US-based Intuit Inc has launched a personal finance software package for Indians. Umang Bedi, MD, talks about the company’s plans for India with Moneylife’s Pallabika Ganguly
Pallabika Ganguly (ML): How do you plan to market Intuit products in India?
Umang Bedi (UB): We believe in customer delight and we believe that happy customers are the biggest marketing vehicle for us. We are mostly marketing ourselves by word-of-mouth that is the strongest (strategy). When we launched our beta version, 87% out of the early 5,000 users said friends and family recommended them this product. But we are also looking at building partnerships with financial institutions.
ML: How much have you invested in India?
UB: In the last four years, we have invested $45 million in India.
ML: What was the thinking behind this financial software designed for India?
UB: We did a survey of available products and their pros and cons. We found that many people were finding it difficult to manage their own money. Even for cash assessment, if people think that they have a certain amount of money, there would always be a difference of 20% to 30% with that figure. The survey also showed us that people were struggling to find out their net-worth at any given time and had to calculate it manually or by using Excel sheets. This was the starting point in launching Intuit Money Manager. We developed it and thought that we would take this money manager to the masses in India.
ML: What was the method that you followed for your survey?
UB: We did a research-based survey called ‘Follow me home’ with around 1,000 customers. We went to their homes, offices and observed them contextually. That is, we did not ask any questions and simply observed their means of managing finances. That helped us to identify the pain-point while managing finances, which the customer does not realise.
We did the survey in four segments—25 years-30 years (single income); 30years-40years (people who may be married, with kids) and (people who were) 40 years plus. We concentrated on these three segments and women separately to observe the gender difference (in attitudes towards money management). We found similar pain-points with all (segments).
The survey also showed that people from the first group (25 years-30 years) usually end up cashless by the 20th of every month. This leads them to either borrow money from someone, or pay bills late, etc. While people in the age group of 30 years-40 years were looking to invest their money, people above the 40-year age group were busy looking at returns. However, this group was finding it most difficult to keep track of investments and returns.
ML: Before launching the software, how did you conduct the beta test?
UB: We did a beta test with moneycontrol.com over the last four-and-a-half months. We had put up a small banner on the site asking if people would like to opt for the money manager. If people opted for the same, we requested them to fill in nine details. In 48 hours, we had over 15,000 people opting for our software. After the beta test, we went live in early January and in ten days, we had 10,500 people regularly using the software.
ML: What are the advantages of using the software?
UB: The product is a smarter way to manage your finances. It provides you with a single window to aggregate all your financial information across disparate financial institutions in one place and then provides you intelligence in the form of tools on how to plan your money and keep a track on your spending. For example, one of my colleagues likes to dine outside, so on Saturdays and Sundays he eats all his meals outside home. When he logged into the money manager for the first time and put the details of his finances and expenses, he found that during the last six months, he had spent more than Rs1 lakh just for dining outside home. He realised that he needs to cut down on dining out so as to save money for the future.
ML: How will the software store the details of cash spending?
UB: For cash, you have either have to manually enter the information or submit it when you withdraw cash from any source, let’s say an ATM. The software stores this information and allows you to split it into different segments according to your spending. This way you get a chance to break one transaction (cash withdrawals from ATMs), into multiple transactions.
ML: Do you think the software will be economical for Indians?
UB: The product comes with a 90-day free trial. After that period, if you like, you can enrol for subscription for as low as Re 1 per day or Rs365 per annum. But if you want to subscribe within 15 days of trial, there is a special rate of Rs249 per annum. I think one rupee a day for managing your finances is quite economical.
ML: What are your growth plans over the next three years?
UB: About 20 million out of 50 million internet users are using Internet banking today and the number of Internet banking customers is growing at about 30% per annum. We see the gap being bridged. Therefore, over the next three to five years, we may be able to reach millions of people.
The Hinduja group is buying more than 51% stake in an Indian construction company and also plans to invest $10 billion in the power sector
Diversified business group Hinduja on Monday said that it is close to acquiring an Indian construction company in a bid to secure a foothold in India's fast-growing infrastructure sector, especially roads, and also announced an investment of $10 billion (around Rs46,200 crore) in the power sector, reports PTI.
"We have shortlisted a local company which we are buying. When you have a local infrastructure company which has synergy then you can start much faster. It is an acceptable company which can be a good foothold for us to give a growth. It is well-managed," Hinduja group's global president GP Hinduja said in an interview at Davos.
"We will retain them as minority partners. The Hinduja policy is to have a minimum 51%. This company is engaged in everything (construction), in parking, roads, concessions, in bridges. But our focus will be on roads," he said, adding that the announcement would be made by 15th March.
Mr Hinduja, who was in Davos to participate in the World Economic Forum's (WEF) annual meeting, said that soon after the taking over of the Indian company, the group will announce its foreign partner, which has already been selected.
About foreign direct investment (FDI) induction programme he said, "We definitely have a programme with full focus on infrastructure including power involving 10,000MW. Finances for the 1,000MW plant at Visakhapatnam are likely to be tied up by the end of this month."
Asked how much investment is expected by the group in the power sector, he said, "Going by $1 billion for 1,000MW, we are ready to bring $10 billion for the 10,000MW once things start moving."
The group has already announced plan to invest $50 billion in power, realty, auto, healthcare and oil & gas projects in India, whose appetite for infrastructure funds is pegged at about $500 billion over the next four-five years.
"In road construction, we have synergy with the transport sector (Ashok Leyland)," Mr Hinduja said.
The group planned the construction of parking lots after acquiring the Indian firm while the foreign partner will be there for technology transfer, he added.
"For road concessions (development of toll plazas), you need a very sophisticated technology. Contractors are cheaper in India. We will bring the concession technology from outside," he said.
"In our ten verticals, for both organic and inorganic growth, there are full plans which are under implementation," he added.
Roads and transport minister Kamal Nath had recently announced that India required $50 billion to construct 20,000 km of highways and had sought a $3-billion loan from the World Bank.
Expect a minor rally in the early part of the week and then another decline
Last week we had said that the Sensex has support at 16,600. If this support is breached, we may see another round of sell-off, all the way down to 15,500. Indian markets were under massive selling pressure throughout the week ahead of the quarterly Reserve Bank of India (RBI) monetary policy review on 29 January 2010 and after the government released weekly inflation data. However, the trend reversed on the last trading day of the week after the central bank kept key interest rates unchanged at the quarterly policy review even though it increased the cash reserve ratio (CRR) by 75 basis points. At the end of the week, the Sensex lost 502 points. We expect a minor rally in the early part of the week and then another decline.
On Monday 25 January 2010, the Sensex declined 79 points from Friday’s (22 January 2010) close to 16,780, while the Nifty closed at 5,008, down 28 points.
As per reports, the Centre for Monitoring Indian Economy (CMIE) expects India’s GDP growth to accelerate to 9.2% in 2010-11 from 6.9% in 2009-10.
Meanwhile, media reports indicated that the government is considering an across-the-board increase in excise duty in Budget FY10-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year high fiscal deficit of 6.8% in the current financial year. Markets remained closed on Tuesday 26 January 2010 due to Republic Day.
On Wednesday 27 January 2010, the Sensex closed at 16,290, declining 491 points from Monday’s close while the Nifty closed at 4,853, down 155 points.
The International Monetary Fund said that India’s economy would grow at around 7.7% this year and at 7.8% in 2011. As per US reports, consumer confidence hit its highest level since September 2008 to 55.9 from an upwardly revised 53.6 in December. Also, the national retail federation reported that retail sales were likely to rise 2.5% this year, after a 2.5% drop in 2009.
On Thursday 28 January 2010, the Sensex gained 17 points from the previous day’s close to 16,307, while the Nifty closed at 4,867, up 14 points. During trading hours, the government announced that the food price index rose 17.40% in the year to 16 January 2010, slightly higher than the previous week’s rise of 16.81%. The fuel price index rose 5.70% while the primary articles price index rose 14.66%.
The RBI’s data showed that banks’ outstanding loans fell by Rs11,900 crore in the two weeks to 15 January 2010 because companies repaid some loans. The data also showed that loans fell to Rs30,08,000 crore in the two weeks to 15 January 2010 and deposits fell by around Rs22,000 crore. In the two weeks to 1 January 2010, outstanding loans rose by a massive Rs78,192 crore and deposits also went up by Rs82,769 crore.
On Friday 29 January 2010, the Sensex surged over 360 points from the low of the day to close at 16,358 after the central bank kept key interest rates unchanged. During trading hours, the RBI, in its quarterly monetary policy review, hiked the cash reserve ratio (CRR) by 75 basis points in two stages to 5.75% to mop up excess liquidity from the banking system. CRR is the percentage of deposits which banks must keep with the central bank. However, the RBI kept the key policy rates—the repo rate, the reverse repo rate and the bank rate—unchanged.
The RBI said in its third quarter review that though inflationary pressures in the domestic economy stem predominantly from the supply side, the consolidating recovery increases the risks of these pressures spilling over into a wider inflationary process. The central bank lifted its wholesale price index inflation forecast for the end of the fiscal year in March 2010 to 8.5% from its earlier forecast of 6.5%, but said it expected inflation to moderate starting in July 2010, assuming a normal monsoon and global oil prices holding at current levels. The RBI also lifted its forecast for GDP growth in the current year to 7.5%, from an earlier target of 6%, and said that the current rate of growth is likely to be sustained in the financial year that ends in March 2011.
Meanwhile, as per reports, the RBI called on the government to get its fiscal house in order and said that monetary policy would be ineffective unless the government rolls back its borrowing, which is on track to hit a record Rs4.50 lakh crore ($96.90 billion) this fiscal year.
The RBI also said that it would continue to monitor macroeconomic conditions—particularly the price situation—closely and take further action as warranted. With regard to capital inflows, the central bank said that the inflows so far have been absorbed by the current account deficit. However, sharp increase in capital inflows, above the absorptive capacity of the economy, may complicate exchange rate and monetary management, it added. As per media reports, D Subbarao, RBI governor, said that the interest rate rise would have had an unpredictable impact on liquidity. He also added that it is important to absorb a predictable amount of liquidity before taking other steps.