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session 2 srishti

Balance Growth, Governance In Today’s Business Landscape: Sethurathnam Ravi To CFOs

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Ravi highlighted the vital role of CFOs in ensuring compliance while fostering growth

Chief Financial Officers (CFOs) play a pivotal role in organisations, responsible for navigating evolving regulatory challenges while simultaneously fostering growth. Sethurathnam Ravi, former Chairman of the Bombay Stock Exchange (BSE) and Managing Partner at Ravi Rajan & Company, in a keynote address at the BW CFO World Future of Finance Summit and Awards 2023 shed light on the pivotal role of CFOs in today’s complex business landscape.

Ravi underscored the inherent conflict between the Chief Executive Officer’s (or CEO) drive for rapid growth and the CFO’s responsibility for regulatory compliance. While CEOs often focus on expansion and speed, CFOs play a critical role in ensuring that the company adheres to an array of regulations. This dichotomy can create a challenging dynamic within organisations, where one party aims to accelerate growth, while the other emphasises compliance and governance.

Ravi stressed the substantial responsibility that CFOs carry in their roles. “CFOs are tasked with balancing growth objectives with governance, risk management, and compliance. Compliance is paramount, considering the complex regulatory environment in which businesses operate today,” he said.

While talking about the essential qualities of a competent CFO, Ravi stated, “A proficient CFO is not merely a box ticker but someone who comprehends the spirit behind the regulations. They go beyond routine compliance to assess risk factors and align business strategies with these considerations. This strategic alignment is key to ensuring that the company not only adheres to regulations but also thrives in a competitive marketplace.”

Ravi also highlighted the role of CFOs in safeguarding the interests of shareholders. Shareholders often look at CFOs as guardians of their investments. The CFO’s responsibility extends beyond the financials to ensure that the business is managed efficiently and ethically, leading to returns on investment and shareholder satisfaction.

Ravi concluded his address by stating, “In a rapidly changing regulatory landscape, proactive engagement is vital. Businesses must stay ahead of regulatory changes, be proactive in compliance, and engage a CFO who is not merely a spectator but an active strategist.”

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Writing Instrument Makers To Record 13-15% Rise In Revenue: Crisil

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According to the Crisil analysis, capacity expansion and expenditures in product innovation will encourage manufacturers to borrow. The operating margin will increase by 150-200 basis points (bps) year on year to 13 per cent this fiscal owing to decreasing raw material prices

India’s writing instruments business is likely to rise 13 to 15 per cent year on year this fiscal, with a continuing increase in demand from the education sector as students return to the physical method and increased exports due to rising demand from the US, according to a Crisil Ratings research. This follows on the heels of a 33 per cent increase in the previous fiscal year. In the long run, the sector will gain from India’s demographic dividend and an increased per centage of organised players.

According to the Crisil analysis, capacity expansion and expenditures in product innovation will encourage manufacturers to borrow. The operating margin will increase by 150-200 basis points (bps) year on year to 13 per cent this fiscal owing to decreasing raw material prices.

“Demand for writing instruments has surpassed pre-Covid levels, with a complete return to physical education from the interim online mode. The overall growth in the education sector, driven by government initiatives such as the National Education Policy and the Samagra Shiksha Scheme, which focus on integrated school education from pre-school to Class XII, bodes well for the growth of the writing instrument sector,” said Jaya Mirpuri, Director, Crisil Ratings.

Exports are expected to climb 15 to 20 per cent this fiscal year, aided by tie-ups with multinational brands for sales in the US as part of a plan to de-risk from China. Exports account for one-fourth of sector revenue.

Organised manufacturers’ market share increased from 65 per cent to 80 per cent of the Rs 10,000 crore industry during the last three fiscals. The organised part of writing instrument producers, which accounts for over 80 per cent of the business, will benefit from this upturn, the report added.

session 2 aarya

Navigating New Frontiers: India’s Growth Amid Geopolitical Crisis

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India’s economy is poised to grow between 6.1 per cent and 6.5 per cent, despite recent projections leaning towards the lower end of that spectrum at 6.1 per cent, says B. Thiagarajan

India, a country renowned for its resilience and adaptability, finds itself at the cusp of a significant economic transformation. In this era of global challenges and opportunities, the nation is redefining its role on the world stage. B. Thiagarajan, Managing Director of Blue Star, recently shared his insights on India’s evolving economic landscape at the BW CFO World Future of Finance Summit 2023 in Mumbai. His keynote address, titled “New Frontiers: Scale, Speed, Smart, Sustainable,” encapsulated the essential elements guiding India’s economic destiny. With optimism in economic growth, the challenges of deglobalisation and a renewed focus on manufacturing, Thiagarajan’s discourse provided a compass for India’s journey towards self-reliance and global competitiveness.

One of the highlights of Thiagarajan’s keynote was his optimistic outlook for India’s GDP growth. He said, “India’s economy is poised to grow between 6.1 per cent and 6.5 per cent, despite recent projections leaning towards the lower end of that spectrum at 6.1 per cent.” The consensus among various stakeholders, including government bodies and corporate leaders, underscores the belief that India is primed for significant economic growth, he added.

Thiagarajan addressed the profound shift to deglobalisation, which is challenging conventional notions of globalisation. While not a universal phenomenon, it demands that Indian businesses, particularly CFOs, adapt and unlearn established practices to navigate this changing landscape.

The MD highlighted the resurgence of manufacturing in India, marking the end of an era characterised by heavy reliance on the service sector. This shift presents both opportunities and challenges for businesses, with CFOs playing a central role in this transformation.

Thiagarajan emphasised the need for businesses to find a delicate balance between self-reliance, as promoted by the “Make in India” initiative and international trade agreements. “The ongoing debate centres on the business case for this approach, given the presence of tariffs and non-tariff barriers from trading partners,” he said.

The keynote session recognised that India’s future growth hinges on consumption, primarily driven by the aspirational middle class residing in Tier 3, 4 and 5 cities, as well as rural areas. To thrive in this new landscape, businesses must pivot toward providing affordable products and services tailored to this evolving consumer base. In the context of innovation, research and development and breakthrough technologies, Thiagarajan urged businesses to differentiate themselves and compete on a global scale.

The session acknowledged a significant shortage of finance professionals, with Thiagarajan projecting a substantial demand-supply gap. He encouraged finance professionals to embrace versatility by rotating roles to meet the evolving demands of the market.

As businesses experience rapid growth, maintaining high governance standards is imperative. Governance issues often accompany expansion, making it crucial for companies to prepare for such situations.

inflation

India Set To Overtake Japan As Asia’s Second-Largest Economy By 2030, Says S&P Global

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“The near-term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand,” said S&P Global

India, the fifth-largest economy in the world, is anticipated to pass Japan and become the third-largest economy in the world by 2030 with a GDP of USD 7.3 trillion, acccording to S&P Global Market Intelligence’s most recent issue of PMI.

The Indian economy showed two consecutive years of strong, sustained growth in 2021 and 2022, and it has continued to do so in 2023.

The fastest-growing global economy in this fiscal year is likely to be India, whose gross domestic product (GDP) is predicted to increase by 6.2 to 6.3 per cent in the fiscal year that ends in March 2024. The third-largest economy in Asia experienced a stunning 7.8 per cent growth in the April-June quarter.

“The near-term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand,” said S&P Global.

The recent acceleration of FDI into India is a reflection of the country’s positive long-term growth prospects, which are supported by a youthful population profile and fast expanding urban household incomes.

“It is projected that India’s nominal GDP, expressed in USD, will increase from USD 3.5 trillion in 2022 to USD 7.3 trillion in 2030. By 2030, the size of the Indian GDP would surpass that of Japan due to the country’s strong economic growth, making India the second-largest economy in the Asia-Pacific region, according to the report.

By 2022, the Indian GDP was already larger than the GDPs of France and the UK combined. India’s GDP is anticipated to exceed Germany by 2030.

The long-term forecast for the Indian economy, according to S&P Global, is underpinned by a number of important growth factors.

“India’s sizable and rapidly expanding middle class, which is assisting in driving consumer expenditure, is a significant positive aspect. India is becoming an increasingly important investment destination for a wide range of multinationals in several industries, including manufacturing, infrastructure, and services,” according to the report. This is due to the country’s rapidly expanding domestic consumer market as well as its sizable industrial sector.

The present digital transformation of India is predicted to drive the rise of e-commerce, altering the retail consumer market landscape during the next decade. According to S&P Global, this is bringing global multinationals in technology and e-commerce to the Indian market.

The report states, “India’s strong FDI inflows have been boosted by large inflows of investments from global technology MNCs such as Google and Facebook that are attracted to India’s large, fast-growing domestic consumer market, as well as a strong upturn in foreign direct investment inflows from manufacturing firms.” 

Overall, India is expected to continue to be one of the world’s fastest-growing economies over the next decade.

 

coal

Mineral Production Goes Up By 12.3% In August 2023: Report

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At the same time, the cumulative growth for the period April- August 2023-24 over the corresponding period of the previous year is 8.3 per cent

The index of mineral production of the mining and quarrying sector for the month of August 2023 (Base: 2011-12=100) at 111.9, is 12.3 per cent higher as compared to the level in the month of August 2022, As per the provisional data of the Indian Bureau of Mines (IBM).

At the same time, the cumulative growth for the period April- August 2023-24 over the corresponding period of the previous year is 8.3 per cent. The production level of important minerals in August 2023 were: Coal 684 lakh tonne, Lignite 28 lakh tonne, Natural gas (utilised) 3110 million cu. m., Petroleum (crude) 25 lakh tonne, Bauxite 1428 thousand tonne, Chromite 148 thousand tonne, Copper conc. 10 thousand tonnes, Gold 113 kg, Iron ore 181 lakh tonne, Lead conc. 30 thousand tonnes, Manganese ore 233 thousand tonnes, Zinc conc. 132 thousand tonnes, Limestone 365 lakh tonne, Phosphorite 107 thousand tonnes, and Magnesite 10 thousand tonnes,.

Important minerals showing positive growth during August 2023 over August 2022 include Gold (46.8 per cent), Phosphorite (40.7 per cent), Manganese Ore (36.9 per cent), Copper Conc. (18.9 per cent), Coal (17.8 per cent), Iron Ore (14.9 per cent), Limestone(13.8 per cent), Natural gas (U) (9.9 per cent), Magnesite (4.5 per cent), Petroleum(crude) (2.1 per cent), Chromite (1.4 per cent ). While minerals like Bauxite (-1.5 per cent), Zinc Conc.(-4.1 per cent), Lignite(-5.4 per cent ) and Lead Conc. (-15.1 per cent) show negative growth.

 

 

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Deloitte Projects India’s GDP Growth To 6.5% For FY24-25 Amid A Positive Outlook

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The Indian economy, according to International Monetary Fund (IMF) estimates, will emerge as the world’s third-largest economy by 2027

Projecting a positive outlook for the domestic economy, Deloitte India in its latest economic outlook has estimated India’s growth rate between 6.5 to 6.8 per cent primarily due to festive spending and higher government spending in the coming months. 

The report predicted a 6.5 per cent gross domestic product (GDP) growth rate for the economy during 2024-25, which could further increase with a stronger global economic bounce back.  

The Indian economy, according to International Monetary Fund (IMF) estimates, will emerge as the world’s third-largest economy by 2027 by surpassing Japan and Germany as its GDP crosses the USD 5 trillion mark. 

However, India will need to grow at least 6.5 per cent to reach this milestone by 2027. The current buoyancy in economic growth gives confidence that the economy is likely to achieve these numbers without hurdles. 

“Navigating geopolitical uncertainties and the slowdown in the global economy, undoubtedly, would not be easy.  India will have to rely on its own domestic demand to firepower its growth, specifically, private consumption and investment spending. What works in India’s favour on the private consumption front are the size of its consumer base, the rising income, and the aspirations of its young population, which is the largest in the world,” said Rumki Majumdar, Economist, Deloitte India.

Majumdar added that as for investments, with the size and scale of operations it offers to global companies, the availability of skill and talent, and technology and innovation capabilities, India continues to be an attractive investment destination. 

The outlook further highlighted the crucial role of India’s micro, small and medium enterprises (MSMEs) in the country’s economic growth. The past two quarters have seen an uptick in the MSME sector. Out of the shadow of the pandemic, the steady revival of this sector will likely help India achieve broad-based growth at the grassroots levels, which is needed to ensure sustained economic activity. 

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India’s Infra Spending To Double To Rs 143 Lakh Cr Between Fiscals 2024 And 2030

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According to the Crisil Ratings, green investments to rise five-fold to Rs 36.6 lakh crore

India will spend nearly Rs 143 lakh crore on infrastructure in seven fiscals through 2030, more than twice the Rs 67 lakh crore spent in the previous seven starting fiscal 2017, Crisil has said.

Of the total, Rs 36.6 lakh crore will be green investments, marking a five times rise compared with fiscals 2017-2023.

Amish Mehta, Managing Director and Chief Executive Officer (CEO), Crisil “Crisil expects India’s gross domestic product to grow at an average of 6.7 per cent through fiscal 2031 to be the fastest-expanding large economy. Per capita income is seen rising from USD 2,500 now to USD 4,500 by fiscal 2031, creating a middle-income country.”

Mehta added that this growth will be underpinned by massive all-round infrastructure development, with a sharp focus on integrating sustainability.

“Policy interventions and a conducive investment climate have aided the uptrend in the CRISIL InfraInvex scores across sectors. Four of these – roads and highways, power transmission, renewable energy and ports – have an overall score of 7+ (out of 10), which underscores the pace of reforms and developments of the past few years,” said Mehta.

Mehta also said that the role of stakeholders cannot be overstated, and we need consistent policies, timely regulatory interventions and relentless execution. These are crucial to keep India’s infrastructure investment thesis compelling over the long term and draw in patient capital.

 

 

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India’s FY24 GDP Forecast: 6.3% Growth Fueled By 5.6% Industry And 7.3% Services Expansion, Survey Reveals

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The survey reveals ongoing obstacles to this trajectory of progress. Potential hindrances include geopolitical unrest, China’s economic slowdown, the sluggish impacts of monetary tightening, and poor monsoon patterns

 
 
 

The latest findings from the FICCI’s Economic Outlook Survey have projected a median annual GDP growth rate of 6.3 per cent for the fiscal year 2023-2024, encompassing a range from a minimum estimate of 6.0 per cent to a maximum estimate of 6.6 percent.

The median growth prediction for agriculture and related activities during the same time period is 2.7 per cent. This reflects a moderated rise when compared to the about 4.0 per cent growth seen in the preceding fiscal year of 2022-2023. The El Nino effect, which altered the distribution of rainfall throughout the monsoon season, is blamed by the survey for this decline.

“The key factors contributing to the GDP growth projection of 6.3 per cent for 2023-24 are anticipated growth in the industry and services sectors. This growth is supported by improved consumption and investment activity, especially in the non-industrial sector, thanks to the government’s focus on capital expenditure. Additionally, the contact-intensive services sector is expected to play a crucial role in driving growth,” stated economists participating in the survey.

The industry and services sectors are anticipated to grow by 5.6  per cent and 7.3  per cent, respectively, in the current fiscal year.

“The primary drivers of this growth are the industry and services sectors, with expected growth rates of 5.6  per cent and 7.3  per cent, respectively. The growth in these sectors is fueled by improved consumption and investment activities, particularly in infrastructure and non-industrial areas,” added experts from the survey.

Prominent economists from the banking, financial services, and industrial sectors participated in the Economic Outlook Survey, which was conducted in September 2023. These experts were asked for their opinions on the most important macroeconomic factors for 2023-24 as well as for the second and third quarters of the same fiscal year.

As a result, after a strong 7.8 per cent rise in the first quarter, the median GDP growth is forecast to fall down to 6.1 and 6.0 per cent in the second and third quarters of 2023-24.

The survey reveals ongoing obstacles to this trajectory of progress. Potential hindrances include geopolitical unrest, China’s economic slowdown, the sluggish impacts of monetary tightening, and poor monsoon patterns.

“While India continues to shine on the global economic stage, the survey findings emphasise the need for vigilance due to persistent challenges. Geopolitical tensions, the deceleration of growth in China, the delayed impact of monetary tightening, and below-average monsoons all pose significant downside risks to India’s economic growth,” as mentioned in the survey.

Survey participants also highlighted that the CPI inflation rate is expected to remain above the Reserve Bank of India’s targeted level for the remainder of the financial year. Regarding policy action by the Reserve Bank of India (RBI), economists believe that a repo rate cut is unlikely until the end of the first or second quarter of the next fiscal year, 2024-25.

The statement from the survey underlined, “The government and RBI can collaborate to control inflation through coordinated measures such as supply-side management and ensuring uninterrupted supply of essential commodities. This suggests that, given the supply-side-driven nature of inflation, monetary policy might have a limited role, and the focus should be on managing supply-side factors.”

In terms of investments, the survey noted the government’s emphasis on capital expenditure, which has positively influenced private investments and bolstered growth. Nevertheless, a complete recovery in private investments is expected to take more time and will likely be led by increased consumption activity, both domestically and externally.

 

 

retail inflation

India’s Wholesale Inflation Stays In Negative Zone For 6th Month

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Deflation in September is primarily due to a fall in prices of chemical and chemical products, mineral oils, textiles, basic metals and food products as compared to the corresponding month of the previous year

Wholesale inflation in India based on the wholesale price index (WPI) continued to stay in the negative zone for the sixth straight month through September, official data showed on Monday.

In April this year, it went into negative territory. Similarly, in the initial days of Covid, in July 2020, the WPI was reported to be negative.

The September wholesale inflation came in at (-) 0.26 per cent against (-) 0.52 per cent in August, and against (-) 1.23 the previous month of July, official data released by the Ministry of Commerce and Industry showed.

Deflation in September is primarily due to a fall in prices of chemical and chemical products, mineral oils, textiles, basic metals and food products as compared to the corresponding month of the previous year.

The WPI data comes after the statistics ministry had said on 12 October that headline retail inflation had fallen to a three-month low of 5.02 per cent in September.

The government releases index numbers of wholesale prices on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.

Overall wholesale inflation was 8.39 per cent in October 2022 and has fallen since then. Notably, the wholesale price index (WPI)–based inflation had been in double digits for 18 months in a row till September last year.

Meanwhile, the retail inflation in India is again back in RBI’s two to six per cent comfort level in September but is above the ideal 4 per cent scenario. September retail inflation was at 5.02 per cent.

Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. (ANI)     

 

mutual fund

Indian Mutual Fund Sector’s AUM Up 21% To Rs 46.58 Lakh Cr Till Sept 2023

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The contribution of systematic investment plans (SIP) to the mutual fund industry touched Rs 16,042 crore in September 2023

The assets under management (AUM) of the Indian mutual fund industry grew by nearly 21 per cent to touch Rs 46.58 lakh crore as of 30 September 2023, up from Rs 38.42 lakh crore as of 30 September 2022, the rating agency Icra has said.

Average assets under management (AAUM) of the industry stood at Rs 47.79 lakh crore for the month of September 2023, as against Rs 39.88 lakh crore in September 2022.  

It added that the contribution of systematic investment plans (SIP) to the mutual fund industry touched Rs 16,042 crore in September 2023 while the total number of unique investors in mutual funds crossed the four-crore mark indicating the growing interest among retail investors for investing in equities through the mutual fund route.  

Notably, net inflows into equity-oriented schemes came down marginally on a year-on-year basis at Rs 14,091 crore in September this year, as against Rs 14,099 crore same period last year, according to data released by the Association of Mutual Funds in India (AMFI) in last week. However, sequentially, inflows dropped by nearly 30 per cent from Rs 20,245 crore in August 2023.   

Among the growth/equity-oriented schemes, the small and mid-cap funds continued to witness inflows to the tune of Rs 2678 crore and Rs 2001 crore respectively; sectoral/thematic funds saw net inflows of Rs 3147 crore, multi-cap Rs 2235 crore while value/contra fund saw inflows of Rs 1291 crore. However, large-cap and ELSS funds recorded net outflows of Rs 111 crore and Rs 141 crore respectively.  

Debt mutual funds witnessed a huge surge in net outflows at Rs 1,01 lakh crore in September this year as against net outflows of Rs 25,873 crore in August with 14 out of 16 fund categories witnessing outflows during the month at the back of higher food inflation, squeeze in liquidity condition and spike in US treasury yield leading to outflow. 

However, two debt categories (long duration and gilt fund) witnessed a marginal net inflow of Rs 299.68 crore on the back of the inclusion of Indian Government bonds in the JP Morgan Emerging Market Debt Index. 

Ashwini Kumar, Head Market Data, Icra Analytics said, “The asset under management (AUM) of the Indian mutual fund industry has witnessed good growth during the first half of the current fiscal fueled by strong gains in stock prices on the back of positive sentiments around the country’s macroeconomic fundamentals.”

Kumar added that equity-oriented schemes continued to witness a strong uptick in demand with net inflows of around Rs 14,091 crore, backed by a sense of optimism around India’s economic growth prospects. FII inflows, too have led to a rise, including comparative economic factors around the globe. 

“The Reserve Bank of India has adopted a rate-pause stance at the recently concluded Monetary Policy Committee meeting, including the evolving geo-political developments that would likely keep the investors cautious in the near term. Long-term investors may show interest to enter the market at this elevated level,” he added.

 

 

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