1. Aventus Partners
Business, Financial & Human Capital
Outlook for 2011-2012
Aventus Partners

2. The Economy - Overview
We have been chugging along at a robust c. Some rub off effect at the rural
growth rate for the last 1 year of close to level on account of the farm loan
8%. The bad news hit the stands on the waiver scheme
IIP Numbers for November, which
showed that the growth engine had more d. Trickledown effect of the NREGA
or less stalled.
Inflation has been a runaway monster this
e. Low interest costs on loans for
year. The government and the RBI have
automobiles, coupled with easy
both been at their wits end trying to
disbursal of loans by banks and
contain the situation. However, you
NBFCs.
cannot have your cake and eat it too. It
has come to the point where the RBI and However, the inflation monster will soon
the government both need to take sides. be catching up with the last of the above.
Do you or do you not let a hyper inflated Increased interest rates will be the first
real estate market deflate? spoilers and will affect two wheeler loans
first. If the increasing interest rates are
We at Aventus Partners believe the
any indication, the rates will be headed
writing is already on the wall. The stance
further upwards for low end four wheelers,
of the banks and the RBI is clear - the real
and these will be into the next leg of the
estate business will need to fend for itself
slowdown that one may expect to see in
in the short to medium term. Reform the
the sector.
way you do business, or else.......It is a
strong and clear message and shows that The slowdown will have the least effect on
the regulators and the policy makers the high end of the automobile sector,
mean business this time around. where the price elasticity is the least.
These automobiles will continue to grow
Automotive sector has shown strong
at a steady clip.
growth figures, but in the coming months
in the light of the increase in interest Banking as a sector had a good run for
rates, it would be interesting to see how most of last year. They also accounted for
the market heads out from here. The about some of the problems, with their lax
growth has been robust on many counts, lending processes and the inability to
principally: grow their disbursal markets for credit.
th There is pressing need for banks to find
a. The award of the 6 pay
creative ways to branch out to new
commission( by the Centre,
sectors for lending; (especially in the light
states the PSUs and the armed
of the current stance of RBI in
forces)
microfinance sector and the situation in
b. Decent corporate sector salary the real estate market).The effective rate
increases of inflation for a large part of the last year
has been close to 10%. This does not
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3. portend well for the economy, especially
given that we are also suffering from
major imbalances in the trade account. So what is the situation going to be like in
We have a deficit of nearly 8.5% with the the next financial year?
bias on the import side. The government’s
It is going to be all gloom?
complete lack of clarity on the crude oil
pricing and taxation will have a long term The slowdown has already commenced,
detrimental effect on the fiscal. We need and the government, though it may be
to get the actual budget deficit (including able to manage an 8.5% number for this
the hole in the oil pool account) under year’s GDP growth is going to have a
control. Sweeping it off the books is not difficult time forecasting the numbers for
going to be a long term viable solution. the next year.
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4. Expectations from the Budget, 2011-12
This year, we can expect the following: markets; it will be back centre
stage.
1. A roll out of the Direct Tax Code.
While the code was formed with a 5. Expect social sector spending to
strong element of honesty in go up, keeping in view state
mind, do not expect the elections in West Bengal and
government to adhere to the Tamil Nadu, there will be a slew
philosophy of the DTC. They will of schemes announced in these 2
stick to it for a year or two, before states, along with additional
they start tweaking it again, allocations to NREGA and the
incrementally. It is far too JNNURM schemes.
tempting to not let revenue
seepage occur. 6. Wealth Tax: expect a surprise on
this front to spring up.
2. Some kind of road map on the
long pending GST rollout. With Things you can expect the Budget to
the central government tweak:
monkeying around with the
o Reduction on duties on
components of the bill and trying
agricultural imports
to give the finance minister
surreptitious control of the o The list of items to make it to the
process, we believe that finally GST list will be further pruned,
the ability of the central policy
makers to work around state o FDI In retail
governments has been
exhausted. We should expect a o Increase in FDI in Insurance
roll out of the GST this year.
o Consolidation on Central Sales
3. A partial to complete roll back of Taxes
subsidies. If the finance ministry
o Call for withdrawal of Octroi
is feeling greedy enough, expect
a claw back even. The auto
industry guys are the ones who
will be expecting the subsidies The important thing to remember is that
provided to continue, one should this will not be a big bang budget where
be surprised if they did. It is time one should expect much on the reform
for the government to have its front on capital account convertibility.
pound of flesh back.
There may also be a change in the STT.
4. A return to the FRBM Act, this Also there may be changes with regard to
was put on the back burner, after
the collapse of the global financial
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5. the tax norms and some clarity emerging speaking on this, the government may go
on tax treatment of LLPs. Broadly in for tweaking the holding structure
advantage that the LLPs have to make it
more tax efficient from the government’s
perspective.
Sectoral Influences and Outcomes
The following sectors will be at an 6. Retail players
advantage post budget:
7. Insurance Players
1. Textiles, Garments, textile
accessories, textile yarn, fabric, VSF 8. Fertilizers & Pesticides
and processing intermediataries.
Sectors that will struggle:
2. Automobile manufacturers and
1. Oil & Gas, till such time as there
auto ancillaries with an exports
is clarity on the oil pool account
focus.
2. Banks and Financial Services
3. Capital Equipment export firms;
3. Real Estate Companies
4. Infrastructure financing firms.
4. Consumer Products companies
5. IT/ITES companies
Overall Human Capital Outlook for 2011-12
1. We expect the outlook to improve Retail space, especially at the
for top talent acquisition in many farm to fork supply chain
sectors. With the coming boom in management side, with the
the infrastructure space, there will upcoming reforms in the retail
be a demand for leadership talent side. There is a distinct talent
in the domain of Energy shortage in this arena, and we
(Supercritical Thermal Power, expect a lot of talent coming in,
Hydel Power, Wind and Solar initially from overseas to
Energy). We expect demand in overcome the shortages here.
nd
these sectors to pick up in the 2
half of the year.
2. We expect an immediate upshot
on the hiring numbers for the
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6. 3. There will be a continued focus latest IRDA guidelines and
on the IT/ITES sector, given its consolidation of products, we
foreign exchange potential and believe that the sector will come
we expect to see strong numbers in for consolidation in this year.
coming in at the leadership levels, The focus for the larger, more
which can only be hampered by established players will be on
the speed of the US recovery. going public. For the smaller and
newer players the focus will be on
4. We expect steel and resources to making operations further cost
be muted, though the commodity effective. Therefore, we see
market is overheated, on account demand being created in
of China’s slow down and the insurance majors for Chief
poor recovery of the real estate Financial Officers’ with IPO
sector in the USA. There will be experience. For people at
replacement hiring in the Steel & General Managerial levels and
Resources sectors, but the large above, handling the regulatory
numbers will still have to wait to aspects of IPOs along with
come in. investment banking opportunities
will also grow. There will be a
5. The real estate business will see
need for professionals with strong
a squeeze on profitability and
process knowledge in the
cost management and we will see
younger insurance companies.
a pruning of high cost talent in
this arena. 8. Banks and financial services
companies will face a tough run
6. We predict a level of strong
this year. They will be struggling
consolidation in the telecom
to get credit moving as there is
space. We believe that the sector
still a fair amount of uncertainty in
is overheated, and there will be
the market. Expect talent to be in
the fall out of the 2G scandal in
demand in corporate banking
the telecom domain. So while
focussed on the export sectors.
growth numbers will continue to
Also expect to see a fair amount
be robust for the larger players,
of executive poaching here.
the newer entrants will have to
play the game more cost 9. Automobile companies have had
effectively, that means sharing a dream run for the past 2 years.
infrastructure and services. This We do see an increased interest
will give rise to stronger in companies on getting in fresh
outsourcing opportunities for talent at the top levels,
IT/ITES players to get a specifically for new variants and
stronghold in the domestic brands .We believe there will be
market. We see a movement of robust growth here and there is
people from the telecom potential for a lot of hiring in this
companies to the IT/ITES sector.
companies servicing the telecom
space . Organizations that have stronger
processes and systems to manage
7. Insurance as a sector has had human capital will be in a position to
robust growth; however, given the
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7. retain talent more effectively. Performance management is going to be
Compensation increases this year are crucial in the coming year, as we see a
seen to be moving in at 15% on an great deal of uncertainty in the market
average. However, top talent continues to environment going forward. Organizations
be a scarce commodity, and we expect that are not able to time the momentum of
compensation increases to be in the the uptick are going to suffer in the short
range of 20-25% for leadership talent with to medium term. It is therefore crucial for
existing employers and 33% and upwards companies to keep their ear to the ground
for moving from one company to another. and to be able to effectively manage their
people’s aspirations and expectations.
"The shell must break before the bird can fly." -- Tennyson
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8. Aventus Partners is an HR solutions firm that enables clients Acquire, Develop
and Manage talent.
Reach us at:
sriram@aventus.in tania.gooptu@aventus.in venkat.iyer@aventus.in
+919895345133 +919810215872 +919810608607
Offices:
Aventus Human Capital Aventus Human Capital Aventus Human Capital
LLP LLP LLP
40/48, Ground Floor, Pocket 919, 2nd Stage, Personal Chamber,
40 Varthur Main Road, Natham’s House,
EPDP Road, CR Park, New Tubrahalli, Chittoor Road, Cochin-
Delhi-110019 Bangalore- 560 066 682035
Phone +91 11 40561242-45 Phone +91 80 3253 7215, Phone: +91 484 3248780
Fax +91 11 40561241 +91 80 2854 3089
www.aventus.in
New Delhi | Kochi | Bangalore