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SocioEconomic Fallout of a Pandemic

Price ` 250
april 10, 2020
RNI Reg. No. MAHENG/2009/28102

Auto Special

Auto Special

trend How MG Motor and

Kia Motors are seeking
to capitalise on their brisk
beginning in India. New
emission norms, weak demand
and Covid-19-triggered supply
chain disruptions, however, / Volume 12 issue 8 april 10, 2020

present fresh challenges

(From left)
Rajeev Chaba, president & MD, MG Motor India
Kookhyun Shim, MD & CEO, KIA Motors India

BS VI and the Big Shift

The Electric Imperative
Chinese Auto and the
India Opportunity
Tata Motors’ SUV Gambit
A crisis is a good time to look at the
Letter From The Editor opportunities for the Indian auto sector

Long and Winding Road

uhan in China, the centre of the outbreak worst. The exception may well be China, which bore the
of the coronovirus, is also the “motor brunt in the March-ended quarter. As growth in new
city” of China, the world’s biggest car infections slows down and employees get back to work,
market. From General Motors and Honda economic indicators will slowly pick up. For the rest of
to Nissan and Renault, a clutch of car makers has their the world, a recovery may be some time away, but the
factories there. The World Economic Forum says Wuhan planning—and the resolve—to come back is evident.
accounts for half of Honda’s production in China and, in As Oliver Zipse, chairman of BMW AG, put it
2019, the Hubei Province, of which Wuhan is the capital, in a mid-March press conference in Munich to
was the fourth-largest car producer in China. As car makers announce the car maker’s 2019 financial performance:
stopped production because of the nationwide shutdown, “There will be a time during the coronavirus. And
car sales in China fell 92 percent in the first half of February. there will be a time after the coronavirus.”
A month on, the pain has moved from China to A crisis is also a good time to look at the opportunities
the rest of the world. At the time of writing, car for the Indian auto sector on the road ahead, and in this
factories in Europe, the US, Canada and Mexico special issue on automobiles we have done exactly that.
were preparing to temporarily shut down. The cover story by Pranit Sarda is on two relative new kids
There’s little choice, as supply chains—not only in town: MG Motor India owned by SAIC, China, and the
from China but most of the developed world—get Hyundai-owned Kia Motors, who have blazed a trail in
disrupted, demand slumps and factory workers quick time. Consider Kia which, since debuting in India in
take the precaution of not turning up. August 2019, has sold 75,000 units of the mid-sized SUV
Cut now to India where the auto sector was Seltos. And then there’s MG Motor, which has bucked the
feeling the heat of an economic slowdown before the slowdown with the Hector SUV launch in June 2019.
4 pandemic broke out. Sales of passenger cars plunged So where do these two go from here? After all, the
by almost 14 percent in 2019 over a year ago, the worst Indian car market is no stranger to debutants who
dip in two decades. The woes of non-banking finance started with a bang only to flatter to deceive. Sarda
companies resulted in a slump in retail loans. reckons MG and Kia may be better placed than many
And, come April, the transition to BS VI emission of the multinationals that entered India earlier. To
norms will worsen demand as many models know why, go to ‘Fast and Furious’ on page 28.
become more expensive and a few bow out of the In the other auto stories, don’t miss Manu
market. The coronavirus crisis has disrupted the Balachandran’s feature on the impending blitzkrieg
supply chain from China, on which Indian and from Chinese car makers, who may well see in
multinational car makers are dependent on. India the opportunity to recover from the Covid-
So that’s the bad news—the spread of the virus, the 19 crisis. And Jasodhara Banerjee dives into what
consequent lockdowns and the fallout on economic the new emission norms mean for Indian auto,
growth, with the April to June period expected to be the who gains, and who loses. That’s on page 30.

Stories to look out for

Brian Carvalho
Editor, Forbes India

(From left) Kookhyun Shim, CEO, Kia Motors India, believes that
extensive market research has helped them plan their product better;
China’s Great Wall Motors has lined up investments worth `100 cr in India

forbes india • april 10, 2020

april 10, 2020
☛ Volume 12 On
Issue 8 The
C ov e r

30  •  The Big Shift

The BS VI emission norms
are good for the environment,
Auto Special
but the rising costs that will
come along may dampen the
industry mood Fast And Furious
Pg. 26 Amid India’s worst automobile slowdown, two new
entrants are trying to make it big. Can they sustain the
34  •  China Drives In success after the initial rush?
With India showing the
potential to become the
world's third-largest
automobile market, car makers
from China are revving up

38  •  Road To Revolution

The future’s electric. And
Indian auto makers are
launching newer models and
building up an ecosystem

42  •  How To Put EVs On

Fast Track
From setting up charging
points to domestic
manufacturing, electric
vehicles need infra push for


faster adoption

46  •  ‘India Is A Price- 5

Sensitive Market
Driven By Sentiment’
Schaeffler India’s Harsh
Kadam on the German
component maker’s plans
for the changing automotive

48  •  On A Familiar
Tata Motors, the maker of
India’s first SUVs, is back
in the game with its Kookhyun Shim (left), managing director and CEO of Kia Motors India, and Rajeev Chaba, president and
aggressive line-up managing director at MG Motor India

Pg. 38 FEATURES Pg. 16

Talking Point
16  •  Banking with
The Yes Bank turmoil came
with a one-off solution, but
newer banks will not be spared
from the contagion effect

special report
20  •  TWO DECADES And
Odisha CM Naveen Patnaik
is scripting another chapter
in a series of developmental
Kona is Hyundai's first electric offering in India turnarounds for the state

april 10, 2020 • forbes india

Contents ☞ april 10 • 2020

Pg. 20 Pg. 64

After their success with cables and wires, the Jaisinghanis of Polycab India
Naveen Patnaik has been Odisha's CM for five terms now want to dominate the Fast Moving Electrical Goods sector

Enterprise 67  •  Hold-’em Herbie

51  •  The New A Florida optometrist has
Upgrade Pg. 58 beaten the odds to become a
Lenovo is remoulding itself buy-and-hold billionaire
as a maker of more than
laptops and phones
72  •  Trust Your Gut
6 Scientists are using bacteria
54  •  Fight Against from the digestive system to
Fakes create novel medicines that
Technology company could transform lives and
Ennoventure has built an deliver massive returns for
authentication tool that can investors
enable pharma companies Robert Joseph Scaringe, Rivian’s 37-year-old founder and CEO
to combat counterfeiters
76  •  Sounds Of Souls
64  •  Switching With its serene atmosphere
Gears and intimate spaces, the
The next-gen at Polycab centuries-old Ahhichatragarh
India is working on making Fort plays the perfect host to
the wires and cables leader the Sacred Spirit Festival
a player to reckon with in Pg. 84
the FMEG space
80  •  Testimonies
To Time
Cross Border The architecture of
58  •  Elon’s New Luxembourg City reflects
Nemesis centuries of styles and heritage
Rivian has a $3 billion war
chest from Amazon, Ford
and the Saudis, and is 84  •  The Inheritance
revving up production on Of Flavours
its electric SUVs and trucks Tracing the food traditions of
The chhappan bhog is made on special occasions in Vrindavan
India’s lesser-known cuisines

regulars   ●  8/ Leaderboard  ●  88/ Thoughts

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april 10, 2020 • forbes india

Leader Board
Oil’s Well For India Inching Towards Normalcy Bitten By The Bug
An increase in excise duty As China reports zero local Famous personalities
on oil can reduce the fiscal transmission cases, life is who are down with the
deficit by 4.9 percent P/10 coming back on track P/12 Covid-19 infection P/12


Bearing Bad Times

Economists warn of recession as markets go into a tailspin following the outbreak of coronavirus

March 2020—Apocalyptic. the markets into a bear phase, with percent in 2020, including its worst
This is how history will key indices having shed over 30 ever fall of 2,919 points on March 12,
record the collapse of equity percent in 2020. The bad news is that and the Nifty50 32 percent, indicating
markets across the globe, hurt by a the bears are not done yet. that India is in a bear market. “The
precipitous fall in oil prices and For those who, from a price- equity market could bottom out once
business coming to a standstill perspective, find that some blue chip- the [Covid-19] infection numbers
because of coronavirus. Economists and mid-cap stocks are available at peak and start to recede,” says
from Morgan Stanley and Goldman a throwaway price, here is the fact: Jitendra Gohil Credit Suisse’s wealth
Sachs warn the spread of the virus will The bottom for the markets has not management, India head of research.
8 trigger a global recession. been found. “The intensity of the price He agrees bottom fishing “could open
India is already growing at its fall is the worst ever,” says Ridham up” in the next few months, led by the
slowest in seven years (4.7 percent Desai, head of India equity research optimism of an effective cure for the
GDP growth for the December 2019 and India equity strategist at Morgan virus or due to strong policy action.
quarter) due to a weak domestic Stanley. For those who reported or Already several central banks
consumption demand. Most equity witnessed the impact of the Lehman have, in an emergency move, lowered
research firms have estimated a 10-15 Brothers collapse of late 2008, or even interest rates or provided stimulus
percent cut in FY21 earnings for India. the 1999 crash “dubbed the dotcom to revive their economies. India has
The price damage and volatility to bubble”, the recent panic has never also created a Covid-19 taskforce
Indian stocks have been so sharp in been so acute. to draw up measures to combat the
recent weeks that they have pushed The BSE Sensex index shed 31 impact of the virus. “The RBI needs to
also provide liquidity and introduce
forbearance on stressed corporate
Nifty Index
loans. This needs to be combined
with a fiscal response to stressed
sectors as well as acceleration in
12000 loan growth,” says Desai.
11600 The government and the RBI
11200 have in several cases, including the
10800 reconstruction of Yes Bank, have
10400 acted to boost liquidity and lower tax
10000 rates. Almost every industry from
9600 airlines, hospitality and tourism
9200 to small- and medium enterprises,
logistics, construction, chemicals and
-25.45% -8560.90 electronics has been impacted by the
coronavirus outbreak. Clearly more
Apr May Jun Jul Aug Sep Oct Nov Dec Jan 20 Feb Mar Apr
and swift measures are required.
● Salil Panchal
Data as of 01:08:21 pm on March 20

forbes india • april 10, 2020

‘The Public Health Crisis Is
A Financial System Issue’
The global pandemic will redefine supply chains and investors’ focus on youth
demographics, says Saurabh Mukherjea, founder of Marcellus Investment Managers

Q The coronavirus crisis started Q How will it redefine our supply

out as a supply side shock, but chains and the way we invest?
evolved to a demand side shock. The supply chain point is non-
When did the shift happen? negotiable now. Fortune-500
Every supply side shock necessarily companies will re-engineer their
becomes a demand side shock. It’s supply chains to reduce their
not unique to coronavirus. Whether dependence on China. The extent
you look at demonetisation or to which India can take a slice of
the US housing crash. Or say, we that supply chain is subject
were to change the labour market to debate, but I’m sure we
rules in India tomorrow; on the will get some slice of it.
face of it, it’s a supply side shock, To the second point, what
but that also affects demand. will now enter the investor lexicon
What’s interesting though is is the average age of the country. So
how this has mutated from an issue far, investors would look at inflation,
which was Asia-centric to a Western- GDP growth, current account
centric one. The issue is no longer deficit. Now it will be impossible 9
our dependence on Chinese imports… for an investor to avoid focusing on
the question is can we insulate our demographics. It’s a brutal reality
financial system from the panic of what coronavirus has hammered
setting in, in the western hemisphere. home. The demographic dividend
The issue is more about ‘Can our will come home to roost for India in
stock market and broader financial the most unlikely manner ever.
system wean itself of its dependence up their economies with rescue You’ll see a lot of capital heading
on the West?’ Because if we can’t, packages worth hundreds towards Asia once prices settle.
then regardless of how robust the of billions of dollars…
Indian economy is, we will gyrate That’s right. While the US and Q What are the similarities
with the western stock market. Europe have not yet gone into and differences between this
The Chinese stock market hasn’t a slowdown, governments are crisis and the global
been punctured at all because they are saying that even before it happens, meltdown of 2008?
not dependent on western markets. preemptively, we will fiscally and The most obvious similarity
Whereas in our case, it’s highly monetarily stimulate the economy. is that both felt like a jump into
unlikely that Q4 earnings will show In India, the reason policymakers the abyss. Everybody believed
meaningful disruption. And yet the are confused is because they can’t the world is going to come to an end.
stock prices have been pulverised figure out how much they should Where the two are dissimilar
because foreigners have sold $5 worry about the financial system is that this is quite obviously a
billion in five days. shock. Within two months, they temporary economic lockdown.
So while the coronavirus crisis have gone from worrying about In 2008, it wasn’t so clear how
started out looking like a real protecting our pharma supply chain temporary it was. Back then
economy issue, it has become more a from dependence on Chinese imports the edifice of America and
financial system issue. This is the first to worrying about saving some of Europe’s financial system
time we’re seeing this happen. our banks and larger NBFCs; from disintegrated and nobody understood
worrying about Chinese auto parts how you could repair so much
Mexy Xavier

Q Which is why governments imports to whether we need a ban financial system damage.
around the world are shoring on short selling. ● Varsha Meghani

april 10, 2020 • forbes india

LeaderBoard Amount of global oil
production by OPEC

Oil’s Well for India The Oil Math

57% 3.7%
An increase in excise duty on oil can reduce the fiscal deficit by 4.9 percent One-year fall One-year fall in
in Brent crude price of petrol in


per litre
`40,000 crore a year
Increase in Additional
excise revenue

of higher supply, this time the slide

in oil prices started on account of
Russia not agreeing to cut supply
along with Opec (Organization of
Petroleum Exporting Countries).
This was swiftly followed by news of
Covid-19 cases spiking in Europe and
the US, leading to lockdowns, lower
consumption and a slide in prices to
$25 a barrel. A combination of higher
supply and lower demand could result
in an extended period of lower oil
prices, according to Crisil, which sees
10 oil prices in the $30-35 range at least
till September.
Over the next six months, the key
will be to see how long the lower
demand stays. Crude oil has, in the
last two years, had to compete with
Accompanying the fall in check for FY21. At `8.07 lakh crore, new energy sources—renewables,
global economic activity on the `40,000 crore increase should gas and batteries. Demand, which
account of Covid-19 has been result in a 4.9 percent reduction in had been rising 1.6 million barrels
a sharp reduction in oil prices. Initial the deficit. This is assuming the fiscal per day over the last five years, rose
estimates put the government’s saving deficit for FY21 stays at about the by just 0.8 million barrels per day in
in India’s import bill at same level as FY20. 2019. In this period, gas prices also
$35 billion (`240,000 “Expect another fell by 35 percent to $1.63 per MMBtu,
crore) in the next fiscal. Demand, which increase in excise if increasing the competition for crude.
While consumers had been rising prices stay at these In India, an aggressive roll-out of
around the globe 1.6 million levels for an extended CNG pumps is likely to keep demand
should see lower barrels per period,” says Miren in check.
prices at the pump day over the Lodha, director at For now, airlines are the only
soon, on March 13, the last five years, Crisil. Analysts have beneficiaries as aviation fuel prices
government announced rose by just also pencilled in a went down by 8 percent in March
a `3 per litre increase 0.8 million significant reduction compared to February. The most
in excise duty on petrol barrels per day in the current account impacted are likely to be oil marketing
and diesel. This is in in 2019 that has been under companies hit by a double whammy
keeping with its past pressure due to of lower demand growth of just
practice of not allowing foreign investors 2-3 percent next fiscal as well as
retail prices to drift too low. The selling stocks. inventory losses on account of the
move should result in an additional Unlike past falls in 2008-09 (prices sharp fall that has come in prices
`40,000 crore in revenue a year and fell due to lower demand) and early since early February.
help in keeping the fiscal deficit in 2016 that were primarily on account ● Samar Srivastava

forbes india • april 10, 2020

Getty Images
LeaderBoard Number of coronavirus recoveries in China
as of March 20, 2020

Inching Towards Normalcy Bitten By

As China reports zero local cases for the first time since the
coronavirus outbreak, people are trickling back to work The Bug
CHINA DAILY / REUTERS Famous personalities affected
by Covid-19

Tom Hanks
The two-time Oscar
winner tested positive for
coronavirus along with
wife Rita Wilson when they
were in Australia. They
were in self-quarantine at
their home there.

Rudy Gobert
He was the first NBA player to be diagnosed
with coronavirus. Prior to that, Gobert had joked
with members of the media by touching all
microphones and recording devices on the table
before leaving a news conference.

Idris Elba
The British actor tested
positive on March 16 and
has been in self-quarantine
since then. “I feel ok… I
have been isolated since
I found out about my
possible exposure to the
virus,” Elba tweeted.

12 Iraj Harirchi
Iran’s deputy health minister tested positive a
day after he made a public appearance assuring
his countrymen of the steps his government had
After weeks of remaining Things should be back on track in two taken in containing the disease.

indoors due to the to three months because all of us want Sophie Grégoire
coronavirus outbreak, to break free,” Ghosh says. Trudeau
Canada’s first lady tested
Shanghai-based Ritwik Ghosh says So far, China has reported 80,928 positive on March 13 and
his “life is inching back on track”. As coronavirus cases and 3,245 deaths, was in self-quarantine.
Canadian Prime Minister
of March 19, China’s capital Beijing the latter making up over a third of Justin Trudeau was also
and commercial centre Shanghai had the global toll. in self-quarantine as a
precautionary measure.
seen 704 recoveries and 11 deaths due The ruling Communist Party,
to Covid-19, according to the John which faced flak for its draconian Nadine Dorries
Hopkins University. Ghosh, vice containment measures, is gradually The UK’s health minister was diagnosed with
Covid-19 on March 11 and was under self-isolation.
president of asset management firm lifting them. Hubei authorities “It’s been pretty rubbish but I hope I’m over the
CDH Investments, says apart from have partially opened their borders, worst of it now. More worried about my 84-year-
old mum who is staying with me and began with
the lockdown of Hubei and its capital excluding Wuhan, for healthy the cough today,” she tweeted.
Wuhan [the epicentre of the virus], people to leave the province. The
the government had adopted government expects China to be fully Mikel Arteta
Arsenal FC’s manager
stringent measures to restrict people’s functional by June. tested positive for Covid-19
movement in public places. A recent report by research firm on March 13. “Arsenal
personnel who had close
“Anyone entering the city was Euromonitor indicates that besides contact with Mikel will now
being mandatorily quarantined for 14 industry-wise impact, major changes self-isolate. We expect this
to be a significant number
days in government facilities,” says are expected in the way China of people,” the English
Ghosh, although the government on approaches work, industry and the football club said in a press
March 18 said all new cases involved service sector. Chinese consumers
people who came into China from will focus more on shaping attitudes Kevin Durant
One of the highest-earning basketball players in
elsewhere and not local residents. toward health and hygiene, the the world tested positive along with three other
“Along with normal life, people’s report says. players from Brooklyn Nets.
mental health has been affected badly. ● Divya J Shekhar ● Manu Balachandran

forbes india • april 10, 2020

#QuarantineAndChill Take off
Social distancing in the age of social media
We have no answers yet, but together at a designated hour, on Grounded airlines face
what we know for certain is video call. A Chrome extension syncs mounting losses
this: We’ll be seeing many your Netflix show with that of your
moons from the isolation of our own long-distance buddies, simulating Airlines are grappling with
homes, before we can crowd up the the distanced-but-not-isolated grounding of flights,
roads, gyms and our schedules again. phenomenon. It’s a great time for cancellations and massive
For a generation that’s used to its old-school, quality content to thrive, monetary losses following the
tiniest cravings appearing at the door, without the frills of manufactured coronavirus outbreak. In March,
the slow game of wait-and-watch is production. GoAir announced that it has been
mind-numbing, anxiety-causing. But After years of breeding trolls, forced to temporarily suspend all its
while the world learns a new term, toxicity and intolerance, is social international operations. The airline
‘social distancing’—the recommended media now circling back to its original subsequently introduced a short-term
act of staying isolated to contain the purpose: Connecting people? rotational leave without pay
coronavirus—is this concept entirely “Anecdotally, yes,” says Raheel programme.
alien? Have we, who have glorified Khursheed, former head of IndiGo too has announced salary
endless hours of Netflix fuelled only news, government and politics at cuts and grounding of international
by Swiggy and Amazon deliveries, Twitter India and Southeast Asia, flights. Ronojoy Dutta, chief executive
unknowingly been priming ourselves and currently co-founder of a officer of the airline, will take a 25
for this for years? streaming infrastructure platform percent cut in salary while the other
called Laminar Global. employees will have to deal with
“Even platforms that have
14 had issues of toxicity are
witnessing a moment where
a large part of the user base
is realising, from a mindset
of divisiveness, that the virus
has no political affinities.
It does not respond to or
respect any boundaries, or
wealth generation systems
that have been built to hold a cut varying between 15 percent
the world together. Tom and 20 percent depending on their
Social distancing is an interesting Hanks or the average Joe on a bus— designations. On March 12, the
concept in the age of social media— everyone’s in the same boat.” company said on a week-on-week
where you’re alone physically, but can The usual caveats aside—not basis, it has seen a decline of 15-20
virtually connect to anyone, anywhere excluding the still-alarming levels percent in daily bookings.
in the world, as though the five senses of fake news still being generated A Press Trust of India report said
have now been redefined: Text; call; and circulated on social media—the the government-owned Air India
FaceTime; DM; send a disappearing virus has, perhaps, laid bare what may also cut salaries. Airlines in India
picture to. it really means to ‘go viral’. “Social have requested the government for
On the first Monday of worldwide media is giving us an outlet to immediate support.
isolation, NGO Global Citizen and articulate a unified experience. In Earlier in March, the Centre For
Shutterstock; Getty Images (right)

Coldplay’s Chris Martin kickstarted a this context, the virus has, ironically, Aviation estimated that by May
live Instagram concert series with the really brought home the adage that 2020, most airlines in the world will
hashtag #TogetherAtHome, which there is more trust that unites than be bankrupt. Kotak Securities in its
hopes to feature one musician a day, divides us,” adds Khursheed. “It has research report dated March 13 has
taking questions and playing acoustic underlined that in a way that nothing said it expects IndiGo’s earnings to
renditions from their homes to yours. else has underlined it as far as global drop by 87 percent for FY20 and a
People are sending each other ‘Zoom experiences go.” loss in FY21.
party’ invitations, to have a drink ● Pankti Mehta Kadakia ● Pooja Sarkar

forbes india • april 10, 2020

$6.8 bln
Valuation of the Indian Premier
League in 2019, as per
Duff & Phelps

Play Date telecom

How Covid-19 has impacted the

schedules of global sporting events Mobile Makers
Feel GST Blues
GST on mobiles increased from 12 percent to 18 percent
Getty Images

Where: Tokyo
Scheduled: July 24–August 9
Status: On schedule. But the organising commit-
tee faces global pressure to cancel or postpone

Indian Premier League (IPL)

Where: India
Scheduled: March 29-May 24
Status: Suspended till April 15

Where: United States
Scheduled: July 24–August 9
Status: Season suspended after a player tested
positive moments before a game began Already grappling with the “At a time when coronavirus is
coronavirus outbreak, the spreading panic, economic slowdown 15
Euro 2020 smartphone industry now is at its peak, consumer sentiment is
Where: Across 12 European nations
Scheduled: June 12 to July 12 has to deal with another hurdle. GST battered and stock markets are in a
Status: Rescheduled to June 11-July 11, 2021 on mobile phones has increased from free-fall, increasing GST is both
12 percent to 18 percent. According to counter-intuitive and insensitive. This
French Open the GST council, this is an attempt to will lead to immediate job losses and
Where: Paris, France
Scheduled: May 24 to June 7
correct the inverted duty structure in dampen future investments in
Status: Postponed to September 20-October 4 the smartphone manufacturing,” says
industry, where the Pankaj Mohindroo,
Formula 1 Chinese Grand Prix components were taxed experts believe chairman, India
Where: Shanghai, China
Scheduled: April 19
at 18 percent and the that the Cellular & Electronics
Status: Suspended finished products at 12 GST for all Association (ICEA).
percent. Experts, components “Our domestic
World Athletics Indoor however, believe that should have consumption target of
Championships the GST for all been brought $80 billion (`6 lakh
Where: Nanjing, China components should to 12 percent crore) by 2025 will not
Scheduled: March 13-15
Status: Postponed to March 19-21, 2021 have been brought to 12 be achieved. We will
percent instead. The fall short by at least `2
tax increase—applicable from April lakh crores.”
1—has been criticised by mobile “The coronavirus pandemic could
manufacturers who say it will push up have been an opportunity for India
the prices of smartphones. “This can as smartphone manufacturers to
Getty Images

weaken demand and affect the mobile look for avenues outside China,” says
industry’s Make in India programme. Navkendar Singh, research director
Shooting World Cup It could also impact internet of IDC India, a market research firm.
Where: New Delhi, India penetration and the Digital India “But these kind of judgements don’t
Scheduled: March 15-26 programme, as a majority of Indians board well when it comes to the ease
Status: Rifle and pistol competitions from May
5-12; shotgun from June 2-9 access internet on smartphones,” says of doing business.”
● Naini Thaker Manu Kumar Jain, global VP, Xiaomi. ● Naini Thaker

april 10, 2020 • forbes india

Talking Point

Banking With
The Yes Bank turmoil came with a one-off solution, but newer banks will not be
spared from the contagion effect. And Covid-19 will only hurt retail lending more

By Salil Panchal

s soon as the sharp 39 percent erosion in deposits funds with the entity), the true test
moratorium for in nearly 12 months—from `227,601 will be its ability to raise low-cost
Yes Bank was crore in March 2019 to `137,506 crore deposits, under its new managing
16 lifted on March 18, as of March 5, 2020. The bank also director and CEO Prashant Kumar.
entrepreneur Jasjeet saw a considerable deterioration
Kaur went online and withdrew most in asset quality and had to increase Failed institution
of her money from her proprietorship provisioning for bad loans. And Rating agencies are adopting a wait-
account. “If I keep the money any alarmingly, its common equity Tier1 and-watch approach with regard to
longer and some other crisis breaks (CET1), a key matrix, was at 0.6 how Yes Bank tries to resurrect itself.
out, I would be the biggest fool,” percent against a minimum regulatory “[Credit rating agency] Fitch would
says Kaur, whose company sources requirement of 7.37 percent. view Yes Bank as a failed institution,
lighting equipment for hotels, private All these called for extreme in terms of its intrinsic viability. The
companies and banquet halls. measures. For the first time in India, fact that there was extraordinary
She also had a housing loan the government and the Reserve Bank support from seven banks through a
linked with Yes Bank whose EMI of India (RBI) got together to devise public-private partnership to keep it
was being paid by ECS (electronic a reconstruction plan for the bank. going implies that it had failed on its
clearing service), which she has now India’s largest public lender, State own,” says Saswata Guha, director
switched to ICICI Bank. “I was never Bank of India, housing finance firm and team head, Fitch Ratings in India.
happy with the customer service of HDFC and six private banks—ICICI The agency does not rate Yes Bank
Yes Bank… it had new relationship Bank, Axis Bank, Kotak Mahindra but monitors its developments.
managers [RMs] every two months. Bank, Bandhan Bank, Federal Bank Yuvraj Choudhary, an analyst
The moratorium was announced on and IDFC First Bank—have infused at Anand Rathi Securities, says the
March 5 when we usually plan for a combined `10,000 crore capital bank “will need to ensure that the
salary expenses and other business into Yes Bank (see: Yes Bank Share quantum of erosion gets arrested
outflows. When I called up my RM, Holding After Capital Infusion). quickly”. Banks run on confidence
he said he was not aware of any such The Yes Bank stock, in March and lending is a trust business
development at the bank,” says Kaur, alone, nearly doubled to `60.8 (as and Yes Bank appears to have lost
who had been banking with the on March 18) at the BSE. Yet, this that confidence from the investor
troubled private sector bank since does not promise a stable future. community over the past two years .
2017 as it was close to her residence. While the bank will be in a position “Depositors will take a call [on
Kaur’s experience is not an to raise bulk deposits (considering the bank’s future],” says Hemindra
aberration. Yes Bank has seen a that corporates are still depositing Hazari, an independent banking

forbes india • april 10, 2020

yes bank

chaitanya dinesh surpur

analyst who publishes his writings
on Singapore-based research
platform Smartkarma. Apart from
UBS analyst Vishal Goyal in 2015,
Hazari had warned in 2017 that all
was not well with Yes Bank. This
was after the bank, in 2016 and 2017,
reported divergences in its gross
non-performing assets (NPAs),
which led to falsely inflating its
profitability. The bank’s board did
not take action against founder-
promoter Rana Kapoor, the bank’s
auditors or the senior management.
“If there is a learning from the Yes
Bank episode, it is that promoters
should not be CEOs. There should
be a separation between ownership
and management. The RBI must
impose these practices strictly and
apply them to all,” says Hazari,
referring to a legal battle that the
RBI had with Kotak Mahindra
Bank, which favoured its founder
and managing director Uday Kotak.
The RBI wanted him to reduce his 17
stake in the bank from 29.9 percent
to 15 percent by March 2020 as per
bank licencing guidelines. After the
agreement, Kotak will have to lower
his stake by only 4 percent by June.
In the case of Yes Bank, the
problems emerged publicly after the
RBI denied an extension to Kapoor
beyond January 31, 2019. The central
bank highlighted “serious lapses”
in corporate governance and “poor
compliance culture” during his
tenure. Kapoor has since sold his
entire stake in Yes Bank; the family-
owned entity, Yes Capital (India),
holds a token 900 shares in the bank.
His sister-in-law and co-promoter
Madhu Kapur on March 18 sold
2.5 crore shares at `65 apiece.

Contagion Effect
The Indian banking sector will have
to deal with the contagion effect of the
Yes Bank fiasco. “Small regional banks
could incrementally find it more
difficult to raise deposits. They will
not see a strong deposit growth. Small
finance banks could also face similar

april 10, 2020 • forbes india

Talking Point

challenges in the coming months,” RBL Bank—once the poster boys

says Choudhary of Anand Rathi. of India’s promising banks—are
Fitch’s Guha agrees. “We have seen facing the brunt of distress at the
deposit flight to safety before, during stock markets in recent months.
previous crises in 2008 and 2013. The pain has been so acute that
There is a contagion risk particularly the management at these banks
on the funding side if the banking have separately made public
sector’s health worsens. These announcements, highlighting
banks could be more vulnerable their strong financials.
due to their limited franchise and IndusInd Bank—Yes Bank’s rival
vintage,” he says. Retail individuals
Despite red flags, in size and profile—has, in just over
particularly will now opt to park their the bank’s board three months, seen a 71 percent
funds with larger, well-established did not take action drop in market value to `459.8 at
banks such as HDFC Bank, ICICI the BSE (as of March 18) while RBL
Bank and Kotak Mahindra Bank.
against Yes Bank Bank has lost 58 percent, trading
The pace of deposit growth is founder-promoter at `166, from around `400 levels
weakening for even new banks, Rana Kapoor in early September. Hazari says
which have showed impressive a weakening stock market price
growth in recent years. AU Small suggests that a nasty surprise might
Finance Bank, which was a vehicle emerge in the months ahead.
finance company in 1996, has seen IndusInd appears to have crossed
a fall in the pace of core deposit one hurdle by getting its succession
growth (Casa deposits and term Vaidynathan, has shown an over-100 plan finalised and approved. Its
deposits combined). The bank, which percent jump in core retail deposits former consumer banking head
commenced operations in April 2017, (Casa and term deposits) for 2018 and Sumanth Kathpalia is now the new
18 showed a 63 percent year-on-year 2019. Also, its core retail deposits, as managing director and CEO for a
rise in deposit growth for Q3FY20 of December-end 2019, constitute three-year term. He succeeds Romesh
compared to a sharper 295 percent for 43 percent of total deposits, which Sobti, who retired on March 23, after
the corresponding period in Q3FY19. goes well with Vaidyanathan’s aim leading the bank for over 12 years.
Similarly Equitas Small Finance to make IDFC First a focussed retail However, after the Yes Bank
Bank, which began operations bank. However, it remains to be seen imbroglio, concerns of IndusInd’s
in September 2016, has shown a how the years 2020 and 2021 pan out financial health continue to mount,
slower pace in deposit growth at for the bank, with annual losses and particularly since it has a `3,995 crore
42 percent year-on-year in Q3FY20 weakening asset quality becoming its exposure to debt-laden Vodafone
compared to 79 percent for the major challenges in the near-term. Idea, besides additional exposure to
corresponding period a year earlier. the still-struggling real estate sector
IDFC First Bank, led by its IndusInd, RBL in trouble? and the now-bankrupt IL&FS.
managing director and CEO V The mid-sized IndusInd Bank and What is worrisome is that
IndusInd’s PCR (provision coverage
ratio)— which indicates the provision
Yes Bank Share Holding After Capital Infusion the bank has made for bad loans
Shareholder Amount infused as % shareholding in Shares eligible from its profits—is still low at 53
per scheme Yes Bank for selling
(In `cr) (in `cr) percent, as of December 2019. This
Existing shareholders 20.3
compares to 78 percent for Axis
Bank, 71 percent for HDFC Bank
SBI 6,050 48.2 278.7
and 76 percent for ICICI Bank.
HDFC 1,000 8 25
But IndusInd Bank is confident
ICICI Bank 1,000 8 25
about is financial health. “We have
Axis Bank 600 4.8 15
already provided for 73 percent of
Kotak Mahindra Bank 500 4 12.5
the IL&FS exposure and this will
Federal Bank 300 2.4 7.5 increase closer to 90 percent in the
Bandhan Bank 300 2.4 7.5 current [January-March] quarter,”
IDFC First Bank 250 2 6.25 an IndusInd Bank spokesperson
Source JM Financial tells Forbes India. Regarding the

forbes india • april 10, 2020

yes bank

Vodafone exposure, the bank said a order impact, particularly if

package is being developed by the The AT1Bonds companies don’t see demand due to
department of telecommunications Write Down Debate weak consumption and economic
for the sector’s long-term viability. activity, says Guha from Fitch.
“That hopefully will be conducive Several corporates have started
to the welfare of all stakeholders, talking about implementing a business
including banks,” says the continuity plan. (This is where
spokesperson, adding that the bank companies start creating a system
will soon unveil its three-year plan. of prevention and recovery from
In the December-ended quarter, Another set of investors—AT1 Bonds
potential threats to a company. The
IndusInd Bank’s gross NPA stood (perpetual bonds with no fixed maturity date) plan ensures that personnel and assets
at 2.18 percent—the second lowest —have much to worry about. The RBI, through are protected and are able to function
its reconstruction scheme of Yes Bank, decided
among large private sector banks. to write off fully, which amounts to `8,000 quickly in the event of a disaster.)
“We expect our net NPA of 1.05 crore issued by Yes Bank. The bondholders In such a scenario, the retail loans
have now moved court.
percent as of last quarter to fall segment—particularly personal loans,
below 1 percent, in line with our loans against property (LAP) and
ambition to take provision cover two state governments, constituting credit card businesses—will bear
beyond 60 percent,” the bank said. about 3 percent of its total deposits the brunt first, says Guha. Anand
IndusInd’s exposure toward in one week. “This issue is being Rathi’s Choudhary says some stress
stressed sectors like non-banking addressed by us on a one-on-one might be seen in LAP and also the
finance companies, construction, basis with the state governments LAS (loans against securities) books
real estate, telecom and gems & and also at the industry level by for banks, considering the sharp
jewellery has been on a downtrend, the RBI,” the statement said. erosion in value at the stock markets
with total fund and non-fund-based Analyst Choudhary says in in the past two months (see: State
exposure declining to 14.1 percent RBL Bank’s case, the situation of Retail Lending Repayments).
in Q3FY20 from 16.7 percent in is “not similar or as bad as Yes Another risk that banks will face 19
Q4FY19, says Gautam Duggad, head Bank because it is well capitalised relates to vehicle/auto financing on
of research at Motilal Oswal Financial and most of its stressed book the commercial side, towards Ola
Services. Experts do not see IndusInd [including exposure to Coffee Day and Uber cars in tier II and tier III
Bank going the Yes Bank way. Enterprise] is already identified”. cities. Driver associations are
RBL Bank, meanwhile, in a hopeful that car financiers will
statement on March 17, defended Covid-19 impact now agree to waive off loans for
itself, saying it was “financially strong, The operating environment for at least two months due to lower
well capitalised and profitable”. banks, which was already crippled earnings and fewer rides.
Commenting on specific concerns, by a credit squeeze, has aggravated In such a scenario, Guha believes
it said there were some withdrawals due to the impact of the Covid-19 that most bank managements
from institutional depositors and virus. India could have a second have a difficult time ahead. Fitch
had downgraded the operating
environment for banks in India in
State of Retail Lending Repayments
mid-2019 expecting deterioration
Closing As Of: Portfolio Current (in `bln) SMA 1 SMA 2 NPAs
following disruptions in the
Mar 2018 46,374 1.55% 1.28% 7.32% NBFC sector and subsequent
June 2018 48,316 1.41% 1.45% 7.43% credit squeeze by them. The
Sep 2018 49,726 1.43% 1.48% 7.58% risks have only worsened.
Dec 2018 52,622 1.63% 1.47% 8.02% It will make business tougher for
Mar 2019 54,012 1.79% 1.28% 7.86% smaller banks such as the capital-
June 2019 55,152 1.58% 1.59% 8.32% strapped Lakshmi Vilas Bank or
Sep 2019 57,751 1.59% 1.48% 8.37% even larger public sector banks that
Dec 2019 57,190 1.50% 1.36% 8.10% are in the midst of mega-mergers,
Source CRIF High Mark
which Minister of Finance Nirmala
The data is derived from all pubic and private sector banks. Retail loans includes housing, auto/ vehicle and personal loans to Sitharaman had announced in
SMA 1 - Principal or interest payment or any other amount wholly or partly overdue between 31 to 60 days
September 2019. Leaders at banks
SMA 2 - Principal or interest payment or any other amount wholly or partly overdue between 61 to 90 days have to face another tumultuous
NPA - If a loan is not repaid for more than 90 days
year that they’d want to forget.

april 10, 2020 • forbes india

Special Report

Two Decades
and Counting
As Odisha CM Naveen Patnaik completes 20
years in office, the state government is scripting
another chapter in a series of developmental
programmes for the state, this time focusing on
knowledge-based industries and manufacturing

By Divya J Shekhar

disha was in darkness schemes, a clean governance image,
when the world was sidestepping controversies and
celebrating the dawn following development narrative, his
of a new millennium party Biju Janata Dal (BJD) has defied
in 2000, says R anti-incumbency and people have
Balakrishnan, an IAS officer who re-elected him for five consecutive
was then posted in Odisha. A cyclone terms. In the 2019 Assembly elections,
20 had uprooted electricity poles and the party secured 113 out of 147 seats;
millions of trees; it had destroyed the Bharatiya Janata Party (BJP)
homes, swept away entire villages was a distant second with 23 seats.
and killed over 10,000 people. In the Patnaik commemorated 20 years
preceding years, the parched district in office on March 5. In an exclusive
of Kalahandi in south-west Odisha interaction with Forbes India at his
had become globally infamous as a residence in Bhubaneswar, he admits
symbol of starvation, malnourishment that the longevity of his tenure has
and poverty. It was under these helped sharpen his focus over the
circumstances that the state had years. An important principle, he
elected Naveen Patnaik as chief says, is to consider winning elections
minister (CM). A man who, until as just a byproduct of the work that
then, had lived in the US, written a party is supposed to do for people.
three non-fiction books, and was a He has now started planning ahead,
reluctant inheritor of the political which is evident in the first political
legacy of his father, Biju Patnaik. appointment he has made after being
“People’s self-confidence was re-elected as party president for the
at its lowest when Naveen Patnaik eighth consecutive term. In March,
took over. The rest of the country he elevated Pranab Prakash Das to ago, the state was known for its bad
bracketed Odisha as a backward state the post of organisational secretary, disaster management, high poverty
suffering from starvation, poverty and which means the 45-year-old Jajpur level and corruption. We have now set
natural calamities,” says Balakrishnan, MLA will be second-in-command global benchmarks to handle disasters,
now an advisor to the Chief Minister’s after the CM on taking decisions have lifted 8 million people above the
Office (CMO). “In the last 20 years, about the party’s organisational poverty line, and are known for our
breaking those stereotypes has been affairs. Patnaik, however, continues to transparency,” he says. His vision for
this man’s greatest achievement.” dismiss talks of succession planning, the next few years, Patnaik explains,
At 74, Patnaik is today one maintaining that “the BJD’s successor is to “take Odisha to the next level”.
of the longest-serving CMs in will be chosen only by the people”. What he means is that besides
India. Through consistent welfare “When we came to power 20 years concentrating on the minerals that

forbes india • april 10, 2020


An iron ore mine in Kheonjhar district. The

government is now aiming to earn more from its
rich mineral deposits, and not merely statutory dues Adam Ferguson / Bloomberg via Getty Images


the state is rich in, the BJD is setting The state budget presented in Intent on industrialisation
ambitious new benchmarks to push February pegged Odisha’s Gross State Experts believe that Odisha needs
tourism, heritage and sport. A step Domestic Product (GSDP) for 2019-20 to leverage its rich mineral assets
further in this plan of action will at `533,822 crore, an increase of 7.7 to strengthen its manufacturing
be to diversify and remodel Odisha percent over the previous year. The backbone instead of just becoming
as a destination for knowledge- budget estimated a revenue surplus of a raw materials supplier. The state
based industries like technology `9,509 crore in the next financial year. has enviable coal, iron ore (accounts
and financial services; or, as According to Patnaik, the renewed for more than 50 percent of the total
certain senior officers of the CMO focus on industry and manufacturing production in India) and bauxite
call it, “creating policy measures is expected to add further impetus to deposits, along with a long coastline.
for the new world economy”. Odisha’s revenue generation capacity. Gyanranjan Swain, political

april 10, 2020 • forbes india

Special Report

analyst and assistant professor at showing a renewed interest in

Ravenshaw University, Cuttack, adds handholding businesses and is trying
that the government’s push toward to speed up its thinking to be in line
industry has intensified only over with other leading manufacturing
the last 15 months. The reason for hubs. The bureaucracy is working
the “delay”, according to him, is that hard to change the image of the state,”
for many years after the BJD’s 2000 says Vijay Sharma, director, JSL.
win, its priority areas had mostly The Delhi-headquartered company
been mitigating natural disasters and has made a total investment of
consolidating power through flagship about `10,000 crore in Odisha, and
welfare schemes like food subsidies
“We have set global believes that while the detailed
that distributed rice at `1 per kilo. benchmarks to and transparent policies of the
“Somewhere along the way, handle disasters, state instil confidence in investors,
many crucial industrial deals the government will continue to
just fell through,” says Swain,
have lifted 8 million work on improving ease of doing
pointing to how the South Korean people above the business, take quick decisions,
steelmaker Posco pulled out of a poverty line, and and improve the supply and
memorandum of understanding demand-generation ecosystem.
with the Odisha government to set
are known for our Patnaik claims that Odisha “tops
up a 12-million-tonne capacity steel transparency.” the country in spending sanctioned
project in Jagatsinghpur district in funds across various sectors”,
2017, following public resistance Naveen Patnaik primarily agriculture, rural housing,
Chief Minister, Odisha
and regulatory hurdles. The deal, sports and skilling, countering the
worth $12 billion, was the biggest BJP’s allegations that the state
foreign direct investment in India at government does not spend funds
22 the time. There was also Vedanta’s released by the Centre. “Odisha was
`50,000 crore aluminium project in a rice-deficit state when we took
Lanjigarh that struggled due to the aggregate value of fresh investments over, and now we are the third-
lack of availability of raw materials received in H1FY20 at `1.9 trillion. largest contributor to the Public
like coal and bauxite on time. After coming back to power last Distribution System in India,” he says.
“Most problems [with execution year, Patnaik sought to reinvent the While capital Bhubaneswar
of industrial projects] happened state’s Industrial Policy Resolution, has been hosting a number of
because the government lacked 2015, to unveil a new legislation international events in hockey, tennis,
negotiation skills and could not strike that focussed on drawing fresh football, rugby and athletics, as far
a balance between the needs of the investments and boosting job as skilling is concerned, the state
local people and the companies,” says creation. In the run-up to the annual has reportedly trained 1.1 million
Swain. “But in the last one year, the Make in Odisha conclave to be held people between 2014 and 2019,
government has adopted a remarkably in November, he is planning new excluding engineering colleges and
different, holistic approach, where it townships in the industrial regions other higher education institutions,
seems to focus not only on industry, of Kalinganagar, Jharsuguda, according to Mindtree Co-founder
but also on policies for education, Paradeep and Angul-Dhenkanal. Subroto Bagchi, chairman of the
job-creation and health care.” In early March, the CM also Odisha Skill Development Authority
The state also has drawn up the inaugurated 23 new industrial (OSDA). It aims to train 1.5 million
numbers to back its intent. The Centre ventures in the state, which he more youth in the next four years.
for Monitoring Indian Economy claimed will employ over 9,100 Odisha has earmarked nearly
(CMIE) stated that during the April to people. He launched three projects `1,400 crore to build a World Skills
September or the H1 period of FY20, at the time—a solar power plant of Centre to attract potential employers.
Odisha received an 18 percent share Aditya Birla Renewables in Boudh, “People get surprised to know that
of all fresh investments across states, a vegetable oil manufacturing unit the Software Technology Parks
the highest in the country, followed of AKM Agro in Khurda and the of India [an autonomous society
by Maharashtra at 16 percent. This expansion of Jindal Stainless Limited’s under the Ministry of Electronics
was a jump from the meagre 4 percent (JSL) cold rolling unit in Jajpur— and Information Technology]
share Odisha had cornered in FY19. collectively worth about `709 crore. reports more exports from a 10
A report by Care Ratings pegs the “The Odisha government is km-radius in Bhubaneswar alone

forbes india • april 10, 2020


than from Delhi,” says Bagchi.

In the next few months, Bagchi Sector-wise Growth in Odisha
will spearhead a Skill Vision, Strategy
Agriculture Manufacturing Services Overall
and Implementation Plan for the (%) (%) (%) GSDP (%)
state, which will “predict where the 2017-18 -6 7.1 11.7 6.3
world might be in 2030, what are the
2018-19 12.1 7.9 6.8 7.9
opportunities and discontinuities, how
2019-20* 5.6 5.5 6.8 6.2
these will impact the notion of work,
employment and entrepreneurship; Source Odisha Economic Survey 2019-20; PRS *Numbers for 2019-20 are advance estimates

and drawing from that, what

preparedness do we need to build at qualified bidders quoted an initial have affected the local people—
a policy and implementation level”. price offer, which is the percentage of who are vulnerable tribals in most
To bridge the gap between premium/revenue to be shared with cases—the new auction process
skilling and industry requirements, the government. The final amount that classifies entire mineral blocks
the OSDA has set up Centres for is calculated on the basis of the sale for specific end users might push
Excellence in areas like artificial price of the mineral as prescribed away smaller standalone miners.
intelligence, augmented and virtual by the Indian Bureau of Mines. “Ideally, the government should
reality and Internet of Things. “We received a revenue sharing have conducted a capacity analysis
premium as high as 95 percent. So if to see how the mining activities will
Beyond mining the market rate of the mineral is `100, burden the respective districts, the
Minerals and metals have the government will get `95. This is tribals and local players,” he says.
conventionally been Odisha’s biggest over and above the regular statutory While the government increases
revenue generators, and senior dues. A mineral-based industry with its revenue, whether the bidders will
officials admit that the government value addition is our biggest hope,” the be able to sustain and scale operations
was getting a raw deal by just official explains. “With mining alone, by paying high premiums remains
collecting statutory dues (like royalty, we stand to earn `15,000 to `20,000 to be seen. Businesses, however, 23
taxes, contribution to district mineral crore annually. This revenue will help seem to be looking at the bright side.
funds etc) from mining operations. us diversify into other businesses In an interview with The Economic
“Miners, on the other hand, were in the new world economy.” In that Times in February, Sajjan Jindal,
earning supernormal profits,” sense, the official adds, it’s like a hedge chairman of the JSW Group that
says an official close to the CM. to move beyond mines, minerals and bagged four iron ore mines by bidding
So mining companies whose leases power, which are environmentally a premium as high as `132 for every
expire on March 31 participated in unfriendly businesses. `100 of ore produced, said he will
an auction where the government Senior journalist and political be able to “afford high premiums”
invited online bids through the analyst Rabi Das cautions that while since having control over more than
tendering process. The technically many of Odisha’s mining operations a billion tonnes of iron ore reserves

photographs: Vipin Kumar / Hindustan Times via Getty Images

(From left) Girls from the Dongria tribe study at a government ITI college, while others attend the Skill Enhancement Workshop at
Chatikona village in Rayagada district

april 10, 2020 • forbes india


Special Report

will eventually turn the economics in scrapping of Section 370 in Kashmir,

favour of the company. JSW declined Economy in Numbers for example—which is why the BJP
to comment on Forbes India’s queries. views him as less of a threat”.
ArcelorMittal bagged an Per-capita income The appointment of Pranab
The per-capita GSDP of Odisha in 2019-20 is
iron ore mine in the Keonjhar Prakash Das as the BJD’s
estimated at `1.16 lakh.
district of Odisha with estimated organisational secretary reiterates
This is 7% higher than 2018-19
reserves of 179.26 million how Patnaik has been testing
tonne in the recent auction. Unemployment the waters for the party’s future
Operating in the state for over The unemployment rate in Odisha was 7.1 %, by letting young party workers,
a decade now, the multinational higher than the national unemployment rate of bureaucrats and officers take
steel manufacturing corporation 6.1%, according to the Periodic Labour Force Survey charge, the analyst believes.
(July 2017 to June 2018)
also has a 6 million tonne pellet A similar example of trusting
plant in Paradeep, and is working Revenue Fiscal young officers could be seen through
Balance Balance
to double it production capacity. (%) (%) Patnaik’s ambitious Mo Sarkar
“Our Odisha facilities are crucial to 2018-19 2.9 - 2.1 initiative to reduce red tape across
ArcelorMittal Nippon Steel [AM/NS] 2019-20 (Revised
1.2 -3.4 all levels of state departments,
India’s steel operations as they meet Estimates) and the Integrated Financial
almost 50 percent of the company’s (Budgeted 1.6 -3
Management System that will take
pellet requirements,” says Dilip Estimates) all government transactions online.
Oommen, CEO, AM/NS India. Source Odisha Budget Documents, 2020-2021; PRS The latter is expected to be rolled
According to him, apart from rich out for the next financial year.
natural resources, working in Odisha’s Steering Mo Sarkar and the
favour are its deep draft ports, road State of Investments 5T (Teamwork, Technology,
Odisha had the major share of new investments in
and rail connectivity, and availability India between April-September FY20 Transparency, Time leading to
of reliable power. “The government H1FY20
Transformation) initiative is 45-year-
States FY19 (%)
24 is also supportive of strategic (%) old V Karthikeyan Pandian. The IAS
investments in the state,” he says. Odisha 4 18 officer says the government’s strategy
Maharashtra 21 16 primarily involves collaborating with
Politics behind the policies Gujarat 2 9 stakeholders across various areas of
Patnaik calls his father a pioneer Andhra Pradesh 7 7 expertise. “Apart from Bagchi, we
Madhya Pradesh 4 2
who inspired him to think differently have Sopnendu Mohanty from the
Tamil Nadu 5 1
about governance and the potential Monetary Authority of Singapore
of industrialisation. In the late Source Centre for Monitoring Indian Economy
helping to build financial services
1990s, following his father’s demise, systems, and various professionals,
Patnaik was asked by then prime He says, “Lack of jobs leads to a including Public Health Foundation
minister IK Gujral to contest from great deal of frustration among the of India’s K Srinath Reddy, providing
his Parliamentary seat in Aska. youth and I see this [communal insights on health care,” he says.
Then in his 50s, Patnaik was unrest] as a reaction to that.” Patnaik considers his work in
perhaps the only second-generation While he has refused to incorporate encouraging women’s participation
politician in the country to not the National Population Register across various levels of politics,
have been groomed for politics by (NPR) as part of the Census process and legislating for their education
his family, and was not even fluent that will start in April and will follow and health care as one of his major
in the local language Odia. When the 2011 format, he supports the achievements in the last 20 years.
he broke away from the Janata Citizenship Amendment Act (CAA) “In a democracy, where you have
Dal to form the BJD, he initially since it “only deals with outsiders”. to win over people’s trust every five
won general elections in alliance Analyst Das believes that Patnaik years, the government in power is
with the BJP, but broke away in has remained in power for the last often known to undo the work of its
2008 following communal violence 20 years because “while there are predecessor,” notes Balakrishnan.
against minorities in Kandhamal. no local leaders within or outside “The sheer continuity of his tenure
The CM believes that the current his party who match his level of has helped Patnaik reshape the
communal unrest seen in Delhi charisma and popularity, he steers development narrative of Odisha
and other parts of the country clear of commenting on national to an extent that no other party
has only “further reiterated his political controversies. He supports will be able to reverse his work or
decision to not ally with the BJP”. the Centre on key political issues—the overturn his legacy in the future.”

forbes india • april 10, 2020

Auto Special

Fast and
Amid India’s worst automobile slowdown, two new entrants are trying
to make it big. Can they sustain the success after the initial rush?

By Pranit Sarda


“We entered India with exhaustive market and customer research.

This has helped us plan our product and services better.”
Kookhyun Shim, managing director and CEO, Kia Motors India
tonnes of features that no other car since its launch. The success of the
in its category has,” says Doshi. Seltos managed to create enough
Doshi’s vote of confidence in the buzz for the launch of Kia’s second,
Hyundai-owned Kia Motors, South luxury multipurpose vehicle (MPV)
Korea’s second-largest automobile Carnival, at Auto Expo 2020. The
manufacturer, is an exception in an seven-seater, along with Seltos,
otherwise downcast auto sector that led to “record-high” sales of
is reeling under its worst slowdown 15,644 units for Kia in February.

(left) NISHANT RATNAKAR for forbes india; Amit Verma

since July 2018. Kia, which entered Kia emerged third beating
the Indian market in August 2019 market leaders and established
with Seltos, a mid-sized SUV automobile players like Tata
Kunal Doshi, 25, an importer and manufactured at their Anantapur Motors and Mahindra & Mahindra
national distributor of nuts and bolts, plant in Andhra Pradesh, has since for the month of February 2020.
booked the Kia Seltos GTX Plus delivered 75,000 units, 32,000 of With a 6.24 percent marketshare,
7 DCT in July 2019 and received which were booked before its launch. Kia followed Maruti Suzuki and
the car in November. “The car Not only has Seltos established Kia Hyundai Motors with 53.33 and 15.96
has a bold style, good engine and among the top five manufacturers percent market share respectively.
performance, is comfortable like in India, it has also become the Another international car maker
premium cars, and is loaded with highest-selling SUV in the country that has begun its India journey with

“Our product offering, customer experience, product assurance, all had to

be different, and we had to connect the whole thing back to technology.”
Rajeev Chaba, president and managing director, MG Motor India
Auto Special

a bang, thereby bucking the trend in stores house a café, an LED video wall units in a new year], Kia performed
the country, is Chinese-owned British that runs the company’s brand videos, reasonably well selling 4,645 units.”
automaker Morris Garages (MG). MG and are decked up with British- While MG has left no stone
set up its India subsidiary MG Motor themed props like the Union Jack, unturned to provide a technologically
India in 2017 in Gujarat’s Halol. The the Big Ben and iconic London phone advanced product for the Indian
company, which launched Hector booths. The Delhi outlet also has a market, its product assurance also
in June 2019 in India, has received 1956 MG Midget to reflect its heritage. stood out. “We have packaged the
over 50,000 bookings and 22,000 Kia too has tied up with telecom entire product under a scheme
cars have already been delivered, services provider Vodafone Idea to set called MG Shield, where even
averaging about 2,000 retailed up internet connectivity in a vehicle the cost of ownership is going to
vehicles a month. The numbers through a smartphone app. Christened be reasonable,” says Chaba. With
come at a time when the overall UVO Connect, it enables features MG Shield, the company assures
sales of vehicles, including passenger like remote locking, navigation and customers a buyback price of
vehicles, saw a 13.77 percent decline switching the engine on and off, minimum 60 percent after three
in 2019, at 2,30,73,438 units, falling among others, through the app. years apart from providing various
from 2,67,58,787 units in 2018. This is Another reason for Kia’s success after-sales services and warranty.
said to be the steepest decline since is the market research done by Kia, too, is focussed on after-sales
the Society of Indian Automobile Hyundai, its parent company. “We service. When the horn in Doshi’s

“These companies are more similar to Maruti in terms of product range

and understanding the consumer compared to a few other MNCs.”
Mitul Shah, vice-president, research, Reliance Securities

28 Manufacturers (SIAM) started entered India with exhaustive car malfunctioned, it was promptly
maintaining the sales records in 1997. market and customer research and replaced in the first service, he says.
While the Seltos and the Hector we identified the unmet needs of the Both Seltos and Hector gain
are not direct competitors despite customers here. This has helped us with competitive pricing, starting
being in the SUV segment (Seltos plan our product and services better. at `9.89 lakh and `12.74 lakh (ex-
being smaller in size), for both Seeing the response, we can say our showroom) respectively. It gives the
Kia and MG, technology is the research was right on point,” says two brands an edge in India’s price-
key differentiating factor that’s Kookhyun Shim, managing director sensitive market against vehicles
helped them swim against the tide. and CEO of Kia Motors India. The like Jeep Compass and Mahindra
While entering India, MG wanted company has invested $1.1 billion in XUV500, which start at `16.49 lakh
to distinguish itself as a brand to its manufacturing plant in Andhra and `12.31 lakh respectively. While
create its unique identity. Says Pradesh that has a production Hyundai Creta and Maruti Suzuki
Rajeev Chaba, president & managing capacity of 300,000 units per annum. Vitara Brezza come cheaper, at `9.99
director at MG Motor India: “Our With the second largest market lakh and `7.34 lakh respectively,
product offering had to be different, share in India, analysts agree that Seltos and Hector score higher
our customer experience had to be Hyundai’s research and results over these two brands with their
different, our product assurance had pushed Kia to further succeed in sophisticated technology offerings.
to be different and we had to connect the Indian market. “Kia is close to Says Shim of Kia: “The success of
the whole thing back to technology. Hyundai, and Hyundai has [globally] both Seltos and Carnival is proof that
So, technology is our biggest pillar of established itself as a passenger the love between Indian consumers
differentiation.” Hector, thus, has over vehicle brand,” says Mitul Shah, and good cars hasn’t faded away
50 connected features like remote vice-president, research, Reliance despite the slump in the industry.”
control, a mobile app where one can Securities. “The numbers for Seltos

check the condition of the vehicle and have continued to improve in hile both MG and Kia
even locate it through ‘find my car’. the last six to eight months. Even started off well in India,
MG has also invested heavily in when the numbers have become recent global factors have
its two flagship stores in Delhi and slightly lower [in December, when dampened their initial euphoria.
Mumbai to provide a seamless retail the car makers typically cut down Hector’s sales have pared down a
experience to customers. The two production as buyers prefer newer bit in February, for instance. The

forbes india • april 10, 2020

company sold 1,218 units, a dip from nce the initial high wears off,
their average of over 2,000 units sold On a Roll how do the two companies
per month. Says Shah of Reliance MG plan to hold on to the
Securities: “The initial response for Current models: Hector and ZS EV momentum? By going into overdrive
Units Sold
any product is high and it slowly mode to launch new products.
goes down in most of the cases.” One MG wants to launch at least one
of the cars caught fire on the road 20,278 product every year, with Gloster
in Delhi and brought bad press for ZS EV during Diwali and another in the
MG, while Kia is said to have been 158 first quarter of 2021. It is also looking
facing problems with the availability Pipeline: Gloster (unveiled at Auto Expo 2020; Diwali
at expanding production at its
of spare parts and quality service launch expected) Halol plant by 2021, up to 100,000
in India. Forbes India could not Kia
units from its current 80,000.
independently verify this claim. Current models: Seltos and Carnival Kia is eyeing a launch every
Add to that the raging Covid-19 Units sold six to nine months, starting
pandemic in China and Europe that Seltos with a compact SUV, Sonet, in
might disrupt the supply chains for 74,518 the second half of the year.
both these companies, as it has for Says Shah of Reliance Securities,
their Indian counterparts. While “Kia’s Sonet will compete with cars
China is on a recovery trajectory,
2,070 like Maruti Brezza and Mahindra
the epicentre of the pandemic has Pipeline: Sonet (concept available at Auto Expo XUV300. That is a category
2020, launch in the second half of the year)
moved to Europe, where multiple people have recently shifted to
cities have gone under lockdown and from sedans. That product is
the economy is expected to wobble recent launch of Carnival, has likely to impact the market share
for several months now. Says Chaba: complied with BS VI norms in both of all the other products.”
“We have a global supply chain, the petrol and diesel variants. Adds Shah: “The success of Kia
where some components come to But MG has caught on to the EV in countries like Korea and a few 29
India through both Europe and wave pretty early by launching the others, in terms of affordability and
China. If the coronavirus continues ZS EV in January across five cities. a few other parameters, is similar to
to wreak havoc in Europe, our supply “When we had just announced the the Indian market. So they would
chain will be affected. But China is booking and not even the price, we best understand the Indian consumer
recovering and we should be back in got an overwhelming response. ZS EV compared to other companies like
action within three to four weeks.” has the same connected technology as Volkswagen.” Both MG and Kia also
For Kia, which sold 15,644 Hector,” says Chaba. ZS EV has seen have deep enough pockets to invest
units in February, Covid-19 hasn’t over 3,000 bookings in India with heavily in the Indian market in terms
yet impacted their production. 158 units being sold in February; it of marketing and brand building,
“But we are keeping a watch on has a waitlist of almost nine months. usually a challenge for new entrants.
the development to gauge future Kia has a thriving presence in India has seen companies like
impact,” says a spokesperson. the global EV market with cars like Renault and Volkswagen launch cars
Some auto experts attribute Niro and Soul, but it does not plan like Duster and Vento, respectively,
the falling vehicle sales in India to to launch the products in India yet. with a bang, only to have them
the introduction of the stringent The company claims that its fade out. Could MG and Kia also
BS VI emission norms from April Anantapur plant, with a production go the same route? It’s too early to
1 as well as the government’s capacity of 300,000 a year that it predict, but they seem to hold the
push for electric vehicles (EVs), plans to fully utilise by 2022 to be potential to go the other way. Shah
auto’s new ‘sunshine sector’. among the top three manufacturers says, “Anything can happen, but
MG’s BS IV inventory was close in India, is fully equipped to it seems like these companies are
to zero at the time of Forbes India’s manufacture EVs. “But,” says Shim, more similar to Maruti in terms of
interaction with the company. “India needs some more time for EV product range and understanding the
They claimed to have their petrol adoption as there are many aspects consumer compared to Renault and
BS VI available in the market and like infrastructure, tax incentives Volkswagen. The latter are present
the diesel BS VI was expected and consumer awareness, which in countries where the products
to go on sale later in March. play a crucial role in making this are slightly premium compared
Kia, right from the launch of transition a success. EVs are not a to India’s, that’s the reason they
Seltos in August 2019 to the more focus currently for Kia Motors India.” were not successful in India.”

april 10, 2020 • forbes india

Auto Special

The Big

The BS VI emission norms are good for
the environment, but the rising
costs that will come along may
dampen the industry mood

By Jasodhara Banerjee

sameer pawar

forbes india • april 10, 2020

first implement BS V and then BS VI. Suzuki India (all models), Volkswagen
The time frame, however, within Passenger Cars India (all models),
which this switch was to be made was Toyota (Etios, Etios Cross, Etios
one of the toughest in the world. The Liva and Corolla Altis), Tata Motors
European Union had implemented (Zest and Bolt), Nissan (Micra,
Euro IV emission standards in 2006, Sunny and Kicks), Mahindra &
Euro V in 2011, and Euro VI in 2015. Mahindra (KUV100) and Fiat
In India, nationwide implementation (Punto and Abarth). The move is
of BS IV standards took place from fuelled by the fact that car makers
2017, just three years before the feel the cost of manufacturing BS
country was mandated to switch to VI-compliant diesel vehicles—
From April 1, when the Bharat Stage BS VI standards from this April. which includes more expensive
(BS) VI emission norms come into While this has led car makers to technological requirements—is
effect, a lot more will change apart invest more on their research and not economically viable.
from the composition of exhaust development (R&D) departments, it However, they also point to the
fumes of new cars. Consumers of has also meant that the total number falling demand for diesel variants in
passenger vehicles will have fewer of BS VI-compliant models available small cars. “There is no business for
models to choose from while buying in the market from April will be diesel variants among small cars,” says
a car and the cars will cost more, as lower than that of BS IV models Steffen Knapp, director, Volkswagen
will their BS VI compliant fuel. The available earlier. This is because Passenger Cars India. “The total
effect that the combination of these some car makers—such as Maruti distance that most consumers drive
factors will have on the Indian auto Suzuki, Volkswagen Passenger Cars within the city is small, and the price
industry—already struggling with India, Hyundai and Nissan—will difference between petrol and diesel
the worst slowdown in sales for be discontinuing their BS IV diesel has been reducing over the years.”
over a year—is yet to be seen. While variants without replacing them with He adds that three years ago, 60
some predict the continuation of BS VI-compliant diesel versions; percent of Volkswagen’s small car 31
tepid consumer response, others pin however, they may have BS VI Polo that was sold in India was the
their hopes on the launch of new petrol variants in their portfolios. diesel variant, while in 2020 it is
models to pique consumer interest. “Though there has been news that down to 10 percent. The company
On February 19, 2016, the ministry some companies will discontinue their has now discontinued the diesel
of road transport and highways had diesel variants, lately some of these variant altogether, and has only
issued a draft notification of BS VI companies have also stated that they the petrol variant of this model.
emission standards for all major are open to looking at diesel options in Knapp’s views on demand for
on-road vehicle categories in the the near future,” says Rajesh Menon, diesel cars is borne out by data
country, including light- and heavy- director general of the Society of from Siam, which shows that in
duty vehicles, as well as two- and Indian Automobile Manufacturers 2013-14, the share of diesel models
three-wheelers. The government (Siam). “Irrespective of diesel or in the sale of new cars was about
had confirmed that the country petrol, the number of models available 42 percent, whereas in the period
would leapfrog BS V level emission on April 1, 2020, will be lower. The between April 2019 and January
standards and move directly to the time available to the industry to transit 2020, it has fallen to 13 percent.
more stringent and robust BS VI from BS IV to BS VI has been just Another company that will be
(see: What’s new with BS VI). There three years, which is unprecedented discontinuing all its diesel variants
were two reasons for this switch: anywhere in the world. Hence, it is Maruti Suzuki, which had seen
One, the rising level of vehicular cannot be expected from all vehicle much success with models such as
pollution in India and the effect manufacturers to develop the entire the Swift, Baleno and Ciaz. “The
it had on public health (see: The BS VI portfolio in such a short time.” company announced in April 2019
burden of vehicular pollution); Car makers who are discontinuing that it would phase out diesel cars
two, reducing the pressure and diesel variants in the small and after BS VI implementation in April
investment costs of oil refineries to compact segments include Maruti 2020,” says a spokesperson for the

“The time available to the industry to transit from BS IV to BS VI has been

just three years, which is unprecedented anywhere in the world.”
Rajesh Menon, director general, Society of Indian Automobile Manufacturers

april 10, 2020 • forbes india

Auto Special

company. The compact segment between 2013-14 and 2018-19,

accounted for 49.7 percent of Maruti The Burden of Vehicular whereas the figure is 5 percent for
Suzuki’s sales in 2017-18. The Pollution small cars in the same period.
segment comprises models such as “Customers of the mid-size and
the WagonR, Ignis, Celerio, Swift, 2 out of 3 executive segments are considering
Baleno and Dzire. “Currently, all Number of entry-level SUVs before making
petrol models offered by Maruti deaths from air a purchase decision, as there are
pollution in
Suzuki are BS VI-compliant.” India which can some additional benefits of SUVs,”
Although both Volkswagen and be attributed says Menon. “These include higher
to exhaust
Maruti will have only petrol variants emissions from ground clearance that make them
in their current portfolios, they are diesel vehicles better suited for Indian roads,
not giving up on diesel entirely. The high-performance engines, higher
new petrol models that Volkswagen seating capacities, and price points
has launched this year—the Tiguan 385,000 that are similar to the mid-size and
Allspace and the T-Roc (both Number of deaths executive category of sedans.”
caused worldwide by
SUVs)—are fully built units being pollution from diesel Hetal Gandhi, director, Crisil
imported from Mexico and Portugal vehicles in 2015 Research, adds that parking
respectively, where the company regulations—such as parking fees
has existing facilities to build Euro or towing penalties—in cities like
Share of these deaths that

VI-standard cars. “Although we occurred in 2015 in the four Delhi and Mumbai are deterring
are launching both small and large largest vehicle markets: people from buying multiple cars.
China, India, the European
SUVs with petrol engines, we will Union and the US “Instead, consumers are opting for
be investigating diesel options for single cars that are larger in size
the future,” says Knapp. Similarly, and serve multiple purposes,” she
Maruti Suzuki says it will continue to Nearly Of the health impacts of air
pollution from vehicles says, adding that one of the reasons

worldwide were caused
32 monitor customer feedback. “In case by on-road diesel vehicles
for slow growth in the small car
there is demand for diesel cars after in 2015 segment is that first-time buyers are
the introduction of BS VI regulations, delaying their purchases. “Earlier,
we may reconsider our decision. At when people became financially
present, we are closely monitoring
customer feedback to BS VI diesel
3.4 Number of premature
deaths annually from
heart and lung diseases
eligible to buy a car, they would make
a purchase within the next three
cars,” the spokesperson adds. million and diabetes caused by
ambient air pollution years. However, that time frame
The paucity of options in the has extended well beyond three
small and compact segments, years now. This is because of other
however, is contrasted by the
continuation and introduction of BS
​$1 Global cost
alternatives such as taxi aggregators,
the problems related to parking
VI-compliant diesel models in the trillion health impact between
2010 and 2015 and higher cost of acquisition.”
large car and UV segments. Models

Source International Council on Clean Transportation,
such as Kia Seltos, Hyundai Venue, George Washington University, University of Colorado lthough car makers are more
Boulder, Global Burden of Disease study 2017
Creta and Tucson, Jeep Compass, enthusiastic about launching
Tata Harrier, and Ford Ecosport diesel variants in the SUV
are UVs that will be available in feel they can assimilate the cost of segment, this category will also
diesel variants, as will be sedans introducing BS VI technology. For see the steepest increase in cost.
such as Hyundai Elantra and Verna. instance, MG Motor India, a new While the rise in costs for petrol
Among the large UV makers, for entrant to the country, has said it variants of compact cars and SUVs
instance, Toyota will continue its only makes sense to offer BS VI- will be between 3 and 5 percent,
diesel variants for Fortuner and compliant diesel options in vehicles it is the larger diesel vehicles that
Innova. More than 60 percent of the that are priced over `15 lakh. The will see a minimum of an 8 to 10
infographics: sameer pawar

company’s sales came from these rapid growth in the UV segment is percent increase in price. So, a
two models between January and another reason why manufacturers vehicle that costs `10 lakh now,
September 2019, with diesel vehicles are willing to bet on diesel variants could cost at least `80,000 more.
accounting for 85 percent of volumes. in this category. Siam data shows “The cost of upgrading a BS IV
Because of the price of vehicles the cumulative growth rate in the petrol car to a BS VI-compliant
in these segments, manufacturers SUV segment has been 12 percent petrol engine costs between `8,000

forbes india • april 10, 2020

and `12,000. However, there are reports indicated that till August
several other reasons for higher cost What’s New With BS VI 2019, 40,000 to 50,000 contract
of ownership for new car buyers,” workers in the auto hubs of
says the Maruti spokesperson. “The  Introduction of Gurugram and Manesar in
cost of car acquisition has gone up Particulate Haryana had been laid off. Similar
substantially for several reasons, Filter (DPF) and situations were expected in other
including implementation of new Catalytic manufacturing hubs like Chakan,
safety norms. The decision by some Reduction (SCR) near Pune, and in Chennai.
states to raise road tax, coupled Globally, too, the auto industry
with the implementation of the is slowing faster than expected
three-year insurance scheme in line  Introduction of
Real Driving Emission
and, according to the International
with the Supreme Court guidelines (RDE), which Monetary Fund, it represented 20
have made cars expensive.” measures a vehicle’s
emission in real-time
percent of GDP slowdown in 2018
The cost of BS VI fuel is also conditions against and about 30 percent of the year’s
expected to be higher than BS IV fuel. laboratory conditions
drop in global trade. The declines
In February, Sanjiv Singh, chairman come as wealthier countries reach
of Indian Oil Corporation (IOC), maximum automobile saturation,
 Introduction
the country’s largest oil supplier, of mandatory
while developing countries
had said there will “definitely be a Onboard struggle with lagging sales.
marginal increase in retail prices (OD) for all
Given these factors, the Indian
of fuels” once the BS VI norms are vehicles industry had been pinning its
implemented. However, he had added hopes of a revival in the new
that the rise will not be a steep one. financial year with the launch of
The reason for this increase in  Use of BS VI fuel, which new models that are expected to
has significantly lower
price is the cost of investments that sulphur content (a maximum interest consumers. For instance, Kia
oil refining and marketing companies BS VI fuel
of 10 mg/kg as compared to Motors India in March announced 33
a maximum of 50 mg/kg in
have had to make in the refining BS IC fuel). Also, nitrogen that it had registered its highest-
and distribution processes. The oxide level for BS VI diesel ever monthly sales of 15,644 units
engines and petrol engines
main objective of moving towards will be brought down by in February; it sold 14,024 units
BS VI emission standards is to 70% and 25%, respectively of the Seltos, and 1,620 units of
reduce the level of sulphur in the the newly launched Carnival.
fuel, which requires changing its  A BS VI-compliant engine will require BS VI; if it But despite this optimism among
uses BS IV fuel, it won’t adhere to BS VI standards.
physical and chemical components. Similarly, if a BS IV vehicle uses BS VI fuel, its engine
some players, there is caution.
Oil and gas companies, therefore, will be affected and increase emissions “Earlier, during the auto
need to modify the refining and sector slowdowns of 2001-02
blending processes to produce and 2007-08, the government

fuel of the required composition. he Indian automobile industry had provided incentives to the
To manage costs and prices, they has had one of its worst years industry to help it recover,” says
need to optimise their processes, as in 2019, with passenger vehicles Gandhi. “However, this time
well as forecast market demand. sales falling by 17.98 percent between around, the government wants the
Singh said government-owned oil April and November, according to industry to recover on its own.”
marketing companies have invested Siam. The slump can be attributed Menon of SIAM says it is
`35,000 crore to upgrade their to multiple reasons, including the too early to say what the effect
refineries, of which IOC alone has slowdown in the overall economy, of the increased BS VI vehicle
spent `17,000 crore. BPCL said it has the crisis in the non-banking finance and fuel prices will be on sales
invested `7,000 crore, while HPCL companies sector, a liquidity crunch, figures and consumer sentiments.
has invested about `5,000 crore. For and the increase in third-party “Where SUVs are concerned,
BPCL, the upgradation has resulted insurance and road tax in some states. however, the new norms would
in a price hike of `0.70 to `1 per This slowdown in the world’s not be a determinant of demand,
litre. However, more clarity on the fourth-largest auto market has and new car models have been
actual increase in prices is expected also severely affected employment, generating some excitement,”
after the new emission norms come with tens of thousands of workers he says. “However, we should
into play, and the new grade of fuels losing their jobs at manufacturing keep in mind that India is a very
are rolled out across the country. plants and ancillary units. Media price-sensitive market.”

april 10, 2020 • forbes india

Auto Special

China Drives In
With India showing the potential to become the third-largest
automobile market in the world, car makers from China are
revving up to sell their vehicles here

By Manu Balachandran

A Chinese storm is approaching

34 India’s automobile sector and
it has the potential to change
its landscape forever.
The automobile industry in India is
dominated by homegrown automobile
manufacturers in addition to Korean
and Japanese brands. However, at the
Auto Expo this year, two of China’s
biggest carmakers—Great Wall Motors
(GWM) and FAW Haima—announced
their intention to sell vehicles in India,
across segments, entering into even
the fledgling electric vehicle (EV)
market. Many more are planning
a similar foray into the world’s
fourth-largest automobile industry.
GWM, China’s largest sports
vehicle manufacturer, showcased its
Haval range of SUVs at the Auto Expo,
in addition to the Ora EV. FAW Haima
showcased the FAW Haima 8S and 7X
SUVs, and has firmed up plans with
Delhi-based Bird Group to launch an
EV priced at less than `10 lakh. In all,
Chinese carmakers exhibited more
than 20 models at the Auto Expo.
Shanghai-headquartered SAIC
Motor has already been selling MG
cars in India since last year. Changan
Sergei Bobylev \ TASS via Getty Images

forbes india • april 10, 2020

“India is expected to be the third-largest automotive market by 2025 and
it is a critical part of Great Wall Motors’ globalisation strategy.”
Hardeep Singh Brar, director, marketing and sales, Great Wall Motors

Automobiles, a car maker owned by time when India’s automobile sales market, which is behind only the US.
the China government, is also likely declined by 16 percent between April “India is expected to be the
to begin operations in India by 2022, 2019 and February 2020. China also third-largest automotive market
apart from other companies like Chery saw its market shrink, with vehicle [overtaking Japan] by 2025 and it is
Automobile based in Wuhu and the sales falling by over 8 percent in 2019, a critical part of Great Wall Motors’
Geely Auto Group from Hong Kong. forcing companies to look outside the globalisation strategy,” Hardeep
Their planned entry comes at a world’s second-largest automobile Singh Brar, director, marketing
and sales, Great Wall Motors, tells
Forbes India. “India is undoubtedly
one of the most promising auto
markets in the world. For foreign
investors, the favourable investment
environment in India enables it to be
their preferred destination for direct
investment,” he says, explaining that
the Baoding-headquartered company
has been paying attention to and
studying India “with an objective
of executing investment plans”.
According to government think-
tank Niti Aayog, only 22 out of
1,000 people own a car in India 35
[compared to 980 in the US and
850 in the UK]. The increasing
number of first-time users enhance
India’s potential to become the
world’s third-largest automobile
industry over the next few years.
The government push toward
electric mobility through policy
changes has also opened avenues for
Chinese manufacturers to tap into the
Indian market. Apart from reducing
GST on EVs from 12 percent to 5
percent last year, the government has
provided an income tax deduction
of `1.5 lakh on interest paid on loans
taken to buy EVs. It has also approved
the setting up of 2,636 EV charging
stations across 62 cities under the
second phase of its FAME scheme.
GWM has lined up investments
worth $1 billion (`100 crore) for
India and purchased General Motors’
manufacturing facility in Talegaon
near Pune in January for an estimated
$250 million (`25 crore). “SUVs are
growing at a much faster pace than the
rest of the segments and contribute
more than 25 percent to the overall
China’s Great Wall Motors has lined up
investments worth `100 crore for India
april 10, 2020 • forbes india
Auto Special

market [in India],” adds Brar. in Halol, Gujarat, after the American to the mobile phone market in
“GWM’s Haval is the number one car maker decided to call it quits in India, which was once dominated
SUV brand in China... and with the the Indian market due to floundering by domestic manufacturers and
growth in the SUV segment, we feel sales. The company spent over South Korean brands before the
this is the right time to enter India,” `2,200 crore on the acquisition of the onslaught of Chinese smartphones
he says. “GWM started as early as 2016 facility and expanding its capacity. led by Xiaomi, Vivo and Oppo.
when we launched our R&D centre “For many global companies, The ongoing slowdown hasn’t
in Bengaluru... now we will be setting India was just another market,” deterred companies from firming up
our manufacturing facility in India.” says Vinay Piparsania, former their India plan because the market
executive director at Ford India, and is expected to bounce back later this
Lining up consulting director–automotive at year. “We have been evaluating the
India’s automobile industry is Counterpoint Technology Market market for a long time and are in the
dominated by Maruti Suzuki, which Research. “Chinese companies, process of finalising the products,
controls nearly 50 percent of the however, hadn’t gone out of their own location and segments,” says an
market. Hyundai has 20 percent country and India is only one of the executive involved in the launch of
market share followed by others few markets that they are foraying a Chinese auto maker. “The market
such as Kia Motors, Tata Motors into. With their resources, focus will bounce back and there is a
and Mahindra. At the same time, and the potential that the Indian massive opportunity there. In 1998,
many global car manufacturers, market offers, the Indian automobile nobody knew about Korean brands
including Nissan [Japanese], Renault landscape is in for some big churn.” in India and today they are the
[French] and Volkswagen [German], “Essentially, two companies second-biggest in India. There is a
haven’t been able to find much dominate the Indian market,” adds similar story waiting for the Chinese
success in India in recent times. Piparsania, referring to Maruti brands because the consumer is
Much of the interest from Chinese Suzuki and Hyundai. “While there looking for the best value proposition,
auto makers—particularly at a time are challenges as far as perception which these companies can offer.”
36 when American and European goes, the success of MG Motor gives Chinese companies are taking
car makers are struggling to make confidence to others as long as they advantage of the cost consciousness
inroads in India—comes at a time can offer a feature-rich product and of the Indian market as the domestic
when SAIC-owned MG Motor India the right quality. He explains that automobile industry undergoes
demonstrated the potential of the the situation is somewhat similar a transformation. “The Indian
Indian market for Chinese companies. automobile market is getting
Since it set up operations here last expensive, so much so that even
June, the company has garnered
The Chinese Onslaught Maruti Suzuki is becoming more
over 50,000 bookings for its wildly expensive,” says Puneet Gupta,
popular SUV, Hector, with MG associate director for automotive
Motor India delivering some 3,000 forecasting at IHS Markit. “With
units every month. At the Auto Expo, their deep pockets and innovative
the company displayed 14 models. offerings, the Chinese players will be
“Today, the Indian consumer does able to offer great features and style
not care about the country of origin to consumers. Time and again, Indian
of a vehicle,” says Rajeev Chaba, consumers have shifted priorities
president and managing director, and they aren’t loyal to one brand.”
MG Motor India. “They believe
in value for money and are happy Confirmed EV potential
as long as their needs are fulfilled. • Great Wall Motors • FAW Haima The Chinese auto makers are
Besides, the automobile industry is a also bringing to India their vast
in the works
global one, with parts being sourced • Chery Automobile • Geely Auto Group experience in the EV segment. China
from many places, and therefore a • Changan Automobiles is the world’s largest EV market,
company isn’t specific to one region accounting for one out of two EVs
alone. Besides, having Chinese The Chinese USP sold globally. In January, MG Motor
resources offer the best proposition.” • Feature-rich and technologically savvy India launched its first EV for the
In 2017, MG Motor India had • Competitive pricing Indian market, an SUV named MG ZS
taken over a manufacturing facility • Deep knowledge of the electric EV, priced at around `23 lakh; it has
previously owned by General Motors vehicle market received over 3,000 bookings so far.

forbes india • april 10, 2020

Wang Chun / VCG via Getty Images
partnership with Hyderabad-based
Olectra Electric to supply electric
buses for various state governments.
“In many ways, MG Motor
has given Chinese car makers the
confidence that they will be able to
find success in India,” says Gupta
of HIS Markit. “What matters is
features and style... and the Chinese
have been extremely competitive
and innovative in that space.”
Brar of GWM agrees. “GWM will
bring in technology disruptions in
terms of products that the Indian
consumer has so far not seen and
experienced,” he says. “We will
make a bold foray in India to place
ourselves as a premium brand,
Shanghai-headquartered SAIC Motor has been selling MG cars in India since last year
offering the best-in-class fit, finish
The vehicle has a range of 340 km. for more EVs and is investing in and interior quality, focusing on
“Electric vehicles will be an integral creating the required infrastructure. technology disruption as a target
part of our strategy,” says Brar of “Until a few years ago, we had in the near future for an enriching
GWM. “It’s because GWM is quite not even heard about electric experience for our consumers.”
strong in EVs in China. Also, there is a rickshaws,” says Kanv Garg, director With the coronavirus crisis in
lot of thrust by the Indian government for renewables and electric mobility China and across the world, concerns
on EVs. Hence, GWM would like to at consultancy firm EY. “The kits have risen over the supply chain 37
use its expertise and be part of the came from China and the market grew network of Chinese companies.
growth story for EVs in India. We organically even without government “The foray into India also provides
are exploring all forms of EVs at support. Customers only care about companies with the opportunity to
this stage, which include pure EVs, high quality and minimum cost and target export-oriented markets,”
hybrid EVs, and plug-in hybrid EVs.” with the Indian companies being in says Piparsania. “Every player
In February, Haima Automobile an inertia as far as EVs are concerned; coming in will set up the ecosystem
announced a joint venture with the Chinese have a huge potential.” to remain competitive in the Indian
Bird Group to launch an electric It isn’t just car makers who are market and supply chains should
hatchback, with range options of making a beeline for the Indian never be a major concern. In
200-300 km. The vehicle will be market. The two-wheeler market, addition, companies are also laying
manufactured at a soon-to-be-set- currently dominated by motorcycles, groundwork on building a strong
up plant in Manesar in New Delhi. could also see some serious threat dealership and service network.”
“With the world moving from Chinese companies. Already, “For now, the focus is on getting
towards clean mobility with least Chinese electric two-wheeler maker the products for the Indian market
environmental impact, we are DAO EVTech has announced plans right,” says the executive working
satisfied with the Bird Electric EV1,” to set up a manufacturing unit in with the Chinese auto maker. “Dealers
Williams Dong, general manager, Andhra Pradesh, while Benling will always be there and sales and
Haima Automobile International and CFMoto are gearing up to service network aren’t a cause of
Corporation, said during the launch. launch electric bikes in India. concern.” GWM, too, has laid out
“We have entered the fastest-growing Then there are truck and bus plans to set up its network across
segment of the Indian automobile… manufacturers, including Sinotruk Tier I, Tier II and a few select Tier
Bird Electric EV1 will reinvent the and Foton, which have been operating III cities to begin with. “We shall
game in terms of technology and in India since 2011. Beiqi Foton has look at select but strong partners
economy, targeted at a wide set tied up with Haryana-based PMI with a high degree of customer and
of customers across segments.” Electro Mobility Solutions Pvt Ltd brand orientation,” adds Brar.
The gamble on the EV market for manufacturing electric buses, The Chinese onslaught has begun
could reap rich rewards, considering while the $20-billion Shenzhen-based and India’s auto sector could be in
the government has been pushing manufacturer BYD Co Limited has a for some serious transformation.

april 10, 2020 • forbes india

Auto Special The Ora RI from China’s Great Wall Motors is
touted as the world’s cheapest electric car

The future’s electric. And Indian auto makers
are launching newer models and building
an ecosystem as the government offers
favourable policies and financial incentives

By Manu Balachandran

followed by the electric version
of its popular SUV, Nexon. In
January, Mumbai-headquartered
Mahindra followed suit with its
electric SUV, e-KUV, which has a
range between 130 km and 150 km.
At the Auto Expo in New Delhi
earlier this year, much of the attention
38 was on EVs with Maruti Suzuki’s
Futuro-e, Tata Motors’ Altroz EV
and the Ora R1 from China’s Great
The Indian automobile sector has Wall Motors. Pune-headquartered
endured some challenging years. domestic manufacturer Force Motors over 1.2 million EVs and is currently
Floundering sales on the back of an also announced its next-generation the world’s biggest EV market.
economic slowdown coupled with mobility platform featuring an electric “With the Chinese auto makers
a transition to the more efficient BS powertrain while MG Motor India getting ready to enter India, we
VI engines with lower emission hit launched its electric SUV, its only will certainly see a huge shift
auto makers hard. Over the past year, second vehicle offering in India. in the landscape by 2022,” says
sales of vehicles across categories fell “Over the past two years, there Puneet Gupta, associate director
by nearly 16 percent in the world’s has been a growing awareness in for automotive sales forecasting at
fourth-largest automobile industry. this space and the growth has been market researcher, IHS Markit.
Now, with the Covid-19 pandemic on the right path,” says Shailesh For long, India’s EV industry found
causing the global economy to go Chandra, president of electric itself stuck in a quagmire, largely
into a tailspin, the sector could mobility business at Tata Motors. due to high prices of vehicles, fewer
take over a year to recover. “If you look at Q1FY20, sales were choices, unsteady policies and lack
Amid the despondency, however, around 300 vehicles… the number of a robust charging infrastructure.
there appears to be a silver lining for rose to 500 in Q2, 800 in Q3 and is The last is essential to alleviate
the industry. Since January 2019, expected to hit 1,400 in Q4. While concerns of range anxiety, a fear that
India’s top car manufacturers have the Q3 sales were on the back of the the vehicle will not have sufficient
been making a beeline to launch fleet segment, the Q4 numbers will be fuel to cover the distance it has
electric vehicles (EV). Last July, on the back of personal purchases.” set out to. “Now, there’s a ‘wow’
Hyundai, India’s second-largest The sudden spurt in launches by quotient if you drive electric vehicles,
car maker, launched the Kona—its Indian car makers comes at a time particularly in metros,” adds Gupta.
first electric offering in India—with when Chinese companies—with their “On an average, people who live in
a range of 425 km. In October deep expertise in the EV industry— metros travel around 50 km a day…
2019, Tata Motors announced the are making plans to foray into the and with companies often providing
launch of its first EV, the Tigor, Indian market. In 2018, China sold charging stations, users have very few

forbes india • april 10, 2020

Ramesh Pathania / Mint via Getty Images


reasons to worry as the range anxiety moved fast with the tender from adoption of EVs. “From 2013 to 2017,
concerns have been addressed.” EESL,” says Chandra of Tata Motors. total subsidies on EVs amounted to
“The EESL programme created the about RMB 50 billion ($7 billion)
Gaining Momentum seed demand for commercialisation in China,” says Vinay Piparsania,
Much of India’s EV journey began and activated the supply chain. consulting director—automotive,
with the government’s FAME scheme, The focus then was on keeping the Counterpoint Technology Market
launched by Prime Minister Narendra total cost of ownership low.” Research. He explains that growth
Modi in 2015 to incentivise the The decision to offer supportive of EVs in China can be attributed to
production and promotion of EVs. It is government policies and financial public procurement programmes,
currently in its second phase—which incentives was based on models financial incentives reducing the
runs until March 2022 with an outlay adopted in countries such as China purchase price of EVs, tighter
of `10,000 crore. The scheme is only and Norway, which had seen a large fuel-economy standards and
for the shared mobility segment, stringent emission regulations.
but it has played a crucial role in India is currently looking at having
improving the overall EV landscape.
“The primary focus at least 15 percent of the total vehicles
Around the same time, the at present should be on its roads as electric by 2023.
government roped in Energy on targetting specific However, the country is grappling
Efficiency Services Limited (EESL), with charging infrastructure,
a public sector company formed
mobility segments forcing many players to turn
in collaboration with four public that have high utilisation their attention towards building
sector entities to procure 10,000 and minimum charging their own ecosystem for EVs.
EVs for government organisations. “The current charging
“Although the incentives were put
infra requirements.” infrastructure is almost nothing,”
in place by 2015, it was by 2017 that CV Raman, SS Kim, Hyundai Motors India’s
affirmative steps were taken… things senior ED, Maruti Suzuki managing director and CEO,

april 10, 2020 • forbes india

Auto Special

The Futuro-e from Maruti Suzuki will pave the way for more EVs from the company Mahindra charging station on display at Auto Expo 2020

told Forbes India in an earlier towards new energy,” says Rajeev Tata Motors, meanwhile, is
interview. “Even 1,000 charging Chaba, president and managing working on an elaborate EV ecosystem
stations will only cover a small pie. director of MG Motor India. “While where Tata Power will step in with
I expect the government to play a we are still at a nascent stage, we the necessary charging infrastructure
substantial role in extending the are taking initiatives, including while Tata Chemicals has begun work
charging infrastructure. But we providing chargers for free to the on batteries for cars. Tata Power,
are developing more low-cost cars buyers. MG is looking at launching which has already set up 100 charging
and vehicles with more range.” another electric vehicle soon.” stations, will add another 650 in
Others are following suit in The company has partnered with more than 20 major cities over the
building cheaper cars and providing Fortum, Delta Electronics and next year. “Our new platforms are all
the necessary infrastructure. eChargeBays, offering fast, normal designed in such a way that we can
“Globally, the trend is about moving and house charging infrastructure. electrify with them,” says Chandra.

40 Range of Options Smooth Ride

Hyundai Kona Indian auto makers are enthused
Range 452 km with the initial response to EVs
despite the teething problems. “So
far bookings have been encouraging,”
says Chandra about the demand for
Tata Motors’ electric variant of its
340 km popular compact SUV, Nexon. “While
the range continues to be the focus,
we have our eyes on the price too.”
The Nexon is priced at `13.99 lakh
Tata Nexon EV
and goes up to `15.99 lakh depending
312 km on features. “We are constantly
working towards improving the range.
As emission norms become stricter
Tata Tigor EV for internal combustion engines
213 km and the price of EVs comes down,
it makes more sense for buyers to
tilt towards EVs,” says Chandra.
MG, too, is “overwhelmed” with
Mahindra eVerito the 3,000 bookings for its new EV. “In
181 km fact, the response has been better than
what we had for the Hector,” says
infographics: sameer pawar

Chaba. Ahead of the EV launch, MG

Mahindra eXUV 300 had set up 50 kW DC fast chargers at
370 km (Estd) 11 of its dealerships across the country.
They help charge the vehicle up to
80 percent in 50 minutes; it takes
up to 8 hours to fully charge the car

forbes india • april 10, 2020

Tata Altroz EV unveiled at the Auto Expo 2020 Kona is Hyundai’s first electric offering in India

using home-based AC chargers. incentives will be a big challenge,”

Much of the reduction in EV Charging Infrastructure adds Raman. “Natural adoption of EVs
prices could be a result of a decline Target: with significant range will happen
in battery costs. “About 60 percent 14,000 charging stations. only when acquisition price comes
of the EV cost is batteries,” says Sanctioned: below `10 lakh. The primary focus
Kanv Garg, director, renewables 2,636 charging stations in 62 at present should be on targeting
and electric mobility at consultancy cities; 1,633 fast charging stations specific mobility segments that
firm, EY. “The EVs have very little and 1,003 slow charging ones have high utilisation and minimum
moving parts, ride better and have Source Press Information Bureau
charging infra requirements. It
lower operational maintenance. should be to target public transport
With supply chains becoming that we have invested in Ather.” comprising buses, three-wheelers,
smoother and scales improving, Hero MotoCorp has set four-wheeler taxis and two-wheelers
the future is clearly electric.” up a separate vertical that is followed by personal segment cars.”
Indian auto makers have already entirely focussed on developing Last year, the government reduced 41
invested a combined $6 billion to alternative mobility solutions. GST on EVs from 12 percent to 5
transition to BS-VI engines and many “This EV programme is working percent, in addition to providing
are expected to reap rich returns towards introducing mass- income tax deduction of `1.5 lakh on
on them before focussing more on market products and solutions in interest paid on loans taken to buy
EVs. “That’s where the startups are a phased manner,” adds Kabi. EVs. Earlier this year, the government
stepping up the game because they Not everyone is blindly jumping approved setting up 2,636 EV charging
don’t have investments on BS-VI. onto the EV bandwagon. Some prefer stations across 62 cities under the
So, it becomes easier in the two- a staggered approach instead. Take, FAME scheme. Of these, 1,633 will
wheeler segment,” says Garg of for instance, Maruti Suzuki, which be fast charging stations and 1,003
EY. Already, companies like Hero sells one out of every two cars sold slow charging ones. The government
MotoCorp and Bajaj, apart from in India. “We are not only looking at aims to install around 14,000 charging
a host of new-age tech companies EVs… our focus is on electrification stations across the selected cities.
like Revolt Intellicorp, Tork Motors of the fleet, from mild hybrid to fully “As of now, while we have
and Ather Energy, have started to electric vehicles, which will not only removed range anxiety, the concern
focus on electric two-wheelers. make vehicles more fuel-efficient is on charging anxiety,” says
“One of our strategic priorities is and hence better for customers, but Garg, who has also advised the
to enhance our participation in the also reduce oil demand, thereby government and companies on the
EV space by pursuing our internal EV reducing oil imports for India,” EV shift. “The government removed
programme in addition to partnering says CV Raman, senior executive taxes, delicenced the charging
with the external ecosystem, director and a member of the infrastructure, allowing anybody to
including startups, in a meaningful executive board at Maruti Suzuki. set up charging infrastructure and
way,” says Bharatendu Kabi, Maruti Suzuki reckons that almost making it mandatory for residential
spokesperson for Hero MotoCorp. 90 percent of the sales in India in the and commercial complexes to allot
“We see this as an important passenger car segment is for models 20 percent of their parking space for
step in building the necessary below `10 lakh, indicating the price- EV charging facilities. Now, private
ecosystem needed to support mass sensitive nature of the market. “At auto makers and power companies
commercialisation of EVs in the current prices, natural adoption have to come together to ensure that
country. It is with this objective of EVs without significant fiscal the ecosystem is developed.”

april 10, 2020 • forbes india

Auto Special

the EV space with serious players to 40 percent, the company claims.
spearheading numerous initiatives The analytics software makes sense
to promote EV adoption.” of battery data to provide insights
Ion Energy builds battery that can ensure zero downtime and

To Put
management technologies and an reduce the overall ownership cost.
analytics platform that can assess “Battery cell and motor
an EV’s performance based on manufacturing, and charging stations

EVs On
data being fed into it. By exploiting infrastructure are critical in the
software analytics, machine learning, near-term. Knowledge capacity
and artificial intelligence, Ion can building is significant in the longer
improve performance and extend term,” says Rajat Verma, founder of

the life of lithium-ion batteries by up Mumbai startup Lohum. The venture

From setting up charging
points to domestic
manufacturing, electric
vehicles need an
infrastructure push for
42 faster adoption

By Harichandan Arakali

“Electric vehicles (EV) are deemed
to be the sunrise sector of the
automobile industry as they are solely
responsible for the sector’s impending
transformation into a renewable
alternative over fossil-fuel-dependent
vehicles,” says Akhil Aryan, founder
of Ion Energy in Mumbai. “India
has shown considerable progress in

forbes india • april 10, 2020

is advancing India’s EV ecosystem in the lack of charging infrastructure
three areas, Verma says: Lowest cost influences the adoption of EVs. Yulu
battery packs; creating battery raw has created a battery-swapping
materials feedstock through recycling network by placing its proprietary
to ensure geo-strategic independence; Internet of Things-enabled charging
and domestic intellectual box, called Yulu Max, at many mom-
property and manufacturing n-pop stores near locations where it
for a seamless supply chain. operates mainly in Bengaluru. Yulu’s
In Bengaluru, Yulu Bikes co- on-the-ground operations team is
founder Amit Gupta says he is solving able to locate the nearest Yulu Max
the ‘chicken-and-egg’ problem faced through a dedicated app. The same
by the ecosystem in India, where app shows the set of vehicles that

“If you look at what’s

really out there, it’s not
much... There is more
intent than real action.”
Ravneet Phokela,
chief business officer, Ather Energy

have a battery-charge level below a

defined threshold along with their
real-time location. This method is low 43
cost and highly scalable, Gupta says.
Companies such as Ion Energy,
Lohum and Yulu Bikes are part of
India’s nascent EV infrastructure
ecosystem. The government’s
push to enable faster EV adoption
through subsidies and tax benefits
is expected to propel the growth of
the sector. For instance, the Indian
government plans to spend `10,000
crore under the Phase II of its plan,
Faster Adoption and Manufacturing
of (Hybrid &) Electric Vehicles or
FAME-II, over a period of three
years through March 2022.
The BS VI rules, which have
more stringent emission standards
for fossil-fuel burning vehicles, will
become applicable from April 2020.
BS VI-compliant vehicles are expected
to be costlier, which will help reduce
the price gap with the more expensive
EVs. The government’s plan to raise
the proportion of EVs to 30 percent by
2030 will also provide impetus to the
sector. NITI Aayog, the government
think tank, has stated that India’s
fuel imports, which account for 80
Scharfsinn / Shutterstock

april 10, 2020 • forbes india

Auto Special

percent of the country’s import bill, charging and battery swapping formulate policies to encourage
can be reduced by $60 billion by infrastructure, he says. domestic manufacturing of battery
2030, through adoption of EVs. cells that use battery chemistry
The EV market stands to grow What’s missing to optimise cost and performance
at a CAGR of 43 percent from 2019 A key differentiator between suited to Indian temperatures. About
to 2030, according to BIS Research, advanced markets and India is the 80 percent of the battery cost is of
a market intelligence, advisory speed-to-market in implementing the constituent cells in the pack.
and research firm. The charging vital infrastructure. Therefore, The government should set up its
infrastructure installation is projected on one hand, the government’s cell manufacturing facilities as it
to grow at a CAGR of 42 percent, push is helping create an EV would decrease the cost as well as
and the EV battery market at 60 mindset in the industry and among enhance the logistics efficiency by
percent. Alongside battery imports, consumers. On the other, various using reduced labour and utility
local battery manufacturers such as components of the EV infrastructure rates to its advantage, says Aryan.
Tata Chemicals and BHEL will also ecosystem are missing in India. Encouraging companies such
likely be present in the market. To build a robust EV ecosystem, as Lohum will help as they are
With India’s choked cities, says Ion Energy’s Aryan, India developing battery technologies
especially the metros, solutions needs enhanced manufacturing locally. “Our focus is developing
are needed to transport citizens capability. Though the price of technology to accelerate EV adoption
in an eco-friendly way and hence lithium batteries has reduced by across price sensitive markets
the potential for shared e-micro- almost 80 percent since 2010, the such as India by reducing costs
mobility is high. EV adoption is lead-to-lithium transition has not throughout the life cycle of the
likely to take place across vehicle been beneficial to manufacturers. battery,” says Lohum’s Verma.
segments. However, unlike China, This is because India is dependent Two core technologies anchor the
Europe, and the US, India has a on expensive lithium imports, venture’s life cycle model—battery
very low penetration of cars. driving up the cost of production and re-use (second life) and battery
44 In terms of adoption in the country, subsequently the sale price of EVs. material extraction (recycling). For
two-wheeler fleets and three-wheelers The government also needs to the second life capability, Lohum
would be the first off the block, takes used batteries and then re-
followed by intra-city buses, corporate uses them to create new battery
taxis, and government fleets. Two- packs for low-power applications
wheelers are expected to be one of the among vehicles such as e-rickshaws
early adopters of electrification due and storage applications. The
to low cost, high vehicle utilisation, startup has developed intellectual
access to easy finance, powered by property in cell life prediction
home or workplace charging options and adoption within Indian road
(currently limited, but evolving). and environment conditions.
Two-wheeler fleets will also grow When the battery reaches its
through the efforts of companies such end of lifecycle, Lohum’s material
as Drivezy, a bike-rental provider, extraction technology recycles the
based in Bengaluru. “Following full cathode (lithium, cobalt, nickel,
our recent Series C fund raise, manganese, etc) and anode (graphite)
we shall commence listing EVs in to create individual oxides or sulfates
Bengaluru and Hyderabad,” says that are used for new batteries.
co-founder and CEO Ashwarya “Battery cell, motor The company says it is a global
Singh. Eventually, Drivezy intends technology leader in each of these
to enter markets like Mumbai, Delhi manufacturing, and technologies. And, due to its
and Pune, which do not permit charging stations downstream technologies, it is able
the rental of petrol-powered two- infrastructure are to produce first-life battery packs
wheelers. The company will bring with the lowest price point because
in 5,000 electric two-wheelers in critical in the near-term; it can generate additional revenues
the next three years, Singh says. knowledge capacity after the battery packs’ initial use.
Currently Drivezy has a network building in longer term.” The industry is also facing a dearth
of more than 250 parking locations of qualified talent as EV technology
which it will tap to establish public Rajat Verma, founder, Lohum will need an amalgamation of more

forbes india • april 10, 2020

mechanical, chemical, electric, entering the space would make
electronic and material sciences EVs more price-competitive.
engineers. Currently, there are There is an immediate need to
only about 1,000-odd engineers enhance electricity supply in various
as opposed to the current demand parts of the country for EVs to be
pegged at 5,000 and likely to escalate considered as an acceptable mode of
to 15,000 in the next couple of years. transport. Maintenance and repair
The ministry of human resources options available should be of high
will also need to include EV-specific quality to ease worries. Revival of
courses at the university level as the overall automobile sector would
Indian higher education in these lead to increase in demand of EVs.
areas lags by over a decade. Yulu also made some suggestions
Besides, there are three major to the government at a recent
challenges to setting up charging government-industry meeting that
infrastructure: Lack of access to “EVs are deemed to focussed on the EV industry in the
land, electricity load connection, and be the sunrise sector country. These included: Considering
capital. As per Bloomberg New Energy loan guarantee schemes and urging
Finance, India had an estimated 650 of the automobile banks to lend to EV manufacturers
charging stations for cars and SUVs in industry as they are and operators with parity on lending
2018. Whereas the largest EV market, solely responsible for terms; a national policy for parking
China, has about 456,000 charging infrastructure for shared mobility;
points. In addition to charging its transformation into driving adoption through school
points, the lack of private parking a renewable alternative buses that need small batteries, etc.
spaces is also noted as a hindrance over fossil-fuel- Gupta says there are lessons
for EV adoption, and the lack of that can be learnt from what the
affordable renewable energy means dependant vehicles.” Europeans have done: It is critical 45
charging EVs is further stressing out Akhil Aryan, founder, to have a policy that permits a
the coal-powered electricity grid. Ion Energy pay-per-click or subscription
Earlier this year, India model—a policy for ease of doing
approved setting up of 2,636 deterrent for private investment EV business. Create an apex body
EV charging stations across in setting up charging points. to monitor carbon emissions and
62 cities under FAME-II. Ather has built its scooter charging incentivise start-ups or companies
infrastructure to its own specifications contributing towards the reduction
Top Challenges and is going ahead with setting up of carbon emissions — this can be
With these missing components in its public charging points and so on, a special division under current
the background, there are several as part of its Ather Grid plan. Today organisations such as Society of
challenges in the way of India evolving Ather has about 30 public charging Indian Automobiles Manufacturers.
as a mature EV market. “If you look points in Bengaluru and about a dozen If India adopts the European way
at what’s really out there, it’s not in Chennai—the two markets where of doing things, all electric two-
much,” says Ravneet Phokela, chief it is selling its scooters. In three years, wheeler fleet owners for more than
business officer at Ather Energy in Ather expects to be in 30 cities and 12 months can be offered subsidised
Bengaluru, which manufactures have as many as 3,000 charging points. rates at various public charging
premium e-scooters. “There is Among other challenges is a stations and start-ups operating
more intent than real action.” need to reduce India’s dependence in the segment for over 18 months
On one hand, there is a degree on battery imports, which in turn can be offered subsidies to pass
of standardisation of charging increases production cost. One way of on the benefit to the consumer.
hardware when it comes to cars, but promoting domestic manufacturing India also needs a national
on the other, India’s car penetration, would be through providing awareness campaign, Gupta says. Just
even for fossil-fuel-burning ones, is incentives to such ventures. as a campaign was run with the tag
very low. “Two-wheelers will lead Reducing the price of EVs to line “mutual funds sahi hai [mutual
electrification in India,” Phokela encourage a shift from traditional funds are right]” to encourage people
says, but there aren’t any standards automobiles will increase adoption. to invest in them, a campaign that says
today for charging hardware for Availability of more models “EV sahi hai [EV are right]” would go
two-wheelers. This could be a as well as more automakers a long way in enabling adoption.

april 10, 2020 • forbes india

Auto Special

‘India Is A Price-Sensitive
Market Driven By Sentiment’
Schaeffler India’s Harsh Kadam on the German component
maker’s plans for the changing automotive landscape By Rajiv Singh

fuel cell propulsion systems. We falling demand and a push
have continuously made strategic towards more electric vehicles…
investments and acquisitions which Looking at the gradually rising trend
enable us to be a valuable business of electric mobility in India, I feel the
partner to our customers and supply technology would initially exhibit
partners. On the industrial front itself in the two-wheeler market,
too, we are taking strides in the followed by three-wheelers and the
areas of reliability and performance passenger bus segment. The two-
improvement of our products as well and three-wheeler segments are
as developing solutions in the area considered high-volume segments
of Industry 4.0—digital industrial and that may help Schaeffler India
India is in the midst of its worst auto technology—leading to a connected become a key contributor in the
sector growth in over two decades industry and the world at large.
and the coronavirus pandemic has
46 only aggravated the situation. But Q Is the industry ready
Harsh Kadam, managing director for the transition?
of Schaeffler India, a subsidiary of We have been in touch with vehicle
German family-owned automotive manufacturers and the companies
and industrial component maker, have been working endlessly on
is looking for positives. Slowdown, this front. Before April, they will be
he says, is the litmus test for any ready with the required technologies.
organisation. “It’s during these trying Towards reducing the overall
times that a differentiation is made by emissions, one of the major trends
successful companies.” Schaeffler’s is to make engines smaller and more
Pune-headquartered Indian arm efficient. In the meantime, engines
gets 60 percent of its sales from are becoming more powerful per
the bearings business. “There is a unit of displacement, in order to not
solution to almost every problem. If compromise on driving performance.
there isn’t, we strive to find or invent This added technology will call for
one,” says Kadam in an interview managing the increased cost. BS-VI
with Forbes India. Edited excerpts: will bring in new functionalities.
The number of functions that will
Q With the new emission norms go into a component will be more,
coming into effect in April, in addition to new raw material and
how do you see the automotive processes. Through automation, the
landscape changing? process cost may be optimised but
It is clear that for the next few not the material cost. In the end,
decades, there will not be one clear consumers will decide what are they
technology, particularly in vehicle going to pay for and how much.
propulsion. We are preparing
for whatever shape technology Q The churn in the auto industry
takes—hybrids, micro hybrids, pure is unprecedented. New emission
electric vehicles or hydrogen or norms, costlier automobiles,
Jignesh Mistry for Forbes India

forbes india • april 10, 2020

“Consumer preferences, regulations are changing, conventional players are
getting challenged by new ones. From this perspective, it is far from gloomy.”
Harsh Kadam, managing director, Schaeffler India

company’s global electric mobility Q How do you see your India to developing new technology
structure. In fact, Schaeffler India has business shaping up? in the automotive market, India
come up with its patented two-speed For Schaeffler, innovation and agility has been more of an adapter.
transmission system for electric towards the business have kept the
two- and three wheelers. Schaeffler ball rolling, even during unfavourable Q Where does India figure in the
in Europe has developed bio-hybrids conditions. In 2019, Schaeffler company’s global scheme of things?
keeping sustainable mobility for intra- showcased agility in managing costs, In terms of revenue share, there is
city mobility and I see big prospects reprioritising projects and responding still a long way to go, but Schaeffler
for such offerings in India too. to changing customer needs. In Group recognises the potential and
The automotive industry is going India, the economic fundamentals strategic importance of India as a
through a transition. Consumer are strong, as our growth is driven by market. Therefore, we are continuing
preferences are changing, regulations internal consumption-led demand. to invest in capacities and capabilities
are changing, conventional players India is a price-sensitive market and in a consistent manner. Till 2016, we
are getting challenged with the driven a lot by sentiment. Customers were investing about €20 million
advent of new technology and truly value low-cost innovation. The per annum in India, but since 2017-
players. If we look at this perspective, key is to master the art of developing 18, we have almost doubled that.
it is far from gloomy. Having said and supplying good quality products With four manufacturing
that, the market has to improve at competitive prices in a volatile facilities and a strong distribution
and volumes need to come back. and dynamic market. When it comes business, Schaeffler has a strong
presence in India. The India
business—which was earlier part
of Schaeffler Europe Region—was 47
made a part of Asia-Pacific region
(China excluded) in January.

Q Do you have a slowdown strategy?

Our strategy is clear: Value creation
for all stakeholders and growing
profitably. Our ‘content per vehicle’
value has increased and this is
contributing to our growth story.
We continue to build and leverage
our strong presence in the engine
and transmission applications with
better and new value products.
Despite economic headwinds
last year, our balanced business
portfolio between industrial (53
percent) and automotive (47 percent)
ensured we ended the year on a
decent note. Our aggressive
localisation drive in the last two
years helped us become more
competitive which helped us gain
market share in some high growth
sectors and applications. The
external markets remain volatile,
but we are optimistic that 2020 will
allow us to chart a better course
as we prepare for the future.

april 10, 2020 • forbes india

Auto Special

On A Familiar Terrain
Tata Motors, the maker of India’s first SUVs,
is back in the game with its aggressive line-up By Jasodhara Banerjee

Cars with a box and cars without were tough to drive and difficult
a box. That was such a simple life to manoeuvre. But technology has
actually,” remembers Mayank evolved, and UVs today are as good,
Pareek, president of Tata Motors. if not better, to drive than high-value
“But as the industry matures, cars.” Pareek attributes the rise of the
segments and sub-segments creep segment to two factors: Aspirational
in, catering to the different choices reasons and convenience. “There
and preferences of customers.” is more space inside, the driving
“Till about early 2000, the sports position is high, so you glide into
utility vehicle [SUV] segment was the vehicle instead of crouching
very nascent, with a limited number in it, and it makes you feel more
The 1990s ushered in a new era of people buying them,” adds Pareek. confident because of the height,
in India’s passenger car industry. “There was a perception that these which makes visibility much better.”
There were just a handful of vehicles cars were used in semi-urban and According to a business intelligence
to choose from till the 1980s, rural areas. But by early 2010-11, report released in February by Data
but a freshly-minted liberalised the new segment occupied about 10 Bridge Market Research, the global
48 economy brought winds of change percent of the market; there was a SUV market is expected to register a
that rapidly took shape in the form sharp jump.” And hence, 26 years CAGR of 12.23 percent in the 2019-
of numerous new models and after the launch of Sierra, Tata Motors 2026 period. It attributes this rise
options across new segments. launched its first crossover SUV, the to higher levels of investments by
It was the decade that saw the Nexon, in 2017, in a market that was manufacturers to develop innovative
launch of three cars that would go dramatically different from the one in and technologically advanced
on to become popular icons. Tata which it had launched its first SUV. vehicles, along with consumer
Motors, known as the maker of An indication of this is the fact that preferences for safety, infotainment
trucks and heavy vehicles till then, the current year will see the launch systems and comfortable off-
took its first step towards becoming of at least 20 SUV models, new and roading options. The report says
a maker of passenger cars with the revamped versions, from companies the global market is expected to be
launch of the Sierra, an off-road such as Mahindra, Maruti Suzuki significantly driven by growth in
utility vehicle, in 1991. The Sierra was India, Hyundai, Kia, Skoda, Toyota, the Asia-Pacific region, which is
the first car produced in India with MG, Citroen and Volkswagen. witnessing higher living standards.
electric windows, air-conditioning As the Indian auto industry has In the Indian auto industry, which
and adjustable steering wheels; it matured, its customers too have has been in the doldrums for more
was also the vehicle that saw the evolved. They can be segmented into than a year, the UV segment has been
tachometer for the first time, now those buying cars for the first time, a beacon of hope for manufacturers
a ubiquitous feature in cars. The those purchasing for their families grappling with falling sales figures.
Sierra was followed by the Estate, and ones who are replacing their Data from the Society of Indian
a station wagon, in 1992, the Sumo older cars. “The first-time buyers, Automobiles Association (Siam)
in 1994, and the Safari in 1998. All which I would put at 40 percent shows the sale of cars in 2016-17
four models were based on the Tata of the market, usually purchase was at 21,03,847 while the sale of
Telcoline, a commercial pick-up small cars,” says Pareek, “but UVs was 761,998. By 2018-19, the
launched in 1988. The only other those who are buying an everyday sale of cars was at 22,18,549, an
comparable vehicle launched in the car for their families or replacing increase of 5.45 percent, whereas
1990s was the Mahindra Classic. their existing cars, prefer UVs.” the figure for UVs was 941,461,
“If you go back to the 1990s, there He adds that UVs of today are an increase of 23.55 percent.
used to be only two car segments: not like those in the past. “Old UVs “Historically, we were big and

forbes india • april 10, 2020

established as manufacturers of will get divided into sub-segments, Nexon is a good attempt to initiate
SUVs,” says Pareek. “Even when the and it will not be a one-shoe-fits-all people into the SUV category.”
market was not there, we had iconic situation. People have different tastes, With the Nexon, Pareek says, the
brands like the Safari… and now we and we need to provide a vehicle for company really pushed the envelope
are coming back big time into this every market and taste,” he adds. where its design was concerned. “In
segment again.” Starting 2016, Tata “Since the SUV segment has been India, people buy cars 50 percent for
Motors has launched three models the fastest-growing one in the auto themselves, and 50 percent for their
in the UV category: The subcompact industry, it makes sense for original neighbours. We wanted people to see
crossover SUV Nexon in 2017, the equipment manufacturers to launch the Nexon, and say ‘Wow, what a car’.”
mid-size SUV Hexa in the same year, new products in this market,” says The subcompact SUV also became
and the five-seater compact SUV Puneet Gupta, associate director, the first car from India to achieve the
Harrier in 2019. At the Delhi Auto automotive forecasting, IHS Markit. coveted five-star crash test rating from
Expo this year, it showcased the “Tata Motors brings out fully loaded Global NCAP (New Car Assessment
seven-seater SUV Gravitas and also a products, and with demand back in Programme) in 2018. “This car was
concept electric version of the Safari. the `10 lakh to `20 lakh category, entirely engineered in India and
“We understand that this market especially in the urban markets, the so it’s not like it required technical



Mayank Pareek, Tata Motors president, with the Harrier that was launched to compete with MG’s Hector and Kia’s Seltos

april 10, 2020 • forbes india

Auto Special

Nitin Kelvalkar / Dinodia Photo

(From left) The earliest model of Tata Sierra launched in 1991; the electric concept model of the car on display at the Delhi Auto Expo 2020

expertise from elsewhere,” said David is for urban vehicles… they are not entry of South Korean Kia Motors
Ward, secretary general, Global real SUVs that are meant to have with the Seltos and Chinese MG
NCAP. “It shows you what the Indian serious off-road capabilities,” he says. Motor with Hector. Both entrants
automobile industry is capable of.” “This is not the segment in which succeeded in creating significant
“The Harrier, which is designed Tata Motors and Mahindra earlier excitement among customers, with
along the lines of the Land Rover— operated. The product life cycles of the Seltos selling almost as much
the gold standard of SUVs—has also their earlier models were very long as the combined sales of Mahindra
done well, and is No 2 or 3 in its because customers also owned the XUV 500, Tata Harrier and MG
50 category. Now with the launch of same vehicles over several years. Hector (see: How the big guns sell).
the automatic and the petrol variant, But now customers frequently want Tata Motors is continuing its
we should be able to get the No. 1 something new and different, and aggressive push in the UV segment,
position in this segment,” says Pareek. Tata Motors and Mahindra have with new models and variants
Gupta adds that Tata Motors had to change their game.” This has lined up for the year. The Gravitas
incorporates a lot of value in its required significant investments generated buzz about competition
products, thanks to localisation in research and development, and in the seven-seater SUV segment,
and frugal engineering. “It has also production facilities. For carmakers with upgraded versions of the
been tying up with global players like Hyundai, it has been relatively Hyundai Creta, Mahindra XUV 500
for navigation systems and music easier since they work at a global level. and the Jeep ‘D-Low’ expected
systems to make its products better.” Tata Motors’ push in the SUV later this year or in 2021 whereas
While the company has made segment comes at a time when the Nexon EV has spurred Hyundai
a re-entry in the SUV segment, the market has become highly to start building its own electric
Mahindra & Mahindra has maintained competitive. For instance, Gupta adds, options in the UV segment.
a relatively steady stream of the Tata Harrier launch happened Mahindra also has its eXUV300
models in the category for almost when the Indian market saw the waiting to be launched.
two decades. With the launch of Has Tata Motors come full circle
the Scorpio in 2002, the Bolero with its UV play? “The UV market
in 2004, the XUV 500 in 2011, the How The Big Guns Sell then and now are different, with
TUV 300 in 2015 and KUV100 in all the sub-segments that we now
2017 2018 2019
20116, the auto manufacturer—also have,” says Pareek. “We now want to
Mahindra Scorpio 52,103 49,077 46,335
one of the country’s largest makers Mahindra XUV500 26,626 25,342 17,175
build a relationship with customers
of heavy vehicles—has launched Mahindra TUV300 28,317 22,511 13,646 who can start in this segment with
models that cater to varying price Tata Nexon 13,573 52,529 49,312 the Nexon, and move up as their
brackets and requirements. Tata Hexa 13,934 9,788 2,917 requirements change. It’s about
However, Gupta says both these Tata Harrier 15,227 acquiring customers for life.”
makers were caught off guard with Kia Seltos 46,494 For some loyalists who never let
the rise of the demand for urban MG Hector 15,932 go of their Safaris from the 1990s,
SUVs. “The demand that we see now Source IHS Markit that would be a familiar feeling.

forbes india • april 10, 2020


The New Upgrade

Lenovo is remoulding itself as a maker of more than laptops and phones

By Rajiv Singh

ahul Agarwal, With the Google Assistant, it lets brand, not as a laptop or phone
managing director and users control over 5,000 smart home brand,” says Agarwal, adding that as
CEO of the Indian arm devices, answer video calls, monitor a leader in the Indian PC and tablet
of the world’s biggest the kids’ room or check who’s at the market, Lenovo is uniquely positioned
personal computer front door through a smart camera. to lead the growth of the smart
(PC) maker, Lenovo, starts his day at “All this stuff without lifting a finger,” device market by introducing new-
his Bengaluru headquarters by looking he smiles. With Smart Bulb, Agarwal age devices and Internet of Things
up the latest sales presentation on says, users can control its colour, products. Adding momentum to this
his ThinkPad laptop. The 46-year- temperature and brightness with mission is a strategic partnership with
old’s Lenovo tablet is perched on their voice, while the Smart camera Google. “Our smart device portfolio
his workstation, which also has a offers high-resolution images with a is in line with our vision of bringing
smart clock, a smart camera and wide field of view for better visibility. smarter technology to all,” he adds.
a smart bulb. At his fingertips is a “With infrared night vision at a Tech analysts view the latest avatar
Moto Z2 Force mobile phone. distance of up to 20 mt, users can even of Lenovo as a natural progression,
As he gets ready to talk about his see inside their homes,” he adds. with digital transformation changing 51
new tech babies, he starts with Smart Welcome to Lenovo 3.0. “We want the lifestyle of consumers and
Display, launched last December. to be seen as a futuristic technology influencing the way services and
products are consumed. Jaipal Singh,
Top Three 2019 2018 lead analyst at IDC India for PC,
smart homes and wearables, says
Players in Indian 35
32% 35
the adoption of new technologies
PC Market 30
is bringing business and cultural
25 25
20.6% transformations, and is nudging
20 20
businesses to include technologies.
15 15 Another shift taking place in the
10 10 computer business is the plateauing
5 5
of PC sales, which is putting pressure
on vendors. In 2019, India posted an
0 0
Lenovo HP Dell Lenovo HP Dell 18.1 percent year-on-year growth in
Source IDC; PCs include desktops, notebooks, and workstations the PC business, including desktops,
notebooks, and workstations,
and shipped 11 million units. But
Top Three 2019 2018
the growth was largely driven by
in Tablet 40 36.9% 25 23.5%
government-driven education
20 17.9%
projects and upgrade purchases
for Windows 10, especially in the
15 13.6% business-to-business (B2B) sectors.
New demand, Singh explains,
is coming from companies that are
5 either scaling up or are formed in the
5 internet age; these companies are
Lenovo Samsung iBall
Lenovo Samsung iBall looking for affordable solutions that
Source CMR are optimised for their businesses.

april 10, 2020 • forbes india


All these factors are forcing PC

vendors, including Lenovo, to
“With its foldable
customise their offerings to the phone Moto Razr,
new demand, and introduce new the brand would
device and solution categories.
With 3.0, Lenovo is trying to
perhaps like to
transform the organisation and capitalise on the
reposition itself as much more than nostalgia and
just a PC and device company. “It
is trying to position itself at the
perceived loyalty
forefront of new-age technologies of customers.”
like augmented and virtual reality,
N Chandramouli,
artificial intelligence and intelligent
CEO, TRA Research
automation,” Singh points out.
Agarwal recalls the first two
versions of Lenovo. 1.0 was to make
a success of its PC business and it
started in 2005 with the acquisition different kind of Asian company,
of IBM’s PC business. “There was which was getting better and better.
no precedent of an Asian company Lenovo 2.0 was about diversifying
buying a global organisation. the product lineup—from PC to
So, it was a big risk,” he says. laptops, tablets, data servers, and
The task was not easy. The buyout mobile phones. In 2014, Lenovo
expanded global reach and share, bought Motorola from Google for
but also brought in its wake the task a little under $3 billion. “It was a
52 of building a common culture and
establishing strong credibility with
pretty bold move,” Agarwal says.
The gambit seems to have paid off,
“Our device
customers. Though the move paid at least globally. “We have achieved portfolio is in
off, the business hit a rough patch in six straight quarters of profitability line with our
2008. “You always go down before
you go up,” says Agarwal, explaining
and five consecutive quarters of
positive pre-tax income,” says
vision of bringing
how the company managed to Prashanth Mani, country head of smart technology
survive the global economic crisis. Lenovo Mobile Business Group to all.”
The world, he says, discovered a and managing director of Motorola
Mobility India. Though Mani declines Rahul Agarwal,
chairman and managing
to give Motorola’s market share in
What Works For Lenovo… director, Lenovo India
India, he is betting big on the brand
 Ability to win and execute large staging a comeback in the country
government projects
where it used to be among the top
 Aggressive pricing and strong portfolio
for commercial business five smartphone players before
 Strong presence among small and medium the entry of much more aggressive
businesses and nimble Chinese brands such as Take, for instance, the November
Oppo, Vivo, OnePlus and Realme. launch of ThinkBook laptop, which
What is reassuring is the strong is especially designed for small
…And What Doesn’t legacy of Motorola in India. “It is still and medium businesses (SMB).
 2020 will be challenging as majority a loved and widely accepted brand Commenting on Lenovo’s SMB
of Windows 10 upgrades are already in India,” says Mani, adding that and B2B play, Singh says what has
the brand is exploring new product worked well for the company is
 Lingering concerns around component
shortages categories, starting with Smart TV, its ability to win and execute large
 Covid-19 is expected to impact supplies which was rolled out last September. government projects. This has come
of PCs “Lenovo 3.0 is all about smarter on the back of aggressive pricing
 Plateauing PC sales and intelligent transformation,” he and a strong portfolio in commercial
 Motorola lost the smartphone game says. “B2B is where there is more businesses. In 2019, Lenovo was the
to Chinese companies
money and massive opportunity.” fastest-growing large PC vendor in

forbes india • April 10, 2020


Nilotpal Baruah


the SMB segment with 25 percent Motorola is a difficult task for two For Agarwal, the bigger challenges
annual growth, and the only company reasons, explains N Chandramouli, include not repeat old mistakes, like
to maintain double-digit growth for CEO of TRA Research: One, while under-investing in ThinkPad and,
two consecutive years, he adds. the brand still has some positive overall, in Lenovo. “Our investments
The challenge for Lenovo, perceptions among Indians, once could have been better,” he says.
though, is multi-fold. While the consumers change phones, their Another challenge is to keep the
immediate one is to ensure that its perception of the current phone focus intact. “We’ve been growing
supply chain remains steady in the invariably exceeds that of earlier market share, and we’ve been quite
face of the Covid-19 pandemic, the ones; the second concern is that profitable,” he says. Lenovo India
bigger and longer term challenge if Motorola is unable to live up to reportedly closed last fiscal with
is to ensure it gets its mobile its aspirational positioning, it will revenues of `7,181 crore, and a
business back on track in India. not be able to settle for any other profit of `179 crore. “It’s a journey.
The aspirational positioning of position in subsequent attempts. And we have just started.”

april 10, 2020 • forbes india

Enterprise (From left) Ennoventure
CTO Shalini V Nair and CEO
Padmakumar Nair at the
company’s office in Bengaluru


Hemant Mishra for Forbes India

Technology company
Ennoventure applied

cryptography to build an
authentication tool that
has been granted two
US patents. The solution
can benefit the pharma

industry in combating

By Kunal Talgeri

forbes india • april 10, 2020


halini V Nair was “The other is specific to what we do:
reading a research paper The profiling for design and how Top Threat ($ euro)
on cryptography and we optimise our cryptographic code Top sectors of global counterfeiting market (2013)
steganography methods for a particular design.” One patent
used by the Central was granted on November 2018, drugs
188 Electronics 158
Intelligence Agency to send images on and the second on February 2019.
internet messengers when her mobile
phone rang. Steganography hides Problem of Counterfeits Foods 46 Auto parts 42 Toys 32

data by embedding it into an audio, The solution developed by the Note: Sectoral list is not exhaustive
Source NetNames, PwC
video, image or text file. It protects company can be applied in many
secret or sensitive data from malicious industries, but Ennoventure has
attacks. Cryptography protects begun with pharmaceuticals. The falsified medicines are visually
information and communication authentication tool can be accessed indistinguishable from genuine ones
by using codes, so that only those by packaging departments of and require a forensic authentication
for whom the information is pharma companies easily as it is process of the packaging and/or
intended can read and process it. a SaaS (software as a service) tool the actual medicine to ascertain
“I was running my own startup that resides on cloud servers. It has their falsified nature and likely
and doing AI (artificial intelligence)- started to get commercialised. impact on patient safety.
related work for a client in Australia,” The packaging departments of “Thefts of our genuine products
says the 44-year-old engineer of that pharma companies can upload an from warehouses or plants, or
day in Bengaluru in October 2017. artwork (package design) on which while in-transit, which are then not
It was Paddy or Padmakumar Nair, the Ennoventure algorithm encrypts properly stored and are later sold
41, at the other end, calling from information proprietary to the client. through unauthorised channels,
Dubai. They knew each other since This is invisible to the eye. The could adversely impact patient
their days as engineering students. encrypted package design can then be safety, our reputation and business,”
In his circle, Paddy is known for printed on the packages of medicines the report states. “There is a direct 55
inquiring and scoping out details to made by Ennoventure’s clients. After a financial loss when, for example,
define a problem, before posing it to batch of medicines leaves the factory, falsified medicines replace sales
3-4 people. Paddy filled Nair in on a distributor or retailer can download of genuine medicines, or genuine
the underbelly of large industries an app and use their smartphone to medicines are recalled following
(counterfeit products) and the check the veracity of medicines. discovery of falsified products.”
opportunity to build a software tool The threat of counterfeit or The World Health Organization
that can verify the authenticity of falsified medicines is a stated risk (WHO) states that counterfeiting can
product packages, thereby preventing factor in the annual reports of most apply to both branded and generic
proliferation of counterfeit goods. pharma companies. The 2018 annual medicines, and counterfeit products
“We need a solution that can be report of the $53-billion (by revenue) may include products with the correct
patented, unique and non-disruptive Novartis warns shareholders that or wrong ingredients, without active
of processes at client’s site. The ingredients, with insufficient active
solution has to be invisible (covert). ingredients or with fake packaging.
And we need a way for only a “The biggest In November 2013, Interpol
smartphone to authenticate—not loophole in today’s (The International Criminal Police
expensive scanners.” Paddy told her. Organization) launched a three-year
Over that week, Nair was coding. technology is Pharmaceutical Crime Programme
In a few months, she co-founded that there is no with 29 drug makers, including
Ennoventure with Paddy, and Joseph way for an end GSK, to build on its Medical Product
G Harb, who lives in the US. By Counterfeiting and Pharmaceutical
August 2018, Shalini—who is also consumer to figure Crime unit. In the same year,
CTO—and Ennoventure applied out if a drug is the US Senate brought to life the
for two patents in the US. “One real or fake.” Drug Quality and Security Act to
patent is for the full flow—how we strengthen the prescription drug
verify the authenticity of products PADMAKUMAR NAIR, supply chain and save families from
using the mobile phone to scan CEO, ENNOVENTURE the menace of counterfeit drugs.
labels which contain our invisible The European Union wasn’t far
cryptographic code,” she explains. behind. An EU Falsified Medicines

april 10, 2020 • forbes india

Enterprise Counterfeiting Cases in the
Pharma Industry
Asia 1100

Directive has set up the first “end- North America 779 cancers etc. A lot of counterfeits
to-end verification system” for drugs Latin America 494 are for mass-market products
across the world. The deadline for Europe 358
like pain killers, antibiotics.”
implementation of the requirements The former legal head says
Eurasia 265
across Europe was February 9, 2019. combating counterfeit drugs became
As developed markets made the Africa 244 important for two reasons: To prevent
transition, so did India because of Middle East 135 pilferage by making packaging hard
its considerable pharmaceutical Source PwC report ‘Fighting Counterfeit Pharmaceuticals’,
to replicate and because the US
exports. Track-and-trace became 2017 made track-and-trace packaging
a buzzphrase, putting the onus compulsory. “Special ‘track and
on pharma companies to use becomes even more serious as several trace’ packaging helps understand
barcodes to identify medicines. patients may be illiterate or unable whether something was produced
“In India, instances of to read a particular language.” by a manufacturer or not, when it
counterfeiting of drugs and Even as national regulators, WHO was produced, which batch, who
nutraceuticals are quite high,” says and agencies like IRACM (Institute it was sold to, etc,” he says. “You
Shwetasree Majumder, managing of Research Against Counterfeit can track the whole supply chain
partner of Fidus Law Chambers, Medicines) have made it a discussion with track-and-trace packing.”
an intellectual property law firm in point, incidents go unrecorded
Noida. “Counterfeit drugs pose serious when counterfeit drugs are seized Costs for Pharma
health risks for patients, and damage a because of the damage they do to Padmakumar, who is CEO of
pharma company’s reputation, impact the reputation of multinationals. Ennoventure, learnt about the anti-
its sales and make it vulnerable to Forbes India spoke to a former counterfeiting opportunity when
probing from the drug authorities.” legal head of an Indian pharma he met Harb, 42, at MIT Sloan
It can open up two types of multinational and a senior manager School of Management during their
disputes, she explains. First, (strategy) of a multinational giant. executive education programme in
56 trademark infringement. “Other Neither was willing to come on record. Cambridge, Massachusetts. Harb
companies using deceptively similar “It’s a much bigger issue for smaller worked with Johnson & Johnson
marks for the same or different drugs. pharma companies that have a fair (J&J) in Africa then, and had
This causes consumer confusion bit of rural business. Companies with experienced how counterfeit drugs
and poses serious health risks,” business around urban conglomerates were leading to financial losses.
Majumder says. Second, imitating don’t really face this problem,” says “Joseph picked up a lotion stock
of trade-dress. “Other companies the strategy head. “Counterfeit that had been replenished by a
may copy the packaging and ‘look’ drugs are segment-specific and don’t different supplier. But he couldn’t
of a particular medicine, which also affect more specialised products, say tell if the lotion was genuine or fake,”
leads to consumer confusion. This for cardiovascular diseases, anti- Paddy recalls. “He sent it to J&J’s
labs in the US where they found
that the lotions were counterfeit.”
Typically, pharmaceutical
companies train staffers to send
drugs suspected to be counterfeit
to the headquarters for verification.
Second, ‘mystery shoppers’ purchase
suspected items as civilians, and
send them to the company lab. Third,
government regulators also organise
random checks. “If a government
body finds even one product to be
Hemant Mishra for Forbes India

fake, the entire batch is taken out of

the market,” says Paddy. The officials
check for falsified packaging and drugs
manufactured for another geographic
market being sold in their jurisdiction.
According to a June 2017
Pharmacists have the onus to ensure that the drugs they sell are legal under relevant drug laws PwC report ‘Fighting Counterfeit

forbes india • april 10, 2020

Matters of Hygiene ennoventure

Global and national thrust to tackle counterfeting in

pharma industry

1992 WHO organises first international meeting on

Pharmaceuticals’, counterfeit “counterfeit drugs” for an end consumer to figure out if
pharmaceuticals form a €188 billion 1996 WHO prepares guidelines for Development of a drug is real or fake,” says Paddy.
Measures to Combat Counterfeit Drugs
($200 billion) market, making it the In the pharma value chain, there
2006 International Medical Products Anti-
largest segment of the fraudulent Counterfeiting Taskforce (IMPACT) is is a medical store or pharmacy at
goods sold around the world. established the ground level. Above pharmacies,
If a regulator finds counterfeit 2008 China’s State Food and Drug Administration there is a stockist or distributor,
makes serialisation mandatory on saleable
drugs, the official sends a letter to pharmaceutical product units for 275
and then the C&F (clearing and
the company asking for the stock to therapeutic classes forwarding) agencies who get the
be cleared. “At this stage, a company 2013 The Drug Quality and Security Act comes stock from factories. “The C&F layer
can spend as much as $150,000 per into effect in the USA
has morphed into a warehouse-like
investigation,” says Paddy. At best, 2014 India makes unique numbers and barcodes
mandatory on export packaging for
facility after the Goods & Services
an investigation agency can find out pharmaceutical goods Tax has been introduced. They are
which country the falsified stock has 2016 European Union begins national enforcement more like master-distributors,”
come from, and through which port. of drug serialisation across the EU says Mayur Shetty, director of
Paddy wants to solve this and use Source WHO, IRACM
Keweenaw Health Solutions,
the SaaS path to scale Ennoventure. which specialises in stocking and
And also allow pharmaceutical number or barcode with specific supply of anti-cancer drugs.
companies to have a proactive details prominently displayed.” In India, counterfeiting is rampant
approach. For example, governments With a 2D barcode for tracking, when distributors or customers buy
insist on serialisation, asking every pharmaceutical factories have to alter medicines without a bill. “Purchases
pharma company to have a unique the workflow because they have to with a bill help in traceability, as long
number for each product. This can be vary the process based on product as the party issuing the bill pays back
expensive, which has pushed pharma packaging and size—to imprint the taxes due. But there are cases where
companies to invest in technologies barcode. That won’t be necessary with rogue parties have sold counterfeit
to track their stock. With blockchain- Ennoventure because the design can drugs after issuing bills, and then
based technologies, every time a be provided by the manufacturer for folded up their business because 57
batch moves from a factory to the the encryption to take place. It can’t the counterfeit drugs have made
warehouse, it gets scanned. There be replicated because the information them their money,” says Shetty.
is a batch number for each set of is not visible. It’s a cryptographic Mass-market or popular drugs get
medicines that is on the move. code, with a biometric reference counterfeited, but even big pharma
But this can be replicated (fingerprint of any company official), brands are not safe. “Being a big brand
by counterfeiters too. “Once a which ensures it cannot be copied. allows counterfeiters to get customers’
counterfeiter figures out the unique A distributor or sub-distributor buy-in more easily. Cardiovascular
batch number based on paper trail, can check it with an app. “When you and diabetic molecules are often
it’s only a matter of imitating the same take a picture using the app, the AI counterfeited,” says Shetty. That’s
batch number on a 2D barcode,” says system helps check if Ennoventure why traceability checks are essential
Paddy. The fake drugs are packaged is working with the company,” says at the retail level. “The onus is on
with the batch number. “So now, you Paddy. If it is, the validation process pharmacists to ensure that the drugs
have the same number of fake units happens. “Then, the font and design they sell are legal under relevant
as genuine medicines with a common get checked in line with the original drug laws, and not infringing third
batch number. How will a distributor artwork. Finally, there’s a check party IP rights,” says Majumder of
know which one is genuine?” he asks. of the decoded information.” The Fidus Law Chambers. “Under the
This is where a cryptographic encrypted approach can be rendered Trademarks Act, there is no difference
approach will prove cost-efficient even on medicine strips, which none in the liability of a manufacture of
to deploy across a range of product of the existing solutions can do. “2D infringing drugs and the distributor or
packages, and as a potent method barcodes are hard to design on strips. pharmacist selling those products.”
to combat counterfeiters. “Ours is We check at a pixel level,” says Paddy. Ennoventure is betting on
an authentication tool rather than Ennoventure has begun to presence at the retail stage too.
straight-out track and trace. It’s more deploy the solution with the Chordia With scale and marketing, a SaaS
AI and cryptography,” says Shalini. Group’s Medopharm, and with product can pave the way for end-
“When we do extend it to tracking, some of the leading pharmaceutical customers at pharmacies to check if
it will be entirely different. The and FMCG companies in India. the medicines are real or not. That’ll
US law mandates that every drug “The biggest loophole in today’s happen by using a smartphone
shipped to the US needs a tracking technology is that there is no way app to check the packaging.

april 10, 2020 • forbes india

Cross Border

Check your
rearview mirror,
Tesla. Rivian
has a $3 billion
war chest from
Amazon, Ford
and the Saudis,
and is revving
up production
on its electric
SUVs and
trucks. Now all
the secretive
automaker has
to do is start
building cars
and avoid the
roadblocks that
almost caused
Tesla to crash.
A rare interview
with its
RJ Scaringe

By Chuck Tannert

forbes india • april 10, 2020


RJ Scaringe, Rivian’s
CEO, introduces his
company’s R1T
all-electric pickup and
all-electric R1S SUV at
the Los Angeles Auto
Show in California


april 10, 2020 • forbes india

Cross Border

t’s 8 o’clock on a January old founder and CEO, Robert at and understanding how different
morning, and the temperature Joseph Scaringe (better known [automakers] were built,” Scaringe
in Normal, Illinois, just a as just RJ), “we will eventually be says. “And we spent a lot of time
few hours south of Chicago, able to produce 250,000 vehicles understanding the risks associated
is well below freezing. per year by mid-decade.” with how to build and scale a business,
The small pond in front of Rivian Starting an independent car and the working capital that’s
Automotive’s assembly plant has company is not easy. Among the [required].” Over the past 13 months,
turned to ice, the grass is covered with roadkill in automotive history are his team and he have raised $2.85
frost and there is snow in the forecast. Preston Tucker, who challenged billion to fund Rivian’s future. First
It’s not much warmer inside the plant. Detroit in the late 1940s, and John Amazon (and others) invested $700
Nearly the entire 2.6 million-square- DeLorean, who failed to take the million in February 2019. Then Ford
foot facility is a construction zone, Motor City back to the future in ponied up $500 million two months
undergoing a massive $750 million the early 1980s. Producing a line of later. Cox Automotive, whose brands
renovation to prepare for the end mass-market vehicles in the 21st include Autotrader and Kelley Blue
of the year, when it expects to start century is even more difficult than it Book, came through with another
rolling out battery-powered trucks, was for Tucker and DeLorean, and $350 million in September. And if
vans and SUVs. So minor details like considerably more perilous in the that weren’t enough to turbocharge
heat are not exactly a top priority. EV (electric vehicles) category. Scaringe’s outsized ambitions,
The only finished area—a second With the emergence of Rivian, just before Christmas Eve, money
floor at the front of the building that the electric vehicle market is no management behemoth T Rowe
overlooks the factory—is where the longer a one horseless carriage race. Price led yet another investment
plant’s previous owner, Mitsubishi, Indeed, the 2020s are gearing up to round worth more than $1.3 billion.
had its executive offices. Back then, be the decade of the EV. According That early infusion of capital—on
access to this floor was restricted to research at Oppenheimer, EVs and top of investments of nearly $500
to the suits. Now it’s a giant open plug-in electric hybrids accounted for million, including from JIMCO,
60 workspace, accessible to all, with a a mere 2.2 percent of all US vehicles the investment arm of Abdul Latif
cafeteria, polished concrete floors and sold in the last quarter of 2019. And Jameel, a Saudi corporation that has
lots of natural light, just like the floor only a third of those were purely bet big on energy and mobility—has
plan at Rivian’s research and design electric. But that is changing rapidly. given Rivian a valuation just north of
centre in Plymouth, Michigan. The While only 5.1 million electric cars $5.5 billion. Scaringe is estimated to
concept for both offices was to merge were sold worldwide in 2018, that own slightly more than 20 percent of
industrial and outdoor aesthetics figure is expected to surge throughout the company, making him the latest
that mirror the company’s brand—an the decade—21 million units are automotive billionaire. The funding
automaker that builds sustainable projected to be sold in 2020, 98 million has also allowed Scaringe to nearly
vehicles usable in off-road settings. in 2025 and 253 million in 2030. triple the size of Rivian’s workforce,
Rivian, which was founded in 2009 Building a new EV, however, from around 700 in 2018 to more
but is finally releasing its first vehicle requires investing in cutting-edge than 2,000 today, which is how he
this year, also has operations in San research into components like battery can scale production this year.
Jose and Irvine, California, where it packs and powertrains. The only The question is: Even with $3
develops its technology and batteries. company that has been remotely billion, does Rivian have enough to
“When we’re done cleaning, successful is, of course, Tesla—and realise Scaringe’s electric dreams?
painting and installing the even it has had a rough go of it. Until now, it’s been a far smoother
equipment,” says Rivian’s 37-year- “We spent a lot of time looking road than the one Musk faced with his

2003 2004 2005 2006 2007 2008 2009 2010

Drive Time Tesla

founded by
Elon Musk
joins as
chairman after
becomes Model S
Tesla goes
public with
$1.7 billion
Eberhard and investing in its CEO; first debuts
A brief history unveiled Roadsters market
Marc $7.5 million
of Tesla and Rivian Tappenning Series A delivered

RJ Scaringe

forbes india • april 10, 2020


how many problems were born out of

the automobile—geopolitical, climate,
air quality and more—it became a
huge source of internal conflict for
me,” he recalls. So he scrapped his
plan for a gas-powered sports car
for one that was battery-powered,
much like Tesla’s original Roadster.
After graduating with his doctorate
in 2009, Scaringe returned home to
Melbourne, Florida, where he founded
the company that became Rivian.
His team and he spent four years
developing a speedster-like EV before
Scaringe found what he thought was
an obvious gap in electric vehicles
and one that spoke to his outdoorsy
Rivian’s adventure SUV can accommodate seven people, but the company has also filed for
a patent to adapt a seat for first responders interests—a truck and a luxury SUV.
Scaringe also spent nearly a
first vehicle. Tesla raised around $100 which hasn’t made a single car, can decade developing its innovative
million between 2003 and 2008 to have a smooth ride? He doesn’t. skateboard platform—a chassis that
produce the Roadster, which was soon “Things will go wrong,” admits the contains the battery pack, suspension,
abandoned in favour of the Model S, young CEO. And Scaringe, who electric motors for propulsion and a
and the Model S required more than comes across like a mild-mannered computer to control it all. Finally, in
$350 million in funding (including a Clark Kent type compared to Musk’s November 2018, Rivian unveiled its
2010 IPO that valued the company at manic Tony Stark, is confident two prototypes at the Los Angeles 61
$1.7 billion). The journey of the Model he can overcome any perils or Auto Show: The R1S, an electric SUV
3 was particularly rocky. Supply- roadblocks. After all, Rivian is that seats seven, and the R1T, an
chain issues and Musk’s desire to built for treacherous terrain. electric pickup truck. The so-called
completely disrupt the manufacturing “adventure vehicles” look like the

process led to a two year–plus delay J Scaringe first dreamt of love children of a Range Rover—
in delivering cars to customers and starting his own car company rugged, capable and luxurious—and
a slew of quality-control issues. when he was in high school. are packed with the latest amenities
The fallout from these problems But unlike most teenage gearheads such as internet connectivity and a
reportedly cost the EV maker with the same ambition, Scaringe host of driver-assist safety features.
hundreds of millions of dollars. (Tesla backed it up by studying engineering. The company expects to deliver
did not respond to multiple requests His vision changed in 2007 while an ambitious 20,000 units (combined
for comment.) The company then attending MIT’s prestigious Sloan truck and SUV) in 2021 and 40,000
took on billions in debt as it scaled Automotive Lab, where he attained a in 2022, which could translate to
its production for the mass market. doctorate in mechanical engineering approximately $1.4 billion and
So if the mighty Tesla has faced and the skills he would need to build $2.8 billion, respectively, if all goes
so many detours and potholes, what the vehicle he imagined in his head. according to plan. By comparison,
makes Scaringe think that Rivian, “As I became increasingly aware of Tesla sold 25,000 units of the Model

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Raises $1 Market cap

billion–plus Model 3 reaches $100
Model X in debt launches; Model Y billion, making
introduced and more than orders top debuts Tesla the most
$5 billion $7.5 billion Raises valuable US
over the next in 24 hours $200 million automaker
five years former in funding Secures
Research from
Name operations Mitsubishi $2.9 billion
changed to plant in Standard from Amazon,
begin in Chartered
Rivian Michigan; Normal, Ford and
Automotive Illinois, for Bank; reveals T Rowe Price
California first vehicles,
follows in $16 million
R1T pickup
2016 and R1S SUV

april 10, 2020 • forbes india

Cross Border

X in 2016, its first full year of release. further] penetration of the EV,” says like Tesla’s Superchargers. “We are
Beyond its first two releases, Steven Low, a professor of computer developing them in parallel,” Scaringe
Scaringe says there will be three more science and electrical engineering says. As for the cost, Rivian’s pickup
vehicles in the Rivian portfolio by at Caltech. One is that vehicle will have a base price around $69,000,
2024. Though he is cautious about range is expanding. Another is the and the SUV will be $72,500 (and both
providing details, Scaringe admits availability of more charging facilities. come with a federal tax incentive).
that one will be smaller in size and all And the third element is price. Scaringe hints that these prices will
will be considerably lower in price. Rivian claims its R1S and R1T come down closer to release but
It’s a strategy akin to what Land will offer outstanding performance, wouldn’t reveal a precise figure.
Rover does with its Defender and including a range of just over 400 Much will depend on Rivian’s
top-of-the-line Range Rovers—that miles, or nearly 75 miles more than new deep-pocketed partners.
is, the same base model with fewer any other existing EV. Both will be Having built a $3 billion war chest
amenities. And if Scaringe can truly able to sprint from zero to 60 mph from Amazon, Ford and Cox in a
keep the price below $50,000, it will in about three seconds. Above all, short time is certainly an impressive
cause far worse headaches for Musk Rivian promises genuine off-road start for Scaringe, but if Tesla’s
than a broken shatterproof window on capability. Try driving your Tesla history is an example, that won’t be
his Franken-vehicle, the Cybertruck. on the beach or into the woods. enough funding to scale production
Tesla, of course, now dominates The company also plans to build to compete with Musk. Then again,
the EV market—by one estimate out a charging infrastructure, much those brands see opportunity in Rivian
it represents nearly 80 percent of that Tesla could never provide.
sales in the US—and Rivian will The partnerships Scaringe forged
face stiff competition in the luxury Road Warriors weren’t just about the cash. In Ford’s
battery-powered SUV segment from case, the two companies will also build
other automakers. The R1S SUV an electric vehicle together. “We’re
will enter a market in the fall that providing the platform,” Scaringe
62 includes the Mercedes-Benz EQC says. “They will provide the body
(starting at $67,900); the Audi e-tron and the interior.” Although Scaringe
SUV ($74,800); the Jaguar i-Pace is reticent in talking about the
($69,500); and, of course, the Tesla Elon Musk RJ Scaringe project, the vehicle will be a luxury
Model X ($84,990). Other automakers CEO, Tesla Founder/CEO, Rivian SUV with Ford’s Lincoln brand.
such as Hyundai and Kia will offer Born
Rivian hopes the Ford alliance will
more affordable options, such as the Pretoria, South Africa Melbourne, Florida allow the company to grow beyond
Kona EV, starting at $37,190, and Niro its own consumer electric vehicle
EV, starting at $38,500, respectively. 48 37
offerings. For its part, Ford is seemingly
Rivian should be without real doing it to keep the company’s options
Net Worth
competition in the truck category, open, as it often does, to pursue the
$39.3 billion $1 billion
however. Despite Tesla’s highly best option with which to achieve its
public debut of the Cybertruck, it’s Cars Produced to Date
electrification goals: 40 electric vehicle
900,000-plus 0
not expected to be produced until models by the end of 2022. Besides the
2022. And both Ford and General Education Lincoln with Rivian, Ford is working
Motors have promised to release BS, University
of Pennsylvania;
BS, Rensselaer
Polytechnic Institute; on the electric Mustang-inspired
electric pickups in the next few years. BS, the Wharton MS and PhD, MIT, Mach-E SUV and both a hybrid and
School Sloan Automotive Lab
“The opportunities [in the EV all-electric version of the Ford F-150,
Marital Status
market] are pretty substantial,” America’s best-selling vehicle. Ford
Twice divorced, Married,
says Ed Kim, a market analyst five sons; now dating three sons is also working with Volkswagen to
for AutoPacific, an automotive pop star Grimes develop EVs on its new EV platform.
research and consulting firm based Superhero Alter Ego Amazon, meanwhile, is looking
in California. If Rivian becomes a Tony Stark Clark Kent to Rivian to develop a battery-
Mike Blake / REUTERS; Rivian

threat to Tesla dominance, it could Twitter followers powered delivery van as part of its
energise the category and set up a 31 million 10,600 pledge to be net-zero carbon across
true EV rivalry. “Some experts have Typical Tweet all its businesses by 2040 and use
been predicting this for a while, and “And, no, I’m not “Great work team.” 100 percent renewable energy to
an alien... but I used
I think there are a few key factors to be one.” power those businesses by 2030.
happening now that [are leading to Consequently, Amazon ordered

forbes india • april 10, 2020


The Fabulous Studebaker Boys

Electric-car companies have been
short-circuiting for more than a century.
Some 50 years after their company was
founded, three of the Studebaker brothers—
Henry, Clem and John—steered their family’s
prosperous wagon-making business toward
automobiles. In 1902, Studebaker released its
first battery-operated vehicle and would
eventually add several more models,
including a line of commercial trucks. But the
cars were expensive—around $30,000 in
today’s dollars, or nearly 15 percent more
than a Ford Model T—and slow, maxing out
around 20 mph, a third of what a gas-
powered car could do. The batteries alone
weighed 970 pounds. After producing just
1,841 vehicles in 12 years, Studebaker ended
its electric line in 1912 to focus on gas
vehicles. The irony was not lost on Elon
Musk, who in 2018 visited the Studebaker
museum in South Bend, Indiana, and tweeted
out John Studebaker’s dictum about gas cars: The Studebakers launched their wagon company in 1852. The
“Clumsy, dangerous, noisy brutes, which last car to bear their name, the Studebaker Cruiser, rolled off
stink to high heaven.” the line in 1966

100,000 vans from Rivian. At least he name of the Illinois town to Rivian for $16 million in 2017,
10,000 should be on the road by that Rivian calls home is the residents remained sceptical. That
late 2022, and all are expected to be perfect adjective to describe negative sentiment soon changed,
operating in Amazon’s fleet by 2024. Scaringe himself and differentiate however. “Rivian showed interest
The vans will presumably become part him from Musk: Normal. Whereas in the lifestyle of the community,
of an end-to-end logistics network Tesla’s co-founder is all bravado and the quality of education, affordable
that Amazon has been working on showmanship—he has weaponised housing and access to transportation,” 63
since 2015. If so, expect more Rivian his Twitter account and turned it Mayor Koos says. The company even
orders to come down the road. into a de facto marketing division— had a preview day in Normal last
But it’s the Cox partnership that Scaringe is soft-spoken and low-key. summer to answer any questions from
could prove the most troubling for While Musk is photographed with local residents. It made a big impact
Musk. While Tesla has more than models and pop stars, Scaringe is a on Normal’s perception of Rivian
100 service centres in 30 states, family man, even if he rarely sees his and, not surprisingly, proved valuable
Cox handled more than 55 million family lately. These days, he lives when it came to recruiting employees.
service appointments in 2019 at its out of a suitcase, spending five days With the town onboard, Scaringe
sprawling network of commercial a week travelling among the is now on a mission to lead Rivian
and dealer partner service centres company’s four offices to make sure through its first production cycle and
across the US. If something goes things are on schedule. His wife, expand its line. Though it’s too early to
wrong with an R1T or R1S, the idea, Meagan, and their three boys (all tell who will win the EV wars, Rivian
presumably, is that a customer will under five) see him from Friday is one of just a couple of companies
be able to take the vehicle to a Cox night to Sunday evening in their that has a strong chance not only to
service centre like Pivet to have it unassuming three-bedroom house survive, but also thrive, according
repaired correctly and in a timely near Irvine. On Sunday evening, to Navigant’s Sam Abuelsamid. He
fashion, something that Tesla has he boards a plane to Michigan and thinks Rivian might even be in a better
struggled with since its inception. repeats the process to ensure that position going forward than Tesla:
Cox is also playing the long his larger vision is being realised: “If you’re talking about who’s going
game with Rivian—as more vehicles Thinking globally and acting locally. to have potentially the most volume,
Stock Montage / Getty Images; Alamy

come to market, it wants to control When the Mitsubishi plant closed getting more vehicles to market in the
secondary sales. “My hope is with in July 2015, for example, the mood near to mid-term, [I’d say] probably
the skills that we have,” says Cox in Normal was decidedly funereal. Tesla.” But from an actual business
president Sandy Schwartz, “and with “It hurt,” says Mayor Chris Koos. standpoint, Rivian is “in the better
all the things that we’re learning, “It left over 1,000 people out of position to succeed because of the
that we’ll be the chief wholesale work, which causes a ripple effect nature of the products it has”.
remarketer for all Rivians someday.” throughout the community.” But first, the rubber has
Now they just have to build some. Even after the plant was sold to hit the road.

april 10, 2020 • forbes india


t all started with a little

shop in Mumbai’s Lohar
Chawl in 1964. Thakurdas
Jaisinghani, who had
moved to Mumbai from
Pakistan after Partition, founded Sind

Electric Stores in the city’s epicentre
for electrical goods and sold various
products, including fans, lighting,
switches and wires. Four years later,
Jaisinghani met with an accident and
passed away, leaving his wife and
five children to pick up the pieces.
How the next-gen at Polycab India is His eldest son Girdhari, then 16,
working on making the wires and cables had just completed his schooling and
leader an FMEG player to reckon with instead of pursuing higher studies, he
had to take over the mantle of running
the shop. Inder, then 14, was also
By Naandika Tripathi
told to drop out of school and join his


The Jaisinghanis of Polycab India: (From left) Ramesh, Ajay, Girdhari, Inder, Nikhil, Bharat, Anil and Kunal

forbes india • April 10, 2020

“We had to take a polycab india

leap of faith from

trading towards
elder brother. Two other brothers, manufacturing... increase our B2C product portfolio.
Ramesh and Ajay, followed suit. we believed in We didn’t want to rely on the B2B
The young guns learnt quickly. By
1975, they set up Thakur Industries
the power of business so much because it is way
too cyclical and the return on capital
and acquired a small piece of land manufacturing and employed is a little lower because
from the Maharashtra Industrial invested in it.” your inventory and payments are
Development Corporation in the longer. Bharat and I focus mostly on
Mumbai suburb of Andheri to set up Inder jaisinghani the B2C side. We launched products
a factory for manufacturing cables chairman and MD, polycab india that complement the business and the
and wires. Eight years later, they distribution network,” says Nikhil.
set up another factory in Halol, They also focussed on branding. “Four
Gujarat, to make and process PVC years ago, we hardly spent anything
insulated wires and cables, copper on branding, but now we spend almost
and aluminium, and bare copper wire, things in the company,” says `100 crore a year on it. Now about
and Polycab Industries was born. Bharat, 35. Changes ranged from 35 percent of our business is B2C.”
“It was time for us to think big introducing Enterprise Resource The brand got major visibility
and differently. We had to take a Planning to hiring a professional after it started advertising during
leap of faith from trading towards in the family-run business. the Indian Premier League in 2016.
manufacturing,” recalls Inder, “The period when we were Polycab also roped in various stars as
chairman and managing director executing these changes... those brand endorsers—from Paresh Rawal
of Polycab India. “We had to were literally the toughest days of for wires since 2014 to R Madhavan
forward and backward integrate our lives,” says Bharat, recalling for fans since 2018 and Ayushmann
to ensure our margins improved how they had to convince the first Khurrana for switchgear in 2019.
consistently and gave us more cash generation to move with the times. In 2015, the youngest from the
in hand. We believed in the power “It took some time for the older second generation, Inder’s son
of manufacturing and invested generation to get used to the fact that Kunal, 26, joined the company 65
in it to grow our business.” the younger generation is going to after completing his bachelor’s in
As they continued to grow and say ‘Look, we are not doing things in management studies from Mumbai
set up more manufacturing plants, the right manner and this needs to be University. “I started handling
the second generation stepped in. corrected’,” adds Bharat, who has a some key channel partners and
Ramesh’s son Nikhil and Ajay’s master’s in operations management contractors under my father’s
son Bharat, both in their early 20s, from Manchester Business School. guidance. I continue to update
joined the family business in 2006. “Thankfully, they trusted us.” myself across functions,” he says.
Starting off by shadowing Inder, they In 2011, Nikhil decided to pursue The first generation continues to
underwent training and rotation in further studies at the Kellogg School provide guidance and motivation,
various departments from operations of Management. “After I completed encouraging the second generation
and purchase to finance. “It took my MBA, I didn’t want to come back to take risks and learn from their
us a few years to get the hang of to the business. I wanted to work, mistakes. “Once I made a mistake
everything. We were then only trying so I applied and even gave a couple in our export business. We supplied
to support our chairman as much of final interviews... somehow the the wrong cable for an order due to
as we could since it was a family- family was not convinced and there a mistake by someone else, and lost
run business and he had a lot on his was quite a bit of resistance. So I went around `30 lakh,” recollects Bharat,
shoulders,” recollects Nikhil, 34, who back to the business. But I went back executive director at Polycab. He
completed his bachelor’s in business at a good time because a lot of things went to his uncle Inder. “I told him
from the University of Kent, UK. began to change in the company,” it was my team’s fault and took
In 2009, International Finance says Nikhil, director, Polycab India. complete ownership of the mistake.
Corporation, the private equity arm Cut to 2014. The company He said, ‘What’s done is done, don’t
of the World Bank, invested `401.75 diversified into Fast Moving worry about it. As long as you know
crore in Polycab and the second Electrical Goods (FMEG), a sector you’ve made a mistake... don’t repeat
generation took on bigger roles. “After pioneered by the late Qimat Rai it’. This approach has motivated
this investment, our roles changed Gupta, founder of Havells. The us to perform better each day.”
from being the export or procurement objective was to move from being With an estimated 18 percent share
manager to change agents, where a pure B2B player to a B2C one. of the organised market for cables
we started implementing new “As a company, we decided to and wires, Polycab is the largest

April 10, 2020 • forbes india

Enterprise REVENUE BREAKUP polycab india

manufacturer in India in this segment. market comprising pan-India branded
The task for the next-gen is to expand players. At an overall level, there were
the revenue share of FMEG—fans, 519 organised players, accounting
lighting, switchgears, switches and Wires & for 66 percent share of the wires and
pumps—which is at 8 percent now. cables cables industry’s production in FY18.
“Having made inroads into 86% The share of organised players is
the FMEG market, the next task expected to increase to approximately
is to become a dominant player 74 percent by FY23 because of GST
in the sector like we are in wires
PEER WATCH (price earnings multiple) implementation, which reduces the
Polycab India 28.2
and cables, and to strengthen price gap between the organised and
the brand,” says Inder. Havells India 48.4 unorganised sectors, say analysts.
With the growth in residential, KEI Industries 19.8 Samit Vartak, founding partner
commercial and industrial Apar Industries 8.9 and CIO, SageOne Investment
infrastructure, the consumption V-Guard 69.7 Advisors, reckons Polycab is strongly
of electrical goods has increased placed in the wires and cables sector.
exponentially in India and “The company will deliver strong
companies are vying for market GROWTH SPREE earnings growth in the coming years
share in the sector, with Havells (April to December, figures in mln) considering its pan-India distribution
India currently leading with a network which helps it roll out
9M FY20 9M FY19 YoY
14 percent market share. new products swiftly,” he says.
“Cables and wires remain a core Revenue 67,006 55,219 21.4% In December last year, Polycab
business for Polycab, accounting for PAT 5,505 3,601 52.9% announced a plan to set up 100
90 percent of revenues. Despite the ‘Experience Centres’ by 2021 to boost
high competitive intensity in FMEG, consumer experience with its range of
the company’s revenue from this Polycab MARKET SHARE electrical goods and appliances. “With
66 segment has been growing at 40-50 Wires & cables ~12% the addition of FMEG and a wide
percent on a small base,” says Ashish FMEG Less than 1% range of cables and wires, it became
Poddar, research analyst at Anand important to showcase the entire
Rathi Share and Stock Brokers. range under one roof,” says Inder.
Last April, Polycab India made The company has 24 manufacturing The first centre was inaugurated
its debut on Dalal Street. The public facilities of which four are dedicated in Lohar Chawl where the first
issue was oversubscribed 92 times, to FMEG and the rest to cables and generation started off, while two
and the stock currently quotes 56 wires. The Halol facility accounts more have been set up in Pune and
percent higher than the issue price for 64 percent of total capacity, with Thiruvananthapuram . “This has
(the current carnage in the markets a utilisation rate of 80-85 percent. helped consumers know our offerings
notwithstanding). The company Given the strong demand for well and our trade partners to
continues to be in growth mode wires and cables across industries experience the wide range and add
and an investor favourite. Revenues and Polycab’s competitive advantage it to their business. It’s been a great
grew by 24 percent in the July to among peers followed by FMEG experience for our dealers, retailers
September quarter last year over traction, analysts from Dalal & and consumers, and we intend opening
the previous year, and operating Broacha Stock Broking Pvt Ltd believe more centres across India,” he adds.
profits grew by 26 percent because Polycab will grow at a compound The foremost challenge for
of higher government spends on annual rate of 17 percent between Polycab in the FMEG business is
infrastructure projects. Wires and FY19 and FY22. The opportunity the competition in the sector, says
cables revenue jumped by 21 percent for the company is immense Poddar. “The company will have to
in the September-December quarter seeing the government’s visibility focus on winning over consumers
on the back of strong demand from in implementing infrastructure with its products and quality. It
the institutional segments in the projects worth `102 lakh crore is addressing the challenge by
domestic and export market. over five years, they add. spending more on branding and
Polycab’s growth has been in line What also augurs well for the advertisements, which is working
with the industry and is expected wires and cables sector is that it is well for the company,” he says.
to continue as the government is gradually moving from being a largely With uptick in revenue in
focusing on electrification and also unorganised one comprising smaller the recent quarters, it looks like
rural development, adds Poddar. regional players to an organised it is on the right track.

forbes india • April 10, 2020

Cross Border Dr Herbert Wertheim occasionally
lectures on engineering at Florida
International University. He
should be teaching finance
jamel Toppin for Forbes


Hold-’em Herbie
Amid stock market booms and busts, and game-changing innovations
from ETFs to algorithmic trading, a Florida optometrist has
beaten the odds to become a buy-and-hold billionaire
By Madeline Berg

t’s 9 pm on the last Saturday iPhone—scenes from what could early-bird specials. What the photos
night of the 2018 Art Basel only be described as a wonderful life. don’t reveal is that Dr Herbie, as he
in Miami Beach. On the first There are fan photos of him cooking is known to friends, is a self-made
floor of the palatial Versace pasta fagioli with Martha Stewart, billionaire worth $2.3 billion by
mansion, the well-dressed on the slopes with Buzz Aldrin and Forbes’s reckoning—not including
and well-Botoxed are dancing to fishing in Antarctica. There are many the $100 million he has donated
remixes of Michael Jackson’s ‘Beat with his wife of 49 years, Nicole, on to Florida’s public universities.
It’ and posing for Instagram by the luxurious World Yacht, where His fortune comes not from some
the mosaic-tiled emerald pool. the Wertheims now live part of each flash of entrepreneurial brilliance
Upstairs, in a VIP room decorated year. He calls these extracurricular or dogged devotion to career, but
in a mélange of styles that marry activities “Herbie time”. from a lifetime of prudent do-it-
classical Greek and Roman touches, a If it weren’t for his trademark yourself buy-and-hold investing.
well-dressed septuagenarian named bright-red fedora, Wertheim, who is Herb Wertheim may be the
Herbert Wertheim is sitting in front of an optometrist and small businessman, greatest individual investor the world
a plate of smoked-salmon toast topped would look like the typical senior has never heard of, and he has the
with gold leaf and shaved truffles, living it up in South Florida. Fidelity statements to prove it. Leafing
and scrolling through photos on his But Wertheim, 79, has no need for through printouts he has brought

april 10, 2020 • forbes india

Cross Border

to a meeting, you can see hundreds Wertheim struggled in school and in naval aviation. This is about the
of millions of dollars in stocks like soon found himself skipping class. time Wertheim began investing in
Apple and Microsoft, purchased “In those days, they just called stocks. It was the Cold War, the
decades ago during their IPOs. A you dumb,” he remembers. “I military-industrial complex was
$800 million-plus position in Heico, would sit in the corner sometimes humming and American industry
a $1.8 billion (revenue) airplane-parts with a dunce cap on.” was on the move. The Dow Jones
manufacturer, dates to 1992. There During his teens, in the 1950s, an Industrial Average had finally
are dozens of other holdings, ranging abusive father prompted Wertheim recovered from the losses it suffered
from GE and Google to BP and Bank to run away periodically. He spent more than two dec­ades before during
of America. If there’s a common much of his time hanging around with the Crash of 1929, and aerospace
theme to Wertheim’s investing, the local Seminole Indians, hunting stocks were leading the market.
it’s a preference for industry and and fishing in the Everglades and Wertheim made his first investment
technology companies and dividend selling game, like frog legs, to locals. at 18, using his Navy stipend to buy
payers. His financial success—and He also hitchhiked around Florida stock in Lear Jet, which at the time
the fantastic life his portfolio has picking oranges and grapefruits. was known for making aviation
afforded his family—is a testament Eventually, his parents had enough. products during WWII. Wertheim
to the power of compounding as At 16, he stood in front of a judge met its founder, Bill Lear, during a
well as to the resilience of American facing truancy charges. Lucky for visit to a Sikorsky Aircraft factory
innovation over the last half-century. Wertheim, the judge took pity on him, in Connecticut, where the Navy’s
“My thing is,” Wertheim says offering him a choice between the US S58 hel­i­cop­ters were manufactured.
as he reflects on his long career, Navy and state reformatory. Wertheim Wertheim was attracted to Lear’s
“I wanted to be able to have enlisted in 1956 and was stationed inventions, like the first auto-pilot
free time. To me, having time in San Diego. He was only 17. systems. (Later, the company
is the most precious thing.” “That’s where my life changed,” would invent the 8-track tape and
he says. “They give you tests all the pioneer the business-jet market.)

68 orn in Philadelphia at the time to see how smart you are, and “You take what you earn with
end of the Great Depression, out of 135 in our class, I think I was the sweat of your brow, then you
Wertheim is the son of Jewish in the top—especially in the areas take a percentage of that and
immigrants who fled Nazi Germany. In of mechanics and ­organisation.” you invest it in other people’s
1945 his parents moved to Hollywood, With a newfound confidence, labour,” Wertheim says of his
Florida, and lived in an apartment Wertheim studied physics and near-religious devotion to tithing
above the family’s bakery. A dyslexic, chemistry in the Navy before working his wages into the stock market.
Once out of the Navy, Wertheim
sold encyclopaedias door-to-door
Compounding: The Most Powerful Force before attending Brevard Community
College and then the University
Wertheim’s returns are miraculous. But merely adding $200 per month to an
initial $10,000 in the stock market over the past 61 years would have produced of Florida, where he studied
a $11 million portfolio engineering but never graduated.
$12 MLN
In addition to taking classes, he
worked for Nasa—then in its first few
$11 MLN
years—in a division that improved
$10 MLN
instrumentation for manned flights.
$9 MLN
This fuelled an interest in the eye and
$8 MLN
instruments optimised for vision.
$7 MLN
In 1963 he received a scholarship
$6 MLN to attend the Southern College of
$5 MLN Optometry in Memphis and after
$4 MLN graduation opened up a practice in
$3 MLN South Florida. For 12 years he toiled
$2 MLN away, seeing patients who were mostly
$1 MLN working-class and who sometimes
$10,000 paid their bills with bushels of
0 10 20 30 40 50 60 mangoes and avocados. Wertheim
Source INVESTOR.GOV spent his evenings tinkering on

forbes india • april 10, 2020

herbert wertheim

inventions, and in 1969, he invented is going to make us millionaires’.” ith BPI cash flowing into
an eyeglass tint for plastic lenses that It did. Between that chemical Wertheim’s brokerage
would filter out and absorb dangerous and the numerous other products account, he went to work
UV rays, helping to prevent cataracts. Wertheim invented for lenses—some buying stocks and honing a strategy
The Vietnam War was under tints for aesthetics, others to help that can best be described as a mix of
way, and plastics had become the ease the symptoms of neurological Warren Buffett and Peter Lynch, with
material of choice for eyeglasses disorders like epilepsy and still others a touch of Jack Bogle, given that he
and sunglasses. Demand for to improve UV protection—BPI dislikes fees and primarily uses two
Wertheim’s tint grew, and he sold became one of the world’s largest discounters, Fidelity and Schwab,
it in a royalty deal for $22,000. But manufacturers of optical tints, selling to manage his massive portfolio.
because of contractual breaches, to companies like Bausch & Lomb, With Lear Jet (later known as Lear
the royalties never materialised. Zeiss and Polaroid. The company Siegler) in the late 1950s, for example,
So in 1970 Wertheim decided to get also began making lab equipment, Wertheim was practicing “invest
more serious about his inventions and cleaners and accessories for opticians, in what you know”, the strategy
set up a new company, Brain Power optometrists and ophthalmologists. popularised by the famous Fidelity
Inc. He founded it as a technology Today BPI has more than 100 Magellan fund manager Peter Lynch
consulting firm, but Wertheim soon patents and copyrights in the area in his 1989 book One Up on Wall Street.
returned to his habit of researching of optics, 49 employees and annual Instead of concentrating on the
and tinkering, developing tints, dyes revenues of about $25 million. metrics in financial statements,
Wertheim is devoted to reading
patents and spends two six-hour
BEAR SURVIVOR blocks each week poring over
technical tomes. “What’s more
Queens Road important to me is, what is your
intellectual capital to be able to grow?”
Small Cap Value Thanks to his engineering background, 69
Manager: Steven H Scruggs the technical nature of optometry
FORBES GRADES and his experience as an inventor,
Up: D Down: A+
the patent library is Wertheim’s
Recent dip1: –13.2% comfort zone. Stocks he invested
Long-term2: 9.6%
in based on their impressive patent
Expense ratio3: 1.18%
Winner4: Fabrinet portfolios include IBM, 3M and Intel.
Loser4: Tenneco Like Warren Buffett, Wertheim
Undiscovered fund will attract believes firmly in doubling down
a following if the bear returns
when his high-conviction picks go
chaitanya dinesh surpur
against him. He says that if you put
your faith in a company’s intellectual
and other technologies for eyewear. In less than two decades, Wertheim property, it doesn’t matter too much
A year later he concocted one had gone from ne’er-do-well to if the market goes south for a bit—the
of the world’s first neutralisers, inventor and entrepreneur. BPI product, he believes, has lasting value.
a chemical that restored lenses never achieved hypergrowth, but “If you like something at $13 a
back to their original clear state. it provided a steady net income share, you should like it at $12, $11
This meant opticians no longer amounting to some $10 million a or $10 a share,” Wertheim says. “If a
needed to carry large inventories of year, according to Wertheim, more stock continues to go down, and you
different-coloured lenses or dispose than enough to feed his passion believe in it and did your research,
of lenses that were improperly for investing and the good life. then you buy more. You are actually
tinted. “I was still seeing patients, I “I didn’t want to have a big getting a better deal.” Whenever
had a little lab,” recalls Wertheim. business,” he says. “But today, possible, he adds, dividends are useful
He showed his wife a coffee can I have a 5 or a 6 or an 8 billion- in cushioning the pain of stocks
containing his chemical concoction dollar corporation, each of that drift down or go sideways.
and said, ‘Nicole, what’s in this can which I own 10 percent of.” “My goal is to buy and almost never
sell,” he says, parroting a Buffettism.
Return Sept 20, 2018–Dec 24, 2018. 2Annualised, Oct 9, 2002–Dec 24, 2018. 3Most expensive share class. 4Big mover in portfolio,
“I let it appreciate as much as it
past 12 months. Source Morningstar; Forbes can and use the dividends to move

april 10, 2020 • forbes india

Cross Border

forward.” In this way Wertheim, like down on his losers to avoid the IRS’ rich from LBOs in the 1980s, the
the Oracle of Omaha, seldom reinvests wash-sale penalties. “If I have a large Mendelsons were looking to find
dividends but instead uses the cash loss in a stock I like,” he says, “I will an undervalued, underperforming
flow from his portfolio to either fund purchase more, usually twice to three industrial company to take over.
his lifestyle or make new investments. times the original purchase, and After they settled on Heico, at
Wertheim points to Microsoft, a wait the 30 days to sell the original the time a small airline-parts maker,
stock he has held since its IPO in 1986. position and book the tax loss.” Wertheim used his aeronautical
“I knew a lot about computers and As with Buffett, Wertheim says knowledge to informally help
had been involved in building them,” finding companies with strong the family analyse its business
he says. BPI had been using Apple management has been key to his and went on to purchase shares
IIe’s, but after Microsoft released its success. A great example of this of the company—a penny stock
Windows operating system in 1985, is Heico, a family-run aerospace priced as low as 33 cents.
Wertheim became convinced it would and electronics company based “At that time Heico was a disaster,
be a winner. “Only Microsoft had an in Hollywood, Florida. but he came up and understood
operating system that could compete what we would do to make it a

with Apple,” he recalls. The Microsoft ertheim became non-disaster,” says Mendelson.
shares he bought during the IPO, friendly with Laurans Heico was making narrow-body
which have been paying dividends “Larry” Mendelson jet-engine combustors, which
since 2003, are now worth more during the 1970s, after Wertheim the FAA mandated be replaced
than $160 million. His 1.25 million bought a condominium in a building on a regular basis after a plane
shares of Apple, some purchased Mendelson owned and docked his caught fire on a runway in 1985.
during its 1980 IPO and some when boat next to Mendelson’s on Coral Under the Mendelsons, Heico
the stock was languishing at $10 in
the 1990s, are worth $195 million.
Not all of the hundreds of stocks BULL WINNER
70 he has owned have fared so well.
He invested big in BlackBerry. “I Hodges
believed in the new management and
Manager: Craig D Hodges
the recovery story,” says Wertheim,
who will generally sell if a position Up: A+ Down: F
reverses on him by 25 percent. Returns
“I watched substantial profits Recent dip1: –40.5%
Long-term2: 9.9%
disappear month after month until Expense ratio3: 1.18%
I decided enough was enough.” Winner4: NovoCure
Loser4: US Steel Corp
Wertheim sometimes uses
This trapeze artist displays good
leverage, but mostly in a limited way long-term results despite recent fall
when buying high-yielding stocks.
“By using the dividends to offset chaitanya dinesh surpur

[the cost of] margin interest, the

government is helping you increase Gables Waterway. “He has two expanded its line of replacement
your portfolio value,” he explains. daughters around the same age as parts, which undercut established
But in 1982 Wertheim got caught my two sons,” Mendelson says. “We original-equipment manufacturers
in a margin call after Federal Reserve got to know each other socially.” like United Technologies’ Pratt &
Chairman Paul Volcker raised the A CPA by training, Mendelson Whitney and GE. After Germany’s
federal funds rate from 12 percent was a successful real estate investor Lufthansa acquired a minority stake
to 20 percent and the market sank who had studied at Columbia in the company in 1997, airline
20 percent. The episode cost him Business School under David Dodd, manufacturers and Wall Street
$50 million and taught Wertheim co-author with Benjamin Graham took notice, and its share price rose
a valuable lesson about the dangers of the seminal book on value sixfold to more than $2. But this was
of leverage and mark-to-market investing, Security Analysis. Inspired just the beginning. Heico enjoyed a
accounting. Like most other active by the wave of dealmakers getting proverbial moat as one of only a few
investors, Wertheim strives for tax
efficiency. In order to harvest tax 1
Return Sept 20, 2018–Dec 24, 2018. 2Annualised, Oct 9, 2002–Dec 24, 2018. 3Most expensive share class. 4Big mover in portfolio,
losses in his portfolio, he doubles past 12 months. Source Morningstar; Forbes

forbes india • april 10, 2020

herbert wertheim

FAA-approved airplane replacement-

parts manufacturers. This translated
into steadily growing orders as Heico
expanded its product mix and as T Rowe Price
demand for air travel increased. For
the last 28 years, Heico’s sales have
New Horizons
compounded at a rate of 16 percent per Manager: Henry M Ellenbogen

year and its net profits at 19 percent. FORBES GRADES

Up: A+ Down: C
Today, Heico trades for $80,
and buy-and-hold Herbie is its Recent dip1: –21.6%
Long-term2: 14.5%
largest individual shareholder. His
original $5 million investment is Expense ratio3: 0.78%
Winner4: Tableau Software
worth more than $800 million. Loser4: CBOE Global Markets

Famous growth fund tops the
charts for performance over
s Wertheim enters his three market cycles
80th year, Herbie time chaitanya dinesh surpur

has become his chief

preoccupation. Besides his $16 million Performing Arts Center and the Wertheim College of Engineering
oceanfront home in Coral Gables, Wertheim Conservatory. He has given at the University of Florida.
Wertheim has a 90-acre ranch near $50 million to FIU and committed ­Wertheim recently doubled
Vail, Colorado, a s­ pectacu­lar four- another $50 million to the University down on British energy giant BP
storey home o ­ verlooking the Thames of Florida. Last year he pledged $25 and now owns over one million
in London and two sprawling estates million to the University of California, shares. But rather than dwell on
in southern California. He spends San Diego, to help create a school its sagging, crude-dependent stock
many w ­ inters with his wife and of public health. Beyond education, chart, he’s betting on its hydrogen
family vacationing aboard World Wertheim says he’s given to hundreds fuel cells and enjoying its 6 percent 71
Yacht, the planet’s largest luxurious of domestic and foreign non-profits, dividend yield while he waits
residential ship continuously including the Miami Zoo and the for the company to recover.
circumnavigating the globe, where Vail, Colorado, public radio station. “They have important intellectual
he owns two luxury apartments. The former truant and class dunce property in that area,” he says of the
A signee of Bill Gates and Warren still gets giddy when he sees his cells, which create electricity by using
Buffett’s Giving Pledge, Wertheim name on the university buildings, hydrogen as fuel, a technology he
has committed to giving away asking passersby to take photos— believes is the future of both air and
at least half his wealth, and he posing in his signature red hat and road transportation. “We’re going
intends the bulk of the donations new Nikes. At the medical school, to move to a hydrogen economy.”
to go to public education—the very he put on a stethoscope, excited to Contrarian Wertheim also likes the
system of which he is a product. test out the latest medical dummies, troubled stock of General Electric;
“I would not have achieved the which breathe, sweat and even he owns over 15 million shares
education and opportunities that talk. In a room designed to study and has been picking up more. He
I have had without the help of our obstetrics, he tries his hand at an says he is making a long-term bet
public-university education system,” ultrasound machine. At a lab that he on GE’s intellectual property; the
he wrote when he signed the pledge. helps fund, he is enamoured with 126-year-old company has more
Stroll around Florida International laser imaging and how it can help than 179,000 patents and growing.
University’s main campus, just measure retinal temperature in the Wertheim is especially jazzed about
minutes from Wertheim’s Coral eye. At the FIU performing arts some patents that involve the 3-D
Gables home, and you can’t help but center bearing his name, he suggests printing of metal engine parts.
notice buildings emblazoned with his adding an outdoor amphitheatre. “You can’t look at what their
name: The Herbert Wertheim College “He’s inspirational in the way he sales are. You can’t look at anything.
of Medicine, the Nicole Wertheim challenges people to think big and What is the future?” he says. “I
College of Nursing & Health Sciences, imagine what’s possible,” says Cammy feel very, very comfortable with
the Herbert & Nicole Wertheim Abernathy, dean of the Herbert GE because of their technology.”
And Wertheim isn’t in any
Return Sept 20, 2018–Dec 24, 2018. 2Annualised, Oct 9, 2002–Dec 24, 2018. 3Most expensive share class. 4Big mover in portfolio,
rush. Playing the long game
past 12 months. Source Morningstar; Forbes is what he does best.

april 10, 2020 • forbes india

Cross Border

Trust Your Gut

infection-fighting capacity of what
scientists call the gut microbiome, the
trillions of cells that move through
the human digestive system. “It didn’t
On the bravest frontier in human health, scientists just affect my gut,” he says. “I was
are using bacteria from the digestive system to create exhausted all the time. I had really bad
novel medicines for a huge range of ailments including brain fog. I couldn’t concentrate.”
Desperate, he researched possible
Parkinson’s, cancer and autism. Gates, Benioff and
therapies and discovered articles
Zuckerberg are true believers, and the result could be about faecal transplants wiping out the
blockbuster drugs that transform lives—and deliver infection. But his gastroenterologist
massive returns for early investors refused to perform the procedure. So
he took matters into his own hands.
By susan adams and Will Yakowicz
He asked his roommate to supply a
stool sample, bought an enema kit
from CVS, pulsed the mixture in a
blender, strained it through a coffee
filter and pumped it into his gut. As
though a wizard had cast a spell, he
made a full recovery within days.
Welcome to the most promising
new frontier in medicine: Poop. By
focusing on what’s coming out of
patients’ rear ends, a growing body
of scientific research over the last
72 15 years has highlighted the crucial
role the microbiome plays in human
health. That new understanding could
lead to breakthrough treatments for a
huge range of illnesses, from obvious
ones like digestive ailments and
food allergies to surprising ones like
cancer and autism. A microbiome-
derived drug is already in the works
to prevent childhood asthma.
Put crudely, the idea is to use gut
bugs as drugs. More than 50,000
scientific papers in the last five years
have explored the microbiome’s
effects. Various kinds of gut bacteria
appear to stimulate or suppress
immune responses in the body, while
others seem to fight off disease-
causing microbes. A groundswell
of cutting-edge research has the
Mark Smith co-founded Finch Therapeutics in 2016 to develop a microbiota pill
potential to deliver a burst of new

therapies that will vastly reduce
harp pains shot through who wishes to remain anonymous, human suffering—and generate huge
the patient’s stomach, he had contracted a recurring case of paydays for the field’s pioneers.
and he had constant Clostridium difficile, or C. diff, after When scientists transferred gut
diarrhea. Seven rounds of having his gallbladder removed in microbiome cells from obese mice
antibiotics over 18 months 2012. Hospital patients are prone into lean ones, the recipients gained
had only made him feel worse. to C. diff since antibiotic treatment weight. In one study, melanoma
A previously healthy man in his 20s for other maladies decimates the patients with the most diverse

forbes india • april 10, 2020


Suzanne Kreiter / The Boston Globe via Getty Images

microbiomes had the best response to two floors in an industrial park that
immunotherapy. And mice injected formerly housed administrative offices
with gut bacteria from marathon and storage space for the Harvard
runners ran longer distances. A Art Museums. Tall and slender with
new drug for obesity alone could piercing blue eyes, he welcomes the
be worth more than $20 billion. inevitable jokes that come with being
So far, the most compelling a human-faeces entrepreneur. On
microbiome-derived therapy is a live Halloween he wore a poop-emoji
faecal transplant for C. diff, which costume (“I was a pooper trooper”)
strikes half a million Americans to the office, where the copiers
annually, killing 15,000. In 2013, the have names like Squatty Potty and
New England Journal of Medicine Magic Stool Bus. But he has raised
published a paper that caught the serious capital. Venture funds have
scientific community by surprise put in $130 million, and Finch has
and jump-started investment in a partnership with Tokyo-based
microbiome drug development. In pharma giant Takeda to develop drugs
a randomised trial, 94 percent of for ulcerative colitis and Crohn’s
recurrent C. diff patients recovered disease, which together have 10
Bernat Olle co-founded Vedanta
after receiving faecal transplants. To Biosciences, which has raised $112 million million sufferers worldwide. Finch
put that in context, cancer drugs with in funding is also working on an autism drug.
efficacy rates as low as 10 percent Traditionally, scientists start with

have been approved by the FDA. omerville, Massachusetts- data gathered through experiments
Billions of dollars are pouring based Finch Therapeutics is on mice. Finch is taking a “human-
into microbiome medicine. Gbola one of the most promising first” approach, skipping the rodents
Amusa, a medical doctor and partner startups developing microbiome and analysing the stool of human
at Chardan, a health care-focused drugs. Co-founder Mark Smith, 33, patients who have recovered after 73
investment bank in New York, pegs was a microbiol­ogy grad student receiving faecal transplants. “We’re
the total amount invested since at MIT when the 20-something C. looking at what works in patients
2014 at more than $5 billion. Techie diff patient begged him for help. “I and figuring out how to make our
billionaires including Bill Gates, had to tell him, I’m a microbiologist, drugs from the top down,” Smith
Salesforce founder Marc Benioff not a doctor,” Smith says. says. “It’s called reverse translation.”
and Silicon Valley venture capitalist The patient’s ordeal motivated For one of its C. diff drugs, Finch is
Vinod Khosla are funding microbiome Smith to create Open­Biome, the extracting what Smith describes as the
startups, and Gates, Benioff and equivalent of a public blood bank “full spectrum” of bacteria in a human
Mark Zuckerberg have all made for human faeces, while Smith stool sample from a patient who has
donations to support microbiome was still at MIT in 2013. The been successfully treated, freeze-
research at institutions including Cambridge, Massachusetts, non- drying it and delivering the equivalent
Stanford, Washington University profit, the first of its kind in the of a faecal transplant in a single pill.
in St. Louis and the University world, has since supplied stool It’s also working on simpler drugs
of California, San Francisco. for more than 53,000 transplants made from five to 10 key bacteria. It
The race is on for FDA approval in 1,200 hospitals and clinics. expects results from its first Phase 2
of the first drug made from gut Inspired by the demand for trial (which demonstrates efficacy) of
bacteria. But the science is young and transplants, Smith co-founded the full-spectrum C. diff capsule by the
unproven. At Oppenheimer in New for-profit Finch (named for the end of the second quarter of 2020.
York, Mark Breidenbach says diverse group of finches Charles “Even if only a few of the
investor enthusiasm in microbiome Darwin discovered in the Galápagos microbiome therapies scientists
companies is on a downswing because Islands) in 2016 to develop an FDA- are working on come to fruition,”
“there is no consensus about what approved C. diff pill. Currently, most Smith says, “it will have a huge
the microbiome can do”. Amusa doctors perform faecal transplants impact on public health.”
is more bullish. “The science is through a colonoscopy, which

turning,” he says. “When it comes can cost as much as $5,000. The nother MIT Ph.D., Bernat
through with proof, these biotech procedure is not FDA-approved or Olle, 40, is running Vedanta
companies will be worth not hundreds reliably covered by insurance. Biosciences, a nine-year-old
of millions of dollars, but billions.” Smith and his 80 employees occupy Cambridge, Massachusetts–based

april 10, 2020 • forbes india

Cross Border

Slaven Vlasic / Getty Images

Olle says. “We are not just the product
of the Homo sapiens genome.”

very gold rush attracts its
share of charlatans and
claim jumpers. More than
a half-dozen startups are using the
microbiome as a marketing buzzword
to sell stool-analysis tests. The kits,
which require the consumer to mail
a small sample to a lab, purport to
convey valuable personalised health
data and nutrition advice. That despite
a consensus among scientists that it’s
not yet possible to draw useful dietary
recommendations from a person’s
poop. To avoid hostile oversight by the
FDA, the kit sellers are careful to make
no specific claims about diagnosing
Naveen Jain’s Viome, which sells a “gut intelligence test” online, has raised $75 million or treating particular diseases.
Four years ago, former InfoSpace
microbiome drug developer with Guinea. Vedanta is isolating and then billionaire Naveen Jain, 60, launched
$112 million in funding, including $10 testing bacteria from each sample Bellevue, Washington–based Viome,
million from the Bill & Melinda Gates in the hope of determining which which sells a $119 “gut intelligence
Foundation. The Gates investment strains make the most effective drugs. test” online. After analysing a
74 supports preclinical research at A wiry Catalan immigrant with pea-sized stool sample, it sends
Vedanta aimed at developing a gut close-cropped salt-and-pepper hair customers a customised 60-page
bacteria-derived drug that would who bicycles to work, Olle came to report with dietary recommendations
prevent child malnutrition in the the US in 2002 to study chemical “aimed at balancing your overall
developing world. Nearly 200 million engineering at MIT, where he focused microbiome”. It might recommend,
children under age 5 suffer from on the emerging science of using live for instance, increasing consumption
either wasting or stunting, resulting organisms like bacteria to produce of “superfoods” like alfalfa sprouts and
in at least 1.5 million deaths a year. drugs. In 2007, after earning both an anchovies or avoiding green beans and
“Malnourished children struggle to MIT doctorate and an MBA from the kombucha. Jain says Viome has sold
gain weight even when fed enough,” Sloan School, he joined PureTech over 100,000 kits and banked more
Olle says. “Emerging research Health, a Boston biotech firm. than $15 million in revenue last year.
suggests that this is because their gut In 2010 PureTech backed “Viome’s claims are not supported
microbiota develop abnormally, and him in launching Vedanta with by any scientific literature,”
that beneficial gut bacterial strains five co-founders, all scientists, says Jonathan Eisen, a medical
may help correct this imbalance.” including big names such as Kenya microbiology professor who directs
Vedanta also has two partnerships Honda, a microbiology professor microbiome research at the University
with big pharmaceutical companies, at Keio University medical school of California, Davis. “What they’re
including Bristol-Myers Squibb, to in Tokyo. Honda had published saying is, in fact, deceptive.” A dozen
develop drugs aimed at boosting a groundbreaking paper on the former Viome staffers say they
the effectiveness of immunotherapy connection between gut bacteria and believe the company was selling
to treat melanoma and colorectal regulatory T cells, known to prevent a product of dubious value. Six of
and gastric cancers. Like Finch, inflammatory diseases. “Think of those ex-staffers describe the food
Vedanta is developing a drug them as the UN peace forces of the recommendations as “pseudoscience”.
to treat recurrent C. diff. intestine,” Olle says. “Honda’s work “Anyone who says this doesn’t
Inside Vedanta’s maze of labs and suggested that the cells encoded in understand how our science works
storage rooms is an oversized freezer human DNA are influenced by the and how we make recommendations,”
containing faecal matter from 275 bacteria that live within you.” Jain counters. “It’s not my job
donors on four continents, including “This work has forced me to to convince everyone; it’s my
an indigenous tribe in Papua New rethink what it means to be human,” job to continue to help make

forbes india • april 10, 2020



the world a better place.” contribution,” says Mazmanian.
A non-stop talker prone to Patterson died the following month.
enthusiastic, stream-of- Mazmanian is carrying on their
consciousness self-promotion, Jain research in his sub-basement lab
immigrated to the US from India in at Caltech, where 1,000 germ-free
1982 and worked at Microsoft from mice, delivered by Caesarean section
1989 until 1996, when he founded in sterile conditions to ensure they
InfoSpace, also in Bellevue, which are bacteria-free, live inside plastic-
delivered internet content to early encased rectangular bubbles. Grad
cellphones. His net worth ballooned students douse the animals’ food with
to $8 billion, then crashed to $220 various gut microbes to test which
million when the first internet bubble bacteria promote tremors and motor
burst. A flood of shareholder suits problems in mice that correlate with
followed, and the InfoSpace board Parkinson’s symptoms in humans.
fired him as CEO in late 2002. Before In 2016, David Donabedian, a
he left InfoSpace, he bought a $13 chemistry Ph.D. who was then a
million stucco mansion on the shores partner at Longwood Fund, a Boston
Caltech professor Sarkis Mazmanian
of Lake Washington not far from is considered one of the foremost gurus of venture capital firm, volunteered
Jeff Bezos’ and Bill Gates’ pads. microbiome research to raise the money and research
Despite having no background power to move Mazmanian’s
in science or medicine, Jain has $500,000 “genius” grant for his work biotech venture forward.
managed to raise $75 million from on the microbiome’s role in disease. The company, Waltham,
investors including Benioff and Since then, he’s been exploring one Massachusetts–based Axial
Khosla. Both declined to comment of the most intriguing connections in Biotherapeutics, has $55 million
on their microbiome investments. human health: the “gut-brain axis.” in backing and 30 employees.
But Alex Morgan, a Khosla Ventures The working thesis is that the bugs Under Donabedian as CEO, Axial 75
principal with an M.D. and Ph.D. in your belly have a direct impact on is in the early stages of developing
from Stanford, suggests Khosla’s your neurological health, which has synthetic drugs made of small
decision to back Viome has nothing profound implications for autism, molecules it hopes will absorb the
to do with nutritional advice. Instead, Parkinson’s and Alzheimer’s. particular gut-bacteria byproducts
he says, the firm invested because In 2008, two years after joining (called “metabolites”) that appear
Viome hired a team of scientists the Caltech faculty, Mazmanian to exacerbate autism symptoms.
from the US Department of Energy’s published a cover story in Nature that It’s also working on a drug to treat
Los Alamos National Laboratory. documented his successful treatment the digestive problems suffered by
In addition, Viome had made a deal of inflammatory bowel disease in mice many people with Parkinson’s.
with the lab to license a valuable with human gut bacteria. A Caltech In the US, more than a million
tech platform that has a unique colleague, Paul Patterson, who was people suffer from autism, and there
ability to sequence the biochemical researching autism in mice, saw a are no drugs to treat it; an additional
activity in microorganisms. possible connection to the digestive million have Parkinson’s. What would
So even if Jain is selling snake problems suffered by as many as 60 be the value of an FDA-approved drug
oil, Viome might have significant percent of children with autism. for either condition? “I can’t give you
value. Indeed, British pharma giant Together they started testing a market size,” says Donabedian. “But
GlaxoSmithKline struck a royalty deal whether human gut bacteria could if either one hits, it will be huge.”
with Viome in November 2019 to use induce and ameliorate autism-like Chris Howerton, a biotechnology
its tech to help develop microbiome- symptoms in mice. In the midst analyst at Jefferies, a New York
derived vaccines. Jain’s investors of their early work, Patterson was investment bank, is less shy. “If
could make out handsomely. diagnosed with fatal brain cancer. every single microbiome paper
In a hospital room at UCLA where turns into a proven therapy, it could

t Caltech in Pasadena, Patterson was awaiting surgery impact the drug markets for most
California, microbiologist in May 2014, Mazmanian signed major categories of disease, which
Sarkis Mazmanian, 47, is papers giving Patterson a stake in a together were worth $350 billion in
considered one of the foremost gurus company that would develop drugs 2018 in the US alone,” he says. “The
of microbiome research. In 2012 the from their experiments. “I wanted breadth of the microbiome’s potential
MacArthur Foundation gave him a Paul to get the recognition of his application is really tantalising.”

april 10, 2020 • forbes india

ForbesLife music

Photographs: Neil Greentree / Mehrangarh Museum Trust


Sounds of souls
With its serene atmosphere and intimate performance
spaces, the centuries-old Ahhichatragarh Fort plays By Uday Benegal

the perfect host to the Sacred Spirit Festival

ome two hours after touching down Row upon row of white tents were set
at Jodhpur airport in mid-February, within the sand-and-stone acreage of the 12th
I found myself at the gates of the century fortress, looking like a luxe barracks:
Ahhichatragarh Fort, after making Each tent was outfitted with a double bed,
my way through the helter-skelter heater, floor fan, converted electric ‘laltains’
of Nagaur, a rather unremarkable town. Located The Areej and a bathroom with running hot water and
halfway between Jodhpur and Bikaner, Nagaur is Sufi toiletries by a luxury ayurvedic brand. Traditional
a typical old Indian town confused about its place from the Rajasthani designs and motifs brightened up
in the modern world—it is choked with vehicles, Sultanate the otherwise staid safari tents, lending a local
of Oman
shops and loudspeakers blaring everything from performing touch to the bedspread, durries and curtains.
calls to prayer to sub-bass-pumping Bollywood at the As I set off on a walkabout around the
Sacred Spirit
hits. But although chaos engulfed the fort from all Festival property, scaled a flight of stairs to the ramparts
quarters, inside was a whole other world altogether. and circumambulated the site, the contrast

forbes india • april 10, 2020


between the chaos outside the fortress walls London-based Helen Hamlyn Trust, along
and the serenity within became stark. with contributions from MMT itself, resulted
Ahhichatragarh Fort abounds in peelu trees, in the resurrection of the fort’s architectural
also called peelo vajradanti or toothbrush trees splendour more than two decades later.
because of their twigs that are used to make By which time someone had the bright idea of
natural teeth cleaners known as miswaak. using this relatively unknown but exquisite fort to
Their cascading willow-esque leaves provide an host a yearly music festival. Evidently, the British
effective camouflage for the posses of parakeets pop star Sting had a role to play in the conception
hiding within, who erupt in cacophonous union, of what eventually became known as the Sacred
scattering skyward at the slightest disturbance. Spirit Festival (he has attended but not performed
From atop the bulwarks I got a bird’s-eye view at the festival yet). In its 13th year now, the festival
of the durbari halls, courtyards and mini mahals has seen spiritual and classical musicians from
interjected by water channels, fountains and India and around the world grace and uplift
baths, beautiful even in their waterless state. the air within these magnificent stone walls.
But the fort wasn’t always this pristine. But What began in 2007 as a single venue for a
by the 1980s it had fallen into considerable select audience turned into a two-city spectacle,
disrepair after years of neglect. The Mehrangarh The Ahhich- with Jodhpur’s Mehrangarh Fort being added as a
Museum Trust (MMT), which also presides Fort was second staging ground four years later. The reason
over the care and maintenance of Jodhpur’s renovated was to open up the festival to a larger audience
in the 1980s
celebrated Mehrangarh Fort, set about a long by the of international visitors and music lovers from
and extensive restoration project along with Mehrangarh India without giving up the intimate exclusivity of
a couple of generous patrons. Grants from the Trust its original creation. Nagaur continues to remain
Los Angeles-based Getty Foundation and the small and contained. Only those residing within

april 10, 2020 • forbes india

ForbesLife music

Photographs: Neil Greentree / Mehrangarh Museum Trust

the fort, in one of the 200 tents or 30 rooms, have
access to the music. So devoted are many of its
long-time guests that the event sells out two years
in advance. And you can’t just buy a ticket. You
have to know the right people to find your way in.

his year boasted a fabulous line-up of
artistes from Africa, the Middle East, Asia
and India. Over three days and five stages,
13 acts played for a delighted audience, with many
of the artistes giving the eager aficionados more
than one performance, occasionally spontaneous
and unscheduled in some quiet corner of the
fort. Eschewing a current festival trend, no
performance at any stage overlaps with another;
there’s plenty of time to move from one stage to
the next, sometimes to grab a drink, a meal or
even a short snooze, so you never have to miss
out on any of the music. The stages were all
relatively small, the lighting never overwhelming
and the performances easy and personal.
Every day’s recitals were unique. Some were
held under a gorgeous peelu tree in the mornings,
as when Morocco’s Walid ben Selim beautifully
intoned the lyrics of revered Arab poets like
78 Hallaj, Ibn Arabi, Abu Nawas and Mahmoud
Darwich as China’s Jiang Nan plucked surreal
tones from her 21-stringed harp-like instrument
known as guzheng. Others upped the visual drama
a notch, like when the Tibetan singer Loten
Namling and his collaborators, Ustad Daood
Khan Sadozai from Afghanistan and a troupe
of spirited Manganiyars, performed against the
backdrop of Buddha’s countenance-in-repose
projected on a fortress wall. The sounds of the
sarangi, sarod, khartal and Namling’s large
voice recounting the glories of Milarepa under
a nearly full moon-lit sky were ethereal.
The sunset concerts were no less divine. Artistes
like bansuri virtuoso Rakesh Chaurasia and the
South Korean experimental pair known as Duo
Bud enthralled and entertained the audience as the
day gave way to night. It was the magic hour when
we were reminded not to take the daytime heat for
granted; those desert nights can get pretty cold.
The Areej Sufi Ensemble from the Sultanate of
Oman were visually as much a treat as they were
sonically, as they swayed in harmonious (and
costumed) symmetry while extolling the Creator
through impassioned calls and responses. And
when Senegal’s Sheikh Djimbira Sow began to
sing, his vocal prowess, timbre and style reminded
me of his fellow countryman, the great Youssou
N’Dour, as the trio of drummers behind him

forbes india • april 10, 2020


wrought infectious West African grooves and mingled informally with their audience between
tones out of wood and skin. Which led me to think: performances. And though the crowd was rarefied
Wouldn’t it be a real treat if Sting were to reunite and cloistered, away from the helter skelter of
with past collaborator N’Dour at a future festival? the outside world, the festival includes the local
Each night’s performance would end at the populace in a variety of ways. Artisans from the area
theatre of a hundred diyas (or perhaps a few have long been employed in the fort’s restoration
hundred), at the sublimely lit Deepak Mahal, works. This year they went further, formalising
situated in a discreet corner of the fort. Danish that relationship with the craftspeople of the
Hussain Badayuni’s ecstatic qawwalis and region by launching their own brand of textiles,
Kachra Khan Manganiyar’s virtuosic renditions (Facing page clothes and jewellery, named Nagori in tribute
of Rajasthani musical lore could not have had from top) to the town’s history, which dates back to the
The Nagaur
a more romantic setting, though their words of fort houses Nagavanshi Kshatriyas, snake-worshipping warriors
love were directed not to human individuals but 200 tents on of medieval times who once reigned over the region.
its premises;
to the incorporeal and divine. Other performers Morocco’s Three days of spiritual music in the desert did
at the festival included Iran’s Mohammed Walid not mark the end of it. After this leg was done,
ben Selim
Motamedi, as well as Sufi poetry expert Madan singing lyrics the festival shifted for another three days to the
Gopal Singh, ghazal exponent Kavita Seth, by revered more grandiose Mehrangarh Fort in Jodhpur. For
Arab poets;
Rajasthani devotional singer Mir Mukhtiyar Ali and Tibetan me, though, Nagaur was truly special, its smaller
Kashmir’s Farooq Ahmad Ganie, all from India. singer Loten scale vastly more endearing than the opulence of
As with any festival of note, it was not only and his a large, imposing venue. This intimacy of musical
about the music. The breakfast tents and courtyard collabora- experience and soul connection far outweighs the
tors; (above)
dinners provided meeting places and watering South scale of any big festival, no matter how high the
holes for old friends to reunite even as new Korean fortress walls or impressive the marquee names.
bonds were made. Three days of cohabitation pair Duo Bud The more I think about it, the more I realise I might
inevitably led to a familiarity of faces, as musicians just become one of its devoted repeat visitors.

april 10, 2020 • forbes india

ForbesLife travel


to time
The architecture of Luxembourg City reflects centuries of styles and heritage
By Neeta Lal

forbes india • april 10, 2020


French, till it finally became an independent state

in 1867. Today, the Grand Duchy of Luxembourg
is a constitutional monarchy, with a Grand
Duke as the head of state instead of a king.
“Luxembourg is named after a Saxon fortress
called Lucilinburhuc (‘little fortress’) and was
founded in 963 by Sigefroid, Count of the Ardennes.
It is the world’s only Grand Duchy,” says our guide
Romain Schwartz, as we stroll around Haute Ville, 81
an area peppered with grand squares and heritage
buildings. “After the defeat of Napoleon in 1815, the
Congress of Vienna made Luxembourg into a Grand
Duchy. The present Grand Duke is Crown Prince
Henri who ascended the throne in October 2000.”

uxembourg is one of the smallest countries
in the world, with an area spanning just
2,586 sq km, and a population of 500,000.
But despite its size, it is a glorious mix of history,
art, culture, gastronomy and entertainment.
Luxembourg City, the country’s capital, is
home to the Bock Casemates, a Unesco World
Heritage Site. It comprises a warren of tunnels

hewn from solid rock, and in the medieval times,
uxembourg City’s Old Town is a it housed workshops, kitchens, bakeries and
haiku of Gothic architecture, mighty | slaughter houses. “The 17-km tunnel was carved
medieval fortifications, gurgling (From left) by the Spanish between 1737 and 1746. It was later
The Old
rivers, stony bridges and quaint streets Town of used as an air raid shelter for 35,000 locals, and
and squares lined by steeply roofed Luxembourg thousands of soldiers during the World Wars,”
City is an
houses. The Unesco-listed area is perched on amalgam of Schwartz explains, as we negotiate labyrinthine
cliffs, and is an amalgam of architectural styles, architectural passages and impressive rock stairways.
styles; the
built and rebuilt over several centuries. underground Ultimately, its demolition was ordered by the
Nestled amid the deep gorges of the Alzette and tunnels 1867 Treaty of London to defuse political tensions
of Bock
Pétrusse rivers, pint-sized Luxembourg is wedged Casemates between France and Germany and mark the future
between Germany, France and Belgium. Between are a Unesco neutrality of Luxembourg. The demolition took
the 15th and 19th centuries, it was conquered by Heritage Site 16 years to complete, Schwartz adds. But because
the French, Spanish, Austrian and again by the it was impossible to raze it completely without

april 10, 2020 • forbes india





demolishing a part of the city, some of the tunnel

was left intact, with different parts at different levels, from left) The
with stairways penetrating 40 meters into the rock. Notre-Dame

Cathedral is
Like many old cities, Luxembourg City has an important
odern-day Luxembourg City is one of
numerous examples of historical buildings being landmark the four official capitals of the European
located in
repurposed over the years. For instance, the Centre the city
Union, and home to the European Court
Culturel de Rencontre Abbaye de Neumünster, centre; the of Justice. It is also a financial powerhouse, with
a multi-arts venue located in the Grund district, is a concert
the European Investment Bank and some of the
82 began life as a Benedictine monastery in the early hall known world’s major businesses houses—such as Skype,
for its
17th century. The building is a unique architectural architecture
Deutsche Bank and KPMG—located here.
ensemble of dun-coloured neo-classical facades and acoustics; Peppering the commercial district are examples
the main
with grey sliding roofs, and was reopened in 2004 city square
of contemporary architectural marvels such as
following years of intensive renovation. Over the is popular the Concert Hall or The Philharmonie, designed
centuries, it has done duty variously as a police tourists
by Christian de Portzamparc. Opened in 2005,
station, barracks and prison. Today, it is the city’s the hall’s stellar architecture and its impressive
signature cultural venue hosting plays, arthouse acoustics won Portzamparc many international
movies and events attracting global audiences. architectural awards. The building includes
However, the Big Daddy of all cultural landmarks 823 slender white pillars and an elliptical
is the Notre-Dame Cathedral located in the city foyer that houses three different auditoria.
centre. A late gothic, semi-Renaissance masterpiece, Then there is The National Museum of History
its interiors are illuminated by sunlight that filters and Art, located in the historic Fishmarket
through stained glass windows dating back to neighbourhood. Many of its sections are carved out
the 19th and 20th centuries. “The Jesuits built of rock, which can be seen through glass walls.
the cathedral between 1613 and 1621,” our guide In line with the modernity reflected in its
explains, as we take in the shrine’s richly sculpted contemporary architecture, is Luxembourg’s
alabaster choir screen, columns decorated with recent move towards making all forms of public
arabesques, neo-Gothic confessionals and modern transport free. Coming into effect from this
sculptures in bas relief. The two majestic lions that March, it is aimed to encourage residents and
flank the cathedral’s entrance, as well as its bronze visitors to use public transports options and
gates, are the handiwork of famed Luxembourger help free up congested roads in a country that
painter and sculptor Auguste Trémont. has the most cars per person in Europe.
A musket shot away from the cathedral sprawls Tiny Luxembourg City sends out many
the Grand Ducal Palace, the official residence important lessons to the rest of the world. Lessons
of Grand Duke Henri. The palace, with its 16th- in good governance, peaceful coexistence,
century façade built in the Romantic and Gothic preservation of culture and respect for the
architectural styles, serves as the home and office environment. Perhaps this is what makes
of the Grand Duke, and is not open to the public. this small city have such a big heart.

forbes india • april 10, 2020

ForbesLife food

The inheritance
of flavours Tracing the food traditions of India’s
lesser-known cuisines
By Anoothi Vishal

hat was food in India before modern-day Indian kitchens must flounder? We do
the Columbian Exchange (the The get tantalising glimpses every now and then into
exchange of plants, animals and bhog is made kitchens of the past. For instance, the venerable food
ideas between the Americas, on special historian KT Achaya records in his book, A Historical
occasions at
Europe and Asia in the 15th the Sri Radha Dictionary of Indian Foods, an incident when Warren
and 16th centuries) changed global and Indian Raman Hastings, the first British governor of Bengal,
temple in
gastronomy, and gave us ingredients such as Vrindavan visited Avadh in the mid-18th century and was
potatoes, tomatoes and chillies, without which most gifted a basket of potatoes—a new, exotic delicacy.


photographs: Madhu Kapparath

forbes india • april 10, 2020


Chillies too are not indigenous to India. Long o experience one such example of continuity,
before their large-scale cultivation thanks to (Clockwise and get a deeper understanding of lesser
from top)
Colonialism, pepper was considered to be black Restaurant known cuisines of India, we head to the
gold. It added heat to dishes and Ayurveda and chefs sit for famous Sri Radha Raman temple in Vrindavan.
a sampling
Unani medicine systems ascribed therapeutic uses to of 32 dishes The temple, one of the oldest in Vrindavan, was
it. The nihari, a pepper-laced stew of Shahjahanabad from the built around 1542 AD, and this is where 10 chefs,
(as old Delhi was known), was created ostensibly to bhog, a as part of my Chefs’ Supper Club initiative, got a
ward off disease brought by the cold waters of the 56-dish sampling of 32 dishes from the bhog, or offering,
spread that
Yamuna. In other parts of the country, pipli, a long includes The food is cooked in a kitchen where the hearth
variety of pepper, was used to give mild pungency. desserts like fire has not been put out in more than 450 years.
malpua and
It still grows wild in Delhi, Rajasthan and Punjab, khurchan; The raj bhog that we sampled is offered to
though it has fallen out of use in modern kitchens. devotees Krishna, the deity of Vrindavan, and his devotees
gather for
There are many such stories of lost ingredients the aarti; every evening. Sometimes, devotees can sponsor
and disappearing dishes through history. To find Holi at the the service and on special occasions, 56 dishes or
a continuous culinary culture that still cooks as chhappan bhog are cooked. The 32 dishes that
it used to almost 500 years ago is thus a rarity. we were offered, on plates made of lotus and saal

april 20, 2020 • forbes india

ForbesLife food

photographs: amit verma


leaves, included kachori, besan ke sev, malpua Bengali influences—evident in a sweeter taste to all
(one a dry pancake, the second soaked in syrup), Shree Radhe dishes. No harsh, astringent or bitter ingredients
Sweets in
boondi, sweetened bottle gourd mithai, peda, kadhi, Orchha are used; no mustard oil, or strong spices, including
colocasia and local bean preparations with hints also makes asafoetida, used generally in other parts of the
of turmeric and black pepper, and even mildly- gujiya, a country as a substitute to onion and garlic, while
fermented, mildly-spiced pickles made in water traditional cooking ‘pure veg’ food. Instead, the food must have
instead of oil. All the food was cooked in ghee, an a sweeter rasa (an Ayurveda taste classification).
ingredient that ancient Vedic rituals prized and The ritualistic explanation, of course, is that
symbolically elevated as a ‘purifying’ medium. everything offered to the god of love must be sattvic
This strain of thought—of the purifying (food inducing morally good qualities) and sweet.
effects of ghee—is also deeply ingrained in many

traditional Indian kitchens. Pucca khana and bout 300 km away, Orchha in Madhya
kaccha khana are the two major categories of Pradesh is a little-known town, home
food prepared in this ritualistic way—pucca being to the Rajput Bundela rulers of the 16th
fried food, sanctified by ghee, kaccha being food century. A fort, temple and cenotaphs are all
cooked primarily in water, like dal or kadhi. architectural marvels here, showing a blend of
The temple follows this classification, and we Indo-Islamic influences; the art and ambitions
get to sample a bit of both. The kaccha khana of the rulers, closely allied with the Mughals.
is cooked while observing strict norms by a As the Betwa flows quietly past the town,
goswami—follower of a sect of worshippers of witness to the ebb and flow of history, some
the Bhakti saint Chaitanya Mahaprabhu (1486 things have endured—architecture aside, it is the
–1534)—who left Bengal to rediscover places quaint old food traditions of this town that lead
of religious significance in Vrindavan. you back to another era. I got a glimpse of some
This Bengali heritage is perhaps reflected in of these while curating the culinary experiences
the mix of Braj ingredients like milk and milk- for Namaste Orchha, a recent arts festival, an
based products and local, seasonal vegetables with initiative of Madhya Pradesh Tourism.

forbes india • april 10, 2020

from left) A 87
thali cooked
by Vandana
Dubey, a local
dishes like
Orchha has a solid mithai tradition waiting to be mangore,
sampled. The gujiya is a dumpling usually served sannato,
local bada
drenched in syrup, but other unique versions, and gujiya,
including flourless, gluten-free ones, are available is a study in fiery chutney made almost like a Mexican salsa.
how seasonal
in this town too. Then, there are unique laddoos ingredients The Bundeli dialect is colourful and has been
from soft malai ones made from milk solids to those can make for the language of poets—from the 12th century
a flavourful
made from bottle-gourd and even saunth (dried plate Chand Bardai, who wrote about the exploits
ginger). The latter is apt since this is the ginger belt. of Prithviraj Chauhan in his epic Prithviraj
In fact, in the local market, you may chance upon Raso. The language lives on, and every now
lesser-known ginger varieties such as the mango and then, is used to name daily dishes like the
ginger, a rhizome which tastes of green mango. sannato, an epithet for a boondi raita with
Bundelkhandi cuisine is a study of how seasonal enough spice to make you, literally, go silent.
ingredients, sans rich additives, can make for an Then there are mangore, dal fritters seasoned
immensely flavourful plate. Vandana Dubey, a local with pounded coriander, available at every tea
guide-turned-cooking instructor, serves a thali that stall. What is more interesting is the buknu masala
includes thadula (the local version of crisp urad they sprinkled on these. I went back home to
dal kachoris), kadhi cooked with brinjal, seasonal research this and found it is an ancient recipe—a
vegetables like drumsticks, the local bada (a cousin mix of five to six spices, of which chief is dried
of the dahi bada but soaked in salt water and thin ginger. Bring it back from your travel; sprinkle on
buttermilk instead of creamy yoghurt), and a your dal or on chaats, for a taste of the past.

april 20, 2020 • forbes india

ForbesLife thoughts
on cars
Keystone / Getty Images Getty Images

I couldn’t find the sports

car of my dreams, so I
built it myself.
—Ferdinand Porsche

All of those cars were

once just a dream in
somebody’s head.
—Peter Gabriel

The best car safety

device is a rear-view
mirror with a cop in it.
—Dudley Moore
Everybody wants to be
88 If GM had kept up with
someplace he ain’t.
technology like the —Henry Ford
computer industry has,
we would all be driving
$25 cars that got 1,000 I would have probably Cars let us out of the
MPG. stolen cars—it would barn and, while they
have given me the same were at it, destroyed
—Bill Gates
adrenaline rush as the American nuclear
racing. family. As anyone who
—Valentino Rossi
has had an American
nuclear family can tell
you, this was a relief to
all concerned.
Your car should drive —PJ O’Rourke
itself. It’s amazing to me
that we let humans drive
cars... it’s a bug that cars I’ve always been asked,
were invented before ‘What is my favourite
computers. car?’ and I’ve always said
‘The next one’.
—Eric Schmidt
—Carroll Shelby

You can’t stop everything
I don’t run a car, have from happening. But Flying a good airplane
never run a car. I could we’ve gotten to a point doesn’t require near
say this is because I where we’re certainly Nobody wants to buy a as much attention as a
have this extremely trying. If a car doesn’t $60,000 electric Civic. motor car.
tender environmentalist have four hundred air But people will pay —Charles Lindbergh
conscience, but the fact bags in it, then it’s no $90,000 for an electric
is I hate driving. good. sports car.
—David Attenborough —Clint Eastwood —Elon Musk

forbes india • April 10, 2020