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Thursday, January 19, 2017

Pharma Industry Grows 29% to Rs 2.04 Lakh Cr in 2015-16

The sector saw FDI equity inflows of $2.25 bn from Apr 2014-Mar 2016, says report

Indian pharmaceutical industry grew by 29 per cent to Rs 2,04,627 crore in 2015-16 from Rs 1,77,734 crore in 2014-15, while it attracted FDI of $2.25 billion during April 2014 to March 2016.

The country "is one of the largest producers of pharmaceutical products and a leading player in the global generics market, exporting nearly 50 per cent of its production", according to the achievement report of the sector under the government's 'Make in India' initiative.


"The Indian pharmaceutical industry has witnessed a robust growth in recent years growing from Rs 1,77,734 crore in FY 2014-15 to Rs 2,04,627 crore in FY 2015-16, registering a growth of 29 per cent as compared to the growth of 12 per cent from Rs 1,58,671 crore during FY 2013-14," the report said.

In terms of FDI Inflows, it said: "The sector saw FDI equity inflows of $2.25 billion from April 2014 to March 2016."

Among the top FDI inflows were UK's Abbot Asia Holdings $447.48 million, the Netherlands-based Mylan group's $372.63 million and Singapore-based Hospira's $301.61 million.

On the export front, it said: "In FY2015-16, the exports of drugs, pharmaceuticals and fine chemicals was Rs 1,06,212.4 crore.

"In the generics market, India exports 20 per cent of global generics, making it the largest provider of generic medicines globally."

The report jointly prepared by the Department of Industrial Policy and Promotion and Department of Pharmaceuticals said when it came to FDI policy, 100 per cent FDI has been allowed through automatic route for greenfield pharmaceuticals projects.

"For brownfield pharmaceuticals projects, FDI has been allowed up to 74 per cent through automatic route and beyond that through government approval," it added.

Highlighting fiscal incentives provided to promote domestic manufacturing, the report said inverted duty structure in medical device industry has been corrected.

Basic customs duty has been reduced to 2.5% along with full exemption from Special Additional Duty (SAD) on raw materials, parts and accessories for manufacture of certain medical devices with effect from January 19, 2016.

Reference - http://www.business-standard.com/article/pti-stories/pharma-industry-grows-29-to-rs-2-04-lakh-cr-in-2015-16-117011801306_1.html

Tuesday, January 17, 2017

Ola Partners with Apollo to Train Drivers for On-Road Medical Emergencies

Partnership will offer medical benefits, accident insurance at discounted rates to driver partners

After Uber, Ola has now partnered with Apollo Hospitals to train drivers to provide medical assistance in case of on-road emergencies.

Besides, the partnership will also offer medical benefits and accident insurance at discounted rates to driver partners.

“Ola has partnered with Apollo Hospitals to create India’s first ever comprehensive medical programme for driver- partners,” Ola said in a statement.

The programme will be conducted in five cities including Bengaluru, Mumbai, Delhi, Hyderabad and Chennai and will be expanded to other cities over the course of the next few months, it added.

“Driver partners will be also be able to opt for a ‘My Apollo Card’ which will provide them with medical benefits, while Apollo Munich will entitle them to accident insurance at discounted rates,” it said.

Last week, Uber had announced a similar programme in partnership with Apollo Hospitals.

Reference - http://www.business-standard.com/article/companies/ola-partners-with-apollo-to-train-drivers-for-on-road-medical-emergencies-117011800041_1.html

Baba Ramdev's Patanjali eyes investments in Chhattisgarh

Yoga guru Ramdev meets state CM Raman Singh, may set up unit running on forest produce

Top officials from the industry department were also present in the meeting, in which Patanjali was invited to invest in the state, which is endowed with rich forest produce.
Patanjali Ayurved Limited is exploring investment opportunities in Chhattisgarh, following a high-level meeting its promoter, yoga guru Ramdev had with the state's Chief Minister Raman Singh.


A state government spokesperson said Ramdev had evinced interest in investing in industries based on agro and forest produce. Singh said the state government was also promoting the agro-forest sector and had offered attractive sops to investors who would help the local community by adding value addition to their produce.

“Baba Ramdev has assured that he would help the Chhattisgarh government in its move to promote industries based on agro and forest produce,” the spokesperson said. The company, reported to be the fastest growing FMCG company in the country, would explore the possibility of setting up a unit in the state.

Patanjali has its manufacturing unit and headquarters located in the industrial area of Haridwar. Its registered office is in Delhi. The company, which manufactures mineral and herbal products, also has units in Nepal under the trademark Nepal Gramudhyog. It imports most of the herbs it uses as raw material in its unit in Haridwar from the Himalayas of Nepal.

Chhattisgarh is suitable for growing mango, banana, guava and other fruits and a variety of vegetables. With 44 percent of its area under forests, Chhattisgarh is one of the most bio-diverse areas in the country. It has abundant minor forest produce like Tendu leaves, and Sal seed. Medicinal plants, bamboo, lac and honey are other potential money earners for the state.

The trade volume of non-wood forest produce in the state is estimated at Rs 1,500 crore per annum.

Reference - http://www.business-standard.com/article/companies/baba-ramdev-s-patanjali-eyes-investments-in-chhattisgarh-117011601018_1.html 

Sunday, January 15, 2017

ICICI Bank blocks Transactions Through Flipkart Wallet PhonePe

These moves are seen as banks getting nervous of being disrupted by new-age digital payments players


ICICI Bank has blocked transactions on Flipkart-owned digital payments app PhonePe, accusing it of indulging in restrictive practices and breaking the Unified Payment Interface (UPI) guidelines of interoperability.

The bank began blocking transactions on PhonePe starting Friday, with Flipkart Online CEO Sameer Nigam taking to Twitter to protest the move. He claimed that the bank hadn’t provided the company with any prior warning or information, saying the move was “on purpose”.

Nigam said, “PhonePe has not received any official notice in this regards from NPCI or its banking partner YES Bank yet. Since Friday afternoon, ICICI Bank has blocked all their customers from using PhonePe, and even blocked any other bank’s customers from sending money to ICICI Bank’s customers using PhonePe.”

ICICI Bank stated: “This entity (PhonePe) is following restrictive practices allowing users to make payments with only its UPI handle, which is in contravention to the UPI guidelines of interoperability and choice that empowers a customer to choose any app to make payments through UPI.” 

This is the second instance of mainstream banks blocking services to new-age digital payments companies. Previously, State Bank of India stopped allowing users from topping up their Paytm wallets using the internet banking feature. The bank claimed it did so because of security concerns.

“And what about blockage for other universal interface called net banking?” Paytm founder Vijay Shekhar Sharma responded to Nigam’s plea on Twitter.

These moves are being seen as traditional banks getting nervous of being disrupted by new-age digital payments players. After the government’s demonetisation scheme, players such as Paytm, Freecharge and PhonePe have been racking up millions of transactions and roping in hoards of new users due to the convenience they offer.

Airtel and Paytm have started their payments bank services, offering customers the same convenience of using a wallet with some benefits of traditional banks, too. Airtel, for instance, will offer users 7.5 per cent interest per annum on money they park in their payments bank/wallet accounts.

While the government is backing BHIM, a UPI app built by the National Payments Corporation of India, people expect the move to only fuel the adoption of other digital payment apps as users begin to look for more options to transact. “We’re a full feature app in the sense that you can do recharges, bill payments or pay directly to a mobile number, whereas they (BHIM) are base vanilla,” Nigam said in a recent telephonic interview with Business Standard.
 
Reference - http://www.business-standard.com/article/companies/icici-bank-blocks-transactions-through-flipkart-wallet-phonepe-117011500600_1.html

Friday, January 13, 2017

SpiceJet Sweetens Partnership with Boeing, Places $22-Billion Order

SpiceJet has announced a fresh order for 150 aircraft from the American aerospace company


Expanding its relationship with Boeing, domestic low-cost carrier SpiceJet has announced a fresh order for 150 aircraft from the American aerospace company. Today's purchase decision, along with an earlier order of 55 aircraft from Spicejet, makes it a $22-billion deal, probably the largest commercial aircraft deal for Boeing in India.
Of the total orders placed on Friday, the order for 100 Boeing 737-8 MAX aircraft is firm, while the purchase of 50 wide-body long-haul aircraft is purchase rights (optional). MAX aircraft allows a five-hour flight and will allow the company to explore new international destinations.
"SpiceJet will have purchase rights for the remaining 50 aircraft, which will be converted depending on the airline's capability to add long-haul aircraft in the future," said Ajay Singh, chairman of SpiceJet. Singh chose Boeing over Airbus for this order. "Boeing gave us an extremely commercial and aggressive offer."
Deliveries for the aircraft will begin in the third quarter of the calendar year 2018 and will be completed by 2024. It is not immediately clear how the company will finance the purchase of these aircraft. "There are various financing models available. One of them is the sale-and-leaseback model. The other models available are funding through EXIM Bank and foreign debt, which are cheaper," said Singh. He said the airline would not opt for debt or equity route to fund the purchases.
"The new aircraft order is on expected lines and significant directionally. A positive and long-term story is likely to emerge with this order," said Kapil Kaul, chief executive officer and director at CAPA, South Asia. Spicejet currently has a share of 12.8 per cent in the domestic aviation market and is looking to expand share. Singh, however, said the company is not after market share and is squarely aiming for profitable operations. "One of the problems of the previous management was that they went after market share, even if by losing money."
SpiceJet posted a record profit of Rs 59 crore in the Q2 of FY17. Singh has worked on cost reduction by renegotiating various contracts and streamlining operations. It has beefed up its ancillary revenues from single-digit a year ago to 16 per cent now. Benign fuel prices also helped. Spicejet's stock gained 2.5 per cent to close at Rs 65.5 on the BSE on Friday even as the market ended flat.
SpiceJet, which was on the verge of a closure in late 2014 has seen a quick turnaround under Singh. Singh, who took over the company from Marans, grew market share from 9 to 13 per cent in 2016 calendar year. The budget carrier has a fleet of 32 Boeing 737 aircraft and 17 Bombardier aircraft. Singh said the company is looking at adding aircraft in their Bombardier fleet too and is speaking to Bombardier, ATR and Embraer.
On Fuel prices
We feel that it (crude oil) will still remain in the range of $60-65 a barrel mark, said Singh. The company said it is comfortable and allows the company to pass minor fluctuations. However, beyond a point, the demand gets impacted. "If it crosses $70, it starts hurting."
Regarding on time performance
"I don't understand what the controversy is all about. This is the same data that had been used by the same airline (Indigo) saying they are number one for years," he said. "I am happy for anybody to evaluate the data. We are only quoting the government data."
On FDI Norms
No other country allows 100 per cent FDI in aviation and it takes away the level playing field. It creates problems in bilaterals. "We are not allowed the same privilege outside. We hope the government will take an appropriate decision," Singh said.


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Reference - http://www.business-standard.com/article/companies/spicejet-sweetens-partnership-with-boeing-places-22-billion-order-117011301102_1.html

Meet Rajesh Gopinathan, the new TCS CEO

Management change came after incumbent CEO N Chandrasekaran was elevated as chairman of Tata Sons


Tata Consultancy Services, India's largest software exporter on Thursday named chief financial officer Rajesh Gopinathan as the new chief executive officer and N Ganapathy Subramanian, head of financial services as the chief operating officer of the company.
The management change came after incumbent CEO and MD N Chandrasekaran was elevated as the chairman of Tata Sons, the group that owns majority stake in TCS.
"Rajesh is one of the rare combinations of business and finance," said Chandrasekaran, who will continue to be on the TCS board, introducing his successor. "He has an end to end perspective on the business. I am very confident he will lead TCS to greater heights".
Gopinathan, 46, is an electrical and electronic engineer from REC Trichy (now NIT, Trichy), graduating in 1987 from the same institute of his predecessor, who completed his masters three years before. After joining TCS in 2001, as a pre-sales consultant, Gopinathan was spotted by Chandrasekaran, who as VP of operations to to help him run strategy for TCS.
Later when he restructured the company as chief operating officer, the soft-spoken Gopinathan was shifted to business finance and later as deputy CFO in 2012 and was mentored by former CFO S Mahalingam. Since 2013, he has led the finance operations at TCS, a role that has transformed the soft-spoken, reserved and a person who would choose his words carefully to become outspoken and confident of his role new but also the roadmap and strategy of the $16.5 billion company.
"I assure you that the vision and roadmap are exactly what you heard from me during the last couple of years . The big thing is that we have worked very closely with Chandra and very much on the same page," said Gopinathan in his first comments in his new role. " More importantly there continuity at a leadership level and we are not expecting any major changes in TCS."
Gopinathan takes over the charge of the company at an interesting stage. The industry is at the cusp of a massive technology disruption and TCS is gearing up to take this change head on.
"This is the first technology change where we are part of it from grounds up. Earlier when the web technologies came, we were still trying to prove customers our credibility. Now we have to show our capabilities, earlier our opportunities were limited because of our size. Now the context is different," Gopinathan said in an interview on December 19.
Chief Operating Officer N Ganapathy Subramaniam or NGS, who is the elder brother of Chandrasekaran, has been a TCS veteran of over 34 years, who has worked in almost every role in the company. He is currently the President of TCS Financial Solutions, a strategic business unit of TCS.

"NGS has progressed across the technology, sales, heading Europe, managing financial services business for a long time and responsible for Deutsche Bank or American Express," said Chandrasekaran. " There is extreme level of confidence from customers for his thought leadership and led TCS product business."


 
 

 
 
Reference - http://www.business-standard.com/article/companies/tcs-names-rajesh-gopinathan-as-ceo-n-g-subramaniam-as-coo-117011201366_1.htmlTCS

Thursday, January 12, 2017

Will Infosys Surprise Street on Q3?

Three brokerages have said the company could cut its revenue growth guidance again in dollar terms

Infosys, the country’s second largest information technology (IT) services company, could see its “weakest” quarterly performance in two years on Friday, when it announces the December quarter results.

“We expect Infosys to report the weakest results and drop its US dollar guidance (growth forecast) to seven-right per cent. We would look for signs of cyclical strength, particularly in US banking or retail, to filter into commentary for 4Q (fourth or March quarter),” brokerage CLSA said. 

At least three brokerages, two domestic and one global, have said the company could cut its revenue growth guidance again in dollar terms, even if it maintains the revised one in constant currency terms. 

Amid pressure over large deal wins in traditional IT services business, coupled with slower growth in the digital technology one, the company has twice reduces its growth guidance for this financial year, finally to eight to nine per cent. 

In a new-year letter to employees, chief executive Vishal Sikka said things like Donald Trump’s US victory and demonetisation here were mere blips. The big impact would be technology disruption. A slow growth projection for a second time has put more pressure on Sikka for achieving his annual revenue target of $20 billion by 2020, with 30 per cent margins and per-employee productivity of $80,000. Also, he has issues such as the H1B visa norms, increasing the minimum wage in the US and local hiring to deal with. 

In Q2 (July-September), net profit grew 6.1 per cent to Rs 3,606 crore and revenue at 10.1 per cent to Rs 17,310 crore over the year-before period. Operating margins, calculated as revenue minus costs, improved by 80 basis points to 24.9 per cent as the company focused on efficiency by increasing work offshore and reducing onsite.

Here are five things investors should watch for: 

Deal wins during Q3: The company has been seeing pricing pressure and delay in deal wins. The RBS contract rampdown has impacted two quarters, back to back. “Investors should look for deal wins in the third quarter and total contract value,” says Ashish Chopra of brokerage Motilal Oswal. The contribution of large deals in its revenue is crucial for $20-bn revenue by 2020. 

Measures for macro economic challenges: After Donald Trump’s presidential election rhetoric to bring back jobs to the US, a Bill has been proposed by legislators there for a minimum pay hike for H1B visa holders from $60,000 to $100,000 yearly. Since the company gets a significant share of its IT services revenue from there and deploys Indians onsite, the management’s comments on how to address such challenges is important, said Kawaljeet Saluja, research analyst of Kotak Institutional Equity. 

Maintaining margin: At least three brokerages have said Infosys might see a decline in margin from its earlier outlook of 24-25 per cent, on the back of seasonal impact and RBS ramp-down. One should take a note of its margin projections for the whole financial year. 

Realisation on investments in new areas: The company has invested in the past three quarters on automation and digital technology, such as acquiring Danish artificial intelligence firm UNSILO to am unmanned air vehicle firm, ideaForge. It is important to hear the company’s commentary on profitability from these investments over the next few quarters.

Vertical-wise improvement: Infosys has already said it has pricing pressure from BFSI (banking, financial services, insurance) clients and some other verticals. And, on a “softness” in the US. “Management commentary on the operative environment, especially in BFSI after comments around potential softness in US, is important to watch,” said Pankaj Kapoor, research analyst, JM Financial. Investors should also look at sequential change in constant currency realisation.

Reference - http://www.business-standard.com/article/economy-policy/will-infosys-surprise-street-on-q3-117011200064_1.html

Tuesday, January 10, 2017

Cyrus Mistry Lacked Urgency to Resolve 'Legacy Issues': Tata Sons

As per petition, board had been asking Mistry to address continuing losses of TTSL for over 3 yrs

Tata Sons, in its petition filed as respondents in the National Company Law Tribunal (NCLT), has alleged that ousted chairman Cyrus Mistry seemed focused only on the problems from the past and blamed them on “legacy issues”, and didn’t do enough to resolve them. NCLT is hearing a petition filed by Mistry’s investment firms alleging mismanagement and oppression of minority shareholders of Tata Sons and seeking the ouster of the current management of Tata Trusts and Tata Sons. “Even after identifying these hot-spots, the execution and follow-through on these matters was slow and lacked a sense of urgency,” said Tata Sons in its petition filed on Friday. 

According to the petition, the board had been asking Cyrus Mistry to address the continuing losses of Tata Teleservices Limited (TTSL) for over three years as it was consuming the cash flows generated by other profitable companies in the Tata Group, with little hope of developing a sustainable profitable position in an increasingly competitive industry. However, as opposed to being decisive and taking a write-down or reducing the debt burden, Mistry kept optimistically holding out for a merger that might save the business, which has yet to materialise. The losses in the business, consequently, kept mounting. “This inability to be decisive to cut losses and resolve issues was a significant weakness in Cyrus Mistry’s leadership,” adds the petition.

Talking about other “legacy issues”, the petition says that all business and commercial decisions which have been taken by the operating companies like the Corus acquisition by Tata Steel and the launch of Nano Car by Tata Motors were taken by the board of directors of these operating companies which is not the legal yardstick on which efficacy and rationality of commercial decisions can be tested. It has submitted that a commercial judgment going wrong cannot be a ground for oppression or mismanagement. 

The petition also puts onus on Mistry, who had led the executive management of Tata Motors for almost two years after the demise of Karl Slym, the former managing director and CEO of Tata Motors. During those two years, Tata Motors invested further in the Tata Nano project so as to develop newer variants of the Nano such as the GenX Nano. Given that the management of Tata Motors at such time also felt that the Nano project held potential and proceeded to invest in it, it was clear that the petitioners are incorrect to assert that the project is not being shut on account of emotional reasons involving Ratan Tata.

Regarding the Corus acquisition, the petition says that it involved a highly competitive bidding process, in which Tata Steel participated along with Brazilian steel company Companhia Siderúrgica Nacional (CSN). Tata Steel’s winning bid was GBP 608 pence per share, while CSN’s final bid was GBP 603 pence per share. “There is no basis to state that the acquisition of Corus was “done at a substantial premium”,” says the petition. Admittedly, the final bid price was higher than the initial offer price quoted by Tata Steel to Corus, this was merely a function of value discovery through a competitive bidding process. 

A part of the acquisition cost of Corus was also funded by a rights issue by Tata Steel to existing shareholders of Tata Steel (including Tata Sons). The rights issue was fully underwritten by Tata Sons. Cyrus Mistry was on the board of directors of Tata Sons at the time when Tata Sons agreed to subscribe to shares in the rights issue and was a party to the decision. 

“Neither were there any deliberations at the board meetings of Tata Sons, nor do the board minutes of Tata Steel indicate that Cyrus Mistry had objections to the decision by Tata Sons to provide funds to Tata Steel for the Corus acquisition,” says the petition. The petitioners and Cyrus Mistry were aware of this transaction and did not object to it at the time. 

Tata petition says: 
· Mistry’s petition is based on alleged acts of commercial mismanagement which were never questioned in the past 
· Commercial judgment going wrong cannot be a ground of oppression or mismanagement
· Allegation of commercial mismanagement is time barred and also incorrect.
 
Reference - http://www.business-standard.com/article/companies/cyrus-mistry-lacked-urgency-to-resolve-legacy-issues-tata-sons-117011000029_1.html

Monday, January 9, 2017

Air India rated as world's third-worst airline, co says report fabricated

Air India says report seems to be fabricated and will be investigated

For those who insist that travelling is all about the journey, we say this: It really depends on which carrier you’re flying.

Aside from variations in cabins and service quality, there’s the major concern of how likely you are to get delayed. Fly on the wrong airline and your odds of a delay are as high as 55 per cent; choose the right one and that number shrinks way down to just 11 per cent. That’s enough to make or break a vacation's spell, no matter where you’re sitting on the plane. But how do you know which airlines to steer clear of, and which ones to prioritise?

Every year, the aviation insights company FlightStats puts together a list of the international airlines with the best on-time performance records. 

In the worst 10 international airlines of 2016 list, based on on-time performance records, Air India comes third after El Al and Icelandair. The best list was topped by KLM Airlines.  Iberia and JAL came second and third, respectively.

 Replying to a query on the inclusion on the worst airlines list, Air India in a statement said, “We totally disagree with the report published by an agency about AI. Initially, it seems that the report is fabricated so AI management will investigate the report till the end.”  

According to Jim Hetzel, vice -president of aviation and distribution at FlightStats, compiling the list is no small feat. The only comparable resource is the monthly report (PDF) that the US Department of Transportation puts out on major domestic carriers, relying uniquely on self-reported data from the biggest carriers in the United States; it doesn’t factor in any of those airlines’ international flights.

 “We stitch data together from 500 different sources,” said Hetzel, likening the process to creating a giant quilt.

Among those sources are flight-tracking and positional services, airport runway times, radar services, airline records, airport data, and such governing bodies as Eurocontrol and the Federal Aviation Administration. “All of these pieces come in in different formats, all with different elements of value, and a lot of times the sources don’t agree,” said Hetzel as to why his business is so unrivaled.

“We’ve built the technology and logic to sort that out and validate information across multiple sources. It’s a pretty interesting process,” he said.

As for this year’s results? Hetzel says they’re the best numbers yet. “I’m seeing a big improvement in overall performance across the board as the industry becomes more and more competitive,” he said, noting that on-time performance has become a major selling point for airlines. “It’s a huge win for travellers.”  

In an especially impressive coup, Delta still ranked in the top 10 carriers after suffering a days-long system outage in the summer that made headlines around the world. Other results go against the grain of local reputations for punctuality. Latin American carrier Copa would have taken the top spot on this list if its route network were larger; it didn’t qualify it as a truly international carrier because it doesn’t substantially serve three or more regions, with a substantial route network. And Swiss fell in the middle of the pack, notwithstanding Switzerland's identification with precision clockwork.
Reference : http://www.business-standard.com/article/companies/air-india-rated-as-world-s-third-worst-airline-co-says-report-fabricated-117011000048_1.html

Sunday, January 8, 2017

Snapdeal to Push Pedal on Growth in 2017: Kunal Bahl

In 2017 the focus will continue to be on economics, experience and growth, says Bahl

E-commerce major Snapdeal is geared up to push the pedal on growth by focussing on "economics and customer experience" this year, its co-founder and CEO Kunal Bahl said.

Snapdeal, which is locked in an intense battle with rivals, Flipkart and Amazon, had started re-hauling its machinery last year, and hopes to make return on the investments this year.

"In 2016, we have made great progress on achieving balance (between economics and experience)... In 2017, the focus will continue to be on economics, experience and growth.

Just that (now), you should expect us to press the pedal harder on growth," Bahl said.

Founded in 2010 by Kunal Bahl and Rohit Bansal as a deals site, Snapdeal is backed by investors like Alibaba Group, SoftBank, Foxconn and Tatas. It is estimated to have raised over $1.7 billion in multiple funding rounds.

It has also strengthened its operations through acquisitions and investing in companies like GoJavas and PepperTap.

On being asked about whether reports of writing Snapdeal off from competition in the Indian market, Bahl said he doesn't worry about such news.

"At the end of the day, we have hundreds and thousands of customers buying from us.... If the number is growing rapidly that's really what we care about. The reports are interesting, they are sometimes insightful and they tell us things we don't know. Sometimes they re-validate things you know. What they are not are necessarily is hard facts," he said.

Bahl said the company has taken a number of steps last year, including a re-branding exercise to improve customer experience and also move towards profitability.

Citing reports, Bahl said Snapdeal was the fastest in terms of delivery among competitors, which indicates that its investments are paying off.

"...us being fastest in terms of delivery and there were many other signals that have emerged that based on the investments and focus we have had on experience, we are making good progress versus the market and 2017 that will continue," he added.

About the re-branding activity undertaken in September, Bahl said the entire exercise required a lot of work and "wasn't about just turning a few knobs".

"It required a lot of network re-design on supply chain, investments in last mile, lot of training, lot of technology that we had to do build around supply chain... So lot of critical decisions you have to make. In aggregate, some went well, some didn't go well but I think we have got a good balance," he said.


Reference - http://www.business-standard.com/article/pti-stories/snapdeal-to-push-pedal-on-growth-in-2017-kunal-bahl-117010800268_1.html

Saturday, January 7, 2017

SC Order Puts Aircel-RCom Deal on Hold

Bench said other averments made by Swamy will be dealt with at a later stage

Malaysian business tycoon T Ananda Krishnan and other foreigners accused in the Aircel-Maxis deal, who have been evading court summons and warrants, on Friday faced the heat of the Supreme Court, which restrained his Maxis Group from “selling or trading” the licences of 2G spectrum.

The court said it “cannot tolerate a person using India’s national resources and evading the law”.

Krishnan and former Telecom Minister Dayanidhi Maran, his brother Kalanithi Maran and five others were charge-sheeted by the Central Bureau of Investigation (CBI) in a probe related to the money trail of around Rs 600 crore allegedly used as bribe in the Aircel-Maxis deal.

The Maran brothers have been accused of pressuring and coercing Chennai-based telecom promoter C Sivasankaran, who got 2G licences in 2006, to sell his stakes in Aircel and two subsidiary firms to Malaysian firm Maxis Group.

“We cannot tolerate a person using national resources such as spectrum (of India) and not honouring the court notice. You (Krishnan) cannot evade the process of law. You must come here from Malaysia and face the law, if you want to use the spectrum,” a Bench headed by Chief Justice J S Khehar said.

The apex court also stayed the “selling and trading in the 2G spectrum” under its consideration, which was originally granted to Aircel in 2006 and said that failure of Krishnan and the other foreign accused to submit before a court of law here would entail passing of the proposed order of restraining the earning of any revenue by using the 2G spectrum licences.

The Bench, also comprising Justices N V Ramana and D Y Chandrachud, asked Krishnan, Malaysian national Augustus Ralph Marshall and two accused companies - Malaysia’s Maxis Communication Berhad and Astro All Asia Networks Plc - to put in their appearance before the apex court within two weeks. Irked over the non-execution of summons and warrants against the Malaysian businessman and his firms, the apex court said it proposes to restrain the earning of any revenue by the company from 2G spectrum licences.

“It is imperative to ensure, in our considered view, that the process of law should not be permitted to be frustrated by non-service of summons on the accused. In order to enforce the presence of accused Augustus Ralph Marshall, Ananda Krishnan, Astro All Asia Networks and Maxis Communications Berhad, Malaysia, we propose to restrain, earning of any revenue, by using the 2G spectrum licences, which were originally granted to Aircel Telecommunications,” the Bench said. The apex court further said that the instant order is to bring to the notice of the accused the proposed action that is likely to be taken.

The Bench asked the telecom ministry to devise ways and means to avoid any adverse consequences following the court’s order to millions of Aircel subscribers by provisionally transferring them to some other service provider, in case the necessity to pass the proposed order arises. It directed the Centre to publish its instant order in two leading newspapers in Malaysia and said that after the proposed order is passed, it would not be open to any of the accused to raise the objection of monetary losses.

The Bench posted the matter for further hearing on February 3 and said other averments made by Bharatiya Janata Party leader Subramanian Swamy will be dealt with at a later stage. Swamy, in his petition, has alleged that Foreign Investment Promotion Board clearances to Aircel-Maxis deal were granted illegally.

Special 2G prosecutor Anand Grover said that hearing on framing of charges in the trial court in Aircel-Maxis deal case is scheduled on January 9. During the hearing, advocate Prashant Bhushan alleged that Maxis Group owner Ananda Krishnan was attempting to exit India after being charge sheeted by CBI for fraudulently ‘force buying’ Aircel for using the spectrum. “We cannot say today that it was a fraud, as there are all allegations at present but the process of law should be honoured,” the apex court said and asked amicus curiae and senior advocate K K Venugopal to suggest ways on what could be done if parties refused to appear before the court.

On October 29, 2014, the special 2G court, for the first time, had summoned former Telecom Minister Dayanidhi Maran, his brother Kalanithi and six others, including Malaysian business Krishnan after taking cognisance of the CBI charge sheet. After two summons were not executed, the special 2G court had, on September 24, last year issued open-ended non-bailable warrants against Krishnan and Marshall.

Reference - http://www.business-standard.com/article/companies/sc-order-puts-aircel-rcom-deal-on-hold-117010700042_1.html

Thursday, January 5, 2017

Google Moves into Augmented Reality Shopping with BMW, GAP

Two new apps for Tango released at CES but with limited reach



Google is rolling out a real world application for its most ambitious virtual reality effort: letting shoppers see what they might buy without leaving home.

The AlphabeMt Inc unit on Wednesday introduced two new retail partnerships, with BMW and GAP Inc, deploying its 3D-scanning project called Tango. The technology uses cameras and sensors in mobile devices to overlay digital images in physical space -- akin to the hit mobile game Pokemon Go. The retail deals announced at the consumer technology show CES in Las Vegas hint at Google’s broader ambition to merge its mapping capabilities with its core business of facilitating commerce.

As virtual and augmented reality technology rapidly improves, analysts predict the retail industry may be one the biggest beneficiaries. IDC estimates the market for the technologies will explode from about $5.2 billion in 2015 to $162 billion in 2020. 

Car dealerships will be “one of the longer-term, more profitable use cases,” said IDC analyst Chris Chute, as automakers look for way to reach customers who are increasingly less likely to enter traditional outlets.

Virtual showroom

With Google, BMW is testing a new app that displays an i3 city vehicle and i8 sports car on smartphone screens. Car shoppers can walk around the superimposed vehicles, placing it to look life-size inside their driveway or garage. Users can choose from six different colors, four types of trims and wheels, all appearing in a high-resolution image. 

The Munich-based luxury automaker said the mobile app will be available at dealerships in 11 countries. “It’s possible we’ll develop a kind of library of models for this app,” said Stefan Biermann, head of innovations for sales for BMW.

At a recent presentation in Munich, the display image of an i3, even on a small phone screen, was convincing enough for users to duck and lift their legs to step inside the vehicle, where they could push a button to turn on the lights and the radio.

“We see a lot of use of this technology in retail, for measuring your garage or buying big-ticket items like kitchens for example,” Eric Johnsen, who heads business development for augmented reality at Google, said at the event.

Bloomberg News reported earlier that Google plans to use the indoor mapping capability of Tango to generate advertising revenue. Johnsen said Google isn’t getting revenue from sales with its newly announced partnerships, but declined to comment further on business plans.

Slow going

On top of the BMW app, Google announced two more developments for Tango on Wednesday. A new app allows shoppers to test clothes from the GAP brand using Tango. And Google added a new hardware partner: The Zenphone from Asustek Computer Inc is now compatible with Tango’s technology.

However, both announcements reveal the limitations of Google’s efforts. For one, there aren’t many consumers that can try it out. The Asus Zenfone is only the second model to enable Tango, following a device from Lenovo Group Ltd.

And it’s still incomplete for consumers that try the technology. With the mobile app for GAP, for instance, shoppers try on outfits using a 3D digital avatar, rather than superimpose the clothes on their bodies. The latter tactic might arrive eventually, but the tech needed is still in its infancy.

“Producing content for these mediums is extremely hard,” said Shanna Tellerman, founder of Modsy, a startup that uses three-dimensional technology for e-commerce. “It often looks a little bit janky.”

Google is aware of the problem. In addition to challenges with realistic rendering, mobile 3D mapping is constrained by difficulties imposed by lighting and geographic space, said Johnny Lee, director of engineering for Tango. The gap between expectations of the technology and its reality can do more harm than good.

“When people think about augmented reality, they think of science fiction quality effects,” he said.

Limited audience

Google
That’s also the rationale behind Google’s cautious implementation of Tango on devices, Lee explained. While the company ultimately plans for the tech to function inside every mobile device, it now doesn’t reach a vast majority of Android smartphones.

Hardware changes demanded from Tango’s sensors also may give Google’s manufacturing partners pause. 

However, that might change if the tech becomes ubiquitous. Other software companies — Microsoft Corp., Facebook Inc and Snap Inc — are investing heavily in augmented and virtual reality. Apple Inc hasn’t revealed any plans for AR, but Chief Executive Officer Tim Cook has touted the technology publicly multiple times. It’s unlikely Apple would allow Google’s Tango to operate on its iPhones. 

E-commerce giant Amazon.com Inc. is certainly thinking about virtual reality shopping too, said Chute, the IDC analyst.

All these companies, however, must grapple with the dual challenge of mastering the necessary tech and, more critically, finding an actual market.

“Hardware ain’t easy,” Chute said. “What works in a closed environment, in (Silicon) Valley, doesn’t necessarily work in the real world.” Bloomberg.
 
Reference -  http://www.business-standard.com/article/companies/google-moves-into-augmented-reality-shopping-with-bmw-gap-117010600028_1.html

Tuesday, January 3, 2017

Paytm Chooses UP for Payments Bank Launch in February

The firm will launch its services first in Uttar Pradesh and then expand operations to the Northeast

After a long wait, online mobile wallets major Paytm is finally going to launch its payments bank in February this year. The company will launch its services first in Uttar Pradesh and then expand operations to the Northeast.

Paytm founder and CEO Vijay Shekhar Sharma told Business Standard in the first phase the bank would have around 100,000 banking correspondents. “In the first phase, we are targeting as many as 200 million warrant, current and savings accounts. While normal banks target savings and current accounts, we will target the warrants as well.”
 
Paytm payments bank was waiting for the final nod from the Reserve Bank of India (RBI) for the last five months to start the operations.

In the last one year, Paytm postponed the opening of the payments bank six times. Sharma in a blog on Tuesday announced the launch of the bank.
 
The payments bank would start its operations with Rs 400-crore initial capital and the first branch would be set up in Noida, UP. The first branch in Northeast would be opened in Guwahati.

Paytn

 
“Exactly three years ago, on January 3rd 2014, we launched our mobile wallet — Paytm. Today, Paytm has become the category leader and changed the way India pays. From villages to cities, from corner vegetable stalls to milk booths, small shops to large retailers, everyone embraced the new way to pay by Paytm. Now, we are embarking on a new and even more exciting journey,” Sharma wrote in his blog.

“Today, Reserve Bank of India gave permission to formally launch Paytm Payments Bank. We can’t wait to bring it in front of you,” Sharma wrote.

“At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of un-served or underserved Indians. With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking,” he added.

Last year, during demonetisation Sharma was in Hong Kong for a stake sale for setting up the bank.

“When demonetisation happened, I had not got my money to spend on payments bank, which means during initial five days I was a fish out of water and I had to sell my shares to be sold to complete the process, as the bank approval was pending. Around Rs 220 crore has been put into the bank of which Rs 120 crore has come from my side,” Sharma had told Business Standard in an earlier interview.

Eleven applicants received payments bank licenses from RBI. After the initial euphoria, three recipients withdrew their applications. However, Paytm hopes to make it one of the biggest businesses in its portfolio and the second-largest revenue earner after wallets.

Airtel Payments Bank Limited was the first payments bank in India to go live in Andhra Pradesh and Telangana and Rajasthan, where over 100,000 customers opened savings accounts in less than two weeks of commencement of services.


Reference - http://www.business-standard.com/article/finance/paytm-chooses-up-for-payments-bank-launch-in-february-117010301067_1.html

Monday, January 2, 2017

Automation, Digitisation Bigger Disruptors Than Trump: Vishal Sikka

Sikka cautions that most of the work done Infosys can already be done with AI systems

Infosys chief executive Vishal Sikka (pictured) has cautioned that the tidal wave of automation and technology-fuelled transformation could make the traditional information technology services obsolete. And, asked employees to shift their behaviour to adopt to shifts in technology. 


“The mountains ahead are tall ones. There is no other way but to get there and go... if we don’t, we will be made obsolete by the tidal wave of automation and technology-fuelled transformation that is almost upon us,” Sikka, the first non-founder chief executive, wrote in a New Year letter to employees. 

Sikka, whose letter had the subject: ‘Answers are blowing in the wind,’ cautioned that most of the work done by firms such as Infosys can already be done with artificial intelligence (AI) systems.

“Our path forward is very clear – we need to harness the dual forces of automation and innovation. We must embrace automation to become more productive in the work that we do and with the resulting capacity, focus our attention upwards towards innovation, both for ourselves and our clients. The foundation for all of this is our culture, our values and especially our infrastructure for life-long learning,” he said. 

Infosys, among the earliest advocates of embracing automation and use of AI to deliver services, has seen the company struggling to shift the company from focusing on the declining traditional services business, which generates four of five dollars currently, to new areas such as digital. While clients are spending more money on newer areas, contracts have now become smaller and require consulting at customer locations – unlike the traditional business where long-term multi-million contracts were bagged by Infosys and rivals TCS and Wipro. 

“We will not survive if we remain in the constricted space of doing as we are told, depending solely on cost-arbitrage, and working as reactive problem-solvers,” he said.


“Often, teams deliver only what is told without going beyond the given scope and with a lackadaisical attitude towards greater value creation. This can no longer be the case.” 

Analysts are keenly watching Infosys results, expected on January 13, when the company is likely to throw light on business impact due to technology shifts and change in policies from US President-elect Donald Trump, who ran his campaign against offshoring jobs.

Sikka alluded to Trump as well as the demonetisation effort by Prime Minister Narendra Modi, where eight out of 10 employees work but said the biggest impact would be due to technology disruption. 

“Brexit, the American Presidential election, demonetisation, cyber security, the refugee and terrorism situation were the events that seriously changed the way we viewed the world, but perhaps the biggest disruption is the one that has been proceeding irreversibly and unstoppably in our times is the accelerating force of technology and digitisation,” he said.
 
Reference - http://www.business-standard.com/article/companies/automation-digitisation-bigger-disruptors-than-trump-vishal-sikka-117010201136_1.html

Navy Cut, Gold Flake price hike may hit ITC's sales

Sales of these two brands have declined 20-30% after the price hike

The decision by ITC to increase the retail prices of its two best-selling brands – Navy Cut and Gold Flake – by 14% could dent sales in the near term as smokers might switch over to other brands. This comes at a time when cigarette sales are already aggravated by demonetisation. 

According to cigarette retailers across the country, sales of these two brands have declined 20-30% after the price hike but uncertainty over future sales volume looms in the era of demonetisation. 

“Cigarette sales normally fall in the first fortnight after a price hike is announced and then returns to normalcy. But in the current situation, when sales are already down, customers might shift over to lower priced brands,” said Subhash Chaurasia, owner of Delhi-based Deepak Cigarette Retailers. 

Mohammad Hussain, a cigarette wholesaler in Kolkata said, “Cigarette sales are down November onwards and we were expecting a recovery in mid-January. However, the price increase has reduced the sales of these two brands”. 

In the immediate after demonetisation was announced, cigarette sales fell 50-60% in Delhi and 40% in Kolkata. Sales in Mumbai and south India dropped 30-40%. One month after demonetisation, although cigarette sales picked up, it hasn’t returned to normalcy.  

According to dealers, the fall in sales of Gold Flake, which commands an enormous customer loyalty, was unexpected.

“The Gold Flake brand has been one of the most popular brands and despite the price hikes in the past, smokers of this brand stuck to it,” said Mohammad Aarif, owner of Aarif’s Point, a tobacco seller from Mumbai. According to him, customers are buying other brands now. 

“Some of my regular customers who used to buy Gold Flake are enquiring about other brands in a ~50-80 price bracket and some even plan to switch over,” said Sanjib Nag, proprietor of Sabita Store in Kolkata.

Navy Cut and Gold Flake brands enjoy immense popularity with the smokers. However, according to retailers, price hikes over the years following the Union Budget had resulted in a large section of consumers shifting over to the lesser prices varieties such as Flake and Silk Cut. 

To counter the shift away from these brands, ITC previously reduced cigarette sizes of Navy Cut and Gold Flake. 

While ITC declined to cite any reason for the sudden price hike, analysts and retailers are of the view that this move is in anticipation of the spike in excise duty, which normally rises sharply in the Budget.

“After the last Union Budget, ITC did not raise the price for these two brands and limited the price hike for the upper price bracket only. So, this was expected”, said Abneesh Roy, a research analyst at Edelweiss Securities.

However, after the 2016 Union Budget, ITC had reduced the cigarette size of Flake and other budget brands instead of opting for a price hike.
 
An industry official opined that since ITC commands a huge brand portfolio and its sales volumes far outpace competition, it can afford to raise prices of some brands to mitigate the higher cost of other brands. 

The official cited above has questioned the company’s decision to increase price before the 2017 Union Budget is announced. 

“What will ITC do if the excise duty hike is higher than it has anticipated? Will it again increase prices after the Budget? In case it does, it will not be a good strategy.” 

ITC’s competitors Godfrey Phillips, Golden Tobacco and VST Industries are not considering price hike before the 2017 Union Budget.

Reference - http://www.business-standard.com/article/companies/navy-cut-gold-flake-price-hike-may-hit-itc-s-sales-117010100603_1.html

Saturday, December 31, 2016

2016 For Start-ups: Of Correction & Consolidation

Valuations had run ahead of fundamentals and investors slowed down from mid-2015

Year 2016 was depressing for start-ups, as they were forced to tighten their belts, reduce cash burn and extend their runways. Many start-ups, which had bloated their teams with easy money, found it difficult to shrink and fire people. Few ventured out to raise money as investors had turned wary and chose to focus on their portfolios. The funding boom from mid-2014 to mid-2015 was led by excess liquidity as investors raced to acquire a pie of the Indian consumer internet story. This drove valuations and saw start-ups raising $6.93 billion in 2015.

Valuations had run ahead of fundamentals and investors slowed down from mid-2015. Investors asked start-ups to conserve cash and improve unit economics. Start-ups that ran out of money or did not have a clear business model shut shop; some tried to pivot, while others with good teams or technology got acquired by more well-funded start-ups. Year 2016 saw 162 shutdowns and 212 mergers and acquisitions. This will continue. Year 2017 may see down rounds (when a firm raises money at a valuation lower than the previous funding round) as start-ups which had raised capital in 2015 come back to raise money.



 


 start




Reference - http://www.business-standard.com/article/companies/2016-for-start-ups-of-correction-consolidation-116123100022_1.html

Wednesday, December 28, 2016

Jet Airways Veers off Runway at Goa, Over 150 Passengers have Lucky Escape

Nose wheel snag, human error may have led to mishap

A Jet Airways plane with about 150 passengers and seven crew members, bound for Mumbai, veered off the runway at Goa airport on Tuesday.


Fifteen passengers were hurt and three of them are in hospital. The Aircraft Accident Investigation Board is probing and will check the digital flight data recorder, runway surface conditions and the pilots’ work patterns.

According to experts, pilot error or malfunctioning in the nose wheel steering could have been the cause.

It happened when the Boeing 737 aircraft was readying for take off. Another reason could be malfunctioning in the aircraft autothrottle system, which provides a thrust to the engines in flight.

“We maintain insurance and third-party liability cover and to that extent, our losses are covered,” Jet’s acting chief executive officer Amit Aggarwal told shareholders at the company’s annual general body meeting.

The aircraft is more than eight years old and on lease. Jet sent medical, engineering and safety teams to Goa to oversee the passengers’ treatment and assist the airport authorities, as well as the regulatory agencies, in investigation.

According to a senior commander, an incorrect application of take-off go around thrust can lead to runway excursions. 

“If the switch is pressed at an inappropriate time, before stabilising of thrust and proper line up on the runway, the aircraft can achieve take-off thrust and lose directional control,” he said.

"I believe that in light of the Boeing 737NG in the past having issues with nose wheel and main wheel there could also be a possibility of the nose wheel steering or the tiller being unresponsive to pilot input thereby preventing the aircraft from being aligned with the runway heading in time for take-off," said aviation consultant Mark Martin

“A significant factor that emerges with this incident in Goa is that morning winds at Dabolim Airfield tend to gust between 15 Kts (28 km/per Hour) to 30 kts (68 km/per hour) during between 0500 and 0900 which as we know as the “Sea-Breeze-Land-Breeze” phenomena; and as a result, this may have also acted as an external force factor with deviating Boeing 737off its assigned runway heading and eventually off the runway," Martin added.


Reference - http://www.business-standard.com/article/companies/jet-airways-veers-off-runway-at-goa-over-150-passengers-have-lucky-escape-116122700842_1.html

Monday, December 26, 2016

M&M Steers SsangYong to Turnaround Road

Tivoli in driver's seat for success story

It took long but automobile major M&M has brought its South Korean subsidiary, SsangYong, on the road to financial turnaround. 

SsangYong, acquired by the Indian utility vehicle and tractor major for Rs 2,100 crore in 2010, has reported a net profit of 23 billion South Korean won (Rs 128 crore) during the nine months ended September — the first time since 2007. In 2015 (Jan-Dec), the loss was 61.9 billion won.

SsangYong posted net profits for the four consecutive previous quarters on strong sales growth. The change is helped by rising volumes, led by the Tivoli, a new SUV launched in January 2015. Total sales volume during the nine months (Jan-Sept) rose 7.5 per cent; revenue grew 8.8 per cent. It showed a continued journey towards sustainable profitability, said Pawan Goenka, managing director, M&M.

Tivoli has turned out to be the best-selling vehicle from SsangYong in its 62-year history. In 2015, this compact SUV contributed  44%to total sales of 144,764 units. A total of 63,693 Tivolis were sold in 2015, broking the record held by another, Rexton, which had sold 54,274 units in 2004. Tivoli is breaking its own record in 2016, by selling more than 76,000 units till November.

Goenka, also the chairman at SsangYong, said the focus post-acquisition had been to significantly invest in new products, brand and market development, cost reduction and the ability to derive synergies with Mahindra in various aspects such as platform sharing, sourcing, and R&D. “There has been significant progress in all these areas and we continue to look for more opportunities in each area,” he said.

M&M
Early this year, Goenka had said there would be an investment of $1 billion to develop new products at SsangYong over the next three-four years. “We have a fairly aggressive plan over the next four years and will work on various levers for the financial turnaround,” he said.

SsangYong, which used to export more vehicles than it sold in South Korea for years, saw a trend reversal last year when its domestic market became bigger. Exports had taken a beating due to currency challenges in the key market, Russia, where a weakening local currency reduced demand for imported vehicles. In early 2015, the company suspended exports to Russia. The focus on the domestic market increased. The firm sold 99,664 vehicles in the home market in 2015, 44%more than in 2014.

Overseas, the main challenge is in managing the foreign exchange risk in the current volatile macro-environment, building a distinctive brand and maintaining competitiveness, says Goenka. Many new markets have grown to become significant contributors to export volumes and among them, the notable markets are the UK, Europe, and Iran.


Reference - http://www.business-standard.com/article/companies/mahindra-mahindra-steers-ssangyong-to-turnaround-road-116122600955_1.html

Auto Firms' Cash Reserves Zoom to Rs 46,000 Crore on Rising Profit

Five companies have improved their cash and cash reserves by 23% in the first half of 2016-17

The country’s top five auto companies, including Maruti Suzuki, Bajaj Auto, and Hero MotoCorp, are sitting on a large cash reserve of Rs 46,000 crore, thanks to increasing profitability. The five companies have improved their cash and cash reserves (including current investments) by 23 per cent in the first six months of 2016-17, taking the reserves in most of them to a new high.


Maruti Suzuki, the country’s largest carmaker, has a cash reserve and investment of Rs 23,800 crore as of September 30, Rs 4,600 crore more than it had on March 31, 2016, making it an increase of 24 per cent.

A company spokesperson said the increase was due to the cash profit earned during first half (H1) and gains on account of a fair valuation of investments under the new accounting norms that kicked in from April 1, 2016.

Maruti’s net profit in H1 of FY17 jumped more than 43 per cent to a record Rs 3,884 crore.

The spokesperson said the company had preserved cash to expand its sales infrastructure and logistics, introduce new models and invest in research & development (R&D), as it gears up to sell two million vehicles a year from 2020.

It will put in an additional Rs 2,000 crore in the Rohtak R&D facility by 2019, taking its investment to Rs 3,800 crore. Maruti Suzuki, which is controlled by parent Suzuki, is not making investments in the Gujarat plant. Suzuki is making investments, and capital expenditure (Capex) of nearly Rs 6,000 crore has been sanctioned. Suzuki will sell vehicles to Maruti at the cost price and the latter will retail them. This strategy has been criticised by proxy advisory firm IiAS, which said that “excess liquidity” in the form of an investment portfolio was detrimental to shareholder interest, as Maruti Suzuki’s portfolio has generated lower returns than the return on capital employed.

Pune-headquartered two-wheeler major Bajaj Auto is holding cash and cash reserves worth Rs 11,398 crore as on September 30, 25 per cent more, compared to March 31. Bajaj reported the highest half-yearly turnover; Ebitda (earnings before interest, tax, depreciation and amortisation) and profit in H1. Its consolidated profit in H1 was a record Rs 2,240 crore.

Soft raw material prices and improving volumes have helped most auto companies post record profits in H1, though second half may bring challenges due to demonetisation. Some may turn close-fisted as regards cash usage.

An analyst said a company preferred to hold cash to meet exigencies and be prepared for potential investments. “This is especially true of Indian information technology firms.”

The cash reserve of the country’s largest two-wheeler maker, Hero MotoCorp, increased to Rs 4,000 crore as on September 30, against Rs 3,700 crore on March 31. The company invested Rs 850 crore in its R&D facility in Jaipur, which became operational early this year. Its Capex of Rs 1,300 crore in 2016-17 will be in the upcoming plant in Gujarat.

Eicher Motors, which manufactures Royal Enfield motorcycles, has had the sharpest growth in the cash position. During the six-month period ending September 30, its cash reserve surged more than 39 per cent to Rs 2,945 crore. This comes again on the back of a record profit in H1. The company’s Capex will be Rs 1,000 crore this year.

Utility vehicle and tractor major Mahindra & Mahindra (M&M) has also seen a 20 per cent surge in cash (including current investments) to Rs 3,945 crore as on September 30. Its profit grew 20 per cent in H1 to Rs 2,118 crore on the back of improving tractor and sport utility vehicle sales.

Maruti Suzuki announced a dividend of Rs 35 a share in 2015-16, 40 per cent more than 2014-15. The trend is likely to continue this year as well. Eicher doubled its dividend to Rs 100 last year. Some are trying to bring down borrowings.

M&M last year repaid Rs 1,298 crore from internal accruals.
 
Reference - http://www.business-standard.com/article/companies/auto-firms-cash-reserves-zoom-to-rs-46-000-crore-on-rising-profit-116122500648_1.html

Tuesday, December 20, 2016

Apple Seeks Incentives for Manufacturing in India

India's smartphone market is next year expected to overtake that of the US as the world's second-largest behind China

Apple Inc is discussing with the Indian government the possibility of manufacturing its products in the country, according to two senior government officials, as the company seeks to grow its sales and presence in the South Asian nation.

In a letter to the government last month, the firm outlined its plans and sought financial incentives to move ahead, the officials told The Wall Street Journal. Senior trade ministry authorities in recent weeks met to discuss the matter. An Apple spokesperson didn’t respond to requests for comment.

Making goods such as iPhones locally would allow Apple to open its own stores in India, helping build its brand in a country where it has just a tiny slice — less than five per cent — of a booming smartphone market. 

India’s smartphone market is next year expected to overtake that of the US as the world’s second-largest behind China, according to research firm IDC. For years, sales in China fuelled Apple’s expansion, but now growth there is slowing.

“Apple wants to emulate its China model in India,” said one of the officials with direct knowledge of the matter. “The company wants financial incentives, which the concerned government departments are looking into,” the official said.

Apple Chief Executive Tim Cook said in May that the company had no plans to set up a factory in India, though the Indian government later said Cook discussed the issue with Prime Minister Narendra Modi when they met in New Delhi.

Under Modi, India has been eager to attract investment and create the manufacturing facilities and jobs the country needs to sustain long-term growth.

Apple in January said it had sought government permission to open its own stores in India, which analysts say would help it gain exposure in the country.

The government in June loosened foreign direct investment restrictions in several sectors, saying foreign-owned single-brand retailers such as Apple could open stores provided they purchase at least 30 per cent of their manufacturing materials from Indian vendors after three years.

Still, that could prove a challenge since there aren’t many high-end phone-part makers in India to buy from.

Manufacturing goods in India would allow Apple to meet its local requirements, the official said. Apple now sells its devices through a network of Indian-owned distribution companies and retailers. Most of Apple’s products are assembled in China, primarily by Foxconn Technology Group, known formally as Hon Hai Precision Industry Co. Foxconn didn’t respond to requests for comment.

Many foreign smartphone makers, such as Samsung and China’s Xiaomi Corp, already assemble in India for the local market.

In a sign of the country’s importance to Apple, Cook visited India in May, where in addition to meeting with Modi he took in a cricket match and posed for photos with Bollywood stars.

Apple, india, manufacturing
Apple’s slice in smartphone pie
In the quarter ended September 24, Apple reported its first annual revenue decline in 15 years amid lukewarm iPhone sales. But revenues have been rising in India, Cook said at the time, adding, “We still believe we’re just kind of scratching the surface there.”

Ishan Dutt, an analyst at research firm Canalys in Singapore, said opening its own stores in the world’s second most populous country would give Apple more visibility and allow the firm to control buyers’ in-store purchasing experiences, a key focus for the firm. Many people in India buy smartphones in mom-and-pop shops, in small electronics stores and online.

“When you’re buying an iPhone from your neighborhood shop you’re kind of losing some of the value” in terms of seeing Apple’s constellation of products on display and receiving in-store support from trained staff, Dutt said.

Reference - http://www.business-standard.com/article/companies/apple-seeks-incentives-for-manufacturing-in-india-116122100037_1.html

Monday, December 19, 2016

Trump Effect: IBM's US Hirings Not Such a Blow for India

There will be some impact with the MNC's shift to emerging technologies but India's cost advantage remains

IBM’s decision to generate 25,000 new jobs in the US might not have an immediate impact on its outsourcing arm in India. However, the company’s focus in emerging areas such as cloud and digital with clients closer home could potentially reduce expansion of its offshore teams here.

Amid President-elect Donald Trump’s promises to bring back jobs to America, IBM chief executive Ginni Rometty’s plan on local hiring and investment of $1 billion was the first significant announcement by a large information technology (IT) entity. Sector experts say new hires in the US are likely to be for areas in the digital segment, where the business model requires work with clients at their location.

“I do not believe the 25,000 people IBM intends to add in the US will directly affect the number already in India. For example, I would expect a significant number of the 25,000 to be at client sites. However, I do expect this shift in emphasis will affect the prospect for adding additional headcount in India, as IBM shifts its focus from a legacy services firm to a cognitive and cloud firm,” said Peter Bendor-Samuel, chief executive of Everest Group, a global IT researcher. 

IT services providers say there has been a decline in traditional services and the pace of growth in digital technologies -- where clients want software applications to work seamlessly with a better user interface on devices like smartphones — is not offsetting the fall in traditional IT services such as building of applications and maintaining these on remote servers. 

Given the strong focus on emerging technologies like cloud and artificial intelligence, there are possibilities of IBM divesting from parts of its legacy IT infrastructure services at some point, says Bendor-Samuel. In this context, he recalls their decision to sell off the low-value call centre business in 2013.  

IBM did not respond to queries sent by Business Standard. That apart, IBM still looks at emerging markets as a growth opportunity. “IBM seems very committed to emerging markets. In fact, when we study the growth rates for IBM, these markets have the most potential and we see IBM the most aggressive there in building business,” said Ray Wang, principal analyst and founder of Constellation Research. 

In fact, experts say, India will remain a strong talent hub for companies like IBM, as there is no alternative in the near future. This country also gets an edge over the US from the cost efficiency it offers. “This (IBM’s decision to hire 25,000 people in the US) might not have a massive impact on hiring in India, as there still remains a relatively good cost arbitrage,” said Wang. 

An aggressive hiring plan in the US could also give IBM an upper hand for IT contract re-bids from US companies, slated to happen over the next couple of years. Some analysts have already hinted at a structural change in renewal and fresh IT deals wherein businesses might look at outsourcing locally and offshoring as a final option. “Hiring in the US will position IBM well as many US federal contracts come up for renewal,” said Wang.

Reference - http://www.business-standard.com/article/companies/ibm-s-us-hirings-not-such-a-blow-for-india-116121900789_1.html

Sunday, December 18, 2016

Meet the BS Banker of the year 2015-16: HDFC Bank's Aditya Puri

Jury chose HDFC Bank MD for his contribution in digital banking, the bank's presence in rural and semi-urban India and healthy profitability
  
Aditya Puri, managing director of HDFC Bank is the Business Standard Banker of the Year for 2015-16.

He was selected by a six-member jury headed by former Economic Affairs Secretary C M Vasudev, for the bank’s commendable contribution in the digital banking space as well as the lender’s deep reach in rural and semi-urban India. At the same time, the bank maintained its healthy profits over the years and also kept a leash on its asset quality. 

The other jury members were former Reserve Bank of India (RBI) Deputy Governors Anand Sinha and H R Khan, Edelweiss Group Chairman Rashesh Shah, Ican Investment Advisors Chairman Anil Singhvi, and Ambit Capital CEO — Institutional Equities Saurabh Mukherjea.   

In the first screening proposed by Business Standard, two filters were used: asset size of over Rs 50,000 crore and a growth in net profit in 2015-16. The result was a dominance of new private sector banks and small public sector banks.

The jury decided to modify the filters and went on to do a more rigorous analysis to rise above “cold statistics”. Statistics, the jury argued, could be made favourable by pursuing narrow banking. 

Thereby, a need was felt to emphasise the risk taking ability of the bank and its leader at a time when a slowing economy meant more bad asset accretion in proportion to the rate of expansion of the lending book.

“We are trying to select the best banker. Should we give the award to someone who is completely risk averse and decided to not contribute much towards industrial development and rural penetration? I think not,” Vasudev set the standard for the rest of the jury. 

The jury gave importance to profitability, asset quality health and how the bank chief had made the organisation stronger over the years. 

Based on the criteria, 13 banks and their chiefs were shortlisted. The jury then narrowed the scope to three individuals. All three had numbers in favour of them so the jury opted for a subjective assessment. 

Vasudev, who is also a former chairman of HDFC Bank said, he would be guided by other jury members, without compromising on the objective evaluation of the task at hand. 

After a lengthy discussion, the other members of the jury unanimously chose HDFC Bank’s managing director Aditya Puri as their winner for maintaining a balance between shareholder returns, the bank’s responsibility towards society and furthering technological innovation in the financial domain, and the chairman of the jury agreed.

The Business Standard Banking Annual, a special 52-page magazine being distributed with Monday's edition, carries a detailed profile of and interview with Puri.

Puri joined HDFC Bank as a founding member and managing director in 1994. Since then, he has taken the bank to great heights and is third most valuable company on the bourses. 

Puri grew HDFC Bank through both organic and inorganic route by acquiring Times Bank in 2000 and Centurion Bank of Punjab in 2008. Puri is the longest-serving CEO of an Indian bank, and is the only bank chief to win the BS Banker of the Year award for the second time. 

The bank’s net interest income grew at 23.2 per cent and its net profit growth was 22.3 per cent in 2015-16.
 
Reference - http://www.business-standard.com/article/finance/aditya-puri-is-bs-banker-of-the-year-116121800819_1.html

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