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What to expect from HDFC Bk, RIL & TaMo stocks

January 18, 2021 - 1:51pm
Jio performance has peaked and in the refining side business it is difficult to predict an upside given the huge over supply of refining capacity globally and the under utilisation that is currently on, says Sandip Sabharwal, analyst, asksandipsabharwal.com. On HDFC Bank Q3 resultThe HDFC Bank results are decent but there are a few areas about which potential investors need to be convinced. First of all, retail loan growth is just 5%. The entire growth is a reflection of wholesale loans which tend to have a lower margin. Right now, given the mix, the margins are sustaining. There is a question mark on whether those margins can sustain going forward. Secondly, there is some sale of non-performing assets to ARCs for which the bank has not given details and that has been used to show a lower NPA figure. The exact amount should ideally have been clarified and the NBFC subsidiary, HDB Financial Services, has taken the brunt of the hit. So the bank has not taken the hit but down the line, the hit has come.The stock trades at around 3.3, 3.4 times price to book, which on a one-and-a-half-year, two-year forward earning, is not really cheap. Combining all of that, I would think that the near-term upside, irrespective of the extremely bullish brokerage commentary, should be limited. The key will be to watch how the entire growth story revives on the retail side without an uptick in NPAs. Obviously, they have cut down growth because they thought there could be an uptick in NPAs on the retail side. Whether growth returns or not needs to be seen going forward. ON SAIL OFSGiven that the OFS was at a substantial discount and steel is a hot sector right now, the response was expected to be good. My guess is that the stock will go into a phase of consolidation rather than a significant upside because one does not know if steel prices can keep on rising the way they have been rising. That is the challenging part, given the significant uncertainties of global growth even today. As we enter a phase of consolidation in SAIL as well as most of the other steel stocks, subsequently we could see another up move if the steel prices sustain at higher levels. On Reliance’s non-telecom, non-retail businessOn the GRM side, there has not really been any significant upside as per the reported figures on the Asian-Singapore GRM numbers. What Reliance comes out with always tends to be very different from what the Asian numbers are. That is something which is very tough to predict normally. Reports on Reliance by large brokerages show they expect about 50% of the entire earnings growth for next year to come out of higher profitability from Jio and some improvement in GRMs. Jio performance seems to have peaked out and they are not gaining market share any longer. That is the challenge which people should be aware of. On the refining side, given the huge over supply of refining capacity globally and the under utilisation that is currently on, it is tough to predict a significant upside. These are the two factors which need to be considered. My guess is RIL will at best be a market performer. On Tata MotorsTata Motors has run up sharply after the entire auto sector moved up because of the apprehensions around Tata Motors. But given the uptick in the global JLR business following the uptick in the Chinese economy, there is renewed bullishness. The recent stock price movement also got a boost thanks to the commentary around the scrappage policy. Now the key is around expectations versus what they can deliver. I would say that the stock has run up a lot and it will be tough for it to sustain this kind of up move in the near term. There should be a phase of consolidation or even a correction from current levels. The scope of positive surprises from a company where expectations are very low typically tend to be high and it is a very under-owned stock. You hardly see it in large portfolios. So if Tata Motors can deliver on the results and show some positive surprise, then I would not be surprised if subsequent to the results, we could see more uptick. But right now, all positive factors seem to have been factored into the price. On cos where high debt can convert into high opportunity This always happens in an economic upcycle, at least in the initial 1-3 years of an upcycle, and it will happen this time also. Given the fear psychosis of most of the fund managers and the fact that the quality stocks have actually delivered, whoever took a bet against quality and moved into some value stocks, have underperformed not only for the last two, three years but for the last 10 years. That is why growth investing into a set of high ROE companies which do not have leverage is the fancied investment thesis today. But eventually, the valuation barrier does come in. Look at valuations of DMart for example. Assuming a 100% earnings growth next year, the stock trades at 100 times next year. I do not see any margin of safety in such a stock at this price. But on the flip side, there will be companies which will turn around and deliver. One key example from a largecap side of these sort of companies is Bharti. It has high debt, the top line growth was under pressure. Now we see pricing improvement. Debt costs have come down and the overall debt could come down. There will be a translation of value from debt free equity. A similar thing is being seen in commodity stocks lately and where given that they will have significant debt repayments, the entire debt value is getting converted into equity returns. So, even if the total enterprise value remains the same, EV debt value getting converted into equity creates a significant upside. That could play out as long as the economic growth revival happens at the pace at which it is expected. On stocks where this concept would applyThe companies which come to mind from the largecap side include L&T which will be a key beneficiary of whatever we have discussed. The order booking has been very strong and debt cost reduction and deleveraging will happen and as execution picks up, we will see more operating leverage coming in. In case of smaller companies, we could see this happening in real estate stocks. Some of the real estate stocks have moved up quite significantly over the last two weeks. Whether they will go through a phase of consolidation before moving up again is a bet people will have to take. But I think the prime companies are larger companies like DLF. I am positive on that and it has a significant percentage in some of our portfolios today. The stock has done well and my guess is it should still be able to do well and as we move down, we have to look at midcap construction companies which not only survived through the entire Covid period but also a very high interest rate environment. Their balance sheet is reasonable and as execution picks up, the earnings will surprise on the upside. These are the two broad categories which actually come to mind. On PVR as movie launch starts on big screen I strongly believe that both PVR and INOX are very well placed for the post pandemic period. We are seeing single screen cinema shutdown and single operated multiplexes are also shutting down. We could see a phase where for the next two-three years, these companies might be able to acquire assets at a much lower price and replacement value and then once movie viewing comes back strongly, they will be winners. One year down the line, there will be complete normalcy and these companies should be able to do very well.
Categories: Business News

Harris prepares for central role in Biden's WH

January 18, 2021 - 1:51pm
WASHINGTON: Kamala Harris will make history on Wednesday when she becomes the nation's first female vice president and the first Black woman and the first woman of South Asian descent to hold that office. But that's only where her boundary-breaking role begins.With the confluence of crises confronting Joe Biden's administration and an evenly divided Senate in which she would deliver the tie-breaking vote, Harris is shaping up to be a central player in addressing everything from the coronavirus pandemic to criminal justice reform.Symone Sanders, Harris' chief spokeswoman, said that while the vice president-elect's portfolio hasn't been fully defined yet, she has a hand in all aspects of Biden's agenda.``There are pieces that Biden may specifically ask her to champion, but outside of that she is at the table for everything, involved in everything, and giving input and feedback and being a supportive partner to him on all pieces,`` she said.People working closely with Harris on the transition resist the idea of siloing her into any specific issue early on, because the sheer number of challenges the Biden administration faces means it will be ``all hands on deck'' during their early months. They say she'll be involved in all four of the major priorities they've set out: turning around the economy, tackling COVID-19, and addressing climate change and racial justice.``She has a voice in all of those. She has an opinion in all those areas. And it will probably get to a point where she is concentrating on some of the areas more specifically,'' Sanders said. ``But right now, I think what we're faced with in this country is so big, it's all hands on deck.''Harris has been closely involved with all of Biden's biggest decisions since winning the election in November, joining him for every one of his key meetings focused on Cabinet picks, the COVID-19 relief bill, security issues and more. The two talk over the phone nearly every day, and she travels to Delaware sometimes multiple times a week for transition events and meetings.Those involved in the transition say both have taken seriously Biden's insistence that he wants Harris to be the ``last voice in the room'' on key decisions. Biden is known to turn to Harris first during meetings to ask for her opinion or perspective on the matter at hand.Biden and Harris knew each other prior to the 2020 presidential campaign in part through Harris' friendship with Biden's deceased son, Beau. But they never worked closely together.Since joining the ticket, and particularly since the election, Harris has made efforts to deepen their relationship and is in frequent contact with the president-elect, people close to Harris say. That personal relationship, according to presidential historian Joel Goldstein, will be key to their success as working partners.``The relationship of the vice president to the president is the most important relationship. Establishing mutual understanding and trust is really a key to a successful vice presidency,'' Goldstein said.Goldstein pointed to Biden and President Barack Obama's relationship as a potential model for the incoming team.Biden and Obama were from similarly different backgrounds and generations and also entered the White House with a relatively fresh working relationship. But their relationship and mutual understanding grew throughout the presidency, and Obama trusted Biden with some of his administration's biggest endeavors, like the implementation of the 2009 Recovery Act and the troop withdrawal from Iraq.Harris is said to be looking at Biden's vice presidency as a guide for her own.But unlike Biden during his first term, Harris will face constant questions about her political future. While Biden has skirted questions about whether he plans to run for reelection, at 78 he'll be the oldest president in history, leaving questions about whether he'll retire at the end of his term. That would make Harris the immediate frontrunner in any 2024 Democratic presidential primary.Early in the vice-presidential vetting process, her potential presidential ambitions gave some Biden allies pause. But since her selection, Harris has proven a loyal partner to Biden, rarely if ever contradicting him publicly.Still, California Rep. Barbara Lee, who was the first Congressional Black Caucus member to endorse in the primary when she backed Harris, said the vice president-elect isn't afraid to speak her mind.``She's no shrinking violet,`` Lee said. ``If she believes that one decision should be made versus another she's gonna weigh in and give her thoughts and opinions.''Biden has a personal affection for the work of diplomacy and deep relationships with global leaders that Harris can't match. But aides say she'll be deeply involved in the administration's diplomatic priorities simply because of the sheer amount of issues that will take up Biden's time. She may also be given a particular aspect of the administration's coronavirus response to oversee.One of her main priorities early on is certain to be the passage of the $1.9 trillion coronavirus relief bill that Biden announced Thursday. Those working with Harris on the transition say that while Biden will be intimately involved with ushering the package through the Senate because of his longstanding relationships with longer-serving lawmakers, Harris knows the newer members and can help build fresh relationships in Congress.The first few months of the Biden administration will be focused on COVID-19 and the economy. But Harris is certain to face scrutiny _ and pressure _ from advocates to ensure the perspectives of Black and brown Americans are reflected in those policies and the Biden White House's priorities.Leah Daughtry, a former chief of staff at the Democratic National Committee, said Harris will make a difference simply by being in the room.``The fact that Kamala Harris is a Black woman, is a woman of Indian ancestry, is a woman, automatically makes her different from every other vice president this country has ever seen,'' she said. ``That combination of experiences brings a set of values and lived experiences into a room where they have not previously existed. And that can only be good for this American democracy.''But as South Carolina Rep. Jim Clyburn put it, ``There will be a lot of weight on those shoulders.''``Those of us who come to these positions, we come to them knowing full well that we have a burden to make sure that we do it in such a way, that there will be people coming behind us,'' he said.Clyburn also acknowledged that Harris could also be a flashpoint for controversy among the portion of President Donald Trump's followers who are motivated by racial animus, which Clyburne said contributed to the deadly attack on the U.S. Capitol.``They're still holding on to a lot of animus about Barack Obama, and they're gonna transfer it to her, just like they transferred it to others here in this building,`` Clyburn said. ``And they're never gonna get beyond that.''But Harris' allies say as a child of civil rights activists, and a Black woman who's spent her life confronting and trying to address racism and inequality, navigating those pressures as vice president will come as second nature for her.``Kamala Harris didn't just fall out of the Harvard Law School like Josh Hawley or Ted Cruz or somebody like that,'' said Bakari Sellers, referencing two Republican senators who objected to the congressional certification of Biden's win. (Hawley graduated from Yale Law School.)Sellers, a former South Carolina state lawmaker and an early Harris endorser, likened her to other civil rights trailblazers."She comes from the same lineage as Fannie Lou Hamer and Shirley Chisholm and Ella Baker," he said. "I mean, she's built for this."
Categories: Business News

Centre to shortlist names for next CBI chief

January 18, 2021 - 1:51pm
The Centre will begin shortlisting the names of contenders for the post of the next CBI director with the Ministry of Home Affairs (MHA) and the Department of Personnel and Training (DoPT) firming up a list of senior IPS officers from the 1984-86 batches for the post.BSF DG Rakesh Asthana and NIA chief YC Modi, both 1984 batch IPS officers, are said to be the front runners for the post. Another Gujarat cadre IPS officer, Keshav Kumar, presently serving as Gujarat ACB chief, may make it to the final list, officials added.The current CBI director Rishi Kumar Shukla’s tenure will end on February 2 before which the DoPT, MHA and CVC will hold consultations over the names of the officers. While the MHA is the cadre controlling authority of IPS officers, CVC is involved in vigilance clearances after which the DoPT ranks them on “seniority, integrity and experience in the investigation of anti-corruption cases”.The final selection for the CBI director is done by a three-member panel headed by the Prime Minister (PM), Chief Justice of India (CJI) and the Leader of Opposition (LoP) in the Lok Sabha. Once appointed, a CBI director gets a fixed term of two years unless the government extends the service. If the present CBI director is given an extension of six months, both Kumar and Modi may lose out, as they are to retire in April and May respectively.NIA DG Modi was part of the Supreme Court-appointed special investigation team that probed the 2002 Gujarat riots. The SIT had given the then Gujarat CM Narendra Modi a clean chit in the Gulbarg Society massacre. Modi had earlier served as additional director in the CBI since 2015 and took charge as DG NIA in 2017. Kumar has earlier served in the CBI and was heading the forensics unit of the agency.Asthana’s tenure as Director General of the Border Security Force (BSF) and Narcotics Control Bureau (NCB) is till July 31, 2021. He had earlier served as special director in the CBI and has handled several high-profile cases, including the Vijay Mallya extradition, AgustaWestland chopper scam among others. Asthana was moved out of CBI in 2019 following his spat with former CBI director Alok Verma.Among other names in the reckoning are Kerala DGP Loknath Behera, UP DGP Hitesh Chand Awasthy, both 1985 batch IPS officers who have earlier served in the CBI. According to the Supreme Court guidelines, officers having anti-corruption or CBI experience and from the senior-most batches shall be considered for the post. The home ministry spokesperson did not respond when asked for a comment.CRPF DG AP Maheshwari, DG SSB, SS Deswal and Special Secretary (internal security) VKS Kaumudi are also said to be in the race. The final panel of officers is likely to comprise three names.
Categories: Business News

ET Startup Awards 2020: Disruptors Undisrupted

January 18, 2021 - 1:51pm
Mumbai | Bengaluru: Amid the uncertainty and wide-spread disruption caused by the ongoing pandemic, Indian startups have weathered the storm and thrived winning wide-spread admiration and applause at the sixth edition of The Economic Times Startup Awards, India’s most coveted prize for entrepreneurial excellence.In a virtual ceremony telecast last Thursday and viewed by the country’s top entrepreneurs, investors and policymakers, online stock trading platform Zerodha was awarded the prestigious prize for Startup of the Year 2020.Alongside the guests of honour Ravi Shankar Prasad, union minister for law and justice, communications, electronics and information technology, and Piyush Goyal, union minister for railways, commerce and industry, consumer affairs, food and public distribution, the leaders of India’s technology and startup sectors gathered to celebrate the winners across nine categories.“There is no cut-copy-paste way of building a business from ground-up,” said Nithin Kamath, founder and chief executive officer of Zerodha while pointing out that his company is still bootstrapped and doesn't spend money on marketing or customer acquisitions.“The ET Startup Awards shows that startups can be built in different ways, without raising external capital,” he said while accepting the award.Kamath’s Zerodha is a repeat winner at ETSA having bagged the prize for Bootstrap Champ in 2016.Among those who joined the circle of winners in this year’s edition was GV Ravishankar, managing director at Sequoia Capital India, who won the award for Midas Touch for having bet early on the likes of edtech startup Byju's, which is now valued at $12 billion. Anju Srivastava, the founder & CEO of Wingreens Farms was chosen for the Woman Ahead award.Ministers Prasad and Goyal stressed on the importance of digital inclusion as well as the need to build local solutions with global applications.“I don’t have the slightest doubt that Digital India and the digital ecosystem will contribute a minimum of $1 trillion to the $5 trillion economy, which we (India) are conceiving for ourselves,” said Prasad. India’s top corporates must also step up and be counted in the cumulative effort to boost India’s thriving startup ecosystem, the law makers pointed out. “I've appealed to the captains of Indian industry to also consider larger involvement in the financing of startups, particularly early-stage financing,” Goyal said.“Because I do believe a lot of very good ideas that come out of our startup ecosystem get sold at abysmally low valuations,” the minister said while underlining the potential for high impact displayed by ideas that have emerged from the crisis engendered by Covid-19.“Twelve startups have become unicorns in 2020, the highest in a single year...I began with this number at the very outset to emphasise that even this pandemic couldn’t deter the surge of the startup movement in India,” Prasad told the virtual audience.Covid-19 brought transformational shifts in the startup ecosystemFollowing the broader theme of resilience, the star-studded panel of jurors, who met earlier in August, had chosen Zerodha for continuing to be bootstrapped even as the profitable venture continues to scale at a rapid pace. The Bengaluru-based startup joins a distinguished list of previous winners of the top prize at ETSA, which includes the 2019 winner - logistics and supply chain firm Delhivery, and hospitality company Oyo Hotels & Homes in 2018. Online food delivery startup Swiggy was the Startup of the Year in 2017, while enterprise software maker Freshworks was the winner in 2016. Ride-hailing app Ola bagged the prize at the inaugural edition in 2015.The strength and robustness displayed by Indian startups over the past year also came in for praise from the high-powered panel, which gathered to debate the challenges and opportunities ahead for companies in a post-Covid world. Participating in the discussion were Zerodha's Kamath, along with Wingreens Farms' Srivastava, Swiggy's Sriharsha Majety, Lightspeed Venture Partners' Bejul Somaia and General Atlantic's Sandeep Naik.“We always questioned how big the total addressable market is once you cut down the subsidies and take back the discounts. Covid-19 showed us that there is still a very large market that is growing at a very fast clip. It’s given us more confidence as investors,” said Naik.Somaia pointed out that Covid-19 had helped bring about a transformational shift in confidence across the startup ecosystem. “Entrepreneurs, in the face of very significant disruptions to their businesses, migrated entirely to home and then executed with resilience, ingenuity and creativity,” he said.The Economic Times Startup Awards 2020 is presented by IDFC First Bank in association with Indorse and knowledge partner Tracxn.
Categories: Business News

India to ship vaccines to neighbours in few weeks

January 18, 2021 - 1:51pm
NEW DELHI: India plans to ship off doses of Covid vaccine to its neighbours as part of its vaccine diplomacy in a couple of weeks.The first destinations would be in India’s immediate neighbourhood, like Nepal, Bhutan, Bangladesh, Myanmar, Sri Lanka, Afghanistan, Maldives and Mauritius to help them kickstart their own vaccination processes against the coronavirus. The first shipments would be a goodwill gesture, while subsequently, the countries concerned would get on a payment basis from either the Serum Institute or Bharat Biotech.India started its own Covid vaccination drive on Saturday, with almost 1.9 lakh people getting inoculated on the first day.Nepal is the latest to ask for Covid vaccines from the government. Myanmar government declared they had signed up with Serum Institute for vaccines as has Bangladesh. Foreign minister S Jaishankar promised the Sri Lankan leadership India would make vaccines available to them too.Government sources said, countries would not be charged much more than Indians are paying for the vaccines even when they do have to pay for the doses. The key is to ensure that India has enough for its own needs before allowing exports of these vaccines.Foreign countries can draw up purchase deals with the two companies concerned, but officials said these are generally being done between government health entities and the companies. So Brazil’s Fiocruz Institute has signed a deal with Serum Institute. So have other countries — UAE, Saudi Arabia, Morocco, South Africa among others. The only catch is, they need export clearance from the Indian government first.The decision is being undertaken by the inter-ministerial body, National Expert Group on Vaccine Administration for Covid-19 (NEGVAC), which includes the foreign secretary, and headed by VK Paul of Niti Aayog.There has been some confusion on that front, particularly with Brazil, which was prepared to send an aircraft to pick up 2 million vaccine doses. The government had to put the brakes on that since vaccines had not been rolled out for Indians yet. So Brazil will get its first lot of vaccines from India, but possibly after the neighbours, a miscommunication that could have been avoided if, sources said, there was clarity in communications between the government and Serum Institute.Brazil has also ordered vaccines from Bharat Biotech, which is yet to come out with its efficacy data after the phase 3 trials, but the purchase has been cleared by the Brazilian government. This comes after the Brazilian regulating agency, ANVISA said the Chinese vaccine, Sinovac, had demonstrated only a 50 per cent efficacy.
Categories: Business News

Can IBC override existing business contracts?

January 18, 2021 - 1:51pm
In a recent judgement which could have wide-reaching ramifications, the National Company Law Appellate Tribunal (NCLAT) upheld the order of the National Company Law Tribunal (NCLT) that set aside termination of a power purchase agreement (PPA) between the corporate debtor, Lanco and the Gujarat distribution licensee, GUVNL. It held that the Insolvency and Bankruptcy Code, 2016 (IBC) will override existing contracts during the corporate insolvency resolution process (CIRP).The termination was set aside citing importance of the PPA for the corporate debtor’s long-term economic and financial viability, which, in turn, is necessary for maximization of the value of assets. NCLAT was of the view that the PPA converts the physical asset namely, the power project, into an economic entity and needs to be preserved during the CIRP/liquidation process to protect the economic value of the corporate debtor.The NCLAT order posits IBC as an overarching legislation to which all other laws must yield. This could result in absurd and unintended consequences which interfere with the contractual rights of parties. To be sure, there is no bar against the termination of agreements during the moratorium period under IBC other than contracts relating to essential services such as water, telecommunications, and information technology. PPAs, and other commercial sale and supply agreements, are evidently excluded from such restrictions.The aim of value maximization and continuing as a going concern under IBC is in the context of corporate debtors. This principle cannot, and should not, be invoked to prevent a party from exercising its right of terminating and walking away from a commercial agreement should the contract allow it. While the CIRP binds the corporate debtor, financial creditors, operational creditors, and resolution applicants, it cannot be extended to bind all parties that have contracts with the corporate debtor.It is also debatable whether NCLT/NCLAT had jurisdiction to adjudicate on termination of the PPA. Termination of PPA being a sector-specific dispute, the jurisdiction would lie exclusively to the sectoral regulator, i.e. the relevant Electricity Regulatory Commission (ERC). This is more so since PPAs (including the provision for termination in case of insolvency) are approved by ERCs. In fact, the Supreme Court has in the past held that expert sectoral regulators are better equipped to adjudicate on such disputes in the context of TRAI and Competition Commission.The NCLAT, contrary to the rationale laid down by the Supreme Court, failed to consider that the issue of termination of PPA, being a sector- specific matter governed by the PPA, ought to have been decided by the relevant ERC under the Electricity Act and not the NCLT. In fact, in several instances, power companies under CIRP have continued proceedings before the ERC.The NCLAT decision places emphasis on Section 238 to hold that the provisions of the PPA must yield to statutory provisions of the IBC. However, the applicability of Section 238 in this case is debatable. For one, Section 238 applies only to the extent of inconsistency, which has been affirmed by the Supreme Court in the Macquarie Bank case. In the instant case, there is no inconsistency between the PPA and the IBC. However, were the contract in question for the supply of essential goods and services to the corporate debtor, then the concerned parties would not be entitled to terminate such agreement, given the express provisions of IBC.Secondly, Section 238 applies only to other statutes, or subordinate legislation, having effect by virtue of such statutes. A PPA does not fall under either category. Hence, the reliance on Section 238 itself may have been incorrect.By interpreting the contractual relationship on the principle of value maximization and continuation of the corporate debtor as a going concern, the Courts may have opened the door to similar claims against any and all major customers.The NCLAT decision could have far-reaching implications as it compels parties to continue doing business and fulfilling contractual obligations with an entity undergoing CIRP or liquidation, thereby nullifying the contractual right to terminate in such an event. There may be a case where a competitor takes over the corporate debtor or where the financial risks involved in continuing to do business with a company under insolvency are unacceptable. Further, it incurs the risk of jurisdictional turf wars, especially in regulated sectors, which may result in protracted litigation.(Vishrov Mukerjee is Partner & Ameya Vikram Mishra is Associate at J Sagar Associates)
Categories: Business News

Indian startups came of age amid the pandemic

January 18, 2021 - 1:51pm
India’s startup sector has bounced back after facing unprecedented disruption due to the Covid-19 pandemic and the resultant nationwide lockdown last year. Funding for the sector fell 29% to $4.2 billion in the first half of 2020, according to data platform Traxcn, raising concerns about its sustainability, but during the last six months of the year, $7.2 billion flowed into the ecosystem, boosting its outlook for the year ahead. The outbreak has, in fact, strengthened India’s startups, said Zerodha’s Nithin Kamath, Swiggy’s Sriharsha Majety, Wingreen Farms’ Anju Srivastava, Bejul Somaia of Lightspeed Ventures and Sandeep Naik of GA Capital, in a candid discussion with ET’s Samidha Sharma. Edited Excerpts: Zerodha has benefited from the bull run in stock trading and financial services, but what do you make of 2020 and its impact on your business, Nithin?Nithin Kamath: This year was spectacular. If you had told me in February that this country was going to be locked down and we will grow 3-4x, I would have laughed. I’ve been trading the markets for 20-25 years, yet I haven’t been able to call one thing right this year. I think what happened is that there were a lot of fence sitters, people who always thought of investing in the markets and probably didn’t have the bandwidth to take the plunge. I think work-from-home enabled a lot of these folks to start investing. Some of my school and college friends who’ve known me for 15-20 years opened an account in the last six months. Also, what happened this year was that a lot of new people came in March and April, made some money, and then you know greed is an enabler. The good thing we’re seeing is there’s not a lot of speculative activity. It’s not like people are trading derivatives or a lot of these guys were opening accounts to leverage margin funding. Most of the accounts that opened this year are actually people investing in stocks, which has certainly broadened the capital market ecosystem in the country.Now, with a bunch of these new IPOs, it is expanding that market even further, because IPOs have usually been enablers to growing the capital market participation. So, I hope Swiggy can IPO soon because that will attract a lot more 20- to 35-year-olds into investing.Why do you say Swiggy should IPO and not Zerodha?Kamath: We’ve been bootstrapped and plan to remain like that. But I think, when more brands that the 20- to 30-year-olds recognise and aspire to own list on the Indian exchanges, the markets are going to broaden quite a bit. The opportunity right now around saving and investing is to be able to direct people to do the right thing, because a lot of these first-time investors don’t really know what they’re doing. They are essentially buying some stocks based on some advice they get, but I think India is missing a big advisory ecosystem. While the rich guys are taken care of, I think there is wealth management in the Rs 0-25 lakh or Rs 50 lakh range. I don’t think the answer for that is really digital, because people still don’t trust an app pushing you to buy a stock. The way is to somehow find a phygital model.Direct-to-consumer brands have had a banner year in 2020, so Anju, tell us what have been your key takeaways that new generation founders can gain from?Anju Srivastava: This has been a great year for startups. We thrive on disruption and when it happens naturally, then automatically we look at where the relevance is and what we can do with that. The functionalquakes are really felt by the bigger companies. This has been a phenomenal year, which has shown us a lot of direction and kept us ready for any kind of uncertainty. My suggestion would be to continue to keep agile manufacturing models, to have very agile sales models, to have very nimble systems. Those things can get completely disrupted the more rigid you are in times of uncertainty. Because of our nimbleness, there is a great opportunity, especially in food. People are eating a lot more at home than they used to, and the standards of what people eat has gone up a lot. Making food or even snacks has become almost a hobby as that latent chef is yearning to come out. We launched new products very quickly because of our agility, which gave people the ability to have thatkind of fun with food, while not compromising on taste, health or convenience. These are the three elements that are really going to lead to success in the food category in future. The food delivery sector was hit badly but made a sort of comeback in the last few months. Sriharsha, can you shed some light on challenges you faced that can help founders looking to start up at a time like this?Sriharsha Majety: For someone who is going to start up in these times, I think their ability to form teams is going to be harder than attracting talent to an established company. Unless me and my cofounders were hustling, meeting a bunch of people for coffee or drinks, dreaming up the pitch and selling the companywhen it was literally nothing, that possibility going away is definitely a meaningful dent. This means that more of the companies that we’ll see being formed now are potentially going to be based on existing networks. People will have to work a lot harder to get the right founding teams and early core teams, which I suspect is going to be a bigger challenge than the business uncertainty itself. I don’t think t’s any more uncertain now, given how uncertain starting up in very early stages itself is. I also think the fundraising game is going to be slightly different as people aren’t going to be able to come to offices, meet teams and understand their operations as much as they could in the past. I keep hearing this from all my investor friends and I guess it places a much higher bar on founders to put on their charm offensive for Zoom calls.With fundraising being so crucial for early-stage companies, what has changed in terms of parameters that you look for when you evaluate companies?Bejul Somaia: With respect to fundraising in 2020, it was a tale of two halves, right? The first half of the year was very quiet, the second half was quite active. I think a lot of firms have now built some capability and adence to invest in this new environment and that will continue into 2021. I think at the stage thatLightspeed invests at, which is typically early, not a lot changes because we’re investing on the basis of the strength of the founders, their connection to a market and the market itself. At that point in time, the business usually is almost always pre-revenue, and quite often it’s even pre-product. So, from a market perspective, there should be no change to the points of view that firms have developed over time. In terms of people, I think obviously we all prefer meeting in person and spending time and there is no substitute for that. That said, I think the role of referencing becomes even more important now. I don’t mean referencing to check whether someone is high integrity or not. Hopefully, that’s not the issue we’re dealing with. But it’s really about getting under the skin of the entrepreneur, what motivates this person, what istheir commitment to the market, how do they deal with ambiguity, how well do they attract talent, how well can they sell, how strong are they at execution? I think the nature of how that happens changes but can still happen. It can just happen through a number of different conversations with people that have surrounded the entrepreneur over time. And so, I think that’s why you’re seeing this get reflected in investment activity. I don’t doubt at later stages when more capital is being exposed, valuations are higher, things do change, because you do want to touch and feel and perhaps visit those companies in a way that may be trickier to do.It seems that the big became bigger in 2020. Sandeep, what are your thoughts on this, considering you’ve backed a giant like Jio Platforms?Sandeep Naik: I actually don’t see it that way. At General Atlantic, we’ve been backing tech enablement as a core tenet for the last 40 years and we’ve seen all the highs and lows. We invest as little as $25 million to as much as $900 million, which we did with Jio. Given our core investment tenets, we believe in backing entrepreneurs driving change in global disruption. Our fundamental belief is India can create over a trillion dollars of economic value from the digital ecosystem. What that means is that you will see the equivalents of Alibaba, Tencent, Baidu show up in India, which willbe domestic Indian companies getting to that hundreds of billions of dollars of value. This is one of our themes in backing Jio, which is democratising the digital society. You will see Zerodha being a multi-decacorn, you will see Swiggy being a $100 billion company and in spite of these existing large tech companies in the space, digital startups will also create immense value. So, it’s not that the big will only get bigger, you will see many more Nithins, Harshas and Anjus of the world come in thenext 5-10 years. So then, what has changed because of Covid-19?Naik: I was always a bull on the digital startup ecosystem in India and I’ve become an even bigger bull post Covid-19 (outbreak). This shock, in many ways, will overcome the natural inertia that resides in any system and accelerate change that was already under way before Covid-19. Adoption has significantly accelerated by almost 5-10 years on the demand side. As Nithin mentioned, he’s seeing users show up who would have never shown up before, and we’re seeing that in Byju’s and Unacademy on the edtech side. When it comes to Harsha’s side of the business (Swiggy), we always questioned how big the total addressable market (TAM) is once you cut down the subsidies and take back the discounts. Covid-19 showed us in a beautiful way that when that happens, there is still a very large market that is growing at a very fast clip that truly uses these services for convenience. Discounts just went to zero and customer acquisition costs fell, but these are still huge businesses with large TAM. So, it’s given more confidence to us as investors. Swiggy is a classic consumer internet company, always in need of cash to grow, but how has this changed in the last 9-10 months? Majety: The need for cash has come down very meaningfully. I think, like Sandeep said, there were changes underway that got accelerated. Our business also had a mix—the food delivery business, we’ve acceleratedprofitability significantly, and new initiatives—we’re going to continue chipping away at and investing in. I think the year was for us also two parts. For me, personally, it was first denial, then acceptance, and then a little bit of determination on the back of some strength that you find month on month. Now, finally, we’re getting back to feeling very excited. We have so many learnings that we now just have to make the most of.While Zerodha doesn’t have the pressure to do an IPO, in terms of the strategies that you had drawn up for the business, has anything changed?Kamath: Last year, the problems we had were all good problems to have. Back in January, we were doing 2.5 million trades a day, but then we had a day where we almost did 10 million trades. A couple of things that we were working on before, came through very well for us this year. First was this platform that we’re building called Nudge, which essentially warns a customer when they’re making a mistake while trading or investing. There was a rush of people trying to buy penny stocks, so the first thing we did on Nudge was we essentiallyscared them. We told them they can lose all the money they are investing, and what we’ve seen is our penny stock trading volumes are down like 70% pre-March. Of course, the customer can always override that nudge to go ahead and buy that penny stock, but what we’re doing can actually help a customer take the right decision. Almost 70-80% of the customers we added last year were first-time investors who may not know what they’re doing. Even with our scaling issues, we were very lucky that we were working on a bunch of things that came through because of which we were able to power those 10 million trades a day. Strategy wise, it remains the same.D2C companies were always said to have a lot of potential but then these brands would not get the kind of valuations a typical tech startup would get. What has changed?Srivastava: Most of the consumer companies, at least the startups that I know and including us, are looking at becoming foodtech companies. We want to be a gourmet marketplace, mostly with our own brand. We have augmented our delivery systems, our warehousing systems, because that’s where the bigger crunch comes. Getting through to people isn’t a challenge because we were so visible offline, and people already know us, and we found that they were looking for us everywhere. When you are on other tech platforms the problem isthat you are dependent on them to showcase you. So, setting up something of our own while still being on other platforms makes a lot of sense. It’s a complete change of model in a way, the continuing growth in D2C will be a huge bonus. We’re looking at 50%-60% of our sales coming from food tech going forward. Before you go, I’d like each of you to tell us what the big transformational shifts will be in 2021.Majety: I think we will see a lot more at the intersection of social media and commerce. The green shoots of that started showing up last year, but I think we’ll really start seeing more of the potential of how they can come together in full bloom.Somaia: There has been a transformational shift in confidence in the ecosystem. Entrepreneurs, in the face of very significant disruptions to their businesses, migrated entirely to home and then executed with resilience,ingenuity and creativity. Then there is genuine pull in the ecosystem from small businesses to large firms that are automating more, to consumers across categories.Naik: I really believe that we have seen the shift of innovation hubs. It all started in the Silion Valley and then predominantly moved to China, and I now think it’s time for India. We’re going to see some real innovation coming out of India that will address the needs of Bharat, which is really the belly of the market where there are a billion-plus people who have aspirations.Kamath: I think in the business of money, building credibility takes a long time. People don’t trust a brand very easily, but I think that has changed significantly. People are saving and investing with newer companies much faster. I think there is this whole breed of first-time investors who are trying to get more than fixed deposit returns, so potentially this market can grow quite fast. Srivastava: We’re looking at a coming together of companies and like-minded brands, and how we can work together to build the kind of innovative ecosystem that customers are looking for.
Categories: Business News

Why Purohit won’t raise HDFC Bank target price

January 18, 2021 - 1:51pm
Our last target price was Rs 1,250. We will not raise it until and unless the retail momentum picks up, says Siddharth Purohit, Analyst, SMC Global SecuritiesWhat are your views on HDFC Bank earnings? How are you looking at the stock price now?HDFC Bank Q3 results were above expectations and much above what the Street was expecting. Provisional loan growth was close to 16% and the surprise was largely I from the other income which was much ahead of expectations. The PAT growth no doubt has been driven by core income but other income has also positively contributed during this quarter. At the start of the pandemic, everybody was expecting a major slowdown but it has not happened in the case of HDFC Bank. But my take is a bit different. I observed that during this quarter also the growth was probably led by wholesale lending and not by retail. Retail just grew 5.5%. For the last two-three quarters, the wholesale segment has been leading the growth. No doubt, the overall growth has been very strong. But HDFC has been historically known for retail-oriented growth and as long as that segment does not grow, there will be some sort of concern even though the absolute bottom line continues to grow and outperform. On the asset quality front, the bank been able to manage the quality so far and as far as restructuring is concerned, net-net the numbers have been decent and there has been no negative surprise so far. As far as stock price calls are concerned, we are not going to revive our target price upwards. Our last target price was Rs 1,250. We will not raise it until and unless the retail momentum picks up.
Categories: Business News

A correction is possible in the market, says Ajit Menon

January 18, 2021 - 1:51pm
While the Indian markets touch new highs every other day in 2021, fund managers are cautious, yet positive about the outlook for the the equity market in this year. We spoke to Ajit Menon, CEO, PGIM India Mutual Fund. The fund house has garnered a good chunk of AUM in the last one year and has launched a new scheme recently. Menon however says that, "We are cautiously optimistic on market." Edited Interview. This year began with a rally in the market. How do you see the market at this point from a valuation stand point? How far do you think it can go from 48k?We are cautiously optimistic on market precisely for these reasons - markets have rallied a lot and valuations are expensive.However, one needs to understand that Sensex is a reflection of the value of the underlying thirty companies. These are the largest companies in India and growing profits at a healthy pace. As profits continue to grow, the value of these companies would continue to rise. Also, as interest rates have fallen, equities will trade at higher valuations.Though the broader economy is just about coming back to normalcy, one trend is very clear - large companies and companies with strong balance sheets have become stronger and gained, perhaps partly at the cost of smaller firms and firms with weaker balance sheets. So, we may continue to witness this disconnect in terms of the stock market, which represents large companies vs. overall economyRelated to that, there are investors who are worried about a correction in the market after this rally. Some are booking profits also. What are your views?It's always good to book some profits. And correction is very much possible. However, investors selling now in anticipation or hope of entering at lower levels should remember that trying to time the market has been extremely challenging for even professional investors and Fund Managers. So, investors should focus on asset allocation, identifying right Funds based on their risk appetite and goals. The support of a good advisor will always be beneficial.Some categories of funds have been offering eye-popping returns to investors, eg - pharma, IT, international funds. There is a lot of investor interest in these categories. Do you see these funds maintaining the returns as Covid vaccine enters the market?That is very difficult to say. Markets discount the future and due to the covid crisis, understandably pharma and IT and funds that have larger allocations to these sectors, whether they be domestic or international funds, have done well. As economies recover and sentiment improves on the back of the vaccine roll-out, there is slowly a more broad basing of growth. Risks of a resurgence of virus infections leading to lockdowns, any disruption in vaccine distribution logistics and its efficacy, the liquidity glut sparking inflation fears, and resultant central bank action will need to be tracked. Investors trying to time markets or sectors and funds could be disappointed long term relative to investors who have a balanced asset allocation with appropriate diversification. Ideally, return expectations should be to achieve a couple of percentage points above nominal growth rates in any economy. A positive real return over inflation and taxes will largely help keep financial goals on track. This is where a good advisor can help. If you have one, then it's best to put your questions to him or her since every investor will have a unique situation to deal with. If you don’t have one, get one.Speaking about inflows, AMFI data shows SIP investors are coming back after a pause. Is this because many are chasing returns in the market? What is your analysis?Whenever markets recover after a sharp drop, many investors tend to first redeem and then decide their next course of action. This has been to perhaps renter the markets systematically using the corpus redeemed. Job losses or reductions in incomes would have also prompted closure of SIPs earlier. With a revival in most parts of the economy helping bring back incomes, organisations reinstating salaries, these investors are coming back and reinstating their SIPs. In some instances, the lockdown has prompted a forced reduction of lifestyle expenses leading to savings. These savings are now being ploughed back. Meanwhile, as markets continue to rally, there is also the feeling of being left out and eagerness to participate in the up move.PGIM has gathered a decent AUM in the last one year. Many schemes have done really well. What has been the journey like in such a traumatic year? What are the future plans?PGIM India had an exceptional 2020 in terms of business. We grew our AUM’s 33% from December 2019. We got over a 1000 cr in net positive flows across our equity funds. This is at a time when the industry as a whole has been witnessing redemptions and net outflows. Our overall AUM crossed 8000 cr including advisory and PMS. The standalone Mutual Fund AUM crossed the 5000 crore milestone. A few of our key funds have gained critical size, especially on the equity side. This helped us move three ranks up on the league table during 2020 and we are poised to grow further. Most parameters of growth, whether they be fresh subscriptions, unique clients, or SIPs, we saw an approximate tenfold growth during the calendar year. Our international fund of fund products gained much attention, and we crossed the 100 million dollar mark in AUM in this category alone.What is your advice to investors who are getting into the market at this point? I would base my advice to investors on what I have done with my portfolio. I sat down with my financial consultant to review my asset allocation and rebalance appropriately based on our family goals. The main approach was to first see if we can increase our diversification. Some profits were redeemed to increase our emergency fund and adjust mortgage debt downward. We added gold bonds to increase allocation to that asset class. We are also in the process of considering available REITs. We are also shifting a small proportion to a balanced advantage fund where the goal requires a fixed income plus kind of return profile in the medium term. My daughter is set to start her undergraduate studies abroad, so we also added two international funds. This gives diversification within equity and exposure to the dollar. So, increasing diversification among asset classes and even within asset classes was the objective. Holding a few equity schemes is not necessarily diversification within equity. There will be significant overlaps. Reducing those overlaps as best possible, diversifying across themes, market capitalization, and styles should also be considered to increase downside protection. Our recommendation would be to first review your protection needs, life, and medical, and build a good emergency corpus and then review their own asset allocation.Which are the mutual fund categories that you are betting on in 2021? India is a nation of savers first and as awareness increases, we expect to see retail participation in good quality short-end fixed income categories like the ultra-short term. Long term SIP growth will continue to feed into mid cap, small cap and I would say the new flexicap category. The attraction to international funds as investors incrementally shift away from the high home bias will mean this category will continue to see flows. Preference would be to diversified global funds. We have seen the theme of ESG pick up steam. Here we believe that ESG factors will be intrinsic to all equity investing. An aspiration would be to see the core asset allocation category of Balanced Advantage Funds grow including hybrid funds. These should serve as an anchor to every portfolio. Investment outcomes are dependent more on investor behaviour as money is emotional. Auto asset allocation funds help in managing these biases. We have launched our own Balanced advantage fund as of now for this reason.
Categories: Business News

Godrej Fund Management launches $500 million office platform; raises $250 million in 1st round

January 18, 2021 - 1:51pm
New Delhi: Private equity firm Godrej Fund Management (GFM) has raised USD 250 million in the first tranche for its new platform to develop prime office buildings across four major cities. Singapore-based GFM, a real estate private equity arm of the Godrej Group, on Monday announced the first closure of its USD 500 million office development platform 'GBTC II' in partnership with Netherlands-based APG Asset Management NV (APG). "We have made first closure of USD 250 million. The fund will be deployed this calendar year," GFM MD and CEO Karan Bolaria told. In the first round, APG has invested 80 per cent of the total amount. The first deal from this fund is expected to be finalised before March 31, he said, adding that GFM would mainly focus on four markets -- Delhi-NCR, Mumbai, Bengaluru and Pune. Bolaria said the second tranche of USD 250 million will be raised and deployed by middle of the next year, he added. Despite fall in leasing activities last year due to the COVID-19 pandemic, he said Indian office market will bounce back and demand will return to its full potential. Bolaria said there is dearth of Grade-A office buildings in India and this fund aims to fill this gap. Under this program, GFM will develop office assets that will be valued in excess of USD 1.5 billion (around Rs 11,000 crore) on completion. The total value of office assets including those from previous funds will take the portfolio value on completion to over USD 3 billion (around Rs 22,000 crore). GFM has fully invested the previously raised capital under GBTC I (USD 450 million) and Godrej Office Fund I (USD 150 million). This is the third India-focused office venture and fifth overall, sponsored by GFM. The two residential funds totalling USD 475 million have also been deployed. "Our group has strong conviction in India's premium office sector and we believe the current dislocation in markets provides attractive capital deployment opportunities," Bolaria said. The addition of this platform brings significant scale to the overall strategy and will open up strategic avenues for value maximisation in the future, he said. Graeme Torre, Managing Director, APG Asset Management Asia, said, "The build-to-core strategy for Indian offices aligns very well with our broader investment aspirations for our pension fund clients and our desire to invest alongside partners who offer best-in-class execution capabilities." As the largest pension provider in the Netherlands APG looks after the pensions of 4.7 million participants. APG provides executive consultancy, asset management, pension administration, pension communication and employer services.
Categories: Business News

Steel companies engage with vaccine makers for bulk supply of doses for employees

January 18, 2021 - 1:51pm
New Delhi: Leading steel-producing companies in the country are drawing up plans to vaccinate their employees across offices and plant sites with the start of the nationwide COVID-19 vaccination drive. Domestic steel makers like -- Tata Steel, ArcelorMittal Nippon Steel India (AMNS India) and Rashtriya Ispat Nigam Ltd (RINL) said they will continue to support the government in the nationwide drive and will wait till vaccines are available for corporates. Meanwhile, players like JSW Steel and Jindal Steel and Power Limited (JSPL) are already in talks with Indian vaccine makers to place orders according to their requirements. JSPL Chief Human Resource Officer said "we are reaching out to vaccine manufacturers for bulk supply of doses and will try to get these doses after completion of all frontline COVID warriors' vaccination." The company has already categorised employees in order of vulnerability, so the ones above the age of 50 years and those who were infected from COVID-19 can be vaccinated first. JSPL will seek the guidance of the government and will try to get all its employees vaccinated, he said adding the company has been conducting RT-PCR test, a test which detects COVID-19 virus, of all employees twice a month since September 2020. Meanwhile, JSW Group which employs 55,000 people directly and indirectly, has plans to vaccinate its staff working at its corporate offices, plants and townships in next financial year. The group is in talks to buy 2 lakh doses initially from one of the Indian vaccine makers and inject double shots once authorities allow private corporate vaccination programme. The first COVID-19 vaccine shots in India were given on Saturday to nearly two lakh frontline healthcare and sanitary workers as Prime Minister Narendra Modi rolled out the world's largest inoculation drive against the pandemic that has caused 1,52,093 deaths and upended millions of lives in the country. Oxford COVID-19 vaccine Covishield, manufactured by the Serum Institute of India, and Covaxin of Bharat Biotech are the two vaccines being given to frontline workers including doctors, nurses, paramedical staff, ambulance drivers and other medical staff besides sanitation workers, police etc. State-owned RINL and Steel Authority of India Limited (SAIL) have sent details of its employees to the administration and who will be vaccinated based on priority. Both SAIL and RINL also run hospitals at their plant sites. A Tata Steel Spokesperson said the company has been working very closely with the government and respective state governments of Jharkhand and Odisha from the start of the pandemic and serving the community with medical facilities at various locations of its operations. Tata Main Hospital (TMH) at Jamshedpur, in Jharkhand has been the largest COVID care facility in the state with over 1,000 beds dedicated for the purpose. As on date, TMH is the designated hospital for conducting COVID vaccine trials. In line with the priority decided by the government, the vaccination is being started with 3,000 health workers at TMH from January 16 onwards. "We will continue to work with the government and as and when further vaccines are made available, we would vaccinate our employees as per the guidelines. As always, Tata Steel stands committed to the safety and security of its employees across locations of its operations," the spokesperson said. AMNS India CEO Dilip Oommen said, "AMNS India has always given the highest priority to the health and safety of its employees. Whenever the vaccines are available to the corporates, we shall certainly take them on priority and provide it free of cost to all the employees."
Categories: Business News

ET Wealth | How to maximise returns in long-term

January 18, 2021 - 10:51am
Sujay is looking forward to a rosier 2021. The year 2020 was a challenging one for many high net worth investors, including himself. Living it day to day was a challenge. In particular, the dark days of March and April had him doubting his overall portfolio allocation and strategy. During the crash, Sujay was faced with a dilemma. Should he sell and wait out the pandemic or stay invested? He made some drastic decisions during that time–decisions that have had a long-term impact on how his portfolio performed through year-end, as the stock market returns ended up being the brightest spot in a dark year. This type of market performance looks smooth in retrospect and he wonders how he should position his investments going forward.Investors who maximised their investment returns in 2020 were found to have followed three basic strategies— having the appropriate amount of fixed income in their portfolio, staying invested and continuing to buy throughout the year. While they may have had some uncomfortable moments while navigating the markets, they are reaping the rewards as we move into 2021.In the low yield environment of 2020, Sujay was often questioning whether it was even worth having bonds in the portfolio. But he must understand that the key part of having bonds as an allocation in the portfolio is not about getting returns as much as it is about cutting volatility so that investors can participate in the equity markets. It is the ‘sleep at night’ allocation of the portfolio. During the intense volatility of March and April, the bonds helped mitigate severe drop in the portfolio return. The deep rate cuts further accentuated the returns on bond funds, again making the point that investors may not always be able to truly guess how an asset class may perform. This makes a strong case for an asset allocation based approach.Experienced investors took the option to stay invested during the market crash of 2020 for two reasons. While the markets are volatile, it could be unwise to exit as long as the underlying fundamentals of the market were intact. Even if they had guessed correctly on when to sell; it is re-entering the market that is a trickier decision. Sujay has now realised the same. Staying invested and riding through the volatility, the hope was that ultimately in the long-term the market would return. Additionally, he would have realised that buying during a downturn is psychologically difficult. While the idea is buy low and sell high, actually in a crisis, the human instinct is to flee to safety.Investors like Sujay really need to focus on their long-term plan. Having the right fixed-income allocation would have allowed him to weather the challenges in these markets. Also, rather than giving into the emotional impulses, it is always better to consistently be buying in the equity markets. A ‘buying consistently at regular intervals plan’ can take a lot of the heartache out of making these decisions.(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
Categories: Business News

Covid: How the U.S. guaranteed its own failure

January 18, 2021 - 10:51am
By Sarah Mervosh, Mike Baker, Patricia Mazzei and Mark WalkerThe path to beating the coronavirus was clear, but Kelley Vollmar had never felt so helpless.As the top health official in Missouri’s Jefferson County, Vollmar knew a mandate requiring people to wear masks could help save lives. She pressed the governor’s office to issue a statewide order, and hospital leaders were making a similar push. Even the White House, at a time when President Donald Trump was sometimes mocking people who wore masks, was privately urging the Republican governor to impose a mandate.Still, Gov. Mike Parson resisted, and in the suburbs of St. Louis, Vollmar found herself under attack. A member of the county health board called her a liar. The sheriff announced that he would not enforce a local mandate. After anti-mask activists posted her address online, Vollmar installed a security system at her home.“This past year, everything that we’ve done has been questioned,” said Vollmar, whose own mother, 77, died from complications of the coronavirus in December. “It feels like the Lorax from the old Dr. Seuss story: I’m here to save the trees, and nobody is listening.”For nearly the entire pandemic, political polarization and a rejection of science have stymied the United States’ ability to control the coronavirus. That has been clearest and most damaging at the federal level, where Trump claimed that the virus would “disappear,” clashed with his top scientists and, in a pivotal failure, abdicated responsibility for a pandemic that required a national effort to defeat it, handing key decisions over to states under the assumption that they would take on the fight and get the country back to business. But governors and local officials who were left in charge of the crisis squandered the little momentum the country had as they sidelined health experts, ignored warnings from their own advisers and, in some cases, stocked their advisory committees with more business representatives than doctors.Nearly one year since the first known coronavirus case in the United States was announced north of Seattle on Jan. 21, 2020, the full extent of the nation’s failures has come into clear view: The country is hurtling toward 400,000 total deaths, and cases, hospitalizations and deaths have reached record highs, as the nation endures its darkest chapter of the pandemic yet.The situation has turned dire just as the Trump administration, in its final days, begins to see the fruits of perhaps its biggest coronavirus success, the Operation Warp Speed vaccine program. But already, a lack of federal coordination in distributing doses has emerged as a troubling roadblock.The incoming president, Joe Biden, has said he will reassert a federal strategy to bring the virus under control, including a call for everyone to wear masks over the next 100 days and a coordinated plan to widen the delivery of vaccines. “We will manage the hell out of this operation,” Biden said on Friday. “Our administration will lead with science and scientists.”The strategy signals a shift from the past year, during which the Trump administration largely delegated responsibility for controlling the virus and reopening the economy to 50 governors, fracturing the nation’s response. Interviews with more than 100 health, political and community leaders around the country and a review of emails and other state government records offer a fuller picture of all that went wrong:— The severity of the current outbreak can be traced to the rush to reopen last spring. Many governors moved quickly, sometimes acting over the objections of their advisers. The reopenings nationally led to a surge of new infections that grew over time: Never again would the country’s average drop below 20,000 new cases a day.— Science was sidelined at every level of government. More than 100 state and local health officials have been fired or have resigned since the beginning of the pandemic. In Florida, leading scientists offered their expertise to the governor’s office but were marginalized, while Gov. Ron DeSantis turned to Dr. Scott W. Atlas, a Trump adviser, and others whose views were embraced in conservative circles but rejected by scores of scientists.— While the president publicly downplayed the need for masks, White House officials were privately recommending that certain states with worsening outbreaks require face coverings in public spaces. But records show that at least 26 states ignored recommendations from the White House on masks and other health issues. In South Dakota, Gov. Kristi Noem, boasted to political allies about not requiring masks even as her state was in the midst of an outbreak that became one of the worst in the nation.Gov. Jared Polis of Colorado said states had faced difficult choices in balancing the virus — often hearing competing voices on how to do it best — and said Trump had left them without the political support they needed as they urged the public to accept masks and social distancing. “The single biggest thing that would have made a difference was the clarity of message from the person at the top,” Polis said in an interview.The pandemic indeed came with significant challenges, including record unemployment and a dynamic disease that continued to circle the globe. Without a national strategy from the White House, it is unlikely that any state could have fully stopped the pandemic’s spread.But the majority of deaths in the United States have come since the strategies needed to contain it were clear to state leaders, who had a range of options, from mask orders to targeted shutdowns and increased testing. Disparities have emerged between states that took restrictions seriously and those that did not.America now makes up 4% of the world’s population but accounts for about 20% of global deaths. While Australia, Japan and South Korea showed it was possible to keep deaths low, the United States — armed with wealth, scientific prowess and global power — became the world leader: it now has one of the highest concentrations of deaths, with nearly twice as many reported fatalities as any other country.SpringThe rush to reopen was ‘the opportune moment that was lost’The country once had a chance to set itself on a path to defeat the virus.There had been many early missteps. The United States failed to create a vast testing and contact tracing network in January and February, which could have identified the earliest cases and perhaps held back the crisis. Then, cases silently exploded in New York, while Gov. Andrew Cuomo and New York City Mayor Bill de Blasio waited crucial days to close schools and businesses.Thousands of lives might have been saved in the New York metropolitan area alone if measures had been in place even a week earlier, researchers found. Driven by the spring surge, New York and New Jersey to this day have the worst death rates in the nation.Elsewhere, though, most of the country had an opportunity to get ahead.By mid-April, most states had resorted to historic stay-at-home orders to avoid the horror seen in the Northeast. At the time, about 30,000 people had died, and the worst of the outbreak was still concentrated in the Northeast.It was during this period that experts say the country had an opportunity to get a handle on the crisis — had it invested in testing and contact tracing and endured a prolonged, if painful, shutdown until cases had been identified and controlled. At the time, the United States was doing only about one-third of the testing researchers thought was necessary. But the White House balked at enforcing its own guidelines, and Trump was openly encouraging states to open up. He turned over control to governors on April 16. “You’re going to call your own shots,” he told them.Looking back, public health experts trace the bulk of the nation’s cases, now reflected in a record death toll, back to this turning point in late April.“That was the critical time,” said Jeffrey Shaman, an infectious-disease expert at Columbia University. “That was the opportune moment that was lost.”In their hurry to get back to business, many governors moved swiftly to reopen and balked at ordering new closures, sometimes ignoring the pleas of local health boards and mayors, according to interviews with health officials and a review of thousands of records obtained under public records law by The New York Times and other groups, such as Accountable. US and the Documenting COVID-19 public record project.In Colorado, a local health official warned that his state’s reopening plan risked upending the gains made during painful shutdowns. In South Carolina, health officials failed to persuade the governor to delay opening indoor dining and the state epidemiologist, Dr. Linda Bell, suggested in emails, first reported by The State newspaper, that health officials needed to step forward and provide different messages to the public.“I will not ‘stand next to the governor’ anymore without speaking to what the science tells us is the right thing to do,” she tapped out on her iPhone one Sunday morning.In Iowa, the health director in Black Hawk County, Dr. Nafissa Cisse Egbuonye, was stunned in April when she found employees working elbow to elbow at a Tyson meatpacking plant — only some of them in masks.For weeks, she said, her calls to the governor’s office about closing down the plant went nowhere, as infections rose so steeply that the local hospital was overrun. “We didn’t know where the resistance was occurring, whether it was Tyson or at the state government level,” Egbuonye said. “It was falling on deaf ears.”Gov. Kim Reynolds said at the time that it was essential to keep the nation’s food supply chain up and running. The plant shut down only after the virus had disabled much of its workforce — more than a thousand employees were infected, many of them immigrants, and at least five workers died.Perhaps nowhere were the consequences of reopening clearer than in Texas.With 29 million residents and a conservative identity built upon being friendly for business, Texas was among the states that were later in enacting stay-at-home orders. Within two weeks, protesters were clamoring outside the governor’s mansion, waving flags emblazed with the motto “Don’t Tread on Me” and demanding to be able to go back to work.Gov. Greg Abbott was quickly pivoting toward reopening. One day after Trump’s call handing authority to governors, Abbott announced a “strike force to open Texas.” More than half of its members had donated to Abbott’s campaigns, including real estate developer Ross Perot Jr. and Drayton McLane Jr., a former owner of the Houston Astros.In a series of phone calls and meetings over the course of several weeks, the strike force hashed out ideas. The Texas Restaurant Association submitted a plan to reopen restaurants. Each step of the way, the ideas were funneled through a panel of four medical experts, who were empowered to veto ideas.But the task before them was clear: how to get Texas’ $1.8 trillion economy up and running again.By late April, Abbott was considering opening up the economy in phases.“My advice was to go a bit slower,” said one member of the governor’s team, Dr. Mark McClellan, a former commissioner of the U.S. Food and Drug Administration. He worried that the state was not allowing time between phases to measure any upticks in infection before progressing through further reopenings, and he feared a surge in new infections.But on May 1, Texas opened back up, starting with restaurants, stores and movie theaters. By Memorial Day, Texas was effectively up and running.A spokesman for Abbott pointed to states like California and New York, which kept restrictions in place for longer but have recently seen resurgences of the virus, as evidence that “lockdowns for months after months” do not work. He said Abbott had balanced “saving lives, while preserving livelihoods.”From late May to late July, new infections in Texas soared tenfold, from around 1,000 new cases a day to as many as 10,000.“It was like a wildfire in brush,” said Dr. Jose Vazquez, who served as the health authority in Starr County, Texas, and who contracted the virus himself as the state’s Southern border region was hard hit over the summer.By late June, Abbott called another meeting of his medical advisers. Reversing course, he shut down bars. Days later, he issued a mask order, which was credited with saving lives in the months to come.Deaths continued to soar into August, and for weeks this summer, Vazquez watched as helicopters swooped into Starr County to pick up patients, taking them to hospitals as far away as Oklahoma and New Mexico.Few returned alive.Summer‘It was just horrific’: Health experts were exhausted, threatened and sidelinedSummer was supposed to bring a reprieve from the horror.Across the Northeast, deaths were subsiding. The weather was growing warm, a chance to spend more time outdoors, where the virus spreads less easily. Health officials hoped the season would be the bridge they needed to prepare for the fall, when infections were expected to worsen.Instead, as officials in New Zealand were recording 100 days in a row without a single new infection and countries like Germany were recording only a few new deaths per day, the United States nearly broke its spring coronavirus hospitalization record.Around the country, health officials who had been steering their communities through the crisis were increasingly facing harassment, dwindling resources and political battles that left them exhausted. The reaction reflected the tone set by Trump, who demanded loyalty from Republican allies and whose rhetoric on masks and the economy became a rallying cry in many communities. Amid the chaos of the year, dozens of health officials were fired or resigned.Amber Elliott, the former health director for St. Francois County, Missouri, said she had received calls from people spewing “curse words, and, ‘You better watch out,’ ” and a photograph of her family at her son’s baseball game was taken without her knowledge and posted online. She began checking security cameras before leaving her office in the evenings, and she eventually resigned. “It’s not worth their safety,” she said, citing the risk to her two young children. “You don’t wait until it’s too late.” In Wisconsin, Dr. Jeanette Kowalik, the health commissioner in Milwaukee, was worn down by a lack of resources. People in her office had been working 20-hour days, struggling to keep up with growing caseloads and dealing with cumbersome technology that reflected a public health system that had been underfunded for years.“It was just horrific,” Kowalik said. “You couldn’t keep up.”At one point, Kowalik sent a plea for help to the Centers for Disease Control and Prevention, according to records. It took the CDC six weeks to respond.In Kansas, Dr. Gianfranco Pezzino, the health officer for Shawnee County, was growing frustrated as commissioners in the county relaxed mask restrictions for the farmers’ market and later extended bar hours and allowed youth sports practices, against his advice.Tired and increasingly frustrated, Pezzino sat down at his desk and drafted his resignation letter.“You can’t put public health professionals in charge of making these difficult decisions and then overrule them based on no data,” said Pezzino, who, in a moment characteristic of the pandemic, read the letter aloud during a video meeting last month and then turned off his camera to leave.At the beginning of the pandemic, the Florida Department of Health convened top experts for an urgent, Saturday morning teleconference with the state surgeon general, Dr. Scott A. Rivkees.“We had this bang-up meeting,” said Dr. Aileen M. Marty, an infectious-disease professor at Florida International University who assumed the meeting would be the first of many.Instead, it was the only one.Rivkees was later sidelined, little to be seen after correctly suggesting at a news conference that social distancing and other measures would need to be in place for at least a year. Another group of scientists that met within the Health Department was also phased out.DeSantis, the governor who owed his 2018 election in large part to Trump’s early endorsement, was hewing closely to the White House’s messaging, and increasingly surrounded himself with business leaders and advisers of his own choosing.Of 22 people on the executive committee of the governor’s task force to reopen Florida, only one, the president of Tampa General Hospital, came from a health care background. None of the others were doctors.One person DeSantis did turn to was Atlas, at the time a high-profile adviser to Trump whose views had been described as dangerous by members of the medical establishment. A radiologist whose appearances on Fox News caught the president’s eye, Atlas frequently clashed with leading health experts, arguing, for example, that the science of mask wearing was uncertain and that children could not spread the coronavirus.DeSantis and Atlas appeared together at events across Florida in late August, promoting in-person instruction at schools and colleges, including the return of fall sports.A spokesperson for DeSantis credited him as an innovator who understood that lockdowns were “ineffective,” had come up with a data-driven approach and had remained “singularly focused” on protecting older residents and others most at risk of dying.In September, DeSantis’ office placed a call to Dr. Jay Bhattacharya, a professor at Stanford who had criticized coronavirus lockdowns as harmful. In an interview, Bhattacharya said the call had come more or less out of the blue, and he was pleasantly surprised to learn that the governor seemed to have studied his work.The governor asked Bhattacharya to appear on a panel, along with Dr. Martin Kulldorff from Harvard, who with Bhattacharya went on to help draft the so-called Great Barrington Declaration, a treatise that calls for better protecting the vulnerable while others in society “resume life as normal,” an approach that has been fiercely criticized within the scientific community.The next day, DeSantis moved forward with a plan to keep Florida open. He allowed restaurants and bars to operate at full capacity, and he prohibited local governments from enforcing mask mandates, curfews and other restrictions.The country had just exceeded 200,000 deaths, including more than 14,000 in Florida.It was a devastating toll, but one that would soon worsen.FallThe science of masks was well-documented, but governors resistedBy fall, Trump’s own coronavirus diagnosis was dominating headlines, and he was still insisting that the country was “rounding the corner” in the pandemic and that the virus would soon “disappear.”But inside the White House, health officials knew more was needed to control the crisis.In a series of unpublicized weekly memos tailored to each state, the White House’s coronavirus task force had been privately pressuring states to do more. The reports recommended that states like Alaska, Georgia and Wyoming embrace face masks. States like Alabama, Louisiana and Mississippi were advised to put more stringent limits on indoor dining.But those states and others — at least 26 in all — ignored the urgings of the White House, even when new cases were ticking upward.For Noem, the governor of South Dakota, the laissez-faire approach was a point of pride. More than perhaps any other state, South Dakota had kept its doors open, hosting Trump for an event at Mount Rushmore and committing $5 million in federal coronavirus relief funds to enticing tourists.In the fall, Noem traveled the country with the help of a former Trump campaign manager, Corey Lewandowski, eager to showcase that her brand of liberty governance was the right one.In New Hampshire, she told a group of Republicans that one of her strategies was that she “never talked about the number of cases of COVID-19 that we have.”In Maine, Noem criticized the state’s restrictions while claiming that her state’s death rate was among the lowest. “Leadership has consequences, and you are all living under some very poor leadership out of your governor’s office,” Noem told the crowd.In fact, new cases and deaths have been climbing in South Dakota. A rally that drew hundreds of thousands of motorcyclists to Sturgis, South Dakota, over the summer is believed to have contributed, in addition to colder weather that pushed many indoors. Noem also continued to resist a mask order despite urging from the White House.South Dakota ended the year with one of the highest death rates in the nation — four times Maine’s — though it also mounted one the nation’s most successful vaccination efforts.Idaho’s governor, Brad Little, also resisted a mask order, but behind the scenes, he appeared to acknowledge that such action was needed. Bryan Elliot, who heads the health board in a heavily hit region in southwest Idaho, said two of Little’s advisers had joined a conference call with two board officials to press them to embrace more control measures, including masks.The request, Elliot said, included a threat. Any such measure was bound to spark a public backlash, and the intention, it seemed, was that Elliot’s board would absorb it. If the region did not impose a mask order, the state advisers told Elliot, the governor’s office would publicly shame him as being responsible for the case numbers.“It was not appropriate,” Elliot said.The decision to further delegate responsibility to local officials opened the door, as it had in many states, to politics and misinformation.A woman invited to testify at one board meeting, Dr. Vicki Wooll, suggested that it was 5G cellphone networks that were putting people’s health at risk.One state over, Dr. Ed Zimmerman, the health officer in Washakie County, Wyoming, saw his community being inflamed by other conspiracy theories on social media, including suggestions that virus fears had been overblown in an effort to harm Trump’s reelection campaign.“It’s a complete relegation of science to the back burner,” said Zimmerman, who described himself as conservative.A week after ordering a mask mandate, he was fired.WinterA bleak season brings record deathsAgainst the odds, some states have managed to keep the virus under control.Washington state, which recorded 37 of the nation’s first 50 coronavirus deaths, has kept in place a steadily adjusting suite of mitigation measures and now ranks 44th in deaths per capita. If the nation had achieved a rate comparable to Washington’s, about 220,000 fewer people would be dead. Vermont has also been among the states with the fewest deaths, thanks in part to a cautious reopening, significant testing and a mask order.But a year of political division and uncontrolled coronavirus spread has caught up to most of the country.In recent days, the virus has been accelerating in nearly every state, and deaths have been climbing from Arizona to Connecticut. Even New York, which became a national model for virus restrictions and testing after its spring crisis, is seeing a resurgence.Winter was always the season in which the virus posed the biggest threat, but in many states, residents have also fallen victim to pandemic fatigue, rendering existing controls less effective.That has been the case in California, which is now experiencing one of the worst outbreaks in the nation.The most populous U.S. state was the first to issue a stay-at-home order last spring, and it managed to keep the virus in check for most of the year. But as winter approached, a restlessness set in.Local journalists exposed how the Democratic leaders Gov. Gavin Newsom and Mayor London Breed of San Francisco — outspoken advocates for virus precautions — had attended birthday parties at the French Laundry restaurant in the Napa Valley, ignoring their own best practices. Disdain for masks and business closures resonated in more conservative parts of Southern California, and health officials pointed to people who had let their guard down at Thanksgiving as a turning point.Now federal health officials are warning that a much more contagious variant of the virus could become the dominant source of infection by March, threatening to accelerate the country’s outbreak.The arrival of vaccines could slow the spread, but the lack of a unified national strategy has resurfaced again as a fundamental flaw. The federal government has pushed the responsibility for administering vaccines to state and local governments, who are strapped for funding and still dealing with daunting virus caseloads. Some states have struggled to deliver the vaccine swiftly, and rules vary widely from state to state.Biden, who takes office this week, said he would call on the Federal Emergency Management Agency to establish 100 federally supported vaccination centers around the country and would also push for thousands of community and mobile vaccination sites.But tight supplies will limit how quickly any such plans can be rolled out, and already there are political divisions over whether to trust the vaccine and what social groups should get it first.Dr. Marissa J. Levine, the director of the Center for Leadership in Public Health Practice at the University of South Florida, said that a failure of leadership — first from the White House, and later from the states — had polarized the entire response to the pandemic and given the virus an extended life. “The toll points to a colossal failure at every level of government,” she said.The top five worst days for new deaths in the United States have come in January. As the calendar page turned for a new year, the virus was worse than it had ever been.
Categories: Business News

Suits & Sayings: Former StanChart banker raises a toast to her own rum brand; high-profile exit at this PE firm

January 18, 2021 - 10:51am
ET's weekly roundup of the wackiest whispers and murmurs in corporate corridors & policy parlours.No Looking BackHe moved to London a while back, but we recently heard this maverick, who rose like a phoenix in real estate and financial services, has decided not to come back to India. That means his personal assets are up for grabs, including a sizeable land parcel in Alibaug and two posh apartments on tony Altamount Road, home to the rich and the mighty. Once upon a time, this poster boy could do no wrong but alas, his dreams have come crashing down even after he exited a large part of his business empire. Hope London will be less taxing.Please Welcome… 2020 was an incredible year for the franchise, blowing the competition to smithereens in the league tables, but it ended on a sad note when Morgan Stanley lost one of its finest in Aisha de Sequeira, one of the most respected investment bankers in the country, late last year. But we hear it’s chosen two of its oldest lieutenants to carry on her legacy and lead operations in India — Kamal Yadav and Sachin Wagle will be co-heads. Far better than parachuting in some expat to come and fill the former leader’s shoes.Key Man Factor Even if this homegrown private equity shop set up by former bankers has seen a steady exodus of its middle layer, the core team has always been steadfast. No wonder they have always been super successful in raising funds despite limited exits from earlier bets. Naturally, we were stumped when we heard the fourth most powerful man in the firm, also its general counsel and partner, is planning to move on in pursuit of “something different.” That would be a body blow for sure, especially when exits have finally begun. A New Toast Throughout the lockdown, we have been reporting about corporate suits rediscovering life and love but by 2018, former Standard Chartered banker for 16 years, Kasturi Banerjee, knew her life was ready for a new high. This weekend, her labour of love, a posh rum called Makazai — which means “I want” in Konkani — hit the sunny state of Goa in both dark and white variants. What caught our attention was the Olive Ridley turtle as the brand’s mascot — a nice, sensitive touch. We have already seen the gin and beer revolution sweep the country, with a whole new bunch of entrepreneurs leading the charge. For a country that has literally grown up on Old Monk rum, we surely won’t mind some new options, would we? Rescue Plan American asset manager Aegis may figure in the consortium of investors that has submitted an expression of interest to take over Punjab & Maharashtra Cooperative (PMC) Bank. This group, which includes multiple overseas investors, has been put together by businessman Surinder Mohan Arora. His resolution plan for PMC Bank cites an infusion of Rs 5,000 crore. Interestingly, the 65-year-old Arora, who had contested the 2019 Lok Sabha polls (and lost), was a complainant in the Maharashtra State Cooperative Bank case, which came into the spotlight in 2019 when the Enforcement Directorate named NCP chief Sharad Pawar in a probe.
Categories: Business News

How your equity MFs performed in the last 5 yrs

January 18, 2021 - 10:51am
ET Wealth analyses the return profile of equity mutual funds across time periods and categories for all fund houses.Outperformance remains the domain of a select fewFunds across categories have struggled to beat indices over the past year. This marks significant deterioration in return profile when compared to performance in year ending 2019. The biggest downward shift in outperformance was seen in mid and small-cap funds over one year. However, these have put in a good show over 3 & 5-year time frames. Other than mid and small-cap funds, others have lagged index even over longer periods. However, better performance figures in AUM terms shows that a few larger sized funds have exhibited better outperformance in categories like ELSS, large & mid-cap, large-cap and mid-cap.%of schemes outperforming chosen index 80300613%of AUM outperforming chosen index 80300628Only few asset managers boast a healthy outperformance track recordThese AMCs have shown the ability to outperform across different scheme mandates over the long-term. 80300658Just a handful of funds have exhibited consistencyThese schemes outperformed in at least four of past five calendar years 2016-2020. 80300668These funds have delivered highest outperformance over index 80300674 80300681
Categories: Business News

6 ways to reduce construction costs

January 18, 2021 - 10:51am
Reports suggest more and more people are looking for plots to build homes on. Property search sites like Magicbricks. com say there is an increased demand for residential plots. However, while buying a plot is easy, constructing a house on it is not. The most challenging aspect is keeping costs under control. “If built with all due diligence, one can make significant savings on overall construction costs,” says Prashant Thakur, Director & Head – Research, Anarock Property Consultants.Architect Hafeez Contractor agrees. “By doing little little things right, you can reduce construction cost by 12-15% or increase the carpet area by 15%,” he says. So how much can you save? It depends on the area available for construction. Though it varies from place to place, the average construction cost for a house would be around Rs 1,500 per square feet. The construction quality is also a determining factor. A luxury home with all the high end fixtures and fittings can cost Rs 2,000 per square feet to build. Settling for slighty less can set you back by Rs 1,500 a square feet. If you are okay with just the basics, Rs 1,200 a square feet should be enough. If you are planning to build a 2,000 square feet home, your construction budget will be around Rs 30 lakh. Saving 12%-15% of that works out between Rs 3.6 lakh and Rs 4.5 lakh. Therefore, it makes sense to follow the simple tips given below to keep down costs.The right plotTry and choose a plot that is even and at road level. “If the plot is uneven or rocky, it may increase the cost of construction as one will have to deploy extra material or equipment to level the plot of land,” says Thakur.Good architect & contractorThough hiring a good architect will cost you money, you will be able to save much more on construction costs. According to Thakur, a good architect can actually optimise the available space and save costs. “Increasing the number of shared walls will optimise space and increase the carpet to build up ratio,” says Contractor. “Since most cost overruns are caused by construction delays, one must select a good contractor who follows deadlines and completes the work on time,” says Thakur. To identify a good architect and contractor, take inputs from your friends or relatives who have built homes from scratch in the recent past. Before finalising, visit the completed houses and talk to the owners. Make sure that you are visiting homes similar to what you are planning to construct. If you are planning to build a 1,500 square feet home, there is little point in surveying a 5,000 square feet luxury villa.Once you select an architect or builder, the next step is to draw up a detailed agreement which will be beneficial to both parties. Make sure this agreement mentions the exact fees, who gets the material, work completion and payment times lines, penalty for delays, percentage to be kept as retention money, provisions if the parties want to discontinue the agreement, etc. Make sure the final payment—to be paid at the time of possession—and retention money—to be paid after 3-6 months— are big enough to keep the contractor engaged in the project.Contractors who promise to ‘finish the entire work and give you the house key’ usually charge around 10% of the construction cost. Should you try to save this money by taking charge of the construction? You can if you have time. However, please note that the entire 10% can’t be saved because you will be forced to hire sub contractors. Stick to a simple design if you are planning to manage it yourself.Go with standard designWhile you may have that dream home in mind that entails an elaborate design, it will also cost more to build. It is better to stick to the commonly used grid structure as it is stable and able to withstand loads. A fancier structure may look good, but could also be less stable. “Though structural engineers can make fancy forms strong with additional RCC, it will increase the total cost of the building by 5-6%,” says Contractor.Buy locally and in bulkOne of the cardinal principles of low cost housing is to source material locally – be it cement, bricks and blocks, doors and windows, tiles, bathroom fittings or pipes, etc. For example, natural laterite stone is a good substitute for bricks or cement blocks in most part of the western ghats region and can save construction costs. While buying in bulk can save costs, be careful about its storage.Use latest technologyThe concept of pre-engineered buildings (PEBs), which is popular in industrial constructions, is slowly spreading to residential constructions as well. In simple terms, PEBs are galvanised iron steel structures and the flooring and walls are done with cement and gypsum particle boards. The main advantage is faster construction and lower costs. “Since the pre-engineered buildings are lighter, foundation costs will be much lesser. The significant reduction in construction time will reduce labour costs also,” says Rahul Kadri from IMK Architects and Urban Planners.Consider life cycle costs“People should not confuse low cost housing with low quality housing or low amenity housing. Low cost housing is about reducing costs with same amenities and qualities,” says Contractor. This is because while constructing a house, one needs to consider not just the initial costs, but also the total costs it will incur during its life, which is usually around 30-50 years. “With the help of an architect, select materials that will last longer and at the same time will not be very costly. This will help you to reduce repair or replacement costs in future,” says Kadri. A well designed house can also reduce recurring expenses like electricity. “A well ventilated and lit house along with good green materials can help bring down the cost and overall maintenance in the future,” says Thakur.
Categories: Business News

You can be a billionaire, if you have 4,000 yrs

January 18, 2021 - 10:51am
I want to be a billionaire. Just like my uncle.”“Your uncle is a billionaire?”“No, my uncle also wants to be a billionaire.”It’s just a social media PJ and surely there’s no harm in having two billionaires in a single family. The more the better. However, when you want to be a billionaire, it’s hard to know where to start. Even though we seem to have been culturally conditioned to think that billionaires are routine phenomena, as a matter of fact, they are not. A billion is a lot of money, even when compared to a million. That’s not a joke, at least not entirely. Most people don’t have a feel for how much more than a million it is. I mean they know numerically but don’t have a FEEL for it.Let me try and help there. If you were to put away Rs 20,000 a month right now, you could accumulate a million rupees by March 2025. Pretty doable for most people reading this, I would say. However, to make it to a billion at that rate would take more than 4,000 years. Big difference. Of course you can nitpick about earning interest etc but it’s still a big difference, there’s no way to ignore that.As equity investors know, most people who are called billionaires nowadays are not actually billionaires, in the sense that they have not earned a billion and may not even be able to produce an usable amount of a billion in any real sense. Some can, but most can’t. Generally, they own a part of some business whose market capitalisation is more than a billion and that’s a notional amount of money. It can evaporate rather quickly as you may know if you’ve been following the tale of a big billionaire’s ex-billionaire brother or that king-size guy or many other Indian ex-billionaires who were not ex about a decade ago.So this column is actually not about making a billion. The title of this article is a lie. I have no experience or expertise to offer there and if you were waiting for some tips and pointers then you can stop reading now and google ‘billionaire jokes’ to entertain yourself. However, I think I do have something else that is actually more useful because it is achievable.What I can do is to tell you—from personal experience of a lot of people I have interacted with—is that those who don’t get started have no chance of becoming any kind of naire. What’s worse is that setting your target too high can actually prevent you from getting started. Once you hear this, it seems like a strange thing to be happening but it’s very much true. If you are planning to be a billionaire and all you can do is save Rs 20,000 a month then it seems hopeless. You don’t have 4,000 years to hang around waiting for the target to come near. However, setting a reachable goal, one which is reachable and will, therefore, meaningfully change one’s life, is the best first step to take.The billionaire may be a joke but unrealistic goals are a serious problem. There are many goals that feel kind of reachable but if you do the numbers realistically then the chances are quite slim. For example, let’s say you want to accumulate Rs 50 lakh in five years and want to do it by saving Rs 25,000-30,000 a month. You may think it’s doable but it’s really not. No realistic adviser or even online calculator will tell you that this is doable. However, is that a discouragement? For many people it is, and becomes a reason to not get started.At the end of the day, there can be a thousand reasons to not get started and not having a realistic chance of becoming a billionaire is only one of them. On the other hand, there are also a thousand reasons to get started. The choice is yours.(The writer is CEO, Value Research)
Categories: Business News

Conspiracy theories slow down vaccination drive

January 18, 2021 - 10:51am
Mumbai | New Delhi: India’s Covid-19 vaccination drive has yet to pick up pace as misinformation and scepticism regarding vaccines creeping in on social media platforms and elsewhere, besides technical glitches, create bumps in the way.While Facebook has banned anti-vaccine groups, other platforms such as Twitter and WhatsApp are fuelling vaccine rumours and fear mongering. One of the bizarre conspiracy theories doing the rounds is that billionaire Bill Gates is funding some vaccine manufacturers because he wants to reduce population growth!The government’s decision to fast track approval of domestic vaccine maker Bharat Biotech’s vaccine without efficacy data has also added fuel to scepticism, experts told ET. “Most of us are facing the vaccine dilemma, whether to get it or not,” a government official said on condition of anonymity. “Many are in fact looking to wait and watch.” In Mumbai, which was expecting to vaccinate 4,000 healthcare and frontline workers on the first day of vaccination on Saturday, saw a turnout of half of this number. 80321224While authorities have blamed this on the technical glitch of the CoWIN app, many healthcare workers across the country said they want some questions answered before they agree to be among the first to roll up their sleeves. “We want to see what kind of adverse reactions are being experienced before we go ahead for the vaccination,” a resident doctor at a government hospital told ET on condition of anonymity. Resident Doctor Association of Ram Manohar Lohia hospital in Delhi in a letter said, “We would like to bring to your notice that the residents are a bit apprehensive about the lack of complete trial in case of Covaxin and might not participate in huge numbers, thus defeating the purpose of vaccination.” The hesitancy among some healthcare workers about getting vaccinated has come as a surprise given the risk they’re facing and their important role in preventing spread of the virus. The government as well as several individuals and organisations are trying to dispel any misgivings about safety of the vaccines.“Both vaccinations developed in India are completely safe,” home minister Amit Shah said at a political rally in Karnataka on Sunday where he urged people to get vaccinated when their turn comes. Several doctors who got vaccinated on the first day took to the social media to support the vaccination drive. “Smooth & painless. Honoured to be vaccinated against Covid-19,” Arvinder Soin of Medanta Medicity hospital tweeted after he got the shot. The Union health ministry has devised an 88-page communication strategy to dispel myths about vaccination. The ministry plans to identify traditionally known vaccine-hesitant and resistant areas/groups/communities based on prior experience and orient credible influencers from local communities to build their trust and acceptance. It has also proposed real-time monitoring of digital media to facilitate appropriate and timely action to address hesitancy among people, and involving influencers and medical professionals to write articles in support of vaccination.
Categories: Business News

Fintech firms demand uniform regulations

January 18, 2021 - 10:51am
Mumbai: Miffed by Google’s diktat to furnish their credentials, fintech lenders have now written to the tech giant citing its policies of not allowing lenders disbursing short-tenure loans of less than 60 days. Fintech lenders say that Google is acting like a super regulator, seeking details that even the Reserve Bank of India (RBI) is yet to do.“We have written to Google on the need for uniform regulations among fintech players, Google says you can’t have a lending product which is less than 60 days while all these apps had 7-14 day products,” said a member of FACE (Fintech Association for Customer Empowerment).The member, who preferred to remain anonymous, said that many of these apps are China-led entities. “We have approached Google on why these China-led apps are allowed to run while we have such restrictions,” said the member. “We have also written to Google with names of these Chinese-led companies.”ET had earlier reported that Google India has initiated a review exercise where it has put the onus on the developers of hundreds of lending applications live on Play Store to establish their credentials and prove that they are in compliance with relevant local laws. Fintech lenders are unhappy with this move. 80320903A mail sent to Google seeking comments didn’t elicit a response. Suzanne Frey, vice-president for product, Android security and privacy at Google in a blog post last week had stated that “hundreds of personal loan apps” are being reviewed based on flags received by users and government agencies.Over 100 money lending apps such as CashGuru, 10MinuteLoan and RupeeClick have also been barred from the Play Store as on Sunday. Among the domestic fintech apps affected, PayU’s credit platform LazyPay also has been taken down, even as a company spokesperson said that this was due to “administrative lag” and not because of non-compliance. “Google is not the regulator to ask for our licence number or certificate copy or the NBFCs that we are backed by. What authority does it have,” questioned an official at a lender that had received such communication from Google. “It should not become the super regulator after collating so much data on us. What we want are simple, common guidelines for all fintech lenders on tenure and interest rates.”According to Anurag Jain, the president of Digital Lenders Association of India (DLAI), the dubious apps exploit several loopholes to fool customers and bypass Google’s Play Store norms. For instance, a loan app may not upfront disclose the tenures of their loans.“What these shady lending apps are doing is they are showing it as a 60 days loan; it turns out to be a shorter tenure loan. They are bypassing Google’s policies and fooling the customers, too,” said Jain. He is also the chief executive of KredX, an invoice discounting platform.DLAI has sent representations to both Google and RBI highlighting the concerns specified by Jain. According to experts, on most occasions these apps are individuals or companies lending their own money without an NBFC licence where the loan agreements are between borrowers and individuals. “There were a lot of overseas players from Indonesia, China and Hong Kong that came in this space. There were a few limited players creating shell companies that in turn ran 10-15 apps each. They did this to not attract any attention to any single brand,” said Madhusudan Ekambaram, cofounder CEO at KreditBee.Industry insiders estimate that there are at least 500 such loan apps that are in violation of Google’s policies as well as the central bank norms.
Categories: Business News

Power exchanges account for 51% of short-term trade

January 18, 2021 - 10:51am
New Delhi: Power exchanges accounted for 51% of the total short-term trade in 2020, marking the beginning of a significant transformation in the Indian power market that has so far been dominated by bilateral deals.Increased share of electricity trade on exchanges is desired world over for deep, competitive market structure.The pandemic-struck 2020 witnessed an interesting shift in the short-term power market of the country. While the competitive exchange market expanded to 51% of the total short-term electricity deals in the country against 37% in 2019, the bilateral trade shrunk to 32% from 46%, data available with the Central Electricity Regulatory Commission (CERC) and exchanges showed.Experts and state governments said the trend was not specific to 2020, though it being an exceptional year, and they expect the share of exchanges in electricity trade to rise further as they offer good discounts over other deals.During the calendar year, the average spot price of electricity in the day-ahead market of power bourses was 16% lower than that in 2019.However, data available with CERC for January-October 2020 showed that the overall short-term purchase of electricity by discoms declined by 10% over the same period a year ago. 80321590The share of the two power bourses—Indian Energy Exchange (IEX) and Power Exchange of India (PXIL)—in total energy consumed increased to 5.2% in January-October 2020 from 4.1% in the corresponding period a year ago. Some of the developed countries like the UK and Germany meet half of their electricity demand through power bourses.IEX chairman SN Goel said 2020 witnessed introduction of two new market segments — the real time market or RTM (for short notice, round the clock power purchase) and the green-term ahead market (for trade in renewable energy). He said ample availability of power during the year resulted in competitive prices.“On a year to date basis, our average price of electricity at 2₹.76 per unit has contributed significantly to the 30% YoY growth in electricity volumes on the exchange. We are now preparing towards introduction of longer duration electricity delivery contracts up to 365 days as well as the green day ahead market,” he said. Uttar Pradesh additional chief secretary for energy Arvind Kumar said due to low prices, procuring power from the exchange during different times of the year turns out to be a better proposition for reducing power purchase cost.A top official in Andhra Pradesh said the state saved ₹1,024 crore or ₹1.43 per unit of electricity purchased during April-December 2020 by purchasing power from exchanges.India proposes to move to global practice of selling entire power generation through exchanges to enable deepening of the markets. Also, the power ministry in July last year approved trade of electricity derivatives and forward contracts.
Categories: Business News

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