THE PET CARE ECONOMY fifffflffiflffiflffi fl fl flffffiflflflfl ffflflffffifffl ffffi ffflflfl flfl fl flflffifl flffffifl fl flflflff flflffffffifl fflffflffffi PAWS PROFITS TO THE INDIAN PET CARE ECONOMY IS POISED TO CROSS RS 20,000 CRORE IN THE NEXT YEAR, ATTRACTING ATTENTION FROM INVESTORS AND ENTREPRENEURS ALIKE Rs 200 www.businessworld.in RNI NO. 39847/81 I 06 APRIL 2024
THE PET CARE ECONOMY PAWS PROFITS TO THE INDIAN PET CARE ECONOMY IS POISED TO CROSS RS 20,000 CRORE IN THE NEXT YEAR, ATTRACTING ATTENTION FROM INVESTORS AND ENTREPRENEURS ALIKE fifffflffifffflfl fiflffffl fifffflffiflfl fl www.businessworld.in RNI NO. 39847/81 I 06 APRIL 2024
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THE PET CARE ECONOMY PAWS PROFITS TO THE INDIAN PET CARE ECONOMY IS POISED TO CROSS RS 20,000 CRORE IN THE NEXT YEAR, ATTRACTING ATTENTION FROM INVESTORS AND ENTREPRENEURS ALIKE fifffflffiflff ffff fifffflffifl ff fl fiff www.businessworld.in RNI NO. 39847/81 I 06 APRIL 2024
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4 | BW BUSINESSWORLD | 06 April 2024 A FEW MONTHS AGO, I had found myself in sole charge of Sydney, who my wife Niti and I consider our third offspring after Prarthna and Prasann. Caring for our family’s golden retriever had been a shared task till then, so I discovered to my surprise that her lifestyle was certainly more enviable than mine and many I know. I was amazed at the amount of time, money and attention that goes into pet care. When I mentioned this at the office, I learnt that I was among the very few not fully aware of the passion with which pet parents in India care for their charge. I was enlightened. Like many pieces of a puzzle coming together, I could clearly see all the dots connecting, to create an emerging pet care industry in India. At BW Businessworld, we are keen to explore new sectors. Driven by various reasons, new opportunities are arising on the horizon, opening doors for young entrepreneurs, creating jobs and eventually contributing to India’s growing economy. One of the first we deep dive into is the Indian pet care industry. In this case, much credit can be given to pet parents and the passion with which HNI (high-net-worth individual) households spend on their pets. The pet care economy is experiencing explosive growth, projected to surpass $3 billion next year with a remarkable 20 per cent CAGR. This surge is fuelled by changing consumer preferences and substantial investments with notable players such as Drools securing a valuation of $600 million. India will probably soon get its first unicorn here too. Our team has done in-depth interviews with some of these founders and international players like Mars, on what is driving this sector. From premium products to pet insurance, this market is evolving to meet the demands of discerning pet parents. Technological advancements and shifting consumer habits are driving innovation and growth in this sector. This issue also features a special coverage of BW Auto World 40 Under 40. The primary purpose of this initiative, much like our other endeavours to celebrate people and talent, is to honour the exemplary achievements of young leaders in the automotive sector. Under the astute leadership of Jury Chair Jyoti Malhotra, Managing Director of Volvo Car India, this year’s cohort of honorees represents a diverse spectrum of talent, ranging from visionary entrepreneurs and innovative engineers to dynamic marketing strategists and sustainability advocates. Also, Union Minister of Road Transport & Highways, Nitin Gadkari, underscores how young leaders are driving innovation and transformation within the automotive sector. This issue vindicates why the nation continues to fare better than most, both domestically and on the global stage. Happy reading! ANNURAG BATRA [email protected] A GROWING PET CARE ECONOMY EDITOR-IN-CHIEF’S NOTE
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8 | BW BUSINESSWORLD | 06 April 2024 MAILBOX YOUR COMMENTS TALK BACK A MORE EQUITABLE WORLD This refers to the editorial (“ Breaking Barriers, Yet Miles To Go,” BW, March 23) . The extraordinary journeys of women in the Indian legal community illuminate the ongoing quest for diversity, equity and inclusion (DEI). As we celebrate their achievements, we are reminded of the persistent challenges that remain. Their stories inspire us to advocate for foundational changes, encompassing the entire corporate landscape and amplifying the voices of women at every level. It is essential for women in influential positions to challenge norms, advocate for change and drive progress for women’s health and rights, ensuring inclusivity reaches every corner of society. ARCHANA BAHL, EMAIL STILL GROUND TO COVER This refers to the editorial (“ Breaking The Gender Mould In Advertising ,” BW, March 23). The evolution of Indian advertising, shedding outdated gender stereotypes, reflects a pivotal societal shift. Brands across various industries are breaking traditional norms to celebrate the diverse and empowered roles of women, while also reshaping the portrayal of men. This progress is commendable, yet there is still ground to cover. The establishment of initiatives like the #Unstereotype Alliance indicates a collective commitment to change. However, true transformation necessitates a holistic industry-wide approach to dismantle deeply ingrained obstacles to genuine equality, both on and off the screen. PAKHI SALVE, EMAIL CORRIGENDUM In the Most Influential Women issue (BW, March 23, 2024), the write-up ‘Minding The Media’ incorrectly mentions HUL in Anita Kotwani’s work experience. She has handled HUL only as an account. The error is regretted. BLIPP THIS PAGE TO GIVE US YOUR FEEDBACK INSTANTLY Submissions to BW |Businessworld should include the writer’s name and address and be sent by email to the editor at [email protected] or by mail to 74-75, Scindia House, Connaught Place, New Delhi-110001
Block your pages... 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 Shruti Arora, [email protected], +91 7982628913 Deepak Bhatt, [email protected], +91 9429423232 Santosh B Singh, [email protected], +91 9820129879 Nitin Pawar, [email protected], +91 9456639006 fifffflffiflfflffifflffffl flflff For Editorial: Noor Fathima Warsia, [email protected] Final Material Deadline: April 2, 2024 In Focus: Astrotech + Faithtech Issue Highlights Emerging Sector: THE SPIRITUAL TECH ECONOMY Rise of Astrotech & Faithtech APRIL 20, 2024 How astronomy & faith merges with cutting-edge tech to create a multi-billion-dollar sector in India Exclusive interviews with leading founders and innovators, providing insider insights into spiritual tech projects Deep dive into astrotech economy and the broader faithtech market Investors’ perspective on why this segment is growing in India Exclusive Features and Interviews Opinions & Insights from Industry Leaders
10 | BW BUSINESSWORLD | 06 April 2024 Cover design by SHIV KUMAR Purring Its Way To Growth A comprehensive look at India’s pet care economy, the trends and factors fuelling its stupendous growth and future prospects, and the opportunities it holds for investors and entrepreneurs alike 46 12 Jottings Will we see more transparency in the electoral system?; Dance of democracy; AI threatens adobe’s reign; The eye of the tiger, and more 14Columns Vikas Singh (p. 14); Minhaz Merchant (p. 16); Srinath Sridharan (p. 18); Amit Kapoor & Devansh Sharma (p. 20); Srinath Sridharan & Steve Correa (p. 22); Prakash Iyer (p. 24); Kiran Karnik (p. 26); Krishan Kalra (p. 28) 32 Unequal Business A deep dive into the myriad challenges that women entrepreneurs face in the country today, particularly in the MSME space 36 Connecting Bharat A look at the domestic air travel market and how it is set to expand with the launch of new regional carriers 40 Smart Measure A look at how smart meters have become a critical component of India’s power sector reforms PET ECONOMY LEADERS 58 Shashank Sinha, Drools Pet Food 60 Rashi S. Narang, Heads Up For Tails 62 Varun Sadana, Aman Tekriwal, & Vineet Khanna, Supertails 64 Pankaj Poddar, Group CEO of PET CARE ECONOMY CONTENTS VOLUME 43, ISSUE 12 06 APRIL 2024 Photograph by Dimaberlin
06 April 2024 | BW BUSINESSWORLD | 11 The pages in BW Businessworld that are labelled BWi or Promotions contain sponsored content. They are entirely generated by an advertiser or the marketing department of BW Businessworld. Also, the inserts being distributed along with some copies of the magazine are advertorials /advertisements. These pages should not be confused with BW Businessworld’s editorial content. TOTAL NO. OF PAGES INCLUDING COVER 124 Zigly’s parent company, Cosmo First 66 Akshay Gupta, Pet Fed 68 Salil Murthy, Mars Petcare India 69 Arun Vasudevan, MaxPetZ BW AUTOWORLD 40U40 WINNER PROFILES 78 Aakash Minda, Spark Minda 78 Aditya Oza, Emotorad 80 Ajit Patil, Rivot Motors India 80 Akash Chaturvedi, Boys and Machines 82 Anant Nahata, Exicom 82 Ashmitha C Ghodkey, Bosch Global Software Technologies 84 Avinash Sharma, ElectricPE 84 Dinkar Agrawal, Oben Electric Vehicles 86 Aanchal Jain, PMI Electro Mobility Solutions 86 Harsh Saruparia, 1T9 Technology 87 Jatin Ahuja, Big Boy Toyz 87 Karan Mahesh Kadaba, 3eco Systems & 3ev Industries 88 Kunal Gupta, Emotorad 88 Kush Mehrotra, C.E. Info Systems 89 Madhumita Agrawal, Oben Electric Vehicles 89 Mayank Sikaria, Sibros 92 Rajesh Kumar, KORN Consult Group India 93Rajib Gangopadhyay, Emotorad 93 Rajneesh Kushwaha Singh, HOP Electric Mobility 94 Randheer Singh, ForeSee Advisors 94 Reeti Nageshri, Mahindra & Mahindra 95 Sankalp Sinha, IBM 95 Shalabh Chaturvedi, CASE Construction Equipment – India & SAARC 96 Shishir Gandhi, GarageWorks 96 Shreedhar FP, Serviceplug Technology 97 Shreyas Krishna, AUTOSherpa 97 TP Sivasankari, AR4 Tech 98 Tarkeshwar Rao, Quantron AG 98 Vishal Muralidharan, Motion Technologies & Services 99 Yuvraj Sarda, Volvo CE India 112 Bookmark Internet entrepreneur and author Ankur Warikoo on why it is necessary to start investing early 90 Mohammed Zulfiquar Khanu, Mahindra & Mahindra 90 Naman Jain, NTF Group Holding 91 Nirmal NR, Greaves Electric Mobility 91 PS Satyanarayana, John Deere India 92 Punit Khandelwal, PreBo Automotive 76 THE FUTURE OF MOBILITY BW Auto World 40 Under 40 Summit & Awards 2024 celebrates young innovators at the forefront of automotive excellence 113 Last Word Debadatta Chand, MD and CEO, BoB on how the bank is pushing for ways of financing renewable and sustainable projects Photograph by Naval Kishor
12 | BW BUSINESSWORLD | 06 April 2024 JOTTINGS Will We See More Transparency in the Electoral System? T HE ELECTION Commission of India released new data ahead of the Supreme Court’s hearing on the State Bank of India’s failure to disclose electoral bond codes. This data strengthens the call for transparency in matching donors to political parties. Some regional parties have voluntarily disclosed their contributors, revealing significant donations from companies like Future Gaming and Hotel Services to parties like DMK and JD(S). Notably, major parties like the Bharatiya Janata Party (BJP) and the Indian National Congress haven’t disclosed their donors. While the BJP claims it’s not obligated by law to maintain donor records, Congress seeks donor identities from SBI. Left parties said they refused electoral bond donations. Despite the anonymity of bonds, parties seem to be able to identify donors. Senior lawyer Prashant Bhushan argues for disclosing bond codes to match donors with parties. The S u p r e m e C o u r t m a n d a t e d t h i s disclosure after deeming the electoral bond scheme unconstitutional. The BJP received the most funds through bonds, followed by the Congress and the Trinamool Congress. Other major recipients include the Bharat Rashtra Samithi and the Biju Janata Dal, it has come to light. All data for the bonds purchased and redeemed are from 1 April, 2019 to 15 February, 2024. The total amount donated during this period was Rs 12,156 crore, of which almost half came from the top 20 donors alone. Will election-related funding see a more transparent system emerge from this exercise? It should! Fingers crossed! —Ashish Sinha ‘DANCE OF DEMOCRACY’ DON’T BE “SELECTIVE”, said the Supreme Court (SC) as it directed the State Bank of India (SBI) to reveal all “conceivable” electoral bond details in its possession by 5 p.m. on 21 March, including unique bond numbers that will disclose the link between the buyer and the recipient political party. In the ‘Mother of Democracy’ – a term popularised by Prime M i n is te r N a re n d r a M o d i – electoral bonds have ignited a firestorm of controversies and remain shrouded in secrecy. L a u n c h e d b y t h e M o d i g o v e r n m e n t t o b r i n g transparency to political funding, the dismantled scheme has resulted in a tug-of-war between the apex court, the SBI and the ruling regime on the nuances of transparency and political integrity. The anonymity these bonds provide has raised concerns about potential misuse, with critics arguing that they facilitate money laundering and quid pro quo politics. Another surprise of sorts was that the electoral bonds which were not encashed by the political parties were transferred to the Prime Minister’s National Relief Fund (PMNRF) as instructed via a gazette notification. The reason this is a surprise is that the PMNRF accepts only voluntary donations from individuals and institutions. Electoral bonds have a purpose distinct from relief, which is the objective of PMNRF, and the question that arises is how two objectives like this can be mixed up without the donors’ consent? — Abhishek Sharma Photograph courtesy: PIB Photograph by TK Kurikawa
06 April 2024 | BW BUSINESSWORLD | 13 THE HUGE DIP IN ADOBE’S shares post the company’s Q1 earnings serves as a poignant reminder of the challenges the company faces in an evolving tech landscape, where the integration of artificial intelligence (AI) threatens its once-unassailable position. Renowned for its innovative suite of creative tools including Photoshop, Adobe now finds itself at a crossroads as AI-focused startups like Stability AI and Midjourney chip away at its competitive moat. A cautionary note of HSBC analysts after Adobe’s Q1 results further underlines the gravity of the situation, suggesting that AI has significantly eroded many of the company’s longstanding competitive advantages. Indeed, while the company has historically enjoyed a commanding lead in the graphics industry, the rise of AI poses a credible threat to its dominance, which could potentially undermine its market position over time. A s A d o b e g r a p p l e s w i t h t h i s existential challenge, investors are left grappling with uncertainty and disappointment. The lacklustre quarterly forecast for the second quarter highlights the urgency of the situation. Despite CEO Shantanu Narayen’s attempts to assuage concerns, the reality remains stark: Adobe m us t co nf ro nt t he realit y of a rapidly evolving competitive l a n d s c a p e , w h e r e A I - p o w e r e d solutions threaten to disrupt its traditional business model. In response, Adobe’s announcement of a $25 billion stock buyback signals a recognition of the need to fortify its defences and reassure investors of its long-term viability. However, the company’s ability to effectively monetise AI across its platforms remains uncertain, leaving lingering doubts about its ability to stave off competition and maintain its market leadership. — Rohit Chintapali AI Threatens Adobe’s Reign THE EYE OF THE TIGER WRISTWATCH collectors will be looking forward to the Christie’s Hong Kong online watch auction that will be on from 27 March to 9 April, 2024. The Rolex Daytona 116588TBR, also known by enthusiasts as ‘The Eye of the Tiger’ is the star of the auction, with its 36 baguette-cut diamonds on the bezel. The estimate for the piece has been put as HKD 1,000,000 - HKD 2,000,000. There is also the 1978 stainless steel SeaDweller diver’s watch, nicknamed the ‘Great White’, the dial features the Kuwaiti coat of arms. It has an estimate of HKD 280,000 - HKD 550,000. Another highlight is Cartier’s ‘Ballon Bleu’ model, introduced in 2007, favoured by celebrities and royalty, including the present Princess of Wales. The auction features a stunning Ballon Bleu, the dial, case and bracelet entirely pavé-set with diamonds. The auction house is known to source and present some of the rarest and finest watches, and this auction promises to be a delight for collectors. — Jyotsna Sharma Photograph courtesy: Christie’s Images Ltd. 2024 Photograph by Narin Photo
14 | BW BUSINESSWORLD | 06 April 2024 Politicians of all hues are increasingly succumbing to populism, and political polarisation to win elections. Policymakers are yet to design a model to combat increasing inequality. Micro, small and medium enterprises (MSMEs) are subjected to inspector raj, often suffering the state’s high handedness. The economy needs holistic and enabling labour reforms to fuel growth. Similarly, infrastructure gaps and logistics costs must remind us that more must be done for development and more effectively. However, challenges remain in financing and project implementation. Utilising public-private partnerships, leveraging innovative financing models, and implementing robust monitoring and evaluation frameworks can accelerate progress and ensure impactful infrastructure development. The economy’s enabling institutions face capacity challenges. Digital Leap: India has taken leaps and is galloping. A digital renaissance has empowered diverse sectors. India has catapulted productivity and transparency across IT, manufacturing, and healthcare by leveraging its educated young. Public-private partnerships in R&D, investments in STEM education can further enhance our soft power. Technological infrastructure and initiatives like Digital India, the JAM trinity (Jan-Dhan Adhar and mobile) has elevated India’s global standing, positioning it as a pioneer. The MSMEs can play a larger role in enhancing the competitiveness of the manufacturing sector. Similarly, investment in infrastructure has streamlined logistics and lowered costs. It’s beginning to pay off. Our financial sector is more transparent than ever with a couple of banks of global scale. Smart sectoral choices, bolstered by embracing appropriate technology initiatives like PLI and efficient trade agreements, has created a dynamic landscape, and position India as a competitive force in the international manufacturing arena. Rural-Urban Convergence: Infrastructure development COLUMN By Vikas Singh I NDIA STANDS AT THE PRECIPICE of an epochal transformation and is poised to emerge as a developed economy within the next quartercentury. This journey is woven from the threads of potent infrastructure, strategic economic engines, a resolute entrepreneurial spirit, a young and dynamic population, and transformative reforms, all underpinning India’s unwavering commitment to building a sustainable and inclusive future. Growth Catalysts: The ascent, however, will not be easy; and progress may be strewn with challenges. The journey towards becoming a developed nation demands critical examination, continual evaluation, and holistic adaptation. Beyond celebrating triumphs, India must proactively learn from setbacks, adapting strategies for sustained growth. Initiatives like Skill India require rigorous evaluation to unlock the youth’s untapped potential and align their skills with the job market’s dynamism. Understanding the diverse middle class is crucial for businesses and policymakers to tap into this vibrant consumer base. Policymakers need to bite the bullet and bring in transformational agricultural reforms with the farmers at the core. This is key to rural growth and can enhance the GDP growth rate by a tenth. The author is an economist and columnist CHARTING A PATHWAY TO PROSPERITY AND DEVELOPMENT
06 April 2024 | BW BUSINESSWORLD | 15 caters to niche markets and diversifies the Indian economy. However, they face challenges in accessing finance, technology, and markets. Government initiatives like credit guarantee schemes, skill development programmes and ecommerce platforms can empower MSMEs, while fostering collaboration with large corporations can create valuable synergies. Streamlining bureaucratic hurdles and implementing administrative and judicial reforms remain crucial. Reforms Fuel Socio-Economy Mobility: Political stability forms the foundation for nuanced and relevant reforms. Navigating complex challenges requires a stable government that can implement transformative changes while maintaining public trust. Such stability fosters investor confidence and encourages longterm commitments. However, challenges persist. Poverty and inequality demand a multifaceted approach, including strengthening delivery mechanisms, targeted poverty reduction programmes, and rigorous impact evaluation. Additionally, empowering every citizen requires increased investment in “soft multipliers” like women’s empowerment, quality and affordable healthcare, and education. Labour market reforms that balance job creation with worker rights, alongside reforms enhancing social security and ease of living, are key to inclusive and sustainable development. Transforming agriculture with farmers at the centre, by empowering them through technology, improving market access, and ensuring fair pricing mechanisms, is crucial for both equitable growth and rural development. Investing in climate action is not just essential for sustainability; it safeguards the future for generations to come. India finds itself on the cusp of a historic transformation, poised to evolve into a developed economy in the next quarter-century. Its commitment to a developed nation should be underpinned by a resolute focus on equitable growth and translate into actionable plans. serves as a bridge between rural and urban realms. Investment in transportation networks, digital connectivity and energy infrastructure, has expanded the market, connected remote areas both to suppliers, improved market access for rural producers. This “inclusive infrastructure” approach promotes balanced development, reduces poverty and inequality, triggering socioeconomic mobility. The demographic offers pivotal advantage. This dynamic workforce not only contributes through skills but also drives consumption as their incomes rise. This dual strength positions India as a formidable market force, attracting domestic and international brands. Understanding the intricacies of the diverse middle class and their evolving aspirations becomes imperative for businesses and policymakers. Equipping the youth with the necessary skills is essential for maximising their contribution to economic growth. Additionally, addressing gender disparities in workforce participation can further unlock the demographic dividend’s potential, contributing to inclusive and sustainable growth. Dynamic Propellers of Growth: Micro, Small, and Medium Enterprises are the unsung heroes propelling India’s economic growth. These dynamic enterprises contribute immensely to job creation, regional development, and innovation. Their agility Micro, Small, and Medium Enterprises are the unsung heroes propelling India’s economic growth. These dynamic enterprises contribute immensely to job creation, regional development, and innovation Photograph by Indiapicturebudget
16 | BW BUSINESSWORLD | 06 April 2024 NDIA IN 1947 was not expected by many to survive as an independent nation. The departing British thought it would fragment along ethnic, linguistic and regional lines. The more benign Americans believed democracy in an impoverished country would be hard to sustain. Over seven decades after independence from the British Empire which drained India’s wealth while enriching Britain’s, India hasn’t just survived. It has thrived. Despite poverty – though diminishing – and despite inequality – though reducing – India has defied the world’s predictions. In the arc from the Middle East to Southeast Asia, India’s robust democracy stands out. Since Independence though, India has experienced at least five major turning points that have helped it negotiate road blocks along the way and brought it to the brink of becoming the world’s third largest economy. Had India stumbled at these five forks on the road, the journey would have been more fraught. First Turning Point: Through the 1950s, Prime Minister Jawaharlal Nehru based his foreign policy on nurturing friendly relations with China. Despite China’s forcible annexation of Tibet in 1950-51 that created for the first time in history a border between the two Himalayan nations, Nehru continued to appease China. In an act of extraordinary generosity, Nehru lobbied to give China a permanent vetocarrying seat in the United Nations Security Council (UNSC), waiving any right India might have had. The India-China entente cordiale ended in 1959 when Nehru – rightly – gave the Dalai Lama sanctuary in Dharamsala. Beijing (then known as Peking) was furious. It regarded, and still does, the Dalai Lama as a dangerous separatist, fuelling the “free Tibet” movement. After the 1962 war, India-China relations slipped into ennui for decades. China was distracted by Mao Zedong’s cultural revolution through the 1960s that took an estimated 30 million Chinese lives. India too was pre-occupied following Nehru’s death in 1964 and years of drought, wars with Pakistan and a sputtering economy. In sum, India’s first turning point was taking the wrong fork in the road with respect to its China policy. Sixty years later China remains India’s most significant security challenge. Second Turing Point: The dynastic ascension of Indira Gandhi after her father’s death was another misstep. In 1959, when Indira was just 41 years old, Nehru appointed her Congress president. From then dynastic politics in India was set in stone. Nehru’s successor as prime minister, Lal Bahadur Shastri, gave rise to the hope that merit would count in Indian politics. But following Shastri’s untimely death during peace talks with Pakistan’s president General Ayub Khan in Tashkent, Uzbekistan, Indira Gandhi’s ascension to the prime ministership in 1966 emboldened other political parties to build their own family dynasties. Third Turning Point: As India struggled to come to terms with its raucous 28-year-old democracy, Mrs Gandhi in 1975 changed the course of Indian politics by declaring the India’s Five Turning Points I Minhaz Merchant COLUMN MINHAZ MERCHANT The writer is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa 2014). He is founder of Sterling Newspapers Pvt Ltd., which was acquired by the Indian Express Group
06 April 2024 | BW BUSINESSWORLD | 17 Modi’s first term was spent on fixing the broken bits of the economic engine he inherited in 2014. His second term could have been hobbled by the Covid pandemic and wars in Ukraine and Gaza. The fact that India’s economy has grown over seven per cent consecutively over the last three years points to the success of third-generation reforms now in place: infrastructure, digitalisation, last-mile electrification and corruptionfree delivery of benefits to India’s most vulnerable citizens. Looking Ahead Of these five turning points, three took India on the wrong path and two in the right direction. Whoever forms the next government in June 2024 will face several challenges. One, to sustain the momentum of economic growth which in the October-December 2023 quarter rose to 8.4 per cent. Two, craft a foreign policy for an era where India stands at the threshold of being the world’s third largest economy. Three, ensure that innovation serves as an enabler across demographics as, for example, UPI has done. John Chambers, former CEO of Cisco and currently Chairman of the US-India Strategic Partnership Forum, declared recently in an interview with The Indian Express: “You have got things going for you. Millions of engineers are educated per year. You have an entrepreneurship attitude. The future is going to be about startups and small businesses getting bigger. So you better lead in innovation and startups. “What Prime Minister Modi has done is outline the vision and strategy. If the policies he’s putting in place stay strong for the next decade, then you’ve locked yourself into being the No.1 economy. You will, at that time, probably be 30 per cent greater than the US, and you’ll probably be 90 per cent greater than China. Whether that happens in 40 years or 70 years is purely a function of math.” draconian Emergency. More than one lakh Opposition leaders, activists and journalists were jailed without charge or trial. The Constitution was suspended and the Supreme Court subverted. The right of habeas corpus was denied. But from the disaster sprang a new political ethos. The Emergency was revoked in 1977. Though it took a decade to nurse democracy back to good health, the assassinations of Indira Gandhi and Rajiv Gandhi within the span of just over six years created both a vacuum and an opportunity to regroup. Fourth Turning Point: After three wrong turns, the Narasimha Rao-Manmohan Singh reforms of 1991-96 set India on the right path. Liberalisation was followed by Atal Bihari Vajpayee’s reformist government that deepened the Rao-Singh reforms. After decades of average annual GDP growth rates of three per cent, India in the 2000s began to record consistent annual growth rates of eight per cent. Fifth Turning Point: The election of Narendra Modi in 2014 would herald a decisive change in India’s political and economic trajectory. Dynasty was devalued, corruption contained and merit promoted. Whoever forms the next government in June 2024 will face several challenges. One, to sustain the momentum of economic growth which in the OctoberDecember 2023 quarter rose to 8.4 per cent Photograph courtesy: PIB
18 | BW BUSINESSWORLD | 06 April 2024 HROUGHOUT history, individuals have grappled with the challenge of balancing personal interests with societal well-being. Unfortunately, pervasive negativity, cynicism, and self-serving attitudes often overshadow our interactions, hindering our ability to prioritise broader societal concerns. However, to achieve our vision of fostering a world guided by principles such as mutual respect and environmental responsibility, we must address the barriers preventing us from adopting a more comprehensive perspective and advocating for the common good. In professional terms, this imperative aligns with the principles of Environmental, Social, and Governance (ESG). At the heart of this challenge lies our evolutionary development. The struggle to exhibit virtuous behaviour is deeply ingrained in human nature, shaped by a complex interplay of cooperation, competition, and survival instincts. While our advancement has yielded remarkable achievements, it has also been marred by conflicts and selfserving motivations, reinforcing individualistic tendencies and a narrow focus on personal interests. Nevertheless, history bears witness to humanity’s capacity to transcend self-interest and champion collective progress. Moments of reflection and unified action, from the abolition of slavery to the pursuit of civil rights, underscore our ability to prioritise justice, equality, and societal well-being over individual gain. To catalyse a shift towards a more inclusive and compassionate worldview, we must foster critical thinking and broaden our perspectives. Education serves as a cornerstone in this endeavour, equipping individuals with the knowledge, empathy, and analytical acumen needed to comprehend the interconnected nature of global challenges. By promoting a comprehensive understanding of history, social sciences, and ethics, we instill a mindset valuing the enduring impact of our actions on society and the environment. Moreover, technological progress empowers us to leverage vast troves of data and insights, facilitating informed decisionmaking that considers the collective welfare. Innovations in renewable energy, sustainable agriculture, and inclusive healthcare exemplify how progress can be achieved without compromising communal well-being. By adhering to the principles of Environmental, Social, and Governance (ESG), we can strike a harmonious balance between individual aspirations and broader societal imperatives. Additionally, fostering a culture that celebrates altruism, T Challenges of Being Human: A Path to Collective Good (A)muse & Musings By Srinath Sridharan
06 April 2024 | BW BUSINESSWORLD | 19 knowledging our inherent biases, we can actively work towards dismantling them and embracing diversity. Education, exposure to different cultures, and promoting inclusive narratives can help break down stereotypes and foster a more inclusive society. Promoting Ethics and Values: Instilling a sense of ethics and values from an early age can help shape individuals’ moral compass and promote respectful behaviour. Teaching principles such as honesty, integrity, empathy, and responsibility cultivates a foundation for respectful interactions and decision-making based on the well-being of others. Leading by Example: Leaders in various domains, including politics, business, and community organisations, have a responsibility to model respectful behaviour. When leaders prioritise empathy, inclusivity, and respect in their actions and interactions, it sets a positive example for others to follow. By demonstrating the importance of respect and rejecting negativity and greed, leaders can inspire a cultural shift. Encouraging Collaboration and Cooperation: Fostering a spirit of collaboration and cooperation rather than competition can help mitigate the negative impacts of greed. Emphasising the benefits of collective effort and shared goals promotes a sense of unity and encourages individuals to work together for the betterment of all. Promoting Social and Environmental Responsibility: Encouraging individuals, organisations, and governments to adopt social and environmental responsibility as core values can redirect focus away from self-serving behaviours. Emphasising the importance of sustainable practices, ethical business conduct, and giving back to communities fosters a culture of respect and responsibility towards others and the planet. These are traits that Public Policy development can use as guiding principles. It is only through our collective commitment to positive change that we can create a world where greed gives way to generosity, negativity yields to optimism, and respect becomes the guiding principle in all our interactions. We can build a society rooted in respect, empathy, and compassion. It is only through our collective commitment to positive change that we can create a world where greed gives way to generosity, negativity yields to optimism, and respect becomes the guiding principle in all our interactions. We can build a society rooted in respect, empathy, and compassion empathy, and social responsibility is crucial. Recognising and celebrating acts of kindness, generosity, and community engagement can inspire others to follow suit. By highlighting stories of individuals who have overcome self-interest to make a positive impact, we can reinforce the idea that being good and doing good are not only desirable but also achievable. Overcoming greed, negativity, and fostering respect for all individuals are crucial steps towards creating a more harmonious and compassionate world. While these challenges may seem daunting, there are ways in which humanity can work towards addressing them and nurturing a more inclusive and respectful society. Cultivating Empathy: Empathy is the cornerstone of understanding and respecting others. By actively putting ourselves in someone else’s shoes and seeking to comprehend their experiences, we can develop a deeper sense of empathy. Encouraging empathy through education, storytelling, and promoting diverse perspectives helps bridge divides and fosters mutual respect. Promoting Dialogue and Communication: Open and respectful communication is vital for building understanding and breaking down barriers. Encouraging dialogue that promotes active listening, empathy, and constructive engagement can help counteract negativity and promote more positive interactions. Creating safe spaces for discussions and promoting civil discourse can lead to a more respectful exchange of ideas. Challenging Biases and Stereotypes: Recognising and challenging our own biases and stereotypes is essential for promoting respect for all individuals. By acThe writer is a policy researcher & corporate advisor Photograph by AlexGukBO
20 | BW BUSINESSWORLD | 06 April 2024 RBAN AREAS have been epicentres of economic activ - ity since the dawn of humanity. Closest to us, San Francisco is the home of OpenAI, X (formerly Twitter), Salesforce, and Uber to name a few. The city remains synonymous with innovation and entrepreneurial dynamism. However, the tech industry is not limited to the city – Google, Meta, and Apple are all headquartered in the city’s suburbs. The creaky infrastructure and rampant homelessness of San Francisco, and the availability of more land, housing, and better amenities in its immediate vicinity, have led to major tech giants developing their headquarters in the suburbs of San Francisco but not the city itself. We see this in the Seattle area too – Microsoft chose to establish their headquarters in Redmond, not the main city itself. The key observation here is that while cities remain the anchors of this ecosystem of innovation, significant economic activity has been offloaded to their suburbs. Focus on New Suburbs in India Too We are seeing a similar situation emerge in India. Our old city cores are woefully neglected and underserved, while the focus of all development is towards new suburbs (Kapoor and Debroy). As the suburbs of our major cities grow into important centres of innovation in their own right, it is imperative that our urban development planners work on improving the connectivity between suburbs, not just between suburbs and the city centres. In this aspect, the San Francisco Bay Area’s public transportation system has a IMPROVING CONNECTIVITY BETWEEN SUBURBS mixed track record. It is indeed hard to go from Stanford to Berkeley via rapid rail, or from either university to the airport. There are four rapid rail transport agencies that are operational. However, on the brighter side, they have indeed coordinated with one another to launch the clipper card, a one-stop card with which you can pay the fares for all transit agencies. Moreover, the Caltrain provides excellent connectivity between the suburbs of the South Bay, while the Bart does the same for the East Bay. As far as the roads are concerned, the Dumbarton bridge and the San Mateo-Hayward bridge are lifelines of connectivity between the East and South Bay. The Seattle area has an efficient public rail system that not just connects the suburbs to the city centres but to one another too. The Link light rail and Sounder Commuter rail seamlessly connect the entire area. Importantly, the Link light rail connects the University of Washington to the airport through the city centre. In a few months the Link Light Rail will connect the important suburbs of Redmond and Bellevue too. The NCR is a prime example of how there should be more focus on improvARTHSASTRA by Devansh Sharma & Amit Kapoor Clockwise from left : Amit Kapoor & Devansh Sharma U
06 April 2024 | BW BUSINESSWORLD | 21 ing connectivity between suburbs, not just between the suburbs and city centres. While the Delhi metro is a stellar of the Central and Delhi governments, there is no direct metro line between Gurugram and Noida – the two upcoming centres for innovation. Neither are there any efficient car routes that can take a person from one suburb to another in less than 60 minutes. For both options, metro or car, one has to first go to New Delhi and then go towards the destination suburb. Ideally, there should be a metro line connecting both Gurugram and Noida (with stoppages in Faridabad). Besides that, there should be at least a six-lane expressway between the two suburbs. The situation in Mumbai is even worse. Mumbai still runs on the old Mumbai local train systems, which are administered by the Central government through the Ministry of Railways. A few lines of the Mumbai metro are operational. At the same time, the road networks across the city remain congested. Bandra-Kurla Complex (BKC), Andheri, Powai, and Navi Mumbai are emerging as alternative economic hubs to South Mumbai, but there exists little direct connection between the first three and Navi Mumbai. At the same time, Mumbai has developed important sea links that improve connectivity in the metropolitan region: the BandraWorli sea link and the recently inaugurated Mumbai Trans Harbour sea link. As a solution to the suburban connectivity problem, urban planners should double down on the creation of these sea links, while developing metro lines connecting the suburbs of North Mumbai with Navi Mumbai. It would be interesting to do a simple back of the envelope calculation on the financial impact of the time gained if there was better connectivity between two suburbs. Say a person has to go back and forth for work between the two suburbs of Gurugram and Noida every day. Assume that they are earning Rs 40,000 a month, which translates to Rs 250 an hour. Currently it takes about eighty minutes to get from one suburb to another. That means 160 minutes are consumed by the commute of that person every day. If this time were to be halved due to better connectivity, then that person would gain an hour and twenty minutes every day. That would translate to a gain of around 330 rupees per day. If there are 100,000 such persons in Gurugram, it would result in a gain of 3.3 crore rupees per day. Every year, this would mean an economic gain of 850 crore rupees to the NCR’s economy. With suburbs emerging as major economic hubs in their own right, it is important for city planners to focus their efforts on improving connectivity between them rather than viewing suburbs as mere offshoots of cities. The solutions are clear and lying in plain sight – create multiple-lane expressways and expand existing rapid rail networks to connect our suburbs. Such an approach will not only ease the lives of those living in these suburbs, but also contribute to sound economic progress. Amit Kapoor is Chair, Institute for Competitiveness and lecturer, USATMC, Stanford. Devansh Sharma is doing his MS and is a student of Dr Kapoor in his course on Competitiveness and Innovation at Stanford The NCR is a prime example of how there should be more focus on improving connectivity between suburbs, not just between the suburbs and city centres. While the Delhi metro is a stellar of the Central and Delhi governments, there is no direct metro line between Gurugram and Noida – the two upcoming centres for innovation Photograph by MaxGoth
22 | BW BUSINESSWORLD | 06 April 2024 E FFECTIVE LEADERSHIP is not just the ability to steer a ship but also the capacity to navigate the diverse currents of talent, perspectives, and experiences that shape teams. Managing differences is not just a challenge but an opportunity for growth and innovation. Managing differences requires a delicate balance of empathy, open-mindedness, and effective communication. When confronted with opposing views on topics, individuals can respond with constructive engagement grounded in a commitment to active listening and mutual respect. This approach involves embracing dialogue as an avenue for growth rather than conflict. By seeking common ground, asking probing questions, and maintaining an open mind, they aim to foster understanding and bridge divides. Additionally, they prioritise respectful communication, recognising that differing perspectives offer valuable insights and opportunities for personal The Tough Task of Managing Differences PEOPLE TALK By Srinath Sridharan & Steve Correa enrichment. Listen and Understand: Navigating opposing viewpoints entails a commitment to understanding the perspectives of others without immediate dismissal or defensiveness. Actively listening involves giving the speaker undivided attention, whether in person or virtually, and being attuned to non-verbal cues that indicate engagement. It requires a conscious effort to recognise and challenge personal biases and assumptions that may cloud one’s understanding of a given issue. When faced with differing views, individuals are encouraged to refrain from immediate reactions and allow space for thoughtful consideration and response. Maintaining composure in heated discussions is essential, as emotional reactions can impede effective communication. The objective of active listening is not necessarily agreement but rather cultivating a respectful and open environment conducive to constructive dialogue. By embracing active listening, individuals contribute to fostering meaningful exchanges of ideas and the potential discovery of common ground within corporate settings. Maintain Open-mindedness:Maintain an openminded approach, acknowledging the potential for unexplored facets within the opposing viewpoint. Be receptive to adapting your perspective in the light of new information. Practice postponing judgment by setting aside initial assumptions or preconceptions about the speaker’s stance. Enter conversations with an open mind, recognising the possibility of overlooked elements. Resist interruptions and refrain from interjecting personal opinions while the other party speaks, allowing them ample opportunity to articulate their thoughts. Expand your informational horizons by diversifying your sources, thus broadening your exposure to diverse perspectives and enhancing your understanding of the subject matter. Engage in Constructive Dialogue: Facilitate a respectful and productive exchange rather than resorting to confrontation. Pose questions aimed at elucidating their perspectives and present your thoughts in a manner conducive to dialogue. Em-
06 April 2024 | BW BUSINESSWORLD | 23 tinuous learning mindset, recognising that growth is inherent to everyone, including oneself. Remain open to evolving views based on new information and experiences. Embrace disagreement as a natural aspect of human interaction, understanding that navigating it constructively fosters personal development and a more inclusive appreciation of diverse perspectives. In addition It is essential for organisations to proactively seek out diverse perspectives and voices as part of their everyday operations. Leaders should champion initiatives that promote diverse hiring practices, create platforms for employee feedback and idea-sharing, and foster a culture where diverse viewpoints are actively sought out and valued. Leaders must model active listening and respectful engagement and encourage and support these behaviours among their teams. This can be achieved by providing training on effective communication and conflict resolution, setting clear expectations for respectful behaviour, and recognising instances of constructive dialogue and collaboration. Additionally, leaders should address systemic barriers to diverse perspectives within the organisation’s structures and policies. Ancient Indic Practice In ancient India, the Koodam and Sangha were engagement models used for dialogue and managing differences that have energised and enabled conscious communities. They were the primary indigenous form of governance for millennia until they were replaced by Colonial structures. The structure and the processes of the Koodam were refined in the idea of design enshrined in the Vaastu-Shastras. Stated simply there are four spaces as spaces where certain ‘roles’ can be played and specific types of dialogue could take place. The central space is empty since the primordial energy is evoked here and is the ultimate source of life for the community. The community that comes together in a Koodam, therefore, acts from an inner dharma and seeks the presence of the divine to guide its thoughts. This space embodies the best, purest and most integral processes of the community, its highest aspiration as well as its highest humanness. ploy clarifying inquiries to deepen comprehension; when clarity or context is needed, employ openended queries to glean insight into the speaker’s standpoint, showcasing genuine interest in their viewpoint. Recapitulate their sentiments in your own words and inquire if your interpretation aligns with their perspective, fostering active listening and rectifying potential misunderstandings. Foster empathy by contemplating the speaker’s experiences, values, and emotions, thereby grasping the context underpinning their opinions. Validate expressions of emotion without necessarily endorsing their content, fostering an empathetic and inclusive discourse. Find Common Ground: Find common ground by identifying areas of agreement, even on minor aspects of the topic, to foster a more positive and fruitful dialogue. Express disagreements diplomatically and respectfully, utilising “I” statements to articulate your perspective without attacking others. Evaluate the necessity of addressing every disagreement, prioritising discussions with the potential for mutual understanding and development. Educationally share your viewpoint, supporting it with facts and evidence while avoiding condescension or dismissal of opposing opinions. If discussions become heated or unproductive, stepping back and revisiting them later when emotions have subsided is acceptable. Embrace a con- Srinath Sridharan is a policy researcher & corporate advisor Steve Correa is an executive coach, OD consultant & author Facilitate a respectful and productive exchange rather than resorting to confrontation. Pose questions aimed at elucidating their perspectives and present your thoughts in a manner conducive to dialogue. Employ clarifying inquiries to deepen comprehension; when clarity or context is needed, employ openended queries to glean insight into the speaker’s standpoint, showcasing genuine interest in their viewpoint Photograph by Scusi0-9
24 | BW BUSINESSWORLD | 06 April 2024 HERE’S AN INTERESTING company called Intercom that I hadn’t heard of, until recently. They are a software-as-a-service business and provide customer service solutions to over 25,000 organisations around the world. And what got me interested in the company was their product engineering philosophy. They have a rule that’s helped them build solutions that are faster, better, and cheaper. And best of all, their philosophy can be summed up in three words: “Run Less Software”. Intercom’s former head of Ops – Rich Archbold – explains the philosophy using the analogy of a soldier and his swords. Imagine he says, you are a soldier in the fifth century, all set to go to battle. You put on your body armour and the helmet. You pick up your shield. And then as you prepare to grab your sword, you realise there are five swords you can choose from. Different shapes and sizes, meant for different, specific purposes. One that’s great to attack a tall man, the other that’s just right to go after a shorter person. One to clear the bushes perhaps. And so on. To be fully prepared, and to win the battle, you’d be tempted to carry all five swords. But you know that would be impractical. It would weigh you down. It would slow down your progress. Besides, imagine seeing an enemy a few feet away from you and thinking “Oh! He’s so tall. I need to put away this sword and pull out the longer one!” Just wouldn’t work. So what do you do? You pick one sword – one you think would work in most cases – and run with it. And that’s what the ‘run less software’ philosophy is all about. Stop looking for – or creating – products and solutions that take care of every possible eventuality. Overengineered products appear sexy, but when it comes to doing every day stuff, they could be less effective. Less efficient too. If you are leading a business, good idea to let the five swords analogy influence your strategy. Focus your product offering. Focus on your positioning in your customer’s mind. What’s the one thing you want to be known for? What’s the one thing your product or service does better than anyone else? Don’t succumb to the temptation to offer five swords. Stick to one. Remember, less is more. Customers aren’t always looking for the best, most comprehensive solution. In most cases all they are looking for is a solution. Focus on being the one providing that solution. When hiring a person into your team, stop looking for five swords in one person. If you do, you’ll take a long, long time finding the person. And when you do find her or him, you’ll probably get an overqualified person for the job who is under-utilised and over-paid. And unhappy too. Focus on the skill, the competence you are looking for. The one sword you are looking for. When buying something – a product or a service – good idea to start by identifying why you need it. What’s the problem you are looking to solve? Look for a solution that works. And when you find it, take it. It’s better. And cheaper too. Don’t let the bells and whistles entice you. Don’t get tempted by what it ‘can also do’. Or what you ‘might need’ someday. Remember the ‘run less software’ principle. Carrying five swords is a bad idea. On the battlefield. And in life too. Fighting with Five Swords T PI TALKIES Prakash Iyer : The author is a speaker and leadership coach and former MD of Kimberly Clark Lever By PRAKASH IYER When hiring a person into your team, stop looking for five swords in one person. If you do, you’ll take a long, long time finding the person. And when you do find her or him, you’ll probably get an overqualified person for the job who is underutilised and over-paid. And unhappy too
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26 | B W BUSINESSWORLD | 06 April 2024 AST MOVING CONSUMER Goods (FMCG) companies, selling consumer goods, are well aware of the need for multiple brands of the same basic product. While these may seem to compete with each other, actually they are complementary, filling price or perception gaps in the product space. One example is a multinational selling multiple brands of soap, each at a different price point and with brand positioning aimed at a different audience. One can also think of large conglomerates operating hotels under various brand names, each with different facilities and room tariff. BARRIER FOR COMPETITION The result may be a degree of cannibalisation, with one brand eating into the share of another, but this strategy expands the market for the product while also creating an entry barrier for competition. Beyond brands that fully encompass the market, companies would love to have product pairs or sets that create demand for each other, in a mutually reinforcing upward spiral. Some examples are known, others need to be found or innovated. Amongst the obvious ones are telecom networks and mobile F handsets; more extensive the network, greater the demand for mobiles – and vice versa. Similarly, roads and cars: more roads or expressways stimulate the demand for cars, and more cars increase the demands for roads. Other virtuous pairs exist but many more need to be found or created. This has special significance at a time when private investment needs to be stimulated. Government expenditure on one set of products could trigger private investment in the “paired” set. Government investment in roads and the consequent growth of private investment in the automobile sector is a case in point. Ideally, a policy tweak could lead to private capital expenditure in both sets. This has happened in the case of telecom – in which investments in both, the network and handset production, are from the private sector. STRANGE SYNERGY In looking at this, though, one needs to be wary of unintended negative effects. Health insurance can, for example, lead to a rise in medical costs, resulting in a rise in insurance premiums. Ultimately, the two chase each other to ever higher levels in a negative spiral of synergy. The US has long been a showcase of this danger. Another example of such negative synergies is in the geo-political arena – the link between intercountry rivalry (even war) and sale of weapons. More conflict means greater arms sales, while more of the latter enhances the possibility of conflict: a spiral that is sad for people, but not really negative for arms manufacturers. An extreme extension of this – reminiscent of Kafka in its level of absurdity – is the US dropping food supplies in Gaza to bring relief to the starving population, a situation brought about by the US itself continuing to supply arms to Israel for its ongoing assault on the hapless people of Gaza! Strange synergy indeed – food to help people survive and bombs to kill: destruction leads to relief supplies for survival, but survival of Palestinians (including of Hamas cadres) “requires” Israel to continue its devastating attacks. Of course, the US is not the only country indulging in such hypocritical “synergistic” actions. The challenge, then, for innovators, corporates, and countries is to come up with sets of products which create mutual reinforcement, but to avoid those with negative effects and certainly those that cause grief. Pairing Products, Spiralling Synergies The writer loves to think in tongue-in-cheek ways, with no maliciousness or offence intended. At other times, he is a public policy analyst and author. Among his books is Decisive Decade: India 2030 Gazelle or Hippo (Rupa, 2021) COLUMN n KIRAN’S KONTRARIAN KORNER n By KIRAN KARNIK Photograph by Iralu1
fiff 2 fflffffiflffifi CONCLAVE MAY 1, 2024 The Radisson Mahipalpur REGISTER NOW POWER SPEAKERS Chetan Mehra: +91 98117 02464, [email protected] For Speakership: Founder, Perfora TUSHAR KHURANA Co-Founder, Bold Care RAJAT JADHAV Founder & Chairman, Nasher Miles ABHISHEK DAGA Founder, Koparo SIMRAN KHARA Founder & Director, Bacca Bucci NATWAR AGRAWAL Managing Director, Fixmycurls ANSHITA MEHROTRA CEO, Da Milano & Rosso Brunello SAHIL MALIK Founder & CEO, FlowerAura SHREY SEHGAL Founder, Phool.co ANKIT AGARWAL Founder & CEO, Zappfresh DEEPANSHU MANCHANDA
28 | BW BUSINESSWORLD | 06 April 2024 HERE ARE SO MANY p r o b l e m s w i t h o u r ‘Healthcare’ system that I am at a loss, where to begin. From crowds at the iconic AIIMS as well as major private hospitals, mortally sick patients being turned away either for want of money or due to shortage of beds, babies delivered outside hospital doors, fake medicines to unnecessary diagnostic tests and even surgeries, rampant kickbacks; there are all kinds of stories floating around. Meantime, people continue to suffer, many mortgage their houses to pay for treatment, others just die as they are unable to afford it. Putting in place a ‘universal healthcare’ system for all is perhaps not feasible for the government – the resources required are humungous – and the private sector can barely take care of their own senior people. Even the reach of their CSR funds is limited to a few ‘memorial hospitals and institutes’ which manage to corner cheap prime land from the government, on the express condition of providing a certain number of ‘free beds’ to the poor, but more often, these are appropriated for extending favours. We have an ironic situation. India has the best of doctors – our physicians and surgeons in almost all specialties are as good as, if not better than, those in advanced economies. There is a ‘culture of empathy and caring for the needy’; our new-age private sector hospitals are equipped with the latest machines and robots. Yet, we see so much suffering and misery all around! Even the so-called ‘upper middle class’ is unable to cope with medical costs when someone in the family needs to be hospitalised. Perhaps the only explanation is that the number of hospital beds and doctors is woefully inadequate for our huge population. What can we do to mitigate the situation? Of all the ‘villains’ in this complex situation, I think the menace of printing artificially high MRP on medicines and consumables is perhaps the worst and, also interestingly, a ‘low hanging fruit’ which can be tackled in a relatively easier manner. Investigating the criminal malpractice of big kickbacks on diagnostic tests could be another ‘not unsurmountable’ exercise. In any case we have to take small steps. Tackling the MRP scam could be the first one. Let me explain the issue with some simple examples. A box of disposable gloves – one of the most common consumables – of a fairly popular brand, containing 450 grams of the product (as I found out personally a few years ago when a young relative was a long term ‘home care patient’ in Ghaziabad) had an MRP of Rs 600 printed on it. Their neighbourhood chemist would charge them Rs 150 for it as they bought three or four boxes every month. We can safely assume that a small hospital, using 300-400 boxes monthly would T The Menace of Inflated MRPs on Medicines Public Health By Krishan Kalra Column
06 April 2024 | BW BUSINESSWORLD | 29 the field had actually gone on record to say that “earlier our procedures were underpriced and implants were overpriced and this is being corrected now”; so much for the government order capping stent prices. An encouraging response had, however, come from the All India Syringes and Needles Manufacturers Association to voluntarily cap trade margins at 75 per cent over their discounted net ex-factory prices including GST. This effectively meant a maximum trade margin of about 43 per cent on the MRP – a far cry from the 80-90 per cent earlier. We need many more initiatives like this. Admittedly, the MRP scandal is not exclusive to medicines and consumables. It seems to be a generic! As an example, my research shows that, a common FMCG item like liquid hand wash – of a popular brand – carried an MRP of Rs 300 on the 750 ml pack but you could easily buy it on Amazon for about Rs 90 net, including GST of Rs 15 after availing of the myriad “cash back” schemes. Even, from the stores, the price including all taxes, didn’t exceed Rs 169 before availing one of the many discounting schemes. However, in the case of the healthcare industry, this practice becomes a truly nefarious one. What can be done about this problem? How can the government stop hospitals from earning such obscene profits on drugs and consumables? The NPPA, along with eminent doctors and the watchdog community of senior chartered accountants and consultancy firms, could surely come up with a practical solution. A simplistic – though admittedly retrograde – approach could be to impose GST on the printed MRP or a price after reducing a margin that is considered fair by the practitioners. Such a move would certainly open up the mystery of astronomically high MRPs that lead to all kinds of malpractices in this all-important life-saving industry. With some of the best doctors and world class hospital equipment in place, the Indian healthcare industry needs to get its act together drugs on the ‘National List of Essential Medicines’ (NLEM) where prices are fixed by the government, there is literally free for all! The government did indeed, make a beginning by capping prices of stents a few years ago, but the results were mixed. In fact, the NPPA (National Pharmaceutical Pricing Authority) had even forced device makers, perhaps for the first time ever, to put the correct MRP tags on the devices, to prevent overcharging by the hospitals. It appears that most private hospitals went on to jack up the ‘angioplasty package cost excluding price of stents’ to make up for the loss of margin on the stents. The CEO of one of the largest players in The author is member, Managing Committee of the Indian Cancer Society, Delhi and was member of the Governing Council of the Rajiv Gandhi Cancer Institute and Research Centre. He is past president of AIMA and former member, Board of Governors, IIMC be getting the same for Rs 125 or less. A bigger hospital’s cost could be still lower around Rs 100 or just 17 per cent of the MRP. Now, what do the hospitals charge from the patients? Almost all bill the patients at MRP! Typically, in a hospital bill, medicines and consumables account for 60-65 per cent of the total; so this is where they make their profits. To the best of my knowledge, only one hospital ‘500 bed Rajiv Gandhi Cancer Institute’ in Rohini (north west Delhi) has, for many years, been giving 21 per cent discount on medicines and a higher amount on consumables. In the Ghaziabad case, other commonly used consumables also had high margins – feeding bags box (MRP Rs 500) came to my relative at Rs 150, suction catheter (MRP Rs 42 for Rs 11) urine catheter (MRP Rs 380 for Rs 130) and so on. The situation is only a little better in the case of medicines. The average discount on the MRP, extended to a hospital, for branded drugs still under patents, varies between 30 -50 per cent and these are billed to the patients at MRP. Shockingly, pharmacy outlets in hospitals – as I found out personally during 2012-15 when my close relative was hospitalised twice – won’t even give the usual 10 per cent discount extended by them to senior citizens at the same chain’s outlets outside. Barring some Photograph by Artostocco
30 | BW BUSINESSWORLD | 06 April 2024 Don’t Junk CDR Learnings, Can Strengthen IBC WHEN THE Insolvency and Bankruptcy Code (IBC) was enacted in 2016 in India, which replaced all other previous schemes, including the widely used corporate debt restructuring (CDR) scheme, there were heightened expectations that India’s infamously long and unwieldy corporate dispute resolution processes will undergo a significant transformation. While CDR emphasised restructuring and negotiation, the IBC emphasises resolution through mechanisms such as insolvency resolution processes and liquidation, with a focus on protecting the interests of all stakeholders, including creditors, shareholders, and employees. It was expected to ensure reorganisation for commercial entities as an alternative to liquidation or other mechanisms of debt enforcement, reshaping the way insolvent firms could restore their financial well-being or close down. Nearly eight years later, the reality is somewhere in between harsh reality and the narrative-of-the-aggregate-recoveries. While there is no gainsaying that there have been some good resolutions, mainly of large operating assets and high profile crises, the recovery rate has been significantly below expectations. In 2023, the average recovery process under IBC was 36 per cent, implying that about only three of every 10 cases brought under the IBC has recovered following resolution. This is very low recovery rate of a law that sets a cap of resolving with an outer limit of 270 days or nine months. This often results in worsening in INSIGHT THE IBC the value of the assets leading to an even lower recovery for non-operating assets under IBC. Corporate debt restructuring had been used as a crucial mechanism for addressing financial distress faced by companies. It involved the renegotiation of terms related to debt obligations between a distressed company and its creditors, aiming to provide relief and facilitate the revival of the company’s operations. When a bank takes a ‘haircut’, it means it accepts less than what was due in a particular loan account. If the promoters have shown commitment in the past and there is no diversion after due forensic audit, lenders have managed to recover almost the full amount. In CDR, since they convert their part of debt into equity and take their stake to 51 per cent, it helps them in navigating the company and also to ensure that their financial exposures are protected. Despite these criticisms, it is important to acknowledge that CDR has been instrumental in resolving financial crises and preserving value for creditors and shareholders in many cases. The structured framework provided by CDR allowed for orderly debt resolution and prevented the chaotic liquidation of assets that can occur in the absence of a formal restructuring process. Furthermore, CDR helped stop contagion effects and systemic risks by containing the fallout from a distressed company’s failure. For example, if the Indian steel companies of the early 2000s had been put into IBC, instead of the then CDR, some of the large Indian steel majors would not have existed today. The RBI’s We need to pick good elements of CDR for strengthening IBC. Timely resolution needs continued emphasis of any recovery process, for only then can it ensure retrieval of the businesses that may have defaulted to creditors for a variety of reasons. For those stressed entities facing deep-rooted operational or governance issues, IBC is an easier solution By Srinath Sridharan
06 April 2024 | BW BUSINESSWORLD | 31 annual report of 2002-03 shows that eight steel accounts with outstanding loans of Rs 28,000 crore were admitted to the CDR cell that year. At the time, a combination of low international prices, sluggish domestic demand and overcapacity had forced bankers to restructure and offer a life-line to these companies. Jaiprakash Power Venture Limited is another case in point. Under IBC when they explored the bidding process, the potential suitors indicated giving an 80 per cent haircut to lenders in 2019. Lenders eventually declined to take such a sharp haircut and opted for CDR, which virtually protected the lender’s principal as well as interest at the company’s then share price. Lenders took over the majority stake of 51 per cent within four years, and the company’s net worth increased substantially in this period. Rajnish Kumar, former State Bank of India (SBI) Chairman in his book The Custodian of Trust: A Banker’s Memoir pointed out that “this problem of inexorable control by promoters has plagued many failing businesses though there have been exceptions like that of Manoj Gaur of the JP Group, who willingly sold one business after another to curtail his debts.” The success of CDR in India can be attributed to several factors. Firstly, it provided a structured framework for negotiations between borrowers and lenders, allowing for a coordinated approach to debt restructuring. Secondly, it allowed for the customisation of restructuring terms based on the specific circumstances of each case, thereby increasing the likelihood of a successful resolution. Thirdly, CDR often involves the participation of multiple creditors, enabling a collective decision-making process that takes into account the interests of all stakeholders. We need to pick good elements of CDR for strengthening IBC. Timely resolution needs continued emphasis of any recovery process, for only then can it ensure retrieval of the businesses that may have defaulted to creditors for a variety of reasons. For those stressed entities facing deep-rooted operational or governance issues, IBC is an easier solution. A fundamental gap within the Insolvency and Bankruptcy Code is the presumption that promoters of a failing enterprise inherently harbour malicious intent. This presumption overlooks the possibility of genuine business failures and may lead to moral hazard, where the intent of promoters is unfairly questioned. Recognising and understanding genuine business failures is essential to foster a fair and just environment conducive to economic growth. A fundamental question that needs to be raised is whether IBC’s sole objective is to hammer out resolutions or is recovery the ultimate goal? In its quest for resolutions, the IBC framework, the evidence suggests, seems to have lost the purpose of ensuring recovery in entities that it is mandated to resolve. Timely recovery needs continued emphasis of any resolution process, for only then can it ensure retrieval of the businesses that may have defaulted to creditors for a variety of reasons. The IBC process remains a work in progress. It needs the benefits of the CDR, to embolden creditors, and hasten both resolution and recovery. The author is a policy researcher & corporate advisor X: @ssmumbai A FUNDAMENTAL GAP WITHIN THE INSOLVENCY AND BANKRUPTCY CODE IS THE PRESUMPTION THAT PROMOTERS OF A FAILING ENTERPRISE INHERENTLY HARBOUR MALICIOUS INTENT Photograph by Drogatnev
Running medium and small enterprises presents its own set of challenges, chiefly difficulties in accessing formal finance. But for women entrepreneurs, overcoming these challenges becomes even more difficult due to the gender gap By Abhishek Sharma T HE STORY OF HINDAVI Solution, the Pune-based manufacturer of the emerging Beestofix brand of adhesives, paints and ink, is as instructive as it is revelatory. While its success is built on an individual’s ambition, hard work, and unwavering commitment, the journey lays bare the challenges women entrepreneurs face. “The challenges were multifaceted — the social stigma surrounding women in science, technology, engineering and mathematics (STEM), financial constraints and the struggle to secure a business loan due to a lack of collateral,” says Amruta Mangale, speaking of her struggles when she founded Hindavi Solution in 2016. After multiple rejections, she finally secured a loan of Rs 20 lakh with the help of Bharatiya Yuva Shakti Trust (BYST), a non-profit organisation. During the Covid-19 pandemic, when several micro, small and medium enterprises shut down, Hindavi Solution not just thrived but IN DEPTH WOMEN ENTREPRENEURS AMRUTA MANGALE, Founder, Hindavi Solution “As a female business owner in the STEM field, I have indeed faced challenges, particularly in securing funding and overcoming societal expectations” 32 | BW BUSINESSWORLD | 06 April 2024 AN UNEQUAL BUSINESS even enjoyed flexibility thanks to the use of technology. That it’s not easy being a woman entrepreneur is borne by data. About 3,057 Indian MSMEs led by women entrepreneurs shut down in between 1 July 2020 and 2 February 2023, said Minister of State (MoS) for MSME Ministry Bhanu Pratap Singh Verma in the Rajya Sabha while sharing data from the Udyam portal.
06 April 2024 | BW BUSINESSWORLD | 33 Challenges Galore Today, nearly 20 per cent of all MSMEs in the country are run by women. They are constrained by various challenges, principally access to finance at different stages of the business. A large body of evidence has documented the disparities in access to finance between menand women-run enterprises. Women entrepreneurs seeking financing from potential investors often face a higher chance of rejection. A 2022 survey by Indifi Technologies, a lending platform for MSMEs, revealed that women-led MSMEs face a finance gap of $158 billion. Alarmingly, the disparity between male and female labour force participation has a huge impact on India’s growth, according to the IMF and Goldman Sachs. “As a female business owner in the STEM field, I have indeed faced challenges, particularly in securing funding and overcoming societal expectations. Initially, despite my educational qualifications, obtaining a job in my field was difficult, and I had to settle for a position in the quality control department with a modest salary. When I decided to start my own business, the traditional norms posed obstacles. Approaching banks for a loan proved challenging due to the lack of collateral, also highlighting gender-related biases,” recalls Mangale. In India, a large number of small enterprises are either financed with family support or self-financed, both of which are difficult for women entrepreneurs. As per a survey by Bain and Company and Google, about 43 per cent of women said that their families and spouses did not support their businesses. Additionally, women entrepreneurs often turn to informal sources for funding, which comes with significant drawbacks such as high interest rates, and demand for substantial collateral in the form of assets such as gold, jewellery, or other property, etc. Even Mangale had to sell her jewellery to raise money. “Ensuring the financial stability and growth of my business has been a strategic journey. I leveraged my knowledge Hardika Shah, Founder & CEO, Kinara Capital “I have seen my share of the skewed dynamic, which was even more stark when I started on my entrepreneurial journey more than a decade ago” of chemistry to develop high-quality adhesive tapes, tapping into an untapped market in Pune,” she says. Balancing Work & Life Then there is the usual challenge of work-life balance that women entrepreneurs face. But Mangale was lucky in this regard. “I am fortunate to have a supportive family, especially my husband and his parents, who understand Photograph by Indiapicturebudget
34 | BW BUSINESSWORLD | 06 April 2024 the demands of entrepreneurship. I discuss my business plans and challenges with my family, fostering understanding and support,” she says. Gender biases are strong in India at many levels This is reflected in the level of funding that women-led businesses receive as well. Even in today’s day and age, as corroborated by Traxcn’s report, only 16 per cent of all funded companies in 2022 were women-owned. The bias also extends to potential investors only addressing the males in the team during funding talks. Hardika Shah, Founder & CEO, Kinara Capital faced this during one of the negotiations. “I have seen my share of the skewed dynamic, which was even more stark when I started on my entrepreneurial journey more than a decade ago. It’s quite rare to see a female CEO in the fintech sector in India,” she states. In the World Economic Forum’s Gender Gap Report 2023, India moved to rank 127 from 135 out of 146 countries in terms of gender parity. Womenled MSMEs in India have a very low share (18 per cent) of the total MSMEs registered, while out of 6.33 crore MSMEs, only 20.37 per cent were owned by women. In India, a major challenge is the stringent repayment terms imposed by informal sources. Borrowers are often subjected to a remarkably short repayment window, creating pressure and potential financial instability. The Global Landscape Globally, less than 3 per cent of all venture capital funding has been going to women-founded companies for more than 30 years. This is so because barely 12 per cent of decision-makers at VC firms are women, and 65 per cent of firms still do not have a single female partner, as per Global Entrepreneurship Monitor (GEM). Over the past few years, there is a growing recognition of the gender gap in business and efforts are being made to address it. The global financial landscape is waking up to the potential of women entrepreneurs, with women entrepreneurs running close to one-third of all established businesses worldwide. Women entrepreneurs are critical to the economy at this juncture. According to a Bain & Company study, women in entrepreneurship, if accelerated, have the potential to generate 150- 170 million jobs, which is more than 25 per cent of the new jobs required for the entire working age population by 2030. This will be the key to taking India’s GDP growth from 6 per cent to 8 per cent, accelerating the economy’s journey to $7 trillion. “As women-led businesses emerge as a good value proposition for investors, even bringing in the social impact angle alongside sustainable growth and profitability, I’m hoping to see the landscape change to accommodate better accessibility and support for entrepreneurs like myself,” says Shah. Even, Prerna Kalra, Co-founder and CEO, Daalchini Technologies says that the existing financial landscape, while evolving positively, still presents significant challenges for female entrepreneurs like her. Accessibility to credit remains a critical issue, particularly for women-owned MSMEs. “Despite the strides in gender equality, traditional financial institutions often lack tailored solutions for female entrepreneurs, making it difficult to access necessary capital. As a female MSME owner, the challenges I face include stringent eligibility criteria, biases in loan approval processes, and limited collateral options, which hinder my ability to secure credit,” states Kalra. Even though they tend to have better PRERNA KALRA, Co-Founder & CEO, Daalchini Technologies “Despite the strides in gender equality, traditional financial institutions often lack tailored solutions for female entrepreneurs” GLOBALLY, LESS THAN 3 PER CENT OF ALL VENTURE CAPITAL FUNDING IN DEPTH WOMEN ENTREPRENEURS
06 April 2024 | BW BUSINESSWORLD | 35 A Bright Future Ahead? In India, women-led MSMEs are indeed undergoing a transformation which is evident from a significant 75 per cent increase over the past five years. Despite their growth, these enterprises predominantly find their roots in the informal sector, which regrettably curtails their access to formal financial avenues and vital resources. Kinara Capital’s report also reveals that about 96 per cent of MSME women entrepreneurs seek working capital, which has emerged as the leading business loan purpose. Also, the PayNearby Women Financial Index showed that over 63 per cent of women in India aspire to start their own business, reflecting a strong desire for financial independence and self-reliance. About 45 per cent of women report availing benefits from government-backed schemes and 85 per cent of them have limited or no access to recurring income sources. Talking to BW Businessworld, Daalchini Technologies’ Kalra narrates instances where other women business owners have felt disadvantaged or discriminated against in accessing credit due to their gender. She adds that these entrepreneurs encountered scepticism from lenders who questioned their business acumen based solely on gender stereotypes. Additionally, some institutions offered less favourable terms to them compared to their male counterparts. “I advocate for systemic changes in the financial sector to foster greater inclusivity and accessibility for female MSME owners. This includes initiatives such as gender-disaggregated data collection to track progress, targeted training programmes to enhance financial literacy among women entrepreneurs, and incentivising banks to adopt gender-neutral lending practices,” Kalra adds. According to female leaders, by prioritising gender equality in credit access, India can unlock the full economic potential of women entrepreneurs and drive sustainable growth. There is also a need for representation of more women in decision-making roles, enabling women-centric perspectives to enter the mainstream and be actualised into actionable initiatives. Meanwhile, Shah also hopes to see gender-lens investing accelerate and financial institutions adopt more inclusive lending practices that prioritise gender equality and provide tailored support to women entrepreneurs. “We can level the playing field by providing incentives to investors and financial service providers who are supporting women entrepreneurs,” she states. In India, the challenging backdrop has yet to deter the resilient spirit of these women-led businesses. As they navigate challenges with determination, they simultaneously dismantle the shackles of poverty and weave a stronger, more inclusive economic fabric for the nation. [email protected] repayment rates, women entrepreneurs often face higher borrowing costs and longer wait times for loan disbursement compared to their male counterparts. According to a recent report by Kinara Capital, women-owned MSMEs demonstrated higher repayment than maleowned MSMEs. While only 3.4 per cent of women entrepreneurs defaulted on loan repayment, the rate among men was as high as 4.6 per cent. Hence, there is a need for the financial services and investor ecosystem can take steps to better support female entrepreneurs in accessing credit, like rolling out women-focused products and implementing gender-sensitive lending policies that recognise the unique challenges and strengths of female entrepreneurs. Kalra stated, “Financial institutions must proactively address these disparities by implementing gender-sensitive lending policies, providing mentorship programs, and offering flexible repayment options tailored to the unique needs of female entrepreneurs.” HAS BEEN GOING TO WOMEN-FOUNDED COMPANIES Photograph by Indiapicturebudget
36 | BW BUSINESSWORLD | 06 April 2024 Domestic air travel is set to expand in a big way with a clutch of regional carriers taking to the skies connecting smaller towns and cities with the metros By Ashish Sinha COME MARCH 18, Goa-based airline FLY91, the newest regional carrier, will take to the skies and start its commercial services with flights connecting Goa to Bengaluru and Hyderabad. It will also operate flights to Sindhudurg on the western coast in Maharashtra from Bengaluru and Hyderabad. FLY91 will join a fast-growing elite club of regional carriers like Star Air, operated by Bengaluru-based Ghodawat Enterprises, and Zooom, run by Gurugram-based Zexus Air Services. Then, there are other players waiting in the wings to cash in on the fast-growing domestic air travel business in India. Very soon, JettWings Airways, the first airline operator from the country’s northeast, will begin its operations. It has received the government’s clearance to operate scheduled commuter air transport services in the country. It has announced that it has been awarded 12 sectors under the UDAN (Ude Desh ka Aam Nagrik) RCS (Regional Connectivity Scheme) 5.3 to serve airports in the Northeast, West Bengal, Uttar Pradesh IN DEPTH CIVIL AVIATION FLY91 n Starts on March 18 n By September, a fleet of 6 ATR 72-600 aircraft n Aims to connect Bharat n Based in Goa n In next 5 years, plans to have 35 planes connecting 50 cities GETTING THERE
06 April 2024 | BW BUSINESSWORLD | 37 AT PRESENT, THE INDIAN AVIATION INDUSTRY HAS A TOTAL ORDER BOOK OF NEARLY 1,700 AIRCRAFT, WHICH IS MORE THAN DOUBLE THE SIZE OF THE CURRENT FLEET and Bihar amidst fierce competition from full-service and budget carriers including IndiGo, SpiceJet, Vistara, Air India Express and Air India, among others. FLY91 received its air operator permit from Director General of Civil Aviation, the aviation regulator, on March 6. It takes to the skies from March 18 with two aircraft, and expand its fleet to six ATR 72-600 planes in six months. “We aim to connect Bharat. Initially, we will connect 13 city pairs. We will also start flights to Lakshadweep from April,” said Manoj Chacko, CEO and MD, FLY91. In the next five years, FLY91 plans to have around 35 planes, connect 50 cities and 6 bases, Chacko said. The carrier, operated by Just Udo Aviation, seeks to enhance air connectivity across Tier 2 and Tier 3 cities. Chacko said the airline’s first base Goa is a huge attraction for pilots. Advantage Regional Is there some distinct advantage to a regional operator compared to the full-service and budget airlines? The answer to this is to be found in the way Jettwings Airways plans to operate. Being the first airline from the Northeast region, and scheduled to operate its fixed wing aircrafts on commercial routes from this year, it plans to have a modern deck turbo fan regional jets, supported by a robust business plan to acquire and operate 42 aircraft in the first five years. To serve the RCS routes under the UDAN scheme, the airline recently revised its fleet plan to additionally include and operate the Cessna Grand Caravan 9-seater aircraft in addition to its proposed 88-seater Embraer fleet. The selection of this aircraft is based on their efficiency and suitability for regional operations, ensuring a balance between passenger comfort and operational economics. “Leasing ATR, Cessna, and Embraer fleets can provide regional airlines in India with significant cost advantages, including lower capital outlay, flexible fleet management, reduced maintenance costs, access to newer and fuelefficient aircraft, easier fleet upgradation, and potential tax benefits,” a senior aviation expert told BW Businessworld. While the Cessna aircraft is well-suited for short-haul regional flights and is
38 | BW BUSINESSWORLD | 06 April 2024 an ideal choice for connecting smaller towns and cities, the Embraer shall provide a higher seating capacity with premium travel experience for passengers. This is exactly why JettWings Airways plans to deploy the Cessna Caravan on shorter, low-density routes, connecting remote destinations with limited infrastructure, and utilise the Embraer E Jets on medium-haul routes with higher passenger demand. “By strategically deploying these aircraft types, Jettwings Airways aims to enhance regional connectivity, promote economic development, and enrich the travel experience for passengers,” said Sanjay Aditya Singh, CEO & MD, Jettwings Airways. Jettwings wants to bolster connectivity and the accessibility challenges prevalent in India, with a focused objective. “The UDAN RCS 5.3 will currently help us in connecting significant locations that are tourism and religious hotspots in the Northeast, West Bengal, Uttar Pradesh and Bihar,” Singh added. Growing Demand Rating agency ICRA in its latest outlook for the Indian aviation sector has maintained a ‘stable’ rating amidst the continued recovery in domestic and international air passenger traffic, and relatively stable cost environment. Building on the fast-paced recovery in FY23, ICRA estimates the domestic air passenger traffic to grow 8-13 per MANOJ CHACKO, MD & CEO,Fly91 “We aim to connect Bharat. Initially, we will connect 13 city pairs. We will also start flights to Lakshadweep from April” cent in FY24, reaching 150-155 million passengers, surpassing the pre-Covid levels of 141.2 million seen in FY20. For the 11-month April-February 2024 period, the domestic air passenger traffic stood at ~1,40.4 million, reflecting a YoY growth of 14 per cent over the previous year’s corresponding period. The momentum is expected to continue in FY25 as well, with a similar estimated YoY growth aided by rising demand for both leisure and business travel and improving airport infrastructure, ICRA states. “The industry has witnessed improved pricing power, as reflected in increase in yields and thus the spread between revenue per available seat kilometre-cost per available seat kilometre (RASK-CASK) for the airlines. The same is expected to remain favourable, aided by a decline in aviation turbine fuel (ATF) prices and relatively stable foreign exchange rates,” explained Suprio Banerjee, Vice President and Sector Head – Corporate Ratings, ICRA. The industry is thus estimated to report a significantly lower net loss of ~Rs 3,000-Rs 4,000 crore in FY24 and FY25 compared to ~Rs 17,000-17,500 crore in FY23, Banerjee added. Common Challenges Whether it’s a full-service/budget carrier or a fleet of smaller aircraft by the regional operators, the ATF prices and the rupee-dollar moveIN DEPTH CIVIL AVIATION
06 April 2024 | BW BUSINESSWORLD | 39 hedge to the extent of earnings from their international operations, overall, they have net payables in foreign currency. At present, the Indian aviation industry has a total order book of nearly 1,700 aircraft, which is more than double the size of the current fleet. The deliveries, however, are likely to be gradual, spanning over the next decade, and will also be impacted by the current supply chain challenges encountered by engine and aircraft original equipment manufacturers (OEMs). “More recently, the Indian aviation industry has been affected by engine failures and supply chain challenges. This has resulted in grounding of aircraft by select airlines, thus impacting overall industry capacity (as measured by available seat kilometer or ASKM), with nearly 20-22 per cent of the total industry fleet grounded as on September 30, 2023,” said Banerjee. However, healthy yields, high passenger load factor, and partial compensation available from engine OEMs would help absorb the impact to an extent, according to Banerjee. And that is a big positive for the growth of aviation in India. And this may be the reason why more regional operators are seeing business potential in connecting the smaller towns in the next 60 months as opposed to starting a full-service operation. In the last few years, established airlines like Jet Airways and Go First have been grounded, while SpiceJet has been facing challenges and finding it hard to keep up with its financial commitments to lessors and creditors. Seen against this backdrop, the rise of new regional airlines comes as boon. [email protected] ment have a major bearing on an airline’s cost structure. The average ATF price stood at Rs 103,547/KL in the 11 months of FY24, declining 15 per cent YoY compared to Rs 120,978/ KL in FY23. However, this was 60 per cent higher compared to an average of Rs 64,715/KL during FY20. As is well known, fuel accounts for ~30- 40 per cent of an airline’s expenses, while ~35-50 per cent of an airline’s operating expenses – including aircraft lease payments, fuel expenses, and a significant portion of aircraft and engine maintenance expenses – are denominated in dollar terms. Furthermore, some airlines have foreign currency debt. While domestic airlines also have a partial natural JETTWINGS AIRWAYS n Based in Guwahati n Awarded 12 sectors under UDAN RCS n To acquire/operate 42 aircraft in 5 years n Aims to go international too n To connect NE to UP, WB & Bihar n Targets religious destinations SANJAY ADITYA SINGH,CEO & MD, Jettwings Airways “Jettwings Airways aims to enhance regional connectivity, promote economic development, and enrich the travel experience for passengers”
40 | BW BUSINESSWORLD | 06 April 2024 Smart meters with their two-way communication feature are key to addressing the country’s myriad energy-related challenges while paving the way for a sustainable and resilient energy future By Ashish Sinha SMART MEASURE A CRITICAL component of India’s power sector reforms, smart meters are expected to contribute significantly to improving the billing and collection efficiencies of distribution companies (discoms). What’s more, these meters can have multi-uses as a single point entry into the consumer’s home as these can connect, read and transmit data related to electricity, gas and water, all via a single hub. For now, however, the government is speeding up the installation of 250 million smart meters across the country. As of now, about 8.5 million smart meters are in service. Under the Revamped Distribution Sector Scheme (RDSS), smart meters are being deployed through the public-private partnership on a total expenditure basis. The national aggregate technical and commercial (AT&C) losses of dicoms stood at 23 per cent as of FY 2021-22 but the actual losses, including agricultural losses, would lie between 30-35 per cent, experts say. In such a scenario, the government had no option but to come up with the Smart Meter National Programme (SMNP), since smart meters provided an excellent solution for increasing efficiencies. The results are for everyone to see. In FY23, the AT&C losses of distribution companies decreased to 15.4 per cent from over 17 per cent in FY22, the power ministry highlighted in its year-end review, attributing it to the various measures taken under RDSS, which aims to reduce the AT&C losses across the country to 12-14 per cent by FY25, a senior government official said. The RDSS comes with an outlay of Rs 3 lakh crore over a five-year period ending in FY26. The government-owned Power Finance Corporation has approved projects worth over IN DEPTH ENERGY
06 April 2024 | BW BUSINESSWORLD | 41 BY BALANCING ENERGY SUPPLY AND DEMAND MORE EFFICIENTLY, SMART METERS HELP UTILITIES IMPROVE GRID STABILITY, AND REDUCE THE RISK OF BLACKOUTS Rs 1 lakh crore for various state discoms under RDSS as of September 2023. “Under RDSS’ prepaid smart metering intervention, over 197 million prepaid smart meters, 5 million distribution transformer meters, and around 2 lakh feeder meters worth over Rs 1.3 lakh crore have been approved,” the power ministry official said. What’s a Smart Meter? Smart meters provide real-time data be it for the consumption of electricity, gas, or water. They capture, record and transmit this data wirelessly to the utility company. This information empowers users to make informed decisions about energy usage, identify areas for efficiency improvements, and ultimately reduce energy costs. Smart meters enable remote meter reading, eliminating the need for manual meter readings. This not only reduces operational costs for utility companies but also ensures accurate and timely billing for consumers. By automating the meter reading process, smart meters streamline billing operations and improve customer satisfaction. Smart meters also facilitate demand response by providing utilities with insights into peak demand and fluctuations in energy consumption. This
42 | BW BUSINESSWORLD | 06 April 2024 enables utilities to implement load management strategies, such as timeof-use pricing or incentives for shifting energy usage to off-peak hours. By balancing energy supply and demand more efficiently, smart meters help utilities improve grid stability, reduce the risk of blackouts, and optimise resource allocation. The Rollout Leading the way is IntelliSmart Infrastructure, a joint venture of the National Infrastructure Investment Fund (NIIF) and Energy Efficiency Services (EESL). Intellismart is currently installing smart meters for approximately 20 million households. The smart metering rollout portfolio, with a value of Rs 20,000 crore ($2.4 billion), has been boosted by awards in four states, including a project each in Uttar Pradesh, Assam and Bihar and two in Gujarat. The Uttar Pradesh project is the largest so far for a national smart meter rollout and should see the installation of 6.7 million smart meters in 14 districts under the jurisdiction of the Pashchimanchal Vidyut Vitran Nigam (PVVNL), a distribution company. In Assam, Intellismart is to install 1.5 million smart meters for the Assam Power Distribution Company. In Bihar, IN DEPTH ‘SMART METERS ROLLOUT SHOULD INCLUDE EVERY HOUSEHOLD’ ANIL RAWAL, MD & CEO, IntelliSmart Infrastructure, is an ex-civil services officer of 1996 batch with over 25 years of leadership experience. He talks to ASHISH SINHA about the nuances of the smart metering initiative. Excerpts IntelliSmart has won a project to install 3.6 million smart meters for South Bihar Power Distribution Company. In Gujarat, IntelliSmart has secured the letter of award for implementation of end-to-end smart metering solutions from Madhya Gujarat Vij Company (MGVCL) and Dakshin Gujarat Vij Company (DGVCL) for a total of 5.1 million prepaid smart meters. An immediate objective of the RDSS smart meter programme is to achieve accurate load profiling and energy audit to improve discoms’ operational and financial efficiency. Talking to BW Businessworld, Anil Rawal, MD & ENERGY