Amazon's India arm — junglee.com — is finally all set to go live midnight (Wednesday-Thursday) after several delays. Junglee.com will be a marketplace with about 500 online retailers showcasing their products on the website. The marketplace will not just feature products from Indian e-commerce websites like timtara.com, bestylish.com, myntra.com or futurebazaar.com; but Amazon will also be seen bringing its global catalogue to India through junglee.com, a person close to the matter revealed. "Amazon is trying to build the biggest catalogue in the country with over 10 million products," he revealed on condition of anonymity. After several months of research, close eye on Alexa ranking, tight scrutiny of comscore data and dummy orders placed with e-retailers, Amazon India team signed up with about 500 players to be featured on junglee.com from an extensive list of 1,000 shortlisted retailers. "Amazon was clear that they will reach out to those people who will match certain parameters in terms of order fulfillment time, customer experience and quality of products," an e-commerce player tying up with Amazon revealed on condition of anonymity. The contract between Amazon and the e-commerce players will give Amazon the permission to pull product information from the data base of these websites and feature it on its market place. The marketplace will have user feedback and rating for every product and every player that has it on offer. All this and even more would be managed by Amazon for free. Unlike its strategy in the US, where Amazon charges the vendors for being featured on its website, it is offering this service without a cost to Indian e-commerce sites.A lot of e-commerce players are on board with Amazon with specific products only. They will keep some SKUs (stock keeping units) exclusive to their own websites. Timtara.com will be seen offering 2000-3000 SKUs to begin with. Amazon's e-commerce partners are expected to benefit from Amazon's traffic strength. Amazon.com already gets about 7 million unique visitors in a month from India. This will help Indian e-commerce players who have been bleeding because of very high customer acquisition cost in India. The company is also in talks to set up its first fulfillment centre in Mumbai and has not yet finalised the deal.California-based Junglee.com was acquired by amazon.com in August 1998. Back then junglee.com was a provider of advanced Web-based virtual database technology that helped shoppers search products on the Internet. Businessworld reported in December that Amazon will break ground in India with an eBay-like model until foreign direct investment (FDI) is allowed in retail and it gets regulatory approvals to have its own backend set up in India (see ‘A Click Away', BW, 5 September 2011). The company is first expected to test the Indian waters with its website junglee.com and once FDI regulations are eased out the company will roll out its full business with brand name amazon.in, according to sources. Current regulations do not bar foreign companies like amazon.com from extending back-end technology help to the e-commerce players and neither does it stop the foreign players from venturing into services like logistics. Hence, Junglee.com will gradually propose managing back-end services for e-commerce websites. It will be well within the gambit of amazon to open a logistics arm for junglee.com in future. For now Indian customers logging on to amazon.com website could find themselves being directed to junglee.com for buying certain products. Well, that is the only marketing or advertising one is going to see about junglee.com – amazon's short term India avatar – as the company continues to remain quiet and play the hush-hush game.
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From cricket to Formula1 racing, sports is emerging as an industry in India, generating lucrative and promising career options not only as a sportspersons but also as sports managers and event coordinators. "As sports enters the entertainment arena, a greater need for professionals who understand the business of sports is also increasing, says David Shilbury co-author of Strategic Sport Marketing and Sport Management in Australia, who is a strategist and an expert in sport governance and development. The former editor of Sport Management Review and an editorial board member for the Journal of Sport Management, Shilbury has worked with many sporting organisations including the Australian Touch Football Association, Cricket Australia, and Australian Weightlifting Fed. Foundation Chair in Sports Management at Deakin University currently, he was recently in India to promote the university's courses. Shilbury spoke to Businessworld Online's Poonam Kumar about the growth and scope of sports management in India. Excerpts from the interview:Why and how has sports management become increasingly popular in India? Sports has a profile in India, mainly through a few popular sports such as cricket and hockey. India's success in cricket has fuelled an interest in sports, and specifically sports management. People are focusing on issues such as how cricket can be managed to sustain long-term success. IPL has also grabbed country's attention on professional sports and the range of careers attached to it. Similarly, decline of India's fortunes in hockey and its inability to remain competitive with Australia, the Netherlands, Spain and Germany has also focused attention on the systems and infrastructure required to rebuild elite hockey so that it can be competitive again. Once again, there is the realisation that professionally qualified staff and expertise will be required to re-launch hockey. What is the scope of Sports Management in India?With the growth in professional sports and major events in India, comes the growth in sports management. Careers requiring skilled staff to manage the IPL, the BCCI, golf, tennis and the Formula1 Grand Prix are evolving. As these events generate profile for their sports, attention will turn towards training the future champions in each of these sports. This will further increase the need to participate in and put in place programmes to encourage participation. And the realisation that participation in sports is not just about producing champions, but it is inherently healthy and a 'wholesome' activity will follow. Larger number of participants in sports will also help build future interest in professional sports, which means revenues through ticket sales, television rights and merchandise. How is a sports management degree different from a regular MBA? An MBA traditionally focuses solely on corporate entities. It is normally about profit and loss and the strategies and skills required to manage profit-making entities. A Master of Business (Sports Management) is different and not solely focused on managing paid staff. In sports, paid staff often have to be managed, retained and maintained. One needs to nurture and understand their motivations for involvement in particular sports. Moreover, bottom line profits are not the sole measure of success as most sporting organisations are non-profit entities. Others include how sports contributes to social capital goals within communities, how it helps people with social interaction, how it contributes to health both physically and mentally, and how it contributes to national identity and pride. Because sports is generally something the community feels close to and there is a sense of ownership, national sporting organisations have broader mandates than simply making money. Is sports management a recent phenomenon?Sports management courses at Deakin University are just over 20 years old, so it is only a fairly recent course. The courses have emerged in response to the professionalisation of sports and the need to prepare professionals to manage the increasing range of tasks such as marketing a major sporting contest (i.e. Test Match India v Australia), managing the facility as per the standards, ensuring that players are professionally ready, their contracts are legally sound and they get paid for what has been agreed upon. There are many other branches including negotiating television rights contracts and so on. What kind of recruiters come to pick students who are pursuing sports management? National governing bodies like the BCCI, Hockey India, All India Football Federation, IMG/Reliance, Swimming India, Federal government and state departments sports, Commonwealth and Olympic Games Organising Committees, Asian Games Organisers and many others. What kind of job opportunities do students look forward to after doing an MBA in sports management? A variety of jobs in all the organisations listed above including human resources, overseeing professional staff and player's conditions, sports marketing and media, public affairs, licensing and merchandising, finance and law, facility management, event management, player management, high performance team management (such as travelling with Indian Cricket team) and so the list goes on. What is the future of sports as an industry? What role will sports management play? It will continue to grow, and this will be more obvious in India where there is more growth potential for professional sports. In 10 years it will be difficult to recognise sports management in India compared to today. There will be more vents, more professional sports, and more importantly more people playing organised sports. A growing middle class of 500-600 million will dictate the need for more opportunities to fill their leisure time with organised sports. What kind of students can take up the programme? Most students who choose to study sports management have an obvious interest in sports. Usually, they are not the elite athletes, but those who have played and enjoyed sports at a variety of levels. People well suited for sports management should also be interested in working as a team and for long hours and travelling. Any message for the students who want to start a career in sports management? Yes, get involved in sports as a volunteer to begin with, enroll in a degree to study sports management, and don't be too fussy in choosing your first job.
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For most individuals, life insurance is the first step towards financial planning. However, many of us end up confusing life insurance products with investments products.Sanjiv Bajaj, managing director of Bajaj Capital and Balwant Jain, chief financial officer of Apnapaisa, a price and features comparison service for loans and insurance products, explain to Businessworld's Tanushree Pillai the different kinds of life insurance products available and the benefits and pitfalls of each. What are the kinds of life insurance products that are available for investors?Bajaj: The life insurance market has evolved tremendously over the last ten years, as there is a wide range of life insurance products which are available for investors now. These include Child Plans, Endowments, Retirement Solutions, Ulips, Term Insurance Solutions and Monthly Income Plans.Jain: First of all, life insurance products should not at all be treated as investment products. One should always separate insurance and investment. Typically, these are the types of products in insurance sphere:1) Term plan2) Traditional Plans 3) ULIP plans How are all these plans different from each other?Bajaj: The various life insurance products differ from each other on the basis of the risk appetite of the client, as to who can choose between unit linked (ULIP) versus non linked products. Also, based on the risk cover requirement, an investor can go for a low-cost term insurance solution or a mix of protection and investment through endowment solution. Child insurance is unique in itself because it often offers a feature called Built in Waiver of premium benefit which assures that in the event case of any mishap with the parent, the child's investments are not frozen or stopped in between. Rather, the insurance company on behalf of the deceased parent would contribute the premium on the due date so that child's financial goals are achieved as it is.Jain: a) Term plan: These are pure insurance products where only the risk is covered. These plans are available for a certain number of years (up to which the risk is covered).There are variations of this as well. A pure term plan is where if the insured person dies during the period of insurance, his nominees get the insurance money. However, in case he survives the term for which the insurance policy is taken, then he does not get anything.Then, there are ‘return of premium policies', where the premium paid is returned without any addition/bonus to that. There are single premium polices we well.These pure terms plans are available both online and off line. Online term plans are cheaper by around 35 per cent as compared to off line plans bought through agents.b) Traditional Plans: These are saving cum insurance plans and thus have higher premium. Historically they have given returns of around 5.5 per cent in the past. These consist of: 1. Whole life polices - money is payable after death of insured person. 2. Money back policies - you get your money back periodically.3. Endowment plans like child plan - money is paid at the end of the term chosen by youThen, there are ULIP plans which have higher component of saving and lower portion of insurance - it is long term product.What are the benefits and pitfalls of each of these products? Bajaj: Endowment is usually bought for a fixed tenure with the objective to receive a lump-sum on maturity to meet one of the financial goals. Being a traditional product, the investment is primarily debt based & hence the investor can expect between 6-8 per cent return only. However, investors are assured of a minimum return called sum assured which is prefixed at the beginning of the policy.Ulips are very flexible investment cum protection solutions where the client has choice in the form of fund allocation, risk cover multiple & transparency in investment returns. But being unit linked, there is no minimum assured return guarantee to the investor & hence he needs to take his own decision on choosing the asset allocation to get the desired returns.Child Plans: There is no replacement for this kind of policy because of the features mentioned above which insures continuity of investment for a child even on demise of the parent. Child products can be bought either as unit link or through traditional versions.Term Insurance Solutions: Term Insurance is the basic form of life insurance bought with an objective to meet the risk cover requirement of an individual.Broadly two types of Term Insurance Solutions are available: With Return of Premium and Without Return of Premium. Pure Term Insurance, which doesn't return anything on maturity, is the cheapest but by adding a little more, one can convert Pure Term into With Return of Premium Solution. The biggest advantage of With Return of Premium Term is that it offers the features like "No Lapse Guarantee" which means that in the situation of the client's inability to pay the premium, his risk cover would get proportionately reduced for the remaining term as against the lapse of a policy in case of the normal term plan.Monthly Income Plans (MIPs): These are the latest and one of the most sort-after products in the life insurance space as they offer guaranteed regular income to the investor for a defined period after he has initially contributed for few years of premium. Since they offer a guaranteed, tax free income, they are ideal for retirement solution or buying a second income for professionals.Jain: Except pure term plan, we would not advise any other product as the returns are abysmally low. Advice to buy only term plan can be taken as rule from us - there are no exceptions to this rule.What should an investor look for before buying a life insurance product?Bajaj: Before buying a life insurance policy, one should contact a financial advisor to help him ascertain his protection needs and investment needs like child education and retirement. Based on this, he should choose between the various type of products mentioned above and also choose the product based upon his risk taking appetite i.e a unit link versus guarantee based traditional plans.Jain: First of all a person should buy an insurance only and only if someone else is dependent on him for financial support. Hence, a student or housewife should not buy any life insurance. However, health insurance for them is a must and one should buy health insurance for all the members of the family irrespective of the age of financial dependency.What should an investor be wary of before buying life insurance?Bajaj: Discipline of staying invested is the key to any life insurance product. Hence an investor should completely satisfy himself as to the requirements and once he has committed to the product, he should stick to the commitment for the full term.Jain: One should get his insurance needs assessed by a professional based on his present living standard, present age, the age at which one wants to retire, number of dependents, life expectancy level. We suggest a person should get his insurance needs assessed through a Certified Financial Planner - one should be adequately insured, neither less nor more.One should buy his insurance term so as to co-terminate with his retirement age. Once a person retires and stops earning he does not have to have any insurance as financial dependency of the family comes to an end.What are the common mistakes that investors make while buying life insurance?Bajaj: The biggest mistake one does while buying a life insurance product is that he buys from the tax saving perspective whereas it is the incidental benefit and should not be the only base in forming a decision. One has to align his financial goals with the life insurance product he is buying. Worldwide majority of the long term savings are primarily done through the life insurance route.Jain: Not disclosing material facts while filling up the insurance proposal form. Normally the insurance agent proposes and fills in the proposal form.One should fill in all the details himself in the insurance proposal form. One should disclose the facts correctly and honestly. Even a small mis-statement on your part can jeopardize the claim in the eventuality of the death of insured.One should not mix insurance and investment at all.If one does not understand investment, there are very simple products like PPF and post office small saving products which combined with term plan will give you better returns any day.
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Hyderabad based Indian School of Business has slipped by 7 ranks from 13th to 20th in the Global Top MBA rankings 2012 released by the Financial Times, London. IIM Ahmedabad on the other hand has maintained its 11th position in the FT rankings this year too. ISB and IIM-A are the only Indian business schools featured on the FT rankings. IIM Ahmedabad is ranked the top business school in terms of Career progression. ISB's career progress rank is 29th.The weighted salary of IIM Ahmedabad stands at $175,076 whereas; the weighted salary for ISB is $129,512. IIM Ahmedabad's weighted salary is marginally up this year by $636, closing to Harvard Business School's who's weighted salary is $178,249. The weighted salary for ISB on the other hand is $129,512 down by %4,894. The IIM Ahmedabad is ranked 29th on the value for money parameter, 23 positions higher than ISB's 52nd rank. The overall salary percentage increase at IIM Ahmedabad is 140 per cent down by 12 per cent as compared to last year's increase. ISB on the other hand recorded salary percentage increase of 177 per cent this year.One of the factors for ISB's comparatively overall lower rank may be its lack of participation in the doctoral rank category in which IIM Ahmedabad has scored 52nd rank. Also the IIM Ahmedabad's research rank was 92 this year, 11 positions below ISB's 70th rank. US based Stanford Graduate School of Business, Harvard Business School and University of Pennsylvania's Wharton are ranked first, second and third respectively. China's Hong Kong UST Business School is ranked tenth and National University of Singapore's School of Business is ranked 23rd.chetna(dot)mehra(at)abp(dot)in
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Erupting much later in the chain of events following the financial crisis, the 'Occupy Wall Street movement'' has nevertheless scored some points by raising issues that have caught the world's attention. True, being forced to vacate the Zucotti Park in New York, the movement may get frozen in the coming winter but its voice of anguish and frustration against inequalities in the US and favouritism showered on the financial sector with tax payers' money have found echoes across other parts of the western world. Growing inequalities within the population at large and the bailout of the financial sector from a mess of its own making at the expense of taxpayers are certainly not justifiable but demonstrations in the financial hubs would hardly resolve these problems because the movement addresses only the symptoms and ignores the maladies behind the current conditions.The return of the bankers-with large bonuses and perks-have infuriated many still scarred by the recent memories of the financial crisis brought on by the greed of the bankers. The demise of the Lehman Brothers and precipitation of crisis in AIG and the consequent bailing out of many of the banks with public money didn't leave people with much sympathy for bankers. But selling adulterated securities is not the only task that mainstream Finance performs on a workday. And, certainly, it is no way responsible for the highly skewed income distribution curve that is an eyesore to the bottom 80 per cent (or even 99 per cent according to some estimates) of the population because the US economy started tilting in favour of the rich and famous long before the rise of the gigantic Wall Street of today.The primary function of a financial system is to ensure smooth flow of credit and finance to desired channels that serve as lubricants which propel the economy forwards. Accepting deposits by banks and reimbursement of fund to borrowers, nurturing of the budding entrepreneurs by the Venture Capitalists through the method of ' stage financing' and design of securities that enforce discipline but also fosters incentives to innovate, investment bankers' courting of the prospective private and institutional investors via credible 'road shows' to make a successful IPO, or making marriages between organizations that spur growth through the process of mergers are few of the contributions of modern day financial sectors to the rest of the economy. Lives of Jobs, Gates and other innovators of the Silicon Valley would never have been complete without the guidance, advice and participation of the venture capitalists. Fredrick Smith, founder of the FedEx, dreamt of making private couriers regular means of business for those who need it at a time when the concept was remote due to a huge deficit of trust in the private postal system. He had floundered time and again but the patient VCs backed him with contractual arrangements that meted out harsh punishments in the event of repeated failures and rewarded handsomely in case of success. In the mid seventies, the VC of the FedEx infused $3.8 million to the company at $0. 63 per share in the midst of its deteriorating performance, thereby taking ownership, control of management and risk of the business. Soon after, with a dashing performance, FedEx went for an IPO at $6 per share. Arthur Rock & Company, the Apple VC, invested $518,000 and bought the shares of the company (before it went public) at $.09. The company floundered and the VC infused more funds at a lower price which got revised upwards with improved performance when the VC raised more fund for the company. It is too easy in these times of antipathy towards Finance to forget how these path breaking companies were rescued from turbulence at a nascent stage even as we courier an iPad to a desired destination.Or take India for example. Ever since liberalisation, the total number of M&A deals from 1992 till 2009 exceeded 12,500 while it was less than 100 between 1985 and 1995. Of the foreign targets of Indian acquirers, 40 per cent are either from the US or the UK while Asia and the EU account for 22 per cent and 14 per cent, respectively. During this period, the total number of domestic M&As was nearly 7,000, indicating a vibrant market for corporate control and takeovers in India. The completion of each deal required finding a target, designing the combination of finance (stock, cash or contingent securities), acquiring finance and intense negotiations between several parties. Without a developed financial network, the whole process would have been hardly complete. These takeovers added growth and jobs and made the financial sectors prosper in the country as well. True, in every such deal, the financial organisations had its own cut and the job is done for purely own interests but ultimately they also helped the innovation of new products or growth of existing firms' boundaries or pushing technological frontier that added and also destructed jobs and made the economy more dynamic and flexible.The glossy package of a greedy banker's bonus is certainly a part of Finance but it does not make up for the whole. The financial architecture of an economy is a broad umbrella which houses institutions from commercial to investment Banks, VCs to Corporate advisories, market makers to analysts and the likes. By specialising on specific activities, each makes own wealth by spurring innovation, sharing and spreading risks of large number of entrepreneurs, making the market for financial assets, selling IPOs and inducing growth via takeovers. At the end of the day, it destroys some wealth but also creates and adds value. Unfortunately, the financial crisis also had a negative impact on this vibrant part of finance which is an essential component of a dynamic economy. The common mistake for the Wall Street Occupiers is to confuse bankers' bonus on artificially bloated financial securities to other important functions that financial institutions carry out for their own profits but help the economy grow as well. The protest and current sentiments would tempt law makers to prepare more stringent rules for this sector, which may or may not curb the future bonuses but would certainly trim the productive segments and encourage regulatory arbitrage in the coming days to the further detriment of everyone. And that may not help either the angry protesters or put the economy back on tracks in the foreseeable future.The write is a Professor of Finance at Nottingham University and can be reached at Sanjay dot Banerji at nottingham dot ac dot uk
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R.K. Pachauri, Chairman of the Intergovernmental Panel on Climate Change (IPCC) and Director General of The Energy and Research Institute (TERI), spoke to BW's Yashodhara Dasgupta about where India stands in the context of sustainability and the biggest opportunities that are yet to be tapped intoWhere does India stand when it comes to sustainable development?India has a long way to go. We've followed the path of development that's been followed by the rich nations which is of course, very different. Perhaps it's suiting or suited them but our case is different. We are major importers of fossil fuels. If we continue with our dependence on these imports, there are implications that we have to consider. Our levels of air pollution are quite horrible and we have widespread poverty. Alleviation of poverty is extremely important for sustainable development. Our forest cover has to be increased — it is inching forward. Over the years they have been degraded. Our rivers are terribly polluted and can't sustain any life. If you look at these indicators and trends, we certainly have a long way to go.What are the areas we should work on?We have to start on various fronts. And while in some cases, one may follow another — given the diversity of challenges — in others; they have to be tackled simultaneously. We certainly need to correct out pricing distortions. There are some subsidies which are actually perverse such as kerosene, LPG, diesel. You look at the lack of investment in public transport. We have to come with models that ensure public good. So we need more investment here. Our rivers need to be cleaned up. I think the costs that are imposed on account of our rivers being totally polluted is very high. Water-borne diseases are the biggest killers in this country. Unless we clean up our ground and surface water, the impact on human health is going to get progressively worse and thus, costs will go up sharply. So I think there are a number of things we need to do and we don't have the luxury of waiting for one or the other. We have to do them together.Where is the Indian private sector in terms of sustainability? Which sector has the most potential in this regard?The private sector has to be a part of this. All stakeholders — government, civil society and businesses — have to work towards creating sustainability, together. There are many success stories. There are many businesses that are visionary and have taken steps that may not make immediate financial sense but would certainly lead to benefits overtime. The one sector where there is enormous potential for improvement is the buildings sector. Our buildings are by and large energy inefficient and given the technology that exists — much of which has been developed by TERI — there is a lot we can do in this sector. Even in terms of reducing greenhouse gases (GHGs), the scientific evidence is very clear that the building sector provides you with and enormous opportunity. This has to be done very quickly and not just at the national level. It must be done at state government and local governments levels too because by-laws and regulations are essentially in the hands of local governments. We need to empower and train them. We also need to train our architects and builders because a lot of them haven't had any formal education on some of these aspects of building and construction.How much has the concept of green growth been embedded in policymakers?At the moment, there is acceptance. But there's greater acceptance than understanding. We need to explain to policymakers and businesses what green growth is like. As it happens, there are a large range of options that we have which are negative cost options: that is, you can actually make or save money or the cost is very little, thus the returns are very attractive in financial and economic terms. Green growth needs to be broken down to see what can be done sector by sector. That's where the intellectual community needs to come into the lead to make assessments on what the choices are for different sectors in different activities. All of these when aggregated national roadmap on how we should proceed.What are the new technologies you're looking forward to for the purpose of mitigating and adapting to climate change?Technological opportunities exist across the board. In the building sector there are immense opportunities. For instance, I don't understand why in a city like Delhi every house should not have a water heater. The technology is there. Perhaps the manufacturing base has to be widened but all of that will happen when you regulations by which a market develops. An example is water pumps, which are highly inefficient. If they were to be replaced by superior models, energy consumption would improve significantly. Our study with the Jal Nigam in Delhi and other cities shows that there are many opportunities here. So it's as much an issue of choices as it is an issue of the policy that would drive you to the right choices.Isn't natural gas polluting?If natural gas leaks from the pipeline, then yes, it adds to GHGs. But if you're making a comparison with coal, then from an industrial point of view, it's far cleaner than coal because for every unit of heat, it emits much lower levels of GHGs.What's your opinion on Durban?I wish that discussions in Durban there were more discussions on the scientific findings we have on various aspects of climate change. If that had happened, perhaps we would have had an outcome that was a little more ambitious. It's not for me to comment on what happened at Durban. This is what the negotiators wanted. But my concern is that action on climate change has to be driven by the knowledge of science of climate change.
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The new RBI guideline — not allowing banks to invest more than 10 per cent of its networth in liquid and liquid plus funds — has been worrying Rajan Krishnan, managing director of Baroda Pioneer Mutual Fund, who feels the bread and butter business (liquid and liquid plus) will put further pressure on the mutual funds that continue to reel under pressure of stringent regulatory norms and the overall weak market condition. In a freewheeling chat with Businessworld he discussed a gamut of subjects from business strategy to lack of decision making by the government to European crisis and its impact on the equity market.Though he doesn't see the Reserve Bank of India (RBI) cutting rates next week, he feels it could be a welcome move if the governor cuts cash reserve ratio (CRR). Holding on to its equity investments through mutual funds he is bullish on sectors like auto, IT and pharmaceutical, while bearish on FMCG. Overall he feels this could be an appropriate time for investors to build a good equity portfolio for a long-run and would advice investors to come through systematic investment plan (SIP) to avoid volatility.Excerpts from the conversation: What impact do you see on the overall P&L of the mutual fund with the RBI norm of restricting banks to investing not more than 10 per cent of its networth in liquid funds coming into effect?The new ruling of a 10 per cent cap by the investments of bank in liquid will see the Assets Under Management (AUM) in liquid funds come down substantially for the industry from the peak levels seen a year or so back. Maybe by 50 per cent or more. While Liquid Funds are low margin products, the big reduction in AUM could see a very significant drop in revenues for a number of fund houses, without any commensurate drop in expense levels.What would be the strategy of Baroda Pioneer to grow its AUM and investor base? How much are you investing in the business?We are very committed to both – increasing AUMs as well as our investor base. However, we have taken a call that we will pursue growth at a meaningful cost rather than growth at any rate. We have been investing in strengthening staff, improving systems, widening distribution, internal communication &training etc. For the moment, we have not been spending much on creating visibility through external communication.The AUM growth is likely to come from growth in corpus of our fixed income product range. Here the key approach from Baroda Pioneer is to pursue and convert as many large clients as possible. And from the converted one pursue higher allocation. While doing that, we have kept our focus on the smaller companies who can benefit from the opportunities provided by our various schemes. Over the last couple of quarters, our average AUM has gone up from around Rs 3,395.58 crore to Rs 4,581.67 crore currently.On the retail side of the business where growing the investor base is key, Baroda Pioneer's focus to a large extent has been in working closely with Bank to Baroda to extend our coverage to as many branches and locations as possible. We believe that the branch network of Bank of Baroda is a very effective platform to reach out to investors in even the smaller towns. We hope to be active in all 3,500 plus Bank of Baroda branches, including rural ones, by mid-2013. These efforts have yielded some success and we have increased our investor base from 57,000 at the end of 2011 to more than 116,000 currently.What is your view on the overall financial market? Do you think the downgrades in Europe will have a major impact on the Indian markets?Currently there are huge challenges facing the financial markets. At a global level as well as at country specific level. Even as one set of issues seem to find a solution others are cropping up. Even though I am optimistic that we will see improved conditions in the coming quarters, I expect that financial markets will keep us on our toes for the next 12 to 18 months.Overall, financial markets are driven by news flow from Europe, global economic data and domestic macros. While conditions in the US are improving slowly and Asia presents a mixed bag, Europe continues to be under pressure. Undeniably, major problems in Europe have and will move global financial markets. Global financial markets are beginning to price in the possibility of a break-up of the Euro, which would have catastrophic consequences not only for Euro but for the global financial system because of the interconnectedness. The European crisis or downgrades in Europe may not affect our economy that much but it will have an impact on the Indian markets. However, spill-over effects from European defaults (or sovereign departures from the Euro) to the banking system and economy to other countries would be manageable. Ever since long-term refinancing operations (LTROs) were issued on 21 December 2011, the tail-risk situation seems to have been averted and liquidity has improved for EU banks. Last week, Spain and Italy could sell more bonds than its planned target. The IMF now says they have $500 billion to lend to Europe's bailout fund. The funding crisis there is over for time being which is a big a positive for European market and equity markets elsewhere.Till when do you see such a drag market condition and why? What is your take on the Indian equity market and why?I am more worried about domestic issues. The growth rate has been retreating. Investment climate has worsened. On the political front, worsening political gridlock and revelation of a slew of scams left the government unable to deliver on any structural reforms. We do not see that quick a recovery in growth. Improvement in fiscal situation too will take some time. The European crisis will continue to weigh heavily on global markets. Things are not looking great but then most negatives have been factored in. We see 2012 to continue to be a challenging year. We expect to see some relief on the inflation and interest rate fronts. Downside from the current level is probably capped at 8-10 per cent. The market is trading below long term averages and this is a good time for long- term investors.In your view what will be the next trigger for the Indian equity market? And why? And when do you see it coming?Decline in inflation and interest rates: The sharp slowdown in economic growth and a decline in food inflation have led us to advance our policy easing call. We believe the RBI will begin easing monetary policy in 1Q12, probably starting with a CRR cut and following it up with a series of cuts in benchmark interest rates.Industrial growth, particularly led by an upturn in manufacturing and infrastructure construction, should revive in 2H12.Potential downgrades in earnings estimates, particularly for FY13. However, we believe the January- March quarter should mark the end of the earnings downgrade cycle, particularly for the rate-sensitive sectors.On the political front, observers hope for a second lease of life to reforms after the conclusion of the key state elections in February-March 2012. We expect the policy environment to remain unsupportive in 1H12 due to the election season.What is your take on next week's RBI policy? Will it set the tone for a rally in the market?In Tuesday's RBI policy, we expect the central bank to be dovish showing concern on slowing growth. With inflationary expectations changing for the better and growth decelerating, RBI will initiate easing monetary policy. But inflation is still not in the comfort zone for RBI which may force RBI to refrain from cutting policy rates just yet. RBI may indicate easing measures from next policy in March if inflation slips below 7 per cent. We feel market is factoring in the above as 10-year government yields has rallied recently. Whether as a signal of policy or not, a CRR cut would be very welcome given the very tight liquidity conditions in the country currently.What is your view on the overall corporate performance of Indian Inc? Have the December-ended quarterly results that have been declared so far been in line with your expectation? Which are the sectors that you are bullish and bearish?December quarter results are likely to reflect the challenging environment being faced by India Inc. There could be several one-time hits due to forex losses. Till date major results from IT, banks, financials and metals are in line with expectations. However, the commentary about future from the IT sector has disappointed the market. We are positive on pharma and IT companies which will benefit from rupee devaluation. We are positive on auto manufacture, which are trading at reasonable valuations. We are bearish on the FMCG sectors due to its stretched valuation.In current market condition where will you advice investors to invest? Currently where are you investing your own money? And why?Given India's long-term growth story, equity investments would continue to offer good returns. I would advise retail investors to invest in equities through the SIP route, as it is a time-tested strategy to even out the effects of volatile markets like what we are going through. I continue to hold my equity investments, mainly through mutual funds. As a fund manager what call will you take on the overall portfolio of the mutual fund? What will be your short-term strategy in the current market condition?We are not trying to ride on momentum. At present, it is better to spread out and balance our portfolio across sectors rather than sticking to defensives or going too aggressive.What is your take on the 10-year G-Sec yields and why?We maintain our stance that 10-year-yield could soften to 8 per cent level in next 3 to 6 months due to weak global economy, slowdown in growth, decrease in inflation and open market operation (OMO) purchase by RBI. But the key risks are deterioration in the government fiscal position, supply of government securities and higher crude and commodity prices.Fixed income, particularly FDs and bonds have become a flavour among investors, even equity fund managers. In your view is fixed income still a cushion for equity investors?We believe fixed income is a cushion during a bear phase in equity markets. Currently the equity market is volatile and may continue to remain so for some more time. Therefore, we have seen asset allocation shift towards fixed income/cash by investors as well as equity fund managers.What is your take on the 1 year, 2 years, 3 years, 5 years and 10-years yields in corporate bonds? Will you be a buyer in corporate bonds and what would be the tenure?We expect the 1-year CD rate could come down by 75 to 100 bps in next 6 months. Similarly 2- and 3-year bond yield can potentially come down by 40 to 60 bps. The 5- and 10-year ones can come down by 20-30 bps to 8.75 per cent in next 6 months but the risk is higher in the long end of curve due to deterioration in the government fiscal position and supply of government securities. In this scenario, the short to medium term bonds offer better risk adjusted return.What is your view on gold? Should it take maximum share of one's portfolio as the world economy is still not showing signs of revival?Gold is another important asset class. An asset class that Indians have been extremely familiar with, has not been taken that seriously as a pure investment option. Its only more recently that Gold ETFs have become popular as an investment opportunity. Gold has run up quite a bit in the last few quarters with uncertainty levels high. As the global economic conditions stablise there is every possibility that we will see a correction in gold prices. Hence, it may not be prudent to have a disproportionate part of your portfolio in gold.
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Yvo de Boer, former secretary of UN Framework Convention on Climate Change and KPMG Special Global Advisor speaks to BW's Yashodhara Dasgupta about the development and the inclusion of private sector and financial institutions What is sustainability? I wouldn't define it as sustaining what we have. It really means transitioning towards a different economy, a different lifestyle, a different concept of welfare based on the fact that the world is changing, and we need to adapt.It means living within the carrying capacity of the planet in terms of energy prices, energy security, resource scarcity, food scarcity, water scarcity, climate change and population growth. We're not exactly in the right direction. And I think that we can do that while giving people a decent lifestyle but our definition of decent has to change. I think we can have health care for all. We can have mobility for all. But the vehicles will probably be different in that they'll be fuelled by different sources energy. There'll be more public transport. I would expect us to change agricultural production to make it more efficient. Now I think 40 per cent of food is actually lost between the farm and the shop. So there are huge efficiencies that we need to realise.Why is there scepticism or reluctance to accept the sustainability concept?Well, in getting ready for the Rio+20 summit where the main focus is on green growth, there's a big fight that has emerged about green growth because developing countries believe it will keep them poor and favour environmentally friendly technology which is in the hands of the industrialised nations. The problem is that while a lot of people talk about green growth, they don't really understand how it can be made to apply in their own country. If you asked the environment minister of most countries if they understand how environment can be greened and grown at the same time, they probably wouldn't have the answer to that question.The best way to explain what green growth is, is to show people. I think some of the analysis being done by the OECD and others is quite useful. But you can't take it home and cook it. You need a story for your own city, your own neighbourhood, your own country. It's only when the model is made for your country that you can begin to believe it. In addition to the policy side, there are also externalities.In terms of a solution, you need it at a local level. But at the same time, it doesn't cover everything. For example, in oceans — not all of which are owned by any one country — you have massive depletion of fish stock. There you need an international approach. Similarly on climate change, I think we need an international regime to help countries given the confidence that everyone is working together.How do you rate financial institutions in embracing this?I would rate them very differently. I think some banks are beginning to understand there is a business case to be made in investing in sustainability. Some pension funds are beginning to see it. But others are not. I think the fundamental problem that underpins that is the fact that at the moment we're not pricing the solutions. You can pump CO2 into the atmosphere without having to pay for it. To my mind, that's what makes renewable expensive.Is complete abandonment of fossils fuels the only option?Fossil fuels are going to be part of the energy mix for decades to come. A number of fossil fuels are a very cheap source of energy especially in developing countries. They will be reluctant to stop using that. It's very much a matter of making a transition. Gas can help in that transition. What worries me is that we can lock in a lot of capital in intermediate technology that makes it difficult to take the next step.Does the private sector need to wait for a push?I don't think they are waiting for that moment to come. Many of them are already putting new products and services in the market. Are they doing enough? No. They could be doing more. One of the things that is most critical for the private sector is long term predictability. To be sure that if an election comes up, there won't be a radical shift in direction. And it's that lack of clarity that slows many companies down.Is it good to mix business with environment?I think we're at a point where there is no such thing as a non-green business. It takes the meat industry 10,000 litres of water to produce 1 kg of meat. So the meat industry needs to be concerned about water scarcity. In that sense, many companies have to take this into account in their supply chain and method of production. This is why CSR was more of a PR thing about 10-15 years ago. It's now coming to the heart of corporate strategy all over the world gradually. Why are the economies of India and China not doing as good as it was last year? Because demand from Europe has declined due to the economic crisis. In other words, most of the developing countries are selling to international markets, so they have to adopt the standards of these markets. Hopefully, we're past the point where we can produce rubbish of one part of the market and quality stuff for others.What about resources? Which do we need to be most concerned about?I would say water because it interacts with so many other things. Most of what we eat, wear or are is virtually water.What did you think of Durban?The outcome is a success. There is an agreement that we need to move forward in a uniform way but respecting that different countries have different responsibilities. We're gradually moving away from this black and white world with industrialised countries on one hand and developing on the other. At the same time, the process needs to focus more strongly on incentives, on finance, technology and on capacity building so that countries can make the concept of green growth come true.Where do you think we are right now?I think we are in very deep trouble. The preoccupation in America and Europe is 100 per cent with financial crisis and not with sustainability issues. I think that's impacting other parts of the world. We might be moving, I hope not, to a global crisis which will preoccupy people and make them more reluctant to change and innovate. And the clock is ticking on many of these global issues.
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