For once, the launch of DRDO’s imaging satellite didn’t steal the limelight except the drama of a midnight launch at Sriharikota and its military uses. That we are told was to make sure that the satellite traverses the Indian subcontinent when there is maximum sunlight on it and the launch time decides its diurnal rhythms. But along with it, Isro also launched KalamSat, the lightest communication satellite, almost as heavy as a chair at 1.2 kg, developed by students, free. Built at a cost of Rs 12 lakh, the 10-cm cube satellite has a life span of two months and will be the first to use the PSLV rocket’s fourth stage as an orbital platform and conduct experiments. Its utility? This one will study the communication systems of nano satellites, which can be applied in disaster management. While the next lunar mission and preparations for Gaganyaan or the manned mission, intended for 2022, make news, the significance of ISRO’s latest launch lies in the fact that besides cost-effectiveness, it is also looking at developing the scientific temperament among our youth, encouraging education satellites and piloting their trial modules in real time. Soon it will be launching its TV as an interface platform with millennials.
The most noteworthy aspect of the student initiative is that the young scientists came from remote corners of the country. This will further embolden young Indians to commit themselves to the Indian space programme and conduct experiments that may result in breakthrough technological solutions for our lives on earth. The multiple applications of ISRO’s projects already have demonstrable spin-offs. For example, the lithium ion battery for our rockets and spacecraft is finding very good application in electric vehicles. Similarly, now that the Gaganyaan space suits are being developed in a cost-effective manner with fire-resistant chemicals, the fire-retardant technology can be used in hazardous industries to protect workers. ISRO is perhaps these days the best example of the Government’s “Make in India” programme. In fact, the Gaganyaan mission will be a national project in the true sense because it won’t just be confined to ISRO but will include research institutions and private industry.
Space, therefore, is quickly turning into not just our final frontier, but a profitable, multi-dimensional one. ISRO has, in a quick spurt of a decade or so, emerged as one of the key players in the global space market, particularly as a low-cost carrier of surveillance and communication satellites. Ever since we launched 104 satellites in a single rocket (PSLV-C37), 96 of which were from the US, even the big space-probing nations have acknowledged our credibility. The New York Times commended ISRO for the high-risk launch “because the satellites, released in rapid-fire fashion every few seconds from a single rocket as it travelled at 17,000 miles an hour, could collide with one another in space if ejected into the wrong path.”
With many of our landmark missions too now costing much lesser than equivalents in Russia, Europe and the US, India can now proudly proclaim to have shifted the axis of the space race to Asia. And by now partnering with altruistic missions, ISRO has shown that space programmes are not just about extra-terrestrial influence but an Elysium for Earth itself.
Writer and Courtesy: The Pioneer
ISRO is using a half-humanoid robot to smoothen out creases for Gaganyaan, our manned mission
So what if we have to wait awhile to send an Indian woman into space, we have a half-humanoid robot in the shape of one doing so. And she will test-pilot drills for our first manned mission as part of the Gaganyaan project. The Indian Space Research Organisation (ISRO) will be sending Vyommitra to mimic humanistic functions in the spacecraft, even converse with intended astronauts and respond to their queries. This preparatory drill is being done to ensure that Indian astronauts can complete their historic manoeuvre without a glitch. India though is not the first nation to send a robot into space to ensure safety of manned flights. NASA had sent Robonaut 2 to the International Space Station (ISS) in 2011 and Japan’s Kirobo had landed there in 2014. Advanced versions are being developed to do a recce for human settlements. Post the failed lunar mission last year, ISRO seems to have learnt its lessons well and is proceeding with extreme caution with AI-aided dry runs.
While the nation would rather not talk about Chandrayaan 2 simply because its rover failed to land on the dark side of the moon, it has had its own success. Forget the lost rover, at the end of the day, it is indigenously developed and manufactured and is testimony to not only R&D and innovation but the ability of home-grown companies to expand capabilities. The Gaganyaan is a logical follow-through of this mission. India has already set a benchmark in PSLV and GSLV launches. It recently launched the high-power communication satellite GSAT-30. This is expected to provide improved coverage and will enable Indian broadcasters to air content in the Middle East, Australia and other parts of Asia, widening the arc of our soft diplomacy. The commercial satellite launch market is estimated to be $30 billion by 2025 and ISRO is certain to be a top player in it. With Vyommitra, ISRO hopes to expand its ability to analyse data and ensure trajectory and payload optimisation for bigger missions. NASA is using AI for its next rover mission to Mars, too. But then a word of caution here. Robots aren’t heroes. As much they promise a new era in space exploration, they must ascend the curve with utmost care.
(Courtesy: The Pioneer)
When it comes to investments, the adage, ‘Don’t put all your eggs in one basket’, comes to mind. Diversification essentially means the strategic allocation of investments among different assets and their categories to spread the money around so that exposure to any one type of asset is limited. This helps manage risk and reduce volatility of portfolio over a period of time. One of the keys to successful investing is to learn the art of maintaining fine balance between comfort level and time horizon.
If one invests conservatively for retirement at a young age, he/she may run the risk of investment growth not keeping pace with inflation. Conversely, if one invests too aggressively, when one is older, they may face a situation where their savings are exposed to market volatility. This can erode the value of their assets at an age when one has fewer opportunities to recoup losses.
One way to balance risk and reward in an investment portfolio is to diversify assets. Although diversification does not ensure profit or guarantee no losses, it may help mitigate risk. It does help in reducing the number and severity of ups and downs. Diversification does not aim to maximise returns but limits the impact of volatility on a portfolio. To better understand this concept let us look at the table along with this article which contains hypothetical portfolios with different asset allocations from 1926 to 2017.
The most aggressive portfolio shown in the table comprises 60 per cent domestic stocks, 25 per cent international stocks and 15 per cent bonds. It has an average annual return of 10.02 per cent. The best 12-month return stood at 134 per cent, while its worst 12-month return lost nearly by 61 per cent. This is too much of volatility for investors to endure.
However, as we can see, a slight change in the asset allocation tightened the range of those swings. It is also clear that additional fixed income investments to a portfolio slightly reduces one’s expectations for long-term returns. But this may significantly reduce the impact of market volatility. This is a trade-off many investors feel is worthwhile, particularly as they get older and more risk-averse.
Factoring time into diversification strategy: People are generally accustomed to thinking about their savings in terms of goals —retirement, college, a down payment or a vacation. But as one builds and manages his/her asset allocation, regardless of which goal he/she is pursuing, there are two important things that must be considered: First, the time horizon ie the number of years when one would need the money back and second, attitude toward risk.
To take an example, a young adult may think of a goal that is 25 years away, like when he/she retires. Since the time horizon is fairly long, he/she may be willing to take additional risk in pursuit of long-term growth. The investor may be under the assumption that there’s enough time in hand to regain lost ground in an event of short-term market decline. In that case, higher exposure to domestic stocks may be appropriate.
However, risk tolerance plays a crucial role here as well. Regardless of the time horizon, one should undertake risk with which he/she is comfortable. So even if one is saving for a long-term goal, or is more risk-averse, he/she may want to consider a more balanced portfolio with some fixed income investments. Regardless of the time horizon and risk tolerance, even if one is pursuing the most aggressive asset allocation model, he/she may want to consider including a fixed income component to help reduce overall volatility of the portfolio.
The other thing to remember about time horizon is that it keeps changing constantly. So, let’s say one’s retirement is 10 years away, he/she may want to re-allocate their asset to help reduce exposure to higher-risk investments in favour of more conservative ones like bond or money market funds. This can help mitigate the impact of extreme market swings on portfolio, which is important when one needs the money relatively soon. Once they enter retirement, a large portion of the portfolio should be more stable. Lower-risk investments can potentially generate income. But even in retirement, diversification is key to help manage risks. So just as one should never be 100 per cent invested in stocks, it’s probably a good idea to never be 100 per cent allocated in short-term investments if time horizon is greater than one year.
After all, even in retirement one needs exposure to growth-oriented investments to combat inflation and help ensure that the assets last for what could be a decades-long retirement. Regardless of the goal — time horizon or risk tolerance — a diversified portfolio is the foundation of any smart investment strategy.
(The writer is Assistant Professor, Amity University)
Some updates:
NSIC sub branch opened in Goa
The joint secretary of the Ministry of Micro Small and Medium Enterprises (MSME) and the CMD of National Small Industries Corporation (NSIC), Sudhir Gar, inaugurated the NSIC sub-branch office at the New Building at Verna Industrial Estate in Goa recently in the presence of the president of the Verna Industrial Estate, Damodar Kochkar, their Executive Committee Members and various other MSME Units
NHPC-NTNU collaborate to research on hydropower
The NHPC Limited, India’s premier hydropower company, has signed a memorandum of understanding (MOU) with the Norwegian University of Science and Technology (NTNU), to facilitate cooperation in research and education of hydropower during the India-Norway Business Summit 2019 held at New Delhi recently. This collaboration will allow for research that is of mutual interest and will aid in undertaking studies in the areas namely dam construction and safety, sediment handling, variable speed operation, pump turbines in existing power plants, future market structures and prices, optimal hydro design in the future power system and hydrology models.
SECL registers growth in coal production in Q3, 2018
The South Eastern Coalfields Limited (SECL), the largest coal producing subsidiary of Coal India Limited, has registered an impressive growth heading towards the coal production target of the year. During the period from April to December 2018, SECL’s coal production and off-take grew by 8.89 per cent and 4.06 per cent respectively. During the same period, SECL’s coal production was 110.751 Million Tonnes (MT) and the Off-take was 115.433 Million Tonnes (MT). The Over Burden Removal was 137.796 MT during this 9-month period. The coal production in the third quarter itself was 38.517 MT.
The Lieutenant Governor of Delhi Anil Baijal, accompanied by the CMD of NBCC Dr Anoop Kumar Mittal, visited the NBCC’s East Kidwai Nagar Redevelopment project in New Delhi. Dr Mittal apprised the LG on the project which is equipped with world class amenities and an eco-friendly and zero waste system.
The students of Guru Gobind Singh Indraprastha University, Dwarka, participated in the All India Inter University Championship 2018-19 held at KIIT, Bhubaneswar. They won 1 Gold Medal in 560 Kg outdoor mix category, 1 Gold Medal in the 600 Kg beach men’s category and 1 Silver Medal in the 540 Kg beach mix category. The vice chancellor of GGSIPU Anil Kumar Tyagi, the pro-vice chancellor Phusplata Tripathi, the registrar Satnam and the director of student welfare C S Rai, felicitated the winners for their achievements
Writer: The Pioneer
Source: The Pioneer
First, Happy New Year to all of you, but let me temper my good wishes with a sobering thought. In 2019, another 150,000 Indians, possibly more are going to die on the roads of this country. Although, to be honest there are times that one wonders why more people do not die on the roads every year. Indian traffic after all is like classical Brownian motion of particles, moving around in random directions but never seeming to touch each other. Everyday while driving in India, actually no matter where in this country, you notice hundreds of motorcyclists without helmets, others triple-rising with impunity, folks on cars and motorcycles making calls while driving, heavily overloaded public transport and what not.
It is a madhouse out there and I will be honest, in such a madhouse I also fall foul of the rules sometimes. When it comes to using my phone, I do not physically use my handset anymore thanks to technologies like Apple CarPlay and Android Auto which are controlled through voice assistants. That said, there are studies out there that prove that using a phone even through a hands-free technology can distract you. And that is something I understand. Imagine if you have a fight with someone on the phone while driving? How can you possibly be paying full attention to the act of driving? And it is getting worse. A few weeks ago I noticed someone making a video call while driving. It all seems hunky-dory until that split second where something unexpected happens and well, your life, as you know it, is over.
Sure, there will be a lot of interesting new cars coming to India this year which I am looking forward to drive and I’m sure there will be some interesting experiences with cars on foreign shores as well, but this year I genuinely wish for another thing. That we all resolve to drive a bit better, drive gentler, be more considerate to others on the roads and generally be nicer road users. I understand that there are days that are frustrating and that driving in this country can be an extremely irritating experience and we can carry on saying ‘what about them’. But whataboutery will not improve the roads, better behaviour will, because let us be honest, I really doubt that traffic enforcement is going to dramatically improve other than the core areas of some major cities. I really hope it does, but it is contingent on us to be better ourselves.
So if you make just one resolution for 2019 let it this, be a better driver, be the better driver.
Writer: Kushan Mitra
Courtesy: The Pioneer
LIC’s New Chairman: Hemant Bhargava
The managing director of the Life Insurance Corporation (LIC) of India, Hemant Bhargava, has taken additional charge as Chairman of the organisation in place of V K Sharma, who retired on December 31, 2018. Bhargava had taken charge as managing director of LIC of India in February, 2017. A true leader, he was instrumental in completing the design and setting up a separate Micro Insurance vertical which was LIC’s first comprehensive enterprise-wide initiative in financial inclusion space. He also set up a new joint venture in collaboration with the banking industry, and founded LIC Cards Services Limited, launching the ‘LIC Card’ in 2009. He also set up the newly formed SBU International Operations to manage LIC’s operations in about 11 countries. He has also been instrumental in finalising the first memorandum of understanding (MOU) for LIC to form a composite insurance company in the Kingdom of Saudi Arabia. Bhargava founded the ‘Indian Business Group’ in Mauritius for promoting the business interests of the companies of Indian origin with the High Commissioner of India being the Patron. Bhargava has also headed different Zones, viz. Northern Zone comprising of Delhi, Punjab, Rajasthan, Himachal Pradesh, Jammu and Kashmir, Haryana and the Union Territory of Chandigarh and the Eastern Zone comprising of Arunachal Pradesh, Assam, Meghalaya, Mizoram, Manipur, Nagaland, Sikkim, Tripura, West Bengal and the Union Territory of Andaman and Nicobar Islands.
Saurabh Kumar takes charge as DGOF and Chairman of OFB
Saurabh Kumar, IOFS, took over from P K Shrivastava, IOFS, Director General of Ordnance Factories (DGOF) and the Chairman of the Ordnance Factory Board (OFB) upon the latter’s superannuation at the OFB Kolkata. Kumar, an IOFS officer of the 1982 batch, is an MTech in mechanical engineering from the Indian Institute of Technology (IIT) Kanpur. An expert in the manufacture of ordnance, Kumar was on deputation to the Ministry of Defence at Delhi as the Director of Planning and Coordination from 2002 to 2009. During this period, he was involved in drafting the Indian offset policy for defence purchases and the ‘Make’ procedure in the Defence Procurement Procedure of 2003-04, which incorporated the recommendations of the Arun Singh Committee.
He was also instrumental in piloting the proposals and obtaining the approval of the government for setting up two, new greenfield Ordnance Factories at Nalanda and Korwa in Bihar and Uttar Pradesh respectively.
As the general manager of the Engine Factory at Avadi (2012-13), he was involved in operationalising the project and initiating an indigenisation programme which culminated in the handing over of the fully indigenous engines of T-90 ‘Bhishma’ and T-72 ‘Ajeya’ tanks to the Minister of Defense in July 2018.
His tenure saw the establishment of the vendor base that led to this achievement and an increase in production of new engines by 30 per cent. As the general manager of the Ordnance Factory Ambajhari, near Nagpur in Maharashtra, Kumar spearheaded the modernisation programme which included the induction of the robotic forging technology, new generation CNC machines and the predictive maintenance, which not only increased productivity and quality but also led to the successful productionisation of the ‘Pinaka’ rockets.
Writer and Courtesy: The Pioneer
Greater financial inclusiveness is a gateway for balanced development and a cohesive society. With billions of people already using mobile phones, the means to introduce them to formal financial services already exists. The mobile telephony system has enabled contact with villages that remained far away from banks and unreachable by road. It has also transformed businesses and family life besides bringing more people into the financial mainstream.
In India, an expansive network of mom-and-pop stores, tailors, pharmacies and telco booths has been extending customers similar services as that of banks. This includes paying the utility bills electronically, sending money back home, mobile phone top-ups, paying television and Wi-Fi bills and purchasing travel tickets — all of this is done without the hassle of opening a bank account.
In most villages, shopkeepers help customers transact these services using their mobile phones. This has made these services accessible to low-income families, who have to struggle with technology. Money can now be transferred quickly, efficiently and securely with a fraction of cost incurred with other channels. People in far-flung villages are now able to receive social benefits, buy ration and make payments using their Aadhaar card. This has helped save the recipients several hours of commute and wait time.
As a platform, the mobile has a unique set of capabilities that can overcome the challenges posed by the payments landscape. Mobile platform combines digital identity, value and authentication to create low-cost access to financial services. Take for instance, OTP-based authentication for Aadhaar-linked accounts and biometric authentication for processing transactions. Mobile finance offers at least three major advantages over traditional financial models. First, digital transactions are essentially free. In-person services and cash transactions account for a majority of routine banking expenses. But mobile finance clients keep their money in digital form. This is why they can send and receive money often, even with distant counter parties, without incurring transaction costs from their banks or mobile service providers.
Second, mobile communication generates copious amounts of data which banks and other providers can use to develop more profitable services. It even acts as a substitute for traditional credit scores (which can be hard for those without formal records or financial histories to obtain).
Third, mobile platforms link banks to their clients in real time. This means that banks can instantly re-lay account information or send reminders; and clients can quickly sign up for services on their own.
Mobile operators know how much consumers are spending on air time and are also able to infer other relevant information. If the customer is a regular user of a mobile money transfer service, the operators may also be able to assess his/her disposable income. They team up with banks, financial tech (fintech) companies and data analytics specialists to use this data to build financial profiles and offer credit to those who otherwise lack proof to re-pay loan. On-time payment of bills can attest the financial discipline of the consumer.
For the micro-finance industry, such systems represent an important opportunity as they enable borrowers to apply for, receive and re-pay loans on their mobile phones using a network of local agents. But this doesn’t mean mobile is a magic device that can provide algorithms for all credit- related issues. A majority of the population still doesn’t use smartphones and there are many who use it very frugally.
The proportion of the Indian population that has access to financial institution accounts via mobile phones or the internet to transact digital payments still remains significantly lower as compared with other developing economies, particularly sub-Saharan Africa. In Kenya, 79.0 per cent of adults made digital payments in 2017, and in South Africa 60.1 per cent, compared to 28.7 per cent in India (World Bank 2018).
While digital technology is opening new channels for delivering financial services, other challenges also persist. Sparse population, inconsistent network coverage, lack of trust or insufficient capital for building new business models can stand in the way of success, particularly in connecting remote or undeserved communities. The aversion of the ‘other India’ to digital finance has more to do with their disinclination to everything that has more to do with technology. This stems from a lack of trust in and comfort to use technology. Women often face additional barriers: Limited access to mobile phones, low literacy level, less confidence in using technology and restrictions on travel or social interaction.
For India to attain mobile money, as has been the case in Kenya, providers will need a more liberal stance from the Central Bank (Reserve Bank of India) whose stiff legal and regulatory framework has constrained the expansion of mobile money. It is understandable that in a vast country like India with such a diverse and remotely dispersed population, most of which is poor and illiterate, the central banker has to tread the terrain cautiously.
Security of consumers must be the topmost priority and concern. Although we must continue to make the case for responsible digital finance being good business, we know that isn’t enough. Independent and well-resourced regulators, consumer groups, and other organisations are critical to ensure that the consumer protections afforded by the law and regulator are actually followed and enforced. The new customer base build-up by the Jan Dhan Yojana has its own peculiar fragilities and vulnerabilities. Regulators must live up to trust.
We must remember that the ‘technological’ layer is another tool — a means to an end — and not a solution in itself. In certain conditions, it happens to be the most powerful tool and certainly enables services to be delivered efficiently at a scale with great benefits. But it has to do with how we are using it and how we are defining the outcomes.
The unfulfilled promise of past technologies rarely piques the most optimist advocates of cutting edge, who believe that their favourite new tool is genuinely different from others that came before. We must not forget that we are working with a constituency which is both politically and socially mute. Building inclusive digital economies requires the collective action of Governments, industry, financiers and civil society. Before speeding ahead, we need to build infrastructure, align policies and create the tools that can enable the poor to comfortably board the digital train.
As Ghanaian diplomat Kofi Annan had said: “In managing, promoting and protecting the Internet’s presence in our lives, we need to be no less creative than those who invented it. Clearly, there is a need for governance but that does not necessarily mean that it has to be done in the traditional way, for something that is so very different.”
(The writer is Member, NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women)
Writer: Moin Qazi
Source: The pioneer
We can’t jeopardise the future of one business to save the other. Similar is the case with the banking system that runs on a few ethical principles. If a person commits fraud by submitting spurious documents, declaration or statement of his/her account, he/she should be treated as an economic offender. By committing fraud, one not only cheats the bank but also puts people’s hard-earned deposits at risk. Millions of poor, pensioners, widows and workers of the unorganised sector keep their hard-earned money in banks with expectations that they would earn interest and would get their money back whenever they need them. Banking business actually thrives on people’s low-cost current and savings account deposits. It is another matter that the Reserve Bank of India (RBI) keeps reserves to protect the banks from crisis, which safeguards people’s deposits. Given that the Indian banking sector is fast integrating itself into an unstable global financial system, reserve funds always work like cushion.
Over the years, a large number of scamsters has taken undue advantage of banking loopholes to run away with huge credits. As per RBI data, as on September 30, 2017, there were 5,879 reported incidents of frauds amounting to Rs 32,048.65 crore in 2017-18. Gross non-performing assets (NPAs) in banks stood at more than Rs 7.34 lakh crore in September this year, according to ratings agency ICRA. The need, therefore, is to strengthen the law and put stringent guidelines for wilful defaulters who try to break the very backbone of the country’s financial system. In doing so, they also create trust deficit between banks and borrowers that adversely affects the credit cycle of the banks. Experts have suggested that the public sector banks (PSBs) be privatised. In reality, the workings of PSBs are entirely different from the private sector banks — it has a wide network to reach people in the remotest area. PSBs face tough challenges, like political interference at the village level, manpower shortage and pressure to meet social sector objectives. On the other hand, private sector banks have better operational efficiency, investment skill and less response time. Nevertheless, both have their strengths and weaknesses. Privatisation of the PSBs is not a sound option but an escape from the difficult task of reforming the banks itself.
Professional CEOs, equipped with updated management information system, effective board of directors, sound HR policy, state-of-the-art internal and concurrent audit system, dedicated asset supervision mechanism and a detailed information structure can prevent frauds and reduce NPAs. Equally, banks must pay more focus on fraud prevention measures than post-fraud correctives. A new mechanism must be adopted to judge the reporting, communication skill and decision-making capacity of the employees. There is also an urgent need to stop the practice of giving incentives to the CEOs so as to achieve desired targets. Many PSB chiefs are known to put pressure on the entire staff. This results in oversight, leading to frauds. All kinds of post-retirement assignment should be stopped for the good health of the banking sector.
Defaulters of the likes of Nirav Modi, Vijay Mallya and Mehul Choksi among others could not have duped the banks had their boards, audit teams, supervising officers, loan review committee, asset verification teams, information system auditors and CEOs worked in tandem. Few banks conduct dedicated physical verification of assets, which in many places invites risk. Here, the Government must provide adequate security to the bankers. Physical asset monitoring is a must for banks. Over the years, bad loan in the agriculture sector has witnessed an alarming increase from Rs 24,800 crore in 2012 to Rs 60,200 crore in 2017 due to loan waivers, poor credit end use, unviable methods of agricultural practices and lack of dedicated research and planning. Politicians desperately cling to loan waivers for votes and cause immense damage to entrepreneurial life cycles. This creates massive idle energy across the country. Politicians should revive village ponds, wells, ground water, bio-diversity and above all natural agricultural practices. Subhash Palekar, agriculturist and research scholar, has revived natural agriculture practices free from all kinds of pesticides. His model works well in villages with rich bio-diversity, which helps increase the farmers’ income in order to help save banks from a defunct credit cycle in rural areas. There is no paucity of credit, technology, skill and innovation in the country. But there is lack of will to ensure that bank credit serves the ultimate purpose.
(The writer is a freelance commentator)
Writer: Sudhansu R Das
Source: The pioneer
Italian small appliances manufacturer, the De’Longhi Group, has announced a strategic partnership with India’s Orient Electric Limited. This is aimed at bringing the premium range of international small appliances to the Indian market.
Orient Electric is a leading home electrical player in the domestic market while having strong presence in 35 countries globally, which made it a suitable partner for this partnership. In the domestic market, the company has a well-organised distribution network, covering over 100,000 retail outlets and a strong service network with a reach in 320 cities.
Commenting on the partnership, the managing director and the CEO of the Orient Electric Limited, Rakesh Khanna, said, “Premiumisation is gathering pace in India. The Indians are travelling abroad, experiencing global food and culture and this being coupled with the rising incomes, is leading to an increased inclination towards an aspirational lifestyle. The partnership with De’Longhi will help us mutually expand our appliances portfolio and tap into the emerging trends in the consumer appliances space in India. Our association will help us offer the internationally acclaimed products to the Indian consumers, which they have been eagerly waiting for.” He further explained that the De’Longhi Group is known for its quality, innovation and design and with the strength of distribution, marketing and service of the Orient Electric, the company is confident that this association will unlock many opportunities for both the companies.
The Middle East, India and Africa vice president commercial and Turkey managing director of the De’Longhi Group, Tunc Gencoglu, added, “We are looking forward to this business partnership as we share similar values and an approach based on consumer-led insights. The appliances market in India is poised for a significant growth. We believe that our brands and the current product selection will cater to a wide spectrum of consumers and create an enjoyable experience. We have a clear strategy to position our three brands—De’Longhi, to deliver the true ‘bean to cup’ coffee experience, the Kenwood brand is positioned at the ‘joy of homemade food’ through its range of kitchen machines, food processors and blenders while the Braun brand will bring in world-class technology and innovation in hand blenders and irons.”
The senior vice president and the business head for appliances division of the Orient Electric, Saurabh Baishakhia, said “Orient Electric always strives to unravel and surface the latent consumer needs and meet them with apt solutions which make life simpler and experiences better. Therefore, it was natural for us to partner with the De’Longhi Group which is known for its, innovatively engineered category-defining differentiated products. We are confident that the partnership will help us capture significant market share in the premium appliances segment in the next few years.”
Orient Electric has already done a soft launch of these products in Delhi and the feedback received from their dealers has been encouraging. Now, the company will launch the same in a phased manner, starting from the Tier-I cities in India. Talking about the marketing strategy of the company, Baishakhi explained that since these appliances are experiential, the company has trained its distribution network across the country to offer a personalised, in-store service to the customers. “We understand that the appliance market demands a strong after-sales service as well. We have also put in place, a robust service infrastructure to cater to the demand of servicing. We have trained our staff across the network to meet the needs whenever necessary.”
Writer: Pioneer
Courtesy: The Pioneer
The government is facing a stand-off with the Reserve Bank of India on the issue of latter’s autonomy.
The Narendra Modi Government just cannot seem to catch a break when it comes to dealing with statutory bodies and officers. And opinion is divided on whose fault that is. After a revolt in the Central Bureau of Investigation, it now appears that the Government and the Reserve Bank of India are at loggerheads. This is because the Government is reported to have invoked Article 7 of the Reserve Bank of India (RBI) Act which allows the Government in some manner to supercede the autonomy of India’s central bank. Of course, the conspiracy theorists are out in force on their websites — allegations are rife that the Government has taken this step at the behest of friendly industrialists who are being forced to borrow money at higher rates; by invoking Section 7, the Government can ‘force’ the RBI to order Indian banks to loosen their purse-strings.
There is an argument to be made that while the RBI has been extra strict with banks, especially public sector banks, in a crackdown on Non-Performing Assets (NPA), this has followed a period of over-lenient central bank supervision loans to all and sundry. As a result, now all financial institutions whether in the public or private sector have had the fear of God instilled in them when it comes to disbursing loans as they are petrified of possible NPAs. This, in turn, has virtually brought economic activity in India to a standstill.
According to media reports, Section 7 has been invoked three times already over the past few weeks at least in part to reclassify the massive NPAs plaguing India’s power sector. Invoking Section 7 is, for better or for worse, a vote of no-confidence in the RBI Governor. It is not as if the RBI and the Government cannot work together. But when the Government compels the RBI to act in a certain way, there are few options in front of the RBI Governor.
Urjit Patel was widely thought to have expressed his displeasure at Government interference through a media interview given by his deputy V Acharya. His position seems to be untenable and the odds are that Patel may have no option but to resign. But that’s not a done deal, yet. After all, we are in an election year and the Government would not want another once-hallowed institution to be seen to be imploding on its watch. But there is also a view emerging in Government that it has no option but to demolish the ‘deep state’ established by the ‘Congress System’ if it is to fulfil what it thinks is its mandate from the people of India.
Writer: Pioneer
Courtesy: The Pioneer
The rapid snowballing of debt defaults by IL&FS and its group entities into a system-wide liquidity crunch has exposed well-hidden fault-lines in the workings of both non-banking finance companies (NBFCs) and the Indian bond market. All that IL&FS needs to do is, drift with the temporary liquidity crunch to boost the confidence of its shareholders and investors.
Infrastructure Leasing & Financial Services (IL&FS), originally promoted by HDFC, Central Bank of India and Unit Trust of India in 1987, operating via 169 subsidiaries, special purpose vehicles and joint ventures, has pioneered the infrastructure revolution in more than one way, with path-breaking projects such as the Zoji La tunnel Pass, Delhi-Noida toll bridge, GIFT, Gujarat International Finance Tec-City and umpteen others. LIC, Orix Corporation of Japan and ADIA, Abu Dhabi Investment Authority, that hold 25.34 percent, 23.54 percent and 12.56 percent each in IL&FS, are today its top three shareholders.
Congress president Rahul Gandhi, who has been tweeting feverishly in the last few days, questioning the need for any potential bail-out by LIC, has conveniently forgotten that it was under the erstwhile Congress-led dispensation that LIC acquired significant stakes in IL&FS in 2005, 2006 and, picking up as many as 19.34 lakh shares in 2010. The fact that LIC pumped in Rs 41,000 crore in 2007-08 and Rs 35,000 crore in 2008-09, with its outstanding exposure to the Indian equity markets at a whopping Rs 20,0000 crore by January 2009, amidst the Lehman meltdown, is a testimony to the fact that LIC used its reinvestible surpluses to stabilize markets, then.
If anything, a series of measures by the Narendra Modi Government to instill confidence in the money markets, which had seen the commercial paper (CP) yields rising by 20-40bps for even top-rated issuers, in the aftermath of the IL&FS imbroglio, deserve praise. For instance, the interbank liquidity deficit was addressed by allowing banks to carve out 15 percent holdings from their statutory liquidity reserves, against the earlier 13per cent to meet liquidity coverage ratio (LCR) requirements, thereby boosting systemic liquidity by an additional rupees two lakh crore.
This, coupled with an open market operation’s (OMO) announcement of Rs 36,000 crore for the month of October by the Reserve Bank of India (RBI), calmed the bond markets, with benchmark 10-year bond yields retracing from 8.23 percent last week to 7.99 percent on October 1. Three group companies of IL&FS are listed on the Indian bourses, namely, IL&FS Investment Managers Ltd, IL&FS Engineering and Construction Company Ltd and, IL&FS Transportation Networks Ltd. Importantly, many mutual funds, banks, insurance companies, non-banking financial companies (NBFC) and housing finance companies, have direct or indirect exposure to IL&FS.
Hence the National Company Law Tribunal’s (NCLT) decision to allow the Government to take-over IL&FS and supersede the erstwhile 10 member board, vide Article 241(2) of the Companies Act 2013, is a prompt and timely one that saved the Indian financial system from any potential cascading effects, limiting the collateral damage, if any. The alacrity, decisiveness and sheer professionalism with which the Modi Government took charge of IL&FS, is unmatched in Indian financial history.
The current embattled state which IL&FS finds itself in, thanks to gross mismanagement by the erstwhile board, is a temporary one arising out of asset-liability mismatch (ALM). In sharp contrast, the Lehman crisis in 2008, with Lehman filing for Chapter 11 Bankruptcy on September 15, 2008, was one of the insolvencies. Hence, desperate attempts by a disjointed Opposition to draw parallels between IL&FS and Lehman, smack of ignorance and a vested agenda to discredit the Modi Government that has been repeatedly praised by the likes of the IMF and the World Bank for turning around the Indian economy into the sixth largest, globally, from a fragile state it had been pushed to in 2012-13.
Do note, the size of debt assets under management of mutual funds in India is over Rs 18 lakh crore, with roughly 17per cent of that invested in NBFCs. Hence, IL&FS is simply too big to fail. Again, IL&FS is a huge borrower accounting for two percent of the outstanding CP market, one percent of the debenture market and roughly 0.7per cent of banking system loans. Interestingly, despite the sheer scale of numbers involved, the resilience of the Indian financial system shone through, with Indiabulls Housing Finance raising more than Rs 500 crore at 8.36 percent via CP market, and a Tata group company raising Rs 3,488 crore via non-convertible debentures (NCD) for the first time in 10 years at a rate of between 8.70-9.1per cent last week, even as the IL&FS issue raged on.
Coming back to the IL&FS fiasco, what triggered nervousness was a default by IL&FS on repayment of a Rs 1,000 crore short-term loan from Small Industries Development Bank of India (SIDBI) on September 5, 2018, followed by a series of defaults. The fact that in less than a month of the IL&FS crisis and barely within 48 hours of the IL&FS Annual General Meeting that was held on September 29 this year, management take-over had been affected by the Modi Government by October 1, 2018, speaks volumes of the current Government’s commitment to the millions of retail investors who have parked their money in debt funds that invariably have some kind of exposure to IL&FS.
Do not forget that in a rather similar incident in 2009 wherein a promoter, Ramalinga Raju of Satyam Computers was summarily removed for defrauding and cooking up the company’s books. The erstwhile Congress-led UPA Government back then had allowed the entire Satyam crisis to fester for seven long months from January till July 2009, before reaching a tentative solution, doing irreversible damage to the Indian financial markets in the bargain.
The IL&FS issue, however, raises questions about ‘conflict of interest’ plaguing credit rating agencies. In this entire issue, while the Modi Government and the RBI showed exemplary nimble-footedness in limiting collateral damage, the credit rating agencies had assigned investment grade ratings till as recently as August 2018, which was then reduced to junk status by September 2018 in a classic knee-jerk reaction.
That the IL&FS group was over-leveraged and rumored to have borrowed between 10-18 times its equity, to fund its infrastructure projects, most of which bring in returns over 20-25 years, was known to the credit rating agencies. They simply refused to even blink till things reached an inflection point.
Making things worse, IL&FS’ borrowings were all repayable in the short to medium-term of roughly eight to 10 years. What abetted the asset liability mismatch was cost overruns and inability to roll over short-term obligations. However, as things stand now, on October 31, 2018, the new board will submit a resolution plan to the NCLT. That could involve monetization of unviable assets, reducing stakes in 25 odd projects being operated by the company, possible Rights/NCD issues, raising authorized capital, deleveraging the balance sheet by 38 percent or roughly Rs 30,000 crore, bringing in new partners for some projects and the like.
At the core, IL&FS is an inherently strong company with assets worth Rs 1,15,815 crore as of fiscal 2018, with a standalone reported gearing ratio of 3.04 and a regulatory gearing ratio of 2.30. It has umpteen profit-making subsidiaries like the Khed Sinnar Expressway, Amravati Chikhli Expressway, Barwa Adda Expressway, Fagne Songadh Expressway, and others. Thanks to the Narendra Modi dispensation, by choosing not to hide the IL&FS issue by fraudulently evergreening its loans, but by tackling the problem head-on, including ordering a Serious Fraud Investigation Office probe to get to the bottom of things, the confidence in money markets has been restored.
Needless to add, the big message for companies and investors from the IL&FS issue is, not to go overboard in “borrowing at the short end and lending at the long end of the market”, as asset-liability mismatches can be a vicious cycle. That said, those indulging in fear-mongering by saying that IL&FS’ lenders will have to take a haircut of Rs 15,000-20,000 crore in a bid to save it, are completely wrong. IL&FS has deep pockets, strong capital base with good operational parameters, net assets higher than net liabilities, and all it needs is, the renewed confidence of its shareholders and investors, to tide over the temporary liquidity crunch.
If push comes to shove, even selling a minuscule stake in one of its subsidiaries, from the umpteen profitable ones it has in its kitty, can replenish its net worth and generate between Rs 20,000-30,000 crore, giving it the firepower to have the cash flows to service its debt obligations, without erosion in its core capital base.
And once market sentiment stabilizes, given its excellent track record in executing and financing some of the toughest infrastructure projects in the country, IL&FS, with a new board at the helm, should be able to continue to access the financial markets at competitive rates and get back to doing what it does best… (—)powering India’s superlative infrastructure growth story with projects like the Chennai-Nashri road tunnel project, that is a befitting example of what political will under the Narendra Modi dispensation has been able to accomplish.
(The writer is an economist and chief spokesperson for BJP, Mumbai)
Writer: Sanju Verma
Courtesy: The Pioneer
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