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In a surprising turn of events, renowned academic and activist-economist Prof Jean Dreze was asked to stay away from the Delhi Economics Conclave 2015 after being invited to the event by none other than Chief Economic Advisor, Arvind Subramanian. The conclave was addressed by Prime Minister Narendra Modi, ministers of the Union Cabinet and Chief Ministers like N Chandrababu Naidu and Raman Singh. Prof Dreze was initially asked to address a session on “Political Economy & States’ Perspectives and Preparedness”. He was sent an invite by Subramanian on September 22. “This is the invitation I received and accepted some time ago. On the train to Delhi, two days ago, I received a call from a functionary from the Ministry of Finance who explained, with some embarrassment, that I had been dropped from the programme and would not even be allowed to attend. No reason was given. I am sure that this was not the Chief Economic Advisor’s doing - we are on good terms and I don’t think that he would be afraid to hear my views even if he disagrees with them. Needless to say I am disappointed, and also concerned that the Conclave has turned into a mutual appreciation society with everyone on the same side,” Prof Dreze told BW Businessworld. Prof Dreze is a known champion of issues like food security, and right to information. He is a former member of the UPA Government’s National Advisory Council, and many of his views would be found to be unpalatable by the present Narendra Modi government. Prof Dreze has, however, quite appreciated the food security programme in BJP-ruled state of Chattisgarh. While none from the government was ready to speak on this faux pas, questions were raised if this was yet another sign of rising intolerance “of the other view” in the country. Asked if the rising intolerance impacted India’s onward economic march, Prof Dreze said: “Tolerance is a value in its own right, we don’t have to justify it by arguing that it has economic returns. Still, I think that Raghuram Rajan had a point when he said that open debate and enquiry foster economic progress. This is not primarily because investors are put off by intolerance - investors care about profits, not communal harmony and that sort of thing. It is because economic progress depends on human creativity, innovation and initiative, all of which benefit from freedom of thought and expression. All this, of course, is a little speculative, and that’s another reason for valuing tolerance for its own sake rather than as an economic asset”. Asked to compare the economic thrusts of the Modi government and the Manmohan Singh government, Prof Dreze said: “I don’t see much difference in their economic policies. This is not surprising since the interests behind these policies remain much the same. I do see some difference in the field of social policy. The UPA government accepted, by and large, that social policy is a shared responsibility of the central and state governments. The NDA government seems inclined to palm off social policy to the states”.
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The just-concluded Bihar Assembly election is set to see a very close contest between the BJP-led alliance and the Janata Grand Alliance, when the votes are counted on Nov 8, if one were to go by the exit polls. There’s an odd man out in this club of exit polls, though -- Today’s Chankaya, which has, in the past, been known for its accurate forecasts. According to this agency, which conducted the exit polls in Bihar in association with News 24, the BJP-led alliance will win 155 seats, whereas the Janata alliance will win a mere 83 seats. Others will get 5. Chanakya, however, had gone wrong in predicting last year's assembly elections in Haryana and Maharashtra. Except for the News 24 forecast, other news channels’ exit polls claimed that the BJP-led alliance could anything between get 90 to 127 seats, whereas the Janata alliance could get 111 to 140 seats. Apart from News 24, Aaj Tak / India Today channels also claimed that the BJP-led alliance may just touch the half-way mark. According to this poll, done in association with Cicero, the NDA could end up with 113 to 127 seats, whereas the Janata alliance would get 111 to 123 seats. India TV, News X / India News, News Nation and ABP News on the other hand forecast a trend that was somewhat similar – they said the JD (U) –RJD – Congress alliance will romp home. The mean / average of various exit polls conducted today (by News 24-Chankaya, India TV-C Voter, India Today-Cicero, News X, News Nation, ABP News) however shows that the Janata alliance is just ahead of the BJP alliance. The Janata average seat is 119, whereas the BJP average seat is 118.News 24-ChankayaBJP + 155JD (U) + 83Others 5India TV-C Voter:BJP + 101-121JD (U) + 112-132Others 6-14India Today-CiceroBJP + 113-127JD (U)+ 111-123Others 4-8News XBJP + 90-100JD (U)+ 130-140Others 13-23News NationBJP + 115-119JD (U) + 120-24Others 3-5
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The Indian operations of Standard Chartered Bank (StanChart) will see "rationalisation" as part of the bank's global lay-off of 15,000 staffers. The move is part of the bank's chief executive officer Bill Winters' larger plan to restore profitability hit by emerging market's economic woes. While the exact staffing to be cut in India is not known as this point in time -- it employs close to 20,000 in India -- the bank may redeploy key local human resources across its global franchise. A key reason for this is on a standalone basis, the largest foreign lender in India in terms of branch network (100) saw its net profit rise 93 per cent in 2014-15 to Rs 3,051.4 crore (Rs 1,584 crore). For the times we live in, that's not bad for a foreign bank in India. The result is seen as a vote of confidence in the ability of the bank's top brass in India; and to that extent pink slips may not be issued left, right and centre. Local incorporation of the bank is also on the cards - as on date no foreign bank in India is locally incorporated; they are branch operations of their parents. Local incorporation will offer them "near national treatment" on a par with Indian private banks even as it means that they will have meet regulatory requirements on priority sector lending like local banks. The churn at the bank started from the time former global CEO Peter Sands and Asia chief Jaspal Bindra left the scene. Sand's deputy CEO Mike Rees saw his wings being clipped; he had joined the bank in 1990 and had regional chiefs reporting into him was the best paid board member last year and has been awarded about $72 million in the six years after the financial crisis. Another biggie who quit was V Shankar -- head of Middle East & Africa -- to set up a private equity fund which will invest in the region. Winters rationalised the bank's eight regions into four new regional businesses: ASEAN & south-Asia, (including India), led by Ajay Kanwal; Africa & middle-East (Sunil Kaushal, India CEO of the bank till then); Greater China & north-Asia (Ben Hung); and Europe & Americas (Tracy Clarke). India now resides in the new ASEAN & south-Asia region under Ajay Kanwal; he assumed his new role on 1st October 2015 based out of Singapore. Kaushal moved over to take charge as regional CEO for the combined Africa & middle-East regions (1st October 2015). A new CEO for India is be appointed (the grapevine says it is Manisha Girotra, boss at Moelis & Company Holdings; and a former India head of UBS) soon and this role will report to Kanwal; both Kaushal and Kanwal do so to Winters, and the Group's management team. StanChart is to cut 17 per cent of its workforce to reduce costs by $2.9 billion by 2018, and sell or restructure $100 billion of loans, on a risk-adjusted basis - or a third of its total. Winters, a former JPMorgan investment bank boss who took the helm of StanChart in June, described this as an "aggressive and decisive set of actions" to shore up the company. The news of the rights issue and restructuring came as Asia-focused bank posted a third-quarter operating loss of $139 million, weighed down by growing global regulatory costs and rising loan impairments in India.
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Global investment firm KKR and The Chernin Group, LLC on Tuesday (03 November) announced the creation of Emerald Media with an initial commitment of $300 million from KKR from its Asia Fund II. The Chernin Group will be joining as a minority co-investor. The two investment groups are building a war chest to buy controlling stakes or a significant majority holding into promising Asian media and entertainment businesses. In a joint statement on Tuesday, KKR and The Chernin Group said that the multi-layered partnership was seeking to capitalize on fast-growing media and entertainment industries across Asia. KKR has also acquired a significant, minority stake in CA Media, the existing Asian media portfolio of The Chernin Group. Media industry veterans Rajesh Kamat and Paul Aiello will jointly head Emerald Media, which will have offices in Mumbai, Hong Kong, and Singapore. They will also continue to manage the CA Media which has significant assets in India in the form of controlling stakes in Endemol Shine India, Graphic India, Fluence, and Only Much Louder, as well as in Indonesia. Rajesh Kamat formerly headed and launched the Colors network, owned by Viacom18, while Paul Aiello, it may be recalled, held office as CEO of Star Asia before moving to the Chernin Group. Emerald Media will focus primarily on providing growth capital ranging from $15 to $75 million for both control and significant minority positions to media, entertainment, and digital media businesses in Asia. Joseph Y. Bae, Member of KKR & Managing Partner of KKR Asia, said, "The growing middle class in the region is using its discretionary income on Internet connectivity, but the industry itself is fragmented. Investing behind proven leaders with high growth potential is a cornerstone of KKR's Asia strategy." Much in the same vein, CA Media chief Rajesh Kamat said: "The media and entertainment sector is on the cusp of a strong growth phase-driven by media convergence, an attractive investment environment, and rising discretionary spends. With the building blocks for growth in place, there is a significant opportunity to create a diversified portfolio of assets in this space, building on our accomplishments and ongoing work with CA Media and The Chernin Group."
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Infosys co-founder Nandan Nilekani is in talks to invest in an early stage logistics venture Fortigo, signalling a strong vote of confidence in the new breed of new breed of India's entrepreneurs. This is the fourth venture that the former UIDAI chairman has backed in the current calendar year alone. Nilekani was recently in news for investing in mobile payments startup Mubble and mobile publishing startup Juggernaut. At a time when startups have become the buzzword for risk capital investors such as private equity and venture capital firms, it is also becoming increasingly common for high networth individuals to take exposure in the country’s startup ecosystem and allocating some of their investible surplus to foster early stage ventures. While for startups, the availability of capital is absolutely crucial, roping in successful corporate honchos also makes it easier for them to attract venture funding later giving them more credibility. Take for instance, Fortigo itself, the firm promoted by technology industry executives Vivek Malhotra and Anjani Mandal that aims to solve the logistics and transportation problems for small and medium businesses. The firm is also in talks with other venture firms including Accel Partners. Mubble too raised capital from Accel after raising its first round of seed capital from Nilekani. So far, 2015 seems to be the year of startups with young entrepreneurs increasingly churning out winning ideas and attracting huge dollars in funding. In fact, investing in emerging businesses has opened up new entrepreneurial avenues for India Inc's head honchos as well who are now parking their personal wealth in startups. In the first half of the current calendar year, as many as 363 venture capital deals were sealed, three times more than the number of private equity deals, which stood at 99, as per data available with Grant Thornton. Fortigo is currently creating a fleet management service for truck owners in order to help them manage their inventory and thereby save logistics costs. In fact, logistics and warehousing are increasingly evincing investor interest with a host of companies raising capital in the sector. Sohanlal Commodity Management recently rasied Rs 100 ccrore rom Creation Investments, a US fund and its existing investor Everstone. Other firms that raised money in the sector include Star Agriwarehousing and Collateral Management and Gati Kausar.
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The Narendra Modi government has said that it will not be found wanting when it comes to heeding Moody’s “warning” on reining in party and parivar hotheads. Union Parliamentary Affairs and Urban Affairs Minister M Venkaiah Naidu said this on Monday, 2nd November, while stressing that most of the instances of communal disturbances or violence had been reported from Congress-ruled states, or states ruled by Congress-friendly parties. “The Centre and the Narendra Modi government cannot be blamed for this,” he said. Moody’s Analytics had on Friday said that PM Modi “must keep his party members in check from making controversial statements or risk losing domestic and global credibility”. “In recent times, the government also hasn’t helped itself, with controversial comments from various BJP members. While Modi has largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions… Along with a possible increase in violence, the government will face stiffer opposition in the Upper House as debate turns away from economic policy,” the MA report said. While acknowledging the MA report, Naidu at the same time referred to many laudatory references to the Modi government “from the World Bank, Ernst and Young, IMF and others”. “PM (Modi) is today rated among the ten most admired leaders of the world,” Naidu added.
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At long last, we have something to cheer about, but there’s still have a long wait ahead before we are out of the woods. The good news first. Moody's Investors Service on Monday upgraded its outlook for our banking system to 'stable' from 'negative' – there’s to be a gradual improvement in the operating environment (for banks) will lead to lesser growth in bad loans in future. The not-so-good bit is while the stock of non-performing loans (NPA) may continue to rise, the pace of new impaired loan formation in the current financial year ending March 2016 will be lower than the levels seen in the past four years – or in effect the run-rate of NPAs will taper off. Moody’s stance today is a reversal of the negative outlook assigned to the Indian banking system four year ago (November 2011). Said the rating agency: “The stable outlook on India's banking system over the next 12-18 months reflects our expectation that the banks' gradually improving operating environment will result in a slower pace of additions to loans problem, leading to more stable impaired loan ratios," Moody's VP & Senior Credit Officer Srikanth Vadlamani said. Moody's, however, said the capital levels of state-run banks are low and the government's announcement to inject Rs 70,000 crore into these banks over the next four years is a "clear positive". It added “But this amount is still short of the banks' overall capital requirements. Ability to access equity capital markets remains key if these banks have to address their capital shortfall," it said, adding high capital levels are a credit strength of private-sector banks. Moody’s expect India's real GDP to grow at 7.5 per cent in the fiscal end-March 2016 and at 7.6 per cent in the next fiscal. “These growth rates would be slightly faster than the 7.4 per cent recorded in fiscal 2015 and substantially better than from fiscal 2013 to fiscal 2014. The Reserve Bank of India will likely maintain its accommodative stance over the outlook horizon, supporting the operating environment for banks”, it noted. What’s the big worry? Indian banks have significantly tightened their underwriting standards, as seen in the sharp slowdown in corporate loan growth to 9.3 per cent over the past three years from 23.1 per cent during 2009-12. That’s a reference to the fact that banks decided to slam the brakes on credit growth as the dud-loan mountain ballooned. Consequently, corporate loans originated since 2013 mostly do not represent a material risk to asset quality, says Moody’s. For loans originated in 2009-12 that are currently under duress, the key issue from an asset-quality perspective is mostly one of recognition of already existing problems, rather than incremental stress in the underlying operating environment. While there has already been a significant recognition of impaired loans, the steel and power sectors in particular will likely see higher levels of new impaired loans. Steelmakers are facing sharp price declines and increased competition from higher imports from China. And here is what has not been taken on board by banks. For the power sector, while 22 per cent of loans were recognised as stressed as of end-December 2014, this percentage largely represented exposures to state distribution companies. “We expect that significant underlying stress in the power generation segment that is not yet reflected in the banks' impaired loan ratios will start to be recognised”. You will come to know of that quantum over the next fortnight!
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Conventional wisdom says that a higher voter turnout favours the principal opposition party, in a bipolar contest. The BJP should then be enthused by the turnout of around 58 per cent voters in the fourth phase of state assembly election in Bihar. Historically, however, a low turnout of voters has helped the BJP in Bihar. So it remains to be seen which way the votes swing in the state, in the face of a high voter turnout. BJP leaders, however, claim that ground reports suggest a decisive edge for the saffron-led alliance in the state, which has been further given a boost in the fourth phase. The fourth phase of voting was held in many BJP strongholds with NDA nominees seeking a re-election in 34 out of the 55 seats that went to polls. Overall, the BJP assessment is quite contrary to the media projections in the Delhi media, which gave a thumbs-up to the Lalu Prasad-Nitish Kumar grand alliance in the first two phases of the state assembly polls. The BJP, as against media reports, feels that it had a slender edge over the grand alliance in the first two phases, and the fourth edge has been solid for the party. The BJP-led alliance, however, is not expected to do well in the fifth phase as voting will be held for 57 seats mostly in Lalu-Nitish strongholds of Seemanchal and around. Even if the BJP’s internal assessment of the party faring well in Bihar comes true, the aftermath of the elections – selection of its CM candidate is not going to be easy at all. Unlike the grand alliance, the BJP-led alliance has not declared its CM candidate, and the entire spotlight has been on PM Modi. The party has, however, made it clear, that only someone from OBCs or MBCs will be the CM. The names doing the rounds include, apart from the tallest BJP leader in the state, Sushil Kumar Modi, that of Prem Kumar and Rajendra Singh (an RSS favourite). The aftereffects of the Bihar elections will be most visible in Delhi, specially during the upcoming Parliament winter session. Should the BJP-led NDA win Bihar, the Modi government can hope for a smooth conduct of the session, with crucial economic legislations like the GST and real estate bill lined up. However, if the grand alliance, that includes the Congress, manages to pip the NDA, the Congress will get a new lease of life at the Centre, and will continue with its confrontationist agenda – much visible during the monsoon session. In the event of the BJP losing Bihar, other opposition parties will make common cause with the Congress, speaking in one voice on derailing the reforms legislation agenda. NDA managers don’t rule out a washout, like the monsoon session, if they lose Bihar. That the Congress has lost none of its belligerence was evident when it boycotted PM Modi’s banquet in honour of the visiting African dignitaries, during the India-Africa Forum Summit. BJP’s worst fear, thus, is – lose Bihar, and lose another Parliament session! BJP’s internal assessment, however, gives it a reason to stay optimistic.
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Online fashion retailer Jabong, owned by Global Fashion Group (GFG), named Benetton’s Sanjeev Mohanty as the new chief executive officer and managing director effective early December, the company said in a statement on Saturday (31 October). Mohanty comes with over 20 years of experience in the fashion industry, primarily at Benetton India where he worked for over 11 years including 8 years as the managing director. “I am excited to enter the rapidly growing online commerce sector, and there could be no better opportunity than Jabong given its scale and consumer brand recognition. The company is uniquely positioned as India’s only large and independent online fashion marketplace, and we have identified a number of growth drivers that will allow us to deliver an unparalleled experience to delight our customers and suppliers,” said Mohanty. “We are delighted to have Sanjeev spearhead the development of Jabong as CEO. His strong leadership skills and deep understanding of fashion and the Indian consumer, coupled with the continued commitment from GFG’s shareholders, will allow Jabong to further strengthen its position as the leading online fashion destination in India,” said Romain Voog, chief executive of Global Fashion Group. “India is a hugely exciting market and GFG’s shareholders and management remain committed to building Jabong to the benefit of its customers, employees and partners. We look forward to supporting Sanjeev as the company starts a new chapter this Diwali,” said Lorenzo Grabau, chairman of GFG and chief executive of Investment AB Kinnevik, the largest shareholder of GFG. GFG operates across four continents and 28 countries, employing over 9,500 people. With a focus on emerging markets, GFG targets a EUR 300 billion fashion market and over 2.5 billion people. Global Fashion Group was founded in 2011 by Swedish Investment AB Kinnevik and German Rocket Internet SE.
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Moglix, a Noida-based startup that operates as a global marketplace from India/ Singapore for Business and Industrial supplies has raised capital from Accel Partner and Jungle Ventures. Founded by Rahul Garg earlier in 2015, a former Google employee with extensive experience building global products and running sales across Asia, Moglix is an online-first sales and marketing engine for Asian brands and sells over 100 countries across the world. The funds raised will be used to enhance the technology platform, building a deep merchant base across Asia as well as marketing to customers across the Globe. “The industrial products market from Asia is growing at a rapid pace. Engineering goods contribute 24 per cent of the Indian exports worth $300 billion+. Hence, this market has also been a strong focus area for Make In India initiatives,” said Rahul Garg, CEO & Co-Founder of Moglix, in a statement released to the media. A large part of this trade remains offline and happens via traditional B2B channels, while the buyers are increasingly moving online. “We believe we can play a significant role in bringing them together online,” added Garg. Moglix is looking to boost the global trade from Asia, via Internet. The company currently focuses on business and industry supplies which include electricals, lighting, hardware and tools broadly referred as engineering goods. Some of the companies that already sell their products via Moglix include Havell’s, Larsen and Toubro, C&S Electric, Anchor, Bajaj, Unbrako, Caparo, Ambika and Taparia. Subrata Mitra, Managing Partner of Accel Partners said: “Accel has always believed in disruptive startups looking 3-5 years ahead where we think technology can make an impact.” Echoing the same sentiment, Amit Anand, Managing Partner of Jungle Ventures said: “Moglix’s vision of disrupting the category by creating a global market place out of Asia is unique and scalable. With Rahul’s experience working across Asia-Pacific driving technology changes we are pretty confident of the impact in the industry that Moglix has set out to create.” So far, 2015 seems to be the year of startups with young entrepreneurs increasingly churning out winning ideas and attracting huge dollars in funding. So much so, that ithe risk capital market, there is growing chatter that venture market is the place to watch out for. In the first half of the current calendar year, as many as 363 venture capital deals were sealed, three times more than the number of private equity deals, which stood at 99, as per data available with Grant Thornton. Accel was recently in news for funding Bangalore-based mobile technology start-up Mubble that earlier raised its seed funding from Infosys co-founder Nandan Nilekani. Jungle Ventures is based out of Singapore ad provides early stage investments and to startups across Asia. It was founded in 2010.
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