re-shaping india post conference report · post conference report featuring ceo track 12 ceo...

Post Conference Report

featuring

CEO Track12 CEO presentations6 Thematic presentations

Panel DiscussionIndia Banking: Beginning ofa new era

Re-shaping IndiaRe-shaping India

1September 2013

9th Annual Global Investor Conference

Conference Highlights

2013 so far has been a challenging year, to say the least! Growth parameters are hitting new lows

and current account deficit new highs. The rupee is hurtling down, and global headwinds have

been on a rise. On corporate earnings, June 2013 quarter PAT in fact de-grew 2% YoY, causing ~3%

downgrade in Sensex EPS estimates (FY14 Sensex EPS to grow only 7%). Amidst this challenging

backdrop, we hosted our 9th Motilal Oswal Annual Global Investor Conference in the first week of

September 2013 at the Grand Hyatt in Mumbai.

Motilal Oswal Annual Global Investor Conferences are arguably the biggest in India, a trend which

continued in 2013 as well. During 2-4 September, top management of over 100 leading Indian

companies interacted with more than 600 investors from all over the world, translating into 3,000+

company-investor meetings. During the last two days (Sep 5-6), we also had an insightful visit to

the power corridors in Delhi.

Conference Highlights CEO Track: During the first two days of the conference, 12 of India's leading CEOs shared their

vision, strategies and success stories.

Thematic presentations: By eminent personalities on a diverse range of themes -

Dr Subramanian Swamy, Eminent Lawyer, Politician, Academician, shared his views on

India: The rising role of judiciary & the way forward

Prof Sandeep Desai, The Grassroot Educationalist, discussed his views on Indian Education:

Taking the train less travelled

Mr Deepak Parekh, Chairman, HDFC, spoke on Looking beyond the gloom & doom

Mahatria Ra, Spiritual Guru, threw light on Unleashing human spirit - most & more

Mr Ravi Venkatesan, ex-Chairman, Microsoft (India), Cummins (India), spoke on Conquering

the chaos - Art of doing business in India.

"Food-for-thought" luncheon sessions: On Day 1, we had a panel discussion on India Banking:

Beginning of a new era, featuring leading CEOs from the financial sector. On Day 2, we had an

insightful case study of the Mumbai dabbawalas, by Dr Pawan Agarwal, Management & Motivation

Guru.

We also set up a unique evening on the opening day (Sep 2) - Super Theater - featuring "Blame It On

Yashraj", a unique play combining Bollywood, comedy, dance … and more !

All-in-all, the positive feedback we received makes us believe that the Conference indeed lived up to

its theme of Re-shaping India, leaving global investors with interesting insights, winning themes,

greater conviction, and the best investment ideas.

We thank you for the active participation at the event. We will host the 10th Motilal Oswal Annual

Global Investor Conference in September 2014 and look forward to your participation.

Navin Agarwal Rajat Rajgarhia

CEO – Institutional Equities MD – Institutional Equities

2September 2013


CEO Track

CEO Track takeaways12 CEOs, 6 Thematics, Panel discussion on India Banking

3September 2013


ICICI Bank

Ms Chanda Kochhar is the MD

and CEO of ICICI Bank, India’s

largest private sector bank

and overall second largest

bank in the country. She is

recognized for her role in

shaping retail banking in

India, leadership in the ICICI

Group and contributions to

various forums in India and

globally. Ms Kochhar began

her career with the erstwhile

ICICI Ltd in 1984 and was

instrumental in establishing

ICICI Bank during the 1990s.

She has held various

significant positions in the

group and assumed the

current role in 2009.

Under Ms Kochhar ’s

leadership, ICICI Bank was

conferred with the “Best

Retail Bank in India” award

in 2001, 2003, 2004 and 2005

and “Excellence in Retail

Banking Award” in 2002

by The Asian Banker.

She was conferred with the

Padma Bhushan award in

2011. In 2013, Ms Kochhar has

been named as the most

powerful business women in

India in the Forbes list of

“The World’s 100 Most

Powerful Women 2013”. She

is the only Indian to be

featured in the Dow Jones

list of “Most Influential

Female Executives in the

World” of the last decade

and is ranked 12th in the

global list.

Covering Analyst(s):Alpesh Mehta+91 22 3982 [email protected]

Sohail Halai+91 22 3982 [email protected]

Key takeaways

Core essence Across business lines, ICICIBC is focusing on a judicious mix of profitability, growth

and risk management to enhance RoE.

Retail to be the key growth driver due to soft outlook on the corporate and SME

business.

Having achieved 15% consolidated RoE, ICICIBC is targeting 18% over the next few

years. Quantifying the timeframe for that is difficult due to current headwinds.

Industry insights The differential between credit and deposit growth rates is not much. A lot of

credit demand is for working capital - not for building inventory but to fund

receivables. There is no cut back in retail lending except for CV loans.

Steps taken by the government - coal imports, reallocation of gas from fertilizer

to power, SEBs raising tariffs - should help, going forward.

Stress in the corporate segment is mainly due to projects having negative cash

flows, which is resulting in postponement of capital investments. Wherever

exposure is high, ICICIBC is advising its corporate borrowers to monetize assets.

There is a possibility of banks converting loans into equity, as several projects

need hand-holding. Provisioning guidelines are not remunerative enough to keep

loans standard by restructuring.

Difference between the slowdown of 90s and now:

1. At that time, money was stuck in half-completed assets/projects. Today, money

is stuck in ready projects.

2. No promoter in the 90s was willing to sell/monetize assets. Today, promoters

are willing to do so, but sale of assets takes time.

Company vision and strategyBalanced approach in tough economic environment

Profitability/NIM: ICICIBC targets to enhance full-year margins, led by

improvement in international margins and loan mix. Improvement in funding

profile will keep cost of funds under control. Strong control over opex is likely to

continue and ICICIBC aims to keep C/I ratio at ~40%. Insurance profitability is

likely to remain superior and drive consolidated earnings.

Growth: Domestic loan growth to be 2-3% higher than system loan growth, driven

by secured retail loans. Cross-selling and further penetration of retail products to

existing client base would drive growth. ICICIBC retains its cautious view on

ThematicPresentation

Ms Chanda Kochhar

Managing Director & CEO

ICICI Bank CEO Track

4September 2013


corporate and SME loans, and growth will be driven by working capital loans.

Growth in the Insurance business is likely to improve.

Risk management: ICICIBC is focusing on further portfolio diversification. It intends

to reduce the share of corporate and international business, and increase the

share of retail business. Underwriting norms have been tightened.

Granular retail business - a key focus area in difficult macro environment

Profitability: Margin vulnerability has reduced due to sharp increase in the share

of granular retail deposits. Helped by recoveries from written-off retail loans and

shift towards secured retail loans, credit cost for the retail business has been near

zero for several quarters. ICICIBC expects this trend to continue. While overall

fee income growth remains muted at low single digits, retail business streams

like liability-related, third-party products, asset-linked fees, etc, remain healthy.

Growth: ICICIBC is focusing on secured retail loans and in 1QFY14, disbursements

grew 32% YoY. Home/auto loan disbursements grew 36%/17% YoY and outstanding

loans grew 20%/21% YoY. ICICIBC continues its calibrated approach towards CV

loans and unsecured products. Of the term deposits, 60% are retail deposits. Since

March 2009, savings/retail term deposits have shown CAGR of 20%/17%.

Risk management: ICICIBC continues to focus on secured retail loans and growth

is expected to be moderate in unsecured retail loans and CV portfolio.

Corporate and SME lending - taking a cautious approach

Profitability: (a) Fees: Project financing related fee income generation remains

low; in the corporate segment, ICICIBC is focusing on transaction banking and

forex-related fees, which are granular in nature, (b) Margins: The bank is focusing

on better asset-liability management, improvement in international margins, etc.

Growth: Growth to remain moderate in the large and mid corporate segments.

Focus would remain on working capital loans. The share of SME business is likely

to remain low, considering the tough macroeconomic environment.

Risk management: Credit selection norms have been enhanced and the bank is

closely monitoring all accounts.

Leveraging on distribution network and technology platform

Expanding distribution network: Since March 2012, 70% of its incremental branches

have been opened in rural and semi-urban areas. ICICIBC has the largest network

among private banks, with 3,350+ branches and 11,000+ ATMs. Strong branch

expansion helped in origination (30% of home loan origination is from branches

now) and third party distribution (50% CAGR in life insurance premium since FY11).

Technological initiatives: ICICIBC has launched various technological initiatives

like improving presence on social networking sites, 24x7 branches, mobile apps,

reward programs, superior ATM performance, etc, to improve business growth.

Key triggers/milestones/challenges Resolution of issues plaguing large infrastructure projects

Direction of monetary policy

ICICI Bank

5September 2013


Lupin

Dr Kamal Sharma is Vice

Chairman of Lupin Ltd. In a

career spanning more than

three decades, Dr Sharma

has held a range of senior

management positions

managing projects,

corporate development and

general management in

the pharmaceuticals and

chemicals industries. He

has been associated with

the Lupin Group since 1979.

Dr Sharma serves as the

Chairman of Kyowa

Pharmaceutical Industry Co

Ltd. He has a PhD in

Economics from IIT,

Mumbai and has

completed an Advanced

Management Programme at

Harvard Business School,

Boston.

Dr Sharma took over as MD

of Lupin in 2003, when the

company had limited

global presence. Under his

leadership, Lupin today

has become the 5th largest

company by generic

prescription share in the

largest pharma market,

USA. He is also responsible

for steering the company

into Japan, the 3rd largest

pharma market, where no

other Indian player has

been able to establish a

strong enough foothold.

Covering Analyst(s):Alok Dalal+91 22 3982 [email protected]

Hardick Bora+91 22 3982 [email protected]

Key takeaways

Core essence Significant opportunities in healthcare across key markets but regulatory

challenges, price controls by local government will be key challenges for the

industry.

Lupin (LPC) aspires to achieve sales of USD5b by 2018.

Industry insights Opportunities across the globe, healthcare reforms favoring generics, bio-similars

and an ageing population are other opportunities for growth.

A hybrid business model will be the way forward, whereby the originator company

uses its intellectual capital capabilities to merge with the cost capabilities of

generic companies.

Company vision and strategy LPC aspires to be a USD5b company by 2018.

US, India, Japan and emerging markets are the key pillars of growth. Increasing

focus on specialty product launches in the US over next few years. Focus on

expanding branded generic presence in the US.

Backward integration benefits to aid growth and margins in Japan. India growth

outlook seen to be ahead of the industry growth rate.

Key triggers/milestones/challenges With over 116 ANDAs awaiting approval from the US FDA, of which 25 are first-to-

file generics, LPC is very strongly placed in the US generics space. A strong product

mix in India is likely to enable the company grow significantly ahead of industry

on a consistent basis. Japan continues to remain a key long term strategic

opportunity.

Regulatory challenges, changing contours of the ecosystem, holistic thinking

leading to empowerment of people and risk management practices are some of

the key risks faced by the industry and LPC.

Dr Kamal Sharma

Vice Chairman

Lupin CEO Track

6September 2013


Zee Entertainment Enterprises

Mr S GopalakrishnanExecutive Co-ChairmanInfosys

Mr Punit Goenka

Managing Director & CEO

Zee Entertainment Enterprises CEO Track

Covering Analyst(s):Shobhit Khare+91 22 3029 [email protected]

Anil Shenoy+91 22 3982 [email protected]

Mr Punit Goenka is MD and

CEO of Zee Entertainment

Enterprises (ZEE). His

strong work ethics and

hands-on approach have

helped steer the ZEE

empire to new frontiers of

success. Under his

leadership, Zee TV has

emerged a leader among

general entertainment

channels in India. He is

now working on

strengthening ZEE’s reach

internationally.

Mr Goenka has grown up

the ranks, handling

various responsibilities

across the Essel

conglomerate for over 15

years. He began his career

with Zee TV in 1995 as

Head of the Music division

and went on to shoulder

addit ional

responsibilities across

group companies. In 2004,

he took charge as the

Business Head of Zee TV

and soon was promoted to

Network Operating Officer

in 2005 and was made

responsible for the

programming, operations,

administration and HR

functions of all of ZEE’s

entertainment channels.

He assumed the current

role in July 2008.

Key takeaways

Core essence Indian TV industry is witnessing structural changes in subscription and advertising

business; Zee to emerge stronger given scale advantage.

Industry insights India remains the fastest growing TV market globally. Regional markets continue

to lead growth, with most growing at 12-15%.

Mandatory digitization yet to be implemented in phase III/IV, which account for

~75% of TV households. DTH could have an advantage in phase III/IV.

Industry estimates indicate 26% subscription revenue CAGR over CY12-17E.

India unlikely to reach US market levels of ~80% subscription revenue contribution

in the foreseeable future.

Digitization offers level playing field to niche channels, which is an additional

revenue opportunity.

Company vision and strategy Zee expects subscription revenue to equal advertising revenue in next four to

five years v/s current ratio of 5:4 for advertising-subscription.

Confident of maintaining margins at current levels despite investments in new

businesses and sports.

Zee has been reducing inventory, resulting in better pricing/ratings and making it

better placed for the implementation of regulations on ad cap.

INR depreciation a concern for sport business, which is currently loss making. Zee

continues to invest in sports, given subscription revenue potential. Ten Network

accounts for ~25% of sports viewership, including cricket and ~50% excluding

cricket.

Movie costs remain high. Company has no plans of entering the movie production

business but can potentially become a studio in the future by acquiring movie

rights, compared to only TV rights currently.

7September 2013


Zee Entertainment Enterprises

Key triggers/milestones/challenges Phase III/IV digitization sunset effective from September/December 2014. While

it could provide significant upside potential to subscription revenue, delayed

monetization (phase I/II so far) remains a concern.

Low ARPU/ad pricing and economic slowdown are the key challenges.

Issues pertaining to lack of transponder capacity for DTH operators are restricting

addition of new channels on DTH platforms.

Ad rates to be increased to offset further inventory decline due to 12 min/hr ad

cap regulation effective from October 1, 2013.

Advertising currency shift from Cost Per Rating Point (CPRP) to Cost Per Thousand

(CPT) to be a major positive for content monetization.

Cable & Satellite (C&S) universe has increased ~60% in the past five years but

industry did not get commensurate ad rate increases due to the CPRP model.

8September 2013


NTPC

Dr Arup Roy Choudhury is

the Chairman and MD of

NTPC Ltd. Dr Choudhury’s

rich and varied

contribution of over 32

years has been recognized

by prestigious

professional, academic

and government

institutions, both national

and international.

He has the distinction of

becoming the youngest CEO

of a central public sector

enterprise (CPSE) at the

age of 44 when he joined

as Chairman and MD of

National Buildings

Construction Corporation

Ltd (NBCC) in 2001 and also

transformed NBCC from a

sick status to a blue chip

enterprise, having

Schedule “A” and

“Miniratna” status

conferred by the

Government of India.

Dr Choudhury was

conferred Doctorate in

‘Performance Assessment

of Infrastructure

Development Projects’ from

IIT Delhi on 18.04.2013. He

has been ranked at No. 40

in “The Economic Times”

list of India Inc’s top 100

CEOs 2013 and is No. 2

among the CEOs of Public

Sector Enterprises (PSEs).

Key takeaways

Core essence NTPC targets addition of 14gw of capacity in 12th Plan, and has 20gw of capacity

already under construction, on current installed base of 41gw. This provides strong

medium term growth visibility. In addition, 20gw is under development stage.

98% of capacity is covered under long term fuel supply agreement and 76% of

linkages are through own railway network - a key differentiating factor.

Industry insights India has the lowest per capita consumer of electricity globally, lagging Brazil and

China by ~3:1. Per capita consumption of India is only 29% of the world average

and hence the country has huge potential for power consumption.

India needs to add 106gw of capacity in the 12th Plan to regain the GDP growth

target of 8%.

Base deficit has remained range-bound ~8.5-8.7% during FY11-13. However, peak

deficit lowered in FY13 at 9.1% from 11.1% in FY12.

Company vision and strategyA] Robust capacity addition growth

NTPC is targeting to add 14gw of capacity addition in the 12th Plan, of which it

added 4.2gw in FY13. For FY14, management expects capacity addition of 2gw.

Similarly, commercialization for FY13 stood at 4.8gw, its highest-ever in a year.

The guidance for commercialization is maintained at 1.5gw.

Management highlighted that last four years witnessed capacity addition of 10gw

- fastest 10gw addition. NTPC's installed capacity stood at 41gw. Management

highlighted its vision to achieve installed capacity of 128gw by 2032.

It has robust project pipeline with capacity award of 13gw over last 2.5 years. The

total capacity under construction as of now stands at 20gw. Additional 20gw is

under development (3gw under bidding and 16.5gw feasibility report is approved).

B] Enhancing fuel security

Fuel security remains the prime focus, with 98% of capacity covered under long

term fuel agreement. 76% of fuel supply is through its own rail network, which

further adds to stability. Coal import could be on an average of ~10% on long term

basis.

Dr Arup Roy Choudhury

Chairman and Managing Director

NTPC CEO Track

Covering Analyst(s):Nalin Bhatt+91 22 3982 [email protected]

Aditya Bahety+91 22 3982 [email protected]

9September 2013


FY14 would be an important year on fuel security front given two vital landmarks:

a) first captive mine, Pakri Barwadih, is to start in December 2013 and b) Jetty for

Farakka and Kahalgaon projects, among the worst hit due to coal supply, is expected

to begin trial operations before 2QFY14-end.

In addition, NTPC has been allocated four new coal blocks, with 2b tons of reserve

for 8.5gw of upcoming capacity.

Company's average cost of power generation is INR2.92/sh, comprising of fuel

cost of INR1.84/unit and fixed cost of INR1.08/unit. This makes its positioning

better on merit order dispatch.

Key triggers Higher generation from coal-based projects and robust PAF/PLF are the key

triggers. In YTD FY14, NTPC's generation de-grew by 2% YoY, comprising of 2% YoY

growth for coal-based projects and 40% YoY de-growth in gas-based projects. PLF

for coal projects have come off by 5.1ps YoY.

Management expects FY14 RAB to grow by ~8% to INR352b (standalone basis),

while FY13 RAB stood at INR326b (a growth of 20% YoY). This would lead to superior

earnings growth ahead in FY14E/15E.

NTPC

10September 2013


ONGC

Mr Sudhir Vasudeva is the

Chairman and MD of Oil &

Natural Gas Corporation

Ltd (ONGC), India’s most

valuable Maharatna public

sector unit (PSU). He is

also the Chairman of ONGC

Videsh Ltd (OVL),

Mangalore Refinery and

Petrochemicals Ltd (MRPL)

and five other ONGC Group

companies — ONGC

Petroadditions, ONGC

Mangalore Petrochemicals,

Mangalore SEZ, ONGC

Tripura Power Company and

ONGC Mittal Energy.

Mr Vasudeva is a gold

medalist Chemical

Engineer with Advanced

Diploma in Management.

Under his leadership,

ONGC registered the

highest-ever profit, became

the highest-ever dividend

paying company in India

and often retains the

numero uno position in

terms of market

capitalization. Mr

Vasudeva has received

accolades for outstanding

achievement in Exploration

& Production (E&P) award

by Chemtech Foundation in

2012. He has also been

conferred with NDTV Profit

Business Leadership

Awards 2012 in Oil & Gas

Sector in April 2013.

Covering Analyst(s):Harshad Borawake+91 22 3982 [email protected]

Kunal Gupta+91 22 3982 [email protected]

Key takeaways

Core essence ONGC aims for aggressive long term production targets, pitching for higher net

realization to the Government and build the non-E&P business to reach 30% of

revenue by FY30. It aspires for 2x increase in group production, led by 6x increase

in international production under its Perspective Plan 2030.

Industry insights Technology and innovation is expanding the capabilities of global E&P sector,

helping to explore geographically difficult basins. Arctic region holds ~20% of the

world's undiscovered hydrocarbon reserves.

NOCs (National Oil Companies) getting aggressive in M&A (spent USD112b in 2012)

and hold 90% of proved world reserves currently.

The US has infrastructure advantage (pipeline network, rigs) v/s other countries,

enabling it to become the largest shale gas producer (40% of current US gas

production comes from Shale).

India's primary energy demand at 7.2% CAGR till 2031-32 is expected to be higher

than China at 2.9%, the US at 0.1% and world 1.5%.

Unconventional energy reserves in India - CBM >450tcf; underground coal

gasification (UCG) ~6,900tcf; gas hydrates ~142bcm and shale gas >65tcf.

Company vision and strategy ONGC requires a minimum net realization of USD65/bbl (v/s FY13 net realization

of USD47.8/bbl) for sustainability (production cost of USD40/bbl); does not expect

upstream companies subsidy share at >USD56/bbl in FY13.

ONGC's domestic oil production (incl JV) to reach a peak of 28-29mmt by FY15/16

for two to three years v/s 26.2mmt in FY13. Key fields include G-1/GS-15(KG basin),

D-1 (Mumbai offshore) and B-193 (western offshore).

Company has produced 80mmt of the total estimate of 172mmt additions, aided

by new and marginal field development at the cost of INR342b.

Perspective Plan 2030 envisages to double production to >130mmtoe by 2030,

aided by increasing OVL's production from current ~8 to 60mmt.

Key triggers/milestones/challenges Key things to watch (1) continued diesel reforms, (2) clarity on Sudan and Syria

production for OVL, (3) subsidy sharing (4) visibility on production growth.

Mr Sudhir Vasudeva

Chairman & Managing Director

ONGC CEO Track

11September 2013


Infosys

Mr N R Narayana Murthy is

the Executive Chairman of

Infosys Ltd. He co-founded

Infosys in 1981, served as

the CEO during 1981-2002,

as the Chairman and Chief

Mentor during 2002-2011

and as the Chairman

Emeritus during August

2011-May 2013. Under his

leadership, Infosys was

listed on Nasdaq in 1999.

He articulated, designed

and implemented the

Global Delivery Model

which has become the

foundation for huge

success in IT services

outsourcing from India. He

has also led key corporate

governance initiatives in

India and is an IT advisor

to several Asian countries.

Mr Murthy was listed

among the “12 greatest

entrepreneurs of our time”

by the Fortune magazine in

2012. He has been

conferred with several

awards and honors,

including the Padma

Vibhushan and Padma

Shri, the Legion d’honneur

by the Government of

France and the CBE by the

British government. He is

the first Indian winner of

Ernst and Young’s World

Entrepreneur of the year

award and the Max

Schmidheiny Liberty prize.

Covering Analyst(s):Ashish Chopra+91 22 3982 [email protected]

Siddharth Vora+91 22 3982 [email protected]

Key takeaways

Core essence Infosys' (INFO) financial performance over the last couple of years has been of

concern, during which revenue growth fell by 80% and profitability reduced by

~7-8pp. While the performance coincides with the onset of Infosys 3.0, there is

nothing wrong with strategy, and the problem has been with execution.

In its quest to increase the share of revenue in consulting-led transformation

business and Products/Platforms/Solutions, INFO lost focus on the bread-n-butter

traditional business. Such price sensitive large deals are imperative to growth

and the company cannot do away with the required aggression.

Industry Insights Large deals in outsourcing are highly price sensitive and INFO is surprised by the

behavior of some growth hungry peers.

Also, there have been some very complex engagements, driving the requirement

of highly specialized people.

Immigration and other foreign norms are further increasing the strain, with the

added uncertainty around currency.

Given the revived focus in growing the traditional business, company is now

approaching this business with the understanding that while markets determine

the price, INFO can only determine its cost. Hence, there is greater focus on cost

optimization than before.

Company vision and strategyINFO is focused on getting its execution in order, with increased emphasis on:

1. Approaching large deals with requisite aggression and successfully closing them.

2. Reinvigorating the sales team to increase the effectiveness of sales, incentivizing

the sales team appropriately to attain the aspired growth.

3. Re-establishing the excellence in delivery execution - by moving from project

level measures of tracking efficiency to individual level measures.

4. Getting the right quality of talent to help de-lineate revenue growth with

headcount growth.

Key triggers/milestones/challenges While growth will still be the key lever for operating margin, INFO aspires to take

its margins higher by increasing cost efficiencies. One of the reasons for lower

margins was higher employee cost outside India. INFO is striving to reduce the

onsite-offshore efforts mix.

INFO will continue "letting bad news take the elevator, good news take the stairs".

Mr N R Narayana Murthy

Chairman

Infosys CEO Track

12September 2013


Godrej Group

Mr Adi Godrej is the

Chairman of the Godrej

Group and several entities

that are part of one of

India’s leading

conglomerates. Over the

last five decades, Mr

Godrej has played an

important role in the

development of a variety of

industries by leading key

organizations of trade and

commerce as the former

Chairman and President of

the Indian Soap &

Toiletries Makers’

Association, the Central

Organisation for Oil

Industry and Trade, the

Solvent Extractors’

Association of India, the

Compound Livestock Feeds

Manufacturers’

Association, the Indo-

American Society and as

member of the Governing

Board of the National

Council of the

Confederation of Indian

Industry. Under his

leadership, the group is

involved in philanthropic

activities too and is a great

supporter of the World

Wildlife Fund of India

(WWFI).

For his contribution to

Indian industry, Mr Godrej

has been the recipient of

several awards and

recognitions, including the

Rajiv Gandhi Award 2002,

Padma Bhushan in 2013.

Covering Analyst(s):Gautam Duggad+91 22 3982 [email protected]

Key takeaways

Core essence Consumption growth, though challenged in the current weak macro environment,

has strong long term drivers, facilitated by rising disposable incomes, youth

demographics and rising aspirations of middle class. There exists significant room

for growth in per capita consumption.

Middle class is spreading to tier II and tier III towns. But credit availability to rural

markets is essential to sustain the consumption growth.

Longer term outlook for Godrej group is extremely positive - specifically, GCPL is

targeting 10x growth in 10 years as a part of its 10 by 10 strategy.

Godrej group is following a CREATE strategy - C-Consumer, RE-Real Estate, A-Agri,

T-Transformational and E-Emerging.

Government needs to act fast and regulators need to ensure timely intervention

to revive short term growth and sentiments.

Industry insightsLong term consumption drivers solid despite near term challenges

Mr Godrej outlined the attractive long term consumption opportunity in India -

driven by favorable macro drivers such as rising disposable incomes, young

demographics and growing middle class.

Significant headroom exists for growth in per capita consumption, which in turn

depends on disposable incomes, extent of urbanization and access to credit.

Shape of India's income pyramid can change due to rising rural consumption. Per

capita consumption growth in rural markets has outpaced urban growth in last

two years.

Pessimism will pave way for optimism in second half, with the onset of harvest

season.

Near term challenges notwithstanding - low growth, high inflation and dampened

consumer sentiments - next wave of growth will come from spreading out of

middle class in tier II and tier III.

Company vision and strategy Godrej group is following a CREATE strategy - C- Consumer, RE - Real Estate, A-

Agriculture, T - Transformational, E - Emerging.

Mr Adi Godrej

Chairman

Godrej Group CEO Track

13September 2013


Consumer: Slowdown in premium segment; however, bottom of the pyramid is

flourishing. Household insecticides still remain under-penetrated.

Real Estate: 13 successful launches. The Godrej project in Gurgaon was a big success,

with complete sale in 24 hours. Land Acquisition Bill to increase the impact of cost

of land significantly, especially in rural areas.

Agriculture: Agriculture is at an inflection point. Godrej group participates in agri

sector through Godrej Agrovet Pvt Ltd. Company saw strong growth in oil palm

business.

Transformation: Human capital - Focus is on building strong human capital.

Emerging: Food retailing is a new business and is doing well, with good same

store sales growth and new store-driven growth.

Key triggers/milestones/challenges Short term - lower growth and higher inflation is impacting consumer demand.

While lower dependence ratio is extremely positive for consumption, young

population needs to be absorbed into labor force.

There is limited penetration of financial services in rural markets, which can pose

challenges for PCC ahead. Thus, there is a pressing need to make credit available

in rural geographies.

Godrej Group

14September 2013


Bharti Airtel

Mr Gopal Vittal is the Joint

MD and CEO (India) at

Bharti Airtel. He also

served as an Executive

Director of Home &

Personal Care of Hindustan

Unilever since September

2008 to January 2012.

He has more than 16 years

of rich experience across

various aspects of

marketing and sales. Mr

Vittal started his career

with Unilever India,

working across

geographies in India and

Asia. He has led several

branding forays for

Unilever and was

responsible for

conceptualizing, leading,

piloting and rolling out

Project Bharat, Unilever’s

largest rural marketing

initiative in India.

Mr Vittal has also been

recognized as one of

India’s Hottest Young

Executives by Business

Today in 2006. He has 18

years experience in

Marketing & Sales in FMCG

market, including skin care,

soaps and laundry. He has

worked both in India and

Asia for Unilever for over 16

years, following which he

served as the Marketing

Director at Bharti Airtel.

Covering Analyst(s):Shobhit Khare+91 22 3029 [email protected]

Anil Shenoy+91 22 3982 [email protected]

Key takeaways

Core essence With its unique leadership position and strong asset base, Bharti India is well

positioned to benefit from an improving industry structure, latent data potential

and increasing regulatory clarity.

Industry insights Indian wireless industry is undergoing passive consolidation. Top 3 revenue market

share has increased from 66% to 70% in the past five to six quarters, implying an

incremental share of ~90% for the top 3.

There is still significant room for an increase in voice RPM, given huge discount of

30-40%, currently being offered v/s headline tariffs.

Economic slowdown is unlikely to impact the wireless sector due to 1) increased

pricing power, 2) limited impact on ticket-sized product/services like telecom

and 3) strong rural growth, driven by better monsoon.

Young demographics are a tailwind for data growth as aspirations are driving usage

even in the non-urban locations.

Company vision and strategy Driving increased usage through marketing innovations (recently launched INR1/

song store) and usage by enhancing 3G uptake. 3G data subscribers use 5x data

compared to 2G data subscribers.

Enhanced focus on quality of subscriber acquisitions; equipping front-end with

information based on analysis to improve effectiveness and acquire/retain high

value subscribers.

Further headroom to improve cost efficiencies by eliminating wasteful

expenditure on sales and distribution and improving network utilization.

Key triggers/milestones/challenges Regulatory clarity is increasing with the Telecom Regulatory Authority of India

(TRAI) doing a commendable job of maintaining a fine balance in its recent

pronouncements.

Strong US dollar v/s INR and African currencies remains a challenge, given ~10b

USD denominated debt/liabilities.

Africa business continues to face competitive and regulatory headwinds.

Mr Gopal Vittal

Joint Managing Director & CEO (India)

Bharti Airtel CEO Track

15September 2013


Ambuja Cements

Covering Analyst(s):

Jinesh K Gandhi

+91 22 3982 5416

[email protected]

Sandipan Pal+91 22 3982 [email protected]

Mr Onne Van Der Weijde is

MD of Ambuja Cements Ltd.

He is a Dutch national

with over 15 years of

experience in cement

industry, including seven

years in the Indian cement

industry. Mr Weijde was

CFO at Holcim Indonesia

from 2001 to 2005. In 2005,

he was appointed General

Manager of Holcim India

Ltd and in 2006 he also

assumed the CFO function

at ACC Ltd until October

2008. From November 2009,

he was the CEO of Ambuja

Cements Ltd. He assumed

the current role of MD in

2010.

Recently Holcim has given

him additional

responsibility by

appointing him as Area

Manager and a member of

its Senior Management

Team. Mr Weijde holds a

Bachelor's degree in

Business Administration

in Economics & Accounting

from Rotterdam,

Netherlands and a

Masters degree in

Business Administration

from the University of

Bradford, UK.

Key takeaways

Core essence Long term demand drivers remain intact, giving confidence of 8% CAGR on steady

state basis. Ambuja Cements (ACEM) would focus on selective growth, cost

competitiveness and deriving synergies from ACC's acquisition to compete in an

over-capacity environment.

Industry insights Short term negative outlook notwithstanding, Holcim continues to believe in India

story. India is one of the most attractive markets in the world, and expects 5.2%/

7.7% demand CAGR over CY13-15E/CY15E-18E.

This growth is expected to be driven by commercial segment (~10% CAGR),

infrastructure (~6.3%) and residential (~5.8%).

Capacity is expected to post a CAGR of 6.3-7% over CY12-16E to 406-415mt.

Company vision and strategy Focus on competitiveness, to exceed cost of capital, in a highly competitive market,

reflecting in RoIC of 39%/37% for ACEM/ACC over 2006-12.

Investments in cost competitiveness is an area of priority viz a) revenue

optimization (through brand premium and focus on retail), b) optimizing fuel mix

(increasing share of pet-coke, captive coal and alternate fuel) and c) logistics

optimization. Making further investments in logistics by professionalizing 'Hub-

and-spoke' architecture.

It is focusing on selective growth through a) region specific (North, Central & East)

expansion and b) M&A opportunities. Objective to deliver return on investments

would be a focus area, rather than maintaining market share. All of its future

capacity expansions (from 58mt to 73.6mt) is in these attractive markets, with

better industry structure, high utilization and pricing power.

Acquisition of ACC is a significant step in the potential merger, although it would

take three to four years to realize entire benefits of synergies. Acquisition of ACC

is at an attractive cost of USD115/ton and offers saving potentials of ~INR9b p.a.

ACEM would have screened almost all cement assets on the block. While M&A

valuation expectations have moderated over last few months, considering the

condition of most plants in India, it would need to invest additional 30-35% to

bring those plants to Holcim's group standards.

Mr Onne Van Der Weijde

Managing Director

Ambuja Cements CEO Track

16September 2013


Key triggers/milestones/challenges It is investing for capacity addition in Rajasthan (4.5mt in ACEM by CY15) and

Chhattisgarh (~3.6mt in ACC, by ACC), and also is planning a Greenfield plant at

Ametha (3mt in ACC, by CY17) and Tikaria (1.5mt in ACC, by CY17).

Initiatives to reduce fuel cost escalation - (1) use more pet coke supplies for

north-based plants, (2) captive coal, (3) ensure 20-25% Indonesian coal usage at

coastal plan and (4) increase usage of alternate fuels to at least 12-15% of fuel

requirement. It would need to invest in its plants to derive these cost savings of

8-10%.

Acquisition of ACC offers synergy benefits of ~INR9b driven by:

Supply chain optimization through clinker/cement swaps between ACC/ACEM,

driving savings of INR3.6-4.2b.

Common procurement driving savings of INR2.7-3b.

Fixed cost reductions by improving efficiency and eliminating duplications,

thus driving savings of INR1.5-1.75b.

Ambuja Cements

17September 2013


Dr Reddy’s Laboratories

Covering Analyst(s):Alok Dalal+91 22 3982 [email protected]

Hardick Bora+91 22 3982 [email protected]

Mr Satish Reddy is the Vice

Chairman and MD of Dr

Reddy’s Laboratories Ltd.

He steers two of the

company’s core

businesses:

Pharmaceutical Services &

Active Ingredients (PSAI)

and Global Generics

businesses. He joined Dr.

Reddy’s in 1993 as

Executive Director and in

1997 went on to become

the Managing Director.

Mr Reddy serves as a

National Council member

of CII, Chairman of CII

National Committee on

Drugs and Pharmaceuticals

and as an executive

council member of the

Indian Pharmaceutical

Alliance (IPA). Earlier, he

was also a member of the

Drugs Technical

Association Board (DTAB)

of India, the highest policy

making body under the

Drugs & Cosmetics Act in

India between 2005-11.

He received the 2009

Distinguished Alumnus

Award from the School of

Pharmacy and

Pharmaceutical Sciences,

Purdue University, U.S.A.

He was identified as a

“Young Global Leader for

2007” by the World

Economic Forum and was

awarded the “IBLA - India

Corporate Citizen of the

Year” by CNBC in 2005.

Key takeaways

Core essence Emerging markets are likely to play a significant role in the global pharma market

growth over the next decade. Increased regulatory risks, consolidation at the

trade levels, declining product opportunities in the US are key challenges. Dr

Reddy's Laboratories (DRRD) is well placed to counter these challenges by

developing a high value product portfolio, deeper customer engagement in

generic products and newer channels of growth like OTC and institutional business.

Industry insights Global pharma industry is likely to reach USD1.2t by 2016, 30% of which could be

generics.

Emerging markets likely to contribute ~70% to the USD200b sales addition till

2016.

Changing business models and consolidation are strategic choices made by pharma

companies.

Company vision and strategyThree pillars of growth:

Product portfolio shifts: Differentiated generics, including formulations and APIs,

by leveraging on vertical integration. DRRD believes it has a strong record in this

area.

Deeper customer engagement: Unbranded generics, physician and retailer

relationships in branded business in markets like India and Russia.

OTC and institutional channels in branded markets: Scale-up in non Rx channels in

Russia and India (OTC and institutional).

Key triggers/milestones/challengesThree key challenges:

Daunting patent cliff in US: USD42b in sales coming off patent in 2014-17, a 42%

decline compared to 2010-13.

Government interference in pricing of products (Germany).

Increasing regulatory risks: US FDA and local authorities are significantly stepping

up regulatory scrutiny.

Increased consolidation of channels, leading to a shift in balance of power in US.

Mr Satish Reddy

Vice Chairman & Managing Director

Dr Reddy’s Laboratories CEO Track

18September 2013


Aditya Birla Group

Covering Analyst(s):Sanjay Jain+91 22 3982 [email protected]

Pavas Pethia+91 22 3982 [email protected]

Mr Kumarmangalam Birla is

the Chairman of Aditya

Birla Group. Mr Birla chairs

the major group

companies in India and

globally. He took over as

Chairman of the group in

1995 and under his

leadership the group has

expanded to telecom,

software, BPO and other

areas. He has restructured

the business and made 26

acquisitions in 17 years in

India and globally, the

highest by an Indian

multinational in India.

He has held and continues

to hold several key

positions on various

regulatory and

professional boards,

including Chairmanship of

the Advisory Committee

constituted by the Ministry

of Company Affairs in 2006

and 2007, membership of

The Prime Minister of

India’s Advisory Council on

Trade and Industry. He also

serves as the Chairman of

Sebi Committee on

Corporate Governance and

is a member of CII.

Mr Birla has received many

awards and honors,

including Forbes India

Leadership Award –

“Entrepreneur of the Year,

2012”, ranked 3rd most

powerful CEO.

Key takeaways

Core essence Aditya Birla Group is a premium global conglomerate, with revenue of USD40b

and operations in 36 countries. Each of its key businesses has focus on quality,

innovation, strong value system, cost & market leadership, and social responsibility

beyond business. The group is last man standing in testing times and first man

forward when the tide turns favorable.

Industry insights Land acquisition bill is likely to slow down growth as the costs and time in acquiring

land for projects will be stretched.

The Cabinet Committee on Investment (CCI) is likely to help in de-bottlenecking

of projects.

Opportunities in aggregation, particularly in North America.

Company vision and strategy To be a global conglomerate at group level but very focused at company level,

with maximum of two businesses.

The group has focused on cash flows, cost leadership and strived to be among the

dominant players. Every business has been built over a long period of time.

Key triggers/milestones/challenges The group's revenue has increased 25x to USD40b and EBITDA has increased 12.5x

to USD5b in 18 years (by FY13), with 53% of revenue coming from overseas

operations. The organization has become younger, with average age falling from

56 years to 36 years.

The group's revenue is expected to increase 63% to USD65b and EBITDA is expected

to increase 1.5x to USD10b as high margin projects start generating cash flows

over next five to seven years. It is likely to witness margin expansion and sharper

increase in cash flows than revenue.

Mr Kumarmangalam Birla

Chairman

Aditya Birla Group CEO Track

19September 2013


State Bank of India



Ms Arundhati Bhattacharya

is the Managing Director of

State Bank of India since

August 2013. She also

served as the Corporate

Development Officer and

Deputy MD at State Bank of

India. She joined the bank

as a Direct Recruit Officer

in 1977 and served as its

Chief General Manager of

Bangalore Circle. Ms

Bhattacharya also had a

stint in the bank’s New

York office where she was

in charge of monitoring

branch performance,

overseeing external audit

and correspondent

relations. She has served

as the Chief General

Manager of New

Businesses for Corporate

Centre at SBI and as its

General Manager of

Network-II, Lucknow and

as Chief Development

Officer.

In her extensive service

with the bank, Ms

Bhattacharya had the

opportunity of working in

metro, urban and rural

areas, thus crisscrossing

the length and breadth of

the country. She has

handled large corporate

credit and initiatives like

financial inclusion and

financing of self help

groups.

Key takeaways

Core essence Focusing on retail liabilities to grow balance sheet; growth to be higher than

industry

Stress continues to rise; monitoring accounts closely

Focusing on improving employee productivity to enhance return ratios.

Industry insights Tight liquidity has significantly increased cost of funds at the industry level. Banks

with higher retail liabilities are better placed.

Green shoots are visible in export-driven sectors like Metals and Textiles, and

small businesses focusing on exports. Given the good monsoon, agricultural

production should increase, in turn resulting in improvement in asset quality.

Difference between the 90s and now: (1) This time, asset quality issues are more

on account of domestic factors; (2) Restructuring and asset quality norms are more

stringent now.

Company strategyEndeavour to maintain domestic NIM at around 3.5%

Systemic interest rate has increased. However, SBIN continues to enjoy the

advantage of strong CASA and retail term deposits flow (proportion of bulk

deposits is negligible). This has helped the bank to contain cost of funds at ~6.5%.

While there is marginal increase in blended cost of funds, the bank is tweaking

spreads over the base rate to maintain margins. Currently, SBIN believes that a

base rate hike is not necessary.

The bank has maintained its domestic NIM guidance of 3.5% for FY14.

Growth to be driven by top-rated corporate and retail loans

Demand outlook for new projects remains muted. However, there is huge

opportunity for refinancing of top-rated corporate loans.

Further, healthy growth in the retail segment (especially home loans) and

incremental demand from substitution of CPs and ECBs would help.

The management expects overall loan growth of ~20%, though its expectation of

systemic growth remains low.

Ms Arundhati Bhattacharya

Managing Director

State Bank of India CEO Track

20September 2013


Asset quality marred by macros; closely monitoring accounts; focusing on agri NPLs

Headwinds in the mid-corporate and SME segments continue; these segments

will be the key contributors to NPAs.

In 2Q, recoveries from the agriculture segment and upgradation of some accounts

due to restructuring might help contain headline GNPAs.

Restructuring is likely to continue, as the current macroeconomic scenario does

not instill positivity. While SBIN has not given any specific guidance on the

restructuring pipeline, as at the end of 1QFY14, it was at INR100b.

SBIN has raised the income limit for auto loans to INR0.6m to reduce risk on the

portfolio. This is the second time in two years that the bank has increased eligibility

criteria/tightened lending process in this segment. While there may be some

moderation in growth, considering that auto loans are just 2-3% of the overall

book, this will not impact overall loan growth meaningfully.

Key triggers/milestones/challenges Clarity on interest rates and improvement in macroeconomic outlook

Resolution of issues plaguing large infrastructure projects

Default rates might move up if economic slowdown persists

Chairperson change in September 2013 - uncertainty on asset quality; change in

strategy expected

Cost-to-income remains high at 50%+; expected slowdown in income growth and

sticky opex to put strain on profitability

Internal plan to merge subsidiaries - uncertainty on asset quality and opex

realignment with parent.

State Bank of India

21September 2013



Dr Subramanian Swamy is an

academician, politician,

activist and economist. He

was president of the

Janata Party which merged

with BJP in August 2013. Dr

Swamy has previously

served as a member of

the Planning Commission

of India and cabinet

minister of India and has

written extensively on

foreign affairs of India

dealing largely with

China, Pakistan and Israel.

He is also a published

author. He had earned a

doctorate in Economics

from Harvard University in

1964. Dr Swamy had also

worked as a team with

Nobel Laureate economists

and has served as a

professor of Economics in

Harvard University and IIT,

New Delhi.

He is responsible for

creating the blueprint that

opened India’s economy to

the world in 1991 and also

simplified trade

procedures and formulated

a new export strategy,

which became the

forerunner of trade reforms

adopted subsequently. In

1994, he was appointed as

Chairman of the

Commission on Labour

Standards and

International Trade. Dr

Swamy has been elected

five times to Parliament.

Indian judiciary laying the ground rules for growth

India can grow at double digit through education, innovation and leadership

Young population, innovations spell enormous potentional of India.

Judiciary is not holding back growth but laying foundation for it.

Education is key for India's growth.

Tax concessions may lift near term settlements.

Enormous potential of India Leadership: India's enormous potential needs leadership and policies.

Young population: 70% of India's population is below 35 years, with average age

of only 27 years vs China (37), the US (38), Europe (47) and Japan (50).

Innovations: New innovations to fuel India's growth. Capital and labour are factors,

however, innovation is the multiplier as proven many times be it in the case of

Internet, jet engines, telex or railways.

Excellence: Indian companies are globally recognized as leaders in quality in the

auto ancillary industry and software ahead of even the US. Ironically, Indians seem

to be performing everywhere except in India!

Agriculture: There is enormous potential in Indian agriculture as we are fortunate

of being able to cultivate it for all 12 months. We can easily grow three crops, but

currently grow only one crop or more in 25% of the land. Yields are very low

although our agriculture research has demonstrated capability to achieve seven

times the current yield. We can become leading exporter of agriculture globally.

Judiciary is not holding back growth but laying foundation for it Judiciary and development: Many think that judiciary is holding up development,

but it has actually given hope that India's governance system can really be

improved.

The PIL system: Judiciary was initially designed to be an Appellate Body. But in

1981, while examining the incidence of bonded labor, Supreme Court found that

the Constitution has given them power to address issues raised in public interest,

even though the petitioner is not an affected party.

Landmark anti corruption law: In 1988, under the Prime Ministership of Rajiv

Gandhi, while Parliament passed the Prevention of Corruption Act, the anti bribery

bill introduced a novel section that anybody holding a public office and facilitating

pecuniary gains for any other party, which is not in public interest, is liable for

ThematicPresentationDr Subramanian Swamy

Eminent Lawyer, Politician, Academician

India: The rising role of judiciary &

the way forward


Dipankar Mitra

+91 22 3982 [email protected]

22September 2013


prosecution, even though he might not have directly benefited from it. These

provisions have been used by Dr Swamy to highlight the recent cases of 2G etc.

Ram Setu: This was another example where Dr Swamy was successful in arguing

that the decision of Tamil Nadu government that time was 'arbitrary', as alternate

and cheaper route is available. Subsequently, the Pachori Committee raised

objection to the project on environmental consideration and now it is on the

backburner.

Some concluding remarks Double digit growth for a decade: India can grow at 12-13% at a stretch for a decade

but should be done in a legal way.

Education holds the key: Such growth is possible in India if we focus on educating

the young population, which enables innovation, the biggest growth multiplier.

Curb discretionary powers: Government is not bad per se, with them playing an

important role in many countries including Japan and even China. But discretionary

powers should be curtailed.

India moved in crisis: India has successfully come out of many crisis, including

food crisis that was overcome by green revolution.

Tax concessions may lift near term sentiments: To lift the mood of investors,

some radical measures could be thought like abolition of personal income tax.

This can be compensated by auctioning huge natural resources that we have or by

bringing back the USD1.5t of illegal money held abroad by Indians.

Vodafone and Vedanta cases: It is difficult to comment on individual cases.

However, the mindset that needs to be adopted is that one should be prepared to

be questioned and subject to judicial oversight.


23September 2013


Indian Education: Taking the train less travelled

Prof. Sandeep Desai pursued

marine engineering (DMET)

and MBA in his academic

period. He has worked with

a leading shipping

company and has extensive

experience in a marketing

profile at MNCs. He

subsequently shifted focus

to academics and social

causes. He was a

professor at S P Jain

Institute of Management &

Research and a visiting

faculty at several B-schools

across India. Prof. Desai

has devoted his entire life

to improving the lives of

those around him and

people who reach out to

him.

Shloka Missionaries is a

public charitable trust

managed by professionals

dedicated to 'Seva-Bhaav'

way of living. The trust has

been committed to reforms

in education from its

inception and the trustees

believe that 'vidya' is the

true wealth of a nation and

its people. Pursuing this

mission, the trust has been

involved with creating new

pools of learning, where

none existed, and bettering

existing pools of

knowledge.

Raises money from local trains to open free schools for the poor

Motilal Oswal Foundation signs up and so does another investor in AGIC

Prof Sandeep Desai, the man who begs in Mumbai's local trains to fund schooling for the

underprivileged in the interiors of Maharashtra, had a corporate beginning.

As a marine engineer he visited 43 countries and then worked in the areas of marketing and

strategy, following his MBA degree.

Subsequently, he taught at business schools, with added responsibility to teach social studies.

It is then he saw the wide gap in reaching quality education for rural poor.

Appalled by the state of education, Prof Desai filed 32 PILs in the court and won 28 of them.

However, while pronouncing the verdict, the judge asked him, "have you ever run a school"?

It acted as a trigger point in his life following which he embarked on a mission to open

schools imparting quality education for the needy.

He started begging in Mumbai's local trains to raise funds for the school and in the process

got arrested. However, a media outcry followed and he was let off with a fine of INR700 by

the court.

Prof Desai, a bachelor, now is on a mission to set up 100 schools before his death that would

provide good quality English medium schooling to the needy children.

Responding to his call to each corporate adopting a school, Motilal Oswal Foundation

announced sponsoring one school. Another noted investor also announced adoption of

another one.

Prof Sandeep Desai - Making of the man Background: Prof Sandeep Desai studied marine engineering from Kolkata, a career

he had chosen for visiting countries. He visited 43 countries in five-and-half years.

Subsequently, he studied MBA and worked for various MNCs, including Castrol

and Aral AG. Thereafter, he took up an assignment of visiting faculty at SP Jain

Management Institute and later became full time professor of marketing and

strategy.

Early motivation and failures: Prof Desai had an additional responsibility to teach

social studies. It is during this period that he got interested in rural education,

particularly in the field of primary education. He had shot off 200 letters to

corporates for donations but a single help was not forthcoming.

Activism: Appalled by the state of education in various schools, he filed 32 PILs

and won more than 28 that drew adverse sanctions of the court on the wrongdoings

of many schools and colleges.

Trigger point: Once pronouncing a judgement, Justice Singh asked him, "have you

ever run a school?" He replied, "is this a challenge or a suggestion." Justice Singh

replied that he could take it either way. Since then he has not filed a single PIL.


Prof Sandeep Desai

Indian Education: Taking the train

less travelled


Dipankar Mitra


24September 2013


Begging: the unique Desai way to fund schools Begging for a cause: Prof Desai applied his knowledge of marketing strategy in

focusing on a captive audience for raising funds through begging. Initially, he did

not have the courage to take out the box and after two stations he thought 'it's

now or never'.

Lessons learnt in begging: He spoke of the realization that if one can bring down

his ego to ground zero level, communication becomes very easy. In his words, if

we have ego for the little achievements that we have, how much ego the creator

of ever-expanding universe must have! He also considers himself as a product of

common man as they contributed to his funds.

Arrested for begging: Prof Desai was arrested by the railway police force for

begging. Following this, there was a massive media outburst. Hindustan Times

carried a campaign. Oddly, the Rajasthan police came to investigate whether

religious conversions are going on in his institute. Finally, the court imposed a

fine of a paltry sum of INR700, which too was paid by a couple who sat through the

proceedings.

Mission: A hundred schools; Motilal Oswal Foundation signs up; so does aninvestor in AGIC A hundred schools: Prof Desai, a bachelor, now is on a mission to set up 100

schools that would provide good quality English medium schooling to the needy

children.

Many difficulties: The school in Umarkhed would require INR3m in the first phase

(@800 psqf). Land acquisition has become difficult. The cost of each school would

go up to INR10m. The methodology of teaching inculcates not just copying western

techniques but also indigenous and broad-based values.

Motilal Oswal Foundation signs up: Responding to his call to each corporate

adopting a school, Motilal Oswal Foundation announced sponsoring a school. A

noted investor also announced adoption of another school.

Indian Education: Taking the train less travelled

25September 2013


Looking beyond the gloom & doom

Mr Deepak Parekh is the

Chairman of HDFC, India’s

leading housing finance

company. Mr Parekh’s

business acumen and

farsightedness has not

only made HDFC the leader

in mortgages, but has

transformed it into India’s

leading financial services

conglomerate, with

presence in banking, asset

management, insurance,

real estate venture fund

and education finance

company.

Besides HDFC Group

companies, Mr Parekh is on

the board of several

leading companies across

diverse sectors. He is often

referred to as the

government’s unofficial

crisis consultant. Be it his

role as Special Director on

the Satyam Board in 2009 to

revive the company or the

crucial role played during

the Unit Trust of India

fiasco in the late ’90s, he

has shared his ideas to

formulate reform policies

across sectors. He is an

active member of various

high powered economic

groups, government-

appointed committees and

task forces.

Look beyond gloom and doom

Lists six areas of positive development

Problems of India are more self-inflicted than emanating from abroad.

Six areas of positivity in India are i) agriculture, ii) containment of fuel subsidies, iii)

readjustment of interest rates, iv) infrastructure debottlenecking, v) disinvestment, vi)

politics.

Agri to contribute 80-100bp to GDP growth this year, food inflation to come down, concerns

of food security overdone.

Government has increased diesel prices consistently and the finance minister is trying his

best to maintain the deficit targets.

RBI's liquidity tightening measures could be scaled back even though rates are not expected

to ease to prior July 15 levels.

Infrastructure bottlenecks are being addressed. The projects are going to take time.

While usual disinvestment should not be done at this time, the disinvestment of Hindustan

Zinc, Balco and SUUTI would be a success at this juncture.

In 2014, chances of a third front led government is very low. The coming state elections

would give us an indication of things to come in 2014.

Self-inflicted wounds of India The contrarian view is missing: Usually, markets have two views, one being

contrarian. However, in the current circumstances, the market view has converged

to doom and gloom.

Self-inflicted damage: However, according to Mr Deepak Parekh, current woes for

India are more of self-making than due to external factors.

Positivity overlooked: In the present gloom, however, people have forgotten to

take note of the six areas in which positive developments are taking place.

Six areas of positive developments Agriculture remains buoyant: Agriculture is the real silver lining this year, with 9%

more area being sown. With this, agriculture is expected to grow at more than 4%

and foodgrains production expected at 260mt. We have five times the stock of

wheat than the buffer stock norm and three times for rice. As a proof of buoyancy

in agriculture, tractor sales are growing fast even as the auto sector has seen ninth

consecutive months of slowdown. Agriculture to contribute 80-100bp to GDP

growth this year and food inflation will come down. Concerns on Food Security

Bill are overdone as the bill would go up by INR400b and its implementation

would take time.

ThematicPresentationMr Deepak Parekh

Chairman, HDFC



Alpesh Mehta

+91 22 3982 5415

[email protected]

Sunesh Khanna


26September 2013


Fuel subsidy: At present under-recovery in diesel exceeds INR10 and remains

significant in kerosene and cooking gas. The huge depreciation in INR has made it

imperative to raise diesel prices by INR3-5, post Parliament session. Hence,

subsidies would come down and this would give confidence to the international

rating agencies. The savings of INR400b on fuel can go to fund the additional

expenditure on account of Food Security Bill.

Reversal of RBI's tightening measures: RBI's liquidity tightening measures clearly

did not achieve goals as INR continued to be on a free fall and in the bargain

money and bond market went for a toss. AMCs of mutual funds came down to

INR8t from INR12t. The inverted yield curve does not help growth and development

in India. Thus, MSF and LAF related measures should be reversed. While the

Government has asked eight public sector companies to raise USD8b from the

market, we need to borrow from a position of strength than from weakness.

Infra bottlenecks being addressed: Government is trying its best to address the

infrastructure bottlenecks. These projects are going to take time. However, biggest

reforms have happened by way of allowing purchase of imported coal and higher

costs to be pass-through. Also, SEBs restructuring is happening.

Disinvestment to kick off: Hindustan Zinc and Balco's disinvestment is expected

to kick off soon. The sale in SUUTI is also in the process. These disinvestments can

potentially fetch a large part of the stated targets in the budget.

No third front in elections: General Elections of 2014 may not be preponed, as

feared by some. However, chances of a third front are slim. In the upcoming

elections in five states (Rajasthan, Delhi, Madhya Pradesh, Chhattisgarh and

Mizoram), the dominant parties are largely Congress and BJP, unlike other states

dominated by regional parties.

Conclusion: Long term prospects intact Long term prospects: Long term prospects of India remain intact. Just to look at,

the banking sector is likely to see an exponential growth - branches are going to

double to 140,000 by 2020, ATMs five times and mortgages would grow by eight

times. Besides, tele density stands at 73% and would grow further and two-

wheelers would double by 2020.

More pain ahead for EMEs, India to hold steady: However, EMEs may undergo

some more pain before they stabilize. However, a growth of 5-6% is assured in

India. If recovery happens in the US and Europe, it would further strengthen India.

Land bill and real estate: Land would become more expensive but would be

available for industry post implementation of LARR Bill. While there may be some

correction in real estate prices, no real estate player has ever gone belly-up.


27September 2013



Dipankar Mitra


Unleashing human spirit – most & more

Mahatria Ra a.k.a. T T

Rangarajan is considered a

spiritual leader and living

master by his students and

is the founder of Alma

Mater – an organization

dedicated to self-mastery

and holistic personality

development. Alma Mater

is one of the leading

organizations in India that

is spearheading the

spiritual renaissance

raging across the world. It

is a non-political and non-

religious organization that

does not promote any

particular ideology but

with a mission to work for

the betterment of the

individual, society and the

world. It conducts

transformational courses

in the cities of Chennai,

Pune, Bangalore and

Hyderabad in India.

He conducts Higher Deeper

Beyond (HDB) — an

annual spiritual retreat

during which thousands of

students have undergone

deep spiritual transformations

and emerged as better

citizens of the world.

Mahatria is also the Editor

of Infinithoughts (formerly

Frozen Thoughts), a growth

oriented magazine

published monthly by Alma

Mater.

Holistic development of individuals ...

... for corporate success and greater glory of country

Corporate sector is more ethical than high places of religion but has its ownchallenges Corporate sector: It is more ethical than most high places of religion replete with

black money and more stifling hierarchy. While no person has ever been lifted

out of poverty through charity as it only keeps one poor. On the other hand, the

corporate sector provides employment and thus accords constructive charity to

lift the poor.

The gap between early success and later achievement: A lot of people showing

promise at early age did not live up to it. On the other hand, many backbenchers

have made it big in real life. The gap between promise and achievement points to

colossal human waste that is far greater in magnitude than the damage to

environment or ozone layer. Unlike environment, human resources get depleted

when we do not use them.

Inadequacies of curriculum: Our educational curriculum does not teach us

leadership, or equip us to deal with relationships in a heterogeneous group of

people. Neither the values of competitiveness, time management, ways to deal

with failure are taught. Thus, the fear of failure comes in the way of taking

initiatives.

The colonel is ready, army is not: Nearly 80% of the people in every organization

are actually sitting. We keep improving systems, technology, one-day executive

training programme etc, but without the person being ready for it, we still do not

have the peak performing individuals. Change is not successful if not monitored.

Changing the system of annual appraisal (APR) to a quarterly one would usher a

new beginning for the organization. However, many in the organization act as

speed breakers hiding behind the power point presentation. The chair protects a

lot of corporate leaders, 90% of whom feel a sense of incompetence. As demands

of the roles are growing much faster than you, thus the gap between expectation

and delivery increases.

Developing human potential to lead to organizational growth Human beings as a composite individual: We need to see a human being beyond

his degree, skill and attitude and as a composite individual comprising of physical,

mental, intellectual, emotional and spiritual being. Organizations need to harness

these aspects of human potential to grow. Thus, we need to develop organizations

holistically.


Mahatria Ra

Spiritual Guru


28September 2013


Physical: While it may appear trivial at the first instance, but if one does not have

a healthy body, it starts showing up later in the day. It shows in diseases and

medicines and efficiency of the people. Physical fitness is one of the criteria for

APR. The body is designed in such a way that it would take care of you, if you take

care of it. Hence, an hour to the body is essential.

Mental: The education system is designed to develop the conscious part of mind.

However, the conscious comprises only one eighth of the mind - the remaining

seven-eighth being subconscious. The mind does not differentiate between the

positive and negative emotions but can only recognize the shallow and deep

emotions. The duct to which one programmes his deep emotions is programmed

for recurrence of the same. Thus, one becomes the co-author of his own destiny.

There are three ways to correct this. One is that, anything positive, speak in five

sentence and anything negative say once or do not. Second, anything positive get

emotionally involved, anything negative only intellectually analyze. Third and

most importantly, train yourself to experience shallow hurt and deep positive

emotions.

Intellectual: Mahatriya Ra picked up some simple philosophy from his managers

in his early part of professional career. The first one was "Subordinate your likes

and dislike to the purpose of your life. The second one is to seek solutions always

and not the problems captured succinctly in the phrase "there is a way and the

way is on the way".

Emotional: We all experience positive and negative emotions. But there is a

difference. Ordinary men spit their negative emotion, the extraordinary channelize

their emotions. But they channelize it to positive direction by identifying a goal

larger than emotions. The same happened with Mother Teresa and Mahatma Gandhi

who made their negative experience channelize it in right directions. We live our

life with an enormous amount of sensory overload, with a never ending traffic

jam. Hence, some period of non-doing, a period of quietude may help either by

meditation, walk alone, star gazing etc may help.

Conclusion: Two stories and one lesson Conquering Mt Everest: After failing to climb Mt Everest thrice, Sir Edmund Hillary

said to the painting of it, challenged itself that "more and more you reject me,

more and more I become determined that I would climb on top of you ... because

as Mt Everest you cannot grow but as human being I would continue to grow".

Get the man correct, the world would fall in place: The father reading a newspaper

and not wishing to be distracted by his little daughter, tore the pieces of a paper

where lay map of the world as part of an advertisement of a courier company and

gave that as a jigsaw puzzle to the girl as a precondition to play. Within five minutes

the girl got the map right and replied to the bemused father that on the opposite

side was the picture of a man and she just put the eyes, ears and nose together.

Thus, getting the man right would get the world right!

It starts with you: Everything starts with you. First you grow holistically and then

empower everyone through leadership to grow holistically. If we thus feel

responsible to empower the 1.2b people to grow holistically, give us 25 years and

collectively we can put India on top of the world.


29September 2013


The Great India Management of Dabbawala

Dr Pawan Agarwal is the CEO

of renowned Mumbai

Dabbawalas (couriers for

lunch boxes to offices) and

is also a well-known

management guru. He is a

proficient professional

involved in conducting

research and contributing

to the design and delivery

of courses for the entire

educational fraternity and

has received several

awards for his work as a

teacher, including the

“Utkrusht Shikshak

Sanmam” from the Mumbai

National Congress in 2010

and the Rajiv Gandhi

Puraskar in 2007. In 2001,

while he was pursuing a

doctorate for the topic “A

Study & Logistics & Supply

Chain Management of

Dabbawala in Mumbai”, he

had approached the

dabbawalas (Mr Raghunath

and Mr Gangaram).

Mr Agarwal has been

involved in the world of

dabbawalas ever since and

works on an honorary basis

to make presentations. He

has been authorized by the

dabbawalas to present their

work for audiences in

English. Outside India, he

has been invited to unleash

the magic of dabbawalas to

organizations such as Young

President Organisations

(YPO) members in Kenya, YPO

members in Nigeria, British

Telecommunication and

Global Services in London

and First Source Solutions

Ltd in London.

Mumbai Dabbawalas - a lesson in management

Rooted in core principles of hard work, customer satisfaction and human values

The success of Mumbai Dabbawalas is built around a few simple and traditional principles

including i) work is worship, ii) customer is god, iii) no alternate to hard work, iv) importance

of human values.

The great Mumbai Dabbawalas services started in 1890 and have 5,000 employees, with an

average literacy rate of 8th grade schooling. They cover a total area of 60-70kms and carry

nearly 0.2m tiffin boxes, totalling 0.4m transactions, 120m transactions every year.

The dabbawalas have a very simple and flat organizational structure, with 13 members at

the top organizational position, including nine directors. The second layer comprises of 800

mukadams and the rest 5,000 are simply members with all equal status.

The cost of dabbawala service is kept low at INR400-450 per month irrespective of weight,

distance and space because if the prices are raised further, they would face competition

from the local restaurants. In all thus, dabbawalas make INR8,000-9,000 per month. This is

added by supplementary income from odd jobs .

Dabbawalas have never resorted to any strike or got involved in any police/court case since

1890. A strict code of conduct is enforced throughout the organization.

Mumbai Dabbawalas have won many awards and accolades, including Six Sigma performance

and ISO 9001:2000 certification, most notably without applying for it. Lastly, dabbawalas

now perform a role of brand ambassador for the country.

Simple principles behind the success The takeaways: The key takeaways from the working of dabbawalas are their i)

passion, ii) commitments, iii) consistency, iv) execution, v) accuracy, vi) dedication,

vii) time management, and viii) complete customer satisfaction.

Four key principles: The four key principles that guide dabbawalas are i) work is

worship, ii) customer is god, iii) no alternate to hard work, iv) importance of

human values.

Functions and workings: The great Mumbai Dabbawalas services started in 1890

and it was registered as a charitable trust in 1956. At present, they have 5,000

employees, with an average literacy rate of 8th grade schooling. They cover a

total area of 60-70kms and carry near 0.2m tiffin boxes totalling 0.4 transactions,

120m transactions every year. It takes around 8-9 hours for this to accomplish,

including the morning three hours of wartime.

Simple organizational structure: The dabbawalas have a very simple and flat

organizational structure, with 13 members at the top organizational position,

including nine directors. The second layer comprises of 800 mukadams and the

rest 5,000 are simply members with all equal status.

ThematicPresentationDr Pawan Agarwal

Management & Motivational Guru

The Great India Management

of Dabbawala


Dipankar Mitra


30September 2013


Impeccable service at a reasonable cost Charges only @400-450 per month: The cost of dabbawalas service is kept low at

INR400-450 per month, irrespective of weight, distance and space. This is because

if the prices are raised further, they would face competition from the local

restaurants who would supply cooked food to the customers. In all thus

dabbawalas make INR8,000-9,000 per month. Diwali bonus, once a year, amounts

to a month's extra payment. Dabbawalas add this with supplementary income,

including delivery of newspapers in the morning and odd jobs in the evening.

No strike or police/court case: Dabbawalas never resorted to any strike since

1890 as they have seen the results of long strikes in Mumbai mills that never

opened thereafter.

Discipline: A strict code of conduct is enforced throughout the organization that

includes the following, i) no alcohol/smoking during business hours, ii) mandatory

white cap during business hours, iii) carry identity card, and iv) no leave without

prior notice. In case of an emergency absence, it is reported immediately.

Some unique features: The average weight carried by a dabbawala is around 60-

65kg. There is no fuel, modern technology, investment or disputes involved in

the entire service. The performance rating is higher than 99.99%, with 100%

customer satisfaction.

A foolproof coding system: Dabbawalas use a simple but foolproof coding system

that mentions i) residential area code, ii) dabbawala code at residential,

iii) building name, iv) floor no., v) dabbawala code at residential station and

vi) destination station.

Delivery of Six Sigma performances against all odds Crowded trains: The Mumbai trains are overcrowded with 12 coach trains, 4,000

commuters, 8,000 disputes but there is no excuse as duty comes first. The tiffins

are unloaded and rearranged as per destination area and building. The reverse

process follows during return journey from all destination stations.

Awards and facilitation: Documentaries have been made on Mumbai Dabbawala

services by various TV channels in India and abroad. Also, they became celebrated

case studies in various business schools across the world. They receive invitation

for lecture among the world's leading institutes. Dabbawalas received ISO

9001:2000 award on August 1, 2006 that too without application! They are included

among DNA's top 50 entrepreneur list of India.

Achievements: One of the most celebrated success of Mumbai Dabbawalas is

that of Six Sigma performance, with an error rate of one in 16m transactions (i.e.,

99.99966 success rate). Besides, they have got recognition at Guinness Book of

World Record, Ripley's "believe it or not" and many other sources.

Brand ambassador for country and other anecdotes: When Prince Charles visited

the dabbawalas, they had to set the venue and time (Churchgate Station between

11.20 AM to 11.40 AM only on November 4, 2003) as they would otherwise be busy

at serving their customers who are god in their eyes. This relationship extended

further when dabbawalas sent gifts on the second marriage of Prince Charles and

when the latter sent his condolence message after heavy floods in Mumbai on

July 26, 2005.

The Great India Management of Dabbawala

31September 2013


Art of doing business in India – Conquering the chaos

Mr Ravi Venkatesan is a

Director on the boards of

Infosys and AB Volvo and a

Fellow of the Center for

Higher Ambition

Leadership, Boston. He is

an advisor to several family

run business houses and

entrepreneurial ventures.

He is also a member of the

Advisory Board of Bunge

Ltd, the Global Alumni

Board of Harvard Business

School and of Marico

Innovation Foundation. Mr

Venkatesan is a founding

partner and Chairman of

Social Venture Partners,

India, a network of

engaged philanthropists

attempting to address

complex social issues

through venture

philanthropy.

Between 2004 and 2011, Mr

Venkatesan was the

Chairman of Microsoft

India, which under his

leadership became the

company’s second largest

and one of its fastest

growing geographies. He

was instrumental in

helping Microsoft India

create “Shiksha”, a large

computer literacy program

that helped train over 35

million students from weak

backgrounds. Prior to

Microsoft, he spent 16

years with Cummins Inc as

Chairman.

Mr Venkatesan was voted

the most influential MNC

CEO for 2011 by the

Economic Times.

Key takeaways

Core essence: Many companies enter India or other Emerging Markets (EMs), but

all are not successful. Some MNCs such as Nestle, McDonald's, Vodafone, Bosch,

LG, Reckitt Benckiser succeed, while others like GE, Apple are not that successful.

Why does India really matter? Why bother with the 'chaos'?: India is the perfect

litmus test which MNCs should be willing to take due to: (1) country's growing

market (nominal GDP grew by more than 6x from 1995 till date), despite all current

challenges and (2) the growing middle class.

How can you ascertain if a company is succeeding in India?: (1) The company is #1,

#2 or #3 in the industry and growing faster than average, (2) India provides 10-20%

of the incremental global growth of the company and (3) product capabilities and

talent from India are being used to succeed in other markets.

Three differentiators to success Have a long term mindset - Companies should have a strategic view of the business

and not just a financial view for short term.

Adapt to the market, do not expect the market to adapt to you - Product to be

tailored for India offering '70% of the value at 30% of price.' Companies should

have a localized business model that delivers profitability even at crazy price

points. They should have a granular bottom-up approach.

Get the talent right - Corporates should seek people with potential and then give

them huge challenges which display their hunger, courage, ability to take quick

decisions. Companies should move top talent around globally, especially in

emerging markets.

India - growth spurts followed by periods of slowdown: Empirical evidence proves

that India has always been a place where growth happens in spurts, followed by

periods of slowdown (three to four good years followed by four to five tough

years), despite slack policy-making. Thus, if MNCs are able to adapt during the

tough periods of slowdown, they will reap the benefits during a good run.

Broad recipe for MNCs to win Indian markets Pick a few big markets like China, India, Indonesia to go deep, rather than smear

investments across many.

Look past the short term challenges of these markets. Play the long game and stay

on the course. Sacrifice short term profitability for market leadership.

Send the best leaders for these markets and for five years or more.

Empower the local team to make most operating decisions do not micromanage.


Ashish Gupta


ThematicPresentationMr Ravi Venkatesan

Ex-Chairman, Microsoft (I), Cummins (I)

Art of doing business in India –

Conquering the chaos

32September 2013


Panel Discussion



Mr Ramesh IyerMD & CEO

M&M Financial Services

Mr Ramesh RamanathanFounder, Chairman,

Janalakshmi Microfinance

Mr Romesh SobtiMD & CEO

IndusInd Bank

Mr Vikram LimayeCEOIDFC

Mr Tamal BandopadhyayDeputy Editor MINT

Author

MODERATOR

India Banking – Beginning of a New Era

Consensus of 6-8 new banking licenses to be given

Panelists for the discussion were (1) Mr Vikram Limaye, MD & CEO, IDFC, (2) Mr Romesh

Sobti, MD & CEO, IndusInd Bank, (3) Mr Ramesh Iyer, MD & CEO, Mahindra & Mahindra

Financial Services, and (3) Mr Ramesh Ramanathan, Chairman, Janalakshmi. The moderator

was Mr Tamal Bandyopadhyay, Deputy Managing Editor, Mint.

The panelists agreed that the medium to longer term opportunity remains large despite

the current gloom in the environment. While India needs a bank of global size, there is also

need for small and specialized branches, given the fragmented economics in different parts

of the country.

On financial inclusion, three panelists believed that banking is the correct business model,

while one was of the view that NBFCs are already helping achieve financial inclusion without

a banking license.

6-8 new banking licenses are expected to be awarded if corporate houses are included.

Financial inclusion and use of technology will be the USPs of the new banks.

Background for the panel discussion

Post liberalization, we have seen structural changes in the Indian economy and

Financials have been at the forefront. 1993 saw the emergence of new private

sector banks (10 licenses in 1993 and two more in 2003), which transformed the

competitive landscape, increased financial penetration and improved customer

service levels. The adoption of newer technology reduced intermediation cost,

which in turn reduced overall lending rates in the system without impacting

profitability.

Post the NBFC debacles in the late 1990's and early 2000's, some focused players

emerged stronger and capitalized on the weakness of the banking business model.

Strong growth in the last decade has also seen the emergence of mono-line NBFCs

like IFCs, MFIs and gold financiers.

Discussion focus areas were: (1) Opportunities and Challenges for Banks and NBFCs

in the New Era, (2) How Technology is Playing an Important Role, and (3) Banking

License: (a) Is the banking space getting overcrowded or is the pie big enough to

accommodate 5-6 new players?, (b) Outlook on standalone NBFCs in the longer

term, considering challenges on the liability side and increasing competition in

their niche areas.

Views from Janalakshmi

India has 30m MSMEs officially. There are also ~30m micro-MSMEs, which are

excluded from formal banking channels. These particularly include rural

inhabitants and migrants in urban/metropolitan areas. Overall banking

penetration is not even 5%. The total requirement is INR30t.

With a banking license, Janalakshmi would look at the financial inclusion

opportunity in the MSME segment. It would use an innovative distribution strategy

and technology for financial inclusion.

PANELISTS

33September 2013


India Banking – Beginning of a New Era

Views from MMFS

MMFS is not applying for a banking license, as the conditions do not provide

opportunity for co-existence of NBFC and Bank, and the transition time to convert

from NBFC to Bank.

Lending in the rural markets and financial inclusion requires interactive lending,

execution excellence, and the capability to scale up where NBFC platform is

required.

It does not see itself losing out on any opportunities if it does not turn into a Bank.

Customers would be fine dealing with a Bank/NBFC as long as they get good

service and convenience.

Views from IDFC

IDFC was formed with the mandate of tapping the opportunity in the fast growing

Infrastructure segment. However, being focused on only one lending segment

leads to significant volatility and increases the risk to the business model. IDFC

will incrementally look to diversify its lending business, though Infrastructure

will remain the key focus area.

From a longer term perspective, the Banking business provides a good platform

for diversification of assets and liabilities. Mr Limaye pointed out that while India

needs BIG banks, it also needs MORE banks to increase penetration. Diversification

of assets and liabilities is important from a risk and growth prospective. Hence,

applying for a banking license makes sense.

Views from IndusInd Bank

For a new bank to be successful in a highly competitive market, a niche presence

and focused strategy are essential. The Indian market is big enough to

accommodate 6-8 new players.

Both the NBFC and Banking business models have their pros and cons. NBFCs are

doing a great job of financial inclusion, and the RBI will not be against that business

model. However, as the NBFC industry is becoming bigger, regulations are also

likely to become more stringent. This will increase regulatory and operating

expenses, which will impact profitability.

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