airIndia

A Suitable Buyer

 

Air India has been bleeding money for quite some time. At the end of March’17, it had piled up debt of nearly Rs. 48,000 crore. Nontheless, it has found suiters in Tata Group and parent company of IndiGo. But, that’s not enough for the government. It wants to raise the stakes, so it may do away with the ‘foreign airlines can own 49% stake in an Indian airline but not Air India’ rule. More bidders, better pricing. Why would a buyer be interested in owning a debt laden company? You ask? Government is hiving off a part of Air India’s loan not linked to the aircraft, a 64% of its debt.

For more news in numbers, read on.

 

84

What is it? The number of seats the Left Alliance in Nepal had won as of Sunday evening in parliamentary elections, as per preliminary results.

Why is it important? With this, the CPN-UML and CPN-Maoist alliance is heading towards a majority, with Khadga Prasad Oli likely to be the country’s Prime Minister. This brings an end to the decade-old civil war in Nepal and completes its move to becoming a federal democracy. It remains to be seen if the Left Alliance’s landslide victory results in the waning of India’s influence on Nepal and China playing a dominant role in the landlocked nation.

Tell me more: The Left Alliance was leading in another 31 seats, while the incumbent Nepali Congress had won just 13 seats. The house of representatives consists of 275 members, of which 165 are to be elected directly under the first-past-the-post system and the rest through the proportional representation system.

 

49%

What is it? The maximum stake that foreign airlines can own in an Indian airline, with the exception of Air India, in which investment from foreign airlines is banned.

Why is it important? The Indian government may reportedly do away with this exception for the disinvestment of state-run Air India, provided the foreign airlines has a joint venture with a local player. This could intensify competition among bidders interested in buying Air India and, perhaps, fetch the government a better price. The parent company of IndiGo is the only airline to have made a formal expression of interest, while the Tata Group has indicated its interest in doing the same.

Tell me more: Jayant Sinha, union minister of state for civil aviation, said on Friday that the process of privatisation of Air India has begun and that it would be finalised in 6-8 months.

 

39%

What is it? Percentage of assets under management (AUMs) of Indian mutual funds in equity funds and balanced funds in November 2017.

Why is it important? This figure was 30% in November 2014. This increase in share of equity-oriented funds comes in the backdrop of consistently rising net inflows into Indian mutual funds, whose total AUMs have increased to an all-time high of Rs 21.8 trillion in November 2017, as against 16.9 trillion in October 2016. More encouragingly, it is individual investors who are driving growth, rather than institutional investors.

Tell me more: The two fund classes that have lost share during this period are both debt funds: income funds (down from 46% to 38%) and liquid funds (down from 21% to 19%).

 

67%

What is it? The rate at which Amazon India’s gross sales volume increased in the July-September quarter from a year ago. Its gross sales by value grew 67% in the same period.

Why is it important? This is more than twice the estimated broader growth rate of the online retail market. It is another indication that Amazon India continues to keep pace with India’s homegrown e-commerce firm and marked leader, Flipkart. In a recent report on customer response and perception by RedSeer Consulting, both e-tailers were tied with a score of 92, similar to the corresponding quarter in the previous year, when they had both scored 95.

Tell me more: Amazon has committed $5 billion in India, of which it has spent over $2 billion, while Flipkart raised $2.4 billion from Japan’s SoftBank Group recently, giving it enough ammunition to battle against its cash-rich rival.

 

14

What is it? Number of consecutive wins recorded by Manchester City in the English Premier League. This is joint best with Arsenal’s run over two seasons in 2002.

Why is it important? On Sunday, leaders Manchester City visited cross-town rivals and second-placed Manchester United in a game with many sub-texts and dominated them in a 2-1 victory. In a weekend when four of the top six teams in the league dropped points, City extended their lead to 11 points. They next travel to Swansea, which is languishing second from the bottom.

Tell me more: The Manchester Derby ended with a fracas in the corridor outside City’s dressing room involving players and staff from the two teams.

 

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Person Of The Year: The Silence Breakers

 

Mahatma Gandhi once said, “Whatever you do will be insignificant, but it is very important that you do it.”

Last month, several women who had experienced sexual harassment came out on Facebook and narrated their bitter experiences with #Metoo. Some of these experiences were fairly recent and some were decades old. But, their memories of the incident/s was just as new. The ripple effect of this movement shook Hollywood the most and has slowly engulfed few senators in the US parliament as well. This year Times Magazine has declared these Silence Breakers as the ‘Person of the year’.  Why is it important, you ask? Read on.

 

3

What is it? The number of times since 2007 when Time magazine’s Person of the Year was not one person, but a group or a movement. On Wednesday, Time declared ‘The Silence Breakers’—the women who have spoken out against sexual harassment and sexual assault at the workplace—as its 2017 Person of the Year.

Why is it important? As actor after actor came out against Hollywood producer Harvey Weinstein, it emboldened more women and men to narrate their incidents of sexual assault by men in positions of power. This had a domino effect, trickling down to the masses through the Twitter hashtag #MeToo, and bringing sexual harassment at the workplace into conversations and actions than ever before. The well-known names accused include actors Kevin Spacey and Dustin Hoffman, Tv host Bill O’Reilly and Silicon Valley investor Shervin Pishevar.

Tell me more: Time bestows this title to someone who impacted the world in a significant way, positive or negative. The previous two occasions since 2007 when it was not given to one person was 2014 (The Ebola Fighters) and 2011 (The Protestor).

 

92%

What is it? The amount by which cryptocurrency Bitcoin has increased in the past month. On Wednesday, it roared past the $13,000 mark.

Why is it important? The latest price rise comes in amid news that Chicago exchanges CBOE Global Markets and CME Group have received regulatory approval to launch Bitcoin futures, and are planning to do so on December 10 and December 18, respectively. It’s a move that has sparked new bouts of concern about regulatory preparedness and systemic risk for this one-of-a-kind asset class.

Tell me more: Two disparate events in the past week highlight the contrast in Bitcoin: on the one hand, South Korean financial regulators banned Bitcoin futures; on the other, the Winklevoss twins, who sued Facebook’s Mark Zuckerberg over the claim that he stole the idea for the social network from them, have become billionaires on the back of their investment in Bitcoin.

 

5

What is it? The maximum number of players a franchise can retain for the upcoming seasons of the Indian Premier League (IPL).

Why is it important? It means each franchise has some chance to hold on to their core players, while all other players go into the auction pool again. Details of the announcement come as a shot in the arm for the two franchises that were handed a two-year ban in 2015 for illegal betting and financial irregularities, Chennai and Rajasthan. Their retention pool includes former players who joined the Gujarat and Pune teams in the interim, paving the way for MS Dhoni to rejoin his old team Chennai.

Tell me more: A franchise will retain players via two routes: retention before the auction (maximum three players) and right to match a bid in an auction (maximum three players, with a total of five under the two heads). Further, the salary cap of each IPL team has been increased from Rs 66 crore to Rs 80 crore.

 

6%

What is it? The rate at which India’s central bank held the benchmark repo rate—the interest rate at which it lends to banks—at its bimonthly policy review on Wednesday.

Why is it important? This the second consecutive review in which the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has not touched the benchmark repo rate. This is despite clamor from industry and the government to do so in order to spur economic growth. The RBI noted risks to inflation, but expressed optimism that the slowdown in economic growth had bottomed out.

Tell me more: Five of the six MPC members—Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral Acharya and Urjit Patel—were in favour of the monetary policy decision. Only one member, Ravindra Dholakia, voted for a policy rate reduction of 0.25 percentage point.

 

Rs 17.38 crore

What is it? The amount Infosys agreed to pay former chief financial officer Rajiv Bansal as severance pay in October 2015.

Why is it important? On Wednesday, Infosys filed a consent plea, without admitting wrongdoing, with capital market regulator Sebi (Securities and Exchange Board of India) over governance and disclosure issues related to this payout. Governance experts have expressed unhappiness over the latest move by Infosys—for long cited as the marker in corporate governance in India Inc—to handle the issue, seeing it more as a way of achieving closure rather than coming clean on it.

Tell me more: The severance pay to Bansal was one of the flashpoints in a tussle earlier this year that saw the Infosys board and previous CEO Vishal Sikka on one side and Infosys co-founders, notably NR Narayana Murthy, on the other side. Sikka was eventually ousted and the board had a new chair in Nandan Nilekani.

 

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Virat Kohli Is Up Against History In Matching Sachin Tendulkar’s 100 Hundreds

The way he is batting these days, Virat Kohli makes hundreds for breakfast. On November 20, he became only the eighth batsman in the history of the sport to reach 50 international hundreds. The next two innings he played in the ongoing test series against Sri Lanka, he added two more—that too double hundreds.

He is in imperious form. He is hungry to write and rewrite history. He has the focus. He has the fitness.

Still, the summit of hundreds, on whose perch Sachin Tendulkar sits alone by a long, long way is a long and arduous journey away. And, in order to reach there, Kohli will have to do things that most others who have tried to make that journey have failed to.

It comes down to a tale of two halves. These top centurions were more productive in the first half of their career than their second. All barring one, and we will come to this exception.

The graph below shows the age at which the top three centurions (Tendulkar, Ricky Ponting and Kumar Sangakkara) and two current players (Kohli and Hashim Amla) have scored their centuries.

Look at Tendulkar’s line (colored blue). It starts before everyone else’s: he debuted the youngest. It extends beyond everyone else: he played the longest. It rises the highest: he has the most hundreds. It is always above everyone else’s: at every age, Tendulkar had more hundreds.

Virat Kohli is 29 today. At that age, Tendulkar had 65 hundreds, 15 more than Kohli. Tendulkar played for nine more years, during which he amassed another 35 hundreds—a lower rate of accumulation. Similarly, Ricky Ponting, who finished with 71 hundreds, added 36 hundreds between the age of 29 and 37, when he retired.

The one exception to this was Kumar Sangakkara. He was a rare top batsman who became more prolific with age and went out in considerable style. Sangakkara played till the age of 37. And between 29 years and 37 years, he racked up 43 hundreds.

For Kohli to overhaul Tendulkar’s record of 100 hundreds, he will need to play as long as Tendulkar and do so with the accumulation prowess of a Sangakkara.

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Mutual Fund CMOs, Are You Tapping The Stories In Lucknow, Ernakulam, Vadodara?

For the longest time, the Indian mutual fund industry was a story of latent potential as risk-averse Indians, even for their long-term savings, preferred the safety of bank deposits to the savvy of mutual funds. In recent years, that potential is starting to be unlocked as more investors gravitate towards mutual funds as a savings and investment habit. Where in India might be more money like that located?

It’s a business question for chief marketing officers (CMOs) of mutual funds as they try to find new markets and new investors. A dataset that can provide direction to that search is the district-wise data on deposits that India’s central bank releases on a quarterly basis, the last being as of June 2017.

This Reserve Bank of India (RBI) dataset carves India into 666 districts. For each district, it breaks down total deposits available with a scheduled bank into three categories:

Current deposits: Typically, used by businesses. For the sake of the question we are trying to answer, we will keep this aside, and focus on the other two deposit categories.
Savings deposits: Fluid money belonging to individuals.
Term deposits: Sticky money belonging to individuals and businesses.

Here are two takeaways from this dataset:

1. Metros matter: Much as India is growing beyond her big cities, its current economic nerve centres—and personal wealth—are still concentrated in and around the metros. There are only 12 districts where the total savings and term deposits exceeds Rs 100,000 crore. And they are spread across a wide range: from Gurgaon (Rs 103,772 crore) to New Delhi (Rs 1,009,694 crore).

In the map below, these are the yellow dots. Click on the legend to isolate them and mouseover on the dots to see which ones they are and their bank deposits. Other than the five main metros or their offshoots, there’s Hyderabad, Pune, Ahmedabad and Lucknow.
Mumbai and New Delhi stand out by a long way. The deposits in New Delhi, for example, are 9 times that of Lucknow and 4 times that of Chennai.

2. The 3 clusters: The map plots 169 districts that have deposits of above Rs 10,000 crore, divided into four bands. From the point of view of focusing marketing resources, there are 3 clusters that can be seen:

i) The capital cluster: Around Delhi, extending into Punjab, Haryana, Western Uttar Pradesh and Uttarakhand. This houses districts like Jalandhar (rank 26, Rs 55,779 crore of deposits) and Dehradun (rank 28).

ii) The Pune-Ahmedabad cluster: This belt runs from Pune to Ahmedabad, and passes through Mumbai—the biggest of them all—and touches several districts in Gujarat. This includes Vadodara (rank 17), Surat (rank 30) and Rajkot (rank 45).

iii) The Kerala belt: It runs along the length of Kerala, and branches off into Tamil Nadu at two points. This belt has 6 districts in the top 50, led by Ernakulam (rank 16), Thiruvananthapuram (rank 23) and Coimbatore (rank 29).

Then, there are smaller pockets, in terms of number of districts: for example, around Kolkata and Chennai. The question before mutual fund CMOs is this: are they maximizing the potential of these districts.

This data is also available as a time-series for the last 5 years for all districts, which can be used to identify stories of growth. If you are interested in an analysis of this data that is tailored to your needs, please contact us.

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