Friday, October 13, 2017

Stable crude price will bring capex back: L&T Hydrocarbon


L&T Hydrocarbon Engineering Ltd (LTHE), a wholly-owned subsidiary of infrastructure major Larsen & Toubro, has emerged as a winning bidder for ONGC’s Daman Development Project.
The offshore contract worth ₹1,150 crore — for the transportation and installation of the Daman project — becomes the second mega order bagged by the L&T division in as many months.
In September, LTHE bagged an engineering, procurement and construction (EPC) order worth ₹1,700 crore from Kuwait Oil Company to construct a new crude transit line (TL-5) from north Kuwait to Ahmadi.
In the first quarter of this fiscal, LTHE had bagged orders worth around ₹800. The Kuwait order, received in the second quarter, was among several others yet to be announced.
“People (now) have more certainty on crude prices,” Subramanian Sarma, MD and CEO at LTHE, told BusinessLine. “A couple of years back nobody knew when it would stabilise.”
“Now the industry consensus is that it will be around $50 per barrel. Having this certainty in mind, people have started making budgets and allocating money.By the second half of calendar 2018, I expect the general sentiment to improve and more capital to come into the market,” he added.
Turning around
According to Sarma, who took over as CEO and MD of LTHE in August 2015, after spending 25 years in the oil and gas industry in West Asia, the company has kick-started a major transformation to turn around the business, hit by both internal inefficiencies and a challenging external environment.
“We put a plan in place: how to consolidate, and how to rationalise and restructure. We have increased internal capabilities, put some digitisation elements in place, and looked at supply chain. We are taking these steps within the group’s five-year plan. The first stage, which is mainly business consolidation, is going to be completed in March 2018,” he said.
Sarma added that while the business may not show the same kind of performance as last year, it will contribute significantly to L&T’s overall revenue guidance of 12 per cent growth set for this financial year.
L&T’s hydrocarbon business turned around last fiscal, with revenue growing 19 per cent and margins improving as a result of more efficient execution, the company noted in its July presentation to investors. It registered a revenue of ₹2,546 crore in the first quarter of this fiscal, with international markets contributing more than half. LTHE’s order book stood at ₹23,026 crore as on June 30.

Sunday, October 8, 2017

China Overhauls Drug Approvals in Win for Global Pharma


China is revamping its approval system for medicines and medical devices to speed up access to new therapies, a potential boon for local innovators and international drugmakers expanding in the world’s second-largest pharmaceutical market.
Data from overseas clinical trials will be accepted for drug registrations in China, according to a statement from the State Council, China’s cabinet, published by the official Xinhua news agency. The changes will likely cut delays in approvals for new treatments by several years and free foreign drugmakers from requirements to conduct expensive late-stage clinical tests on Chinese patients.
Demand for new therapies is surging in China due to an aging population and rising incidence of chronic diseases such as cancer and diabetes, and the faster approvals are likely to provide a boost to multinationals like Pfizer Inc., AstraZeneca Plc and GlaxoSmithKline Plc, who are expanding there. China spent $116.7 billion on medicine in 2016 and the market is second only to the U.S. in size, according to researcher QuintilesIMS.
Shares of Chinese drugmakers researching new medicines jumped on Monday. Jiangsu Hengrui Medicine Co. surged as much as 6.5 percent and Shanghai Fosun Pharmaceutical Group Co. added as much as 6.1 percent.
"For multinational and leading local innovative drugmakers, the anticipated acceleration of approval will improve patients’ access to new medicine and increase revenues for pharmaceutical companies," said Jialin Zhang, senior health-care analyst at ICBC International Research Ltd. 

The changes had already been widely telegraphed by the Chinese government, which earlier this year said it was considering overhauling the approval process.

The China Food and Drug Administration has conducted bold reforms in recent years, and the latest policy appears to have received the blessing of top-levels of the central government, said Zhang. Reforms "will help the industry select its fittest for survival and improve its overall competitiveness," he said in an e-mail.  
The reforms also include measures to speed up approvals for clinically needed drugs and equipment, establish a compulsory-licensing system and make it easier for research institutions to conduct clinical trials, according to the document. The government will also explore a slew of rules to protect patents.

Alphabet's Google Assistant AI Can Rule Inside Home Appliances: Seeking Alpha


Summary

Google Assistant was declared to be the smartest voice-based digital assistant earlier this year.
Voice-based artificial intelligence services is an important part of Google’s cloud computing and advertising platforms.
LG Electronics' use of Google Assistant on its nearly 90 home appliances increased the total addressable market of Alphabet’s voice-based AI service.
Google Assistant uses Alphabet’s search engine to provide results to voice queries. Consequently, personal data gathered from LG appliance users are valuable to Google’s advertising platform.
Anything that improves the core advertising business of Alphabet is worth discussing here at Seeking Alpha. There is no ad-blocking software yet on voice-based appliance search queries.
LG Electronics (OTC:LGEAF) has expanded its use of Alphabet’s (GOOG) (GOOGL) Google Assistant voice-based artificial intelligence app on more than 80 smart appliances. LG-branded refrigerators, gas range, dishwashers, washing machines, ovens, and other home appliances can now be voice-controlled with Google Assistant via Google Home or any compatible Android/iOS smartphone.
(Source: LG Electronics)
Google Assistant was declared the smartest digital assistant earlier this year. Like how Android conquered the mobile devices ecosystem, third-party support can boost Google Assistant's eventual ascendance as the industry-leader for voice-based artificial intelligence.
Revenue from the global Virtual Digital Assistant Market is predicted to reach $15.8 billion by 2021. Home appliances like those from LG are the consumer VDAs (Virtual Digital Assistants) hardware. Tractica's chart below illustrates that Consumer VDAs will form the larger base in the Virtual Digital Assistant Market.
VDA-16 chart2

Industry support for Google Assistant among electronics product vendor is a tailwind for Google's AI push.

Why LG Electronics Is Important To Google Assistant

LG Electronics greatly increased the total addressable market of Google Assistant. Google's consumer-centric AI service has increased its reach into people’s home. Consequently, its search engine advertising and personal data gathering will penetrate deeper into the lives of people who will use Google Assistant on their laundry and kitchen appliances.
Going forward, LG is likely to incorporate direct Google Assistant access to its future smart appliances. The current implementation still requires the use of Google Home or a smartphone/tablet but that is not yet optimal. My fearless forecast is that most future home appliances will have built-in internet connectivity and default smart assistant software.
Alphabet’s Google Home smart assistant gadget is not yet as popular as Amazon’s (AMZN) Alexa-enabled Echo smart speaker. However, LG Electronics is a multi-awarded industry leader in laundry and kitchen appliances. By virtue of its global appliance customer base, LG is now an important growth driver for Google Assistant.

Why Google Assistant Needs To Be As Successful As Android

Voice-based artificial intelligence is an important part of the multi-billion voice-recognition market. Grand View Research surmised that implementation of AI-enhanced voice-based apps on home appliances can help accelerate the voice-recognition market to grow to a $127.58 billion industry by 2024.
Smart home appliances made by LG Electronics adds to the future economic benefit of Google Assistant. Google’s digital advertising business needs new channels to penetrate. PCs and smartphones will eventually reach saturation point. It is also more convenient to directly talk to a Google Assistant-enabled electric stove on how to cook particular dishes, rather than having to do it via Google Home or smartphone.
It is also more satisfying to dictate an email to a relative or co-worker via your washing machine in the basement, than having to go upstairs and seek your phone just to do the same task.
Furthermore, like traditional advertising on radio, Google will probably implement voice ads through its Google Assistant app. Instead of charging users a monthly fee to access artificial intelligence applications, Google will likely enforce ad monetization on Google Assistant.
Further, Alphabet needs a growing advertising business because I do not think its Google Cloud business segment can catch up with Microsoft’s (MSFT) Azure and Amazon’s (AMZN) AWS. I also seriously doubt Google G Suite’s future success against the mighty Office 365/Microsoft Teams/Dynamics package.
Google Cloud is a far third to cloud infrastructure leaders, AWS and Azure.
Alphabet is also eating dust behind Microsoft on Software-as-a-Service. AI-assisted digital advertising will, therefore, remain as Google's core business.

My Takeaway

Wide industry support is why Android became the dominant operating mobile system. Likewise, third-party support from hardware manufacturers is a boon to Google Assistant.
Google Assistant is Alphabet’s potential universal 24/7 window to people’s household habits. Integrating Google Assistant and its search engine matrix on refrigerators, washing machines, stoves, and other household appliances allows a persistent peek into people’s behavior/habits beyond their online surfing or mobile device usage.
Most people still shop offline, they go to brick & mortar malls and groceries. Google cannot obviously access the data on what people like eating/drinking if they bought food from non-online retailers. Google Assistant accessing an LG smart refrigerator solved this dilemma.
GOOG, GOOGL, and LGEAF are worth adding to your long-term portfolio. Their collaboration to make smart homes really smarter is a good idea for their respective businesses.

Wednesday, October 4, 2017

Digital eyes and ears on: the internet of things takes off


This May, California-based company C3 IoT announced that it was managing streams of information from 100m digital eyes and ears. The sensors and devices that the eight-year-old business has “under management” are planted in the factories, processing plants and buildings belonging to its clients, which include global energy company Engie and the US Department of State. By helping these organisations harvest and make sense of the data flowing through their systems over the internet, privately held C3 IoT — valued at more than $1bn — increased its revenue by 65 per cent year-on-year. The start-up’s growth is a sign that the internet of things — the attention-grabbing label that refers to electronic devices that send and receive information over the internet — is becoming big business. Twenty years ago, being online meant hunching over a chunky desktop computer and dialling up the internet on a fixed phone line. Today if you wear a FitBit or Garmin Activity Tracker you are already connected. The internet is also in home appliances such as sprinkler systems controlled by smartphones or fridges that order more milk when supplies run low. For companies, connected devices present compelling opportunities. Bill Ruh, chief digital officer at US conglomerate General Electric, hailed the IoT as “the way to get to the next level of productivity”. A growing business commitment is reflected in hiring patterns. According to a LinkedIn analysis, the third quarter of 2017 saw four times more advertisements for jobs mentioning the IoT than in the same quarter two years ago. The number of such jobs posted is, on average, doubling each quarter, year-on-year. IoT sensors in electronic equipment constantly gather data. Businesses can crunch through this, often using machine learning, to discover more about their customers, machines or supply chains. It is a wealth of information that should, in theory, help managers and executives make better decisions.   Grassroots groups use ‘internet of things’ data to tackle damp and noise Amazon working on first wearables to interact with Alexa Possessed: the dangers of the digital home Researchers expect that companies will increase spending to capture the potential benefits of “internetting” everything, from tracking pallets of their goods to giving WiFi-connected pedometers to staff. Estimations for spending on the IoT vary considerably. Research firm Technavio believes that the market value of the IoT could be nearly $132bn in 2020. Gartner says more than $440bn will be spent on the IoT in 2020. IDC, meanwhile, reckons that global spending on the IoT will reach $1.29tn in 2020. Sam Lucero, an analyst at IHS Markit, says the numbers are hard to verify: “To my way of thinking it does not mean anything because who’s getting that money? It’s a very convoluted picture, ultimately.” Mark Hung, an analyst at Gartner, says that while connected consumer goods such as Apple’s smartwatch have gained most media attention, “industries that are asset-intensive by nature”, including manufacturers and energy companies, spend the most on connected devices. The companies benefiting most from the internet of things are the ones providing the services to build it. Companies are still in the exploration stage with most of their IoT projects   Bringing the IoT to business is a slow process rather than a revolution. “Right now, the internet of things is still largely about increasing efficiency,” says Mr Lucero. The companies benefiting most are those providing the services to build it, says Mr Hung, “because companies are still in the exploration stage with most of their IoT projects . . . they’re looking for outside help for that,” rather than trying to create them in-house. Cloud computing giants, allowing organisations to access their information from anywhere on the planet, are the biggest providers of IoT platforms — including Google, Microsoft, Amazon Web Services and IBM. Long-established manufacturing and utilities companies have also rushed to offer IoT services. Hitachi, the Japanese company, made what Toshiaki Higashihara, company president and chief executive, called a “monumental change” in September, when it combined three companies into Hitachi Vantara, a single business focused on the IoT. GE has also entered the arena, offering Predix, an IoT platform for industry, while SoftBank, the Japanese telecom company, this year acquired chipmaker Arm Holdings for $32bn, largely based on its anticipated ability to produce 1tn chips for IoT devices over the next two decades. Some start-ups hope to establish themselves in the nascent market for providing IoT platforms, notably Ayla Networks of California, which is backed by investors including Cisco and led by David Friedman, who previously worked at tech groups ZeroG Wireless and SanDisk. The IoT does, however, come with a host of real world difficulties, from ethical questions over companies spying on employees to an organisation’s vulnerability to cyber attack. Internet-enabled devices have been hacked and used to mount cyber attacks. Stories abound about mundane internet-connected items being exploited to gain access to systems, including a fish tank in a casino The US Federal Trade Commission is so concerned about the effect on the privacy and information security of consumers that it laid out best security practices two years ago. Mishandling IoT security is a legal and reputational risk for companies and the commission has already taken device-makers to court. In January, it charged D-Link, a computer networking company, and its US subsidiary, over inadequate security measures that the regulator says could have allowed criminals to gain access to users’ live webcam feeds — although part of the FTC’s case was subsequently dismissed by a California judge. Chris Doran, director of research collaborations at Arm Holdings, told the MIT Technology Review that security anxieties were a barrier for the IoT. “Most people realise . . . that IoT won’t happen until security is cracked to the point that people have a sufficient level of comfort [with it],” said Mr Doran. There are also ethical concerns, with the EU taking a dim view of businesses using wearable devices to monitor staff’s footsteps: an EU panel said in June that the practice should be outlawed even if businesses obtained workers’ permission. These potential storms make it difficult to determine the return on investment that companies will achieve from becoming hyper-connected, says Mr Lucero. Even within the industry, companies are pragmatic about how far the IoT can go. CloudMine, a Pennsylvania-based start-up, provides hospitals with a platform to help manage and analyse data, a key component for any IoT project. “I think that health IoT, whether it’s wearables or portable devices, provide us with the ability to capture an unprecedented amount of patient data,” says Steve Wray, CloudMine’s chief executive. This patient information could be used to personalise healthcare. He adds, though, that “the great promise somewhat has to be tempered with a bit of realism,” because healthcare in the US “operates in a largely disconnected state.” “Healthcare IoT is an example of potentially putting the cart before the horse,” he says. 5G and the fourth industrial revolution According to Rajeev Suri, Nokia’s chief executive, the fourth industrial revolution will be powered by superfast 5G internet. “I know that more than a few of you may wonder why we need 5G, wonder what is so different about it, wonder whether it will be worth the billions planned to be spent on it,” he told the Mobile World Congress. “My simple answer is yes. It is both worth it and it is also necessary.” Visitors to Seoul for next year’s Winter Olympic Games will be the first to try the turbo-charged internet connection, thanks to a rollout by Ericsson and the KT Corporation (formerly Korea Telecom). A full mobile-standard version of 5G is expected to be widely available by 2020, says IHS Markit analyst Sam Lucero. Analysts say that 5G will be a big leap forward for the industrial internet of things, for example enabling split-second responses on a factory floor. Less battery power will be required for devices connecting to 5G, meaning that remotely deployed devices, for instance a sensor detecting water levels on a farm, could last much longer. Orange and Nokia are partnering to accelerate the development of 5G services for industries in Europe.

How 3-D Printers Could Erase a Quarter of Global Trade by 2060: ING


Critics of global trade might find something to celebrate in the advent of 3-D printing. 

Raoul Leering, head of international trade analysis at at ING, writes that growth in 3-D printing could wipe out almost one-quarter of cross-border trade by 2060. His review of the technology’s landscape kicks off this week's economic research wrap, which also touches on innovation clusters, attitudes about men and women in the American workplace, and the demographics of art spending. Check back each week for a rundown of new and pertinent economic studies. 

Printing away trade flows

If high-speed 3-D printing makes mass production using the tool viable, it could cause major disruption to the global flow of goods, Leering writes. About half of manufactured good could be printed by 2060 if the current growth of investment in the technology persists, he estimates. That would cut world trade by a quarter, because it would require less labor and reduce the need to import intermediate and final goods from low-wage countries. That could cause trade deficits to narrow for major importers, though countries with a trade surplus could suffer.

That’s Leering’s slow-growth scenario. If investment ramps up, doubling every five years, he guesses that as much as two-fifths of global trade could disappear. His estimates are uncertain (there is no data on the value of 3-D printed products and related services worldwide, and the technology hasn’t yet evolved to the point that it’s enabling mass production), but they highlight that there’s potential for disruption. 

Now Robots Are Coming After India’s Low-Cost Labour


Butler, a stubby, orange robot, crawls along the aisles to fetch everything from smartphones to shampoos from warehouse shelves. It takes an hour to do what an average worker does in five. Its cousin Sorter, a smart conveyor belt, arranges parcels by weight, size and delivery location at least four times quicker than humans.
Built by India’s largest warehouse robotics startup GreyOrange, they help online retailers and logistics firms cut delivery time and costs, central to the fight for supremacy in this nation’s booming e-commerce market. The startup operates from Gurugram and Singapore counts the country’s biggest e-tailer Flipkart, furniture portal Pepperfry and courier service providers DTDC and Delhivery among its clients.
“With the help of these robots, an order can be picked from the warehouse and dispatched in 20 minutes,” said Akash Gupta, co-founder and chief technology officer of GreyOrange. The robots are already sorting about 1.2 crore packets a month, he said. Butler and Sorter could even replace 60-80 percent of warehouse workforce, according to a GreyOrange presentation.
That robots are gaining ground in a land of abundant cheap labour shows just how dramatic the disruption to human work could become in the very near future.
A warehouse worker here earns Rs 10,000 a month on an average (about $8 a day). As online retailers turn to machines to manage a growing volume of orders, a chunk of such unskilled jobs could become redundant. More so when homegrown e-tailers like Flipkart – still the nation's biggest e-commerce site backed by SoftBank Group Corp, Tiger Global and Tencent Holdings – battle Seattle-based giant Amazon, which triggered an automation war in the U.S. by acquiring Kiva Systems for $775 million in 2012.
“The kind of jobs we used to see in warehouses four, five years back are not going to be there in the coming two to three years,” Satish Mena, an analyst at Forrester Research India Pvt., told BloombergQuint. “The pace of job creation in these warehouses is slowing down. The scale e-commerce companies are looking at, and the order volume they are getting, they need robots and humans to work side by side.”
The advisory firm expects India’s online commerce to be a $64-billion market in four years, clocking a five-year compounded annual growth rate of 31.2 percent.
Amazon and Flipkart opened nearly a quarter of their 71 warehouses in the last one year. Having lured customers with discounts, they are dealing with demanding buyers in a competitive market. The focus has shifted to same-day deliveries and easy returns, to win customer loyalty.
With automation, the number of jobs per warehouse may not increase or could decrease as companies become more efficient, said Arvind Singhal, chairman of Technopak Advisors Pvt. Ltd, a retail consulting firm. “Yet, as the e-commerce industry grows, the likes Flipkart and Amazon will require more distribution centres and will require more people to manage them.”
Flipkart, Pepperfry, Delhivery didn't respond to BloombergQuint’s queries and Amazon said it doesn't use robotics in India but has an automated conveyor system at two of its largest warehouses.
GreyOrange said it has shipped the robots to logistics companies globally, from Chile and Brazil to Singapore and Hong Kong.
Having raised $35 million from the likes of Tiger Global Management and Blume Ventures, it runs eight offices in five countries and employs more than 650 people. The company declined to share revenues.
Courier service DTDC Express Ltd., which serves more than 11,000 locations, has been using the GreyOrange Sorter for three years now. It used to take six to seven hours to push a parcel out of its hub. The time has come down to 90 minutes after installing the sorter, said Abhishek Chakraborty, executive director at DTDC Express.
“It reduced the number of human touch-points that came in the journey of the parcel. The speed went up and the number of errors came down.”

Dawn of Solar Age Declared as PV Beats All Other Forms of Power


Solar power blossomed faster than for any other fuel for the first time in 2016, the International Energy Agency said in a report suggesting the technology will dominate renewables in the years ahead.
The institution established after the first major oil crisis in 1973 said 165 gigawatts of renewables were completed last year, which was two-thirds of the net expansion in electricity supply. Solar grew by 50 percent, with almost half new plants built in China.
“What we are witnessing is the birth of a new era in solar PV,” Fatih Birol, executive director of the IEA, said in a statement accompanying the report published on Wednesday in Paris. “We expect that solar PV capacity growth will be higher than any other renewable technology through 2022.”
This marks the sixth consecutive year that clean energy has set records for installations. Mass manufacturing and a switch by governments away from fixed payments for renewables forced down the cost of wind and solar technology.
The IEA expects about 1,000 gigawatts of renewables will be installed in the next five years, a milestone that coal only accomplished after 80 years. That quantity of electricity surpasses what’s consumed in China, India and Germany combined.
The surge of photovoltaics in China is largely due to government support for renewables, which are being demanded by a population concerned about air pollution and environmental degradation that has led to deadly smogs. The country is seeking to reduce its reliance on coal and has become the world’s largest market for renewables, particularly solar.
“The solar PV story is a Chinese story,” said Paolo Frankl, head of the IEA’s renewable energy division. “China has been for a long time the leader in manufacturing. What’s new is the share in the market. This year, it was equivalent to the total installed capacity of PV in Germany.”
The U.S. and India are among other nations pushing renewables. They along with China are projected to make up two-thirds of the clean-energy expansion worldwide. Despite President Donald Trump’s vow to bolster coal’s position in the power market, the U.S. is expected to be the second-largest market for renewables.
The IEA also expects biofuels to take a larger role in the transportation industry, surpassing gains by electric vehicles.
“A lot of attention has been given in recent months to electric vehicles, and rightly so. They are increasingly globally, exponentially,” Frankl said. “But I have to say, we should not forget the biofuels, which at the end of 2016 represented 96 percent of total renewable transport.”
Electric vehicles numbers will double by 2022, but biofuels will still make up 93 percent of renewables consumed in the transport industry, the IEA estimates. The fuels are needed especially for heavier vehicles including planes and ships.
The organization recommends that governments put incentives in place to spur the development of biofuels made from non-edible plants, which would avoid diverting food crops into fuel tanks. The cost of biofuels currently is about double the global price of gasoline, Frankl said.