the global analyst june 2015

1The Global AnAlyst | JUNE 2015 |

A N E X C L U S I V E M O N T H L Y O N B U S I N E S S & F I N A N C E

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June 2015

Volume 4 Issue 6

MODIVERSARY

Modi Government delivers, but needs to do lot more

SPECIAL ISSUE

100

MAKE IN INDIAWhat Can Make it Happen?

AGRICULTURE Can mobile phone services be an agent of change?P6

SUSTAINABLE LIVINGHow Ecova Reduced its Carbon Footprint

P54

MANAGING STRESSED ASSETSRacing against Time!P32 P44

The Global AnAlyst | JUNE 20152 |


June 2015 Vol. 4 | No. 6 managing editor - N Janardhan Raoeditorial director - Amit SinghreSearcH teamSurya Prakashini (Proof Reader), Anjaneya Naga Sai Prashanth, Vijaya Lakshmi, Narasimhanan, Karthikeyan, Nagaswara Rao & MSV Subba Rao

adViSorY BoardDr. Paritosh Basu, Former Group Controller, Essar GroupN Harinath Reddy, Advocate & Sr. Partner, H&B Law Offices (Hyd)

Sanjay Banka, CFO, Landmark Group, Saudi ArabiaPrashant Gupta, IIT-K, IIM-L, CEO - Edunirvana Dr David Wyss, Former Chief Economist, S&P & Visiting Fellow, Watson Institute at Brown University. NY, USDean Baker, Economist and Co-founder, Center for Economic and Policy, Washington, USWilliam Gamble, President, Emerging Market Strategies, US Andrew K P Leung, International and Independent China, Specialist at Andrew Leung, International Consultants, Hong Kong

M G Warrier, Former GM, RBIIvo Pezzuto, Management Consultant, Professor, and Author of the Book “Predictable and Avoidable” (Gower)

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Published & Edited by D Nagavender Rao

It doesn’t take much to understand that all is not well with the Indian agriculture. The share of the agriculture sector in the country’s GDP

has more than halved in the last two decades and a half – from 32 per cent in the 90s to about 14 per cent now. And though its contribution in the GDP has consistently been declining, more than 60 per cent of India’s population depends on agriculture

A WORD From EDITOR

Saving Agriculture




June 2015

Volume 4 Issue 6

MODIVERSARY


SPECIAL ISSUE

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P54

MANAGING STRESSED ASSETSRacing against Time!

P30 P42

for their livelihoods. Though the country has made rapid strides in technology, particularly, Information Technology, farming is done still the same old way, resulting into lower productivity and profitability for the cultivators. About 60 per cent of the country’s cultivated area is rain-fed and depend mainly on rainfall, which has been nothing but erratic. Issues like global warming, higher input costs, are posing further challenges to farmers. Growing population, rapid urbanization, changing lifestyles, growing shift to bio-fuels, etc., they have all been ensuring that supplies continue to struggle to keep pace with the rising demand.

Given the plethora of challenges facing the sector, there is a need for find-ing solutions that could not only address new and emerging challenges, but which could also have long-lasting impacts. Improving productivity is one solution with GM crops offering a ray of hope, but there is a need to look for more, and perhaps, better alternatives. Against this backdrop, ‘Climate-Smart Agriculture’ emerges as the answer to the problems af-fecting the agriculture sector in the country. The World Bank defines Cli-mate-Smart Agriculture (CSA) as an approach to managing landscapes—cropland, livestock, forests and fisheries—that aims to achieve three outcomes: Increased productivity; Enhanced resilience (reduce vulnerabil-ity to drought, pests, disease and other shocks; and improve capacity to adapt and grow in the face of longer-term stresses like shortened seasons and erratic weather patterns); and, Reduced emissions.

The results are already visible. In Haryana, for instance, where this latest technique was introduced five years ago, despite the slow adoption rate, the farmers who have adopted the climate-smart way are benefitting in terms of higher yields, better crop-mix and lower input costs including lower water consumption. CSA approach, according to a Inter Press Service report, not only enables lower input costs including lower water consumption, but also allows to grow better crop-mix (for example, four acres of maize needs only a fifth of the water required for paddy). It also emphasizes on direct seeding instead of sapling transplantation, thus doing away with high labour costs and a week of standing water to survive; besides it also eliminates threat of vulnerability to floods and strong winds due to a weak root system.

Citing examples of farmers implementing CSA technique, the report says that the new method also gives shorter-cycle harvests and vegetables are grown as a third annual crop, translating into higher income for the farmer. These farmers also use technology like the laser land leveler, which produces exceptionally flat farmland, which ensures equitable distribution and lower consumption of water, and other tools like the Leaf Colour Chart and GreenSeeker which help farmers assess the exact fertilizer needs of their crops. Text and voice messages received on their mobile phones about weather forecasts help them to time sowing and irrigation to perfection. While adoption to this technique is slow, expectedly though, there is a need to create greater awareness and provide handholding to farmers, especially small and marginal ones, given the enormity of challenges. Editorial Director

‘Climate-Smart Agriculture’ could be the answer


SMS “HOME” TO 567676

SMS “CAR” TO 567676

P12 Largely On Track With Fulfilling Poll-Time Promises

P14 Low Demand, Not Policy, Biggest Problem for India Inc

FINANCIAL SERVICES

P30 My name is Insurance and I am not an Investment

P32 Managing Stressed Assets - Racing against Time!

The rule, “Prevention is better than cure” is equally applicable in the case of credit portfolios of banks, as it is for the maintenance of our own health.

P58 LIC unveils new policy

REALTY SECTOR

P26 Real Estate Report Card9 Impressions Indian Real Estate Stakeholders Have about Modi Government - And JLL’s Take.

P34 Is Your Home Safe From Earthquakes?

Over the years, increasing concerns about earthquake resistance have led scientists and engineers to invest R&D resources and considerable funding into methods to make modern buildings earthquake proof.




June 2015

Volume 4 Issue 6

MODIVERSARY


SPECIAL ISSUE

100




P54


EXECUTIVE SUMMARY

P52 Low oil prices & monetary easing triggering modest acceleration of global recoveryLow oil prices and monetary easing are boosting growth in the world’s major economies, but the near-term pace of ex-pansion remains modest, with abnormally low inflation and interest rates pointing to risks of financial instability.

PERSPECTIVE : E-COMMERCEP36 Myntra’s Mantra - App-only Platform : But, Can it be the New Holy Grail?Myntra’s, India’s largest online fashion store, decision to embrace the mobile ‘app-only’ model doesn’t sound too convincing, notwithstanding the hype surrounding its latest platform.

BANKING : EARNINGS SEASONP38 State Bank of India

P40 Punjab National Bank

P40 Syndicate Bank

P41 Oriental Bank of Commerce

P42 State Bank of Hyderabad

ENVIRONMENT & YOU

P44 Sustainable Living : How Ecova Reduced its Carbon Footprint by 1.49 per cent

P45 PepsiCo’s Safe Water Network

How the F&B giant is delivering access to safe water?

COVER STORY P8 MODIVERSARY

Modi Government delivers, but needs to do lot more As Modi Government celebrates its first year in office, comparisons, criticisms, accolades and admirations have been pouring in from across the country. While PM Modi has delivered on 3G: Governance, Growth and Growing Global Presence (of India), his government faces a slew of challenges as it enters its second year in office, with the biggest being creating large-scale jobs and reviving rural economy.

REGULARS

P50 BUSINESS BRIEFS

P56 BOOKSHELF

CORPORATE WORLDP46 Junna Solar Systems - Harnessing Solar Power

CONTENTS

INSIGHTS

P54 AGRICULTURE : Can mobile phone services be an agent of change?

Yes, says a Vodafone study which identifies six mobile services with the potential to transform Indian farmers’ lives and livelihoods. The report claims that these services could increase an estimated 60 million Indian farmers’ annual incomes by an average of US$89 a year in 2020.


The government’s role as building the arena for the ‘Make in India’ initiative, defining the rules of the game, and constructing the infrastructure (physical and digital) would be critical, going forward.

SHASHANK TRIPATHI, PwC Strategy Consulting Leader

‘MAKE IN INDIA’ What Can Make it Happen?

BUSINESS ENVIRONMENT




TGA

MAKE IN INDIA

PwC recently launched a marque thought lead-ership “Future of India – The Winning Leap” where we set out to understand what it would take for India to increase its GDP by 9 per cent per year to become a 10-trillion-USD econo-

my over the next two decades. The last electoral man-date for development was a more immediate signal of India’s desire for growth and for the benefits of growth to be extended to all members of society. A 9 per cent GDP growth rate with a per capita income rising from US$1,500 to just under US$7,000 per year will boost qual-ity of life for more than 1.25 billion citizens. This would be the largest national development effort any democ-racy has ever attempted.One of the most significant campaigns initiated by the new Government has been the ‘Make in India’ initiative, which seeks to position India as a best-in-class manu-facturing destination, supplemented by all the support systems and investments necessary to make it a practical reality. A key point that Prime Minister Narendra Modi stressed at the time of launch was the need to restore the faith of the home-grown industrialists to invest in India. Additionally, the campaign was also originally devised to help guide foreign investors on all aspects of regula-tory and policy matters along with facilitation in approv-als and clearances.

Unblocking BottlenecksHowever, as history suggests, India, has a reputation of being a difficult market in which to do business. Invest-ment plans are often abandoned, not because the idea lacks merit but because the business environment pres-ents too many barriers. Regulations for tax compliance and audits, along with labor laws and constantly chang-ing government policies, create unnecessary complex-ity. India has historically performed poorly on various benchmarks gauging the business environment, as indi-cated by the World Bank’s Ease of Doing Business rank-ing. Currently, India ranks 142 out of 189 countries, be-low countries such as Indonesia, Brazil, and China. The reasons for its poor performance are straightforward: un-necessary costs, the difficulty of complying with complex regulations, and frequent delays in regulatory decisions. Areas such as starting a business, paying taxes, and en-forcing contracts significantly depress India’s overall ranking.For instance, contract risk, in India, is a problem that cas-cades through the larger economy. One of its repercus-sions is that companies often have difficulty quantifying the risk of their business relationships. New businesses must go to extraordinary lengths to prove that they would be a reliable partner, an effort that often hampers their growth and expansion. Complex business activities that require multiple, interlinked commercial agreements have also become substantially riskier. In the modern in-dustrial supply chain, there may be hundreds of service, maintenance, delivery, and other agreements between numerous companies. One minor dispute that rapidly escalates could be enough to disrupt all other companies

along the supply chain. Without any guarantee that this dispute could be readily resolved, the disruption could extend for years, destroying value for all involved. This is just one example of how India’s business environ-ment puts the country at a clear disadvantage relative to other countries it competes with for foreign investment. Through ‘Make in India’ initiative, the Government could look to support an economic system that contrib-utes to development while promoting fair and effective regulation that conforms to the nation’s unique business and social climate.

Learning from a few Manufacturing Success StoriesOur research indicates that the countries which have boosted their per capita GDP have done so by making the shift in focus from low to high-tech industries. Take South Korea, where the per capita GDP grew 20-fold from 1963 through 2013. The nation achieved this growth in part by developing the manufacturing capabilities es-sential for high-tech industries, which now dominate its manufacturing landscape. Our analysis shows that val-ue-added manufacturing can grow to 20 per cent by 2024 and to greater than 25 per cent in 2034 if India can step up its manufacturing competitiveness. Besides removing the regulatory hurdles, strengthening manufacturing skills training will also prove crucial. Im-porting foreign technology can help Indian manufactur-ers strengthen their capabilities that will help achieve the true potential of the Make in India campaign. This has to be augmented by stepping up investments in R&D, which will have to grow from its current 0.8 per cent to 2.4 per cent of the GDP in 2034 to achieve the desired gains. Growth can also be pushed through improvements in labor productivity that translate from domestic re-forms and through opening up of the economy to foreign participation – which encourages technological spill-over from international markets to India. To achieve such un-precedented growth, the country may need to increase its annual investments to six times the figures in 2014, while the amount of FDI flowing into India would have to more than double as a percentage of GDP by 2034.

Critical FactorsThe global community has viewed India through the twin lenses of admiration and skepticism — admiring this vast nation for its democratic values and cultural heritage while expressing concerns about pervasive cor-ruption, fickle business rules, and slow pace of change. “Make in India” is one of the pioneering initiatives that aims to marshal and channelize India’s resources toward a common vision and purpose. The government’s role as building the arena for the “Make in India” initiative, defining the rules of the game, and constructing the in-frastructure (physical and digital) would be critical go-ing forward. While the government will create the envi-ronment for this achievement; the private sector should shoulder responsibility for generating and executing the vision within that environment.


As Modi Government celebrates its first year in office, comparisons, criticisms, accolades and admirations have been pouring in from across the country. While PM Modi has delivered on 3G: Governance, Growth and Growing Global

Presence (of India), his government faces a slew of challenges as it enters its second year in office, with the biggest being creating large-scale jobs

and reviving rural economy.

COVER STORY

MODIVERSARYModi Government delivers, but needs

to do lot more

The Global AnAlyst | JUNE 20158


1YEAR OF MODI GOVT

On May 16, Prime Minister Narendra Mo-di-led NDA government completed a year in office. It was exactly a year ago that riding on the Modi wave, BJP and its allies swept the Lok Sabha elections, reg-

istering a massive victory. Indeed it was the charisma of Modi which helped BJP romp home, securing an ab-solute majority in the Lok Sabha 2014 elections with a tally of 282 seats, thereby also becoming the first politi-cal party to achieve this feat in the last 30 years. Modi factor was at work again as the BJP won elections in key states of Maharashtra, Jharkhand and Haryana, besides it also successfully formed a coalition government in J&K, another first for the party. If the rise of Modi to the centre stage of the national politics was dramatic, his soaring popularity, first on the national stage, and then in the global arena, has been equally amazing. In fact, his growing stature as the world leader has been nothing short of phenomenal to say the least.

Lifting sentiment, reviving economy

While a year is too short a period to evaluate a govern-ment’s work, especially when it also happens to be the very first year in office, yet, there is absolutely no doubt that the Modi government has done a remarkable job in many areas. When PM Modi took the reins of the gov-ernment at the centre the economy was in bad shape. In the previous two years before the NDA government came to power in May 2014, the economic growth was

stand pressure amidst a surging dollar, which has been gaining against most international currencies in re-cent times, and lower inflation too provided the much needed succor to the government to push its reforms agenda, they in no way take away the credit from the government for the massive efforts it has put in, and which are still under way, to lift the sentiment and re-vive the economy, initiate timely measures to improve situation in the hinterland and help farmers who have been hit hard by the recent bad weather conditions in-cluding unseasonal and uneven rains, and hailstorms in several parts of the country, besides taking several steps to ensure that Bharat (rural India) grows along with (urban India).

But Modi is awaiting a bigger test as fears of poor mon-soon this year loom. Prices of food grains, fruits & veg-etables have already firmed up, making many of the food items beyond reach of poor and needy. Whatever official inflation indices suggest, the fact of the matter is that common man is already bearing the brunt of surg-ing food prices and the government needs to come out with remedial measures without wasting any further time. In fact, it also needs to take some robust measures in strengthening storage, pilferage-proof transportation and effective distribution of food items through PDS.

Social security schemes, a huge successOne program that needs special mention for its remark-able work is social security, or financial inclusion. The

below par, with the GDP registered recording two successive years of below 5 per cent growth – first such instance of longest spell of below par growth in the last 25 years. In contrast, the Indian economy has grown at 7 per cent plus rate in the last two quarters – September and December – and is expected to re-peat the feat in the March quarter as well, which has also prompted many international organizations such as IMF, World Bank and Moody’s to forecast the Indian economy growth to even surpass that of China, the world’s fastest growing economy so far in the last several years. The miraculous turn-around in the Indian economy is at-tributed to the strong reforms push of the Modi government.

While his government has ben-efitted from factors such as lower international crude oil prices for most of the second half of 2014 and early 2015, stronger foreign portfo-lio inflows into the domestic capital market, which helped rupee with-

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MODIVERSARY

Modi government has also em-barked on an ambitious social secu-rity program or financial inclusion mission to take banking/financial services to the door steps of the com-mon man, the unbanked people in the form of nation-wide campaigns such as PMJDY (Pradhan Mantri Jan-Dhan Yojana), PMJJBY (PRAD-HAN MANTRI JEEVAN JYOTI BIMA YOJANA), PMSBY (Pradhan Mantri Suraksha Bima Yojana), and Atal Pension Yojana (APY), which have been huge successes so far. Though critics have been quick to question the successes of these schemes, with major criticism be-ing that a majority of the accounts opened under PMJDY have hardly seen any transactions or are lying dormant, post-launch, the question is – can government be questioned for the non-transaction or non-maintenance of those accounts?

The Modi government has indeed done a commendable job of tak-ing these services to the common man in perhaps no time since tak-ing over. And it is expected that his government would also take appropriate steps to address the concerns raised in some quarters in due course of time. Further, there is a need to improve the quality of service to customers at these finan-cial services organizations to help in customer retention, besides encour-aging more people to benefit from these programmes. The govern-ment has also done good work in the area of subsidy reforms. Thanks to the DBT (Direct Benefit Transfer) scheme, it has been able to ensure to a great extent that the benefits of subsidy reach the intended benefi-ciaries. Its effort in asking rich and influential to give up subsidy on their LPG connections is also a wel-come move. But where Modi gov-ernment earns more appreciation is its efforts in instilling confidence among foreign investors.

Indeed, it’s the Modi effect that has seen a number of global corpora-tions lining up investments in a big way. Be it PM Modi’s vision of promoting India as a global manu-

facturing hub with the launch of the famous ‘Make in India’ campaign, or Digital India, or his Smart Cit-ies project, or his hugely popular Swachh Bharat Mission, these pro-grams are not mere slogans but are well-articulated, well thought-out initiatives aimed at making India a world leader, which also have the world sit and take notice. The NDA government at the centre has also done well when it comes to improv-ing India’s ties with key interna-tional allies including its neighbor-ing nations.

Improves governance, yet more steps neededModi government’s biggest achieve-ment, however, is in the area of gov-ernance, though, there is still a lot

needs to be done to ensure an open, effective and accountable adminis-tration. An important step for Good Governance, Modi had said in one of his addresses, is simplification of procedures and processes in the government so as to make the entire system transparent and faster.

In a speech he made last year on December 25th, which his govern-ment declared as ‘Good Gover-nance Day’, the PM said that initia-tives like new web portals mygov.in and interact with the PM to reach to the people directly, which evoked unprecedented response, “places a large responsibility upon us, and I assure you, my countrymen that we will not let you down”. “The effort to usher in an era of Good Gover-nance has just begun, and begun on

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1YEAR OF MODI GOVT

a very promising note. An open and accountable administration is what we had promised to deliver and we will do so,” Modi assured. Howev-er, it needs to be reiterated that one year is too short a time to assess the success of many big-ticket measures launched by the government in its first year in office, and that it needs to be given some time for effectively delivering on the same. Programs like Make in India and Digital India need massive efforts, investments and conducive climate.

Global geo-political developments such as Greece Crisis and troubles in Euro Zone, the expectations of withdrawal of the quantitative eas-ing, which is stoking fears of a rate rise in the US by the end of the year, ongoing tensions between Russia and Ukraine and other parts of the globe, besides fears of a rise in in-ternational crude oil prices present formidable challenges to the gov-ernment. Besides, And then there are challenges on the domestic front as well. Forecast of a below average monsoon does not augur well for the economy.

A below normal monsoon could only worsen situation for the ag-riculture sector and hence rural economy, which could make the job of the government tougher as it’s working hard to rein in infla-tion, particularly food inflation. It goes without saying that contain-ing inflation along with job creation remain two major challenges before the Modi-led NDA government at the centre.

The government also needs to step up efforts to create more jobs, which will require it to kick start industrial growth in the country, by bringing in fresh investments, by way of cap-ital formation, by boosting exports, and so on. Its focus on skill develop-ment must be supported by creation of jobs opportunities for the youth and the unemployed.

Another area that needs immedi-ate attention is social-sector spend-ing. It’s worrisome that social-sector spending as a percentage of the gross domestic product (GDP) has been in a decline, falling to its lowest levels since 2010, suggests a report in business daily Mint. The government needs to take correc-tive measures, giving it (the issue) a top priority. Education sector is another segment which needs ur-gent action on part of the central government. The paper further re-ports that spending on education sector has fallen below 3 per cent of GDP, including food subsidies.

It’s much below the 6 per cent level promised by his party in its election manifesto.

It’s time for bold measures There is no doubt the Modi gov-ernment faces the challenge of ‘outsize expectations’, however, it must make efforts not to get bogged down by the same, look beyond mere sloganeering, and instead focus on introducing bold reforms, taking steps to revive ru-ral economy, increase spending on infrastructure including social in-frastructure development, and de-livering the goods which reach and benefit the common man.

The NDA government at the centre faces a slew of challenges as it en-ters its second year in office, with the biggest being creating large-scale jobs and reviving rural econ-omy. Surely, the second year in of-fice could be a make or break year for the Modi government.

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Ushering in Reforms

India is embarking on ushering in game-changing reforms through the use of Jan Dhan, Aadhar and Mobile (JAM), a unique combination of three to implement direct transfer of benefits. This innovative methodology will allow transfer of benefits in a leakage-proof, well-targeted and cashless manner. There would be cut in subsidy leakages but not in subsidy themselves. NDA Government has built a national consensus and introduced a Bill to amend the Constitution to implement the Goods and Services Tax (GST). The GST will put in place a state-of-the-art indirect tax system by 1st April, 2016. This will create a unified and common domestic market by replacing a confusing array of taxes and preventing their cascading effects.

The Government has started a unique scheme called Sansad Adarsh Gram Yojana, encourage MPs to take ownership of a village in their constituency and develop this as a model village. It motivates parliamentarians to ensure holistic development of their constituency rising above specific schemes. The Government has approved the MoPNG proposal to supply pooled Natural Gas at uniform delivered price to all grid connected gas based fertilizer plants for urea production. It has also approved the scheme for utilization of stranded gas based power generation capacity which was a joint proposal from MoPNG and Ministry of Power and will help in revival of 16000 MW stranded gas based power plants.

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Largely On Track With Fulfilling Poll-Time Promises

As the Modi Government completes its first year in office, there is no dearth of bouquets and brickbats for the NaMo regime in the media. On analysing the Modi government’s electoral assurances, the actions taken so far and the respective timelines being followed to achieve these, I would say that it is reasonably on track with fulfilling its short-term, medium-term and long-term promises.

Importantly, the continuation of the previous government’s policies like Land Acquisition and Rehabilitation and Resettlement (LARR) Bill, Real Estate (Regulation and Development) Bill will have significant impact

on the real estate industry once these are passed by the Parliament. India’s historically opaque real estate sector will move towards more transparency with the introduction and implementation of these key policies.

It is worthwhile to reflect on the grassroots-level transformation we can expect to see when:

• Millions of home buyers in towns and cities and farmers across the country (the latter being landowners affected by infrastructure projects) are empowered with the clauses in the real estate regulatory bill and LARR

• Investment opportunities in office spaces open up for small retail investors thanks to REITs

• The quality of life of millions of Indian citizens is upgraded when the proposed 100 smart and sustainable cities come to life.

• ‘Benami’ transactions, which have for the longest time been a bane of the real estate sector, are eliminated

Let us take a look at the progress on some of the promises Narendra Modi’s party made in its electoral manifesto. Specifically, we will isolate promises which have direct bearing on enhanced governance and reinforced democratic fundamentals, which are important for India’s development and future-readiness:

Promises On Track

Transparency: Re-auctioning of coal blocks earned the government huge revenues

Efficiency: Real-time effort towards rendering the existing institutional frameworks more efficient; a good example being the change in Food Corporation of India’s food procurement and storage mechanisms.

Productivity And Accountability: Narendra Modi has been directly involved in monitoring and raising the productivity as well as efficiency of his ministry officials. He is clearly bucking a chronic trend of bureaucratic unavailability and aiming to increase public access to government officials

Black Money: The Black Money Bill has given a moratorium period to bring back unaccounted money into the system by paying normal tax. The ongoing dialogue with the Swiss financial authorities to disclose secret accounts of Indians abroad is reaping results

Corruption: Wired (online) transactions are now being encouraged for property transactions. This is a major step forward for curtailing black money in the sector

Investor Confidence: Market confidence has improved with the strengthening of the Indian equity, debt, currency markets and equal tax regime that was promised to both domestic as well as international investment companies

Positioning India: Via a series of international tours, the PM is helping India rid itself of its anti-

MODIVERSARY

ANUJ PURI, Chairman and Country Head at JLL India


investor image and is opening up new avenues of foreign business in India, especially under the ‘Make in India’ campaign

Decentralisation And Cooperative Governance

• Gradual increase in the financial autonomy of states

• Farmers get real-time information on Minimum Support Price through digital channels and Kisan TV. Drastic price movements have been largely under control. A focus on citizen outreach programmes as well as leveraging social media have bought people closer to the governance process.

Promises That May See Progress Soon

• States with similar problems will be able to form councils under Niti Aayog to discuss common concerns

• Niti Aayog, along with other national agencies, will help individual states in mobilisation of resources.

Promises That Saw Little Or No Progress

Relaxing clauses in the Land Acquisition and Rehabilitation and Resettlement Bill (LARR), Real Estate Investment Trusts (REITs) and Foreign Direct Investment (FDI) policies that investors find difficult to follow

• Increased credit facilitation to start-ups

• Initiation of employment exchange programmes with other countries

• Obsolete laws to be scrapped or modified

• Online dissemination of court cases for better monitoring and creation of specialised courts to fast-track delivery of justice.

In short, the Modi Government has a fairly balanced list of hits and misses so far. The trend does seem to lean more towards action than inaction. It definitely seems that Modi has every intention of living up to the larger part of his electoral promises in the future.

I agree with Reserve Bank of India (RBI) Governor Raghuram Rajan when he says that the expectations from the new government when it came to power last year were ‘probably unrealistic’, and that it has in fact taken steps to create an environment for investment and is sensitive to concerns of investors.

Industry Inc. CEOs Praises Modi Government’s First Year

In its first year, the Government led by Prime Minister Narendra Modi has turned around investor sentiment and taken strong action across multiple sectors for scripting a new growth narrative.

- Chandrajit Banerjee, Director General, CII

Modi government has been successful in putting India on the global map for investment.

- Tulsi Tanti, Chairman, Suzlon Group

The government in the past year has taken unprecedented and innovative steps of a scale that could not have been envisaged earlier. They have succeeded in changing the economic calculus of the country by demonstrating that 120 million bank accounts can be opened at short notice or 4 lakh toilets can be built in schools in a year and so on.

- Adi Godrej, Chairman, Godrej Group

The government under Mr Modi has been moving steadily and purposefully in creating a climate where it is easy to do business. We have to give them enough time and have patience. Rome wasn’t built in a day!

- Venu Srinivasan, Chairman & MD, TVS Motor

We are highly encouraged by the series of actions and policy reforms taken by the government in the last one year. The government has been successful in improving the state of the economy and setting the foundation for long term higher growth and development.

Several path-breaking measures have been announced, notably the introduction of social security net for all citizens, rationalisation of corporate tax rates and implementation of GST by April next year.

- Jyotsna Suri, President, FICCI

The government has exceeded our expectations and has achieved more in the first year than any other government has achieved in their first year. The government’s emphasis on lower tax rates and introduction of GST in coming year will greatly enhance competitiveness of the Indian industry

- Sumit Mazumder, President, CII

Reforms so far announced should see their implementation on ground level so that ease of doing business at grassroots is further facilitated. The coordination of the Centre with states needs to be cemented for which the central government alone has to take a call.

- Alok B Shriram, President, PHD Chamber

The NDA administration has its ears to the ground and knows well what needs to be done, but what it lacks is the acumen for execution. For instance, it knows that governance is an issue for public sector banks, which account for 70 per cent of the banking industry’s assets, and this is why it has split the top post between a chairman and a managing director to avoid concentration of power, but it has not been able to appoint any chairman so far. - Tamal Bandyopadhyay, Consulting Editor, Mint

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LOW DEMAND, NOT POLICY, BIGGEST PROBLEM FOR INDIA INC

Building blocks being put in place to raise India’s potential-growth rate, says CRISIL. Investment cycle unlikely to restart soon; growth recovery will be a slow process. CRISIL released ‘Modified Expectations’, a report on May 18, 2015, evaluating the economy-related performance of the Narendra Modi-led government as it completes one year in office.

Guided by the principle of Antyodaya our government is dedicated to the poor, marginalised and those left behind. We are working towards empowering them to become our soldiers in the war against poverty. Numerous measures and schemes have been initiated: from making school toilets to setting up IIT’S, IIM’S and AIIMS. From providing a vaccination cover to our children, to initiating a people driven swachh bharat mission; from ensuring a minimum pension to our labourers to providing social security to the common man; from enhancing support to our

farmers hit by natural calamities to defending their interests at WTO.

- Narendra Modi, Prime Minister

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The report assesses India Inc’s performance in the first nine months of fiscal 2015 using unique metrics of demand, debt

and policy. The findings belie some popular narratives. It highlights how the government is putting in place building blocks that will improve India’s crucial potential-growth rate, and explains why it will take longer than expected for the investment cycle to kick-start.CRISIL analysed the results of 411 companies from the National Stock Exchange’s CNX 500 index (excluding those from the BFSI and oil & gas sectors), which together account for 90 per cent of the market capitalisation of the bourse. We compared revenue and operating profit growth with nominal GDP growth (it was 12 per cent in 2014-15), which showed that 69 per cent – or 285 companies out of 411 – underperformed.Says Prasad Koparkar, Senior Director, CRISIL Research: “Our findings are telling. For more than half the companies that underperformed, the main obstacle was poor demand. That flies in the face of the refrain that policy is the biggest bottleneck. Policy was only the No. 3 factor according to our study, affecting just 15 per cent of the companies analysed.”‘Modified Expectations’ blends CRISIL’s unique expertise in macro-economy, corporate and banking

research, and credit ratings to offer a 360-degree view on India. It uses four metrics to evaluate the government: What has worked so far; where are the signs of a pick-up; what hasn’t worked so far; and what lies ahead.The report underlines a host of steps that the government has taken or is taking to address constraints – specifically structural – to growth. This, we believe, will ensure that growth sustains beyond fiscal 2016. But major reforms will remain a tough task given the government’s lack of support in Rajya Sabha, and the government will have to show exceptional statecraft to cobble up consensus to pass crucial Bills.Given this, CRISIL believes growth is on a slow grind up in the short term, and will touch 7.9 per cent in 2015-16 if monsoon is normal; else it would flat-line at 7.4 per cent.Says Dharmakirti Joshi, Chief Econo-mist, CRISIL: “The government can’t push demand up in the short term be-cause there is no monetary and fiscal silver bullet. We expect private con-sumption to pick up only gradually this fiscal, which, in turn, will provide some impetus to demand. But it won’t be enough to lift extant capacity utilisa-tion to levels where the private corpo-rate investment cycle needs to be kick-started again. A meaningful recovery in capex is not seen till fiscal 2017.”In the interim, CRISIL believes the government has to pick up the

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Why it will be a slow grind up?

gauntlet and try to push the investment cycle through public investments. The Union Budget for the current fiscal does propose a more than 50 per cent jump in public spending in infrastructure.On the legislative side, consensus is necessary to push through leg-islations on Goods & Services Tax and land –

without much dilution. This will test the gov-ernment’s resolve and statecraft, but they are critical building blocks that will raise India’s ‘potential-growth’ rate. We also look forward to steps that re-kindle agri-culture growth and ame-liorate distress in farms. India badly needs dura-ble solutions to improve farm productivity and

the government needs to sustainably address distress through crop in-surance schemes rather than loan waivers. The budget for the current fiscal had announced a lot of reforms with far reaching implications for infrastructure, finan-cial sector and taxation. Progress on these will be a key monitorable.

When the Narendra Modi-led National Democratic Alliance came to power with a resounding majority last year, it had inherited a frail economy. Twelve months on, the macros are looking better, growth is inching up, inflation has tempered and current account deficit is in the safe zone.

Feverish speculation about big-bang reforms and a quick turnaround in the economy are getting the deserved reality check. The recent rise in crude oil prices, possibility of a weak monsoon amid rising rural distress, and the parliamentary logjam over two critical pieces of legislation – onland acquisition and Goods & Services Tax - are also helping rationalise expectations.Winding back, the main reasons for a sharp slowdown in India’s growth since 2012 were the discontinuation of stimulus to rein in rising fiscal deficit and inflation, and policy paralysis that slowed decision making and made it difficult to do business.The Modi government is addressing policy paralysis by energising the bureaucracy, fasttracking decision-making, and enhancing the ease of doing business. This will create enablers for growth, but cannot push demand up in the short term. There is no monetary and fiscal bazooka at hand either – which is also because of the legislative mandate to bring down fiscal deficit. And monetary policy turned mildly favourable only this year.In other words, there is little that can be done to engineer a quick revival in demand. That’s exactly why corporates are shy of undertaking fresh investments,

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as the report show the analysis of the results of CNX 500 companies in the first nine months of fiscal 2015 in the following analysis. The study reveals that private corporate investments picking up only in fiscal 2017. This lack of demand is also reflected in low utilisation of capacities. Net-net, we believe demand will pick up only slowly. And as is the typical progression in such a milieu, consumption demand will improve first, which then will trigger investments.Independent studies done by CRISIL Research and CRISIL Ratings conclude similarly on the outlook for consumption-driven sectors. CRISIL Research data show consumption-linked sectors have done better than investment-linked ones in the last fiscal and will continue to do so in fiscal 2016 as well. CRISIL Ratings’ data on upgrades and downgrades confirm the relative strength of consumption-linked sectors compared with investment-linked sectors. Yet capacity utilisation will be slow to pick up. As for major reforms, given the lack of numbers in Rajya Sabha, It believe the government will have to show exceptional statecraft to cobble up consensus to pass the Bills. These are reasons why we believe India is on a slow grind up. The report evaluated the Modi government’s one-year performance using four metrics: What has worked so far, where are the signs of a pick-up, what hasn’t worked so far, and what lies ahead.The study blends in CRISIL’s unparalleled expertise in macroeconomic, industry, corporate and banking analysis, to offer a 360-degree view on India. The key findings are:

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What has worked?• The government has not been able

to effect a quick turnaround in the economy but has made prog-ress in putting in place building blocks needed to raise India’s potential growth. Initial steps at improving transparency, en-hancing the ease of doing busi-ness, improving the efficiency of the goods and labour markets, and financial sector reforms will pave way for higher growth over the medium run

• Prudent tactical moves have helped keep a tab on inflation even in the bad monsoon year of 2014. Restraint in increasing minimum support prices and release of food grain stocks into the market have helped kept food inflation under control and allowed RBI to cut interest rates

Where are the signs of pick-up?• Credit ratio, or the ratio of up-

grades to downgrades, is ticking up

• Business and consumer confi-dence is also looking up

What has not worked?• Difficulty in arriving at a consen-

sus carries the risk of delay and dilution of key legislations such as the Land Acquisition Bill and the Goods & Services Tax (GST) Bill

• Inability to use policy tools such as interest-rate cuts and fiscal spending to stoke demand

• Inability to revive manufacturing and address enhanced rural dis-tress

• Our study of CNX500 companies shows that while regulatory is-sues and high leverage constrain corporate performance and in-vestment decisions, lack of de-mand is the singlebiggest factor holding back private-sector in-vestments

What lies ahead• Our analysis shows that con-

sumption will lead the invest-ment cycle. Lower food and fuel inflation and reduction in inter-est rates will support private consumption. Industry-level granular findings confirm the strength of consumption-linked sectors over investment-led sec-tors. Credit ratings data, too, show that consumption-linked sectors enjoy higher upgrades than investment-linked sectors

• With a gradual pick-up in con-sumption demand and public investments in select infrastruc-ture sectors, private investment activity should revive by fiscal 2017

• We expect GDP growth to grind up to 7. per cent, inflation to come down to 5.8 per cent and current account deficit at 1 of GDP in fiscal 2016, given a nor-mal or near-normal monsoon

What has worked so far• Macro-economic indicators have improved• Short-term issues that needed fixing are fixed• Early steps taken to improve infrastructure and institutions

Macros are improving graduallyOver the last one year, several steps have been initiated to unshackle binding constraints to growth. The government has cleared many infrastructure bottlenecks, speeded up decisionmaking, fast-tracked project clearances, cut red tape and sorted out mining issues. These steps, and the fortuitous kicker from a slump in global crude oil prices and the commodity complex, have engineered a moderate turnaround in the economy. Low oil prices have helped rein in inflation and tamed the beast of twin deficits – fiscal and current account.Consequently, GDP growth increased to 7.4 from 6.9 per cent in

fiscal 2014, while inflation dropped to 6 from 9.5 per cent, and CAD and the government’s subsidy burden, both nearly fell by 50 basis points as a percentage of GDP, with the latter helping fiscal consolidation. And after a sweatinducing lag, monsoon caught up a lot last year to prevent sharp spikes in food prices. Steps taken to raise India’s ‘potential-growth’ rate: For long-term well-being, a country needs to raise its ability to grow faster without creating inflationary pressures. This is its ‘potential-growth’ rate. There are many factors that combine to increase the potential-growth rate and one of the important ones is competitiveness.

The World Economic Forum’s Glob-al Competitiveness Index (Chart 1) shows India’s competitiveness has been continuously eroding in the last six years. Specifically, India ranks poorly in institutions, infrastructure, macroeconomic environment, health and primary education and the effi-ciency of its goods and labour mar-kets.Our assessment shows that the Modi government has identified the ma-jor issues correctly and put in place some crucial building blocks, but it will have to do a lot more. The chal-lenge will be to stay the course yet step on the gas, and get corporates to hitch their wagon to the govern-ment’s star.

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Improving India’s CompetitivenessWe use the World Economic Forum (WEF) rankings and methodology rooted in Michael Porter’s The Competitive Advantage of Nations (1990) on the stages of development and benchmark India’s growth potential/ competitiveness versus competitors. As per the WEF, the Indian economy is still in the factor-driven stage, and needs to transit from agriculture to manufacturing.For the sixth consecutive year, India’s ranking on the WEF Global Competitiveness Index saw a decline in fiscal 2015, and was the lowest among BRICS nations. Out of 144 countries, India ranks 71 on the overall index, 92 on factor-driven parameters, 61 on efficiency-driven parameters and 52 on innovation and sophistication parameters. While we rank high on innovation (49) and business sophistication (57), we are far behind our competitors on the efficacy of institutions, infrastructure, macroeconomic environment and health and primary education. These are critical for pushing our competitiveness in the factor–driven parameters and for making manufacturing India’s growth engine. It is imperative, therefore, to improve our building blocks. What has been done to raise India’s competitiveness? The Modi government has announced a slew of measures since taking the reins a year back. We analyse what these steps amount to in terms of improving India’s potential growth. We use the likeness of a speedometer to gauge the performance so far – the needle is the starting point and the arrow indicates the direction and extent of reforms.

Institutions

Efficiency of labour market

InfrastructureInfrastructureWEF Ranking, Fiscal 2015

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Health & primary education

Efficiency of goods market

Financial market development

Technological readiness

Macroeconomic environment

Where arethe signs of pick-up

• Consumption outlook is improving

• Higher credit-rating upgrades in consumption-linked sectors

There’s promise in higher rating upgradesRatings data show debt remains a bone in the gullet: CRISIL Ratings’ analysis of data for the second half of fiscal 2015 shows some improvement in the credit ratio, or rating upgrades to downgrades. Almost two-thirds of the 816 upgrades seen in the second half were driven by business-related factors such as scaling-up of opera-tions, and a modicum of improve-ment in demand in consumption-linked sectors. Export-linked sectors and nondiscretionary consumer segments such as agricultural prod-ucts, textiles, packaged foods and pharmaceuticals continued to see the highest upgrade rates. But demand isn’t anywhere close to the levels re-quired to kick-start the corporate in-vestment cycle.Value of debt downgraded far more than that upgraded: On the other hand, there were 466 downgrades in the second half of which almost 60 per cent were attributable to weak liquidity.Investment-linked sectors such as capital goods, construction, engineer-ing, steel and real estate continued to log the highest downgrade rates.However, a pervasive improvement in credit quality remains elusive be-cause the value of debt seeing down-grades is far more than those seeing upgrades. This is reflected in the ra-tio of debt of upgraded firms to that of downgraded firms, which stood at 0.72 times. This proportion is even weaker for large-sized firms at 0.45 times. Also, companies with high debt continue to see more down-grades than upgrades.CRISIL believes heavy burden of debt will continue to constrain the

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ability of large firms to improve their credit profiles. A chunk of their debt was taken for projects/ capacity ex-pansions that haven’t been complet-ed, or are facing demand slack after completion. Essentially, a backwash of irrational expansions undertaken well before the Modi government took the reins.Business and consumer confidence is looking better: Leading and coincident indicators do show initial signs of improvement in investment outlook, especially in consumer-facing sectors.Confidence indicators are looking up, too. The RBI’s quarterly survey covering 1,565 manufacturing com-panies, released in April 2015, shows that industrial outlook has been on a steady uptrend since June 2014. And as per the latest survey, outlook is improving for production, order book, capacity utilisation, cost of raw material, profit margins and employ-ment, though it remains dismal for exports and price-setting.The indicators of private consump-tion are also showing a steady up-tick. One, the RBI’s consumer confi-dence survey results show continued improvement in future expectations on employment and spending. More than 80 per cent of the respondents in the latest survey (March 2015) ex-pect an increase in current as well as future spending perceptions on essential items, while 40 per cent expect an increase in non-essential spending. More than 50 per cent of the respondents expect improve-ment in employment situation one year ahead. Second, inflation expec-tations have eased, positively influ-encing purchase decisions. The RBI’s April 2015 survey results show that inflationary expectations are coming down. Third, retail-loan growth has been rising fast in sectors such as vehicle loans (22 per cent), consumer durables (34 per cent) and housing (18 per cent). Besides, au-tomobiles (passenger vehicles and scooters), organised retail and air-lines are also seeing improved con-sumer demand.

Improving credit ratios in consumption-led sectors

Business expectations

survey

Consumer confidence improves Inflation expectations ease

Private consumption will provide fillip: We believe private consump-tion could be the bulwarkthis year, but it will improve only gradually. But this will depend a lot on a normal monsoon. Over the last few years, key contributors to the de-cline in private consumption – high fuel prices, inflation and interest rates – have started to turn around and will continue to do so in fiscal 2016.Lending rates are edging down, too, though by a mere 20 bps or so till now. We believe the push to con-sumption spending from easing of lending rates this fiscal will be small and gradual. Still, this will be posi-tive for interest-rate sensitive sectors such as automobiles, housing and consumer durables.

Household spending power has in-creased: CRISIL estimates household spending power has increased by Rs 1.4 trillion in fiscal 2016 because of low fuel prices, benign food infla-tion and steadily improving income growth. This money could be spent on consumer discretionary items if consumers feel the gains as lasting. But if perceived as transient, it could be deployed insavings. However, with real returns on savings expected to rise only mar-ginally this year as nominal interest rates ease and inflation falls, house-holds could spend rather than save the extra money. In nominal terms, the Rs 1.4 trillion increase in the spending power of householdsis close to 2 per cent of their annual spending.

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What hasn’t worked so far• Inability to pump-prime constrains manufacturing• Investment cycle in limbo, agriculture remains stressed• Consensus to pass key legislations elusive

The tyranny of inheritanceInability to pump-prime, having in-herited high fiscal deficit and infla-tion: Typically, a slowing economy is accelerated through deep interest-rate cuts and increase in government spending. But fiscal profligacy of the past and inflationary concerns pre-clude such steps. Public spending is also restrained by the legislative mandate to bring down India’s fiscal deficit-to-GDP ratio. On its part, the Reserve Bank of India (RBI) has cut interest rates by 50 basis points so far in 2015, to 7.5 per cent, but this has not benefited the economy much be-cause the banking sector’s bad-loan mountain increases risk aversion, restricts transmission of interest rate cuts and subdues credit growth. Fis-cal and monetary restraint entails sacrificing growth in the short run, but will eventually foster macro sta-bility and improve India’s ability to sustain higher growth rates in future.Slack demand – and not policy – holding back private investments, especially in manufacturing: De-spite some macros turning green, the investment cycle in India is stuck anddemand for a number of consumer goods remains subdued..CRISIL Research analysed the per-formance of 411 of the CNX 500 com-panies (the rest belong to BFSI and oil & gas sectors, which were exclud-ed), accounting for 90 per cent of the market capitalisation of the National Stock Exchange, and compared their revenue and operating profit growth in the first nine months of fiscal 2015 to nominal GDP growth. It showed 69 per cent, or 285 companies, have performed below par, while 126 com-panies, or 31 per cent, outperformed.

While regulatory issues and high leverage are constraining corporate performance, our analysis shows that it is demand slowdown that’s hurting India Inc the most. This is especially true of manufacturing companies. A good 126 companies, or 56 per cent of the 285 underper-formers, are impacted by a demand slowdown (also see Chart 8 on ca-pacity utilisation). The No. 2 factor was intensifying competition, which impacted 45 – or 16 per cent -- of the laggards. Policy was only the No.3 factor, affecting 42 – or 15 per cent -- of the companies, while high debt or leverage was the No. 4 factor, affecting 29 – or 10 per cent -- of the companies. But from a banking sector perspective, the contribution of highly leveraged companies to total outstanding debt is very high at about 22 per cent.Stagnant manufacturing, stress in agriculture: The ‘Make in India’ programme will take a long while to make a difference to India’s manufacturing sector. But improving growth in the sector is crucial because one million Indians are

Poor demand curbs corporates, not so much policy

entering the workforce every month and to boot, there is also labour spillover from farms. The agriculture sector, employing close to 50 per cent of the workforce, continues to battle low productivity and a raft of other inefficiencies. Damage due to unseasonal pre-summer rains on the back of a sub-normal monsoon last fiscal has aggravated farm distress (see The criticality of monsoon for hinterland).Consensus to pass key legislations elusive, risking dilution of reforms: The government lacks majority (having only 63 out of 244 seats) in the Rajya Sabha, and the situation is unlikely to change anytime soon. The government will, therefore, need do the hard yards, show statecraft and build political consensus to pass crucial Bills on land and GST that will spawn structural reforms. Consequently, there is a risk the eventual legislations are watered down. Deft political management and effective communication will be essential if the government has to take forward the economy.

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What lies ahead• Debt pile in infra, bad loans will curb speed of recovery • Private consumption growth crucial to investment cycle• Normal monsoon a critical need

Expect a slow recovery in fiscal 2016If monsoon delivers, we expect a 50 bps uptick in GDP growth: We fore-cast India’s GDP growth to touch 7.9 per cent in fiscal 2016, from an esti-mated 7.4 per cent in 2015. The re-covery, as we see it, will be triggered by a lift in private consumption and a mild pick-up in public sector-led infrastructure projects.The key risk to watch out for in the immediate term is a sub-normal monsoon. It can depress rural de-mand and delay the consumption-led recovery that we envisage.The headroom in capacity utilisa-tion needs to close first: We believe that given the current macro-eco-nomic pace, it could be 12-18 months before headroom in capacity utilisa-tion in the manufacturing sector gets closed, and private investment cycle is set in motion.That’s because, despite underlying optimism, companies are chary of putting money where their mouth is; they are seeking affirmations that growth triggers are well-pulled and will stay so.

The path growth could takeClosing in on a goldilocks spell: We believe a gradual upturn has begun, and indications are there should be steady progress this time (Table 4). And if inflation remains under leash – as it seems now – at least a goldi-locks spell can be had. But with lim-ited counter-cyclical tools available to pump the prime, unlike in 2009, and covenants of fiscal consolidation shackling government spending, the speed of rebound will be limited.Speed will also depend on how do-mestic consumption shapes up. The trifecta of lower food inflation, drop in oil prices – which have left more money in the hands of people in the last 10 months -- and mild easing of interest rates could stoke private consumption that, in turn, will im-prove sales in the automobiles, retail, consumer durables and fast-moving consumer goods sectors. But there is unlikely to be a dramatic change in

the wealth effect such that demand would overwhelm extant capacities in the current fiscal.On the infrastructure side, invest-ments will start much earlier – in-deed, in the current fiscal itself – fol-lowing a government-led push to spending in sectors such as roads, railways, irrigation and urban infra-structure. But for private corporate investment in infrastructure to start, resolution of policy bottlenecks, more equitable sharing of risks and rewards with private sector (for PPP projects) and improved demand visi-bility are critical. That will take time, and could turn favourable only after the current fiscal. Highly leveraged corporates, especially in the infra-structure space, would also be averse to taking risks and therefore, the government will have to bear more risks, till private sector cash flows and confidence levels improve.Exports offer no ballast: The global economy is expected to navigate a mild and uneven recovery path in

2015. Muted world trade growth will restrict exports. The World Trade Organisation expects world trade to grow at 3.3 per cent in 2015 and 2016 compared with over 5 per cent recorded since 1990. Also, an appre-ciation in the rupee in real terms has hurt India’s competitiveness.

Investment revival is the biggest challengeWe do expect a minor uptick in in-vestments in select sectors, especially infrastructure, where government role is dominant. But in manufactur-ing, which is dominated by the pri-vate sector, revival will depend on the speed at which private consump-tion demand improves. Also, some push to investments this year will come from unclogging of projects.Investment revival is inarguably the single-biggest challenge for the Modi government. Over the last few years, investments have trailed GDP growth and the overall investment rate has slipped to 29.8 per cent in

It will take 12-18 months for private investment cycle to revive

: *Measurement from beginning of fiscal 2016

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fiscal 2015 from 33.6 per cent in fiscal 2012. The reasons are well known. In the manufacturing sector, swathes of under-utilisation (Chart 8) and poor visibility on demand have slowed the pace of investments. In the infra-structure sector, high leverage and interest costs (the sector’s interest cost to operating income ratio rose to 11.5 per cent in fiscal 2014 from 4.6 per cent in fiscal 2010), falling returns on investment due to delays in proj-ect implementation, and lack of vis-ible demand pick-up are deteriorat-ing private-sector investment.Good thing is, ease of doing busi-ness is improving: Since taking over, the Modi government’s emphasis has been on reviving the investment climate by improving the ease of do-ing business. A number of steps have been taken in this regard.However, the nature of these mea-sures is such that immediate gains would be less than what will accrue in the medium-to-long term. Such steps include launch of online por-tals and monitoring of timelines for providing project clearances and providing licences, consolidation of ministries to ensure faster decision-making and taking the ordinance route to push through the Bills. Re-sults are most visible in the roads sector where debottlenecking has significantly improved the pace of paving.Public spending in infrastructure re-ceived a significant boost in the Bud-get announcements for fiscal 2016 with spending allocation for roads, railways, irrigation and urban infra-structure increasing nearly 1.5 times.However, overall capex spending has not gone up much and hence, only a few sectors are set to benefit from higher government spending. But the private sector will go full tilt on investments only once the de-mand picks up and other factors con-straining it are addressed, so remov-ing them in double-quick time is an imperative.Growth in investment-linked sectors has lagged consumption-driven sec-tors in the past few years. And we believe this gap will widen further in fiscal 2016.

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Better-looking colours of the macro-economy

The capacity utilisation picture

Revenue growth to be higher for consumption-linked sectors

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The criticality of monsoon for hinterlandOur views are predicated on a par monsoon: The IMD has predicted a 7 per cent rainfall deficiency (south-west monsoon) in 2015, and going by international weather forecasters, El Nino conditions – which typically distorts spatial distribution of mon-soon – have emerged. An important assumption in our growth estimates is that rainfall will be normal or near-normal this fiscal.Deficient monsoon will cull 50 bps from GDP growth: According to our

calculations, a deficient monsoon will take away 50 basis points from our GDP forecast of 7.9 per cent for fiscal 2016.

This is the worst-case scenario. But, we go by the assumption that al-though some monsoon deficiency is predicted in 2015, spatial distribution of rainfall could still be normal, lead-ing to a normal agriculture year, as past experience shows. For instance, in the last 15 years, there were two years when rainfall deficiency was 7-10 per cent - similar to the Indian Meteorological Department’s (IMD)

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forecast for 2015 - but in these years agriculture production did not suffer

because rainfall was timely and well distributed. Also, the latest forecast is the IMD’s first forecast and more reliable ones will only be available in June.Angst in rural India: Last fiscal, monsoon deficiency was 12 per cent, with some regions facing acute short-age of rains. In March and April 2015, unseasonal, pre-summer rains dam-aged crops in regions already reeling from inadequate monsoon. A second straight year of weak monsoon will decrease the efficacy of India’s irri-gation ecosystem and hit agriculture output and farmers severely. Al-ready, rural wage growth has plum-meted to around 8 per cent in latest count, from a peak of 18-20 per cent in 2012. Therefore, a weak monsoon will also completely wipe off gains in other sectors of the economy. For details, see our report titled, ‘Clouds over rain’ released in April. Mitigato-ry and pre-emptive steps by the gov-ernment are therefore an imperative.Focus areas for government: Given the current situation of agriculture and its importance in both employ-ment and growth, the government needs to go on mission-mode to find solutions, such as to reduce systemic dependence on rainfall by exponen-tially increasing the drip irrigation ecosystem, improving skillsets at the farm-gate through many more tar-geted initiatives, bringing sea-change in the farm-to-fork trans action chain

Monsoon and agriculture GDP

Note: Years when monsoon deficiency was 7 to 10 per cent, *first forecast issued in May

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and rapidly ramping up warehous-ing and cold storage infrastructure with win-win revenue models.

Banking hobbled, bad-loan millstone hangs heavyExposure of banks to vulnerable sectors remains high: While credit growth should pick up from the lows of fiscal 2015, continued deterioration in the asset quality of banks and the resultant risk aversion will remain a headwind in fiscal 2016. Gross non-performing assets (GNPAs) of banks shot up from 3.9 per cent as of March 31, 2014, to 4.3 per cent by the end of the previous fiscal. Growth in slippages are expected to decelerate in the current fiscal, but reported GNPAs will still remain at elevated levels as some of the as-sets restructured in the previous 2-3 years, especially in the infrastruc-ture, construction, and textiles sec-tors, degenerate into NPAs again.We forecast GNPAs to edge up 20

basis points to around 4.5 per cent of advances -- or rise by Rs 600 billion to Rs 4 trillion -- by March 31, 2016 (Chart 10). Indeed, overall weak as-sets of the banking sector could cross Rs 5 trillion. Worryingly, exposure of banks to vulnerable sectors is expect-ed to remain high (65 per cent to the medium- and high-risk sectors), just the way it was in fiscal 2015. Bad loans are seen rising mainly be-cause of the withdrawal of regulato-ry forbearance on restructuring, and high slippages from restructured as-sets. As much as 40 per cent of assets restructured between fiscals 2012 and 2014 have degenerated and be-come NPAs again.CRISIL believes the government’s stance to provide capital only to PSBs meeting its performance thresholds – even as they reel under asset qual-ity and profitability pressures – will force many to grow at a significantly slower pace and spawn capital stress for many weak banks.

Dirty picture

Note: F = forecast. According to CRISIL’s definition, weak assets include gross NPAs + 30% of restructuredassets (excluding those of state power utilities) + 75% of security receipts

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Leverage pain will continue in infrastructure: Debt piling up in the books of infrastructure companies is a major roadblock to reviving investments. In infrastructure, especially for companies engaged in road and power-generation projects, accumulated debt is so high their interest cost threatens to go off the charts. Their ratio of interest cost to operating income galloped to 11.5 per cent in fiscal 2014 from 4.6 per cent in fiscal 2010.In the past, many private developers have bid aggressively for projects, especially in roads and power. However, most projects have seen execution delays due to issues such as fuelavailability, land acquisition and environmental clearances; resulting in significant cost overruns. Also, volume growth for operational

The debt-wish saga

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projects has been below expectations on account of slowdown in economic activity. As a result, poor operational cash flows coupled with rising debt burden have led to a sharp deterioration in the debt-servicing ability of many companies. Banks, too, are wary of lending to the sector. Many private infrastructure companies have either sold or are in the process of selling their operational assets on lender pressure

to pare debt even as they need to find funds to bid for new projects. Many others have resorted to restructuring of debt and assets. We believe it will take time for companies to clean up their balance sheets and a significant pickup in private infrastructure investments looks at least a couple of years away. Till then, the public-sector has to carry the can. Courtesy: CRISIL

Real Estate Report Card9 Impressions Indian Real Estate Stakeholders Have about Modi Government - And JLL’s Take

JLL India’s Research team is releasing a whitepaper on the first year of Modi government. A survey of the Indian real estate community, done as part of the research, reveals nine impressions, or misimpressions, of this government that exists in the minds of Indian realty’s stakeholders. The report also provides research team’s own views on each of these: Read on.

ANUJ PURI, Chairman and Country Head at JLL India

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services.

MODIVERSARY




1YEAR OF MODI GOV

1. Much has been said, but little has been deliveredJLL’s view: Modi has taken several initiatives, the outcomes of which will be seen only in the medium-to-long term (i.e. 2-3 years). Initiatives such as developing affordable residential projects, robust infrastructure, financial inclusion of the LIG segment into the banking sector, etc., are important initiatives but require time to fructify. Critical evaluation of success at this stage may be premature.

2. Power is too concentratedJLL’s view: This fear loomed large in the minds of several political and market analysts since the time Modi came to power. The highly centralised appearance of the government has moderated in recent times with decentralisation of power to cabinet members and states’ chief ministers. We agree that power should be further de-centralized to the grassroots level (i.e. district and panchayat level authorities) and this further downward percolation of power may take another year or two.

3. Land Acquisition and Rehabilitation and Re-settlement Bill not progressing as expected

JLL’s view: There has not been much progress on the bill since the time it was first approved by the previous Congress government, and even after the recent amendments made in the Bill by the Modi government. Modi’s grand vision to build superior infrastructure, affordable housing projects and smart cities is related to the success of this Bill, which could be cleared by the Parliament after recommendations by the Joint Committee of Parliament come through in the monsoon session.

4. Clarity needed on ‘Housing for all by 2022’ schemeJLL’s view: After having announced the scheme during the first Budget in June 2014, the government has remained silent on details. The market expected fine prints to come by in subsequent communications. The task of constructing 2.34 million homes every year as against an actual delivery of 1.2 million homes during the 11th five-year plan period (ending March 2012) is humungous. As of now, matters definitely do not look upbeat on this front, and the doubts being expressed are justified.

1YEAR OF MODI GOVT


5. Smart Cities Mission cleared by the Cabinet but clarity neededJLL’s view: As the definition of smart cities given in the note released by Ministry of Urban Development is too broad, different agencies have had different interpretation of the concept. Even though the union cabinet has cleared the Smart Cities Mission and allocated Rs 48,000 crore, there is a lack of clarity on identification criteria for the qualifying cities.

6. The Real Estate (Regulation and Development) Bill still pendingJLL’s view: Construction delays in many real estate projects are the result of delay in granting statutory ap-provals. Cost of financing material costs rise exponen-tially as a result of such delays, and this has an adverse impact on housing prices. The Bill – that the government is currently considering sending to a select committee for review – does not cover the actions of approval au-thorities and largely attempts to curb malpractices at the developers’ end. We feel that the Modi government could have done more on this front.

7. E-commerce needs to be regulatedJLL’s view: E-commerce has taken the Indian retail market by storm, and has been growing at close to 35 per cent y-o-y in the last few years. Stiff competition among e-commerce players has resulted in price wars that had impacted the margins of physical retailers. There is a need to regulate the online retail space and bring them on level playing field along with physical retailers. As of now, we see no evidence of efforts being made in this direction.

8. Anti-corruption needs to be a focus areaJLL’s view: The promise of bringing the Lokpal bill immediately had given Modi a marginal edge over the AAP party - the champions of the anti-corruption brigade - during the elections of May 2014. However, subsequent lack of progress or even convincing talk in that direction has been giving an impression that the issue is a low priority one for the Modi government. If not for this apathy, Modi would have performed better in the recently concluded Delhi elections.

9. Tax structures are complex and retrospective tax amendments continue to haunt businessesJLL’s view: While the Modi government had expressed its strong intention of doing away with retrospective amendments, the issue still remains unresolved. Also, while simplification of tax structures has been spoken about, this will take some time to implement. If these tax issues are addressed properly, India would move for-ward in terms of improvement in World Bank’s ‘Doing Business’ rankings.

Major Events of Modi as PM of India (1 yr)26th May 2014: Modi Government to Rule – Prime Minister Narendra Modi and his cabinet moved to Rashtrapati Bhawan after winning in the landslide elections.27th May 2014: First meeting with Pakistan Premier Nawaz Sharif in the office. Just next day after getting the throne.14th June 2014: Charge on Military Might, Prime Minister Modi dedicated INS Vikramaditya a warship and want to make the country self-reliant on production defence gear. 21st June 2014: First face against the decision, Modi government tasted the protests on the issue of rail fare hike and increase the import duty on sugar. It was the first bitter experience to government by opposition parties and the public. 27th July 2014: Discrimination against minorities created a doubt whether the Modi government is seriously interested in preserving equality. Shiv Sena lawmaker forced food into the mouth of a Muslim caterer, another indicating that India could become a Hindu nation under Modi. 15th August 2014: Making his first Independence Day speech after becoming India’s Prime Minister. Modi made his speech with two main points ‘Swacch Bharat’ and exhorted countrymen to produce attempts to train the girl child. 5th September 2014: The Teachers’ Day dilemma-Many were enraged especially on social media as to how students were made to come to school on a day generally regarded as a holiday. 25th September 2014: Shiv Sena breakup-The ruling BJP and the Modi government were hit by a huge blow after hectic negotiations with the Shiv Sena. 19th October 2014: Maharashtra’s crucial election results positive for Modi. Haryana also, for the very first time, gave the initial chance at power to the BJP. Modi had campaigned vigorously to woo voters. 12th November 2014: PM Modi’s foreign outreach continued along with his presence in the ASEAN-India as well as the East Asia Summits held in Myanmar at NayPyiDaw. 1st December 2014: In a major embarrassment for the Modi government communal comments by Sadhvi Niranjan Jyoti caused an uproar in the winter session in both houses of Parliament. 23rd December 2014: J&K History was created by the BJP in Kashmir and Jammu by crossing the Jammu area and becoming the second-biggest party in the state Assembly elections. The verdict in both states was a testament to 2014 staying a tremendously successful electoral year for its own leader Narendra Modi and the ruling BJP.7th January 2015: Four children – Sadhvi Niranjan Jyoti statement every Hindu woman must produce at least 4 children to protect the religion. Once again, the remark was widely panned and the PM’s silence over it questioned.10th February 2015: Delhi Debacle – Modi’s techno-minister Suresh Prabhu, the Railways Minister, presented his first budget announcing no increase in passenger fares. 22nd March 2015: Modi government battled extreme heat over the controversial land acquisition bill, PM Modi spoke to thousands of farmers over the radio, trying to dispel rumours that his policies are anti-farmer. 14th April 2015: External Affairs Minister Sushma Swaraj declared on Twitter the Indian embassy in Yemen had been evacuated in light of the war there. 17th April 2015: PM Modi undertook a three-state tour to France, Germany and Canada exhorting industrialists and CEOs to contribute to the ‘Make in India’ programme of the government.May 7, 2015: Historic property swap – Foreign Minister Sushma Swaraj got a round of applause from all quarters in the Parliament as members across opposition and treasury benches came together to pass a constitution amendment bill for a historic land boundary deal with Bangladesh.

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INSURANCE

My name is Insurance and I am not an Investment

With due apologies to Mr. Karan Johar, inspiration for the above wtitle comes from his movie tagline ‘My Name is Khan and I am not a terrorist’.My name is Insurance...

... and I am not an InvestmentOr, rather it would be apt to admit... and I am not a “good” InvestmentWhy?Firstly, your primary expectation from any investment is to earn GOOD returns. And I definitely fail on this front.When you give me your premium, out of Rs.100 about- Rs.2-4 goes towards providing you the insurance cover

i.e. mortality charges,- Rs.10-15 is paid out as the agents’ commission, and- Rs.3-5 is spent on fund management and policy admin-istration.Thus, you lose Rs.15-25 as soon as you pay me the pre-mium and only Rs.75-85 remains as investable amount. Instead, with bank fixed deposits, bonds, debentures, debt mutual funds, PPF, EPF, NSC, etc. your investment amount remains at Rs.100 or thereabout, as most of these carry “zero or minimal” charges.Since the money is finally invested in the same debt mar-ket in India, it will earn more or less the same returns. However, as your ‘net invested amount’, after deducting all costs, is lower in insurance, it is but natural that on

SANJAY MATAIAuthor-Advisor, Personal Finance, The Wealth Architects


maturity you will receive a lesser payout as compared to any other aforesaid product. In other words, while your effective returns from insurance would typically be in the range of 5-7 per cent p.a., other investments would deliver around 7-9 per cent returns.I am sure you don’t prefer earning such poor returns.Secondly, I offer very poor prospects of liquidity vis-a-vis others.I believe in long-term relationship, generally extending to around 10-20 years. Moreover, it is a one-sided affair. During this long tenure, you cannot depend on me to help you even if you are in dire and urgent need of mon-ey. If you surrender your policy, I will give you not even half of your accumulated corpus (unless the relationship is nearing maturity).Other investments are lot more understanding and ac-commodating. With them, you will be able to ‘prema-turely’ access your money with minimal damage.Thirdly, I am an extremely rigid fellow.If you fail to pay even a single premium over the 10-20 years of policy tenure, I will cancel your policy. I demand complete and absolute commitment.With other investments, you have the flexibility to change your amount every year based on your financial circumstances. If you are going through difficult times, you could always cut down on your investment. Alter-natively, when you are making good money, you can increase your outlay.Of course, I enjoy lot of trust because I am considered “risk-free” and “tax-free”. But, frankly speaking, this edge over others is neither unique nor useful.If you have a tunnel vision and believe that an invest-ment is risk-free only when you are assured of receiving your money back, then I am risk-free. But default-risk is not the only risk in life. Given the poor returns, I offer no protection against the inflation-risk. Plus, without going into the nitty-gritty, debt mutual funds offer excellent opportunity to benefit from the interest rate movements, whereas with me you will also suffer from the interest-rate risk.Yes, the returns that I offer are tax-free, while most of the other investments attract tax. However, PPF and EPF are tax-free. Moreover, even with the ‘taxable’ debt mu-tual funds this advantage is lost. With indexation benefit over 3-5 years, your returns from debt funds too would become practically tax-free.Thus, I the Insurance, hereby declare that I am not a ‘Good Investment’.(Note: For simplicity, I have focussed on the currently more popular traditional insurance plans such as mon-ey-back or endowment. I haven’t discussed the ULIPs, where you have the option to invest in equity too. They do not suffer from the aforesaid deficiencies as seriously as the traditional plans. However, they still don’t just match up to their closest rival and competitor, the equity mutual funds.)

Exclusions In Health Insurance Often Cause Conflicts

Not all treatments are payable by insurance companies under a health insurance policy. Not all people are fully aware of these exceptions, which in insurance parlance are called “exclusions”. This lack of awareness and communication routinely results in disputes and disagreements with the insurance company. Listed below are the most common exclusions you will often find as part of any typical health insurance plan.1. Amount spent on treatment of pre-existing diseases / conditions / ailments / injuries, including any complications arising from them, will not be payable. It does not matter whether you were aware of such problems or not. Such medical issues normally get covered only after 48 months (i.e. 4 years) of continuous coverage under the health insurance policy.2. Any illness or disease, that is contracted during the first 30 days from the date the insurance policy becomes effective, is excluded. However, medical expenses that arise out of an accident would be covered during these first 30 days.3. There is a waiting period — typically around 12 to 24 months — during which certain specified diseases will not be covered. Some such common exclusions include cataract, piles, hernia, tonsils, hypertension, diabetes, benign ENT disorders, etc.4. There is a waiting period — typically around 48 months — during which certain age-related medical problems will not be covered. Some such common exclusions include osteoporosis, knee replacement, arthritis, etc.5. Corrective or cosmetic dental surgery, filling of cavity, root canal treatment, etc. are all excluded from a typical health insurance plan. However, dental problems that become necessary due to any accident, are payable under the policy.6. Surgery for correction of eye sight, cost of spectacles and contact lenses, hearing aids.7. Treatments related to pregnancy, childbirth, miscarriage, abortion and caesarean section.8. Diagnostic charges e.g. laboratory examinations, x-ray etc. which are not related to any specific illness, injury etc. that require hospitalization.9. Psychiatric and psychosomatic disorders.10. Alternative therapies such as naturopathy, acupressure, acupuncture, etc. 11. Genetic disorders, stem cell implantation / surgery.12. Treatment of obesity, weight control program, Cosmetic and Plastic surgery e.g. botox, liposuction.13. Circumcision, Infertility, Sterility, Venereal diseases, sexually transmitted diseases, including HIV AIDS.14. Vitamins, tonics, vaccination and inoculation.15. Any injury or disease that is a result of any war, invasion, nuclear weapons/materials or problems arising out of misuse of liquor, drugs etc.Medical problems are anyway a difficult and challenging experience physically, mentally and emotionally. There is no point in adding disappointment and bitterness to it. Besides, you can plan the cost of treatments more judiciously and minimize the financial setbacks. So read the terms and conditions of your health insurance policy... now.


The rule, “Prevention is better than cure” is equally applicable in the case of credit portfolios of banks, as it is for the maintenance of our own health.

Managing Stressed Assets Racing against Time!

During the 20-month period since he be-came RBI Governor, Dr Raghuram Ra-jan has successfully

taught (his teaching abilities were recently appreciated by none other than Prime Minister Narendra Modi, who had personally experienced it) the government and banks the need to arrest the growth of stressed assets and to handle with care the huge ac-cumulation of Non-Performing As-sets (NPAs) with Indian banks. The awareness created by him has started yielding results, if not in numbers, at least in a change in approach of gov-ernments and bank managements to the management of NPAs.The concern about stressed assets has become an integral part of the speeches and responses during

meetings/interviews given by CEOs of banks, including those on the occasion of announcing quarterly working results. No wonder, in the interview given to The Global ANA-LYST, Santanu Mukherjee, Managing Director, State Bank of Hyderabad (TGA, May 2015), mentioned that NPA management was the most im-portant domain for the top manage-ment and the bank had a specialised Stressed Assets Management Group to deal with the NPA challenge on a daily basis. In December 2013, in a Discussion Paper on “Early Recog-nition of Financial Distress, Prompt Steps for Resolution and Fair Re-covery for Lenders: Framework for Revitalising Distressed Assets in the Economy” brought out by Reserve Bank of India, the regulator had this to say:

“With the slowdown of the Indian economy, a number of companies/projects are under stress. As a result, the Indian banking system has seen increase in NPAs and restructured accounts during the recent years. Not only do financially distressed assets produce less than economically possible, they also deteriorate quickly in value. Therefore, there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors”.

Needed ‘out-of-the-box’ measures Suffice to say, there is greater awareness now, on the part of RBI and the lending banks about the need to arrest further accumulation of stressed assets and ‘managing’ the NPA that has already entered the banks’ books. The proposals considered by RBI to manage NPA menace included:• Making future borrowing more

expensive for borrowers who do not co-operate with lenders in resolution of NPAs on agreed terms.

• More liberal regulatory treatment of asset sales, where recovery of dues can be made only through that route.

• Takeout financing/refinancing possible over a longer period and will not be construed as re-structuring.

BANKING SECTOR

M G WARRIER, Ex-GM, Reserve Bank of India


• Steps to enable better functioning of Asset Reconstruction Companies.

Let us go back in history and look at the genesis of the concept of NPAs and handling of defaults in repayments in general. It was never the lack of awareness about the need to recover loans on due dates to ensure recycling of funds or the institutional neglect towards recovery of loans that has brought India to the shameful position of having financial institutions with unmanageably high stressed assets. In the introductory paragraph on ‘The Overdues Syndrome’, the Report of the Agricultural Credit Review Committee (ACRC- Khusro Committee, 1989) had this to say:“Repayment of the loan together with interest thereon by the borrow-ers is central to the smooth func-tioning of institutional credit. The assumption while providing credit, is that its application to production generates enough produce which in money terms which in money terms would be sufficient to repay the loans together with interest and leave a reasonable surplus. Credit can be said to be effective only if this basic postulate is borne out. However, this in itself is not sufficient; the genera-tion of incremental income has also to be accompanied by willingness of the user to repay. A default in repayment can, there-fore, occur if either the assumption regarding production does not turn out to be valid or even when the va-lidity of the first assumption is not in question, the second assumption is proved wrong. Efficient manage-ment of recovery of dues is, there-fore, not only of crucial importance but also amongst the most complex of all problems associated with insti-tutional credit.”Quoted this to emphasise that credit appraisal, close monitoring of not only the projects/activities financed, but the willingness of the borrower to make timely repayment and efficient management of recovery were all concerns of the policy makers in India even before the emergence of

NON PERFORMING ASSETS

TGA

financial sector reforms, circa 1991.The Committee on the Financial System (Narasimham Committee) which submitted its report in No-vember 1991, made several recom-mendations for toning up the op-erational efficiency of the banking system, including:a. The balance sheets of banks

should be transparent and full disclosure made, as recommend-ed by the International Account-ing Standard Committee, in a phased manner.

b. Banks and financial institutions should adopt uniform account-ing practices, particularly with regard to income recognition and debt provisioning and these should correspond to interna-tional standards.

Following the Committee’s recom-mendations, RBI issued necessary instructions/guidelines to the banks. If these guidelines were followed in letter and spirit, if public sector banks and private sector banks had been given a level playing field, if the expectations from the banking sector was uniform without owner-ship-divide, if there was no interfer-ence from a government anxious to enforce popular schemes for imple-mentation by public sector banks ir-respective of the economic feasibility or financial viability of individual projects/activities, RBI Governor Ra-jan would not have to come down heavily on banks within months of his occupying the august office and say that ‘the worst way for a bank management with limited tenure to deal with distress was to “extend and pretend” to evergreen the loan, hop-

ing that it recovered by a miracle or that one’s successor had to deal with it’. He further advised:“Here again, you bankers have a critical role to play, by fighting the natural incentives that are built into the system. You have to help those with genuine difficulty while being firm with those who are trying to milk the system. The RBI will help you with every means at our disposal.”

The writing on the wall!My own reading is that the message has gone down the line well and slowly, the bank managements and GOI are falling in line. During the three-year period, 2011-14, the Gross Non-Performing Assets (GNPAs) of public sector banks grew at an alarming pace. In many cases, as a percentage of outstanding credit, it doubled. By additional provisioning, private sector banks and some public sector banks showed Net NPAs at levels below one and two percentage of outstanding credit, respectively, for FY’14. If this is the position when private banks work with high Net Interest Margins (NIM), it will really be an uphill task to arrest further accumulation of stressed assets and ensure recovery of a reasonable percentage of current NPAs. The apprehension is based on the fact that the pressure on NIM is going to be much more real in the coming years as the Indian economy gets integrated to global economy and the present level of NIMs, some of which are above the lending rates in some countries, will become unsustainable. Given, the message is loud and clear: perform or peril.


Over the years, increasing concerns about earthquake resistance have led scientists and engineers to invest R&D resources and considerable funding into methods to make modern buildings earthquake proof.

Is Your Home Safe From Earthquakes?

The Indian subcontinent has always been prone to earthquakes. However, it is only the recent earth-quakes in Nepal which

have made home owners and pro-spective buyers wonder about the earthquake resistance factor in In-dian real estate. Two quakes, a week apart, ripped the beautiful moun-tainous country to debris and sev-eral Indian states and cities felt the impact, as well. In some places, there were even incidents of damage to old structures and ill-planned buildings. The According to geographical sta-tistics, more than 54 per cent of the Indian landmass is prone to earth-quakes. The reason for this high amount of exposure is the increasing intensity at which the Indian pelagic plate is driving into mainland Asia. The United Nations and World Bank estimate that by 2050, more than 200 million Indian homes would have experiences earthquakes and storms.

The most vulnerable cities are Sri-nagar and Guwahati, which have been categorized under ‘very se-vere intensity’ zones. Apart from these two, 36 other Indian cities have been identified to be vulner-able to earthquakes. These include Kolkata, Dhanbad, Patna, Dehradun, Jalandhar, Jamnagar, Surat, Pune, Mangalore, Kochi, Trivandrum, Chennai, Vijayawada, Jabalpur and Bhubaneswar, among others. Some of these are also among the most im-portant and highly populated cities of the country.

Over the years, increasing concerns about earthquake resistance have led scientists and engineers to in-vest R&D resources and consider-able funding into methods to make modern buildings earthquake proof. Earthquake proof buildings have deep strong base and are lighter in loads than traditional constructions. Special beaming and bracing make them resistant to the kinds of side-ways movements that are experi-enced in the event of an earthquake. Some of the latest concepts being used to render buildings more earth-quake-resistant in many global cities are:Base Isolation System: Here the foun-dation of the building is separated from the actual structure using rub-ber bearings that act as seismic isola-tors during a quake. During a shake, only the foundation will slide, but

the actual construction will stay in-tact. The rubber bearings also act as shake absorbers and cut down the intensity of the impactDampers: The concept is quite simi-lar to the big shock absorbers used in vehicles. Their job is to dissipate the total energy across the base of the building to keep the top structure safe. Dampers are advisable for high rise buildings and for retrofitting older buildings.Levitation: Levitation engineering lifts up the house when an earth-quake strikes. The building here is constructed upon a deflated air bag that pumps up during a quake and builds air space of a few centimeters between the house and the ground. This reduces the impact to a great extent.In India, the Bureau of Indian Stan-dards had a detailed and revised

REALTY SECTOR

KISHOR PATE, CMD – Amit Enterprises Housing Ltd.


publication for ‘Recommendations for Earthquake Resistant Design of Structures, 1962. According to the standards, buildings that adhere to these recommendations will not encounter a ‘total collapse’ even in earthquakes of intensities as high as 8.0 on the Richter scale.If you are an existing home owner or planning to buy a new home, you would doubtlessly be concerned about how safe the building really is – especially if it is a modern high rise. The first thing to know here is that there is no such thing as a 100 per cent earthquake-proof residen-tial building – the best that can be achieved is a standardized level of earthquake resistance. However, most residential projects that have been built in the last 5-6 years will be resistant to mild earth-

IS YOUR HOME SAFE?

quakes registering at around 4.0 on the Richter scale. However, very few would be able to remain standing during a massive quake registering at, say, 9.0. The good news is that in most Indian cities, reputed and established devel-opers are following the accepted lo-cal building bye laws and standards for structural safety laid out by the National Building Council (NBC). These are the accepted standards of earthquake-resistance in high-rise buildings, meaning that their build-ings will be able to withstand certain intensities of earthquakes. Such developers follow the guide-lines for construction of earthquake resistant buildings as a matter of course. This is not in just a cursory fashion – reputed developers appoint specially qualified engineers who

oversee the construction process and make sure that the highest standards of earthquake-proofing are actually being incorporated. Also, builders with a strong reputation for quality construction will at all times ensure that their buildings are built with high-grade steel and that there are sufficient emergency escape routes.This is yet another reason why one should only by homes in projects built by established developers who have a standing reputation for high standards in their construction norms. If one is still in doubt, one can consult a neutral architect or contrac-tor while the building is still under construction, who will be able to give a fair estimate based on soil cohesive-ness and quality of materials and processes being used.

Common building problems

Most houses are not as safe as they could be. The following presents some common structural problems and how to recognize them. Once you determine if your building has one or more of these problems, prioritize how and when to fix them, and get started.Inadequate foundations Look under your house at your foundation. If the foundation is damaged or built in the “pier and post” style, consult a contractor or engineer about replacing it with a continuous perimeter foundation. Look for bolts in the mudsills. They should be no more than 1.8 meters (6 feet) apart in a single story and 1.2 meters (4 feet) apart in a multistory building. Adding bolts to unsecured houses is one of the most important steps toward earthquake safety. This can be done by a contractor or by someone skilled at home maintenance.Unbraced cripple walls. Homes with a crawl space should have panels of plywood connecting the studs of the short “cripple” walls. You or a contractor can strengthen the cripple walls relatively inexpensively.Soft first stories Look for larger openings in the lower floor, such as a garage door or a hillside house built on stilts. Consult a professional to determine if your building is adequately braced.Unreinforced masonry All masonry (brick or block walls) should be reinforced. Some communities have a program for retrofitting buildings made of unreinforced masonry. If your house has masonry as a structural element consult a structural engineer to find what can be done. Inadequately braced chimneys are a more common problem. Consult a professional to determine if your chimney is safe.For those who rentAs a renter, you have less control over the structural integrity of your building, but you do control which apartment or house you rent:• Structures made of unreinforced brick or block walls can collapse and cause great loss of life.• Apartment buildings with “tuck-under” parking space openings can also collapse.• Foundation and cripple wall failures can cause expensive damage but less loss of life.• Objects attached to the sides of buildings, such as staircases, balconies, and decorations, can break off in

earthquakes.Ask your landlord these questions:• What retrofitting has been done on this building?• Have the water heaters been strapped to the wall studs?• Can I secure furniture to the walls? Source: earthquakecountry.info

TGA


PERSPECTIVE / E-COMMERCE

Myntra’s Mantra: ‘App-only’ Platform

But, Can it be the New Holy Grail?

FFlipkart-owned fashion e-tailer Myntra in a rare but decisive move has debunked desktop and browser-based e-commerce model in favor of mobile app-only platform, the first such example anywhere

in the world! It’s to be mentioned that the Bengaluru-based online fashion retailer currently derives 80 per cent of its traffic and 70 per cent of its sales from its mobile app, while its parent Flipkart’s, which too is reportedly mulling to go Myntra way by the end of this year, gets over 60 per cent of sales through its app store. This perhaps explains why India’s largest online fashion retailer chose for the app-only model. However, the move does not seem to address a few concerns raised by criticsIndustry expert estimates that Smartphones are going to drive online shopping in India in the years to come, accounting for as much as 70 per cent of the total annual revenue generated through online commerce. Such optimism is based on the rapid surge in sales of Smartphones, driven by ever falling prices and more powerful yet cheaper devices which can perform the role of a computer, a TV, and a PDA, all rolled into one, as compared to other personal digital devices such as PCs, laptops, Smart TVs, etc. Besides, what’s also gone in favor of is the portability factor.

Myntra’s, India’s largest online fashion store, decision to embrace the mobile ‘app-only’ model doesn’t sound too convincing, notwithstanding the hype surrounding its latest platform.

Now it’s really become easier for one to do shopping from anywhere! India remains one of the fastest growing Smartphones markets in the world and is soon expected to surpass the US to become the second largest, according to estimates from research firm eMarketer. “India will exceed 200 million smartphone users, topping the US as the world’s second largest smartphone market by 2016,” eMarketer said in a latest report. Driving the surge could be 4G, which is seen by many as the next wave of growth for Smartphones. According to data from IDC, the overall mobile phone market in India stood at 64.3 million units in Q4 2014, though a sequential drop of -11 per cent over Q3 2014 and an year-over-year decline of -5 per cent. However, the shipment is expected to gather momentum once nationwide rollout of 4G, which will allow for faster downloads and make surfing a fun, is much faster than begins and more number of operators enter the fray. Will this mean more users taking to Smartphones for surfing the Internet and making urchases? eMarketer predicts that by 2018 India will have 346.3 million Internet users against 274.1 million in the US; China, which has the world’s largest Net users, will continue to retain its position with a little over 700


MYNTRA

million by 2016 and 777 million by 2018, it forecasts. “Inexpensive mobile phones and mobile broadband connections are driving Internet access and usage in countries where fixed Internet has been out of reach for consumers, whether that’s due to lack of infrastructure or affordability,” observes Monica Peart, eMarketer’s Senior Forecasting Analyst. This definitely gives Smartphones an edge over browser-based platforms as far online commerce is concerned. However, the concern is not as much about the medium (Smartphones vs. desktops) but it is more about the flexibility. In an app-based model, a user is directed by a company/developer to a particular firm’s app, which, however, does not allow a user the flexibility of comparisons with similar products of rival companies. And this becomes a problem in a price-conscious market like India. According to projections from Morgan Stanley, online shopper penetration (as a percentage of internet users) in India is forecast to jump from 9 per cent in 2013 to 36 per cent in 2020, primarily led by mobile users. With mobile usage increasing, advertisement costs (primarily search engine optimization) are declining as traffic is increasing either directly to the website or through a mobile app. This is also increasing customer stickiness as once an app has been downloaded, customers generally visit that website before visiting any other site, TOI said citing report the said report. Given the rapid growth in Smartphone market, soon e-commerce could give way to m-commerce. “In India, the mobile internet traffic now outweighs personal computer traffic. With increasing penetration of smartphones, India is all set to be a massive market for m-commerce. The marketing strategies for e-commerce companies will increasingly be tailored to suit the rising adoption of Smartphones, social media and improving customer experience across touch points and platforms,” Amazon India Vice President and Country Manager Amit Agarwal. More than 40 per cent of his firm’s traffic comes from mobile

devices. Mobile internet users in India, according to an ET report, are estimated to be 120 million compared to 100 million users using internet on their personal computers. A year ago, Flipkart, one of the largest e-commerce players in India, was deriving less than 10 per cent of its orders, transactions and visits used from mobile commerce. That number has now rise to more than 50 per cent today. “It is accelerating at a very rapid pace. We are seeing more than 2 times or 3 times growth from the mobile front compared to desktop, where Flipkart is growing overall but mobile is growing at a much faster pace,” noted Flipkart Senior Director Marketing Mausam Bhatt. According to Ankur Bisen, Senior Vice President, Retail and Consumer Products at retailing industry consultancy firm Technopak, “M-commerce is estimated to be 30 per cent of the $3 billion e-tailing industry and is likely to grow to nearly 40 per cent of the industry that is expected to be 32 billion by 2020. And the trend is increasingly becoming visible at more e-commerce players. For fashion portal Jabong, according to ET, m-commerce constitutes 30 per cent of its sales. Flipkart’s fierce rival Snapdeal, which too has reported strong growth momentum on its mobile platform, Jabong and Amazon are, however, not in a hurry to shift to app-only platform anytime soon. “Close to 60 per cent of our orders are coming over mobile now. It is growing really fast. We get more traffic on the mobile than we get on personal computers. Within the next 12 months over 75 per cent of our orders will be on mobile,” according to Snapdeal co-founder Kunal Bahl. After all it makes sense to give the consumers more choices and not constrain them. Imagine what hap-pens if your favorite soap brand is available only at a particular retailing store or you need to buy a par-ticular mobile phone brand only from a select chain of shops. Who won’t agree: Consumer is King.

“India is a mobile-first internet country for a large portion of the population.

And with the way things are going may become a mobile-only internet country in the

future.”

SACHIN BANSAL, Co-founder and CEO of Flipkart

TGA




State Bank of India, the country’s top lender, continues its good show in Q4FY’15 as well, suggesting that the measures to boost bottom line and rein in bad loans are very much on track.

SBI beats street’s expectations, posts 23% jump in standalone PAT in Q4FY’15

State Bank of India (SBI) has reported better-than-expected standalone profit after tax of Rs.3,742 crore, up 23 per cent y-o-y, in the

fourth quarter ended March 31, 2015. The bank’s PAT was higher than ET Now Poll of Rs.3,610 crore, while it also handsomely beat the figure of Rs.3,481 crore expected in a CNBC-TV18 poll of analysts. The rise in Net Profit was led by higher Net Interest Income (NII), which grew by 14 per cent to Rs.14,711 crore in Q4FY’15 from Rs.12,903 crore the correspond-ing quarter of the previous financial year, higher other income that surged 19 per cent year-on-year (y-o-y) to Rs.8,515 crore (vs. Rs.6,586 crore), besides lower write-off (Rs.4,874 crore in Q4FY’15 vs. Rs.5,698 crore in Q4FY’14) which too helped. Dur-ing the Jan-March quarter of FY’15, the bank’s operating profit grew by 17 per cent y-o-y to Rs.12,409 crore (vs. Rs.10,628 crore), while its total income surged 14.5 per cent y-o-y to Rs.48,616 crore from Rs.42,443 crore, during the period under review. A further analysis of the bank’s segment-wise revenue suggests that retail segment accounted for a little over 40 per cent or 2/5th of the bank’s total income, followed by wholesale operations (corporate banking) with a share of 33 per cent, while treasure income, whose share in the total in-come rose significantly at 24 per cent, saw a jump of 30 per cent y-o-y to Rs.11,805 crore in the March quar-ter. In fact, the bank’s PBT (profit before tax) from treasury operations too jumped substantially - up 118 per cent - to Rs.2,739 crore (Rs.1,257

BANKING \ EARNINGS SEASON

crore), though it incurred a loss of Rs.1,210 crore (vs. loss of Rs.2,073 crore) in the fourth quarter of 2014-15. The PBT from retail banking seg-ment was also lower at Rs.4,208 crore in Q4FY’15 vis-à-vis Rs.6,234 crore in the same quarter a year ago. For the full year ended March 31, 2015, SBI’s standalone PAT registered a growth of 20 per cent to Rs.13,102 crore (vs. Rs.10,891 crore), while its total in-come was up by about 13 per cent to Rs.1,74,973 crore from Rs.1,54,904 crore in FY’14.

Asset quality continues to im-prove A big positive that emerges from the bank’s March quarter result is the ongoing improvement on the asset quality front, thanks to a slew of mea-sures initiated by the bank in recent times. As a result, the bank reported lower fresh slippages (incremental accretion of NPAs) of Rs.4,769 crore in the Q4FY’15 as against Rs.7,947 crore reported during the same quar-ter of the preceding financial year. Sustained recovery efforts have also resulted into lower NPA numbers for the bank. The bank’s Gross NPA (as percentage of total assets) fell to 4.25 per cent as at the end of March 2015, from 4.95 per cent in Q4FY’14, while its Net NPA stood at 2.12 per cent of the total advances, down from 2.57 per cent, during the same period. The recoveries during the latest fourth quarter amounted to Rs.4,485 crore versus Rs.3,389 crore in the year-ago quarter. SBI also sold loans worth Rs.4,510 crore to asset reconstruction companies (ARCs), during the fourth quarter.

According to Arundhati Bhattacha-rya, Chairperson, SBI, “The stress is coming down,” adding, “Going for-ward we do believe that we’ll be able to hold (the bad loan ratio) at this level or over a period of time try and bring it further down.” The country’s largest lender has been intensifying efforts to rein in bad loans while also pushing credit growth. The bank has set up specialized teams to track as-set quality. “This has been a year of consolidation. Consolidation has been done not just in regular lines of business, but we have also explored new digital business opportunities,” she recently told. According to Vaib-hav Agarwal, VP Research-Banking, Angel Broking, “Definitely the num-ber seems pretty decent as the first glance itself indicates that the bank had been able to deliver the kind of numbers been expected from them. Even seems it is little better that what we were assuming it.” Speaking to CNBC-TV18, he further stated, “So, there has been a consistent trend of declining net NPAs as well for SBI compared to last year. So, clearly for SBI it has been quite consistent in the last four quarters.”

Exploring new frontiers of growthBesides intensifying efforts on im-proving asset quality, the bank, un-der the charismatic leadership of Bhattacharya, has also been explor-ing new frontiers of growth to make SBI a truly global bank, while at the same time, offering innovating prod-ucts and services to its customers. Taking such an approach further, the SBI recently entered into a strategic


tie-up with PayPal, the world’s lead-ing open digital payments company, to promote cross border trade and fa-cilitate payments for SBI and PayPal users both in India and abroad. The partnership will enable SBI Debit cardholders to use PayPal when buy-ing products from overseas websites and allow SBI’s Micro Small and Me-dium Enterprise (MSME) customers to gain access to PayPal’s secure pay-ment solutions. Further, in an effort to boost the growth of the MSEM (Micro, Small and Medium Enterprises) segment, which plays a major part in the eco-nomic development and in creating jobs in the country, and with the aim to be a part of India’s e-commerce industry’s phenomenal growth, SBI has entered into an agreement with Snapdeal.com, India’s largest online marketplace, for financing latter’s sellers under Snapdeal- Capital As-sist program. This is currently the first and only such agreement for seller fi-nancing entered into by SBI keeping in the view of specific requirements of sellers in the e-commerce indus-try. The move is intended to help the bank’s existing customer base of ap-prox. 9 lakh MSMEs. Earlier, the bank also announced a strategic tie-up with Amazon.com, the world’s top e-retailer, with aimed at identifying areas of cooperation to build a digital India which meets the aspirations of the next generation of customers and small businesses. SBI and Amazon will develop trusted and frictionless payments and com-merce solutions for customers and small businesses, capitalizing on the exponential growth in internet pen-etration to drive the adoption of e-commerce and m-commerce in India. Commenting on the occasion, the country’s premier bank’s chairper-son opined that the partnership with E-Commerce platforms like Amazon would give a fillip to e-commerce in India and brings lots of value to SBI’s retail and SME customers. “E-commerce as an industry is at inflec-tion point and SBI stands with all the stake holders – the retail customers, the SME portant and highly popu-lated cities of the country.

Financial Summary (as on March 31, 2015)Deposits

Deposits of the bank increased from Rs 13,94,409 crore in March’14 to Rs 15,76,793 crores in March’15.( 13.08 per cent Y-o-Y growth) Savings bank deposits increased from Rs 4,69,262 crore in March’14 to Rs 5,13,905 crore in March’15 (9.51 per cent Y-o-Y growth). Current account deposits increased from Rs 1,10,935 crore in March’14 to Rs 1,23,855 crore in March’15 (11.65 per cent Y-o-Y growth).

Advances Gross advances increased from Rs 12,45,122 crore in March’14 to Rs 13,35,424 crore in March’15 (7.25 per cent Y-o-Y growth). Large corporate advances increased from Rs 2,42,719 crores in March’14 to Rs 2,71,778 -crore in March’15 (11.97 per cent Y-o-Y growth). Retail advances increased from Rs 2,37,667 crore in March’14 to Rs 2,72,429 crore in March’15 (14.63 per cent Y-o-Y growth). Home loans increased from Rs 1,40,738 crore in March’14 to Rs 1,59,237 crore in March’15 (13.14 per cent Y-o-Y growth).

“The bank restructured Rs.11,800 crore of loans in the fourth quarter, double the Rs.5,500 crore it had guided for in February. To be sure, restructurings were anyhow supposed to increase since fresh recasts from this financial year will attract a higher rate of provisioning. A good part of this restructuring was pre-emptive since no one wants the NPA tag.”

ARUNDHATI BHATTACHARYAChairperson, State Bank of India

TGA


Syndicate Bank PAT grows to Rs.417 crore in Q4FY2015

ing period of the previous financial year. Syndicate Bank is India’s 10th largest public sector bank in terms of Market Capitalization (the bank’s m-cap stood at Rs.7,292 crore, as on May 15, 2015). The bank’s top line, or total income, jumped a little over 23 per cent to Rs.6,599.13 crore from

Rs.5,357.40 crore, during the period under review. The bank’s operating profit too showed a near similar rise (up 20 per cent) in its operating profit to Rs.1,201 crore in the fourth quarter of FY2014-15 as against Rs.998 crore in the same quarter of the previous fiscal. In another positive, the bank’s


PNB’s Net Profit at Rs.307 crore in the March quarter of FY’15

Punjab National Bank, In-dia’s third largest public sector lender, posted a rise of 7.7 per cent in its total income to Rs.13,456

crore in the fourth quarter of finan-cial year 2014-15. The bank’s oper-ating profit was also up marginally to Rs.3,203 crore in Q4 of 2014-15 as against Rs.3173 crore in the year ago quarter. However, its net profits fell 62 per cent, y-o-y, to Rs.306.56 crore in the Jan-March quarter of 2014-15. The substantial decline in PAT was triggered by lower NII (Net Interest Income) coupled with a significant jump in provisions & contingen-cies, which surged 79 per cent to Rs.3,834.19 crore. The bank’s Net In-terest Income (NII) was down at 2.79 per cent in Q4FY2015, compared to 3.2 per cent in the same quarter of last fiscal. However, on a positive, the New-Delhi headquartered bank posted a rise in both its CASA ratio as well as credit-deposit ratio, which was at 76 per cent, as of March 31, 2015. The bank’s CASA ratio (or, share of CASA in domestic deposits) stood at 40.6 per cent at the end of March 2015, up from 39.4 per cent, as on December 31, 2014. Further, the bank also witnessed a significant jump in its non-interest income to Rs. 1,805

Mar’14) and business per employ-ee (Rs.13.19 crore, as of Mar’15 vs. Rs.12.83 crore, as of Mar’14). It add-ed 153 branches and 139 ATMs in the March quarter of FY’15, thus taking its overall network strength to 6,559 branches and 8,348 ATMs. The bank witnessed a growth in its alternative delivery channels as well with about 30.75 lakh internet banking useRs., while more than 8 lakh customeRs.are availing its Mobile Banking facil-ity. In fact, more than 56 per cent of the bank’s transactions are being con-ducted currently through Alternate Delivery Channels. The bank has also embarked on an ambitious organiza-tional restructuring exercise named

Manipal-based state-owned lender Syn-dicate Bank posted a marginal rise of two per cent in

its profit after tax (PAT) to Rs.417 crore in Q4FY2015, compared to Rs.409.30 crore in the correspond-

crore, up 29 per cent y-o-y, led by close to three-fold rise in its trading income to Rs.538 crore, recoveries in written off accounts to the tune of Rs.335 crore, and divi-dend income, from liq-uid mutual funds, of Rs.85 crore in the quarter ended March 2015. The bank also improved its performances in terms of business per branch (Rs.127.42 crore, as of Mar’15 vs. 126.10,

“PNB Pragati”. The programme is based on three pillars namely - HR Transformation, Operating Model Optimization and Alternate Chan-nels & New Business Opportunities. It is aimed at moving the Bank into higher growth trajectory giving edge over its peers and new players. A to-tal of 666 branches have been covered under PNB Pragati. As part of its CSR initiatives & Empowerment Ini-tiatives, Ten “Farmers’ Training Cen-ters” working under the aegis of PNB Farmers Welfare Trust are providing free of cost training on Agriculture and allied activities. Over 1,37,750 farmers were provided training by these centers through 4210 training programs during FY’15.


OBC asset quality improves

The public sector lender Oriental Bank of Com-merce (OBC) posted a net loss of Rs.178.44 crore in the Q4 of FY 2014-15, as

against profit after tax of Rs.310.32 crore in the same quarter a year ago, hit by higher provisions and a reduc-tion in the book value of security re-ceipts. The Gurgaon-headquartered PSB had sold Rs.395.22 crore worth of loans to asset reconstruction com-panies during 2013-14 and booked a gain of Rs.292.73 crore, but due to a change in rules, it had to reduce the book value of the security receipts re-ceived in return for the asset. According to a statement from the bank, “The Reserve Bank of India (RBI) observed that only cash com-ponent of the sale consideration is eligible to be booked as profit. Based on the observation of RBI, the bank reduced the book value of security receipts by Rs. 280.43 crore

during the quarter,” an OBC state-ment said. The bank’s NII dropped marginally to Rs. 1,297.69 crore in the March quarter from Rs. 1,308.70 crore in the year ago quarter, while NIM dropped a bit (down 14 bps) to 2.58 per cent, y-o-y. Provisions rose about 19 per cent to Rs. 1,106.57 crore compared with Rs.930.70 crore in the year-ago quarter. However, in a major positive, the bank’s efforts in reining in bad loans have begun to pay off. The bank’s Gross NPA stood at 5.18 per cent at the end of March 2015, compared with 5.43 per cent in the preceding December quarter, while Net NPAs too fell in Q4FY2015 to 3.34 per cent quarter on quarter or sequentially, from 3.68 per cent in the third quar-ter of 2014-15. The bank also showed improvement in productivity during the March quarter. In the fourth quarter of FY2014-15, OBC’s business per employee in-

creased to Rs. 17.43 crore (up from Rs.17.10 crore in Q4FY’14), though business per branch fell marginally to Rs.156.40 crore (from Rs.157.15 crore), during the same period. The bank’s Capital Adequacy Ratio stood at 11.41 per cent as per Basel III norms, as on March 31, 2015.

domestic CASA deposits rose 14 per cent year on year to Rs.63,671 crore from Rs.55,911 crore, during the said period. The domestic CASA deposits of the bank stood at 28.25 per cent of its total domestic deposits as at March 31, 2015. . In terms of asset quality, the bank’s Gross NPA ratio stood at 3.13 per cent in Q4 of 2014-15, up slightly from 2.62 per cent, as of March 31, 2014. It Net NPA ratio too was up marginally to 1.90 per cent in the Jan-March quarter of FY2015 from 1.56 per cent in Q4FY 2013-14. The bank’s domestic NIM (Net Interest Margin) stood at 2.60 per cent in the fourth quarter of 2014-15 as compared to 3.23 per cent in the corresponding quarter in FY2013-14. The bank’s profitability was affected by higher provisioning for bad loans and contingencies; provisions were higher by 13.3 per cent to Rs.715 crore during the March quarter as

against Rs.631 crore in the year ago quarter, while fresh slippages were to the tune of Rs.820 crore, and the recoveries amounted to Rs.767 crore. “Our net profit did not grow much mainly because of the higher provi-sions and contingencies as well as an almost flat net interest income dur-ing the quarter,” said T K Srivastava, Executive Director, Syndicate Bank. The bank opened 303 branches dur-ing 2014-15, crossing a milestone of 3,552 branch network. The board of directors of the bank has recom-mended dividend of 47 per cent for

the FY2014-15. Meanwhile, Arun Shrivastava has taken charge as Managing Direc-tor & CEO of Syndicate Bank. Prior to joining Syndicate Bank, he was Executive Director of Bank of India. He started his career as a Direct Re-cruit Officer in Bank of Baroda in 1979. The bank aims to open 55 new branches in Andhra Pradesh and Telangana, while it also aims to take the total business to Rs.55,000 crore by March 31, 2016, the bank’s GM M Mohan Reddy said in a press confer-ence.

TGA


State Bank of Hyderabad shows consistent performance

SBH Net Profit grows 29.19 per cent in FY’15

State Bank of Hyderabad, one of the leading public sector banks in India, has posted strong numbers for the financial year as well

as fourth quarter ended March 31, 2015. The results were declared at the meeting of the Board of Directors of State Bank of Hyderabad on 06th May, 2015 at Mumbai. The meeting was presided over by the Chairper-son Smt. Arundhati Bhattacharya and SBI MD, also present on the oc-casion was Group Executive (A&S) VG Kannan. On conclusion of the Board meeting, the Managing Di-rector of State Bank of Hyderabad released the Financial Results. The bank reported a rise of 29.19 per cent in Net profit at Rs. 1,317.13 Cr in the financial year 2014-15 as against Rs. 1,019.51 Cr in the previous financial year, 2013-14. The Net Profit during the Jan-March quarter of 2014-15 jumped by 33.43 per cent to Rs. 445.51 crore from Rs. 333.89 Cr in the preceding quarter, i.e., October-December quarter of 2014-15. Continuing with the FY’15 results, the bank’s NII (Net Interest Income) increased by 10.49 per cent to Rs. 4,392.61 Cr in FY’15 from Rs. 3,975.99 Cr in FY’14. The bank improved its

NIM to 3.29 per cent in the March quarter of 2014-15, from 3.05 per cent in the year-ago quarter. The bank’s Capital Adequacy Ratio (CAR), as per the Basel III norms, as on March 31, 2015, stood at 11.26 per cent, with CET-1 at 8.86 per cent which is much above the RBI’s prescribed norms. The bank’s total business, dur-ing the FY’15, stood at Rs. 2,40,775 Cr, consisting of Total Deposits of Rs.1,32,022 Cr and total Advances of Rs.1,08,753 Cr. The bank’s Credit-Deposit Ratio stood at 82.89 per cent, as on March 31, 2015, up from 82.13 per cent a year ago, as at the end of March 2014. There was also an im-provement on the CASA front, as the bank grew its CASA deposits by 16.87 per cent y-o-y, from Rs. 36,882 Cr in FY’14, to Rs. 43,105 Cr in FY’15. The bank’s Personal Loans segment portfolio increased by 17.01 per cent y-o-y from Rs. 21,968 Cr in 2013-14 to Rs. 25,705 Cr in 2014-15.

The bank improves its asset qualityIntensive NPA recovery efforts taken by the bank have yielded results, as a result, in absolute terms, the GN-PAs declined from Rs. 5,824.20 Cr in March 2014 to Rs. 4,984.77 Cr in March 2015. In percentage terms, the GNPA declined from 5.89 per cent

to 4.59 per cent (or fall of 130 bps), while Net NPA fell from 3.12 per cent to 2.24 per cent (decline of 88 bps), during the said period. Further, the bank’s Provision coverage ratio (PCR) also improved from 54.50 per cent in March 2014 to 61 per cent in March 2015.Key Financial RatiosReturn on Assets 0.89 per cent in March 2015 against 0.70 per cent in March 2014.Return on Equity 14.66 per cent in March 2015 against 12.74 per cent in March 2014.Cost of Deposits declined to 7.26 per cent in March 2015 from 7.50 per cent in March 2014. NIM increased to 3.29 per cent in March 2015 from 3.05 per cent in March 2014.

Network growth SBH opened 127 branches during the financial year 2014-15. Out of which 34 branches were opened in the unbanked rural centres, thereby taking its total branch strength from 1,694 in Mar’14 to 1,821, as at the end of March 2015. This includes 741 branches in Telangana and 399 branches in AP.

CSR activities• 25 fowler cots worth Rs.6 lacs was

donated to MGM Hospitals, Wa-rangal.

• School Bus worth Rs.18.07 lacs was donated to Shriram Charita-ble Trust, Nalgonda for Kaluram Gurkha Vidyadayini vidyalay-am.

• Bank continued adoption of 20 Tigers enclosure at National Zoo Park, Hyderabad at Rs.15 lacs.

• Rs.150 lacs donated to AP Chief


Financial Results Overview – Year ended March 31, 2015 (Rs. Cr)

Particulars Year ended

31.03.15 31.03.14 % Change

Interest Income 13823.76 13466.81 2.65

Interest Expenditure 9431.15 9490.82 -0.63

Net Interest Income 4392.61 3975.99 10.49

Other Income 1325.06 982.47 34.93

Operating Income 15148.82 14449.28 4.84

Operating Expenditure 2804.01 2267.47 23.69

Operating Profit 2913.66 2690.99 8.29

Provisions & Contingencies 1597.00 1671.00 -4.43

Net Profit 1317.13 1019.51 29.19


Minister’s Relief Fund for Hud-hud Cyclone Relief.

• Rs.9.83 lacs were given for en-hancing the environment at NTR Health University, Vijayawada.

• Scholarship, Uniforms, Note-books, shoes was distributed to poor students of MGM High School, Vizag worth Rs.6.02 lacs.

• Bio-Merieux machine was donat-ed to Kolkata Heart clinic & Hos-pitals, Kolkata worth Rs.14.30 lacs.

SBH shows Consistent Perfor-mance – FY 2014-15• Total Business at Rs.240775 crore

(increase of 9.19 per cent y-o-y)• Total Advances grew by 9.98 per

cent (y-o-y) to Rs.108753 crore• Total Deposits increase by 8.54

per cent (y-o-y) to Rs.132023 crore

• Total PER Deposits increase by 19.04 per cent (y-o-y) to Rs.72471 crore

• Total CASA Deposits increased by 16.87 per cent (y-o-y) to Rs.43105 crore

• ROE improved 192 bps from 12.74 to 14.66 (y-o-y)

• ROA improved 19 bps from 0.70 to 0.89 (y-o-y)

• Total Operating Profit up by 8.29 per cent (y-o-y) to Rs.2914 crore

• Net Profit up by 29.19 per cent (y-o-y) to Rs.1317 crore

• Net profit per employee im-proved from Rs.6.10 lacs to Rs.8.29 lacs (y-o-y)

• Net Interest Income higher by 10.49 per cent (y-o-y) to Rs.4393 crore

• Net Interest Margin is 3.29 per

cent (up by 24 bps over March, 2014)

• Capital Adequacy Ratio at a healthy 11.26 per cent (Basel III)

• 127 new branches added taking network to 1821.

• Provision Coverage Ratio in-creased to 61 per cent (Previous year 54.50 per cent)

• Gross NPAs declined from Rs.5824 crore (5.89 per cent) in March 2014 to Rs.4984 crore (4.59 per cent) in March 2015

The bank’s intensive NPA

recovery efforts yielded results

with gross NPAs reducing from Rs 5824.20 crore in

March, 2014 to Rs 4984.77 crore in

March, 2015. SANTANU MUKHERJEEMD, State Bank of Hyderabad

TGA

If you run from risk, you run from richesYour risk starts as soon as you have money. It loses value with each passing day due to inflation. Since inflation will make things more expensive, you can’t keep your money under the mattress. You must earn returns on it, which... at the bare mini-mum... must match the levels of inflation. If not, you will become poorer day-by-day even if you don’t spend a single rupee from your corpus. Given that there is no prevention against inflation, you have to protect and grow your money. And this is possible through... Investment. Investing your money will enable you to earn returns on it. Now, there are three possibilities:i. Returns less than inflation: Erosion of your corpus continues, although at a slower paceii. Returns equal to inflation: Your standard of living is maintainediii. Returns more than inflation: You become richer everydayHowever, investment is an activity that comes attached with risk. There is no such thing as risk-free investment.But, just because you are afraid of risk, you cannot afford not to invest your money. You may never to able to educate your children. You may never be able to provide good medical facilities to your family members. You may never be able to own a dream-home. Because, even if you have the freedom to avoid any investment-risk by keeping all your cash at home, there is no escape from inflation-risk. Logically, therefore, instead of avoiding it you must learn how to manage and protect investment-risk. And this, precisely, is the difference between the crorepatis and the unsuccessful investors.If you understand and appreciate the fact that risk is something that needs ‘management’ and not ‘avoidance’, you have excel-lent chances of becoming a crorepati. If not, in all probability your life would be an endless financial struggle.Typically, you will face four prominent types of risks with your investments, namely:- Default Risk i.e. when you don’t get back your investment- Interest Rate Risk i.e. when you earn lower rate than the market- Liquidity Risk i.e. when you don’t have easy access to your money- Market Risk i.e. when the value of your investment depreciatesThere are varied types of investments such as fixed deposits, bonds, debentures, shares, mutual funds, PPF, EPF, insurance and much more. Given that the nature of each type of investment differs, it is but natural that the risk associated with each type of investment too will differ. For example, while the fixed deposits face high levels of default risk, their market risk is practi-cally nil. Or insurance has high liquidity risk, but almost no default risk. Or shares are highly susceptible to market risk, but very minimal liquidity risk. Concluding, if you have crorepati-aspirations, you have no option but to choose risk-protection over risk-prevention. Source: wealtharchitects.in


ENVIRONMENT & YOU

SUSTAINABLE LIVINGHow Ecova Reduced its Carbon Footprint by 1.49%

Ecova, the American energy and sustainability man-agement service provider, sets new standards in how business organizations can play a pivotal role

in saving the environment by cutting their carbon emis-sions and help make the world a better place. The Spo-kane, Washington-based company impacted the environ-ment by reducing its carbon footprint by 1.49 per cent in 2014 from 2012 by consolidating offices, implementing office efficiency improvements and efficiently managing business travel. In 2014, Ecova reduced its business-re-lated greenhouse gas emissions by 81 tons compared to the 2012 baseline. And it aims to increase that number to 166 tons — a 3 per cent reduction compared to 2012 by the end of 2015. “Corporate responsibility has always been at the core of our business model, and in 2014 we set specific, measurable goals for the four areas we focus on as a company: our employees, our clients, our com-munities and our environment,” says the company in its Corporate Sustainability Report 2014. In an effort to reduce its GHG emissions, the company, which is now a part of the French major Cofely and GDP Suez, post-the 2014 acquisition, installed electrical sub-metering equipment at seven of its largest facilities to gain insight into its consumption and take steps to re-duce the company’s business footprint. The company also incorporated energy-saving features and low-impact construction materials into the remodel of the company’s Spokane headquarters, which is its largest office. Starting in March 2014, this location undertook a huge remodel-ing and expansion project that included the integration

of energy-efficient features. The new space includes: • High-efficiency LED lighting system: More than 500

LED fixtures were installed which will save over $20,000 and over 300,000 kWh over their lifetime. Further, fewer bulb replacements will save mainte-nance time and expenses as well. Additional lighting upgrades included occupancy sensors and automat-ic daylight harvesting.

• Environmentally-friendly materials: New carpeting tiles are made from recycled fibers and new paint has no VOCs.

• Recycled waste: As much as possible, old materials were recycled including the 850 outdated light fix-tures pulled out of the building during demolition.

The company, which won Spokane County’s 2013 Pin-nacle Award for its efforts to reduce the carbon footprint at its corporate headquarters through alternative com-muting programs, its involvement on local and regional boards and the rollout of company-wide commute trip reduction efforts, says that lessons learned during this project will help inform decisions for other office up-grades and remodels. And it’s extending its efforts to its new facilities as well. For example, the company’s new Portland office has been selected for its natural light and close proximity to mass transit. Besides, the company has also said that it will be investigating travel patterns re-lated to its business travel and use its energy monitoring services internally to optimize energy efficiency, among other initiatives.

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A ccording to the United Nations, every day nearly 800 million people lack access to safe water and more than two billion people live without basic sanitation. PepsiCo, the world’s leading food &

beverage major believes that a responsible business must act as a global citizen. The company, which has a strong presence in India, selling hugely popular brands such as Pepsi, Mirinda and Seven Up among others, says that it understands that access to safe water is fundamental to our business and the communities where we operate. It impacts both the company’s internal company operations and its supply chain, much of which is dependent on water-intense agricultural activities. “For us,” says the cola giant, “the necessity of water stewardship is immediate: there is no business without water.” PepsiCo has long understood the importance of water to the communities in which we operate. In 2009, PepsiCo was among one of the first global companies to publicly recognize water as a basic human right in the context of the World Health Organization’s and the United Nations’ Joint Declaration on the Human Right to Water. The United Nations defines the human right to water as all people’s right to safe, sufficient, acceptable, physically accessible and affordable water for personal and domestic uses.In 2013, the company announced that by teaming up with partners around the globe, it had provided access to safe water for more than three million people, meeting that goal more than two years ahead of schedule. Since then, it has doubled the original goal, and now intends to provide access to six million people by the end of 2015 through its partnerships. An important part of holistic water stewardship is advocacy through partnership. PepsiCo has formed strategic alliances with organizations including the United Nations Global Compact’s CEO Water Mandate, the World Business Council for Sustainable Development Water Leadership Group, the U.S. Water Alliance, Cambridge University, and many more. By the end of 2013, Safe Water Network had worked with 67 communities throughout India and

PepsiCo’s Safe Water Network

How the F&B giant is delivering access to safe water

Ghana to build and maintain Safe Water Stations. Each Safe Water Station provided affordable, reliable and safe water access to local residents on a daily basis. The model worked, even on tight margins. “This is a big deal, creating incentives for communities to invest in their own water system,” Gimble said. “When households purchase safe water from our Stations, revenues are used to pay the local operator and delivery truck drivers, and build up a reserve for ongoing maintenance of the purification system. This is a critical driver of sustainability.” “We take a more hands-on approach to corporate engagement,” said Amanda Gimble, Safe Water Network’s Senior Vice President for Strategic Initiatives. “This is not just about money. This is about bringing expertise and applying the knowledge and experience to everything that we do.” This commitment to corporate partnership combined with the innovative “bottom-up” strategies adopted by Safe Water Network offer real hope for organizations and individuals dedicated to solving the world’s water crisis.

Action on the ground

In Brazil: With support from the Columbia Water Center, residents in the state of Ceará built sustainable and cost-eff ective water delivery infrastructure bringing safe water to more than 60,000 people. The Agriculture Department of the State of Ceará adopted the program to develop systems for other communities in the state. In India: Punjab, the “breadbasket” of India, irrigation of rice based on more precise soil moisture measurement and other water effi ciency measures facilitated by the Columbia Water Center helped farmers save millions of liters of water and thousands of kilowatt-hours of energy.

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Junna Solar Systems in a short span of time has carved a niche for itself among the solar energy industry players in India. The Hyderabad-headquartered company, which offers an array of solar power products and boasts of a state-of-the-art manufacturing plant and a strong focus on product innovation and customer service, is well poised to capitalize on the growing demand for energy, going ahead.

Every year as summer approaches, longer and unexpected power cuts become the order of the day (oops! night too), and it becomes hard not to get overwhelmed by the cacophony of overworked generators

and compressors – at shops and homes – as people struggle to beat the sweltering heat. This is a common sight across Indian cities – from Delhi to Dehradun, Nashik to Nagpur, Hyderabad to Hubli - across cities and towns in India. In fact, the situation in the country’s hinterland is even worst to say the least. However, this is set to change if the renewed thrust, on part of the central and several state governments, on harnessing renewal energy sources, particularly solar energy, is any indication. A growing number

of cities and villages are now joining India’s march towards becoming self-reliant in renewable energy, in general, and solar energy, in particular. The country took a major leap towards this when Dharnai in Bihar became India’s first village to source its entire electricity need from a solar-powered micro-grid. Set up by Greenpeace, an international NGO based in The Netherlands, the 100 kilowatt (kW) micro-grid, provides quality electricity to a population of more than 2,200 in Dharnai. More villages are now going Dharnai way by opting for the solar energy to light up the lives of their denizens. In January this year, Lokari in Adilabad district of Telangana, became another village in the district to be powered entirely by solar energy.

JUNNA SOLAR SYSTEMSHarnessing Solar Power

CORPORATE WORLD


Growing awareness and industry-friendly measures have seen many a company enter the sector to be a part of the mission to make India self-reliant in electricity production. Junna Solar Systems is one such company that has carved a niche for itself among solar energy equipment manufacturers in Telangana, which has been making rapid strides in the area of solar energy; the State government has planned to illuminate 10,000 villages in Telangana by harnessing solar energy.

From a humble beginning to a major player Junna Solar Systems traces its roots to the year 2006 when Junna Shekar Reddy, a young man with a dream to light up the lives of people, decided to tread the path less traveled and set up Junna Group. It was not an easy decision for the young entrepreneur to enter the field of solar energy in the wake of a number of obstacles. While benefits of solar energy have been known since long, lack of enough support from the government in terms of industry-friendly policies, suitable incentives for manufactures given relatively higher costs of products, protection from imports, and significant subsidies to the end-users have acted as major deterrents to the entrepreneurs desirous of entering this promising industry. However, this does not deter the young Shekar Reddy from going ahead with his plans to set up Junna Solar Systems, a pioneering company in 2012. Under the able guidance of its dynamic founder, Junna has grown by leaps and bounds since making its debut nine years ago.

Strong manufacturing capabilityThe company, over the years, has built strong capabilities in manufacturing products such as Solar Modules, Solar Lanterns, Solar Inverters & Batteries, Solar Water Pumps, Solar Radios, Solar Traffic Lights, Solar Water Pump Sets, Solar Home Lights, On- and Off-grid Solar Systems, Domestic Solar Pack, Solar Energy Systems for Commercial Establishments such as Hotels, Commercial Complexes, Hospitals, Offices, Schools/Colleges, etc. The company has also developed a number of products to cater to the farmer community, which remains one of its key market segments. It specializes in manufacturing of solar products like Solar Water Pumps, Solar Water Pump Sets, etc., that are used in Agriculture. “Our main goal is to serve farmer with our solar products for renewable energy,” says the company.

Expertise in EPC of solar grid connected power plantsThe company has also emerged as a leading player in the EPC (Engineering, Procurement and Construction) segment of solar grid connected power plants. The group’s combined experience and expertise of about 10 years in this realm ensures that only comprehensive solutions are provided to the clients.

Forging strong global partnershipsJunna Group of Companies has also taken a giant leap in

making its pres-ence felt in inter-national markets since its incep-tion. The com-pany has forayed into several inter-national markets during this peri-od, leveraging on its strong brand equity and trust among custom-ers built over the

JUNNA SOLAR SYSTEMS

Harnessing Renewal EnergyIndia’s Total Installed Capacity (MW)

Source Total Installed Capacity (MW)

Wind Power 22,465.03

Solar Power (SPV) 3,062.68

Small Hydro Power 3,990.83

Biomass Power 1,365.20Bagasse Cogeneration 2,800.35

Waste to Power 107.58

Total 33,791.74

years. Besides, the group’s focus on quality, a custom-er-centric focus, and top-class after-sales service has helped the company stand in good stead through this period, helping it win and build a strong network of partners all over the globe.

Excellent after-sales serviceA customer-centric approach is not a just a strategy statement but it is more a passion at the Hyderabad-headquartered Junna Solar Systems. The company offers excellent after-sales service to its customers. It provides planned maintenance to all solar equipment installed by it. In another innovative step towards improving customer service, the company also sends/mails service bulletins on a routine basis to its customers as a reminder that planned maintenance saves major repair costs in the long-term, besides updating them (customers) of any potential problems.

Certifications and major achievementsJunna Solar Systems boasts of a state-owned plant plant located in Hyderabad, Telangana. Its products are widely renowned for energy- efficient and environment-friendly, safe, cost effective & low maintenance. The company has ISO 9001:2008 Certified quality manufacturing facility. ISO International Standards ensure that products and services are safe, reliable and of good quality. Junna Solar PV modules have met the standards and, therefore, listed by Underwriters Laboratories for IEC 61703 -1&-2. The certification allows the modules to be used in PV systems up to 1,000V. Junna Solar PV modules have met the standards and, therefore, listed by Underwriters Laboratories for IEC 61703 -1&-2. The certification allows the modules to be used in PV systems up to 1,000V. As per MNRE, UL Standards are recognized nationally and internationally as the benchmarks for product safety. JUNNA Solar is also having IEC 61215, IEC 61730-1 & -2 & IEC 61701 for Solar PV Modules. The company achieved a major milestone when on November 16, 2014, it launched a 5HP solar powered water pump for agriculture in Telangana to drag out

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Renewal Energy in India – A Snapshot

India’s total installed capacity of power generation stood at 295.7 GW as on December 31, 2014, as per ES 2015. Installed capacity of Indian solar power in 2013-14 was 2,647 MW. The country’s total renewable power installed capacity as on December 31, 2014, has reached 33.8 GW. Wind energy continues to dominate this share, accounting for 66 per cent of installed capacity, followed by biomass, small hydro power and solar power. India’s renewable energy sector is driven primarily by the private sector. As per Census of India 2011, around 1.1 million households are using solar energy to meet their lighting needs and an almost similar number meets cooking energy needs from biogas plants. India’s renewable energy sector is driven primarily by the private sector. The government has been promoting private investment in renewable energy through an attractive mix of fiscal and financial incentives in addition to preferential tariffs being provided at the state level. To provide a big push to solar energy, two new schemes -- ‘Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects’ and ‘Pilot-cum-Demonstration Project for Development of Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops’ -- were rolled out in December 2014. Supplementary guidelines were issued under the existing ‘Solar Pumping Programme for Irrigation and Drinking Water’ schemes to solarize the targeted one lakh pumps throughout the country during the current year. Under the ‘Pilot-cum-Demonstration Project for Development of Grid Connected Solar PV Power Plants, ‘in principle’ approval has so far been accorded to canal-top projects for generation of 34 MW solar power and canal-bank projects for 35 MW.The government has been promoting private investment in renewable energy through an attractive mix of fiscal and financial incentives, in addition to preferential tariffs being provided at the state level. These include capital/interest subsidy, accelerated depreciation, and nil/concessional excise and customs duties. The level of capital subsidy being provided depends on the renewable resources and region, and varies from about 10 to 90 per cent of project costs.

1,20,000 liters of underground water per day from 150-foot depth in Dindi in Mahabubnagar district of the state, underlining the potential of solar pump sets for irrigation and rural water supply.

Solar energy – The future of power According to estimates, over 300 million people, or about 25 per cent of India’s population, lack access to electricity. However, solar energy offers a ray of hope for this energy-starved nation, given India’s unique proposition. There are certain factors which make solar energy an ideal choice as an alternative source of energy. First and foremost, India is endowed with abundant of solar radiation. According to the US EAI, being a tropical country, India receives adequate solar radiation for 300 days, amounting to 3,000 hours of sunshine equivalent to over 5,000 trillion kWh/year, which is far more than its total annual energy requirement. In fact, almost all the regions receive 4-7 kWh of solar radiation per sq mtrs with about 2,300–3,200 sunshine hours/year, depending upon the location. Solar energy is also the solution to the growing global quest for cutting its carbon footprints/reduce carbon emissions and save the planet earth. Given, solar energy source holds immense potential for meeting the growing demand for electricity, globally. At present, Germany leads the list of countries with significant focus on producing solar energy with capacity of 35.5 GW (1 Gigawatt = 1,000 Megawatt). India is ranked 12th with solar energy production capacity of 2.3 GW or 2,300 MW; China with capacity of 18.3 GW and USA with capacity of 12 GW are ranked 2nd and 5th, respectively, according to pureenergies.com. The US Energy Information Administration (EIA) estimates that about 11 per cent of world marketed energy consumption

is from renewable energy sources (bio-fuels, biomass, geothermal, hydropower, solar, and wind) with a projection for 15 per cent by 2040. The EIA estimates that about 21 per cent of world electricity generation was from renewable energy in 2011, with a projection for nearly 25 per cent in 2040. In 2014, solar energy accounted for less than a per cent (0.4 per cent, to be precise) of the total energy (98.3 quadrillion Btu) consumed in the country. In Germany, the world’s top producer, solar energy (with total production of 35.2 TWh accounted for about 6.9 per cent of the country’s net electricity consumption, according to the Fraunhofer Institute for Solar Energy Systems ISE. However, bolstered by the government’s renewed thrust and increasing global investors’ interest in the sector, India aims to raise the solar power generation capacity from the present 3,062 MW to 100,000 MW by 2022. The country has also set an ambitious target of drawing 60 per cent of its electricity needs from solar energy by 2035. Though a section of experts say that raising the proportion of solar power in the energy mix from less than a per cent today to around 10 per cent by 2022 is going to be tough task.

Empowering consumers, powering growth As Junna Solar Systems prepares to celebrate a decade of a glorious journey and readies to usher into the next decade, it seems well poised to capitalize on the growing demand for energy going ahead. The company’s strong manufacturing capability, focus on product innovation and, to top it all, on making its products affordable as well as strong customer focus, they all give the company an edge over competitors. Indeed, it can look forward to script many more success stories, going ahead.

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June 2015

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WPI falls in April, driven by lower fuel pricesNotwithstanding the current sluggishness in the stock markets, India continues to remain an attractive destination among emerging markets for overseas investors. According to Geoffrey Dennis, Head-Global Emerging Market Strategy at UBS, India story will stay intact in long-term, though he doesn’t rule out some profit-taking in the short-term. Speaking to CNBC TV18, he told that disappointment over the earning story in the last quarter, some concern about the economy, the recent decision on retrospective taxation of capital gains have created anxiety among investors. He, however, feels, ‘this all represented challenges, good reasons to take some money off the table but we think the India story is still very good and we would be advising people to start to look to get back into the market.”

He expects Fed to start raising rates in September. “So, we have to keep an eye out as to what could happen in terms of a US monetary policy down the road. However, the markets are vulnerable in EM to some strong data at some point over the next several weeks. Also, we have had a very good run and valuations are getting a little stretched in the emerging markets and so we are waiting for earnings growth to come through also which would be beneficial,” he told the business channel. According to leading market analyst Anand Tandon even though markets appear to be oversold in near-term, valuations are still not cheap. “For

now, the market looks reasonably expensive,” he told CNBC TV18, adding, “But in the broader market, you may get some chances to buy.”

Government announces new urea policy The central government has approved the new urea policy for the next four years beginning FY 2015-16, with the aim to make India self-sufficient by increasing urea production in the country by making plants more energy efficient and through pooling of gas supplied to urea facilities, and ensuring timely supply of soil nutrients to farmers. India currently produces about 22 million tonnes (MT) of urea annually and imports about 8 MT of the fertiliser annually to meet domestic demand. Urea is under government control and is sold at a highly subsidised rate of Rs 5,360 per tonne. The new urea policy will increase annual production by two million tonnes (mt), besides it will also help cut the yearly subsidy bill by Rs 4,800 crore, of which direct saving would be Rs 2,618 crore. The government pays the difference of the maximum retail price (MRP) and the cost of production as subsidy to the manufacturers. The

new urea policy will also incentivise domestic manufacturers and freed transportation of P (phosphorus) and K (potassium) fertilisers. It also links the incentive given to domestic manufacturers with their annual energy consumption to lower the carbon footprint.

India IT Infrastructure spending to reach $2.02bn in 2015The Indian IT infrastructure market will reach $2.02 billion in 2015, a 3.3 per cent increase from 2014, suggests a latest report from global IT research and consultancy firm Gartner, Inc. The IT infrastructure market includes server, storage and networking equipment. “Indian IT infrastructure is poised to be a $2.29 billion market by 2018,” said Naveen Mishra, Research Director at Gartner. “The Indian infrastructure market will witness investments primarily fuelled by data center modernization initiatives to drive uninterrupted and better quality of service.” Indian enterprises will focus on creating integrated data centers for optimizing existing IT assets and delivering non-stop IT services to business. This will drive greater emphasis on public cloud,

Urea subsidy (in Rs.Cr)

* Revised Estimate # Budget Estimate

BUSINESS BRIEFS


DevOps (a software development method, referring to a type of agile relationship between ‘development’ and IT ‘operations’).

Within the Indian IT infrastructure market, server revenue is forecast to reach $658 million in 2015, a decline of 4.7 per cent from 2014. The server market is expected to return to positive growth in 2016 when revenue is forecast to total $698 million. Enterprise networking is the biggest segment with revenue expected to touch US$944 million in 2015. With increased focus on mobility and big data activities in India, software defined networking is getting discussed and adopted amongst Indian enterprises.

Reforms to improveMoody’s Investors Service, the leading global credit rating agency, has said that India’s reforms will improve its sovereign’s credit profile over the next several quarters. India’s Baa3 issuer and senior unsecured ratings are supported by its economic growth, which has outperformed similarly rated peers over the last decade, Moody’s observed. According to it, the country’s current subdued growth conditions reflect both global and domestic factors, which include weak domestic credit conditions, tepid domestic demand and uncertain global growth.

Since India’s structural reform efforts will revive domestic investment and competitiveness over the medium- rather than near-term, the above factors will limit the pace of economic recovery in India

over the next two quarters, while the monsoon and the potential for global financial volatility pose additional risks to growth this year. Moody’s observes that the last peak in India’s business cycle coincided with robust global growth and financial conditions, resulting in very high rates of growth. It is less certain that similarly salubrious global conditions will recur during India’s next business cycle. Nonetheless, looking ahead to the next 18 to 24 months, Moody’s says that India’s growth is likely to average around 7.5 per cent, which is higher than forecast in similarly rated peers. This growth forecast is supported by India’s structural advantages as well as by recent and planned improvements to its operating environment. India’s structural advantages include favorable demographics, a large economy — which offers investment opportunities — economic diversity, as well as high savings and investment rates.

Recent reform efforts include: 1) the inflation targeting framework; 2) regulatory simplification; 3) the increase in limits for foreign direct investment in the rail infrastructure,defense and insurance sectors; 4) higher levels of public infrastructure investment; 5) measures to promote financial savings; 6) bills relating to mining; and 7) measures to reduce banking system risk, such as counter cyclical buffer requirements and liquidity coverage guidance. However, it cautions that the extent to which India’s growth will outperform, and for how long growth will remain high, will depend on how infrastructure, regulatory and bureaucratic reforms are implemented; given that these measures are still at the early stages of design. Moody’s points out that even with robust growth, India’s fiscal metrics are likely to remain weaker than those of similarly rated peers, and the social, political and

economic challenges associated with low average incomes will persist over the medium term.

India calls for more efforts to meet renewable energy generation target

The country needs to step up efforts to meet the 175 GW of renewable energy generation capacity by 2019-20, according to India’s Power, Coal and New & Renewable Energy Minister, Piyush Goyal. “The role of NISE will see a quantum leap as the energy security of the country is linked to the success of the renewable energy mission,” the Minister said while inaugurating the National Institute of Solar Energy (NISE), the centre for research and development of solar energy. While the target is for 2022 – seven years from now, all efforts should be made to achieve the target by 2019-20, he stressed. The Minister also announced the establishment of the International Solar Policy and Applications Agency, which is aimed at being a coalition of solar resource rich countries.

According to India Brand Equity Foundation, as of April 2014, India’s total thermal installed capacity stood at 168.4 gigawatt (GW), while hydro and renewable energy installed capacity totalled 40.5 GW and 31.7 GW, respectively. At 4.8 GW, nuclear energy capacity remained broadly constant from that in the previous year. India’s The Indian government formally confirmed the solar power capacity addition target for 2022 as 100 GW. The current installed solar power capacity stands at around 3.38 GW.

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EXECUTIVE SUMMARY

Low oil prices & monetary easing triggering modest acceleration of global recovery

Low oil prices and monetary easing are boosting growth in the world’s major economies, but the near-term pace of expansion remains modest, with

abnormally low inflation and interest rates pointing to risks of financial instability, according to the OECD’s latest Interim Economic Assessment. Strong domestic demand is driving growth in the United States, which, combined with dollar appreciation, is adding to demand in the rest of the world. The euro area should benefit from low oil prices, monetary stimulus and euro depreciation, which combine to offer the chance to escape from stagna-tion. In Japan, monetary and fiscal stimulus provide the im-petus for faster near-term growth, but longer-term chal-lenges remain. A gradual slowdown in China, towards the new official growth target, is expected to continue. India is expected to be the fastest-growing major econo-my over the coming two years, while the outlook is likely to worsen for many commodity-exporting nations, with Brazil falling into recession.“Lower oil prices and widespread monetary easing have brought the world economy to a turning point, with the potential for the acceleration of growth that has been needed in many countries,” said OECD Chief Economist Catherine L. Mann. “There is no room for complacency,

however, as excessive reliance on monetary policy alone is building-up financial risks, while not yet reviving business investment. A more balanced policy approach is needed, making full use of fiscal and structural re-forms, as well as monetary policy, to ensure sustainable growth and public finances over the longer term.The OECD projects that the US will grow by 3.1 per cent this year and by 3 per cent in 2016, while the UK is pro-jected to grow at 2.6 per cent in 2015 and 2.5 per cent in 2016. Canadian growth is projected at 2.2 per cent this year and 2.1 per cent in 2016, while Japan is projected to grow by 1 per cent in 2015 and 1.4 per cent in 2016. The euro area is projected to grow at a 1.4 per cent rate in 2015 and a 2 per cent pace in 2016. Growth prospects differ widely among the major euro area economies. Germany is forecast to grow by 1.7 per cent in 2015 and 2.2 per cent in 2016, France by 1.1 per cent in 2015 and 1.7 per cent in 2016, while Italy will see a 0.6 per cent growth rate in 2015 and 1.3 per cent in 2016. China is expected to grow by about 7 per cent annually in both 2015 and 2016. India will grow by 7.7 per cent in 2015 and 8 per cent in 2016. Brazil’s economy is expected to shrink by 0.5 per cent in 2015 before returning to a 1.2 per cent growth rate in 2016. (Courtesy : OECD)

OECD Better Life Initiative

Is life really getting better? How can we tell? What are the key ingredients to improving life – is it better edu-cation, environment, healthcare, housing or working

hours? Does progress mean the same thing to all people, or in all countries and societies?The OECD, a pioneer in this field of research, has been working for more than a decade to identify the best way to measure the progress of societies – moving beyond GDP and examining the areas that impact people’s lives. In 2011, the culmination of this work was presented in the OECD Better Life Initiative.Better Life InitiativeThe OECD Better Life Initiative focuses on developing statistics to capture aspects of life that matter to people and that shape the quality of their lives. This allows for a better understanding of what drives the well-being of people and nations, and what needs to be done to achieve greater progress for all.Drawing upon the recommendations of the Commission on the Measurement of Economic Performance and So-cial Progress (to which the OECD has been an important

contributor), the OECD has identified 11 dimensions as being essential to well-being, from health and education to local environment, personal security and overall sat-isfaction with life, as well as more traditional measures such as income. The two core products of this initiative are the How’s Life? reports and the Better Life Index.Better Life IndexThe Better Life Index is an interactive web-based tool created to engage people in the debate on well-being


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and, through this process, learn what matters the most to them. The tool invites you to compare well-being across countries according to the importance you give to 11 top-ics: community,education, environment, civic engagement, health, hous-ing, income, jobs, life satisfaction, safety and work-life balance. Once you have created your own index, you can see how countries’ average achievements compare based on your priorities, as well as the differences in well-being between men and women in each country. You can then compare and share your index with other people who have created indexes, as well as with the OECD. You can also see the number of responses from users by country, age and gender, and what topics people think are most important for a better life.The Better Life Index is updated every year with new data. It covers all OECD countries as well as the Russian Federation and Brazil and is currently available in English, French, German, Portuguese, Russian and Spanish, with an Italian version added in 2015. The Better Life Index is optimised for use on por-table devices (tablets and iPads) and can be embedded in websites and blogs. How’s Life? reportHow’s Life? Measuring Well-Being is a report that comes out every two years. This paints a broad picture of how life is in OECD countries and other major economies, by looking at people’s material conditions and quality of life in the 11 dimensions of the Better Life Initiative. This report responds to a demand from citizens, analysts and for better and more comparable information on peo-ple’s well-being and societal progress. The second edi-tion of How’s Life?, released in 2013, includes in-depth studies of four key cross-cutting issues: how well-being has changed during the global economic and financial crisis; gender differences in well-being; the quality of employment and well-being in the workplace; and sus-tainability of well-being over time.

Understanding well-beingThe well-being agenda calls for improved and new statis-tical measures, aimed at filling the gap between standard economic statistics and indicators that have a more di-rect bearing on people’s life. For more than 10 years, the OECD has been looking not only at the functioning of the economic system but also at the diverse experiences and living conditions of people and households. Further to How’s Life? the following works help to address various research areas in well-being: The How Was Life? Global Trends in Well-being since 1820 report, looks at 10 dimensions of well-being from 1820 to the present day. Guidelines for Measuring Subjective Well-being helps to address measurement gaps in dimensions such as life satisfaction.How’s Life in Your Region? Measuring Regional and Lo-cal Well-being for Policy Making measures people’s well-being in 362 regions across 34 OECD countries, covering nine dimensions (income, job, housing, education, health, access to services, environment, safety and civic engage-ment). It also offers guidance for all levels of government in using well-being measures to better target policies at the specific needs of different communities.The OECD Regional Well-being web tool allows you to measure well-being in your region and compare it with 361 other OECD regions based on the nine topics.What comes next?In addition to the regular update of data and analysis on well-being, the OECD aims to continually adapt and fine tune the methodologies and indicators used as this field of study evolves. Since the launch of the Better Life Ini-tiative, the discussion on well-being has expanded, with many countries and organisations introducing their own well-being programmes. For an updated list of well-be-ing initiatives consult Wikiprogress.

Better Life Index - 2015

Your Better Life Index aims to involve citizens in the debate on measuring the well-being of societies, and to empower them to become more informed and engaged in the policy-making process that shapes all our lives. Each of the 11 topics of the Index is currently based on one to three indicators. Within each topic, the indicators are averaged with equal weights. The indicators have been chosen on the basis of a number of statistical criteria such as relevance (face-validity, depth, policy relevance) and data quality (predictive validity, coverage, timeliness, cross-country comparability etc.) and in consultation with OECD member countries. These indicators are good measures of the concepts of well-being, in particular in the context of a country comparative exercise. Well-being at work is a topic that has increasingly received attention, especially in post-materialistic societies. Since basic needs are largely fulfilled for most people in these societies, the hedonic treadmill has been turned on and expectations have risen. As a consequence, employees are increasingly asking for meaning and purpose at work. Extrinsic motivation alone is no longer sufficient for a growing number of employees. Intrinsic rewards and good working conditions are required, in a sort of upward movement on Maslow’s pyramid (a sociological theory establishing a hierarchy of needs from basic physiological requirements to higher ones, such as sense of self-realisation). As a consequence, companies have to be able to provide conditions for self-growth to be able to keep the best employees, as this will become a basic requirement along with a decent salary or health insurance. Source: OECD


Can mobile phone services be an agent of change?

Believe it or not, but it is true. A recent study conducted by Vodafone (one of the world’s leading mobile phone ser-

vice operators), which is based on research commissioned from Accen-ture Strategy with support from the Vodafone Foundation, has found that simple mobile services could en-hance earnings by an average of $128 a year for almost two-thirds of Indian farmers, achieving a material posi-tive impact in communities where the average farming household lives on less than $4 a day and many farm-ers struggle to feed and educate their families. The report titled, “Connected Farm-ing in India” further suggests that the introduction of six simple mobile services designed to help small-scale farmers in emerging markets could

boost the farm gate incomes of 70 million Indian farmers by US$9 bil-lion in 2020. chance to escape from stagnation. Average farming family in India lives on less than US$4 a day. Vodafone has also launched its ‘Farmers Club’ service in four additional emerging market countries – India, Ghana, Kenya and Tanzania. The Vodafone Farmers’ Club is a social business model which offers a range of mobile services to help farmers boost pro-ductivity. It was first launched by Vodafone in Turkey in 2009; around 25 per cent of the Turkish population work in agri-culture and the Farmers’ Club pro-gramme has benefitted 1.2 million farmers, helping them to enhance crop yields and increase farm gate incomes.

Yes, says a Vodafone study which identifies six mobile services with the potential to transform Indian farmers’ lives and livelihoods. The report claims that these services could increase an estimated 60 million Indian farmers’ annual incomes by an average of US$89 a year in 2020.

India is one of the world’s largest food producers with more than 200 million people currently estimated to work in agriculture, around 100 million of them farmers and the re-mainder working as agricultural la-bourers. In India, around 62 per cent of farmers own less than one hectare of land, significantly increasing their exposure to the effects of crop fail-ure, pests, disease and volatile mar-ket pricing. Vodafone and Accenture Strategy have identified six mobile services with the potential to trans-form Indian farmers’ lives and liveli-hoods. There are: • Agricultural information ser-

vices providing early warning of weather events, information on the best times to harvest and advice on crop techniques to enhance yields. These services

INSIGHT


INDIAN AGRICULTURE

could increase an estimated 60 million Indian farmers’ annual incomes by an average of US$89 a year in 2020.

• Receipt services to provide great-er transparency in daily com-modity supply chains, allowing farmers to raise their incomes by improving efficiency and elimi-nating fraud.

• Payments and loans enabling farmers to access simple and secure financial products and services using mobile money payment systems such as Voda-fone’s M-Pesa, launched in India in April 2013. Access to highly cost-effective micro-finance and quick and transparent electronic payment systems could provide an annual benefit of US$690 for some farmers in 2020, represent-ing a 39 per cent increase in their average farming income.

• Field audit enabling auditors monitoring quality, sustain-ability and certification require-ments to move away from paper records and adopt instead elec-tronic reporting via tablets and mobile data, greatly enhancing efficiency and potentially in-creasing annual average income by US$612 for some farmers.

• Local supply chain enabling small-scale producers to transact with local co-operatives through simple but robust information services and mobile money sys-tems. These could boost some farmers’ annual incomes by US$271 in 2020; a 50 per cent increase on current farming in-comes.

• Smartphone-enabled services to provide deeper functionality and richer sources of informa-tion than is possible using ba-sic SMS and voicemail services. While Smartphone penetration is currently low in rural areas in emerging market economies, av-erage device prices continue to fall year-on-year. Advanced and affordable mobile services could lead to an increase in average an-nual farming incomes of US$675 for more than four million farm-ers in 2020.

Monsoon rains to hit south shores on time: IMD

The Indian Meteorological Department (IMD) expects monsoon rains to hit the southern Kerala coast around May 30. Timely rains could bring the much needed relief to the worried farmers amidst fears of a dry weather against the backdrop of an El Nino (a warming of sea-surface temperatures in the Pacific) weather pattern. However, the worries over a below normal monsoon still persist given the approaching kharif season. The period spanning four months beginning June quarter is crucial for the farmers given that most of its farmlands depend on annual rains for irrigation in absence of a robust irrigation infrastructure. While experts believe that a below average monsoon may not lead to rural distress, thanks to job-creation schemes like MNREGA, which have seen rural incomes rise in recent times; though some experts disagree with this. However, the biggest worry is over any spike in prices of food grains, fruits and vegetable prices, which have already been in an uptrend in the recent few months due to unseasonal rains that damaged food crops. And the worry is that poor monsoon could further stoke food inflation. Monsoon raise generally arrive by late May or June 1st, which is considered normal by IMD, and helps in timely of summer crops. Last year, India had deficient monsoon – a deficient north-east monsoon (Oct-Dec; which was 33 per cent below the normal), which follows the main south-west monsoon season (which was 12.3 per cent below the normal) from June 1 to September 30. In 2009, the country had witnessed its worst drought in four decades. Agriculture accounts for 15 per cent of the domestic economy and supports two-thirds of its 1.25 billion people. “There are instances in the past when the monsoon onset took place much ahead of the normal date but the season turned out to be dry as happened in 2009,” Reuters quoted IMD’s chief forecaster DS Pai as saying.

The information challenge for India’s small land holders

Lack of information about farming techniques, prices, weather and support services can have a significant impact on yield and income for smallholder farmers. In recent years, the Indian Government, NGOs and private sector input companies have increased investment in agricultural extension services (educational services for farmers) to try to bridge this knowledge gap. However, public spending on agriculture research, education and extension remains relatively low at around 0.65 per cent of agricultural GDP, compared with an international average of 2 per cent. Most extension services rely on in-person training delivered by extension workers and it has been estimated that the ratio of extension workers to farmers is just 1:1,000, limiting their impact.

Growth of mobile information servicesMobile information services can be more cost effective than traditional extension services, enabling large numbers of farmers to be reached with daily information updates. There are now multiple providers of these services in India, using a range of commercial and donor funding models. An estimated five million farmers use these services, mostly on small to medium land holdings (1 to 4 hectares). Growth rates are strong, with the number of users increasing by an estimated 45 per cent a year. Source: vodafone.com

TGA


The Withering BanyanA well-to-do business family, whose members are torn apart by a turbulent father-son relationship shrouded in mistrust, suspicion, and contempt for one another a result of the vagaries of the son’s mind and its maladies suffers silently. Well-wishers fear that Badri is suffering from a mental derangement, and is on the brink of wiping away his father, Siveswara’s hard-earned fame and fortune. Unaware of the boundless periphery of its affliction, descendants of the five-generation lineage are confounded with an enigmatic and stigmatizing battle of their lifetime which they have to decode and overcome in order to ensure the well-being of the ensuing generations.

About the Author

Hyma Goparaju is a management professional based in Hyderabad. She dabbled quite a lot in creative writing while at school and college, which remained dormant for a long time to come until she took the plunge to pen her first novel, The Withering Banyan . She hopes to write more.

BOOKSHELFBooks on Business & Management Sterategy - 2015

Release Date:May 06, 2015

Price $12Pages 357

Leadstart Publishing Pvt Ltd

30 Women in Power: Their Voices, Their Stories30 Women in Power carries the inimitable voices of Indian women who have been pioneers and led large organizations - in banking, law, the media, advertising, government services, health care, consulting, the fast-moving consumer goods sector and the not-for-profit space.

In these narratives - told up, close and personal - thirty of India’s greatest women achievers speak of the guiding principles that have held them in good stead, the role models who have anchored them, the childhood influences that have shaped their values and the interests outside the world of work that have revitalized them. Coming from all walks of life, these empowered women discuss their many successes and their dreams for the future. Yet, they also venture to disclose the setbacks that have preceded hard-won conquests, the barriers, psychological or otherwise, that may have held them back at certain points and the compromises they’ve had to make to reach the top.

Through these honest and contemplative revelations, thirty women in power answer those questions that confront all working women - from how best to balance the personal and the professional, to how to dismantle gender biases. Equally, the essayists consider seminal issues that concern every committed professional, man or woman: What are the qualities that define a leader? Where does one find a mentor? What are the ingredients in the recipe for success? Edited by business leader extraordinaire Naina Lal Kidwai, this topical and relevant book is a must-read, not only for the lessons it provides but also for the intimate accounts it offers of lives powerfully lived .

Quotes:

‘There is nothing so powerful as empowered women speaking in their own voices and when the editor of their stories is herself an icon, the message becomes that much more memorable.’ - Anand Mahindra, Chairman and Managing Director, Mahindra Group

‘Naina Lal Kidwai’s 30 Women in Power is a compelling read and shows us how Indian women are participating in nation-building.’ - Arun Jaitley, Minister of Finance, Corporate Affairs and Information and Broadcasting, Government of India

‘30 Women in Power presents a complex, nuanced portrait of women in command by showcasing the leadership styles, qualities and achievements that have propelled their careers and inspired us all.’ - Indra Nooyi, Chairman and Chief Executive Officer, PepsiCo

About the AuthorNaina Lal Kidwai is executive director on the board of HSBC Asia-Pacific and chairman of HSBC India. She is also a non-executive director of Nestle SA and was the first woman president of the Federation of Indian Chambers of Commerce and Industry (FICCI), India’s leading and oldest industry association. She has served on several government committees and is India’s representative on the BRICs Business Council, the India-Malaysia CEO Forum and on the governing boards of the National Council of Applied Economic Research and the National Institute of Bank Management. She is also a global advisor for Harvard Business School and chairs its India advisory board.

Release Date:May 11, 2015 Price Rs. 375Pages 314

Rupa Publications


Predictable And Avoidable: Repairing Economic Dislocation And Preventing The Recurrence Of CrisisMuch has been said and written about the ‘financial tsunami’ and subsequent economic dislocation that occurred in the opening decade of the 21st Century. Dr. Ivo Pezzuto, Professor of Business Economics and International Management at the Milan-based Catholic University of the Sacred Heart and ISTUD Business School, is described by business scholars as an expert on the global financial crisis. He has lectured about it at conferences and seminars; written some of the most read and quoted papers; contributed to what is considered the most authoritative book on the subject; and to one of the best known US-based blogs dealing with it.

In Predictable and Avoidable, Dr. Pezzuto offers business school students; academics; and industry experts in the fields of finance, risk management, audit, corporate governance, economics, and regulation, a truly independent and unbiased analysis of the financial crises starting in 2007 and one of the first fully considered expositions of the financial, governance and regulatory reforms needed for the future.

Augmented with personal interviews involving selected global thought leaders and industry experts, the author’s narrative focuses on the technical issues that led to the global crisis, but also addresses the human, cultural, and ethical aspects of the events from both sociological and managerial perspectives. The book exposes the root causes (i.e. financial services deregulation and uncontrolled shadow banking expansion, systematic liquidity risks, macroeconomic imbalances, moral hazards, short-termism, widespread belief that markets are self-correcting, financial firms’ interconnectedness, etc.) and contributes significantly to the debate about the change needed in the banking and finance industries and to supervisory frameworks and regulatory mechanisms.

This groundbreaking and unique analysis enables readers to understand with fact-based evidences that

the crisis we have seen was predictable and should have been avoidable, and that a recurrence can be

avoided, if lessons are learned and the right actions taken.

The book received the following favorable reviews:

- The Economist Intelligence Unit. “This insightful book is a valuable work of interest to academics,

industry experts and students alike written by a professor of business administration and a renowned

expert on the global financial crisis” (EIU, World: Finance bookshelf, December 2013)

- Baker & Taylor YBP Library Services. “Research Essential” ! (2014)

- IESE Business School. “A complete and detailed explanation of the financial crisis and a deep

presentation of the consequences of the crisis and an accurate study of the policies that have been

adopted” (Prof. Antonio Argandoña’s blog post) (2013)

- The IMLPO (The UK Institute of Money Laundering Prevention Officers). “The book has been

classified as ‘Relevant Money Laundering and Fraud Title’ (2014)

- Bloomberg LP, New York. “An excellent analysis of the causes of the recent financial crisis.

Predictable and Avoidable does not limit itself to a sterile a-posteriori criticism, but describes concrete

actions to take to prevent the occurrence of similar catastrophic events in the future. A must read!’

(Fabio Mercurio, Head of Derivatives Research, Bloomberg LP, New York, and Adjunct Professor, New

York University, USA) (2014)

- Agência Estado, Brazil. ‘This exquisite book sheds a light on the facts that led to the biggest

financial crises since the Great Depression. Dr Pezzuto provides the opportunity to understand the

extreme risk taking, the excessive power of the banks and the regulation failure. By using fact based

evidences, he proves that the biggest financial turbulence of this generation was preventable.’ (Daniela

Milanese, Executive Editor ), (2014)

About the Author

Dr Ivo Pezzuto is a professor of business administration and a management consultant. He holds a BS degree in business administration from NYU Stern School of Business (USA), an MBA degree from SDA Bocconi School of Management (ITALY), and a DBA degree from SMC University (SWITZERLAND) on corporate governance. He teaches courses at undergraduate, graduate, and doctoral levels and specializes in corporate education and executive seminars. He is professor of business administration at SMC University in Zurich; Fondazione ISTUD Business School in Baveno; Universita Cattolica del Sacro Cuore of Milan; and guest lecturer at MIP School of Management of Politecnico di Milano. Prior to his academic career he was Senior Manager in Accenture, Head of Product Development and Portfolio Management for American Express Europe, and more recently Vice President (Credit Cards Division - Europe) for Diners Club. He has authored many journal articles and contributed to a number of books.

Release Date:November 28, 2013

Price $144.95(For both hardback

and ebook.)Pages 419

Gower Pub Co

TGA

BOOKSHELF


TGA

Continuing with its effort to offer innovative prod-ucts and more choices to potential policyholders, the Life Insurance Corporation (LIC) of India has

come out with another insurance plan - Jeevan Tarun, a participating non-linked limited premium payment plan which offers an attractive combination of protection and saving features. The newly-launched money back policy from LIC, India’s largest life insurance company, is spe-cially designed to meet the educational and other needs of growing children through annual Survival Benefit payments from ages 20 to 24 years and Maturity Benefit at the age of 25 years. Jeevan Tarun is also a flexible plan wherein at proposal stage the proposer can choose the proportion of Survival Benefits to be availed during the term of the policy as per the following four options:Where, Survival Benefit is the annual payment of a fixed percentage of Sum Assured (as defined in the table above) every year starting from policy anniversary coin-

ciding with or following the completion of 20 years of age and thereafter on each of the next 4 policy anniver-saries and Maturity Benefit is a fixed percentage of Sum Assured (as defined in the table above) along with vested Simple Reversionary Bonuses and Final Additional Bo-nus, if any, on maturity. The chosen option shall become a part of the policy con-tract and no further change in option shall be allowed. In addition, this plan also takes care of liquidity needs through its loan facility. The plan can be purchased by any of the parent or grandparent for a child aged 0 to 12 years. For further details, contact a LIC agent or visit the nearest branch of LIC.

LIC has launched its new policy, Jeevan Tarun, an innovative money back policy exclusively designed to meet the educational and other needs of growing children.

Option Survival Benefit Maturity Benefit

Option 1 No survival benefit 100% of Sum Assured

Option 2 5% of Sum Assured every year for 5 years

75% of Sum Assured


50% of Sum Assured


25% of Sum Assured

Despite the fact that Indian life insurance sector is the biggest in the world with about 36 crore policies in vogue, insurance penetration remains

abysmally low in the country. With a figure of 3.9 per cent, India compares poorly with the world average of 6.3 per cent (as of 2013), data from IRDA (Insurance Regulatory & Development Authority) suggests. The re-port, “Handbook on Indian Insurance Statistics 2013-14, further shows that countries such as Taiwan (insurance penetration level of 17.6 per cent), Hong Kong (13.2 per cent) and Japan (11.1 per cent) are much ahead of India. Further, in terms of insurance density too, India has a lot of catching up to do. As per the latest statistics from the insurance regulator, India’s insurance density stood at a mere $52 versus the world average of $652, as at the end of 2013. Switzerland with a figure of $7,701 and Hong Kong with $5002 were way ahead of others, including In-dia, in terms of insurance density, which is measured as ratio of premium (in US Dollar) to total population. Life insurance segment continues to have a dominant share in both insurance penetration and insurance den-sity with figures of 3.10 per cent and $41, as of March 31, 2014, according to IRDA’s Handbook on Insurance Statistics 2013-14. Non-life insurance segment’s share in insurance penetration and insurance density stood at 0.8 per cent and $11, as at the end of March 2014, according to the said study. Motor Insurance accounted for nearly half or 48 per cent, to be precise, of the Gross Domestic Premium (of Rs. 70,61,002 lakh) collected within India, while the Health Insurance segment’s comes as a distant second to it with a share of 22 per cent (in the Gross Do-mestic Premium collected within India), during FY’14. In FY’14, number of healthcare policies totaled 10026100, number of persons covered totaled 216,231,000, while the Gross Premium collected stood at Rs. 1749454 lakh, as per the IRDA study. Life Insurance Corporation of India (LIC) continues to lead the insurance sector in the country with a market share of 75 per cent in FY’14; in fact, the insurance pub-lic sector major has also consistently increased its mar-ket share in the last four years since 2009-10 when its market share stood at 70 per cent, the data from IRDA shows. Lower insurance penetration and insurance den-sity, however, also means that there is immense growth potential for the sector in India. According to the official projections, the domestic insurance industry is expected to reach $1 trillion mark while insurance penetration is forecast to achieve the level of five per cent by 2020.

Insurance penetration - India has a lot of catching up to do

LIC unveils new policy - Jeevan Tarun


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