FinNiche
FinXpress
FinXpress Volume 21 December 11, 2013
From The Editorial Yet Another Special Edition
CONTENTS
Recruiter Companies
Greetings from club FinNiche!
Genpact HDFC Life Idea Cellular Infosys KPMG MAQ Software Meru Cabs SMC Pneumatics Tupperware VIP Industries Top News Expert Opinion
Continuing with our philosophy of continuous knowledge dissemination, we bring yet another special edition to assist the senior batch in preparation for final placements. This edition includes a comprehensive coverage of most companies that will visit the campus for placements. We have tried to incorporate diverse aspects including a brief about the company, its business, vision and mission, financials and corporate strategy. We hope you enjoy the various articles in this edition of FinXpress. We look forward to your comments, acknowledgements and your criticisms regarding our online magazine. Do let us know if you want to have any additional section (s) in our special editions of Finxpress. Happy Reading! Regards, The Editorial Team FinNiche Club
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine. December 2013
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FinNiche
OPINION
GENPACT History
Expand: Deliver both geographically and industry oriented approach Genpact begun it’s as a business Provide Insights: Combine data process services operation for GE analytics, process expertise and Capital and became an independent solutions organization by 2005. Currently caters to verticals like BFSI, Manufacturing, Smart Enterprise Process Transportation, Healthcare, Automotive and Retail. Analytics, enterprise Genpact introduced its Smart SM application is key growth areas Enterprise Processes (SEP ) a scientific identified by the company for managing methodology enabling business process its client needs. effectiveness to deliver measurable business outcomes. With this process, companies can achieve substantially improved financial performance by breaking down organizational silos and making business processes effective and measurable. Compared with traditional efforts focused on efficiency within individual processes or business units, SEPSM’s end-to-end methodology can deliver two to five times the impact on improved cash flow, margins, revenue growth or other targeted financial and operating metrics. Facts
Recent News
Winner of Excellence award under the It had achieved a CAGR growth rate of category security in Global BPO 18% in revenue and 33% revenue awarded by the Data Security Council growth in its global client revenues. of India on Jan’13 Presence in more than 18 countries by Genpact struck a deal with Jaguar & means of 70+ delivery centres. Revenues Land Rover to provide extensive and FCF for the year 2012 stood at process management and analytics $1902m & $227m. service to optimise its procurement Revenues from GE have contributed operations. only to 26% as against 40% in 2009, Genpact as the top 20 financial which symbolizes the growing diverse technology provider company on the client base of Genpact. global fintech-100 list In July’12 , it has acquired Triumph Growth Strategy engineering services to strengthen its capabilities in the energy and aviation Lead: Guide the global clients by means sectors SM of our SEP frame work for delivering Headstrong- Virginia based financial improved business outcomes. services company was acquired in Invest: Expand our capabilities by April’11 which is having its presence means of investments or acquisitions in the IT and consultancy domain
December 2013
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IN FOCUS
FinNiche
HDFC LIFE Introduction
At
the Asian Leadership Awards 2012, HDFC Life was honoured with HDFC Life is a JV between the HDFC an award for underwriting initiative of (72.37%) and Standard Life Plc (UK the year. based financial services firm having the Awarded ‘The Indian Insurance award 26%). It offers a product portfolio which for best product innovation’ covers various customers’ needs likes protection, pension, investment, health Strategic Focus and savings. After having established 500 branches and touching customers Leader in providing long term in 900 cities and towns, it’s a leading Insurance solutions (Conventional insurance player with such wide reach. products still contribute up to 39% revenues) and diversify distribution channel mix which includes tie up with MFI’s in various Tier-II and III cities Own select customer segment and product categories Cost leadership across the delivery chain
Fortify
CSR Initiatives
Facts
Won the 5th Loyalty Award 2012
under the category of Insurance Sector (Life) Ranked 2nd in individual business among private players Total premium growth stood at 13% with income having a CAGR of 19% growth. Was awarded CIO100 award for enterprise excellence Company achieved Rs.11,323 crore in premium with a growth rate of 11% YOY and PAT of Rs.457 crore (growth of 67% YOY)
December 2013
HDFC Life’s Corporate Social Responsibility initiative- aims to play a positive role by contributing towards the advancement of society and conservation of environment while engaging with our stakeholders. Few of these activities include Swamibhaan Careers reaches to the policy makers dependents Teach for India for supporting education to under privileged students Financial literacy project is aiming to equip children with basic knowledge about finances Payroll giving where employee donate to credible NGO.
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Companies
IDEA CELLULAR Idea Cellular, an Aditya Birla Group Company and India's first truly multinational corporation is a pan-India integrated GSM operator offering 2G and 3G services. With a subscriber base of over 121 million in FY 2013, it became India’s 3rd largest mobile operator. Currently, Idea ranks among the Top 10 country operators in the world with a traffic of over 1.5 billion minutes a day.
Grasim Industries Limited Hindalco Industries Limited
Idea believes in providing world-class service delivery through its most extensive network of customer touch Birla TMT Holdings Private Limited points, comprising of nearly 4,500 The core values that define Idea Cellular exclusive Idea outlets, and over 7,000 commitment towards its customers and partners include: Integrity-Honesty in every action Commitment-Delivery on promise Seamlessness-Boundary less in letter and spirit Speed-One step ahead always Passion-Energized Action
call centre seats. It has its customer service delivery platform ISO 9001:2008 certified, making it the only operator in the country to have this standard certification.
Idea stringently believes in making an ethical, collaborative yet competitive environment among its employees.
Idea offers a range of high-speed mobile broadband devices including Android based 3G smart phones, dongles etc. Idea’s wide portfolio of 3G smart phones offer the latest in 3G applications and Idea gained leadership through Mobile high-end data services such as Idea TV, Number Portability (MNP) as every 4th games, social networking etc. at most mobile user who exercises choice affordable prices. through MNP, prefers Idea. Idea has always pioneered in introducing the Idea played a key role in the customized product offerings for its development of mobile telephony in segmented customers and has remained rural India. It pioneered the concept of ahead of the industry in data product ‘Shared Telecom Infrastructure’ services, offerings. along with a few other industry leaders in the wireless space leading to a It has been ranked #1 in the Telecom substantial reduction of carbon foot sector as “India’s Best Companies to print. Work for Study – 2013 and the “Best P l a c e t o W o r k ” a t t h e A s i a Idea being global in vision with its roots Communication Awards 2013. deeply driven by the Indian values and cultures, the Group is always driven by The promoters of the company are: a performance ethic pegged on value creation for its multiple stakeholders. Aditya Birla Nuvo Limited
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Companies
Infosys Infosys is a global leader in consulting, technology and outsourcing solutions. As a proven partner focused on building tomorrow's enterprise, Infosys enables clients in more than 30 countries to outperform the competition and stay ahead of the innovation curve. With US$7.906bn in LTM Q2 FY14 revenues and 160,000+ employees, Infosys provides enterprises with strategic insights on what lies ahead. They help enterprises transform and thrive in a changing world through strategic consulting, operational leadership and the co-creation of breakthrough solutions, including those in mobility, sustainability, big data and cloud computing.
Global Alliance Partners The partnership focuses on developing solutions that incorporate the intellectual property (IP) of Infosys as well as technology and services from the alliance partners. They jointly deliver and market our solutions to clients acro ss mu l ti pl e i ndu stri e s an d geographic regions.
Microsoft Oracle SAP Sustainability
Infosys employees actively participate in the welfare of the local community. Our Awards Development Centers (DCs) in India make a difference through several Infosys has consistently been honored Corporate Social Responsibility (CSR) by clients, industry bodies, media and initiatives. other influencers. Their employees organize and contribute
Infosys was identified as one of the to welfare programs, especially for
top 25 performers in Caring for Climate Initiative by UN Global Compact and UN Environment Program – the only global consulting and technology major in the list. Infosys ranked No.1 among the best managed companies in Asia Pacific in the annual Euromoney Best Managed Company in Asia survey, 2013. Infosys has been voted India's most admired company in The Wall Street Journal Asia 200 survey every year since 2000. Also were recognized as a top performing global partner by Procter & Gamble (P&G). Infosys Public Services ranks 15th in the 2013 Healthcare Informatics 100, based on revenues from healthcare IT products and services. British Telecom's Seamless Desktop program powered by Infosys AssistEdge awarded the prestigious Global Telecoms Business Innovation Award for 2013 in the Consumer Service Innovation category.
December 2013
underprivileged children.
They support the activities of institutes and Non-Government Organizations (NGOs) dedicated to healthcare and education, and campaigns for skills development and community welfare. Recent News Infosys Unveils TradeEdge to Help Global Brands Accelerate Profitable Growth in the Emerging Markets Bangalore, India – December 9, 2013: Infosys today announced the launch of TradeEdge an insights-driven sales platform which provides visibility to global brands across the demand chain – from distributors to consumers. The new platform delivers insights that help brands accurately sense and fulfill consumer demand while significantly improving sales and operational performance. A cloud-based platform, TradeEdge provides brands one of the
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Companies
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most affordable ways to expand reach in service areas, and responsiveness to the emerging markets. clients. Infosys Inducted Into the ‘Winner’s Circle’ in the HfS Enterprise Analytics Services Blueprint 2013 Bangalore – December 2, 2013: Infosys today announced that it has been placed in the 'Winner's Circle' in the HfS Enterprise Analytics Services Blueprint 2013. The report recognizes Infosys for its significant scale in analytics, execution excellence across
Infosys Expands Presence in Sydney; Premier of New South Wales Inaugurates New Office Sydney – December 2, 2013: Infosys, a global leader in consulting, technology and outsourcing, has opened a new Sydney branch office this week to keep pace with business growth of more than 500 percent in New South Wales (NSW) over the past five years.
Snapshot of Financials Q2 FY 2014
December 2013
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Companies
KPMG KPMG in India is one of the leading environments in which they do providers of risk, financial services and business. business advisory, internal audit, corporate governance, and tax and Tax and Regulatory regulatory services. Progressive and bottom-line focused KPMG was established in India in managements have realized that taxes September 1993, and has rapidly built a (both direct and indirect, domestic and significant competitive presence in the international), should be viewed as a country. The firm operates from its dynamic item of cost rather than a offices in Mumbai, Pune, Delhi, Kolkata, passive charge on the profits. The Chennai, Bangalore, Hyderabad, Kochi, company provides effective tax-cost Chandigarh and Ahmedabad, and offers management solutions and has its clients a full range of services, developed a total tax management including financial and business capability which encompasses the entire advisory, tax and regulatory, and risk spectrum of direct, indirect and advisory services. personal taxes. Its approach to tax planning is multi-jurisdictional. Advisory
In India, KPMG has a client base of over 2700 companies. The firm's global approach to service delivery helps provide value-added services to clients. The firm serves leading information technology companies and has a strong presence in the financial services sector in India while serving a number of market leaders in other industry segments. Mr. Richard is serving as Chief Executive Officer of KPMG in India. The sectors adopted are: Consumer Markets, Defense, Education, Energy & Natural Resources, Financial Services, Government, Healthcare, Technology, Media & Entertainment, Pharmaceuticals, Private Equity, Real Estate & Construction, Telecom, Transportation and Logistics.
KPMG in India, looks for sustainable growth, staying in shape and preparing for a new landscape. Partnering with its clients, the company develop tailored and thorough recommendations in collaboration with sector and technical experts, bringing among the best minds from across the vast KPMG network. It delivers holistic thinking and insights helping clients in transforming their organization, no matter what their primary challenges are - from improving performance, to optimizing risk, to restructuring their operations or seizing new opportunities. Management Consulting: It deals with critical areas like: Customer Growth, Data and Insight, Efficiency and Cost Management, Financial Management A dvi so ry Se rvi ces, I T A dvi so ry , Operational Strategy, Shared Services and Outsourcing, Supply Chain Optimization, Talent and Human Capital Management.
Services KPMG in India provides tax and advisory services and industry insights to help organizations negotiate risks and perform in the dynamic and challenging
December 2013
Risk Consulting: Its primary service lines include: Accounting Advisory Services, Development Sector Advisory , Financial Risk Management, Forensic and Governance Risk.
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Transactions & Restructuring: Services include: Business Sales and Disposals, Due Diligence, Financial Modelling, Integration, Mergers and Acquisitions, Private Equity Advisory, Restructuring Advisory, and Valuations.
immediate and long-term business imperatives for the global member firms by harmonizing its core Advisory services with the various Centers of Excellence to provide services using a flexible delivery model.
KPMG Global Services
Services range from highly complex and diverse advisory engagements like shared services design, financial transformation, sourcing strategy, financial due diligence and information protection, to research based solutions like benchmarking and competitive landscape analysis, and advisory support activities like project management, bid and administrative support.
KPMG Global Services (KGS) is a joint venture between KPMG in the US, UK and in India. Set up as a global capability platform, KGS provides professional services to KPMG member firms globally. With its broad portfolio of services and cross-functional capabilities, KPMG Global Services delivers on both
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COMPANIES
MAQ Software MAQ is a digital marketing and technology solutions company. It offers cost effective Digital Marketing and Analytics solutions using cloud and mobile platforms. Its solutions use advanced features of web, mobile, and cloud computing on the industry leading platforms. Founded in 2000 by Rajeev Agarwal, the company employs over 400 people worldwide in three development centers. Headquartered in Redmond, Washington, the company maintains two development centers in India, one in Mumbai and the other in Hyderabad. MAQ Software has been closely aligned with Microsoft Corporation for thirteen years as a Microsoft Preferred Supplier and a member of the Microsoft Partner. Network.
data from a range of sales, and marketing databases of Microsoft Corporation. SharePoint MAQ Software has delivered over 100 SharePoint projects. It has a large team with vast experience in delivering SharePoint projects for various teams at Microsoft Corporation. It has delivered projects leveraging on latest SharePoint offerings - Cross site publishing, Web Content Management, Display Templates, Content Search Web parts, etc and has developed SharePoint apps. App Development
Over six years of experience in mobile application development, the company has developed apps across different platforms, including Windows Phone 8, MAQ Software has been listed as one of iPhone, and Android.. After deploying the fastest growing companies in over a hundred mobile applications, it is America for past six consecutive years now ready to take on mobile project. by Inc. Magazine- a rare achievement. MAQ Software has also received ISO Some of its mobile products are: 27001 certification, the highest i) Traffic Edge ii) Dialogs internationally accepted standard for iii) Translate Edge iv) 2012 Apocalypse Information Security. It has expertise in building both retail By following lean and agile software and LOB apps for Windows 8. development techniques, MAQ Software delivers software solutions in half the Cloud - Windows Azure time compared to larger players. And helped client cut its costs by 70 to 80 The company has been developing percent. The success at MAQ Software applications on Azure since it was can be credited to two simple ideas: released in 2010. It helps clients to 'focus' and 'execution'. Through daily optimize and manage their cloud meetings with globally distributed teams solutions in order to reduce the amount and management, everyone stays of time required to manage, maintain focused on their goals every day. and deploy them and help them reduce the overall costs. The company provides expertise on following domain Services include developing and hosting custom applications with low cost, Business Intelligence migrating existing applications to Azure, enabling transition of existing cloud The company has successfully delivered applications to Azure etc. MAQ a wide range of solutions including Software, have been delivering high c a m p a i gn m a n a g e me n t , we bs i te traffic websites at Microsoft for over optimization, data analysis, and data thirteen years and are experts in warehousing. It has also delivered Microsoft branding standards. multiple database applications using December 2013
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Companies
SMC Pneumatics Incorporated in 1995, SMC India is a 100% Subsidiary of SMC Corporation Japan, the World Leader in Pneumatic Technology. SMC India has three stateof- art manufacturing facilities in India. Two facilities are at Noida near Delhi, (spreading over 12000 Sq. mt. and 29,000 Sq. mt.) and one in Chennai (46,000 Sq. mt.). These facilities comprise of separate floors for manufacturing and assembly. Special purpose CNC machines are installed for precision processing. They maintain a large warehouse, which follows a trademark Bin Management System of inventory (KOGO Seisan System) to cater to the large demand and ensure faster deliveries. SMC India thrives on their ability to provide excellent personalized service and innovative products to our customers whenever and wherever required. SMC India has a well established an extensive marketing network of Branch Offices and Resident Engineer locations at major cities & industrial areas providing nationwide support to our customers. Their trained Application Engineers serve our customers by functioning as part of their team to accurately gauge their needs and develop customized solutions. SMC’s policy of tandem product development, of which our valued customers, our Application Engineers and our Product Development Engineers form vital links enables rapid tracking of the winding path of automation process spanning the various Industrial scenario.
established global network in all major countries of America, Europe and Asia. The company has technical facilities in US, Europe, China and Japan with Key Production facilities in China and Singapore and local Production facilities in US, Mexico, Brazil, India, Korea and Australia. The company develops a broad range of control systems and equipment, such as directional control valves, actuators, and air-line equipment to support diverse applications. The SMC group entered the Pneumatic m a r k e t i n 19 6 1 a f te r i n i t i al l y specializing in sintered metal filters and filtration elements. Since 1961, it has engineered and produced a wide variety of pneumatic products for the global market. Its product range now exceeds over 11,000 with around 620,000 variations including air-line equipment, directional control valves, actuators and air preparation equipment and catering towards various industrial fields like Automotive, machine tools, food processing, pharmaceutical, printing and packaging, mining etc.
The SMC group embarked on its first international operations in the year 1967 with the establishment and capital participation of SMC Australia. In 1970, they first started manufacturing air cylinders. By the end of 1973, the company had established 2 factories in Japan. It entered North American market in 1977 with the establishment of its subsidiary SMC USA and subsequently SMC Germany in 1978.
They develop & supply special products against customer - specific requirements which makes us stand out in the industry. Given that their standard products have 6,00,000 variations, they can confidently match myriad clients’ The company now has a consolidated expectations and deliver consistently. employee strength of 15,596 with a capital stock of about 61 billion Yen. It It is the world’s largest manufacturer of has a sales network of 55 sales offices in Pneumatic components with a turnover major cities of Tokyo, Nagoya, Osaka of 325 billion Yen ($ 4.05 billion). It has and Fukuoka. December 2013
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Companies
Tupperware For over 60 years, Tupperware has been creating a niche for itself in the business world, making a difference to the lives of millions through its innovative storage products and extremely attractive business opportunity. In recent years, Tupperware has made tremendous inroads into becoming a true global entity.
structures for the markets. Products Products range by category Aquasafe Canisters Dry Storage Food Preparation Freezer Fridge Smart Lunch 'n' Outdoor Microwave Refrigerator Serving
In 2000, Tupperware acquired Dallasbased BeautiControl, followed by the acquisition of the Sara Lee Corporation’s direct selling business in 2000. These advancements brought an increasing product diversity to brand Tupperware. In order to reflect this diversity, Lifetime Guarantee Tupperware Corporation changed its n a m e t o T u p p e r w a r e B r a n d s Buying with confidence is assured with Corporation in 2005. Tupperware products that are guaranteed against chipping, cracking These acquisitions were in line with the or peeling under normal noncommercial Company’s corporate strategy to add use for the lifetime of the product. premium consumable items to their Certain products marked with the "Q" product category mix. They also boosted symbol are not covered by the Lifetime the Company's global portfolio to eight Guarantee but are still guaranteed by champion brands and changed the Tupperware Brands to be free from Tupperware Brands Corporation into a manufacturing defects. multi-brand, multi-category, direct sales conglomerate with a worldwide sales News force of over 2 million. December 2, 2013: Asha Gupta, MD of Tupperware’s Philosophy Tupperware India on #49 in Fortunes most powerful women in business Enlighten: To share insights & provide products and knowledge that makes life July 10, 2013: Tupperware is planning simpler and more enjoyable for families. to premium by getting working women in its sales force and a premium product Educate: To provide smart, simple range solutions that enable customers to save time, money and effort while leading April 9, 2013: Tupperware has decided active and healthy lives. to engage in a first -of-its-kind endeavour - ‘Care4FoodDay’, to spread Empower: To better the lives of women greater awareness on reducing food by giving them the confidence to live wastage with respect in the society and becoming independent. Financials To date, the Tupperware Brands portfolio of direct selling companies incorporates Tupperware, BeautiControl, NaturCare, Nutrimetics, Fuller Cosmetics, Nuvo, Avroy Shlain and Swissgarde - each with their own product lines, sales methods and December 2013
Tupperware Brands Corporation has seen net income shrink from $218.3 million to $193 million despite relatively flat revenues. A key factor has been an increase in the percentage of sales devoted to income tax expense from 2.98% to 3.09%. Page 11
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Companies
VIP Industries VIP Industries Ltd is world second largest and Asia’s largest luggage maker based in Mumbai Maharashtra, India. The company was founded in 1971, and is headquartered in Mumbai. It currently
bags and briefcases.
satchels,
suitcases,
and
The different brands in the portfolio of VIP Industries are as follows—VIP, Caprese, Carlton, Skybags, Alfa, Aristocrat Luggage, Footloose and The vision of VIP Industries is "To be the Buddy. It also manufactures moulded Global Leader in the travel products furniture under the Moderna brand. business." The mission statement is as f o l l o w s “ B u i l d i n g e n r i c h i n g VIP Industries is listed both on the BSE partnerships, pride of leadership and and the NSE. The closing prices as of d e l i g h t f u l e x p e r i e n c e s t h r o u g h December 11th, 2013 is Rs. 57.00 in the innovation in all that we do. “ BSE and Rs. 57.05 in the NSE. It had a total income of Rs. 876.86cr and an operating profit of Rs. 68.47cr in FY 2012-2013. The market is also assumed to be bullish about VIP Industries. The employee reviews about VIP Industries give high scores on rewards and recognition. They also indicate to VIP Industries having a very participative management and a good corporate culture. The key values of VIP Industries are Entrepreneurship—where it gives the freedom to act and take ownership of one’s actions, Innovation—where it strives to create and execute new ideas continuously, Meritocracy— where it wants to create a culture where performance matters and Youthfulness—by which it wants a create hub of energy, fun and undying enthusiasm.
The top reason to work here has been quoted as the brand name and the great learning and development that VIP Industries provide. The primary skills one needs to succeed here are a good leadership ability, strong relationship management and out of the box thinking capability of a person.
Few of the areas that VIP Industries has been known to question are a person’s The primary management team consists objective in life, questions related to of Mr. Dilip G.Piramal, Chairman, Ms. retail management and manpower Radhika Piramal, Managing Director, handling. and Mr. Jogendra Sethi, Chief Financial Officer. It also focusses on a person’s knowledge about Branding, Merchandising, Stock The company manufactures plastic auditing, Inward and Outward stock molded suitcases, handbags, briefcases, movement and sale out. VIP Industries vanity cases and luggage. It also also focusses on the ability of a person provides travel products, hard and soft- to work in a team and also the sided luggage, bags, backpacks, duffels, individual's ability to motivate and shoulder bags, waist pouches, sling handle the team. bags, duffel trolleys, vanity cases, office
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Companies
Meru Cabs Mount Meru, in Hindu mythology, had helped the Gods and Demons extract nectar during the churning of the ocean. Meru Cabs, which derives it name from the mountain, has sped past road-weary taxi services, and taken metered cabs to a new level.
Meru, the brand is today a symbol of commitment to unshakeable reliabilitythe heart of promise to its customers. It is this promise of reliability that drives Meru Cabs to endeavour to provide the most efficient services every time to its customers.
When Mr. Neeraj Gupta, MD of Meru Cabs, had started it in 2006, very few people had given it a chance to succeed. Most thought it was too expensive, and would appeal only to a small sliver of the commuting market. They were all proven wrong. Mr. Gupta started off by floating a holding company, V-link Travel Solutions. It’s one arm was was the V-Link Travel Solutions, which is the parent company of Meru Cabs Company Pvt. Ltd. Indus Value Fund had invested Rs50 crore in the parent company in December 2006, which helped it foray into the air-conditioned taxi market, which was Meru Cabs.
Meru Cabs, now runs a fleet of 5000+ taxis in Mumbai, Bangalore, Hyderabad and Delhi, with a fleet of 2000+ in Mumbai itself. It has 700+ employees and had a topline of Rs100 crore in the year, 2011. The market for the cab services has grown more than four fold in the last 4 years. The company has developed its own software which directs the nearest taxi driver to pick up customers. Meru is also working on a technology to offer TV services in its cabs. Meru earns more than 10% of its revenue from advertisements on the car front. The problem that Meru is facing is facing is that out of its fleet of 5,500 cabs across four cities, only 3,500-3,800 cabs are currently operational. There have been at least three incidents of Meru drivers striking work. Out of every 10 drivers that sign up with it, at least three quit and join rivals or choose to go back to conventional cabs.
In this short span, of seven years, it has become a well recognized urban experience. Customers, especially women, find it safe to travel in a Meru Cab and find it easy to book one. Cab drivers who were toiling away in rickety old taxis, have signed up to drive its clean, air-conditioned taxis. It would seem then that Meru has everything brand, customers, and good technology - to become a profitable business.
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Gupta's main challenge is to keep pace with the rising demand for Meru cabs, and the Mumbaikar crib that cabs are not always available. State government norms, which make it mandatory for drivers to read and write Marathi and stay in Mumbai for at least 10 years to get driving licenses, are partly to blame. Meru also carries out rigorous checks of drivers' records, to maintain the spotless reputation it has enjoyed so far.
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In Focus
New Tax Law a Dampener for Corporate Bond Market Atul Joshi Economic Times 11 Dec, 2013 02:48 AM IST
Deepening of the corporate bond market is one of the prime objectives of the central bank and several industry and regulatory bodies in the country. Corporate bond market should be viewed not in its narrow sense of bonds issued by banks and corporates but must encompass three different asset classes and types of issuers.
in many cases, investor classes enjoyed a tax-exempt status. By ignoring this key factor, the new dispensation seeks to tax distributions across the board, thus potentially diluting transaction economics and viability. Securitization transactions originated by banks, non-banking finance companies and housing finance companies covering a host of asset-backed securities These are corporate bonds, municipal (ABS) and mortgage-backed securities bonds and securitisation through pass (MBS) are affected by the application of this through certificates (PTCs). Globally, PTCs new stipulation of distribution tax. are securities issued by a trust which is expected to receive certain cash flows from However, the potential disincentive it can underlying asset(s) and the same are re- pose to infrastructure developers in the distributed to investors of PTCs. The very long run is considerable. As more and more name suggests that the cash inflow is by projects become operational and establish and large passed through to investors decent performance track records, sponsors under a pre-defined water-fall mechanism would contemplate accessing capital without tax implications. markets for re-financing their bank debt through the issue of PTCs via bankruptcyThere are enough and more supporters of remote vehicles or securitisation trusts. the corporate bond market working towards bringing about changes in regulations that In the larger context of the government's affect corporate bonds issuances. However, stated objective of galvanising bond when it comes to securitisation, discussions markets to part-finance the ambitious $1 are confined to closed doors with only a few trillion investment in building India's affected parties raising issues albeit in infrastructure over the next five years, the shrill voices. The change in tax law aforesaid tax law, acts as a dampener to introduced by the government of India (GoI) companies seeking innovative instruments earlier this year with respect to taxing to widen their financial tool box. income distributed by securitisation trusts has serious negative implications in the One needs to consider the infrastructure long-run for infrastructure financing. financing model in developed markets as well. Banks lend to projects at the initiation Effective June 1, 2013, the Income-tax Act stage and undertake the project completion 1961 was amended (Section 115TA) so that risk. Once the projects are completed, the Indian securitisation trusts are required to exposure is sold in capital markets through pay additional tax on income distributed to v a r i o u s instruments including investors. The rates range from 0% (if the securitisation. investor is exempt from tax) to 25% (if the investor is an individual or Hindu Banks need to reduce their infrastructure Undivided Family (HUF)) to 30% (for all exposure especially for those completed and other categories of investors). The tax is on operational projects by way of a take-out. distribution, which is comparable to Securitisation of cash flows from such dividends. And, the obligation of paying the projects is one very important method. The tax has been cast on the trustee. key issue with the new guidelines is that the cash flows are reduced at the trust Prior to the amendments, tax on income level. Though the instrument is called pass distributed by securitisation trusts was through - it actually does not behave like a charged and paid at the investor level and, pass-through.
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There is cash withheld at the trust level and only the balance amount is passed into the hands of the investor. Assuming that by and large the investor need not necessarily be tax-exempt, this will be a huge disincentive. This impacts the investment appetite of the investors for such instruments. Besides, there arise cash flow mismatch issues. A few illustrations in the infrastructure sector where this legislative amendment could pose a deterrent to the furtherance of capital market issuances via the PTC route:
issuing credit-enhanced bonds secured by repayments from loans extended to a collection of m u n i ci p a l i t i e s for implementing specific infrastructure development projects. Pooled finance programmes and similar leveraged municipal loan pools enable government entities, especially a pooled finance vehicle at the state level, to fund the infrastructure needs of various municipalities such as water and sanitation facilities, roads, bus stands, and other public amenities. The idea of securitising cash flows from a pool of assets can be extended to the world Loan Sell-Down by Banks of privately-built, financed and maintained Banks' ability to sell their loans (of infrastructure as well. operating infrastructure projects) to infrastructure debt funds (IDFs) by issuing Mexico has successfully demonstrated PTCs could be adversely affected. Given capital market appetite for pooled toll road capital constraints, lending capacity can be project financing. The individual project freed up only if the financing of SPVs and project concessions continue as infrastructure assets migrates from the before, but the debt is refinanced using a bank loan market to the fixed income master trust structure that credit-enhances market with long-term investors. the senior debt by pooling multiple project revenues. The financing consists of the Airports Receivables including ADF/UDF bundling of debt from several separate toll Airports wishing to securitize dedicated road projects into one financing trust. revenue streams such as an airport Credit enhancement is achieved by crossdevelopment fee (ADF) or user development collateralisation through the pooling fee (UDF) although in most instances such of project revenues and portfolio transactions tend to get done within the diversification. airport company itself and not necessarily through a SPV set up purely for this It is also necessary to stipulate a couple of purpose. caveats. One, the new law is applicable only for income distributions by securitisation Utility Tariff Bonds trusts and not to other vehicles that may be Power utilities seeking to raise capital (to employed for raising debt such as operating refinance current high-cost debt or fund a companies or companies that are special capex programme) by securitising cash flow purpose vehicles. However, these alternate streams established under legislative or vehicles may not be as tax-efficient as regulatory authority. A very widely used trusts are. Two, a reversal of this tax law capital market product in the US, utility will, no doubt, have loss of revenue tariff bonds, as they are generally referred implications for the exchequer. That said, to, are secured by collateral in the form of a the benefits from facilitating flow of longdedicated special tariff. term investment from fixed-income markets into financing infrastructure would more Large power conglomerates than offset the revenue loss. Large power conglomerates planning to securitise cash flows from an identified At this juncture, India needs to equip itself power asset (say, one amongst a portfolio of with options that would allow issuers in the many generating plants) by leveraging on infrastructure sector to use the medium of its possible unique features - operating capital markets to fund the ever-expanding track record, assured fuel supply, need for finance. The aforesaid tax financially strong off-taker counterparty. amendment serves the opposite purpose besides hurting the overall development of Pooled municipal bond issuances the bond market. Pooled municipal bond issuances - a trust December 2013
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Using Big Data to Capture Risk Volatility Claude Yoder and Dave Heppen www.cfo.com 10 Dec, 2013, 01:08 AM IST
Companies have traditionally measured their exposure to risks through total cost of risk (TCOR) calculations. Definitions vary, but TCOR represent the sum of these larger elements: the insurance premiums a corporation spends, the cost of the losses it retains, and other items such as administrative costs, brokerage fees, and taxes and assessments.
The Metric in Practice Consider the two hypothetical companies (in the charts below) with the following loss history, assuming constant size over the past five years (“Ground-Up Losses” are a measurement of the original losses to a company):
The shortcoming of this line of thinking is that it places no value on uncertainty, rather treating losses as a known quantity. And yet the amount of losses at any one company fluctuates unpredictably from year to year. In fact, this uncertainty is the main reason that companies buy insurance and create loss control and mitigation programs. Company B Company A The importance of measuring uncertainty and volatility has led to the Each of these companies has an average creation of a new measure of risk: the loss of $10 million per year. Traditional economic cost of risk (ECOR). TCOR analysis might suggest that there is no difference in the cost of risk for ECOR is defined as the sum of: these two companies. But there is much more volatility in Company B’s losses. Expected retained losses. Premiums. Other expenses (for example, claims- Such volatility can lead to unexpected handling fees and the cost of and unpleasant effects on a company’s earnings and performance. Intuitively, it collateral). feels as if the cost of risk for Company B Implied risk charge. should be higher than Company A because of the higher downside risk. Unlike TCOR, ECOR incorporates an The question then becomes: How do you implied risk charge (IRC) that evaluates put a value on this volatility? t he se ve r i t y a n d l i ke l i h o o d o f detrimental outcomes and their ECOR measures this additional cost of associated cost. Because no company is risk through the IRC, which is pe rfe ctl y p ro te cte d ag ai n s t the computed as the capital at risk unexpected, every organization bears an (expected losses above average losses) implied charge for their unexpected risk. multiplied by the company’s cost of Thus, IRC can be quantified for any capital. Stochastic modeling is typically insurance or mitigation structure. IRC used to measure IRC. However, for incorporates a company’s capital costs purposes of simplicity, we can show how and provides a direct linkage between IRC for Company A and Company B can insurance purchasing decisions and be measured based on their historical financial performance metrics. It also losses. cre ate s a n e ce ssary an d mo re meaningful way for companies to For Company A, average losses are $10 strategically engage between their million, and there is one year, 2011, finance and risk management functions. December 2013
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In Focus with losses above that amount, of $11 million. Total losses above the average are thus $1 million ($11 million – $10 million). There is a 20 percent chance of experiencing losses above the average (one year out of five). Therefore, expected losses above the average annually are 20 percent multiplied by $1 million, or $200,000. For Company B, average losses are also $10 million. But there are two years with losses above $10 million, 2009 ($15 million) and 2011 ($18 million). Therefore, total losses above expected are $13 million (the sum of $15 million – $10 million = $5 million, and $18 million -$10 million = $8 million). Average losses above expected are $6.5 million (the average of $5 million and $8 million). There is a 40 percent chance of experiencing losses above the average (two years out of five). Therefore, expected losses above the average are 40
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percent multiplied by $6.5 million, or $2.6 million. The IRC for Company A is $200,000 multiplied by the company’s cost of capital. In relation to ECOR, this is a trivial amount, which should be the case when losses are highly predictable. The IRC for Company B is $2.6 million multiplied by the company’s cost of capital. That becomes a significant cost component of ECOR and, in this example, is more than 10 times higher for Company B than Company A. That should be the case when losses are highly volatile, particularly when considering that the capital is at risk for the lifetime of the claims rather than only a short period, such as 12 months. By measuring the cost of risk through the lens of ECOR, companies can now place a value on uncertainty.
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Predictive Analytics Drives Profitability, Growth Lana Klein and Colin Hare www.cfo.com 10 Dec, 2013, 01:15 AM IST
There are several ways in which a CFO can leverage predictive -analytics solutions to manage profitability and enable corporate functions to adopt its principles. CFOs can successfully lead that charge if they know that:
while optimizing budget allocation among these functions. In addition, foresight analytics can help a CFO and his or her C-suite peers to better measure performance, scout opportunities and prioritize initiatives.
Analytics must be forward-looking to
be truly impactful. A company can’t grow if its senior leaders are looking in the rear-view mirror to see what’s coming next. Robust, analytics-driven foresight is a great tool to inform better decisions. Analytics is not just about developing a capability. It’s also about asking the right business questions and determining how to answer them. Analytics development makes up only 20 percent of value creation, according to the Analytic Function Effectiveness Benchmarking Study, a 4i internal study that measured the design, focus and impact of analytic functions on corporate performance across a sample of 35 companies. Participating executives indicated that the most important questions are: What decisions and business issues do we address with analytics? And, how are analytics-driven insights activated and realized? Foresight analytics can remove ambiguity and help resolve conflict in the C-suite. It’s no secret that executives typically have different priorities depending on their roles and areas of ownership. Chief marketing officers want their marketing budgets increased. Heads of manufacturing want more funding to do research and development. However, it’s the CFO’s job to manage such agendas in the best interest of future growth prospects while at the same time being financially prudent. Foresight analytics can bring objectivity to these decisions by determining the return on investment from marketing and R&D spending
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How can CFOs work more effectively with C-level counterparts through predictive analytics? Robust forecasting analytics will bring objectivity and transparency to the planning process Deploying a collaborative single-demand planning system can help finance, sales, operations and marketing properly align based on anticipated demand. Reduce costs through tighter inventory control Supply-chain and demand analytics can help reduce inventory levels with more accurate demand projections. Increase marketing effectiveness Many companies conduct ad hoc studies to measure the impact of marketing programs. But such studies are often backward-looking, take too long to assess and don’t have sufficient management support to drive decisionmaking. Those who act the most decisively tend to have an end-to-end marketing analytic process that looks forward, is iterative and truly has the management support to make it part of the executive conversation. Increase impact of pricing and promotion decisions through optimization The use of analytics to influence collective decision-making with retail partners is highly underleveraged, even as it’s an opportunity where predictive analytics can play a major role. Given the wealth of data available, it’s definite an area to consider investing in to drive
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In Focus both efficiency and effectiveness. Invest smarter in innovation by looking forward It’s common industry knowledge that 95 percent of new products fail, according to Acupoll. While they fail for a variety of reasons, it doesn’t mean a company can’t invest in acquiring the capability, research and sets of processes to
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increase the probability of success. There are many solutions in the market that identify, test and quantify the impact of new product and innovation ideas. Further, the cost of investing in such opportunities early is far more attractive than recouping significant cost of a failed innovation. Therefore, a CFO should seek to understand and champion these solutions where
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Impact Investing 101: Finance For Humanity N. Rana & U. Majumdar Economic Times 10 Dec, 2013, 05:11 PM IST
Consider the hard facts. Two billion people on this planet do not have access to safe water, heath care, or financial services. A billion people do not have access to electricity. Two hundred and fifty million children do not have access to education or childhood immunization. The problems are immense and need speedy solutions. With public funds being limited, the need for private investment in public areas is acutely felt. Impact investing expands the role of private enterprise in addressing the world’s most pressing social problems.
Companies Bill (2012) that mandates 2% investment in CSR activities subject to certain criteria. Growth in impact investing is likely to come from four sources:
Massive pent-up demand at the bottom of the pyramid – a large number of consumers and producers in this segment will join the market Driving green growth – investment in renewables are forecast to grow at a steep rate Reconfiguration of the welfare state – fundamental shifts in the ways in which we approach public good output will create opportunities for the private sector Emerging lifestyles of health and sustainability segment at the top of the pyramid – this is already a fast and growing segment
Impact investing is defined by The Global Impact Investing Network (GIIN) as: “investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.” Impact investing also goes by several other names – socially responsible investing, social investing, mission driven The social investing ecology is best investing, responsible investing etc. described in Figure below. Although, traditional investors have been foundations, Impact investing is set to soar. Industry development financial institutions and high research suggests that approximately 2,200 net worth individuals have contributed, impact investments worth $4.4 billion were recent studies indicate that other investors made in 2011. This is almost doubling of are getting attracted to the potential of investments from 2010. In India, the impact investment. impetus is likely to come from the new
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Impact investors also create new financial instruments such as social impact bonds a contract with the public sector in which a commitment is made to pay for improved social outcomes that results in public sector savings.
Another area of challenge is the much stricter fiduciary obligations of institutional investors. Lack of a successful track record and shortage of scalable and attractive investment opportunities create barriers to impact investing. Layering of financial instruments (e.g. grants and PRIs) also The growth and visibility of the impact makes it harder to precisely define the investment industry has been remarkable. impact of investing. However, significant challenges remain. It has generally been pointed out that the lack Governance is an area of significant of track record of successful investments is concern. Profiting from the poor is a grey a main concern and that too few area and significant attention needs to be established players are active in impact paid towards creating frameworks that investing. build an independent third party monitoring mechanism. One of the key challenges is the measurement ‘problem.’ As an example, if Other roadblocks include investor the impact of an investment is creation of skepticism about achieving both financial three jobs then the outcome is increased returns and creating social impact together; wages to the workers, higher taxes to the imperfect information regarding investment state and reduced government subsidies. opportunity set; limited exit strategies due On the other hand, if one of the workers to insufficiently developed and illiquid would have found a job without the markets. investment then the benefit would have been a net of two persons. Hence it is not Despite several roadblocks impact easy to track impact over time. investing is expected to grow and become Measurement issues are being addressed part of the mainstream finance. by three distinct but complementary tools: IRIS, PULSE, and GIIRS.
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In Focus
Shift to Consumer Driven Agriculture Nidhi Nath Srinivas Economic Times 10 Dec, 2013, 11:23 AM IST
How responsive is agriculture to consumer demand? More than any other industry in the world. Agriculture only appears to be slow, traditional and caught in a time warp. In reality, it is more agile and nimble than manufacturing.
gum and powder was rapidly scaled up. More than 100 companies sprang up around Jodhpur and grabbed 40% of the $3 -billion export market. No one waited for an SEZ, an export sop or an Apeda scheme. Entrepreneurs were pumping in capital because the profits in 2012 were 10 times more than those in 2011. Price signals created an automatic inflow of investment. In Pakistan, guar and guar products export was just $29 million in 2006-07. It shot up to a record $152 million in 2011-12.
When consumers rush to buy any product, and prices rise, they clearly signal a business opportunity. A company usually needs a couple of years to put up a factory of any significant size for this new demand. Farmers take six months. The moment they realize a crop has profit potential, wham Agriculture doesn't have high entry barriers goes more area under it. like industry. So abnormal profits are short -lived. Guar is no longer enjoying tripleA classic Indian example is guar. In 2011, digit price increases because supply has when American drilling companies caught up with demand. The consumer too discovered money in shale gas, Indian is becoming wiser. Halliburton, an oil farmers immediately understood guar’s company, is reportedly spending $800,000 golden moment had come. As demand annually in Texas on guar research. Food trebled, guar gum became India’s most ingredient companies, worsted by drilling valuable commodity export, beating companies in the scramble for supply, are jewellery. American companies spent searching for chemical substitutes. $2.5billion that year on this small neglected Companies like the US-based Guar Global bean with an outsized role in shale gas Ltd are using technology to help Rajasthan extraction. farmers increase yields and make the supply chain more efficient. These are all By 2012, guar production had doubled. welcome signs of a maturing market and Acreage jumped 25%. Traditionally, guar sustainable prosperity. was grown on malnourished, arid farms with little or no investment by the farmer. But those crazy profits are not the real Today, this virtually orphan crop is planted story anyway. Guar shows how intelligently in irrigated areas, displacing grains and Indian farmers were tracking consumer cotton. Almost overnight, guar made demand. Not just demand here but geography history. News of the windfall thousands of miles away in Texas. Easier gains in Rajasthan and Gujarat spread like access to real-time information – mobile wild fire and farmers in Andhra Pradesh, phones, internet, futures trading – allowed Karnataka, Haryana, Punjab and them to pick up the earliest signs of a Chhattisgarh jumped onto the bandwagon. boom. Business decisions – what to plant and when to sell – were made looking What makes the guar story truly through the front windshield, not the rear remarkable is the complete absence of any view mirror. government policy, subsidy or even a minimum support price to encourage Guar also shows the future of Indian farmers. Farmers just kept their ears to the agriculture. More and more farms will shift ground and in 14 weeks reaped what they to demand-driven agriculture. They will sowed. grow more of the crops that people value highly – be it guar, onions, cotton, fruits, or Agri-business was equally quick to seize the maize. Unlike in the past, farmers won’t opportunity. Capacity to manufacture guar grow a crop and then go seeking a buyer.
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They will analyse what people want to buy Farmers will invest in technology that and then decide what to grow. creates this extra value. Since the stakes are higher, farmers will use their computer, The success of demand-driven agriculture social networking and communications rides on one crucial factor – the price signal skills to find multiple marketing channels from buyer to seller. If the price signal is for capturing higher margins and mitigating clear and correct, farmers will decide well. If risk. Both consumers and farmers will signals are distorted by market aberrations, demand more transparency. Eventually, politics or industry cartels, farmers will both will come out ahead. remain victims of circumstance. It is a myth that agriculture is a slowBut if we can get the price signals right for moving behemoth that requires government all crops, demand-driven agriculture can support and large subsidies to move with change the lives of 600 million Indians. the times. All that farmers today need is a Their finances will strengthen. Consumers phone signal and a price signal. They are want variety, convenience, affordability. ready play ball.
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Venture Capital in India– The Summit Push Alok Mittal Economic Times 10 Dec, 2013, 4:20 PM IST
It is now eighth year in succession of claiming a great year for venture capital. I have been in the business for all of eight years. But then, I am also an amateur marathoner and a climber. In all of these three trades, it takes years of perseverance to scale the summit. As I look back at 2013, I am more convinced than ever of the decisiveness of this moment.
venture backed companies is concerned. For example, just between four companies, namely Justdial, Redbus, GlobalLogic and Prizm, over US$ 2 billion of market value was affected in 2013. These companies, amongst themselves, also represented strength of variety of exit mechanisms from an IPO trading at 100 percent premium to issue price, to strategic exits, and a PE buyout. Such a stream of exits At the surface, 2013 was a slower year for provide increasing validation to viability of venture capital investments than recent venture capital in India. past. It seems that by the time the year .. closes, we might be 10 percent down Thirdly, 2013 reversed the policy tide to relative to 2012. The sentiment also seems assist the flow of foreign direct investment to have gone through a trough, even though in India. From relaxation of FDI limits to there seems to be some revival in the last rationalization of GAAR, and from IPO quarter. Why then the optimism? facilitation to allowance of preferential clauses for investors, the silent wave of The first reason is the emergence of key reforms in the latter half of 2013 has investment themes that could redefine the started to undo the damage that the complexion of technology ventures in India. regulatory arrogance of 2011/2012 had While ecommerce innovation continued to initiated. There is increasing expectation get funded in 2013, the second place has that this momentum will continue into been taken by global product innovations 2014, without being held hostage to the coming out of the Indian market. This results of the impending general elections. enhances the market that Indian startups will play in the future, as well as the Against this backdrop of 2013, it is an significance of those companies on the exciting 2014 that knocks on our doors. global stage. Next on the rung is mobile And like the final push to a summit, this application startups - given the large base stretch does not require us to do different of mobile consumers in India and the things - it indeed requires us to persist with nature of India as a mobile-first market, what we have done well in the past. It calls innovation in mobile applications could also upon entrepreneurs to dream big and lead to global leaders in the space. This execute well. opportunity set is likely to get further strengthened as payment systems around It calls upon investors to support the mobile mature - something that 2014 entrepreneurs and be focused on realizing should bring in, both around electronic returns as investments mature. And it calls payments as well as micropayments. These upon the regulators to provide an enabling emerging investment themes represent environment for businesses. From the significant broadening of technology momentum that we have seen towards venture activity, beyond the classic services close of 2013, it might very well be that and internet spaces. 2014 is a better year in terms of fund deployment as well. However, the lasting Equally important has been the strong contribution of 2014 could very well be in performance of Indian startups on the exit establishing strong proof points around front. The year 2013 marked a watershed India as an attractive venture market. moment as far as exits of technology
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Modinomics Andy Mukherjee Business Standard 11 Dec, 2013, 10:39 AM IST
Narendra Modi could be India's Shinzo Abe. If the recent state polls are any indicator of the electorate's mood, the opposition politician will be prime minister of the world's largest democracy by May next year. Just like his Japanese counterpart, Modi would oversee higher asset prices and revive growth, but struggle with structural reforms.
solution is to raise money by privatizing state-owned businesses. But Modi can't talk about that now for fear of upsetting unionized state-sector employees. The closest Modi has come to supporting the idea is saying: "I believe government has no business to do business." This suggests he would restart the process of selling controlling stakes in state-owned enterprises, the BJP's strategy before it lost Financial markets would cheer a Modi the 2004 elections. victory just as loudly as they hailed the Japanese prime minister's ride to power. It's doubtful Modi will invest much of his Both Goldman Sachs and UBS expect political capital in labour reforms, which India's benchmark stock index to rise by Abe has also avoided. Reviving the stalled 10% by the end of next year, a prediction credit cycle will also prove a challenge for that's bound to be raised if Modi manages both countries. Japanese banks aren't to cobble together a majority. Add a boosting domestic lending because credit recovery in the battered rupee, and the demand is still weak. India's banking gains for foreign investors could be quite system is dominated by poorly run, lucrative. The economy will also revive, as it government-owned lenders, saddled with has in Japan. But when the euphoria bad loans. Privatizing them is a non-starter subsides, questions will arise about Modi's because these lenders keep uncompetitive resolve to usher in structural reforms. If the businesses - and their politically connected February 2015 budget disappoints, owners - afloat. confidence will take a knock. Modi's best hope is to revive credit demand. Modi will face a tougher job than Abe. The That won't be an insurmountable problem Japanese prime minister's Liberal given just how strongly big businesses are Democratic Party won a decisive mandate rooting for him. As chief minister of the in December 2012, and took control of the Gujarat state, Modi has built a reputation upper house of parliament the following for cutting red tape and making it easier to July. Unlike the all-too-entrenched LDP, do business. Those skills could help him Modi's Bharatiya Janata Party will need the revive private investment nationally. As support of a number of coalition partners to prime minister, however, he will also need wrest power from Sonia Gandhi's Congress to make states agree to taxation reforms. A Party. These smaller regional parties prefer nationwide value-added tax that subsumes populism to reforms, and will expect Modi many bad local levies remains an elusive to make costly concessions. goal. Moreover, the Indian leader doesn't have a well-articulated vision for the economy. That's quite unlike Abe, who has made slaying deflation his mission. Modi has attacked the Congress for inhibiting growth and stoking inflation, but hasn't spelt out just what he will fix and how. There is no "Modinomics".
Indeed, Modi and Abe could help to solve each others' problems. Japanese businesses, banks and pension funds want to invest, but Japanese society is too old to utilise many new investments. The solution might be to invest more in India, which has a young population and desperately needs infrastructure. In 2013, Abe raised hopes that decisive leadership can help tackle Electoral tactics may be part of the reason. Japan's deep-seated economic problems. Tackling India's stagflation requires tighter Next year, Modi could do the same for government finances, but cutting spending India. will depress growth further. The obvious December 2013
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