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This section offers content on business updates and new rules made by the government which could affect the running of a business.

Bank Failures

Bank Failures: Lessons To Safeguard Your Savings

Bank failures can significantly impact depositors, so it’s crucial to understand how to safeguard your savings. Recent news and the experiences of Silicon Valley Bank and Signature Bank failures serve as a reminder of the importance of being prepared.

In this article, we’ll explore tips for protecting your savings from bank failures, including choosing a reputable bank, diversifying your accounts, and monitoring them regularly. We’ll also discuss the role of the FDIC and the benefits of FDIC insurance. Don’t let a bank failure catch you off guard; read on to learn how to keep your money safe.

Bank Failures: Causes and Help Available To Depositors

Understanding bank failures is crucial in protecting your savings. It refers to the inability of a bank to meet its financial obligations to depositors.

Causes of failures include

  • Poor management,
  • Economic downturns, and
  • Fraud

When a bank fails, depositors may lose access to their funds, significantly impacting their finances. In such cases, it may not have sufficient funds to repay all of its depositors, leading to losses for those with uninsured deposits. In the US, the FDIC (Federal Deposit Insurance Corporation) plays a crucial role in protecting depositors. The FDIC provides deposit insurance to protect depositors’ funds in case of failures.

However, in India, the State owns a majority of bank assets which works as an implicit assurance of safety for their depositors. For other banks, the government has willingly and compulsively bailed out troubled banks and FIs via forced mergers or regulatory forbearance and unconventional regulatory engineering. It happened in the case of the Punjab and Maharashtra Cooperative (PMC) Bank bailout too.

India has managed to protect the interests of depositors in the three instances of bank failures that occurred within the past three years, namely PMC Bank, YES Bank, and Laxmi Vilas Bank. The regulatory body has succeeded in doing so with the government’s support. Moreover, software companies have also been prevented from failing in response to the public’s demands.

History of Bank Failures in the US

Bank failures have been a recurring issue in US history, as illustrated by a graph depicting the number between 1984-2023.

image 59
Source: Business Insider

Bank Failures: Consequences and Impact on Depositors

Inaccessible Funds: The moratorium that suspends bank operations for an uncertain period can be challenging for customers, especially small depositors, as their funds become inaccessible, despite deposit insurance guaranteeing eventual repayment. Though the proposed Banking Resolution Corporation aims to provide formal mechanisms for quickly liquidating banks, it has yet to become a reality.  

Increase in Fees & Interest: Bank failures can have severe consequences beyond just hurting depositors and investors. They can also result in increased fees and interest rates as banks attempt to make up for their losses.

Slow-down in Lending: One bank’s failure can trigger a chain reaction of other failures, causing a significant slowdown in lending and negatively impacting the economy. So the central banks would want to avoid dealing with such a crisis.

DICGCI: The Key Player in Protecting Your Savings in India

Deposit insurance, an instrument that helps to minimize the impact of bank failure, has been used sparingly in India. The banks themselves have long funded deposit insurance in India. Banks’ contributions are, however, not ‘risk-priced.’ 

Under the Deposit Insurance and Credit Guarantee Corporation of India Act, all banks must pay the same premium to insure their deposits, regardless of their financial health or asset quality. However, a few strong banks have been reluctant to fulfill this requirement.

FDIC: The Key Player in Protecting Your Savings from Bank Failures

The Federal Deposit Insurance Corporation is an independent government agency that provides deposit insurance to protect depositors in case of bank failures. FDIC insurance coverage applies to deposits in savings accounts, checking accounts, money market accounts, and certificates of deposit (CDs) at FDIC-insured banks.

The coverage limit is currently $250,000 per depositor per insured bank, and it covers both principal and any interest earned. The primary benefit of FDIC insurance is that it protects depositors against the risk of losing their money if their bank fails.

If a bank fails, the FDIC takes over it and ensures that depositors receive their insured funds, usually within a few business days. The U.S. government fully backs FDIC-insured deposits, making them one of the safest places to keep your money.

It means that even if your bank fails, you can still recover your insured funds up to the coverage limit. It’s important to note that not all banks are FDIC-insured, and depositors should always check to ensure their bank is FDIC-insured before opening an account.

The FDIC maintains a database of FDIC-insured institutions on its website, and depositors can also look for the FDIC logo on bank websites, statements, and marketing materials. By choosing an FDIC-insured bank and understanding the benefits of FDIC insurance, depositors can safeguard their savings from bank failures and other financial risks.

Silicon Valley and Signature Bank: Lessons from Their Failures

Silicon Valley Bank and Signature Bank are two examples of banks that have experienced significant failures, leading to financial losses for their customers. These failures highlight the importance of safeguarding savings from bank failures.

In the case of Silicon Valley Bank, the bank’s failure was due to a combination of factors, including poor risk management and the bank’s exposure to high-risk loans. The failure of Signature Bank, on the other hand, was due to the bank’s heavy reliance on volatile funding sources.

These cases offer valuable lessons for customers of any bank.

It’s essential to understand the potential risks and to safeguard savings, including diversifying accounts, choosing a reputable bank, monitoring accounts regularly, and being aware of FDIC coverage limits.

By taking these steps, customers can better protect themselves from the impact of any future bank failures.

Bank Failures: Safeguarding Your Savings

  • To safeguard savings, it is important to diversify your accounts, choose a reputable bank, monitor your account regularly, and be aware of FDIC coverage limits.
  • Diversification of accounts is one of the most effective ways to protect your savings. Instead of keeping all your funds in a single bank account, consider spreading them across multiple banks or financial institutions.
  • Choosing a reputable bank is crucial to safeguarding your savings. Look for banks with a solid financial standing and a proven stability and reliability track record.

It’s also important to monitor your account regularly to detect any suspicious activity or errors. Be sure to review your account statements and balance frequently and report any discrepancies to your bank immediately. By following these tips and being aware of FDIC coverage limits, depositors can minimize the risks of financial losses in the event of a bank failure.

Final Words

Safeguarding savings from bank failures is crucial to prevent financial losses. Recent examples of bank failures are a reminder to diversify accounts, choose reputable banks, monitor accounts regularly, and depositor insurance coverage limits.

FAQs

How to confirm if my bank is FDIC-insured?

You can check if your bank is FDIC-insured by looking for the FDIC logo or using the FDIC’s BankFind tool on their website.

What happens to my money if my bank fails and is not insured?

If your bank is not insured and it fails, there is no guarantee that you will get your money back. You should always make sure your bank has appropriate insurance to protect your savings.

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tata capital consolidation

A Step into The Future: Tata Capital Consolidation of Subsidiaries

Tata Capital plans to consolidate its subsidiaries with an eye on its potential listing. Focusing on efficiency, cost reduction, and regulatory compliance, it aims to streamline its operations and strengthen its position in the Indian financial services market.

This move involves merging some subsidiaries, divesting non-core subsidiaries, and reducing the number of subsidiaries to achieve a streamlined business structure.

Let’s understand more about this consolidation.

Streamlining Operations: Tata Capital to consolidate 19 subsidiaries

Tata Capital, the financial services arm of the Tata Group, recently announced plans to consolidate its 19 subsidiaries to simplify its business structure, improve compliance, and meet regulatory requirements.

It is the holding company for six businesses:

  • Three financing companies – Tata Capital Housing Finance, Tata Financial Services, and Tata Cleantech Capital, and
  • Three investing and advisory companies – Tata Securities, Tata Capital Singapore, and Private Equity.

The central bank recognizes Tata Capital Financial Services as a systemically important non-deposit accepting non-banking financial company. It intends to enhance its ability to serve its customers more effectively and efficiently by streamlining its operations.

Consolidating its subsidiaries aligns with the company’s strategic objective of becoming a more focused and agile financial services provider. It intends to leverage its strong brand and reputation to expand its market presence and offer its customers a broader range of products and services.

Tata Capital Consolidation Plan

What It Involves and How It Will Streamline the Business?

The consolidation plan involves merging some of its subsidiaries, such as the housing finance and affordable housing units, to create more efficient operations. In addition, the company is exploring options to divest non-core subsidiaries, such as Tata Capital Forex and Tata Cleantech, which are unrelated to its core businesses. The aim is to streamline its business structure and focus on core businesses that offer high-growth potential. This consolidation plan will reduce the number of subsidiaries from 19 to a smaller number.

image 14
Source: ET

In FY22, the company’s consolidated income was ₹10,253 crore, up from ₹9,988 crores in the previous year, and its profit after tax on a consolidated basis increased by about 46% year-on-year to ₹1,648 crores.

The consolidated return on assets for FY22 was 2%, and the return on equity was 15.6%. These impressive financial results show the company is in a strong position to implement its consolidation plan successfully and capitalize on future growth opportunities.

Through this move, the company expects to enhance its competitiveness while allowing it to respond more quickly to changing market dynamics and customer needs. Industry experts believe the consolidation is a step in the right direction. ICRA, a rating agency, has assigned a positive outlook to the company’s long-term rating, citing its efforts to improve its business structure and reduce costs.

Let’s take a closer look at the benefits of the consolidation plan.

Maximizing Growth: Benefits of Consolidation Plan

  • Consolidating subsidiaries will improve efficiency and coordination among businesses under the holding company.
  • Reduced duplication of functions and resources will result in significant cost savings.
  • The company will position itself for potential future growth by focusing on core businesses.
  • The consolidation will ensure better compliance with regulatory requirements and reduce the risk of penalties and other sanctions.

Reserve Bank of India and Tata’s consolidation plan

Tata Capital is consolidating its subsidiaries to meet the Reserve Bank of India’s regulatory framework, which mandates non-banking finance companies to maintain a certain level of net-owned funds. It plans to improve its financial position by streamlining its business structure and meeting the NOF requirements.

Tata Capital’s Consolidation Timeline

The company has already begun the consolidation process aiming to complete it by the end of the financial year 2022-23. However, they haven’t announced a timeline for a potential listing. Analysts expect that this move will prepare the company for a successful IPO in the future.

Impact of Consolidation on Tata Capital Services

Considering the consolidation aims at improving efficiency and focusing on core businesses, there will be no impact on the services the company offers.

Final Words

The consolidation plan is a strategic move expected to benefit the company in the long run. Streamlining its business structure and focusing on core businesses will help the company position itself for future growth and success in the Indian financial services market.

The potential for a future IPO is an added incentive, allowing the company to raise capital and expand its operations further. Overall, the consolidation plan is a positive development that could be worth watching in the next few months.

FAQs

What companies are being considered for consolidation by Tata Capital?

The company is considering the consolidation of Tata Capital Ltd., Tata Capital Financial Services Ltd., Tata Cleantech Capital Ltd., Tata Capital Housing Finance Ltd., Tata Securities Ltd., and Tata Capital Pte Ltd., Singapore, and its subsidiaries.

What extent of consolidation is Tata Capital considering for these companies?  

The company plans for a full consolidation, with Tata Capital Ltd. as the holding company and all other companies as its subsidiaries.

Why is Tata Capital consolidating its subsidiaries?

The consolidation is to prepare the company for future growth and a potential listing. With a more streamlined business structure, focus on core businesses, and meet the regulatory framework of the Reserve Bank of India. Doing so will position the company for success in the Indian financial services market.

Will the consolidation have any impact on the customers of Tata Capital?

The consolidation will not impact the consolidated entities’ day-to-day operations, and customer service will continue uninterrupted.

Will Tata Capital’s consolidation plan lead to any job cuts?

The company has not announced any job cuts due to the consolidation plan. The focus is to streamline the business structure and improve efficiency.

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credit ratings

3 Credit Ratings -What Are They, And How Do They Affect You?

As we speak, a huge crisis-like situation in the US banking sector that started with SVB (Silicon Valley Bank) has brought the entire US banking sector under the scanner. One of the reasons that led to SVB’s collapse was Moody’s downgrading their credit ratings for the US from ‘stable’ to ‘negative’.

Whenever there is a financial crisis, you will invariably see a mention of the Credit ratings and the role these ratings play in propagating or advancing the problem. So let us understand these ratings and how they affect you as investors.

What is a Credit Rating?

A credit rating evaluates a borrower’s creditworthiness, whether it’s a company or even a country. It’s an evaluation of the borrower’s ability to repay its debts based on multiple factors such as financial stability, past payment history, and other financial indicators.

The same evaluation is called a Credit Score when done for an individual. You would have heard about this term if you ever applied for a Home loan, Car loan, or even a credit card. So what is called credit score for an individual is called the credit rating for a company or country.

Who Issues These Credit Ratings?

A handful of rating agencies issue credit ratings; for example, we have Crisil, Care Ratings & ICRA issuing most of the credit ratings in India. Similarly, in the US, we have S&P (Standard and Poor’s), Moody’s, and Fitch control more than 95% of the market for credit rating agencies.

Three Types of Credit Ratings

Credit rating companies typically assign three broad buckets of ratings based on the creditworthiness of the borrower:

  1. Investment Grade: This bucket has borrowers with the highest credit rating, indicating a low risk of default. These instruments typically have a rating of BBB- or higher by Standard & Poor and Fitch Ratings or Baa3 or higher by Moody’s.
  2. Speculative Grade: These are debt instruments with a high risk of default. They are also called “Junk” or “high yield” debt. Debt instruments rated BB+ or lower by Standard & Poor’s and Fitch Ratings, or Ba1 or lower by Moody’s, are considered speculative-grade.
  3. Default of Distressed: These are debt instruments that have already defaulted or are on the verge of defaulting. These instruments are typically rated D or C by rating agencies. Some credit rating agencies treat this as part of a Speculative grade only.
image 1
Source: S&P, Moody’s & Fitch

Various Advantages of Credit Ratings

A wide range of instruments starting from corporate bonds, Government bonds up to complex financial products like mortgage-backed securities and collateralized debt obligations, are rated by Credit Rating agencies.

  • These ratings are meant to guide prospective investors on the riskiness of these instruments and price these products accordingly.
  • Investors can demand higher interest rates for lower-rated debt instruments to compensate for the increased risk of default.
  • For organizations/companies looking to raise debt, their credit rating significantly impacts their ability to access the capital markets.
  • A better credit rating can make it easier and less expensive for an issuer to issue debt and attract investors, while a lower rating can make it more difficult and expensive to raise funds.

Important Factors That Decide A Credit Rating

If you read through a typical credit rating report, it will try to evaluate the following factors:

  • Previous payment history of the borrower
  • Quality of income streams or sources of funds that will be used to repay the loans
  • Usage of the borrowed money itself
  • Various financial ratios include solvency, interest coverage, debt to equity, etc.

The end rating results from all of these factors, and it is essential to note that it is an “Opinion” on the company’s current financial situation.

Can We Blindly Trust Credit Ratings?

The fact that the end credit rating issued by a rating agency is an “Opinion” makes this subjective. It is also relevant to understand how the credit rating operates and who pays for these ratings to understand further if there is scope for manipulation in these ratings.  

Credit ratings are paid for by the entities that seek to obtain them. Generally, the issuer of the debt instrument, such as a company issuing bonds, will pay a credit rating agency to evaluate and assign a credit rating to their debt securities. Therefore, rating agencies may be reluctant to give very low ratings to securities issued by companies that pay their salaries.

So even if the rating is not entirely incorrect, there is still a chance that the issuer is biased in favor of his client, and hence the rating may not be completely objective.

Let us now look at some of the past famous examples where these credit rating agencies have gone wrong:

  • IL&FS crisis: You would remember that in 2018 IL&FS had severe credit rating issues. IL&FS had a high credit rating before its default, and the situation led to a crisis in India’s financial markets.
  • Lehman Brothers: Before its collapse in 2008, credit rating agencies rated Lehman Brothers as investment-grade. However, its credit rating was downgraded to junk status just days before its bankruptcy.
  • Argentina: In 2002, Argentina defaulted on its Sovereign debt despite having a high credit rating from credit rating agencies.

Final Words

Does this mean credit ratings are not important? No, they are important. Having looked at all the aspects of credit rating, you should look at credit rating as one of the factors for making an investment decision. However, a credit rating report should never be considered as a final recommendation to buy, hold or sell any debt instrument.

You must assess the entity’s or the instrument’s financial situation independently before investing and use credit rating reports as a supporting tool.

FAQs

What are the key factors of credit rating?

The payment history of the borrower, debt-to-equity ratio, length of credit history, etc., all play a role in arriving at the credit rating or credit score.

What are the problems with credit rating?

The biggest problem is poor rating quality. This could be because of insufficient information or because the ratings may be biased.

What is the validity of credit rating?

A rating is valid until withdrawn, usually when the rated debt obligation is fully paid.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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SEBI

SEBI Fines 7 Entities For Violating Market Regulations

Recent Events in the stock market prompted SEBI to act against seven entities for violating market regulations. These entities have engaged in fraudulent and manipulative trading activities, undermining the securities market’s integrity. Its actions demonstrate its commitment to enforcing market regulations and promoting transparency and fairness in the securities market.

Entities Fined By SEBI For Violating Market Regulations

SEBI imposed a fine of Rs. 62 lakhs on six entities for fraudulent trading practices. The six entities are Riddhi Siddhi Bullions, Riddhi Siddhi Bullions (India), Riddhi Siddhi Jewellers, Akash Agro Industries, Royal Tradelinks, and Royal Tradelink (India).

According to the regulatory body, these entities engaged in coordinated trading activities that manipulated the market price of shares of BSL Ltd. The watchdog found that the entities had placed buy and sell orders pre-determined to create an artificial volume in the market and influence the price of the shares.

This practice is known as “wash trading” and is illegal under Indian securities laws. The watchdog investigated the matter and found that the entities had violated several provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

The regulator concluded that the entities had engaged in fraudulent and manipulative practices that harmed investors’ interests and undermined the securities market’s integrity.

SEBI imposed a fine of Rs. 62 lakhs on the six entities, fining each entity Rs. 10 lakhs as a penalty. The regulator also directed them to disgorge the unlawful gains made through fraudulent trading activities. They also barred the entities from accessing the securities market for six months.

In this case, the capital market regulator imposed a penalty to deter others who may engage in similar fraudulent trading practices. Moreover, it highlights the regulator’s commitment to maintaining the integrity of the Indian securities market and protecting the interests of investors.

What is the LODR violation?

Continue reading to learn more. The watchdog levied fines of Rs 11 lakhs on seven entities for violating regulatory norms to SS Organics Ltd (now known as Oxygenta Pharmaceutical Ltd).

SEBI found that a loan transaction of Rs 15 crore between ARR Capital Investment Pvt Ltd and SS Organics Ltd exceeded the firm’s turnover for FY2019-20, exceeding the limit of material transactions.

It also found that ARR was the related party of SS Organics Ltd, and the three directors of ARR held directorship at SS Organics Ltd on the loan transaction date. Despite this, SS Organics Ltd did not take shareholders’ approval for the loan transaction, nor did they consider ARR as a related party and obtain consent from the audit committee under the Listing Obligations and Disclosure Requirements (LODR) regulations.

Additionally, SS Organics Ltd did not make subsequent disclosures of related party transactions as required under the norms. Sai Sudhakar Vankineni, D Sadasiva Reddy, Gunreddy Krishna Reddy, Muralidhar Rambathri, Rajasekhar Reddy Puchakayala, and Raghavender Rao each paid fines of Rs 5 lakh and Rs 6 lakh to SS Organics Ltd., which the SEBI imposed.

This incident highlights the importance of adhering to regulatory norms and obtaining proper transaction approval. Failure to do so can result in hefty fines and damage to the reputation of the company and its directors. It also emphasizes transparency in related party transactions and the importance of avoiding conflicts of interest. Companies should ensure that they comply with all applicable regulations and seek proper approvals to avoid facing similar penalties in the future.

SEBI’s Preventive Actions to Curb Market Violations

SEBI’s actions against these entities are a part of its efforts to prevent fraudulent trading and market manipulations. They have taken several preventive actions to maintain a solid and regulated Indian market.

SEBI has implemented strict regulations against wash trading, including rules prohibiting market manipulation, fraudulent and unfair trade practices, and insider trading. The regulator has also established a comprehensive surveillance system that monitors trading activities to detect and deter wash trading.

Furthermore, SEBI has mandated that brokers and trading members maintain proper documentation and records of their trading activities to ensure compliance with the regulations. It also encouraged market participants to promptly report any suspicious activities.

The regulator takes active actions to implement the Listing Obligations and Disclosure Requirements regulations, which ensure that companies listed on the Indian stock exchanges comply with specific standards of corporate governance, financial reporting, and disclosure.

SEBI has also been enhancing transparency and investor protection in the Indian market. They have implemented several measures to increase the flow of information to investors, including the requirement for companies to disclose material events and related-party transactions. SEBI has also implemented regulations to prevent insider trading and other market manipulations.

Final Words

SEBI’s recent actions against entities violating market regulations strongly indicate that the watchdog will not tolerate companies and individuals flouting regulatory norms. By imposing fines on the violators, SEBI has taken a step towards ensuring a level playing field for all participants in the capital market, promoting investor protection, and maintaining the integrity of the securities market.

It remains to be seen whether SEBI registered advisory will successfully implement the proposed scheme. In the meantime, it’s essential to emphasize the importance of conducting thorough due diligence before selecting any stock market investments advisory

FAQs

What is the penalty for violating SEBI’s regulations?

The penalty for violating SEBI’s regulations can range from a warning or a monetary fine to suspension of trading privileges or even criminal charges. The exact sentence depends on the nature and severity of the violation.

What can investors do to ensure compliance with SEBI’s regulations?

Investors can ensure compliance with SEBI’s regulations by staying informed about the latest rules and guidelines, conducting due diligence before investing in any security, and reporting suspicious activity to it or other relevant authorities. Investors can also consult with financial advisors or seek guidance to ensure compliance with its regulations.

What is the penalty for violating SEBI’s regulations?

The penalty for violating SEBI’s regulations can range from a warning or a monetary fine to suspension of trading privileges or even criminal charges. The exact penalty depends on the nature and severity of the violation.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Quick Commerce

Is Quick Commerce In India Dying?

On February 15th, 2023, the Economic Times published a news article stating that Reliance Retail’s quick commerce app JioMart Express had been removed from Google Play Store and that the company’s website was inactive. The company’s quick commerce grocery delivery service was launched in 2021 and initially had plans to expand to 200 cities. Similarly, Ola Dash, Ola’s quick commerce platform, was discontinued in June 2022.

And other players like Zomato-backed Blinkit, Swiggy’s Instamart, and Tata-backed BigBasket are returning to longer delivery times. So, are quick commerce platforms in India struggling or transitioning to a more sustainable business model?

Overview of Quick Commerce in India

Quick commerce is an offshoot of e-commerce with a distinct business model in which goods with a short shelf life (food items) are delivered within 10-30 minutes of ordering. Unlike traditional e-commerce marketplaces, which ship goods from a central warehouse, quick commerce ships goods from multiple small warehouses- called dark stores, located throughout the city for faster delivery times.

It’s hard to trace the evolution of quick commerce because it has always existed in some form or other in the market. For instance, Domino’s under 30 min delivery model has existed for a very long time in the market, which helped it to penetrate the market deeper.

During the pandemic, the quick commerce segment witnessed increased adoption, and companies began competing with the speed of deliveries of grocery items or any household products. From an hour or 30 min, companies started promising deliveries within 10 minutes of ordering. 

Zepto pioneered quick commerce in India when they launched their services in April 2021 in Mumbai and quickly became a hit. Within five months of its launch, Zepto raised $60 million in November, followed by $100 million at a valuation of $570 million. In the following round in May 2022, it raised $200 million at a valuation of $900 million.

The move by Zepto prompted other players, such as Zomato and Swiggy, to enter the segment, leveraging their extensive food delivery network. Zomato acquired Blinkit (formerly Grofers), and Swiggy started with Instamart, making considerable investments to crack the model right.

In a few months, quick commerce became the fastest-growing e-commerce model, with market consulting firm RedSeer in its report published in March 2022, estimating the quick commerce market in India to reach a $5.5 billion market size by 2025, a total addressable market estimated of $45 billion.

But, cut to March 2023, most of the companies operating in the segment have changed track and are going slow on deliveries and expansion. Companies are clubbing orders and dispatching them in 60-minute intervals, incentivizing users to choose longer delivery times.

The Challenge of Positive Unit Economics

At this point, quick commerce is a cash-burning business for most companies, meaning companies are paying out of their pocket to fulfil the orders.

For instance, Zomato burns ₹41 on each order they process. In FY22, the company posted ₹347 crores net loss in Q3FY23, of which, Blinkit’s share in the loss is ₹288.5 crores. Similarly, Swiggy is burning $50 million monthly in the food delivery business and Instamart.

Zepto incurred a total loss of ₹390.4 crores, and Dunzo’s consolidated loss jumped to ₹464 crores on revenue of ₹67.4 crores in FY22. For quick commerce to scale, businesses cannot keep losing money on each order amidst the funding winter. They must innovate, be frugal with their approach, and improve per-unit economics.

According to a report published by brokerage firm Bernstein, the average order value of quick commerce in India is ₹490, and that’s not financially feasible for quick commerce platforms in the long term. Hence, the platforms are nudging users to increase order value above ₹1,000 by offering discounts. Also, on the store level, each dark store needs to fulfil 800 orders per day to break even.

By going for a longer delivery time, delivery executives can club orders and reduce the cost of shipping. Furthermore, quick commerce platforms are closing dark stores in low-volume areas. On the other hand, quick commerce platforms nudging users to go for higher order value completely defeats the purpose.

According to Hari Menon, CEO of Big Basket, while large orders have the flexibility to be delivered later, quick commerce is about delivering small orders almost instantly, which is its USP.

Demographic Challenges

Unlike in Western countries, where quick commerce platforms can maintain consistent product availability across all dark stores, companies in India must hyper-localize their dark stores based on consumer preferences. This raises logistical and restocking costs.

Peak & Non-Peak Hours

Unlike traditional e-commerce platforms, where festive and month-start and month-end cycles determine peak and non-peak cycles, quick commerce is different. The peak periods are usually two hours in the morning and evening when people plan their meals. And, in order to meet peak demand and deliver instantly, quick commerce platforms must keep a sufficient number of riders on standby. But, during non-peak hours, they often sit idle, which adds to the cost.

And, all dark stores are open from early morning until late at night, extending the normal working hours to 18 hours. Quick commerce platforms must maintain two shifts in order for all workers to fulfil orders.

Funding Winter

2021 was a good year for India’s startup ecosystem, with a record $42 billion investment, including $1.5 billion from quick commerce platforms. However, the overall slowdown in venture funding in 2022 has impacted many startups’ growth plans. In 2022, quick commerce platforms raised $1.1 billion.

And, with funding winter expected to continue in 2023, quick commerce platforms are aligning their goals with evolving developments and staying well-capitalized by reducing burn rate.

Will It Be A Quick Death of Quick Commerce Platforms in India?

Quick commerce is very difficult to crack, and one needs many things in the right place to profit from it. The potential for growth of quick commerce is immense in Tier-one and metro cities. Still, they face severe competition in Tier-two and other urban cities from kirana stores, where they present in every nook and cranny.

And, as quick commerce platforms withdraw promotional offers on orders amidst the funding winter, we may see a more hybrid model, where users need to pay extra or subscribe to a premium plan for quick deliveries.

Hari Menon feels 2023 will be a challenging year for quick commerce platforms as they focus on turning profitable and cutting back on places where they have over-invested or order density is low.

FAQs

What is quick commerce?

Quick commerce is the next step in the evolution of e-commerce, where goods, especially grocery items, are shipped and delivered within 10-15 minutes of ordering.

Which are the quick commerce platforms in India?

Zepto, Blinkit, Swiggy Instamart, and BBNow, are some of the quick commerce platforms in India.

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Retrenchment Compensation: Turning Change into Opportunity

Retrenchment Compensation: All You Need To Know

A sudden separation from your employment may knock you hard before you’re ready. It may rob you of all your confidence, morale, and financial stability. Nothing can be more relatable than the global recession between 2007 and 2009. Retrenchment compensation was the most popular buzzword in those days.

Retrenchment Compensation – Do You Need It?

The past few months have seen large-scale layoffs. The tech and financial sector was the hardest hit, with many bankers and others in the financial industry fearing they would be the next to get the pink slip. But, instead, with speculations of another major recession on the horizon, retrenchment compensation is making the rounds and is quickly becoming the hottest topic discussed during a tea break.

So, if you’re among those worried that the pink slip will be yours next, relax because we’ve got the best answers to your retrenchment compensation issues. So, let’s get started.

What is the Industrial Disputes Act (ID Act) 1947?

Before the Industrial Disputes Act of 1947, employers had the power to terminate employees arbitrarily. The ID Act introduced structured mechanisms for dispute resolution, protecting workers from unjust retrenchment and ensuring financial security.

How the ID Act Defines Retrenchment Compensation

Section 2(oo) of the ID Act defines retrenchment compensation as a monetary relief provided to employees whose services are terminated for reasons other than disciplinary action.

However, certain exclusions apply:

  • Voluntary retirement
  • Superannuation
  • Non-renewal of the employment contract
  • Termination due to prolonged illness or inability to perform work duties

What is Retrenchment Compensation?

Eligibility Criteria: Who Qualifies for Retrenchment Compensation?

To qualify for retrenchment compensation, an employee must:

  1. Be categorized as a workman under Section 2(s) of the ID Act 1947.
  2. Have worked at least 240 days in the last 12 months.

Who Can Receive Retrenchment Compensation?

Eligible employees must fulfill the following conditions:

  • They must be engaged in manual, technical, operational, clerical, or supervisory work.
  • Their salary should not exceed ₹10,000 per month if in a supervisory role.
  • They must not belong to excluded categories such as armed forces, police, or managerial personnel.

Who can receive Retrenchment Compensation?

There are two conditions for retrenchment compensation-

  • You must be covered under the definition of “Workman”.
  • You must have offered continuous service for 240 days in the previous 12 months, counted as one year of regular service. Sickness, officially sanctioned leaves, lock up of industries, work halts, etc., are not considered an interruption of service.

How to Calculate Retrenchment Compensation?

Retrenchment compensation is an average pay of 15 days per year of interruption-free service or any part of that for half a year. Consider the following example to gain a better understanding:

Say an employee X working in ABC for the last 4 years and earning a monthly in-hand salary of Rs. 50,000/-, is being laid off under company cost-cutting measures due to the recession. Then, the 15 days’ average X pay will be Rs. 25,000/- Now, the retrenchment compensation will be calculated as-

15 days’ average pay x No. of years of continued service i.e. Rs. 25,000/- X 4 = Rs. 1,00,000

Retrenchment should be put into force only when the employee is served a notice intimating the termination process at least 30 days before the action, failing which the company has to pay a retrenchment compensation. Further, the employer has to pay the employee his wages for the notice period.

Retrenchment compensation  can be reimbursed in one of three ways:

  •  Under a month-by-month ground scheme based on three months
  • An employee is paid every week for four weeks.
  •  Under a week-based scheme on the last 12 working days.

Table: Retrenchment Compensation Calculation Example

Employee TenureMonthly Salary (₹)15 Days’ Average Pay (₹)Retrenchment Compensation (₹)
2 years40,00020,00040,000
4 years50,00025,0001,00,000
6 years60,00030,0001,80,000

Retrenchment Compensation Taxability

Is Retrenchment Compensation Taxable?

Retrenchment compensation is taxable only if it exceeds ₹5,00,000. Any amount above ₹5,00,000 is taxed as income from salary under the Income Tax Act.

Tax Exemptions Under the Income Tax Act

  • If retrenchment compensation is ₹5,00,000 or less, it is fully tax-exempt.
  • If compensation exceeds ₹5,00,000, only the surplus amount is taxable.
  • If paid under a government-approved scheme, the full amount is tax-free.

Employer Responsibilities and Employee Rights

1. Notice Period and Compensation Payment Timeline

Employers must provide employees with a 30-day notice period before retrenchment. If not, they must compensate the employee with one month’s salary.

2. Legal Consequences of Non-Compliance by Employers

Failure to provide retrenchment compensation can lead to legal action, including:

  • Monetary fines
  • Employer liability for full compensation
  • Court orders for reinstatement of the employee

3. Employee Options If Retrenchment Compensation Is Denied

Employees can seek legal recourse through:

  • Labor courts or industrial tribunals
  • Filing complaints with the Labour Commissioner
  • Consulting with a labor lawyer for legal representation

Conclusion

The law governing retrenchment compensation for laid-off employees is based on citizens’ constitutional rights to economic justice. A significant anomaly in the termination created the need for a transparent and systematic framework. Employers used retrenchment policies to reduce labor costs even before the implementation of the ID Act in 1947. However, the methods used were biased and favored employers striking any compensation for sudden interruptions in regular income.

FAQs

Can an employer rehire an employee who has received retrenchment pay?

Employers usually include a clause in their retrenchment letters stating that the company may consider rehiring the employee within six months if he or she remains retrenched until then and there is a suitable slot in the company.

Will an employee be paid retrenchment compensation if not covered under the ID Act 1947?

Where an employee does not meet the “Workman” definition, the terms and conditions of the employment contract signed at the time of hire will govern your claim for retrenchment compensation. When an employee is fired, the payments are made by the contract terms.

If an employee believes that appropriate retrenchment compensation clauses are missing from his contract, he or she may bring the matter up with the employer to incorporate appropriate changes.

Can an employer fire an employee right before retirement?

Yes, an employer can fire an employee at any time before retirement if the employer intends not to prevent the employee from receiving full superannuation benefits. In such cases, proving intent may be difficult, so keep all records and documents detailing the events of your retirement in a safe place.

If your termination was caused by age discrimination, you can sue your employer for wrongful termination.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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The Great Tech Layoffs

The Great Tech Layoffs And The Changing Face Of The Tech Industry

2022 saw industry-wide layoffs across the globe. Many were simply asked to leave, while some companies offered severance pay before asking employees to leave. The spate of layoffs continued throughout the second half of last year. So, we thought a deeper look at the great tech layoffs made perfect sense.

Great Tech Layoffs -The Story

Companies drove more than 1,50,000 tech professionals to leave their once-secure and well-paying jobs between the end of 2022 and the beginning of 2023. In addition, the tech industry, typically known for its stability and prosperity, has been hit hard by a broader economic downturn. This has led to great tech layoffs, with employees scrambling to secure new positions.

Here’s a rundown of some of the significant cuts in the tech industry thus far, with all numbers based on filings, public statements, and media reports:

image 59
Source: CNBC

Google’s parent company Alphabet announced plans to lay off 12,000 employees. CEO Sundar Pichai stated that the process would begin in the US immediately and take longer in other countries due to local laws and practices. The move comes after Alphabet’s first significant layoff in January, cutting around 240 employees from Verily’s health sciences division.

Microsoft reportedly laid off approximately 10,000 employees and announced a $10 billion investment in OpenAI, creators of ChatGPT. The investment, amounting to $1 million per laid-off employee, suggests a business motive behind the move.

Amazon CEO Andy Jassy announced that the company would lay off over 18,000 employees, mainly in the HR and stores divisions, following reports in November 2022 that it was seeking staff cuts of around 10,000. Amazon’s workforce grew from 798,000 in Q4 2019 to over 1.6 million employees worldwide by the end of 2021 due to the COVID-19 pandemic.

In November 2022, Facebook parent company Meta announced it would cut over 11,000 jobs, 13% of its workforce, following disappointing Q4 2022 guidance. It is the most significant round of layoffs the company has ever had, despite expanding headcount by 60% during the pandemic. In addition, the competition from TikTok, a slowdown in online ad spending, and Apple’s iOS changes have affected the business.

Similarly, Elon Musk cut around 3,700 Twitter employees, half of the staff, after purchasing the company for $44 billion. In addition, following policy changes, several more employees have quit. Musk cited Twitter’s losses of $4 million per day as a reason for the layoffs.

Several companies have announced tech layoffs over the past few months. For example, Crypto.com, Coinbase, Salesforce, Lyft, Stripe, Shopify, Netflix, Snap, Robinhood, and Tesla have all reduced their workforce, citing various reasons, from market downturns to the impact of the pandemic.

Many jobs cut has ranged from hundreds to thousands, with some companies reducing their workforce by up to 23%. The tech layoffs have come in different forms. Some companies offer severance pay and health insurance to laid-off employees, while others charge billions of dollars to record headcount reductions.

The great tech layoffs indicate many companies’ economic challenges, signaling a hard time for the tech industry.

The Cause of The Great Tech Layoffs

The findings are related to the massive layoffs in the IT industry. While it is understandable that IT companies hired many individuals during the COVID-19 epidemic, the average term of a laid-off employee is roughly two years.

The typical degree of experience held by individuals laid off is 11.5 years, indicating that these layoffs affect more than junior workers. One explanation for this might be that employees with longer tenure tend to get paid more, making them a target for cost-cutting initiatives.

HR jobs and job functions were the most affected by layoffs, accounting for 28% of all layoffs. This might be due to corporations cutting back on recruiting or automation replacing some HR services.

According to 365 Data Science statistics, more than half of the laid-off employees (56%) were women. This is the reason for worry, as the tech sector has been working over the past decade to eliminate gender disparities in the area, particularly in technical and engineering roles.

This development may not bode well for potential female applicants. On the contrary, it adds to existing difficulties such as salary disparities, fewer prospects for advancement to senior positions, and a greater risk of being laid off.

Final Words

The great tech layoffs have impacted many tech workers, with many firms announcing job losses due to the economic slump. The layoffs have affected employees of various job areas and experience levels, with HR being the most affected and longer-tenured staff more likely to be targeted. Given the continuous attempts to address gender gaps in the tech industry, the disproportionate impact on women is cause for worry. The layoffs reflect the economic issues that the tech industry is facing, as well as the difficult times ahead.

FAQs

What do the US Tech Layoffs mean for India?

Recent mass layoffs in the US tech industry have affected around 30 to 40 percent of Indian IT professionals, prompting them to consider staying in India for work. The layoffs may also impact future generations of Indians who aspire to work in the US. To avoid brain drain, the Indian government must create better employment opportunities for its educated youth, especially women, to retain the best talents in the country.

Will there be more tech layoffs?

As per data from Layoffs, a website tracking tech layoffs since March 2020, 297 tech companies have laid off almost 95,000 workers since the beginning of the year, as reported by USAtoday.com. If this trend continues, the tech industry may eliminate over 900,000 jobs by the end of 2023.

What strategies might tech companies adopt instead of focusing solely on growth?

Tech firms may hesitate to attract new customers as their services may already be widely adopted. Therefore, they may shift their focus towards diversifying their offerings or expanding globally.

What is the tech industry’s impact on the economy and stock market?

The performance of tech stocks impacts the stock market and local economies. Tech is a bellwether for corporate decisions, and labor shortages remain a significant challenge. While the tech industry’s layoffs may not affect the broader economy, individuals’ investment and retirement plans can be negatively affected.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Hindenburg

Hindenburg v/s Adani – All You Need To Know

Over the last decade, Adani Enterprises has become synonymous with India’s growth story. The group’s spectacular rise saw the arrival of a new generation of entrepreneurs keen to expand their ventures internationally.

Led by Gautam Adani, the group is home to over half a dozen major corporations with interests ranging from infrastructure development to transportation, power, food, and more.  A regular face on the Forbes billionaire list, Gautam Adani and Adani Enterprises was rocked by the release of the report by Hindenburg Research that wiped out a staggering USD 118 billion since 24th January 2023.

What Led to the Adani Empire’s Fall from Grace?

The Hindenburg Report was released by Hindenburg Research, a forensic financial research firm founded by Nathan Anderson in 2017. The organization analyses equity, credit, and derivatives. It has a proven record of exposing corporate scams and wrongdoings.

This US-based short-seller Hindenburg has alleged that the Adani Enterprise has been built on poor fundamentals, with Gautam Adani possibly pulling one of the ‘largest cons in corporate history.’ In its 100-page report, Hindenburg revived old suspicions about corporate governance at the Adani conglomerate and stated that it had the evidence to support that the company had been party to ‘brazen stock manipulation and accounting fraud scheme over the course of decades.’

The release of the Hindenburg Report set in motion a tumbling down effect that resulted in a combined loss of USD 1.7 bn (Rs 1.4 trillion) in wealth for investors in Adani Group stocks. Adani also saw a drop in his personal fortune. The second wealthiest man in the world now features at No. 21 on the Bloomberg Billionaires Index.

What Were the Main Accusations in the Hindenburg Report?

“Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 5 of 7 key listed companies have reported ‘current ratios’ below 1, indicating near-term liquidity pressure,” said the report by Hindenburg Research.

In other words, the 100-page Hindenburg report has mainly focussed on how this Indian conglomerate inflated revenues and manipulated stock prices using a web of companies in tax havens despite debt piling up on its books.

Other than this, the allegations by Hindenburg Research touched upon the following:

  • The Hindenburg Report disclosed the existence of 38 shell companies in Mauritius controlled by Vinod Adani, Gautam Adani’s brother. Similar entities have been found to operate in other tax havens under the supervision of Vinod Adani and his close associates. The report stated that these offshore shell entities formed a network to manipulate the usage of the company revenue.
  • The firm auditing the books of Adani Enterprises and Adani Total Gas is seemingly a small company with only 4 partners, 11 employees, and no website. This tiny firm is said to be the auditor of just one other listed company. It triggers suspicion as the complex audit work required for Adani Enterprises, which has over 156 subsidiaries and many more joint ventures, can be managed by an audit firm of this size.
  • The Hindenburg report also mentioned that 8 of 22 key roles are held by the family members of Gautam Adani, Founder and Chairman of the Adani Group.

Moreover, the Hindenburg Report also shed light on the four major government investigations that were undertaken in the past relating to allegations of fraud by the company.

What were the Immediate Consequences of the Hindenburg Report?

Following the release of the Hindenburg report, a massive sell-off of Adani stocks has adversely impacted market perceptions over the last week.

Look at how Adani group stocks performed over the last few days.

Adani Enterprises stock was down by 2.2% at the close of business on Friday, 3rd February 2023. The share price had plummeted by 50% in the last 7 days.

image 4
Source: NSE

The shares of Adani Green Energy closed at Rs 935.90, recording a new 52-week low. Overall, the share value has experienced a fall of 30%.

image 5
Source: NSE

A 25% fall was recorded in the share price of Adani Ports and Special Economic Zone Ltd in the NSE, with the stock closing at Rs 488.40 at the end of business on Friday.

Besides triggering the downhill journey of one the wealthiest men in corporate history, the release of the report by Hindenburg Research has seriously undermined investor confidence in India. Not just that, it has also raised critical questions about the integrity of the country’s regulatory framework.

A look at how Adani stocks fared 12 days after the report was released.

image 18
Source: Economic Times

The rollover effect of the release of the Hindenburg report has led to the Reserve Bank of India launching an inquiry into ascertaining the exposure of Indian banks. Additionally, financial institutions like Credit Suisse and Citigroup have refused to accept Adani Group’s securities as collateral for loans. After the Hindenburg report was published, some rating agencies began examining the risks associated with the Adani Group’s debt and creditworthiness.

What is the Way Forward for Adani Enterprises?

Adani Group has responded with a 413-page letter rebutting the allegations put forward by the report released by Hindenburg Research as “unsubstantiated speculations.” Gautam Adani recalled the sale of the fully subscribed FPO to gain investor confidence. He clarified that the Group’s books are strong and healthy, with secure assets and an “impeccable track record of servicing their debt.”

15 days after the report was released, Adani stocks have recovered from their decline, with Adani Enterprises rising to Rs.2220 as of 8th February, which is a ~23% gain in a day. Other stocks have also gained.

FAQs

What was Gautam Adani’s net worth according to the Hindenburg report?

Gautam Adani had a net worth of USD 120 billion, of which USD 100 billion was amassed in the past 3 years.

What led to Adani Group’s rise in the past decade?

Adani Group invested in capital-intensive projects such as airports, power plants, and data centers, which aligns well with Prime Minister’s core agenda to drive India’s growth story. 

Did all Adani companies experience a huge loss in share value in the last week?

Adani Transmission experienced a 10% degrowth in share price, whereas Adani Power, Adani Total Gas, and ACC Ltd. stocks witnessed a 5% decrease each over the last week.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Tata Consumer Bisleri Deal: A Match Made In Heaven

Tata Consumer Bisleri Deal: A Match Made In Heaven

For Tata Consumer, it was just another day when they announced the acquisition of Bisleri International for ₹7,000 crores. Many analysts were surprised at the steep buyout price because its estimated FY23 revenues are pegged at ₹2,500 crores at a profit of ₹220 crores. So, what are we missing, and how will Tata Consumer benefit from the Bisleri acquisition? First, let’s understand the economics of such a deal.

Tata Consumer Bisleri Acquisition

On a closer look, you will find TCPL’s acquisition perfectly fits with their strategy of pursuing inorganic growth to make a mark in India’s burgeoning food & beverages (F&B) industry, which accounts for 3% of India’s GDP.

And over the years, TCPL has made a series of acquisitions, particularly in the beverages segment, following this strategy. Like the acquisition of NourishCo from Pepsico and Mount Everest Mineral Water which owns the Himalayan Natural Mineral Water brand. However, the acquisition is the real game-changer as it will let TCPL spread its feathers rapidly across the country.

Bisleri – The Brand Story

The brand “Bisleri” is not Indian and originated in Italy on November 20th, 1851, and was not initially involved in producing mineral water. Instead, the founders started the company to produce drinks made up of cinchona, herbs, and iron salts for alcohol remedies.

In 1965, Bisleri set up India’s first mineral water plant in Thane, Mumbai, along with its Indian partner Khusroo Suntook, who witnessed a business opportunity in selling bottled mineral water in India. The business recorded tremendous growth in the starting years, but its limited reach hindered its development.

So, to upscale and expand its availability across all customer segments, the founders finalized selling the brand to a large business house. That’s when Ramesh Chauhan of Parle Group bought Bisleri for ₹4 lahks in 1969, just four years after its launch. And the painstaking journey of building the brand as India’s no.1 bottled mineral water started.

Bisleri’s Success

In the packaged water bottle segment, Bisleri has become the genericized trademark, meaning the brand has become the generic term of the product due to its popularity. Just like Xerox is used as a reference for photocopies in India. In other words, the company is the category creator in India.

The very reason you will find many packaged water bottle brands that sound very similar to Bisleri. Despite the launch of many other brands, the water giant has maintained and grown its market share. Only Rail Neer, the packaged water bottle from IRCTC, is closer to the company in brand recall. Still, it’s unavailable outside the railway premises, which gives the brand a clear advantage over competitors.

Bisleri – Tata Consumer Synergy

India’s bottled water market was valued at $2.4 billion in FY2021 and is expected to grow at a CAGR of 13.25% between 2023-2027, as per the report from market research and advisory TechSci Research.

The mineral water giant has a market share of around 32% and competes with Coco Cola’s Kinley, Pepsico’s Aquafina, Parle Agro’s Bailey, and Rail Neer. In FY22, IRCTC’s Rail Neer reported revenues of ₹169.15 crores and produced 19.86 crores of water bottles.

What will TCPL gain from the acquisition?

TCPL is looking to expand its footprint across the country for the beverage business and plans to increase the direct outlet coverage to 1.5 million stores this fiscal to 1.3 million. And the company only sells its products in 45-50% of the addressable market.

So, for TCPL, it’s not just about the bottled mineral water business with Bisleri but its whole distribution and dealership network that it has built. The company has over 4,500 distributors and over 5,000 distribution trucks across India & neighboring countries.

TCPL is building a future-ready portfolio of natural and healthy beverages beyond sugary sodas under its ‘Himalayan’ brand and tap growing non-alcoholic beverages market, which is expected to touch ₹1.47 lakh crores by 2030 from around ₹67,000 crores in 2019.

Therefore, if the acquisition happens, TCPL will gain access to the entry, mid, and premium segment markets spread across retail stores, chemist channels, hotels & restaurants, and airports. Therefore, in the short term, we may see high sales volume for products like Tata Gluco Plus jelly drink, Tata ORS+, Fruski, Tata Copper+, etc. The acquisition is a shot in the arm for TCPL to pursue its ambitious beverage play in the Indian market.

Financial Impact on Tata Consumer

The cost of marriage between India’s two most iconic brands is pegged around ₹6000-7000 crores, and TCPL’s strong balance sheet will absorb the acquisition cost. With ₹3,455 crores of cash in books and a debt-to-equity ratio of 0.02, TCPL is placed comfortably to finance the acquisition through debt or a combination of debt and cash.

There will be a short-term impact on the finances in terms of a rise in interest costs. Still, the deal would give TCPL’s business operations an unprecedented scale by leveraging the water giant’s distribution network.

Tata-Bisleri: A Match Made in Heaven

Many buyers were keen on buying Bisleri and ready to pay a higher price for the deal, but Ramesh Chauhan was looking for a buyer who would nurture and care for the brand. And, preference for Tata over other buyers was much more understandable. In his words: “I like the Tata culture of values and integrity and hence made up my mind despite the aggression shown by other interested buyers.”

And the house of Tata is known for nurturing brands with great care, as we have seen in the Jaguar Land Rover acquisition and the recent Air India acquisition.

FAQs

What is the acquisition price of the Tata-Bisleri deal?

TCPL will buy Bisleri International for up to ₹7000 crores.

What is the market share of Bisleri in India?

Bisleri has a market share of 32% in the bottled mineral water market and competes with Coco Cola’s Kinley, Pepsico’s Aquafina, Parle Agro’s Bailey, and Rail Neer.

When was Bisleri started?

Bisleri was founded in Italy on November 20th, 1851, and set up its first mineral water plant in Thane, Mumbai, in 1965, marking its entry into the Indian market.

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Carbon Credits: The Next Big Business Opportunity

Carbon Credits: The Next Big Business Opportunity

As countries take steps to decarbonize their economies and reverse climate change, carbon credits are proving to be a potent tool for governments globally to ensure carbon emissions are reduced.

An incentive-based system, carbon credits are designed to motivate companies to limit their greenhouse gas emissions and choose a greener path to conduct their business operations. Let’s understand what carbon credits are and how they can open up new business opportunities for companies.

What are Carbon Credits?

Firstly, the terms carbon credits and carbon offsets are frequently interchanged, but they are entirely different and should not be confused.

Carbon credits are like permits that work like permission slips for emissions. For example, a unit of carbon credit permits a business to generate 1 tonne of CO2 emissions. These credits followed all the United Nations Climate Change accords and the 1997 Kyoto Protocols when carbon was recognized as a tradable good.

Governments allocate carbon credits to every business organization based on the nature of their business activity. These credits act as a cap for carbon emissions.

If the organization generates fewer tonnes of carbon emissions than allocated, it can trade, sell, or hold the surplus credits. When a company trades or sells its carbon credits, they earn a profit. It’s like reward points for low pollution of the atmosphere.

Carbon Offsets

In carbon offsets, businesses earn carbon credits on removing a tonne of carbon dioxide from the atmosphere. It can be done via operating renewable projects, carbon and methane capture, improving energy efficiency, land use for reforestation, and other eco-friendly processes as a part or outside of their regular business activity.

Businesses can trade the offset credit points generated with other companies looking to reduce their carbon footprints. There are no geographical boundaries with whom companies can exchange or sell carbon credits, as climate change is a global concern.

Did you know Tesla earned carbon credits revenue worth $1.46 billion in FY 2021? It was almost 3% of the total revenue. Tesla earns carbon credits from its various clean energy initiatives.

What is the Carbon Credit Market?

The carbon credit market plays a vital role between all the buying, selling, and trading of carbon credits. The market decides the price for carbon emissions as per the evolving market conditions.

Every year, governments systematically reduce the allocation of carbon credits to companies to force them to choose a greener path and penalize polluting companies. It makes the carbon credit market dynamic and encourages businesses to choose low-carbon paths.

There are two types of carbon credit markets -one is regulated, and the other is voluntary.

The regulated marketplace is called a cap-and-trade program and is a common term for government environmental regulatory programs.

The cap-and-trade program works in many ways to reduce companies’ carbon footprints. For example, as regulators lower the total carbon emission cap each year, carbon credits in the open market become more expensive. As a result, companies will have more incentive over time to invest in clean technologies and reduce carbon footprints.

While the voluntary carbon credit market is optional and is driven by companies, who take responsibility for offsetting their own emissions and do more than what is stipulated by the government. These companies are primarily driven by corporate social responsibilities, ethics, and the intention to make the atmosphere greener.

Overview of the Global Carbon Credit Market

The global carbon credit market is shaping up rapidly as economies around the world are racing to become carbon net zero. In 2019, the global carbon credit market was valued at $211.5 billion, and it is expected to grow at a CAGR of nearly 31% from 2020 through 2027, with a value reaching $2.7 trillion.

While it is difficult to gauge the market size of the voluntary carbon market, rough estimates show that it has quadrupled since 2020 and has reached $2 bn in 2022.

In 2021, the value of traded carbon dioxide permits in the global market grew by 164% to $851 billion, and 90% of the worldwide trade was done from the European Union’s Emission Trading System (EU ETS), which is the world’s most established carbon market.

Most carbon credits are priced between $40- $80 per metric tonne of CO2. This number varies greatly depending on market conditions and other factors at play.

Carbon Credit Market in India

India has very ambitious climate goals with a long-term goal of reaching net zero emissions by 2070. It is also committed to reducing the emission intensity of its GDP by 45% by 2030 compared to 2005 levels, or 60 million tonnes a year. Carbon net zero provides a massive opportunity for Indian businesses to tap the rapidly growing carbon credits markets.

Between 2010 and 2020, India issued 17% of all voluntary carbon market credits issued globally, bringing in significant capital for climatic financing.

Indian companies must depend on international carbon marketplaces and often trade them at lower prices to meet their carbon credits requirement or sell extra carbon credits. So, a domestic union was formed to establish a national carbon marketplace to help Indian businesses achieve their climate goals.

Indian companies such as Adani Green, carbon offsetter- EKI Energy Services, etc., have shown interest in developing a national carbon credit market. The lower house of the Parliament has also passed the necessary amendments in the Energy Conservation Bill 2022 in that direction.

Indian Companies to Benefit Most from Carbon Credits

Companies that choose a greener path to business activities would gain significantly from the evolving carbon credit market. For instance, Tata Power sold 87,351 Certified Emission Reductions (CERs) in FY 21, generating revenue of ₹1.44 crores. And, with a target of a fivefold increase in green capacity by 2030, Tata Power will gain significantly from the carbon offsets. In addition, civic bodies like Chennai and Indore Municipal Corporation are earning revenue by selling carbon offsets in the International markets.

Companies involved in sectors such as renewables, carbon capture, waste management, sustainable development, emission reduction technologies, and clean technologies benefit the most from the country’s clean development mechanism program.

So, are you ready to get started on lowering your carbon emissions and earning carbon credits and offsets? If you haven’t begun yet, now is the time to do so, considering the market potential for carbon credits.

Disclaimer Note: The numbers mentioned in this article are for information purposes only. He/she should not consider this a buy/sell/hold from Research & Ranking. The company shall not be liable for any losses that occur.

FAQs

What are carbon credits?

Carbon credits are a kind of permit allowing companies to generate one tonne of CO2 emissions. Governments allocate credits to companies based on the nature of their business activity, which can act as a cap for carbon emissions.

What are carbon offsets?

In carbon offsets, companies earn a carbon credit point when they remove one tonne of CO2 from the environment. Generating offset carbon points can be done via operating renewable projects, carbon capture, improving energy efficiency, land use for reforestation, etc.

What is the carbon credit market?

Companies trade surplus carbon credits for monetary consideration in a carbon credit market. For example, carbon credits are bought by companies facing a carbon credits deficit or require more carbon credits points than allocated.

Read more:  How Long-term investing helps create life-changing wealth – TOI. 

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DeFi Unleashing Explosive Global Adoption in the Next Decade

DeFi: Will the Next Decade Belong to it and See Higher Global Adoption?

Crypto news has been dominating the markets for the better part of 2022. However, the expert outlook on the crypto market now is hovering on bleak, with it being largely stalled and a continuous fall in crypto prices across key financial markets. As the global investor community still debates the long-term benefits of cryptocurrency among its magnificent highs and massive lows, a silent revolution has been brooding in the background for the past few years.

Decentralized Finance, popularly referred to as DeFi, is supposedly the next big thing in the fintech space. According to experts, it is expected to garner tremendous adoption in the next 10 years.

What is DeFi?

Decentralized Finance is a blockchain-based application that includes decentralized exchanges, lending platforms, and digital asset-staking technology. The platform introduces bankless digitization of Wall Street minus the hefty fees and intermediaries. Moreover, transactions, including payment, settlement, and transfer of ownership processes, are almost instantaneous.

Most importantly, you can access DeFi round the clock, from any corner of the globe, if internet connectivity is available. It has been developed on blockchain technology and smart contracts.

Smart contracts are basically programs stored on the blockchain that can operate automatically if the predetermined conditions of the program are met. The Decentralized Finance ecosystem had already reached US$ 247.5 billion in total locked value or TVL by the end of 2021. TVL is currently the capital in use or secured in the decentralized ecosystem.

The amount is undoubtedly insignificant compared to the commodities, derivatives, and equities market. But, having said that, the growth rate of decentralized finance has been impressive at 13x since January 2021. Analysts attribute this spike to the effective and efficient nature of its platforms, which have delivered high returns to retail investors.

What are the Key Challenges for DeFi?

Several challenges have obstructed a full-fledged deployment of decentralized finance in the mainstream ecosystem. Here are a few crucial challenges:

Limited Scalability

The first major obstacle is scalability, as the technology cannot be implemented with a ‘one size fits all approach. It clearly limits the platform to a certain extent. Moreover, experts think that developing a sustainable decentralized ecosystem in the short to mid-term may possibly contain interoperable blockchains where it becomes imperative for these blockchains to find a foothold among various market segments.

Over the next three to five years, the ecosystem will be consumed by cross-chain protocols expected to define the ecosystem to create a multichain world.

Vague Regulatory Processes

Regulating a decentralized ecosystem is the next roadblock, as the SEC has several concerns about the lack of equal informational access around it. Again, the body has some control over specific segments, but it is mainly ambiguous and vague.

Technical and sophisticated investors who have a monopoly over the average user in their ability to extract and interpret complex data still dominate the space. It is believed that a precise and transparent regulatory framework will eventually emerge in the foreseeable future, driving consumer and institutional adoption of decentralized finance.

Standard Tool Integrations

The absence of a counterparty risk assessment tool and the lack of integration of a standardized application layer for trade execution and enterprise-grade data and analytics poses a hurdle in its institutional adoption.

How Can DeFi Define the Future of Finance?

Global interest in a decentralized ecosystem has increased despite the crypto boom and will probably continue. It offers attractive returns to token holders compared to cryptocurrencies. The experts believe there will be an inclusion of cryptocurrency and standardized DeFi products across more neo-banks and fintech companies as their goal is to expand their product offerings.

Additionally, analysts expect DeFi to act as a bridging platform between the physical and the digital world, posing as an alternative asset class that is more liquid and interchangeable. The beauty of such an ecosystem is that it is not designed to replace the current financial infrastructure but a system that can co-exist with traditional financial institutions. It essentially means constant innovation that will help a decentralized system align with conventional financial products to retain its competitive edge in the market.

Will DeFi See Higher Global Adoption in the Next Decade?

Decentralized finance is gaining acceptance as a financial model with more than a billion people living on a daily wage of US$ 1.90 or less. It is the critical driver in the digital revolution as it bridges the gaps between decentralized finance infrastructure, assets, and the underbanked, which can potentially accelerate institutional adoption. In a nutshell, it can transform how people usually interact with assets of different sizes and banking in general.

This shift in banking attitude is primarily due to people being more open to the Internet, enabling asset tokenization of all sizes. But, most importantly, the move is aligned with the financial model’s overall goals of lowering costs and increasing financial accessibility for all.

Will DeFi become the next big revolution in FinTech? We will have to wait and see how a decentralized model will help the Fintech companies function efficiently.

FAQs

1. Which is the dominant network of Decentralized Finance?

Currently, from a general-purpose blockchain, the dominant network is Ethereum which has fostered a robust community of users, developers, nodes, tools, and applications. Terra is another blockchain focussing on primary use cases such as algorithmic stablecoins.

2. What is the difference between DeFi and crypto?

Decentralized finance generally covers a range of financial services, whereas Bitcoin is only a decentralized cryptocurrency. For example, a decentralized system enables lending, borrowing, and trade, including cryptocurrencies. On the other hand, Bitcoin is a store of value like flat currency.

3. Is investing in Decentralized Finance safe?

The decentralized platform comprises smart contracts, a self-executing agreement that builds the foundation for such projects. Unfortunately, this can make the platform vulnerable to bugs. Moreover, investors risk becoming targets of a wide range of crypto crimes like phishing, rug pulls, and perhaps even honeypot scams.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Elon Musk Twitter

Elon Musk’s Twitter Takeover Saga: What Held Up The Deal?

Finally, it’s Elon Musk’s Twitter, and the bluebird is set to get a brand new identity in the world of free speech. The takeover was not a picture-perfect deal from any angle. A high-stakes legal battle by both parties, allegations, and counter-allegations mired the deal with controversies.

It’s not sure what caused Elon Musk to initially back out from the $44 billion deal to buy the company, whether it was the high premium or the issue of the percentage of spam accounts in the system. It could be both, but he knew that the costs would be higher if the deal didn’t materialize or he lost the court battle.

Let’s check how the Elon Musk Twitter drama unfolded in the last six months until the acquisition.

The Tale of Twitter’s Spam Accounts

The real bone of contention was the share of spam accounts or the bots in the system that manipulate users’ responses.

In a filing to the US stock market regulator, SEC, on Jul 8th, 2022, Elon Musk said that he wanted to terminate the deal as he was misled during the negotiation and Twitter was in “material breach” of their agreement by not disclosing the necessary information on fake or spam accounts.

Spam accounts or bots are fake and inauthentic accounts that imitate users’ behavior on the platform and are automated. The bots tweet at people, retweet, follow people, and are followed by people. As a result, they are challenging to detect or identify.

Not all spam bots are bad. Some useful spam bots provide helpful information upon request or the happening of an event. For example, @mrstockbot gives real-time stock price updates on recommendations for a stock quote. Or, the @earthquakebot updates whenever an earthquake measuring higher than 5.0 on the Richter scale happens worldwide.

However, bad actors mostly use spam bots to influence users’ decisions, sow division among communities, or for other nefarious purposes.

Since Twitter went public in 2013, the company has maintained that the share of spam bots in the system is roughly five percent. However, Musk feels the percentage is much higher, and the company is not transparent with him.

image 12

How the Twitter Deal Got Back on the Table?

As Musk was facing a lengthy legal battle and Twitter was able to prove that they provided all the information related to spam bots during the negotiation process, the chances of terminating the deal got slim. And, if he lost the trial, the judge would force him to close the deal and impose interest payments and penalties, which would have increased the cost of acquisition.

Therefore, sensing the defeat, Elon Musk declared the deal to buy Twitter was back on the table. His representatives spoke with the company to redo the pricing and sought a 30% discount, valuing the company at roughly $31 billion. However, Twitter’s board refused the proposal, and Elon had to acquire Twitter at his original offer price to avert legal proceedings.

What’s Next for Twitter under Elon Musk?

Post-Elon Musk’s Twitter takeover, a slew of decisions were made by the new management that was expected including firing the entire leadership team and laying off 50% of the 7,500-strong workforce. Defending the move, Elon Musk said that the layoffs were to control costs as the micro-blogging site was losing over $4 million in a day.

Shoring up Revenues

For Elon Musk’s Twitter, the primary task is to shore up revenues and chart a clear path toward profitability. And Elon Musk has made it clear to users that there will be no free lunch for premium services like the blue tick verified sign.

For instance, Twitter will charge $8 per user monthly for a blue verification badge. The user will get priority placement in replies, the ability to post longer content, including videos, and lesser ads on the feed. The blue verification badge services will be rolled out soon for Indian users. In FY 2021, Twitter posted a net loss of $220 million and it had approximately 250 million users.

image 13

Content Moderation

Elon Musk is a big advocate of free speech and was very critical of Twitter’s content moderation policy before the acquisition. Soon after the acquisition, Musk took away some employees’ access to specific content moderation and policy enforcement tools. He has plans to revamp the entire content moderation policy.

image 14

Content moderation policy is critical for any social media platform to prevent misinformation, inflammatory posts, and hate speech. And, with a lack of any clarity on the content moderation front, brands have stopped their advertisement spending, which has affected Twitter’s revenues.

More Power to Content Creators

Elon Musk’s Twitter plans to make the platform a super-tier network and offer better payout ratios to content creators. In a tweet, Musk said that the platform can beat YouTube’s 55% ad-revenue share rate with creators; however, he made it clear that brands must splurge more for the revenue shares to increase.

Many changes are coming to the platform; it is just the beginning. And, with Twitter going private on Nov 8th, it will give Elon Musk more power to bring in changes to the platform forcefully.

image 15

With the $44 billion Elon Musk’s Twitter takeover saga, which consistently grabbed eyeballs around the globe coming to an end, the next phase of developments will be even more controversial as Musk prepares the platform to be the flag-bearer of free speech. And, if anybody follows Elon Musk closely, they would know he loves to stay around the controversies.

Will Twitter become the torchbearer of free speech or get mired in controversies with Elon Musk at its helm? While that remains to be seen, what you can do is keep an eye out for Twitter.

FAQs

How much Elon Musk paid for the Twitter acquisition?

Elon Musk paid $44 billion to acquire Twitter, which means a per-share cost of $54.20.

When were the shares of Twitter delisted from Nasdaq?

Twitter went private on Nov 8th, 2022, after it was delisted from Nasdaq.

Who is the CEO of Twitter?

After acquiring Twitter, Elon Musk made himself the CEO of Twitter. Parag Agrawal was the CEO of Twitter before Musk completed the acquisition.

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How does Tata Trusts work

125 Years Of Philanthropy: Inspiring Story Of How Tata Trusts Work

Tata Trust is a family legacy of over 125 years. Above all, it provides service for the common good using its income from dividend outflows of Tata Sons.

Tata Trusts represent compassion and socioeconomic advancement countrywide. Sir Jamshetji Tata founded the Tata Trust was founded approximately 125 years ago. The “Father of Indian Industry” was a visionary and a business legend. His staff policies infused a sense of security and confidence among its members.

Sir Dorabji Tata and Sir Ratan Tata built this flourishing business empire by carrying forward their father’s dream of constructive philanthropy. Once a visionary’s dream, Tata Trust owns a two-thirds stake in Tata Sons, the apex Tata group company. Until 1993, the chairpersons of Sir Ratan Tata Trust and Sir Dorabji Tata Trust were always different. Sri Ratan N Tata has been the chairman and the guiding force of Tata Trusts since 1995. He has transformed the organization from a responsive charity to a premier philanthropic foundation.

Overview of the Tata Trusts

Since its inception, Tata Trusts has aided the impoverished members of our community. Tata Trust is a conglomerate of 14 public Trusts that control almost 66% stake in Tata Sons, an unlisted company. A few of the causes supported by Tata Trusts include the following-

  • Healthcare and Nutrition
  • Education
  • Water and Sanitation 
  • Migration and Urban Habitat
  • Social Justice and Inclusion
  • Disaster Relief and Rehabilitation
  • Digital Transformation
image 7
Source: Registrar of Companies, Annual Reports of Trust

Sir Ratan Tata Trust and Allied Trusts

Sir Ratan Tata Trust was established in 1919 under the leadership of Sir Ratanji Tata. Sir Ratan Tata has the second-highest stake in Tata sons at 23.56%.

The grants made by the Trust are broadly classified as follows:

  • Grants to organizations that improve rural livelihoods, community welfare, and education.
  • Endowment funds are used to sustain positive social change.
  • Grants for Small Welfare Organizations
  • Individuals can apply for grants to cover medical expenses and to further their education.
Trust/ SchemeYear of Inception
Sir Ratan Tata Trust1919
Navajbai Ratan Tata Trust1974
Tata Education and Development Trust2008
Bai Hirabai J.N Tata Navsari Charitable Institution1923
Sarvajanik Sewa Trust1975

Sir Dorabji Tata Trusts and Allied Trusts

Sir Dorabji Tata Trust is the brainchild of the elder son of Sir Jamshetji Tata. Sir Dorabji Tata has the highest stake in Tata Sons, at 27.98%. Sir Dorabji Tata Trust is a testament to his belief that wealth should be used constructively. Through his will, he transferred his substantial shareholdings of Tata Sons, Indian Hotels, and allied companies to Sir Dorabji Tata Trusts.

Trust/ Scheme Year of Inception
The JN Endowment for the Higher Education of Students1892
Sir Dorabji Tata Trust1932
Lady Tata Memorial Trust1932
Lady Meherbai D Tata Education Trust1932
JRD Tata Trust1944
Jamshetji Tata Trust1974
JRD and Thelma J Tata Trust1991
Tata Education Trust, Tata Social welfare Trust, and RD Tata Trust1990

About Tata Trusts: Themes of Engagement

Tata Trusts deploys the income generated for communities’ welfare striving to improve their quality of life. The premier Trust primarily serves the vulnerable and deprived population still struggling for their basic needs. In addition, philanthropic Trust helps in measuring, monitoring, and improving livelihood opportunities.

Tata Trust operates in 655 districts across 33 states and Union Territories. To assist as many households as possible, it has partnered with over 900 organizations for various causes. It covers all fields with the goal of sustainable development, from health, and rural development, to environmental conversations or sports.

image 8
Source: https://www.tatatrusts.org/

About Tata Trust: Source of Revenue Generation

The salt-to-software conglomerate earns its income through dividends from Tata Sons. Tata Sons’ revenue mainly depends on two companies- Tata Consultancy Services (TCS) and Jaguar Land Rover (JLR).

Tata Trust 02
Source: https://timesofindia.indiatimes.com/business/india-business/aid-from-tata-trusts-up-10-fold-in-10-yrs

In the fiscal year 2021-22, Tata Sons, the unlisted company of Tata group, declared a dividend of Rs. 10000 per share (@ 1000 percent). As a result, Tata Trust earned a whopping Rs. 267 crores in FY 2021-22, which it intends to use to address development in various sectors. 

In the Annual Report released in March 2022, directors’ remuneration and expenses are clearly stated. In the battle against Covid, Tata Trust donated Rs. 1000 Crore in FY 2021. However, the dividend distribution led to an outflow of funds to the tune of Rs. 404 crores for FY 2022. 

With an 18.5% stake in the company, Mistry Family received Rs. 75 crores as dividend income. The Chairman of Piramal Group, Ajay Piramal, received a commission of Rs. 2.25 Cr in FY 2021. Former Managing Director of Titan Company, Mr. Bhaskar Bhatt, earned a similar amount on account of commission on profits. Tata Sons recorded a massive gain of more than Rs. 17,000 crores on total revenue of approximately Rs. 24,132 crores in FY 2022. The reason for such a spurt is attributed to generous dividends from TCS.

Tata Trust 01
Source: The Economic Times (https://m.economictimes.com/news/company/corporate-trends/)

Key Takeaways

Tata Trust enjoys respectable recognition as one of the oldest philanthropic institutions rendering valuable service to society. This prestigious charitable institution has come a long way in touching millions of lives and ensuring their basic needs -from health and sanitation to education are met. The Tata Trusts strive to build a stronger nation every day.

FAQs

How Tata Trust contributes to providing better health facilities?

Tata Trust has been contributing towards better health facilities over decades. Adopting a multi-pronged approach, it tackles communicable and non-communicable diseases. In addition, it works to improve people’s well-being via its multispecialty hospitals to bridge the gap in healthcare professionals.

What is Tata Trust’s contribution to transforming rural India?

Under its Transforming Rural India (TRI) mission, Tata Trust aims to provide nutrition-focused health services and good career opportunities. As a result, it will help people become self-reliant and overcome poverty.

What is Tata Trust symbolic of?

Tata Trust represents humanity and compassion. They believe in growing as a nation; you must first empower citizens. Provide better facilities and opportunities to catalyze development.

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Deloitte Investors Find India Attractive Destination For FDI

Deloitte Says Investors Find India An Attractive Destination For FDI. Know Why Now

The markets have been volatile in the last few months. Foreign portfolio investors (FPI) have withdrawn close to 40 thousand crores in May amidst the rising bond yields in the US, the appreciating dollar, and the chances of the Fed hiking rates. The FPIs have taken out around 1.67 lakh-crore (the US $22Bn with the rupee conversion rate of 77.51) with this amount since 2022 began.

FPI may remain volatile because of rising crude prices, surging inflation, and tight monetary policy. However, as per a recent Deloitte investor survey, investors still find India an attractive destination for Foreign Direct Investments (FDIs). 

FDI inflows, including equities, capital, and re-invested earnings, amounted to the staggering US $83.57bn in FY2021-22, 10% higher than before. Based on the past trends, India needs ~US $400bn of foreign capital cumulatively in the next six years to become a US $5 Trillion economy.

But before we get to that, let us understand the difference between FPI and FDI.

Foreign Direct Investments (FDI): Foreign investment made directly in the productive assets of another country is FDI. It is more than capital investment. The foreign investors also bring in knowledge, expertise, and technical know-how to the company they have invested in.

Foreign Portfolio Investments (FPI): Foreign investments made into the financial assets of another country is FPI. Also called passive investments, FPIs do not actively manage the companies they have invested in.

Difference between FDIs and FPIs: The most significant difference between FDIs and FPIs is the investor’s degree of control over the invested company. FDIs have a high degree of control in the company’s management, while FPIs have shallow control in how the company is run.

FDIs are long-term investments, while FPIs are short or medium-term investments. Investors invest directly in foreign companies when they plan expansions, while investors looking for short-term profit invest in another country’s stocks, bonds, and other financial assets.

Attracting investments in capital-intensive sectors is critical to accumulating gross capital and establishing India as a global trade partner. But to attract FDIs, understanding investor perceptions about India is a must. So Deloitte surveyed 1200 multinational business leaders to know what they felt about India as an investment destination in September 2021. Let us see what the survey found. 

1. FDIs – India continues to be a favored destination

Per the United Nations Conference on Trade and Development (UNCTAD), the Indian information and communication technology (ICT) and construction sectors received the highest FDI, making India the fifth-largest recipient globally in 2020-21. This trend continues, and India remains the favored nation for FDIs.

The respondent business leaders said they look for growth, political and economic stability, and a skilled workforce while finding investment destinations. India scores well for its financial prospects and skilled workforce. 44% of those surveyed in the US, UK, Japan, and Singapore said they were planning additional or new investments in India.

The graph below will give you a better idea of the additional or new FDI coming to India.

image
Source: Deloitte Survey, September 2021.

The time horizon for Investments: Over 21% of investors in the US, 17%, 12%, and 7% of investors from the UK, Japan, and Singapore, respectively, are likely to invest in India within the next two years. 5% of businesses in the US, 7% in the UK, 6% in Japan, and 9% in Singapore may invest in India in the next three-five years. 2% of companies from the US, UK, Singapore, and 1% of Japan may look to invest after six years.

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2. Improvement in Conducting Business in India

Around 40% of business leaders don’t find conducting business in India challenging. However, over 50% of business leaders from the US, UK, and Japan, and 70% of respondents from Singapore find the business environment challenging in India compared to China and Vietnam.

The same trend continues with ~60% of businesses across industries like real estate, industrials, utilities, IT, and healthcare feel conducting business in India is complex and challenging. However,  with the changes made in the last few years, this perception is changing, making India an attractive destination among foreign investors.

image 1

3. Increased Awareness of Government Programs Changed Perception

The government has done much to simplify doing business in India. However, business leaders in Japan and Singapore were unaware of the digitization of customs clearance or the production linked incentives (PLIs), scoring India 16% and 9%, respectively, the lowest for ease of doing business. But once these business leaders were made aware of these changes and reforms, their perception changed.

Of the respondents, ~70 -80% were more likely to do business in India once they knew more about the changes and policy reforms the government initiated in the country.

The graph below can give you a better idea of the changes in perception once awareness increases. 

graph

4. India Has a Competitive FDI Environment

The survey found that among the probable destinations, China, Brazil, Mexico, Vietnam, and India for FDI, India had the sturdiest reputation among investors from the US. India was a close second to China and Vietnam in the UK and Japan. Though China’s reputation took a beating after the pandemic, it is still India’s closest competitor amongst US investors looking to make capital investments.

The survey results above show how India’s score is improving. Higher scores among 1200 respondents make India an attractive destination for FDI.

However, the current geopolitical tensions between Russia-Ukraine, supply chain issues, surging inflation, and tightening of the US economy are reasons the Rupee devalued.

Despite these issues, India still finds itself on the list of favored nations for Foreign Direct Investments. An influx of FDI in India would mean an increase in the demand for Rupee, which will raise its exchange rate. Moreover, currency appreciation would mean better terms of trade. It also means better job opportunities, an increase in income, and purchasing power. 

Read more: About Research and Ranking.

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Netflix

Do You Know The Five Reasons Why Netflix Lost 200k Subscribers? Find Out Now

Netflix experienced a staggering 200k subscriber loss for the first time in its 25-year history in April 2022. Wall Street analysts were expecting a growth of 2.5 million new subscribers. Instead, the overall total subscriber base was down to 221.64 million.

This fall came as a big jolt to the company and its stakeholders as they have only seen massive growth since 2011.

But it is not where the story ends.

In a market swamped with streaming services at a more affordable price range, Netflix estimates that there will be a further loss of approximately 2 million subscribers in the second quarter of the year.

The company signaled immediate cutbacks in content expenditure, let go of employees, and rolled back any discretionary spending.

Impact of the Subscriber Loss on its Stock Price

As a result of the current and estimated loss in subscribers, Netflix’s stock prices dropped 35% on 20 April 2022 and wiped more than US$ 50 billion off its market cap. As of April 2022, it was one of the worst-performing stocks in the S&P 500, down by a whopping 62.5% in 2022.

Given the weak Q1 performance, the company reduced its subscriber forecasts and pushed back its estimates on profitability to a significant extent. Another major impact of the drop in share price was investors selling Netflix shares instead of buying.

This event triggered a tumble-down effect on the stock prices of other streaming services, too. Disney shares took a 5.5% dip, whereas Roku fell more than 6%. Paramount’s share price slumped 8.6%, and Warner Bros. Discovery witnessed a dive of 6% on the same day.

So, why did Netflix lose its subscribers? We have five reasons for you.

1. Netflix Suspended Its Service from Russia:

The Russia-Ukraine war has had a widespread impact across the globe. Along with other global conglomerates, Netflix also decided to suspend services in Russia.

Discontinuing services in this region led to an instant loss of almost 700,000 subscribers.

2. Netflix Became More Expensive in US and Canada:

A price hike for Netflix subscribers in the United States and Canada followed as the New Year rolled in. It led to a frenzy of subscription cancellations among long-term subscribers as the region was already experiencing high inflation with the rise in costs of everyday necessities.

Netflix claims that it lost approximately 600,000 subscribers in the US and Canada because of the hike in subscription costs in 2022.

3. Password Sharing Slows Down Growth for Netflix:

The issue of password sharing among Netflix subscribers has been a bane for the company. Growth has been affected as subscribers ignore the company’s Terms and Conditions on sharing their account credentials.

Netflix estimates that there may be ~100 million households globally, of which 30 million in the US and Canada use the streaming service without paying the designated subscription fee.

4. Not Enough Good Quality Content on Netflix:

Experts say that the quality of content on Netflix has been deteriorating over the last few years. This deterioration could be because Netflix lost out on excellent quality content from credible media companies to competitor streaming services.

Moreover, media companies have also opted to merge and launch their own streaming platforms which led them to push out content directly on their service rather than licensing it to Netflix.

As a result, Netflix had to invest more in creating original content whilst letting go of all-time favorites and classics in the process.

5. There Are Too Many Competitor Streaming Platforms:

When Netflix launched its services, it had the first-mover advantage. However, the market has streaming services available to subscribers at a fraction of the price of Netflix.

Among the competition, Netflix has the highest subscription price. It boils down to the shows viewers would pay to watch. Given that Netflix is losing out or canceling popular shows, this has not gone down well with loyal Netflix subscribers.

How Netflix Plans to Combat These Losses?

The loss of 200k subscribers and fall in stock prices had a significant impact on Netflix. That said, Netflix plans to battle these losses and ensure that the business has sustainable growth in the long term.

The primary concern for the company is to deal with the problem of account sharing. There are 222 million households that subscribe to its services, and ~100 million watch Netflix content for free.

Netflix plans to run a trial in select countries that will help them manage the issue of password sharing better., Netflix introduced two new paid sharing features where current subscribers can add additional subscribers to the existing plan to monetize these free-watching households.

Moreover, introducing a more economical plan with ads may be the answer to bridge the gap and onboarding these freeloaders as paying subscribers to Netflix. Doing so will automatically be a revenue generator for the company. It also solves the problem of Netflix offering a premium service in the backdrop of rising inflation globally.

Final Thoughts

The recent subscriber loss is a warning bell of a less promising future for Netflix. Addressing the de-growth in subscriber base and a crackdown on password sharing with an ad-supported economical platform does not give enough reasons for subscribers to remain loyal to the streaming giant.

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billionaires-tax

Wonder How Billionaires Don’t Pay Taxes? Read The Blog To Know The Answer

The pandemic had economies declining and many slipping into poverty, but the world still added 607 new billionaires. That’s like three every alternate day. Per the Hurun Global Rich List 2021, India minted one billionaire a week. 

India has been adding more millionaires a year since 2018 than any other country. Yet, the World Inequality Report classifies India as poor and unequal as the top 10% own as much as 57% of the country’s income while 50% of the population owns a mere 13%.

“Taxing the rich to fight inequality back in fashion” – a new Indian express headline
“Can India go back to a wealth tax by appealing to the better side of the rich?” -an economic times headline in Jan this year?

And when you read such headlines, you want to know how they avoid taxes when you must have bills for every expense and rupee earned. So, we did a deep dive to understand what billionaires do to avoid paying taxes.

Taxes are directly proportionate to your income! The more you earn, the more taxes you must pay. Well, not really.

Tax systems in developed countries like the US make the high-income, high-earners pay a higher tax rate to penalize the ultra-rich who frequently take advantage of the regulations that allow them to reduce their effective tax rate.

ProPublica’s report on some of the world’s wealthiest people found they have options to offset their taxes via credits, deductions, and losses. Some billionaires own sports teams that offer write-offs, which means they pay taxes lower than their players in some cases. Others own commercial buildings often used to show paper losses to offset income. Companies like Google, Facebook, Apple, and Microsoft pay little or no US corporate tax as they send their profits abroad.

Let us take a few examples of the world-renowned billionaires who pay minimum taxes on their giant financial empires.

Elon Musk- Net worth- $207 Billion (21st May 2022)

Tesla’s CEO saw an increase of $13.9 Billion in his net worth over four years (2014-2018). During this period, he reported $1.52 Billion in income, and the true-tax rate paid was 3.27%. He made very little money each year through his stock accounted for a large portion of his net worth.

Jeff Bezos- Net worth- $133 Billion (21st May 2022)

From 2014 to 2018, Jeff Bezos paid a true-tax rate of 0.98% as his net worth rose by $99 Billion. He reported only $4.22 Billion in income during this period. He could offset his earnings with the losses from his investments and other deductions, such as interest on the debt.

Warren Buffet- Net worth – $110 Billion (21st May 2022)

Between 2014-2018, Warren Buffet’s net worth increased by more than $24 Billion, for which he paid a true-tax rate of 0.10% only, though he earned $125 million during that time. It was because he could write off his large charitable donations while earning in the form of low-taxed capital gains.

How Do The Wealthy Avoid Paying Income Tax While Increasing Their Net Worth by Billions?

There are various reasons the rich can avoid taxes. Primarily, billionaires know how to make the most of the loopholes in the tax system. Here are some ways the rich, use to pay low taxes-

1. Donating for Charity

Money given as charity and donations in cash or cash equivalents is tax-deductible under the tax code. Taxpayers enjoy the tax savings by deducting their part of their donation or contribution on their tax returns. They need to itemize their taxes to enjoy the tax benefit. In 2021, Buffet announced that he had donated $4.1 Billion worth of Berkshire Hathaway shares to five charitable foundations and saved up on his taxes.

2. Making the Most of Interest Deductions

Another option to boost the possible returns is to deduct the interest expenses, which allows the income tax department to ration the borrowing costs. The IRS allows a deduction of up to 37%, i.e. when taxpayers apply for the highest tax bracket, they can offset their other income with up to 37% interest cost. Doing so means compounding returns over and above what they’re getting through a borrowing strategy.

3. Increase Equity Holdings

It is one of the most important reasons for avoiding taxes. Billionaires hold most of their net worth as stock, which means unrealized gains. For instance, most of Bezos’s wealth is in Amazon stock. He can avoid taxes as his accumulated wealth is from Amazon stock. And stock gains accrue no taxes till sold.

Equity shares have value, but they cannot be used as legal tender or considered income despite the rapid appreciation in value. So, Elon Musk doesn’t take any salary as a wage income, and he is one of the richest globally.

4. Create LLCs to Manage Assets

Another way to save taxes is to create a Limited Liability Company to manage numerous investments such as portfolio assets, real estate, and other businesses. An LLC protects the business owner from personal accountability for the firm’s debts.

There are ways to save money while establishing a governance framework for the assets. The expenses incurred in governance and providing counsel can be deducted as business expenses. Elon Musk manages his wealth through a single-family office, Excession LLC.

5. Take Strategic Leverage

The rich like to invest in companies using leverage. They strategically structure their debt and equity so that interest is tax-deductible. Security-based loans provide significant benefits under the right conditions. Such loans also include the risk of keeping enough collateral in an account during periods of volatility.

We can say that the tax system has some loopholes. Avoiding taxes may not be possible. However, meticulous tax management and planning can help to lower taxes significantly. When taxes go up, tax planning becomes more valuable. Strategic borrowing and dynamic spending help billionaires preserve their wealth.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Elon Musk’s Twitter – Know What’s The Story Behind the Deal Today!

Whew! Elon Musk finally acquired Twitter on 25th April 2022 for $44bn. The days before signing the deal were nothing short of a family saga on TV or a well-crafted family drama.

We know we are late in sending this write-up, but we wanted to share the inside scoop. Most news channels and papers shared the news and its salient features. But we thought we could dig a little deeper and know the story behind the Tesla owner’s deal.

Let us understand how Elon Musk’s Tesla-Twitter deal came about.

Elon Musk Changes 1
Elon’s Timeline from Buying Shares to Acquiring Twitter

Elon Musk quietly began buying Twitter shares in January this year. But few noticed this buying spree till he announced holding a 9.1% stake in Twitter in the first week of April. The news that the richest man was now the largest shareholder in his favorite social media channel sent the world a-twitter and stock prices soaring.

Wanting to flex his proverbial muscles, Musk tweeted a poll asking for suggestions to improve Twitter. The Twitter board offered him a seat. A seat that would have let him own only 15% of the company. Initially, he agreed and then later declined the offer. Few understood why he changed his mind.

Securities Exchange Commission -Here I Come

After refusing the seat on the Board, Musk updated his filing in the SEC, which showed he was no longer willing to be a passive participant in the company, restricting himself to only a 14% stake. His actions would have been the first signs that Musk was looking to do something more than owning a stake to get a seat on the Twitter Board.

Speculations Galore

People watched the news and forgot about Musk’s stake in Twitter by evening. Few believed he would launch a hostile takeover. Experts briefly thought he could buy Twitter, but they reasoned Musk had everything he wanted out of Twitter.

Musk Offers to Buy – His Final Salvo

Musk started his bid as the best and final offer Twitter could get. He was offering Twitter which had a $37bn market cap, a fair premium of $43bn. Musk felt the best way forward was to go private to undergo changes he wanted, like the edit feature, an open-source algorithm, less moderation, and a higher limit to remove offending tweets.

Experts Wondered Why The Hostile Takeover

Would the richest man need to buy a company for money? What do you think? Musk wanted everyone to believe he was an advocate of free speech and was trying to protect it. He believes Twitter is the modern town square. Experts felt Musk leaped before looking and did not have a plan in mind because his finances weren’t lined-up, and he was still talking with Morgan Stanley for a loan. They felt if Elon got Twitter to change its policies then, he could even take his offer back.

Twitter Board -What Was Happening There

The Twitter Board was not happy with Musk’s takeover bid but evaluated the offer. They later invoked the ‘Poison Pill’, which would hamper Musk’s attempt to assume control. The Poison Pill strategy is when existing shareholders get the right to purchase additional stock at a high discount, diluting the holdings of the new hostile investor. It is called a shareholder rights plan.

Musk Puts Forth His Finance Plan

Elon Musk put forth his bid financing plan with loans worth $46.5bn that would let him finance his buyout offer in a new filing with the SEC on 14th April 2022. Morgan Stanley Senior Funding agreed to two debt loans worth $25.5bn. The remaining $21bn would be from Musk’s finance.

The will-he, won’t-he story finally ended on 25th April 2022. The Board evaluated the funded offer over the weekend. Elon Musk expressed his pleasure with a Tweet.

elon twitt
Source: Elon’s Twitter account

The Impact Of This Buyout

The publicly listed company will become a private holding, and Musk will have total control over Twitter. It could mean a lighter moderation policy, an algorithm open to the public, and perhaps reopening doors to the likes of Donald Trump on Twitter.

Many worry about what happens if Twitter no longer has strict content moderation. Unregulated free speech on social media could become ugly quickly.

What Does This Takeover Mean For India Operations?

India is one of the biggest markets for Twitter, with 23.6 million users since January 2022, as per Statista. Musk’s plans for Twitter are sketchy at best. Neil Shah, VP of Counterpoint Research, India, told moneycontrol, “Someone like Parag, being a CEO and an Indian, understands fairly well how important and strategic market India is, but Elon might have a different vision.”

The Indian government and Twitter are at odds on several matters. The most recent issue was compliance with the new IT rules. Moreover, Elon Musk’s run-ins with the government over the import duties for Tesla may become a hindrance.

Starlink, a part of Musk’s SpaceX, was banned from accepting pre-orders for its satellite broadband services in India without a license in November 2021, while the Telecom department asked the company to refund all the pre-orders.

Free Speech –Another Challenge In India

Social media channels have struggled with balancing free speech and moderation. Several government departments use Twitter to disseminate information. The team may need to be cautious in public while trying to appease the government in the background. Experts believe Musk may have no such compulsions and could do as he pleases.

There could be a day when he may even shut down Twitter India operations, which could have a far-reaching geopolitical impact. Elon has significant clout on Twitter, which he leverages successfully.

Remember Dogecoin and Shibu Inu, the two cryptocurrencies that became popular after a single tweet from Musk. His tweet suspending Bitcoin as a payment option at Tesla led to its crash in 2021.

Revenue Challenges Ahead

Twitter now must reach 315 million monetizable daily active users (mDAUs) with a revenue of $7.5 billion by December 2023. They reported 217 million mDAUs and a topline of $5.08bn at the end of 2021.

The Way Forward

Despite the drawbacks, many feel Musk could help Twitter turn around as he did for SpaceX, Tesla, and PayPal. Industry experts believe there could be more deployment of Twitter Blue, the premium subscription service. Other initiatives may also get support in a bid to make Twitter profitable.

The question remains. Should Musk have control of Twitter despite the benefits the company may reap? We will have to wait to see how things play out and what happens to Twitter now.

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Taxation checklist – A convenient list to make sure you have everything in order to file income tax this month

March is here and like always the end of the month will be hectic. Many of us will scramble to get papers  to submit for tax purposes at work.  There are six things that can help you be income tax compliant.

Have you linked your PAN and Aadhaar yet? It is a must if you want your tax returns to be processed. If you haven’t, then do so before 31st March 2022.

2. File pending IT returns

The last date for filing the Income-tax return for AY 2020-21 (Assessment year) is 31st March. If you haven’t filed your returns for the same period, then do so before the month ends. . Your tax returns will include the penalty and interest for delay in filing taxes.

3. Calculate deductions

 Individual taxpayers can invest in specific investment/saving sachemes such as FDs, NSC, ELSS, ULIPS etc.,  to avail deductions u/s 80C, 80D, and 80G. Understanding these calculations can help you diversify you save in taxes as well as create an investment.

4. Invest to claim deductions

You can invest in various instruments to claim exemptions and deductions while earning handsome returns. Make sure you invest before 31st March to include it in the current financial year (FY22)and claim deductions.

5. Claim reimbursements

Do you have your expense receipts ready to claim reimbursements? If you haven’t, then collect your medical, telephone, leave travel, and house rent receipts to submit as proof of expenses to your employer right now. 

6. Compulsory investment under PPF

Do you have a PPF account? If yes, then you must contribute at least Rs. 500 to the account every financial year. March end is the last day to contribute to your PPF account


Well, the points mentioned above are based on individual requirements. But we have a handy checklist that can help you keep a track of documents and proofs needed to be tax-ready.

Tax checklist

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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Latest Union Budget – Status Quo For Tax Payers and a Mixed Bag For MSMEs

After a quick look at points highlighted in the Economic survey – a precursor to the FY23 Budget, let’s look at what FM Nirmala Sitharaman had to say for Tax Payers and theMicro Small Medium Enterprises (MSMEs).

No Change in Taxation (H1)

Every year, the common man expects several things from the Budget. A major expectation revolves around ‘Taxation’. 

This year too, the common man expected FM Nirmala Sithamana to decrease tax rates. He/she expected the Budget to present tax rate and surcharge reductions, an increase in the deduction amount available under section 80C, an increase in the housing loan repayment exemption, dividend tax relief, capital gains standardization across different asset classes, the removal of securities transaction tax (STT) and the exclusion of GST on services provided to the general public.

However, the Budget didn’t fulfill any of these expectation. The Budget maintained its status quo on Income tax rates. Here is how taxpayers will pay taxes this year.

  • Personal income tax slabs remains as it is (H2)

In the shortest Budget speech ever, FM Nirmala Sitharaman, didn’t pronounce a single word that would sound like a melody to the taxpayers’ ears. No change came out of finance ministry’s kitty. 

An individual tax payer will continue to pay as per the existing tax slabs, depending on the tax regime that he/she selects for FY23. Under both income tax regimes, tax rebate of up to Rs. 12,500 is available to an individual tax payer under section 87A of the Income-tax Act, 1961. This means that anybody with a net taxable income of up to Rs. 5 Lakh would not be taxed irrespective of the tax regime he/she chooses.

  • The difference between two tax regimes (H2)

Income Tax slabs and rates for FY2022-23

Old tax regime

Total Income

New tax regime

NIL

Up to Rs. 2.5 Lakh

Nil

From Rs. 2,50,001 to Rs. 3 Lakh

5%

5%

From Rs. 3,00,001 to Rs. 5 Lakh

20%

From Rs. 5,00,001 to Rs. 7.5 Lakh

10%

From Rs.7,50,001 to Rs. 10 Lakh

15%

30%

From Rs. 10,00,001 to Rs. 12.5 Lakh

20%

From Rs. 12,50,001 to Rs. 15 Lakh

25%

From Rs. 15,00,001 and above

30%

There are two different tax regimes. You need to know the difference between the Old and New tax regime to decide which one to pick. Under the New Tax Regime an individual tax payer misses almost 70 income tax exemptions and deductions but gets taxed on lower rates. On the other hand, under the Old tax regime an individual can avail deductions/tax exemptions such as 80C, 80D deductions, HRA, LTA tax exemptions, etc. 

Sometimes no change can also be a good thing. 

A Mixed Bag for MSMEs (H1)

Just like the taxpayers, MSMEs also expected several things from the union Budget. And it accurately delivered on the sectors’ needs. MSMEs contributes ~29% towards the GDP, so it is important for the finance ministry to pay heed to their needs. 

There have been many MSME-centric announcements this time. The budget extended the Emergency Credit Guarantee Scheme (ECLGS) till March 2023. Moreover, the FM added another Rs. 50,000 crore to the ECLGS for the benefit of hospitality and other allied sectors. 

Pushing for digital transformation among MSMEs, the sector-centric portals such as Udyam, e-shram, NCS & Aseem would be inter-linked to widen their scope. These portals will now encompass organic databases and provide services such as credit facilitation and offer entrepreneurial opportunities. 

The Budget proposed a digital ecosystem for skilling and livelihood. Theaim is to skill, reskill and up-skill citizens through online training. 

The finance minister Nirmala Sitharaman, unveiled a World Bank- funded initiative RAMP (Raising and Accelerating MSME Performance). Though the finer details about the initiatives are not yet public, the Federation of Indian Micro Small & Medium Enterprises (FISME) is happy with the announcement. It expects a speedy economic recovery for MSMEs.

While most of the MSME sector welcomed the announcements, the Budget failed to cheer certain sections. FISME President, Animesh Saxena says that he was expecting specific measures focused on “medium” firms. But nothing came from the Budget. 

Moreover, micro and small enterprises were looking for an incentive package, but it did not materialize. Like any new startup that enjoys interest subvention for 3 years, there is no investment scheme for new MSMEs. 

While the feelings are mixed, the one thing to take away from this Budget would be the idea that the government want to emphasize on growth and economic revival of all sectors and not just certain audiences like the tax payers or the MSMEs.

This conservative budget leaves room for the ministry to maneuver in case of pandemic-related issues and imported inflation too that rising global prices may cause. 

We hope we’ve given you a better idea of the Budget. If you’ve liked this chapter don’t forget to share it with your friends and family. 

In the meantime, subscribe to the 5 in 5 Wealth Creation Strategy and begin creating wealth.

Read more:  How Long-term investing helps create life-changing wealth – TOI. 

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An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

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