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India

Good things come in fours…Blockchain and the Fourth Industrial Revolution

By India, News No Comments

You might have missed the Second and Third and none of us were around for the First, but the World Economic Forum is currently focusing its considerable energies and resources into preparing for the Fourth Industrial Revolution and it has placed India front and centre in its plans. The forum’s Policy Groups are currently working to establish a new governance framework that will enable Blockchain and non-Blockchain platforms to interact more effectively with one another, and that’s by no means as dry and desiccated a concept as it might seem. This initiative has real potential to change the way we all do business in the future.

And here’s why…

Whatever their stripe, it’s a given that every business all over the world will seek stability and predictability in its operational planning: that’s one of the reasons Brexit is on your breakfast table every morning (because it is neither stable or predictable) and its why Governments work so hard to deliver an environment of legal, regulatory and administrative certainty as part of their geopolitical mix. Laws have to be clear and workable, Courts have to be quick and consistent in enforcing them and Public Administration needs to be transparent and, above all, beyond reproach. 

Sadly India has been historically slow to address that critical triumvirate, with court cases sometimes taking more than 50 years to resolve and rumours of bribery rife from shore to shore, but all of that has radically changed over the last decade: the Modi Administration has slashed red tape, introduced new (statutory) adjudication procedures to shorten resolution times in construction disputes and significantly pushed back the black economy with its demonetisation legislation.

The work of the World Economic Forum now tells us that the next step in this process will be Blockchain based Smart Contracts that will effectively eliminate the possibility of delay and improper inducement because there will be no physical steps to take and no intermediary to induce; no single individual or entity will have control over the central register at all in a Blockchain environment. And so far as regulatory and legal compliance goes, it’s simply impossible to be non compliant on either count because Smart Contracts build full conformity into the contract’s DNA.

Take a simple example: I want to sell my house in Delhi to my cousin (don’t worry, I got a good price and it’s falling down anyway). In the old days I would need a lawyer to transfer the title and my cousin would need one to check it out for defects; I would also need confirmation from his bank that he has sufficient funds and we would both need to deal with a battalion of revenue officials eager (but not necessarily quick) to make sure land duties and taxes are paid on the transaction. But with a Smart Contract, all of that is done automatically: Blockchain technology instantly scans the Registry to confirm I own the house, it engages automatically with my cousin’s bank to make sure he has the money and then automatically initiates payment of the purchase price to me having automatically deducts all duties and taxes, paying them directly to the State and local authorities before transferring the title and updating the Registry. All of that happens in the blink of an eye, as soon as we have signed on the dotted line (electronically, of course).

And that’s what’s meant by self-execution: it’s why Blockchain based Smart Contracts will be so revolutionary for the future of international commerce. They will deliver the legal and regulatory certainty the commercial community demands and India is leading the way to make sure it gets exactly what it wants by way of both, with innovative and creative Blockchain technologies. 

Good things really do come in fours…

North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

 Invest in North Block Capital Fund

North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I have been convinced for some time of Blockchain’s potential to change the way we all do business but (as explained by the World Economic Forum’s working paper) the capacity of the technology also to regularise compliance and enhance contractual certainty is yet another of its virtues.

And as I businessman myself, I couldn’t agree more with the article when it says certainly and predictability are at the very heart of all commercial decision-making. India hasn’t in the past always been good at delivering on either, but it has made huge strides on both over the past decade and investors on the subcontinent can now be sure of a compliant and stable environment. Blockchain, and Smart Contract technologies will further enhance that assurance and that can only be a good thing.

Who on Earth is Kristalina Georgieva…and why does she make Positivity India’s watchword?

By India, News No Comments

Shares on India’s financial markets have been going through something of a renaissance recently, which might come as a surprise to those of us who are hooked up to the drip feed of gloom coming out of the IMF (take a bow Kristalina Georgieva). But there’s no confounding the markets and for anyone outside the naval gazing of Washington’s Beltway the subcontinent’s current corporate results are now diverging radically from most macro economic forecasts and Ms Georgiana’s in particular.

Take, for example, the Nifty Tech Index that rose by 3.49% at the end of October, the highest of any of the 14 sectoral benchmarks on the Subcontinent and enough to leave NASDAQ in the shade, having risen over the same period by a mere 0.3% and even that for the most part was fuelled by the Federal Reserve’s third base rate cut since January. Over in London, the Financial Times reported last month a distinct lack of glister on the Stock Market: Shore Capital has now pulled out of its planned listing on fears of lack of liquidity and there has also been a marked decline in London’s issuance levels with most observers predicting a generalised shrinkage in the months ahead.

But liquidity worries of that kind are the least of India’ concerns: the Nifty PSU Bank Index (a tracker platform shadowing the performance of state run lenders) rose by 1% in October and shares in the Central Bank of India increased in value by nearly 6% in the week. Yes Bank also announced that it had received a binding offer of $1.2 Billion from an as yet unnamed global investor as part of a fundraising initiative launched by the private sector lender designed to raise capital through a further share issue. Yes shares rose 39% on the news and it admitted coyly to being “in advanced talks with other investors as well” so expect additional upwards pressure in the weeks and months to come.

So where is the IMF inspired gloom in all that? 

Bear in mind Yes has already raising nearly $275 million this year by way of a qualified institutional placement (a common capital-raising tool in India, designed to give funding flexibility while maintaining the lender’s capital adequacy ratio) so it’s not as though key participants in the sector are lacking appetite. Stocks in Indian automobile companies also rose in the last two weeks of October, responding to a particularly positive set of sales data.

No surprise then that the Head of Research at Mumbai based IDBI Capital, A.K Prabhakar spotted the uptick: “We have had one of the best months in the last four months and positivity has continued”…indeed it has.

It might be the time for Ms Georgieva over at the IMF to polish up her lenses and take a closer look at India’s market fundamentals. Like Mr Prabhakar, she is likely to discover that positivity is still the order of the day…

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.

Executive Overview

There was a saying we heard a lot from Margaret Thatcher in the 1980’s, and it was true: you can’t buck the markets. 

And now, thirty years later it’s still true: however you dress up the macro economic analysis India’s financial markets are speaking their own success story, loud and clear.

Perhaps someone should tell the IMF…

Unaffordable Housing and a Bubble Waiting to Burst…It’s a Tale of Two Cities

By India, News, United Kingdom No Comments

The average price of a home in London is now £466,824 and take home pay in the Capital (after tax) currently averages £2,250: so your average Londoner now has to divert no less than 17 years and three months of earned income just to pay off the capital cost of the home that may or may not turn out to be his castle. And when you take interest into account (at a modest notional 2%) the actual final outlay will cost more than £640,000, which will take 23 years and six months to pay off assuming nothing is diverted to fripperies and whims along the way, like food, clothes and heating. UK property prices have crashed twice in the last thirty years: between 1990 and 1992 and in 2007 to 2010: with this level of market disequilibrium, dystopian economics and price inflation how long can it be before the next crash?

Things couldn’t be more different in India, where the Affordable Housing Program is steadily and successfully working to bring homes within the reach of those living on average incomes. Last month for example Lodha Group launched its Crown Housing brand that will make properties available in Mumbai for as little as £28,000, so that families earning just £567 a month will be able to pay off the capital cost of the purchase in just over four years: thirteen years earlier than their London counterparts.

With an appropriate sense of understatement, Lodha’s eponymous Managing Director Abhishek Lodha summed up the overriding mission and commercial dynamic behind the Crown initiativeWe believe in the Prime Minister’s vision of ‘Housing for All’, which will help revive the economy and that’s why we have embarked on this round of investment. It is quite amazing that a family which earns just Rs 50,000 per month will be able to own a home”.

Indeed it is…try doing that in Camberwell.

But it’s just one example of the extraordinary resurgence in the subcontinent’s real estate markets over the last decade, fuelled by a burgeoning and increasingly middle class and urbanised population that is now finding home ownership within its grasp.

At the other end of the spectrum, the snappily if utterly forgettably named MMRDA (Mumbai Metropolitan Regional Development Authority to you and me) declared itself in September to be in “total development mode”, inviting tenders for major projects worth £229 Million and targeting foreign investors including Goldman Sachs and AIA Group. And that comes hard on the heels of previous mammoth projects in the City including the Mumbai Trans Harbour Link and a 14 line, 337 kilometre long Metro Network. 

Small wonder then that one of Asia’s largest diversified real estate groups, CapitaLand has also now announced its plans to double property investments on the subcontinent from $3.3 Billion to $7 Billion within the next five years. 

It really is a Tale of Two Cities.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

Even on the most superficial analysis, it’s hard to conclude the London property market is anything other than asymmetric at the moment and whether that’s sufficient to precipitate another crash, who knows: I certainly don’t, but I do know instability of this kind is the very last thing investors need during a period of radical political and economic change.

That’s why my primary focus is still very much on Indian real estate markets where not only are the demographic trends supportive of continued market growth but the Government there is also full square behind keeping market momentum going with initiatives such as the Affordable Housing Program.

These are the trends Modulex will continue to build on for the benefit of our investors and I’m proud Red Ribbon is playing a part in the project.

 

Fundamentals Worth Paying Attention to…India and the Inverted Bond Yield

By India, News No Comments

Suppose I ask you to lend me £1000, just for a month or so to see me through: I’m not looking to pay much interest because you’re not Wonga are you. But then if I need to buy a small house in Dundee on a ten-year mortgage, you’ll want more interest and you’d be right to ask for it too. Ten Year money is riskier for longer because nobody knows what tomorrow brings, perhaps I won’t even be there to pay you back. Naturally the borrower should pay more for a long-term loan and you’d think that would be a fundamental principle of financial markets… wouldn’t you?

Well it’s not.

Some markets behave very differently: in particular Ten Year Bond Markets where, in normal conditions (whatever that might be these days), long term instruments pay more interest because the lender has to be compensated for enhanced payment risk and guarded against credit flakiness (see above): but when conditions aren’t normal the principle flips and short term bonds have a higher yield than their long term cousins and that gives rise to a fascinating and important indicator.

Economists and fully paid up merchants of doom call it an the inverted bond yield and its not just a matter of academic interest: inverted yields generally (and almost inevitably) indicate that an economy is moving into recession: and if you think that’s all hocus pocus, fake news, smoke and mirrors take a look at the current difference (the spread) between Two and Five Year Bond yields in Venezuela which is a terrifying 9,248,972 base percentage points (“bps”). For ordinary human beings, that means there’s simply no market for long term debt in Venezuela: investors don’t think they’ll be paid back and no rate of interest will persuade them otherwise and let’s face it, with inflation having reached 1,698,488% in 2018 before the Maduro Government stopped producing statistics, they’re probably right.

It is therefore a matter of some concern that eleven countries worldwide currently have an inverted bond yield curve, not all by any means as striking as Venezuela: but striking nonetheless. The United States has a Five to Two year spread of minus 7.4bps and the UK is even worse at minus 8 bps.

Happily, India is not one of these eleven bellwether economies heading for the recessionary cliff: on the subcontinent the Five to Two year spread on bond yields is a healthy 8 bps (and that’s a positive 8 unlike the one in Westminster), and for Ten to Two year Bonds the spread is an even more attractive 75.3 bps. So no wonder then that Foreign Direct Investment into India is also running at an all time high at the moment, second only to China at $11,190 Million; betraying a level headed faith in India’s long-term prospects that is increasingly absent in other western economies (eleven of them in particular).

Manufacturing output is now slowing down in the United States and the UK, but it is picking up in India. After the re-election of the Modi Administration this year the Sensex and Nifty Indices reached new heights: with Nifty spiking sharply again as recently as 19 September.

Now those are fundamentals well worth paying attention to…

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.                                                                                                               

Executive Overview

Key economic indicators are difficult to find and even more difficult to assess accurately in any practical context: but the inverted bond yield has proved to be right time and time again as a precursor to recession and I think it would be rash to ignore. It is a core constituent of the fundamentals any market analyst will be looking for at the moment.

And to that extent I’m encouraged India is not only failing to follow in the footsteps of the eleven countries that currently have an inverted bond yield, but is positively buoyant in its latest report of Ten to Two Year spreads of as much as 75.3 bps.

The future is indeed unpredictable, but it pays to keep a close watch on the fundamentals.

Slower than expected but faster than the rest…the IMF needs to look more closely at India

By India, News No Comments

As a wise man once said, there aren’t any fleas on a dead dog, but when the dog is an economy it’s even less informative to count the fleas than to check for vital signs of life. That’s a lesson the IMF might usefully have taken to heart when it laconically reported last week that India’s economy was “growing more slowly than expected”. Well, I suppose it depends what you mean by “expected” and how fast “slowly” can be before it speeds up. But rather than counting the fleas, lets take a look at some of the vital signs of India’s economy instead…lets take a look at it’s Industrial Output.

First though, a bit of context: in July of this year the US industrial sector suffered its first contraction since 2009 (when you could still buy VHS tapes). And more importantly, the PMI index (a key pointer to trends in manufacturing and service sectors) fell to 44.9 in the US last month: given 50 is the PMI threshold separating expansion from contraction, the US manufacturing sector is now officially in decline and it is impossible to rule out Donald Trump’s trade war with China as its root cause. America’s yield curve promptly inverted (again): a sure sign that bond investors fear a recession is on the way.

So that old American dog looks far from healthy at the moment, although it does (to be fair) have a few more fleas than it’s UK counterpart…

Industrial production seems to be dying on its knees in the UK with Rob Dobson, a director at the influential HIS Markit agency certainly declining to mince his words: The UK manufacturing sector is suffocating under the choke-hold of slower global economic growth, political uncertainty and the unwinding of earlier Brexit stockpiling activity…Production volumes fell at the fastest pace in seven years as clients delayed, cancelled or rerouted orders away from the UK.”

And unlike the States, the UK is now facing a double whammy in the shape of higher than expected inflation: in July the rate broke through the Bank Of England’s target of 2%, almost certainly because of the higher prices caused by a sharp decline in sterling’s value against the Euro and the Dollar (Brexit again I’m afraid).

On proper reflection the IMF might think these two old colonial dogs are probably better targets for its gloom.

Certainly over in India things couldn’t be more different. Industrial production on the subcontinent rose by 4.3% in July, much improved from the June figure of 1.2% and consumer inflation rose only very marginally in August to 3.2% (from 3.15% in July): well within the Reserve Bank’s target of 4% (unlike the UK counterpart). And, equally importantly, these promising trends continue to be underpinned by a range of measures introduced by the Modi Administration to improve capital fluidity and promote Foreign Direct Investment. The Reserve Bank is also set to cut base rates further having already announced a 110 basis point relaxation earlier this year.

On the subcontinent the manufacturing, mining and energy sectors (dynamo components of India’s rapidly expanding industrial base) have all reported better than expected figures in July at 4.2%, 4.9% and 4.8% respectively. Those are figures most western economies would die for.

Executive Overview

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.                                                                                                               

Executive Overview

I’m always wary when economic analysts report “slower than expected” growth because, as the article says, it depends what “slower” means and it depends what your expectations were in the first place. In that light I too found the IMF analysis last month to be particularly muddle headed.

The fact is that the key economic drivers of India’s economy, and particularly its industrial sector, are all outperforming their equivalents in the West and in comparison with the subcontinent the US and the UK are both languishing in the doldrums at the moment.

I’m sure the Fed and the Treasury would each give their institutional right arms for the “slower than expected” growth India is experiencing at the moment.

More than Roughly Right… Contrasting Fortunes of Infrastructure in the UK and India

By India, News No Comments

Nobody believes the HS2 Rail Project can (or will) be delivered to its original, fantastical budget of £56 Billion: Treasury Advisers hiked the figure up to £70 Billion as long as three years ago (albeit ignored by the Government), and now even Boris Johnson seems to have given up hope, ordering a “Public Review” that has all the hallmarks of a political volte face, not a foot of track laid and tunnels that exist only on paper or in Skanska’s worst nightmares. But major infrastructure projects like these are still the lifeblood of any modern economy: creating much needed employment, innovation and (particularly in these troubled times) something of a beacon of economic hope. So even though it’s not all beer and skittles on the executive floor of HS2 Headquarters at the moment, it’s worth remembering Keynes’ maxim that“ it’s usually better to be roughly right than precisely wrong”.

Which is why it’s a fair bet that the last thing Narendra Modi will be thinking about before he goes to bed is infrastructure and it’s probably the first thing, he thinks about in the morning too, because Infrastructure is now a key dynamic at the very heart of heart India’s economic miracle. By 2022 public spending on the subcontinent’s infrastructure projects is expected to reach $ 778 Billion and Mr. Modi knows better than anyone that this is the bedrock of sustainable growth. That’s why he’s prepared to commit more than eleven times the HS2 budget in a single year, to keep that beacon of economic hope burning as brightly as possible.

It’s a sign of the Policy’s success that Indian infrastructure projects are now starting to attract unprecedented levels of Foreign Direct Investment (FDI). Private Equity and VC Investment volumes topped $1.97 Billion last year, with 91 M&A deals being brought to market at $5.4 Billion in aggregate value (and rising), so the Prime Minister must be doing something right.

To sustain and build on this momentum the Indian Government has also announced a series of eye-watering initiatives of its own, everything from highways to renewable energy and urban transport projects in between. The 2019/20 Union Budget included $63.2 Billion in public infrastructure funding with Communications receiving $5.36 Billion, Railways $9.25 Billion and a whopping $11.5 Billion for new Road Systems. Over the next fiscal period new water supply systems will be rolled out to all households in more than 500 cities on the subcontinent and brand new government run medical colleges and hospitals will be dotted across the country as well.

More than 132,000 kms of new roads have been built in India over the last four years (that’s enough to stretch halfway from Mumbai to the Moon) and the number of Airports on the subcontinent rose to 102 at the end of last year. India has also entered into a series of joint venture agreements with the Japanese Government (and Japanese companies) for a series of projects in North Eastern States and the two countries are poised to enter an India-Japan Development Agency, so don’t expect the pace of growth to slow down anytime soon.

Whether we can ever expect to travel twenty minutes faster to Birmingham by train is, of course, a different matter altogether…

View our preference shares offer

Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.

Executive Overview

Keynes wrote that an economy could be stimulated simply by paying 100 people to bury ten pound notes in bottles, and then paying another hundred (presumably different) people to dig them up spend them. Nowadays we’re more likely to call it Quantitative Easing, but the expansionist impact of a freer monetary policy is now pretty much beyond question.

But how much better would it be to use the money instead to build something lasting and important for the economy? Something that can be used by our children and grandchildren and help make our day-to-day lives better too.

That’s why I’m saddened by the current state of public infrastructure policy in the United Kingdom: we could do so much better and make such a difference, whether with HS2 or otherwise but something that speaks to the ambition of the economy.

And, for my part, I certainly think there are important lessons to be learned from examining Infrastructure Policies in India where the Modi government is using Public Spending initiatives as a dynamo to supercharge the economy.

We could do a lot worse than to try that here.

Cryptocurrencies - India

Giving up the Goose… The Reserve Bank’s Attempt to Block Cryptocurrencies is Bound to Fail.

By India, News No Comments

Before the UK’s Malicious Communications Act passed into law, Parliament anguished over its reach: by all means outlaw threatening letters, but even a mild mannered bank manager can’t get the bank’s money back without threatening something so would that be illegal too? By the same token, if you’re a Bank a PPI pamphlet can look malicious but it’s often amusing or rewarding for the rest of us. And it was the same in India where the Information Technology Act meant anyone sending an e-mail causing “annoyance or inconvenience” could go to prison for three years. For those of us who find vacuous PPI advertising irritating, that might be a good thing: after all, what right thinking person could possibly object to three years in prison for the mastermind behind Gladstone Brookes?

But of course, there’s much more to it than that. What might be offensive for me may not be offensive to you, and what for you should be eagerly lapped up like ambrosia might be bile and vitriol for me. We’re all different, and in the words used by Indian Supreme Court Justice, Rohinton Nariman striking down the Indian Information Technology Act (see above) the legislation was not only “open ended, undefined and vague” but positively unconstitutional too. The Indian Government might have thought it was a good idea at the time, but the Indian Government was wrong.

And Justice Nariman was very cross again in August when the Reserve Bank of India had the misfortune to find him presiding over their long and drawn out litigation relating to the constitutionality of the 2018 Bitcoin Ban

The slightly bizarre nature of that ban and the curious circumstances which led to its imposition last year make “open ended, undefined and vague” sound something of an understatement, but the fact is that the ban is clearly unconstitutional and just like the earlier ban on unpleasant e-mails, the Reserve Bank is about to find out why: Justice Nariman is precisely the right person to tell them.

He was indignant, livid even: accusing the higher executive of the Reserve Bank of failing to respond appropriately (or at all) to concerns raised by the cryptocurrency industry over the legitimacy of the ban and even though the Government has recently argued (tenuously) that there was never a ban in the first place, nobody is really buying that. Indeed, the Government has now distanced itself even further from its Central Bank colleagues by setting up a regulatory sandbox to pave the way for a full throated Blockchain revolution, with talk even running to the possibility of a Digital Rupee. Talk about stabbing your friend in the front…The Reserve Bank must feel like a wedding guest with a slice of albatross instead of cake.

So the stark reality is that the Reserve Bank now has just two weeks to come up with an answer to the action, and it’s a safe bet that it won’t be able to do so because there is no answer. In the meantime Prime Minister Modi’s Government has gone still further in the other direction by announcing its intention of introduce a Bill to regulate the Blockchain and Bitcoin sectors in the forthcoming session, the Garg Committee has come out in favour of cryptocurrency (following Mr Garg’s slightly petulant resignation) and India at last stands ready to lead the world by taking over regulatory stewardship of this game changing sector. 

Blockchain at last has its moment, and it’s about time the Reserve Bank gave up the goose…or should that be albatross.

 Invest in North Block Capital Fund

North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I doubt the Reserve Bank of India has ever truly believed in its ability to prevent use of cryptocurrencies on the subcontinent, even if it wanted to (which I don’t think it does either): but the current stark divergence between in its own position in the Supreme Court litigation with that of an increasingly Blockchain hungry Modi Government is, to say the least, striking.

There can, I think, only be one outcome and I have no doubt the final Supreme Court decision (when it comes) will unequivocally signal a combined Blockchain and Cryptocurrency revolution that will change the way we all do business in the future, and India will be at its head.

Social Housing Modular COnstruction India

Modular Construction moves Centre Stage…And Here’s Why

By India, News No Comments

Within a year of assuming office in 2015 Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana (“PMAY”) Scheme, with an ambitious target of housing all India’s urban poor by March 2022 through provision of 20 Million new affordable homes: that’s five new homes every hour, every day (and night) for seven years, but the astonishing thing isn’t the scale of the ambition it’s that the programme is actually meetings its targets. To put that in perspective, the UK Government is currently working to build 300,000 new homes annually until 2022: leaving aside the prospect that it won’t be here in 2022, barely 40,000 new builds were completed in the first quarter of 2019 which is only a little over half the annual target (and a 9% decrease year on year).

In the same period 8 Million new homes have been approved under PMAY.

But divergent as their ambitions and performance levels might be, India and the United Kingdom do also have something in common when it comes to housing policies: each of them are increasingly resorting to Modular technologies as a cornerstone of policy delivery, increasingly viewing Modular Construction as a more reliable and cost efficient platform than traditional construction technologies, radically speeding up completion periods and reducing overall costs (not an irrelevant consideration, even for the fastest growing economy on the planet).

Historically sector participants have become used to building only as many properties as they are likely to sell in the short term, concerned about unwittingly accumulating a bank of unwanted buildings whenever there is a slump or even minor bump in market demand (as, of course, there has been in the United Kingdom recently despite historically record low interest rates). And with such a firmly entrenched mind set there’s simply no incentive for builders to step up construction and completion rates: certainly to nothing like the levels the subcontinent and the UK require at the moment.

But with Modular Construction inexorably moving to centre stage, all that’s about to change…Take skilled labour rates for example.

India and the United Kingdom have (in the case of India) or will shortly have (in case of Brexit) a significant skills shortage in construction: unsurprisingly so in absolute terms on the subcontinent given the sheer scale and ambition of the PMAY Project, but also in relative terms in the United Kingdom where the sector is so reliant on European migrant workers. No less an authority than JLL have highlighted this recently through its Head of Living Research, Adam Challis: “We will need to switch to modern methods of construction as a way of offsetting labour irrespective of Brexit, but there’s no question labour scarcity from the Continent will exacerbate the problem…we aren’t recruiting skilled labourers at anything like the rate they’re retiring.”

And factory built, site assembled modular homes not only require less skilled labour: they are also produced in controlled environments where completion timing can be defined much more accurately and specifications meticulously adhered to. As Luke Barnes of Ideal Modular Homes very appropriately puts it: “you wouldn’t buy a car that’s been built outside in the rain and mud”.

You certainly wouldn’t…Not if you want to meet those challenging targets you won’t.

Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

The Affordable Housing Program, and PMAY in particular with its commitment to India’s urban poor, is an enormous credit to Prime Minister Modi’s Government and the fact it is still on track to meet its targets by March 2022 is greater testament still. 

But they are certainly rigorous and challenging targets, so I’m not surprised Modular Construction is now starting to play a greater and greater part in achieving them and that applies to the United Kingdom too where social housing is now such a pressing issue.

Like most things, workable long-term solutions call for different strokes and I’m sure Modular Construction will continue to be one of them.

India reinvents blockchain for the 21st century

By India, News No Comments

Imagine the Government had decided to ban rubber, wheels and petrol and then immediately announced a funding initiative to produce more cars: we might rightly take the view its policy imperatives were out of whack. But that’s just the sort of the dynamic we can see playing out in India at the moment, where Blockchain sandbox initiatives are forging ahead at the same time as the Supreme Court is in the final stages of its death roll with the Reserve Bank over last year’s ban on cryptocurrencies. As the old song goes… “you can’t have one without the other” and its certainly hard to imagine a Blockchain world without cryptocurrencies, so where exactly is all this heading?

The Modi Government has been at pains to say the Reserve Bank ban does not necessarily mean cryptocurrencies are unlawful on the subcontinent, but such well modulated (and crafty) ambiguity is not an option open to the Judges currently hearing the case brought by the Internet and Mobile Association of India (IAMAI) against India’s Central Bank: these three Judges must finally come to an unambiguous decision on the issue, and when they do it’s likely to mark a decisive moment for the future of Blockchain not only on the subcontinent but for Global financial and commercial markets as well.

Lawyers for the IAMAI have been arguing the Reserve Bank simply doesn’t have the power to regulate virtual currencies, and certainly not without any prior legislative framework in place (there is none). They have also pointed out, not without justification, that the Reserve Bank would have been well advised to take market soundings and conduct market research before imposing its ban last year (it did neither), with the inevitable result that although Blockchain has now been given a green light for future development, the “arbitrary, unfair and unconstitutional” prohibition on its cryptocurrency life support system still remains in place.

But make no bones about it: the Reserve Bank will lose this case, not only because logic and fairness is against it (just like maintaining a ban on rubber, wheels and petrol), but the broader sweep of economic history is against it too.

Take, for example, recent events in India’s second largest State.

Maharashtra is currently preparing a regulatory sandbox for testing Blockchain technologies across a full spectrum of its own public services: everything from healthcare to vehicle registrations, agricultural produce, supply chain and document management systems and even printing children’s school examination certificates. It has earmarked no less than $1.4 Million for seedcorn investment in the project of which $560,000 has already been approved and allocated. Does any of that sound like it’s about to ignore a new model for technology markets?  Of course not, and in doing so Maharashtra is merely following in the footsteps of its own Government’s IndiaChain initiative which, according to the National institution for Transforming India, will lead to faster contract enforcement, help eliminate fraud and deliver faster distribution of agricultural subsidies (amongst other things). Does any of that sound like a Government hiding from the future?

Of course not…

The truth is Blockchain is already being used extensively across India: not least by the subcontinent’s own Banking and Finance Sector (regulated by the Reserve Bank of India lest we forget), where day to day functions including KYC, credit approval and trade finance are currently being revolutionised through the use of new technologies: transactions that used to take hours (sometimes days) to complete are now being put through in a matter of seconds.

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North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I don’t think the Reserve Bank of India can have any real confidence in its ability to prevent the use of cryptocurrencies on the subcontinent, even if it wanted to (which I don’t think it does). But if only for reasons of saving face, it is now clearly committed to fighting its Supreme Court battle through to the end, even if that means losing and losing badly.

Looking at the bigger picture though, I’m not sure any of that matters greatly: if only because the Bank is likely to lose its case and the Government has already made plain its willingness to recognise a cryptocurrency environment. That’s what the future will look like.

For the moment, I’m excited to be living through such an interesting period when cryptocurrencies and Blockchain are now more likely than ever before to come together in an all-Indian regulated market.

Modular Construction

India is building a new modular construction paradigm

By India, News No Comments

Mark Twain had nothing bad to say about the service at Watson’s Esplanade Hotel in what was then Bombay: his gripe was about quantity, the sheer volume of white suited, starched and over eager attendants tracking his every move and dishing up tea and tiffin every five minutes. History doesn’t tell us whether Joseph Conrad or Rudyard Kipling had the same reservations, but both of made a beeline for Watson’s Esplanade when they were staying in India: it was, after all, one of the subcontinent’s and Asia’s most luxurious hotels.

Not anymore…

The cavernous hulk of the Esplanade Mansion (now re-branded for our more prosaic times) is a decrepit shell of a building, echoing to its rafters and rusting to its Victorian core. Local Courts are currently deciding whether it should be demolished altogether, despite its cultural and historic significance and despite it now being home to dozens of Mumbai’s poorest families.

And the Esplanade Mansion is by no means alone: in May this year Mumbai’s Central Municipal Council identified no less than 499 buildings in the City in a dangerously run-down condition (down from 619 last year but that’s hardly a cause to celebrate), and in August this year the Court ordered 23 seriously dilapidated apartment blocks to be demolished: in the same month the sprawling Navrang Building caught fire and collapsed before it could be pulled down (killing one labourer) and in June the Kesarbai multi-storey apartment block, designated for demolition as long ago as 2017, collapsed leaving 24 families homeless (although, mercifully, unhurt).

According to Google, there are currently more than 3,500-registered demolition companies in Mumbai, so it’s not as though there aren’t enough of them to make sure Court Orders are listened to. So what’s going on?

Well, for a start, it costs an average of $18,000 to demolish even a small family home, never mind a multi-storey block like the Navrang Building and these “end of use” costs are quite literally stored up by traditional construction projects dating back to Victorian times, sunk immovably into the fabric of the building for future generations to pick up. And in the case of the impoverished neighbourhoods of Mumbai, that’s usually one cost too far, so many have little choice but to continue living in dangerous and unhealthy buildings like the Navrang and the Kesarbai, and all too often they’re dying in them too.

That’s a particularly graphic and harrowing illustration of the housing bottleneck facing Prime Minister Modi’s Government as it continues to push through the Affordable Housing Program, delivering the dwellings India’s urban poor so desperately need so that Navrang and Kesarbai can become a thing of the past. The Government is now on track to build 10,000,000 new homes by 2022 (in line with policy targets), making use of key initiatives such as RERA, GST and new tax breaks to steadily help address this pressing issue. But if the scale of the Government’s ambition is large, the challenge is larger still: millions of people are continuing to move from rural India in to the subcontinent’s urban conurbations so something more is required.

And in such challenging circumstances, Modular Construction may well be the answer: delivering new housing at the accelerated rate India needs, with design to handover periods half those of traditional technologies, construction costs lower and simultaneous completion systems allowing for tighter completion scheduling in absolute terms. For those in the most pressing need and those striving to look after them, those are hard facts that can’t be ignored. And, unlike conventional technologies, modular construction doesn’t store up excessive costs for the future either: once the building has come to the end of its useful life it can be readily disassembled or even removed altogether for reassembly elsewhere.

All of which might be bad news for Mumbai’s 3,500 demolition firms, but it is very good news for the rest of us.

 Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

With an increasingly urbanised and rapidly burgeoning population, it is simply impossible to understate the scale of the current housing challenge facing India: and although Prime Minister Modi’s Government has made huge strides to bring the Affordable Housing Program to a successful conclusion by its target date of 2022, it should be obvious to all of us that the remaining challenges are still immense.

That’s why I’m convinced Modular construction will be a major contributor to providing a workable solution that is also capable of delivering to the pace India needs.

Modular Construction schedules are half those of traditional building technologies. It’s also cheaper, more resilient, less labour intensive and better for the environment.

To get things right, and like most things, a workable solution will call for a variety of approaches, but I’m sure Modular Construction will be one of them.

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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