3D Printing; the next tech disruptor?

 “Yes, I’d like a burger and fries, please. But make sure they’re freshly printed, none of the pre-cooked stuff.”

“Sure, printing it right away, would you like us to print your cutlery as well?”

“Of course”

Wondering if this conversation could be something you hear at a fast food joint, soon or an excerpt of a sci-fi movie? 3D Printing has grown leaps and bounds, in its use, cost and how it has begun to seamlessly integrate into our everyday life. The above mentioned discussion may be too much to digest (pun intended) however believe it or not, ‘Additive Manufacturing’ has come a long way in the past two decades, making its way into key manufacturing processes for its unique capabilities. Let’s have a look at what this element of the 4th Industrial Revolution has to offer, and whether its really the disruptor, it claimed to be when it hits the news in the late 90s!

This technology is very different to the manufacturing process from traditional subtractive; CNC machinery or formative; injection molding technologies. In 3D printing, the system reads a 3D model of an object and then, literally, prints the object layer upon layer.

The late 90’s and rolling into the next millennium, the hype of 3D printing grew further, but with the hardware required for this technology still coming at a cost and being bulky in nature, there was still time for this technology to completely bloom.

As processes have become more efficient, machinery more compact and the understanding of the scope of this technology increase in the past few years, has the time come for 3D Printing to deliver its prophesized potential?

To explore this further, it’s interesting to explore how 3D printing is used for its unique properties, array of ink material and the sectors that can benefit.

Light-weight yet strong

The ability to create parts with a high weight-to-strength ratio is particular appealing for the aerospace industry. 3D printers using polyamide (nylon) or polycarbonates are able to maximize strength while keeping structures lightweight. Furthermore, being able to consolidate multiple and complex parts without a seam make additive manufacturing a preferred choice for key components.

As companies become more confident with 3D printing, experts say we are not far from having entire aeroplanes being printed. Currently large UAVs (unmanned aerial vehicles) are already being produced through additive manufacturing.

Jigsaw puzzle:

In 2014, vehicle manufacturer ‘Local Motors’ released the first fully 3D printed automobile, named ‘Strati’ which means ‘layers’ in Italian. The ability to print in steel as well as other durable metals and materials, allowed the manufacturer to print separate pieces and slot the car into life.

One block at a time:

A Chinese construction company, named WinSun Global was able to put together a six-storey apartment block using only additive manufacturing. They later partnered with Dubai Future Foundation and constructed an office block (20ft high x 120 ft long x 40ft wide) in just 3 months, which would’ve taken several years! The printers used a special ink composed of cement, sand, and fiber as well as a proprietary additive.

Iron Man?

The medical industry has seen a huge interest in 3D printing due to its diverse application. Printing in titanium, and malleable metals has become useful for prosthetics and advancements in bionic limbs. The medics have taken really well to additive manufacturing, with many surgical tools, surgical models for training as well as replacements for body parts can be made, adjusting to the unique requirement of patients. Over 90% of hearing aids sold in USA, consists of parts manufactured using 3D printing. As the range of materials that can be printed expands, the uses and benefits have seen a great response from the medical arena, and made complicated surgeries less risky. Additive manufacturing is helping reduce the probabilities of complications in transplants and other biomedical fields.

Fusion of materials:

The ability to use multiple materials as ink, as well as print diverse shapes without a seam, has made 3D printing challenge traditional manufacturing processes. This is an industry with the biggest implication of 3D printing, especially as the commercial use of such printers because widespread due to affordable hardware and easier interfaces. Additive manufacturing has moved on from just being a form of prototyping to actually being a means to a final product, in a cheaper, more efficient and customizable fashion.

Is this a fad or leap in innovation?

Additive manufacturing has found itself breaking boundaries and norms throughout industries and repositioned itself as a means to high-end final products and not solely for the purpose of prototyping. Many casting businesses in India, such as Bharat Forge, use additive manufacturing for key components/complex components Between subtractive and formative manufacturing, 3D printing has built its own presence due to the unique qualities it brings. For highly specialized and complex products, especially to eliminate the need to consolidate multiple pieces, additive manufacturing plays a key role. It also offers a quick turn around time and the geometry of the item is a constraint.

Future scope of printing?

In commercial use of 3D printing, the ability to now print food using edible material such as dough, and mostly anything that can be pureed, as well as the multitude of materials that can be printed, leave the gates open for innovators to experiment and evolve this technology.

Highlights of the Union Budget 2019 – 2020


  1. Income Tax Exemptions
    • In a move aimed at the middle class, Finance Minister Piyush Goyal announced a full tax rebate for individual tax payers earning an annual income of Rs 5 lakhs.
  2. Defence Budget
    • The Defence Budget was increased beyond Rs 3 lakh crore.
    • The Government has disbursed Rs 35,000 crore to the soldiers under the ‘One Rank One Pension’ scheme which was pending for the last 40 years.
  3. Pension for the Unorganised Sector
    • Under the Pradhan Mantri Shram Yogi Maan Dhan Yojana, the unorganised sector workers will get a pension of Rs 3,000 per month after the age of 60.
  4. Direct Income Support for Farmers
    • Under the Pradhan Mantri Kisan Yojana, the vulnerable farmers will get direct income support of Rs 6,000 per year.
    • The scheme is applicable to farmers will less than two hectares of land.
    • This initiative will benefit 12 crore small and marginal farmers at an estimated cost of Rs 75,000 crore.
  5. Gratuity Limited Extended
    • Gratuity payment limit has been increased from Rs 10 lakhs to Rs 30 lakhs.
  6. Interest Subvention on MSMEs Loans
    • GST-registered MSME units will get 2 percent interest subvention on loan of Rs 1 crore.
  7. Simplify Direct Tax System
    • Income Tax returns will be processed within 24 hours and returns will also be paid immediately.
    • The assessment and verification of IT returns will be done electronically without any intervention by officials.
  8. Standard Deduction Raise
    • Standard deduction was raised from Rs 40,00 to Rs 50,000 per year.
  9. Changes in TDS
    • TDS threshold on rental income raised from Rs 1.8 lakh to Rs 2.4 lakh per year.
    • Also, no TDS on bank, post office interest up to Rs 40,000 as compared to Rs 10,000 earlier.
  10. Increase in Direct Tax Collection
    • Direct Tax collections have increased from Rs 6.38 lakh crore in 2013-2014 to almost Rs 12 lakh crore.
    • The tax base has also increased from Rs 3.79 crore to Rs 6.85 crore
  11. Vision 2030
    • Building next-gen infrastructure
    • Focus on digitalising India
    • Making India clean and pollution free
    • Expanding rural industrialisation to ensure massive employment
    • Clean rivers
    • Developing coastlines and inland waterways
    • Make India a launchpad for space programmes by sending an Indian astronaut in space by 2022
    • Healthy India
    • Minimum Government and Maximum Governance with proactive and responsible bureaucracy
  12. Healthcare
    • Ayushman Bharat, launched with an aim to provide medical care to nearly 50 crore people, has resulted in Rs 3,000 crore savings by families.
    • AIIMS are operating or being established of which 14 have been announced since 2014.

Petroleum Politics: US v/s OPEC

On January 10, 1901, an enormous geyser of oil exploded from a drilling site at Spindletop Hill in Texas, USA. Reaching a height of more than 150 feet and producing close to 100,000 barrels a day, the “gusher” was more powerful than any previously seen in the world. Oil erupted for nine days before it could be brought under control with the technology of the time. Although, oil was first discovered in America in 1859 by Colonel Drake, known as the father of American Petroleum Industry, the discovery of the Spindletop geyser in 1901 is considered to be the start of modern oil age.
Within a year, more than 1,500 oil companies had been chartered in US, and oil became the dominant fuel of the 20th century.

With the technological breakthroughs of the 20th century, oil emerged as the preferred energy source. The key drivers of that transformation were the electric light bulb and the automobile. Henry Ford started the commercial production of Model “T” automobile in 1908. This was the world’s first inexpensive, mass-produced car.

As oil was first commercially extracted and put to use in the United States; consequently, pricing power for the fuel lay with the United States, which was, at that time, the largest producer of oil in the world. The dominance of the United States during the first half of 20th century is illustrated by the fact that regardless of where oil was produced in the world, its price
was fixed at that of the Gulf of Mexico.

Beginning with World War I, oil became a strategic energy source and a tremendous geopolitical prize. In 1919, however, the U.S. Geological Survey estimated that U.S. oil supplies will run out in ten years, triggering the country’s first oil security fears. Though the United States produced roughly one million barrels of oil per day, or 65 percent of global oil supplies, more than 90 percent was consumed domestically. Following British and French attempts to shut U.S. oil companies out of regions they controlled in the Middle East, the U.S. government began active oil diplomacy in the late 1920s, insisting on an ”open door” policy that would allow all companies to compete for foreign concessions regardless of national origins.

In the 1930s, Gulf Oil, BP, Texaco, and Chevron were involved in concessions that made major discoveries in Kuwait, Saudi Arabia, and Libya. Based on those discoveries, a cartel of seven companies was formed that controlled the world’s oil and gas business for much of the twentieth century. Known as the Seven Sisters, they included: Exxon (originally Standard Oil), Royal Dutch/Shell, BP, Mobil, Texaco, Gulf, and Chevron. Five out of these seven companies were American.

Oil production in America was not able to catch up with the fast pace of industrial development. American reliance on imported oil, which began during the Vietnam war, increased further during the economic boom period of the 1950s and 1960s. Here’s a snapshot of America’s dependence on imported oil since the 1940s:

* in the late 1940s, for the first time, the US began to import oil
* in the 1950s, 10% of US oil consumption was imported
* in the 1960s, 18% of US oil consumption was imported
* in 1973, the share of imports in US oil consumption reached 30%
*By 1977, share of imports in US oil production increased to 50%

America’s dependence on imported oil provided Arab countries and OPEC (which had been formed in 1960 to counter the hegemony of Western oil companies) with increased leverage to influence oil prices. The Seven Sisters controlled much of the oil market till the early part of 1970s. However, the 1973 oil shock swung the pendulum in OPEC's favour. That year, in response to U.S. support for Israel, OPEC and Iran stopped oil supplies to the United States. Further, events like the disintegration of the Soviet Union in 1991 and Asian Economic Crisis in 1997 helped OPEC strengthen its control over oil prices.

OPEC presently holds 40% of the world’s conventional oil reserves and has the world’s lowest barrel production costs. This enables it to have a wide-ranging influence over oil prices. Thus, when there is a glut of oil in the world, OPEC cuts back on its production quotas. When there is less oil, it increases oil prices to maintain stable levels of production.

In the last 3 decades, The Shale Industry in the US has been able to increase production to a major extent, which has reduced US’s dependence on imported oil. Shale oil is generated in Shale rock through processes like Pyrolysis, hydrogenation and thermal dissolution. Extraction of oil from Shale Rock formations, however, is costlier. Shale oil drilling in US picks up only when crude oil prices are expected to sustain above $60 for a long period. The significant fall in crude prices during 2014 to 2017 forced many shale oil producers in US to shut shop. Presently, US imports 20% of its oil demand.

To conclude, regions that hold pricing power over oil control vital levers of the world’s economy. Conspiracy theories in political circles widely acknowledge that the wars such as Persian Gulf war, US’s movement of troops to Saudi Arabia to forestall invasion, Iraq wars, etc. had control over oil production and prices, rather than “preservation of democracy” and
religious reasons as the main intent. The United States controlled oil prices for a major part of the previous century, only to cede it to the OPEC countries in the 1970s. However, the technological advancement in extraction from Shale Rock formations might shift the power back to US in the years to come. Also, US’s focus towards greener resources of energy might tilt the balance in future.

Our investment Adviser, Anurag Roonwal penned his thoughts about Petroleum Politics.

Poker Face – A Strategy

Poker Face – A Strategy
noun
An impassive expression that hides one’s true feelings.

Movie:
My introduction to this concept was in my early childhood. One of my favorite book and movie is ‘The Godfather’ written by Mario Puzo. I was fascinated with it, enthralled by dialogues such as ‘It’s not personal; it’s just business’, mimicking them in my not so great Italian ascent. But the most important thing I took away from the movie is how not to negotiate. They show that sunny (godfathers firstborn) showed his interest in a drug deal which the Godfather refused; which resulted in godfather being shot. This is what I took away from the movie. In Business whether it’s your colleague, boss, client or vendor they should never know your thoughts. You should be impassive at all times, this is absolutely critical during times of negotiations. If the opposing party can determine high level of interest, the price if not going up will at least not budge from the current price.

Game:
We cannot discuss poker face as a strategy without discussing poker. If godfather introduced me to this concept, poker developed it. Poker is different from the other gambling games i.e.  you do not play against the house, you play against each other. The best way to describe poker is you don’t play the odds, you play the man. The biggest test in poker is your
opponents should not be able to read your thoughts & game. Bluffing in poker and catching a bluff in poker is a tremendous negotiation skill to have. It requires two things – acute observation and absolute control on one’s expression. This is one art which all the negotiators need to master.

 

The Corollary:
The corollary to having a poker face is being observant to others, deciphering their motives through their expressions & behavior. Reading people is an art which helps you not only in business but in all aspects of life. The observation prowess helps you go into detailing of each aspect of your business. You need not be the most brilliant person in order to be the best communicator. You can have a more successful meeting by changing the agenda of the meeting by seeing the client’s reaction.

The Conclusion:
Poker face & observation are like yin & yang, they are incomplete without each other. You can pickup, develop and hone these skills not only in the business world but also by doing things you like i.e. playing poker, reading books and watching movies!!
For me this is the single most important quality I would look in the person whom I appoint to negotiate on my behalf. What about you?

Contributed by guest author Shreyam Shah, CEO Tee Venture (India) Private Limited.

 

An overview on the Indian market roller coaster

Following my colleague Siddhant Shah’s overview on the markets extra-ordinary rally in July, let’s have a look at how the markets have fared in the past few months. My colleague left us speculating whether the rally was sustainable and backed by an uptick in value, or was it another bull run driven by market sentiment. Let’s find out what followed…

NIFTY at 11000 Levels

The Indian equity market was trading at lofty valuations because of high liquidity in the market from DII’s and individual investors post demonetisation. Being amongst the top emerging countries with government revamp plan to bring various new policies and amend the existing ones for ease of doing business attracted foreign inflows too.

 

Global woes with domestic liquidity crunch

The boiling of crude price, depreciation of rupee, Fed rate hike along with US-China tariff war, and ballooning current account deficit in India were not the only concerns for market to correct. In August end and early September, ICRA, CARE and Brickwork Ratings, and other rating agencies downgraded IL&FS group’s various long and short-term borrowing programmes worth over Rs 12,000 crore to ‘default’ or ‘junk’ grade. This created liquidity fear in the debt market.

The above mentioned global worries created sell off pressure by Foreign portfolio managers dragging the Indian market further.

Further, in second half of September,DSP mutual fund sold commercial paper of Dewan housing at a higher yield indicating further liquidity crunch in debt market. This led to a contagion effect in the equity market.

Why are NBFC and HFC stocks under pressure?

NBFCs and HFCs have raised significant borrowings from debt schemes of Mutual funds. A further default will trigger sell off button from fund managers and retail investors putting pressure on equity markets too. This panic would eventually lead to corporates redeeming their investments in debt schemes of mutual funds which would further add pressure on the NBFCs and HFCs.

Rift between RBI and Government with looming State and Central elections

The rift between the RBI and Government has also created extremely bearish narratives. However, softening of crude prices and halt in Rupee’s depreciation along with rising foreign indices are reflecting on Indian markets.

Various State elections are due in this month and the results to be announced in December and Central elections in May 2019are key events in a near future.

Mixed sentiments would continue till Central elections with market volatility to increase further as the events draw closer.

Do long term investors need to worry?

The market sentiments have been impacted by tightening liquidity on account of global and domestic factors enumerated above. The growth in cement volume, uptick in sale of Commercial vehicles and increase in casting volume in this result season are some of the early indicators of turning of Indian economy implying long term bull outlook to remain intact.

Wealth Mantras:Adding on dips would act as catalyst for long term investor in volatile market. Stay invested in quality stocks.

Moneybee group wishes you and your family a happy Diwali and prosperous new year.

A quick market overview by Hardik Solanki, Investment Adviser, Moneybee Investment Advisors Private Limited

What if Shri Narendra Modi runs your business?

         What if Shri Narendra Modi runs your business?

You may be a believer or a non-believer, a follower or a critic – but one thing everyone must agree that Mr. Modi is a master manager and knows how to run the show. He will surely go down in the history!

Have you ever wondered if we can apply Modism to your day to day decision making? How does it affect our HR policies, financial planning, marketing, technology, laws, competition and various other matters.

As a Growth and Turnaround Advisor, here are few interesting Modisms that we can try and apply in our businesses.

Modism No. 1: Outside capital can spur and revive current business

Money is to business what blood is to our body, free circulation of both is very much necessary in the life. Modi recognized this principal very early. During his term as, chief minister in Gujarat he knew that fiscal deficits is something the nation should work on.Reviving India`s fledging economy constituted the central theme of Mr. Modi.  He focused on attracting Foreign investments in India by initiating the Make in India scheme in September 2015, announcing the ease of doing business allowing 100% FDI in almost all the sectors.Taking this into mind, a businessman must plan the cash flow in order to stay on the field for the long run. One needs to strategize the outflow based on the requirements at the same time always check the inflow equity vs. debt.

Modism No. 2: Hire the right man for the right job!

Every Business follows a plan even if it’s not written down in a document. But developing and implementing strategic change needs a team who can execute the way it is required. Mr. Modi is a visionary and a hardcore strategist. One would be aware of how Mr. Modi successfully headed the Pragati Project where as many as 180 out of 350 stalled projects in the states in key infrastructure areas which were delayed for several reasons for a period of 4 to 15 years were on track again. This was done with the help of dedicated team of cabinet secretary P.K. Sinha, who reviewed various delayed projects in the centre and placed for discussion on the Pragati portal based on their relevance. This helped Modi to speed up the infrastructure in India. In business one should take a note that hire the best man for every job.

Modism No. 3: Back your team

सरकार वो ही, मुलाजिम वही, दफ्तर वही, फाइल वही, आदत वही, लोग भी वही। काम हुआ कि नहीं हुआ

Mr. Modi has been in the forefront when it comes to developing skill sets amongst the citizens of the country. To get the work done one needs to solve the problems faced by the employees for their smooth functioning. Mr. Modi knew that the grievance redressal team was stacked with a backlog for various reasons. When went into the roots he realized that the team was divided into 2 areas due to lack of space and physical processing slowed down the processing of petitions.Within few months the process to free up the space to integrate the team was done and online petition platform was formed which reduced the processing time as well as helped to move toward paper-free environment. In the same manner one should help all the employees in every department of the company to develop essential competencies so that they can work efficiently and effectively and also motivate and encourage the young managers and leaders of the company which will help the company to have a sustainable growth for the future.

Modism No. 4: Use technology to eliminate middlemen

Procurement has always maintained an essential role in the business and has a link to the business success, whether by reducing cost or by sourcing for key material for the organization’s operation. Recently, the role of procurement has become more critical in the ever-increasing competitive market to be cost effective.  Just like he has eliminated the need of middlemen by connecting the producer and buyer by creating a marketplace. This should be replicated in the company’s business model by which the total cost of procurement of products and services will considerably go down.

Modism No. 5: Market Market Market!

Marketing serves as the face of the business. Everything in the business depends on marketing. No sales equals to  No company. One needs to develop a brand by promoting the product and creating awareness among the customers. This will give a competitive edge in the industry. The best example is Make In India which he promoted during his foreign trips by holding meetings with businessmen of the countries concerned. He globally promoted and increased the brand equity of India.

Modism No. 6: Take decisions and be persistent

Willpower is that inner fire that gets you past the naysayers, obstacles, challenges and inevitable failures.  No one can give it to you, and no one can take it away. Use it as you see fit.  Mr.Modi`s willpower and vision in making India bright and puissant has helped him to grow. With all his strong desire and decision power he is attracting the world towards India. There are always ups and downs in the business. This can be overcome if one has the willpower to go ahead and tackle the situation.

Modism no.7 Simplicity:-

No matter how complex a task, break it down to the simplest elements!

Thus, if our Respectable Prime Minister were to run my business then there is no doubt that the business will witness a sound and steady growth while satisfying all stakeholders like customers, employees and suppliers. He will be successful in creating a sustainable and robust business model. We would love to hear your thoughts on some of the modism that can be effectively put to use in day to day businesses.

This article is penned by Khushbu Gandhi, Investment Adviser, Moneybee Group.

Nifty’s July 2018 rally: Is all well?

The 50-stock index hit an all-time record high as it clocked in at 11,200 on Friday 27th July. With 54 percent of the index trading above its 200-day moving average, it’s a worth dissecting this movement before we all proceed to cut the cake.

Time to celebrate?

The movement over the last few months begs one to search a little deeper into last weeks all-time high. The last time such a portion of the Nifty was driving the rally to a peak was ominously January 2008, when 52 percent of the constituents traded above the technical level.

Furthermore, data shows that over the past few years, such an upward movement has pulled the mid-cap and small-caps as well, however this reassurance is missing in the recent rally, with BSE MidCap and BSE SmallCap indices losing at 9.27% and 12.36%[1], in the past six months, whereas Sensex added 4.05% in the same duration.

FANG in India

As for other similarities, experts are beginning to draw a parallel to this movement to the rally driven by FANG (Facebook, Amazon, Netflix and Google [Alphabet]) stocks in the US. Just as the recent decline of Facebook’s stock by 20%, the recent rally poses a threat brought about by the major drivers for the overall market.

So who’s to blame and who’s to thank?[2]

ITC; The FMCG major itself contributed a rise of more than 125 points on the BSE Sensex in the morning trade on Friday 27th July. The scrip rallied more than 5 per cent post its reassuring Q1 earnings.

The company on Thursday reported 10 per cent increase in standalone net profit at Rs 2,818.68 crore for the first quarter ended June, compared to a standalone net profit of Rs 2,560.50 crore in the first quarter last fiscal. This rise is supported by lower expenses, good growth in agri-business and other FMCG business despite a decline in it’s cigarettes sales.

Robust buying in oil-to-telecom titan Reliance Industries and private lender ICICI Bank further reinforced the 50-share index. RIL, HDFC Ltd. And ITC, which make up 3 out of the 4 heaviest weighted stocks of the index (in itself accounting for over 20% of the index), all outperformed the market, and strained the rally. One cannot deny the rise in other stocks to propel this growth with ICICI Bank posting a rise in net profit, however what is alarming is that 18 stocks of the BSE barometer were trading lower, down by over 10%.

Although TCS and Hindustan Unilever, served as the heavyweights that would average out this spurt, the market still saw a leap. UBS Securities India outlined, such outperformance of stocks is seen during currency weakness and risk aversion.

Nifty’s Top Point Contributors[3]

Name Point Contribution
HDFC Bank 121
Reliance Industries 88
HDFC 85
Infosys 65
ITC 64

 

Nifty’s constituents by Weight: https://stocksandsecurities.adityabirlacapital.com/equity/nifty-weightage

BSE Sensex’s constituents by Weight: https://stocksandsecurities.adityabirlacapital.com/equity/sensex-weightage

 

Other Factors:

FII comfort: Data showed that foreign institutional investors made sizeable buying on Thursday, which further supported sentiment. Foreign portfolio investors (FPIs) bought shares worth a net of Rs 2,453.57 crore.

Investor Optimism: There is an overall positive sentiment with corporate earnings for the June quarter boosting investors confidence. Bullishness in the stock is further highlighted in the huge put selling witnessed on the derivatives counter Friday pre-results. This is derived from a revival in earnings growth, prospects of a good monsoon, and quiet on further global trade barriers.

What Next?

Overall, the markets are likely to remain volatile over the next few months amid global conflicts over trade, as well as a tightening on excessive liquidity which has affected the global markets. We may see a slight correction on stock driven rally, but investor sentiments are likely to be governed by the prediction of the outcome of next years’ election.

This article is penned by Siddhant Shah, Moneybee Investment Advisors Private Limited.

[1] ‘Mint’ (2018) Article  – ‘Sensex, Nifty at new highs, but why is the current market rally so different’, Newspaper (31 July 2018)

[2]Economic Times (2018) Web Article – Link //economictimes.indiatimes.com/articleshow/65160890.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[3] Bloomberg Quint (2018) Web Article – ‘Nifty’s Rally To Record Has An Eerie Similarity With 2008-Peak’ (Since 23 March 2018)

 

Moneybee Bookshelf

Here is a sneak peak into what Team Moneybee is reading in the rainy weekends and their views.

  1. Elon Musk by Ashlee Vance – A book about how one man is changing our future in cars, space, solar and transport. It is interesting to note that how innovative businesses required 100% commitment of time, energy, money from not only the promoters but also the team involved. It is an interesting read in future and has amazing lessons on entrepreneurship [which as bankers we think is the need of the hour].
  2. Marching with a Billion by Uday Mahurkar – A critical evaluation of the current Indian government in power in 3 years. It makes an interesting read to who follow politics and policy making.   The book also touches upon the sensitive area of demonetization and  other areas of governance like foreign affairs, finance, digital technology and agriculture. Everything is spoken.
  3. Think and Go Rich by Napolean Hill – Success comes to those who become success conscious. Failure comes to those who indifferently allow themselves to become failure conscious. Think and Grow Rich by Napoleon Hill examines the psychological power of thought and the brain in the process of furthering your career for both monetary and personal satisfaction. The object of this book is to help people learn the art of changing their minds from failure consciousness to success consciousness. Riches begin with a state of mind. If we want to get rich, we must first change our minds so that we become, as Napoleon Hill calls it, money conscious. He says that we must literally THINK ourselves rich. The term riches by the way could mean any form of wealth like money, happiness, healthy relationships, business success etc. This book offers the How-To of the aforementioned concept. It shows us how we must think to become money conscious. It shows us how to think ourselves rich, how to control our minds and our thoughts so that we can become rich.
  4. The Subtle Art of not giving a F*ck by Mark Mason – A New York time bestseller is a self help book to embrace your problems in this “perfect moment selfie”obsessed world. It is the opposite of every other book. Don’t try. Give up. Be wrong. Lower your standards. Stop believing in yourself. Follow the pain. Each point is true, useful, and more powerful than the usual positivity. Succinct but surprisingly deep, I read it in a weekend. Worth It.
  5.  Common Stocks & Uncommon Profits by Philip A Fisher was published in 1958. The book propelled him to his now legendary status as a pioneer in the field of growth investing. In the book, Fisher has outlined the essence of his approach to hunting quality stocks – “Scuttlebutt”, which basically means conducting detailed interviews with stakeholders – suppliers, customers, shareholders, employees and competitors about a company’s prospects. Apart from elaborating on “what to buy”, Fisher also enlightens his readers on “when to sell”, which according to him is “almost never” by treating a stock not as a trading chip, but as part ownership in a business. Published in 1958, the book is still a required reading at the author’s alma mater, Stanford Graduate School of Business.
  6. The everything Store – Jeff Bezoz and the Age of Amazon by Brad Stone

    courtesy Loose Gravel Press

    absolute brilliant insight in this internet giant and its founder. Learning from interesting Management Theories to lessons of frugality to passing all VUCA metrics. Study on how a company survives market meltdowns and changing legal and regulatory framework. And the most important – how a company this big can reinvent itself again and again with acquisitions, amazon web services, kindle, prime, music etc. A true story of CUSTOMER is the KING.

Let us now in comments what are you reading this monsoon.

Team Moneybee

Indian Sports Goods Industry: The Game is changing

In a Cricket crazy nation, other sports are slowly but definitively holding ground. Indian Super League, Pro Kabbadi, Premier Badminton League, Hockey India League have come and are here to stay.

Along with the sports and the sportsmen, it is important to develop sports eco-system as well. There are leagues promoting both professional as well as recreational sports. Startups like Sports Gurukool, Kooh Sports, who are reinforcing different sports at school level. Sports festival like Indian Derby weekend in Maharashtra, Jaisalmer Desert Festival in Rajasthan, Khel Mahakumbh and International kite festival in Gujarat are encouraging sports tourism internally. Global giants such as Decathlon, the North Face are entering India. New age companies like SportsQ (Continuous cycle of assessments and improvements to sportsmen in the areas of Physical Fitness, Sports Nutrition, Mental Toughness and Genetics) Spotrz Village (events, after-school sports, sports sponsorship, sports tickets, school sports, and sports technology – primarily at a grass root and recreational sports level) Sportskeeda: (It is the biggest all sports website in India, with over 160 mn page views monthly. Users engage in this website, read, write and post their view. This website also offers news, real time updates and videos) are changing the way sports is perceived in India.

However, one always forgets the person who makes the bat or buffs the seams on the footballs. Who makes sports towels or the all-important yoga mats. The sports goods industry in India is an old one and its worth looking at. In India, the Sports Goods Industry was founded by Sardar Bahadur, Sardar Ganda Singh Oberoi in the year 1883 at Sialkot.

Sports Equipment became the first Indian Industrial Product to be exported in 1885.”

India is among the largest sports goods manufacturers in Asia after countries like China and Japan. Although its share in global trade is only around one per cent.

The towels produced every year for the prestigious Wimbledon Grand Slam tennis tournament are produced in a factory in Gujarat (Welspun India), while footballs used in many of the international football tournaments across the globe are manufactured in the city of Jalandhar.

The Indian sports goods industry manufactures more than 300 items.

United Kingdom is the one of the major importer of sports goods manufactured in India followed by countries like USA, Germany, France and Australia.

Facts of Sports goods industry in India

 

 

 

 

 

 

Manufacturing clusters of Jalandhar and Meerut:

Jalandhar

This cluster is called a transplanted cluster, as a major segment of this cluster, which was originally part of Sialkot of undivided India, moved to Jalandhar on India’s partition. It is an important supplier of quality sports goods to more than 130 countries including some of the developed nations of the world. The Jalandhar cluster is also the only cluster to introduce the concept of machine-stitched footballs to meet the demands of the FIFA world cup 2010 and beyond.

Meerut

There are about 1,250 registered and 2,000 unregistered big and small sports goods manufacturing units providing direct and indirect employment to approx 70,000 persons in the Meerut District of Uttar Pradesh.

The above clusters are providing employment to more than 500,000 people.

India also has some niche manufacturers in Sports goods. Companies like

  The company is into business of manufacturing golf balls and it is India’s only and exclusive golf ball manufacturing unit with current installed capacity of 12000 dozen balls per day.

 

The Company was established in 1980 and is a public limited company listed on the stock exchanges in India. It is a leader in Sports Goods in India having a very wide range of products for many sports like Football, Volleyball, Cricket, Tennis, etc. The company makes available health & fitness equipment of international quality and of renowned world brands as well.

Sports goods industry in India is highly underdeveloped and needs push from both government and private players. Increasing importance of sports at schools and colleges help domestic consumptions. As an emerging Indian sportswear brand “Shiv-Naresh” is leveraging the growing popular culture of sports in India.

This article is penned by Ritesh Mistry, Investment Adviser, Moneybee Investment Advisors Private Limited. For more details, please email on ritesh@moneybeeadvisors.com

 

Vehicle Scrapping – What, Why & How?

The Indian Government has decided to scrap commercial vehicles older than 20 years which can be upto 700,000 units in a year.. The current total Indian CV capacity is 3.5mn vehicles and this program will benefit OEMs and Auto Ancillaries emmensly.

OEMs to benefit:

  • Tata Motors – 44% market share in MHCVs
  • Ashok Leyland – 34% market share in MHCVs
  • Volvo Eicher Commercial Vehicles – 5.2% in Heavy Duty Segment

Auto Component manufacturers to benefit:

  • Wabco India: 65% revenue from M&HCVs
  • Jamna Auto: 85% market share in leafsprings with OEMs
  • Setco Automotive: 85%+ OEM market share in clutches in MHCVs
  • Harita Seatings: 18% of the business comes from MHCVs
  • Bharat Forge: 15% market share in OEMs in MHCVs
  • Bosch: 26% contribution from Indian OEMs in MHCVs

Older vehicles, typically more than 10 years of age and pre-BS I compliant, constitute 15% of the total fleet but pollute 10-12 times more than a new vehicle because of drastic change in pollution norms, thus, there is an urgent need for implementation of this scheme.

 

 

 

 

 

 

 

Fuel efficiency

The program will result in improvement in fuel efficiency with the new vehicle replacement. This would lead to lower oil consumption to the tune of 3.2 billion liters per year translating. Crude oil import savings will also be higher to the tune of Rs 7,000cr. MHCVs (both buses and trucks) will account for ~55% of these fuel savings.

Benefits OEM Suppliers

The policy would boost sales of OEMs leading to higher production capacity utilisation and the automobile manufacturers would support the government in this initiative “financially by giving special discounts to customers buying vehicles under this scheme”.

Scrappage policy expected to come in by Apr-20 will be a major growth driver for the CV industry. 200‐250K vehicles will come under the ‘over 20 years’ scrappage policy while in case of a scrappage policy for vehicles older than 15 years, ~600‐700K units will need to be scrapped.

Besides reducing emissions, it generates steel scrap worth Rs. 11, 500 annually, reducing steel import burden.

Though manufacturers are lauding the move, they say the impact will play out over two to three years. According to them, transporters are unlikely to rush to buy vehicles immediately.

How the policy will be implemented?

The programme will follow a structured implementation and execution process, coordinated between the vehicle owner, the recycling and shredding center, OEMs, dealers and government representatives.

Implementation Hurdles

Change of hand

Given that commercial vehicles change hands two to three times during their lifecycle, the government has to work out ways to issue tradeable certificates which would incentivize the last owner to scrap the truck and subsidize the purchase of the primary buyer. This will in turn create a win-win situation for all stakeholders and make the overall dynamics of commercial vehicle trade more vibrant.

Incentives

Levers Proposed Scheme
Scrap Value Part of scrap value from old vehicle to be given as payback
OEM Discounts Special discounts to be given as incentive
Excise Duty Upto 50% ecxcise duty to be passed on as incentive

Fragmentation

The CV industry remains heavily fragmented, unorganized and very rough in nature. The fleet owners are heavily fragmented in India, with more than 80% of the fleets owned by people having less than 10 vehicles, which gives birth to the intermediaries. There are multiple entities involved in the entire transaction and multiple activities happen in the background before the vehicle can actually be in-transit.

Infrastructure required

The most critical enablers required for smooth implementation of this programme are robust IT infrastructure (ensure measurement of programme effectiveness through MIS generation) and setting up of Recycling and Shredding Centers.

 

Global practices

Scrapping of End of life vehicles is carried out all across the world wherein vehicles are shredded and the metal content is recovered for recycling, while in many areas, the rest is further sorted by machine for recycling of additional materials such as glass and plastics. Approximately 10 million vehicles are recycled annually. The successful ones in the CV space have been Japan and Germany, where post the incentivization scheme, truck sales increased by 9% and 17% respectively.

Currently, 75% of the materials are able to be recycled. As the most recycled consumer product, end-of-life vehicles provide the steel industry with more than 14 million tons of steel.

Moneybee View

New vehicle purchases will be even lower

Over 20-year old trucks normally ply in rural areas (national permits are typically for 12 years, state permits for 15 years) as vehicles with high operating costs are not viable on long distance routes. Consequently, it is unlikely that these operators will purchase new vehicles to replace the older ones. While new purchases may lead to higher replacement demand in the long term, in the near to medium term (i.e. after 2020), the impact could be limited. This is because any incentives of buying a truck may eventually flow through to fleet owners that were already looking to purchase new vehicles.

 

Long way between now and 2020

The policy has yet to be approved by the GST council. Further, we believe there is a high possibility of the policy shifting between now and 2020, considering the election cycle in 2019 and likely lobbying in the interim. A similar policy with detailed calculations was floated about 2 years ago (with age criterion at 15 years). Hence, we would be surprised if the scrappage policy were to be implemented as currently envisaged.

 

Conclusion

Overall, while the policy is a step in the positive direction, the boost to volumes could be limited. Adoption of BS VI standards by itself will reduce HDV emissions in India, but the near-term benefits are restricted because older, poorly maintained vehicles will still contribute most of the in-use fleet emissions in the near-term. Both direct and indirect subsidies are key in supporting a scrappage program, as is the early introduction of the cleanest vehicles available. Sufficient financial subsidies, offered by government and manufacturers, can reduce, or even eliminate the price gap led by the technology improvement between BS IV and BS VI vehicles.

This article is penned by Sneha Prashant, Investment Adviser, Moneybee Investment Adviser Private Limited. For more details please call on +91 22 4030 2090