INSIDE: ZEPTO JOINS INDIA’S UNICORN CLUB +INDIA’S TOP EMERGING BUSINESSES www.businessworld.in RNI NO. 39847/81 I 09 SEPTEMBER 2023 Rs 150 INDIA’S PSU GOLD RUSH The story behind PM Modi’s cryptic clue to invest in PSU stocks and how India’s lithium discovery presents the next multi-bagger opportunity
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4 | BW BUSINESSWORLD | 09 September 2023 ‘I reached my destination and you too!’: Chandrayaan-3 —update on the ISRO website on 23 August ON 23 AUGUST the Made-in-India Rover Chandrayaan -3 soft landed on the moon, propelled into space from an Indian launch pad at Sriharikota. The moon mission as the world knows now, was accomplished by Indian scientists and spearheaded by the Indian Space Research Organisation (ISRO), a government-funded entity. The ISRO is not the only government-owned agency that is in step with global compatriots, many Maharatnas are too. Maharatnas like the Oil and Natural Gas Corporation, the Steel Authority of India Limited and Indian Oil Corporation are public sector behemoths with major market shares in their respective domains and most now have footprints overseas. They do India proud. So, Prime Minister Narendra Modi’s retort in Parliament on Congress leader Rahul Gandhi’s remarks about the health of Hindustan Aeronautics Limited was more than a jibe. Many market experts second the Prime Minister’s advice that it is, indeed, worth betting on the PSUs. The gigantic public sector enterprises (PSEs), who own most of the country’s natural resources and minerals and generate employment for several lakh Indians, are our cover feature in this issue. As stock market expert S. P Tulsian points out in his column, the grand PSE turnaround story, particularly of public sector banks and the ordnance factories, has attracted the attention of not just stock investors at home, but also foreign portfolio investors (FPIs). Read about India’s promising stateowned enterprises in this issue. The India growth story, though, is being scripted at many levels and is as much the outcome of the endeavour and enterprise of policymakers and PSEs as private enterprise, both big and small, legacy companies and startups. In keeping with BW Businessworld’s tradition of shining the spotlight on the best and most innovative ventures of the day, we bring to you a snapshot of the most laudable companies and entrepreneurs among micro, small and medium enterprises (MSMEs), now acknowledged as the backbone of the economy. The fifth edition of BW Businessworld’ s Emerging Business Summit & Awards celebrated the winners in the MSME space. Read about these bold and enterprising business leaders and companies. Of course, we also bring to you all our regular columns and features. Happy reading! ANNURAG BATRA [email protected] WHEN THE SKY IS THE LIMIT EDITOR-IN-CHIEF’S NOTE
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8 | B W BUSINESSWORLD | 09 September 2023 MAILBOX YOUR COMMENTS TALK BACK Rs 150 Priyanka Salot Anupama Katkar Radha Basu Anshu Parmar Lalitha Palle Priya Prakash Priyanka Rathore Tanisha Fagwani Santhoshi Sushma Buddhiraju Vani Khosla Gunjan Taneja Smita Tiwari Pallavi Utagi Hinshara Habeeb Nikita Prasad Anubha Dixit Smiti Bhatt Deorah Ritika Smita Agnishwar Roy Shivani Malik Aakriti Rawal India’s leading women entrepreneurs who are reshaping the business landscape INDUSTRIOUS LEADERS Women Entrepreneurs www.businessworld.in SUBSCRIBER’S COPY NOT FOR RESALE I RNI NO. 39847/81 I 26 AUGUST 2023 EMERGING BACKBONE OF ECONOMY This refers to the editorial (“ National Policy On Stainless Steel Must Adress Raw Material Concerns”, BW, August 26). The stainless steel industry, despite its high value and low manufacturing volume, presents unique challenges that require a dedicated national policy. Crafting such a policy, however, is a complex task as it must strike a delicate balance to avoid any bias towards favouring certain products. The National Stainless Steel policy must address critical concerns, including ensuring a consistent supply of raw materials, promoting domestic production of ferro alloys, and eliminating customs duties on raw materials not available in India. The industry also grapples with the significant hurdle of high logistics costs, which account for 13 per cent of the GDP. In addition, there’s potential for growth through enhanced R&D and stronger academia-industry partnerships. These initiatives can foster innovation and facilitate skill transfer, benefiting both major players and MSMEs in the stainless steel sector. ANANYA RATHORE, EMAIL E-INVOICING FOR MSMEs This refers to the editorial (“ The Small And The Vulnerable ”, BW, August 26). GST collections nationwide have been remarkably successful. In an effort to further enhance this, the government has mandated e-invoicing for GST payments, extending its reach even to smaller players. Approximately 30 per cent of MSMEs with annual turnovers ranging from Rs 5 crore to Rs 10 crore have come under its purview. Undoubtedly, this move is a positive step for tracking GST transactions. However, SMEs have faced challenges in swiftly adopting this technology, leading to an increased compliance burden for them. Nevertheless, the government has acknowledged this issue and plans to implement e-invoicing in phases, allowing less technologically advanced SMEs to adapt gradually. This initiative holds the potential to address one of the most pressing problems in the sector: delayed and pending payments. As the article highlights, a staggering Rs 10.7 lakh crore is currently tied up in delayed payments from buyers to MSME suppliers. VIKRAM KUMAR, EMAIL 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
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10 | BW BUSINESSWORLD | 09 September 2023 INDIA’S PSU GOLD RUSH CONTENTS 12 Jottings The monsoons and those rural consumers; Apple’s fall spectacle; The future of mobility; Progress & pollution, and much more 14 Columns Minhaz Merchant (p. 14);Vikas Singh (p. 16);Srinath Sridharan (p. 18); Amit Tiwari (p. 20);Krishan Kalra (p. 22);Kiran Karnik (p. 24); Amit Kapoor, Vanschica Kant & Meenakshi Ajith (p. 26); Devendra Chawla (p. 28) 30 Housing Solutions A deep-dive into what the state governments, local authorities and financial institutions can and should do to give the middle-class their dream homes and the confidence to invest in future projects 34 In Conversation Rajan N. Bandelkar, President, NAREDCO and Founder & MD, Raunak Group on the positive changes in the real estate landscape, the increasing investment opportunity and much more 36 Always Grocery-first Zepto founders on how they have successfully cracked the delivery of groceries, fresh produce and other everyday essentials in the on-demand commerce space and how they will always stick with it 38 In Conversation Kaspersky Founder and CEO Eugene Kaspersky on the company’s changing business strategies, his views on the Indian market compared to China and the US, and more 40 Targetting Adani How the Adani Group led by Gautam Adani appears to have become a soft target for Modi baiters, with investigators warning of another Hindenburg-like attack on the group by an entity linked to notorious short-seller George Soros VOLUME 42, ISSUE 23 09 SEPTEMBER 2023 Cover design by SHIV KUMAR All Eyes On PSU Stocks How certain categories of PSU stocks have caught the attention of stock market investors and PM Modi alike. What’s fuelling the frenzy? 44
09 September 2023 | B W 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 104 EBA WINNERS: COMPANIES 58 Aye Finance 59 Imperative Business Ventures 60 Search Ends 61 Jeena Criticare Logistics 62 CSM Technologies 64 Multi Décor India 65 New Street Tech 66 Elanpro 67 Chandra Fabrics 68 Ostrich Mobility Instruments 69 Sakhi Utpadan Samiti 70 Quiklyz 72 Prismatic Softwares INDIVIDUALS 73 Aakanksha Bhargava, CEO, PM Relocations 74 Divij Bajaj, Founder & CEO, Power Gummies 75 Shubhika Jain, CEO & Founder, RAS Luxury Skincare 82 Barriers Galore Women enterprisers have taken giant strides, yet they lead only 20 per cent of the MSMEs in India. A look at the hurdles that still hold back women in business 84 EBA 2023 in Photos Snapshots from the 5th edition of BW Businessworld’s Emerging Businesses Summit & Awards that brought together industry experts, entrepreneurs, investors, and emerging firms to discuss and accelerate the growth of Indian MSMEs 92 BW Event A photo perspective on the inaugural edition of the BW Flex Spaces Conclave and Awards, which provides a platform for industry professionals, thought leaders, and experts to convene and delve into the realm of third party operated spaces 98 Generative AI & Fashion Generative AI is making inroads into practically anything everything. Leading fashion designers debate its pros and cons for their industry 102 Last Word Ashu Shinghal, Managing Director, Mahanagar Gas on the city gas distribution major’s preparedness for meeting the demand for natural gas in future and much more K.V. Shridhar Prashanth Kaddi Pearl Uppal Raghavendra Rathore Abraham & Thakore 76 Mayurakshi Das, Founder & CEO, Elixir AI 77 Anita Tejwani, CEO, TheySway 78 Kishore Indukuri, Managing Director, Sid’s Farm 79 Imbesat Ahmed, CEO & Co-founder, Filo 80 Sudhanshu Agarwal, Director & Promoter, Citykart group 81 Taniya Biswas & Sujata Biswas, Co-founders, Suta
12 | BW BUSINESSWORLD | 09 September 2023 JOTTINGS APPLE’S UPCOMING fall event, scheduled for 12 September, has tech enthusiasts buzzing with anticipation about a new line-up of iPhones and smartwatches. The event should prove a pivotal moment for the tech giant as it navigates a challenging global smartphone market.Amid a rare 2.4 per cent decline in iPhone sales during the third quarter of the ongoing fiscal, Apple’s move to introduce fresh features is a strategic response to reignite demand. The latest iPhone is expected to have a periscope camera with enhanced zoom capabilities, which demonstrates the company’s commitment to push the boundaries of smartphone photography. This innovation could not only attract photography enthusiasts but also cater to the rising demand for sophisticated camera capabilities in a mobile device. Meanwhile, talk of an upgraded processor for the Apple Watch line hints at Apple’s dedication to refining its wearables. The integration of the A15 Bionic chip could Fall Spectacle MONSOONS AND RURAL CONSUMERS T HE ONGOING PROGRESS of the southwest monsoon exhibits both spatial and t e m p o r a l d i s p a r i t i e s , intensifying risks to agricultural output this year. Concentrated bouts of heavy rainfall in north-western India have damaged vegetable, fruit and other standing crops, while deficient rainfall in the south and east pose potential yield challenges. The sowing of certain crops, particularly pulses, continues to be slow, accompanied by significant reservoir deficits in the eastern and southern regions. While the recent surge in vegetable prices is expected to be temporary, prices of staples like wheat, rice, and coarse cereals are likely to stay elevated in the days rural demand. Already the performance of fast moving consumer goods (FMCG) companies suggest a fragile rural demand. So, while a resurgence in consumption is likely during the festive season, it could get handicapped by the repercussions of the uneven monsoon. But there is hope in the robust capital expenditure and more moderate core inflation in the second quarter of FY2024, which could give rural demand that much needed fillip. —Ashish Sinha ahead. The government’s initiatives to mitigate supply side glitches, though, should contain mounting inflationary pressures in the months ahead. T h e s t a t e s o f M a h a r a s h t r a , Jharkhand, Karnataka, Odisha, West Bengal, and Tamil Nadu arethe most susceptible to erratic monsoons, jointly constituting a substantial portion of ‘Gross Value Added’ by agriculture. By inference, the double whammy of heightened food inflation and a considerably whittled income from crop losses are likely to choke off potentially unlock new levels of performance, heralding exciting possibilities for the device’s functionality and efficiency.Whether the anticipated features will indeed make a significant impact remains to be seen, but one thing is clear: Apple is keen to assert its dominance by offering products that capture the imagination of its loyal customer base and entice new adopters. — Rohit Chintapalli Photograph by Indiapicturebudget Photograph by Bloodua
09 September 2023 | B W BUSINESSWORLD | 13 THE AUTOMOTIVE industry is shifting gears and quickly moving towards sustainability. Governments around the globe are already enacting regulations for a mobility eco-system that is green, s u s t a i n a b l e a n d m o r e efficient, to reduce carbon emissions and achieve the long-term goal of Net Zero by 2070. The e-mobility innovations are underway but what will the future of the automobile industry look like? The automobile i ndustr y is the largest consumer of fossil fuels and around 1.4 billion vehicles are on road, worldwide. So, the solution cannot come from just one innovation, but many. Already many automotive OEMs are encouraging Alternative Fuel Vehicles to achieve the sustainability goals. Recently, Toyota Kirloskar Motor unveiled a prototype of INDIA, LIKE THE REST of South Asia, stands at the crossroads between progress and the price it entails, namely economic development and the heightened pollution levels it brings in its wake. A new study claims that air pollution will compromise the mortality of an average Indian by more than five years. In metropolises like the national capital territory of Delhi, the average life expectancy of a resident could get reduced by up to 12 years. The latest Air Quality Life Index report by the University of Chicago’s Energy Policy Institute (E P IC ) highlights the g r o w i n g b u r d e n o f hazardous air on health as air pollution in South Asia increases at the cost of rapid industrialisation and population growth. The South Asian region the world’s first BS-6 Stage-II electrified flex fuel vehicle, based on the Toyota Innova Hycross. This prototype has both the flex fuel engine as well as an electric powertrain, thereby offering higher use of ethanol combined with better fuel efficiencies. The next steps for the prototype include finer calibration, homologation, and certification. In the recent past, the ethanol mix (in petrol) in India has gone up from 1.53 per cent in 2013-14 to 11.5 per cent in March 2023, which has helped reduce the oil import bill by Rs 41,500 crores over the last eight years. With the impending implementation of E20 (20 per cent ethanol blending in petrol) by April 2025, India is expected to save Rs 35,000 crores annually in its oil import bill and reduce GHG emissions by 21 million metric tonnes. But the technological innovations do not end here. This is just the beginning. — Utkarsh Agarwal The Future of Mobility Progress & Pollution which encompasses India, Bangladesh, Nepal and Pakistan, accounts for more than half the total life years lost globally to pollution. In 2022, the World Health Organization announced that India’s average life expectancy had improved to 70 years from the earlier estimates of around 65 years. With air pollution getting worse every year, will the health of an average Indian get compromised? While India is responsible for about 59 per cent of the w o r l d ’ s i n c r e a s e i n pollution since 2013, China has worked to reduce pollution by 42.3 per cent between 2013 and 2021, the EPIC report says. R e d u c i n g g l o b a l levels of lung-damaging airborne particles, known as PM 2.5, to WHOr e c o m m e n d e d l e ve l s could raise average life expectancy by 2.3 years, or a combined 17.8 billion life years. —Shivam Tyagi Photograph by KKulikov Photograph by Utkarsh Agarwal
14 | B W BUSINESSWORLD | 09 September 2023 AN INDIA’S ECONOMY grow at an average annual rate of eight per cent? Most global financial institutions forecast India’s longterm GDP growth at between 6.5 and 6.8 per cent. They could be mistaken. Several factors are beginning to coalesce which indicate an eight per cent annual growth rate is within reach, given the right policies and absence of new Black Swan events. Consider three key factors that can accelerate India’s economic output over the next decade. The first asset, of course, is demography. But India has to avoid the oft-cited trap of allowing its demographic dividend to dissipate into what cynics call a demographic disaster. A young workforce obviously does not guarantee higher economic output unless it has requisite skills. A significant number of Indian graduates are unemployable. Even amongst engineers, quality varies. The government recognises the problem and has made skill development a core agenda. The National Skill Development Mission (NSDM), which works under the Ministry of Skill Development and Entrepreneurship, has a clear mission statement: “To rapidly scale up skill development efforts in India, by creating an end-to-end, outcome-focused implementation framework, which aligns demands of the employers for a well-trained skilled workforce with aspirations of Indian citizens for sustainable livelihoods.” The NSDM concedes: “India currently faces a severe shortage of well-trained, skilled workers. It is estimated that only 2.3 per cent of the workforce in India has undergone formal skill training as compared to 68 per cent in the UK, 75 per cent in Germany, 52 per cent in the US, 80 per cent in Japan and 96 per cent in South Korea. Large sections of the educated workforce have little or no job skills, making them largely unemployable. Therefore, India must focus on scaling up skill training efforts to meet the demands of employers and drive economic growth.” While ensuring that India’s demographic advantage is not frittered away, the secThe Consumption Conundrum C 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 Photograph by Elena Kalinicheva
09 September 2023 | B W BUSINESSWORLD | 15 ture: 14 per cent), an average annual growth rate of five per cent across the two sectors could contribute another 2 per cent (five per cent of 40 per cent) to the GDP growth baseline of six per cent. The total: eight per cent. The third factor that could turbocharge economic growth over the next few years is massive investment in infrastructure. Both government and private investment is set to surge in renewable power, green hydrogen, highways, metros, airports, seaports and housing. Additionally, the establishment of a chipmaking ecosystem, ranging from fabrication units (fabs) to assembly and design centres, will have a spin-off effect on ancillary industries. Investment in electronics manufacturing, automotive, artificial intelligence, space technology and data centres is reaching critical mass. What are the likely impediments? Jobless growth is a concern. Skill development takes time to acquire momentum. Meanwhile, millions of poorly trained graduates flood the jobs market. Many have to be satisfied with lowskill and low-paid jobs in the gig industry, from logistics to retail sales. A key component of economic growth is consumption. This is beginning to have a significant impact. India’s consuming class can be broken up into three categories. According to the 2023 Indus Valley research report from Blume Ventures, the top slice of India’s consuming class comprises around 120 million people with an average per capita income of $12,000 (Rs 10 lakh a year). This, broadly speaking, is the upper middle class with a smaller sub-set of 25 million Indians with, according to Blume Ventures, an average per capita income of $35,000 (Rs 29 lakh a year) – the wealthy. The second slice comprises another 100 million Indians with an average per capita income of $3,000 (Rs 2.5 lakh a year). This is the middle class. The third slice is the real India, consisting of 1.20 billion people with an average per capita income of $1,500 (Rs 1.20 lakh). The Blume Ventures report takes per capita income at market dollar-rupee exchange rates. It needs to be corrected for purchasing power parity (PPP) for a more accurate picture of spending power. A consumer in the slice of 120 million upper middle class Indians with a per capita income of Rs 10 lakh a year can buy far more in India than a consumer with a similar income ($12,000) can buy in the United States. The PPP per capita income multiple for India, according to the International Monetary Fund (IMF), is 2.8. When that multiple is applied, the consumption power of the top two slices in Blume Venture’s research report, comprising 220 million Indians, becomes apparent. More pertinently, the third slice of 1.20 billion low-income Indians out of a total population of 1.42 billion, reflects the country’s vast untapped potential as they move into the middle bracket. When they do, and consumption soars along with other economic indicators, even eight per cent annual GDP growth rate will begin to appear modest. ond factor that will drive India’s annual growth rate to eight per cent is a booming services sector. Services contribute 60 per cent to India’s economic output. Industry and manufacturing account for 26 per cent and agriculture for 14 per cent. Services are growing at well over 10 per cent a year. Since the services sector accounts for 60 per cent of India’s GDP, it forms a strong base for annual growth of six per cent (10 per cent of 60 per cent) even if growth in industry or agriculture falters. Agriculture has been growing at an average rate of four per cent a year and industry and manufacturing at around 5.5 per cent. Taking into account their proportionate weightages in India’s GDP pie, their median annual average growth rate is around five per cent. Since industry and agriculture together contribute 40 per cent to economic output (industry: 26 per cent; agriculServices are growing at well over 10 per cent a year. Since the services sector accounts for 60 per cent of India’s GDP, it forms a strong base for annual growth of six per cent (10 per cent of 60 per cent) Photograph by Reenya
16 | B W BUSINESSWORLD | 09 September 2023 I NDIA’S RAPID urbanisation presents a golden opportunity. Equally a monumental challenge. Urbanisation is a necessity, an irreversible process, a trigger to economic transformation. It catalyses social mobility. In developing economies, cities are growth fulcrums. Well planned, well governed sustainable cities are the key to societal progress and prosperity. Growth, socioeconomic mobility embedded in urbanisation: Economic and demographic ascendancy of cities is coming under greater scrutiny. A Crux study of 18,000 citizens, and 60 economists, policymakers and city administrators across eight of the largest Indian cities provides a valuable insight, and underscores policy priorities. The impact of urbanisation on the economy and the accompanying challenges should be on the high table. An insight from the study is that cities can generate 85 per cent of net new jobs and contribute to three-fourths of the GDP. They can stimulate a near twofold increase in per capita income during this decade. Urbanisation creates jobs, induces investment, and triggers a conBy Vikas Singh The author is an economist and columnist sumption boom. It spawns “true” discretionary spending. A city is a powerhouse of productivity. It’s a hub for dense and frequent interactions, compelling individuals to engage with one another. It enables interactions and fosters efficiency. Urbanisation facilitates and generates returns through a multiplier effect. It’s a growth engine that catalyses economic development through agglomeration and has spill-over effects. Policymakers must seize the moment, act decisively to create an urban infrastructure capable of supporting equitable access to urban life, employment, education, public amenities, and entertainment. Unfortunately, our track record has been less than promising. Most citizens are denied basic services. The study highlights that if we continue with the current trend of ‘poorly planned, sprawling and unconnected’ pattern of urbanisation, it could impose an estimated cost of up to Rs 2 lakh crores by mid-century. As an example, a 10 per cent increase in a city’s dispersion index could lead to about 0.8 per cent decrease in economic growth. The intangible cost is even more, and manifests as unfulfilled life. Traffic snarls and a polluted environment take a toll on mental wellbeing and deteriorates the quality of life. An insight from the study is that people commuting to work for more than two hours suffer a poor quality of life. It spills over to their social and family circle. They are more likely to be divorced, more likely to be stressed and suffer psychological issues and are less likely to have an engaging social circle. They tend to have poor health and will lead shorter lives. Furthermore, the resource crunch amplifies social inequality. The urban middle class is deprived. The poor live in squalor, with limited access to education and job opportunities, perpetuating a cycle of poverty that is difficult to break. They are ‘DECENTRALISED’ URBANISATION KEY TO GROWTH, SUSTAINABILITY & EQUITY COLUMN Photograph by DmitryRukhlenko
09 September 2023 | B W BUSINESSWORLD | 17 ble governance. Municipalities must broaden their perspective, and move beyond ‘administration’ that overshadows planning. Well-conceptualised, holistically planned cities provide a roadmap for effective governance, thriving and productive ecosystem and a better quality of life. Our cities are governed poorly and planned badly. Planners pay little or no attention to equity. There is scant regard for affordable housing. The ‘essentials’ of city infrastructure like, drainage and sanitation, roads and public transportation, are often ignored. The informal economy is neglected. Liveability indicators suffer. While megacities do contribute significantly to the economy, they often come at the cost of compromising the environment and equity. To promote sustainability and equity, policymakers should emphasise decentralised urbanisation as a more viable approach. Much to do. And holistically: India underperforms on all aspects of urban management. It must make enormous strides. Municipalities need efficient planning and a new governing model. For instance, unlike in most countries, in India city ‘administrators’ are neither empowered not have the requisite authority. Most administrators lack the capacity and have little stake in the municipalities. Decentralisation could be a solution, but the Crux study ends on a cautionary note. It should be carefully planned and more importantly, balanced well. The goal must be to create a thriving re - gional ecosystem. The focus must be to create a collaborative and connective framework where smaller towns can complement the strengths of larger cities without becoming isolated or disconnected. Thus far India has barely acknowledged the challenge in its cities. marginalised and excluded. Underfunded municipalities are at the core of the urban transformation problems. Revenue of all the municipal corporations put together is approximately one per cent of the GDP, and amongst the lowest in the world. India needs to invest over Rs 5 lakh crores to revamp its urban infrastructure. Can India realistically find such enormous sums? It is challenging, but doable. It will require a mind-set change. Municipalities must create a cohesive public-private partnership. The landscape has evolved from government agencies to a complex institutional setup with multiple actors (private, government and civil society) playing a role in service delivery. They must build capacity. Identify a serviceoriented framework and transition to a citizen centricity model. Wellrun cities around the world tap appropriate and sustainable revenue streams. Municipalities must create a fair and transparent mechanism to collect property taxes and user charges that reflect costs. They must monetise land assets This alone can meet 80 per cent of the funding requirements. The rest must come from state and central governments. Cities generate almost 75 per cent of the taxes. They deserve a stake in their growth. Additionally, financial empowerment will alleviate the service offering. The Crux study recommends that the government share a fifth of the GST revenues with them. Most cities are complex conundrums : State governments have an even bigger role to play. Metropolitan areas in India are marked by administrative polycentricity, with a diverse set of central, state, and municipal agencies ‘shaping’ policies and implementation. These functions often overlap, leading to uncoordinated development, lack of accountability and transparency. Local governments (ULBs) are often bypassed, rarely empowered, further hindering the translation of the urban development agenda into action. This translates into poor planning, inefficient revenue collection, appalling service delivery and, above all, execraAn insight from the study is that cities can generate 85 per cent of net new jobs and contribute to threefourths of the GDP. They can stimulate a near twofold increase in per capita income during this decade. Photograph by Umesh Gogna / CANVA Photograph by Sidrahsana / CANVA
18 | B W BUSINESSWORLD | 09 September 2023 HE 1990S WITNESSED a remarkable turning point for India’s economy, as the country emerged as a global leader in ITenabled services (ITES). Bengaluru and Gurgaon, cities that epitomise India’s IT prowess today, gained international prominence during this period. However, India’s journey towards becoming an IT product nation encountered hurdles, relegating it to a reputation primarily focused on USD-INR arbitrage work and being a market for the infamous phrase – ‘body-shopping’. Yet, the real story lies in the underlying challenges and subsequent transformation that India underwent. In the 1990s, India grappled with economic weaknesses and lack of political heft on the global stage. Its civic infrastructure lagged far behind its present state, although there is still vast room for improvement. Today, India boasts a world-class digital ecosystem, a feat we hope to replicate in civic infrastructure. The nation was undergoing economic reforms aimed at liberalising its economy and integrating it with the global market. This era witnessed a shift from a predominantly state-controlled economy to one embracing market-oriented policies. While these reforms paved the way for a thriving IT-enabled services sector, they failed to adequately address the requirements for IT product development. The struggles faced by early founders of current IT giants, including the daunting task of importing cutting-edge computing devices, have been widely chronicled. India’s economic weaknesses during this period played a pivotal role in hindering its progress in the IT product space. Inadequate infrastructure, limited access to capital, and a shortage of skilled technology talent posed significant challenges for Indian companies. Investing in research and development, innovation, and building a robust product ecosystem proved difficult. Additionally, India’s limited geopolitical influence at the time hindered foreign investment and international collaborations for IT product development. The country’s reputation even raised sarcastic questions from global clients about elephants roaming its roads. Between the 1970s and 1990s, India witnessed a substantial brain drain as talented professionals sought better opportunities abroad. The country’s restrictive licensing policies restricted the ability of professionals to innovate, and limited capital hampered progress. Professionals across sectors migrated from India, compounding the challenges faced by the IT industry. The loss of talent, combined with a limited pool of skilled workers, made it challenging for Indian companies to compete in IT product development. The perception of limited domestic growth opportunities for professionals, particularly in the technology sector, played a significant role in the talent drain during the 1990s. Many Indian professionals sought work environments that fostered innovation and provided platforms for cutting-edge ideas, drawing them to product companies and startups abroad. These individuals yearned for an ecosystem that encouraged creativity, offered higher salaries, better work-life balance, and access to advanced technologies. Impact on India’s Aspirations: The brain drain of Indian talent, particularly in technology, sigT Can India Become a Tech Product Nation? (A)muse & Musings By Srinath Sridharan
09 September 2023 | B W BUSINESSWORLD | 19 technologies like AI, ML, and blockchain to build innovative products and services tailored to various sectors. Government support and initiatives like Startup India provide mentorship, funding, and access to a vibrant network of investors, incubators, and accelerators. Recognising the importance of retaining talent and addressing citizens’ concerns, India has made substantial efforts to improve its domestic ecosystem, foster entrepreneurship, and provide better career opportunities. A changing perception of India as a hub for technology and innovation has led to a reverse brain drain, with talented individuals returning to contribute to the country’s growth. The rise of digital platforms, ecommerce, and digital payments has opened new avenues for businesses, resulting in a thriving digital economy. Indian startups have recognised the potential of catering to global clients, taking advantage of technological advancements and reduced entry barriers in global markets. The mindset shift among Indian entrepreneurs to actively seek international customers has enabled startups to tap into a vast customer base and expand their reach globally. Skilled talent, cost-effectiveness, and a culture of innovation have become significant advantages for Indian startups, making India a preferred destination for outsourcing and product development partnerships. India has transformed into a digitally-led tech product nation, featuring a thriving startup ecosystem, innovative solutions, and an influential presence on the global stage. Of course, there is much more to be done, and product supremacy is yet to be achieved, unlike what primarily the American tech majors have. While there is still progress to be made, India’s journey from an IT back office hub to a hub of technological innovation and entrepreneurship is a testament to its resilience, determination, and the transformative power of digital advancements. This transformation embodies the collective efforts, sacrifices, and hardships borne by countless families who participated in this remarkable journey. This is the New India – emerging as a global force in technology and embracing a future of endless possibilities. The writer is an author, policy researcher and corporate advisor India has transformed into a digitally-led tech product nation, featuring a thriving startup ecosystem, innovative solutions, and an influential presence on the global stage. Of course, there is much more to be done nificantly hindered India’s aspirations to become an IT product nation. The exodus of skilled individuals deprived the country of their expertise and innovative ideas. This drain not only weakened the domestic ecosystem for product development but also limited knowledge transfer and technological advancements. The consequences extended beyond economic terms, impacting India’s intellectual capital and potential for technological progress. India’s cultural context also played a role in inhibiting the development of IT products. The prevailing mindset emphasising employment as stability and risk aversion discouraged entrepreneurial ventures and experimental approaches. This cultural inclination hindered the creation of a vibrant startup ecosystem necessary for fostering innovation and product development. Over the past decade, the landscape has transformed significantly with the advent of the Digital India ecosystem and the rise of a new generation of entrepreneurs. The government’s Digital India initiative has played a pivotal role in fostering technological innovation, entrepreneurship, and startup growth. The digital revolution brought about by Digital India has fostered connectivity and bridged the digital divide across the country. Affordable smartphones, high-speed internet access, and digital infrastructure have empowered Indian youth with unprecedented opportunities. This paradigm shift has fueled entrepreneurial ambitions, enabling young individuals to harness their potential and create successful ventures. India’s startup ecosystem has witnessed remarkable growth, attracting investments and attention from both domestic and international players. Young entrepreneurs leverage cutting-edge Photograph by Bivash Banerjee
20 | B W BUSINESSWORLD | 09 September 2023 MARKETING AND ADVERTISING AmitScope ITH THE introduction of Machine Data and Social Data, an ongoing supply of data at an incredible pace has become a reality, indicating that the data pool is constantly expanding. This necessitates quicker data capture, storage, analysis, and insight generation, which is the essence of Big Velocity in Big Data. According to a new report from the Chief Marketing Officer Council and GfK, modern marketers require high-velocity data marketing to detect abrupt, disruptive shifts in customer and market behaviour. These data systems must be agile and adaptable, with the capacity to acquire real-time, relevant data signals and to bridge the divide between data, insights, and action. AUTOMATION ADVANTAGE Marketers should encourage automation as a means to help manage the Velocity of Big Data, as they will be able to quickly achieve several benefits: l Integrated Response Management – Already feasible with existing data, this capability is extendable to all channels, allowing for the opportunity to respond to current activity/sentiment/opinion and thus presenting context-based messages. l Enhanced Personalisation – Velocity enables you to know your customer in the moment. This allows for real-time personalisation via desktop, mobile, and local devices, as W well as across ad networks (including Real Time purchasing and programmatic ad purchasing). Improved customer relevance, engagement, and conversations are also empowered. l Actionable Evaluation – With the addition of large-scale data collection techniques, the outcomes of measurement will also accelerate. This will allow marketing activities to reflect current performance while also ensuring that the budget (time, resources, and money) is appropriately allocated. IMPROVED AUDIENCE TARGETING The delivery of real-time data enables targeting or, alternatively, non-targeting based on current knowledge. Therefore, when a customer has completed product reviews, posed questions on social networks, and generally demonstrated positive, inquisitive behaviour, you can target this customer with the most relevant marketing activity. Alternately, a customer who has complained and generated negative sentiment on social networking sites requires a distinct form of communication activity. Understanding current behaviour across multiple channels also enables marketers to respond to their specific activity rather than using a one-size-fits-all approach, by providing the appropriate level of information and recognising that clients may want different things across their consumer journey. IN CX, SPEED MATTERS Despite record-high consumer expectations for quality CX experiences, many businesses have moved away from the customer-centric approach that drove recent digital enhancements. The 2022 U.S. Customer Experience (CX) Benchmark study by Forrester uncovered declines in customer experience quality across 13 industries and demonstrated that companies have failed in their digital and CX efforts. The majority of companies are mired in the middle of their CX pivot. They are investing in digital and offline capabilities that can meet customer requirements with great experiences and messaging, but they are unable to orchestrate these capabilities to an extent that exceeds those needs. To deliver compelling content swiftly, brands require processes and technology platforms that enable the creation and utilisation of content much more rapidly than they did even a year ago. The focus must be on the velocity of the entire content creation and utilisation process, not just a single component. Also, the prompt delivery of personalised content must support omnichannel initiatives for non-digital brands. Marketers can and should become catalysts for healthier, more compassionate brands that deliver sustainable development by combining imagination and intuition with the science of data at the speed of today’s decisionmaking. The author is Global Head, Marketing Demand Center, TCS Big Data needs Big Velocity; marketers need to adapt faster By Amit Tiwari
22 | B W BUSINESSWORLD | 09 September 2023 R SHIBAL Bhartiya was working as a senior research fellow at Geneva, when she was assigned to a humanitarian mission to a poor community in Egypt. As a doctor, she had learnt about ‘clinical detachment’ but what she saw here – lack of drinking water and the stark difference between high privilege and abject poverty – hit her hard! She had grown up as a sensitive child – despite being a DM’s daughter she was teaching poor children at the age of nine. She did MBBS and MS at a top college in Delhi, followed up by super specialty research work in advanced Glaucoma studies at AIIMS – and had seen sufferings of patients – before going to Switzerland. The visit to Egypt transformed her towards embracing inclusivity and giving. Her perspective shifted from not just doing well but also ‘doing good’. Beginning of a Journey Back in Delhi, as a single mother of a five-year-old son, she came across perfect strangers being kind to her and realised that every small act of kindness and support leads to a ripple effect of positive change. She started with a small food bank for her needy neighbours and also began teaching their children in a park. Her journey of doing good had begun. Around 2012 she moved to the flagship Fortis hospital in Gurgaon and continued spending all her free time on social work in the slums. The years 2015-16 saw the formal registration of ‘Vision Unlimited’ (VU) – a charity dedicated to teaching under- privileged kids around Badshahpur. Schools were set up within the slums closer to their homes so parents could leave their small children there in safe hands while they went out to find work and earn a living. The unfortunate arrival of Covid-19 meant huge gearing up and, with generous help from friends and family, VU ended up supporting 7,000 families during the epidemic. Work at the schools, often housed in an empty structure donated by philanthropists, wasn’t limited to teaching literacy and numeracy – essentially catch-up learning and helping parents with paper work to get the kids into government schools – and a hot nutritive meal. She realised that these children needed help beyond that. This gave birth to the unique concept of ‘after school clubs’. Vision Unlimited Vision Unlimited and its driving force, the indefatigable Shibal Bhartiya – busy head of ophthalmology at Fortis – now run four schools, each with an ‘after school club’ across Badshahpur, with 450 students (900 enrolled since inception). The after-schoolclubs play a crucial role by way of sports, extra-curricular activities, health and hygiene checks, immunisation, micro and macro nutrient supplements and counselling of children and their parents. Free Eye Drops for All The recent spread of conjunctivitis meant soap and eye drops for all. When some of the children left the slum cluster following a fire, VU followed them and set up another centre close to their new homes and persuaded them to remain in the safety net of the system. With the kind of all-round learning experience at the VU centres, these less fortunate children will hopefully do better in life, enjoy good health and also become empathetic like their teachers and the “Doctor Ma’am”. Communal tension is a new challenge but, I am sure, the VU children and their families will help douse this fire too. D Inclusivity By Krishan Kalra Column The visit to Egypt on a goodwill mission transformed her towards embracing inclusivity and giving. Her perspective shifted from not just doing well but also ‘doing good’ The author is Member, National Advisory Board, Sarthak and President, National Abilympic Association of India (NAAI) The Doctor Who Found Her Purpose in Life Doing Good in Egypt
09 September 2023 | B W BUSINESSWORLD | 23 How has the journey been for Nippon Paint India? Seventeen years ago, Nippon Paint India began its domestic operations from Chennai, as a decorative paint business mainly dealing in household paints. Circa 2023, and the multinational paint and paint products manufacturing company has three business units in India. As it strides ahead, the company has begun leveraging India as a base for not just developing a strong domestic business but also expanding the global automotive aftermarket business. There are very few multinationals that have come out of their comfort zone. We have our headquarters in Osaka, and a regional headquarter in Singapore but, as far as the automotive aftermarket business is concerned, we are running it from India. We are expanding it from India by reaching out to global markets, and undertaking acquisitions as we look at organic growth and development. What is the overarching, long-term vision for Nippon Paint India, and what strategic approaches has the company formulated to realise this vision? India is a very critical market for us. We are a strong brand, globally, but less heard of in India because of our IN CONVERSATION “INDIA IS A VERY CRITICAL MARKET FOR US” I n an exclusive interaction, Sharad Malhotra,President and Director, Nippon Paint India & Middle East, talks about how the company has begun leveraging India as a base for not just developing a strong domestic business but also expanding the global automotive aftermarket business By Team BW mestic capabilities. Nippon Paint India’s automotive aftermarket division is a completely India-run operation with an almost fully Indian workforce and management team, indicating our optimism on India’s potential. How does Nippon Paint plan to leverage its global expertise and experience while also creating tailored solutions for the unique needs of its global customers? We did not enter the India market with any preconceived notions on the product front but rather, chose to start with the groundwork and study market requirements from scratch. For instance, when we started with coatings in India, there was a big interest in Italian wood products and we launched a series to cater to this demand, in line with the initiatives exhibited by our competitors. However, we realised very soon that Italian products do not work in India, given the needs of the customers and the climate differences. Therefore, we undertook significant customisation and, as of today, our wood coating portfolio is almost completely indigenous. Whenever we expand to new regions, we embed our R&D and marketing teams there, understand the market requirements, and come back to India develop the product. For products that require faster service or more competitive pricing, we make it on-site, thus operating in a very flexible and grounded manner. What are your expansion plans on a global front? In the last few years, we have expanded our footprint for automotive aftermarket paints to nearly 25 countries. As we strengthen our operations in the UAE, we believe the region will be our launch pad into the entire Middle East market. Today, we are exporting from UAE to Oman and Qatar but, in the next few months, we plan to expand to Bahrain, Kuwait and Saudi Arabia. Within this year, we will also be setting up a subsidiary in Kenya as Africa is our next big market opportunity, while also expanding our footprint in Central and East Europe, Central Asia and East Africa. current focus on South India, in the architectural coatings segment. However, the fact remains that we are very bullish on India – we are here for good and are investing deeply in terms of infrastructure, manpower, and do-
24 | B W BUSINESSWORLD | 09 September 2023 VER THE CENTURIES, humans have cracked many of nature’s secrets, and scientists have discovered ever more laws that explain the working of the world around us. This knowledge now extends outwards, into the vastness of inter-stellar space, and inwards, into the human body and the minute genes that compose it. Much of this has been translated into technology: a variety of products in every conceivable field, and an ability to cure many health afflictions. Life has generally become easier, more comfortable, and healthier. SCIENTIFIC ADVANCES Neuro-scientists have begun to understand the functioning of the brain, and psychologists are fathoming mind and behaviour. Data analysts mine massive data sets to use such knowledge to model and predict an individual’s action (will you buy a shirt today?), or even to instigate it (what stimulus will trigger an impulse purchase?). Advertising – and displays in stores – are intended not only to create brand visibility, recall, or salience, but also to stimulate purchase. Scientific advances and new technologies (including artificial intelligence) promise to take this to new levels of soO phistication, triggering concerns about how this new knowledge may be used to even influence voter behaviour and, hence, election results. Advice your friends to quickly sell their shares in weapons companies: regime changes may no longer need the “awe and shock” of the force of arms; it could now be done more insidiously and unattributably. Worries about the power of the military-industrial complex are already giving way to those about the big-tech complex. THE HUMAN MIND REMAINS AN ENIGMA Yet, despite all the scientific advances, the human mind remains an enigma: unpredictable and illogical. Economic postulates of rational behaviour, or of maximising utility, fall by the wayside in the real world. Biological dictates of self-preservation stand exposed by the millions willing to risk their lives for a cause. Altruism is yet to be scientifically explained. Irrational individual behaviour while amidst a mob is largely inexplicable. Clearly, reducing humans – even human behaviour – to an algorithm is not possible. At least, not yet! Like the “glorious uncertainties” of cricket, humans too are unpredictable. We are given to sudden mood changes, to snap or instinctive decisions, to intuition rather than logic, to saying “yes” when we mean “no”. Machines based on logic inevitably find it difficult to deal with or predict discontinuities: the leaps of faith or of imagination that the human mind sometimes practises. To see a piece of stone and imagine a sculptured statue emerging from it, or “To see a world in a grain of sand/And a heaven in a wild flower” (William Blake), requires an ability that a computer might find difficult to comprehend or emulate. NOT A MAGIC SOLUTION What this means is that machines and AI are not yet a magic solution to all our problems. First, the machine needs smart (intelligent!) humans to define the problem: designing a faster ship to carry people across the seas vs inventing an altogether new device (an aeroplane). Or to feed the appropriate prompts to Chat GPT. Then, it needs imaginative humans to look beyond the purely logic-based solution. Organisations that are gung-ho on replacing employees by machines might take a pause. All in all, humans yet have a role! Human Eccentricities By Kiran Karnik The author 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. His latest book is Decisive Decade: India 2030 Gazelle or Hippo (Rupa, 2021) COLUMN n KIRAN’S KONTRARIAN KORNER n
26 | B W BUSINESSWORLD | 09 September 2023 Job-rich Green Development EBUILDING our economies means rethinking about the future. The ongoing emergencies like climate change and decelerating progress to achieve the sustainable development goals are accelerating the need to shift towards greener economies. These economies are climate-resilient, low carbon and socially inclusive. Moving towards a green economy entails smart and coordinated policy response and the G20 can play a key role in supporting this transition. Employment stands at the intersection of social, economic, and environmental dimensions of sustainable development. It is a launchpad of productive solutions for a greener economy. To be prosperous and inclusive, a green economy must generate decent jobs for all and hence, the focus on green jobs ensures that the linkage between development and equity is strong. In this backdrop, the G20 has been discussing the relevance of just green transitions globally, to create an international enabling environment for all, and green jobs are integral to addressing the “just” aspect of any transition. The concept of Green jobs gained popularity at the Rio+20 Conference on Sustainable Development where countries had to review their development policies in the backdrop of growing environmental challenges. The International Labour Organization, which has been leading Just Transitions programmes defines Green Jobs as work in agricultural, manufacturing, research and development (R&D), administrative, and service activities that contribute substantially to preserving or restoring environmental quality. These jobs contribute towards reducing consumption of energy and raw materials, limiting greenhouse gas emissions, minimising waste and pollution and protecting ecosystems. The idea has already gained much attention in the developed world ARTHSASTRA by Amit Kapoor, Vanshica Kant & Meenakshi Ajith Clockwise : Meenakshi Ajith, Amit Kapoor & Vanshica Kant R and opportunities have opened, especially in the energy sector. It is estimated that green transitions will create 24 million jobs by 2030, far more than the six million that could be lost. How can emerging economies in G20, like India tap into this opportunity? Unlike the developed world, developing economies lack the infrastructure, education and policy thrust to harness and in future to fill this growing need. It is therefore critical to understand that trajectory of green jobs in the global south have and will continue to be unique
09 September 2023 | B W BUSINESSWORLD | 27 from that of the developed world and unless we gauge this diversity in green skills, our policy priorities, and efforts for greening the economy will be insufficiently centred only around the energy sector. How can the G20 under Indian presidency reinvent or rather align the concept of green jobs for developing countries like India to suit regional realities, resources, and experiences? Green jobs in emerging economies like India or Brazil don’t appear the same way as it does in the developed world. They don’t yet have the infrastructure to create opportunities at scale in the higher remunerative sectors such as renewable energy. So, it should begin with green farmers, green fishermen and other ecosystem services. For example, Payment for Ecosystem Services (PES), is a successful model for carbon sequestration in states like Meghalaya. It has empowered the local communities by creating employment and engaging youth by training them in innovative technologies that maximise the efficiency of eco-system services. Regions with rich forest-based economies and ocean-based economies need to go back, re-invent green jobs and marry their line items to high-premium global value chains. The G20 efforts to facilitate a globally just transition and green development should therefore consider scaling up inclusive opportunities and help countries build the necessary policy-space for such transitions. Alongside policy, a simultaneous shift in education is also essential to raise awareness and promote the dissemination of green skills. The current and future generations need to be trained in knowledge, abilities and value to live in and develop a sustainable and resourceefficient society. The transition to a lowcarbon society will inevitably affect a systemic shift towards new services, products and production processes. Beyond hard technical skills, critical green skills for future include design thinking, creativity, adaptability, resilience, and even empathy. In India, traditional communities have a rich-repository of nature-based solutions and ecosystembased approaches. Blending them with green skills can help emerging economies in the G20 harness the benefits of a green transition without falling behind. Ultimately a shift in policy and education would be inscrutable without adequate infrastructural support. As a premier multilateral forum with a mix of both the developed and developing countries, G20 can come together by channelling finance and technology through international cooperation. Without infrastructure, emerging economies cannot create sufficient jobs in sectors which require high-value skills such as in renewable energy. Investments in sectors like transportation, smart-electricity grids are prudent at times like this when the returns on green investment are growing. Beyond monetary benefits, it is also for humanity to survive and prosperously thrive on this planet. Emerging economies of the world today are perhaps the least responsible and yet most affected by the poly-crises. Therefore, even at the most basic level, investments in resilient infrastructure can contribute to environmental preservation and productivity while mitigating the impacts of future disasters. Indian presidency’s agenda this year captured the fierce urgency and need for alternate development models. Alternate models also need alternate and creative thinking as they navigate through uncertain times. Green jobs are critical for inclusive and productive growth. Developing countries should reinvent the concept and harness opportunities offered in these changing times. To support this transition, G20 should come together with the right policies, unlock capital, disseminate green skills and scale up infrastructure for a sustainable future. Green Development as envisioned by India should also be a job-rich development. HOW CAN THE G20 REINVENT GREEN JOBS IN EMERGING ECONOMIES? These jobs contribute towards reducing consumption of energy and raw materials, limiting greenhouse gas emissions, minimising waste and pollution and protecting ecosystems Amit Kapoor is Chair, Institute for Competitiveness and lecturer, USATMC, Stanford University. Meenakshi Ajith is a researcher at the Institute for Competitiveness. Vanshica Kant is a consultant with the Asian Development Bank Photograph by Indiapicturebudget
28 | B W BUSINESSWORLD | 09 September 2023 T HE TRANSPORTATION sector assumes a pivotal role in contributing to global energy-linked greenhouse gas emissions and shoulders a significant share of human-induced emissions in the world economy. According to the Global Greenhouse Gas Emissions Data from the Environment Protection Agency (EPA), this sector alone accounts for a staggering 23 per cent of such emissions and 18 per cent of all man-made emissions. In addition to climate implications, transportation substantially contributes to air pollution, resulting in approximately three million premature fatalities annually. Moreover, the rising cacophony of traffic presents a grave environmental and health hazard. In the face of these challenges, electric vehicles (EVs) emerge as a compelling panacea. Studies indicate that, on average, EVs emit 50-60 per cent less carbon dioxide per kilometre driven compared to their conventional counterparts. This promising data underscores the potential of EVs to drastically CHARTING OUT A COURSE FOR SUSTAINABLE MOBILITY curtail urban carbon emissions and enhance air quality, thereby nurturing a more sustainable trajectory. Toward a Sustainable Future India’s dedication to upholding global environmental commitments remains unwavering. The government reaffirmed this commitment at the COP26 summit in Glasgow, setting audacious targets to combat climate change. The nation aspires to achieve net-zero emissions by 2070 and slash carbon dioxide emissions by a staggering one billion tonnes by the close of the current decade. With these ambitious aims, the shift from internal combustion engines to clean, ecologically friendly transportation is not a distant reverie but a foremost priority for the nation. The Transformative Odyssey India’s expedition toward sustainable transportation is palpable, galvanised by a transformative journey towards eco-friendly mobility. The EV30@30 campaign, for instance, endeavours to ensure that at least 30 per cent of all veGUEST COLUMN THE EV30@30 CAMPAIGN / Devndra Chawla hicle sales in the country are green by 2030, heralding a silent revolution in the mobility landscape. Addressing Hurdles To fully harness the potential of green mobility in the country, specific challenges must be tackled. Expanding the charging infrastructure is of paramount importance in expediting EV adoption. India aims to establish approximately five million public charging points by 2030, a substantial escalation from the present 1,742 charging stations. Moreover, mitigating safety apprehensions and reducing initial costs are pivotal in catalysing widespread EV usage. Merits of Electric Vehicles The advantages of green mobility transcend climate change mitigation and have enduring implications. Realising sustainable mass mobility in India will culminate in a substantial reduction in premature deaths and ailments attributed to air pollution. Additionally, it will address the mounting issue of transportation-induced noise pollu-
09 September 2023 | B W BUSINESSWORLD | 29 Realising sustainable mass mobility in India will culminate in a substantial reduction in premature deaths and ailments attributed to air pollution. Additionally, it will address the mounting issue of transportation-induced noise pollution, contributing to enhanced public health and holistic well-being The author is Managing Director, CEO & Chief Driving Officer, GreenCell Mobility tion, contributing to enhanced public health and holistic well-being. A Holistic Path to Sustainability Achieving a sustainable future mandates a comprehensive approach encompassing technological strides, infrastructure evolution, and supportive policies. Investments in the Advanced Chemistry Cell (ACC) sector and the lithium-ion battery manufacturing ecosystem play a pivotal role in accelerating energy storage technology growth. India’s emphasis on forging a manufacturing ecosystem for green hydrogen further underscores its commitment to exploring diverse and innovative resolutions. Collaboration with global partners and local investment will nurture expertise and a skilled workforce in these burgeoning sectors. Furthermore, instituting a circular economy for battery reuse and recycling will fortify the longterm sustainability of the green mobility framework. Embracing Agility & Adaptability In conclusion, sustainable mass mobility in India assumes paramount significance as the nation fulfils its global obligations and confronts climate change. Green mobility proffers an imperative and indispensable solution. While electric vehicles currently mark a substantial stride toward realising sustainable mass mobility, it is vital to acknowledge that technology and transportation are in constant flux. Enterprises should remain innovative and receptive to emerging advancements that may materialise in the future. The primary emphasis should be on attaining sustainable mobility, with electric vehicles serving as a present means to that end. Through embracing an adaptable and agile approach, we can ensure that our endeavours toward sustainable mass mobility endure effectiveness and responsiveness to shifts in technology and environmental imperatives. Embracing green mobility today will assuredly mould a greener and healthier future for the nation, thereby paving the route to sustainable transportation for posterity. Photograph by Danielala
30 | B W BUSINESSWORLD | 09 September 2023 More than 4 lakh housing units are stuck in stalled projects. How the state governments, local authorities and financial institutions act now will be key to giving the middle-class their dream homes and the confidence to invest in future projects By Ashish Sinha O WNING A HOUSE IN India was always an expensive affair. But nowadays, it is even more costlier to own a home. And this has had a telling effect on the ‘affordable housing’ segment. Apparently, buyers in this segment are increasingly putting off purchase decisions for a host of reasons, leading to languishing sales and developers curtailing supply. As per a recent report by leading property consultants ANAROCK, the share of affordable housing in overall sales in H1 2023 fell to 20 per cent, down 11 percentage points compared to the corresponding period in 2022. Likewise, in the top-7 cities, this segment’s share plunged to 18 per cent, from 23 per cent in H1 2022. The fact that affordable homebuyers have been paying almost 20 per cent more in their EMIs over the last two years has also not helped matters. The floating interest rates for home loans up to Rs 30 lakh have jumped from 6.7 per cent in mid-2021 to nearly 9.15 per cent today. Prashant Thakur, Regional Director & Head – Research, ANAROCK Group, says, “Home loan borrowers who were paying an EMI of Rs 22,700 in July 2021 are now paying around Rs 27,300 today -- an increase of Rs 4,600 per month. This 20 per cent increase in the EMI has resulted in a jump of Rs 11 lakh in the overall interest component -- from around Rs 24.5 lakh interest payable in 2021 to around Rs 35.5 lakh today.” The total interest payable over a 20-year tenure is now more than the principal amount, says Thakur. If a buyer seeks to buy a property worth over Rs 40 lakh, factoring in the LTV (loan to value) ratio, the total borrowed amount is Rs 30 lakh for a tenure of 20 years. In this scenario, the buyer would have paid an EMI of Rs 22,700 in 2021, when the interest rates stood at around 6.7 per cent. “At this rate, the total repayment to the bank was around Rs 54.5 lakh, of which UNLOCK HOMES KEYS TO the interest component was around Rs 24.5 lakh -- less than the total principal amount,” says Thakur, adding, “Today, when home loan interest rates hover at around 9.15 per cent, this buyer’s EMI is around Rs 27,300. The total repayment to the bank at this rate is now Rs 65.5 lakh, of which the interest component will be around Rs 35.5 lakh -- more than the total principal amount.” Echoing the sentiments, Niranjan Hiranandani, Vice Chairman, NAREDCO says, “The market is experiencing a supply catch-up to meet the soaring demand for mid-priced and luxury housing, while the weakening demand for affordable housing represents a spoiler alert.” IN DEPTH HOUSING Photograph by Snehitdesign
09 September 2023 | B W BUSINESSWORLD | 31 Metropolitan Region. According to Sunil Mehta, Chief Executive, Indian Banks’ Association (IBA), if 75 per cent of these stressed units are recovered, about three lakh units will get added to the housing sector. “The resolution of these stressed units will assist the middle and lower middle class in getting houses for which they have already paid a substantial Reviving Stalled Projects Today, Rs 4.08 lakh crore of value is locked in more than 4.12 lakh stressed housing units. The numbers haven’t changed much over the past year. At the end of May 2022, 4.8 lakh homes worth Rs 4.48 lakh crore were stuck or significantly delayed across seven major cities. A majority of these projects are located in Delhi-NCR and Mumbai AMITABH KANT, G20 Sherpa & former CEO, NITI Aayog A committee headed by Kant has given radical suggestions to revive the stalled housing projects thereby re-energising the affordable housing segment
32 | B W BUSINESSWORLD | 09 September 2023 amount,” said Mehta, before a committee set up under Amitabh Kant, former CEO of NITI Aayog, by the Ministry of Housing and Urban Affairs (MoHUA). This committee, charged with formulating comprehensive strategies to breathe life back into these stalled ventures, has submitted its report. The action now shifts to the various state governments and their respective housing authorities to implement the suggestions. Most of these stalled housing projects date back to more than a decade or more. The Problem & the Solution At the crux of the problem identified by the committee is the financial infeasibility of these projects, resulting in escalating costs and persistent delays. The committee stressed the imperativeness of enhancing the internal rate of return (IRR) of these projects to attract higher levels of funding. It strongly recommended that measures such as the Insolvency & Bankruptcy Code (IBC) should be considered only as a last resort. The process of project resolution, the committee emphasised, should ideally culminate in a win-win scenario for all stakeholders, including developers, financiers, and land authorities. To ensure financial viability, the committee has advocated a “haircut” approach, whereby all stakeholders would proportionately reduce their financial obligations. To streamline fund allocation, the committee has proposed the establishment of project-specific escrow accounts under the purview of RERA (Real Estate Regulatory Authority). These accounts would operate based on a “waterfall mechanism,” prioritising fund allocation for project completion. Subsequently, the disbursal of funds to financial institutions, land authorities, and other relevant entities would be determined by their respective dues, ensuring an equitable distribution. Mitigating financial strain induced by extraordinary circumstances such as the Covid-19 pandemic, the committee suggested implementing a “zero period.” During this phase, interest and penalties would be suspended, the committee noted. Calculating interest based on the 3-year marginal cost of fundsbased lending rate (MCLR) was proposed to ensure uniformity and fairness in interest rates for all developers. The proposed “zero period policy” and haircut approach might necessitate authorities like Noida and Greater Noida to forgo substantial sums of IN DEPTH NIRANJAN HIRANANDANI, Vice Chairman, NAREDCO "The weakening demand for affordable housing represents a spoiler alert” MANOJ GAUR, Chairman, CREDAI "The removal of provisions for capitalisation of interest by Noida may help in making the projects viable” CALLING ATTENTION n Stalled housing units worth Rs 4 lakh crore need revival n Affordable housing sales dip in H12023 over H12022 n Floating home loan rates jump from 6.7 % to 9.15%, impacting EMIs n Rs 4.08 lakh crore in value is locked in over 4.12 lakh stalled housing units n Committee suggests "haircut" approach n Recommends projectspecific escrow accounts for resolution n Sales across major Indian cities show 7% QoQ decline but 8% growth YoY HOUSING
09 September 2023 | B W BUSINESSWORLD | 33 sales of housing units across eight major markets show a quarter-on-quarter (QoQ) decline in the sales across major cities like Delhi-NCR, MMR, Hyderabad, Bengaluru and Kolkata. The overall combined QoQ sales declined 7 per cent. However, on an annual comparison, sales was up 8 per cent led by double-digit growth in only two markets, MMR and Pune. With the central bank continuing to pause increase in interest rates, the housing market is now looking ahead at the festival season/Diwali period with expectations. “This move (to keep the rates unchanged) might also serve to boost sentiment in the lead-up to the festive season, which is an important time for the real estate industry,” says Dhruv Agarwala, Group CEO, Housing.com, Proptiger.com, and Makaan.com. Now, all eyes are on the upcoming festive seasons. Developers are lining up projects with attractive schemes and marketing slogans to lure homebuyers to invest in housing projects. But high interest rates, rising inflation and economic uncertainties may play spoilsport. [email protected]; @Ashish_BW money. For instance, while Noida may have to write off Rs 7,400 crore, Greater Noida could be looking at a Rs 6,000 crore haircut. But these actions are crucial for the collective goal of reviving the stagnant real estate sector. Getamber Anand, former chairman, CREDAI and chairman, ATS Infrastructure said: “’The zero period policy’ of Noida may be re-introduced for the time period which was affected due to the farmers agitation and pendency of this dispute before the hon’ble high court etc. This would make many projects viable and would result in restarting of the construction work in many projects.” This was seconded by Manoj Gaur, Chairman, CREDAI. “The removal of provisions for capitalisation of interest by Noida may help in making the projects viable,” says Gaur. Rajan Bandelkar, President, NAREDCO too supports the re-introduction of zero period policy. “The development authorities should also be brought under the ambit of RERA so that the requisite approval of clearances is processed in a time bound manner,” he says. The committee has accepted these suggestions. “The state governments could examine and provide further zero periods based on the local conditions/ circumstances,” the committee said. Sales Impacted A recent report by Proptiger.com, owned by REA India, on the April-June SUNIL MEHTA, CEO, IBA "The resolution of these stressed units will assist the middle and lower middle class in getting houses for which they have already paid a substantial amount" Photograph by Ritesh Sharma
34 | B W BUSINESSWORLD | 09 September 2023 Can you share success stories of affordable housing projects that have improved access to housing for lower-income communities? Certainly, there have been several successful affordable housing projects that have significantly improved access to housing for lower-income communities. Launched in 2015, the Pradhan Mantri Awas Yojana (PMAY) is a government initiative aimed at providing affordable housing to all eligible beneficiaries. The Mahila Awas Yojana in Rajasthan targets women from economically weaker sections and provides them with financial assistance to build or renovate their homes. The Sardar Patel Awas Yojana in Gujarat focuses on providing affordable housing to the urban poor. It offers subsidies and financial assistance to beneficiaries. The project has been successful in promoting homeownership among low-income families. Now the latest talk of the town is the Dharavi Redevelopment Project, Mumbai, which aims to transform the area into a well-planned urban space with improved infrastructure and housing. What steps has the government taken to streamline regulatory processes and create a more investor-friendly environment in the real estate sector? RERA is a landmark legislation that has brought significant transparency and accountability to the real estate sector. This has instilled confidence among buyers and investors, leading to increased transparency and a safer investment environment. Many states in India have introduced single-window clearance mechanisms for real estate projects. The government has embraced digital platforms for various approvals and permissions. This reduces the need for physical visits and expedites the clearance process. Initiatives like the ‘e-biz’ platform offer online services for obtaining clearances and permits. What are the tax incentives and benefits available for real estate developers and investors, and how are these encouraging investment in the sector? The government offers various tax incentives to developers and investors engaged in affordable housing projects. These include a deduction under Section 80-IBA of the Income Tax Act, which allows developers to claim a tax deduction on profits from affordable housing projects. Additionally, the interest subsidy provided to homebuyers under schemes like the PMAY can stimulate demand for affordable IN CONVERSATION R ajan N. Bandelkar, President, NAREDCO, Founder & MD, Raunak Group talks to ASHISH SINHA of BW Businessworld about the positive changes in the real estate landscape, the increasing investment opportunity and much more. Excerpts: ‘RERA HAS BROUGHT IN SIGNIFICANT TRANSPARENCY AND ACCOUNTABILITY’ housing projects. Then, REITs (Real Estate Investment Trust) enjoy certain tax benefits, such as exemption from capital gains tax on the transfer of assets to the REIT and dividend distribution tax at the SPV level. These benefits make REITs an attractive investment option for investors seeking exposure to the real estate sector without directly owning properties. Homebuyers can avail tax deductions on the interest paid on home loans under Section 24(b) of the Income Tax Act. How is the private and the public sector collaborating with each other to address the infrastructural needs of the real estate industry and support its growth? Collaborative partnerships have emerged as a driving force behind the transformation of urban landscapes. Public-private partnerships (PPPs) bring together the strengths of both sectors, leveraging public resources and regulatory frameworks with private capital and efficiency. These partnerships enable the creation of state-of-the-art infrastructure, spanning transportation networks, utility services, and social amenities, that lays the groundwork for thriving communities. However, successful collaboration hinges on open communication, shared goals, and a commitment to the greater good. By aligning objectives, pooling resources and harnessing each sector’s unique strengths the private and public sectors can jointly construct the foun-
09 September 2023 | B W BUSINESSWORLD | 35 dations for resilient, prosperous cities that cater to the needs of both present and future generations. What is the real estate sector doing on the ground to promote sustainable development and environmentally-friendly practices? Central to this shift is the proliferation of green building certification systems, exemplified by LEED and IGBC ratings. Energy efficiency has emerged as a focal point, with real estate projects integrating solar panels, LED lighting and efficient HVAC systems. Beyond curbing carbon emissions, these innovations yield economic benefits by reducing operational costs for both developers and occupants. Waste management practices have been revamped, interweaving waste reduction and proper disposal into construction and property management protocols. The issue of water scarcity, particularly prevalent across India, has driven the integration of rainwater harvesting systems within buildings. Developers have taken to crafting low-impact landscapes populated by native and drought-resistant flora that also helps in enhancing air quality and temperature regulation. How is skilling in the real estate sector empowering the industry for growth? The National Real Estate Development Council (NAREDCO) has emerged as a pivotal player in shaping the skill ecosystem of the Indian real estate sector. NAREDCO has been at the forefront of advocating skill development and training initiatives that bridge the gap between industry demands and workforce capabilities. By collaborating with training institutions, universities, and vocational programmes, NAREDCO facilitates the design and implementation of curriculum that aligns with the industry’s current and future needs. [email protected] “By aligning objectives, pooling resources and harnessing each sector’s unique strengths the private and public sectors can jointly construct the foundations for resilient, prosperous cities...”
36 | B W BUSINESSWORLD | 09 September 2023 SPOTLIGHT ZEPTO Z Zepto’s founders, Aadit Palicha and Kaivalya Vohra, are upbeat about the future of their online grocery delivery startup as despite industry headwinds Zepto is positioned for growth and success By Resham Suhail epto which promises 10-minute delivery of groceries was founded in 2021 by two 19-yearold Standford dropouts, Aadit Palicha and Kaivalya Vohra. Aadit Palicha, Co-founder and CEO of Zepto believes, “Quick commerce is going to be the fastest growing consumer internet category in the country”. Funding Logbook Within three years Zepto has attained the status of a unicorn after raising $200 million at a $1.4 billion valuation. The latest development was remarkable as Zepto became the first startup to join the billion-dollar club in India this year. The latest Series E round brought in new investors, the round was led by the StepStone Group, a US asset management firm. Additionally, California-based VC firm Goodwater Capital joined the group as a new investor. Notably, existing investors Always ‘Grocery-first’ such as Nexus Venture Partners, Glade Brook Capital, Lachy Groom and more impacted Zepto with meaningful follow-on investments. Amongst all stakeholders, the founder duo, Aadit Palicha and Kaivalya Vohra disclosed that they hold a 25-30 per cent stake in the company, as of now. Profitability and IPO Palicha highlighted that most of the capital raised in earlier rounds sits in their bank accounts as the quick commerce unicorn nears profitability. The latest round is mainly to maintain a strong balance sheet ahead of the IPO launch, he stated. “Even with this capital, we want to maintain our discipline, avoid complacency and push hard to hit EBITDA positivity,” Kaivalya Vohra, Co-founder and CTO of Zepto said about the latest funding round. “We are building one of the best supply chain product stacks in the country today,” he added. In line with its IPO goal, the company aims to hit the EBIT-
09 September 2023 | B W BUSINESSWORLD | 37 APRIL 2021- BEGAN OPERATIONS OCTOBER 2021 - $60 MILLION AT $225 MILLION VALUATION DECEMBER 2021 - $100 MILLION AT $570 MILLION VALUATION MAY 2022 - $200MILLION AT $900 MILLION VALUATION AUG 2023 - $200 MILLION AT $1.4 BILLION VALUATION DA positive mark in the next 12-15 months. Amidst the intensified competition in the segment, the company has managed to demonstrate substantial growth with a 300 per cent year-on-year increase in sales. The founders intend to reach $1 billion in annualised sales in the upcoming quarters. Zepto plans to use the funds to expand to newer cities as well as to go deeper into the seven Indian metro cities where it has a presence. The founders claim that most of the dark stores are generating cash, are EBITDA positive and the rest are set to reach the mark in the next 12-15 months. “In the last 24 months, operating in a bear market has forced us to be more mindful of every penny and to take highquality decisions. There is no growth or profit, it has to be both,” Palicha emphasised while sharing his experience. Zepto has been through a journey from a monthly cash burn of Rs 90 crore in September 2022 to now, clocking consistent monthly revenue of around $50-60 million. The Mavericks Zepto disrupted the quick-commerce market in India about two years ago. ery startup backed by Y Combinator, as their second venture. Palicha and Vohra have thrived inspite of the challenges posed by the high cash burn segment business. Following a huge spike in demand, the platform recorded massive growth. Vohra also got listed as the youngest richest Indian in the IIFL Wealth Hurun India Rich List 2022. Tapping India’s FMCG Market While the founding duo foresee Zepto’s foray into other categories, they have no immediate plans in place as such. “Grocery is the mother of all categories and that is our DNA,” said Palicha. Zomato’s Blinkit, Reliancebacked Dunzo, Tata’s BigBasket and SoftBank-funded Swiggy directly compete with Zepto. Even among them, the company has the quickest average delivery time of 13 minutes, according to Palicha. Grocery can be considered as the largest consumer opportunity that exists in the market today. “We have successfully cracked the delivery of groceries, fresh produce and other everyday essentials in the ondemand commerce space,”Palicha candidly commented. Long-term Vision Vohra shared that the Zepto team plans to be heads-down executing for the next year with the aim of building a better business every day. Palicha said that Zepto’s culture of frugality and worshipping customers has stood them in good stead. According to him, their customer obsession, operational excellence, fiscal discipline and high-quality talent have been the bedrock of their growth since the start. The future looks incredibly promising as Zepto continues to redefine this landscape. [email protected] JANUARY 2021- $730K IN ITS FIRST ROUND KAIVALYA VOHRA, Co-founder & CTO, Zepto “Zepto plans to go public by 2025 as a profitable technology company that customers love” ZEPTO’S FUNDING ROUNDS Its massive scale and growth have outshined most of the peer players such as Swiggy and Dunzo, which have been around for nearly a decade. Getting groceries delivered the same day, forget on time, was not a norm earlier. During the pandemic, Palicha and Vohra were confined to their houses in Mumbai because of lockdown restrictions. The teenage duo, in 2020, realised that there was an opportunity to build a business by doing rapid home-delivery of groceries. The two 19-year-old Standford dropouts founded Zepto in April 2021, a 10-minute grocery delivAADIT PALICHA, Co-founder & CEO, Zepto “My vision is to build the next generation of ecommerce and long-term value for all our stakeholders ”
38 | B W BUSINESSWORLD | 09 September 2023 IN DEPTH ICAI N TODAY’S AGE of digital revolution, where technologies like Artificial Intelligence (AI), Blockchain, Cyber Security, and Data Analytics are revolutionising industries, the profession of Chartered Accountancy is no exception. As businesses harness technology for unprecedented achievements, accountants and auditors are also embracing this transformative landscape to remain ahead in the curve. To provide teach based qualitative services to stakeholders, to stay relevant in an ever-evolving global business environment and provide effective client guidance, Chartered Accountants (CAs) are making their mark and remain updated with emerging technologies such as AI, Blockchain, Cloud Computing, Robotic Process Automation (RPA), and Machine Learning (ML). The Institute of Chartered Accountants of India (ICAI) recognises the pivotal role of technology in reshaping the accounting profession and has initiated several pioneering endeavours to leverage its power. By blending digital proficiency with emotional intelligence, ICAI is shaping a new generation of accountants capable of navigating the complexities of the digital era. ICAI’s technological initiatives span diverse domains: ICAI introduced the Unique Document Identification Number (UDIN), an 18-digit code that validates documents certified by practicing Chartered Accountants, countering fraudulent attestatools to navigate the digital landscape efficiently. By providing students with the necessary skills to embrace these technologies, ICAI ensures that future Chartered Accountants are well-equipped to navigate the evolving landscape of the digital era. Digitisation of CA examination is one such step that has led to faster evaluation, making the Result Cycle much quicker than earlier. By adopting AI-powered audit solutions, ICAI proactively enhances audit efficiency and effectiveness. Furthermore, Practice Management Software optimises operational efficiency for member firms, streamlining client service, and the dayto-day office management. The software encompasses functions like Jobs and Billing, Capacity Planning, Documentation, Centralised Client Database, Time Sheets, and other valuable features, offering technological advantages to all firms. As of August 2023, over 6,200 members have adopted this software. Going Digital Enthused by PM’s Digital India proI Empowering the CA Profession Through Technology ICAI is embracing technology to empower CAs for the digital era. Initiatives like AI-powered audits, Digital Tools, Practice Management software, Blockchain integration, & Forensic Accounting Standards ensure CAs remain adept in a tech-driven landscape By Team BW tion and bolstering document authenticity. As on August 27, 2023, over 5.33 crore UDINs have been generated, a testament to document integrity in a digital landscape. This unique concept of UDIN was widely appreciated not just by Ministries and Government bodies in India but global bodies too. Seeing the success of UDIN, the Governing Board of National Board of Accountants and Auditors (NBAA), Tanzania has approved the introduction of UDIN system in Tanzania and requested ICAI to share the step-by-step process and support for implementing UDIN in Tanzania. This initiative ensures the integrity of documents in an increasingly digital world and safeguards against fraudulent activities. The use of technology for better services has not only been to the members but also for the students. ICAI’s forward-looking new curriculum which has been launched w.e.f. July 1, 2023, integrates Artificial Intelligence, Data Science, and Blockchain, equipping aspiring Chartered Accountants with the essential “By equipping members and students with digital skills, ICAI fosters innovation, enhances learning, and ensures CAs seize opportunities and lead the digital revolution” Photograph by Cifotart
09 September 2023 | B W BUSINESSWORLD | 39 dedicated to Blockchain Technology, offering professionals insights into its transformative potential. Integrated Digital Learning Platform is another initiative of ICAI for providing members and students access to a repository of professional and academic learning resources, promoting continuous learning in a digital age. Digital identities were introduced through @CA.IN mailboxes, enhancing communication within the professional community. ICAI’s global influence is evident in its participation in developing internagramme, ICAI has become a trendsetter to start Digital Accounting and Assurance Board (DAAB) to look into the changes in Information Technology and its impact on profession as well as academics. Setting New Standards, ICAI is the first Accounting Body in the world to release the detailed Forensic Accounting and Investigation Standards (FAIS) guiding professionals through the intricacies of forensic accounting in a digital context. An implementation guide for FAIS was also brought out that bridges’ theoretical insights and practical application. Further, ICAI’s Digital Competency Maturity Model (DCMM) helps accounting firms to self-evaluate and level up their digital maturity and attune their operations to the emerging business scenario. Members have been empowered through various emerging digital training programmes like Certificate Course on Forensic Accounting and Fraud Detection and courses on Artificial Intelligence and Machine Learning for Finance Professionals and more. The Institute’s research into emerging technologies ensures that members always stay at technology’s forefront. Addressing the rapid adoption of emerging technologies, ICAI launched an Executive Development Programme tional AI auditing standards as a member of the International Auditing and Assurance Standards Board (IAASB). ICAI’s Concept Paper on “Embracing Robotic Process Automation - Opportunities and Challenges for Accountancy Profession 2021” sheds light on RPA’s role in reshaping finance functions. RPA’s are basically programmes that replace humans performing repetitive rules-based tasks and thus are a game-changer in this regard. President’s Take CA. Aniket Sunil Talati, President, ICAI, underscores the importance of embracing technology to address dynamic challenges and seize opportunities. He emphasises that technologydriven data analytics will revolutionise audit procedures, providing comprehensive and risk-focused audits for stakeholders. He said, “The audit landscape is evolving in response to technological advancements. As auditors, we must adapt our methodologies and adopt advanced tools to further enhance the effectiveness of audit procedures. I believe, technologydriven data analytics will enable auditors to conduct more comprehensive and risk-focused audits, providing greater assurance to stakeholders. From Robotic Process Automation, Artificial Intelligence to Blockchain and Data Analytics, these advancements will revolutionise how CAs provide qualitative services to stakeholders. At the same time, one must remember ‘AI’ is not just about ‘Artificial Intelligence’ but ‘Adaptive Intelligence’ as well. By adapting to changing circumstances, we can remain relevant and lead the charge in driving technological innovations that benefit the users of our services and society at large.” As ICAI embarks on its digital transformation journey, it reshapes the accounting and assurance practices landscape. By equipping members and students with digital skills, ICAI fosters innovation, enhances learning, and ensures Chartered Accountants seize opportunities and lead the digital revolution. Established in 1949, ICAI’s commitment to integrity, excellence and independence guides Chartered Accountants as they embrace technological advancements in the service of society. CA. ANIKET S. TALATI, PRESIDENT, ICAI “Technology-driven data analytics will enable auditors to conduct more comprehensive and risk-focused audits, providing greater assurance to stakeholders”
A SOFT TARGET? Investigators probing stock market-related matters warn of another Hindenburg-like attack on Adani Group by an entity linked to notorious shortseller George Soros By Palak Shah The group suffered a major setback after shortseller Hindenberg accused it of pumping up its stock prices in a report GAUTAM ADANI, Chairperson, Adani Group Photograph by Umesh Goswami FOCUS CORPORATE 40 | B W BUSINESSWORLD | 09 September 2023
OLITICS AND BUSINESS GO hand in hand. Globally, business houses perceived to be close to the ruling dispensation or the prominent political parties are often highly vulnerable, especially when elections are around the corner. In India, Reliance Industries in the 1980s and 90s was a soft target of the global cabal and the local media. Currently, it is the Adani Group. More than Adani, Hindenburg Research now is a household name in India since it managed to trigger a $125-billion stock rout with mere allegations. Such popularity will undoubtedly attract clones. Sources say that agencies in India involved with stock market-related investigations have learned that an organisation known as Organised Crime and Corruption Reporting Project (OCCRP), which is infamous for its links to notorious stock market short-seller George Soros, was planning a series of reports on the Adani Group. Time is of the essence for short-sellers in the stock market, and Hindenburg claimed that it had shorted Adani grouplinked instruments in the overseas market before it published its report. Hindenburg had published its report just when Adani’s mega follow-on public offer worth more than Rs 20,000 crore (over $3 billion) was to open. Similarly, OCCRP’s report too is being planned when the Supreme Court will be taking cognizance of Adani-related probe by market regulator SEBI. The OCCRP Backers That Soros is a Modi hater and rejoiced at the Hindenburg attack on Adani Group is a secret revealed by the man himself at an economic forum when he openly said that the attack on Adani would weaken Modi’s hold on the government. But a look at how he and the fund linked to another global financier, Rockefeller, who was infamous for the 1929 US market crash, fund OCCRP lays bare the story in itself. OCCRP, which calls itself “an investigative reporting platform formed by 24 nonprofit investigative centre’s spread across Europe, Africa, Asia and Latin America’’, identifies the Open Society Foundations of George Soros as one of the institutional donors. Others include Ford Foundation, Rockefeller Brothers Fund and Oak Foundation. Akin to Soros, the control of leftwing philanthropists over Ford Foundations too is a well-known fact. Further, as per OCCRP’s own website, one of its associates in India is Anand Mangnale, who worked with online portal Newsclick.in prior to joining OCCRP in 2021. Newsclick has been identified as a proChina-funded news website operating in India. The Gameplan OCCR, which claims to be a network of global investigative journalists, has been trying to cajole Indian media houses and a few in the global arena to publish stories that it claims to have dug up on the Adani Group, the sources said. According to people in the know, part of OCCRP’s focus is on the same related-party transactions (RPTs) of the Adani Group, which were mentioned in the Hindenburg report. As per a few investigators privy to what OCCRP was planning, their story mainly relates to a case by the Directorate of Revenue Intelligence (DRI) with regard to over invoicing, when the MORE THAN ADANI, HINDENBURG RESEARCH NOW IS A HOUSEHOLD NAME IN INDIA SINCE IT MANAGED TO TRIGGER A $125-BILLION STOCK ROUT WITH MERE ALLEGATIONS. SUCH POPULARITY WILL UNDOUBTEDLY ATTRACT CLONES P The lynchpin: Billionaire investor George Soros, who is notorious as a stock market short-seller 09 September 2023 | B W BUSINESSWORLD | 41 Photograph Courtesy: World Economic Forum / Sebastian Derungs
42 | B W BUSINESSWORLD | 09 September 2023 Congress-led UPA government was in power in the Centre. This apart, the reports are also likely to rake up the same transactions involving Vinod Adani, elder brother of Adani Group founder Gautam Adani -- the same transactions that Hindenburg Research had mentioned in its report. On pages 34 to 37 of its report, Hindenburg Research had mentioned how Adani Group re-routed nearly a billion dollars in Indian rupees that it had generated via over-invoicing in India to offshore havens and how the same money made its way back to pump up Adani stocks via the use of Emerging India Fund and Emerging Market Resurgent Fund (mentioned on page numbers 34, 36 and 37 in the Hindenburg report). But what Hindenburg had failed to highlight in its report is that the basic premises of the re-routing story that it had traced was based on the DRI case, which was dismissed by the adjudicating authority of the DRI in 2017 and even the Supreme Court in March 2023. Related-party Deals Still, market regulator SEBI too has investigated the RPTs raised by the Hindenburg report and there were some 6,000 transactions on which the report had raised suspicions. SEBI’s MMPS rules specify the minimum float that listed companies should have. Currently, the rules suggest promoters should hold not more than 75 per cent stake in a listed company and the rest should be public float. Hindenburg had alleged that Adani had circumvented SEBI’s minimum public shareholding (MPS) norms by way of round tripping and using certain FPIs (foreign portfolio investors) as a front. But forget SEBI, even Hindenburg has failed to give any iota of proof on how the FPIs were acting as a front for Adani and that the beneficial ownership of the funds in question was linked to the Adani Group. In fact, the Supreme Court-appointed committee, which was to check if there were any regulatory failures on part of SEBI with regard to the probe into the FOCUS CORPORATE WHAT IS OCCRP? nOrganised Crime and Corruption Reporting Project calls itself a network of global investigative journalists nIt is formed by 24 nonprofit investigative centres spread across Europe, Africa, Asia and Latin America nIts donors include the Open Society Foundations of George Soros, Ford Foundation, Rockefeller Brothers Fund and Oak Foundation nOne of its associates in India is Anand Mangnale, who earlier worked with Newsclick.in Adani Group, has labelled the MPS rules in listed companies as “having a chequered history” that were subject to frequent and repeated changes. “Having adopted the path of making explicit situations prospectively, the path testing the principles underlying the regulations governing RPTs was abandoned. That being so, it would be legally infeasible to attack past transactions on the standards that have been made applicable with prospective effect,” the committee appointed by the apex court had said in its report on page no 124. Price Manipulation Like Hindenburg, OCCRP is expected to reiterate that Adani Group stocks were manipulated using the FPIs as a front and with the help of RPT linked to Vinod Adani-related entities, say sources. Again, going the Hindenburg way on this issue of price manipulation would be a mundane task without providing evidence beyond doubt since the alleged transactions involve multiple jurisdictions. One must not forget that over the past 8-9 months since the drama around Adani Group stocks and the Hindenburg report played out in the public, the stock markets factored in the seriousness of Hindenburg’s allegations on the commercial facets of the transactions in question and decided to reprice the Adani Group stocks, which are now up significantly from February lows. In light of this, how markets will treat another Hindenburg-like report is quite obvious. BW Businessworld had first published this report on its website on August 28. BW’s prediction came true, as two days later on August 30, OCCRP came out with a series of reports in Europe and US media racking up the same allegations that were made by Hindenburg Research in January. In subsequent developments, Adani Group has denied all the allegations made by OCCRP.
44 | B W BUSINESSWORLD | 09 September 2023 COVER STORY PSUs India’s public sector companies and their shares are witnessing a dramatic turnaround in their fortunes on the country’s bourses. Experts are calling them the next multi-bagger theme. What’s fuelling the frenzy? By Palak Shah THE MAHARATNA MOMENT AY ATTENTION WHEN Prime Minister Narendra Modi is giving investment tips. On August 10, the Parliament guffawed when the PM, in his usual aplomb, asked stock market investors to ‘bet on the PSU stocks.’ Like most of the PM’s colleagues in the Parliament, stock market punters and investors largely passed his investment tip as just another light-hearted Lok Sabha chatter meant to amuse the gallery. But sources in New Delhi’s policy-making circles are agog with the talks of India’s grand lithium mining plan where auctions for the site in Jammu and Kashmir (J&K) Pare likely to be held before December 2023. The anticipation is high. The govern-
09 September 2023 | B W BUSINESSWORLD | 45 Gujarat Mineral Development Corporation (GMDC), Steel Authority of India (SAIL), Hindustan Copper, National Aluminium Co (NALCO), Orissa Minerals Development Company, MOIL and Coal India are some of the pure-play listed PSU miners that are likely to be at the forefront of lithium ment is expecting thousands of crores of rupees from the auctions to flow into the coffers before the end of the current fiscal year. But that is not the big story. Stock traders can reap huge profits by simply following the PM’s tip. Companies such as National Mineral Development Corporation (NMDC), mining in India. There will be other PSU miners, too, but they are not listed. NMDC is likely to assume the lead since it seems set for the game. The corporation has partnered with Australia’s Hancock Prospecting, a company owned by billionaire Gina Rinehart for lithium and cobalt mining. Rinehart Photograph by Bivash Banerjee
46 | B W BUSINESSWORLD | 09 September 2023 All this is an indicator of the silent work that the PSUs are doing with an eye on the big game, and the government seems all geared up. Gearing up for Growth According to Deven Choksey, Promoter, KRChoksey Group & MD, KRChoksey Shares & Securities, the prospects of PSU companies and especially mining stocks are extremely bullish. “I will not be surprised if PSU mining companies report growth in excess of 15-20 per cent in the coming years. At the bare minimum, the growth rate of mining companies will be double that of India’s GDP,” he says. S.P. Tulsian, investment advisor and founder of Sptusian.com says that mining and metal companies and their shares are stars in the making. “With the advent of the green revolution, commodities such as copper, lithium, rare earth metals are grabbing attention. Copper global demand has risen by 200 per cent in the past 12 months, due to three times higher demand. The COVER STORY PSUs NARENDRA MODI, Prime Minister “They [the Opposition] said many things about LIC that the money of the poor will sink but today LIC is getting stronger” [He was speaking in Parliament on LIC’s mega IPO and listing] as the deposits in India, and any expertise they get will be an edge. GMDC and Hindustan Copper, too, have announced their plans for the mining of rare earth metals, obviously with an eye on lithium and cobalt. The Gujarat government in June appointed retired bureaucrat Hasmukh Adhia as the GMDC chairman — it is an open secret in the policy circles that Adhia enjoys PM Modi’s backing. even had a one-on-one meeting with PM Modi when he was on his celebrated Australia tour earlier this year. NMDC and Hancock are already exploring sites for lithium mining in Australia under the comprehensive strategic partnership. Australia is the world’s largest lithium producer, and its lithium industry is more mature than India’s. Importantly, Australia’s lithium reserves are in the same hard rock form Photograph by PIB Photograph by Lookaround
09 September 2023 | B W BUSINESSWORLD | 47 STOCKS WITH A LITHIUM PLAY Coal India National Mineral Development Corporation (NMDC) Gujarat Mineral Development Corporation (GMDC) Steel Authority of India (SAIL) Hindustan Copper National Aluminium Co (NALCO) Orissa Minerals Development Company Manganese Ore (India) MOIL The Bill also empowers the central government to auction mining lease and composite license for certain critical minerals exclusively. For the first time in his nine-year tenure, PM Modi has given investment advice to the stock markets. This after the amendment to mining Bills were passed by both the Houses of Parliament and when he was sure that there were no other major hurdles to India’s grand plan. consumption growth in rare earth metals, copper and lithium is mainly driven by electric vehicles and the solar energy play.” But what has changed about PSUs during the nine years of the Modi government? “Unlike the earlier years, the government is more demanding on productivity and accountability about lack of productivity. Coal India, a giant in terms of operations, is the best example of the changing face of Indian PSUs. The company’s production has witnessed significant improvement and it has managed to grow in excess of 15 per cent. With the kind of commitment that I see and the growth programme that the government has undertaken for PSUs, it will exceed all numbers in the coming years,” says Choksey. India’s Lithium Plan India is way behind the curve when it comes to manufacturing laptops and mobile phones, but electric vehicles are something that the government has set its sights on. In the years ahead, all the battery-dependent electronic manufacturing will settle in countries that can source lithium easily. In July, the Parliament cleared the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 to allow private companies to mine six out of 12 atomic minerals, including lithium, and deep-seated minerals such as gold and silver. The Bill has also been cleared by the Rajya Sabha. The government will now insert the provision of an exploration license only for deep-seated and critical minerals in the law. This license will be granted through auction for undertaking reconnaissance and prospecting operations. DEVEN CHOKSEY, MD, KRChoksey Shares & Securities “I will not be surprised if PSU mining companies report growth in excess of 15-20 per cent in the coming years. At the bare minimum, the growth rate of mining companies will be double that of India’s GDP”
48 | B W BUSINESSWORLD | 09 September 2023 Until now, India was playing into China’s hands when it came to sourcing lithium for domestic needs. But that equation changed when in February the government announced the discovery of 5.9 million metric tonne of lithium in J&K valued at around $410 billion. In May, news reports also suggested huge lithium deposits in Rajasthan as well. What’s more? Following India’s lithium finds, the Tata Group in June entered into an agreement with the Gujarat government to invest Rs 13,000 crore for a lithium battery manufacturing factory in Sanand. The government has also announced the National Programme on Advanced Chemistry Cell (ACC) Battery Storage as part of the Make in India initiative, wherein it will grant over $2 billion in incentives to EV manufacturing companies. This will equip the Indian economy for every step in the lithium lifecycle and ensure that the benefits of domestic lithium mining stay in the country. In August, auctions for two lithium mines in China’s Sichuan province received nearly 7,000 bids, with prices hundreds of times higher than the starting levels. Therefore, place your bets on PSU mining company stocks blindfolded... especially when the investment tip comes from PM Modi. Global Lithium Mining Stocks In Australia, the world leader in lithium mining, the shares of Liontown Resources surged 105 per cent to lead the Australian gauge in 2023 after spurning three takeover bids in five months from the world’s top lithium producer Albemarle. Its peer Lake Resources has declined more than 70 per cent after flagging a six-year delay and cost blowouts at a project in Argentina. Azure Minerals is among Australia’s emerging lithium stars, gaining over 1,100 per cent in 2023. Earlier in August, it rejected a takeover bid from Chilean lithium producer SQM and has shot past its offer price of A$2.31. Patriot Battery Metals, which is developing a large lithium deposit in Canada, has risen 81 per cent this year. Among others in Australia, Pilbara Minerals has in three years become a A$15-billion giant producing 8 per cent of the world’s lithium. Another miner Allkem in Australia is up 25 per cent. Similar frenzy in companies linked to lithium is seen in South Korea. Hydro Lithium skyrocketed more than 1,500 per cent in 2022 after the little-known civil engineering firm changed its name from Korea SE and announced plans to manufacture EV batteries. Chemicals firm Kum Yang has gained over 400 per cent in 2023 due to a link with a Mongolian lithium mine. Global lithium production that was 737,000 tons in 2022 is expected to reach 964,000 tons in 2023 and 1.17 million tons in 2024. The list of publicly traded lithium companies is short, which limits the investor options for lithium stocks. Also, most lithium mining companies are not listed on the US exchanges, which has forced some of the world’s large commodity funds to look elsewhere for the opportunity, or trade in the over-thecounter market in the US. Back home, the share price of Gujarat Mineral Development Corporation (GMDC), a little known PSU company belonging to Prime Minister Narendra Modi’s home state, has caught the fancy of India’s share market. GMDC’s share price is up 45 per cent in just around a week after BW Businessworld first did a story on August 21 on government’s focus on mining stocks. Other PSU mining stocks too are up in the range of 5 to 15 per cent. It appears at the moment as though PSU stocks will power the next leg of the bull-run on the Indian bourses. We will be closely tracking the journey of PSU stocks hereon. Watch this space for the latest developments. S.P. TULSIAN, Founder, Sptulsian.com “With the advent of the green revolution, commodities such as copper, lithium, rare earth metals are grabbing attention. Copper global demand has risen by 200 per cent in the past 12 months, due to three times higher demand” COVER STORY PSUs
50 | B W BUSINESSWORLD | 09 September 2023 I still remember Rahul Gandhi’s words: “Hindustan Aeronautics does not have money to pay salaries. The company is going bankrupt.” That was in January 2020, when Gandhi was criticising Prime Minister Narendra Modi for mismanagement of PSUs. But the stock markets took an entirely different view of the PSU. In barely three years, the share price of HAL witnessed a stupendous eight-fold rally to touch a high of Rs 4,135 in August 2023 from a low of around Rs 500 sometime in 2020. This prompted PM Modi to say in the Parliament recently, “Bet on those PSU companies, which are abused by the opposition parties.” Like HAL, many of the central government-owned companies have undergone a makeover, with some of them now counted among the country’s premium institutions. The shareholding pattern of these PSUs shows the growing interest of foreign institutional investors in them in the recent past. These include PSUs such as BEL, Mazagaon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, Bharat Dynamics, among others. The share price of these companies has gained two- to six-fold over the past five years. Public sector companies have been present in almost every sector of the Indian economy, from the humble post office to the sophisticated space and defence sectors that boast of organisations like the Indian Space and Research Organisation (ISRO) and the Defence Research and Development Organisation (DRDO). All along, PSUs were synonymous with poor performance, which was blamed on their ‘Sarkari’ culture and corruption in government departments. Aware of this drawback, PM Modi, when he took charge, said, “Government has no business to be in business.” The Modi government has so far COLUMN S. P. TULSIAN raised more than Rs 4 lakh crore via PSU disinvestment. This includes the sale of Air India and listing of the insurance behemoth Life Insurance Corporation (LIC). The government has also ensured the turnaround of moribund companies like Ordnance Factory Board and ISRO as well as a few other listed companies. Next on the government agenda is clearing India’s telecom sector mess. While in policy terms, the government is now on a clear footing, some restructuring is on the cards. Banking NPAs Decline Sharply The turnaround story of India’s PSU banks is another testimony of how damsels in distress have turned into THE CHANGING FACE OF INDIA’S PSUs Many of the central governmentowned companies have undergone a makeover, with some of them now counted among the country’s premium institutions PUBLIC SECTOR UNITS