CAYMAN IS THE REITS GAIN

businesstoday.in NEW MAURITIUS TRACTION

OC
March 7, 2021 `100

TRANSFORMING TATA
HOW CHAIRMAN N. CHANDRASEKARAN IS REVAMPING
THE $106 BILLION GROUP INTO A FUTURE READY, TECH
ENABLED CONGLOMERATE
From the Editor
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A
common characteristic of some of the world’s oldest SPECIAL PROJECTS AND EVENTS
Senior Editor: Anup Jayaram
organisations is their uncanny ability to adapt & adopt, de-
CORRESPONDENTS
struct & rebuild, terminate and transform — constantly. Senior Editors: P.B. Jayakumar, Nevin John,
Take Finland’s 156-year-old Nokia which began as a paper mill in Joe C. Mathew, Dipak Mondal, Manu Kaushik,
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coming the world’s biggest handset maker with over 40 per cent glob-
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eo gaming firm Nintendo, known the world over for revolutionising Deputy Chief Photographers:
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PRODUCTION
For corporate houses, it takes enormous resilience and persistence Chief of Production: Harish Aggarwal
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to weather a century. The $106-billion Tata Group has already thrived Associate Chief Coordinator: Rajesh Verma
for a century and a half — more than twice the age of the Republic LIBRARY
of India. Ever since Chairman N. Chandrasekaran took charge four Assistant Librarian: Satbir Singh

years ago, it is in the midst of one of those transformative journeys in Associate Publisher (Impact): Vidya Menon
its 154th year of existence. This transformation will surely not be Ta- IMPACT TEAM
Senior General Manager: Jitendra Lad (West)
ta’s last but it appears designed to set the Tata Group on its next 150- General Manager: Upendra Singh (Bangalore)
year journey. Read Nevin John’s inside account of how Chandrasek- Deputy General Manager: Indranil Chatterjee (East)

aran is pivoting the 100-company behemoth on the lines of ‘One Tata’. Marketing: Vivek Malhotra, Group Chief Marketing Officer

If Tatas are changing track, so are some of India’s biggest foreign Newsstand Sales: Deepak Bhatt, Senior General Manager
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direct investors. Interestingly, Mauritius has lost currency as their fa- Rajeev Gandhi, Deputy General Manager (North),
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ish Territory Cayman Islands. Dipak Mondal captures this hot new Piyush Ranjan Das, Senior Sales Manager (East)

trend of why Cayman Islands is the new Mauritius for investments

into India. Vol. 30, No. 5, for the fortnight February 22, 2021 to
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Volume 30, Number 5 YASIR IQBAL

10

The Point

India Inc Gets

Back on Its Feet
Nifty companies seem to be
getting back to profitability
after several quarters of severe
stress

12

Forex Reserves at 18
All-Time High
India reported all-time high
foreign currency reserves of COVER STORY
$586.1 billion on January 8, 2021,

TRANSFORMING
due to robust FDI and FPI inflows

TATA
HOW CHAIRMAN N. CHANDRASEKARAN
IS REVAMPING THE $106 BILLION GROUP
INTO A FUTURE READY, TECH ENABLED
CONGLOMERATE
PHOTOGRAPH BY YASIR IQBAL

36

Economy

Beating Mauritius
FDI surge from Cayman Islands
makes it the new Mauritius;
chorus grows China might be
routing investments into India
through it

4 Business Today 7 March 2021

 44 60

Corporate Industry

Debt Challenge Rise Of Oligopolistic

Why Shapoorji Pallonji Group, with Dominance
exposure to worst-hit sectors such As debt-laden distressed
as construction, real estate and companies fall by the wayside,
infrastructure, is exploring options some cash-rich large companies
to deleverage are practically monopolising
their sectors 78

Interview

68 “We expect
double-digit growth
The Game Within over the coming years”
Niti Aayog’s consultation paper Richard Boocock
on fantasy sports advocates
self-regulation, but legal and
regulatory uncertainties remain a
52 drag for an industry that has the
capacity to attract `10,000 crore
FDI in the next few years
Finance

REITs: The New Real(i)ty

Though India caught on to the Real
Estate Investment Trust model late,
successful listings have not only
demonstrated investor appetite,
but also paved way for many others
to consider a new approach to
86
commercial real estate
72 Money Today

Tax-saving In
Technology The Eleventh Hour
Planning last-minute
Streamlining Workflow investments to save taxes?
How workflow automation is Here’s what all you can do
helping organisations become
more efficient by reducing errors
and operational costs

96

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An Feature
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From time to time, you will see pages titled “Focus”, “An
Impact Feature”, or “Advertorial” in Business Today. These
are no different from an advertisement and the magazine’s “Small Is Beautiful, But
editorial staff is not involved in their creation in any way. Big Is Necessary”
Chandra Shekhar Ghosh

6 Business Today 7 March 2021

 The Point
Nifty companies
seem to be
getting back to
profitability after
several quarters
of severe stress

INDIA INC
GETS BACK
ON ITS FEET
By SHIVANI SHARMA
Illustration by SIDDHANT JUMDE
Graphics by TANMOY CHAKRABORTY
 NET PROFITS: NIFTY FIRMS
MAKE A STRONG COMEBACK OPERATING PROFIT
IN DEC QUARTER GAINS MOMENTUM
PAT (` thousand cr) Operating Profit (Y-o-Y%)

100 2.15 1.96

Dec-19 Dec-20
0.64
80 Sep-19

60
-1.46 -1.63
Mar-20 Sep-20
40

20

0
Dec-18

Dec-19

Dec-20
Sep-18

Mar-19

Mar-20
Jun-19
Sep-19

Jun-20
Sep-20

-11.92
Jun-20

STOCK MARKETS SALES, TOO, RISE AFTER

GO HIGHER SEVERAL QUARTERS
Nifty 50 Returns (%) Nifty 50 Gross Sales (Y-o-Y%)
20 5

0
10
-5
0
-10
-10
-15
-20 -20

-30 -25
Dec-19

Dec-20
Mar-20
19-Dec
20-Jan
20-Feb
20-Mar
20-Apr

20-Dec

Sep-19

Jun-20

Sep-20
20-May
20-Jun
20-Jul
20-Aug
20-Sep
20-Oct
20-Nov

OPERATING EXPENSES SO DO EMPLOYEE

RISE SHARPLY, THOUGH COSTS
Nifty 50 Operating Expenses (Y-o-Y%) Nifty 50 Employee Cost (Y-o-Y%)
12
18.43
Dec-20
9

6
6.58
Dec-19 4.44 3
2.26 Sep-20
Sep-19
0

-3
-3.29
Mar-20 -6
Dec-19

Dec-20
Mar-20
Sep-19

Jun-20

Sep-20

-17.12
Jun-20

7 March 2021 Business Today 11

The Point

GOVERNMENT
250
Y-o-Y (%)

EXPENDITURE
200

150

PICKS UP IN Q3 100

50
Ô The pace of central crore in April-December
government expenditure 2019 to `23.4 lakh crore 0
picked up in third quarter in April-December 2020
of FY21 with easing of (flash estimates)
lockdown restrictions. -50
Ô Capital expenditure

Apr-20

May-20

Jul-20

Aug-20
Jun-20

Oct-20

Nov-20
Sep-20

Dec-20
In fact, December saw
was `3.17 lakh crore, 24
a year-on-year jump of
per cent more than in
50.2 per cent
corresponding period
Ô According to the last year. It rose 81.9 per
Economic Survey, the cent in December 2020
expenditure grew 11 (flash estimates) Capital expenditure
per cent from `21.1 lakh Total Expenditure Source: Economic Survey

Forex Reserves
at All-Time High
Ô India reported all-time high billion in April-December 2019
foreign currency reserves of
Ô Meanwhile, net services
$586.1 billion on January 8,
receipts remained stable at
2021, due to robust FDI and FPI
$41.7 billion in April-September
inflows
2020 compared with $40.5
Ô Merchandise trade deficit billion in corresponding period
in April-December was $57.5 of 2019
billion compared with $125.9

Foreign Exchange Reserves

($ Million)
586082

586100
585324

584242
568494

579346
575290
560532

578568

580841
545638

574821
560715
555120

572771
551505

581131

8-Jan-21
9-Oct-20

11-Dec-20

18-Dec-20

1-Jan-21

15-Jan-21
2-Oct-20

16-Oct-20

25-Dec-20

22-Jan-21
23-Oct-20

30-Oct-20

6-Nov-20

13-Nov-20

20-Nov-20

27-Nov-20

4-Dec-20

Graphics by ASIT ROY

Illustrations by TANMOY CHAKRABORTY Source: RBI

12 Business Today 7 March 2021

 WORLD ECONOMY TO
GROW 5.5% IN 2021
Ô The International Monetary Fund has forecast
that the world economy will grow 5.5 per cent
in CY2021 compared with 3.5 per cent contraction
in CY2020
Ô China is the only major economy that grew
in CY2020. India’s gross domestic product (GDP) is
projected to fall 8 per cent in CY2020
and grow 11.5 per cent in CY2021
5.1

3.5

CORPORATES
4.5
5.5
2.2

3
0.3

1.3
0.6
1.4
1.5

RAISE RECORD
–3.4

-9.0

-3.6
-5.4
-10.0
–9.2

United
States
France Italy United Germany
Kingdom
Russia FUNDS VIA BONDS
Ô Companies raised `7.77 lakh crore via
corporate bonds in CY2020. This was 10 per
cent more than the `7.09 lakh crore raised in
CY2019, despite 2020 being the pandemic
year
Ô Government organisations and financial
institutions raised 53 per cent of the total
amount, less than the 58 per cent in 2019

South India DEBT PRIVATE PLACEMENTS

Spain Brazil Africa China Japan
11.5

8.1

Amount (`crore)
3.6

3
2.8

4.2
5.9

2.3

800000
0.3
1.4

0.2

6
2

700000
–11.1

600000
–8.0
-4.5

-5.1
-7.5

500000
5.5

400000
4.2

4.3
2.8

1.6
1.3

300000

200000
–3.5

100000
-4.9
-7.2

0
World Output Euro Area Advanced
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Economies

2019 2020 2021

Source: CARE Ratings Source: primedatabase.com

7 March 2021 Business Today 13

The Point

STRONG REBOUND
IN IPO ACTIVITY
Ô Indian stock exchanges Q4 2020 versus five in Q4
(BSE, NSE and SME 2019 and four in Q3 2020.
platform) ranked ninth in
Ô The SME platform
the world in number of
hosted nine IPOs in Q4
IPOs in 2020
2020 as against six and
Ô The main markets, BSE four in Q4 2019 and Q3
and NSE, saw ten IPOs in 2020, respectively

OVERALL IPO ACTIVITY
No
 Proceeds  of IPOs

Overall $4095.99 M   43
IPO Activity

Main $4070 M
Market 
15
SME 28
Market 
$25.99 M 

Source: Prime Database

Air Passenger Ô India’s air passenger traffic is expected to fall

64.9 per cent this financial year, according to

Traffic to Dip
Airports Authority of India (AAI) data
Ô Domestic traffic is expected to plunge 60 per
cent while international air passenger traffic is

64.9% In FY21
likely to plummet by 85 per cent
Ô The cargo traffic is expected to fall 27.99 per
cent compared to 6.56 per cent dip in FY20
15.57
12.72

12.25

PASSENGER TRAFFIC CARGO TRAFFIC

11.91
10.12
7.29
18.28
18.31

16.52

10.44
21.5

11.64
13.13

6.1
8

2.62
8.46

6.12

2019-20 2020-21 (F) 2019-20 2020-21 (F)

-0.26
-1.06

2016-17 2017-18 2018-19 2016-17 2017-18 2018-19

-4.23

-2.68
-6.56

-8.96
-60
-64.9

-85

-27.22
-27.99
-29.15

Total
Domestic
International
F is forecast; Source: AAI

14 Business Today 7 March 2021

CIGARETTES
OUTPUT TO FALL
IN FY21 TOO
Ô Production of cigarettes is expected to dip 11.8
per cent in FY21 as consumers reduce discretionary PETROLEUM
PRODUCTION DIPS
expenses due to economic slowdown
Ô Around 77.6 billion sticks are expected to be

13.5% IN
produced during the year; it will be the eighth
straight year of fall in production

PRODUCTION OF CIGARETTES(BILLION STICKS) APRIL-DECEMBER

Ô Production of refinery/petro products fell
13.5 per cent in first nine months of FY21
105464.9

as refineries processed 4.3 mb/d crude oil

compared with 5.1 mb/d in first nine months
94560

of FY20
86569.3

87912.4
80944.4

82522.1

Ô Cumulative capacity utilisation was around

83306

85.6 per cent compared with 101.6 per cent in

77575

same period of previous year

Ô Consumption of petroleum products fell
12.6 per cent; it was 87.2 per cent of level
seen during the same period last year

MILLION TONNES/ MMT)

PRODUCTION CONSUMPTION EXPORTS
195

169

50
161

42
141
2019-20
2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2020-21 (E)

FY20 FY21 FY20 FY21 FY20 FY21

Change (y-o-y) Change (y-o-y) Change (y-o-y)

E is estimate; Source: Industry Outlook
FY20 FY21
8.9%

6.8%
-0.6%

FY21 FY21
FY20
-13.50%

FY20
-15.9%
-12.6%

IMPORTS
35.5%
32

32

April-December;
Source: PPAC
1.1%

FY20 FY21 FY20 FY21

7 March 2021 Business Today 15

` 80,000 CRORE
THE AMOUNT TATA SONS HAS INVESTED IN
GROUP COMPANIES IN LAST FOUR YEARS
 COVER STORY
TATA GROUP

Transforming
BY NEVIN JOHN
Photograph by
RACHIT GOSWAMI

TATA
How Chairman N. Chandrasekaran is revamping the $106
billion group into a future ready, tech enabled conglomerate
 COVER STORY
TATA GROUP

tech-enabled conglomerate. His four years at the helm

have seen the group focus on three areas — identifying
new business opportunities, modernisation of old busi-
nesses and resolution of lingering troubles.
Now, it is readying to build on those. With big opportu-
nities looming in e-commerce, electronics, electric mobil-
ity, medical and diagnostics, renewable energy and pay-
ments, Chandrasekaran is re-emphasising on customer
centricity and financial fitness of highly leveraged manu-
facturing companies. Tata Steel, with `86,170 crore net
debt, for instance, has to get out of troubles in Europe and
focus back on the Indian market. Tata Power, with debt of
`36,363 crore, needs to focus on renewables and consumer
businesses, and Tata Motors, with `54,700 crore debt in the
automobile business, has to get ready for electric mobility.
“Every business and industry is becoming an ecosys-
tem business. It is not that you can create a product and
then try to sell it. Everywhere you have to interact with
the customer and the consumer,” Chandrasekaran says in
atarajan Chandrasekaran’s first major decision an exclusive interview to BT. The group, he says, is work-
as Chairman, Tata Group, was rather symbolic of the ing on Simplification, Synergy and Scale (3Ss). Each firm
changes in store. Three months after taking over on May will be driven by artificial intelligence, data analytics and
30, 2017, he asked architects to refurbish Bombay House, Cloud computing. They have to bring down debt to zero
the iconic headquarters of the 152-year-old conglomerate. and follow sustainable practices.
The heritage building on Homi Mody Street in Mumbai’s “Tata Group, through its various brands, has a large
Fort area had never been altered since it was built in 1924, number of consumers. But as a group, we need to offer
based on design of Scottish architect George Wittet, who them products and services that not only meet their de-
also designed the Gateway of India. The building had cracks mand and requirement, but do it in such a way that we sim-
in the roof, limited natural light and was vulnerable to ter- plify their lives,” he says. So, the group is building a digi-
mites. Chandrasekaran, who started his career with TCS tally connected enterprise which brings together products
and contributed hugely to its growth over three decades, and services to meet customer requirements, he adds.
wanted to make Bombay House vibrant, incorporating his
idea of ‘One Tata’. Compassionate Management
Until then, group companies had been working in si- As the son of a lawyer, Chandrasekaran lived a middle class
los within the building — complete with separate board life in his early years, walking three kilometres to school,
rooms, conference halls and pantries. Movement of top from his village Mohanur in Namakkal district of Tamil
executives was restricted within their companies. Chan- Nadu. After graduation, he wanted to be a banana farmer
drasekaran changed the office structure and created as his father had switched to agriculture. But life changed
common conference halls. He also got a Starbucks coun- after the MCA degree from National Institute of Technol-
ter opened on the ground floor. The aim was to remove the ogy, Tiruchirappalli.
psychological barriers to one-ness. Observers say compassion comes naturally to him
The changes did not come a day too soon. The group from his humble beginnings. A colleague in TCS says
was in desperate need of direction when he took over. if he engages aggressively in the morning, he will come
Cyrus Mistry’s ouster as chairman and battles in the in the evening to patch up. This has come in handy dur-
boardroom were hogging the limelight. And major group ing the past four years of refocusing the group’s energies
companies such as Tata Steel, Tata Motors, Tata Power and consolidating the recovery. These years were spent
and Tata Teleservices were burdened with unsustainable on identifying the group’s core competence — including
debt. Chandrasekaran channelled the group’s focus on re- products, services and geographies — pooling resources
solving pending issues and ensuring improvement in per- and strengthening balance sheets. Though some old is-
formance. The chairman’s office was redesigned on the sues of group companies are still pending, the group is on
theme of ‘metamorphosis’, which is now being deployed the cusp of transformation. Harsh Goenka, Chairman,
to transform the 100-company group into a future-ready RPG Enterprises, says Chandrasekaran is a thinker and

20 Business Today 7 March 2021

Chandra's
10 Point
Strategy
1. Tapping digital experts
from group companies to
build India’s first Super App
2. Tata Power to invest
only in renewable energy or
consumer facing
businesses
3. Engineering capabilities
pave way for Tata Elec-
tronics, Tata Medical and
Diagnostics
4. Integrating supply PHOTOGRAPH BY YASIR IQBAL
chains of all Tata
companies
a man of action. “At a time when technology is the game-
5. Leveraging group expertise in changer, his experience in TCS is helping him drive trans-
financial services, launch of Tata
formation in group companies.”
Payments
6. Combining consumer businesses; Digital And Electronics Play
making Tata Consumer Products an Chandrasekaran is focused on strengthening the past and
FMCG giant
sowing the seeds for the future. He has reignited the spirit
7. Combining expertise of different of entrepreneurship in the group, says Janmejaya Sinha,
companies to create an EV ecosys- Chairman (India), Boston Consulting Group (BCG). At the
tem
outset, he had six key objectives — Indian consumer, data
8. Combining consumer connect of and digitisation, growing formalisation of economy, sus-
Trent, Infinity Retail, Tata Consumer tainability, selective infrastructure and nation building op-
Products, Titan, Tata Chemicals and
portunities, which go well with the Tata brand. The concept
Voltas
led to the creation of a new company, Tata Digital, which es-
9. Tata Steel to cash in on the lucra- sentially targets e-commerce through a Super App.
tive Indian market Chandrasekaran brought together a team of tech ex-
10. Aerospace, defence subsidiaries perts from TCS and other companies to build Tata Digital.
to tap government business In August 2019, Tata Sons appointed TCSer Pratik Pal as
CEO, Tata Digital. Pal was the global head of retail, travel,
transportation, hospitality and consumer packaged goods
industry unit. Another expert from TCS, Aarthi Subrama-
nian, Group Chief Digital Officer, Tata Sons, is supporting
There are several the company in building the e-commerce Super App that
will offer all products and services from the group. “The
key trends that group has a large consumer base and each of our brands
services millions of people. We are trying to connect them
are going to be important and give all products and services they need. Not only Tata
as we go into the future. products but more. It (Super App) is open architecture. We
will have a strong loyalty programme, payments engine, fi-
Every company will nancial products, and a number of other categories, so that
be driven by AI, data it is a compelling value proposition,” he says.
Building an e-commerce application to compete with
analytics and cloud” the likes of Amazon, Walmart-owned Flipkart and JioMart
N. Chandrasekaran, Chairman, is not easy. Billionaire Mukesh Ambani is also working on
the idea of building a Super App like WeChat and Alipay in
Tata Group China. Super apps serve as a single point to a wide range of
products and services. WeChat and Alipay bundle online

7 March 2021 Business Today 21

 UDAY KOTAK
COVER STORY MD & CEO, Kotak Mahindra Bank

TATA GROUP
Chandrasekaran has
demonstrated enormous
messaging (similar to WhatsApp), social media (Face-
book), marketplaces (like eBay) and services (like Uber).
ability to understand the levers
The app will complement the group’s widespread retail for sustainable growth. He has
presence — Trent, Infinity Retail, Tata Consumer Prod-
ucts, Titan and Voltas — and financial products companies
been relentlessly focusing on
such as Tata Capital, Tata Asset Management, Tata AIA value creation, return on capital,
and Tata AIG. The group is also in talks to acquire a major-
ity stake in online grocery retailer Big Basket for $1.2 billion
execution and accountability in
and e-pharmacy chain 1mg. every group company”
Atma Nirbhar
The other strand of the digital play is electronics manufac-
turing. Newly formed Tata Electronics plans to manufac-
ture high-end technology products in Chennai and is in
talks with Apple Inc. to manufacture iPhones, say sources.
Here, the Tatas are up against intense competition from
Taiwan’s Foxconn and Wistron, manufacturers of iPhones
in India. Electronics manufacturing will complement con-
sumer technology or retail firms Croma, Voltas, Titan and
Nelco. “We have a vision to scale up this business to a large
enterprise,” says Chandrasekaran.
The hunt for new opportunities also got Tatas to
launch Tata Payments at a time when PayTM, Flipkart’s
PhonePe and Google Pay are vying for a large slice of the
payments business. PayTM was valued at $16 billion in the

PHOTOGRAPH BY RACHIT GOSWAMI

last round of funding in 2019. PhonePe claims $5.5 billion
valuation. The Tatas will find it tough to make inroads into
digital payments as they are late in the game. However, this
service can play at the backend of the Super App.
Then, during the peak of the Covid pandemic, the group
got into medical equipment. It set up Tata Medical and Di-
agnostics (Tata MD) to provide patient-centric solutions
and making healthcare accessible and reliable. The first
product is the world’s first commercially available CRISPR
Cas-9-based Covid-19 test. The company will also manu-
facture ventilators. “We are trying to create a large-scale
business…This whole stack of medical equipment has a lot
of demand and potential for India,” says Chandrasekaran.
The business is an extension of its capabilities in electron- about the spat,” says a Tata insider.
ics and manufacturing. But that is not enough for compet- The next was to address profitability issues of large
ing with global manufacturers. Analysts say the Tatas need companies. Only a few companies, like TCS and Titan,
patented technologies to scale up this business. among the 30-40 large companies, were registering consis-
tent growth in profits. TCS continued as the major contrib-
Taking Charge utor to revenues of holding company Tata Sons — about 90
Super App and technology orientation of group firms, elec- per cent. Some businesses were badly aligned. Tata Chemi-
tronics manufacturing and entry into healthcare and medi- cals, for instance, was producing advanced chemicals and
cal equipment are all aimed at tapping new business oppor- selling salt. Every company had a bunch of subsidiaries.
tunities in an aspirational India. That's a far cry from what So, the first thing he did on the business front was to get
he inherited — court cases with Cyrus Mistry, boardroom the basics in order. There was an acute need for accountabil-
fights and poor performance of companies. “The first thing ity. Sharp focus was also required on deleveraging, creating
he needed to do was to calm things down — with media, more free cash flow, reducing cross-holdings, simplifying
boards and judiciary. His effort was to get company CEOs portfolios of companies. He added 3As — accountability,
focus on running companies rather than reading news agility and aspiration — to the 3S slogan to pivot the group.

22 Business Today 7 March 2021

 CONSUMER & RETAIL FINANCIAL SERVICES
Trent, Infinity Retail, Tata Tata Capital, Tata Asset
Consumer Products, Titan, Management, Tata AIA,
Tata Chemicals, Voltas Tata AIG

AUTOMOTIVE INFORMATION
Tata Motors, TECHNOLOGY
Tata Autocomp Tata Consultancy
Systems Services, Tata Elxsi

THE 10
AEROSPACE &
CLUSTERS
Chandra has created 10 Clusters STEEL
DEFENCE that will house key companies Tata Steel, Tata Steel
Tata Aerospace & in the Tata Group. A first look at BSL, Tata Steel Long
Defence what companies and what sectors Products
the group will focus on

INFRASTRUCTURE TRADING &

Tata Power, Tata Realty,
INVESTMENTS
Tata Housing, Tata
Tata International, Tata
Projects, Tata Consulting
Investment Corporation,
Engineers
Tata Industries
TELECOM & MEDIA TOURISM &
Tata Communications, Tata TRAVEL
Teleservices (Enterprise), Indian Hotels Company,
Tata Sky Vistara, Air Asia

…AND NEW BUSINESSES

Tata Digital, Tata Medical and Diagnostics, Tata Payments, Tata Electronics

Chandrasekaran at times questioned presence in sec- silos (See The 10 Clusters). The infrastructure cluster for
tors that were not relevant. He hired close to 10 CEOs, in- instance, comprises Tata Power, Tata Realty, Tata Housing,
cluding Sunil D’Souza in Tata Consumer Products, Puneet Tata Projects and Tata Consulting Engineers.
Chhatwal in Indian Hotels, Rajiv Sabharwal in Tata Capital, Besides clustering, he combined similar businesses.
and recently picked Marc Llistosella (former Daimler exec- The consumer business of Tata Chemicals was combined
utive) to head Tata Motors from July. Amur Lakshminaray- with Tata Global Beverages (TGBL) and renamed Tata
anan, former President and CEO of TCS Japan, was chosen Consumer Products (TCPL). TGBL’s market cap was
for heading the languishing digital infrastructure business, `9,000 crore in 2017. TCPL is at `45,000 crore now.
Tata Communications. Getting new thinking into the Tata Steel was reorganised into four distinct businesses
group was a departure from the earlier way. — long products, downstream, mining and utilities and in-
frastructure. It will focus back on the lucrative Indian mar-
Clustering & Cleaning ket. About 10 years ago, two-third production was coming
Chandrasekaran reorganised around 30 group companies from Europe. Now, it is two-third from India. The domestic
under 10 clusters. This was largely intended to optimise business produced 12.18 MT of steel as against Europe’s 6.9
synergy among group companies, which were working in MT in first nine months of 2020/21. The domestic business

7 March 2021 Business Today 23

 DOWN
MEMORY February 2017
Ô Tata Sons bought NTT
February 2018
Ô Tata Steel completed

LANE DoCoMo’s stake in Tata

Tele for $1.27 billion and
settled the pending dispute
rights issue of `12,800 cr

Key actions during March 2018

the four years of Ô Tata Sons bought
N. Chandrasekaran Tata Power’s stake in
Tata Communications

April 2018
Ô Tata Sons con-
solidated businesses
October 2017 in aerospace and
Ô Indian Hotels com- defence sectors under
pleted a rights issue of one entity
`1,500 crore
Ô Transferred the May 2018
consumer mobile Ô Tata Steel acquired
business of Tata Tele bankrupt Bhushan
to Bharti Airtel free of Steel for `35,000 crore
cost
Ô Tata Sons cleared
past liabilities of the September 2018
telecom business Ô Tata Steel acquired
worth `38,000 crore Usha Martin’s steel
business for `4,000 cr

is hugely profitable because of captive iron ore mines. the group the bandwidth to focus energies on the telecom
Similarly, Tata Motors took the call to consolidate or infrastructure business instead under Tata Communica-
exit small businesses and focused on three — passenger tions. It paid `8,400 crore to the Japanese company and
cars in India, commercial vehicles and Jaguar Land Rover. closed the festering dispute. In addition, Tata Sons cleared
It shut down the production of Nano, the dream project of past liabilities in telecom worth `38,000 crore— including
Ratan Tata, as it failed to find buyers despite upgrades. A loans from banks and dues to the government. It then got
year back, Tata Motors board approved a plan to float pas- rid of the loss-making Tata Teleservices by selling the mo-
senger vehicle business, including EVs, as a subsidiary to bile telephony business to Bharti Airtel.
bring in strategic investments. Guenter Butschek, MD & Tata Communications is now focusing on cloud, mobil-
CEO, Tata Motors, said in the 2019/20 annual report, “The ity, Internet of Things, collaboration, security and network
subsidiarisation of the passenger vehicle business enables services. It carries around 30 per cent of the world’s internet
the realisation of its full potential with mutually beneficial routes. The government has also announced divestment of
strategic alliances and better access to products, architec- its 26.12 per cent stake in Tata Communications. Another
tures, powertrains, new-age technologies and capital.” vital task was to rationalise cross-holdings and increase
In another overhaul, Tata Power plans to transfer its re- group ownership of companies with low promoter holding.
newable power assets and respective debt in the portfolio In most cases, Tata Sons bought cross-holdings. In Tata
to an infrastructure investment trust (InvIT). The move Motors and Indian Hotels, it increased its stake by almost
will reduce the company’s net debt to half. It has reduced 10 per cent and, in Tata Communications, by 5 per cent.
the debt by `7,552 crore in 2020, wants to cut it further to “Chandra does not duck hard issues and has the cour-
an overall `25,000 crore by creating an InvIT and sell- age to take them on,” says Janmejaya of BCG.
ing a stake in it. It is in final stage of talks with PE funds. It
has also decided to merge the loss-making Costal Gujarat Businesses Of Scale
Power, which runs 4,000 MW imported coal-fired Mundra Chandrasekaran says when he started in 2017, he was
power plant, with itself for simplification and to provide fi- pretty clear about the strength of the Tata brand and its
nancial support. heritage. “Whenever you have a group which has such a
Settlement of the long-pending issue of arbitration large presence and a strong history of more than 150 years,
award to DoCoMo for its stake in Tata Teleservices gave you should expect that there will also be complexity,” says

24 Business Today 7 March 2021

 COVER STORY
November 2018 January 2020
TATA GROUP
Ô Tata Steel started Kalin- Ô Tata Motors launched
ganagar plant expansion Electric SUV – Nexon EV - and
to 8 MTPA from 3 MTPA an e-mobility ecosystem, Tata
uniEVerse April 2020
Ô Tata Power acquired
Ô Tata Power, Tata Chemi- Ô Tata Power sold the stake in
Prayagraj Power
cals, Tata Autocomp, Tata South African JV Cennergi
Motors Finance and Croma
August 2019 announced participation in June 2020
Ô Tata Sons infused e-mobility play Ô Tata Group’s brand value
`1,000 crore into Trent crossed $20 billion
Ô Tata Communications February 2020
completed demerger of Ô Consolidated consumer July 2020
surplus land businesses of Tata Chemicals Ô Tata Sons infused `2,600
and Tata Global Beverages to crore in Tata Power
October 2019 create Tata Consumer
Ô Tata Sons infused Products Ô Tata Power divested ship-
ping firms for $212.76 million
`6,500 crore in Tata Motors
March 2020
November 2020:
Ô Tata Motors board ap-
proved the plan to float Pas- Ô TCS acquired Deutsche
senger Vehicles, including Bank’s full-range IT service
Electric Vehicles, business provider Postbank Systems
as a separate subsidiary Ô TCS acquired select assets
of Pramerica Systems Ireland
from insurance firm Prudential
Financial Inc

15 9.5
and increase in demand,” he says. But the fact is that it is
competing with equally efficient JSW Steel and Arcelor-
Mittal Nippon (former Essar Steel) in a capital intensive
PER CENT PER CENT sector. T.V. Narendran, MD & CEO, Tata Steel, recently said
RISE IN GROUP MARKET SHARE IN the company’s domestic business has the highest profit-
REVENUES IN LAST CARS IN OCTOBER- ability in the world and delivered 20 per cent EBITDA mar-
THREE YEARS, FROM DECEMBER 2020; IT
WAS 4.8 PER CENT IN gin even during the worst of times.
` 6,54,000 CRORE TO
2019/20 At Tata Motors, the passenger car business has dou-
` 7,53,000 CRORE
bled the market share, though from a low base. “We have

`45,000
launched a Tata EV ecosystem. We are seeing huge demand
for EVs. And we will be saying more things about our foray
into EV transformation. JLR is also going through a mas-
sive transformation. All these are visible in the operating
CRORE
TATA GLOBAL BEVERAGES performance,” says Chandrasekaran. Tata Motors is bring-
MARKET CAP ing in the expertise of multiple Tata companies — like Tata
Power, Tata Chemicals and Croma — to build the EV eco-
the Tata chairman. With this in mind, he executed the sim- system. The market share in passenger car business rose to
plification and synergy strategy. The third point he intro- 9.5 per cent in October-December 2020 from 4.8 per cent in
duced after the cleaning and clubbing in the first phase was 2019/20 with growing demand for Tiago, Tigor, Altroz and
achieving scale. Nexon. In commercial vehicles, though, the market share
In India, Tata Steel increased capacity to over 20 MT, dip has not been arrested yet — it was 29.6 per cent in Oc-
building 3MT unit in Kalinganagar and acquiring Bhushan tober- December 2020 compared to 45.1 per cent in 2018/19.
Steel (5.6 MT) and steel business of Usha Martin (1MT). Uday Kotak, Managing Director and CEO, Kotak Ma-
Chandrasekaran expects steel consumption in India to hindra Bank, says Chandrasekaran has demonstrated
grow significantly over the coming decade. “So, we made enormous ability to understand the levers for sustainable
the bold bet and acquired Bhushan Steel and Usha Martin. growth. “He has been relentlessly focusing on value cre-
Those are proving to be right with the turn of the market ation, return on capital, execution and accountability in

7 March 2021 Business Today 25

 HA RSH GOENKA

ADDING Chairman, RPG Enterprises

At a time when
MUSCLE
Tata Group's performance has been
technology is a game-
showing a consistent improvement changer, his experience in
over last four years TCS is helping him drive
transformation in Tata Group"
793
753

FY17 FY18
702

FY19 FY20
654

*Normalised, without exceptions;

#Excluding lease liabilities
All figures in `'000 crore,

196
171
160
154
116
101
105
96

47
41

31
33

REVENUES EBITDA PAT* NET DEBT#

MARKET CAP
as of 31 Mar
(` '000 crore)
844 945 1,110 1,771

DEBT : EQUITY NET DEBT : MARKET CAP

PHOTOGRAPH BY RACHIT GOSWAMI

0.96

0.18x
x
0.8

7x
8x

0.1

1.0
1x 5x
0.1
1.17x
FY17 FY18 0.11x
FY19 FY20

every group company.” folio, both through organic and inorganic routes. On the
Tata Power, which has decided to shift focus from coal- organic route, we will ramp up our innovation flywheel,
fired power plants to renewable and consumer businesses, and on inorganic opportunities, we will make sure they
will increase production to 25 gigawatts in five years from 11 pass muster both on our strategic and financial filters,”
gigawatts at present (including thermal, hydel and renew- says D’Souza. His second target is improving execution,
able). All additions will be in renewable energy. It is also fo- doubling direct reach in 12 months and doubling numer-
cused on consumer renewable energy by rooftop solar, mi- ic reach in three years. It is a Herculean task in a fiercely
cro grids and distribution. However, the renewable energy competitive FMCG market. “We have already expanded
space has turned very competitive with investments from our reach to 2.4 million outlets, up from 2 million outlets
Adani Group, JSW and Shapoorji Pallonji Group. French in March 2020,” he says.
energy major Total has agreed to acquire 20 per cent stake However, despite four years of unrelenting focus, not all
in Adani Green Energy, which has set an ambitious target of is sorted at Bombay House.
building a 25 gigawatt renewable energy portfolio.
Newly formed TCPL is also going for scale. Sunil Sorted & Unsorted
D'Souza, MD & CEO of TCPL, says the company plans Tata Steel Europe continues as a sore spot in the group.
to expand the market and its portfolio to become a size- It tried to merge the loss-making steel business with
able FMCG player. TCPL is a food and beverages company German steel giant Thyssenkrupp in 2019. But this was
with presence in tea, coffee, salt, select food categories called off after European Commission raised objections
and liquid beverages. “First we want to expand the port- on grounds that the merger would reduce competition

26 Business Today 7 March 2021

 COVER STORY
TATA GROUP

generate working capital for operations as the permitted

tariff for the power from the plant is `2.26 per unit. The
company is negotiating with five power procuring states —
Gujarat, Haryana, Punjab, Maharashtra and Rajasthan—
for a price revision. But, the process is lengthy and needs ap-
proval from Central Electricity Regulatory Commission.
Losses in the aviation business also continue to be a
concern. AirAsia, Vistara reported losses of `670 crore
and `830 crore, respectively, in 2018/19. On top of that,

PHOTOGRAPH BY REUBEN SINGH

the group has submitted expression of interest to acquire
cash-strapped Air India. Chandrasekaran says building
an airline business takes a few years. “The pandemic has
affected the airline business and recovery has become
slower. It has huge opportunities, but there are challenges
in the near term.”
In spite of the lingering issues, in the last three years,
until March 2020, revenues of Tata Group increased 15 per
cent from `6,54,000 crore to `7,53,000 crore, despite the
Covid-19 impact. Net profit increased to `47,000 crore in
March 2019 from `33,000 crore in March 2017, though it
fell to `31,000 crore in March 2020. Net debt increased to
J ANM EJAYA SIN HA
`1,96,000 crore from `1,54,000 crore because of acquisi-
Chairman (India), Boston
tions and expansions. However, debt-equity ratio fell to
Consulting Group 0.96 times from 1.17 times. The aggregate market capitali-
sation of listed Tata Group companies more than doubled
to `17.7 lakh crore in first week of February 2021 from `8.4
The essential focus was lakh crore in March 2017.

on strengthening the Lost Opportunities

past and sowing the seeds for Financial services and realty and housing are the few lost
opportunities for the group. Tatas had the example of the
the future" Bajajs in financial services but failed to execute as well as
Bajajs did. Bajajs hived off the two-wheeler financing busi-
ness in 2007 from Bajaj Auto and floated Bajaj Finance—
and increase prices. A few days back, Tata Steel’s attempt which is valued at `3.35 lakh crore on stock markets. They
to sell its profitable division in the Netherlands — the 7.5 also scaled up two insurance businesses. Tatas’ insurance
MT plant — to Swedish steelmaker SSAB also failed. Tata JVs — with AIA and AIG — have found traction in the last
Steel also unsuccessfully tried to sell the units in Thailand couple of years, though. Chandrasekaran believes AI and
and Singapore. data analytics will drive the financial services portfolio.
The steelmaker had accumulated over `1 lakh crore How Godrej built their real estate business is also an
net debt (till March 2020) in its failed attempt to become example for Tatas.
a global giant. This left the Indian unit with heavy debt re- And even though Tata was one of the earliest in retail, it
payment commitments. However, it reduced the net debt hasn’t scaled up the business as Reliance did, for instance.
by `18,609 crore in first nine months of 2020/21 and plans Between Westside, Croma and Star Bazaar, it has the right
to cut gross debt by `12,000 crore in January-March. springboard to build on.
Tata Motors also plans to reduce the net automotive The gargantuan task of transforming Tata — one of
debt of `54,700 crore to zero by 2025. For that, it will be de- India’s oldest conglomerates — lies on Chandrasekaran’s
pend on the complete revival of passenger car and commer- shoulders. He has taken the first bold steps towards reori-
cial vehicle segments. The automotive debt has come down enting the group but a lot of the big moves are still a work in
by `7,000 crore in the last couple of quarters. progress. How they play out from here on will decide what
The Mundra power plant of Tata Power is another cash the Tata group of the future looks like.
guzzler. The project has been jinxed ever since it was com-
missioned in March 2013. The plant has not been able to @nevinjl

7 March 2021 Business Today 27

‘DIGITAL EVERYWHERE’
STRATEGY WILL DRIVE
EVERY TATA COMPANY
Since N. Chandrasekaran took over as chairman on February 21, 2017,
Tata Group has been trying to resolve pending issues in group compa-
nies and pivot their businesses by leveraging technologies, including
Artificial Intelligence (AI), data analytics and Cloud computing. In the
last 10 months, despite the Covid-19 related sluggishness in the econ-
omy, the group has launched four companies for new-age businesses.
Chandrasekaran talks to Nevin John and Rajeev Dubey about the
key trends that are set to drive the group in the future. Edited excerpts:
PHOTOGRAPH BY YASIR IQBAL
 COVER STORY
INTERVIEW

and then try to sell it. You have to stop with the cus-
tomer to understand his/her needs.
And the fourth, the supply chain globally is get-

T
ting rebalanced. In the past, supply chains used to
focus on efficiency, but now they have to be resil-
ient, which means tough and elastic.
Another key trend is changing consumer as-
pirations. Tata Group, through its various brands,
has a very large number of consumers. They love
the brand and want to do business with the group.
But we need to offer them products and services
that not only meet their requirements, but also
simplify their lives. The best way we can simplify
lives is to build a digitally connected enterprise,
which will bring together products and services
and all other needs of consumers so that we give
ata Group seems to be on the cusp of a them what they deserve, require and desire.
transformation. What is it all about?
When I started in 2017, I had said that brand, trust, How does the new strategy play out in the
standard and heritage are the biggest strengths of traditional businesses of Tata Group?
the group. And whenever you have a group which Tata Steel, for instance, has reorganised itself as four
has such a large presence and strong history of more distinct businesses — long products, downstream,
than 150 years, you should expect that there will be mining and utilities and infrastructure — and re-
complexity. So, I had proposed a strategy of simplifi- duced the number of subsidiaries. The business has
cation, synergy and scale. We evaluated the number shifted its focus to the financially attractive Indian
of entities and their businesses. Besides, we focused market since steel consumption here is set to grow
on balance sheet fitness and financial returns. significantly. So, we took the bold bet by acquiring
Simplification resulted in the creation of 10 Bhushan Steel and Usha Martin. The turnaround of
clusters. Then we started taking the cluster-specific the market is proving it right. Our presence in Eu-
approach and brought in synergy. We looked at how rope has now become one-third of our overall pro-
coming together of group companies can create sig- duction capacity and India has become two-third.
nificant capabilities in products and services and We did the same in Tata Motors. We decided to
generate value for shareholders. consolidate or exit, and focus on
Then we decided the core busi- three businesses — passenger
ness and on scaling the core. cars in India, commercial ve-
hicles and JLR. We have been fo-
How do you plan to pivot Every Tata Group cusing on operational improve-
the group? company will ments. So, the passenger car
There are several key trends that have to be business has turned around. We
are going to be very important as sustainable, go have doubled the market share.
we go into the future. The first beyond zero We have launched a Tata EV eco-
one is ‘Digital Everywhere’. Every net debts system, which has brought the
company, whether it is a manu- full range of capabilities, from
facturer or a services firm, B2B charging stations to batteries. We
or a B2C, will be driven by AI, data analytics, Cloud also launched two exciting products within a short
computing and machine learning. span — Nexon and Tigor. We are seeing a huge de-
The second is sustainability. Every company mand for both vehicles. JLR is also going through a
will have to be sustainable. They will have to go be- massive transformation. All of these are visible in
yond zero net debts. the operating performances. We have set a target to
Third, every business and industry is becoming reduce Tata Motors’s net debt to zero by 2025.
an ecosystem. It is not that you can create a product We decided that Tata Power’s future invest-

7 March 2021 Business Today 29

 COVER STORY
INTERVIEW

ments will go into either renewable energy or consumer- How will you position Tata Communications in a
facing businesses. The generation capacity will increase to ‘Digital Everywhere’ world?
25 gigawatts (GW) in the next four years from the current 11 Tata Communications is a digital infrastructure company.
GW and all increments will come in renewable energy. We In an AI and Cloud-driven world, it has huge opportunities
have also announced an InvIT for renewable energy. It will in a range of services, starting from digital infrastructure to
halve the company’s debt. We hope to complete the process network security to messaging.
in February. We are also focusing on the consumer renew-
able energy business — rooftop solar and micro grids — and What kind opportunities do you see in the medi-
the distribution business. We unbundled the food business cal and diagnostics business?
from Tata Chemicals, and merged it with Tata Global Bever- It is an area where there is a huge demand. We launched the
ages and renamed the company Tata Consumer Products. company to create a diagnostics spectrum, which will also
We resolved the 17-year-old land issue of Tata Communica- use CRISPR technology (which allows researchers to alter
tions by deconsolidating the land and removing complexi- DNA sequences and modify gene functions). They will man-
ties. It helped the company to focus on three or four core ar- ufacture ventilators. We are trying to create a large-scale
eas. There are many more such initiatives across companies. business and we will be building it over the next few years.
This whole stack of medical equipment has a lot of demand
Tata Group has entered new areas. What is the and potential for India. We are looking at it.
thought behind it?
We have created an electronics company, Tata Group also planned to scale
which is starting with precision manu- up the financial services business
facturing. We have a vision to scale the like the Bajajs …
The Tata Super
business. We have taken similar oppor- We have a good portfolio. We have Tata
tunity in the medical devices and diag-
App is an open Capital, and life and general insurance
nostics business. architecture. It will firms, Tata-AIA and Tata-AIG. Since
offer products of these are private companies, not much
What is the intent behind the Tata not only the Tata information is available. Insurance
Super App? brands, but more companies have strong market share.
Each of our brands service 10-12-15-20 It was a tough year for Tata Capital. We
million customers. We are trying to give will scale up all three businesses, lever-
consumers products and services they need. Not necessar- aging technology.
ily only the Tata brands, but more. It is an open architec-
ture. We will have a strong loyalty programme, payments Analysts say you have a strong retail presence.
engine, financial products and other categories. But the scaling up is slow compared to Reliance
Retail. What is the reason?
When will you launch the app? Retail businesses focus on building the right business and
There are a couple of dependencies, so I am not able to give profitability model. In the last two years, the number of
you a date. stores has increased across all formats, whether it is Croma
or Westside or Zudio or Starbucks. We believe in digital om-
How big will be your e-commerce play in the su- ni-channel. All these businesses will be connected.
per app?
We will have all categories such as electronics, groceries, What will the Tata Group look like 10 years later?
fashion and lifestyle, beauty, travel, health, education and All our businesses — steel, power, automobile, TCS, finan-
entertainment, among others. But, it will be done in a par- cial services, consumer business and digital— are getting
ticular sequence. Everything will not be done on day one. scaled up. We will have to see where we are heading with the
airline business. Currently, we are ensuring that we have the
You are planning to manufacture high-end smart- routes and slots for scaling.
phones in Tamil Nadu. What kind of scalability do Some businesses are easy. We have to lift the others. We
you see in the business? will be a set of consumer-focused companies, which will
There are multiple categories in the electronics industry, leverage digital technology for connecting with consumers
which need capabilities in manufacturing. We are in the pro- and giving them choices and making their lives simple.
cess of building those capabilities. We think there is a huge
opportunity to build the electronics ecosystem in India. @rajeevdubey; nevinji

30 Business Today 7 March 2021

Beating Mauritius
FDI surge from Cayman Islands makes it the new
Mauritius; chorus grows China might be routing
investments into India through it
BY DIPAK MONDAL
ILLUSTRATION BY RAJ VERMA

Cayman Islands is situated in Caribbean Sea,

480 miles southwest of Miami, USA. The three is-
lands are spread over 101 square miles, have a popu-
lation of 65,000 and gross domestic product (GDP)
of $5.5 billion, slightly more than that of the Union
Territory of Puducherry.
Still, it was the third-largest contributor of eq-
uity foreign direct investment (FDI) in India in the
first six months of FY21 ($2 billion). Only Singapore
($8.3 billion) and the US ($7.13 billion) were ahead.
Economy – Cayman Islands

The tiny British Overseas Territory Inside Cayman it gaining at the cost of Mauritius and

Islands
even bettered Mauritius, traditional- Singapore?
ly the biggest source of FDI into India. Amit Jindal, Co-founder of char-
The emergence of Cayman Is- tered accountancy firm Felix Advi-
lands as India’s biggest FDI source is sory, says Cayman’s no-tax territory
not a one-off event triggered by the Area status is a big reason for investors
Covid-19 pandemic. The trend had shifting there. “Unlike most coun-
been taking shape for the last two- 260 sq km tries, Cayman doesn’t have corporate
three years, but became more vis- tax, making it an ideal place for mul-
ible only in FY20 when the island be- Population tinational corporations to base sub-
came the fifth-largest source of FDI sidiary entities to shield some or all of
($3.7 billion). It had entered the top 65,000 their income from taxation,” he says.
10 (sixth rank) only in FY18. While Akhilesh Ranjan, former member
it topped countries such as France, GDP (current price) of the Central Board of Direct Taxes
Germany, the UK and Japan in the last (CBDT), who was also in charge of
three years, if trends for the current $5.5 billion the administration of international
financial year hold, it may outflank (2018) taxation and transfer pricing in India,
Mauritius, traditionally the number says there was a shift from Mauritius
one FDI source, in FY21. GNI Per capita to Singapore after the amendment in
Why is a country half the size of the Mauritius treaty. “Though both
Puducherry emerging as one of In- $47,320 the treaties were amended at the
dia’s biggest FDI contributors? Is it same time, Singapore already had a
the new Mauritius — a typical no-tax, Corporate tax rate Limitation of Benefits clause, which
low-compliance jurisdiction, which specified some objective parameters.
investors take advantage of to route Nil So, there was an element of certainty
ill-gotten money into India? Or is in Singapore, which was not there in
there more to it than meets the eye — Tax treaties Mauritius, which is why substantial
a China connection, may be? investments shifted from Mauritius
10 to Singapore,” he says. However, he
Tax Arbitrage refuses to say that the surge in FDI
The rise of Cayman Islands went par- Financial from Cayman Islands is only due
allel with both Mauritius and Singa- services sector to low tax rates there. “There are
pore losing their tax advantages after no clearly identifiable reasons. Of
India modified its tax treaties with 40% course, it is a low-tax jurisdiction, but
these two countries. The new India- of GDP so are others,” he says.
Mauritius and India-Singapore tax Virendra Nath, Managing Di-
treaties that came into force from rector, APC Partners of Hong Kong,
Net FDI inflows
April 1, 2017 took away some of the which has a Cayman Islands-based
tax advantages of routing invest- $16.77 billion FPI (APC Prestige Fund) registered
ments through these jurisdictions. in India, says Cayman is preferred not
Cayman Islands, on the other hand, because it is a tax haven, but because
does not have a tax treaty with India Source: World it offers a tax neutral jurisdiction.
but only a Tax Information Exchange Bank, FATF “Our investors are from different
Agreement, signed in 2011. This could territories. If I put the fund in Hong
have meant double taxation for in- Kong, I will benefit certain investors

10%
vestors but for the fact that Cayman (from countries which have tax trea-
Islands does not impose income, cor- ty with Hong Kong) and not certain
porate, capital gains or other direct others (from countries which have
taxes such as payroll and withholding no tax treaty with Hong Kong). So, I
Maximum FPIs can
taxes. According to the The Organ- have to put my fund in a place that is
invest in a company in
isation for Economic Co-operation India; anything above it neutral to all.” As Cayman is a no-tax
and Development (OECD), Cayman is characterised as FDI jurisdiction, investors do not have to
Islands has had tax treaties with just worry about being taxed twice if their
10 countries, of which only eight were country has not signed a tax treaty
in force in the first half of 2020. So, is with it. He tries to dispel what he calls

38 Business Today 7 May 2021

 China and all neighbouring
countries got banned in April
2020. They had to find a way
to come in. Not everyone
could have waited for their
applications to be cleared”
Nischal Arora, Director, Nangia
& Andersen India

last year, the Indian government issued a press note on

April 17, 2020, putting restrictions on investments from
border countries, including China. The aim was to curb
unchecked Chinese investments. The sharp jump in eq-
uity FDI from Cayman Islands in the April-September
2020 period set tongues wagging that Chinese investors
might be routing money through Cayman. Is this true?
Cayman has always been a favourable jurisdiction
from the perspective that regulators there do not ask for
investor details, says Nischal Arora, Director, Nangia &
Andersen India. “China and all neighbouring countries
got banned in April 2020. They had to find a way to come
in. Not everyone could have waited for their applications
to be cleared. They had to find different avenues,” he
says, insinuating that Chinese investors might be using
is a ‘misconception’ associated with tax havens by saying the Cayman Islands route.
that even if an entity based in Cayman Islands does not Since there are no strict guidelines by Sebi and RBI
pay tax, investors in the fund pay tax wherever they are on screening Chinese investors, some banks are strictly
supposed to. “Our fund is based out of Cayman Islands, screening all Chinese investments, while others may be
and when I am investing in India, I am paying taxes (in going by the 10 per cent or 20 per cent ultimate beneficial
India). So, where is the question of tax haven?” he says. ownership checklist, adds Arora. Smaller holdings (less
Tax rates for foreign investors in India are specified than 10 per cent) might still be getting approved despite
in tax treaties with their countries, but as Cayman Is- the government order.
lands does not have a treaty with India, investors have to According to Dhaval Jariwala, a Mumbai-based
pay tax in India — short-term capital gains at 15 per cent chartered accountant, who works with a few Cayman
and long-term capital gains at 10 per cent. Islands-based funds, the ban is more from the perspec-
A total of 339 Cayman Islands-based FPIs are regis- tive of Chinese investors taking controlling stake in In-
tered with the Securities and Exchange Board of India; dian companies. “The government is not closely looking
these invest only in listed securities. The purpose of at FPI investments from China. FPIs cannot invest more
their investments is not management control. than 10 per cent in a company, and the moment they
cross this, they have to characterise their investments
China Connection as FDI,” he says. The government won’t be too closely
At the height of tension with China at the Ladakh border looking at Chinese investors putting money in a Cayman

39
Economy – Cayman Islands

Islands-based vehicle registered as FPI as their intent is ance cost is around $30,000. Cost of compliance is lower
not to have a controlling stake, he adds. in Mauritius, though.
Virendra Nath of APC Partners rejects any such in- Though Cayman Islands is rated largely compliant
sinuation. “(To say that) Chinese investors are sneaking by the FATF based on its 40 Recommendations — a set
in through Cayman Islands is totally wrong. Sebi has is- of counter-measures against money laundering — the
sued licence (to FPIs), and that should lay all other ques- anti-money laundering global body says in its report that
tions to rest,” he says. “a portion of the securities sector is subject to limited
A fund, in order to invest in India, needs Sebi approv- supervision and not subject to monitoring for anti-mon-
al, he adds. “Sebi looks at a lot of things — whether the ey laundering and CFT (counter financing of terrorism)
fund has an independent money laundering reporting compliance or risk assessment.” This, says the FATF re-
officer and an independent administrator, whether the
fund follows see-through requirements. The underlying
investors have to be known.”

Ease of Doing Business?

None of the experts BT talked to attributed the rising
FDI from Cayman Islands to zero-tax jurisdiction. Most
point towards its easier and low-cost compliance regime
and relaxed regulatory norms that allow investors the
much-needed secrecy.
The mutual evaluation report on Cayman Islands
published by the Financial Action Task Force (FATF),
the global money laundering and terrorist financing
watchdog, says the territory is the world's sixth leading
global financial services centre. It says the majority of
financial services are targeted towards non-residents,
particularly high-net worth individuals and institu-
tions, from a variety of jurisdictions, not all with robust
measures against anti-money laundering or financing
of terrorism. The financial services sector accounts for
approximately 40 per cent GDP of Cayman Islands and
employs 3,424 persons or 8.4 per cent of the workforce.
Banking, securities and investments and, to some ex-
tent, insurance industries dominate the financial land-
scape, says the report. Jariwala says a number of inves-
tors in Europe and the US get comfort from the fact that
it’s a British territory. “European or US investors looking
for a pooling vehicle prefer Cayman Islands as they are
pretty much familiar with rules, regulations and docu-
mentation,” he says.
Low cost of setting up funds and compliance are also
Our fund is based out of
big pull factors. “Lower cost of operations and compli- Cayman Islands, and when I am
ance requirements make Cayman Islands attractive.
There has been a dip in FDI from Mauritius and Singa-
investing in India, I am paying
pore and Cayman Islands, with its low operating cost, is taxes (in India). So, where is
increasingly replacing the two,” says Divakar Vijayasara-
thy, Founder and Managing Partner, DVS Advisors LLP. the question of tax haven?”
Increasing regulations and costs in Singapore and grey- Virendra Nath, MD, APC Partners
listing of Mauritius have been key triggers for the rise of
Cayman Islands.
According to an estimate by Jariwala, setting up a
fund in Singapore costs anywhere between $90,000
and $1,00,000, while the annual compliance cost is
$60,000-80,000. In comparison, the cost of setting up
a fund in Cayman Islands is $70,000 and annual compli-

40
 The Big Leap: Top 10 contributors
of FDI in India

12.18
16.228
Singapore
14.671
8.3

15.94
8.084
Mauritius
8.241
2.03

2.8

The Netherlands
3.87
6.5
The Cost Advantage
1.498 Annual
Set-up cost compliance cost

2.095 Singapore
$90,000 $60,000
(not for Variable
3.139 –1,00,000 –80,000
USA Capital Company)
4.223
$10,000 $25,000
7.123 Mauritius
–30,000 –40,000
Cayman Islands $70,000 $30,000
1.237
1.008 Figures are estimates
Cayman
Islands 3.702
2.103 port, is a potential source of money laundering and ter-
ror financing risks.
1.633 Could these lax supervisions be the reason for in-
2.965 vestors looking for a veil of secrecy? Akhilesh Ranjan,
Japan
3.226 former CBDT member, says, “Now, the thrust is on
0.653 transparency and tax rates are not so much an issue,
so people are looking at jurisdictions that are more
0.511 opaque than others.”
0.406 However, Virendra Nath of APC Prestige says Cay-
France
1.896 man is favoured because it is more compliant. “The
1.135 reason is that it is FATCA compliant, which Mauritius is
not as of now. FATCA is all about anti-money launder-
0.847 ing regulations, and when it comes to these regulations,
1.351 Cayman is no different from Hong Kong or any other
UK Figures in $ billion; FATCA-compliant countries,” he adds.
1.422 Source: DPIIT
The Foreign Account Tax Compliance Act (FATCA)
1.352
requires foreign financial institutions and certain other
non-financial foreign entities to report on foreign assets
0.417 2017-18 (April – March)
held by their US account holders or be subject to with-
0.296 2018-19 (April – March)
Cyprus holding tax.
0.879 2019-20 (April – March)
Though there are no definite answers for the reasons
0.048 2020-21 (Apr-Sept)
for the surge in investments from Cayman Islands, the
trend will certainly be keeping the government on its
1.124 toes. Meanwhile, December quarter FDI numbers may
0.886 dispel the mystery shrouding the FDI numbers.
Germany 0.488
0.202 @dipak_journo

41
44
Cyrus Mistry

Shapoor Mistry
PHOTOGRAPH BY UMESH GOSWAMI

PHOTOGRAPH BY RACHIT GOSWAMI

DEBT
CHALLENGE
Why Shapoorji
Pallonji Group,
with exposure
to worst-hit
sectors such as
construction,
real estate and
infrastructure,
is exploring
options to
deleverage
BY ANAND ADHIKARI & NEVIN JOHN
ighty four years ago, the patriarch of
Mumbai-headquartered Shapoorji Pal-
lonji family and grandfather of 52-year-
old Cyrus Mistry got a golden opportu-
nity to buy 12.5 per cent stake in Tata Sons
from F E Dinshaw Estate, a finance firm
owned by F E Dinshaw which had pro-
vided the Tatas growth capital in their
formative years. After Dinshaw died, his
legal heirs sold the stake to construction
magnate Shapoorji Mistry. Later, Mistry
senior increased the stake to 16.5 per cent

7 March 2021 Business Today 45

Corporate – SP Group

by buying from JRD Tata’s siblings. for value unlocking,” says Deven R. Choksey, MD, KR
Over the years, the Mistry family held on to the Choksey Investment Managers.
shares through thick and thin. In fact, Cyrus’s father, However, in spite of financial difficulties over the
Pallonji Mistry, had to cough up a large sum in mid- last few years, pledging their stake in Tata Sons was
90s to participate in Tata Sons’ rights issue, which in- not the first option for Mistry brothers. For almost two
creased the family’s stake to 18.4 per cent. The Tatas, years, the group availed every possible option to raise
however, claim that the Mistrys became shareholders funds. As a first step, SPACL pledged shares of half-a-
only in 1965, that is, 55 years ago, by buying shares from dozen operating companies like Forbes & Company,
Dinshaw Group. Whatever be the truth, such a large Sterling and Wilson Private Ltd, Afcons Infrastruc-
stake in a $110 billion group is a family treasure for the ture, Sterling And Wilson Solar Ltd, among others. At
Mistry family that it is trying to monetise to get out of the same time, it knocked on doors of existing lenders.
the financial crunch it is facing, much like the F E Din- Some approved additional loans. Many insisted on more
shaw family scions had done decades ago. collateral. The holding company also extended cor-
The consolidated debt of Shapoorji Pallonji (SP)
Group, which claims to be a $7 billion (`51,100 crore)
group, rose from `19,981 crore in FY17 to `31,035 crore
in FY19. Numbers for FY20 and FY21 are not available Value unlocking
but ratings agency ICRA has pegged the holding compa- through IPO
ny’s FY21 debt repayment obligation at close to `10,000 or stake sale,
crore. Shapoorji Pallonji And Company especially in
Pvt Ltd (SPCPL), the holding company, Eureka Forbes
had even sought a one-time resolution of
its obligations under Covid relief regula-
tions of the Reserve Bank of India (RBI)
in September. Deleveraging
It is no surprise then that the stake in Strategy
Tata Sons is at the heart of a fierce court Uncertainty
battle between the Tata Group and the remains over Tata
Mistry family. The Mistry family has val- Sons stake sale
ued the stake at `1.75 lakh crore whereas Sale of solar as-
the Tatas have quoted `80,000 crore. sets, both devel-
The Mistrys have already charged the Ta- oped and under
tas with blocking their attempts to raise development
funds in the midst of the pandemic. “The
matter is before the Supreme Court, and Monetisation
we are hopeful that the honorable SC will of annuity-
uphold the rights of minority sharehold- based road
ers,” SP Group said in an email response assets
to Business Today. So, what is forcing the
Strategic
155-year-old SP Group to put the family
sale in port
jewel on the table for pledging or sale?
business;
Share pledg-
Nuts & Bolts ing in group
SPCPL, India’s oldest existing construction company, companies
operates through a dozen subsidiaries in sectors such as
engineering & construction, real estate and infrastruc-
ture. These, in turn, have multiple subsidiaries, both
in India and abroad. All these businesses have been hit
badly over the past few years due to slowdown. Covid
has dealt them a further blow.
For example, bulk of revenue of SPCPL comes from
real estate and construction. “They will have liquidity Use of RBI's
issues as they operate in capital intensive sectors. The one-time debt
proceeds from Tata Sons stake sale will remove liquid- restructuring
ity concerns and allow private group companies to go window

46 Business Today 7 March 2021

 and IDBI Trusteeship. However, the
Holding Company's Rising Debt Tatas soon raised the red flag and
claimed the first right to buy as, in ex-
49,901 treme situation of the Mistry family
39,386 not honouring the debt obligations,
30,280 31,035 there is a possibility of invocation of
19,981 23,348 pledged shares, resulting in transfer
of ownership. Faced with a legal tan-
131 302 467 gle, the Mistry brothers decided to
2016-17 2017-18 2018-19 completely exit Tata Sons by valuing
the holding company around `9.51
Total Debt Total Revenues Profits lakh crore. They have pinned their
Shapoorji Pallonji And Company Ltd hope on the Supreme Court, which
Consolidated; in ` crore; Source: NCD offer document
will soon give a ruling on the issue.

Trouble Starts
The first sign of debt trouble came
High Share Pledge May Become Pressure Point
when promoters failed to repay dues
to group company Sterling and Wil-
Forbes & 73.85 son Solar Ltd in June last year. Ster-
Company Ltd 72.56 ling and Wilson is a global solar EPC
(engineering, procurement and con-
Sterling Wilson & 50.58 struction) player. Subsequently, the
Solar Ltd promoters, including Khurshed Da-
37.24 ruvala, missed the September dead-
line to repay the remaining `1,148
Afcons 97.47
crore to Sterling & Wilson out of the
Infrastructure 28.38 `2,644 crore promised at the time
of the company’s initial public offer
Promoter Stake (%)
(IPO). The promoters have got an
Shares Pledged (%) extension till September this year
to pay the amount. Around the same
time, SPCPL failed to repay short-
term commercial paper of `200 crore
to Union Bank of India. The company
porate guarantees on behalf of group companies, says approached bankers for one-time loan restructuring
a banker. One more option was fire sale of businesses, due to Covid disruption and liquidity mismatches. The
which would have been disastrous, as real estate, con- holding company had some liquid funds but decided not
struction and infrastructure can deliver substantial to pay as RBI restructuring was under way.
value if adequate liquidity is injected into them. Pledg- These events were serious enough for rating agen-
ing or sale of stake in Tata Sons was the last option. “The cies to take note. Leading ones like ICRA, CARE and
Mistrys would also be looking for simplification of SP India Ratings started downgrading group companies
Group’s capital structure through sale of stake in Tata because of liquidity position and delay in fund raising
Sons,” says Choksey. at the holding company level. In a note, CARE recently
In fact, the process of pledging a small part of Tata said promoter fund raising (via pledging of Tata Sons
Sons stake had started early last year shares) of `11,000 crore, supposed to be
when the brothers, Cyrus and Shapoor completed by June last year, was post-

`10,000
Mistry, initiated discussions with glob- poned to September and later got stuck in
al investors for raising around `11,000 legal issues. Group companies need funds
crore. As per available information, for refinancing debt and running the busi-
Cyrus Investments has pledged 37,122 CRORE ness. A default will create more trouble.
Tata Sons shares, which is about 9.2 “SP Group is badly stuck as it is not able
per cent of its stake in the Tata holding Debt payments due to monetise real estate and infrastruc-
company. Between January and April, in FY21 ture assets. They were awarded a massive
`5,000 crore was raised from Axis Bank project in Colaba. It requires `15,000-

7 March 2021 Business Today 47

Corporate – SP Group

20,000 crore for execution. The size

of the development is expected to
Key Group Companies
be `50,000 crore. But they have not Facing Challenges
been able to liquidate whatever has
been constructed,” says Arun Kejri-
wal, Director, KRIS, an investment Total Income Net Profit Consolidated; ` crore
advisory firm.
Now, a lot will depend on pledg-
ing of Tata Sons shares. Relations Forbes & Company:
between the Tata Group manage- Eureka Forbes Bringing the Most Losses
ment and the Mistrys are not the
best. Cyrus Mistry is battling with 2,857 2,890 2,791
the Tatas over his ouster as Tata Sons
Chairman four years ago. And even if
the Tatas decide to buy out the Mis-
trys, valuation is going to be a big -41 -2.98 -338
bone of contention.
2017-2018 2018-2019 2019-2020
Debt Chakravyuha
The one-time restructuring was
availed on October 26, 2020, by 100
per cent of the company’s lenders. Afcons Infrastructure:
“We are finalising the plan in consul- Monetisation Plans Under Way
tation with our lenders,” says the SP
Group. An ICRA report in October 10,130
last year said the company has made 8,875
slower-than-expected progress on 6,687
asset monetisation that has delayed
the planned deleveraging. So, how
will the group come out of the debt 164 234 248
chakravyuha given that the stake in
2017-2018 2018-2019 2019-2020
Tata Sons is stuck in legal issues?
Quick asset monetisation is the
only way out for the group for now,
say experts. Shapoorji Pallonji Infra- Sterling and Wilson Private Ltd:
structure Capital (SP Infra) has good
assets in renewable- and gas-based
Turnaround Plans
**EBIDTA Loss for 2019-20; Consolidated/provisional data
power, roads & highways and ports.
It is keen to sell its solar assets, both 3,840 3,932
3,328
operational and under development.
In April last year, SP Infra had sold as
many as five solar assets to private
equity firm KKR for `1,554 crore.
-137 -316 -215**
Next in line are roads assets. There
are also plans to rope in strategic in- 2017-2018 2018-2019 2019-2020
vestors in ports.
SP Real Estate is also ripe for value
unlocking. Monetisation of land is
another option; the group owns several land parcels at issue here. The group has only three listed companies.
prime locations. The company, among the top five de- IPOs of two companies have failed to materialise in the
velopers, claims to have a development pipeline of 80 past. Eureka Forbes, a subsidiary of Forbes & Company
million square feet. It is present in key markets such as and a well-known brand in water purification and vacu-
Pune, Bangalore, Gurugram and Kolkata. um cleaner market, was up for an IPO and strategic sale
IPO and stake sale to strategic players are the other two years ago, but the plan didn’t materialise. A restruc-
options that the company is considering. But there is an turing is under way, which includes merger of Eureka

48 Business Today 7 March 2021

 with a market cap of `3,800 crore, offered one share for
`780. It is trading at `240. The BSE Sensex has risen 30
per cent during the period. The promoters of Sterling
and Wilson Solar include SPCPL and Khurshed Daru-
vala. Arun Kejriwal of KRIS says promoters have not
honoured the debt obligations to the company despite
The group is making efforts commitment to pay up after the IPO. “The company
to generate funds by has excellent business, but investors are not happy,”
he says.
cutting overheads, Similarly, another listed entity, Forbes & Company,
repositioning businesses with a market cap of `2000 crore, is struggling. Its stock
price is almost at the same level as it was prior to Covid
and improving profitability in January last year. Gokak Textile, another listed entity
with a market cap of just `16 crore, is also languishing.
“They have to showcase and deliver returns to exploit
the stock market route for value unlocking. Today, insti-
tutional investors look for management delivery, consis-
tency and transparency,” says an industry veteran.
Forbes and two of its subsidiaries - Aquaignis Technolo- Lastly, the group is making efforts to generate funds
gies (electric water purifier business) and Euro Forbes by cutting overheads, repositioning businesses and im-
Financials. In the second leg of the restructuring, Eu- proving profitability. Take the loss-making Sterling and
reka Forbes and Forbes & Company will merge. In the Wilson Private Ltd, which is into electrical contract-
third stage, the Forbes Environs business will be de- ing services and is implementing a plan to reduce over-
merged. “The plan is to list or bring strategic investors heads, focus on margins and bid for large projects. It had
in Forbes Environs, which is into water treatment, RO earlier de-merged the solar EPC business as Sterling
and sewerage treatment,” says a source. Wilson Solar Ltd with a public listing in 2019. Sterling
EPC player Afcons Infrastructure is also a good and Wilson has ambitious plans, but is waiting for pay-
candidate for value unlocking via IPO or strategic sale. ment of past dues from promoters. “Once the loans are
The company, where promoters hold 95 per cent stake, repaid, we should be focusing on growth aggressively
planned an IPO way back in 2007, but deferred it later. and increasing shareholder value,” says Bikesh Ogra,
The aim of the fund-raising was overseas expansion. CEO of Sterling and Wilson Solar Ltd. In the past one
year, the company has seen a couple
of large orders in Middle East and
North America getting renegotiated
because of rapidly falling solar tar-
Sterling and Wilson Solar Ltd: iffs, which resulted in its exit from
Fighting Chinese bidding and diversifying those projects and fall in revenues/
profitability. It is also facing stiff
8,240 competition from Chinese EPC play-
6,884 ers in the Middle East. “We are now
5,575
very selective as Chinese players are
quoting ridiculously low prices,”
says Ogra. The company, though, has
450 638 304 expanded in Europe, Australia and
2017-2018 2018-2019 2019-2020 North America, where margins are
Source: BSE higher than in the Middle East.
The group, with large global
operations, is also faces head-
Afcons, with consolidated revenues of `10,130 crore, is winds from falling global growth and fast-changing
bigger than many EPC players. Sources suggest it has political dynamics. If pledging or sale of Tata Sons
done the groundwork for monetisation of assets. “There shares is delayed further, the group will have no op-
is no plan to list Afcons at present,” says the company. tion but to take some hard decisions about selling its
However, investors are not very happy with the stock businesses.
market record of group companies. Take the listing of
Sterling and Wilson Solar in August 2019. The company, @anandadhikari; nevinjl

7 March 2021 Business Today 49

REITs: The
New Real(i)ty
Though India caught on to the Real
Estate Investment Trust model late,
successful listings have not only
demonstrated investor appetite,
but also paved way for many others
to consider a new approach to
commercial real estate
BY RUKMINI RAO

52 Business Today 7 March 2021

 eading the way in 1960, the US
Congress signed a legislation intro-
ducing Real Estate Investment Trusts
(REITs) to bring the benefits of com-
mercial estate to the common Ameri-
can, which were largely available to
financial institutions and wealthy in-
dividuals. REITs are securities linked
to real estate that can be traded on
stock exchanges once they get listed.
They invest in income-generating
real estate. This income gets distrib-
uted among unit holders, including
sponsors, trustees, fund managers
and unit holders. Bradley Real Estate
Investors, Continental Mortgage In-
vestors, First Mortgage Investors and
First Union Real Estate were among
the first ones to create REITs in the
US. In 1965, Continental Mortgage
Investors listed on the New York
Stock Exchange.
Back home, though the Securities
and Exchange Board of India (Sebi)
introduced the draft REIT regula-
tions as early as 2007, it was only
seven years later in 2014 that Real Es-
tate Investment Trusts Regulations,
2014 (REIT Regulations) were en-
acted. Other reforms, including liber-
alisation of foreign direct investment
(FDI) norms in real estate, opening
up of the domestic fund industry to
foreign investments and clarity on

7 March 2021 Business Today 53

Industry – REIT

REIT's GLOBAL FORAY

2007
1960 UK
USA 2003
Hong Kong

2001
Japan,
South Korea

1989
Malaysia

Source: NAREIT, Wall 2002

Street Research Singapore

2019 1971
India Australia

tax implications of REITs, helped the market get ready its `4,500-crore initial public offering (IPO) in August
for its first REIT listing in 2019. On April 1, Embassy Of- 2020. While the institutional portion was subscribed
fice Parks (a joint venture between US private equity 10.61 times, the non-institutional segment, including
firm Blackstone and Embassy group) REIT got listed on HNIs and retail investors, was subscribed 15.77 times.
the BSE. Investors lapped it up. Vinod Rohira, MD and CEO, Commercial Real Estate &
According to estimates of the European Public Es- REIT at K. Raheja Corp, calls the pandemic a blessing
tate Association, the total value of listed real estate glob- in disguise. “Since we were doing our roadshows over
ally is around $3,864.3 billion and property under REITs Zoom calls, we could reach out to far more people within
forms nearly 53 per cent, around $2042.8 billion. How- the time range than we could have done physically,” he
ever, this is largely concentrated in developed markets. says. The company managed to reach out to nearly 800
The two listed REITs of Embassy and Mindspace people over Zoom, including HNIs, which helped them
Business Parks hold a tad over 60 million square feet un- expand their reach. The listing consisted of a fresh issue
der listing out of the 500-plus million square feet of Grade of `1,000 crore and offer for sale (OFS) of `3,500 crore,
A office space in India, according to industry estimates. and 29.5 million square feet of leasable area.
A healthy demand and supply dynamics for office Brookfield India Real Estate Trust’s `3,800-crore
space, factors such as low interest rates, falling yields of REIT issue closed recently with an overall eight times
government bonds globally, and interests from global firms subscription. Barclays, Bank of America Continuum,
have opened up opportunities for developers to tap into. RBS, TCS, Cognizant, and Accenture are some of the cli-
The next two-three years could see another four-five ents of Brookfield India Real Estate Trust. The company
listings, according to experts. has campus-format office parks in Mumbai, Noida, Gu-
rugram, and Kolkata.
The India Story It was, however, Bengaluru-based realtor Embassy
Despite Covid-19, Mindspace Business Parks REIT, joint- group’s maiden listing in 2019 that showed the way for
ly owned by K. Raheja group and Blackstone, launched others. Vikaash Khdloya, Deputy CEO and COO, says

54 Business Today 7 March 2021

 Bengaluru being the first mover in the market also meant hard
30% work, which began in 2018. To set the right context for
institutional investors “it took some time to explain how
the product works in India, and we didn’t want to take
Delhi-NCR
19%
any shortcuts,” he adds. The listing garnered a good re-
sponse with investors placing 181 million bids and the
issue getting oversubscribed 2.6 times. Embassy Office
Chennai Parks REIT comprises 26.2 million square feet of com-
13% pleted and operational commercial properties across
CITY-WISE India. With approximately 7.1 million square feet of on-

REIT Mumbai
campus development in the pipeline, the total portfolio
spans 33.3 million square feet across seven Grade A of-
WORTHY 13% fice parks and four city centre office buildings in India.
STOCK Winner All The Way
(IN %) Hyderabad
12%
The reason for such enthused investor response to
REITS is due to a variety of factors. These include the
trustee and manager-managed model, the mix that RE-
ITs offer (only 20 per cent of a property can be under
Pune construction, 80 per cent should be rent-yielding), list-
11%
ing and disclosure norms that ensure transparency, and
the 90 per cent income distribution rule (to qualify as a
REIT, the trust must distribute at least 90 per cent of its
Kolkata
2% taxable income to shareholders).
“A large part of Indian investors put money in gov-
ernment bonds and fixed deposits. Interest rates have
dropped significantly and that makes REITs very at-
tractive since there are chances of higher return,” says
Anshuman Magazine, Chairman and CEO, India, South
East Asia, Middle East & Africa, CBRE. Also, investors
can exit REITs any time by selling the shares in the stock
market. “It encourages institutions to put in money,”
adds Magazine.
According to Crisil’s India’s REIT Opportunity re-
port, private equity (PE) funds invested nearly `75,000
crore in the sector over the past three years, with nearly

Being the first mover in the mar-

ket also meant hard work, which
began in 2018. It took some
time to explain how the product
works in India, and we didn’t
want to take any shortcuts”
Vikaash Khdloya,
Deputy CEO & COO, Embassy Parks

7 March 2021 Business Today 55

Industry – REIT

A HIT WITH
INVESTORS ASSET QUALITY:
Professionally
managed, high-quality
commercial spaces
LIQUIDITY: REIT
units can be
traded like equity
DISTRIBUTION: Unlike
equity-related uncertain
dividend, stability in
distribution due to regulation
TRANSPARENCY:
Strong governance
framework &
disclosure to
regulators PERFORMANCE: Upside
participation in capital
appreciation from organic /
inorganic growth

LISTED REITs
Embassy Office Parks REIT thereby improving the return for unit holders.” Cap rate
Mindspace Business Parks REIT is the rate of return on a property based on the income
that the property is expected to generate.
Brookfield India Real Estate Trust Also, fund managers prefer to back REITs compared to
other Infrastructure Investment Trusts (InviTs). “Mutual
funds invested `735 crore in REITs in the first six months of
2020, indicating a nearly three-fold jump from the year-ago
period. On the other hand, according to Sebi, mutual funds’
70 per cent in the commercial and office space. investments in InvITs dropped by 8 per cent to slightly low-
To put it in perspective, if one were to evaluate the er than `5,000 crore during the period under review,” says
upside for investors, JLL’s ‘The India REIT Opportunity’ Vishal Ahuja, Head, Private Wealth Group, JLL India.
research report of November 2020 notes that Embassy
REIT now enjoys an average cost of capital of 6.7 per The Road Ahead
cent, allowing it to acquire assets priced at 7.2 per cent, Embassy and Mindspace REITs have seen both foreign
and still provide dividend accretion. So if Blackstone was and domestic institutional players participate in their
to exit/divest any stabilised asset to the REIT, it poten- public offerings along with retail investors. According to
tially stands to gain. “Blackstone could use the existing the latest annual report of Embassy, Blackstone and the
arbitrage opportunity by acquiring assets at a cap rate Embassy group hold over 70 per cent of the units (55.30
more than 8.5 per cent and divest them to a REIT at a per cent and 14.97 per cent, respectively) and foreign
cap rate of 7-8 per cent and reap an immediate divest- portfolio investors hold another 16.37 per cent. Shobhit
ment gain. REIT management fees are tied to the port- Agarwal, MD & CEO, ANAROCK Property Consultants,
folio size and will likely increase after the REIT acquires says Mindspace REITs included institutional investors
more assets. Otherwise the REIT’s distribution per unit such as Singapore state investor GIC, Fidelity, Capital
(DPU) will increase as it would raise debt and equity at Group and Fullerton, while Embassy REITs have seen
6.7 per cent to acquire assets yielding 7.5-8.5 per cent, participation from investors, including Fidelity Interna-

56 Business Today 7 March 2021

 EMBASSY VS MINDSPACE
Market cap (`cr) 52-wk high 52-wk low

Embassy 33,668.24 518 301

Mindspace 20,162.62 342.79 298.5

Market cap as of January 17, 2021; Source: BSE

tional, Capital Group, TT International and Schroders.

Pointing out at a strong domestic interest in Indian RE-
ITs, Agarwal adds, “Kotak Mahindra Life Insurance and
the family office of Radhakishan Damani (the promoter
of Avenue Supermarts that runs the D-Mart chain of su-
permarkets) participated in the Embassy REIT IPO.”
While work from home (WFH) could look like an
inflection point in the office space segment, India still
commands a 56.5 per cent share of APAC inventory of of-
fice space, according to Cushman & Wakefield. In Q2 of
FY21, Embassy’s rental collections from office occupiers
remained at 99.5 per cent, while new leases and renewals
stood at 2,10,000 square feet. It even saw rental increase
of 11 per cent on 1.9 million square feet in Q2 across 18
office leases, with year-to-date rental increase of 12 per
cent on 3.7 million square feet across 40 office leases.
Khdloya says the demand for office space is not going
anywhere and the company is steadily seeing an increase
in footfalls across tech parks, and with vaccine roll-out,
employees will be back in office. MNCs such as Goldman
Sachs, Facebook and McAfee “want to give the best ex-
perience to employees and we have seen some of them
spend more on interiors and doing up their office than
the lease amount,” adds Khdloya.
According to rating agency Crisil, the top 10 com-
mercial real estate owners, including developers and
funds, have around 184 million square feet, which could
fetch annual lease rental income of `17,000 crore and has
the potential to raise `1.5 lakh crore in REITs. It could
mean that India’s REIT listing could expand beyond
office space. Around 45 million square feet of Grade A
Since we were doing our road- mall spaces sized more than 2 lakh square feet, exclud-
shows over Zoom calls, we could ing standalone anchors (key tenants), were added across
the top seven cities in the last decade. “These malls, with
reach out to far more people
an overall occupancy of more than 80 per cent, can po-
within the time range than we tentially provide a major retail REIT opportunity,” says
could have done physically” Agarwal of ANAROCK. Even around 110 million square
feet Grade A warehousing stock across India has the po-
Vinod Rohira, tential to come under REIT.
MD and CEO, Commercial Real Estate & REIT,
K. Raheja Corp @rukminirao

7 March 2021 Business Today 57

 BT EVENT: VIRTUAL ROUNDTABLE

INDIA’S MEGA
VACCINATION DRIVE
Leading experts explain how supply
chain dynamics are critical to
achieving targets
BY TEAM BT

DR SURESH JADHAV RAJIV NATH DR RANA MEHTA

Executive Director, Serum MD, Hindustan Syringes & Partner & Leader,
Institute of India Medical Devices Healthcare, PwC

Even as India is ramping up and vaccines came together that the discovery of Covid-19
its Covid-19 vaccination drive in a Business Today webinar vaccine and its effective
and every citizen above 50 on 'Supply Chain Dynamics in inoculation pose entirely differ-
years of age is expected to be India's Mega Vaccination' to ent challenges. The effective
eligible for vaccine adminis- highlight challenges and sug- procurement, digitalisaiton and
tration in the coming months, gest the way forward. India supplies are key to successful
overcoming supply chain plans to innoculate 300-mil- administration, which remains
hurdles remain the key to suc- lion people with coronavirus a work in progress. Dr Suresh
cessful implementation of the vaccines by July. Jadhav, Executive Director,
ambitious programme. Lead- Dr Rana Mehta, Partner and Serum Institute of India, said
ing experts representing the Leader, Healthcare, PwC, initi- the broad framework that
entire spectrum of healthcare ated the discussion by stating India follows is that of the
World Health Organization Jadhav said. five years, but it is a challenge
(WHO). The prioritisation of Serum, which was allowed to make huge quantities of
vaccine administration is the to stockpile the vaccines since needles. Different new forms
government’s choice. While October-November 2020 even of vaccines are being devel-
Western countries chose to before getting the 'emergency oped like single dose and nasal
inoculate the most vulnerable use authorisation' from the sprays and droplets. Such vac-
first, India chose to vaccinate Drug Controller General of cines require special syringes
its fronline healthworkers first. India (DCGI), has so far made and delivery platforms which
However, the country is racing about 100-million doses. Of will require time to design and
against time to complete its this, 20 million has been given make them.
first phase of vaccination drive to India and 8 million were ex- "Consumption needs to be
as the stocks — 20 million ported to other countries (like ramped up to match at least
supplied by Serum Institute Bhutan, Maldives, Bangladesh, production of vaccines, sy-
of India alone — carries a six- Nepal, Seychelles and Brazil). ringes and then start depletion
month expiry date. “The gov- "These are costly vaccines and of stockpiles of inventories by
the government needs to quick- starting vaccination of 60-plus
ly utilise the supplied stocks and essential services and
of about 18 million. We have products providers, including
sufficient stocks for India and journalists in field and airline
if required can give additional staff," added Nath.
quantities," says Dr Jadhav. He Jack Muhs, President,
also said that stability stud- Indian sub-continent, Middle
ies are going on with positive East and Africa of Fedex Ex-
results to increase the shelf life press, said the scale of vaccine
of the vaccine to nine months. supply has created many chal-
"This can be achieved soon lenges like cold chain manage-
and with better stability data, ment, packaging, tracking sup-
eventually it can be increased plies and last-mile delivery. "It
JAMES R. MUHS to one or one-and-a-half years has been a continuing exercise
Regional President, FedEx
Express, Middle East, Indian going forward," he adds. working with regulatory agen-
Subcontinent and Africa Rajiv Nath, Managing cies, manufacturers and other
Director, Hindustan Syringes stakeholders," he says.
& Medical Devices Ltd, said PwC’s Dr Mehta said the
ernment needs to use it within unlike vaccines, needles have coronavirus pandemic saw the
weeks and months before they a longer shelf life of about emergence of a new business
expire. Of the 20-million doses model involving regula-
supplied by Serum till date, tory flexibility, collaborations
Centre has administered just
a little over two million shots Serum among competitors and gov-
ernments pre-purchasing vac-
so far. The company has a
stock of another 50-60 million
Institute has cines etc and the learnings will
be useful in future to handle
doses. It is also producing at supplied about such pandemics and even drug
a monthly average of 50-60
million, which will go up to 100
20-million development.
Business Today editor Rajeev
million a month by April”, Dr doses till date Dubey moderated the webinar.
 Rise Of
Oligopolistic
Dominance
As debt-laden distressed companies fall by the
wayside, some cash-rich large companies are
practically monopolising their sectors
BY DIPAK MONDAL
ILLUSTRATION BY SIDDHANT JUMDE

During the 26th meeting of the Monetary Policy Committee

(MPC) of the Reserve Bank of India (RBI), one of the MPC mem-
bers — Jayant R. Varma, Professor, Finance and Accounting, IIM
Ahmedabad — made an interesting observation, which many in
government institutions would barely admit to.
“Anecdotal evidence suggests that in several sectors which
are characterised by an oligopolistic core and a competitive pe-
riphery, the oligopolistic core has weathered the pandemic well
and it is the competitive periphery that has been debilitated. Ris-
ing profits and profit margins, improving capacity utilisation
and lack of new capacity additions create ripe conditions for the
oligopolistic core to start exercising pricing power,” he had said.
An oligopoly is a form of market form where a sector/industry is

60 Business Today 7 March 2021

61
Industry – Market Leaders

dominated by a small group of large com-

panies.
CONCENTRATION OF PROFITS
Professor Varma refused to comment % share of Sensex companies in total profit
on the issue and name the companies
of listed companies
when Business Today contacted him, say- 80
ing “there were some constraints on MPC 75.1
members commenting on MPC matters.” 70
In the last couple of years, many large % share of Sensex companies
businesses fell by the wayside as mount- in total PAT*
60
ing debt forced them to distress-sell or
sell their assets after being put through 34.6
the insolvency process. Reliance Com- 50
munications, Reliance Infratel, Essar
Steel, Bhushan Steel, Future Retail and 40
Videocon Industries were sold off either Source: CMIE;
*net of prior period and extraordinary transactions
through merger & acquisition (M&A) 30
deals or the insolvency process. 2000/01 2019/20
So, whether it’s Future Retail selling
out to Reliance Retail, Adani Port and SEZ
acquiring a controlling stake in Krish-
napatnam Port from the CVR Group, Ad- WHO RULES THE MARKET
ani Group picking up 74 per cent stake in
Mumbai International Airport from GVK, & BY HOW MUCH
or JSW buying out Bhushan Power and Sectoral Leaders
Steel and Monnet Ispat or Vedanta buying
out 13 group companies of Videocon and Sector Market leader Market share
Electrosteel — the deals saw old sectoral Baby food & milk powder Nestle 85%
giants giving way to new business leaders, Cigarettes ITC 77%
and creating a more concentrated market.
Business Today tried to reach out to the Adhesive Pidilite 70%
companies, but did not get a response. Aviation InterGlobe Aviation 60%
As consolidation picks up pace and Hair oil Bajaj Corp 55-60%
few firms get bigger, India Inc. is seeing
market share, revenue and profit concen- Automobiles Maruti Suzuki 50%
trating among a handful. According to Paint Asian Paints 40%
Saurabh Mukherjea, Founder and Chief Mobile telephony Reliance Jio 35%
Investment Officer of Marcellus Invest-
ment Managers, large swathes of the In- Health diagnostics Dr Lal PathLab 30%
dian economy are controlled by 20-25 Retail (offline) Reliance Retail 20%
families. “The top 20 companies in India
generated 70 per cent of profits of the cor-
porate sector (in 2019/20), compared to
only 15 per cent in 1992/93.” Mukherjea
thinks this will only increase over time.
CMIE data over the last 20 years corroborates Market Concentration
Mukherjea’s claim. In 2000-01, Sensex 30 companies ac- Much of this debate was triggered by a few of the follow-
counted for 35 per cent of the profit of all the listed com- ing developments — a flurry of investments received
panies. In 2019-20, it rose sharply to 75 per cent. by Reliance Industries and its subsidiaries, and its sub-
So, are Indian markets becoming more concentrated sequent acquisition of Future Retail; Adani group’s ac-
and less competitive? Is the balance tilting in favour of a quisition of a 74 per cent stake in Mumbai International
few companies in certain sectors? Airport, after it had won the rights to manage six other
Globally, companies including technology giants airports also fuelled the talks. Sectors, including ciga-
such as Google, Facebook and Amazon, have been criti- rettes, non-banking finance companies (NBFCs), small
cised for too much market power. How grave is the situ- cars, paints, adhesives, baby milk powder, hair oil, phar-
ation in India? Are these concerns genuine and is such ma APIs and health diagnostics, also throw up such ex-
market dominance always bad? amples.

62 Business Today 7 March 2021

 “MONOPOLISTS,
THROUGH INTELLIGENCE
AND HARD WORK,
HAVE BUILT VERY HIGH
BARRIERS FOR ENTRY,
WHICH ALLOW THEM
TO EARN A RETURN ON
CAPITAL OF, SAY AROUND,
40-45% — THREE TIMES
THE COST OF CAPITAL”
Saurabh Mukherjea, Founder and Chief Investment
Officer, Marcellus Investment Managers

aging Director, Shoppers Stop, says none of Reliance

Retail’s competitors have 400 million mobile subscrib-
ers like Jio has. “A telecom customer interacts with the
network every second. He is on the network and that’s
Nestle, for example, has an 85 per cent share in the one advantage which none of the (other) players have.
baby foods market. ITC has a 77 per cent share in ciga- Reliance has tied up with Facebook to get the WhatsApp
rettes, Pidilite has 70 per cent in the adhesive segment, tie-up in. Now, WhatsApp is ready for payments. It will
Bajaj Corp has 60 per cent in hair oil, and Asian Paints give Reliance an upper hand, as India is WhatsApp’s sin-
around 40 per cent in the paints market. gle-largest market globally with over 400 million users.
But, how genuine are these concerns? It will give them a large base of customers who are inter-
The Reliance-Future deal will put Reliance Retail be- acting with them every day, every second.”
yond the reach of most players. Reliance Retail will add While critics may raise a hue and cry, the anti-trust
1,500-1,700 more stores to its existing network of 13,000 regulator, Competition Commission of India (CCI),
stores across more than 7,000 cities and towns across does not see the Reliance-Future deal affecting compe-
India. The distant second will be D’Mart with close to tition in the retail sector. Approving the acquisition, the
250 stores. CCI said in its order that “the proposed transaction will
Besides consolidation in the brick-and-mortar seg- not lead to any change in the competitive landscape or
ment, the Jio platform gives Reliance Retail an edge cause any appreciable adverse effect on competition in
over others for its online retail play. And even if it only India, irrespective of the manner in which the relevant
controls 20-25 per cent of the modern retail market (the markets are defined.”
largest market share in the sector), experts see it grow-
ing much bigger, thanks to its revenues increasing over Entry Barriers
nine times — from `17,640 crore in 2014/15 to `1,63,000 According to experts, some of these businesses have cre-
crore in 2019/20 — and the leverage that Jio offers. ated entry barriers — regulatory or technology driven —
Says Arvind Singhal, Chairman, Technopak Advisors, which are insanely high.
a management consulting firm, “Reliance (Retail) will be- Mukherjea of Marcellus Investment Managers cites
come bigger and bigger for multiple reasons — its strategy the example of the infant milk powder segment, where,
is fundamentally sound, it offers multiple products and he says, no one can compete with Nestle, partly because
services on the same platform. You have services through advertising is prohibited. Infant Milk Substitutes (IMS)
Jio platforms, and as far as physical retail is concerned, Act, 1992 bans any kind of promotion of infant formula,
they are trying to partner with independent retail outlets feeding bottles and infant foods for 0-2 year-old children.
for cash and carry. The numbers show that it is working.” Nestle India spokesperson refused to comment on
Even rivals agree. Govind Shrikhande, former Man- the issue.

7 March 2021 Business Today 63

Industry – Market Leaders

Then there is Asian Paints in the

paint segment with 40 per cent mar- WHAT THE capitalism by the then incumbents —
both Airtel and Vodafone — accusing
ket share. “Asian Paints removed
all layers of channel partners and
LAW SAYS the regulators of favouring Reliance
Jio. “Over the last two years, we had
reached out directly to paint dealers many regulatory outcomes that were
on the high street, while also com- against everyone in the market ex-
pressing their channel margins. The cept Jio,” Vodafone CEO Nick Read
incentive offered to these dealers was had said in February 2019.
supply chain efficiencies (of three- Former Telecom Regulatory of
four deliveries per day), which helped India (TRAI) Chairman Rahul Khul-
them generate healthy returns on lar had said in 2018 that Jio’s entry
capital employed. This capability was had to be disruptive as it was the only
built using tech investments to fore- way for it to succeed. However, he was
cast demand with greater accuracy Indian competition law does quick to mention the regulatory ac-
compared to their competitors,” ex- not define monopoly tion that became the ‘invisible hand’
plains a note by Marcellus. determining Jio’s economic fortunes.
In January (2020), JSW Paints filed Much has also been said about
a complaint against Asian Paints with Gautam Adani and his turn of fortune
the CCI, saying the latter had denied since 2014. Adani is the second-richest
access to the distribution channels in man in India, after Reliance Industries’
the relevant market to JSW Paints by Mukesh Ambani. His personal wealth
threatening and coercing such dealers has more than doubled to $32 billion
through various means. The CCI found compared to Mukesh’s $75 billion in
merit in the complaint and launched an the last one year. Adani owns a group
investigation into the charges. of companies in varied businesses
Or take the example of Bajaj Fi- ‘Dominant position’ is a — ports, power, food and airports. It
nance, the leader in consumer loans. position of strength, enjoyed has also won the right to upgrade and
“Bajaj Finance leveraged tech- by an enterprise, in the operate six airports — Ahmedabad,
nology to develop credit algorithms relevant market, in India Lucknow, Jaipur, Guwahati, Thiruva-
to capture data points which are not nanthapuram and Mangaluru — for
captured in credit scores generated 50 years. GMR, which handles three
by a credit rating agency, and built a airports — Delhi, Hyderabad and Goa
huge data-based lending engine to — is the only other airport operator
identify the credit worthiness of re- handling more than one airport.
tail borrowers,” says Mukherjea. While discussing the proposal to
Reliance’s foray into telecom with lease out the six airports of the Air-
the launch of Jio in 2016 offering free ports Authority of India (AAI), an
voice, zero roaming charges and free appraisal note by the Department of
data rates, is probably one of the most Economic Affairs (DEA) had suggest-
This position enables a
strategic business moves in the last ed that not more than two airports
particular company to operate
decade, keeping in mind the future independently of competitive be awarded to the same bidder, ‘duly
potential of digital economy and Big forces prevailing in the market factoring in the high financial risk
Data. Within three years of its launch, and performance issues’. However,
Jio emerged as the leader by number the note was ignored during bids and
of subscribers, ahead of incumbents Adani has won all the six airports of-
such as Airtel, Vodafone and Idea. fered in this round.
Jio currently has a 35 per cent mar- The DEA appraisal also argued
ket share (in terms of the number of that awarding them to different
subscribers), followed by Bharti Air- companies would facilitate yardstick
tel (28.7 per cent) and Vodafone Idea competition and that ‘in case of proj-
(25.5 per cent). Jio is also the leader in ect failures there would be capable
broadband (wired and wireless) with bidders available’. Business Today has
a 55.6 per cent share, followed by Air- It also helps the company a copy of the appraisal note.
tel at 23 per cent. affect its competitors or CCI Chairman Ashok Kumar
Of course, approval to its con- consumers or the relevant Gupta tells Business Today that sec-
sumer plans was objected to as crony market in its favour tors which are more innovation-driv-

64 Business Today 7 March 2021

en and technology-based may be more concentrated, Mumbai Ltd issued a clarification that work from home
and in some instances, may give rise to monopolies. along with prevailing weather conditions had resulted in
“Platform markets in the digital space may have a ten- an increase in electricity consumption.
dency to ‘tip’ in favour of a single market player as a re-
sult of network effects,” he says. The Good, The Bad And The Ugly
The Indian anti-trust regulator recently ordered an So, what is wrong with a company growing bigger than
inquiry into a complaint against Google for ‘pre-instal- the rest through hard work, smart strategy and better
lation and prominence of Google Pay on Android smart- technology adoption?
phones’, search manipulation and bias by Google in fa- Why would one fault Reliance’s Retail strategy of
vour of Google Pay, etc. Earlier in 2018, the CCI found using its telecom subscriber base to reach out to a larg-
Google violating the provisions of competition law for er market or Pidilite’s strategy of targeting carpenters,
abusing its dominant position in the online search mar- educating them about the benefits of its products and
ket and imposed a penalty of `136 crore. then skilling them to use those to create a demand in
Recently, the US Federal Trade Commission, an in- the market (Pidilite has a 70 per cent share in the adhe-
dependent consumer protection agency, has sought the sive market)? Or could one blame Adani for its vertical
break-up of Facebook, asking it to sell Instagram and integration efforts in the power sector, or for expand-
WhatsApp. It alleges that Facebook buys out rivals to ing its energy offerings by diversifying into the gas dis-
curb competition and kills start-ups that it cannot buy tribution business?

“PLATFORM MARKETS IN THE

DIGITAL SPACE MAY HAVE A
TENDENCY TO ‘TIP’ IN FAVOUR OF
A SINGLE MARKET PLAYER AS A
RESULT OF NETWORK EFFECTS”
Ashok Kumar Gupta, Chairman, CCI

by limiting access to its tools. Being a dominant social Indian competition law does not define monopoly, but
media player, Facebook’s failure to curb fake news and it describes ‘dominant position’ as a position of strength,
hateful content have also invited a lot of criticism across enjoyed by an enterprise, in the relevant market, in India,
the globe as well as in India. which enables it to operate independently of competitive
Globally, in 1984, US-based AT&T's local telephone forces prevailing in the market, or affect its competitors
service was broken up into seven Baby Bells, giving con- or consumers or the relevant market in its favour.
sumers access to more choices and lower prices. How- When asked by Business Today about the growing
ever, by 2018, most of the Bells were together again as discomfort due to the emergence of monopolistic and
a single company called AT&T, which is currently the oligarchic forces with the help of the government, a se-
world's largest telecommunications firm. nior Niti Aayog official says, “They are just conjectures.”
CCI chairman Kumar points to ‘natural monopolies He does not see any statistical evidence to buttress these
in the provision of utilities such as electricity, gas, water, claims. “These are fears that are being created to gener-
etc’. In utility services, the markets are not contestable, ate a false narrative,” he adds.
he says. “However, if the provisioning is unbundled, According to competition experts, and market dom-
some segments such as generation of electricity are ame- inance do not always mean market abuse. Unless there
nable to competition. The role of a competition regula- is evidence of past misconduct of dominance, which is
tor in these markets is to ensure that monopoly service abusive and harming — for the market, other stakehold-
providers do not abuse their market powers.” ers and consumers — there is no justification for malign-
In July last year, Mumbai residents complained ing a company or a firm.
about a sharp increase in electricity bills after Adani A partner at a law firm says market monopoly in itself
group took over retail electricity distribution from Anil should not be a cause of concern for the regulator. “In
Ambani’s Reliance Infrastructure. As people took to case of competition law, without having any evidence of
social media airing their grievances, Adani Electricity abuse the regulator should not try to discipline big com-

7 March 2021 Business Today 65

Industry – Market Leaders

panies just because it doesn't like them. This is not the a higher market share), through intelligence and hard
intent of competition law,” he says. work, have built very high barriers for entry, which allow
CCI Chairman Gupta says “possession of high mar- them to earn a return on capital of, say around, 40-45 per
ket power is not frowned upon in the antitrust frame- cent — three times the cost of capital.
work. Taking such a stance would damage incentives to
innovate.” The anti-trust watchdog, he says, follows a Inequality And More
nuanced assessment where the facts of the case, the un- No matter how dispassionately competition experts or
derlying market and technology take centre stage. “Our stock market analysts view the debate around monopo-
lies, oligopolies, dominance and corporate biggies, a
large section of activists and economists fear that not all
dominance is being created through best business prac-
tices, strategies and innovations driven by technology.
“Western regulators paid a heavy price for blindly
following the doctrine that monopoly itself is not bad,
only its abuse is. Now, they are considering splitting up
big tech companies. Our regulators seem to be not pay-
ing any heed and are turning a blind eye towards some
disturbing monopolistic tendencies across sectors,”
says Shiju PV, Senior Partner, IndiaLaw.
According to an Oxfam India spokesperson, in certain
cases, large corporations do influence policy initiatives.
“Let us not forget that it was not too long ago that India was
ranked ninth in crony capitalism by The Economist,” he says.
An OECD discussion paper on market concentration
suggests that in many markets, firms that have built mar-
ket power, perhaps through innovation or efficiency, and
have capitalised on the success by engaging successfully
in lobbying and rent-seeking for regulatory protection.

THE PROCESS OF The paper also hints that regulation and (poll) campaign
spending are responsible for an increase in mark-up of 1-2
CONSOLIDATION WOULD per cent. Mark-ups measure the extent price exceeds the

BE EXPEDITED ONCE
marginal cost, and an increased mark-up suggests a firm
has a better ability to raise and maintain price above the
THE SUSPENSION OF level that would prevail under competition.
Economist Geeta Gauri, also a former member of
THE INSOLVENCY LAW IS the CCI, says a competition regulator can intervene as
LIFTED IN MARCH AND long as the barrier is created by the firm, but cannot do
anything if the barrier is created by the government. She
MORE BANKRUPT FIRMS even goes on to say that if the government wants to fa-
COME UP FOR SALE vour national champions, it is a political decision, and
the regulator cannot do much about it.
The process of consolidation would be expedited
once the suspension of the insolvency law is lifted in
March and more bankrupt companies come up for sale.
approach is calibrated in nature, so that intervention re- More companies would be up for grabs when the govern-
mains effective and targeted; it does not restrain innova- ment expedites its privatisation of some of the profitable
tion and would in turn help the market to regulate itself.” public sector units (PSUs).
So while competition experts do not see companies More churn and disruption is likely to happen across
with a higher share as an automatic threat to the rest of India Inc. over the next couple of years, as companies
the market or consumers, stock markets also view them with weak operational and financial capabilities make
favourably in certain cases. Famously called economic way for better run or ‘better-connected’ companies. But
moat, stock market analysts love the competitive advan- whether they tilt the balance in the market in their fa-
tage that a company has/likely to have over its peers. vour only time will tell.
Mukherjea of Marcellus Investment Manager says (With inputs from Ajita Shashidhar)
such companies are the source of investment, innova-
tion and wealth creation. “Monopolists (or those with @dipak_journo

66 Business Today 7 March 2021

Industry – Online Gaming
The Game
Within
Niti Aayog’s consultation paper on
fantasy sports advocates self-regulation,
but legal and regulatory uncertainties
remain a drag for an industry that has the
capacity to attract `10,000 crore FDI in
the next few years
BY RUKMINI RAO
ILLUSTRATION BY RAJ VERMA

aming apps are not new to run-in with the legal

G
system. Take the latest Kerala High Court notice to
some celebrities for endorsing these apps, or a No-
vember 2020 Madras High Court notice to BCCI chief
Saurav Ganguly and Indian cricket team captain Virat
Kohli for endorsing fantasy apps. The Madras High
Court notice was in response to a plea filed by an ad-
vocate after a youth killed himself as a result of losing
money on these applications.
While law in India distinguishes between games
based on skill and those based on chance, and prohib-
its the latter for stakes, in December 2020, govern-
ment think-tank Niti Aayog released a draft discus-
sion paper seeking comments on guiding principles
Industry – Online Gaming

The aim is to bring regulatory clar-

ity to a segment that has the poten-
Rise in Online Contest Entry
tial to generate substantial business Fantasy Sports Amount Sees
in years to come. The draft, among Users in India Sharp Spike
other things, has proposed the set-
ting up of a self-regulatory govern-
ing body for industry players with June 16 16,467
2 mn
an independent oversight board and
customer redressal mechanism.
The industry, which believes
that the right regulations can help Dec 17 6,158
fantasy sports attract `10,000 20 mn
crore foreign direct investment 1,743
and create as many as 10,000 jobs,
should have been thrilled. But it

FY18

FY19

FY20
was cautious. The reasons — the le-
gal complexities involved and mul-
Dec 18
tiplicity of industry federations; 51 mn
ambiguity in some of the recom-
mendations; and an industry divide
between fantasy sport and other Operators’
online gaming players with the lat-
ter saying that the regulations are
Revenues
undermining their interests.
Mar 19
Rise Too
65 mn 2,470
Online Bet
Prime Minister Narendra Modi, in
a meeting on the toy industry last
year, called for tapping the poten-
tial of the gaming sector, largely 924
dominated by international com-
panies. A latest Deloitte report says 262
Dec 19
the gaming industry can touch $2.8 90 mn
billion by 2022, with real money
FY18

FY19

FY20

gaming, fantasy sports and esports

segments leading the growth.
Figure in ` crore
A KPMG report, ‘Business of Source: The Business of Source: The Business of
Fantasy Sports’, says number of us- Fantasy Sports Report Fantasy Sports Report
ers participating in online fantasy
sports in India grew at a compound-
ed annual growth rate of 212 per
cent between June 2016 (two mil-
lion) and December 2019 (90 million). It says revenues of This vertical has gone through that,” he says.
the online fantasy sports players grew from `262 crore The Niti Aayog paper looks at creating a separate
in FY18 to `924 crore in FY19 and `2,470 crore in FY20. category of online fantasy sports that will stand out
The sector has so far been regulated by state laws from other skill games as well as betting and gambling.
with online fantasy game operators also relying on It also calls for a single self-regulatory organisation for
broad principles laid down in these legislations and prec- the fantasy sports industry whose governance will be
edents. Rameesh Kailasam, CEO, IndiaTech.Org, which undertaken by an independent oversight board. “These
represents consumer internet companies and investors, guiding principles may be treated as a uniform ‘regula-
says the urgency to streamline the segment stems from tory sandbox’ and recalibrated based on innovations
its fast evolution, increase in foreign investor interest and developments in the sector,” it says. Arun Prabhu ,
and fluidity of the legal framework. “In this country, if Partner, TMT (technology, media and telecom), Cyril
there is no law, the business is neither legal nor illegal, Amarchand Mangaldas, says the guidelines will bring
and if a court upholds your business, it becomes legal. the much-needed predictability in regulatory positions.

70 Business Today 7 March 2021

 “This will stop fly-by night operators from muddying Creating Distinction
the waters with non-compliant formats,” he says. Sai A well-settled position of law puts rummy, bridge and
Srinivas, Co-founder and CEO, Mobile Premier League, horseracing in skill gaming bucket. Several court deci-
which recently raised $95 million in a Series D round and sions have put fantasy sports on the same footing. But
is valued close to a billion dollars, says a joint represen- where this distinction converges with the former is
tation on the draft has been sent to Niti Aayog by major when the element of money is involved like pay-to-play,
players in the industry such as Paytm First Games, My- putting them all under real money gaming.
11Circle, Junglee Games and Winzo. “One major issue is Following an advisory by the Information and
the ambiguity, which comes with most sunrise sectors. Broadcasting Ministry, the Advertising Standards
As esports and fantasy grow, we can expect regulations Council of India (ASCI) recently released guidelines for
to start solidifying. Niti Aayog has taken the first steps real-money gaming companies. The guidelines asked
and we welcome them,” he says. them to give a disclaimer about financial risks and ad-
The OFSP (online fantasy sports platforms) indus- diction. It also mandated that advertisements for these
try body, the Federation of Fantasy Sports (FIFS), ear- games cannot target minors, or present gaming as a pos-
lier known as the Indian Federation of Sports Gaming, sible source of livelihood, or link it to success. ASCI said
was set up in 2017. It has nearly 35 members. Dream 11 within seven weeks of the guidelines coming into effect
is a founding member. Other members are Fancode (December 15), it had processed complaints against 81
Myteam11.com, Mobile Premier League and Indian entities. Around 75 per cent were from consumers. “In
Fantasy League. Former Chief Information Com- terms of platforms, a majority were from Instagram (39)
missioner Bimal Julka, who joined as chairman a few and YouTube (37). Cricket (55) and rummy (15) received
months ago, says, “These guidelines provide equal op- the greatest number of complaints in terms of types of
portunities to all operators, protect consumer inter- games,” it said.
ests and curb possible malpractices. They will provide
impetus to responsible growth.” A former judge of the The Gaps
Supreme Court, Justice A.K. Sikri, is the Ombudsman The Niti Aayog’s draft seems to be deficient in address-
ing the complexity of the ‘real-money’ element, say ex-
perts. While it briefly touches upon the ‘pay-to-play
variant’ of fantasy sports getting prior approval in cases
where winning is largely dependent on skills, the ques-
What OFS Can Do tion of how much money is too much is debatable.
Other gaming federations such as The Online Rum-
$100 `2,000 10-12K my Federation and the All India Gaming Federation
have shared with Niti Aayog their concern over non-
million crore Estimated inclusion of the entire online skill gaming ecosystem
Estimated FDI Likely job crea- and just limiting itself to fantasy sports.
the industry can advertising tion, direct Bhavin Pandya, Co-Founder and CEO, Rummy
attract in 1-2 years revenue and indirect Circle, says the draft seems not just incomplete and
Source: Niti Aayog draft short-sighted, even the consultation process of Niti
Aayog was far from inclusive. While fantasy sports is
less than one-third of the entire skill gaming indus-
try, “There is this perception that playing some of the
games for money is leading to problems in the society
and Ethics Officer. and perceptively fantasy sports wants to steer clear
While advocates of self-regulation claim benefits from this even as games of skills,” he says, pointing to
like transparency, quicker dispute resolution and con- the whole emphasis on the uniqueness of the fantasy
sumer trust, the success of such a body will depend on sports segment.
factors such as participation of all stakeholders, cred- There is no doubt that with many celebrity sports
ibility of the regulating body and unbiased outreach. A stars more open to endorsing some of these platforms
leading lawyer in TMT practice who did not wish to be and user base likely to increase with on-ground sporting
named says, “If an organisation where large players have activities slowly coming back, not to forget the advertis-
control and are on board, with voting rights, it becomes ing revenues, the distinction could well be a perception
difficult for other players to submit themselves. There is battle. Still, keeping the flock together will be the indus-
always the chance of emergence of break-away factions. try’s biggest challenge.
This is where government sanctioning and monitoring
comes into play.” @rukminirao

7 March 2021 Business Today 71

STREAMLINING
WORKFLOW
How workflow
automation
is helping
organisations
become more
efficient by
reducing errors and
operational costs

BY NIDHI SINGAL
ILLUSTRATIONS BY RAJ VERMA
Tech – Workflow Automation

W
hen Reliance Jio started
building its 4G LTE wireless
network, it had the option of
using a standard map to de-
cide things such as the cus-
tomers it will reach out to and
HOW
places where it will set up its towers. This manual pro-
cess would have taken several quarters before it could AUTOMATION
have been streamlined. In order to get going as fast and
with as much precision as possible, it built maps based
on a geographic information system. While Jio Maps
HELPS…
helped find the best sites to set up towers for optimum
coverage, Jio used the tool to coordinate materials for Monitors front,
just-in-time deliveries and dispatch teams for network back-office work-
construction. Marketing executives, too, used the flows more
maps to understand demographics and zero in on ar- effectively
eas where their efforts would yield the best results. The
company is now leveraging the same systems/work-
flows to market its fiber-to-home offering. Automates
Jio is not a one-off case. It is part of a trend where operations at
thousands of companies, across sectors, are automat- scale; offers
ing workflow to make complicated business processes cost savings
simpler with workflow system software that can au-
tomate manual, repetitive processes to save time and Helps businesses
cost, apart from eliminating errors and accelerating ex- share processes
ecution. Be it scheduling orders and payments or con- across multiple
ducting research and audits, workflow automation has platforms
brought consistency to processes and helped reduce
errors and costs for companies in sectors as diverse as
oil (Numaligarh Refinery Ltd or NRL), health (Apollo Creates unified
Hospitals Group and telecom (Reliance Jio). data records
HP India says the size of the Indian workflow au-
tomation market is close to `500 crore. It has been Reduces time to
growing at a compounded annual growth rate of 20- market by bringing
22 per cent for the last five years. Capgemini, a Paris- down turnaround
headquartered technology services company, says the time, thereby
global market will grow to $18 billion by 2023 with India improving custom-
having a 5 per cent (`6,300 crore) share. er experience
“Effective workflows can hide complexity from us-
ers, minimise mistakes and enhance responsiveness of
an organisation to custom-
er requests,” says Agendra
Kumar, President, Esri In-
dia. Jio had used Esri’s Ar- `500 CRORE
`6,300
CRORE
$18
BILLION
cGIS platform to zero in on
India's workflow automation Estimated size by 2023 Estimated global
tower sites. market in 2020 (5% of global market) market size by 2023

The Gains
Workflow solutions automate operations at scale, create unified efficiency gains or employee and customer
data records and deliver better outcomes and cost savings. They satisfaction which can be difficult to quan-
also reduce the time to take a product or service to the market, tify; these can be measured by CSAT (cus-
bring down turnaround time and improve customer experience. tomer satisfaction) surveys,” says Ananth
The return on investment (RoI) depends on several factors. Chandramouli, MD, India Market, Cap-
“There are two measurements of RoI: hard RoI & soft RoI. Hard gemini.
RoI refers to cost and/or time savings. Soft RoI refers to general Workflow automation is known to have

74 Business Today 7 March 2021

 ally, significant improvements can be made in efficiency,
productivity, accuracy and accountability. Being adopted
across sectors, workflow automation at its core orchestrates
multiple processes — straight-through, human-assisted or
case management — of the organisation. Manual workflows,
in contrast, are slow and run the risk of disruption. “Lack of
transparency and dependence on employees can make busi-
nesses vulnerable to a variety of bottlenecks that create inef-
ficiencies. Automating workflow provides a safeguard against
potential barriers and empowers the organisation to directly
participate in designing business solutions,” says Viswanath
Ramaswamy, Vice President, Cloud & Cognitive Software &
Services, IBM India/South Asia, a leader in this space. IBM
Business Automation Workflow combines business process
management and case management capabilities in a single in-
tegrated workflow solution. Case management is the work —
recording, monitoring and analysis —involved in processing
of data, procedures and related content that comprise a case
(a case can be an investigation, a service request or any issue
that must be resolved).
IBM’s solution unites information processes and users to
provide a 360-degree view of work to drive better business
outcomes. It even supports a hybrid cloud strategy and can
be deployed on private cloud, public cloud or on-premises.
It also supports a SaaS environment
through Business Automation Work-
”Automating workflow flow on cloud.
Assam-based NRL, as part of its
safeguards against barriers and roadmap for accelerating digital
transformation, recently created a pa-

empowers the organisation to perless office solution based on IBM

Business Automation Workflow. The
objective was end-to-end digitisation
directly participate in designing of its procurement cycle starting from
requisition and tendering to release

business solutions” of payments to vendors and contrac-

tors. The application made the pro-
curement process more secure and
Viswanath Ramaswamy, Vice President, Cloud &
transparent by ensuring movement
Cognitive Software & Services, IBM India/South Asia
of proposals online and accessibility
to everyone in the cycle 24x7, thereby
making it the single source of infor-
mation, with all approvals and annex-
ures available in one single location.
reduced operational costs by 30-70 per Workflow automation is being used in industries too, includ-
cent in a number of cases, say experts. ing healthcare, manufacturing, ITeS and banking and financial
services. “Automation of manual processes improves productiv-
Nuts & Bolts ity and collaboration, turnaround times, minimises errors and
Workflow automation refers to designing, lowers costs. Our customers have slashed costs by 20-25 per cent
execution and automation of processes after moving to a Xerox IWS environment,” says Leo Joseph,
based on workflow rules. Human tasks, Managing Director – India, Xerox. For example, Indraprastha
data or files are routed between people Apollo Hospitals has adopted Xerox ConnectKey-enabled work-
or systems based on pre-defined rules. By place assistants for streamlining document management by op-
automating workflows, especially pro- timising document printing and costs. Even Apollo Telehealth,
cesses that are primarily handled manu- a unit of the Apollo Hospitals group, has adopted a workflow

7 March 2021 Business Today 75

Tech – Workflow Automation

solution for various tasks that, among other things, ensures that in instances where workflow is controlled
while doing teleradiology, doctors don’t have to type the reports by data locked in forms and other content.
(they are printed via voice command). Also, artificial intelli- “Using our Managed Print Services, which
gence can be used to create alerts for abnormal fundus images utilise document workflow solutions, one
in Tele Ophthalmology (fundus photography involves photo- of our manufacturing clients was able to
graphing the rear of an eye). achieve 33 per cent reduction in contract
Apollo Telehealth has even designed an indigenous device in- approval time, from 45 days to 30 days and
tegration layer. “This platform acts as a plug and play model for savings in paper, supplies and filing/labour
all new devices in the market. Earlier, integrating a new device costs. This also improved productivity and
would take 10-20 days, but with this platform, it takes only two gave the companies capability to review
hours,” says Vikram Thaploo, CEO, TeleHealth, Apollo Hospi- contracts remotely. The solution also pro-
tals Group, India. vided searchable/usable data for quicker,
The cost and process optimisation is achieved either through easier access and improved auditability
faster processing of information or a more secure and less error- and security of every document in compli-
prone way of doing so. “The benefits of such exercises are very ance with the security policy,” adds Gupta.
much dependent on the investment in the process being au-

THE USER CLUB

Reliance Jio has de- Assam-based Numaligarh Indraprastha Apollo Hospi-
ployed location intel- Refinery has created a tals has adopted workplace
ligence to model and paperless office solution assistants for streamlining
test the best sites to for enhanced security document management
locate towers for opti- and transparency in the by optimising document
mum coverage procurement process printing and costs

tomated vs cost savings being achieved. This will be unique in The Covid Push
each scenario. Moreover, as we move towards a new era of digi- “Adopting workflow automation five to
tal transformation, the need for enhancement of automation to seven years ago would have given busi-
support productivity will be crucial to ensure businesses conti- nesses a competitive advantage. But if
nuity and resilience,” says Kavit Gupta, Director, Print Services you talk about today, it is a necessity if an
& Solutions, HP India. organisation wants to innovate and make
HP Document Workflow solutions are being used across in- its operating model more efficient. The
dustries. For example, manufacturing organisations struggling pandemic has accelerated adoption of a lot
with overwhelming number of invoices as well as shipping and of these technologies,” says Ganeshji Aw-
receiving documents are using HP Capture and Route Forms Rec- asthi, Partner, Deloitte India.
ognition software to streamline repetitive document-based pro- With focus on hybrid work, companies
cesses to reduce processing time and associated costs, especially are enhancing the digital agility of their

76 Business Today 7 March 2021

”The need for ”There is hard RoI as
enhancement of well as soft RoI. Hard RoI
automation to support refers to cost and/or time
productivity will be savings. Soft RoI refers
crucial to ensure to general efficiency
businesses continuity gains or employee and
and resilience ” customer satisfaction”
Kavit Gupta, Director, Print Services Ananth Chandramouli,
& Solutions, HP India MD, India Market, Capgemini

employees and actively identifying oppor- telligent Workflows. “By integrating new-age capabilities like
tunities for automation and digitisation. AI, analytics, cloud and skills, workflow automation can fun-
As future of work demands more agility damentally change how work gets done,” says Ramaswamy. AI
from businesses and expects employees will even help in automating workflow decisions. Another key
to benefit from productive tools, busi- trend is the use of open source-based tools and low-code or no-
nesses will move from basic workflow au- code workflow software which require minimal or no coding.
tomation to complex Enterprise Content This will make the solution more accessible to the organisa-
Management where content in multiple tion. As users utilise highly specialised workflow automation
formats (documents, images, videos, etc.) tools, customisation will be a key feature of workflow automa-
is brought together to make processes even tion software.
more efficient.
The future will also see the rise of In- @nidhisingal

7 March 2021 Business Today 77

 Interview
WE EXPECT
DOUBLE-DIGIT
GROWTH OVER
THE COMING
YEARS
The $9-billion US-based Air
Products, the world’s leading
industrial gases company,
has extensive operations in
India. Industrial gases are an
integral raw material in energy,

S
ince you assist numerous compa- hydrocarbons and chemicals.
nies in manufacturing, do you see Richard Boocock, Senior Vice
recovery in India post-Covid? President, Chief Information
Officer and Special Advisor to
Air Products is among the leading indus- the Board's Chairman, tells P.B.
trial gases companies globally. Our market Jayakumar that the policies
capitalisation is around $60 billion. That announced in the last few
makes us one of the bigger American spe- months for Atmanirbhar Bharat
cialty chemical companies. Our industrial will boost manufacturing in
gases business is growing in double digits. India further. Edited excerpts:
Obviously, there was some disruption re-
lated to the pandemic. India is a growing
market for manufacturing. The policies announced in the last
few months around self-reliant India are supportive of continued
growth of manufacturing in India. This means consumption of
industrial gases will continue to grow. A lot of industrial gases are
used in iron and steel manufacturing, semiconductor manufactur- Industrial gases have numerous applica-
ing, food processing, glass manufacturing, tyre production, and so tions in chemical and hydrocarbon sectors.
on. One of the areas where we have a world lead-
With Air Products and INOX Air Products ( joint venture), we ing position is gasification of coal. If India
are definitely the leading industrial gases companies in India. India is going to gasify coal, as announced by the
is a developing market for industrial gases with some steelmak- prime minister, to take advantage of domes-
ers owning a lot of captive capacity. Then there’s the Build Own tic coal supplies, Air Products has a leading
Operate capacity that Air Products and INOX Air Products have position in gasification technology as well as
built over the years. I think the Indian market for industrial gases is supply of oxygen to gasify the coal. This is an
around 4,000 tonnes per day, probably around $500 million a year. area where we are looking to invest — on a

78
 into synthesis gas could be turned into
methanol, which can be used to make
ethylene; or we can use the same gas to
make ammonia and fertilisers. This is a
very good example of how we can make
India self-reliant. Air Products’ business
model is Build Own Operate. We will in-
vest in the entire facility, from receiving
coal to making the finished chemical
product. Air Products operates in more
than 50 countries.

India is going to mine out more

coal, but our reliance on coal for
producing electricity is going
to fall. We are moving towards
green energy. There will be coal
available for other applications.
What are your plans for India?
We’re ready to invest $5-10 billion in
India for gasifying coal to make value-
added chemicals for the Indian market.
We positively look at the target set by
the Indian prime minister for gasifying
100 million tonnes of coal per year. We
will work with the appropriate coal com-
pany. It could be Coal India, for example
the Dankuni project being developed
in West Bengal. We will take coal, gas-
ify it to clean gas and make something
like methanol, for example. Methanol
is feedstock for a number of processes.
One particular application in India is
its blending with gasoline (petrol) to
improve the latter’s environmental
performance. That is the type of busi-
ness structure we have in mind. Metha-
nol can also be used in other chemical
processes, for example, making certain
acids. It can also be used to make other
chemicals such as polyvinyl alcohols
and polyvinyl acetate, which are then used in a lot of everyday mate-
rials that go into making many homecare products, paints.
Essentially, our facilities will use domestic coal to make chemi-
cals that otherwise have to be imported. The other factor is the in-
Build Own Operate model — to make world creasing sophistication of manufacturing in India, which means use
scale gasification complexes in India. of more industrial gases.

What is coal gasification? What are You have extensive presence in India with base in cities
its applications? such as Vadodara and Pune. Air Products has been in
We take coal as a feedstock and gasify it using India for a long time. Are you looking at other partners
oxygen to produce clean synthesis gas. This in ‘coal to gas’ projects?
gas can be converted into a number of high- Yes. We are prepared to do this ourselves as Air Products. We have
value chemicals for which India has a signifi- also been very successful in joint ventures in many parts of the
cant need. The gasified coal that is converted world, including in industrial gases in India, INOX Air Products. So,

7 March 2021 Business Today 79

Interview – Richard Boocock

we are very comfortable doing joint ventures, but we are also pre- is relatively small. It's a $9-billion company.
pared to make 100 per cent investments, because this is our technol- You know, our revenues from India are a
ogy, our investment, our capability, our value addition. small percentage of that. However, we are ex-
pecting double-digit growth, very consistent
How many jobs will these projects will create? double-digit growth, over the coming years.
Each coal gasification project will be a $1-2 billion investment. We I hope that with some major projects and in-
have to employ hundreds to thousands of people. It will require a vestments such as coal gasification projects,
lot of material and equipment which we will look to source within India will become a much more significant
India. We will also require a lot of support industries and companies component of Air Products’ revenues.
around the facility which will perhaps generate another 5,000 jobs.
We believe these types of investments are going to have a long-term Are similar large-scale coal gas proj-
positive impact on economies and generate local jobs. ects already operational in India?
This is a local business as is difficult to transport these gases There aren’t major coal gasification facilities
over long distances. That is why we make in the country where they in India. But we see that a lot of value can be
are consumed. The volume of our production will
be measured in tens of thousands of tonnes per day.
These are world scale facilities that support world
scale production.

Apart from the West Bengal project, have

you identified any other areas where you I hope with some major
are going to invest?
Another area where we’re very active is providing investments, India will
hydrogen for refining. Currently, we have a close to become a much more
$500-million facility in Cochin in Kerala operating
for almost four years. It is supplying hydrogen to the significant component of
BPCL refinery in Cochin. As India continues to grow
and develop, we expect to see continued growth in
Air Products’ revenues
refining capacity in India. That will require additional
industrial gases such as hydrogen. That will be a spe-
cific area of interest for us. So, if we take the Dankuni
coal gasification opportunity, we will invest in that
facility as part of the creation of that entire project. For large invest- added through development of domestic
ments, we will invest in parallel to our customer that is consuming coal reserves and policy frameworks that
the gases. have been put in place in the last few months
We are always interested in additional investments in India. around the changes in the way coal resources
We’re supporting BPCL in production of Oxo alcohols. If they have can be developed and promotion of coal gas-
other plans to build on their capabilities, either further expansion ification for utilising domestic coal.
of the refinery, or making additional chemicals and petrochemicals
from the refinery, we would be happy to increase our investments Going forward, because a lot of tech-
there to support them. nology is coming into play in manu-
facturing, what kind of changes can
Do you see India as a place from where you can export happen in manufacturing?
to other markets? So, one of the things that Air Products has
Yes. In engineering activities, we are already executing projects always supported and been involved in its
from our Pune and Vadodara offices for locations all over the world. entire history is supporting improvement in
We are currently supporting projects in Indonesia, in the United manufacturing performance, manufacturing
States, as well as in Western Europe. So, we are exporting engi- efficiency, and so, as manufacturing becomes
neering talent. We also have a programme to significantly increase more sophisticated and new technologies
the equipment and material that we are purchasing from India for are brought into manufacturing, we would
our projects around the world. This is where we feel that we have a expect industrial gases to not only continue
very strong commitment to Make in India. We are also supporting to have a very strong part to play, but to have
growth of domestic manufacturing and fabrication in India to sup- some very exciting growth opportunities.
port our exports to other geographies.
At the moment, India, as a proportion of our global revenues, @pb_pbjayan

80 Business Today 7 March 2021

ILLUSTRATION BY RAJ VERMA

86

TAX-SAVING IN
THE ELEVENTH HOUR
PLANNING LAST-MINUTE INVESTMENTS TO SAVE
TAXES? HERE’S WHAT ALL YOU CAN DO

92

INTERVIEW WITH CHANGPENG ZHAO

 Money Today – Cover Story

Scary On
Tax-saving
In
TheThe
Top
Eleventh
Hour
PLANNING LAST-MINUTE
INVESTMENTS TO SAVE TAXES?
HERE’S WHAT ALL YOU CAN DO
BY AVNEET KAUR
ILLUSTRATION BY RAJ VERMA

ith the current financial year nearing its

close, it’s time to take stock of your tax-saving
investments. In case you opt for the old tax re-
gime, you can claim deductions of up to `1.5 lakh
in a financial year under Section 80C. There are
other sections also to help you reduce your tax
outgo. Do your tax planning activity at the be-
ginning of the financial year to avoid last-min-
ute hiccups. But in case you are late, there’s still
time to invest and save taxes. A look at the op-
tions available for last-minute investors.

86 Business Today 7 March 2021

Money Today – Cover Story

Section 80C: The Most Popular in Tier-I accounts. Firstly, any individual who is a sub-
You can avail a deduction of up to `1.50 lakh in a financial scriber of NPS can claim tax benefit under Section 80
year under Section 80C of the Income-Tax Act. A num- CCD (1) within the overall cap of `1.5 lakh under Sec-
ber of options are available but choose the one that suits tion 80 CCE. Secondly, NPS allows a deduction for
your risk profile the best. Think long-term and do not investments up to `50,000 under subsection 80CCD
take decisions on an ad-hoc basis. (1B). This is over and above the deduction of `1.5 lakh
Tax-saving mutual funds: Most financial planners available under Section 80C of the I-T Act. Thirdly, a
swear by tax-saving mutual funds, or ELSS. An ELSS corporate subscriber may avail a deduction of up to 10
is an open-ended equity-linked scheme with a statu- per cent of salary (basic + DA) on employer’s contribu-
tory lock-in period of three years and tax benefits. ELSS tion under Section 80CCD (2).
funds have the shortest lock-in period among tax-saving NPS also offers a voluntary account, Tier-II, with
options available under Section 80C. “In the tax-saving flexible withdrawal and exit rules. Last year, the govern-
space, ELSS is one of the preferred investment vehicles ment allowed NPS subscribers working with the Central
as it has one of the lowest lock-in periods and offers the government to avail tax benefit on their contribution to
maximum potential for returns. For the long-term, eq- Tier-II accounts as well. Such contributions are locked in
uity is the most-suited investment for three years.
option as volatility is reduced substan- NPS delivered double-digit re-
tially. Given the growth environment turns in 2020 for both equity and debt
around us, it is preferable to remain schemes. But such high returns are not
invested in equities,” says Raghvendra
Nath, Managing Director, Ladderup
Wealth Management.
22.30%
Average return by ELSS
always guaranteed. “As with mutual
funds, NPS schemes primarily invest
in market-linked securities, which
In the last one year, ELSS funds funds in the last one year, are susceptible to various economic
have delivered an average return of the highest among
cycles, market movements, policy
tax-saving options. They
22.30 per cent, the highest among tax- have a three-year lock-in decisions and other socio-economic
saving options. The best-performer factors. Hence, one should not expect
among them (irrespective of asset high returns generated in the last one
size) has been Quant Tax Fund with year to continue for the long-term.

10%
55.52 per cent return in the last one Any correction in the equity market
year. In the last three and five years, or a prolonged bearish condition can
ELSS funds have given average re- Capital gains tax on ELSS
adversely impact the returns of NPS
turns of 8.98 per cent and 14.31 per funds on gains exceeding equity schemes like in the case of eq-
cent, respectively. `1 lakh in a financial year uity MFs,” says Sahil Arora, Director,
Mutual fund advisers, however, Paisabazaar.com.
advise caution. The market remained “Similarly, a reversal in the inter-
volatile in 2020, which benefitted est rate regime or deterioration in the
these schemes. “Expected returns debt market or money market can ad-
from these schemes should be 12 -14 versely impact the returns of NPS cor-
per cent per annum,” says Nath. porate bonds and government bond schemes as well as
Also, no gain is without risks. If you are a risk-averse debt mutual funds,” he adds.
investor, don’t go for ELSS funds. They are for those who NPS is suitable for investors with low-to-medium
have high risk appetite and can stay invested for at least risk profile. For those with high risk-tolerance capacity,
five-seven years. the 75 per cent cap on equity allocation is a drawback. “A
Capital gains on tax-saving MFs attract 10 per cent major disadvantage of NPS is the 75 per cent upper cap
tax on gains exceeding `1 lakh in a financial year. placed on equity exposure. Those with higher risk appe-
National Pension System: Another tax-saving instru- tite seeking higher growth for their post-retirement cor-
ment, which allows equity allocation, is the National pus would find ELSS more suitable,” says Arora.
Pension System (NPS). The government launched this However, NPS can be utilised to avail additional tax
low-cost tax-saving option to help investors save for benefits. “It is recommended to use ELSS investments
retirement. NPS restricts withdrawals till the age of 60 for deductions under 80C up to `1.50 lakh and utilise
in Tier-I accounts. Premature withdrawals are allowed NPS only for additional deduction under 80CCD (1B)
after three years in specific cases like critical illness, up to `50,000, as this would ensure maximum liquid-
children's education, wedding expenses, purchasing or ity and tax efficiency,” says Nath of Ladderup Wealth
building a house. Management.
NPS offers three kinds of deductions for investing Life Insurance: Life insurance as a category offers fi-

88 Business Today 7 March 2021

 THE BEST IN ELSS
Canara Robeco 34.09
Equity Tax Saver 17.76
Fund 18.54

32.39
Mirae Asset Tax
15.46
Saver Fund
22.1 Returns (%)
19.33 1-Year
Axis Long Term
14.98 3-Year
Equity Fund
16.08 5-Year

18.36
Kotak Tax
Saver Fund 12.14
16.16

Invesco 22.03
India Tax 12.04
15.98

Top schemes on the basis of three-year returns; schemes holding assets

up to `500 crore were not considered; source: ValueResearch

NPS vs ELSS
Rate of Return
Investment
1-Year (%) 3-Year (%) 5-Year(%)
ELSS 9.14-55.52 - 2.44-17.33 8.12-21.51
NPS Tier-1 Equity Plans — 22.56-24.19 Tier-1 Equity Plans — 9.56-12.48 Tier-1 Equity Plans —
(All Citizen Model) Tier-1 Government Bond Plans — Tier-1 Government Bond Plans 13.70-16.37
9.58-10.59 — 11.11-12.73 Tier-1 Government Bond
Tier-1 Corporate Debt Plans — Tier-1 Corporate Debt Plans — Plans — 9.89-11.50
9.94-12.23 8.62-10.21 Tier-1 Corporate Debt Plans
— 9.05-9.97
Debt Mutual Fund: 1.52-10.08 0.25-9.70 3.21-8.81
Corporate Bond
Debt Mutual Fund: Gilt 5.48-11.61 7.43-11.49 6.33-10.07

Data as on February 5, 2021; source: Paisabazaar.com

nancial protection as well as tax saving. Premiums paid earner dies. Calculate an adequate sum to take care of
qualify for tax deduction under Section 80C. Also, the your expenses, liabilities and goals before going for a
amount at the time of maturity is tax exempt under particular policy.
Section 10(10D). Except in case of ULIPs where the ma- Term insurance is the cheapest and the most rec-
turity amount is tax exempt for annual premiums of up ommended life insurance scheme. However, industry
to `2.5 lakh only. experts believe ULIPs, which saw a major revamp in the
The objective of buying life insurance goes beyond last few years, are making a gradual comeback. The new
saving taxes though. The primary goal should be finan- ULIPs are low on charges. However, to buy an adequate
cial security for family members in case the primary insurance cover under an ULIP, you need to pay a heavy

7 March 2021 Business Today 89

Money Today – Cover Story

premium compared to a term plan. TAX STATUS OF INVESTMENTS

PPF: Public Provident Fund (PPF) is a 15-year invest-
ment scheme, which falls under the EEE category. EEE EEE PPF, Sukanya Samriddhi Yojana, Life Insurance
means an investor enjoys tax exemption at the time of
EET NPS, Tax Saving Mutual Funds (ELSS)
deposit, accrual of interest and withdrawal. It is a popu-
lar investment option to save taxes under Section 80C, ETE Tax Saving FDs, NSC, Senior Citizen Savings
Scheme
but the 15-year lock-in period is a drag on liquidity. The
lock-in can be extended by five years in case the inves- EEE: Investment, interest on investment and maturity
value are tax exempt
tor does not need the money at the time of maturity. EET: Investment and interest on investment are tax
PPF also scores high on safety. It is a suitable tax-saving exempt, but maturity value is taxable
option for risk-averse investors who do not mind a long ETE: Investment and maturity value are eligible for tax
exemption but interest on investment is taxable
lock-in.
PPF allows one withdrawal after five years, exclud-
ing the year of account opening. The current interest

FIXED-INCOME INVESTMENT OPTIONS UNDER 80C

Interest rate (%)

5-Year Tax-Saving FDs*

Public Provident Fund Sukanya Samriddhi Yojana 5 YEARS

5.4
15 YEARS 21 YEARS

7.1 7.6 6.2 in case of senior citizens

*Returns for SBI tax-saving FDs

rate on PPF deposit is 7.1 per cent, the lowest since 1977. interest earned on these deposits is taxed according to
Till the March quarter of FY20, PPF accounts used to at- the investor’s tax bracket. The bank also deducts TDS
tract 7.9 per cent interest. wherever applicable. Senior citizens can claim deduc-
Sukanya Samriddhi Yojana (SSY): Parents or guardians tion of `50,000 on the interest earned from deposits ac-
can open SSY accounts in the name of a girl child till she at- cording to Section 80TTB.
tains 10 years of age. A SSY account matures after 21 years National Savings Certificate (NSC): Anyone look-
or at the time of the marriage of girl child after she becomes ing for a safe investment avenue to save taxes under
18. Like PPF, investments under SSY fall under EEE. Section 80C while earning a steady income can invest
SSY accounts currently offer 7.6 per cent interest per in NSC. It offers guaranteed interest for a term of five
annum, the highest among small-savings schemes. It can years. Being government-backed, it provides complete
be prematurely closed after five years in case of death of capital protection. Currently, NSC offers an interest of
the account holder or death of the guardian. An investor is 6.8 per cent compounded annually, but payable at ma-
allowed to withdraw up to 50 per cent of the deposit once turity. The interest is taxable when received, at the time
the girl reaches the age of 18 or after passing Class 10. The of maturity. The interest earned on an annual basis is
account can be opened for a maximum of two daughters, not paid to the investor but reinvested, which qualifies
with a combined investment of up to ` 1.5 lakh in a year. for a fresh deduction under Section 80C, thereby mak-
Tax-saving FDs: Tax-saving deposits by banks come ing it tax-free.
with a lock-in of five years. At present, SBI 5-Year Tax Senior Citizens Savings Scheme (SCSS): Senior
Saving FD offers an interest rate of 5.40 per cent per an- Citizens Savings Scheme is a tax-saving investment
num. It's 6.20 per cent for senior citizens. However, the option for those above 60 years of age. A government-

90 Business Today 7 March 2021

backed scheme, it is a safe investment option. An indi- (`50,000 if parents are senior citizens) for premium
vidual may invest a maximum of up to `15 lakh in SCSS paid towards the health insurance policy of parents.
in lumpsum. It has a tenure of five years and the ac- Section 80DD: If you have incurred expenses on a hand-
count can be extended for a further three years, with- icapped dependent with at least 80 per cent disability in
in one year of maturity. Currently, the scheme offers the previous year, you may claim tax deduction on ex-
an interest rate of 7.4 per cent per annum. The interest penses of up to `75,000. The deduction amount increas-
is paid quarterly, which makes it a source of regular in- es up to `1.25 lakh in case of severe disabilities.
come for investors. Section 80DDB: The I-T Act allows tax deduction to-
One of the major drawbacks of investing in SCSS is wards treatment of specific diseases for a maximum of
that the interest earned is taxable if it exceeds `50,000 up to `40,000 under Section 80DDB. The maximum de-
in a financial year. TDS is also deducted accordingly. duction in case of senior citizens is `1 lakh.
Apart from investments, several expenses qualify Section 80E: You can claim deduction on interest pay-
for tax deduction under Section 80C. In fact, you should ment if you have taken an education loan for self, spouse
first look at these expenses. Deduct the total amount of or children.
Section 80EE: This section allows
tax deduction for first-time home
buyers on home loan interests. Maxi-
mum deduction that can be claimed
under this section is `50,000 during
a financial year.
Besides, you can also claim up to
`2-lakh deduction on interest pay-
ments under Section 24b. In case of
a let-out property, the tax benefit is
only limited to the interest payment
amount. You can claim an additional
deduction of `1.5 lakh under Section
80EEA on interest repayment for af-
National Savings Certificate Senior Citizen fordable housing this year.
5 YEARS Savings Scheme Section 80G: Charity to approved

6.8 5 YEARS

7.4
institutions can be claimed as deduc-
tion.
Section 80GG: Employees who do
not get HRA, but are still paying rent,
may avail a maximum deduction of up
to `60,000 in a financial year.
qualifying expenses incurred during the financial year Section 80GGB and 80GGC: These sections allow 100
from the `1.50-lakh limit under Section 80C and invest per cent tax deduction on contributions made to a politi-
the remaining amount in a suitable option. cal party in any mode other than cash.
An amount paid towards a child's tuition fee for up Section 80TTA: Interest earned on savings accounts
to two children also qualifies for tax deduction under up to `10,000 per year is allowed as deduction. The limit
Section 80C. Repayment of home loan principal is also of `10,000 includes interests from all savings accounts
allowed as a deduction under the Section. Stamp duty with banks, co-operative banks, and post offices. Inter-
and registration charges towards taking ownership of est earned over ` 10,000 will be taxable as income from
a property can be claimed as deduction under Section other sources.
80C. However, exemptions can only be claimed in the Section 80TTB: Senior citizens can claim a deduction
year the duties are paid. of up to `50,000 in a financial year on interest income
from fixed deposits or savings accounts at banks, co-
Beyond Section 80C operative banks, and post offices.
The Income-Tax Act allows some more deductions apart In case you are late, there’s still time to invest and
from those under Section 80C. save taxes in the current fiscal. Consult a good financial
Section 80D: It allows deductions on payment of pre- planner or an expert. And from next year, plan your in-
miums towards health insurance policies. You can claim vestments from the first month of the financial year it-
deduction of up to `25,000 for premium paid towards self to avoid last-minute chaos.
insurance of self, spouse and dependent children. The
section further allows a deduction of up to `25,000 @avn_kaur

7 March 2021 Business Today 91

 Money Today – Interview

India could lose out on

one of the most important
global financial rallies

N
ews of the government’s proposed What if the proposed ban comes
ban on cryptocurrencies, in fa- through?
vour of a digital rupee, is doing the The current market conditions in the
rounds. Your thoughts. digital asset space have brought renewed
I cannot comment directly on govern- interest in the sector in India, both from a
ment policy, but based on our experience retail and institutional perspective. Uni-
globally, a better way to address the issue would be to start versities, including IITs, have embraced
a constructive dialogue with all the players, with an aim to the sector’s underlying technology, block-
create sustainable regulations. It would promote the growth chain, which is set to lead the way globally.
of the sector, while addressing the government’s concerns. Indian exchanges have recorded all-time

92 Business Today 7 March 2021

The government is Bitcoin has emerged as the best asset class of
2020 with over 300 per cent return. Ether is also
all set to bring a Bill, touching new highs. What is the future of these
which is likely to ban currencies?
cryptocurrency trading, Bitcoin and other cryptocurrencies are the future of finance.
We are currently in the pre-adoption phase. Institutional and
mining and investments retail investors are entering the market in large numbers.
in the country. Rallying Bitcoin has jumped from $30,000 to $46,000, hitting mul-
over 300 per cent in tiple all-time highs in the past 30 days. On a long-term basis,
Bitcoin and other cryptocurrencies have been on an upward
the last year, the world’s price trend since their creation. While there are short-term
largest cryptocurrency, fluctuations, I am bullish on the future of cryptocurrencies
Bitcoin, has gained as a store of value and a medium of exchange in the long-term.
popularity in the
What is your advice for investors?
country among other Just one, DYOR (Do your own research). Don’t fall prey to
crypto assets, with top scams, always look out for security updates and never share
exchanges witnessing your keys. As with all asset classes, never invest what you
can’t afford to lose.
a multifold jump in
trading volumes. Some experts believe Bitcoin can replace gold
Changpeng Zhao, also as a hedge against inflation? Your take.
The on-going economic, political and social events, combined
known as CZ, Founder with the effects of the pandemic, have set the scene for a finan-
and CEO of Binance, cial storm, which will need a next-gen support system. Bitcoin
the world’s largest is a better store of value than gold and is a valid hedge against
inflation and potential economic crises. Both gold and Bitcoin
crypto exchange in are scarce, but we can’t precisely quantify the amount of gold
terms of volume, talks left to be mined. But we know that there are only 21 million
to Avneet Kaur about Bitcoins, and this guarantees its scarcity. Blockchain being an
the government’s immutable ledger gives Bitcoin the security of immutability.
The distributed network of nodes ensures the reliability and
potential move. Edited efficiency of the network as they validate transactions and
excerpts: maintain a transparent public ledger.
Gold lacks reliability in terms of origi-
nality and true value.
Bitcoin is a better
store of value Binance recently became the
high trading volumes and user registra- than gold and world’s largest cryptocurren-
tions in the past six months. cy exchange in terms of trad-
The digital asset industry is expected
is a valid hedge ing volumes within a year of its
to have a very positive impact on employ- against inflation launch. What led to that?
ment in India based on the expected num- and potential When we launched Binance, our aim
ber of jobs it will create in IT, customer economic was to provide a platform for crypto
support, marketing and design spaces. traders to buy and sell digital assets
crises
Any regulatory change that would damp- at a low cost. Upgrading our security,
en the rapid growth of this sector, which rolling out market-fit products and
is globally leading the way in the fintech constantly listening to our customers
space, would slow down this growth. If got us where we are today.
decentralised currencies are eliminated
from the financial infrastructure, India as So, where is Binance based actually?
an emerging market hub may lose the op- Our team is dispersed throughout the globe. Binancians
portunity to participate meaningfully in are everywhere; we are a decentralised organisation.
one of the most important evolutions in
the financial sector. @avn_kaur

7 March 2021 Business Today 93

Money Today – Q & A

Money
Matters
MANAGING YOUR MONEY
CAN BE TRICKY. SEND
YOUR QUERIES, AND
PERSONAL FINANCE
EXPERTS WILL HELP YOU
RESOLVE ANY ISSUE

REAL ESTATE I will be taking tax exemption on

I am a married woman and a single child. My father is no more. My mother the interest amount. Now, I am in
is a homemaker and I need to provide for her. As of now, I give her cash a position to save an additional
for monthly expenses, which I will continue. I want to explore the reverse `10,000permonth.ShouldIprepay
mortgage option so that she can get extra regular income. Will it be a the loan with additional money or
viable option? –Ashika Tagore, Indore invest in mutual funds that may
give more than 10 per cent returns
A reverse mortgage is an unconventional loan. You pledge your property to a lend- in the long run and then repay
ing institution. The loan amount is determined on the basis of property value and the loan after they appreciate?
interest rate. The financial institution will pay your mother a monthly amount – Ali Zafar, Lucknow
against the property. But you may not be able to inherit this property. You can, of
course, repay the loan later to claim the property. Also, your mother needs to be 60 If you are certain you will continue saving
or above. The property should be her primary residence. `10,000 in the long-term (next five
You must weigh all your options before going for this. Your mother may consider years), then SIPs in mutual funds make
selling the house and moving into a smaller place. The money saved can be invested sense, because markets are volatile. At
in options that can multiply the money and pay monthly income. –Adhil Shetty, the moment, markets are high, and may
CEO, BankBazaar.com be in the next one or two years some
incidents will happen and they will crash
by 40 per cent. In that case, you should
still be in a position to continue the
SIP and at the same time save `10,000
additionally. If you feel that this savings
TAXATION has already made tax computations/ (`10,000) might not be consistent
My salary income is more than deductions, you can opt for the new and fluctuate with the volatility of the
`10 lakh. My office has made tax system while filing the return. If tax market, you should first repay the home
deductions as per the old tax payable under the new regime is less loan and invest once you are debt-free
regime for FY21. I want to opt for than what you have paid, you can claim so the volatility does not bother you.
the new tax regime. Can I still do a refund during ITR filing. –Lionel –Rachit Chawla, CEO & Founder,
that? –Tarun Kumar, Mumbai Charles, CEO, IndiaFilings Finway FSC

Yes, taxpayers can opt for the tax HOME LOAN

regime any time before filing the I started my home loan post-Covid Please send your queries to
return for the year. If the employer at around 7 per cent interest rate. [email protected]

94 Business Today 7 March 2021 ILLUSTRATION BY RAJ VERMA

 Network
PHOTOGRAPH BY YASIR IQBAL

Narayanan’s Book Hub

If Suresh Narayanan, Chairman ing is his way of not just unwinding himself in a book, right in the middle
and MD, Nestle India, is asked about after a hard day at work, but also help of nature. Having spent a significant
his most luxurious possession, his him reflect on his actions and strate- part of his growing-up years on
instant response will be books. His gies. “It important for a CEO to reflect mountainous terrains such as Joshi-
library at home has some of the finest from time-to-time, especially during a math (Uttarakhand) and the Nilgiris,
books on leadership, purpose and pandemic,” he says. Narayanan loves the hills. “The hills
technology, some of which have, in Covid-19 has compelled him to be calm me, and reading helps in making
fact, cost him a fortune. “I am the hard home-bound, but his favourite way to me a humble human being.”
cover variety,” he says proudly. Read- unwind has always been to immerse – AJITA SHASHIDHAR

96 Business Today 7 March 2021

 OUTDOOR PLAY
Ritesh Chopra, other activities such
NortonLifeLock’s Di- as horse riding or
rector for Sales and skiing. The duration
Field Marketing, India of the races can be
& SAARC Countries, anything between
loves outdoor sports. two hours and
Way back in 2007, two weeks.” The
Chopra took part in ultimate goal is to
the Eco Challenge in navigate one’s way
New Zealand along through the wilder-
with his colleagues, ness to reach the
to navigate through finish line with all
an unmarked wilder- team members by

PHOTOGRAPH BY RAJWANT RAWAT

ness course. For your side. “This is a
Chopra, this was learning that I take
the beginning of the to the boardroom,”
little-known sport says Chopra. He has
of adventure racing. completed four such
“It has three core expedition races —
elements — trekking, two in New Zealand
biking and paddling. (2007 and 2008),
Depending on the one in Hawaii (2011)
course, addition- and one in Rishikesh
ally there can be (2014). – NIDHI SINGAL

Bhargava,
PHOTOGRAPH BY RAJWANT RAWAT

The Violinist
Rohan Bhargava, week. Currently, he
Co-founder of cash- can comfortably read
back and coupons music and is working
site CashKaro.com, on his skills to play
wanted to play the a song impromtu.
violin from a very While his training's
young age. But as he focus is classical mu-
grew older, passion sic, he follows some
took a backseat. It violinists on YouTube
was only when he who play popular
read the book Atomic music, Taylor David
Habits by James being a favourite.
Clear, which talks “As an entrepre-
about taking micro neur I am always
steps towards one's thinking about the
interest instead of things to be done,
postponing it, that what to do next. But,
Bhargava decided when I am practic-
to learn to play ing, it is just me and
the instrument, my violin, and noth-
and started taking ing else. It is the best
classes twice a week. de-stressor I could
Now, two years later, have found,” says
Bhargava practices Bhargava.
for four-five hours a – SONAL KHETARPAL

7 March 2021 Business Today 97

 “SMALL IS BEAUTIFUL, BUT
BIG IS NECESSARY”
CHANDRA SHEKHAR GHOSH, MD & CEO, Bandhan Bank

Q. What was the problem you

were grappling with?
A. It wasn’t a business challenge or prob-
lem per se. Bandhan’s mission, since it
started in 2001, has been to create social
impact at scale by helping unbanked and
underbanked get access to formal credit
and use it to financially empower them
through entrepreneurial pursuits. We
have also focused on developmental pro-
grammes aimed at the not-so-privileged.

Q. Who did you approach and

why?
A. A piece of advice that has always helped
me through my professional life was given
to me by late Sir Fazle Hasan Abed, Founder
and Former Chairperson of BRAC, one
of the world’s largest NGOs based in
Bangladesh, where I had my first job.

Q. What was the best advice you

ever received?
A. Abed Bhai had told me, “Small is beau-
tiful, but big is necessary.” It means any
activity or business is good at small scale,
but to create a meaningful impact, it is nec-
essary to build scale.

Q. How effective was it in

resolving your problem?
A. It was very helpful as I went about build-
ing Bandhan Bank. It gave us the conviction
of converting into an NBFC-MFI, from an
NGO, in 2009, and subsequently become
PHOTOGRAPH BY YASIR IQBAL

a pan-India bank in 2015. It helped create

impact at scale and touch the lives of 2.08
crore customers, with a total asset base of
`76,620 crore and a deposit base of `66,130
crore. Through programmes in education,
health, employment generation and finan-
cial literacy, we have already touched the
lives of more than 28 lakh people.
– ANAND ADHIKARI

98 Vol. 30, No. 5 for the fortnight February 22, 2021 to March 7, 2021. Released on February 22, 2021. Total number of pages 100 (including cover)