Gap set to enter India in May, partners with Arvind Lifestyle Brands

NEW DELHI: San Francisco-based clothing retailer Gap is set to enter India with its first store in Delhi in May in partnership with domestic textile company Arvind Lifestyle Brands, which has appointed Oliver Kaye as the business head of the division dealing with the American brand.

This will be Kaye’s second stint in India as he was appointed as the head of Calvin Klein India in 2008 and held the post for a month short of two years.

“We primarily zeroed in on Kaye because of his rich international experience in retail and his earlier stint in India made it more compelling for us to have him lead the Gap division,” said J Suresh, managing director and CEO of Arvind Lifestyle Brands and Arvind Retail.

He added: “We have multiple divisions under Arvind Lifestyle. Gap will be another division, for which we have recently appointed Kaye as business head and general manager.”

Kaye will be operating out of Bengaluru, unlike his Calvin Klein days, when he was based out of Mumbai.

Before this appointment, Kaye was heading the “non-food strategy implementation” at supermarket chain Tesco in Britain. At Tesco, Kaye also led the e-commerce business and retail operations (non-food).

Arvind Lifestyle is looking at opening 40 franchise-operated Gap stores in the first few years, said Suresh, adding that Gap stores will offer clothes for all sections including men, women, kids and babies from the very first store in Delhi from the first day. “The pricing is based on what is right for India,” he added.


What central government employees can expect from the 7th Pay Commission?

Sounds odd, but the highest paid Indian bureaucrat till 1959 was the railway board chairman and not the cabinet secretary. The top rail bureaucrat, who was earlier called chief commissioner of railways, drew a basic salary of Rs 3,250 per month, a smart 8.3% more than that of the cabinet secretary, the senior-most bureaucrat in India. But as the fortunes of Indian Railways dwindled over the years its market share in freight movement has shrunk from 90% in 1950 to 30% now the clout of the rail bosses and their corresponding rank and pay have also slipped.

Today, the railway board chairman and eight other top rail babus receive a salary equivalent to a government of India secretary, a scale which as many as 230 Indian Administrative Service (IAS) and 40 Indian Police Service (IPS) officers also draw. For good measure, the cabinet secretary now not only draws a higher salary than the railway board chairman, his superior rank comes with better perks including a bungalow at Prithviraj Road located in the heart of Lutyens’ Delhi.

Meanwhile, the Indian Revenue Service (IRS), a 5,541 officers-strong cadre responsible for collecting direct taxes in India, now claims that IRS should get better pay and perks than IAS. The entry-level salary for all Group A Central services is the same now, but thanks to two more increments and faster promotions, IAS maintains an edge over others. The basis for this claim? “Today, IRS — not IAS — is the revenue collector for the government. So, it’s logical that that the edge given to IAS should be given to us,” says Jayant Misra, Income-Tax commissioner and general secretary of IRS Association. In a 58-page-long memorandum to the 7th Central Pay Commission (CPC), which is now examining a pay hike for Central government employees, the IRS Association argued that the primary reason for higher pay to the Indian Civil Service (ICS) of the British era and its successor service, IAS, was that they were revenue collectors. But now, the dynamics have changed, they claim.

7th pay Commission

IRS has argued that the net direct tax collection has grown 9.35 times between 2000-01 and 2013-14, an impressive piece of statistics in the backdrop of only 5.4 times expansion of GDP during the corresponding period. Also, the cost of revenue collection in India is one of the lowest in the world, which according to IRS officers is yet another reason for demanding a good deal from the CPC. For every Rs 100 they collect, the tax department spends merely 57 paisa. In percentage terms, the cost of revenue collection in India is 0.57% as against 1.58% in Japan, 1.35% in France, 1.17% in Canada and 1.05% in Australia.

Welcome to the behind-the-scenes manoeuvring before the Big Sarkari Pay Hike. With a new pay scale for 36 lakh Central government employees, and also pensioners, likely to come into effect from January 1, 2016, the officers and non-gazetted staff of various services have been lobbying hard to get a good deal from the 7th CPC. Unlike in the private sector, the pay hike in government is a once-in-10-years-affair, making every CPC, right from the first that submitted its report in 1947, a hugely powerful agency. No doubt, government employees have to undergo an annual appraisal process called Annual Performance Appraisal Report (APAR), but that exercise is important only for promotion, and not for any pay hike. Government employees do get a regular hike in dearness allowance, a measure meant for offsetting inflationary pressure on their earnings, but at the end of the day it is the CPC that fixes the bureaucrats’ pay for 10 long years.

That’s precisely why officers and staff of every service can’t afford to ignore the CPC. Constituted in February 2014 under the chairmanship of retired Supreme Court judge Ashok Kumar Mathur, the 7th CPC has an economist and two bureaucrats as its members. Most of the employees’ associations have already had at least one round of talks with the Commission. And some are waiting for Round II.

The Ripple Effects

A cursory glance at the memorandum submitted by IPS Central Association on behalf of Indian Police Service (IPS) will throw light on the importance attached to a pay commission. The 137-page memorandum, a copy of which was reviewed by ET Magazine, is well designed and comparable to any standard report prepared by a global consultancy firm. PV Rama Sastry, an Inspector General of Police at National Investigation Agency (NIA) and secretary of IPS Central Association says the memorandum is the result of intense in-house research, factoring in the macro environment of growth, development, equity and justice vis-a-vis the role of a police officer. Though Sastry is the spokesperson of 4,720 IPS officers, the memorandum prepared by his team encompasses the role and needs of 30 lakh police personnel across India out of which 10 lakh come under the gamut of the pay commission. As the CPC recommendations are often accepted by the state governments as well, the remaining 20 lakh police personnel too may eventually benefit.

The IPS memorandum has quoted a number of reports to suggest that the tough life of a cop justifies the demand for a fatter hike. For example, it has quoted articles published in two journals Global Journal of Medicine and Public Health and International Journal of Pharma and Bio-Sciences to conclude that one of two cops in India suffers from sleep disturbances and anxiety whereas chances of cardiovascular problems increase by 38% after a person joins as a police officer. Among other demands (see What it Expects), IPS wants better life and health insurance cover, an overtime allowance and also a new perk called allowance for “un-social” hours (for duty between 8 pm and 6 am).

Railway officers too cite round-the-clock work demands as a reason for better salary. “A railway officer may be called to join duty any time during the night. The pressure always remains as it’s a 24×7 work,” says RR Prasad, an Indian Railway Personnel Service officer and secretary general of Federation of Railways Officers’ Association. The Indian Railways is a gigantic organisation with over 13 lakh employees, 16,000 of whom are officers. Both the officers and staff associations have made their representations to the 7th CPC. The officers want non-gazetted staff to get their dues but they demand the proportion of the pay of the lowest and the highestpaid employee should increase from current 1:12 to 1:18.

To be sure, a formula towards pay parity has been the hallmark of the last few pay commissions. A government entry-level peon now gets a monthly pay of Rs 14,000, if dearness allowance is factored in. Similarly, a mid-level government driver’s monthly salary, including allowances, is Rs 30,000, at least two times that of his counterpart in a private sector company. And that’s why the salary gap between the lowest and highest paid government servant has drastically decreased over the last three decades.

The pay commissions have also reduced the disparity among the officers of various services. Till the late 1980s, an IAS officer used to receive a salary that’s 25% higher than that of a Group A service officer. Today, the pay for all officers, at least at the entry level, is same. But IAS and Indian Foreign Service (IFS) officers still maintain an edge over others as their empanelment process (a step to get higher posts) is much faster.

Balancing Act

An IPS officer can become a joint secretary to government of India only two years after an IAS of the same batch can reach that level. Similarly, there has been a nine-yearlong gap in joint secretary empanelment between IAS and IRS, something many services claim is a continuation of the British legacy. Today, IAS officers at the level of deputy secretary and director at the Centre constitute about only 13% of the total officers. But as the hierarchy goes up, the percentage of IAS vis-a-vis others also rises. For example, 75% joint secretaries to government of India belong to IAS and IFS, and the percentage of IAS and IFS goes further up to 95 in case of government of India secretaries.

“The edge that the IAS has must continue. Why will a person join the IAS after quitting a job in HSBC Bank if that edge is missing? IAS officers have work experiences at Tehsil, sub-divisions, district, state and Central government levels. We interact with the political executives at all levels. IAS should remain a premium service,” says Sanjay R Bhoosreddy, a joint-secretary-ranked officer and secretary to IAS (Central) Association.

On its part, the Indian Economic Service (IES) which has a cadre strength of 511 officers, represented in 55 Central government departments, has demanded parity in pay, perks and promotions of all services, including IAS, so that the “officers deliver what they have been employed for rather than fret over their pay and promotion prospects”.

The question is how far the 7th CPC will go in changing the pay and associated service conditions like empanelment and promotions. IAS officers have pulled out a 1991 Supreme Court judgement (Mohan Kumar Singhania and Others vs Union of India and Others) where it was said that other services should not approach the pay commissions and attempt to change the rules of career progressions and push for a case for parity with the premier service. But other services are continuing their demand for pay parity and also for the creation of more departments where the IAS can’t dictate. At present, only three major ministries railways, external affairs and post are not headed by IAS but run by their own cadres. Now, IPS wants a new department of internal security headed by a cop and IRS wants a separate direct tax department headed by a taxman.

Will the 7th CPC venture into such nuances? Or will it, like the past few pay commissions have, adopt a simple formula of Multiplier 3 under which the basic salary is hiked by three times or more depending on the economic health of the nation. If that is the case, it won’t be too hazardous to make a prediction: A secretary to government of India will get a basic monthly salary (excluding DA) of Rs 2.4 lakh (current basic salary multiplied by three) and the cabinet secretary Rs 2.7 lakh from January 1, 2016. And, yes, perks, DA and other allowances will be extra.

Should you buy Sukanya Samriddhi Yojana?

The launch of Sukanya Samriddhi Yojana (SSY) by the government for the girl child has sparked considerable interest given its tax benefit and interest rate higher than Public Provident Fund. The SSY offers 75 basis points (bps) higher than the 10-year government bond as against 25 bps by the PPF. For 2014-15, the interest rate for PPF is 8.7% while the SSY offers 9.1%.

But, wealth planners believe subscribers should put money in this product along with an investment in equity products. This is because interest rates could fall in the future. Given that the investors are investing for a period of 10 years or more, a combination of equity mutual funds and SSY will generate better returns.

“Depending on their risk profile, investors could use SSY along with a combination of equity mutual funds/child funds to meet long-term asset allocation goals for their girl child,” says Vishal Dhawan, chief financial planner at Plan Ahead Wealth Advisors.

Sukanya Samriddhi

Hemant Oberoi: The man behind Taj’s cuisine all set for his dream project – a signature restaurant in Mumbai

MUMBAI: Left to himself, Hemant Oberoi usually makes do with a dal-chawal. That would count as a rare luxury though, for Oberoi is the man behind the food at some of the Taj Group’s renowned restaurants. Currently grand executive chef at the Taj Mahal Palace in Mumbai and corporate chef for the Taj luxury division, he’s set to retire in a few weeks after 41 years with the Tata-owned group.

But that doesn’t mean he’s about to get out of the kitchen anytime soon. It’s more like the next course of a rich and satisfying meal. For one thing, there’s the consultancy with the Taj that could continue for a bit. The dream project, however, is a signature restaurant in Mumbai.

“Hopefully, the restaurant will happen soon. I have not yet given it any shape, but I know it will have fresh produce and no fixed menu. Every day will be different and I would like to serve what I feel like cooking that day. The cuisine would most likely be global and fusion. Both my sons would join me as I believe the legacy must be carried on,” Oberoi, 60, told ET.

Oberoi has played a key role in setting up some of the Taj’s most valued restaurant brands Varq, Masala Kraft, Wasabi and, of course, Zodiac Grill.

Fond Memories Remain

So, while he’s looking forward, he can also be persuaded to look back a little for anecdotes about all the famous people he has served in the last four decades. “Food is all about passion, whether it is cooking it or serving it and there are so many people — who I do talk about?” said the man who’s served both JRD Tata and Ratan Tata. While JRD preferred French cuisine, Ratan Tata likes Lobster Thermidor, creme brulee, sushi, seafood and, not to forget, a great scrambled egg for breakfast. Still, Oberoi’s favourite guests all have one quality. “While Mr Ratan Tata is very particular about his food, he is one of the most humble people I have served,” Oberoi said.

He’s understandably a bit hesitant about naming people but he has fond memories of his first big wedding reception, which was that of Kumar Mangalam and Neerja Birla in 1989. Rajashree Birla and Nitin and Jyoti Kasliwal (the bride’s parents) were meticulous in their planning and generous with praise for efforts of Oberoi and his team.

“We served a 900-people sit-down thali dinner, which we did in 45 minutes. All rooms were occupied, from the Ball Room to Crystal Room, at Taj Palace Mumbai and this was all vegetarian fare,” he said. Other big weddings were those of Sahara chief Subrata Roy’s sons in Lucknow three days and 5,000 people everyday and the Bachchan son and daughter.

Former British Prime Minister John Major liked the Dum Ka Zaffrani Ghost (lamb curry) so much that he sent Oberoi a note from the UK. The recipe was sent to the Bombay Brasserie restaurant in London so it could be made and dispatched to No. 10 Downing Street whenever there was a request from the occupant. It used to be called “the John Major Curry”, Oberoi said with a chuckle. Major’s illustrious predecessor Margaret Thatcher too was a fan, as are the Obamas. “They really take the pain to thank and appreciate, which is touching,” Oberoi said.


Read Full Article at Economic Times


Global funds exploring India; seasoned FIIs dig into midcap space: Abhay Laijawala, Deutsche Equities

Nikunj Dalmia: We have seen a bumper budget session, isn’t it? The kind of Bills that have sailed through 14 bills in Lok Sabha, 17 in Rajya Sabha that is something very encouraging. Won’t it have an impact on the markets?

Abhay Laijawala: It was. But a lot of positive may have already been discounted. One must note that the market has surged over 25 per cent since the 2014 election. It has, more or less, moved in a single direction. Therefore, a lot of good news is in the price. Hence, investors now want to see the reforms translating into earnings, industrial production numbers.

Nikunj Dalmia: Until now, we were seeing more of a PE expansion rather than an expansion in earnings. But, if we look at the outperformers be it pharma names or some of these five-digit stocks like Eicher MotorsBSE -0.03 % or Page Industries — even though they are expensive, no one is letting them go; they are going up. What explains this trend?

Abhay Laijawala: That is right. Stocks that satisfy the criteria foreign institutional investors (FIIs) were looking for, have been the drivers of the market almost all the way till November of 2014.

However, since November, domestic investors too entered the market; they led a rally in the midcaps. But, as far as the large-caps are concerned, FIIs are avoiding them; they want to be sure on the earnings, corporate governance and even on catalysts’ front. Therefore, wherever they are finding certainty, they are buying into those sectors/stocks. Wherever, there are less of corporate governance-related issues, the risk is that those stocks have the potential to get richer in valuations.

Nikunj Dalmia: Are long-only funds ready to go down the ladder? I am asking this because long only funds tend to go not beyond Nifty 50 stocks. Will they look broader, let’s say the top 100 names? These funds have not gone beyond HDFC or HDFC BankBSE 0.62 % in the financial space, a TCS or InfosysBSE 2.68 % in the IT space and when it comes to pharma, Sun PharmaBSE -1.70 % and Dr Reddy have remained their preferred picks?

Abhay Laijawala: Many foreigners who understand India well have recognised that the next big drive would be seen in the midcap segment. Therefore, we are beginning to see that many of the experienced FIIs are willing to go beyond the market capitalisation cushions.

We are beginning to see that change come through. You have got to break down FIIs into the ones who understand India very well and have years of experience with them, and the ones who are new to India.

In the last three to four months, we have seen a completely new set of foreigners come into this market.

These are the global funds. They are basically benchmarked to MSCI World and MSCI International indices; they could not ignore India.


Read Full Article at Economic Times