technovation 2020...6 26 july 2020 business today 7 july 26, 2020 volume 29, number 15 cover by...
TRANSCRIPT
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July 26, 2020 ̀ 100 OC
Hindujas: The Battle Withinbusinesstoday.in
Can An Economic Strike Against China Work?
TECHNOVATIONTECHNOVATIONTECHNOVATIONTECHNOVATIONTECHNOVATIONTECHNOVATIONTECHNOVATIONTECHNOVATION202020202020
Technology is aT The hearT of new, emerging business models
ThaT are alTering several indusTries forever
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From the Editor
China: Do Barriers Work?
Repeated, unexpected strikes on Chinese economic interests in India since March may have caught the dragon by surprise, but retalia-tion is inevitable. In fact, the lack of any retaliatory move so far is build-ing up more intense anticipation. While it may have come to a head in the past few months — mostly fuelled by the rise of nationalism following the Chinese incursions and fatal face-offs — India has been erecting tariff and non-tariff barriers to reduce import dependence since 2017, when it had imposed anti-dumping duties on 93 Chinese products around the time the forces of the two counries were facing off each other in Doklam. With China+Hong Kong being India’s biggest trading partner, it hurts them the most. Particularly, when the duo together enjoys a $54.6 billion trade surplus against India. Tariffs have been raised on 3,465 items in the past 36 months with 92 anti-dumping measures in place against China, while investigations are on for another 11. Among non-tariff barriers, India is setting higher quality standards for imports to eliminate inferior quality products from the market such as toys, chemicals and fertilisers, steel, air-conditioners, pressure cookers, electric cables, even plugs and sockets and aluminium foil. The move is targeted at making imports less attractive. In-arguably, Indo-Chinese trade has shrunk 7 per cent in FY20. Joe C. Mathew ex-plains where India’s measures are succeeding — and where they are failing.
Meanwhile, cracks have surfaced in the tradition-oriented, religious and always-together Hinduja family after the eldest of the four brothers, Srichand, 84, has been ill with a severe case of dementia for the past three years. His two daughters, Shanu and Vinoo, have staked claim to Switzerland-based Hinduja Bank on behalf of their father. They have asked the courts to nullify a 2014 letter which states that assets held by one brother belong to all. Their sole claim to the bank is hotly contested by the other three brothers — Gopichand, 80, Prakash, 75 and Ashok, 70. While the brothers — the second generation of the group founded by Parmanand Deepchand Hinduja more than 100 years ago — held the $12.9 billion group together for decades, the next generation is finding it hard to work together. Differences have been brewing. As recently as last year, a board battle for management control between Srichand’s daughters and Prakash’s son Ramkrishan on Hinduja Global Solutions resulted in both sides resigning from the board in the interest of the company.
But with tempers flying, what makes this dispute particularly volatile is the lack of a family constitution. As next-gen comes on board, most families opt for written family constitutions to avoid conflicts. Japan’s Mitsui family’s consti-tution goes as far back as 1800. Several European business families such as the Mulliez family — owner of retail chain Auchan — have had a constitution for de-cades. At home, the Burmans of Dabur, GMR Group, Dalmias and the Murugap-pa Group have family constitutions. The Singhania-family run JK Group is man-aged by a family parliament called the JK Organisation. But the Hindujas didn’t plan it. Nevin John explores what that means for the Hinduja family dispute.
Also, don’t miss this issue’s cover package ‘Technovation 2020’, which ex-plores how new, emerging business models in some vastly different industries have one thing in common — inexhaustible reliance on technology. Read those fascinating stories on how that’s playing out in financial services, agriculture, telecom, IT, logistics, consumer products, education, consumer technology and even digital currency.
Editor-in-Chief: aroon purie Group Editorial Director: Raj Chengappa
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Joe C. Mathew, E. Kumar Sharma, Dipak Mondal, Manu Kaushik, Sumant Banerji
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Vol. 29, No. 15, for the fortnight July 13 to July 26, 2020. Released on July 13, 2020.
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6 726 July 2020 Business Today
July 26, 2020Volume 29, Number 15
Cover by NilaNJaN das
illustration by raJ verma
Quantum LeapPg. 36
Intelligent Farming Pg. 40
Telecom 2.0Pg. 46
Digital KiranasPg. 51
Time For Hyperscale Edge Data CentresPg. 58
Big Bang 2.0Pg. 60
Wheels of Change Pg. 67
Online LessonsPg. 72
Smart BuyingPg. 76
Firms Must Test Cyber Resilience Plans, PoliciesPg. 82
Coin Flipping Time Pg. 84
Recessions are The Mothers of IT InventionPg. 88
10
11
90
“Remain hungry for growth and challenge the
status quo”RaJiV BHalla
Best Advice I Ever Got
From time to time, you will see pages titled “An Impact Feature” or “Advertorial” in Business Today. This is no different from an advertisement and the magazine’s editorial staff is not involved in its creation in any way.
An Feature
businesstoday.in
stay CoNNeCted witH us oNwww.facebook.com/Businesstoday@Bt_india
Cracks in The Hinduja Undivided Family
Hinduja family seems headed for a split. why a family constitution
may have helped
Corporate
20Hole in the Pocket
Finances of households, a big source of funds for other sectors of the
economy, are worsening
India’s Stimulus Way Behind Most
the `21 lakh crore package is 10.5% of GdP, less that what a number of
other nations have announced
Industrial Production More Than Halves
industrial output fell 55 per cent in april as against 16.7 per cent
dip in March
The Point
8
Businesses are increasingly adopting
safer and smarter ways of manufacturing and
delivering services
New Biz Models
30
Vehicle Registrations Fall 88.9% in May
after nil sales in april, May is turning out to be only
slightly better for the auto sector; overall vehicle
registrations fell 88.9 per cent during the month
14
16
Tough Fighteconomic measures against China — where they work,
where they don't
Policy
T E C H n O L O g y S P E C I a L
Businesses are increasingly adopting
safer and smarter ways of manufacturing and
delivering services
New Biz Models
30
T E C H n O L O g y S P E C I a L
-
6 726 July 2020 Business Today
July 26, 2020Volume 29, Number 15
Cover by NilaNJaN das
illustration by raJ verma
Quantum LeapPg. 36
Intelligent Farming Pg. 40
Telecom 2.0Pg. 46
Digital KiranasPg. 51
Time For Hyperscale Edge Data CentresPg. 58
Big Bang 2.0Pg. 60
Wheels of Change Pg. 67
Online LessonsPg. 72
Smart BuyingPg. 76
Firms Must Test Cyber Resilience Plans, PoliciesPg. 82
Coin Flipping Time Pg. 84
Recessions are The Mothers of IT InventionPg. 88
10
11
90
“Remain hungry for growth and challenge the
status quo”RaJiV BHalla
Best Advice I Ever Got
From time to time, you will see pages titled “An Impact Feature” or “Advertorial” in Business Today. This is no different from an advertisement and the magazine’s editorial staff is not involved in its creation in any way.
An Feature
businesstoday.in
stay CoNNeCted witH us oNwww.facebook.com/Businesstoday@Bt_india
Cracks in The Hinduja Undivided Family
Hinduja family seems headed for a split. why a family constitution
may have helped
Corporate
20Hole in the Pocket
Finances of households, a big source of funds for other sectors of the
economy, are worsening
India’s Stimulus Way Behind Most
the `21 lakh crore package is 10.5% of GdP, less that what a number of
other nations have announced
Industrial Production More Than Halves
industrial output fell 55 per cent in april as against 16.7 per cent
dip in March
The Point
8
Businesses are increasingly adopting
safer and smarter ways of manufacturing and
delivering services
New Biz Models
30
Vehicle Registrations Fall 88.9% in May
after nil sales in april, May is turning out to be only
slightly better for the auto sector; overall vehicle
registrations fell 88.9 per cent during the month
14
16
Tough Fighteconomic measures against China — where they work,
where they don't
Policy
T E C H n O L O g y S P E C I a L
-
FY18
FY19
FY20
FY18
FY19
FY20
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
Lakh Crore
% of GDP
% of GDP
% of GDP
% of GDP
Lakh Crore
`Lakh Crore
The Point
Gross Financial savinGs ToUcH
THree-year low…
neT Financial liabiliTies rise sHarply in Q4…
HoUseHolds park MosT asseTs in
deposiTs and liFe insUrance
deposiTs rise FasTer THan bank borrowinGs in Q4
bank loans accoUnT For
a biG cHUnk oFliabiliTies
…wHile Gross Financial liabiliTies
Fall in Fy20
…THoUGH neTsavinGs rise a biT
in Q4
100
80
60
40
20
2018 2019 2020
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
FY18
FY19
FY20
* Net financial assets are gross financial assets less financial liabilities
Hole in tHe
PocketFinances of households, a big
source of funds for other sectors of the economy, are worsening
By shivani sharmaGraphics by Tanmoy chakraborty
52.6
1.8
20.6
7.31 7.
5
6.0
1
21.2
21.6
2.76
12 11.1
10.6
1.8
5.5
2.9 5
.6
-0.4 2
.8 4.2 5 4.2
3.9
2.9
6.1
4.9
4.4
13.2
7.1
7.5
6.5 9
.6
2.2
6.56
0.8
3 2.5
3
1.38
2.75
-0.1
8 1.38 2.
16 2.6
4
3.6
8 5.0
9
3.4
8
3.36
2.13
Commercial Banks
Life Insurance Funds
Currency Mutual Funds Co-operative
Banks
Bank DepositsBank Borrowings
Deposits and Borrowings of Households (`Lakh Cr)
75.9
Outstanding Position (at end-March 2020) % Share
Outstanding Position (At end-March 2020) % Share
23
.213.4
73.8
10.2 7.24.9
Commercial Banks
Housing Finance Companies
Financial Corporations
Co-operative Banks & Credit Societies
Others
`Lakh Crore
8 Business Today 26 July 2020 926 July 2020 Business Today
-
FY18
FY19
FY20
FY18
FY19
FY20
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
Lakh Crore
% of GDP
% of GDP
% of GDP
% of GDP
Lakh Crore
`Lakh Crore
The Point
Gross Financial savinGs ToUcH
THree-year low…
neT Financial liabiliTies rise sHarply in Q4…
HoUseHolds park MosT asseTs in
deposiTs and liFe insUrance
deposiTs rise FasTer THan bank borrowinGs in Q4
bank loans accoUnT For
a biG cHUnk oFliabiliTies
…wHile Gross Financial liabiliTies
Fall in Fy20
…THoUGH neTsavinGs rise a biT
in Q4
100
80
60
40
20
2018 2019 2020
Q1 2
019
Q2
2019
Q3
2019
Q4
2019
Q1 2
020
Q2
2020
Q3
2020
Q4
2020
FY18
FY19
FY20
`Lakh Crore
* Net financial assets are gross financial assets less financial liabilities
Hole in tHe
PocketFinances of households, a big
source of funds for other sectors of the economy, are worsening
By shivani sharmaGraphics by Tanmoy chakraborty
52.6
1.8
20.6
7.31 7.
5
6.0
1
21.2
21.6
2.76
12 11.1
10.6
1.8
5.5
2.9 5
.6
-0.4 2
.8 4.2 5 4.2
3.9
2.9
6.1
4.9
4.4
13.2
7.1
7.5
6.5 9
.6
2.2
6.56
0.8
3 2.5
3
1.38
2.75
-0.1
8 1.38 2.
16 2.6
4
3.6
8 5.0
9
3.4
8
3.36
2.13
Commercial Banks
Life Insurance Funds
Currency Mutual Funds Co-operative
Banks
Bank DepositsBank Borrowings
Deposits and Borrowings of Households (`Lakh Cr)
75.9
Outstanding Position (at end-March 2020) % Share
Outstanding Position (At end-March 2020) % Share
52.6
Commercial Commercial Banks
Life Insurance Life Insurance Funds
Currency Currency Mutual Funds Mutual Funds Co-operative Co-operative
Banks
23
.213.4
73.8
1.8
75.9
10.2 7.24.9
Commercial Banks
Housing Finance Companies
Financial Corporations
Co-operative Banks & Credit Societies
Others
`Lakh Crore
8 Business Today 26 July 2020 926 July 2020 Business Today
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10 11Business Today 26 July 2020 26 July 2020 Business Today
The Point
INDIA’S STIMULUS WAY BEHIND MOSTî The Central government has come out with a `21 lakh crore package to help the economy get out of the coronavirus-induced slump, which is 10.5 per cent of GDPî Packages announced by a large number of countries exceed India’s by a fair marginî Italy’s package, for instance, is 44.5 per cent of its GDP
Italy
Spain
UKGermany
Singapore
Thailand
Indonesia
India
Brazil
South Africa
France
Canada
US
Philippines
Malaysia
Australia
Hong Kong
Japan
South Korea
China
44.5
40.4
12.8
26.1 37.1 23.9
5.2
6.4
10.3
10
8.9
13
18.317.312.2
10.5
15.8
13.1
11.3
4
Covid support paCkage (% of CY19 GDP)Source: Motilal oswal
54321
0-1-2-3-4-5
fY14
fY18
25
20
15
10
5
0
-5
-10
-15
fY19 fY20
*Estimate
fY21*
Source: Motilal oswal
Source: CARE Ratings
Infrastructure Spend to Fall Furtherî Infrastructure spending as percentage of GDP has been falling after FY17 due to slowdown and limited spending capacity of the governmentî The number is expected to fall steeply in FY21 as coronavirus brings economy to a standstill, says a CRISIL reportî Infrastructure companies are expected to log a 13-17 per cent fall in revenue in FY21
industrial produCtion More than halvesî Industrial output fell 55 per cent in April as against 16.7 per cent dip in Marchî While manufacturing declined 64.3 per cent, power generation contracted 22.6 per cent, and mining 27.4 per centî Basic metals, non-metallic minerals, rubber & plastics, and chemicals & pharmaceuticals contracted more than 50 per cent
Cement volumes see sharp Fallî Cement volumes fell 13 per cent in Q4 of FY20 î Volumes in Q1 of FY21 are likely to decline 40 per cent, according to estimates by CARE Ratingsî April volumes fell 86 per cent (as per core industry data released by the Office of the Economic Advisor of India). May was somewhat better with decline of 10-15 per cent
inFrastruCture investMent (as % of GDP)
Change in voluMes (Y-o-Y %)
growth (% YoY)
Min
ing
0-2
7.4 -2
0.6
-64
.3-6
.8-2
2.6 -1
6.7
-55.
5
Man
ufac
turi
ng
elec
tric
ity
iip
March 2020April 2020
Source : MOSPI
-
10 11Business Today 26 July 2020 26 July 2020 Business Today
The Point
INDIA’S STIMULUS WAY BEHIND MOSTî The Central government has come out with a `21 lakh crore package to help the economy get out of the coronavirus-induced slump, which is 10.5 per cent of GDPî Packages announced by a large number of countries exceed India’s by a fair marginî Italy’s package, for instance, is 44.5 per cent of its GDP
Italy
Spain
UKGermany
Singapore
Thailand
Indonesia
India
Brazil
South Africa
France
Canada
US
Philippines
Malaysia
Australia
Hong Kong
Japan
South Korea
China
44.5
40.4
12.8
26.1 37.1 23.9
5.2
6.4
10.3
10
8.9
13
18.317.312.2
10.5
15.8
13.1
11.3
4
Covid support paCkage (% of CY19 GDP)Source: Motilal oswal
54321
0-1-2-3-4-5
fY14
fY18
25
20
15
10
5
0
-5
-10
-15
fY19 fY20
*Estimate
fY21*
Source: Motilal oswal
Source: CARE Ratings
Infrastructure Spend to Fall Furtherî Infrastructure spending as percentage of GDP has been falling after FY17 due to slowdown and limited spending capacity of the governmentî The number is expected to fall steeply in FY21 as coronavirus brings economy to a standstill, says a CRISIL reportî Infrastructure companies are expected to log a 13-17 per cent fall in revenue in FY21
industrial produCtion More than halvesî Industrial output fell 55 per cent in April as against 16.7 per cent dip in Marchî While manufacturing declined 64.3 per cent, power generation contracted 22.6 per cent, and mining 27.4 per centî Basic metals, non-metallic minerals, rubber & plastics, and chemicals & pharmaceuticals contracted more than 50 per cent
Cement volumes see sharp Fallî Cement volumes fell 13 per cent in Q4 of FY20 î Volumes in Q1 of FY21 are likely to decline 40 per cent, according to estimates by CARE Ratingsî April volumes fell 86 per cent (as per core industry data released by the Office of the Economic Advisor of India). May was somewhat better with decline of 10-15 per cent
inFrastruCture investMent (as % of GDP)
Change in voluMes (Y-o-Y %)
growth (% YoY)
Min
ing
0-2
7.4 -2
0.6
-64
.3-6
.8-2
2.6 -1
6.7
-55.
5
Man
ufac
turi
ng
elec
tric
ity
iip
March 2020April 2020
Source : MOSPI
-
12 Business Today 26 July 2020
The Point
Household Incomes Crash Despite Mini Surge in Jobsî In April, 49.3 per cent households surveyed by the CMIE reported income contraction compared to a year agoî In May 2020, things worsened, in spite of some improvement in employment; a measly 3.6
per cent of households said that their incomes were higher than a year agoî Only 3.8 per cent believed they would be better off a year laterî A high 68.2 per cent said they would be worse off the next year
MF Assets Rise 2.6% M-o-M as Markets Recover a Bitî Assets under management (AUMs) of mutual funds rose 2.6 per cent month-on-month to `24.5 lakh crore in Mayî One trigger was partial stock market recovery in April and May after steep losses in Marchî However, the AUM fell 5.4 per cent compared with May 2019. This translates into a `1.4 lakh crore reduction in assets
June FII Inflows Highest Since November 19î After withdrawing a massive $8.4 billion in March, FIIs have invested $4.5 billion in Indian markets since Aprilî Of that, $1.7 billion was invested in May and $2.8 billion in June (till the 19th)
40
35
30
25
20
15
10
5
0June 2017
Better than a year ago (%)
Better a year ahead (%)
May 2020
HouSeHoldS WItH INcoMe
AuM oF INdIAN MF INduStRy
(`lakh crore)FII INFloWS ($billion)
May 2019 May 2019May 2020 June 2020*
(Till June 19)
30
28
26
24
22
20
4
2
0
-2
-4
-6
-8
-10
Source: CMIE
Source: AMFI Source: DIPP
-
14 Business Today 26 July 2020
The Point
IndIa Inc. StepS up covId FIghtî A total of 113 companies out of 130 (87 per cent) which responded to a Nielsen survey have supported India’s fight against Covidî Of these 113, 84 have made cash contributions totalling `7,537 crore, which can be classified as CSR spend; of this, 57 per cent was contributed to the PM CARES Fundî The remaining 29 either contributed to other funds (`373 crore), and/or facilitated voluntary employee donations (`84 crore) that cannot be classified as CSR spend, or donated in kind (food and masks), for which assigning a monetary value is difficult
Vehicle Registrations Fall 88.9% in May
î After nil sales in April, May is turning out to be only slightly better for the auto sector; overall vehicle registrations fell 88.9 per cent during the month
î At the end of May, out of 26,500 outlets, only 60 per cent showrooms and 80 per cent workshops were operational in the country
14,19,842
2,35,933
51,430
80,392
`4,316 cr
56
`5,112 cr
`2,229 cr
24
`186 cr
`3,221 cr
34,053
1,881(-96%)
30,749(-87%)
2,711(-97%)
8,317(-76%)
1,59,039(-89%)
Two-wheeleR
TRacToR
ThRee wheeleR
coMMeRcial Vehicle
PM caReS Fund
Private sector
Private sector
Public sector
Public sector
Private (foreign)
sector
No. of companies
amount spent
Private (foreign)
sector
others
PaSSeNgeR Vehicle
May 2019May 2020
cSR SPeNdeRS FoR coVid
FighT ToTal`7,537
crore
ToTal84
4
Source: Federation of Automobile Dealers Associations
Source: Nielsen
-
16 Business Today 26 July 2020
By Joe C. Mathew & SuMant BanerJiilluStration By raJ verMa
Tough FightEconomic measures against
China — where they work, where they don't
M
Cause and effeCt
PoliCy: Between 2014 and 2016, In-dia reduced import duties on many electronic items and machinery
EFFECT: Imports from China increased sig-nificantly between 2013 and 2018 for electronic goods, solar panels/ modules and other machinery
PoliCy: India starts increasing import duties on mobile phones, LED and CRT TVs, computers, etc, from Budget 2016/17, and more significantly, in 2017/18 and 2018/19
EFFECT: Import of elec-tronic items, machinery and solar equipment, which peaked in 2017/18, began declining after that. It coincided with a downturn in India’s economy
PoliCy: To pro-tect domestic in-dustry, safeguard and anti-dumping duties imposed on steel from China between 2015 and 2016
EFFECT: Steel imports from mainland China and Hong Kong peaked in 2014/15; they have declined since then
in sTorE For ThE FuTurE: On June 23, India imposed anti-dumping duty on some grades of steel from China, Vietnam and Korea for five years. It is the clearest indication yet of what may follow in other sectors
umbai-based Vu Technologies is a relatively new entrant in India’s fast-growing smart TV space. But it has managed to hold its own against established rivals like Sam-sung, LG and Sony as well as a slew of Chinese companies like Xiaomi, Oppo and One Plus. The `1,000 crore company claims to be the largest maker of 4K TVs in India and a seg-ment leader in India’s online marketplace. The company has not been impacted by India’s decision to discourage sourc-ing of electronic components from its second-biggest bilat-eral trade partner, China, through higher tariffs, but is not too happy about the frequent changes in tariffs and policies in the country. This, it says, prevents manufacturers from committing funding to build own manufacturing capacities. “From my perspective, the big challenge in government pol-icy is that there is not much consistency. Every day, you read the papers, and suddenly the active duty is 20 per cent, and then 10 per cent. The point is, whether it’s 10 per cent or 20 per cent or whatever, don't change the policy for five years,” says Devita Saraf, Co-founder and CEO, Vu Technologies. “When you do that, it’s very harmful for entrepreneurs who take risk and set up manufacturing and then find that, sud-denly, there’s a political meeting and the policy is changed.” Vu has a factory in Bhiwandi, though most of the large TVs it sells in India are assembled in China and have parts sourced from all over the world.
-
16 Business Today 26 July 2020
By Joe C. Mathew & SuMant BanerJiilluStration By raJ verMa
Tough FightEconomic measures against
China — where they work, where they don't
M
Cause and effeCt
PoliCy: Between 2014 and 2016, In-dia reduced import duties on many electronic items and machinery
EFFECT: Imports from China increased sig-nificantly between 2013 and 2018 for electronic goods, solar panels/ modules and other machinery
PoliCy: India starts increasing import duties on mobile phones, LED and CRT TVs, computers, etc, from Budget 2016/17, and more significantly, in 2017/18 and 2018/19
EFFECT: Import of elec-tronic items, machinery and solar equipment, which peaked in 2017/18, began declining after that. It coincided with a downturn in India’s economy
PoliCy: To pro-tect domestic in-dustry, safeguard and anti-dumping duties imposed on steel from China between 2015 and 2016
EFFECT: Steel imports from mainland China and Hong Kong peaked in 2014/15; they have declined since then
in sTorE For ThE FuTurE: On June 23, India imposed anti-dumping duty on some grades of steel from China, Vietnam and Korea for five years. It is the clearest indication yet of what may follow in other sectors
umbai-based Vu Technologies is a relatively new entrant in India’s fast-growing smart TV space. But it has managed to hold its own against established rivals like Sam-sung, LG and Sony as well as a slew of Chinese companies like Xiaomi, Oppo and One Plus. The `1,000 crore company claims to be the largest maker of 4K TVs in India and a seg-ment leader in India’s online marketplace. The company has not been impacted by India’s decision to discourage sourc-ing of electronic components from its second-biggest bilat-eral trade partner, China, through higher tariffs, but is not too happy about the frequent changes in tariffs and policies in the country. This, it says, prevents manufacturers from committing funding to build own manufacturing capacities. “From my perspective, the big challenge in government pol-icy is that there is not much consistency. Every day, you read the papers, and suddenly the active duty is 20 per cent, and then 10 per cent. The point is, whether it’s 10 per cent or 20 per cent or whatever, don't change the policy for five years,” says Devita Saraf, Co-founder and CEO, Vu Technologies. “When you do that, it’s very harmful for entrepreneurs who take risk and set up manufacturing and then find that, sud-denly, there’s a political meeting and the policy is changed.” Vu has a factory in Bhiwandi, though most of the large TVs it sells in India are assembled in China and have parts sourced from all over the world.
-
18 19Business Today 26 July 2020 26 July 2020 Business Today
For all the talk of promoting locally made goods, be it in government contracts or house-hold appliances, from a policy perspective, India’s push for a self-reliant economy is fairly recent. The framework of the first two an-nual budgets of the Modi government after 2014 was to the contrary. Import duties were slashed on a host of products and their compo-nents such as LED/LCD TV panels, microwave ovens, solar equipment and laptops/desktops. It was only in FY17 and afterwards that duties on all these products were either partially re-stored or increased.
The trend of imports from mainland Chi-na and Hong Kong follows roughly the same trajectory. For example, imports of electrical machinery from the region rose from $14.81 billion in FY14 and peaked at $29.87 billion in FY18, before falling in last two fiscals. In case of other machinery, where focus of policymak-ers has been less intense so far, there is no de-cline yet. Imports were $9.61 billion in FY14, rose for a cou-ple of years and stagnated around $14.67 billion after that.
The slowdown, or stagnation, in imports is in tune with global trade trends. A decline in global demand will auto-matically impact import of raw materials to produce goods for exports. Growth in India’s overall exports and imports had been declining long before Covid-19 disrupted sup-ply chains and muted domestic demand. India’s efforts to make imports from China expensive have led to re-routing,
not just through Hong Kong, but also several South East nations like Singapore, Indonesia and Vietnam. This has caused a dip in import figures from mainland China, without a cor-responding reduction in import dependence. The absence of clear classification of goods (HS Codes) also plays a role as goods on which there is higher tariff or anti-dumping duty are often imported under different tariff lines or simply under the “others” category. The gov-ernment is attempting to plug most of these loopholes but the impact of its steps will be visible only in the medium term. The decline in value of goods imported from China and Hong Kong should thus be seen as the result of a combination of factors of which protection-ist measures are just one part.
Import of solar panels and modules is perhaps the best example. Imposition of safe-guard duties in mid-2018 to check import of solar panels from China has had little impact.
Further, India’s efforts to have 100 GW solar power by 2022 largely depend on Chinese equipment as the country accounts for nearly 80 per cent of India’s solar panel and module imports. This cannot be substituted by local pro-duction in a hurry. Any ban on Chinese imports or substan-tial increase in duties is only likely to harm domestic power producers in the short term. “There was an attempt to curb imports from China with safeguard duties but it was not very successful. We are not in a position to self-sustain. Chi-
Bureau of Indian Standards (BIS), is bringing more prod-ucts under compulsory quality certification. In the last six months, standards have been reviewed or introduced for steel, chemicals and fertilisers, air-conditioners, plugs and sockets, pressure cookers, electric cables, rubber hose for LPG, aluminium foil, toys, flat transparent sheet glass, etc, all aimed at making imports from China less attractive. The BIS has also notified that products such as LED modules for general lighting, keyboard, induction stove, ATM ma-chines, USB external hard disk drive, wireless headphone, earphone, USB storage devices above 256 GB, electronic music system, etc, all mainly imported from China, will have to undergo quality compliance from October 1. The cumulative effect of these measures, Commerce Minister Piyush Goyal tweeted, will see the country in the "next five years fulfill our aspirations, encourage entrepreneurship and our businesses to grow, make quality products, become the global factory of the world, create new job opportuni-ties and ensure a better future for every citizen of the coun-try.” Incentives and protectionist measures alone may not be enough to fulfill this dream. As Vu Technology's Saraf points out, lack of consistency in policy — like reducing and then restoring duties in a span of just three years — could reduce the appetite of industry to invest in manufacturing in the country. Some even believe it will be unrealistic for India to insulate itself from China and make each and every machine component in-house . Considering the tensions at the borders, expect a lot of action on the trade front.
@joecmathew; sumantbanerji
na has the full value chain for manufacturing solar panels, modules and cells,” says Ashish Khanna, Managing Direc-tor, & CEO, Tata Power Solar & President, Tata Power Re-newables. “They also have the scale that makes them cost-effective. For us, till the time we have the full supply chain, any abrupt stoppage (of imports) will harm the industry.” He adds: “We need a concrete policy that incentivises man-ufacturing of the full supply chain. It is capital intensive, but given the demand for renewable energy that India is pro-jected to see, it is possible. Till we have the full supply chain here, stopping imports abruptly will harm the country.
More MeasuresThe iron and steel sector is an outlier here. Anti-dumping duties imposed by India to curb dumping from mainland China between 2014 and 2016 produced the desired results. Imports of iron and steel from China between 2015 and 2018, which peaked in the second half of FY15, have been declining ever since.
Despite moderate success, the government seems to be pinning a lot of hope on such measures as it expects high tariffs, anti-dumping duties and mandatory standards to make India less reliant on China. It has already raised tar-iffs on 3,465 items in the last three years to protect domestic industry. According to the World Trade Organization’s da-tabase, India has 92 anti-dumping measures against China in force, and investigations on another 11 are in progress. Similarly, it has initiated 203 sanitary and phytosanitary measures against WTO member countries, including Chi-na. In addition, India's official standards setting agency,
Policy – China
Anti-dumping measures taken
against China
In force:91
Initiated:
11
Countervailing duty
In force:5
Initiated: 1
25 per cent safeguard duty on steel imposed from July 30, 2018, to July 29, 2019. This was lowered to 20 per cent from July 30, 2019, to January 29, 2020, and 15 per cent fromJanuary 30, 2020, to July 29, 2020
From August, basic customs duty of 20-25 per cent is proposed on solar modules in first year and 40 per cent in subsequent years. On solar panels, a duty of 10-15 per cent has been proposed from August, which will rise to 30-40 per cent in subsequent years
Safeguard duty on import of some grades of Chinese steel imposed from September 2015 till March 2018. The duty was staggered between 20 per cent at the start and 10 per cent at the end
Between 2017 and 2018, India also imposed anti-dumping duty on certain grades of steel from China. On June 23, it again imposed anti-dumping duty on some grades of steel from China, Vietnam and Korea for five years
The domestic steel industry has sought a flat 25 per cent safeguard duty on steel imports, primarily from China, to protect local players; this has come at a time the industry is hurting due to low overall demand
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
3.02 2.224.11 3.53 2.64 3.18 3.34
2.84
0.40 0.600.60 1.97 2.83 3.43 1.74 1.33
10.11 9.6110.32 10.70
11.24
13.6814.67
14.6714.5114.81
17.41
20.76
23.08
29.87 29.29
27.80Electronics and electrical machinery
Nuclear reactors, boilers, machiney & mechanical parts
Iron & steel
Solar panels and modules
The BarriersThe Trade WarImports of key goods from China and Hong Kong ($bn)
Source: Commerce Ministry
-
18 19Business Today 26 July 2020 26 July 2020 Business Today
For all the talk of promoting locally made goods, be it in government contracts or house-hold appliances, from a policy perspective, India’s push for a self-reliant economy is fairly recent. The framework of the first two an-nual budgets of the Modi government after 2014 was to the contrary. Import duties were slashed on a host of products and their compo-nents such as LED/LCD TV panels, microwave ovens, solar equipment and laptops/desktops. It was only in FY17 and afterwards that duties on all these products were either partially re-stored or increased.
The trend of imports from mainland Chi-na and Hong Kong follows roughly the same trajectory. For example, imports of electrical machinery from the region rose from $14.81 billion in FY14 and peaked at $29.87 billion in FY18, before falling in last two fiscals. In case of other machinery, where focus of policymak-ers has been less intense so far, there is no de-cline yet. Imports were $9.61 billion in FY14, rose for a cou-ple of years and stagnated around $14.67 billion after that.
The slowdown, or stagnation, in imports is in tune with global trade trends. A decline in global demand will auto-matically impact import of raw materials to produce goods for exports. Growth in India’s overall exports and imports had been declining long before Covid-19 disrupted sup-ply chains and muted domestic demand. India’s efforts to make imports from China expensive have led to re-routing,
not just through Hong Kong, but also several South East nations like Singapore, Indonesia and Vietnam. This has caused a dip in import figures from mainland China, without a cor-responding reduction in import dependence. The absence of clear classification of goods (HS Codes) also plays a role as goods on which there is higher tariff or anti-dumping duty are often imported under different tariff lines or simply under the “others” category. The gov-ernment is attempting to plug most of these loopholes but the impact of its steps will be visible only in the medium term. The decline in value of goods imported from China and Hong Kong should thus be seen as the result of a combination of factors of which protection-ist measures are just one part.
Import of solar panels and modules is perhaps the best example. Imposition of safe-guard duties in mid-2018 to check import of solar panels from China has had little impact.
Further, India’s efforts to have 100 GW solar power by 2022 largely depend on Chinese equipment as the country accounts for nearly 80 per cent of India’s solar panel and module imports. This cannot be substituted by local pro-duction in a hurry. Any ban on Chinese imports or substan-tial increase in duties is only likely to harm domestic power producers in the short term. “There was an attempt to curb imports from China with safeguard duties but it was not very successful. We are not in a position to self-sustain. Chi-
Bureau of Indian Standards (BIS), is bringing more prod-ucts under compulsory quality certification. In the last six months, standards have been reviewed or introduced for steel, chemicals and fertilisers, air-conditioners, plugs and sockets, pressure cookers, electric cables, rubber hose for LPG, aluminium foil, toys, flat transparent sheet glass, etc, all aimed at making imports from China less attractive. The BIS has also notified that products such as LED modules for general lighting, keyboard, induction stove, ATM ma-chines, USB external hard disk drive, wireless headphone, earphone, USB storage devices above 256 GB, electronic music system, etc, all mainly imported from China, will have to undergo quality compliance from October 1. The cumulative effect of these measures, Commerce Minister Piyush Goyal tweeted, will see the country in the "next five years fulfill our aspirations, encourage entrepreneurship and our businesses to grow, make quality products, become the global factory of the world, create new job opportuni-ties and ensure a better future for every citizen of the coun-try.” Incentives and protectionist measures alone may not be enough to fulfill this dream. As Vu Technology's Saraf points out, lack of consistency in policy — like reducing and then restoring duties in a span of just three years — could reduce the appetite of industry to invest in manufacturing in the country. Some even believe it will be unrealistic for India to insulate itself from China and make each and every machine component in-house . Considering the tensions at the borders, expect a lot of action on the trade front.
@joecmathew; sumantbanerji
na has the full value chain for manufacturing solar panels, modules and cells,” says Ashish Khanna, Managing Direc-tor, & CEO, Tata Power Solar & President, Tata Power Re-newables. “They also have the scale that makes them cost-effective. For us, till the time we have the full supply chain, any abrupt stoppage (of imports) will harm the industry.” He adds: “We need a concrete policy that incentivises man-ufacturing of the full supply chain. It is capital intensive, but given the demand for renewable energy that India is pro-jected to see, it is possible. Till we have the full supply chain here, stopping imports abruptly will harm the country.
More MeasuresThe iron and steel sector is an outlier here. Anti-dumping duties imposed by India to curb dumping from mainland China between 2014 and 2016 produced the desired results. Imports of iron and steel from China between 2015 and 2018, which peaked in the second half of FY15, have been declining ever since.
Despite moderate success, the government seems to be pinning a lot of hope on such measures as it expects high tariffs, anti-dumping duties and mandatory standards to make India less reliant on China. It has already raised tar-iffs on 3,465 items in the last three years to protect domestic industry. According to the World Trade Organization’s da-tabase, India has 92 anti-dumping measures against China in force, and investigations on another 11 are in progress. Similarly, it has initiated 203 sanitary and phytosanitary measures against WTO member countries, including Chi-na. In addition, India's official standards setting agency,
Policy – China
Anti-dumping measures taken
against China
In force:91
Initiated:
11
Countervailing duty
In force:5
Initiated: 1
25 per cent safeguard duty on steel imposed from July 30, 2018, to July 29, 2019. This was lowered to 20 per cent from July 30, 2019, to January 29, 2020, and 15 per cent fromJanuary 30, 2020, to July 29, 2020
From August, basic customs duty of 20-25 per cent is proposed on solar modules in first year and 40 per cent in subsequent years. On solar panels, a duty of 10-15 per cent has been proposed from August, which will rise to 30-40 per cent in subsequent years
Safeguard duty on import of some grades of Chinese steel imposed from September 2015 till March 2018. The duty was staggered between 20 per cent at the start and 10 per cent at the end
Between 2017 and 2018, India also imposed anti-dumping duty on certain grades of steel from China. On June 23, it again imposed anti-dumping duty on some grades of steel from China, Vietnam and Korea for five years
The domestic steel industry has sought a flat 25 per cent safeguard duty on steel imports, primarily from China, to protect local players; this has come at a time the industry is hurting due to low overall demand
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
3.02 2.224.11 3.53 2.64 3.18 3.34
2.84
0.40 0.600.60 1.97 2.83 3.43 1.74 1.33
10.11 9.6110.32 10.70
11.24
13.6814.67
14.6714.5114.81
17.41
20.76
23.08
29.87 29.29
27.80Electronics and electrical machinery
Nuclear reactors, boilers, machiney & mechanical parts
Iron & steel
Solar panels and modules
The BarriersThe Trade WarImports of key goods from China and Hong Kong ($bn)
Source: Commerce Ministry
-
2126 July 2020 Business Today
By nevin john
Hinduja family seems headed for a split. Why a family constitution may have helped
July 1, 2014: The brothers reportedly sign an agreement that assets held by one brother belong to all and appoint each other as their executors
2015: Srichand Hinduja sought to disavow the agreement signed with the other three brothers; the family dispute started
Sep 4 2019: Hinduja Global Solutions board accepts resignations of cousins Ramkrishan Hinduja (chairman), Shanu Hinduja (co-chairperson) and Vinoo Hinduja (director)
June 23, 2020: Vinoo, on behalf of Srichand, moves High Court of Justice in London seeking separation. Wants her family to control Hinduja Bank
What the Fight is About
ver the past 50 years, the Hindujas have epitomised bonding, as they dined, prayed and holidayed together, even as the family expanded from the second generation to the third and fourth generations. The business empire also grew as they moved headquarters from Shikarpur in Sindh province of today’s Pakistan to Tehran and then London, though most of their businesses are headquar-tered in India.
In fact, it was the unity of the second generation – the four sons of patriarch Parmanand Deepchand Hinduja – Srichand (84), Gopichand (80), Prakash (75) and Ashok (70)– that helped them sail through political controver-sies, including the one in London in which a British cabi-net minister lost his job, and the Bofors scandal, which shook Indian politics in the late 80s.
Cracks in The Hinduja Undivided Family
OFrom Left (Standing): Gopichand Hinduja, Prakash Hinduja, Ashok Hinduja with Srichand Hinduja (seated)
PhotograPh by UMESh goSWaMI
-
2126 July 2020 Business Today
By nevin john
Hinduja family seems headed for a split. Why a family constitution may have helped
July 1, 2014: The brothers reportedly sign an agreement that assets held by one brother belong to all and appoint each other as their executors
2015: Srichand Hinduja sought to disavow the agreement signed with the other three brothers; the family dispute started
Sep 4 2019: Hinduja Global Solutions board accepts resignations of cousins Ramkrishan Hinduja (chairman), Shanu Hinduja (co-chairperson) and Vinoo Hinduja (director)
June 23, 2020: Vinoo, on behalf of Srichand, moves High Court of Justice in London seeking separation. Wants her family to control Hinduja Bank
What the Fight is About
ver the past 50 years, the Hindujas have epitomised bonding, as they dined, prayed and holidayed together, even as the family expanded from the second generation to the third and fourth generations. The business empire also grew as they moved headquarters from Shikarpur in Sindh province of today’s Pakistan to Tehran and then London, though most of their businesses are headquar-tered in India.
In fact, it was the unity of the second generation – the four sons of patriarch Parmanand Deepchand Hinduja – Srichand (84), Gopichand (80), Prakash (75) and Ashok (70)– that helped them sail through political controver-sies, including the one in London in which a British cabi-net minister lost his job, and the Bofors scandal, which shook Indian politics in the late 80s.
Cracks in The Hinduja Undivided Family
OFrom Left (Standing): Gopichand Hinduja, Prakash Hinduja, Ashok Hinduja with Srichand Hinduja (seated)
PhotograPh by UMESh goSWaMI
-
22 23Business Today 26 July 2020 26 July 2020 Business Today
That was then. Today, the Hinduja Group is on the verge of a vertical split as the three younger brothers rally against the family of Srichand P. Hinduja, the chairman of the group who was instrumental in creating its financial institutions, including IndusInd Bank and Hinduja Bank (Switzerland). The five group companies which are listed together generated revenues of ̀ 65,700 crore and profits of `5,500 crore in 2018/19.
The root of the current rift lies in 2014, when the broth-ers signed a letter that assets held by one brother belonged to all. The three younger brothers allegedly tried to use the
2014 letter to take control of Hinduja Bank (Switzerland), which was in Srichand's sole name, resulting in the legal battle. The cracks started surfacing as the third generation —the children of the four brothers — started moving up the ladder and holding vital positions in family businesses, say sources in the know. “Though the brothers were close ini-tially, problems cropped up between daughters of Srichand and their cousins, who are on boards of group companies,” says a source from another business family.
Documents submitted to the High Court in England show the family dispute had started way back in 2015.
and principles,” they said.Presiding over a private hearing in the Chancery Di-
vision of the High Court, Justice Sarah Falk agreed that Srichand Hinduja’s daughter, Vinoo, could act on her father’s behalf as his “litigation friend” and safeguard her father's interests due to his ill health. Sources close to Srichand’s family say that though the initial claim is for the Swiss bank, the matter will grow to gain control of one- fourth of the entire assets of the Hinduja family. Both the parties did not comment on detailed questionnaires from BT.
New-Gen IssuesThe Hinduja Group is largely controlled by the four broth-ers. But operations of most businesses – Ashok Leyland, Gulf Oil, Hinduja Renewables, GOCL, Hinduja Bank (Swit-zerland) among others – are headed by the third generation, except IndusInd Bank, where professionals are in charge. However, the promoter holding company of the bank is controlled by youngest brother Ashok Hinduja as chairman.
Outsiders are intrigued why Srichand’s family has staked their claim only for this bank. “It is likely that they are counting it as an asset outside the overall family assets of the Hindujas. They will claim their portion of other businesses as well,” says a banker in Mumbai.
Srichand’s daughter Shanu is chair-person of Hinduja Foundation, US. Vi-noo, who has filed the litigation against the uncles on behalf of her father, is director of Hinduja Ventures Ltd, Hin-duja Group India Ltd and GOCL Cor-poration.
Hinduja Bank (Switzerland) was founded by Srichand Hinduja in Gene-
va in 1994. It is a small bank with assets of 343 million Swiss francs (`2,744 crore) as of 2018. The bank offers person-alised services to its high net worth customers. It also owns close to 5 per cent in Ashok Leyland.
Gopichand’s two sons — Sanjay and Dheeraj – are heading two prominent businesses in the group. However, daughter Rita is not in business. The management control of the automotive business is under Dheeraj Hinduja. He is chairman of the second-largest manufacturer of com-mercial vehicles in India, Ashok Leyland. Dheeraj is also the chairman of Hinduja Tech, the engineering and digital technologies service provider for automotive manufac-turing industry, and Hinduja Leyland Finance Ltd, a non-banking financial company for vehicle financing.
Sanjay Hinduja is chairman of Gulf Oil International and India-listed Gulf Oil Lubricants India Ltd. Gulf Oil has a manufacturing facility in Silvassa and over 350 distribu-tors and 50,000 retail counters in the country. Ashok Hin-duja’s son Shom is director in the Indian business. It is one of the largest independent downstream lubricant compa-nies in the world with sales in over 100 countries. It owns blending plants in Argentina, China, India, the Philippines
Srichand Hinduja himself sought to disavow the agreement signed with the other three brothers on July 1, 2014.
The elder Hinduja sought a meeting with his brothers in 2015 to discuss an exit route, but that did not work out. They had an unpleasant discussion during a board meeting in 2018 too. By then, the family had two camps — Srichand’s daughters Shanu and Vinoo on one side and the rest of the family on the other. Prakash Hinduja, the third brother, who initially supported Srichand for nullifying the 2014 let-ter, also switched sides, says another source in the group.
The current legal battle is over ownership of Hinduja Bank (Switzerland), though it may not stop there.
Vinoo Hinduja moved the High Court of Justice in Lon-don, acting on behalf of her father, asking for separation. She wants her family to get control of Geneva-based Hin-duja Bank (Switzerland), in which her father is chairman emeritus and elder sister Shanu is chairperson. Shanu’s son Karam Hinduja was appointed CEO of the bank in mid-June; this had added fuel in the simmering feud.
No Family Constitution In many business families, as new gen-erations come on board, a family con-stitution is framed. Family constitu-tion advocates point to recent tussles and splits in high-profile business fami-lies — the Ambanis and the Bajaj fam-ily, to name just two — as a good reason to draw such instruments. In Japan, the Mitsui family constitution dates back to before 1800. European business families like the Mulliez family that owns Auchan, one of France's biggest retail chains, have had family constitu-tions that go back decades.
In India, the Dalmias, GMR Group promoters, the Burmans of Dabur and Murugappa Group promoters have formal family constitutions. The Singhania-run JK Group has an elaborate family parliament called the JK Organisation.
The Hinduja battle is similar to that of the Bajaj family where also it was one brother versus the rest. Shishir Ba-jaj’s family finally separated from Rahul Bajaj and cousins to chart out a new journey. The families of Rahul Bajaj and his cousins reached a family agreement to ring-fence busi-nesses from future disputes. Management responsibilities have been given to qualified family members — Rajiv Bajaj got the responsibility of Bajaj Auto and his younger brother Sanjiv Bajaj got Bajaj Finserv — but every third generation family hold stakes in all businesses. It is time for Hindujas to consult the Bajaj’s.
The three Hinduja brothers, who are defending the case, said in a statement that Srichand’s health has been deteriorating for a number of years. He is suffering from Lewy Body disease, which is a form of dementia. “It is very unfortunate that these proceedings are taking place as they go against our founder’s and family's values
Corporate – Hindujas
Parmanand Deepchand Hinduja
Founder, Hinduja Group
Jamuna Parmanand Hinduja
Srichand(Son)
Shanu(Daughter)
Vinoo(Daughter)
Ajay(Son)
Ramkrishan(Son)
Renuka(Daughter)
Girdhar(Son)
(1932-1962)
Gopichand(Son)
Prakash(Son)
Ashok(Son)
Sanjay(Son)
Dheeraj(Son)
Shom(Son)
Satya(Daughter)
Ambika(Daughter)
Rita(Daughter)
The Three Generations
Outsiders are intrigued why
Srichand’s family has
staked its claim only for
one bank
-
22 23Business Today 26 July 2020 26 July 2020 Business Today
That was then. Today, the Hinduja Group is on the verge of a vertical split as the three younger brothers rally against the family of Srichand P. Hinduja, the chairman of the group who was instrumental in creating its financial institutions, including IndusInd Bank and Hinduja Bank (Switzerland). The five group companies which are listed together generated revenues of ̀ 65,700 crore and profits of `5,500 crore in 2018/19.
The root of the current rift lies in 2014, when the broth-ers signed a letter that assets held by one brother belonged to all. The three younger brothers allegedly tried to use the
2014 letter to take control of Hinduja Bank (Switzerland), which was in Srichand's sole name, resulting in the legal battle. The cracks started surfacing as the third generation —the children of the four brothers — started moving up the ladder and holding vital positions in family businesses, say sources in the know. “Though the brothers were close ini-tially, problems cropped up between daughters of Srichand and their cousins, who are on boards of group companies,” says a source from another business family.
Documents submitted to the High Court in England show the family dispute had started way back in 2015.
and principles,” they said.Presiding over a private hearing in the Chancery Di-
vision of the High Court, Justice Sarah Falk agreed that Srichand Hinduja’s daughter, Vinoo, could act on her father’s behalf as his “litigation friend” and safeguard her father's interests due to his ill health. Sources close to Srichand’s family say that though the initial claim is for the Swiss bank, the matter will grow to gain control of one- fourth of the entire assets of the Hinduja family. Both the parties did not comment on detailed questionnaires from BT.
New-Gen IssuesThe Hinduja Group is largely controlled by the four broth-ers. But operations of most businesses – Ashok Leyland, Gulf Oil, Hinduja Renewables, GOCL, Hinduja Bank (Swit-zerland) among others – are headed by the third generation, except IndusInd Bank, where professionals are in charge. However, the promoter holding company of the bank is controlled by youngest brother Ashok Hinduja as chairman.
Outsiders are intrigued why Srichand’s family has staked their claim only for this bank. “It is likely that they are counting it as an asset outside the overall family assets of the Hindujas. They will claim their portion of other businesses as well,” says a banker in Mumbai.
Srichand’s daughter Shanu is chair-person of Hinduja Foundation, US. Vi-noo, who has filed the litigation against the uncles on behalf of her father, is director of Hinduja Ventures Ltd, Hin-duja Group India Ltd and GOCL Cor-poration.
Hinduja Bank (Switzerland) was founded by Srichand Hinduja in Gene-
va in 1994. It is a small bank with assets of 343 million Swiss francs (`2,744 crore) as of 2018. The bank offers person-alised services to its high net worth customers. It also owns close to 5 per cent in Ashok Leyland.
Gopichand’s two sons — Sanjay and Dheeraj – are heading two prominent businesses in the group. However, daughter Rita is not in business. The management control of the automotive business is under Dheeraj Hinduja. He is chairman of the second-largest manufacturer of com-mercial vehicles in India, Ashok Leyland. Dheeraj is also the chairman of Hinduja Tech, the engineering and digital technologies service provider for automotive manufac-turing industry, and Hinduja Leyland Finance Ltd, a non-banking financial company for vehicle financing.
Sanjay Hinduja is chairman of Gulf Oil International and India-listed Gulf Oil Lubricants India Ltd. Gulf Oil has a manufacturing facility in Silvassa and over 350 distribu-tors and 50,000 retail counters in the country. Ashok Hin-duja’s son Shom is director in the Indian business. It is one of the largest independent downstream lubricant compa-nies in the world with sales in over 100 countries. It owns blending plants in Argentina, China, India, the Philippines
Srichand Hinduja himself sought to disavow the agreement signed with the other three brothers on July 1, 2014.
The elder Hinduja sought a meeting with his brothers in 2015 to discuss an exit route, but that did not work out. They had an unpleasant discussion during a board meeting in 2018 too. By then, the family had two camps — Srichand’s daughters Shanu and Vinoo on one side and the rest of the family on the other. Prakash Hinduja, the third brother, who initially supported Srichand for nullifying the 2014 let-ter, also switched sides, says another source in the group.
The current legal battle is over ownership of Hinduja Bank (Switzerland), though it may not stop there.
Vinoo Hinduja moved the High Court of Justice in Lon-don, acting on behalf of her father, asking for separation. She wants her family to get control of Geneva-based Hin-duja Bank (Switzerland), in which her father is chairman emeritus and elder sister Shanu is chairperson. Shanu’s son Karam Hinduja was appointed CEO of the bank in mid-June; this had added fuel in the simmering feud.
No Family Constitution In many business families, as new gen-erations come on board, a family con-stitution is framed. Family constitu-tion advocates point to recent tussles and splits in high-profile business fami-lies — the Ambanis and the Bajaj fam-ily, to name just two — as a good reason to draw such instruments. In Japan, the Mitsui family constitution dates back to before 1800. European business families like the Mulliez family that owns Auchan, one of France's biggest retail chains, have had family constitu-tions that go back decades.
In India, the Dalmias, GMR Group promoters, the Burmans of Dabur and Murugappa Group promoters have formal family constitutions. The Singhania-run JK Group has an elaborate family parliament called the JK Organisation.
The Hinduja battle is similar to that of the Bajaj family where also it was one brother versus the rest. Shishir Ba-jaj’s family finally separated from Rahul Bajaj and cousins to chart out a new journey. The families of Rahul Bajaj and his cousins reached a family agreement to ring-fence busi-nesses from future disputes. Management responsibilities have been given to qualified family members — Rajiv Bajaj got the responsibility of Bajaj Auto and his younger brother Sanjiv Bajaj got Bajaj Finserv — but every third generation family hold stakes in all businesses. It is time for Hindujas to consult the Bajaj’s.
The three Hinduja brothers, who are defending the case, said in a statement that Srichand’s health has been deteriorating for a number of years. He is suffering from Lewy Body disease, which is a form of dementia. “It is very unfortunate that these proceedings are taking place as they go against our founder’s and family's values
Corporate – Hindujas
Parmanand Deepchand Hinduja
Founder, Hinduja Group
Jamuna Parmanand Hinduja
Srichand(Son)
Shanu(Daughter)
Vinoo(Daughter)
Ajay(Son)
Ramkrishan(Son)
Renuka(Daughter)
Girdhar(Son)
(1932-1962)
Gopichand(Son)
Prakash(Son)
Ashok(Son)
Sanjay(Son)
Dheeraj(Son)
Shom(Son)
Satya(Daughter)
Ambika(Daughter)
Rita(Daughter)
The Three Generations
Outsiders are intrigued why
Srichand’s family has
staked its claim only for
one bank
-
24 Business Today 26 July 2020
and the United Arab Emirates. Gulf Oil Lubricants India posted a profit of `203 crore on a revenue of `1,644 crore in FY20. Another Hinduja group company, GOCL, acquired US-based specialty chemicals maker Houghton Interna-tional Inc. for $1.05 billion in 2012.
Prakash Hinduja has two sons, Ajay and Ramkris-han, and a daughter, Renuka. Ajay is Chairman of GOCL Corp. The second son, Ramkrishan, was vice chairman until March 2019. GOCL operates in real estate, land development, infrastructure contracts, commercial ex-plosives (through DL Explosives Ltd), detonators, min-ing, chemicals and accessories. The company’s realty division is building a 40-acre IT township, ‘Ecopolis’, in Bengaluru in association with Hinduja Realty Ventures, which is headed by Ashok Hinduja. Ajay is also on board of IndusInd International Holdings Ltd, the promoter of IndusInd Bank.
Ramkrishan Hinduja was Chairman of Hinduja Global Solutions until last year, while Shanu was co-chairperson and Vinoo a director on the eight-member board. But the cousins left the board in September 2019 after a bitter bat-tle. Sources said differences among family members were impacting the functioning of the business. The tension within the family was building up for over a year.
Ashok Hinduja has two daughters, Ambika and Satya, and one son, Shom. Shom joined Hinduja group in 2014 af-ter working with KPMG. He is now Chairman of Hinduja Renewable Energy Private Ltd and a director on Hinduja National Power Corporation Ltd and Gulf Oil Lubricants India Ltd boards. Ambika Hinduja is a former Bollywood film producer who produced movies Teen Patti and Being Cyrus. She is married to producer Raman Macker. The sec-ond daughter, Satya, is a DJ and music producer.
Each brother has been assigned separate business re-
Litigation TargetsThe Hinduja brothers had in 2014 signed on a document saying the assets held by one brother belong to all and that each of them will appoint others as their executors. But now, family patriarch Srichand Hinduja and his daughter Vinoo want the letter to be declared of “no legal effect” and the family's assets be separated as per his wish.
Based on this, it appears that one of the key questions here for the court is whether the 2014 document, at the centre of the dispute, is an informal agreement, a will or a family arrangement, says Ramesh Vaidyanathan, Found-er and Managing Partner of Mumbai-based law firm Ad-vaya Legal. “If such an arrangement is entered into bona fide and terms are fair in the circumstances, the courts will readily give consent to such an arrangement than to avoid it. A family arrangement will bind all the parties to the arrangement and will preclude the brothers from re-voking or challenging the same if they have taken advan-tage under the agreement,” he adds.
However, family arrangements are generally governed by principles that are not applicable to dealings between strangers. The predominant concern of the court when deciding the rights of parties under a family arrangement or a claim to upset such an arrangement is the interest of the family. Considerations that will lead a court to sup-
sponsibilities. Besides Hinduja Bank, Srichand also holds chairmanship of the entire group and the CSR arm, Hindu-ja Foundation. He conceived the idea of IndusInd Bank and executed it with contributions from the NRI community.
Gopichand is co-chairman of the Hinduja group, but he is in charge of operations of Hinduja Automotive Ltd, UK, as chairman. The two eldest brothers, Srichand and Gopichand, are based out of London. Gopichand led the transformation of the group from a Indo-Middle East trad-ing operation into a multi-billion dollar transnational con-glomerate. He also spearheaded acquisitions of Gulf Oil and Ashok Leyland in the 1980s.
The third brother, Prakash, heads Hinduja Group (Eu-rope), as chairman. He joined the family business in Tehran and later moved to Geneva and took charge of the group's European operations. In 2008, he moved to Monaco.
Youngest brother Ashok Hinduja, Chairman of Hinduja Group of Companies (India), is based out of Mumbai. From an operational point of view, he has a bigger role among the brothers. Ashok joined the family's expanding business at a young age, looking after affairs in India. He serves as Chair-man of IIHL (Mauritius), the parent promoting company of IndusInd Bank. He is also Chairman of Nxt Digital Ltd, the media and entertainment vertical, and Hinduja National Power Corporation Ltd, the company that runs a 1,040 MW thermal power plant. He is also Chairman Emeritus of BPO firm Hinduja Global Solutions,.
The family holds 15 per cent in IndusInd Bank. The Hin-dujas recently applied to the RBI for increasing their stake to 26 per cent, but failed to get the nod. In FY20, the bank’s total income rose 28.05 per cent to ̀ 35,735.50 crore. Consol-idated net profit grew 35.07 per cent to `4,458.18 crore. The balance sheet increased 10.59 per cent to `3,07,229 crore in March 2020 from `2,77,821 crore a year back.
port a family arrangement are that disputes are avoided in the family, the honour of the family is safeguarded, or var-ious obligations, morally binding on a family, are provided for, or family property is continued in the family, adds Vaidyanathan.
“As far as the Hinduja brothers are concerned, their conduct in public and the manner in which their share-holding is held in their Indian businesses (no direct ownership, all holdings through multiple promoter com-panies) suggest that they are in it together. It was never really known to the general public how much each brother held in these companies,” says Vaidyanathan.
Given the Hinduja brothers’ high profile, their large circle of influential friends can potentially act as me-diators. So, experts refuse to ignore the possibility of an out-of-court settlement. “If the family wants to retain the $13 billion fortune as joint property, they should in-troduce a family constitution to avoid disputes. Like in the Bajaj group, the separation of management control and cross-ownership of promoter families can be pos-sible only through family settlement agreement,” says an executive. Perhaps, the brothers may wish to go along on similar lines.
@nevinjl
IndusInd Bank
32,920.11
Ashok Leyland
13,782.30
Gulf Oil Lubricants
India 2,855.79
Hinduja Global
Solutions 1,367.45
GOCL Corporation
873.47
NXT Digital 811.94
THE PIEIndusInd Bank & Ashok Leyland are the biggest assets of the family
Market Cap (in ` cr)
Corporate – Hindujas
-
24 Business Today 26 July 2020
and the United Arab Emirates. Gulf Oil Lubricants India posted a profit of `203 crore on a revenue of `1,644 crore in FY20. Another Hinduja group company, GOCL, acquired US-based specialty chemicals maker Houghton Interna-tional Inc. for $1.05 billion in 2012.
Prakash Hinduja has two sons, Ajay and Ramkris-han, and a daughter, Renuka. Ajay is Chairman of GOCL Corp. The second son, Ramkrishan, was vice chairman until March 2019. GOCL operates in real estate, land development, infrastructure contracts, commercial ex-plosives (through DL Explosives Ltd), detonators, min-ing, chemicals and accessories. The company’s realty division is building a 40-acre IT township, ‘Ecopolis’, in Bengaluru in association with Hinduja Realty Ventures, which is headed by Ashok Hinduja. Ajay is also on board of IndusInd International Holdings Ltd, the promoter of IndusInd Bank.
Ramkrishan Hinduja was Chairman of Hinduja Global Solutions until last year, while Shanu was co-chairperson and Vinoo a director on the eight-member board. But the cousins left the board in September 2019 after a bitter bat-tle. Sources said differences among family members were impacting the functioning of the business. The tension within the family was building up for over a year.
Ashok Hinduja has two daughters, Ambika and Satya, and one son, Shom. Shom joined Hinduja group in 2014 af-ter working with KPMG. He is now Chairman of Hinduja Renewable Energy Private Ltd and a director on Hinduja National Power Corporation Ltd and Gulf Oil Lubricants India Ltd boards. Ambika Hinduja is a former Bollywood film producer who produced movies Teen Patti and Being Cyrus. She is married to producer Raman Macker. The sec-ond daughter, Satya, is a DJ and music producer.
Each brother has been assigned separate business re-
Litigation TargetsThe Hinduja brothers had in 2014 signed on a document saying the assets held by one brother belong to all and that each of them will appoint others as their executors. But now, family patriarch Srichand Hinduja and his daughter Vinoo want the letter to be declared of “no legal effect” and the family's assets be separated as per his wish.
Based on this, it appears that one of the key questions here for the court is whether the 2014 document, at the centre of the dispute, is an informal agreement, a will or a family arrangement, says Ramesh Vaidyanathan, Found-er and Managing Partner of Mumbai-based law firm Ad-vaya Legal. “If such an arrangement is entered into bona fide and terms are fair in the circumstances, the courts will readily give consent to such an arrangement than to avoid it. A family arrangement will bind all the parties to the arrangement and will preclude the brothers from re-voking or challenging the same if they have taken advan-tage under the agreement,” he adds.
However, family arrangements are generally governed by principles that are not applicable to dealings between strangers. The predominant concern of the court when deciding the rights of parties under a family arrangement or a claim to upset such an arrangement is the interest of the family. Considerations that will lead a court to sup-
sponsibilities. Besides Hinduja Bank, Srichand also holds chairmanship of the entire group and the CSR arm, Hindu-ja Foundation. He conceived the idea of IndusInd Bank and executed it with contributions from the NRI community.
Gopichand is co-chairman of the Hinduja group, but he is in charge of operations of Hinduja Automotive Ltd, UK, as chairman. The two eldest brothers, Srichand and Gopichand, are based out of London. Gopichand led the transformation of the group from a Indo-Middle East trad-ing operation into a multi-billion dollar transnational con-glomerate. He also spearheaded acquisitions of Gulf Oil and Ashok Leyland in the 1980s.
The third brother, Prakash, heads Hinduja Group (Eu-rope), as chairman. He joined the family business in Tehran and later moved to Geneva and took charge of the group's European operations. In 2008, he moved to Monaco.
Youngest brother Ashok Hinduja, Chairman of Hinduja Group of Companies (India), is based out of Mumbai. From an operational point of view, he has a bigger role among the brothers. Ashok joined the family's expanding business at a young age, looking after affairs in India. He serves as Chair-man of IIHL (Mauritius), the parent promoting company of IndusInd Bank. He is also Chairman of Nxt Digital Ltd, the media and entertainment vertical, and Hinduja National Power Corporation Ltd, the company that runs a 1,040 MW thermal power plant. He is also Chairman Emeritus of BPO firm Hinduja Global Solutions,.
The family holds 15 per cent in IndusInd Bank. The Hin-dujas recently applied to the RBI for increasing their stake to 26 per cent, but failed to get the nod. In FY20, the bank’s total income rose 28.05 per cent to ̀ 35,735.50 crore. Consol-idated net profit grew 35.07 per cent to `4,458.18 crore. The balance sheet increased 10.59 per cent to `3,07,229 crore in March 2020 from `2,77,821 crore a year back.
port a family arrangement are that disputes are avoided in the family, the honour of the family is safeguarded, or var-ious obligations, morally binding on a family, are provided for, or family property is continued in the family, adds Vaidyanathan.
“As far as the Hinduja brothers are concerned, their conduct in public and the manner in which their share-holding is held in their Indian businesses (no direct ownership, all holdings through multiple promoter com-panies) suggest that they are in it together. It was never really known to the general public how much each brother held in these companies,” says Vaidyanathan.
Given the Hinduja brothers’ high profile, their large circle of influential friends can potentially act as me-diators. So, experts refuse to ignore the possibility of an out-of-court settlement. “If the family wants to retain the $13 billion fortune as joint property, they should in-troduce a family constitution to avoid disputes. Like in the Bajaj group, the separation of management control and cross-ownership of promoter families can be pos-sible only through family settlement agreement,” says an executive. Perhaps, the brothers may wish to go along on similar lines.
@nevinjl
IndusInd Bank
32,920.11
Ashok Leyland
13,782.30
Gulf Oil Lubricants
India 2,855.79
Hinduja Global
Solutions 1,367.45
GOCL Corporation
873.47
NXT Digital 811.94
THE PIEIndusInd Bank & Ashok Leyland are the biggest assets of the family
Market Cap (in ` cr)
Corporate – Hindujas
-
30 Business Today 26 July 2020
Businesses are increasingly aDOPTingsafer anDsmarTer ways Of manufacTuring anD Delivering services
New Biz Models
By JOE C. MATHEWillusTrATiOn By rAJ vErMA
T e c h n o l o g y S p e c i a l lEAd EssAy
emergingBusinessmODels
Smart solutions in urbanisation, surveillance, farming, construction
Robotics and automation
Digital push for healthcare sector
Remote healthcare
Contactless solutions for smooth global trade
New Biz Models
the midst of the covid-19 lockdown, Siemens India, which makes turbines and turbo compressors, motors and generators, transformers and advanced medical imaging equipment, had to commission some machines in far-off loca-tions. On normal days, its engineers would have flown to each site and got the machines up and running. With air, rail and road travel not possible due to the lockdown, it had to work remotely, using a technology that wasn’t the first choice of many of its clients until that moment. The Siemens engineers, sitting in their homes, looked at the digital imprint of the ma-chine which was captured real time through a 3D-glass worn by a person at the site. Directions were given remotely, for ex-ample which wire needs to be connected where, just as the en-gineer would have done sitting inside the machine at the site.
Installation of these machines meant savings in travel costs and increase in efficiency. “You begin to realise through the experience of Covid that a lot can be done in a different way. There are new business models, there are new ways of working that are emerging because people could not physi-cally go out,” says Sunil Mathur, CEO, Siemens India. The Mumbai-based company provides technology solutions for sustainable cities, smart grids, building technologies, mobil-ity and power distribution. “Digitalisation was always being talked about, but now, it has become a reality, and I’m not
26 July 2020 Business Today 31
-
30 Business Today 26 July 2020
Businesses are increasingly aDOPTingsafer anDsmarTer ways Of manufacTuring anD Delivering services
New Biz Models
By JOE C. MATHEWillusTrATiOn By rAJ vErMA
T e c h n o l o g y S p e c i a l lEAd EssAy
emergingBusinessmODels
Smart solutions in urbanisation, surveillance, farming, construction
Robotics and automation
Digital push for healthcare sector
Remote healthcare
Contactless solutions for smooth global trade
New Biz Models
the midst of the covid-19 lockdown, Siemens India, which makes turbines and turbo compressors, motors and generators, transformers and advanced medical imaging equipment, had to commission some machines in far-off loca-tions. On normal days, its engineers would have flown to each site and got the machines up and running. With air, rail and road travel not possible due to the lockdown, it had to work remotely, using a technology that wasn’t the first choice of many of its clients until that moment. The Siemens engineers, sitting in their homes, looked at the digital imprint of the ma-chine which was captured real time through a 3D-glass worn by a person at the site. Directions were given remotely, for ex-ample which wire needs to be connected where, just as the en-gineer would have done sitting inside the machine at the site.
Installation of these machines meant savings in travel costs and increase in efficiency. “You begin to realise through the experience of Covid that a lot can be done in a different way. There are new business models, there are new ways of working that are emerging because people could not physi-cally go out,” says Sunil Mathur, CEO, Siemens India. The Mumbai-based company provides technology solutions for sustainable cities, smart grids, building technologies, mobil-ity and power distribution. “Digitalisation was always being talked about, but now, it has become a reality, and I’m not
26 July 2020 Business Today 31
-
32 33Business Today 26 July 2020 26 July 2020 Business Today
talking about getting your pizza online, that’s one part of it. I’m talking about indus-trial processes, I’m talking about running power plants, I’m talking about making energy more efficient,” he adds. This can mean huge cost savings for clients. “For ex-ample, in cement plants, 40 per cent of the cost is electricity. If you are able to save 10 per cent energy costs and energy is 40 per cent of your total cost, you have saved 4 per cent,” says Mathur.
Siemens is not an exception. Umpteen technologies and their possibilities have proven their mettle since March after the Indian economy went into the lockdown mode. As V.K. Saraswat, mem-ber of the government’s apex think-tank, Niti Aayog, says, “Post-Covid days will be that of smart surveillance, indoor farming, au-tonomous stores, telematics fleet management, digital factories,
tele-healthcare, robots, 3D printers....” And many more. Over the past three months, as the world has been locked down, companies have been constantly reimagining the way business is done, deploying an array of tech tools to do things differently. In India, the pandemic has advanced the introduction of digital solutions across industries. Today, no one bats an eyelid if one talks of tele-con-sultation, adopting artificial intelligence solutions in agriculture or use of machine learning in manufacturing.
Global consultancy McKinsey said in its “Future of Asia” report in May that digital capabilities proved to be even more criti-cal in context of the pandemic as there was acceleration in digital adoption across sec-tors. It said Asia could unlock $440-620 billion of economic profit by improving performance of companies and investing in value-creating sectors in post-Covid years. “The corporate ecosystems operat-ing in Asia will be tested by the extent of the Covid-19 shock, which could raise com-petitive intensity but also offer new oppor-tunities for outperformers to pull further ahead,” it said, adding that “whether it’s the emergence of digital health solutions such as tele-health or productivity gains of energy companies through robotics and automation, digitisation is a key lever in all sectors.” The report covers health-care, pharmaceutical, energy, real estate,
financial services and consumer goods sectors, pretty much echoing Niti Aayog’s Saraswat.
Aiding HealthcareTechnology is not only helping companies do business, it is also changing the way they function. “Remote and virtual care solu-tions such as tele-ICU, e-ICU and AI-based auto-positioning tools will see an explosion in adoption due to Covid-19 given their abil-ity to deliver care remotely,” says Nalini-kanth Gollagunta, President and CEO, GE Healthcare, South Asia. In fact, on June 22, the day he was expressing his views, All In-dia Institute of Medical Sciences (AIIMS) in Jhajjar was seeing deployment of Bengal-uru-based GE Healthcare’s Centricity High Acuity Critical Care, an e-ICU solution to digitise and manage internal workflow of its ICU department, comprising over 80 beds. The hospital was thus becoming capable of tapping into clinical expertise of other AI-IMS centres, including the prestigious one in Delhi, to deliver high-quality care. The use of virtual care solutions is unlikely to come down even after Covid-19 is tamed as governments realise the need to strengthen the health system. Virtual care solutions are the only way forward given the geographi-cal challenges and huge variations in quality of health infrastructure across states.
here are more reasons why new business