@Leisure - Vol-39 | srei
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@Leisure - Vol-39

Newsletter
 

A golden phase for the Indian Economy on the horizon

India is one of the best known emerging markets (EMs) and benefits from being a vibrant multi-party democracy with a stable polity. EMs tend to outperform when investors target growth instead of safety. The Indian economy is now on the brink of entering a phase, which would make it stronger than ever, a golden age, which makes it highly attractive to investors. Here are some indicators of what is driving the economy:

India’s International Trade:

Indian exports are likely to benefit from a general trend in revival of international trade. EM trade has been outpacing developed economies in dollar value. Indian exports have been rising for the past 9 consecutive months although GST transition and the strong rupee have acted as dampeners in the previous two months. The Non-Petroleum and Lubricants sector has seen a robust period of growth in the recent past - this is the largest component of Indian exports. Government efforts like marking anti-dumping on Chinese steel products and providing support has been aiding this sector.

Consumption:

Emerging markets have been seeing a revival in consumption. In India, investment-to-GDP is at a decade’s lowest of 29 per cent in FY 17, which indicates that Indian consumption expenditure is rising at a fast pace. Inflation in India is at an ebb, which allows for more discretionary spending as households spend less on essentials like food. Additional consumption has the potential to promote higher economic growth in the future.

Investments:

As consumption rises, a pick-up in investments can be the next logical step in India’s growth story as was demonstrated historically, especially in the period 2003-2008. Higher government spending is a strong indicator of rising investments. The government is spending 3x on roads and rail as it did in 2015. There is resurgence in the construction equipment sector. Public capex in crucial areas like infrastructure coupled with reduction in interest rates has the potential to kick off private investments as well.

India’s three pillars - trade, consumption and investments - are like the proverbial ducks in a row. Internationally, India is now in company of other emerging markets, which have begun to appear attractive as well. Consumption and exports are already on their way to providing support to economic growth while investments may take a little longer to pick up. India is entering a golden phase where stable growth will propel it in the future and investors - both domestic and foreign - will find value.

 

How Srei touches your life

  • Srei Foundation plays a crucial role in the corporate social responsibility (CSR) activities of Srei. Dr. HP Kanoria, the Chairman of Srei Foundation, conceptualised the foundation in 2001 with a firm desire to serve humanity in a practicable way. Dr. Kanoria, a devout follower of Shri Ramakrishna Paramahamsa and Swami Vivekananda, was guided by the principle that, “Service to the society has always been and will be the guiding star of life.” Dr. Kanoria has been chosen for the honour of being the Global Man of the Year at the 3rd Annual Global Officials of Dignity Awards in 2015. The award ceremony was held at the UN headquarters in New York, USA. Today, Srei Foundation is the spearhead of all of Srei’s CSR initiatives. Not only is the foundation in the service of humanity, Srei takes a holistic approach with each of its business verticals to make a positive impact on society. Here is how Srei is helping society:
  • Education and Skill development:Srei is managing two schools in conjunction with Suryodaya Trust. These schools are located at Santoshpur and Birati in Kolkata. These institutes employ 50 skilled staff that take care of over 700 students. The students not only get quality education but also get subsidised text books, note books and school uniforms. A free mid-day meal is provided to the children at the school as well.  The parents are charged a nominal admission and monthly fee. Srei has also adopted 15 ‘one teacher’ schools in Gaya district, Bihar. These schools provide education to tribal people in remote areas. 15,000 students of various schools have also received assistance in the form of laptops, computers, printers and water purifiers by India Power. Additionally, Srei Foundation also provides scholarship and financial support to Sanskrit at St. James School, London, and has helped create the Srei India Scholarship Fund at Boston University.
  • Social Upliftment: Srei is active across many important areas related to social upliftment. Srei Foundation has set up the Acid Survivors Foundation of India (AFSI) to help acid attack victims. Srei also undertake initiatives surrounding community health and has worked on eradicating polio from India. India Power is helping with neighbourhood development by supplying free water to 3,750 rural residents.
  • Saving the environment: Srei is actively helping in preserving the environment through various initiatives; some of these include cleaning water bodies such as lakes, cleanliness and recycling initiatives in different parts of the country, etc.
  • Humanity and Spiritualism: Srei is attempting to create awareness about the importance of spiritualism. In this direction, Srei Foundation has started an event called, “World Confluence of Humanity, Power and Spirituality.” Till date, five such events have taken place and brought together eminent personalities with diverse and rich backgrounds from different disciplines from within India and abroad.

Srei has, under the aegis of Srei Foundation, given structure to its CSR initiatives. Srei has ensured that these remain sustainable in the future. Srei Group truly believes in its vision of creating ‘A world filled with shared happiness, peace, prosperity and good health’.

 
 

The Bankruptcy code can help deepen bond prices

The Insolvency and Bankruptcy Code became law on May 28, 2016 and certain provisions of the code have come into force on August 5 and August 19, 2016. The bankruptcy code has separate provisions for bankruptcy for individuals, partnership firms and companies. It is now mandatory that the insolvency process be finished within 180 days. The Insolvency and Bankruptcy Board of India has been put in place to act as a regulator to look after insolvency proceedings. How will this new law affect the Indian landscape given its potential to change the corporate bond markets? Let’s have a closer look:

Increase investor confidence:

Investors, both domestic and foreign, have the tendency to stay away from corporate bonds in India even if they are deemed to be ‘investment grade’. The reason was sub-optimal recoveries in case of default. Now with the insolvency code having been implemented, investors can have more confidence in securities even if they are not as highly rated.

Bankruptcy code will help build the market:

Bankruptcy codes have globally been a significant factor in the development of the corporate bond markets. As an example, in Brazil, the corporate bond market as a percentage of GDP rose from 12.7 per cent to 26.3 per cent, in China from 18.8 per cent to 33.4 per cent, in Russia from 8.1 per cent to 13.1 per cent and in the UK, from 68.4 per cent to 106.8 per cent in a period of just five years after insolvency related reforms were carried out.

The market will acquire depth:

In the financial year 2016-17, Rs 7 lakh crore was raised in funds through corporate bonds, 40 per cent more than Rs. 5 lakh crore raised in 2015-16. The future potential in the Indian corporate bond market will only increase from here on as recovery processes have been streamlined. A deeper market emerging would redefine the ability of the Indian corporate sector to raise finances and reduce dependence on bank credit.

The insolvency law is perhaps one of the major reforms that the government has made, which will enable the country to raise funds for its growth in the infrastructural arena. A side benefit of this code would be in the deepening of the debt markets in the country and increase in investor interest in this segment.

 
 

Buddy Jokes

Jokes / Quotes

“I finally know what distinguishes man from the other beasts: financial worries.” – Jules Renard

I saw this bank that offered 24-hour banking. I did not go in it. No one has that much time.

A chemist, an engineer and an economist were stuck on an island. They found a washed up can of food lying on the beach. The chemist said, “If we gather some wood and make a fire and hold the can over the fire, the heat will expand the can and it will burst open.” The Engineer suggested finding a rock and smashing the can open with it. The economist who was listening to both of them finally spoke up, “Assume we had a can opener…”

Always borrow money from pessimists; they don’t expect it back!

 

Buddy Quiz

1) What kind of market is India?
a. Underdeveloped market
b. Emerging market
c. Developed market

2) Emerging markets tend to grow when investors target
a. Safety
b. Growth
c. Good returns

3) Srei’s corporate social responsibility activities are under the umbrella of:
a. Srei headquarters
b. Srei branch offices
c. Srei Foundation

4) Srei has started AFSI to help victims of which social scourge?
a. Acid attacks
b. Dowry
c. Female infanticide

5) The bankruptcy code became law in?
a. May 2017
b. June 2015
c. May 2016

Answer:1 – b; 2 – b; 3 – c; 4 – a; 5 – c.