Why is Nomura upbeat about Indian tyre industry? Apollo Tyres, Ceat & Balkrishna on its radar

    Global research firm believes that the Indian tyre industry is witnessing a phase of cyclical uptick in demand.

    The industry fundamentals are in a better shape now due to the demand and high utilization as well, analysts at the firm wrote in their report.

    It sees 8 percent volume CAGR over FY18-21.

    The segment is a good play on the back of healthy growth outlook, pricing discipline, and benign commodity prices, which will support margins.

    Further, the benign commodity prices could also lead to 20-25% EBITDA CAGR over FY18-21.

    Nomura expects strong demand scenario to keep utilization healthy.

    Among stocks, it has initiated coverage on Apollo Tyres with a target at Rs 288, along with Ceat and Balkrishna Industries.

    On Ceat, it neutral with a target at Rs 1,346. In case of Balkrishna Industries, it is also neutral with a target at Rs 1,008.


    One Man’s Mission To Teach More People Of Color How To Code

    Photo credit: Pexels.comPixabay

    Antoine Patton is on a mission: He wants to teach more people of color to code. His goal is to help 2,020 people learn how to code by the year 2020. Patton wants to increase gender and racial diversity in the tech industry. “If more people of color had easier access to learn how to code, program, project manage…then there would be a lot more people of color in tech,” Patton asserts. “[There would be] a wider pool of people for employers to select from and hence a lot more diversity.” It’s no secret that diversity is lacking in the tech industry. When looking at the demographics, women, Blacks, and Hispanics are grossly underrepresented. One study found that 70.6% of computers programmers in the United States were White. The 2018 diversity report in major tech companies like Google, Microsoft, and Facebook reflect similar findings. And while it is commonly understood that the STEM field lags behind in this area, it has been difficult for companies to make strides toward increased representation.

    Antoine Patton teaching his daughter, Jay Jay, how to code.Antoine Patton

    In an effort to close this gap, Patton has made it his mission to teach others how to code, offering free online classes. Patton first learned to code in 2011 while incarcerated. He found a book on JavaScript and began teaching himself. He was then mentored by another inmate who was proficient in computer programming. Patton’s mentor made him promise to pass the knowledge he shared with him onto others once he was released from prison. Patton stayed true to his word and began sharing his knowledge of coding with others. Before becoming the chief technology officer at his software consulting firm, Patton worked at three different tech companies and had over 50 freelance jobs. He teaches the coding courses through an online school he is developing called Unlock Academy. The purpose of Unlock Academy is to teach others about the tech industry and to educate people about the essentials of programming. The coding classes are taught in a live and interactive environment, that allows students to ask questions. After completing the course, the participants are connected with business owners who can provide internship opportunities. Patton is adamant about teaching kids to code at an early age. He taught his 10-year old daughter how to code and she was even able to build an app for him. “When I was released from prison, I started teaching my daughter how to code…my charity had a website but I never got around to building the mobile app. In November 2017, my daughter took the initiative to start building the app and was done building it by February 2018. It was live in the app store by April 2018.”

    Research supports the benefits of teaching skills, like coding, at an early age. The Center for Childhood Creativity came out with a 2018 report on the roots of STEM success. The report indicates that an early focus on STEM learning can positively impact a child’s brain architecture and thinking skills. There are also several documented advantages to teaching coding in the classroom. Students who know how to code are better equipped for the technology revolution. In addition, teaching students how to code helps them develop and harness skills that will make them more marketable on their job search. More schools should consider making coding a regular part of the curriculum.

    Increasing diversity in the STEM field goes beyond simply hiring and retaining more diverse talent. It starts at an early age. Research indicates that for the majority of scientists, their interest in science began well before middle school. Being able to spark a child’s interest in the STEM field and offer opportunities for them to grow and develop that interest, may be the missing ingredient to fostering more diversity in the tech industry. “It’s important to teach our youth how to code. They will out-consume us when it comes to mobile device usage so it’s critical we start teaching them how this technology they love so dearly is created and maintained…we want them to willingly grab the torch and lead the digital era we live in,” Patton says.


    Coffee Can Investing: What Mahesh Patil learned from legends Chandrakant Sampat, Parag Parikh

    Image result for Coffee Can Investing: What Mahesh Patil learned from legends Chandrakant Sampat, Parag ParikhIn the latest instalment of the Coffee Can Investing series, Saurabh Mukherjea talks to Mahesh Patil, Co-Chief Investment Officer, Aditya Birla Sun Life Mutual Fund.

    Patil joined the fund house in 2005, and has managed funds such as the Aditya Birla Sun Life Frontline Equity Fund, which has been amongst the top performers in its category over the last 10 years.

    In this conversation, Patil talks about his investing journey, and how he helped build the fund house into one of India’s largest.

    S: Let’s begin with the start of your career. What was it that attracted you to the stock market, given that you came from a middle-class background?

    M: I came from a middle-class family. My father was a government servant. We used to discuss about stocks at home. My dad used to talk about his investments in companies like Castrol, Reliance Industries and Grasim.

    S: This was is the early 90s right?

    M: Yes. Most of these companies were acquired through initial public offerings (IPO). At that time, I didn’t know much about stocks. Home is where I initially got to know about stocks as my father used to talk about how he made good amount of money in some of these investments.

    I always wanted to be an engineer and that’s how after completing my 12th I got into engineering at VJTI. I worked for two years at a computer firm CMC (which was amalgamated into Tata Consultancy Services on October 1, 2015). However, I yearned to do something more and the option was to do my Masters in Science abroad or an MBA over here. Since my dad wanted me to be with him, I thought it was best to pursue an MBA with Jamnalal Bajaj Institute of Management Studies (JBIMS). That is the time when I was exposed to the equity market. It was the year (1991-92) when big bull Harshad Mehta held sway over the market and that period saw most people having their first brush with equities.

    While pursuing my MBA, I invested in the market with savings that I had accumulated while working over two years. During that period, the market went up almost 250 percent. It was a thrilling experience. I was doing my own research. Also, a lot of the projects I did during the second-half of my MBA also revolved around equity research and investing. It was around then that I decided to really pursue a career in finance.

    I was very clear that this is an area where a lot of my analytical skills as an engineer and knowledge about finance could be put to use to really make good amount of money. That’s how I really veered towards getting into the stock market. At that time, I was not very sure what I would want to do, even though it was clear that I wanted to get into equity research. Initially, I got a job which was more into project finance in Tata Economic Consultancy Services (merged with Tata Strategic Management Group in August 2006). At that point in time, there were not many research houses. One of the research houses was Parag Parikh Financial Advisory Services, which was known for its unique style of research. I joined them and that’s how my journey really started in equity research.

    S: You are one of the few people I know who has had the privilege of working with the late great Parag Parikh and also with Raamdeo Agrawal at Motilal Oswal. What were the learnings from that phase of your career as you worked with two of the most celebrated investors our country has seen?

    M: At that point in time, early stage in the career, some foreign fund research houses had come in and they were like boutique firms like Parag Parikh. I started my career with Parag Parikh as a research analyst and as you know Parag Parikh’s style — unfortunately he is no more — was value investing.

    S: Yes, he was famous for that.

    M: He was a great value investor and at the early stage of a career, we also had a good research head Amarnath. Most of the guys in research who came in that point in time had background, say in the domestic financial institution ring. So, I think (we were) really focusing on hardcore research over there and Parag Parikh used to come and give his bit of knowledge about long term investing. He didn’t drive us to chase stocks just because of momentum or price action. So, it gave a lot of liberty to dwell into the companies, do proper research and take longer term view on stocks, not get carried away by the short term stock movements and during that time we used to also have interactions. There was a gentlemen called Chandrakant Sampat, I don’t know whether you know about him.

    S: Yes, legendary investor.

    M: Unfortunately, he is no more. He used to come and share his wisdom with us and really give us a lot of knowledge. He was known to really buy in to stocks… great companies, quality companies, brand companies – stocks like Gillette for example. So, [he would tell us] what he saw in these companies, how to really hold on to it.

    S: He would come and share those with Parag Parikh analysts?

    M: Yes, and he used to sit with us and share that knowledge with us. He used to also share with us books which he used to read. For example books like ‘Good to Great’ and  ‘Built to Last’ by Jim Collins. One’s doing desk research for medium companies but the insights what you get from some of these legendary people in terms of the subtleties about investing and which nobody will teach you right in formal school is something which was a great learning experience. Especially with Chandrakant Sampat on how to really buy stocks which are very expensive. A lot of these quality stocks are expensive, so in a formal model, it might not look that great but when you look at cash flows they generate and the kind of brand power — which gives them long term enduring sustainable advantage — how to really price that in when looking at these companies is something which I learned immensely.

    And then the second stint was with Motilal Oswal, I was there for four-and-a-half years. Raamdeo was not the head of research but really took a lot of interest on the research side while Motilal was more on to the management side. Raamdeo again has his own style. He used to talk about his own investments which he has done in his early stage. It was more about the practical way of investing. Identifying companies and looking at the big picture, looking at what’s happening at the ground level, getting insights into that. For example, Hero MotoCorp, how is the distributor doing, talking to distributors, getting feedback and then trying to really build a broader picture in terms of the outlook. So, that is something which I learned at Motilal Oswal and he was a big Warren Buffett fan.

    So that’s where we learnt a lot about Warren Buffett — whatever he (Agrawal) used to share with us — Berkshire Hathaway annual report, letters to the shareholders. They used to give us a compendium. That’s how actually we got a sense about how to really simplify things about investing the way Warren Buffett did. That had a pretty lasting impression in terms of how we analysed companies besides your normal analytical research which one would do.

    S: Capital goods and telecom were two sectors you covered when you were an analyst. Both sectors have been under the cosh over the past few years. Since you have a keen interest in these sectors, has it affected your investment style?

    M: Capital goods is a cyclical sector and getting the cycle [right] is very important in order to make big returns. While tracking that sector, I realised that there you could bet on only a few companies like ABB, Siemens and BHEL. In any cycle, these were the companies, which would grab market share. So, if you are able to time the cycle and the huge operating leverage which these companies had, that’s where the big delta happens not only in earnings but also in PE multiples. This learning helped me later on when I joined Birla Sunlife Mutual Fund in 2005 when it was beginning of the big capex [cycle] from 2003-2008, both in the capital goods as well as the infrastructure sector.

    I was quick enough to really identify some of these stocks, build the portfolio and it helped me to set my foundation there in the early stage because some of the winners were from the capital goods sector.

    S: You said if someone is dabbling in a balance-sheet heavy sector like capital goods, one needs to time the cycle right. Is there any specific indicator you have used to figure out the right time?  

    M: The challenge in some of these sectors is that your near term earnings will never justify investing. So, one has to see where there is value because normally in a down cycle, these stocks get beaten down and get a pretty good value and then you have other indicators like order book, movement in order book inflows. In the early stages, we didn’t have big models in terms of capturing some of these cycles but over the period of time, we built certain models looking at some of the macro indicators like how capacity utilisation levels are shaping up, how demand growth is picking up, etc.

    S: So, basically you wait for capacity utilisation to hit 75-80 percent?

    M: 80 percent.

    S: You know then capex will begin and at that point you press the trigger on capital goods?

    M: Right and then you monitor how the order inflow is starting to play out in that sector, to see which are the companies, which would start to build in, because that would really give visibility to long term sales growth.

    S: There are two financial plays where you were very early. You were at least four years before they became consensus buys – IndusInd Bank and Bajaj Finance. And I remember broking these stocks in 2010-11 and you spotted the potential and the promise of these two lenders before anybody else did. What gave you the conviction to press the trigger quite so hard on IndusInd and Bajaj Finance?

    M: It was a different story for both IndusInd and Bajaj Finance. IndusInd was a company, which had gone through some kind of turmoil and there was a change in management and typically whenever there is a big change in the company it is worth having a look at it and then meeting the management. Understanding whether the change they are trying to make is something much more sustainable.

    So, IndusInd was about change in management. When we met the management team, they had a clear vision in terms of how they wanted to transform the bank. Coming in from a very mediocre performance, how numbers such as return ratios would change. It was a bet really on the management at that point in time, on the CEO and his vision, how they could do it. And evaluation was always in your favour when the company is kind of in the woods. It is a question about how much rerating can happen and how much growth can the company deliver.

    S: So, this was fundamentally a play on Romesh Sobti and his team.

    M: Yes. I would again give credit to the analyst who was working with me, who had done a lot of research earlier. It helped us build more conviction over there.

    In case of Bajaj Finance, it was a company, which already had some kind of track record. The company went through a kind of crisis, but it came out of that and we thought this company was doing something good on the technology side, which was kind of new at that point in time in terms of digital.

    S: This is the 2009-10?

    M: This was somewhere in 2011-12. So in the financial services space, it is something which we thought we had a big opportunity in. This was one company which we heard would be trying to do something more with technology and digital. Trying to use that in their framework to reduce cost, trying to reduce the cycle time for consumers, but also [improve] on risk management.

    So we decided to spend one full day with the management, the CEO, the other leaders down the line and it gave us a conviction that this is a company which is trying to do something different. It is trying to build some kind of moat, which is very important, which is more on the risk management side, because finance is all about how you manage risk. Your job is to lend, but how you manage risk and monitor that and at the same time, how you use technology to reduce cost, how you reduce your time to go to the consumer and that was a big transformation we saw in this company.

    S: Talking to Rajeev Jain and his team gave you that conviction that they would have this ability to use technology?

    M: Yes. That was one of the reasons and again when we looked at the stock fundamentally, once you like a company it boils down to the valuations. So, valuations were reasonable and we know what has happened over there. The way the company has grown to deliver consistently and despite now at this size, they are growing at around 30-35 percent or so. But again, the idea is to spot it early, spot the big change and then capture not only earnings growth, but also PE re-rating or the price-to-book value in the case of Bajaj Finance, which lead it to be a big multibagger over a period of time.

    S: So, one of the most interesting aspects of your investment style is that other than buying great franchises and holding them for long periods of time, you have also made lots of money from large opportunistic bets. Two examples which come to mind are DLF in 2015 and Vedanta in 2016…

    M: When you invest in the market, as you rightly said, you want to have your long-term winners, which will continue to compound and give you good returns. So, they form the base of the portfolio. You don’t really tamper with them unless there is a big change in the fundamentals. But at the same time, there are a lot of opportunities because of the market, the greed and fear cycle, you see lot of stocks get beaten down at valuations which are attractive. The only challenge there is, you don’t want to get into a company, which is too highly levered and is not able to bounce back. So, at times you spot those opportunities. For example, DLF was the case where the company was going through some kind of pain after the big run in the real estate cycle, we saw a big downturn in that period and the stock was quoting at significantly below book value, but there was still some challenge about debt over there. But when we met the management, we got comfort that the management was serious about deleveraging because they had good assets like rental assets, which they could have easily monetised to bring down debt. So, while the debt looks high, there is enough asset backing it.

    Normally, when you take those kind of bets, it is only to really play out the specific value. Once you realise the target, discipline has to be really to get out of this because they are not really long-term value creators. So, that was what triggered DLF.

    In Vedanta, again, it is a classic cyclical commodities [play] where commodities went through a pretty bad phase in 2015-2016 and we saw a huge crash. Some of the global stocks like Glencore went down almost 50-60 percent. During our research process, we also started tracking global macros. We also had an international fund and you get some of these cues for global commodities when you track some global stocks — how they are behaving. And when we saw Glencore was kind of coming out of that cycle and Vedanta again as a proxy to the commodities space, we thought this was the beginning of the commodity cycle and this was a good company to play at that point in time.

    Though again, the leverage was higher but they were across multiple sectors. And again, it was more a macro call rather than on Vedanta. Vedanta was just a vehicle to play that.

    S: So, basically the metal cycle in a way.

    M: Yes, the metal cycle. So, we have been tracking global macros and we have tried to institutionalise that in our investment process. That helps take some of these macro calls, which, if they work in your favour, make a big difference. And it doesn’t matter which company you play but if you are able to bet on the right company within that, the returns could be much bigger.

    S: So, let’s move to the institutional processes that you built. As I said in the beginning, there is you and only one other fund manager I know who in the last 10 years who has been part of the building of a massive asset management house in India. The traditional leadership — the big three or four AMCs in India — were stable.

    M: Yeah.

    S: The rise to prominence of Aditya Birla Sun Life over the last 10 years has been remarkable and you are managing $3 billion in equities today. What catalysed this success? There aren’t too many other success stories of this ilk in the last 10 years in India and, especially given that your house doesn’t have a bank bolted on to it and you can’t really follow the bancassurance model of distribution, it’s even more impressive. What were the processes? What were the cultural improvements you sought to catalyse in the last 10 years?

    M: The journey with Aditya Birla Sun Life has been really great and as I said, when I joined over here there was a total transformation in the investment team. We had a whole new team, which in a way is good. You have people who can get built and can come along with you, and we had tough times during the global financial crisis but that was the time when we actually got things together and built a lot of things around processes, systems, trying to relook our whole investment process. But the most was in terms of risk management framework. We built a robust risk management framework in terms of what kind of risk we would want to take at the stock level.

    So, all the fundamental pieces were really put in place and during the time of the [financial] crisis. We actually took time to really build some of these things. Because normally in a bullish market, returns come easily, you don’t have time to focus on the processes, systems and that really helped us in good stead when the market started to recover from 2013 onwards. So we built decent performance in terms of our funds across and we are managing different category of funds and more importantly, built the team. We had a lot of these star fund managers earlier. Institutions were based around individuals, I clearly believed that it was the team really, which contributed to the whole fund house success. And the research analysts whom we groomed internally and who were part of the journey had a significant role to play in terms of developing us as a fund house. In fact, we were the first ones who actually started research analysis-based fund at that point in time. When I had gone abroad, I had visited MFS, which is one of our parents, which is one of the oldest institutions in the US. They have global research funds managed by analysts. So, we started that concept as a trial where analysts were managing the fund, they were putting their high conviction ideas in the fund and that again became a good success, and it also gave a lot of voice to the analysts.

    So a lot of integration took place between the analysts and the fund managers. Lot of things which the analysts were doing were getting replicated in the fund. And that cohesiveness of working as a team really helped us to do – normally you would have one or two funds, which would do really well and you want to really ramp up those funds. But fortunately for us, all of our funds, because of the strong internal process – the way the analysts were contributing, and the way you are integrating that, ensured that a lot of funds were doing well. So, during the good times, we could ramp up lot of our funds and get a larger share of the pie.


    ADNOC CEO says oil and gas industry a critical enabler of economic growth in 4th industrial age in ADIPEC keynote address


    Abu Dhabi — The global oil and gas will be a critical enabler of economic growth in the 4th Industrial Age, according to His Excellency Dr. Sultan Ahmed Al Jaber, UAE minister of state and group CEO of the Abu Dhabi National Oil Company (ADNOC).

    Delivering the opening keynote address, today, at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), one of the world’s leading oil and gas conferences and exhibitions, H.E. Dr. Al Jaber said the world is on the verge of an era of unprecedented prosperity. This will be driven, he said, by rapid advances in technology and a global middle class, which will grow to five billion people by 2030, creating greater demand for energy and products derived from oil and gas.

    “We are at the cusp of a new age of opportunity for our industry, an era in which digital innovation is delivering unprecedented levels of progress,” H.E. Dr. Al Jaber told the audience of government ministers, industry CEOs, policymakers and decision makers. “This era, known as the 4th Industrial Age, is creating a paradigm shift in global growth and driving demand for our products. Our industry must step up to enable this massive step-change in global development.

    “In short,” H.E. Dr. Al Jaber added, “this mission can be given a simple name: Oil and Gas 4.0.”

    H.E. Dr. Al Jaber said ADNOC recognizes that to fulfill the mission of Oil and Gas 4.0, it must leverage all its resources, its partnerships and, in particular, the latest technologies, if it is to continue to thrive and deliver on the ambitious strategic objectives of its 2030 smart growth strategy.

    “All this is only the start of a new era at ADNOC,” he said, adding that ADNOC is continuing to put in place the building blocks that would allow it to seize the opportunities created by Oil and Gas 4.0, emphasizing the strategic oil and gas announcements, made recently by Abu Dhabi’s Supreme Petroleum Council (SPC), which will see ADNOC increase its oil production capacity to 4 MMbpd by 2020 – and to 5 MMbpd by 2030 – to meet growing global demand. In addition, ADNOC will develop its vast untapped gas resources.

    “As we set out to meet these ambitious goals, we will access our undeveloped reservoirs, tap into our gas caps and further capitalize on our sour gas. Today, we are able to make this happen by thinking outside the box, leveraging technology and reframing our business model. This has finally unlocked the commercial formula that will enable the UAE to attain self-sufficiency and transition to becoming a potential net exporter of natural gas.” H.E. Dr. Al Jaber said. “We are also taking steps, never taken before, to realize our comprehensive gas strategy.

    “For the first time, we will jointly develop our unconventional fields in a concession partnership with Total. In addition, our strategy will ensure we remain a reliable supplier of LNG well into the future.”

    H.E. Dr. Sultan added, “While advances in technology are impacting every industry, it is time for us to focus our attention on how it can advance our industry,” H.E. Dr. Al Jaber said.  “At ADNOC, we believe technology can enhance our operational efficiency, drive performance, maximize profitability and empower our people.”

    ADNOC, he said, is applying artificial intelligence and the science of predictive analytics to significantly reduce maintenance costs and building out its state-of-the-art Panorama Digital Command Center to mine for, monitor and measure terabytes of information across its operations. And yet, ADNOC is only scratching the surface of how technology can transform its potential, he declared.

    “Our ambition is to extend technology’s power across our entire value chain from drilling platforms to trading platforms,” H.E. Dr. Al Jaber said. “By embedding innovation into every aspect of our business, we are determined to make ADNOC the destination of choice for a highly skilled, digitally native workforce and a home for the best and the brightest of our young people.”

    H.E. Dr. Al Jaber also emphasized the importance of ADNOC’s downstream expansion. “This expansion capitalizes on our high-grade feedstock, proximity to growth markets and best-in-class logistics to create an integrated plug and play ecosystem, an ecosystem where I invite partners to invest and grow alongside ADNOC as we continue on our journey to diversify the UAE’s economy, enable in-country value and support GDP growth,” he said.

    Following H.E Dr. Sultan Al Jaber’s speech, a special ministerial panel discussion took place – entitled, ‘Reshaping Markets: Continuing the Global Energy Discussion, with the participation of H.E. Suhail Al Mazrouie, minister of energy, United Arab Emirates; H.E. Khalid Al Falih, minister of energy, industry and mineral resources, Kingdom of Saudi Arabia; and H.E. Mohammad Barkindo, secretary general of the Organization of Petroleum Exporting Countries (OPEC).

    Hosting more than 80 ministers, CEOs, and global oil and gas business leaders as speakers, ADIPEC has convened the companies, decision- and policy-makers who shape the future of oil and gas supply, for four days of focused business, dialogue and knowledge-transfer that addresses today’s energy challenges and defines tomorrow’s hydrocarbon landscape.

    ADIPEC’s international technical and strategic conference spans 200 sessions, with 980 expert speakers and over 10,400 delegates. The technical conference program, organized in collaboration with the Society of Petroleum Engineers (SPE), sets the international standard for the exchange of best-practice and operational excellence in the world of energy, with all technical abstract submissions put through a rigorous evaluation process by the technical program committee. Sessions cover upstream, midstream and downstream sectors, including specialized program such as offshore and marine.

    Alongside the conference are the landmark ADIPEC exhibition areas, underpinning the event’s status as a premier showcase for suppliers and customers across the oil and gas industry. For 2018, ADIPEC has attracted more than 2,200 exhibiting companies, including 38 National Oil Companies and International Oil Companies, and 30 international country pavilions.


    What If AI Could Uber The Healthcare Industry?

    Watches and accessories maker Titan Co reported an 8.34 percent growth in consolidated profit during the July-September quarter. Subbu Subramaniam, CFO of Titan, spoke to CNBC-TV18 about the earnings growth and the company’s business plans going forward.

    “The company is growing faster than the industry each quarter,” said Subramaniam.

    “The company is now seeing the benefits of ad spends on jewellery in the third quarter,” said Subramaniam, adding that going forward in the second half, the ad spends would be lower. “It was part of the plan to incur higher ad spends in the first half and therefore expected margins to be lower,” he said.

    In terms of sales, Subramaniam said, “The company had a very good run up to Diwali, saw 27 percent growth and the retail-end in the first 29 days upto Diwali. Therefore, market share gains continue.”

    With regards to the watch business, he said,” The company would spend more on ads in the second half and so expect the EBIT for that business to be in between 15-16 percent for FY19. For the second half, the EBIT margins would be around 12-13 percent in second half because of ad spends.”

    “Eyeware is small part of the overall business but it saw a good growth in October. The focus here is more on growing topline, increase network rather than look at profitability,” said Subramaniam.
    With regards to IL&FS exposure, he said, “It would be difficult to predict additional provisioning that would be needed. The company has exposure to IL&FS inter-corporate deposits worth Rs 145 crore.”


    Titan growing faster than industry each quarter, says CFO Subramaniam

    Image result for Titan growing faster than industry each quarter, says CFO Subramaniam

    Watches and accessories maker Titan Co reported an 8.34 percent growth in consolidated profit during the July-September quarter. Subbu Subramaniam, CFO of Titan, spoke to CNBC-TV18 about the earnings growth and the company’s business plans going forward.

    “The company is growing faster than the industry each quarter,” said Subramaniam.

    “The company is now seeing the benefits of ad spends on jewellery in the third quarter,” said Subramaniam, adding that going forward in the second half, the ad spends would be lower. “It was part of the plan to incur higher ad spends in the first half and therefore expected margins to be lower,” he said.

    In terms of sales, Subramaniam said, “The company had a very good run up to Diwali, saw 27 percent growth and the retail-end in the first 29 days upto Diwali. Therefore, market share gains continue.”

    With regards to the watch business, he said,” The company would spend more on ads in the second half and so expect the EBIT for that business to be in between 15-16 percent for FY19. For the second half, the EBIT margins would be around 12-13 percent in second half because of ad spends.”

    “Eyeware is small part of the overall business but it saw a good growth in October. The focus here is more on growing topline, increase network rather than look at profitability,” said Subramaniam.
    With regards to IL&FS exposure, he said, “It would be difficult to predict additional provisioning that would be needed. The company has exposure to IL&FS inter-corporate deposits worth Rs 145 crore.”


    Michigan’s New Governor Can Accelerate The Auto Industry’s Transformation

    Michigan Gov.-elect Gretchen Whitmer hosts a post-election news conference, Wednesday, Nov. 7, 2018, in Detroit. (AP Photo/Carlos Osorio)(AP Photo/Carlos Osorio)ASSOCIATED PRESS

    My congratulations go out to Gretchen Whitmer for winning my state’s gubernatorial election. The governor-elect – as well as governors across the other 49-states – face many great challenges from health care to infrastructure with significant financial constraints. Of course, with great challenges come great opportunities. Given the significant inflection point the automotive industry is at related to autonomous technology, vehicle electrification and transformational mobility as a service innovation, governor-elect Whitmer has the opportunity to create a business environment in Michigan to maximize the positive returns of these trends while minimizing the transitional costs. Here are a few ideas I would think the Governor-elect should pursue to accelerate these mega-trends. Other governors are free to apply these as applicable.

      1.  Connect-the-dots before initiating-the-new. The State abounds with advanced vehicle technology testing institutes and facilities. The State hosts the American Center for Mobility, University of Michigan’s Mcity, Western Michigan University’s Transportation Research Center for Livable Communities, and Kettering University’s Mobility Research Center to name a few. It is always attractive to bring in new money, start new initiatives and make political headlines.  However, I would suggest we take stock in what we have, reinforce these assets and leverage the collective, current assets to solve industry and public policy problems.
      2. Don’t forget autonomous and electrification touches all forms of transportation. Too often when we talk about transportation and mobility we only think about passenger vehicles – because they are in our garages and we drive them every day. However, the mega-trends of autonomous, electric and mobility as a service need to be integrated into commercial vehicles, rail, air, water and pipeline as goods cross all these forms of transportation and individuals interact with each as well as we optimize how merchandise goes from manufacturer to retailer to customer and, for example, making first- and  last-mile transportation efficient makes mass-rail more efficient. Having the many facilities listed above allows the state to address these varied transportation modes.
      1. Make our Manufacturing USA centers model operations. The industry is on the cusp of a light-weighting and multi-material revolution. Detroit hosts two public-private partnerships under the Manufacturing USA initiative that could, with the right direction, be the epicenter of many industry lightweight innovations. The Lightweight Innovations for Tomorrow (LIFT) and The Institute for Advanced Composites Manufacturing Innovation (IACMI) are not only beginning to run pre-competitive manufacturing projects, but they also have the opportunity to be learning laboratories to teach the most recent manufacturing technology to the next gen labor force.
      2. Engage the finance community equally to industry and labor. In Michigan, it is easy to focus on the manufacturing and labor side of the business and overlook the capital side. The industry has always been a huge consumer of capital.  But, it has been dominated by big business, with big balance sheets and big investment bankers.  The industry’s transformation is going to take a mosaic of funders – from the recent SoftBank Vision Fund investment into GM’s Cruise to corporate and independent venture capital funds and non-distress, private equity (the auto industry is very familiar with the PE firms focused on distressed turnarounds). The state must be a welcome environment for all these forms of capital, including our traditional commercial bankers.