Symbiosis Centre for Corporate Education

Symbiosis International (Deemed University)

Business Awareness Test - I

 Index
Sr. No. Particulars Page No.
The Greatest Business Decisions of All Times
1. 2–8
by Fortune Editors
2. India's Family Businesses: Pursuing Newfound Ambitions 9 – 10
15 of the Best Mergers & Acquisitions of 2017
3. 11 – 13

4. Top 5 Mergers & Acquisitions of 2017 In India 14

Can homegrown brands springing surprises on their global
5. 15 – 16
counterparts?
6. 10 Digital Marketing Trends to Watch Out For In 2018 17 – 21

7. Capturing the mCommerce Industry in India 22- 23

How Paytm Payment Bank, Airtel Payment Bank are different
8. 24
from normal banks
Reliance Jio partners with Samsung to bring IoT to India, take
9. 25 – 26
LTE to 99% population by Diwali
10. Crowd Funding: Fund Seekers’ New Hope 27 – 30

11. The secret behind Patanjali’s rise and rise 31 – 33

12. Taking wings: Can Udan fly? 34

13. Good Corporate Governance Always Pays Off 35 – 37

14. Punjab National Bank: The Great Indian Bank Job 38 - 40

New Income Tax Forms Notified:
15. 41
Five changes you should know

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 1. The Greatest Business Decisions of All Times
by Fortune Editors
Once in a great while a leader makes a truly game-changing decision that shifts not only the
strategy of a single company but how everyone does business as well. These big decisions
are counterintuitive -- they go against the conventional wisdom. In hindsight, taking a
different direction may seem easy, but these bet-the-company moves involve drama, doubt,
and high tension. What made Apple's board bring back Steve Jobs to the company? What
motivated Henry Ford to double the wages of his autoworkers, and how did that change the
American economy for the next century? Why did Intel decide to spend millions to brand a
microchip? The following stories, adapted from the new book The Greatest Business
Decisions of All Time, provide the background to these pivotal moments. You'll learn how
these ground-breaking decisions have shaped the thinking of today's top leaders.
--Brian Dumaine

Ford

1914: Henry Ford decides to double his workers' wages

Lesson Learned: With their pay doubled, Ford's autoworkers could now afford the very
products they were producing. This triggered a consumer revolution that helped create the
wealthiest nation on earth.

Henry Ford had a problem. He was becoming too successful. The growing popularity of the
Model T was causing him to rethink his ideas about mass production. He had introduced the
moving assembly line at his Highland Park, Mich., plant in 1913, and it had worked far
better than he could have imagined. The year before the assembly line was installed, he had
doubled production of the Model T by doubling the size of his workforce. The following
year he nearly doubled production again, but this time he did it with the same number of
workers. The assembly line had made the plant so efficient that the Highland Park payroll
actually fell.

The trouble was, employee turnover was accelerating at an alarming rate. The dispiriting,
mind-numbing work on the line was causing workers to quit en masse. The men (and it was
all men back then) reacted to their narrowly defined, repetitive, and physically demanding
jobs by leaving them.

Acting on the advice of his devoted lieutenant, James Couzens, Ford decided to take radical
action. On Jan. 5, 1914, Ford and Couzens summoned newspaper reporters to the plant to
publicize changes in employment policies at Highland Park that they hoped would improve
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employee retention. First, the company would reduce the workday from nine hours to eight.
Second, it was moving to three shifts a day instead of two, opening up lots of new jobs. But
the big news came in the third announcement: Subject to certain conditions, Ford would
more than double the basic rate of pay to $5 a day. The 11-year-old company was willing to
spend an additional $10 million annually to improve productivity and the lives of its
workers.

The news spread quickly beyond southeast Michigan. "A magnificent act of generosity,"
declared the New York Evening Post. But the Five-Dollar Day turned out to be an excellent
investment. Within a year, annual labor turnover fell from 370% to 16%; productivity was
up 40% to 70%. Between 1910 and 1919, Henry Ford reduced the Model T's price from
around $800 to $350, solidified his position as the world's greatest automaker, and made
himself a billionaire.

And by raising wages he expanded the overall market for the Model T. As Ford said to
reporters that January: "We believe in making 20,000 men prosperous and contented rather
than follow the plan of making a few slave drivers in our establishment millionaires."
--Alex Taylor III

Apple

1997: Apple brings back Steve Jobs

Lesson learned: Sometimes boards are too quick to jettison a founder in favor of
professional management. But for all a company might gain from bringing in a pro, it risks
losing the magic and entrepreneurial vigor that only a founder can bring.

History often applies a gauzy layer of film to great decisions. Take the action by the Apple
board of directors to bring back Steve Jobs to the company he had co-founded 20 years
earlier. It is impossible to overstate just how rotten a state of affairs Apple found itself in
during its 20th year of existence. In 1996, Apple lost $816 million on $9.8 billion in sales.
Then-CEO Gil Amelio convinced the board that Apple needed to purchase a software
company to gain the intellectual property and talent to replace Apple's aging operating-
system software. The company soon bought NeXT, whose founder was none other than
Jobs. Amelio understood the value of NeXT's software and the effect on morale, product
vision, and creativity that could come from persuading Jobs to rejoin Apple. Amelio should
have been wary of Jobs. He had met with him in 1994 when Amelio joined the Apple board,
and Jobs asked for Amelio's help in having himself named Apple's CEO. Shortly after the
acquisition, Jobs became an "informal adviser" to his former company and began roaming
its halls as if he were the boss.

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Apple's newest board member, former DuPont CEO Edgar Woolard, became alarmed about
Amelio. He discussed Amelio with Jobs and senior executives at Apple. At the time Apple
was in a continual downsizing mode, and Woolard was worried about the company's ability
to achieve its plan and about employee morale.

In July 1997, after consulting with Jobs, Woolard spearheaded the decision by the board to
fire Amelio. While Woolard had no reason to be sure that Jobs would step in as CEO, he
must have sensed that the organization was starting to follow the young man's lead. By
firing Amelio, Woolard had made a decision that eventually helped Jobs regain power at the
company. In a sense, what he decided to do - perhaps all he could do at that point - was
remove any obstacles to Jobs' return.

--Adam Lashinsky

Tata Steel

1993: A radical approach to downsizing

Lesson learned: Tata Steel's CEO made a decision that led to a novel and humane approach
to layoffs that today's leaders should heed. It boosted employee morale while saving money.
When J.J. Irani walked into his regular quarterly meeting with the shop stewards at the steel
plant he managed, he knew this meeting would not be regular. He would be discussing very
bad news, news that no one in the room had ever heard before.

This was the sprawling, rusting, smoking, antiquated Tata Steel plant in Jamshedpur, India.
The news was that some employees were going to lose their jobs. It was unbelievable. No
one ever lost his job at Tata Steel. It existed to give people jobs. Once you worked there,
your job was guaranteed, and after 25 years you were guaranteed that your son or daughter
could also work there. The company responded with an uncommon solution, one that in fact
seemed crazy -- irrational on its face. When an Indian industrialist heard about it, he sent
Irani a note: "You either have too much money or not enough brains."

Yet Irani's solution has proved to be one of the wisest decisions in the whole realm of
employee relations and corporate culture. And it was startlingly generous. Workers under
age 40 would be guaranteed their full salary for the rest of their working lives. Older
workers would be guaranteed an amount greater than their salary, from 20% to 50% greater
depending on their age. If they died before reaching retirement age, their families would
keep receiving the full payments until the worker would have reached that age. The program
wasn't as economically crazy as it first appeared. While workers who took the offer would
get their full salaries or more, that amount would stay constant until age 61 instead of
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increasing, as it would if they remained employed; nor would Tata Steel have to pay payroll
tax or make retirement-plan contributions. Tata Steel's labor costs began to decline
immediately. By 2004, Tata Steel's workforce had shrunk from 78,000 to 47,000, with about
a third of the reduction from natural attrition. Lower labor costs, combined with over $1
billion of new investment, turned Tata Steel into a far more efficient, globally competitive
firm.
--Geoff Colvin

Intel

1991: How Intel got consumers to love its chips

Lesson learned: By deciding to brand its product "Intel Inside," the chipmaker proved that
an anonymous ingredient of a consumer product might achieve its own identity and provide
a competitive edge.

A PC is made of various components: the power unit, keyboard, mouse, hard disk, and - the
brains of the operation - the microprocessor. Way back when, users of a Compaq no more
knew who had supplied those ingredients than a Chevy owner knew who had made the
radiator under the hood.

Intel changed all that in 1991. Until then, the high-tech marketing landscape had pretty
much consisted of Apple's rainbow logo and IBM's Little Tramp. But if a small blue
Chiquita sticker could turn a banana into a marketing icon, then why not an Intel Inside logo
on a computer?

The genesis for Intel Inside came from inside the cubicle of CEO Andy Grove. His young
technical assistant, Dennis Carter -- who had two engineering degrees and a Harvard MBA -
understood that the company faced challenges in the maturing microprocessor market. The
surprising cause: the very success of the microprocessor. Because of Moore's law - which
holds that the number of transistors on a chip roughly double every 18 to 24 months - Intel
and other chipmakers were able to quickly make obsolete each generation of chip. So Intel's
16-bit microprocessor - called the 286 - was replaced within three years by the 386, a 32-bit
one.

Trouble was, nobody was buying it; everybody was still wedded to the 286 chip, although
the 386 was a much better product. Carter wondered whether the problem was that end users

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weren't aware of the product differences. Grove had his doubts, but in early 1989 he agreed
to a $500,000 test, telling Carter, "You believe it - you go do it." Intel took out billboard ads
in Denver with a big, bold "286" inside a circle and a large red "X" spray-painted over the
286. After a couple of weeks, another sign went up next to it: a "386" inside a circle. The
message was clear, and those buying PCs got it: Sales of computers with Intel's 386
microprocessor shot up. It was a major moment: Carter had shifted power in the chip
industry from the PC makers to a key supplier.

Ultimately Carter became head of marketing, his reward for demonstrating that an
anonymous ingredient of a larger consumer product might achieve its own identity.
--David A. Kaplan

Boeing

1952: Boeing bets big on the 707

Lesson learned: When CEO Bill Allen decided to launch the 707, he had no orders in hand.
He simply believed customers would buy. It takes courage to wager a company's future on a
vision.

Here's a shocker to even the casual student of aviation history under the age of, say, 75. At
the dawn of the Jet Age, Boeing, one of today's dominant makers of commercial aircraft,
was a nonentity in the business of building planes for airlines. That's right. In the years
following World War II, when U.S. industry was retooling for civilian production, Boeing
was primarily a maker of military aircraft. Its famous B-52 bomber and a companion tanker
had proved that the Seattle company had the right stuff when it came to jet aircraft
technology. But for the airlines, jets weren't commercially viable: Converting to jet
technology would require a massive investment that could pockmark their bottom line.

The safe choice for Boeing would have been to stick to its defence-industry knitting. That,
however, wasn't the plan of Boeing's postwar president, William McPherson Allen, who
made a prototypical great decision, a bet-the-company move on civil aviation in the form of
a single product. He was convinced that consumers would cotton to the speed, convenience,
and comfort of jet travel and that the real growth would be in the civilian sector of the

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booming global economy. Allen was so sure of his conviction that he was willing to risk
Boeing's financial future on it.

In 1952 he persuaded the Boeing board of directors to invest $16 million in what would
become the Boeing 707, the first U.S. transatlantic commercial jetliner and the plane that
would alter the course of Boeing's history. The 707 grew to become as much a cultural icon
as a transportation vehicle. The swimwear company Jantzen called its swimsuit line the 707.
Every U.S. President from Dwight D. Eisenhower to George H.W. Bush flew on an Air
Force One that was a modified version of a 707.

All told, Boeing invested $185 million in the 707. According to a 1957 article in Fortune,
that was $36 million more than Boeing's net worth the previous year. It was just one plane,
but it remade a company, an industry, and the very culture of its time.

--Adam Lashinsky

Johnson & Johnson

1982: Do the right thing

When J&J learned that bottles of its Tylenol being sold in Chicago had been laced with
cyanide and had left seven dead, CEO James Burke pulled off the shelves every bottle of the
painkiller nationally and designed a tamper-proof bottle -- all at a cost of $100 million. He
lived by the credo that a leader's first responsibility was to J&J's customers.
--Timothy K. Smith

Samsung

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1993: It pays to goof off

Samsung had a problem. Its culture was too inward-looking. Then Lee Kun-Hee, chairman
of the South Korean electronics giant, sent a handful of his brightest young employees to
faraway corners of the globe -- not to work, but to immerse themselves in the culture, learn
the language, and build networks so that someday Samsung would profit.

--Nicholas Varchaver

This article is adapted from The Greatest Business Decisions of All Time, by Verne
Harnish, CEO of Gazelles, and the editors of Fortune, with a foreword by Jim Collins.
fortune.com/greatestdecisions

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 2. India's Family Businesses: Pursuing Newfound Ambitions
BY BRIAN CARVALHO Editor, Forbes India

Many of India's timeworn family businesses are pursuing newfound ambitions with the
help of technology

A KPMG study a few years ago estimated that family businesses accounted for two-thirds of
India’s GDP. That’s pretty much in line with trends in the US where family businesses
account for roughly 64 percent of the GDP.

The difference, though, may be that while in the US some 35 percent of the top 500
companies are family-controlled, in India, that figure would be over 70 percent. So while the
Ambanis, Birlas, Godrejs, Piramals et al are familiar names on the Indian business
landscape, little is known about the thousands of largely unlisted universe of family-owned
businesses doing their bit for economic growth, job creation and the country’s
entrepreneurial fabric.

Many of these are built around the core of a flagship activity that is regional in nature, but
now harbouring pan-India aspirations. In a few cases, the newfound growth ambitions are
riding on the back of technological innovations that can give a fresh impetus to time worn
businesses. A perfect example: Cycle Pure Agarbathies from the Mysuru-headquartered NR
Group, which has taken puja rituals digital with a website and app. The aim is to become a
one-stop e-shop for all puja needs, from camphor, to a puja bell, to a holder for the product at
the core–the incense stick.

Like the Ranga Raos of the NR Group, the Singhs of ACG Worldwide are low profile to a
fault. With a next-gen scion now at the helm as managing director, ACG has quietly become
a global pharma services giant with annual revenues expected to hit $500 million in FY2018.
As Forbes India’s Aveek Datta, who doggedly pursued the Singhs, explains: “ACG’s
strength is that it has built a global reputation for frugal innovation, cost-effective products, a
strong R&D base and efficient customer service.” Read this fortnight’s cover story.

Family businesses are known to be more entrepreneurial than widely-held ones. The flipside,
though, is that most are not known for their risk appetite and their keenness to access capital.
In this edition’s family business special, we capture contrasting businesses: One set that
conforms to the trend and the other that bucks it.

There is, for instance, India’s third largest packaged tea label Wagh Bakri, which is content
with single-digit profit growth on annual sales of Rs 1,100 crore. Profit maximisation is not a
credo of the Desais, whose founder was a follower of Mahatma Gandhi in the early 1900s.
Growth for the Desais is an imperative but not an end in itself.

At the other end of the spectrum are the Talwalkars , who are now relying on investor and
IPO funds to expand beyond fitness—into large-format sports clubs with swimming pools,
tennis courts, restaurants… the works. Clearly, it’s horses for courses for Indian business
families.

Getting listed on the stock exchanges is, of course, a totally different ball game. Investors are

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typically sceptical of a high concentration of shareholding with the family. An independent
board in such cases is often a casualty and, with it, corporate governance.

A company that’s tasted some success in breaking this mould is Wipro, where the Premjis
control roughly 75 percent of the shares. An IFC scorecard on corporate governance shared
exclusively with Forbes India suggests that Wipro has shown a sharp increase in its scores to
figure among the top rankers. For an inside look at how Wipro did it, Harichandan Arakali
met up with the top brass of the IT services major and came back with some fascinating
insights and anecdotes. Don’t miss his piece.

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 3. 15 of the Best Mergers & Acquisitions of 2017
BY MADELEINE JOHNSON, ZACKS.COM

The deals that were announced this year, though, were major, and revolved around some of
the biggest consumer and technology names. Here are 15 of the best mergers and
acquisitions of 2017.

1. Amazon Buys Whole Foods

Earlier this summer, e-commerce giant Amazon AMZN announced that it would be buying
high-end organic grocery chain Whole Foods for $13.7 billion; the deal officially closed at
the end of August. While the acquisition has been off to a rocky start, it gives Amazon
hundreds of physical stores and provides the company a strong entryway into the
competitive grocery and food industry.

2. Intel Acquires Mobileye

Intel INTC said in August that it had completed its tender offer for the outstanding shares of
Mobileye, a company that develops sensors and cameras for Advanced Driver Assisted
Systems (ADAS); the Israel-based company is also known for its computer vision and
machine learning technology. The $15.3 billion deal gives Intel a huge advantage in the
growing self-driving car industry, a market they estimate will grow to $70 billion annually
by 2030.

3. United Technologies Buys Rockwell Collins

In a major industry deal, United Technologies UTX agreed to buy Rockwell
Collins COL for roughly $23 billion. This is one of the biggest moves in aviation history,
and gives rise to an aerospace giant that will focus on the manufacturing of aircraft parts
like touchscreen cockpit displays and jet engines, among many other things. United plans to
combine its aerospace business with Rockwell Collins, creating a new unit named Collins
Aerospace Systems.

4. Disney To Buy Some of 21 st Century Fox's Assets

Just a few weeks ago, Disney DIS and 21 st Century Fox FOXA announced a historic $52.4
billion deal that would see Mickey Mouse's parent scoop up a good chunk of the media
conglomerate's assets, including the film studio 20 th Century Fox, the company's TV
production arm 20th Century Fox Television, Fox-owned cable networks (including FX and
National Geographic), and FOXA's stakes in international networks like Star TV and Sky;
Disney will also gain majority control of streaming service Hulu. The deal, however, will
likely face intense regulatory scrutiny.

5. JAB Holdings Acquires Panera

For $7.5 billion, European investment firm JAB reached a deal to buy bakery-café chain
Panera Bread earlier this year, creating a formidable food-focused portfolio that includes
Keurig Green Mountain, Krispy Kreme Doughnuts, Peet's Coffee & Tea, and Caribou
Coffee Company. Additionally, Panera is a restaurant that has managed to post steady
comparable sales growth and rising revenue at a time when many chains are hurting.

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6. Michael Kors Acquires Jimmy Choo
"Affordable" luxury retailer Michael Kors KORS agreed to buy footwear brand Jimmy
Choo, a popular name in the fashion world known for its towering stilettos, for about $1.2
billion in July. The purchase had been a long-rumoured one, and Kors plans on using its
own massive global infrastructure to expand Jimmy Choo's footprint. This likely won't be
Kors' last acquisition either, as the company is now focused on forming a new, "luxury
group."

7. Coach Buys Kate Spade

Coach, now Tapestry Inc. TPR, shook up the fashion industry back in May when the
company announced that it would be purchasing its smaller rival, Kate Spade, for $2.4
billion. The deal is both an effort to reach younger consumers-it recently signed a deal with
millennial and Instagram icon Selena Gomez-and to rebrand itself as a broader "lifestyle
assortment company."

8. CVS Buys Aetna

After weeks of rumors and speculation, drugstore chain CVS announced that it would
acquire insurance provider Aetna AET for $69 billion. The two companies said this
blockbuster deal would rein in health care costs and transform CVS's 9,700 pharmacy
storefronts into community medical hubs for primary care and basic procedures. It's
expected to close in the second half of 2018, and is subject to shareholder and regulatory
approval.

9. Gilead Acquires Kite Pharma

In October, Gilead Sciences GILD shelled out $11.9 billion for Kite Pharma, marking its
biggest acquisition ever. The deal gives the biopharmaceutical company access to a
promising cancer therapy, and hopefully makes it less reliant on antiviral treatments like its
Hepatitis C drug Sovaldi. In particular, the cancer therapy is a CAR-T drug, which many in
the industry believe will transform the cancer treatment market.

10. Cisco Acquires BroadSoft

In a move that will grow its software footprint, Cisco CSCO paid nearly $2 billion for
BroadSoft BSFT , a company that sells cloud-based call control software, a product that is
often re-labeled and sold by traditional telephone companies to their customers. This
acquisition is what IT vendors dub "the future of work," as it uses technology meant to
make it easier for workgroups to communicate with each other.

11. Apple Buys Shazam

Recently, iPhone maker Apple AAPL confirmed that it has acquired Shazam for $400
million, a company that lets users identify songs, movies, TV shows, and commercials from
short audio clips. The tech giant will be able to use Shazam to boost Apple Music. It also
hopes to integrate Shazam more deeply into iOS, and utilize the app's augmented reality
technology to improve its ARKit efforts.

12. Arby's Roark Buys Buffalo Wild Wings

Just last month, Arby's owner Roark Capital Group announced that it would be acquiring
chicken wing chain Buffalo Wild Wings BWLD for $2.4 billion. Arby's has successfully
executed a turnaround strategy by specifically emphasizing its unique fast-food menu
selection; the firm hopes to apply this similar formula to Buffalo Wild Wings. Arby's will
also assume the debt of BWLD.

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13. Meredith Corp. Buys Time Inc.
The Meredith Corporation MDP closed a $2.8 billion deal in November to buy
Time TIME that would create a publishing giant. The Des Moines-based Meredith
publishes the magazines Better Homes and Gardens , Family Circle , and Shape , among
others, while Time owns T ime , People , Sports Illustrated , Fortune , Entertainment
Weekly , and many other print and digital media properties, and has been in business since
1922.

14. Discovery Acquires Scripps Networks Interactive

In November, Discovery's DISCA $14.6 billion acquisition of Scripps Networks
Interactive SNI received overwhelming shareholder support. The merger would unite two
cable programming giants; Discovery owns the Discovery Channel, Investigation
Discovery, OWN and TLC, while Scripp's portfolio includes the Food Network, HGTV and
Travel Channel.

15. Google Buys Part of HTC Smartphone Team

This fall, Alphabet's GOOGL Google division confirmed that it plans to acquire part of
HTC's mobile division team for $1.1 billion as it grows its smartphone hardware business.
Google has become very serious about its hardware development with the debut of its Pixel
line of smartphones, and scooping up a chunk of HTC's team means that the tech giant can
better directly challenge Android partners like Samsung, LG, and Huawei.

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 5. Top 5 Mergers & Acquisitions of 2017 In India
BY : NITHYA NAIR

Take a look at the top five merger and acquisitions in the Indian market in 2017, which
helped some big players seal their position as market leaders while giving comfort to the
smaller or the troubled ones.

The year 2017 witnessed some big-ticket mergers in the Indian market. Acquisitions and
mergers are considered to be the strategic moves by the companies for expanding their
business and reach. To stay competitive in the market, companies need to invest a lot of
money into their business or merge themselves with other companies.

As the mega-merger of Idea Cellular and Vodafone India is coming to fruition, let us take
a look at the biggest mergers that have taken place in the Indian market in 2017.

Axis bank and Freecharge

India's private sector bank Axis Bank acquired payment wallet Freecharge in 2017. The
bank has entered into an agreement with Jasper Infotech Private Limited to acquire 100%
stake in its subsidiaries viz. FreeCharge Payment Technologies Private Limited and
Accelyst Solutions Private Limited, according to an Axis Bank statement.

Flipkart and eBay

Indian e-commerce major Flipkart acquired the Indian wing of eBay. The transaction was
announced in April 2017 and completed in August 2017. eBay and Flipkart have also
entered into an agreement for cross-border sale.

Airtel and Telenor

In February 2017, Telecom major Bharti Airtel acquired Telenor (India) Communications
Private Limited. After the acquisition, Airtel owns and manages Telenor's spectrum,
operations, licenses including its employees and customer base of 44 million.

Tech Mahindra and CJS Solutions

Indian software company Tech Mahindra Ltd acquired US-based healthcare IT consulting
firm CJS Solutions Group LLC. With the acquisition, Tech Mahindra Ltd. would have the
ability to cross-sell Tech Mahindra's services to a new set of clients of CJS Solutions and
thereby boost its revenues.

Wipro Ltd and InfoSERVER S.A.

India's software services exporter Wipro has entered into a pact to acquire Brazilian IT
firm InfoSERVER S.A in 2017. InfoSERVER provides custom application development
and software deployment services to clients. The company is mainly focused on the
Brazilian market. The acquisition is in line with Wipro's aim to expand its presence in the
Latin America market.

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 6. Can homegrown brands springing surprises on their global
counterparts?
BY K RAMAKRISHNAN

Homegrown brands may mean different things to different people. For this discussion, I
refer to brands that have been created primarily for consumers in India, whether made by an
Indian brand owner or multinational. The brand may have crossed shores and could even be
selling more outside India. But we still call them homegrown. Good Knight, Ashirwad,
Ghadi, Idhayam are all homegrown brands. So are Fair & Lovely, Ayush, Colgate Ved
Shakti and the like. Indian brand history is replete with instances of homegrown brands
springing strong surprises on their larger global counterparts. We all remember the frontal
attack by Nirma on Surf, and Cavinkare, with its format differentiation taking on Clinic
Plus. All of these were based on the planks of pricing and affordability. The global brands
found answers, albeit slowly, and came back fairly strongly.

Today’s homegrown brands seem to be of a different ilk. As we drew the curtain on 2017,
the closing numbers saw the emergence of homegrown brands stronger and bigger than ever.
Kantar Worldpanel’s household panel data indicates that the growth in penetration of home
grown brands far exceeds that of global brands, across several categories. A comparison of
household growth rates of the leading homegrown brands and their global counterparts
indicates that former had more than twice the growth rates of the latter in several categories.
In this comparison, we only consider brands that have a penetration above 10% to ensure
that we are talking growths on a significant base. For eg., a 10% penetration cut off ensures
that a brand like Patanjali can make the cut for comparison only in toothpastes and not other
categories. Even at a total level, the growth rate of homegrown brands put together well
exceeds the growth rate of global brands put together across multiple categories.

Whilst this data is for India, the trend is similar across the world. Kantar Worldpanel data
from around the world shows such trends in rest of Asia, Africa, Latin America and more.
What could be the reason for this? What are some of the environmental factors and
behavioral differences that have spawned this growth?

As good or better...
For years we have noticed marked differences in the overall offering of homegrown brands
in comparison to global ones. There was almost a clear stamp among homegrown brands
terming them as “local”. In the last decade we have seen a palpable scale up on the overall
package offered by the homegrowns. Be it the quality of offering or class of packaging or
advertising and even the use of brand ambassadors, homegrowns have not left too much
reason for the global brands to be chosen over them.

Appropriate Innovation
Many of the noticeable and successful innovations in the last five years have come from
homegrowns. Intense consumer knowledge and quick development cycles, unhindered by
global averages to meet the needs of multiple markets, have resulted in these. Good Knight
Fast Cards, Saffola Olive + Flaxseed oils, Fortune Vivo (oil for diabetics), Ashirwad Sugar
release control atta are some examples of recent innovation.

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 Not just a cheaper alternative
Unlike the price and affordability game of the 90s, homegrowns are in fact priced
confidently, sometimes even higher than global brands in the same category or segment.
Safed, Safechem’s flagship washing powder brand, has an average price that is marginally
more than Wheel from Unilever’s stable. Dabur Red 100G, which saw a strong 9% growth
in penetration this year is priced at the same price as Colgate Dental Cream 100G, the
highest penetrated toothpaste brand. Himalaya’s 100ml shampoo is priced almost at par with
Dove’s 100ml shampoo. In fact, many homegrown brands have in fact flourished with a
premium tag, particularly in personal care domain. Forest Essentials, Biotique and VLCC
are a few Indian brands with luxurious experience offerings.

Hyperlocal focus... Super quick reflex

Many homegrown brands operate in very small geographical zones. Nevertheless, they are
colossally dominant in these zones making their numbers count even when looked at
nationally. For eg., Nature Power has a national penetration of 3.5% placing it higher than a
national soap brand like Liril. Notably, 90% of Nature Power purchasing households are in
one state – Tamilnadu. Same is true for brands like Safed and XXX Detergent Powders –
while over 80% of Safed’s households are in West Bengal, nearly all of XXX’s powders are
in Andhra Pradesh and Telangana. Yet, Safed has about 7% penetration at the national level
and XXX has over 3% penetration – both higher than a national brand like Henko. Given
that these brands focus on a very limited geography, they go all guns blazing in that focused
zone. They have tight relationships with distributors and unique distribution models to cater
to their needs. With their head honchos being in close proximity to the consumer, they have
the ability to quickly assess the pulse of the consumer and react; something that takes the
multinationals months to notice.

Being where the growth is...

Homegrowns have a strong presence and focus on what the globals would call the
hinterland. In the last few years, the growth rate of FMCG in rural has typically been twice
or more than the urban growth in volume terms. Even within urbans, towns less than 1 lakh
in population have driven growths almost comparable to rural India. The skewed and strong
presence of homegrown brands in these town and village classes has been both a beneficiary
as well as contributory to the growth story. To conclude, not only have we seen a huge
growth in the number of homegrown brands, we have also seen a huge growth in the
homegrown brands that are growing. Added to all the above factors, there is a global trend
of nationalism and pride in local offerings which is hard to contend with. The growing
natural wave has only furthered the cause of homegrowns. It nearly looks like the time of the
homegrowns. The Global brands fended off a strong insurgence from homegrown brands in
the past. With changing times can they triumph once more? It looks like a hell of a challenge
this time.

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 7. 10 Digital Marketing Trends to Watch Out For In 2018
BY PRADEEP CHOPRA

Is your business still practicing old techniques of digital marketing? Are you wondering why
Digital marketing is not getting you the desired results? If yes, then this article will surely
give you some live examples of how you can use some of the latest developments in the
industry. It will help you focus on what all can get you better results while promoting your
business online. There are primarily 4 factors that are driving the evolution of Digital
Marketing in today's times
1. Technology
2. Storytelling
3. First Mover Advantage
4. Mobile Focused Digital Marketing

The above-mentioned factors are driving businesses to create experiences that customers can
literally fall in love with. Technology is helping marketers to strategize and measure more
effectively. It is also helping in making digital marketing operations smoother and more
productive. Advancement in technology ensures that you know more about audience
behaviour and preferences to be able to run campaigns that are extremely personalized.

Storytelling, on the other hand, is evolving because of fierce competition among marketers to
get audience attention. In 2018, you will be assisting your customers in taking even more
informed decisions. You'll have to know them in and out and make sure you are educating
and entertaining in a way they like. Let's first look at some of the ways in which brands are
using technology to enhance their Digital Marketing efforts:

Technology
AI and Chatbots
Starbucks, the popular coffee chain is using bots to help customers place their orders. If you
are a Starbucks customer, you can use voice commands or text and the bot will tell you
everything about the status of your order. The bot is available in the Starbucks app. Bots are
now helping companies provide superior customer service. Brands are making use of
Facebook Messenger and Slack to develop their own customised bots for improving their
service standards. While sometime back everyone was talking about social media as a
channel for customer service. The times to come will see Chatbots dominating the space.
You can benefit from 3 big advantages that chatbots come with 1. Chatbots are mobile first
and so their user experience is already streamlined according to a mobile audience 2. They
are easy and quick to develop 3. You can get real-time insights from the Chatbot activity - so
you have tons of data to run personalized campaigns.

Big Data and Predictive Analytics

American Express recently created sophisticated predictive analytics models to analyze
historical customer transactions based on 115 variables. This model helps them to forecast
the potential churn rate. So, for example, in the Australian market, the company can actually
predict the exact percent of accounts that will close in a period of four months. Such
analytics is helpful in creating customised campaigns that would reduce the churn rate for the
business. Travel and eCommerce companies are using predictive analytics to personalize
product recommendations to each and every site visitor. Recommender systems are being

17
used to understand the behaviour and preferences of the site visitors and then make a
recommendation that's best suited for them.

Virtual Reality and Augmented

Reality L'Oeal's makeup app uses virtual reality to allow the users apply makeup virtually. It
helps them understand how they would look after using any of their products. Elle magazine
recently made use of virtual reality to create a 360-degree virtual tour of its photo shoot. VR
and AR are helping brands to provide fascinating experiences to their audience. These
technologies are going to play a big role in helping brands to differentiate themselves.

Marketing Automation
Mumsnet is the largest parenting site in the UK. Mumsnet uses marketing automation to run
personalized campaigns for parents. Parenthood is a journey and each one has their own.
Therefore, their pregnancy newsletter is fully automated and personalized. When someone is
about to get pregnant, she can share her due date on their site and she would start getting
educational mailers from that very date. Automation along with predictive analytics makes
your digital marketing campaigns super-productive.

The technology helps you to segment your audience on the basis of their demographics,
behaviour, and preferences. You can know more about them and create customized
campaigns. The additional advantage is these campaigns can be fully automated according to
pre-set triggers and customer actions.

Tools for Digital Marketing

You must ensure you are using the latest tools for managing Digital Marketing for your
business:

Hubspot
Tools such as Hubspot will dominate how businesses manage their leads, campaigns, and
conversions. Such tools provide a single dashboard to manage and measure all of your digital
marketing activities from a single dashboard. An all-in-one marketing cloud software like
Hubspot can help you do everything from storing, managing and segmenting your leads to
creating automated campaigns to analyzing the results from each of these campaigns.

BuzzSumo
BuzzSumo is a unique content research tool that helps you find out content pieces that are
getting the highest number of social shares. It gives you a deep understanding of the type of
content that will do well for your business.

PowToons
Technology now enables you to create professional looking videos without having any
technical knowledge of video editing. Catch hold of tools like PowToons and YouTube video
editor to create videos that your audience can value and share.

Apester
Apester provides content publishers to easily create interactive content types like polls,
quizzes and personality tests.

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Google Trends
Google Trends is a multi-purpose tool that you can use for keyword research, news jacking
and brand monitoring. The tool will play a crucial role in helping marketers hack trends and
stay ahead of the competition.

Storytelling
Most businesses are now creating tons of content to promote their business. So how do you
differentiate your business amidst the existing noise? Creating content that is thought-
provoking and entertaining can help you to grab their attention and engage them for longer.
Content, therefore, takes the form of a story that your audience can enjoy and communicate
with your brand. So, how can you make sure your content is story-driven? Newer content
formats are paving the way for marketers to make sure the content they create is experiential
and influences how the audiences think and act. Formats such as online videos and
interactive contests quizzes and polls will give you a tremendous opportunity to create some
remarkable content. Online Influencers, on the other hand, are playing a big role as creators
of culture. If brands can collaborate with them to propagate their ideas then they are bound to
gain tremendously. Let's now look at how brands are using these storytelling techniques to
break the clutter and build emotional relationships with their audience.

Video Marketing
Video is the type of content that is helping brands to go viral and get more shares and
impressions. Take a look at this heart touching example from dignity health.

Interactive Content Marketing

Siyaram's, the popular textile brand recently created an interactive content marketing
campaign. The campaign was called #10DaysofGoodwill. They created a 10-day contest
during Navratri. The audience was given one new challenge every day.

Contests like these get the audience to participate while tagging their friends and relatives on
Facebook and Twitter. The campaign was a huge success and received 32K organic
impressions on Twitter and a total of 750 participations. Such interactive campaigns can help
you to get a much higher reach and engagement with your brand. Here is another example of
a compelling piece of interactive content in the form of Digital Marketing Quiz from Digital
Vidya.

The quiz has got three levels - Beginner, Intermediate, and Expert. It helps site visitors to
gauge their level of digital marketing expertise and learn along the way as well. The Hubspot
blog topic generator is another piece of interactive content that helps marketers to easily
generate ideas for their blog posts.

Influencer Marketing
Axis Thought Factory is the digital arm of Axis Bank. The company is working on
innovative technology solutions in FinTech sector. They tied up with tech bloggers in
Bangalore, to spread awareness about the brand and what it aims to achieve. They organized
an influencer meet to present their vision to all the bloggers who then covered the story in
their respective blogs. The brand got tremendous results from the activity as #Axis Thought
Factory was trending on Twitter India for one whole day. Every niche has online influencers
and bloggers who have a big audience for their content. You will now find a growing number
of influencers each with a big audience. Brands who will collaborate with them would surely
expand their reach and get better results.

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The First Mover Advantage
Digital marketing is fairly dynamic and if you need to get more from it, you must hack the
latest trends. For example, until a few years back, businesses used to get a very reasonable
amount of organic reach on their Facebook page posts. With an influx of new business pages,
the organic reach fizzled out into oblivion. In today's times, if you are not running a paid
campaign on Facebook, you would practically have no reach on your posts. Similarly, 'live
streaming' on Facebook and Twitter are big now and so are temporary content features such
as 'Stories' on Instagram, Snapchat, Facebook and now Whatsapp.

Quora
Quora is another very interesting platform to solve problems that your audience is facing and
build up a follower base that will eventually give you business.

The experts shown above have garnered millions of answer views and thousands of followers
by consistently answering questions on this bustling community. As a community Quora is
growing and if you wish to showcase your professional expertise then you must not miss out
on this exciting platform.

The experts shown above have garnered millions of answer views and thousands of followers
by consistently answering questions on this bustling community. As a community Quora is
growing and if you wish to showcase your professional expertise then you must not miss out
on this exciting platform.

LinkedIn
You can now do a lot more on LinkedIn. You can use @mentions to tag influencers in your
industry. LinkedIn now allows you to follow those who are outside of your network, view
their updates and engage with them. You can organize and post short interviews with your
customers and industry influencers. You can tag them and leverage from reaching out to a
bigger audience. LinkedIn now also allows you to post videos. You can showcase your
expertise in a smartphone video and put it up as an update on your LinkedIn profile. You will
be surprised by how much value this platform can provide to your business.

Snapchat
If you are marketing to millennials and Gen Z then you can't miss out on SnapChat. The
instant messaging app got popular with it's stories feature which was later copied by
Instagram. The app is still doing very well and has got 178 million daily active users.
Snapchat has got some cool features that its users love to play around with - 60 second snaps,
drawing with emojis and custom geofilters etc. Cedar Point a popular amusement park
created a Halloween centric campaign to get 233% more engagement on Snapchat than on
other social media platforms. Snapchat has got this really cool feature which notifies you if a
user has taken a screenshot of your snap.

Cedar Point created a snap with a ghost footage of less than a second. They then asked their
users to take a screenshot of the ghost as quickly as possible. They rewarded the quickest five
participants in the competition. Similarly, you can use any other unique feature of this
amazing platform to surprise your audience and get them to participate.

20
Mobile Focused Digital Marketing
In the year 2016 Google announced the mobile first index which means that by 2018 Google
will rank websites on the merit of their mobile versions as opposed to their desktop versions.
This move came in because most internet users are perpetually on their mobile phones.

How does that affect your digital marketing?

Here are some tips
1. Make sure your website is mobile friendly and loads faster than three seconds (on the
mobile device too).
2. A mobile audience is more akin to watching video content. So, creating videos can
surely help you more in a mobile first world.
3. Create paid campaigns that are more skewed to mobile users (You'll find yourself
getting better results from the mobile device while optimizing your campaign).
4. You can utilize user location to create innovative and contextual campaigns for your
business.
5. Use live streaming to build deeper relationships with a mobile audience.

Conclusion
It is time to shed old techniques, tools and strategies in favour of those that would bring your
business incremental results. Those businesses that will tell unique stories and provide jaw-
dropping experiences to the target customers are bound to leap ahead of their game. You've
got to watch for the latest features of the key digital marketing platforms and create
personalized and innovative campaigns for your audience.

Knowing your target audience better through technologies like predictive analytics and
machine learning would always work to your advantage. Whatever be the size of your
business, make sure you're aware of what the world is doing, so you can always compete and
stay ahead.

21
 8. Paytm: Capturing the mCommerce Industry in India
(http://www.paymenteye.com)

Our name itself makes an apt calling card! Paytm stands for Pay Through Mobile. In the last
few years we have built a payment system to reckon with in India. Today, Paytm Wallet is
the most widely used virtual wallet in India. It finds use not just on Paytm for its own
services, but also to pay for people’s shopping on many websites outside Paytm. Not just
shopping at online merchants, Paytm wallet also enables P2P transfers

Paytm strategy clearly got its customers used to and trust its wallet. Now this m-wallet is
helping Paytm in its own mCommerce business. It is the only e-tailer in India to have such a
widely used mobile wallet.

Today, the Paytm Cash wallet enables customers to add and maintain balance on Paytm, with
which they can pay for not just Paytm’s own services of mobile & DTH recharge, bill
payments, and shop for millions of items from its online mobile marketplace. Now people
can also buy items outside Paytm at the sites of merchants whom we have tied up with such
as Make My Trip, Book My Show, Home Shop18, Zovi, Fab Furnish and many more.

Paytm Cash has become a virtual currency, and is being more used on-the-go by our
customers using their mobile phones than on the web.

Paytm partners with all major banks of India and gives a PCIDSS certified secure experience
to the customers. This ensures more and more customers feeling comfortable with Paytm
Cash. Customers also prefer using Paytm Cash because it enables them to transact faster –
sometimes as fast as in 7 seconds. This is available to them across all platforms from web to
the popular mobile platforms, on SMS or even on call.

A short journey filled with tall milestones

We started with a closed wallet, where people could only buy products and services on our
own website www.paytm.com. In the latter half of 2013, Paytm Cash was granted a license of
Semi Closed Wallet by the apex Indian Body, the Reserve Bank of India.

Last year, before our launch in Jan, we had 3.3 million wallets. And now the figure stands at
15 million wallets with 6 million saved cards. It is the market leader in virtual payments
space in the country having achieved a GMV of Rs. 1000 Crore processed within the last 6
months. Our wallet has tremendously helped us with driving customer loyalty to our
mShopping destination.

22
Reaching out
Our target market comprises of all those people who transact using online modes of payment.
Our approach to reaching them was two-pronged:

1. Upgrading our old closed wallet customers – 3.3 millions of them. This had to be done a
new as per mandate via permission based marketing.
2. Acquiring new customers through marketing channels of online marketing, offers on our
platforms as well as others, advertising and social media marketing.

Our figures say that the mobile wallet is now gaining success in tier 2 and 3 cities and remote
areas.

Wooing the customers

Paytm is PCI DSS 2.0 certified and uses Verisign certified 128-bit encryption technology.
Millions of users transact on Paytm's secure payment platform each month. It maintains a
robust Fraud Detection & Monitoring System. We keep updating to give our customers even
a better experience. Further, our usability and transaction flow are so smooth and simple, that
the user gets to do a transaction in a few seconds flat!

Supported by a keen 24x7 customer support function, Paytm utilizes the power of social
media to deal with and resolve customer queries and issues at lightning speed. Paytm Care
works on the brief of resolving issues at lightning speed. The way it communicates is also in
sync with the Paytm personality. Every email carries a name and aspires to bring a resolution
at the quickest best.

Once our customers use Paytm Wallet, they get very comfortable using it. If there is any gap
that remains, our marketing steps in to bring in a returning customer and to also acquire new
ones. With offers people cannot refuse, the wallet is growing by leaps and bounds

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9. How Paytm Payment Bank, Airtel Payment Bank are different
from normal banks
Paytm recently launched their payments bank and currently there are four payments bank in
India- Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank and FINO
Payment Bank. Digitalization has taken the center stage now more than ever. Banking and all
other kind of financial services has made its presence in the digital space and it's growing
every day; and the introduction of payments bank is one of them. The payments bank is like
normal banks, they perform almost all banking operation but doesn't engage in any credit
providing service and functions on a rather smaller business scale compared with other
banks. Paytm recently launched their payments bank and currently there are four payments
bank in India- Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank and
FINO Payment Bank. Find out how these payments bank differ from normal banks.

Interest rates: The standard interest rate for commercial banks range from 3.5 - 6%. As of
now, Airtel payments bank is giving the highest interest rate of 7.25% which is a very
attractive rate compared to other commercial banks. Paytm's bank offers an interest rate of
4% on savings account and 7% on FDs whereas, India Post payments bank is offering
between 4.5 - 5.5% for savings account. Some other small scale commercial banks such as
RBL bank offers interest rate of 7% and Yes bank offers interest rate of 6.25% but that too
depends on the deposit amount. As per the RBI guidelines, payments banks cannot lend they
can only take deposits or accept payments. Banking experts believe by offering higher
interest rates on deposits competition in this sector is expected to rise.

Minimum Balance: Most banks levy a charge on its customers in case one fails to hold a
minimum balance in their account. Among payment banks, Paytm payments bank came up
with zero balance account where no minimum balance needs to be maintained and without
any charge. Few banks and digital banking system has also come up with this but most bank
charges for not maintaining minimum balance.

Charges: Normally banks charge a certain amount of fees for online transaction, along with
most payment banks. Among payment banks for online transfers, India Post payments bank
charges Rs. 5 for IMPS and NEFT is free of cost. For online transfers within the bank Airtel
payments bank doesn't charge anything otherwise it charges 0.5% of the transferred amount.
For every online transaction Paytm payments bank is not charging anything, all fund transfer
services like IMPS, NEFT and UPI online transactions are free of cost. Different payments
banks charges differently for cash withdrawals. Paytm payments bank follows the standard
RBI rules of cash withdrawal charges similar to all other commercial banks in India. For the
same, Airtel payments bank charges 0.65% of the withdrawal amount; India Post payments
bank doesn't charge any fee for withdrawals made from their own ATM or any Punjab
National Bank's ATM if not it too follows the same RBI rules.

Process: To open a bank account and the application process of payments bank is made very
easy as compared to other banks. These bank accounts can be opened instantly through their
respective mobile apps just by providing details like Aadhar number with KYC verification.
India Post payments bank offers a free debit card with annual maintenance fee of Rs. 100
from second year. Paytm payments bank is also offering digital debit card for free and an
annual subscription charge of Rs.100 for the physical card. It is also providing its customers
with checkbook for Rs. 100.

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 10. Reliance Jio partners with Samsung to bring IoT to India,
take LTE to 99% population by Diwali
ECONOMICS TIMES

The partnership formed last year between Reliance Jio and Samsung entered its next leg at
the 2018 Mobile World Congress with something new thrown into the mix - internet of things
(IoT). The Mukesh Ambani-led Jio and the Korean tech giant have joined hands to deploy a
nationwide cellular IoT network in India. Both companies have also agreed to extend their
collaboration to bring LTE coverage to 99 per cent of Indian population and improve network
capacity across the country.

The commercial NB-IoT (narrowband internet of things) has already been established in
Mumbai by Reliance Jio and Samsung in February this year. The aim is to roll out India's
first IoT network with new use cases for both the consumer and enterprises such as vehicle
tracking, smart appliances, smart metering, security, surveillance and more.

"Making sure that everyone benefits from mobile broadband that is both available and
affordable to all is our top priority. We will once again partner with Samsung to offer a suite
of innovative services for all users," said Jyotindra Thacker, President of Reliance Jio
Infocomm.

NB-IoT is a Low Power Wide Area Network (LPWAN) radio technology standard which
allows a wide range of devices and services to be connected using cellular
telecommunications bands. The NB-IoT network not only utilises the existing spectrum
owned by Jio, but can also be enabled by a mere software upgrade to the already installed
base stations. The company has also deployed a dedicated cellular IoT virtualised core.

On the question of how long before Reliance Jio rolls out IoT in India, Tareq Amin, Senior
VP (Technology), Reliance Jio said that the company will have to create an entire ecosystem
before the rollout. "Rather than of doing city-by-city launch, we would launch IoT always
pan India. We are not waiting for network readiness, but we are awaiting maturity of the IoT
platform," he said.

Moreover, Jio is hopeful of covering 99 per cent of country's population by Diwali this year.
At present the company has a user base of 160 million subscribers in India. We are deploying
around 8,000 to 10,000 towers every month, Thacker said.

25
"We are delighted to contribute to Jio's success story and rapid growth. We have been
striving to offer the best experience possible to all users at Jio. Jio's LTE network will unlock
the potential of IoT and promise a much more convenient and safe environment for users,"
said Youngky Kim, President and Head of Networks Business at Samsung Electronics.

26
 11. Crowd Funding: Fund Seekers’ New Hope

Crowd funding concept

Crowd funding is the process of one party financing a project by requesting and receiving
small contribution from many parties in exchange for a form of value to those parties.
Crowd funding connects investors with small business startups and projects through an
online transaction portal that removes barriers to entry.

It is an alternative method of raising finance for a business, project or idea through an online
campaign and funding target. The idea is to effectively communicate the concept to like-
minded individuals to seek funds.

Unlike angel investment, where one person typically takes a larger stake in a small
business, a crowd-funded project attracts a large number of investors. It also helps
entrepreneurs establish their brand, get some free PR and make initial sales before their
product is actually ready.

Different types

There are different types of Crowd-funding

1. Donation based funding
2. Investment based funding:

Investment based funding can again be classified into following types

 Equity based Crowd funding (EbC): Also known as ‘Crowd-financing’, is a model
where start-ups are promoted via a platform that also has investors listed with it. The
platform or portal thus links start-ups with potential investors, who may pick up a small
stake in the fledgling venture.
 Debt based Crowd funding (DbC): Funding would be against issue of debentures or debt
securities subject to the condition that the issuer shall appoint a debenture trustee to hold
the assets on behalf of the investors and the issuer shall need to create a Debenture
Redemption Reserve (DRR) of 25 per cent of the value of the debentures.
 Fund based Crowd funding (FbC): The funds of the accredited investors registered with
a recognized platform will be collected online through the platform and pooled under the
AIF to invest in shares or debt securities in crowd funded ventures

Perils of Crowd funding and ways to mitigate them

Crowd funding comes with risk to the investor. Crowd funding markets have been operating
in many countries for several years with few reported instances of fraud. It has
characteristics that require regulatory protection and robust investor education for
contributing meaningfully and successfully to a country’s economy.

The biggest concerns regarding risk are business failure and execution or fulfillment of
challenges. Failure may result from poor management decisions, lack of funds, or miscal-
culations of market demand. Execution or fulfillment challenges may occur in some
successful Crowd funding campaigns when a company is not ready with, for instance, the

27
necessary logistics and manufacturing capacity to meet the demand generated by their
campaign.

These risks may be mitigated through the following approaches:

• Regulation
• Technology
• Social
• Cultural

Crowd funding: Indian context

India is a huge, developing country and enormous economy. It is abuzz with innovation and
entrepreneurs seeking funds to float new ideas. Typically, entrepreneurs raise money for
their fledgling start-ups from angel investors, venture capitalists and even banks. But getting
cash from these sources is a tedious affair, and many small start-ups are not equipped to
handle the paperwork.

Crowd-funding is thus a great alternative to raising funds with minimum risk involved but it
is still at a nascent stage in India.

Potential Gainers
Lack of money becomes a hurdle in the way of talented people. Crowd funding helps to
cross that hurdle and fulfill dreams. Anyone with potential and a dream vis-a-vis Artists,
musicians, painters, dancers, singers, photographers, writers, scientists, event managers
anyone can benefit from crowd funding

Crowd funding minimizes the tedious fundraising process (and its associated time and cost)
so entrepreneurs spend more time on the business. Scrappy entrepreneurs from humble
means are no longer disadvantaged when trying to launch companies from scratch

The key to a successful Crowd-funding project is a great campaign that attracts investors
with a well-defined set of goals and targets

Challenges & Some Legal Know–how

Challenges
 The concept of online Crowd funding is new to the country. The industry is also not very
investor-friendly. It seems people are still not ready for this concept
 Low trust levels of doing the things online are also a challenge. India’s ecommerce space
needs to really mature before anything substantial can happen in this space. People need
to be spending more and more online for them to even start thinking about backing
online projects online
 Ecommerce in India only got a boost when they initiated the concept of cash on delivery.
Similarly, Crowd funding will have to look at building an offline base to finally induce
mass awareness and encouraging larger participation

Legal Know-how
 There are legal issues around Crowd funding in India, since equity-based online Crowd
funding is not legalized in India yet. Many money laundering schemes might run in the
name of Crowd funding via social media, pushing SEBI to set up a regulatory

28
 framework if it is found that such platforms involve large amounts of money or issuance
of securities.
 SEBI has come up with draft proposals which may provide a legal platform for Crowd
funding in India, an alternate funding route for startups in the country
 SEBI has said individual investors must sign a ‘Risk Acknowledgement’ that they
understand the risk of illiquid nature of investment and potential loss of entire
investment, and that they can bear the loss. The issue has to be in demat form and the
payment has to be made through a cheque or a demand draft or another banking channel.
Payment by cash and credit cards shall not be accepted.

Story of Reliance Industries: A Crowd funding success

With Government support, Crowd funding could become a useful tool in the developing
world as well. Interestingly, India has witnessed a massive Crowd funding success story
many years before the term was coined: the story of the Reliance Industries founder
Dhirubhai Ambani.

His small yet growing textile business was crowd funded by communities across the Indian
state of Gujarat. Today’s India with its huge market and human capital has become a
popular destination for global business and other investments that have identified
opportunities. Its Crowd funding however has been restricted to micro financing category
projects, and the occasional donation-reward funding category

Some emerging Crowd funding websites in India

 Fundlined - Fund The Change You Want To See!
 Wishberry - GO FUND YOURSELF!
 http://www.thehotstart.com/
 Fund a Peer – Homepage
 Catapooolt
 Indiegogo: Crowd funding for what matters to you - start now!
 Bitgiving
 Crowd Funding Platform India-Start51
 HomePage | Ketto.org
 Pik A Venture - Empowering Entrepreneurship and Creativity !!
 http://fundmydream.in/

Future of Crowd funding in India

Today, with India having given a decisive mandate to its new leadership, the country is
poised to not just bring its economy back on track but also explore new ways to solve some
of its challenges. It is here where creative concepts like Crowd funding could play a major
role.

More Jobs For Young India: Crowd funding makes it easier for entrepreneurs to access
the early capital they need for their business.

Global VCs Track Indian Startups: For Indian startups to grab attention of global VCs, a
successful Crowd funding campaign with some good traction can go a long way in helping
investors buy into a startup’s offering.

Customer Demand Leads Production: The notion that Crowd funding revolves only
around funds can be misleading. While receiving funds may be the ultimate goal, it is the
29
engagement opportunity with potential customers that is one of the biggest value-adds of
running a Crowd funding campaign. With the delivery time established in the campaign, the
product manufacturers can plan their product as per demand. There are many startups that
have successfully planned and sold products with the help of a crowd funding campaign.
Crowd funding helps maintain a good inventory turnover

Collaborative Teams, The New Mantra: A successful Crowd funding project also requires
the various stakeholders to collaborate for the larger goal. For example a product
manufacturing company will need its production, delivery, sales and marketing teams to
collaborate seamlessly in order to become successful.

Support Beyond Family & Friends: Unlike in some of the Western countries where
government support is a way out in case of financial difficulties, in India it is the family and
friends who tend to be more supportive. With Crowd funding, entrepreneurs may not only
have the support of family and friends but also an extended group of early investors who
believed in the offering.

Fund Innovations For Indian Challenges: Unlike most mature economies, India’s
challenges are unique and more diverse. Crowd funding can help address some of the issues:
such as supporting rural businesses through micro-financing, non-profits needing funds for
causes like poverty alleviation, education, better health, scientific research and business
growth.

Policymakers & Businesses Get together: While lessons from other countries that have
benefited by easing laws are out there to see, promoting Crowd funding in India may also set
a good precedent of having lawmakers, financial regulators and the industry working closely
on issues that affect the country’s progress.

SMEs Can Compete With Big Businesses. With the ability to reach out to the masses
through Crowd funding, the small and medium enterprises (SMEs) have a good shot at
competing with the bigger players who have the money and resources. With the funding
figured, these SMEs can now focus on bettering their products and services. It is widely
believed that if India needs to compete with the global powers, it not only needs large
corporations but also innovative startups to succeed.

Fund Projects For & From The Community. Successful Crowd funding projects like
funds being raised by local residents to build a foot over-bridge as well as other initiatives
that serve a much larger community interest can be a good learning and implemented across
India.

Compete Globally Based Out Of Anywhere. Crowd funding also helps companies go
global. No more does the location of the manufacturing unit or the founders’ office matter,
not as much as the founders’ background and the product itself. Reaching out to the world
has become much easier through Crowd funding.

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 12. The secret behind Patanjali’s rise and rise

PANKAJ GUPTA
DEEPAK HIMAN
VASANT RAMADOSS
http://www.thehindubusinessline.com/catalyst/

The company’s sales and distribution methods help it to keep its costs low too

Patanjali Ayurved, started in 2006 by the famous Yoga Guru Baba Ramdev, has seen a
meteoric rise in the past few years with revenues of ₹5,000 crore in FY16 from ₹450 crore in
FY12. While Patanjali’s combination of low prices, ‘natural and pure’ proposition and
‘swadeshi’ positioning are widely acknowledged to be the reasons behind success, what is
not that well known is the critical role played by Patanjali’s path-breaking sales and
distribution strategy in driving this exceptional growth trajectory.

Patanjali can offer low prices to consumers due to very low selling, administrative and
general costs at 2.5 per cent of revenues. Advertising spend in FY 16 at 6 per cent is also well
below the peer set. Critically, it has kept retail margins at half or lower levels as compared to
competition. The focus of the article is to demystify how Patanjali scaled up distribution in an
intensely competitive retail FMCG environment in India despite low retail and A&P spends.

Distribution strategy
Patanjali has followed a two-stage distribution strategy in general trade (GT):
Stage 1: Create a strong alternative distribution system for demand creation and building
word-of-mouth advocates
Stage 2: Pivot to GT once a sizeable consumer base is generated from Stage 1

Another distribution system

In a new market, Patanjali first drives trials and consumption using dedicated stores. These
stores are essentially Ayurveda clinics, run by entrepreneurs entirely with their own
investment. They are of three types – Arogya Kendra, Chikitsalaya and Swadeshi Kendras.

Patanjali extends support in two ways: It trains and certifies medical practitioners nominated
by these stores in Ayurveda, and provides usage of the Patanjali brand name. This
automatically bestows trust and credibility due to the rub-off effect of Baba Ramdev’s
credentials on Yoga and Ayurveda.

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In return, these stores provide various services. One is free consultation by certified medical
practitioners. This assures high footfalls and likelihood of building a large scale of early
adopters. It serves as a retail store. The entire range of around 200-260 SKUs is stocked
across both OTC, pharmaceutical and FMCG products and there is typically a weekly
replenishment cycle. There is skillful cross-selling across pharmaceutical and FMCG
products. The presence of Ayurvedic medical practitioners at the outlet is a major
determinant of sales. On the days when the medical practitioner is absent, sales fall 30-40 per
cent! The average FMCG throughput per dedicated store is typically at ₹6-7 lakh per month
in a metro.

A powerful network effect is seen at these stores. Early adopters bring in additional footfalls
through strong word of mouth. The fact that a trustworthy consultation is free in an important
area such as healthcare provides a strong hook for passing on recommendations to friends and
relatives.

These stores also serve another function – product introductions are done extremely
efficiently and decisions to continue tweaking or scaling up the product and communication
mix can happen in a short time frame.

Currently, 10,000 dedicated stores (Chikitsalaya, Arogya Kendra, and Swadeshi Kendras)
contribute to 60 per cent of the company’s revenues. In Delhi NCR, one of the older markets
for Patanjali, there are over 400 of these stores whereas in a newer market such as Mumbai,
there are approximately 270 stores.

The pivot to GT
Once a sizeable consumer base is built through these dedicated stores, these consumers
would expect Patanjali’s products to be available at general stores, grocers and chemists in
the vicinity of the dedicated store. These retailers are then forced to stock up on Patanjali’s
products for fear of losing out on a customer’s goodwill. This builds a platform for the next
stage of growth.
Various towns are at different stages of evolution. For instance, the company’s biggest
market, Delhi NCR, is in Stage 2 and is responsible for revenue of ₹1,500 crore.

In 2013, dedicated stores contributed to 80 per cent of total FMCG sales across GT and the
dedicated store network. As consumer awareness and pull were created, GT started stocking
Patanjali’s top products (oral care and honey) despite uncompetitive margins. This pivot to
GT continued resulting in dedicated stores’ contribution falling to around 45 per cent today.

Mumbai is still a Stage 1 market; dedicated stores contribute to around 70 per cent of FMCG
sales across the GT and dedicated store network. As consumer trials and consumer pull is
created, it is increasingly evident that availability in general trade would increase. Higher
incidences of placards outside several outlets stating ‘Patanjali products are available here’
bear testimony to the same.

Alternative channels
While Patanjali’s scorching pace of growth has stupefied most FMCG players, the concept of
winning in alternative distribution channels is not new. Select players have adopted a
“flanker” strategy to bypass competition, entrench their position, encircle and then launch a
frontal attack in mainstream channels.

32
Notable examples include Starbucks’ consumer packaged goods (CPG) business. Starbucks
leveraged its retail store footprint to build a flourishing CPG business. The intent was to
capture a larger share of coffee consumption – reaching consumers whenever they want great
coffee.

The stores provided a perfect platform to drive effective sampling and build partnerships with
retail consumers. Starbucks then enhanced availability through a tie-up with the CPG giant
Kraft. Today, with its own network, these at-home consumption products are now available
in grocery stores, airports, hotels, and convenience stores as well.

In the case of Yellow Diamond Wafers, the company targeted a relatively lesser contested
space – smaller mom-and-pop retailers within the intensely competitive wafers market.
Yellow Diamond also provided higher margins than competition to ensure a very high shop
share with those retailers. In six years, Yellow Diamond grew to ₹700 crore. Yellow
Diamond is now planning to enter the more mainstream bigger retailers.

Developing an alternative channel strategy can help a company create white-space

opportunities and dominate them. This approach is valid both for incumbents as well as new
entrants into the FMCG market. The question is “will a company take risks in a blue ocean
and enjoy the associated upsides or will it try to compete in a red ocean with a classical sales
and distribution approach”? Time and risk appetite will separate the winners from the rest of
the pack.

(Pankaj Gupta is a Sr. Practice Head of the Consumer & Retail Practice at Tata Strategic.
Deepak Himan is an Engagement Manager while Vasant Ramadoss is an Associate
Consultant at the same division)

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 13. Taking wings: Can Udan fly?
BY ANSHUL DHAMIJA FORBES INDIA STAFF

Aviation experts believe the government's big bet on regional connectivity seems to be
paying off, but real success lies in the active participation of budget airlines

When the central government came out with the National Civil Aviation Policy on June 15,
2016, its commitment to ushering in regional air connectivity under Udan (Ude Desh ka Aam
Naagrik) was lauded by all industry stakeholders. However, behind closed doors they
admitted that the scheme’s success was fraught with challenges. Biggest among them was
whether all airlines, particularly IndiGo and Jet Airways, which together account for 58
percent of domestic air passenger traffic, would participate.

In the last week of January this year, the ministry of civil aviation announced that 325
additional regional air routes under Udan were awarded to airlines, including IndiGo and Jet
Airways. This happened through a bidding process, the second in less than 12 months,
wherein the airline with the lowest bid bagged the route. In order to incentivise airlines to
operate in India’s hinterland, the government provides for a three-year monetary support.

The actual break-up of the 325 routes wasn’t disclosed by the ministry and neither IndiGo nor
Jet Airways has publicly announced the routes bagged by them. Emails sent to both airlines
by Forbes India did not elicit a response till the time of going to print.

Given IndiGo and Jet Airways’ interest in Udan, Dibyanshu Sinha, partner at Khaitan & Co,
thinks the government’s big bet on regional connectivity has started paying off.

In April last year, when the first round of bidding took place, IndiGo and Jet Airways were
conspicuous by their absence. While IndiGo didn’t have small aircraft to operate on regional
routes, Jet Airways was evaluating the economics of the Udan scheme. Much has changed
since then.

IndiGo signed an agreement with Toulouse-based turboprop aircraft manufacturer ATR to

purchase 50 ATR 72-600 aircraft, which is most suited for regional air connectivity.
Meanwhile, Jet Airways, which already operates a fleet of 18 ATRs, seems to have seen the
merits of the Udan scheme. As Jitender Bhargava, former executive director of Air India,
says, “While helping to increase air connectivity, it [Udan] provides adequate safeguards for
profitable operations.”

Manish Agrawal, leader, capital projects and infrastructure at PwC India, however, believes
the success of Udan should be measured on the active participation of budget airlines. For
instance, SpiceJet has participated in both bidding rounds and won routes. Besides, the airline
has placed an order for 50 Bombardier Q400 aircraft, a rival to ATR. But the two other low-
cost airlines GoAir and AirAsia India, have not participated in the bids.

“They [budget airlines] have mastered the model of solving [air travel] to small towns. So I
would read more into their behaviour. As long as they participate, I think the objectives of
Udan will be met,” says Agrawal.

34
 14. Good Corporate Governance Always Pays Off
BY VLADISLAVA RYABOTA

Infosys among top three companies on IFC India scorecard despite recent controversies

Corporate governance principles do not follow a one-size-fits-all approach. That would

elude the local contexts in which companies operate, which are key to understanding
practices and behaviours as well as expectations of investors. This is important because each
country’s legal framework is built on historical choices and subsequent developments. No
system is better than any other. However, local and national specifics cannot ignore the
trends of globalisation, the free and immediate flow of information, as well as the resulting
access for investors and stakeholders. Events in one part of the world can have global
consequences and impact any economy. Every time an economic crisis unfolds, investors
learn to their expense that some companies they invested in did not follow good governance
principles. Thus, investors realise that financial data alone cannot give the full picture to
provide the comfort that the company not only talks the talk, but also walks it. Therefore,
over the years, corporate governance has become a predominant topic in discussions related
to investments, joint ventures and partnerships.

Companies worldwide recognise these changing trends and act on them. They recognise the
opportunities that come with embracing good governance. For one, this allows them to
attract more investors. But good governance also enables companies to gain reputation,
which brings with it access to talent, new customers and public recognition.

Some companies in India have been at the forefront of corporate governance for years. The
Securities and Exchange Board of India and institutional actors, such as the Bombay Stock
Exchange and the Institutional Investor Advisory Services, have also played an instrumental
role in raising awareness among market players to help understand the importance of
corporate governance. International Finance Corporation (IFC) has been partnering with
many to participate in this journey of increasing India’s economic footprint in the world.
One of such partnerships has materialised in the Indian Corporate Governance Scorecard,
which was first launched in 2016 and is now celebrating its second edition.

A scorecard is a tool that serves to measure levels of corporate governance for listed
companies. Out of the realm of the regulatory world, it is a voluntary action that serves to
benchmark practices on different topics related to governance and provides useful
information for companies, investors, regulators and stakeholders. Of course, scorecards
have their own limitations: A high score should not be seen as an indicator of current or
future financial performance. The scores also do not indicate the permanency of governance
practices: A company’s governance may improve or deteriorate from the date of the scoring.
Nevertheless, scorecards have been used worldwide and have helped in improving practices
of individual companies and markets in general. IFC has played a key role worldwide in
such an exercise and we are proud to have contributed to the development of the two
editions in India.

The Indian Scorecard is built around 70 questions, covering four essential areas: Rights and
equitable treatment of shareholders, role of stakeholders, disclosures and transparency and
responsibilities of the board. While the driving principles have been those of the G20/OECD
Principles of Corporate Governance, the questionnaire has been adapted to India’s legal and
35
regulatory framework. Therefore, while the scorecard provides information that can serve
the needs of investors and stakeholders worldwide, it also provides a fair representation of
whether the Indian private sector is in line with global and national requirements.

From 2016 up to today’s report, we already see a growing interest in the scorecard. We
initially started with 30 companies and reached 100 in 2017. For the first time, we published
the names of companies with highest scores which, we hope, will boost interest and generate
knowledge-sharing among companies. We are confident that next year’s edition will cover a
higher number and attract even more attention. But it is not only about the number of
companies we scored. Changes have happened at the level of practices and this shows when
comparing results of both years.

In 2016, out of the 30 scored companies, 50 percent reached an overall ranking of either
‘leadership’ or ‘good’ with the remaining ranking either ‘fair’ or ‘basic’. For 2017, the
proportion of ‘leadership’ or ‘good’ reached 60 percent even with the sample size rising
from 30 to 100. This is impressive by all accounts and demonstrates the seriousness of
Indian economic actors in the field of corporate governance. Interestingly, two companies
(HDFC and Infosys) that made it to the ‘leadership’ category in 2017 were there in the 2016
exercise too. One of the factors for this, in addition to high level of governance, is that they
engaged with their stakeholders proactively and maintained processes and systems to
manage them. For Infosys, the scoring has factored in the controversies around disclosure
practices. Yet, on a broader comparable landscape, its governance practices remain high
enough to make it to the top three. We were also happy to see a sharp increase in Wipro’s
score. This happened due to improved disclosures on board evaluation, succession planning
and leadership, areas that remain insufficiently covered by many listed companies.

It is worth noting that this year our results showed a clear correlation between high scores on
the scorecard and financial ratios among banks: Those scoring the highest, see a gain of
more than 1.5 percent on return on assets as compared to banks scoring the least.
Additionally, banks scoring the highest also see a better ratio of gross non-performing
assets, with a staggering difference of 12 percent.

Overall, given the regulatory requirements and the need for Indian companies to attract
capital, most companies score better in the category of disclosure and transparency. In the
remaining three categories, the score range is wide. For example, in the category of ‘rights
and equitable treatment of shareholders’ the highest score was 80, and the lowest 28. The
two categories that need improvement are ‘role of stakeholders’ and ‘responsibilities of the
board’.

What the scorecard shows is that it pays to abide by good corporate governance principles.
Regulators and investors understand that poor governance standards can add negative impact
on cost of doing business, hence their push for better standards. Indian companies
understand this as well, as our results show. We could observe more companies providing
shareholders with detailed transcripts of the previous annual general meetings, enabling
shareholders to ask questions in advance, or even participate via video or tele-conferencing.
Although the number of such companies is still in the single digits, it is clear that they can
score higher should they give it a priority. Evaluation across the four categories shows that
there are companies that achieved an 80 percent score in one area. Next year, we hope to see
companies who get equally high scores across all categories.

36
As they embark on this new journey, companies need to avoid box-ticking, adopt changes
that go beyond compliance to really embrace corporate governance in its key component,
namely behaviours and practices that truly live by the principles of corporate governance.
These are accountability, fairness, transparency and independence.

The IFC, and its India partners, will keep promoting good corporate governance and intends
to remain as a long-time and trusted partner for the development of the private sector.

37
 15. Punjab National Bank: The Great Indian Bank Job
BY SALIL PANCHAL FORBES INDIA STAFF

The ease with which diamantaire Nirav Modi left a Rs 11,000-crore dent in the books of
PNB leaves much to be desired in banking practices

Several of India’s state-owned banks have over the years grappled with the problem of
weakening asset quality and bad loans. This has in turn brought their managements under
the spotlight due to governance lapses and faulty decision-making.

The estimated Rs 11,400 crore fraud at Punjab National Bank (PNB), which came to light in
February 2018, makes the cry louder for the Reserve Bank of India (RBI) or even the
finance ministry to act differently and take remedial action to repose the lost faith in the
functioning of public sector banks (PSBs). A Rs 2.11 lakh crore recapitalisation plan is not
enough.

In the case of Vijay Mallya, where the still-elusive tycoon defaulted on vast sums of money
to a consortium of banks led by the State Bank of India (SBI), the attention of investigating
agencies moved to trying to bring back Mallya to India and little has been done to recover
the monies.

In the PNB case, investigating agencies are pulling the plug on the supposed perpetrator of
the crime—billionaire jeweller and diamantaire Nirav Modi—by attaching his properties,
assets and bank accounts.

There are also bigger questions and fears being raised, to which neither PNB nor the
regulators have a clear answer.

Forbes India spoke to a range of experts, from forensic specialists to banking analysts and
private bank risk management executives, to determine what could be the fallout of the PNB
fraud to the overall banking system and assess how deep this rot runs.

Last month, India’s second largest PSB Punjab National Bank disclosed to the stock
exchanges that it had discovered “fraudulent and unauthorised” transactions to the tune of
nearly Rs 11,400 crore in a Mumbai-based branch, which benefited Modi and the chairman
and managing director of Gitanjali Gems, Mehul Choksi, who has been suspected to be
involved in the money laundering case. Modi and Choksi have fled the country.

PNB officials blame a couple of its staffers at the branch for the fraud, accusing them of
issuing fake letters of undertaking (LoUs) in favour of companies run by Modi. An LoU is a
form of bank guarantee under which a bank allows its customer to raise credit from another
Indian bank’s foreign branch.

The PNB bank staffers misused the SWIFT network—an encrypted messaging system—to
transmit messages to other banks to transfer foreign currency funds, thus circumventing the
‘core banking system’, which ensured that the PNB bank management was unaware of the
LoUs. Alarmingly, these transactions had been going on since 2011 and remained
undetected until PNB disclosed the details.

38
The RBI, in a statement on its website, said that the PNB fraud “is a case of operational risk
arising on account of delinquent behaviour by one or more employees of the bank and
failure of internal controls”.

Systemic Risks
PNB is not alone in its bad lending practices. As on September 30, 2017, more than ₹1.1
lakh crore was owed to various Indian banks by over 9,300 people or companies
characterised as ‘wilful defaulters’, according to a recent The Times of India report. Over 80
percent of this is owed to public sector banks, the report adds.

So here is the damaging truth: More risks definitely exist, particularly where governance and
risk management processes are not well-defined or executed by state-run banks. Further,
there is no guarantee that the LoU-SWIFT route is not being misused, in sectors apart from
gems and jewellery.

“I was not shocked or alarmed by the quantum of the crime, but definitely concerned by the
longevity of the fraud,” says Tarun Bhatia, managing director of Kroll, a US-based risk
management firm, which in India advises clients on corporate due diligence, investigations,
corporate governance and risk mitigation.

Finance Minister Arun Jaitley has come down hard on the role of auditors too. Though local
auditors might not be able to detect a fraud of this nature, experts say that a foreign branch
audit could have detected discrepancies, as the SWIFT system does link up later with the
core banking system through the Nostro account (an account that a bank holds in a foreign
currency in another bank).

“More risks to the banking system definitely exist. The fact that the fraud has happened for
over seven years, in a large branch, in a high-risk industry suggests gaps in the internal and
external audit processes and hence the auditors are accountable to some extent,” Bhatia
tells Forbes India.

Banking analysts insist that PSBs with weak processes are at risk. “What is worrying is the
stark process and repeated instances of similar frauds [like the default of Jatin Mehta-
39
promoted Winsome Diamonds and Jewellery Ltd in 2013-14 to 14 Indian banks. PNB had
the highest exposure here]. PSU banks continue to grapple with weak systems, raising
questions on why the processes are not centralised, unlike most private banks where
bypassing the core banking system is not easy,” Edelweiss Securities analysts Kunal Shah
and Prakhar Agarwal said in a note to clients.

“The process used to carry out the fraud and the exposure risk (from PNB to other banks)
suggest that the malaise could be higher. A fraud of this type can recur at almost any public
sector bank, barring maybe SBI and Bank of Baroda, which have better controls in place,”
adds another banking analyst with an equity research firm, declining to be named. Private
banks are less at risk as questions about accountability and delivery are higher.

“This is one more case of poor monitoring. Serious questions need to be asked about
whether the PNB board and management regularly reviewed management information
systems,” says a risk management officer with a private bank, on condition of anonymity.
The analyst says: “We have kept a sell on PNB [stock] and most other PSBs. We don’t
believe in the people, system or the processes followed by PSBs.”

(This story appears in the 16 March, 2018 issue of Forbes India. To visit our Archives,
click here.)

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 16. New Income Tax Forms Notified:
Five changes you should know
Now, mentioning Aadhar number is mandatory for filling income tax return. You have to
mention the 12-digit Aadhaar number or the 28-digit Aadhaar enrolment number while
filing the income tax return. It's an attempt to simplify the tax filing process and reduce the
compliance burden on the tax payer. The Central Board of Direct Taxes (CBDT), the
income tax regulator, has notified the new simplified income tax return forms for the
assessment year 2017/18. Here are the changes that you should know about.

1) The New ITR- 1 (Sahaj) Form is a one page form and it can only be filed by an
individual with income of up to Rs 50 lakh a year. This will include salaried income,
interest income and income from one house property. "Those who have income of more
than Rs 50 lakh or own more than one house property will have to file ITR - 2 Form,"
said Archit Gupta, founder and CEO, Cleartax.com.

2) In order to account for those who have deposited Rs 2 lakh or more in a bank account
during the demonetisation period, the tax department has introduced a new column
where the person filing the tax will have to give details of the money deposited and bank
account. If a person has deposited Rs 2 lakh or more he or she will mention the IFSC
code, name of bank, account number along with the amount deposited in the income tax
return." At the time of demonetization, it was said by the concerned authority and it
appears that probability to receive notice for cash deposit would be less in case where
cash deposit amount is less than Rs 2.5 lakh that is the exemption limit. Now with this
change that is addition of column "cash deposit in case amount is Rs 2 lakh or more", it
seems that chances of getting notice is increased to explain the source of income despite
the fact that the said assessee is having income less than Rs 2.5 lakh in current year,"
says Sudhir Kaushik, CFO, TaxSpanner.com.

3) Now, mentioning Aadhar number is mandatory for filling income tax return. You have
to mention the 12-digit Aadhaar number or the 28-digit Aadhaar enrolment number
while filing the income tax return. Till last year it was optional to mention the Aadhaar
number while filing the return.

4) The asset and liability column has been removed from ITR- 1 (Sahaj) form. Earlier a
person having income of more than Rs 50 lakh in a year had to declare assets and
liabilities while filing the tax return. It has been done away with in ITR-1 as now a
person with inocme over Rs 50 lakh can't file ITR-1. All the other forms still have the
asset and liability column.

5) The number of income tax forms has been reduced from earlier nine to seven. "Old ITR-
2, ITR-2A and ITR-3 have been done away with and merged to new ITR-2," said Gupta
of Cleartax.com. ITR -2A was filed by those having more than one house property.
While ITR-3 was filed by those having income from business and profession. ITR 2 was
filed for those having more than one house property plus taxable capital gains tax. Now,
if you have more than one house property, taxable capital gains tax or income from
business and profession, then you will have to file new ITR-2 Form. As the ITR 2A and
ITR 3 no longer exist, ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and
ITR-4 (Sugam) respectively.

41