07 October 2023 | BW BUSINESSWORLD | 49 Done right, it can be potentially quite transformative to our higher education system and our higher education quality, which can go a long way in building the right kind of public research base for the country. There remains the issue of addressing our autonomous government R&D laboratories, which I also talk about in one chapter in the book. There’s no movement on that as yet. On Economic Milestones Becoming a $5-trillion economy is not a goal. Becoming a $5-trillion economy in a defined timeframe is a goal. The original goal was to be a $5-trillion economy by 2024. We’ve now pushed it back to 2026. Even becoming a $5-trillion economy by 2026 requires a rate of growth that is significantly higher than what we are achieving now. Yes. I think it requires a rate of growth of around 9 per cent, which is significantly higher than the 6-7 per cent we are achieving now. I think my concerns for the economy are not short term. I think all the short term signs are actually pretty encouraging. I think India’s in a good place, largely because other parts of the world have done stupid things. On the Government’s Role In Economic Matters And I think we should be giving much more air time to the Indian industrialists who are confident and positive and want to go out into the world and are confident of being able to compete with the best of the world in India and in the world. So I think that would be my message to my colleagues in industry. I really think that government should be an enabler. It should not be a decision maker when it comes to deciding which industries we should go into, which technologies matter to us. This is not the government’s role. The government’s role is to enable industry to take those decisions and the market to decide whether they were the right decisions or not. On Cofounding A Private University Yes, I am one of co-founders of a private university to be launched next year. The goal is to start with a focus on public policy and then to move into the humanities, social sciences, physical and natural sciences, to provide undergraduates and graduate students, over time, with a truly world-class experience. This is a collective effort of several member companies that are active members of Confederation of Indian Industry, but this is not a CII project. We want to start a university that can really tap into the talent of India.
50 | BW BUSINESSWORLD | 07 October 2023 IN DEPTH MARKETS S EPTEMBER WAS remarkable for India in more ways than one. T he G20 Summit 2023 under India’s presidency was hailed as the most successful ever in terms of outcomes. And, as if to celebrate that success, Nifty scaled Mount 20K for the first time, reinforcing the belief in a resurgent India. Although the stock market feat was the result of a complex interplay of solid fundamentals, global optimism, and substantial investments, both foreign and domestic, what really impressed everyone was the speed with which Nifty hurtled from 10K to 20K. It went from 10K to 11K in just 47 days, from 11K to 12K in 84 days, from 12K to 13K in 43 days, from 13K to 14K in 37 days, and from 14K to 15K in just 36 days, underscoring market enthusiasm. The euphoria generated by the unabated market momentum has seen some people trying to indulge in soothsaying and predicting where the markets would be three months or six months down the line. A common poser emanating from such folks now is whether Nifty would scale Mount 24K in fiscal year 2023-24. While that may or may not be possible, and no one is likely to lose sleep over it, what really matters is that the market momentum remains secure and intact, a factor that has seen companies making a beeline for the bourses with their IPOs (initial public offer) and finding investors ready to lap up their shares, even if it means paying a premium. This trend certainly looks like continuing. As per the latest EY IPO Market report, the Indian stock exchanges were ranked first in the world in terms of the number of IPOs and eighth in terms of issue proceeds as of first week of August. Adarsh Ranka, Partner, Financial Accounting Advisory Services Leader, network firm of EY Global, said, “In the forthcoming months, significant moThere is no way of telling whether NSE will head to 24K in six months. But with fundamentals remaining intact, the IPO market looks set to surge By Ashish Sinha GOLD RUSH mentum is anticipated in the Indian IPO market, encompassing both the main and SME market segments.” Towards 24K? It’s important to note that the stock market is influenced by a complex interplay of factors, and predicting its movements with certainty is challenging. Investors should exercise caution, diversify their portfolios, and stay informed about economic and geopolitical developments that could impact the NSE Nifty Index in the coming months. Several factors are set to influence the trajectory of the Nifty index in the near term. Firstly, the growth of corporate earnings remains a key driver, and if companies across various sectors sustain their robust financial performance, it is likely to create a favourable backdrop for the Nifty’s upward movement, say stock market experts. “The broader global economic recovery, particularly in major economies, holds significant sway over investor sentiment towards emerging markets like India. Positive signals emanating
07 October 2023 | BW BUSINESSWORLD | 51 ment for investors, potentially driving gains in the market. IPO Buzz The second half of September saw significant activity as ten companies went ahead with their IPOs with a collective fundraising target of at least Rs 2,400 crore. At the time of writing, six ongoing offers were still open while five companies were on the brink of making from global markets have the potential to attract greater foreign investments into Indian equities,” the market expert said. Furthermore, the decisions and communications from India’s central bank pertaining to interest rates and monetary policy, exert a profound impact on market dynamics. A dovish stance by the RBI, characterised by lower interest rates can prove advantageous for equities, he added. In addition, government-led economic reforms and policy initiatives geared towards enhancing the ease of doing business and attracting foreign investments can act as catalysts for market expansion. Lastly, the state of geopolitical stability plays a pivotal role in shaping investor confidence and market performance. A reduction in geopolitical tensions or uncertainties can create a more favourable environtheir stock market debut. Leading the IPO charge in the mainboard segment were Sai Silks Kalamandir, an ethnic apparel retailer from Telangana, and Signature Global (India), a NCR-based real estate developer. Sai Silks planned to raise Rs 1,201 crore, and offered shares at Rs 210–222 apiece. Signature Global, supported by the International Finance Corporation, priced its IPO at Rs 366–385 per share, targeting a total issue size of Rs 730 crore, with fresh-issue shares worth Rs 603 crore and an offer-for-sale of Rs 127 crore by the IFC. Vaibhav Jewellers’ IPO was open from September 22 to September 26, with shares priced at Rs 204–215. The Andhra Pradesh-based jewellery retailer looked to raise Rs 270.20 crore, consisting of a fresh issue of Rs 210 crore and an offer-for-sale of 28 lakh shares worth Rs 60.2 crore by promoter Grandhi Bharata Mallika Ratna Kumari. Privately held S a m h i H o t e l s , backed by Equity International, ACIC Mauritius, and Goldman Sachs, concluded its maiden public issue at Rs 1,370.1 crore on September 18. Simultaneously, Zaggle Prepaid Ocean Services, a business spend management platform provider closed its Rs 563.38 crore IPO on the same day. In the SME segment, three companies debuted their IPOs on September 18, namely Madhusudan Masala (size Rs 23.80 crore), Techknowgreen Solutions (size Rs 16.72 crore) and Master Components (size Rs 15.43 crore). The substantial influx of IPOs across diverse sectors in India reflects the nation’s economic strength and allure as an investment destination. [email protected]; @Ashish_BW In the months ahead, significant momentum is anticipated in the Indian IPO market, encompassing both the main and SME market segments Photograph by Ple-sunisa
N RECENT TIMES, India’s stock market has been a remarkable story of ascendant valuations, capturing the attention of global investors and domestic market enthusiasts alike. Even as the Indian economy faced the challenges posed by the pandemic, the stock indices were scaling new peaks with remarkable consistency. This unprecedented surge in market valuation has sparked conversations about the underlying factors, implications, and the need for prudent navigation through the bourses. Recently when the Nifty index crossed 20,000, it incited excitement and investors speculated on whether or not it would cross what the bull runners call – 24k in 2024. A 20 per cent growth in the stock market index in a year or at stretched time of 16 months? No, I would not share such bullishness. I have robust optimism about our economy and its ability to continue to grow. It is indeed that India’s economic resilience and potential have significantly contributed to the surging stock market. The nation’s ambitious reform agenda, driven by the government’s ‘Make in India’ and ‘Digital India’ initiatives, have I IS THE STOCK MARKET THE LEAD INDICATOR FOR ECONOMIC PROPHECY? Market exuberance, when left unchecked, can lead to speculative bubbles that ultimately burst. The sustainability of these valuations hinges on the pace at which economic reforms translate into tangible results, corporate earnings growth, and the ability to manage external shocks effectively, says Srinath Sridharan THE STOCK MARKET MIASMA ESSAY 52 | BW BUSINESSWORLD | 07 October 2023
margins of FMCG companies. India’s economic trajectory has been phenomenal. The country’s GDP has grown from $0.5 trillion in 2002 to an impressive $3.4 trillion today. Over the past two decades, nominal GDP has maintained a 10 per cent CAGR, signifying sustained economic expansion. Correspondingly, India’s aggregate market capitalisation has skyrocketed, increasing twelve-fold since 2003. This impressive growth has also led to an uptick in market capitalisation to GDP ratio, which now stands at 87 per cent, reflecting the country’s rising prominence on the global financial stage. The national general elections expected to be conducted by May of the next year will have an effect over the domestic stock market. History has shown that few months prior to the elections, the large and foreign investors tend to exhibit some wobbliness. The political stability and government policies wield immense influence over economic growth and investor sentiment. As benchmarks like Nifty and Sensex continue to reach unprecedented highs, the fundamental question remains: How much higher can they climb, and for how much longer? While optimism prevails, the cautious undertone emerges, contemplating the actions of foreign institutional investors (FIIs) in the lead-up to the elections. Will FIIs exercise caution, potentially waiting for the election’s outcome before reinvesting, booking profits, or initiating fresh investments? The equation is straightforward – if foreign investors decide to pour funds into India, the markets are likely to respond with an upward trajectory. It’s attracted both domestic and foreign investments. India’s tech prowess, coupled with the rise of innovative startups, has generated immense optimism about the country’s long-term growth prospects. Yet, amid this euphoria, there is an undeniable need for caution. Market exuberance, when left unchecked, can lead to speculative bubbles that ultimately burst. The sustainability of these valuations hinges on the pace at which economic reforms translate into tangible results, corporate earnings growth, and the ability to manage external shocks effectively. Moreover, the regulatory environment plays a pivotal role in maintaining market integrity. The Securities and Exchange Board of India (SEBI) has been vigilant in safeguarding investor interests and ensuring transparency, but the everevolving landscape of finance requires a continuous review of regulations to address new challenges. Investors, too, must exercise prudence. While the allure of soaring valuations is undeniable, a well-diversified portfolio remains the cornerstone of sound financial planning. Thorough research, risk assessment, and a long-term perspective are imperative for those who seek to navigate this bullish market wisely. In recent years, India has witnessed a significant surge in the participation of retail investors in the stock market. This growth can be attributed to several factors, including increased accessibility to financial information and trading platforms, a burgeoning middle class with disposable income, and a growing awareness of investment opportunities. The democratisation of stock market access through mobile apps and online brokerages has made it easier for individuals to invest, while initiatives like mutual fund SIPs (Systematic Investment Plans) have encouraged systematic, longterm investing. Additionally, the allure of potential returns in a bullish market has drawn many first-time investors, transforming India’s stock market landscape into a more inclusive and diverse arena. However, with this rise in retail participation, there is also a growing need for financial education to ensure that investors make informed decisions and manage risks effectively. India’s financial landscape is experiencing a remarkable transformation, with its market capitalisation currently standing at a staggering $3.3 trillion, securing its place as the fifth most valued market on the global stage. This surge, which has seen an increase of nearly $330 billion in market capitalisation since the beginning of the year, is a testament to India’s economic prowess and investor confidence. While these numbers are undeniably impressive, they also raise some crucial questions and call for a balanced approach to investment in the country. One concern that has been echoing through the investor community is whether India is becoming the “most expensive market in the world.” This concern, while valid, should not overshadow the vast potential and growth prospects that India offers. For long-term investors, the key lies in navigating these seemingly expensive valuations with discipline. India Inc.’s performance in the first quarter of the fiscal year 2023-24 paints a promising picture, with net profit growth exceeding 30 per cent across the listed universe. The country’s investment-led growth is expected to benefit cyclical industries like banking, infrastructure, and real estate. Even amid challenges like rising interest rates and inflation, the demand for premium products is poised to help the The nation’s ambitious reform agenda, driven by the government’s ‘Make in India’ and ‘Digital India’ initiatives, have attracted both domestic and foreign investments. India’s tech prowess, coupled with the rise of innovative startups, has generated immense optimism about the country’s long-term growth prospects Photograph by Movinglines Studio 07 October 2023 | BW BUSINESSWORLD | 53
54 | BW BUSINESSWORLD | 07 October 2023 not merely a matter of news but liquidity that often drives market movements. The FIIs’ behaviour will undoubtedly be scrutinised as they have the potential to tip the scales one way or another in the months leading to the elections. In the run-up to this critical juncture, investors should maintain a watchful eye on both domestic and global developments. Diversification, careful risk assessment, and a long-term perspective will continue to be the guiding principles for navigating the fluctuating tides of the Indian stock market. Ultimately, the interplay of political dynamics and investor behaviour will define the market’s course in the period ahead, reinforcing the undeniable link between politics and the financial world. As the general elections in India draw nearer, there’s a palpable curiosity surrounding the prospect of a rush of initial public offerings (IPOs) in the market. The question on everyone’s minds is whether investors will embrace this IPO frenzy or exercise caution in the face of political uncertainty. JPMorgan Chase predicts that India will witness a substantial annual raise of at least $30 billion through primary and secondary share sales in 2024 and beyond. Companies and their shareholders appear increasingly eager to tap into the market for funding, reflecting optimism in India’s economic prospects. Several macroeconomic factors are aligning in India’s favour. The country boasts the distinction of being the fastest-growing economy, complemented by the easing of commodity prices, a resurgence in credit growth, and robust bank balance sheets. The renewed focus on capital expenditure (capex) driven by infrastructure development, Production Linked Incentives (PLI) schemes, the ‘China+1’ strategy, and digitisation initiatives further bolster the economic landscape. Notably, India stands out in its corporate financial health, with companies displaying a prudent approach to capital expenditure, indicative of their preparedness to navigate potential economic headwinds. This contrasts sharply with many other global economies mired in negative growth or experiencing sluggish expansion. The concept of disinvestment has posed a persistent challenge for successive governments in India. Despite notable milestones like the privatisation of Air India and the public listing of Life Insurance Corporation of India (LIC), the process remains fraught with volatility. The government’s disinvestment strategy has indeed been multifaceted. It encompasses not only listing and selling minority stakes through mechanisms like Offer for Sale (OFS) and share buybacks but also strategic sales or privatisation in identified sectors, monetisation of noncore assets, and the closure of non-viable firms such as Scooters India. However, despite the breadth of this approach, the number of transactions has remained relatively low, and their scale has been THE STOCK MARKET MIASMA ESSAY
07 October 2023 | BW BUSINESSWORLD | 55 limited. Further, the Indian economy and markets face a series of significant tests. The impact of El Nino on crop yields and its subsequent effect on inflation loom large on the horizon. While food inflation remains volatile, it is currently under control. Meanwhile, concerns persist over the subdued monsoon rainfall. Against this backdrop, India’s economic momentum is being propped up by government-induced capital expenditure, even as rural India exhibits tentative signs of recovery, and urban discretionary demand remains lacklustre. What could slow down corporate earnings in India is the potential impact of rising input costs. Inflationary pressures and supply chain disruptions can lead to increased production expenses for companies, thus squeezing profit margins. Additionally, economic slowdowns or recessions, both domestically and globally, can dampen consumer demand and corporate sales, affecting earnings adversely. Optimism about the government’s ability to address the current economic weaknesses, especially in rural and low-income urban household consumption, is bearish. Factors such as lower-than-expected corporate tax collections and substantial losses incurred by PSU oil marketing companies may constrain the government’s ability to augment its revenue expenditure, even with its aggressive approach to capital expenditure. The recent surge in valuations of IT services firms has indeed been fueled by hopes of a strong revenue rebound, parThe equation is straight forward if foreign investors decide to pour funds into India, the markets are likely to respond with an upward trajectory. It's not merely a matter of news but liquidity that often drives market movements. The FIIs' behaviour will undoubtedly be scrutinised as they have the potential to tip the scales one way or another in the months leading to the elections
56 | BW BUSINESSWORLD | 07 October 2023 ticularly driven by the robust US economy. However, the rising concerns about a potentially more substantial slowdown in the US economy than initially expected could be a dampener. The US Federal Reserve’s persistent hawkish stance on interest rates raises uncertainties and could result in a less favourable economic scenario than the widely anticipated ‘soft’ landing. The recent release of household financial savings data by the Reserve Bank of India (RBI) has sent shockwaves, sparking intense discussions among economists and experts. According to the data, household financial savings have plummeted to a concerning 5.1 per cent of GDP, marking a historic low not witnessed in nearly four decades. This alarming trend has had a ripple effect, with the share of savings and investments in GDP dwindling to approximately 30 per cent, reminiscent of figures last seen in the early 2000s. The decline in savings, coupled with a slowdown in investments, has raised significant concerns. This disconcerting trajectory underscores a critical issue: the The SEBI’s regulatory teeth must be prominently displayed to deter and penalise unregistered FinFluencers who engage in activities that can harm investors and disrupt market stability driver of economic growth, could bring a noticeable deceleration in the nation’s economic progress. A robust savings rate is not only a cornerstone of financial stability but also a catalyst for sustained economic growth. Geopolitical issues and global factors such as oil prices and interest rates can indeed have a significant impact on the Indian economy. A surge in global oil prices can burden India’s import bill, leading to higher inflation and fiscal challenges. Moreover, fluctuations in interest rates by global central banks can influence India’s borrowing costs and capital flows, impacting economic growth. It’s crucial for policymakers and businesses in India to closely monitor and adapt to these external factors to ensure economic stability. It is imperative to recognise that despite significant economic progress, the misuse of market euphoria by penny stocks and unregulated FinFluencers can have detrimental effects on investor sentiment. While economic indicators may be positive, irrational exuberance and speculative practices can create a false sense of security, leading investors into risky and uninformed decisions. The rise of financial influencers, often exemplified by larger-than-life celebrities, has raised significant concerns within the investment landscape, warranting regulatory intervention. Taking a firm stance on the issue at hand, it is imperative for the Securities and Exchange Board of India (SEBI) to wield its regulatory authority effectively in clamping down on unregistered financial influencers, or “FinFluencers.” The reasons for such a stringent approach are abundantly clear. The FinFluencers In recent times, the proliferation of FinFluencers on social media platforms has reached unprecedented levels, and with it, the risks associated with unsound financial advice and market manipulation. These self-proclaimed experts, often operating without any regulatory oversight, have gained substantial followings, wielding immense influence over unsuspecting investors. This unchecked power has the potential to wreak havoc on the financial well-being of individuals who look to these influencers for guidance. The SEBI’s role as a guardian of market integrity and investor protection cannot be overstated. As the Indian financial landscape evolves, it is imperative that SEBI ensures that these FinFluencers adhere to established rules and regulations governing financial advice and market commentary. The SEBI’s regulatory teeth must be prominently displayed to deter and pegrowth of financial liabilities, primarily stemming from loans offered by banks and financial institutions, has outpaced the growth of financial assets, including investments in bank deposits and stocks. The resulting imbalance has translated into a deceleration in the growth of financial savings. This slowdown in financial savings has far-reaching consequences, leading to an overall reduction in savings rates, which in turn could stymie the growth of investments. This adverse impact on investments, a vital THE STOCK MARKET MIASMA ESSAY Photograph by Subhabrata Das
07 October 2023 | BW BUSINESSWORLD | 57 nalise unregistered FinFluencers who engage in activities that can harm investors and disrupt market stability. This means enforcing stringent penalties, conducting rigorous audits of their financial claims, and ensuring that these influencers are held accountable for any misleading or fraudulent information they disseminate. Furthermore, investor education plays a pivotal role in safeguarding individuals from falling victim to the charms of these unregistered financial influencers. The SEBI should actively promote investor awareness programmes and caution against relying solely on social media-based advice, especially when it comes to high-risk investments like penny stocks. Should SEBI take decisive action against a celebrity FinFluencer and assert its authority, it would send a clear and impactful message to the market. However, it must also ensure that its regulatory measures are effectively enforced and do not face challenges or reversals at the Securities Appellate Tribunal (SAT), as has been the case in numerous instances. Penny Stocks The SEBI’s crackdown on penny stocks is a necessary and resolute move aimed at safeguarding the integrity of India’s financial markets. Penny stocks, with their susceptibility to manipulation and rampant misinformation, pose a significant threat to unsuspecting investors. By clamping down on these speculative instruments, SEBI would maintain market transparency, protecting investors from potential scams, and ensuring a level playing field. It has to send an unequivocal message that fraudulent activities and market manipulation will not be tolerated, reinforcing the regulator’s vital role in upholding the credibility of India’s financial ecosystem. Investors must recognise the pivotal role they play in safeguarding their financial well-being. Relying solely on hearsay, rumours, or so-called investment tips can lead to disastrous consequences. It is imperative for individuals to take ownership of their own financial future by acquiring knowledge about investing. A wellinformed investor is less susceptible to the pitfalls of market speculation and manipulation. Ultimately, the responsibility for making sound financial decisions rests with the individual, and this awareness is the first step toward achieving financial security in the dynamic world of investments. A regulator cannot save any investor from their greed, and stupidity. l(Disclaimer: This article does not purport to be investment advice. Please seek investment advice from licensed and registered financial advisors) The writer is an author, policy researcher & corporate advisor X : @ssmumbai
58 | BW BUSINESSWORLD | 07 October 2023 India and Asia’s oldest stock exchange has discovered its place in the sun, overcoming an unfriendly regulator and rival NSE’s stifling hegemony. Its stock price has been on a tear in recent times. What has really worked for the bourse? By Palak Shah BSE’S DREAM RUN RDENT FOLLOWERS of 24/7 mundane business channels will be familiar with advertisements proclaiming Nifty 50 as the stock of the nation. But on the equity trading screens these days, BSE is the new stock of the nation. The share price of Asia’s oldest equity exchange is on a dream run. The rally has outperformed shares of every other listed financial company in India this year. From the lows seen in March, BSE shares have gained a whopping 350 per cent to touch new lifetime highs and yet some experts believe the trend could continue. In the battle of the bourses in India, BSE was always the underdog. Although its share price had been in an uptrend amidst the market recovery after Covid, its recent sharp upmove has surprised many. What’s cooking? A Photograph by Hywardscs IN DEPTH CORPORATE
07 October 2023 | BW BUSINESSWORLD | 59 FROM THE LOWS SEEN IN MARCH, BSE SHARES HAVE GAINED A WHOPPING 350 PER CENT TO TOUCH NEW LIFETIME HIGHS AND YET SOME EXPERTS BELIEVE THE TREND COULD CONTINUE
60 | BW BUSINESSWORLD | 07 October 2023 Just nine months ago, such buoyancy was missing for BSE. In January, around 36 per cent institutional shareholders of BSE (among the voting participants) had rejected Sundaraman Ramamurthy’s appointment as the exchange’s new MD and CEO. He was replacing Ashish Chauhan, a member of the founding team of the National Stock Exchange (NSE) who, after a 10- year stint as BSE chief, was moving back to the NSE as its MD and CEO. The voter turnout for Ramamurthy’s appointment too was ridiculously low at just 17.69 per cent. His name was not in the initial list of candidates given to SEBI by the BSE board. But when SEBI seemed unhappy with the board’s initial suggestions and Ramamurthy’s name came up, the regulator gave its thumbs-up. Ramamurthy’s Magic Wand Before Ramamurthy, a decade was spent at the BSE in putting up the building blocks for the exchange in upgrading its technology and regulatory process that averted its shutdown. BSE rose to be the world’s fastest exchange sans major technical glitches, went public and managed to add a chapter on corporate governance to its textbook. It was also no secret that BSE stood up to NSE’s hegemony, and the MD and CEO prior to Ramamurthy conceptualised new segments like exchange-based mutual fund investments even in the face of an unfriendly regulator. For long, SEBI was awestruck by NSE’s former bosses Ravi Narain, Chitra Ramkrishna and other influential board members of the exchange. Then, the two NSE bosses were so powerful that they could lock up SEBI officials in a room when they visited the exchange’s premises for inspection. In such a scenario, many attempts of BSE at attracting volumes fell short as the game was often skewed due to the regulatory regime that mainly favoured the NSE. How SEBI turned a blind eye to NSE’s scandalous launch of co-location-based algo trading that propelled it to a monopoly, crippled India’s 17 other regional stock exchanges and nearly finished BSE, is a chapter in history. But the credit for BSE’s new stardom, on the back of visible green shoots of revival of its derivative segment, should go to Ramamurthy. In just nine months of him taking charge, BSE’s derivative segment has sprung back to life. And Ramamurthy is doing this without any doles or incentives to brokers for generating volumes that BSE was used to giving earlier. BSE spent nearly Rs 400 crore in various market making and incentive schemes over the past few years but derivative volumes were never sticky on its platform. Thus when the market saw that BSE was suddenly attracting some derivative volumes, after Ramamurthy came in, its share price started reacting. Although at age 62 Ramamurthy started new innings where he has to lead from the front, in the past, he has always worked from the shadow of his bosses. At Bank of America, where he worked as the chief risk and compliance officer prior to joining BSE, Ramamurthy was the blue-eyed boy of Photograph by Subhabrata Das IN DEPTH CORPORATE
07 October 2023 | BW BUSINESSWORLD | 61 Ramamurthy, who was the chief of products there, never really hogged the limelight. So how did he turn out to be a prize-fighter for the BSE? Old NSE insiders and observers of India’s exchange space say, there is little wonder that Ramamurthy has learned a thing or two from his stint at NSE on building bridges with the regulator. The buzzword is that SEBI’s sudden benevolence towards BSE is due to ‘Ramamhurthy’s magic wand.’ SEBI’s Balancing Act After Ramamurthy moved to BSE, SEBI dropped the earlier stringent requirement of registering at a single trading venue for clients. As per SEBI’s recent circular, brokers have to compulsorily register clients to trade on both NSE and BSE and the clients have to specify if they want to opt out of any one. This was not the case earlier. Most brokers registered their clients only on the NSE, since it had higher volumes and there was no regulatory compulsion to sign-up for both options. Effectively, this meant that even if BSE was giving Kaku Nakhate. A high flying investment banker, Nakhate is the country head of Bank of America in India and believed by many to have a swivel door access to the office of successive Prime Minister’s, over the past two decades. She is also well respected in Mumbai’s power lobbies and regulatory corridors of SEBI and RBI. Ramamurthy is the second senior official from Bank of America to lead BSE. Earlier, when BSE was chaired by Deepak Parekh’s confidant Jagdish Capoor, the exchange had roped in Madhu Kannan as the MD and CEO from New York where he was the MD of Bank of America-Merrill Lynch. Then, Nakhate was the head of global markets for DSP-Merrill Lynch in India. Later, when Bank of America gobbled up Merrill Lynch, its Indian partner and DSP founder Hamendra Kothari also sold his stake to the US bank. But before Ramamurthy moved to Bank of America in 2012, he cut his teeth at the NSE where he worked under Narain and Ramkrishna for two decades between 1992 to 2012. Even as NSE won several accolades at the world stage, Kamala Kantharaj, Chief Compliance Officer, BSE Khushro Bulsara, Chief Risk Officer, BSE Deepak Goel, Chief Financial Officer, BSE Girish Joshi, Chief Trading Operations and Listing Sales Sunil Ramrakhiani, Chief Business Officer (Equity), BSE Ritu Kundu Head, HR, BSE Samir Patil, Chief Business Officer, BSE Subhash Kelkar, Chief Information Officer, BSE SENIOR MANAGEMENT AT BSE Photographs courtesy: BSE
62 | BW BUSINESSWORLD | 07 October 2023 a better price quote in some instances, nobody cared. NSE had a higher volume pool and most chose to execute their trade there. “All the brokers are mandated to register their new clients on all the active exchanges. For existing clients, the stock brokers are mandated to offer them access on all active exchanges...” SEBI said in a circular on June 21. Brokers also have to seek a client’s negative consent for not opting to register on both exchanges. Although a lacuna in the rule making, such soft changes were never envisaged by SEBI even when BSE was on the verge of shutting down. Hence, Ramamurthy’s magic touch is believed to be a force behind SEBI’s change of heart now, observers say. Every large online broker can now provide default options to clients to trade on both NSE and BSE. There is a view that brokers that own a stake in BSE will be more than happy as they don’t have to justify to clients their reasoning for registering on BSE too. Ramamurthy also waved his wand in June after NSE announced a change of the expiry day for its popular Bank Nifty contracts. To keep ahead in the race of expiry day volumes, NSE had declared that it was shifting the expiry of its Bank Nifty contracts to Friday from the decade-long practice of keeping the same on Thursday. This was with a clear view to deter the shift of volumes on BSE’s Sensex and Bankex contracts, the expiry of which was changed to Friday by Ramamurthy recently. On the expiry day for the derivatives contracts, the trading volumes are extremely high due to the rush to shift positions and NSE did not want Ramamurthy to have the cake alone. But in a sudden U-turn, just days after making the earlier announcement, NSE issued a joint press statement with BSE and said that it had dropped its plan to change the expiry “in the interest of market development.” Here too, SEBI’s nudge is likely to have done part of the magic, insiders say. This exclusivity of expiry to BSE seems to have worked for it well. As per a report by HDFC Securities, BSE’s derivatives market share on expiry day is now 30 per cent that of the NSE on Friday. (BSE Friday vs NSE Thursday). Earlier, a SEBI rule on putting small company stocks under the mandatory call-auction mechanism had hurt the exchange badly. While the NSE has 1,600 listed exclusively on its platform, the BSE has more than 5,000 stocks. Under the call-auction rule, which was earlier made popular by NSE-linked researchers Ajay Shah and Susan Thomas and adopted by SEBI, stocks that had low volumes and turnover were mandatorily allowed to trade only once a week. Also, the trading was not continuous but orders were collected first and then matched in regular intervals, which was frustrating to most brokers and hence volumes on BSE even in the cash segment had started to decline. A couple of months ago, after a plea was filed in the Securities and Appellate Tribunal, SEBI without any resistance or appeal, decided to relax call-auction rules to allow trading RAMAMURTHY HAS LEARNED A THING OR TWO FROM HIS STINT AT NSE ON BUILDING BRIDGES WITH THE REGULATOR. THE BUZZWORD IS THAT SEBI’S SUDDEN BENEVOLENCE TOWARDS BSE IS DUE TO ‘RAMAMHURTHY’S MAGIC WAND’ Photograph courtesy: BSE IN DEPTH CORPORATE
07 October 2023 | BW BUSINESSWORLD | 63 estimates by 7 / 11 per cent for FY24 / 25E, increase core multiple to 28x (vs 25x), and upgrade rating to Buy.” BSE still has a long way to go. Currently, 100 per cent of BSE’s derivatives volumes is concentrated only in the index options segment, which SEBI has often termed as high-risk for retail investors. It’s a pure lottery. But then, index options on NSE too account for 98 per cent of its derivatives volumes. Yet, 2 per cent of other stock futures and index futures on NSE is huge in terms of sheet capital since it recorded an average daily trading of more than Rs 300 lakh crore (around $400 billion) in July. The HDFC report says that NSE derivative volume is 30 times larger than BSE and it has registered a 10- year volume CAGR of 62 per cent. NSE’s options turnover is 28 times higher than BSE but on the basis of options premium traded, it is 75 times more than BSE. NSE’s premium to notional ratio is 3x of BSE. The cash market share of BSE is around 7 per cent now. Risk Factor BSE has a much lower cost regime than the NSE currently but the rising volumes could bring in some additional burden for the exchange. This is mainly as the stock exchanges have to pay a turnover fee to SEBI from their own pocket and higher the turnover, more could be the outgo for the exchanges. Also, while the NSE pays the turnover fees to SEBI on notional turnover volumes in the options segment, the BSE has been paying the turnover fees on amount of premium traded. It means that whenever SEBI decides to rationalise the collection of turnover fees and make it similar for both exchanges, either the NSE will have windfall gains or the BSE will have to shell out more. But if SEBI decided to keep its collection of fees at the amount of options premium traded then it would mean a loss to government exchequer as a lion’s share of SEBI’s income now goes to the government, experts said. Turnover fees on notional value is premium of option traded plus the value of the underlying asset. But the same on premium means only on total value of premium traded. for the entire week -- advantage BSE. This apart, sources say that many large brokers, high frequency traders, foreign funds and insurance companies too have received an informal but a stern nudge from various regulators to trade more on BSE from now on. Truly, there is a regulatory consciousness and an attempt to bring duopoly in India’s stock exchange space, experts say. But there is also a view that a balance is required in the commodity exchange trading space too, which has largely remained neglected despite several troubles. Derivative Boost In addition to SEBI’s support, Ramamurthy’s ways are yielding results for BSE, so far. As per a recent report by HDFC analysts Amit Chandra and Vivek Sethia, BSE’s market share in India’s equity derivatives segment has gained momentum. It has risen from nil in April to 3.4 per cent in August on a monthly basis. On the expiry day, BSE had more than 11 per cent market share in derivatives, the report says. The rest is all with NSE. According to HDFC, much of BSE’s derivative market share is in the weekly options contract of its benchmark index Sensex. But the icing on the cake is that these volumes are without any incentive scheme. “The derivatives volume is organic and driven by 219 members (proprietary and retail) and the active UCCs (unique client codes) on the BSE derivatives platform have reached 0.17 million, from nearly zero in three months. We expect BSE derivative market share to reach 10 per cent in Q4F Y24E (fourth quarter of financial year 2024), driven by on-boarding of large member brokers, the launch of new weekly index contracts, hedging activity and a continued increase in active traders. The increase in derivatives volume will boost cash volumes too,” the HDFC report said. HDFC further said, “Steps taken by the new management are yielding results and will boost growth and margin. We expect a revenue/EPS (earnings per share) CAGR (compounded annual growth return) of 19 / 25 per cent over FY23-26E, led by a revival in transaction revenue. We increase our EPS AFTER RAMAMURTHY MOVED TO BSE, SEBI DROPPED THE EARLIER STRINGENT REQUIREMENT OF REGISTERING AT A SINGLE TRADING VENUE FOR CLIENTS
64 | BW BUSINESSWORLD | 07 October 2023 Premium traded largely is not even 1 per cent of the underlying index options, where 98 per cent of trading volumes are concentrated. Also, BSE has so far tried various pricing mechanisms (steep discount/nil charges) in most of its segments to compete with NSE but was unable to garner market share. The new management has decided to match pricing with NSE as they believe that exchange transaction charges do not trigger volume shifts. BSE has increased cash transactions, currency futures and listing fees to match with NSE. BSE’s cash and listing charges are now at a premium to NSE. But BSE charges are far lower in index options segment, which is where all the volumes are being generated. BSE transaction charges in options are Rs 50 per million versus Rs 350 per million of NSE. Thus, to manage extra outgo of SEBI turnover charges, it will have to increase its options transaction charges significantly. Considering the options segment turnover in August and if the trend remains the same going ahead or its market share improves, rough estimates suggest that BSE will have to pay SEBI turnover charges of more than Rs 10 to Rs 12 crore per month based on the current month volumes. NSE has provided Rs 275 crore for payment to SEBI as turnover fees for quarter ended June 2023. BSE also has a very high notional to premium turnover compared to the NSE, which means it will have to raise its transaction charges as its volumes goes higher. If BSE has to pay SEBI turnover fees on notional value, its outgo will be several fold higher. Similarly, BSE’s contributions to settlement guarantee fund, clearing charges will also have to increase several fold, experts say. For the quarter ended June 2023, BSE reported that its consolidated net profit had jumped over 10 times to Rs 440 crore from Rs 40 crore in the same quarter last year. But that was only one-time profit due to sale of Rs 468 crore stake in depository player CDSL to meet SEBI shareholding requirements. Revenue from operations during the April-June period was up 15 per cent to Rs 216 crore, compared with Rs BSE HAS A MUCH LOWER COST REGIME THAN THE NSE CURRENTLY BUT THE RISING VOLUMES COULD BRING IN SOME ADDITIONAL BURDEN FOR THE EXCHANGE Photograph by Maxxyustas IN DEPTH CORPORATE
07 October 2023 | BW BUSINESSWORLD | 65 designated as chief, special projects. Sunil Ramrakhiani is the new chief business officer (equity). Also, Samir Patil is still designated as chief business officer. Apart from doing propriety work in past few years, Goel was the director and chief officer of Way2Wealth Securities and VP and Head of Commodities at IL&FS Securities. Ritu Kundu joined as the new head of HR in January. Shivkumar Pandey, chief information and security officer, has submitted his resignation, sources say. Many of other senior BSE employees under the previous regime have left or are on their way out and new recruitments in senior positions are in the offing, the sources say. Changing fortunes of BSE have made ace investors like Madhu Kela, broking firm Zerodha and Quant Mutual Fund turn bullish on the exchange, markets experts say. BSE Chairman S.S. Mundra is also the chairman of MK Ventures Capital, a listed company owned by Kela. [email protected] 187 crore in the corresponding period of previous year. But balance sheet shows that profit before exceptional item and tax was just Rs 69.21 crore in the June quarter compared to Rs 83 crore in March. Profits from exceptional items were shown at Rs 504 crore. Tough Task Master Compared to the previous regime at the BSE, Ramamurthy is a tough task master who cooks his evening rice in the office. BSE insiders say he has also renovated the shower cubicle and purchased new furniture to spend long hours in the office. Ramamurthy has roped in his former NSE colleague Kamala Kantharaj as BSE’s chief compliance officer, who is delegated most of the work, sources say. She replaced Neeraj Kulshrestha who left BSE. BSE’s former senior officials have been moved to other roles or are being eased out. Deepak Goel, who earlier worked with Kotak Group, has been hired as the new chief financial officer in place of Nayan Mehta who has been re-
66 | BW BUSINESSWORLD | 07 October 2023 What opportunities do you envision in the dynamic Indian market? In a competitive aviation landscape like India, how do you ensure sustainable growth and profitability for Malaysia Airlines? As the third-largest aviation market globally, India offers tremendous potential for growth and expansion. Notably, India is also the fastest-growing aviation market in the world. A rapidly growing population along with an expanding middle class are expected to stimulate travel demand, both domestically and internationally. The Indian government is also proactively working towards building or expanding aviation-related infrastructure and we are highly appreciative of the same. Given the increasing travel demand, we are closely monitoring the level of capacity coming into the market as all airlines rush to ramp up their operations. The chal- ‘INDIA IS THE LEADING MARKET FOR MALAYSIA AIRLINES SURPASSING AUSTRALIA’ INTERVIEW A hmad Luqman Mohd Azmi, Chief Executive Officer, Malaysia Aviation Group, in a conversation with ASHISH SINHA of BW Businessworld, talks about the opportunities in the dynamic Indian aviation market, Malaysia Airlines’ plans to operate 60 weekly flights within India by the close of 2023, and much more. Excerpts: lenge is to work towards the right level of supply of seats versus level of demand. We are proactively managing our capacity and operations to mitigate the impact of unprofitable routes resulting from rising fuel costs and market conditions. We remain mindful of potential risks and the volatility of the market, and are taking steps to minimise their impact on our business. By keeping a close eye on market conditions and implementing strategic measures, we are striving to navigate through these times while safeguarding the resilience of our operations. Balancing healthy competition and sustainable growth in India’s competitive aviation industry is challenging. Recognising the value of partnerships and alliances is crucial. While domestic aviation sees rising passenger traffic, India’s market remains inviting for foreign carriers like Malaysia Airlines. This competition benefits the Indian aviation market, offering opportunities for both domestic and foreign airlines to thrive. How do you anticipate new routes contributing to the overall growth of Malaysia Airlines’ operations in India? When evaluating potential new routes, one of the primary considerations is the level of demand, essentially gauging the number of passengers interested in utilising the route. The travel demand from India has been very encouraging for Malaysia Airlines, with average load factor at 81 per cent, prompting us to enhance our connectivity and increase frequencies to the country. Another factor that determines whether a new route can be explored is competitive positioning. In this context, rival airlines frequently strive
07 October 2023 | BW BUSINESSWORLD | 67 you are implementing to capture the rising travel demand from India? The surge in travel demand from India has prompted us to expand our network and offerings for this market. In fact, this demand has propelled India to become Malaysia Airlines’ leading market, surpassing even Australia. Currently, we have already restored over 90 per cent of our pre-pandemic levels in India, operating 57 weekly flights to six destinations, comprising New Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, and Kochi, and we are on target to restore 60 weekly flights by year end. Noting the strong demand in the market, we also recently announced that we will be expanding our services to three more cities: Trivandrum, Amritsar, and Ahmedabad - starting from November this year. As Malaysia’s national carrier, we’re steadfast in enabling seamless travel between Malaysia and India. Our Indian passengers can take advantage of the Bonus Side Trip programme, affording them the opportunity to stop over in Malaysia and explore cultural gems like Alor Setar, Langkawi, Johor Bahru, Kota Bharu, Penang, and more at minimal expenses. For the leisure market, we are also working closely with state tourism boards to position Malaysia as a top-of-mind wedding destination, which is popular with the Indian market. Given that India is a pivotal focus market for us, we’re committed to continuously adding new routes, increasing flight frequencies, and upgrading aircraft to cater comprehensively to the growing travel demand. Your partnership with Acumen Overseas for air travel management is a significant step. How do you envision this collaboration strengthening Malaysia Airlines’ position in the Indian market? In a bid to strengthen our customer base across the Indian network, we recently partnered with Acumen Overseas in March. The role of Acumen Overseas as to be pioneers in accessing a new route. Additional prominent factors such as the viability of operations, strategic importance, and the anticipated financial viability of the route also factor into our decision-making process. In addition to achieving our goal of operating 60 weekly flights within India by the close of 2023, the introduction of new routes originating from Amritsar, Trivandrum, and Ahmedabad underscores our commitment to long-term growth, increasing our point-to-point connectivity, and solidifying our presence in the Indian market. Could you share the key initiatives that
68 | BW BUSINESSWORLD | 07 October 2023 our general sales agent (GSA) for India is significant as it’s helping us expand our services in the world’s fastest-growing aviation market. A part of Group Concorde, Acumen Overseas is vastly experienced in airline management. As part of their prestigious client portfolio, the organisation caters to 22 international airlines through their 18 international offices in the Asia Pacific region. With India being their home country, they are spread across 37 branch offices in 23 Indian cities covering North, South, East and West India. We are actively leveraging Acumen Overseas’ extensive knowledge as well as strong trade and business network to bolster our presence in India. Malaysia Airlines is confident that this association will prove to be meaningful and mutually beneficial for both parties. Can you share insights into how the MHfriends programme has helped identify areas for improvement and shape the overall passenger experience on your flights between India and Malaysia? At Malaysia Airlines, our customers hold paramount importance. We are wholeheartedly dedicated to ensuring a seamless and stress-free travel for each of our passengers. In our pursuit of constant improvement, we place significant emphasis on the input provided by our customers. In this context, MHfriends, an impactful and highly successful venture, stands as a testament to our unwavering commitment to a customer-centric approach. Through this initiative, we actively engage with our loyal and frequent fliers, conducting surveys and encouraging them to share their invaluable insights. This collaborative effort enables us to pinpoint areas where enhancements can be made. As our customers are the primary users of our services, engaging in open conversations with our customers is crucial. By attentively recognising and addressing their feedback, we can turn them into loyal supporters of Malaysia Airlines. Our commitment to Malaysian hospitality drives us to value kindness, diversity, and embrace each input provided to us to enhance service delivery. As a member of the Oneworld Alliance, Malaysia Airlines has a broad network. How do you see the role of the alliance in expanding your reach and enhancing services for the Indian market specifically? Are there any collaborative projects within the alliance that benefit passengers traveling between India and Malaysia? Malaysia Airlines takes pride in being a member of the Oneworld Alliance. Through this, Malaysia Airlines boasts an extensive network that encompasses more than 900 destinations across 170 territories together with Oneworld airline members. In relation to our India operations, we currently operate 57 weekly flights with the recent addition of two flights to Kochi. We strongly believe in the power of collaboration and building meaningful partnerships in the airline industry. At Malaysia Airlines, we have strategically joined forces with airlines globally. Specifically, for the Indian market, we have interlined partnerships with Air India and Vistara, which offer passengers seamless travel options through connecting flights operated by both airlines. Additionally, we are actively exploring opportunities for codeshare partnerships with Indian carriers that align with Malaysia Airlines’ network expansion strategy. [email protected]; @Ashish_BW
70 | B W BUSINESSWORLD | 07 October 2023 I N THE PAST THREE years, the entertainment landscape has undeniably transformed, and so has the experiential economy ecosystem. With cinemas shuttered and streaming services reigning supreme, it seemed like the days of the multiplex were numbered. However, in a remarkable twist, multiplexes are not only making a comeback but are thriving, proving their enduring relevance in a world saturated with home entertainment options. The same would hold true, for instance, for gala weddings, each celebrity wedding bigger, more extravagant, yet more personalised. THE IRREPLACEABLE CINEMATIC EXPERIENCE Talking about the cinematic experience, as we weathered the storm, a truth became evident: the cinematic experience was AIMING TO ‘TRANSFORM’ YOU THE EXPERIENTIAL ECONOMY OVERVIEW Personalisation and immersion have become the latest buzzwords in the experience economy as it strives to go all-out to pamper the consumer who is indeed the king By Team BW irreplaceable. The communal atmosphere of a movie theatre, the immersive visuals, the thunderous sound, and the collective gasps and laughter of the audience—these elements form an intrinsic part of what makes cinema special. Multiplexes have recognised the importance of technology in reclaiming their status. They have invested heavily in state-ofthe-art projection systems, sound technology, and even innovations like IMAX and 4D experiences. This technological edge gives moviegoers a reason to venture out of their homes for an unparalleled visual and auditory spectacle. LUXURY & COMFORT FACTOR The modern multiplex is not just about the movie; it’s an experience in itself. Luxurious, reclining seats, gourmet dining options, and elegant interiors have transformed multiplexes into Photograph by Anna Om Photograph by Olexiysyrotkin
07 October 2023 | BW BUSINESSWORLD | 71 entertainment hubs that pamper the audience. Going to the movies has become an indulgence, a respite from the ordinary. Multiplexes have expanded their horizons beyond just showcasing mainstream blockbusters. They’ve embraced diversity and inclusivity by offering a platform to independent films, international cinema, and niche genres. This shift has broadened the cinematic palate of audiences, offering a more eclectic and culturally rich menu of choices. A NIGHT OUT FOR ALL AGES Multiplexes have rebranded themselves as the ultimate destination for a night out. Beyond movies, they offer arcades, bowling, and even live events. Families, couples, and friends see multiplex outings as more than just watching a film; they’re an all-encompassing entertainment experience that caters to all age groups. THE APPEAL OF BLOCKBUSTERS While streaming platforms can provide a plethora of content, they can’t replicate the buzz and excitement that surrounds a blockbuster movie’s release. The thrill of being among the first to witness a cinematic phenomenon on the big screen is an experience that streaming services can’t offer. So, whether it’s the extravagant, yet personalised wedding, or a night out in a multiplex on a weekend, it’s the “experience” that drives the consumer, yes, the economy as well. The “experience economy”, or the “experiential economy” as we call it in India, is driving businesses, forcing organisations to adapt, and making sure that the consumer indeed is the king. Little wonder then that increasingly, organisations are appointing “chief experience officers”. The progression to the “experience economy” has not entirely been unexpected. The agrarian economy led to the industrial economy which in turn led to the services-led economy. It eventually gave rise to the experiential economy. It was over two decades ago that Joseph Pine II and James H Gilmore came up with the expression “the experience economy”. It triggered a revolution of sorts. Businesses were transformed and they changed, once and for all, on how they perceived themselves. Pine and Gilmore argued that the idea of “mass market” was then dead. The future of businesses, they argued, was all about “customisation” and “personalisation”. The immersive experience of the experiential economy aimed at an individual’s “total transformation” — with the connected digital ecosystem being an enabler. Goods were now perceived in the nature of services. And, services were perceived as “experiences”. This was at the genesis of the “experience economy.” In India, it came to be known more commonly as the “experiential economy”. It was argued that corporations would grow and expand their businesses via “experiences”. Chief experience officers were, in fact, also in part, chief growth officers. According to the classic The Experience Economy: Work Is Theatre & Every Business A Stage,the employees while interacting with customers, in multiple settings, “need to perform”. So, employees of new-age corporations, who are in interaction with customers all the time, need to “perform suitably”. When experiences are customised and tailor-made for an individual in a particular setting, “transformation” is what is expected. The experience economy thus aims at “transformation” of the consumer. Joseph Pine II has been quoted as saying: “When you customise an experience and stage experiences so appropriate and tailored to this particular person, you cannot help but create a life-transforming experience that changes us in some way.” Photograph by Indiapicturebudget
T HE EXPERIENTIAL ECONOMY stands as a pivotal moment in the course of humanity, representing a profound shift in how we perceive and prioritise our existence. It transcends the mere acquisition of material wealth and possessions, instead placing experiences at the forefront of our collective aspirations. We are no longer just consumers; we are seekers of moments that define our lives. This transformation reflects a deeper yearning for connection, authenticity, and the timeless memories that enrich our journey. The Experiential Economy is, without a doubt, a tipping point that compels us to reevaluate the very essence of what it means to be human in a world driven by the pursuit of meaningful encounters and the stories we create along the way. In the ever-evolving landscape of commerce, the experiential economy has emerged as a transformative force, globally and particularly in India. This shift has given birth to a new era of marketing, one focused on the creation and marketing of memories and experiences. The experiential economy, at its core, is a radical departure from the traditional notion of consumerism. It signifies a transition from the tangible to the intangible, from the material to the emotional. In this economy, the consumer, the ‘ME,’ takes centre stage. It’s about crafting experiences that resonate on a deeply personal In the ever-evolving landscape of commerce, the experiential economy has emerged as a transformative force, globally and particularly in India. This shift has given birth to a new era of marketing, one focused on the creation and marketing of memories and experiences COVER STORY E s say A TIPPING POINT FOR HUMANITY By Srinath Sridharan level. It’s about creating moments that leave an indelible mark on individuals, moments they cherish and share. This shift has sparked a metamorphosis in marketing, a shift from the ‘marketing of things’ to ‘marketing of memories and experiences (M&E).’ It has its roots in the evolving social dynamics of our time. One significant factor is the changing preferences and priorities of consumers. In an increasingly interconnected and fast-paced world, people are seeking more meaningful and memorable moments. They are driven by the desire to escape the monotony and crave authentic experiences that resonate with their individuality. Socially, this shift represents a collective yearning for deeper personal experiences, self-expression, and the pursuit of THE EXPERIENTIAL ECONOMY 72 | BW BUSINESSWORLD | 07 October 2023
happiness beyond just the accumulation of possessions. Younger demographics, notably millennials and the Gen Z, have played a pivotal role in propelling this trend. These generations, known for their tech-savviness, value experiences that align with their lifestyles. They prioritise authenticity, uniqueness, and personalisation over traditional status symbols. This demographic’s sheer size and influence have spurred businesses to adapt their marketing strategies to cater to these preferences, further accelerating the shift towards the experiential economy. The rise of social media can be attributed, in part, to fundamental aspects of human nature, such as self-gratification, narcissism, and voyeurism. Social media platforms cater to our innate desire for attention and validation, allowing individuals to curate and showcase their lives, accomplishments, and even their vulnerabilities. In an era where self-expression and self-promotion have become the norm, social media serves as a digital stage where we seek acknowledgment and connection, driving the widespread usage of these platforms. Experiential businesses are keenly attuned to these social Photograph by Dell640 07 October 2023 | BW BUSINESSWORLD | 73
74 | BW BUSINESSWORLD | 07 October 2023 behaviours. They recognise that consumers are not merely passive observers but active participants in the digital realm. To harness this phenomenon, experiential offerings are increasingly designed to leverage users’ desire for self-expression and recognition. From immersive events with shareable moments to interactive installations that encourage user-generated content, these businesses understand that the more an experience aligns with the self-gratification and narcissistic tendencies fostered by social media, the more likely it is to succeed in today’s market. In an age dominated by fleeting digital interactions, there’s a profound yearning among consumers to break free from the digital noise and embrace the present. People want to live in “this moment,” cherishing real-world experiences that create lasting memories. These experiences provide a tangible and authentic alternative to the curated digital personas on social media. Consumers are increasingly valuing moments they can cherish and boast of, as these become the true currency of a life well-lived. As a result, businesses that offer such moments, whether through travel adventures, live events, or unique dining experiences, are well-positioned to thrive in an experiential economy that prizes the tangible over the virtual. “The Experiential Economy: Where moments become the currency of value, and memories the treasures of a lifetime.” In India, the acceptance and adoption of the experiential economy are strongly linked to its economic development. As the country experiences robust economic growth, a burgeoning middle class with increased disposable income is emerging. This burgeoning middle class is eager to explore and indulge in novel experiences, both domestically and internationally. The growth of tourism, entertainment, and hospitality industries in India is a testament to the rising demand for experiential offerings. Moreover, the government’s initiatives to promote tourism and investment have facilitated the development of infrastructure, making it easier for businesses to create and market these experiences. The influence of media and, in particular, social media, cannot be overstated in driving aspirations for experiential living. The digital age has connected individuals worldwide, providing a platform to share experiences and inspire others. Social media In today’s modern economy, we find ourselves at a crossroads. It’s no longer just about the physical world; the digital realm plays an equally vital role. Enter immersive technologies, augmented reality (AR) and virtual reality (VR). These technological marvels have the power to redefine marketing strategies in the digital age. They offer marketers the means to create immersive and interactive brand experiences, captivating consumers like never before THE EXPERIENTIAL ECONOMY Photograph by Hay Dmitriy COVER STORY E s say
07 October 2023 | BW BUSINESSWORLD | 75 roads. It’s no longer just about the physical world; the digital realm plays an equally vital role. Enter immersive technologies, augmented reality (AR) and virtual reality (VR). These technological marvels have the power to redefine marketing strategies in the digital age. They offer marketers the means to create immersive and interactive brand experiences, captivating consumers like never before. The evolution of digital immersive technologies adoption in India has been a fascinating journey. Initially, these technologies were embraced primarily by tech enthusiasts and early adopters. However, as smartphones became more affordable and accessible, augmented reality and virtual reality gained wider acceptance. The convergence of rising internet penetration, cheaper Internet access and the development of local content in vernacular languages further accelerated adoption. Today, these technologies are permeating various sectors, from ecommerce and entertainment to education and healthcare, promising a future where immersive experiences are becoming integral to daily life in India. Looking ahead, the future of experiential consumption is poised for continuous evolution. As technology continues to advance, consumers will increasingly seek more immersive, personalised, and interactive experiences. The boundaries between the physical and digital realms will blur further, offering opportunities for brands to create seamless and memorable experiences. Whether it’s through virtual showrooms, gamified marketing campaigns, or location-based AR adventures, the future of experiential consumption will be marked by innovation and customisation, catering to the diverse tastes and preferences of the modern consumer. Beyond marketing, brands are venturing into a realm where they are not just using immersive tech for promotion but are becoming digital brand offerings themselves. This shift signifies a deeper integration of technology into brand identities. Companies are creating digital avatars, chatbots, and virtual brand ambassadors that interact with consumers in immersive ways. These digital brand personas engage with customers in real-time, providing information, assistance, and even entertainment. This transformation goes beyond marketing; it’s about establishing a continuous and meaningful connection with consumers in the digital space, forging lasting brand loyalty in a world increasingly defined by digital experiences. Augmented Reality (AR) brings the virtual into the real, allowing users to envision products in their own environment before making a purchase. Imagine trying out furniture in your living room virtually or experimenting with fashion items without even stepping into a store. This technology provides a unique and personalised experience, forging a deeper connection between brands and consumers. On the other hand, Virtual Reality (VR) transports users to fully simulated environments where they can engage with platforms amplify the allure of experiences, enabling individuals to showcase their adventures and memorable moments to a global audience. This sharing culture fuels aspirations, as people are exposed to a multitude of exciting experiences that they too wish to partake in. Thus, the power of media and social media in shaping aspirations and driving the shift towards the experiential economy is undeniable, creating a continuous cycle of demand for memorable experiences. The modern-day Indian consumer is experiencing a remarkable shift in mindset, where there is a realisation that there is no guilt associated with indulging in memories and experiences. This transformation stands in contrast to the previous generation, which often adhered to societal norms that emphasised frugality and self-denial. Today’s Indians are embracing the idea that personal gratification and the pursuit of enriching experiences are not only acceptable but essential for a fulfilling life. This shift is liberating, enabling individuals to invest in experiences without the burden of guilt, ultimately fueling the exponential growth of the experiential economy in India. In today’s modern economy, we find ourselves at a cross-
76 | BW BUSINESSWORLD | 07 October 2023 branded content in a profound and memorable way. It’s the chance to explore a car’s interior before setting foot in a dealership or embarking on a virtual journey through a brand’s story. These immersive technologies are not just novelties; they are powerful storytelling tools that make brand messages resonate more deeply. In India, the marketing landscape is gradually embracing these immersive technologies, recognising their potential to revolutionise customer engagement. While adoption is still in its infancy, the burgeoning interest in AR and VR spans industries. Companies are experimenting with product visualisation, virtual showrooms, experiential marketing, and interactive brand experiences. Moreover, as the cost of AR/VR devices continues to drop, these technologies will become accessible to a broader demographic. As these immersive experiences become available to a more extensive swathe of the population, the potential for growth and innovation in the experiential economy becomes boundless. Picture yourself embarking on a spiritual journey from the comfort of your home, virtually visiting revered religious sites worldwide. Or perhaps you’re attending a live cooking class with a celebrity chef, mastering the art of gourmet cuisine without leaving your kitchen. Sports enthusiasts can find themselves sitting in dugouts with their favourite cricketer, sharing insights and experiences like never before. But it doesn’t stop there. Imagine going backstage at a Coldplay concert, witnessing the energy of a soundcheck moment before the show. History buffs can virtually step back in time, exploring ancient civilisations or witnessing pivotal moments in history through AR. Even if travel isn’t feasible, immersive technologies can whisk you away on remote adventures like scuba diving in the Great Barrier Reef or hiking the Inca Trail to Machu Picchu. For fans, it’s about enjoying unprecedented access, whether it’s a front-row seat at a music concert game or a one-on-one virtual meet-and-greet with a beloved celebrity. These technologies have the power to transport you to the heart of your passions, offering unforgettable, personalised, and accessible experiences that bridge the gap between reality and the extraordinary. We are at the cusp of a paradigm shift in the world of commerce, one that places the ‘ME’ – the individual consumer – at the heart of economic transactions. The experiential economy’s ascendancy is undeniable, and as immersive technologies like AR and VR continue to evolve and become more accessible, the future promises a vibrant landscape where marketing is not just about selling products but creating unforgettable experiences. India, with its dynamic and youthful population, is poised to be a key player in this transformative journey, where the business of memories and experiences takes centre stage. The writer is an author, policy researcher & corporate advisor X: @ssmumbai Whether it’s through virtual showrooms, gamified marketing campaigns, or location-based AR adventures, the future of experiential consumption will be marked by innovation and customisation, catering to the diverse tastes and preferences of the modern consumer THE EXPERIENTIAL ECONOMY Photograph by Naratrip Boonroung / CANVA COVER STORY E s say
Block your pages... Up-close with India’s Ecommerce Game Changer CHANGE MAKER SPECIAL OCTOBER 21, 2023 Spotlight on Companies making a Social Impact Regular Features & Columns Opinion articles from industry leaders fifffflffiflfflffifflffffl flflff Ensure Your Brand’s Presence in this Special Issue!!! Aparna Sengupta, [email protected], +91 9958000128 Anjeet Trivedi, [email protected], +91 9818122217 Ravi Khatri, [email protected], +91 9891315715 CS Rajaraman, [email protected], +91 9342262859 Somyajit Sengupta, [email protected], +91 9818247444 Kiran Dedhia, [email protected], +91 9833399009 Sajjad Mohmmad, [email protected], +91 9911855935 Saurabh Jain, [email protected], +91 9911334633 Shruti Arora, [email protected], +91 7982628913 For Editorial: Noor Fathima Warsia, [email protected] Issue Highlights
Y esterday at dinner, a friend (a director at a Big Four) was talking about taking a sabbatical from work and exploring India. He could feel a burnout approaching way back in 2021 but carried on because of the usual, running his house, and responsibility to the family thought process. The start of 2023 was especially tough on him, he just couldn’t cope, and so he finally decided to take the sabbatical. He leaves next month to travel through India and plans to pick up small environmental projects in the villages he visits. A colleague has recently negotiated a three-day working week for herself. A neighbour who just added a spaniel to his family has requested for work-from-home. Of late one has witnessed many such scenarios where people are reimagining the way they work. This phenomenon is what we call the ‘You Only By Jyotsna Sharma THE EXPERIENTIAL ECONOMY YOLO FEVER Photograph by Shevtsovy COVER STORY YOLO Economy 78 | BW BUSINESSWORLD | 07 October 2023
The positive is that people get to live their best life. The negative is that people take decisions that might not be in their best interest in the long run. It is definitely beneficial for the economy in the short run. In fact, some sectors have seen an uptick in revenue on the back of the YOLO effect 07 October 2023 | BW BUSINESSWORLD | 79
80 | BW BUSINESSWORLD | 07 October 2023 Live Once’ (YOLO) effect. If you examine the psychology of the YOLO mindset, experts believe it can be both positive and negative. The positive is that people get to live their best life, and do exactly what they want with their time. The negative on the other hand is that it can make people take decisions that might not be in their best interest in the long run. For example, Sam gives up a hectic high-paying job to spend more time with his wife, kid and dog. In the short run it will be great for his mental health but in the years ahead, when his kid has to go to college, he might not think this was the best decision. Employee-organisation relationship redefined The YOLO effect is being seen across sectors and has definitely redefined the employee-organisation relationship. What does this mean for the future of employment especially at structured organisations? “Traditional, rigid structures are giving way to more flexible arrangements. Employees seek greater work-life balance, purpose, and autonomy. This shift means organisations must adapt by offering remote work, fostering a culture of innovation, and valuing individual growth to remain competitive in attracting and retaining talent. It is likely that the future of work will see a combination of hybrid work models, along with a focus on the well-being of employees and their personal development,”says Pradyumna Pandey, Manufacturing HR Head, Hero Motocorp. Rajendra Mehta, CHRO, Suzlon agrees, “I believe we stand at the cusp of a major shift - the future of workplaces will be defined by an intrapreneurial mindset and that would be a leapfrog moment for the society. Employers must reset to value-based models and redesign work with the right amount of technology to offer individuals the canvas to fulfill their needs of innovation, contribution and excellence.” In addition to redefining the way we work the YOLO effect has seen some sectors boom given indiscriminate spending by consumers. Instant gratification, personalisation and convenience are at the core of the YOLO economy. For now, brands are adapting to the YOLO effect PEARL UPPAL, Creative Head and Founder of Talking Threads Bridal RAJENDRA MEHTA, CHRO, Suzlon THE EXPERIENTIAL ECONOMY COVER STORY YOLO Economy
07 October 2023 | BW BUSINESSWORLD | 81 “At Claridges, we have embraced this shift by redefining hospitality as a truly bespoke and experiential journey. A celebration of extraordinary experiences, tailored to your unique desires.” Pearl Uppal, Creative Head and Founder of Talking Threads Bridal says that in the last two years, there has been an increase in both the number of weddings planned and the amount of money being spent on the weddings. She believes the YOLO effect is a trend that is dominating today and will continue in the future as people feel empowered by it. “It’s not just about getting married: It’s about living your dreams; it’s the idea that we live our lives more fully NOW because we don’t want to worry about what can happen down the road.” She explains how the focus of weddings is shifting from bigger and better to more meaningful experiences and spending. In terms of wedding dresses, this means that brides and grooms are opting for a more personal look. They are looking for something that reflects their personality and style, they want their dresses to be memorable, rather than something that can be worn again. “For example, Talking Threads Bridal Lehenga titled Your Story is seeing accelerated traction from brides across India. In this bespoke wedding dress experience, we incorporate personalised motifs that capture the bride and groom’s love story into the lehenga and sherwani artwork. The bride and groom give us references of things, people and experiences that brought them together and keep them together. Our design team incorporates these into motifs that get depicted on the wedding lehenga and sherwani. We are seeing sartorial experiences like this being a driver of the wedding dress industry going forward.” For now, brands are adapting to the YOLO effect and tweaking their offerings accordingly. We will take stock at the close of this year to see how it has impacted the Indian bazaar. [email protected] Impact on experiential sectors In addition to redefining the way we work the YOLO effect has seen some sectors boom given indiscriminate spending by consumers. Instant gratification, personalisation and convenience are at the core of the YOLO economy. Let’s look at the wedding industry and the hospitality business. The demand for personalised experiences across these sectors because of the YOLO effect is a leading reason for an uptick in revenues. As per industry estimates, the Indian wedding industry was to garner business of Rs 3.8 lakh crore in 2022 and 2023 too has a positive outlook. The hospitality industry in India estimated at US$ 23.50 billion in 2023 is expected to reach US$ 29.61 billion by 2028. Hemendra Singh Kushalgarh, General Manager for The Claridges, New Delhi speaks about how the YOLO effect has given rise to personalised and bespoke experiences. PRADYUMNA PANDEY, Manufacturing HR Head, Hero Motocorp HEMENDRA SINGH KUSHALGARH, General Manager, The Claridges, New Delhi
82 | BW BUSINESSWORLD | 07 October 2023 IN CONVERSATION Silver Screen By Ruhail Amin THE EXPERIENTIAL ECONOMY THE ENDURING ALLURE OF CINEMAS AJAY BIJLI, Chairman and MD, PVR Cinemas, in an exclusive chat with BW Businessworld, talks about the revival of cinemagoing in India, strategies driving PVR’s success in an era of digital streaming dominance, innovative enhancements to the movie-watching experience, the dynamics of urban and rural audiences, industry challenges, and the exciting expansion plans for PVR both at home and abroad. Excerpts We have witnessed a phenomenal resurgence in people going back to cinemas. What do you think explains this trend? Well, you know, as Aristotle said, man is a social animal. Everybody’s desire to go out, in fact, in my view, has only increased after the pandemic, because during the pandemic, people were forced to remain inside, and it was not by choice. There was 18 months of closure. You can’t write off a strong activity like cinema-going, which has been around for hundreds of years, by just 18 months of closure. Definitely, habits did change, and people did not have any choice, because when you don’t have a choice, then you do consume content at home. Where else are you going to go? But I think when you do have a choice, then you like to consume content where you’re meant to consume it. People’s desire to go out and watch movies is something which cannot be replaced by anything happening at home. And I have nothing against OTT, that’s a different form of entertainment. OTT is just another avatar of home
07 October 2023 Photographs by Naval Kishor | BW BUSINESSWORLD | 83
84 | BW BUSINESSWORLD | 07 October 2023 entertainment. So home entertainment used to be with TV, then colour TV, then satellite TV, VHS, DVD, LD, and OTT. It has always been in existence, home entertainment. So I think that’s why people are going out and watching movies. How have you innovated in order to enhance the cinema-going experience? It’s an event for people to go out and watch a movie. And when they get out of the comfort of their homes, make a programme with their kids or their friends or their family, I think it takes an effort to do that. Once you do that, then we as exhibitors and cinema operators must not disappoint you. We should try to enhance that experience. Now that experience gets enhanced when you have a very high quality audio-visual. They should say, “Wow’, this sound, I can’t get at home.” For the visual experience from analogue to celluloid to digital to laser, you should be able to say, “Okay, wow, now the quality that I’m getting on the screen, the lightness, luminosity is unparalleled.” In any case, big screens are not competing with your video home theatres. Then comes the seating part, so I try to focus on what’s happening in that black box. The black box must have very good seating comfort. It must have excellent audiovisual, and it must also be very vibrant and colourful. Movies are larger than life, our heroes look like demigods, our heroines look like demigoddesses and the influence in our THE EXPERIENTIAL ECONOMY IN CONVERSATION Silver Screen “People’s desire to go out and watch movies is something which cannot be replaced by anything happening at home. And I have nothing against OTT, that’s a different form of entertainment”
07 October 2023 | BW BUSINESSWORLD | 85
86 | BW BUSINESSWORLD | 07 October 2023 “The response to movies can vary depending on the content. Some films are designed to connect with a broader audience and resonate across urban and rural areas, while others may be more urban-centric” designs has also come from the content. It’s all about people saying, “Wow, you know, this I could not get at home.” So, I think, if you don’t make it experiential, then people will come back to the first question that you asked, “How is it different from watching at home?” Over a period of 30-odd years, I’ve committed myself to getting everybody out of their homes and watching movies on the big screen while also trying to understand the disparate needs of every customer. I think the customer is very discerning and, therefore, the experience enhances their movie-going outing basically. What strategies or collaborations have you undertaken to ensure that PVR continues to provide a fabulous and enhanced cinematic experience for audiences, especially in an era where digital streaming platforms are becoming increasingly popular? You see, I am in the middle of content makers and content consumers. So basically I’m not in the production business at all. But content obviously is the number one thing for people to come in. And I only enhance and augment that by giving a fabulous experience. So I get that delta in the occupancies. We are not a passive company, we have flexible pricing, dynamic pricing. We do so much to customise our communication, marketing communication to the people to get them out. So that’s what we do. At the same time, content makes us complete. And a cinema without content is an empty space. India has so much quantity of content, 1,400 to 1,500 films come through the system every year. The film fraternity, whether it is Malayalam, Kannada, Telugu, Tamil, Hindi, Punjabi, Bengali, Marathi, those guys are determined to make sure that they create content which connects with the consumer. So I don’t have to do much. I have to be obviously in touch with them to understand what they’re thinking. When I was in touch with Shah Rukh before Pathan, I didn’t have to do anything. He was extremely determined to make sure that he created some content which connected. Rajamouli, when we did a long promotion with him long ago, maybe pre-pandemic, we had to change the name to PVRRR. He was so determined to make a movie which connected RRR with the whole of India. When you see these filmmakers, people like Rajkumar Hirani, Vidhu Vinod Chopra, Aamir Khan, Ranbir, Ranveer, Karan Johar, Aditya Chopra, all these guys are very determined. They understand that the theatre business is very important because how else will they recoup their budgets. Budgets of the movies cannot be recouped if you go straight to a streaming platform. So I think I don’t need to do anything. I just need to make sure that when these guys make a fabulous movie, I make sure my environment where I’m showcasing these movies is fabulous. It enhances that experience. How does the cinema-going trend vary between urban and rural areas? It depends on the movie. So if you look at a movie like Gadar 2, it was made for Bharat. It was made for the whole country. So I think some of these movies, the storylines and the budgets are such that they resonate with everybody. And some movies are urban, like Rocky Rani turned out to be an urban movie. The response in urban and rural is a function of the movie and who it is being addressed to, or made for. RRR was for the whole country, it didn’t matter where you belong to. So I think the content makers decide who they are making the movies for and accordingly they get the reaction. The response to movies can vary depending on the content. Some films are designed to connect with a broader audience and resonate across urban and rural areas, while others may be more urbancentric. The success of a movie often aligns with its target audience. What challenges do you foresee for the cinema exhibition industry? Challenges are always there for any entrepreneur in any business. And you know, it doesn’t matter how much we try to differentiate ourselves. We have to keep pushing the envelope. So because your story is about experiential economy, I think that’s where the challenge lies. We have to keep pushing the envelope to make sure that every cinema gives a fabulous experience. And we are able to give consistent experience across 1,700 screens. It’s not easy to give a consistent experience throughout the country. I think that challenge remains. And number two challenge is access to real estate. We still need to figure out whether we get good locations, good developers, good developments, or shopping THE EXPERIENTIAL ECONOMY IN CONVERSATION Silver Screen
07 October 2023 | BW BUSINESSWORLD | 87 We have 1,800 screens, the second largest in the world. We are almost 50 per cent more than the third, fourth and fifth guys put together. We will have our 100th property sometime in December 2023. So we have about 60-odd properties under construction, 40-odd properties which we will still acquire and some we will construct. [email protected] centres and malls where we can have an anchor presence. And sometimes I have no option but to go to a place where I don’t have access to the movies I want to show. All the mall operators now want to have a cinema operator in their mall, because they have realised that they have to attract footfalls. It’s not about just attracting the guys, the footfalls. They have to give entertainment and food. So the malls and the shopping centres are our real partners in many ways. So that’s where the challenges are. What are your expansion plans, both on domestic and international fronts? We never ventured out of India because India has a humongous market. But what we did was we went to Sri Lanka and we’ve been there for 13, 14 years. We built one of our largest properties there, PVR Cineplex, which has nine screens. The Showmen:PVR’s Bijli brothers Anil and Sanjeev
88 | BW BUSINESSWORLD | 07 October 2023 THE EXPERIENTIAL ECONOMY Photographs by Naval Kishor IN CONVERSATION Cinemas
07 October 2023 | BW BUSINESSWORLD | 89 By Ruhail Amin “We Never Stopped Innovating” There has been a revival of the cinema industry to a level that has not been witnessed since before the Covid-19 pandemic? How do you explain this phenomenon? The nature of our business is such that if content resonates with the audiences, then people come back to the cinemas, and it is purely that. From our side, we continue to focus on what we can provide, and what we have been providing is a very safe, hygienic and great environment for people to watch movies with some great service, great F&B options and no compromise on the hygiene factors, which include your sound and projection, your seats, air conditioning. We aspire to give the patrons who come and spend three hours with us the best possible experience both in terms of the facilities that we provide and the service that we provide. You said that you’ve focused on enhancing the cinema experience and safety. Can you highlight the innovative strategies that have encouraged people to choose cinemas over OTT for family outings? When we were going through a lean phase, we probably had that time and mind space to still innovate. We never stopped innovating. We never stopped thinking out of the box and providing, as you said, various ways for audiences to enjoy films. So first of all on the product side, which is actually the physical cinemas, we continue to invest in technology. We invested in new technologies. We launched a new format called ICE cinemas, where you have screens on the side panels. So it’s a very immersive exSANJEEV KUMAR BIJLI, Executive Director, PVR INOX, in a conversation with BW Businessworld, talks about the remarkable resurgence of the cinema industry as well as the innovative strategies that have reignited the allure of the big screen. Excerpts
90 | BW BUSINESSWORLD | 07 October 2023 IN CONVERSATION Cinemas “4DX is another format that we have launched, where all the seats shake and you have these senses, eight or nine senses that get stimulated when you’re watching a film. So that’s been a big success” perience. You almost feel like you’re in the film. We launched about three, four of them, and that was a big success for the audiences. We also launched a couple of IMAX screens. Again, IMAX screens are, by definition, large. They need about 9 metres or 10 metres height, you feel immersive and it’s obviously differentiated from watching OTT at home. 4DX is another format that we have launched, where all the seats shake and you have these senses, eight or nine senses that get stimulated when you’re watching a film. So that’s been a big success. The introduction of new formats is something which the industry worldwide is looking at because we need to differentiate the experience, as I said, between coming to a cinema and watching OTT at home. We keep taking customer feedback, we keep taking feedback from the sites as well as to what is it that the customers prefer. And we have not just feedback, but we have technology and algorithms to tell us what does well and what doesn’t do well. And therefore, we try to provide the best option as far as F&B is concerned. Is it primarily Bollywood and South Indian cinema, or Hollywood that’s drawing audiences consistently to theatres? All languages have contributed to the success of cinemas. Hollywood also has contributed greatly in the months of June and July. We had films like Mission Impossible, Oppenheimer and Barbie that did very well. We’ve also had horror successes in Hollywood such as None, Insidious, Talk to Me. Plus in Hindi, of course. We’ve already mentioned all these movies that did well. And regional films like Jailor with Rajinikanth also did very well in the month of August. We had this big Marathi film that did very well in the months of June and July. So language-wise, all films have contributed to the trend of people coming back to the cinema. I think all languages, and we’re very fortunate that we have multiple languages, have contributed. You know, if one language doesn’t work, another one starts working. We as consumers and we as moviegoing audiences want a variety of genres. And that’s what pulls us back into cinemas. Are there any expansion plans, innovations, or other developments on the horizon? Our focus is to grow in India. As I said, we’ll end up opening about 140-odd screens this financial year and we are entering into new territories as well. There is a mix of cities where we are opening these 140 screens. But we are entering new markets this year as well. Markets such as Machilipatnam, Bhubaneswar, Jodhpur and Ajmer. These are new markets where we don’t have cinemas right now. In addition to that, I have spoken about formats and technology, be it ICE or IMAX or 4DX or luxury formats such as Insignia or Director’s Cut. We are adding those also in various markets and pockets where there is a market for these. We are very careful when we add these formats because the demographics have to support it. We are also focusing a lot on technology. We have our own app. Online sales of tickets is almost 65 per cent now, and our app is selling 10 per cent of those. THE EXPERIENTIAL ECONOMY
07 October 2023 | BW BUSINESSWORLD | 91 can watch them over a period of time. It’s like a subscription programme that we’re launching in October. So there are many initiatives that we are looking at. The list is endless. And I think that is what’s exciting because that’s what keeps everyone charged up and excited. [email protected] And we’re continuously improving our app so that the journey of buying a ticket for the customer is very smooth and it’s very seamless. Then we also have a loyalty programme. We have a good and solid loyalty member base of 80 million people with whom we are using various personalisation tools to communicate directly and really find out what it is that they want and try to deliver a very personalised experience. We are also experimenting. We launched low F&B pricing through our promotions, which has been accepted very well by the audiences. We are also now launching PVR Passport, which is a subscription plan where you can buy 10 tickets for 700 rupees, 699 actually to be precise. And then you
92 | BW BUSINESSWORLD | 07 October 2023 In a mere span of 7-8 weeks since its inception, RedBeryl Lifestyle Services has made its mark on the luxury landscape in India. In a conversation with BW Businessworld, MANOJ ADLAKHA, Founder and CEO, speaks about the inspiration, motivation, and unwavering commitment that underpin the art of crafting bespoke luxury experiences By Team BW IN CONVERSATION PERSONALISED EXPERIENCE THE EXPERIENTIAL ECONOMY “Experiential luxury is about creating the intangibles and ‘money can’t buy’ kind of stuff”
07 October 2023 | BW BUSINESSWORLD | 93 What motivated you to launch this venture that specialises in crafting exceptional luxury experiences and personalised services? One of the key inspiration levels for us was the backdrop of the luxury market and the boom we are seeing in the luxury market in India. Luxury in India is growing anywhere between 30 per cent and 35 per cent. That’s a track record, by the way, for the last 4-5 years. And if you take any Study A right up to Study D, all will tell you that the rate of growth is not going to be tapered down. Having had an experience of almost three decades of working with the rich, diverse, and discerning customers, the one thing that I realised was that there was a pain point. The pain point was that all the needs of a customer were not met under one roof. Now it may sound like a cliché, but that really was the case. So it was about how does an organisation meet all the needs of a customer. What sets your company apart in the highly competitive luxury market, and how do you define the essence of a truly bespoke experience? When you look at whether there are a lot of players in the luxury market, the answer is yes. What I was trying to do through this creation of the product, and it’s really more than a product, it’s “We have got all the pillars or the verticals and every vertical caters to the needs of the customer and the customer for us is the HNI or an ultra HNI segment” Photographs by Naval Kishor
94 | BW BUSINESSWORLD | 07 October 2023 services or a platform that we’ve created. We have got all the pillars or the verticals and every vertical caters to the needs of the customer and the customer for us is the high net-worth individual (HNI) or an ultra HNI segment. They want to fly on a private jet or hire a yacht or want to go and watch the best concert and have the best seats in the concert, etc. They would want you to know about sporting events like Wimbledon or a Grand Slam or NFL or NBA and then want curated travel. So the idea was to really see what we as an organisation could do. So each of the customers whom we have on board has a dedicated relationship manager who is available to them at all points in time, and after understanding their needs, the relationship manager fulfils those needs through the key suppliers that we have. When you look at experiential luxury, it’s about authenticity, it’s about creating memories, creating moments, it’s about creating the intangibles and ‘money can’t buy’ kind of stuff. Could you provide some examples of the most extravagant or unique bespoke services your company has offered to clients? I want to say at the outset that we are not a concierge company. Neither are we a credit card company. What we do is we bring the best of both the worlds. So we bring all the premium benefits and features which are there on credit cards and we have a 24x7 concierge which is there in about 45 to 50 countries. So whenever any of our customers travel to any part of the world, they get to know the benefits of that concierge. If you were to travel from India to Paris there’s a lot of nightlife and a lot of night bars open in Paris at 10 p.m. and if you are calling from Paris, it’s 2.30 a.m. here. Right at 2. 30 a.m., when the call is made by a RedBeryl customer, we would have somebody at this side of the line to ensure that the request is fulfilled. One couple who went from India to Greece were very keen to have a vegetarian meal in a restaurant which otherwise has a long waitlist for bookings and it’s a Michelin star restaurant. We could get that booking for them within three hours. Your services are known for their strong emphasis on personalisation. Could you elaborate on your approach to customising experiences to align with the unique preferences and wishes of your clients? It’s all about personalisation. We did an event in Delhi recently and right from the regular communication that goes out to the customer, to of course the relationship managers addressing the customers, it was all personalised. In today’s day and age, if you’re not personalising or you are not customising, you are not there. You know, it’s very easy to say that you can meet the needs of a customer, over here we have actually pre-empted the needs of a customer. Today, partnerships and collaborations play a very crucial THE EXPERIENTIAL ECONOMY IN CONVERSATION PERSONALISED EXPERIENCE
07 October 2023 | BW BUSINESSWORLD | 95 role in the success of companies. Has RedBeryl got into any partnerships? Within the last seven weeks we have got into about 12 partnerships which are already on board and five or six more are in the pipeline. I have always been a firm believer that anytime you get into a partnership, it should be a strategic partnership and both the parties must have something to gain from that partnership. It should not be a short-term partnership. So very clearly it has to be something which is a win-win for both the parties. We should gain something from it. Our partner who is the vendor should gain something from it, but most importantly it’s the customer who should benefit from that partnership. Can you give a rough percentage and sector wise breakup of customer requests in this uber luxury category? At this point in time, the majority of the requests which we are getting are on travel and dining rights, so about 60 to 70 per cent of the total requests are related to travel and dining, balance are, you know, the one-off requests. How do you envision the future of super luxury experiences, and what steps are you taking to continue offering unparalleled bespoke services to your clients? Somebody could answer that question and say AI is the future. I’m not sure AI is the future. And I may be the odd man out here saying this, you know, because whoever you ask they will say AI is the way to go. But in luxury, which is a high touch category, would you or a customer who is a high net-worth individual require a robot or machine learning or artificial intelligence to be able to answer the question? I’m not sure that’s what they’re looking for. You want a human touch. That’s why we have a dedicated relationship manager who’s there 24/7 because it is a very human tendency to pick up the phone and speak to the relationship manager. If the relationship manager is not there then one can call up the concierge which operates after 8 p.m. That’s the way it works. “I want to say at the outset that we are not a concierge company. Neither are we a credit card company. What we do is we bring the best of both the worlds”
96 | BW BUSINESSWORLD | 07 October 2023 What does E-Factor Experiences’ IPO announcement mean to you and to the event industry at large? It is a milestone moment for us because of various reasons, we’ve always wanted to go this route. Number one, we think that for anybody to expand operations and raise capital, this is one of the best ways available in the context of the economic environment that we are living and thriving in. It gives us both confidence and the required capital infrastructure to be able to now expand into the different segments that we are wanting to expand to. Hospitality predominantly being one of them. In our case, something that has gone very well is the fact that 50 per cent of our issue was reserved for qualified institutional buyers and about seven financial institutions have invested in our company. I think this is something which in the long-term is going to be extremely beneficial for anybody “We hope to achieve a market cap of about Rs 200 crore by next year” In an exclusive interview with BW Businessworld, Samit Garg, Managing Director & Co-founder of E-Factor Experiences talks about the company’s IPO announcement, factors driving the growth of the event industry, and much more By Pratyaksh Dutta INTERVIEW THE EXPERIENTIAL ECONOMY in our industry who’s wanting to go this route. We know the event industry is doing great when compared to pre-Covid numbers, what is driving this growth? There are various things that are driving the growth of the industry including the rush of the pent-up demand, which has already gone by. Specifically in our country, I think it is stemming from the fact that the economy of our nation is doing much better than many others. The spending capacity in the last 18 months is something we’ve seen increase. Hotel tariffs are on the rise, even the airline fares are skyrocketing but still you don’t get rooms or seats. It means that business is happening at those price levels. The balance of payment position, behaviour of foreign exchange reserves and performance of stock markets in the last twelve months are indicators of the fact that our economy overall is progressing. In the context of the positioning of our country globally, we are the fifth-largest economy in the world, and we are aiming at the number three position in probably three to five years from now. What is your vision for E-Factor from here on? Our vision for E-Factor from here on is that we hope to achieve a market cap of about Rs 200 crore by next year. And then 2025 to 2028 is the time that we are giving ourselves to reach a market cap of Rs 500 crore. We have seen the Government putting a lot of focus on new infrastructure and PM Modi inaugurated a few of them, how do you see it helping India in terms of becoming a global player in the event industry? India is gradually forging ahead to become a global player as far as the MICE sector is concerned. Better connectivity, better road infrastructure, better availability of qualitative enterprises in terms of supply chain for light and sound staging, and more are contributing to the growth. India is gradually progressing towards being able to attract more MICE events into the country and the success of the G20 Summit has been extremely influential in getting India to the map of global recognition. If you measure the growth of inbound MICE and wedding events into India starting today, I anticipate this to be growing at about 20 per cent for the next two years and then 40 per cent to 60 per cent thereafter for the next five years.
SCHOOLS SURVEY 2023 INDIA’S BEST Upcoming Special November 2023 SUBMIT NOW LAST DATE TO FILL FORM OCT 20, 2023 India’s Most Comprehensive & Trusted B-School Ranking For any queries: Ravi Khatri, [email protected], +91 9891315715 Priya Saraf, [email protected], +91 97322 47222 In Association With
98 | BW BUSINESSWORLD | 07 October 2023 A face-to-face with PRAMOD LUNAWAT, the creative architect behind some of the most breathtaking destination weddings IN CONVERSATION Destination Weddings THE EXPERIENTIAL ECONOMY CRAFTING DREAM WEDDINGS “My team members and I attend a lot of international conventions across the world. I try to attend about six to seven of them every year. Because that's where you learn from peers in the industry. That's the way we have always preferred”