Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you

RBI

Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

Australia passes law to make Google, Facebook pay for news

Australia’s laws forcing Google and Facebook to pay for news are ready to take effect, though the laws’ architect said it will take time for the digital giants to strike media deals. The Parliament on Thursday passed amendments to the so-called News Media Bargaining Code agreed between Treasurer Josh Frydenberg and Facebook chief executive Mark Zuckerberg on Tuesday.

In return for the changes, Facebook agreed to lift a ban on Australians accessing and sharing news.

Rod Sims, the competition regulator who drafted the code, said he was happy that the amended legislation would address the market imbalance between Australian news publishers and the two gateways to the internet.

All signs are good, Sims told Australian Broadcasting Corp.

The purpose of the code is to address the market power that clearly Google and Facebook have. Google and Facebook need media, but they dont need any particular media company, and that meant media companies couldnt do commercial deals, the Australian Competition and Consumer Commission chair added.

The rest of the laws had passed earlier, so they can now be implemented.

Google has already struck deals with major Australian news businesses in recent weeks including News Corp. and Seven West Media.

Frydenberg said he was pleased to see progress by Google and more recently Facebook in reaching commercial deals with Australian news businesses.

But Country Press Australia, which represents 161 regional newspapers across the country, has raised concerns that tiny publications outside large cities might miss out.

Sims said he was not surprised that the platforms would strike deals with the large city businesses first. I don’t see any reason why anybody should doubt that all journalism will benefit, Sims said.

These things take time. Google and Facebook don’t have unlimited resources to go around talking to everybody. I think this has got a long way to play out, he added.

Chris Moos, a lecturer at Oxford University’s Business School, said the latest amendments amounted to a small victory for Zuckerberg. Moos said the legislation would likely result in small payouts for most Australian news publishers. But Facebook could again block Australian news if negotiations broke down.

The legislation was designed to curb the outsized bargaining power of Facebook and Google in their negotiations with Australian news providers. The digital giants would not be able to abuse their positions by making take-it-or-leave-it payment offers to news businesses for their journalism. Instead, in the case of a standoff, an arbitration panel would make a binding decision on a winning offer.

Frydenberg and Facebook confirmed that the two sides agreed to amendments to the proposed legislation. The changes would give digital platforms one month’s notice before they are formally designated under the code. That would give those involved more time to broker agreements before they are forced to enter binding arbitration arrangements.

A statement Tuesday by Campbell Brown, Facebook’s vice president for news partnerships, added that the deal allows the company to choose which publishers it will support, including small and local ones.

Frydenberg said his department will review the code within a year to ensure it is delivering outcomes that are consistent with the government’s policy intent.

India expected to harvest record wheat, rice crops this year

wheat harvesting

India is likely to harvest a record 109.24 million tonnes of wheat this year, the farm ministry said, further boosting stocks at government granaries that are fast running out of storage space due to more than a decade of bumper production.

Wheat output in India, the world’s second biggest producer, is expected to go up by 1.3% in the crop year to June 2021, the Agriculture & Farmers Welfare Ministry said in its second crop forecast for 2020/21.

Rice output is estimated to rise by 1.2% to 120.32 million tonnes. India is the world’s biggest rice exporter and second biggest producer.

The Agriculture & Farmers Welfare Ministry forecast this year’s total grains output at a record 303.34 million tonnes against 297.5 million tonnes produced in the previous year.

Output of rapeseed, the main winter oilseed with the highest oil content, is expected at 10.4 million tonnes, higher than previous year’s production of 9.1 million tonnes.

Production of chickpeas, a variety of pulses, is likely to be 11.62 million tonnes against 11.08 million tonnes harvested in the previous year.

Any increase in rapeseed and chickpea production cuts imports of expensive vegetable oils and pulses – the commodities that are mostly in short supply in India, the world’s biggest importer of both cooking oils and protein-rich pulses.

Also, a string of bumper rice and wheat harvests – thanks to high-yielding seed varieties, increasing farm mechanisation and good weather conditions – have bumped up local supplies.

Brim-full granaries have hardly any extra space to accommodate new season harvests that will start trickling in from next month, potentially exposing food stocks to rains and rodents.

Despite bumper harvests, the government of Prime Minister Narendra Modi is grappling with discontent in the countryside, with tens of thousands of farmers protesting about three new agricultural laws introduced in September.

DU admission may be based on combination of scores in board exams, common entrance test

The Delhi University is considering admission based on the performance in the Central University Common Entrance Test (CUCET) as well as board exams for its undergraduate courses, according to officials. However, the weightage of the two scores in determining the eligibility of candidates is yet to be decided.

“The Education Ministry had announced CUCET in the new National Education Policy (NEP). A committee has also been to recommend modalities for a high-quality aptitude test which would be common for admissions to all central universities. “Once that is done, we will be having weightage for both CUCET and board examinations with 50 percent for each,” a top official of the varsity said. “A final decision in this regard will be taken once the modalities of CUCET are finalised,” the official added.

The National Education Policy, 2020 envisaged that the National Testing Agency will work to offer a high-quality common aptitude test, as well as specialised common subject exams in the sciences, humanities, languages, arts, and vocational subjects, at least twice every year. These exams shall test conceptual understanding. Students will be able to choose the subjects for taking the test, and each university will be able to see each student’s individual subject portfolio and admit students into their programmes based on individual interests and talents” Delhi University admissions are characterised by sky-high cut-offs every year. Last year, Lady Shri Ram College for Women had 100 percent cut-offs for three programmes, and 30 courses across colleges had cut-offs over 99 percent.

Blueshift raises $30 million funding

Rupee rallies 21 paise to 73.55 per US dollar

Blueshift, an AI-powered customer data platform (CDP), on Wednesday said it has raised $30 million (about Rs 217.4 crore) in funding, led by Fort Ross Ventures, along with Avatar Growth Capital. Existing investors including Softbank Ventures Asia, Storm Ventures, Conductive Ventures and Nexus Venture Partners also participated in the round, a statement said.

With the latest series C round of $30 million, the total amount raised stands at $65 million, it added. Ratan Singh of Fort Ross Ventures will join Blueshift’s Board of Directors.

Marketing and Customer Experience (CX) are increasingly intertwined in today’s connected world, and marketers are being tasked with understanding customers through the lens of CX data to craft personalized experiences. Traditional marketing platforms focus only on marketing response data (like clicks), and are unable to leverage CX data from across the customer journey, the statement said.

Blueshift’s SmartHub CDP platform combines the data fidelity of a CDP with the intelligence needed for marketers to make real-time decisions, it added. Blueshift will use the proceeds from this latest funding round to further accelerate its global growth, cementing its leadership position in the CDP space, it said.

“With the increased urgency towards digital transformation, we have seen an increased demand for a SmartHub CDP, that can not only unify silo-ed data, but also unify silo-ed experiences, Vijay Chittoor, co-founder and CEO of Blueshift, said.

India second most cyber attack target in Asia Pacific in 2020: IBM

Companies must gear up against cyber-risks to avoid facing disruption

India was the second most attacked country by cyber criminals after Japan in Asia Pacific in 2020, according to an IBM report released on Wednesday.

In 2020, IBM Security X-Force observed attackers pivoting their attacks to businesses for which global COVID-19 response efforts heavily relied, such as hospitals, medical and pharmaceutical manufacturers, as well as energy companies powering the COVID-19 supply chain.

“India was the second most attacked country in the Asia Pacific. Attacks on India made up 7 per cent of all attacks X-Force observed on Asia in 2020. “Finance and insurance was the top attacked industry in India (60 per cent), followed by manufacturing and professional services,” the report said.

Ransomware was the top attack type, accounting for around 40 per cent of total cyber attacks. In addition, X-Force observed digital currency mining and server access attacks had hit Indian companies last year.

“We also witnessed cybercriminals using relief efforts and public health information as spam lures including targeted attacks on critical components of the vaccine supply chain. These all remain issues in 2021,” Sudeep Das, Security Software Technical Sales Leader, IBM Technology Sales, India/South Asia, said in a statement.

RBI to conduct simultaneous sale-purchase of govt securities next month

The Reserve Bank of India (RBI) on Wednesday announced open market operations for sale as well as purchase of government securities for Rs 15,000 crore each.

On a review of current liquidity and financial conditions, the central bank has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of Rs 15,000 crore each on March 4, 2021, RBI said in a release.

Simultaneous purchase and sale of government securities under OMOs, popularly known as Operation Twist, involves purchasing G-Secs of longer maturities and selling equal amounts of G-Secs of shorter maturities.

On March 4, the RBI will purchase four government securities of different maturity dates aggregating to Rs 15,000 crore and sell two securities aggregating to the same amount using the multiple price auction method.

Eligible participants can submit their bids in electronic format to the RBI on its core banking solution (E-Kuber) system between 10 am to 11 am on March 4. Only in the event of system failure, physical bids would be accepted, RBI said.

RBI said it reserves the right to decide the quantum of purchase/sale of individual securities, accept bids for less than the aggregate amount, as well as to accept or reject any or all bids either wholly or partially without giving any reasons. The names of successful bidders will be announced on the same day.

RBI will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly functioning of financial markets, it added.

NSE technical glitch: Communication from exchange and regulator was very sketchy, say experts

A technical glitch halted trading on the National Stock Exchange (NSE) for nearly four hours on February 24, which later led to an extension of trade on the bourses. The glitch was noticed when exchange rates stopped updating at 10.08 am, following which NSE was forced to halt trading in cash as well as futures and options segments at 11.40 am.

Trading resumed at 3.30 pm and the market remained open until 5 pm. BSE also extended trading hours until 5 pm. Although, the NSE blamed connectivity issues for today’s fiasco, experts were of the view that the exchange and market regulator SEBI did not communicate the glitch and subsequent extension to traders efficiently.

To discuss the issue, CNBC-TV18 spoke to Alok Churiwala, MD of Churiwala Securities, JN Gupta, Former ED of SEBI and Nithin Kamath, Founder and CEO of Zerodha.

Watch the video to find out what they had to say.

BARC will not lose its relevance due to the on-going scandal: CEO Sunil Lulla

India’s I&B ministry has told TV viewership tracking agency BARC not to resume delivering TV ratings for the news genre until its examination into deficiencies in the existing TRP system are concluded.

The ministry says it is still studying the recommendations submitted by a committee in this regard.

Meanwhile, BARC India CEO Sunil Lulla says he is 101 percent confident BARC will not lose its relevance due to the on-going scandal.

Also Read: I&B Ministry asks BARC not to resume news ratings till committee’s report examined

Speaking to CNBC-TV18’s Anuradha Sengupta, Lulla said the agency would continue to enhance its processes to ensure data is authentic and reliable.

Watch video for more.

TRAI invites suggestions on encouraging R&D in telecom, broadcasting sectors

Sector regulator TRAI on Wednesday invited suggestions from industry, academia and public on encouraging Research and Development in telecom and broadcasting sectors. The Telecom Regulatory Authority of India (TRAI) has sought stakeholder inputs by March 15, on the issue, according to a statement.

TRAI conducted an online brainstorming session on ‘encouraging research and development in telecom and broadcasting sector’ on Wednesday with academia, industry and institutions, it said. TRAI Chairman P D Vaghela, who chaired the session, highlighted the importance of indigenous R&D in telecom and broadcasting sectors, which will boost domestic manufacturing, and offset equipment imports in these sectors.

The TRAI chief said that telcom and broadcasting sectors have a great potential and will play an important role in making India a USD 5 trillion economy. Suggestions received during the deliberation included incentivising R&D efforts in India, need for structured approach to create conducive environment for R&D focus, and adoption of indigenous technologies by the industry among others.

To achieve these objectives, a high-level committee comprising senior officials from academia, industry and research institutions, will be set up under the aegis of TRAI. “…TRAI invites valuable suggestions from various stakeholders…academia, telecom, and broadcasting industry, related research organisations, students, startups and general public for encouraging R&D in telecom and broadcasting sectors in India,” TRAI said.

Goldman-based ReNew Power to merge with RMG II

Out of the total 2,050 MW capacity, the National Thermal Power Corporation (NTPC) implemented the work for 600 MW of solar PV projects, SECI implemented 200 MW, while KREDL implemented 1,250 MW. (Representative Image -- Source: Reuters)

ReNew Power has agreed to merge with blank-check company RMG Acquisition Corporation II, giving India’s biggest renewable power producer an enterprise value of USD 8 billion and a listing on NASDAQ. The biggest deal in the fast-growing clean energy sector is expected to close in the second quarter, a company statement said on Wednesday.

The deal will be financed with cash proceeds of USD 1.2 billion, including USD 855 million in investments from serial blank-check dealmaker Chamath Palihapitiya, funds managed by BlackRock and Sylebra Capital. A blank-check company is a developmental stage firm that does not have established business plan.

“The transaction would further bolster ReNew’s leading position in solar and wind energy generation for the Indian market, by funding medium-term growth opportunities, as well as paying down debt,” it said. This is the first major overseas listing of an Indian company via the SPAC (special purposed acquisition company) route, which is a big hit currently on Wall Street.

A SPAC is a shell or blank-check company and its sole aim is to raise capital via an IPO (initial public offering) to acquire a private business at a later date and then take it public without going through the traditional route of IPOs. In this transaction, RMG Acquisition Corporation II is the blank- check company. It raised USD 345 million in itsDecember 2020 IPO. Founded in 2011, ReNew Power counts Goldman Sachs and Canada Pension Plan Investment Board (CPPIB) among its prominent investors. It owns and operates 5 GW of solar and wind energy projects.

The merger comes at a time when India is targeting 450 GW renewable energy capacity by 2030. “The Indian renewable energy sector has grown rapidly over the last decade,” said Sumant Sinha, founder Chairman and CEO of ReNew. “During this time, ReNew has been a driving force in making sure that the sources of this growth are sustainable, and also economically competitive.” “Over the next decade, ReNew plans to maintain its track record of market share growth. Over time, we will expand our capabilities even further, with utility-scale battery storage, and customer-focused intelligent energy solutions,” he said.

RMG II CEO Bob Mancini said the firm was looking to partner with a company driving change on a global scale, with a proven track record, and best-in-class management. “We found that company in ReNew,” he said.

The pro forma consolidated and fully diluted market capitalization of the combined company would be USD 4.4 billion. “Proceeds (from the deal) will be used to support ReNew’s growth strategy, including the buildout of its contracted, utility-scale renewable power generation capacity, as well as to reduce debt,” the statement said.

ReNew’s management, and its current group of stockholders, including Goldman Sachs, CPPIB, Abu Dhabi Investment Authority, and JERA Co, among others, who together own 100 per cent of ReNew today, will be rolling a majority of their equity into the new company, and are expected to represent 70 per cent of the effective company ownership upon close of the transaction. The firm’s leadership will remain intact, with Sumant Sinha as Chairman & Chief Executive Officer of the combined company, overseeing its strategic growth initiatives and expansion. The Board of Directors of the combined company will include representation from ReNew’s existing stockholders, RMG II, and independent directors. Mancini will be the appointee from RMG II to the Board.

While Goldman Sachs and Morgan Stanley are financial advisors to ReNew Power, Bank of America is the financial advisor to RMG II. Commenting on the deal, Gaurav Singhal, managing director, India Investment Banking, Bank of America, said “The transaction re-emphasises strong investor interest in Indian renewable energy sector with massive growth potential. The deal saw participation from some of the world’s top ESG (environmental, social and governance) investors and opens the door for many more SPAC transactions from India across sectors.” .