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January 2014

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e l c a r i M r o F e r Cu redit c a r h d om an hase r p f h s t n w o e less second gro k a t s ancier ve onto the n i f o r o mic hey m t s a s crisi


AAP Startup Experiment

Weighing Bitcoins

Prince of Ship Design

Aam Aadmi Party Convenor Arvind Kejriwal has taken over as the Chief Minister of Delhi P22

Thousands of Indians have started to invest in Bitcoin, a virtual currency that is still free from regulation P29

Ship architect Antony Prince sheds light on the Indian shipbuilding industry’s lack of initiative and capacity to deliver P82

• Thiruvananthapuram: East Fort, 0471-2472922 | Pazhavangadi, 0471-2572117 | Pattom, 0471-2543611 | Peroorkada, 0471-2539377 • Nedumangadu: Market Junction, 0472-2803505 • Kollam: Chinnakada, 0474-2752005 • Pathanamthitta: K.P. Road, 0468-2270555 • Thiruvalla: Near KSRTC, 0469-2604060 • Kottayam: Rajiv Gandhi Complex, 0481-2303555 | K.K. Road, 0481-2564825 • Thodupuzha: 04862-226699 • Kochi: M.G. Road, 0484-2353295 | Lulu Mall, 0484-2728777 • Kodungallur: Vadakkenada, 0480-2801771 • Chavakkad: Bypass Junction, 0487-2500000 • Thrissur: Palace Road, 0487-2323971 | High Road, 0487-2420011, 2440460 • Palakkad: G.B. Road, 0491-2524500 | T.B. Road, 0491-2500101 • Coimbatore: Cross Cut Road, 0422-2482222 • Bengaluru: Jayanagar, 080-41666842 Shop online: | | /JoscoGroup



Checking on AAP and the voter’s choice

India’s biggest political startup experiment has begun with the Aam Aadmi Party forming government in Delhi

42 Miracle Cure For Poverty Indian microfinance institutions enter the second growth phase, as government, NGOs, and commercial banks explore new ways to provide easy credit to the poor




Playing Japan’s intimate friend Weighing the India is making determined Bitcoin wallet

efforts towards fostering intense bilateral engagements with Asian powerhouse Japan

The prince of ship design

Thousands of Indians have started to invest in Bitcoin, a virtual currency that is still free from any kind of Govt regulation

The Indian shipbuilding industry has great many things to learn from ship designer Antony Prince, successor to legendary naval architect George T R Campbell

Regulars & Insights 10 PHOTOSPEAK 12 ECONOMY WATCH 19 corporate


MONEY INDICES January 2014

41 FINMIN TALKS 70 Auto/uae 78 Tourism Statistics

80 global INDICES 92 tech update 98 What money taught me

Leadership Startup Success 58

muHive looks at social beehive

muHive is a startup that seeks to help consumer-facing brands understand their customers and deliver more value

Global footprints of the desi honcho


We take a look at four famous corporate heads who continue to make India proud in foreign shores

Management 55

Learning Human Resource Interventions

Leadership teams in many companies are completely missing out on a formal teaching culture

Industry watch 60

Direct selling up 12%, but who’s backing it?

Direct selling companies are in need of some regulatory support from the government in their push for better growth

Aviation 62

New wings for Qatar Airways

Qatar Airways displayed its brand new Boeing 787 Dreamliner and Bombardier Global 5000 at the Dubai Airshow

Innovative entrepreneur 52 A smart stove for rural women

Two young green entrepreneurs are providing rural Indian women with a clean, efficient, and economical cooking solution

Tourism Watch 88

Karnataka showcases wildlife terrain

The World Travel Market 2013 gave birth to new themes at the Karnataka Pavilion – wildlife, nature, and adventure

Islamic Finance 74

Dubai looks into skill gaps

Efforts are on to make Dubai the capital of the world’s $8 trillion Islamic economy in just three years

tech/Gaming 92

The NextGen gaming consoles are here!

Microsoft’s Xbox One and Sony’s Playstation 4 are locking horns in a market where rivals have upped the competition

World Expo 2020 Dubai stands to gain from 2020 Expo


Dubai is on an infrastructure development overdrive to become an investor’s paradise by the 2020 World Expo

mobile buzz No worries for BlackBerry in Middle East


BlackBerry is doing reasonably well in the Middle East and undertaking new initiatives to take on competitors

Social Entrepreneur Keep track of water, with NextDrop


Startups are now using technology to provide household solutions. NextDrop is a startup delivering information on water supply

UAE Life Sciences Dubai: The Emerging Hub of the Life Sciences Industry


Dubai Biotechnology and Research Park is the Middle East’s premier free zone business park

Readers can also send their feedback, suggestions, and comments to:

January 2014 MONEY INDICES


Volume 2 Issue 1 | January 2014 Founder & editor Ravi Deecee

Executive Editor Ratheema Ravi DC MEDIA - OPERATIONS

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You Can Win

Motivational speaker Shiv Khera talks about success



Great details on Coca-Cola

The cover story on Coca-Cola was well-written. It contained in-depth information, giving me an idea about how one of the largest corporations in the world operated. Money Indices is doing a solid job with a good mix of stories on personalities, features, and latest tech news. Prashanth Singh, New Delhi

‘Liked the non-preachy side of Shiv Khera’

The article on Shiv Khera was inspiring. It showed the real face of the man behind motivational workshops. Today’s businesses can do well with his advice. It was nice to read an advisory piece of sorts without the usual preaching tone. Sandra Kapoor, Mumbai

‘Capt Krishnan Nair story was good’

Economy Watch, What Money Taught Me, and Tech News are the best sections of Money Indices. Your selection of business personalities is also improving with every edition. The article that stood out in particular was the piece on Capt. Krishnan Nair. As a Mumbaikar, it was good to read about a local, yet not-so-local businessman. Keep up the good work. Harsh Godbole, Mumbai

I’m a regular reader of Money Indices magazine, and I just want to thank you for bringing out a magazine that I can connect to. You keep your language simple and I applaud you for that. Your coverage on the latest corporate and economic news is just what the doctor ordered - short and sweet. You don’t go into hardcore economics and I appreciate that. Good job, Money Indices. Sandeep Chawla, Gurgaon

‘Increase auto, tech pages’

I like all of the features in Money Indices, but I mostly prefer reading about automobiles. In the last issue, I liked the story on Lykan Hypersport. I hope you will increase your tech and auto pages. Rashi Diwakar, New Delhi

Informative article on Israel

The article on Israel in the December issue of Money Indices was spot-on. It gave a clear picture about Israel’s intentions, when it comes to engaging with the East. It will be interesting to see if Iran casts a shadow on SinoIsraeli and IndoIsraeli relations. Overall, it was an informative piece. Keep it up! Rajesh Khurana, Pune

w w w. m o n e y i n d i c e s . c o m


Wish you a prosperous 2014!

This is the moment to watch out for. Wounded by poor governance and a continuing streak of price spirals across the whole spectrum of goods and services, the much-beleaguered common man in Delhi is all eyes and ears, hoping to bring some sense of stability in his daily life

It’s time to turn over a new leaf. Only then will we find ourselves at the right intersections of growth and fruitful ideation. The first calls for this personal, professional makeover have come from India’s first, biggest political startup experiment in Delhi, with social crusader Arvind Kejriwal taking over as the seventh Chief Minister of Delhi. Don’t listen to naysayers. This is the moment to watch out for. Wounded by poor governance and a continuing streak of price spirals across the whole spectrum of goods and services, the much-beleaguered common man in Delhi is all eyes and ears, hoping to bring some sense of stability in his daily life. For the first time, the common man knows that he’s made an educated choice by reposing confidence and faith in a party that promises to act upon burning issues of the day only after due consideration of the legitimate concerns of the masses. For once, the common man knows that he stands a chance to be heard for all that he lives for. He also knows that the future of this people’s government has been tethered to outside support from the Congress, which can pull the rug any given day. So, a lot depends on how Kejriwal’s government delivers on its promises of clean and efficient governance, and if it does make a positive impact, we may get to see some surprising results in the General Elections this year. We just hope that India will benefit from a new political choice. After all, it’s a political startup experiment that involves the common man. There’s more on startup experiments. Heard of the new digital currency called ‘Bitcoin’? Thousands of Indians have started to make investments and transactions in this virtual currency, despite the absence of a regulatory framework around it. In our news feature on Bitcoins, we have got every aspect of this new age e-currency covered, with expert opinions from startups built around this new medium of online transactions. In our Cover Story, we focus on the challenges of the Indian microfinance sector. Microfinance can certainly be a permanent cure for poverty, but then, microfinance institutions are still in the process of optimising their business models. We look at the whats, whys, and hows of microfinance. In our ‘Focus’ section, we tell you why India’s shipbuilding experiments have failed to produce the desired growth. Making the case for growth in this industry vertical is an Indian, Antony Prince, who upholds the legacy of the greatest naval architect, George T R Campbell. It’s all about anchoring your ideas the perfect way. This edition is aimed at giving you diverse knowledge of a clutch of new products that have been lined up for the new age consumer. These products range from hot wheels, gaming, and digital marketing to smart cooking in the rural setting. We promise to deliver the best of news packages this year and hope to inspire you in newer ways. Soak in the new and start afresh. Happy New Year once again!!!

Ravi Deecee Editor


MONEY INDICES January 2014




he Davos Congress Centre is a major convention centre in Davos, Switzerland. It opened in 1969 and has undergone major transformations and extensions in 1979, 1989, and 2010. It has hosted the meetings of the World Economic Forum since 1971. Since the last extension in 2010, the Davos Congress Centre can host up to 5,000 attendees with 34 high-tech rooms for 20 to 1,800 people. The centre includes a spacious entrance hall and a plenary hall spanning 45 metres.

The Davos Congress Centre, Switzerland


MONEY INDICES January 2014


January 2014 MONEY INDICES



CRISIL: Financial inclusion gains momentum in India


inancial inclusion has gained momentum in India with a significant rise in new savings accounts, increase in agriculture credit accounts, and expansion of bank branches in deeper geographies, according to CRISIL. “India’s overall CRISIL Inclusix score has risen by 2.7 in fiscal 2012 – the highest annual increase since 2009. As many as 587 out of total 638 districts in India and 34 out of 35 states and union territories improved their scores, reflecting a broad-based improvement in financial inclusion,” said Roopa Kudva, Managing Director and Chief Executive Officer of CRISIL. CRISIL said 79 million new savings accounts were opened in fiscal 2012 across the five regions – north, south, east, west, and north-east – of India. This was 12.6 per cent more than in fiscal 2011. Agricultural credit accounts increased by 11.1 per cent, the most since fiscal 2009. The number of bank branches in the bottom 100 districts increased by six per cent, faster than the all-India growth of 5.6 per cent. Credit penetration in the top 50 districts of the country also expanded sharply as the number of smallborrower accounts surged.

Mercedes Benz’s Centre of Excellence in India


erman luxury car-maker Mercedes Benz has launched its centre of excellence at Chakan, Pune. “This one of its kind experience for customers will ensure that they live the company’s complete brand experience and are able to personalise speciality cars to suit their taste and preferences”, said Mercedes Benz Vice-President for Global Sales Matthias Lurhs. The objective of the Centre is to offer customer experience, under which a prospective buyer of an AMG model can customise the interiors and the exteriors, including the colour. The customer can even choose to fly down to the centre on a chopper as the company has set up a helipad at its plant in Chakan. The helipad is one of the few in the world for the German car-maker. “Our efforts towards creating customer fascination and addressing increasing customer differentiation for the brand have resulted in the creation of many industry best practices and infrastructure. This centre is one of them,” said Mercedes Benz India Managing Director and Chief Executive Eberhard Kern.

India to be world’s third largest economy by 2028


ndia is likely to overtake Japan in 2028 to become the third largest economy in the world after China and United States, according to London-based economic consultancy Cebr. According to Cebr’s World Economic League table report for 2013, India has lost a place in the league table in 2013 to Canada and is now the 11th largest economy in the world. “But demographics and economic growth will eventually drive the Indian economy up the table and the forecast for 2028 has India becoming the world’s third largest economy overtaking Japan,” the report said. The Cebr World Economic League Table (WELT) is an annual calculation by the consultancy. The base data for 2012 is taken from the IMF World Economic Outlook and the GDP forecast draws on Cebr’s Global Prospects model to forecast growth, inflation, and exchange rates.


MONEY INDICES January 2014

The report gives an end of year report on GDP in the 30 largest economies in the world and forecasts countries that will be in the ‘top thirty’ after 5, 10, and 15 years. In the 2013 league table, India is at the 11th place with a GDP of $1,758 billion, and by 2018, the country is likely to be at the 9th place with a GDP of $2,481 billion, and by 2023, it would be at fourth place, with GDP size of $4,124 billion, and it will claim the third spot with GDP of $6,560 billion by 2028, it said. The 2013 league table shows only two changes in the list of top 20 economies. Firstly, Russia overtook recessionstricken Italy to gain 8th place and Canada overtook India as a result of the collapse of the rupee to retake its position as the second largest economy in the Commonwealth and the 10th largest economy in the world, the report said.


Chidambaram Pegs Economic Growth At 5 per cent for 2013-14


he Indian economy is on the path of recovery. Growth will accelerate in the coming quarter and is expected to be around five per cent for the current financial year, Union Finance Minister P Chidambaram has said. The country’s gross domestic product (GDP) growth rose to 4.8 per cent in the quarter ended September as compared to 4.4 per cent in the previous quarter, according to latest data from the Central Statistics Office (CSO). “The second quarter GDP growth rate indicates that the economy may be recovering and is on a growth trajectory again,” the Finance Minister said. Apart from the second quarter GDP growth numbers, Chidambaram also based his optimism on recovery in exports and a very good improvement in the current account deficit situation. “With the recent improvements in some important sectors like manufacturing, better performance of exports and with the measures taken by the government, the economy can be expected to show further improvement. We expect the growth for the financial year 2013-14 to be 5 per cent,” the Finance Ministry said in a statement.

P Chidambaram

RBI Governor Keeps Interest Rates On Hold for now

R India’s Cushion Against Fed Tapering measure


ndia appears to be in a much better position to deal with the impact of the US Federal Reserve’s possible move to reduce monetary stimulus that has supported inflows of cash to emerging markets. Worries over the Fed’s possible tapering had triggered massive capital outflows last summer from emerging markets. Saddled with hefty current account and fiscal deficits, India looked the most vulnerable. The rupee went into a free-fall, losing as much as 20 per cent against the dollar before recovering. Thanks to the measures taken to bolster the forex reserves and control the current account deficit, India is better placed to deal with the fallout of any decision to reduce the stimulus. India is also talking with JP Morgan and others to gain entry into benchmark indexes for emerging market debt in hopes of attracting billions of dollars in investment that could act as an insurance against any external shock.

eserve Bank of India Governor Raghuram Rajan has said that the central bank had decided to keep interest rates on hold even before the high consumer price and retail inflation data for November 2013 were released. The RBI’s move surprised investors as data showed that consumer prices in November posted their biggest annual rise on record at 11.24 per cent, while wholesale inflation hit a 14-month high. The RBI will wait for the next set of data on inflation and industrial growth before taking a call on interest rates. The government will release the next set of data on inflation and industrial growth this month. The RBI had increased the key interest rate twice by 0.25 per cent each in successive monetary polices. The repo rate is currently 7.75 per cent.

Raghuram Rajan



New centre for promotion of Islamic economy DUBAI: Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum has issued a decree to set up the Dubai Islamic Economy Development Centre as part of the emirate’s plans to become a global hub for Islamic finance. A decree was also ordered to form the centre’s board of directors, which will be chaired by Mohammed Abdullah Al Gergawi, according to a news report. Sami Daen Al Qamzi was named Vice-Chairman, while the other board members are Abdul Aziz Abdullah Al Ghurair, Hussain Nasser Lootah, Dr Hamad Al Shiebani, Abdul Rahman Saif Al Ghurair, Hussein Daen Qamzi, Helal Saeed Al Marri, and Isa Abdul Fattah Kazim. Separately, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, has said that Abdulla Mohammed Al Awar will be CEO of the centre. According to the decrees, the centre will have legal and financial independence and will promote Dubai and make it “the global capital of Islamic economy”. It will build a database on Islamic economic activities and encourage recourse to arbitration in the event of economic disputes.

Qatar’s rate of growth Nakheel eyes IPO in 2018 Dubai’s more than halved last year DUBAI: Nakheel is mulling QATAR: Qatar’s rate of economic growth more than halved last year to 6.2 per cent as a surge in global oil prices abated, but its construction, finance, and manufacturing sectors expanded by around a third and should grow again this year. Output in mining and quarrying, which includes oil and gas and accounts for almost half of the Arab Gulf state’s GDP, rose only 1.7 per cent last year following a surge in oil prices, which drove the economy overall to 13 per cent growth in 2011, the country’s statistics authority said. But the construction and finance sectors, which each account for more than a tenth of GDP, grew by 34 per cent, while manufacturing expanded by 28 per cent. Quarterly growth in the fourth quarter slowed to 0.1 per cent from the 1.7 per cent rise in the third quarter, but was still 6.6 per cent year-on-year.


MONEY INDICES January 2014

a stock listing in 2018, the stateowned company’s chairman has said. “At the moment, we are looking at meeting commitments to lenders and investors, but we will look at an IPO in the future. In 2018, it could be possible, if markets allow... Everything is possible,” Ali Rashid Lootah, Chairman of Nakheel, said in an interview with The National newspaper. Earlier this week, Lootah said in an interview with Arabic daily Al Ittihad that the company was committed to completing all of its announced projects on a schedule that responds to market needs. He said that as part of a restructuring of the company’s financial and commercial debt, the board has decided to categorise the company’s projects as those to be implemented in the short term, such as Al Furjan, Jumeirah Park, Jumeirah Village, Jumeirah Heights, Jumeirah Island, and Badra, and those to be implemented in the long term, such as Jebel Ali Palm.


NBK reports 35.3 fall in Q3 KUWAIT CITY: National Bank of Kuwait (NBK), the Gulf Arab state’s largest lender, has reported a 35.3 per cent fall in its third-quarter net profit, mainly due to a one-off gain recorded in the year-ago period. Net profit for the three months to the end of September 30 was KD70 million ($248.4 million), as against KD108.1 million in the corresponding period in 2012. The profit slightly missed the average estimates of six analysts who had predicted a quarterly profit of KD72.3 million. NBK’s nine-month net profit was KD198.6 million, as against KD228.9 million a year ago. The lender recognised exceptional gains of $288 million during the yearago period because of the consolidation of results of Boubyan Bank, it said in a statement. Excluding the gain, net profit for the nine-month period rose 34.7 per cent, NBK said. It did not provide quarterly figures.

Spar to open nine supermarkets in Oman MUSCAT: Oman will get nine new Spar supermarkets by 2016 under a deal between Spar International and local business conglomerate Khimji Ramdas, says a new report. The agreement is the latest deal for Spar International, which is developing Spar throughout the Middle East in a co-operative venture with Abu Dhabi Co-operative Society (ADCOOPS). The two groups have already found key license partners QNIE, a leading distributor in Qatar, and BMI, a major investment and management company in Lebanon. The first Spar supermarkets will open in Doha and Beirut in 2014. “Spar is targeting the Middle East for growth in 2014,” says the news report, quoting Gordon Campbell, Managing Director, Spar International. “We are delighted to add Khimji Ramdas to our network of prestigious partners in the Middle East. With the combined knowledge and support of Spar, ADCOOPs, and Khimji Ramdas, Spar will expand rapidly in Oman.”

Coal & Oil Group Secures Dhs1bn For Indian Power Project DUBAI: Dubai-based Coal & Oil Group has secured additional funding of approximately Dhs1 billion ($250 million) to complete its 1200 MW Independent Power Plant (IPP) in India, the company announced in a statement. The Mutiara Thermal Power Plant, presently under construction in Tuticorin district, Tamil Nadu, is being developed by Coastal Energen, the power generating unit of the Coal & Oil Group, with a capital expenditure

of around Dhs4.25 billion ($1.1 billion). The plant, which aims to address the 5,000 MW power shortage in the Indian state, obtained Dhs3.25 billion in funding from a consortium of Indian banks led by the State Bank of India. “This latest sanction will contribute to last mile funding and address cost escalation due to recent steep rupee devaluation, among other things,” the statement said. The project, the largest under

construction in the region, is slated for completion by June 2014. Ahmed Buhari, the Founder, President and CEO of the Coal & Oil Group, said, “India, and particularly, the state of Tamil Nadu, is currently facing severe power shortage. Our power project will be able to partly mitigate the hardships being faced by the state. In fact, we have committed to supplying a large part of our generation to the state grid.”

January 2014 MONEY INDICES



Deutsche Bank Holds Out Hope For Fed Tapering


n the interest of stimulating their respective economies, many analysts and economists are holding out hope for a Fed taper, while most have lost hope. However, Deutsche Bank’s Joe LaVorgna is part of the tiny minority that expects the Fed to announce tapering at the conclusion of its FOMC meeting. He considers what happened in September 2013, when the Fed shocked markets and unexpectedly refrained from announcing tapering earlier in the fall. Tapering refers to the gradual reduction of the Federal Reserve’s monthly purchases of $45 billion worth of Treasury securities and $40 billion worth of mortgage bonds. The programme has been intended to stimulate the economy by keeping interest rates low and credit market liquidity high. Importantly, at the time of the September FOMC meeting, when policymakers ultimately developed “cold feet”, there were four main factors weighing on their decision-making: a potential stumble in the housing data, a loss of momentum in the pace of hiring, anticipation of a potentially disruptive government shutdown/debt ceiling standoff, and a perceived failure of market participants to draw the distinction between tapering and the timing of future rate increases. Since September, there has been significant improvement with respect to each of these factors.

LaVorgna expects the Fed to announce a $10 billion reduction in Treasury purchases while keeping mortgage bond purchases going at full speed. He expects the Fed to reassure the markets that tapering is not tightening. In other words, it will articulate that despite tapering, it will do what it can to keep interest rates very low for a very long time. Currently, the unemployment rate threshold stands at 6.5 per cent.

Portugal Passes Bailout Review By International Lenders


ortugal seems to be desperate to exit its bailout programme as its latest austerity measures are becoming increasingly unpopular. But austerity seems to have paid off, as Portugal has moved a step closer to exiting its bailout programme after the international lenders that saved the country from bankruptcy approved a review of the economy six months early. The European Union and the International Monetary Fund have been monitoring the country’s economic reforms, a condition of the 2011 78-billion-euro bailout. Portugal hopes to leave the bailout agreement in the middle of this year. For the record, Ireland became the first eurozone country to exit its bailout. The troika - the EU, IMF, and European Central Bank have carried out ten reviews of the economy to ensure that


MONEY INDICES January 2014

budget cuts and economic restructuring are implemented. The country’s Finance Minister, Maria Luis Albuquerque, seems to be happy with the lender’s evaluations and envisages that the bailout may end on the agreed date, which is in mid-2014. An exit from the bailout would give Portugal back its financial independence, allowing the country to borrow in the financial markets. During Portugal’s recession, borrowing in the capital markets was effectively closed as the interest rate being demanded was seen as unsustainable. Portugal has so far received 71.4 billion euros of the 78 billion euros which the troika agreed to lend the country in May 2011. The country’s economy is expected to return to growth of 0.8 per cent this year after falling 1.8 per cent last year.


Euro zone Closer To Setting Up Banking Union


uro zone Finance Ministers are making steady progress on some details of a plan to close weak banks, paving the way for completion of a euro zone ‘banking union’ that is to restore confidence in the financial sector and boost growth. More than five years into a financial storm that toppled banks and dragged down states from Ireland to Spain, Europe wants to seal its biggest project since the introduction of the euro - a framework to police banks and tackle their problems together. The process to set up a banking union will involve an overall agreement on an agency and fund to shut weak banks to complement European Central Bank’s supervision of the sector. This process is aimed at closing down failing lenders and boosting chances of a robust reform in 2015. Under the agreement, banks will provide the cash to pay for the closure of failed lenders, giving roughly 55 billion euros ($76 billion) over 10 years accumulated in a Single Resolution Fund. Until then, however, if there is not enough money from the fees, governments will be able to impose more levies on banks. If that does not suffice, they would help with public money. If a government would not have enough money, it could borrow from the euro zone bailout fund ESM, like the Spanish government did to recapitalise its banks in 2012, according to the deal reached by Euro

zone Finance Ministers. Ministers have already agreed on another plank of a banking union, making the ECB supervisor of the region’s largest banks from the end of 2014. An agency for winding up problem banks remains to be sorted out. There is a question mark over the new procedure for closing a bank.

Ukraine Not Thankful For Russian Bailout


Merkel said ties with Russia should not prevent here is growing unrest in Ukraine Kiev from looking West. regarding the $15-billion bailout from Putin wants to bring Ukraine’s big, mineralRussia, which the people of Ukraine and rich market into a Eurasian Union he plans the opposition say had sold the country out to to build with Kazakhstan, Belarus, and other its former Soviet masters in Moscow. ex-Soviet republics to match the economic Ukraine’s President Viktor Yanukovich faced might of the United States and China. Without calls to resign as tens of thousands of protesters Ukraine, it looks much weaker. gathered in Kiev after he secured financial The suspicion and distrust towards the assistance and a gas price discount at talks with Russian bailout seems to stem from Putin, who President Vladimir Putin. is determined to stop Ukraine, by far the most Russia said it will buy Ukrainian bonds under a deal which keeps Kiev firmly in populous former Soviet republic after Russia, Moscow’s orbit and out of the European Union’s from building a new and close relationship with the EU. grasp but sowed doubts in some Ukrainians’ Yanukovich has been seeking the best minds about what Yanukovich might have Viktor Yanukovich possible deal for his country of 46 million but agreed to in secret. has been criticised in the West after the police Many of the protesters are angry that Yanukovich has spurned an offer of closer cooperation with used force against the protests in the heart of Kiev. Moscow, accused by European officials of bullying Europe and look on Russia with suspicion after living for Kiev into dropping the EU deal in 2013 with the threat of decades under Soviet communist rule. economic retaliation, now has great financial leverage over Ukraine needs money to cover an external funding gap of Ukraine. If it withdraws its money and alters the gas price, $17 billion this year - almost the level of the central bank’s it could pull the plug on its neighbour. Putin appeared to depleted currency reserves - and avoid defaulting on its debts. The United States warned Kiev that the deal would not stress this by saying that the agreements on the gas price were temporary. satisfy the protesters, while German Chancellor Angela

January 2014 MONEY INDICES



JPMorgan Faced With Criminal Action In Madoff Case


he Bernard Madoff scandal is haunting JPMorgan Chase & Co as federal authorities are nearing settlements over the bank’s relationship with the convicted Ponzi schemer, striking tentative deals that would involve about $2 billion in penalties and a rare criminal action. It is believed that the settlements would fault the bank for turning a blind eye to Madoff’s huge Ponzi scheme. Madoff was convicted in 2009 of defrauding thousands of investors and is serving a 150year prison sentence. JPMorgan has been accused of ignoring warning signs that Madoff’s business was a fraud, often to win more fees and commissions for services they provided. It is believed that the settlement with federal prosecutors in Manhattan would include a so-called deferred-prosecution agreement and more than $1 billion in penalties to resolve the criminal case. The rest of the fines would be imposed by Washington regulators investigating broader gaps in the bank’s money-laundering safeguards. JPMorgan, the biggest US bank by assets, recently reached a $13 billion settlement of a range of government claims over bad mortgage securities and struck another deal with regulators to pay about $1 billion for its “LondonWhale” derivatives trading debacle.

Canadian Banks Evince Interest In Energy Trading


hen it comes to energy business, Canada seems to be stepping up to the plate as its cousin, the US, retreats into the shadows. As Wall Street giants are pulling back from the energy business, Canadian banks are stepping forward, aided by booming domestic oil production and a greater sense of caution. Bank of Montreal, Canadian Imperial Bank of Commerce, and Bank of Nova Scotia, longtime niche players in energy trading, hedging, and dealmaking, are expanding their operations both north and south of the US border. In total, commodity trading revenues at the three banks rose by 30 per cent last year. With their reputation for caution, Canadian banks say they are unlikely to copy their US counterparts and start amassing physical assets such as metal warehouses or oil storage terminals. Big Wall Street banks including JPMorgan Chase & Co and Morgan Stanley are looking


MONEY INDICES January 2014

to sell their physical trading desks as regulatory scrutiny increases and returns diminish. Scotiabank is by far the biggest commodity trader in Canada, due in large part to its long-held ScotiaMocatta precious metals venture. Scotia reported a 26 per cent rise in commodity trading revenues to C$425 million ($397 million) last year. Of the other “Big Five” Canadian banks, Toronto-Dominion Bank does not break out commodity trading revenue figures, but Royal Bank of Canada’s trading revenues for foreign exchange and commodities climbed by 11 per cent last year. While many Wall Street banks embraced physical energy trading, Canadian banks have so far shied away. CIBC, Scotiabank, TD, and RBC do trade physical natural gas, a homogenous product that is easy to value. None of the banks are involved in physical crude trading, however, which would entail greater investment in logistics and storage.


Apple Finally Breaking Into Asia


pple is finally breaking into the much-coveted Asian populace with its sleek iPhones. As Apple and Samsung have rumbled for leadership in the global smartphone market, the Korean electronics giant has always enjoyed a big advantage. In China and Japan, Asia’s two biggest economies, Samsung had deals with the No. 1 mobile operators to sell its handsets — and Apple didn’t. Despite years of trying, the maker of the iPhone couldn’t win over China Mobile or Japan’s NTT Docomo. The two carriers have 821 million customers combined. Apple’s Asia handicap may soon be a thing of the past. In Japan, Docomo began offering the iPhone in September. Meanwhile, Apple Chief Executive Officer Tim Cook’s shuttle diplomacy may be about to bear fruit in China. The timing of Apple’s breakthroughs in Japan and China is no coincidence. Smaller companies, such as China Unicom and SoftBank, that have inked deals with Apple, are capitalising on the iPhone’s popularity to woo customers. Watching these smaller rivals make good of their business, the big boys of Asian telecom have decided to jump in as well because, though these companies have forever been

dominant in their home markets, the scene isn’t exactly the same anymore. China Mobile is the world’s largest mobile carrier, with 759 million customers as of October 31. Apple shipped 22.1 million iPhones there in the 12 months ended September 2013. It is believed that a deal with China Mobile could add another 18.1 million this year. Even with China Mobile on board, Apple faces hurdles. The overwhelming majority of China Mobile’s customers are of modest means: Less than a quarter have signed up for 3G service. The average price of a smartphone in China, where handset purchases are not subsidised by carriers, is about $250. In Japan, the iPhone is already a big hit, accounting for three out of every four smartphones sold in the country, according to market researcher Kantar Worldpanel ComTech. All said and done, a new deal with Japan’s Docomo and an impending one with China Mobile will give Apple a leg up in Asia. Note: Apple and China Mobile sign long-awaited deal to sell iPhones. Apple smartphones are set to be available to China Mobile customers starting January 17, 2013.

GM’s Opel Brand Avoids Cost Cuts With Sales Growth


rguably one of the world’s largest corporations, General Motors (GM) has bought itself some time to circumvent cost cuts. GM’s European unit Opel is cautiously optimistic that sales will grow enough in 2014, enabling it to avoid a further round of cost-cutting, says Chief Executive Karl-Thomas Neumann. Opel is on track to reach profitability by 2016, but the company expects a difficult year ahead, weighed down by restructuring costs for ending vehicle production at its factory in Bochum, Germany. The optimism is palpable as Neumann states that if the world doesn’t come to an end, the company and the brand should keep growing, and then it won’t need additional cost savings. GM is sticking with a 4 billion euro ($5.5 billion) investment plan for Opel and a strategy for the loss-making European subsidiary will remain in place even after a change of leadership at GM headquarters in Detroit. GM’s commitment to the Opel brand doesn’t seem to be a shortterm affair, as the company plans to stick in Opel’s corner for the long haul. No one seems to be a staunch believer in the Opel brand than Neumann himself, who said he was responsible for GM in Europe. So as head of Europe, he will stand for Opel and will fight for the brand. Being a member of key GM committees in Detroit will certainly help.

Opel’s cooperation with Peugeot of France would continue even after GM said it would sell down its 7 per cent stake and the French automaker announced it would seek closer ties to Dongfeng.

January 2014 MONEY INDICES



Is the worst over for the rupee?

2013 was a particularly cruel year for the Indian rupee, which was among the worst performing currencies, hitting a record low of 68.85 against the dollar due to the weak domestic economy and speculation over scaling back of stimulus, or extra printing of notes, by the US MI BUREAU



he rupee lost 27 per cent of its value between June and August largely due to a pull out of money by foreign institutional investors (FIIs) after the US Federal Reserve said it will consider reducing its $85 billion monthly bondbuying programme, introduced after the 2008 global economic crisis to pump prime the economy. The record low of 68.85 against the dollar came on August 28, just over three months after the US Federal Reserve’s May 17 announcement of possible scaling down on the stimulus programme. FIIs also pulled out $3.7 billion from the Indian equity markets between June and August leading to over 10 per cent slide in the benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE). Global funds sold $8.9 billion worth of bonds amid US stimulus tapering speculation. Total foreign holding of rupee-denominated bonds stand at around $25 billion, or 29 per cent of the $81 billion ceiling set by the government. The rupee as well as the stock markets recovered after the Reserve Bank of India (RBI) took a number of steps to help the battered currency and improve investors’ sentiments. Sentiments received a further boost after the US Federal Reserve announced in mid-September that it would keep intact its $85 billion monthly bond-buying programme, known as Quantitative Easing (QE). Most analysts expect that the US will start tapering the stimulus further from early 2014 and that would again put pressure on the Indian currency. However, now the reaction would not be knee-jerk as it was seen after the May announcement, analysts added. Improvement in current account deficit numbers along with mobilisation of nearly $34

India’s current account deficit fell to $5.2 billion in JulySeptember quarter, 75 per cent down from $21 billion recorded in the corresponding quarter of last year

billion by the RBI through various measures helped the rupee regain some ground. The partially convertible rupee was trading in the range of 61-62 level towards the end of the year, showing a gain of nearly 10 per cent since August’s record low. There was huge buying of Indian equities by global funds between October and December.

Overseas funds bought $17.5 billion more of Indian stocks than they sold last year until November. India’s current account deficit fell to $5.2 billion in July-September quarter, 75 per cent down from $21 billion recorded in the corresponding quarter of last year. Even amid lower-thanexpected economic growth, Planning Commission Deputy Chairman Montek Singh Ahluwalia believes that the 12th Plan’s target could be lowered to an achieveable 7.5 per cent. “So, today 8 per cent is a bit on the high side. The possibility for next five years I feel is 7.5 per cent, which is not impossible,” Ahluwalia said. As a proportion of the country’s gross domestic product (GDP), the current account deficit during the quarter ended September 2013 was 1.2 per cent, sharply down from five per cent recorded in the corresponding quarter in the previous year, according to the latest RBI data. It is believed that the biggest positive impact of the improvement in the current account deficit numbers would be on the rupee.

Highlights of 2013 Rupee hits record low of 68.85 against the dollar on Aug 28 Indian currency loses 27 per cent of its value between June and August Speculation of US stimulus tapering led huge pullout of money by the FIIs Weak macro-economic numbers like slow growth, high inflation, and deficits put pressure on rupee Rupee gained over 10 per cent between September and December on the back of RBI measures and positive cues from US Fed The first three quarters of the calendar year saw a fluctuating growth in the economy at 4.8 per cent, 4.4 per cent and 4.8 per cent respectively The average growth for the first three quarters of 2013 stands at 4.6 per cent, the slowest in over a decade The economy had expanded 4.7 per cent in October-December quarter of 2012 The government has lowered growth target to 5 per cent for 2013-14 from earlier projection of 6.5 per cent Private estimates put growth below 5 per cent The IMF has cut India’s growth projection for 2013-14 to 3.75 per cent World Bank pegs growth at 4.7 per cent Agriculture and farm sector shows good improvement, while industry disappoints Manufacturing took a hit, posting dismal 1 per cent growth in July-September quarter Manufacturing had fared dismally in the first three quarters as well, logging a growth of (-)1.2 per cent, 0.1 per cent and (-)1 per cent respectively

January 2014 MONEY INDICES



Checking on AAP and the

voter’s choice

Political startup Aam Aadmi Party (AAP) made a spectacular electoral debut within one year of its launch, scooping up 28 seats in the Delhi Assembly Election. This rise of the AAP brought on the sunset of Sheila Dikshit’s 15-year rule of Delhi, but the elections also generated a fractured mandate, with the Bharatiya Janata Party (BJP) five seats away from the magic figure of 36. For days, neither the BJP nor the AAP staked claim for government formation, given their minority status. The political scene entered a fresh stage of fermentation just when Lieutenant Governor Najeeb Jung recommended President’s rule in Delhi, with the AAP finally making up its mind to form a government with outside support from the Congress, following a referendum. At the time of going to press, AAP Convenor Arvind Kejriwal had taken over as Delhi’s seventh Chief Minister, as the Aam Aadmi cheered on the social crusader with a sense of great achievement and hope By Vishnu Rageev R


MONEY INDICES January 2014



oney Indices published an catapulted Arvind Kejriwal to fame – to the Delhi gangrape article titled “End of Sheila’s case, were held in the capital city. All these had a direct winning streak?” in its impact on the government. The market was ripe for a August edition. An excerpt change as you witness it now.” from the article read: “Delhi Interestingly, the highlight of the AAP’s sterling victory is bound for assembly is that several of its political non-entities turned giant elections this November in killers by defeating Congress stalwarts like four-time MLA what seems like a threeChaudhary Prem Singh, PWD Minister Raj Kumar Chauhan, cornered fight that could Education Minister Kiran Walia, Transport Minister bring the decade-long Ramakant Goswami, and Health Minister A K Walia. The Congress rule in the national capital territory region to a AAP won not only in constituencies dominated by the lower definitive end just before the 2014 General Elections.” middle and working classes in East and West Delhi, but It’s not that we are thumbing our nose at loyalists of the also emerged victorious in the posh South Delhi Assembly grand old party who may have nursed hopes of retention segments. of power. We are just glad that we perceived the popular On December 8, Congress Vice-President Rahul Gandhi wave in the right sense, making us root for a new political conceded that the AAP succeeded by being different from beginning in the national capital. Change is good, when other political parties. “I think the AAP involved a lot people are ready to ride the crest of new beginnings. of people whom the traditional political parties did not Therein lay the real test and triumph of involve. We are going to learn from democracy. that and do a better job than anybody Though the Delhi Assembly in the country and involve people in The BJP did win three seats Elections threw up a fractured ways you cannot even imagine now,” more than the AAP, but its mandate, it brought the 15-year said Rahul. rule of Sheila Dikshit to a definite accomplishments were Baby steps end and focussed the arclights on a Launched on November 26, 2012, totally whitewashed with the one-year-old political startup, Aaam AAP came into existence following Aadmi Party (AAP), led by Arvind electorate clearly extending difference of opinion between social Kejriwal, a government administratoractivists Arvind Kejriwal and Anna support to the new entity turned-social crusader. The BJP did Hazare over politicisation of the win three seats more than the AAP, that rode to stardom on its popular ‘India Against Corruption’ but its accomplishments were totally plank of clean governance movement that had been demanding whitewashed with the electorate a Jan Lokpal Bill since 2011. Hazare and accountability. The clearly extending support to the wanted the movement to be apolitical, new entity that rode to stardom on broom, AAP’s symbol, took up while Kejriwal felt the failure of the its plank of clean governance and agitation route necessitated a direct the cause of the common man accountability. The broom, AAP’s political involvement. “Usually, a symbol, took up the cause of the on issues like corruption, political party turns out to be a 20-year common man on issues like corruption, project,” explains Neerja Chowdhury, a price rise, water scarcity, price rise, water scarcity, cost of political analyst and senior journalist. electricity, inadequate public health cost of electricity, inadequate facilities, poor state of government public health facilities, poor schools, and women’s security, and became an extension of hope against state of government schools, politics of the contaminated kind. and women’s security, and “Since its inception, the AAP played became an extension of a different pitch, when compared with other major political parties,” hope against politics of the feels Malavika Velayanikal, Executive contaminated kind Editor, “Though Sheila Dikshit had a strong brand image as someone who had done good work, the people were bored, if not tired, of the Congress. Scams and scandals that had plagued the party didn’t help either. Also, protests and demonstrations over various issues, ranging from the Jan Lokpal Bill – which first

Arvind Kejriwal


political outfits. The “But Kejriwal has had the knack AAP’s vote share of of turning all more than 50 per cent is adversities and substantially ahead of challenges in his comparable state-wise favour. Kejriwal electoral debuts: the foresaw the AAP TDP in Andhra Pradesh as a differentiator in 1983 (46 per cent), the which would emerge AGP in Assam in 1985 as a major force, (35 per cent), and the and worked towards BSP in UP in 1989 (10 it. When Kejriwal per cent). dared to take on One of the main Sheila Dikshit in reasons for the her constituency in AAP’s remarkable New Delhi, everyone electoral performance thought it was is attributed to its political suicide. ‘winning manifesto’. But he usurped It spoke of the Jan the throne by a Lokpal Bill, swaraj, One of the main reasons for the AAP’s remarkable electoral thumping majority electricity, water, performance is attributed to its ‘winning manifesto’. It spoke – 25,864 votes more sanitation and waste than Sheila Dikshit of the Jan Lokpal Bill, swaraj, electricity, water, sanitation management, women – and created a security, education, and waste management, women security, education, health, larger profile for health, Delhi’s villages, himself and his Delhi’s villages, unauthorised colonies, slums, inflation, unauthorised colonies, party. I see Kejriwal slums, inflation, unemployment, transport, environment, social justice, and as game-changer.” unemployment, other economic issues, promising one-stop solutions to the Subrata transport, environment, Mukherjee, a social justice, and dilemmas faced by Delhiites political analyst other economic issues, who teaches at promising one-stop Delhi University, says: “I see the AAP as a byproduct of the solutions to the dilemmas faced by Delhiites. “When the crusade against the corruption, which Hazare and Kejriwal Congress government plunged to a historic low because hold successfully in the national capital region. The party of various factors affecting the common man, the AAP was built from scratch using small donations made by formulated a manifesto which made an instant connect Indian philanthropists across the world. Unlike other with Delhi’s electoral masses,” says Mahesh Rangarajan, political parties in India, there is a kind of accountability a Delhi-based psephologist and political analyst. “It’s not and credibility factors which are underlying in the AAP’s magic, it’s not mysterious, and it has nothing to do with DNA. The success of the AAP justifies the fact that gone is genes. It’s all about the timing. Though the Congress was the days of political dubiousness. The more you are open, credited with development of infrastructure, bringing in the more are the chances of winning.” Delhi Metro, setting up educational institutions, the party Kejriwal had handpicked 70 candidates of the AAP by failed to decode a strong undercurrent of the AAP and keeping in mind their clean image. The AAP had made it aspirations of the young voters – a majority being firstclear that not a single tainted candidate would be allowed timers – who turned out in large numbers to cast their to contest with an AAP ticket, and made details about them votes. Delhiites were fed up with the hike in electricity and available online for public scrutiny. This transparency water rates, women security, unauthorised colonies, and stood out in contrast to both the Congress and the BJP, who inflation, among other issues. Kejriwal not only devised fielded several tainted candidates in the previous polls. a best-of-its kind manifesto but also marketed it well. The most significant ‘connecting factor’ that had worked However, one has to wait and watch how he is going to for the debutant party is its ability to connect with the implement the promises made.” middle class. Now, both the BJP and the Congress are doing Delhi Congress Unit President Arvinder Singh Lovely some introspection. said the Congress has offered outside support to the Arvind Winning manifesto Kejriwal-led AAP, as the grand old party wants Delhiites to get the benefits proposed in the AAP’s manifesto. “We have The Delhi Assembly Election results had come as a surprise agreed to support from outside. We will support the AAP in both for the electorates as well as regional and national


MONEY INDICES January 2014


the Legislative Assembly. They have won the election only by blaming us and through the promises they have made in their election manifesto. We want to give them a chance to implement their manifesto.”

End of post-poll standoff On December 8, the electorate in Delhi sprung a surprise by throwing up a mandate where no party was in a clear position to form the government on its own. While most BJP leaders proclaimed that their party would form the government in four states on December 8, by the evening of December 9, it went back to occupy the opposition benches in Delhi, even though it was the largest party. The AAP then laid down 18 conditions for accepting support from the Congress and the BJP. In the end, the Congress agreed to extend outside support. In the mean time, thousands of respondents to a newly-released survey wanted Arvind Kejriwal-led AAP to form the government. AAP Convenor Arvind Kejriwal said, “It (government formation) is a plan taken after a lot of homework, consultations with all the key stakeholders, most importantly, the ‘Aam Aadmi’. With the government formation, we are putting the best foot forward to bring changes in the lives of Delhiites. We will continue to stick and work towards implementing our promises, making necessary policy changes as and when needed.” This is truthfully a moment of change for democracy. Rangarajan says, “While the present and future of the AAP is as volatile as its birth, it has created a distinctive space in the political discourse, rewriting rules in electoral democracy, challenging old political practices, and empowering people to participate in a way Congress scion Rahul Gandhi dreams the Congress would. The journey of the AAP so far has been one where

Narendra Modi

conventional wisdom and practice have been challenged at every stage. But the true test lies in the days ahead. How the AAP is going to take up the challenge posed by the Congress, is yet to be seen, when its leaders say they are eagerly waiting to see how the AAP is going to keep the promises given to Delhiites.” Ahead of the Lok Sabha elections, the Congress would still like to have at least one foot in the door of the Delhi government. How this will work out for them remains to be seen.

BJP’s Modi versus AAP’s Kejriwal The AAP is planning to go national now. The party is organising itself in over 380 districts, more than half the country including all big towns and cities, with an eye on this year’s General Elections. It is estimated by experts that even if the AAP replicates a fraction of its Delhi success, the party can win 30-50 seats, denying the BJP a clear run in the 2014 elections. It is also being said that the Modi wave has been dented by the Kejriwal effect post-Delhi elections. “Yes, now the BJP has to reckon with the freshlyminted AAP in the urban region, like the Congress,” says Subrata Mukherjee. “The AAP’s win in Delhi proves that the BJP cannot claim that its prime ministerial candidate, Narendra Modi, who campaigned extensively in the capital, has stirred the city. It must be seen how Kejriwal is going to capitalise his strengths as he spreads out his reach across India. Kejriwal must show the people of the country that he does his job with the same energy and vigour when in power. However, it would be too premature to comment about the way his party is going to perform in the 2014 elections. It all depends upon his ability to deliver his promises.” Sanjay Kaul, Executive Member of BJP’s Delhi Unit, sees no threat from the AAP. He says, “Since the AAP is taking up the Congress offer of support, it is the culmination of what we always knew: Congress ka haath, AAP ke saath.

The AAP is planning to go national now. The party is organising itself in over 380 districts, more than half the country including all big towns and cities, with an eye on this year’s General Elections. It is estimated by experts that even if the AAP replicates a fraction of its Delhi success, the party can win 3050 seats, denying the BJP a clear run in the 2014 elections

January 2014 MONEY INDICES



In the midst of all this, the AAP’s internal organisational transition has been complicated by the timing of the 2014 elections. The party has only five months left to decide upon a vision and strategy reflecting the national interests. Viewed from these angles, Modi has a clear first-mover advantage

Let the kid gloves come off. The AAP is an adjunct of the Congress and we’ve to fight it the same way we fight the corrupt Congress. I don’t think it is going to have any repercussions for the BJP in the 2014 polls. Rather, people of this country would give a clear mandate for the BJP and Modi to form the next government (at the Centre). It is another matter though that a group that started out as an anti-corruption crusade against the litany of scams by the Congress is today coming full circle to partner with the same corrupt party.” Vishal Duggal, Consulting Director (Content), Egovin. com, says, “I don’t think Kejriwal can drive the national electorate that easily like he did it in Delhi. The AAP is a roaring success in Delhi because of the imbalance in regional political climate. I know many people who would vote for the AAP in the state election and the BJP in the General Elections. The new murky deal between the AAP and the Congress would play spoilsport for the AAP’s future triumphs.” Pankaj Gupta, Member, National Executive, AAP, isn’t worried by negative speculation. “These kind of baseless stories about the AAP’s poor election performance and further extinction have been doing rounds since its formation. The reason why we decided to form the government is that we do not shy away from responsibilities. Our decision to form the government with the Congress support will not stop us from undertaking our mission of transforming India as a corruption-free nation. We have already begun working for the 2014 polls. I don’t


MONEY INDICES January 2014

see any Modi wave anywhere. We will field candidates in all constituencies in Gujarat and in other identified states. The AAP is poised to be the real game-changer in India’s national politics. You will see it in May 2014.” Modi doesn’t seem to be perturbed by the AAP as much as he is by the Congress. He continues to make critical remarks against the Congress rule at all of his public rallies. “People are waiting to remove the Congress government at the Centre. This time, elections will not be fought by political parties or any individual, people will fight the election. We have to move towards making the country rid of the Congress,” Modi said at a public meeting in Varanasi. On the other hand, the Congress has been on the defensive following its defeat in four states. Ahmed Patel, Political Secretary to Congress President Sonia Gandhi, says, “I don’t understand why the media is in a hurry to close the Congress chapter. Winning and losing are part and parcel of the electioneering process. It is not the first time that the Congress is losing an election. While we accept our defeat, we are keenly looking forward to take all corrective measures to improve the performance of our government as well as the party. The Congress is neither bothered about Modi nor Kejriwal. We have been working for the betterment of India and will continue to do so. Our strategy going forward would be to make sure that the people of this country are the biggest beneficiary and the successful implementation of the Lokpal Bill is aimed in that direction. The people of this country understand the Congress and would definitely give us clear mandate in the


forthcoming polls. The party will soon announce its prime ministerial candidate.” Patel declined comment when asked about the possibility of Rahul Gandhi becoming its prime ministerial candidate. In the midst of all this, the AAP’s internal organisational transition has been complicated by the timing of the 2014 elections. The party has only five months left to decide upon a vision and strategy reflecting the national interests. Viewed from these angles, Modi has a clear first-mover

advantage. “Narendra Modi is clearly ahead of his peers as far as campaigning for the 2014 polls is concerned,” says Virag Pachpore, Senior Editor, New Bharati. “The AAP’s Delhi win is just instant. I don’t think they would manage to create the same ripples outside the state. Kejriwal is a social crusader and it would be unjustifiable to compare him with a tall leader like Modi. No leader in independent India has got that connect with the Indian public like Modi has. He will continue to be a firebrand and get the BJP absolute majority in the 2014 battle. The AAP’s strategy of seeking

January 2014 MONEY INDICES



The AAP has taken a moral high ground by giving people the alternative of honest politics, without the aid of dirty money or muscle power. The party, which has the power of new young leaders (10 of the 11 elected members are aged 25 to 35), has sent out warning signals to not just national parties, but also regional parties

the Congress support would turn out to be a killer tsunami sooner or later.”

Preparations for May 2014 The AAP has taken a moral high ground by giving people the alternative of honest politics, without the aid of dirty money or muscle power. The party, which has the power of new young leaders (10 of the 11 elected members are aged 25 to 35), has sent out warning signals to not just national parties, but also regional parties. “Thus far, all


MONEY INDICES January 2014

commentators have been glibly telling the BJP that in the states where regional parties are strong, the BJP may not be able to make much headway,” says R Jaganathan, Editor-inChief of Firstpost. “But the AAP is an idea, and the regional parties do not necessarily have a better image than the Congress or the BJP in their states. If the AAP becomes a factor in metros such as Mumbai and many state capitals, one can’t rule out a dent in the regional vote too.” Well, in the end, everything boils down to the vote. So, wait we shall, until the real (May 2014) drama unfolds.


Weighing the

Bitcoin wallet Is a non-regulated currency given to unexpected appreciation or depreciation in value worthy enough of our trust when it comes to making daily investments or transactions? Well, there’s hardly any room for prudence in such a scenario. So, it comes as no surprise that the Reserve Bank of India (RBI) has warned people against investing their trust in Bitcoin, a virtual currency minted through a blend of mathematics and computer algorithms. The warning has come at a time when thousands of Indians are looking at this virtual currency as a viable means of exchange and valuable investment option. A number of startups that had been dealing in Bitcoins have now suspended their operations following the RBI’s warning By Rajamma panicker

January 2014 MONEY INDICES




supply is controlled by a computer algorithm,” says Mike he Reserve Bank of India has cautioned the users, holders, Jain, Consultant to Satoshi Foundation, an organisation and traders of virtual currencies, that is working towards bringing about awareness on including Bitcoins, about the Bitcoin. “Once you download and run the Bitcoin client potential financial, operational, legal, software, it connects over the Internet to the decentralised customer protection, and securitynetwork of all Bitcoin users and generates a pair of unique, related risks. The central bank said mathematically linked keys, which you’ll need to exchange that it is examining issues associated Bitcoins with any other client. One key is private and kept with the usage, holding, and trading hidden on your computer. The other is public and a version of such virtual currencies under the of it, dubbed as Bitcoin address, is given to other people so existing legal and regulatory framework of the country. But they can send you Bitcoins.” then, why is there a big hue and cry over the dependability Most importantly, Bitcoins can neither be manipulated of Bitcoins? Pay attention as Money Indices tells you by governments and political bodies, nor inflated or everything about Bitcoins. deflated artificially. The transactions are directly between Bitcoin is a digital currency two parties, with no financial launched in 2008 by a mysterious institution as the intermediary. programmer who called himself So, transaction costs, if any, are Satoshi Nakamato. In the last low. The value of this currency five years, Bitcoin has gained Most importantly, Bitcoins is determined by supply and popularity across the world, demand, similar to equities and can neither be manipulated thickening in value from the gold. quarter of an American dollar to by governments and political “Designed to be a lot like cash, $753.69 (`46,272.91) as of today, Bitcoin is traded on a number of bodies, nor inflated or deflated according to exchanges or swapped privately,” artificially. The transactions are Many technically adept says Mahim Gupta, whose Bitcoin people in India took advantage trading website directly between two parties, of Bitcoin’s insulation from the suspended operations following with no financial institution as established financial system the RBI’s warning. “Using a and lack of regulation. “Bitcoin particular software, Bitcoins are the intermediary. So, transaction is used by a growing number generated by a process called costs, if any, are low. The value of businesses and individuals mining and can be converted globally, and India is not far of this currency is determined into cash after being deposited behind,” says Sunny Ray, Director into virtual wallets. Bitcoins by supply and demand, similar to of Business Development at USallow anyone with an internet based Buttercoin, a free Bitcoin equities and gold connection, through a computer exchange backed by investors such or smartphone, to send and as Google Ventures. receive payments from anywhere “There are a growing number in the world, at negligible cost.” of businesses and individuals Gupta, who used to offer using Bitcoin. India ranked in the Bitcoin exchange in the local currency, had seen an top 30 Bitcoin-using countries, with an estimated 30,000 exponential increase in turnover during the last few Bitcoin users. However, the actual number could be far months. more than this, which means Indians have embraced the Bitcoins are also used to pay for goods and services novel concept.” on websites that accept them, observes Ray of Buttercoin. At the end of August 2013, the value of all Bitcoins in “Every time they change hands, they are stamped with the circulation exceeded $1.5 billion. transaction details and the identification key of the new owner. All transactions are communicated to the public The alternative money pill network and indexed for future verification. Buyers and Programmed in 2008 during the financial crisis as an sellers remain anonymous, as the identification numbers alternative to traditional banking structures, Bitcoin runs include no personal details.” in a peer-to-peer network that takes financial middlemen, Bitcoin is a safer alternative to online payments through such as the banks that process credit card payments, out of credit or debit cards, feels Vikram Nikam, a member of the equation. CoinMonk, an organisation aiming to create general This cryptocurrency is pretty much like cash for the awareness about Bitcoins in India. “When you make an Internet, which is touted as the most prominent triple entry online transaction using a credit or debit card, you are bookkeeping system in existence. So, how does it work? “It exposing your card to frauds such as phishing. A transaction exists through an open-source software programme and its


MONEY INDICES January 2014


talks with Indian banks to launch using Bitcoins is more secure, as it involves a private key: Bitcoin an exchange in India to allow the transactions are untraceable. Also, purchase and sale of Bitcoins, we Bitcoins are encrypted for security are also working with companies reasons and cannot be easily that develop software for banks counterfeited.” in India to make it possible for CoinMonk hosted India’s first banks to accept Bitcoin. We expect two-day conference on Bitcoins on to receive the approvals and ‘a December 14-15 last year, where no objection certificate’ from discussions took place on the the country’s banking regulators potential of the virtual currency including SEBI and RBI shortly.” industry, especially in Bangalore. Bitcoins can be stored on your India’s Silicon Valley is home to computer, phone wallet, or an some 1,000 member-strong Bitcoin online wallet. To have a wallet community. It is not known what on your system, all you need is this community is up to now that some disk space. Online wallets the RBI has cautioned people. take care of disk space and keep According to the Bitcoin your Bitcoins secure. You may be website, a public ledger, called charged a small fee for an online the “block chain”, contains every wallet. According to the Bitcoin website, transaction ever processed, An important point to allowing a user’s computer remember is where and how you a public ledger, called the to verify the validity of each store your bitcoins, informs Nikam. “block chain”, contains every transaction. “The authenticity of “If there is a technical glitch with each transaction is protected by your hardware, you could end up transaction ever processed, a digital signature corresponding losing your Bitcoins. So, one must allowing a user’s computer to the sending address, allowing handle it with care.” all users to have full control over to verify the validity of each Value hikes sending Bitcoins from their own transaction At last count, there were Bitcoin addresses. Hence, the approximately 1,17,62,550 Bitcoins digital money is also known as a in circulation. In June 2010, one “cryptocurrency”, since it uses Bitcoin was worth the quarter of cryptography to facilitate and a US dollar. In 2011, the rate rose control transactions.” to $3-4. This year, prices have Since the Bitcoin is not fluctuated. In April, one Bitcoin cost $237. It crashed the a regular currency – no stacks of gold or government next month to $80. Now, it stands at $747. income govern its value – its rate is governed by demand against limited supply, adds Gupta of “The The Bitcoin shop algorithm that Nakamato created allows only a limited As of December 4, 2013, the ‘buy’ price of one Bitcoin was number of Bitcoins to be generated. It is estimated that no `75,314, against `74,449 on December 3. As of December 4, more than 21 million Bitcoins can be mined over a period the ‘sell’ price was `72,357. After the RBI’s warning, Bitcoin of 140 years.” According to Nakamato’s programme, the last was trading at `46,272.91 as of December 29. Bitcoin will be produced in 2140. To buy Bitcoins internationally, you have to create an account with one of the Bitcoin exchanges, such as the Bitcoin boom in India Tokyo-based Mt Gox (, the largest one, According to The Genesis Block, Indian Bitcoin software and start buying the currency. The website always displays downloads increased 17.23 per cent in the third quarter and an exchange rate; it can also show a chart with historical this is nearly double the average rate of growth in Bitcoin exchange rates. One can also get Bitcoins for free from downloads registered by the other 30 countries. Of these, websites such as and close to 70 per cent, or 24,723 downloads, took place in These websites earn money from advertisers and share a 2013. In October alone, there were 2,067 downloads of small portion of that with visitors. Bitcoin, moving India’s ranking one place up to 16. Globally, In India, laws do not recognise mining, purchase, or sale Bitcoins have been downloaded 4,256,207 times from 199 of Bitcoins. That is why technology startups are excited countries till date. The US tops the ranking with 1,207,661 about the potential of this currency, says Benson Samuel, downloads, followed by China and Germany. Founder of an exchange rate setter called Coinsecure. “Setting up a Bitcoin exchange in India is a logical next “While setting up a business, many startups prefer step for the Indian Bitcoin community. While we are in

January 2014 MONEY INDICES



transacting in Bitcoins, instead of cash, as there is no tax liability as of now and cryptocurrency can be integrated into any software.”

Positive for e-commerce Once a Bitcoin is sent, the transaction cannot be reversed unless the receiver gives it back, like in a cash deal. That is good for merchants who may end up being liable if someone uses another person’s credit card to pay for goods and the money is reclaimed in what’s known as a “chargeback”. In addition, consumers don’t have to submit personal information while sending Bitcoins, reducing the chances of identity theft.

In India, mining, buying, and selling Bitcoins are neither illegal nor recognised by law. And, Bitcoins’ taxability is a big question. Some experts say the amount of Bitcoins held will not be added to your income for tax purpose, if you retain Bitcoins in that form, that is, not convert these into rupees

Bitcoin transactions are considered final after six verifications are received from computers on its decentralised network, says Gupta. “Since computers verify the transaction, people don’t have to trust the person who sent them a Bitcoin, or any other entity. However, on a broader level, people using Bitcoin must trust the software and ecosystem. You’ve got to have several kinds of trust involved when you don’t have the government or reserve banks or the banks themselves. It is more or less like creating your own set of rules.”

Anonymous nature is a killer The transactions done via Bitcoin are totally anonymous. There are no records of the sender or receiver in the database. There is a public listing of the transactions (for verifying the proper transactions) which will only show the amount of money transferred and the transaction ID. In normal currencies, whenever you make a payment to anyone, you will need to provide all the details, like your name, address, and so on, and these details will be available


MONEY INDICES January 2014

in the database forever, notes S N Ravichandran, an anticyber crime expert who helps police and other authorities regularly. “Bitcoin does away with this and you can send money to another Bitcoin user anywhere in the world and no one will ever know about it.” The Indian government is still studying the new digital currency system, possibly because China and European countries are also on a wait-and-watch mode. While Bitcoin is clearly not a Ponzi scheme, the frenzied get-in-now enthusiasm belies the fact that it is a very new and immature software experiment, points out V Rajendran, advocate and President, Cyber Society of India. “As a result, Bitcoin’s buzz is offset by suspicion, doubt, and, occasionally, contempt. The real fear is that Bitcoin can be used to help money laundering. The concept of a digital currency, unregulated by any monetary authority, is a recipe for disaster. The RBI must step in and regulate this immediately. Lured by so-called appreciation in Bitcoin value, people may invest in this and risk losing everything. Since Bitcoin transactions are irreversible, scammers and fraudsters find them useful.”

Not a safe bet? Financial experts recommend against keeping one’s investments in the form of Bitcoins for a longer period. Bitcoins should be considered a high-risk asset class. One should never store money that one cannot afford to lose in this form. While the price of a Bitcoin could increase or decrease unpredictably through a short period due to its novel nature and relatively illiquid markets, the currency is still in infancy, says Anil Rego, a certified financial planner who advises on using Bitcoins as an investment option. “It remains to be seen how widespread its acceptance will be and the fluctuations it will face. It is advisable to avoid this as an investment route till these questions are answered in time.” Though Bitcoins have matured substantially, the system is still experimental, and has a few aspects that can be exploited or result in a glitch. If someone could control 51 per cent of the total computing power in the Bitcoin ecosystem, for instance, they could manipulate it to retrieve the money already spent. Another risk is that Bitcoin apps, which serve as the backbone of the system, could malfunction. Recently, an incompatibility between two versions of the mining software resulted in a company losing a lot of Bitcoins. Bitcoins could also get lost or stolen if digital wallets are not secured through encryption and paper or digital back-ups. A lost or deleted Bitcoin cannot be replaced at any cost.

The regulatory side World’s top monetary regulators are waking up to the reality of Bitcoins. In March, the US Financial Crimes Enforcement Network said a money transmitter’s licence would be required to sell or exchange Bitcoins, although


they can still be freely used to pay for goods and services. Similarly, China has banned its banks from doing business in Bitcoins. The Chinese regulators said Bitcoins were an unsafe investment that can be controlled by speculators, making it highly volatile. Beijing believes that Bitcoins make money laundering easy and could be used by criminal organisations for purchase of drugs and weapons. China, however, grants individuals the freedom to buy and sell Bitcoins at their own risk. For the record, Thailand was the first country to ban Bitcoins in July. The US authorities have declared that all prevailing

China had asked its banks and financial institutions not to deal in Bitcoins, cautioning the public. Similarly, the RBI has also cautioned the public and is keenly watching the discussion around Bitcoin. They have three options: to reject Bitcoin entirely, which would be the easiest option; to accept Bitcoin, which would mean that someone will have to make that call and defend it politically, either before this government or the next; and finally, to adopt Bitcoin, to embrace the whole idea, allow transactions, and encourage its use

money laundering laws would apply to Bitcoins, says Na Vijayashankar, Managing Director of Ujvala Consultants, a cyberlaw consultancy firm. “China had asked its banks and financial institutions not to deal in Bitcoins, cautioning the public. The RBI is keenly watching the discussion around Bitcoin with a lot of interest. They have three options: to reject Bitcoin entirely, which would be the easiest option; to accept Bitcoin, which would mean that someone will have to make that call and defend it politically, either before this government or the next; and finally, to adopt Bitcoin, to embrace the whole idea, allow transactions, and encourage its use.�

January 2014 MONEY INDICES



Distributor enquiries solicited from unrepresented areas in India & Abroad: E-mail:,,,


Playing Japan’s

intimate friend Last November, India played a perfect host welcoming two of its most distinguished guests, Japanese Emperor Akihito and Empress Michiko, marking determined efforts towards fostering intense bilateral engagements between Asia’s two leading democracies


By vedaant vishnu

apanese Prime Minister Shinzo Abe is a staunch pro-Indian. It comes through clearly in his book Utsukushii Kuni E (Towards a Beautiful Country), in which he says that strengthening bilateral ties with India is extremely important to Japan’s interests. While assuming office in January 2013 as Japanese Premier for a second term, Abe pertinently argued that it is the duty and responsibility of both India and Japan to work together in safeguarding the Indo-Pacific region, which he diplomatically refers to as ‘broader Asia’. Prime Minister Manmohan Singh’s trip to Tokyo in May 2013 saw both the leaders mutually agreeing upon the need for more cooperation towards enhancing regional

security. Praising Singh for developing and promoting a strategic and global bilateral partnership, Abe said, “I’m very pleased that I’m able to hold a summit with you as the Prime Minister of Japan again. India and Japan are indispensable partners and will continue to be.” Singh made positive gestures after the summit and said, “Our discussion was guided by the fundamental belief that at the time of global uncertainty, change, and challenge, India and Japan are natural and indispensable partners.” India is now looking forward to a civil nuclear deal with Japan that will allow Tokyo to export nuclear reactors to the country. There have been discussions with Japan in this connection, and Singh’s May visit marked a formal move in that direction. “I am hopeful that before long we will be able to put our signatures to a civil nuclear energy agreement with Japan as well,” Singh had said.

January 2014 MONEY INDICES



A joint statement, issued at the end of exhaustive talks between Singh and Abe, had said that the two leaders reaffirmed the importance of civil nuclear cooperation between the two countries, while recognising that nuclear safety is a priority for both governments. “In this context, they directed their officials to accelerate the negotiations of an Agreement for Cooperation in the Peaceful Uses of Nuclear Energy towards an early conclusion,” the statement had said.

Royal visit Six months after the summit, Emperor Akihito and Empress Michiko visited India for a week-long tour on November 30, proving that the efforts made by both prime ministers have paved the way for more fruitful engagements. It is interesting to note that their maiden visit to India was in 1960, as a young Crown Prince and Princess, and that both the countries have covered many a ground over the past five decades. There’s another fact that only goes on to show the importance Japan gives to India: in the more than 2,600-


MONEY INDICES January 2014

There’s another fact that only goes on to show the importance Japan gives to India: in the more than 2,600year history of the Japanese monarchy, the world’s oldest continuous hereditary royalty, no Emperor has been to India, although India has been traditionally referred to in Japan as Tenjiku, or the heavenly country

year history of the Japanese monarchy, the world’s oldest continuous hereditary royalty, no Emperor has been to India, although India has been traditionally referred to in Japan as Tenjiku, or the heavenly country. In recognition of the momentous nature of the visit of the Japanese royals, Manmohan Singh had appointed Ashwini Kumar as his special envoy with Cabinet rank to “prepare for the visit” of the imperial couple, and for Abe’s visit early this year. So, is there something to be read between the lines from this visit of the Japanese royal couple? “The Japanese Emperor significantly stays away from internal and external politics,” says Brahma Chellaney, an international affairs geo-strategist and professor of strategic studies at New Delhi-based Center for Policy Research. “The royal couple’s visit is a clear signal from the Japanese government that India is a vital ally to Japan on diplomatic and economic fronts. The good part about the recent visit of the Japanese Emperor is that it symbolises a watershed in relations with India.”


It was widely reported in the Japanese media that the royal couple decided to visit India on a pressing request from Abe. Interestingly, there are more than 50 countries whose invitations to the royal couple are still awaiting acceptance. This clearly shows Abe is upbeat on IndoJapan relations. The Japanese PM is also expected to be the chief guest at India’s Republic Day celebrations in January 2014. Underlining the strategic nature of the royal visit, Prime Minister Singh and his wife received the royal couple at the airport, a rare gesture he extended to US President Barack Obama in 2010, and earlier to his predecessor, George Bush, in 2006. The November visit primarily focussed on the changes in India since Akihito’s father Hirohito visited the country in 1960, the uses of alternate and renewable sources of energy including solar energy, the progress made by India in agriculture, Japanese aid and investments helping India build its infrastructure, like the New Delhi city rail service and the ambitious $90 billion Delhi-Mumbai industrial corridor (DMIC). Meanwhile, Sakutaro Tanino, Press Secretary to Japanese Emperor Akihito and Empress Michiko, regretted that there were only 23 weekly flights between Japan and India, in contrast to the 527 weekly flights between Japan and China. “There are only 573 Indian students in Japan as against 87,000 Chinese students in Japan. Tourism flows were also dismal — mainly due to the lack of cheap, clean hotel accommodation in India. These were the trends that the royal visit was trying to reverse. It was a similar royal visit to China in 1992 that helped transform SinoJapanese relations,” said Tanino.

There are only 573 Indian students in Japan as against 87,000 Chinese students in Japan. Tourism flows were also dismal — mainly due to the lack of cheap, clean hotel accommodation in India. These were the trends that the royal visit was trying to reverse. It was a similar royal visit to China in 1992 that helped transform Sino-Japanese relations

historically been positive. During the early 20th century, Japan’s emergence as a major powerhouse was interpreted positively by India as the beginning of Asian resurgence. The support and assistance rendered by Japan to Netaji Subhash Chandra Bose and the Indian National Army (INA) continue to shape up India’s popular thinking about Japan. “Indo-Japan relations are singularly free of any kind of dispute, unlike with China: ideological, cultural, or territorial,” says Lalima Varma, Professor of Japanese Studies at Center for East Asian Studies, JNU, New Delhi. “It is one of warmth emanating from generous gestures and sentiments of standing by each other at times of need. The recent visit of the royal couple emulates the age-old foundation of India’s strong principles and relations with Japan.” Popular goodwill in both societies has been a notable element in the relationship, avers Tanino. “In Japan, it is not uncommon to hear politicians refer warmly to India’s declaration of mourning at the time of demise of the Showa Emperor. Japanese businessmen active in steel, textiles or trading are nostalgic as they recall their Indian connections during the reconstruction period.” The economics too make a strong case for ties with India. “Japan wants to make India its most

The indispensable duo India and Japan had established diplomatic relations in 1952, and the two nations enjoyed cordial relations based on trade and economic and technical cooperation since then. The image of Japan in India has

January 2014 MONEY INDICES



important partner because India is an emerging market. It would be foolish for any global player to ignore India,” says Savitri Viswanathan, retired professor of Japanese Studies at Delhi University and one of the pioneers of Japanese studies in India. “Japan also has an ageing population, which needs to be supported by business incomes from overseas, where its investments can be safe and profitable. The US is on the decline. China is unsafe for Japan. India provides the best opportunity. India as a birthplace of Buddhism is another cementing factor.” Unsurprisingly, over the past two decades, Japan has been helping India out with commendable restoration work at Ajanta and Ellora in Maharashtra, and in Bodh Gaya in Bihar.

Indo-Japan bilateral trade reached $18.61 billion in FY 2012-13, as against $18.43 billion in FY 2011-12. During FY 2012-13, India’s exports to Japan stood at $6.1 billion and imports from Japan were to the tune of $12.51 billion

Bilateral economics Indo-Japan bilateral trade reached $18.61 billion in FY 2012-13, as against $18.43 billion in FY 2011-12. During FY 2012-13, India’s exports to Japan stood at $6.1 billion and imports from Japan were to the tune of $12.51 billion. IndoJapan bilateral trade is set for further growth with increased focus on areas such as agriculture, food processing, and bio-technology. “The Japanese sanctions against India for the Pokhran nuclear tests left Indo-Japan relations crippled during the 1998-2000 period,” says Jeffrey W Hornung, Associate Professor at the Asia-Pacific Center for Security Studies in Honolulu, Hawaii. “However, bilateral ties have grown rapidly within a short time to embrace a strategic partnership and defence links between both the countries. Constant high-level interaction – the annual Indo-Japan summit, the regular exchanges between the two defence ministers, a “two plus two” dialogue involving the foreign and defence secretaries, a dialogue on maritime security, and a trilateral dialogue that includes the United States – has kept up the momentum.” Japan offers India a wealthy, sophisticated market for textiles, seafood, IT, pharmaceuticals, and services. Japan, on the other hand, looks to India as an export market for its auto components, high-end technology, and

Export-Import Statistics (In US dollar billion) Year EXPORT India’s Total Export

2005-06 2006-07



2009-10 2010-11













2011-12 6.33 305.96






































India’s Total Import %Share TOTAL TRADE (with Japan)


MONEY INDICES January 2014

capital goods. “India is important to Japan because of its geopolitical position and economic potential, while Japan is India’s critical source of capital and commercial technology,” adds Varma of JNU. “Over the past five years, bilateral trade has doubled. Things moved forward rapidly after the Comprehensive Economic Partnership Agreement went into effect in August 2011, removing duties on 94 per cent of products over the next ten years and ensuring greater movement of goods, services, capital, and people between the two countries.”

Japanese FDI statistics

India has emerged as one of the most favoured destinations in Asia for Japanese foreign direct investment (FDI). DIPP statistics show that Japanese companies have made actual investments of $12.66 billion in India between April 2000 and June 2012. This accounted for 7 per cent of total FDI inflow into India and made Japan the fourth largest investor in India. Further, the number of Japanese affiliated companies in India has grown significantly over the last five years. About 1,000 Japanese companies are operating in India as of today. “Japanese FDI into India has mainly been in the auto, electrical equipment, pharmaceuticals, trading, and telecommunications sectors,” adds Krishan Malhotra, Head of Tax and expert on FDI at corporate law firm Amarchand & Mangaldas. “India’s growing economy and stable investment climate offer large opportunities for Japanese companies. Some of the areas which provide huge opportunity for Japanese investment include infrastructure, manufacturing, automobiles and auto parts, power, metals, renewable energy, food processing, and electronic hardware.”

CEPA and more… During Manmohan Singh’s visit to Tokyo in October 2010 for the Annual Bilateral Summit, the two Prime Ministers signed a Joint Declaration on the conclusion of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries. In a separate Joint Statement on the ‘Vision for India-Japan Strategic and Global Partnership in the next Decade’, the two leaders directed their relevant authorities to work towards an early entry into force of CEPA and its smooth implementation. “The Agreement is most comprehensive of all such pacts concluded by India and covers not only trade in goods but also Services, Movement of Natural Persons, Investments, Intellectual Property Rights, Custom Procedures, and other trade-related issues,” according to a senior official at India’s External Affairs Ministry. “CEPA envisages abolition of tariffs over 94 per cent of items traded between India and Japan over a period of 10 years. The Agreement is expected to give a major fillip to trade and investment ties between India and Japan. CEPA will further deepen


of the opportunities which have led to a sharp increase in the economic engagement in terms of trade in goods, exchange of business delegations.” services, investment, and contribute immensely to mutual prosperity.” States wooing for investments India has been the largest recipient of Japanese Official It’s not just the Central government of India that has Development Assistance (ODA) since 2003-04. realised the potential of relations between India and Japan. Cumulative commitment of ODA till March 2013 States like Rajasthan, Tamil Nadu, Maharashtra, and Gujareached Yen 3807.763 billion on commitment basis. As on rat have also been wooing Japanese investors with incenFebruary 6, 2013, 66 projects were under implementation tives and infrastructure support. with Japanese loan assistance. The loan amount committed “Rajasthan realised the potential way back in 2006, for these projects is Yen 1640.099 billion. These projects and signed a memorandum of understanding with Jetro are in the sectors of power, environment and forests, urban (Japan External Trade Organisation) to develop a Japanese transportation, urban water supply and sanitation, rural Special Economic Zone,” says the External Affairs drinking water supply, tourism, irrigation, agriculture, Ministry official. “The Zone has come up in the form of shipping, railways, renewable energy, and financial services. Neemrana industrial estate, about 100 km from Delhi. The “Japanese ODA has been supporting India’s efforts for Rajasthan government is granting tax breaks and excellent accelerated economic development, particularly in the infrastructure facilities to Japanese companies planning to infrastructure sector,” adds the External Affairs Ministry set up shop in this SEZ.” official. “Japan has also been generous with financial Tamil Nadu is home to about 360 Japanese companies. assistance for infrastructure projects such as the Delhi More than 700 Japanese expats are living in the state and Metro and the Delhi-Mumbai Industrial Corridor.” over $1.8 billion worth of business is being exchanged The two flagship projects of Indo-Japan cooperation, between Japan and Tamil Nadu. namely the Western Delhi Freight Corridor (DFC) and Even as work is still in progress for the first integrated Delhi-Mumbai Industrial Corridor (DMIC), are making good township in Chennai, Japanese companies have begun the progress. process of setting up the second one in the city. A joint Furthermore, the Dedicated Freight Corridor (DFC) venture (JV) between Sojitz and Motherson is planning a project is one of the most ambitious projects that Indian 200-acre industrial park at Sriperumbudur near Chennai, Railways has ever taken up. It is intended to meet the which will house both Indian and Japanese companies transport requirements of the two busy trunk routes across sectors like automotive, electronics, and food (Eastern and Western Corridors) for the next 15processing. 20 years. Japan and India are committed to The first one, initially called the ‘Omega execution of the Western corridor of the DFC industrial township’ and now renamed project through an ODA loan utilising Tamil Nadu is home as ‘One Hub Chennai’, is coming up on Japan’s Special Terms of Economic the Old Mahabalipuram Road, 55 km Partnership (STEP). to about 360 Japanese from Chennai. This 1,600-acre park, The dynamic growth of Indocompanies. More than 700 built by Ascendas and a consortium Japan relationship is reflected in the from Japan, will house more than 60 Japanese expats are living in the number of high-level ministerial and Japanese companies when the project parliamentary exchanges that have state and over $1.8 billion worth is complete. Viewed from this light, been taking place at regular intervals, it comes as no wonder that the royal of business is being exchanged points out Varma of JNU. “There is couple had also visited Chennai. a parallel process of business and between Japan and In Gujarat, as many as 100 Japanese industry in both countries, taking note

Tamil Nadu

January 2014 MONEY INDICES



companies had participated in the recently-held Vibrant Gujarat Summit 2013. “This is my third visit to this very vibrant state (Gujarat) in the last eight months,” Japan’s Consul General at Mumbai Consulate, Kiyoshi Asako, had said in February 2013 after inaugurating the centre for Indo-Japanese Relations at Ahmedabad Management Association complex. “Last time I came here to attend the Vibrant Gujarat Summit 2013, and not 60, but as many as 100 Japanese companies had participated in that event and 17 MoUs were signed.”

Keeping the dragon under check

as India. The availability of a large market and abundance of semi-skilled and skilled workforce make India an attractive destination.” Yaodong says that the recent events would further mark a strengthening of alliance between Japan and India in terms of defence and military cooperation, and that Japan is trying to take advantage of the border conflicts between India and China, to contain the latter. Tanino has made it clear that Japan’s relations with China and India were “totally different” and should not be viewed together. “Indo-Japan ties are marked by mutual warm sentiments for each other and there are no big pending issues to resolve, unlike with China.”

India and Japan have improved economic and diplomatic relations at various levels. One of the undisclosed objectives Way forward is to thwart the rise of China as an economic and military Many of the Japanese products have been household names powerhouse. China has tremendously increased its military in India, be it automobiles or consumer durables. The Delhi spending, creating one of the most sophisticated armed Metro, which has made a difference to the day-to-day life of forces in the world. the people of Delhi, is a resounding success story of Indo“Japan, in keeping with its pacifist Constitution, does Japanese partnership. Cooperation in the energy sector, not possess offensive systems, such as nuclear submarines, particularly nuclear energy, offers great opportunities for large aircraft carriers, and long-range missiles,” says future cooperation. Chellaney. “But with the world’s sixth largest defence “India’s one trillion dollar infrastructural development budget, it has a formidable defensive capability, an during the 12th Five Year Plan offers Japan a great impressive armament production base, and Asia’s largest opportunity for investment,” adds Savithri Viswanathan. naval fleet, including top-of-the-line conventional subs, “Besides the modernisation of Indian railways, the prospect large helicopter-carrying destroyers, and Aegis-equipped of introduction of speed trains is an attractive investment cruisers capable of shooting down ballistic missiles.” destination.” China has been continually using its military and India must also forge closer economic power to assert its defence ties with Japan, including dominance in Asia. The most co-development of weapon recent example of this has been systems and missile defence. the declaration of air defence The most stable economic identification zone by China partnerships in the world, such as over the disputed Diaoyu Islands the Atlantic community and the (known in Japan as Senkaku Japan-US partnership, have been Islands) in the East China Sea. built on the bedrock of security China has also shored up collaboration. its military presence in its “Economic ties that lack territorial border with India. In the underpinning of strategic addition to this, there’s Tibet’s partnerships tend to be less autonomy issue. So, it would not stable and even volatile, as is be wrong to say that China has apparent from China’s economic unknowingly brought India and relationships with India, Japan, Japan closer than before. Many of the Japanese products have been and the US,” believes Chellaney. In the last decade or so, household names in India, be it automobiles “Through close strategic China was the biggest outbound collaboration, Japan and India investment destination for or consumer durables. The Delhi Metro, must lead the effort to build Japanese companies, points out which has made a difference to the dayfreedom, prosperity, and stability Lu Yaodong, a researcher at the in the Indo-Pacific region. That Institute of Japanese Studies at to-day life of the people of Delhi, is a is the way forward for both the the Chinese Academy of Social resounding success story of Indo-Japanese countries.” Sciences. “However, recent Against this background, the trends suggest that Japanese partnership. Cooperation in the energy Japanese Emperor’s visit is likely companies are looking at sector, particularly nuclear energy, offers to herald an enduring Indodestinations other than China. great opportunities for future cooperation Japanese strategic partnership in These include new frontiers such the years to come. as Myanmar and old friends such


MONEY INDICES January 2014


Egypt aims for social justice with

World Bank’s help


Egyptian Finance Minister Ahmed Galal is optimistic about his country’s tie-up with the World Bank

gyptian Finance Minister Ahmed Galal is upbeat about his country’s tie-up with the World Bank in the present as well as the future. The interim government intends to maintain cooperation with the World Bank and benefit from its knowledge and experience to further both its economic plan and the interest of social justice, he said. In response, World Bank Executive Director Mirza Hassan has said that the bank supports “the interim government’s efforts to apply its economic and social development programme”. Galal said that inclusiveness is one of the characteristics of the Egyptian economic programme, since it includes “concrete plans aimed at social justice and raising living standards”. It seems that Galal intends to do so through better targeting of poverty and lowering the burden on low-income groups. It would help the country attain a more equitable distribution of growth and development benefits, which would lead to economic and social stability in the medium term. The Minister recently met with Mirza Hassan, who happened to be one of a number of high-ranking World Bank officials to visit Egypt since the July 3 ouster of former President Mohamed Morsi. At the meeting, the Minister presented the government’s fiscal and economic policy objectives. He discussed several important topics including the cash subsidy programme for the poor

MI bureau

Galal said that inclusiveness is one of the characteristics of the Egyptian economic programme, since it includes “concrete plans aimed at social justice and raising living standards

and opportunities for the World Bank to assist in accelerating reforms in education and healthcare services. Galal went on to assert that the repeated visits by the high-ranking World Bank officials confirm the bank’s willingness to respond to Egypt’s request for technical support to accelerate the economic and social programmes needed for the country’s democratic transition. Hassan has assured that the World Bank would send additional experts to provide technical assistance. Hassan praised Prime Minister Hazem El-Beblawi’s government’s economic and social policies as well as its overall vision of reform, which, he said, “suited current needs of the Egyptian economy and society.” Hassan added that the World Bank is currently subject to structural changes in its decision-making process, aiming to improve the degree of cooperation and services provision to member states, including Egypt. It is believed that the World Bank will finance four new projects in Egypt. These projects would be in the areas of social development, education, health, infrastructure, as well as fight against poverty. It is also believed that the World Bank would be supplying Egypt with a loan of $2 billion, with a grace period of seven years and an interest rate of 1 per cent, to be paid over 20 years. On the other hand, Egypt is said to be negotiating a new aid package with Saudi Arabia. While figures are yet to be released, sources say the aid package would be worth $5 billion. Such an aid package will certainly help the country’s economic prospects.

Ahmed Galal Egyptian Finance Minister



A miracle cure for poverty

The Indian microfinance sector, a key tool for poverty alleviation by way of financial inclusion, is poised for a significant expansion as government functionaries, nongovernmental organisations, and commercial banks explore ways to provide easy credit access to around 400 million bottom of the pyramid (BoP) Indians. With an estimated loan portfolio of over `25,000 crore, the sector provides people who are not served – or are underserved – by the formal banking system with appropriate, accessible, and fairly priced financial services, helping them build their savings, cover the costs of unexpected emergencies, and invest in families’ health, housing, and education. While factors like overzealous lending and intense competition among microfinance institutions, negative press with respect to heavy handedness during collection, suicides by borrowers, ambiguity in the regulatory environment, drying of funds to the industry, and over-regulation continue to blight the industry, Money Indices empirically examines the future of India’s microfinance Industry and the positive economic and social impact it is bringing into the lives of its clients By Vishnu Rageev R


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udhakumary, 56, of Kadapa, a city in Andhra Pradesh’s Rayalaseema region, is a vegetable vendor in an urban residential locality. She had availed of a loan facility offered by SKS Microfinance to start her small business after her husband passed away in 2005 following a heart attack. Sudhakumary has two daughters who have been brought up with the help of microloans. “But for a small hut on the city outskirts, I was left with nothing when my husband died. I heard about SKS through a friend and approached them for a loan of `5,000. They were cooperative and sanctioned me the amount within a week’s time. That is how I started my vegetable vending business. I repaid them the complete amount within a year itself. After that, I took another loan of `15,000, when my elder daughter was getting married in 2007. That amount was also repaid. I continue to repay instalments of a loan amounting to `10,000, which I had availed of after closing

the second loan in 2010. The new loan was for my younger daughter’s studies (TTC training) and will be repaid within months. Had SKS not been there, I and my children wouldn’t have been alive today,” says Sudhakumary. Sudhakumary is one of the 30-40 million BoP microloan clients engaged in some kind of production activity and contributing to the national economy. The total number of BoP Indians is anywhere between 350 and 400 million, a huge market which 1000-plus Microfinance Institutions (MFIs) – NGOs (registered as societies or trusts), Section 25 companies, and Non-Banking Financial Companies (NBFCs) – are trying to crack open. With financial inclusion emerging as a major policy objective, microfinance has once again occupied centre-stage as a promising channel for extension of financial services to unbanked sections of Indian population. Union Rural Development Minister Jairam Ramesh had recently stated that microfinance 1.0 has failed. “It was not the miracle it was touted to be. There had been no attempt by microfinance institutions to create social capital.”

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Now, more BoP families can dream of empowerment with Microfinance industry is coming of age MFIs all set to launch microfinance 2.0, with better focus Nobel Laureate Muhammad Yunus is credited with laying and renewed vigour. “Be it vegetable or fruit vendors, the foundation of the modern MFIs with establishment rickshaw-pullers, pan shop owners, or small traders, there of Grameen Bank in Bangladesh in 1976. During the early is an economic activity happening across Indian streets,” years, when the SHG (self-help groups) movement was says Alok Prasad, CEO of Microfinance Institutions Network growing slowly (there were only about one lakh groups in (MFIN). “From an economic and social standpoint, these the whole country till 1999), several Indian development people are very important for us. Like you and me, they are workers tried out an alternative. Inspired by the example also contributing to the country’s economic growth. If they set by Yunus, they began to carry out direct microfinance don’t do their small way of business, they would be starving. activities from their NGOs since the mid-1990s. They are our people. Shouldn’t we give them a chance to Under this model, NGOs raised loans from an agency grow in life? Aren’t they economically important for all of like the Rashtriya Mahila Kosh or the Small Industries us? A guy who is selling vegetables wants to buy a cow to Development Bank of India (SIDBI) and loaned to poor sell milk as well. Where will he go?” Set up as an industry women. Today, that model has transformed itself into body in November 2009, MFIN promotes the microfinance a vibrant industry, exhibiting a variety of business industry and has over 40 NBFCs as its members, who are propositions with the provision of a broad range of regulated by the Reserve Bank of India (RBI). financial services such as deposits, loans, payment services, Banks lend to only those people who have the capacity money transfers, and insurance to poor and low-income to pay back the principal and households and their microinterest within a stipulated time, enterprises. and the poor are left with no “About half of the Indian From an economic and loan avenues. “That is where the population still doesn’t have a importance of the microfinance social standpoint, savings bank account and they are sector comes into broader light. deprived of all banking services,” these people are very important Microfinance is not just about giving says Brij Mohan, former Executive microcredit to the poor. Rather, it for us. Like you and me, they Director of SIDBI and Founder of is an economic development tool SIDBI Foundation. “Even today, are also contributing to the whose objective is to assist the poor the largest lender of money to country’s economic growth. If in working their way out of poverty,” such people is the money lender. reasons Prasad. they don’t do their small way Although a direct casual impact of According to research by the microfinance, in view of a multitude of business, they would be World Bank, India is home to of factors which impact the lives almost one third of the world’s starving. They are our people. of the poor, is difficult to prove poor, surviving on an equivalent empirically, the Indian microfinance Shouldn’t we give them a chance of one dollar a day. “many Central sector is witnessing reasonable government and state government to grow in life? Aren’t they growth after coming out of the 2011 poverty alleviation programmes Andhra Pradesh crisis.” Mohan, economically important for are currently active in India, currently the Chairman of Access where microfinance acts a major all of us? A guy who is selling Development Services, has served contributor to financial inclusion. In a number of institutions in the vegetables wants to buy a cow the past few decades, it has helped microfinance and small enterprise to sell milk as well. Where will out remarkably in eradicating development sectors in an advisory poverty. People who have taken capacity. he go? microfinance have been able to Industry statistics increase their income and improve Loan disbursements by Indian MFIs their standard of living,” says Prasad. stood at around `23,000 crore in The Microfinance Institutions the 2012-13 fiscal, a growth of 13 (Development and Regulation) per cent over the previous fiscal. Bill envisages the RBI as the sole The industry expects a 15 per cent regulator for all microlenders, growth in loan disbursements including the smaller ones operating as trusts and non-governmental this year through an increase in organisations. But the apex bank the amount of each loan. This wants to bring only for-profit MFIs, expectation emanates from the enjoying the status of NBFCs, under increase in the average ticket size of Alok Prasad its ambit. loans.


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Many people who used to start with a credit of `5,000 are now looking for credits in the range of `20,000-25,000 from MFIs, explains Prasad of MFIN. “With many banks yet to reach distant parts of the country, these people have to rely on either regulated MFIs or unregulated moneylenders. Funding to the industry during Q2 FY14 grew by close to 300 per cent to `3,780 crore as compared to the previous quarter.” Commercial Banks, Regional Rural Banks (RRBs), cooperative societies, and other large lenders have played an important role in providing refinance facility to MFIs. Banks have also leveraged the SHGs’ channel to provide direct credit to group borrowers. In all, MFIs have received 86 per cent funding from banks and the rest from other financial institutions. The product concepts offered by MFIs were largely dependent on selling of third party products, ranging from no-frills savings accounts, money market mutual funds, insurance schemes, and pension funds. The only proprietary product was gold acquisition loans, which work as a sort of reverse savings avenue. Of these different product concepts, most have variants tailored to the requirements of the low income market as with micropension schemes, variable SIPs for ULIPs as well as money market mutual funds, etc. Meanwhile, the gender-effects, which are not only statistically significant, but are also economically relevant, indicate that women in general are indeed a better credit risk for the MFI. Additionally, MFIs with more women clients carry less loan loss provisions ceteris paribus, providing additional evidence that focus on women significantly reduces the MFI’s perceived credit-risk.

Andhra blues Rapid sectoral growth and regulatory oversight eventually led to predatory lending practices, widespread client over-indebtedness, and allegations of abusive collection practices, culminating in 2010 with the sensational media stories of farmers in Andhra Pradesh being driven to suicide as a result of their inability to repay loans. The crisis affected not just Andhra Pradesh, but households all over India. Many MFIs had to stop granting loans upon finding that their sources of refinancing had dried up. “This was a disastrous state of affairs in a country where half a billion people do not have access to formal financial services,” says Sam Sharpe, Head, Department for

Loan disbursements by Indian MFIs stood at around `23,000 crore in the 2012-13 fiscal, a growth of 13 per cent over the previous fiscal. The industry expects a 15 per cent growth in loan disbursements this year through an increase in the amount of each loan. This expectation emanates from the increase in the average ticket size of loans

Rural data of the Census 2011 released on December 10, 2013 Some Statistics related to Rural-Urban data: Census 2011 Population in Crores 2001















Rural population is increasingly getting concentrated in a narrow band of villages ranging from the size of 2,000 population to the size of 10,000 population. Close to 50 per cent of the rural population now lives in just 1.2 lakh villages. The remaining 50 per cent lives in 4.8 lakh villages. Out of 640930 villages, 597483 villages were inhabited, whereas 43447 villages were deserted. In the previous Census held in 2001, there were 5.93 lakh villages with inhabitants and there were 44865 deserted villages. Between 2001 and 2011, the share of rural population living in villages with less than 2000 population went down from 46 per cent to 41 per cent. To the contrary, the share of population living in the biggest villages (with over 10000 population size) went up marginally from 8.55 per cent to 8.68 per cent between the two census counts. There were 670 more big villages in 2011 than in 2001. Uttar Pradesh has the most number of 10000+ villages. Kerala stands next in having bigger villages. International Development (DFID) India. “Microfinance’s designation as a priority lending sector made it advantageous for banks to lend to MFIs, and by 2006, MFIs in Andhra Pradesh were experiencing a substantial influx of capital. The RBI responded to the crisis by forming the Malegam Committee to investigate the situation in Andhra Pradesh and review the general MFI sector. Based on the recommendations of the Malegam Committee, the RBI introduced strict central regulation on microfinance operations in February of 2011. These regulations included capping profit margins, lowering lending interest rates, and narrowing the definition of an eligible loan client.” However, the regulatory changes added to the existing confusion in the sector post-Andhra Pradesh crisis, causing many banks to move out of the industry and withdraw funding. With less financial reserves, reduced profit, and international scrutiny, Indian MFIs are presently rethinking their traditional operational models and re-evaluating their future strategy.

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“Microfinance’s Ignorance of success story in social purpose India was rudely “Making money, interrupted when rather than helping the government of those in need, was Andhra Pradesh, the driving force home to a quarter behind most of the of the Indian lending firms in microfinance Andhra Pradesh,” says industry, put a stop Venkat Narayana, an to microfinance economics professor throughout the at Kakatiya University, state,” says Prasad. Warangal. “They were “Multiple lending, guided by greed, and over-indebtedness, the social purpose coercive recovery was completely practices, and ignored. Microfinance unseemly institutions had enrichment by failed to motivate promoters and people towards senior executives development. There (of microcredit was no re-orientation companies) led to programme, and they failed to take care Studies have shown that this situation. Allegedly in the name of of the basic needs of the people – their protecting customers, the government women are more likely financial literacy and human development. further issued a restrictive ordinance and Unless you take care of all these, just than men to repay their called on borrowers to refuse to repay offering credit can’t help.” their loans. But the crisis in Andhra loans, which is important Post-Andhra crisis in 2011, at least Pradesh has normalised expectations of for any microfinance six microlenders restructured their loan the industry.” obligations to banks after the RBI allowed The new RBI regulation ensures that institution interested in them to do so. MFIs that opted for the only serious players survive. Investors profit, sustainability or debt recast include Bhartiya Samruddhi are no longer pouring capital into MFIs Financial Services Ltd, Spandana Sphoorty with the hope of large returns and the long-term impact Financial Ltd, Share Microfin Ltd, Asmitha MFIs that are still operating have proven Microfin Ltd, Trident Microfinance Pvt that they are willing to work within Ltd, and Future Financial Services Ltd. The the confines of the evolving regulation. debt restructuring, however, has not helped a majority of However, the framework of the Andhra Pradesh MFI Act these companies resolve the crisis, as loan recoveries from (APMFI), 2011, is complicated, burdensome, and impossible borrowers in Andhra Pradesh remain dismal. for MFIs to operate. “Two years after the crisis, indisputably the worst in the “MFIs in Andhra Pradesh were being driven away by history of microfinance, the ruins are being rebuilt,” says provisions of the APMFI Act and the developments that M R Rao, MD and CEO, SKS Microfinance Ltd. “Not only followed,” says YC Nanda, Chairman, ACCESS-ASSIST. has the situation returned to normal, there have also been “While the largest and only listed MFI, SKS Microfinance, significant improvements. The sector is once again back on has shifted its base to Mumbai, others like Basix, Spandana, the path of growth, and is regulated by the RBI. The credit Share, and Asmitha are spreading out to other states in bureaus are working well, and MFIs have further optimised India and abroad. The MFIs clocked losses of over `6,500 the process for granting loans. This means the outlook is crore in Andhra Pradesh following the APMFI Act, which is altogether positive for the sector in coming months.” intended to control high interest rates, coercive collections, and illegal insurance practices by the MFIs. Within a year, Big boys the operations of the MFIs in the state have come down Although there are an estimated 1,000-plus microfinance to less than 10 per cent, besides reduction of over 30,000 institutions operating in India, a handful of companies staff.” ACCESS, which was incorporated as a “not for profit” including SKS Microfinance Ltd, Spandana Sphoorty firm to support the organised growth of the microfinance Financial Ltd, Share Microfin Limited, Asmitha Microfin sector in India, hosted the 10th edition of Microfinance Ltd, Shri Kshetra Dharmasthala Rural Development Project, India summit on December 9 and 10 last year. Bhartiya Samruddhi Finance Ltd, Bandhan Financial


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Services, Cashpor Micro Credit, Grama Although there are an estimated L K Manjunath, Executive Director of SKDRDP. Vidiyal Micro Finance Pvt Ltd, Grameen 1,000-plus microfinance During the current year, SKDRDP Financial Services Pvt Ltd dominate borrowed `160.52 crore from commercial the market. Currently, MFIN member institutions operating in banks to sustain its microfinance organisations consist of 42 of the leading India, a handful of companies operations and dispersed `89,453 crore NBFC-MFIs, whose combined business to the SHGs. As of September 30, 2013, constitutes over 90 per cent of the Indian including SKS Microfinance Ltd, the microfinance outstanding is `2,567 microfinance sector (excluding SHGs). Spandana Sphoorty Financial crore. In spite of increased financial costs, In August 2010, SKS Microfinance’s Ltd, Share Microfin Limited, SKDRDP did not revise its lending rates, `1,654 crore initial public offering of which were maintained at 18 per cent on stock was subscribed 13.8 times after Asmitha Microfin Ltd, Shri reducing scales. drawing strong investor demand. The Kshetra Dharmasthala Rural Hyderabad-based Bharatiya IPO, the first in India by a microfinance Samruddhi was present in 33,226 villages institution, has attracted significant Development Project, Bhartiya in 155 districts, spread over 18 states attention to an area of the economy that is still nascent as an organised sector. SKS Samruddhi Finance Ltd, Bandhan (Andhra Pradesh, Karnataka, Orissa, Maharashtra, Madhya Pradesh, Jharkhand, Microfinance, which has 1,261 branches Financial Services, Cashpor Rajasthan, Chhattisgarh, Uttarakhand, across India, dispersed `3,320 crore as Micro Credit, Grama Vidiyal Uttar Pradesh, West Bengal, Sikkim, loan and had reported a revenue of `353 Micro Finance Pvt Ltd, Grameen Meghalaya, Delhi, Bihar, Tripura, Gujarat, crore in the 2012-13 fiscal. Another and Tamil Nadu), as on May 31, 2012. It Hyderabad-based player, Spandana Financial Services Pvt Ltd cumulatively dispersed over 3,369,914 Sphoorty Financial, which has around dominate the market loans worth `42,834 million, and its 3.44 million clients, dispersed `9, 839 outstanding was `6,834 million, including million in FY 2013-14. Spandana has a assigned loans under management at over 973,215 active loan portfolio outstanding of `21,422 million. It has 1.081 loans. branches across India and has been growing at about 100 Kolkata-based Bandhan Financial Services has 1,816 per cent since its inception. branches across 209 districts of the country, of which, 81.33 M Urdaia Kumar, MD, Share Microfin Ltd, says, “We per cent (148 districts) are in under-banked or unbanked had given away `14,064 as loan during FY 2012-13. Share areas. As many as 18,383 students, 41,2500 individuals, currently serves more than 3.46 million members across and 2,000 families in unbanked areas have taken education 19 Indian states - Andhra Pradesh, Chhattisgarh, Delhi, loan, health loans, and MSME loans from Bandhan. “We Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh, are not just offering microcredit. Bandhan also deals with Rajasthan, Bihar, Uttarakhand, Gujarat, Haryana, Himachal other financial products. For instance, Bandhan, which Pradesh, Tamil Nadu, West Bengal, Jharkhand, Orissa, sells LIC products, has nearly one crore insurance clients Kerala, and Assam. We cater to the needs of poor rural and 207,782 subscribers for NPS (national pension system) women through 4,352 staff members, spread across 914 products. Out of a total loan outstanding of `4,296.97 branches (as on March 31, 2012). The total outstanding portfolio is about `2,110 crore ($384 million).” Share is also based out of Hyderabad. Asmitha, another Hyderabad-based MFI, has plans to provide financial and support services to about four million members over the next three years. It plans to operate a network of 1,250 branches by increasing the staff strength to about 7,500. It intends to achieve an operational selfsufficiency of 125 per cent within the next three years, while dispersing loans amounting to `22,670 crore by the same period. Shri Kshetra Dharmasthala Rural Development Project (SKDRDP), based in Dharmasthala in Karnataka, is presently working with 28,19,505 families. For their convenience, 2,43,647 SHGs have been promoted. “These members contribute loan margins, borrow money, share it among themselves, and repay at weekly intervals. In order to meet the financial needs of members, SKDRDP has borrowed funds from commercial banks and disbursed to the SHGs for onward lending to the members,” informs Clients of SKS Microfinance hit the gong at its Mumbai listing

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crore, 82.71 per cent is in under-banked areas,” says Chandrashekhar Ghosh, CMD, Bandhan Financial Services. Uttar Pradesh-based Utkarsh Micro Finance operates in 29 districts of Uttar Pradesh, Bihar, Madhya Pradesh, Uttarakhand, Delhi, and Himachal Pradesh. It has a client base of almost three lakh, catered to by 123 branches, and has a loan portfolio of `276 crore. Five states (Tamil Nadu, West Bengal, Karnataka, Maharashtra, and Uttar Pradesh) account for 60 per cent of the microfinance clients, while West Bengal tops in terms of loans disbursed, followed by Tamil Nadu, Maharashtra, Karnataka, Uttar Pradesh, and Madhya Pradesh.

Challenges of Indian MFIs

Andhra Pradesh, reasons adds K Paul Thomas, Founder Chairman and Managing Director, Esaf Microfinance & Investments. “On the other hand, given the unpredictability of Indian politics, it is not clear how long the approval process will last. A cap on gross margins will force many larger MFIs, already very efficient, to further boost efficiency.” Many of the experts do not see any further room for improvement in terms of portfolio quality. The ongoing development of credit technology and controlled volume growth remain persistent challenges for many MFIs. “The only ways remaining for large MFIs to improve their efficiency are by implementing longer loan terms and fewer repayment instalment options, and closing down branches,” says Brij Mohan. “The future belongs to institutions that keep pace, transforming their corporate structures, systems, cultures, and human resources to meet the challenges of change,” says Lise Grande, UN Resident Coordinator, United Nations Development Programme. “Many governments have now implemented interest rate ceilings and margin caps to curtail excessive profits for MFIs, while ignoring the margins of the market’s non-organised alternatives, like pawnbrokers. In order to provide a more balanced perspective on the microfinance industry, as compared to other kinds of financial services providers, MFIs need to do more to measure and explain their social and economic value.” The inability of MFIs to raise sufficient funds remains one of the important concerns in the microfinance sector. Though NBFCs are able to raise funds through private equity investments because of the for-profit motive, such MFIs are restricted from taking public deposits. Not-forprofit companies, which constitute a major chunk of the MFI sector, have to primarily rely on donations and grants from the government and apex institutions like NABARD and SIDBI. In absence of adequate funding from the equity

While the interest rates charged by moneylenders per annum would range between 500 per cent and 800 per cent, and even 1000 per cent sometimes, MFIs, The RBI guidelines, yet to be approved by which provide Parliament, will spell the end of the kind an alternative of political adventurism that occurred in funding source to the Indian poor, Andhra Pradesh. On the other hand, given are now faced the unpredictability of Indian politics, with the challenge of restructuring it is not clear how long the approval their models. process will last. A cap on gross margins The RBI guidelines, yet will force many larger MFIs, already very to be approved efficient, to further boost efficiency. by Parliament, will spell the Many of the experts do not see any end of the kind further room for improvement in terms of political of portfolio quality adventurism that occurred in


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K Paul Thomas


which contradicts with the social market, a major source of funds for MFIs are bank loans, which is the aspect of microfinance.” reason for high Debt to Equity ratio of The business of Way forward most MFIs. providing financial Without profit, MFIs are unable “Though concerns about to invest in talent and product transparent pricing in the services to the development initiatives, needed microfinance sector have been there poor requires commitment. to serve people for the long term. for a while, it is gaining significance Industry bodies, investors, and with the growing size of MFIs and Instead of remaining as a governments have already introduced increasing competition in the sector,” niche financing option for metrics for factors ranging from says Steve Hollingworth, President and pricing to conduct. This has resulted entrepreneurs in certain CEO, Freedom from Hunger. “Nonin a rather disparate set of indicators, transparent pricing by MFIs confines markets, MFIs must bring which must be standardised, and such the bargaining power of the borrowers affordable financial access to efforts are an encouraging sign of the and their ability to compare different microfinance industry’s commitment loan products, because they don’t the unbanked and the underto securing its role in the financial know the actual price. In absence of a banked segment services ecosystem. proper understanding of the pricing, “There was a ‘big leap’ forward clients end up borrowing more than in enforcing self-regulation in many their ability to pay back, resulting in areas, including elimination of over-indebtedness of the borrower.” multiple loans and introduction of more defined ground MFIs, in order to make their products look less rules, says Brij Mohan. “The business of providing financial expensive and more attractive, are disguising their actual/ services to the poor requires commitment. Instead of effective interest rates (better known as the Annualised remaining as a niche financing option for entrepreneurs in Percentage Rates – APR) by including other charges like certain markets, MFIs must bring affordable financial access service charge, processing fee, etc, says Sharon Buteau, to the unbanked and the under-banked segment.” Executive Director, IFMR Research. “Some MFIs even take While increasing the number of MFIs will not interest-free deposits for lending microloans. There have been cases where the interest rates are linked with the loan necessarily make the industry stronger, it would be amount, which means a higher interest rate for smaller healthier for the industry to invest in existing MFIs, loans (because of higher transaction cost). This is resulting enabling them to achieve greater economies of scale and in highest interest rate being charged to the poorest clients, keep operating costs down.

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Dubai: The Emerging Hub of the

Life Sciences Industry By offering world class infrastructure and specially tailored facilities, Dubai Biotechnology and Research Park (DuBiotech) has strengthened its position as the Middle East’s premier free zone business park dedicated to facilitating and fostering growth of the region’s life sciences industry. Marwan Abdulaziz Janahi, the Executive Director of DuBiotech and TECOM Investments’ Sciences Cluster, tells us about DuBiotech’s activities and the investment opportunities it offers BY prashob K P

Marwan Abdulaziz Janahi 50 MONEY INDICES January 2014


aunched in 2005, Dubai Biotechnology and Research Park (DuBiotech), a member of TECOM Investments, has continued to strengthen its position as the Middle East’s premier free zone business park dedicated to the development of the life sciences industry. The park was conceived by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE’s Vice-President, Prime Minister, and Ruler of Dubai. Marwan Abdulaziz Janahi, the Executive Director of DuBiotech and TECOM Investments’ Sciences Cluster, beams with confidence while talking about the growth of the park. The life sciences park aims to develop an integrated life sciences hub via national and international research collaborations. “We are providing the best atmosphere for companies to grow here. With advanced technical expertise, community infrastructure and R&D facilities, we assure our partners of fresh air availability and bio-safety. In 2012, we delivered remarkable growth by issuing 40 commercial licenses and signing memorandums of understanding with key industry partners. Our focus is on small and medium-sized firms. Pharmaceutical, food, environmental, and medical equipment companies such as Bayer Middle East, Lupin Middle East, Life Technologies, Sobi Middle East, and Wockhardt are some of the major players in the park,” says Marwan.


Sprawling over 22 million square feet, DuBiotech is ready to meet all the needs of the life sciences industry. It has a world class Nucleotide Laboratory Complex, wellsuited for the most demanding requirements, 25 warehouse facilities for manufacturing and distribution activities, and land for new manufacturing plants and logistic platforms. In addition, the free zone offers office space in a landmark bio-headquarter building and business centres for companies wanting to test the market before extending their commitment in the free zone. All DuBiotech buildings are classified as LEED certified ‘green’ buildings. This extends to the laboratory complexes, warehousing facilities, and community services buildings. The BIO headquarter Towers, once completed, are expected to be one of the world’s largest ‘green’ buildings. For pharmaceutical companies, the United Arab Emirates (UAE) is the best place to grow. The favourable regulatory and political environment in the country and the increasing public and private health amenities, backed by the oil boom and strong healthcare infrastructure, are the positive sides. The UAE is second in the region in terms of capital invested in the pharma sector, reliant on imports with more than 72 countries exporting pharma products to this market. “The Middle East’s pharmaceutical market is valued at more than $12 billion and is expected

to grow at a healthy 10-15 per cent rate annually. Within this amount, the UAE is considered the second largest consumer of pharmaceutical products in the Gulf, after Saudi Arabia, with a market valued at around $640 million,” adds Marwan. Every industry needs to upgrade its capacities and strengths regularly. To this end, DuBiotech works closely with its partners to modernise infrastructure by adopting cutting edge technologies. The life sciences park facilitates multiple platforms for partners to explore myriad growth opportunities. “We actively organise business development events, conferences, and activities for our business partners. These value added services aim to provide our business partners with a platform that facilitates industry and regulatory collaboration, identifies business opportunities, and enables sharing of common experiences,” says Marwan. The Ministry of Health extends its support to DuBiotech by officially recognising a wide range of activities and operations that can be undertaken at the free zone. These activities include operating scientific offices; import and re-export of pharmaceutical and medical devices and equipment; and the manufacture and production of these products. As part of expansion, DuBiotech plans to invest more into infrastructure development and hopes to attract more companies from India and South Korea.

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A Smart Stove For Rural Women Thanks to the prohibitive cost of clean and efficient cooking technologies, two-thirds of Indian women are making do with their economical mud stoves, despite their vulnerability to noxious fumes billowing out of their primitive kitchen systems. Now, two young green entrepreneurs are making a spirited attempt to put an end to the silent killing game in India’s rural kitchens by taking the idea of an alternate, costeffective, clean cooking solution to every doorstep in the hinterland




MONEY INDICES January 2014

ust when Mumbai-based MBA graduates Neha Juneja and Ankit Mathur were all set to start their careers, their moral and social conscience pulled them back from the tried and tested formulas. They wanted to give back to society in whatever way they could. “We wanted to do something that benefited rural communities and the environment. We eschewed the traditional placement route and started a venture called ‘Greenway Eco development’, which saw us doing consulting on climate change mitigation projects in rural areas for large institutional

clients. While taking on these small, community-led projects, we were continually confronted with a harsh everyday reality - cooking in rural India,” says Neha, whose resolve to work on a safer, economical cooking solution took birth after she and Ankit saw the ancient cookstoves in action every day across rural India. This resolve was strengthened by data they found that indicated that nearly 67 per cent of Indian households use traditional mud ‘chulhas’ with solid biomass fuels like wood, cow dung, or charcoal. In 2012, a report was released that attributes 8,75,000 deaths per year in India alone from the effects of toxic smoke generated in kitchens. Five-hundred million households across the world and 160 million households in India do not have access to modern cooking fuels, making them dependent on solid biomass (wood, cow-dung, charcoal, etc.) burnt in open fires or mud stoves. This method of cooking creates toxic, dangerous smoke, and what makes matters worse is the fact that women inhale this smoke for 4-5 hours every single day. “We wanted to make a clean cooking product for rural consumers that could improve their health and quality of life, without any behavioural change. If you have to change your behaviour, you are much less likely to use a product in the long run, no matter what the benefits might be. So we didn’t want to force consumers to prepare their fuel in a different way or buy a new fuel,


but rather take the fuel they already use and burn it more efficiently,” says Neha. “We wanted to create something that people were excited about and proud to display in their kitchens. We want all of our products to be aspirational and add joy to lives of consumers.” This idea to design a clean cooking solution for rural households finally took shape in early 2011, with the establishment of a product design and distribution company named Greenway Grameen Infra, whose flagship product was the ‘Greenway Smart Stove’. It took them 12 months of experimentation with 10 prototype designs to get to the final product. The Smart Stove burns biomass fuel (wood, cow dung, agricultural waste, etc.) more efficiently, reducing fuel consumption by up to 65 per cent and smoke emission by up to 70 per cent. It ensures rural consumers access to clean cooking. Neha and Ankit’s problems didn’t end with the product finalisation. They had many more challenges at hand. “Expanding our reach, both geographically and logistically, was a big challenge. Rural India is very diffuse and it can be very difficult to scale up distribution and promotions in an economical way. However, we have taken on team members and advisors who have much experience in distribution in this very space and have tailored our distribution strategy to best expand our reach,” says Neha, the Chief Executive Officer of Greenway Grameen Infra. “Pitching our product based on its appeal to women was also a big challenge. Nobody believed that a beautiful, sleek stove would matter to rural consumers. There was a somewhat patriarchal view that the woman’s opinion and desire for a good visual design wouldn’t factor into the purchasing decision,” she adds. Considering these

Neha Juneja

Never underestimate the amount of time you must spend listening to and understanding your consumer – our motto is ‘Consumer is Queen’. Everyone will have some different opinion about what you should do and how you should sell, but, when it comes down to it, nothing is more important than your consumer and what he/she thinks and feels

issues, Neha and Ankit took the story of their innovative stove solution to rural Indian villages, to send out the right message. “We focussed on design that is modern and aesthetically pleasing – and that adds convenience to consumers. Our stove cooks food faster and requires little or no use of a blowpipe or fan to keep it lit. We also wanted the products to have immediately tangible benefits. If the benefits of our product were seen only a long time into the future, it would be difficult to convince consumers to buy it right now,” says Neha, adding that the ancient practice of cooking in mud stoves stood in stark contrast to other aspects of the rural household. “So many of the families we saw owned many modern appliances like television sets, mobile phones, and two-wheelers. Yet, we saw no products available to make cooking more modern and convenient for rural consumers – that is, aside from fuels like LPG, which is very expensive and access is often very unreliable in rural areas. Even the families we saw that owned a gas stove continued to use their mud stove consistently due to the high expense.” So, all hopes of Greenway Grameen Infra rested on the positives of Greenway Smart Stove. Greenway Smart Stove features an enhanced, air-flow mechanism that provides cleaner combustion. The stove can run on all sorts of biomass, including wood, cow dung, and agricultural waste. “The Smart Stove accomplishes this

Ankit Mathur


Operation: Designing and distributing convenient, aspirational, and efficient cooking stoves for rural consumers across India

Number of Employees: 26 – 11 in Mumbai office and 15 in field operations/sales

Major Customers: The majority of

our sales revenue (71 per cent) comes directly from the end-user (customer). Products are also sold to NGOs and other institutions (~24 per cent) and, in a smaller capacity, to government entities (~5 per cent)

Areas of Operation: Greenway The Greenway Grameen Infra team with the Co-founders through our unique, patent-pending airflow technology that brings a consistent flow of fresh air into the combustion chamber, allowing the particles of fuel that would otherwise dissipate into the air as smoke to be more fully combusted. This, in turn, reduces smoke while increasing fuel efficiency. This airflow also makes the flame burn more consistently, requiring less tending with a blowpipe or handfan,” says Neha. So far, Greenway Grameen Infra has sold tens of thousands of stoves across seven states, built up sales in 91 retail outlets, formed relationships with six key financial institutions, and created an excellent team of 26 full-time employees (11 in their Navi Mumbai office and 15 located within user and retail communities). Currently, the stove is priced at `1399. The Greenway Smart Stove ensures a useful blend of efficiency together with affordability. While the typical mud stove has an efficiency of 10 per cent, Greenway Smart Stove has an efficiency of 32 per cent. Stoves using LPG in urban households have an efficiency of about 45 per cent, and this despite LPG being a much cleaner fuel. On


MONEY INDICES January 2014

the other hand, while a mud stove uses 1.5 to 2 kgs of firewood for an hour of cooking, Greenway Smart Stove uses only about 0.85 kg of firewood for an hour of cooking. In the next two years, Greenway Grameen Infra plans to release several new products, expand retail operations throughout South India, and build partnerships with financial institutions like MFIs. “We see an eventual product rollout throughout India and into surrounding countries, partnering with companies abroad to bring Greenway throughout the world. We are striving to become the brand of choice for rural consumers in a variety of energy and household products, with several new products in the late stages of our product pipeline,” says Neha. She has a simple advice to budding entrepreneurs: “Never underestimate the amount of time you must spend listening to and understanding your consumer – our motto is ‘Consumer is Queen’. Everyone will have some different opinion about what you should do and how you should sell, but, when it comes down to it, nothing is more important than your consumer and what he/she thinks and feels.”

Grameen Infra has 91 retail points in Karnataka. It also conducts sales through financial institutions and other organisations in Karnataka, Kerala, Tamil Nadu, Madhya Pradesh, Andhra Pradesh, Chhattisgarh, and Maharashtra.


In the market now: Greenway Smart

Stove, a high-efficiency, naturaldraft biomass stove that provides clean cooking for small families (4-6 members). A value product that delivers drastic reductions in smoke emissions and fuel usage at an affordable price (MRP is `1399)

To be in the market soon: Two new products to be released in 2014. Two more estimated for release in 2015. Impact Area: Energy, Environment, Rural Development Achievements: Many international

institutions and publications have lauded Greenway Grameen Infra’s designs and its business strategy. It has won the prestigious Echoing Green Fellowship Award, the Tata Social Enterprise Award 2013 (1st place), and the Intel Global Challenge 2012 (1st place), and been featured in such publications as Fast Company, BBC, The Times of India, Businessworld, India Today, and SmartCEO


Learning Human Resource Interventions


he learnings documented below have been identified as enriching by many managers when it was shared during training programmes. This opportunity is being taken to share these learnings with a wider audience, with the confidence that the below mentioned cues can add value to individuals and organisations who have accountability for leading teams.

Teaching culture versus learning culture Many organisations talk about building a learning environment. But it is seen that leadership teams in many companies are completely missing out on a formal teaching culture. It would be worth evaluating how much time has a member of your leadership team through casual gatherings or formal meetings with their subordinates shared a teaching session. It is seen that there are not many who take time to share their learnings with their team. Leaders must share their experiences and knowledge base with their teams. It must be part of the agenda of every leader to have time dedicated to build this teaching culture. This not only builds a great team, but also ensures alignment towards key goals. This must be seen as a tool for companies to be an employer of choice.

Goal setting It does not need much probing to identify that many team members lose focus because they try to work on multiple goals. It is important to prioritise and focus on the key objectives. Everybody knows this, but one sees a lot of individuals still not getting out of this puzzle. An interesting methodology that could be the direction in managing this predicament is as mentioned below.


List and segregate goals into three categories in terms of importance, namely, “Must Have” (A), “Should Have” (B), and “Could Have” (C).


Delete completely from the list goals that were categorised as “Could Have” (C).


Then segregate “Should Have” (B) as “Must Have” (A) and “Could Have” (C).


Again delete “Could Have” (C) and add the “Must Have” from Step 3 to what was noted as “(A)” in step 1

1 2 3 4

“Carbon Copy” culture (“cc” culture) In the pursuit towards achieving goals, “Information” and the “Flow of Communication” supporting it is seen as pivotal. It is important for team members working towards a goal to be aware of milestones and at what stage

are activities that will help accomplish these goals. If team members are aware of the same, they will achieve the end results in an efficient and timely manner. Key stakeholders and team members who also indirectly contribute to a particular objective, when required, can be kept focussed by ensuring they are copied or updated on necessary information at each step. Carbon copying (“Cc”) or Blind Carbon copying (“Bcc”) of mails, if managed effectively, ensures everyone in the team is kept updated. Being bombarded with many mails is not easily manageable, but over a period, team members realise they are pivotal for reaching the objective and thus this information flow. Leaders can facilitate creativity. The statement that we can’t manage creativity is a myth. Leaders can facilitate creativity in their teams by creating the right environment. The physical environment, if filled with the right mix of stimuli, sends the message, or provokes individuals or teams, to think differently. Creating space where a team member can reflect could bring out the creativity trait in an individual. Hosting engagement centres where a team member can indulge in activities which give a break for their mind from the challenges or problems at work are all add-ons that can contribute to stimulating creativity. (Compiled by Vijayan B, Head of Human Resources with a leading hospitality company in Dubai)

January 2014 MONEY INDICES



Keep track of water,

with NextDrop

India is well on course to meet its millennium development goals on safe drinking water, but depleting water tables, flaws in water conservation methodologies, poor access to clean water resources in rural and urban heartlands, and supply disruptions continue to keep the country in a spot of bother. It is within these challenging domains that a new breed of social entrepreneurs is toiling hard for sustainable such social enterprise, nextdrop, is even making good use of a mobile technology-supported water availability analysis system to support its ground-breaking research and disseminate crucial water supply information among residents of certain areas in Karnataka. A socially driven entity, NextDrop focusses on urban India’s water problems, with a solid research base backing up its noble intent to help out the daily consumers of this life-giving resource. Their work has met with success in three areas of Karnataka MI BUREAU


MONEY INDICES January 2014


mily Kumpel, a Civil Engineering PhD student from University of California, Berkeley, visited India quite often as part of her countryspecific research on ‘intermittent water supply’. During the course of her research, she learnt that irregular water supply caused great inconvenience to people in many parts of India. At the same time, she realised that her research was becoming snail-paced because of the time lost in collection of water samples. She wanted to tie up her research with a onetime solution to the end-users. Emily’s discussions with her professor in Berkeley, Tapan Parikkh, and a few students at Stanford School of Business, led to the formation of a project team that went into the multiple (water) supply issues. And shortly after, the team put together a minimum viable product for crowd-sourcing information on water, called “Smart Grid Lite”. The basic objective of Smart Grid Lite is to collect information about the water delivery system in a given area and enable sharing of such crucial data between water utilities and residents. Emily and her team, comprising students from Stanford school of Business and University of California, Berkeley, raised funds and started off their pilot project in Hubli, Karnataka. Upon receiving an overwhelming response from Hubli residents, the team decided to turn the project into a real time venture in 2010. The efforts came to fruition with the establishment of NextDrop, with Anu Sridharan, a Civil and Environmental Engineering student at University of California, leading it from the front as the Co-Founder and Chief Executive Officer.


Mode of operation NextDrop thought of a technological solution considering the ever-growing mobile phone market in India, and it wanted to bring about a synergy within the local communities to tackle the problem of irregular water supply using this technology. With the help of local governments, Smart Grid Lite brings workmen of water utilities and end-users together on an Interactive Voice Response (IVR) system that works on mobile phones. Under this system, valvemen, engineers, and customers stay connected through mobile phones, leading to free flow of information on water availability and supply. Here’s how the system works: the valvemen measure the level of water in reservoirs every day; then, the NextDrop team makes hourly calls to them through the IVR system, to collect information on the water levels; upon receipt of information, NextDrop sends data to the engineers, who, in accordance with the supply needs, decide further proceedings by texting to the valvemen; the valvemen then send text message updates to residents 30 to 60 minutes before water delivery. This information mechanism not only brings about community involvement in water issues, but also helps the customers know details of their water supply. In the end, the NextDrop team contacts customers to verify the accuracy of information given by the valvemen. To sign up for this service, a resident has to give a missed call at 07795590931. The NextDrop team will then call back the resident to get his/ her address and ensure that he/she has been located correctly for sharing of information on water supply. Each family is charged `10 per month for the services rendered. For BPL families, the charge is `5.

Challenges The NextDrop team faced many challenges at the early stage, with micropayments and inadequate geospatial datasets of residents

NextDrop has had a simple beginning with no sky-high dreams. It started out as a mission to provide access to information on water and later turned into something greater Anu Sridharan Co-Founder and Chief Executive Officer making it difficult to survive. “We overcame the problem of micropayment by partnering with citizen service centres, where people can pay all their utility bills. As for the geospatial datasets problem, we created a technology that uses water (supply) timings to help locate residents of urban India,” says Quijano Flores, Chief Operating Officer, NextDrop. But the toughest hurdle was that of fundraising. “We initially raised money from business competitions and grants. Once we had some results, we were able to approach investors. Fundraising is difficult; it is basically a full-time job in itself. Demos of technology really help,” adds Quijano.

Growing stages NextDrop has had a simple beginning with no sky-high dreams. It started out as a mission to provide access to information on water and later turned into something greater. “The journey has been a set of very fast paced learnings too,” says Quijano. NextDrop has grown significantly, erecting an effective platform for the public as well as local governments to communicate and build a new developmental vision. Currently,

NextDrop operates in Hubli and Dharwad in Karnataka, and more than 15,000 families receive information on water over SMS. Recently, NextDrop started off its operations in Bangalore as well, with the water utility agreeing to provide asset monitoring. NextDrop’s Anu Sridharan was featured in the Forbes “30 Social Entrepreneurs Under 30” list for her work. NextDrop has also bagged several international cash awards from Bill & Melinda Gates Foundation, Knight Foundation, Google, Clinton Global Initiative University, Centre for Information Technology Research, GSM Association mWomen Programme, Global Social Venture Competition, and Global Social Entrepreneurship Competition.

NextDrop’s future course NextDrop’s primary aim is to grow as fast as it can without burning through cash reserves. It wants to increase its subscriber base. “We aim to provide the authorities with technologies to improve their distribution systems using data. Right now, we are focussed on water and believe that our technology can be applied across different verticals,” says Quijano.

January 2014 MONEY INDICES




looks at social beehive Customer relationship management through social media is a fairly new concept in India, unlike the West. muHive is an early bird in this field in India, seeking to give businesses the advantage of easy mobility and outreach MI BUREAU


MONEY INDICES January 2014


ith millions of messages being bandied about in social media every second of the day, it’s no wonder that new age entrepreneurs are taking a plunge into online communities looking for some traction for their startups. And traction they do get. The startup story of two close companions from the Indian metropolitan landscape only amplifies the truth about entrepreneurial experiments in social media. Sagar Vibhute, a Mumbaikar, and Ritesh Nayak, a Bangalorean, have been together since school days. While doing their masters from IIIT Bangalore, these friends even worked together on some projects. After that, they secured jobs at some of the finest technology companies in India, but stayed in touch because of their common interest in music. After a few years, Ritesh and Sagar witnessed the incredible rise of Facebook, Twitter, Salesforce, and even Zoho, iFlex, and InMobi, which were making a mark sitting right here in India. The realisation that they too could be a part of this growth story provoked them into devising something on their own. “We started working on Rowz, a personal knowledge management and productivity tool, our first product, and decided to take it up full time sometime in 2011. But we realised soon enough that our product, although promising, wasn’t generating revenue. We repurposed the technology used for Rowz to build (a startup called) muHive and that’s where it took off. We are a part of the social media generation, and we believe that social media is driven by personal interactions. This is the underlying philosophy of muHive,” says Ritesh.


muHive took birth sometime in June 2012. given the right opportunities, muHive can help a muHive It simplifies social conversations for brands and lot of consumer-facing brands understand their simplifies social customers and deliver more value to them,” says turns them into business benefits. However, with the number of conversations on social media conversations Ritesh. “We had a lot of challenges when it came multiplying exponentially by the hour, it is hard, starting up. Both Sagar and I come from nonfor brands and to if not impossible, for a brand to tackle customer business families, and it was a challenge to quit relationship management manually, which is our jobs and start something by ourselves. But turns them where a product like muHive makes life easy. there are plenty of entrepreneurs who into business luckily, muHive helps brands discover, analyze, and are willing to help you out, if you approach them benefits reach out to their customers on social media. politely.” “The idea was acceptable, but hurdles spread Seed capital is hard to come by, especially out like brambles in every lane. During our initial when one has only an idea. Finding the right days, we met different sets of people, including mentors and advisors is also hard. Luckily, investors, advisors, and prospective customers,” various incubators and accelerators have come adds Ritesh. up of late to solve this problem. “Another big challenge At last, the duo met their angel investor through a software startups face in India is related to payments. Very referral and it helped that he too worked in the same few customers agree to pay and even when they do, there industry that muHive had been targeting. He immediately are problems with collection. We are working on a model saw value in what the duo was doing and decided to invest to make muHive indispensable. We are trying out options in the company. like one-time payment, pre-paid accounts, and other such Firmly believing that product companies should stay solutions to solve this problem,” informs Ritesh. as lean as possible, muHive hasn’t hired any employees. It’s not just the Indian market that Ritesh and Sagar are It makes do with interns whenever it is in need of some looking at. “We are looking to grow globally. Our immediate assistance. It also outsources works pertaining to finance, plan is to innovate, from the product, sales, and marketing compliance, law, etc. points of view. We are trying to grow a small team based out muHive is strategically positioned to influence of India and mobilise capital,” says Ritesh. the Indian market because social media has grown Despite the big numbers and positives of social media phenomenally in the last couple of years. India has over in India, muHive group believes that India is still a nascent 100 million people on social networks, and the availability market when it comes to customer engagement solutions, of bandwidth and growth of the mobile phone market only and that is where the leverage will come from. At the same mean that this number is going to rise. time, muHive is a product that can hold its own in the “There are very few companies in India that are actually international market, “so we are also looking at a large concentrating on connecting brands with customers, and global opportunity”, says Ritesh.

We are a part of the social media generation, and we believe that social media is driven by personal interactions. This is the underlying philosophy of muHive,” says Ritesh Sagar Vibhute

Ritesh nayak

January 2014 MONEY INDICES



Direct selling is the oldest form of business, trudging ahead on the back of admirable persuasive, demonstrative, and communication skills of its foot soldiers. It’s a tough job, but the determination to win over the customer at every doorstep hasn’t waned

Direct selling up 12%, but who’s backing it?



n ever-present threat from e-commerce and technologysupported product manufacturers, coupled with the absence of a regulatory environment because of step-motherly treatment from the governments, only stacks all kinds of odds against direct sellers. Yet, direct selling companies haven’t given up hope. They continue to make steady contributions to the national economy and are negotiating with governments for a better, organised form of daily trade. In fact, the 2012-13 Annual Survey Report on the Indian direct selling industry shows a 12 per cent growth, with the market size touching `7,164 crore. Following the joint release of the Annual Survey Report by the Indian Direct Selling Association (IDSA) and the PHD Chamber of Commerce and Industry, Chavi Hemanth, the


MONEY INDICES January 2014

Secretary General of IDSA, said: “The industry continues to develop and has shown growth of 12 per cent during 201213, expanding from `6,385 crore in 2011-12 to `7,164 crore in 2012-13. I am confident that we will continue to grow at an annual average of more than 20 per cent for next three years. On account of regulatory hurdles, specifically in the state of Kerala, the Southern region’s share in sales revenue has reduced to 30 per cent in 2012-13 from 38 per cent in 2011-12.” The decline in the overall growth scenario has also been attributed to the volatile global economic milieu, stifling policy environment, and declining investments. The survey revealed that the Northern region has contributed around `19,343 million to the gross sales revenue in 2012-13 and exhibited growth at around 33 per cent, as against 56 per cent in 2011-12. The Eastern region has contributed around `12,179 million to the gross sales revenue this year. “Direct selling companies have been active towards the growth of the Indian economy by contribution to the exchequer


and generation of self-employment opportunities. The total tax paid by the member companies amounts to `987 crore in 2012-13 as compared to `821 crore in 2011-12, a growth of 20 per cent. For (generation of) selfemployment opportunities, more than 57 lakh distributors are associated with direct selling companies in India,” said Amarnath Sengupta, Chairman of IDSA. The North-eastern region has contributed around `7,881 million in 2012-13, clocking 27 per cent growth. Its share to the gross sales revenue stands at 11 per cent, up from 10 per cent in 2011-12. The Western region has contributed around `10,746 million in 2012-13 and exhibited growth at around 9 per cent. The region has exhibited a decline in share to the gross sales revenue. “Women constitute 60 per cent of total sales force. At the same time, the number of men has increased from 37.5 per cent in 2011-12 to 40.6 per cent in 2012-13. An analysis of these figures revealed that a majority of men have turned to direct selling for supplementary income,” said Sengupta. The total distributor base of the Indian Direct Selling Industry during 2012-13 stood at 57,75,345. Of these, 47,93,537 distributors are employed

by member companies and 9,81,808 distributors are employed by nonmember companies. Growth of the distributor network stands at 18.9 per cent in 2012-13. This steady growth is mainly attributed to factors such as entry of new firms, expansion of business to different cities, and admission of more youth into the workforce. At 47 per cent, wellness and healthcare products contributed to a lion’s share in the total sales revenue of the direct selling industry, while beauty and cosmetics and personal care, homeware and home improvement products account for 35 per cent and 11 per cent sales respectively. “The direct selling industry has been emerging as an alternative sales distribution channel in the Indian market over the years. The growth prospects of the industry are bright, thanks to a strong consumer base, rising urbanisation, growing middle class population, and expanding markets,” said Dr S P Sharma, Chief Economist, PHD Chamber of Commerce and Industry.

The road ahead for direct selling In the 2011-12 annual survey on the direct selling industry, the PHD Research Bureau had listed the following challenges and suggestions. “All of these concerns remain.

Challenges High incidence of fraudulent companies Absence of regulatory law/ guidelines Lack of training and orientation for leaders Low environmental clearances, political risk, and poor logistics and distribution channels Poor leader motivation Contagion effect of fraud companies on the reputation of legitimate companies Attrition Harassment by authorities Compliance of special guidelines for multi-level marketing (MLM), issued by Kerala government

Suggestions Stricter registration policy by the government Implementation of a single standard workable policy Increase the number of leadership trainings Income enhancement Increase the number of trainings provided Review the guidelines in terms of international MLM business model and practices

Left to right: Saurabh Sanyal, Chavi Hemanth, Amarnath Sengupta, S P Sharma

January 2014 MONEY INDICES



The 13th edition of Dubai Airshow was a major displaying platform for big aircraft carriers all over the globe. Doha-based carrier Qatar Airways displayed its brand new Boeing 787 Dreamliner and the Bombardier Global 5000, a new acquisition for Qatar Executive, the corporate jet division of Qatar Airways MI BUREAU


New wings for

Qatar Airways

reamliner is a state-of-the-art interiors, together with a unique inflight entertainment system offering over 1,000 audio and video programming aircraft being deployed on four options. It’s the world’s first fully connected 787s with daily rotations between the two wireless facilities for passengers to remain in touch with cities of Doha and Dubai, marking their friends and loved ones on the ground. Every seat a new era for Middle East aviation throughout the aircraft has the award-winning touch as Qatar Airways is the Boeing 787 screen Android system, enabling passengers to navigate launch customer in the region. through a truly interactive service offering more than 1,000 Qatar Airways’ newest addition movie, TV programmes, music and gaming to its fleet heralds entertainment options in a sophisticated the start of an The 787 Dreamliner is and user-friendly way, just like the latest exciting new era for travellers worldwide smartphones. with unparalled levels of comfort and luxury made up of composite The touch-screen control unit has onboard Boeing’s next generation aircraft. materials making it a a unique dual screen interface allowing The 787 services to and from the UAE will passengers to play games on their handheld lighter and more fuel target peak travel times in a combination device while enjoying a movie on their of morning, afternoon, and night flights to efficient than any personal screen. Dubai. The carrier giant has ordered for 60 Passengers will also be fully connected comparable aircraft of Dreamliners. Following the 787’s welcome through WIFI and GSM telephony. They can into commercial service on the Doha-Dubai its size and range send both text and MMS messages, with route, it will spread its wings on one of each seat equipped with USB, MP3, and the airline’s five daily flights to London other charger ports, including laptop power outlets. In Heathrow. As more 787s join the fleet, the aircraft will addition, dynamic mood lighting and the composite design be inducted on other long-haul routes, including Zurich, of the Dreamliner with lighter materials will ensure that Frankfurt, and Delhi. passengers are less fatigued and more refreshed as the Dreamliner facilities cabin pressure is 2,000 feet closer to ground level, with an Qatar Airways has 254 custom-made seats across its 787 air purification system that is cleaner and healthier than Business and Economy Class cabins with specially designed any other aircraft.


MONEY INDICES January 2014


The 787 Dreamliner is made up of composite materials making it lighter and more fuel efficient than any comparable aircraft of its size and range.

Bombardier Global 5000 amenities Qatar Executive has welcomed a new Global 5000 to its fleet. The company’s all-Bombardier fleet now numbers seven business jets – three Global 5000s, three Challenger 605s, and a Global XRS. Bombardier Global 5000 features a spacious two-cabin configuration with a separate galley and allows passengers to enjoy discrete service and maximum confidentiality. The powerful yet versatile aircraft is known to have the widest and most spacious cabin among superlarge business jets, ensuring that Qatar Executive business

and private customers travel in the luxury of corporate aviation’s most comfortable and ‘business connected’ cabin. The forward cabin has space for eight passengers, with a four-place conference table, while the rear cabin features two single seats, a private aft lavatory, and a three-person divan that can be transformed into a double bed. The interior decor features warm earthy tones, creamy beige leather seating, and medium chestnut wood. The IFEC system features iPods at every seat to control cabin features such as cooling, mood lighting and sound system, two high-definition TV screens, Blu-ray DVD system, satellite telephone, printer capabilities, and internet service. The aircraft also features a dampening cocoon system to reduce cabin noise.

January 2014 MONEY INDICES



No worries for in Middle East The moment you mention BlackBerry, tech analysts start counting the thorns on its path to resurrection. While the future of this brand still remains uncertain, there’s at least one market where BlackBerry seems to be holding its own – the Middle East. In an interview with Money Indices, Nick Horton, BlackBerry’s Managing Director for the Middle East and North Africa, tells us how the brand will consolidate its position in this market


By Prashob K P

hile things continue to be unstable at BlackBerry’s headquarters in Ontario, Canada, the brand is safe and steady in the Middle Eastern markets. Nick Horton, BlackBerry’s Managing Director for the Middle East and North Africa, is confident of brand consolidation. While sluggish handset sales in North America and other developed countries saw the brand losing $965 million in the second quarter, it continues to deliver a good performance in the Middle Eastern countries. In the United Arab Emirates (UAE), the brand occupies the third position,


MONEY INDICES January 2014

and in Saudi Arabia, it is second, next to Samsung. The brand hopes to maintain this growth trend and better its position with aggressive plans and promotional activities in the region. With hot deals and campaigns, BlackBerry was very active at Gitex Shopper and Gitex Technology Week in Dubai last October. Nick Horton is crystal clear about the future course of action. “We are targeting a wider path of the consumer and business markets with good offerings and by transitioning customers from the traditional BlackBerry operating system (BB7) to the new BB10 operating system. So far, we have been successful in doing it. We will continue doing this through the rest of the year. As compared to our last quarter, we increased our marketing budget this quarter. We were the sponsors for Mercedes Benz at the Abu Dhabi Grand Prix,” says Nick.


n erica and m A e r, an esearch e Servic e n t r r is to Ga hnology Enterpr with g n i y y, r rd ec Acco mation t BlackBer globall ly 25,000 d h r info ry firm, increase at roug o e g s advi ents hav standin i s 10 cl gure now allation i t the f prise ins r ente Whatever the global situation, people in the Middle East are not ready to drop this brand from their pockets. “As a brand, BlackBerry still has brand value and the people here are very brand conscious. BlackBerry Messenger (BBM) is very active among consumers in the UAE and will reach more customers when it’s available on Android and iOS platforms,” adds Nick. In the UAE, 98 per cent of the consumers use BBM, one of the highest customer use rates in the world, and Horton feels happy about that. “To increase the customer base through this BBM, we are now moving to other rival platforms like Android and iOS. When we look at the social apps, it is clear that scale is important. That is why we have decided to take BBM across other platforms. But that does not mean Blackberry devices will lose value. We are 100 per cent confident that our devices have the right differentiation, right platform, and right brand

Nick Horton

to compete in the smartphone race,” says Nick. He is also confident about the sales of Z30, the handset that came after the Z10 series.

According to Gartner, an American information technology research and advisory firm, BlackBerry Enterprise Service 10 clients have increased globally, with the figure now standing at roughly 25,000 enterprise installations. “We have already witnessed 25 per cent of our enterprise server businesses migrating to the new platform in the region and we are getting a great response from them,” says Nick. The present Blackberry 10 customers will get an upgrade to the new Blackberry 10.2 operating system within one-and-ahalf months. What next in Middle East? Looking forward, Nick says that the company wants to continue the success and better its position in the region. “We’ve managed to build a brand in a proposition that really appeals to consumers and has durability to it. We want to focus on our core strengths and continue to evolve our hardware and software,” says Nick. Next year onwards, BlackBerry will look into customer expansion plans and catch more portions of the market by offering new handsets. “Consumers in the region trust our brand and we have to safeguard that. We want to show that we are successful,” says Nick.

We’ve managed to build a brand in a proposition that really appeals to consumers and has durability to it. We want to focus on our core strengths and continue to evolve our hardware and software

January 2014 MONEY INDICES



Global footprints of

the desi honcho

The celerity and success of India Inc are not just limited to the leadership achievements of our charismatic honchos in the domestic domain. There are many testimonies showing the canvas broadening to the world stage, with our very own industry stalwarts consistently playing an anchor role at some of the global business giants of the day. we raise a toast to all those formidable corporate heads around the world who continue to make the country proud, both back home and abroad BY VISHNU KAIMAL


Indra Nooyi, CEO, Pepsico

Admitted to Yale School of Management in 1978, she earned a Master’s degree in Public and Private Management. While at Yale, she completed her summer internship with Booz Allen Hamilton. Graduating in 1980, Nooyi joined the Boston Consulting Group (BCG), and then held strategic positions at Motorola and Asea Brown Boveri.

Born on born October 28, 1955, Indra Krishnamurthy Nooyi is an IndianAmerican business executive and the current Chairperson and Chief Executive Officer of PepsiCo, the second largest food and beverage business in the world by net revenue. According to Forbes, she is consistently ranked among the World’s 100 Most Powerful Women. In 2013, she was Nooyi leads ranked 10th in USIBC’s Board the list of Forbes of Directors, World’s 100 most powerful women. an assembly of She is arguably the more than 60 most powerful and influential name senior executives in the world of representing a corporates.

Early life and career

cross-section of American industry

Nooyi was born in Madras (presently Chennai), Tamil Nadu, India. She was educated at Holy Angels Anglo Indian Higher Secondary School in Madras. She received a Bachelor’s degree in Physics, Chemistry, and Mathematics from Madras Christian College in 1974 and a Post Graduate Diploma in Management (MBA) from Indian Institute of Management, Calcutta, in 1976. Beginning her career in India, Nooyi held product manager positions at Johnson & Johnson and textile firm Mettur Beardsell.

MONEY INDICES January 2014

Indra Nooyi


PepsiCo executive Nooyi joined PepsiCo in 1994 and was named President and CFO in 2001. Nooyi has directed the company’s global strategy for more than a decade and led PepsiCo’s restructuring, including the 1997 divestiture of its restaurants into Tricon, now known as Yum! Brands. Nooyi also took the lead in the acquisition of Tropicana in 1998, and merger with Quaker Oats Company, which also brought Gatorade to PepsiCo. In 2006, she became the fifth CEO in PepsiCo’s 44-year history. According to BusinessWeek, since she started as CFO in 2000, the company’s annual revenues have risen 72 per cent, while net profit more than doubled, to $5.6 billion in 2006. Nooyi was named on Wall Street Journal’s list of 50 women to watch out for in 2007 and 2008, and was listed among Time’s 100 Most Influential People in The World in 2007 and 2008. Forbes named her the #3 most powerful woman in 2008. Fortune ranked her the #1 most powerful woman in business in 2009 and 2010. On the October 7, 2010, Forbes magazine ranked her the 6th most powerful woman in the world.

Compensation As CEO of PepsiCo in 2011, Nooyi earned a total compensation of $17 million, which included a base salary of $1.6 million, a cash bonus of $2.5 million, pension value, and $3 million in deferred compensation.

Honours, awards, and international recognition

In January 2008, Nooyi was elected Chairwoman of the USIndia Business Council (USIBC). Nooyi leads USIBC’s Board of Directors, an assembly of more than 60 senior executives representing a cross-section of American industry.

Atul Singh, Deputy President, Pacific Group, The Coca-Cola Company Arguably, PepsiCo’s biggest rival too has gone the Indian way by hiring Atul Singh for the top job. Atul Singh is the Deputy President, Pacific Group, The Coca-Cola Company, responsible for operations of the Indian and South West Asia Business Unit and China and Greater Korea Business Unit. Recently elevated to this position, he supervises operations in China, Korea, Taiwan, Mongolia, Hong Kong, Macau, India, Sri Lanka, Bangladesh, Bhutan, Nepal, and Maldives. Prior to his elevation as the Deputy President of the Pacific Group, Atul was the President of Coca-Cola India and South West Asia Business Unit, a responsibility that he took over on September 1, 2005. Under his stewardship, Coca-Cola’s business in India has made strides in all facets of

its operations and has reported 27 consecutive quarters of growth, of which 19 quarters have registered double digit growth. Atul joined The Coca-Cola Company in 1998 as VicePresident, Operations, Coca-Cola India Division. He led the Franchise Operations and Key Accounts group of the India Division from 1998 to 2001. Atul then moved to China and served as the President of the East, Central, and South China Division. Under his leadership, mainland China operations were among the fastest growing Coca-Cola businesses. Atul is an independent Director on the Board of Bata India Ltd and has also been appointed as a Director on the Boards of The Coca-Cola Bottling Company of Saudi Arabia and The Coca-Cola Bottling Company of Egypt. He is on the Board of AMCHAM India and has been its past Chairman on two occasions. He is also the Chairman of the Sports Committee of the Confederation of Indian Industry (CII). He has chaired CII’s National Committee on Rural Development and the National Committee on CSR. He is a part of the National Executive of the Federation of Indian Chambers of Commerce and Industry (FICCI), having earlier led the Sports Committee of FICCI for three years. He currently chairs FICCI’s Water Council. Atul is a member of the Advisory Board of AIESEC, the world’s largest student organisation, and a member of the Young Presidents’ Organisation, a global body dedicated to creating ‘Better Leaders through Education and Idea Exchange’. He is also on the advisory board of Catalyst, a leading global non-profit membership organisation founded in 1962 and focussed on expanding

Atul is a member of the Advisory Board of AIESEC, the world’s largest student organization, and a member of the Young Presidents’ Organisation, a global body dedicated to creating ‘Better Leaders through Education and Idea Exchange

Atul Singh


opportunities for women and business. With more than 500 pre-eminent corporations as members, Catalyst has been contributing towards women’s progress in the workplace over the last five decades. Prior to joining Coca-Cola, Atul worked with The Colgate Palmolive Company for 10 years and held several key positions, including that of Country General Manager, Nigeria (1995-1998), Finance Director and Country General Manager, Romania (1992-1995), and Finance Manager, Body Care Division, USA (1990-1992). Before joining Colgate, Atul worked as an Auditor with Price Waterhouse in New York. Atul is an alumnus of the prestigious St Xavier’s College of Kolkata, India, from where he majored in Commerce (Honors). Atul holds an MBA degree from Texas Christian University, USA. He has lived and worked in Asia, Africa, Europe, and North America.

Sanjiv Mehta, Unilever Established in 1933 as Lever Brothers India Limited, Hindustan Unilever Limited (HUL) came to be known as Hindustan Lever Limited in 1956 as a result of a merger between Lever Brothers, Hindustan Vanaspati Mfg Co Ltd, and United Traders Ltd. It is headquartered in Mumbai, India, and employs over 16,500 workers, whilst indirectly

helping facilitate the employment of over 65,000 people. Lever Brothers first commenced operations in India in the summer of 1888, when crates full of Sunlight soap bars, embossed with the words “Made in England by Lever Brothers”, were shipped to the Kolkata harbour, and it began an era of marketing branded Fast Moving Consumer Goods (FMCG). Sanjiv Mehta joined the Board of the company (Unilever) in October 2013 at the age of 53. He is a member of the Nomination & Remuneration Committee, Stakeholder Relationship Committee, and Corporate Social Responsibility Committee of the company.

CEO and Managing Director Sanjiv joined Unilever in October 1992. He has led several Unilever businesses across South Asia, South East Asia, and the Middle East. He was appointed Chairman and Managing Director of Unilever Bangladesh in 2002. In 2007, he was appointed as Chairman and CEO of Unilever Philippines. In 2008, he took up responsibilities as the Chairman of Unilever North Africa and Middle East (NAME), leading a multi-country organisation spanning 20 countries in the region. During his tenure as the Chairman of Unilever NAME, the business achieved significant success accelerating both growth and profitability. Importantly, he has been instrumental in building leadership talent and substantially strengthening organisational capabilities. Before joining Unilever, Sanjiv worked for Union Carbide India. He is a Commerce graduate and a Chartered Accountant. He was recipient of the Justice SM Shah and UC Majumdar Prizes in the final examination of Chartered Accountancy. In 2004, he completed the Advanced Management Programme from Harvard Business School. Hindustan Unilever’s distribution covers over two million retail outlets across India directly and its products are available in over 6.4 million outlets in the country. As per Nielsen market research data, two out of three Indians use HUL products. Under his leadership, HUL may be able to expand into a farther reaching network of retail.

n er’s distributio ev il n U an st u d Hin retail outlets n o li il m o tw covers over its products d an y tl ec ir d ia ets across Ind .4 million outl 6 er v o in le b are availa Nielsen market r pe As y. tr n u ians in the co ut of three Ind o o tw , a at d ch resear s use HUL product

Sanjiv Mehta


Asha Gupta, MD, Tupperware Knowing the Indian woman seems to have helped Tupperware India Managing Director Asha Gupta a lot in her rise to the top. She’s got a tough task ahead of her: convincing Indian women to ditch stainless steel and use plastic containers instead. But then, Asha clearly understands the mind of her customer. Which is why she was top boss of the Indian unit of the US company, known for food storage containers, at just 33, barely seven years after she joined. “Often, I was the youngest MD at CEO forums,” says Asha. “A business like Tupperware, which required building a strong direct selling model led by women, required a lot of EQ… The softer side of me grew very, very fast.” Asha has used her enterprise and understanding of the mind of the Indian woman to make India one of the global company’s fastest growing markets. India ranked among the top five countries in terms of size of business. But it hasn’t been an easy ride since the first Tupperware party in India in 1997. The company didn’t make money until 2006, mostly because of the reluctance of Indian women to abandon stainless steel. Ironically, the economic slowdown in 2008-09 helped lift Tupperware India’s financial fortunes. As more middle class families needed dual incomes, an increasing number of women became Tupperware distributors and earned up to $6,000 a year. Today, India has at least 115 Tupperware distributors across the country. Women from different social backgrounds have achieved some degree of financial independence, without stepping out of their homes. The women weren’t the only ones making money. Tupperware India has also grown at a rapid clip the past few years, even outstripping the US parent’s pace of growth on occasion. The Indian unit logged 38 per cent growth in 2012, much higher than the 6 per cent global growth.

Asha has diverse experience in sales and marketing with multinational companies, both in India and abroad. She started her career with Coats Viyella India (Madura Coats) and worked with the organisation for three years in sales management in Mumbai. She then worked with Coca-Cola in the Middle East, where she oversaw the launch of new products such as juices and energy drinks. She joined Tupperware in 1997 as part of the startup team and headed the sales for the southern markets in India. After a successful two-year stint in the South, she was promoted as head of marketing for Tupperware in India. Her acumen, hard work, and understanding of the Indian market have always given her an edge over others. It was her down to earth attitude which helped her climb to the top post of Managing Director and oversee eight Western European countries. She has been instrumental in energising the markets with new programmes, B2B initiatives, and sales development activities. She returned to India after a threeyear stint to take up charge as the Managing Director in her home country. Evidently, she has added a new dimension to direct selling with her enterprising ideas and skillful handling of the Indian market. And though Tupperware’s present strategy is to market its products through parties and social gatherings, Asha knows the advantages she can garner from the advances in technology. She has taken fresh initiatives to ensure that Tupperware’s presence on Internet is felt as e-shopping catches up in India. With a visionary like Asha in command, you will most likely see Tupperware stuff adorning most kitchens in India in days to come.

anding of the st er d n u d an e al her enterpris one of the glob ia d In Asha has used e ak m to ng the ian woman dia ranked amo In . mind of the Ind ts ke ar m g hasn’t est growin usiness. But it b f o company’s fast ze si f o s m India ies in ter erware party in pp top five countr Tu st r fi e th mostly e since ney until 2006, o been an easy rid m e ak m ’t n id mpany d andon in 1997. The co n women to ab ia d In f o ce an reluct because of the stainless steel

Asha Gupta


Speed has just crossed a new barrier, with three brothers from the United Arab Emirates devising a new throttle for a super car that can break all existing records of highoctane driving. The name of the new speed devil is ‘Devel Sixteen’ UAE Bureau


MONEY INDICES January 2014

Ride@560 km/h!!!



hree car-crazy brothers from the United Arab Emirates have matched the pace of their dreams and engineering abilities with that of a next generation speed devil that can pummel any roadster with its 5,000 horsepower engine at a top speed of 560 km/h. Christened ‘Devel Sixteen’, this car can fire up to 60 mph in 1.8 seconds! Unveiled at the Dubai International Motor Show in November last year, this speed monster has dazzled the entire industry with its unique specifications and extreme looks. For the three brothers, Majid Al Attar, Mohammed Al Attar, and Rashid Al Attar, the birth of Devel Sixteen is a dream come true moment. Why not? Their love for cars since childhood only galvanised them to deliver a road king that could leave anyone in the world agape. Known for having started the first car manufacturing unit of the UAE, called Defining Extreme Vehicles Car Industry, the three brothers now have a speed monster that will certainly make them popular across the world. “This has always been our dream. We wanted to do something that had never been achieved before, in terms of going beyond the extreme, ahead of the super car level. We can see so many super cars in the market today. We wanted to do something beyond that segment and we achieved it now,” says a beaming Majid Al Attar, President, Defining Extreme Vehicles Car Industry. The three brothers, whose dreams for Devel Sixteen took shape in 2002, have a wide collection of cars that belong to different segments, including the original Batmobiles. They knew the advantages and disadvantages of super cars pretty well, and that knowledge helped them design their ultimate dream vehicle. “In our childhood days, our

teachers scolded us when we used to draw cars… There were times when we used to think why Dubai couldn’t produce its own car. That’s when we decided to do it. People laughed at us, but we never changed our mind and kept working on our ideas, and today, we stand here,” says Rashid Al Attar, Vice-President, Defining Extreme Vehicles Car Industry. The extreme look of Devel Sixteen has been adapted from the F15 and F16 jet fighters. It really looks like a jet fighter with tyres. But for the tyres, every part of Devel Sixteen will be made in Dubai. The chassis is made of carbon fibre and aluminium, while the

The extreme look of Devel Sixteen has been adapted from the F15 and F16 jet fighters. It really looks like a jet fighter with tyres

body is completely carbon fibre. The power comes from a huge V16 engine made by a US company. “We wanted to break all existing records and create a new level of speed. There are sports cars delivering high speed, but we wanted something beyond that. We have got enquiries for Devel Sixteen from all over the globe. While the specifications may sound a little heavy, we have taken all safety measures to ensure a comfortable ride. It will take around 14 months for us to launch the final production model of Devel Sixteen, which will be about the same size as a Ferrari Enzo, with a normal power range between 800 and 1,200 horsepower,” says Majid Al Attar. For the 5,000 horsepower version, there will be a special switch, similar to the Buggati Veyron, and the driver can pull it if he wants to fly. The price will start from Dirham 5.5 million. A customer-centric car factory will be opened at Jebel Ali, where buyers can customise the model according to their wish. After the launch, the company will start work on the next edition of Devel Sixteen.

January 2014 MONEY INDICES




rolls out two sixth generation models


The GTS model is not only the fastest, but also the most powerful and economical four-door Maserati ever built uae Bureau

talian luxury car manufacturer Maserati invented the concept of the luxury sports sedan with the first generation Quattroporte in 1963, and over the past five decades, the company launched four more models suiting the tastes of each generation. This year, it has launched two models of the sixth generation Quattroporte (Quattroporte GTS and Quattroporte S) in the Middle East region, setting a new benchmark for high quality engineering, supercar performance, and limousine comfort. Even with all of its new technology, the new Quattroporte remains true to Maserati’s roots. The Quattroporte GTS and the Quattroporte S are powered by state-of-the-art high performance engines. The direct injection engine family will boast a 3.8-litre V8 (Quattroporte GTS) and a 3.0-litre V6 (Quattroporte S), both of which are all-new, twin turbo charged, developed by Maserati Powertrain in partnership with Ferrari Powertrain and built by Ferrari in its world-leading engine construction facility in Maranello. The Quattroporte GTS engine sets Maserati’s new performance benchmark at 100km/h in just 4.7 seconds and achieves a top seed of 307km/h. It is 20km/h faster and has up to 200 Nm more torque than its predecessor, Quattroporte Sport GT S. The Quattroporte S engine, too, doesn’t lack in performance, reaching 100km/h in 5.1 seconds and achieving a top speed of 285km/h. Both models have a rear-wheel drive configuration. The GTS model is not only the fastest, but also the most powerful and economical four-door Maserati ever built. The Quattroporte GTS has lowered both its fuel consumption and emissions by 20 per cent over the outgoing Quattroporte.


MONEY INDICES January 2014

The all-new architecture retains the Quattroporte’s traditionally exquisite handling characteristic, thanks to its 50:50 weight distribution, a double-wishbone front suspension, the state-of-the-art five-link rear suspension, the limited rear slip differential, and the Maserati Skyhook suspension system. It also delivers new standards in quality in every area, from design, development, and fabrication to process controls. It is produced in a new plant that combines Maserati’s traditions of craftsmanship with cutting edge technologies. Traditional handcrafted detailing continues in the Quattroporte’s cabin, and this has been added to with even more interior space in all seats and both four- and five-seat layouts. Cabin luxury leaps forward technically, too, with features like the Maserati Touch Control screen, adjustable pedals (left hand drive only), Reversing Camera, and the optional 15-speaker Bowers & Wilkins audio system, as well as WLAN-based WiFi. Quattroporte GTS Engine: 3.8L V8 Power: 530 HP Transmission: ZF Eight Speed Automatic Gearbox Torque: 710 Nm Top Speed: 307 km/h Acceleration: 0-100km/h in 4.7 seconds UAE starting price: $142,000/525,000 AED Quattroporte S Engine: 3.0L V6 Power: 410 HP Transmission: ZF Eight Speed Automatic Gearbox Torque: 550 Nm Top Speed: 285 km/h Acceleration: 0-100km/h in 5.1 seconds UAE starting price: $111,500/410,000 AED Quattroporte GTS - V8 Twin Turbo Engine and Performance


The flagship 3.8-litre V8 engine is a perfect representation of Maserati’s performance tradition combined with a 20 per cent reduction in emissions. It is almost a litre smaller in capacity than the 4.7-litre V8 in the Quattroporte Sport GT S. Yet, this is more than countered through twin turbo charging and direct fuel injection to deliver 18 per cent more power and 39 per cent more torque. The engine produces 390kW (530hp) of power at 6800rpm and accompanies this with 650Nm of torque from 2000rpm to 4000rpm. This maximum normal torque figure can be overboosted to 710 Nm from 2250rpm to 3500rpm. These figures represent the highest specific power output in the class, with 139hp/litre, and the best specific torque as well, with 171Nm per litre. It is also considerably a more powerful engine than the finely balanced 4.7-litre engine in the Quattroporte Sport GT S, with fully 59kW (80hp) more power and an astonishing 200Nm more torque (on the overboosted output). The torque peak also arrives at less than half the engine speed of the Sport GT S’s V8, peaking at 2000rpm versus 4750rpm. Its combination of a lighter body design and a stronger engine give the Quattroporte the best power-to-weight ratio in the class, too, with just 3.6 kg for each horsepower. These engine figures help the Quattroporte GTS accelerate up to 100km/h in just 4.7 seconds, 0.3 seconds

faster than the previous Sport GT S, making the new Quattroporte the fastest accelerating four-door car in Maserati’s history. It is 0.6 seconds faster to 100km/h than the outgoing Quattroporte S and almost a second faster than the 4.2-litre Quattroporte. Quattroporte S - V6 Twin Turbo Engine and Performance The Quattroporte’s all-new V6 Twin Turbo engine bears a close relationship to the V8, sharing most of its core components. With 301kW (410hp) of power at 5500rpm, the V6 Twin Turbo lacks little for speed, providing a tremendously powerful driving experience with 550Nm of torque between 1750rpm and 5000rpm. While it shares much with the V8 Twin Turbo, it has a character of its own, revving to a lower 6000rpm maximum speed and delivering its torque peak 500rpm sooner. While specific power output is slightly lower (at 137hp per litre), its specific torque is actually higher than that of the V8, at 183Nm per litre. It is also a lighter car, weighing 1860kg in its rear-wheel drive configuration. In its rear-wheel drive layout, the V6 Twin Turbo accelerates to 100km/h in 5.1 seconds. Both cars are as fast as people would expect from the Maserati brand, with the rear-wheel drive’s 285km/h top speed almost matching the outgoing Sport GT S and besting the all-wheel drive V6 Twin Turbo by two km/h.

January 2014 MONEY INDICES



Dubai looks into skill gaps in


Islamic finance sector


Islamic finance is a central pillar in Dubai’s strategy to become the world’s capital of the Islamic economy UAE Bureau

n response to UAE Vice-President, Prime Minister, and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum’s ambition to make Dubai the capital of the world’s $8 trillion Islamic economy in just three years, industry experts, government officials, and leading academics assembled to discuss the existing and emerging skills gaps within the Islamic finance sector – one of the seven pillars of Dubai’s Islamic economy initiative. Senior representatives from Standard & Poor’s, Simmons & Simmons, Dubai Holding, Dubai Islamic Bank, Dubai Financial Services Authority, and the Knowledge and Human Development Authority joined academic leaders and discussed about the skills needed to ensure that the UAE’s Islamic finance sector thrives in the future. The debate, organised by Dubai International Academic City (DIAC) in collaboration with the organisers of the Global Islamic Economy Summit, Thomson Reuters, saw participants review the key findings of a Workforce Planning Study, which has identified some of the major themes and skills gaps within the fast-growing Islamic finance sector. The Workforce Planning Study revealed that dedicated Islamic banking skills are in high demand from GCC banks, particularly at the entry level, closely followed by financial risk management and customer segmentation and analytics skills. Of the 60 banks surveyed, 50 per cent said that they find it difficult to hire graduates for entry level positions; 23 per cent said that they find it difficult to hire for mid-level positions; and just 5 per cent of banks said that they find it hard to hire for senior positions.


MONEY INDICES January 2014

The study also offers some critical recommendations about how the UAE can address the skills gaps arising from the sector’s growth, such as genuinely bridging the communication gap between the industry and the academia. Dr Ayoub Kazim, Managing Director of DIAC and Dubai Knowledge Village, said: “Islamic finance is a central pillar in Dubai’s strategy to become the world’s capital of the Islamic economy. Demand for skilled workers in this field has never been higher, and as a home for the region’s education and training institutes, we have an important role to play in bringing academia, industry, and government closer together to ensure the future success of the sector. Roundtable debates such as these, informed by evidence found in the Workforce Planning Study, enable our academic partners and training institutes to tailor their education programmes to the demands of local business. This is a smart and forward-looking approach to education – and it is one that ties back to Dubai’s overarching vision of developing a thriving, knowledge-based economy.” Essa Al Mulla, Executive Director, Emirates National Development Programme, Knowledge and Human Development Authority (KHDA), said: Islamic finance plays a crucial role in the UAE’s financial system. The debate not only highlights the existing skills shortage in the sector, but also provides a platform to discuss innovative ways to encourage sustainable and long-term skills development. At present, there are a number of institutions in Dubai offering programmes in banking and finance; however, we need programmes specialising in Islamic Finance.” Rashid Mahboob, Senior Vice-President, Customer Excellence, Dubai Islamic Bank, said: “This high level discussion offers an early insight into the skills gaps that


Islamic finance plays a crucial role in the UAE’s financial system. The debate not only highlights the existing skills shortage in the sector, but also provides a platform to discuss innovative ways to encourage sustainable and long-term skills development. At present, there are a number of institutions in Dubai offering programmes in banking and finance; however, we need programmes specialising in Islamic Finance

exist within the Islamic finance sector, as well as how to nurture the human capital needed to meet the sector’s expected growth. In the future, there will be an increasing focus on excellence in all aspects of employment, and this will be particularly true for those working within Islamic finance. To prepare for this, universities and training providers must refine their programmes and courses to support the sector, equipping young talent with the level of specialism and sophistication that is required by employers. Similarly, employers must dedicate themselves to providing genuine on-the-job training.” During his presentation, Professor Abdullah Al Shamsi, ViceChancellor of the British University in Dubai, observed: “According to PricewaterhouseCoopers, Islamic financial assets are growing 17 per cent per year and are set to reach $2.67 trillion by 2017. These developments vouchsafe the growing significance of Islamic finance and banking in the

aftermath of the global economic crisis. Clearly realising the market needs for trained manpower in this industry, the British University in Dubai has already initiated steps to introduce a full-pledged postgraduate programme in Islamic economy and finance from the next academic year. Currently, we are preparing the necessary documents to be submitted to MOHESR for its inspection and approval.” Initial findings from the ICD Thomson Reuters Islamic Finance Development Indicator report show that there are over 533 institutions globally offering courses or degrees in Islamic finance. The UAE sits in third position with 31 course providers and 9 degree providers, ahead of the US, Indonesia, and Saudi Arabia, but behind the UK and Malaysia. According to a recent analysis by Tahseen Consulting, a specialised advisor on strategic and organisational issues in the Arab world, $87-124 billion could potentially enter the UAE Islamic banking system by 2015, creating

approximately 7,800 new jobs at Islamic banks if the current asset concentration ratios remain similar. Additionally, 500 jobs will be created in other Islamic financial services segments. By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000. DIAC and Thomson Reuters’ roundtable took place at the Dubai Knowledge Village Conference Centre. Attendees included Sharjah Islamic Bank, Abu Dhabi Islamic Bank, Imarat Consultants, and DIAC academic partners.

By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000

January 2014 MONEY INDICES



Dubai stands to gain from

2020 Expo

As predicted by Money Indices, Dubai has won the 2020 World Expo bid. Now, the emirate is on an overdrive to change the infrastructural landscape to ensure that it is well placed to attract the best business, trade, and economic investment pledges from countries as well as corporate behemoths. While analysts are still sizing up the economic might of the United Arab Emirates in the backdrop of investment opportunities being thrown up by the Expo, the Dubai government as well as private players are setting their houses in order to make sure the environment is conducive for economic agreements


trategic economic experts say that over the next three years, the 2020 World Expo ripples will add an economic growth of 6.4 per cent per annum. This annual rate of growth will possibly reach 10.5

per cent by 2020. Online job portals and HR consultancies operating in the United Arab Emirates (UAE) say that the Expo-triggered boom will create 277,000 job opportunities between 2013 and 2021, with a majority of these openings in the travel and tourism sector. The Dubai government promises to leave no stone unturned to make the Expo a resounding success. In the final bidding presentation held at Paris, Reem Al Hashemi, Minister of State and Managing Director of the Higher Committee for Hosting the World


MONEY INDICES January 2014


Expo 2020, told the delegates that the UAE would always strive for quality, excellence, and respect by remaining consistent and determined to deliver an inclusive and engaging Expo. The Dubai Department of Tourism and Commerce Marketing says that the city is likely to attract 25 million visitors at the Expo, more than double the figure of tourist inflow today. And over the next six years, Dubai and the UAE are set to benefit from an estimated $6.9 billion (Dh25.3 billion) in infrastructure projects tied to the Expo. According to a report by Deutsche Bank, the biggest beneficiary of growth opportunities should be the real estate sector, which has to cater to an increased demand for new hotel and infrastructure projects. The report says that Dubai property prices are currently up around 50 per cent since the third quarter of 2011 but still 45 per cent below the peak of 2008 and close to the average price of the last

eight years. Compared with other major cities in the world, Dubai offers attractive property prices and rental yields and a low tax environment. Moreover, the emirate’s safe haven status, strategic location, and growing tourism sector continue to attract investor interest, adds the report. Money Indices spoke to three key industry players to gauge their sense of preparedness for the Expo, and here’s what they had to say:

‘Strategic team to monitor opportunities’ Joy Alukkas, the Chairman and Managing Director of Joy Alukkas Group, says: “The UAE has already established itself as a hub for trade in the Middle East and I feel Expo 2020 will be a platform to establish the country as the hub for global business. The Expo is a meeting wherein countries and industries from across the world showcase their products and latest innovations. Almost every nation


the UAE’s healthcare sector. The global fair requires more such international conferences focussing on latest medical updates and innovations, treatment modes, and technologies. It also will strengthen the healthcare sector to impart knowledge, share insights, and ensure continued training to medical professionals on various health issues.”

‘Ideal platform to contribute to the UAE’

sends representation to this world fair. I am sure Dubai will pull all stops to ensure Expo 2020 is the best ever in the history of this esteemed event. Once people see the infrastructure, facilities, dynamism, and grand vision of this great nation, they will understand why it is the best place to do business. We have created a strategy team that is constantly monitoring and studying the impact of the event on the other countries that have hosted the event in the past and then we will form concrete plans accordingly.”

‘Expo will strengthen healthcare’ Dr Azad Moopen, the Chairman and Managing Director of Aster DM Healthcare, says: “Dubai proved that it’s the ideal place on the planet to host the Expo 2020. The UAE has all the components required to host the Expo 2020 in Dubai, which enjoys a prominent position in the global tourism map. The tremendous growth in the healthcare sector, with the

hosting of Expo 2020, will go along with the long-term vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to transform Dubai as a popular medical tourism destination in the Middle East. The Expo 2020 will have a phenomenal positive impact on

Ravini Perera, the SVP of Sales, Marketing, and PR at Atlantis, The Palm and Global Partnerships Kerzner, says: “In Dubai and the UAE itself, hospitality is so widespread from hotels and resorts to restaurants, retail, and travel management, that from an economic and development point of view, it seeks to enhance and develop people and professions from within the UAE as well as all around the world. Seeing as to how hotels and other hospitality segments are choosing to opt for greener practices through limited resource usage and recycling initiatives, amongst other practices, the Expo 2020 would be an ideal platform for hotels to maximise on these practices and effectively contribute to the UAE. At Atlantis, The Palm, we continuously make an effort to take luxury comfort to a new level by optimising the resort’s efficiency in usage of economic, social, and environmental resources whilst meeting our commitment to offer premium service to our guests.”

Seeing as to how hotels and other hospitality segments are choosing to opt for greener practices through limited resource usage and recycling initiatives, amongst other practices, the Expo 2020 would be an ideal platform for hotels to maximise on these practices and effectively contribute to the UAE

Ravini Perera

January 2014 MONEY INDICES



International tourism T

ourism continues to be a major revenue contributor to the world economy, with a 5 per cent increase in tourist traffic to travel destinations across the globe between January and September 2013. Total tourist traffic swelled to

845 million during this period, 41 million more than in the corresponding period of 2012, according to UNWTO World Tourism Barometer. This growth was mainly driven by Europe and Asia and the Pacific.












World % Growth



Tourist arrivals to India grew by 13 per cent in the January-September 2013 period


growing strong UNWTO Secretary-General Taleb Rifai said, “International tourism continues to grow above expectations, supporting economic growth in both advanced and emerging economies and bringing much-needed support to job creation, GDP, and

the balance of payments of many destinations. It is particularly encouraging to see the strong results in many European destinations, where the tourism sector is, undoubtedly, one of the engines of the economic recovery.�

Asia Pacific









Middle East




















S&P/TSX 13399.60

Uk FTSE 6678.61

Germany DAX 9488.82

United States S&P 500 1827.99

France CAC 4215.29

NSE Market Statistics(crores) Segments Capital market Equity futures and options Currency Futures
















IPC 42508.03




Smi 8107.10

Spain IBEX 9758.40


Performance of various indices as of end Nov 2013 (in %) 1 month

3 month

6 month

1 year

CNX Nifty





CNX 500










CNX Nifty Junior





CNX Midcap Index





MIB 18565.61


BOVESPA 51356.10

Argentina MERVAL 4296.81

CNX IT Index





CNX Bank Index





CNX 100





CNX Realty





CNX infrastructure





CNX Energy Index





CNX Fmcg Index










CNX Pharma Index



















CNX Service Sector


MONEY INDICES January 2014

US and Asian Market Indices Indices Dow Jones







Nasdaq Compsite




Shangai Composite




Hang seng Index




Nikkie 225




Straight Times Index




Kospi Compsite Index





RTS 1452.79

South Korea KOSPI 2001.59

Japan NIKKEI 15889.33


hong kong






BSE 21099.07

Saudi Arabia TADAWUL 8551.23

South africa

JSE 44574.25

New Zealand NZX 4722.64

australia ALL ORDINARIES 5291.95

Prices and Returns of Top 10 shares by Market Capitalisation Company Name


Price (23.12.2013)

Price (22.11.2013)


52 wk

52 wk



Market Cap (`cr)

FII and DII Statistics (in crores)























Nov 2013


Oct. 2013









July 2013






278.15 3349.3






Coal India





















Bharti Airtel








FII net purchase/sales 7079.40

DII net purchase/sales -482.60

-2168.60 *Data as on December 24, 2013

January 2014 MONEY INDICES



Antony Prince, the President of GTR Campbell Marine Consultants Ltd and Smart Engineering & Design Solutions Ltd, is better known as the man who keeps the legacy of legendary naval architect George T R Campbell alive. Despite owning assets worth millions of dollars, Prince is a man of poise, and his endearing charm only reflects his down to earth mannerisms. At the same time, he gets excited like a playful child every time he talks about two of his favourite subjects: sea and ships. He is credited with the creation of six prolific ship designs and the launch of about 140 ships between 1993 and 2013. He has contributed a lot to the global shipping industry with his masterful works in China, Japan, Korea, Singapore, Hong Kong, and Spain, among other countries, but always laments that he couldn’t replicate the same successes in India due to a host of reasons beyond his control. Though he was instrumental in bringing substantial shipbuilding orders to India (for instance, shipbuilding orders of six vessels costing more than `400 crore for Cochin Shipyard Limited), a majority of his attempts to take India’s cash-rich, labour-centric shipbuilding industry to the next level of growth proved to be non-starters because of discouragement at various levels of government owing to unreasonable logic. That still hasn’t dented his patriotic spirit in anyway. Even today, he continues to impress upon Indian authorities the need to support the immense growth potential of the domestic shipbuilding industry By Vishnu Rageev R


MONEY INDICES January 2014


The prince of

January 2014 MONEY INDICES


Photo: Jose Jacob

ship design



hile starting out in a chosen field of trade, everyone dreams of rubbing shoulders with the greatest professionals and being a part of the legends. Only a few manage to realise such lofty dreams, and despite the enormity of their achievements, they stay humble to the core. Here’s the story of a man who is known for upholding the legacy of one of the greatest naval architects as well as his individual contributions to the shipping industry. Any mention of renowned Scottish naval architect George T R Campbell brings up the name of Kerala-born ship architect Antony Prince. What’s the story behind it? Money Indices traces the legacy. Inspired by his father, Prince took a plunge into the world of shipping during the early 1970s. “When I graduated in 1968, there were 60,000 unemployed engineers in India,” says Prince, who did his schooling at Kottayam and Ernakulam and pursued higher studies at St Albert’s College, Ernakulam, and TKM Engineering College, Kollam. “I had a fascination for ship engineering. My father also influenced me in opting for this field. He had a collection of cars and motorbikes. Although he was a banker, he had the habit of dismantling and assembling his vehicles. As a child, I always had an eye for his activities. After graduation, I came to know that there are many opportunities for engineers at sea. As luck would have it, I was absorbed by Shipping Corporation of India (SCI). I still remember the seven-month training I underwent at Kolkata and my first-hand sailing experience. The sea fascinated me and I did very well.”

Antony Prince

There are two ranks – first class engineers and second class engineers – as far as a job at sea is concerned. In order to become a second class engineer, one should have certification from the Ministry of Transport after 18 months of sailing. After 19 months of sailing, Prince secured the certificate, having passed the respective examination. It was at this time that he cultivated an interest on the construction aspect of ships. He then requested SCI officials to post him anywhere in the world where they have a new ship under construction. “SCI had a number of ships under construction in many parts of the world and I was keen to work on any of those ships on any rank. Despite promises, they never got back on my request. The organisation was too big, and perhaps, they didn’t have the time to listen to any individual demands. I realised that it was not a place where I should continue to work, though I didn’t want to leave the country, as I was too patriotic. Yet, I eventually left SCI.”

Biggest breakthrough While hunting for jobs across the seven seas, Prince had a solo demand: “regardless of any rank, I want to work in a ship under construction”. After a short while, legendary ship design and consultancy firm GTR Campbell Marine Consultants (GTRC), led by late George Campbell (19101994), offered him a job in an under-construction ship in 1972. That turned out to be the biggest breakthrough in Prince’s life.

I had a fascination for ship engineering. My father also influenced me in opting for this field. He had a collection of cars and motorbikes. Although he was a banker, he had the habit of dismantling and assembling his vehicles. As a child, I always had an eye for his activities. After graduation, I came to know that there are many opportunities for engineers at sea. As luck would have it, I was absorbed by Shipping Corporation of India (SCI). I still remember the seven-month training I underwent at Kolkata and my first-hand sailing experience. The sea fascinated me and I did very well


“Campbell doesn’t require any intro. He is well-known across the world. I worked with Campbell for more than two decades. He was a tough task master. He quickly found that I shared his way of thinking. I became the Chief Engineer at 26, and in 1986, I became the President of GTRC Japan. In 1989, I was promoted as the President of GTRC International for the worldwide operation.” Prince stayed in Japan till 1990 before moving to Canada on Campbell’s advice. “Campbell wanted my children to grow up in Canada and not in Japan. Campbell said, ‘Your children may be studying at Japanese schools and thinking and behaving like the Japanese do, but one day, the Japanese will not accept your children as Japanese. That would be a big problem. Canada is an immigrant country. You must go and bring up your kids there.’ Campbell had sacrificed the whole company by moving me to Canada because I was at the peak of my performance in Japan not only as the President of GTR Campbell Japan, but also as the President of GTR Campbell International.” Life in Canada proved to be beneficial in every way, turning Prince into an all-rounder, as Campbell had farm operations, an agricultural equipment manufacturing unit, and a shipowning and management firm where he was the Vice-President. Prince also continued to be the President of a consulting and ship design firm during that time. “I had around five jobs at that point in time. I stayed in Canada between 1990 and 1999. Campbell passed away in 1994, and when my children’s education was finished, I moved to Bahamas where the whole company was incorporated.”

China is second home In 1994, a shipowner approached Prince for the review of a ship design made by the Japanese. Upon finding the design old-fashioned, he advised the ship owner to think of a ship of the future. Then, the shipowner asked him what he meant by “ship of the future”, and that’s when things started moving into a new direction. “Be prepared when an opportunity strikes. I utilised the opportunity presented by the ship owner with the best of my abilities and delivered them the right product. They accepted my proposal for the ship of the future. When they wanted me to present it to the shipyard owners, I revisited the Japanese shipyard where I had worked for years and presented my design. They were not convinced and thought that my design may not be successful. When the Japanese declined to build a ship based on my design, I went to China. A project which started off with two ships in China soon became a fleet of 12 ships.” Around that time, China had 28 shipyards, owned by the state authority. “The Chinese used to take four to five years to build one ship. When I managed to build and deliver 12 ships in three years, it shocked the entire industry. That accomplishment brought me instant recognition in China. The Chinese government then ordered the chairmen of the 28 shipyards to study my project and see how I and my team were able to deliver 12 ships in such a short time,” recalls Prince. “China’s aim was to become Asia’s number one shipping

January 2014 MONEY INDICES



India’s shipbuilding industry is very small, when compared with global standards. Indian-built ships constitute less than 0.5 per cent of the global fleet, and accounts for only 10 per cent of the Indianowned ships. Low productivity and long build periods have rendered Indian shipyards uncompetitive, in comparison to yards in China, Japan, and Korea, which build around 77 per cent of the world’s ships nation by 2020, which they championed in 2010, 10 years in advance,” says Prince. “Today, China is a paradise in the shipping business. When I first went to China, there were 28 shipyards. Today, there are over 28,000 shipyards across China. In fact, over the last three days, I have granted licences to three shipyards in China, enabling them to build ships on my design. Can you imagine this in a Communist setup? Decisions there are made faster than in a Capitalist country. For me, working in China is like working at home. With my reputation, I can walk into any shipyard. Their doors would be kept open for me.”

Campbell’s seatransporter under construction at CSL

India lacks shipping vision India’s shipbuilding industry is very small, when compared with global standards. Indian-built ships constitute less than 0.5 per cent of the global fleet, and accounts for only 10 per cent of the Indian-owned ships. Low productivity and long build periods have rendered Indian shipyards uncompetitive, in comparison to yards in China, Japan, and Korea, which build around 77 per cent of the world’s ships. Our ship-building practices are fairly outdated, whereas global industry standards have already graduated


MONEY INDICES January 2014

to a ‘womb-to-tomb’ concept called Concept, Assessment, Demonstration, Manufacture, In-Service, Disposal, or CADMID in short. “Why are countries like Japan and Korea advanced in terms of shipbuilding? Though their labour costs are very high, they support the shipping industry and promote shipbuilding. In shipbuilding, 40 per cent is labour content. Ship is a very expensive thing, so when you export it, you earn a large amount of foreign exchange. Seeing the business potential, I had made many attempts in India to replicate what other countries were doing. Every time I made an attempt, everybody discouraged me saying that ‘it won’t work in India’. It is needless to say that a lot of measures need to be taken to enable shipyards to increase capacity and enhance competitiveness. Productivity has to increase and production costs have to be reduced by a combination of improvements in infrastructure, technology, and practices. If that isn’t the case, it is clear that we will have to incur significant import expenditure in sourcing ships from overseas, much against our cherished national objectives of indigenisation and self-reliance,” adds Prince.

Fruitful association with CSL Although Prince’s maiden attempt to persuade Cochin Shipyard Ltd (CSL) to engage in a fast-tracked shipbuilding exercise in 1999 failed, he returned to CSL in 2003, when it was an ailing baby with zero business. He stunned the entire shipping fraternity by placing an order for building six ships. The only demand he put forth to the CSL management was that he wanted to get those ships delivered in three-and-a-half years. This was unheard of, as the minimum time spent to build a ship by CSL was five to six years. “I asked them why CSL couldn’t build and deliver ships on time when they had the best infrastructure in place, and the answer came suddenly: ‘We are a PSU’. One of the reasons for the delay in delivery was the time consumed for approvals from various stakeholders. Anyway, I came up with an order of six ships from a Denmark citizen, who owned 300 ships. It was a pre-approved design, which meant that they didn’t have to wait even for a single day to begin construction. I was building the same ship in China with all the approvals, so there was no question of delays. On January 2004, we signed the contract and brought in 36,000 tonnes of steel to CSL (6,000 tonnes for each ship). There were six main engines, 18 generators, and 24 cranes, among other material. The best team was employed to look after the progress. I promised to solve any engineering problem in eight hours and any commercial problem in 24 hours. Although I supplied the full material amounting to $10 million, I ended up spending $17 million, as the price of materials shot up in due course. My friends at CSL underestimated me and thought I was just an intermediary,” laments Prince. “In my relationship with clients, they never appear. I do everything for them. It is all about a level of trust that I


Prince looks on as his wife alice addresses colleagues during an inhouse Onam celebration

Prince’s wife, Alice, serves as Senior Vice-President and CFO of his shipping companies, while his son, Martin, 32, whose background is law and finance, is the VicePresident, based in Bahamas had developed over the years. My friends (at CSL) assumed that they can break deadlines and delivery dates. And they started sleeping on it. I asked them not to sit on schedules. They got upset and told me shipbuilding is our business. I said if it was your reputation, you wouldn’t have got these six orders. I told them that I will be held responsible for contractual delay in delivery. We had put a gun on their head to do it. Fortunately, the labour class was with us, and finally, the CSL management had to fall in line. The labour class had a delightful spirit. They realised this is the one and only chance in their life to prove that they are not parasites. They all wanted to build ships. They identified me as one of them. And for the first time in the history of CSL, a ship was launched on time. I remember few people coming to me and saying, ‘Sir, you outsmarted us. Nobody among us, including our CMDs, was able to do this. You managed to do it sitting outside the shipyard’,” says Prince, with a sense of pride. “We have a very educated workforce at CSL. But it is very impractical to think that a bureaucrat would do anything (for projects). Since it is a public sector, there is headache if they do it (ground work), so they think it is better not to do it. It is very difficult to motivate a CMD to take the risk. I never blame the workers. I still believe that CSL has the best resource. If they cannot produce ships, it is because of the environment they are in. It was because of them that I could deliver all the six ships in three years and two months’ schedule.” What is the current status of India as far as shipbuilding is concerned? “Sharpen your pencil in the best way you can

and draw a line as thin as possible. That is our position,” answers Prince. “There is zero commercial shipbuilding in India. The shipyards are surviving only because of the naval ships. We don’t have a vision for shipbuilding. Ship design is the foundation with which you build a ship. If you don’t have the foundation and borrow it every time, then what would be your future? Who is going to lead the country? You will always be followers.” Will privatisation of shipyards help India achieve industry growth? “My answer to this question is ‘yes as well as no’. It primarily will depend on the intention of an Indian entrepreneur. What is the intention of Indian entrepreneurs? What are entrepreneurs like Vijay Mallya, Rishi Agarwal, B Kumar, and Nikhil Gandhi doing? There ought to be some clarity from these entrepreneurs whether they are creating wealth for the country or for themselves? If CSL gets into the hands of a bad entrepreneur, he will sell the real estate. Or he will engineer in such a way that the shipyard would fail. We need patriotic people. We have to inculcate patriotism in our children. We are not responsible to ourselves, to society, and not even to our children. We have to encourage and promote people who believe in serving society well.”

Following Biblical values Prince employs about 150 people across the world to run his companies. Prince opened his office in Kochi in 2007. What started as a small two-man office has become a full-fledged ship design house with 150 staff. He charges royalty fees, design fees, and supervision fees, like a lawyer or doctor. “There is an internationally accepted fee level, so I can demand it and get what I want,” says Prince. “When the Chinese organised a function to honour me, they said, ‘We respect you as a ship designer, shipbuilder, management expert, and people’s person. But we respect you much more for showing us how to be honest and run a successful business’. Even in the Bible, God has not told us to be clever. I believe the biggest sin is obsession.” Prince’s wife, Alice, serves as Senior Vice-President and CFO of his shipping companies, while his son, Martin, 32, whose background is law and finance, is the Vice-President, based in Bahamas. Prince has a daughter, Rose Mary Prince, who is practising as a paediatrician in New York. Ask him about his Vision 2020, and Prince says that his (ship) designers are educated in the newest developments and often encouraged to innovate and come up with cutting edge designs that will help in identifying new products and new markets. “We take pride in employing many experienced hands in our organisation. My company is healthy and we aim to excel in what we do (ship designing and consulting). Our business is not related to money and turnover. It has more to do with socio-economic changes. Money is a consequence of an effort and it is not an end. I want to be known for the value I am giving to society rather than the money I amassed. I do not have a `5,000 crore company but have created a `50,000 crore industry in India.”

January 2014 MONEY INDICES



Karnataka showcases

wildlife terrain For years, Karnataka’s main theme for presentations at leading international trade fairs has been heritage, culture, and architecture MI COREsSPONDENT



he World Travel Market 2013 gave birth to a rather surprising theme at the exclusive Karnataka Pavilion – Wildlife, along with nature and adventure, expanding Karnataka’s already burgeoning

interest in our products and destinations. The emergence of quite a few new resort chains in the state has taken service and experiential standards to new levels of sophistication. Destinations like Hampi, Mysore, Pattadakal, and Kabini have also seen greater exposure in terms of recognition, recall, and association with the state. Tour operators are on the lookout for better options, more variety, and great experiences. Keeping this in mind, tour portfolio. operators, particularly the larger ones, have This coincided with the Conde Nast been more than willing to join hands with Travellers’ October Karnataka Tourism 2013 acclaim of Kabini to promote the as India’s next big destination. Operators Safari Destination. like Cox & Kings, The acclaim resulted Bales Worldwide, and Some of the leading tour in a lot of specific Black Tomato have operators have implied enquiries on the already indicated keen state’s wildlife terrain, interest to partner that wildlife could become the products available, with Karnataka in the backbone of Karnataka’s and also for Jungle this regard. This is Lodges & Resorts. an emerging trend future and will be an Arvind Jadhav, in destination ideal platform to expand IAS, Additional Chief marketing.” its product portfolio, Secretary-Tourism, “One of our other Govt of Karnataka, key focus areas of this especially amongst the led a delegation year was to push tieforeign travellers comprising resorts, ups with some of the hotels, and tour leading organisations operators at the in world tourism. World Travel Market. With the Pacific Asia Some of the leading Travel Association, tour operators from the United Kingdom, for example, we are trying to pitch in to host with whom meetings were fixed beforehand, one of the immediate PATA Travel Marts had come calling on the Karnataka Tourism and even offer many of our properties and delegation and discussed opportunities to destinations for smaller meets of the PATA. jointly promote new products and possibilities With the ITB, we are trying to look for training that attract travellers to Karnataka. and development that can be imparted to the TUI-UK, Black Tomato, Bales Worldwide, tourism trade in the state. This is not to say and Cox & Kings-UK were among the top that the trade in our state does not know how tour operators that met with the delegation. to conduct its business, but there are areas Jadhav remarked, “There is considerable where we feel a little bit of exposure to global

MONEY INDICES January 2014


trends and scenarios will go a long way in shaping the industry,” said Jadhav. Some of the leading tour operators have implied that wildlife could become the backbone of Karnataka’s future and will be an ideal platform to expand its product portfolio, especially amongst the foreign travellers.

Mysore and Coorg dominated the delegation Resorts like The Serai, Windflower, and Tamara; tour operators like Deccan Dreams, Spice Trip, and Blue Yonder; and Mysorebased Sandesh The Prince hotel were part of the delegation along with Jungle Lodges & Resorts and The Golden Chariot. These apart, Skyway International Travel, a Mysore-based tour operator, and Quorum Hotel, a Mysore-based hotel and hospitality

There were enquiries specifically because of the wildlife promotion theme that was presented on the Karnataka Tourism Pavilion

group, were other participants from Karnataka. The private sector participants were enthusiastic about the WTM experience this year with some of them clocking up to 26 tour operator meetings. “It’s a very good way to generate international business and all the more advantageous to be part of the state’s banner at trade fairs like these,” said Sanjay Sinha of The Serai Resorts. Sandeep Sinha of The Blue Yonder said, “International trade fairs work very well in terms of not just business, but brand visibility, brand establishment, and new contacts. Particularly when it comes to niche segments like Responsible Tourism. The theme of wildlife on the Karnataka Pavilion was fresh and resulted in an interesting avatar for the destination.”

January 2014 MONEY INDICES



the North to push the theme of wildlife to consumers. We found the answer in Kenneth Anderson and the idea found “Rather than saying Kenneth Anderson is the Jim Corbett of instant success. Immediately, a connect was established South India, I would like to put it differently – Jim Corbett is and this looks like a perfect product for the future. Almost the Kenneth Anderson of the North of India,” said Jadhav. every destination in a particular stretch, ranging from BR An exciting new find from Karnataka Tourism – the Hills to Malnad to Dandeli, has been explored by Kenneth Kenneth Anderson Trails - was conceptually launched at the Anderson and we had discussions with the Ecotourism just-concluded World Travel Market in London. Kenneth Board to create these trails. Three trails have been Anderson is an Indian-born, British game-hunter and writer identified, and we are in the process of getting the required who chronicled all his thrilling escapades in the jungles number of things to be set up in order to finalise the tour of South India. This, according to Jadhav, program. Interestingly enough, most of has all the potential to pull in people who the Kenneth Anderson locations have are interested in wildlife and nature trails. Jungle Lodges & Resorts (JLR) properties “Each year, we’ve been trying to identify a nearby. In looking for places to stay, the strong ambassador for the brand, someone tour operators found viable options in the on whom the brand would lean on and JLR properties. We are drawing up plans push the case forward. And it doesn’t get for JLR to use Kenneth Anderson more as a better than what we have just discovered,” brand ambassador for wildlife in the state he said. This partnership of sorts could and develop memorabilia, merchandise and mean a hitherto untapped potential for themed suites, and rooms. Also, there’s an tourism in the state. unending array of opportunities to take the There were enquiries specifically We’ve had concept forward with activities that appeal because of the wildlife promotion theme to the current generation, like games, many fruitful that was presented on the Karnataka treasure hunts, apps, etc. If Angry Birds can Tourism Pavilion. “People enquired about discussions with become such a craze, why wouldn’t a true the availability of strong, personalitywildlife enthusiast like Kenneth Anderson members of the led stories like those of Jim Corbett in be?” said Jadhav, confidently.

Kenneth Anderson Trails

travel trade community to look at ways to increase footfalls and also look into suggestions in product upgrades and modifications. There are demands from certain operators like Eurasia for inclusion of more states in the itinerary


MONEY INDICES January 2014


50% bookings for The Golden Chariot The Golden Chariot has grown into a popular product, and the manner in which enquiries keep coming in from various markets is an indication of its popularity. Being South India’s only luxury tourist train, it has easily gained recognition with the travel trade community across markets. After the first two years, a steady occupancy rate of 40% has been clocked. In between, there have been fully booked charters too, like the trip on November 25, 2013, chartered by a Japanese group. Tour operators from the UK, USA, Canada, Germany, and even South America approached The Golden Chariot and bookings for up to 50 per cent of the train’s capacity for the years 2014 and 2015 have been made. An increasing number of agents have shown interest to market the luxury train exclusively (as luxury train products) in respective markets. Enquiries to charter the train trips for special events (incentives, marriages, conferences) aboard The Golden Chariot were also received. Jadhav said that a certain amount of destination branding took place as a result of marketing The Golden Chariot. He said, “I’ve heard people say, ‘oh, this is the place where The Golden Chariot runs’. In today’s competitive world of travel, it pays a lot to get branded in a particular way, or known for a particular distinguishing product. The Golden Chariot has done just that.” “We’ve had many fruitful discussions with members of the travel trade community to look at ways to increase footfalls and also look into suggestions in product upgrades and modifications. There are demands from certain operators like Eurasia for inclusion of more states in the itinerary,” said Jadhav. Despite the adverse market conditions that see most Indian luxury trains hitting a slump of more than 30 per cent as compared to last year, The Golden Chariot certainly looks to emerge even stronger. Overall, Karnataka tourism seems to be headed for a very profitable venture with its partnerships and new recognitions. But only time will tell if the newly discovered potential of wildlife as a tourism selling point can reach its true potential in a state that has hitherto advertised itself mainly as a state of culture, heritage, and architecture.

Tour operators from the UK, USA, Canada, Germany, and even South America approached The Golden Chariot and bookings for up to 50 per cent of the train’s capacity for the years 2014 and 2015 have been made

January 2014 MONEY INDICES



n e G t x e N The

ft and Both Microso . d e iv r r a nd ly l g has fina One (XBone) a x min o a B g X f e o h n t e , s g e t nex onsol a decade, the U system and gen gaming c t Wii x d e e n h e c iv n t u c a e After nearly l p es iously nched their r tendo’s prev in N l a iv chine by Valve r a M in Sony have lau o m j a y e e t S h T w ). e the n n 4 (PS4 in the bunch, d the Playstatio r a c d il w d e ounc the newly-ann By Vishnu



Xbox One

box One is a video game console developed and manufactured by Microsoft. Announced on May 21, 2013, it is the successor to Xbox 360 and is the third console in the Xbox family. It directly competes with Sony’s PlayStation 4 and Nintendo’s Wii U as part of the eighth generation of


MONEY INDICES January 2014

video game consoles. Xbox One was released across North America, several European markets, Australia, and New Zealand on November 22, 2013, and is scheduled for release in Japan and the remaining European markets in 2014. Microsoft and various publications have classified the device as an “all-inone entertainment system”, making it a competitor to other home media devices such as the Apple TV and the Google TV platforms. Xbox One’s exterior casing consists

of a two-tone “liquid black” finish; with half finished in a matte grey, and the other in a glossier black. The design was intended to evoke a more entertainment-oriented and simplified look than previous iterations of the console; among other changes, the LED rings used by Xbox 360 are replaced by a glowing white Xbox logo used to communicate the system’s status to the user. Xbox One will support 4K resolution (3840×2160) (2160p) video

g n i gam


! e r e h e r a s e l o s con

output and 7.1 surround sound. The Xbox One will support HDMI 1.4 for both input and output, and does not support composite or component video. The console can monitor its internal temperature and adjust accordingly to prevent overheating; alongside increasing fan speed, additional measures can be taken, including forcing the hardware to run in a lower power state — a new feature that was not present on Xbox 360. Restricting power consumption lowers maximum performance, but the setting would be intended as a last resort to prevent permanent hardware damage.

Initial used games and Internet verification policies When first revealed, Microsoft unveiled a number of features and policies for Xbox One games that placed an emphasis on the console’s “always-connected” design and digital content delivery, which were claimed to bring a number of benefits to both developers and players. This basically meant that to play a game or access any app on the system, you need to have an internet connection, a ludicrous notion, though it is a given in this day and age that we have broadband technology at our fingertips. But to dedicate all of their internet cap (which in India tops up

at an average of 4 GB to 16 GB) to a single device didn’t sit well with consumers. Especially, the fact that this system would have also required the console to connect to the Internet on a periodic basis (at least once every 24 hours) in order to synchronise the library and download updates for games; failing to do so would prevent any games from being played until the console is connected to the Internet again. Industry and consumer reaction to these plans were largely negative. These DRM (Digital Rights Management) restrictions and the ‘Always On’ Kinect sensor raised issues of privacy among consumers.

January 2014 MONEY INDICES



In response to the growing criticism, Microsoft released a statement outlining how the policies as originally envisioned would be dropped in favour of a system that works in much the same way as the Xbox 360. The new policies include no Internet connection requirements (except for a one-time connection required for initial installation of a new game), no disc authentication, and no regional restrictions. As a result of the changes, the family sharing feature was dropped, as was the sharing feature for digital titles. Some analysts believed that the change was in direct response to Sony’s aggressive position during the Electronic Entertainment Expo (E3) conference. But the damage had already been done. As a result of these initial policies, public perception of the system was hit. But it may not affect the sales of the system as much because it is wellknown in the industry that Xbox One is a much-anticipated commodity among tech enthusiasts all over the world.

Sales On November 22, 2013, Microsoft confirmed that it had sold at least one million Xbox One consoles within its first 24 hours of availability. It has to be noted that Microsoft launched its Xbox One console in 13 countries to reach that figure, while its rival Sony’s Playstation 4 reached that figure with just two territories, namely North America and Canada.


MONEY INDICES January 2014

Technical specifications AMD “Jaguar” Accelerated Processing Unit (APU) with two quad-core modules totalling eight x86-64 cores clocked at 1.75 GHz, and 8 GB of DDR3RAM with a memory bandwidth of 68.3 GB/s. The memory subsystem also features an additional 32 MB of “embedded static” RAM, or ESRAM, with a memory bandwidth of 109 GB/s. The system includes a 500 GB nonreplaceable hard drive, and a Blu-ray Disc optical drive. It was reported that 3 GB of RAM will be reserved for the operating system and apps, leaving 5 GB for games. The graphics processing unit (GPU) is based on an AMD GCN architecture with 12 compute units, which have a total of 768 cores. For networking, Xbox One supports Gigabit Ethernet, 802.11n wireless, and Wi-Fi Direct.


Playstation 4 (PS4)


layStation 4 (PS4) is the next iteration of Sony Computer Entertainment’s Playstation system. Announced as the successor to PlayStation 3 during a press conference on February 20, 2013, it was launched on November 15, 2013, in North America, and November 29, 2013, in Europe and Australia. This time around, the console is trying to make a leap in performance and resolution, a mainstay in nextgen gaming and entertainment. Even aesthetically, the PS4 seems sleeker and svelte than the generic box from Microsoft. Moving away from the complicated Cell architecture of its predecessor, PlayStation 4 features a more elementary AMD processor, in hopes of attracting a broader range of developers and support for the system. Sony intends more focus on social gameplay, incorporating a “share” button on the new controller and enabling a view of in-game play streamed live from friends. The console enables interactivity with other services and devices through the following methods: Gaikai, a cloud-based gaming service that offers streaming video game content; PlayStation App, designed to enhance gameplay by using smartphones and tablets as a second screen; and PlayStation Vita’s design for playing a majority of PlayStation 4 games through wireless Remote Play. The console features a hardware on-the-fly decompression module boosting optical disc reading speed and buffer unread data when a game is not actively accessing the optical drive, forming part of Sony’s PlayGo strategy. The console is equipped with a 500 Gigabyte hard drive for additional storage, which makes it a good fit for the large games. This hard drive can further be upgraded by the user. It also includes secondary custom chips that handle tasks associated with downloading, uploading, and social

gameplay. These tasks can be handled seamlessly in the background during gameplay or while the system is in sleep mode.

Sales As of August 2013, SCEE has been quoted as saying that over one million preorders have been placed for PlayStation 4. On November 17, 2013, Sony announced that one million PlayStation 4 consoles have been sold within 24 hours in North America. In India, one can preorder PS4s at stores like Landmark at just `1499. (Note: `1499 is the pre-order price, the rest of the consoles’ markup is yet to be specified).

Software and services PlayStation 4 runs an operating system called “Orbis OS”; prototypes ran on the FreeBSD operating system. The final version runs on the FreeBSD kernel. Although the console does not require an Internet connection to function, it would provide “richer” functionality when it is connected to the Internet. PlayStation Network (PSN) allows users to access a variety of online services, including PlayStation Store, and the Music Unlimited and Video Unlimited subscription services. Customers can browse titles and stream games via Gaikai (Playstation’s cloud computing system which may enable backwards compatibility among nextgen and previous gen Playstation consoles. This feature itself could turn a

Technical specifications The processor has been developed by AMD in cooperation with Sony. It combines a central processing unit (CPU) and graphics processing unit (GPU). The CPU consists of two quad-core Jaguar modules totalling 8 x8664 cores and 8 GB of GDDR5 memory. Read-only optical drive is capable of reading Blu-ray Discs at speeds of up to three times than that of the PS3s. profit for Sony. Access to a game’s online multiplayer usually requires a subscription to PlayStation Plus, a new policy introduced with the PlayStation 4, though this is dependent on the game publisher. It is to be noted that both Xbox One and PS4 seem to be championing the cause of cloud computing with their online services. Though it only remains to be seen how these changes are accepted by the public who more often than not still prefer analog over digital.

January 2014 MONEY INDICES



Wii U


ii U is a video game console from Nintendo and the successor to Wii. The system was released on November 18, 2012, in North America; on November 30, 2012, in the PAL regions; and on December 8, 2012, in Japan. It is the first entry in the eighth generation of video game home consoles. It is a successor to the hugely popular Wii system that revolutionised game controllers with its unique Wii mote, a game controller which may have heralded a new generation of motion gaming and not just the couch potato gaming of yore. Wii U is believed to be an improvement on Wii. Though that may be true technically, it fell flat when it came to connecting to gamers. Nintendo tapped “Lightning in a bottle” with the Wii, but was unable to do so a second time. The console was first conceived in 2008, after Nintendo recognised several limitations and challenges with Wii, such as the general public perception that the system catered primarily for a “casual” audience. With Wii U, Nintendo explicitly wishes to bring “core” gamers back. Game designer Shigeru Miyamoto admitted that the lack of HD and limited network infrastructure for Wii also contributed to the system being regarded in a separate class to its competitors’ systems, Xbox 360 and PlayStation 3. It was decided that a new console would have to be made to accommodate significant structural changes. Miyamoto and his team wanted to include a small screen to provide game feedback and status


MONEY INDICES January 2014

messages to players (in similar vein to the VMU for Sega’s Dreamcast). Much later in development, this was expanded to a full screen that could display the game being played in its entirety, a concept which was suggested but not financially viable earlier in the project. Wii U was originally released in two bundles: the Basic Set and the Premium/Deluxe(US) Set. The Basic bundle contains a white Wii U with 8 GB of on-storage, a white Wii U GamePad and stylus, and an HDMI cable, while the Premium/ Deluxe bundle contains a black Wii U with 32 GB of on-storage, a black GamePad and stylus, an HDMI cable, and adds a Nintendo Network Premium subscription, the Nintendo Land game (except Japan), as well as stands for the console and controller and a sensor bar (except Japan). On November 18, 2012, Wii U launched in North America, priced at $299.99 for the Basic Set and $349.99 for the Deluxe Set. The system was scheduled to launch on November 25, 2012 in Mexico. However, it was delayed to November 29. On November 30, the system launched in Europe, Australia, and South Africa, with European pricing set by individual retailers. On December 8, 2012, the system launched in Japan, priced at ¥26,250 for the Basic Set and ¥31,500 for the Premium Set. As of September 30, 2013, Nintendo shipped 3.91 million units worldwide. During its first week of release in the United States, Nintendo sold its

entire allotment of over 400,000 Wii U units and sold a total of 425,000 units for the month of November, according to the NPD Group. It also sold over 40,000 consoles in the UK in its first weekend. In Japan, over 600,000 Wii U units were sold during December 2012. According to the NPD Group, nearly 890,000 Nintendo Wii U units were sold in the United States after 41 days on the market. At first glance, these sales numbers look solid. But in the end, Wii U ended up disappointing. Still, with the launch of its rivals, the Xbox One and PS4, Nintendo intends to breathe a new life into its long suffering console.

Technical specifications Custom multi-chip module (MCM) has been developed by AMD, IBM, and Renesas in cooperation with Nintendo. The IBM CPUPowerPC 750-based tricore processor “Espresso” clocked at 1.24 GHz. It has AMD GPU-AMD Radeon High Definition processor with a 34 MB eDRAM cache built onto the die clocked at 550 MHz. It has 2 GB of DDR3 system memory consisting of four 512 MB (4 Gb) DDR3-1600 DRAM chips with a maximum bandwidth of 12.8 GB/s, in which 1 GB is reserved for the operating system and unavailable to games. This is 20 times the amount found in the original Wii.



Steam Machine

alve seems to be on a roll. First, we had Steam, the elegant digital store for games. Made more tempting to gamers with its delightful seasonal sales where consumers could purchase their favourite games at ridiculously low markups. But now, it seems that they have gone a step further and introduced their very own game console into the fray, the Steam Machine.

the-shelf parts as desired. The units are expected to arrive in 2014, with Valve expecting to announce its partners for this first line at the 2014 Consumer Electronics Show (CES) in early January. A core part of the machine configurations was the method of providing ventilation and cooling of the CPU, GPU, and power supply; Valve engineered custom compartments within these beta units so that each of these three units has separate circulation and ventilation routes. Valve is also working with AMD to develop and certify hardware for future Steam Machines.

SteamOS Steam Machines are a line of video game consoles that will be manufactured and distributed in 2014 by a number of vendors using a range of different design specifications outlined by Valve Corporation. Steam Machines will run SteamOS, an open source Linux-based operating system developed for games and other entertainment iBuyPower has announced a prototype model which is that is capable of running hundreds of games currently powered by an AMD CPU with a discrete R9-270 GPU and a in the Steam catalog, as well as upcoming titles from 500GB hard drive with a price of $499. other developers. The devices can be freely modified and Games will be developed to run natively on Linux upgraded by users, similar to PCs. SteamOS will also be and SteamOS. Linux compatibility is already a feature available for anybody to install on their own personal offered through the Steamworks application programming computer at no cost. interface. Valve will not make games that are exclusive to The line of pre-built Steam Machines will have a range SteamOS or Steam Machines, and has cautioned third-party of different hardware optimised for power, size, price, and developers against making games exclusive to the platform. other factors. Valve is also developing a touchpad-based Players will also be able to stream games from regular haptic Steam Controller intended to provide players with PCs running Steam to Steam Machines, allowing access a level of accuracy similar to the mouse-and-keyboard to games that are native to Windows or OS X. Through setup used by many PC games, as well as to provide the SteamPlay, users can play games available on SteamOS functionality of a typical console controller. that they already own on Windows Unlike other gaming consoles, or MacOS X and will not need to the Steam Machine does not have a Technical specifications repurchase the SteamOS title. specific configuration of hardware, CPU: Intel Core i7-4770, i5-4570, and i3 These are the eighth generation but a minimum specification of computer hardware components Graphics card: Nvidia GeForce GTX Titan, of videogame consoles. And none of these consoles yet have system that would be needed to support GTX 780, GTX 760, and GTX 660 selling launch titles, so it’s still the SteamOS operating system and Graphics card RAM: 3 GB GDDR5 early in the console life cycle to games developed for it. Main RAM: 16 GB DDR3-1600 judge which of them will come out Valve plans to have several Hard drive: 1 TB storage/8 GB SSD cache ahead, but it is certainly good news different retail versions of the for gamers. It also has to be noted Steam Machine through various hybrid drive that these consoles give as much hardware manufacturers, but will Power: 450 W power supply importance to social media and also allow users to create their Measurement: 12” × 12.4” × 2.9” high sharing as they do to gaming and own units from components and (30.5 cm × 31.5 cm × 7.4 cm) entertainment. or modify retail products with off-

January 2014 MONEY INDICES




Executive Director of Raheja Developers Limited

It doesn’t matter how much wealth an entrepreneur makes. There are things of value that should be created, but are not particularly profitable. However, it is fortunate for the entrepreneur that things of value can usually be monetised in some shape or form. After all, money exists to be exchanged for things of value. Minting money isn’t the goal. It is the byproduct. It turns out to be a great byproduct because it can be reinvested to create more things of value. And I do believe if you make your customers earn money out of the money they have invested with you, be rest assured that you will remain an entrepreneur for all your life. It’s a give and take deal completely. Be honest to yourself and only then can you be truly honest with your clients. Why I say this? Because you’d rather be an under-achiever but over-deliver than the other way round – over-achieve but underdeliver. This goes for how you consult with your clients too: if you can’t go as low as their budget, then don’t; if you think your pricing is too much for the service you’ll provide, then re-evaluate; and lastly, don’t be a ‘yes-man’ as you may put yourself in situations which can be very embarrassing to get out of. Be prepared to say ‘no’. Top tip: Don’t choose to do a job simply based on the money being offered. Before doing something drastic, look whether you could have gotten that for a bit cheaper (or possibly free) by some alternate creative means.


MONEY INDICES January 2014

aGE 30 THE FUEL Optimism is the fuel of business ownership. It’s almost impossible to run a business, if you don’t truly, honestly believe that what you do matters, and that it’s going to work brilliantly (forever)

THE METHOD Great businesses balance the sustainability of a solid balance sheet with the resilience of an awesome culture

THE THINKING How you think about money and personal finance will reflect on how you deal with money and the ways you accumulate money

Money Indices January 2014  
Money Indices January 2014