On Episode 998 of The Core Report, financial journalist Govindraj Ethiraj talks to Saharsh Damani, CEO at FADA as well as Abhishek Gupta, Founder, Managing Partner, Pierag Consulting.

SHOW NOTES

(00:00) Stories of the Day

(00:50) Crude Oil Is Flowing Out Of West Asia But Not Refined Products Like Diesel

(02:53) Markets Continue Recovery As Oil Prices Fall

(05:17) Power Demand Is Rocketing As Country’s Second Summer Kicks In

(06:32) India Sees Record Auto Sales In September Across Most Categories

(16:23) Are GCCs Consolidating Back Into IT Services Companies?

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Wednesday, the 7th of October and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

Our top stories and themes…

Crude oil is flowing out of West Asia but not refined products like diesel.

Markets continue recovery as oil prices fall.

India sees record auto sales in September across most categories.

Our GCC is consolidating back into IT services companies in India and power demand is rocketing as country's second summer kicks in.

Markets, Oil, Rupee and Gold

Gulf oil flows, excluding Iran, crossed 81% of pre-war levels in September, according to data, but on the other hand, while ships are ferrying almost as much crude oil out of the Strait of Hormuz as they were before the Iran war, they are barely moving any barrels of diesel, the fuel that powers a lot of mobility, particularly commercial.

In the US, the national average for a gallon of diesel has hit a record of $6.5 a gallon last month and in states like California, diesel has touched a record high of $8.4 a gallon. Now, not much of this appears to matter to the policy makers in Washington, but it's worth noting. Andy Lippo, president of Lippo Oil Associates in Houston, told the Wall Street Journal that consumers don't buy crude oil, they buy gasoline, jet fuel and diesel.

As a result of missile and drone strikes in the Middle East, several large refineries have been damaged and the world finds itself short of refined products. Now, India, of course, does not have a refining problem and the crude problem is getting addressed. India has more than 260 million tonnes of crude refining capacity, but the cost of transport of crude is rising, so the paper or terminal price that we refer to here and the contracted price can differ much more than usual.

The Wall Street Journal said that cargoes of oil products like gasoline and diesel came to about 1.3 million barrels a day, accounting for only 11% of overall flows. The rest was unrefined crude oil and before the war, refined products were about 20% of the oil cargo passing through the strait. Meanwhile, Goldman Sachs has forecast that global diesel and jet fuel crack spreads.

The premium refined products command over crude will average above $40 per barrel in 2027, which is more than twice the usual level of around $20. And this is despite Goldman expecting Brent to stabilise at approximately $80 a barrel as the crude flows through the state of Hormuz normalise. But the overall price trend for crude seems to be positive, at least for right now, thanks to which Brent crude futures were at about $98.60 on Tuesday afternoon, so that's below $100 a barrel, thanks to which markets in India were strong ahead of a potential interest rate hike too.

The benchmark indices were up. The Sensex was up 685 points to 73,067 and the Nifty 50 was up 220 points to 22,776. The broader market saw the Nifty mid cap and small cap rising 1 and 1.5% each.

Meanwhile, as Indian markets limp ahead, NVIDIA corporation is on the verge of becoming the first company with a $6 trillion market capitalisation, much more than all of India, as investors have rushed back into the chip stock. NVIDIA had earlier given a very strong revenue outlook and announced the biggest buyback in history. The rupee has meanwhile declined to its weakest level in over two months on Tuesday, thanks to all the foreign portfolio investors selling, even as traders now look at the Reserve Bank of India's monetary policy decision today, that's Wednesday, where a hike is anticipated, according to Reuters polls.

The rupee ended the session at Rs 96.42 on Tuesday evening. Gold prices were up slightly on Tuesday as expectations of a Federal Reserve interest rate hike have now come down and gold is at about $4,152 per ounce. The World Bank on Tuesday raised its growth forecast for India, saying strength in industry and services will help the economy weather a weaker monsoon and elevated energy prices.

The economy will mostly grow 7.1% in the year ending March 2027, which is half a percentage point more than what the bank had earlier forecast. The projection is in its latest South Asia development update and is above the Reserve Bank of India's 6.7% estimate, which could also be upgraded or updated today. Meanwhile, a note from CareAge Ratings has said that fresh spreads for scheduled commercial banks in India has widened 27 basis points month-on-month to 2.94% in August 2026, the highest since November 2025.

The fall in fresh deposit rates reflects a change in the mix of deposits banks have raised. The note says that $133 billion mobilised under the foreign currency non-resident bank swap window replaced costly rupee wholesale funding and deposit growth reached a 15-year high of 17.8% end of August. The rise in lending rates came from private banks where fresh lending rates rose about 10 basis points to 9.19%. All of this, thus the funding benefit is unlikely to extend because the swap window closed on the 31st of August and system liquidity has fallen back to about Rs 490,000 crore as of September 30.

Power Demand Is Rocketing As Country’s Second Summer Kicks In

The signs of a truncated monsoon and a second summer are already showing on power demand as temperatures rise across the country. Several Indian states are seeking additional power allocations from the government to avoid outages as weak hydropower output and maintenance at some plants have reduced electricity supply during the night, a Reuters report is saying. States like Rajasthan and Gujarat, which lead the renewable energy list, have sought additional supplies along with other states like Maharashtra, Tamil Nadu, Andhra Pradesh, West Bengal, Uttar Pradesh, Chhattisgarh and Delhi, the officials told Reuters.

Meanwhile, the average market clearing price in the day-ahead market or DAM at the Indian Energy Exchange stood at Rs 7.3 per unit in September 26, which is a 100% year-on-year jump on the back of high demand, the exchange said on Tuesday, according to reports quoted in the Business Standard. Strong power demand also led to a 281% increase in buy bids in the day-ahead market thanks to or rather resulting in higher market prices. Similarly, the average market clearing price in the real-time market or RTM at Rs 6.90 per unit was a 108% jump year-on-year and this was for the month of September.

India Sees Record Auto Sales In September Across Most Categories

Car sales for the month of September were up 32% while overall auto sales were up 32%. Moreover, almost all categories except tractors have seen record numbers for the month of September. Two-wheelers were up 33%.

The Federation of Automobile Dealers Associations has said that September was the best ever September in Indian auto retail with the industry growing to about 2.5 million units up about 32% year-on-year and about 4.7% month-on-month. FADA has also said the figure is the most base distorted print of the year a mirror of last September when buyers deferred purchases in the week before a GST 2.0 which essentially means reduction in prices because of lower GST on many products took effect on the 22nd of September 2025. So the real year-on-year test says FADA now lies in October which lapsed last year's GST-fuelled festive surge.

Growth was fairly even across geographies on an annual basis but the sequential festive pickup was higher in urban India. I spoke with Saharsh Damani CEO of FADA and I began by asking him what stood out in the September figures and I also asked the outlook was for the coming few months.

INTERVIEW TRANSCRIPT

Saharsh Damani: I would actually say that once we remove the base effect, the September numbers become even more interesting, you know, because there are three or four underlying signals which stand out very clearly. First is the absolute scale of retailing. We retail around 25.4 lakh vehicles, making this the best September ever for Indian auto retail. That's a known fact. And this is not only a marginal record. The previous best September was in 2018 at around 20 odd lakh vehicles.

So we are about five and a half lakh vehicles plus, which is 26% above the previous September, previous peak. And also if you see five out of the six categories have recorded their best ever September. Second is the sequential movement.

If you see September normally does not necessarily grow strongly over August, particularly when part of festival buying is still ahead of us, you know, yet overall retails has grown 4.7% on a month-on-month basis. Passenger vehicle has grown 6%. Commercial vehicle has grown a staggering 14%.

And you see wheel construction equipments is above by 25%. Tractors was the only single loan case, you know, where it didn't perform as much as we would have thought have been. Third is if you see you completely remove September from the equation and look at April to August figures, you know, retail was still growing at around 17%.

So to me, that is probably a much cleaner indication of the underlying run rate that a 31.8% headline number itself, you know, and if you see H1, which is April to September, this has closed at again at a record 1.55 crore vehicles, which is up by around 21%. And the fourth is the structural story, you know, which I think is very important, which is electrification. September EV retail test and all-time high numbers of roughly 3.35 lakh odd vehicles, whereas overall EV penetration has also, you know, test and has gone above 13%. So two wheelers and if you see EV penetration is now at 11.5%, which is again all-time high numbers. PV electrification is around 8.5%. So all these numbers, you know, are creating newer records every month, which is going by. Lastly, if I remove the, you know, GST base effect entirely, my reading is that the market is still showing genuine breadth, sequential momentum, and also a fairly significant change in the power drain mix.

The question from here is not whether September was strong or not, it clearly was, you know, but the real question is how much momentum, you know, converts during the festival period against a much tougher October base, which will now kick in.

Govindraj Ethiraj: Right. Couple of questions. Since you mentioned electrification, last time, I think the ratio of alternate fuels to regular fuel for passenger was almost 50-50, or it was slightly lower in favour of alternate.

What is it currently?

Saharsh Damani: So if you see the ratio of alternative fuel was 41% in August and 40% for petrol vehicles. This time, you know, it has flipped. 41% is petrol and 40 odd percent is alternative fuel.

And we are seeing that there is some softness coming in, in the CNG vehicles, more because of demand is much high compared to the supplier. And that is, I think, is a constraint because hybrids and electric EV vehicles, both are holding the fort. It's a 2% drop in the CNG vehicles.

That's the reason why alternative fuel is a tad lesser compared to the petrol vehicles this month.

Govindraj Ethiraj: As compared to previous listings.

Saharsh Damani: So, and petrol, you're saying is holding at the same level. Petrol continues to hold at the same level. In fact, diesel also continues to hold at the same level.

Govindraj Ethiraj: Right. And just to come back to the all-time highs, you also said that it's not just September, but all categories except tractors have seen an all-time high, which means the highest sales ever recorded so far. And within that, what's the segment that's grown the most?

Saharsh Damani: The sectors, if you see the first six months, you know, passenger vehicle clearly has grown by 24%, two-wheelers has grown by around 20%. And also what stands out is the, you know, the way commercial vehicles have shown particularly the strong momentum. CVs has crossed 1 lakh units in September for the first ever time, you know, at about 1.04 lakhs. And it is up by around 14% sequentially over August. That is encouraging because if you see the demand gives us a good read on the underlying economic activity made with the infrastructure spending, the freight movement, replacement demand, mining, as well as construction. But also what I would again highlight is the way two-wheelers has performed simply because of their scale.

You know, we retail around 18 odd lakh vehicles in September, and the previous best was 15.5 lakh vehicles in 2018, way back in 2018. So we are now around 15% above the record, which has stood for a clean eight years. This is significant because the two-wheeler market, if you see, has taken much longer than the passenger vehicle to fully regain its previous peak.

What caused this jump after so long? If there are any one or two driving factors? The biggest driving factor you see is the GST 2.0, which was rolled out last year. And this coupled with the rural pickup, which has happened, you know, first time buyers have started coming into the market, both in the passenger vehicle and as well as the two-wheeler category. People are migrating and upgrading from a bicycle to a two-wheeler. And similar upgrades are happening from entry-level category to a mid-level category or to a higher-level category.

So all these factors, you know, along with the disposable income, which has gone up because of the income tax benefits, which kicked in last year. So these all have, you know, rooted for a better two-wheeler market in last one odd year.

Govindraj Ethiraj: Right. We saw very strong rural demand in the last few months. And that was really powering, not powering, but at least significantly powering, let's say, passenger vehicle sales, particularly on the lower ends.

Is that changing now? Or are you seeing some shifts there?

Saharsh Damani: Yeah, I think because of the monsoon, there is some tepidness, which we are seeing on a short-term basis. That is definitely happening. I think September basically is giving us the first indication that the very large rural-urban gap, what we saw earlier, may now be normalising rather than rural demand actually, you know, collapsing.

So if you look at the passenger vehicle growth, August rural passenger vehicles was growing at around 25% YOY versus roughly 11% in the urban market, you know, a very substantial gap. But in September, however, if you see rural passenger vehicles and urban passenger vehicles, both are growing in 32% range, you know, on a YOY basis. And sequentially, if you see urban actually is growing faster by about 8% versus three and a half percent in the rural market.

If you look at the month-on-month figures, you know, now, I would not read one month as a reversal of the rural story, but rural demand remains quite resilient. And even in the two-wheelers, if you see the rural and urban growth in September, was almost identical at around 33%, you know, but there is a, you know, clearly a risk building because of the deficient and uneven monsoon, you know, and you can already see some sensitivity in tractors for the past two-odd months, you know, because tractors fell by around 12 and a half percent on a month-on-month basis, which gives a short-term trend.

So for the next few months, I would watch how the Rabi is showing, what are the reservoir levels like and how the rural cashflow is coming into the system. These things have to be monitored very closely. At the same time, you know, rural India is not purely an agricultural economy because there are non-farm income infrastructure activities, you know, finance, improved connectivity.

All those are also playing a big role in terms of building traction for the auto retail in the rural market.

Govindraj Ethiraj: Right. So you already answered part of it when you talked about the coming few months in the context of rural. What's the overall outlook?

Saharsh Damani: So I think overall outlook is, you know, quite good. What our dealers are saying for the month of October, which is the near-term outlook, around 75% dealers are positive for the month of October. And if you look at the long-term outlook, again, around 70% dealers are positive for the months of October, November and December.

But we are going a bit cautious in this optimism. So hence our stance is cautiously optimistic because of the very single fact that the base has become quite huge, you know. So even 1 to 3% ROI growth if we see over these kind of base effects, you know, I think we'll be doing a good job.

Govindraj Ethiraj: Got it. Saharsh, thank you so much for joining me.

Saharsh Damani: Thank you.

Are GCCs Consolidating Back Into IT Services Companies?

A report in the Economic Times says many GCCs despite long operations have struggled to mature beyond a certain level.

This has led to higher operating costs and internal inefficiencies and the deals provide the IT industry with an inorganic method to enhance revenue and also facilitate capability acquisitions. The big transactions this year include Tata Consultancy Services or TCS buying Best Buy's GCC operations, HCL Tech acquiring Guardian Life GCC and Wipro buying MindSprint. MindSprint is the IT unit of food and agriculture company OLAM.

I reached out to Abhishek Gupta, founder and managing partner of Pierag, a global consulting firm that advises GCCs and I began by asking him whether he too was seeing this trend.

INTERVIEW TRANSCRIPT

Abhishek Gupta: Well, I think it's pretty big news out in the market which has kind of evolved and TCS is as recent as this week. So I think it's been great to kind of hear such big transactions happening in our world. To address your question whether this is a kind of a trend which we are going to see in the near future, is it something which is picking up?

I think these are one of transactions which have happened recently. There will be some individualistic transactions which will keep on happening over the next few years. However, the trend will still remain the same which is more towards the inclination to have their own captive centres.

I think in the last one or two years, we have seen a lot of positive momentum coming in wherein the companies back in the western part of the world are trying to kind of set up their own captive centres. They are shifting away from the service providers. However, having said that, there is a lot of positivity which is coming up for the BOT kind of a model.

And there are different forms and formats in which the BOTs are being now structured. We ourselves have been part of one of such transactions where we helped in setting up one of the biggest TCCs and then they kind of carved out themselves into a captive centre. So yeah, I think the future is more about captive.

The other interesting thing with what we are observing now out in the market is about the M&A activities. There are a lot of M&A activities which are happening across the world wherein the companies are buying each other. And as part of those M&A transactions when we look into those M&A transactions, either the two parties have their separate operating centres in this GCC environment or one of them is a pretty big player with their own captive centre or through a service provider.

And when they get into this kind of a consolidation, that's where they think that how they want to bring the two centres together or where they want to bring the synergies together. So I think the trends are evolving. It's a learning which the world is going through.

And I can only say that I've been in this space for almost 20 years now. But the way the evolution of this entire GCC concept has happened in the last two years is quite remarkable.

Govindraj Ethiraj: Right. And I get a sense of M&A driving consolidation back here as well. But when you look at the Indian market today, so obviously different companies are driven by different imperatives.

But in the case of the companies who went back to their parents or in the case of companies which went or were bought over by service providers, what could be the rationale?

Abhishek Gupta: It's probably the rationale where the companies are kind of looking to really streamline the overall focus, specifically with the AI coming into play. They want their entire concentration of the so-called the research, the functionality around AI should be kind of streamlined and should house under one particular unit. So I think this is what is kind of one of the reasons why we are kind of seeing this kind of a trend.

And of course, the overall optimisation was from a cost perspective. That's another thing which kind of come into play. And the third is, of course, the talent, how they want to really optimise the talent.

So I think if you kind of put across the combination of these three things, the AI, the cost and the overall talent, I think these are the three underlying factors for our situations.

Govindraj Ethiraj: And as you look ahead, Abhishek, what are the kind of companies or investments that you're seeing in the GCC space? Is it more banking and finance? Is it more consumer facing or other sectors?

Or is there, if there is any sector weightage or leaning?

Abhishek Gupta: I think there used to be a trend few years back where there was a kind of a situation where a particular sector was more interested and then the other players in the similar sector were kind of following that particular starting point. However, in the last two years, what we are observing is it is becoming more sector agnostic. At this point of time, there is no particular sector where you can kind of really put your bets in and say that, you know, what are the next six months belongs to the retail consumer products or the next 12 months belongs to this manufacturing industry.

So I think the common phenomena which every GCC is now kind of adapting and the companies are now focussing is on the entire concept of the research, where they're not seeing these kind of GCCs as a cost centres. They want to convert this entirely into a value centre. And as part of the value centre, the ask from the organisation is not only to kind of optimally look from a cost standpoint, but also to kind of figure out avenues where they can start doing this kind of production in terms of tech and AI.

So I would say that there is, I have not seen any such trend kind of dropping up where there is any particular industry sector which is more focused.

Govindraj Ethiraj: Right. And broadly, how are you seeing the talent pipeline at this point, either for specialist areas, which could be, let's say, engineering, and maybe even, let's say, relatively non-specialist areas?

Abhishek Gupta: See, talent pipeline is extremely interesting. If I happen to talk about a little bit about our company, we are about 40% AI native. So technically, we are kind of transitioning our talent into an AI native talent.

And that's what exactly is the demand is. Interestingly, India is one of the highest producers of the AI learned or AI equipped talent. And that's what is going to be the future, wherein the clients and the companies are going to kind of look out for a talent, which brings a subject matter expertise with some flavour of an AI.

It is not that they will not look for the IT folks, they will not look for the finance folks, and so on. But every other organisation is looking for every other person working in the GCC world to kind of have some kind of knowledge and experience to kind of showcase on the AI side. So I think it's going to be a combination talent.

That's how I see the things.

Govindraj Ethiraj: Right. Last question, Abhishek. So the last year and a half, two years have been a difficult phase for most companies, economies around the world.

Has that changed the way people look at the concept of GCCs? I know the numbers show that they continue to add capacity, including in India, but is there any shift in the way people look at GCCs or the role they play, or the kind of skills and talent that are being equipped within them?

Abhishek Gupta: Yeah, I think the sentiments are definitely not positive across the world. There are a lot of job bursts and everything is happening. It has somewhat shown a very miniscule impact in the GCCs as well.

We have seen some kind of a job cuts coming our way as well. We would have heard the PayPal story and a couple of other stories wherein in India in the last one year, we have lost about 5,000 to 6,000 jobs. But if you look and apply that ratio on the overall population of the GCC talent, which is about 2.4 million, it is hardly 0.2%. Wherein if you look into the growth annually, we are still looking to add about three to 400,000 people every year. So if you look into the net of between 1 and 400,000 people vis-a-vis 5,000 people kind of losing out the jobs, it is negligible. Having said that, yes, the companies have become overly cautious and they are becoming more thoughtful. And there is a huge shift which is kind of really transforming into talking about ROI vis-a-vis measuring ROI.

So when this entire GCC concept got started, everyone was kind of rewarded with the fact that, of course, it's going to help in uplifting the margins, providing value, talent to the end clients and consumers. But off late, I think the companies which are really setting it up, they are quite focused in terms of the measurable ROI. So that's a big shift which is happening and which is kind of putting a lot of pressure on the entire ecosystem within the countries like India as well.

Wherein now every individual who's being added needs to kind of generate the expected ROI. So I think that's where it is becoming more demanding. It is becoming more value generating.

So that's what I would like to kind of add over.

Govindraj Ethiraj: Great. Abhishek, thank you so much for joining me.

Abhishek Gupta: Thank you. Thank you, Govind, for having me over here.