In USD terms 2.67 Billion $ in 6 days.
Amazon, Flipkart generate Rs 19,000 cr in festive sales, Flipkart takes lead
Amazon, Flipkart generate Rs 19,000 cr in festive sales, Flipkart takes lead
Indian Economy : News,Discussions & Updates
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Govt to invite bids for Air India privatization
3 min read. Updated: 08 Oct 2019, 11:38 PM IST; by Asit Ranjan Mishra
Debt-laden Air India has been surviving on a ₹30,000-crore government bailout and has ceded market share to private airlines such as IndiGo and SpiceJet.
News Delhi: The government will soon invite bids to sell its entire stake in Air India, after potential buyers baulked at an initial attempt to divest a partial stake in the national carrier.
“The expression of interest document for Air India will be put out anytime now, at least before the end of this month. The plan is to sell 100% stake in the airline. The proposal needs clearance from a ministerial panel before it is made public," a finance ministry official said on condition of anonymity.
A sale of Air India is key for the Union government to meet its ambitious disinvestment target of ₹1.05 trillion for the year to 31 March. Meeting the target is crucial this year as the government estimates that its corporate tax rate cut will lead to a revenue loss of ₹1.45 trillion.
Debt-laden Air India has been surviving on a ₹30,000-crore government bailout and has ceded market share to private airlines such as IndiGo and SpiceJet.
Air India’s net debt swelled from ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019
The ministerial panel to divest Air India, headed by home minister Amit Shah, met for the first time on 19 September to explore all options. The panel also includes finance minister Nirmala Sitharaman, civil aviation minister Hardeep Puri, and railway and trade minister Piyush Goyal. The panel is likely to meet soon to formally clear the privatization process of Air India.
The first attempt at selling a stake in the flag carrier in March 2018 failed to take off as investors were uncomfortable with the government retaining a 24% stake in the airline as well as the requirement to stay invested for at least three years. Also, Air India’s debt of more than ₹33,000 crore that was bundled with the sale deterred investors.
To reduce the debt burden, the government established Air India Assets Holding Ltd (AIAHL) in February, a special purpose vehicle (SPV) to park a part of the airline’s debt not backed by any asset, non-core assets and other non-operational assets of the airline. Only Air India Air Transport, out of the company’s four subsidiaries, has been transferred to AIAHL as of now. The SPV has raised ₹7,000 crore through a bond sale to refinance its debt last month.
Air India’s net debt swelled from about ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019. It includes working capital and aircraft-related debt. The sale of Air India, which has about 128 planes, will also let the government exit a loss-making business.
Presently, full foreign ownership is allowed in an Indian airline, although foreign airlines cannot own more than 49% stake in a local carrier.
The environment is now conducive to restart the privatization process of Air India and the failure of Jet Airways (India) Ltd to secure an investor will not affect the disinvestment plan, said Atanu Chakraborty, then secretary of the Department of Investment and Asset Management in an interview in July. Chakraborty is currently the economic affairs secretary. Jet Airways has been grounded since 18 April due to an acute cash crunch.
With a revival of Jet Airways appearing bleak, Air India offers a great opportunity for any company that wants to enter the full service carrier business in India, said Dhiraj Mathur, an aviation expert and former partner at PwC India.
“It is an attractive asset but the issue is how many will have the deep pockets to take Air India since the present rules don’t permit 100% ownership by foreign airlines. The government may have to review that policy. The other two issues are related to employees and liabilities, a lot of which the government has restructured and put into an SPV. If those can be addressed, it’s a great asset," he added.
Gireesh Chandra Prasad contributed to this story.
Govt to invite bids for Air India privatization
3 min read. Updated: 08 Oct 2019, 11:38 PM IST; by Asit Ranjan Mishra
- Centre now plans to divest 100% stake in the loss-making national carrier
- The first attempt to privatize the airline failed as investors were not happy with the govt retaining a 24% stake
Debt-laden Air India has been surviving on a ₹30,000-crore government bailout and has ceded market share to private airlines such as IndiGo and SpiceJet.
News Delhi: The government will soon invite bids to sell its entire stake in Air India, after potential buyers baulked at an initial attempt to divest a partial stake in the national carrier.
“The expression of interest document for Air India will be put out anytime now, at least before the end of this month. The plan is to sell 100% stake in the airline. The proposal needs clearance from a ministerial panel before it is made public," a finance ministry official said on condition of anonymity.
A sale of Air India is key for the Union government to meet its ambitious disinvestment target of ₹1.05 trillion for the year to 31 March. Meeting the target is crucial this year as the government estimates that its corporate tax rate cut will lead to a revenue loss of ₹1.45 trillion.
Debt-laden Air India has been surviving on a ₹30,000-crore government bailout and has ceded market share to private airlines such as IndiGo and SpiceJet.
Air India’s net debt swelled from ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019
The ministerial panel to divest Air India, headed by home minister Amit Shah, met for the first time on 19 September to explore all options. The panel also includes finance minister Nirmala Sitharaman, civil aviation minister Hardeep Puri, and railway and trade minister Piyush Goyal. The panel is likely to meet soon to formally clear the privatization process of Air India.
The first attempt at selling a stake in the flag carrier in March 2018 failed to take off as investors were uncomfortable with the government retaining a 24% stake in the airline as well as the requirement to stay invested for at least three years. Also, Air India’s debt of more than ₹33,000 crore that was bundled with the sale deterred investors.
To reduce the debt burden, the government established Air India Assets Holding Ltd (AIAHL) in February, a special purpose vehicle (SPV) to park a part of the airline’s debt not backed by any asset, non-core assets and other non-operational assets of the airline. Only Air India Air Transport, out of the company’s four subsidiaries, has been transferred to AIAHL as of now. The SPV has raised ₹7,000 crore through a bond sale to refinance its debt last month.
Air India’s net debt swelled from about ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019. It includes working capital and aircraft-related debt. The sale of Air India, which has about 128 planes, will also let the government exit a loss-making business.
Presently, full foreign ownership is allowed in an Indian airline, although foreign airlines cannot own more than 49% stake in a local carrier.
The environment is now conducive to restart the privatization process of Air India and the failure of Jet Airways (India) Ltd to secure an investor will not affect the disinvestment plan, said Atanu Chakraborty, then secretary of the Department of Investment and Asset Management in an interview in July. Chakraborty is currently the economic affairs secretary. Jet Airways has been grounded since 18 April due to an acute cash crunch.
With a revival of Jet Airways appearing bleak, Air India offers a great opportunity for any company that wants to enter the full service carrier business in India, said Dhiraj Mathur, an aviation expert and former partner at PwC India.
“It is an attractive asset but the issue is how many will have the deep pockets to take Air India since the present rules don’t permit 100% ownership by foreign airlines. The government may have to review that policy. The other two issues are related to employees and liabilities, a lot of which the government has restructured and put into an SPV. If those can be addressed, it’s a great asset," he added.
Gireesh Chandra Prasad contributed to this story.
Govt to invite bids for Air India privatization
India Looks to Privatize Its Biggest Shipping Company
Shipping Corp. of India operates about a third of all Indian cargo tonnage and a sale could be difficult to pull off.
Shipping Corp. of India’s fleet includes five very large crude carriers and 29 smaller crude tankers. Pictured, Jawaharlal Nehru Port in Maharashtra state. Photo: Dhiraj Singh/Bloomberg News
By Costas Paris - Oct. 8, 2019 12:00 pm ET
The Indian government is again looking to sell its majority stake in the country’s biggest shipping company, but may face the same headwinds that have blocked past privatization efforts.
The Shipping Corp. of India is at the heart of the country’s industrial economy, with about 70 cargo vessels of all types worth some $1.2 billion. That makes it a key target for Prime Minister Narendra Modi’s bid to sell off state assets.
“A proposal to divest the state’s 63.8% holding has been submitted to the cabinet which will decide later this month,” said a ministry of shipping official, who spoke on condition of anonymity because he wasn’t authorized to speak with the media. “It’s part of a wider move to privatize a number of state assets.”
SCI operates close to a third of all Indian waterborne tonnage, with five very large crude carriers and 29 smaller crude tankers, product tankers and gas carriers. Its fleet also includes dry bulk carriers, container ships and ferries.
The government first tried to sell its stake in 2017 but the sale was canceled after pushback by various bodies, including the ministry of shipping. Privatizations in India are often complicated, with a number of senior politicians standing steadfast against the sale of what they describe as vital national assets.
Mr. Modi’s government has been pushing to sell government stakes in dozens of Central Public-Sector Enterprises or Undertakings, CPSEs, as part of what it calls “investor-friendly reform” across many parts of the economy including railways, shipping, banking, mining, petrochemicals and airlines.
Although many economists believe the majority of India’s more than 300 CPSEs can be privatized, public-sector jobs are highly sought-after in India because they offer relatively secure employment and better-than-average salaries and working conditions.
In a 2018 jobs competition, around 25 million people applied for 90,000 positions at the country’s giant state-run railways, according to government data.
The Mumbai-based Shipping Corp. of India, which is listed on the local bourse, has a market value of around $290 million. Apart from ships it also owns premium property in Mumbai, including its 19-storey headquarters.
Opponents of the sale say a good part of India’s vital oil imports move on SCI ships and selling the carrier could rattle oil supplies.
Company executives say the biggest hurdle to the sale will be trying to sell a company with so many ship types, however. Private-sector operators may view such spread across various markets as inefficient.
“There are few shipping operators or other investors that are looking to invest in so many ship types,” the shipping ministry executive said. “It could be broken up and then sold, but this will take years and face a lot of opposition.”
India Looks to Privatize Its Biggest Shipping Company
Shipping Corp. of India operates about a third of all Indian cargo tonnage and a sale could be difficult to pull off.
Shipping Corp. of India’s fleet includes five very large crude carriers and 29 smaller crude tankers. Pictured, Jawaharlal Nehru Port in Maharashtra state. Photo: Dhiraj Singh/Bloomberg News
By Costas Paris - Oct. 8, 2019 12:00 pm ET
The Indian government is again looking to sell its majority stake in the country’s biggest shipping company, but may face the same headwinds that have blocked past privatization efforts.
The Shipping Corp. of India is at the heart of the country’s industrial economy, with about 70 cargo vessels of all types worth some $1.2 billion. That makes it a key target for Prime Minister Narendra Modi’s bid to sell off state assets.
“A proposal to divest the state’s 63.8% holding has been submitted to the cabinet which will decide later this month,” said a ministry of shipping official, who spoke on condition of anonymity because he wasn’t authorized to speak with the media. “It’s part of a wider move to privatize a number of state assets.”
SCI operates close to a third of all Indian waterborne tonnage, with five very large crude carriers and 29 smaller crude tankers, product tankers and gas carriers. Its fleet also includes dry bulk carriers, container ships and ferries.
The government first tried to sell its stake in 2017 but the sale was canceled after pushback by various bodies, including the ministry of shipping. Privatizations in India are often complicated, with a number of senior politicians standing steadfast against the sale of what they describe as vital national assets.
Mr. Modi’s government has been pushing to sell government stakes in dozens of Central Public-Sector Enterprises or Undertakings, CPSEs, as part of what it calls “investor-friendly reform” across many parts of the economy including railways, shipping, banking, mining, petrochemicals and airlines.
Although many economists believe the majority of India’s more than 300 CPSEs can be privatized, public-sector jobs are highly sought-after in India because they offer relatively secure employment and better-than-average salaries and working conditions.
In a 2018 jobs competition, around 25 million people applied for 90,000 positions at the country’s giant state-run railways, according to government data.
The Mumbai-based Shipping Corp. of India, which is listed on the local bourse, has a market value of around $290 million. Apart from ships it also owns premium property in Mumbai, including its 19-storey headquarters.
Opponents of the sale say a good part of India’s vital oil imports move on SCI ships and selling the carrier could rattle oil supplies.
Company executives say the biggest hurdle to the sale will be trying to sell a company with so many ship types, however. Private-sector operators may view such spread across various markets as inefficient.
“There are few shipping operators or other investors that are looking to invest in so many ship types,” the shipping ministry executive said. “It could be broken up and then sold, but this will take years and face a lot of opposition.”
India Looks to Privatize Its Biggest Shipping Company
Indian Stocks to Make a Comeback as Banking Crisis Passes, AMP Says
By Abhishek Vishnoi - October 8, 2019, 9:30 PM EDT
India’s stocks will make a comeback as the economic benefits of a landmark corporate-tax cut prevail against concerns over a shadow banking crisis, according to AMP Capital Investors.
“Shadow banking incidents are unlikely to derail the positive backdrop for India equities following the tax cuts,” said Nader Naeimi, who oversees more than $1 billion in assets at AMP Capital. “Indian firms have now become a lot more competitive, which will attract a lot of investors, even those that had valuation concerns.”
Naeimi’s funds went from having no exposure to Indian stocks to boosting it to 5% of assets after Narendra Modi delivered a Donald Trump-styled cut in corporate taxes on Sept. 20. He is looking to buy more.
AMP Capital is sticking to its bullish stance despite the market’s recent rout. The benchmark S&P BSE Sensex Index has given up almost half of the surge it saw after the tax cut, as bad-loan concerns emerged at lenders including Indiabulls Housing Finance Ltd. and a cooperative bank.
Naeimi expects the Sensex index to rise by more than 20% in the next two years. The gauge dropped 0.4% to 37,531.98 on Tuesday, sliding for a sixth day.
“The tax cut has put Indian stocks on the path of a multi-year bullish phase,” the fund manager said.
https://www.bloomberg.com/amp/news/...ally-will-resume-as-banking-crisis-passes-amp
By Abhishek Vishnoi - October 8, 2019, 9:30 PM EDT
India’s stocks will make a comeback as the economic benefits of a landmark corporate-tax cut prevail against concerns over a shadow banking crisis, according to AMP Capital Investors.
“Shadow banking incidents are unlikely to derail the positive backdrop for India equities following the tax cuts,” said Nader Naeimi, who oversees more than $1 billion in assets at AMP Capital. “Indian firms have now become a lot more competitive, which will attract a lot of investors, even those that had valuation concerns.”
Naeimi’s funds went from having no exposure to Indian stocks to boosting it to 5% of assets after Narendra Modi delivered a Donald Trump-styled cut in corporate taxes on Sept. 20. He is looking to buy more.
AMP Capital is sticking to its bullish stance despite the market’s recent rout. The benchmark S&P BSE Sensex Index has given up almost half of the surge it saw after the tax cut, as bad-loan concerns emerged at lenders including Indiabulls Housing Finance Ltd. and a cooperative bank.
Naeimi expects the Sensex index to rise by more than 20% in the next two years. The gauge dropped 0.4% to 37,531.98 on Tuesday, sliding for a sixth day.
“The tax cut has put Indian stocks on the path of a multi-year bullish phase,” the fund manager said.
https://www.bloomberg.com/amp/news/...ally-will-resume-as-banking-crisis-passes-amp
I used my own twitter as Datawrapper wasn't allowing me to embed links here. Do follow those links to get to the interactive graphs.
The unheralded story of a job market revival in India
4 min read . Updated: 09 Oct 2019, 12:45 PM IST; by Pramit Bhattacharya, Nikita Kwatra
The latest ASI data confirms a slow but steady recovery in factory jobs since 2013, with auto, pharma, and apparels driving job growth
Three key sectors have driven the job-creating engine in the post-crisis era: auto, pharma, and apparels.
Amid rising concerns about an intensifying economic slowdown and the threat of job losses in the country, an encouraging set of data from India’s largest factory database seem to have gone largely unnoticed.
The provisional Annual Survey of Industries (ASI) numbers for the fiscal year ending March 2018, released a couple of weeks ago, show that new jobs for both blue-collar and white-collar workers rose to their highest levels in half a decade in fiscal 2018. The results are based on the annual survey of more than two hundred thousand factories across the country, employing more than 15 million employees.
After showing a sharp decline in fiscal 2013, when India was faced with a near-economic crisis, factory jobs have been rising over the past few years. The latest data confirms a slow but steady recovery in factory jobs since 2013.
After declining in 2013, factory jobs posted a recovery in the subsequent years
To be sure, the latest numbers on annual growth of workers (4.8%) and managers (4.5%) do not qualify as a boom. The last factory jobs boom India witnessed was in the 2004-08 period, when the blue collar workforce grew at an average annual pace of 8%. In the four years leading to fiscal 2018, the average growth rate was much more modest at 4%.
However, it is worth noting that the boom phase was preceded by a sharp contraction in the factory workforce in the years leading up to the boom. In four of the five years between fiscal 1999 and fiscal 2004, the factory workforce actually shrank in size. As a result, a part of the boom that followed merely replenished the diminished stock of workers across India’s factories.
Like all booms that went bust after the financial crisis of 2008, factory job growth also slowed down in the post-crisis era. Nonetheless, the slowdown was not as severe as the one in the early 2000s. The upswing too has been more modest.
Besides, as in the rest of the world, almost all indicators of economic activity in India --- other than the disputed gross domestic product (GDP) numbers --- have grown at a more modest pace in the post-2008 era than they did in the pre-2008 era.
Data from annual reports of companies broadly corroborate the trend reported by ASI, with job growth picking up over the past few years after a slowdown in the first half of the current decade. Compensation data from ASI and corporate balance sheets also point to a gradual --- even if slow --- recovery in real wages (adjusted for inflation).
Real wage growth has been rising over the past three years but the pick-up has been slow
But how do these data square with the numbers from the Periodic Labour Force Survey (PLFS) conducted in 2017-18?
The comparable numbers from the PLFS survey relate to workers in regular or salaried jobs (although this category includes more than just those employed by registered factories and large companies). For regular workers, the picture is less gloomy than what the headline numbers suggest. Compared to the previous employment survey conducted in 2011-12, the PLFS reported a 5 percentage point increase in the proportion of regular workers to 23% in 2017-18.
It is also worth noting that since the PLFS was conducted after a gap of six years, it fails to capture both the jobs slowdown and the recovery in the intervening years that the other (annual) datasets report. And it only shows the net result at the end of the period (a modest increase in regular jobs).
It is another matter that the government’s economic managers did not care to look at those numbers carefully, and hurried to hush up the report on the eve of elections, creating an impression that the job market situation is far more grim than what the evidence suggested.
Be that as it may, the ASI numbers indicate that India’s post-crisis industrial recovery has not been ‘jobless’ even if both the quantity and quality of employment leave much to be desired.
Three key sectors have driven the job-creating engine in the post-crisis era: auto, pharma, and apparels.
The auto, pharma, and apparel industries have added relatively more workers in the post-crisis era
The share of all three in India’s factory workforce have risen significantly over the past decade even as that of three other labour-intensive industries --- textiles, food products, and basic metals --- declined sharply. Despite attempts to boost electronics production in the country, the share of workforce employed in the ‘computers and electronics’ industry actually shrank over the past decade, and accounts for just over 1% of the factory workforce. Electrical equipment showed a more promising trend, with its share in the factory workforce increasing 0.5 percentage points to 3.7 percent over the past decade.
The latest data point to two worrying trends in India’s industrial landscape. The first relates to growing regional imbalance. Only a few states in the country account for most factories and factory workers in the country. The top three states --- Tamil Nadu, Maharashtra, and Gujarat --- together account for four of ten factory workers in the country. And their share has risen over the past decade.
TN, Maharashtra, and Gujarat together accounted for 40% of factory workers in FY18, up from 37% in FY08
The other worrying trend pertains to the lack of investments in fixed assets. In four of the past five years for which data is available, investments in factories have declined. Only in fiscal 2016 did investments show a positive trend, rising 17%. The investment declines were particularly sharp in fiscal 2015 (-8.5%) and fiscal 2018 (-10.3%).
Unless India’s financial sector weaknesses are fixed, and overall demand in the economy recovers, factory investments could continue to suffer. This would take a toll on jobs, and the recovery in factory employment could come to a halt once again.
The unheralded story of a job market revival in India
The unheralded story of a job market revival in India
4 min read . Updated: 09 Oct 2019, 12:45 PM IST; by Pramit Bhattacharya, Nikita Kwatra
The latest ASI data confirms a slow but steady recovery in factory jobs since 2013, with auto, pharma, and apparels driving job growth
Three key sectors have driven the job-creating engine in the post-crisis era: auto, pharma, and apparels.
Amid rising concerns about an intensifying economic slowdown and the threat of job losses in the country, an encouraging set of data from India’s largest factory database seem to have gone largely unnoticed.
The provisional Annual Survey of Industries (ASI) numbers for the fiscal year ending March 2018, released a couple of weeks ago, show that new jobs for both blue-collar and white-collar workers rose to their highest levels in half a decade in fiscal 2018. The results are based on the annual survey of more than two hundred thousand factories across the country, employing more than 15 million employees.
After showing a sharp decline in fiscal 2013, when India was faced with a near-economic crisis, factory jobs have been rising over the past few years. The latest data confirms a slow but steady recovery in factory jobs since 2013.
After declining in 2013, factory jobs posted a recovery in the subsequent years
To be sure, the latest numbers on annual growth of workers (4.8%) and managers (4.5%) do not qualify as a boom. The last factory jobs boom India witnessed was in the 2004-08 period, when the blue collar workforce grew at an average annual pace of 8%. In the four years leading to fiscal 2018, the average growth rate was much more modest at 4%.
However, it is worth noting that the boom phase was preceded by a sharp contraction in the factory workforce in the years leading up to the boom. In four of the five years between fiscal 1999 and fiscal 2004, the factory workforce actually shrank in size. As a result, a part of the boom that followed merely replenished the diminished stock of workers across India’s factories.
Like all booms that went bust after the financial crisis of 2008, factory job growth also slowed down in the post-crisis era. Nonetheless, the slowdown was not as severe as the one in the early 2000s. The upswing too has been more modest.
Besides, as in the rest of the world, almost all indicators of economic activity in India --- other than the disputed gross domestic product (GDP) numbers --- have grown at a more modest pace in the post-2008 era than they did in the pre-2008 era.
Data from annual reports of companies broadly corroborate the trend reported by ASI, with job growth picking up over the past few years after a slowdown in the first half of the current decade. Compensation data from ASI and corporate balance sheets also point to a gradual --- even if slow --- recovery in real wages (adjusted for inflation).
Real wage growth has been rising over the past three years but the pick-up has been slow
But how do these data square with the numbers from the Periodic Labour Force Survey (PLFS) conducted in 2017-18?
The comparable numbers from the PLFS survey relate to workers in regular or salaried jobs (although this category includes more than just those employed by registered factories and large companies). For regular workers, the picture is less gloomy than what the headline numbers suggest. Compared to the previous employment survey conducted in 2011-12, the PLFS reported a 5 percentage point increase in the proportion of regular workers to 23% in 2017-18.
It is also worth noting that since the PLFS was conducted after a gap of six years, it fails to capture both the jobs slowdown and the recovery in the intervening years that the other (annual) datasets report. And it only shows the net result at the end of the period (a modest increase in regular jobs).
It is another matter that the government’s economic managers did not care to look at those numbers carefully, and hurried to hush up the report on the eve of elections, creating an impression that the job market situation is far more grim than what the evidence suggested.
Be that as it may, the ASI numbers indicate that India’s post-crisis industrial recovery has not been ‘jobless’ even if both the quantity and quality of employment leave much to be desired.
Three key sectors have driven the job-creating engine in the post-crisis era: auto, pharma, and apparels.
The auto, pharma, and apparel industries have added relatively more workers in the post-crisis era
The share of all three in India’s factory workforce have risen significantly over the past decade even as that of three other labour-intensive industries --- textiles, food products, and basic metals --- declined sharply. Despite attempts to boost electronics production in the country, the share of workforce employed in the ‘computers and electronics’ industry actually shrank over the past decade, and accounts for just over 1% of the factory workforce. Electrical equipment showed a more promising trend, with its share in the factory workforce increasing 0.5 percentage points to 3.7 percent over the past decade.
The latest data point to two worrying trends in India’s industrial landscape. The first relates to growing regional imbalance. Only a few states in the country account for most factories and factory workers in the country. The top three states --- Tamil Nadu, Maharashtra, and Gujarat --- together account for four of ten factory workers in the country. And their share has risen over the past decade.
TN, Maharashtra, and Gujarat together accounted for 40% of factory workers in FY18, up from 37% in FY08
The other worrying trend pertains to the lack of investments in fixed assets. In four of the past five years for which data is available, investments in factories have declined. Only in fiscal 2016 did investments show a positive trend, rising 17%. The investment declines were particularly sharp in fiscal 2015 (-8.5%) and fiscal 2018 (-10.3%).
Unless India’s financial sector weaknesses are fixed, and overall demand in the economy recovers, factory investments could continue to suffer. This would take a toll on jobs, and the recovery in factory employment could come to a halt once again.
The unheralded story of a job market revival in India
The steel frame has become a cage. A $10-trillion economy needs deep civil service reform
The current economic slowdown is short-term pain for long-term gain because of overdue medicine.
Written by Manish Sabharwal | Updated: October 9, 2019 10:05:01 am
Cutting edge economics views development as a game of scrabble where vowels provided by the government enable the private sector to make more words and longer words.
In September 1984, J R D Tata responded to retired bureaucrat P N Haksar’s letter taunting him that businessmen were not doing enough for India’s development with “I began my 55-year-old career as an angry young man because I couldn’t stomach foreign domination… I end it as angry old man… because it breaks my heart to see the continuing miserable fate of the vast majority of our people, for much of which I blame years of ill-conceived economic policies of our government. Instead of releasing energies and enterprises, the system of licences and controls imposed on the private sector, combined with confiscatory personal taxation, not only discouraged and penalised honest free enterprise but encouraged, and brought success and wealth, to a new breed of bribers, tax evaders, and black marketeers”. Reforms over 35 years since J R D’s letter — delicencing, deregulation, Aadhaar, UPI, inflation targeting, Bankruptcy, GST, lower corporate taxes, etc. — are India’s strong foundations for a $5-trillion economy. But reaching a $10-trillion economy and a per capita income close to what China has today needs a new human capital regime for India’s 20 million civil servants.
Let’s imagine India’s $10-trillion economy. Eighty per cent of our labour force works outside farms (the only way to help farmers is to have less of them). We have 200 cities with more than a million people (today we have 52). Our cities meet the Marchetti constant (people have 30-minute work commutes). Our government borrows at less than 4 per cent. Our Aadhaar-linked land markets equalise rental yields and mortgage borrowing rates. PSU banks are governed by an independent holding company with no access to taxes. Our credit to GDP ratio rises to 100 per cent (from today’s 50 per cent) because our financial institutions know how to lend and recover money. Government school enrollment stops declining because learning outcomes improve (if anything should be free with quality, it should be schools). We have attracted China factory refugees that are going to Vietnam and Malaysia today. The global capital glut of negative interest rates chasing growth underwrites our investment needs. Fiscal discipline delivers low inflation. Fifty per cent of our college-going-age kids go to a diverse higher education system (today 25 per cent are in a homogenous system). Policy encourages formal hiring (today’s labour laws are like marriage without divorce). Our reformed social security system covers 60 per cent of workers (today’s cover only 20 per cent because the Provident Fund and ESI provide poor value for money).
Prosperity needs productive firms and workers. But India’s capital is handicapped without labour and labour is handicapped without capital because of our regulatory cholesterol universe for employers of 57,000 compliances, 3,100 filings and 4,000 changes a year (details verifiable at Compliance Automation and Management Company and Rulezbook App). This horrible hostility to private enterprises comes from toxic civil service thought-worlds like prohibited till permitted, know-it-all rather than learn-it-all, too small for big things but too big for small things, poor and jerky law drafting, contempt for execution complexity, immaculate conception over continuous improvement, stereotyping the private sector as big companies rather than MSMEs, only using punishment to enforce policy rather than design driven by domain specialisation, and not viewing wealth creators as national assets. Listed PSUs have destroyed $150 billion in value over the last decade, consistent with the Gujarati saying “Jahan raja vyapaari, wahan praja bhikhari” (where the king is a businessperson, the population is a beggar). Cutting this regulatory cholesterol needs a climate change for civil servants.
A new human capital regime starts with two projects each in six areas of structure, staffing, training, performance management, compensation, and culture. Structure Project 1 involves rationalisation: We don’t need hundreds of PSUs and departments in 55 central ministries (Japan has nine, the US has 14, UK has 21). Structure Project 2 involves reverting the cylinder to a pyramid on the way to becoming an Eiffel Tower (250+ people in Delhi with Secretary rank).
Staffing Project 1 eliminates the sanctioned and actual strength gap because this is possible only with good people being overworked, non-urgent work neglected, or squatting on unnecessary posts. Staffing Project 2 creates cognitive diversity and competition with 20 per cent lateral entry. Training Project 1 involves restructuring how courses are chosen (demand rather than supply driven), how course nominations choose people, how courses are evaluated, and how course results integrate with performance management. Training Project 2 involves making learning continuous rather than episodic.
Performance Management Project 1 involves a forced curve for appraisals of outstanding (20 per cent), good (60 per cent) and poor (20 per cent) because 98 per cent of people can’t be outstanding. Performance Management Project 2 involves replicating army thresholds where people retire at 50 if not shortlisted for promotion. Compensation Project 1 involves moving to a cost-to-government number by monetising benefits. Compensation Project 2 involves freezing salaries at the bottom (we pay too much) and raising them at the top (we pay too little).
The two culture projects are the most difficult — tone from the top around corruption and differentiation. Too many civil service leaders overlook graft among subordinates or don’t question the processes that breed corruption. And leaders punish good performers by writing performance appraisals that don’t differentiate between gaddha (donkey) and ghoda (horse), giving top jobs by seniority, and allowing automatic promotions that create a pool of “promotable but not postable”. Differentiation needs a fear of falling and hope of rising.
The current economic slowdown is short-term pain for long-term gain because of overdue medicine. This climate change for employers — ability and strategy only becomes valuable with competition and bankruptcy — needs replication for civil servants. Cutting edge economics views development as a game of scrabble where vowels provided by the government enable the private sector to make more words and longer words. The current civil service fails to provide enough vowels; the steel frame has become a cage. For too long, the brain of the Indian state was not connected to its backbone. Since that has now changed, it’s time to connect the backbone to its hands and legs.
The writer is with Teamlease Services
— This article first appeared in the October 9, 2019 print edition under the title ‘Uncaging India’.
The steel frame has become a cage. A $10-trillion economy needs deep civil service reform
The current economic slowdown is short-term pain for long-term gain because of overdue medicine.
Written by Manish Sabharwal | Updated: October 9, 2019 10:05:01 am
Cutting edge economics views development as a game of scrabble where vowels provided by the government enable the private sector to make more words and longer words.
In September 1984, J R D Tata responded to retired bureaucrat P N Haksar’s letter taunting him that businessmen were not doing enough for India’s development with “I began my 55-year-old career as an angry young man because I couldn’t stomach foreign domination… I end it as angry old man… because it breaks my heart to see the continuing miserable fate of the vast majority of our people, for much of which I blame years of ill-conceived economic policies of our government. Instead of releasing energies and enterprises, the system of licences and controls imposed on the private sector, combined with confiscatory personal taxation, not only discouraged and penalised honest free enterprise but encouraged, and brought success and wealth, to a new breed of bribers, tax evaders, and black marketeers”. Reforms over 35 years since J R D’s letter — delicencing, deregulation, Aadhaar, UPI, inflation targeting, Bankruptcy, GST, lower corporate taxes, etc. — are India’s strong foundations for a $5-trillion economy. But reaching a $10-trillion economy and a per capita income close to what China has today needs a new human capital regime for India’s 20 million civil servants.
Let’s imagine India’s $10-trillion economy. Eighty per cent of our labour force works outside farms (the only way to help farmers is to have less of them). We have 200 cities with more than a million people (today we have 52). Our cities meet the Marchetti constant (people have 30-minute work commutes). Our government borrows at less than 4 per cent. Our Aadhaar-linked land markets equalise rental yields and mortgage borrowing rates. PSU banks are governed by an independent holding company with no access to taxes. Our credit to GDP ratio rises to 100 per cent (from today’s 50 per cent) because our financial institutions know how to lend and recover money. Government school enrollment stops declining because learning outcomes improve (if anything should be free with quality, it should be schools). We have attracted China factory refugees that are going to Vietnam and Malaysia today. The global capital glut of negative interest rates chasing growth underwrites our investment needs. Fiscal discipline delivers low inflation. Fifty per cent of our college-going-age kids go to a diverse higher education system (today 25 per cent are in a homogenous system). Policy encourages formal hiring (today’s labour laws are like marriage without divorce). Our reformed social security system covers 60 per cent of workers (today’s cover only 20 per cent because the Provident Fund and ESI provide poor value for money).
Prosperity needs productive firms and workers. But India’s capital is handicapped without labour and labour is handicapped without capital because of our regulatory cholesterol universe for employers of 57,000 compliances, 3,100 filings and 4,000 changes a year (details verifiable at Compliance Automation and Management Company and Rulezbook App). This horrible hostility to private enterprises comes from toxic civil service thought-worlds like prohibited till permitted, know-it-all rather than learn-it-all, too small for big things but too big for small things, poor and jerky law drafting, contempt for execution complexity, immaculate conception over continuous improvement, stereotyping the private sector as big companies rather than MSMEs, only using punishment to enforce policy rather than design driven by domain specialisation, and not viewing wealth creators as national assets. Listed PSUs have destroyed $150 billion in value over the last decade, consistent with the Gujarati saying “Jahan raja vyapaari, wahan praja bhikhari” (where the king is a businessperson, the population is a beggar). Cutting this regulatory cholesterol needs a climate change for civil servants.
A new human capital regime starts with two projects each in six areas of structure, staffing, training, performance management, compensation, and culture. Structure Project 1 involves rationalisation: We don’t need hundreds of PSUs and departments in 55 central ministries (Japan has nine, the US has 14, UK has 21). Structure Project 2 involves reverting the cylinder to a pyramid on the way to becoming an Eiffel Tower (250+ people in Delhi with Secretary rank).
Staffing Project 1 eliminates the sanctioned and actual strength gap because this is possible only with good people being overworked, non-urgent work neglected, or squatting on unnecessary posts. Staffing Project 2 creates cognitive diversity and competition with 20 per cent lateral entry. Training Project 1 involves restructuring how courses are chosen (demand rather than supply driven), how course nominations choose people, how courses are evaluated, and how course results integrate with performance management. Training Project 2 involves making learning continuous rather than episodic.
Performance Management Project 1 involves a forced curve for appraisals of outstanding (20 per cent), good (60 per cent) and poor (20 per cent) because 98 per cent of people can’t be outstanding. Performance Management Project 2 involves replicating army thresholds where people retire at 50 if not shortlisted for promotion. Compensation Project 1 involves moving to a cost-to-government number by monetising benefits. Compensation Project 2 involves freezing salaries at the bottom (we pay too much) and raising them at the top (we pay too little).
The two culture projects are the most difficult — tone from the top around corruption and differentiation. Too many civil service leaders overlook graft among subordinates or don’t question the processes that breed corruption. And leaders punish good performers by writing performance appraisals that don’t differentiate between gaddha (donkey) and ghoda (horse), giving top jobs by seniority, and allowing automatic promotions that create a pool of “promotable but not postable”. Differentiation needs a fear of falling and hope of rising.
The current economic slowdown is short-term pain for long-term gain because of overdue medicine. This climate change for employers — ability and strategy only becomes valuable with competition and bankruptcy — needs replication for civil servants. Cutting edge economics views development as a game of scrabble where vowels provided by the government enable the private sector to make more words and longer words. The current civil service fails to provide enough vowels; the steel frame has become a cage. For too long, the brain of the Indian state was not connected to its backbone. Since that has now changed, it’s time to connect the backbone to its hands and legs.
The writer is with Teamlease Services
— This article first appeared in the October 9, 2019 print edition under the title ‘Uncaging India’.
The steel frame has become a cage. A $10-trillion economy needs deep civil service reform
Amazon, Walmart Will Help Save India’s Banks
By Andy Mukherjee | Bloomberg
October 10 at 7:18 AM
A common refrain you hear in India is, “There’s no credit in the market.”
The despondence cuts across industries as diverse as real estate, autos and road construction. An 88% slump in the flow of funds to the commercial sector between April and September shows that the producers’ unease is justified.
However, one credit tap is starting to gurgle, giving some cause for optimism. Pocket-sized loans are feeding online consumption, with demand coming from smaller cities and towns. The amounts are still tiny, but as digital spending grows, financing it has the power to turn the page on Indian lenders’ underwriting of soured corporate loans: the source of a $200 billion sigh of collective agony.
Amazon.com Inc. and Walmart Inc.’s Flipkart Online Services Pvt claimed record sales during the recently concluded six-day online shopping bonanza that marks the start of the Indian festival season. Although nowhere close to Alibaba Group Holding Ltd.’s $31 billion Singles’ Day promotion in China, the Indian version of Black Friday has grown fivefold to $3 billion in four years, according to a review of this year’s sales by RedSeer, a consulting firm. Add the spending between now and Diwali, the Hindu festival of lights, and Forrester Research reckons the total for a month of online purchases may fall just shy of $5 billion.
Although the 30% growth this year was slower than in the previous three, it’s a strong outcome in a weak economy. Both of India’s leading e-commerce marketplaces cited small towns – and credit – for their success. Flipkart says Tier 3 cities ordered 100% more goods this year. The share of transactions using credit options grew by 70%, with a majority of these people living outside of big cities. Amazon revealed that three out of four customers who availed themselves of financing came from Tier 2 and 3 cities; significantly, every second buyer who used credit did so for the first time.
All this is hardly unique to India. China’s e-commerce boom saw an explosion of microloans, with millennials buying hamburgers on credit and the buy-now-pay-later habit picking up in Indonesia. What makes India interesting is the possibility that soon even physical retail will embrace digital in-store credit – minus plastic.
A mobile-payment app with pay-later options at physical stores will be an important innovation. For all its expansion, e-commerce will account for only 7% of India’s $1.2 trillion retail sales by 2021, according to Deloitte. Credit cards won’t go beyond big cities and organized retail. It’s not worth any bank’s while to make card acceptance universal because the revenue to a bank from signing up a mom-and-pop shop – the merchant who handles purchases at the bottom of the income pyramid – is a meager $4 a month.
That’s why Flipkart’s “cardless” credit deserves attention. Customers are validated for a $1,400 limit via a simple video upload; the actual financing comes not from Flipkart but from banks and financiers like Bajaj Finserv Ltd. This is the model that Mukesh Ambani, India’s richest man, might use to connect India’s 30 million small retailers with consumers. Amazon’s claim that its Great Indian Festival saw orders from 99.4% of the country’s postal codes owes that reach to Ambani’s aggressive entry into telecoms three years ago. The 4G network of Reliance Jio Infocomm Ltd. has caused data prices to crash and usage to explode.
But Ambani won’t let the American duo of Amazon and Walmart be the biggest beneficiaries of his disruption. If Jio succeeds in taking its knowledge of 340 million Indians who use its mobile service to neighborhood stores, where most people still shop, banks and shadow banks will rush in with credit. From Citigroup Inc. to State Bank of India, HDFC Bank Ltd. to Singapore’s DBS Group Holdings Ltd., everyone will want this sizable new line of revenue at the intersection of consumer and corporate banking.
Writing in the Financial Times, Viral Acharya, a former deputy governor at the Indian central bank, argues that finance in India must learn from shampoo makers such as Unilever and Procter & Gamble Co., who boosted sales by offering families affordable quantities in small sachets rather than in more expensive full-size bottles.
To similarly make bite-sized finance sustainable, account aggregators are coming. They’ll digitally record a consumer’s transactions with various institutions and, with consent, share data with a lender. Given that 52% of Indian workers are self-employed, and only 23% earn a regular wage, to be able to accurately assess a borrower’s irregular cash flows will give lenders confidence to extend credit.
So large is the overhang of bad corporate debt that to suggest a better model of banking will emerge invites skepticism. Yet below the surface of corporate bankruptcies and failing financial institutions, technology is enabling important change. Maybe not tomorrow, but credit will go where it is due.
https://www.washingtonpost.com/busi...b65012-eaf1-11e9-a329-7378fbfa1b63_story.html
By Andy Mukherjee | Bloomberg
October 10 at 7:18 AM
A common refrain you hear in India is, “There’s no credit in the market.”
The despondence cuts across industries as diverse as real estate, autos and road construction. An 88% slump in the flow of funds to the commercial sector between April and September shows that the producers’ unease is justified.
However, one credit tap is starting to gurgle, giving some cause for optimism. Pocket-sized loans are feeding online consumption, with demand coming from smaller cities and towns. The amounts are still tiny, but as digital spending grows, financing it has the power to turn the page on Indian lenders’ underwriting of soured corporate loans: the source of a $200 billion sigh of collective agony.
Amazon.com Inc. and Walmart Inc.’s Flipkart Online Services Pvt claimed record sales during the recently concluded six-day online shopping bonanza that marks the start of the Indian festival season. Although nowhere close to Alibaba Group Holding Ltd.’s $31 billion Singles’ Day promotion in China, the Indian version of Black Friday has grown fivefold to $3 billion in four years, according to a review of this year’s sales by RedSeer, a consulting firm. Add the spending between now and Diwali, the Hindu festival of lights, and Forrester Research reckons the total for a month of online purchases may fall just shy of $5 billion.
Although the 30% growth this year was slower than in the previous three, it’s a strong outcome in a weak economy. Both of India’s leading e-commerce marketplaces cited small towns – and credit – for their success. Flipkart says Tier 3 cities ordered 100% more goods this year. The share of transactions using credit options grew by 70%, with a majority of these people living outside of big cities. Amazon revealed that three out of four customers who availed themselves of financing came from Tier 2 and 3 cities; significantly, every second buyer who used credit did so for the first time.
All this is hardly unique to India. China’s e-commerce boom saw an explosion of microloans, with millennials buying hamburgers on credit and the buy-now-pay-later habit picking up in Indonesia. What makes India interesting is the possibility that soon even physical retail will embrace digital in-store credit – minus plastic.
A mobile-payment app with pay-later options at physical stores will be an important innovation. For all its expansion, e-commerce will account for only 7% of India’s $1.2 trillion retail sales by 2021, according to Deloitte. Credit cards won’t go beyond big cities and organized retail. It’s not worth any bank’s while to make card acceptance universal because the revenue to a bank from signing up a mom-and-pop shop – the merchant who handles purchases at the bottom of the income pyramid – is a meager $4 a month.
That’s why Flipkart’s “cardless” credit deserves attention. Customers are validated for a $1,400 limit via a simple video upload; the actual financing comes not from Flipkart but from banks and financiers like Bajaj Finserv Ltd. This is the model that Mukesh Ambani, India’s richest man, might use to connect India’s 30 million small retailers with consumers. Amazon’s claim that its Great Indian Festival saw orders from 99.4% of the country’s postal codes owes that reach to Ambani’s aggressive entry into telecoms three years ago. The 4G network of Reliance Jio Infocomm Ltd. has caused data prices to crash and usage to explode.
But Ambani won’t let the American duo of Amazon and Walmart be the biggest beneficiaries of his disruption. If Jio succeeds in taking its knowledge of 340 million Indians who use its mobile service to neighborhood stores, where most people still shop, banks and shadow banks will rush in with credit. From Citigroup Inc. to State Bank of India, HDFC Bank Ltd. to Singapore’s DBS Group Holdings Ltd., everyone will want this sizable new line of revenue at the intersection of consumer and corporate banking.
Writing in the Financial Times, Viral Acharya, a former deputy governor at the Indian central bank, argues that finance in India must learn from shampoo makers such as Unilever and Procter & Gamble Co., who boosted sales by offering families affordable quantities in small sachets rather than in more expensive full-size bottles.
To similarly make bite-sized finance sustainable, account aggregators are coming. They’ll digitally record a consumer’s transactions with various institutions and, with consent, share data with a lender. Given that 52% of Indian workers are self-employed, and only 23% earn a regular wage, to be able to accurately assess a borrower’s irregular cash flows will give lenders confidence to extend credit.
So large is the overhang of bad corporate debt that to suggest a better model of banking will emerge invites skepticism. Yet below the surface of corporate bankruptcies and failing financial institutions, technology is enabling important change. Maybe not tomorrow, but credit will go where it is due.
https://www.washingtonpost.com/busi...b65012-eaf1-11e9-a329-7378fbfa1b63_story.html
Here is a pretty good layman video on the progression/history of the Indian economy. Maybe a bit optimisitc, but interesting nonetheless.
Ethanol you mean ? At first the plan was to replace all petrol fuel with ethanol, but that was never going to be practical. So the govt. decided to blend petrol with ethanol. The approach taken is a phased increase in % composition of ethanol in petrol blend. We are actually doing quite well there :
Last year it was 6.6 % : India to achieve highest-ever ethanol blending in petrol this year - ET EnergyWorld
This year its going to be 7.2 % : India to achieve 7.2% of ethanol blending with petrol this season
But as the first link shows we don't produce enough ethanol(thought production is increasing), so we import it mostly from the US. Its likely that the ethanol levels will continue rising and we will continue importing more and more ethanol. Govt. is looking at ways of increasing production and looking for cheap, even if controversial, sources of petrol. For example :
India's Reliance to resume Venezuela oil loadings after four-month pause
India jumps to 7th spot in Brand Finance Nation ranking
India jumps to 7th spot in Brand Finance Nation ranking
India jumps to 7th spot in Brand Finance Nation ranking
India’s crorepati club continues to swell, 97,689 disclose income above Rs 1 crore
India’s crorepati club continues to swell, 97,689 disclose income above Rs 1 crore
India’s crorepati club continues to swell, 97,689 disclose income above Rs 1 crore
Barefoot billionaire: Sridhar Vembu built a tech giant you've never heard of
By Cara Waters
April 20, 2019 — 12.00am
Sridhar Vembu would rather not have to wear his sandals with his t-shirt and jeans, he much prefers bare feet.
"I live fairly simply, I hate wearing shoes. If I can avoid it, I do," he says.
But Vembu's unassuming demeanour belies his personal wealth and extraordinary success in building a tech giant you've probably never heard of.
Zoho's founder Sridhar Vembu.
Vembu describes Zoho, the company he started 23 years ago, as "an unusual company".
"It's not what you would typically see and it is going to stay that way," he says.
Zoho digitises businesses with apps that handle tasks ranging from customer acquisition and management to sales and customer support and has 45 million users across 180 countries.
However, unless your business is one of the "tens of thousands" using Zoho in Australia it's unlikely you've ever heard of the tech giant.
Barefoot billionaire
On the sidelines of Zoho's annual 'Zoholics' conference in Austin, Texas, Vembu is dressed in his standard t-shirt branded with a Zoho logo, jeans and sandals.
Despite his low-key appearance Vembu owns 88 per cent of Zoho along with his family, and Forbes estimates his fortune at $US1.6 billion ($2.23 billion) and growing, with Zoho's turnover estimated at almost $1 billion a year.
Vembu says Zoho flies under the radar because it is outspent on marketing "20 to 1" by its competitors which include Salesforce, Microsoft and Google.
Despite counting Qantas and BHP as its customers in Australia, the tech company is only just opening its first offices here.
Timothy Kasbe is the managing director for Australia and New Zealand of Zoho.
Avoiding venture capital and staying private
The 50-year-old entrepreneur has boot-strapped Zoho for its entire existence with no external funding and no plans to sell or list the company.
"From the profits, we keep reinvesting, reinvesting," he says. "It also helps that from the beginning, from the earliest days it was never about how much you have in your bank account, it was what interesting things can you do with it. Startups are supposed to aim towards exit. You do something because you love it, if you do something because you love it why exit?".
It's a radical approach in a sector that chases venture capital funding, initial public offerings and "unicorn" valuations.
In 2015 Zoho put up ads in train stations around San Francisco targeting industry giant Salesforce, which was not profitable at that stage saying "Dear Salesforce, sorry for your losses."
"These companies are post-IPO but operating like a non-profits," Vembu says. "Not in a good way, they are burning money. It is a problem because it distorts markets. If you look at the cloud, extreme amounts of money is spent on customer marketing and a much lesser percentage goes into research and development."
Vembu believes technology stocks are currently in a bubble and warns that history shows bubbles always burst.
"The present bubble will come to the same end, so we need to build durable companies that can navigate these cycles," he says. "There was a time when business was too easy. We have built this company to survive these bubbles. This is what taught us to engineer patiently, because if we rush and we take shortcuts we pay for it and the customer pays for it."
Starting at the bottom
Vembu was born in the small village of Thanjavur in southern India and got his PhD at Princeton before being offered a job as a lecturer at Australian National University in Canberra.
"I got the job and paid for the permanent residency, then I had the remorse and I thought 'I actually don't like what I am doing, I don't like this work and research, I don't believe in it anymore'," he says. "I was 26 and I called them up and apologised and said 'I can't do this in good conscience, it is not about you it's about me'."
Vembu says he decided to "start at the bottom" as an engineer where he was introduced to software and realised he liked it.
He saw opportunities for a software business in India and started a business, AdventNet, along with two siblings and three friends, which eventually became Zoho.
Zoho has more than 40 apps for its Zoho One product alone and Vembu says the firm's wide-ranging product suite, which includes everything from online games to accounting software, is a result of letting his staff run with their ideas.
"My philosophy of leadership is I identify good people and then get out of their way," he says.
Christopher Lau, founder of eCargo with his father and eCargo's controlling shareholder John Lau. Credit:Christopher Pearce
'Classic' entrepreneur
Christopher Lau, founder of ASX listed company eCargo, which is a Zoho customer, says Vembu is a "classic example" of an entrepreneur.
"He certainly epitomises all successful entrepreneurs, trying to do everything at once," he says. "It's like Jack Mah [founder of Alibaba], every day there is a new business idea, every day a new business initiative, his hit rate is very low but when he hits, he hits."
Sramana Mitra, founder of One Million by One Million, a Silicon Valley virtual accelerator says Vembu has followed a number of unique strategies to build Zoho.
These include creating a product that is very similar to Salesforce's customer relationship management product but dramatically slashing the pricing on it, making it affordable and attractive for small businesses.
"Over time, Zoho has applied the same model of copying successful products by Google, Microsoft, etc to create a broad portfolio that caters to small businesses very effectively," she says.
Vembu says his vision for Zoho is that it will be the software that drives all functions for businesses from sales to finance with competitive pricing from $1 per employee a day.
"To build this kind of company you almost have to be crazy or insanely ambitious," he says.
The reporter attended Zoholics in Austin as a guest of Zoho.
https://www.smh.com.au/business/sma...nt-you-ve-never-heard-of-20190415-p51e8i.html
By Cara Waters
April 20, 2019 — 12.00am
Sridhar Vembu would rather not have to wear his sandals with his t-shirt and jeans, he much prefers bare feet.
"I live fairly simply, I hate wearing shoes. If I can avoid it, I do," he says.
But Vembu's unassuming demeanour belies his personal wealth and extraordinary success in building a tech giant you've probably never heard of.
Zoho's founder Sridhar Vembu.
Vembu describes Zoho, the company he started 23 years ago, as "an unusual company".
"It's not what you would typically see and it is going to stay that way," he says.
Zoho digitises businesses with apps that handle tasks ranging from customer acquisition and management to sales and customer support and has 45 million users across 180 countries.
However, unless your business is one of the "tens of thousands" using Zoho in Australia it's unlikely you've ever heard of the tech giant.
Barefoot billionaire
On the sidelines of Zoho's annual 'Zoholics' conference in Austin, Texas, Vembu is dressed in his standard t-shirt branded with a Zoho logo, jeans and sandals.
Despite his low-key appearance Vembu owns 88 per cent of Zoho along with his family, and Forbes estimates his fortune at $US1.6 billion ($2.23 billion) and growing, with Zoho's turnover estimated at almost $1 billion a year.
Vembu says Zoho flies under the radar because it is outspent on marketing "20 to 1" by its competitors which include Salesforce, Microsoft and Google.
Despite counting Qantas and BHP as its customers in Australia, the tech company is only just opening its first offices here.
Timothy Kasbe is the managing director for Australia and New Zealand of Zoho.
Avoiding venture capital and staying private
The 50-year-old entrepreneur has boot-strapped Zoho for its entire existence with no external funding and no plans to sell or list the company.
"From the profits, we keep reinvesting, reinvesting," he says. "It also helps that from the beginning, from the earliest days it was never about how much you have in your bank account, it was what interesting things can you do with it. Startups are supposed to aim towards exit. You do something because you love it, if you do something because you love it why exit?".
It's a radical approach in a sector that chases venture capital funding, initial public offerings and "unicorn" valuations.
In 2015 Zoho put up ads in train stations around San Francisco targeting industry giant Salesforce, which was not profitable at that stage saying "Dear Salesforce, sorry for your losses."
"These companies are post-IPO but operating like a non-profits," Vembu says. "Not in a good way, they are burning money. It is a problem because it distorts markets. If you look at the cloud, extreme amounts of money is spent on customer marketing and a much lesser percentage goes into research and development."
Vembu believes technology stocks are currently in a bubble and warns that history shows bubbles always burst.
"The present bubble will come to the same end, so we need to build durable companies that can navigate these cycles," he says. "There was a time when business was too easy. We have built this company to survive these bubbles. This is what taught us to engineer patiently, because if we rush and we take shortcuts we pay for it and the customer pays for it."
Starting at the bottom
Vembu was born in the small village of Thanjavur in southern India and got his PhD at Princeton before being offered a job as a lecturer at Australian National University in Canberra.
"I got the job and paid for the permanent residency, then I had the remorse and I thought 'I actually don't like what I am doing, I don't like this work and research, I don't believe in it anymore'," he says. "I was 26 and I called them up and apologised and said 'I can't do this in good conscience, it is not about you it's about me'."
Vembu says he decided to "start at the bottom" as an engineer where he was introduced to software and realised he liked it.
He saw opportunities for a software business in India and started a business, AdventNet, along with two siblings and three friends, which eventually became Zoho.
Zoho has more than 40 apps for its Zoho One product alone and Vembu says the firm's wide-ranging product suite, which includes everything from online games to accounting software, is a result of letting his staff run with their ideas.
"My philosophy of leadership is I identify good people and then get out of their way," he says.
Christopher Lau, founder of eCargo with his father and eCargo's controlling shareholder John Lau. Credit:Christopher Pearce
'Classic' entrepreneur
Christopher Lau, founder of ASX listed company eCargo, which is a Zoho customer, says Vembu is a "classic example" of an entrepreneur.
"He certainly epitomises all successful entrepreneurs, trying to do everything at once," he says. "It's like Jack Mah [founder of Alibaba], every day there is a new business idea, every day a new business initiative, his hit rate is very low but when he hits, he hits."
Sramana Mitra, founder of One Million by One Million, a Silicon Valley virtual accelerator says Vembu has followed a number of unique strategies to build Zoho.
These include creating a product that is very similar to Salesforce's customer relationship management product but dramatically slashing the pricing on it, making it affordable and attractive for small businesses.
"Over time, Zoho has applied the same model of copying successful products by Google, Microsoft, etc to create a broad portfolio that caters to small businesses very effectively," she says.
Vembu says his vision for Zoho is that it will be the software that drives all functions for businesses from sales to finance with competitive pricing from $1 per employee a day.
"To build this kind of company you almost have to be crazy or insanely ambitious," he says.
The reporter attended Zoholics in Austin as a guest of Zoho.
https://www.smh.com.au/business/sma...nt-you-ve-never-heard-of-20190415-p51e8i.html