The IBS Times; 185th Issue; November 2015

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.

APOORVA ANUSHA

KOLISETTY AISHWARYA MANJARI SHARMA NAVJOTH SAHU PRIYANKA MALIK RAHUL MISHRA RIPU TANDON

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.

SACHI KHESKANI SAMEENA USMAN SRISHTI KARMAKAR

Hope you have an enriching experience reading The IBS Times. Your feedbacks and opinions will help us make it better.

ABHINAV BANERJEE ANUPAMA KUMARSWAMI CHESTHA KUMAR

Kaushik Chandell Team FinStreet

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.

33 | N O V E M B E R 2 0 1 5

“FINANCIAL TRIVIA” There is a ‘pirate stock exchange’ in Somalia where locals can invest in pirate gangs planning hijacking missions.

The IBS Times is an academic print and is not for any commercial sale.

Reliability and Responsibility for sources of data for the articles vests with the respective authors. Please feel free to drop in your suggestions or any feedback at editor.ibstimes@gmail.com © IBS Times – FinStreet, The Official Capital Markets Club of IBS Hyderabad.

All Rights Reserved Visit us at www.finstreetibs.org

34 | N O V E M B E R 2 0 1 5