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Sunday, May 16, 2010

Highlights of railway budget 2010-11

Highlights of railway budget 2010-11


New Delhi:

  • Railway Minister Mamata Banerjee appeals to business houses to join hands for building partnership with Railways. Presenting Railway Budget for 2010-11, Banerjee says a special task force will be set up for early clearance of projects.
  • No fare hike for passengers.
  • Railways not to be privatised; It will remain with the government, says Banerjee. While not privatising, Railways have to develop business models for improving earnings, says Banerjee.

  • Railways 2020 vision document will contain short, medium and long-term goals. Commitments fulfilled to the maximum. Out of 120 trains announced in last budget, only three remain to be flagged off because of lack of broad-gauge lines, says Banerjee.

  • Plans to launch a pilot project for fire detection.The government also plans to construct more underpasses for safety, the minister said while presenting the Railway Budget.

  • Railways to start six water bottling plants in places like Ambala, Thiruvananthapuram, Farakka, Amethi and Nasik to provide clean and cheap drinking water to passengers.

  • Indian Railways aims to add 25,000 route kilometers by 2020. The railways currently has 64,015 route kilometers, she said.

  • India's railways has set up a special task force to clear investment proposals in 100 days

  • Indian Railways plans to keep rail freight rates unchanged, Bloomberg-UTV news channel reported, without saying where it got the information.

  • Railways to set up mobile e-ticketing centres at hospitals, universities, courts, IITs, IIMs, district headquarters and village panchayats. All 13,000 unmanned level crossings to be manned in the next five years.

  • Railway Protection Force to be strengthened through amendments in RPF Act; women's wing to be formed in RPF to ensure security of women. Ex-servicemen to be inducted in RPF. Railways will be the lead partner in the Commonwealth Games in Delhi.

  • Railways to set up Rabindra Museum in Howrah and Geetanjali Museum in Bolpur -- both in West Bengal -- tocommemorate Rabindranath Tagore's 125th birth anniversary.

  • Railways will provide houses to all its employees in the the next 10 years in collaboration with the Urban Development ministry.

  • Railways to enhance contribution to central staff benefit fund. Centre for Railway Research to be set up at IIT-Kharagpur. Chittaranjan Locomotive Works capacity to be augmented from 200 to 275 engines a year.

  • Work on Rae Bareli Coach Factory in Uttar Pradesh to start within a year. Wagon Repair Shop to be set up in Badnera near Amravati in Maharashtra.

  • Integral Coach Factory in Chennai to be modernised and a new unit to be set up there. If land is available, Railways willing to set up a Diesel Multiple Unit factory in West Bengal.

  • No forcible acquisition of land for freight corridor project. One member of each family of land losers to be given employment in the freight corridor as also in the new projects.

  • High-speed dedicated passenger corridors to be constructed; National High Speed Rail Authority to be set up.

  • Revenue from non-core business of Railways to go up from Rs 150 crore to Rs 1,000 crore. Indian Railways has set a target to transport 944 million tons of goods in the year beginning April 1.

  • Railways expects to increase earnings from non core activities. The government aims to increase non core earnings to Rs10 billion rupees from Rs1.5 billion.

  • Railways expects to increase earnings from non core activities. The government aims to increase non core earnings to Rs10 billion rupees from Rs1.5 billion.

  • Despite slowdown, Railways to exceed freight loading target by eight million tonnes during 2009-10. Freight loading target for 2010-11 fixed at 944 million tonnes, 54 million tonnes more than the current year's revised target. Gross traffic receipt for 2010-11 pegged at Rs94,765 crore.

  • Allocation for construction of new lines increased from Rs2848 crore to Rs 4411 crore.

  • Rs1,302 crore provided for passenger amenities in the 2010-11 railway budget against Rs 923 crore last year.

  • Indian Railway Finance Corporation (IRFC)will borrow 91.2 billion rupees ($1.97 billion) from the market in 2010-11.
  • Railways to have master plan for North Eastern region. Special train between India and Bangladesh to be started to commemorate 150th birth anniversary of Rabindranath Tagore.
  • 101 additional services to start on Mumbai suburban railways. Survey will be conducted to connect Sealdah and Howrah stations in West Bengal. To commemorate Rabindranath Tagore's 150th birth anniversary, 'Bharat Teertha' trains to connect several pilgrimage centres across the country.
  • Indian Railway Finance Corporation will borrow Rs91.2 billion ($1.97 billion) from the market in 2010-11.

Cricket ODI Records Celebrating Sachin's 200 Runs

We have observed that in many recent exams, there were questions from cricket. Most of the questions revolved around records, personal achievement of cricket players, famous milestones etc.

We would advise all of you to keep an eye on the current matches being played and note down the records created and milestones achieved by famous players.

Here is a list of some important records.

And, yes, this post has been inspired by Sachin's Double Century in ODI. We all love Sachin! Don't we?

Sachin Tendulkar's Records (as on Feb 24, 2010)

Highest ODI Runs: 17598

Highest Individual Score: 200*

Highest 100s: 46

Highest 50s: 93

Highest partnership: 338 (with Rahul Dravid)

ODI Records (as on Feb 24, 2010):

1. Highest individual score

Rank Runs Player Match Venue Season
1 200* India Sachin Tendulkar India v South Africa Gwalior 2010
2 194* Zimbabwe Charles Coventry Zimbabwe v Bangladesh Bulawayo 2009
3 194 Pakistan Saeed Anwar Pakistan v India Chennai 1997
4 189* West Indies Cricket Board Vivian Richards West Indies v England Manchester 1984

2. Highest innings Totals (>400 Runs)

Rank Score Teams Venue Season
1 443-9 (50 overs) Sri Lanka v Netherlands Amstelveen 2006
2 438-9 (49.5 overs) South Africa v Australia Johannesburg 2005-06
3 434-4 (50 overs) Australia v South Africa Johannesburg 2005-06
4 418-5 (50 overs) South Africa v Zimbabwe Potchefstroom 2005
5 414-7 (50 overs) India v Sri Lanka Rajkot 2009
6 413-5 (50 overs) India v Bermuda Port of Spain 2007
7 411-8 (50 overs) Sri Lanka v India Rajkot 2009
8 402-2 (50 overs) New Zealand v Ireland Aberdeen 2008
9 401-3 (50 overs) India v South Africa Gwalior 2010

3. Lowest innings totals

Rank Score Teams Venue Season
1 35 (18 overs) Zimbabwe v Sri Lanka Zimbabwe 2004
2 36 (18.4 overs) Canada v Sri Lanka Sri Lanka 1975
3 38 (15.4 overs) Zimbabwe v Sri Lanka Sri Lanka 2001
4 43 (19.5 overs) Pakistan v West Indies Australia 1993
5 44 (24.5 overs) Zimbabwe v Bangladesh Bangladesh 2009

4.Most Centuries in ODIs

Rank Centuries Innings Player Period
1 46 431 Sachin Tendulkar from 1989 to -
2 29 340 Ricky Ponting from 1995 to -
3 28 444 Sanath Jayasuriya from 1989 to -
4 22 311 Sourav Ganguly from 1992 to 2008
5 21 246 Herschelle Gibbs from 1996 to -

5. Highest partnerships

Rank Runs Players Opposition Venue Season
1 338 (2nd wicket) Sachin Tendulkar & Rahul Dravid v New Zealand Hyderabad 1999
2 318 (2nd wicket) Rahul Dravid & Sourav Ganguly v Sri Lanka Tonton 1999
3 274 (1st wicket) James Marshall & Brendon McCullum v India Aberdeen 2008

Indian Retail Models

Indian Retail Models: Reliance Retail vs. ITC Retail vs. Future Group Retail

 

This case study helps to create an in-depth understanding of the distinct models of the retail giants in India - ITC, Future Group and Reliance. Analyzing the unique model of Reliance's retail venture and its growth prospects, the case facilitates a comparison and evaluation of the three retailing business models based on the sustainability and effectiveness of the models in the context of Indian retailing sector's untested growth trajectories. Organized retail is still in its nascent stages in India as Indian corporate houses were late in realizing the potential of organised retail. The sector, which was on a boom, was hit hard by the global financial crisis during 2008. Many of the retailers have resorted to reducing costs by consolidating formats and models. However, at a time when the existing retailers are tackling their blues, Reliance Industries Limited (RIL) has made a grand entry to the retail sector through Reliance Retail Limited (RRL), its retail arm. RRL has opened stores in each of the verticals and by mid-2009 has been operating around 12 formats, above 920 stores - spread across the country - in about 4.2 million sq. ft. Though it is the biggest conglomerate in the country, RRL is facing tough competition from two powerful and ambitious retailers - Future Group and ITC. Future Group's retailing arm Pantaloon Retail India Ltd. has managed to find growth even during the recession and its pan-Indian retail model has gained loads of acclamations. ITC has its presence in rural and urban areas alike with its well-positioned national brands in FMCG and Lifestyle Retailing Business Division (LRBD). The three famous corporate houses, emerging from three different backgrounds have different operational models. While wading through the crisis, the three retailers are trying to script a right combination to succeed in the Indian organized retailing sector.

Most Indian retailers tend to blindly copy from Western models. I am looking for a pan-Indian model of retailing.

- Kishore Biyani,
Managing Director,
Pantaloon Retail.

Unlike global retailers who operate on thin margins, Reliance Retail is looking at a fairly high-margin business model.

- Business World

Of late, the Indian organized retail industry has become very lucrative, attracting both Indian and international business corporations to try their hand at the retail business. Though the recession that set in following the global financial crisis of 2008 slowed down the progress of Indian organized retail, increasing number of players are entering the segment because of the large potential it offers. Indian corporate majors like Tata, Birla, Bharti, RPG and Raheja groups have made their foray into the retail sector with varying formats. Kishore Biyani's (Biyani) Future Group has long been in the organized retail with its retail arm Pantaloon and is doing well in spite of the recession. ITC, well-known for cigarettes, has diversified itself into agribusiness and retail, already a major player in the fashion apparel retailing, with Wills Lifestyle and has even entered into the urban markets with ITC Choupal Fresh - a neighborhood store selling vegetables and other farm-related products. Bucking the trend, Reliance has also made its way into the organized retail sector with a unique `retail conglomerate model'. While most of the major players were trying to establish one-stop shops, Reliance has come up with a diagonally opposing model of operating as a speciality retailer in various verticals - 14 in all - ranging from groceries to auto accessories. Despite the best of funding and experienced `think-tank' it has, it would be too early to predict the future of Reliance retail, as it has to compete with the best of the incumbents in each of the verticals.

Reliance Retail

Reliance's entry into the much sought-after retail sector was not just intuitive. The company has worked hard to analyze the potential of the field and even tested the retail space before making a grand entry into the retail segment. For this, Reliance tied up with the state-owned, old style cooperative store in Mumbai, Sahakari Bhandar, and renovated it to be greeted by a huge success. It served as a test bed for Reliance's retail ventures. With the success of Sahakari Bhandar, the Reliance Industries Limited's (RIL) retail arm Reliance Retail Limited (RRL) drew a pan-Indian retail plan. At first, it formed an excellent management team by hiring some of the highly experienced people from retail and consumer durables industries.
With this expertise, RRL forayed into the organized retail sector in November 2006. Its first initiative, Reliance Fresh where fresh fruits, vegetables, dairy products and staples are offered at a lower price, left most of the cart vendors and independent unrecognized retailers in panic. The store, which was started as a convenience store format, was told to be a `farm-to-fork' initiative and was expected to provide the utmost benefits to the farmers (Refer Exhibit I).
Later on, Fresh also added a range of items to its list of offerings. "Fresh now carries, in addition to fruit and vegetables, grocery, bakery, dairy, personal care, cleaning, kitchen essentials and some impulse items as well", said Raghu Pillai, Chairman and CEO (Strategy and Operations), RRL. The convenient store format also served staples under the private label `Reliance Select', for better margins. In addition, to increase the visibility and develop the brand, RRL is planning to supply `Reliance Select' to mom-and-pop stores (famous as kirana stores in India) as well.
Thus, the convenience store format proved to be a success initially. A faster turnover was expected from the lesser area and convenience store format. However, it did not work out in the long run. Apart from the profitability concerns, Reliance Fresh stores were also subjected to protests from local traders as it caused a dent in their business. Traders ransacked the Reliance Fresh stores in many of the states including Kerala, Orissa, West Bengal and Uttar Pradesh. As a result of the protests and also due to the prevailing downturn, the number of Reliance Fresh stores had reduced considerably. Reliance's wholesale venture in the same sector, Ranger Farm, aimed to serve streetside vegetable vendors also could not make much impact on the market.
Reliance had also started the retailing of fuel through franchised petrol pumps, alongside the launch of Reliance Fresh. But the venture, which started in 2006, did not prosper. Though the outlets provided good product quality and services, they were forced to sell fuels for higher prices as they did not have the subsidy, which the government-owned fuel outlets had. Due to the higher price, the number of customers dropped and soon, the business turned unviable to run. The company closed 1,432 petrol pumps after it incurred a loss of Rs. 800 cr in its petroleum retail business in 2008. Reliance bought back the property from its dealers paying huge amounts. But its plan to build malls and multiplexes on the sites has not yet realized.
However, the undeterred Reliance once again bounced back into the retail segment by opening its first consumer durables retail chain, Reliance Digital, in April 2007. Through a tie-up with the computer major Apple, Reliance Digital opened stand-alone stores—called `istores'—to sell Apple's products exclusively. Further, it has entered into a tie-up with Reva Electric Car Company, India's first electric car manufacturer, to sell its electric car through Reliance Digital outlets. It has also planned to have private labels introduced in Reliance Digital in the near future. "We will see how the volumes build. Then will get private labels as well," said Reliance Retail Consumer Durables Information Technology (CDIT) head-Operations, Nitish Tipnis. Though the chances for the success of private labels are minimal, Reliance Digital can still be hopeful, as the trend is gradually shifting from traditional stand-alone retailers to organized retailers, who offer an assortment of products and brands, enabling easy and better choice for customers. The organized retail chains have a small share of over 8%, translating to Rs. 25,000 cr, of consumer durables market. As not many organized retailers are present in this field, Reliance Digital has a competitive edge by virtue of being the exclusive retailer for Apple products like ipods, iPhones and Macintosh computers through its istores. However, it has to face tough competition from Future Group's e-zones, one of the main competitors for Reliance Digital, and Big Bazaar, which has its own private labels in certain electronics. Also, neck-to-neck competition from other major players like Tata's Croma, Next, exclusive outlets like Sony Center and from much trusted local players like TMC makes the situation tough for Reliance Digital.
Despite the setbacks and the challenges, RRL has been quite aggressive in the retail business. When other retailers were consolidating and cutting down retail spaces fearing the global recession, RRL launched speciality outlet chains in more than one vertical. At present, RRL has more than a dozen speciality formats. (Refer Exhibit II)
In March 2009, Reliance Retail's 920 stores were spread across 20 formats in 80 cities and 14 States covering almost 4.5 million sq. ft. of consumer-facing retail space. (Refer Exhibit III)
In the apparel segment, RRL has come up with Reliance Trends (Trends), a speciality chain, which also handles luggage and accessories. Projected as a mix of values and lifestyles, the store offers world famous international brands in lifestyle segment and its own private labels and national brands in the value segment. Dependence on private labels is to make higher profitability. Reliance Trends is expected to be a hit as a wide array of products are made available at affordable prices. But Trends faces stiff competition from incumbents like ITC-Wills Lifestyle, Future Group-Fashion@ Big Bazaar, Brand Factory, Pantaloon, Tata-Westside stores and innumerable local players. Even after being a price under-cutter, the chain is in an intense battle of finding and maintaining customers. "We are now present in five cities with seven stores and plan to have 100 by 2010-11. Our aim is to be among the top two players in the organized retail market for apparels by that period", disclosed Reliance Trends' Chief Executive, Arun Srideshmukh.
Reliance Footprint (Footprint), RRL's footwear vertical chain store, is also in a similar state. Major players in the footwear retail, including Bata, Woodlands and international brands like Reebok, Adidas, etc., are posing a threat to Footprint, which is finding it tough to cope with the competition. Reliance's entry into the Rs. 15,000 cr domestic footwear industry, which is dominated by the largest retailer Bata, has taken many by surprise. It sells well-known brands from all over the world including private label footwear. It has entered into a partnership with Bata to sell all Reliance private label footwear through Bata, which has the largest number of exclusive footwear chains across India. It also has ambitious plans to sell its private labels through other retail players. "Footprint has a 20:80 ratio of private label footwear to other domestic and international brands," explained G Shanker, Chief Executive, Footwear, RRL. Footprint has also planned to tie up with some of the foreign footwear brands to make their presence felt in India.
Reliance Jewels, the jewelry chain store of RRL, claims to provide a unique shopping experience to the lovers of the yellow metal. Its exquisite collection comprises of Kolkata Filigree, Rajkot Minakari jewelry, Kundan from Jaipur, temple jewelery from Kerala, Jadau from Amritsar and much more. Jewelry retail in India is ever expanding at a rate of 40% with new players setting up retail outlets across the country. Though there are specialized retailers in this segment, the Indian consumer is always ready to experiment with new formats and players and organized retailers are ever expanding in this arena. For instance, Big Bazaar's jewelry retail is carried through the store-in-store format named Navras. However, with the vast collection and stand-alone store format, Reliance Jewels may beat the competition from Navras, as well as other players. It has also big plans to expand the chain soon. "We plan to open 50 such stores during the next one year and another 300 speciality stores across the country during the next three years," said Bijou Kurien, President and Chief Executive, Lifestyle, RRL. But it is still doubtful if Reliance would be able to deal with the nuances of jewelry retailing like well-experienced incumbents and uncountable local players.
As far as speciality stores for books, music, toys and gifts are concerned, Reliance retail has launched a new member in the race, named Reliance TimeOut (TimeOut). Many of the retail majors like FutureGroup' s Depot, RPG's Books&Beyond and K Raheja's Crossword are already operating in this segment in addition to foreign players like Walden. TimeOut stores, spread over an area of 21,000 sq. ft., offer books, music, toys and gifts and have an in-store coffee shop. TimeOut also conducts weekend workshops for kids to improve their creativity (and to impress the parents who are the potential customers). It has plans to expand the number of stores to 47 by 2010. "Our target customers are primarily the youth, modern professionals and young parents. We want to create a place that will cater to all sections of the society. We will allow customers to browse at leisure and shop at pleasure," elaborated Bijou Kurien. However, with the ongoing financial meltdown coupled with stiff competition from established players, TimeOut has a long way to go. Future Group's Depot, which offers the same merchandise, is a store-in-store and poses tough competition to Reliance. But the real danger comes from other local players, bookstores, stationery stores and toyshops, which have established strong sourcing networks and occupied strategically important locations. Nonetheless, with the additional services and benefits that TimeOut is providing, it might be able to gain more customers than its competitors.
Reliance Delight (Delight), a non-vegetarian retail outlet offering fresh fish and frozenmeat, was another venture of RRL. The stores were opened to tap the potential of the non-vegetarian retail in India that delivers margins up to 20%, compared with the 10%-15% margins in food and grocery retailing. Also, with the number of non-vegetarians in the country gradually increasing, Delight has good opportunities, as the number of organized players in the market is very low. To gain advantage of location, Delight stores are located next to Reliance fresh stores. The neat and clean maintenance of the Delight stores has already impressed many non-vegetarian consumers. However, immediately after the opening of these stores, RRL had to face protests from the fishermen in Andhra Pradesh and Tamil Nadu, who were afraid that the clean ambience of the stores would take away their business. Despite these protests, Delight is planning to open 1,000 stores by the end of 2010. Reliance bags a huge advantage in this field, as other organized retailers are not even considering non-vegetarian retailing. Though the Godrej-operated integrated poultry business, `Real Good' has the first mover advantage, Delight is likely to become popular among the non-vegetarian Indians. Some other retailers in the non-vegetarian retailing are Spencer's, Spinach and Hypercity. With fewer players in the sector, Reliance Delight is expected to contribute 10% to the overall revenue of RRL, over years.
Reliance Autozone (Autozone) is RRL's another initiative in the retail sector. The auto retail chain engages in sales and service of accessories for two-wheelers and four-wheelers under one roof. The chain also undertakes sales of electric scooters, a new phenomenon in the Indian automotive sector. A typical store with 6,500 sq.ft. presents the ambience that can be found only in global automotive retailer chains. RRL is keen to capitalize on the business opportunities it has in this sector. Despite the competition, Autozone is expected to grow steadily. Though there are many companies with their own service and accessory shops, the one-stop-shop format might provide a massive advantage for Reliance. "This new format provides a one-stop solution to automobile owners who face inconvenience by having to criss-cross between various touch points for accessories, batteries, tyres and lubes, etc., at different locations at different times," says Arun Dey, Chief Executive, Autozone.
The same advantage can be associated with RRL's pharma venture `Reliance Wellness', a one-stop shop for all health and wellness products. The stores contain medicines in Allopathic, Homeopathic and Ayurvedic medicinal systems and have a well-equipped optical shop with a qualified ophthalmologist and preferred brands of lenses. To help people who are under long-term medication, Reliance Wellness has launched a program called `Medical Compliance Program', in which the customers will get alerts and reminders about replenishments and uses of their medicines. Another customer loyalty program of free health insurance to customers is done through a tie-up with ICICI Lombard General Insurance. With its additional facilities, such as attractive insurance and customer loyalty program, Reliance Wellness may also be able to carve a niche for itself. It has already won awards for its `Innovative Drug Store' concept. The advantage is that a one-stop solution like Reliance Wellness is rare even in metros. But with the presence of `Fit and Healthy' of Future Group, Health and Glow of RPG Group, Apollo Pharmacy and other chains like Med Plus and Medicine Shoppe besides the regional and local pharmacy shops, it would not be an easy task for Reliance Wellness to achieve its Rs. 6,000 cr target by 2011.
Same is the case with RRL's home furniture and furnishing retail chains, Reliance Living Furniture and Reliance Living Furnishing. Indian furniture retailing is clouded with local, as well as the branded players, such as Future Group's Home Town and Furniture Bazaar, Godrej Lifespace, Timbor Home, Housefull and popular foreign Groups, such as Durian and Kian. "There is an opportunity in the furnishing retail space in the country when it comes to the range being design led without the normal penalty of being too expensive. High quality fashion and design in home furnishings need no longer be expensive," said Raghu Pillai. Reliance Living Furnishing offers both international brands and private labels to its customers. The 4,500 sq.ft. stores promise a unique shopping experience but RRL will have to wait to know whether it would be able to tap the Rs. 30,000 cr worth Indian furniture and furnishings market.
Reliance Super and Reliance Mart, the supermarket and hypermarket stores of RRL, face the same dilemma as that of its furniture and furnishing retail chains. They have forayed into the most clouded arena of supermarket in Indian retail. Even in 2009, round-the-street mom-and-pop stores accounted for 95% of the total Indian grocery retail. On top of it, in this business with wafer thin margins, organized players, such as Vishal Mega Mart, Big Bazaar, Spencer's, etc., have already fortified their brands and many other cash-rich players are getting ready to open their supermarkets. However, with 10,000 to 15,000 sq.ft. space to stack up goods and provide easy access to customers, Reliance Super is expected to have a cutting edge over other retailers. Even Reliance Mart is spread over an area of 165,000 sq.ft. and aims to become the one-stop solution to all customer demands. "The concept is to develop it as a `solution center' where anyone can come to our Mart and get anything under one roof and at cheaper or equivalent prices but with much better quality products," Raghu Pillai said. Both Reliance Mart and Reliance Super have bet high on the value platform and private labels, like other players, but they still have not managed to clock the expected business.
Thus, RRL has tough competition in almost all the verticals. (Refer Exhibit IV)
RRL had earlier planned to expand its chains with an investment of Rs. 25,000 by 2011, but all developments have come to a standstill because of the global recession. With independent stores in each of the verticals, insufficient and inefficient supply chains and stiff competition in every vertical, RRL is still bungling through its way to success. The recession-hit retailer had to downsize the staff and reduce the retail space in order to save money. The Director of Center for Research in Technology & Innovation at the Kellogg School of Management, Prof. Mohanbir Sawhney opines, "The capital intensive business model of companies, like Reliance Retail, makes their ventures very risky. Three years down the line we may see these ventures going in for a spin-off (stake sell-out)." His estimation may come true if things proceed the way they are now.
Whatsoever, with the expected policy alteration from the Indian government in favor of 100% FDI in the retail sector, RRL can benefit by tying up with foreign players. But the current policy allows only 51% FDI, that to only for single brand retailing. For multi-brand retailers, FDI remains a forbidden fruit. RRL had already tied up with UK-based toy-maker Hamleys to design the stores, train the personnel and the like. It has also tied up with many foreign retailers in other verticals, but only in the back-end processes. Once 100% FDI is allowed, tie-ups can be made with respect to the front-end processes too. Then there would be a better chance to compete with the best in the industry and probably that is what Mukesh Ambani, CEO of RIL, had been expecting to happen. In the meanwhile, ITC, one of the biggest, oldest and the most respected conglomerates in the country and Future Group, the largest retailer in India, are preparing for a neck-to-neck competition with RRL.

ITC's Retail Venture

ITC, formerly Imperial Tobacco Company of India Limited, is striving to change its image from a cigarette maker to a socially responsible, value-driven conglomerate (Refer Exhibit V). Since 2000, apart from consolidating its traditional businesses, ITC has forayed into lifestyle retailing, branded packaged foods, personal care products, greeting, gifting and stationery products, as well as incense sticks and safety matches manufacturing. In the lifestyle retail sector, ITC is one of the preferred names with its Wills Lifestyle Stores and John Players brand. ITC's agribusiness and paperkraft are one of the topmost names in their respective sectors.
Before the launch of Wills Lifestyle, ITC had the experience of making tobacco and paperboard. Nothing related to retailing; however, Chairman, Yogesh Chandra Deveshwar (Deveshwar) was sure that they would not go wrong. Wills Lifestyle, which started with a range of men and women's relax wear, `Wills Sport', soon filled up its exclusive retail outlets with new brands of clothing and accessories. ITC's Lifestyle Retailing Business Division (LRBD) grew swiftly winning various awards in retailing, which provided the necessary impetus for a new chain attempting to move closer to its target audience.
Apart from Wills Lifestyle clothing range, ITC launched John Players, men's casual and formal clothing range, and Miss Players, a range of formal and casual wear for women. It also launched Essenzia DiWills, the fragrance range, Fiama DiWills and Vivel DiWills, bath and personal care products. ITC has carved a niche with its excessive and effective advertisement campaigns targeting the youth and super rich. All the brand endorsers of ITC lifestyle products are youth icons and that had paid off well. (Refer Exhibit VI)
ITC's positioning as a brand has helped it enormously in becoming a major lifestyle retailer. Apart from lifestyle retailing, ITC forayed into agri-retail too, both in rural and urban areas. It recognized the needs of rural population, an untapped potential, which no company was able to exploit prior to them. The initiative was also aimed at empowering small and marginal farmers. It had helped the farmers to overcome the inhibitions of poor farming and risk taking. With a blend of click-and-mortar capabilities, village Internet kiosks managed by farmers—called sanchalaks—enable the agricultural community to access ready information in their local language on weather and market prices, disseminate knowledge on scientific farm practices and risk management, and sell farm inputs and purchase farm produce right at the farmers' doorsteps. ITC's Agribusiness division, the biggest exporter of agricultural commodities from India, has conceived e-Choupal as a back-end integrated supply chain. ITC soon forayed into rural retailing with its rural malls named Choupal Sagar. The 7,000 sq. ft. stores not only sell commodities, apparel and branded home appliances, but also motor pump sets, pesticides and other agriculture products to its customers. Apart from the goods, these malls provide services like soil testing, banking, insurance and medical facilities to farmers. ITC is planning to open one Choupal Sagar for every 30 to 40 e-Choupals. ITC has spent Rs. 4 cr for a Choupal Sagar and in return it is getting a turnover of Rs. 3 cr per annum. There are also plans to expand Choupal Sagar and open smaller malls in smaller towns. However, these plans have come to a sudden halt due to the financial crisis and economic slowdown.


ITC, apart from opening rural malls, entered the urban market too with fresh fruits and vegetable outlets named Choupal Fresh, which sources its merchandise directly from farmers through e-Choupal initiative. Choupal Fresh is being operated in only selected metros and the company has plans to increase the number of outlets to 140 by 2010. "The emphasis is on improving the quality and productivity of domestic horticulture products through ITC's good agricultural practices as opposed to relying on imported products", said Siva Kumar, Chief Executive of ITC's Agribusiness. The speciality of these chains is that they combine retail with wholesale. The 2,500 sq.ft. store is backed by a 7,500 sq.ft. cold storage and warehouse facility. Choupal Fresh stores open at 5 a.m. to serve the wholesale business. Future Group's Pantaloon retail had entered into a strategic tie-up with Choupal Fresh chains to gather fresh fruits and vegetables for its `Fresh & Pure' section in Food Bazaar. Though Godrej Agrovet's `Nature's Basket' was the first of its kind store selling farm fresh food in urban areas, Choupal Fresh has made significant advantages as it deals with both wholesaling and retailing. However, India's farm fresh organized retail has a lot to improve in terms of supply chain practices in order to grow to realize its actual potential.
ITC has a number of brands in Fast Moving Consumer Goods (FMCG) and staples, which they supply through kirana stores and competitors' retail outlets (Refer Exhibit VII). ITC's ready-to-eat foods, snacks, staples and confectionery have become household names for Indians in a short span of time and fetched the recognition of an FMCG company. It was also conferred the Business Today Award for the Best Managed Company - Retail and Consumer Products for the year 2008.
The conglomerate model of ITC was thus gaining momentum but the recession and the higher rent of the retail space had forced it to reduce its pace. Around eight of Wills Lifestyle exclusive showrooms were closed and now ITC is planning to set up boutiques in its own chains of hotels. Wills Lifestyle has also closed down four of its exclusive retail chains due to decrease in sales and high rent. However, ITC is trying to get into more customer-centric activities to increase the dropping sales. Deveshwar is confident that the company will come out of the blues soon.

Future Group's Retail

Future group's retailing arm Pantaloon Retail (India) Limited has its presence in various sectors of retail in multiple formats (Refer Exhibit VIII) with a number of formats in each of the lines of business (Refer Exhibit IX). As the business is based on the `value for money' psyche of Indian middle class, Pantaloon's retailing has become a huge success. The company's turnover has surged from Rs. 285.3 cr in FY 2002 to Rs. 5,048.9 cr in the year ended June 2008. During the same period, the Group's Profit After Tax (PAT) has jumped from Rs. 7 cr to Rs. 126 cr. Its market capitalization also increased from Rs. 60 cr in FY 2000 to Rs. 3,737.8 cr as on October 13, 2008.
Apart from retail business, it has a few specialized businesses in which it operates independently. (Refer Exhibit X)
The value-based retail business of Pantaloon retail has received a phenomenal acceptance from the customers. The company, which was incorporated as an apparel retailer `Manz Wear' with India's first men's formal trouser brand Pantaloon, had forayed into the retailing mainstream in 1997 with its 8,000 sq.ft. Pantaloon retail showroom. Later, Pantaloon launched big format retail centers like Big Bazaar and Central. Big Bazaar ranges from 15,000 to 20,000 sq.ft. and Central spreads over 200,000 sq.ft. In 2006, `Pantaloon Group' was renamed as `Future Group' and its retail arm was named Pantaloon Retail (India) Limited. In his book, It Happened in India, Kishore Biyani (Biyani), CEO of Future Group, explained how the group had come a long way. With its vision to `Deliver Everything, Everywhere, Every time for Every Indian Consumer in the most profitable manner', Future Group brought out such innovative retail formats that Indian consumers had been only dreaming of. The company's supply chain management is done through Future Logistics, its logistics arm. Future Logistics has plans to become independent and obtain the benefits of third party logistics market.
But the largest retailer also has not been spared by the recession. With the credit freeze, Pantaloon retail has decided to restructure its operations by consolidation. Future Group, at present is a conglomerate with many divisions. To make the business model more sustainable, it was planned to restructure the company and rename it as Future Markets & Consumer division. The new division would be a holding company with two subsidiaries - Future Value Retail, that will own all fashion brands and Future Speciality Retail, that will own all the supermarket chains. However, the restructuring was postponed due to expectations of new FDI policy by the government. Future Group has ambitious plans once 100% FDI is allowed on multi-brand retailing.

Businesses Converge, But Business Models Diverge

Competition in the Indian retail industry is intensifying by the day with many on the field and many waiting for an opportunity to enter. What matters most is, the business model that these retailers are going to adopt and not really the `retail' tag. "Most Indian retailers tend to blindly copy from Western models. I am looking for a pan-Indian model of retailing," echoed Biyani when the organized retail was just emerging in India. By mid-2009, with a model that extends services to value-based consumers and lower socioeconomic segment, Biyani was leading the pack. His competitors, however, are right on his heels. The models and value chain clearly vary for all the players. While Big Bazaar is aiming to target the middle and lower income strata alike, ITC is developing its image in the Lifestyle segment with Wills Lifestyle and John Players. While Future Group has diversified into Future Capital Holdings, Future Logistics and Pantaloon Retail, ITC has expanded into agribusiness and Lifestyle retailing. RRL, on the other hand, has evolved as an all-inclusive retail by opening 920 independent stores across the country in almost 15 verticals.
Retailing is not all about reselling things in a shop. The background work that each company has to do is enormous. The decisions on the issues—`make or buy', `in-house or outsource' are the most critical ones. The right mix of manufacturing products and outsourcing of the processes is critical for every retailer. The concerns that follow are integration of back-end processes and supply chain management. The pattern varies across the three corporate houses of India.
It would be surprising to know that ITC does not have manufacturing facilities. The respected Indian conglomerate does not manufacture almost anything, but bets heavily on outsourcing the production of all its merchandise. Even apparel designs were initially made in association with American Design Intelligence Group (ADIG), a San Francisco, US-based garment and retail consultancy. However, later on, ITC has hired its own set of designers and established a close relationship with Science and Designs, an Italian fashion design house, for additional assistance in apparel design. Though the retailer established in-house designing, it does not manufacture any of its collections. Kamal Bose, General Manager, Sourcing and Merchandising, ITC Lifestyle, explains, "Companies are primarily following three models for outsourcing - completely controlled, partnership and buyer-supplier. Our company had realized the potential of outsourcing manufacturing and gone for 100% outsourcing from the day we began operations." LRBD has around 20 vendors from whom they source their items. Apart from India, its vendors are from nearby foreign countries, such as Nepal, Bangladesh and Hong Kong. An outsourced Just In Time (JIT) manufacturing facility for `quick response' located in Bangalore is LRBD's prime strength.
On the supplies network, ITC does best what it has practised for years together. It has managed to make its cigarettes reach every nook and corner of the country. Over the years, ITC has developed a flexible supply chain for its LRBD. By putting into practice concepts like JIT Production, Full Truck Load (FTL) and Regional Distribution Centres (RDC), ITC has managed to significantly cut cost in its supply chain. The award, `Best Supply Chain Practice-Organized Retail' for 2006 further supports this fact. Since LRBD's suppliers are spread across India, it has no compulsion of keeping the major production facilities and the central warehouses nearby to its locations. LRBD has set up regional distribution centers for each of the four zones - Delhi, Kolkata, Bangalore and Pune; established strategically in important cities of all the four regions of India - North, East, South and West respectively. Since these locations are near major markets, LRBD is able to supply the products as and when they are required. It replenishes all the stores in the major markets within 24 hours and all over India within 48 hours of order placement. "Our decentralized model has grown in significance with the advent of the Large Format Retailers (LFR). If the retailer's store shelves are empty, we can fill them up before the others can arrive (which might take days)," examines Sanjeev S Khanna, Manager, Logistics, LRBD. With its Electronic Shelf Labels (ESL) and Radio Frequency Identification (RFID), ITC can keep track of the changes in the stock easily and take necessary action in minimum time. With the help of technology in logistics, ITC is further planning to cut the cost in its supply chain side and deliver more value to the consumers.
ITC's strong presence in the FMCG sector in the country comes from cottage business and Small and Medium Enterprises' (SME) entrepreneurs, and not from its own manufacturing facilities. The support that ITC provides through its facilities of Research and Development (R&D) and marketing should be noted as ITC's effort to enhance the competence of SMEs. Its notebooks are outsourced from vendors in Tamil Nadu and incense sticks (Agarbattis) are made in association with Sri Aurobindo Ashram Udyog, Pondicherry and ITC's matchboxes are made in cottage industries of South India. Similarly, all its packaged food and powders are also outsourced to SME manufacturing facilities spread across the country. ITC assists its manufacturers in maintaining highest level of hygiene with Hazard Analysis and Critical Control Points (HACCP) certification.
Not just manufacturing, ITC has also been hailed for the way it developed FMCG supply chain, a task that is considered to be the toughest by the FMCG companies. It has integrated all the manufacturing facilities, godowns and warehouses exceptionally well all across the vast spread of the country, utilizing all the knowledge that it has acquired from decades of experience in agribusiness. All these have grown in the recent past, forcing it to find better methods of supply chain management. To find alternatives, ITC is trying to build an IT infrastructure to bar code the FMCG produce even before it reaches the retailers so that it would be easy to track all the products and manage its facilities and inventories in a better way.
While ITC's competency lies in supply chain management, Future Group's lies in its value-based volume business it holds across its formats. It has 98 Big Bazaar outlets spread across the country in 59 cities and receives a massive 110 million footfalls per annum. Being a reseller that sources products in bulk, it has managed to maintain a margin from its sourcing activities. Further, to strengthen its agri-products sourcing, Future Group has purchased 70% of Adhaar, a hub of agri-products, from Godrej. This was brought through Future Ventures, Future Group's venture capital arm. It is supposed to exploit the rural retailing chances and at the same time help Future's retail ventures to maintain a constant supply of agri-products. For in-house electronics brands, such as Sensei and Koryo, it has a sourcing alliance with Indian electronics major Videocon. As a part of its global sourcing, Future Group has set up purchasing centers in Hong Kong and China, the first attempt of its kind by an Indian retailer. It sources both perishables and non-perishables from these places. A huge part of Future Group's private labels are sourced from China. In garments, private labels of Pantaloon are manufactured in its own manufacturing facilities located at Mumbai and Gurgaon. This backward integration has helped the group largely in maintaining its bottomline.
To translate sourcing efficiencies into logistics management, Future Group's supply chain arm, Future Logistics Solutions Limited (FLSL) was incorporated as a separate entity. FLSL even serves external business parties in finding logistics solutions by acting as a distribution intermediary and as a wholesaler. The fact that not many organized players are there in the wholesale distribution chain management market is an added advantage for FLSL. Its initiatives of providing all logistics services from warehousing, transportation, international logistics, reverse logistics and distribution are sure to enrich the profits of the Group. The company plans to lease 7.5 million sq. ft. for its business to increase the warehouse area and build an efficient IT infrastructure.
The sourcing model of RRL is vastly different compared to those of ITC and Future Group. RRL has a tie-up with ITC Choupal Fresh for an uninterrupted supply of fruits and vegetables. Apart from this, RRL has tied up with US-based fresh fruit and vegetable suppliers—Dole and Chiquita—and meat retailers - Sadia of Brazil and Doux of France. The association with these foreign players is supposed to give the requisite technological and process expertise to the growing fresh food formats of Reliance Fresh and Reliance Delight. Reliance has also set up rural sourcing hubs in states like West Bengal, Punjab, Haryana, Uttaranchal and Himachal Pradesh for sourcing grains and milk products.
Reliance Digital has plans to source televisions from Videocon to introduce private labels. Reliance has plans to set up its sourcing office in China to source electronic and footwear products in large quantities. For Trends, the apparel speciality chain, RRL has its own manufacturing facilities for the private labels. It has also tied up with Sixty Group, an Italian design shop, to sell its brands through Trends. Footprint, the footwear chain, is also sourcing from international players. In order to actively promote its private labels, Reliance is sourcing heavily from domestic footwear exporters. Some of its stock is sourced from China too. Reliance also intends to tie up with some more famous international brands to assure their presence in India. For the jewelery retail initiative, RRL sources from across the country varying from regional kaarigars (regional term for goldsmiths), as well as established design houses, in order to make its collection suit every occasion. Moreover, it has tied up with 37 manufacturing partners for various kinds of jewelery.esigns for its Reliance Jewels showrooms. Reliance Wellness is all planning to sign up a deal with Cipla, a major pharmaceutical manufacturer. If this materializes, Cipla will supply generic pharmaceutical products to Reliance Retail, which will sell them under its private label at its outlets. Reliance's bigger retail formats, Reliance Super and Reliance Mart are also supposed to source heavily from China for their private labels.
To resolve worries in supply chain management, which is one of the worst problems for Indian organized retailers, Reliance has signed a Memorandum of Understanding with UK-based supply chain management major, Wincanton. But recession has corroded RRL's expansion plans and Wincanton is unsure about the deal. The operation was supposed to start in the beginning of 2009, but nothing significant has happened even by mid-2009.
With innumerable retailers to sell its FMCG brands and exclusive stores for LRBD, ITC has every chance to win the retail game. But its competitors, RRL and Future are not far behind. RRL is betting heavily on its stand-alone speciality stores through its retail conglomeration model. But it is unsure whether Indians will accept the model. Future group has already proved its success but the changing consumer preferences and global recession has dimmed its glory of store-in-store formats and seamless malls.
With decreasing footfalls and reducing profits, organized retailers in India are unsure whether they are following the right format and models of their business. The question seems to be too difficult to be answered because the models, which are initially appreciated, also seem to be losing their charm in no time. The three retailers are in the experimentation mode to strike the right balance. In the wake of declining footfalls, all the three retailers are considering plans to supply their private labels and other merchandise to kirana stores. They expect twin benefits out of this move - to leverage their supply chain network for earning incremental revenue and to push their private labels through kirana shops for wider exposure. While ITC is a leader in FMCG products and also sells through kirana stores, RRL and Future Group are also planning to sell their private labels through small unorganized retailers. Experimentation of models with Indian consumers is quite expensive as it is difficult to deal with large number of customers. Many of the major organized retailers are also waiting for the government to allow 100% FDI in multi-brand retailing. Once it is allowed, Indian organized retailing will be altogether a new story. Only time will tell which retail business model would be able to sustain and survive the swift changes in consumer behavior.

Indian Mutual Fund Industry

Indian Mutual Fund Industry : Winds of Change

 

By announcing the setting up of trading platform for mutual fund units in the exchanges, Sebi has automatically opened the mutual fund window to millions of potential investors from the rural and semi-urban areas. This is an indication that the investors are all set to rule in the fast-growing mutual fund industry.

 

A very recent circular issued by the Sebi created big news in the mutual fund circles. In another paradigm shift, Sebi announced a dedicated trading platform for the mutual fund products on the major stock exchanges. The din that was created in the distributor and advisor circles after the announcement of the ban on entry load (a charge levied while selling mutual fund products) a few months back had not settled down completely, when the above new announcement hit the mutual fund industry. The writing is on the wall for the intermediaries in the mutual fund industry. Shape up or ship out. Even the fund houses got a clear message. Reorient policies for investor benefit. It is evident that investors are set to rule.

The beginning

Before examining the two big recent events, along with many other investor-friendly initiatives of the regulator, that have shaken many in the mutual fund industry, let us peruse the issue from scratch. In the last 18 months, Sebi made news on several occasions when they released as many as 22 circulars with a strike rate of more than one a month (may be a record), touching almost every issue of the mutual fund business and possibly hitting every participant of the industry barring one, `the investor'. The given Table highlights the major circulars issued by Sebi to the mutual fund industry.
The pace and intent are clearly visible. The number of circulars, the wide coverage of various facets of mutual fund business and micro management of certain issues clearly spell the depth of importance given by Sebi. As it is seen, it involves everyone who is associated with this industry. The genesis of the current new `investor-friendly avatar' dates back to a period prior to October 2008, when things were moving fast in the mutual fund industry. The pace was visible and felt. The Assets Under Management (AUM) growth was phenomenal then. The number of new entrants evincing interest in this industry was encouraging. The new fund offers were pushed at great speed towards investors. Several varieties of existing products were offered. Above all, one community was smiling all the way with roaring business. That was the `distributor or advisor' fraternity, a vital intermediary in the mutual fund setup. Things were smooth when the first jolt was felt around the October 2008 liquidity crisis. In order to overcome the crisis, when redemptions were pressed by some large entities on or ahead of schedule, leaving small investors' interest highly risky, Sebi must have got the first wake up call for a major overhauling. Since then Sebi has not looked back. While many other micro events might have equally convinced Sebi towards the new thrust to protect investors, October's was possibly the trigger. The pace shifted to the regulator side, and since then there was no looking back. Who is the loser? Will investors truly benefit? Are we going to see the same growth in the industry? How is the landscape likely to change in the future? These are some of the questions we must answer. We discuss the two major salvos of Sebi first, before trying to answer the questions and predict the future scenario.

Entry load

The first major salvo of Sebi was to scrap the entry load with effect from August 1, 2009. Entry loads are upfront payments from investor's pocket along with his investment in a specific mutual fund scheme. The entry load paid is passed as commission to the distributor/ agent, either wholly or partly or by supplementing further amount, by the Asset Management Company (AMC) for the service rendered by him in collecting the payment. By scrapping this, Sebi empowered the investors in deciding the commission paid to distributors. Before this, the distributors earned a fixed sum on mutual funds irrespective of performance. Those were times, when investor investments were more through inducement than knowledge. This led to constant churning across schemes and hampered long-term asset creation, which might have forced Sebi to issue this diktat. While some other reasons might have equally prevailed, this one appears to be the most important one.
The effect is that it has already altered the dynamics of the mutual fund industry. The impact has already started showing in the AUM of the mutual funds. The AMCs have begun to reorient their strategies. More time is spent in marketing existing funds than the new ones. Some have diverted the resources to other avenues like PMS etc. to keep the net revenue intact. The distributors, who by far have made the maximum noise, have come to terms with the new environment and have initiated steps to augment infrastructure, knowledge, systems, etc. to earn rightfully. In the new scheme of things, the distributors now prefer to push alternative products, especially the high incentive insurance products. For survival, many distributors have now offered to provide several services across various financial products.
Voluntary service from distributors and advisors to sell mutual funds has virtually stopped. The investors who got used to the `perceived' free service are shying away from paying, even if they are offered genuine service. The `rich' AMCs have devised new methods to pay the distributors, albeit lower than before, by dipping into their coffers, and aim to continue to collect funds the inducement way. The new process may not last long. This increased expense, lack of organized distribution channels, and decline in profitability may force reconsideration and may also force some smaller fund houses to quit the business and could result in industry consolidation. However, ultimately it is the good fund performance that would rule the market.
Automatic inflows would be seen only when the investor becomes knowledgeable, and he understands that quality service needs to be paid and it is the good performance that is going to augment his wealth. We know that money chases better returns. Obviously, this fact would force investors sooner or later to shift money to better performing funds. Investor education is important here. It is a challenge for everyone, including the regulator. Investor education is the joint responsibility of all fund houses, Association of Mutual Funds of India (AMFI) and the regulator, and in fact of the government and every entity who believes that mutual fund industry growth is an important requirement for the overall healthy investment setup.

MF products on stock exchanges

In what we can as a second salvo, the regulator Sebi, in its most recent and landmark announcement, pronounced the creation of separate mutual fund trading platform on the stock exchanges. It has opened a new transaction point for the investor. This one being the easiest way of buying and selling mutual fund units, which can be done over phone. Units purchased or sold will be credited or debited to the investor's dematerialized account, just like the way the shares are traded today; with similar convenience, even redemptions can be pressed. Obviously, the required formalities are to be completed. This means an investor can have just one consolidated demat account showing all his mutual fund holdings and equities as well. At present, liquid funds and systematic investment plans are not available on stock exchanges. The broker needs to be certified by the AMFI and has to apply for the trading platform.
The numbers of Indian cities where one can buy and sell MFs would go up straightaway to about 1,500, up from about 300. Possibly, Sebi did not want to wait for mutual funds to take the initiative of setting up offices in the Indian hinterlands. Alternately, it can be viewed as Sebi wanting to signal financial inclusion.
For the mutual fund, this is an opportunity to tap a new source of inflow. It is the mutual fund house that would be the biggest beneficiary if it clicks the way Sebi thinks. An MF would save on the cost of printing and dispatch of account statements if the transaction is done on a stock exchange. The same goes for printing application forms. Now, under a new setup, since one can place an order to buy or redeem units over the phone, there is no need to fill any forms. The savings would amount to crores of rupees, with the amount significantly large for the biggies. This amount can be spent productively towards investor education or for other productive avenues.
The decision might be another blow for the mutual fund distributors and Individual Financial Advisor (IFA) who are already struggling with the no entry load norms, especially the ones who do not have enough infrastructure or those who have nil infrastructure. The weak ones are set to perish and only the fittest and the efficient will survive. Interestingly, the stock broking fraternity might see mutual fund distribution as a new line of business. It could also give brokers a different profile of potential customers for their business.
A big advantage for a stockbroker would be the advantage of directly being able to debit the client's accounts, much like the banks, which a normal MF distributor was not having. Going forward, this would lure distributor- broker tieups owing to the presence of tremendous synergies for both.
It is feared that what Sebi has taken away from the distributors, it has returned to the brokers. In the earlier era, most distributors were pushing products for commissions and promoted churning. Now it is felt that the brokers would do no different job because brokers are not expected to give an expert advisory call. Therefore, the tendency of investors to trade without knowledge would still remain in the new era. In fact, now it would be a convenient world for investors with a wider reach.
Another issue that might be open for discussion is the brokerage that would be charged by the broker when an investor transacts a buy/sell/both in the exchange trading platform. Unless brokers charge a lower rate for MF schemes as compared with direct equity, an investor would not be much interested in transacting through the exchange. Also, any grievance at the brokers' end is a new problem for the investor. Add to this, the cost of advice that the broker would charge. The overall cost would be higher, as the opportunity cost of time for a broker is much higher as he is already very much engaged in his business and requires him to take the mutual fund business seriously enough to invest time and effort.
Another fear is that MF units would be treated like stocks by investors. If stock-like activity is seen, then AUM volatility is likely to be high. And fluctuating AUM is not good for fund management and frequent buying and selling increases transaction costs and affects returns.

Other issues

In the changed setup, post-entry load ban, many investors were put to great discomfort whenever they wanted to switch investments from an AMC to the other. Investors were required to get an NOC (No Objection Certificate) from the old distributor, in case he decided to change the distributor or were to apply directly at AMC. This created lot of hardships to investors. The old distributors avoided issue of NOC because they would be losing the trail commission once the investor switches to another distributor. Post-entry load ban, giving away even the trail is simply going broke for many. This required the intermediation of the regulator. Sebi in its most recent circular has sent a terse warning to entities concerned to desist from insisting on NOCs.
Among other measures, Sebi has directed asset management companies to have a systems audit conducted by an independent CISA/CISM auditor at least once in two years. The asset management activity is mostly technology-driven and hence the requirement of the audit. This systems audit report and compliance status should be placed before trustees of the mutual fund and that the report/findings along with trustees' comments should be communicated to Sebi. Audit of the entire system ranging from front office, back office, fund accounting, financial accounting and its integration would be done.
Sebi has also announced exit load rules, which bars mutual funds from having different exit load structures for various classes of investors. This measure is definitely aimed at helping small investors. Certain AMCs deliberately kept lower exit load for big investors. This was affecting returns of small investors. Sebi also introduced norms on valuation of debt securities, simplification of offer documents and Key Information Memorandum (KIM), etc. which all are investor-friendly.

Future prospects

So many changes so fast might be the first remarks of anyone who is associated with the industry. But if one understands the underlying notion, it would be evident that the changes have happened with a clear thought process. For instance, with the announcement of the setting up of trading platform for mutual fund units in the exchanges, Sebi has automatically opened the mutual fund window to millions of potential investors from the rural and semi-urban areas. With the entry load ban, Sebi has helped investors save cost and enhance returns.
When Sebi imposed entry load ban, distributors chased higher commission and suddenly switched to marketing insurance products. It automatically implies that all these days distributors sold mutual fund products with sole financial objective. In India, investors listen to the distributors and inducement way of selling prevails. Investor education is the only cure.
Going forward, investor education initiatives would therefore increase, and investors in future are likely to make more informed investment decisions. Investor expectation would change from chasing highest returns to sensible investment planning. Only knowledgeable financial planners would survive in future. Investors would start gauging the performance based on risk. Therefore in future, risk adjusted returns would be the benchmark of performance in investors' eyes.
Understanding of products would automatically improve with investor education. Investor meetings would be more frequent for a fund marketing personnel. Brand building in the MF industry would gain prominence. And it is brands that would forge stronger relationships with investors. Mobile, Internet and possibly television would become dominant platforms for information and trading.
The new environment would see more consolidation in the mutual fund industry. The one who would invest in their brands, people and technology would survive. Cost reduction along with investor education would be assigned top priority. Services will be top notch and for that to happen best technology would be invested upon. Sooner or later, an investor would be able to buy and sell mutual fund units using his mobile phone. As such, the initiative has already begun with the listing of mutual funds on stock exchanges.
The future of mutual funds in India is very bright, though it has paused owing to the structural change that is underway. If one believes that the goal of `financial inclusion' would be met realistically, tremendous expansion of the industry can be visualized.
Some may complain about the pace of change during the last one year, but the new environment is here to stay, foremost to protect investor interest than any other one thing. The regulator would play its part, ensure effective MF governance. Every initiative of Sebi is towards empowering the investor. Investors are henceforth set to rule in the fast-growing mutual fund industry.

Indian IPO Market : Poised for a Big Leap!

Indian IPO Market : Poised for a Big Leap!

 

If 2009 was the year of capital erosion, 2010 could well be the year of capital raising! Thanks to the recovering capex cycle and surging domestic expansion activities, the year is all set to witness a frenzy of capital raising activities via IPO, right issues and overseas issues.

 
The collapse of Lehman Brothers has led to the rechristening of the financial events as `Before Lehman Brothers' and `After Lehman Brothers'. The spiralling events in the last two years have uprooted the conventional wisdom and, in many cases, forced the entities to go back to the basics. Banks have gone back to deposit and lending business, investors have gone back to long-term investments, (re)understanding the risk-reward relationship (high yield = high risk), and in most cases, nations have become `police states'. As developed economies started getting into recessionary trends, overseas investment in emerging markets flew back to its original source. For example, Indian equity market witnessed net sales of $12 bn in 2008. As the demand for investment ideas started drying up, the primary market—IPO market—in India became much quieter. To stretch Schumpeter's idea of `innovator' to `break the cycle'—the government's stimulus package did just that. Globally billions of dollars were pumped into the economies to encourage spending and the investing attitude of public. A cursory look at the Indian IPO market over the last two years shows that economic fundamentals continue to dominate the financial markets. Domestic demand, consumption, savings, and investment are the main currents flowing under the glamorous facade of financial markets.
During 2008 (see Table 1), India Inc. raised Rs 185,526.3 mn ($~4bn) through IPOs. This amount is negligible, compared to almost $30 bn mopped up through IPOs in the US during the same period. Even during the turbulent times, Visa Inc. managed to launch a massive IPO of $17.9 bn. In 2008, a majority of the Indian IPOs were concentrated in the energy sector. The crude oil prices were hitting a new high everyday, so also the commodity prices. Reliance Power managed to make a debut just before global meltdown in January 2008. As the year 2008 progressed, the US continued to record negative GDP growth. The UK government forecast a worst recession in decades, and capital flight from emerging economies gained momentum. Domestically, in the backdrop of falling exports and employment, growth in industrial production (IIP) reached its nadir (see Chart).
During 2008, 35 IPOs were canceled and/or postponed (see Table 2). A majority of these IPOs belonged to engineering, financial and IT-related sectors. The first axe of global recession fell on these sectors, as companies decided to go slow on new capex and expenditure. A sharp fall in domestic manufacturing was also evident from the fact that as global demand—especially from developed markets—slowed down, domestic companies put a cap on capex.
Despite the stimulus packages announced globally, including by India, year 2008 remains one of the worst years for financial markets. The volatility continued for the Indian market because of the general elections in May 2009. The possibility of a hung Parliament kept investors at bay and away from the Indian capital market. The domestic consumption took a hit, as fears of unemployment widened. During 2009, 42 IPOs were canceled and/or postponed. A majority of those belonged to the real estate sector. The demand for new and existing housing in tier 2-3 cities had started waning and companies were trying to tap the primary market to fund the existing and new projects. Low domestic consumption also badly hit the FMCG sector, where some IPOs were canceled and/or postponed. Interestingly, many companies involved in gems and jewelry business tried to tap the capital market, but in vain.

Signs of revival

A historic win by the UPA government ensured the possibility of a stable government for the next five years. Meanwhile, the government stimulus package started working like a panacea. Globally and domestically, demand started picking up gradually, especially in the second half of 2009. A major push in the IPO market was witnessed during this period. The theory of decoupling became more evident, as the Indian and Chinese economies continued to show a stronger growth rate, though lower than the previous year. During 2009, 17 IPOs worth Rs 151,568 mn were launched. Though engineering and energy sectors continued to dominate the IPO market (in terms of value), new economy sectors such as media, hotels and IT also showed their presence. Companies involved in shipping and oil and gas exploration also tapped the primary market to mop up funds for expansion. The growth in India's exports was the sharpest in late 2008; over a long period of more than 12 months, exports growth turned positive in November 2009. The growth recovery in industrial production was well-rounded, as mining and electricity also contributed positively towards the overall growth.
Global liquidity is very comfortable; in fact, it is a debatable whether to call it liquidity or savings glut. Indian equity market has witnessed a net inflow of ~$11 bn of overseas funds. The prospects of the emerging economies, including India, remain brighter. In fact, investing in the BRIC economies has become the `call of the decade'. Year 2010 is likely to witness a flush of IPOs in the Indian market. However, it is important to remember and practice the lessons from the last two years. Going back to the basics, due diligence remains the main priority for the investors.

NOTE ON PLACES AND AREAS IN ANCIENT INDIA

NOTE ON PLACES AND AREAS IN ANCIENT INDIA

1. AIHOLE near Badami with rock cut and structural temples of Western Chalukya period, is favous for the temples of Vishnu, Ladkhan and Durga. It furnish examples of a well developed Deccan style of architecture. The other three styles of ancient India being Nagar Dravidian and Vesara. It is also famous for its inscription or Prasasti composed by Ravikirti, the court poet of Pulkesin II. This prasasti mentions the defeat of Harsha by the Chalukya king, Pulkesin II, a r rare event of a Northern emperor or ruler being defeated by a ruler south of Narmada.

2. ACHICHHATRA identified with modern Ramnagar in Bareily district of U.P. was the capital of North Panchala in the first half of first millennium B.C. Exacavation grove that it had moats and ramparts around it, it has revealed terracottas of the Kushan period, and also remarkable siries of coins of second century A.D. Its importance lies in the fact that it was on the important ancient Indian northern trade route linking Taxila and Inidraprastha with Kanyakubaj and Sravasti, Rajgriha and Pataliputra indicating that trae could be one of the reasons for its prominence.

3. AJANTA near Aurangabad (Maharashtra), is famous for wonderful Buddist caves, and also paintings probably executed only b the Buddhist monks. Paintings of exceptional skill belong to the period between 2nd century B.C. and 7th Century A.D. One of the cave well depicts the reception of a Persian mission in the Chalukya court of Pulkasin II indicating cultural and commercial contacts with the Persian empire.

4. ANUPA in Narmada valley mentioned in the Nasik inscription (dated 115 A.D.) of Gautami Balasri, mother of the Satvahana ruler Sri Satakarni (Circa 72-95 A.D.) was conqured bythe latter from the sakas, and was a bone of contention for long between the Sakas and the Satvahanas. The sakas were responsible for driving the Satavahanas. Into the south -eastern and western direction. In other words, Anupa signifies the earlier homeland of the Satvahanas.

5. APARNTAKA (Aparanta), identified withk Konkan, i.e. North western region of the Deccan, was a bone of contention between the sakas and the Satavahanas and is mentioned in Nasik Inscription (dated circle 155 A.D.) of Gautami Balasri. Gautamiputa stakarni conquered it from theSakas. According to the Mahavamsa, the third Buddhist council deputed Great elder Dharamarakshita to do missionary work in Aparantaka region. Literacy evience locates the Abhiras in this region, who probably were responsible for identifying Lord Krishna as the diety of cowherd and milk-maids.

In matters relating to trade and commerce it was famous for the production of cotton textiles in ancient times and ated, as the hinterland for the ancient ports of Bharukachechha and Sopara.

6. ARIKAMEDU near Pondicherry, known to the periplus as podoka, wa port of call in Sangam Times (200 B.C.) on the route of Malaya and china. Recent excavation during which a veryrich treasure of Roman beads, glass and coins, and of Roman and south Indian Pottery were found have proved that it was once a prosperous settlement of Western trading people, including the Romans.

The favourable balance of Payments position ejoyed by India in its trade with Rome is amply revealed by the rich haul of Roman gold coins.

7. AYODHYA also known as A-yu-te or Abhur of Saketa on the river Sarya (Modern Ghaghra) in Faizabad district of U.P. was the earliest capital of the Kosala Janapade and was the seat of the epic hero, Rama. It is also known for its short Sanskrit inscription of king Dhandeva of Kosal (belonging probably to the first century B.C.) which refers to the conducting of two Asvamedha sacrifices by king Pushyamitra. From the economic view-point it was located on the important trade of Tamralipti-Rajagriha-Sravasti which passed via Ayodhya.

8. AMRAVATI near modern Vijayawada (Andhra Pradesh), is famous for its stupa and as an art center flourishing under the Satavahanas and the pallavas. Second century works of art khow mastery of stone sculpture. Amravati bas-reliefs have the representation of ancient Indian vehicles - the boat or the ship or the cart, and of a foreign mission (like the Ajanta cave paintings) of marchants being received by a king. In ancient times is was an important center of trade, and ships from here sailed to Burma and Indonesia.

It is maintained by some scholars that a human figure, for the first time, that a marble stone relief was executed.

9. ASIKA (Probably on the left bankof the river Krishna), is mentioned in the Nasik inscription (dated circe 115 A.D.) of Gautami Balasri, it was conquered by the Satavahana rular Gautamiputra Satakarini (………) The latter fact reveals that Gautamiputra Satakarni gained a stronger hold of southern India which proved beneficial because of the continuing Saka pressure even after his victory against the Sakas. King Kharavela of Kalinga also made a claim of its conquest.

10. AVANTI (western Malva) one of the 16 Janapadas of 6th century B.C. with its capital at Ujjain; struggle dhard against Magadhan imperialism but in vain. According to Buddhist traditions, Asoka, the Mauryan ruler, served as the Viceroy of Avanti, while he was a prince.

Since Malwa region is important politically, and economically it became a bone of contention between the Sakas. And the Satavahanas, Rashtrakutas and Pratiharas in ancient India. It is through this region that the importanttrade routes from eastern and western Indian passed Via Ujjain to the important Western ports Bharukachchha (Broach) and Soparaka (Sopara).

11. ANGA one of the 16th Janapadas of 16th century B.C. Lay to the east of Magadha with Champa, near Bhagalpur, as its capital. Some of the Anga monarchas, like Brahmadatta, appear to have defeated their Magadha contemporaries. Subsequently, however, Magadha emerged supreme leading to the establishment of the first empire of ancient India. In other words, the conquest of Anga by Magadha was one of the stepping stones for the Magadhan Empire
 

12. BARHUT in central Indian is famous for Buddhist Stupa and stone railings which replaced the wooden ones in the Sunga period. Barhut sculptures depict the visit of king Ajatasatru to the Buddha. Barhut along with Sanchi and Bodh-Gaya represent the first organized art activity of the Indian people as a whole. Furthermore, all these clearly indicate the transition of sculpture from wood to stone.

13. BARYGAZA OR BHARUKACHCHA (Broach) was the oldest and largest northern most entrepot on the mouth of the Narmada river in modern Maharashtra. It handled the bulk of the trade with western Asia (Jataka stories and the Periplus mention it). It was also one of the district head quarters of the Saka rulers. According to Jain traditions, it was the capital of the Saka empire. It was international trade that mode Barygaza important in ancient India.

14. BARBARICUM was an important port in the Indus delta, receiving Chinese furs and silks through Bacteria for export to the West. It added to the growing prosperity of India in the first century A.D.

15. BADAMI (MODERN NAME FOR VATAPI) in Bijapur district was founded by pulkesin I as an early capital of the Western Chalukyas. It as a hill-fort and an exquisite cave temple of lord Vishnu excavated during the rule of Manglesh, the Chalukya ruler. Huen-tsang visited it.

16. BODH-GAYA situated six miles south of Gaya in Bihar on the western bank of the Nilajan river, was the place where the Buddha attained enlightenement. It was part of the Magadha janapada.

17. BANAVASI (north kanara in Karnataka) also known as Vaijayanti, was the capital of the Kadambas who were defeated by the Chalukya king Kirtivarman during the last quarter of the 6th century A.D. According to the Ceylonese chronicles Ashoka sent a mission to Deccan with the Monk Rkshita who went as far as Banavasi.

18. BRAHMAGIRI in Chitaldurg district of Karnataka, is remarkable for its continuity of cultural heritage extending from Neolithic (stone-age culture) to megalithic (early historic culture-3rd century B.C. to Ist century B.C. with possible links with Mediter anean and Caucasian Megaliths) revealing ancestory worship and animism pointing to the practice of cist and pit burials. It is the site of one of the two minor rock edicts of Askoka. These edicts suggest the provability of Ashoka entering the Sangha as a full monk after two and a half years of his conversion to Buddhism.

19. BURZAHOM in Kashmir Valley near Srinagar, is associated with megalithic settlements (dating 2400 B.C.) where the people lived on a plateau in pits using tools and weapons of stone (axe) and bones. (The only other site which has yielded considerable bone implements is Chirand, 40 km. West of Patna on the northern bank of the Ganges and using coarse grey pottery. The information that we gather from the two places, recently discovered, throws light on the proto-histroy of India).

20. BAMIYAN an important Buddhist and Gandhara Art center in Afghanistan in the early Christian centuries, has tall rock-cut Buddha statues. The ancient trade route linking north western India with China passed through it. It was the capital of the Hunas in the 5th and the 6th centuries A.D.

21. BELUR with a group of Hoysala monuments including the famous Chennakesava temple (built around 1117 A.D.) represents an art which applies to stone the technique of the ivory worker or the goldsmith.

22. CHIDAMBARAM a town in south Arcot district in Tamilnadu is famous for its great Hindu Siva Temple dedicated to Nataraja, i.e. Siva in his aspects of cosmic dance. The Nataraja sculptures are esteemed as tehgreatest specimens of sculpture in the world. Also, Chidambaram bears evidence to the birth as well as the development of Shaivism to begin with insouthern Indian and its consequential spread to the whole of India.

23. CHEDI OR CHETI one of the 16 Janapadas of 6th century B.C. roughly corresponds to modern Bundelkhand and adjacent tracts. It lay near the Kanuna, its metropolis was suktimati to Sottihivatinagar.

24. CAAMPA the capital city of the Anga Janapada on the border of Bengal was of great commercial importance in ancient times; for it was a river port from which ships would sail down the Ganges and the coast the south India, returning with jewels and spices which were much in demand in the North. By Mauryan times, with the eastward expansion of Aryan culture, Tamralipti replaced in in importance. An interesting feature of this is the fact that a Hindu Kingdom with the same name came into existence in the mainland of South east Asia. Indeed it is difficult to say how exactly this name came to be transplanted in South-east Asia.

25. DASAPURA modern Mandasor in western Malwa, was disputed between the Sakas and the Satavahanas. Its famous Siva temple of the guild of Silk weavers, was built during the reign of kumar Gupta I (414 A.D.-455 A.D.) the institution that is responsible for building the Siva temple indicates the climax of Indian trading and commercial activities in ancient Indian. It also reveals that manufacture of silk was no longer the secret monopoly of China and it had taken roots in India by the 5th century A.D.

26. DEVAKA modern Dokak in Nowgong district in Assam, a frontier country which paid tribute to Samudragupta claiming the payment of tribute by Kamarupa goes along with Devaka. However, it is to be borne in mind that Harisena's Prasasti is of doubtful historical validity. The one significant thing that is known is the fact that no ruler of the northern India could ever conquer the Assam region but instead Burma conquered it and it was wrenched from Burma by the British in 1829 by the Treaty of Yandavoo.

27. DEOGARH in Jhansi district of U.P. is famous for its Dasvatara Vishnu temple belonging to the Gupta period. The temple may be considered as most respresentative and well known example of the early sikhara style of temple architecture in example of the early sikhara style of temple architecture on the panels of its walls. Deogarh is one the temples with which began the temple architecture of India. In particular, the Shikhara is the unique feature of the northerntemples compared to those of southern Indian.

28. DWARAKA Legends associate this place toYadavas after the battle of Kurukshetra. According to mythology Dwaraka was destroyed by the huge tidal wave as per the forewarning of Lord Krishna. In very recent times Dr. S.R.Rao with the cooperation of the Department of Ocenography, did carry out under-sea explorations. Some artifacts including stone anchors have been found dating back to the Harappan period. The exploration is still continuing.

29. ELLORA With three distinct groups of rock-cut architecture associated with Buddhism, Jainism and Brahmanical Hinduism, is famous for its temple of Kailash (Siva) "an entire temple complex completely hewn-out of the live rock in imitation of a distinctive structural form". The temple ws built by the Rashtrakuta king Krishna I (758-773 A.D.) and is one of the most magnificent examples of Dravida architecture with its four principal characteristic components, viz. Vimana, Mandapa, nandi mandapa and gopuram. The Ellora sculptures are famous for their liveliness.

30. ERAN Besnagar district (Madhya Pradesh) is famous on account of Eran Inscriptions dated 510 A.D. This inscription mentions the practice of Sati, first of its kind. It is also famous for its colossal board, the zoomorphic incarnation of Lord Vishnu.

31. ELEPHANTA beautiful little island off Bombay, with latest cavetemples in Ellora style was famous for their sculpture, especially the great Trimutti figure of Siva, emblem of the Maharashtar Govt. representing the highest plastic expression of the Hindu concept of divinity.

32. GANDHARA with Taxila and peshwar as two capitals, in earlier and later ancient periods was one of the 16 Janapadas (6th century B.C.) onthenorth-western frontier of India. Under the Kushans it become a popular center of Mahayana Buddhism and Gandhara art- Indian images both secular and religious (the Buddha and Lord Krishna) but in long floating garments, as is the tradition of early Greek sculpture. It was a meeting ground for several civilizations and mercantile communities belonging to different countries.

33. GORATHAGIRA A hill fortress on the modern Barabar hills in the Gaya district of Bihar, was attacked by King Kharavela of Kalinga in the 8th year of his reign. This fact is known from the Hathigumpha Inscription of king Kharavela.

34. GANGAIKOND-CHOLA-PURAM was capital city of the greatest Chola ruler Rajendra Chola I (1012-1044 A.D.) who built it after the successful Chola military camaign upto the bank of the river Ganges in 1021-22. Currently the city lies inruins and its enormous tankshas dried up.

35. GIRNAR hill near Janagarh in Gujarat, where a Mauryan governor is said to have built an artificial lake, known as Sudarsana lake which Rudradaman, the Saka ruler renovated. Rudradaman's Sanskrit Inscription was located here and it is the first Sanskrit inscription It had been a sacred place to the Jainas since remote times because Jain shrines are also located here.

36. HASTINAPURA aim district Meerut in U.P. (known as Asandivant) was the capital of the ancient tribe of the Kurus. Later the floods destroyed it. Recent excavations prove that the people of this region used iron by about 700 B.C. that is the Aryans had learnt the art of making iron which revolutionized the whole socio-economic pattern of Aryan communities. It was this fact that lay at the base of the Economic Revolution that India passed through between 1000 B.C. to 600 A.D. with far too many consequences like the emergence of an empire, various kinds of guilds, brisk trade both with in and with out the country and links with buth South-east Asia and the Roman empire.

37. HATHIGUPHA on Udaigir hill, three miles from Bhuvaneshwar in the puri district of Orissa, is famous for an inscription in post-ashokan character, engraved inside the elephant cave. It depicts the meteoric and dazzling carer of Jaina king Kharavela, the 3rd ruler of the Cate dynasty. It also refers to the building of an equeduct in Kalinga by one of the Nanda rulers of Pataliputra. The importance of this inscription lies in the fact that it is the first important sign-post in fixing the chronology of ancient India.

38. HAILBID is famous for Hoysalesvara temple (Hoysala period) designed and built by Kedoroja, the master-building of Narasimha I. The infinite wealth of sculpture over the exterior of this temple makes it one of the most remarkable monuments of the world. Known as Dwaramudra it was the capital of the Hoysalas.

39. INDRAPRASTHA identified by Jain scholars with the site around the enclosure of the Purana Oila (Delhi) one of the sites of painted Grey Ware (10th century B.C.) finda, was the legendry capital of the Pandava brothers of the epic Mahabharata, which they lost to the Kauravas having been defeated in the gambling match. After the second battle of Tarain (1192) Moh. Gauri appointed Outbuddin Aibak as his deputy at Indraprastha which became a base for Aibak's successful operations against north Indian states.

40. KURA one of the 16 Janapadas of 6th century B.C., was in the neighbourhood of Delhi. Among its towns may be mentioned Indraprastha and Hastinapur. This place clearly brings home the truth to us that Mahabharata was not purely fictional story but some amount of historical evidence is embedded in the story. As a matter of fact, Vasudeve Krishna is now known as a historical personality as borne out by the writings of patanjali and other sources of evidence.

41. KAJANGALA in Raj mahal district in Eastern Bihar, where king Harsha (606-647 A.D.) held his court while campaigning in eastern India.The Chiense pilgrim Huen-Tsang first saw Harsha here.

42. KAPISA It is the region near Kabul, probably Kipin as referred to by Chineses writers. The presiding diety of the city according to Chiense writers was zeus. The Greek god. The gold and silver coins issued by the Greek kings have been discovered from this region in big numbers. The Greeks were the first to issue gold coins in India. These coins testify to the growing trade links between India and Central Asia and China and also with the Roman world. Far more important is the fact that these coins testify to the gowing worship of Vasudeva-krishna or the Bhagavata cult which later repened as Vaishnavism.

43. KIPIN is identified with Kapisa or Kafirstan in Kashmir. It indicated the wide region know in earlier times as the Mahajanapada of Kamboja. It was ruled by the Sakas, the Kushans and the Hunas in succession. The name Kamboja reappears as the name of kamboja, an important of the mainland of South-East Asia.

44. KAMPILYA was the capital of southern Panchalas, one of the tribal communities of the Aryans. This fact proves that the Aryans, to begin with in India, lived as various tribes. The tribes were in constant war with eachother culminating in the emergence of the Magadha Empire.

45. KUSAMDHVALA (Patliputara) Gargi-Samhita alludes that in the 2nd century B.C. the Yavanas (Indo-Bacterians) having reduced Saketa, Panchala, and Mathura reached kusumdhvana. Demetrios, was, most probably, the Yavana leader. He was defeated or he retired withouth fighting.

46. KASI one of the 16 Janapadas of the 6th century B.C. with its capital of the same name. It was also called Varanasi (69). It greatly prospered under the rule of Brahmadatta.

47. KOSAL one of the 16 janapadas of the 6th century B.C. had three different capitals (Saketa, Ayodhya and Sravasti) in three different periods. It region roughly corresponded to modern oudh.

48. KUSINAGAR (Kusinara ?) moder Kasia, in Gorakhpur district in UP was a small town where the Buddha attained Mahaparinirvana. It was one of the two capitals of the Mall Janapada in pre-Buddhists times. It was visited by Ashoka and the Chinese pilgrim Fa-hien.

49. KANYAKUBJA (Kanauj) on the bank of river Gangas in UP rose to prominence during the time of Mukhar is, Harsha and Gujara-Pratiharas. Under the pratiharas, Kanauj successfully resisted the Arabs. In the 9th century A.D. It was disputed among the Palas of Bengal, Prathiharas, and the Rashtrakutas. It was situated on a very important trade-route linking north-Western regions of India with Prayaga, Kasi, Vaishali, Pataliputra, Rajagriha, Tamralipti.

50. KAUSAMBI identified with the villagesof Kosam near Allahabad was one of the earliest cities, so prominent that Anand, the Buddhist monk, though it important enough for a Buddha to die in. Recent excavation it here unearthed historically and culturally important terracotta figures. It was built in the shape of a trapezium and was the capital of the vastse Janapada. One of the Ashokan Pillars was located here. It was also an inscription of the Kushan monarch.

60. KARNA-SUVARNA : refers to the region of Bengal and some parts of Bihar and Orrisa, fuled by sasanka in the early 7th century A.D. Harsha conquered the region from him after 619 A.D.

61. KANHERI In Thana district near Bombay, has rock cut Chaitya shrines with elaborately decorated railings belonging to the third century A.D. One inscription of the last great ruler of the Satavahana dynasty. Yajnasri Satakarni is found here. Kanheri Buddhist Tank inscription makes mention of Matiemonial relationship between the Sakas and the Satavahanas. It was the chief center of Buddhism in Rashtrakuta times. Faint traces of the art of paintings may be traced in the caves of Kanheri.

62. KANCHI modern canjeevaram, south-west to Madras is reckoned among the seven sacred cities of the Hindus. It was an important center of Jaina culture in the first half of the first millennium A.D. It was one of the south Indian kingdoms conquered by Samudragupta. It was visited by Huen-Tsang. It rose to prominence in 7th century A.D. Under the Pallava king. It possesses the famous Kailashnath temple (built by Pallava King Narsimhavarman - II) and Vaikuntha perumalla (constructed sometime after the kailashnath). The Kailashnath temple is a landmark in the development of dravida temple style with its characteristic components-vimana, mandapa gopuram and an array of vimanas along the walls of the court, i.e. peristyle cells.

63. KAVERIPATTANAM known as Puhar, was the Chola capital and chief port in Sangam period (200 B.C.- 300 A.D.) with a large colongy of foreigners. It was an important trade center. Ships sailing from here to South-East Asia. A long poem on this Chola capital is the part of the famous Sangam work pattupattu (Ten Idylls).

64. KURUKSHETRA near Thaneswar, to the north of Delhi in Haryana, was the site of the great battle of Mahbharata. This battle fought between the Kauravas and the Pandavas, formed the basis of the story of the greatness of India epics the Mahabharata. It is in this great war that Krishna prached his gospel of the Gita, to the Pandava hero Arjuna who saw his own elders and kishmen arranged himself for the fith and then early decided to renounce and retire. Krishna gave him the message of disinterested perfomance of duty i.e. renunciation in action but no renunciation of action. That a great war ws fought between the cousin brothers - Kauravas and Pandavas is quite possible.

65. MANYAKHET (modern Malkhed in Hyderabad region) was the capital of Rashtrakuta Amoghavarsha I in the 9th century A.D.

66. MAHABALIPURAM is today a tiny coastal village 65 kms. south of Madras. This port-city was founded by Pallava king Narasimhavarman in the 7th century A.D. Pallava kings created an architecture of their own which was to be the basis of all the styles of the south. In fact Mahabilipuram, the Pallava art with its monolithic temples (rathas) and rocks sculptured in the shapes of animals with a wonderfully broad and powerful naturalism, with whole cliffs worked in stone frescoes, immenspictures unparalleled at the time in all Indian in their order movement and lyrical value. The Descent of the Ganges, the unique masterpiece of Pallava art was surely one of the most remarkable compositions of all time (in which is portrayed the Ganges coming down to earth, with gods, animals men and all creation in adoration). The shore temple built by Rajasimha represents one of the earliest examples of structural temples. the Pallvava monuments at Mahabalipuram symbolize not only the transition from rock-architecture to structural stone temples but also significantly the completion of the "Aryanisation" of South India during the Pallava period.

67. MADHYAMIKA is identified with Nagari near Chitor in Rajasthan. Patanjali alludes toYavana (Indo-Bacterian) invasion of Madhyamika.

68. MUSHIKAS on the lower Indus with its capital at Alord. Was the greatest principality at the time of Alexander's invasion. Its king mousikanas submitted to Alexander after brave resistance.

69. MATIPUR modern Mandawar in district Bijnor of UP was a center of Hinayana Buddhist studies in the 6th and 7th centuries A.D. Huen-Tsang stayed here for some time.

70. MADURAI popularly known as the city of festivals, was the seat of the 3rd Sangam and was till the 14th century the capital of the Pandyan kingdom which had sea-borne brade with Rome and Greece. It is famous for the Minakshi temple.

80. MACCHA or Matsaya, was one of the 16 janapads. The Matsyas ruled to the west of the Jamuna and south of the Kurus. Their capital was at Viratnagar (modern Bairrat near Jaipur).

81. MALLA was one of the 16 Janapadas of the16th century B.C. The territory of the Mallas was on the mountain slopes probably to the north of the vijjain confederation. They had to branches with their capitals at Kusinagar and Pawa. But in pre-Buddhist time the Mallas were a monarchy.

82. MUZIRIS modern canganors in Kerala at the mouth of the river Periyar, an important port in Sangam period (20 B.C. - 300 A.D.) abounded in ships with cargoes from Arabia and Roman world. Later literature speaks of Roman settlements and a temple was built here ni honour of Augustus.

83. NAGARJUNAKONDA is Krishna Velley, harboured a Neolithic community with stone-axe-culture and primitive mode of agriculture. With a few classical accidental looking sculptures in proves trade and culture contacts with the Roman world. Survival of a Buddhist stupa proves it to be a Buddhist center in early Christian centuries. The beginning of Hindu temple architecture in south India are best traced in the remains of the early brick temples of the Ikshavakus excavated here anticipating the Nagara, Dravida and Vasars styles.

84. NASIK (also known as Naiskya and Govardhan) is famous for exquisite rock-cut Buddhist temple (of the period 2nd BC - 1st A.D.) with an engraved iscription of Gautami Balsari recording the achievement of the Satavahanas ruler Gautamiputra Satakarni). A large board of silver coins bearing the name, the titles of Nahapana were discovered at Jogalthambi very close to the Nasik suggesting the defeat of the Saka ruler bythe Satavahana knig. It is also famous for the Chaitya and Vihar as pan-du-lonea.

85. PITHUNDA on the Godavari, was the capital of the Avapeople or the Avamukta which was conquered as Samudragupta.

86. PADMAVATI was Nag capital is Gwalior region. Its king Ganapati Naga was defeated by Samudragupta.

87. PRATISHTHANA (Paithan) at the mouth of the river godavri in the Aurangabad district of Maharashtra, was the capital of Satavahana kings. It was an important commercial mart linked with Sravasti.

88. PURUSHPURA (modern Peshawar) was the capital of Kanishka's vast empire and the center of Gandhara art. It became the chief center of Buiddhist activity and studies with building of number of huge Chaityas and viharas and with one stupa. The Chiense pilgrims refer to a many storied relic-tower in which some relics of Buddha were enshrined. It is here that the icons of Buddha and other Hindu gods were first finely carved. In provided the meeting place of the marchants of India, China, central Asia, Persia, and the Roman world.

89. PATTADAKAL near Aihole Badami is famous for magnificentrock-cult and sculptures temples in Chalukya and Pallava style. The number of such temples is ten - four in the northern style and six in southern. Most famous of these temples is lokesvara temple (now called Virupaksha).

90. PANCHALA was one of the 16 janapadas of the 6th century B.C. Its area correspondent to modern Bundelkhand and the portion of the Central Doab. It had two divisions northern and southern, the Ganges forming the boundary line. Their capitals were Ahicchatra and Kampilya respectively. One of the early Panchalas kings, Durmukha, is credited with conquests in all directions.

91. PUSHKALAVATI i.e. the "city of lotuses' in Afganisthan to the north of the river Kabul (modern Charasadda) in the district of Peshawar was conquered by Alexandar. It was the old capital of western Gandhara. A gold coin (belonging to the 2nd century B.C.) with the city goddess (Lakshmi) holding a lotus in her right hand and an appropriate Kharoshthi legend "Pakhalavati devata" had been discovered here pointing to the popularity of Indian goddess. It remained under the rule of the Indo-Greeks, the sakas and the Kushana. It was an important link in India's trade relations with central Asia and China.

92. RAJAGRIHA moder Rajgir, near Patna in Bihar was and ancient capital of Magadha under Bimbisara and Ajatsatru. It was here that first Buddhist council was held after the death of Buddha. The cyclopean walls of the this old commercial town are among themost remarkable finds in India.

93. SAKALA modern Sialkot, capital of Menander, was the refuge of Buddhist monks. It was here, according to Buddhist tradition, that Pushyamitra Sungha declared to give an award of 199 dinars for the head of a Buddhist monk.

94. SANCHI :near Bhopal famous for a Buddhist stupa and for one of Ashoka's Minor Pillar Edicts. Sanchi sculptures along with Bharhut Godh-Gaya represent the first organized art activity of the Indian People. There are reliefs of the Jatkas on the stone walls around the stupa. Sanchi revealed historically important inscription of the Satavahanas and the Gupta kings. Kakanodbota probably was the ancient name for Sanchi, which was inhabited by the tribal people Kakar, and was conquered by the Samudragupta.

95. SRAVASTI moder Saket-Mahet on the borders of the Gonda and the Bahraich districts of U.P. On the river Rapti - It was a famous center of trade in ancient times, from where three important trade routes emanated linking it with Rajagriha, Pratishthana, and Taxila. It was one of the early capitals of the Janapad of Kosal. Later, it served as the provincial headquarters of the Gupta kings. Fa-hien visited it.

96. SAKETA region around Ayodhya, was invaded by Yavanas (Indo-Bacterin) is attested to by Patanjali.

97. SARNATH near Varanasi, is the place where the Buddha delivered his frist sermon in the Deer park, this event being known as the "Turning of the Wheel of Law". It is the site of the famous Ashokan Pillar of Polished sand-stone whose lion capital was adopted by the people of Free India as the state emblem. It was also the famous seat of Gupta sculpture. Gupta plastic art reached its perfection e.g. the seated Buddha in preaching posture.

98. SRAVANA-BELGOLA in Hasan district of Karnataka, is famous for the monolithic statue of Gometeswara- 85fit. High, erected in 980 A.D. by Chemundya Rai, the chief minister of the Ganga king Rachmal.

99. SOPARA port town known to the Periplus and ptolmey, carried most of the ancient Indian trade with foreign countries; gradually it began to lose its importance to Berygaza and Barharium- Ist century A.D. onwards. It ahs survived as a village 40 miles north of Bombay.

100. TOSALI (Dhauli) near Bhuaneshwar in Puri district of Orissa, was the seat of one of the Mauryan viceroyalties as well as one of the fourteen major rock edicts of Ashoka. The Tosali rock edict refers only to the conquered province.

101. TRIPURI now village near Jabalpur, was the capital of the Kalachuri dynasty. The Kalachuri kings became independent in 10th century A.D. In 1939, Tripuri had the distinction of being the venue of the 54th session of Indian National congress.

102. TAMRALIPTI Tamluk in the Midnapur district of Western Bengal was one of the most important port-towns of ancient India. Outlet to south-east Asia when there was trade boom.

103. TANJORE is famous for Rajarajeswava or Brihadeswara temple of lord Shiva which is the largest and tallest of all India temples with its vimana towering to a height of nearly 200 feet over the Garbhagriha with Pyramidal body in thirteen tiers. It was the seat of Chola government in the 9th century A.D. and later of an independent kingdom after the fall of ther Vijayanagar Empire. Weight of the cap 80 tonnes. Conceived on a gigantic scale. Stone relief as minute as that of jewelers.

104. THANESWAR near Kurukshetra, to the north of Delhi in the province of Haryana, was the capital of the Pushyabhuti dynsty. The kingdom of thanesar emerged into a powerful state under Harsha's (606-647 A.D.) father, Prabhakarvardhan who was in constant warfare against the Huns on the frontier and with the rulers of Malwa. Harsha shifted his capital from Thaneswar to Kannauj. According to Heun-Tsang the people of this city were specially inclined to trade. Thus thanesar was a principal center of trade. It was attacked by Mahmud of Ghazni in 1014 A.D. it is here that ahmad Shah Abdali first defeated the Maratha army in 1759 boding to the Maratha collapse at Panipat in 1761.

105. UJJAIN in Madhya pradesh was the capital of Avanti (6th century B.C.) and Chandragupta II, and was one of the provincial capitals of the Mauryas. It was the modal point of two ancient trade routes, one from Kausambui and the other from Mathura, its chief exports being agate, jasper and carnelian. It has an observatory built by Maharaja Savai Jai Sing II (1686-1743).

106. URAIYUR also known as Aragaru,on the river Kavari, was for some time the Sangam chola capital, was famous for its pearls and muslin, the latter being as think as the slough of the snake.

107. UTTARMERUR is a village of Tamil Nadu where nearly two hundred inscriptions belonging to Pallava and Chola periods indicating the nature and working of the village administration have been found. According to Uttarmerur inscriptions Pallava and Chola villages enjoyed maximum of autonomy inadministrative matters with popular village assemblies like the Ur, Sabha, Mahasabha or Nagaram looking after the village affains without any interference from royal officers. The village of Uttarmerur was divided in thirty wards.

108. VATSGULMA modern Basim in the Ahoka district in the South of Ajanta, was the capital of a Junior branch of the Vakatakas who are mentioned in the Ajanta cave inscriptiona No. XVI.

109. VIDISA modern Besnagar, near Bhilsa, in East Malwa, was a part of Sunga empire with Agnimitra, the sone of Pushyamitra Sunga as viceroy. The Vidisa guild of ivory worker was famous for these workers carved the stone sculpture on the gateways and railings surrounding the Sanchi Stupa. It indicates commercial prosperity. It was also famous for the Garuda Pillar Inscription which testified its erection by a Greak ambassabor named Heliodorus in honour of Vasudeva Krishna, the god of the Bhagavatas.

110. VAISHALI indentified with modern Basali in Muzaffarpur district of Bihar, was apulent and prosperous town in the Buddhist period. The second Buddhist Councial was held here. It served as the capital of lichchavis. Later, Ajatsatru annexed it to this kingdom. Ambapali, the famous charming courtesan, lived here and hosted to the Buddha at one time and later she became a convert to Buddhism.

111. VENGI (in Andhra Pradesh) one of the south Indian kingdoms probably joined the Sangha conquered by Samudragupta. It was the capital of the eastern Chalukyas, and was disputed between the Chalukyas and the Pallavas