Business en Wed Nov 02 10:28:30 IST 2022 ondc-ceo-t-koshy-interview <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>MANY CALLED IT</b> the ‘Amazon/Flipkart killer’ when the Narendra Modi government first unveiled the plans for the Open Network for Digital Commerce a year ago. Slowly being tested and rolled out in various parts of the country, the government’s ambitious venture to re-configure e-commerce checks boxes ranging from politics and ideology to economics and national interest.</p> <p>&nbsp;</p> <p>But the proof of the pudding will be in winning over the hearts and wallets of the some 20 crore Indians who shopped online last year and the 45 crore who are expected to do so in four years. That is the unenviable task entrusted with Thampy Koshy, digital pioneer who has on his CV milestones ranging from demat settlements and Aadhaar in India to pension reforms in China. ONDC’s first CEO took time off his busy schedule to explain his blueprint to change the way India shops online. Excerpts from an interview:</p> <p>&nbsp;</p> <p><b>Q/ ONDC is often referred to as both ‘like UPI’ and ‘the Amazon-Flipkart killer’, at least in the public’s mind.</b></p> <p>&nbsp;</p> <p>A/ It does resemble UPI in the sense that in the same way we are trying to broaden participation. But the latter, I would say, is a wrong narrative. ONDC is not trying to compete with anybody; we are not creating a super platform in competition with the existing players. What we are trying to do is to make an inclusive agenda which will enable any platform or app to have equal opportunities in the field of commerce.</p> <p>&nbsp;</p> <p>Why the talk about Amazon is that the current digital commerce all over the world works on a model where entities establish their platform using proprietary technology, providing end-to-end services from selling to buyer interface. When you create any such operation, what happens is that the entity which reaches a certain threshold the fastest in terms of usage will get the network effect of feeding on itself and will become bigger and bigger, with very limited opportunities for anybody else. It kills the competition.</p> <p>&nbsp;</p> <p><b>Q/ We have seen that in social media.</b></p> <p>&nbsp;</p> <p>A/ Everywhere. Whether it is in food or social media or e-commerce or mobility, hotels or travel, you see this kind of concentration happening. When this happens, the entity which has high concentration will be able to dictate terms on how the industry has to evolve. That kind of oligopoly and monopoly takes away competition and reduces options.</p> <p>&nbsp;</p> <p>This is a concern all over the world, from the US and Europe to even a controlled economy like China’s. Some countries have tried to control it by regulation. Whereas in India [we are using] technology and enabling policies to address this issue. It gives an equal opportunity to everybody. Then their success and failure becomes a function of what they have to offer, not the stranglehold they have on any segment of users due to technology and investments. We have created a standard protocol which helps the industry to unbundle the building blocks of transactions like seller interface, warehouses, logistics, buyer interface, all of them.</p> <p>&nbsp;</p> <p>Today all of them are one package deal. When an entity has a package deal, it ends up determining how the seller should sell, what should be the pricing and branding strategy, the commission, the discounts, everything. Whereas when you enable unbundling, the power goes back to the endpoints, to the sellers and buyers. And it also enables significant competition. While this will de-segregate the building blocks, the common ONDC protocol will ensure there is seamless commerce, because it enables everything to be stitched together.</p> <p>&nbsp;</p> <p><b>Q/ It is not restricted to products, is it?</b></p> <p>&nbsp;</p> <p>A/ Products and services, it could be anything. Wherever there is a product to sell and/or buy, they can prepare a catalogue using ONDC protocol, an offer can be made and a contract made for fulfilment. And the beauty is that even logistics is available as a service. You don’t have to worry about going and tying up with a delivery service provider.</p> <p>&nbsp;</p> <p><b>Q/ Coming to the technology part, one of the allegations against the Big 2 was that they favoured in-house sellers through the algorithm. How does ONDC platform keep it neutral?</b></p> <p>&nbsp;</p> <p>A/ In your mind, you are thinking like a platform. ONDC is not a platform. Secondly, [what you mentioned] was possible because the seller and buyer were captive users. When a buyer puts in his requirements through his buying app, say through a bank or telco or any platform, the buying agent’s interest will be to help the buyer make the right decision. The platform’s interest is with the buyer, he does not even know who the seller is. This will naturally reduce the propensity of any seller to do things behind the back of the buyer.</p> <p>&nbsp;</p> <p><b>Q/ Many expected ONDC to roll out quickly. Somehow the pace seems to be a bit slow.</b></p> <p>&nbsp;</p> <p>A/ Abracadabra happens only in fairytales. Look at any transformation project―UPI, UIDAI, all of them took time. Nothing happens overnight. But this will certainly be faster than all of them. It will take a few months for everything to come together. We started in five cities, now we are in 80 cities, only for limited users. In Bengaluru, we have opened up to the public. Next year this time you will see a significant shift. Any national transformation project takes two or three years to reach its full potential.</p> <p>&nbsp;</p> <p><b>Q/ Would you say ONDC gives a fillip to local, small-time businesses?</b></p> <p>&nbsp;</p> <p>A/ There is an enormous possibility for local producers to make their products visible. And that is where we are making extra efforts to help the local businesses.</p> <p>&nbsp;</p> <p><b>Q/ Will there be regional languages and audio support?</b></p> <p>&nbsp;</p> <p>A/ All of them. Each of the buyer applications will add regional language support and improvising. We are actively encouraging people to work on it. The beauty of ONDC is that it is throwing up enormous opportunities for everyone to innovate. In the current market, you don’t have that option. If you want to set up [an alternative] e-commerce operation in India, it is going to be hugely expensive. Only one or two people can manage it. But here, in six months, if a friend of yours wants to try out his new app, he gets the opportunity.</p> Sun Oct 30 12:48:06 IST 2022 many-indians-have-found-their-feet-in-the-us-startup-scene <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>His village in Himachal Pradesh got electricity when he was 13. Running water came two years later. It was not an easy childhood, but that did not stop Jay Chaudhry from earning an engineering degree from IIT BHU and going to the US for higher studies. He worked in many large technology companies there after that. In 1995, he came to know about the internet browser Netscape and was fascinated by the world wide web. He wanted to start a company that offers cyber security solutions.</p> <p>&nbsp;</p> <p>Chaudhry and his wife, Jyoti, quit their jobs and started SecureIT in 1996. He ran sales and marketing and she managed finance, human resources and operations. SecureIT was later acquired by Verisign. His second venture, AirDefense, was acquired by Motorola, and the third one, CipherTrust, was bought by Secure Computing. The fourth one, CoreHarbor, was taken over by AT&amp;T. Chaudhry currently runs Zscaler, which offers cloud-based cyber security solutions. He founded the company in 2007 and it went public in 2018. He has a net worth of $8.1 billion, according to Forbes.</p> <p>&nbsp;</p> <p>In 2000, far away from American shores, in a small apartment in the Mumbai suburb of Andheri, Pranay Agrawal, Srikanth Velamakanni, Nirmal Palaparthi, Pradeep Suryanarayan and Ramakrishna Reddy started a data analytics company called Fractal Analytics. Those were early days for AI and analytics in India and they eventually moved to the US, which already had a big AI market. Today, the New York-based company generates 70 per cent of its revenue in the US, and turned a unicorn this year, after raising $360 million from TPG Capital Asia.</p> <p>Chaudhry and the founders of Fractal Analytics took different routes to the promised land, but they are all part of the long list of Indian-origin founders of US startups. Ilya Strebulaev, professor at Stanford Graduate School of Business, and his team studied 500 US unicorns and their 1,078 founders, and found that as many as 474 of them, or 44 per cent, were born outside the US. “A large number of unicorn founders are first-generation immigrants. Internationally, 10 countries were the birthplaces of more than 10 founders, with India, Israel and Canada as the top three, followed by the UK, China and Germany,” said Strebulaev. India topped the list with 90 startup founders.</p> <p>&nbsp;</p> <p>Some of them are quite big names there. Baiju Bhatt, for instance, co-founded the commission-free stock trading app Robinhood, which became a rage during the pandemic. Or Rohan Seth, a former Google employee who co-founded the popular social audio app Clubhouse.</p> <p>&nbsp;</p> <p>What’s behind so many Indians finding their feet in the US startup scene?</p> <p>&nbsp;</p> <p>Indians are accepted as CEOs in America now, which was not the case even a decade ago, said Deepak Sekar, who went to the US in 2003 to do his PhD. He worked with the data storage company SanDisk after that, but soon decided to pursue his own dreams. He started Chowbotics, a food robotics firm, in 2014.</p> <p>“When you look different, speak with a different accent and come from a different culture, it is not easy,” he said. “I had to learn a whole bunch of skills to be considered CEO material by investors. The emergence of high profile Indian CEOs at Google, Microsoft, IBM, Pepsi and Twitter made things easier,” he said.</p> <p>&nbsp;</p> <p>Chowbotics’ first commercially released product, Sally, made salads. There were not many companies in the space at that time. In 2020, just when the Covid-19 pandemic started upending markets globally, food delivery company DoorDash acquired Chowbotics. Sekar now runs the artificial intelligence-driven e-learning company, Prof Jim, along with Pranav Mehta.</p> <p>&nbsp;</p> <p>The robust growth of the startup ecosystem in India played a part in bolstering confidence in Indian entrepreneurs in the US, said Chaudhry. But the journey has been an uphill climb, involving a lot of hard work and effort. For instance, when Fractal Analytics shifted base to the US in 2005, one of its assignments from FMCG giant P&amp;G was for just one week and worth just $2,000. “The first five years were very difficult,” said Agrawal. “It took us a while to get there.”</p> <p>&nbsp;</p> <p>One of the biggest challenges was funding. Chaudhry said when he approached a venture capital firm, his business plan was rejected because he “lacked experience in creating startups”. His company, Zscaler, has clients from around the world, including Siemens, MAN Energy Solutions and AutoNation.</p> <p>&nbsp;</p> <p>Most of these companies maintain a strong connection with India. A third of Zscaler’s offices, for instance, are based in India. Prof Jim’s entire research and development team is also based in India. Fractal Analytics has some 3,000 employees in India. Last year, it doubled its workforce and will add 40-50 per cent more people over the next five years. The company also works with several multinationals who have their global innovation centres in India. It has plans to go public via an IPO on the Indian stock markets.</p> <p>&nbsp;</p> <p>Thousands of Indians go to the US every year to pursue higher education and work there. According to the annual report of US Citizenship and Immigration Services, the number of Indian students in the US rose 12 per cent to 2,32,851 in 2021. And most of them dream of a future there.</p> <p>&nbsp;</p> <p>“I had no background in entrepreneurship but I saw the opportunity to do something in the internet security space and I took it,” said Chaudhry. “It was not easy by any means, but taking these risks have led me to reap the rewards.”</p> Fri Oct 14 16:58:59 IST 2022 in-us-what-matters-is-the-quality-of-idea <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Fractal Analytics was born in 2000 in a small apartment on the outskirts of Mumbai, where six friends came together and set up the data analytics company. Five years later, they moved its headquarters to the US and went on to cater to large corporations like P&amp;G, Colgate and Microsoft. Pranay Agrawal, cofounder of Fractal Analytics, talks about this incredible journey in an interview:</p> <p>&nbsp;</p> <p><b>Q/ Why did you move to the US?</b></p> <p>&nbsp;</p> <p>A/ It was clear that to create high impact from the work that we were doing, we needed to work with larger, mature companies. In search of that we came to the US. Today, about 70 per cent of our revenue comes from US companies, about 15-20 per cent comes from European companies and about 10-15 per cent comes from companies headquartered in Australia or Asia.</p> <p>&nbsp;</p> <p><b>Q/ How were the initial years in the US?</b></p> <p>&nbsp;</p> <p>A/ It was tough and slow. It is not as if we had a robust sales engine or that we were bringing a lot of market access. The first five years were very difficult but we won clients like P&amp;G, SAP and Microsoft. And once we had five to seven clients, then it started gaining momentum. One of the first assignments from P&amp;G back in 2005 was a one-week assignment for $2,000. Today, they are one of our top five clients. You have to keep showing up. I think that is a critical part in the journey.</p> <p>&nbsp;</p> <p><b>Q/ You turned unicorn this year. What are the key areas that you intend to focus on?</b></p> <p>&nbsp;</p> <p>A/ We are using the funding for a few big things. One of them is creating products under Fractal Alpha, where we have already incubated different companies. We have a lot of opportunity in the marketplace to bring products that are AI engineering relevant. The second big area is acquisition. In December we announced the acquisition of Neal Analytics. They are a Microsoft technology-based AI and engineering company. We also acquired Samya, which is a management and demand forecasting platform.</p> <p>&nbsp;</p> <p><b>Q/ You were one of the early Indian startups to go to the US. What is your view of the startup ecosystem there?</b></p> <p>&nbsp;</p> <p>A/ The ecosystem for creating new businesses and creating value is strong. There is a lot of talent that is wired to do this work. A bunch of other things like infrastructure are also robust. That helps. If you look at the places where a lot of startups happen in the US, it is an open environment where what matters is the quality of your idea and your solutions.</p> Fri Oct 14 16:54:48 IST 2022 theres-a-lot-more-confidence-in-indians-in-the-us-than-earlier <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Jay Chaudhry went to the US three decades ago for higher studies. He worked in many big tech companies and then went on to set up several startups. He currently runs the cybersecurity firm Zscaler. Excerpts from an interview:</p> <p>&nbsp;</p> <p><b>Q/ Your story is like an American dream come true, from a village in India to building successful global enterprises in the US.</b></p> <p>&nbsp;</p> <p>A/ There were limited basic resources when I was growing up in a small village called Panoh in Himachal Pradesh. But seeing my parents, both of whom were farmers, working hard to provide for our family taught me the importance of hard work, integrity and ethics. While my father never had the chance to go to school, he always encouraged me to study and I was good at it. After high school, I decided to pursue higher education in electronics engineering at IIT BHU.</p> <p>&nbsp;</p> <p>I came to America for further studies and found myself working at large technology corporations for over a decade. I was fascinated by the internet and the world wide web. I believed that it would be critical to secure the internet against cybercriminals looking to exploit it. This inspired me to kickstart my first internet startup.</p> <p>&nbsp;</p> <p><b>Q/ What were the kind of challenges you faced as an entrepreneur?</b></p> <p>&nbsp;</p> <p>A/ After completing my education in the US, I had the opportunity to join large technology enterprises—IBM, NCR and Unisys. My tenure in these companies allowed me to take on various roles, from engineering to sales, marketing and management. It was around this time that internet adoption was beginning to gain traction in the US. My fascination with the web drove me to pursue my first startup venture in the internet security industry.</p> <p>&nbsp;</p> <p>It was a difficult road ahead. When we first drafted a business plan and took it to a venture capital for funding, they rejected it because we lacked experience. From that instance, the choice was clear—either we give up on the startup dream and go back to our comfortable jobs or we invest everything we have in our startup dream. We decided that the risk was worth it.</p> <p>&nbsp;</p> <p><b>Q/ Many US unicorns were founded by Indian immigrants. Tell us something more on the startup culture there.</b></p> <p>&nbsp;</p> <p>A/ When I launched my first startup, SecureIT, in 1997, there were very few Indian leaders. After SecureIT was sold, the main question I had was ‘what’s next?’ At that point, I reached out to one of my mentors, Khan Vulreki, for advice. He told me of The Indus Entrepreneurs (TiE) organisation he was initiating to help fellow Indian entrepreneurs.</p> <p>&nbsp;</p> <p>There are great entrepreneurs in the US who hail from India and the numbers are growing. Perceptions are changing now. Today, there’s a lot more confidence as we are seeing more success stories when it comes to business leaders with Indian origins, such as Robinhood or Sprinklr.</p> Fri Oct 14 16:52:33 IST 2022 indian-techies-should-do-more-than-mundane-jobs <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Deepak Sekar’s journey from IIT Madras to a PhD in the US and then a job in Silicon Valley is what most Indian techies aspire for. But Sekar did not stop there; he started his own company, Chowbotics, a food robotics firm. It was acquired by DoorDash in 2020 and now Sekar is focusing on using AI to create online learning content. Excerpts from an interview:</p> <p>&nbsp;</p> <p><b>Q/ How did you overcome the challenges in the US?</b></p> <p>&nbsp;</p> <p>A/ Indians tend to be more accepted as CEOs in America now. But 10 years ago, that wasn’t the case. When you look different, speak with a different accent and come from a different culture compared with the stereotypical CEO, it is not easy. I had to learn a whole bunch of skills to be considered CEO material by investors. The emergence of several high-profile Indian CEOs made things easier.</p> <p>&nbsp;</p> <p><b>Q/ There are many startups in the US founded by Indians. What can India learn from the ecosystem there?</b></p> <p>&nbsp;</p> <p>A/ To truly make an impact on the world, you need to solve difficult problems, analyse them in depth and be thorough. Today, truth be told, US-located engineers score higher on that front than India-located engineers. The workforce in the US has more people with masters and PhD degrees. While doing those degrees, you learn to analyse things in depth. Not just that, a good portion of India’s workforce has people in IT services and consulting jobs. In those roles, engineers often get mundane tasks that people want to do in low-cost locations. Even in multinational tech companies, Indian teams often get mundane jobs while the most interesting engineering projects are done by US engineers. Spending years of your career doing mundane tasks does not train engineers to do deep technical work, and many engineers lose interest in engineering as well.</p> <p>&nbsp;</p> <p><b>Q/ How do you think tech like AI is going to evolve and change our world over time?</b></p> <p>&nbsp;</p> <p>A/ You already have AI like GPT-3 that can write like Shakespeare, generate marketing copy, write software code automatically and even write essays on any topic of your choice. Over the next decade or two, the way computing power is evolving, we are projected to have AIs with complexity comparable with the human brain. I believe that will change the world.</p> <p>&nbsp;</p> <p>Many mundane programming jobs will be automated. You will have advanced robots that can communicate well and do useful tasks at home. We will no longer be limited by language. For example, you can have one person speak in Hindi on a Zoom call and it will get translated in real time into English for another person.</p> Fri Oct 14 16:50:11 IST 2022 accelerate-your-portfolio-with-transport-and-logistics <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>IN A VOLATILE MARKET,</b> every investor is concerned about one thing—how will his portfolio perform. Then comes the concern about where should you invest to make the most of the volatility. As is usually said, a market plunge is the best time to invest in fundamentally strong avenues, as you can enjoy the benefit of buying more assets for less. In mutual funds, you can also benefit from the concept of rupee cost averaging, especially if you have a systematic investment plan in place, as your money will be able to get you more units, thus helping you earn higher returns when the market makes its rise. If you have been considering thematic investment opportunities in the current market scenario, here is some food for thought.</p> <p>&nbsp;</p> <p><b>Why thematic investing</b></p> <p>Going for thematic investing helps you leverage the potential inherent in a theme you believe in, be it consumer durables, pharmaceuticals, transport or logistics. You can simply pick the theme you are bullish on, and invest in the different companies comprising the underlying theme. This investment strategy adds firepower to your portfolio while also helping you diversify across different companies adhering to the theme you believe in. You also narrow down your research universe, making the investing journey much simpler and streamlined. One of the major themes you should consider backing is transport and logistics.</p> <p>&nbsp;</p> <p><b>Transportation and logistics</b></p> <p>Considered as an economic growth engine, the transport and logistics theme consists of industries broadly classified under 3 key sectors – Auto Original Equipment Manufacturers (OEMs) such as manufacturers of 2-Wheelers, 3-Wheelers, Tractors, etc., Auto Ancillaries manufacturing batteries, electronics, tyres, etc. and Logistics companies catering to the supply chain, rail, shipping, etc. This diverse categorisation makes the transport and logistic theme an exceptionally diversified one capable of offering robust returns to investors. Let us consider each of these categories in detail.</p> <p>&nbsp;</p> <p>As we evolve, luxuries turn into necessities, and this is extremely true in the case of automobiles. In this scenario, the auto original equipment manufacturers sector, with its presence across different products, offers multiple investment opportunities. Moving to the next component, auto ancillaries add a lot of value to the automobiles we see on the road. Indeed, the automobile sector is incomplete without the ancillary industry, including elements such as sensors, protective side trims on door panels, seat upholstery, instrument panel, fuel tank door, etc. The third category is logistics, a part of the ecosystem which supports both the luxury and the necessity. As a simple example, consider your shopping patterns – how frequently do you use an Amazon or Flipkart for delivery? Each time you place an order, it is logistics which steps in to fulfil your order and deliver the items you purchase. Logistics helps you get anything, anytime and anywhere.</p> <p>&nbsp;</p> <p>With the increase in user demands and requirements, and the focus on an aspirational lifestyle, the transport and logistics theme is set for a surge, making it an excellent investment opportunity.</p> <p>&nbsp;</p> <p><b>Ways to invest</b></p> <p>Once you are convinced about the potential of the theme, you will consider ways through which you can invest in it. One of the easiest ways to capitalise on the theme is by investing in a transportation and logistics based thematic fund which is actively managed. This will ensure that the fund manager will carry out trades which will work for the portfolio in the long run. Such a fund will typically invest in companies like Bajaj Auto, Mahindra &amp; Mahindra, Tata Motors, TVS Motor, Eicher Motors, Ashok Leyland and Maruti Suzuki. Under the auto ancillaries, Amara Raja Batteries, Apollo Tyres, Motherson Sumi Wiring, MRF, Minda Corporation and Bosch are some of the names which could be a part of the portfolio. The fund will also invest in logistics majors such as Blue Dart Express, Container Corporation of India, Delhivery, Gujarat Pipavav Port, Shipping Corporation of India, Mahindra Logistics and VRL Logistics, thus offering your portfolio the acceleration and power it requires to shine. These names are only indicative in nature such that the readers/investors can have a better understanding of the universe of investments.</p> <p>&nbsp;</p> <p>To conclude, as India moves to be a $5 trillion economy, transportation and logistics could play a vital role in this phase. ICICI Prudential AMC has recently launched ICICI Prudential Transportation &amp; Logistics Fund and the NFO period is open from Oct 6 to 20, 2022.</p> <p>&nbsp;</p> <p><b>The author is the founder of Gururam Financial Services Pvt Ltd</b></p> Fri Oct 14 16:44:40 IST 2022 new-generation-of-ambanis-are-leading-reliance-to-a-new-era <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>December 29, 2021, was the 89th birth anniversary of Dhirubhai Ambani. Reliance Industries Ltd, the company he founded in 1973 and helped become an industrial behemoth, celebrated the occasion—as it does every year—as Reliance Family Day. Only that this time RIL’s 2.3 lakh employees got an indication of what the future would look like for India’s largest company, as Mukesh Ambani, chairman of RIL and Dhirubhai’s son, mentioned a “momentous leadership transition”.</p> <p>&nbsp;</p> <p>Ambani, 65, has three children—twins Akash and Isha, 30, and Anant, 27. Though all of them have been involved in the family business, it was the first time that he had talked about succession. “We should guide them, enable them, encourage them and empower them... and sit back and applaud as they perform better than us,” he said.</p> <p>&nbsp;</p> <p>The succession plan is well and truly under way. On June 28, Reliance announced that Ambani was stepping down as director of Reliance Jio Infocomm, a telecommunication services provider, and Akash was appointed chairman of the board of the company. Reliance Jio Infocomm is India’s largest telecom operator and a unit of Reliance Jio Platforms, the RIL subsidiary that houses all its digital businesses. Mukesh remains the chairman of Jio Platforms.</p> <p>&nbsp;</p> <p>Isha has been given a leadership role at Reliance Retail, India’s largest retailer, and Anant is being groomed for bigger responsibilities in RIL’s new energy business. While a formal announcement of Isha’s elevation is yet to be made, Ambani mentioned it in no uncertain terms. “Akash and Isha have assumed leadership roles in Jio and retail, respectively,” he said, addressing shareholders at the company’s 45th annual general meeting on August 29. “Anant has also joined our new energy business with great zeal.” Anant is spending a lot of time in Jamnagar in Gujarat, where Reliance is developing a huge new energy complex.</p> <p>&nbsp;</p> <p>There is clearly a well-thought-out plan. “Whether it is telecom, retail or new energy, they are all scalable, and quick scalability has been Reliance’s strength. Family and business incumbents want to give equal growth opportunity businesses to their scions so that there is fairness in division of wealth as well as responsibilities,” said Chitra Singla, associate professor, strategy area, Indian Institute of Management, Ahmedabad. “Assigning specific roles to children in scalable businesses is a good decision.”</p> <p>&nbsp;</p> <p>Ambani had learnt the lesson the hard way. His father died intestate in 2002, and what followed was a bitter feud with brother, Anil, for the control of the businesses. Their mother, Kokilaben, brokered peace in 2005 by splitting the empire. While Mukesh got Reliance Industries (oil and gas, refining, petrochemicals and textiles), Anil was given Reliance Communications (telecom), Reliance Capital (financial services), Reliance Power (electricity generation and distribution), Reliance Infrastructure and the entertainment business.</p> <p>&nbsp;</p> <p>Despite the split, the brothers continued sparring in court over the supply of natural gas to Anil’s power plants. But in 2010, they reached an agreement and cancelled all non-compete agreements they signed in 2006—but for the one on gas-based power generation.</p> <p>&nbsp;</p> <p>Ambani clearly wants to avoid his father’s folly. “It is essential to demarcate businesses to heirs and prevent cross-holdings,” said Siddharth Mody, partner at the law firm Desai &amp; Diwanji. “Most of the conflicts that take place during generational changes stem from interference in businesses from other heirs. Hence, when a diversified business is passed down, it is ideal for each heir to have complete ownership and control of the demerged/independent business.”</p> <p>&nbsp;</p> <p>It was in 2014 that Akash, a Brown University graduate, and Isha, a Yale and Stanford alumna, were appointed to the boards of Jio Infocomm and Reliance Retail Ventures. “The transition had to happen at some point,” said Mayuresh Joshi, head of research at William O’Neil. At the AGM on August 29, both were on their own—Akash giving details of Jio’s big plans and Isha talking about retail and Reliance Foundation.</p> <p>&nbsp;</p> <p>Akash and Isha have played a part in key decisions at Jio. It is said that Isha, tired of the poor internet speed in the country, nudged her father back in 2011 to start Jio. Both Akash and Isha were part of the discussions between Jio and Meta (parent of Facebook), which led to Meta picking up 9.99 per cent in Jio Platforms for Rs43,574 crore in April 2020.</p> <p>&nbsp;</p> <p>Jio Platforms has got investment also from technology giants Google and Qualcomm, private equity players KKR and Vista Equity Partners, and sovereign wealth funds PIF of Saudi Arabia and Abu Dhabi Investment Authority.</p> <p>&nbsp;</p> <p>Isha, who briefly worked at Mckinsey before joining the family business, was instrumental in the launch of the online fashion portal Ajio in 2016, and she played a key role in several deals and partnerships struck by Reliance Retail.</p> <p>&nbsp;</p> <p>Despite being the biggest players in their sectors, Reliance Jio Platforms and Reliance Retail Ventures are subsidiaries of RIL. Mukesh remains the chairman of RIL and his wife, Nita, is on the board. She is also the chairperson of Reliance Foundation. P.M.S. Prasad, who has been with RIL for four decades, Hital Meswani, who was involved in the petrochemicals complex in Hazira and the refinery in Jamnagar, and Nikhil Meswani, who played a major role in making Reliance a petrochemicals giant, are also on the board.</p> <p>&nbsp;</p> <p>The day-to-day operations of Reliance Retail is run by V. Subramaniam and Jio is headed by Pankaj Mohan Pawar. Akash and Isha will be assisted by young managers like Kiran Thomas, director of Jio, and Anshuman Thakur, the head of strategy at Jio. Reliance has hired many experienced executives from top retail companies as well. “In my opinion, giving children the chairperson’s role is more of a signal to the market and the Reliance stakeholders that the family would like to retain control over decision making,” said Singla.</p> <p>&nbsp;</p> <p>Reliance has had many transformations in the past seven decades. What Dhirubhai started as a small textile business in the Masjid Bunder area in Mumbai became a major oil refiner and a petrochemical giant under Mukesh. Now, as the third generation of the Ambanis takes charge, the group is the largest telecom player in the country as well as the largest retailer, even as the legacy businesses continue to grow.</p> <p>&nbsp;</p> <p>Akash’s elevation comes at a time the Indian telecom industry is on the cusp of a huge shift, with Reliance emerging as the biggest bidder in the 5G spectrum auctions in August. It spent Rs88,078 crore to acquire pan-India spectrum in the 1,800 MHz, 3,300 MHz and 26 GHz bands. Crucially, it also acquired spectrum in the sub-GHz bands of 700 MHz and 800 MHz, which could give it an edge over rivals. Jio’s spending on 5G spectrum was more than twice that of main rival Bharti Airtel, which spent Rs43,084 crore.</p> <p>&nbsp;</p> <p>Jio’s customer base already is around 42 crore, ahead of Airtel’s 36 crore and Vodafone Idea’s 26 crore. Started just six years ago, Jio registered a revenue of Rs81,587 crore and a net profit of Rs15,487 crore in 2021-22.</p> <p>&nbsp;</p> <p>Jio is planning to launch 5G services in Mumbai, Delhi, Chennai and Kolkata by Diwali. By December 2023, Ambani wants its 5G to reach every town in the country. It is spending Rs2 lakh crore to build the pan-India 5G network.</p> <p>&nbsp;</p> <p>Akash, as chairman, will lead the company’s transition into the 5G era and its efforts to widen the subscriber base. While it is all set to tackle the first challenge, adding customers has become increasingly tough in the saturated mobile market. In the past few months, Reliance, like the other two competitors, has lost subscribers. In April, some 75 lakh people gave up their connections (mostly second SIM cards) after tariff hikes by companies.</p> <p>&nbsp;</p> <p>On the other hand, expansion in the retail sector continues unabated. Reliance Retail opened some 2,500 outlets last year, taking the total store count to 15,196, spread across super markets, wholesale markets and consumer electronics stores. It has also scaled up its digital business rapidly through platforms like Ajio and the grocery delivery service JioMart. Digital and new commerce now accounts for 19 per cent of its core retail sales.</p> <p>&nbsp;</p> <p>“We undertook more than 220 million transactions during the (April-June) period. That is more than 60 per cent growth over the pre-Covid period. So, our business is growing on a strong note,” said Gaurav Jain, head of strategy and business development at Reliance Retail. He said that daily orders on the digital platforms had grown 64 per cent from a year ago and the merchant base on the new commerce side had scaled up three times in a year.</p> <p>&nbsp;</p> <p>India’s retail sector is estimated to be worth $1.3 trillion by 2025. The share of organised retail is expected to double to about 15 per cent of the total market in that period. “Reliance Retail tried to do many different things in the initial years,” said Govind Shrikhande, an industry veteran. “But the blueprint became clear by 2015-16, and they decided to go in-depth across retail segments.”</p> <p>&nbsp;</p> <p>Size, he said, mattered for Reliance. “Whenever they enter new businesses, whether they can reach a huge size is a big consideration for them. Also, there are business cycles that will keep coming. Any retailer needs the financial muscle to ride out these cycles. While many of them have struggled, Reliance didn’t have that worry given their finances,” said Shrikhande, former managing director of Shoppers Stop.</p> <p>&nbsp;</p> <p>The financial muscle is quite visible in its acquisitions and partnerships. In 2019, it acquired the British toy retailer Hamleys. This year, it entered into a long-term partnership with GAP, to bring the American fashion brand stores to India. It has already partnerships with multinational brands like Marks and Spencer, Superdry, Steve Madden, Burberry and Vision Express, among many others. It is also bringing Britain’s popular sandwich and coffee chain Pret a Manger to India; a move that will see it take on the likes of Subway and Tata Starbucks Coffee.</p> <p>&nbsp;</p> <p>Reliance has inked deals with several homegrown designer labels like Abu Jani Sandeep Khosla, Ritu Kumar, Abraham and Thakore, and Rahul Mishra, among others.</p> <p>&nbsp;</p> <p>While scaling up the retail business, the company is also building a strong wholesale presence across categories like grocery, electronics, garments and pharmacy. Its decision to expand into the fast-moving consumer goods segment is key to this. “The objective of this business is to develop and deliver high quality, affordable products which solve every Indian’s daily needs,” said Isha at the AGM. It has also been making inroads in the wholesale pharmaceuticals business after the acquisition of online pharmacy NetMeds in 2020.</p> <p>&nbsp;</p> <p>In the e-commerce space, Reliance faces tough competition from the deep-pocketed Amazon and Walmart-owned Flipkart. That might be about to change with JioMart partnering with instant messaging app WhatsApp. In what is said to be a global first, JioMart on WhatsApp will let users browse through its grocery catalogue, add items and make payments. “If executed well, RIL will be able to significantly leverage WhatsApp’s large user base in India to grow its new commerce business,” said Anil Sharma, analyst at Kotak Institutional Equities.</p> <p>&nbsp;</p> <p>In April, RIL-backed Viacom 18 launched a dedicated sports broadcasting television channel and went on to acquire the digital media rights for the Indian Premier League (IPL) tournament. It has also bagged the broadcasting rights for this year’s FIFA World Cup in Qatar. It was not unexpected, as Akash is an avid sports fan and is often seen at the IPL matches of Mumbai Indians, the team RIL owns. He led Viacom’s charge for IPL digital media rights. IPL is the most-watched sports property in India (total viewership of about 350 million) and its digital rights will come in handy for the young Ambani in expanding Jio’s subscriber base and tapping more customers for its fibre broadband service.</p> <p>&nbsp;</p> <p>Analysts, however, have a word of caution. “Viacom18’s winning bid of Rs58 crore a match for IPL 2023-27 implies cost of Rs63-65 crore a match including production/hosting costs. It looks like Viacom18 would incur losses in the initial years and perhaps break even in the 2026-27 season,” said Jaykumar Doshi, research analyst at Kotak Institutional Equities. Also, the competition between Disney (Star has IPL’s television rights) and Viacom18 for advertising money could reduce the bargaining power for both, unlike in 2018- 22, when Star owned both.</p> <p>&nbsp;</p> <p>RIL’s biggest bet will be in the clean energy sector. It plans an investment of Rs75,000 crore, which includes Rs60,000 crore towards setting up four giga factories and Rs15,000 crore in value chain, partnerships and future tech. The goal is 100GW of renewable energy by 2030.</p> <p>&nbsp;</p> <p>Ambani has a knack for scaling up quickly, and that is where acquisitions can play a big role. In the new energy business, RIL has acquired 40 per cent stake in Sterling &amp; Wilson Solar, a company owned by Shapoorji Pallonji Group, and bought solar panel manufacturer REC Solar Holdings and the assets of lithium battery maker Lithium Werks. Reliance will have integrated manufacturing, from raw silica and polysilicon to finished cells and modules.</p> <p>&nbsp;</p> <p>It has now announced a new giga-factory for power electronics (application of electronics to regulate electricity). “One of the key components linking the entire value chain of green energy is affordable and reliable power electronics,” said Mukesh at the AGM. “We are building significant capabilities in design and manufacturing of power electronics and software systems, integrating with our capabilities of telecommunications, cloud computing and IoT platform.”</p> <p>&nbsp;</p> <p>RIL aims to start production of battery packs by 2023 and scale up to a fully integrated cell-to-pack manufacturing facility by 2024, which will have an annual capacity of 5GWh, expanding to 50GWh by 2027. It will also be setting up 20 GW of solar energy generation capacity for captive use by 2025 and will progressively begin transition from grey to green hydrogen from that year.</p> <p>&nbsp;</p> <p>Separately, the company will invest Rs75,000 crore over the next five years to expand capacities in existing and new value chains in its oil-to-chemicals business.</p> <p>&nbsp;</p> <p>Analysts at Motilal Oswal Financial Services say RIL’s consolidated revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) could clock 13 per cent and 15 per cent compounded annual growth, respectively, over financial years 2022 to 2024. That is without factoring in any incremental growth from 5G capex and new energy. “Retail, telecom, and new energy can be the next growth engines over the next two-to-three years, given the large technological advancements and ambitious growth targets. However, the same can dent its existing single-digit return ratios in the near term,” said the analysts.</p> <p>&nbsp;</p> <p>Currently, all the businesses of the group are held under the listed parent RIL. Ambani has in the past said that Jio and Reliance Retail would be separated and listed on the stock exchanges. The listing could smoothen the succession process and all his children may hold individually listed business, with the parent RIL overseeing the empire.</p> <p>&nbsp;</p> <p>“When the businesses are in very different industries, listing them separately could help in better organisational structure and faster decision making. From a family point of view, listing businesses separately is a clear division of wealth. In Reliance’s case, Mukesh Ambani is trying to give equal opportunity businesses to his three children, and he wants to establish those businesses under his supervision. Therefore, advance planning is being done,” said Singla. One advantage RIL has is that its businesses are distinctive, barring a slight overlap in the retail and telecom businesses.</p> <p>&nbsp;</p> <p>“RIL’s business segments are very well positioned to benefit from segment tailwinds, given its solid leadership position and well-integrated business structure,” said Avishek Datta of the stockbroking company Prabhudas Lilladher.</p> <p>&nbsp;</p> <p>Big changes are coming to India’s largest company. The elevation of Akash as the chairman of Jio Infocomm and the big renewable energy push are just the beginning. And it will not just reinforce its pre-eminence among Indian corporates but also unlock significant value for its shareholders in the years to come.</p> Sun Sep 25 13:18:42 IST 2022 a-debt-fund-for-all-seasons <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>Based on the investor’s profile, </b>mutual fund portfolios feature a mix of equity and debt funds, in varying proportions. For instance, if you are someone who has a high risk appetite, a large part of your portfolio would be dedicated to high risk-high return equity mutual funds. Across portfolios, prudent investors choose to allocate a portion to debt funds as these schemes are known to be relatively safer than equity funds. In addition to diversification, such funds are likely to offer stable returns, especially during volatile markets, making them an excellent part of the portfolio. Even within debt funds there are multiple options available for a debt investor. One of the categories to invest is dynamic bond fund which provides flexibility to a fund manager to move across maturities and credit.</p> <p>&nbsp;</p> <p><b>Reasons to invest in dynamic bond funds</b></p> <p>Dynamic bond funds can be defined as debt funds which park their corpus in fixed income and money market instruments such as sovereign bonds and corporate bonds. As mentioned earlier, dynamic bonds invest in securities across different maturities, thus offering investors benefits such as reasonable returns, tax-efficiency, flexible investment horizons and better liquidity. They also allow investors to ensure optimal diversification across corporate bonds and government securities, facilitating robust returns without compromising on security. The biggest advantage of dynamic bond funds is the modified duration which is maintained in a range of 1-10 years, making it a hugely versatile investment.</p> <p>&nbsp;</p> <p><b>Dynamic bond funds for volatile markets</b></p> <p>Typically, dynamic bond funds aim to benefit from interest rate volatility and increase their duration when interest rate is expected to fall, thus benefiting from capital appreciation. Further, the scheme has the option of reducing their duration when the interest rate is expected to rise, with the aim of mitigating risks from marked-to-market losses. Such factors make dynamic bond fund particularly suitable for the current market conditions, wherein the yield curve is moderately steep.</p> <p>Additionally, changes in macro-economic factors can prompt dynamic bond funds to lower or increase their duration as required. For example in a worsening macro environment like high inflation, current account and fiscal deficit would potentially lead to rise in interest rates, as seen by the consistent repo rate hikes by the Reserve Bank of India in recent times. This has prompted dynamic bond funds to pivot towards a lower duration to ensure optimal returns even during volatile situations. Further, the fund can increase exposure to credit as and when spreads are available at reasonable risk.</p> <p>&nbsp;</p> <p><b>ICICI Prudential All Seasons Bond Fund</b></p> <p>With a modified duration of 2.35 years, based on the macro-economic factors, and a yield to maturity of 7.16%, the ICICI Prudential All Seasons Bond Fund is an excellent option for investors keen on building positions in dynamic bond funds and meeting the market volatility head-on. The fund invests in high and medium quality debt instruments ranging from low to long maturity.</p> <p>Given the current market scenario, the scheme’s Macaulay duration has been maintained at 2.47 years, with sizeable exposure towards spread assets for better accrual income. Also, the fund offers a good mix of instruments which benefits from higher term premium and better liquidity. Based on the interest rate scenario, the scheme takes tactical calls on investments in corporate bonds and gilts. Accordingly, when the interest rates are high, the scheme will behave like a long duration scheme and when rates are low, it will act as an accrual scheme, offering robust returns across market conditions and helping investors benefit from the move, irrespective of whether yields fall or rise.</p> <p>Considering the current market condition, the scheme has maintained its exposure to higher maturity government securities to benefit from term premium, while enjoying good exposure to spread assets for better accruals. Going forward it is very likely that the scheme would endeavour to ensure exposure to spread assets with a rating above AA-. With a moderate risk rating, and the ability to help you diversify and earn stable returns across volatile markets, the fund is an optimal offering for a debt investor with a long term investment horizon. To summarise, dynamic bond fund is an evergreen product since they provide reasonable returns in all market conditions.</p> <p><b>The author is from Affluenz Wealth Advisors.</b></p> Fri Sep 23 15:59:39 IST 2022 experts-want-more-debate-on-moonlighting-before-it-is-shunned-completely <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>Wipro fired 300 employees</b> for doing it; TCS COO N.G. Subramaniam said it was an “ethical issue”; Tech Mahindra CEO C.P. Gurnani supported it; and Infosys said it would terminate contracts of those found guilty.</p> <p>Moonlighting is not a new concept, but the pandemic gave it a bigger spotlight. As lakhs of India’s IT professionals started working from home, they found more time to take up a second or third assignment. The major reasons for doing so—extra income, the chance to prove their capabilities in different jobs, non-recognition by employers, and utilisation of spare time.</p> <p>As employees started working from anywhere during the pandemic, managers could not supervise them. “IT companies saw a huge demand during the pandemic as every industry sector wanted to digitise its processes,” said Aditya Narayan Mishra, MD and CEO of CIEL HR. “The demand for IT professionals increased, but the supply was not adequate. Hence, companies were desperate to get employees on board without conducting due diligence.”</p> <p>A few experts THE WEEK spoke to said that moonlighting could not be bracketed one way or the other. “It prevails due to talent shortage in the market, backed by the increasing demand for niche skills in the IT sector,” said Arjun Ramaraju, CEO of software firm Conneqt Digital.</p> <p>Experts pointed out that the gig model was viewed negatively, too, but has now become an accepted mode of employment globally. Therefore, rather than curbing it altogether, it would be fruitful to discuss whether moonlighting can be explored in a transparent, compliant and secure manner.</p> <p>Said Sarita Digumarti, chief learning officer of online learning portal Unext: “I do believe that the definition of moonlighting is currently vague. Is it moonlighting when a software developer takes up gigs as an artist or a musician after work hours? Before implementing strict laws and outrightly being dismissive about it, bringing in a sense of clarity on what moonlighting means would be a good start to develop newer policies for the future workforce.”</p> <p>She recalled a recent report from Kotak Institutional Equities, which said that, of the 400-odd people surveyed, close to 65 per cent knew of professionals who were “moonlighting”. “This is also an inference to understand why 42 per cent of them prefer WFH,” said Digumarti. “Dual income is obviously a good sign from an employee’s perspective. But if we ask at whose expense, a lot more dimensions would open up.”</p> <p>Said Prerna Kohli, director of human resources at Cyware, an IT company in Bengaluru: “Moonlighting has garnered attention because it is a violation of the employment agreement and [creates] a reasonable degree of risk to the proprietary information and the operating model of the employer. Companies must deploy security tools and techniques to detect and prevent risks associated with moonlighting, such as data leakage and abuse of intellectual property. Beyond policy measures, HR leaders must maintain clear communication with all employees to avoid conflicts or a drop in performance. Recruitment practices should also be reevaluated to highlight high-risk profiles during the hiring process.”</p> <p>HR experts believe that about 30 per cent of IT employees have moonlighted at some point in their career. “Given the intensity of messages that are coming from the IT bigwigs, there is a likelihood that moonlighting as a phenomenon is prevalent in certain pockets and is growing,” said Alok Shende, MD of Mumbai-based Ascentius Consulting. “However, to cast aspersions on all individuals indulging in moonlighting might not be appropriate. There could be individuals working on... opportunities that might not be available in their daily 9 to 5 jobs. Companies must... offer avenues to moonlighters so as to co-opt them in the formal process.”</p> <p>Experts say that employers should develop a clear policy that helps employees be open about the secondary jobs and pick the ones that do not hurt the organisation. “Employers need to conduct stay interviews and regular feedback sessions, provide career progression plans for the employees, and give them challenging work to make them feel trusted and create a sense of belonging,” added Mishra. “This will increase the employee retention rate and enhance the company’s performance.”</p> <p>The question now is whether moonlighting will have a long-term impact on the industry. “Overall this could have a great impact on the IT companies and also the people,” said Sathya Pramod, CEO, Kayess Square Consulting Private Limited and former CFO of Tally Solutions. “Attrition, which was already high, will increase. This will lead to the quality of work being compromised. On the other hand, it will also increase the costs since these companies will need to maintain a bench more than what was earlier the norm. Employees will start a ‘try and buy’ scheme whereby they will moonlight and figure out if the new place is better. In the long run, it is not great even for employees. There will be mental breakdowns and the greed for money will lead to them overpricing themselves and when the demand for professionals goes down, it will be impossible to adjust to the new normal.”</p> <p>A few HR pundits, however, said it was too early to predict the impact. “HR leaders must put in place corrective policies and talk to their employees to proactively prevent this issue... rather than reacting through hasty measures,” said Kohli. “In the long term, the entry points during the screening process have to be strongly governed to eliminate the chances of moonlighting. [The practice] is prevalent mostly among employees with three to six years of experience.”</p> <p>There is also the expectation that the industry will eventually settle down. “An efficient means would be to re-look at employment contracts,” said Ramaraju. “For companies, security and confidentiality must be treated as non-negotiables, while for employees, transparency, flexibility, and an encouraging environment are key to maintaining harmony. Needless to say, there needs to be more debate.”&nbsp;</p> Sun Sep 25 13:20:17 IST 2022 web-exclusive-sugar-cosmetics-never-shied-away-from-dreaming-big <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> Vineeta may wince if her brand is compared to Nykaa, considering the travails of that unicorn recently, but it is a good template. Like Nykaa, SUGAR is also female-led startup success story having a massive physical presence (more than 100 own stores besides being available at 35,000 touch points across 500 cities), and nearing unicorn status after having being valued at more than half a billion. &nbsp;<br> <br> But its future trajectory may just include a public listing rather than more funding series. THE WEEK asked Singh to share her thoughts on how she came up with the business idea and what being a startup in today’s India involves. Excerpts:<br> <br> <b>Q/ How did the idea for SUGAR come about and how did you do it differently?</b><br> <br> A/ I have always been passionate about building a company with women at its core. While trying to build my previous startup, which was a monthly subscription-based company for grooming products, we gained a lot of insight into an average modern-day consumer’s wants and also the problems they were facing. We realised that even though the cosmetics market had a lot of multinational brands to choose from, there weren’t many that were catering specifically to Indian skin types and tones. Indian women would either have to import their base products from overseas or wear shades that didn’t match them due to the lack of availability. This is what paved the way for us to start SUGAR Cosmetics to fill this white space. &nbsp;<br> <br> <b>Q/ How is setting up a business been different as compared to conventionally? How has technology helped?</b><br> <br> A/ From the process of gathering data to connecting with our consumers, since its inception, technology has been a major factor in the growth of SUGAR Cosmetics. The Indian beauty industry is an extremely competitive market with an ever-evolving technology landscape that has helped it grow remarkably over the past decade. Interacting with and focusing on consumer needs has taken the front seat, and with the help of the latest technology, beauty brands are now exploring new markets such as virtual platforms like Facebook, Instagram, and more, to engage them. Social commerce platforms have been popular where consumers can purchase products directly from within the social media app. &nbsp;<br> <br> Technology has played a major role in accelerating personalisation offering, which is crucial for the Gen Z and millennial consumers, who want products that not only make them look beautiful but also reflect their personality. With the advancement of technology, brands are now also using artificial intelligence (AI) to spearhead product innovation and drive higher customer engagement. &nbsp;<br> <br> <b>Q/ The journey to become a unicorn.</b><br> <br> A/ Our focus has always been to build our brand and make our products available for all of our consumers. Being my third startup, SUGAR Cosmetics has taught me the power of determination and resilience, the path has been challenging - I recall times when we were out of stock and yet couldn't order a new batch of products because we didn't have the money. However, even during these times, I’m glad to have had the privilege to work with a remarkable and supportive team. &nbsp;<br> <br> Customer satisfaction is extremely important to us which is why we are constantly innovating, staying true to our uniqueness, and continually improving our chart-topping products as a routine practice. Taking into account what our customers think of us and their feedback whether positive or negative makes scope for us to be better.<br> <br> <b>Q/ Future potential and challenges?</b><br> <br> A/ As our next steps, we plan on building and expanding our core pillars - our retail footprint by enhancing the retail marketing and visual merchandising experience, our product line and our product distribution. We intend to go stronger on our omni-channel approach to expand our product ranges and to be able to grow the brand on an even larger scale. Increasing our distribution channels in India and beyond, along with creating an even stronger base on our D2C platforms will be focused on. &nbsp;<br> <br> We also will be looking at creating solid content to keep educating and engaging our SUGAR community across all platforms – digital and otherwise. Employing more than 10,000 women and an IPO, we want to make SUGAR one of India's Top 3 brands in the total colour cosmetics market. Getting to that point will be a challenge but we never shied away from aiming higher and dreaming big. Sun Sep 04 10:10:57 IST 2022 ideas-are-taking-centrestage-in-indias-booming-startup-ecosystem <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>I am going to build the McDonald’s of India!”</p> <p>&nbsp;</p> <p>The business bug bit Eshwar K. Vikas fresh out of college. He started Mukunda, a restaurant serving idli and dosa at a mall in Chennai, borrowing from his parents and friends to rent the space and set up a self-service model with large screens and LED lighting. He bought the batter from someone else and set about with his ‘McDosa’ dreams.</p> <p>&nbsp;</p> <p>“Business was good from day one,” Eshwar recalled. So much so that he committed the blunder of his career—a second outlet on a franchisee model through a friend. “That was when I realised we were not able to maintain the consistency of the batter,” he said. To add to his woes, the ‘dosa master’, the guy in the kitchen, left. Customers stopped coming back, complaining that the quality had gone down.</p> <p>&nbsp;</p> <p>An engineer, Eshwar wanted to solve the issue by getting a machine that can make dosas uniformly. The problem? There wasn’t one.</p> <p>&nbsp;</p> <p>He did not give up. He refashioned an Archimedes screw, used to pump concrete mix in construction, into a pump for dosa batter. A person was assigned to design and make a tawa (wok) for the machine. And presto, Eshwar had pivoted from running a ‘manual’ restaurant into an automated kitchen.</p> <p>&nbsp;</p> <p>Today, Eshwar is the go-to man in kitchen automation and robotics, with his machines DosaMatic, Eco Fryer, RiCo and Wokie used to make dosas, rice, noodles, momos and curries without human intervention. In the latest funding round two months ago, by the likes of Zomato which is rumoured to be using his machines in its 10-minute delivery, he raised around Rs60 crore. Driven by the demand, Eshwar has pivoted into running micro cloud kitchen factories, where he runs the machines in one location, uses ingredients supplied by multiple brands, and delivers through agents of Swiggy and Zomato. “Kitchen automation has slow scale of growth, but kitchen-as-a-service will grow very fast,” he said.</p> <p>&nbsp;</p> <p>Ambitious, innovative and riding on technology and easy funding, people like Eshwar are driving an entrepreneurial revolution in India. It is fuelled by massive investor cash inflow from abroad, and indications are that even a recent tapering of this stimulus-driven funding will not slow down India’s tryst with the business bug.</p> <p>&nbsp;</p> <p>“Fifty-three crore youth are the future,” said Dharmendra Pradhan, Union minister for education, skill development and entrepreneurship. “They will have to become employers to make India an entrepreneurial economy.”</p> <p>&nbsp;</p> <p>The number of Indian unicorns—startups with valuations of more than $1billion dollars—crossed 100 early this summer. That makes India the fastest growing startup ecosystem in the world, and also the third largest, after the US and China. Indian Angel Network, a firm that invests in startups, said it got 30 applications for funding in 2006, the year it started; today it gets 75 a day.</p> <p>&nbsp;</p> <p>Last year, around Rs28,000 crore was invested in privately held startups, with about 400 of them getting investor money for the first time. No longer is a bank loan or a handout by parents the only source of funding for a business with a good plan. The explosion of private investors, angel funds and venture capitalists has ensured that there are multiple sources a sharp mind with a bright idea can tap.</p> <p>&nbsp;</p> <p>“It is a great time to be an entrepreneur in India,” said Vikram Gupta, founder &amp; managing partner of IvyCap Ventures, one of India’s leading funding companies. “See how Zomato created value without turning in profits. Questions of ‘how can a startup be valued at a billion and not even have profits’ have already been answered.”</p> <p>&nbsp;</p> <p>The rush of the ordinary Raj and Rahul (and his mate from IIT) becoming entrepreneurs is surprising because getting a salaried job had always been considered a better option in India than the risky proposition of starting one’s own business. Padmaja Ruparel, founding partner of Indian Angel Network, recalled how her parents told her to look for a job when she started her business. “Today parents come to me saying ‘my son is doing a startup’,” she said. “When I tell them about the possibility of failure, they say, koi baat nahi, we will look for a job then!”</p> <p>&nbsp;</p> <p>The tipping point, perhaps, was the 1991 economic reforms. Out went the quota and licence raj, and entrepreneurship bloomed. While the first wave had existing business leaders expanding their coffers or multinational biggies making their presence felt, the dot com boom and the e-commerce explosion made it all real for ordinary aspirants. Governments, too, turned proactive, offering funds and looking for startups with innovative solutions to problems.</p> <p>&nbsp;</p> <p>Somewhere along the way, failure became a stepping stone for learning, rather than a dead end. “Today, entrepreneurs do not fear failure, and are envisioning building world class companies out of India,” said Vishesh Rajaram, managing partner at Speciale Invest, an early-stage venture capital firm.</p> <p>&nbsp;</p> <p>Education also played a part, with many private universities and coaching centres focusing on practical training and setting up entrepreneurship cells. “We are slowly moving away from employment seeking education towards skill-based and entrepreneurship-focused education,” said Ashish Munjal, co-founder and CEO of Sunstone, a higher education group.</p> <p>&nbsp;</p> <p>Yet, the true enabler of change has been technology. “Technology helps you speed up your business and execution,” said Manish Rathi, co-founder of the bus operator IntrCity. “Idea is still at the core of it, but tech has made it simpler.”</p> <p>&nbsp;</p> <p>He should know. While some of the big private bus transport companies took decades to build a fleet, IntrCity took just about two years. “What are we doing different? Technology,” said Rathi. “Traditional businesses depended on trusted hands, usually relatives, to monitor new branches or inventory as businesses expanded into other locations. For us, it is simply technology. We are able to add 50 new buses a month because technology helps us monitor and keep track of performance.”</p> <p>&nbsp;</p> <p>“Technology is the only way to reach out to a large number of people faster,” said Vikram of IvyCap. For investors, it is even more important—a company that can scale up fast using technology is very attractive, because a typical VC would be looking to cash out in a few years.</p> <p>&nbsp;</p> <p>The process of startups getting funded works both ways. Anyone from international investors like SoftBank and Tiger Global to local funds created by families or companies and even Union ministries and educational institutions is ready to invest in startups that appeal to them. Funding also ranges the whole gamut, from early seed (first time) and angel investors (providing mentoring to startups who have just about started operating) to multiple series, which are titled Series A, B, C and so on. Some companies at a later stage then venture on to the stock markets by going for an IPO.</p> <p>&nbsp;</p> <p>Investor Arjun Vaidya breaks it down: “50 per cent depends on the founder, the person or persons behind a startup. We look for whether they will be resilient when things are tough, and whether they are best placed to solve the specific problem at hand.” The remaining he breaks down to 20:30 between whether the market for the product or service is big enough and the rest on the business metrics, ranging from sales, growth velocity, gross margin, profitability and team members.</p> <p>&nbsp;</p> <p>Of course it helped that the past two years had investors flush with cash looking for opportunities. This was fuelled by the excess money pumped into the system as a post-Covid stimulus measure by countries like the US and Japan, which made its way into India. However, with interest rates on their way up, particularly in the US, this easy liquidity is set to be squeezed. Does that mean the joy ride is over?</p> <p>&nbsp;</p> <p>“A large number of startups will find it difficult,” said Ruparel of Indian Angel Network. “[But] an investor will always look for good opportunities. A good company is not only about growth. Problem-solving products and excellent entrepreneurs will always find takers.”</p> <p>&nbsp;</p> <p>The confidence of Indian startups is also visible in their trajectory. Earlier, startups built products meant for the US and other western markets. Then came the big play with the likes of Swiggy, PayTM, Byju’s and the likes, where entrepreneurs built products for the Indian market and scaled them up successfully. And now, Indians are building products for the global market, be it fintech, space or defence.</p> <p>&nbsp;</p> <p>“We have the potential to become the hub for the global startup ecosystem—we are diverse, large in terms of land space and demography, and we have the buying capacity,” said Vikram of IvyCap. “These are great ingredients for startups to come here and set up businesses.”</p> Sun Sep 04 10:51:37 IST 2022 safety-net <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>THERE HAD NOT</b> been an easier time to get a personal loan than the past few years, thanks to the boom in digital lending driven by the thriving fintech companies. Just a few clicks on the smartphone and you have the money in your bank account. Data from the Digital Lenders Association of India shows that digital lending went up from around $75 billion in 2018 to $200 billion in 2021. It is expected to rise to $270 billion this year.</p> <p>&nbsp;</p> <p>But the fertile ground also brought up many weeds. Complaints have been aplenty about exorbitant interest rates, misuse of customer data and unethical recovery practices. There has also been a spurt in unregulated loan apps. In the 2021-22 financial year alone the Reserve Bank’s integrated ombudsman scheme received some 7,800 complaints about digital lending apps and recovery agents, prompting the regulator to crack the whip.</p> <p>&nbsp;</p> <p>The RBI had constituted a working group on digital lending in January 2021. It has now firmed up a regulatory framework based on the report and inputs received from various stakeholders. Under the framework, all loan disbursals and repayments will have to be between the bank account of the borrower and the regulated entity, without any pass-through or a pool account of the lending services provider. Also, the lending services provider’s fees and charges should be paid by the regulated entities and not borrowers.</p> <p>&nbsp;</p> <p>The RBI has also said that the data collected by the lending apps will have to be need-based and with clear audit trails and the explicit consent of the borrower.</p> <p>The new guidelines are clearly aimed at incorporating operational discipline while empowering the end consumers, said Joginder Rana, vice-chairman and MD of CASHe, a digital lending platform. “With borrowers being given the option to accept or deny consent for use of specific data, the RBI aims to give the charge back in the hands of the customer,” he said.</p> <p>&nbsp;</p> <p>The RBI norms will also help push unregulated players out of the market. “Because of loopholes, certain section of digital lenders had started taking advantage. With the guidelines coming in, the unauthorised or unregulated players will vanish from the ecosystem and serious players will become stronger,” said Vivek Veda, co-founder and CFO of digital lender KreditBee.</p> <p>&nbsp;</p> <p>The new regulations require all digital lending to be reported to credit information companies regardless of the nature or tenor. “This will benefit all prudent consumers paying back their loans, including short-term consumer loans, by giving them a clear insight into their overall credit burden,” said Adhil Shetty, CEO of</p> <p>&nbsp;</p> <p>While customers stand to benefit from this, the requirement to set up a grievance redressal mechanism will lead to higher costs for some of the smaller companies. “In many small NBFCs, the cost of compliance will increase,” said Veda. Over time, however, the customer acquisition costs would come down as the number of players in the market falls, he said.</p> <p>&nbsp;</p> <p>Lenders are likely to be a lot more careful in their partnerships with fintechs. “The restriction on access to mobile phone resources could require lenders and LSPs to explore other methods of assessing borrowers’ creditworthiness,” said M.B. Mahesh, analyst at Kotak Institutional Equities.</p> <p>&nbsp;</p> <p>Experts say some of the issues still need to be addressed, like the first loss default guarantee, which is an arrangement in which a third party compensates a lender if the borrower defaults. “There are a few proposals from the draft paper, which have been accepted in-principle by the RBI’s working group but require further examination by the RBI, including FLDG, baseline technology standards for digital lending apps, and framework for web-aggregators of loans,” said Anand Dama, analyst at Emkay Global Financial Services.</p> <p>&nbsp;</p> <p>Separately, there are some recommendations for the consideration of the government such as banning unregulated lending activities and creating self-regulatory organisations like Digital India Trust Agency. The Digital India Trust Agency is expected to verify lending apps before they can be publicly distributed through an app store. Unverified apps will be considered unauthorised.</p> <p>&nbsp;</p> <p>The RBI has clearly taken first steps towards strengthening the digital lending system. What more checks and balances it puts in place and how it addresses the remaining issues will be closely watched.</p> <p>&nbsp;</p> <p><b>RBI’s regulatory framework for digital lending</b></p> <p>&nbsp;</p> <p>Loan disbursals and repayments to be executed between the borrower and the regulated entity</p> <p>&nbsp;</p> <p>Fees and charges to be paid by the regulated entities and not borrowers</p> <p>&nbsp;</p> <p>A look-up period, during which the borrower can exit a loan without any penalty</p> <p>&nbsp;</p> <p>Regulated entities and LSPs to have a nodal grievance redressal officer</p> <p>&nbsp;</p> <p>Data collected by the digital lending apps to be need-based</p> <p>&nbsp;</p> <p>All lending to be reported to credit information companies</p> <p>&nbsp;</p> <p><b>Concerns</b></p> <p>&nbsp;</p> <p>A grievance redressal mechanism will lead to higher costs</p> <p>&nbsp;</p> <p>Fintechs with active NBFC arms have an advantage over those without</p> <p>&nbsp;</p> <p>Lenders to be more careful in their partnerships with LSPs/fintechs; this might push out small companies</p> <p>&nbsp;</p> <p>No clarity on first loss default guarantee, in which a third party compensates a lender if the borrower defaults</p> Sat Aug 27 12:20:12 IST 2022 a-memorable-meeting-with-rakesh-jhunjhunwala <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>WHEN I PITCHED</b> a story on Rakesh Jhunjhunwala in mid-2015, I had my doubts on whether he would agree to a meeting. He rarely gave media interviews; there would at most be a couple a year, and that too in business magazines or pink newspapers.</p> <p>&nbsp;</p> <p>Despite the odds, I had to try. I got the board line number of his company, RARE Enterprises (named by taking the first two letters of Rakesh and wife, Rekha) and spoke to a receptionist. She gave me his email address and I mailed him. There was no reply. I tried again. This went on for 25 days. Then, suddenly one afternoon in June 2015, I got a call from a Mumbai landline number. “Hi, this is Rakesh Jhunjhunwala calling. When would you like to meet me?” I said, “At the earliest.” I landed at his office at Nariman Bhavan in Mumbai with our chief photographer Amey Mansabdar. It was morning and the Big Bull was sitting at his desk, surrounded by screens that flashed stock market updates. He got up to greet us, but suddenly got an urgent call; he asked us to postpone the meeting to later in the day. I was afraid that he would change his mind and cancel it.</p> <p>&nbsp;</p> <p>Fingers crossed, we reached his office in the evening. This time, he was in no rush. We were ushered past a big portrait of Lord Balaji at the entrance and into his cabin; it had an excellent view of the Arabian Sea and several idols of Lord Ganesha. He greeted us with his white shirt untucked and led us to a huge conference table. “These Ganesha idols inspire me,” he said. “All of them are gifts. I am not very religious, as you may think on seeing these idols. But, yes, I do believe that God is the giver of all wealth.”</p> <p>&nbsp;</p> <p>During the two-hour conversation, I got a glimpse into how he analysed a company’s performance. “People look at profits to judge the performance of a company,” he said. “But I look at the different factors that drive those profits. For instance, Infosys capitalised on the IT opportunity and succeeded.”</p> <p>&nbsp;</p> <p>Jhunjhunwala, who has been called the Indian Warren Buffet, recalled a lunch meeting with the billionaire investor in Delhi. “Though I have been compared to him, I am nowhere near him,” he said. “I have neither his skills nor his wealth. In fact, I do not have as much wealth as people think I have. But, yes, I have much more than I need.”</p> <p>&nbsp;</p> <p>As a stock market expert, he believed that one should never be afraid to make mistakes; no one is perfect. However, the mistake should be such that the investor should have the ability to live to fight another day. He felt that investors must approach the market with optimism and an open mind. He also believed that stock markets were “Like women, volatile and difficult to understand and cannot be taught but have to be learnt.”</p> <p>&nbsp;</p> <p>It was Jhunjhunwala's father, an income tax department employee, who had set him on the investing path. Radheshyam Jhunjhunwala had taught his son to always aspire, but never envy someone because he had got something by God’s grace. Father and son lived together in Mumbai, and would discuss stocks every day till the former died.</p> <p>&nbsp;</p> <p>Jhunjhunwala's initial investment was 15,000; he later supplemented it with a borrowed capital of 120 lakh. He made 125 lakh in the first year and never looked back. One of his first investments was Tata Tea. Another early investment that paid off was Sesa Goa, the iron-ore exporting company.</p> <p>&nbsp;</p> <p>Asked about his net worth and assets, Jhunjhunwala said, “Personal wealth is like a woman’s age; it cannot be discussed in public.”</p> <p>&nbsp;</p> <p>An issue that bothered Jhunjhunwala was the average Indian's lack of exposure to the stock market, compared with other countries. He felt that individuals should invest some amount in equities every month.</p> <p>&nbsp;</p> <p>Though stocks were his passion, Jhunjhunwala was also an avid reader. “As a child I was a voracious reader, mostly of adventure and history books,” he said. “I even read comics—Phantom, Tarzan and Mandrake. My father used to motivate me to read and recommended books.” He was equally fond of horses and loved to see them race. He used to be a regular at the Mahalaxmi Race Course in Mumbai.</p> <p>&nbsp;</p> <p>At home, he was a doting father to daughter, Nishtha, and twin sons, Aryaman and Aryavir. He was also full of praise for Rekha, who was his pillar of strength. He considered charity his fourth child, and was concerned about child malnutrition and women’s education in India.</p> <p>&nbsp;</p> <p>This May, seven years later, I approached him for another interview; he was in the thick of launching Akasa Air. This time he was quick to reply and recalled our earlier meeting. He called me from his personal number. “Let us do it sometime in June,” he said. When I reached out in June, he said, “I am not in good health. Forget the interview for now, we will meet after two months.”</p> <p>&nbsp;</p> <p>That interview never happened.</p> Sat Aug 20 12:08:18 IST 2022 rakesh-jhunjhunwala-was-always-bullish-on-india <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>AMERICAN BILLIONAIRE</b> investor Charlie Munger once said that big money was not in buying and selling, but in the waiting. Rakesh Jhunjhunwala’s investment style echos this strategy. Case in point—his holding in Titan Company.</p> <p>&nbsp;</p> <p>Jhunjhunwala began investing in the Tata Group-owned watch and jewellery maker back in 2002. And, in 20 years, its worth alone has risen to over 111,000 crore. Stock exchange data for the April to June quarter shows that Jhunjhunwala and his wife, Rekha, together held 4,48,50,970 shares of Titan, which gave them a 5.05 per cent stake in the company.</p> <p>&nbsp;</p> <p>Over the years, starting from 1985, Jhunjhunwala had built a portfolio of 32 stocks through the privately held RARE Enterprises. Apart from Titan, he and his wife also invested in several other Tata companies like Tata Motors DVR (2.95 per cent stake), Tata Communications (1.08 per cent), Rallis India (9.81 per cent) and Indian Hotels (2.12 per cent), indicating his faith in the Tata Group. “He had tremendous regard for the Tata Group,” noted N. Chandrasekaran, the chairman of Tata Sons, in his condolence message.</p> <p>&nbsp;</p> <p>Jhunjhunwala’s other notable investments included ratings agency CRISIL (5.48 per cent stake), farm equipment maker Escorts, footwear company Metro Brands (14.4 per cent stake), gaming company Nazara Technologies (10.03 per cent stake), Aptech (23.37 per cent stake) and Fortis Healthcare (4.23 per cent stake). He also backed Star Health and Allied Insurance, in which he and his wife held 17.49 per cent stake.</p> <p>&nbsp;</p> <p>His long-term bets have paid off; the day he died, on August 14, his net worth stood at over $5.8 billion, according to Forbes.</p> <p>&nbsp;</p> <p>“[He was a] man with a sixth sense about stock bargains,” said Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services. He calls Jhunjhunwala “yaaron ka yaar” (a friend among friends).</p> <p>&nbsp;</p> <p>“When I hear Rakesh Jhunjhunwala’s name, the first thing that comes to my mind is his love for India, his love for the markets, his love for his friends and his love towards life. Rakesh was a very unique personality,” said Agrawal.</p> <p>&nbsp;</p> <p>Not all of Jhunjhunwala’s bets were successful, though. For instance, he had invested in Mandhana Retail, which sold actor Salman Khan’s Being Human brand. He sold the shares last year at a loss. Similarly, his bet on Dewan Housing Finance Ltd (DHFL) also backfired after insolvency proceedings were initiated against the mortgage lender.</p> <p>&nbsp;</p> <p>His name also cropped up in an insider trading case related to Aptech shares. Jhunjhunwala, Rekha and eight others settled the matter in 2021 by paying Sebi 137 crore. While Jhunjhunwala paid 118.5 crore, Rekha paid 13.2 crore.</p> <p>&nbsp;</p> <p>Following Jhunjhunwala’s death, what happens to his property, including the stocks he held, is a question many would have had. He had made arrangements to ensure a smooth succession and is learnt to have left his assets to his wife and three children. “Rakesh Jhunjhunwala, a true nationalist, lived a life committed to the India story. His unwavering belief in Indian entrepreneurs and enterprise will certainly outlive him. True to his nature and unerring eye for detail, he had planned and meticulously executed a smooth transition to sustain and enhance his legacy,” the RARE Group said in a statement.</p> <p>&nbsp;</p> <p>The smooth succession and the fact that his investments will continue to be managed by his company are the reasons why there will not be any impact on the shares of companies he had invested in, say analysts.</p> <p>&nbsp;</p> <p>After his death, the performance of stocks has been mixed. As of August 17, Titan shares were up 0.8 per cent from the closing price on August 12. Tata Motors (DVR) gained 3.2 per cent, Indian Hotels rose 1.2 per cent, and Tata Communications was down 1.7 per cent. Aptech has corrected 0.8 per cent, while CRISIL is down 1.3 per cent. Star Health, meanwhile, is up 0.8 per cent and Nazara Technologies gained 3.4 per cent.</p> <p>&nbsp;</p> <p>Jhunjhunwala was a firm believer in India and was always bullish on the country’s growth story. His investment in the low-cost airline Akasa is a case in point. India’s airline industry has struggled over the last few years and made huge losses during the pandemic. But, Jhunjhunwala was convinced that a well-run frugal airline could succeed in an under-penetrated market like India. He put his money where his mouth is and invested $35 million for over 40 per cent stake in the airline.</p> <p>&nbsp;</p> <p>Just a week before Jhunjhunwala died, Akasa launched its maiden flight. Vinay Dube, founder and CEO of Akasa, said they would honour his legacy, values and belief by striving to run a great airline.</p> <p>&nbsp;</p> <p>But, with its biggest backer no more, will it impact Akasa’s growth story? Unlikely, say experts. “Airlines are a long-term investment, where break-even takes years. So, one would like to think that the investment made by Jhunjhunwala was one that should survive him not being there,” said an industry observer.</p> <p>&nbsp;</p> <p>Akasa has a strong management. Dube is an industry veteran and was formerly CEO of Jet Airways and later GoAir (now Go First). Co-founder Aditya Ghosh was earlier the president of IndiGo, India’s largest airline.</p> <p>&nbsp;</p> <p>“We are thankful that Mr Jhunjhunwala supported us in recruiting some of the best aviation talent in the country. He wanted us to have a top-notch leadership team that made all day-to-day decisions at the airline without having to fall back on him or any other investor,” said Dube.</p> <p>&nbsp;</p> <p>He added that, thanks to Jhunjhunwala, Akasa was well-capitalised to induct 72 aircraft over the next five years. The airline has so far received three aircraft. “Our financial platform is strong enough to allow Akasa to place an aircraft order in the next 18 months that will be significantly larger than our first,” said Dube. “In simple terms, our growth is secure.</p> Sat Aug 20 12:04:13 IST 2022 booster-stp-to-help-navigate-volatility <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p><b>DO YOU WANT TO</b> invest lump sum in equity markets but unsure how to go about it? Or else do you have a lump sum amount waiting to be invested in a manner where you can make the most of a volatile market? If the answer to either of the question is yes, then it is time you are introduced to a feature by the name of Booster STP. This is a solution put together by one of the leading fund houses to get investors out of the lump sum investing fix.</p> <p>Before we talk about what a Booster STP is, let us look at how a traditional STP functions. Here, the investor parks lump sum amount in a debt fund (source fund) and sets up an STP into an equity fund (target fund). Assuming that the frequency of transfer is monthly in nature, after STP is set up, on a particular date every month, the fund house will automatically transfer a specific amount from debt fund to equity fund. As a result, you get to experience the same advantage of SIP while earning from the debt scheme as well.</p> <p>&nbsp;</p> <p>Now, let us consider Booster STP. This is an improved Systematic Transfer Plan that allows an investor to transfer varying amounts from source fund to target fund at predetermined intervals based on market valuations. For determining market valuation, the fund house will use an in-house developed Equity Valuation Index (EVI), based on which the transfer multiplier will be determined. The multiplier ranges from 0.1x to 5x and is determined using EVI. As a result, this mechanism allows an investor to make the most of market volatility.</p> <p>&nbsp;</p> <p>At the time of signing up, an investor provides a base installment amount which is meant to be transferred to the target scheme. The actual transfer amount can vary between 0.1x to 5 x of the base instalment amount. When the equity valuation index signals that the market is expensive, Booster STP will allow only a small portion (0.1x) of the base instalment to be transferred. In contrast, if the equity valuation index signals that the market is cheap, a significantly higher portion (5x) of the base instalment will be transferred. For instance, if the initial instalment is, let’s say, $1,00,000, the investment would range from $10,000 to $ 5,00,000 (0.1x to 5x), depending on the market valuation.</p> <p>&nbsp;</p> <p><b>WHY BOOSTER STP MAKES SENSE IN THE CURRENT SCENARIO</b></p> <p>There is a fair amount of consensus that, over the next one year, the equity market will be volatile. So, if you are a lump sum investor, opting for a variable transfer amount works out to be better that a fixed amount, thereby making the most of the volatile times. With the help of Booster STP, an investor need not worry about the right investment amount and the right time to invest. Instead, let the model guide the fund house to make an impartial investment decision.</p> <p>&nbsp;</p> <p>The Booster STP feature is just a year old as it was launched in July 2021. So, if one were to compare how Booster STP has stacked up against traditional STP over the last one year, the results is startling at best. The assumption here is that the investor has invested Rs12 lakh in the source scheme (ICICI Prudential Savings Fund) in July 2021. If one were to go the traditional STP way, an amount of Rs1 lakh was transferred every month for the next 12 months. However, with Booster STP, the multiplier over the last one year varied from 0.1x to 0.4x and hence also the transferred amount.</p> <p>&nbsp;</p> <p>As of June 2022, the investment amount in case of traditional STP will be worth $11.20 lakh as compared to $12.13 lakh generated by the Booster STP. The difference in investment value under the two methods is $93,000 or 8.29 per cent. This clearly shows how Booster STP could provide sizeable outperformance to its investors.</p> <p>&nbsp;</p> <p>To conclude, if you are looking to deploy your investment in a manner by which you can benefit from market volatility, Booster STP feature is a worthy consideration.</p> <p>&nbsp;</p> <p><b>Writer is partner, Hindustan Capital</b></p> Sat Aug 20 11:59:40 IST 2022