Finly January 2022 by FINLY

FINLY

JANUARY 2022 | Issue No. 107

PM Gati Shakti - National Master Plan Intriguing Indeed

Sector Analysis

Eco Section

Why the metaverse is more than Mark Zuckerberg's dream

Specialty Chemical Sector

The Nippon India Taiwan Equity fund NFO

CONTENTS 01

EDITO R IAL

TEAM F INL Y

C O VER ST O R Y

EC O SEC TIO N

PM Gati Shakti - National Master Plan

The Nippon India Taiwan Equity fund NFO

SEC TO R ANAL YSIS

C O MPAN Y AN ALYSIS

Specialty Chemical Sector

Aarti Industries Ltd.

INTR IG UIN G IND EED

ENTR EPR EN EU R SHIP INN O VATIO N

Why the metaverse is more than Mark Zuckerberg's dream

Pepperfry

30 P ER SO N I N F O C U S

Falguni Nayar

C ALL F O R AR TIC LES WINNER

Swapneel Verma

C ALL F O R AR T IC L ES R U NNER UP

ALUMN I INSIG HTS

Naman Anand

Saiyam Jain

ISSUE NO. 107, JANUARY 2022

Dear Readers,

Editor's Note

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” - Arundhati Roy This pandemic is an opportunity to expand our knowledge by finding new ways to circumvent the circumstances, invest in the most intuitive ideas that come to our mind and surpass this havoc. As Ben Franklin rightly said, “An investment in knowledge always pays the best interest,” we at Finstreet are back with the next edition of our monthly magazine “Finly” for the academic year 2021-22. Team FINLY has always been a dedicated group of people who put in a lot of time and effort to put this magazine together, and we can't thank them enough for their unwavering support and initiative. To begin 2022 on an amazing note, our January edition’s cover story tries to understand the master plan of PM Gati Shakti . The intriguing indeed article goes through the interesting topic of Metaverse. We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, PGDM Core and Faculty Coordinator, Finstreet) for providing the much-required mentoring, support and backing to the Finly team. We thank all our readers and faculty members for their valuable reviews and feedback. HAPPY READING!!! STAY HOME STAY SAFE!!! Anusha Nair

Riya Agarwal

|Editor-in-Chief|

|Editor-Finly|

MBA FS

ISSUE NO. 107, JANUARY 2022

TEAM FINLY Faculty in-charge

Dr. (Prof) Pankaj Trivedi

Editing Team Editor-in-Chief

Editor - FINLY

Anusha Nair

Riya Agarwal

Team Coordinator

Jonath Simon

Conceptualization & Design

Jonath Simon

Tanisha Chaudhary

Anupreet Lall

Content Team

Anirudha Kulkarni

Anshul Sharma

Moumita Biswas

Kartik Anand

Muskan Jain

Priyanka Acharekar

Abhijeet Upadhyay

Tuneer Sarkar

Upendra Baliga

Varun Nagur

Vidyathmika S

Viram Vora

| COVER STORY

PM GATI SHAKTI - NATIONAL MASTER PLAN

On October 13, 2021, the PM Gati Shakti National Master Plan was launched. The purpose of this Rs. 100 crore (US$ 13.42 million) plan is to provide multi-modal connectivity for the movement of people, goods, and services across more than 1,200 industrial clusters, including the two defense corridors. It is essentially a digital platform designed to bring sixteen Ministries, including Railways and Roadways, together to integrate planning and coordination to implement future infrastructure connectivity projects.

Priyanka Acharekar | MBA-A| 2021-23 Anirudha Kulkarni | MBA-B | 2021-23 THE VISION To make Indian businesses more competitive by improving connectivity, the PM Gati Shakti will be incorporating the infrastructure schemes spread across various Ministries and State Governments like UDAN, inland waterways, dry/land ports, Sagarmala, Bharatmala, etc. PM Gati Shakti will also cover economic Zones like defense corridors, electronic parks, industrial corridors, fishing clusters, Agri zones, textile clusters, pharmaceutical clusters. The Plan will extensively leverage technology like spatial planning tools from ISRO (Indian Space Research Organisation) and imagery developed by BiSAG-N (Bhaskaracharya National Institute for Space Applications and Geoinformatics).

Source: twitter.com

| COVER STORY THE PURPOSE To address the lack of coordination amongst different departments for example, when a road is constructed, within a few months, other agencies dig up the constructed road again to lay underground cables, gas pipelines, etc. This is not just a great inconvenience but was also a waste of taxpayers’ money. Through the Plan, efforts will be made to increase coordination so that all cables, pipelines, etc., are laid simultaneously. The technology can also tackle time-consuming approval processes, multiplicity in regulatory clearances, etc. Instead of planning & designing separately in silos, the projects can be designed and executed with an integrated vision.

Planning, Permissions, and Project Management Information Systems, available for individual organizations at the Centre and State level. This will offer more than just a visual depiction of the Master Plan. Still, through APIs (Application Programming Interfaces), this will also integrate the physical progress of each of these Ministries in real-time with the existing database. This technology realizes the six pillars of the PM Gati Shakti Master Plan:

THE TECHNOLOGY USED The PM Gati Shakti NMP has been prepared in the Geographic Information System(GIS) based platform developed by BISAG-N to provide a birds’ eye view of the infrastructure development across the country encompassing the layers of administrative boundaries, economic zones, infrastructure & utilities, etc. This portal is a GIS-based ERP system to support the stakeholders in planning, reviewing, and monitoring the Plan.

The six pillars of the PM Gati Shakti Master Plan Infrastructure projects launched in recent years to improve logistics and the efficiency of logistics management in the country. Bharatmala Sagarmala Jal Marg Vikas

It will ensure smarter decision-making through the power of spatial analysis made available to the Network Planners. The portal will provide analytical tools for

UdeDesh Ka AamNaagrik (UDAN) Regulatory, IT, and process reforms (e.g., GST, FASTAG, etc.) E-Sanchit - Paperless EXIM trade process

| COVER STORY THE EMPOWERED GROUP OF SECRETARIES The Government of India has formed a 20member committee called the Empowered Group of Secretaries that shall oversee the progress and implementation of the PM Gati Shakti National Master Plan. This committee will monitor infrastructure construction and all utility services on a pilot basis. Sixteen crucial ministries such as railway, transport, road, telecommunications, civil aviation, and agriculture are brought together through this. The Department for Promotion of Industry & Internal Trade (DPIIT) is to be the nodal Ministry to implement and monitor all projects and a national planning group will regularly take stock. PLAN TARGETS The Government of India has set the following targets for 2024-25: 1. Expansion of National Highways The Ministry of Road Transport & Highway targets to extend national highways to 0.2 million kilometers, connecting all state capitals in the northeast with four-lane national highways or two two-lane national highways and completing four or six-lane national highways 5,590 km along the coastal areas.

Source: DPIIT For the shipping sector, the target is set at 1,759 million tonnes per annum of total cargo capacity to be handled at ports. 3. Doubling the Existing Aviation Footprint The Ministry of Civil Aviation has set a target to increase the existing aviation footprint and have 220 new airports, heliports, and water aerodromes by 2025. This requires the development of an additional 109 facilities. 4. Strengthening the Port Connectivity The Ministry of Ports has identified about 101 projects under the Plan to strengthen the port connectivity. Also, 111 waterways across 24 states in the country have been declared as national waterways. Other infrastructure plans such as Sagarmala, Bharatmala project are at various stages of implementation.

2. Increase in Cargo Capacity This increased efficiency in supply chain and The Railway Ministry has a target to handle 1,600 million tonnes of cargo and decongest 51% of the network by completing additional lines and implementing two Dedicated Freight Corridors (DFCs).

logistics will help achieve the target of a $5 trillion economy by 2025. The government is also proactively encouraging private sector

| COVER STORY participation in the development and operations of port infrastructure. Investment in ports reached an all-time high of $2.35 billion in 2020.

enhance business inclusive growth.

5. Construction of the Pipeline Network The government aims at doubling the gas pipeline network to 34,500 km by building an additional 17,000 km long trunk pipeline that will connect major demand and supply centers for industries. 6. Extension of the Transmission Network The total power transmission network is targeted at ~0.5 million circuit km, and the renewable energy capacity to increase to 225 GW.

for

8. Augmenting Coal production

Source: DPIIT

opportunities

Coal is India's primary domestic fuel and the single largest commodity transported across the country. Rail remains the dominant evacuation mode for coal and aims to expand its modal share from 64% to 75% by 2030. To cater to the increased coal dispatch from Chhattisgarh and Odisha, 14 railway infrastructure projects are under implementation in line with the Gati Shakti plan. The Ministry of Railways developed the Freight Operations Information System to monitor the movement of freight trains and calculate freight and other charges. Meanwhile, the Port Community System (PCS) developed by the Ministry of Ports, Shipping and Waterways provides a secure platform for exchanging information between terminal operators, traders, and government agencies. These interventions aim to reduce logistics costs for coal evacuation and thus lead to efficiency gains in the coal sector.

7. Boosting the MSME sector GLOBAL HISTORICAL PRECEDENT The Plan includes constructing 11 industrial corridors to achieve a Rs 1.7 lakh crore (US$ 22.1 billion) turnover in defense production and to have 38 electronics manufacturing clusters and 109 pharmaceutical clusters. This scheme will hugely benefit the MSME sector as it will ensure the reach of basic

Post-World War II, Europe experienced an infrastructural resurrection, similar to the United States signing the ‘New Deal’ to bounce back from the Great Depression of 1929. Another example is South Korea, which grew at the rate of 10% per annum

amenities to the most remote areas and

| COVER STORY between 1960 to 1990, post extensive investment in infrastructure. China, too developed at a similar rate between 1980 to 2010, ushering in an era of socio-economic prosperity and becoming the world’s manufacturing hub. Along the same lines, in India, the infrastructural spending through Gati Shakti is aimed at economic prosperity in the near future.

will be seen by the increase in demand for construction materials, labor, and secondary effects being better connectivity and reach.

Studies by the Reserve Bank of India and the National Institute of Public Finance and Policy have estimated that a multiplier effect can be anticipated at least 2.5-3.5 times. This implies that well-timed and targeted public investment can actually 'crowd-in' private investment rather than 'crowd-out.' To realize these benefits, we need to raise our capital expenditure as a percentage of the Gross Domestic Product (GDP) at both the central and state level. CONCLUSION

Source: The Economic Times

The Plan’s success is still heavily dependent on political interventions and the central government coaxing and incentivizing state governments for cooperation and participation.

ECONOMIC PARLANCE According to a recent study conducted by the Confederation of Indian Industry (CII), India’s estimated logistic supply chain costs stood at 14% of its GDP. For the US and Europe, logistic supply chain costs stood at 8–10% of their GDP. The Pradhan Mantri Gati Shakti Plan, with its many planned activities, aims to fulfill an ambitious target for 2024-25 and lower the inefficiencies in supply chains in the country to bring the cost down to 8% of the GDP. This will have multiplier effects on the economy, saving public revenue and taxes.The immediate effect

In conclusion, the Gati Shakti Infrastructure Plan is expected to synchronize the activities of each department, transform the infrastructure sector and provide an integrated, seamless, and timely delivery of projects within budgeted costs, motivating private companies to associate with government projects and encourage investments in various development plans to boost the Indian economy.

| ECO SECTION

THE NIPPON INDIA TAIWAN EQUITY FUND NFO INTRODUCTION There has been a flurry of NFO launch in India in the November-December months of 2021, with big fund houses like Mahindra Manulife, ICICI prudential, Motilal Oswal and Kotak Nifty coming up with their NFOs in December. Among these NFOs is the Nippon India Taiwan equity fund offered by Nippon India. Nippon India Taiwan Equity Fund is a themed fund that focuses on Taiwan. The fund will concentrate on emerging technological developments, particularly in the semiconductor industry, and its investment consultant will be Cathay SITE. According to the product note, the fund will employ a multi-cap investment approach where it will invest in companies with a large market share, a strong business plan and a high profit from superior technology that can be sustained. The fund will adopt a targeted approach,

Vidyathmika S | MBA - FS | 2021-23 Anshul Sharma | MBA - C | 2021-23 investing only in high conviction stocks and maintaining a portfolio of at least 40 stocks. It will also cap the maximum exposure to any single stock at 10%. It is an open-ended mutual fund scheme, and this NFO (New Fund Offer) was on sale for the first time on Monday, 22nd November 2021, and closed for an initial subscription on Monday, 6th December 2021. WHAT NFO AND HOW DOES IT WORK? A New Fund Offer (NFO) is how an asset management firm raises money for its securities purchases by launching a new fund on a first-subscription basis. The chance to subscribe to a new fund offer is only accessible for a short time in a new fund offer. During the pre-defined period, investors can purchase units of the mutual fund scheme and subscribe to the NFO at an offer price. This is set at Rs.10 in most cases. Investors will be able to purchase fund units at the stipulated price once the tenure has

| ECO SECTION expired. NFO subscribers, on average, have seen significantly higher returns after the listing.

exchanges of Taiwan. The secondary aim of the Equity Fund is to generate consistent returns by investing in debt and money market securities of India.

ABOUT NIPPON INDIA LIMITED The asset manager of the Nippon India Taiwan Equity Fund is Nippon Life India Asset Management Limited (NAM India) (NIMF). The Company's name was changed from 'Reliance Nippon Life Asset Management Limited' to 'Nippon Life India Asset Management Limited' on January 13, 2020, and a new certificate of incorporation was obtained by the Registrar of Companies in Mumbai. The promoter of NAM India is Nippon Life Insurance Company, which owns 73.97 percent of the company's total issued and paid-up equity share capital as of September 30, 2021. NAM India's equity shares are traded on the BSE Limited and the National Stock Exchange of India Limited.

Thus the Scheme will be focusing to invest mainly in the stocks that are traded in Taiwan stock exchange while some portion of the net assets will be invested in debt and money market instruments which are permitted by SEBI or RBI. The amount thus collected in this scheme can be invested in any of the following securities: Equity securities of the companies listed in Taiwan Stock Exchange. Money market instruments issued by RBI or SEBI such as Certificate of deposit, Commercial paper, Treasury bills, Government securities. Other Mutual fund schemes. Open-ended Liquid Schemes registered with SEBI.

Source: indiatvnews.com

Investments in rated fixed income securities that will be in securities rated by at least one recognised rating agency.

ABOUT THE FUND The primary aim of Nippon India Taiwan Equity Fund is to provide the investors a long term capital appreciation by investing in equity and equity related securities of companies listed on the recognized stock

The Scheme may take derivatives positions like stock/Index futures. The main investment strategy of the fund is

| ECO SECTION to create a diversified portfolio of companies that are participating in the growth related sectors of Taiwan and are listed on recognized stock exchanges of Taiwan. The investment approach would be a mix of both top down and bottom up approach without any extreme biases. The investment in any sector would be assessed on the basis of their growth potential in the mid and long term view. On the other hand, companies within the selected sectors would be analysed based on the nature and stability of business, potential for future growth, sales volume, earning performance, corporate image and the financial strength of the Company. Mrs Kinjal Desai, who is a dedicated fund manager for overseas investments, would be acting as the Fund Manager for the same, and the fund manager would be investing the majority of the investor’s capital in Equity and equity-related securities. Hence, the fund is suitable for high risk-taking investors.

VIEW OF ANALYSTS ON THIS FUND Rushabh Desai If you see the P/E Ratio of the TAI EX Index, it’s trading below its 10-year historical average. So its 10-year historical average is around 15 and is trading at around 13. From valuations perspective, it is very attractive, and also corporate profits have shown tremendous upside growth. I see immense long-term potential in the Taiwan market, but I would still bet on the Greater China region, it just gives a better diversification rather than just a concentration risk. Mitali Dhoke The fund is nevertheless vulnerable to risk, notwithstanding its global exposure and investment in new prospects in the Taiwanese market. The scheme would invest in high-risk overseas shares, and any downturn in Taiwan's economic story could result in a concentration risk. There are geopolitical risks and currency fluctuation concerns, in addition to being a thematic fund focused on Taiwan. RESPONSE TO THE NFO TILL NOW

Source: myinvestmentideas.com

According to the fund house, the Nippon India Taiwan Equity Fund received Rs 617 crores from 65,500 applications during its NFO period. The fund received money from 50,720 retail applications for Rs 181 crore and 6,044 high-net-worth individuals

| ECO SECTION (HNI) applications worth Rs 408 crore. The fund is now the highest grossing NFO among the international funds that are outside the USA. RISKS AND OPPORTUNITIES WITH THE FUND

ASSOCIATED

WHO SHOULD INVEST IN THE SCHEME? The scheme is suitable and apt for high-risk investors who want to profit from the growth of companies listed on Taiwan's recognised stock market. To weather market volatility, you'll need a long investing horizon and an investment aim that matches the funds.

Risks Possible conflict with China in the future, which will directly impact Taiwanese economy and stock market. Investors who own segregated portfolio units may not be able to liquidate their assets until the issuer is paid.

One who wants to diversify their portfolio globally can invest in this fund. However, investing in a worldwide fund that spans regions would be better compared to the one that focuses on one country and hence invest only if you are confident in the Taiwan market's future growth.

Risks associated with Taiwanese currency. Investing in a single country, so returns depend on growth of a single country. Opportunities Taiwan plays a significant role in the global semiconductor supply chain. Source: dsj.in Opportunity to diversify by investing in Taiwan’s semiconductor industry. Semiconductor manufacturing is a large and rapidly growing sector in Taiwan. High dividend yield of 2.8 percent in Taiwanese stocks compared to 0.97 percent in Sensex listed stocks.

| SECTOR ANALYSIS

SPECIALTY CHEMICAL SECTOR

OVERVIEW A complex and interlinked industry produces specialty chemicals. In the strictest sense, specialty chemicals are chemical products sold based on their performance or function rather than their composition. They can be single-chemical entities or formulations whose composition sharply influences the performance and processing of the customer's product. Products and services in the specialty chemicals industry require intensive knowledge and ongoing innovation.

Tuneer Sarkar | MBA - DSA| 2021 - 23 Viram Vora| MBA- C| 2021-23 Furthermore, it provides raw materials to various end-use sectors and pillars in its growth process. Foreign investment in the Indian chemical sector reached one billion US dollars per year between 2016 and 2020. International players had 24 acquisitions of Indian chemical enterprises in the first six months of 2020.

On a global basis, the market value of specialty chemicals is expected to increase to USD 197.8 billion by 2023. India's chemical industry is one of the largest in the world. In terms of revenue, it was ranked fifth in the world in 2020. It is also one of the most diverse sectors in the country, with over 80,000 goods.

Source: Statista

| SECTOR ANALYSIS India is only preceded by China, the United States, and Japan, having the fourth-largest deals globally. India stands at 14th Position in Global Exports for Chemicals and 8th Position when discussing Global Imports for Chemicals. This sector's Small and Medium enterprises are expected to grow 18-23% in revenue for FY2022. India is one of the largest exporters of agrochemicals globally, which reached 384 thousand metric tons in 2021, which in and of itself is the largest sector of India's specialty chemicals market at 30% market share.

Covid-19 had a significant impact on the specialty chemicals industry, with the most significant impact being faced by the oil and gas industry and Automobile industry.

Source: Statista Market Segmentation Geographical Segmentation: Leading chemical markets by country worldwide in 2020, based on revenue (in billion euros)

Source: Statista MARKET ANALYSIS Market size and growth prospects

Source: Statista

India's chemical industry was estimated to be worth USD 178 billion in FY20 and has a significant potential to reach USD 300 billion by FY25. In terms of demand, the industry has grown at approximately 1.3 times the country's average GDP growth in the last five years and shows a strong linkage with its GDP.

China is by far the biggest market for specialty chemicals globally, followed by Germany and India. Market value forecast: Market value of specialty chemicals industry in India in 2015 and 2019, with an estimate for 2025 (in billion US dollars)

| SECTOR ANALYSIS

Source: Statista According to the latest forecasts, the market size of the Indian specialty chemicals will increase to USD 64 billion by 2025. Market Revenue: Total revenue of the chemical industry worldwide from 2005 to 2019 (in billion US dollars)

Source: Statista The demand for specialty chemicals peaked between 2011 and 2016. Although since then, there has been a decline in the demand, owing mainly to the rising concerns regarding the environment. Market Share: Market share of specialty chemicals industry in India in 2020, by segment.

Source: Statista Agrochemicals, dyes, and pigments hold the most significant segments of the markets, at 29% and 22%, respectively. The segments are expected to have the largest market share in the industry. GROWTH DRIVERS The major growth drivers behind India's chemical industry could be listed as follows: Structural advantage: With a growing market and purchasing power, the domestic industry will likely grow at over 10-13% in the coming years. Growing disposable incomes and increasing urbanisation are fueling the end consumption demand for paints, textiles, adhesives, and construction, which, in turn, leads to the substantial growth opportunity for chemicals companies. High domestic consumption: The chemicals industry in India is the largest consumer of its products, consuming 33% of its output. With promising growth trends in the chemicals industry, this internal consumption is also rising.

| SECTOR ANALYSIS Diversified industry: The Indian chemicals industry has a diversified manufacturing base that produces world-class products. There is a substantial presence of downstream industries in all segments. Further, this large and expanding domestic chemicals market also boasts a large pool of highly-trained scientific workforce. Promising export potential: Chemicals constitute ~5.4% of India's total exports. India already has a strong presence in the export market in the sub-segments of dyes, pharmaceuticals, and ago chemicals. The country is also involved in exporting dyes to Germany, the UK, the US, Switzerland, Spain, Turkey, Singapore, and Japan. KEY PLAYER Aarti Industries Limited (AIL)

Source: Statista Revenue

Cr ₹ 4,886

Market Cap

Cr ₹ 34,498

Dividend Yield

0.08 %

ROCE

13.6 %

ROE

16.2 %

Face Value

₹ 5.00

Promoter holding

₹ 5.00

Price to book value

9.85

The most significant revenue share of the company comes from its specialty chemical business, although Pharmaceuticals play a considerable part, and HPC chemicals have not been offered since 2019. PORTER'S FIVE FORCES ANALYSIS Competitive Rivalry

Aarti Industries is India's largest specialty chemical manufacturer by revenue. The company combines process chemistry expertise (recipe focus) with scale-up engineering expertise (asset utilization) for a more sustainable future.

In the Chemical industry, more than 50,000 manufacturing units make rivalry more intense. Moreover, there is 100% FDI allowed in the sector.

| SECTOR ANALYSIS

Barriers to Entry A Huge amount of Capital investment for setup is required in this sector. Adding to it increased spending on Research and Development (R&D), the strength of Patents makes it more difficult for newer entrants. Another restriction on entry arises due to government regulation for dumping lowcost, poor-quality Chemicals in domestic markets by mandating certifications for imports. Overall, there are high restrictions for entry into the sector. Bargaining power of Suppliers In the Indian Market, few but large-scale suppliers control raw materials' primary supply and prices. These suppliers are not dependent on the Supply chain. Forward integration seems to be pretty standard here. Moreover, as far as specialty chemicals are concerned, most imports come solely from China. Hence bargaining power of suppliers remains high in this sector. Bargaining power of Customers Chemicals are used as primary raw materials in Industries like Adhesive & sealants, cosmetic chemicals, textile chemicals, and many more. Since most sellers sell differentiated products according to buyers' needs, the buyers enter into long-term contracts, which makes switching costs very high.

Moreover, due to differentiated use of Chemicals, the buyer’s negotiation powers vary across the different product segments. Overall, the Buyer power is moderate to low in this industry. The Threat of Substitute Products Substitutes of specialty chemicals are rare; mainly, the trend of using natural substitutes has now shifted the focus of some companies. However, natural substitutes are not inadequate compared to traditional chemical offerings. Also, finding a suitable hardcore substitute requires intense research and development, which requires a considerable budget outlay. Hence, the threat of substitutes remains weak in the specialty chemical segment.

CONCLUSION It can be safe to consider that the industry is expected to grow with many new government initiatives. As global supply chains start to normalize, greater demand for specialty chemicals can be expected, especially in newer categories, while agrochemicals might lose some of their growth due to increased demand for organically grown crops.

| COMPANY ANALYSIS

AARTI INDUSTRIES LTD

OVERVIEW Aarti Industries is a chemical company headquartered in Mumbai that is involved in manufacturing specialty chemicals and pharmaceuticals with a global footprint in 60 countries. It was established in 1984 by firstgeneration technocrats with just two products and one manufacturing unit. They hold first to fourth positions for 75% of their product portfolio. The company serves leading consumers of specialty chemicals and intermediates for pharmaceuticals, agrochemicals, polymers, pigments, printing ink, dyes, fuel additives, aromatics, surfactants, and various other specialty chemicals across the globe. End-use applications of their products: Agrochemicals Pharmaceuticals Polymers and additives Fuel additives FMCG Dyes and Pigments

Varun Nagur| MBA - IB | 2021-23 Muskan Jain | MBA - FS | 2021-23 Printing inks Other specialty chemicals

Top Management of the Company

Source : www.aarti-industries.com OVERALL STATUS OF THE COMPANY: HISTORY AND PRESENT Over the years, the organization has had an eventful journey from manufacturing out of just one manufacturing unit to now having a global presence and twenty manufacturing plants. A brief timeline of the organization is as follows: 1984: Incorporated Aarti Organics Pvt Ltd

| COMPANY ANALYSIS 1990: Set up the first large scale organic plant in Vapi – a 4,500 TPA unit for NCB 2005-2008: Set up large scale specialty chemical unit at Kutch

AIL has adopted a ‘7 S’ framework to guide actions responsibly, which comprises Structure, Systems, Style, Staff, Skills, Strategy, and Shared Values. VALUES OF THE COMPANY

2011: Received US FDA approval for the custom synthesis division at Vapi and also commenced bulk shipment for global markets 2016: Commissioned an ethylation facility at Dahej SEZ (ethylene gas via pipeline) and expanded the NCB capacity from 57 KTPA to 75 KTPA 2018: Manufacturing facility set up at Dahej SEZ and commissioned the Nitro Toulene plant 2021: Operationalized Phase 2 unit at Dahej SEZ for agrochemical intermediates

Source: www.aarti-industries.com

CORPORATE GOVERNANCE The board of directors at Aarti Industries Ltd is a diverse mix of highly qualified and experienced veterans from various industries. The board maintains complete oversight across various business units and functions via delegation of responsibility to various committees and ensures that the organization's goals in terms of growth, sustainability, and profitability are secured.

Vision

BUSINESS SEGMENTS AND PRODUCTS

To emerge as a ‘Global partner of choice’ for leading consumers of specialty chemicals and intermediates.

The organization is broadly categorized into two verticals:

Mission Delight Stakeholders As a leading manufacturer of specialty chemicals, AIL creates value for the stakeholders through business achievements.

Pharmaceuticals Segment Aarti Industries has 5 active pharmaceutical ingredients (API) manufacturing plants, two of which are approved by USFDA and three of which are WHO/GMP certified. The pharmaceutical segment is divided into three verticals: API, intermediaries, and manufacturing Xanthine derivatives.

| COMPANY ANALYSIS Xanthine derivatives are used in beverages, nutraceuticals, and pharmaceuticals. AIL has backward integrated intermediaries for most APIs that are manufactured, which are exported to regulated markets globally, including the USA, several countries in the European Union, and Japan.

Source: www.aarti-industries.com

Specialty Chemicals This segment makes up the core business of the organization that contributes the maximum to its revenue. In FY 2020-21, over 85% of the revenue was generated by customers that have been associated for more than five years. Some of the specialty chemicals that are produced include the following: Single Super Phosphate (SSP) Export grade calcium chloride granules Fuel additives Phthalates Aarti Industries is the only manufacturer in India for Nitro-Fluoro Aromatics and amongst the top 3 global manufacturers for NCB (Nitro Chloro Benzene) and DCB (DiChloro Benzene) OPERATING PERFORMANCE Despite the challenges induced by the pandemic, AIL is committed to closing the year with great numbers to establish a strong base for the upcoming years. The pandemic set up new trends in the market and AIL successfully adopted these in sync with the market.

With the onset of pandemic and economic slowdown, the business of AIL was also impacted initially. AIL managed to recover from the slowdown and establish great recovery numbers for growth. Aarti Industries Ltd. adopted a series of megatrends to keep up with the marketFocus on health and safety Increasing automation and digitalization More investment towards sustainability Preference for remote or digital sales channel Virtualization of the workforce FINANCIAL ANALYSIS AIL reported a gross total income of 4,808 Crores for FY 2020-21 against 4,408 Crores for FY 2019-20. Similarly, the exports for the year were at 2,004 Crores for FY 2020-21 as against 1,841 Crores for FY 2019-20. The company’s EBIDTA stood at 935 Crores in FY 2020-21 as against 930 Crores in FY 2019-20, registering a growth of 0.54%. Likewise, Profit before Tax stood at 632 Crores in FY 2020-21 as compared to 646 Crores in FY 2019-20

| COMPANY ANALYSIS Likewise, Net Profit after Tax and Deferred Tax stood at 514 Crores in FY 2020-21 compared to 523 Crores in FY 2019-20. The consolidated total income for FY 2020-21 was 5,023 Crores compared to 4,621 Crores for FY 2019-20 and exports for FY 2020-21 2,188 Crores v/s 1,966 Crores for FY 2019-20. On a consolidated basis, the EBIDTA stood at 982 Crores in FY 2020-21 compared to 977 Crores in FY 2019-20, registering a growth of 0.51%. Similarly, Net Profit after

consolidation stood at 523 Crores in FY 2020-21 compared to 536 Crores in FY 201920.

Source: Marketline

The Company has utilized a lesser amount of debt to finance its assets. The continuous drop in the inventory turnover ratio signifies that the inventory has been kept for a longer duration year after year; this could be due to weak sales of the chemicals and pharmaceuticals. FUTURE OUTLOOK India’s specialty chemical industry is expected to witness a growth of 10-12% CAGR between 2020-2025 due to rising demand from end-user industries and limited supply from China due to stringent environmental norms. Even the pharmaceutical segment of the Company registered strong growth during FY20-21. The Company is witnessing strong business traction in the pharma segment based on higher volumes from regulated markets, value-added products, and new intermediaries.

Ratio Analysis

The Net profit margin of Aarti Industries displays a continuous increment, implying that the company is able to increase profits with increasing revenues over the years. The drop in the Debt-to-equity ratio from 2020 to 2021 proves the company’s recovery from COVID as in 2021.

Source: Crisil Increase in Consumption Capacity The scope of Aarti Industries Ltd. is expected to grow as penetration of specialty chemicals in India is very low,

| COMPANY ANALYSIS providing a huge area to expand. The per capita consumption in India is only USD 23 compared to the global average of USD 100. Government Initiatives Under the 'Make in India' scheme, the Government has drafted a National Chemical Policy to improve the chemical industry's contribution to the GDP. This draft mentions focusing on 'Specialty

Chemicals.' Projected Growth for AIL For the FY2023-24, it is projected that the turnover will be 1.7 to 2 times over the FY 2020-21 performance with respect to turnover (5,023 Cr), EBIT (753 Cr), and PAT (524 Cr). Similarly, for FY2026-27, Aarti Industries has projected a growth of 2.5 to 3.5 times over FY 2020-21 performance.

| INTRIGUING INDEED

WHY THE METAVERSE IS MORE THAN MARK ZUCKERBERG'S DREAM LITIGATION FINANCING The recent rebranding and investments by Meta have sparked a new surge of interest in the metaverse. It’s all over the news, in memes, on social media, and on gaming platforms. Users “live” and “act” within a digitally produced cosmos in the Metaverse, which is a synthesis and integration of several elements of technology including virtual reality (VR), augmented reality (AR), and video. Many of the technologies that could really make it possible predate the word Metaverse, which was coined in 1960. “Behind or beyond” is the meaning of the suffix meta-. The -verse portion of the word comes from the word “universe” and refers to a certain sphere or territory. The term “metaverse” is used to describe a virtual environment that exists beyond, on top of, or in addition to the actual world. Mark Zuckerburg’s name conjures up an image of everything both virtual and literal: You use the Quest VR headset to attend business meetings as an avatar and a wrist device to text buddies.

Upendra Baliga | MBA-C | 2021-2023 Karthik Anand| MBA-D | 2021-2023 When you are outdoors, you’ll put on intelligent glasses which would record and store all that you observe around you and provide you with a virtual reality experience. The metaverse would have access via smartphones, laptops, AR and VR headsets, and also by skin contact wearable devices, and can be reached from wherever we wish like gyms, malls, café’s, parks, and places of entertainment and social interaction. People have been seeking to create immersive virtual worlds since the 1960s, a goal inspired by the film and video gaming industries’ efforts to create worlds. Online communities have existed since at least the mid-1980s, and chatrooms, AOL instant messaging, and the first social media sites proliferated in the 1990s. In the early 2000s, the game ‘World of Warcraft’ became a popular social interaction hub for millions of people.

| INTRIGUING INDEED to platform in the same t-shirt, maintaining seamless continuity of objects and identity. With a 3 Billion user base, the metaverse is well poised to host unlimited number of users without compromising the experience. Also, Mark confirmed that each of the features included in the metaverse will have its own presence.

Source: Solid state lighting design This has led to the development of gaming communities among the youth, for whom the experience is just another social interaction akin to physical meets and gatherings that happen in current times. Among the most shared examples of meta, is of living a second life, where people can build their dream houses, visit the choicest of restaurants and connect with partners of their imagination, making them feel like living an alternate life of perfection. This seems like a scene straight out of inception or Avatar but is indeed fascinating. The metaverse poses the big “what If” question, where it queries the amalgamation of Virtual and Augmented realities, zoom meetings, artificial intelligence, cyber security, wearable technology, cryptocurrency, 5G and what not. This is said to be the future of technology, but is it good for the world is what remains to be seen. In a Facebook Connect Presentation by Mark, his own avatar moved from platform

For the most part, most of those who have been extolling the virtues of the metaverse are Silicon Valley personas, primarily technology futurists who believe that the metaverse is the next logical step in the tech evolution. Others include Hollywood stars and actors like John Smart, with heavy financial investments in the metaverse, are betting on its fruition. Prolific writer and venture capitalist Matthew Ball and Mark Zuckerberg are certainly among those in the lead. What is paramount to understand is that the metaverse is not real, rather a fancy dream. For Zuckerberg, as he clearly states, it is a goal, and for the engineers, academicians, scientists and investors, it is a project that carries the task of growing their wealth. However, the idea has faced a lot of criticism from the people, who so much so hate it and believe that it is a dystopian mess which could do immeasurable damage which is unfathomable. For Meta, the idea of metaverse at the fundamental level is fraught with concerns on scaling up the platform. Primarily, the expansion of the virtual world is more likely

| INTRIGUING INDEED

to amplify the negative and harmful attributes of associating with it. Now, what would it imply for the world when a handful of profit fishing companies who mediate the tools of essential human interaction? If we were to go by Meta’s dominance of the social media space, the future does not feel promising. Information privacy and social security is a matter of concern in the metaverse. This is because companies will use all means to collect personal information using feeds from wearable devices, and IOT driven systems, to constantly understand their user’s behavior. Facebook itself has made it clear that it will persist with the idea of targeting users with customized advertising, elevating the fears of privacy loss and spread of misinformation. Moreover, the interaction using virtual avatars might lead to heightened levels of negative emotions in case of unfavorable and forced interactions leading to increased anxiety and depression.

online existence – hacking, catfishing, harassment, hate speech – to truly asses our road ahead into this virtual universe. “It’s important to recognize that there are five really important problems we haven’t yet solved in the mobile internet: data rights, data security, radicalization, misinformation and platform power,” says Matthew Ball, author of the forthcoming The Metaverse: And How it Will Revolutionize Everything. “If the fundamental premise of the metaverse is that we will spend more of our time, labor, leisure, wealth, existence inside virtual worlds, then by definition, every one of those five problems is exacerbated. The amount of data captured and the importance of that data goes up, or the risks of data loss are intensified.” User addiction, improper and irresponsible social

media

handling,

another

impending concern for the development of the metaverse. Internet addiction disorder, social media and video game addiction can

We all have far more to worry about the digital spaces than just the level of interaction or time spent on the metaverse. The direction in which the technological innovation is heading does little to consider whether it is the direction to be taken in the first place. If at all the metaverse is an extension of the internet we are currently aware of, then there are a myriad of problems to worry about. We need to address a lot of issues in our state

have severe repercussions over physical and

mental

prolonged depression,

health

periods

conditions

heightened

time

over

such

anxiety,

sleep

disorders, obesity and low libido. Experts are concerned with the misuse of the metaverse as an escape from reality into a fake

paradise

causing

long

lasting

implications for the society. They say it could lead to disorientation of the brain and loss of discriminatory abilities between the physical and virtual.

| INTRIGUING INDEED The metaverse might magnify the impact of digital echo chambers and digitally alienating spaces. Since the metaverse development may be algorithmically tailored to construct virtual spaces according to each person’s beliefs, it could further distort reality and its perception by developing a seemingly utopian world to increase engagement by users with it. Coming to Zuckerberg’s philosophy of promoting the metaverse as the future of Facebook’s Business, it has got a lot in it for him to lobby so assertively. Facebook’s business for the most part since the last decade has attributed its success to acquiring innovative applications like Whatsapp and Instagram through billion dollar deals and developing imitated products from novice innovators. Facebook has been reliant on Apple and Google’s success for its applications to perform well as they run on iOS and Android. With their priorities being poles apart, recent changes in the app transparency has dealt a severe blow to Facebook’s advertising business as collecting user information through them has become difficult than ever before. The Metaverse is therefore a strategic attempt to gain platform independence through Oculus and similar other modules, thereby reacquiring the lost pool of youthful users who have migrated from Facebook and Instagram, to more innovative and customizable Tiktok and Snapchat. If interaction with the internet were to be dominated by smartphones, this is the only way for them to gain more control.

Source – Outlook India Also, it would cleanse their reputation damaged by scandals and its usage for political vendetta. With so many issues eliminated by one idea no wonder Mark is all smiles when talking about it. With Governments being sluggish in handling cyber security concerns such as misinformation and deep fakes, can it be trusted to make metaverse safe ethical and sustainable? What would be the environmental cost of handling it? For now, the metaverse is mostly the hope of a few, a speculation, a fantasy with many gaps to let the chill winds of the unknown to blow through. The metaverse as an idea is for some – a cherished dream and for many others a nightmare in the making.

| ENTREPRENEURSHIP INNOVATION

PEPPERFRY INTRODUCTION Pepperfry, India’s largest online furniture retail store, was founded in 2011 by ex-eBay executives Ambareesh Murthy and Ashish Shah, with its headquarters in Mumbai. Initially, it started as a horizontal ecommerce site revolving around fashion and lifestyle products. This was around the time when Flipkart was also a common ecommerce platform, and Amazon had yet to enter the Indian online marketplace. While they made profits initially, their business eventually began to decline. They ultimately decided to ditch this earlier business model and focus on a niche segment, i.e., the online sale of furniture and other home furnishing products. Pepperfry is a leading brand driving the popularity of online furniture shopping among Indians.

Moumita Biswas | MBA A | 2021-2023 The brand specializes and deals in diverse home décor segments like furniture, lighting, dining, kitchen appliances, bathing equipment, etc. While it is primarily an online store, Pepperfry has also opened over 40 physical stores named Studio Pepperfry in more than 18 cities across the country. The company claims to have more than 60 lakh registered users and offers over 1.2 lakh products. Pepperfry’s roaring success can also be attributed to its omnichannel capabilities that let its users order from any device anywhere, anytime. In 2018, Pepperfry started a furniture rental service in Ahmedabad, Bengaluru, Chennai, Delhi, Gurgaon, Hyderabad, Mumbai, Noida, and Pune. This initiative was launched to target the urban population aged 25 to 35 who can rent furniture for 6, 9, or 12 months.

| ENTREPRENEURSHIP INNOVATION BUSINESS MODEL While the founders were confident and clear about their business idea, it was the name where they faced initial confusion. They wanted a name that was genuinely Indian. It was then that they realized that nothing represented India better than its spices. Therefore, they came up with the name Pepperfry – “pepper” represented an Indian touch while “fry” was added just to bring in an element of fun. The owners found a way to explain their brand and work through videos on their Pepperfry TV. Pepperfry follows a Managed Marketplace Business Model. The sellers selling their products through the platform are small and medium businessmen. Pepperfry’s team meets the sellers and conducts proper checking of their products. Once the products pass the check, they are taken to studios for photoshoots. These photographs are then cataloged and uploaded on the website. When a customer places an order, the products are brought to Pepperfry’s warehouse from the sellers and dispatched to the customer after quality inspection.

Pepperfry is currently working with over 10,000 merchants and is actively expanding its reach. Pepperfry is also known for its prompt adoption of new-age technologies. The company extensively uses artificial intelligence (AI) and machine learning (ML) to drive product discovery and recommend the appropriate products for a particular customer. Pepperfry has also launched innovation hubs to offer immersive solutions to its customers and make the furniture-buying process easier and more accurate. GROWTH While Pepperfry is the largest online furniture store in the country, Redseer estimated its market share at a mere 3.5% of the total size of $20 billion. The overall Indian furniture market is expected to reach $37.72 billion by the end of 2026. Assuming the current market share of 3.5%, Pepperfry will grow to $1.2 billion.

Pepperfry has 17 fulfillment hubs across the country and has covered over 500 cities. The company gets over 120 lakh monthly visits. Among the furniture items sold, the coffee table remains the most popular product bought on the platform.

Source: Startup Talky, Inc42

| ENTREPRENEURSHIP INNOVATION Pepperfry reported a 27% increase in operating revenue from ₹193.26 crores in 2019 to ₹246.03 crores in 2020. Its total income also increased by 26%, while total expenses decreased by 1.8% during this period. Pepperfry was also able to reduce its losses from ₹183.49 crores in 2019 to ₹117.4 crores in 2020. AWARDS Pepperfry won the Red Herring Top 100 Asia award on 12th September 2012. This award is given to the most promising private tech ventures in Asia. Pepperfry was conferred the Pure-Play e-Retailer of the Year award at the Indian e-Retail Congress in 2014.

Pepperfry is planning to integrate such technological features further to boost customer experience in the future. While Pepperfry primarily focused on partnering with leading manufacturers of furniture and home décor in 2021, the company is now planning to turn towards local and regional players. They want to move ahead with this to add more variety to their collection and promote the local and regional manufacturers. The company is also eyeing the prospects of IPO in the first half of 2022, according to the reports published in October 2021. Since they are starting to turn profitable, the founders believe that an IPO is the right next step for the brand.

The company also won the Gold award for Best Creative at the Neons under Retail Advertising for its outdoor campaign “Happy Furniture to You.” ROAD AHEAD Pepperfry has made tremendous contributions to the Indian furniture market and added significant value to this industry. It has recently launched an augmented reality feature that allows customers to virtually place furniture in their homes and evaluates their choices before placing an order.

| PERSON IN FOCUS

FALGUNI NAYAR Falguni Nayar, born 19 February 1963, is an Indian businesswoman and billionaire who is the founder and CEO of the beauty and lifestyle retail company Nykaa. She is one of two self-made female Indian billionaires. Nayar is now the wealthiest female Indian billionaire with her estimated wealth to the tune of $7 billion, after recent listings, and in India's top 20 wealthiest people. PERSONAL LIFE Falguni Nayar belongs to a Hindu Gujrati family and was born and brought up in Mumbai, Maharashtra. Her father, Nayar, migrated from Karachi, Pakistan, to a village in Gujarat during the Partition of India in 1947. Later, she and her family moved to Mumbai, where her father started working as a Hindi teacher. After a while, her father and her uncle started a trading business and later, a ball-bearing manufacturing business on a small scale that they eventually built into a

Abhijeet Upadhyay |MBA – RM| 2021-2023 medium-sized business. Even when Falguni Nayar was a child, her father started involving her in his business. While she was in her 6th grade, her father used to ask for her advice on the diversification of his business and other business-related things, stock market, etc. This inspired Falguni Nayar to study the price-earnings ratio in newspapers, which ignited her interest in Finance. In 1980, Falguni Nayar joined Sydenham College of Commerce & Economics, Mumbai, to study for a Bachelor of Commerce (B.Com.) in Accounting and Business/Management. She was a bright student throughout her student life, after completing her B.Com. In 1983, Falguni Nayar joined the Indian Institute of Management, Ahmedabad, to study MBA in Finance. She met Sanjay Nayar (her husband) at IIM Ahmedabad and became very close to him since then. They both graduated in 1985 and tied the knot in May 1987. They both have two beautiful

| PERSON IN FOCUS children, a son named Anchit Nayar and a daughter named Adwaita Nayar. PROFESSIONAL LIFE After passing out from IIM, Falguni Nayar joined A. F. Ferguson & Co. in May 1985 and worked at A.F. Ferguson & Co. as a manager until December 1993. Then, in 1994, she

Source: freepressjournal.in

joined Kotak Securities and worked as a Head of International Business in London and the City of Greater New York. While working in London and New York, Falguni learnt many things about managing businesses and this confidence later helped her in the foundation of Nykaa. In 2001, she moved to Mumbai and worked as Director and Head of Institutional Equities Business until 2007, then, in December 2007, Falguni Nayar joined Kotak Investment Banking and worked as a Managing Director until March 2012. While working at Kotak Investment Banking, Falguni Nayar oversaw the IPOs of companies like Marico, Godrej, etc. During that time, she saw entrepreneurs building

many successful and sustainable businesses, and she, too, was excited to start her venture. But for a long while, she couldn’t convince herself and quit her good job at Kotak Investment Banking, but she also had an aspiration deep inside her heart to become an entrepreneur by the time she turned 50. Finally, in March 2012, she resigned from her job to embark on her entrepreneurial journey. She founded Nykaa in 2012 with the vision of building a multi-brand omnichannel beauty-focused retail business. She entered the beauty ecommerce market with Nykaa and avoided the overly competitive markets of electronics, fashion, etc. In 2012, ecommerce wasn’t popular, but as she was confident about the growth of e-commerce, she didn’t doubt her decision. Even though she wasn’t passionate about applying makeup herself, she was very interested in the beauty business. By empowering customer choices and enabling brands to reach the breadth and depth of the country, Nykaa has emerged as India’s leading beauty retailer playing a critical role in developing the beauty market in India. Today, heading a team of over 1600 Nykaa-ites, she has built a beauty and lifestyle retail empire with a portfolio of 1500+ brands, including its private label, available online and across 68 stores in India. Nykaa’s revenue exceeded Rs. 1200 crores in revenue in FY19 and is on track to exceed Rs. 2000 crores in FY20. She has

| PERSON IN FOCUS ventured into new verticals like Nykaa Fashion - a fashion-first, style-led curated fashion platform. AWARDS AND ACCOLADES 2017 - Awarded the ‘Woman Ahead’ award at the Economic Times Start-up Awards, 2017. 2019 - Awarded the Businesswoman of the Year at the Economic Times Awards for Corporate Excellence,2019. 2019 - Listed as one of Asia's Power Businesswomen, 2019 by Forbes Asia. 2019 - Named Businessperson of the Year, 2019 by Vogue India.

from that, Nykaa Man was also launched to cater to men's lifestyle needs, which also worked in favour of the makers, increasing profitability and creating a name for the brand. Elaborating more about her journey of building Nykaa, Femina quoted her as saying, “I have really enjoyed learning every aspect of the business, right from marketing and technology to operations, and seeing how all these pieces come together to create the magic we do every day.” Thus, here stands a woman who broke the glass ceiling. At an age when most people consider retiring and resting as a life choice, this woman, without caring about society's stereotypes, created a world of her that is not only her dream but a sustainable lifestyle tool for others.

2019 - Awarded EY Entrepreneur of The Year 2019 – A start-up award by Ernst and Young. RECENT REVOLUTIONS The 58-year-old CEO of Nykaa, while talking about how the lockdown impacted the sales, told the said portal, “Although business

was

initially

impacted

significantly because of the lockdown and the overall uncertainty, we quickly pivoted by adding pin code-centric personalization capabilities. As we opened up operations, the revival of demand through nationwide availability, online and offline, as well as improved supply chain and logistics led to strong revenue numbers by July.” Apart

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THE GREAT RESIGNATION 2021

Swapneel Verma Millions were forced into confinement when the pandemic set upon the world. The Global Economy underwent a state of shock and substantially shrank in response to this rare disaster. This economic upheaval cost several thousand workers their jobs and the ones who remained were subjected to grueling work schedules. As per a report of The UN Department of Economic and Social Affairs, a whopping 131 million more people were pushed into poverty in 2020. Over the past few months, a novel phenomenon has been a cause of concern for businesses across the United States. In this unexpected observation, millions have deliberately walked out of their jobs in record numbers across the U.S. As per the U.S. Bureau of Labor Statistics, the quit rate climbed to an all-time high of 2.9% in August 2021. This amounts to about 4.3 million resignations. The scenario was even worse in the Leisure and Hospitality Industry

XISS | PGDM - FS | 2021-2023 where the rate soared to 6.4% in the same month.

Source: U.S. Bureau of Labor Statistics

Anthony Klotz, an associate management professor at Texas A&M University was the first to coin this wave of resignation as “The Great Resignation”. Months of financial precarity have caused many to reevaluate the value they are getting out of their jobs. As per a recent study conducted by the auditing giant Deloitte and UK-based

| CALL FOR ARTICLES - WINNER industrial body, The Manufacturing Institute, the projections suggest that 2.1 million jobs would be left unfilled by 2030 costing the U.S. economy close to $1 trillion. While mostly pronounced in the US, the effects of the phenomenon have reverberated across the international boundaries.

Source: IFO Business Survey, September 2021

In Germany, a study by the IFO Institute for Economic Research, says that 33.5% of the building construction company reported problems in finding skilled workers. Add to it, 37.9% of Civil Engineering firms which complained about the paucity of suitable applicants. The British Chamber of Commerce, in a quarterly recruitment outlook survey for Q2 2021 reported a steep rise in the percentage of firms experiencing difficulty in recruiting from 53% in Q4 of 2020 to 70% in Q2 of 2021. The Great Resignation has stirred the employment landscape completely, causing many to search for root causes. Despite many surveys that have been done in this regard, it

has been difficult to particular cause for it.

attribute

one

A consensus suggests that the Pandemic smothered a pent-up desire to jettison current organizations. Myriad of employees across different sectors hunkered down for months in their homes and instinctively clung to the same roles. This prolonged period of pause caused many to experience what may be termed as “Pandemic Epiphany”. The stressful time provided an opportunity to reflect on the inability to build a financially stable life in the harsh reality of the soaring cost of living and education. Fortunately, the “spending only on essentials” mentality enabled many to build an emergency fund. Now, with the availability of such financial cushion, many feel empowered more than ever to take a break and filter out flexible and financially healthier options. The pandemic also revealed the inefficiencies of traditional work practices and pushed the employers on a path filled with experimentation. For many, the newly introduced work from home was difficult to adjust with but soon they realized the autonomy that came with it. The ability to work remotely worked out well, so much so that they are unwilling to sacrifice it now. A recently conducted survey by EY Global reflects that nine out of ten employees want flexibility in where and when they work. Around 54% of the respondents

| CALL FOR ARTICLES - WINNER expressed unwillingness to return to work in absence of flexible work culture which manifests in the recent spate of resignation.

that employer who cares about their emotional and financial wellness. The sooner a business realizes it, the better will become its retention rate.

There is one dot left to connect. Why the quit rate climbed to an all-time high in August? Why, of all times, employees were on the lookout for jobs with greater flexibility and higher wages then? The explanation lies in the data. Around March 2020, the countries went into lockdown to curb the spread of the virus. The lockdowns carried an atrocious implication for the economy. The businesses which are considered as the engines of the economy began to announce massive retrenchments. The situation improved when vaccination drives started. During the post-pandemic recovery, the economies started opening up. As a result, businesses across the globe began to witness a steep rise in demand. To meet the said demand, people were needed. Consequently, around the end of the first quarter of 2021, the job market got flooded with a deluge of employment opportunities. As per Bureau of labor statistics, the number of unemployed in August 2021 was close to 8.4 million while the jobs available to them were around 10.6 million. This wide gap of demand and supply elucidates why employees felt so confident to move on. The Great Resignation has still not lost its steam which is why it becomes imperative to examine the motivation which triggered it. In this moment of empowerment, the employees have clearly shown the intention to stay with

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REPEAL OF FARM LAWS NAMAN ANAND NOT ALL FARMERS GET BENEFITTED FROM APMC! Kisan Mandi in Delhi was launched in 2014 with the objective of linking farmers to wholesalers and retailers in the fruit and vegetable segment. Till date more than 47,000 MT produce has been marketed to wholesalers, restaurants, and caterers. In an attempt to come to a solution for one of independent india’s longest protest, the government decided to repeal the three farm laws . But what made the government step back after 378 days of the farmers protest ? To understand this, we need to know the situation on the Indian farmers and the need for these three farm laws. Since Independence , agriculture is largest source of survival for majoriy of the Indian population. In the existing model of selling the produce, the farmers look for a hope at the Mandis where they can sell the produce with an assurance of getting the minimum

GLIM,GURGAON | 2021-2023 selling price. These Mandis are regulated by the state governments under the Agriculture Produce Market Committee (APMC) Act. The farmers are supposed to sell their produce to the Arthiyas (Licensed Commission Agents) who charge a commission of 1.5 to 3 % of the price. The small and middle farmers who are unable to access the government schemes sell their produce to these agents at a low price. If we talk about states like Punjab and Haryana, there are 48,000 agents who are employed at the APMC’s. Due to this large number , the agents form a cartel to demand high prices of the crops. Normally,the first users of the farmers produce are the wholesaler , Restaurants and factories . After forming a monopoly , the agents buys the farmers produce at a low price and sell it further with a high bargaining power, which tends to increase inflation . 36

| CALL FOR ARTICLES - RUNNER UP PROMOTION AND FACILITATION ACT

ESSENTIAL COMMODITIES ACT

The state governments collect tax at Mandis from farmers to sell their produce, which turns to be around Rs.1750 cr and Rs.850 cr for states like Punjab and Haryana where almost 34% of the farmers own less than 5 acres of land. Hence, not all farmers can afford to pay taxes for their produce and they do not have access to APMC.

The third law, The Essential Commodities (Amendment) Act lifts the stock limits imposed on agricultural produce. This meant that the farmers can now sell the entire produce at one go and also provide them the incentives for the cold-storage facilties. The government will impose the restrictions only when there is a rise in the commodities prices. EMPOWERMENT AND PROTECTION ACT Empowering the small farmers

The government realized that a large segment of farmers is deprived of this service, for which after two decades of consultations with agriculture experts, the three farms laws were brought in to provide opportunities and security to all the farmers. The Farmers’ Promotion and Facilitation Act, one of the three laws finds a solution to the problem faced by the small farmers. This law provided the option to sell the farm produce outside the APMCs at a mutually agreed price. The transaction will be free of the mandis tax which will act as savings for the farmers.

While earlier, the farm produce was sold to the wholesalers, Restaurant owners, or at the factories, The Farmers’ Empowerment and Protection Act allows farmers to sign a contract with anyone and produce according to the demand. The biggest advantage of this act is that during any uncertainty like extreme rain or drought, if there is no production, still the contract will remain valid and there will be no transfer of land or ownership, which is sighted to be a widespread rumor among the farmers. So if big industries or even foreign companies reach out to the farmers for their produce, they can offer attractive prices much higher than the MSP. At the same time, the farmer is empowered to launch a grievance to the SDM or the civil court in case of any dispute.

| CALL FOR ARTICLES - RUNNER UP WHAT MADE THE GOVERNMENT STEP BACK? With 11 rounds of conversations, a huge financial loss faced by the states due to the farmers’ agitation, and 378 days of non-stop protest, both the parties failed to convince each other. Opposition parties decided not to implement these laws in their states and the supreme court declaring the Right to Protest as a Fundamental Right, made the government think on some serious notes.

same throughout the winter session, and on the other hand repeal these laws to move on with the development of the national policies. FARMERS’ FEAR Although after years of consultation with the scientist, these three farm laws when passed by the parliament, witnessed a high protest throughout the country. Few groups of farmers were blaming the government for not taking their advice before implementing the laws. Several farmer unions blocked the roads and sat on an indefinite strike demanding the repeal of laws. They blamed the government to support the big industrialist on which the government took the support of innovation and investment which could be brought in by the corporate world only. WHAT’S NEXT?

The government tried to educate the farmers about these three laws, but when they can do that? The citizens of the country were suffering from this fight, roads being blocked and the public property being destroyed, the government decided to take a step back and repeal the three laws to focus on more important tasks for the nation.

The government may try to come back with some changes in the laws after careful considerations, but it is unlikely to be seen before until next year due to elections in many major states.

During the winter session of the parliament, 10 bills are passed with an important Election Laws bill linking Aadhar card with the voter Id card to stop bogus voting. So on one side government had the option to not repeal these farm laws and continue discussing the

| ALUMNI INSIGHTS

COUNTERPARTY CREDIT RISK Saiyam Jain A journey of a thousand miles begins with a single Step:- Lao Tzu Dear Finly Readers, Kindly accept my greetings for the New Year. (Feliz año Nuevo) On this eve of New Year, I want you to give a fresh look towards the approach we follow to choose finance as a career and would also like to introduce you all to the world of Counterparty Credit Risk. I am very thankful to the committee for giving me the opportunity to write for Finly. I would like to use this opportunity to share my learnings with my peers and hope that it helps them in their current phase of the journey. During my college life, I was fortunate enough to be guided by amazing seniors, faculties and industrial persons. So first rule:- Try to do networking as much as you can and try to learn from their experiences. As per Eleanor Roosevelt “Learn from the mistakes of others. You can't live long enough to make them all

Batch 2017 - 2019 yourself.” I have taken my career guidance from JPMC and Citi Bank India’s head by simply connecting with them on LinkedIn, it is very easy to be done than to think of. THE DILEMMA OF FINANCE AS A CAREER Luck is what happens when preparation meets opportunity:- Seneca Many of us want to make a career in finance but that’s vague, and will lead to nowhere because even in the Credit Risk department we have 12 Sub teams and each one is unique in its functioning and technical expertise. Therefore one has to be very specific for the field and learn the technical know-how as per it, as the knowledge required for Credit Risk is different from Valuation ( even in valuation we have segments for Equity, Purchase Price Allocation, or Tangible Assets). To learn more about dimensions of finance one should use Problem Based Learning

| ALUMNI INSIGHTS Approach. It can be done through: Participating in Case Study Competitions Writing Research Papers / Articles Live Projects / Virtual Internships PBL approach will help you to identify the field in which you want to make your career otherwise will help you to eliminate that field. You will learn more from the PBL approach, as reading books and classroom study will give you a strong foundation and later will help you to apply them in the real world, if not then at least it will bring browny points to your resume. LIFE AS A COUNTERPARTY CREDIT RISK ANALYST I work as a Counterparty Credit Risk Reporting and Visualization Analyst with Standard Chartered Bank. My work here is divided into three categories: Monitoring, Investigating and Remediating I track Mark to Market Value of Contracts, Potential Future Exposures, and Specific Wrong-way risk. If any value breaches its limit then I have to investigate the reasons behind them and suggest remediation to the Singapore Team. I also work with the Credit Excess Monitoring team for Limit Breach, where we check limit breaching Counterparties and their trades and provide remediations for them.

Ensuring No Data Break I ensure that data from different source systems flow to Risk engines and finally to report generation tools. This allowed me to work on different software like Bloomberg, Sabre, Tableau, Murex, Harrier Simulation, etc. Bringing Automation With the help of the engineering team, we are also bringing automation to the CCR department which allows us to focus on Fundamental Parts of the job rather than the associated scut work. This allowed me to work on SQL and Python. In short, the CCR role touches every aspect of finance. It is not limited to crunching numbers to calculate exposures rather it’s a multiverse as its combines Mathematics, Finance, Economics, and Law. For example - We calculate the probability of Germany Light out and its impact on the exposures of the Indian Company and prepare a model to calculate it. Hence, one should have an interest in generating hypotheses, statistics knowledge and must have an urge to play with numbers. Now I will take the liberty to introduce you all with the Counterparty Credit Risk. It is in discussion since 1980’s and now plays an important factor while reporting Capital under BASEL III.

| ALUMNI INSIGHTS COUNTERPARTY CREDIT RISK “If you can’t explain it to a 6-year-old, you don’t know it yourself” - Albert Einstein With the advent of Derivatives in financial markets, measuring volatility has become both important and challenging. Derivatives referred to the financial instruments that derived their values from an underlying assets class like interest, FX rates, or indexes (also includes debt obligations, swaps, futures, options, and forwards). As per Warren Buffet “Derivatives are the financial weapons of mass destruction”. With his statement, we can measure the intensity of derivatives in the financial markets, how much they can impact our financial system. Counterparty Credit risk is one of the risks associated with the Derivatives contract. It refers to the risk that the counterparty to a financial contract will default before the expiration of the contract and will not be able to meet the obligations required by the contract. Only the contracts privately negotiated between counterparties — overthe-counter (OTC) derivatives and security financing transactions (SFT) — are subject to counterparty risk. Exchange-traded derivatives are not affected by counterparty risk, because the central exchanges guarantee the cash flows to the counterparties. Counterparty Credit Risk is different from Credit Risk on two grounds:

Bilateral Nature, lead emergence of Credit Risk THE EMERGENCE CREDIT RISK

the

COUNTERPARTY

Although CCR traces back to the 1980s but it came under the limelight in the advent of the 2007 US Crisis. Before the financial crisis, the aspect of CCR in financial contracts was generally overlooked especially in those trades where collateral was posted. Financial Institutions with good credit ratings were considered riskfree and termed as “too big to fail”. At the time of default, Lehman Brothers had around half a million derivative contracts with around 8000 different counterparties. Most of these counterparties probably never even considered a scenario where Lehman would default. CALCULATION OF COUNTERPARTY CREDIT RISK BASEL Committee (Under BASEL III), has laid down the guidelines for calculating the Counterparty Credit Risk to calculate the Risk-Weighted Assets which will be shown in the Balance Sheet. In simple terms, CCR is the exposure at default, which means in the case of default if one counterparty defaults how much loss the other has to bear. It is denoted as: Max (0, MtM)

Notional Amount is not fixed, lead to the emergence of Market Risk

| ALUMNI INSIGHTS It means exposure will always equal the positive MtM value of trade that the other party is liable to pay. Here 0 represents the negative MtM value which we are liable to pay to the other counterparty. Three Major ways to Calculate CCR:Current Exposure Method (BASEL I) = EAD = Current Exposure + add-on

specified but for others, it is generally calculated using the Monte Carlo Simulation method. It runs a sensitivity analysis using a stochastic differential equation model under the Markovian Process. It uses inputs like ratings, seniority, recovery rate, correlated trades, etc.

Internal Model Method (BASEL II) = EAD = alpha (1.1 – 1.4) X EEPE Standardized Approach to CCR (BASEL III) = EAD = alpha (1.4) X (RC+PFE) IMPORTANT TERMINOLOGIES RELATED TO COUNTERPARTY CREDIT RISK Potential Future Exposure

Wrong-Way Risk

It refers to the maximum exposure counterparty could have over the life of the contract calculated at a specified confidence interval.

When the probability of default of counterparty on its exposure is correlated to the general market factors or its specific transactions then it is termed as Wrong Way risk. For example:- When an Oil Company give bonds of a different Oil company as collateral, it will be termed as Wrong Way Risk. Netting

Under the SA-CCR model, its calculation is

A legally binding contract that allows aggregation of transactions which allows offsetting them against each other, leads to one final transaction.

| ALUMNI INSIGHTS For example - On the day, when Lehman Brothers declared its bankruptcy German bank KfW Bankengruppe had made a Euro 300 million payment to Lehman Brothers in the first half of the day and in the second half of the day were entitled to receive payment from Lehman Brothers in another contract. Later one German newspaper called KfW ‘‘Germany’s dumbest bank’’ as it cost Euro 4 to each German Citizen. Note: I have tried to explain terms and concepts using the ceteris paribus notion, as each concept is further divided into sub-topics and each has its assumptions. ENDING NOTE The world will ask you who you are, and if you don’t know, they will tell you. – C.G. Jung We all generally have a notion that 1 year back if I would have done XYZ or have taken other option or worked hard for exam, my life would have been awesome compared to now. If you will say this statement on 01st Jan 2023 then 01st Jan 2022 would be exactly 1 year back. Hence, it is upon us, if we want to pass 2022 as a year of infinite calendar or 01 Year of our limited life because this time we are fully aware that we can bring changes in our lives and reach out to our full potential. With this ending note, I wish you all a cheerful year ahead.

ISSUE NO. 107, JANUARY 2022

About Finstreet Finstreet, the finance committee of K J Somaiya Institute of Management aims at bridging the gap between industry and academic curriculum through effective delivery of knowledge-oriented sessions and events through a network of highly motivated members and renowned industry experts. Through the FINLY magazine, we focus on covering crucial topics for each month and giving our members a platform to express their views. OUR UPCOMING EVENT