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ECONOMY: EV CHARGING: September 22 , 2019 I ` 100

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PAIN OF DEBT
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A SURVIVAL GUIDE
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 FROM THE EDITOR

http://www.businesstoday.in

Editor-in-Chief: Aroon Purie

Group Editorial Director: Raj Chengappa

The Tyranny of Debt Editor: Prosenjit Datta

Group Creative Editor: Nilanjan Das
Group Photo Editor: Bandeep Singh
Executive Editor: Anand Adhikari

I
Deputy Editor: Naveen Kumar (Money Today)
NDIA HAS a debt problem – at every level. The government’s official debt
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SPECIAL PROJECTS AND EVENTS

to GDP ratio has been rising. If you add the debt it has taken but kept off Senior Editor: Anup Jayaram
the balance sheet, the picture gets much worse. A big chunk of the debt
CORRESPONDENTS
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now goes into servicing interest payments of the old debt. In a nutshell, the
government is in a debt trap. What is worse, its borrowings are crowding
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Senior Editors: P.B. Jayakumar, Nevin John,
Goutam Das, Ajita Shashidhar, Joe C. Mathew,
E. Kumar Sharma, Anilesh Mahajan
Senior Associate Editors: Dipak Mondal,

out private sector borrowings, pushing up their cost of funds. The finance Manu Kaushik, Sumant Banerji
minister tried to fix this through a proposal that envisaged borrowing in foreign Associate Editor: Nidhi Singal
Assistant Editors: Sonal Khetarpal, Rukmini Rao,
currency denominated bonds. The government has had a rethink after many
.t.

Renu Yadav (Money Today)

eminent economists pointed out the dangers, which included exposing itself to RESEARCH
Principal Research Analysts: Niti Kiran, Shivani Sharma
foreign currency risk. After some weak attempts at defending the proposal, the
m

COPY DESK
finance ministry has quietly put the whole thing on the backburner. Senior Editor: Mahesh Jagota
If the Union government has been profligate in its borrowing, the state Senior Associate Editor: Kaveri Nandan
Associate Editor: Sanghamitra Mandal
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governments are also not much better. Except for a few, most states borrow Chief Copy Editor: Gadadhar Padhy
Copy Editor: Aprajita Sharma
to meet the promises made by the party in power. The combined fiscal
PHOTOGRAPHY
deficit of the Centre and states is well over 6 per cent. Beyond that are the
Ta

Photo Editor: Reuben Singh

government-owned arms – most of which are heavily leveraged. So you have Deputy Chief Photographers: Shekhar Ghosh, Rachit Goswami
Senior Photo Researcher: Sudhansh Sharma
state electricity boards, Central and state public sector enterprises and others
ART
which are overleveraged. Assistant Creative Editor: Safia Zahid
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Deputy Art Director: Amit Sharma

Corporate India is in an equally bad shape. Except for a few honourable Associate Art Director: Ajay Thakuri
exceptions, company balance sheets show the strains of overleverage and Assistant Art Director: Raj Verma
Designer: Rajesh Singh Adhikari
rising interest costs. Small and medium companies are the worst-hit – and
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PRODUCTION
many of them are folding under the burden of this leverage. What’s more, Chief of Production: Harish Aggarwal
Senior Production Coordinators: Narendra Singh, Rajesh Verma
no one knows exactly how bad the level of actual debt is even with highly
LIBRARY
respected groups. What shows up in the listed company’s balance sheet is
D

Assistant Librarian: Satbir Singh

only a small part of the debt tale. Quite often, there is promoter-level debt
Publishing Director: Manoj Sharma
taken through multiple subsidiaries that escape scrutiny. It is only when a Associate Publisher (Impact): Anil Fernandes
F_

promoter or company fails to honour its debt or defaults that the real picture IMPACT TEAM
Senior General Manager: Jitendra Lad (West)
starts coming out. Whole sectors are in deep trouble because of excessive debt General Managers: Upendra Singh (Bangalore)
– power, roads, telecom and real estate, among others. Even the strongest Kaushiky Gangulie (East)
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balance sheets show rising debt. Even a company like Reliance Industries has
been piling up debt as it aims for complete domination of the telecom space,
though it is now trying to monetise assets to reduce its net debt. Some of the
biggest names in the steel sector that thought they were picking up great
Marketing: Vivek Malhotra, Group Chief Marketing Officer;
Preetha Athrey, Head – Marketing
Newsstand Sales: D.V.S. Rama Rao, Chief General Manager;
Deepak Bhatt, General Manager (National Sales); Vipin Bagga,
Deputy General Manager (Operations); Rajeev Gandhi,
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Regional Sales Manager (North)

assets cheaply in the bankruptcy courts are now finding that the decision was
probably a tad rash, given the slowdown in steel.
Statistics also show that the Indian households are saving less and
Vol. 28, No. 19, for the fortnight September 9-22, 2019.
Released on September 9, 2019.
Editorial Office: India Today Mediaplex, FC 8, Sector 16/A, Film City, Noida-201301; Tel: 0120-
sp

borrowing more to fuel their spending spree. During an economic boom, this is
not a problem. It becomes one when the economic growth starts sputtering.
Debt is not a bad thing when used judiciously to build assets and grow a
4807100; Fax: 0120-4807150 Advertising Office (Gurgaon): A1-A2, Enkay Centre, Ground Floor,
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business. But if the cost of funds become higher than the value it is creating, it
becomes a problem. Our cover story looks at the alarming debt trends in detail.
Meanwhile, the government has been trying its best to revive the
sentiments of businessmen and kick-start the sagging economic growth. After
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4078080; E-mail: wecarebg@intoday.com
rs

North Block have put together a package to revive sentiment. Will it do the
trick? We examine it in detail in the story Fixing the Slowdown (page 50).
Sales: General Manager Sales, Living Media India Ltd, C-9, Sector 10, Noida (U.P.) - 201301;
Tel: 0120-4019500; Fax: 0120-4019664 © 1998 Living Media India Ltd. All rights reserved through-
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Printed & published by Manoj Sharma on behalf of Living Media India Limited. Printed at
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SEPTEMBER
22, 2019
VOLUME COVER BY
28 Nilanjan Das

NUMBER
19
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COVER STORY
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ILLUSTRATION BY NILANJAN DAS

PAIN OF DEBT
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28
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A SURVIVAL GUIDE
e rs

THE 10 HEADING FOR TRUCE

BUZZ > Now IndiGo is 14
adopting a new policy
HAPPY ENDING for related-party
Big win as Jalan panel transactions, and
says revaluation reserves increasing the board
cannot be touched strength from six to 10

6 I BUSINESS TODAY I September 22 I 2019

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 THE BUSINESS-
HUB > 68
THE PET BET
TODAY.IN >
Well-being of pets is
serious business.
And the action is
just hotting up
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STAY CONNECTED WITH US ON

www.facebook.com/BusinessToday@BT_India
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Are Structural Weaknesses, Fundamental Shifts

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Slowing Indian Economy?

Disruption by way of new technology and digitisation
is making life difficult for well established businesses
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businesstoday.in/economy-disruption
SECTOR Decoding Mukesh Ambani’s First-Day-First-Show
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REPORT: Business Model

AGRITECH All eyes are on Jio’s First-Day-First-Show, which also
may turn out to be a win-win for film-makers
businesstoday.in/jio-firstdayfirstshow
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88 What Triggered “logout” Movement in Zomato vs

Restaurants Fight
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LONG WAY TO GO The battle isn’t over yet. While most aggregators have
India must increase farm agreed to limit discounting, Zomato is still reluctant
income and become businesstoday.in/logoutmovement-restaurants
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globally competitive.
Technology can help
PERSPECTIVES
F_

No White Elephants Please! Where Not to Invest RBI

Surplus of `1.76 lakh Crore
Dumping money in sick state-run enterprises, recapi-
talising public sector banks, incentivising exports
THE
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would not be prudent use of what used to be the

BREAKOUT RBI’s rainy-day reserves

ZONE >
businesstoday.in/psb-rbi.surplus
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India Versus Africa – A Tale of Two Airtels

The subscriber numbers are falling and customers
are unwilling to pay more for high-speed LTE
104
services, thanks to the disruptor Reliance Jio,
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which has brought down the 28-day tariffs to `49

BEWARE OF THE businesstoday.in/airtel-s.africa
VOICE TRAP
Voice interactions are Why Your Home, Car Loans Are Not Getting Cheaper
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most convenient, but Despite RBI Rate Cuts

they could also lead When interest rates go up, banks are quite quick to
to privacy breach and hike the rates. However, when interest rates go down,
fake information the transmission is always delayed
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businesstoday.in/rbirate-home.carloans
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An Feature
From time to time you will see pages titled ‘An Impact feature’,
‘Focus’ or ‘Advertorial’ in Business Today. This is no different
from an advertisement and the magazine’s editorial staff is not
involved in its creation in any way.
COLUMN
What RBI Surplus Bonanza Tells About Government
Finances
The government cannot stop or slow down spending.
The economy is losing steam with exports and private
sector investment slowing down, says Business
Today Editor Prosenjit Datta
businesstoday.in/privatesector.investment-rbi

8 I BUSINESS TODAY I September 22 I 2019

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 GST: UNENDING OYO MAKES MULTI-BRAND RETAIL:
P.12 P.12 P.16
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ORDEAL US ENTRY TAPPING GREY AREAS

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RBI SURPLUS CAPITAL

HAPPY ENDING
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BIG WIN AS JALAN PANEL SAYS REVALUATION

RESERVES CANNOT BE TOUCHED.
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By ANAND ADHIKARI
ILLUSTRATION BY RAJ VERMA
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THE FIGHT between
the government and the
Reserve Bank of India
(RBI) over the latter’s
lower level of realised
equity or contingency
fund between 6.5 and 5.5
per cent of the balance
that is coming to the
government is from the
surpluses of `1.23 lakh
crore generated during
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the surpluses during the
year is just `5,414 crore.
The total additional fund
that is coming to the

surplus capital has had sheet as against the 2018/19. These surpluses government over and
a happy ending, though current 6.8 per cent. What are the result of monetary above budgeted dividend
after some casualties, is surprising is that the policy operations like of `90,000 crore is
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as Governor Urjit Patel RBI, which was fighting open market operations `58,051 crore. Some
and his deputy Viral a few months back for (releasing liquidity in suggest the government
Acharya exited because its independence and exchange for government will ask for an interim
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of differences over also reserves, agreed to a bonds) and selling of dividend in the current
many issues with the lower band of 5.5 per cent, foreign exchange to year, which will add
government, including which released `52,637 reduce volatility in rupee– further funds to its kitty.
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transfer of capital. But the crore surplus capital for dollar trades. Of `1.23 But clearly, there is no
Bimal Jalan Committee the government. Many lakh crore, `28,000 surplus capital that the
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has made it clear that
the `7 lakh crore-plus
revaluation reserves of the
RBI cannot be touched.
This is a big win for the
RBI. The committee also
recommended a slightly
suggest the RBI could
have easily gone for a
higher band of 6.5 per
cent or mid–point of
6 per cent.
The second part
of the surplus money
crore was earlier paid
as interim dividend
for 2018/19. The
government budgeted
a dividend of `90,000
crore for 2019/20.
Therefore, the net from
government can eye.
Also, the capital transfer
amount is not what the
government was earlier
demanding.
@anandadhikari

10 I BUSINESS TODAY I September 22 I 2019

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ILLUSTRATION BY AJAY THAKURI
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GST
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UNENDING
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ORDEAL
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THE HIT AND TRIAL approach of the government
towards implementation of the goods and
services tax (GST) is taking its toll. Whether it is
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GST collections, compliance or systems, there is
uncertainty over everything.
The date for filing annual returns and GST audit for
2017/18 has again been extended – this time from 31
August to 30 November — due to ‘technical’ glitches.
This exposes the inability of the GST Network to cope
with the ever-fluid indirect tax regime.
While the government would like us to believe
that technical glitches are one of the main reasons
for extension of the deadlines, the bigger issue, it
seems is, taxpayers finding it difficult to reconcile
returns with financial statements. As part of GST
annual return and GST audit, taxpayers have to
reconcile those returns with financial statements. But
reconciliation is taking a lot of times as taxpayers
fear questions from the tax department if they report
differences. And while dates for filing annual GST
returns are extended again, other major compliance
deadlines are also around the corner. Going by the
trend, more extensions and delays look imminent.
-Dipak Mondal
12 I BUSINESS TODAY I September 22 I 2019
OYO
US Entry with Hooters
IN ITS FIRST purchase in the US, Softbank-backed
Oyo Hotels and Homes has bought the Hooters
Casino Hotel in Las Vegas. Oyo, along with Highgate,
a US-based real estate investment and hospitality
management company, reportedly shelled out nearly
$135 million to buy this property on the Las Vegas strip.
Hooters will be re-branded as Oyo Hotel and Casino.
A few months ago, Oyo had announced it would invest
$300 million in the US. Catering across several budget
price points, Oyo now claims to be the third-largest
hotel chain in the world. However, this six-year-old
company is yet to be profitable. Valued at around
$10 billion, founder Ritesh Agarwal recently bought
back shares worth around $2 billion to significantly
increase his stake in the company. An unprecedented
transaction in the Indian start-up space, this had raised
eyebrows questioning the move.-Rukmini Rao
VIDEOCON
Fight for Oil
WHO OWNS THE OIL exploration as-
sets of Videocon? Are those part of the
insolvency resolution process? These
questions came up in the bankruptcy
court a year after the consumer appli-
ance manufacturer defaulted on loans.
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It was when lenders of Videocon Oil
Ventures (VOV) invited bids from potential buyers for sell-
ing its exploration assets in Brazil and Indonesia that the
resolution professional of the parent company, Videocon
sp
Industries (VIL), requested the National Company Law
Tribunal to include Videocon Energy Brazil Ltd. and Vid-
eocon Indonesia Nunukan Inc. in the ongoing insolvency
process. But VOV has favoured sale of assets, particularly
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the Indonesian asset in which an Indonesian government
firm owns majority stake and BPCL a minority stake. SBI
had appointed Deloitte to find buyers for the assets in Bra-
zil and Indonesia. The fact is that the oil assets will attract
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buyers for Videocon during the insolvency bid. Without
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these assets, VIL has just some aging factories, lands and
workers and the banks may not be able recover any of their
debt. The beleaguered Videocon group has admitted to
outstanding of over `90,000 crore, making it perhaps the
biggest corporate bankruptcy case in the country’s banking
history.-Nevin John
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 THE BUZZ
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BANK MERGERS
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Core Problems
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Remain
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THE GOVERNMENT has merged
10 public sector banks (PSBs) into
four entities; decided to strengthen
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the national presence of two;
and form four regional focussed
banks. Together with the merger
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of SBI with associate banks and
the three-way merger of Bank of
Baroda–Vijaya Bank–Dena Bank,
there will be a dozen large, national
and regional banks to help achieve
the government’s aim to be a $5
trillion economy. The merger move
is recognition of the fact that bigger
banks have greater ability to absorb
shock, reap economies of scale and
raise resources without depending
on the exchequer, says SBI Chief Ra-
jnish Kumar. The three broad gains
from the consolidation will be an
increased capacity to lend; stronger
Heading for Truce
FINALLY, there’s truce between
IndiGo promoters Rakesh Gangwal
and Rahul Bhatia. The fight that
began early last year was settled
with IndiGo adopting a new policy
for related party transactions (RPTs),
and increasing the board strength
from six to 10. In the fourth week of
August, Gangwal announced that
he’s going to support the proposed
changes to the Articles of Associa-
tion (AoA) – to increase the board
size to 10 – since the board has
national presence and global reach;
and operational efficiency that will
lead to lower cost of lending. But
size alone won’t guarantee results.
India’s largest bank, SBI, doesn’t
figure in the top quartile in terms of
performance. Merging Punjab Na-
tional Bank with two weak banks,
United Bank of India and Oriental
Bank of Commerce, will eventually
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weaken the stronger entity.
The PSB model of banking with
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government ownership, control and
lending support to government’s
agenda (priority sector, financial
inclusion, Mudra etc) has been a big
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stumbling block for bringing change
in their functioning. The merger
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doesn’t address the core structural
and fundamental issues plaguing
PSBs.– Anand Adhikari
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INDIGO
closed an open issue as per Gang-
wal’s satisfaction. His agreement
with the board decision is in stark
contrast to his previous stance on
the board expansion where he had
suggested that the board strength
be increased to seven so that at any
point in time, Bhatia’s IGE Group
would not have significant control
RUPEE VALUE
TIME TO
GET REAL
IN THE LAST week of August,
the Indian Rupee depreciated to
`72 to a dollar, the lowest in nine
months. Conventional wisdom
says this should make export-
ers happy as it improves their
competitiveness. Some of them,
who do not depend on imported
raw materials, are indeed happy
but others find the increase in
input costs an added burden.
What worries everyone is
that the currency of their main
competitor, China, is also depre-
ciating at a much faster pace,
against the US dollar. In addi-
tion, to effectively manage its
currency, China is also providing
several support measures to
cushion exporters from the im-
pact of higher tariffs slapped on
them by the US as the result of
an ongoing trade war between
the two countries.
The result: Indian exporters
are on tenterhooks as they are
uncertain about how long the
trend of rupee slide will last.
The rupee moving towards its
real effective exchange rate is
perhaps the way forward.
- Joe C. Mathew
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sp
over the board. Gangwal also did not
attend IndiGo's AGM on August 27.
His nominee on the board Anupam
Khanna also skipped it, a move that
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has raised doubts among share-
holders on the terms at which the
promoters smoked the peace pipe.
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– Manu Kaushik
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 THE BUZZ
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PHOTOGRAPH BY SHEKHAR GHOSH
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MULTI-BRAND RETAIL
CAPITALISING ON
GREY AREAS
THE Government of
India has been against
allowing FDI in multi-
brand retail for a long
time since it believes it
would hurt the interests
of local retailers. How-
ever, it has allowed for a
number of grey areas in
the policy which global
retailers have capitalised
upon. In the past couple
of years, Amazon has
made three investments
in Indian retail compa-
nies through indirect
routes. It has recently
invested in Future Retail
by buying a 49 per cent
stake in Future Coupons,
a promoter entity of
Future Retail, and has a
call option to acquire the
entire stake of Future Re-
tail over a period of time.
Earlier, it invested in
Aditya Birla Retail’s More
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by joining hands with
Samara Capital. Amazon
also picked up a 5 per
cent stake in Shoppers
Stop through its invest-
ment arm.
The ambiguity in the
retail policy existed in
FDI in single-brand retail
too. Though the recent
FDI announcement has
eased the 30 per cent local
sourcing clause for single-
brand foreign retailers,
and the local sourcing
compulsion did dis-
suade many single-brand
retailers from investing
16 I BUSINESS TODAY I September 22 I 2019
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in India, the fact remains
that many foreign retailers
found an easy way to enter
India by partnering with
Indian retail companies.
The likes of Zara and
Marks and Spencer have
entered India through
such partnerships. The
1.3 billion consumption
opportunity in India is an
attraction for all global re-
tailers and Indian retailers
need capital to survive. It
is high time policy makers
come up with friendlier
investment policies.
-Ajita Shashidhar
PPAs
Review and
Restructure
AMID THE controversies
related to the state govern-
ments cancelling power
purchase agreements,
or PPAs, especially of the
renewable energy play-
ers, a group led by Special
Secretary Sanjiv Nandan
Sahai with representatives
from the Central Electricity
Authority, Central Electric-
ity Regulatory Commission
and Power System Opera-
tion Corporation Limited,
has been formed. The
group has been asked to
review the entire system,
and suggest restructur-
ing of the agreement. The
state governments are
finding it difficult to cope
with dipping prices in re-
newable energy and lock-
ing PPA for two decades.
Andhra Pradesh has
cancelled recently signed
PPAs of various renewable
energy projects. Before
this, some states such as
Uttar Pradesh, Karnataka
and Gujarat refused to
adhere to the agreements.
The investors, too, find
it difficult to convince
banks to raise debt for
this period, but they insist
on longer tenure PPAs to
spread the fixed cost and
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get competitive tariff. It will
be difficult for the group to
find a win-win deal.
-Anilesh S. Mahajan
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`17.9
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TRILLION
rs
Size of entity formed
after merger of
PNB, Oriental Bank
of Commerce and
United Bank of India
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 THE BUZZ

NUMBER CRUNCHING
WHAT: Future of Analytics Summit
WHEN: October 16, Mumbai
WHAT TO LOOK FOR: The second
edition of the summit will focus on
strategies around data analytics in
order to enhance business growth. The
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participants will learn effective use of

data and analytical tools
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EMPOWERING IDEAS COMMERCE

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WHAT: World Infrastructure WHAT: APAC Commercial Summit

Congress & Awards
.t.

WHEN: October 17, Mumbai

WHEN: October 15-16, Mumbai
WHAT TO LOOK FOR: More than 200
WHAT TO LOOK FOR: The two-day professionals from the life sciences
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event will have exhibitors and key industry will gather to exchange ideas
decision makers share industry updates and discuss latest technology trends.
and opportunities in order to empower
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Professionals in sales/commercial
participants to augment profitability of operations, brand management and
their businesses. marketing should attend the event.
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7 18 19
16 1 20
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15 21
14
22
13

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23
12

24 25 26 27
10 11

CALENDAR
9

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8

28
7

29
6

30
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5 31
DRIVING GROWTH
4 3 2 1 GLOBAL NETWORK
WHAT: India Summit WHAT: Global Conference on
Business Management and
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WHEN: October 17, Mumbai Economics

WHAT TO LOOK FOR: Over 1,000 WHEN: October 26, Canada
delegates will participate in the summit
that will evaluate states on parameters WHAT TO LOOK FOR:Participants
sp

such as investment opportunities, ease will have an opportunity to network

of doing business, entrepreneurship with academics, researchers, industry
and education. The idea is to spur specialists, policymakers and business
managers in areas of international
ap

growth by enhancing competition

among states. business and economics.

LUXURIOUS REALTY
e

WHAT: World Property &

Investment Show
rs

WHEN: October 19-20, Mumbai

WHAT TO LOOK FOR: The event will
be a platform to showcase international
residential, commercial, luxury and
sustainable properties. Participants will
include real estate industry specialists,
corporates, fund managers, wealth
managers, brokers and HNI investors.

18 I BUSINESS TODAY I September 22 I 2019

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 THE BUZZ

GLOBAL BUSINESS

US-CHINA TRADE FLIP-FLOP CONTINUES ARGENTINA, BRAZIL IN TROUBLE

There is no lack of surprise in the ongoing US-China trade war. Brazil has narrowly avoided recession in the second quarter
After slapping a fresh round of 10 per cent tariff on $300 billion of while Argentina is struggling to avoid its ninth sovereign debt
Chinese imports, U.S. President Donald Trump declared he would default, as per economic data released on August 29. Brazil
w

delay imposing the tax on selected consumer goods until mid- recorded a second-quarter growth of 1 per cent, slightly bet-
December but the new tariff would hit the rest from September. ter than expected, but overseas investors yanked $5 billion
w

Trump then added that trade talks could continue following signs from its stock exchange this year. The country’s treatment of
that Beijing would not immediately retaliate against the latest the Amazon rainforest is also adding to its woes. A recession-
tariff increase. China is reportedly preparing for a no-deal sce- racked Argentina is now trying to delay repayments on $100
w

nario. However, the S&P 500 Index rose after a spokesman for billion of debt. Its currency, the peso, fell more than 20 per cent
China’s commerce ministry said that escalating the conflict would over the past two weeks and the Buenos Aires Stock Exchange
not benefit either side. Earlier, China’s central bank seemed to plunged 30 per cent. Its central bank tried to shore up the
.t.

have responded to fresh tariffs by lowering its currency’s official peso with close to $1.5 billion, but it did not work either. The
exchange rate ($1= ¥7.04). As a result, Chinese goods now appear country’s latest financial crisis was triggered when President
cheaper to overseas customers. China is also shipping US-bound Mauricio Macri suffered a surprise primary election defeat that
m

exports to other Asian countries to circumvent tariffs. makes his re-election as president in October quite unlikely.
e/
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BREXIT TURNS MURKY, BP TO SELL ALASKA PHILIP MORRIS, ALTRIA

YET AGAIN BUSINESS FOR $5.6 BN PLAN TO REUNITE
ap

UK Prime Minister Boris Johnson has
come under fire after advising Queen
Elizabeth II to order prorogation and
suspend the parliament only a few
Oil behemoth British Petroleum is selling its
Alaska business to American private oil firm
Hilcorp Energy for $5.6 billion, thus clos-
ing its 60-year activity in that location. Post
Tobacco giants Philip Morris International
and Altria Group are reportedly in talks to
reunite 11 years after they split. The poten-
tial merger could create a $210 billion
e

weeks before the Brexit deadline on the deal, Houston-based Hilcorp will have tobacco giant. The companies split in 2008
October 31. The Queen has approved access to Prudhoe Bay, one of the most pro- mainly because Altria wanted to highlight
rs

the plan. It a frequent occurrence
before a Queen’s Speech (scheduled
for October 14), but Johnson’s critics
insist that the PM is trying to curtail
the debate so that his Brexit plan can
be forced through. If the UK exits the
European Union without a deal, it can
make the economy 9 per cent smaller in
15 years, as per government estimates.
ductive oil fields in the US. The sale is part of
BP’s pay-off plan as it bought BHP Billiton’s
US shale business last year and decided to
sell off $10 billion of assets to help pay for
it. The latest move also indicates a larger
change as the company seems to be focus-
sing more on shale oil and natural gas to cut
down on environmental impact and reduce
its carbon footprint.
its non-tobacco businesses – large stakes
in Kraft Foods and brewer SABMiller. Now
that these businesses have been sold off,
the former partners want to follow suit. The
combined entity could also grow in e-cig-
arette and cannabis products segments
as Altria owns a 35 per cent stake in vape
company Juul and 45 per cent in Canadian
cannabis firm company Cronos.

20 I BUSINESS TODAY I September 22 I 2019

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THE BUZZ
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Ta
F
OOD AGGREGATOR and
delivery company Zomato
recently won hearts for its
stand against an unusual de-
mand. The Gurgaon-based
firm refused to appease a customer
demanding that a Hindu delivery boy
bring in his order. Taking a courageous
stand — unlike most brands, which
prefer to stay mum on sensitive issues
— Zomato tweeted it does not dis-
criminate on the basis of race or reli-
gion. “Food doesn’t have a religion. It is
a religion,” it said. From celebrities and
politicians to common people, all ap-
preciated the move. Former Election
Commissioner S.Y. Quraishi and for-
mer Jammu and Kashmir Chief Min-
ister Omar Abdullah tweeted in favour
of Zomato. Many others ordered food
from its app to show support.
Business heads prefer to stay
neutral on controversial issues. But,
the times are changing. Consumers
now look up to their favourite brands
to stand up for what is wrong in the
22 I BUSINESS TODAY I September 22 I 2019
S
SE
D
ER
NIV
N
LU
A A
CIA
R H
SO
B IT IAL
W OC
S ICE
VO
a s tan d
n g
Taki
b u t n ecess
is risky er loyalty.
custom
By Sonal Khetarpal
Illustration by Raj Verma
m
society. The 2018 Edelman Earned
ilP
Brand study showed that 64 per cent
consumers around the world buy or
boycott a product based on values of
D
the company.
Companies do follow a set of stan-
F_
dard principles, but in an age of social
media, voicing their views has become
equally important. “Brands might have
En
their own value system but making
consumers aware of it should be an in-
tegral part of their consumer strategy,”
suggests K.V. Sridhar, Founder and
Chief Creative Officer of cross-disci-
plinary brand consultancy HyperCol-
lective. “Without emotions and feel-
ings, a brand is as good as a commodity
such as atta, dal and chawal,” he adds.
Social media analytics firm Sprout
Social surveyed 1,000 consumers in
the US to study what they want from
brands. The survey found out that 52
per cent respondents who agreed with
the brand’s position had greater brand
loyalty, 44 per cent expressed likeli-
hood of purchasing more and 28 per
cent said that they would love to praise
the brand publicly.
Values are subjective. There is
nothing right or wrong about it. What
ues
i ve i s s
o n s ensit
y t o win
a r
matters is brands do not digress from
their value system. R.S. Sodhi, Manag-
ing Director of Gujarat Co-operative
Milk Marketing Federation (that owns
the Amul brand), says, “One can voice
out anything but expressing ethos on
which business is built is important be-
cause consumers are smart to pick up
false claims.”
Recently, Amul, which has a long-
standing reputation of trust and trans-
parency, slyly indicated in an ad that
Britannia’s Good Day cookies have
more vegetable oil than butter unlike
Amul’s butter-filled cookies. Britan-
nia retorted by raising health concerns
of excessive consumption of butter.
The two brands may hold contradic-
ew
tory views but their version of values
allowed consumers to choose what
works for them and gives them a bet-
sp
ter brand recall.
However, speaking up can backfire
sometimes, as some consumers may
ap
boycott the brand or post negative
comments. Sodhi of Amul suggests
that “even if people troll or voice nega-
tive opinions, brands should revert
e
gracefully, clarify their position and
rs
leave space open for dialogue”. This
helps consumers interact directly with
the brand, thus driving sales via word-
of-mouth marketing.
@sonalkhetarpal7
 TWITTER ADVISORS
FEEL #IGNORED
Twitter’s 40-member Trust and Safety
w

Council, comprising outside experts such as

Unwelcome academicians and Internet advocates, wrote a
w

Delay stinker to the microblogging site and said that

in spite of their repeated e-mail and messages,
w

France is optimistic that the platform tends to ignore them. The Council
the US-based social media
.t.

giants, including Facebook was formed in 2016 to help fight abuse and
and Snapchat, will be part fake news. In a letter, the members said there
m

of its charter “for an open, had been “no advance heads-up of Twitter’s
free and safe Internet” by
signing a pledge to fight policy or product changes to the council,
e/

online hate speech. The leaving many of us to have no prior warning

EU nation had invited or let alone knowledge when answering press
Ta

these companies, as well and media inquiries. This is embarrassing.”

as Google, to its 45th G7
summit, recently con- The letter ends by requesting a call with CEO
cluded in Biarritz, but the Jack Dorsey to discuss the council’s future.
m

signing did not happen.

As per media reports, U.S.
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President Donald Trump

influenced the social media
platforms not to sign the
pledge publicly, but Wash-
D

ington denied those allega-

tions. A French minister
F_

also said that the signing

had only been delayed.
En

DOUBLE-EDGED
ew

SWORD

35%
TIKTOK SENT A NOTICE TO
sp

SHARECHAT, INDIA’S VERY

FIRST REGIONAL SOCIAL MEDIA
PLATFORM, ASKING IT TO TAKE
DOWN THE FORMER’S EXCLUSIVE
ap

CONTENT. THE HOMEGROWN

FIRM DULY COMPLIED BUT ALSO
WROTE TO THE GOVERNMENT
THAT CONTENT EXCLUSIVITY IS ESTIMATED RISE OF THE ASIA-PACIFIC’S SHARE OF SOCIAL
e

THE DOMAIN OF BROADCAST- ADVERTISING SPENDING IN 2023, FROM 30 PER CENT IN 2018,
ERS AND STREAMING SERVICES ACCORDING TO FORRESTER’S SOCIAL MEDIA ADVERTISING
rs

SUCH AS OTT PLATFORMS, WHILE
TIKTOK IDENTIFIES ITSELF AS AN
INTERMEDIARY. THIS HAS PUT THE
SHORT VIDEO-SHARING APP’S
FUTURE IN JEOPARDY AS THE
GOVERNMENT IS NOW ALL SET TO
CONFRONT TIKTOK.
FORECAST, 2019-2023. AS USER GROWTH IS SLOWING DOWN IN
MOST OF THE KEY MARKETS, SOCIAL MEDIA COMPANIES ARE
TRYING TO INCREASE THEIR PER-USER REVENUE IN GROWTH
MARKETS SUCH AS CHINA AND INDIA. ASIA-PACIFIC MAY
WITNESS THE FASTEST GROWTH DURING THIS PERIOD AND BE
ON A PAR WITH THE US AND EUROPE’S SHARE OF SOCIAL
ADVERTISING SPENDING.

September 22 I 2019 I BUSINESS TODAY I 23

 THE BUZZ
START-UP
THINKERBELL LABS
BREAKING
THE BARRIER
w
w
OF BLINDNESS
w
.t.
THE BENGALURU-BASED
COMPANY HELPS SET UP
SMART CLASSES FOR THE
m
VISUALLY IMPAIRED.
By Sonal Khetarpal
Photograph by Lantern Camera
e/
Ta
1) Founders
Sanskriti Dawle, Aman
Srivastava, Dilip Ramesh
and Saif Shaikh – all of them
engineering graduates
from BITS Pilani, Goa.
2) The Concept
Not many college projects turn
into full-fledged businesses,
but the four managed to
develop a self-learning device
for the visually impaired as
part of their research project.
Initially, they used a credit-
card-sized computer called
Raspberry Pi and audio guides
to make Braille learning easy.
But what they thought was
a rudimentary prototype got
an overwhelming response
when tested in a Hyderabad
blind school. The peers had
addressed a big gap in this
space as Braille is a tactile
language and a teacher must
hold a student’s hand to teach
her the alphabet. But this kind
of one-on-one interaction
means the rest of the class is
idle most of the time; it delays
the learning process. The peers,
therefore, decided to leverage
technology further and build
a scalable learning solution.
They also decided to name
their device Annie, after Anne
(From left) Thinkerbell
Co-founders
Aman Srivastava,
Dilip Ramesh and
Sanskriti Dawle
KEY Sullivan, who taught the legendary Helen Keller.
NUMBERS 3) How Annie Works
m
FOUNDED IN Four years and seven iterations later, Annie features a
June 2016
Braille display and keyboard as well as a digital Braille
slate and offers audio-guided interactive lessons to
ilP
ensure self-learning via gamified quizzes and exams.
Teachers can use the companion app called Helios
FUNDING: to monitor progress and schedule lessons so that all
D
Raised students can learn simultaneously. Besides English,
`1.3 crore in the audio-tactile content is currently available in
F_
seed funding from five Indian languages. The company has set up its
Indian Angel Network
and Anand Mahindra; manufacturing unit in Pune and can produce 500 units
recently got `2.1 crore every quarter.
En
from IAN, LetsVenture
and angels from
Birmingham, UK 4) Revenue and Growth
In the domestic market, Thinkerbell sells Annie as a
smart class solution that consists of Annie toolkits,
ew
supporting infrastructure (server and software with
localised content) and materials for a teacher’s training
TEAM
MEMBERS: programme. The average cost of setting up each
10 classroom is `10 lakh, and the biggest customers are
sp
government-run special schools and philanthropic
organisations. Last year, the start-up installed 20
ap
Braille-teaching devices in a government school
in Ranchi in collaboration with the government
PRODUCTS of Jharkhand. Other key customers included the
SOLD: government of Telangana and L.V. Prasad Eye Hospital
e
105, including six units
for Annie Braille in Hyderabad.
rs
smart classes In February this year, Thinkerbell landed its first
international customer, the Wales Sensory Service. It
has also tied up with the Royal National Institute of
the Blind to curate content and enter the UK market.
GROSS In developed markets, Annie is sold as a single device,
REVENUE: priced at £700. The company is planning to enter the
`17.2
lakh in FY2017/18
US market in 2020 and aims to sell 4,000 products
over the next two years.
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 COVER STORY > DEBT
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GRAPHITI
Ta
m
DEBT, SET, GO ilP
The economic wheels in India are already
turning very slowly. But the overall debt
D
burden, which spiked in 2018/19, could halt
even that progress.
F_
GRAPHIC BY NILANJAN DAS
TEXT BY SHIVANI SHARMA
En
` ` ` $
ew
84.7
LAKH CRORE
9
LAKH CRORE
1.76
LAKH CRORE
543
BILLION
Central government Aggregate interest expenses Amount that the Reserve Bank India’s external debt – about 20 per
sp
gross debt as of March of BSE 500 companies in of India will transfer to the cent of GDP at the end of March
2019. This is 11% more 2018/19 as compared to government for 2019/20 2019 – is $13.7 billion more than the
than in March 2018 `7.07 lakh crore in 2014/15 level at the end of March 2018
ap
rs e
 w
WEIGHED DOWN ALARM BELLS
w
India Inc’s loans are rising The household sector's
w
even though earnings are loans from non-banks almost
muted. The 16 per cent rise in doubled in 2017/18
2018/19 has been the highest
in four years
.t.
m

53

46

42

40
39
4.30 / 2.43

33

28

26

25

22
3.02 / 0.56
3.09 / 0.22

e/
2.82 / 0.94

2.73 / 0.17
2.75 / 1.16
2.51 / 1.23

2.69 / 0.09
1.94 / 0.09

1.80 / 0.09
1.55 / 0.09

FY15 FY16 FY17 FY18 FY19

Ta
(` lakh crore)
Total revenue
m
Total debt (` lakh crore)
FY11
FY17

FY12
FY15

FY13
FY14
FY18

FY16

FY10

FY08
FY09

ilP
Bank advances
ON THE EDGE Loans & advances from other
D
financial institutions
Long-term loans and
advances rose 12.5 per cent
in 2018/19, the highest in DANGER POINT
F_
four years
The 19.4 per cent increase in
Long-term loans and PSU debt in 2018/19 can be
advances of BSE 500 viewed as a sign of trouble
En
companies from banks and
other financial institutions PSU debt (` lakh crore)

4.74
ew
21.85

4.44
18.30

4.34
16.89

15.72

14.31

4.21

4.05
sp
FY15 FY16 FY17 FY18 FY19

(` lakh crore) Sources: Ministry of Commerce,

ap
Ministry of Finance, BSE, NSE,
FY15 FY16 FY17 FY18 FY19 Ace Equity, RBI
rs e
 COVER STORY / LEAD

PAIN OF
w
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DEBT
.t.
m

Government, corporates and

e/

even households are deep in debt.

In a slowing economy this
Ta

could only escalate.

By PROSENJIT DATTA
m

ILLUSTRATION BY NILANJAN DAS

ilP
D

A
F_
En

few months ago, when the Comptroller and Auditor General of India (CAG)
rapped the Union Finance Ministry for its off-balance sheet borrowings, the
news did not come as a surprise to anyone following the government’s finances.
As several economists have calculated, if one were to add up all the extra bud-
ew

getary liabilities of the Indian government, the fiscal deficit would actually be
double what was being claimed in the Budget speeches.
Off-balance sheet borrowing is not something new – governments resort to
sp

it all the time. However, the scale of borrowings was worrying. It reflected the
government’s deteriorating finances in a slowing economy.
Even if just the official debt numbers were to be counted, the debt-to-GDP
ap

ratio has been creeping up. A bigger concern was that almost a quarter of the
Budget spends were going into servicing the rising debt. More importantly,
fresh debt being taken by the government was largely being spent on paying the
interest of its debt taken earlier. In essence, not a nice place to be in.
e

For a long time, when the debt problems in India were talked about by
rs

economists and business analysts, it was largely in reference to corporate debt.

But as is slowly becoming apparent, India has a debt problem at every level – in
Union and state government finances, in the balance sheet of corporate India,
and even in household debt. The indebtedness has been creeping up slowly, and
under the radar. But unless this appetite for debt is curbed now, it could hit the
already slowing economic growth very badly.
Unfortunately, the country is caught in a vicious cycle. The government has
had to keep spending (and, therefore, borrowing more) to ensure that the GDP

28 I BUSINESS TODAY I September 22 I 2019

 WHAT
CAN BE
DONE
Tighter
control on
government
w

finances;
reducing
fiscal deficit
w

Increasing
w

tax revenues;
focus on
compliance;
.t.

widening tax
payer base
m

Making PSU
sector more
accountable;
e/

bringing in
efficiencies;
reducing
government
Ta

fund support

More thrust
on public
m

private
partnership
ilP

Transfer-
ring higher
resources
to states for
D

better results
F_
En

`
growth does not stall. But that is also one of show a worrying trend of household savings
the reasons for the corporate sector’s inabil-
ity to access cheap debt. Government bor-
coming down while household debt is going
up. High household savings were the cheap-
131
lakh crore
rowings are crowding out the private sector, est source of funds for banks; it allowed them Government
ew

causing firms to raise money at higher costs. to lend freely and support corporate invest- general debt
(states and
Corporate India has not been able to re- ment in new projects. But this source is be- Centre) in
duce its debt problem, despite the clean-up ginning to falter. 2018/19
sp

initiated by the then Reserve Bank of In-
dia (RBI) governor Raghuram Rajan. They
mainly got into trouble because of excessive
At the same time, cheap consumer finance
had been fueling the consumption spree of In-
dian households. Given how reliant the Indian
` 32
ap

borrowings for projects that turned dud for
a variety of reasons – deteriorating economy,
policy changes, dishonest promoters and
global factors. Despite the concerted efforts
economy is on consumption growth, this was
not a bad thing while growth remained high. lakh crore
But now, as growth slows, and in turn hits Overall
debt of 800
jobs and income growth, the rising indebted-
e

companies
by the RBI and the government (Insolvency ness could cause problems. Consumption has in 2018/19
rs

and Bankruptcy Code), the problem has wors- already started slowing as cheap consumer fi-
ened. A cursory look at the balance sheets of nance dries up, and people get more cautious.
top companies shows that in the majority of
the cases, debt is rising faster than revenues
In the following stories, we look in de-
tail at the problems of debt being faced by ` 22
lakh crore
and profits. And now, hidden debt taken by the government, the corporate sector and
promoters – or promoter level debt – is roiling households. Outstanding
debt of
the financial sector. households
If that isn’t bad enough, recent statistics @ProsaicView as of 2018/19

September 22 I 2019 I BUSINESS TODAY I 29

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w
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or three decades up to the 2008 global fi-

m

nancial crisis, China’s gross domestic product

(GDP) grew close to double digits. Government
debt to GDP remained low at 20-25 per cent.
ilP

As growth rate slipped to 6-7 per cent after that,

government debt started getting out of hand.
The debt-to-GDP ratio of the world’s second-
D

largest economy has almost doubled to 55 per

cent in the last decade. This has been a result
F_

of China’s massive investment push to create

more capacity as the export engine slowed after
the global meltdown. Many say even the 55 per
En

cent figure is an understatement. In fact, inter-

national rating agencies often look at Chinese
debt numbers with a pinch of salt due to heavy
off-balance sheet borrowings.
ew

Is India, too, showing signs of running into

something similar? The economy is slowing.
GDP growth fell to a six-year low of 5 per cent
sp

in the first quarter of 2019/20. International

rating agency Moody’s has cut the 2019 calen-
dar year GDP growth forecast from 6.8 per cent
ap

to 6.2 per cent. The parallels are unmistakable.

Like China, Indian policy makers have stepped
up public spending in the last few years, though
to balance the lack of private sector invest-
e

ments (again due to heavy debt). Government

rs

general debt touched 69 per cent of GDP in

2018/19, up from 60.7 per cent six years ago.
Given the likely global recession and weakness
1/4TH ` 7.1 lakh crore in the domestic market as consumption – the
one growth engine running well for years – also
of budgetary Budgeted
borrowings go government slows due to banking and NBFC liquidity cri-
into interest borrowings in sis, the government’s target of reducing this to
payments 2019/20 60 per cent in the next five years is challenging
 COVER STORY / GOVERNMENT DEBT RISING LEVELS
A slowing economy will compound
the problem of high debt
challenging (see Rising Levels). The situation is so bad that
the Centre spends close to one-fourth of its yearly Budget 131
General Debt
on interest payments. About 90 per cent yearly borrowings ` lakh crore
114.5
go into paying interest on past debts, leaving little for the % of GDP 102.9
more productive capital investments. A sustained higher 94.4
borrowing means higher inflation, more interest burden 83
w

will mean lesser resources for public expenditure, higher 75.3

borrowing costs for companies and fall in value of the rupee
69
w

against the US dollar – all in all, a perfect storm. 68.5

India’s combined fiscal deficit, at 6.9 per cent of GDP, 67.1
w

is one of the highest among the G-20 countries. Only Ar- 66.6 67 67
gentina, at 7 per cent, is ahead. In fact, Viral Acharya, the
former RBI deputy governor, had quoted a former central
.t.

banker of Argentina to make a strong statement about the

likely consequence of interfering with the autonomy of 2013/14 2015/16 2018/19
m

central banks. This was when the government first talked

General debt (states and Centre combined)
about dipping into the RBI’s surplus capital, a move that Off-balance sheet borrowings excluded
e/

bore fruit last week when the central bank accepted the rec- Source: Economic Survey and rating agencies
ommendations of the Bimal Jalan Committee for transfer
of an additional `52,637 crore surplus to the government.
Ta

Though this will shore up the government’s balance sheet,

it is likely to be seen by international rating agencies in a
STRUGGLE IN FISCAL
negative light, a sign of financial distress.
CONSOLIDATION
For 2019/20, central government
m

India also seems to be taking a leaf out of the Chinese

borrowings will see a big jump
government’s off-balance sheet borrowings, which are at-
tracting the attention of rating agencies. “Off-balance sheet
ilP

Govt Borrowings Fiscal

borrowings are over 1.5 per cent of GDP,” says Arun Singh, ` lakh crore deficit as
% of GDP
Chief Economist at Dun & Bradstreet. A weak fiscal posi- 2013/14 5.03 4.5
tion is a big reason India’s sovereign ratings have not been
D

2014/15 5.9
upgraded for years now. 4.1
2015/16 5.9
In the 1990s, too, the government had a large fiscal
F_

2016/17 5.8 3.9

deficit. India’s debt-to-GDP ratio touched 77.4 per cent in
1991/92. The problem got compounded because of rise in 2017/18 5.9
oil prices, currency depreciation and trade as well as cur- 2018/19 5.7 3.5 3.45
En

rent account deficit. This led to a huge balance of payments

2019/20 7.1 3.35 3.3
crisis. Similarly, in 2001/02, the economy was in the slow
growth mode, and the Kargil war took place. The global Source: CARE Ratings, Union Budget,
economy was also in bad shape after the 9/11 attacks. The Economic Survey
ew

debt to GDP ratio rose to a high of 84.2 per cent. Is India

hurtling towards a similar crisis?
sp

SLOWING ECONOMY
Immediate Danger growth engine that has been working in the absence
The Economic Survey this year warned that a slow- of private sector investments. Plus, it is not easy to cut
ap

ing economy would impact revenue collections. “GDP
slowdown could impact the debt servicing numbers,”
it warned. Weak growth numbers are a partial cause of
government debt build-up, Credit Suisse said in a recent
funds already committed for key schemes such as the
PM Kisan, Ayushman Bharat or Fasal Bima Yojana.
“If things come to cutting the capital expenditure or
breaching the fiscal deficit in case of a revenue shortfall,
e

study. The CAG data shows that net tax collections in the I would suggest not cutting the capital expenditure. We
rs

first quarter (April-June) of the current financial year rose
just 6.3 per cent from the year-ago period. This is way be-
low the yearly target of 11 per cent. In fact, the govern-
ment barely achieved its net tax collection target of `14.84
lakh crore in 2018/19.
One way of managing fiscal deficit is reducing ex-
penditure. This will worsen the slowdown and lead to
a downward spiral as government spending is the only
don’t have to worry about inflation as it is very low,” says
Arun Singh of Dun & Bradstreet.
“India is staring at a silent fiscal crisis and the gov-
ernment should release a white paper on its medium-
term targets in the backdrop of a shortfall in tax reve-
nues,” Rathin Roy, a member of the Economic Advisory
Council to the Prime Minister, said recently.
Some relief has come from the RBI, which is giving

32 I BUSINESS TODAY I September 22 I 2019

 INDIA TOPS
THE DEBT LIST
AMONG EMERGING off-balance sheet borrowings by rolling over subsidy pay-
MARKETS ments to next year and encouraging public sector entities
to borrow from the market. Take, for instance, the gross
Debt to GDP ratio
revenue shortfall of `1.5 lakh crore in 2018/19. The bud-
Figures for Q3 2018;
Source: Institute of International Finance
geted figure was `24.5 lakh crore whereas the actual col-
lection was around `23 lakh crore. Then, how did the gov-
w

ernment manage to meet its fiscal deficit target of 3.4 per

cent? There was actually a cut in expenditure. It did not pay
India Malaysia
a `60-70,000 crore food subsidy to the Food Corporation
w

68.4 51.9
of India (FCI). The FCI, in turn, borrowed funds to bridge
w

the subsidy gap. “Rolling over of subsidy creates a debt bur-

den for the FCI in the longer run,” says a market expert.
The CAG has pointed out that government dues to the FCI
.t.

are rising because of such rollovers. In government books,

China which are prepared on a cash basis, the actual paid amount
m

48.5
is shown, while in FCI books, it is shown as accrued from
government. The government pays it as soon as the next
e/

year starts. As a result, the FCI has to take loans on its

books for making payments. Similarly, the NHAI debt has
ballooned from `40,000 crore six years ago to `1.78 lakh
Ta

crore. These off-balance sheet borrowings of `1-1.5 lakh

crore are not reflected in the general debt of 69 per cent of
GDP. Viral Acharya had said at a Monetary Policy Com-
m

mittee meeting that the practice has inflationary implica-

Hong Kong tions in the longer run. “The estimates of overall public
sector borrowing, which appropriately accounts for extra
ilP

44.3
Philippines
budgetary resources and other off-balance sheet borrow-
South Korea 39.8 ings of central and state governments, have now reached
39.2 8-9 per cent of GDP. This is at a level similar to that in 2013
D

at the time of the ‘taper tantrum’ crisis,” he said. The rupee

had depreciated sharply against the US dollar during taper
F_

Indonesia tantrum due to foreign fund outflows after the Fed said it
29.7 would end monetary easing.
Experts say off-balance sheet borrowing is an expen-
En
ew
sp

another `53,000 crore to the government, apart from the

surplus of `1.23 lakh crore generated during 2018/19, for
ap

2019/20. Many experts are not convinced that this will

help as the government had earlier wasted the oil bonan-
za — it had failed to lower oil prices or reduce fiscal defi-
cit when international crude oil prices had fallen sharply
e

in the early years of the first Narendra Modi government.

“THE GOVERNMENT’S RELIANCE
rs

In addition, the RBI surplus is a one-time bonanza and

ON THE NATIONAL SMALL SAVINGS
cannot be a sustainable source of revenue. Even the stra-
tegic sale of PSUs is going to be a challenge due to fall in
FUND HAS BEEN INCREASING
stock markets. YEAR AFTER YEAR”
MADAN SABNAVIS
OFF- BALANCE SHEET BORROWINGS
Chief Economist, CARE Ratings
Camouflaging of Debt Numbers
The government has been resorting more and more to

September 22 I 2019 I BUSINESS TODAY I 33

 NT D EBT
OV E R STO RY / GOVERNME
C

G S T O R EMAI N H IG H
B OR R O W I N
ns below
for GST collectio
ouble; chorus expectatio n s
Economy in tr
stimulus to rise hemes
t Large social sc , A yushman
omy to impac like PM K is an
Slowing econ ctions – taxes, EGA to
revenue colle t and others Bharat, MGNR
disinvestmen continue

rating agenci
es es at state
Fiscal slippag liance on
w

International off-balance sheet r re

are factoring st of funds to go level, highe ings
borrowings; co market borrow
w

c.
up for India In
w
.t.

sive way of raising resources. International rating agen- been increasing year after year,” says Madan Sabnavis,
cies are already factoring in off-balance sheet borrowings Chief Economist, CARE Ratings. Borrowings from the
m

while assessing India’s general debt. Higher debt increas- NSSF were financing around 2 per cent of fiscal deficit six
es the cost of funds for corporates raising money abroad. years ago. This jumped close to 20 per cent in 2019/20.
e/

“This kind of reliance on the NSSF puts tremendous pres-

PRESSURE POINTS sure on banks. They cannot lower fixed deposits rates fur-
Central Banks’ Surplus Capital and Sovereign Bond ther (even though repo rates are coming down) as rates on
Ta

Government borrowings are expected to be `7.1 lakh crore government savings schemes, which they compete with,
in 2019/20 from `5.7 lakh crore in the previous year. Pres- are much higher,” says a banker.
sure points are building up. A desperate government got Rising government borrowings leave little for the pri-
m

into a running battle with the RBI for dipping its hands vate sector. For this, the government had come out with
into the central bank's surplus capital. Finally, a committee an idea of taking a part of its debt in foreign currency. The
headed by Bimal Jalan pegged excess reserves at `52,637 plan has been apparently on the backburner after econo-
ilP

crore. The government was expecting some `2-3 lakh crore mists raised an alarm over the risks involved.
but is getting less as the Jalan Committee ruled out parting
with revaluation reserves. India Ratings says the surplus STATE FINANCES
D

transfer is likely to be used to meet the revenue shortfall. Added Risk

With GDP growth slowing, the shortfall is likely to be high. The expenditure of states now surpasses the central budget
F_

There are other worrying signs too. “The government’s expenditure. In 2018/19, the states’ budget expenditure was
reliance on the National Small Savings Fund (NSSF) has `33.59 lakh crore compared to the Centre's round `27 lakh
crore. The states’ fiscal situation deteriorated in 2015/16
En

and 2016/17 as they took over the debt of Discoms under

the Uday Scheme. Their borrowings are also on the rise.
In 2018/19, gross borrowings are budgeted at `5,50,000
crore, 2.9 per cent of GDP. “State governments are coming
ew

to raise money in the same market where the Centre is bor-

rowing. States’ borrowings have grown gradually over the
years. This equation can change if GST collections improve
sp

in future,” says Arun Singh of Dun & Bradstreet. In fact,

borrowing costs of states are steadily rising and are more
than the Centre’s borrowing costs.
ap

The recent loan waivers by states are going to put

more pressure on state finances. The share of states in
the combined deficit of Centre and states has been ris-
ing since 2015/16. There is also a trend of states raising
e

borrowings from the international market. The Kerala

“I WOULD SUGGEST NOT CUTTING
rs

Infrastructure Board recently became the first state gov-

THE CAPITAL EXPENDITURE. WE ernment institution in India to raise money abroad. Many
DON’T HAVE TO WORRY ABOUT economists complain that states’ data comes in a haphaz-
INFLATION AS IT IS VERY LOW” ard manner. “The data is not standardised. It comes with
ARUN SINGH
a lag. There is data with and without the Uday scheme,”
Chief Economist, Dun & Bradstreet says Sabnavis.

@anandadhikari

34 I BUSINESS TODAY I September 22 I 2019

 ers
ap
sp
ew
En
F_
D
ilP
m
Ta
e/
m
.t.
w
w
w
TIGHTENING
w

NOOSE
w

Overall debt of 800

w

companies increased
30% in five years
.t.

(FY 19). But net profit

increased just 10%.
Some sectors have
m

been hit badly

e/

TELECOM
`7.7 lakh crore
Ta

R E A L E S TAT E
`4.8 lakh crore
m

P OW E R *
`2.24 lakh crore
ilP

STEEL
`2.82 lakh crore
D
F_

Source: COAI, CRISIL,

industry reports
* 75 companies
En
ew
sp
ap
ers
 COVER STORY / CORPORATE DEBT

TILL DEBT
w
w

DO US PART
w
.t.
m

Corporate India’s interest outgo

is growing faster than its operating
e/

income. As sectoral issues combine

with a slowdown to pull down
Ta

earnings, servicing debt could

become more challenging.
m

BY RASHMI PRATAP
ilP

ILLUSTRATION BY RAJ VERMA

D

I
F_

n his book 'How the Mighty Fall', American business

En

consultant and author Jim Collins outlines five stages of

decline that even the best of companies could witness –
beginning with hubris born of success and ending with
the entity becoming irrelevant or dead. But when many
ew

mighty companies begin to feel headwinds at the same

time, witness credit downgrades, struggle with dwindling profits and rising debt,
there is more to the story than just the five internal stages of a giant’s decline.
sp

The last two years can well be called the years of the fall of the mighty in In-
dia Inc. There is hardly any business expansion or new project, debt overhang is
looming large, there have been defaults by those who seemed infallible until this
ap

time last year and many are facing bankruptcy proceedings.

Debt papers of companies of billionaires Sunil Bharti Mittal, Ajay Piramal and
Mangal Prabhat Lodha besides biggies like Tata Motors, ICICI Bank, Vodafone-
Idea and many others have been downgraded by credit rating agencies in the last
e

eight months on the back of weakening financial performance and rising debt levels.
rs

The mightiest in their sectors, IL&FS and Dewan Housing Finance, are now
a pale shadow of their peak avatars; Subhash Chandra’s Essel Group has been so
far unsuccessful in lowering its debt levels and Jet Airways, once India’s largest
commercial passenger airline, is history. And that’s just in the key sectors like tele-
com, auto, aviation and real estate. “Rating downgrades for large companies are
a precursor to what could happen to smaller companies. Smaller players will find

September 22 I 2019 I BUSINESS TODAY I 37

 COVER STORY / CORPORATE DEBT
REAL ESTATE
Drying up of liquidity
for project completion
High levels of
developer debt
T
Stagnant sales as well
as property prices
w

Unsold inventory at
40 months
w

INFRASTRUCTURE
w

Lack of financing by banks

Thermal power projects
.t.

stranded due to lack of

fuel supply or long-term
purchase contracts from
m

AUTO
government
Switch to BS VI
from April 1, 2020 Inconsistent policy
e/

and regulation
Customers TELECOM
waiting for EVs Industry debt of over
Ta

Inadequate `7.7 lakh crore in FY18

financing for Revenues in FY19 are
dealerships and one-fourth of FY13 levels
customers due to
m

liquidity crunch Levies on the sector among

the highest in the world
ilP
D

credit availability getting tightened and they will be under McKinsey also believes that financial stress is build-
F_

intense scrutiny by lenders. This will only make the go- ing in India, along with the rest of Asia, with increased
ing tougher at a time when liquidity is not easy to come indebtedness, stress in repaying loans, lender vulnerabili-
by,” says Dhananjay Sinha, Head of Strategy Research and ties and shadow banking practices being areas of concern.
En

Chief Economist, IDFC Securities.
Not surprisingly, while the operating income of cor-
porate India increased only 7.6 per cent year-on-year in
2018/19, its interest expenses went up by 12 per cent. This
The value of debt in India, issued by companies with an
interest coverage ratio of less than 1.5, has increased from
$18 billion in 2007 to $27 billion, creating an alarming
situation, it says.
ew

indicates that the ability of companies to service debt is

not growing as fast as its leverage levels. COST OF MONEY
In the common sample of companies Magnifying the trend is the fact that banks are not able
sp

from BSE 500, BSE Mid-cap Index to pass on the benefits of the RBI’s rate cuts to borrowers.
and BSE Small Cap Index (excluding
banks, NBFCs, MNCs and FMCG
250
basis points
While the central bank has cut the repo rate by 2.6 per cent
since 2014, India’s largest bank, SBI, has reduced its float-
ap

companies), debt went up 10 per cent ing rate by only 1.1 per cent. This is also because house-
while net profit grew only 3.8 per cent. Spike in cost hold savings have been declining, non-performing assets
The overall debt of these 800 of capital for (NPAs) are rising and there is severe liquidity crunch. Bor-
companies in
companies increased from `24.5 lakh rowing costs and deposit rates are not linked to the repo
e

one year
crore in 2013/14 to `32.03 lakh crore rate today and so any bank’s ability to transfer the repo
rs

in 2018/19, a rise of 30 per cent in five
years. During the same time, net profit
of these companies increased a meagre 10 per cent from
`2.44 lakh crore to `2.69 lakh crore.
“It is not that this rising debt is going into capacity ex-
pansion. Debt has been inherited and it is now increasing
to meet working capital requirements due to slow profit
growth in the last few years,” Sinha says.
rate cut to borrowers is limited,” says Amit Goenka, Man-
aging Director and Chief Executive Officer, Nisus Finance
Services. Further, banks are required to keep liquidity re-
serves and provision for NPAs, which are still erupting as
cost of capital is much higher than the repo rate.
Moreover, in the current scenario of demand for li-
quidity outstripping supply, there is no incentive for
banks to lend at repo rates. “Borrowers in auto, infra-

38 I BUSINESS TODAY I September 22 I 2019

 2015 2016 2017 2018 2019
YoY Change

24.6
(%) year, they are lagging both interest payments (rise of 12 per
cent) and tax payments (rise of 20 per cent).
In real estate, sales grew only 1.28 times between
2009 and 2018 to `2.06 lakh crore. But the sector’s over-

17
all debt increased 3.33 times during the period to over `4
14.6

lakh crore. Developers continued to buy land at exorbitant

11.8
rates, expecting continued boom. “Land prices have in-
10.7

10.2
w

11
creased 10 times in the last 14 years. Developers took debt

9.7
8.7

to buy land, but since sales have remained abysmal, they

w
7

5.7
are finding it difficult to meet their debt obligations,” says

5.3
5.2

4.5

3.8
Pankaj Kapoor, Founder and Managing Director at real
w

estate consultancy Liases Foras.

1.7

0.9

The story is worse for the telecom industry, where ad-

justed gross revenues stood at `1.45 lakh crore in 2018/19
.t.

(`1.88 lakh crore in 2015/16). The sector is sitting over a

debt of `8 lakh crore. The monthly average revenue per
-4.2
-5.5
m

user (ARPU) from wireless services was just `71.39 in

the March 2019 quarter, less than a fifth of what it was
e/

in 2005: `374.
RISING STRESS It all began with the high spectrum charges that oper-
Debt and interest payments
ators paid during 3G auctions in 2010 – around `70,000
Ta

grew much more than net

profit in 2019 crore. Then there was network layout and expansion.
Subsequent spectrum auctions, implementation of newer
Source: Common sample of companies technologies and cut-throat competition following the en-
m

from BSE 500, BSE Mid-Cap and BSE

-22.4

Small Cap Index excluding banks, try of Reliance Jio in 2016 compounded the problem.
NBFCs, MNCs, IT and FMCG companies Moody’s cut Bharti Airtel’s rating to ‘junk’ in February
while both CARE Ratings and CRISIL have downgraded
ilP

Net Sales Net Profit Interest Total Debt

Vodafone-Idea.
D

structure and realty (sectors) are willing to pay higher

F_

cost of capital to secure credit. And given that NBFCs

and housing finance companies are also willing to pay a
higher cost, banks don’t feel the need to push lower-cost
En

capital,” says Goenka.

On an average, the cost of capital has gone up 250
basis points (bps) for companies in one year and 400 bps
for realty commercial loans.
ew

Thomas John Muthoot, CMD, Muthoot Pappachan

PHOTOGRAPH BY RACHIT GOSWAMI

Group, says his company’s cost of funding has gone up by

100 bps in the last one year, pushing up interest charg-
sp

es and pulling down growth. “For the last nine months,

things have been tough. Banks have not been lending. So,
our growth has been impacted. Last year, we were grow-
ap

ing at 2 per cent every month and were expecting 25 per

cent growth, but in November, we were forced to conserve
cash. Overall, we grew only 16 per cent in 2018/19,” he
says. The company has been “bearing the brunt for al-
e

most 12 months” and it was time banks resumed lending "RATING DOWNGRADES FOR LARGE
rs

after the announcement of the fiscal stimulus package by COMPANIES ARE A PRECURSOR
the government, Muthoot adds. TO WHAT COULD HAPPEN TO
SMALLER COMPANIES"
FALL SEASON
DHANANJAY SINHA
The rising corporate debt and interest outgo have been Head of Strategy Research and Chief
coupled with slow growth in profits due to declining sales Economist, IDFC Securities
across sectors. Net profits fell 4.2 per cent in 2017/18 and
while they bounced back with 3.8 per cent growth the next

September 22 I 2019 I BUSINESS TODAY I 39

 COVER STORY / CORPORATE DEBT

In the steel industry, a global slump is pushing more

and more companies towards the Insolvency and Bank-
ruptcy Code (IBC). Lower demand from China and glob-
al protectionist measures have led to fall in steel prices.
w

Moreover, the sector’s working capital cycle is stretched

due to delayed payments and banks’ liquidity crunch.
w

As of now, the steel sector’s outstanding credit stands at

`2.82 lakh crore.
w

“In the current and next fiscal, we expect the steel sec-
tor’s profitability to be under pressure in the wake of price
or realisation downtrend and rising iron ore costs. Profits
.t.

will be squeezed more for non-integrated players, which

PHOTOGRAPH BY VIVAN MEHRA

constitute three-fourth of the steel capacity,” says Hetal
m

Gandhi, Director, Crisil Research, adding that the profit-

ability downtrend “will have some bearing on the sector’s
e/

debt prospects.”
In line with the slump everywhere, the overall auto sales
too contracted 19 per cent year-on-year in July 2019, the
Ta

worst since April 2001. Sales of commercial vehicles, an

important indicator of economic activity, were down 25.71
per cent to 56,866 units, while for passenger vehicles, the
m

decline was 31 per cent to 2,00,790 units. “This is the worst "THIS IS THE WORST YEAR WE
year we have had in the last many decades. We have reached (AUTO SECTOR) HAVE HAD IN
the bottom,” says R.C. Bhargava, Chairman of Maruti Su- THE LAST MANY DECADES.
ilP

zuki, India’s largest automobile manufacturer. WE HAVE REACHED

For the auto sector, the factors that led to the slow- THE BOTTOM"
down are structural (push for electric vehicles, implemen-
D

tation of Bharat Stage VI or BS-VI emission norms from R.C. BHARGAVA

2020) and transient (rising cost of ownership), besides the Chairman, Maruti Suzuki
F_

overall gloom due to increased job losses and reduced in-

comes.
“Unfortunately, all the causes have come together in
En

one year,” says Bhargava, who is hopeful that the govern-

ment’s stimulus package will bring the sector back on Kumar, the ongoing financial crisis in India is “unprec-
track in the next couple of quarters. edented in the last 70 years”. He said the entire econom-
In infrastructure, the power sec- ic situation had changed after implementation of initia-
ew

tor is among the worst off. Power tives like demonetisation, GST and IBC, a view echoed by
Secretary S.C. Garg puts the over- many others.
all stressed portfolio at around `4
19
sp

lakh crore. CRISIS OF CONFIDENCE

per cent
While power is a capital inten- Niranjan Hiranandani, Co-founder and Managing Di-
sive sector, many entities are not Fall in year-on- rector, Hiranandani Group, and President of the Na-
year overall
ap

able to realise payments fully and tional Real Estate Development Council (Naredco), says
on time due to various concession auto sales the Indian economy is facing challenging times with re-
(July 2019)
agreements with consumers, ex- duced consumption and liquidity crisis, underscoring
plains Goenka of Nisus “The effi- an urgent need for solutions. “The set of ‘tsunamis’ that
e

ciency of these assets is very low and impacted real estate began with demonetisation, which
rs

they are not able to generate sufficient returns on capital.
Slow conversion of assets to cash leads to higher debts.”
Fall in per unit prices of alternative sources like hydro
and solar power in the last few quarters has made them
attractive, further affecting the profitability of fuel-based
power plants where “input prices have gone up without cor-
responding rise in output prices,” adds Goenka.
In the words of NITI Aayog Vice-Chairman Rajiv
sucked out liquidity from the system. And while intro-
duction of RERA, or the Real Estate (Regulation and
Development) Act, impacted real estate at various lev-
els, what hurt the most was the norm to keep 70 per cent
of a project’s funds in an escrow account,” he says. This
resulted in project funds getting blocked. Over 1,74,000
homes in 220 projects are stalled in the top seven cities
across India as developers don’t have funds to complete

40 I BUSINESS TODAY I September 22 I 2019

 or even cancellation of mine leases, they have become cau-
tious regarding lending to the sector. “Given the current
liquidity scenario, they don’t want to lend to infrastruc-
ture. And unfortunately, the NBFC problem has gone into
w

a tailspin and is getting more and more entangled. The

entire liquidity in the system has been squeezed – first by
w

banks and then by the NBFC crisis,” he says.

w

FUTURE TENSE
If the issues are not addressed and companies are not able
to raise profits even though their debt is increasing, there
.t.

could be a rise in NPAs, warns IDFC Securities’ Sinha.

PHOTOGRAPH BY SHEKHAR GHOSH

“The debt servicing capabilities of companies will dimin-
m

ish and their ability to invest in fixed assets will continue

to languish. So any ability to kick-start investment will be
e/

impaired, resulting in a vicious cycle,” he says.

A McKinsey report points out: “The large share of
stressed utilities in India and Indonesia is particularly
Ta

troublesome because their ability to turn around per-

formance and repay the debt requires working across
multiple stakeholders – regulators, consumers, local and
m

"THE GOVERNMENT MUST SUPPORT national governments, and the companies themselves –
THE CREATION OF A BOND MARKET FOR making recovery much more complicated for this sector.”
ADDITIONAL FUNDING AND INTRODUCE Kanoria of Srei Infra Finance says there is an urgent
ilP

CORPORATE BONDS, SOVEREIGN BONDS need to channelise liquidity in the right manner. “That can
AND ECBs" happen only when confidence comes back. People have
money, but prefer to sit over deposits in the current eco-
D

NIRANJAN HIRANANDANI nomic environment,” he says.

Co-founder and MD, Hiranandani Group With a shallow corporate bond market in India,
F_

NBFCs and housing finance companies continue to give

long-term loans against short-term funding. Due to their
dependence on wholesale funding, any failure to make
En

payments when debt instruments come up for redemp-

them. It will take over 40 months to liquidate the cur- tion can trigger a crisis. “The government must support
rent unsold inventory across the country. the creation of a bond market for additional funding and
“While banks went slow on lending to real estate, introduce corporate bonds, sovereign bonds and ECBs (ex-
ew

NBFCs were impacted by the IL&FS crisis last year. Now, ternal commercial borrowing),” says Hiranandani.
DHFL has impacted the finance market sentiment. This While Finance Minister Nirmala Sitharaman has
has resulted in the funding funnel getting choked,” says announced the government’s intent to deepen the bond
sp

Hiranandani. market, no concrete measures have been undertaken

In early August, Moody’s Investors Service down- so far. On its part, on August 23, the government an-
graded the corporate family rating of Macrotech Devel- nounced measures to ease liquidity constraints, with a
ap

opers (earlier Lodha Developers, the largest player in the
residential real estate by sales) to B3 from B2, with a nega-
tive outlook. In July, rating agency ICRA downgraded the
long-term rating of `350-crore non-convertible deben-
focus on the worst-hit sectors. Sitharaman announced
additional liquidity support of `30,000 crore for housing
finance companies, `70,000 crore for PSB recapitalisa-
tion, and loan restructuring for MSMEs, besides a host
e

tures of Piramal Realty, driven by the deterioration in the of other measures.

rs

operating environment owing to tight liquidity that may
diminish the ability of holding companies to raise funds.
The rating downgrade story is common across sec-
tors in India Inc, and infrastructure has not remained
unscathed by this adverse liquidity scenario. Hemant
Kanoria, Chairman of Kolkata-based Srei Infrastructure
Finance, says that in the last five years, since banks have
lost money due to NPA provisioning, regulatory changes
However, the success of these measures will depend
on speed of implementation. Almost two months after the
Budget, most of the proposals announced remain only on
paper. If corrective measures are implemented speedily, it
may help defuse the debt bomb that threatens India Inc.
Otherwise, the mighty in India Inc may continue to fall.
@RashmiPratap3

September 22 I 2019 I BUSINESS TODAY I 41

w

COVER STORY / HOUSEHOLD DEBT

w

BALLOONING
w
.t.

DANGER
m
e/

In a weakening
economy, rising
Ta

indebtedness could
cause problems.
m

BY ANAND ADHIKARI
ilP
D
F_
En

T
ew

he global financial meltdown of 2008 was brought on by a choppy

sp

U.S. mortgage market. Part of the crisis was triggered by high household
debt besides lending to borrowers with not-so-good credit history. The
world’s largest economy saw its household debt steadily rise to nearly 100
ap

per cent of GDP at the time of the crisis from 65 per cent a decade ago.
That was a massive jump in a matter of 10 years as the money had rolled
into mortgages, car loans, credit cards, personal loans and more. Even-
tually, the easy money induced the crisis and other markets suffered as
e

well. India’s household debt to GDP currently stands at 11.67 per cent,
rs

which is quite low compared to developed countries like the US. But debt
levels are also rising here – household debt was in the range of 8-9 per
cent of the GDP six years ago (see graphic Ballooning Danger).
71.6%
One-year increase
Shanti Ekambaram, President, Consumer Banking, at Kotak Ma-
hindra Bank, has a point to make. As India is a low per-capita-income
in bank advances to
households (2017/18) country compared to developed nations, Indian households are more
prone to shock due to lower income levels. As per the data available, an-
nual per-capita income stands at `1.42 lakh against the debt of `16,945
w
w
w
.t.
m
e/
Ta
m
ilP
per person. “The debt levels are not alarming, but you
have to analyse the loan segments. It could be alarming
at lower-income segments but not necessarily at per-
capita income levels,” she says.
Already there is a new institutional infrastructure
in place, including small finance banks (SFBs), full-
scale banks like Bandhan Bank, microfinance insti-
tutions or MFIs, fintech companies and peer-to-peer
(P2P) platforms, lending money to the underbanked
and the underserved segments. Large-scale digitisa-
tion also provides easy access to credit, much like what
happened in the US. But all these may not augur well
in the long run. Experts think India’s household debt
could become a big burden if job losses happen (un-
employment has risen to a 45-year high) and people’s
income fails to increase. Even now, the economy is wit-
nessing a cyclical and structural shift due to business
D
F_
En
ew
disruptions, slowdown and the possibility of a global
sp
recession. “There are weaknesses in the economy and
income levels are not rising fast enough,” says Madan
Sabnavis, an economist at Mumbai-based CARE Rat-
ap
ings. Given this scenario, the rising household debt has
implications for the economy as it will impact house-
holds, banks and financial systems and also reduce net
financial savings.
e
rs
RISE OF THE EMI CULTURE
The debt level can move up rapidly if Indian youths
start spending like their Western counterparts. The
demographics are favourable as more youngsters are
joining the workforce every day. And unlike the previ-
ous generations of careful savers, they are not credit-
averse. “Savings, investment and spending patterns
change whenever a new generation comes in,” says
 LOADED WITH RISK
Household debt has jumped in the past few
COVER STORY / HOUSEHOLD DEBT years, and slowdown and unemployment
could amplify the problem

Outstanding Household 22.20*

Deepak Chellani, Head of Third Party Products at Mum- Debt (in ` lakh crore)
bai-based stock-broking firm Prabhudas Lilladher. Tra- 18.63
ditionally, mortgages or housing loans dominated this % of GDP
space. This trend still continues, but new segments are 15.51
also gaining traction. Personal loans, consumer-durable 13.35
w

financing and credit card transactions are on the rise (see 11.43 10.9 11.67
graphic Red Flags). 10.16 9.7 10.1
w

“Most of these new segments are about short-term

9.05 9.17
debts,” says Hrushikesh Mehta, Country Manager at
w

ClearScore, a UK-based free credit-checking service pro-

vider. According to him, growing access to credit and a
new EMI culture for purchasing consumer durables and
.t.

credit card payments are fuelling the debt culture in In-

2013/14 2015/16 2018/19
dia. Personal loans are now extending to areas like for-
m

eign travel, wedding and also for repaying old loans. *Estimated. Data is based on banks’ outstanding
retail loans; Source: RBI and Economic Survey
“The problem gets compounded in recessionary times
e/

when job losses are more frequent and purchasing power

gets curtailed drastically,” says Abhinav Angirish, Found-
er of Investonline.in, an investment portal. From the debt
RED FLAGS
Ta

perspective, defaults will first surface in the personal loan

Mortgages dominate household debt, and
and credit card space, followed by secured car and auto
share of unsecured loans is on the rise
loans. Home loans are the last to be impacted.
m

Credit cards Others

3.97% 7.37%
MORE TRIGGERS
The loss of growth in corporate banking segment due
ilP

Vehicle
to over-leveraging and asset quality deterioration has loans
been compensated by retail growth in terms of mort- 9.10% Housing
gages, personal loans and credit cards. “While banks are loans
D

52.24%
consolidating their positions in Tier-I and Tier-II cities, Personal
non-banking financial institutions such as MFIs are go- loans
F_

ing deep into Tier-III and Tier-IV cities,” says Ashish
Singhal, Managing Director at Mumbai-based Experian
Credit Information Company. Consequently, some pri-
En
27.32%
Others includes advances against deposits, shares and
bonds, education loans and loans for consumer durables
Source: RBI Sectoral Report, March 2019

vate banks have seen their share of unsecured loans rise

to 10-15 per cent of total book value. Then there are non-
banking financial companies (NBFCs) where unsecured
loans account for more than 50 per cent of the loan book.
ew

The P2P model is also based on the unsecured loan. “The sumption rate is also increasing, especially led by consum-
share of unsecured loan is moving up steadily. These er durables and two-wheelers,” he adds.
loans are mostly for consumption purposes,” says Arun The rising household debt not only impacts net finan-
sp

Singh, Chief Economist at Dun and Bradstreet. cial savings but also affects consumption in the long run as
The government is also encouraging banks, especially disposable income eventually gets depleted. In fact, there
public-sector banks, to provide collateral-free loans. The is a cascading effect when a household starts cutting back
ap

Mudra loans (provided under the Pradhan Mantri MU-
DRA Yojana, or PMMY, to non-farming and non-corpo-
rate micro and small enterprises) of less than `50,000 are
mostly given to the self-employed. However, these loans
on discretionary spending. A recent example is the auto-
mobile sector where the falling growth would have seri-
ous implications for steel, tyre, auto ancillary and a host
of other industry segments. “In such cases, the real cost of
e

are witnessing high delinquencies, and loans against prop- stimulating the economy rises significantly,” says Angirish
rs

erty are also facing stress. Incidentally, the entire Mudra
loan exposure is around `8 lakh crore.
FALLING SAVINGS RATE
India’s household savings rate is consistently falling over
the years, every year. This is not surprising, though, as
“India is shifting from a savings economy to a borrow-
ing economy”, says Singhal of Experian. “Household con-
of Investonline.in. A recent study by the Bank of Interna-
tional Settlements (BIS) also pointed out that debt boosts
consumption and GDP growth in the short run, but the
long-term negative effects of debt eventually outweigh its
short-term positive effects. And the household debt ulti-
mately proves to be a drag on growth.
@anandadhikari

44 I BUSINESS TODAY I September 22 I 2019

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w
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POLICY
50
w

FIXING THE SLOWDOWN

.t.
m

The finance minister has announced a

e/

mini-stimulus package to arrest the economic slowdown. But

Ta

the economy needs much more than piecemeal solutions

m

56
ilP

CORPORATE
D

BATTLE FOR
MUMBAI AIRPORT
F_

GVK is trying to retain its hold

on its crown jewel, the Mumbai
International Airport, even as
En

the Adani Group eyes a stake

in it. The battle has just begun
ew

76
sp

62
INTERVIEW
AUTOMOBILES
ap

“India could
Plugging establish itself
e

into the as a leader

rs

Future for the region

The onset of electric in energy
vehicles in India has opened
up a billion-dollar industry
storage”
in EV charging that is ANDRÉS GLUSKI
attracting companies from
diverse sectors

FIXING THE
w
w
w
SLOWDOWN
.t.
m
e/
Ta
The Finance Minister has announced a
mini-stimulus package to arrest the
economic slowdown. But the economy
needs much more than piecemeal solutions
T
HE LAST WEEK OF August has
witnessed a series of economic
stimulus announcements by the
Narendra Modi government,
which seems to have finally ac-
cepted that the economy is in
serious trouble. On August 23,
Finance Minister Nirmala Sith-
araman announced the first shot
of the stimulus package with an
upfront disbursement of `70,000
crore to recapitalise banks, a set of
administrative measures to speed
up GST refunds and reduce med-
dling of tax authorities.
Five days later, Commerce
50 I BUSINESS TODAY I September 22 I 2019
THE HUB POLICY
m
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By JOE C. MATHEW
PHOTOGRAPH BY K. ASIF
D
F_
En
ew
sp
Minister Piyush Goyal and En-
vironment Minister Prakash
Javadekar jointly revealed what
ap
they claimed to be the next dose
– tweaks in FDI rules to attract
more investment into India.
On August 30, Sitharaman an-
e
nounced the mega merger of 10
rs
public sector banks into four large
entities. Punjab National Bank
will merge with Oriental Bank of
Commerce and United Bank to
form India’s second largest bank.
Canara Bank and Syndicate Bank
will merge to form the fourth larg-
est bank. Union Bank of India will
w
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m
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D
F_
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Dribs and
Drabs: FM
Nirmala
Sitharaman
ew

announced
measures on
GST, bank
mergers,
sp

auto sector,
and more
ap

70,000 4
e rs

`
CRORE MEGA PUBLIC SECTOR BANKS
Upfront disbursement to Ten PSBs have been merged to
recapitalise banks increase efficiency

September 22 I 2019 I BUSINESS TODAY I 51

 STIMULUS & OBJECTIVE
POLICY > ECONOMY

merge with Andhra Bank and Corporation Bank

to form the fifth largest bank. Finally, Indian
Ease for Tax Payers MSME Help
Bank will be merged with Allahabad Bank. Amendment to the
Pre-filled IT returns; faceless scru-
In between, the Reserve Bank of India (RBI) tiny from Vijaya Dashmi (October MSME Act to move
strengthened the government’s ability to front- 8); reduction in GST returns and towards single
simplification of forms; simplified definition; TReDS will
load public expenditure by handing over `1.76 GST refund process; risk-based be allowed to use
w

lakh crore as dividends and transfer of surplus approach in dealing with taxpayers; the GSTN system in
CSR violations will not to be treated the medium term to
reserves. If Sitharaman’s words are to be be- as a criminal offence enhance market for
w

lieved, this is just part of an ongoing endeavour bill discounting for

OBJECTIVE MSMEs; all pend-
to achieve high economic growth. The declin- Addressing negative sentiment ing GST refunds to
w

ing growth in India’s GDP explains the rationale MSMEs will be paid
within 30 days. In
behind the government move. India’s economic future, GST refunds
growth has been sliding since four quarters. The
.t.

shall be paid within

Q1 FY20 GDP growth at 5 per cent, the lowest in 60 days from the
date of application
seven years, is yet another signal to that end.
m

The signs of trouble which warranted these OBJECTIVE

Taxation Measures Help MSMEs get
stimulus measures have been visible for some Relief from enhanced sur- back on their feet
e/

time. Automobile sales have been declining charge on long-term/short-

month after month for almost a year. Merchan- term capital gains; withdrawal
of angel tax provisions for
dise exports growth was more of an aberration as start-ups and their investors
Ta

it remained muted or negative for several years.

OBJECTIVE
Almost every industrial sector, including biscuit Encourage investment in
manufacturers who cater to mass market brands, capital markets and mitigate Infra & Housing
Proposal to establish an
m

genuine difficulties of start-

had begun to complain of lower sales, and possible ups and their investors organisation to provide
job cuts. Even Bharatiya Mazdoor Sangh (BMS), credit enhancement for
infrastructure and hous-
the trade union affiliate of the RSS, had openly
ilP

ing projects; further

expressed concerns over job losses. The Northern action on develop-
ment of Credit Default
India Textile Mill Association inserted advertise- Auto Push Swap markets soon, in
ments in mainline dailies a couple of days before BS IV vehicles can be consultation with RBI
D

Sitharaman’s stimulus package, pointing out the purchased till March 31, and SEBI
2020; revision of one-
job losses the industry has been facing. time registration fee; OBJECTIVE
F_

The stimulus package was the first public ac- higher depreciation for Will deepen bond
all vehicles; both EVs and markets
knowledgement by the Narendra Modi govern- ICVs will continue to be
ment of the severity of the economic crisis. Now registered; the govern-
En

ment will lift the ban on

that the illness has been diagnosed, medicines purchase of new vehicles
prescribed, and treatment begun, will it provide for replacing old vehicles
a complete cure? Or is it going to be just a symp- by its departments
tomatic relief? OBJECTIVE
ew

Eliminate uncertainties in
the automobile sector and
Positive Moves boost demand
The initial response to the stimulus has been
Credit Crisis
Upfront release of `70,000
crore capital to PSBs; additional
lending and liquidity to the tune
of `5 Lakh crore; banks to effect
sp

positive, particularly from the automobile indus- timely rate cuts and launch
repo rate/external benchmark-
try which was among the worst hit. “We welcome linked loan products; and
the government’s measures to boost the economy ensure return of loan docu-
ments within 15 days of loan
ap

and the automobile sector in particular. We are closure; more credit support for
optimistic that this move will boost customer Welcoming Foreign purchase of houses, vehicles,
sentiment in the current market scenario and en- Funds consumer goods. Decisions
Easing of FDI norms on recommendations such as
courage customer acquisition of cars in the com-
e

for several sectors. on ease of credit, marketing,

ing festival season,” says S.S. Kim, MD and CEO, These include rules for technology, delayed payments,
etc, within 30 days
rs

Hyundai Motor India. overseas single-brand

stores and FDI through
Others also consider this a positive move. the automatic route in OBJECTIVE
contract manufactur- Will benefit corporates, retail
“The slowdown in the automobile sector was borrowers, MSMEs, small
ing and all areas of
because of three broad reasons – poor senti- coal mining traders, etc. Working capital
ment, availability of finance and transaction loans for industry will become
OBJECTIVE cheaper
cost for buying vehicles. The announcement will Push investments
go a long way in improving sentiment because in India
it shows the government is listening to the in-
 dustry. Financing concerns have been
more or less taken care of by the an-
nouncements,” says Pawan Kumar
Goenka, MD, Mahindra & Mahindra.
He adds that though not much was
done for reducing transaction costs,
w
there were several measures that will
incentivise vehicle purchase.
w
Rajiv Kumar, Vice-chairman of
government think-tank NITI Aayog
w
considers the stimulus package to be a
comprehensive package, while Rathin
Roy, member of the Prime Minister’s
.t.
Economic Advisory Council, believes
the minister has addressed several key
m
pain points.
Industry chambers, too, were sup-
e/
portive of the move. “There are some
specific directives in the stimulus
package which are good. A 30-day
Ta
deadline for GST refunds, recapitali-
sation of banks and plans to facilitate
long-term credit for infrastructure
projects belong to this category. The
government has also made many poli-
cy corrections, which should have been
abolished in the first stage itself,” says
K.E. Raghunathan, former President,
All India Manufacturers’ Organisa-
tion. According to him, the abolition of
angel tax, surcharge on capital gains,
and other measures can do a lot of
damage control.
Sitharaman categorised the ini-
tiatives announced into some broad
themes. The first round of stimulus
focussed on decriminalisation and re-
ALL-ROUND STRESS
12
WHOLESALE
GDP GROWTH (%)
10 PRICE
INDEX (%)
8
6.45
4 DEFICIT
5 INTEREST
3.81
2 (% OF GDP)
0
Jun-13 Jun-19 Jun-13
-2
-4
-6
WHAT MORE NEEDS TO
BE DONE
Time-bound implementation
of measures announced in the
stimulus package
Coverage of ailing sectors like
real estate and exports in the
next round of stimulus
Refining the GST regime
Faster reforms in
agriculture
Rationalisation of direct taxes
duction in harassment especially by
law enforcers; encouraging enterprise
and investment; supporting banking,
m
credit, NBFCs, MSMEs, capital flows
and financial markets; and the auto-
motive sector. She said the government
ilP
will continue to calibrate responses in
sync with stakeholder response. NITI
Aayog’s Kumar believes next in line to
D
get special treatment could be real es-
tate, exports and tourism.
F_
Cause and Effect
The stock markets have responded
En
positively but the measures announced
may not be enough to sustain its mo-
mentum. “Finance Minister Nirmala
GDP growth has fallen steeply; other parameters
also hint at economic slowdown
10.25
GROSS
CURRENT
FISCAL
ACCOUNT
(% OF GDP)
2.68
Jun-19 Jun-13 Jun-13
-1.12
Mar-19
-4.74
September 22 I 2019 I BUSINESS TODAY I 53
Sitharaman announced a slew of mea-
sures to revive the economy... However,
these measures are likely to support
growth only in the medium term. The
announcements address cyclical prob-
lems and not structural problems fac-
ing the economy. What she has done
is reversed a couple of announcements
made in the Budget, and those won’t
help much in reviving the economy,”
says Sunil Kumar Sinha, Principal
Economist and Director-Public Fi-
nance, India Ratings and Research.
India Ratings has revised India’s
2019/20 GDP growth downwards to
6.7 per cent (a six-year low) from its
earlier forecast of 7.3 per cent. The
agency expects FY20 to be the third
consecutive year of subdued growth
pushed by a slowdown in consumption
demand, delayed and uneven prog-
ress of the monsoon so far, decline in
manufacturing growth, inability of
the Insolvency and Bankruptcy Code
to resolve cases in a time-bound man-
ner, and rising global trade tension ad-
versely impacting exports.
Arvind Virmani, Chairman, Foun-
dation For Economic Growth & Wel-
fare, and a former Chief Economic
Advisor to the government of India,
says solutions to tackle problems are
not easy because “reasons are largely
structural, relating either to policies
that have outlived their utility, collat-
eral damage from policies that may
have served some purpose, or just plain
ew
sp
ap
e
7.44
6.88
rs
G-SEC
DEFICIT
RATES (%)
Jun-13 Jun-19
-0.65
Mar-19 Source: Mospi, RBI,
Ministry of Commerce
 POLICY > ECONOMY

What will be the impact of
the stimulus package?
It’s a very comprehensive
package and will boost
investor confidence. As
the Prime Minister said
w
support to NBFCs.
The FM said there will be
more measures. What
could be the priority?
The Prime Minister had
sectors have a huge multi-
plier effect and will get India
back to the growth track.
FY20 may be a bit weak,
but all of these measures
are preparation for a better

on August 15, we want to talked about the need to growth rate in the coming
recognise the contribution promote exports, so that years. It is definitely possi-
of the private sector. This is could be one area of focus. ble to look at 8 per cent-
w

what the package has man- When the domestic demand plus (GDP) growth.
aged to signal strongly. We is weakening, the best way
know that growth of bank is to take advantage of How do you see RBI’s deci-
w

credit has been declining, external demand. For tour- sion to transfer ` 1.76 lakh
especially in exports. A ism, also, maybe there will crore to the government?
lot of this was because of be a package. We get about It’s a big fiscal help. You
.t.

the non-performing assets
(NPAs). The recapitalisa-
RAJIV tion of banks, by infusing
`70,000 crore upfront, will
m
10 million foreign tourists; have seen that bond yields
China gets 50 million. Given have already declined be-
our history, geography, cause they now know that

KUMAR archaeology, there is huge the government pressure

help them provide growth scope (for growth in tour- will be less.
Vice equity. The package also ism). There could be focus See full interview on
Chairman, provides additional liquidity on real estate too. All these www.businesstoday.in
e/

NITI Aayog
Ta

The RBI bonanza also cannot outward flow of foreign investments.

make a major difference in the spend- That was precisely the reason why gov-
m

ing pattern of the government, though ernment expenditure increased by just

bad policies.” The most fundamental it brings in some certainty that budget- two per cent during April-June 2019.
underlying reasons, he says, are the ed expenditure plans, especially on in- The RBI report says that reviving
ilP

collateral damage from “black money frastructure, will not get scuttled due consumption and private investment
crusade (demonetisation)”, complex to lack of funds. “The surplus transfer has assumed the highest priority:
GST, and from tighter regulatory and is likely to provide some respite to the “This may involve strengthening bank-
D

reporting norms for banks and deposit Centre’s finances. But a major portion ing and non-banking sectors, a big
taking NBFCs. of this amount is likely to be utilised push for spending on infrastructure
F_

Virmani prescribes a focussed ap- in meeting revenue receipt shortfalls and implementation of much needed
proach towards central schemes, and emanating from weakening economic structural reforms in labour laws, tax-
introduction of the new Direct Tax conditions,” India Rating states. ation, and other legal reforms.”
En

Code with rationalisation of corporate
income tax to 25 per cent in the next
Budget and 20-22 per cent in the sub-
sequent three Budgets. He also calls for
RBI, which analysed prospects of
the economy in its just released Annu-
al Report 2018/19, states the key ques-
tion is whether we are dealing with a
The silver lining in the Indian
economy could be that India continues
to be the fastest growing major econ-
omy globally. This gives it an advan-
ew

further simplification of GST slabs. In- soft patch, a cyclical downswing, or a tage in attracting global investments.
centivising exports is another reform structural slowdown. “A cyclical down- “There is about $18 trillion of debt in
measure that he suggests. swing will warrant counter-cyclical ac- the world earning negative returns. So
sp

The relaxation of FDI norms, tions in terms of monetary and fiscal there is a lot of money out there that
however, may not have a far reaching policies, but a structural slowdown will could be attracted to India for high re-
impact. It targets mining and single- need deep seated reforms. The diagno- turns. The India story abroad remains
ap

brand retail. Even though 100 per cent
FDI was allowed in mining, the cur-
rent tweaks allow foreign investment
in almost the entire spectrum, includ-
sis is difficult, ” it said.
A time-bound implementation
plan for measures announced in the
stimulus package is critical, but more
very strong,” says Kumar.
The ability to fight this economic
slowdown may depend on the coun-
try’s ability to lock such foreign capital
e

ing commercial sales, unlike the earlier is needed. According to the CMIE, in- in long-term assets and job creation in-
rs

permission for mining for captive con-
sumption.
What will help global single-brand
majors like Apple or IKEA is that com-
pulsory local sourcing norms have been
watered down by bringing in contract
manufacturing under the umbrella of
activities eligible for sourcing set-off.
terest of corporates in fresh capacity
creation – which has already dropped –
is unlikely to kick-start until there are
clear signs of sustainable demand pick-
up. Without private capital, the gov-
ernment will be constrained to push
expenditure, as it has to be seen to be
fiscally disciplined to avoid any major
vestments in India.
Until then, all we can say is that
the last week of August 2019 saw Na-
rendra Modi begin a war on economic
ill health. But it’s too early to predict
the result.
@joecmathew

54 I BUSINESS TODAY I September 22 I 2019

 ers
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THE HUB CORPORATE

BATTLE
FOR
w

MUMBAI
w
w

AIRPORT
.t.

GVK is trying to
m

retain its hold on

e/

its crown jewel,

the Mumbai
Ta

International
Airport, even as the
Adani Group eyes a
m

stake in it. The battle

has just begun.
ilP

By E. KUMAR SHARMA
D
F_
En

GVK AND ADANI ARE BOTH BIG

names in infrastructure. Both symbolise
entrepreneurship spawned by the post-
1991 economic liberalisation. Yet, both are
ew

distinctly different. One broke the mould

as developer of the Mumbai International
Airport, and turned it into one of the best
sp

in the world but is cash-strapped now and

has been forced to restrain any expansion.
The other is also deep in debt and although
ap

new to the airport business, is driven by an

unmistakable ambition to make it big in the
business. Other than a big-bang entry early
this year into this space by winning bids to
e

operate six airports, the Adani Group also

rs

seems keen to have a say in the running of

the Mumbai International Airport (MIAL)
in which GVK has a 50.5 per cent stake.
The Adani Group has been in the news
for its private offer to South Africa’s Bidvest
Group, which holds a 13.5 per cent stake
and a board seat in MIAL, and is seek-
ing to buy Bidvest’s stake at `77 per share

56 I BUSINESS TODAY I September 22 I 2019

 MUMBAI
INTERNATIONAL
AIRPORT STAKE
BREAK-UP
w

GVK
w

50.5%
w
.t.
m

AIRPORTS
AUTHORITY OF
e/

INDIA
26%
Ta
m
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D
F_
En
ew
sp

SOUTH
AFRICA’S
BIDVEST
13.5%
ap

ACSA
10%
e
rs

September 22 I 2019 I BUSINESS TODAY I 57

 CORPORATE > MUMBAI AIRPORT

for around `1,200 crore. But GVK

is fighting tooth and nail — after all,
the airport business revenue of around
`3,700 crore, largely from this airport,
accounts for nearly 90 per cent revenue
of its listed entity, GVK Power & Infra-
w

structure. The group has moved court

for exercising its right of first refusal In January, the Adani Group
made an offer to buy the 23.5%
w

for the Bidvest stake and is arranging

stake held by the South African
funds to back its offer. companies, Bidvest and ACSA, Gautam Adani,
w

Adani’s move comes on the back at `77 per share totalling around Chairman,
of it emerging as the successful bidder `2,300 crore Adani Group
early this year for upgrading and oper-
.t.

ating six airports – Ahmedabad, Luc- ADANI'S AIRPORT

know, Jaipur, Guwahati, Mangalore ADVANCE...
m

and Thiruvananthapuram. Sources

say the group is keen to become the
e/

largest player in the country. Mumbai

is an important pit stop in this journey.
The Adani Group’s spokesperson It has set up a
Ta

In February, the Adani Group new company

refused to comment on the offer to won rights for six airport called Adani
Bidvest and the group’s plans for the projects — Ahmedabad, Airports Ltd
Mumbai airport. Lucknow, Jaipur, Guwahati, This made it the to manage
m

Thiruvanathapuram and third-largest private its airport

Mangalore airport operator in businesses
The Mumbai Advantage terms of passengers
What is the attraction of the Mumbai
ilP

handled, after the

airport? First is the volumes – 48.5 GMR and GVK groups
million passengers in 2017/18. This
is more than the total passengers at
D

all the six airports that Adani bid for

last year. India’s current total capac-
F_

SA
LE
ity is 317 million. CAPA estimates that
India will require a $36-45 billion
investment in around 55 airports by
En

2030 to create an additional 500-600 GVK filed an

million capacity. It is this growth that injunction in the
Delhi High Court to
Adani is betting on. block Bidvest from
Another major attraction of the selling its stake
ew

Mumbai airport is its 60-year conces- G.V. Krishna

sion period and regulated tariff struc- Reddy, Chairman,
ture. MIAL, which runs the airport, is GVK Group
sp

on the path to profitability and is see-

ing good growth in both non-aero and
...AND THE GVK It said it will
DEFENCE exercise its right of
cargo businesses. It reported a profit of first refusal to buy
`35.4 crore in 2017/18 compared to a Bidvest's stake
ap

loss of `89.7 crore in the previous year.

Gross sales rose from `3,025 crore to GVK may be ready
`3,342 crore during the period, ac- to pay Bidvest the
e

cording to Ace Equity data. same price it has been

offered
rs

But why go after a minority stake?

(`77 per share)
That too when the company has not It is trimming its debt
even started paying dividends? Ex- by getting additional
perts say that even this much owner- investments through,
some say, a private equity
ship will give the Adani Group a board investor to take up stake in
seat and a stake in the Navi Mumbai GVK Airport Holdings
airport, a 100 per cent subsidiary of
MIAL. The group could also gain from

58 I BUSINESS TODAY I September 22 I 2019

 the experience of operating a leading
airport, and would be able to hire tal-
ent from here for other airports.
Loose Grip
Adani Group’s focus on the Mumbai
w
airport has also perhaps got to do with
the financial health of GVK, whose as-
w
sets are stretched. In power alone, its
debt is around `12,000 crore (out of
the total group-level debt of `24,000
w
crore). The Mumbai airport is GVK’s
best bet to generate cash.
.t.
To retain its hold on the airport,
sources say, GVK is willing to pay Bid-
m
vest the same price it has been offered
(`77 per share) by Adani but needs
e/
time. In February, it informed stock
exchanges that GVK Airport Holdings
Ltd, a step-down subsidiary of GVK
Ta
Power & Infrastructure, has the right
of first refusal to acquire 162 million
equity shares of MIAL, constituting
m
13.5 per cent paid-up capital, from
Bidvest at `77 per share and subse-
quently raise the shareholding of the
GVK Group from 50.5 per cent to 64
per cent. GVK has sought time till the
end of September this year.
The company approached the Delhi
High Court for a full bench hearing
after a single-judge bench dismissed
its plea to stop Bidvest from selling to
a third party. BT has learnt that the
court has asked GVK and Bidvest to
settle the matter through arbitration.
GVK is working hard to look at
ways to prune debt and raise money.
One of the options being considered
is asking a private equity investor to
take up a substantial stake in the air-
port holding company. Sources say the
group is in talks with a financial inves-
tor. Names doing the rounds are ADIA
(Abu Dhabi Investment Authority),
NIIF (India’s National Investment and
Infrastructure Fund), and leading Ca-
nadian pension fund PSP. Much will
depend on the details of the deal and
the quantum of the investment.
With little to fall back upon in
terms of revenue from power, the GVK
Group has also been working to get its
stalled power projects restarted. The
Goindwal Sahib thermal power project
– the `5,000 crore project that it took
up in April 2016 and which faced chal-
September 22 I 2019 I BUSINESS TODAY I 59
WHY MUMBAI
AIRPORT IS
ATTRACTIVE
Passenger traffic - 48.5 million in
2017/18
60-year concession period
Trained and experienced
workforce
Not dividend paying but
turning around
Stake in MIAL gives automatic
stake in Navi Mumbai airport
ilP
FUND CRUNCH
D
Both GVK and Adani groups are
already under heavy debt
F_
GVK Group:
GVK Power’s debt is around
`12,000 crore. From the airports
business, about `9,000 crore.
En
from roads and others, around
`3,000 crore.
Total: About `24,000 crore
Adani Group:
`126,535
crore
Consolidated for Adani
Enterprises, Adani Gas, Adani
Green Energy, Adani Ports and
Special Economic Zone, Adani
Power and Adani Transmission.
As of March 2019.
Source: Ace Equity
lenges due to lack of coal availability –
started operating at full capacity from
December 2018. The group has set up a
team of nearly 25 people to ensure un-
interrupted supply of good quality coal
to the project. It had stopped bidding
for new projects after Goindwal Sahib
and took up the Navi Mumbai airport
project only recently. The other stalled
venture, the Alaknanda hydro power
project, is said to be operating at about
55 per cent capacity. Other than these,
GVK has several gas-based power
projects, which are constrained by lack
of gas availability. Sources told BT that
from the second quarter of 2020, Reli-
ance Industries and ONGC are likely
to supply gas and GVK intends for bid
for these then.
Empty Pockets
Adani Group, too, is stretched. It al-
ready has around `1.26 lakh crore con-
solidated debt and will need more as
it ventures into new areas of business
like airports, domestic gas distribu-
tion, power transmission, solar/wind
power, apart from pursuing coal min-
ing in Australia, a space that others,
including GVK, are seeking to exit as
coal prices dip. While it won rights for
six airports last year, those in the in-
dustry say it bid at such low levels that
it will take some years for the projects
to start reporting positive EBITDA.
In another development, just four
months after joining the group’s newly
formed airport business, its CEO, Sid-
harath Kapur, resigned. Kapur had
joined in the second half of April.
However, sources say the Adani
Group is confident of things improving
in the power sector with the Supreme
Court directing the Central Electric-
ity Regulatory Commission to listen
to Adani Power’s plea and allowing it
ew
fuel cost pass-through for the Mundra
power project that had turned unprof-
itable due to rise in prices of imported
sp
coal. The group expects more cash to
come in from the power business. Its
defence business has also started pick-
ap
ing up with projects like the one involv-
ing sale of drones (unmanned aerial
vehicles) to Israel. That apart, it is mov-
ing ahead with its Australia plans and
e
has started construction in Australian
rs
coal mines after receiving clearances
from the Australian government.
To what extent airports give the
Adani Group the next growth push
and how GVK tries to stay the course
remain to be seen.
@EKumarSharma
 ers
ap
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ew
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 THE HUB CORPORATE

PLUGGING
INTO THE
w

FUTURE
w
w
.t.

THE ONSET OF ELECTRIC VEHICLES IN

INDIA HAS OPENED UP A BILLION-DOLLAR
INDUSTRY IN EV CHARGING THAT IS
m

ATTRACTING COMPANIES FROM

DIVERSE SECTORS.
e/

By SUMANT BANERJI
Photographs by SHEKHAR GHOSH
Ta
m
ilP
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F_
En
ew
sp
ap

n the last few months, if there is First came the expansion of the Faster Adoption and
e

one sector that has benefited from Manufacturing Hybrid and Electric Vehicles (FAME)
rs

the largesse that policymakers can
sometimes bestow on industries, it is
the nascent electric vehicle (EV) in-
dustry in India. For long all that this
industry got from the government
was mere lip service even as the world
moved ahead and charted a course.
That has changed now.
Scheme, the umbrella policy to encourage electrifica-
tion of mobility in India, in March. The corpus of this
scheme was increased more than 10-fold to `10,000
crore for three years (fiscals 2020-22) from just `895
crore for four years (fiscals 2016-19) in its first edition.
Then, in her maiden Budget, Finance Minister Nirmala
Sitharaman announced a slew of incentives, including
income tax deduction on interest on loan on EVs, lower

62 I BUSINESS TODAY I September 22 I 2019


w
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w
.t.
m
e/
Ta
m
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import duty on many components, and
investment-linked income tax exemption
for setting up manufacturing facilities for
solar electric charging infrastructure and GST applicable on
lithium storage batteries. Another booster
dose came in the form of GST reduction on
EVs from 12 to 5 per cent on July 27.
While these incentives are expected to
expedite automakers into launching more
EVs in the country, this thrust on electrifi-
September 22 I 2019 I BUSINESS TODAY I 63
Delhi-based EV Motors plans to invest
`1,400 crore to set up 6,500 PlugNGo
charging stations in 15 cities in India
over the next five years
D
F_
En
ew
sp
ap
5%
cation has opened up a new business area
e
of EV charging infrastructure, which is at-
rs
tracting numerous companies from very
diverse backgrounds. The potential size of
all EVs. Earlier, this emerging business vertical is signifi-
this was
12 per cent cant. According to a McKinsey report, even
at a moderate rate of adoption wherein by
2030 about 11 million battery EVs would
account for a third of overall vehicle sales
in the country, India would need about five
 CORPORATE > ELECTRIC VEHICLES

million charging stations, entailing an investment to

the tune of $6 billion (about `42,000 crore) in setting
up that infrastructure.
With uncertainty on the policy front ebbing,
the list of companies that want a piece of the action
is growing. From oil majors like Indian Oil, Bharat
w

Petroleum and Hindustan Petroleum to power gen-

eration and distribution companies like NTPC and
w

Tata Power, ride hailing firms like Ola and Uber, the
obvious ones in battery and power solutions busi-
w

nesses like ABB, Exicom, Fortum or Delta, to a clutch

of start-ups like EV Motors, Sun Mobility or Lithion
Power and even a company like Indus Tower, which is
.t.

India’s largest mobile tower installation firm, the EV

dream has captured everybody’s imagination.
m

“Globally, there are two or three different set of

companies that are investing. The oil companies like
e/

Shell or BP are investing big time, trying to hedge their

risks in the future by investing in charging because
once electrification in transport takes off, it is their cus-
Ta

tomer that will shift from oil to electricity,” says Rajeev

Singh, Partner and Automotive Sector Leader, Deloitte
India. “Then there are power generation or distribution
m

equipment manufacturing companies – the ABBs, Sie-

mens and Schneider Electrics of the world – that are
keen. Plus, there are a host of start-ups as they see a
ilP

lot of opportunities. Some start-ups have already gone

through their first few cycles of investment to establish
credibility in the market. Some OEMs (original equip-
D

ment manufacturers, in this case carmakers) have also

now invested into them. We are likely to see something
F_

similar in India as well.”

Different Ways to One End We have not reached the

En

With a small number of moving parts and high mecha-

nisation, an EV may be easier to develop and produce
inflection point yet, but it will
compared to the vehicles of today that run on internal probably come in three-four
combustion engine (ICE), but the process of recharg- years. When it does, it will
ew

ing them promises to be more complicated. At least for be in huge numbers

some time, it will not be as easy as a five-minute stop Sanjay Aggarwal, MD, Fortum India
at a gas station.
sp

From slow AC (alternating current) chargers at

homes and offices that will require overnight charg-
ing, to relatively fast DC (direct current) chargers that
ap

take up to an hour or more to superchargers that may

take just a few minutes, there are many ways to re- hours, we won’t set up a fast charger. There we will set
charge the humble lithium ion battery that powers the up a 22 KW or a 7 KW charger, which is also more cost
EVs of today. The range of options also opens up many effective. The ratio would be something like two slow
e

business possibilities. chargers for every fast charger.”

rs

“We will plan the network in a manner that it has
a combination of all types of chargers,” says Sanjay
Aggarwal, Managing Director, Fortum India, which
is setting up India’s first 50 Kilowatt fast charger. “In
India, we will have 70-75 per cent public charging; the
rest will be home charging. In public charging, there
will be both AC and DC charging. In a shopping mall,
for example, where you are going to spend two-three
There are many combinations at present, “right
from the standards for the charging stations to the rev-
enue models. It is going to take a bit of time before it
settles in India,” agrees Singh of Deloitte. “It will be a
mix and not one-size-fits-all.”
“Technology like our Terra HP charger serves as a
future-proof solution that will support development
of next generation of EVs,” says C.P. Vyas, President,

64 I BUSINESS TODAY I September 22 I 2019

 Electrification Business, ABB In-
dia. “Capable of delivering 350 KW The Big company earns `300 (post-elec-
tricity costs). Its cost of equip-
power, it can add 200 km range to
an EV in a time frame not much
longer than refueling a traditional
Movers ment is `20 lakh. If 15 vehicles
are charged per day on one char-
ger, it comes to `1.35 lakh a
gas engine vehicle (eight minutes).” month, or about `18 lakh per year.
IT services firm Vakrangee
w

Another option is swapping bat- plans to set up charging “In a year or two, we will reach
teries. Chetan Maini, who gave In- stations across all its centres break even, depending on the
in India. It currently has over
w

dia its first electric car Reva almost number of vehicles. There will
3,500 centres and wants to
two decades ago, is moving in this expand to 75,000 by be some challenges in profitabil-
FY2022 and 3,00,000 by
w

direction. He believes this route ity because the number of vehicles

FY2025
solves three of the biggest handi- will be less and the need would be
caps of an EV – high cost, range to spread the network. But once
.t.

anxiety and long hours needed to EESL, which has set up over the scale comes in, it will become
300 charging points in the
charge batteries. country so far, plans to ramp much easier. `2/km when it is
m

“Even when battery costs are up to around 4,000 in the `6-7/km on petrol would be very
next three years
falling 8 per cent year on year, it attractive,” says Awadhesh Jha,
e/

still constitutes 30-50 per cent of Vice President, Fortum Charge

the cost of the vehicle. It is too high. Tata Power is planning to and Drive India.
install 500 EV charging
Then there is range anxiety, which outlets in five cities over the “There is no need for a single
Ta

is psychological as well as techni-
cal. The third challenge is long re-
fuelling; six-eight hours on regular
m
next one year. It currently has solution for everyone - charging
around 85 charging points
can be as ubiquitous as electrici-
ty for small vehicles. However, for

charging, one hour for fast charg- Chetan Maini’s Sun Mobility
has taken the lead in setting
ing. For consumers who are used up battery swapping stations.
to five minutes for anything, more It plans to increase manifold
ilP
heavy users and available battery
technology, battery swapping
innovations should be encour-

the number of such stations

than that is an eternity,” Maini says. from around 100 today. aged because they eliminate wait
“So if you remove the battery from Delhi-based Lithion Power time, optimise land resources,
an EV, it immediately becomes cost is also investing in this and require smaller batteries,”
D

segment
competitive with a conventional adds Anand Shah, Co-founder,
(ICE) vehicle. No compromise Ola Electric.
F_

on performance. If you can then Fortum India will install 10 Battery swapping has its draw-
fast charging direct current
swap the batteries in a couple of EV stations with MG Motor backs though and most believe its
minutes, you have successfully ad- in five cities in India in the utility will be restricted to fleet
next few months
En

dressed both range anxiety as well consumers. “An individual cus-

as long refuelling time. The cost of tomer may not be receptive to
energy of a battery is cheaper than Companies like Exicom, swapping batteries as he sees the
ABB, Delta, Panasonic,
petrol or diesel.” Indian Oil Corp., BPCL, battery in his new car as an asset
ew

The concept is already find- HPCL, NTPC and Indus which he would like to maintain
Towers are also looking to
ing traction among fleet owners. aggressively expand himself,” says Jha.
Maini’s Sun Mobility recently tied in this sector
sp

up with ride hailing company Uber Making It Work

for battery swapping in the latter’s Slowly but surely, charging sta-
upcoming electric three-wheeler tions are coming up in some key
ap

range. The largest organised player areas of metro cities in India.

in this business, SmartE, which runs almost 1,000 Government-owned Energy Efficiency Services Ltd
electric rickshaws in Delhi-NCR, also swears by it. (EESL) has a head start. EESL, a joint venture of four
“We have seen the efficiency of the fleet go up by al- power PSUs that famously heralded the LED bulb
e

most 40 per cent as unlike in the past when e-rickshaws revolution in the country, saw a business opportunity
rs

were off the road when they were being charged, now
the battery is swapped in a matter of minutes,” says
Goldie Shrivastava, Co-founder and CEO, SmartE.
Here’s an example of Hyundai Kona charged
through a fast charger. It has a 40 KW battery, 300
km range, and cost of charging is `600 per full cycle
(comparable to topping up a petrol or a diesel tank).
The cost to the consumer will be `2 per km, but the
in buying electric cars in bulk to replace all petrol and
diesel vehicles used by the government. It soon realised
that the plan would come unstuck unless charging in-
frastructure is laid out. It has now changed tack to fo-
cus only on setting up charging points. So far, it has set
up 300 charging stations, mostly in Delhi-NCR, and
in the next three years, plans to take that number to at
least 4,000 across the country.

September 22 I 2019 I BUSINESS TODAY I 65

 CORPORATE > ELECTRIC VEHICLES

“We have big plans in this area. In three years, this

segment should have a revenue of `3,000 crore and ac-
count for 20 per cent of our overall turnover,” says Sau-
rabh Kumar, Managing Director, EESL.
Others have equally bullish plans. Tata Power,
which currently has about 85 charging stations in five
w

big cities, plans to open at least 500 more in the next

one year alone. Delhi-based EV Motors has earmarked High
an investment of `1,400 crore to set up 6,500 of its Charge
w

PlugNGo charging stations in 15 cities in India over

w

the next five years. Mumbai-based IT services firm Direct charging, fast
Vakrangee also wants to convert each of its centres into charging (DCFC) may
an EV station. Similarly, Indus Towers is looking at start slow, but is likely to
.t.

catch up in India
transforming its 1,60,000-odd mobile towers into EV
charging points. AC
m

The three government-owned oil marketing com- 74

panies are also looking into the possibility of convert- 58
2020
e/

ing their network of petrol pumps into charging sta- DCFC

tions for EVs. There are over 60,000 petrol pumps in 26 2030
India at present. India’s largest oil marketing company, 42
Ta

Indian Oil, is one of the early entrants in this business

and has already installed 24 charging stations across Energy demand by
charging technology (%
eight cities. of Kwh; home scenario)
m

“Primarily in major cities and dedicated highways,

our focus is NCR, Jaipur, Chandigarh, Delhi-Chandi-
garh Highway, Agra, Delhi-Agra Highway, Bengaluru,
ilP

India will require capital

Greater Mumbai and Kochi,” says a company spokes- investment of about $6
billion through 2030, largely
person. “Subsequently, we plan to target Kolkata, Chen- driven by higher reliance on
nai, Ahmedabad, Pune and Surat. For select highways slower chargers
D

connecting metros, EV charging stations are proposed India EU

along the Mumbai-Pune Expressway, Ahmedabad- 6 17
F_

Vadodara Expressway, Yamuna Expressway (Delhi to US

Agra), and Delhi-Jaipur, Bengaluru-Mysore, Bengalu- 11
ru-Chennai and Surat-Mumbai expressways.”
En

Even the government is betting big with the Min-

istry of Road Transport and Highways floating an China
expression of interest for setting up 1,000 charging 19
Estimated
stations with 6,000 chargers across all big cities. The
ew

Capital
subsidy on offer is up to 70 per cent of the cost of public Needed
($ billion)
charging stations being set up under this exercise. This
is just one of the many tenders the government intends
sp

to issue in future.
Estimated number of
On a broader scale, the government wants to set up chargers (million)
charging stations every three km in all the cities with
1 2020
ap

a million-plus population (46 cities) and every 50 km India

5 2030
on highways. The demand from this alone would be
US 2
around 30,000 slow and 15,000 fast charging points 13
over the next five years.
e

EU 1
15
rs

Cautious Approach China 1

“The size and quantum of tenders for EV chargers will 14
only increase in future. This is the industry to invest
in,” says a senior Ministry of Heavy Industries official.
Yet, most companies are hedging their plans and
are not willing to commit fully for now. And with good Data may not add up to 100
because of rounding off
reason. Sale of EVs in India remains abysmally low: Source: McKinsey & Company
just 0.06 per cent of the overall vehicles sales. Apart

66 I BUSINESS TODAY I September 22 I 2019

w
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w
.t.
m
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Ta
m
ilP

time ourselves so that we do not put in too much capital

We have seen fleet efficiency
ahead of time.”
D

go up by almost 40 per cent… Globally, EVs have been helped by subsidies and in-
now the battery is swapped in centives by governments and while fiscal constraints
F_

a matter of minutes and the do not provide much headroom for the government in
vehicle is back on the road India, the FAME-2 scheme did earmark `1,000 crore
specifically for charging infrastructure in the country.
En

Goldie Shrivastava, Co-founder and CEO, SmartE “Unless you lay down the infrastructure, the cycle
doesn’t start. It is a chicken and egg situation. We are
trying to break the jinx by participating in creating the
infrastructure and in parallel watching the evolution
ew

of EVs,” Subramanyam adds. “The first few years will

from this, while there are a number of products avail- be formative where there will only be investment. We
able in two- and three-wheelers, only a handful exist in will need to fix the network, and help car penetration
sp

cars and commercial vehicles. and eventually charge the subscribers. Once it crosses a
“We have not reached the inflection point yet, but it threshold, there will be revenue to be made.”
will probably come in three-four years,” says Aggarwal While the first round of investments is being made,
ap

of Fortum. “When it does, it will be in huge numbers.
We have taken the decision that we will jump in now
and tune ourselves and based on the market we will de-
cide whether to accelerate or not.”
it is scale that everybody is looking at in the longer
term. “For a couple of years, you may not make money
because you do not have the volume, but in this busi-
ness the upside is very lucrative,” says Aggarwal of For-
e

While a lot hinges on how quickly EVs spread, there tum. “We have taken a conscious decision that smart
rs

is enough money to be made by recharging batteries.
“Today, if we have to make our plans based on vis-
ible profits tomorrow, I do not think we will go very
far. This business is going to take time to mature,” says
Ramesh Subramanyam, CFO, Tata Power. “We are not
going in with so much money that we lose sight of the
returns but this requires incubation. Players like us
will have to invest in this sector for the long haul, and
unmanned chargers are the future. There is no need to
have a person there. Business is profitable and it will
become even more so as the scale increases.”
Wider availability of EVs and related infrastructure
in India is just a matter of time. Companies don’t want
to miss out on the opportunity this offers.
@sumantbanerji

September 22 I 2019 I BUSINESS TODAY I 67

 THE HUB CORPORATE

The
Pet Bet
w
w
w
.t.

Well-being of pets is serious business.

And the action is just hotting up.
m
e/

By K.T.P. RADHIKA
Ta

D
m

elhi-based media professional Arushi Sharma is a proud parent of

ilP

three-year-old black labrador Alex. Weekends mean trips to cafes,

pool parties, parlours and parks where he plays with friends. Alex
goes to spas and fun games every now and then. On weekdays, Alex
D

stays with Sharma’s parents in Meerut. “He thoroughly enjoys all

the pampering. Meerut is an emerging town and does not have good
F_

facilities for a dog like him. So I bring him to Delhi on weekends

and we hang out at Puppychino or Heads Up For Tails (HUFT) out-
lets,” says 28-year-old Sharma. “Alex is my world and I want him to
En

have the best of food, shelter, safety and entertainment – not to men-
tion love.”
Sharma is among the many new generation of pet owners – or
pet parents – who treat their pets as their children, and spare no ex-
ew

pense in their care. “Pet care is an evolved category now, mirroring

the baby care category,” says Mohit Arora, Director-Marketing, Mars
Pet Nutrition India, which owns pet food brands like Pedigree and
sp

6,00,000
ap

`4,000 Pets being adopted

every year
PER MONTH
What Indian pet
e

owners spend on pets

rs

$270
MILLION
Size of Indian
pet food market

68 I BUSINESS TODAY I September 22 I 2019

 Part $125 $202 $800
of Family
BILLION BILLION MILLION-PLUS
Global pet care Projected Size of Indian
market in 2018 size by 2025 pet care market

Sources: Euromonitor, Tech Sci Research,

India International Pet Trade Fair
w
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.t.
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80%
e/

Share of dog food

in the pet care
Ta

value market (2017)

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80%
Pets are dogs
D
F_
En
ew

19
MILLION
sp

Estimated number
of pets in India
ap
e rs

September 22 I 2019 I BUSINESS TODAY I 69

 CORPORATE > PET CARE

Royal Canin. “Pet parents are concerned

about maintaining the hygiene and health
of their pets. So, right from vaccinations to
grooming and food and nutrition to enter-
tainment, everything is very important for
pet parents,” he says.
w

India is witnessing a pet care boom.

Urban centres are abuzz with pet dedi-

PHOTOGRAPH BY REUBEN SINGH

w

cated retail outlets, for grooming, holiday

boarding. There are even luxury pet ho-
w

tels. For instance, Gurgaon-based Crit-

terati, started in late 2017, is a dedicated
luxury pet hotel that boasts of royal suites
.t.

and family suites for overnight stays, and

also offers day boarding, spa services, pet
m

boutique and many other dedicated ser-

vices. Bengaluru-based Petcart-nest is a
e/

pet resort that opened last year. Spread

over two acres, it features 70 small bam-
boo ‘huts’ for pets. Pet care chains such
Ta

as HUFT and Tail Lovers Company and

dedicated pet cafes such as the Delhi-
based Puppychino, Cat Cafe in Mumbai
m

or Twisty Tails in Chennai are doing brisk

business.
ilP

Fast-growing Market
Rapid urbanisation, coupled with rising
disposable incomes and shift to nuclear
D

families, are driving more people to get

pets. Also catching up is the trend of hu-
F_

manisation of pets. “For example, years

ago, a dog used to be treated as a guard- “With more than 5,000 customers
ian and stood outside the house. That is a month, we are registering 100%
En

changing, especially in cities: the dog is

now a companion animal and a member of
growth year-on-year. Value-based
the household. Many younger couples are innovation is the key and we will
increasingly adopting a pet (read dogs and invest in that.”
ew

cats),” says Amol Sharma, Founder of Pet- Rashi Narang,

Sutra, a Gurgaon-based start-up that sells Founder, Heads Up For Tails
pet products online. “The trend is encour-
sp

aging higher spending on pet care and giv-

ing rise to opportunities to commercialise
pet products and services,” he says. al. A very large chunk of this, 73 per cent, or over $91
ap

Quality chain of pet stores was unheard of a few
years back, says Binoy Sahee, Fair Director, India In-
ternational Pet Trade Fair (IIPTF), an annual B2B pet
exhibition-cum-trade show organised by Creature Com-
billion, will come from just pet food. Compared to the
global size, the Indian market size is just about $800
million-plus, according to the IIPTF. The global pet care
industry is growing at about 5 per cent a year, and is pro-
e

panion, a pet care magazine. The August 2019 event jected to reach $202 billion by the end of 2025, accord-
rs

was its 11th edition in India, and featured 100-plus ex-
hibitors, compared to 32 in the first expo. “Pet owners
are now more aware of their pets’ welfare and needs.
They are looking for nutrition, and not just any food. Pet
grooming is taken seriously,” he says.
The Indian market may be growing but is just a frac-
tion of the global pet care market, which touched $125
billion in 2018, according to Euromonitor Internation-
ing to Euromonitor.
Bon Appetit
In India, too, the pet food category is in a yummy phase
of growth. “In developed markets such as Europe and
the US, pets – especially cats and dogs – meet more than
85 per cent of the calorific value of food consumption
through packaged food. In India, it is just 5.5 per cent,”

70 I BUSINESS TODAY I September 22 I 2019

 says Sharma. But pet ownership is steadily increasing:
industry estimates show there are around 19 million
pets in India (around 80 per cent of these are dogs, fol-
lowed by cats and then smaller animals like fish and
birds), and on an average, 6,00,000 pets are adopted
every year. This has attracted many multinational pet
w
food are around `1,700 crore and growing at a healthy
rate of 15 per cent CAGR for the last three years. How-
ever, our Indian business is less than 1 per cent of our
global sales,” says Arora. The company faces competi-
tion from brands such as Drools, owned by the Indian
Broiler Group, and multinationals like Farmina, Orijen,

industry players to India. etc. Last year, Nestle also forayed into the pet food seg-
Mars International, which sells dog food brands ment in India by setting up a wholly-owned subsidiary,
w

Pedigree and Royal Canin in India, entered the market Purina Petcare India.
here in 2000, and has more than 50 per cent market “Pet owners no longer depend solely on home-cooked
w

share in the pet food category. “Retail revenues from pet food for their pets. This means increased headroom for
pet food manufacturers to grow in India,”
says Gaurav Kwatra, Director, Purina Pet-
.t.

care India. “Our dog food brands – Super

“Pet owners no longer depend solely Coat and Pro Plan – have been well-re-
m

on home-cooked food for their pets. ceived in the Indian market. We recently
introduced cat food, too in this market,”
This means increased headroom
e/

he says.
for pet food manufacturers to As a vast majority of pets in India are
grow in India.” dogs, it is understandable that the pet
Ta

Gaurav Kwatra, nutrition market is predominantly a dog

Director, Purina Petcare India food market – more than 80 per cent.
However, the cat food segment is grow-
m

ing fast, in fact, surpassing the growth

rate of dog food. “There has been a huge
increase in cat ownership in the last three
ilP

years. Cat food accounts for around 25 per

cent of pet food revenue for Drools,” says
Fahim Sultan, Director, IB Group, adding
D

that its annual turnover is `200 crore.

Apart from multinational brands,
F_

there are many Indian companies and

start-ups that provide customised diets for
puppies and senior dogs; diets for weight-
En

loss; and even delivery services for wet pet

food. “We started in 2011 with a custom-
ised diet plan for dogs and now we cater
to NCR, Mumbai and Pune markets,” says
ew

Rashee Kuchroo, Founder of Gurgaon-

based Doggie Dabbas, which delivers wet
food for dogs. The company expanded
sp

to dry food a couple of years back and is

now clocking a growth rate of 40-50 per
cent year on year, says Kuchroo. “Last year
(2018/19), we recorded about `2.5 crore in
ap

revenue,” she adds.

Bengaluru-based Khanal Foods, with
the brand Dogsee Chew, claims to use only
e

natural ingredient dog food available. The

rs
PHOTOGRAPH BY REUBEN SINGH

company has expanded into overseas mar-

kets such as Belgium, the Netherlands,
Luxembourg and South Korea. Started
in 2015, the company has recorded more
than 100 per cent growth since then.

At Your Service
Apart from food, pet grooming, train-

September 22 I 2019 I BUSINESS TODAY I 71

 CORPORATE > PET CARE

“The trend (of pets being

companions) is encouraging
higher spending on pet
w

care and giving rise to

opportunities to commercialise
w

pet products and services.”

Amol Sharma
w

Founder, PetSutra
.t.
m
e/

ing and other services are also increasing their

footprint in India. While e-commerce compa-
nies such as Amazon, Grofers and Flipkart sell
Ta

pet care products, dedicated portals such as

PetSutra, Petworld and PupKart are also doing
brisk business. Services such as grooming, day
m

boarding and vacation homes have enough tak-

ers and have the potential to grow further. “Mo-
bile grooming vans, for instance, are prevalent
ilP

in cities. They come home and offer services like

cleaning and hair and nail trimming at rates that
are better than at pet parlours and spas,” says a
PHOTOGRAPH BY AKRITI SONDHI

Chennai-based pet owner.

Pet boarding, sitting and walking are some
F_

other segments that are growing. Delhi-based

Bhavna Gakhar, who offers day boarding ser-
vices, says, “I was working with a leading insur-
En

ance provider for the past five years. Last April, I

decided to quit the job and started dog boarding
services. I now earn as much as I was earning be-
fore, and I have better job satisfaction.” Gakhar
ew

is confident and is planning an expansion in a

few years; she also wants to start a dog farm house. Al- ucts, the company started offering services such as spas
lied services such as pet sitting and walking are getting and birthday parties too. They also have educational
sp

formalised and taking the shape of companies such as videos on pet care and training. “We currently have 26
Bengaluru-based Anvisinc that offers dog walking, pet stores across six cities in India. With more than 5,000
sitting, dog boarding and pet relocation services. customers a month, we are registering 100 per cent
ap

“On an average, Indian pet parents spend around
`4,000 per month on pets. About 75-80 per cent of this
goes towards food and treats. The rest is spread across
grooming and other services,” says Mohit Lalvani,
growth year-on-year,” says Narang. HUFT plans to in-
crease the number of stores to 30 by the end of this year,
apart from increasing online sales.
Pet cafes are another part of the growing business.
e

Founder of Captain Zack, which has shampoos and “Started in January 2018, our cafe sees a footfall of
rs

conditioners for dogs. about 5,000 a month. We reported a revenue of `3 crore

Pet care is a largely unorganised space but there is
enough competition to warrant marketing initiatives
and investments. “A lot of money goes into scaling up
the business as competition increases,” says Rashi Na-
rang, Founder of HUFT, which she started in 2008 in
Delhi, and decided to start scaling up in 2015. Apart
from pet food, accessories, apparel and grooming prod-
in the first year,” says Rekha Dandey, Founder and CEO
of Twisty Tails, a Chennai-based pet cafe.
Multi-speciality vet clinics that provide state-of-
the-art treatment have mushroomed in Indian metros.
“There is a high level of awareness about new medical
treatments among pet owners and high demand for
them,” says Jamshyd K. Cooper, a Mumbai-based vet-

72 I BUSINESS TODAY I September 22 I 2019

 erinarian. “In Mumbai, one can find a pet clinic every
one to two kilometres.”
Finding Investors
As the market is expanding, pet care companies and
start-ups have caught the attention of investors. A couple
w
ment and business expansion. Chennai-based Nimble
Wireless, which has developed solutions based on Inter-
net of Things to remotely monitor temperature of pets,
received $1 million from Prime Venture Partners and
other investors.
The highest disclosed amount has been raised by

of years ago, pet care portal DogSpot.in made headlines HUFT – $3 million from various high net worth indi-
when Ratan Tata invested an undisclosed amount in it. vidual investors. “Pet care has now become an attractive
w

But even before that, it had received seed funding from sector for investors as the industry is at a nascent stage
other investors which included Aloke Bajpai (Founder, and there is a lot of scope for expansion. HUFT is using
w

ixigo.com), Vikas Saxena (CEO, Nimbuzz), and others. the funds to further improve technology and end-user
While Dogsee Chew received `2 crore in angel funding, experience,” says Narang of HUFT.
Bengaluru-based pet care start-up TailsLife raised an
.t.

undisclosed amount in a bridge round from its existing Space For More
investor. Last year, PetSutra received `95 lakh from an- There may be many pet related services coming up, but
m

gel investors while Captain Zack received $1.5 million scaling up business can be a tough task. “Pet nutrition
in pre-series A funding, to be used for product develop- and health are relatively new concepts. Without prop-
e/

er awareness, it is difficult to sell high-

quality pet food,” says Kwatra of Purina.
Then there are mindsets to deal with. As
Ta

humanisation increases, people tend to

Market leaders
treat their pets as ‘humans’ and feed them
whatever they are eating, which might be
m

in pet food
harmful, explains Mumbai-based vet-
erinarian, Cooper. Also, with vegetarian-
ism common in India, many people want
ilP

vegetarian food for their pets too, a de-

mand that companies are trying to cater
Pedigree, to. “Providing vegetarian diet to dogs is
D

Royal Canin a big challenge as it is difficult to get all

Both are brands of Mars the proteins required in the right mix. For
F_

International. The total cats, it is a strict ‘no’ as certain amino ac-

revenue is
ids won’t be there in it (vegetarian diet),”
`1,700 says Cooper.
En

CRORE Be it food, grooming or training, the

from retail sales. Mars
entered the Indian market in
2002 but its Indian business
is less than 1 per cent of its
pet care market, despite being fragment-
ed, is growing, and growing enough to at-
tract further investments from players big
ew

global business.
and small. “Our global business is keeping
a keen eye on how to grow the business in
India. In the next three years, we will have
sp

big investments to bring in more brands

to India, expand distribution, make prod-
Purina ucts more accessible and develop the eco-
ap

The Nestle brand system to drive pet adoption,” says Nitin

entered India only Kulkarni, Director of Corporate Affairs,
last year
Mars Pet Nutrition India. Smaller busi-
nesses also feel there is room to expand.
e

“As the market expands, we also have to

rs

expand our business. Value-based innova-

tion is the key and we will invest in that,”
Drools
says Narang of HUFT. Evidently, pets
An Indian Broiler
Group brand launched and their parents are ‘paw’ering
in India in 2010; the business.
annual turnover of

`200 The writer is a Chennai-based

CRORE freelance journalist

September 22 I 2019 I BUSINESS TODAY I 73

 ers
ap
sp
ew
En
F_
D
ilP
m
Ta
e/
m
.t.
w
w
w
 ers
ap
sp
ew
En
F_
D
ilP
m
Ta
e/
m
.t.
w
w
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THE HUB INTERVIEW
w
w
w
.t.
m
e/
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m
ilP
D
F_
En
ew
sp
ap
e
rs

76 I BUSINESS TODAY I September 22 I 2019

 “INDIA COULD
ESTABLISH ITSELF
w

AS A LEADER FOR
w

THE REGION IN
w

ENERGY STORAGE”
.t.
m

US energy storage major AES Corporation recently installed

India’s first grid scale energy storage unit with Tata Power.
e/

Andrés Gluski, President and CEO of this Fortune 500

company, talks to Business Today’s Anilesh S. Mahajan
Ta

about the global energy storage market and how India –

with its ambitious solar energy and electric vehicle plans –
can gain from the latest trends. Edited excerpts:
m
ilP

PHOTOGRAPHS BY SHEKHAR GHOSH

D
F_
En

elp us understand the trajectory of the energy stor-

age space. In India, we are looking for solutions
ew

which can be scaled up quickly, and in the entire

conversation there is a price point, too.
sp

A. The time for the energy storage technology has come.

The price is a critical part of this equation across the world.
In the last five years, it has come down by about 70 per
ap

cent and, with this, we are already seeing the market tak-
ing off. Globally, five years ago, a total of 200 MW energy
storage (grid connected) was installed. Last year, the figure
reached 4 GW. This is a factor of 20. Some markets are
e

much more advanced and some are laggards, but there is

rs

no dispute that this technology is fundamental to the grid

of the future.
Markets progress at their own speed and a lot of that has
to do with regulations and price of energy. In the US – per-
haps the most advanced market globally – there is a tremen-
dous influx of renewable energy, especially solar. To stabi-
lise the grids, one option is fossil fuel-based thermal power
plants. The other is energy storage systems which soak up

September 22 I 2019 I BUSINESS TODAY I 77

 INTERVIEW > ANDRÉS GLUSKI

energy and allow you to inject it when you need it the most.
It is the key for India as well. It allows for flexibility while de-
signing the grid and laying transmission lines. For example,
if there is growth in demand at the other end of the trans-
mission line, conventional planning requires an increase
w
market. It is much less market-driven than India. For ex-
ample, users there have to change their routes to suit an
electric bus.
Are the Chinese companies on a shopping spree to

in capacity of the entire line even if the demand increase is capture sources of materials for storage?
for 15 minutes or two hours a day. Installation of the energy
w

storage system at the end of the line can meet the demand. Not really, because the biggest resources of lithium are in
In India, which has a target of 175 GW renewable energy South America – Bolivia, Argentina and Chile. Most of the
w

capacity by 2022, storage will play a critical role. production is happening with either western firms, big
mining companies or local firms. And they are the most
What are your calculations of movement in price successful companies. The Democratic Repbulic of Congo
.t.

points over the next five years? What’s your

vision for the future of storage?
m

I’d say that in next five years, it may not be a 70 per cent
e/

cut, but long-term costs will certainly continue to come

down. There are several factors at work. One is technol- THE WORLD WILL
ogy, as we have better designs, but it really comes down
NOT BE TIED UP TO
Ta

to economies of scale, which has been the big driver for

renewables. In solar panels, there have been technological ONE GIGA FACTORY.
improvements, but it’s mostly been scale. The same thing
WE CAN GO OUT AND
m

happened in wind turbines. It is a matter of getting scale.

That will improve once you are selling not 4 GW but 10 SOURCE BATTERIES
GW around the world. That depends on electric vehicles, as
FROM MULTIPLE
ilP

in any forecast I have seen, the breakdown is usually 90 per

cent vehicles, 10 per cent grid. At the most it may be 80:20. PLAYERS AND GO
The input has been lithium. The world has a lot of lithi-
TO THE LATEST AND
D

um and people are opening up mines. It will also get cheap-

er as you become bigger. There were some bottlenecks with BEST TECHNOLOGIES
F_

cobalt, mostly from Africa and some difficult geographies.

But they are coming up with new chemistries, using more
AT THE TIME
nickel and magnesium, and no cobalt. Tomorrow they may
En

come up with a much cheaper battery with different chem-

istry. We are fine with that. We just put those batteries into
the kit. We are not betting on one specific chemistry equa-
tion or one specific battery, but we really think it will be
ew

lithium-ion for a foreseeable future. We realised these bat-

teries are for the most part the same as the ones you put in had more cobalt but is reducing the amount used. There
electric vehicles. So, the bigger that [electric vehicle] mar- are other sources such as Australia as well. This is not a
sp

ket becomes, the more economies of scale there will be for case of the Chinese having a lock on this. This is much more
grid-scale energy storage. in what are called precious metals and things like that. It’s
interesting as those aren’t so rare, it’s just very dirty to pro-
ap

Are you also moving to the mobility side of the duce them. So, quite frankly, that’s why China has a lock on
business? Are there some lessons from the them, as other countries don’t want to produce them. This
Chinese that we can take? sort of rare metals, as they are called, go into electronics.
e

We are doing some incubation project, because if you have So what are the unique points for companies to
rs

a lot of electric vehicles out there, you have two things.
One, you have to charge them effectively like mobile stor-
age units. So, you have to incorporate what happens in
the electric vehicle market. It will also affect the price of
batteries. We see that as natural progression. We are not
doing anything yet, but it’s natural progression of the
business we are in. As far as lessons from Chinese experi-
ences are concerned, it depends. China is a very different
cut prices?
We are aggregating. Take India. We get demand from several
large customers. No one large customer is likely to have those
economies of scale. Plus, we bring the experience. What is
very interesting that one of the first successful grid-scale ener-
gy storage system was in Chile, not in the US, associated with
a coal plant. Because we are in different countries, we have a

78 I BUSINESS TODAY I September 22 I 2019


w
w
w
.t.
m
e/
Ta
m
ilP
lot of experience and we can try different things.
D
How do you rate the Elon Musk gigawatt factory? Will
his venture be able to disrupt the pricing of storage?
It is a good addition. They are gearing up to fulfil vehicle
orders primarily. They are using some of the same batteries
for their energy storage. I’d say it is welcome, because the
more batteries you produce, the cheaper they will become.
The product is the same. The chemistry can vary a bit,
or the designs vary. You can optimise for one or the other.
I’d say that in the energy storage space, he does not have the
desire or the chemistry to be disruptive from what we have.
He is certainly a competitor in some markets but has much
less reach than we do. We generate energy from all possible
sources excluding nuclear. We have a wealth of experience
that no car manufacturer can match. We have a fundamen-
tal view that we need an open architecture. Battery tech-
nology is changing rapidly. The cost has come down, the
efficiency has increased. So, the battery of today is going
to be very different from the battery we will get five years
down the line. It is going to be more efficient and cheaper.
So, the world will not be tied up to one giga factory. We can
go out and source batteries from multiple players and go to
the latest and best technologies at the time. For India, the
potential for grid [storage] application is so big that it may
be bigger than the potential from electric vehicle at first.
In India, the energy mix is changing rapidly. We
September 22 I 2019 I BUSINESS TODAY I 79
may have some dysfunctional gas-
based projects, then we have coal,
and now we are adding renewable
to the energy basket. Do you en-
visage drastic change in the en-
ergy basket once these storage
facilities come up?
India is a big market. Not all states
generate at the same speed. But I am
certain that it will make a very big dif-
ference in the Indian grid over time. It
will be good for the local environment,
for the global environment, and also
for consumers. I also think it will allow
India to become a leader in a very in-
teresting technology. What we will see
in India is what you are going to see
in the rest of, for example, Southeast
Asia. India could establish itself as a
leader for the region in energy storage.
India has a very different market
from the US or western countries.
There is less policy clarity. Then
there are hurdles from regulators.
How do you see yourself in the
India market, especially as you have selected the
Tatas, probably one of the most reliable partners.
What were the things going on in your mind?
F_
Tata Power is one of the most prestigious groups in India,
and if you look at our partners around the world, they are
En
of the same league. The success of the partnership is im-
portant for us. With Tata Power, there is an opportunity to
expand to their entire portfolio.
Along with this, energy storage is bit like a hammer, as
ew
you can have various avenues to remunerate, such as mak-
ing solar power more reliable and avoiding fines in case of
inaccurate predictions. The grid can be made more resil-
sp
ient. You may want to use the electricity stored instead of
a peaking plant or replan transmission investments. We
understand that the regulations are going to be different in
ap
different countries. The applications will also be different
and we value partners creating this knowledge for us.
I think India will be one of the biggest markets, and that
too with a very ambitious renewable programme. In various
e
markets, renewable energy is cheaper than the variable cost
rs
of fossil fuel. The future is renewable. The storage is mak-
ing it available round the clock. India can’t have 100 GW
energy storage capacities overnight. So, it requires conven-
tional energy as well. But the future is much more renewable
and much more energy storage. It will be cheaper and more
green power. Think of the air quality in your cities.
@anileshmahajan
 COLUMN

Align CSR with

National Goals
w

INNOVATIVE AND INCLUSIVE SOCIAL

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INVESTMENTS BY INDIA INC. WITH BROADER

POLICY FRAMEWORKS CAN AUGMENT THE BY
GOVERNMENT'S DEVELOPMENTAL INITIATIVES. GEN. BIKRAM SINGH

c
w
.t.

ORPORATE social responsibility (CSR) in India has evolved already witnessed the fury of nature in
since 1965 when Prime Minister Lal Bahadur Shastri, at an event some parts of our country.
m

inauguration in New Delhi, urged the corporate fraternity to Even as companies pursue their
fulfil its obligations towards customers, workers, shareholders ongoing CSR projects, it may be
e/

and the community at large. In 2009, the voluntary guidelines on prudent to take note of both stated and
corporate governance and CSR were disseminated by the Ministry of Cor- implied goals and ideas of PM Modi.
porate Affairs in the wake of a scam in a major enterprise. These guidelines Statements made from the ramparts
Ta

were later included in the Companies Bill, 2011, that got promulgated as the of the Red Fort are well processed and
Companies Act, 2013, based on several modifications. This Act made CSR provide a broad strategic framework
mandatory. Perhaps the reason for imposing a statutory obligation was the for various stakeholders to evolve
m

need to strengthen trust between the business community and the society suitable strategies and implemen-
that had taken a beating owing to various scams. The eroding trust had tation plans. Although concerned
spurred some segments of the society to discredit and disparage even the ministries will pursue his goals and
ilP

ethical corporate achievers and wealth creators. unique nation-building ideas, some
As per the Act, every company with net worth of `500 crore or more, programmes need to be included in
or turnover of `1,000 crore or more, or net profit of `5 crore or more CSR policies and must be started im-
D

during any financial year is required to spend on CSR at least 2 per cent mediately. These include freeing India
of its average net profits made in the preceding three years. The spend- from single-use plastic, ensuring water
F_

ing is to be undertaken in conformity with conservation and making it available

a policy formulated by a committee of the IDEALLY, ALL MAJOR to all households, implementing small
board comprising three or more directors, CSR ACTIVITIES family norms, eliminating the use of
En

including at least one independent director. SHOULD BE chemical fertilisers and making India
An ideal policy is steered by a company’s IMPLEMENTED an open-defecation-free country. Ac-
CSR vision statement and includes selected IN CONCERT cording to open-source data, several
areas of social responsibility, budget and its WITH STATE companies are already committed to
ew

GOVERNMENTS
apportioning, governance structure, roles some of these goals. However, there
TO MAXIMISE
and responsibilities along with a monitoring VALUE AND AVOID is a need to have every company on
and reporting architecture. As mandated, it DUPLICATION board. Although the total CSR amount
sp

should be regularly brought before the board. OF EFFORTS available with the business community
The amended Schedule VII of the Compa- is a drop in the ocean compared to
nies Act, 2013, lists the activities which could national developmental budget, its
ap

be included by companies in their CSR policies. judicious spending would have a

These activities have been determined, keeping meaningful impact on people, supple-
in mind people’s aspirations and the need to preserve our planet. When it ment the government’s efforts and help
comes to people, the emphasis is mainly on poverty eradication, potable preserve our planet to some extent.
e

water, sanitation, preventive healthcare, and gender equality and empower- Besides provisioning for requisite
rs

ment through education and employment-centric vocational skills. As for facilities and infrastructure, action
the planet, the Schedule highlights the need for environmental sustainabil- plans for additional activities would
ity, which has acquired great significance nowadays. Even Prime Minister necessitate a comprehensive public
Narendra Modi, while highlighting his goals for ‘New India’ during his information campaign aimed at
Independence Day address, emphasised, inter-alia, the perils of climate raising awareness levels and manag-
change and the dire need for water conservation. It is about time that we, ing perceptions. People follow new
as a nation, realise that continued global warming will create catastrophic initiatives only when they understand
conditions, causing widespread loss of human lives and property. We have the shortcomings of prevalent systems

80 I BUSINESS TODAY I September 22 I 2019

 and practices and begin to realise
the benefits of change. Corporate
houses should consider constitut-
ing small teams possessing excellent
interpersonal and conceptual skills for
not just influencing people’s behaviour
but also for developing the prowess
w
to implement additional activities in
concert with various stakeholders.
w
Wherever it is necessary, specialists’
services from medicine, agriculture,
w
rainwater harvesting, waste man-
agement and other fields should be
obtained. For capacity maximisation,
.t.
collaboration with like-minded part-
ners should be considered, albeit with
m
due diligence. Current provisions of
the law also allow a company’s board
e/
to decide on undertaking CSR activi-
ties which have been approved by the
CSR committee through a registered
Ta
trust, society or a company established
by the enterprise or through its hold-
ing/subsidiary/associate company.
Ideally, all major CSR activities
should be implemented in concert
with state governments to maximise
value for the identified communities
and avoid duplication of efforts. Programmes focussing on neighbour-
hood communities help develop mutually beneficial relationships and
strengthen trust. As a matter of principle, the responsibility of running
all projects should ultimately be passed on to the community. For
instance, the Indian Army undertakes
its civic action projects in insurgency-
PEOPLE FOLLOW afflicted areas with a philosophy of
NEW INITIATIVES helping people to help themselves. In
ONLY WHEN THEY such cases, the consistent endeavour is
UNDERSTAND THE
to empower people with the necessary
SHORTCOMINGS OF
skills and expertise so that they can run
PREVALENT SYSTEMS
AND PRACTICES AND the projects on their own. The success of
BEGIN TO REALISE various programmes should be gauged
THE BENEFITS OF by their impact on people and the
CHANGE environment and not just by the output.
People’s ownership of the projects is an
essential benchmark of success.
The CSR teams of India Inc., given
their people-friendly endeavours, are
much respected and listened to by the communities they serve. So, these
teams are ideally placed to change the perception and behaviour of the
people concerned, which is a prerequisite for effectively implementing
any new social programme. Undoubtedly, the contributions of the cor-
porate world towards nation-building have been phenomenal. Its leader-
m
ship, CSR teams and countless unseen hands which work tirelessly for
the success of various initiatives, rightfully deserve special kudos.
The writer is former Chief of the Indian Army and
ilP
now sits on a company’s board
D
F_
En
ew
sp
ap
e rs
 THE WRONG WAYS T
O
w

STRENGTHEN CULT
w

URE
w
.t.

The three
m i s st e p s
m

that thwa
rt many e
fforts.
e/

Illustratio
n by R a j V
erma
Ta
m
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ew
sp
ap
ers
w
w
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OMPARED with
.t.
some other activities
of business leaders,
m
such as hiring the
right talent and set-
e/
ting strategy, changing corporate culture
can be especially challenging. Culture is
amorphous; there are no direct levers
Ta
for shifting it in one direction or another.
Indications are that CEOs are putting
a higher priority on this aspect of lead-
m
ership than in the past. According to a
study by the research and advisory firm
Gartner, CEOs mentioned culture 7 per
cent more often during earnings confer-
ence calls in 2016 than in 2010. In sur-
veys, both CEOs and CHROs say that
“managing and improving the culture” is
the top priority for talent management.
But the data suggests that there’s lots of
room for improvement: Each year com-
panies spend $2,200 per employee, on
average, on efforts to improve the culture
(much of the money goes to consultants,
surveys, and workshops) – but only 30
per cent of CHROs report a good return
on that investment.
When trying to spearhead culture
change, many leaders use the wrong
tools. Having surveyed more than 7,500
employees and nearly 200 HR leaders
at global companies and conducted in-
depth interviews with 100 HR leaders,
Gartner has written a report identifying
the most- (and the least-) effective ways
leaders try to transform culture. To in-
crease their odds of success, the report
advises, they should avoid three mistakes.
Don’t use simple adjectives to de-
scribe culture. Because culture feels
“squishy” and hard to describe, leaders
tend to resort to a generic, overused set of
adjectives: Cultures are said to be high-
performing, collaborative, innovative,
customer-focussed, entrepreneurial,
September 22 I 2019 I BUSINESS TODAY I 83
results-oriented, transparent, or trusting.
Gartner studied how companies using
these various buzzwords compared with
one another on progress towards revenue
goals and found no significant differences
– meaning that none of the labels cre-
ates an advantage. One reason: Often the
chosen buzzword is at odds with how the
company actually operates. That causes
what Bryan Kurey, Gartner’s Managing
Vice President for HR research, calls a
say/do gap: Employees see leaders’ cul-
tural aspirations as hypocritical.
Instead of using a single adjective to
ilP
describe the culture you aspire to, illus-
trate it by acknowledging an important
tension. “The tension is about the inter-
D
section of the ideal and present realities
and how those play out day to day,” Kurey
F_
says. Talk about wanting to create a “cul-
ture of innovation” might sound fanciful
and out of touch if the business currently
En
devotes 80 per cent of its resources and
personnel to existing product lines. The
CEO should instead speak to the tension:
“We support a culture of innovation while
continuing to seek growth and profits
from legacy businesses.”
Other tensions evident in most busi-
nesses include the need to achieve both
short- and long-term goals and an em-
phasis on results and accountability while
also caring about employees’ well-being
and work/life balance. Explicitly recog-
nising such tensions avoids the disillu-
sionment that can result when employees
see leaders espouse one set of behaviours
but live by another.
Don’t measure culture with data
alone. Because culture feels intangible,
many companies depend on employee
surveys when trying to quantify what
frontline people think about it. Often
the surveys overrely on measures of em-
ployee engagement. Firms also com-
“GOOD LEADERS RECOGNISE
THAT ALTHOUGH ASPIRATIONAL
TALK ABOUT CULTURE MAY
ORIGINATE IN THE C-SUITE,
THE ACTUAL CULTURE MANI-
FESTS IN CUBICLES AND ON
SHOP FLOORS FAR FROM TOP
LEADERS’ PURVIEW”
monly look at turnover rates as an indi-
cation of culture and morale. But those
numbers can provide false comfort. “The
feedback gets sanitised at the leadership
level, even if you’re not trying to do that,”
ew
Kurey says. “Data gets aggregated and
averaged and becomes a little generic.”
Gartner suggests that companies in-
sp
clude open-response questions in their
surveys and ensure that leaders see some
of the raw feedback. Smart leaders also
ap
go beyond periodic surveys, providing
an atmosphere of safety that allows em-
ployees to speak up at any time without
fear of reprisal.
e
Such unfiltered feedback is especially
rs
useful given that many employees feel
disconnected from leaders’ cultural aspi-
rations. Gartner’s research shows that on
average, 69 per cent of employees don’t
believe in the cultural goals set by their
leaders, 87 per cent don’t understand
them, and 90 per cent don’t behave in
ways that align with them. By closing
 MANAGEMENT
these gaps, Gartner says, companies are
9 per cent more likely to meet or exceed
their annual revenue goals. And having
a qualitative sense of how employees
are feeling can help them do so. “CEOs
must not only encourage the unvarnished
w
truth, but also create an environment
that demands it,” the researchers write.
w
Don’t forget to alter policies to sup-
port cultural change. It’s all well and
w
good to talk about a company’s collab-
orative culture. But if that company uses
a forced-curve performance manage-
.t.
ment system – in which a certain per-
centage of employees must receive low
m
marks – it has created an environment
in which workers must compete against
e/
one another for high marks, undercut-
ting collaboration. Similarly, companies
might declare themselves to be customer-
Ta
centric but clamp down on the expense
account spending necessary to let sales
reps travel to meet customers face-to-
face. “This is the area where leaders are
least consistent – putting the operating
model behind the culture,” Kurey says.
To drive change, leaders must align
what they say, how they behave, and
how their companies operate in terms of
processes, budgets, and policies. Many
companies overlook the third item. “The
‘operate’ component has the biggest im-
pact on workforce-culture alignment,
[but] leaders are least focussed on the
most important aspect of role modelling,”
the researchers write.
Good leaders recognise that al-
though aspirational talk about culture
may originate in the C-suite, the actual
culture manifests in cubicles and on shop
floors far from top leaders’ purview. That
disconnect makes it essential that CEOs
do more than talk a good game. “As the
leader, you need to set up the structures,
processes, and incentives in your organ-
isation and put your money where your
mouth is,” Kurey says. “That’s the part of
leadership people often miss – enabling
your organisation to actually adopt the
new culture you seek to have.”
About the Research “Three Culture
Conversations Every CEO Must Have with
the Head of HR,” by Gartner (working paper).
This article was first published in the July-
August 2019 issue of Harvard Business
Review (www.hbr.org). Copyright@2019
Harvard Business School Publishing
Corporation. All rights reserved.
“I T’ S NO T A W IN -L OS E SI TU AT IO N”
family-owned
IN 2012, the Guatemalan
Oscar Rivera as its
conglomerate CMI hired
er. Since then he has
first-ever chief culture offic
ral transforma tion pr
led a cultu
River a sp oke with HB R about the challenges of th
employees work.
d ho w he me asur es su
effort an
What about CMI’s culture
needed fixing?
We are a highly diversified
conglomerate, with six businesses
that were very siloed. The
company had been taking steps
to create more synergies, such
as implementing a companywide
IT system, transforming the HR
function, and consolidating
purchasing efforts. Those projects
had trouble getting traction, and
our family owners concluded
it was a cultural issue that CMI
needed to resolve.
What did you do first?
m
We needed to hear what
employees thought and help
them find a way forward. Over
ilP
18 months, we held more than
30 workshops that included the
company’s top 300 leaders. The
dialogues recognised the tension
D
between the benefits of behaving
more like a single company and the
F_
facts that each business is unique,
the people running it have special
expertise, and they need to run it
with some autonomy. So there was
En
some resistance to change.
How did you overcome that?
Through dialogues in the
workshops, people recognised
how siloed we were and
concluded that what had gotten
us here would not take us into
the future. The leaders realised
we would be more successful if
we became more focussed on
managing synergies and value
chains. And we urged everyone
not to think of this as a win-lose
situation, where the company is
going to be one way or another.
For example, you don’t need to
focus on either short- or long-
term goals; you try to balance
them. There are many examples
of how ideas that are in tension
can coexist.
How do you ensure honest
feedback on how employees
feel about the culture?
oc ess to adapt how the firm’
s 37,000
e
cc ess. Edited excerpts follow
.
We do surveys that yield data, but
comments really matter, too. Twice
a year all employees attend a
workshop at which they talk about
how they are living our values. The
focus isn’t on teaching behaviours;
we want people’s opinions, and the
workshops are the main source of
feedback on the transformation.
Sometimes comments correlate
with the survey data; sometimes
they don’t. The most important
thing is listening to what people
have to say.
What’s an example of how
you changed processes to
support the culture shift?
In collaboration with our head
of HR, José Miguel Larios, we
proposed changing how we
measure and recognise the
performance of our top 300
executives. In the past it was
focussed on short-term and
individual business results. The
new system introduced two
significant elements linked to
how the entire company was
performing over the long term
and how the overall cultural
transformation effort was
progressing. That reinforced the
idea that people weren’t doing this
ew
because it was politically correct.
There were benefits to individuals.
What’s the return on the time and
sp
money you’ve invested in this?
In 2012, when we asked employees
to describe our culture, the
majority said it was coercive. By
ap
2017, more people described it as
“democratic” and “visionary.” We
invested about $50 million in the
e
overall transformation project.
We’d hoped to earn that back in
rs
10 years; we managed to do it in
seven. We’re no longer organised
around our six businesses; today
we think of the business as two
large platforms. We’re starting
to have conversations to make
the two platforms unique but
collaborative. The work on culture
is never-ending.
 ers
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70
per cent
India's rural
population that depends
on farming for suste-
nance, mostly small
and marginal farmers

88 I BUSINESS TODAY I September 22 I 2019

 AGRITECH SPECIAL > LEAD ESSAY

LONG
w
w
w

WAY
India must increase
.t.

farm income and

become globally
m

competitive.
Technology can help.
e/

By JOE C. MATHEW
Ta

TO GO
m
ilP
D
F_
En

D
ANCING CROW FARM, near Seattle, US, finds a special men-
tion in gatesnotes.com, the personal blog of Bill Gates, the found-
er of information technology (IT) behemoth Microsoft. The farm
is a pilot site for FarmBeats, a key research project of Microsoft
ew

which strives to make data-driven precision agriculture afford-

able for even the poorest farmers. What Gates considers “re-
markable” about Dancing Crow is that the team of researchers
sp

at FarmBeat, led by IIT-Kharagpur alumnus Ranveer Chandra,

utilises unused TV spectrum or airwaves to transmit data from
sensors installed at various locations of the farm and digitally
ap

analyses those to offer crop advisory. Unlike most farm data

systems, which require expensive transmitters to connect, this
one is low-cost and helps collect and analyse weather conditions,
temperature, pH, moisture level of soil, and other parameters,
e

using low-cost sensors, drones, and vision and machine learning

rs

algorithms. The result: up to 30 per cent less water needed for ir-
rigation, 44 per cent less lime to control soil pH, updates on ideal
time for planting seeds, and a more productive harvest.
“One of the big challenges in Agtech (agriculture technology)
adoption is cost, and we are developing techniques to make it
more affordable. We are doing a few trials in India, and our re-
search is focussed on bringing down the cost of Agtech solutions
to make them relevant in places like India,” says Chandra, Chief

September 22 I 2019 I BUSINESS TODAY I 89

HEAVY DEPENDENCE SUFFICIENT STOCK
Agriculture forms a significant In foodgrains, India produces more
part of states’ economy than can be consumed domestically
Share of agriculture and Fourth Advance Estimates of Production
allied activities in Gross of Foodgrains for 2018/19 (mn tonnes)
State Value Added
(2016/17; at
current prices) Total foodgrains Kharif Rabi

30% AND
ABOVE
w

300
Andhra Pradesh,
Arunachal
w

Pradesh,
Madhya Pradesh
250
w

20-29%
Bihar, Odisha, Punjab,
.t.

Rajasthan, Uttar Pradesh

200
15-19%
m

Chhattisgarh, Gujarat, Haryana,

Jharkhand, Meghalaya, Telangana
150
e/

LESS THAN 15%

Chandigarh, Delhi, Himachal Pradesh,
Ta

Karnataka, Kerala, Maharashtra, Puducherry,

100
Sikkim, Tamil Nadu, Uttarakhand 2014/15 2015/16 2016/17 2017/18 2018/19

Source: State of Indian Agriculture 2017 As on August 19, 2019

m
ilP

Scientist, Microsoft Azure Global, in al farmers, there is an urgent need to

D

an e-mail response to Business Today. reduce production costs and increase

“There are several things that the In- farm incomes. The only solution is tech
F_

dian government could do to acceler- interventions that bring in efficiencies

ate the adoption of digital agriculture at all levels of the agriculture ecosys-
with Indian farmers, including allow- tem – from sowing to harvesting, from
En

ing data transmission from farms on marketing to value addition. The ef-
unused TV channels, and some new al- forts of global giants like Microsoft,
gorithms that we have developed using IBM (which has a full-fledged research
satellite data,” he adds. team in India that looks into digital
ew

Chandra is right. Indian agricul- farming and precision agriculture) and

ture needs technology adoption more others can only help.
than any other country. Despite being World over, governments and or-
sp

a major producer of agricultural crops “SATELLITE DATA IS ganisations at all levels – private and
– largest producer of milk, jute and ALSO BEING USED public, global as well as local – are
pulses, and second-largest producer of FOR DROUGHT working to build innovative solutions
ASSESSMENT,
ap

rice, wheat, sugarcane, cotton, fruits to solve the problems of agriculture us-
and vegetables – India is increasingly TO ASSESS THE ing technology. A lot of the activity is
finding it difficult to make farming a POTENTIAL AREA based in India, and some farmers, al-
sustainable and profitable economic
FOR GROWING beit in small numbers, have begun to
e

PULSES AND
activity for every stakeholder. The soil HORTICULTURAL adopt agritech practices.
rs

quality in large tracts of land is de- CROPS”

clining, water stress is worsening, and Government Initiatives
Narendra Singh Tomar
climate change, with associated flash The government has set a goal of dou-
Union Minister
floods and droughts, has turned farm- of Agriculture and bling farmer income by 2022. The
ing in to a high-risk sector. Farmers’ Welfare 14-volume report of the Committee
With 70 per cent of India’s rural of Doubling Farmers’ Income, headed
population depending on farming for by Ashok Dalwai, has an entire vol-
sustenance, mostly small and margin- ume devoted on the need for science

90 I BUSINESS TODAY I September 22 I 2019

 FOODGRAIN Higher production AGRITECH SPECIAL > LEAD ESSAY
means more price
BREAK-UP uncertainty

TOTAL: 2018/19 data; Source:

Ministry of Agriculture have a regulatory process for new technologies so that farmers have ac-
284.95 & Farmers' Welfare cess to latest technological advancements. It also suggests that a mix of
MILLION
TONNES technologies be used to achieve higher productivity.
While most of these are still in the realm of recommendations,
one definite technology intervention, in addition to the much-talked
w

about e-NAM (National Agriculture Market – which is yet to be fully

RICE
operational), is the government’s decision to carry out pilot studies to
116.42 MT
w

(record) optimise crop cutting experiments (CCEs) in various states under

the farm insurance scheme Prime Minister Fasal Bima Yojana
w

GRAM (PMFBY). “The studies used various technologies, including

10.13 MT satellite data, artificial intelligence, modelling tools, etc.,
to reduce the number of CCEs required for insurance unit
.t.

WHEAT level for yield estimation,” Narendra Singh Tomar, Union

TUR 102.19 MT
PULSES 3.59 MT (record) Minister of Agriculture and Farmers’ Welfare, said in the
m

23.4 MT Lok Sabha.

The government is using satellite imagery to assess
e/

crop area, crop condition and crop yield under various pro-
COARSE
CEREALS grammes. “Satellite data is also being used for drought as-
42.95 MT MAIZE sessment, to assess the potential area for growing pulses and
Ta

27.23 MT
horticultural crops,” Tomar added.

Private Participation
m

About two years ago, Microsoft and The International Crops Research
Institute for the Semi-arid Tropics (Icrisat) developed an AI-based sow-
ilP

and technology interventions in ag-

D

riculture. Use of Big Data, Internet

of Things, Artificial Intelligence and
F_

Blockchain in developing value chains

and use of robot and sensors figure
significantly, along with the need for
En

better research in crop sciences and ge-

netically modified technologies, in the
to-do list.
The Indian Council of Agricul-
ew
PHOTOGRAPH BY SHEKHAR GHOSH

tural Research’s (ICAR’s) 2025 Vi-

sion Document, too, emphasises on
use of technology, including robotics
sp

and automation; energy-efficient and

environment-friendly devices for farm
operations; precision farming using
ap

IT, Geographic Information Systems,

GPS and remote sensing; climate
smart resource management tech-
nologies; and smart sensors and new
e

delivery systems to help combat vi-

“WITH INCREASED FOCUS ON AGRICULTURE
FROM VARIOUS SIDES, THE TIME IS RIGHT
rs

ruses and pathogens. According to the FOR AGRI-FOCUSSED PRIVATE EQUITY

document, high-performance comput- FUNDS IN INDIA TO LOOK AT EARLY-STAGE
ing could be used to analyse very large COMPANIES AND GROWTH-ORIENTED FIRMS”
data sets, particularly those related to
Rajesh Srivastava
agricultural genomics, proteomics, Executive Chairman, Rabo Equity Advisors
geo-informatics and climate change.
The Vision Document goes a step
further. It also articulates the need to

September 22 I 2019 I BUSINESS TODAY I 91

 AGRITECH SPECIAL > LEAD ESSAY

ing app to send sowing advisories to participating AGRICULTURE has investments in several agritech
farmers in Andhra Pradesh. The aim was to de- CHALLENGES start-ups, says is it still early days for
termine the optimal days for sowing. The farmers agri start-ups to make their mark.
did not have to instal any sensors in their fields or Inadequate resources – The initial success stories could come
human, physical
incur any capital expenditure. All they needed was and financial from food-tech firms, especially food
w

a feature phone capable of receiving text messages. delivery businesses that got funding
According to Microsoft, the app, combined as an extension of e-commerce invest-
Poor linkages and
w

with a personalised village advisory dashboard, convergence in ments, he says.

resulted in the average yield per hectare increas- research, extension “The farm-to-fork space has also
and farmer-market and
w

ing by 30 per cent. public-private initiatives attracted a large pool of capital. Hope-
IBM Research India is also pursuing a digi- fully some of them will do well and cre-
tal farming initiative. One of the objectives of ate a success story,” Shah says. “Real
.t.

Lack of focus on value

digital farming or precision agriculture is to raise agritech, however, started in 2011/12
farm productivity by increasing the visibility of after people began to understand that
m

Poor infrastructure in
agronomic conditions such as soil moisture, crop mobility, connectivity, this was something interesting. We
health and weather, and leveraging digitisation, information and have a good number of start-ups look-
communication
e/

mobile, IoT and cognitive technologies. The team technology

ing into how to improve the agronomy
is working on developing a suite of solutions (pest and income of farmers. Many of them
risk prediction, plant disease/pest detection, crop are beginning to do well. Whether it is
Ta

identification, yield prediction, precision irriga- market linkages, or better yields, we

tion advisory services, etc) leveraging the compa- have young entrepreneurs looking at
ny’s big data platform, IBM states on its website. this sector,” he adds.
m

Home-grown majors are not far behind. While With increased focus on agri-
food and FMCG major ITC is known for its pio- culture from various sides, the time
neering e-chaupal initiative, others have their own is right for agri-focussed private eq-
ilP

versions of technology adoption to narrate. uity funds in India to look at early

Mahindra & Mahindra, the world’s largest stage companies and growth oriented
tractor manufacturer by volumes, is working on firms, says Rajesh Srivastava, Execu-
D

digital and data driven technology to back pro- tive Chairman, Rabo Equity Advisors.
ductivity, crop-care and yield in a more definitive “There are a lot of start-ups and early
F_

way. “With agriculture increasingly becoming TECH stage firms now. In fact, we get many
technology-intensive, we are investing in future- SOLUTIONS more proposals from these people
ready technologies. This is to provide complete High-yielding seed
(than from established firms looking
En

solutions to the global-farming community,” says technologies for growth). We are trying to reca-
Rajesh Jejurikar, President – Farm Equipment librate our investment strategy (to ac-
Sector, Mahindra & Mahindra. Resource-conserving, commodate such firms). Cloud kitch-
Over the past two years, the company has en- climate resilient tech ens, food deliveries, agritech... all are
ew

tered into five strategic partnerships and has made part of the new story,” he says.
investments in some of them, including start-ups, Mechanisation The scope in agriculture, of course,
to develop data and digital driven capabilities. This technologies is much larger. Moreover, given the
sp

includes a 10 per cent stake in Canadian firm Res- fragmented nature of Indian farms,
son, for capabilities in machine learning, big data Post-harvest the size of population it caters to and
analytics and computer vision to help growers make technologies the diversity of its ecosystems, Indian
ap

better-informed decisions about crop management agriculture will need diverse technolo-
so that productivity can be increased. The company NextGen tech such as gies. Every attempt to make agricul-
biotech, nanotech, GIS
also has a 11.25 per cent stake in Switzerland-based and sensor technology, ture profitable and sustainable – be it
Gamaya to provide crop-specific tech solutions. IT, Internet, drones, at the stage of cultivation, harvesting,
e

blockchain
“Our strategic associations will enable us to develop marketing or consumption – would be
rs

and deploy next-generation farming capabilities a case to benefit from technological in-
such as precision agriculture and digital farming tervention. And that is what is begin-
technologies. With these partnerships, we expect ning to happen. Success, however, will
to set new benchmarks in farming and its related depend not only on technology, but
services,” says Jejurikar. also its affordability – a fact that Bill
Agritech investments have other sources, too: venture capitalists and Gates acknowledges.
private equity players that see growth opportunities in this segment.
Jinesh Shah, Co-founder of Omnivore Capital, a venture fund that @joecmathew

92 I BUSINESS TODAY I September 22 I 2019

 ers
ap
sp
ew
En
F_
D
ilP
m
Ta
e/
m
.t.
w
w
w
 > PRODUCTION

FOR A
w
w

BETTER
w
.t.

HARVEST
m
e/
Ta

A number of attempts are

under way to improve farm
yield through technology
m

intervention.
By JOE C. MATHEW
ilP

PHOTOGRAPH BY SHEKHAR GHOSH

D

W
F_
En
ew

HEN THE ASHOK DALWAI Committee on Doubling of Farmers’ In-

come sat down to finalise its report on the role of extension services in
sp

increasing farm incomes 18 months ago, it faced a technical problem.

It found that the definition of “agricultural extension” was outdated
– it was “too production-centric”, prepared during the days India was
ap

struggling for self-sufficiency in foodgrains, particularly cereals. It de-

cided to redefine “agricultural extension” as “an empowering system
of sharing information, knowledge, technology, skills, risk and farm
management practices, across agricultural subsectors and along all
e

aspects of the agricultural supply chain, so as to enable the farmers to

rs

realise higher net income from their enterprise on a sustainable basis”.

The definition, the committee said, brings into focus the all-important
PAIN Microirrigation:
Current irrigation
issue of farmers’ empowerment through information, knowledge and POINTS system caters to
less than 50% of
skilling. The committee, predictably, recommended a bigger role for arable farm land
private sector players. The focus is on using information, knowledge
and skilling to empower farmers, something that a clutch of start-ups
from various parts of the country – Uttar Pradesh, Madhya Pradesh,
Maharashtra and Karnataka – are already working on.

94 I BUSINESS TODAY I September 22 I 2019

w
w
w
.t.
m
e/
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m
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sp
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e rs

Productivity: Farm Agrifinance: Marginal Farm

Commercial crop Mechanisation: Farm credit accounts Holdings:
yields in India Penetration level for 13% of total bank Less than one-
are 2/3rd of of farm machinery credit; agriculture hectare farms
global average and implements is generates 60% account for 85%
only 15% employment farm land

September 22 I 2019 I BUSINESS TODAY I 95

 AGRITECH SPECIAL > PRODUCTION

“WE GET FARM-LEVEL be accurate,” says Shailendra Tiwari,

DATA IN TERMS OF Co-founder, Fasal. “We get all farm-
TEMPERATURE, PRESSURE, level data in terms of temperature,
MOISTURE, ABOVE pressure, and moisture, above the soil,
THE SOIL, BELOW THE
w

below the soil, by using a sensor at the

SOIL... USING A SENSOR
farm level. It addresses critical issues
INSTALLED AT THE FARM”
w

in agriculture. We produce irrigation

Shailendra Tiwari recommendation for specific farm and
Co-founder, Fasal
w

crop needs. It optimises irrigation,” he

explains. Tiwari calls his product an
actionable intelligence platform that
.t.

is farm-specific, crop-specific, in a
language that farmers understand,
m

Crop Health on a medium that is available with

“If there is one area where the Indian farmer can mostly be in control, the farmer (SMS or app). “We produce
e/

it is sowing (and subsequent stages of cultivation). If the farmer does farm-level, crop-specific, irrigation
the right thing, he can produce the best out of his land, unlike the fi- recommendation, pest recommenda-
nal price of the produce, which is not in his hands,” says Tauseef Khan, tion, disease recommendation. We
Ta

Co-founder and CEO of Indore-based agritech start-up Gramophone. also try to provide operational recom-
His focus is “crop advisory and supply of quality inputs”. Khan, a quali- mendations on a daily basis.” Depend-
fied agriculture engineer, says the relevant farm-specific information ing on the size of the plot, this service
m

around Gramophone’s service is helping farmers increase productiv- is offered on a monthly subscription
ity by 15-30 per cent and reduce costs. “We help farmers improve pro- basis after the farmer pays for the sen-
ductivity by working with them and supplying inputs. We have built a sor. “Fasal is at present tracking 3,000
ilP

knowledge repository around agronomy and automated that. So, farm- hectares spread over 60-70 farms.
ers get a personalised advisory at their plot level. Doorstep delivery of
agri inputs (seeds, pesticides, fertilisers, agri hardware) is also part of Catering to Credit
D

the package,” he says. Gramophone also helps farmers identify the prob- Over a year ago, BT featured farMart,
lems, suggests the most suitable solution or product and supplies it from a Lucknow-based start-up. Today,
F_

genuine sources. “We can work anywhere in the country on any crop. For farMart is an agri-fintech platform
every crop, we have parameters such as the soil it grows on, the region which also offers agri-machinery hir-
where it grows, the weather condition needed at different stages, etc. We ing as a service. “The shift in focus
En

have defined pest and disease problems also. This is the backend work was a result of the realisation that
that adds value,” he says. farmers are heavily dependent on
Gramophone has a toll-free number, and also works on a smart credit and need more leeway in re-
phone app. “You give a missed call, we call back, ask for details, and payment,” says Alekh Sanghera, Co-
ew

slice down all the problems into solutions. This is the dosage, this is the founder and CEO of farMart. “We
mix, this is the product… over 2.5 lakh people, mostly from Madhya offer something like a virtual credit
Pradesh, have got in touch with us in the last 12-18 months,” he says. card using which the farmers can buy
sp

Gramophone handles about 40 crops such as soyabean, cotton, chilli, different inputs based on their credit
vegetables and wheat. limit from offline retail channel part-
Fasal, a Bengaluru-based start-up, ners. We partner with financial insti-
ap

also provides crop advisory services, but tutions on one end, and on the other

2.5
mostly to horticulture farmers. But unlike side, we underwrite customers. So, we
Gramophone, it does not make money by do the match-making, and our service
selling inputs. Fasal’s advisory is mostly providers, the retailers, become the
e

around the microclimate within the farm. pickup points for our services,” says
rs

“We found that advisory services, especial-
ly related to weather, were mostly generic
in nature. The microclimate inside a farm
could be different from the one mentioned
in the general climate advisories that you
get. The result is that a generic advisory a
farmer gets today, like a rainfall prediction
covering a 35 km x 35 km block, may not
Sanghera. In the last two seasons,
lakh farMart has been instrumental in dis-
Number of farmers
who have used bursing about 4,000 loans of about
Gramophone's `3.5 crore value to farmers in four dis-
services in the past
tricts around Lucknow. “We provide
12-18 months
end-to-end services in terms of cus-
tomer on-boarding, including KYC,
loan disbursement, tracking and risk

96 I BUSINESS TODAY I September 22 I 2019

 mitigation, through our platform.
That is the technology we have built.
Repayment is not monthly but at the
end of the crop season. We are in the
w
the farmer within 30 minutes instead
of the three months that a lender takes
today,” says Ahluwalia. In the first
three months of the current financial

process of bundling a microinsurance year, 1,520 loan applications worth

product into this,” he says. `4.4 crore were sanctioned through
w

Mumbai-based Jai Kisan is an- the Jai Kisan platform.

other rural fintech platform. Arjun There are dozens of other firms in
w

Ahluwalia, Co-founder and CEO, Jai this space but given the low scale at
Kisan, says his aim is to help India’s which these companies operate, there
rural population build credit history is enough space for hundreds of such
.t.

and show suppliers of capital (lenders) “WE HELP entrepreneurs to provide tech-based
that they are an asset class and not liv- FARMERS IMPROVE solutions to each of Indian farmer’s
m

ing on doles. “The entire world today is

PRODUCTIVITY pre-harvesting problems. With 85 per
BY WORKING
running after the next billion users of WITH THEM AND cent of Indian farms having a size of
e/

India and they don’t live in urban In-
dia but in rural India. So, our effort is
to build a good credit-quality product.
Ta
SUPPLYING INPUTS” one hectare and less, such services can
only be provided by an enterprising
Tauseef Khan
breed of private entrepreneurs. India

Co-founder & CEO,

We are doing farm equipment loans Gramophone seems to be luring more of them with
and all types of loans that are backed tech-driven ideas.
by pre-purchase agreements. The
m

technology play comes in on-boarding @joecmathew

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 > WAREHOUSING
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MAXIMISING
w
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INCOME
.t.
m

Technology is being used to

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minimise agricultural losses

and generate revenues.
Ta

By JOE C. MATHEW
m
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O
D
F_
En

E-PLATFORMS
FOR PROFITS
Government electronic
ew

interfaces like e-Trade,

e-PQIS, GrapeNet,
FFICIALS ADMINISTERING the Narendra Modi AnarNet and e-Biz prove to be a boon for not only increas-
government’s flagship crop insurance programme – to allow electronic ing farmers’ income but also curtail-
delivery of services
sp

the Pradhan Mantri Fasal Bima Yojana (PMFBY) – in agritrade ing wasteful expenses. Instead of the
were mystified for some time by a pattern in payout traditional way of assessing crop loss
of insurance claims. Around 50 out of India’s 600- through manual crop cutting experi-
e-NAM platform with
ap

odd districts accounted for half the total claims gen- ments (CCE) that are prone to error,
National Agriculture
erated across the country almost every other year. Market to aid better the government has decided to migrate
They were desperate to address the issue because price discovery to a technology-based assessment
high payouts to select districts led to a year-on- model where synthetic yield analysis
e

year increase in the government’s (Centre as well as IoT-based warehouse will be carried out using a combina-
rs

states) insurance premium outgo. With the Union receipt system in tion of weather analysis, limited CCE
government’s budgetary provision for crop insur- APMC yards and and satellite data.
private wholesale
ance touching `28,000 crore, it was not a financial market yards “Substantial work has happened.
commitment that they could ignore. Within the next three (crop) seasons,
Are farmers in these 45-50 districts growing we will totally migrate to technology-
Devices to grade
the wrong crop? Should they diversify? Should these agri-produce on the based assessment of paddy and wheat;
crops be excluded from the insurance cover? basis of quality and all crops by 2021. It will be a tec-
Luckily for officials, agriculture technology may tonic shift in the way we handle crop

98 I BUSINESS TODAY I September 22 I 2019

w
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m
ilP
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insurance. The time taken to get yield

results and calculate payouts will be ` 28,000
sp

reduced,” says Ashish Kumar Bhuta-

ni, CEO, PMFBY. That is not all. The crore
Union government’s budgetary
government is also planning to link provision for crop insurance
ap

insurance policies to land records that

are being digitised by various states.
By the end of October 2020, the agri-
culture ministry hopes to have a data-
e

base of land records of all farmers in account a year) will eliminate possibilities of multiple and bogus claims,
rs

the country.
Once that happens, de-duplication
through integration of digital land
records with the Aadhaar number of
each individual and beneficiary of the
PM Kisan Scheme (another govern-
ment welfare scheme where every eligi-
ble farmer gets `6,000 in her/his bank
reducing wastage of government funds. In one stroke, technology will help
transform what used to be more like an assured payout scheme in some
cases into a crop insurance scheme, where payouts happen only when there
are genuine claims of crop losses.
Private entities are also using technology to minimise losses and gen-
erate optimal revenues in agriculture. Bengaluru-based agritech firm Cro-
pIn operates a business-to-business (B2B) model with a range of agribusi-
ness stakeholders, including farming companies, agri-inputs companies,

September 22 I 2019 I BUSINESS TODAY I 99

 AGRITECH SPECIAL > WAREHOUSING

government and development agencies, banking financial services and of fruits, vegetables and other perish-
insurance firms, and cooperatives and NGOs that operate through the able items. We want to get people to say
agriculture value chain. These stakeholders, in turn, use CropIn’s technol- that if it is certified by us, it is good. We
ogy platform to efficiently manage farming activities of a huge network of want to increase our width in terms of
farmers they are engaged with. more commodities and depth in terms
w

“In this model, farmers do not pay for technology but businesses of more parameters.”
that we work with pay for the technology. Our pricing model is either Sohan Lal Commodity Manage-
w

per user licence or by land acreage,” says Krishna Kumar, Founder and ment (SLCM), the company which
CEO, CropIn. What CropIn does is provide crop advisories to farmers, manages a network of over 4,000
w

while offering real-time monitoring of the field and health of crops to warehouses across India, is using a
their clients – the enterprises. “We have 106 clients, some with multi- technology platform for monitor-
country operations,” says Kumar. The company’s services are sought by ing commodity stocks that are ly-
.t.

contract farming companies that want to keep an eye on health of crops ing in its warehouses. Parameters
they need to buy. “Seed companies that get their seeds produced from like moisture and temperature,
m

and photographs, are captured and

transmitted in real time. Recently,
e/

it introduced a mobile phone-based

attendance registration system for
its warehouse managers. “We are
Ta

experimenting with a technology to

“IN THIS MODEL, map the fidelity of the people on the
FARMERS DO NOT PAY
ground, someone like a warehouse
FOR TECHNOLOGY BUT
m

BUSINESSES THAT WE manager. On any moment a mes-

WORK WITH PAY FOR sage alert can go on his device say-
ing within such and such time please
ilP

THE TECHNOLOGY”
mark your attendance. At that time,
Krishna Kumar the device will open only if the geo-
Founder and CEO, CropIn
metric positioning of the mobile is
D

within the specific parameters of the

warehouse, which means he is within
F_

the premises. And once the applica-

tion opens, it gives you 10 seconds to
rotate the phone for a selfie. It gets
En

farms through multiplication process would want us to give the right captured real time at the centre where
advice to the farmer to get the right quality of seed. At the same time, his attendance is registered. The
they would want us to geo-tag the farm. Once we have the location of the same thing happens at least thrice a
farm, the boundary of the farm, we run our machine-learning algorithm day,” says Sandeep Sabharwal, Group
ew

to tell them which farm is doing well, which is not, how much to expect CEO, SLCM. He says moves are afoot
from each farm, etc. So there is very precise monitoring of every farm on to use technology to audit existing
the platform,” Kumar explains. stock, even stock which is in transit.
sp

Gurugram-based Intello Labs is also focussing on a B2B model, CropIn’s Kumar says that the gov-
where it helps retailers and traders in quality assessment of farm pro- ernment can do a lot more to help
duce. “We are trying to digitise the whole system of quality checking and advance technology interventions in
ap

making it verifiable and scalable using smartphones. No longer will a agriculture. “Government can open
person in the headquarters of a big retail chain have to go by the word up lot of databases. The Indian Me-
of the person who actually purchases the farm produce in bulk from a teorological Department can provide
remote location. And it will not be purchased on the basis of perception weather data, which we are buying
e

of good, bad or ugly, but on its quality, which can be verified,” says Deven- today. The Indian Space Research
rs

dra Chandani, Co-founder of Intello Labs. Organisation has satellite data. Why
“We are not changing sampling techniques. The biggest component is can’t they open it? It can help private
visual parameters. For specific commodities, there are different param- players, especially start-ups, assist the
eters, and for some we have created sensor-based solutions. In cardamom, government in augmenting its activi-
we have a small attachment, a sensor that can be attached to the mobile ties to support farmers,” he says.
phone to capture the quality parameters,” says Chandani. Intello, which Is the government listening?
started with tomato, is currently handling 25 fruits and vegetables, carda-
mom and wheat. “We are looking at how to be the de facto quality norm @joecmathew

100 I BUSINESS TODAY I September 22 I 2019

 AGRITECH SPECIAL > COLUMN

TECH-ENABLED
FUTURE
Access to new technology
w

and customised solutions can

redefine Indian agriculture.
w

BY D. NARAIN
w
.t.
m
e/

T
HE AGRICULTURE SECTOR is one of the largest em-
ployers in India with more than 265 million engaged
in farming. Close to 70 per cent of rural India works in
Ta

farms and depends on agriculture for livelihood. How-

ever, farm incomes have seen a steady decline in recent
years with low productivity being the main contributing
m

factor. Low productivity leads to fall in farm incomes,

hampers long-term food security and affects India’s potential to become a
global producer and exporter of food, feed and fibre.
ilP

The need to scale up agriculture has become more acute with rising
global population. By 2050, the world will have 10 billion people, with
India accounting for 1.73 billion. Small farmers with limited or no access
D

to new technologies cultivate 80 per cent of India’s agricultural produce.

They have to grapple with decreasing per capita farmland, depleting water
F_

reserves and climate change. Meanwhile, consumers want safe, nutritious

and sustainably cultivated food. tion services can go a long way in enabling
India, with its 15 agro-climatic zones and varying cultivation practices, easy adoption.
En

can benefit from advances in agritech such as digital farming. Farmers can Technology can act as a crucial en-
benefit from faster, more accurate methods of monitoring plants and take abler for sustainable agriculture by reduc-
better-informed decisions. With solutions like precision farming, they can ing greenhouse gas emissions, promoting
ensure that each section of the farm gets the exact crop protection it needs, water and soil conservation and enabling
ew

at the right time. This technology saves farmers’ resources and ensures judicious use of crop protection solutions.
healthy plant growth, leading to economic and environmental benefits. It can also address income inequality faced
During the Green Revolution in the 1960s, India experienced how by rural farming communities. With this in
sp

technology can redefine agriculture. In the current scenario, besides dis- mind, global and local players are already
covering new technologies, we need to look at improving awareness of and developing customised agronomic solutions
access to technologies. One technology that has immense untapped po- and digital tools tailored to meet the spe-
ap

tential to enhance India’s crop productivity is hybridisation. Hybrid seeds cific local needs of Indian farmers.
offer various benefits such as stronger biotic stress tolerance and protec- The gap between technology’s prom-
tion against devastating pests and diseases, in-built abiotic stress toler- ise and reality can shrink with the Indian
ance, and increased resilience towards adverse growing conditions such government’s support through targeted
e

as temporary drought, moderate salinity and flash floods. By growing hy- incentives. Enabling policies and industry
rs

brid rice, Indian farmers have achieved additional yield advantage of one thought leadership will pave the way for
tonne/hectare and additional income of `6,000-10,000 per acre. more local innovation. This can transform
The use of drones also holds huge potential. Drones can be used for crop Indian agriculture as a strong third leg to
analysis and decision making regarding fertilisation and control of weeds, India’s growth story in addition to manu-
diseases, pests, etc. They can be used to apply crop protection chemicals. facturing and IT.
The cost of using manual power sprayers is high. It is also time and labour
intensive. Drones can evenly spray crop protection chemicals and reduce The author is CEO and
cost and time. Government subsidies to farmers to secure drone applica- Managing Director, Bayer CropScience

September 22 I 2019 I BUSINESS TODAY I 101

 AGRITECH SPECIAL > BY THE NUMBERS

FINDING
w

SOLUTIONS
w
w

Agriculture is the primary source of livelihood for

.t.

about 60 per cent of India’s population. Gross Value

Added by agriculture, forestry and fishing is estimated
m

at `18.53 lakh crore. Given its importance, the focus

of the government as well as the private sector is on
e/

increasing funding, spreading insurance coverage

and using tech solutions.
Ta

Graphic by TANMOY CHAKRABORTY; Research by SHIVANI SHARMA

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` 1.4
D
F_

lakh crore
Budgeted allocation for
Ministry of Agriculture
for 2019/20. This is 80
En

per cent higher than

the revised estimates of
2018/19
ew

FARMER INCOME
sp

The growth in average wages of rural labourers

(male) engaged in agriculture slowed in 2018/19

284
ap
323

Average Annual
311

28
298

wage growth
281
269
242

million tonnes (`/day) (%)

e
189

Fourth advance estimate 19 19

161

rs

of foodgrain production 16
135

(2018/19). This is 10 million

113

18
tonnes higher than the third
97

11
87

advance estimate
12 56 4 4
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19

FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19

Source: Ministry of Agriculture, CMIE

 $ 248 1.9 million 20.3
million Number of farmers trained million
Funding received by In- under the Agricultural
Number of successful calls
w

dia’s agri-tech start-ups Technology Management

Agency, which also reviews that the Kisan call centre
in 2019 (till June) com-
and approves research and received in 2018/19. mKisan
pared with a much lower
w

extension plans at district sent out about 4,27,400-plus

$73 million in 2018
level, in 2018/19 crop advisories
w

270
.t.

260

248
EXPORT
237
m

223
212
FOCUS Exports
Agri-related products
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(` '000 cr)
and services have a
FY14

FY15

FY16

FY17

FY18

FY19
significant
role in exports
Ta
m
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ON THE 15
RISE
D

Funds released in 11
five years for crop
F_

insurance
Expenditure
3 (` '000 cr)
1.5 2.6 2.6 Key
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Challenges
for Indian
FY13

FY14

FY15

FY16

FY17

FY18

Agritech
Firms
ew

AN ATTRACTIVE Funding
sp

PROPOSITION 39%
FDI (` cr) in agriculture rose sharply in 2018/19
ap

Policy
FY14
FY15
560 / 113
352 / 1,378
29%
e

Digital Infra
FY16 566 / 144
rs

FY17 516 / 6
Agri services
Fertilisers 20%
FY18 710 / 173 Farmers’ Mindset
FY19 625 / 608
12%
Source: Nasscom
Agritech CEO
Survey 2019
w

MAKE THEM LEADERSPEAK:

P.106 P.116
STRONG TO BEN VERHAERT
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GUARD DATA
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.t.
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TECH SCARE
rs

BEWARE OF THE VOICE TRAP

Voice interactions are most convenient, but they could also
lead to privacy breach and fake information.
Illustration By Raj Verma
 F
w
w
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ORGET MOUSE AND TOUCH; voice
is taking over. The sheer convenience
of going hands-free and command-
.t.
ing voice assistants to access informa-
tion or get tasks done may come back
m
to bite us sooner than we imagine.
By now, just about every technology
e/
major has been caught listening to
users through one route or the other.
In the process of operating, improv-
Ta
ing and personalising voice assistants,
Amazon, Apple, Google and Microsoft
have to rely on their users and the way
m
they communicate. So, they listen to
recordings, without which it will be
tough to make these assistants more
natural and useful.
Although tech firms have been do-
ing it for a long time, they do not make
full disclosure of the same. Besides,
most users are not diligent enough to
peruse privacy policies as the language
is often too complicated. Also, people
have somewhat accepted that their
names and e-mail IDs are sold to third
parties for targeted advertising. Never-
theless, they are surprised, shocked and
outraged when reports of unauthorised
listening hit the headlines.
Recently, Amazon gave its users an
option to delete their commands by
another voice command. But no one is
sure whether the voice data completely
disappears or not. The company also
offered an option to disable human re-
views of voice recordings. Not long ago,
a report published by the online maga-
zine Motherboard shared actual record-
ings handled by Microsoft contractors
working on the virtual assistant Cor-
tana and Skype translation. Apart from
personal information, those recordings
included phone sex conversations and
voice searches for pornography. Even
though the contractors did not know
to whom they were listening and were
under strict confidentiality agreements,
September 22 I 2019 I BUSINESS TODAY I 105
it is an uncomfortable thought. As per a
Bloomberg report, Facebook also admit-
ted to listening in on private audio con-
versations on Messenger, which were
later transcribed. Apple said its contrac-
tors had studied a few interactions with
voice assistant Siri for quality purposes.
But they did not know the Apple IDs
related to the Siri recordings.
If you are feeling spooked, here is
yet another danger. As we use virtual
assistants to call local businesses via
voice commands and do not ensure
whether these phone numbers and
businesses are legitimate, we are likely
to fall victim to scamsters mimicking
the original brands. Two such instances
have already grabbed public attention.
A woman called what she thought to
be a Zomato number but encountered
scamsters instead and lost her bank
balance. And a person in Chennai just
missed a similar fate. Do not blame it
on voice-commanded diallers, though;
these might have occurred as the peo-
ple concerned used phone numbers
ilP
without adequate cross-checking.
D
AS WE USE VIRTUAL ASSISTANTS
TO CALL LOCAL BUSINESSES VIA
F_
VOICE COMMANDS, WE ARE LIKELY
TO FALL VICTIM TO SCAMSTERS
En
MIMICKING THE ORIGINAL BRANDS
ew
Miscreants are always ahead of us-
ers, and they seem to have prepared
for the time when voice commands
become the preferred way to connect
with local businesses. Consequently,
the Internet has been flooded with
fake companies to dupe customers. In
a world ruled by algorithms, scamsters
pay for high search engine rankings
and use the right keywords and tags
to appear among top results almost
instantly. With your eyes glued to the
screen for a long time, you may lose fo-
cus and that little bit of due diligence
to make sure if a phone number looks
right or not is taken out of the equa-
tion. Thus, many more fake calls be-
come a real possibility.
HR TECH
FIRING PEOPLE?
LET VR HELP
FIRING SOMEONE is always
stressful for all parties con-
cerned. The inhuman way of
doing it is to lock down the
person’s computer and shut off
all access to the office or hand
over the dreaded pink slip with
few explanations. But in doing
so, a company may lose its
reputation and the person thus
terminated may suffer untold
harm. However, a US-based
company called Talespin is try-
ing to change all that. The com-
pany trains people in soft skills
and emotional intelligence,
and has now come up with a
virtual reality (VR) tool to teach
interpersonal skills so that one
can behave more humanely in
such situations.
Talespin has created a vir-
tual entity called Barry, a man
whom you can see if you don
a VR headset. The company
describes this method as a
software-based approach to
training soft skills. “The prem-
ise behind the software is giv-
ing employees a safe space to
practise challenging interper-
sonal situations while using AI
(artificial intelligence) to create
emotionally realistic charac-
ters to stimulate and challenge
sp
them,” its website says. “When
a trainee enters a virtual human
training experience, VR pro-
vides the environment and
ap
medium for the most effec-
tive delivery of the training
scenario, while AI gives users
a counterpart to interact with
e
and carry out the other half of
the simulated conversation.”
rs
One can interact with
Barry and practise firing him,
and changing the conversa-
tion again and again until it
feels right. Barry responds,
not just with words but with
full body language and facial
expressions, showing distress,
arguing, shouting and so on,
to raise the challenge.
PERSONAL TECH

MAKE THEM
w

STRONG
w
w
.t.

A MUST-FOLLOW GUIDE
FOR CREATING PASSWORDS
m

WHICH CAN KEEP DATA

BREACHES AT BAY.
e/

By NIDHI SINGAL
Illustration by AJAY THAKURI
Ta
m
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D
F_
En
ew
sp

W
ap

E LIVE IN A DIGITAL age where just about every retailer, ARE THEY SECURE?
bank, credit agency, website and social media platform If you think your password is difficult
is under attack. Like it or not, hackers can easily crack to crack, let us take a short quiz and
e

our passwords, access our smart devices, steal our data find out. Do you have the same pass-
rs

and hijack our identities. Of course, companies try to
protect us from malicious attacks by adding two-factor
authentication (2FA) and best-in-class encryptions.
Besides, several predict that physical passwords will
soon be obsolete and biometrics will kick in. But
until then, we should try and shield ourselves from
cybercriminals by using passcodes which cannot be
cracked easily.
word for your e-mail login, social media
accounts, shopping sites and net bank-
ing? Or do they have the same compo-
nents – your first name, last name,
phone number, date of birth, anniver-
sary date, pet’s name or your child’s
data? If that is the case, you are not
alone and may soon become a victim

106 I BUSINESS TODAY I September 22 I 2019

 THE BREAKOUT ZONE

of data breach as your personal infor-
mation can be hacked easily. Worse
still, most people suffer from a kind
of password fatigue and tend to stick
to the same code for all their accounts
w
usernames and passwords that Google
knows to be unsafe due to third-par-
ty data breaches. One can also try the
Kaspersky Secure Password Check to
find out how fast her next password
manager to create a secure and ran-
dom passcode. For instance, LastPass
allows you to generate a strong pass-
word, say, #5fMQt6c!S!l, which can
be further customised by changing

for the sake of convenience. Again, can be cracked. The site warns you not the number of characters or selecting
many of us like to keep them simple to type your real passwords, but it is a options such as easy to read or easy to
w

(and hacker-friendly such as iloveyou fun exercise. say. Or try 1Password that gives you the
or 12345) because difficult passwords option to choose from random pass-
w

are not easy to remember. Finally, CREATE A STRONG PASSWORD words, memorable passwords or pins.
some people are just lazy – they do not The rule of thumb is to stay away from Although these passcodes are diffi-
even change default passwords despite the obvious. For instance, never use cult to remember and key in every time
.t.

regular prompts. If your passwords fall easy, sequential numbers or letters or you wish to log in to a site or a service,
under these categories, you could be a combo of both such as 12345, 11111, there is an easy solution. Password
m

facing huge security risks. According 123123, qwerty, abc123 and so on. generators and password managers
to Norton (a division of the US-based Similarly, avoid using common words will securely store your passwords in
e/

cybersecurity goliath Symantec), hack- and phrases such as ‘donothack’, encrypted vaults (can be accessed with
ers are hungry for passwords as they ‘antivirus’ or ‘password’. As discussed a master password that only you know)
have a substantial monetary value. before, do not use any personal data and autofill usernames and passwords
Ta

Thanks to data breaches and pass- (name, birthday and the like) while cre- for online accounts. Otherwise, you can
word leaks, millions of records could ating your password. This information rely on the autofill feature of Google
be stolen by cybercriminals and sold at is often featured on social media plat- and Apple which also store your pass-
m

a premium, depending on the sensitive forms and hackers can access it. words securely and autofill the data
nature of the data. You can create a strong password by on their respective platforms. Many
Before you rush to create unique using a combination of alphabets (both companies, especially banks and cred-
ilP

and complicated passwords to pre- upper and lower case), numbers and it agencies, also send time-restricted
vent these malicious attacks, find special characters or symbols, but do one-time passwords or OTPs to your
out whether your current passwords not put the letters or numbers sequen- registered phone and e-mail to make
D

would pass muster. You can do this by tially. Besides, passwords should be authentication more secure.
installing Google’s Password Checkup long – anywhere between 12 and 16
F_

extension (available from Chrome Web characters should serve the purpose. MORE SAFEGUARDS
Store), designed to keep your digital life All this may sound slightly technical, Now that we know the basics of strong
secure. A bright red warning box pops but in reality, it is a simple exercise. passwords, here are five golden rules to
En

up whenever you log in to a site or a ser-
vice by using one of the four billion-plus
If you still find it challenging, opt for
a password generator or password
ensure password safety.
• Never share your e-mail id and
password with anyone, including
the people you trust.
ew

• Change passwords regularly –

anywhere between 60-90 days is
Sign In With Apple recommended.
sp

• Never reuse an old password.

As every website/app makes it mandatory to sign in
using your e-mail ID, you often end up putting your • Start using secure Password
primary e-mail and password to log in. Another pop- Managers to keep your passwords
ap

ular option is to sign in using your Gmail or Facebook well protected.

account, which grants the site/app access to all • Password recovery may not be as
e-mail contacts and important information. That is secure as you think. In case you have
why Apple has figured out a solution. The Cupertino forgotten your password, a code or
e

company is coming up with a feature called Sign In

link is usually sent to your phone
With Apple that eliminates the need to fill in forms
rs

or create passwords. If a user prefers it, Apple will or e-mail so that you can reset your
create a unique e-mail address to be shared with the app, thus keeping the password. This can leave you vul-
real e-mail ID private. In simple terms, instead of sending your actual e-mail nerable if an attacker has gained
address, Apple will sit in-between and send a random but unique ID to the access to your phone, e-mail, voice-
app and relay all the messages back to you. This will keep your e-mail and mail or other information related to
password safe and eliminate the hassle of remembering multiple passwords
the authentication process.
for not-so-important apps and websites. If you ever wish to log in again, Apple
will be at your service.
@nidhisingal

September 22 I 2019 I BUSINESS TODAY I 107


w
w
16 MP
FRONT
w
CAMERA
.t.
m
6.3-INCH
NOTCH
DISPLAY
e/
WITH
1,080X2,340
RESOLUTION
Ta
REALME 5 PRO
LOW-COST CAMERA FEST
By NIDHI SINGAL
A
QUAD-CAMERA set-up in a
smartphone is not a new con-
cept, but it is a lucrative deal
when a sub-`15,000 device
sports it, including a 48 MP
Sony IMX586, an 8 MP ultra-
wide sensor, a 2 MP macro
lens and a 2 MP depth sensor besides a
waterdrop-notch 16 MP front camera.
But the camera app UI on Realme 5
Pro does not complement the hard-
ware. For instance, just the video, photo
and portrait modes are out there at
the centre, but most other modes and
options are hidden, and you can only
access them after a few clicks. I had to
scroll to the very top under the photo
mode to activate the ultra-wide lens
(119˚) for capturing landscapes and
108 I BUSINESS TODAY I September 22 I 2019
8 MP ULTRA
WIDE-ANGLE
LENS
2 MP
PORTRAIT
LENS
m
ilP
D
F_
En
a large group of people. Similarly, the
ultra-macro mode under ‘more options’
could be reached from the bottom left.
As for image quality, the primary sensor
captured quite clear and bright images
in a well-lit environment. But in low-
light condition and indoors, there was
some noise when I zoomed in. Colours
appeared a little too bright on the dis-
play but looked good when images were
uploaded on social media platforms.
The ultra wide-angle lens did a decent
job while the portrait mode was rather
impressive as it successfully focussed
on the subject and blurred the back-
ground. But the macro mode failed to
capture details. Realme’s Cromaboost
mode was a hit-and-miss affair – some
images looked good, but the colours did
48 MP
PRIMARY
SENSOR
2 MP
MACRO
LENS
PRICE
`13,999
onwards
not look natural in others. Overall, the
camera is a decent performer, and given
the price, we should not be complain-
ing. My review unit, with 8 GB RAM
and 128 GB onboard storage, is priced
at `16,999, but the base price is quite
pocket-friendly.
The 6.3-inch notch display
appeared super bright and I had to
keep it on auto-bright mode. It was
comfortable to hold in spite of its size,
but reaching the top of the screen dur-
ing the one-hand operation was rather
challenging. The phone has a capaci-
tive fingerprint scanner at the rear and
ew
a face unlock option (not so secure).
And it took me only a couple of days to
get used to its ColorOS 6 user interface.
sp
The search bar at the top of the app
tray is another cool feature. However,
the Realme 5 Pro is not free of bloat-
ap
ware and you will find several apps
such as Opera News, Paytm, Facebook,
ORoaming (a preinstalled roaming
app) and more. I was able to uninstal
e
most of them but a few could only be
rs
disabled. Powered by a Qualcomm
Snapdragon 712 SoC, the Realme 5 Pro
has been a decent performer, capable
of handling multiple apps at the same
time. The 4,035 mAh battery easily last-
ed me a day on a single charge.
@nidhisingal
 THE BREAKOUT ZONE

AMAZON ECHO SHOW 5 compatible lights and briefing me about the day’s schedule. I could
toggle between routines from the smart display but had to use the
Alexa app to set up this activity.

A Near-perfect Alexa on Echo Show 5 responds to voice commands for con-

trolling compatible devices. Otherwise, you may go to the Smart

Companion Home icon on the interactive dashboard (it displays all paired
devices) and manage them without speaking. However, this one
w

does not come with Zigbee support (available in Echo Spot and
By NIDHI SINGAL
Echo Show 10.1 inch) and you need to buy the hub separately for
Zigbee-compatible devices. (For the uninitiated, Zigbee is a two-
w

way communication system used to control smart appliances).

SMART SPEAKERS with built-in voice assis- This version of the Echo Show also displayed lyrics of some of
w

tants could be a great way to fetch infor- the English tracks it played from my Amazon Music library, which
mation and control compatible household was a nice experience. But for Bollywood songs and other tracks,
.t.

appliances. Add to that a neat rectangular it simply displayed the album cover along with artiste details. The
screen and affordable pricing, and you get biggest downside, however, is non-availability of the Google eco-
Echo Show 5, a near-perfect household com- system. Although Google and Amazon seem to be sorting out their
m

panion. The 5.5-inch display (with 960x480 differences with the YouTube app landing on the Fire TV Stick, it
resolution) propped at a slight angle, has is still not available here and Netflix is absent as well. To stream
the right form factor to be placed on a night- YouTube content, I had to choose either Firefox or Silk browser, but
e/

stand, television unit, study desk or a kitchen they did not support voice search. Nevertheless, it was able to fetch
counter without being obtrusive. The mute videos and movies from Prime Videos and a few other compatible
mic button and the camera shutter take care apps within a few seconds.
Ta

of privacy issues while the display adjusts

the brightness automatically. The two micro- @nidhisingal
phones on this entry-level device can pick
up your voice from another room.
m

Setting it up is easy; all you need is MANUAL KEYS FOR

MUTING MICROPHONES
Amazon account login data and wireless AND SHUTTERING THE
ilP

connectivity. Swiping down from the top CAMERA

reveals the brightness control toggle along
with settings and ‘do not disturb’. Swiping
towards the left from the right edge opens
D

the dashboard, giving access to communi-

cations, smart home controls, music, video,
F_

routines and alarms. Plus, you get access

to information – time, weather report, lat-
est news, WikiHow and more. It updated my
Amazon order and I was able to add items to
En

my Amazon shopping cart by commanding

the smart display. Hands-free video calling is
supported between Alexa-powered devices.
Another ideal usage scenario that I test-
ew

ed was waking up with a morning alarm, and

the Echo Show did it right by switching on
sp
ap
e rs

PRICE
5.5-INCH `8,999
DISPLAY
 ers
ap
sp
ew
En
F_
D
ilP
m
Ta
e/
m
.t.
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 THE BREAKOUT ZONE
EXECUTIVE HEALTH
w
IT’S ALL IN
w
THE BLOOD
w
.t.
AN AGE-OLD
DIAGNOSTIC METHOD
m
CONTINUES TO BE A
GUIDING LIGHT.
By E. Kumar Sharma
e/
Ta
MOST OF US DO NOT LIKE the painful
needle poke and the tense wait after-
m
wards before our blood tests tell us what
has gone wrong. The system was first
introduced in the 20th century, but it
evolved fast, much like medical science.
Now blood tests are considered the
most useful and least expensive diag-
nostic method that has revolutionised
the science of healing.
The vast range of medical condi-
tions which can be analysed and iden-
tified from blood samples is mind-
boggling. For instance, a routine CBC
(complete blood count) test, costing
around `250 at the best facilities,
measures different types of blood cells,
haemoglobin concentration and hae-
matocrit (the ratio of red blood cells’
volume to total blood volume). It also
tracks vitamin B12, crucial for nerve
regeneration, and vitamin D, critical for
bone strengthening. Doctors will ask
you to get a CBC done to review overall
health, identify anomalies or monitor
ongoing treatment. But this test could
help in detecting blood cancer and
other critical medical conditions if too
many or too few blood cells of a kind are
found. It also indicates whether one has
thalassaemia, a genetic blood disorder
quite common in India.
A fever panel test is advised when
a person is suffering from high-grade
fever (101ºC-plus) for a couple of days
or low but persistent temperature for
September 22 I 2019 I BUSINESS TODAY I 111
a week or more. The blood test deter-
mines the cause – be it mosquito-borne
diseases such as malaria, dengue or chi-
kungunya, or deadly bacterial infec-
tions like leptospirosis. Also, haema-
ilP
tocrit and platelet counts are checked
to rule out dengue that peaks during
D
A BLOOD TEST HAS
BEEN REPORTEDLY
F_
DEVISED BY SCIENTISTS
AT THE WASHINGTON
UNIVERSITY FOR
En
EARLY AND ACCURATE
DETECTION OF
ALZHEIMER’S DISEASE
the monsoon, spreads fast and often
reaches epidemic proportions.
Blood tests can be beneficial when
it comes to specific diagnoses. For in-
stance, early samples from an expect-
ant mother could accurately determine
the risks of giving birth to a baby with
Down syndrome. Then there is chorion-
ic villus sampling (CVS), a prenatal test
used to detect if a baby will inherit any
genetic disorder or a would-be mother
will be at the risk of toxaemia, a kind of
blood poisoning. A blood test is often
done in this case as part of the diagnosis.
However, these new forms of blood tests
are quite complex, require specialised
labs and happen to be expensive. For ex-
ample, blood tests to study certain gland
functions or detect some rare tumours
could cost `9,000-10,000.
Improving diagnostics: As per lat-
est reports, a blood test has been devised
by scientists at the Washington Univer-
sity in St Louis, US, that measures the
amyloid-beta protein in the blood to
provide early and accurate detection of
Alzheimer’s disease. The Science Daily
has also published an article that says
researchers hope to develop a test that
could help detect early changes in blood
flow to the heart. These underline how
blood tests have evolved. They also help
in studying bacterial pathogenesis (the
ew
way they infect a host) and molecular
pathology (diagnoses through molecular
analyses of body components).
sp
In fact, we have seen improved
diagnostics at every level. About five
years ago, TB culture test used to take
ap
six-eight weeks. Today, one can get the
diagnosis done in a day. The prescrip-
tion also arrives in a couple of days after
the drug sensitivity test is carried out
e
using a molecular method called the
rs
Hain test. Such speed is admirable.
Nevertheless, be careful when you
choose a pathology lab next time to get
your blood test done. This space has
very few entry barriers and lax regula-
tions. Unless you ensure quality and ac-
curacy, the blood will not tell the whole
health story.
 THE BREAKOUT ZONE
Sumptuous Sunday
brunches from the
Hong Kong Club will
please all foodies
w
w
w

LUXURY
.t.

FINE LIVING
m

BECKONS
e/
Ta

GET READY FOR A COLOURFUL

SOJOURN AS THE EAST AND
m

THE WEST COME TOGETHER

WITH OFFERINGS TO WOW
CONNOISSEURS.
ilP

By PRACHI BHUCHAR
D
F_

Dim Sum
THE Heaven
En

JAPANESE THE HONG KONG CLUB at Aerocity,

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Delhi, has always been viewed as a hip-

SWAG
ster place for young corporates wooing
clients and entrepreneurs looking to
up their swag quotient. Now, the bar-
sp

cum-dining destination (known for its

J A PA N E S E FA S H I O N Cantonese cuisine) has gone up a notch
brand Uniqlo may not be by bringing The Brunch to its patrons
what you imagine cou-
ap

on Sundays. Here is a look at the fare:

ture to be, given its price
A 16-course dim sum spread; a bril-
point. But thanks to superb
cuts, superior fabric and high-
liant band belting out jazz, rock and
pop with equal ease, and a bar well-
e

on-comfort clothes, it is a favou-

rite across ranks. The iconic brand, stocked with cocktails and Taittinger
rs

which appeals to young CEOs, outdoorsy bubbly to lure you. Go from dim sums
people (athletes are also among them) and hoodie-clad entrepre- to salads, soups, baos, small plates and
neurs alike, is now making its debut in India. The first store will open mains throughout the afternoon and
in Delhi in October, and another outlet in Bengaluru will follow soon. take a dip in the pool while you wait
These outlets will offer everything that the brand's Tokyo and New between courses if you will. Better still,
York stores have. The brand may also tie up with local designers it is a child-friendly space. So, take the
for select capsules, something that Uniqlo does well globally. For
little ones along and spend some qual-
example, it has joined hands with the Finnish design house Marime-
kko, and similar collaborations may happen in India.
ity with the family in the food heaven.
 A rare pair of Nike Moon
Shoes (only 12 pairs were
made) fetched an all-time-
high price of $437,500 at
a sneaker auction hosted
by Sotheby’s
w
w
w

Collector’s Choice
.t.

DÉCOR WITH A
m

ENTREPRENEUR- $437,500 at an auction man designed the Moon

collector Miles Nadal
has a soft spot for the
hosted by Sotheby’s. It
smashed the previous
Shoes and only 12 pairs
were manufactured. The DIFFERENCE
e/

finest of shoes and his record for sneaker auc- auction had 100 pairs up
collection is legendary. tion – that of $190,373 for sale – many of them Global fashion houses are
So, it did not surprise for a pair of Converse are quite rare – and Nadal striding into the interiors,
Ta

many when he bid for sneakers worn by Mi-
and bought a pair of chael Jordan in the 1984
1972 Nike Waffle Racing Olympics finals. Nike
Flat Moon Shoes for Co-founder Bill Bower-
m
purchased all 99 in a pri-
and the likes of Ritu Kumar
vate sale before bagging
are not lagging either. She
the Moon Shoes in the
has ruled the bridal circuit
public sale.
and Label by Ritu Kumar

also works brilliantly as a

prêt collection. The brand
has now forayed into the
ilP

home space, offering

bed linens, dinnerware,

CLASSIC
THERE is a new car out there that is scorching the wallpapers and gift items
tarmac and making people sit up. The first-ever BMW (candles, lamps and
D

X7 has come to India, offering the ultimate in elegance more). All are sporting the

AND
design imprint of Kumar
and performance. The Bavarian carmaker’s flagship SAV
F_

but in a more evolved way.

(sports activity vehicle) looks modern but also sports
Each collection pays hom-
the classic lines of a luxury sedan. Size rarely matters in

POWERFUL
age to an indigenous art
SAVs, but this one is bigger than most, with impressive form, and the outcome is
features and components. From high-gloss chrome
En

a picturesque weave
elements on the exterior to state-of-the-art craftsman- of vibrant colours, tradi-
ship inside, the sheer magnitude of things will wow you tional motifs and
if you are looking for power and comfort. modern designs.
ew
sp
ap
e rs
 THE BREAKOUT ZONE
EX-LIBRIS
A MAVERICK
w
IN POLITICS
w
w
.t.
HE GREW UP POOR IN BIHAR.
BUT YASHWANT SINHA BECAME
m
INDIA’S FINANCE MINISTER TWICE
AND HAD A RINGSIDE VIEW OF
EVENTS IN TWO GOVERNMENTS. HE
e/
PRESENTS AN INSIDER’S TALE.
By Palakunnathu G. Mathai
Ta
THE TIME: JUNE 1998. The place: A
room in Parliament. Finance min-
ister Yashwant Sinha had presented
the Budget – and raised petrol and
urea prices. Members of Parliament
erupted in protest. Sinha stormed into
his room where I had been waiting to
interview him, asked his secretary to
get a senior functionary on the phone
and exploded into the phone as I was
being shooed out.
Sinha is a courteous politician. But
he does not have a thick skin.
In 1967, the Bihar cadre IAS
officer was the deputy commissioner
of Santhal Parganas district. Irrigation
minister Chandrashekhar Singh
had shouted at him in public. Sinha
protested. Chief minister Mahamaya
Prasad Sinha shouted at him and told
him to look for another job. Sinha’s
classic reply: “Sir, I am a gentleman
and expect to be treated as one. I am
not used to being shouted at. And as far
as looking for another job is concerned,
114 I BUSINESS TODAY I September 22 I 2019
Relentless: An
Autobiography
By Yashwant Sinha
m
Publisher: Bloomsbury India
Pages: 542
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Price: `799
D
F_
I can become a chief minister someday,
but you can never become an IAS
En
officer. ” Bihar chief secretary B.D.
Pande would later tell him: “Yashwant,
in the civil services, you must have the
skin of a rhinoceros.” Sinha writes in
his autobiography, “I have never been
able to develop a thick skin, much less
one like a rhinoceros.”
Sinha, of course, is no stranger to
the public. A poor boy who studied in
Hindi-medium schools, he worked
hard, taught political science at Patna
university, got into the IAS, married an
ICS officer’s daughter, thus marrying
into high society (as he puts it). He
writes here of life in the boondocks of
Bihar, in the bureaucratic worlds of
Patna and New Delhi, and his switch
to politics and eventual rise to power.
His two political mentors were former
prime minister Chandra Shekhar,
in whose short-lived government he
served as finance minister, and BJP
doyen L.K. Advani.
Sinha also confirms what had
been widely rumoured in New Delhi
when he was finance minister – he was
not particularly close to then prime
minister Atal Bihari Vajpayee. In fact,
Tarun Das, Director General of the
ew
Confederation of Indian Industry
(CII), an influential business lobby
organisation, advised Sinha to see
sp
Vajpayee more often. Sinha and the
prime minister grew closer later after
Sinha became external affairs minister.
ap
In the book, he casts light on
several matters.
• V.P. Singh offered him the
governorship of Punjab. Sinha
e
consulted Chandra Shekhar and
rs
turned it down.
• The Congress party, which
was supporting the Chandra
Shekhar government from outside,
wanted former finance secretary
S. Venkitaramanan to replace R.N.
Malhotra as Reserve Bank of India’s
governor. So, Sinha had to ask

Malhotra to resign. Venkitaramanan would grapple
with a foreign exchange crisis. He told me in Chennai
that he had proposed handing over the Indian embassy
properties in Tokyo and Beijing to real estate developers
to net $1 billion.
w
• P.V. Narasimha Rao invited him to defect to the
Congress party, which had 232 MPs. Sinha was then a
w
member of Chandra Shekhar’s Samajwadi Janata Party
that had five MPs. Perhaps, Rao hoped that other SJP
w
MPs would follow Sinha into the Congress. But Sinha
did not bite. Instead, he joined the BJP.
• Did Manmohan Singh have a memory
.t.
lapse when he appeared before the all-party joint
parliamentary committee (JPC) formed after the
m
Harshad Mehta scam broke?
Sinha was a member of the JPC. He felt that
e/
Manohar J. Pherwani, who had been appointed the
chairman of the Unit Trust of India (UTI) by the
Rajiv Gandhi government and was sacked by the V.P.
Ta
Singh government, had indulged in malpractices. The
Narasimha Rao government had reappointed Pherwani
to UTI. Asked about this, Manmohan Singh said he had
m
not appointed Pherwani; his predecessor (Sinha) had.
Sinha demanded that the committee should call for the
file. Singh had signed it.
ilP
Incidentally, Pherwani denied any wrongdoing in
an interview to me days before he died.
• Sinha and foreign secretary Kanwal Sibal shot
down a proposal to return Jinnah House in Mumbai
to Dina Wadia, industrialist Nusli Wadia’s mother.
Vajpayee had cleared the proposal, made by Jaswant
Singh, Sinha’s predecessor, but Sinha persuaded the
prime minister to reverse his decision. Predictably, that
put paid to Sinha’s friendship with Nusli Wadia.
Although he had swadeshi sympathies, Sinha was
never a member of the Rashtriya Swayamsevak Sangh
(RSS). The two were out of sync. He says in the book,
“Most of these people were prisoners of an ideology that
had long become irrelevant... Unfortunately, it carries
great conviction with the gullible, as does the complete
nonsense that is dished out by the bhakts on social
media these days.”
Sinha rebelled and quit the BJP. Today he stands
marginalised. Ministers do not reply to his letters.
This is a good, interesting book, rich in detail –
sometimes too much detail. Why, for instance, write
about so many countries that he dealt with as foreign
minister? Still, it is a well-edited book. I could spot
only one major error – “Nusli Wadia’s sister Dina
Wadia, sister of Muhammad Ali Jinnah” (page 419).
Dina Wadia was Jinnah’s daughter, not sister, and
Nusli Wadia’s mother.
The reviewer worked at India Today, was executive
editor of a business magazine, resident editor at two
financial dailies and a deputy editor at The Telegraph
THE MODEL THINKER:
What you need to know to
make data work for you
BY SCOTT E. PAGE
Publisher: BASIC BOOKS
Pages: 448
Price: `1,625 (HB);
`580 (PB)
BEYOND BIG DATA
A NEW WAY OF UNDERSTANDING AND
ANALYSING RECENT DATA FUSILLADE.
By Dipak Mondal
IF YOU PICK UP a book on how to make data work for
you, it is assumed that you like numbers and statistical
terms. The Model Thinker by Scott E. Page is all about
models – formal structures presented through math-
ematics and diagrams to help us understand why things
happen the way they happen. In simple terms, models are
tools which encapsulate daily-life problems and situa-
tions in mathematical terms, try to explain why they are
happening, predict possible outcomes and help design
potential solutions. The book discusses a wide array of
models, how they are formed, their utility and limitations.
Which means nothing is random in life. All our decisions
D
and actions happen because certain variables function in
a certain way and models teach us to put these variables
F_
in a mathematical form. These equations can be simple
or complex based on the number of variables involved.
Page does a great job of analysing 30-plus models, along
En
with real-life examples. He also focusses on many-model
thinking as single models often fail to provide a complete
picture in this age of Big Data where the fire-hose of data
flow leaves little scope for complex and nuanced analyses.
ew
For instance, a single model may point out that the poor
state of national health in the US might have been trig-
gered by the opioid crisis, but the current scenario is not
sp
the outcome of a single cause.
The real-life examples given here are intriguing. The
book explains why the US government decided to bail out
ap
the American International Group (AIG) instead of the
Lehman Brothers in 2008 – the choice made was based
on a model. The author gives another example of how the
French authorities used probabilistic models to locate the
e
fuselage of the AF 477 that crashed in 2009. There are
rs
many more incidents which show how business-related is-
sues could be accurately predicted by using specific models.
But such things do not make the book a page-turner.
All too often, readers drown in too many assumptions,
logical conclusions and alphabetic symbols while trying
to understand the basic premise of a model and what it
can achieve. The best approach: Read this book as an
academic exercise but certainly not for fun.
 LEADERSPEAK
BEN VERHAERT, President (South Asia), Anheuser-Busch InBev
He has been with the world’s biggest brewer for over 15 years and headed business operations
in Europe. In India, he has led the company’s growth across several brands,
including Beck’s Ice and Budweiser.

Q. The biggest challenge in your career

A. When I took on my current role, it was a big
challenge. It came right after the global merger
w

between SABMiller and AB InBev and I had the

opportunity to spearhead change in India, an
w

extremely diverse market. It was a big step for me to

discover a new culture, acquaint myself with varied
policies related to our business and understand
w

different market dynamics at play. There were plenty

of challenges, but at AB InBev, we look at them as
.t.

opportunities. It also enables us to push boundaries

and thrive under pressure, helping us learn and grow
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and become better leaders.

Q. Your best teacher in business

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A. Humility is the best teacher in business. It invites

you to listen, to ask for advice, to be open to feedback,
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to accept and admit failures. It not only allows you

to change course when it does not work but also
promotes an open and candid work environment.
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Q. One key lesson for young people

A. You can only hit a target you can see. So, it is
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important to set your goals high, both in personal

and professional life. You must write them down if
you want to achieve these goals. When you have put it
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down in writing, it will serve as a compass – guiding

you in any choice you need to make, act as an aid and
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push you to achieve all the great things on that list.

Q. Two essential qualities of a leader

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A. You should not only inspire your colleagues

but also walk the talk. You may have the greatest
groundbreaking idea to transform your business,
PHOTOGRAPH BY SUDHIR DAMERLA

but if you do not lead by example, you will not

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be able to drive change effectively. Successful

leadership also focusses on ‘we’ rather than ‘I’. These
leaders rely on a team of great people. They focus
on recruiting the best people, develop and support
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them to help them achieve their best potential, and

create a highly motivating environment to retain
them. After all, they will always be judged by the
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quality of their teams.

“HUMILITY IS THE BEST TEACHER IN BUSINESS. IT INVITES

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YOU TO LISTEN, TO ASK FOR ADVICE, TO BE OPEN TO FEEDBACK, TO ACCEPT

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AND ADMIT FAILURES.”

116 Vol. 28, No. 19, for the fortnight September 9-22, 2019. Released on September 9, 2019. Total number of pages 118 (including cover)
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