India creates 11 unicorns in 2020 - the year of WuhanCoronaVirus

India has seen a record number of startups becoming unicorns in the year 2020. 

The year that began with shock of lockdowns 

The year which began with the fear of Wuhan Corona Virus spread all across the world saw the longest lockdowns ever.  This had a major impact on the economy - especially of India - as it imposed one of the strictest lockdowns. 
However release of liquidity (money) by Central Banks of various countries ensured that easy money was available to businesses. 
And many businesses, the ones sensing higher business due to lockdown, quickly went into expansion mode.

Indian Startups weather the storm

Some Indian startups managed to weather the storm, post impressive revenue figures and raise funding to gain a valuation of more than $1 Bn and enter the unicorn club.

In all, 11 Indian startups —  

1. Unacademy, 
2. Pine Labs, 
3. FirstCry, 
4. Zenoti, 
5. Nykaa, 
6. Postman, 
7. Zerodha, 
8. Razorpay, 
9. Cars24, 
10. Dailyhunt and 
11. Glance — 

became unicorns this year. As experts have pointed out, the core propositions of these startups were ones that actually solved challenges for individuals and businesses during the lockdown for a large portion of the year. 

3rd largest number of unicorns

India is home to 32 Unicorns, making it the 3rd largest country with most Unicorns. Delhi NCR, the city with most Unicorn activity, alone has 14 unicorns.

On an average it took 5.5 years for Unicorn companies in India to achieve the status of a "Unicorn"

Aileen Lee first wrote about Unicorns

According to Investopedia - A unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. The term was first popularized by venture capitalist Aileen Lee, founder of CowboyVC, a seed stage venture capital fund based in Palo Alto, California.

Aileen Lee first wrote about unicorns in the venture capital world in her article, "Welcome to the Unicorn Club: Learning from Billion-Dollar Startups." Here, she looked at software startups founded in the 2000s and estimated that only 0.07% of them ever reach $1 billion valuation. Startups that managed to reach the $1 billion mark, she noted, are so rare that finding one is as difficult as finding a mythical unicorn.

(Disclaimer : This blog is for information purposes only)

India - Stack, A set of APIs (Application Programming Interface) One of the best of what India has created.

 WHAT IS INDIA STACK

IndiaStack is a set of APIs (Application Programming Interfaces) that allows governments, businesses, startups and developers to utilise an unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery. 

Its founded on core principles that services can be 

1. Presenceless = capable of being authenticated from anywhere
2. Paperless = reliant on digital records
3. Cashless = truly universalising the access and usage of digital payments 
4. Consent based = allowing secure movement of data authenticated by its owners.

THE EVOLUTION OF INDIA STACK 

1. 2009 - UIDAI was created with objective to issue Unique Identification Numbers named as "Aadhaar"
2. 2010 UIDAI launched Aadhar Authentication API before the first Aadhaar was issued 
3. 2011 NPCI launched Aadhar Payments Bridge and Aadhaar Enabled Payments System which uses Aadhar Number as a central key for electronically channelizing the Government Benefits and subsidies 
4. 2012 UIDAI launched eKYC which allows business to perform Know Your Customer verification process digitally using Biometric or Mobile OTP
5. 2015 CCA launches eSign as an open API to facilitate an Aadhar holder to digitally sign a document and MeitY launches Digital Locker, a platform for issuance and verification of documents and certificates in a digital way, thus eliminating the use of physical documents 
6. 2016 NPCI launches Unified Payments Interface, the most advanced payments system in the world to revolutionise digital payments in India 
7. 2016 NeGD launches Digital Locker a platform for issuance and verification of documents and certificates in a digital way. 

(Source : The India Fintech Report 2020)

The Very Different Approach 

India has chosen to have a very different approach to open banking. Unlike many other geographies where instant payment initiatives are running parallel to open data initiatives, India flipped the equation by implicitly launching open banking payments first on what is now widely considered the best real-time payment network in the world. 

Based on the success of IndiaStack, over 20 countries have shown interest in studying and implementing a digital identity system inspired by Aadhar and the software stack built around it. 

In 2018 Singapore and India had signed a high level agreement to internationalise the IndiaStack which resulted in creation of a joint working group on Fintech to develop API based platforms in ASEAN region. 

A number of countries and international agencies such as the World Bank and Gates Foundation  have also approached India with help to build digital identity. 

 Visit the website of IndiaStack here

(Disclaimer : This blog is for educational purposes only. Please read further disclaimers at the bottom of this webpage)

Hero Motors - worlds largest 2 wheeler maker in terms of no of units sold for last 19 years

Hero MotorCorp

Hero MotoCorp is India's leading two wheeler company, which has been providing customers with an excellent range of two wheelers that ensure both style and comfort. 

The story of Hero MotoCorp can be traced back to the vision of a mobile and empowered India, powered by its two wheelers. Today, Hero MotoCorp has made it its mission to become the best two wheeler company, not only in India but globally by setting benchmarks in style, performance and technology.

Manufacturing Facilities 

Hero MotoCorp has eight globally benchmarked manufacturing facilities, 

• including six in India (Dharuhera, Chittoor, Gurugram, Haridwar, Neemrana, Gujarat) and
•  one each in Colombia and Bangladesh. 

World's Largest Two Wheeler Company

In 2001, the company achieved the most sought-after recognition of being the largest and best bike manufacturer in India and also the 'World No.1' two-wheeler company in terms of unit volume sales in a calendar year. 

Hero MotoCorp Ltd. continues to maintain this position till date.

Milestones 

• 1983 - Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders Agreement signed.
• 1984 - Hero Honda Motors Ltd. incorporated.
• 1987 - 100,000th motorcycle produced.
• 1994 - 1,000,000th motorcycle produced.
• 2000 - 4,000,000th motorcycle produced, Splendor declared largest selling single 2 wheeler model.
• 2004 - Total sales crossed a record of 10 million motorcycles. 

• 2006 - 15 million production milestone achieved.
• 2011 - 5 million cumulative sales in a single year. 
• 2013 - 50 Million cumulative 2 wheelers production achieved.
• 2017 - 7 million cumulative slaes in a single year achieved. 
• 2019 - Hero MotoSports Wins The Pan Africa Rally 2019 At Merzouga.

Hero MotorCorp Share - Past 1 year 

Hero MotorCorp Share - Past 5 years 

Hero MotorCorp Share - Since 1999

(Disclaimer : This blog is for information purposes only. Equity market investing is a with risk investing, including risk on capital invested. Please take a well considered decision.)

Amid pandemic, while most Indian startups are struggling for funds, four have become unicorns

Unicorns in Corona Crisis 

The virus outbreak and the nationwide lockdown that ensued have thrown up funding and business continuity challenges for many in the Indian startup ecosystem. More than half of Indian startups are struggling to raise fresh funds

Four Indian tech startups became unicorns, or private companies valued at over $1 billion, in the middle of the pandemic.

These are – 

1. online beauty products retailer Nykaa, 
2. tech firm Postman, 
3. education startupUnacademy and 
4. fintech firm Razorpay 

India’s total unicorn count is now  33.

Challenges faced by Indian Startups During Corona Lockdown 

The virus outbreak and the nationwide lockdown that ensued have thrown up funding and business continuity challenges for many in the Indian startup ecosystem. More than half of Indian startups are struggling to raise fresh funds.

Consider startups in the hospitality sector. Since the possibility of travel and tourism has been next to nil over the past six months, and with revival of the sector expected to take anywhere six to 12 months from now due to the apprehensions of the public regarding infection and safety, enterprises in the hospitality sector have been struggling just to stay afloat.

If startups in the hospitality industry are faring badly, social sector enterprises are in a worse state.  The pandemic has increased the risks for staff to work on the field. Anyone with Covid-19 symptoms have had to go into quarantine, which affected the ongoing projects.

New investors are risk averse. CSR funds are also not available since all private companies are practicing conservative spending for the rest of the financial year to prepare for the full economic impact of the pandemic in 2021.

Not all are suffering 

Not all startups are suffering though. Those in e-learning (think Byju’s and other online learning apps), e-commerce (Grofers and Big Basket) and health spaces are flourishing. 

(Disclaimer : This blog is for information purposes only.)

What is PLI Scheme. How does it benefit the Indian Economy.

PLI Scheme 

The Union Cabinet on the 11th of November 2020 approved Production Linked Incentive (PLI) scheme worth up to Rs 1.46 lakh crore for 10 key sectors in a bid to boost India’s manufacturing capabilities and enhancing exports. The scheme will make Indian manufacturers globally competitive, attract investment and enhance exports.

The decision of the Union Cabinet was announced by information and broadcasting minister Prakash Javadekar along with finance minister Nirmala Sitharaman in New Delhi.

The aim is to give the right impetus to the Indian economy to enable the nation to plug into global supply chains, Sitharaman told reporters. There is no cap on the number of companies that will be eligible for PLI under each category for now, she added.

The manufacturing sector currently contributes 16% to India’s GDP, Javadekar said adding that the idea was to increase this share. Among sectors, auto components and automobile sectors have received the maximum incentive of ₹57,000 crore, Javadekar said.

Key Features 

It is a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.

The scheme invites foreign companies to set units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.

Benefits

1. The PLI scheme will make Indian manufacturers globally competitive,attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.
2. India is expected to have a USD 1 trillion digital economy by 2025. Additionally, the Government's push for data localisation, Internet of Things, projects such as Smart City and Digital India are expected to increase the demand for electronic products.
3. India is the world's second largest steel producer in the world. It is a net exporter of finished steel. A PLI scheme in Specialty Steel will help in enhancing manufacturing capabilities for value added steel leading to increase in total exports.
4. Telecom equipment forms a critical and strategic element of building a secured telecom infrastructure and India aspires to become a major original equipment manufacturer of telecom and networking products.
5. The growth of the processed food industry leads to better price for farmers and reduces high levels of wastage.

(Disclaimer : This blog is for information purposes only)

GIG Economy - tends in India and Govt. initiatives

What is it? 

Gig workers are independent contractors online platform workers, contract firm workers, on call workers and temporary workers.  Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients.

Background

In the 2000s, the digitalisation of the economy and industry was carried out rapidly due to the development of information and communication technologies such as the Internet and the popularisation of smartphones.

As a result, on-demand platforms based on digital technology have created jobs and employment forms that are differentiated from existing offline transactions by the level of accessibility, convenience and price competitiveness.
In general, "work" is described as a full-time worker with a set working hours, including benefits.

But the definition of work began to change with changing economic conditions and continued technological advances, and the change in the economy created a new labor force characterised by independent and contractual labor, such as well.

Job Economy vs GIG Economy 

How is it different?

In a Gig Economy, employees work on a contractual basis, which exists outside its traditional employment. The jobs are flexible, on a temporary basis, and mostly creating networks digitally.

People start making a living by taking multiple job roles which are project based, and it’s definitely fun since they do what they want to and whenever they wish to. No limitations.

Some are already a part of this GIG ECONOMY like Cab drivers, delivery and some are freelancers like web designers, content writers and the other talent gigs.
Teachers, sales person, independent contractors, consultants, artists are few more examples of common gig workers.

INDIA'S GIG Economy - projections 

New Platform - by the Govt. - for GIG workers on the anvil

The draft rules of the labour code on social security unveiled on Sunday by the Centre (Govt. of India) has suggested establishing a national platform, man database and monitor progress, while states will create policies to provide social security benefits to gig and informal sector workers on a self-registration basis.

• Under the Code on Social Security (Central) Rules, 2020 all unorganised sector workers will have to update their particulars on a portal specified by the Govt
• Gig firms will be required to make an annual contribution by June 30 of every year for the social security of gig and platform workers
• The rules have been framed for the implementation of the provisions of the Code on Social Security, 2020, which was passed by Parliament in September

(Disclaimer : This blog is for information purposes only)

Risk Management in Investing - The most important thing.

 

What is it? 

Risk Management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions. 

Risk is inseparable from returns in the investment world. 

Inadequate risk management can result in severe consequences e.g. subprime mortgage meltdown in 2007 that helped trigger the Great Recession stemmed from bad risk management decisions. 

How to measure risk 

A variety of tactics exist to ascertain risk; one of the most being standard deviation,  a statistical measure. (of dispersion around a central tendency).

Beta, also known as a market risk, is a measure of the vocality, or systematic risk, of an individual stock in comparison to the entire market. 

Alpha is a measure of excess return.  Managers who employ active strategies to beat the market are subject to alpha risk. 

In simple terms how much volatility (measured by standard deviation) an investor should accept depends entirely on the individual investor's tolerance for risk. The use of Beta and Alpha in a portfolio is best understood by the graph below. 

In simple words Beta is the gradient of the line.  And it means that a a manager employing a passive management strategy can attempt to increase the portfolio return by taking one more unit of risk and vice versa. 

Active managers hunt for Alpha - the measure of excess return.  In the above diagram represented by "a". 

According to "Investopedia" -  "In their quest for excess returns, active managers expose investors to alpha risk, the risk that the result of their bets will prove negative rather than positive. For example, a fund manager may think that the energy sector will outperform the S&P 500 and increase her portfolio's weighting in this sector. If unexpected economic developments cause energy stocks to sharply decline, the manager will likely underperform the benchmark, an example of alpha risk."

Types of Risk

Every saving and investment product has different risks and returns. Differences include: how readily investors can get their money when they need it, how fast their money will grow, and how safe their money will be. In this section, we are going to talk about a number of risks investors face. They include:

Business Risk

With a stock, you are purchasing a piece of ownership in a company. With a bond, you are loaning money to a company. Returns from both of these investments require that that the company stays in business. If a company goes bankrupt and its assets are liquidated, common stockholders are the last in line to share in the proceeds. If there are assets, the company’s bondholders will be paid first, then holders of preferred stock. If you are a common stockholder, you get whatever is left, which may be nothing.

If you are purchasing an annuity make sure you consider the financial strength of the insurance company issuing the annuity. You want to be sure that the company will still be around, and financially sound, during your payout phase.

Volatility Risk

Even when companies aren’t in danger of failing, their stock price may fluctuate up or down. Large company stocks as a group, for example, have lost money on average about one out of every three years. Market fluctuations can be unnerving to some investors. A stock’s price can be affected by factors inside the company, such as a faulty product, or by events the company has no control over, such as political or market events.

Inflation Risk

Inflation is a general upward movement of prices. Inflation reduces purchasing power, which is a risk for investors receiving a fixed rate of interest. The principal concern for individuals investing in cash equivalents is that inflation will erode returns.

Interest Rate Risk

Interest rate changes can affect a bond’s value. If bonds are held to maturity the investor will receive the face value, plus interest. If sold before maturity, the bond may be worth more or less than the face value. Rising interest rates will make newly issued bonds more appealing to investors because the newer bonds will have a higher rate of interest than older ones. To sell an older bond with a lower interest rate, you might have to sell it at a discount.

Liquidity Risk

This refers to the risk that investors won’t find a market for their securities, potentially preventing them from buying or selling when they want. This can be the case with the more complicated investment products. It may also be the case with products that charge a penalty for early withdrawal or liquidation such as a certificate of deposit (CD).

(Disclaimer : this blog is for information only)

RBI news bulletin - India back on growth path. Some Graphical excerpt

India back on growth 

RBI came out with its news bulletin today and according to it "At a time when global economic activity is besieged by the outbreak of the second wave of COVID-19, incoming data for the month of October 2020 have brightened the near-term outlook for the Indian economy and stirred up consumer and business confidence. There are, however, formidable downside risks that confront the path of recovery."

Some graphs from the RBI bulletin 

(Read the RBI state of the economy report here)

Preliminary Estimates of Household Financial Savings - Q1:2020-21 

(Read the RBI report on Household savings here)

FinTech: The Force of Creative Disruption (Read the RBI report on Fintech here)

(Disclaimer : This blog is for information only)

Project AIRAWAT - India's AI push

What is it?

The Indian government’s think-tank NITI Aayog recently released an approach paper to set up India’s first AI-specific cloud computing infrastructure called ‘AIRAWAT’ (AI Research, Analytics and Knowledge Assimilation platform).  

This platform aims to guide the research and development of new and emerging technologies.

AIRAWAT will be established based on the recommendations made by the National Strategy for Artificial Intelligence (NSAI).

Top 5 Supercomputers in the World

Under the AIRAWAT initiative, 

1. The government plans to build a series of supercomputers with the help of microprocessor manufacturers, like NVIDIA and Intel. The supercomputer facilities will be hosted at various academic institutes like IITs, IISc, etc and these academic institutes will be at the forefront of AI research. They are also expected to act as guides and mentors for other institutes in this domain
2. Going ahead, the government will be building AI-specific compute infrastructure that will help the computing needs of Centres of Research Excellence (COREs), International Centers Transformational AI (ICRAIs) and Innovation Hubs.

AIRAWAT is being modelled after the Summit and ABCI facilities in the US and Japan, respectively. Both of which are run by state-sponsored research institutes. And like in other countries, AIRAWAT is also expected to complement our current mandate of building 70 high-performance computing facilities in India. 

Currently, India has just two supercomputers among the 500 best computers in the world — 226 of which are in China, and 113 in the US. With AIRAWAT, the hope is that India can also compete with these superpowers.

Read NITI Aayog's approach paper on AIRAWAT here

(Disclaimer : This blog is for information purposes only)

Infosys Q2 profit rises by 20% as compared to the same period last year.

 Q2 - Profits rise 

India's second largest software services provider on Wednesday reported 20.5 per cent year-on-year (YoY) increase in the net profit for the September quarter. 

The company posted ₹4,019 crore profit for the corresponding quarter last year. Consolidated revenue from operations increased to ₹24,570 crore in Q2FY21, up by 8.6% YoY. The operating profit also rose to ₹6,228 crore, growth of 26.8% YoY.

Revision in Growth Guidance 

Infosys revised its revenue growth guidance upward to 2-3% in constant currency for financial year 2020-21, from 0-2% earlier. The full year operating margin guidance also revised upward to 23-24%, against 21-23% earlier.

“Our second quarter performance is a clear reflection of our ability to help clients on their digital transformation journeys. Our digital and cloud capabilities combined with intense client relevance are helping us achieve differentiated results in the market as is visible in 2.2% year on year overall revenue growth and 25.4% growth from digital offerings, which now are at 47.3% of revenues", said Salil Parekh, CEO and MD.

2nd Largest IT Company 

Infosys Limited, is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. The company is headquartered in Bangalore, Karnataka, India.^[6] Infosys is the second-largest Indian IT company after Tata Consultancy Services by 2017 revenue figures and the 596th largest public company in the world based on revenue.

Infosys 2nd Quarter Results Factsheet 

(Disclaimer : This blog is for information purposes and not to provide any kind of advise or solicit business.) 

India China Macro Comparison Graphs

External Debt 

 India - External Debt in Millions USD (last 25 years)

China - External Debt in (HML) Hundred Million USD (last 25 years)

GDP 

India GDP - USD Billions (last 25 years)

China GDP - USD Billions (last 25 years)

Government Debt/GDP 

India - Govt. Debt to GDP (last 25 years)

China - Govt. Debt to GDP (last 25 years)

Households Debt to GDP 

India - Households Debt to GDP (last 25 years)

China - Households Debt to GDP (last 25 years)

Taxes (peak levels compared)

India - China corporate tax rates (last 25 years)

India China - personal Income Tax rates (last 25 years)

India China - sales tax rates (last 25 years)

(Disclaimer : This blog is for information purposes only)