The IBS Times; 210th Issue, December 2018

Team IBS Times Ishaan Sengupta (Editor in Chief) Aarushi Jandrotia (Managing Editor) Nishika Tatiya (Associate Editor) Sambhav Jain (Associate Editor) Aishwarya Siram Amit Shovan Mandal Ayush Thalia Kartik Grover Noel Mathew Tanay Sood Achintya Saraswat Akanshi Bhargava Anisha Jose Bidisha De Chandrayee Mukherjee Samudrala Jagadish Kartik Bhardwaj Krishma Mohanan Narayan Tripathi Rahul Kumar GS Revathi Menon Samriddhi Bhatnagar Simran Abhichandani Supriya Panse Designed By : Nishika Tatiya Sambhav Jain 2

When the industries do the talking, the country keeps on walking‌.

The industries in the country, are responsible for improved, improvisation as well as fulfilling the rampant requirement of jobs. What seems to be the backbone of the economy requires a thorough and effective boost in terms of skill, funding and upgradation. From banking to precious metals, different industries react differently to government policies and it is therefore epitome to understand the nitty gritty of each such industry.

So join us on this journey of exploration and introspection for a better future for the country.

As an editor, it gives us immense pleasure when we hear from our readers.

We intend to improve ourselves every step of the day. We would like to that your support for the same. Keep following us on our website www.finstreetibshyd.wordpress.com as well.

Please write to us and become of part of these discussions.

Email id : editor.ibstimes@gmail.com Ishaan Sengupta POC - Editor-In-Chief Team IBS Times, Finstreet

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Contents 05

Banking With Care: NPAs on Display

08

Aviation: Wings Plagued With Losses

12

Healthcare/Pharmacy/Insurance: Correlated As Always

14

Renewable Energy Sector In India: The Numbers In Favor

16

Automobile Sector: Potentially Booming

19

Precious Metals: Net Exports Driven, Backed By Domestic Demand

22

Indian Retail Industry: Can E-commerce Win The Retail Battle?

25

Iron And Steel: Growing Ahead

28

Real Estate: Goliath of Regulations

31

Media: From Controversy Into Profits

32

FMCG: Fast Moving As The Name Suggests

36

Indian IT, ITes & BPM Industry Analysis: Facts and Figures

39 Market Watch: Growth and Growing Intentions

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Banking With Care: NPAs on Display - Krishma Mohanan

INTRODUCTION India’s banking sector is one among the world’s fastest growing sector. It has withstood all the challenges and downturn of the global economy and is generally resilient.

But the whole sector is grappling with challenges and the primary among them being the burden of distressed loan. Indian banking system consists of 27 public sector banks, 21 private sector banks, 49 foreign banks and 56 regional rural banks. There are many other internal and external factors which affect the working of banking sector.

INTERNAL FACTORS 1. Earnings of a company How much profits a company earn acts as a significant factor in determining the performance of the company. If the quarterly and yearly results of the bank are good, then investors tend to invest in the bank more. An analysis of the earnings of the banking sector helps us realise that among all banks in the banking sector only Indian bank and Vijaya bank are making profits, all other banks are making losses. The highest loss making bank being the Punjab National Bank.

Banks Earnings (in Rs. Cr.) 1. Indian bank - 1258 2. Vijaya bank – 727 3. Punjab and Sind – (743)

4. Bank of Maharashtra – (1145) 5. United Bank – (1454) 2. Market capitalisation Market capitalisation is the market value of the publicly traded company’s outstanding shares. It’s calculated by multiplying the price of the share by the number of outstanding shares. Lately, Kotak Mahindra bank became the second largest bank by market capitalisation surpassing India’s largest bank SBI. HDFC bank is the market capitalisation leader with an overall capital of Rs 547358, followed by the capitalisation of Kotak Mahindra bank of Rs 224658.

3. Interest rates Interest rates play a very important role in determining the stock prices of the banks.

Interest rates are determined by the demand for capital, which pushes them up and indicate that the economy is thriving. Low interest rate indicates low demand for capital and liquidity builds up. Recently, all the three banks SBI, HDFC and ICICI Bank have increased their FD rates. SBI offers an interest rate of 6.75%, while ICICI offers 7.5% interest rate and HDFC an interest rate of 7.4%.

EXTERNAL FACTORS 1. Reserve bank policies 5

The RBI’S integrity as the regulator of India’s financial system has emerged unscathed. The RBI controls the banking system through various measures like the SLR, CRR and bank rate. It is the regulator of the entire banking, money, liquidity, financial inclusion and many other functions. The whole functioning of the banking system depends on the policies initiated by the apex bank. The differential rates are as follows; SLR-19.5% CRR-4% Bank rate -6.75%

2. Sentiments The investor sentiment is almost impossible to predict. Investor sentiment can lead to irregular buying or selling of the shares and the result being, bullish or bearish market.

The banking sectors investor’s sentiments appear to be very volatile in nature due to the current devaluation of the rupees, RBI and government tussle and due to the global economy.

3. The economy The health of any economy has an effect on the banking system because it is the driving force behind the working of any system. The performance of any sector is determined by the credit to various sectors on gross basis measures the gross banking systems because it reflects the extent to which savings are financial. The next measure is the credit to the private sector, which refers to the amount bank credit allocated to the private sector.

The higher private credit indicates as an indication of higher financial services and therefore higher financial intermediary development. Recently there was a steep devaluation in the rupee due to various factors like the Turkish crisis, rising crude oil prices and the global economy.

Recently there was a steep devaluation in the

rupee due to various factors like the Turkish crisis, rising crude oil prices and the global economy. Indian Rupee turned out to be the world’s worst performing currency in the recent times.

The slide in the currency squeezed the profitability of the banks as it raised their funding costs. The Indian banks were hardly able to absorb the rising costs as there was a shortage in the local currency.

State run banks sold dollars in order to arrest the declines. Adding to that, any efforts by the RBI to infuse money into the system were sucking the banks further. The country’s largest banks SBI and ICICI bank raised lending Rates earlier this month on account of weak deposit growth and strongest loan demand.

CURRENT SCENARIO The state owned banks losses widened three and a half times to Rs 14716.2 crore due to the mounting bad loans. The 21 public sector banks had posted a net loss of Rs 4284.2 crore in the September quarter of 2017-18. Higher provisioning towards bad loans or nonperforming assets (NPA’s) has impacted the balance sheets of these PSU lenders. As per the financial the reports published by them, the biggest loss was posted by scam hit Punjab National Bank (PNB) of Rs 4532.35 crore in the September quarter of the current fiscal as against a profit of Rs 560.58 crore in the previous period. During the same quarter of September in the current fiscal year IDBI bank posted a loss of Rs 3602.50 crore and Allahabad Bank Rs 1822.71 crore. IDBI banks loss was Rs 197.84 crore in the previous quarter while Allahabad Bank had posted a profit of Rs 70.2 crore.

While, SBI which had incurred a net loss of Rs 4875.85 crore in the June quarter, posted a profit of Rs 944.87 crore for July- September.

While, SBI which had incurred a net loss of Rs 4875.85 crore in the June quarter, posted a 6

profit of Rs 944.87crore for July- September.

Oriental bank of Commerce posted a profit of Rs 101.74 crore as against a net loss of Rs 393.21crore in the June Quarter of the current fiscal year. The narrowing of the cumulative net losses on the quarter-on-quarter basis is mainly attributable to the good performance of these banks.

The government and RBI have been taking steps to help the debt ridden public sector banks to improve their performance. The government has been trying to infuse capital into the market with government bonds. One way for the government to increase capital adequacy in the public sector banks under Basel three regulations is to increase equity capital and sell sovereign bonds to the lender.

This won’t need actual cash infusion but only an accounting entry in banks. These processes have been used even earlier to increase the capital adequacy ratios.

CONCLUSION Speedy implementation of projects enhanced spending on infrastructure and continuation of reforms are expected to provide further impetus to growth. The mobile and internet banking have bought the sector for more advancement. Upgradation of technology infrastructure is giving the banks a competitive edge.

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Aviation: Wings Plagued With Losses -Rahul Kumar GS -Narayan Tripathi Introduction: Aviation industry is growing with the rapid pace in developing countries as the buying power of people in the countries is increasing.

One such country is India, as per IBEF, it is one of the fastest growing industries in the country. India considered as one of the third largest market in this sector. It is expected that it will become the largest market within 10-15 years. Big firms like Singapore airlines, Emirates, Quator and many other internationally renowned names either have invested in the country or trying hard to jump in the business.

Aviation industry can be divided into segments- commercial, private and military.

In this article we will be focusing on commercial segment only and slight about the private segment of the aviation industry.

Aviation industry is a capital intensive business that is the region why not many players are there in both manufacturing side of the business (Boing, Airbus) as well as on the operating side of the business (Indigo, Spice jet, Air India and etc.). So, it can be concluded that it is the Oligopoly segment of the business.

History: Notable contribution December 17, 1903, for the first time the dream of flying the clouds like birds came into existence. When the first flight by the Wright Brother was successfully tested. The industry

started picking up in from 1920, when for the very first time the airplanes commissioned to be used for passenger and airmail service.

First widely used passenger jet was Boeing 707, because it was more economical than other planes of that time. During this time only the international tours started becoming popular. Seeing the market demand Boeing came up with the Jumbo Jet- iconic 747.

From 2000 onwards the industry boomed and the steady increase in revenues of the companies reflected its growth path. The noteworthy reason is the traffic coming from the countries like India, China and other developing countries.

Major Manufacturers: There are few but giant manufactures of airplanes are as follows: Airbus Boeing Business Jet Bombardier Aerospace Cessna Aircraft Company Dassault Falcon Gulfstream Aerospace Hawker Beechcraft Corp.

Piaggio America Inc. Pilatus Business Aircrafts, Ltd Embraer Empresa Brasileira DR Major Airlines in the World: China Eastern Airline China Southern Airline 8

Southwest Airline International Airlines group Emirates Group Air France – KLM Lufthansa Group United Continental holdings Delta American Airlines group Trends in Aviation: Airport ownership Transition – countries are moving from public model to PPP (public private partnership) model. This helped a lot in the development of the airports in terms of the services Airport Cities - Airports now a days give a world class experience to meet, rest and experience the best possible services.

Location based services - Customised services for the passengers on board or off board.

Digitization and AutomationThe technology is changing the way and making the processes more reliable and less chaotic.

Green Airports- Airports being designed in such a way so that they are causing minimum impacts to the environment.

Analysis Aviation is considered to be one of the most flamboyant and happening industries among all. The aviation industry has taken its sweet time to spread its wings in India due to lack of infrastructure, lack of passengers or lack of players in the industry. Currently, passengers using flights for commutation has grown to 18% compared to the 99.88 million who flew in 2016. In 2017 around 117.18 million people used airline service compared to 59.87 million who used the services in 2011.

Currently, flights are almost flying full around 86.1% times in comparison to 75.5% in 2011. There has been a steady growth in the industry as people are becoming more welcoming to use aircraft for traveling. The

industry has also seen the entrance of many new players and has made the industry a highly competitive one to survive. Jet airway the market leader in the sector during 2011 with the lion share of 27% is in the verge of a merger with Tata group as it is not able to stand alone due to heavy losses and saw shrinkage in its market share which reached to 18%. Many other airlines like Kingfisher, Paramount, and Air Costa had to go out of business as they were not able to meet their expense and heavy competition.

India is one of the most price sensitive countries you could ever find and to succeed here you have to play carefully with your pricing. Indigo who is the current market leader of the sector with a share of 38% has found the essence of it giving low prices and not providing any complementary food on board, which has actually benefited them on a huge scale helping to gross good profit from the onboard food sales. On the other hand, giving complementary food on board was one of the main reasons which dragged Jet airways to losses.

Currently, the aviation industry contributes Rs912 billion to the GDP of India. India has also entered an open sky agreement with Australia and Japan which allows the countries involved in the agreement to operate an unlimited number of flights between the involved countries. Airport Authority of India is going to invest Rs 15,000 Cr to expand the existing airport terminal and to build 15 new ones. The government has exempted aircraft manufacturing, overhauling and repairing service providers from customs and other countervailing duties as most of the repair work of the aircraft is done outside India. A new scheme known as Udan Yojana has been brought to spread the reach of aviation into tier 2 and 3 cities providing flights at cheaper and affordable rate to customers.

The aim is to operationalise 50 underutilized 9

airports while reserving 50% of the seats in the flights under the Udan Yojana.

Currently, India has 500 planes in service and has given order for another 800 more planes keenly making its moves to become the world’s third largest aviation market by the year 2025 by overtaking the United Kingdom who is currently in the third position. China decorates the first position followed by the United States of America in the second position in terms of the world aviation industry.

The main issues faced by Indian aviation industry is lack of infrastructure, aircraft parking bay in some of the most important and high traffic attracting airports. The main villain of all these would be the constantly rising fuel prices. Oil prices make about 30 to 40 % of the operational cost of the aircraft.

As the crude oil prices’ skyrocketing with Brent crude oil reaching $80 per barrel doesn’t give a good sign to the industry. They would not be fully able to transfer the burden of rising fuel prices to their customers if they try to do so their current customer base could shrink in no time.

In a situation like this, we need innovative ideas to rely on. Spice Jet one of the players in the aviation sector took the initiative to test the strength of biofuel. Powering their flight with biofuel to shuttle between Dehradun to Delhi. The flight was successful and the representative's of the ministry of civil aviation was also present who have announced that they will be bringing in new laws in concern with the use of biofuel in the aviation industry. By this India has become one of the few nations who have used biofuel to power their flights. The fuel used contains 75% of aviation turbine fuel and 25% of biofuel. The new fuel is assumed to provide better fuel efficiency and fewer carbon emissions compared to the old fuel. If this fuel is accepted by the whole world it could

help us reduce the contribution of the aviation industry to the global greenhouse gas emission which currently is 2 %.

The focus should be on providing low fare carriers because if the fare prices increase the customers will opt out. This trend was clearly seen when the fares from Delhi to Mumbai which usually range from Rs 4500 to Rs 5500 raised to Rs 6500 to Rs 7500 and customers were reluctant to buy the tickets.

The sad reality is that even the aviation sector seems to grow at a steady rate and the air traffic has also been increasing compared to the past years but most of the companies in the sector are continuously posting losses.

The market leader Indigo is also not free from losses; this is mainly due to their low pricing strategy to increase their customer base and to penetrate more into the market. They currently don’t care about the losses they are making and are only focused on acquiring customers.

Indigo doesn’t provide business class seats they only provide economy class it’s a very calculated move to attract the masses and to make a connection to the masses to show their loyalty to towards their customers. This is one of the reasons because of which Indian airlines companies are one the highest purchasers of single-aisle aircraft from Airbus SE and Boeing Co. Future of the aviation industry seems to be grandeur. Whatever happens, it will surely be beneficial for the customers as the numbers of players in the industry are increasing and everyone is trying to outsmart each other by bringing competitive pricing and other freebies such as loyalty program to customers.

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Market Share Indian Aviation Indsutry Jet airways

Air India

Indigo

Go Air

others

Spice Jet

14%

18%

9% 13%

8% 38%

Other Players: Air Asia India: 4.3% Vistara: 3.7% Trujet: 0.5%

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Healthcare/Pharmacy/ Insurance: Correlated As Always - Samudrala Jagadish Healthcare has become one of the India’s largest industries in terms of revenue and employment. The market in India is expected to reach US$ 372 billion by 2022 this comes in the wake of increase in health awareness, rising income and increase access to insurance. Healthcare consists of hospitals, medical devices, clinical trials, health insurance and medical equipment. The constitution guarantees free healthcare to the citizens of India but in general people prefer private healthcare and only the poor and lower middle- class visit the government hospitals as they can’t afford. Though in speeches the politicians announce that they have established particular number of beds for a government hospital for the welfare of the people but they can’t get the best treatment. The number of doctors in 2010 were 8, 27,006 and in 2017 it was increased to 8, 41,104. This are the few things that exhibit the industry is growing.

Mergers and acquisitions with foreign and domestic companies also play a major role in healthcare sector. Infosys which is into technological services and consulting has made a bid to acquire trizetto a U.S healthcare company in which Wipro was also in the race for the bid but finally it was acquired by cognizant. Ranbaxy was sold or acquired by sun pharmaceuticals. Another example would be Baxter international, which is a US-based health care company has

moved on to expand their portfolio for generic injectables has moved on to acquire an Indian firm. So the industry has a rapid growth.

Ayushman Bharat is the largest government funded healthcare program in the world was launched on September 23, 2018. This scheme covers over 10 crore poor and vulnerable families providing coverage up to 5 lakh rupees per family per year for secondary and tertiary care hospitalization.

The benefits are portable across the country and a beneficiary covered under the scheme will be allowed to take cashless benefits from any public/private hospital across the country.

The costs would be pre-defined by the government at a package rate in advance.

Pharmaceuticals: India is the largest provider of generic medicines and accounts 20% of the total exports in terms of volume. Low cost productions and increasing expenditure on research and development has led to competitive pharma exports from with exports reaching from US $ 17.27 billion in FY 18. India is the 3rd largest exporter of pharmaceutical products in terms of volume.

U.S as key market accounts 40% of the generic medicines and for U.K 25% of all medicines. The government’s mission “Pharma Vision 2020” aims to make India a global leader in end-to-end drug 12

manufacturing. India holds an important position in the global pharmaceutical sector.

At present 80% of the antiretroviral drugs used globally to combat AIDS are supplied by the Indian pharmaceutical firms. Indian drugs are exported to more than 185 countries in the world with U.S as key market. The drug and pharmaceutical sector attracted FDI inflows of US $ 15.83 billion between April 2000 to June2018. The reason is the country has large pool of scientists and engineers who have the potential to steer the industry ahead to a higher level. India’s pharmaceutical business exports stood at US $17.27 billion in 201718, in 2018-19 these exports are said to be crossed US $19 billion.

Going forward if there is a better growth in domestic sales which is completely depended on the companies to align their respective product portfolio in which the therapies are on the rise helps the industry more to grow further.

Insurance: India’s insurance industry is expected to reach US $ 280 billion by 2020 this change was to increasing awareness, innovative products and more distribution channels. In 2003 for insurance companies the private sector contributed 98% and the public sector contributed 2%. In 2018 the public sector contributed 70.31% and the private sector contributed 29.69%. Of the major people in private sector were HDFC standard life with 5.65%, SBI life with 5.59%, ICICI prudential life with 4.9% . With the introduction of different schemes by the government such as Pradhan Mantri Suraksha Abhiyan Yojana to cover all poor households will bring the security of insurance benefits to the marginalized sections, giving basic economic protection in case of injury or death through accidents of a family member.

Overall the insurance penetration in India was 3.69 % in 2017 providing a huge

underserved market. Apart from this national health protection scheme under Ayushman Bharat launched in 2018 to provide coverage to more than 100 million vulnerable families. The companies in insurance sector also raised around U.S $ 6.7 billion through public issue in 2017. The insurance companies in India consist of 57 insurance companies of which 24 are in life insurance business and 33 are non-life insurers. Among the life insurers, Life insurance Corporation (LIC) is the sole public sector company in India. In addition to these, there is sole national re-insurer, namely General Insurance Corporation of India (GIC). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third party administrators servicing health insurance claims.

Out of 33 non-life insurance companies, five private sector insurers are registered to underwrite policies exclusively in health, personal accident and travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more specialized insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance.

The future looks promising for the life insurance industry as there were several changes made in the regulatory framework which will lead to how an industry conducts its business and how well the companies engage with customers. Factors such as increasing income level of the people and growing awareness of the need and protection and retirement planning will be a support to the insurance industry.

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Renewable Energy Sector In India: The Numbers In Favor - Achintya Saraswat Renewable energy resources are the way of generation of electricity in such a manner that the generation of electricity doesn’t pollute the environment in any manner. The dependence of generation of electricity is most dependent on non-renewable resources of energy in developing countries like India.

Not only it results in depletion of resources which are hard to find and extract, take millions of years to form, the process of generation of electricity via such sources also leads to bigger issues as global warming and climate change cause by the pollution created in the process.

Everybody in the world in looking towards non-conventional energy resources to generate the power needed. India is no exception to it. The Indian renewable energy sector is the 4th most attractive1 renewable energy market in the world. The country ranks 4th in the world in terms of total installed wind power capacity. The country also has a geological advantage of having the ability to generate green energy because of the vast demographical conditions as well.

Installed renewable power generation capacity has been increased steady over the years, posting a CAGR of 9.3 per cent over last ten years. India added record 11,889 MW of renewable energy capacity in 2017-18 and 1,832.3 MW (Mega Watt) in April-July 2018.

The focus of Government of India has shifted to clean energy after it endorsed the Paris

Agreement. With the recent increasing support of government and improved economics, the sector has become attractive from investors perspective as well. As India looks to meet its energy demand on its own, which is also to be expected to reach 15,820 TWH (Tera Watt Hour) by 2040, renewable energy is set to play an important role.

The current situation of India, in the field of green energy generation is improving by leaps and bounds. As of July 2018, total renewable power generation installed capacity in the country stood at 116.82 GW (Giga Watt), which is 33.80 percent of the total installed capacity of 345.49 GW. With a potential capacity of 363 GW(Giga Watt) and with policies focused on the renewable energy sector only, North India is expected to become the hub for renewable energy in India. According to data released by the DIPP (Department of Industrial Policy and Promotion), FDI inflows in the Indian non-conventional energy sector between 2000 and 2018 stood at US$ 6.83 billion. Moreover, more than US$ 42 billion has been invested in India’s renewable energy sector since 2014. Some major investments and developments in the Indian renewable energy sector are been seen lately. World’s largest solar park called as ‘Shakti Sthala’ was launched in region of Karnataka in March’18 with an investment of Rs 16,500 crore. Just for comparison solar sector in India received investments of about US$ 10 billion in 2017.

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Private investments in India's wind and solar power have increased by 47 percent in 2017 amounting to US$ 920 million, consisting of nine deals, as compared to US$ 630 million coming from ten deals during the corresponding period of time in 2016.

In the first half of 2018, investments in green energy increased 22 percent year-on-year. It is expected that by the year 2040, around 50 percent of the total electricity will be produced by the renewable energy resources, moreover the recent technological development in batteries and the amount of charge they can hold is increasing day by day, it is just can be predicted that batteries will be used to store electricity which would be generated through these means. Which will in turn further cut the solar energy cost by 66 percent as compared to the current cost of solar energy produced? One of the biggest problems of generation of energy from nonconventional resource is the storage. For example it is comparatively easier to generate electricity from solar cells, but the storage of electricity during the day so that it can be used at night is a problem. Currently the best battery that is developed has an energy density of 2.5MJ per kg, which is twenty times lesser than that of oil. What it means is that would need a twenty times heavier battery to produce similar energy as oil supplied resource. The problem only gets bigger if we consider bigger means of transport such as electric ships and airplanes.

The weight of battery needed to fly an aircraft across Atlantic powered by electricity will be over one thousand tons. But since many private firms are also now investing a lot into development of better batteries, this issue can be solved. Lithium powered batteries are being modified to increase their energy contribution to compete better with conventional energy resources.

The dependence on non-renewable resources

of energy had to stop eventually. As every year world uses 35 billion barrels of oil, we have already used 40% of oil in the earth, and with such rate, in less than 50 years will eventually run out of oil. Even if we ignore the political problems involve this is a big challenge. The good news in that our electrical systems are already equipped to use non-conventional energy unlike our transportation problems. Nevertheless recent developments in automobile industries are also letting us use eco-friendly technologies such as Hydrogen Fuel Cell and Electric cars.

Moreover recently scientists are trying to convert the solar energy into chemical energy, this is already happening in labs but the efficiency is too low. It is just about time when scientist will be able to overcome the challenge.

With the CAGR of about 9.5 percent recently, the renewable sector in India is showing a good growth. The realization of government towards promoting the green technology is also creating awareness. The recent increase in investments in the field is also encouraging. Thus the overall shape of the renewable energy sector in India is coming out to be quite good. With the current projections in next twenty years we would be self-sufficient to generate the energy that we need.

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Automobile Sector: Potentially Booming - Anisha Jose Indian automobile industry is now glancing through a new epoch. India being the fourth largest market for passenger vehicles is expected to emerge as the world’s third largest player by 2020. India is the largest two-wheeler market selling 17.7 million vehicles in 2017. Currently automobile sector is contributing more than 7% of the country’s GDP and is expected to grow to 12% by 2026 through the implementation of “Automotive Mission Plan 2016-26”. Availability of skilled labour at low cost and low-cost steel production have marked up the FDI inflow into the auto sector to 19.29 billion between April 2000 and June 2018. India is also a prominent auto exporter and has strong export growth expectations for the near future. India could successfully increase its annual production of passenger vehicles from three million to four million in just 7 years. And now is running for a target of five million vehicles in less than five years by foreseeing a growing young potential population. But this marathon is undergoing a cascade of disruptions from the global automotive industry, which have the potential to reshape the Indian automobile industry in unexpected ways.

Potential Global Disruptions : The global automotive industry is changing in a dynamic manner. With the introduction of electrification, the oil-driven vehicles are being thrown out and are replaced by lithium

and cobalt batteries. Along with the growing dominance of technology, the auto industry is also transforming and we are likely to see a new era of mobility soon.

There are a lot of discussions happening regarding the evolution of electric vehicles and its urgency. The factors like reduction of pollutants, the development of new intelligent transport system and lack of availability of finite fossil fuels in the near future proved the urgency for electrification in the automobile industry.

In the US alone, electric vehicle sales increased 21% last year. But China is ahead of every other country and is the largest electric vehicle and auto market in the world.

The country has the fourth largest reserve of cobalt in the world and is also a house of highest reserves of lithium. Thus, China is obviously on an advantageous position. These reserves will play a crucial role in the evolution of the automobile industry in coming years. Countries like Brazil, Argentina and Chile also have these raw material reserves. Also 2017 saw a lot of automakers making several crucial EV announcements. Toyota announced its plans to electrify its entire line-up by 2025, General Motors announced plans for 20 new EVs by 2023, and Volvo announced that all models introduced after 2019 will either be hybrids or all-electric. Meanwhile, Ford said it is investing $4.5 billion into 13 new EVs. Even Jeep got into the mix announcing its 16

plans to release a plug-in Wrangler in 2020.

On a snapshot, the global automobile industry is expecting 127 battery driven electric vehicle models to be launched world wide over the next five years. Better options integrated with familiarity and comfort is expected to accelerate the EV demand in future.

Electrification: The Indian Portrait Electrification in India is at its inception stage, where it has just begun the global race.

In 2017, India sold 2352 electric vehicles and its target is to have at least 15% of the vehicles on its road to be electric in the next five years, thereby joining a long list of countries around the globe that are already seeking to cut fossil fuel consumption to a large extent. “If at least 15 percent comes in the next five years, it will be useful for the country. This is a time for the country to think seriously about pollution”, Transport Minister Nitin Gadkari said at a conference organized by the Society of Indian Automobile Manufacturers in New Delhi. The early signs of growth are clearly visible in the country, as the Government is taking initiative through its energy- servicing company known as ‘Energy Efficiency Services Ltd’.

But as compared to other countries like China, India is a laggard in this global race of electrification. The country is definitely lacking clear guiding policies as china have, which offers various incentives to the EV makers in an effort to reduce the dependence on fossil fuels. According to Bloomberg NEF, EVs may account for about 7% of sales in India by 2030. In contrast China will account for 15% of the vehicle market by 2025 with a targeted sale of 7 million EVs. Exhibit 1 will show the comparison of India’s EV market with China, Europe and United States.

Hurdles for Indian Auto-Industry It is certain that the growing young population of India will create a huge market for the electric vehicles in the near future. However, India requires careful planning and execution of smart policies in this regard. Lack of the crucial raw material reserves (lithium and cobalt) will make the country more dependent on China for the raw material. India has only a few reserves of cobalt in Jharkhand, Orissa and Nagaland.

With this situation on hand, Argentina has approached India to invest in lithium reserves in the South American nation. But India hasn’t replied to their invitation yet. Also, the country is a facing a competitive disadvantage in power electronics and battery manufacturing and lack of infrastructure like charging stations. Apart from these hurdles, the Indian auto-industry may have a huge task of convincing its customers who remains wary of the EVs because of the cost, range and lack of options.

CLOSING NOTE: The automobile industry and market in India are at the verge of a huge and crucial transformation and this would become a. milestone the saga of the auto-industry. The 17

opportunities created by these global disruptions will change the competitors’ game by stepping beyond its traditional roles.

Careful planning and execution of the policies, along with handling of the risks associated with it will make India fly ahead of the era and bite the bullet.

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Precious Metals: Negative Net Exports Backed By Domestic Demand - Supriya Panse Precious metal segment is a very important sector for a developing country like India.

The value addition in this industry begins from sourcing and mining of the metals and extends to jewellery retail. Government of India has declared this segment as a focus area for export promotion. A campaign named “Brand India” is continuously promoted by Government of India on an International level. “Gem and Jewellery Export Promotion Council (GJEPC)”, is also set up by government for further expansion of this industry.

Precious metals basically include metals like Gold, Silver, Platinum, Diamonds, Bullions, etc. It contributes 7% to the GDP of India.

This is the segment which boosts the exports of a country & helps to get a good amount of foreign exchange reserves. Out of total merchandise exports 15.71% is a contribution by this sector. Not only this, Precious metal industry also generates & provides employment to large number of individuals.

Employment is provided to around 4.64 million workers, which includes both organized sector & unorganized sector.

Market size of this industry is about US$ 58.58 billion of which 55% is unorganized sector only.

As shown in the table below, Net exports in Financial Year 2017-18 was $30.67 billion.

UAE, US, Russia, Singapore, Hong Kong,

Latin America and China are the biggest importers of Indian gems & jewellery.

Diamonds India is the largest manufacturer of cut & polished diamond in the world. India exports 75% of the world’s polished diamonds, which is a big contribution. The diamond is like a “crown jewel”, of all gemstone. Around 90% of world’s diamond is passed to Gujarat for polishing. Mumbai & Surat are to backbone cities of Diamond industry in India. India exports 93% of its cut and polished diamonds produced, thus only 7% of the diamonds produced are used domestically. The diamond industry in India is a capital intensive industry in India.

A lot more amount of diamonds are cut & polished 19

in an unorganized sector. In this unorganized sector workers are paid on daily basis.

As shown above in the Table 2, total diamond exports were US $21.71 billion in financial year 2017-18.

Gold India is one of the top 5 countries in the world, which is exporting a large amount of gold jewellery every year.

India approximately exports jewellery to around 160 countries. High-end jewellery & machine-made jewellery is imported from Middle East or South East Asian countries.

Thus India is specialized in handmade jewellery. As shown in Table 3, imports & exports of Gold jewellery are fluctuating a lot.

Silver The Indian silver firms are reported to be going through a transition phase, upgrading their technologies to conform to international standards. The short supply of gold in the country and the rising prices of the yellow metal have in a way benefited silver jewellery manufacturers. India is the second

largest consumer of silver in terms of industrial fabrication next only to China.

India is one of the major exporters of silver jewellery and silverware. There has been a huge demand for silver in many countries like the United States and those in the Middle East. Silver is majorly used in Jewellery, Industrial application, silverware, photography & as an asset too.

Current Scenario of Precious metals segment in India In October, 2018 imports of Gold fell by 43%, due to depreciating rupee & subdued demand.

As on 17/11/2018, the Gold prices have seen a sudden increase in India as wedding season is at its peak. Not only this, weakness in the Dollar, has disrupted sentiments of an individual’s & so Gold is a better option to go for it rather than any currency.

Government of India along with Bureau of Indian Standards (BIS) is making hallmarking of gold in India a mandatory thing to maintain high standards.

Silver Prices have also seen a sudden increase due to industrial use. Silver is heavily used in Industries in India & so there has been as increase in demand and price.

Many big companies like PC Jewelers, PNG Jewelers, etc are coming up with Virtual Reality (V.R), experience for their customers.

In an “Indian International Jewellery Show” which was held in August 2018, has brought around ₹8000 crore of cash flow.

A “Common Facility Centre (CFC)” in Kerala is to be set up by Government of India.

The Gems and Jewellery Export Promotion Council (GJEPC) has signed a MoU with Maharashtra Industrial Development Corporation (MIDC) to build India’s largest jewellery park in Navi Mumbai.

Rhodium- a by-product of platinum is 20

world’s most expensive precious metal, is even expected to become more costly. The main reason for which is as South Africa threatens supply shortage.

Impact of GST, on precious metals Thus this GST rates have impacted this industry at a large. According to the Analysts further Growth can be expected in this industry. Government keeps a large amount of Gold reserves. Not only this stocks, futures, forwards, options & Mutual funds are also traded on these precious metals. Thus this being a very sensitive sector, it has a direct impact on Indian economy.

21

Indian Retail Industry: Can E-commerce Win The Retail Battle?

- Samriddhi Batnagar The growing population of India has been one of the major contributors to the growth and success of the retail industry in the country.

Since the arrival of the millennials the expectancy of online shopping spree has aggressively increased, and hence the retail industry has been experiencing an exponential growth, with retail development taking place in major metro cities as well as tier 1 and tier 2 cities.

According to a recent report by India Brand Equity Foundation (IBEF), India is expected to become the World’s third largest consumer economy reaching US $ 400 Billion in consumption by 2025. India’s retail market is set to increase by 60 per cent to reach US$ 1.1 trillion by 2020. At Present, India leads in terms of per capita retail store availability making it a favourable market for retailers.

The major contributions to the retail industry comes with the advent of new technology in the country, which has contributed to the growth of E-commerce. The e-commerce retail industry in India has grown substantially due to increasing internet penetration, smartphone usage and language diversity on e-commerce platforms.

In India, the online retail market has grown by leaps and bounds from its weak state in the mid-2000s to its current market of USD19.5 billion worth of transactions. Strong government initiatives with reducing prices of smartphones and data plans by telecom

service providers have led to an increase in adoption of internet amongst new users. Consumer behaviour has also evolved wherein ecommerce initially was more of a heavily discounted market place, to today where many users are seeking convenience of ordering products from the comfort of their homes, rather than visit physical stores.

Online retail sales as a percentage of total sales have shown a tremendous rise, going from 0.8 percent in 2014 to 3.6 percent of total retail sales in 2018, with the advent of online websites like Amazon, E-bay, Flipkart, etc.

But does this signify a slowdown in physical visits by consumers?

Against the online giants like Amazon and Flipkart, It is known that the Indian retail industry especially super markets and hypermarkets are expected to grow at 20 22

percent per annum. Currently, Aditya Birla Retail has a total of 658 “MORE" branded retail outlets and 20 hypermarkets covering more than 2 Million square feet whereas the largest retailers in the segment is Reliance Retail which has 3837 stores with an area of 17.7 million square feet. This signifies that while the online growth has been enormous with a lot of support, 95% of the market is still with offline sector, with the presence of the unorganised stores like mom-and-pop stores and stand-alone stores.

expects double-digit growth in same-store sales by March 2019.Departmental store chain Shoppers Stop, too, sees 12% growth in same-store sales for financial year 2019.

Avenue Super marts, which runs the hugely popular chain, D-Mart, has pegged its samestore sales growth figure at over 20% for financial year 2018.Future Retail, which runs the Big Bazaar stores, has seen its stock price nearly double in the past year following sustained quarterly growth of over 10% in same-store sales during the period.

(Source: ibef.org) Consumers of different ages prefer in a variety of ways to advent towards retail stores whether online or offline for shopping for daily essentials, which is evident that consumers would rarely be found shopping online for as mere a thing as bathroom essentials or kitchen essentials. Due to the presence of big retailers with physical sopping stores like reliance trends, Avenue super marts, future retail group, shoppers stop, etc and the consumer preferences, The shift to organised large-format chains has been on in the last decade, but only at a snail’s pace.

But that’s changing now. Demonetisation and implementation of GST have been a big game changer for organised retail in India, allowing them to gain share from unorganised trade.

Because of all this reasons there has been an increase in sales of almost all organised players. Value fashion retailer V-Mart

What can digitalise e-commerce giants do to gain over this distribution?

Over the past few months, the Indian ecommerce industry has witnessed a lot of M&A activity. Recently, Amazon acquired Aditya Birla Group Retail arm MORE for a value of Rs 4300 crores. Walmart paid Rs 1,16,900 crores ($16.7 billion) to acquire a stake in Flipkart. These acquisitions signify the need recognised by these giants to collaborate and bring about a change in the Indian scenario of shopping physically.

Naturally, offline retailers have started making some noise about the low prices offered online; the e-commerce laws in India are yet to be defined and offline retailers have approached the government to intervene in their price war with the online merchants.

Currently, the online e-commerce players are not allowed to hold inventory as per government policy. This provides immense benefit to players such as Reliance Retail.

Moreover, the online market place model cannot sell in the 2nd and 3rd tier cities and categories such as grocery. This move by Amazon would help enhance and combine the inventory based model with the online ecommerce model by making MORE an online seller in the Amazon market place.

Consecutively, other online retailers are seeking such options of mergers with offline 23

retailers to avail advantage and gain more consumers and acquire significant market share.

Online shopping has witnessed Indian consumers because of attractive websites, multiple online stores, with countless options and trending fashion, easy and secure online payment methods. The frenzy of online buying has it offline retailers as buyers quite often prefer shopping online for lower prices and dependable delivery options.

Consumers in India have become smart shoppers, preferring to do exhaustive research before they find the best prices and deals for the things they want to buy's-commerce is expanding steadily in the country. Customers have the ever increasing choice of products as there has been an increase in variety at the lower rates. E-commerce is probably creating the biggest revolution in the retail industry, and this trend would continue in the years to come.

24

Iron And Steel: Growing Ahead - Bidisha De Being an industry on which transport and communication industries directly depend upon, there’s no doubt that the Iron & Steel Industry is one of the growing sectors of the world as a whole. In 2017, it was accounted that about 25% of the world’s total steel production was done by the top 10 steel producers of the world.

Even India has proven its position in this industry and was ranked as the third largest steel producer after China and Japan in .2015 According to Steel Users Federation of India (SUFI), India surpassed Japan by February 2018 to become the second largest producer of crude steel of the world.

India’s Performance India has shown remarkable growth as a producer of both crude steel and finished steel.

Crude steel being the first solid steel product formed right after the solidification of liquid steel and Finished steel being the final steel produced that can be directly utilized for other purposes.

From 2008-2018, India’s finished steel consumption grew at a CAGR of 5.69% to reach 90.68MT. At the same time, India’s total crude steel production grew at a CAGR of 6.63% reaching to 102.34MT from 58.44MT in FY09.

Besides this, India’s finished steel exports

increased by about 17% on a YoY basis.

To encourage the export of Iron Ore, our Government has also levied an export duty of 5% (which was previously 15%) to the domestic steel industry. Adding to this, curbing down the import of iron & steel has also shown a remarkable effect in this industry. With all the big and small players in this industry, about 2% of India’s GDP is contributed by this industry.

25

Some Iron & Steel Producers in India •TATA Steel (Formerly known as TISCO) was founded in 1907 by J N Tata, is the oldest player in this industry. Listed as the top ten global steel producers with a crude steel producing capacity of 30 Million tonnes per annum, this company ranks the second-most geographically diversified steel producer of the world.

•JSW Steel Limited (Jindal South-West Steel Limited) started as a single steel mill in 1982 and now it stands as the US $9 billion conglomerate spread over six locations in India. It ranks as one of the lowest-cost steel producers of the world, and amongst 40% of its products are considered high-valued steel today and about 1/5th of this is exported.

•Rashtriya Ispat Nigam Ltd. (RINL), also known as Vizag Steel, after a gap of three years, have posted hopes of getting back into the game. With an EBITDA of Rs.200 crore, the second largest steel-maker in the public sector has also posted a net profit in March 2018.

• Although, not having a huge market share as TATA and JSW steel, SAIL (Steel Authority of India Ltd.) is still one of the strong players in this industry. Being a producer of both Basic & Special Steel, SAIL is one of the seven Maharatnas of the country’s Central Public Sector Enterprise.

• Jindal Steel & Power Limited also ranks as one of the major steel producers in India with a significant presence in mining, power generation and infrastructure. It is a part of the US$ 18 billion diversified Jindal Group conglomerate and has an annual turnover of about US$ 3.6 billion.

• With all the major players in the market, even the small players hold a strong ground, as this is a sector that will always have demand from other sectors.

Problems in the industry No matter how big and strong an industry is, there are always some challenges they have to overcome and loopholes that they have to fill in. The steel industry is no exception to this.

As mentioned earlier, with the increasing demand from other sectors, it becomes necessary for this industry to meet the demand and supply accordingly. However, the Indian steel industry is known for low potential utilisation due to factors like strikes, lockouts, scarcity of raw materials, energy crisis, etc. This low potential utilisation, in turn, affects the steel production and in order to meet the demand from other sectors, steel needs to be imported.

India’s next target in this industry is to increase its annual steel production to an amount of about 300MT by teem oT .2030 esaercni ot eriuqer dluow aidnI ,tegrat siht htiw dna tnuoma eguh a ot noitcudorp leets ti ,leets fo noitcudorp fo tsoc gnisaercni eht a rof egnellahc rehtona emoceb lliw .aidnI ekil yrtnuoc gnipoleved The cost of production is directly or indirectly dependent on transportation and technology.

In India, most of the freight transport is done via railways which compromises the passenger fares with that of the freight. On the other hand, India still lacks modern technological inputs and hence steel making becomes more time consuming, expensive and yields low-quality products.

Indian iron and steel industry is dependent upon high-grade coking coal for the purpose of smelting of iron ore. Having a limited amount of these metallurgical coals, India is bound to import them from other countries.

For example, RINL has to rely on imported coal from Australia for their steel production.

Good news is, this issue has been noticed and thoughts are being given to replacing coal with natural gas from Krishna-Godavari basin.

26

Adding to all the above issues, India’s per capita labour productivity is also very low )about 100-90tonnes (compared to that of other major steel producing countries .

Conclusion Despite the growing demand of this industry, India’s per capita steel consumption is about 61kgs, whereas that of the world is about 208kgs (according to 2017 reports). With this huge difference in the per capita consumption amount, it is evident that the demand for steel is very high worldwide.

To meet this high demand and to increase the production & export of steel, the Indian Government has come up with policies like NSP dna (2017 yciloP leetS lanoitaN)2017 citsemod eht egaruocne ot ycilop .leets & nori fo srerutcafunam Thus, being an industry strongly supported by the Government, it is expected that India will overcome all its challenges and meet its target of producing 300MT steel annually by 2030.

27

Real Estate: Goliath of Regulations - Simran Abhichandani 2018 has been a roller coaster ride for the Real Estate sector in India. From the ups and downs in the demand and prices of the residential or commercial properties to the implementation of RERA in full form, we are seeing it all. So, is real estate still the most favourite child of investors? Is the industry a stable one? Is the demand still growing for real estate? Are all components of real estate reacting accordingly? These are some of the questions that are definite to pop up in our heads as we read the news headlines, which differ their opinion on the industry every month. Not to blame the media, as we said, 2018 has indeed been a playful area for the REAL ESTATE industry in India.

First things first, the following are some of the facts of Real Estate industry as a whole: It is one sector that is recognized globally.

It is the second largest employer for skilled as well as unskilled labour, first being agriculture.

Expected to grow at 30% over the next decade.

The real estate sector comprises of four sub sectors, namely - housing, retail, hospitality, and commercial.

The growing corporate environment and the demand for office space as well as urban and semi-urban accommodations.

The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of

the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term.

OVERALL INDUSTRY ANALYSIS: The real estate industry is basically divided into commercial and residential real estate services, although some asset management and brokerage companies engage in both.

Both of these segments are quite fragmented. In each of them, the fifty largest companies make for about 30% of the industry’s total revenue.

INDUSTRY RISKS: Macroeconomic factors: There are several factors that are outside the control of a business. Example: Downturn of economy of a country Excess supply: Building of new properties, and/or newly for sale properties in the area can drive rental or property prices down as well.

Changing demand: A location once coveted can change quickly and properties can become less desirable. Of course, the reverse is also true.

Changing requirements of business 28

management companies: This is particularly in relation to aging properties.

Example: Indoor air quality liability can be a serious legal issue, as can required removal of mild growth.

MAJOR INVESTMENTS 2018: February 2018- DLF bought 11.76 acres of land for its expansion in Gurugram, Haryana.

May 2018: Blackstone group acquired One Indiabulls Chennai from IndiaBulls Real estate for around rupees 900 crores.

Apr-June 2018- New housing launches across top seven cities in India increased 50% quarter-on-quarter.

September 2018- Embassy office parks announced that it would raise around rupees 52 billion through India’s first Real Estate Investment Trust (REIT) listing.

MAJOR PLAYERS (WORLD): In all, 38 real estate investors made the Global 2000 list this year—not including firms such as Blackstone,

the private equity giant that has a massive property portfolio but also invests in many other asset types.

These companies include diversified players like Brookfield (which in addition to a range of real estate assets invests in infrastructure and renewable energy), as well more specialized owners such as cell tower giant American Tower Corporation, Mall owner Simon Property Group and warehouse king Prologis.

The names that made it to the Forbes list are: 1. Brookfield Asset Management- Canada 2. American Tower Corporation- United States 3. Simon Property Group- United States 4. Annaly Capital Management- United States 5. Prologis- United States 6. Link REIT- Hong Kong 7. Weyerhaeuser- United States 8. Gecina- France 9. Klepierre- France 10. Westfield- Australia 11. Public Storage- United States 12. AvalonBay Communities- United States 13. General Growth Properties- United States 14. Ventas- United States 15. Boston Properties- United States

MAJOR PLAYERS (INDIA): 1. DLF 2. Unitech Real Estate 3. Supertech 4. Omaxe 5. HDIL 6. Kolte Patil 7. Pura Vankara 8. Brigade group 9. Oberoi Realty 10. Hiranandani Developers 11. Jaypee Group 12. Godrej Properties

29

FEW HICCUPS Just when the real estate sector was regaining and maintaining its momentum, a news flashed. Although only for a particular segment of REALTY, it was bound to shake the base of Realty in India. In its article titled ‘2018- the year real estate died’, Mint informed that the residential segment of real estate had been down in the dumps. As shocking as it may seem, property prices in Delhi, actually fell by 0.70% annually between June 2013 to September 2018.

During the same period, property prices in Mumbai and Bengaluru increased annually just by 7.50% and 5.75% (Source: National Housing Bank report). However, what lies ahead for real estate in entirety is the burning question as of now.

Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.

Only time would unveil the reality of realty now.

THE ROAD AHEAD: The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The growing flow of FDI into Indian real estate is encouraging increased transparency.

30

Media: From Controversy Into Profits - Akanshi Bhargava The media and entertainment industry consists of film, print, radio, and television.

These segments include movies, TV shows, radio shows, news, music, newspapers, magazines, and books.The Indian media and entertainment industry is growing very rapidly. This growth is attributed to increasing digitization and internet usage over the last decade. The development of the Media and Entertainment Industry is also due to the growing disposable income and the stable economic environment.

Radio and Television Industry The radio and broadcasting industry consists of two types of companies one is the public service broadcasters and the other is commercial broadcasters. The public service broadcasters are funded through public money while the commercial broadcasters are funded by advertisement spots. Radio and television broadcasters acquire content for broadcasting, such as entertainment, news, talk, and other programs. Many television broadcasters use digital broadcasting to transmit pictures that have higher resolution, known as high-definition television (HDTV).

They can transmit a single HDTV broadcast or transmit several conventional broadcasts.

Television is the mass media in India, it has produced many celebrities who have attained national fame. The reach of television has even increased to the rural India. The major

players of media industry are Doordarshan, Star Television , Zee Television , Sony Television , Discovery channel to name a few.

Print Industry The print industry consists of publishing companies that produce newspapers, magazines, books, journals, and periodicals.

The Indian print industry has grown to 3% in 2017 reaching Rs 303 billion. The market size of the Indian printing industry has risen from USD 10.2 billion in 2014 to 12.7 billion in 2017. It is expected to grow at an overall compounded annual growth rate of 7% till 2020.The major players in printing industry are: DIC India Limited, Gopsons Papers Limited, Orient Press Limited. The readership rate has grown by 110 million over the last 3 years with rural reader base being more than the urban population.

Film Industry The film industry has a great influence on the youth of today. The films are screened in various languages like Bengali, Telugu, Tamil, Hindi. It consists of large and independent studios. It comprises of three sub sectors: film production, film exhibition and film post-production. The Indian film industry is the largest in the world with major studios in Mumbai, Calcutta, Chennai, Bangalore and Hyderabad. There are various 31

job opportunities available due to the launch of cable channels in the domain of direction, production, graphics, editing. It is one of the biggest employment generating industries in the Indian economy.

It has also been observed that the Indian film industry has been involved in illegal activities of hiring some IT professionals to launch Denial-of-service attack against companies who are violating the intellectual property rights. Denial-of-service attack is a cyber attack in which the perpetrator makes a network source unavailable to its intended users.

Recent Development / Investment The Foreign Direct Investment in the Information and Broadcasting sector from 2000 to 2017 was US$7.17 billion as per data released by Department of Industrial Policy and Promotion.

Twitter announced a video content collaboration with 12 Indian partners namely Red Chillies Entertainment, Viacom18’s music platform Vh1 Supersonic, Comic Con India, Network 18, news publishers such as NDTV, Film fare and mobile app for cricket CricBuzz for live streaming of sports , entertainment and news.

PVR Ltd has reached an agreement with South India’s largest premium cinema exhibitor SPI Cinemas to acquire the company for Rs 850 crore. SPI Cinemas operates brands like Sathyam Cinemas, Escape, Palazzo, The Cinema and S2, in the states of Tamil Nadu, Telangana, Andhra Pradesh, Karnataka, Kerala, and Mumbai.

Star India’s sports arm Star Sports has acquired the broadcast and digital rights for New Zealand Cricket (NZC) for the Indian subcontinent and South-East Asia till 2020.

For the next three years, Star Sports will be the official home of all men’s and women’s International matches being organised in New

Zealand. India is expected to play a total of 3 Tests, 10 ODIs, and 3 T20s during this period in New Zealand.

The Indian digital industry is expected to grow by a compounded annual growth rate of 32% by 2020.

The increase in the total number of mergers and acquisitions is 5. From 58 in the year 2016 to 63 in the year 2017.

Government Initiatives One of the government initiatives is the development of National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Telecom Regulatory Authority of India would request the Ministry of Information and Broadcasting to FastTrack the recommendations of broadcasting.

India and Canada have signed an audiovisual co-reduction deal for producers to exchange their creativity and their culture.

The Foreign Direct Investment limit was increased from 74% to 100% in the media industry. It also granted film industry an industry status to access institutional finance.

Road Ahead The growing affinity towards digital media is forcing the media industry to rethink the older paradigms of entertainment. There is a shift in the focus of the entertainment providers from urban English entertainment episodes to entertainment in multilingual languages. The reduction in 4G tariff has led to the penetration of digital entertainment in remote parts of the country. The increase in income of the growing population has led to the rising demand for digitized services.

The growth of the Media industry is expected to be more than the global average growth.

The growth is expected in the retail advertisement sector as well due to the upcoming e-commerce business.

32

FMCG: Fast Moving As The Name Suggests - Chandrayee Mukherjee FMCG, the fast moving consumer goods, or the consumer-packaged goods are the goods, which are sold quickly and at relatively low costs. Examples are- packaged foods, beverages, toiletries, over the counter products. Many of them have short self-life, may be because of high consumer demands or the quick deterioration of products. Though the profit margin is relatively small more so for retailers than the producers or suppliers.

They are sold in large quantities and cumulative profit is substantial. It is the fourth largest sector in the Indian economy.

Household and Personal care is the leading segment having 50% of overall market followed by hair care products (23%) and food & beverages (19%) in terms of market share. Growing awareness, easier availability and changing lifestyles are the key factors for its success. The number of online users is likely to cross 850 million by 2025, says Indian Brand Equity Foundation. Retail markets is estimated to reach $1.1trillion by 2020 from US$672 billion from 2016, modern trade expected to grow by2025percentage per annum, which is likely to boost the revenue of the FMCG industries. People are mostly preferring Ayurveda products mainly Patanjali, it has earned a revenue of US$1.57 billion dollars from FY2017. The company plans to expand globally in next 5-10 years. If we make a comparative study between

the growth of FMCG sectors in the financial year 2000 to financial year 2017, we can come across the following points: It has evidenced the growth from US$9 billion to US$49 billion from 2000 to 2017, market size of chocolates which was less than US$100 billion now it has reached to US$ 1766 billion. Market size of personal care products, which was less than US$3 billion, has now reached to US$12.58 billion. HUL’s personal care products had acquired a market share of 50% but now had reached a market share of about 37.4%. There are three major segments in FMCG industry. They are classified as food and beverages, household goods, and health-care products. Food and beverages accounts about 19% of the market share, which includes chocolates, cereals, ice creams, processed food products, dairy products, tea, coffee, flour etc. Healthcare products accounts for about 31% of the market share which includes over the counter products. Household and personal care accounts for about 50% share in the market, which includes hair care, skincare, cosmetics, deodorants, feminine hygiene, paper products etc.

The FMCG sector had generated a growth of US $ 49.3billion in 2016 and it is expected to grow by US$103.7billion in 2020, thus the market becomes more compliable and demonetisation brings a slow benefit to the 33

organised FMCG industries. The primary focus is on the agriculture, healthcare, MSME and primary education, employment, and infrastructure in the Union Budget 20182019.The above initiatives help to increase the disposable income of the hands of common people helping in the growth of FMCG industry.

MARKETSHARE

50%

31% 19%

goods and services produced finally at a particular period. India has witnessed a slowdown since past 3 years and it is expected to grow for more than 15% in the coming 2-3 years. This can be only possible if the company focuses on brand penetration, says a research. The industry growth rate has fallen to 0.8 from a historical growth of 1.2 says a research. The recent report also says that the slowdown is quite perplexing since it has evidenced a change in the consumer spending power or may be the growth of the non-FMCG companies.

REVENUE(US$BILLION)

HEALTH CARE 103.4

FOODS AND BEVERAGES HOUSEHOLD AND PERSONAL CARE 49.3

The government of India has allowed FDI(foreign direct investments) on online retail stores through an automatic route that will help the existing business. GST council also covers the FMCG goods which has covered the toothpaste, soaps to come under this bracket, helping the FMCG industry against 23-24% rate previously. The major companies playing role in the FMCG goods are HUL, COLGATE, ITC NESTLE, PARLE, BRITANNIA, MARICO, P&G, AMUL, and GODREJ. Consumer product manufacturers like ITC,GODREJ,HUL has reported a very good healthy market share, and as evitable the aggregate performance of top 10 companies are shown over the past 8 quarters, when the average growth is about 16-21%. Biscuits and confectionery maker PARLE has tried to increase from 15% share to 18% of market share from 2016 to2018.

ITC has generated highest revenue until 2017.

GDP has also affected the industry in the following ways. GDP is the gross domestic product. It is the monetary measure of all the

68.4

57.4

REVENUE(US$BILLION)

TURNOVER (Rs. Crores) 4 2.15 6 15

17 7

83

87 61 1 7.3

HUL

COLGATE

ITC

NESTLE

PARLE

BRITANNIA

MARICO

P&G

AMUL

GODREJ

PARLE

In Japan, it has a budget of $1.99trillion while USA it has a budget of $2.45trillion.In the following years due to advancement of 34

technology, a strong work ethic and government industry co-operation it has helped Japan to develop a strong economy.

Whereas in USA the market dominated economy makes most decisions although long-term stagnation of labour wages, in USA has been a major threat. Japan has faced a threat of deflation. When the durable goods price has grown up by 9% in China, India has grown by percentage. These are because in China 46% of the goods growth occurred via modern trend while In India it has gone via older trends only. So effective brand improvisation is needed.

The FMCG industry is creating a huge chance of direct employment out of approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. The sector is responsible on social contribution like providing employment on lower educational groups. Over the upcoming years, the market is estimated to grow by US$100 billion, according to the Market research firm done

by Neilson.

Hence, the sector has undergone various competitive strategies to undergo. Thus the advent of MAKE IN INDIA comes after researching into these 25 sectors of FMCG. Hence most of the innovation , fostering technology has come with their advent and many more are yet to come.

According to BCG analysis, the performance wise FMCG sector can grow and characterised by the following pattern. They are:1. CASH-COWS- they are included some brands like AXE AND VASELIN in HUL, CIGARETTES in ITC, CERELAC of NESTLE, DABUR VATIKA in DABUR, ARIEL in P&G. 2. STAR-they include the products if high growth and high market share. Are LUX and SUNSILK of HUL, PAPERBOARDS of ITC, NESCAFE and MAGGIE of NESTLE, FRUITJUICE of DABUR, PANTENE of P&G. 3. QUESTION- RIN of HUL, FINANCIAL of ITC, KITKAT of NESTLE. 4. DOG- WHEEL of HUL, ITC INFOTECH of ITC. 35

Indian IT, ITes & BPM Industry Analysis: Facts and Figures - Kartik Bhardwaj

India is the world's largest sourcing destination, with approximately 55 per cent of the US$ 185-190 billion market in 2017-18.

India’s highly qualified technical graduates is one of the largest talent pool in the world and the country has an advantage by being 5-6 times inexpensive than US in terms of cost.

Revenue of Indian IT industry reached US$ 167 billion and exports stood at US$ 126 billion in 2017-18. Export revenue from the digital segment forms 20 per cent of the industry’s total export revenue.

Total export revenue of the industry is expected to grow 7-9 per cent on an yearly basis. Moreover, India’s IT-BPM sector is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 5055 billion out of the total revenue.

The computer software and hardware sector in India attracted cumulative Foreign Direct Investment inflows worth US$ 32.23 billion between April 2000 and June 2018 and ranks second in inflow of FDI. The Government of India has also extended tax holidays for the IT sector for software technology parks of India (STPI) and Special Economic Zones (SEZs).

Moreover, it is providing procedural ease and single window clearance for setting up

facilities.

Also, the government has recognised that Information Technology is one of the 12 champion service sectors for which an action plan is in process. It will set up a US$ 745.82 million fund for valuating the potential of these champion service sectors.

Growth Patterns, Constraints and Government Initiatives The computer or information technology (IT) software industry in India is still in its evolving. Yet, its growth and development has caught the attention of the world market so much so that India is now being looked as the major powerhouse for incremental development of computer software. The reason for this attention is its rapid growth rate during the 1990s and its projected growth rate in first decade of 2000.

According to the National Association of Software and Services Companies (NASSCOM), India’s quasi-governmental software industry promotion organization, the software industry in India was worth US$ 5.7 billion in 1999-2000, whereas ten years back its worth was not more than US$ 150 million.

The 3 most important factors that has driven this progress of the domestic software market is the growth of the export market. While 36

While still a relatively small share of export. market, India’s software export business is flourishing and export revenue has been growing at an increasing rate. In terms of Indian rupees, the compound annual growth rate (CAGR) for India’s software export revenues for the past five years has been as high as 62.3 percent, compared to 46.8 percent of CAGR for its domestic market revenue during the same period.

With a gradual beginning in 1984-85, software exports have moved up from US$ 734 million in 1995-96 to US$ 4 billion in 1999-2000.

Furthermore, NASSCOM’s survey in 2000 indicates that more than 185 of the Fortune 500 companies, i.e., almost two out of every five global giants, outsourced their software requirements to India during 1999-2000.

Top 10 Hidden Factors Affecting Software Stocks

online business can impact software business revenues. For instance, certain versions of a Linux operating system may run only on certain hardware or a Google.

Chromebook laptop may need specific hardware from a specific company. Any direct or indirect disaccords in the business model, infrastructure, and revenue between the two dependent companies can affect the business severely.

3. Customer Retention Lifecycle One crucial measure of software business expectation lies in how long the company can keep a customer locked-in for continuous stream of revenues. Determining factors are the customer’s costs for shifting to a competitor, operational challenges in a shift in terms of dependencies on processes, people, and technology, new offerings from competitors, and the duration of license or service contracts.

1. Customer Profile The customer profile includes customer specific details like geographic, demographic, and psychographic characteristics, along with buying patterns, business needs, software spend estimates and purchase history. It can largely impact the revenues and profits for a software company. A company with a few number of large customers contributing most of the revenue can shift its focus on customer service. Although, such a customer base also carries risk because the loss of just one customer will immensely affect the company’s profits. Hence, one should consider the customer profile when evaluating future revenues of a software company.

4. Scalability Potential Microsoft is a best example of a company that created a benchmark and reaped the benefits of selling multiple copies of the same software on larger scales, resulting in profits without additional costs. A software company selling market data through endof-the-day daily files can multiply revenues without.

2. Partner Profiles A partner like a hardware provider for a customized software offering or a depending source like search engine rankings for an

5. Innovating and adapting to new technologies The traditional model of selling software on a CD and leaving the customer responsible

any additional costs. Generally, increasing software revenues/sales result in increasing profits at little or no additional cost.

Scalability potential assessment is an important parameter in evaluating a software business.

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for installation, self-learning, and usage is getting obsolete. Newer software companies are on the cloud, mobile, and social platforms. They sell software-as-a-service (SaaS) with continuing subscription fees instead of software as a widget for a one-time payment. Older companies like Microsoft have been struggling transition to a cloud platform and bring the system licensing fees to zero for its traditional server operating system software.

Investors should keep a close eye on the openness of the company to adapting to emerging business trends.

6. Expansion to new business tangents For years, Microsoft has continued to focus on desktop and laptop computers even as customers were getting to mobile centric devices. When Microsoft finally adapted the trend and offered mobile devices that ran on a Windows phone operating system, it had a clear message of making itself compatible with the needs of the changing customer demands. A customer on a Windows phone will be lead to more Bing search traffic which in turn may provide additional advertising revenue from Microsoft.

7. The goodwill and brand value of the product and the services offered Linux, Solaris, Ubuntu, Chrome and various other mobile operating systems exist, but Windows still continues to be the dominant operating system. An evaluation on how much the brand value and uniqueness of software product and services offered can provide insights into business future and associated revenues.

Hence, the companies should portrait themselves as they have the potential to stand out and will perform according to the expectations of its investors. The future plans of the companies should be clear with the investors as they should which way the company is headed and will it fetch them what they expect in return.

The Bottom Line Valuating any business is a tough task, but valuating a software company is a special challenge. In addition to standard financial figures, investors should also consider a lot of other factors like customer base, business model, scalability, and visibility before investing in a software company.

Quick fact: Spending on Information Technology in India is expected to grow over 9 per cent to reach US$ 87.1 billion in 2018.

The future of IT sector in India India is the foremost offshoring destination for IT companies across the globe. Having proven its capabilities in delivering both onshore and off-shore services to global clients, emerging technologies are now offering an entire new spectrum of opportunities for top IT firms in India.

Export revenue of this industry is being predicted to grow at 7-9 per cent year-onyear to US$ 135-137 billion in FY19.

8. Future expectations of investors Any investor looks for clear estimates about future revenues, and the same applies to software companies.

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Market Watch: Growth and Growing Intentions - Revathi Menon

India being the fastest growing country among other emerging countries is always an attraction for the investors who look for investment opportunities. India is booming in terms of economic growth which also inclusive and sustainable due to the highest domestic savings rate and the largest working population in the world.

It’s often difficult to assess the driving force of the market as a whole. A stock market is a combination of small and large investors making complex uncoordinated decisions about a huge kinds of investments. Some indicators that help in assessing the markets are supply and demand, wars and conflicts, inflation and deflation, fiscal and monetary policy, natural disasters, technological change, and government performance. Every stock exchange acts as a barometer to measure the economic condition of any country. All the major changes in the economy are affected by the prices of the shares. It’s often referred as the economic mirror or eye of the economy. Investors are attracted and encouraged to invest more due to the number of investment opportunities the stock exchange offers.

Market is in equilibrium when supply equals demand where supply is the amount of shares people want to sell and demand the amount of shares people are willing to buy. In trading, the investor buys stock when he or she believes its value will increase and this

helps in earning profits. When a group of investors believe that an asset value will increase in the market then it is termed as bullish market. A person who is bullish tends to hold the securities for a longer time. Bull market is when an asset’s price is increasing in the market. When an investor feels that he is able to buy the asset back at a lower price, it’s termed as shorting. Bearish is the belief that price has every chance of falling.

The Indian IT industry saw a growth of 167 billion dollars in the year 2017-18.Exports from the It sector also grew by 126 billion dollars in financial year 2018. The revenue from the sector alone amounted to 38 present of the forecasted US dollar 350 billion. The exports for this industry grew up to 9 present.

In the year 2017 India became the 4th largest automobile industry in the world with sales from the sector rising up to 9.5 present. The industry is one of the major attractions of the foreign investors and has a foreign direct investment of 19.29 US dollars. One of the giants in automobile sector that is the Mahindra and Mahindra is planning to invest Rupees 500 crore for its plant expansion. This sector is expected to grow to reach Rs.16.1618 trillion by 2026.

The aviation industry sector is one of the fastest growing industries in India during the last 3 years though it’s challenging. The loss that is expected to occur in the aviation sector sums up to Rs3600 crore approximately in the 39

2018-19. Indigo, once the market leader did slowdown in the year 2018-19 due delays in aircraft deliveries and other operational and technical glitches. Many of the domestic carriers experienced a slowdown in its performance in the last financial year.

In the view point of stock market Indian banking sector is popular sector. The expected credit growth in this sector is to grow 15 percent and the GDP to grow by 7 percent in FY19. According to the Global rating Agency Moody’s the Indian banking system is stable. The fourth largest sector in the Indian economy is none other than the Fast moving consumer goods sector which is expected to grow to 74 billion dollars in 2018.

Some of the top firms in this sector is Hindustan Unilever ltd., ITC, Nestle etc. The overall growth in the Iron and steel sector has been due to the cost effective labour and the market size grew up to 5.69 percent in the financial year 2018. The foreign investment amounted to 10.84 billion in the year 2018.

5.7 percent is the expected steel consumption in the country in the year 2018.

Indian retail market will reach 827 billion dollars by the end of 2023.Due to the increase in price of Indian commodities across the globe the retail sector will experience a sudden boom in the coming years. Tourism sectors holds 9.6 percent GDP of India and the third largest in earning foreign exchange in the country.

The pharmaceutical sector is one which can never be ignored. This sector is bearish for the past few years and one of the best sector to invest on a long term basis. Some of the players in this sector are Sun pharma , Glenmark , Pharma , Aurobindo Pharma etc.

When we invest in stocks the first factor we should take into consideration is the life span of the products, services offered by a particular company. It should be in the market for at least 10-15 years. So while investing in any sector a person has to analyze the sector

in a deep manner ad investigate up on stocks gaining and losing every day in the stock market. Infosys, Wipro, HUL are some of the companies that gives loyalty to their shareholders. An intelligent investor will always look up on diversifying the risk and investing in the booming sectors of the Indian economy for a long term investment.

Allocating funds in different sectors can always help in diversifying the risk factor and earn a profit and Indian economy Is one economy where diversification is possible to a large extend. One should know about the business of the company where he or she is investing and this often creates trouble for people ,also people tend to go by the opinion of others and this can back fire.

Until and unless you don’t know the company and their business we should never invest in that. In India most of the investors are still unaware about the stock market and its functioning and acknowledging them about the functioning of the business can help in improving the condition of stock market investors in India.

1043 million barrels per day in 2019 and down from 1.64 million barrels per day in 2018 as per the Organization of Petroleum Exporting Countries (OPEC) report.

The major reason behind lower growth is because of the trade and disputes between the United States China and the emerging market turmoil. But, apart from this considering the oil industry as a whole the oil demand is likely to remain healthy in the market.

Agricultural commodities like turmeric is expected to see a down fall from the range of Rs7050 to Rs7200. Shares in commodity cotton is likely to witness correction to Rs23,550 in the international market.

Base metals like copper is likely to see an increase from 418 to 428 in the market, followed by zinc from 172 to 177, followed 40

by lead from 144 to 149 and aluminum can go even higher to rate of 147 being 143 its support level on MCX. India is country where there is potential in untapped market and MCX has been taking various initiatives to develop markets with help of innovation, educating and researching, and focusing on spreading awareness on the modern techniques as well as mechanisms that facilitate easy trade exchange in the market.

Investors must have a clear idea about the price fluctuations before they invest in anything.

The MCX along with the Forward Mission Commission has conducted many workshops and programs for the upbringing of farmers, and other market participants. The main intention behind this was to teach them in hedging risk thus increasing the profits. In order to diversify the portfolio and the investment in this market the policy makers should focus on making the environment more market friendly as well as enabling banks and other mutual funds to invest in commodity markets can largely help in development of this market.

Besides changing market trends, innovation technology advancement and other challenges the market remains constant and witness growth at a reduced rate. In this scenario, do you think that the Indian commodity future market will scale global heights?

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FINANCIAL TRIVIA A survey done by All India Manufacturers Association (AIMO) bore the following results - While job loss was reported at the rate of 43% in the trader segment, micro-segments reported job losses of 32%, small segments reported 35% and medium-scale industries reported 24% job losses. Most of these reasons have been associated to Demonetisation and GST, the two landmark policies taken up by the 2014 general election winning Government under the leadership of Prime Minister Narendra Modi

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