DOSSIER
DOSSIER
India report 2018
India Powers Ahead
India report 2018
Economy | Finance | Healthcare | Construction Retail | Technology | Ports & Logistics | Entertainment
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INTRO
Onward and Upward for UAE-India relations Business, trade and diplomatic ties between the UAE and India are closer than ever
DOSSIER Chief Executive Atulya Sharma Vice President Alpana Roy
EDITORIAL Akshay Bhatnagar
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he GCC and India have long had a close association and the UAE best epitomises this, with the relatively close proximity of the two countries combined with historical trade and social links ensuring a constant flow of goods, services, finance, and of course, people. Indians account for some 27% of the UAE’s population and have a proud history in the country and the wider GCC region, establishing thousands of business across all industries – many of which are featured in this report. Of course, all of this was made possible by the strong, stable and benevolent leadership of countries including the UAE, where the economy and society has always fostered the perfect environment for business, commerce and society to prosper. While the bonds between the UAE and India were already strong, there is a definite sense that they can only grow stronger, and indeed the evidence is all around. As many of the executives who spoke to this publication made clear, the two countries appear to be reaching new height in terms of trade, societal and diplomatic relations. One of the landmark events for the two
CONTRIBUTORS
countries’ bilateral relations was the visit of Indian Prime Minister Narendra Modi in Abu Dhabi in February 2018 for his second state visit. The two countries signed about 14 agreements during the two-day visit, which started on February 10, covering strategic partnerships in sectors including space technology, finance, defence and investment. The UAE hopes to invest some $75 billion in India in the coming years, and much progress towards this aim was achieved during the visit, which itself built on Modi's first state visit to the UAE in August 2015. Among the many agreements to result from the visit was an MoU signed between an Indian consortium of energy companies and the Abu Dhabi National Oil Co for the acquisition of 10 percent interest in its offshore Lower Zakum Concession. But for the executives who spoke to the India Dossier, the real excitement of the state visit of Prime Minister Modi was related to something deeper than business, and that is the unshakeable spirit of friendship and cooperation between the UAE and India. This is important, as the trust engendered by such amity is the well-spring from which everything else flows. ●
Javin Jain Nandini Kelkar Vidya Nath Nikhil Shah
ART Art Director
Steven Castelluccia
MARKETING AND SALES General Manager Poonam Chawla Marketing Executive Tanvi Dhawan Circulation Executive Rex Emmanuel A UMS International Presentation for exclusive distribution with Bloomberg Businessweek Middle East edition UMS International FZ LLC P.O Box 503048, Building no 5 Office 206, Dubai Media City, Dubai, UAE Tel: +971 4 4329467 Printed at Emirates Printing Press LLC, Dubai For marketing enquiries Please call +971 50 144 0703
INDIA REPORT 2018
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CONTENTS â–¼
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Dr. B.R. Shetty, founder & Chairman of NMC Healthcare
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The importance of quality healthcare in society
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ECONOMY
Standard Chartered Bank's MEA CEO Sunil Kaushal on business
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Accounting and investment under the spotlight
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Barjeel Geojit Securities' CEO on key market trends
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ICAI's Naveen Sharma discusses wealth management
HEALTHCARE
India's banking sector is in top form
CONSTRUCTION
FINANCE
India's economy powers ahead with confidence and GDP rising
India's healthcare industry is forging a new path
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Construction and real estate on the up with government support
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Blue Star's Dawood Ozair on the nuances of the AC industry
INDIA REPORT 2018
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OFFICES
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LAND PLOTS
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RETAIL
info@adafz.ae www.adafz.ae 01/09/2018 14:35
CONTENTS â–¼
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How online shopping is transforming India's retail sector
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RETAIL
Canon's regional head discusses his ambitions for growth
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TECHNOLOGY
Nikai Group's chairman outlines the company's plans
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India's ICT sector positions the country as a global leader
PORTS & LOGISTICS
How ADAFZ is facilitating growth in the UAE
ENTERTAINMENT
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The logistics industry is coming of age
How the modern retail trade is changing the shopping experience
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Frost & Sullivan assesses India's entertainment sector
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Sachin Gokhale of Viacom18/IndiaCast discusses key trends in broadcast
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LAST WORDS
INDIA REPORT 2018
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ECONOMY ▼ Pedestrians cross the road in front of motorcycles, cars and buses at a crossroads in Kolkata.
INDIA'S ECONOMY POWERS AHEAD As India’s economy gathers steam, optimism for renewed growth is high
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ECONOMY
“The goods and services tax created a unified national market for the first time by lowering internal barriers to trade — effectively establishing a free trade agreement for a market of over 1.3 billion people”
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ith a population in excess of 1.3 billion people, GDP of some $2.6 trillion in 2017, and a GDP growth rate of 6.7% the same year, India is a true economic powerhouse. The country has certainly outshone average global economic growth and the trend looks set to continue in 2018. Indeed, according to data from the International Monetary Fund, India’s economy is expected to grow by about 7.4 percent – which is significantly higher than the 3.9% growth predicted for the world economy, and the 4.9% growth attributed to “developing and emerging market and developing economies”. The sense of optimism felt about the Indian economy by many commentators is fuelled partly by the fact that the country appears to have absorbed the twin shocks of the government’s demonetarisation policy in 2016 and the
introduction of a Goods and Services Tax (GST) in 2017. The introduction of GST, along with various measures to boost foreign inward investment, also helped to garner greater confidence in the economy. After demonetisation and 'Goods and Services Tax' (GST), the Indian economy is moving towards “normalcy” and the central bank will continue to monitor inflation numbers and liquidity data to decide on the next course of action in their monetary policy, according to Nikhil Shah, Associate Director, Business & Financial Services Consulting, Frost & Sullivan (see page 10). However, despite this growth and general optimism, much work remains to be done to ensure these heady growth rates are sustained. In a recent report, the IMF pointed out that to sustain rapid growth and raise incomes for the country’s 1.3 billion people, India would need to build on the success of its reforms. Ranil Salgado, the head of the IMF team for India, likened the Indian economy to an elephant starting to run. “To sustain and build on these policies and to harness the demographic dividend associated with a growing working-age population (which constitutes about two-thirds of the total population), India needs to reinvigorate reform efforts to keep the growth and jobs engine running. This is critical in a country where per capita income is about $2,000 U.S. dollars, still well below that of other large emerging economies,” Salgado said in an interview with the IMF Country Focus. With the recovery from the currency demonetisation and GST well underway, Salgado also offered some interesting insights into how GST will help the economy in the coming years. “The goods and services tax created a unified national market for the first time by lowering
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ECONOMY
$100bn The value India-UAE trade is estimated to reach by 2020
internal barriers to trade—effectively establishing a free trade agreement for a market of over 1.3 billion people,” he said. “The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy— leading to better quality and more reliable jobs. As a result, the goods and services tax should improve productivity and boost medium-term potential growth, while also creating room for the government to increase much needed social and infrastructure spending.” ▲ Sxyyxyxyxxyxyxyyxyxyxyxy In terms of the banking system – a critical pillar of any economy – Salgado highlighted the fact that India recently implemented a new insolvency and bankruptcy code. This should make it easier for creditors to seek repayment from debtors who are in arrears, according to Salgado. In a nod to problems faced by banks globally in the aftermath of the financial crisis of 2008-9, India’s central bank and government have also sought to improve banks’ recognition of bad assets and to recapitalise public sector banks. “Ultimately, these efforts will help to solidify bank balance sheets and support the flow of credit to the rapidly expanding economy,” Salgado said. FOREIGN DIRECT INVESTMENT As a growing trade partner – across a broad range of products and services – to countries in Asia and beyond, India also stands to benefit from improving its integration with global markets. “The country has made a lot of progress, in that most foreign investments are now allowed to enter sectors of the Indian economy under what is known as ‘the automatic route’, Salgado told the IMF Country Focus. “This amounts to a meaningful reduction in bureaucratic oversight, and greatly increases access to the Indian market for foreign investors. However, Salgado added that more can be done to sustain the recent foreign direct investment inflows and remove trade barriers including: reducing trade documentation requirements and procedures; lowering tariffs; continuing to improve the business climate; and improving governance. 8
MIDDLE EAST TIES One area where India has met with huge success in terms of developing economic and cultural ties is the Arabian Gulf, and especially the UAE. Indian business leaders who spoke to this publication hailed the developing relationship between the UAE and India, and view the ties as hugely beneficial to both countries. In May, Dubai Investment Development Agency (Dubai FDI), an agency of the Department of Economic Development (DED), completed a tour of three Indian cities, Mumbai, Hyderabad and Kochi, as part of plans to increase foreign investment. Dubai FDI met with solutions providers in sectors including logistics, aviation, biotechnology, engineering, construction, financial services, healthcare, industrial machinery, pharmaceuticals, tourism and hospitality in the three Indian cities, according to the UAE’s state news agency, WAM. UAE-India trade is estimated to reach $100 billion by 2020, and Dubai’s industrial, residential, tourism and entertainment sectors, along with existing airports and sea ports, will play a major role in achieving the milestone.Major areas where UAE-bound FDI was invested in 2017 included manufacturing, renewable energy, aviation, travel and tourism, logistics, technology and healthcare, according to Dubai FDI. ●
INDIA REPORT 2018
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FINANCE
INDIA’S BANKING SECTOR: A MACRO VIEW India's banking sector is undergoing major changes that bode well for business
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▶ Nikhil Shah, Associate Director, Business & Financial Services Consulting, Frost & Sullivan
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he Indian banking sector is well-regulated and sufficiently capitalised, as per reports suggested by Reserve Bank of India (RBI). The country’s financial and economic conditions are far better than any other country in the world. Studies related to market, credit and liquidity risk show that Indian banks are generally resilient and they have withstood the global downturn well. The Indian banking industry has recently witnessed the roll out of neo and innovative banking models like payments and small financial banking structure. The new
measures adopted by RBI will go a long way to help the restructuring of the native banking industry. The digital payment system in India has evolved the most among 25 countries with India’s Immediate Payment Service (IMPS) as it is the only system which is at level 5 in the Faster Payments Innovation Index (FPII). As the global economy rebounded in the preceding year, its impact will bring a positive trail for the Indian Banking Sector. With the beginning of the end of easy money era, Federal Reserve hiked interest rates thrice in 2017 and the same now stands in a range of 1.25% to 1.5%. 2018 will see three rate hikes and the following year will have two rate hikes as forecasted by the Fed. The rate hike suit by USA will soon be followed by the European Central Bank (ECB). The International Monetary Fund (IMF) also expects the global economy to grow by 3.9% in 2018 and 2019. The 2017 financial year saw a muted domestic economic growth and the growth of Indian banking sector remained under pressure as well. The credit growth was at 4.7% which was one of the lowest in over a decade. The asset quality review initiated by the central bank resulted in an increased recognition of bad loans. By the end of March 2017, 12.1% of the advances of the banking system were stressed and the Public Sector Banks witnessed most of the deterioration in the asset quality as the gross NPA increased to 13.9% and that of private sector banks was at 5.24%. After demonetisation and Goods and Services Tax (GST), the Indian economy is now moving towards normalcy and the central bank will continue to monitor inflation numbers and liquidity data to decide on the next course of action in their monetary policy. As per the new RBI directive, once a default has occurred, the bank will have 180 days to come up with a resolution plan. If in case they fail, then they will need to refer the account to Insolvency and Bankruptcy Code (IBC) within fifteen days. The government plans to recapitalise the public sector by 2.11 trillion rupees
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FINANCE
“The 2017 financial year saw a muted domestic economic growth and the growth of Indian banking sector remained under pressure as well. The credit growth was at 4.7% which was one of the lowest in over a decade” – Nikhil Shah, Associate Director, Business & Financial Services Consulting, Frost & Sullivan
▲ The brand new Indian currency notes of 2000 and 500 rupees isolated on black. These have been introduced to curb black money.
By the end of March 2017, the percentage of advances of the banking system that were stressed stood at
12.1% Credit growth in 2017 was
4%
which will aid these banks to make provisions for bad loans, lend money to the corporate and retail sector which would help them in maintaining their Capital Adequacy Ratio (CAR) above the statutory minimum. With the corporate earnings recovering in financial year 2018, the capacity utilisation levels would inch higher and the private capital expenditure cycle could also pick up moving forward. This eventually would lead to a spurt in the corporate lending by the banks. As for FDI in the banking sector, recently Emirates NBD, UAE’s second-largest lender, started operations in India with an aim to invest USD 100 million capital into its Indian operations, as stated by the bank. The Mumbai branch is the bank’s fifth international branch outside of its UAE network. The branch will offer a range of services to corporate, SME and institutional clients including trade finance, bilateral and syndicate loans and treasury services in addition to support NRI (Non-resident Indians) customers who look for cross-border wealth management solutions. As per Shayne Nelson, Group CEO of
Emirates NBD, “Emirates NBD is the only UAEbased bank with physical presence across all of India's important trade corridors from the Middle East and North Africa (MENA) across to Asia and the United Kingdom (UK) and our aim is to be the bank of choice for Indian corporates and individuals looking to invest and do business in the MENA region.” Indians constitute the largest expatriate community in the UAE and a third of Emirates NBD’s customer base is from India. "We are delighted to expand our footprint to India, building on the UAE's strong historic, cultural and commercial ties with the country. As a key trading partner of the UAE and as one of the fastest growing economies in the world, India represents an important and strategic growth market," Nelson said. Considering the current flow of the Indian banking sector, we can conclude that it has fruitful prospects in the future. With global investments pouring in the country and recovery of corporate earnings, the capacity utilisation levels would inch higher. India is now rapidly moving towards a digital payments economy with various milestones to enhance the customer’s overall banking experience and to have a competitive edge in the banking industry. ●
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DYNAMIC VISION Sunil Kaushal, Standard Chartered Bank's regional CEO for MEA, is upbeat about the next few years
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fter facing a challenging few years since the oil price crash of 2014, the region’s banking industry seems set to tap into a growing sense of optimism. Sunil Kaushal, regional CEO, Africa & Middle East, Standard Chartered Bank discusses his plans for the region and the importance of strategic ties between India and the UAE. What is your vision for Standard Chartered in the Middle East and Africa region? Firstly, let me give you some background information to set my vision in context. For Standard Chartered Bank this is one of the most exciting regions. We have a portfolio of 25 markets in the Middle East and Africa. While the banking and financial services industry had a very tough time in 2015, including this region, we have made great progress towards consolidating and delivering solid results. It’s been a region that has performed despite the tough headwinds we’ve faced. In this light, my vision is to build up a business which delivers a solid result and generates the right returns for all our stakeholders – but on a sustainable basis with a strong foundation of controls and compliance. That is hugely important. It’s not one or the other, it’s the whole complement of performance, conduct and sustainability. My aim is to ultimately create a top-notch regional powerhouse which brings these elements together and we are well on our way to doing that. Are you on a surer footing than 10 years ago? Yes, we are. But it has been a tough journey. We have seen a lot of the international competitors retreat from many parts of this region, so we believe we have now come out of this looking pretty good – good in terms of our own participation which is broad-based. This is a differentiating factor for us as well compared to our competitors who have retreated. We are the only international bank with major presence from China and South Asia to the Middle East and Africa. These regions include some 12
of the most populous countries and some of the most exciting markets. There is no doubt that these markets are going to be delivering growth for decades to come. How are ties between the Middle East and India? Ties between India and the Middle East continue to be strong. India is a large hinterland for the Gulf in general and, looking at Dubai, it has continued to develop its capabilities as a trading hub, becoming an entrepot for trade between India and Africa. Dubai is also a hub in terms of travel routes: the only way one can fly between India and many parts of Africa is through Dubai. These factors are traits of a much broader relationship that the UAE has with India. This relationship, which dates back decades, is strategically important in many ways, including in terms of imports, exports or investments coming from India. It also spans across many industries, from real estate and construction to agriculture, and is a key contributor for strengthening India’s ties with Africa. The Indian and UAE governments work very well together and, as India develops into a major economic superpower, we expect it to continue to play a key role in the growth of this region. As a bank, how do you support clients with businesses spread across MEA and India? That is what our unique proposition is: our network. We have existed in these markets for more than a century and that’s the competitive advantage that we have. Our network allows us to provide seamless services across the region for clients with cross-border businesses. For example, we are well-positioned to serve an Indian customer who wants to either create a trading hub in Dubai and sell into Africa or have an operation in Africa with a financing centre in Dubai. How has your experience in India and South Asia influenced the way you run the MEA operation?
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“My vision is to build up a business which delivers a solid result and generates the right returns for all our stakeholders – but on a sustainable basis with a strong foundation of controls and compliance. That is hugely important.” The ability to manage diverse markets, large markets, and manage change as well as economic headwinds. This is the experience I gained before coming into this role three years ago. It’s really helped me in shaping the strategy for this region, as well as executing it. How can banks better serve entrepreneurs and startups? We do serve startups and we run an accelerator programme for technology startups in particular. In Africa we have a technology incubator for women. As a commercial bank we also provide funding for SMEs through our division for smaller corporates. We are associated with many companies which started small in the UAE but are now multibillion dollar companies. We have an important role to play in this space. If we’re talking about the smaller SMEs, then the participation should be much more broad-based; it can’t just be the commercial banks, it has to be the government, the SME focused funds and the whole ecosystem which have to come together. Many countries in Asia have done this very well where banks have a large exposure to the SME sector and are supported by numerous government schemes. At Standard Chartered Bank, we have a programme called Business Instalment Loan where we work with government institutions in some of our markets to provide credit. What are the key factors to running a successful bank? The key to running a successful bank is to keep things simple, focus on your strengths and customer centricity, and have a strong
foundation of controls and risk management. This is critical as we are ultimately in the business of managing risk, managing our customers’ money and lending it out to get a sustainable return. What are the most important factors to leadership success in the banking industry? It depends on the situation and the different markets that you operate in. However, I can tell you how I approach things: it’s about setting the broad roadmap and trajectory of where you want to take the institution and helping to remove roadblocks for your team. It’s very important to get people’s buy in because, at the end of the day, sitting on top there is only so much you can do, so having the buy-in from the people who are going to execute the plan is crucial. Some leaders make the mistake of thinking they can drive everything from the top, and don’t invest enough in getting the buy-in from the people. So, you set the strategy, involve the people early on in terms of what you wish to achieve and empower your people to execute. ● INDIA REPORT 2018
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Auditing value James Mathew, Group CEO, UAE & Oman at auditing specialist Crowe Mak, discusses some of the accounting challenges that companies face in the UAE
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he introduction of VAT on the 1st of January 2018 brought in some big changes in the way businesses are being run in the UAE. Previously about 50% of companies – usually small one-man businesses – did not maintain proper books of accounts, but now the situation has changed. Now you need to account those things; you need the compliance and you need to file your returns because most companies are earning more than 375,000 dirhams per annum. Do you see any challenges with money supply in the UAE? We have about 53 banks in the UAE. In
2015-16 we saw a number of companies facing issues the world over, and that has also affected the UAE. The banks here took serious note of that and they withdrew facilities perceived to be risky. Banks have become extremely cautious in the way they lend; they have changed the way they lend and even today the small and medium business sector – which accounts for almost 55-60% of the total businesses – has difficulty accessing funds from the banks. This is one of the biggest challenges because in the UAE a significant amount of business is done on credit: You buy
your products on credit and sell them on credit, so whatever amount of capital you are bringing in, some smaller companies may struggle to survive more than three months. What you will see in the coming years is that after the introduction of the VAT more and more companies are complying with the maintenance of books of accounts and filing of VAT returns. This, combined with other regulations, will help to drive up the quality of lending in the coming years. Many businesses in the UAE could also achieve farmore with better business planning. ●
Alternative Investments Rishi Kapoor, co-CEO of InvestCorp, a manager of alternative investment products, on industry trends and leadership
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hat challenges do you face as an investment company in the Middle East? The challenges we face are twofold: The first are in a macro-economic context that affects the entire industry as a whole and the other set are more idiosyncratic. On the macro-economic front the asset management industry at large is facing a few secular trends: One is a decline in top-line fees; there is an intense focus on reducing the fees that investors are charged. The second is an increase in the cost base of asset management firms relating mainly to the heavy regulatory burden that has been introduced over the last several years 14
since the financial crisis. Consequently there is pressure on margins, and therefore it is going to be pivotal for asset management firms in the future to have scalability embedded in their business model. Size is going to matter: It is going to define the survivors from the ones who don’t survive, and the ones who prosper versus those that don’t. What makes a good business leader? The textbooks talk about a variety of things but from my own experience there are really only two key factors that define success in leadership that have worked for me personally: One is empathy, which is about being able to
understand what people need and what they want. If you are able to cover their needs and give them what they want it will be possible for you to provide that layer of leadership that they are looking for and that relates to all stakeholders; clients, investors, employees, shareholders. The second is the need to have a problem-solving mindset; a mindset that finds solutions to the problems that you are encountering on a day-to-day basis. Leaders also need to have the conviction of their own beliefs to be able to pursue a course of action without knowing for sure whether it is going to be a resounding success or not. ●
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CLIMATE TO INVEST Krishnan Ramachandran, CEO of Barjeel Geojit Securities, a financial and commodities markets intermediary, discusses key challenges in the market and why relations between the UAE and India keep getting better
How is your industry performing? What are the main challenges? After 2016, which was probably one of the most challenging years that we faced, 2017 was a good turnaround year for our business, which is predominantly in wealth management. Despite a lot of political uncertainty and the expectation that the markets were not going to perform, 2017 was one of the best years that we have seen for a long time. The clients’ return on their portfolios have been very good, and in 2018 the trend as of now still continues. There have been some minor corrections in terms of the markets overall, but it is consolidating. Overall, during the last couple of years the trend has been quite good. The challenges are more from a macroeconomic perspective in terms of the geo-political situation around the world; for example now we have trade wars. It may have a limited impact on certain economies but it is going to create a sort of imbalance across the world in terms of volatility in the market, which may not be suitable or liked by many of our customers. Interest rates are also moving up in the US and globally, so yield return becomes a challenge. Asset allocation becomes a challenge and has to become more dynamic. What typically used to be a long-term view of two to three years may not hold in this sort of an emerging environment where we need to be more tuned in to the market situations on a regular basis and try to move into asset classes that are able to cushion this volatility to a great extent. What do you see as the main opportunities in 2018-19? The UAE has GDP growth in the region of 1.7 percent, and I think the forecasts predict 3.5 to 4 percent over the next few years. Oil prices are good and there is a lot of financial stimulus that has flowed into this region from various governments. There is, across the region, a drive to make it easier to do business. Investment will come in and once the investment cycle begins then obviously there is going to be more money in the pockets of the people. The investment climate in this region is bound to improve over time. Most of the negative signals that we were seeing till about the middle of 2017 are moving away 16
and there is a sense of optimism coming in. What trends are we seeing in wealth management? The risk appetite of an HNI or an ultra HNI is a little more conservative than a mass affluent client, or a client who is in a small SME type of a business. HNIs and ultra HNIs are looking at protection of capital, and a yield which is commensurate with the global market returns. When it comes to the current environment, with rising interest rates, their expectations on yields are going to be much higher. But in terms of structured products, and in terms of leveraging and other issues, there could be challenges in product management. That’s why I mentioned before that asset allocation is the key and is also the choice of markets. How are trade ties between India and the UAE? I think we are in a sweet spot where we have never been before, especially after 2014 when the new government was elected under Prime Minister Modi. I think the sort of engagement we are having between India, the UAE and GCC as a whole has been phenomenal. For the first time after so many years India had a Prime Minister visiting countries in the region, including the UAE. The reception we have received across the GCC has been amazing. We have seen huge investment flows happening and the partnership has moved from an oil-related level to a more strategic level. The UAE is looking at about US$75 billion investment in infrastructure projects in India. The engagement is happening at the highest level. What is your view on leadership? Leadership has to look at two major criteria; one is to look at the business that we are in, and the other is to look at what is good for your customers in terms of protecting the investments that we are doing. You also need to have your team in line with those thoughts and processes. As an industry, wealth management needs to be more focused on training and knowledge creation, as well as being aware of what the global markets are doing, and of course ensure that there is growth happening in an ethical manner. �
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FINANCE
All About Accounting Naveen Sharma, chairman, ICAI (Institute of Chartered Accountants of India) UAE Dubai Chapter, discusses trends in leadership, M&A and trade ties between the UAE and India What are the main challenges? How is your industry performing in the region? The region has changed for the better in the last decade. The rank of the UAE was 68 in ease of doing business 10 years ago and today the rank is 21 - better than Japan whose rank is 34 and France whose rank is 31. The rank in ease of doing business has improved, which means that the industry is doing well. The world class infrastructure is doing wonders for the city. Lately oil prices have also helped. What are the main challenges that you face? Innovation is changing the way we live and do business. IT has become mainstream and it has changed most of the businesses. The main challenge is to find skillful people for the new economy. Believe me, there is a shortage of talented
people who are skillful in the new technologies. Adopting a new way of working in line with what is happening worldwide is the main challenge. What are the standout opportunities for your company in 2018-19? The UAE is the land of opportunity. The rulers of the city are dynamic and they have created the best environment for business. EXPO 2020 work is in full swing. Recently the authorities have reduced the charges and fees. They have also simplified rules and regulations governing businesses. Crude Oil prices have improved in the last 6 months. Many new tourist attractions along with theme parks have come up in the UAE. Emirates and Etihad Airlines of the UAE are now connected very well with the rest of the world. The government's emphasis on innovation is fuelling a start-up culture. I can see opportunities in tourism, IT, pharma and education sectors. How do you see M&A in the region? I think M&A will grow faster than we have seen in the recent past. The majority of the population in this part of the world is from other countries; people are arriving with good ideas; they invest here and at one point of time they have to exit, and when they exit, M&A is one
"The UAE is the land of opportunity. The rulers of the UAE are dynamic and they "Our belief of profit created the being a have by-product and not our purpose in best environment healthcare continues to drive our efforts as an for business.” organisation to push boundaries of excellence and meet the needs of people who are less privileged than us.” – Dr. Azad Moopen
of the main routes. In the other parts of the world, there are other options available such as the stock market and security markets. But in this part of the world M&A is the preferred route. Secondly, there are a lot of SMEs in this market and in some industries consolidation may be required. What I can see is that M&A related activities will go up much faster than we have seen. The healthcare and education industries are two sectors in which we will see a lot of M&A activity. It is the mid-market segment where we will see a lot of consolidation because mid-market is where the acquirer can see value. If it is very small, the impact of mergers will not be seen. How are the trade ties between India and the UAE? I believe that by 2020 Indo-UAE trade will hit 100 billion. This is growing and not only in trade. you can see the tourists who are coming from India; you can see the companies which are coming from India, and the Indians living in this part of the world. It is all going very well. IndiaGCC relations are very good primarily because of the geography of this region, and secondarily because of the ease of doing business. The UAE has one of the best infrastructures in the world, and they have some of the best business regulations. If you see DIFC, we can compare it with the rest of the world; we can see the management this city has provided. It is one of the best in the world because of the ease of doing business, because of good infrastructure, because it is very near to India. Traditionally both countries have been close to each other. I think everything is going very well. What are your views on leadership? Teamwork makes dream work; it is all about the team. Leaders have to understand that they can achieve more because of their team. It means that they have to delegate wisely; they have to set the goal, and they have to review with them. And of course, honesty and integrity are very important. ● INDIA REPORT 2018
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HEALTHY RETURNS With investment soaring and new technologies being adopted, India's healthcare industry holds huge promise 18
I
n the last decade, healthcare in India has improved substantially. There has been a 370 percent increase in health expenditure from 2000 to 2014, according to PWC. The healthcare sector is expected to hit US$133.44 billion by 2022. It is expected to create about 40 million jobs by 2030. The industry is changing in other ways too. For example, lifestyle diseases are replacing
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“Through the aid of technology, healthcare can be made more accessible. It will need technology-enabled healthcare solutions, which can be provided by healthcare start-ups, according to Ernst and Young and FICCI”
the communicable disease problems. Due to this the demand for specialised care has increased, according to data and research compiled by IBEF. The Government of India is making efforts to reduce the prices of medicines. It is also encouraging doctors to prescribe generic drugs. Prices of some important medicines used to treat cancer and diabetes have been reduced by 86 and 42 percent, according to the data compiled by PWC. Ayushman Bharat, a national health protection scheme which will provide insurance to about 100 million families, was launched in the 2018 Union Budget. A benefit of up to 500,000 INR per family per year will be provided under it. The Ministry of Health and Family Welfare launched several eHealth initiatives to increase the accessibility and affordability of health care. The Integrated Health Information Program (IHIP) is being set up by The Ministry of Health and Family Welfare to provide Electronic Health Record to all the citizens. The Government is working towards providing healthcare benefits on
40
million
Jobs in India's healthcare industry by 2030
$6.2 billion
Value of home healthcare market by 2020
86% Reduction in the cost of some cancer medicines
mobile devices using apps, according to PWC. Despite such promising government schemes, the challenges faced by the healthcare sector in India are significant. There are 1.3 hospital beds per 1000 people, according to the PWC analysis. Healthcare facilities are not evenly distributed across the country, with about 67 percent of the total doctors present in urban areas. Government health expenditure is lowest amongst the BRICS countries, according to the data collected by PWC. With organisations becoming digital, the healthcare sector has become more innovative. Through the aid of technology, healthcare can be made more accessible. It will need technology-enabled healthcare solutions, which can be provided by healthcare start-ups, according to Ernst and Young and FICCI. Telemedicine, which provides treatment to the patients using telecommunication technology, has shown a significant growth. It is expected to exhibit a compound annual growth rate of 20 percent during FY16-20, amounting to US$32 million by 2020. It will provide low-cost medical consultation to the remote areas, hence countering a shortage of medical professionals. Integration of Information Technology with medical electronics has bought healthcare to the home, making it more affordable by reducing the costs by up to 20-50 percent. The home healthcare market is expected to hit US$6.21 billion by 2020, according to data and research compiled by IBEF. India accounts for a quarter of tuberculosis patients in the world. The majority of these case comes from rural areas, where diagnosis and treatment are difficult. The Government of Haryana along with a hospital in Delhi-NCR worked on a project in which a mobile van performed digital chest x-ray in villages located in remote areas. Those x-rays were processed using artificial intelligence with an accuracy of 85 percent. Out of 618 suspected patients, 244 were detected positive. This marked an extraordinary advancement towards eradication of tuberculosis, according to PWC. ● INDIA REPORT 2018
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SERVICE ORIENTED Dr. B.R. Shetty, Founder and Chairman, NMC Healthcare, discusses potential for growth in the region and beyond
How is the healthcare industry at the moment? Healthcare is a very good opportunity now in the UAE. NMC Healthcare was the first provider of private healthcare in the UAE, and thanks to the royal family and their support we are doing extremely well. We started with a one-room clinic and as of today we have about 170 facilities in 15 countries and three continents. In the UAE there is still a very good scope to develop more facilities, partly because health insurance is now compulsory and everyone has to be covered. We as healthcare providers believe that our main job is to relieve pain. Pain is the same for everyone and relieving that is always the priority. The NMC concept is we never ask for the money first, we treat the patient first. Where do you see the best opportunities for expansion? We are everywhere in the Middle East now. We are expanding in Saudi Arabia, Oman and Kuwait. We’re developing facilities including healthcare centres, rehab centres and wellness centres. Wherever there are opportunities we are expanding. How is the relationship between the UAE and India? It’s superb. In 34 years none of the Prime Ministers from India visited the UAE. Prime Minister Modi’s visit is the first time our Prime Minister visited, and he was welcomed very open-heartedly by the rulers of Abu Dhabi and Dubai. I thank the government for giving Indians the chance to enjoy their benevolence. What is the role of technology in the healthcare sector and how is it changing? There are a lot of developments in IT, medical equipment, diagnosis tools and laboratory services. What are the keys to successful leadership? Sheikh Zayed bin Sultan Al Nahyan, peace be upon his soul, had a vision for quality, affordable and ethical healthcare. We have the passion, discipline, integrity and loyalty to provide these healthcare services. That is all the ingredients for our success. On top of that we always innovate; we have moved beyond healthcare with a money remittance company, UAE Exchange. In other parts of the world it is known as UniMoni. We also have a fintech company, called Finablr, which is based in the UK. It’s a home grown company, and we have good technical people. We also have Travelex, a currency exchange company. ● 20
▲ Born in India, Dr Shetty arrived in the UAE in 1973 shortly after the country’s formation. As a trained pharmacist, he opened his first pharmacy in 1974. In 1974 he established the New Medical Centre (NMC), which also included a dedicated dental department. NMC has since grown to become the UAE’s largest private sector healthcare provider. Dr Shetty’s other business activities include UAE Exchange, a leading global money transfer and foreign exchange provider, of which he is Founder and Chariman, and investments in hospitality, food and beverage, pharmaceutical manufacturing and real estate. Dr Shetty received the Order of Abu Dhabi in 2005, the country’s highest civilian award, for contribution to the development of the community and the cause of the Emirate, as well as the Padma Shri Award from the Government of India in January 2009. In addition to his business activities, Dr Shetty is involved in several philanthropic causes. He has supported the development of a medical institution in the north Indian state of Uttaranchal and is the founder and patron of the Indian Pharmaceutical Association in the UAE.
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HEALTHCARE
Towards a Healthier India Quality and affordable healthcare is not just vital for the individual. It is also a key pillar of a healthy nation
A
s an Indian doctor turned entrepreneur, it makes me very proud to see that my country is one of the fastest growing economies in the world today and is expected to maintain this momentum as it continues to lead the world through advancements across domains. As we progress, our ability to thrive as a nation is intricately linked to the health of our people because the greatest natural resource a society has is its people, and its success depends on how well they are nurtured. We, at Aster DM Healthcare, firmly believe that an accessible, affordable and quality driven healthcare system should be a key step in our journey towards building a nation as a global economic powerhouse. In UAE, we have already witnessed our visionary rulers identifying health and wellbeing of our people as a key indicator for happiness. We are glad that the Indian government has also rolled out many proactive initiatives to make quality healthcare more attainable for its citizens. As we celebrate the 72nd Indian Independence Day today, I applaud the efforts of our government and our people to put utmost priority to health and well-being. We have come a longway and there is still further opportunity to shape the sector and ensure that good health and happiness of people becomes a key indicator for recognizing development. We established our presence in India in 2001, with the setting up of Malabar Institute of Medical Science in Calicut (Aster MIMS), Kerala. Since then we have gone from strength to strength
with 10 hospitals offering a wide range of specialised tertiary and quaternary healthcare services. Today, we have 1430 doctors and 5935 nurses across geographies, working together to serve the common purpose of making a positive difference in the lives of our patients that we serve every day. We are also proud to say that all our hospitals in India are accredited by the NABH (National Accreditation Board for Hospitals & Healthcare Providers), with many of our highly specialized doctors performing procedures which are first in the country. With a bed capacity of 3887 across units and facilities like Aster Medcity and Aster CMI Hospitals recognised across the country for delivering excellence in patient care through their Centres of Excellence, we remain committed to providing the best healthcare services to our patients. We recognise the need to strengthen the roots for a healthy society and currently our aim is to significantly
"Our belief of profit being a by-product and not our purpose in healthcare continues to drive our efforts as an organisation to push boundaries of excellence and meet the needs of people who are less privileged than us.” – Dr. Azad Moopen
accelerate our presence ▲ Upcoming Aster multiin India as well as GCC. We are coming up with a speciality hospital in new hospital project in Al Qusais. Kannur in Kerala, which will be a 240-bed tertiary care facility focusing on specialties like Cardiac, Orthopaedics, Urology, Nephrology, Neuro and Gastro. We are also set to start our second hospital in Bangalore. In Dubai we are about to start operations for a state-of-art multispecialty hospital in Qusais matching international standards. It will be a 150 bedded facility where doctors will adopt a multi-disciplinary approach to provide holistic treatment to patients. Our belief of profit being a by-product and not our purpose in healthcare continues to drive our efforts as an organisation to push boundaries of excellence and meet the needs of people who are less privileged than us. With this thinking, we launched the Aster Volunteers Global Programme on occasion of our 30th anniversary in 2017, with an aim to bridge the gap between people who would like to help with those in need. Today, it is running successfully across the 9 countries in which we are present, with 8217 volunteers coming from all walks of life and not exclusively from the medical field. In all 624,397 lives have been impacted through various initiatives of this programme, till March 2018. As a leading healthcare group in the country, we strongly believe that “a healthy society is a productive society’’ and hence we remain committed to ensure health and well-being for all through enabling wider access to quality and affordable care. ● INDIA REPORT 2018
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CONSTRUCTION
REAL ESTATE
ES
R IS
With the Federal government throwing its weight behind ambitious housing policies, the construction and real estate sectors look set for significant growth
W
ith a population of almost 1.35 billion people, India is the world’s second most highly populated country after China. And with about 45% of the population below the age of 25, according to data from the CIA World Factbook, India's demographic looks set to fuel strong demand for real estate well into the future. Most Indian states certainly understand the need to fast-track construction schemes in order to ensure sufficient housing stock for the country’s growing population and rising middle class. Indeed, in its Union Budget 2018, announced on February 1, the government of Prime Minister Modi committed to provide assistance for building 3.7 million houses in urban areas in 2018-19 under the Pradhan Mantri Awas Yojana (PMAY) scheme. 22
CREDAI, the apex body of private real estate developers, is planning to launch 250 affordable housing projects across India through its members in a bid to extend support to the central government’s Housing for All scheme, according to consulting firm Grant Thornton. Soaring demand for property, and government and state initiatives to help stimulate construction, will no doubt help stimulate solid growth in the industry. The construction industry, in terms of value, is expected to record a CAGR of 15.7% to reach US$738.5 billion by 2022, according to data from Research & Markets. Meanwhile, the residential construction industry in value terms increased at a CAGR of 11.7% during 2013-2017, and the commercial building construction market in value terms is expected to record a CAGR of 18.3% over the forecast period, the firm added. The value of infrastructure construction was estimated to be US$116.8 billion in 2017, posting a CAGR of 12.0% during review period. In a nod to the future, a significant number of real estate schemes are being developed as smart cities. The government recently added 40 more cities to the list of towns it wants to develop as Smart Cities by providing funds for initiating urban reforms, according to a report from Grant Thornton, which cited comments from Union Minister M Venkaiah Naidu. The addition of 40 new cities will take the total Smart Cities count to 100. Since January last year, the
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“In a nod to the future, a significant number of real estate schemes are being developed as smart cities. The government recently added 40 more cities to the list of towns it wants to develop as Smart Cities by providing funds for initiating urban reforms.”
▲ Under construction buildings in Noida, Gurgaon Delhi
government has announced three lists of smart cities which will get INR 200 crore for improving their infrastructure, said Neeraj Sharma, Director, Grant Thornton Advisory Private Limited “2017 can be best defined as a landmark year for the industry as various gamechanging regulatory developments including Real Estate (Regulation & Development) Act (RERA), Goods & Services Tax (GST) and industry status to affordable housing, were rolled out,” Sharma added in a note introducing Grant Thornton’s India Real Estate Sector Annual Handbook for 2018. “Even with demonetisation impact abating, not a single Real Estate Investment Trust (REIT) took off in 2017. On the positive side, government’s Credit Linked Subsidy Scheme (CLLS) had many takers, making affordable housing a hot-selling segment across metros and tier II cities. In order to push mission,” he stated. Other decisions by the government are also likely to help transform the real estate sector, according to Grant Thornton. For example, as Sharma pointed out, the government extended the CLSS scheme until March 2019 and further relaxed the carpet area norms for certain categories in a bid to drive the Housing for All scheme by 2022.
45%
of India’s population is below the age of 25
$738.5bn
The value India’s construction industry is expected to reach by 2022
40
Number of cities the government added to a list of towns to become smart cities
“2018 will be the year of large-scale consolidation of developers and brokers, resulting in a drop in unsold inventory. Government’s push in promoting affordable housing will continue. Overall recovery in the sector will be backed by solid fundamentals,” the company said in a research note. ● INDIA REPORT 2018
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Conditioned for Growth Dawood Ozair, CEO at Blue Star International, discusses the nuances of the air conditioning business in the Middle East and why a rigorous focus on customer needs is the key to growth.
Tell us about Blue Star International. What does the company do? Blue Star is an air conditioning and manufacturing contracting services company from India and we have been in this market for almost 15 years. We have been consistently growing and every year we prepare a three year plan which shows our continuous growth in this region. Where are you present in the Middle East? We are present across the Middle East and all the GCC countries and almost all countries are performing well but the focus areas are the UAE and Saudi Arabia. About six months ago we had the opportunity to set up our business in Saudi Arabia and today we are growing very well. We have been in the UAE for some time and are still growing. We have set up an office in DAFZA which is our HQ for the international operation, which oversees 18 countries in the Middle East, Africa and South East Asia. We are also investing in another office on Dubai mainland for undertaking contracting services in the refrigeration business. This is the next phase of our expansion plan in Dubai. In previous years we have been growing about 12-15% year-on-year. This year we believe growth will be about the same. How cyclical is the industry if you’re partly dependent on sectors such as construction and real estate? There are two patterns in our business. One is the room AC business which is cyclical even seasonally, so when it is hot we sell more room air conditioners. The other business is project related which is directly related to the construction industry, so if the projects are going on and announced properly then we grow bigger. We have been growing. It depends on what kind of
"I think successful leadership comes from a leader whose ears are on the ground and eyes are on the sky. If you evaluate your customer properly you will not fail.” 24
ambitious plan you have. If it is a well calculated plan and you take that step to grow, you will grow, but if you have an unplanned growth pattern then perhaps you may have a problem. How is competition in the AC industry? Competition has always been very fierce. We started with competition from Japan and then came Korean and Chinese companies. The main thing is how you address that competition: Are you in line with the market? Are you customer facing? If you’re service and warranties are good, customers will choose you. If you have one reference and that reference is good the customer will come back to you. That’s one of the reasons we have grown. What opportunities do you see in the Middle East? The Middle East is a growing market. Saudi Arabia has ambitious plans to build infrastructure and of course the UAE itself is growing, so we have no worries about that. This is why we are investing in our new phase of business in Dubai and Saudi Arabia. What are the keys to successful leadership? I think successful leadership comes from a leader whose ears are on the ground and eyes are on the sky. If you evaluate your customer properly you will not fail. People keep talking about the cash crunch in the market. I would say if you know your customer you will not face a cash crunch. If you are aware of the market demand and how you are catering to that demand, you will perform well. That’s the leadership that is required in business. How are business ties between the UAE and India? The UAE India relationship is one of the strongest relationships in this region. The Prime Minister of India visited the UAE twice within the last two years and both times when he visited you could see how the people of both countries feel close. That’s one of the reasons why Blue Star is currently focusing on the UAE as a business partner and why we are now extending our investment in this region, especially the UAE. ●
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RETAIL ▼ View of shoppers at South City Mall in Kolkata.
INDIAN RETAIL COMES OF AGE ▶ Nandini Kelkar
A fast growing young population and rising GDP is providing plenty of impetus for India's retail sector to thrive
T
he Indian retail sector is one of the fastest growing industries and it is one of the few countries enjoying high growth in this sector. Some of the key elements supporting growth of the Indian retail sector are a growing young population, fast technology development, supportive government policies and simplified tax structure, rising disposable income, changing lifestyles, and improving internet connectivity. The entry of various international brands has additionally supported the growth of the retail sector in India. COUNTRY OVERVIEW India is one of the few countries that continues to witness brisk growth in GDP. India’s 7.4% growth has surpassed China’s GDP growth at 6.8% in 2018. India is the second most populous country in the world and population is expected to grow at the rate of 1.1% over the next five years. Of India’s population, 62% is young (in age group 15-34) and of high importance as it will drive demand for various products, including premium, bridge to luxury and luxury products. The urban population as a percentage of India’s total population is estimated to increase from the current 32.8% (2017) to 35% by 2020, thereby increasing the number of people that access better ▶ INDIA REPORT 2018
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▲ So called ‘Mom and Pop’ stores remain an important part of India’s retail sector.
retail facilities. An increase in the overall per capita income has resulted in a rise of per capita disposable income in the country, which has increased at a CAGR of 10% over past five years. INDUSTRY OVERVIEW The retail industry is valued at US$680 billion and contributed 8% of the overall workforce of India in 2017. While the overall retail market is expected to grow at 12% per annum, the modern trade would expand twice as fast at 20 % per annum and traditional trade at 10%. The organised retail sector currently has less than 10% contribution to the total retail market, and is expected to account for 24% of the market by 2020. The growth of the Indian economy is being witnessed not only in large cities but also in small cities. FMCG players are focussing on the rural market as this accounts for a large base of potential consumers. This market is yet to be well tapped for other product categories. A hub-spoke approach can be adopted for other categories where cost of reaching out to the deep rural consumer is high. SHOPPING CULTURE Rising incomes, an increasing population of working women, changing lifestyles, an increase in travel (including overseas travel), increasing internet penetration, infrastructure development and urbanisation are key drivers of the growing retail industry. 26
Indian consumers welcome different shopping formats. The industry has seen a drastic change from 'mom and pop' stores to modern trade and now to e-commerce. However, the Indian shopping culture is still dominated by unorganised retail outlets operating through small 300-500 sq. ft. shops. The organised sector accounts for approximately 9% of the total market indicating huge potential for growth. In addition to exploring and welcoming new shopping formats, open-minded Indian consumers look forward to new products, new brands and new experiences. Indian consumers offer a large addressable market for regular or popular brands and products as well as for luxury and bridge to luxury goods and services. While the growth of the FMCG products is not very high, product categories like mobile phones, apparel, fashion accessories,
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RETAIL
▼ Changes in lifestyle, such as longer commute times, are also influencing shopper habits.
“The growth of the Indian economy is being witnessed not only in large cities but also in small cities. FMCG players are focussing on the rural market as this accounts for a large base of potential consumers.”
$680bn 7.4% The value of India’s retail industry in 2017
India’s growth surpassed China’s GDP growth of 6.8% in 2018
cosmetics, shoes, watches and jewellery are some that have been witnessing very high retail growth recently. Exponential growth of e-commerce has changed the face of retailing in India, particularly in lower rung cities. E-commerce shopping formats offer a variety of products, easy accessibility, never-seen-before discounts and promotions for Indian consumers. Indian consumers now are looking forward to more evolved retail experiences with better technology. The majority of the retail chains are offering online shopping along with brick and mortar shops in India. Online shopping has aided these chains in reaching out to Tier 2 and 3 cities’ consumers and helped them survive the deep discounting challenge offered by e-commerce.
INDUSTRY RESTRAINTS The high cost of real estate is a key challenge for the retail industry in top rung cities. Smaller cities face challenges such as a lack of easy availability of the desired products, quality and variants, Indian consumers are very price sensitive but are not willing to compromise on product quality, and other aspects like aftersales service for durables, or product freshness in the case of food and beverages. Product delivery expectations are high and hence delivery needs to be at very competitive prices. The cost of real estate and deep discounts offered by e-commerce to price sensitive Indian consumer challenge brick and mortar retail. Since the retail sector is largely dominated by unorganised retailing, there is a huge opportunity for organised retail. Local players like Reliance and Future Group are expanding their wings beyond metros to cater to a larger consumer base, and many international retailers including the Middle East’ Landmark Group and global giants like Walmart have invested in the growing Indian retail sector. Powerful Indian consumers have backed these investments through their transformed retail buying behaviour and they are now looking forward to better experiences, technology, and wide product and service offerings. Summing it up, the retail sector has a very bright future in India with investments from local and global giants, leading to the organised sector dominating and holding high potential for growth in the complete retail chain. Nandini Kelkar is Research Director, Customer Research, Frost & Sullivan ● INDIA REPORT 2018
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RETAIL
â–˛ Interior of the MFG Metropolitan mall in Jaipur, India
RETAIL BLAZES A TRAIL IN INDIA As India’s organised retail sector grows, opportunities abound 28
B
y 2020 the Indian retail sector will double its size to US$1 trillion from US$600 billion in 2015, according to the Boston Consulting Group and the Retailers Association of India. While the traditional trade is expected to grow at 10 percent, the modern trade is expected to project a growth of twice that figure. Increasing purchasing power of the middle class and greater brand awareness has created a demand for modern shopping environments. This, combined with a positive regulatory environment and new players entering the market, makes the modern trade exhibit a promising future ahead. With the rise in modern trade, demand for a seamless shopping experience has become increasingly significant. Customers do not want their shopping experience to get inhibited by the limitations of the channel they are making a purchase in. With a lack of expertise in delivering an omni-channel approach to sales, long lead times and infrastructure challenges, it is the need of the
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RETAIL
hour for the evolution of the supply chain. Indian retailers should focus on developing an omni-channel approach which will allow customers to engage in a seamless shopping experience. They should work on increasing the end-to-end visibility of inventory flow and provide training to the employees to enhance their capabilities, according to the Boston Consulting Group and the Retailers Association of India. Online retail experienced an unprecedented growth in the past few years due to an increased internet penetration. With improvements in payment systems, use of plastic money has increased significantly. Yet the number of cards per capita was just 0.2, making it the lowest in the world in 2015. Online transactions have increased significantly from 3 million in 2007 to 11 million in 2011. This can be attributed to the improvements in online payment gateway systems as well as low transaction charges, according to Ernst and Young. Annual disposable income is expected to increase at a combined annual growth rate of 5.1% from 2005 to 2025, according to ResearchonlineIndia. Increasing annual disposable income and decreasing prices of PCs and smartphones have made them well within the reach of the customers. The unorganised retail in India will amount to US$986 billion while the organised sector will reach somewhere around US$262 billion by 2020, according to the Boston Consulting Group. A lack of clarity on the Foreign Direct Investments policies has kept the foreign investors at bay. However, in 2016-2017 the guidelines permitted a 100 percent foreign direct investment in marketplace model for eCommerce. Under the marketplace model the eCommerce firm acts as a platform where transactions between customers and suppliers can be made, the firm, however, doesn’t own any inventory and hence can’t engage in direct selling. eCommerce giants like Flipkart and Amazon follow the marketplace model. With 100 percent foreign direct investment permitted in the marketplace model, Walmart decided to enter the Indian market by acquiring a 77 percent stake in Flipkart for US$16
“With 100 percent foreign direct investment permitted in the marketplace model, Walmart decided to enter the Indian market by acquiring a 77 percent stake in Flipkart for US$16 billion.”
75%
By 2020, about 75 percent of India’s total population will belong to Generation I, according to the Boston Consulting Group.
250m Domestic trade has been the bread and butter of around 250 million people in India, according to the Confederation of All India Traders
11
shops per
1000 people
India has the highest shop density in the world, according to the Confederation of All India Traders
billion. Flipkart might circumvent the policy which forbids it to engage in direct selling under the marketplace model via clever documentations according to the Deccan Herald. This would act as good as a 100 percent foreign direct investment in multi-brand retail, where government levied a limit of 51 percent. The deal would pave a way for unfair practices such as dumping and predatory pricing policy thereby affecting the trade and unorganised sector adversely, according to the Confederation of All India Traders which represents over 60 million merchants. Domestic trade in India amounts up to 15 percent of India’s gross domestic product and within it, the self-organised trade such as low-cost retail trade accounts for 95 percent of the total trade. Due to the low investment and infrastructure requirements, domestic trade has been the bread and butter of around 250 million people in the country. Organised domestic trade is witnessing an enormous growth with a large number of businesses expanding their operations. However, the growth of the organised domestic trade due to a large number of businesses expanding their operations will have some ramifications on the unorganised trade, according to the Confederation of All India Traders. With the developments happening in the organised retail sector, the unorganised retail is bound to get affected inevitably, this call for the need of making some major changes in the unorganised sector. ● INDIA REPORT 2018
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Winning in Consumer Electronics Paras Shahdadpuri, Chairman, Nikai Group explains how he continues to grow his company despite economic headwinds in key markets
▲ Paras Shahdadpuri, Chairman, Nikai Group, of Companies, is an
What are the main trends and challenges in retail in the Middle East? Well honestly at this point of time, the electronics industry in the region is going through a tough time due to political instability in certain countries. There have also been other reasons, such as the US dollar being at a peak against the world currencies, which means the importation in various countries has become more expensive. Once the buying power goes down, the overall demand goes down. Luckily for me, I am a brand owner worldwide. An entrepreneur knows how to survive. I am very glad to say that we have gained about 10-15 percent growth over the past year. This is through our innovative moves: we have entered some completely new markets. We are expanding our territory and we are even growing vertically in the sense that we are offering existing customers more facilities and more products. Where are you growing geographically? In many countries around the world. We are growing in East Europe and we are refocusing our efforts in CIS countries. However, the foreign exchange in those countries is a problem as they have depreciated against the US dollar and some of them are short of foreign exchange. These are the two problems we are facing, but you know, an entrepreneur knows how to explore and succeed in new areas. How are ties between the UAE and India? Well let me tell you, and I am very proud and delighted to say that the relationship between India and UAE is at a new peak and it looks set to keep growing. With the visit of Prime Minister Modi here, twice in the past three years, and with the visit of His Highness Sheikh Mohammed Bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi and the Deputy Supreme Commander of the Armed Forces, this has bought a totally new dimension: It is a genuine paradigm shift. The warmth which these two leaders have is unparalleled. They have huge respect and appreciation for each other. What is your view on leadership? 30
ex-diplomat serving the Indian government. He started with trading in commodities in 1988 and chose Dubai to be the headquarters of his business activity and this laid the foundation of the Nikai Group of Companies – a diversified business group which has forayed into electronics, home appliances, IT, FMCG and retail food chain.
I believe a good leader is someone who makes leaders, who develops leaders, who nurtures leaders – within his own organisation, family or society. This is the most important thing, a leader must learn how to delegate to his people, particularly if you are talking about companies and the business world. A leader should try make himself redundant, and still run the show successfully. It is very important for a leader to inculcate confidence, motivate people and maintain the organisation’s values. Those values must percolate down to every single member of the company; without values you can’t sustain your group, company or enterprise. Leadership means being a role model for the rest of the people, nurturing leadership and motivating people. ●
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RETAIL
Canon Middle East has ambitious plans for the Gulf region. Anurag Agrawal, the company’s managing director, discusses the company’s strategy, leadership and how technology is transforming the sector.
CLEAR IMAGE How is your industry performing in the Middle East? The imaging industry as such has evolved in the last 100 years with technology, and this evolution has only accelerated in the last 10 years. Today it is used in both the consumer and business place widely: You can see an amplified presence and use in healthcare, security, manufacturing, construction, to name a few. Despite the challenges in our region, we see a big scope of growth, given our demographics: We have a well of a large proportion of youth in our population. How are emerging technologies affecting business? Governments and corporates are building their future plans on a new economic reality rather than relying on the traditional ones. Increasing productivity, cost savings, security, growth, and profits are key words and more important than ever before. There are a lot of opportunities as our ecosystem is backed by strong technology used in products, hardware, software, and services. We have our inventory of propositions as solutions that can benefit organisations through integration and consolidation, for example, business services, management services, workflow solutions, and applications for graphic arts and production print environment are a few of these propositions. Where do you see the main opportunities in the next year or two? With the shifting landscape of the imaging industry, we see our opportunities in three core sectors that will have a positive knock-on effect on the complete market. These sectors are youth, education and professional arts. We approach these opportunities in four steps, the first one being to get closer to the customer, which means enhancing our presence in the region in the form of expansion and
“Recently we launched a direct operation in Saudi Arabia with three offices in Riyadh, Jeddah and Khobar, and we plan to hire 300 staff across these three offices by 2020.”
development of our existing partners in each country, and in the form of establishing our own direct operation as we have done in the Emirates. Recently we launched a direct operation in Saudi Arabia with three offices in Riyadh, Jeddah and Khobar, and we plan to hire 300 staff across these three offices by 2020. Secondly, we have integrated offerings of our technology, software, services and ecosystem that offer solutions in the form of propositions. Thirdly, we are working to help the youth develop new skills. We are further developing and training them along with our existing talent to be ready to address the upcoming opportunities. Finally, the fourth step involves performing our duties towards the society we live in and work in, under the guidance of our corporate philosophy called ‘Kyosei’ which means living and working together for common good, by contributing to education, environment, and the community welfare. What are your views on leadership? I can only speak from my experience, and what has worked for me and my colleagues at Canon. We have been guided by the Canon internal spirit of ‘3 selves’: ‘self-motivation’ ‘self-management’ and, ‘self-awareness’. These are simple and self-explanatory words which guides you towards your everyday conduct at the work place. Secondly, what is more important for me is the engagement with colleagues which I practice in the form of listening and incorporating the employees' ideas and opinions in the strategy, followed up with visible action and communication of the progress being made. Finally, I also roll up my sleeves and become a part of the action plan, and engage in the continuous feedback process to find out opportunities for continuous improvement. ● INDIA REPORT 2018
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TECHNOLOGY
Path to
TECHNOLOGICAL EXCELLENCE Charting India’s rise as a technology powerhouse
I
ndian IT/BPO industry revenue is estimated at US$ 151 billion in FY2017-18. Out of this, exports revenue will amount to US$ 126 billion, in it the IT services segment will have a major share of US$ 69.3 billion, according to NASSCOM, a not-for-profit association representing India's IT BPM (business performance management) industry. Upcoming technologies such as Cloud, Artificial Intelligence, and automation are becoming more significant which calls for the companies to start becoming competent in them, according to PWC. DEVELOPING SKILLS With a plummeting demand for traditional IT services, companies have to work on re-skilling their employees so that they become well versed with the emerging technologies. New technologies such as automation will reduce the number of jobs required for the same output significantly but at the same time they will create new jobs, those jobs however, will require a higher level of skillset, according to NASSCOM. About 1.5-2 million employees need to be reskilled in next 3-4 years according to the Boston Consulting Group and NASSCOM. “The need for re- skilling talent is a reality that we have to address. To keep up in a fast-evolving technology environment, the IT industry must 32
reinvent itself by re- skilling its employees in new and upcoming technologies," said R. Chandrashekhar, President, NASSCOM. "Looking at the future needs of the industry, NASSCOM will continue in its efforts to create opportunities for skilling and reskilling of employees to make them competitive for the industry,” With increasing manufacturing costs in China, manufacturers are shifting their base to India as availability of low-cost labour makes it an attractive location. Government programmes like Digital India are buttressing the growth of the electronics manufacturing sector. Further, the budgetary allocation towards schemes like Modified Incentive Special Package Scheme and Electronics Development Fund has been increased to US$ 114 million in FY 2017-2018 in order to keep up with the growing number of investments proposals made within the electronics manufacturing sector, according to Make in India
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TECHNOLOGY
▲ India is performing well in areas including Information Technology enabled Services
CONSUMER ELECTRONICS The Indian Consumer Electronics and Appliances Industry is expected to become the fifth largest in the world by 2025. A rise in disposable income of the middle class and a fall in prices of the electronic products has led to the widespread consumption of electronic devices. By 2020, the electronics market in India is predicted to reach US$ 228 billion, according to Invest India, the national investment promotion and facilitation agency of India. The internet industry in India is expected to reach US$250 billion by 2020. Financial services and eCommerce are projected to grow the most, according to the Boston Consulting Group and the Indus Entrepreneurs. By 2020, the number of internet users in India is expected to reach over 650 million, with majority of user growth coming from rural areas. Digital influence will shape the consumption in several industries like FMCG and consumer electronics, which will witness upto 40 and 60 percent of consumption being digitally influenced respectively. Yet the investments in the digital influence are low due to lack of awareness of the significance of digital influence, inadequate understanding and limited capabilities, according to the Boston Consulting Group and Google. Foreign direct investment of US$ 29.825 billion has been made in the software and hardware sector in India, according to the Department of Industrial Policy and Promotion. US$ 7.6 billion of investment has been made in the IT and ITeS sector by private equity and venture capital, according to the India Brand Equity Foundation. TECHNOLOGICAL READINESS India ranked 47th globally in the Economist Intelligence Unit’s (EIU) 2013-17 Technological Readiness Rankings. The report assesses 82 countries in terms of various categories deemed vital for technological readiness. India rarely gained a mention in the report, other than appearing in the bottom 10 countries for mobile phone penetration rates, with India on a meagre 77% as of 2015. However, the sheer size of India’s landmass and population is likely to have put the country at a disadvantage, with obvious
difficulties in connecting remote rural areas, some of which remain off-grid. In other areas of technological development, India is evidently roaring ahead. For example, the global IT & ITeS (Information Technology enabled Services) sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination in the world, accounting for some 55 per cent market share of the US$ 185-190 billion global services sourcing business in 2017-18, according to the India Brand Equity Foundation (IBEF). Indian IT & ITeS companies have set up over 1,000 global delivery centres in about 80 countries across the world, IBEF research indicated. More importantly, the industry has led the economic transformation of the country and altered the perception of India in the global economy. India's cost competitiveness in providing IT services continues to be among the mainstays of its Unique Selling Proposition (USP) in the global sourcing market. However, India is also gaining prominence in terms of intellectual capital with several global IT firms setting up their innovation centres in India. RELATIONS WITH THE UAE During the state visit of the Crown Prince of Abu Dhabi to India in 2017, both countries agreed to work on increasing the business-to-business cooperation in IT, ITeS, and Electronics System Design and manufacturing. Progress in the US$75 billion target investments by the UAE in India’s infrastructure was also evaluated. The UAE also showed interest in the proposal for establishing a semiconductor fabrication facility in India, according to the Ministry of External Affairs. Abu Dhabi Investment Authority, which is one of the largest sovereign funds in the world signed an investment of US$1 billion in National Investment and Infrastructure Fund of India, according to the National Investment and Infrastructure Fund’s website. With the new initiatives taken by the government and the projected growth rates, the future of technology sector in India looks promising. Indian IT vendors have adopted global quality standards and with 30 percent of the Indian IT exports credited to SME, their contribution in the IT industry is significant. According to NASSCOM IT exports from India will exceed US$330 billion by 2019-20. ● INDIA REPORT 2018
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PORTS & LOGISITCS ▼ Container vessel in the new Mbharat Mumbai Port
MOVING ON UP Ports and logistics industries are the arteries that carry the lifeblood of the economy
T
he maritime industry is part and parcel of India’s surging economic growth, allowing raw materials and good to move into and out of the country and providing and keeping the wheel of the economy in motion in the process. Some 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport, according to India’s Ministry of Shipping Furthermore, India has 12 major and 200 notified minor and intermediate ports, ensuring that the benefits of maritime reach almost all parts of the country. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country, according to the Indian Brand Equity Foundation (IBEF). IBEF adds that the Indian ports and shipping industry plays a vital role in sustaining growth in the country’s trade and commerce. India is the sixteenth largest maritime country in the world, with a coastline of about 7,517 km. The Indian Government plays an important role in supporting the ports sector, IBEF states. Indeed, the Government has allowed Foreign Direct Investment of up to 100 percent under the automatic route for port and harbour construction and maintenance projects. In addition to this it has also introduced a 10-year tax holiday to enterprises that develop, maintain and operate ports, inland waterways and inland ports. In terms of numbers, in April-May 2018, traffic at major ports increased 2.41 per cent year-on-year to 116.26 million
34
tonnes. During 2016-17, major and non-major ports in India have accomplished a total cargo throughput of 1,133.09 million tonnes, an increase of 5.7 percent over the previous year 2015-16, IBEF reported. The growth in cargo handled at major and non-major ports in 2016-17, were 6.8 per cent and 4.2 per cent, respectively. The share of major ports in the total traffic handled by Indian ports increased from 56.5 per cent in 2015-16 to 57.2 per cent in 2016-17. Perhaps unsurprisingly, logistics is expected to play an increasing role in driving the Indian economy, according to global accounting and advisory firm Deloitte. In 2016, India was ranked 35th in The World Bank LPI Index that ranks countries based on their logistics performance – a significant move up from 54th place in 2014. However, while this is reflective of improvement in the sector, Deloitte points out that “multiple challenges of infrastructural deficiency, lack of integration amongst stakeholders, lack of skilled manpower and slow adoption of technology” continue to weigh the industry down in India. These challenges include infrastructure, skill development, IT, regulatory hurdles and performance standards, according to Deloitte. Deloitte adds that through the use of innovative models, new technological systems, international best practices, research and an adequate implementation approach can all help to improve the sector, which in turn can stimulate growth and employment in the country. ●
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PORTS & LOGISTICS
▶ Adel Al Taheri, Acting GM, Abu Dhabi Airports Free Zone (ADAFZ), explains how his organisation is helping diverse companies reach the next level
Enabling Growth When was ADAFZ established? How successful has the free zone been so far? ADAFZ was first established in 2010 and commenced operations towards the end of 2012. The company has succeeded in attracting over 200 companies to the Free Zone. The company’s first project was the Logistics Park that consists of 100 warehouses. Today the park is home to many renowned companies such as FedEx, DHL, TNT, and others. In 2013, our second project was ready for operations, a business centre where we provide our customers with furnished facilities equipped for starter companies to facilitate the start-up of their business immediately. Following the business centre came our first Grade-A commercial building in the year 2015. In addition to these office buildings, ADAFZ offers hangars and “Musataha” which is the long-term leasing of land plots to investors to be able to build their own facility. What type of companies are they? ADAFZ operates free zones at Abu Dhabi International Airport, Al Ain International Airport and Al Bateen Executive Airport and also comprises of a logistics park, business park and business centre providing One Stop Shop Services. ADAFZ caters to a broad spectrum of business sectors including aviation, aerospace, technology & ICT, pharmaceuticals, cold storage, logistics,
e-commerce, consultancy, light manuinvolved in further developing the facturing, trading, and many others. emirate’s socio-economic prosperity, How popular is the free zone knowledge-based economy and diversiproving to be with Indian comfication of energy demand and supply. panies (defined as Indian compaReports indicate that Abu Dhabi has nies that have opted to use ADAFZ continuously contributed over 60% to as their UAE or ME base, or UAE– the country’s GDP. ADAFZ’s solid infrabased companies under Indian structure, strong financial system and management)? steadfast support for entrepreneurs are Abu Dhabi Airports Free Zone further enabling the capital’s ambition (ADAFZ) is the UAE’s gateway towards building an open, to a future free zone aeroefficient and globally intetropolis, making Abu Dhabi grated business environment a thriving destination of that will strengthen internaof the companies tional business relationships. choice for local and internaregistered at ADAFZ tional businesses. ADAFZ has What additional services are Indian been able to attract compadoes ADAFZ offer? nies from across the globe with a large Within the free zone environment, percentage from the Asian countries, ADAFZ offers its customers the full which brings Indian business to the spectrum of free zone services, includforefront as largest at about 10% of the ing company registration, licenstotal companies in registered in ADAFZ. ing, leasing, rapid visa processing for What are the major attractions employees, among several others. of ADAFZ, especially for Indian Entrepreneurs enjoy benefits includbusinesses? ing 100% foreign ownership, 0% corpoThe location of Abu Dhabi geographrate tax, 0% personal income tax, 0% ically is very convenient for business import or re-export duties, no restricopportunities from the West, starting tions on capital repatriation and no from the growing economy of UAE and currency restrictions, as well as a full largely the capital city of Abu Dhabi range of business activities licenses. which attracts a lot of business. Additionally, licensed companies operADAFZ’s vision and mission are ating at ADAFZ are offered dual licenses closely aligned with and support the allowing for operation outside the free Abu Dhabi Economic Vision 2030. zone and therefore, are provided with Through its various initiatives and vast an opportunity to participate in govarray of services, ADAFZ is directly ernment tenders. ●
10%
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ENTERTAINMENT
THAT’S ENTERTAINM Expanding the broadband user base expands viewership opportunities for the media industry
I
n February 2018, Netflix’s CEO, Reed Hastings affirmed the company’s interest and optimism in the Indian market at a panel. He reportedly said that he expected the company’s next phase of growth to come from international markets, especially India, “The next 100 million (subscribers) is from India. We are at 120 million across the world.” The attractiveness of India in terms of potential numbers is undeniable. It grew to be the second largest Internet user base with over 450 million in 2017. It also grew to have the second largest smartphone market by volume after the US in 2017. Though the average broadband speed in the country is 4.9 Mbps (lower than world average) and penetration of mobile and fixed broadband services is still under 30%, network infrastructure is rapidly improving as a result of concerted efforts by the government of India and telecom operators. This accessibility to broadband has resulted in multiple
36
shifts in the entertainment and broadcast industry - a boom in non-user generated over the top (OTT) video services, expansion of movie distribution outside cinema screens and TVs to online platforms, an explosion in the universe of content creators; and intense competition for the fractured attention of the digital user. TARGETING THE INDIAN CONSUMER India has one of the youngest working populations in the world. Brands, consumer applications and content producers are constantly trying to understand the pulse and aspiration of this Gen Y population, but India’s socio-economic framework doesn’t leave any room for generalisation. With over 22 official languages, 29 states and 7 union territories, the country presents an interesting but challenging conundrum in terms of what people relate to and empathise with. Till 2017, over 80% of OTT platforms were targeted toward English and Hindi content with a limited library of other languages, restraining adoption of OTT platforms by a vast percentage of the Indian demographic. However from 2017 onwards, multiple service providers are driving investment to acquire and produce original productions to expand vernacular content libraries. For example, Zee5, Voot, Hotstar, Amazon Prime Video, Yupp TV, Eros Now and others offer content in Gujarati, Marathi, Tamil, Telugu, Bengali, Kannada, Malayalam, and Punjabi among other languages. The other trend that has driven a quiet debate between
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ENTERTAINMENT
“India still offers one of the promising advertising markets in the world with growth in both traditional avenues such as television, print, OOH among others and digital” – Vidya S Nath
NMENT! content producers, distributors and regulators is on the type of content. With a large part of OTT viewership driven by individuals on their respective mobile devices, it is not just Youtube, but also OTT platforms such as Alt Balaji, Netflix, Amazon Prime Video, Hotstar, and more recently Zee5 that carry bold and edgy content that would have never made it to the telly. That said companies have realised that titillating content alone is poor in driving adoption of new age platforms. Most successful platforms have a wide library that ensures something for every person in a household, including children. MONETISING DIGITAL PLATFORMS India still offers one of the most promising advertising markets in the world with growth in both traditional avenues such as television, print, OOH among others, and digital. Digital advertising spend in India has ramped up in growth over the past three years. It gained $1.1 billion in revenue in 2017 and will likely grow at a CAGR of 28.6% to $4 billion by 2022. Digital video advertising has grown rapidly and contributed over $490 Mn in 2017, according to Frost & Sullivan's 2018 report 'P9BC-70 OTT Video Services Market, India'. While there is emphasis on subscription based services, it comprises
less than 8% of total revenue from digital video. Clearly advertising is what will fuel the next phase of growth for video entertainment in India. MULTISCREEN OR CORD-CUTTING? Star TV India created history in 2017 by bagging the five year contract of the global television and digital rights of the 2018 Indian Premier League for cricket outweighing Sony and Facebook. Star bet big on IPL to boost the viewership on its digital platform, Hotstar, and it posted remarkable growth. According to Star India, 202 million viewers watched cricket on Hotstar in 2018 growing by 55% over the 2017 series. This demonstrated a new paradigm in viewership behaviour and broke the myth that people watch only on-demand content on their mobile devices while tuning into TV for sports. However, this does not imply a shutdown of TV channels or Pay TV services. The US$7.5 billion industry comprises over 800 TV channels in India, 7 satellite TV service providers and thousands of cable TV operators offering Pay TV services, according to the national regulator, the Telecom Regulatory Authority of India (TRAI). Yet there is room to grow as TV penetration is at 76%, out of which only 66% of the households have a pay TV subscription. According to the (TRAI), India had nearly 180 million registered digital TV households, out of which Frost & Sullivan estimates about 60% are active subscribers. Despite being a mature market, Pay TV Services continues to grow in revenue, driven by higher adoption of HD services. Pay TV revenue in India is expected to grow at 19% primarily driven by direct to home (DTH) services despite a moderate growth of 4% in active pay TV subscriptions. (Source: Frost & Sullivan’s Pay TV Services in India 2017 report). Television will co-exist alongside on-demand services. With initiatives from telecom operators such as Reliance Jio and Airtel, there will INDIA REPORT 2018
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ENTERTAINMENT
By 2022, digital advertising spending in India is expected to reach
$4bn
According to the TRAI, the number of registered digital TV households in India is about
180m
▲ Content creation is booming in India.
be rapid growth in connected set top boxes, which will drive the adoption of multiscreen television and video on demand services. However, every content production house and studio is eyeing the OTT video services market. The $ 543 million market has potential to grow at a CAGR of 40% over the next five years. Since 2015, the number of video-on-demand services have expanded to over 50 legitimate ones including app services by broadcasters and operators including Hotstar, Sony Liv, Asianet, Amazon Prime Video, Netflix, Voot, Zee5, among others. TAPPING BROADBAND POTENTIAL One of the downsides of rapid broadband connectivity over the last 24 months is that the market has saturated within its initial targeted audience - the urban demographic. According to the country’s sector regulator, TRAI, the rural Internet density (i.e., the number of Internet subscribers per 100 people) is at 14.89%, compared to 76.76% for the urban population (Source: TRAI Performance Index Report May 2017). This means the next phase of growth will be completely dependent on rural expansion- for both broadband as well as Pay TV. While satellite TV operators such as Tata Sky, Videocon D2H, and Dish TV have made significant inroads over the last decade, competition is set to intensify as MSOs and telcos will push hybrid boxes offering video distribution over IP. Reliance Jio is eyeing this market next. In the latest annual general meeting in July 2018, the company announced its intent to drive up its market share in fixed broadband and 38
home entertainment. The growth for the broadcast and OTT video services in India will be multi-fold. One, Pay TV services will continue to grow in smaller towns and villages, HD penetration will increase, even if a small percentage of urban viewers will transition to broadband connected services. Two, OTT video services will increase rapidly riding on the back of high speed mobile broadband penetration and vernacular content offerings, but sustaining viewers on such platforms will depend on quality of service and experience. Three, there will be growing partnerships across the value chain resulting in bundled offerings from Pay TV operators and telcos. Finally, Indian content distribution will expand beyond regular Bollywood fare. Worldwide releases of originals such as Sacred Games by Netflix (with marquee star cast- Saif Ali Khan and Nawazuddin Siddiqui), will give both Indian and international viewers great content to chew on with their popcorn. Vidya S. Nath is Senior Director, Frost & Sullivan ●
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ENTERTAINMENT
Content is King Despite the slowdown in the TV industry, opportunities abound for forward-thinking broadcasters, according to Sachin Gokhale, Business Head, Middle East & Africa, Viacom 18/IndiaCast What kind of challenges are you seeing in the T.V. industry at the moment and over the past year? The biggest challenge for us has been the marked slowdown in the advertising industry. Most of the key advertising categories who have traditionally been active on our channels such as FMCG, consumer durables and retail have suddenly seen a cut in budgets across the board. A lot of people are being far more choosy and particular when it comes to their campaigns. The flipside of that has been that even in the middle of the slowdown, brands and advertisers are more open to trying out newer things. While the reliance on the traditional TV model of buying a 30 seconds spot and showing sponsorship remains, we have also seen brands being open to experimentation. On the back of this trend we have launched about six or seven big local formats now on an annual basis. We do around 100-120 hours of local programming, which is topical, locally relevant and has advertiser integration built in. A lot of brands are showing more and more interest in this. The second trend we’ve seen is that advertisers and brands want a 360 degree connect: They want something that will give them exposure on television, but also a presence on digital. They want engagement and interaction, and preferably they want it to result in sales and conversions of some kind. The challenge for us therefore has been how to take our content and brands and use them to create larger vehicles which brands can use to reach consumers. To give you an example, we have created a local show called CheckMate, which is a local talent-based
show for college students. The show is very simple; we go across universities, we choose young people aged around 18-22 who are aspiring management professionals and we put them through a series of management tasks which are designed to test their sales abilities, teamwork skills, creativity, crisis management and so on. The winner then gets an internship with a big corporate. The genesis for this was that we saw a gap in terms of educational opportunities for young people: there were a lot of options available here in the UAE. But there was a definite gap between the vast amount of opportunities for young people in terms of university places and courses, but a lack of quality work experience opportunities. Through this show we are really trying to bridge that gap. Through this show we have not only
“My belief has always been that I need to hire people who are smarter than me, and who bring a variety of experiences to the table”
created a ground connect with universities, we have also allowed brands to integrate themselves into the tasks in a fun and engaging way. For a lot of brands, having fresh students do an internship with them also becomes a way for them to connect with young audiences. We have done this show for about two seasons now and we have had companies such as Uniliver and Rakbank come on board. What would you say are the keys to good leadership? One key is to acknowledge that you don’t know everything. My belief has always been that I need to hire people who are smarter than me, and who bring a variety of experiences to the table. This means that as a leader I have consciously stayed away from hiring people who are exactly like me, or people who come with exactly the same carbon copy resume that I would essentially want. I have tried to hire people with diverse experiences, and I think I hire as much for attitude as for competence. Both are important: You need people who have the attitude and the alignment to be with you where you are going. Once you have that rare breed of people with you, then I think it is all about empowerment and trust; it is about letting people make mistakes, but letting them grow, giving them space to take responsibility, mentoring them, and as a leader it is also about being able to present a bigger picture to what you are doing. People will come to work to earn their salary, but what makes them stay and what makes them perform more than that 100 percent is when they genuinely have a passion for doing what they are doing. ● INDIA REPORT 2018
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LAST WORDS
Taking cybersecurity to the next level Amit Roy, EVP and regional head, EMEA, Paladion, discusses how AI can boost security for organisations in the Middle East What are the main challenges in cybersecurity. How can AI help? There are three industry challenges which the cybersecurity industry is facing, despite investing in different technologies and models. One issue is how do you detect deeper unknown patterns and threats. With a threat that’s known a human can always put rules and signatures. You can look at it because you know a threat has emerged and you know what is to be done. There are various tools and various prevention technologies which enterprises have been using to handle those kinds of threats, but they still face targeted attacks which are difficult to uncover. The second challenge is if you take any attack or any compromise globally you would see that, by and large, people come to know about that incident close to within 180 days. So enterprises tend to find out about a breach late, and by the time they have a mechanism to respond, the damage has been done. Everyone believes that someday or another, they are going to have an incident but what determines whether it is a real breach or not is their ability to detect, respond and mitigate or remediate in time, or did they let it pass without being able to do anything about it. The third challenge is that while organisations, especially the larger enterprises, have invested in various mechanisms to continuously find out what kind of vulnerabilities exist in a network, they are unable to decide which ones to prioritise and patch. This was part of the problem we saw last year when the Wannacry incident happened. The compromise was well known, but when the incident happened it took everyone by surprise because most organisations took no measures to patch it up. How have you brought AI into cybersecurity? While our platform drives enhanced security results at every stage of a potential threat’s lifecycle, we specifically designed it to tackle the three modern security challenges I mentioned above. First, our AI 40
platform detects unknown attacks that follow unknown attack patterns. We have built algorithms and statistical models that find anomalous, potentially malicious patterns within user and network behaviour. Our AI platform uncovers these behaviours, and then presents them to our experienced analysts and Threat Hunters. These human experts utilise these AI-generated enriched alerts to determine if they are witnessing a false alarm, or if they’ve found an unknown threat—with no previous record or signature— emerging within the network. Second, our AI platform can not only identify an organisation’s vulnerabilities, our platform also prioritises those vulnerabilities, and helps organisations focus on real threats. We designed our AI platform to give special attention to vulnerabilities with existing exploits. If our platform identifies 10,000 vulnerabilities in your network, but sees that only 1,000 of those vulnerabilities have existing exploits, then our AI will tell you to patch those 1,000 exploitable vulnerabilities before you handle the remaining 9,000 lower-priority issues. Third, we built our AI to help our clients contain and control their uncovered incidents ASAP. To do this, we used our AI to build “rule books”, also known as “incident response mechanisms”. These help us quickly uncover threats, and then immediately focus on how to effectively respond to them. Our Machine Learning algorithms allow us to rapidly develop very fast, consistent responses to unknown threats. The result: drastically reduced dwell times. Gone are the days when cybersecurity used to sit in one corner of the IT park. It has become a board level decision. ●
INDIA REPORT 2018
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42343SCGBM_Refresh Glb_Shop_UAE_Bloomberg BizWk_266x200w_2 Sep.pdf
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