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September 2015 Magazine

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CONTENTS YOUR GATEWAY TO INDIA INC. SEPTEMBER 2015, Rs 35 EDITOR AMIT BRAHMABHATT ASSISTANT EDITOR SHRIVATSA JOSHI GENERAL MANAGER (Marketing) C S RAJARAMAN ADVERTISING MANAGER WILLIAM RUMAO GRAPHIC DESIGNER RENUKA SAWANT ADVISORY PANEL SHASHIKANT PATEL JITENDRA SANGHVI REGISTERED OFFICE 102, RAJASTHAN TECHNICAL CENTRE, PATANWALA ESTATE, GHATKOPAR (W), MUMBAI 400 086. INDIA PHONE: 6703 0250/6703 0251 FAX: +91 22 6703 0251 EMAIL: mail@ibj.in BUREAU CHIEFS AHMEDABAD: B D RAWAL CHENNAI: G JACINTH DELHI: RANJANA ARORA KOLKATA: DIPANKAR SEN COVER STORY ON THE MOVE Chief Minister Akhilesh Yadav's consistent focus on development over the last three years is catapulting Uttar Pradesh into a higher growth orbit. 22 Viewpoint ..........4 Reforms washout and a way out News Round-Up ...........6 A brief on news, tie-ups, appointments and awards Face To Face ..........10 "We are working on five key tasks": Suresh Narayanan, MD, Nestle India Infrastructure ..........14 A Welcome Lifeline: The proposed NIIF could kick-start vital infrastructure projects dented by an overleveraged private sector and banks steeped in bad debt. Corporate Report ..........16 Winning Strategy: Shriram Housing Finance's focus on clients at the bottom of the socio-economic pyramid is paying it rich dividends. Legal Services ..........18 Big Gains: Opening up legal services in a calibrated manner can benefit fast-globalising India Inc and boost the fortune of Indian legal fraternity too. Banking ..........34 A Good Start: The government's capital infusion plan bodes well for beleaguered Staterun banks. But it would falter in the absence of a specific action plan to address PSBs' legacy issues. International Business .....36 Derailed Again: The much-awaited India-EU trade talks, slated to begin last month, fail to resume after hitting a pharmaceutical hurdle. INDIA BUSINESS JOURNAL Focus Perfect Match: Prime Focus World and Double Negative join hands to set up a world-class VFX studio in Mumbai. ..........38 Spreading Wings: JK Paper is eyeing a larger growth pie with a 25 per cent rise in export target and expansion of its distribution network across tier-II and -III markets. ..........39 High-Tech Bouquet: Prime Focus Technologies' Digital Next suite, set to be unveiled shortly, may offer surprising options to contenthungry consumers. ..........40 Steel ..........42 Sparks Of Hope: Despite putting on hold its 12-mtpa mega steel plant in Odisha, Posco seems keen on shifting its Finex plant from South Korea to the eastern State. Management Mantra ..........44 "Avoid unnecessary distractions": Rajesh Patil, CMD, Pause Wines Global Wrap-Up ..........46 A quick round-up of news and current affairs across the world Readers' Lounge ..........48 Catch up with new book launches - Elon Musk - The Attacker's Advantage - The Country Of First Boys Printed and published by Amit Brahmabhatt for Issues Analysis and Research Pvt Ltd and published from 102, Rajasthan Technical Centre, Patanwala Estate, Ghatkopar (W), Mumbai 400 086 and printed at Graphtone (India) Pvt. Ltd., A1/319, Shah & Nahar Indl. Estate, Lower Parel, Mumbai 400 013 Processed at Graphtone (India) Editor: Amit Brahmabhatt Volume XI, No 3 Issue date September 1-30, 2015 Released on September 1, 2015 EDITORIAL ASSOCIATE Press Trust of India MARKETING ASSOCIATE Milage ads & events SUBSCRIPTION RATES India Rs 420/- for 1 year (12 issues) Overseas Rs 1,860/- or US$32 for 1 year (12 issues) Add Rs 50/- for outstation cheques www.indiabusinessjournalonline.com Star Talk ..........50 Forecast by Bejan Daruwalla Knowledge Zone ..........52 - Sundar Pichai, CEO, Google - 5:25 Scheme - Spiritual Corner: Science of Karma Hot Seat ..........54 Rupal Surana, COO, Stayzilla SEPTEMBER 2015 3

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VIEWPOINT Reforms Washout And A Way Out T Many vital reforms have hit the Parliament roadblock, costing the economy dearly. The bleeding stock market and the battered rupee tell the tale of stalled reforms like none else. A contraction in the WPI inflation points to a disturbing downturn in vital segments of the economy, such as capital goods and consumer durables. The country's farm sector continues to be at the mercy of nature in the absence of any reforms. 4 SEPTEMBER 2015 he monsoon session of the Parliament has been a complete washout. The Congress Party's numerical strength in the Rajya Sabha is frustrating the Modi government's development agenda. The Congress may want to give the ruling BJP-led NDA government a taste of its own medicine. As the leading opposition party, the BJP too had stalled the Parliament frequently for ten years and blocked the then Congress-led UPA government's economic reforms. Sadly, the political tit-for-tat practised by the two national parties is costing the economy dearly. The Goods and Services Tax (GST), one of India's biggest reforms since the 1990s, is likely to miss yet another deadline of April 2016. The GST, a major indirect tax reform, aims to dismantle fiscal barriers and bring about a common, national market. But the crucial piece of reform has been drowned in the political din. As many vital reforms hit the Parliament roadblock, the fragility of the economy is coming to the fore. The first quarter (Apr-Jun 2015) GDP has registered a muted 7 per cent growth as against 7.5 per cent in the previous quarter (Jan-Mar 2015). The country’s exports and imports have contracted for eight months in a row. The contraction in the country’s trade is a reflection of the ongoing global economic slowdown. Besides, it also mirrors sluggish global commodity prices, especially of oil and metals. The bleeding stock market and the battered rupee tell the tale of stalled reforms like none else. The bourses, no doubt, reflect the global turmoil more than the local malaise. However, the weakening rupee, which has crossed 66 to a dollar, is loud and clear about the mess in the domestic economy. Not surprisingly, the investor, business and consumer confidence levels have been sliding month after month. The two sets of inflation figures, based on Wholesale Price Index (WPI) and Consumer Price Index (CPI), clearly indicate complex contours of the ailing economy. The WPI inflation has contracted for nine straight months now, dipping to (-) 4.05 per cent in July (the latest available numbers). The WPI reading suggests that prices continue to be influenced by a deflationary trend in global commodity cycle. It also points to a disturbing downturn in vital segments of the economy, such as capital goods and consumer durables. On the other hand, the CPI-based inflation, which dropped to 3.78 per cent in July against 5.4 per cent in June, is certainly not reflecting the ground realities. The benign number flies in the face of surging prices of onions, pulses and other food products. It also shows how the country's farm sector continues to be at the mercy of nature in the absence of any reforms. Unseasonal rains in summer, followed by a deficient monsoon, have aggravated the distress across the country's farmlands and rural India. The resultant liquidity crunch in the countryside is aptly reflected in the poor offtake in consumer durables and automobiles, among others. The Chinese economic slump and the consequent devaluation of the yuan could trigger a deluge of cheap Chinese imports and upset India's trade deficit further. Incidentally, problems in China and subdued global prices of oil and other commodities offer India a unique opportunity for growth. But sadly, India's own domestic troubles prevent it from cashing in on the opportunity. With the legislative hurdle not seeming to disappear any soon, the government has to pursue reforms outside the Parliament's ambit. Several reform measures can be rolled out by the executive without the legislature's nod. States too can be persuaded to bring about substantial changes in the economy. This way, the Modi government can get the economy back on track before pursuing bigticket reforms. INDIA BUSINESS JOURNAL

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PART II Sr. No. 1 Particulars Income from operations (a) Net Sales/Income from Operations (Net of excise duty) (b) Other Operating Income Total income from operations (net) (a) + (b) Expenses (a) Cost of materials consumed (b) Changes in inventories of finished goods, work-in-progress and stock-in-trade (c) Employee benefits expense (d) Depreciation and amortisation expense (e) Power and Fuel (f) Other expenditure Total expenses Profit / (Loss) from operations before other income, finance costs and exceptional items (1 - 2) Other Income Profit / (Loss) from ordinary activities before finance costs and exceptional items(3 + 4) Finance costs Profit / (Loss) from ordinary activities after finance costs but before exceptional items(5 - 6) Exceptional items Profit / (Loss) from ordinary activities before tax (7 + 8) Tax Expense Net Profit / (Loss) from ordinary activities after tax (9 -10) Extraordinary Items (net of tax expense) Net Profit / (Loss) for the period ( 11 - 12 ) Share of Profit / (Loss) of associates Minority interest Net Profit / (Loss) after taxes, minority interest and share of profit of associates (13 + 14 + 15) Paid-up equity share capital (Nominal value Rs 10 per share) Paid-up Debt capital Reserves excluding Revaluation Reserve as per balance sheet of previous accounting year Debenture Redemption Reserve Earnings per share* (before extraordinary items) (of Rs. 10/- each) (not annualised): (a) Basic (b) Diluted Earnings per share* (after extraordinary items) (of Rs. 10/- each) (not annualised): (a) Basic (b) Diluted Debt Equity Ratio Debt Service Coverage Ratio Interest Service Coverage Ratio Quarter ended 30.6.2015 (Unaudited) 62,839.73 498.61 63,338.34 38,668.42 2,164.89 2,221.91 1,247.88 2,095.97 5,452.01 51,851.08 11,487.26 274.36 11,761.62 1,575.84 10,185.78 -10,185.78 3,159.99 7,025.79 -7,025.79 --7,025.79 12,409.54 Quarter ended 31.3.2015 (Audited) 77,686.57 777.18 78,463.75 44,722.66 15,122.90 2,030.87 1,425.24 1,636.96 7,312.35 72,250.98 6,212.77 497.91 6,710.68 1,036.64 5,674.04 (500.00) 5,174.04 2,405.95 2,768.09 -2,768.09 --2,768.09 12,409.54 Quarter ended 30.6.2014 (Unaudited) 65,522.33 749.64 66,271.97 37,756.42 6,700.43 1,908.94 1,490.36 2,624.32 4,697.90 55,178.37 11,093.60 521.63 11,615.23 2,820.27 8,794.96 (1,649.59) 7,145.37 2,125.10 5,020.27 -5,020.27 --5,020.27 12,409.54 (Rs. in lakhs) Year ended 31.3.2015 (Audited) 245,170.97 2,443.96 247,614.93 177,907.48 5,384.92 7,397.29 5,867.42 11,253.10 24,563.55 232,373.76 15,241.17 2,023.58 17,264.75 7,037.10 10,227.65 (2,149.59) 8,078.06 3,300.23 4,777.83 -4,777.83 --4,777.83 12,409.54 10,000.00 66,330.45 7,500.00 Segmentwise Revenue, Results And Capital Employed Sr. No. 1 Particulars Quarter ended 30.6.2015 (Unaudited) Quarter ended 31.3.2015 (Audited) Quarter ended (Rs. in lakhs) Year ended 31.3.2015 (Audited) 30.6.2014 (Unaudited) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21(i) SEGMENT REVENUE Net Sale / Income from each segment: 41,493.17 (a) PVC 51,000.34 (b) PVC Pipes & Fittings 3,846.63 (c) Power Total 96,340.14 Less: Inter Segment Revenue 33,001.80 Net Sales / Income 63,338.34 from Operations 2 SEGMENT RESULTS Profit / (Loss) before tax and interest from each segment: (a) PVC 6,920.12 (b) PVC Pipes & Fittings 4,923.82 (c) Power 809.70 Total 12,653.64 Less: (I) Finance costs 1,575.84 (II) Other unallocable expenditure 1,134.34 Add: Other unallocable income 242.32 Total Profit / (Loss) Before Tax 10,185.78 3 CAPITAL EMPLOYED Segment Assets - Segment Liabilities: 71,673.82 (a) PVC (b) PVC Pipes & Fittings 43,024.34 (c) Power 27,716.03 (d) Other than segments 35,770.77 Total 178,184.96 57,207.68 48,620.65 4,858.54 110,686.87 32,223.12 78,463.75 41,394.70 54,379.37 3,533.58 99,307.65 33,035.68 66,271.97 156,009.54 169,381.76 13,074.56 338,465.86 90,850.93 247,614.93 2,156.19 3,214.32 1,448.27 6,818.78 1,036.64 1,086.54 478.44 5,174.04 5,969.60 5,197.00 621.10 11,787.70 2,820.27 2,315.30 493.24 7,145.37 4,796.84 13,371.31 1,744.04 19,912.19 7,037.10 6,748.99 1,951.96 8,078.06 60,599.77 46,486.23 25,519.05 20,955.22 153,560.27 84,800.19 30,633.09 30,976.63 13,806.60 160,216.51 60,599.77 46,486.23 25,519.05 20,955.22 153,560.27 5.66 2.23 4.05 3.85 21(ii) 5.66 ---- 2.23 ---- 4.05 ---- 3.85 0.30 1.63 2.15 22 23 24 PART II Sr. No. A 1 * As per weighted average number of shares outstanding during the period (Rs. in lakhs) Particulars A PARTICULARS OF SHAREHOLDING Public shareholding - Number of shares - Percentage of shareholding Promoters and Promoter Group Shareholding (a) Pledged / Encumbered - Number of shares - Percentage of shares (as a % of the total shareholding of promoter and promoter group) - Percentage of shares (as a % of the total share capital of the company) b) Non-Encumbered - Number of shares - Percentage of shares (as a % of the total shareholding of promoter and promoter group) - Percentage of shares (as a % of the total share capital of the company) Particulars Quarter ended 30.6.2015 31.3.2015 30.6.2014 (Unaudited) (Audited) (Unaudited) Year ended 31.3.2015 (Audited) 58,981,684 47.53 NIL NIL NIL 58,981,684 47.53 58,994,784 47.54 58,981,684 47.53 2 NIL NIL NIL NIL NIL NIL NIL NIL NIL 65,113,697 100.00 52.47 65,113,697 100.00 52.47 65,100,597 100.00 52.46 65,113,697 100.00 52.47 Notes1. The above results have been reviewed by audit committee and approved by the Board at its meeting held on 7th August, 2015. 2. Exceptional item for earlier period includes write off of insurance claim on aircraft and settlement of claim against derivatives. 3. The Limited Review of the financial results of the Company for the quarter ended 30th June 2015 has been completed by the statutory auditors. 4. Previous periods' figures have been regrouped wherever necessary to confirm to the current period's classification. By order of the Board of Directors For Finolex Industries Limited Prakash P. Chhabria Executive Chairman DIN : 00016017 Quarter ended 30.6.2015 0 3 3 0 B INVESTOR COMPLAINTS Pending at the beginning of the quarter Received during the quarter Disposed off during the quarter Remaining unresolved at the end of the quarter Pune 7th August, 2015

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NEWS ROUND-UP MISCELLANEOUS Mutual Fund has attained an asset base of over Rs 1,00,000 crore with about 1 crore investor accounts. The country's oldest fund house is now targeting leadership position across various segments. Besides expanding its presence to smaller cities, the fund house is also looking to bolster its offerings in terms of pension and offshore market products. The fund house is also looking at launching an IPO. UTI Mutual Fund is the fifth-largest fund by asset base after HDFC Mutual Fund, ICICI Prudential Mutual Fund, Reliance Mutual Fund and Birla Sun Life Mutual Fund. UTI Mutual mops up Rs 1,00,000-cr assets UTI through other ETFs or investing directly in equities. ASBA must for all IPO investors from Jan 1 The Tirupati's Lord Balaji gets a demat account Lord Balaji of to equity markets, fund-flush Employees' Provident Fund Organisation (EPFO) entered Dalal Street last month through the exchange-traded fund (ETF) route with an EPFO makes Dalal Street debut via ETF In a big boost the Tirumala Tirupati Devasthanams (TTD) has opened a demat account! With a demat account, TTD, the trust that manages the famous shrine in Tirupati, has said that it will accept shares and securities as donations from devotees. The management of Tirupati, the second-richest temple in the country, has said that many of its devotees were offering shares in physical form, making it difficult to accept the offering. Hence, it went in for a demat account - holding securities electronically - accept its devotees' offerings. through SBI Mutual Fund's two index-linked ETFs - one linked to BSE's Sensex and the other to NSE's Nifty. The minister ruled out the possibility of the fund entering capital markets SEBI has made ASBA (Application Supported by Blocked Amount) facility mandatory for all categories of investors applying for a public issue. ASBA allows the bid amount to remain in the applicants' account till the time the shares are finally allotted. Besides, the capital market regulator has said that in rights issues, where not more than one payment option is given, the issuer will provide the facility of ASBA. These norms will be effective from January 1. The number of bank branches with ASBA facility has increased to 95,500 from 9,800 when this facility was introduced. initial corpus of Rs 5,000 crore. The amount could go up to nearly Rs 15,000 crore next year. The first investment, announced by Labour Minister Bandaru Dattatreya, will be made APPOINTMENTS The Association of Mutual Funds in India has appointed C V R Rajendran, a former chairman and managing director of Andhra Bank, as its new chief executive officer. TIE-UPS Gautam Adani-led Adani Ports and Special Economic Zone has entered into an agreement with the Kerala government for building Rs 7,525-crore Vizhinjam seaport project, which is expected to be operational in a record time of less than 1,000 days. Online marketplace Snapdeal has joined hands with Tamil Nadu Small Industries Development Corporation to develop skills in online commerce among MSMEs in Tamil Nadu. 6 SEPTEMBER 2015 INDIA BUSINESS JOURNAL

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IDFC to start operation next month IDFC Bank will Federal Bank unveils digital loan product Federal Bank has launched Fed-ECredit, the bank's first digital loan. Fed-E-Credit is an online loan product against deposit and the first in the series of online loan products planned by the bank. Through Fed-E-Credit, customers can apply for loans against their fixed deposits online through FedNet, the bank's internet banking facility, and avail themselves of an amount up to 90 per cent of the deposit value. Loans of Fed-E-Credit can also be closed online through FedNet. FINANCE kick-start its lending operations from October 1 following a demerger of the financial undertaking from IDFC. The transfer of business to the new bank will coincide with commencement of IDFC's banking business. Last month, the board of directors of IDFC and IDFC Bank determined that the demerger scheme could be effective only with receipt of requisite operational licences from the RBI. The new bank plans to start operations with an initial loan book of around Rs 55,000 crore and with 20 branches. 11 entities get nod for payments banks The RBI has granted planning to launch green bonds this year to enable fund-raising for investments in projects with environmental benefits. "HSBC is the world's fourth largest issuer of green bonds," noted HCBC Chairman Naina Lal Kidwai recently. Axis Bank and Yes Bank have come out with such bonds earlier this HSBC India to float green bonds HSBC India is in-principle approval to 11 entities, including Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel, to set up payments banks and proposed such licences on tap in future. The other entities that have been given in-principle approval are Department of Posts, Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository, Fino PayTech, Sun Pharma's Dilip Shantilal Shanghvi and PayTM's Vijay Shekhar Sharma. The in-principle approval will be valid for 18 months. Payments banks allow mobile companies, supermarket chains and others to cater to individuals and small businesses. year. In February, Yes Bank had raised Rs 1,000 crore against a targeted Rs 500 crore by issuing green infrastructure bonds. HSBC India is also looking at creating yieldcos that enable access to low-cost liquidity and generate predicable cash flows by bundling up renewable assets with longterm power purchase agreements. Rego was appointed as MD and CEO of Bank of India, while Union Bank of India Executive Director Kishore Kharat Piraji and Bhartiya Mahila Bank CMD Usha Ananthasubramanian were named as MD and CEO of IDBI Bank and Punjab National Bank respectively. PSB chiefs appointment norms unveiled The APPOINTMENTS Indian Bank has appointed T C Venkat Subramanian as its parttime non-official director and non-executive chairman for three years. government will start selection process for chiefs of public sector banks (PSBs), barring the top five State-owned lenders, in September. Under the Appointments Committee of Cabinet-approved guidelines for selecting MDs and CEOs of PSBs, EDs of nationalised banks, DMDs of IDBI Bank and MDs of associate banks of SBI are eligible for consideration. Banks can tie up with more than one insurer The Insurance Regulatory and Development Authority of India (IRDA) has allowed banks to tie up with more than one insurer in life, nonlife and health insurance segments. Banks have been allowed by the insurance sector regulator to sell three products each from all life, non-life and standalone health insurance. However, it will not be mandatory for banks to implement the same, and it has been left up to them to take a call on the subject. RBI panel moots tough norms for UCBs An TIE-UPS HDFC Bank, India's second-largest private sector lender, and online marketplace Snapdeal have jointly launched cobranded, e-commerce credit card to enable the etailer's customers to make online payments instead of opting for cash on delivery option. INDIA BUSINESS JOURNAL of Baroda (BoB) and Canara Bank became the first Stateowned banks to be headed by private sector professionals last month. VBHC Value Homes MD and CEO P S Jayakumar took over as MD and CEO of BoB, while Laxmi Vilas Bank MD and CEO Rakesh Sharma assumed charge as MD and CEO of Canara Bank. Besides, IDBI Bank Deputy Managing Director M O Pvt sector chiefs to head BoB, Canara Bank Bank internal committee of the RBI has recommended that urban cooperative banks (UCBs) with a business size more than Rs 20,000 crore be allowed to convert into universal commercial. The committee has also recommended that UCBs with a lower size be converted to small finance banks. The nine-member committee, has been mandated to study and recommend improvements for UCBs. The committee has also recommended stiff entry-point norms for new UCB. SEPTEMBER 2015 7

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NEWS ROUND-UP PUBLIC SECTOR Nod for BSNL to hive off tower business The government's recent measures are set to revive the flagging fortunes of Bharat Sanchar Nigam (BSNL). The Stateowned telecom company received approved from the government for hiving off its tower business into a new company. Besides, the government has also agreed to compensate BSNL and Mahanagar Telephone Nigam (MTNL), its sister concern in Mumbai and Delhi, for Rs 627.20 crore spent on for 800 mhz CDMA spectrum that they had surrendered. BSNL's mobile tower assets consist of about 64,500 towers, and spinning them off into a new company will help the telecom company to improve its financial position. increase its hydrocarbon output. OIL is expediting to bring these blocks on stream soon because its existing blocks have reached saturation limits. The oil and gas explorer is also implementing improved oil recovery techniques to boost output. The company has begun drilling its first well in the Mizoram block, which it bagged in the sixth round of NELP auction. Besides, gas discovery has been made in the first well of the K-G basin block. making, unlisted PSUs and their subsidiaries may have to submit listing plans when signing annual performance pacts with the government. The move is aimed at helping the Centre garner resources and unlocking the value of many State-owned companies. Of about 160 profitmaking CPSEs, only 43 are listed on the BSE. The major Govt mulls listing profitable PSUs Profit- IOCL stake sale to net government Rs 9,300 cr The government's 10 per cent stake sale in Indian Oil Corporation (IOCL) was subscribed by 1.18 times last month despite high market turmoil. The share sale was pulled off by demand from institutional investors - LIC's over Rs 8,000 crore investment saved government the blushes - who bid for 27.85 crore shares, against 19.42 crore shares on offer. However, retail investors mostly shunned the biggest disinvestment of this year. The stake sale would fetch about Rs 9,300 crore to the exchequer. The government has already raised over Rs 3,300 crore through stake sales in three PSUs in this financial year so far and is targeting to raise Rs 69,500 crore from disinvestment in the FY16. unlisted, profit-making CPSEs include RINL, ONGC Videsh, Coal India subsidiaries, Airports Authority of India and Hindustan Aeronautics. The listing will help unlock the true value of profit-making PSUs and give public ownership in the listed companies. networks in Oman, the filing adds. APPOINTMENTS Ashwani Lohani, the managing director of Madhya Pradesh Tourism Development Corporation, will be taking charge as chairman and managing director of national carrier Air India. Balmer Lawrie & Co has appointed Prabal Basu to take over as the Mini Ratna's chairman and managing director. NBCC floats subsidiary in Oman NBCC has incorporated a subsidiary in Oman to carry out commercial construction activities. The State-owned construction company has a 70 per cent stake in NBCC Gulf and the remaining 30 per cent is held by Al Naba Holding, a leading business group in Oman, NBCC has said in a regulatory filing. NBCC Gulf has been established to carry out commercial construction activities of buildings, roads, airports, harbours, water sewerage and electricity Natural Gas Corporation (ONGC) is planning to spend up to $7 billion (over Rs 44,000 crore) to develop its block off the east coast and begin gas production there in 2018. ONGC's block in the Krishna-Godavari (KG) basin is estimated to produce about 77,000 barrels per day of oil and up to 17 million cubic metres a day of natural gas at peak rate. The investment figures are based on preliminary estimates. ONGC eyes K-G gas output by 2018 Oil and Bank of India (SBI) is strengthening its low-cost business correspondent (BC) model to reach out to rural, unbanked areas to compete with upcoming payments banks. Payments banks can operate at a much lower cost than that of full-fledged or universal banks, providing access to banking services in remote parts of the country. The country's largest lender already has about 56,000 BCs operating through pointof-sales machines across the country. The bank is planning to open customer service points in 500 unbanked gram panchayats in West Bengal. SBI's BCs to take on payments banks State (OIL) is targeting early development of blocks bagged under New Exploration Licensing Policy (NELP) auctions in K-G basin, Rajasthan and Mizoram to OIL sets early target for NELP blocks Oil India Bank of India (UBI) is planning to bring down its gross non-performing assets (NPAs) below Rs 6,000 crore by the end of this financial year. The Kolkata-headquartered bank's gross NPAs for the quarter ended June 30 was Rs 6,533 crore. The State-owned lender has targeted to slash over Rs 500 crore of bad assets to bring the gross NPAs to around 8 per cent from the current 9.57 per cent of its total advances. INDIA BUSINESS JOURNAL UBI to slash gross NPAs by Rs 500 crore United 8 SEPTEMBER 2015

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High Court has set aside the countrywide ban on nine variants of Nestle India's Maggi instant noodles. The court observed that the Food Safety and Standards Authority of India (FSSAI) had acted in an "arbitrary" manner and not followed the "principles of natural justice" while banning the product. The court also noted that the food labs engaged by the FSSAI, which found excessive lead in Maggi noodles, were not "authorised" under the food safety law. The court ordered Nestle India to conduct fresh safety tests on the product at three centres accredited and recognised by the National Accreditation Board for Testing and Calibration Laboratories before relaunching it. Partial relief for Nestle, rap for FSSAI The Bombay tablets and capsules and generate 232 jobs. This will be GSK's first facility coming up in the last 15 years anywhere in the world. GSK is one of the oldest pharmaceutical companies established in India in 1924. It has two manufacturing units in India - Nashik and Thane and a clinical development centre in Bengaluru. CORPORATE 4G is new battleground for telecom operators The mobile Thomas Cook to buy Kuoni's travel business telephony market is set to sizzle with competition with Mukesh Ambani's Reliance Jio Infocomm slated to roll out 4G services in December. Rival Bharti Airtel, the country's largest telecom operator, launched its 4G services - the first of its kind in the country - across 300 cities early last month. Vodafone India, the country's second-largest mobile operator, has also joined the race for launch of 4G services by the end of the current calendar year. Idea Cellular too will be launching 4G services in the next calendar year. Stiff competition is likely to see consumers once again getting the best in terms of tariffs, data packages, movie and song downloads, coupled with affordable and snazzy devices. A tariff war is also imminent as more and more operators jump on the 4G bandwagon. The Munjals - OP and BM, elder brother Brijmohan Lal Munjal - were quick to understand that India needed affordable mobility for its growing population. They set up a business that made bicycle parts and then went on to make bicycles. While BM is often credited with building the group, OP was instrumental in getting the group's fundamentals right. Munjal, 86, the chairman of bicycle giant Hero Cycles, died after a heart attack in Ludhiana last month. OP, as he was famously known, was born in Kamalia (in Pakistan's Punjab province). His father Bahadurchand owned a small wholesale shop in the village where farmers' grains were sold. Hero Cycles' O P Munjal passes away Om Prakash GSK lines up Rs 1,000-cr for Kolar plant UK-based pharmaceutical major GlaxoSmithKline (GSK) will invest Rs 1,000 crore to set up a new greenfield pharmaceutical manufacturing unit in Karnataka. The State has sanctioned 50 acres at the Vemgal Industrial Area in Kolar district for setting up the new plant, where the company will manufacture assembling phones in Andhra Pradesh's Sri City. Tekla has partnered with AF Infotech to set up Tekla Centre of Excellence in Ranchi, Jharkhand, to train technology students in Building Information Modelling (BIM) skills. Home shopping network Shop CJ has inked a marketing alliance with travel services company Thomas Cook. Travel services provider Thomas Cook India is acquiring rival Kuoni's business in India and Hong Kong for Rs 535 crore. The company has entered into an agreement with the Kuoni Group to buy a 100 per cent stake in Kuoni Travel India. It will take all 1,800 employees of Kuoni's travel business unit and continue to run the business activities as an independent entity. Fairfax Financial Holdings is the controlling shareholder of Thomas Cook India. The Kuoni acquisition is set to strengthen Thomas Cook's Asian business. APPOINTMENTS Roland S Folger, the president and CEO of Mercedes-Benz Malaysia, will take over as MD and CEO of Mercedes-Benz India from October 1. Rekha M Menon has assumed charge as the chairperson of Accenture's Indian subsidiary. Larsen and Toubro has named former Infosys INDIA BUSINESS JOURNAL executive Sanjay Jalona as MD and CEO of its IT arm, L&T Infotech. Omer Dormen, the sales director of BP Lubricants for CIS, Turkey and Central Asia, will be joining Castrol India as its MD from October 1. TIE-UPS China's Xiaomi has joined hands with Taiwan-based tech giant Foxconn to start airline IndiGo has finalised the purchase of 250 A320neo aircraft. The deal hands Airbus its biggest-ever order by number of planes in a deal worth about Rs 175 crore. IndiGo, which has grown rapidly to become India's biggest airline by market share, has now ordered 530 A320-family planes from Airbus. The deal also makes IndiGo the largest airline customer for Airbus' A320 family of aircraft. The A320neo is the re-engined and upgraded variant of the A320 family of planes and competes with Boeing's upgraded 737 Max in the narrow body market segment. SEPTEMBER 2015 IndiGo, Airbus in 250 A320neo plane deal Budget 9

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FACE TO FACE "We are working on five key tasks" uresh Narayanan finds himself in an unenviable position. The new managing director of Nestle India has a huge task lined up before him. Mr Narayanan has to build from scratch the tarnished image of Nestle's instant noodle brand, Maggi. The noodle brand, which has been banned by the Food Safety and Standards Authority of India (FSSAI) for high lead content and other violations, has resulted in Nestle India suffering the first quarterly loss after almost three decades. For the new Nestle India chief, bringing Maggi - the noodle brand last month got a partial relief from the Bombay High Court, which allowed it to be tested in the country's three approved laboratories - back to the market is among his top priorities. A Nestle veteran, Mr Narayanan served in the sales and marketing divisions of the Switzerlandheadquartered company across the globe. From India, he moved to Indo-China in 2003 and went on to occupy various responsible positions in South Asia and North Africa. Perhaps, it is this vast and varied experience that has prompted Nestle to bank on Mr Narayanan to revive its Indian subsidiary. In a wide-ranging interview, the new S KUMAR RAHUL "If the presupposition is that as a company we have said no Maggi, it's completely and totally wrong. We are here in a situation talking about the return of Maggi." 10 SEPTEMBER 2015 Nestle India head outlines his priorities in bringing brand Maggi back on track and talks of the challenges ahead. What are your priorities in getting Maggi back in business in India? My career has seen many challenges in the past. But this is a different kind of a challenge. I look forward to impacting the fortune of our products, including Maggi, and lives of over 7,000 people who work for the company positively. As a part of transition of leadership, we have to bring in the skill sense that would be needed at a point relevant to the context. So, will you be solely responsible for settling issues that Maggi is facing? The entire team of 7,200 employees of Nestle India, and not just me alone, will be taking measures to get the noodle brand back on track. My role will be discharged as the leader, but there are 7,200 people behind me and 99 per cent of them are Indians. Therefore, there is a very strong contingent of my colleagues, comprising people working in different factories and partners across the value chain, who are all working towards reviving brand Maggi. Does having an Indian face help Nestle rebuild the image here? What I bring to the table is a set of experiences, competencies and track record. That is hopefully valuable to this company, whether or not I am an Indian. Being an Indian, as my boss Wallin Mattias has said, is an icing on the cake. Yes, Why not Indian? Being an Indian makes me familiar. The fact is I can speak Hindi, but the fact is that I can also feel the heartbeat of the country being from the same society. Can you assure your employees that their jobs are safe, irrespective of whether the ban on Maggi is lifted or not? Let me put it simply this way. Maggi is clearly a key part of our business. It is my endeavour and that of my colleagues that we get back respect and support from the authorities. I am not in a confronting frame. I am a part of this country, Nestle is a part of this country, and we will be a part of this country as we have been for the last 100 years, respecting the laws of the land. It is my hope that we are able to find a solution and move forward. Nestle India suffered the first quarterly loss in more than three decades. Where do you see the company INDIA BUSINESS JOURNAL

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SURESH NARAYANAN MD, Nestle India going from here? I have defined five key tasks, namely bringing back Maggi on track, putting the growth agenda of other categories in which we are participating, engaging more with all our stakeholders, including authorities, partners and within the organisation, improving the focus and energies around the environment where we believe that we can play a role going forward and engage with the people. If the Maggi comeback is prolonged, what are the possible scenarios for the company? For me, my scenario is that Maggi should and will come back. The whole business segment, from procurement right up to manufacturing, has been dismantled. The whole system is in a state of freeze. I would not hazard a guess at this stage as to how long it would take and what would be the kind of timeline involved in a country as complex as India where we cover 9 million outlets. It is in the process of being worked through, and when we are closer to the time-line, I would be happy to share it with you. Do you think that Nestle ignored other categories and focused more on Maggi? I am not here to dwell on what was done in the past. My mind is very clear. Aage dekho (see ahead). It means that in the last few days, I have looked at each of those categories as the areas that we need to focus on. To me all these categories have clear potential, and there are plans which the company can put together. So, will you be bringing down overdependence on Maggi INDIA BUSINESS JOURNAL "Being an Indian, as my boss Wallin Mattias has said, is an icing on the cake. Being an Indian makes me familiar. The fact is I can speak Hindi, but the fact is that I can also feel the heartbeat of the country being from the same society." in coming months? It is a fact that Maggi is a big part of our movement. It is not to say that I am diluting its importance in any case. But for me, what is going to be the key focus is on growing some of our other categories as well. We have presence in dairy, coffee, other beverages, chocolates and confectioneries as well. There are opportunities there, and I believe in moving up the value chain. There are opportunities there in terms of more consumer insight to come up with new propositions as the country's consumer market is evolved, and all this is a part of the agenda. The journey of Maggi would continue, and the journey of other categories will be significantly emphasised over a period of time. It is not just a question of having new products and having innovation that works. It is also a question of enhancing partnerships, efficiencies, responses and responsiveness of the organisation. Will Maggi come out in a new edition? There is a lot of work in terms of all aspects of Maggi, SEPTEMBER 2015 11

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FACE TO FACE "I am a guy who was born in a market that grows. I would like the growth zing to come inside the organisation, and that's really a part of the mission that I will be pursuing here." such as product, communication and packaging, among others. There is a full scale of work which is on and I would be very happy if all this comes to fruition. Looking back, where do you think that Nestle could have handled the issues better? I will only say that one of the tenets of business which I have learned is that never to speculate what could have happened in the past when you were not there. As I was not here, I am not in a position to take any call on what could or could not have been done. I can only assure that as a consequence of what has happened, we will have a process of introspection as an organisation. All this is internalised and taken for the future in terms of assuring that we don't come by any unfortunate incident again. What exactly is the company's take on different test results? We do not want to make any comments as all these are a part of court proceedings. So, I do not wish to comment on it. Would consumers be ready to accept brand Maggi easily after this controversy? When I say that Maggi will make a comeback, it is obviously addressing the issues that have impacted the brand. Of course, it is the company's strong desire, and we are confident of being able to go back to consumers. Has there been a dialogue with the government? We are constantly engaged in the process of dialogue. It's not that we are going to start the dialogue now. It's an ongoing process, and it will keep on going. 12 SEPTEMBER 2015 How has the Maggi controversy impacted Nestle's other brands in last few months? A matter of this scale has already had its impact beyond the brand. Yes, there has been an impact on the rest of the portfolio because it is also sold in similar outlets and in similar geographies. As of now, it is very difficult to assess the scale of impact on other brands. I would say that the impact has been reasonably uniform across all categories. Are you increasing your marketing or promotional spend to counter this impact? Yes, that's a part of the thinking to see what we can really do to some of our other portfolios. One of our portfolios is affected. So, we will be looking into how we can scale up advertising and support activities for our other brands. Are you bringing in new products to fill the void created by Maggi? If the presupposition is that as a company we have said no Maggi, it's completely and totally wrong. We are here in a situation talking about the return of Maggi. In the long term, I want to have a transparent and honest relationship. In short term, it is prudent to leverage what you have on the table rather than go and expand what you do not have currently. The current strategy would be to focus on what we have and do it better. What are you doing to keep Maggi in consumers' mind until the brand makes a comeback? We still have some Maggi products on the shelves, and those products are still there to remind consumers that there is a product called Maggi. Will there be more snacking products under the Maggi brand? Yes. In Maggi itself, there are a couple of ideas on which we are working. In other products categories, there are a couple of ideas that we have got. I am a guy who was born in a market that grows. I would like the growth zing to come inside the organisation, and that's really a part of the mission that I will be pursuing here. At any point of time, I have access to different products in different parts of the world. I have an R&D centre here in Manesar, Haryana, and it is constantly working on projects. Obviously, I cannot tell you how many projects. But I can tell you that work is on, on a range of projects. Would you sue the FSSAI, if you get a clean chit from labs? Hum karobaar karne aaye hai (We have come here to do business. Let us stick to the karobaar (business). I am a qualified sales and marketing professional. Let me do the job that I know best, which is to serve the consumer best. The issue you are speculating on has not come on the table. INDIA BUSINESS JOURNAL

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INFRASTRUCTURE A Welcome Lifeline The proposed NIIF could kick-start vital infrastructure projects dented by an overleveraged private sector and banks steeped in bad debt. he government has proposed to operationalise the Rs 20,000crore National Investment and Infrastructure Fund (NIIF) by the end of this year. The entity will function as a sovereign wealth fund similar to Singapore's Temasek and UK's Green Investment Bank. The NIIF, which will operate at an arm's length from the government, will primarily focus on fund infusion in infrastructure projects - greenfield, brownfield and the stalled ones. The government's equity in the proposed fund will be capped at 49 per cent, and the remaining portion will be held by large business groups as well as provident fund, endowment and sovereign wealth funds. "It will be a commercially-oriented enterprise and will be located in Mumbai and operate at an arm's length from the government," reveals Minister of State for Finance Jayant Sinha. 14 SEPTEMBER 2015 T JOYEETA DEY Several countries have shown interest in investing in the fund, notes Mr Sinha, adding that cash-rich public sector undertakings (PSUs) too can invest in the NIIF. "We will be hiring the best talent in the world for this institution so that they can assess and evaluate a variety of investment opportunities using the most sophisticated valuation techniques," Mr Sinha adds. Mr Sinha notes that if the NIIF finds right investment opportunities, it can draw down Rs 40,000 crore. "We have a number of long-term investors interested in partnering with us. At a minimum, we have the ability this year, in the next 12 months, to be able to draw down Rs 40,000 crore. We have that ability, though it may be difficult to achieve that level of disbursement in a short period of time.: Many suitors The decision to set up the fund was taken at the meeting of the Cabinet headed by Prime Minister Narendra Modi last month. The NIIF is being established with an aim of maximising economic impact mainly through infrastructure development in commercially-viable projects. The concept of NIIF was proposed by Finance Minister Arun Jaitley in his Union Budget 2015-16. The NIIF's governing council will have government representatives and experts, eminent economists and infrastructure professionals. The fund is going to be a series of Alternative Investment Funds which are regulated by the Securities and Exchange Board of India. Since the NIIF will be a private entity with a government stake of 49 per cent, the fund will not be subject to audit by the Comptroller and Auditor General of India. The NIIF has been planned with a dual role of equity capital infusion in projects as well as getting due diligence done for investment in infrastructure projects and having investors available for them. The NIIF would have a dual mission of finalising a pipeline of projects and attracting coinvestors as well. A range of opportunities that the NIIF would invest in includes equity and quasi-equity investment financing agencies - Indian Railway Finance Corporation, India Infrastructure Finance Company and National Housing Bank - by providing equity support to them. It will also act as sponsor fund and provide capital for funds that are focused on infrastructure. Domestic pension and provident funds and national small savings funds may also invest in the NIIF. The NIIF may utilise the proceeds of the monetised land and other assets of PSUs for infrastructure development. "We are willing to have cash-rich PSUs to sponsor the funds. We are hopeful that we will get them also to participate in some of these funds because this is an entity which is ultimately sponsored by the government," reasons out Mr Sinha. INDIA BUSINESS JOURNAL

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The government has also discussed with the New Development Bank (NDB) if it can partner in with the NIIF to meet funding needs in the infrastructure sector. "We think that the NDB could be a co-investor," notes Mr Sinha. The NDB, founded by the BRICS nations, is expected to roll out its operations by April 2016. Reviving core sector The NIIF is likely to gauge the commercial viability of infrastructure projects by using market-based selection criteria and checking for the robustness of project appraisals. While investments would mainly be in the core infrastructure sector, the fund would work out the priorities in consultation with the government. Smart cities would be an important area of investment for the NIIF. The overall criterion for investment by the NIIF is commercially-viable infrastructure projects. The government is trying to put in place the best-inclass tax and regulatory regime to have vibrant equity and asset management practices. "We need lakhs of crores of rupees going into infrastructure. So, we need a vibrant way of financing for institutions to be able to fund India's infrastructure needs," Mr Sinha adds. "We have a number of long-term investors interested in partnering with us. At a minimum, we have the ability this year to be able to draw down Rs 40,000 crore." JAYANT SINHA Minister of State for Finance NIIF At A Glance Rs 20,000-crore NIIF likely to start by year-end Government's equity in fund capped at 49% Pension, sovereign wealth funds and PSUs likely to partner Fund mandated by dual mission of finalising projects and attracting co-investors long way in addressing the funding problems of the infrastructure sector. With the fund expected to be run on the lines of sovereign wealth funds, it can play a vital role in financing many key infrastructure projects The NIIF will be able to deploy many times its capital as it will raise money from a number of other agencies, like provident funds, overseas pension funds, endowment funds and other sources. The government has said that other sovereign wealth funds and governments have shown interest in investments in the fund, and this is a positive development for a fund that is yet to become operational. Issues of regulation and sharing of project risks have been obstacles to infrastructure growth. But, in general, the pace of creation of capital assets has remained slow due to pub- The government's planned capital expenditure in the first quarter of the current financial year grew by 38 per cent to Rs 31,051 crore from Rs 22,552 crore in the same period of the last financial year. However, there is a very serious shortage of equity financing in major infrastructure projects. A report of the government's highlevel committee on financing infrastructure in 2014 had noted that fresh INDIA BUSINESS JOURNAL inflows of equity in the infrastructure sectors had slowed down significantly over the past few years, constraining several domestic players from making further investment. The report had also recommended that a larger portion of insurance and pension funds may be channelled to finance infrastructure projects and strengthen financing to the sector. The proposed NIIF is likely to go a lic infrastructure investment lagging badly behind the physical demand for infrastructure. Many vital infrastructure projects have come to a standstill, thanks to a highly-leveraged private sector and banks neck-deep in bad debt. The proposed NIIF could be the way forward in realising the country's huge unmet infrastructure needs. SEPTEMBER 2015 15

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