INDIA:SILICON VALLEY’S NEXT FRONTIER BY ROHIT TILLU
The IBS times November 2015, Issue No. 185
VW SCANDAL EXPLAINED
VEHICLE EMISSION CRISIS BY RANU SARUPRIA
LICENSE TO DRIVE BY
CAFÉ COFFEE BOOST BY SUPRIYA GAUR
ANUPAMA KUMARSWAMI & PRATEEK PANDEY
THE LURE OF EXTERNAL COMMERCIAL BORROWINGS
BY ISHAN GUPTA FinStreet, IBS Hyderabad 1|NOVEMBER2015
ISSUE NO. 185, NOVEMBER 2015
What’s Inside
2|NOVEMBER2015
INTELLIGENCE BEYOND SUCCESS
LETTER FROM THE EDITOR TEAM IBS TIMES KAUSHIK CHANDELL (EDITOR-IN-CHIEF) AVIK CHAKRABARTY (MANAGING EDITOR) ALISHA SINGH
Dear Readers, Greetings from Team FinStreet. We crossed the milestone of 50,000 views and we are indebted to our readers for their continuous support and interest of our readers. Your support keeps us motivated to deliver our best with every coming issue.
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This issue of The IBS Times continues to follow the path of in-depth research and analysis and presenting the same to our readers in simplistic yet interesting format. Team FinStreet is proud to present the 185th edition of The IBS Times. Our team, in this edition has shared with you insights on Café Coffee Day IPO and Net Neutrality. Also, our team worked hard to present to you the Quarterly Report for IT, Telecom and Ecommerce. We have also shed some light on DELL’s EMC Acquisition along with rich in knowledge articles like Is net neutrality more important than access to knowledge.. From the Industrial point of view we have presented our report on Automobile Industry.
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EYAMINI N HEMLATA HAJONG ISHAN GUPTA JATIN SHARMA JHARNA SONI PRATEEK PANDEY RANU SARUPRIA RAVI RANJAN PANDIT ROHIT TILLU SAKSHI ISSAR SANDHYA ADHAVAN SUPRIYA GAUR SWARUPA ROY 3|NOVEMBER2015
-WILLIAM JAMES
PRECIOUS
GOLD STRUGGLES 2 WEEK LOW AHEAD OF U.S. JOB DATA
-Hemlata Hajong
Gold is not just jewelry but also an investing instrument. The World Gold Council has stated that Central banks have recently begun buying more gold than they are selling. The Central banks diversify their monetary reserves by doing this as generally the prices of gold rises. Many of the world’s nations have reserves that are composed primarily of gold, including the United States. But gold has an inverse relationship with the U.S. dollar. A stronger U.S. dollar tends to keep the price of gold lower and more controlled whereas a
as a reserve currency.
weaker U.S. dollar is likely to drive the price of gold
The given chart shows there’s an inverse relationship
higher. This is because people have a tendency to invest
between the trade-weighted dollar and the price of
and trade in dollars, when the dollar is strong and
gold. Trade-weighted value shows how the U.S.
people prefer to invest in gold & when the dollar is
dollar is attaining or losing purchasing power
weak through instruments such as gold funds or coins
compared to its trading partners. The inverse
as gold is often considered a “safe haven”. With the
relationship remains because:
hope that the Federal Reserve would hike rates on the
back of a recovery in the economy the investors
countries’ currencies. This increases the
positioned themselves ahead of U.S. jobs data. But
demand for commodities including gold. It
higher rates could dent demand for non-interest payingpaying gold while boosting dollar. Why gold and dollar have an inverse relationship? During the time when gold standard was being used, the value of a unit of currency was tied to the specific
A falling dollar increases the value of other
also increases the prices.
When the U.S. dollar starts to lose its value, investors look for alternative investment sources to store value. And gold is the safest alternative.
amount of gold. After the separation, the U.S. dollar and
However, it’s possible for the U.S. dollar and gold
gold were freed. They could be valued based on supply
price to increase at the same time. This can happen
and demand. The U.S. dollar became a fiat currency-a
only in the time of a crisis in other country or region.
currency that gets its value from government
Just ahead of U.S. jobs data gold fell to a two-week
regulation, but isn’t backed by a physical commodity.
low. Data from the Labor Department (non-farm
It traded on foreign markets. The U.S. dollar was used
payrolls) showed that U.S. employers hired 203,000
as a reserve currency.
workers in September, improving from August’s
4|NOVEMBER2015
173,000 workers. The unemployment rate was forecast to hold at 5.1 %
workers in September, improving from August’s
of months thanks to China’s market turmoil. According
173,000 workers. The unemployment rate was forecast
to a national survey, 70% of Americans believe the U.S.
to hold at 5.1 per cent, a near seven and half year low.
economy is permanently damaged, while 84% do not
These supported views that the economy was recovering and hence the dip in the gold price. Spot
believe the economy has improved since the recession ended in 2009.
gold had eased 0.1 per cent to $1,111.66 an ounce after
The weaker-than-expected U.S. jobs data report dented
dipping to $1,110.55 earlier in the session-the lowest
rate hike hopes. Investors raced to cover short deals and
since September 16. It had lost about 3 per cent for the
some put on new longs after U.S. Labor Department data
week. This was the biggest decline since July 24. But a slowdown in manufacturing activity failed to provide any relief for gold, as traders were cautious to take any chance ahead of the jobs report. Other precious metals
showed payrolls outside of farming rose by 142,000 workers last month, much lower than the expected 203,000. This immediately made gold to jump more than 2 per cent and silver over 5 per cent. Gold prices were down nearly 1% but reversed losses after the release of
like palladium was trading near a three-month high of
the data. The unemployment rate stayed at 5.1% in line
$679.50 and due to strong car sales from major
with the expectations. A stronger data would have
automakers the metal, chiefly used in catalysts for
strengthened the U.S. economy and the dollar and
gasoline engines, was boosted.
pressured precious metals, which become less attractive
The fall in world trade and a slowdown in China took their toll on the U.S economy last month as surveys
when compared with higher-yielding bonds. And in addition to the latest jobs data another political showdown over the nation’s debt ceiling, with implications for the
reported that firms postponed hiring and factory
U.S. credit rating and suggestions that the U.S. could run
contracted. The report also found that the employers
out of borrowing capacity sooner than expected-gold
kept average pay rises at zero and thousands of workers
could become a sought after asset again.
quit the labor market, taking participation rate back to levels last seen in 1970s. The lack of any pressure on
Gold rose to the highest mark of $1,191.70 per ounce on 15th of October and closed at $1,174.30 per ounce on 16th
wages is likely to be the biggest factor urging Fed
of October. Silver futures on COMEX, a commodity
officials against a rise from the current rate of near zero.
division of the New York Mercantile Exchange, also
This was predicted last month until it became obvious
slipped. Gold prices have almost recovered from their
that the downfall of the Chinese economy and the terror
2015 losses. Dampened expectations of the Federal
it had caused on global markets formed a powerful case
Reserve rate hike decision and weal U.S. retail sales data
against a rate rise. Moreover surveys revealed that U.S.
gave some buoyancy to gold. Gold is often seen as a
factory orders fell 1.7% in August, compared with
hedge against inflation. If inflation is set to rise, we can
expectations of 1.3% decline and business activity for the first time in eight months in September. The U.S. markets have been on a wild ride during the last couple of months thanks to China’s market turmoil. According 5|NOVEMBER2015
to a national survey, 70% of Americans believe the U.S.
expect gold to rise. Of 41 economists surveyed, 21 still see gold falling from its current level resulting in a loss, a forecast based largely on the view that rates will be increased no later than December.
TECH NEWS
INDIA: SILICON VALLEY’S NEXT FRONTIER
-Rohit Tillu
India is the second largest economy of the Asian
huge high-tech players. World class players such as
continent and the fifth largest economy of the world.
Tesla Motors, Facebook and Google have their
With a Gross Domestic Product close to $2 billion, we
headquarters in the Silicon Valley. Not to mention
are certainly a force to be reckoned with. Previously
Microsoft’s coverage throughout the globe, also
known as the land of snake charmers and white
spans from the Silicon Valley itself. The companies
elephants, we have grown from being a nation on the
herein are world leaders and nations compete among
verge of bankruptcy in the year 1991 to a nation which
themselves to land a few offices of these companies.
is being regarded as an upcoming super power in the
The Silicon Valley alone accounts for a large amount
coming years. All credits to the new policy of Indian
of business throughout the United States and to the
Government which did away with all the laws that
rest of the world.
controlled the entry of outside companies and brought in more efficiency and diversified sectors into the economy. India has seen tremendous growth in various spheres after the Liberalization of 1991 which did away with all the licensing and quotas. The service sector, which was almost non-existent in the late 90’s, proved to be the biggest contributor towards India’s GDP. Liberalization also brought in more Industries and various big global players on the Indian soil. We can see India’s trajectory very clearly in the preliberalization era and the post-liberalization era.
India and China are the two biggest and fastest growing economies
of the Asian continent.
Thousands of Start-ups from India and China compete with each other voraciously. Both turn to the Silicon Valley in search of better technology and more streamlined processes. China has always been the fascination of the Silicon Valley due to its efficiency on a world level. In India particularly, factors such as poor infrastructure and corruption are the thorns in the way of these US giants. India has been seen as a nation where the government is
China, the World’s biggest centrally planned economy,
interested in filling their own coffers. But the
has always been Industrious and export-oriented.
election of Narendra Modi as the Prime Minister of
Initially, they used the concept of ‘backyard industries’
India has witnessed a sea of change during the last
to promote new industries. These ‘backyard industries’
couple of years. Mr. Modi has been very aggressive
paved way for Chinese doing great in almost every
towards improving the technical infrastructure of the
industry across globe. Chinese have made it to the
country right from the beginning of his term in the
famous Silicon Valley of the United States of America.
office as the Prime Minister. He used the model of
The Silicon Valley, a region in the Northern California,
‘Digital India’ for improvement of the country’s
is the home to thousands of Start-up companies and
technological infrastructure & promoting education
huge high-tech players. World class players such as Tesla 6Motors, Facebook and Google have their |NOVEMBER2015 headquarters in the Silicon Valley. Not to mention
across the far-fetched areas of the country using the
to established companies like Samsung by offering
digital cplatform. Modi targeted big social media Z
same technological specifications at cheaper prices.
platforms such as Google and Facebook for spreading
China had earlier been the fascination of the Silicon
awareness and educating people across the country.
Valley due to its readiness to invite new companies
Narendra Modi is the first Indian Prime minister to have
and their workforce efficiency. Now with more and
visited the Silicon Valley in the last 36 years. Modi met
more restrictions cropping up on the public and
the CEO of Google Sundar Pichai, CEO and CTO of
increasing domestic competition, it is not very
Tesla Motors, Elon Musk and the world famous Mark
feasible for these companies to invest in China given
Zuckerberg. The purpose of his visit to the valley was
its Socialist economy pattern.
to entice these big players to invest in India showcasing its vast potential for growth. As they say in the Silicon Valley, the Facebook of India is Facebook; the Google of India is Google and so on and so forth. The future was showcased in the Silicon Valley during the Prime Minister’s visit to the Valley. This visit can be seen as the country’s readiness to adopt new and top notch technological services for the growth of the entire nation. The companies like Facebook and Google often come along with big setups, which not only involve huge costs but also need a big operational base. They employ thousands of people at a time and contribute to the nation’s Gross Domestic Product significantly. These big players operate using various stakeholders and in this process they also facilitate in the growth of the stakeholders involved with them. With better educational
facilities
and
young
and
talented
individuals taking the hull, India can be seen as overtaking the Chinese in the Silicon Valley who used to be the fascination of the Silicon Valley companies.
Another reason that can be attributed to this sea of change is the slumping Chinese economy. The economic condition is not very closely related to the current scenario but somehow has its impacts on it. The Chinese markets have been falling for the past couple of months wiping out the gains that investors generally earn during a year. The stock markets are fueled with debts and margin payments which seem to be very difficult to recover given the negative sentiment in the Chinese markets right now. China has been forced to devalue its currency which resulted in higher payments towards the employers. These payments add up further to the cost of the product/service and thus the competitive edge of providing cheaper products is lost. If we closely look into these factors that are affecting the investment decision of the Silicon Valley companies, we can understand that it is quite imperative for them to invest in a country which not only promises them more returns but also gives them a chance to
China, on the other hand, has banned these social
contribute significantly to a nations overall growth
networking sites as they are considered as derogatory to
prospects.
the interests of the general Chinese public. China has also been giving the Silicon Valley tough competition at the technological front if we see the mobile phone 7|NOVEMBER2015
industry. We can see newer companies like Xiaomi
COVER STORY
THE LURE OF EXTERNAL COMMERCIAL BORROWINGS
-Ishan Gupta
With the implementation of the economic reforms in
The LIBOR (London Interbank Offer Rate) is the
1992, Indian companies gained access to the abundant
international benchmark through which all the
and low cost capital offered by the developed
floating rate instruments are measured. Let us also
economies. These were sourced in various forms
look at the amount of money that the corporates have
including Global Depositary Receipts (GDR’s) and
raised through ECB’s/ FCCB’s on a monthly basis.
American Depositary Receipts (ADR’s) which are equity
instruments;
and
External
Monthly ECB/FCCB data ($ mn)
Commercial
Borrowings (ECB) and Foreign currency convertible bonds (FCCB) which fall under debt instruments category. We will be looking at ECB’s and the various macroeconomic factors that are currently affecting it.
Jan
Feb Mar April May June July Aug
2013-14 1,793 4,303 3,550 3,203 1,460 1,887 3,722 507 2014-15 2,591 2,263 2,665 727 2,395 3,160 2,144 751
As per the Reserve Bank of India (RBI) definition, ECB’s refer to commercial loans in the form of bank
The amount of ECB raised by corporates has been
loans, securitized instruments (floating rate notes and
fluctuating over the months, but there has been a
bonds), buyers’ credit, suppliers’ credit availed of from
strong inflow of funds over the period. Now that we
non-resident lenders with a minimum average maturity
have given an overview of the funds raised by
of 3 years. They can be accessed through two methods:
corporates let us look at the various factors that affect
Automatic route and approval route. The RBI has also
the amount of capital raised through ECB’s. The first
fixed the maximum interest rate that can be charged on
factor is the LIBOR rate. The inter-bank rate is a
these borrowings. The table below provides the all-in
common variable across all foreign borrowings. An
costs for ECB’s depending upon their borrowings.
increase in the increase in the LIBOR rate will increase the cost of raising funds and vice-versa. The
Average Maturity
All-in-cost Ceilings
Period
over 6 month LIBOR
second factor is the exchange rate. A weak exchange rate means that a company can receive more rupees
Three years and up to 350 basis points
for every dollar i.e. it raises more debt in rupee terms
five years
when the exchange rate is high. The third factor is
More than five years
500 basis points
the European Central Bank (ECB) and the Federal Reserve policy. Another important factor is government policies. If the industry believes that the
The above rates represent the maximum cost of ECB’s.
government policy will promote growth, then they will raise more capital. Further, the easing of rules
8|NOVEMBER2015
also makes it possible for businesses to raise more funds.
also makes it possible for businesses to raise more
reduced. This makes it easier for the companies to
funds.
plan their fund requirement and redemption
LIBOR is the short term loan rate for interbank loans. This rate is the standard benchmark when it comes to pricing floating debt issues among other securities. This rate is affected by the monetary policy of both the ECB and the Federal Reserve, and the rate at which interbank loans are given. With fed delaying its historic rate hike,
forecasts. Further this also reduces the transaction costs as the spread (difference between bid and ask price) for the rupee reduces. The exchange rate is highly dependent on the global market for stability and even a whiff of a problem can lead to exchange rate volatility.
the LIBOR rate has remained near its lowest. This
The Indian government has definitely brought about
makes it cheaper for the companies to raise fund from
a change in the image of the country as a more
the external market. The recent LIBOR scandal has
business friendly nation; further the global macro
eroded
The
environment factors have made India, at present, a
investigations are still continuing and it might just be
magnet for investments for return hungry investors.
the tip of the iceberg. The markets might remain
The current market conditions are somewhat similar
panicky about it. Also with Also with inflation going
to the condition following the sub-prime mortgage of
down over the months in India the RBI might be forced
2008. Our strong banking policies and parallel
to reduce its benchmark rate, making the local
economy shielded us from the after effects of the
borrowing equally competitive. The RBI recently
crisis. Even at that time the world was gung-ho about
slashed rates by 50 basis points, but the banks have not
our economy. But it took nothing more than some
passed on this benefit to the consumer. With most
government scams to dampen the mood and destroy
analysts delaying the fed rate hike for 2016 and the ECB
investor confidence. So this factor remains fragile
having no intention of increasing its near zero interest
unless strong economic data supports it.
the
goodwill
of
the
benchmark.
rate soon, there will be continued excessive liquidity in the market. This excessive liquidity will try to find high yield (probably riskier avenues) avenues and the Indian companies will be in a position to provide that. Yes, some might say that these central banks have heeded the call of the emerging market to prevent a further turmoil, but somewhere their priority lies to their own countries and this might force them in raising rates. The rupee exchange rate has also been stabilizing over the period and most analysts believe that the rupee volatility has ebbed and the uncertainty associated with it has been 9|NOVEMBER2015
So in the short term; lower LIBOR rate is positive, fed and ECB policies are positive, stability in exchange rate is good and the government initiative is also welcome. This makes it an apt time to either issue new cheap debt or replace the old expensive debt. However, one should be more caution when it comes to these factors in the medium and the long term. While for a shorter duration these factors might be stable but in the long term they tend to be volatile and no forecast can actually give you an absolutely correct scenario.
INDUSTRY ANALYSIS
LICENSE TO DRIVE: AUTOMOBILE SECTOR
-Anupama Kumarswami & Prateek Pandey
“From one car made for 3186 people in India in 1995,
makes the Indian Automobile industry very viable
we now have 481 people for that one car”
for future investments. While the global car majors have been revamping up the investments in India so
-Economic Times
that it could cater to the growing domestic demand
With an annual production of 23.37 million vehicles in
and these manufacturers plan to leverage India’s
the FY 2014-15 following a growth of 8.68% over the
competitive advantage to set up export-oriented
last year, Indian Automobile industry becomes the
production hubs.
seventh largest producer in the world. Automobile industry contributes up to 7.1% to the country’s Gross Domestic Product (GDP). It is said that, Indian Automobile Industry is the 4th largest automotive market by volume. It is touted that there will 6 million plus vehicles that will be sold annually by 2020. The industry is expected to achieve a turnover of $300 million dollars with a CAGR of 15%. To set the map of auto and auto component industry and to promote Indian Automobile Industry as the globally preferred
Main components of Indian Automobile Industry are
manufacturing destination and introduced intervention
Passenger vehicles, Commercial vehicles, two-
and prescription mechanisms to promote the industry
wheelers and three wheelers. The sales are
through the Automotive Mission Plan in 2006. With lot
continuing to recover gradually as operating cost
of groundwork being covered under AMP 2006-16,
eases the domestic Passenger Vehicles which
there have been setbacks too. The challenges lead to
showed 3.9% during FY15, though the thrust slowed
Vision AMP 2016-26, which would focus on
down to 2.7% growth during this month. Both,
developing India as one of the top three automotive
Passenger Car as well as Utility Vehicle witnessed
manufacturing hubs in the world. Vision AMP has been
moderate growth during March 2015. During Fy14,
aligned to Make in India campaign and is expected to
the Passenger Car segment had seen sales growth of
bring out colorful results. The emergence of large
4.8% shrugging two years of declining volume
automotive clusters in the country: Delhi-Gurgaon-
trends whereas the Utility Vehicle segment saw
Faridabad
Mumbai-Pune-Nashik-
relatively better 5.5% growth. Van segment declined
Aurangabad in the west, Chennai-Bengaluru-Hosur in
by 10.2% during FY14 but on monthly basis, volume
the south and Jamshedpur-Kolkata in the east which
stabilized by 14000 units’ approx. correction in fuel
makes the Indian Automobile industry very viable for
prices and easing financing cost has resulted in lower
| N O V E M While B E R 2 0the 1 5global car majors have future 10 investments.
operating costs which should further aid domestic
been revamping up the investments in India so that it
Passenger Vehicle growth in near to medium term.
in
the
north,
prices and easing financing cost has resulted in lower
second consecutive month registering a volume
operating costs which should further aid domestic
decline of 1% in March 2015 owing to continued
Passenger Vehicle growth in near to medium term.
weakness in motorcycle sales which declined by 5%
Credits to uptick in demand for MSIL’s MPVs i.e.
and moderation in the scooter segment growth to
Omni and Eco, the Van segment is also reflecting the
about 11% during March 2015 compared to strong
same trend in small commercial vehicle. . In terms of
double digit growth in earlier months. Within the
market share, MSIL continue to maintain its leadership
motorcycle segment, the volumes in 100cc sub-
position with 45.0% market share (+292bps) during
segment remained largely flat registering a modest
FY15 followed by Hyundai (16.3%, +114bps), M&M
volume growth of 2% in March 2015 while the 125cc
(8.6%, -155bps), Honda (7.6%, +219bps) and TML
sub-segment witnessed sharp decline of 42% mainly
(6.3%, -159bps) during FY15.
owing to weak rural demand. While the 100cc sub-
While in regards of the commercial vehicles segment, the domestic industry gradually came out of the down cycle during the FY15 after two years of demand contraction. The sharp uptick in the replacement demand for the Heavy Commercial vehicles and
segment saw Hero, TVS and Honda registering volume growth, even as all other OEMs that have a presence in the 100cc sub-segment posting a degrowth in March 2015, the 125cc bike sub-segment saw volumes contract across all OEMs.
improvement in the bus sales has led to growth of 16%
Domestic three-wheeler segment grew by 10.8% in
in Medium and Heavy Commercial vehicle segment.
FY 2015 compared to a decline of 10.9% in FY 2014
The pick-up in M&HCV sales albeit on a low base was
The domestic three-wheeler industry has also been in
driven
operating
a sweet spot during the current financial year,
environment for fleet operators, expectations of pick-up
registering a growth of 10.8% in FY 2015 in contrast
in
as
to de-growth of 10.9% witnessed during FY 2014.
manufacturing space along with renewal of mining
The demand improvement during the current fiscal
activities. Tata Motors has maintained its market share
has primarily been led by pick-up in the passenger
in the M&HCV segment, while ALL has gained market
carrier segment, which has benefited by fresh permit
share on back of expansion in non-South markets. The
issuances across various cities. During the year,
growth remains constrained by weal motorcycle sales
three-wheeler exports, which contribute almost 43%
in the two-wheelers segment. The motorcycle volumes
to industry sales, have also grown by a healthy
decline by 5%, while the scooter sales grew by 11% in
15.4% over the previous year primarily on account
March 2015. The domestic two wheeler industry
of higher demand from South-East Asian and
growth continued to remain in negative territory for the
African markets.
by
gradual
investments
in
improvement
infrastructure
11 | N O V E M B E R 2 0 1 5
in
as
well
Automobile Production Trends Category
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Passenger Vehicles
23,57,411
29,82,772
31,46,069
32,31,058
30,87,973
32,20,172
Commercial Vehicles
5,67,556
7,60,735
9,29,136
8,32,649
6,99,035
6,97,083
Three Wheelers
6,19,194
7,99,553
8,79,289
8,39,748
8,30,108
9,49,021
Two Wheelers
1,05,12,903
1,33,49,349
1,54,27,532
1,57,44,156
1,68,83,049
1,84,99,970
Grand Total
1,40,57,064
1,78,92,409
2,03,82,026
2,06,47,611
2,15,00,165
2,33,66,246
The Road Ahead
3. Rural markets are on the verge of opening up.
Indian automobiles have a bright future because India
4. The Japanese auto maker Maruti Suzuki expects
is one of the biggest markets in the world. The country
the Indian passenger car market to reach four million
has more than hundred crores of people, accounting for
units by 2020, up from 1.8 million units in 2013-14.
one-sixth of the total population of the world. It is
5. The domestic market is growing.
marching towards developments and the standard of living of people in India is improving. The following
To tap this opportunity, we need two things: capital
points are favorable to Indian automobiles:
and technology. Through globalization, we can get both of these.
1. India is the second largest two-wheeler market in the world, the fourth largest commercial vehicle market in
The road ahead for Indian automobile sector should
the world, and 11th largest passenger car market in the
be to emerge as the destination of choice in the world
world that is expected to be the seventh largest by 2016.
for design and manufacture of automobiles and auto components with output reaching a level of US$ 145
2. There are about 700 million vehicles on the road in the world. It is estimated that the vehicle population would grow to about 1.3 billion in the year 2030. Most of this increase of 600 million will come from developing countries. 3. Rural markets are on the verge of opening up. 12 | N O V E M B E R 2 0 1 5
billion accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016.
CCD IPO
CAFÉ COFFEE BOOST
-Supriya Gaur
James Cash Penney once quoted “Growth is never by
Café Coffee Day (CCD) IPO
mere chance; it is the result of forces working together”.
Coffee Day Enterprises Ltd owns and operates
In business, going public is one such force. If an
coffee cafes in India since 1996. It runs the most
organization wants to grow, it needs to expand its
popular hangout joint among the youth, Café Coffee
territory and this expansion will eventually help it to
Day (CCD) founded by V.G.Siddhartha. As of 2015,
achieve what it wants and where it wants to be. This
there are 1530 outlets of CCD across 29 states in
exactly is what Coffee Day Enterprises Ltd. (CDEL),
India and most of them are located on interstate
which is the parent company of Café Coffee Day
highways. It plans to open another 215 outlets and
(CCD), is up to. It launched its Rs. 1,150 crore Initial
105 kiosks in the next two financial years. This will
Public Offering (IPO), country’s biggest in 3 years, in
require capital and investments. For the same reason
mid-October to raise up to Rs. 11,390 million in order
the firm filed a Draft Red Herring Prospectus
to keep itself ahead of its competitor Starbucks and has
(DRHP) with Securities and Exchange Board of
a well-defined set of objectives to fulfil with the
India (SEBI) through its lead merchant banker Kotak
proceeds of this offering.
Mahindra Capital Company Limited on 26th June,
Initial Public Offering (IPO)
2015. A DRHP is a mandatory document to be
An initial public offering refers to the first time the company publicly sells shares of its stock in the open market. Stock is the equity or ownership interests in corporations. An open market is characterized by absence of taxes, tariffs, subsidies and any regulations that restricts free participation in the market. Since an initial public offering allows a company to interact with public, it is also termed as “going public”. Smaller companies use IPO to obtain capital for its expansion while large private firms use it for public trading. The main advantages of going public are to generate cash which can be utilized for research and development or for paying off debts, getting better rates for issued debt and facilitate mergers and acquisitions.
submitted by the companies opting for an initial public offering with Securities and Exchange Board of India through engagement of a SEBI registered merchant bank which is responsible for preparing the offer document providing all necessary information except the price and size of the offering. The draft was approved by SEBI on 14th August, 2015 which permitted CCD to launch Rs.1, 150 crore public offering. The issue is listed at Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and was open from 14th October-16th October, 2015 comprising of equity shares (shareholders has to share the profits as well as bear the losses) with a face value of Rs.10 to be ordered in a lot of 45 shares with an issue price of Rs.316-Rs.328 per equity share. Café Coffee Day 13 | N O V E M B E R 2 0 1 5
aims at fulfilling the following objectives by utilising the proceeds of the
Most of them opined that since company is not generating any profit, the prices of the IPO are not justified and hence it would be better not to invest. While Angel Broking was neutral about the subscription, Sharekhan pointed that it is meant only for long term investors. However, ICICI Securities was in favor of the subscription. These all analysis were based on the profit, loss and possible future benefits of the company. According to the financial Fig. IPO details
data of Café Coffee Day, it has been incurring losses
Rs.316-Rs.328 per equity share. Café Coffee Day aims
since 2013 and its current situation does not favor
at fulfilling the following objectives by utilizing the
any kind of investment in the company.
proceeds of the offering: financing coffee business, setting up new outlets and kiosks, manufacturing and assembling of vending machines, establishment of a new coffee roasting plant facility along with an integrated coffee packing and tea packing facility,
But the subscription results swayed the opinions in other direction. According to Prithvi Haldea, chairman of prime database, “CCD saw almost twice the subscription and it shows that a company with a good track record can sell in the IPO market”.
repayment of loans to companies and subsidiaries and general corporate purposes.
With the Initial Public Offering subscriptions turning in favor of Coffee Day Enterprises Ltd, it would be
Issue Subscription Details
interesting to see whether the company implements
Qualified Institutional Buyers (QIB) are financial
the right strategy to make the most out of this in
institutions, banks, foreign institutional investors (FII)
terms of expanding their business, clearing their
and mutual funds who are registered with SEBI. Non
payments and achieving other objectives it has listed
Institutional Investors (NII) are individual investors,
while planning for “going public”.
NRIs, companies, trusts etc. who bid for more than Rs. 2 lakhs and are not required to register with SEBI. Retail Individual Investors (RII) are investors who can apply up to Rs. 2 lakhs. NRIs applying below Rs. 2 lakhs are also considered as RII. The Final Take Before the subscription was open, several analysts gave different views regarding investment in CCD IPO. Most of them opined that since company is not 14 | N O V E M B E R 2 0 1 5
generating any profit, the prices of the IPO are not justified and hence it would be better not to invest.
MARKET WATCH
MARKETS REJOICE AS SURPRISE TRICKLED THROUGH The global market had been going through a rough phase for the past couple of months. There has been huge volatility and uncertainty in the markets. But now its time for the markets to cheer up. Raghuram Rajan, Governor of RBI (Reserve Bank of India) announced a surprise repo rate cut of 50bps, reducing it to 6.75%. This step was taken to kick start economic activity within the country, which was slowing down due to the great fall of the china market, European crisis, fall in commodity prices and many other reasons. This move
-Jharna Soni
Currency Market Due to the reduction in repo rate, the Indian currency market is also benefited. The rupee is now 65 against dollar. In the month of august the rupee suffered a major setback and was valued at 67 against dollar but now it seems that the situation has improved. We can now see that the impact of china devaluation is no longer leaving its footprint on India. Looking at Global currencies the dollar edged up to two week high against other major currencies as investors eye
has created a new hope for Indian markets amidst the
upcoming data on U.S jobless claim. The dollar was
slowdown of global economies.
higher against the euro, with EUR/USD shedding
Implications of the rate cut
0.23% to 1.1315.
Call it the need of the hour or from political
Bond Market
pressure, reduction in the repo rate is the new
Looking at the current situation of the bond market
reality. There are a few implications of it which
in china, bankers fear that the debt driven bond
are mentioned below
market is showing similar signs of overheating that
Reduction in mortgages: Demand for home
preceded the collapse in equities. Repurchase
loan, car loan and personal loan has increased
transactions allowing investors to use existing note
due to lowering of interest rates.
holdings as collateral to borrow money for one day
Increase in Savings: Repo rate cut has an
doubled in the past year to a record 2.1 trillion Yuan
indirect impact on interest given on the deposits
($330 billion) thus showing signs of overheating.
of banks.
Corporate Investments: Now with lower interest rates the ball is in the government’s court to announce policy changes in order to prompt corporates to invest.
Stock Market: Lower interest rate will lead to higher profits and better valuation in stock markets. 15 | N O V E M B E R 2 0 1 5
While we look at India, it has opened a window to allow foreign investors to buy around $2.5 billion worth of its government bonds. India has laid a benchmark on its bond yields at 7.5%, offering a more lucrative return to investors than similar bonds from china and Malaysia where bond yields are only around 4%. India’s rupee has fallen less against dollar when compared with other currencies, thus strengthening its bond market.
Currency
Rupees
Stock Market
1 US $
65.1225
The stock market is going through a recovery phase
1 Euro
72.7057
1 UK
100.3583
1 Aus. $
47.0184
and is slowing pulling up. A range bound movement was witnessed as key benchmark indices traded near their highest level in almost nine weeks. The barometer index, the S&P BSE Sensex, was up 123.79 points or 0.45% at 27,430.62. The gains for 1 Japanese
0.5409
the Sensex were higher in percentage terms than
1 Singapore
46.6995
those for the 50-unit CNX Nifty index. The Nifty is currently up 29.70 points or 0.36% at 8,291.35. The
1 Renminibi
2.0094
market breadth indicating the overall health of the
dollar when compared with other currencies, thus
market
is
strong.
strengthening its bond market.
performances,
Looking
automotive
at and
sector
wise
information
technology sectors are doing well, whereas there is a Commodity Market
decline in the performance of banking and
The commodity market is still in its downswing. There is an urgency for oil exporting countries to adjust their spending’s. Due to the fall in oil prices the revenues of
manufacturing sector. Conclusion
oil exporters have dropped sharply. Gold lost 0.88%,
To sum it up, it has been a pretty resourceful month
the lowest since October 13th 2015, as a stronger U.S.
for the global markets. The impacts of the great fall
dollar dampened the appeal of the precious metal. A
of china are still there, but the effects are diminishing
stronger U.S. dollar usually weighs on gold, as it
as the clock ticks by. The global economy is pacing
dampens the metal's appeal as an alternative asset and
back to the position it was before the happenings of
makes dollar-priced commodities more expensive for
“black Monday�. The repo rate cut of 50 bps has
holders of other currencies. Copper futures inched
come at a good time, as the inflation rate is
higher as the demand for the metal in increasing from
decreasing and the Indian economy needs a boost in
top consumer, China.
its system. The month of October seems to be fruitful for investors, as the markets have started to perform
Commodity
Rupees
Gold
26914
Silver
36940
Crude Oil
2979
better. It is said that markets tend to return to the mean over time. In simple terms, this means that periods of market insanity never last forever. Whether it's extreme optimism or pessimism, markets eventually revert to saner, long-term valuation levels.
16 | N O V E M B E R 2 0 1 5
CNX NIFTY 8300 8250 8200 8150 8100 8050 8000
BSE SENSEX 27,500.00 27,400.00 27,300.00 27,200.00 27,100.00 27,000.00 26,900.00 26,800.00 26,700.00 26,600.00 26,500.00 26,400.00
FIG: Graph 1: Stock movement for Nifty. Graph 2: Stock movement for Sensex.
17 | N O V E M B E R 2 0 1 5
VW SCANDAL EXPLAINED
VEHICLE EMISSION CRISIS - END OF DIESEL GATES
-Ranu Sarupria
The Volkswagen emissions scandal also known
and preferred to develop their own system. Starting
as Diesel gate began on 18 September 2015 when
with the 2009 model year (some date back to
the
Protection
2008 "electronically controlled common rail direct
Agency (EPA) issued a Notice of Violation of the Clean
injection system with Bosch high pressure pump"),
Air Act to German automaker Volkswagen Group. The
Volkswagen Group began migrating its light-duty
company had intentionally programmed their model
passenger vehicle turbocharged direct injection
year 2009 through 2015 turbocharged direct injection
(TDI) diesel engines to a common-rail fuel
(TDI) diesel engine so that US standards nitrogen
injection system. This system allows for higher-
oxides (NOx) emissions were met only during
precision
laboratory emissions testing. NOx emissions during
controlled fuel injectors and higher injection
driving were up to 40 times higher. The EPA classified
pressure,
this programming as a defeat device, prohibited by the
capture soot, and on some vehicle models, a urea-
Clean Air Act. An estimated eleven million cars
based exhaust after treatment system, the engines
worldwide, and 500,000 in the United States, included
were described by Volkswagen as being as clean as
such programming.
or cleaner than US and Californian requirements,
United
States
Environmental
Where VW Went Wrong
fuel
delivery
theoretically
using
leading
electronically
to
better
to
while providing good performance. The system failed to combine good fuel economy with compliant
The company put software called a “defeat device� on
emissions, and VW chose sometime before 2010 to
millions of its diesel-powered cars. That software can
program the engine control to switch from good fuel
tell when a car is going through an emissions test,
economy and high emissions to low-emission
making the vehicle appear more environmentally-
compliant mode when it detected an emissions test,
friendly than it actually is. These devices were emitting
particularly for the EA 189 engine. This caused the
harmful emissions. Emissions are exactly what they
engine to pollute in daily operation, but comply with
sound like: The exhaust that comes out the back of a car
pollution rules only when being tested. As of 2014,
using an internal combustion engine. These gasses are
VW is registered with a Corporate Average Fuel
considered harmful to the environment, contributing to
Economy (CAFE) of 34-38 mpg. The low emissions
climate change. In the U.S., car emissions are regulated
levels of Volkswagen vehicles tested with the defeat
at the federal level through the Clean Air Act, and can
device in operation enabled the company to
also be regulated at the state level. In 2005, parts of VW
receive green car subsidies and tax exemptions in the
intended to purchase Mercedes' Blue Tec system for
US.
reducing pollution, but other parts of VW rejected that and preferred to develop their own system. Starting 18 | 2009 N O V E model M B E R 2year 0 1 5 (some date back to with the
2008 "electronically controlled common rail direct
Volkswagen Investors have been accused of ignoring
Fine paid by the company is equal to 4200 per car
clear signs of corporate governance failings at the
and around 482,000 diesel cars are ordered for recall.
German carmaker before the scandal. Howard Sherman, head of corporate governance business
traded in US currency, an increase Resignation by Volkswagen’s Ceoin value of dollar
development at MSCI, had concerns about VW for
accompanies a decrease in its price. Martin Winterkorn, the CEO of Volkswagen, has
some time.
The crisisdown in international market has also The negatively stepped and abruptly resigned. move affected the the price of gold. Thedefeat downfall in that the comes after discovery of the devoce
Why VW Cheated On Emission Tests?
Chinese economy has led tousing massive selling of 30 the company was allegedly "defeat" software
The U.S. has tougher diesel emissions standards than
tonnes gold atofShanghai Gold Exchange on 11 million its diesel-powered vehicles because to cheat
Europe, where such cars are far more common. Meeting
people in market off the debts emissions tests. Towanted cover to thepay Winterport wouldand be
those steeper requirements can mean reductions in fuel
liquidate every possible investment they had done. replaced by current Porsche CEO Matthias Müller.
efficiency and performance, making it tougher for an
As a result the price of gold dipped to its lowest due Conclusion to excessive supply than demand and forcing people Volkswagen‘s scandal is most to sell at lower recent prices. emissions Iran’s nuclear deal with the
automaker like VW to advertise their diesel cars against more typical vehicles in the U.S. Cars Affected By Volkswagen Actions The diesel versions of the Jetta, Beetle and Golf model years 2009-2015, as well as the 2014 and 2015 Passat diesel. The diesel Audi A3 model years 2009-2015 is also involved (Volkswagen owns the Audi luxury brand). If you own one of these vehicles, contact your
likelyhas to led have far-reaching consequences. West to reduction in conflicts in thoseRigging regions pollution results will not only prices cost the which in turn indicated the gold to beautomaker lowered. dearly in Greece terms ofhas legal fines, and customer Further, been in investor the danger of being backlash,from class suits, possible removed Euroaction list. It has a huge amountcriminal of debt investigation, and by losssealing of future but thewith illwhich it dealt with a lastsales, minute deal effects of this spill ofover its creditors thus scandal imbibingcould less value gold.to other
on the stock market, where VW shares have fallen about
automakers, particularly Germans who make cars Moving to the factors internal to Indian economy, the that run on diesel, and have a broader impact on the government and Reserve Bank of India (RBI) have automotive industry. In fact, this scandal has taken several measures to curb gold imports resulting everybody raising their eyebrows at the previously in lowering its prices and making it as an option for trusted and respected German engineering, the blow investment asset. This reduction has attracted to the country’s largest automotive company could, consumers leading to healthy demand and high in turn, hurt the country’s economic growth. consumerism. The unpredictable pattern of monsoon According to our estimates, the net present value of is also a matter of concern. India is the second largest the cost of the entire dieselgate scandal for consumer of gold out of which rural population Volkswagen, including government fines and contributes to about 60% of overall buying of settlements, private settlements, recall expense, and products. With a good monsoon over the year the future loss of sales, might cross $34.5 billion. demand for gold would increase especially during
38%.
the festive season. On the other hand, lower levels of
Volkswagen dealer or the company for more information. Result Of the Volkswagen Happening Which Led To Failure The recent revelations could also have negative implications on other companies, and, in general, on Germany’s automotive sector. VW could face billions of dollars in fines from the EPA. There’s also the chance of civil lawsuits launched by consumers who feel duped. Meanwhile, Volkswagen has taken a big hit
FINE PAID byV the 19 | N O E M company B E R 2 0 1 is 5 equal to 4200 per car and around 482,000 diesel cars are ordered for recall.
monsoon would negatively impact the demand for gold thus leading to an increase in its price. According to the facts, India has been the world’s
QUARTERLY REPORT
HALF OF AN INNING
-Eyamini N & Abhinav Banerjee
The return on investment which forms the major criteria
the fastest growing industry in the recent trends, it
for any investor can be assessed on how a company is
has grown by 34% (CAGR) since 2009, has reached
performing in the recent quarter. These quarterly
a range of 22 billion USD in the early 2015’s.
reports based on their financial performances forms a
The fast development of telecommunications
major influence on investor’s decision. Therefore we
technology in the past few decades is changing many
here write to you about a few important sectors which
aspects of our lives – how we search for information,
have seen a major boom in the year 2015 in the past
how we travel and not at least how we buy products
quarter.
or services. The most well-known form of ecommerce or electronic commerce is online
India is currently the second-largest telecommunication market and has the third highest number of internet users in the world .India's telephone subscriber base expanded at a CAGR of 19.22 per cent to 1,002 million over FY07–15.Teledensity (defined as the number of telephone connections for every hundred individuals) increased from 18.3 in FY2007 to 79.67 in FY 2015nbsp.In May 2015, total telephone subscription stood at 1,002 million, while tele density was at 79.67 nbsp.
shopping, also known as business to consumer ecommerce (B2C), where private customers can order various products which they then receive by courier or postal mail. Another category of e-commerce focuses on transactions between companies, such as manufacturers and a wholesalers or wholesalers and retailers and is called business to business ecommerce (B2B). The third category of e-commerce involves transactions from consumer to consumer (C2C), as in the example of eBay or other similar
There has been a tremendous improvement in computer
websites.
technology. Evolution of high performing personal IT INDUSTRY
computers has made it an integral part of the people of developed nation and urban people of developing nation Increased competition among the MNCs has forced them to focus on operational efficiency. Enterprise Resource Planning or ERP has become an integral part of companies. A significant number of IT projects are ERP based. Banks, Retailers and many
TATA CONSULTANCY SERVICES (TCS)
There was a 16 percent increase in the net profit.
Good performance on digital platform.
Recovery in Latin American and domestic market.
other service sectors consider use of IT as the most effective way of customer care. Most, if not all, take the
Order book grew 30 percent in this quarter.
help of IT to remain competitive. Ecommerce industry
Revenue from digital platform increased from 12.5 to 13.3 percent.
has changed the way business is transacted. They are the fastest growing industry in the recent trends, it has
Revenue growth of 5.8 quarter on quarter and 14.1
grown by 34% (CAGR) since 2009, has reached a range
percent year on year
20 | N O V E M B E R 2 0 1 5
Revenue growth of 5.8 quarter on quarter and
The liquid assets of the company stood at Rs
14.1 percent year on year.
32,099 crore while the EPS was Rs 14.87 at
Digital services and solutions grew 10.7% Qoq.
the end of second quarter.
Overall decrease in sp revenue for it solution
to 6.4-8.4% in dollar terms.
and services as application development and maintenance decrease from 40.5 to 40 as compared to q2of fly 15,enterprise solutions
Revenue guidance FY16 lowered 7.2-9.2%
38 projects went live in Q2.
Attrition rate up at 19.9% v/s 19.2% (QoQ).
also decreased from 15.6 to 15.1 and assurance
TELECOMMUNICATION
service increased from 8.4 to 8.5.
EBITDA was 78,224.
Operating income 73536.
AIRTEL Net Profit: The Company reported 54.96 per cent fall in its standalone net profit at Rs 2,223.70 crore
INFOSYS
for the quarter ended September 30, 2015 as
Net profit rising 9.1%.
compared to Rs 4,937.30 crore for the same quarter
The revenue momentum for Infosys continued
in the previous year. Consolidated net profit of the
to see an upsurge with 6% sequential rise in US
company rose 10.09 per cent to Rs 1,522.70 crore for
dollar terms, which was the highest in the last
the quarter ended September 30, 2015 as compared
16 quarters.
to Rs 1,383.20 crore in the same quarter last year.
Net profit at the end of the second quarter stood at $599 million while the revenue was $2.3 billion.
In terms of rupee - the revenues at the end of second quarter stood Rs 15,625 corer recording a sequential growth of 8.9%.
In terms of rupee- The net profit during this period was Rs 3,398 corer revealing a sequential
Total Income: Bharti Airtel’s standalone total income decreased by 4.91 per cent to Rs 15,911.90 crore for the quarter under review from Rs 16,733.60 crore for the corresponding quarter of the previous year. On the consolidated basis, total income of the company increased by 4.33 per cent at Rs 23,851.90 crore for quarter under review as compared to Rs 22,861.70 crore for the quarter ended
growth of 12.1%.
150 basis points rise in operating profit margin
Mobile data revenue: Consolidated mobile data
to end at 25.5% as against 24% in the
revenues grew 49.8 per cent to Rs 3,806 crore,
comparable previous quarter.
boosted by data traffic growth of 76.3 per cent.
YOY growth percentage was 8.7% as compared
Data ARPU: Data average revenue per user (ARPU)
to the 6.5% of last year quarter i.e. FY 15.
increased by Rs 42 to Rs 193 (year-on-year) in the
The liquid assets of the company stood at Rs
reported quarter, led by 35.9 per cent increase in data
32,099 crore while the EPS was Rs 14.87 at the
usage per customer.
end of second quarter.
21 | N O V E M B E R 2 0 1 5
Total Debt: The net debt of the company at the end of September 30 stood at Rs 70,777 crore.
Total Debt: The net debt of the company at the end of
NSE’s 50-share Nifty. On a sequential basis, Idea’s
September 30 stood at Rs 70,777 crore.
net profit declined to Rs 809.3 crore in the reported
EBITDA Margin: EBITDA margin of Bharti Airtel stood at 34.7 per cent for the quarter ended September 30, 2015. The figures were at 35 per cent and 34.9 per cent for the quarter ended September 30, 2014 and June 30, 2015, respectively. Dividend: The Company, in its Annual General Meeting held on August 21, 2015, declared final dividend at the rate of Rs 2.22 per equity share (face value of Rs 5 each) aggregating to Rs 8,87.4 crore.
period from Rs 930.8 crore the previous quarter while total revenue was down to Rs 8,689.1 crore from Rs 8,798.3 crore. Stock markets were closed on Thursday on account Dussehra. Idea Cellular, India’s third-largest telecom operator by subscribers, on Wednesday reported a 7 per cent increase in net profit at Rs 809.26 crore for the JulySeptember quarter, helped by non-voice revenue growth. The company, however, witnessed a decline in voice usage and pressure on mobile data.
IDEA Idea, part of the Aditya Birla group, had reported a net profit of Rs 755.88 crore for the second quarter last fiscal. Total revenue rose to Rs 8,689.06 crore for the reported period as against Rs 7,569.92 crore a year ago, Idea had said in a statement. E-COMMERCE Indian digital commerce space is fast growing. One big reason is the prominent shift to internet, via Smart phones, Tablets and/or Laptops. According to Idea Cellular share price fell 7.5 per cent on Friday after the company’s second quarter earnings failed to cheer investors. After falling 8.97 per cent to Rs 149.80 in intra-day trade at BSE, shares of the company finally ended at Rs 140.45, down 7.35 per cent from previous close. On NSE, the stock dipped by 7.53 per cent to Rs 140.45. Consequently, the company’s market valuation fell by Rs 4,013.47 crore to Rs 50,556.53 crore. In terms of volume, 12.72 lakh shares of the company changed hands at BSE and over one crore shares were traded at NSE during the day. The stock was the top loser on NSE’s 50-share Nifty. On a sequential basis, Idea’s net 22 | N O V E M B E R 2 0 1 5
profit declined to Rs 809.3 crore in the reported period
the report by Mobile Internet in India 2014, India will soon reach the mark of 213 million mobile internet users by June 2015, indicating a jump of 23% in a time span of 6 months (January 2015-June 2015). The consumer mentality of Indian customers is changing fast, aiding to the growth of this industry. This high-end growth can be attributed to few recent facts –
Ranked ahead of Europe (482.3 billion USD) and North America (452.4 billion USD).
India’s internet penetration with total ehouseholds at 46 million against China’s 207 million is one of the reasons behind India’s poor B2B sales growth.
India had e-commerce sales of only 10.7 billion USD in the year 2014 which has come
Low-priced smart phones and 2G/3G/4G networks
has
enabled
internet
up to 23.7 billion USD in the early 2015.
access everywhere, even in the rural areas. Tier
million in 2014 is an indicator of the sector’s
II and Tier III cities are growing fast.
Rise of the middle-class people, who have less time. They are more prone to do everything on their smart phones, even shopping.
A fast growing internet population of 243
huge growth potential in India.
In coming years, as internet presence increases in rural areas, rural area India will yield more e-commerce business.
Free home Delivery, deals, discounts, and offers of such have given a boost to this industry.
Investments in E-Commerce Companies from
Increase in the use of Mobile wallets.
2014-2015
With people using technology to shop, more
Investors are preferring ecommerce companies in
online retail stores are opening up, making way
India to invest their money. In the food retail
for more employment.
industry, BigBasket, a leading grocery retail store
Trends in the Industry - Mounting Social Media
received $32.7 million in September 2014 from Helion Ventures, Ascent Capital, Zodius Capital and
- M-commerce – A new wave!
Lionrock Capital. In order to maintain their grounds,
- Online Group Buying – Explosive growth!
big daddies of e-commerce are indulging into
- Change in the Business Model - Hiring the best
acquisitions.
For
instance,
leading
fashion
retailer, Myntra reportedly has 60% of its sales happening from mobiles, got acquired by Flipkart in
Facts:
2014. Similarly, baby care retailer BabyOye, that had Asia specific emerged as the strongest B2C e-
acquired its competitor Hoopos in late 2013, itself
commerce region in the world in 2013-14.
got acquired by Mahindra groups in February 2015.
Sales of around 567.3 billion USD, a growth of
However, with Flipkart, Amazon taking up the
45% over 2013-14.
maximum market, most of the player in baby care
Ranked ahead of Europe (482.3 billion USD) and North
section has faded with time. Currently, only
America 23(452.4 | N O Vbillion E M B EUSD R 2 0 )1 5
Hopscotch
and
FirstCry
have
managed
to
India’s internet penetration with total e-households at
survive. One of the recent investments to happen in
section has faded with time. Currently, only Hopscotch and FirstCry have managed to survive. One of the

recent investments to happen in 2015 is that of Quikr. Quikr, an online classifieds platform has very recently entered the billion dollar club after it received a funding of $150 million from new investor Stead view Capital along with existing investors Tiger Global
Snapdeal New Delhi based Snapdeal is the second most valued online retailer, after receiving $627 million from Japanese Softbank in October last year. Apart from Softbank, eBay and BlackRock are the other major stakeholders in Snapdeal. The valuation of Snapdeal stands at $2 billion.
and eBay. The start-up is now valued at $1 billion, according to the reports.
Ola Cabs
Most Valuable Online Retailers
After raising funds worth 2,500 crore in April, online cab aggregator Ola emerged as the third most
Flipkart 
valuable venture-backed company in India after
Backed by big investors, Flipkart is currently the most
Flipkart and Snapdeal. The Bangalore based
valued start-up in e-commerce space, with its valuation
company's valuation rose to 15,600 crore with that
skyrocketing to $15 billion from $1.5 billion in October
round of funding. Founded in 2011, the taxi firm
2013. In 2014 alone, the company raised a capital of
operates in more than 65 cities as of now.
around $2 billion. However, Flipkart has never booked
Paytm
profits since its beginning in 2007, despite its GMV growing to $4 billion recently. The company plans to
Paytm, a mobile payment services firm, is the fourth
double its GMV to $8 billion by the end of this
most valuable internet firm with a valuation of $1.83
year, Business Standard said. Recently Flipkart has
billion, Live Mint said. Paytm, which has recently
acquired Myntra in Rs 2,000 crore to capture the
forayed into e-commerce space, estimates its
apparels market. This move has made Flipkart largest
revenue run rate to more than $4 billion (Rs 25,417
ecommerce company of India's market. In 2015 Lenovo
crore) by year-end. Alibaba, the Chinese e-
has tie up with Flipkart to launch its budget smart phone
commerce giant, has 25% stake in One97
Moto G, Mote E and Moto X. Moto Smart phones are
Communications, the parent company of Paytm.
available online on Flipkart and customers have the
Paytm is planning to bring in 1,00,000 sellers from
facility to buy through credit card, cash on delivery and
Chinese e-tailer Alibaba's online arm AliExpress to
EMI. Flipkart has seen overwhelming response and
its platform from August, The Economic Times said.
more than 20,000 units of Moto G had sold in few hours
All the major sectors of the economy such as
of launch. Flipkart reported a loss of 281 crore for the
telecommunications, e-commerce and IT posted
FY 2012-13. In July 2013, Flipkart raised USD 160
positive net profits when compared on quarter-on-
million from private equity investors.
quarter basis.
24 | N O V E M B E R 2 0 1 5
POVERTY REDUCTION STRATEGY
RBI RELEASES MFI NORMS TO PROVIDE CHEAPER LOANS TO SC’S
-Swarupa Roy
“The test of our progress is not whether we add more
status, high literacy rate and low unemployment rate,
to the abundance of those who have much; it is whether
so as to keep up with their healthy economic rate and
we provide enough for those who have too little.”
growth.
-Theodore Roosevelt
Amongst all the named components that hamper the growth, the crucial factor that has always remained a
Today, the world and the world economy had been highly globalized, and a country’s development and progress is counted on the basis of its economic growth. If we look upon the standard definition of economic growth than according to it, ‘Economic Growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another.’ While, the definition speaks and measures
matter of great concern for both developing and developed nations is ‘Poverty’. One can easily link the illiteracy rate and also up to certain extent the unemployment to poverty, making it the root cause of some of the other prime problems. Every country has its own pre-decided norms and income level on which it measures the poverty or rather the poverty line.
growth of a country by production, there are also quite a few numbers of other factors that contribute towards
According to World Bank, a person is considered
what we all call growth of a nation including its
poor if his or her consumption or income level falls
economy.
below some minimum level necessary to meet basic needs; this minimum level is called as ‘Poverty
As mentioned in the quote above and rightly said by American
President
Theodore
Roosevelt,
the
advancement of an economy is decided by how successful the country has been in lowering the poverty and upgrading the standards of living of the people dwelling there. For the developing countries like India, Bangladesh, Pakistan, South Africa, Malaysia and many more, it is highly important that they focus on issues like poverty, illiteracy and unemployment. The overall prosperity along with rapid and substantial growth of the economy is majorly depended on uplifting and addressing these vital issues. In case of developed nations like United States and Russia, it is relevant for them to maintain low levels of poverty status, high literacy rate and low unemployment rate, so 25 | N O V E M B E R 2 0 1 5
as to keep up with their healthy economic rate and
Line’. The benchmark of poverty line in India is set up by taking into account the minimum daily requirement of individual living in urban and rural India as 2,100 calories and 2,400 calories respectively, People who are under this consumption rate are considered to be ‘Below Poverty Line’ (BEP). Until 2014, the poverty line was stated to be at Rs 27 in case of rural population and Rs 33 for the urban population. According to the statistics, around 21.9 percent or 269 million of people were found to be living ‘Below the Poverty Line’ (BEP). In 2014, this criterion was revised and the new line was set at Rs 32 for rural India and Rs 47 for urban India. This revised line saw an increase in the percent of poor from 21.9 percent to 29.5 percent and from 269 million to 363 million.
revised line saw an increase in the percent of poor from
easy access to banking services. RBI in an attempt to
21.9 percent to 29.5 percent and from 269 million to
issue credit at low rate has now eased the norm of 4
363 million.
percent variance in interest rates that was earlier
For the Indian economy which is considered to be amongst the emerging economies of the world, the increase in poverty rate is matter which needs immediate attention. Over the years the Indian government has implemented number of measures and policies to reduce poverty and help people raise their standard of living. Anti-poverty programs such as the Natural Rural Employment Program (NREP), Rural Landless Employment Guarantee Program (RLEGP), Integrated Rural Development Program (IRDP) and Targeted Public Distribution System (TPDS) have been implemented with aim of uplifting and helping
applicable to small loans which were offered to Schedule Caste individual. The National Scheduled Castes
Finance
&
Development
Corporation
(NSFDC) highlighting its major goal of economic empowerment of poor people has regulated that all the loans that are extended under the Non-Banking Financial Company (NBFC)-Micro Finance (MFI) norms will have now not have the 4 percent variance between minimum and maximum interest rate while lending loans especially to the people belonging to the schedule caste. NSFDC also plans to expand its reach of funds to schedule caste through the lower
individuals and families who are ‘Below the Poverty
rates of NBDC-MFIs.
Line’ (BEP). Along with these, other measures like
The
providing cheaper loans, health facilities, educational
government to uplift even the lowest sector of the
facilities and many more amenities are being provided
society, shows the constant efforts that the
by the Indian government. With the country’s high
government is putting into increase its economic
population of 1.25 billion, it is a very challenging task
development and growth. Growth will help
for the government to reduce and control poverty.
individuals to move out of poverty and increase their
Although, the implementations of such programs over
income level which in turn will help in human
the time have resulted in reducing the poverty to great
development of the country. Currently, India is at
extent, the current figures only portrays the long path
135th position in the Human Development Index and
that lay ahead of achieving the required reduction for
to move ahead to a better position it is time to carry
the appropriate economic growth.
out many other innovative programs effectively.
Recently, the Reserve Bank of India (RBI) declared to ease Micro Finance Institutions (MFIs) norms to ensure that cheaper loans are available to the people of schedule caste. Microfinance Institutions (MFIs) are institutions which provide financial services to lowincome individuals or those people who do not have easy access to banking services. RBI in an attempt to 26 | N O V E M B E R 2 0 1 5 issue credit at low rate has now eased the norm of 4
strategies
implemented
by
the
Indian
While it is not easy to break the vicious circle of poverty and low standard of living in certain rural areas, steps like this ensures that all hope is not lost.
ADVANCE TAX PAYMENTS BY TOP 100 FIRMS
ADVANCE TAX PAYMENTS SIGNALS A HEALTHY ECONOMY?
-Sandhya Adhavan
“When tax collections are growing at over double
Corporation) tax payment rose from Rs.28 crore to
digits, it suggests the underlying tax base or the nominal
Rs.49 crore. Cement companies, which were
GDP seems to be healthy and moving upwards,” said
affected due to sluggish growth on the infrastructure
Arvind Subramanian, an Indian Economist and the
sector, also showed a jump in tax payments. In the
current Chief Economic Adviser to the Government of
consumer durables space, Hindustan Unilever's tax
India.
payment soared massively to Rs.300 crore from Rs.190 crore. Engineering and construction major
The advance tax is a way of paying income tax through the year in order to avoid piling up of tax liability for the year end. The advance tax payments has shown an improvement of about a factor of 9.09 percent in September by the top 100 firms as compared to the last year. On a half yearly basis there has been an 11 percent jump among the top 100 companies in income tax payment. The country’s largest lender State Bank of India’s advance tax payment was up 10.3 percent to Rs.1820 crore from Rs.1650 crore as compared to the previous year. The second largest private sector lender HDFC Bank, which is the most valued bank by market capitalization, showed an impressive 37.5 percent rise in tax payment, with the amount going from Rs.800 crore to Rs.1,100 crore. However, Reliance Industries, the country’s largest company by market value, declined 15 percent from Rs.1800 crore to Rs.1530 crore as compared to the previous year. This was negated by top corporates such as SBI, LIC and HDFC to receive an overall advance tax realization in the
Larsen & Toubro's second quarter advance tax payout declined from Rs.355 crore to Rs.350 crore a year ago. Another optimistic sign of our economy growth is that the Purchasing Managers’ Index (PMI), which is the indicator of the economic health of the manufacturing sector, in September has showed an improved manufacturing activity in the second quarter as compared to the first quarter. Expressing the opinion on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at Markit and author of the report, said: “Despite having been supported by sustained increases in new work, growth of Indian manufacturing production in September was weighed down by a difficult economic climate. Nonetheless, the region’s growth prospects for the July-September quarter are encouraging.
According
to
PMI
data,
the
manufacturing sector looks set to provide a stronger contribution to GDP than it did in the April-June quarter”.
second quarter by a healthy 10 percent rise. TATA group companies, country’s largest software exporter also witnessed a 35 percent increase at Rs.812 core. Among oil refiners HPCL’s (Hindustan Petroleum Corporation) tax payment rose from Rs.28 crore to 27 | N O V E M Bcompanies, E R 2 0 1 5 which were affected Rs.49 crore. Cement
due to sluggish growth
The core sector data which was released showed a growth of 2.6 percent in August as compared with 1.1 percent in July. Apart from this, robust Indirect tax revenue will encourage the Centre to maintain its strategy of accelerated capital spending to boost the investment. Three months of sound industrial growth
strategy of accelerated capital spending to boost the
to understand that the excise duties on automobiles,
investment. Three months of sound industrial growth
petroleum and consumer durables were lower last
steered by manufacturing, signs of upturn in
September.
investment, robust indirect tax collections and
An Optimism in The Manufacturing Sector
indications of a mining sector reboot suggests that the government’s attempt to revive the economy through
"According to PMI data, the manufacturing sector
reforms and higher public capital spend are effective.
looks set to provide a stronger contribution to GDP than it did in the April-June quarter," said Pollyanna
The indirect tax collections attained 36.5 percent in the first five months of the financial year, to Rs.2.63 lakh
De Lima, economist at Markit, the agency that compiles PMI.
crore. The April-August collections were about 40 percent of the budget by the government. “The tax
But the higher profits can probably be because of the
growth for April-August, compared to the same period
better margins from lower input costs from crude and
last year, reflect a number of additional measures.
commodity prices, better demand or it could be both.
Stripped of these, indirect tax growth for the period was
Indirect tax collection that include excise duty,
still 12.2 percent. That shows recovery in the economy
customs duty, service tax has shown a robust growth
is very much underway,” said chief economic advisor
even as there was an increase in the levy on
Arvind Subramanian. The Reserve Bank of India stated
petroleum products. These levies are seen as a key
that it expects the economy to grow 7.4 percent in
barometer of production, consumption and demand
current fiscal against 7.6 percent projected earlier. As
in the economy. In July the growth was 39.1 percent.
this projection by RBI came after the slowdown of the
The additional revenue measures include a rise in
economy to 7 percent from 7.5 percent in the previous
excise duty in petroleum products last October,
one, the central bank was prompted to cut its policy rate
removal of excise duty sops to the automobile and
by 50 basis points to reinforce the growth.
capital goods sector and a service tax increase from June.
The Advance tax payments is paid in four installments. In June 15 percent, September 45 percent, December 75
Even though the growth of manufacturing sector,
percent and 100 percent payment in March. This is
higher income tax collections and advance tax
based on taxpayers’ projected income thereby giving us
payment by the firms contributes to the growth in the
an indication of corporate performance in the coming
GDP, more analysis has to be made to accurately tell
months. The September’s advance tax collections was
whether it contributes to the growth of our economy.
at Rs.1.41 lakh crore against Rs.1.31 lakh crore in the previous fiscal year. Even though these figures show us a growth in the GDP, as compared to last year, we need to understand that the excise duties on automobiles, petroleum and consumer durables were lower last 28 | N O V E M B E R 2 0 1 5
September.
A BRILLIANT MOVE?
DELL’S EMC ACQUISITION
-Chestha Kumar
Being Master of your own destiny: With those words,
The combined entity would remain and extend its
Michael Dell (CEO of Dell Inc.) spelled out what taking
lead as the world largest storage vendor but crucially
Dell private has meant to the technology firm. Dell took
for Dell, it would give access to a strengthened
a significant step into the deal storage business when it
software ecosystem including a chunk of VM- ware
bought Iscsi system maker equal logic for $1.4 billion
revenues, RSA security and pivotal, a cloud software
in 2007, at the time the largest acquisition in the
development platform. Although not all one way
company's history. Three years later, Dell spent $940
traffic, the deal would strengthen the overall storage
million for storage vendor compellent and bought
portfolio by raising the profile of the highly regarded
deduplication software vendor Ocarina Networks. As
compellent technology Dell acquired a few years
dell grew its storage capabilities, its decade- long
back. Although dell has established a foothold in the
partnership with EMC drew to an end.
enterprise, the perception of many customers and
The EMC deal will give Dell more capabilities in such areas as data storage, virtualization and the cloud, and greater traction in large enterprises. It also promises to make dell a more significant competitor with the likes of HP and IBM, though a merger of this size brings challenges in such areas as product and culture integration and greater debt. Analysts say it could be two years before Dell can say for sure how the deal worked out. The expected $67bn purchased of EMC by Dell is potentially the biggest IT deal ever with far reaching consequences for partners and rivals. Although still not finalized the deal would create a
partners is still "cheap and cheerful" and although somewhat unfair, the tag has stuck with largely uninspiring products across storage, networking and modest software acquisitions. In the terms of R&D, Dell has little heritage in developing new technologies compared to EMC. Yet, where EMC has enterprise credentials, Dell has stronger brand within SME's and most conscious buyers reaching down into the customer space. This means that EMC brands that have not been that successful (like lomega) may well get a new lease of life as Dell products re-tasked for SBMs
company with an estimated 1, 70,000 staff, combined
What the deal will mean for the various product lines
revenue of possibly $ 80bn and a channel community
is still a highly speculative exercise? But statements
of roughly 1, 40,000 partners. There is a lot of
from Emc and dell suggest that VMware COO Carl
conjecture in even these numbers due to the private
Eschenbach says, there will “not a lot of change" or
nature of Dell, the status of the various EMC businesses
a more candid description by another VMware exec.
and the speculation of how dell will digest EMC over
'' They won't want to kill the golden goose."
what will likely be a multi-year reorganization process.
It seems likely that the Dell takeover will try to do as
The combined entity would remain and extend its lead
little damage as possible to this position. Although
| N Olargest V E M Bstorage E R 2 0 1vendor 5 as the 29 world but crucially for
from Dell's perspective, every sale that includes a
Dell, it would give access to a strengthened software
VMware component is more profitable that any pitch
little damage as possible to this position. Although from
With some proposed financial wizardry involving
Dell's perspective, every sale that includes a VMware
the ownership of the majority of voting stock in VM
component is more profitable that any pitch for Hyper-
ware while it still remain public, Michael Dell has
V, KVM or Open stack.
gotten shareholders off his back and instead will
The deal also gets Dell into the cloud space, an area in which Dell has been sluggish. Although VMware's vcloud Air is light on features compared to AWS, it’s catching up fast, and crucially, has the continuity of brand between on premise, hybrid VMware clouds and service offering. Dell has made a transition over the last years to become a more channel- centric vendor, especially in the enterprise space. While EMC has a sizeable direct sales team that accounts for roughly half of its revenues, it is supported by an estimated 5000 VARS. Although similar on paper, the cultures at the two firms are very different. EMC has experienced a bit of channel conflict between its direct sales and channel its teams are notoriously "effective" and even "aggressive" when it
carry a big debt pile. A prospect he obviously prefers to dealing with activist investors. The deal makes sense if you consider that EMC's heritage of big tin is fading. While Dell's heritage as the direct, low cost vendor is threatened by rivals like lenovo, asus and others. Both vendors have acquired higher value software, although VMware eclipses all the software deals of Dell such as Secure Works and Quest. Yet for the deal to work, its needs to benefit from economies of scale and this will probably means a reduction in headcount and product portfolio where there is duplication.
Mid-level
marketing,
sales
and
administrative tasks are also ripe for some cost cutting.
comes to sales. They are also focused on storage and are
The question will still remain if the acquisition will
good at selling it.
be a good deal for Dell? That is anybody’s guess.
Distribution is likely to stay consistent although EMC's severing its relationship with Ingram Micro earlier this year might see a reversal as Ingram is a flagship Dell distributor. For partners in the short term little change is likely. Gaining EMC's certifications, especially at the higher end and across legacy platforms is not a simple online questionnaire like some of the consumer grade partner cert. Invested EMC partners should have no concerns that the hordes Dell partners will suddenly turn up at high-value Isilon deals- it's just not going to happen. 30 | N O V E M B E R 2 0 1 5
INTERNET.ORG
IS NET NEUTRALITY MORE IMPORTANT THAN ACCESS TO KNOWLEDGE What is internet.org? Internet.org
is
a
-Sakshi Issar
his pet project Internet.org, now known as Free partnership
between
social
networking services company Facebook and six companies (Samsung, Ericsson, Media Tek, Opera Software, Nokia and Qualcomm) that plans to bring affordable access to selected Internet services to less developed countries by increasing efficiency, and facilitating the development of new business models around the provision of Internet access.
Basics. Under Prime Minister Narendra Modi’s Digital India initiative, Facebook founder Mark Zuckerberg hopes to find a large partner in the Indian government for his ‘free internet’ scheme in developing nations, internet.org. The broad objective of the Facebook initiative is to help developing countries
overcome
challenges
ranging
from
infrastructure to affordability to help large tracts of their populations gain access to the Internet.
What is net neutrality?
However, ever since the net neutrality debate gained
The principle that Internet service providers should
steam in India during the TRAI controversy,
enable access to all content and applications regardless
internet.org has come under fire for violating the
of the source, and without favoring or blocking
basic principles of net neutrality in India. And
particular products or websites.
probably in hope to rebrand their image as ‘walled garden’ (for having just one partner operator in
What is zero rating concept?
India), internet.org renamed itself to Free Basics,
It means not to charge end customers for data used by
probably a name that better encapsulates what they
specific applications or internet services through their
offer.
network, in limited or metered data plans It allows customers to use provider-selected content sources or data services like an app store, without worrying about bill shocks, which could otherwise occur if the same data was normally charged according to their data
According to Zuckerbeg, free basics are ways to help emerging markets come online. Besides India, Internet.org has also been launched in other countries like Colombia, Zambia, Tanzania, Kenya and Ghana.
plans and volume caps.
Flip side?
A different internet for remote areas
Berners Lee, founder of World Wide Web said, “In
Facebook founder, Mark Zuckerberg will be in India later this week and this trip won’t be one where he will seek spiritual answers and visit temples, but one where he is expected to answer a lot of moral questions about his pet project Internet.org, now known as Free Basics. 31 | N O V E M B E R 2 0 1 5
the particular case of somebody who’s offering … something which is branded internet, it’s not internet, then you just say no. No it isn’t free, no it isn’t in the public domain, there are other ways of reducing the price of internet connectivity and giving something … (only) giving people data connectivity to part of the network deliberately, I think is a step backwards.”
Something (only) giving people data connectivity to part of` the network deliberately, I think is a step backwards.” Through a campaign called ‘The Web We Want’ the activists are promoting key principles related to the freedom of online expression including affordable access to the net, protection of user data and privacy, a decentralised and open infrastructure, and net neutrality. However, activists are quick to add that these principles are just the foundation and only set an optimum standard and they can be further improved upon. Also compromising on any of the standards will only increase conflict. What’s interesting is that I think that net neutrality is really important. It’s an important value. But access to knowledge is also an important
can now get an Android phone that is almost equivalent in terms of specs to the original iPhone. Yes it’s a cheap crappy phone when compared to your Samsung S6. But people are getting real access who couldn’t get it earlier and it’s coming faster than people realise.
value. And they can be in tension to a certain extent. Like all other issues of importance, this also garnered
So it’s important that we think about the people who
attention and many came forward with different types
are coming online. These people now have the ability
of opinions.
to buy a smartphone and they want to come online.
Wikipedia’s Jimmy Wales says, “I believe that
However, data charges can still be cost prohibitive. So we need to think: how can we help those people?”
programs like Internet.org or Wikipedia Zero are really transitory phenomena. In the sense that data is getting
Zuckerberg’s take
cheaper and cheaper so it becomes less and less
In a video blog, he explained that the initiative
necessary to think about ways of subsidizing access to
supports itself, when people use free basic services,
data. For example: we would have not thought of doing
more of them then decide to pay to access the broader
Wikipedia Zero in the United States, because of course
Internet and this enables operators to keep offering
if you have a data plan, there’s no need for that. So I
these basic services for free. It is not sustainable to
definitely think [the need for zero-rating] is somewhat
offer the whole Internet for free. But, it is sustainable
transitory in nature.
to offer free basic services that are simpler, use less
But in the short run, I think that it [zero-rating] is super
data and work on all low-end phones," he said.
important for people who are coming online. And they
The first telecommunication player in India that
are all coming online so fast. The very rapid drop in the
triggered the debate was Airtel after it introduced an
price of the smartphone is pushing this. For $50, you
open marketing platform 'Airtel Zero' where the data
can now get an Android phone that is almost equivalent
charges
N O V EtoMthe B Eoriginal R 2 0 1 5iPhone. Yes it’s a cheap in terms32of| specs
developers.
crappy phone when compared to your Samsung S6. But
Facebook, tied up for Internet.org initiative in India,
were
being
borne
by
application
Taking cue from this programme
The third group that internet.org is trying to partner with are the programmers as the internet.org will be open for the whole of developer community. However, it is important to note that all developers will have to follow certain guidelines that hinder the concept of net neutrality. But the Zuckerberg’s project is gaining momentum because the project’s objectives are aligned with Modi’s Digital India FIG: internet.org LOGO charges
were
developers.
being
borne
by
Campaign. application
Taking cue from this programme
Facebook, tied up for Internet.org initiative in India, too offer access to 33 websites for free. Even after the entire backlash for internet.org Zuckerberg maintained that must co-exist with programmes like Internet.org that encouraged bringing people online. Has Modi brought a Trojan to India’s internet? There are umpteen partnering opportunities under the Digital India and Vigil Campaign. Foreign players want to make services and products that are best for the people in the country even if they have never had access to internet before. Everyone wants to make the best of the ecosystem available in India. Internet.org is promoting itself as a platform that is really about giving unconnected people more access to voice and more choices in their lives and that is what we see happening with internet.org. The second group Zuckerberg is trying to partner with is mobile data, mobile operators as that can offer free basic services to their user base.
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“FINANCIAL TRIVIA” There is a ‘pirate stock exchange’ in Somalia where locals can invest in pirate gangs planning hijacking missions.
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