realities of Netflix's costly business model are finally catching up to the firm. Cash Burn Compounds Obligation Growth Issues As Netflix's content obligations increase, its free cash flow (FCF) only grows more negative. Since 2010, the last year Netflix generated positive FCF (and first year it began increasing its content library), Netflix has burned through a cumulative $6.4 billion in cash, per Figure 2. After the above problems the Netflix shares seems to be overvalued and investors are realizing the true economics of Netflix.

Figure 2: Netflix's 2016 Free Cash Flow is -$2.8 Billion

Netflix survives in the competitive market because of its pricing strategy and this is creating negative cash flows as international members grew 39% YoY in 1Q17, down from 65% in 1Q16 and 78% in 1Q14. Similarly, domestic members grew 8% YoY in 1Q17, down from 13% in 1Q16 and 22% in 1Q14. Prominent Players in India The success of VoD platforms did not come overnight. Reliance's BigFlix launched in 2012 and Times Groups BoxTV launched in 2013 did not leave the mark as they came into India way ahead of its time and faced the challenges of Internet penetration and user adaptation. There are top 12 players that make up over 90% of the Video on Demand market in India. Out of these, 3 main players are: 1.Hotstar: It has the highest viewer base in India around 100 million users. Main revenue is through advertisements as it provides most of its content for free. Premium subscription is for Rs. 200 annually. It owns the digital rights for IPL and has even claimed to score 40-50% of Star Sport's television viewership for large sporting events in India.

ECO Section

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2. Amazon Prime: It provides a viewers an access to it content base by charging an annual subscription fee Rs.1000. Along with that, it offers several promotional and shipping benefits to the online store. 3.Netflix: It was the first one to come up with this idea and was established in 2010. It is leading VoD provider in the world. It entered India in 2016 and has more of international content. It is formulating a strategy to provide more regional content and increase its market. Following the Hot Star's footsteps, Viacom 18 launched 'VOOT 'in March 2016 where viewers of the channels like Colors TV, MTV etc. can complete the episodes of their favorite serials anytime and anywhere on their mobile applications. Famous for Saas Bahu serials, Balaji telefilms has launched 'Alt Digital' whose focus is on Out of the box and original Indian content. 'Yupp TV' was launched in the year 2006 for st re a m i n g I n d i a n T V c h a n n e l s worldwide to Indian diasporas. It came

to India in the year 2015 when the market was ready for such services. Other players include 'OZEE' by Zee, Sony's 'SonyLIV', JioTV from Reliance JIO and TVF Play, Cineplay etc. Strategy adopted by Indian players Some of the strategies adopted by Indian players to capture the VoD market are: 1.Regional Content: India has 1600 dialects, 30 languages and over 234 million language Internet users. Thus, content in their own language holds significant value for consumers 'Viu' works with works with the language experts of the region they are catering to.Amazon Prime offers the latest movies in Marathi, Tamil, Telgu and Bengali. According to Netram, 25%-30% of the audience visiting VoD platforms consume regional content and number is expected to reach 50% this year. Maharashtra and South are the dominant markets at present. 2. A business model palatable to Indian taste: Content is being created by considering the thought process of the Target Audience Example: TVF Play targets youth

ECO Section

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with series like 'Pitchers' which revolved around the idea of Entrepreneurship. HotStar is famous for streaming the sports matches. 3.Partnership with local talent and film production houses: Recently, the VoD market has seen various partnerships and associations. Amazon has signed 14 Indian comedians for comedy specials in one go and has signed long term deals with major film production houses like Yash Raj films, Excel Entertainment, Dharma Productions, Vishesh Films , T-Series and a deal with Salman Khan for all his films. NetFlix has signed the deal with Shahrukh Khan's Red Chilies Production and Amir Khan Production. It provides access to its content by charging Rs.500 per month. 4.Marketing strategies: VoD providers of Voot, Hot Star, SonyLIV and Ozee etc. use their own TV networks to promote their platform. AlTBalaji uses digital marketing to increase its audience reach. Analytics is widely used for targeting the right audience. Changing dynamics in Entertainment Industry There have been many controversies between film production houses and censor board. Recent example is about the film-'Padmavat'. Currently, the regulations for streaming an online content are not that strict. This has attracted many media houses to launch their content on VoD platforms to connect with their audience in the most effective manner and in way which they want.

The VoD platforms have projected many local talents which would not have been otherwise possible. Web series from AIB and TVF has given a chance to many new faces to the entertainment industries and has a better audience connect. Standup comedy has become a new and an attractive profession. VoD platforms have changed the landscape of the 'Advertisement' industry. With these platforms, it is possible to build amazing interactions to encourage the user to view and interact with the advertisements. The on demand content can be made available to user not only on web and mobile but with right integrations these platforms have made their engagement space on television, car screens etc. Conclusion: Ease and convenience are the two main pillars on which this industry stands. Since the data is digital in nature, data and content security has become an area of concern. The real trick to win the market is to capture the Tier 3 cities and rural areas. Even though the internet penetration is increasing but awareness about such platforms is low. An assistive model should be used to spread the usage of these platforms. Cable operators can play an important role here as they can provide VoD content app as a monthly paid subscription. Instead of being a threat to cable operator these platforms can open a new avenue for the cable operators. The Indian Internet language user base is growing at CAGR of 18% and is expected to reach 536 million by 2021. Regional language content has been the key focus area for the VoD platforms.

Fintech Section

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In an era of endless contact across territories, fast-paced technological advancements and progress, where the grandest of deals are finalized within a few minutes and the most complex transactions take place at a blink of the eye, FinTech solutions come as a breath of fresh air, enabling consistent, seamless and robust delivery of exemplary performance. One can say that the Demonetization drive initiated by the Government of India has significantly contributed to instillation of the financial inclusion goal of our country. In this edition of FinTech Analysis, we will be looking at our nation's prime financial integration partner, National Payments Corporation of India (NPCI), an organization that has revolutionized the concept of financial payments over a cross-sectional network.

FINLY| August 2017 | Finstreet | SIMSR

Shalini Balakrishna (PGDM ) Rishabh Shah (MMS) NPCI as an organization, came into existence in the year 2008, as a Not-ForProfit entity under the Reserve Bank of India. Being a registered entity under Section 8 of the Companies Act, 2013, the principle aim of NPCI is to not only enhance the Indian Banking system in totality, but also to enable Indian citizens to have unrestricted access to physical and electronic payment and settlement services. At present, the organization is supported by ten promoter banks, viz., Punjab National Bank, Bank of Baroda, Bank of India, Citibank N.A., HSBC, State Bank of India, Canara Bank, ICICI Bank, HDFC Bank, and Union Bank of India. Incorporating the integration of technology with finance, NPCI works at reducing redundancies in the existing system and achieving operational efficiencies.

Fintech Section

The idea of creating NPCI and revolutionizing the retail payment systems was conceptualized by the former President of India, Mr. Pranab Mukherjee, and endorsed by the Honorable Prime Minister of India, Mr. Narendra Modi, predominantly in the form of the promising Pradhan Mantri Jan Dhan Yojana. Mr. M. Balachandran was the former Chairman, serving the organization for over 8 years, that is, from 2009 to 2017, along with Mr. A.P. Hota as the CEO, serving from 2010 to 2017. The Board of Directors is now constituted by Mr. B. Sambamurthy as the Interim Chairman, and Mr. Dilip Asbe as the MD and CEO. The core values of the organization span across Passion for Excellence, Integrity, Customer Centricity, Respect, and Collaboration. These values strongly resonate with the Government of India's objective of empowering the citizens of our country for a better tomorrow.In July, last year, NPCI received a green signal from RBI for it to function as the Bharat Payment

Here are some of the initiatives undertaken by the Government of India, in collaboration with NPCI (RBI), before and after demonetization to ensure financial integration:

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Central Unit (BPCU) and operate the Bharat Bill Payment System (BBPS). This has been one of the greatest steps to empower our economy National Financial Switch (NFS) NFS was launched by Institute of Development and Research in Banking Technology (IDRBT) in 2004 and later taken over by NPCI in December 2009. It was developed with a view to interconnect the ATMs in India. The National Financial Switch facilitates routing of ATM transactions through interconnectivity between its member institutions. This enables the citizens of the country to utilise any ATM of a connected entity. This would thus make Banking easier for the citizens of the country. As on 31st August 2017, there were 941 members using NFS network connected to over 2.37 Lac ATMs. NFS not only offers basic transaction services such as Cash Withdrawal, Balance Enquiry, PIN Change and Mini Statement but also Value added services like Interoperable Cash Deposit (ICD), Mobile Banking Registration (MBR), Card-to-Card Fund Transfer (C2C) and Cheque Book Request (CBR).

Fintech Section

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Unified Payments System (UPI)

RuPay Card

UPI is a system that was introduced PreDemonetization (April 2016), by NPCI along with the sustained efforts of the then RBI Governor, Dr. Raghuram Rajan, in an attempt to consolidate all the banking transactions into a single mobile application. UPI is a real time payments system that enables fund transfers between two banks through a smart phone.

RuPay is India's own payment gateway launched by NPCI to integrate the payments system in the country. It is an Indian version of credit card/debit card just like the International cards such as Visa and Master Card. RuPay is derived from the two words Rupee and payment. It is accepted at all ATMs in India under the National Financial Switch (NFS).

Sending money through UPI is as easy as sending a SMS. It does not require the hassle of giving Bank account details and other sensitive information. It uses a unique identification called the virtual payments address (VPA) as a payment identifier for sending and collecting money. UPI allows a customer to pay directly from his bank account to merchants online and offline through a single click. The per transaction limit for UPI is Rs 1 Lac. BHIM (Bharat Interface for money) application uses UPI to make quick payment transactions.

The RuPay cards have lower transaction and processing costs as compared to the International cards. The fees charged by RuPay can be as low as two-third of the fees charged by the foreign cards. Bharat BillPay The Bharat BillPay driven by the NPCI is a system where one can make payments for all the bills on a single platform. It is a one stop payment platform provided to all the customers in India, accessible anytime anywhere. Once the payment is made, the customer will receive an instant confirmation via an SMS or receipt.

Fintech Section

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The current billing categories under Bharat BillPay are Electricity, Telecom, DTH, Gas and Water. Over a period of time other billing categories can be added such as mutual funds, school fees, insurance premium, etc. One can make payments on Bharat BillPay through multiple payment modes like cash, cards (credit, debit and prepaid), Internet Banking, UPI, wallets, IMPS, Account transfers and AePS. Aadhaar Enabled Payment System (AePS) AePS is another initiative by NPCI. It is a bank led model that enables payments through just your Aadhaar data for authentication. You neither require your signature nor debit card. It only requires IIN (Institute Identification Number), Aadhaar number and the finger print captured for the customer to make any transactions. The finger print replaces the signature, thus making AePS fast and secure since no two people have the same finger print.

In addition to these initiatives, NPCI also undertook literacy building measures to train and inform citizens denizens. In November 2017, the 2nd Young Entrepreneur Summit was conducted to educate budding entrepreneurs about the digital payment platforms launched by NPCI that are available for facilitating online payments. The attendees were also provided knowledge pertaining to integrating these platforms with their business models. Along with this, a workshop on BHIM and USSD based *99# was held in Jhumeri Talliya, Jharkhand, for the staff of d.Light Energy Pvt. Ltd. The attendees were encouraged to download the BHIM App and undertake transactions. The Road Ahead As per recent statistics, in December 2017, 145.46 million transactions were registered in on UPI as compared to 4.15 million transactions in January 2017. The value of transactions rose from Rs. 1,568 crores to Rs. 13,144 crores during the same period. This has indeed been a remarkable feat.

Fintech Section

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What has been surprising is that the share of transactions made using the BHIM App in the circle of UPI payments reduced from 8% to 6% from November 2017 to December 2017. While the monetary value of transactions rose significantly, there has been notable competition experienced from private players such as Google India's Tez, Paytm, Flipkart's PhonePe, to name a few. This is not perceived to be a deterrent as such, because the financial inclusion goal is certainly being catered to, nevertheless! All these platforms will ultimately contribute to rapid welfare and development of the nation.

Alumni Section 29

Marsh for the better understanding of aspirants looking to make a career in the insurance industry along with sharing my opinion on how students can prepare to be â&#x20AC;&#x153;Industry Ready â&#x20AC;? as per my experience. I am a part of the Placements team in Marsh wherein my role is an Insurer facing one and involves the following key responsibilities.

Preyas Jain MMS (2015-2017)

Hello everyone, I am from MMS-Finance, batch of 20152017, I am currently working for Marsh India Insurance Brokers Pvt Ltd, which is one of the leading insurance brokers in the country since its inception in 2003. I would like to thank team Finstreet for giving me this opportunity to convey my thoughts to the readers and I will use it to throw some light over my profile at

Interacting with clients to assess their risks and understanding their business requirements. Assessing the risks associated with the clients' overall portfolio of physical, financial and intellectual assets â&#x20AC;&#x201C;and offering customized insurance products to mitigate those risks. Negotiating with the insurers on getting the best terms suited to the client requirements and placing the insurance policies In addition to the above, I am also involved in the User Acceptance testing of

Alumni Section

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Although, I was completely new to Insurance business when I started, the company provided me ample opportunities to learn and grow as a skilled professional. SIMSR, my alma mater, helped me a lot throughout the 2 years of my management education to groom me as an industry ready person and I feel highly indebted to all my professors, mentors and colleagues for all their help and support throughout my college life. I would highly recommend the juniors to consider Marsh during their placement season as Insurance industry currently is amongst the most rapidly growing In addition to that I would also like to emphasize that those who have a prior experience in IT industry and are pursuing their MBA in Finance can consider the Business Analyst roles in BFSI domain offered by the IT companies on the campus as IT is still growing in India, despite the context it is currently undergoing. My last bit of advice to my dear juniors would be to master one of the Business/Market research tools like SAS, R or SPSS as much as they can as it would add highly to their skillset. I wish all the best to the juniors for their upcoming commencing new jobs/summer internships. Hope you make the most out of it and enjoy it to the fullest.

Sector Analysis

FOOD PROCESSING INDUSTRY

INDUSTRY OVERVIEW In India, due to its immense potential for value addition, the food processing industry has emerged as a high-growth and high-profit sector. The term 'Food Processing' means that the action of performing a series of mechanical or chemical operations on food in order to change or preserve it. The food processing sector in India primarily covers meat and poultry; fruit and vegetables alcoholic beverages, dairy products, grain processing, fisheries, soya-based products, plantation, and other consumer product groups like confectionery, chocolates and cocoa products, mineral water, high protein foods etc. The Government of India (GoI) has been a significant reason for the growth and

Sitharthan K (PGDM) R Prashanth (PGDM) development of this industry. The Ministry of Food Processing Industries (MoFPI) is encouraging investments by approving the proposals for joint ventures (JV), foreign collaborations, 100 percent export oriented units and industrial licenses. MARKET SIZE India has the world's sixth largest food and grocery market in which retail contributes 70 percent of the sales. Out of the Total Food Market in India, the food processing industry accounts for 32 percent of the country and is one of the largest industries in India. The sector contributes around 8.80 percent of GVA in Manufacturing and around 8.39 percent of GVA in Agriculture. Also, it contributes 6 percent of total industrial investment and 13 percent of India's exports.

Sector Analysis

SWOT ANALYSIS

From the Official Data of the Department of Industrial Policies and Promotion (DIPP), during the period of April 2000 â&#x20AC;&#x201C; March 2017, the food processing sector in India has received FDI of around US$ 7.54 billion.

Also, as per the estimates of The Confederation of Indian Industry (CII), the food processing sectors have the potential to attract as much as US$ 33 billion of investment over the next 10 years.

TOP PLAYERS IN FOOD PROCESSING INDUSTRY

Sector Analysis

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EXPORT India's export of food products to abroad is gradually increasing. In the world economy, India's share was only 1.7 percent in 2010 which increased by only 0.1 percent by the year 2014 to 1.8 percent only. In terms of developing and emergin g in d u strial eco n o mics category, India's percent was 5.5 percent which increased to 5.9 percent only. It implies that India is still having the potentiality of growth towards this sector.

GOVERNMENT AND REGULATOR'S VIEW INVESTMENTS OF $11 BILLION COMMITTED TO THE SECTOR T h e Fo o d P ro c e s s i n g m i n i s t r y announced a big boost to the sector, committing a sum of $11 Billion by signing (MoUs) and additional funds from the government adding up to $18.84 Billion during the World Food India Event. Dedicated efforts are on to materialize the 50 memoranda of understanding (MoUs) signed in areas of infrastructure, food processing, beverages, logistics, wholesale and retailing, e-commerce and organic farming. Countries such as the US, the

UAE, Germany, the Netherlands, and France have announced big investments in the country's food processing sector. These initiatives are expected to potentially create a lot of employment opportunities and with the influx of the latest state of the art technology from outside India would benefit the domestic players to improve their production and operational capabilities. This would lead to increased revenues and create a positive investor sentiment for this sector. ONE NATION ONE FOOD LAW The Food Safety and Standards Authority of India (FSSAI) is set to launch its 'One Nation One Food Law' initiative. The regulator is leveraging technology for uniform implementation of norms for testing and sampling by various states and labs. FSSAI is launching the Food Safety Compliance through Regular Inspections and Sampling (FoSCoRIS) platform. This is an online platform that food safety officers will use to verify compliance with safety standards by food businesses. Food safety officers will require a hand-held device with Internet connectivity. Such an initiative which will ensure that there will will be a uniform metrics used to conduct tests and sample collections across the country. This will be welcomed as a boom for the food processing business, since it will be able to avoid situations similar to what Nestle faced in 2015, with its Maggi noodles line of products, wherein two labs authorized under the regulator, produced different sample tests.It is to be noted that the Maggi noodles, was banned in 2015 owing to the presence of lead in excess of permissible values and this had led to the

Sector Analysis

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loss of huge sums of money, market share, and goodwill. The FSSAI also plans to invest Rs 482 crore (US$ 72.3 million) to strengthen the food testing infrastructure in India, by upgrading 59 existing food testing laboratories and setting up 62 new mobile testing labs across the country. EMPLOYMENT GENERATION Policymakers have identified food processing as a key sector in encouraging labour movement from agriculture to manufacturing. By 2024, food processing sector is expected to employ 9 million people in India. It is expected to generate 8,000 direct & 80,000 indirect jobs in the state. BUDGET-2018 EXPECTATIONS AND PREDICTIONS In Union Budget 2017-18, the Government of India has set up a dairy processing infra fund worth Rs 8,000 crore (US$ 1.2 billion). A provision was made for providing grants-in-aid to Indian Institute of Crop Processing

Technology (IICPT).There was also provision made for providing grants-in-aid and other charges under the umbrella scheme of National Mission on Food processing (SAMPDA) which includes a scheme for Mega Food Parks, Integrated Cold Chain Infrastructure and for expansion of food processing and preservation facilities in the country. (725 Crores) For the 2018-19 budget, the finance minister has mentioned that the entire Indian agriculture value chain is set to change drastically and food processing is going to be one of the main industries of the country, with increased agricultural production, better storage facilities, more food processing and changing consumer food preference. Food processing is going to be one of the principal industries of India in future, and an entrepreneur in 2017 should think of the industry from the perspective of where it will be in 2040, 2050. In terms of market size, the Indian food market was worth $193 billion in 2016 and is expected to cross $540 billion in 2020.

Source: Ministry of Food Processing Industries Annual Report 2016-17, TechSci Research

Sector Analysis

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The food processing sector accounts for 32 percent of the total food market and the growth is expected on similar lines as that of the overall food market. The industry already enjoys many fiscal incentives, including preferential credit under priority sector lending and there has been a proposal for a Food Processing Bank under consideration. GST AND DEMO IMPACT The demons of Demonetisation haunted the unorganised sector to a fairly large extent and the food processing industry was no exception. The unorganised sector accounts for 42 percent of India's food processing industry and 70 percent of the sector is unorganised. Fruit and vegetable vendors, as well as wholesale agents, faced the heat as business suffered, as most of the transactions were cash based. Transportation and cold chain related activities were impacted and cold storage owners had asked suppliers to remove their produce as its value has disappeared, owing to the lower demands post-demonetisation era. Industry experts and leaders were positive in a way, as even small business and lower-income consumers are migrating to digital payments, food apps, and e-farmer websites, a drift that could be hastened by the demonetisation. In consequence, it would make the consumers aware the harmful effects of unpackaged foods which were bought by cash and a shift will be made towards buying more of packaged foods, which come under the organised trade. Unpackaged foods were most prone to adulteration and

were of unreliable quality and this would also help chase away the unscrupulous and informal traders and businessmen in the sector. GST, on the other hand, affected the food processing industry differently. High GST on several processed agro-food items will be a hindrance for the industry as food processing in an agro-based industry which makes its purchases in cash and directly from the farmers. If Agro-Food processing industry is pushed to the corner, it would adversely impact the farmers. The food processing industry was also hit hard with the 20 lakh exemption limit for registration of business for GST and interestingly enough; the Government's effort to bridge the gap between the service and the manufacturing sector was met with rampant criticism and disapproval. A small example of this would be food processing units set up in smaller towns such as Aurangabad. With the inclusion of processed food within the category of 'luxury items' has inflicted a heavy set back upon the newly established food processing units in Aurangabad. Ripples have been felt of the same by food processing units based out of smaller towns. In the opinion of the President of All India Food Processors Association, the manufacturing economy inevitably carries with itself the value of the raw materials used quite opposed to the service sector which do not require incorporating 'raw material' as such. The 18% rate which was applicable in both manufacturing and the service sector has undoubtedly caused

Sector Analysis

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disruption in the smooth working of the food processing sector. In spite of MSMEs being considered to be 'tax neutral' in concept, in form this tax neutrality has been done away with. The unfairness of GST towards MSMEs in this sector is manifold in 2 ways: (I) Products manufactured by the food processing sector fall under 'luxury items' as previously mentioned and under the previously existing regime, luxury items attracted a higher rate of taxation from both the Central and State Governments. However, in order to 'unify' the taxing structure, GST imposes the same rate for normal goods as well as luxury items. Therefore further contributing to the gap between the rich and the poor (II) Quite contrary to 'unification' of taxes as intended by the GST regime, the presence of three different taxes – Central GST (CGST), State GST (SGST) and Integrated GST (IGST) has raised serious doubts about the kind of unity of taxes GST seeks to achieve. The burden imposed upon MSMEs is magnified considering the rates of all three will be different with SGST either 2% above or below the rate set by the Central Government. Also considering that there are 5 different rates imposed – 0%, 5%, 12%, 18% and 28% GST fails to deliver on its main aim which is – one Nation one Tax.

growth prospects. The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to encourage commercialization and value addition to agricultural produce. Food processing sector has the potential of attracting US$ 33 bn of investment in coming years and generate employment of 9 mn persons days. It also has the potential to be valued at $500 billion by 2020, and expected to grow at CAGR 20%. This sector is having ample scope to prosper in future years ahead. It could also serve as a potential for the Company Secretary Professionals who want to start their own enterprises. Also, the adoption of food safety and quality assurance mechanisms would enable them to adhere to stringent quality and hygiene norms. This would protect consumer health, prepare the industry to face global competition, enhance product acceptance by overseas buyers and keep the industry technologically abreast of international best practices.

ROAD AHEAD The Food Processing Industry in India is one of the largest in terms of consumption, export, production and

News Buzz Trivia

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November Factory Output at 17-month high, retail inflation surges to 5.21% in December

On January 12, 2018 the Central Statistics Office of the Ministry of Statistics and Programme Implementation released the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of November 2017. As per this report, the factory output had hit a 25-month high in November 2017, while inflation measured by the Consumer Price Index (CPI) accelerated to 5.21% in December from 4.88% a month ago. The Index of Industrial Production (IIP) grew by 8.4 percent in November 2017 in comparison to a growth of 1.99 percent in October 2017 and 5.1 percent in November 2016. The Manufacturing sector grew by 10.2 percent while Mining and Electricity sectors grew by 1.1 percent and 3.9 percent respectively. Fifteen out of the 23 industry groups in the manufacturing sector have shown positive growth in November. As per the report, the industry group 'Manufacture of pharmaceuticals, medicinal chemical and botanical

products' has shown the highest positive growth of 39.5 percent followed by 29.1 percent in 'Manufacture of computer, electronic and optical products' and 22.6 percent in 'Manufacture of other transport equipment'. When it comes to inflation, higher inflation in December has been attributed to hardening of vegetable prices (29%) and rising cost of housing (8.25%) due to the 7th Pay Commission recommendations. In a signal of improving investments, production of capital and infrastructure goods in the use-based classification registered robust growth in November. This is also the final set of macroeconomic data with Finance Minister Arun Jaitley,as he prepares for the Union Budget on February 1. Terming this as industrial recovery will be too early. In August and September 2017, IIP growth was more than four per cent, however. In October 2017 it fell to two per cent. Nonetheless, it is an encouraging number and has to be watched closely. But the divergent IIP and CPI trend has dashed any hopes of monetary easing in the near future. The Reserve Bank of India (RBI) had maintained a neutral stance in its December monetary policy review, citing the risk of rising inflation. If inflation continues to follow past seven months' trend, the monetary authority may start thinking about tightening of monetary policy.

News Buzz Trivia

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Aadhar's new security layer with 16digit Virtual ID

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The collection and storage of Aadhar number by various entities has heightened privacy concerns. Amid mounting concerns over breach of privacy, the Unique Identification Authority of India has introduced a system of virtual authentication for citizens enrolled on its database and limited the access available to service providers. Hence access to stored personal information has been limited and the use of unique tokens has been mandated through which authenticating agencies can access data.

automatically expire when a user generates a new one, as there can only be one valid VID number against a particular Aadhaar number at any given point in time. People can opt to use the Virtual ID as many times as they wish, or keep generating a new one everytime they have to share their unique ID. Thus, they can change their virtual ID after every authentication or after every 10 seconds. It is not compulsory to use or generate a VID. However, the UIDAI is insisting to use this as another option for authenticating identity, which it claims to be more secure. Think of the VID as a 16-digit OTP that can be used to validate your identity without actually giving out your Aadhaar number. According to UIDAI, it is not possible to “derive Aadhaar number from the VID”. VID “is only mapped with the Aadhaar number”. So, while the VID will help confirm your identity to the Authentication User Agencies (AUA) (for example, a bank), it will not necessarily share your Aadhaar number and other data with the AUA.

Under the new regime, for every 12digit Aadhar number, the authority will issue a 16-digit virtual identity number that can be used at the time of authentication for any service. This 16digit number will be temporary and revocable at any time. Also this virtual ID can be generated only by the individual Aadhar holders. So, unlike the 12-digit Aadhaar number that is permanent, the VID will have a certain period of validity, at the end of which it will expire, and the user will have to generate a new one. UIDAI is yet to announce what the minimum validity period for the VID will be. Also, a VID will

The possibility of Aadhar number being stored in many databases goes away, through these new security measures. To enable a speedy roll out of the new safety standards, the UIDAI plans to release the required technical updates by March 1, 2018 and all the Authentication agencies using the Aadhar database will need to upgrade their systems latest by June 1, 2018. The UIDAI has said that agencies not allowed to use or store the Aadhar number should make changes inside their systems to replace Aadhar number within their databases with UID token. The authentication using virtual ID will be performed in the same manner as the

News Buzz Trivia

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Aadhar number and people can generate or retrieve their virtual numbers (in case they forget) at the UIDAI's resident portal, Aadhar enrolment centers or through the Aadhar mobile application.

Which countries have experienced the worst hyperinflation in history?

Trivia Who made the first credit card?

Diners' Club, Inc., in 1950, introduced the first universal credit card, which could be used at a variety of establishments. It was used mainly for travel and entertainment. Although its purchases were made on credit, Diners Club was technically a charge card, meaning the bill had to be paid in full at the end of each month. By 1951, Diners Club had 20,000 cardholders. Another major card of this type was established by the American Express Company in 1958.

American Express soon claimed milestones of its own by expanding its re a c h t o o t h e r c o u n t r i e s a n d introducing the first plastic card in 1959, replacing cardboard and celluloid.

Within five years, 1 million American Express cards were in use at 85,000 merchants, both foreign and domestic.

Hyperinflation is extremely rapid or out of control inflation. Although there is no precise threshold for hyper-inflation, normally it describes an inflation rate that exceeds 50 percent, i.e., prices of goods and services rise more than 50 percent a month. Hyperinflation starts when a country's government begins printing money to pay for spending. The money supply grows faster than the real output of the economy, causing the prices to rise and currency to lose its value. Germany's hyperinflation after World War I is probably the most famous. By 1923 Germany finally put an end to its hyperinflation. There were three other hyperinflations that were as devastating as the German inflation. In fact they made the German case look amateurish. These hyperinflations were experienced by Hungary in 1946, Yugoslavia in 1992-1993 and Zimbabwe from 2004 to 2009. Of these three, Hungary's hyperinflation was the worst of them all.

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We welcome your valuable feedback www.finstreet.weebly.com Finstreet, Finance Committee of SIMSR finstreet@somaiya.edu