Welcome to Top of the Morning by Mint, your weekday newscast that brings you five major stories from the world of business. It's Wednesday, May 1, 2024. My name is Nelson John. Let's get started:

Indian markets broke the upward trend on Tuesday ahead of the US Federal Reserve’s policy decision today. Both Sensex and Nifty saw a slump, ending the session down 0.25 per cent and 0.17 per cent respectively. 

As the wave of Generative AI  continues to swell, major global IT companies like Accenture, Cognizant, and Capgemini are stepping up, recognizing the technology as a significant business risk. This shift points to GenAI's growing impact within the tech sector, prompting a crucial conversation about the potential legal, financial, and reputational risks associated with AI deployment. These leading firms have started flagging concerns in their latest annual reports about how the rapid evolution of AI tools could negatively impact their operations. From potential legal liabilities to disruptions caused by fast-paced technological changes, the risks are mounting. Moreover, there's an underlying worry about the technology's still-developing regulatory environment and its ability to deepen social divides or amplify cyber threats like AI-generated deepfakes. Mint’s Varun Sood reports on the cautious approach of IT companies towards AI and how Indian IT majors like TCS and Infosys could follow their lead.

The global pandemic changed many aspects of our lives, and one of them was the way we vacation. Covid restrictions across the world gave rise to the phenomenon of ‘staycations’ and ‘workations’. Villa rental emerged as a trend because of this. However, the way we vacation in villas has really shifted since the pandemic. There was a time when these private holiday villas were booked for about 15 days a month on average. Now, they're seeing just nine days of occupancy. What's behind this change? As more of us head back to the office, the need for extended stays has dropped. Plus, there's been a bit of a boom in the number of high-quality villas.  Mint’s senior editor Varuni Khosla spoke to industry insiders including the heads of villa rental platforms StayVista and SaffronStays, who told her that these villas are now popping up all over the country. However villa owners are hopeful for a turnaround and modelling their villas around the needs of vacationers. This push towards luxury is helping operators pump up their revenue despite an overall fall in bookings. As the luxury villa market continues to grow and evolve, it's clear that this segment of the hospitality industry is headed for some exciting times.

Anant Goenka, the 40-year-old vice-chairman of the $4.4 billion RPG Group, is charting a new course for the conglomerate. Unlike his father, Harsh Goenka, and grandfather, Rama Prasad Goenka, who expanded the business through aggressive acquisitions, Anant is known for a more conservative approach. Yet, after a decade-and-a-half with RPG, he’s signalling a shift towards greater acquisition activity. Anant, who prefers to keep a low profile, has been instrumental in improving the group’s financial health while expanding into related business areas. Recently, he expressed a desire to adopt a more acquisitive strategy moving forward. This includes investing 70% of capital in core businesses, 20% in adjacent businesses, and 10% in high-risk, high-return ventures. Under his leadership, RPG has ventured into new fields like e-commerce and telematics and is making strides in the climate sector. Mint’s senior editors Ranjani Raghavan and Satish John spoke to the Goenka scion for a profile. You can scroll down to the end of the show description and read all of the stories featured in this episode.

Awfis Space Solutions just got the green light for its IPO, and it's a big deal for the flexible workspace crowd. If Awfis nails its market debut, it could open the door for other co-working space providers to hit the public markets. Remember when Embassy Office Parks went public in 2019? It pretty much kicked off a trend for office and retail REITs. Awfis could be about to do the same for shared workspaces. The sector's visibility from Awfis' IPO could attract significant capital investment, drawing interest from diverse investor groups like private equity, real estate investors, and venture debt providers. This influx of capital will likely accelerate the expansion and profitability of flex workspace operators. Companies such as WeWork India, IndiQube, and Smartworks are already positioning themselves for potential IPOs, fueled by growth in revenues and expansions across multiple cities.  Mint’s senior editor Madhurima Nandy explains what Awfis’ IPO could mean for the co-working space sector, in today’s Mint Primer.

Indian Railways, for years has pride itself on being the carrier of India’s common folks. If you grew up in India you are highly likely to have memories related to the Indian Railways. However, the last few years have seen Indian Railways transform for both better and worse. Better for the AC-passengers - with the advent of new trains like Vande Bharat which are heavily focused on customer service - and worse for the Non-AC passengers who are seeing cuts in the number of affordable coaches. This shift, while it may sound progressive, comes with higher costs, potentially alienating the vast majority of train travellers who rely on the railways for affordable long-distance travel. Given the financial strains—highlighted by the near-miss between operating costs and revenues in 2023-24—the future may hold even tighter spaces in non-AC carriages, as projections indicate a surge in AC passengers but a tepid increase in non-AC ones. Railways grapples with a common dilemma found in many consumer businesses: a small percentage of its customers generate a substantial portion of its income. In the fiscal year 2023-24, passengers in the AC classes—encompassing chair cars, and AC two-tier, three-tier, and first-class compartments—made up just about 11% of total ridership yet contributed over half of the railway's revenue. In stark contrast, second-class passengers, despite comprising three-quarters of total passengers, accounted for less than a quarter of revenue. Moreover, passengers travelling in non-AC sleeper classes, which represent 13% of the ridership, contributed approximately 22% of the revenue. This Long Story by howIndialives.com looks at the ongoing shift at the heart of Indian Railways.

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Show notes:

Unease at Cognizant, Capgemini, Accenture over rise of AI risks

From long retreats to short escapes: The changing face of villa holidays

RPG Group in for a do-over as a scion takes charge

IPOs by flexible workspace firms: Sharing to grow

Indian railways wants to ride the gravy train. But there’s a catch

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