Arbitrage Magazine - December 2021 - Finance & Investment Club | IIM Rohtak

1 | Page

Presents

Our best read – Cryptocurrency

Special Mention – FARM LAWS: A LOST OPPORTUNITY OR A GOOD RIDDANCE?

2 | Page

INDEX

S. No. 1 2 3 4 5 6 7 8

Article Cryptocurrency FARM LAWS: A LOST OPPORTUNITY OR A GOOD RIDDANCE? Impact Investing: Zeitgeist of the Modern World Forecasting Bond Yields in the Era of Omicron Sports Analytics The Great Resignation and its financial implications Sustainability of the rising trend of the Gig economy EXPONENTIAL INCREASE IN MARKETING SPEND, JUSTIFIED?

Page No. 3 7 13 17 21 29 31 34

3 | Page

Cryptocurrency By: Ankita Agrawal (Jamnalal Bajaj Institute of Management Studies)

What is Cryptocurrency?

Cryptocurrency came into existence in the aftermath of the 2008 crisis when an unknown person or group of people or organizations under the pseudo name of Satoshi Nakamoto published a paper on this topic. Cryptocurrency, built on a technology named Blockchain, is a digital currency not having legal backing by any government authority. It makes use of a computational algorithm, a private key, and a public key. The transactions are stored on a distributed public ledger which can only be accessed by the users making the transfer and does not reveal details of the transactions to any person on the platform.

Which are the major cryptos?

4 | Page

The major cryptos being traded around the world are Bitcoin, Ethereum, Ripple, Binance Coin & Dogecoin to name a few. Out of the total cryptocurrencies in circulation, almost 80% are bitcoins.

As of November 2021, there are 18.8 million bitcoins in circulation with a market capitalization of $1.2 trillion. As per another report by Reuters, the Indian cryptocurrency market has around 20 million crypto investors, with a total investment value of INR 400 billion.

What are the Opportunities & Advantages of cryptocurrencies?

The major advantage in dealing with cryptocurrency is the lower transaction costs as compared to normal banking & trading transactions. In addition to this, since the cryptocurrency mechanism uses blockchain technology, it comes with higher efficiencies as compared to the traditional models. Cryptocurrency also secures the whole transaction & protects the privacy of the users, who get diversification benefits when investing in crypto securities & assets. Apart from this, the users also get the benefit of direct transfer without the involvement of 3rd party or bank regulators, so there is no risk of the bank failure & the domino effect resulting from the same. The majority of the crypto transactions can be completed within seconds, saving on the time & energy of the transactors. For Bitcoin, the transactions are concluded manually and it takes 10 minutes on average as compared to Ethereum where the transactions are automated and take 20 seconds. The users also feel a sense of financial inclusion while investing in Cryptos.

What are the Challenges & Disadvantages while dealing with Cryptos?

The major challenge that the cryptocurrency market is facing is that it is not regulated at present, making it difficult for users to trust the same. Owing to the same, it is a well-known fact that this market is used for illegal & immoral transactions such as trading weapons, evading taxes & hiding black money. Even though it has greater security, the security & privacy attack possibility cannot be totally ruled out. In addition to this, crypto markets are infamous for the volatility of their securities & many people have made extreme losses or extreme profits depending on their volatile nature. Although the cryptocurrency transactions do not leave any trail, The Federal Bureau of Investigation (FBI) has the authority & resources to go after the digital trail of these transactions.

Also, a particular cryptocurrency i.e, Bitcoin has concentrated ownership. Almost 45% of the total bitcoins in circulation are held by only a handful of 11,000 investors as per an MIT study on this issue. Cryptocurrencies also come with additional & significant data mining costs.

How is Cryptocurrency viewed in the Indian Scenario?

The Indian government’s stand on cryptos has changed significantly in the past few years. In April 2018, the RBI issued a circular preventing the banks from dealing in digital currencies and providing any services related to them. This was followed by a writ petition in the Supreme court by several exchanges. In March 2020, the Supreme Court quashed the ban on cryptos citing the absence of laws regulating cryptos. This came as a breath of fresh air for crypto traders with the price of Bitcoin jumping leaps and bounds from April 2020 to February 2021.A crypto-research firm named Chainalysis reported that the Indian Crypto market grew by a whopping 641% from July,2020 to July,2021. In the month of December 2021 itself, the Bitcoin investors made a profit of around $862 billion!

5 | Page

Recent happenings: In the current scenario, there is a lot of speculation on the regulatory framework for crypto in the country. The proposed bill titled “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” states that it “seeks to prohibit all private cryptocurrencies in India except for certain exceptions to promote the underlying technology”. It also hints at the issuance of an official digital currency by the banking regulatory watchdog which could be named ‘Laxmi’ after the Indian Goddess of wealth. While there is no consensus on what constitutes private crypto, any cryptocurrency managed by a specific set of people outside the purview of central authority can be referred to as private.

One thing that is coming into talk nowadays when discussing cryptocurrencies is the appointment of a grievance officer that will be a single point of contact for the Government with respect to the matters relating to cryptocurrency. Already, a precedent has been set for this by Meta (previously known as Facebook) by appointing Ms. Spoorthi Priya as their grievance officer & by WhatsApp by appointing Mr. Paresh B Lal in the same position.

At the time when India is poised for Fourth Industrial Revolution, a right policy needs to be formulated which recognizes the impact of crypto on the markets and at the same time does not hamper the growth of new technology in the Indian economy. Regulation could protect from volatility and scams, at the same time create a plethora of job opportunities for blockchain developers, project managers, analysts, etc.

6 | Page

Conclusion Though cryptocurrency has gained a lot of investor traction, it is still a relatively novel instrument and thus it is subject to a higher degree of volatility in its value. The industry is only in its infancy and constantly evolving. That’s a big part of why every new Bitcoin high can be easily followed by big drops. For instance, in the month of December 2021, there is a drop of $260 billion in the total market value of total cryptocurrencies as per a report by tracker Coin Gecko. So, it is for the investor to decide whether to take a risk & bet on cryptos or to invest in other relatively safer assets.

7 | Page

FARM LAWS: A LOST OPPORTUNITY OR A GOOD RIDDANCE? By: Aishwarya Saxena (Lucknow University) Parliament passed the Farm Laws on September 27, 2021. They created a stir across the nation and led to a massive upsurge of farmers. On April 5, 2021, the Supreme Court suspended the laws temporarily. Recently, the laws were repealed.

What were the three farm laws?

1) Farmer's Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: This act sought to promote barrier-free trade and commerce of agricultural produce outside the premises of markets specified under State Agricultural Produce Marketing legislations. The farmers and traders could enjoy the freedom to purchase and sell agricultural produce. In addition,    

The farmers would not be charged any levy for the sale of their products and would not have to bear transport costs.

The bill proposes introducing an electronic trading and transaction platform to foster smooth trade electronically.

Besides mandis, farmers would have the freedom to do trading at farm gate, cold storage, warehouse, processing units.

By engaging in direct marketing, farmers could eliminate the intervention of intermediaries, thereby securing the total price.

Apprehensions: Upon enforcing this law, the farmers feared that Agricultural Produce Market Committees (APMC) could turn redundant, which would imply that the government would no longer procure excess supply at the minimum support prices (MSP).

Clarification Procurement at Minimum Support Price will continue  Mandis will not stop functioning, and trading will continue as before. Farmers would now have the option to sell their produce at places other than mandis.  The e-nam trading system (an online platform for the trade of agricultural produce) will continue in mandis.

2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 This act sought to empower farmers to engage with the wholesalers, large retailers, and exporters at a level playing field through a contract farming agreement between the buyer and seller of agricultural produce before the inception of any farming activities. Contract Farming would secure price assurance for farmers.   

The market risk would get transferred from the farmer to the sponsor.

It would foster the farmers to access better technology and inputs like seeds.

It would help increase the farmer's income besides reducing the marketing costs.

8 | Page



It sought to establish an effective dispute resolution mechanism between the farmer and the trader.  It encouraged to research and applying new technology in the agricultural sector.

Apprehensions: Though the bill sought to protect the farmers against price exploitation, it failed to specify any price fixation mechanism. This loophole could have allowed private corporate houses to exploit the farmers. Also, formal contractual obligations seemed unreasonable in a sector as unorganized as agriculture. Farmers also lacked resources to wage a legal battle against private entities in case of exploitation.

Clarifications:  After signing the contract, the purchasers of the product would directly pick up the product from the farm. Farmers would not have to look for traders.  A local dispute redressal mechanism would help solve disagreements. The farmers would not have to pay visits to the court again and again.

3) The Essential Commodities (Amendment) Act 2020: Deemed to be the most businessfriendly act out of all the three, it allowed the government to regulate the supply of agricultural food products only under exceptional circumstances like war, famine, natural calamity, and extraordinary price rise. It provided to remove cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. Features:  It provided to liberalize the stocking of agricultural produce.  It sought to address the fears of the private investors regarding excessive intervention in their business operations for "regulation."  It sought to attract foreign direct and private investments to the agricultural sector by imparting the freedom to hold, move, distribute and supply. As a result, investment in the

9 | Page

modernization

of

the

food

supply

chain

and

cold

storage

would

surge.

WHY WERE THE FARMERS PROTESTING? 







The protesting farmers primarily belonged to Punjab, Haryana, and Western Uttar Pradesh, the first states to witness the Green Revolution in India. To encourage the farmers to adopt HYV seeds, they had been offered procurement of excess supply at MSP as an incentive. The already well-established system has only evolved ever since. Farmers were afraid that accepting these reforms would eventually lead to the government abandoning the procurement policy at MSP. MSP incentivizes the farmers to produce wheat and rice in excess, often at the cost of other crops. If the government reduced its procurement, and with the establishment of private markets, the prices of rice and wheat would fall drastically, hurting the interest of the big farmers and the marginalized farmers.

Arhatiyas or commission agents facilitate the transaction between farmers and the buyers by providing a platform for farmers to unload, clean, auction, weigh and bag their agricultural produce before moving out. For this, they earn a 2.5% commission. They also finance the farmers. If the trading were to move towards markets other than mandis, they could get drastically hit.

Contract farming is not a new trend in the agricultural world. Delayed payments, highly onesided contracts, and outright cheating have often marred it. Moreover, the new laws did not prescribe any price fixation mechanism, which made the farmers prone to exploitation at the hands of corporate houses. Farmers feared that the private sector would take over the agricultural sector just like it has taken over numerous other industries.

10 | Page



The recent rise in the agricultural cost of production owes itself to the increase in input costs such as machinery, seeds, and human labor fuel. The farmers attributed it to the increasing corporization of the agricultural input sector, further intensifying farmers' resentment towards the private sector.

11 | Page

HOW COULD THE FARM LAWS CHANGE THE LANDSCAPE OF THE AGRICULTURAL SECTOR? Crucial problems like low yields and inefficient smallholdings have plagued the agricultural sector.

Experts believe that the new farm laws can change the face of the Indian agricultural industry.

With the inclusion of contract farming in the formal system, it could be easier to sell the crops, which would help stabilize the farmer's income. Improvement in production would prompt an increase in export and the resultant increase in agricultural revenue.

Agriculture is essentially an investment-starved sector that has resulted in inadequate infrastructure and technology. The farm laws aim to attract private and foreign direct investments to the agricultural industry. A surge in investments would facilitate the sector's modernization, improvement in infrastructure, technology, and farming techniques. More warehouses would be established, thus storing perishable agricultural produce to foster yearlong supply, stabilizing market prices, and reducing post-harvest losses, which amounted to Rs. 44000 crore in 2009 at wholesale prices. Also existed a strong possibility that the firms would provide inputs to farmers as a part of the contract, thus reducing the cost of production for the farmers.

Ending APMC's monopoly to sell outside mandis would provide greater market access and an array of new opportunities to farmers so that they could seek commercial outcomes and profitable avenues than to sell their produce. Farmers presently sell their produce to the registered licensees of the state government. The poor infrastructure of APMC, inefficiencies of the system, and the exorbitant taxes levied by APMC would cause the farmers heavy losses. The new system sought to do away with intermediaries for farmers to decide the price they would like to sell. They would also secure the payment within three days. In addition, there would have been no need for a license to purchase agricultural commodities, and those with necessary documents like PAN cards could join the trading. The digital transformation could expand the sector by $30 -$35 billion by 2025.

Quashing the stockpiling restrictions would drive supply chain efficiencies through stock access and fostering price stability.

These reforms could help lift the farmers out of poverty and help transform the Indian agricultural sector into a "food export powerhouse."

12 | Page

CONCLUSION It is a common opinion that the bill witnessed a hasty implementation, and the leading cause of its repealing is the lack of consensus and debate before its enforcement. Critics accused the government of violating democratic rights. The opposition makes it almost impossible to get bills passed in the parliament as the interest extends more than the welfare of the people to political friction. It is about time we put the nation's development before the vested interests. Moreover, on April 5, 2021, the Supreme Court suspended the laws. Had debate been the solution, this temporary suspension provided enough time for discussion, but no efforts were taken from either side to resolve the deadlock.

At the same time, we currently lack the resources to bridge the gap between what we are and what we seek to be. Doing away with go-betweens is beneficial for well-informed farmers and infrastructure, which was not the case here. The government should have taken active steps to address the fears and apprehensions of the farmers to counter their insecurities and provide the much-needed impetus for the vision of transformation. The government to assure the farmers should have statutorily backed MSP. The lack of inclusion of stakeholders in decision-making had sown the seed of mistrust. Open discussion between the farmers and the government is the only viable option to solve this deadlock.

India's agriculture lacks adequate infrastructure despite the government's support. Private investment is the only feasible solution to bring about the necessary technological advancements.

Repealing the law sends negative signals to the corporate world.

With proper implementation and support, the much-needed reforms possessed the potential to change the face of Indian agriculture and bring about the much necessary infrastructural changes.

However, resistance to change and apprehensions seems to have seized the opportunity to improve forever.

13 | Page

Impact Investing: Zeitgeist of the Modern World By: Muskan Bajpai (National Institute of Bank Management, Pune) Background: As we are moving ahead in the field of technology, finance, and science, the consciousness of the people seems to have been germinating faster. Investing based on the ESG (Environmental, Social and Governance) metrics, in the field of finance is a branch of the bigger tree called Impact Investing. The Impact fund adds to the social benefit fund as well as the financial goals of a company. The intention behind making these investments is to generate positive, measurable, environmental and social impact along with the financial returns.

Current Scenario: The post pandemic world is actively demanding solutions to problems that were rising eventually and have now come at our feet. Social innovators who can bring in disruptive innovations and who believe in the long-term vision of impact funding are direly needed. Due to the pandemic, our health and economic machinery were questioned and the pandemic also impacted the disadvantaged population even more severely. But the world became aware. The care towards the question of ‘What is my money going to do?’ increased. The answer was sitting right here all the time - Impact Investing. It would be naïve and irrational to believe that only the government & the philanthropic community will bring the change. It is a collective effort and even the private investors and venture capitalists, family groups etc. shall take a pledge to address the ESG problems around us and invest in what brings a change and increases the sustainable standard of living.

India: Still in Nascency Currently, many insurance companies, venture capitalists, pension funds, traditional banks, foundations, and family offices are stepping in this impact investing pond. Globally, a gradual increase can be observed in the number of family offices and High Net Worth (HNI) individuals in the investor segment. The reason why family offices and individuals are growing so rapidly in this field is due to the less stringent regulations bounding them. But when it comes to India, an emerging hub for startups, there is a lot of potential for the HNIs to jump in on the wagon early and encourage long term intergenerational impact. Very few domestic investors are aware of this amalgamation of social benefit with financial return which is why we see almost 80-85% of impact investing in India from overseas. India is on a path to getting over 6 lakh HNIs by 2025, but till now only a few notable HNIs like Kris Gopalakrishnan, Ravi Venkatesan, Anil Rai Gupta, Ronnie Screwvala, Vikram Gandhi etc., are actively investing domestically. Impact investing in India is being spearheaded by firms such as Omidyar Network, Elevar Equity, Unitus Ventures Aavishkaar Group, Acumen and etc. Despite the culture of impact investing being new, the movement is gradually gaining momentum. The aggregate assets in impact investments between 2010 and 2016 in India were US$5.2 billion, of which US$1.1 billion was invested in 2016 alone.

14 | Page

Even though, the overall impact investments in 2020 fell by 25 percent as opposed to 2019, the sector saw a 16 percent increase in seed stage investment funding [2]. Investors were inclined to back early-stage tech enterprises in the livelihoods, agriculture and healthcare sectors. The year-on-year decrement was actually led by the fall in late-stage investments in healthcare and financial access enterprises.

Investments in agriculture almost remained the same during the year,while education saw a record level of growth in investments. Healthcare sector could manage to obtain only in seed-stage investments and technology for development displayed huge promise in the SME space.

Returns vs Goodwill: “Is the returns vs goodwill tradeoff effective? Is it really the case?”

As the societal demand for ethical governance and climate responsible behavior by the corporates is rapidly on the rise, impact investing seems to have abundant opportunities, both in the developed and the developing world. The cynical notion of 'goodwill comes at the price of returns' is being busted by many new-age impact investing firms.

As per Abhilash Mudaliar, GIIN Research Director, impact investments can achieve the market rates, by making proper allocation and choosing the right fund manager and he also believes that

15 | Page

increased transparency of the data can enhance the performance both ways. As per the GIIN report on the ‘Evidence on the financial performance of Impact Investments’ which reviewed a dozen studies, evaluated investments in three asset classes – private equity, private debt and real estate assets. They all showed that if the goal is to achieve the market rate of return then it is very much possible depending on the selection of the fund manager and the type of asset class as some classes can be riskier than other. Most of the times the median performance is also at par with the market performance.

There can be situations where the investment is not made to seek market rates but targets an impact specifically. Impact investing has been profitable when the intention was to generate profits while doing something for the society. One such example is ‘Setu’ which is a three-year-old startup wanting to bring about a change in the financial landscape. The Indian Government has been responsible for significant developments in the domestic digital payments structure, and this is what Setu is targeting. Last year, it raised $15 Million through various international and national impact investors for bringing in ‘Sachet sized’ financial products to India. It has brought in India’s first Whatsapp bill collecting service and also provided easy linkages to FastTag, BillPayments and FD Booking etc. for the customers who found the preexisting technologies complicated.

Turns out that a right balance between the impact objective, impact measurement & management practice and financial returns is what needs to be established to get the best out of the Return vs Goodwill question.

The Gen-Z Revolution: Gen-Z, also known as the generation Z i.e. humans born between the early 1990s and early 2010s have been at the forefront of a global political revolution. The emergence of famous child activists such as Greta Thunberg has been a testimony to the 'Zoomer' generations resolve to hold the previous generations accountable for their misdeeds.

Climate change resulting due to globally unrestricted carbon emissions, promotion, and encouragement for the use of fossil fuels coupled with crony capitalism to save the 'planet harming industries' are some of the issues taken by this generation fiercely. Movements like the Extinction Rebellion which is an international non-partisan movement for championing the motto of climate accountability are gradually shaping up the priorities of the future.

On the social and governmental fronts, Gen-Z is asking for more accountability, especially after the Global Financial Crisis. The distrust in the traditional systems has given birth to the revolutionary idea of decentralized finance and the subsequent narrative against the notorious shareholder worshipping principle of modern-day corporates.

The Way Forward: Impact Investing brings in a completely radical but rational approach to investing. As humanity moves ahead in the 21 Century, it can be fairly predicted that ecological and social issues will be the most critical ones. In order to solve these issues, the new age firms as well as the legacy firms will have to adopt to practices that are innovative and sustainable. This shift in the way business is done, will eventually lead to creation of a sustainable investment mindset; And hopefully, the upcoming generations will carry on this mindset in the time to come! st

16 | Page

References: 1. Impact investments in India - Observer Research Foundation https://www.orfonline.org/expert-speak/impact-investments-in-india-66617/ 2. India impact investments trends in 2020 - https://idronline.org/what-were-the-impactinvestment-trends-in-india-in-2020/ 3. GIIN report https://thegiin.org/assets/2017_GIIN_FinancialPerformanceImpactInvestments_Web.pdf 4. Setu raises $15Million - https://techcrunch.com/2020/04/15/setu-raises-15m-to-helpdevelopers-connect-with-banks-to-offer-indians-sachet-sized-financial-products/ 5. IIIC Publications - https://iiic.in/research-publications/

17 | Page

Forecasting Bond Yields in the Era of Omicron By: Jaideep Katiyar (Shri Ram College of Commerce) Financial markets (“markets”) were only recovering from the 1 and 2 waves of the Covid-19 pandemic that the 3 wave put by the delta variant is upon us. Undoubtedly, this was anticipated and shadow measures were already set in force by the controllers. At the surface level, the economy looks to be faring pretty well owing to the success of different IPOs, but it is only the tip of the iceberg. Dig deep and one can see the harm caused by the outbreak that it looks nearly impossible for the Republic’s markets to reach pre-pandemic levels. One thing is clear from the lessons learned so far, that it is going to be a bumpy ride in 2022. st

nd

rd

Only about 3% of the total eligible population actively participate in the markets. Approximately half of these market players trade in fixed-income securities to minimize or diversify the risk.

Bonds generate a fixed stream of cashflows, thereby helping investors during uncertain times.

History is full of events where bond yields predicted cycles of recession. It is then imperative that we devote our time to the debt-market returns. Yield is the percentage rate of return on the amount invested. Bond yields depend primarily on the market rate of return (“interest rates”) and the time to maturity. However, bond values are determined by coupon rate and redemption repayment in addition to the factors mentioned previously. Keeping our focus on bond yields, academia dictates that interest rates affect bond yields directly. Higher the interest rates, higher will be the bond yields, and vice-versa.

Data showcases that India’s bond market has started recovering from the pandemic. At the onset of the pandemic, yields on the 10-Year (“Benchmark”) and 5-Year bonds were 6.1% and 5.6% respectively. The yields gradually declined with time reaching to an all-time low of 5.8% and 4.8% for the 10Y and 5Y bonds respectively, during the first wave and started gaining traction in the coming quarter. This period between July and September of 2020 is herein referred to as the “Impact period”. Since July’20, the yield curve is sloping upward indicating that traders were anticipating positive returns. The GDP growth rate is also moving in tandem with the yield curve for both 10Y and 5Y bonds. This proves our previous point that yield curves and GDP cyclicity go hand-in-hand.

18 | Page

Leaning on the curve at our disposal and the generated insight, it is apparent that the bond market will rise further following the underlying trend. The rationale is supported by the stance of the Monetary Policy Committee (“MPC”) as well. MPC has maintained status quo on all interest rates

19 | Page

assuring markets that the helping hand of the Central Bank is not going to disappear any time soon.

Unchanged interest rates indicate Central Bank’s neutral outlook towards the economy.

Experts suggest that India will witness an intense but short-lived Omicron outbreak. Reckoning by the lockdown and containment measures, it can be safely assumed that the 3 wave is expected to strike Indian markets in the middle of the first quarter of 2022. Following the cyclicity, coupled with a positive market sentiment owing to the new year, both the 10Y and 5Y bond markets are forecasted to grow at a rate similar to the rate generated during the impact period. Our premise is based on unchanged interest rates. RBI has kept its benchmark repo rate at a constant low of 4.0% since 2020 due to its ultra-loose monetary policy. A low interest rate implies more lending in the economy leading to unexpected yield rises. During the impact period, the 10Y Benchmark bond and the 5Y bond grew at 4.4% and 8.8% respectively. A similar growth rate will push the 10Y bond yield from its present levels to 6.8%. Likewise, yields for the 5Y bond market will jump to an astonishing 6.4% at the end of March’22. rd

Our prediction is further supported by a well-established data-driven visualization model that utilizes daily percentage values of the past three quarters to forecast the result using additive trend method, adjusted for a ±10% error margin to incorporate any future development. The spread has been intentionally kept at a low level to ensure accuracy in the forecast. The resultant output

20 | Page

indicates 7.0% and 6.6% forecasted yield as of March 31, 2022. The manual forecast deviates from the data model by a mere +0.2%, that if needed, can be overcome by focusing our attention on the lower shaded area for both the visualizations.

It should be noted that bond values and yields move inversely. A higher yield in the future indicates a higher discounting factor and therefore, a lower present value leaving investors with comparatively less liquidity in their portfolios. On the upper side, high yields point to higher future cashflows. It is in the hands of the investors how to trade-off between the present vs. future returns.

Bonds market has emerged as a key source to provide greater funding avenues to public and private sector projects and reduce the pressure on institutional financing. Though government bonds are widely traded, the corporate bond market is still in its early phase. On account of various defaults, like the IL&FS crisis, traders have a negative perception related to corporate bonds, even in the presence of various credit rating institutions. This makes the government bonds a safe bet as these are only perceptible to sovereign risk. Using forecasts then becomes another method to satiate with the mind-boggling queries of the market participants.

References:       



Investing.com India 10-Year Bond Yield Historical Data [https://www.investing.com/rates-bonds/india-10year-bond-yield-historical-data] India 5-Year Bond Yield Historical Data [https://in.investing.com/rates-bonds/india-5-year-bondyield-historical-data] Koyfin, Inc. [app.koyfin.com] RBI Repo Rate History [https://freefincal.com/rbi-repo-rate-history/] Omicron May Drive "Intense But Short" Outbreak In India [https://www.ndtv.com/indianews/omicron-may-drive-intense-but-short-outbreak-in-india-report-2676214] Bond bulls return as RBI Governor gives market a policy support booster [https://economictimes.indiatimes.com/markets/bonds/bond-bulls-return-as-rbi-governor-givesmarket-a-policy-support-booster/articleshow/88160917.cms] What is the importance of Debt Market to the economy? https://timesofindia.indiatimes.com/business/faqs/market-faqs/what-is-the-importance-of-debtmarket-to-the-economy/articleshow/60425009.cms

21 | Page

Sports Analytics By: Indrani Chakraborty & Sourish Atorthy (T A Pai Management Institute, Manipal)

How Statistics & Analytics is guiding a new era in sports.

“How can you not be romantic about Baseball!” When Brad Pitt says this in the movie Moneyball, he is speaking for all of us and about all sports. Statistics says about 56% people in the world love sport and 73% people have played at least one sport in their lifetime in any level. But how has statistics and analytics changed sports through time? Or did it affect at all?

To answer that we need to look no further than the movie mentioned earlier – Moneyball.

Moneyball Theory is a concept in statistics, which came out when Bill Beane of Oakland Athletics, with the help of his number two, Peter Brand, used empirical analysis to scout players and built a team with undervalued players which created history by winning 20 straight games in Major League Baseball of America. They did not bring big names to their teams but instead went for players who were written off by others but fetched enough amount of runs to win matches. “The goal was not to buy players but runs. As players don’t win you matches, runs do.” And how did they find out which player fetched the right number of runs? Yes, you guessed it right – through statistical analysis and data mining. This was one of the first examples of using statistics and analytics in the field of sport. But now the question rises, what is the future of this then? That is what we will try to see and answer through this article.

The World Sports Market According to a recent Kearney assessment of sports clubs, leagues, and federations, the global sports sector is worth between €350 billion and €450 billion ($480-$620 billion). Infrastructure construction, sporting equipment, licensed items, and live athletic events are all included in this.

According to a study commissioned by Lagardère Unlimited, the global sports business is rising at a far quicker rate than national GDP rates around the world. And the global sports value chain, in terms of size, composition, and revenues, has substantial future growth potential.

22 | Page

The global sports market can be divided into numerous subcategories that span multiple markets and, in some cases, have a direct impact on the global economy. There are various submarkets within the professional sports industry, including broadcasting and licensing, sponsorship, and many others. Aside from professional sports, there is the sporting goods sector, which is largely reliant on brand marketing and is frequently linked to professional sports via player sponsorship and affiliations. Food and nutrition, such as the protein industry, and worldwide gambling, considering how much of it is linked to sports betting, are the next two significant markets intimately associated with the global sports economy. The eSports market is also worth noting, given recent technological advancements in the video game market and similar economic features to professional sports.

The participation sports category, which will generate $136.7 billion in worldwide annual sales by 2025, will present the best prospects in the sports market categorized by type. The sponsorship category, which will generate $71.1 billion in worldwide annual sales by 2025, will have the best prospects in the sports industry categorized by revenue source. The fitness and recreational sports centers sector, which will generate $55.0 billion in worldwide annual sales by 2025, offers the best potential in the participatory sports market categorized by type. The sports teams and clubs category, which will generate $55.1 billion in worldwide annual sales by 2025, will have the best prospects in the spectator sports market categorized by type.

The Rise of Statistical Analytics Statistics has shown to be a superior method of analyzing and interpreting data in a variety of sectors, including psychology, business, sports, physical and social sciences, production and manufacturing, government, and so on. Data Science, on the other hand, is a great combination of business, mathematics, computer science, and communication.

23 | Page

Frederick Winslow Taylor, who pioneered time management exercises in the nineteenth century, is credited with introducing analytics to corporations. Another example is Henry Ford's assembly line speed measurement. In the late 1960s, as computers became decision-making support systems, analytics gained traction. Because of the rise of big data, data warehouses, the cloud, and a variety of software and hardware, data analytics has exploded. Data analytics include the study, discovery, and interpretation of data trends.

Statistics & Analytics in Sports The study of analytical data regarding players and their performances to understand their shortcomings and strengths is known as sports data analytics. Sports Data Analytics is now being applied in a range of ancillary industries, with a lot of room for expansion. In this article, we have discussed few concepts which, recently, are hugely used in sports industry in general and baseball and football in particular.

Sabermetrics Sabermetrics was established to help baseball fans learn more about the game by using objective data. This is accomplished by assessing players in all aspects of the game, particularly batting, pitching, and fielding. Because prior statistics were deemed inefficient, these evaluation metrics are frequently expressed in terms of runs or team wins.

It constitutes of two main measurements which is used to gauge a player.

1. Batting Measurements: The traditional metric of batting performance, hits divided by the total number of at-bats, is changed by the On-base percentage, which takes walks and hit-by-pitches into account. The total number of hits + bases on balls + hit by pitch is divided by at bats + bases on balls + hit by pitch + sacrifice flies to get the On-Base percentage. Weighted on-base average, secondary average, runs created, and equivalent average are some of the other statistics used by saber-metricians to analyze batting performance.

24 | Page

2. Pitching Measurements: Earned run average is the usual metric for evaluating pitching performance. It's assessed in terms of earned runs per nine innings. Earned run average does not distinguish between a pitcher's ability and that of the fielders with whom he interacts. A pitcher's winning percentage, which is computed by dividing victories by the number of decisions, is another traditional metric for pitching (wins and losses). The pitcher's team, particularly the number of runs it scores, has a significant impact on his winning percentage.

Saber-metricians have tried to come up with various measurements of pitching performance that don't include the fielders' performances. The most used statistic is walks plus hits per inning pitched (WHIP), which, while not completely defense-independent, indicates how many times a pitcher is likely to put a batter on base (either by base-on-balls, hit-by-pitch, or base hit) and thus how effective batters are against that pitcher in reaching base. The creation of the defense independent pitching statistics (DIPS) system is a more recent development.

Football Analytics In today's football industry, data analytics has become increasingly vital. Big data is allowing clubs to extract insights to improve player performance, reduce injuries, and increase their commercial efficiency, allowing them to gain a competitive edge on and off the field. Context is crucial, and as a result, a few measures have been established that prioritize context when comparing players.

Let us see few and how they change the way of comparing players in football. 

“Per 90” Metrics: Using raw, total figures for a measure can be deceptive because it ignores the minutes played to arrive at that figure. We need to create a fair way to compare performance by looking at the figures in the context of the entire game (per 90 minutes or "per 90"). Let’s consider two players for a particular season:

25 | Page

Table 1

Goals Assists Successful Dribbles Successful Passes Minutes Played

Player 1 18

11

78

432

1896

Player 2 11

7

60

238

935

Apparently (as per Table 1), Player 1 is much better than Player 2. But if consider the players stats per 90 minutes (as per Table 2), then we can see Player 2 has a far better stats than Player 1.

Table 2

Goals p90 Assists p90 Successful Dribbles p90 Successful Passes p90

Player 1 0.85

0.52

3.70

20.51

Player 2 1.06

0.67

5.76

22.91

This is how per90 stats can change the context of comparison and hence sheds more light on two player comparison.



xG and xGOT: The likelihood that a shot will result in a goal based on the features of the shot and the circumstances leading up to it is known as xG (or expected goals). The characteristics considered are the location of the shooter, the body part used to shoot the ball (header or left foot or right foot, etc.), the type of assist pass (through ball, cross, set piece etc.) and the type of attack leading to the goal (in possession shot or rebound). To assess the likelihood that a shot will result in a goal, each shot is compared to thousands of other ones with comparable characteristics. The expected goal total is determined by that likelihood. A miss with an xG of 0 is a sure miss, whereas a goal with an xG of 1 is a sure goal. If ten identical shots were tried, an xG of.5 would suggest that five of them would be expected to result in a goal.

26 | Page

xG is a metric that gauges the quality of a team's chances, while xGOT is a metric that tells us what a team did with those chances. xGOT is a post-shot model, whereas xG is a pre-shot model.

The Expected Goals on Target model is based on previous on-target shots and incorporates not only the shot's initial xG but also the goalmouth location where it landed. When compared to shots that go straight down the middle of the goal, it offers more credit to shots that end up in the corners.

This model is only applicable to on-target shots, as there is a 0% chance that your shot will result in a goal if it is not on target.

Big Data in Sports – Fan Analytics Sports are a business, and the more fans that are involved, the more profit organizations make.

Sports management teams can uncover how and when people are likely to attend events or purchase items by learning about data analytics in the online realm. To better understand what consumers desire from the game, management examines social media behaviors, attendance, and item sales. This enables them to determine what matters most to fans, such as a fun mascot or unique items. Management can build marketing strategies and advertising campaigns that target fans. Data enables them to quickly identify supporters who are likely to engage with the club, allowing them to avoid wasting advertising dollars on customers who are uninterested in their sport.

Data science and statistics may be useful to sports bettors. It is considerably simpler to anticipate when and where a team will be successful in the future when gamblers can study a team's prior performance with reliable statistics. Sports fans are more willing to gamble if they do not have to guess which team or individual will do well. Statistics enable them to create a data-driven prediction system, giving gamblers more confidence in placing bets on certain teams or players.

Legalized sports gambling is increasingly become more and more popular in many countries. In India, introduction of apps like Dream11 and My Dream Circle, have shown huge investments and interactions by fans in sports gambling, especially during the times of the IPL (Indian Premier League), ISL (Indian Super League) and PKL (Pro Kabaddi League). This also is increasing the viewership of many sports (especially football and kabaddi) in India and hence increasingly attracting revenue from sports which are less popular.

27 | Page

Data Driven Football Management – The Story of Brentford FC In 2012, something unique happened when a lifelong fan, , of Brentford FC, Matthew Benham, saved the club down in deep debts from bankruptcy by paying off the £500,000 the club owed.

Since then, he invested close to £90 million in the club, but as other owners will spend on players, he installed a clear culture driven only by analytics and data. He did away with the notion that outcomes should drive decisions, instead relying on the analysis of key performance metrics to determine any hiring decisions. Benham sought to take a tiny team like Brentford and compete at the top level against clubs with far greater funds by actively doing things differently.

The club's large efforts in nurturing new talent were not yielding beneficial dividends, as the greatest talent generated by their academy was being snatched away for free by major Premier League teams at a young age. This is why Brentford FC opted to shut down their academy and focus only on attracting players from other teams. They transitioned from being a feeder club for new talent into larger opponents to collaborating with them to release surplus assets for a modest charge. The club guaranteed that it had a plan of succession and a place to nurture excellent players regardless of their age by having a B-team as a steppingstone into the main squad.

At the club, evaluating team performance has also altered dramatically. Brentford are major admirers of xG models, which they employ to get a possibly alternative perspective on the current league table position and match outcomes. They stated that this eliminated the luck aspect that might impact football outcomes and instead focuses on the quality of the team's performances with an eye toward the club's long-term viability. The club's approach to player recruiting has also evolved to evaluate which players should be signed in a stock market-like manner, almost as if they were appreciating and depreciating assets, considering market inflation in various regions.

28 | Page

In the realm of football, implementing a fresh pioneering method, such as the one Benham desired for Brentford, is not simple. After winning promotion to the Championship the previous season and the squad being in a good league position, Benham dismissed successful manager Mark Warburton in 2015. Warburton's basic philosophical concerns with the new framework in which Brentford FC was operated were freely aired. Brentford recruited Dean Smith as their head coach, and he became one of the league's longest-serving managers after completely embracing the club's revolutionary ideology.

Concluding Thoughts Sports analytics has ushered in a paradigm shift in the sports sector, but there is still a long way to go. With the integration of technology and wearables, the day is not far off when analytics will measure a player's mental and emotional composition and how it connects to their on-field performance. Sports analytics offers a wide range of applications and will continue to develop in the coming years. regions.

A career in sports analytics is on the rise, owing to the ideal combination of high demand and limited supply. In India, a growing number of teams, both college and professional, are expanding their in-house analytics personnel. With the development of third-party consultants like Fantasy and gambling apps, demand can only increase.

References 1. Keith D. Foote (September 20, 2021), A https://www.dataversity.net/brief-history-analytics

Brief

History

of

2. 2U, Inc. (September 23, 2020), The Role of Data Science https://www.mastersindatascience.org/resources/big-data-in-sports/

Analytics, in

Sports,

3. Wikipedia (August 2020), Expected goals, https://en.wikipedia.org/wiki/Expected_goals 4. David Hellier (May 28, 2021), Big Data Model Helps Local London Team Win Soccer’s Richest Game, https://www.bloomberg.com/news/articles/2021-05-28/big-data-modeltakes-local-london-team-to-soccer-s-richest-game

29 | Page

The Great Resignation and its financial implications

By Davleen Kaur (Mata Sundri College for Women, University of Delhi) The Great Resignation refers to mass level resignation of employees from corporate jobs and conventional career paths owing to Covid-19. The sudden surge in the abdication of the workforce from traditional passage has various reasons. The Great Resignation also includes the proportion of workers who were sacked from their duties owing to unpredicted lockdowns and international border restrictions.

The planet was astonished at the onset of the pandemic. Prominent leaders took various hasty decisions. Many countries were insufficient to tackle the health emergency. Inadequate resources and incompetent governance were crucial reasons leading to administration breakdown. Many countries faced exorbitant shortages of basic amenities, supplies, medical instruments, healthcare staff and other commons. Due to closure or fragmentary operations of businesses, many companies saw a gross dip in the revenue incurred. As a result, they depleted the workforce and gave menial wages to functioning staff. Many companies raised the workload on the employees and further took away other benefits provided earlier to them. Unsafe working conditions and no medical benefits were prime reasons behind mass resentment amongst workers. Developed and underdeveloped nations faced a similar situation. Countries without consideration of the resources possessed or fuelled with the latest technology were incapable of providing aid to their citizens.

Many professionals experienced anxiety due to excessive work pressure. Thus they failed to maintain a proper balance between professional and personal life. Many employees who were down with Covid or were in direct contact with Covid patients were inefficient to balance their professional life. As a result, their productivity and net performance were knocked. Thus, they bid ciao to their professional career. Also, many professionals resigned from jobs that demanded long travels or were not aligning with their ethics and morals. Companies that no longer value their employees are not preferred anymore. Appreciating and valuing employees holds more priority than salaries for almost all professionals. Companies that valued their employees saw remarkable progress. Even in times of hardship, companies with fierce work commitment, respect for fellow workers and team spirit accomplished a significant part of their goals.

The sudden upsurge in resignation had a significant effect on the economy of the World. As massive unemployment prevailed, the working people percentage immediately went down. They transformed into a liability for the government. Due to unemployment and inflation, the standard of living plunged. Due to a shortage of goods, people failed to satisfy their wants. Buying luxury goods or travelling to opulent destinations became a fantasy for many. Besides, mass resignation has an epic toll on savings and investments. People are ineffectual to investing the capital as they strive to meet their ends. As a result, the real estate and stock market saw an all-time low during this period. The GDP of various countries are facing a colossal slowdown. Many economists are working to devise policies that bring the growth back to the GDP. Hospitality firms, fast food chains, airlines and tourism industries were the worst hit during the period. Export industries, wholesale businesses and other allied networks saw unbearable losses.

Small retailers with menial savings were the worst hit during these times. Many successful chains had to shut down due to an uncertain environment. Educational institutions were closed likewise.

Entire operations whirled into an online state. Due to excessive expenses for online education, many students discontinued their operations. Banks and allied institutions garnered low revenue

30 | Page

from the general public. As a consequence, they reduced the interest rates to some extent. Retired professionals were adversely affected during the pandemic as their savings were ending impulsively.

These malignant measures turned a progressive society into an unqualified and relinquished unemployed one. On the other hand, many functioning sectors were not performing to the fullest owing to ill or unavailable staff. The medical industry and other essential governmental sectors faced a severe shortage of labour.

An unemployed population can be very detrimental to society in the long run. Unsatisfied citizens opt for the wrong path consisting of malpractices, corruption and fraud. Unconventional career opportunities and social media digitalization called a halt to people longing for conventional jobs.

Creative and skilled brains utilized the lockdown period and devised extraordinary ways of earning online. Modern-day netizens introspected the possibility of building a career in digital marketing, freelancing, social media marketing and startup opportunities. Many people are raising a successful career in these fields. Thus, they are helping revive the economy from a severe downturn.

Covid19 has a profound effect on the accustomed routine escorted by the public. In times of hardship, exceptional plans need to outrange to keep things going. During occasions of extreme retaliation amongst everyone, purposive strategies and composed decisions are the pressing priority to manage the inconstant financial conditions. With consistent efforts and adjusting to the "new normal," the citizens can deal with the financial implications of The Great Resignation.

31 | Page

Sustainability of the rising trend of the Gig economy By: Priyanshu Kumar (MDI Murshidabad) Workplaces are evolving, and the rise of the gig economy in recent years has been obvious. It will be intriguing to see how the gig economy continues to grow and effect the future of work, from the changing nature of labour to enterprises being driven to become more flexible, agile, and efficient.

Independent workers who are paid by the gig (i.e., a task or a project) rather than by a salary or hourly wage; consumers who require a specific service, such as a ride to their next destination or an item delivered; and corporations that connect the worker and thus the consumer directly, such as app-based technology platforms.

Due to downsizing trends among talented professionals, the rise of the digital age, where the workforce is increasingly mobile and can work from anywhere, and the effect of globalisation to create more opportunities, the Gig economy is gaining significant traction among the current generation of professionals. Today's economy has provided opportunities for independent contractors to expand their customer base both domestically and worldwide, as well as for businesses to receive professional services from the global market beyond their local market. The gig economy enables more efficient services, such as Uber or Airbnb, to be provided at a cheaper cost. These businesses serve as a link between the worker and the consumer, facilitating payment.

Three fundamental parts of labour are significantly altered by the gig economy: the work itself, who performs the work, and where the work will be performed. The gig economy isn't just a passing fad; it has the potential to change the way we recruit talent. The gig economy, according to data, will spread its wings and fly as far as it can. According to the report, a large majority of Millennials and Generation Z workers want to work in the gig economy, either full-time or as side hustlers. Companies who aren't embracing the Gig Economy are missing out on key resources.

According to research, 30 percent of Fortune 500 companies use this method to hire.

Gig workers include independent freelancers, online platform employees, contract firm employees, on-call and temporary workers, and others who enter into formal agreements to provide services to on-demand businesses. Because gig workers are paid by the hour, decisions must be taken promptly, and many firms' top-down approaches will become outmoded. Active social media

32 | Page

networks are replacing traditional modes of working, and this new level of collaboration and reciprocity among peers will surely contradict past hierarchical arrangements.

Several factors have contributed to the growth of the gig economy. People appear to prefer freelancing to full-time employment because of its flexibility and independence. It has made it easier to find work all around the world, and it has made work more adaptable to changing requirements and wants for more flexible lifestyles. Freelancers have the freedom to make lifestyle decisions that would be unthinkable in a typical job. They can choose when and where they work, as well as how much they want to charge for their services. Companies benefit from having a flexible workforce since they save money on training and recruitment, don't have to pay for health insurance, and can more easily replace employees if needed. Contract workers are more costeffective for businesses, and employers gain from a bigger applicant pool and the fact that they don't have to hire full-time employees.

The development and widespread acceptance of supporting technology infrastructure has also contributed to its rise. IT comes second in terms of the number of freelancers hired by businesses.

For a variety of reasons, 81 percent of businesses have hired gig workers. They hired freelancers for a variety of reasons, including 29.7% for project work, 26.5 percent in the absence of a fulltime employee, 24.2 percent for work that didn't require 8-hour shifts, and the rest for a variety of other reasons. Up to 53% of these organisations have hired 5-20% of gig workers, while more than 20% have hired up to 30%. This just goes to show that when a bright person is discovered, companies are eager to hire them in order to keep them on board.

While the gig economy is largely acknowledged in industrialized countries, it is also gaining traction in emerging economies, as seen by the preference of a major portion of their population.

Since COVID-19, gig has helped many people escape unemployment by providing a source of income. According to a study, the gig economy employs over 200 million individuals throughout the world today.

The benefits it provides for both businesses and employees are credited with the gig economy's rapid expansion. It gives employers access to low-cost labour; it gives employees the freedom to choose projects, manage their schedules, and be accountable only to themselves.

33 | Page

However, the gig economy’s long-term sustainability is in question. Due to the difficulties it encounters, integration with the main economy appears to be challenging. The following are some of the most common accusations levelled against the gig economy: 1. Labor exploitation — Gig economy workers are not entitled to the same benefits as full-time employees. As a result, there are no health benefits, paid vacations, or retirement benefits. The corporation completes the work without incurring any additional costs to the employees. It can afford to pay the worker a fraction of what it would otherwise have to pay a full-time employee.

2. Job security — Gig workers are recruited on a project-by-project basis. There is no guarantee that they will be hired on a regular basis or that they will acquire regular work. Workers are constantly under pressure to find new projects and labour in order to obtain regular salary.

3. Issues with payment – Many gig workers complain about not being paid on time or at all. For many of them, payment systems aren't well-defined, allowing employers to exploit them.

4. Regulatory framework – Many countries currently lack a clear regulatory framework for monitoring the well-being of gig workers. There are no clear guidelines for businesses.

Dangerous work is outsourced to gig workers in some industries, saving employers money on medical and life insurance.

5. Emotional state — In order to succeed in the gig economy, employees must have selfdiscipline and resilience. Because temporary work is inherently insecure, the uncertainty may be debilitating. Furthermore, working alone or from a remote place might cause loneliness and even melancholy in some people. Lack of organizational support can also cause havoc in the minds of employees, lowering the quality of their work.

The gig economy is perfect for young professionals who are still determining which career path to take and so have the financial means to try out a variety of jobs.

Gig employment are on the rise all across the world, according to data. However, in order for the gig economy to be viable, employers and policymakers must provide it with a framework. It is necessary to enact rules that provide independent workers with social protection. Medical insurance, workplace safety, a defined payment structure, and job security, even if only for a limited time, will go a long way toward alleviating the uncertainties that come with temporary employment. The gig economy will only be able to survive and develop if the interests of gig economy employees are protected. The gig economy must become more structured in order to become sustainable and integrated into a country's economy.

34 | Page

EXPONENTIAL INCREASE IN MARKETING SPEND, JUSTIFIED? By: Mudit Jain and Trish Gupta (Shri Ram College of Commerce) Ever wondered why in earlier times, companies didn’t feel the need to market their products? The primary reason behind this was the monopoly of companies, more brand loyalty, and less consumer awareness. As a result, the consumers were being exploited, and companies were getting an unfair advantage. Then came liberalization and everything changed for good. Marketing increased, consumers became more aware, and now they opted for a brand that gave them superior products, and the concept of brand loyalty was abolished. In this new era, for a company/brand to be successful, marketing became paramount. Many successful brands have, over the years, used various innovative marketing strategies to market their products. Thus, marketing became a double-edged sword. Companies with good products couldn’t sell their product without a proper marketing system, and some companies could sell even the most inferior product just by using the right tactics. But is it the only thing to focus upon? Or we can say that there are many other things as well, and marketing is just a piece of the puzzle. This is something that needs to be pondered upon in detail.

Modern-day companies try to put their sole effort into the marketing of their product but become ignorant while innovating upon their product. If focusing on marketing only yielded the results, everyone would have stacked cash in their pockets. Therefore, we can say that marketing is an inherent part of the product’s journey but not the only one. There is a correlation going on nowadays in people’s minds, i.e., more expenditure on marketing means more top-line growth.

Many companies are running into huge losses, and the reason behind it is the high marketing costs associated with the product. Nowadays, the companies not only rely on old traditional ways of marketing by advertising their product through print media, television channels, contacting celebrities to endorse their brands, etc. But with the advent of the internet and the technology wave that is going on the social media platform too has become a popular place for marketing. Due to the fierce competition in the market and well aware consumers, everything has changed.

Consumers buy those products that add value to their life. So, the focus of the companies should be on coming up with some great products that are difficult to resist. In reality, come up with those products that need to be actually shopped rather than window shopped.

Moving further, let’s focus on some facts and see how things are going around. When we ask a person, name the top companies of the world doing impeccably good? The names that would pop up instantly are Google, Facebook, Apple, Tesla, Netflix, Uber, etc. Which is true; these companies are doing exceptionally well in their fields. So, if we dig deep and see the reason behind their success, we would eventually realize that their strength is a ‘GOOD PRODUCT’. These companies spend the least on marketing but earn the most. This may be difficult to digest but is better realized sooner than later. Therefore, the previous correlation needs to be corrected, and it should be read as more innovative the product is more the top-line growth. The companies should not completely focus on the marketing of a product because if the product is innovative and its utility is high then it will itself develop a good marketing channel. So, instead, they should try to explore the path which was not traversed by someone else. For instance-Flipkart introduced the Cash on Delivery (COD) facility. Before this, every customer was forced to make payments using online banking

35 | Page

services, which reduced the scope of the online market as the consumer was doubtful of the fishy tactics. Moreover, in a country like India, where people have more faith in the hard cash, it was difficult for anyone to make them digest the new technology. Therefore, with the coming of Flipkart, the journey of Indian e-commerce markets changed.

Nowadays, a new trend is being followed, i.e., marketing without advertising. This method has emerged as one of the effective and efficient methods. Under this basically, the brands try to build a network with influencers. They try to maintain a small circle and create an enormous impact. A consumer would be more tempted to buy a product if another consumer suggests it, but the same won’t happen in the case of a celebrity endorsing the same product. It is nothing but human psychology. The first case had a more significant impact because the consumer knew that another person used the product, but the second case couldn’t guarantee the same. Therefore, companies have identified it, and now they are focusing on it.

Many companies still believe in their products and in their brand names that they feel that there is no need for advertising. Expensive and luxury car makers like Rolls-Royce, Ferrari, and Lamborghini are a few companies that don’t follow the marketing policy. Their philosophy is straightforward: “Those who buy their products don’t spend time watching TV.” On the other side, we have companies like Cred, Zomato, and other new-age startups whose existence in today’s markets is difficult without advertising. These companies post heavy losses in every financial year, but their spending on marketing is showing no signs of change. Cred is better known for its smart advertisements rather than its product. On the other hand, a company like Zomato, founded in 2008, grew popular only recently; ever wondered Why?. The answer to this question is marketing.

Giving discounts, operating even at a loss, advertisements involving celebrities, free deliveries were a few marketing tricks they used to obtain this dominant position in the market. No doubt the sales have increased, and a brand image has been created, but it came at a considerable cost. The company has been in operations for the last 13 years, and it will take the company another 5-6 years to become profitable. This is what is called the actual cost of marketing which most of the time remains hidden and unknown.

To conclude, marketing is a powerful force that can influence the opinion of the public. But it is something that can backfire too. Creativity and Innovation also play a far more significant role in influencing the masses. Spending money on marketing is necessary to create a brand value and image but heavily spending on it is something the firms should try avoiding. Sometimes the quality of product and word of mouth is enough to create a dominant position in the market. Many companies have shown that to become successful, all you need is a brilliant idea and the ability to sell it so that the consumers can enjoy it by paying the least amount of money. Moreover, this excess spending on marketing can be used for the development and research of the goods because that will attract a customer more towards the organization. However, marketing has become a powerful tool, and everyone in some or the other way relies on it but is it worth the hype? We will leave it for time to tell.

36 | Page

ALL RIGHTS RESERVED

FINANCE & INVESTMENT CLUB INDIAN INSTITUTE OF MANAGEMENT ROHTAK For any queries/feedback/comments, email to fi@iimrohtak.ac.in

Website: https://fi9522.wixsite.com/home

Follow us on Facebook: https://www.facebook.com/FIclub.IIMRohtak

To Advertise with us: Contact Rashi 9717272044 Bharat 8439143938