Businessworld - 27 June 2016 PDF

+ THE FAILURE OF CONSORTIUM BANKING I NEW PORTS BRING HOPE TO BACKWATERS
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RNI NO. 39847/81 I 27 JUNE 2016
AMBANIS
NEXT
MARATHON
Inspired by Make in India and fired by

global ambitions, Anil Ambani is gearing up
to make defence his flagship business
Rs 60
SUBSCRIBERS COPY NOT FOR RESALE I RNI NO. 39847/81 I 27 JUNE 2016
6.18%
SPURT IN
SPENDING BY
OUTBOUND
TOURISTS
Going Places:
S
e
t
l
s
e
v
a
Tr a
New
Tourist arrivals
growing at
4.8%
1.2 lakh
hotel rooms in India
INTERVIEW:
MAHESH SHARMA,
Minister of Tourism
e
s
r
u
o
C
250 PLUS
STARTUPS IN TRAVEL
INDUSTRY
24%
EXPANSION
IN CIVIL
AVIATION
EDITOR-IN-CHIEFS NOTE
Defending India
DEFENCE IS EMERGING AS A big business in India. Going by some estimates,
India is expected to procure defence equipment worth $200-300 billion in the years
ahead. Even as major global powers cut down on defence spending, India faces the
mammoth task of scaling up expenditure to upgrade the technical capabilities of its
armed forces. A report by Edelweiss Research says: Over the next 10 years, India, the
largest importer of defence arms in the world, is expected to spend a whopping $248
billion as few countries in the world face the range of security challenges, concerns
and threats that it does terrorism, low-intensity conflict and nuclear weapons.
Edelweiss says the opportunity for Indian companies stands at $75 billion, thanks
to the 30 per cent offset policy given the governments intent and recent steps to
boost private sector participation (such as the move to increase FDI in defence).
Developing domestic defence manufacturing capability is high on the
governments agenda, demonstrated through DPP 2013, where imports would be the
last resort for acquisition and buying Made in India would be accorded top priority,
the Edelweiss report says. Given the cost advantage and highly skilled engineering
talent base, India has already carved a niche in frugal engineering. Coming at par
with the global supply chain will be the next logical move for domestic companies.
The report adds that like the auto, IT and pharmaceutical industries, all of which
require highly skilled talent but overcame odds to become major players on the global
scene, the next sunrise industry will be defence.
Anil Ambani-led RADAG has been a fast mover in tapping the opportunity arising
out of the Modi governments policy. Over the next few years, Ambani plans to grow
big in defence and make it his flagship business. Its an ambitious target to set, as
defence has established players like L&T, the Tatas, the Mahindras, Ashok Leyland
and a host of PSU players, not to count newer market players trying to capitalise on
the opportunities Indias new resolve and policy presents. Coupled with the PMs
Make in India initiative and the increased outlay in defence spending, the sector will
provide opportunities to build large-scale businesses.
Partnerships with specialised players will be crucial. Ambanis RADAG is moving
fast to emerge as a key player in this domain and its acquisition of the Pipavav port
showcased its commitment to ramp up defence as a business. Senior associate editor
Suman K. Jha looks at the strategy and gameplan of the RADAG groups foray into
defence. Television host and strategic affairs analyst Maroof Raza supplements the
cover story with his views on why this sector is poised to grow.
Travel experiences are turning grander. The average money spent on travel
packages is growing. Technology is changing the way we travel. These, in turn, are
changing the business of travel and leading to the creation of new opportunities and
new businesses. Assistant editor Paramita Chatterjee looks at the trends in the travel
industry and the opportunities it presents. Associate editor Smita Tripathi and special
correspondent Monica Behura examine the way the rich travel now and how foreign
tourists see India. Suman K. Jha gives us an insight into Indias tourism policy in an
exclusive interview with tourism minister Mahesh Sharma.
This fortnight we present a double cover story package comprising Anil Ambanis
foray into defence and the trends in the travel business. We hope you enjoy reading
both. This issue also contains an in-depth report by senior associate editor
Unnikrishnan C.H. on new generation ports conceptualised along Indias vast
coastline many of which will transform the backwaters of Emerging India into
economic hotspots. Mother Dairy, a brand that evolved out of Operation Flood,
is today striving to be a viable business venture. Senior editor Ashish Sinha maps
Mother Dairys journey from an altruistic venture to a successful brand.
ANURAG BATRA
anurag.batra@businessworld.in
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IPL is Back
on the Block
RNI NO. 39847/81 I 13 JUNE 2016
MAILBOX
YOUR COMMENTS
The dog fight is about

to start. Will Sony
retain the $4-bn
property or can Star
wrench it away?
JUDGING MODI
R s 60
HOW THE BAN ECONOMY IS

KILLING JOBS AND BUSINESS
TALK BACK
Submissions to BW | Businessworld
should include the writers name and
address and be sent by email to the
editor at editor@businessworld.in or
by mail to Express Building, 2nd Floor,
Bahadur Shah Zafar Marg,
New Delhi - 110002.
Meenakshi Menons analysis (The

Licensing Detonator, BW Businessworld,
13 June) made for an interesting read.
However, the writer seemed a bit harsh in
her assessment of Modi. Agreed that his
government came up a little short in terms
of environment issues but merely looking
at the negatives will be a great disservice to
his regime. Efforts to speed up development
projects and bring down corruption
mustnt be forgotten. Modi has learnt from
his mistakes and the latest budget is a
testimony to the same.
MAHIMA MIRDHA, EMAIL
BEHIND THE SCENE

BLIPP
THIS PAGE
TO GIVE US
YOUR FEEDBACK
INSTANTLY
For cricket fans, IPL is all about packed

stadiums, favourite players gathered at
home grounds and the unbridled joy that
the game brings. But as fans we never knew
much about the battle for IPL broadcast
rights and the big bucks involved in it. The
cover story (The coming IPL war, BW
Businessworld, 13 June) tells us all about
the broadcasting war of the decade.
UTSAV BASU, EMAIL
STEPPING UP
This refers to the story on Bangalore (Snags
and The City, BW Businesworld, 13 June).
Like any other cosmopolitan city, the vibrant
culture of Bengaluru attracts people from
all over the country. Before the authorities
could realise, the Silicon Valley became
too unwieldy. Lets hope the metro service
will ease the woes of the citys transport
infrastructure to a reasonable extent.
SHREYASHI JHA, EMAIL
12 | BW BUSINESSWORLD | 14 - 27 June 2016
DIGITAL BW
BW TV
w w w . b u s i n e s s w o r l d . i n
Anvita Mehra, founder, Confidential Couture, talks about how

luxury shopping is getting easy
FIVE MINISTERS WHO HAVE PERFORMED FOR

PM NARENDRA MODI
FIVE MAJOR PROTESTS THAT

CONFRONTED MODI
Five ministers are seen as good

performers in Modis cabinet. Their
ministries have lived up to the PMs
promise of better governance
Protests and democracy go

hand in hand but if they get
out of control, things can
turn ugly.
RBI Chief Wins Over Modi

Despite Broad Mistrust
OPINION
With Modis patronage, it is

more likely the government
will reappoint Rajan, whose
term expires in September,
should he wish to stay on
Indias Mobile Data Traffic Projected To Grow 15 Times By 2021
India grew the most in terms of net additions in mobile subscriptions during the
March quarter at over 21 million, according to Ericsson Mobility Report
SoftBanks Investments In India
May Surpass $10 Billion
The Coming Of
The Bots
Does the future
of human job
security lie in
being able to
conceive, design
and develop
intelligent
machines, asks
Santanu Paul
SoftBank,Japans telecom
and Internet giant, will invest
$350 million in a solar project
in India, its first in the sector
Indian Jewellers On Global
Luxury List
Luxury groups with operations

in multiple sectors are at the top
with a 32% share in total sales,
and average sales
of $6.5 billion
In Defence Of The Poor Taste

Of Tanmay Bhat
Social media trolls have made

the video very popular. But
this also brings the incredible
hypocrisy surrounding the
freedom of speech in India
CONTENTS
VOLUME 35, ISSUE 22
14 - 27 JUNE 2016
JOTTINGS & SNAPSHOTS
20
Jottings
Future Group versus on-demand grocery
stores; High-speed trains to become a
reality in India, and more
26
Columns
Gurbir Singh, Rajendra Abhayankar
(p.50), Rachna Chhachhi (p. 110), Mala
Bhargava (p. 115)
28
Transit Lounge
George Zhu of Chinas Transsion Holdings
says their primary focus is on
the tier-3 and tier-4 costumers
30
Verbatim
What Raghuram Rajan, Jayant Sinha and
Tim Cook, among others, said
32
The Social Circuit

Instagram updates logo and app design ;
Amazons Video Direct competes with
YouTube; and more
34
Marketing & Advertising

Pillsbury celebrates mother figures this
Mothers Day; Suresh Ramaswamys tips on
how to improve social media marketing
36
Globescan
Microsoft sells patents to Xiaomi; EU
cautions governments against banning
Uber, Airbnb, and more
Cover design by
DINESH S. BANDUNI
38
On A New Track
Anil Ambani is betting big

on defence. In the course of
one year, Reliance Defence
has entered into as many as
30 partnerships in
10 countries
CONTENTS
VOLUME 35, ISSUE 22
14 - 27 JUNE 2016
78
70
46
THE TRAVEL ECONOMY

52
Trends in Travel
62
Inbound Tourists
64
Q&A with Mahesh Sharma
66
Luxury Travel
68
Column by Namita
Gokhale
70
How To Fund Travel
THE BIG STORIES

46
Green Energy 2.0
After falling behind wind energy,
solar is set to lead the clean
energy charge in FY 2017
106
84
Ports of Hope
102
In Conversation
116
Bookmark
New generation ports are turning

many little known hamlets and
hick towns into economic hotspots
Olivier Blum of Schneider Electric

says he sees India as an active
destination for jobs
V.N. Bhattacharya reviews Edge

Strategy: A New Mindset for
Profitable Growth
90
The Startup Society
Indian startups are helping
each other grow something
phenomenally unique to India
BEYOND BUSINESS
106
Lifestyle
A beginners guide to art
collection
74
Making Of A Monster
94
Taste Of India
112
Gadget
How the NPA mess is the result

of borrowers flitting between
consortium and multiple banking
Startup Teabox takes Indias

finest teas online and sans
frontiers
The iconic e-paper screen

Pebble smartwatches are light,
pretty and minimalistic
78
Toned Down
96
The Game Changer
114
Apps
Take a look at how technology

has perked up the Indian mutual
fund industry
Apps that can be used for

hearing aid, chats and
creating posters
Mother Diary is expanding its

footprint to deal with the drop in
revenues and profit margins
120
Book Extract
Extracts from Seema Singhs
Mythbreaker: Kiran MazumdarShaw and the Story of Indian
Biotech
AND ALSO
125
People In The News
Jack Dorsey, Vijay Mallya, Anurag
Thakur, and more
126
Last Word
Celebrity chef Sanjeev Kapoor
on why he sold his food channel
to Discovery, and more
TOTAL NO. OF PAGES INCLUDING COVER 128
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JOTTINGS
DISCOUNT WAR
BANKS
BEWARE!
T HAD TO happen;
when was the issue.
After repeated warnings
over mis-selling to
customers, Mint Road has come
down hard on banks and said it will
impose stiff penalties. S.S. Mundra,
Deputy Governor, Reserve Bank of
India, put it bluntly: The Right to
Suitability enshrined in our Charter
of Customer Rights has been
totally ignored or rather knowingly
violated for reasons best known to
banks. We are seized of this issue
and may be constrained to take
strict actions including imposition
of heavy penalties, if the banking

industry continues to follow
such unethical and unacceptable
practices of mis-selling of thirdparty products. Another point
highlighted was money muling
where idle accounts are used for
receiving and transferring large
funds with the account holder in
the dark. Its a clear failure on the
part of banks. Ominous is Mundras
observation: Newly opened
accounts under the PMJDY could
be very vulnerable to such sharp
practices. Is anybody listening?
Raghu Mohan
ELEPHANT ON THE CHARGE

THE INDIAN ELEPHANT has begun to trot again, even as
the Chinese dragon and global economy show signs of

fatigue. Indias gross domestic product (GDP) grew 7.6
per cent in 2015-16, buoyed by a 7.9 per cent growth in the
fourth quarter, up from 7.2 per cent in the corresponding
quarter last year. The rise in the value of goods and services got a boost from a slight increase in farm production
FUTURE GROUP recently

announced its plan to launch
a discount scheme on the first
eight days of every month at its
retail arm Big Bazaar. Although
Kishore Biyani, group CEO of
Future Group, denied the scheme
had anything to do with the
competition with e-tailers or ondemand groceries, apparently, a
price war is on between physical
grocery stores and on-demand
ones. The on-demand stores are
battling the rising supply chain
and delivery costs while physical
stores are fast losing out to the
convenience of online. While
price will continue to be critical
for both on-demand and offline
models, the key will be quality
and convenience. The quality of
products becomes paramount
in case of groceries where
consumers health is at stake.
Ayushman Baruah
and a considerable jump in the output of refineries, power

plants as well as cement, steel and fertiliser industries.
The real elixir perhaps, was the overriding optimism that
prevails in the economy that prompted the 7.4 per cent
rise in private final consumption expenditure (PFCE), to
revive domestic demand. India is obviously spinning on
its own momentum, defying a global slowdown which
sadly will still hit earnings from exports, tourism and some
service industries. Madhimita Chakraborty
Photograph by Umesh Goswami
IN THE FAST
LANE
SOCIAL, NATURALLY
OF ALL PRIME Minister Modis talents, none is as visible as social
media savvy. By no means young, he nevertheless seems to have

been born in the age of the social web. Second only to US President
Barrack Obama on Twitter and Facebook, Narendra Modi seems
to have an innate understanding of the power of social media
which even though is only inclusive of some segments of the Indian
population, is still deep in its influence particularly as it influences
some of its most active participants, the media. Some of Modis
posts, as shown by recent Facebook data, are staggeringly popular,
specifically those showing the human side of the PM, wheeling
his mother in her chair to see the gardens at his residence. Modis
ministers have long forgotten their derision of social media and
also now have large followings. If posts from the Prime Minister
and his ministers were instant and relevant during times of trouble
and controversy however, there is no telling how much further the
popularity of their social accounts would soar, undoubtedly past
that of the American presidents. Mala Bhargava
BELATED REALISATION
AFTER THE RECENT episodes of valuation downgrades, Indias
fledgling startup ecosystem has something to cheer about. The

government is considering a proposal to increase the income tax
exemption period for startups to seven years from the current three,
which had come in for sharp criticism. The commerce ministry is said to
have taken it up with the Ministry of Finance. If through, the move will
certainly give a much-needed respite to businesses that have come
up in the last 3-4 years and raised capital from the investor fraternity.
Today, the biggest worry of startups is how to get enough margins, how
to be price competitive and how to keep customer acquisition costs
low. The proposed extension will give them a breather as it will leave
them with funds to expand operations, generate employment and hire
quality talent. Indeed, expecting startups to break even in three years
was a bit too much! Paramita Chatterjee
AFTER YEARS OF TALK,

high-speed trains may finally
become a reality in India. The
Indian Railways recently conducted the trial of Spains Talgo
coaches between Bareilly and
Moradabad in Uttar Pradesh, a
distance of 90 km. The ninecoach Talgo train was pulled by
a 4,500 horse power diesel engine, and covered the distance
in 70 minutes running at 110-115
km per hour. The Talgo coaches
are much lighter and 30 per cent
more energy efficient than the
existing Indian Railways coaches. After a series of trials, the
Talgo coaches will be tested on

the Rajdhani track between Palwal and Mathura at speeds of up
to 180 km. Timing trials will follow
the current phase of testing.
Talgo reckons the Delhi-Mumbai
journey can be completed in 12
hours compared to 17 hours it
takes now by Rajdhani. Successive railway ministers belonging
to different political parties have
over the years talked about the
feasibility of introducing highspeed trains on aging Indian
tracks. But all that talk remained
just that talk. Much like the
issues of maintaining cleanliness across railway stations and
handling passenger complaints.
With Talgo, at least a beginning
has been made! Ashish Sinha
14 - 27 June 2016 | BW BUSINESSWORLD | 21
JOTTINGSPlus
UNLOCKING IPLS
POTENTIAL
B
OARD OF CONTROL
for Cricket in India

(BCCI) president
Anurag Thakur is quite
clear when it comes to
taking decisions that are
commercial in nature.
Take, for example, the
upcoming bidding for
television rights for the
cash-rich Indian Premiere League (IPL), the
rights which are expected
to come up for renewal in
2017. Thakur has made
his views public. There
wont be a clause called
the right to first refusal in
any commercial contracts
going forward.
Thakur considers such
practice as a favour or an
incentive. He has a reason
to believe so. Around nine
years ago when the then
IPL commissioner/BCCI
vice-president Lalit Modi
was calling the shots on
all commercial aspects
of the new IPL, he is said
to have lured in the host
broadcaster Sony Pictures
Network to commit $1.1
billion for the 10 editions of
IPL telecast by offering the
right to first refusal.
Of course, in hindsight,
no one could have anticipated the big commercial
success of IPL T20 format
cricket that contributes
35-40 per cent to BCCIs
turnover apart from generating an average of Rs 9001,000 crore on-air revenue
for the host broadcasters.
In future contracts,
we will make sure that no
such thing is there... and in
the last 15 months also, we
have not given anyone this

kind of incentive or opportunity. We will make sure
that in future agreements
also, such a clause will not
be there, Thakur said after
taking charge of BCCI.
As per the terms and
conditions inserted in the
contract between BCCI
and Sony Pictures Network, the broadcaster in
2008/2009 period was
offered the right to first
refusal as and when BCCI
decides on who to award
the telecast rights of IPL
40%
IPLs contribution to
BCCIs turnover. It also
generates about
Rs 1,000 crore
on-air revenue
eleventh edition onwards.

Simply put, now BCCI
will have to ask Sony first
for renewing the IPL
telecast rights before it can
open it up for bidding or
float tenders.
BCCI wants to unlock
the real commercial potential for IPLs television
viewership. But it cannot
do that unless there is an
open bidding as there are
a number of logical suitors
willing to pay top dollars
for hosting IPL on their
networks. These include
Murdochs Star TV Network and Discovery Networks Eurosport. Then
there are home grown networks such as Zee Group,
NDTV, Network 18, Sun
TV Group and others who
can get interested in IPL
tomorrow based on their
past interests in cricket
telecast, IPL teams etc.
After all for Thakur and
BCCI, IPL should unlock
handsome and manifold
jump in revenues whenever the future of IPL
activities are discussed
in the governing council
meetings expected in the
next two-three months
time. Get in line everyone!
Ashish Sinha
JOTTINGSPlus
MOTORING AHEAD
WITH A GOAL IN MIND
O
FTEN IT takes one

man to make the
impossible, possible. The much-discussed
Delhi-Mumbai Industrial
Corridor (DMIC) project
seems to be back on track
and ready to take off. Construction and other related
activities have begun in
over half of the eight investment regions envisaged
of Kerala cadre, he has

managed to get projects
off the files and into action
mode in the past six month.
He took charge in October
last year.
Construction has begun
across the AhmedabadDholera region in Gujarat,
Dadri-Noida-Ghaziabad
in Uttar Pradesh, ShendraBidkin Industrial Park
pleted by their deadlines.

Some in 2018, others
in 2019. The greenfield
airport at Dholera should
finish by 2020, Sharma
says with confidence.
Sharma has earlier
worked in roads min-
2020
The expected year
of completion of the
greenfield airport at
Dholera
under the project.

The man driving the
project is Alkesh
Kumar Sharma, CEO
and managing director of
Delhi-Mumbai Industrial
Corridor Development
Corporation (DMICDC).
A 1990-batch IAS officer
in Maharashtra and
Pithampur-Dhar-Mhow
regions among others.
We have over 20,000 acre
of land already with us.
Environment clearances
have been taken across all
projects. Many of these
projects should be com-
istry and with union

minister Nitin Gadkari
where he was involved
in finding solutions to
several bottlenecks that
were hampering the construction of highways and
expressways. He has also
headed the Kerala State
Industrial Development
Corporation in the past.
The work is moving at a
fast pace in Dholera, says
Sharma. Dholera is located
around 110 kilometre from
Ahmedabad.
Consisting of a vast
shoreline and a huge parcel
of land, the Dholera project
is seen as a world-class industrial hub with integrated residential areas and
social amenities. In short,
a smart city. Dholera has
a total area of 903 square
kms, of which 540 sq kms
will be developed. It will
also have a greenfield airport and a hub for maintenance, repair and overhaul
for the aviation sector.
Companies from
Taiwan, Korean, Hong
Kong, Germany and others have made enquiries on
land and facilities in these
hubs. We will be ready to
allocate land from November this year. We will
also do roadshows to give
a marketing push to these
projects, says Sharma.
Sharma has another
30 months at the hot seat
extendable by another 24
months. Will DMICs success help NDA in 2019? It
seems so! Ashish Sinha
Photograph by Sanjay Sakaria
JOTTINGSPlus
HE Debt Recovery
Tribunals (DRT)
order to freeze the
$75-million settlement
deal between Vijay Mallya
and Diageo, and Enforcement Directorates (ED)
constant probing into the
deal has brought warring
partners the beleaguered Indian billionaire
and the liquor giant on
the same side.
In April, the DRT, while
hearing a petition filed by a
lenders consortium claiming its first right on the
settlement amount, had
asked the Diageo-owned
United Spirits (USL)
to furnish details of the
severance package. It had
also asked the company to
deposit some $40 million
with it barring Mallya
from accessing the same.
But USL and its parent
refused to furnish the details asked by the DRT saying that they have no legal
obligation to do so and that
the tribunal has no power
to direct the company to
deposit a part of the settlement amount with it.
The $75-million settlement from USL to former
chairman Mallya for stepping down from the post
was announced in February. The severance package
was mainly on account of
terminating a contractual
obligation on the side of
Diageo to continue with
PROBE
BRINGS
WARRING
PARTNERS
CLOSER
$40m
The sum paid to Vijay

Mallya by Diageo as
part of the $75-million severance
package
Mallya as USLs board

chairman and also to make
Mallya sign a non-compete
agreement. As per the deal,
the payment was to be
made in phases between
2016 and 2021.
Apparently, $40 million of the exit money
has already been paid to
Mallya, who fled to the UK
in March as he faced legal
proceedings for defaulting
on debt amounting
Rs 9,000 crore from various banks for his defunct
Kingfisher Airlines.
Diageo contended before the tribunal that the
amount was paid outside
India.The amount of $40

million, which is part of
the $75 million payout
package between Mallya
and us, was paid outside
India and hence the DRT
does not have power to
direct us to attach the
money before the tribunal.
Such a deal does not fall in
the jurisdiction of DRT,
Diageo argued.
Since 2014, USL
and Diageo had been
fiercely fighting a serious
boardroom battle with
Mallya over fund misappropriation and related
party transaction charges.
Diageo, which bought
Mallya-promoted USL
(the worlds second largest
alco-bev company) in 2012,
even raised these charges
against Mallya while he

remained the chairman
of the company. Following the findings on his
wrongdoings, USL wanted
to recover the financial
losses and expel Mallya
from its board. USL even
complained against Mallya
to the Registrar of Companies and the Securities and
Exchange Board of India,
besides taking the cases to
courts.
But the dilly-dallying by
the authorities then had
left the warring partners
to fight on the streets. The
surprising haste shown
by the authorities in the
debt recovery action now
has, however, made them
friends.
C.H. Unnikrishnan
MEDIA MONITOR
T WAS not just an electoral victory in the recent five-state assembly elections for the Bharatiya Janata Party (BJP); it also
made a clean sweep in the media
war. The journalistic hyperbole
has consigned the Congress to the
dustbin of history, while the BJPs media machine has managed to seize hold
of the narrative and get itself declared
as the star performer in the state elections. More than that Prime Minister
Narendra Modi declared with conviction: BJPs ideology is being accepted,
appreciated and supported by more
and more people.
On the face of it, the PM has made a
reasonable proposition. The BJP-led
alliance in Assam trounced the Congress, winning the state for the first
time, and grew its seat tally from 26
to 86. On the other hand, the Congress
lost both Assam and Kerala; and the
only consolation was Puducherry,
where it won with a simple majority.
But what does the fine print say?
Does it support the thesis that BJP
is being accepted and supported by
more and more people? Hard data
points in the other direction. Of the
812 seats contested by the Congress in
the five assembly polls, the party won
115 against the BJPs 68. Of these, 60
alone were accounted for by Assam,
while all the other states returned
just eight MLAs. In terms of popular
vote, the Congress got almost thrice
as much as the BJP.
Of all the quixotic ironies the actual
vote share of the Indian National Congress in Assam was marginally ahead
at 52.39 lakh votes compared to the
BJPs 49.92 lakh. Where the Congress
lost out was its shoddy strategy in
shunning winning alliances with the
BJP Wins
The Media
War
Muslim groups who then landed up

dividing the anti-BJP vote.
Compared to the 2014 Lok Sabha
elections, the BJPs vote-share in the
latest Assembly elections moved south.
In Assam, it fell from 36.5 per cent in
the 2014 to 30.1 per cent in the 2016
state poll; in West Bengal it dropped
from 17.2 per cent to 10.2 per cent; in
Tamil Nadu from 5.56 per cent to 2.7
per cent. In Kerala, however, the BJP
did manage to increase the vote share
marginally to 10.7 per cent from the
earlier 10.33 in 2014.
In contrast, the Congress actually
increased its vote share. In Assam, it
went up from 29.6 in the May 2014 Lok
Sabha poll to 31 per cent in the recent
By Gurbir Singh
assembly elections; in West Bengal, it

was up to 11.9 from 9.58 per cent and
in Tamil Nadu to 6.5 from the earlier
4.3 per cent.
However, mass perception works
differently. The BJP got one state
when it had none of the five. On the
other hand, the Congress had three
states in the bag, but after the vote it
was left with the one small enclave of
Puducherry. The fact that 230 of 232
BJP candidates lost their deposits in
Tamil Nadu was lost in the media din.
Most important, in the perception
war the BJP was able to put the embarrassing drubbing it got from the Nitish-Lalu alliance in Bihar and the legal
defeat in Uttarakhand behind immediate recall, and prepare itself for the
all-important UP elections next year.
If there is a message that mass media lost in the five state elections, it is:
First, the perceptible decline in BJPs
vote compared to the euphoric numbers of May 2014; and, second, if there
was a victor in these state elections it
was regional politics at the expense
of the two big national parties. Mamata Banerjee shocked all exit poll
pundits by her thumping score of 211
of 294 seats; and J. Jayalalitha, again
proved all pollsters wrong (with the
exception of C Voter).
In a fractured polity, where political promises are broken and demand
for change produces anti-incumbency
waves, it is never safe to write off the
Congress; or for that matter any other party. The swinging pendulum is
ironically the symbol of Indian politics today; but media analysis should
be made of harder mettle, and better
long-term perspectives.
gurbir@businessworld.in;
@gurbir110
TRANSIT LOUNGE
GEORGE ZHU
says his company aspires to be

the market leader in emerging
countries like India
Our focus is on
tier-III and -IV cities
George Zhu, global president of Chinas Transsion Holdings, talks to BW Businessworlds
Haider Ali Khan, about his new venture in India and on delivering low-cost mobile phones.
Q: What brings Transsion

Holdings to India?
A: We aspire to be the
market leader in emerging countries like India.
We started the mobile
industry from Europe and
America, and moved to
Japan, Korea and China.
Now its blooming in
the Indian and African
markets; we are here to
provide value for money
to the Indian consumers.
Q: What is the global

footprint of Transsion
Holdings?
A: We cover more than
40 countries across the

world, and last year, we
sold around 60 million
units, and this year, we are
expecting to sell 85 million
units. Our majority sales
come from Africa.
Q: What are your expectations from the Indian

market?
A: India is among the
fastest growing economies and holds huge
potential for us. We do
not have any short-term
goals; we are here for the
long-term. From the beginning, we would like to
focus on marketing strategies, consumer insights

and also bring local talent.
We have our trusted ecosystem on all the fronts of
technology from software,
hardware to Internet.
Q: You must have done

research before entering
India. How do you plan to
access the Indian market
and consumers?
A: We are focusing on
consumers, which are at
the bottom of the pyramid. Our focus is on tier-3
and tier-4 consumers.
In our market analysis,
we found that people in
these towns prefer phones
with bigger memory,
multimedia features,
loudspeakers, camera and
Internet. Our features
phones have features

like IM and Chat. We
have also designed a chat
phone for India, which
can work and be accessed
across platforms. This
service already has 400
million users in Africa.
This would be similar to
WhatsApp.
Q: Is Transsion Holdings
going to set up a unit in
India for manufacturing
iTel phones?
A: We have an assembly
unit in Delhi NCR a
joint venture between
an Indian and a foreign
partner. But we would
like to bring our vendors
and start manufacturing
here. We would also love
to set up a technology
park. By 2017, we should
be able to set up our own
assembly line in India.
Q: How do you plan to

promote iTel in India?
A: We have had discussions with Reliance

which is going to launch
its 4G network in India
for making our services
more affordable. We want
to reach to last mile consumers in every remote
corner of this country.
haider@businessworld.in
VERBATIM
In our defence against the global uncertainty,
good policy is the first line of defence. If we
have good policy, people will come to India no
matter what happens in the world
RAGHURAM RAJAN, governor, Reserve Bank of India, insisting that
though many economies in the world have been hit by the global volatility,
India is fairly safe against such volatility
To not be considering Amazon and

others would be in my view delusional
ART PECK, CEO, GAP, told shareholders at the companys annual meeting
In any developing country in the world, both the public

and private sector have a very important role to play. You cant
suddenly get rid of the public sector, nor should you
NARENDRA MODI, Prime Minister of India, in an interview
TIM COOK, CEO, Apple,

while attending the quarterly
earning call of the company
JAYANT SINHA, union minister of state for finance, referring to an ongoing consolidation
phase that has led to a sharp reduction from the 27 state-owned banks currently in existence
The crux of the achievement is change in mindset. The

ministry was in a fear psychosis and was stuck in a frozen
mindset. I have managed to break this barrier of fear and
create an atmosphere of trust, if not fully then partially, that
is good enough for the ministry to start moving
MANOHAR PARRIKAR, defence minister of India, on the
biggest achievement of the NDA government
PHOTOGRAPH: UMESH GOSWAMI, BLOOMBERG
Smartphones that are

working there (in India) are low
end, primarily because of the
network and the economics,
the market potential has not
been as great there. But I view
India as where China was
maybe seven to ten years ago
from that point of view, and
I think theres a really great
opportunity there
When the dust settles, I think we will have

may be eight or 10 very competitive banks.
Some of them are going to be large-scale
global players. Some of them are going to be
differentiated banks
THE SOCIAL CIRCUIT
Dig The
Data
SIMPLER,
YET RICHER
Sad Reaction
INSTAGRAM launched a new look for
the platform including an updated icon

and app design for the main Instagram
app, and a new unified set of icons for
Boomerang, Hyperlapse, and Layout.
It has also refreshed the user interface with what it calls a simpler, more
consistent design that helps peoples
photos and videos shine.
When Instagram started, it was primarily a place to edit and share photos.
Five years later, its a global community
where people share photos and videos,
use new tools like Boomerang and Layout, and connect with others through
explore. Weve been inspired by all
the ways the community has grown
and changed, and we wanted to create
something that reflects how vibrant
and diverse storytelling on Instagram
has become, the company said in a
statement.
The new logo is inspired by the previous app icon, but the simplified shape
represents a more versatile camera, and
the rainbow lives on in gradient form.
VIRTUAL REALITY
Stay focused here do not get distracted.
Oooh, thats so shiny!!
The icon serves as a colourful doorway to the app, but once youre inside,
we believe the colour should come
from the communitys photos and
videos. The new simpler design puts
more focus on your photos and videos
without changing how you use the app.
Weve also made tweaks to fonts so
that your experience feels more native
on Android and iOS, the company
statement added.
The company had recently also
introduced the video format in the ad
carousel. The new video slideshow ads
will allow advertisers to use up to five
videos and photos in combination for
richer storytelling. The maximum video
length is 60 seconds per video.
Brand Buzz
Amazing Times
Amazon launched an
enhancement to Amazon Video
with Amazon Video Direct ,
which will allow people to upload
videos for Amazon customers,
including prime members. The
ad-supported video service is
competing with YouTube. Content
creators can distribute content
directly to prime members and
earn royalties based on minutes
streamed. Its an amazing time to
be a content creator. Were excited
to make it even easier for content
creators to find an audience, says
Jim Freeman, vice-president of
Amazon Video.
A new study of the use of

Reactions launched by
Facebook in February by
visitors to 20 top publishers
Facebook pages, from social
media news aggregator
NewsWhip, found that
the volume for the five new
reactions love, haha, wow,
sad and angry was just 16
per cent of the total volume
of good, old-fashioned
likes. Reactions accounted
for 10-15 per cent of total
engagements.
Growing Posts
Social analytics provider

Quintly, after analysing
180,000 brand profiles
on Facebook, Instagram
and Twitter throughout
2015, found that daily post
frequency rose 36 per cent
on FB and 14 per cent on
Instagram, while slipping
by 2 per cent on Twitter.
#LEADER
Uday Kotak
@udaykotak
Exec. VC & MD, Kotak Mahindra Bank
With elections done,
government has spring in
its step. As it completes
2 years it is settled at the
crease. Now for more runs
and rains!
Jeff Weiner
@jeffweiner
CEO, LinkedIn
Amazed at the VR fidelity

Google Cardboard and an
iPhone can deliver. Cool to
know such advanced technology will be so accessible.
MARKETING AND ADVERTISING

AD iNFiNiTUM
CELEBRATING NOT JUST MOTHERS
M0THERS DAY campaigns typically focus on mothers, but

Pillsbury has taken a new approach to celebrating the day with
its new Also My Mom campaign. This Mothers Day, the brand
wants people to take note of the mother figures aunts, grandmothers, neighbours or even friends mothers in their life who
have always been there. In its latest campaign, Pillsbury stops to
celebrate the women who are just like our moms.
Conceptualised by Leo Burnett, the ad film shows a number of
people talking about a person they are really close to. All along, it
appears that they are talking about their mothers, until the end,
when it turns out that they were describing their relationship with
their aunts, grandmothers and sisters.
Commenting on the marketing strategy, Salil Murthy, marketing director of General Mills India, says, Pillsbury has been helping mothers around the world delight their families with snacks
and meals they love. This Mothers Day, we wanted to pay tribute
to moms and the special bond they have with their children. But
as we talked to our consumers, we realised that we need to think
of this relationship in a much more expansive way. You know
you really have a special bond with someone when you can tell
them anything. People do that with their moms and they also do
that with a few special others who they look up to, just like their
mom, an elder sister or an aunt or the

neighbour next door, who always has
time to listen. So this Mothers Day, we
decided to celebrate the special bond
that people have with their moms and
all the people they hold just as close to
them, who are just like their moms.
Pillsbury, which bases its brand proposition on celebrating
women through food, takes its vision of creating happy moms
further with this campaign as it focuses on the other motherchild-like relationships.
Raj Deepak Das, chief creative officer of Leo Burnett, adds:
As a brand, Pillsbury believes in creating a strong bond between mothers and children. This Mothers Day, our idea was
to look deeper and sweeten this bond further. We recognised
that there are some special people in our life who we open up to,
share moments of joys and sadness. They never give up on us,
instead they help us grow and become the people we are. They
are like our moms and they come to our life as aunts, sisters,
grandmothers, etc. With #AlsoMyMom, we are encouraging
consumers to embrace all mothers in our life and wish them
happy mothers day.
Shubhi Tandon
A NEW RECIPE
Pillsbury has a new

take on mothers day.
Its paying tribute to all
mothers and motherfigures in our life
STANDPOINT
SEVEN
TIPS
TO ACE
SOCIAL
MEDIA
By Suresh Ramaswamy
FIRST OFF, hat tip to We
Are Social for the rich

information it shares generously. In its latest South
East Asia Report, you
would notice the biggest
social platforms in SEA
and Asia; Facebook, Instagram, YouTube and Twitter
compete with messaging
apps such as WhatsApp,
Line, Messenger, QQ,
and WeChat for time and
attention. No surprises
here. The social channel
adoption patterns in SE
Asia mirror that of most
markets, without firewalls
or censorships.
The standout metrics
to focus on are the growth
rates. Internet access, active social usage and active
users of social via mobile
devices grew by double
digits in 2015. If this rapid
growth and exposure continue, rapid maturity of the
How are digital, social and mobile changing peoples

behaviour and expectation today? How will these
changes impact marketing communications in 2016?
And most importantly what you could do in the coming days and months to embrace and navigate these
changes for your brands...
audience will follow. It will

be a matter of time, before
the majority in Asia expect,
and behave like the digital
natives of today.
To better engage this
changing Asian audience
in 2016 and beyond, brands
could consider the following tweaks and checks in
their social efforts:
Define/revisit plan:
Uber, Netflix, Google
Maps, etc., are conditioning people to believe that
the world revolves around
them, on their terms.
Brands should acknowledge this change, but stay
true to what drives them.
Data, insights and past
learning should lead your
plans. Finally, ensure your
plan has a solid tracking,
measurement, and course
correction plan in place.
Pick core channels:
Vine never took off.
Periscope fizzled out

after SWSX. Secret came
and went. As a rule of
thumb, choose your core
social channels based on:
reach amongst your core
audience and receptivity
to your proposition within
the culture of the channel.
Add premium: Move
away from creating mundane content calendars to
creating social content that
is worthy of sharing, and
right for the channel.
Plan media budgets:
Pay-to-reach is the new
norm. Before you create
social content, make sure
you have enough budgets
to drive reach, and support
creative wear-in frequency.
Dont compete with
news: News jacking is difficult and expensive. Your
participation may come
across as lame if your brand
has no right in a trending
topic or you turn up late. It

may even backfire.
Staff for a dialogue:
When you open a social
channel, prepare to respond. Ensure you have a
response plan, with workflow and processes aligned
across departments in
place, to moderate and
manage two-way conversations with speed.
Get experts: Hire a small
expert team on tap for
counsel. It can advice on
strategy, measurement,
tools & platforms, changes
in the social landscape and
percolate implications /
recommendations to the
trenches.
Lastly, data proves
social strategies are more
effective when they take a
long-term view.
The author is digital lead
SEA at Grey Group
GLOBESCAN
SUMMER SENSE: St. Louis Federal Reserve President James Bullard said global markets appear to
be well-prepared for a summer interest rate hike from the
Fed, although he did not specify a date for the policy move.
My sense is that markets are well-prepared for a possible
rate increase globally, and that this is not too surprising given our liftoff from December and the policy of the
committee which has been to try to normalise rates slowly
and gradually over time, he said. So my ideal is that if all
goes well this will come off very smoothly. Bullard added a
rebound in US GDP growth seems to be materialising in the
second quarter, but reserved his opinion on whether the Fed
should hike in June or July .
FAIR DEAL: Software maker Microsoft is selling about
1,500 of its patents to Chinese device maker Xiaomi, a rare

departure for the US company and part of what the two
companies say is the start of a long-term partnership. The
deal also includes a patent cross-licensing arrangement
and a commitment by Xiaomi to install copies of Microsoft
software, including Office and Skype, on its phones and
tablets. Both companies declined to discuss financial terms
of the deal. This is a big collaboration agreement between
the two companies, Wang Xiang, senior vice-president at
Xiaomi, said. Analysts said Xiaomis ambitions to be a major
player outside China were hampered by weak patent protection and a fear of a prolonged legal battle.
PRIVATE AFFAIR: US private equity firms

Warburg Pincus and General Atlantic
have bought a 49 per cent stake in United
Arab Emirates-based payments processor Network International from The
Abraaj Group, the companies announced
in a statement. The investment is a rare
example of Western private equity capital
being injected into the Middle East, with
Warburg and General Atlantic attracted
by the gradual transition from cash to
electronic transactions in the Middle East
and Africa. Neither Warburg nor General
Atlantic indicated how much they paid for
their stake in the largest payment processor in the Middle East and Africa, which
has a presence in more than 40 countries
and is 51 per cent owned by Dubais largest bank, Emirates NBD.
1.5k
The no. of patents
Microsoft is selling
to Chinese device
maker Xiaomi
TALKING SENSE: European Union governments
should not ban services like home-rental site Airbnb, or ride-hailing app Uber except as a last resort, the EU
says in new guidelines, seeking to rein in a crackdown on the
sharing economy. In guidelines, the European Commission said any restrictions by EU
member states on these new online services should be justified
and proportionate to the public
interest at stake. Total bans of
an activity constitute a measure
of last resort that should be applied only if and where no less restrictive requirements to attain a
public interest can be used, the
draft document says.
DEBT SERVICE: SoftBank Group said it

will sell at least $7.9 billion of shares in
Alibaba Group Holding a move that will cut the
Japanese firms debt amid worries about losses
at its US telecoms unit Sprint Corp. The transaction marks the first sale of shares in the Chinese
e-commerce giant by its largest shareholder since
SoftBank began investing in the company in 2000,
and will reduce its stake to around 28 per cent from
32.2 per cent. The two companies said they would
maintain a strategic partnership. Investors have
been worried about finances at the Japanese Internet and telecoms company since its 2013 buyout.
BIDING TIME: Japanese Prime Minister Shinzo Abe an-
nounced his widely expected decision to delay a scheduled sales

tax increase by two-and-a-half years, putting his plans for fiscal
reforms on the back burner due to growing signs of weakness
in the economy. While the decision may help Abe win votes at
an upper house election on 10 July, it could fan doubts about his
plans to curb Japans huge public debt and fund ballooning social
welfare costs of a fast-ageing population. Mindful of opposition
criticism that the delay is a sign his Abenomics stimulus policies
have failed to spur growth, Abe justified the decision, saying it
was needed to forestall risks posed by external factors notably
slowing Chinese growth.
HYGIENE CHECK: Regulators in Hong Kong and Singa-
pore have asked banks doing business there to disclose if they

have dealings with entities and individuals named in the leaked
Panama Papers, which contained details on thousands of shell
firms, people familiar with the requests said. The leaked documents from Panama law firm Mossack Fonseca, which contained
information on 214,000 offshore companies, revealed that Hong
Kong was the most active center in the world for the creation of
shell firms, which have many legitimate purposes but can also be
used to hide assets and avoid taxes.
HEALTHY IDEA: Nestle, the worlds
biggest food company, is stepping up its push into medicine

with a global deal worth up to
$111 million to develop and
market an experimental
milk allergy test for infants.
The Swiss group will pay DBV
Technologies 10 million upfront
for rights to its skin patch test for
cows milk protein allergy, with the balance depending on successful development, the two companies said. The deal underscores
Nestles ambitions for its Health Science division,
which it believes could eventually generate more
than $10 billion in annual sales. It also complements
the companys market-leading infant formula business and could help lift sales of products designed
for babies with food intolerance. Nestle has signed a
series of similar deals with other small companies.
Nestle steps
up push into medicine with 111 m
milk allergy test
deal
SIGN OF REVIVAL:
Volkswagens massmarket VW brand returned to profit in the

first quarter, in a sign deep cost cutting is
starting to revive the business at the heart
of the German carmakers emissions test
cheating scandal. VW said the group
underlying operating profit fell 5.9 per cent
to $3.5 billion in the quarter. That was better
than analysts average forecast of 2.8
billion, as demand for upmarket Audi and
Porsche models offset a drop in sales at the
mass-market VW brand. But Volkswagen
said it was still braced for a tough year as
it battles to rebuild following the biggest
business crisis in its 79 year history. VW
plunged to a record loss last year after
making provisions at a group level to cover
the costs of the diesel emissions scandal
and ditched its long-standing CEO after it
admitted to cheating tests in the US.
COVER STORY
DEFENCE
NIL AMBANI likes to be known as a long-distance runner. Defence manufacturing is the next marathon he
wants to run and win, big time.
In the year-and-a-half since Prime Minister
Narendra Modi launched the Make in India programme, Ambani has gone about acquiring Indias
state-of-the-art Pipavav naval shipyard (the Pipavav
Defence and Offshore Engineering Company) and forging a number of agreements with some of the worlds
leading defence manufacturers in air, land and naval
domains of weaponry.
In the course of one year, Reliance Defence (RDL)
has entered into as many as 30 partnerships in 10 countries. Reliance Defence is a wholly-owned subsidiary of
Reliance Infrastructure and has spawned 13 subsidiaries in niche segments of the defence sector, like propulsion systems (Reliance Propulsion Systems), defence
infrastructure and aerospace (Reliance Defence &
Aerospace).
IN THE LONG RACE
Reliance Defence has entered into as many as 30 partnerships

At the Reliance group, we are proud to be at the forefront of the national effort. In consonance with the
Prime Ministers vision of Make in India and Skill India,
we have ventured into the defence sector by making
Indias largest defence acquisition at an outlay of more
than Rs 10,000 crore. The acquisition of the Pipavav
Shipyard is a demonstration of our resolve to walk the
talk and make Indias and the Prime Ministers vision a
reality, Ambani said at the Andhra Partnership summit
in Visakhapatnam some months ago.
As on date, he has 27 licences for cross-spectrum manufacturing of defence equipment, platforms and systems; design, development and production of missiles;
helicopters; cryogenic technology-based enhanced
vision systems for military application; manufacturing
FOR DEFENCE
in 10 countries over a year By Suman K. Jha
BIG BET: Anil Ambani, chairman, Reliance Group,

wants defence to be his flagship business over the
next five years
COVER STORY
DEFENCE
ANKUR GUPTA,
Vice- president, Aerospace & Defence, EY
RADAG was the first of the large Indian business

houses with no prior relevant experience to have
invested in the defence manufacturing space
and upgrade of airplanes and choppers for military applimanufacturing space, says Ankur Gupta, vice- president,
cations. The companies under the Reliance Defence
Aerospace & Defence, EY. Speaking at the DefExpo 2016,
umbrella also have licences for upgrading all kinds of
in Goa, Ambani had remarked, There would have been
naval vessels and manufacturing simulators for air, land,
no Reliance in existence today if experience was the sole
and naval platforms. Taking into account the eight
defining yardstick of entrepreneurial success.
licences that the erstwhile Pipavav Defence and Offshore
Its not difficult to figure out why Ambani is betting big
Engineering Company already had, the tally of licences
on defence. According to government and industry estiwith the group led by Ambani now goes up to 35.
mates, the defence market in the country would be worth
So, with the exception of small arms (which only gov$250 billion over the next ten years. India currently
ernment concerns are allowed to manufacture in India),
imports 70 per cent of its defence requirements. With its
the group has shown interest in manufacturing every conthrust on Make in India, the Modi government wants the
ceivable defence system from
nuclear submarines to military (and
civil) aircraft, from artillery guns to
UAVs (unmanned aerial vehicles).
Ambani wants defence to be his flagship business over the next five years.
Today, Reliance Defence is the most
talked about and most valued
Reliance Infrastructure subsidiary.
The defence business is likely to be
one of our flagship businesses in the
coming year. The decision to enter the
defence business was made in early
2015 because of the forward looking
policies of Prime Minister Modi and
the liberal FDI (foreign direct investment) policy regime aimed at attractSTANDING TALL: Anil Ambani
ing the best-in-class global defence
at the Bangalore Air show
manufacturers and international
OEMs (original equipment manufacturers), a Reliance Defence spokesperson told BW
import figure to go down to 30 per cent over the next five
Businessworld recently.
years a target most industry watchers describe as too
The groups defence business is likely to be commerambitious. They, however, do say that the private players
cially viable over the next three years, according to
in the defence space may be able to contribute 20 per cent
Reliance Defence and Aerospace president Rajesh
to Indias defence requirements over the next five years.
Dhingra. Some industry insiders, speaking on condition
So, if the private players in defence production, namely,
of anonymity say Lack of experience and credibility is the
the Tatas, Mahindras, Larsen & Toubro, Bharat Forge and
biggest challenge for the group, arguing that the group
some other minor players, command a market share of
had walked away from a few large infra projects.
$100-150 million a year, the size of the pie should increase
The Reliance Anil Dhirubhai Ambani Group (RADAG)
substantially to $5 billion annually, over the next five
was the first of the large Indian business houses with no
years. Ambani wants a lions share of this pie. Some of his
prior relevant experience to have invested in the defence
confidants say that the feat would not be impossible to
AMBER DUBEY,
Partner & India head, Aerospace & Defence, KPMG
The ADAG is offloading stakes in its infrastructure

and financial services business to pare debt and to
fund its capital intensive defence forays
achieve, given Ambanis hands-on involvement, strategic
planning and long-term vision for his group in the sector.
The group is also preparing its manufacturing systems for
the global market, which is at least 50 times as large as the
Indian market.
The Pipavav Defence and Offshore Engineering
Company was the groups largest private sector defence
acquisition. The shipyard was rechristened Reliance
Defence and Engineering (RDEL) after the acquisition,
enabling the group to set its eyes on naval warships and
repair and overhaul of ship and warships.
RDEL is all set to deliver the first batch of two naval offshore patrol vessels (NOPVs) by early 2018. In all, five
NOPVs worth Rs 2,500 crore, are being constructed in
two batches of two ships and three ships for the Indian
Navy. These will be the first ever warships to be constructed at a private sector shipyard. The company also
has plans for offshore patrol vessels and training ships for
the Coast Guard.
The group plans to build a shipyard along the eastern
coast and construct a yard near Visakhapatnam for building nuclear submarines for the Navy. Thanks to the
Pipavav Shipyard acquisition, Reliance Defence expects
the naval part of its business to be the first to take off. For
its foray into aerospace, the group has acquired 289 acres
of land reserved for special economic zones at Mihan near
Nagpur, where it will provide prime system integration
with various global partners.
The group has already inked a deal with the Ukrainebased Antonov for assembling and manufacturing
Antonov platforms in India, for both commercial and military aircraft. The group has acquired more than 400
acres of land close to Indore and is in the process of
acquiring another 500 acres or more. In the pipeline are
artillery guns, armoured vehicles and ammunition.
The company is seriously looking at UAVs and radars. It
is also setting up centres of excellence
where the thrust
would be on absorption of technology
instead of simply borrowing technology, to
enable Reliance
Defence to manufacture third and fourth
generation defence
systems.
Significantly, the
group is looking at the
civil and commercial
market too. It expects the new aviation policy to open up
the market for private players, enabling it to manufacture
choppers and fixed wing aircraft for the civil market. The
possibilities are huge. For instance, in a country of Indias
size, we have just 300 choppers. So, we have entered the
race at just the right time, says a company spokesperson.
The optimism in the groups ability to get its teeth on
the defence business spills beyond insiders. Points in
favour of the Reliance Anil Dhirubhai Ambani Group is
the strong commitment shown by the companys chairman himself, investment in the Pipavav shipyard and
Nagpur SEZ, several MoUs with global defence majors
including the big one with Antonov, says Amber Dubey,
partner and India head, Aerospace and Defence at global
consultancy firm KPMG. Reports suggest that the ADAG
is offloading stakes in its infrastructure and financial services business to pare debt and to fund its capital intensive
COVER STORY
DEFENCE
THE OTHER PLAYERS
BHARAT FORGE has a joint

venture with Rafael of Israel for the
Spike missile. The company has also
received titanium related work from
Boeing and French company SNECMA. The group has a joint venture with
ELBIT of Israel for Howitzers
LARSEN & TOUBRO designs
MAHINDRA AUTOMOBILES
and develops equipment, systems

and platforms for naval vessels. It has
associated with the design, engineering and construction of Indias first
nuclear powered submarine, INS
Arihant
has a JV with Telephonics for dual use

(defence and civil) radars. It has an
MoU with Airbus for helicopters. It has
a state-of-the-art sheet metal facility for aerostructure in Bangalore
TATA ADVANCED SYSTEMS
TATA MOTORS supplies several kinds of vehicles to the defence

sector and is also competing for
the Future Infantry Combat Vehicle
programme. Tata Advanced Materials does composite work for global
original equipment manufacturers
TATA POWER SED has
DYNAMATIC TECHNOLOGIES has an enviable order book
KINECO has a joint venture
has JVs with US firms. It also has large

work share agreements with RUAG,
Rolls Royce, Cobham and Pilatus. It also
has an agreement with Airbus as the
Indian production agency for the Avro
replacement programme
DANTAL HYDRAULICS
is indigenising hi-tech foreign
hydraulic systems for the IAF fleet.
It is also designing and supplying
hydraulic equipment for Indian
missiles
from Airbus and Bell Helicopter (part

of the Textron group). It is also doing
large chunks of aerostructure work for
the Sukhoi Su-30 aircraft
defence forays, he added.

Some sceptics do warn of a bubble around the ADAG
plans. It will be 15-20 years before the group can expect
reasonable profits, says Harish H.V., partner, Grant
Thornton. Reliance executives, however, say that the
Pipavav shipyard is already executing orders and that the
time required to break even should not be more than
three years.
The key challenges that most Indian players face in
defence manufacturing are slow and small orders from
significant orders for the Pinaka

rocket system and the Akash missile launcher. It is also in the race
for contracts to make Tactical
Communication Systems and
Battlefield Management Systems
with Kaman Aerospace of the

United States and is doing a lot
of work for international original
equipment manufacturers in the
composites space
the MoD (Union ministry of defence), extreme hostility

from the DRDO (Defence Research and Development
Organisation) and defence PSUs (public sector undertakings) worried about their falling clout, over-dependence
on foreign technology partners and the long breakeven
period. RADAG is no different, says Dubey.
The MoD now needs to reinforce this belief by giving orders in a competitive environment to these new
entrants. This will, without doubt, encourage others to
give this sector a closer look and that is how the Make
BIG DEAL: Anil Ambani with Reliance Defence
and Aerospace president Rajesh Dhingra and

other associates for business development at the
Antonov Aircraft factory in Ukarine
HARISH H. V.,
Partner, Grant Thornton
It will take at least 15-20 years before the group

can expect reasonable profits
in India initiative will truly achieve its goals, says
Gupta. Industry watchers are not skeptical just because
of the notoriously slow defence procurement process
and long gestation period. They also believe that the
group was being overambitious by aiming for virtually
everything in the defence business. They point out that
international OEMs were usually known for their specialised products.
An interesting anecdote points to how the group got
interested in the defence space in the first place.
According to a Reliance spokesperson, Ambani had
met Prime Minister Narendra Modi on the sidelines of
a function in Delhi sometime in November 2014. The
Prime Minister asked Ambani if he had ever thought of
veering into defence manufacturing. The PM apparently informed him that even the tear gas that the
police force use in India was imported, not to speak of
arms and armaments.
The conversation had a lasting impression on Ambani.
By December 2014, he had decided that Reliance would
foray into defence production through the group company, Reliance Infrastructure. A hands-on boss, Ambani
today spends more than two-thirds of his time at Reliance
Defence. On an average day, says Reliance executives,
Ambani may call Reliance Defence bosses no less than 20
times. Over the last one year, he has met almost every single significant global defence equipment manufacturer,
crisscrossing the globe.
Reliance executives joke about Ambani (now 58) training from 5.30 every morning. The joke is that he is training to compete in a triathlon when he turns 60. At work,
by the time he reaches his office in the morning, he has
already started training for a different triathlon making
his sea, land, and air defence businesses grow and compete with the best, says a Reliance executive. This remark
is made in all seriousness.
suman@businessworld.in;
@skjsumankjha
For more on the defence sector, visit businessworld .in
COVER STORY
COLUMN
MAROOF RAZA
Defence analyst
Time To Address
Critical Gaps
NDIA is today amongt the largest importers of

weapons in the world, and is expected to buy weapons worth $200 billion dollars or even more over
the next decade. It is thus no surprise that the NDA
government is keen to make India a global manufacturing powerhouse on par with China, which has
over the last decade turned from being one of the largest
importers of weapons to one of the top five exporters.
In contrast, the poor track record of Indias defence
public-sector units (PSU) the chosen sarkari favourites in delivering defence items to the armed services
on time and within the budget leaves little room for
optimism. But this could change if the defence minister
and the top bureaucratic-military leadership are willing
to re-invent the wheel and demand time-bound delivery
on projects, once specifications are agreed and frozen.
And simultaneously overhaul our defence PSUs which
reek of nepotism.
Despite our long-standing desire to develop Indias
domestic defence manufacturing base instead of
resorting to short-term modernisation efforts, we have
continued to depend heavily on imports. The armed
forces reject many of the products that were manufactured locally as ineffective or outdated since this
process of creating a major weapons platform can take
up to 15 years or more. And with successive governments insisting that our PSUs be allowed to develop
almost everything that our forces need, the private sector has largely been denied the opportunities to enter
this domain.
Apparently, one reason why the Rafale fighter jet deal
has been endlessly delayed is because the French want
the bulk of these jets to be manufactured in partnership
with a private sector Indian company, but the government insists this should be done with a PSU.
And even if some Indian companies can rise up
to the challenge and that could take several years
there is an urgent need to address the critical gaps in
Indias military capabilities. For instance, the collective requirement of helicopters for the three services
and the paramilitary forces itself is for 800 units of
various types, and it requires an immediate investment
of $12 billion.
By 2027, India will need more than 450 fighters and
other aircraft, and over 200 warships to acquire some
serious blue water naval punch. Add to that the armys
immediate need for tanks, missiles, artillery systems,
and better assault rifles to match the global favourite
of terrorist, the AK-47. The demand for rifles itself (to
replace the sub-standard INSAS) could be in the range
of at least half a million units. All this requires billions of
dollars in capital investment.
But ironically, despite being a huge market for arms
sellers, it isnt easy to crack defence deals in India. With
across the board black-listing of a large number of
equipment manufacturers (OEMs) in the wake of the
AugustaWestland scandal as well as the reluctance
now of politicians and bureaucrats to finalise deals for
fear of scandals, along with dwindling capital outlays for
purchases, would barely allow India to counter a twofront threat from China and Pakistan, which are both
increasing their offensive capability by the day.
And even though an Indian Parliamentary committee
report had stated that 3 per cent of gross domestic product (GDP) must be spent on defence, we currently spend
about 1.8 per cent of GDP on defence. In contrast, NATO
countries that are safe under a US military umbrella
spend 2 per cent of GDP on defence. A western study
suggests that India must spend 4 to 6 per cent of its GDP,
to have a world class military force. But that perhaps,
will never happen.
IN THE NEWS
CORPORATE
LBS
FELICITATES
RANA
KAPOOR
HE LONDON Business School (LBS)

recently felicitated Rana Kapoor,
managing director and chief executive
officer, Yes Bank for his exemplary
contribution to entrepreneurship and
innovation at the India Business
Forum (IBF) 2016, the annual flagship
conference of the London Business
School India Club.
LBS is one of the most prestigious
business schools and has been consistently ranked among the top business
schools in the world.
June 1, the day he was felicitated, incidentally, marks
36 years in the banking industry for Kapoor.
The award conferred by John Mullins, Associate
Professor of Entrepreneurship, LBS, acknowledged
Kapoors exemplary contributions in promoting the
entrepreneurial ecosystem in India. The citation
lauded Kapoors inspirational journey as a model
entrepreneur and his stellar role in the development of
a vibrant entrepreneurial culture.
The award also recognised that Kapoor, in many
ways, was a pioneer in employing knowledge as a key
differentiator in the financial services sector. He
started Yes Bank through a differentiated knowledgedriven approach with a special focus on the sunrise
sectors of India, such as food & agribusiness (F&A),
healthcare, education, infrastructure, hospitality,
media & entertainment and renewable energy.
Under Kapoors leadership, Yes Bank has become
one of the youngest banks in the world to find a place

in Forbes Global 2000 worlds largest companies list.
Yes Bank, incidentally, is the only bank in India
which started from scratch in the last 20 years.
Kapoors leadership and entrepreneurial zeal and dedication as the founder has been instrumental behind its
success.
Kapoor has also served as the president of
Assocham Indias apex knowledge chamber. Under
his leadership, Assocham launched the Believe in
India campaign with the aim to actualise Indias vision
of achieving sustainable and inclusive development.
An alumnus of the prestigious Shri Ram College of
Commerce, Kapoor went on to do an MBA from
Rutgers Business School, New Jersey, US.
As an entrepreneur, since 2003, he has been
involved in establishing a high quality, state-of-the-art
private Indian bank with a vision of building the best
quality bank of the world in India by 2020.
IN DEPTH
ENERGY
CLEAN
ENERGY IS
NOT
SPOTLESS
The wind and solar

energy industry face a
few dark spots that need
immediate attention
By Amit Bhandari
NDIAS CLEAN energy push, with its ambitious target of 1,75,000 megawatts (mw) of capacity
by 2022, is being driven by a new set of companies independent power producers (IPPs)
focusing only on renewable. Companies such as Greenko, Mytrah, ReNew and Welspun
Renewables have all come up after 2010 and are the largest renewable energy generators in
India, with close to 1,000 mw of capacity each.
This is a contrast from the previous boom in renewable energy; before the 2008 financial crisis, wind power was going strong, but most of the orders were from companies/entities looking
for accelerated depreciation to bring down tax on profits made elsewhere. Top owners of wind
farms at that time included real estate companies, auto-makers, oil drillers and even a seed
company. The bulk of orders now, are from companies in the power generation business
indicating a level of maturity in the business.
Renewable energy now accounts for over 5 per cent of the electricity generated in India,
and growing. Renewable energy installations during FY16 added up to 7,072 mw
(see Gaining Heft), and are likely to

exceed 10,000 mw in FY17.
Falling Costs, Rising Capacity
During FY16, multiple developers
bid to supply solar electricity at less
than Rs 5/unit, enabled by improvements in solar photovoltaic manufacturing technology. Wind is a relatively mature technology and has
been on par with coal-based power
for some years now. The cost of
solar power for our projects ranges
from Rs 5.5-5.75/unit, while the cost
of wind energy is Rs 4.5-5.8/unit
across different locations, says Ravi
Kailas, founder and chairman,
Mytrah Energy. Mytrah currently
operates 827 mw of windmills, and
has another 500 mw of capacity
mostly solar, under implementation.
ReNew Power, which is Indias largest renewable IPP, puts the cost of
solar power production at Rs 4.54.7/unit. These numbers compare
favorably with thermal power that
stands at Rs 4.5-7.5/unit for newly
built coal-based power plants,
depending on location. Additionally,
renewable electricity has flat tariffs
for 20-25 years, whereas price of
coal-based power will increase in
line with the price of coal and handling costs.
Solar and wind power projects can
be put up in 1-1.5 years versus 4-5
years gestation for thermal power
plants, says Vinay Rustagi, managing
director of Bridge to India, a renewable energy consultancy. Construction
time for nuclear power plants in
India is usually over a decade, with
even higher capital costs. Having
capital tied up for a shorter duration
also helps in keeping costs down.
The falling cost of solar power is
reflected in the pipeline of new projects. The governments target for
new solar installations in FY17 is
10,500-12,000 mw, but our research
shows that 6,000 mw of new installations is a more realistic target, says
Rustagi. Some projects are likely to
IN DEPTH
ENERGY
get delayed as tenders were completed late or the power purchase

agreements got delayed, he says.
In case of wind, the industry
expects some growth, albeit slower.
Inox Wind, one of the leading wind
turbine manufacturers in India,
expects 4,100 mw of wind energy
installations during the current
financial year.
However, as this industry builds
up scale, it is now having to deal with
a new set of issues, ranging from
access to capital, weak counter-parties and technology.
Solar Shift: Well advised?
Wind energy currently accounts for
over 60 per cent of installed renewable capacity in India, and new
installations exceeded solar during
FY16 as well. However, this is
expected to reverse in the current
year with projected solar and
wind installations at 6,000 mw and
4,000 mw, respectively. The government is also looking at solar power
for the bulk of its renewable commitments of the 175,000 mw that
India has committed as a part of its
renewable energy goals, 100,000
mw is going to be from solar power.
Is this shift well advised?
Solar power has one advantage
over wind that it is almost similar
all across India irrespective of location. Wind energy is confined to specific locations with favourable wind
characteristics. That said, as of now,
almost all solar power equipment in
India is imported, mostly from
China. Wind energy equipment on
the other hand, is almost entirely
made in India, by Indian and foreign
firms including Gamesa, Suzlon and
Inox. For a country struggling to create manufacturing jobs and a government trying to push for make in
India, pushing for a higher share of
wind in the renewable mix should be
a no-brainer.
Capital Crunch
The renewable IPPs are in an assetheavy industry the cost of solar
and wind energy installations averages Rs 6 crore per megawatt, with
returns spread over as long as 20
years. During FY16, total invest-
Indias target of
175,000 mw capacity
by 2022 would need
total investments of
$200 billion
RAVI KAILAS
Founder & chairman,
Mytrah Energy
Weak financial
health of state
electricity boards
has always been an
issue
VINAY RUSTAGI
Managing director,
Bridge to India
ments in wind and solar power

added up to Rs 38,588 crore or $5.7
billion. At this pace, the investment
required during FY17 for capacity
additions, would be $9 billion. Is
this sustainable?
With most IPPs going big on new
installations, this kind of capital
cannot come from internal accruals. Access to capital is a major
issue for the sector. The sole listed
renewable IPP, Mytrah Energy, had
a debt of $674 million on a total
asset base of $949 million.
Although, Mytrah reported a profit
after tax of $0.39 million on revenue of $74.72 million in FY15, its
not sufficient to meet the investment commitments of the company. ReNew Power has a project
pipeline of 1,650 mw to be executed
over the next 12-18 months, which
cant be funded by existing cash
flows. Recent reports suggest that
Welspun Renewables is looking for
a buyer while ReNew Power is
readying plans to file for an IPO.
Indias target of 175,000 mw
capacity by 2022 would need a total
investment of $200 billion, says
Kailas of Mytrah. Assuming 25-30
per cent equity, this means an equity
component of $50 billion and a debt
component of $150 billion. While
equity is available, debt financing is
a problem in India, he says. With the
poor health of the Indias banking
sector, rounding up this kind of capital will be a major challenge.
Could This Be A Re-run?
A number of companies had entered
power generation during the pre2008 boom Reliance Power, GVK,
GMR, Lanco, JSPL and JP Power
amongst others. Many of these companies have been selling assets to
bring down their debt levels. While
high debt has heightened the financial distress of these companies, the
trigger for the misery lies elsewhere.
GAINING HEFT
Renewable energy now accounts for over 5 per cent

of the electricity generated in India
End FY15*
End FY16*
Installations
during FY16
Wind
23,444
26,867
3,423
Solar
3,744
6,763
3,019
Others
8,589
9,219
630
Total Renewable
35,777
42,849
7,072
* RENEWABLE ENERGY CAPACITY IN MW

SOURCE: CEA FY15 & FY16 INSTALLED CAPACITY REPORTS
CAPITAL CRUNCH
With most IPPs going big on new installations,

access to capital is going to be a major issue
FY14
Solar
Wind
5,670
12,473
FY15
6,670
13,871
FY16
18,100
20,488
* FIGURES ARE INVESTMENT IN SOLAR AND WIND ENERGY IN Rs CRORE

SOURCE: RAJYA SABHA
In some cases, the fuel linkage that

the plants had relied on such as
natural gas from KG Basin or coal
didnt materialise. Moreover, the
buyers of electricity from these plants
the state electricity distribution
companies (discoms) are also in poor
financial health and can often not
afford to buy power from all, but only
the cheapest sources. Payments also
often end up in arrears. In a statement to BW Businessworld, ReNew
Power says, The poor financial
health of the discoms is a cause of
concern for all the stakeholders...
Payment delays have plagued the
renewable sector today especially in
the states of Maharashtra, Madhya
Pradesh, Rajasthan and Tamil Nadu.
This results in negative investor sen-
timent because these are the states

where most of the development has
happened in the past.
As discoms continue to remain the
largest buyers of electricity, do
renewable IPPs run the risk of going
down the same path as the conventional power companies?
Weak financial health of state
electricity boards (SEB) has always
been an issue, says Rustagi of
Bridge to India, but IPPs have now
become comfortable that these are
government entities and wont
default. Companies also factor in
delayed payments at the time of
making their bids. Cost of electricity is lower by 20-30 paise/unit if
the counter party is NTPC instead of
an SEB, because of higher payment
security, says Kailas. However, since

renewable energy has zero cost of
fuel/goods, a delayed payment
doesnt hit operations, he adds.
Because of this last factor, a renewable energy asset is less likely to
become a stranded asset compared
to a conventional power plant. Even
if a company/project falls into distress, a financial restructuring is all
that it would take to bring it back
into black, unlike a conventional
power plant with issues of fuel supply and other operating costs.
Diseconomies Of Scale
A new issue, which is now coming
up, as renewable energy gathers
scale, is of demand curtailment.
Tamil Nadu, which has the highest
concentration of wind-mills in
India, is facing it already. The
7,500 mw of windmills on Tamil
Nadus coast tend to work or stay
idle at the same time. And when,
all of these wind-mills produce
electricity together, the state grid is
unable to absorb the electricity and
cuts back the renewable purchase.
The same scenario is likely for solar
panels all of them work in sunlight and stay idle the rest of the
time. As solar capacity becomes a
significant part of energy supply,
this problem will be encountered
more frequently, and will have to
be addressed.
These issues of access to capital,
problems of the discoms and issues
with grid are growing pains of a fast
growing sector. To meet the 2022
renewable target, the sector needs
to expand at over 20 per cent per
annum for the next seven years
which is not possible without
addressing the problems of capital,
counter parties and technology.
The author is a media, research and finance
professional. He holds a B-Tech from IITBHU and an MBA from IIM-Ahmedabad.
GUEST COLUMN
RIME MINISTER Na-
rendra Modis visit

to Tehran May 2224, 2016 rejuvenated the India-Iran
relationship stuck in
a miasma of United
Nations a nd US
sanctions. In realising this initiative the
devil will be in the detail and in committed performance. It will determine
the success of Indias relationship with
an Iran sought by world powers looking
for political and economic gains.
The centre piece of the visit were the
agreements to develop the Chabahar
port which, when completed, would
be Indias gateway to Afghanistan
and Central Asia. Afghan President
Ashraf Ghani also signed the agreement together with President Rouhani
and PM Modi considering his country
will be its largest beneficiary. Indias
commitment of $500 million and a
credit line of Rs 3,000 crore for import
of steel rails sets the stage for an early
start to the project.
The other agreements range from
building connectivity, trade, investment and energy trade to cooperation
between the two countries. India will
develop an aluminum project in Iran,
while IRCON will develop the Chabahar-Zahedan railway line through an
Indian credit line of $1 billion. It complements the road link from Zaranj
(Afghanistan) to Delaram (Iran) which
connects Afghanistans Garland Highway to the Iranian border completed by
India in 2010.
Modis initiative comes at a time
when Iran has become a major arbiter
in the affairs of the Middle East and
Central Asia and an important player
in northern South Asia. It has steadfastly supported Syria in the ongoing
war against the Islamic State alongside
By Rajendra Abhyankar
Modis
Iran Visit:
A Much
Desired
Initiative
Russia; it has continued its support to

the Hezbollah against Israel, and has
become a crucial player in Afghanistans future evolution. With India,
Iran shares apprehensions about developments in Pakistan. This increases
the importance of Iran in Indias extended neighbourhood.
Indias was forced to triangulate its
relationships with Iran and the US to
minimise adverse fallout of one on the
other. Indias vote in the International

Atomic Energy Agency supporting the
capping of Irans nuclear ambitions
set a negative tone to the bilateral relationship. India suffered in building
its energy security and developing a
secure gateway to Afghanistan and
Central Asia. It had to reduce its crude
imports from Iran and its exports of
petroleum products.
The end of US sanctions and its recognition of Iran as a key player in resolving the situation in Syria and the
region, allows India to move forward
on its decade-old commitment to develop a robust alternative access to
Central Asia. Even more crucial will
be the denouement of the ongoing sectarian proxy war being waged by Iran
and Saudi Arabia through proxies in
Syria, Iraq and Yemen. Having visited
Riyadh in early April 2016 it was fitting
that Modi got the other view during
his visit to Tehran. Iranian Supreme
Leader Ayatollah Khamenei meeting
Modi made it clear that this was an issue for the Islamic countries to resolve.
With almost 150 million Muslims its
outcome could affect Indias religious
harmony and stability.
Even more crucial will be the denouement of the on-going sectarian
proxy war being waged respectively by
Iran and Saudi Arabia through proxies
in Syria, Iraq and Yemen. Having visited Riyadh in early April 2016 it was
fitting that Modi got the other view
during his visit to Tehran. Iranian Supreme Leader Ayatollah Khamenei
meeting Modi made it clear that this
was an issue for the Islamic countries
to resolve. With almost 150 million
Muslims its outcome could affect Indias religious harmony and stability.
The author is a former diplomat who served in West Asia. He currently teaches at the
School of Public and Environmental Affairs, Indiana University, Bloomington
TRENDS
TRAVEL
COVER STORY... Pg 52
INBOUND TOURISTS...Pg 62
Q&A WITH MAHESH SHARMA... Pg 64
LUXURY TRAVEL...Pg 66
COLUMN BY NAMITA GOKHALE...Pg 68
HOW TO FUND TRAVEL... Pg 70
COVER STORY
TRAVEL
AROUND THE
WORLD, WHEN
YOU WANT, HOW
YOU WANT
Tech startups
are busy
transforming
the Indian travel
industry with
opportunities
for all
stakeholders
By Paramita Chatterjee
Photograph by Ritesh Sharma, Model: Sanj Singh
IFE, THEY SAY, is a journey. In todays

India, however, to travel far and wide is
life. At least, its living the good life.
Startups with technology enabling
new services have long since sniffed
out new opportunities and completely
transformed the face of travel. From
that seed of a thought on going somewhere, to returning safe and sound,
every step of the way is anything but
the way it used to be.
With all the information and recommendations available at a click,
Indians have become globetrotters,
willing to venture out to discover new
places that are off the beaten tourist track.
Ask Seema Kothari, a 45-year-old corporate lawyer.
Shes ready to set off on a 10-day trip to Iceland, of all
places, in June with her husband and two children. We
diligently take a trip abroad every summer and we love to
discover uncommon places, she says. We are enamoured
with the idea of travelling. We started reading up on the
Internet about six months ago on the probable countries
we could visit and thats where Iceland happened to us,
she says, adding that they wouldnt have thought of going
there if they hadnt spent time online and grown fascinated with the country. Kothari planned the trip all by
herself online without the help of a travel agent.
COVER STORY
TRAVEL
The tourism sectors contribution to Indias GDP was $125.2

About 40 per cent travellers have moved away from the
physical travel agent. Booking today is a matter of a few
clicks. Other aspects of travel have become so much easier
that the number of outbound tourists has gone up significantly over the past few years.
On The Upswing
According to The World Bank, the number of outbound
tourists from India went up to 18.33 million in 2014 from
16.62 million in 2013. In 2012, the number stood at 14.92
million. This, notwithstanding the economic slowdown,
devalued rupee, and general pessimistic sentiments globally that spread to India, too.
India today is emerging as the worlds fastestgrowing
outbound market, and in absolute numbers, it is currently
second only to China.
In 1991, the year India opened to reforms, there were
just 1.94 million Indians who travelled abroad, according
to Confederation of Indian Industry (CII). In 2014, the
figure stood at 18.33 million, a CAGR of 10.25 per cent.
With over 1.1 billion population and GDP increasing
by more than 7 per cent every year, India definitely offers
enormous potential for future growth in outbound travel,
GLOBETROTTING:
Indians are now discovering
exotic overseas locales that
were earlier off the radar
says Chandrajit Banerjee, director general at CII.

Tourism has become a significant contributor to the
domestic economy, almost on par with the IT sector. The
former contributes over 6 per cent to the countrys GDP,
while the latter around 7.5 per cent.
Much of Indias outbound growth can be attributed to a
growing disposable income and a lifestyle that is changing
with increased use of technology that is bringing travel
possibilities in focus and offering a variety of services from
travel startups. Also, the ease of arranging documentation, visa on arrival and availability of affordable travel
packages are making travel more popular.
According to the United Nations World Tourism
Organisation (UNTWO), India will account for 50 million
outbound tourists by 2020.
The New Way
Every aspect of the travel and hospitality business has
changed because of startups creating services. It has also
given rise to new peripheral businesses such as traveller
hostels, in-destination activities, local guides, etc. Most of
these operate on an asset-light marketplace model.
According to travel search engine ixigo, travel startups
billion in 2014, and is expected to reach $259 billion in 2025
HEALTH SHOPPING
MANMEET
AHLUWALIA
Marketing head, Expedia India
WEVE IMPLEMENTED
CAPABILITIES TO
TRACK A SINGLE
CONSUMERS
JOURNEY ACROSS
MULTIPLE DEVICES
have grown from about 50 in 2011 to over 250 in 2015. It
also says that the Indian airlines industry, which is a big
beneficiary of the travel booking ecosystem, is growing at
a CAGR of 24 per cent and the momentum is expected to
continue over the next four to five years. Today, India has
about 12 domestic airlines, of which six fly international.
Besides, there are over 35,000 hotels, guesthouses, dorms
across the country. In terms of hotel rooms, the number
stands close to 1.2 lakh as of 2015.
Traveling today is less about landing directly at your
typical destination, but is more an enlivening experience
that begins from the moment the thought takes root.
Half the fun is in the planning, the choices, the recommendations from friends, the decisions, says Vandana
Puri, who recently returned from a two-week trip to
Langkawi, Malaysia. Even finding the cheapest deals in
hotels and flights is great fun.
With the digital penetration and emergence of startups
Medical tourism, as a segment, has grown considerably

owing to Indias increasing strength in healthcare delivery.
Expected to expand at a CAGR of 31 per cent, the medical
tourism market, according to KPMG, is likely to reach
$10.6 billion in 2019 from $2.8 billion in 2014. With its cost
advantage, immediate access to healthcare services and
quality healthcare facilities, India is a naturally attractive
destination for medical tourists. Initiatives such as m-visa
and e-visa facility, National Medical and Wellness Tourism
Promotion Board, and the impetus provided to traditional
therapy methods, are expected to further propel growth
in this sector. However, challenges such as shortage
of specialist doctors, perception of an inhospitable
environment, and inadequate healthcare infrastructure
to meet the growing demand, are stalling the countrys
ambition to be one of the most attractive medical
destinations in Asia.
that offer more customised travel, the traditional nextdoor tour operator has had to reinvent to capture the new
class of traveller who likes DIY travel.
A typical journey today has five stages inspiration,
research, planning, booking and in-destination. Travel
tech startups have emerged and evolved in each of these
stages. There is huge room for all of them to grow and
help boost the tourism industry, says Aloke Bajpai, CEO
and co-founder of ixigo.
Travelling, even a decade ago was about going wherever
the agent fixed up and doing what everyone else did visiting a few museums and tourist spots, restaurant hopping an shopping. Today, the traveller is more informed
and connected through mobile devices, tablets and various applications which help in searching, planning and
booking travel itineraries.
We have implemented capabilities to track a single
consumers journey across multiple devices including the
desktop, laptop, mobile and tablet, says Manmeet
Ahluwalia, marketing head, Expedia India.
Praveer Kochhar, founder & CEO at social discovery
app for travel within India, Shouut, says: Consumers
want information with just one click: they no longer want
to call ten people, download five apps and look at several
blogs to figure out the great things around them.
COVER STORY
TRAVEL
In 2015, India is estimated to have received $109.6

TRAVEL AND TOURISMS
CONTRIBUTION TO ECONOMY
Contribution to GDP(%)
Direct
Contribution
Indirect
Contribution
7.6
2.5
2.2
2014
16.6
Employment(million)
Direct Contribution
Indirect Contribution
6.7
FOREX EARNINGS
45.6
11.8
29
17.7
18.4
19.7
14.2
11.1
23 36.7
2025
2014
2025
SOURCE: TRAVEL & TOURISM ECONOMIC IMPACT 2015

INDIA, WORLD TRAVEL AND TOURISM COUNCIL, 2015
2008
2009
2010
2011
2012
2013
2014
SOURCES: INDIAN TOURISM STATISTICS AT A GLANCE 2015, MINISTRY OF

TOURISM, GOI; PERFORMANCE OF TOURISM SECTOR DURING DECEMBER
2014, MINISTRY OF TOURISM, GOI; TRAVEL AND TOURISM ECONOMIC
IMPACT 2015: INDIA, WTTC; FIGURES IN $BILLION
TOTAL OUTBOUND TOURISTS OF THE TOP-FIVE

COUNTRIES AND THEIR ARRIVAL IN INDIA IN 2013
Total outbound tourists
Tourist visits to India
1,085
98,185
809.4
84,414
There is significant
scope to tap into the
leading countries for
outbound tourists
61,569 58,510 54,069
INBOUND TOURISTS
5.3
5.2
2008
2009
5.8
6.3
6.6
2011
2012
7.0
7.7
32,977
174
259.1
China Hong Kong USA
UK
Russia
255.2
2010
2013
2014
Canada
SOURCES: INTERNATIONAL TOURISM NUMBER OF DEPARTURES, WORLD

BANK WEBSITE, ACCESSED 20 JANUARY 2016 HTTP://DATA.WORLDBANK.
ORG/INDICATOR/ST.INT.DPRT; INDIAN TOURISM
STATISTICS AT A GLANCE 2014, MINISTRY OF TOURISM, GOI; FIGURES IN 000
SOURCES: INDIAN TOURISM STATISTICS AT A GLANCE 2015, MINISTRY OF

TOURISM, GOI; PERFORMANCE OF TOURISM SECTOR DURING DECEMBER
2014, MINISTRY OF TOURISM, GOI; FIGURES IN MILLION;
TRAVEL AND TOURISM ECONOMIC IMPACT 2015: INDIA, WTTC
Exotic Locales
Tourists are now open to exploring exotic locations. They
love travelling abroad for leisure, sports events and shopping trips apart from business, says Rajesh Magow, cofounder and CEO-India, MakeMyTrip.
With exposure levels going up, people now are increasingly taking longer holidays. Indian travellers have
become much more adventurous and experimental, says
Magow. From solo-travel, to women-only travel, three to
four long weekend breaks a year and a couple of short holidays during the festive season Indians are discovering
new ways to holiday.

Travel is no longer an annual event. People have started
taking longer international holidays such as two-week
itineraries. This is driven by the desire to completely experience and discover a new place to where they may not
return in future. Whats more, they simultaneously also do
a short haul foreign trip to destinations in Thailand,
Maylasia, and UAE, among others.
Big Spenders
The World Bank data shows that international travel
billion in revenue from domestic and foreign tourists
SHARE OF FOREX EARNINGS

FROM TOURISM (%) 2014
Foreign Revenues
FOREIGN TOURIST
ARRIVALS IN INDIA
(IN MILLION)
18.5%
15.3
7.7
Domestic Revenues
81.5%
2014
2025E
SOURCE: TRAVEL & TOURISM ECONOMIC

IMPACT 2015 INDIA, WORLD TRAVEL
AND TOURISM COUNCIL, 2015
expenditures have gone up from $13.84 billion in 2013 to

$17.49 billion in 2014. Indians are increasingly spending
significant amounts at destination by adding on activities
to their itinerary while on tour, says Magow, adding that
shopping is another big spend for Indian tourists across
the globe.
Indias GDP per capita crossed $1,500 in 2014.
Historically, in developed countries, this is the income
threshold at which peoples willingness to spend on travel
spikes up, according to Tripoto, a travel community and
travel search engine portal established in 2013. This can
explain the advent and success of startups such as OYO
Rooms and budget airlines in India in the past two years.
What we are seeing is that Indian travellers are very
discerning. They have their first trip to Europe, perhaps
to Rome, Paris and Berlin. Now they are starting to venture into the next tier of cities such as Prague or
Budapest, says Alexander Schlaubitz, vice-president,
Global Marketing, Lufthansa.
The fact that Indians splurge on shopping and dining
out naturally makes them the favourites of various countries. In fact, in a bid to woo Indian tourists, foreign tourism boards across countries are increasingly setting up
their own offices in the country. In India, we are especially targeting families, young travellers and honeymooners. Viennas imperial heritage along with contemporary
attractions and young neighbourhoods offer something
CHANDRAJIT BANERJEE
Director general, CII
WITH OVER 1.1 BN POPULATION,

INDIA OFFERS ENORMOUS
POTENTIAL FOR FUTURE
GROWTH IN OUTBOUND TRAVEL
for everyone in an Indian family, says a spokeswoman
from the Vienna Tourist Board.
Distant Lands
Back in late 90s or early 2000, the fad among travellers
was to go to South East Asia and visit countries such as
Thailand and Malaysia. Those who went to Bali,
Indonesia, considered themselves lucky.
S. Ramesh, a corporate executive, and his wife, travelled
to Europe for the first time in 2004. We had never gone
for a vacation abroad before as it was almost unaffordable, says Ramesh. The couple with their five-year- old son
visited London, Paris and Switzerland in a span of six
days. We restricted ourselves to the more touristy destinations and now to think of it, it was just touch-and-go,
he says. This year, the couple is taking a 10-day tour to
London and Scotland to see the interiors extensively.
While traditional European destinations such as
London, Paris, Switzerland, and those in Italy apart from
UAE, South-East Asia and the US remain among the top
destinations, there is an increase in footfall in rather
unique places such as Norway, Poland and Russia. In fact,
COVER STORY
in what emerged as an interesting trend in 2015 is the fact

that Amsterdam overtook London as the most talkedabout city in Europe and adventure overtook culture as
the most sought-out category for travel, as per Tripoto.
Going forward, Iceland will continue to attract Indian
tourists in 2016 and cities such as Amsterdam and Prague
will feature in the top cities to visit, alongside mainstream
destinations such as London and Paris, says Michael
Lyngdoh, co-founder at Tripoto.
In todays world of globalisation, when business travel,
holiday and visiting-friends-and-relatives trips are dominating outbound volumes, travellers are also increasingly
opting for niche services such as sports tourism, luxury
travels, MICE, honeymoon packages and cruises.
According to Tripoto, Thailand has overtaken Maldives as
the preferred honeymoon destination, while Australia
and Sri Lanka are trending destinations and adventure
sports such as scuba diving are key attractions. Greece
and Iceland were extremely popular in the 18-30 -years
demographic.
TRAVEL
Traveling Young
Funded by indulgent parents, Priya and Myra are just
back from a Europe tour. The two of them planned every
aspect of the trip including AirBnb stays, which trains to
take between places, what to see and where to hang out.
One may not find this unusual today except, the two girls
are just seventeen. A few years ago, they wouldnt have
been allowed to venture that far alone, but now youngsters are off on their own.
Today, 65 per cent of population of India is below the
age of 35 and the travel industry is certainly seeing considerable growth driven by the younger generation. As
per estimates by ixigo, about 61 per cent are below 40
years.
They are looking beyond a normal vacation for which
they have started to travel beyond the regular destinations
to explore neighbouring locations, says Ahluwalia of
Expedia India. These travellers are in the mood to plan
multiple short trips to places around their cities, mostly
booked through their mobile apps, he adds.
COVER STORY
Adventure tourism
The geographical
diversity of India
attracts adventure
enthusiasts.
Mountaineering,
rafting and water sports
activities are being
developed to gain
global popularity as an
adventure destination.
Religioud/ culture
tourism
The abundance of religious
and heritage sites in India
has always played a pivotal
role in attracting tourists.
Architecture and art in India
have influences from all over
the world, including Islamic,
Persian and Ottoman.
Medical and wellness

tourism
Tourists seek
specialised medical
treatments including
ayurvedic, spa and
other therepies in India
as services here are
economical than those
in developed countries.
The market has values
at $4 billion in 2015.
Together Alone
Even when a group trip is planned, it has to be customised
for the members. The group travel industry which had
become quite slow is now once again gaining popularity, especially as people are venturing out on solo trips.
Travelling with new people, getting to know them and
learning as you travel is now becoming the next big thing.
Group trips are still a trend but with a twist.
Traditionally group trips were family trips or official sales
incentive trips. Now it is like-minded people travelling
together and exploring interesting destinations of their
choice. There are group trips for single women travellers,
adventure sports lovers, golfers, older people and even
those with disabilities, among others, says CIIs Banerjee.
Home Front
Prime Minister Narendra Modi recently said that adventure tourism, in the north eastern region, has the potential
to become the biggest employer in the country. North
East, sure, is blessed with natural scenic beauty that offers
great scope for mountaineering and trekking.
Already, the government is trying to promote tourism in
a significant way and is taking measures to attract foreign
tourists in the country. The ministry of tourism, which has
been working closely with the ministry of home affairs
TRAVEL
Nature/
ecotourism
The diversity of flora and
fauna, as well as the variety
of landscapes, have
attracted torists from all
over the world.
A plethora of sanctuaries
and national parks having
exotic animals, also help to
attract tourists.
Other
products
Cruise tourism
Golf tourism
Polo tourism
Meetings, incentives,
conferences and
exhibitions (MICE)
Film tourism
Rural tourism
SOURCE: KPMG
and the ministry of external affairs for easing the visa

regime in the country, has recently supported the initiative of implementing tourist visa on arrival.
Destinations that have become popular in the last few
years are Ladakh and North-east India. These aside, Goa,
Delhi, Mumbai, Kasol and Pondicherry are amongst the
most popular destination.
With the penetration of technology, the hospitality
industry in India has undergone a makeover and given
rise to home stays, Airbnb and Oyo Rooms. The Airbnb
concept is gaining popularity in India, as more and more
people are letting out apartments and homes to people
through the Internet. It has almost doubled its listing in
India year-on-year, says Ixigos Bajpai.
The government too, on its part, has formulated an
action plan for Incredible India Bed & Breakfast /Home
Stay Scheme, which will throw up significant business
opportunities for many in the country.
All in all, travelling abroad is no longer a cumbersome
and uncertain process. With the amount of information
and services available, thanks to technology, any destination is just a click away.
paramita@businessworld.in; @paramitachat;
For more on travel, visit www.businessworld.in
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COVER STORY
INBOUND TOURISM
BOUND
FOR INDIA
More tourists would flock

to Incredible India if the
government addressed
some critical issues
INCREDIBLE INDIA
Americans account for the largest chunk of foreign

tourist arrivals in India after Bangladeshis
12,13,624
8,67,601
By Monica Behura
HEN SARAH COLE from

Halifax, Canada, visited the
picturesque backwaters of
Kerala in 2014, she never
realised that the beautiful
Indian landscapes would
beckon her again. The very
next year, she found herself
atop a camel exploring the
mysterious deserts of
Jaisalmer, Rajasthan. And
again in 2016, she is pushing her way through the jostling crowds of the lanes of Chandni Chowk, Delhi.
The rising interest among the tourists, from all over the
world, indicates a positive growth in inbound tourism to
India. With Asian countries accounting for six of the top
10 markets, it shows an increase in the share of visitors
looking at exotic Indian destinations.
A part of this increase can be attributed to the introduction of online visas extended to over 100 countries, along
with reduced airfares.
No. of arrivals
11,33,879
15.12
USA
14.13
Bangladesh
10.81
UK
% Share
2,99,513
3.73
Sri Lanka
2,72,941
3.40
Malaysia
Tourist destinations such as Delhi, Agra and Jaipur in

the North, and Goa and Kerala in the West and South
have the highest influx of travellers. Other states such as
Karnataka, Tamil Nadu, Maharashtra, Uttar Pradesh and
Uttarkand are also seeing more foreign arrivals.
Foreign Tourist Arrivals (FTA) in India in 2015 have
increased to 8.27 million compared to 7.68 million in 2014
and 6.97 million in 2013. The growth rate in FTAs during
2014 over 2013 was 10.2 per cent compared to 5.9 per
cent during 2013 over 2012. The double-digit growth of
10.2 per cent in 2014 for India was better than the growth
rate of 4.2 per cent for the International Tourist Arrivals
around the world in 2014, according to the Ministry of
Tourism Statistics and Research.
We are seeing an incremental growth in inbound travel
from the APAC (Asia Pacific) region of late. The US,
Europe, China and Singapore still lead the list, says Vijay
Dutt, general manager, The Ashok Hotel, New Delhi a
Photograph by Ritesh Sharma
flagship hotel of ITDC.

However, certain Indian cities making headlines for
sexual assault on foreign tourists have dented the countrys image, resulting in a drop in the flow of tourists. Last
year, Delhi slipped from third to fourth position in the foreign tourist arrival list. Delhi Tourism officials revealed
that after the Uber and the infamous 2012 Nirbhaya rape
cases, the footfall of tourists declined.
There hasnt been any long-term impact.
Unfortunately, we do live in a world where security and
safety concerns exist. Did Paris stop getting tourists after
the terror attack? Maybe for the short-term, but visitors to
these destinations come back, so is the case with Delhi,
says Dhananjay Saliankar, regional director, Sales &
Marketing and Starwood Sales Organisation, South Asia.
Media reports have labelled some cities in India as

unsafe and this has stunted the growth of inbound FTAs.
Goa was scrapped off the list of safe travel destinations
recommended for Russian tourists, according to a leading
newspaper report last year. The number of Russian tourists to Goa has halved since. India is still not a top destination for mature markets like Russia, the US and
Europe. There has been more influx from Asian countries
like Malaysia, Sri Lanka, says Permender Kumar, director
at IndiaTravellers an inbound travel service agency.
Even so, tourism continues to play an important role as
a foreign exchange earner for the country. In 2014, foreign
exchange earnings from tourism were $20.2 billion compared to $18.5 billion in 2013, registering a growth of 9.7
per cent. Tourism in India is economically important, but
it still is a single-digit contributor to the GDP. The World
Travel & Tourism Council estimates that tourism generated a revenue of $120 billion, or 6.3 per cent of the
nations GDP in 2015 and supported 37.32 million jobs
making up 8.7 per cent of Indias workforce.
India needs scores of hotels, a facelift to road infrastructure to be able to attract more tourists. According to the
global hospitality consultancy HVS, India is expected to
bolster its hotel room capacity by 54,000 over the next 3-4
years. The governments report of the Working Group on
Tourism, under the 12th Five- Year Plan (2012-2017) set
up by the Planning Commission states that India requires
1,90,108 hotels rooms by 2016 to meet a projected 12 per
cent growth in tourism.
We must liberalise the aviation sector, get 100 per cent
FDI in the Hotel and Tourism industry to attract eco,
rural and medical tourism that are growing fast and contribute heavily to the sector, said Harkirpal Singh, chief
representative of the Travel Agents Association Of India.
Indias medical tourism sector is a lucrative sector worth
$3 billion. It however, receives no government support
and no international accreditation. There are no simple
laws to extend visas and no apex body for medical tourism. Even so, the sector is projected to grow to $270 billion by 2025. In 2014, 184,298 foreign patients travelled
to India to seek medical treatment.
Singh says that the government should play the role of
a regulator and a facilitator of private investment in
healthcare. Tax incentives to the service providers, import
duty reduction on medical equipment, committees to
promote and foster medical tourism are some of the initiatives that he suggests. Ironically, even in this digital age,
no apex portal provides information to assist foreign
medical tourists.
COVER STORY
Q&A
Medical tourism
is growing rapidly
Union Minister of State (Independent Charge) for Culture & Tourism
Mahesh Sharma talks to BW Businessworlds Suman K. Jha about
the initiatives that the ministry is
pioneering. Excerpts:
What are the achievements of the tourism

ministry in the past two years?
One of the biggest initiatives of the
ministry is that we have been able
to initiate e-visa facility for 150
countries. We have also recommended 36 more countries for
the facility. About 8.5 lakh people
have availed this. Second, medical
tourism is growing rapidly at 24
per cent here. We have formed the
National Medical Wellness Board,
where we will recognise medical centres providing treatment

to international patients. Third,
security is a concern worldwide, especially for international tourists.
We have started a helpline no. 1363,
which is available in 12 languages.
But the perception doesnt quite match the bigticket changes that you have ushered in
The World Economic Forum has
recognised us, and we are ranked
52nd from 65th in the recognition
index. Last year, we witnessed a
growth of 9.96 per cent, while the
world average is only 4.6 per cent.
Our foreign exchange earning was
Rs 1, 23,000 crore last year. This
year, its Rs 1,35,000 crore. Tourism
currently contributes 6.67 per cent
to the GDP.
What are your targets for the next 5-10 years?

Indias share is less than 1 per cent
of the global pie (0.68 per cent). By
2020, we propose to take it to 1 per
cent, and by 2025, we will take it to 2
per cent. The sector will contribute
8 per cent to the GDP by then.
The tourism and travel industry

contributes significantly to employment generation. Do you have
targets in mind for the sector?
Around 11.2 per cent
of total employment is
generated directly or
indirectly by tourism.
We are planning to
take this to 12 per cent in the next

few years.
You are also in charge of civil aviation (as MoS).

How are you combining the two roles?
We are starting with a regional
connectivity scheme. Tier-II and
Tier-III cities would be connected
through the air route, and flying
cost for an hour would be less than
Rs 2,500. We are also supporting
people in teaching training and
skill development programmes.
Are you joining hands with the private sector in

promoting tourism?
We have disinvested in the hotel
industry. Out of 16 ITDC hotels, we
have disinvested in 14. We are also
trying to privatise some of the other
services. For hospitality service, we
are trying to invite private players.
Theres been a quantum jump in the outbound

tourist traffic from India. Are you working with
the MEA and other governmental agencies to
protect their interests?
Whenever our tourists face problems abroad, we take immediate
action. Weve signed memorandum
of understandings with different
countries. Of course, the MEA and
our embassies are also actively
involved there.
When we consider inbound traffic, the growth

rate of tourist inflow has taken a dip? Do you
think the recent controversies like banning beef
or rape incidents have led to this?
We have surpassed the world average!
Last year, theres been a worldwide
economic slowdown which we
must keep in mind. But, yes we can do
without our share of controversies.
suman@businessworld.in;
@skjsumankjha;
For more interviews , visit businessworld.in
IN DEPTH
LUXURY TRAVEL
TOUR DE
ADVENTURE
How multi-millionaries are travelling in ever new ways
around the globe By Smita Tripathi
MAGINE DRIVING through the majestic and

beautiful Italian countryside in a gleaming red
Ferrari, staying like a king in a late Renaissance
country home in Tuscany, sipping wines, savouring Italian delicacies and pampering yourself at a
spa. Sounds like the perfect holiday? Well, thats
just what a Delhi-based entrepreneur Nitin
Bhatia (name changed) did for his 40th birthday
last summer. Bhatia had been to Italy previously
and was looking for a new experience. Over the
course of the one week holiday, Bhatia drove the
Ferrari 612 Scaglietti across the Tuscan countryside, while staying at some of the most luxurious
properties in Italy. The cost: $25,000 for a couple.
Tired of regular run-of-the-mill holidays and wanting
to do something different, found an Almora-based entrepreneur Mukti Datta on a flight to Uganda, a couple of
years ago where she went in search of gorillas in their natural habitat. Tracking gorillas in the wild is often touted as
one of 50 things to do before you die. Not surprising, considering there are just over 800 mountain gorillas in the
wild making them a rare species. Of these nearly 350 are

found in Ugandas Bwindi Impenetrable Forest a World
Heritage Site. Seeing these primates in their natural habitat is spellbinding, says Datta.
Welcome to the world of luxury travel where no two
experiences are the same. While for one traveller, it could
be a private multimillion-dollar cruise around the Arctic
on a famous yacht. For another, it could be having their
favourite Michelin-starred chef flown in to prepare a meal
in a Bedouin tent in the middle of the Sahara. Todays
luxury traveller seeks more depth of understanding and
immersion into local culture than ever before. People
dont just want to see they want to participate, says
Taruna Seth, founder and vice-president of Pearl Luxe
Travels a boutique travel company specialising in luxury travel experiences. And those in search of such experiences are willing to pay top dollar for them.
Little wonder then that Indias luxury travel market is
growing at a CAGR of 12.8 per cent, which is higher than
that of any BRIC nation, and the highest of the 25 countries explored in a recently published report by Amadeus
Luxury travellers
today seek more
depth of
understanding and
immersion into
local culture
TARUNA SETH
Founder & vice-president
of Pearl Luxe Travels
Its like having a

Louis Vuitton bag
with the LV logo all
over as compared to
a Louis Vuitton,
where the branding
is more subtle
ANKUR BHATIA
MD of Amadeus India
titled Shaping the Future of Luxury Travel. While there

are no recent reports on the size of the Indian luxury
travel market, industry insiders peg it around $1.7 billion.
Whats more, with the rise in the number of multi-millionaires in the country, this is only likely to increase further. According to the Kotak Mahindra Top of The
Pyramid report 2015, the number of ultra high networth
households those with a networth of over Rs 25 crore
in India has increased by 17 per cent to 137,100 from
117,000 in 2014 and their combined wealth has increased
by 23 per cent to Rs 128 trillion. The number of such
super rich households may increase to 348,000 by 2020
with a combined networth of Rs 415 trillion. And while
the super rich love spending on jewellery and apparel,
travel comes a close third accounting for 14 per cent of
their spend. The super rich are passionate about travelling
and nearly 50 per cent make at least three luxury trips
annually. They are also willing to spend large sums of
money with nearly 31 per cent spending above Rs 25 lakh
for a holiday.
Luxury travel is not restricted to metros, even non-metros have been bitten by the travel bug. According to the
Kotak report, small towns are contributing as much as
25-30 per cent of a renowned travel companys luxury
customer base. Says Vikram Ahuja of Bangalore-based
Byond Travel: There is a huge demand from small towns
like Amritsar and Ludhiana. We had maximum queries

from Ranchi and Surat for Tomorrowland Belgiums
largest music festival. On a recent road trip from India to
Bangkok organised by Ahuja, a family of four travelled
from Coimbatore at a cost of Rs 3.5 lakh per person.
According to the Amadeus report, there are different
profiles of luxury travellers. While for the Always Luxury,
luxury is a way of life, a minimum requirement rather
than a perk for the Strictly Opulent, its all about show.
Sharing their luxury holiday on social media is an important part of this experience they want to be seen as living life to the fullest and being able to indulge. While the
traditional rich want to stay in functional, luxurious
accommodation, which is more intimate and private, the
new rich want to be seen at the it hotels across the globe.
Its like having a Louis Vuitton bag with the LV logo all
over it as compared to a Louis Vuitton, where the branding is more subtle. While both are extreme luxury, their
owners want different things, says Ankur Bhatia, managing director of Amadeus India.
Other profiles include Special Occasion, who are seeking the wow factor such as sacrificing luxurious facilities
to go on a tour of the Arctic and Cash-Rich, Time-Poor,
who are keen to holiday, but obligations prevent them
from taking long-haul holidays.
The average age group of most luxury travellers in India
is 35-44 years. For the young and the young-at-heart, luxury is no longer only about comforts. In fact, the big
spenders are willing to compromise on comforts for
adventure. Its all about that once-in-a-lifetime opportunity. For the luxury set, adventure holidays give them the
adrenalin rush and they dont mind roughing it up, says
Karan Anand, head, relationships, Cox & Kings. Cox &
Kings has tied up with G-Adventures to provide a 11-day
tour of Antactica, priced at Rs 6 lakh per person.
Have money will travel to the ends of the earth seems to
be the motto of the super rich.
COVER STORY
COLUMN
THE
CHANGING
FACE OF
TRAVEL
BY NAMITA GOKHALE
RAVEL IS A STATE of mental as well as

material transportation. The nature of
travel is transforming with accelerations
in technology and the ease with which we
can know and access new places and cultures. There are few voyages of discovery
to be made in our times. The analytical
and adjectival traditions of examining
foreign cultures in travel writing have
been diluted by the all-knowing interconnectedness of our age.
Its a much smaller world, with enforced cosmopolitanism and cheek by jowl multiculturalism changing the way
we think about faraway people and places. Millennials
tend to have a sense of unselfconscious entitlement about
the process of belonging to different places at the same
time. And the ever-expanding Indian and South Asian
diaspora leaves its footprint in the most unexpected and
expected places. There is a sense of dj vu in encountering our countrymen and countrywomen wherever we go,
as they footprint the globe with curry and masala,
Bollywood rhythms and desi talk.
Many years ago, in the course of a reading, Salman

Rushdie had declared that trees have roots, men have
boots. He was perhaps referring to the diasporic experience, but the phrase stayed with me, changing context and
meaning in my mind. The joys of rootedness and the quest
for otherness seemed part of a perpetual pendulum of
internal and external experience.
Then there are migrations, the usually disruptive mass
passages of people in search safety and security. While the
old nomadic communities, such as the gypsies and the
Romani communities, are no longer as geographically
fluid as they once were, migrants and refugees display a
new and determined aspect of human mobility across
borders, visas and barbed wire.
We are all travelling all the time. As our small blue
planet continues its trajectory around the sun, migratory
birds use stellar and solar cues to intuit the magnetic field
of the spinning earth. Other migrating animals, like
whales and sharks and porpoises, use the unseen magnetic grid and the position of the sun to orient themselves.
Space travel and interplanetary tourism is no longer the
stuff of speculative science fiction. At the Jaipur Literature
Festival 2016, one of our speakers was the inspirational

Anousheh Ansari. In 2006 she became the first Iranian
woman in space, and the first self-funded woman to travel
to the International Space Station. Her motivation? She
had read The Little Prince by Antoine de Saint-Exupery
and wanted to see the stars.
Despite hiccups and setbacks, and a test flight crash in
2014, Richard Bransons space travel programme Virgin
Galactic is set to send mega-wealthy celebrity civilian
space tourists out unto the blue yonder. Singer-songwriter
Justin Bieber, actors Kate Winslet and Leonardo
DiCaprio, physicist Stephen Hawking, are among those
who have signed up for the trip. The SpaceShip Two cabin
is reportedly roomy enough for passengers to float during
a few minutes of weightlessness. Way to go.
The search for new frontiers is the motor of the authentic travel experience. But all too many modern tourists
travel without seeing, never crossing built in comfort
As for the monkey caps and khakra that were once the
insignia of the Indian traveller, I wont even go down that
road. Things have changed, and if perchance you actually
encounter such nostalgia-feed, snap away, post away, for
the times they are a changing.
I am myself a lazy traveller, preferring to read and daydream about distant places rather than trudge tiredly
through the cobbled streets of historic towns and heritage
sites.
By the law of contraries, I travel constantly, within India
and around the world. Wherever I go, I encounter fellow
writers, and listen in to ideas and stories and arguments. I
tend to take in new and changing surroundings with an
oblique gaze, being careful not to startle the subject of my
scrutiny. As a novelist, what I am seeking is both difference and commonality.
The object of travel is not to leave carbon footprints. It
is, to quote T.S. Eliot, to return where we began and see
the place for the first time. Yatras,
pilgrimages, and circumambulations
hold out just that promise, of the
journey and the quest becoming one.
Reading remains, for some of us,
the best way to travel. Literary festivals rate a close second, as they open
up a cross section of informed understanding and cultural context.
Bypassing the lazy eye syndrome and
internalising experience is crucial to
the process. In a recent anthology
which I edited, titled Travelling In,
Travelling Out, I sought precisely such startling moments
of self recognition, exterior journeys, interior monologues,
subtle shifts of perception.
The nature of travel, of one foot placed after the other,
uphill and downhill, on horseback or bullock cart, perhaps astride a yak in Bhutan, palanquin or aeroplane or
intergalactic ship, caravanserai or pilgrimage, stimulates
both personal and economic growth, measuring out the
miles on our spinning globe, rendering the world both a
smaller and bigger place.
Traveller, venture forth
THE OBJECT OF TRAVEL IS NOT TO LEAVE

CARBON FOOTPRINTS. IT IS, TO QUOTE
T.S. ELIOT, TO RETURN WHERE WE
BEGAN AND SEE THE PLACE FOR THE
FIRST TIME. YATRAS HOLD OUT JUST
THAT PROMISE, OF THE JOURNEY AND
THE QUEST BECOMING ONE
zones to make the leap to the farther shore. This holds
especially true of well-off Indian travellers, who carry everything, from maids to pre-cooked masala meals, to circumvent the otherness of their glamorous destinations. It
is almost as though they want to travel to the celluloid
interiors of their inner imaginations and to inhabit the
foreign locales of great Bollywood travel busters. From
Sangam through the entire Yash Chopra ouevre, with a
special nod to DDLJ from Hum Dil De Chuke Sanam to
Dil Dhadakne Do and Queen, this is where Indian wanderlust takes us, without disconnecting the umbilical cord
from Mothership India. And the desired outcome is
greedy shopping and show-off selfies on Facebook and
Instagram. Such travel is certainly not transformational,
but if it works for them, and for airlines, hotels and travel
companies, who am I to complain?
Namita Gokhale is a writer, publisher and festival

director. She has authored thirteen books. A new novel,
Things to Leave Behind, will be published later this year
COVER STORY
FUNDING
OUR FIRST foreign holiday ought

to be an enjoyable, and care-free,
time of fun and adventure. But,
though its easy to keep anticipation and excitement high, you are
most probably keeping a close
watch on your wallet, too. Foreign
holidays dont come often and, yes,
arent exactly inexpensive, either.
A typical US trip a 6-day,
7-night package could start at a
price tag of Rs 1,13,785 an adult,
which probably includes the usual
features such as tickets, visa,
boarding, meals and sightseeing. If
you want more adventure (and include some exotic destinations or an Alaskan cruise or a trip through the Grand
Canyon), the tab could rocket up substantially. And, that
does not include some of the expenses you would naturally incur on souvenirs and gifts for family and friends
back home.
As these holidays go, you dont want to miss out on the
fun. So, you have to trawl through the tedium of financing
your tour pretty early, and keep a buffer for spur-of-themoment spending. A typical family of four could require
about Rs 4 lakh at the least for a decent top-end holiday to
HOLIDAY IN
YOUR POCKET
Funding your holiday overseas is easy
due to the funding options, and the credit
card. But do scout for low rates, and
bargains By Clifford Alvares
DEEPAK
SHARMA,
Exec. VP & Head, Digital Initiatives, Kotak Mahindra Bank
IF THE HOLIDAY IS
BEING PLANNED
IN ADVANCE, AN
HOLIDAY RD CAN
BE OPENED, WHERE
THE CUSTOMER
CAN SAVE FOR 12
MONTHS
The Travel
Finance Checklist
n You can finance your travel through personal loans or

credit card EMIs
n Normally, the interest rates on a personal loan vary
between 12 and 18 per cent. However, it could be higher
for people with low credit history
n Credit card EMIs also come handy and the cost of
interest may be slightly higher than a personal loan
n Watch out for processing fees and prepayment
penalties which are normally in the range of 0.5-2 %
n Planning a travel holiday in advance? Opt for a
recurring deposit with a bank in which the cost of travel
is split in 12 equal installments
n Keep a tab on interest rates for large-ticket items
like foreign travel where the total interest cost adds to
significant sums
n Keep the tenures at less than a year if you can afford to
pay a higher EMI;, this will reduce the interest outgo
a foreign destination.
And, unlike many other financing decisions, this one is
probably the most difficult to crack. Travelling is a discretionary expense, or one that you can mull over and probably dismiss as unimportant. Its easier for people to fund a
wedding or a car through bank finance, but a holiday?
Hence, typical questions arise: should one borrow for leisure travel? How to make funds available for this tour?
What are the financing options?
Thankfully, foreign holidays are not generally sudden
decisions. Hence, you can plan your finances much earlier.
And, given the way financing has mushroomed and the
large amounts of credit available to people, financing for
travel has gotten quite trouble-free.
In normal circumstances, families would dig into
reserves and savings to fund holidays. Says Abraham
Alapatt, president & group head, Marketing, Service
Quality, Financial Services & Innovation, Thomas
Cook, India: In some sense, tour-loan financing didnt
COVER STORY
FUNDING
find too much traction as people normally dont borrow for a holiday. What has changed, however, is that
as credit cards are offering easier loan options, that
segment is seeing some movement.
Over the last couple of years, more people are increasingly opting for EMI on credit cards to avail of travel or
other, related, loans. For most people, credit cards provide
the convenience of no paperwork, and as long as borrowers are within the credit limits proffered by banks, an EMI
option is usually a call away.
Typically, youngsters are not shying away from footing
their travel bills with a credit card, particularly those looking for their first holiday to a South Asian destination or
for a short education tour, where the cost of travel and stay
is manageable. If these expenditures are not exorbitant, a
credit card becomes an easy mode of availing of finances.
Says Naveen Kukreja, co-founder and CEO,
Paisabazaar.com: If the customer is looking for a quick
processing and the loan amounts are usually smaller with
a shorter duration of loan, credit cards are usually convenient. Of course, the rate of interest on a credit card is normally 2-3 per cent higher than a personal loan.
Credit card companies offer installment options on
spends, which is often converted to an EMI by calling
your bank. The bank or the credit card issuer converts
the bill for an EMI for a specified length of time.
Hence, you can convert travel cost into an EMI. But
the cost is still quite significant. The typical interest
rate could hover around 24 per cent per annum, but
this differs between banks.
n Using a credit card for EMIs could be a

costly option as banks bundle in interest and
processing fees in your EMI break
n The typical interest rate on your credit card
transaction varies between 34.4 per cent
and 42 per cent per annum if you roll over the
payments
n However, opting for an EMI will help you
reduce the costs of travel, but not by much as
interest rates still hover around the 24 per cent
mark
n Watch out for processing fees and
prepayment penalties which are normally in
the range of 0.5-2 per cent; these raise the
cost of loans
n Defaulting on your card EMI will result in the
same showing up in your normal transactions
where interest costs are much higher
Personal Loan A Cheaper Option

On the other hand, if you want to travel and are quite okay
with a little bit of processing time, financing your travel
through a personal loan is a bit of a better and cheaper
option. Travel loans come under the umbrella of personal
loans. Kukreja reckons that about 15 per cent of applications made in personal loans are for travel related purposes, and the typical amount of disbursements for travel
is around Rs 2-4 lakh.
A few banks do have a tie-up with travel companies
for personal loans. Says Deepak Sharma, executive vice
president & head, Digital Initiatives, Kotak Mahindra
Bank: As part of one such initiative, we have tied up
with Thomas Cook and Kuoni Travels, where customers can select domestic or international packages
offered by these agencies. Customer can make payment
for these packages by availing a personal loan with an
easy installment option.

Of course, there is some paperwork involved, and banks
are usually asking for your credit and repayment history
along with your income documents.
Processing time is usually longer, and could range from
1-3 weeks. At the end of it, you may have to contend with
rejection of your loan, if the banks find your credit history
not quite encouraging. However, if your job description is
good, and income is high enough to comfortably pay the
EMI, your personal loan for travel should be a breeze. Says
Kukreja: One should look for the processing fee, which
ranges from about 0.5-2 per cent. You should also see that
the prepayment penalty is quite low, just in case you want
to pay off the loan earlier.
Most travel companies also offer discounts on hotels,
as well as packages (though this is common for all trav-
The Costlier
Card EMI
ellers, regardless of whether they are taking a loan or

not). Typical travellers on the EMI route are not likely
to get discounts over and above the ones normally
being offered. Says Neelu Singh, CEO and director,
Ezeego1: The discounts that we offer across all products at the time applies. There will be no additional discounts for customers availing of the EMI facility. The
bank reserves the right to offer a discount on rate of
interest based on their independent assessment.
Saving For Your Holidays
On the other hand, travellers looking not to take on the
hassles of a loan can also save for their holidays through
THE FINANCIERS LIST
A look at some financing options and rates of

interest on personal loans
Bank
Interest
rate (%)
Processing
fee (Rs)
HDFC BANK
11.49-22
999/ 2.5% of loan amount
ICICI BANK
11.49-19.5
999/ 2.5% of loan amount
BAJAJ FINSERV
14-15.99
1-2% of loan amount
CITI BANK
11.49-17.5
0.25-2% of loan amount
KOTAK MAHINDRA
11.5-19
500-2% of loan amount
INDUSIND BANK
12.99-17
0.5%-2% of loan amount
AXIS BANK
13.5-24
0.99%-2% of loan amount
TATA CAPITAL
12.45-20
999/2.25% of loan amount
SOURCE: PAISABAZAAR.COM
savings packages offered by some tour operators. If you

want, say, a Swiss holiday in a years time, you could opt
for one of the Swiss packages and make monthly savings
with a banking institution to fund the expense.
Wannabe travellers will have to open a recurring
deposit account with a bank, and make regular deposits
into these accounts. The cost of the tour is divided typically into 12 installments, while the 13th is funded
through the interest on the recurring deposit. For example, Thomas Cook has partnered with Kotak Mahindra
Bank while Cox and Kings has a tie-up with Ratnakar
Bank. Says Ravi Menon, head, Foreign Exchange &
Insurance, Cox & Kings: This programme has been
designed keeping in mind that the traveller gets an opportunity to plan a holiday a year in advance.
A typical European 9-night, 10-day holiday, covering
France, Switzerland, Austria and Italy can be funded

in a years time by saving the requisite EMI. For example, if a tour costs Rs 1.7 lakh per head, the monthly
installment a customer would have to make to a bank
is Rs 13,076 for 12 months. The 13th installment, comprising interest and any other additional amount, will
be done by the travel company. Says Allapat: We are
guaranteeing an inflation-proof holiday, and most people feel proud to save. Hence, this allows them to take a
better holiday.
The typical interest rate on these travel deposits is
about 7-7.25 per cent, and they largely work as a recurring deposit. This is good for people who want to plan
a long foreign holiday in advance. Says
Sharma: If the holiday is being planned
in advance, a holiday RD can be opened,
where the customer can save for 12
months, and earn interest on the same.
On your travel, however, you dont need
Max. loan
to carry wads of cash. Another product
tenure (Yrs)
that could come in handy and is offered by
5
most banks is a multi-currency prepaid
5
card. Some of these cards offer the option
5
of paying in dollars, or any other currency.
But, on your travel, you do not want to
5
carry cash or calculate exchange rates
5
when you are out shopping.
5
One can just top-up the travel and
5
prepaid cards. Says Sharma: Travel
6
cards allow customers to load multiple
currencies, and can be topped up online.
Travel cards make for an excellent
option to carry foreign currency, as it eliminates the
risk of theft.
All in all, if you are looking for a quick getaway, a normal EMI on credit cards could be your option. But if its
the longer destination, and you are not averse to funding
it through loans, one option could be personal loans. Says
Kukreja of Paisabazaar.com. If the travel is discretionary,
it should always come out of your savings. If the travel is
an emergency and you cannot finance it yourself, of
course, a loan is OK. If you have a good credit history, personal loans would be the cheapest form.
But if you have the time, theres nothing like pouring the
good old recurring deposit into the adventure.
editor@businessworld.in; Clifford.alvares@gmail.com;
For more on funding travel or education, visit www.businessworld.in
IN DEPTH
BANKING
PLAYING BLIND
As lines between consortium and
multiple banking blur, bankers are
blind-sided even as dud-loans continue
to haunt them By Raghu Mohan
N JULY 1997, Tata Tea pulled out of its unwieldy decades-old State Bank
of India (SBI)-led consortium of a dozen banks to try Mint Roads new
brew for India Inc. multiple banking. You could shop bilaterally for
loans from banks, get a bespoke structure and pricing. Two decades on,
these galactic arrangements are in disarray the line between consortium and multiple banking has blurred; and bankers are now in a tizzy.
The fallout has had a terrible consequence; visibility on the state of
credit is less than adequate. And the huge information asymmetry on
matters credit is one of the key reasons for the dud-loan pile which tops
$100 billion now though much of it is provisioned for. Senior bankers
have raised the issue with the Reserve Bank of India (RBI) to rectify the
situation which is nothing short of delinquent behaviour.
Traditionally, in a consortium, there are inter-creditor ground rules; the
lead-bank keeps an eye on the goings-on. In multiple banking, a borrower gets
independently assessed on credit limits set by individual banks. But today
banks within a consortium also offer benefits of multiple banking or club
deals to borrowers. So what you now have is a Platypus a semi-aquatic
mammal that also lays eggs, which the naturalist George Shaw was inclined to
dismiss as a hoax as there might have been practised some arts of deception in
its structure.
At the systemic level this Platypus has blind-sided banks as it encourages a
high level of corporate debt leverage which comes back to bite them. You have
more trouble: banks are split over the 75:25 rule in decision making as it tips
the scale in favour of the majority of lenders by value who may not be the most
prudent. And borrowers, in turn, play off one bank against another to their
advantage.
Whose line is it anyway?

Within a consortium, some treat an account as a non-performing asset (NPA)
in a quarter, while others may not. If banks in a consortium are talking to one
another, why is that they cant provide for a default irrespective of the 90-day
norm and treat it as an NPA upfront after all theres nothing in Mint Roads
book that says you cant do so? The response on this differs.
State Bank of Indias chairperson Arundhati Bhattacharya tells BW
Businessworld: Information is available. There is the CRILC (Central
Repository of Information on Large

Credits) data on the RBI site. And
yes, an account can be performing in
one quarter and not be so in the
next. Now when you say provide
irrespective of the 90-day norm,
then you have to provide for everybody and anybody. It doesnt work
that way.
Shyam Srinivasan, managing
director (MD) & CEO of Federal
Bank, says, It could be a timing issue
and depends on the record of recoveries and other relationships the client has with an institution. He does
not read too much into it. At most,
the delay may be for a few weeks. It

may reflect in a different quarter
from a reporting standpoint and
could be a timing issue. After that if it
has missed all criteria, then the
account is tagged as an NPA, he
adds.
You may get the impression that
information is one thing, but NPA
classification is a technical or business call. Its not always so. Its better
to treat every information and opinion on its merit irrespective of the
size of lending or exposure of the
bank. At times, a few customers tend
to take undue advantage of any disconnect in terms of information flow
that may exist, says Murali Natrajan,
MD & CEO, DCB Bank. On early
provisioning for NPA, N. Kamakodi,
MD & CEO of City Union Bank, is
blunt: Why should you do so? Pull
on as long as you can to avoid the
pain!
Now differences within a consor-
Illustration by Dinesh S. Banduni
tium in itself is no cause for alarm,

but the extent of the systemic exposure to a borrower is clouded due to
multiple banking in these tough
times as banks are called to honour
their special long-standing relationships.
As Divyanshu Pandey, Partner-J
Sagar Associates points out: At
times an existing lender may not be
in a position to lend due to singleborrower limits being exhausted or
internal sanctions not being in place.
A new lender may be willing to provide credit on the basis of its credit
assessment and at a better pricing. In
these circumstances, refinancing of
an existing loan may be resorted to
by borrowers.
And that new lender will do so on
terms to protect its own interest; and
a transaction of this nature has its
own dynamics both the borrower
and the lender will work to ensure
their relationship is insulated from
the wider worries within a consortium.

The Aditya Puri Committee Report
(Data Format for Furnishing of
Credit Information to Credit
Information Companies) of 2014 had
this to say on derivatives: Borrowers
have, in general, not been forthcoming in sharing such information with
lenders, particularly with banks that
are not part of the consortium. You
can well imagine the blowback if
matters were to go awry.
Its now a game of self-interest. It
(information asymmetry) poses a
systemic risk in itself, but as banks
asset cover on loans start to erode, its
used in a strategic and proprietary
manner to get a good deal for yourself as a lender at the cost of other
banks, says Suhail Nathani, managing partner at Economic Law
Practice. Reshmi Khurana, MD of
Kroll (India), cites the inability to
take legal recourse due to whats
IN DEPTH
BANKING
often perceived as a tedious and

unwieldy judicial process. This compounds the issues as companies can
get away from borrowing from Peter
to pay Paul, until the proverbial
music stops, she says.
Its Boiling Below The Surface
Banks are rethinking the institutional credit-delivery arrangement
be it consortium or multiple banking.
Even within a consortium, a decision once taken is not honoured.
Then whats the point? As for smaller
banks, who cares? This has serious
implications when it comes to wilful
defaulters as they can get away, says
a candid Vishwavir Ahuja, MD &
CEO of RBL (the erstwhile Ratnakar
Bank). You get the feeling hes aware
of the poet A. H. Audens quip: We
are all here on earth to help others.
What on earth others are here for, I
dont know.
Says Kamakodi, We have predominantly single-banker relationships
with minimal exposure to consortium
and multiple banking. Getting into
consortia would have helped us grow
faster, but it would have come at a
price. You hear more of the same
from Rajat Monga, senior grouppresident at YES Bank: We lead the
financing and help syndicate, or we
are into bilaterals. Its because the
bigger banks call the shots in such
arrangements; and it leads to a certain line of thinking expecting
others to solve your problems, says
Monga. DCBs Natarajan walked out
of the Corporate Debt Restructuring
game for the same reason.
The more prudent banks now prefer to settle issues bilaterally as joint
mechanisms often lead to power
struggles among banks at every stage
from loan disbursal, its monitoring
to recovery. All this even as some
banks dole out loans without a clue
on the risks involved. RBIs deputy
governor S. S. Mundra was scathing:
IN A NUT-SHELL
A look at the lending ecosystem as well as the pros

and cons of various channels
Consortium banking
A system wherein several banks lend to a borrower with common ground
rules headed by a consortium leader.
Pros: In theory, banks within a consortium have both a worms and
birds eye view on the borrower. They can share information readily and
can red-flag concerns. Useful in large and complex credit exposures
Cons: Unwieldy and bureaucratic; does not usually allow leeway by
way of relationship banking
Multiple banking
It allows a borrower to have relationships with several banks on a bilateral basis
Pros: A borrower can negotiate on a bilateral basis with banks. It allows
for flexibility as each bank can extend credit based on its appraisal. Pricing on loans can be relationship-driven
Cons: In the absence of information sharing among banks, a borrower
can abuse and avail of huge credit before the system comes to know of
it. Over-leverage is a common fallout
Club deals
A relatively new informal arrangement that is pre-marketed to a few
relationship lenders
Pros: It is a variant of loan-syndication, but only available to top-end
borrowers. Not common in India
Cons: Like in multiple banking if things go awry, its each bank to its own
Going forward, they have to refrain

from binging on what their neighbours are eating.
Worse, nobody senior from a bank
attends these credit meetings that
may last anywhere between an hour
to half a day which usually happen
when bankers squabble over a credit
mess. In the case of state-run banks,
its not unusual for a new officer to
overturn a decision as his new boss
has a different worldview on how the
banks interest is to be protected. An

RBI inspector who did not want to be
named says, The consortium was
supposed to be a joint family, but everybody in there behaves as if they
have gone nuclear.
The big bone of contention is the
75:25 rule; theres now a debate on
whether this rule needs to be revisited. Says Srinivasan: If a lender has
participated in a consortium and the
lead-bank has been facing off with
When you say

provide irrespective
of the 90-day norm,
then you have to for
everybody. It doesnt
work that way
ARUNDHATI
BHATTACHARYA
Chairperson,SBI
Going by the rule

book, only record
of recoveries
should decide the
fate of the credit
SHYAM SRINIVASAN
MD & CEO,
Federal Bank
clients, the lead bankers may have

greater visibility on the client and
that may bring about the view on
who calls the shots, if such a line can
be used. The issue is that a stake in
relationship will bring about its own
implications and it can be argued
both ways on who calls the shots. But
going by the rule book, only satisfactory record of recoveries should
decide the fate of the credit! You can
interpret the last line to mean that
the best solution isnt always taken
on board.
Its exactly the kind of quicksand
Mint Road had feared back in 1997
when the mandatory consortium
banking system was disbanded. It
asked banks to report credit limits
both as part of the consortium and as
individual banks, irrespective of
whether the consortium-leader was
doing it on their behalf. The logic
behind this was relying only on the
lead-banks weekly returns will skew
the picture as inter-bank confirmations (within existing corporate con-
sortia arrangements) of limits sanctioned to a corporate usually come in

late. And consortium members also
sanction limits with the lead-bank in
the dark.
A truce of sorts was called among
banks after a round of meetings at
the Indian Banks Association and
South Block as credit abuse
mounted. Right after, in a note (23rd
April 2012), V.K. Chopra, deputy
secretary - Department of Financial
Services, summed up the shortfalls
the security offered to each bank
is separate and no formal understanding exists on financing the
same borrower; that all this is contrary to the principles of credit disci-
pline which requires that a wholesome view of entire operations of a

customer be taken under consideration by the lender and the assessment and monitoring of credit needs
be done in totality. He also called
attention to the high-value frauds
and the Central Vigilance
Commissions concerns over it. But
we are still at the same place.
You Could Have A Bigger Mess
As the information asymmetry gets
bigger, lawyers and forensic firms
find themselves in a sweet spot with
more incoming business.
Says Pandey, Banks should, with
the help of third-party service providers, consider undertaking deeper
analysis of the data provided to them
and a second level of verification, by
way of forensic analysis. Information
provided by the borrower when there
is incipient stress should be independently cross verified to the extent
possible. Adds Khurana, There are
multiple instances when Kroll has
been retained to conduct a discreet
investigation by a bank with a
smaller exposure, because it wanted
to take action sooner than the banks
with larger stakes were willing to.
Mint Road has an idea to bring the
situation under control restrict the
size of the consortium. But as bankers point out off-record, this does not
rectify the current mess.
As the credit demand of India Inc.
rises, you will need more banks
within a consortium. More so as several banks have hit their exposure
limits to either a firm or an industry
or both; or are just not in a position
to lend as in the past because of capital adequacy constraints. And if borrowers continue to flit between consortium, multiple banking and club
deals with bankers turning a blindeye, the mess will only get bigger.
raghu@businessworld.in;
@tabonyou
IN DEPTH
CORPORATE
HEART OF
A MOTHER
Milk products major Mother

Dairy puts farmers interest
and consumer benefits
above all. Its mission has been
accomplished, but profit
margins are floundering. Will
an expansion spree turn the
noble venture around?
By Ashish Sinha
T FUNCTIONS and competes in the marketplace like any other fast moving consumer goods company, with
one difference Mother Dairy Fruits & Vegetables (MDFVPL) operates on wafer thin margins.
Commissioned as a wholly-owned subsidiary of the National Dairy Development Board (NDDB) in 1974,
Mother Dairy never did have profit at the core of its business strategy. The NDDB was part of the
Operation Flood initiative, the worlds biggest dairy development programme, launched to make India a
milk sufficient nation. Protecting farmers interests and providing milk and vegetables at reasonable prices
have always been part of its social obligation, but now the business of the Delhi-based company is stagnating. Mother Dairys milk business, accounting for 65 per cent of its revenue, is shrinking on its home turf
the National Capital Territory. The MDFVPL management is worried. It now wants to take the production
and distribution of milk and dairy products, fruits and vegetables, beyond the NCT to the rest of India,
hoping that the expansion would spur the next level of growth.
The 2015-16 financial year was perhaps, MDFVPLs worst year in half a decade. The company is
expected to close its books with less than 2 per cent growth over the previous year. In 2012-13, Mother
Dairy had clocked nearly 10 per cent growth in turnover, while its average growth rate for the previous
three years had been 8.2 per cent. Across an expanded horizon of five years (2010-11 to 2014-15),
MDFVPLs compounded annual growth rate (CAGR) was a healthy 13 per cent. Mother Dairy expects a
marginal growth in its 2015-16 turnover over the previous year, when it clocked a turnover of Rs 6,930
crore.
Photographs by Ritesh Sharma
THE CAPTAIN: .S Nagarajan, managing

director, Mother Dairy Fruits and Vegetables
One reason for the stagnation in

revenue could be the stagnant retail
prices of milk since May 2014, notwithstanding an increase in procurement costs. In April this year,
the company increased payouts to
farmers by Rs 2 a litre, but ruled out
increasing milk prices till June.
Mother Dairy has no choices now,
but to hike milk prices as milk
accounts for 65 per cent of its turnover. We work on very thin margins, said S. Nagarajan, managing
director, Mother Dairy Fruits and
Vegetables. We are witnessing a
decline in customer footfalls in our
milk shops primarily because the
customers are seeking convenience
by having milk delivered at their

doorstep among other factors, he
added.
In papers filed with the Registrar
of Companies a mandatory
requirement for all companies
incorporated in India under the
Companies Act the MDFVPL
board of directors indicated why the
company was different. The papers
stated: The philosophy of the company is slightly different from other
mercantile organisations. The primary objective is to ensure fair price
to farmers and at least partial protection to them against the vagaries
of the uncertain market conditions.
These, while delivering highest
quality to consumers at an affordable price and at the same time

addressing the nutritional requirements of the country. Even so, the
business needs to grow. The companys net profit has hovered between
Rs 30 crore and Rs 39 crore over the
last three financial years, which was
significantly lower than that of
rivals in the business of dairy-based
products.
Milking The Business
Mother Dairys milk business comprises Bulk Vended Milk (BVM)
and Poly Pack Milk, of which the
latter includes variants like standard, toned, double toned, full-cream
STEERING AHEAD:
The team at Mother
Diary is working on
taking the business to
new cities in India and
abroad, launching
new products and
exploring the e-commerce market
and skimmed milk. Insiders say the

company has been steadily losing
sales of BVM in Delhi and the
National Capital Region (NCR)
over the last couple of years. In
2014-15, milk volumes in the NCR
declined by 6 per cent leading to a
loss of 5.6 lakh litres per day.
Availability of loose milk at low
prices led to many of the bulk buyers shifting to loose milk purchase
due to the price advantage, the
company said. Fading customer
footfalls at Mother Dairy milk
booths has proved to be a real challenge for the company. Company
sources blamed factors like the
depressed demand for dairy commodities in the domestic and international markets and the resulting
abundance of milk, for the low
growth in revenues.
Mother Dairy took a price reduction in liquid milk in select markets
of Mumbai and East UP to pass on
the benefit to consumers. Similarly
for dairy products, a few categories
like curd, ice cream, etc., also saw
some price reduction to drive volumes resulting in lower sales realisation, MDFVPL said in a written
response. Nagarajan said the current fiscal had also been hit by cli-
matic disturbance during peak

summer, which impacted some
dairy product categories.
In 2014-15, Mother Dairy
achieved a turnover of Rs 6,930
crore and an overall growth of 8.8
per cent, with its milk and valueadded dairy products business
growing by 16 per cent. The companys edible oil business grew 2 per
cent. Its horticulture business, however, fell 6 per cent.
Counter Strategy
Mother Dairy is now pushing sales
of polypack milk in markets like
Mumbai, Pune, Hyderabad, Jaipur,
Chennai and Tirupati. In the 201415 financial year, it recorded a
growth of 19 per cent in turnover

from sales beyond Delhi and the
NCR. Mother Dairy also test
launched BVM in Mumbai through
automated vending machines. The
initial response was very encouraging. Customers appreciated the
practically adulteration proof milk,
along with the flexibility of being
able to buy either by quantity or for
a specific amount.
Meghnad Mitra, chief financial
officer at Mother Dairy, said the
company had a strong balance
sheet, high credit rating and strong
corporate governance systems. Our
strength is our backend capability
and in the coming years we are
going to invest in the front end to
MOSTLY MILK
Although milk accounts for the bulk of the revenues, value-added (VAD)
products and Dhara have been the fastest growing segments
BUSINESS
SEGMENT (Rs Cr)
TURNOVER
2010-11
TURNOVER
2014-15
CAGR FROM
2010-11 (%)
2,914
4,687
13%
VAD products
401
887
22%
Dhara
343
743
21%
F&V
516
598
4%
Total
4,175
6,915
13%
Milk
IN DEPTH
CORPORATE
Block and Aloo Methi. The company continues to consolidate its

leadership in the consumer pack
business.
drive brand salience along with

revitalising our retail formats making it more relevant in todays scenario and at the same time expand
our go-to market footprint. We will
also look at the possibility of forming alliances with strategic partners
to enter into adjacent categories
and new markets, Mitra said.
To drive the growth of its fruits
business, Mother Dairy has been
focusing on the quality and assortment of fruits. Last year, mangoes
were directly sourced from Odisha
and introduced in Delhi for the first
time. Jharkhand has also been
explored as a new source for fresh
fruits. This will be further leveraged in the succeeding years,
Brand Mother Dairy

The company is going all-out to leverage on brand Mother Dairy. So
far, its annual spending on advertising and promotions have hovered
around Rs 100 crore Rs 105 crore.
These numbers are going up in the
current financial year. Mother Dairy
has already joined the Indian
Premier League (IPL) bandwagon
by becoming the principal sponsor
TOPSY-TURVY GROWTH
Over the past four years, Mother Dairys revenue
growth yo-yoed between 10 per cent and 1.1 per cent
YEAR
TURNOVER (Rs cr)
GROWTH (%)
NET PROFIT (Rs cr)
2012-13
6,064
10.7
30.4
2013-14
6,364
33
2014-15
6,930
8.8
39
2015-16
7,000*
1.1*
**
*Company estimates; ** Not disclosed
Nagarajan said. Mother Dairys Safe

Fruit Campaign, bearing the tagline, khud pakao, surakshit aam
khao (eat safe mangoes, ripened at
home) is in its fifth year. The campaign strives to strengthen, create
and promote chemical-free ripened
mangoes. The SAFAL brand of
pulses, launched in MDFVLs own
stores in the Delhi NCR last year, is
now available in general trade as
well. In the frozen products category, MDFVPL has launched Aloo
Tikki in a new pack and introduced
two new products during the last
financial year, namely Spinach
of the Delhi Daredevils which

incidentally, is at its best performance across nine IPL editions. It
has new products on offer and has
already re-branded its curd. Our
regional delicacy launch of Nolen
Gur ice cream is a treat for the
Bengali community and their love
for the flavour. I am confident that
the newly launched ice cream will
appeal to consumers just like our
Mishti Doi and Aam Doi, said
Subhashis Basu, business head
Dairy Products, Mother Dairy.
In the 2014-15 fiscal, Mother
Dairys dairy products business com-
prising ice cream, fresh dairy products and the probiotic range of products, like cheese, butter, ghee and
ultra-heat temperature (UHT) pasteurised milk, had grown by 16 per
cent to record a turnover of Rs 887
crore. The business crossed the Rs
1,000-crore mark in the 2015-16 fiscal. The pulp business that registered
a growth of 11 per cent in turnover
and 9 per cent in volumes during
2014-15 is also going strong. The
company has already added 24 new
customers across geographies. It has
been leveraging brand Mother Dairy
through its UHT milk, ghee, Dhara
edible oil and frozen vegetables
through exports to the Middle East
and Far East Asian countries for
three years. At the back end, Mother
Dairy has been developing high-density plantations of Totapuri mangoes,
as part of its crop production
improvement programme. The
Dhara brand of mustard oil variants
continue to be a focus area for
Mother Dairy. The company is adding two more plants (third party) to
its tally of 12 plants (own and third
party) to achieve its targeted growth
in volumes in this business.
E-commerce is a market-place
like any other, be it modern trade or
general trade. Mother Dairy is
already a part of the e-commerce
ecosystem and its products are
available on leading platforms, like
Big Basket and Groffers. We are
getting encouraging responses from
this channel and it will grow as we
move ahead; and hence we are in
the process of strengthening our
presence in the network, said Basu.
He said the company was observing
and exploring the e-commerce marketplace and would take a call on a
direct presence in it at an appropriate time.
ashish.sinha@businessworld.in;
@ashish_bw
HUBS OF
The new generation ports could

morphing remote hamlets into
Photographs by Umesh Goswami
IN DEPTH
INFRASTRUCTURE
GOOD HOPE
breathe life into the backwaters,

economic hotspots By C.H. Unnikrishnan
UTHUKUR IS still a little known place.

Till recently, this coastal village in Andhra
Pradesh didnt even have a motorable
road that the rural folk could use on their
weekly visits to the nearby market to vend
home-made pickles, which is still the livelihood of many. Children at the village had
to travel at least 14 kilometres to the nearest school at Venkatachellum and electricity and mobile phones were distant
dreams for most.
Things have changed since. The once
remote village now has a couple of star
category hotels and a number of commercial hubs on both sides of a
new four-lane road. Not just the hotels, but most of the small cafes
too offer free WiFi connectivity. A smart city is on the anvil, which
could provide state-of the-art living standards to hundreds of skilled
and unskilled employees likely to be absorbed in an emerging industrial hub. Come June, children of this rural village will walk into an
elegant five-storey international school.
The catalyst of change was a seaport that came up at the coastal
village. The Krishnapatnam Port, an all-weather deep water port
built on Indias east coast, brought in its wake an industrial economy
that gave this village an instant urban facelift. At least a dozen large
cargo-based industrial units, including power plants, fertilizer units,
food and edible oil processing units and a host of ancillary service
providers, are already operational in and around the port. The port
operator, Krishnapatnam Port Company and the Andhra Pradesh
government, have begun mulling on a larger industrial hub, to be
built at a cost of Rs 11,000 crore across nearly 14,000 acres of land, in
IN DEPTH
INFRASTRUCTURE
partnership with foreign investors.

Mahatma Gandhi had said, If the village perishes India
will perish too. The modern and new generation port
development process promises to live up to the Gandhian
dream of development. A host of new generation ports are
set to turn many little known hamlets and hick towns into
happening economic hotspots.
New Generation Ports
At least 11 such ports are already operational so far.
Among the major Greenfield ports that are already in
operation around the country are those at Pipavav,
Mundra, Hazira, Dahej, Dighi, Dhamra, Kattupalli,
Krishnapatnam, Gangavaram and Kakinada. Two other
important projects coming up along the western coast
include the countrys first international transhipment
port at Vizhinjam and a cargo port at Ponnani in Kerala.
Since the major ports at near saturated metropolises
like Mumbai, Chennai and Kolkata offer little scope for
expansion, the large seaports of the future are likely to
emerge at remote locations along the Indian coastline.
The existing city-based ports are also constrained by
limited operational flexibilities, as they are not too
mechanised and have huge fixed overheads, like a large
number of employees and related liabilities. The traffic
clutter within the ports and beyond them, moreover,
restrict cargo movement beyond a point.
The new generation ports bank on large parcels of land,
making provision as they do for fully integrated and massive cargo handling facilities, with multiple industrial
hubs around them. The new, modern, self-sustaining and
cost-efficient port projects, therefore, are likely to emerge
along rural locales of the Indian coastline.
Recent government reforms in port development regulations and a liberal approach on investments have facilitated private sector participation in most of the new ports,
which is just as well, since the initial investments are very
high. The private operators, mostly cash-rich companies
with expertise in port construction, operations and
related services, have tended to treat the port projects like
professional business units. They have exploited every
opportunity for cost efficiency, providing competitive
pricing to clients.
Large capacity Greenfield ports like Krishnapatnam,
are usually rated high on operational parameters, like
optimum cost, reliability, fastest turnaround time for all
types of vessels and minimal waiting time to avoid demurrage. These new cargo ports, which are mostly operational
round the year and capable of round-the-clock navigation
without any restrictions, also provide end-to-end services
from stevedoring to custom documentation.
We want to offer e-commerce

with door-to-door service to help
business clients & retail customers
ANIL YENDLURI
Director & CEO, Krishnapatnam Port
Industrial users of these ports are assured of inbuilt
connectivity with the dock for cargo movement, with
zero wastage and no delay. At Krishnapatnam Port for
instance, industries in its vicinity like power plants,
cement units, food processing units and edible oil
plants, are directly connected through ramps or pipelines with the dock, facilitating direct loading and
unloading of cargo. The logistics of these modern ports
include increased rail and road connectivity through
existing and newly planned inter-State corridors and
highways and inland water transport systems.
We want to offer even e-commerce with door-to-door
service to help not only business clients but also retail customers, who want to purchase or send individual items
from anywhere in the world, says Anil Yendluri, director
and CEO, Krishnapatnam Port.
Gateway to the world
Vizhinjam in Thiruvananthapuram is another remote
village, which will be linked to an international sea
route through the countrys first transhipment port.
Given Vizhinjams access to

international maritime route, the
project will be a catalyst in
positioning India as a global
transhipment hub
GAUTAM ADANI
Chairman, Adani Group
PORT
STATS
THE NO. OF
12 MAJOR
PORTS
NO. OF NON
187 THE
MAJOR PORTS
$1,637.3 million
THE FDI ATTRACTED BY THE PORTS
SECTOR DURING 2000-2015
NO. OF NEW PORTS

44 THE
UNDER CONSTRUCTION
Rs25,876
crore
THE INVESTMENTS ON THE
CONSTRUCTION ON 44 NEW PORTS
This port is likely to effect a more transformative

change in the rural economy in its hinterland than the
Krishnapatnam Port, once it becomes operational by
2020.
The Rs 4,000-crore Vizhinjam International Seaport,
is a deep water multipurpose port. It is an ambitious pro-
ject taken up by the government of Kerala through a public-private partnership (PPP). Indias largest private sector
seaport builder, the Adani Group, is the private investor in
this project and is expected to complete the first phase of
work by 2018. It has been awarded a 40-year build, operate and transfer contract.
The transhipment port, expected to compete with the
busiest ports in Singapore and Colombo, should logically be able to attract a massive cargo-based industry in
its hinterland. Since the port is being developed as a
transhipment hub that caters to the largest mother vessels, it can turn into a gateway for Indias foreign trade
attracting cargo movements from all other inland ports
to this international route, says A. S. Suresh Babu,
managing director and CEO, Vizhinjam International
Seaport.
Given Vizhinjams access to prominent international
maritime route, the project will be a significant catalyst in
positioning India strategically as a global transhipment
hub, says Gautam Adani, chairman, Adani Group.
Past Glory
The recent thrust on water transport and cargo ports
by the Union and State governments has resulted in
the revival of some historical sea-trade hubs. Perhaps
the first among these is the Rs 3,000 crore deep water
cargo port being developed by Malabar Port at
Ponnani in Kerala. Sangam literature, which docu-
IN DEPTH
INFRASTRUCTURE
ments the history of the ancient Tamil country

(between 300 BC and 400 AD), refers to the coastal
town as Tondi and describes it as a major hub for foreign trade, taking advantage of a natural harbour. The
coastal town in now likely to regain its old glory with
the new cargo port.
The public-private partnership project, which has no
financial investment by the State government except a
30-year land lease, is expected to be completed in three
years. The sleepy town
that lost its sheen as a
port city centuries ago,
will now wake up to a
new dawn. Ponnani
should in the years ahead,
Total cargo
evolve into a bustling port
capacity
attracting sea trade not
Capacity
only to Kerala, but also
utilisation
neighbouring industrial
Container
cities like Coimbatore
handling
and Tirupur in Tamil
Coal cargo
Nadu.
traffic
I am sure that this project will change Ponnani
into one of the biggest
commercial hubs in the
State and perhaps in South
India, soon, says P.
Sriramakrishnan, the local
legislator and current
Speaker of the Kerala
Assembly.
Shipping, Road Transport and Highways for massive

investments in Indias ports and roads sector include
developing 10 coastal economic regions. The economic
zones will evolve into manufacturing hubs, supported
by port modernisation projects spanning across at least
300 km to 500 km of the coastline. The Union government is considering developing the inland waterway
system as an alternative to road and rail routes for
transporting goods to ports and hopes to attract private
investment in the sector.
Two new major ports
are on the anvil, one at
Sagar in West Bengal and
the other at
2015
2014
Dugarajapatnam in the
871.52
581.54 MMT
Nellore district of Andhra
MMT
Pradesh. Once opera66%
62%
tional these ports too will
enhance the countrys sea
8 million
7.46 million
cargo handling capacity
TEUs
TEUs
and space to berth more
118.1 MMT 104.2 MMT
shipping vessels. The proposals to add new terminals to the existing ports
will also augment Indias
sea cargo handling capability.
The port sector has
been allowed 100 per
cent foreign direct investment through the automatic route. Investment
incentives for the sector
include a 10-year tax holiday for enterprises that
develop, maintain and
operate ports, inland waterways or inland ports.
Standardization of bidding documents and concession
agreements, enhancement of the shipping ministrys
powers to delegate finances to accord investment
approval for PPP projects and streamlined security
clearance procedures will go a long way to boost the
maritime infrastructure in India.
All silver linings have clouds embedded within and so
do these projects that could breathe life into the backwaters, where time has stood still. Social and environmental groups warn of the menace of land grabbers and
of potential damages to the natural ecosystem should
the projects go awry.
FREIGHT FACTS
Thrust on ports
India is currently the sixteenth largest maritime
country in the world. It has close to 12 major and 187
minor ports. Indias total cargo traffic was 1,052 million
metric tonnes (MMT) in 2015, and is expected to touch
1,758 MMT by 2017. Indias coastline of 7,517 km is among
the longest in the world. The seaports and the shipping
industry play a key role in Indias trade and commerce.
The Union government is expected to invest Rs
70,000 crore in 12 major ports over the next five years.
The proposals include reviving the Sagarmala project (a
string of ports). The Sagarmala project involves setting
up of several low-cost minor ports along the coastline in
the vicinity of the 12 major ports, to accord priority
berthing to shipping vessels and to facilitate faster
movement of cargo.
The recent proposals of the Union Ministry of
unni@businessworld.in ;
@unni_ch
STARTUPS
THE S
HARMONY
Startups in India believe in
hand-holding to grow faster, but
some motives for sticking together
are not as innocent as they seem
By Chhavi Dang
ANJAY SETHI was watching the e-com-
merce story unfold in India from the

sidelines until 2011 when he decided to
take a plunge and launched ShopClues,
another online retailer to join the elite
unicorn club from India. Sethi recalls
that if it wasnt for smart strategic tie-ups with other
startups, ShopClues wouldnt have been where it is today. He also doesnt shy away from saying that the companys growth also contributed to other startups who
showed faith in its business model.
Sethi is a realistic believer of the fact that startups
have to work with other startups in order to accelerate
their growth. He still owes it to his friend who loaned
him his conference room and other necessary infrastructure to hit the ground running in 2011. Like ShopClues, there are many startups that swear by their busi-
Snapdeal, Quikr, Paytm, InMobi

who not too long ago were small
startups, are signing business deals
with a host of medium-sized startups
to strengthen support for their own
business. Poster boys of the Indian
startup stories have turned angels for
new and fast growing startups and
are investing in new companies. According to CrunchBase, InMobi
founder Naveen Tiwari and Vijay
Shekhar Sharma, founder and CEO
of Paytm have invested in nine startups each in their personal capacity.
Kashyap Deorah, author of The
Golden Tap and a serial entrepreneur, says, Large startup founders
turning angels is a trend that has
been prevalent even in Silicon Valley
but the difference is that the entrepreneurs built their businesses first,
gave a profitable exit to their investors and used the money they earned
from their venture for investment
purposes. In India, we are yet to see
so-called unicorns turn profitable.
Deorah is working on launching his
fourth startup HyperTrack, a cloudbased tracking delivery items solution for hyper-local players. A business primarily to meet the needs of
other startups and their end-users.
ness partnerships and believe that it

is definitely the way to grow faster for
everyone in the ecosystem.
India is home to more than 4,000
startups, according to CBREs latest
report on the sector, making it the
third largest country after the US and
the UK. If we divide this startup universe into three subsets large, medium and young startups there is
increasingly a trend where startups
irrespective of their size are helping
each other grow. The help is coming
in many forms business alliances,
partnership, sharing information
and investing in businesses.
Large companies such as Flipkart,
India is home
to more than
4,000 startups,
according to
CBREs latest
report on the
sector, making
it the third
largest hub after
the United
States and UK
Interestingly, this trend of startups

helping each other is a phenomenon
unique to India. Startups by nature
operate under much uncertainty
survival, fund raising, product acceptance, consumer traction and they
dont like to add to it by working with
another startup that is probably battling the same challenges. If we juxtapose this with the international
startup scene, some amount of uncertainties have been done away
with, courtesy the government and
previous startup founders who have
been around for a long time and have
stabilised the ecosystem over the
years. The government too has created a policy environment conducive
to startups. All this is gathering momentum in India, but we have a long
way to go. Thus, it is even more imperative that we stay hungry and
restless to find solutions within the
startup ecosystem and grow together
rather than die one by one.
Culturally, in India, startups are
still not looked upon as a dignified
career choice. We still operate with a
mindset of landing a stable job. But
the attitude is changing, if at a snails
pace. Thus, there are some people
who are a part of the startup ecosystem and understand one another
emotionally and otherwise. These
bunch of founders are ready to take a
leap of faith with each other. Sethi
puts it succinctly, If I want to work
with a large MNC, I meet their various department or vertical heads and
the discussions go on for days, while
if I work with another startup: two
founders meet, connect with each
others challenges and opportunities
naturally.
Tiwari of InMobi says, Startups
have very limited resources at launch.
Augmenting their core business
proposition internally becomes extremely difficult and expensive.
When startups team up, they can offer a lot more value to end-custom-
STARTUPS
ers. Over the last four years, InMobi
has helped 40 startups come to life.
The startup founders are rooting
for collaborations and partnerships
among them. They feel this camaraderie will bring more stability to the
ecosystem, accelerate the growth of
startups, encourage newcomers to
come into the fold and eventually result in individual growth of companies too. Many such tie-ups seem to
back this rationale. When Uber came
to India, it faced great difficulty as
RBI norms required a two-step verification on all online payments. The
tie-up with Paytm saved it from developing a unique online payment
system exclusively for India.
Augmenting their
core business
proposition internally
becomes extremely
difficult and expensive
for startups
NAVEEN TIWARI
Founder,
InMobi
If two startups are

involved in an
economically viable
deal, it will grow the
ecosystem and also
improve ones
chances of survival
KASHYAP DEORAH
Founder,
HyperTrack
Sethi says, Of the total external

payments, at least 60 per cent goes to
one startup or the other which is
working with us in supporting our
business operations. ShopClues
works with well-known startups
such as Delhivery, E-com Express,
Zettata among many others.
Rightly so, the e-commerce sector
alone has given birth to many business ideas. There are several e-commerce companies that have tied up
with hyperlocal delivery startups to
meet their last-mile delivery challenge. Tiwari says, E-commerce
startups face a number of constraints, including cost-constraints,
when it comes to last-mile logistics in
a country as vast as India. Hyperlocal delivery players such as Runnr,
Delhivery, E-Com Express have well
established last-mile logistics networks that e-commerce players can
tap into. Thereby maximising e-commerce companies business reach.
Sheroes, an exclusive jobs and career portal for women, also works
with startups as clients. Sairee Chahal, founder of Sheroes, says, We
have built Sheroes on significant
partnerships from day one. A business to succeed needs collaboration
from within the company and the
ecosystem. Sheroes has raised Rs 5
crore from angels such as Paytms
Sharma and Binny Bansal of Flipkart. She says that the camaraderie
among startups sometimes extends
beyond business deals and investing.
They use each others market presence to build their business and in
times of crisis also offer to absorb talented people from each others companies.
Deorah of HyperTrack says, If two
startups are involved in a genuine
deal which is economically viable for
both the companies, it will not only
benfit the ecosystem but also improve
ones chances of survival. It is clear
from both Chahal and Deorahs
statements that startups are a force
to reckon with; they build an asset
light model and have the ability to act
fast and execute their clients vision
quickly. So, this camaraderie can
only mean happy days for everyone.
Tiwari resonates the same sentiment. Startups need to scale fast!
Tie-ups are a great way to scale by
augmenting business models, automating functions and reducing the
impact of supply-demand mismatch.
The dynamic and flexible structure
of startups helps them to reshape
quickly and adjust to changing environments. The tie-ups take little to
no time in this ecosystem to show
positive results, he says. The top
three areas where startups are col-
laborating with one another are logistics, payments and customer support followed by angel investment
and sharing manpower and workspace. VCs traditionally have encouraged such tie-ups especially within
their portfolio companies if there are
synergies among them.
Startups working together is not
really about innocent bonhomie.
Some tie-ups are formed with the intention of taking the company to the
next round of funding. Many experts
agreed off the record that a number
of entrepreneurs have assumed that
raising one round of funding after the
next was the Holy Grail.
It is good news that startups are
working together to grow together
but at what cost? Most startups refused to share details and names but
people aware of certain partnerships
said that the startups-helping-startups syndrome was a game to jack up
one anothers valuations, specially in
these tough times when investors are
tightening their purse strings and insisting on profitability roadmaps.
Some entrepreneurs enter into unviable alliances to give their investors the impression that they were
signing up new clients or that fast
growing businesses were eager to

work with them and hence build a
case for investors to park more funds
into the business.
A case in point being Runnr, formerly known as RoadRunnr, which
in a short span of time emerged as the
go-to delivery partner for a host of
food tech and e-commerce startups
like Faasos, LookUp, Bhukkad, Brekkie, GrabEat and Snapdeal. The food
tech startups got into a deal in which
the other partner (Runnr) was losing
cash on every delivery. An unviable
model to begin with, but it continued
as long as the The Golden Tap of
funding kept providing it with money.
According to CrunchBase, the company has raised more than $21 million in funding since its inception last
year. The food tech startups probably
didnt factor in that if Runnr goes
down so does their delivery mechanism. One of their clients PepperTap has already shut down. Runnr
has been trying to raise funds to the
tune of $20-25 million over the last
four months and has been in talks
with DST Global among other big
names from the investors community but no deal has been signed yet
according to media reports. Its busi-
A business
model to
succeed needs
collaboration
from within
the company
and the
ecosystem
SAIREE CHAHAL,
Founder,
Sheroes
Of the total external

payments, at least
60 per cent goes to
one startup or the
other which is working
with us
SANJAY SETHI
Founder,
ShopClues
ness is down from 30,000 deliveries
per day to less than 10,000 deliveries,
as per an industry source. Runnr refused to participate in the story. This
is just one of many such deals that
have been signed among startups on
the pretext of growing faster.
Industry watchers say that currently such tie ups are few in number
but if it goes on a little bit longer, the
domino effect can completely destroy
global confidence that is still at a nascent stage for Indian startups.
It is true that such things happen
but it cant take away from the fact
that startups working together have a
better chance of surviving.
The author is the founder of Comm Sutra,
a startup-focused communications firm
STARTUPS
THE TEA
OF THE
FUTURE
Startup Teabox
takes Indias finest
teas online and sans
frontiers
By Mala Bhargava
N A WORLD WITH MUCH strife and turmoil,
theres nothing more comforting than a perfect cup of tea. Soothes the nerves and settles
the mind, almost like meditation, as anyone
who loves tea will tell you. Tea is quiet and our
thirst for tea is never far from our craving for
beauty, says James Norwood Pratt an author and authority on tea and tea lore.
But is your cup of tea really as perfect as it could be?
Probably not! says Kaushal Dugar, founder and CEO
of Teabox a startup that makes tea its business from
end-to-end. Its very unlikely to be fresh. By the time
the tea reaches the consumer, whether it is in Tokyo, or
London, or anywhere else, it has already lost most of its
freshness, says Dugar. Tea is like a fine wine. Its all
about the quality and the taste, after all!
The Teabox founder and CEO knows his tea well, as
he comes from a tea family. Tea has been the familys
business, and he has grown up around the tea estates
in Assam. Before starting Teabox, Dugar worked with
a tea export firm for a certain period, where he got the
KAUSHAL DUGAR
Founders & CEO , Teabox
opportunity to become intimately familiar with the entire supply chain

and logistics of tea export. It meant
being able to identify those gaps in
the system that, if fixed, could make a
very big difference and present a viable business opportunity. Tea has
been one of those industries that has
hardly changed in the past 150-200
years, says Dugar, Things are still
done in the same way, as it used to be
at the time of the British. The way of
manufacturing the tea, maintaining
the production, and the
auctions to which the
tea goes after that. An
exporter buys the tea,
and sells it to an importer and the importer
sells it to the wholesaler,
then to the retailer and
finally it reaches the
consumer, he explains.
I realised that between
production and consumption, there are
three to six months of
delay, which I think in
todays age is definitely
unjustified, he says.
Dugar started Teabox to cut down
the long journey that the tea makes
from plantation to tea-drinker by cutting down on the points in between
and the number of middlemen involved. With the idea of delivering
fresh tea within the days of production, rather than months, to consumers worldwide, Dugar started what he
firmly believed was a viable business,
which was initially called Darjeeling
Tea Express. From many Englishspeaking countries such as Canada,
Australia, etc., people found that
someone can deliver the very popular
Darjeeling tea straight from the
source and within days, said Dugar.
They realised the quality was unparalleled when they tasted the tea. So
we started having customers come
back to us for real Darjeeling tea.
Then we scaled it up to include all varieties of tea from all regions in India
and Nepal. The tea industry is approximately $40 to $60 billion and
the high-end tea exported from India
is around $8 to $10 billion worth, according to Dugar.
Raising about $1.5 million from
Accel Partners about a year and a half
ago, Dugal set up the Teabox office in
Bangalore from where he put tea and
tech together, essentially becoming
the Uber of high-end tea.
TEABOX
YEAR OF FOUNDING: 2012
WHAT IT DOES: Delivering fresh tea
through online within the days of production

POTENTIAL: $4.3 billion market (Loose
leaf specialty tea market worldwide)
FUNDING: Got $6 mn in Series A funding led by JAFCO Asia and with Accel
Partners, Keystone Group & Dragoneer
Investment Group. Teabox had raised $1
mn in seed funding from Accel Partner
and Horizen Ventures in early 2014. It
also raised an undisclosed amount from
Ratan Tata
COMPETITION: No direct competition for
loose leaf tea market
REVENUES: Not disclosed
The interesting twist in the teacup

is that one can subscribe to the tea of
ones choice.
From the Teabox Website, a customer can order tea on a regular basis
and can discover new teas by a process of answering questions about
ones tastes (such as for chocolate).
The result throws up the names of
teas that the person is likely to enjoy.
A beautiful box of curated teas is then
sent off to the customer to sample. A
great deal of importance is placed on
the packaging, as the idea is to create
Indias first global tea brand, according to Dugar. When we look at the
global tea brands, none are from India. Others buy the tea
and create the brand. We
have great domestic
brands and so our idea
then became to leverage
the power of technology
to reach consumers
around the world with a
multi-million brand that
was Indian, said Dugar.
The branding is therefore very important because tea is difficult to
sell to customers, who
want what they have always had. Teabox raised
another round of funding of about $6
million and scaled the business as
well as expanding it to control the
whole supply chain from sourcing to
end-consumer. Teabox also now has
the countrys first cold storage for tea.
Teabox has now shipped 30 million
cups of tea to around 90 countries
with Russia and China being the largest markets. Today Teabox is not selling anyones brand, but is a vertically
integrated brand, says Dugar. Its for
tea connoisseurs worldwide.
mala@businessworld.in
@malabhargava
For more on startups, visit
IN DEPTH
MUTUAL FUNDS
THE
MIDAS
TOUCH
OF
TECH
It is changing the
industry as well
as the ways of
doing business. In
effect, boosting
the volumes
with the ease in
transactions
By Aniruddha Bose
VER THE PAST five years, the Indian mutual fund

(MF) industry has rapidly transformed itself.
Following the 2008 panic that hit global markets,
Indian MF had slipped into an extended hiatus;
investors burned their fingers and their loss of
faith ensured that for four years between 2008
and late 2011 the MF industrys overall assets
under management (AUM) clocked a compound
annual growth rate (CAGR) of just 5 per cent.
Fortunately, things have turned around since and
the overall AUM has more than doubled from
Rs 6.68 lakh crore to Rs 13.39 lakh crore, posting a
healthy growth rate of 19 per cent per annum
between 2011 and 2013. Possibly, the single biggest enabler of this growth has been technology.
Unlike the stock and commodity markets which went electronic in the
mid-1990s to early 2000s, MF in many ways have been behind the curve in
adopting new technology. The highly protected and regulated trust structure of MFs, coupled with the political controversy and resulting loss of
investor confidence surrounding US-64 in the early part of the millennium
A MF client
can now
comfortably do
the entire
transaction on
technology
platforms
AASHISH
SOMMAIYAA
MD & CEO,
Motilal Oswal AMC
may have set the industry back a few years in this regard.
In addition, compared to stocks and commodities, MFs
are considered a more passive investment in which unit
holders are expected to adopt a buy and hold stance, with
active trading being considered counterproductive. As a
result, technology was never really a focal area in the MF
business. Resources were instead diverted towards bolstering fund management capabilities and developing
distribution channels. This trend has shifted rapidly in the
past half-decade, with the industry harnessing technology
to enhance both client as well as distributor experience.
Gone are the days when MF investors had to wade
through a sea of paperwork to invest in mutual funds or
transact on their existing folios. Aashish Sommaiyaa,
managing director and CEO of Motilal Oswal AMC,
believes that mutual fund operations are fast moving
towards total technology dependency. A MF client can
now comfortably do the entire transaction chain from
receiving money to investing and back to redeeming it
everything on technology platforms, he says.
Ease Of Transactions
The overall ease with which a first-time investor can get
started with mutual funds has gone up too. For instance,
the e-Know Your Customer (KYC) process now allows
non-KYC compliant investors to cross the first hurdle of
KYC compliance by logging on to the KYC registration
agency website following a few simple steps.
In 2014, the Securities and Exchange Board of India
paved the way for future growth by permitting distributors to redeem mutual fund units as well as transact on
non-demat units through the stock exchange. Using feature-rich platforms such as Bombay Stock Exchanges
(BSE) StAR MF and AMFI, registered MF advisors can
now buy, sell or switch MF units on behalf of clients without chasing the paper trail. In the past one year, many
intermediaries have adopted these platforms in order to
stay relevant. In fact, the removal of this physical layer has
spawned an entirely new business model of distributing
MFs through remote digital action, without the need for
face-to-face meetings.
IN DEPTH
MUTUAL FUNDS
In a recent statement, the BSE stated that its StAR MF

had processed more than 81,000 orders worth Rs 270
crore on 28 March. It claims to have processed close to 33
lakh orders in FY 2015-16 and is well poised for further
growth. This augurs well for clients, as their overall investing experience is bound to be enhanced as their distributors choose to go online.
Enhancing The Distributor Experience
Technology has been instrumental in creating efficiencies
for distributors too. A case in point is the IFAXpress platform by DSP BlackRock Mutual Fund, which provides
advanced analytics to distributors in addition to transactional capabilities.
Aditi Kothari, executive vice-president at DSP
BlackRock Mutual Fund, believes that technology has had
a positive influence on the selling behaviour of distributors, and this has, in turn, benefited clients.Sale of money
market funds (that typically does not happen from the
advisor channel due to lack of economic viability) has
zoomed for us from IFAXpress. This is great for investors,
as they finally have someone offering them better alternatives to bank savings accounts, says Kothari.
Other platforms help offline distributors go online in a
matter of a few days, thereby making overnight re-engineering of their business model a real possibility. In a distribution business with unpredictable brokerage structures, it becomes difficult for distributors to create predictable revenue streams. In such situations, platforms
such as the ones being offered by Mumbai-based iFAST
Financial can help distributors tech-turbocharge their
Its a win-win
when financial
advisors use
platforms;
customers get
the best of
both worlds
RAJESH
KRISHNAMOORTHY
Managing director,
iFAST Financial India
Investors finally have

someone offering them better
alternatives to bank savings
ADITI KOTHARI
Executive vice-president,
DSP BlackRock Mutual Fund
offering and even consider charging clients a fee. Its a
win-win when financial advisors use platforms. For the
customers, they get the best of both worlds, says Rajesh
Krishnamoorthy, MD, iFAST Financial India.
E-commerce: Future of Distribution?
In December 2015, Sebi chairman U.K. Sinha mentioned
that sale of MF units on e-commerce platforms could
become effective soon. What this essentially means is that
you may be able to purchase MF units online on Flipkart
and Amazon like any other product!This move may provide a further fillip to the industry by unlocking the buying power of the 400-million-plus Internet users in India.
But some believe the elimination of the advisory layer
from the investing process is not advisable. Sommaiyaa of
Motilal Oswal says that the human advisory element is
critical in order to safeguard clients from the emotional
traps of investing. Advice has to be intelligent and coming from a human being, he says.
As transaction-based differentiation hurtles towards
redundancy, it becomes critical for traditional distributors
to think beyond mere transaction processing as a means
of creating value. Although theres no simple solution to
this, offering financial planning and multi-product distribution as bundled services together with outstanding
customer relationship management practices may help
distributors stay relevant.
aniruddha@businessworld.in; @bose_aniruddha;
For more on MFs, visit visit www.businessworld.in
IN CONVERSATION
India and
China are
important
for us
The executive vice-president of
Schneider Electric sees India as
an active destination for jobs with
great opportunities at every stage
By Monica Behura
LIVIER BLUM has served as managing
director at Schneider Electric India. He
is now executive vice-president of Global
Human Resources at Schneider Electric.
Blum was in India recently to interact
with internal and external stakeholders of
the company. Taking time off, he spoke to
BW Businessworld about the companys
human resource initiatives as well as
the active role it is playing in the Skill
India, Digital India and Make in India
initiatives. Excerpts:
Schneider Electric India (SEI) has been associated with the Indian governments initiatives
like Skill India and Digital India. What are the
companys achievements so far?
SEI is investing in the Prime Ministers Digital India initiative. We
are connecting villages through a
national optical fiber network. We
are also leveraging virtual network
operators for urban connectivity and
a national information infrastructure
for the government. We offer VDI
OLIVIER BLUM
SAYS THE COMPANY
IS AGGRESSIVELY
PROMOTING THE
HEFORSHE IMPACT
10X10X10
PROGRAMME
structured cabling infrastructures to

support data, telephone and video in
offices, data centres and homes. We
are also providing the latest technologies to support increasing bandwidth,
higher densities, and scalability and
cost expectations. For the Skill India
programme, we have trained nearly
53,000 unemployed youth in the
electrical trade.
How do you look at India as a job market? Does India
being a multi-cultural country pose challenges

for SEIs HR management and practices?
The job market in India is very active
with great opportunities at every
stage. I was here 10 years ago, things
have changed. The attrition at that
time used to be high, but today it
is at the lowest as compared to the
industry standard. I agree that India
is complicated as a market because
of its multi-cultural diversities.
However, managing diversity can
be a challenge and is something we

are still learning here as there are a
lot of regional biases. Our management heads across the globe create an
environment that is multi-cultural.
We have a global policy for India and
we make sure we blend talents.
SEI advocates gender diversity as a key metric for its

business strategy. Have you reached your target of
hiring 40 per cent women in your workforce in India?
SEI, along with the United Nations,
IN CONVERSATION
is promoting the HeForShe IMPACT 10x10x10
programme. It targets
the communities that
need to address womens
empowerment and gender
equality concerns. The
HeForShe initiative puts
responsibility for change
right where it matters
spotlights leaders who can
make it happen. We are
working towards this by
increasing the representation of women to 40 per
cent of our workforce in
India and implementing
a salary equity process,
involving group leaders
worldwide.
We strongly believe that
we can make significant
progress only if our male
employees raise their voice
against gender inequality.
We have a focused strategy and policy that took
a decade to formulate.
Every country has its own
women related issues. In
India security is an issue,
which is not the case in
other countries. So we have
country specific policies for
women employees.
1,500 are engaged in R&D

and 11,000 in plants.
How good is the job market from a

global perspective?
Our Predictive Analytics

helps us to predict the
possible reasons why
people quit
How beneficial is your companys Predictive Analytics tool? How helpful are research and development
(R& D) and IT development centres in recruiting
fresh talent in India?
Our Predictive Analytics helps us
to predict the possible reasons why
people quit. What is the time frame
in which they are likely to quit, which
helps to determine the patterns, and
also predict the future outcomes and
trends. It is a form of software-driven
calculation that helps in hiring. Its
during these times that the chances of
inappropriate hires can peak due to
the paucity of time and other concom-
itant pressures in filling positions. If

thats the case, there can be higher
turnover of employees within the first
year either voluntary, or involuntary. It helps us recognise the type
of people, who could succeed in the
environment and the kind of sources
that will help produce better hires.
It should be noted that even minor
improvements in attrition rates can
lead to significant financial benefits.
We stay competitive to stay attractive.
We treat our employees like our customers. As a HR, we are in sync with
technology to make the work easy.
We have 21,000 employees, of which
Even though the global

economy environment is
not looking good, the job
market is looking good
globally because many
companies are undergoing
restructuring and people
movements across industries are happening. The
job market in the lower and
mid-level Europe and Asia
is fairly more stable than in
the US, while at the senior
level the market looks
good everywhere. We have
many Indians, who are
global heads of verticals
like our chief technology
officer and R&D officer.
New economies like Asia
Pacific, South Asia are
very competitive markets,
but India is very specific in
terms of the size and the
structure of the market.
What are your plans for boosting

investment in India?
I would not be able to share

any figures. But in the past
two years, we have grown fast and will
grow even faster in the coming years.
Currently, 3.5 per cent of our global
turnover comes from India.
We have done a lot of acquisitions,
which have helped to accelerate
growth and a much stronger set up in
India. We have 31 factories and over
900 engineers in India. Now, we are
more adapted to manufacture a
very big part of Make In India project.
Inside the new economies, two countries are important for us China
and India.
monica@businessworld.in
AFTER HOURS
GADGETS, GIZMOS,APPS
/ HE A LT H & F I T N E S S / BOOK S / A ND O T HER F UN S T UF F
106
A BEGINNERS
GUIDE TO ART
COLLECTION
112
THE LIGHT &

PRETTY PEBBLE
SMARTWATCH
114
APPS FOR HEARING

AID, CHATS AND
CREATING POSTERS
116
V.N. BHATTACHARYA
REVIEWS EDGE
STRATEGY
120
EXTRACTS FROM
SEEMA SINGHS
MYTHBREAKER
PHOTOGRAPH COURTESY: ALDEBARAN
AFTER HOURS
COLLECTIBLES
The art market is often

difficult to manoeuvre for
first-time collectors. Here's
a ready reckoner on what to
look out for
By TANYA GOYAL &
CAROL GOYAL
MAKE
SPACE
ON YOUR
WALL
OU HAVE JUST
got that long
awaited performance bonus.
Not a very large
sum. But tidy enough. And
for years youve dreamt of
starting an art collection.
Well, your time has come.
Is there a starters
guide to collecting art?
Not really. Some of it is
experience, some of it is
experiential. None of it is
taught; all of it is learnt.
Largely, self-learnt. We
ourselves started collecting
art in a serious kind of way
only 3-4 years ago. We are
happy to share here some
of our own experiences,
and hope they will help
other first time collectors
get started.
Step one in starting
a collection, is actually
knowing whos who. While
Hussain, S H Raza, F N
Souza and Gaitonde have
entered the social lexicon
with the stratospheric
prices reported in media
for their works at Christies and Sothebys, most
It's important
to get familiar with
better known names
such as Jatin Das
STEP ONE IN STARTING A

COLLECTION IS ACTUALLY
KNOWING WHO'S WHO IN
THE ART WORLD
of these artists, while
being very famous, are
just beyond the realms of
common affordability. So,
getting familiar with the
better known names (perhaps lesser known outside
art circles) is a mandatory.
In todays market a Paresh
Maity, his wife Jayshree
Burman, her uncle Sakti
Burman (all of
whom are current
market flavourites) and senior artists like
Jogen Chowdhury, Anjolie
Ela Menon,
Himmat Shah,
Laxma Goud, Thota
Vaikuntam, A Ramachandran, L P Shaw, Jatin
Das, Prabhakar Kolte
are worth knowing, and
understanding.
The next step in the
collectors journey is to
start going to the openings. Especially in cities
like Mumbai and Delhi,
big artists are normally
hosted by leading galleries to a cheese-and-wine
opening of their shows. Art
openings are a good way to
mingle with the art fraternity, and a good way to get
to know them. It is good
to have an invite, but most
Known artists
like K. S. Radhakrishnan
are a safer bet
openings are an openhouse. More than anything

else, at the opening you
always get to meet the artist in person, and interact
with him or her. Plus, most
likely there would be other
seniors attending. We
were at Delhi artist Seema
Kohlis opening at Mumbai's Jehangir Art Gallery
recently. Besides getting
to hug-and-kiss Seema,
we also got to meet Brinda
Miller, Vinod Sharma,
Subhash Awchat and
Charan Sharma. Quite a
line-up for an evening!
Frequenting the galleries is a necessary habit
one needs to develop when
becoming an art collector.
There are seasoned collectors we know who make
it a point to visit Jehangir
almost every weekend,
without fail. Jehangir is
a great place to see both
masters, as also to be
introduced to emerging
artists. The Delhi Art Gallery (DAG), also in the Kala
Ghoda precinct in Mumbai
is another art destination,
especially for artists from
the Santiniketan school.
Pundoles at Tanna House,
not far away, is another
must-visit for top-end art.
Art Musings further down
AFTER HOURS
COLLECTIBLES
Senior artists
like Prabhakar Kolte are
worth knowing
and understanding
in Colaba; Gallery Art &

Soul and Tao Art Gallery in
Worli; and Cymroza near
Breach Candy are all good
to get onto the mailing
lists of. India Habitat and
Triveni are the epicentre of
art in Delhi, while Vadhera
in Defence Colony, Art
Alive in Panchsheel and
the likes of Dhoomimal are
well regarded too.
Art auctions are a good
learning ground for budding art collectors. The catalogues are a good source
for understanding the contemporary art landscape,
as also the broad range of
prices. Some rare works often come up on offer. At the
recent Pundoles auction at
the NCPA Mumbai, many
nice works of Gaitonde,
Tyeb Mehta and Nasreen
AUCTIONS ARE A GOOD

BAROMETER OF WHICH
ARTISTS ARE SOUGHT AFTER
Mohamedi came under the
hammer. Auctions are also
a good barometer of which
artists are sought after.
Plus, you can strike it lucky
sometimes. At the Art for
Concern auction at the
Imperial, New Delhi a few
months back, we managed
to bid for, and buy, a Ram
Kumar masterpiece far
below the market because
there were no other serious
bidders.
Once you get into the
circuit, you will realise the
value of being an early bird
as a collector. Previews
are better than openings

because you get to make
the first choice out of a
collection. You also get to
put a red bindi in comparative peace, without being
jostled by other collectors.
We were late for a Sujata
Bajaj showing of Ganeshas last month as we were
travelling. By the time we
finally got to Jehangir, the
best of the collection were
gone.
We learnt over the years
that to be a good collector,
you have to cultivate not
just the eyes, but your ears
and nose too. Once you

start collecting, you not
only need to start understanding the aesthetics and
the beauty of the works,
but also need to keep your
ears open. For instance,
we hadnt actually heard
of Amit Bhar till we heard
his name mentioned more
than once at different occasions. We sought him out,
saw his works, and today
one of his Benares series
proudly adorns our walls.
Similarly, you need to develop a nose for collecting.
You need to smell opportu-
nities that come your way.

An old collector was trying
to sell some masters. A
friend recommended us to
him. We are now negotiating a Krishen Khanna of
40-years vintage which no
gallery would have on offer.
Another aspect one
learns as one starts to
collect art is that there
are no rules, only deals.
Art is still a very one-toone business in India.
Especially, right now,
when the art market is
down, good deals are
abundantly available. It
is just that you have to be

careful. We were offered
a Jamini Roy by a Kolkata
dealer recently. He said
the provenance would be
provided by the artists
family. The artwork is a
beauty but one can really not be sure about the

paintings authenticity.
It has been more than a
couple of months since we
have been discussing the
deal. The rule is never to
rush it, till you are sure of
origin and price.
Another dimension in
the art quest is to know
that the best price may not
always be the lowest price.
Sunil Das, best known
for his charcoals of horses
and bulls passed away a
few months ago. Suddenly
there is a huge demand for
his works. Because there

will be no more supply.
So, if you want a Sunil
Das in your collection,
you cannot really bank on
getting the lowest price.
The trade-off is not about
price many times: it is

about having the artist in
your collection, or not.
Now to practical investing in art. Our cardinal
rule is to invest in known
artists. While there is
much merit in investing
in emerging artists, we
tend to veer towards more
recognised talent. Known
artists are safer. Emerging artists are like penny
stocks; known-but-lessfamous artists are like
mid-caps. We believe midcaps have a better chance
to hit upper circuits in
An oil on canvas
by Subhash Awchat
has the potential
to appreciate
the future. We do buy

from newer artists. We
picked up two absolutely
fabulous, sinewy bulls
in bronze from sculptor
Elanchezhiyan last year,
but a K S Radhakrishnan
work would any day have
been a safer bet.
Last piece of advice.
Never be afraid to ask.
For a better price. For a
discount. For authentication. For provenance. For
the philosophy behind a
painting. For a meeting
with the painter. Even to
pay in installments. We
had planned to buy one
of Arzaan Khambattas
famous horse heads. During a visit to his studio
we had already chosen
the horse, but persisted
in asking if he had any
other interesting pieces.
Within our budget. He
showed us a smiling bull.
We fell in love with it. Today it welcomes guests at
the entrance of our Delhi
home.
Art has to become an
obsession if you have to
enjoy collecting it. You
have to not just imbibe
art, you have to live it.
For, art is beautiful.
Sensuous. Alive. And not
always measurable. Or
quantifiable.
The authors run the
Kailasham Trust that
endeavours to help promote the
arts by providing a platform to
emerging artists
Disclaimer: Works of most of
the artists mentioned in this
article are part of the private
collection of the authors , under
the aegis of The Kailasham
Trust
BEING HEALTHY
ANCER. TYPE2 DIABETES. High cholesterol.
High blood pressure.

Stroke. There is one
single cause for all of
these, and its called internal inflammation. Make a check list of the causes
of inf lammation inside you, which
could be your precursor to diseases,
and eliminate them before its too late.
Actually, hey, eliminating them at any
By Rachna Chhachhi
Food Allergies: Our allergy levels

are increasing because were consuming more artificial foods. We need loads
of zinc and vitamin C to flush out allergens from our blood, but we are not
taking these. Allergies raise inflammation levels and the result is that you have
to take anti-allergics to suppress the
allergy rather than root it out by going
to the root cause.
Insufficient Fibre: Fibre pulls out
Whats Going
To Cause You
A Disease?
stage will prevent, manage or reverse
your condition! So start here.
High Bad Fat Foods: Especially
foods with dairy and animal fats. The
right kind of fat is very important, beneficial and anti-inflammatory, like raw
fats from nuts, seeds and virgin oils.
They will reverse your inflammation,
which causes disease.
Processed and cured meats and
cheese: hams, sausages, cold cuts,
smoked items, all cause internal inflammation. Young girls with high
consumption of these get early periods or PCOD. These promote high
cholesterol, high blood pressure and
high uric acid all precursors to cardiovascular disease.
toxins from the your gut and acts like

a broom. Processed and cooked foods
have little or no fibre, and hence the
food toxins remain in our system, increasing internal inflammation.
Insufficient Phytonutrients: Phytonutrients are primarily found in
fruits, veggies, nuts, and seeds and act
as anti-inflammatories and anti-oxidants. These are rich in cancer fighting
properties, and stop growth of cancer
cells. The higher the cancer cells in your
body, the higher the inflammation.
Insufficient Exercise: Exercise
helps reduce adipose tissue (fat), which
is pro-inflammatory and it increases

lean muscle mass that reduces inflammation by improving insulin sensitivity. Exercise also releases endorphins,
chemicals that make you feel better!
Vitamin D Deficiency: It causes inflammation, promotes autoimmune
disorders, and accelerates the progression of osteoarthritis since lack of vitamin D means lack of calcium absorption to strengthen the bones.
Fatty Acid Imbalance: Insufficiency in Omega-3 and -6 fats, along with
excess of saturated and trans fats lead
to inflammation. This simply means
that if youre having even very little oil in
your cooked food, but no good fats like
raw extra virgin olive oil, nuts, seeds,
oily fish, flaxseeds, you will be deficient.
Vitamin and Mineral Deficiency:
Magnesium protects against cancer
cell growth, and other vitamins and
minerals protect the body against toxic
substances all around us, which deplete
nutrients. Magnesium is naturally
present in dark green leafy vegetables,
nuts, mackerel and oily fish, apart from
whole grains, avocados and figs.
Toxic substances. Chemicals, pesticides, diodes from plastic bottles and
food boxes, cigarette smoke (active or
passive), pollution etc.
Emotional Stress and Toxic Relationships: High stress has been shown
to impair wound healing, weaken the
immune system, and promote inflammation inside the body as well as the
mind. It is linked to autoimmune disorders getting aggravated.
Go through these categories and
circle the ones you need to work on and
then get started on themone step at
a time.
The author is a certified nutritional therapist and WHO certified in nutrition. BW Businessworld
published her book Restore, to order a copy mail at rachna.chhachhi@businessworld.in
AFTER HOURS
GADGETS & GIZMOS
ITS SHEER SIMPLICITY

THE ICONIC E-PAPER SCREEN PEBBLE SMARTWATCHES ARE FINALLY IN INDIA AND
THE PEBBLE TIME ROUND IS ESPECIALLY PRETTY, LIGHT AND MINIMALISTIC
By MALA BHARGAVA
HE PEBBLE smartwatch is, in a way, the

one that started it
all. Eric Migicovsky,
CEO and co-founder
of Pebble Technology tells
me he first had the idea of
developing a smartwatch
eight years ago when he was
cycling. I love cycling and I
wanted to be able to see who
was calling me, or texting or
emailing me just by looking
down at my wrist, says Migicovsky. In the beginning, the
Pebble watch was a watch
that shows you text messages
and email, but in time it was
used most for fitness tracking, which is today what it
does best.
Back in 2012, the first
Pebble smartwatch was
pledged with a Kickstarter
campaign and four years later
it has made its entry into the
Indian market with its range
of smartwatches including
Pebble Classic (Rs 5,999),
Pebble Time (Rs 9,999),
Pebble Time Round (Rs
13,599)and Pebble Time Steel
(Rs15,999). These smartwatches will be exclusively
available on Amazon.in.
Ive used a lot of smartwatches, and because of that
it took me a while to get used
to the e-paper and non-touch
screen of the Pebble Time
Round. I kept trying to swipe
and tap at stuff. In fact,
the Time Round has three
Rs
5,99915,999
Fitness
tracking
Works with iOS

and Android
Swappable
straps
E-paper colour
display
navigation buttons and

a button for the watchs
light. The screen is colour
e-paper. Under some
conditions its not as easy
to see as on an LCD touch
display.
If you use the Pebble
watch without previous
smartwatch experience,
youll find it the essence of
simplicity. In fact, its been
something of a cult and
even those who use a lot
of complex tech still love a
straightforward Pebble.
The Pebble Time Round,
the variant Ive been using
for a while, is very neat
and light, unlike some
smartwatches. But
then, lets remember
it doesnt have many
of the sensors other
watches do such as heart
rate. It has a thick bezel
which youll either hate or
accept as a stylisation. The
round form really makes
it look much closer to a
regular watch and with
a subtle leather strap, it
looks elegant enough and
certainly doesnt scream
smartwatch.
I particularly liked the
size of the Time Round,
which in its 38.5mm version is just the right size
for a womans wrist while
being just fine for men too.
There are silver, black,
rose gold, etc. versions and
the straps can be changed
for regular ones you get
in watch shops. But dont
shower with this one as
youll ruin both the watch
and the strap the watch
can only take an occasional
light splash. The Pebble
connects to your Android
or iOS phone via Bluetooth
CHECK OUT
CREO MARK I
and the Pebble app. You

can add the Android Wear
app for additional functionality with notifications.
Once your watch is set
up, youll get your main notifications, preventing the
need to keep picking up the
phone to look. The heart of
this watch though is fitness
tracking. It gets along with
the popular fitness apps.
You can set shortcuts to
apps using the buttons.
Right up front, with step
and calorie counting etc,
is tracking your sleep
Rs 9
9
19,9
and thats
something the
Pebble does well
provided you havent left
it charging. Users report
being able to repair their
poor sleeping habits after
using the Pebble.
The battery lasts about
two days and charges fast.
Charging for the Time
Round happens when you
turn it over and magnetically attach the cable to its
pins. The Pebble Time
Round is a good one for
those who like their watch
small and simple and are
happy with an e-paper
screen instead of the usual
touch.
mala@businessworld.in
@malabhargava
For more on startups, visit
F all the Android smartphones are beginning to

seem the same to you, Bangalore-based Creo
has an idea. The company is going to push feature
after feature into the phone each month, so much so
that they promise their Creo Mark I will feel new each
time it "ReFuels" FuelOS being the name of its
system on top of Android 5.1. Its a fun idea, all right.
But there are a few problems...
First, it isnt as if users dont care about the design
of their phones. Creo has come up with a heavy black
slab of a phone that has nothing to distinguish it.
Glass back and front and some aluminium do not a
design make. On top of that, its a broad phone, which
along with its 5.5-inch display and 190 grams weight
is not enjoyable to hold in the hand.
The other problem is that its MediaTek
Octacore processor with 3GB of RAM
and 32GB of internal storage
doesnt perform very well. It
lags and stutters and
heats up. Its quite
possible that
these problems
will get ironed
out with updates
and reviewers are giving it
a bit of a free pass for now.
The QHD 2560 x 1440p display is just
ok and the 21MP and 8MP cameras are disappointing. Indoors in low light, I kept feeling Id left a plastic
covering on the lens but that wasnt the case.
The Mark I has other stuff Indian users like: expandable by up to 128GB with microSD card, USB
OTG support, a 3,100mAh battery and USB Type C
charging port. But heres whats really nice about
it: Users can actually suggest features they want
and if its feasible, Creo will add it in. There are
already unique features to explore. Echo is your
answering machine one that doesnt incur carrier costs. Sense is an intelligent search across the
device. Retriever helps trace your phone if its lost,
including getting SMSs when someone puts in a new
SIM. There are other features and each of them is
impressive and what youd wish for on every phone.
It will be nice to see if this device improves overall
in the coming months.
AFTER HOURS
APPS
A NEW
SPACE
TO CHAT
Use your phone as a hearing aid; create mini posters
to share on social media or download a new messaging app
By Mala Bhargava
NEW
SPACES
NEED A NEW place to talk? Maybe not,
but Google has one for you anyway.

It's a platform called Spaces, available
as an app on Android and iOS as well as
on the desktop. Here, you can create
conversations with groups in fact
Google refers to it as a small group
messaging app. So, if you've a mind
to chat about
something with
a few friends,
you just tap to
create a group
and invite.
At work too,
you could just
tap to start a topic and gather a few
people around it. The groups and
conversations arrange themselves
interestingly, in tiles. This gives it a
different look from the other messenger apps. And Google has added a few
things to make this platform unique.
There's a search box right in the app.
You can share a website or something
on YouTube for discussion.
114 | BW BUSINESSWORL1| 14 - 27 June 2016
YOU HEAR
THAT?
A SPARK OF
AN IDEA
ADOBE HAS A
suite of apps for

iOS that provide
interesting
creative tools
for someone
who wants to
DIY some design projects. Try Adobe's
Spark Post to make single page posters and messages you can post on
social media.
Once you've logged into Spark
Post, just follow the buttons. It's
very intuitive. Basically, you choose
from among templates and replace
photos with your own, if you like. You
can choose colours, shapes, styles,
themes and exact text to create a nice
looking message. Once done, you can
animate it. For instance, I made a page
with a beautiful flower with the text
Waiting For Rain. I chose an animation
that made it fade in from black and
white into colour slowly. After that, I
shared it on Facebook. Because it's
iOS, the format of the video is .mov.
LOOKS LIKE THE hearing aid business
could see some losses. Pune-based

company, Quadio, has just launched
an app called Q+ Hearing Aid which
has your smartphone doubling up as
a hearing device. Well, not all phones
yet, but some of the Android phones
running recent versions of Android.
I tried out the
audio test and
my audiogram
seems to have
come out with
the same consistent results.
You have to
plug in earphones both to test and to
use the phone as a hearing aid. Once
tested, you can opt for heavy, flat or
sharp sound profiles. There are also
advanced settings you can make to
reduce noise, increase certain frequencies etc. It seems most impressive though only a person with a hearing impairment can tell us whether it's
better than a physical aid.
LIVING DIGITAL
IRTUAL REALITY
hasnt even properly hit the masses yet and theres

already a battle
on for dominance
in the technology.
On one side you have Facebook,
which is working intensively to integrate VR into its platform. It even
bought a company called Two Big
Ears to pull in VR quality sound or
spatial sound or 3D sound, which
will fit right in with 360-degree videos as well. Facebook, in any case, also
owns Oculus, a leading VR company.
Facebook is trying to attract content creation so that users stay on its
platform because of the immersive
and addictive experiences. The social
network wants to be the default hub
for virtual reality.
In the initial experiences with VR,
audio has lagged behind while developers work on the visual content.
With some products you actually
need to wear headphones in addition to the clunky headset to get the
audio to match up even a little. But it
has to move on to becoming inseparable from the visual aspect, and it
has to come from all dimensions
when you turn your head, the sound
must match what you see. Facebook
wants to make the VR experience so
compelling that advertisers too wont
hesitate to jump right in.
On the other side of the fence,
Google just introduced Google Daydream, its own design and plan for
virtual reality. Their mandate is to
get VR to the masses as easily and affordably as possible. So theyre going
to bake it into Android.
By Mala Bhargava
Daydream
or Reality?
The VR battle has begun in
earnest between the tech
worlds biggest companies
with Googles introduction
of Daydream
Clay Bavor, who heads the VR initiative for Google emphasised that
VR should be mobile, approachable,
and for everyone. Google did bring
VR to all with its Google Cardboard,
but thats just a taste of what will
be the whole experience as its been
visualised.
It will start happening with Android N based phones that must have
specified hardware specs and be
Daydream ready. Google will first

make reference phones and then companies like Samsung, HTC, LG, Huawei, Alcatel, ZTE, Xiaomi and Asus
will do so. ZTE has already jumped
the gun and said that its new Axon 7
phone will support Androids Daydream, though at this point, thats unknown. Current phones wont support
it but no doubt Daydream-ready will
be the flavour of the month for phones
soon enough.
Though it isnt just about phones
and headsets. An entire ecosystem
will be needed, most of all, of rich,
compelling content which isnt limited to entertainment but extends to
services and education as well.
What will differentiate the Daydream experience is difficult to say
right now, but from the looks of it,
it will focus on Presence, a dimension that is being reached by Oculus
as well. It involves how latency can
be reduced as one moves ones head
inside the VR zone, making rendering visual material faster with less
smearing in the 360-degree field,
and bringing in high-quality correction and calibration. This will make
everything seem very much more
real and make one less prone to motion sickness.
While theres so much action to
ready this new computing platform,
there are voices that claim virtual reality is going to come crashing down
and that its just a bubble thats about
to burst. The content so far is so demolike that itll be a long time before VR
is useful.
mala@businessworld.in, @malabhargava
For other columns by Mala Bhargava, visit www.businessworld.in
AFTER HOURS
LIBRARY
EDGE STRATEGY:
A New Mindset for
Profitable Growth
Alan Lewis, Dan
McKone
HA RVARD BUSINES
S
SCHOOL PU BL ISHING
Pages: 200
Price: Rs 995
LEAD
REVIEW
FOCUS ON
THE CORE
N THE HYPERCOMPETITIVE business land-
scape today, managers

are open to advice on
revenue and profit
growth. Authors Alan
Lewis and Dan McKone
provide practical suggestions in this easy-to-read
book Edge Strategy.
Opportunities for
growth and profit exist at
the periphery of every business just as life teems at
the edges of oceans. Three
types of prospects are most
prevalent: at the edge of
product, edge of customer
journey or mission, and at
the rim of enterprise.
Edge of product opportunities occur when
a product or service does
not fully meet needs of one
or more customer groups.
Upselling accessories, complementary services, etc.,
are ways of capturing them.
Automobile companies
offer extended warranties;
laptops can be insured at
the time of purchase; and
one can back-up important
BY V.N. BHATTACHARYA
data on ones computer by

buying additional storage
on the cloud.
Sometimes, a product
or service offers more than
the customer desires. In
such cases, unwanted
features or services can
be unbundled from the
original offering, thereby
reducing cost and making
it attractive for price sensitive customers. Unbundling can also help manage
unprofitable customers
weeding out those that are
especially costly to serve.
Self-service is another
approach. By persuad-
ing customers to check

in online, or pay for extra
baggage airlines leverage
product edge strategies.
iTunes is an excellent
example of unbundling.
Instead of having to buy
an entire album, Apple
permitted customers to
download one song at a
time for 99 cents.
Promising prospects exist at the edges of customer
journeys. Firms can gain
additional revenue by helping customers accomplish
the mission for which the
product or service is just
one element. The value of
accounting software is
greatly enhanced when it
comes with the facility to
prepare and submit tax
returns. Taxation software
(a complementary product)
enables the customer to
complete the job of managing the firms finances
and complying with the
tax laws. iTunes enabled
customers of iPod, and
now other Apple products,
enjoy music more by mak-
ing available a large online

collection for downloading.
Solution selling is another
approach to helping customers fulfil their missions.
Innovative ways of
customer segmentation
is essential to identify
opportunities at the edges
of products and customer
journeys. Opportunities at
the edges of enterprise are
more lucrative but complex
and harder to exploit. A
firm can make better use of
its assets, technologies,
and capabilities to reduce
costs, generate new streams of profitable revenue,
or improve margins.
Cane sugar plants burn
bagasse, a waste product,
to produce cheap energy.
Telecom companies configure their broadband
infrastructure to offer corporates secure virtual
private networks. Amazon
originally invested in large
banks of servers to deliver
their round-the-clock
online shopping service.
Later, they developed Am-
azon Web Services, one of

the largest cloud platforms
in the world today, so that
businesses would not have
to build their own. LinkedIn offers free membership
to millions of individuals
and organisations. Their
paid service packages
range from talent sourcing
to recruiter and marketing
services. In the process,
they created new streams
of profitable revenue and
greatly enhanced their
market capitalisation.
The authors stress the
importance of an edge
mindset to identify and
exploit opportunities.
They highlight its utility in
mergers and acquisitions.
This mindset enabled
P&G-Gillette merger to
unlock valuable synergies.
Its lack led eBay to acquire
Skype with disastrous
consequences.
The book does not, however, address the issue that
many edge strategies, especially those at the edges
of product and customer
journey, are imitable. For
that reason, most gains of
edge strategy are likely to
be short-lived. The book is
silent on how edge strategy
can be made sustainable.

The concept of edge
itself is not new. Igor
Ansoff (1957) outlined
four growth alternatives:
market penetration, market development, product
development, and diversification. Chris Zook and
James Allen wrote about
growth opportunities in
adjacent spaces (HBR,
2003). Adam Brandenburger and Barry Nalebluff
proposed that bundling
complementary products or services enhance
customer value and make
primary offerings more
competitive (HBR, 1995).

Edge strategies echo these
ideas. This weakness is also
the books strength. The
concept of edge combines
several frameworks in one
approach. The book offers
a step-by-step guide on
how to implement edge
strategy. Rightly, the authors highlight that it is the
way of thinking the edge
mindset that unlocks
opportunities.
The writer is a visiting
professor in IIMs and a
consultant on business and
corporate strategy
FOR THE SME
HE WAY CORPORATES AND

BRANDS WORK IS getting
more complex and inteBUSINESS MANgrated by nature, and in

AGEMENT SIMPLImany instances certain important
FIED: Practical,
Actionable Solutions
aspects are missed or undervalued.
for Entrepreneurs
Business Management Simplified:
Practical, Actionable Solutions for
Sanjay Shah
Entrepreneurs is Sanjay Shahs amPages: 372
bitious book that seeks to re-introPrice: Rs 400
duce a certain level of wisdom for
the seniors and guidance for those
who want to develop a successful
and competitive business model
that is sustainable.
solve their manageBusiness has always
ment challenges. But,
been a mysterious
there is hardly any
entity and when it
guidance available
comes to growing one,
to an entrepreneur
the entrepreneur is
during the crucial
not always very clear
phase. Management
about the direction
education does not
in which it can grow.
help because of its
Thus, entrepreneurs
focus on bigger busifeel the need for some
BY VISHAL PAREKH
nesses and most of
practical guidance
the solutions sugwhich can help them
gested in management schools are

not implementable in a growing
business.
Business Management Simplified
is an excellent guidebook for SME
entrepreneurs as the author has
defined the most difficult subject in
the simplest way. This book actually
delivers its promise on the title and
truly simplifies business management by providing easily executable
guidelines for managing every busi-
AFTER HOURS
LIBRARY
ness function through its exhaustive

coverage of the smallest details.
Beyond simply providing the theories and concepts, this book replicates some of the practical advice
and solutions for the business. It
acts as a mentor to the businessperson guiding him or her in solving
business management challenges
in the easiest manner. The book is
truly a all-in-one guide for all the
business management challenges
faced by SMEs as the author has
touched upon every single phase
of an SME business and explained
business fundamentals in the most
simplified language.
Covering all the fundamental
aspects of business management,
Shah, who has self-published this
book, illustrates the perfect road
map for SMEs and young businesspersons by providing them with the
dos and donts along the way. The
book not only provides a broader
perspective but also enhances ones
vision to achieve greater success in
business.
Parekh is Marketing Director,
Kingston Technology India
BOOKMARK
TEAM
BUSINESS
HO BETTER THAN SIMON

HARTLEY to write a book on
how great teams work. Hartley has over two decades experience
as sports psychology consultant
and a performance coach. In his
role as a sports consultant, Hartley
has gone through a range of experiences while dealing with world
class teams. He not only applies
his wisdom to his clients in sports,
Hartley also writes that he has come to realise that the wisdom he
gained from being consultant in sports holds relevancy to businesses
as well. Stronger Together: How Great Teams Work (Hachette) is
part-autobiography and part-business self-help book comprising
his coaching experiences and wisdom Hartley applies to people who
work with him.
I help individuals, teams and organisations to maximise their
performance, and work towards becoming world class in their field,
writes Hartley on his LinkedIn page. With workshop modules and
case studies of people he has worked with, Hartley delves deep into the
thought process behind teamwork and each individual within the team
in his book. Know each others goals, ensure each team member think
as one, create syncronicity within the group of people, importance of
interdependencies, caring for each other are some of the gems explained
by Hartley. Although Hartley sounds repetitive at times, the book helps
executives in relearning rules they learnt back in the B-school.
NEW
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Recent read: Top 10 Visionaries that Changed the World
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A long-term
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Sania Mirzas
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sport icons
Senior executives who lack

formal training
in finance can
find answers
here
How little insights

and unknown
incidents have
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around global
brands
AFTER HOURS
BOOK EXTRACT
TO THE
MARKET
How Kiran
Mazumdar-Shaw
worked towards
getting Biocon
listed in the
stock market
SEEMA SINGH, a journalist,

has been a Knight Science
Journalism Fellow at
Massachusetts Institute of
Technology and a MacArthur
Foundation researcher
NCE THE UNILEVER

HANGOVER WAS
behind her, Kirans

scramble for capital
started again.
Lovastatin was growing reasonably well
in the labs and it needed a place of its
own in a large submerged fermenter.
With no bank willing to lend, she called
Kashyap for raising money. Can I see
the business plan? he asked. What
business plan? she snapped. I know
theres a huge potential in statins; we
have cracked it but I need money to
build a plant.
Kashyap went around selling the
idea. A California fund, DLG, which
showed interest with a cool shrug Of
course we understand biotech, we
are from the Bay Area discussed
the term sheet but did not honour the
commitment. Mumbais Infrastructure
and Leasing Financial Services too
shied away over some minor issue. The
saviour was ICICI Ventures, which,
in its earlier lending avatar of TDICI,
had already invested in Biocon and this
time it came around once again with
$4 million for a share of 20 per cent.
The understanding was that the private
equity would get an exit in five to seven
years, either through a public offering or
some secondary route that would yield
at least 25 per cent return.
In a storied corporate shuffle, most of
the top management at ICICI Ventures
left in 2001. Renuka Ramnath took

the leadership position that Nitin
Deshmukh had vacated but she seemed
to carry the rumble to Biocon, and into
its board meetings. Once seated at the
table, she did not like how business
was conducted, particularly how the
chairman of the audit committee,
Neville Bain, oversaw matters.
Soon after taking charge at ICICI
Ventures, Ramnath also invested in a
freshly minted biotech, Avesthagen,
started by an agriculture scientist, Villoo
Morawala-Patell, and would often
compare the two Bengaluru women
entrepreneurs at Biocon meetings.
She thought I did not know how to run
the company or report numbers. She
would tell me, I think you are not very
intelligent, Villoo is much smarter. I am
on the board of these two companies
and I can see the difference. You watch
it, Villoo will overtake you, recalls
Kiran.
Investors can push a company on
to the most adventurous paths. By
2002, Biocon began to understand
that. Ramnath wanted an exit; Kiran,
not having got along particularly well
with her, was keen to oblige when one
of the formers third-party buyers got
Deutsche Bank to evaluate the deal but
did not eventually buy. Once again, the
onus fell on Kashyap, who was by then
a partner at a boutique investment
bank, Allegro Capital, to look for an
MY THBREA KER:
Kiran Mazumdar-Shaw and
the Story of Indian Biotech
Seema Singh
HA RPERCOLL INS
IN DIA
280 pages; Rs 599
investor. This time it wasnt hard for

him. Biocons growth story was emerging insulin and novel molecule programmes had taken root and revenues
were growing rapidly on the back
of statins which were selling at ridiculously high margins never known
before and never to be heard of later.
Meanwhile, Kirans vision had become grander with the Biocon Park, but
she did not want to run the private
equity gauntlet again. Going to the stock
market was the only option and the
board began to discuss it in all earnestness. That made it easier for Kashyap
as he went back to the American
International Group (AIG) which had
earlier refused investment because
they did not understand biotech. I

told them that this time they must
invest. They agreed for two reasons:
one, the company would go public;
two, they said that since they did not
understand the story, they would want
a downside protection, a clause to
protect their principal, said Kashyap.
Finding a middle ground, he said
Biocon promoters would give downside
protection but the American investor
would have to give upside protection,
which meant if the investor made any
money, it would be shared with the
promoters.
This says something about the cult
of private equity and the legendary
appetites of this risk-faring tribe. Here
was a seller who knew the company

was to go public, yet wanted to exit. And
there was a buyer, who, knowing that a
public offering was in the works, wanted
its principal protected. Both had their
wishes fulfilled. Ramnath exited with
156 per cent return when American
International Group scooped up 10 per
cent of the company in 2003 along with
Gary Wendt Capital, now called India
Value Fund, which took a minority stake
in one of its first India investments. (If
Ramnath had stayed until the public
offering, she would have made sixtyfold
returns.)
Around the same time, Kiran
went on a branding blitzkrieg. The
tagline Working with Nature was
dumped. She wanted to move from
something that made Biocon seem like
an Ayurvedic company to something
that was in vogue, even scientifically.
For the rebranding, she wanted the
chic branding and design consulting
firm in the city, Ray+Keshavan (now
part of Brand Union of WPP), but in
an odd coincidence, its founder Sujata
Keshavan had just taken on Avesthagen
as a client and could not sign up
Biocon due to conflict of interest. From
among some experienced agencies,
Kiran finally chose tsk Design. A few
years earlier, in 1999, she had given its
founder Tania Khosla her first break
when she was setting up a design studio;
but all she had then by way of portfolio
was some academic work from her
masters programme at Yale University
but no real work for clients.
AFTER HOURS
BOOK EXTRACT
In her second coming, though,

Khosla had an interesting challenge.
She had seen the enzyme business, she
had watched the early pharmaceutical
business take off, but the brief she got
from Kiran We want to be one of the
top ten biotech companies of the world
was way beyond anything her creative
eye could foresee. It was a huge leap in
every sense of the term. We had to come
up with a future-proof brand; it had to
look like a global biotech which could be
from any geography. We had to capture
the DNA of the company because,
however sophisticated the technology
might get, a biotech will always work
with the genetic material, said Khosla.
After several months, she came up with
the idea of DynalixDynamic helix,
because Biocon derives from Kirans
personality which is dynamic, bold
and agile. The double-stranded DNA
structure became the corporate logo,
with a strap The Difference Lies in
Our DNA.
Governance in Place: Among other
things, Kiran needed a heavyweight
board of directors for the IPO.
At a wedding reception at Taj
Westend Hotel in Bengaluru in 2013,
Kiran and Shaw met Suresh Talwar,
held his hand, and they made him
promise that he would come on board
when the company went public. A
seasoned corporate lawyer, Talwar had
served on multiple boards, including
a few pharmaceutical companies and
the textile company Madura Coats
where Shaw was the managing director.
Importantly, he had seen the listing of
pharmaceutical companies like Merck,
Glaxo, Burroughs and Solvay on Indian
bourses. Talwar had also guided Kiran
when she was negotiating a buyout
of Unilever-ICI shares and knew her
well well enough to notice that she did
everything in style. She is an unusual
Gujarati in that sense, he joked.
After securing Talwar, she turned
to Charles Cooney, who, even as an
academic at MIT had been swift in
taking biotech discoveries into new

manufacturing processes. As an
industry-inclined professor, he was
associated with Genentech for the first
full decade of its existence and later, in
1982, he was involved in the founding
of another biotech legend, Genzyme,
where he continued as a director for the
next thirty years.
Since I was deeply involved in the
American biotech industry, I could see
some parallels. The way Biocon was
evolving, it was similar to Genzyme,
which was more of a manufacturing
company making drug substances
for rare diseases, and not an early-
stage discovery company, Cooney

recounted. ...Biocon was building on
technology-driven innovation, rather
than the discovery-driven science of
Western biotechs. During the Plafractor
development days, he would grill Shri
and Tambe, but also back them when
the board would debate or be divided
over sharing the always scarce funds for
research.
In addition, Cooney had the
experience of corporate governance,
so he joined the Biocon board as a
non-executive, independent director.
In his decade-plus association with
Biocon until then, he had found there
Photograph by Jagadeesh N.V.
To The Market
In 2004, Biocon IPO was

oversubscribed by 33 times
was always the excitement of a new

thing, new opportunities. What was
clever was to go to Cuba, which nobody
else in the world could do. I had been in
Cuba in the early 1990s and had seen
what the country had done in spite of
the American embargo. We were all
cheering for her then, recalls Cooney.
From the promoters side, it was brother Ravi and sister-in-law Catherine
Rosenberg on two board seats. I dont
think we are on the board because of our
understanding of life sciences. We are
very clear and Kiran is very clear about
that too. We sit as observers and give our
honest opinion, says Rosenberg, who
considers it is her role in life to tell Kiran

the truth, which, after 2004, extended
to the boardroom too.
A professor at the Waterloo
University in Canada, Rosenberg works
with telecom companies in France
and the United States as a specialist
in wireline and wireless networking
and knows how boards, certainly the
scientific ones, work. You have to know
who was going beyond their call of
duty and so you also have to know why
you want them, she says in her casual,
no-nonsense way. Which is why even
outside the board, she is the messenger.
Anybody in the family wanting to tell
Kiran something tough or unpleasant
will ask me to break the news.
Over time, theirs became a role of
more than just loyal observers. ...When
at times the company got too focused
on its strategy in the United States,
Ravi got it to rethink the fixation of
being validated by America. There
are so many other markets where
Biocon can make a difference, he
said. Recognizably French (his wife,
Rosenberg, is French and so are his
mathematician collaborators), Ravis
approach made business sense as
regulated markets dragged their feet on
biosimilars regulation.
Along with the board of directors,
Kiran assembled some luminaries for
a scientific advisory board. Some were
figureheads, like the highly decorated
Chintamani Nagesa Ramachandra
Rao, who, though a fountain of
chemistry know-how, hardly had any
interest in pharmaceuticals. Others
like Anthony Allison, inventor of the
immunosuppressant micophenolate
mofetil, added pomp to the product
portfolio of Biocon, one of the few generics manufacturers to make the full
range of anti-transplant rejection drugs.
However, there was one scientific advisor who turned out to be unique: later in
the year, Bala Manian was inducted as
an additional director to the board.
In the mid-1990s, ICICIs Vaghul
introduced his brother Manian to

some eminent industrialists and
executives like Ratan Tata, Azim Premji,
Hindustan Unilevers Ashok Ganguly
and others in the hope that Manian, a
successful entrepreneur in California
who had built and sold multiple
companies, would find a reason
compelling enough to develop some
technology in India. Kiran was one of
Vaghuls hopes, and as it turned out, the
only one who struck up a formal and
long-term relationship with Manian.
After selling his first company in
1984 to Matrix Corp, Manian thought
he had so much money, he could retire.
So, for the next three years, in return
for co-investing opportunities, he did
consulting for three venture capitalists
in California and one of the investments
he made was in Amgen, along with a few
other companies in life sciences. Most
of his biology learning was self-taught,
though he had an advantage he was
married to a physician. I still have my
chart of Amgen stock appreciation
sixtyfold between 1985 and 2005. Thats
what patience is, he said. Other than the
life sciences investing connection, it was
his own inventive career and technology
tinkering in Silicon Valley garages that
Kiran found useful, even inspirational.
Manian had worked with the first three
employees of Pixar the pioneering
computer animation film studio that
Steve Jobs acquired for $10 million and,
years later, sold to Disney for $7.4 billion
where he invented special effects
technology that got him an Oscar, a
technical achievement award from the
Academy of Motion Pictures Arts and
Sciences. Through the life cycle of Pixar,
closely watching Jobs infuse life into
the start-up, Manian learnt you have to
give breathing space for innovation to
happen. At Biocon, he ensured he was
Kirans co-conspirator in carving out
that breathing space.
Excerpted with permission from
HarperCollins India
PEOPLE
IN THE NEWS
IT GOT HIM
EMPLOYEES FIRST
JACK DORSEY would rather have a smaller part of something
big than a bigger part of something small. To make Twitter

big and strong, he had pledged to donate one third of his
Twitter shares to employees last October. Last week, stockholders of the micro-blogging site approved CEO Dorseys
pledge to give away 6.8 million shares. The shares, to be
added to Twitters employee pool, were worth about $200
million on 22 October 2015. Since then Twitter stocks
has slid more than 50 per cent, lowering the value of
the promised shares to $98 million.
None To Be Spared
VIJAY MALLYA has fallen. And so have many along
Something For
Silicon Valley
There are no free lunches. But
there is free education. French
billionaire XAVIER NIEL is opening a California campus of his
tuition-free Parisian engineering school, 42. The CEO of telecom company Iliad will invest
$100 million of his own funds
to launch the school, where he
hopes to train 10,000 people
over the next five years. Based on
a unique open education model
Niel launched in France three
years ago, 42 has no teachers,
books, curriculum or grades and
is free of any charge!
with him. This time United Spirits Sanjay Churiwala came close. The Enforcement Directorate
examined the chief financial officer of Indias largest
liquor company in its probe related to the companys
$75 million payout deal to Mallya. Churiwala was
asked for clarifications pertaining to the terms of
the agreement, the basis on which the sum was
decided as well as the mode of payment to Mallya.
The Agenda
BJP MP ANURAG THAKUR has been
unanimously elected as the second
youngest BCCI president. The
41-year-old former BCCI secretary
replaced Shashank Manohar who
quit the position to take up the ICC
chairmans job. Thakurs election
represents a generational shift that could lead to the
old guard finally taking the back seat in the affairs
of the board. For some, there is a bigger agenda at
work: it is seen as the completion of BJPs takeover
of yet another important body in the country.
NOT FAT ENOUGH

In his first year at Wipro as the CEO, ABIDALI NEEMUCHWALA
took home an annual pay package of $1.8 million. While this
was higher than what his predecessor and former CEO T.
K. Kurien earned at Bengaluru-based IT major, his peers at
rivals Infosys and TCS drew fatter pay packages. According to
a regulatory filing, Neemuchwala received $859,079 in salary
and allowances, $351,213 in variable pay, $575,122 as other
payouts and $21,216 as long-term compensation.
Mitsubishi Motors president TETSURO AIKAWA,

62, will step down in
June as the Japanese
automaker looks to
regroup from its widening fuel economy testing
scandal with the backing
of Nissan Motors. In a
statement, Mitsubishi
Motors accepted that its
management created an
environment for fraud,
and that it tested nine
vehicles improperly and
overstated the ratings of
four minicars.
THE BREAKUP
Power couple DHIRAJ

RAJARAM, founder &
chairman of $1.5-billion
worth Mu Sigma, and
wife Ambiga, the
companys
CEO, have
divorced. Apparently, the
marriage was
on the rocks
for sometime and
the investors of the
company were apprised
of the matter. Dhiraj and
Ambiga have told newspapers that their divorce
would not impact the
working of the company.
THE UGLY TREND
MARTIN SENN, the

former CEO of Zurich
Insurance, one of the
worlds largest insurers,
has committed suicide
six months after leaving
the company. Strikingly,
Senns suicide came less
than three years after
CFO Pierre Wauthier
also took his own life. In
Senns last year at the
helm, the company had
botched a takeover of
UK insurer RSA, which
contributed to it missing
its profit target.
LAST WORD
Sanjeev Kapoor
Celebrity chef,
TV host and
entrepreneur
Single channel distribution

was a big challenge
Celebrity chef, restaurateur, businessman, television host and broadcaster,

Sanjeev Kapoor is one person wearing many hats. FoodFood, a channel he launched
five years ago, has been bought by Discovery Communications. Kapoor speaks to BW
Businessworlds Ashish Sinha of his journey and plans. Edited Excerpts:
Q: How did Khana Khazana happen?

A: Khana Khazana was born in 1993 and
went on to become the most successful
cookery show on Zee TV from India. It had
an estimated viewership of over 500 million
in about 167 countries and ran non-stop on
TV for more than 17 years. During my tenure
in Centaur, I was approached by a radio
producer from Fiji to host a TV show for an
upcoming and Indias first cable channel.
This cookery show was tentatively named
Shriman Bawarchi. I liked the idea of doing
the show. But being a professional chef, to
do a show targeting housewives with simple
recipes, was something for which I was neither trained nor had any idea. I was unhappy
with the name and actually refused to come
on board unless the production changed
the name. I suggested the name Khana
Khazana. Rest is history.
Q: What has clicked for FoodFood channel?
A: The idea of a 24x7 food channel was
there in my mind since the time I started.
FoodFood is a one-stop destination for
foodies. I alongside my experienced
team have been constantly on our feet to
research, direct and supervise the content
on FoodFood which became the first Indian
channel with all its shows shot and produced
in High Definition format. It has two feeds

India feed and US feed.
Q: What was the biggest challenge for
FoodFood?
A: Distribution of a single channel has
always been a challenge in India, especially
due to involvement of high carriage cost.
Plus surviving on a single channel in a niche
or specialty category like food did not make
sense. Discovery has been handling the
ad-sales from April. Going forward, they will
manage its content etc. I will be happy to
lend my inputs whenever they ask for it.
Q: FoodFood always had foreign partners. Why?
A: Broadcasting is a cash guzzling business.
We needed a foreign partner like Astro
not only for its financial muscle power, but
also for its understanding and experience
in broadcasting. Now Discovery, which is a
master in lifestyle and specialty format, will
drive FoodFood. I will continue to be on the
board as a minor shareholder.
Q: Why is FoodFood a profitable proposition?
A: We reach about 30 million homes in
India. We are distributed in the US, Canada,
UAE and Qatar through linear distribu-
tion and in many other countries through

syndication. Our combined reach overseas
is approximately 1 million households. Discovery Communications is now on-board
to support our focus on local programming
and products. This in turn will also add to
more value from the constant digitisation
in India. Discoverys Asia-Pacific region will
manage Turmeric Vision. The transaction
is expected to be completed soon. As far
as the channels valuation is concerned, I
would not like to comment on that.
Q: How are your other businesses, Wonderchef and SK Restaurants, doing?
A: I am a strong believer of women
empowerment which I have achieved to
some extent with Wonderchef a range of
cookware/bakeware. It has succeeded far
beyond my expectations. SK Restaurants
has various brands with different positionings and offerings all over India as well as
overseas with a count of 58 operational
ones. Apart from our brand The Yellow Chilli,
the other fast-growing brands are Hong
Kong and Signature. Besides this, we are
also reaching out to tier-2 cities like Satna,
Kolhapur, etc. A multi-cuisine all vegetarian
brand called India Green will also be coming up soon in the cities of Allahabad and
Indore.

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+ THE FAILURE OF CONSORTIUM BANKING I NEW PORTS BRING HOPE TO BACKWATERS

RNI NO. 39847/81 I 27 JUNE 2016

Inspired by Make in India and fired by

hotel rooms in India

VOL. 35, ISSUE 22 FOR THE FORTNIGHT 14 - 27 JUNE 2016

HUMAN RESOURCES: Yamini Sharma (yamini@businessworld.in / HR@businessworld.in)

BW Businessworld Media Private Limited

RNI NO. 39847/81 I 13 JUNE 2016

The dog fight is about

HOW THE BAN ECONOMY IS

Meenakshi Menons analysis (The

BEHIND THE SCENE

For cricket fans, IPL is all about packed

12 | BW BUSINESSWORLD | 14 - 27 June 2016

Anvita Mehra, founder, Confidential Couture, talks about how

FIVE MINISTERS WHO HAVE PERFORMED FOR

FIVE MAJOR PROTESTS THAT

Five ministers are seen as good

Protests and democracy go

RBI Chief Wins Over Modi

With Modis patronage, it is

Luxury groups with operations

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In Defence Of The Poor Taste

Social media trolls have made

JOTTINGS & SNAPSHOTS

The Social Circuit

Marketing & Advertising

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Anil Ambani is betting big

THE TRAVEL ECONOMY

THE BIG STORIES

New generation ports are turning

Olivier Blum of Schneider Electric

V.N. Bhattacharya reviews Edge

How the NPA mess is the result

Startup Teabox takes Indias

The iconic e-paper screen

Take a look at how technology

Apps that can be used for

Mother Diary is expanding its

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ELEPHANT ON THE CHARGE

the Chinese dragon and global economy show signs of

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FUTURE GROUP recently

and a considerable jump in the output of refineries, power

Photograph by Umesh Goswami

media savvy. By no means young, he nevertheless seems to have

fledgling startup ecosystem has something to cheer about. The

AFTER YEARS OF TALK,

Talgo coaches will be tested on

14 - 27 June 2016 | BW BUSINESSWORLD | 21

for Cricket in India

22 | BW BUSINESSWORLD | 14 - 27 June 2016

have not given anyone this

eleventh edition onwards.

FTEN IT takes one

of Kerala cadre, he has

pleted by their deadlines.

under the project.

24 | BW BUSINESSWORLD | 14 - 27 June 2016