THURSDAY, 13 FEBRUARY2020 30 pages in 2 sections MUMBAI (CITY) ~9.00 VOLUME XXIV NUMBER 129

THE MARKETS ON WEDNESDAY Chg# Sensex 41,565.9 349.8 Nifty 12,201.2 93.3 ECONOMY&PUBLIC AFFAIRS P21 COMPANIES P2 Nifty futures* 12,228.5 27.3 Dollar ~71.3 ~71.3** Euro ~77.9 ~77.8** LOOKING FORWARD TO AIR INDIA’S JEWELS TO FIND Brentcrude ($/bbl)## 55.9## 54.0** Gold (10 gm)### ~40,421.0 ~40.0 FIRST INDIA VISIT: TRUMP PLACE IN NATIONALMUSEUM *(Feb.) Premium on Nifty Spot; **Previous close; # Over previous close; ## At 9 pm IST; ### Market rate exclusive of VAT; Source: IBJA PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE SRINATH NAMED TATA TRUSTS CEO; JHAVERI Taxresolution Bill’s Retail inflation hits near TO JOIN DORABJI TRUST 6-year high; IIP contracts ambit setto widen INDIVJAL DHASMANA continued to decline at a reduced New Delhi, 12 February MACROECONOMIC WOES rate in December. It shrank 0.1 per (In % YoY) cent in December from 5 per cent Cabinet approves changes to include litigation across forums A slim revival in industrial pro- in November. Manufacturing duction in November had prompt- declined 1.2 per cent in December DILASHA SETH EYEING HIGHER sion issues, under the ed Finance Minister Nirmala from a growth rate of 2.7 per cent in New Delhi, 12 February scheme. Sitharaman to see green shoots of the previous month. Srinath Narasimhan (left), a Tata group MOP-UP This means that high- recovery. But this has turned out It was only mining which veteran, was on Wednesday appointed CEO aking the direct tax Key features of the profile cases like Vodafone to be a temporary blip — factory redeemed IIP numbers, rising by of Tata Trusts with effect from April 1. He dispute resolution DirectTax Vivad se and Cairn Plc, which are output has again contracted by 0.3 5.4 per cent, against 1.7 per cent in joins at a time when group trusts are facing scheme attractive, Vishwas Bill, 2020: pending in arbitration, per cent in December. November. litigation with the I-T department over M the Union Cabinet are eligible for the The retail inflation rate, how- Before November, IIP had con- their tax status. The trustees also on Wednesday expanded its | Scheme open till scheme. Queries sent ever, rose to a 68-month high of tracted three months on the trot. appointed Pramit Jhaveri, former CEO of Citi scope to cover litigation pending June 30 to the two companies 7.59 per cent in January, even as Note: Base year is 2011-12 Source: MoSPI Capital goods continued to India and former vice-chairman of in arbitration forums and debt | Complete waiver did not elicit any the rate of price rise in food decline at an accelerated rate in banking, capital markets and advisory for recovery tribunals (DRTs). The of interest and response. items declined. However, the per cent in December. December. Production of these Asia-Pacific at the American bank, as a scheme will also include cases penalty for Javadekar said food inflation rate remained ele- The index of industrial pro- items fell 18 per cent in the month, trustee of the Sir Dorabji Tata Trust with related to revision and small-val- the decision had been vated at 13.63 per cent. The con- duction (IIP) fell from a growth rate from a contraction of 8.6 per cent in effect from Wednesday. 3 > ue search disputes. settling tax disputes pending taken on the basis of sugges- sumer price index (CPI)-based of 1.8 per cent, as the manufactur- the previous month. This will The Cabinet also reduced the at various levels, if payment tions received from various stake- inflation rate stood at 7.35 per ing sector slipped into negative ter- impact industrial production in the disputed amount by half for those made by March 31 (cases in holders. “After the Union Budget, cent; food inflation was at 14.19 ritory again. Electricity generation coming months. Turn to Page 19 > COMPANIES P2 assessees who got favourable arbitration include Vodafone, the finance minister held discus- DRL to buy Wockhardt’s orders but the income-tax depart- Cairn Plc) sions with stakeholders and ment challenged those. | Additional 10% of tax amount sought suggestions from them. branded bizfor ~1,850 cr The move On the basis of their suggestions, will have to be paid after that Dr Reddy's Laboratories has entered into a ECONOMY comes a week there are now new amendments BUSINESS STANDARD BEST B-SCHOOL PROJECT AWARD definitive agreement with Wockhardt to PAGE 4 after Finance | Fortax arrears pertaining to to be made in this session of PHOTO: KAMLESH PEDNEKAR acquire select divisions of its branded CABINET OKAYS Minister interest and penalty, 25% of Parliament,” he said. generics business in India, Nepal, Sri Lanka, INFUSION OF Nirmala disputed penalty/interest Disputes related to search and (From left) Bhutan, and Maldives, and a manufacturing ~2.5KCR INTO 3 Sitharaman will need to be paid by seizure cases where recovery is G Teja of Vinod plant for ~1,850 crore. The business is valued introduced the below ~5 crore will also be taken PSU INSURERS March 31; 30% if payment Gupta School at 3.8 times the annualised revenue. Direct Tax made after that up under this scheme. The whole of Management Vivad se purpose, Javadekar said, was to at IIT-Kharagpur Vishwas Bill, 2020, in the Lok enlarge the scope of the Bill. (1st runner-up), LPG price sees biggest Sabha to resolve disputed tax cas- Amit Maheshwari, managing Kapil Gavali of hike in sixyears es, amounting to ~9.3 trillion, giv- plete waiver of interest and penal- partner, Ashok Maheshwary & NITIE, Mumbai ing effect to the Budget ty will be given if tax dues are paid Associates LLP, termed it a wel- (winner), and State-run OMCs sharply hiked the price of announcement. by March 31. An additional 10 per come inclusion. “Including revi- second runners- non-subsidised liquefied petroleum gas by The scheme offers waiver of cent of the disputed amount will sions, arbitrations, and DRP pro- up Ayush Trivedi a steep ~144.5 per cylinder due to a spurt in interest, penalty, and prosecution have to be paid after that. ceedings will help in garnering of SCMHRD, benchmark global rates. The price was for settling tax disputes. It was ear- Union minister Prakash more revenue. There was no good Pune, and Vivek increased to ~858.50 for a 14.2-kg cylinder, lier limited to cases pending before Javadekar, briefing the media reason to keep these proceedings Sathiamoorthy from ~714 earlier. This is the steepest hike in the commissioner (appeals), the after the Cabinet meeting, said it out of the purview of the scheme, of XIME, Chennai rates since January 2014, when prices had Income Tax Appellate Tribunal, had decided to cover disputes if the intention is to garner rev- gone up by ~220 per cylinder to ~1,241. high courts or the Supreme Court pending in DRTs, arbitration, tri- enue and reduce litigation.” > as of January 31, 2020. Now, a com- bunals, and courts, besides revi- Turn to Page 19 > SOLVING REALWORLD PROBLEMS AT INDIA INC P21 ON DoTmaysendAGR SPECIALS THURSDAY PERSONALFINANCE: demandnextweek Take some risk in a soft interest rate scenario 8 > Move likely if telcos’ plea not taken up by SC The other option is to go for instruments with a higher lock-in period, which MEGHA MANCHANDA IN ATIGHT SPOT give better returns, write BINDISHA SARANG New Delhi, 12 February & SANJAY KUMAR SINGH | On Oct 24, SC rejected telco’s The Department of Telecommunications appeal against govt definition of STRATEGY: (DoT) plans to send out letters to Bharti adjusted gross revenue (AGR) Secondtimelucky? 20 > Airtel and Vodafone Idea, seeking pay- Bisleri is banking on a new recipe for ment of dues, if the industry’s modifica- | Telcos filed a modification plea in SC growth of its soft drinks business but low tion plea on the adjusted gross revenue last month, seeking extension of Jan initial offtake, intense competition and (AGR) issue is not taken up by the 23 deadline to pay AGR dues; the plea Supreme Court this week. The gaps in distribution may make the going is yet to come up for hearing expectation is that at least the tough, writes SHUBHOMOYSIKDAR first tranche of the total esti- | AGR definition has been a mated dues of ~1.47 trillion long-standing issue should be paid immediately, between DoT, telcos > RESULTS RECKONER based on a self-assessment | Cellular Operators method. Association of India says Quarter ended Dec 31, 2019; common sample While the DoT had earlier components of AGR which of 1,620 companies (results available of 1,922) said it would not take any coercive govt was trying to include SALES action if telcos missed the January were in contravention 23 deadline as the SC had agreed to of the Telegraph Act and the Dec 31, ’18 19.5% ~17.54 trillion hear their application requesting Dec 31, ’19 0.5% ~17.62 trillion for modification of the order, offi- recommendations of telecom regulator PROFIT BEFORE TAX cials believe the time has come for the companies to start paying up the Dec 31, ’18 -14.5% ~1.43 trillion dues linked to AGR. “Companies cannot Dec 31, ’19 33.1% ~1.91 trillion manipulate our order (on no coercive inition of AGR and had asked the tele- action) like this and not pay at all,” an offi- com companies to pay up the licence NET PROFIT cial told Business Standard. The letters fee dues and spectrum charges along Dec 31, ’18 -24.4% ~90,062 cr are expected to go out early next week. with penalties and interest to the gov- Dec 31, ’19 42.6% ~1.28 trillion In an order on October 24, 2019, the ernment within three months. Supreme Court had upheld the DoT def- Turn to Page 19 > Companies with zero sales excluded; Given the change in corporate tax rates, to give a fair comparison the profit before tax has been > considered; Compiled by BS Research Bureau; Source: Capitaline CONSOLIDATION OF TELCOS MAYHURT CUSTOMERS Page 2 India’sITleadersseeproduct-led growthas nextbigopportunity

DEBASIS MOHAPATRA PHOTOS: Mumbai, 12 February PTI Inararesight,headsofIndia's topinformationtechnology servicescompaniesshareda stageonWednesday,brainst- ormingthehealthofthe industryandthewayforward. Inafiresidechatorganised byNasscomaspartofits flagshipannualITevent,TCS ChiefExecutiveOfficer(CEO) (From left) Tata Consultancy Services MD & CEO Rajesh Gopinathan, Infosys MD & CEO Salil Parekh andManagingDirector(MD) and Wipro Chairman Rishad Premji at Nasscom’s leadership summit in Mumbai on Wednesday RajeshGopinathan,Infosys CEOandMDSalilParekh,and goingtoputamajorfocuson combineproductandserv- PAGE 2 WiproChairmanRishad product-ledgrowthstrategy. ices,anddeliverthemtoour Premjiagreedthatwhile Thethreecompanieshave clients.We willincreasingly > IT REVENUESTO GROW 7.7% timesforthepredominantly acombinedmarket seetheproductisationof IN FY20: NASSCOM export-drivenITindustry capitalisationofmorethan services(fortheindustry),” > continuedtoremain ~12trillion,andemploy saidRishadPremji,whois INDIATO REMAIN ASTRETCHED challenging,domesticplayers around600,000staffers. alsoaformerchairmanof SOCIETYFOREVER, SAYS TATA SONS CHAIRMAN operatinginthespacewere “Ourphilosophyisto Nasscom. Turn to Page 19 > 2 COMPANIES MUMBAI | THURSDAY, 13 FEBRUARY 2020 STOCKS >IDBI Bank > CEAT > HEG > Ipca Laboratories > Bharat Heavy Electricals IN THE NEWS Q3 loss at ~5,763 cr, Commences production Q3 loss at ~1 cr, against Q3 Ebitda margin at Q3 operational revenue against ~4,185 cr in at greenfield project profit of ~865 cr in the 23.56%, against 20.72% declined 23.3% to the year-ago period in Chennai year-ago period in the year-ago period ~5,459 cr, YoY

~34.75 CLOSE ~1,028.15 CLOSE ~1,027.30 CLOSE ~1,326.85 CLOSE ~36.35 CLOSE q6.08% DOWN* p4.80% UP* q12.58% DOWN* p6.34% UP* q5.71% DOWN* *OVER PREVIOUS CLOSE > IN BRIEF Consolidation Airtel plans to raise another DRL to buy Wockhardt’s $250 million through bonds of telcos may Bharti Airtel on Wednesday said its wholly- owned subsidiary Network i2i plans to raise branded biz for ~1,850 cr up to $250 million (around ~1,780 crore) via hurtcustomers perpetual bonds. This amount will be in addition to existing securities of $750 million Pharma major expects the acquisition to boost its domestic business (around ~5,343 crore) that the company has TELECOM LANDSCAPE raised recently. Network i2i, a Mauritius- SOHINI DAS & B DASARATH REDDY December 31, the business The 3-4 player market is more akin to advanced nations based wholly-owned subsidiary of the Mumbai/Hyderabad, 12 February Dr Reddy’s (~) contributed ~377 crore, or 3,220 company through joint book runners and joint lead managers 3,190.80 around 34 per cent of the Mobile SIM penetration has approached investors for the proposed additional issuance, r Reddy’s Laboratories 3,205 standalone and 15 per cent of connections No. of (as % of the company said in a regulatory filing. PTI (DRL) has entered into 3,190 the consolidated revenue from (in million) players population) D a definitive agreement 3,175 operations, Wockhardt said. Australia 32.9 3100 with Wockhardt to acquire 3,197.55 “The intended sale of busi- 3,160 Malaysia 41.0 990 NRC project contract USFDA issues two select divisions of its branded Feb 11 Feb 12 ness portfolio is in line with South Korea 60.4 4100 with Assam not observations to generics business in India, Wockhardt (~) the company's strategic plan Nepal, Sri Lanka, Bhutan and to shift from acute therapeutic France 65.5 493 420 renewed: Wipro Lupin’s MP unit Maldives, and a manufactur- areas to more chronic busi- UK 72.4 494 367.15 400 Wipro has said its contract Drug firm Lupin on ing plant for ~1,850 crore. ness like anti-diabetic, central Thailand 93.8 6100 380 with the Assam for the Wednesday said the US The business is valued at 3.8 nervous system etc and also South Africa 103.9 570 National Register of Citizens health regulator has issued times the annualised revenue. G V PRASAD, 393.45 360 to its niche antibiotic portfolio Germany 110.9 385 (NRC) project was not renewed two observations after As a part of the deal, a portfolio co-chairman 340 of new chemical entities,” “upon its expiry in October, inspection of the company's of 62 brands in multiple ther- and MD of DRL Feb 11 Feb 12 said Habil Khorakiwala, Japan 191.5 399 Brazil 205.8 790 2019”, in response to reports Madhya Pradesh facility. The apy areas such as respiratory, INDIA IS AN IMPORTANT MARKET FOR US AND THIS founder chairman and group that NRC data disappeared inspection of the company's neurology, VMS, dermatology, ACQUISITION WILL HELP IN SCALING UP OUR DOMESTIC chief executive officer, Russia 237.6 780 from the website because of Pithampur Unit-I facility by gastroenterology, pain and vac- BUSINESS. THE ACQUIRED PORTFOLIO SHALL ENHANCE Wockhardt. US 351.9 596 the cloud storage provided the United States Food and cines would be transferred to DRL’S PRESENCE IN HIGH-GROWTH THERAPY AREAS” “The divestment will also India 1,100467 by the IT services firm. Drug Administration (USFDA) DRL, along with related busi- ensure adequate liquidity to BS REPORTER has been completed, Lupin ness assets and liabilities, con- bring in robust growth in the China 1,600 386 said in a filing to BSE. PTI tracts, permits, intellectual acquired portfolio shall 2015. It had acquired Belgian chronic domestic branded Source: GSMA Intelligence 2020/industry estimates WhatsApp says it properties, employees, and enhance DRL’s presence in the company UCB's select product business, international oper- now has 2 million GitHub sets up unit marketing, sales and distribu- high-growth therapy areas portfolio business in India, ations, investments in SURAJEET DAS GUPTA which could reduce to three. in India to engage tion of the same. with market leading brands besides Nepal, Sri Lanka, and Biosimilars for the US mar- New Delhi, 12 February Experts say, though the Indian users globally Wockhardt's plant in such as Practin, Zedex, Bro- Maldives for ~800 crore. ket, apart from the compa- market looks more akin to WhatsApp now has two with developers Baddi, Himachal Pradesh, is zedex, Tryptomer and Biovac. Wockhardt expects the ny's global clinical trials of As India stares at the possibil- advanced markets in terms of billion users globally, the Microsoft-owned GitHub, the also being sold to DRL, We believe the portfolio holds deal to help it focus on its breakthrough anti-infectives ity of becoming a three-player number of players, those firms company said in a statement world's largest open source together with entire man- a lot of potential and will get niche antibiotics portfolio, and R&D activities,” mobile telecom market in case handle a fraction of sub- on Wednesday. The firm has development platform, is power of the plant. an impetus under DRL,” said and infuse liquidity in its Khorakiwala added. Vodafone-Idea shuts opera- scribers, who pay far more been under fire lately in setting up India entity in DRL sees the acquisition as G V Prasad, co-chairman and existing business. For Wockhardt, the deal tions, questions have been than in India. India and other parts of the order to better serve the a strategic move to boost its managing director of DRL. In FY19, this business con- brings in the much needed raised on whether this will So, for instance, the three world after it disclosed that developer community and its domestic business. “India is The drug maker expects to tributed around ~594 crore, or liquidity it needs to spruce up lead to concentration of pric- mobile players in Japan sup- an Israeli malware called own enterprise customers. an important market for us, close the deal in the first around 28 per cent of the total its existing business, espe- ing power and if this will be port a mere 191.5 million cus- Pegasus was used to target India is home to it’s third and this acquisition will help quarter of financial year 2020- standalone and 14 per cent of cially the research and devel- detrimental for consumers in tomers. In fact, the customer about 140 users globally. largest community of in considerably scaling-up our 21. DRL last made India-cen- the consolidated revenue. For opment for its novel antibio- the long run. base of each of the top three BS REPORTER developers. BS REPORTER domestic business. The tric product acquisition in the nine-month period ended tic pipeline. Bharti Airtel chief execu- players individually — Bharti tive officer (CEO) Gopal Vittal Airtel, Vodafone Idea, and just last week said publicly that Reliance Jio — is far higher India should have three pri- than the total mobile customer vate mobile service providers base of all the players in Japan. ITsector’s revenuetogrow 7.7%inFY20:Nasscom (excluding BSNL-MTNL) as it Japan, though, is nearly a was good from all perspectives 100 per cent postpaid market — investments, jobs and rep- with a SIM penetration of 99 Industry body higher over the same period utation of the industry. per cent. India is exactly the last year. “Despite so much India to remain a stretched He is not off the mark if opposite — a predominantly ‘cautiously negativity, rising protec- global trends are anything to prepaid market (87 per cent) tionist themes, Brexit, and society: Chandrasekaran go by. Emerging markets where customers are not sticky optimistic’ on other headwinds, the indus- across the world have more and have lower average reve- try has delivered well ahead DEBASIS MOHAPATRA than four mobile players in nue per user (ARPU) than growth in FY21 of expectations,” said Mumbai, 12 February their countries, even though postpaid customers. And SIM Murugesh. they handle a much smaller penetration at 67 per cent DEBASIS MOHAPATRA In FY20, the industry India will always remain a number of customers than (large rural markets are Mumbai, 12 February body said, net new employ- ‘stretched society’, with limita- Indian operators. However, untapped), means that there ees’ addition stands at tions of both infrastructure and the Indian market is more in is still a large upside to bring Nasscom on Wednesday said 205,000 — which is 15,000 skilled manpower that under- sync with mobile markets of in net customer additions. the IT sector was likely to higher than FY19. This is the lines the importance of technol- advanced countries like the The trend is also reflected end the current financial SECTOR-WISE PROJECTION highest number of addition ogy in improving efficiency and UK, Japan, and South Korea, in other advanced markets. year with 7.7 per cent reve- n Revenue ($ bn) p(% YoY growth) in new employees in the last creating jobs, said Tata Sons where there are fewer players For instance, in Germany, the- nue growth to touch the five years. Chairman N Chandrasekaran. — three to four. re are only three players for 111 $191-billion mark. Though p(6.70) p(8.20) p(11.0) p(9.60) p(6.10) p(25.60) While in FY17, the indus- Addressing the Nasscom Brazil boasts of seven million customers. In the UK, this (growth rate) was higher try added 173,000 staffers, Technology and Leadership players jostling for 205 million four telcos fight it out for 73 97 by 160 basis points (bps) over the number was 105,000 in Forum, the annual flagship event “WE DON’T HAVE customers — an average of 30 million customers. And South FY19, the industry body said 54 FY18 and 190,000 in FY19. of the IT industry body, million customers each. In Korea has four players for 60.4 it remained “cautiously 38 On visa restrictions by Chandrasekaran said the fears of PROBLEMS WITH AGE OR India four firms handle 1.1 bil- million mobile subscribers. optimistic” on growth pro- 33 the Trump administration, job loss due to artificial intelli- NUMBERS, BUT WE LACK lion subscribers — an average Even in the US, the merger spects for the next financial 16 Debjani Ghosh, president of gence (AI) was a narrative created of 275 million. In Indonesia, of T-Mobile and Sprint was year (FY21). 9 Nasscom, said the govern- by the developed economies. SKILL & QUALIFICATION” seven operators support just a stuck for many years over fears “Based on what CEOs ment has to change its narra- “India forever will remain a N CHANDRASEKARAN third of the number of users that it would stifle competi- have said, we are cautiously ITservicesBPM Engineering,Software Hardware E-com tive about the importance of stretched society. We should Tata Sons chairman handled by Indian operators. tion, but it got court clearance optimistic,” said Keshav R&D products Indian engineers in driving make the most of what we And Thailand has six players on Tuesday. However, even Murugesh, chairman of US growth. already have. The problem of the for 93.8 million customers, or after it has been cleared US will Nasscom. He said they revenue projection of $200- the IT services sector is “We have to change the country is distinctly different play out differently (for us),” said an average of 15 million per continue to have a three big would invest mainly in two- 225 billion, it looks difficult likely to touch revenues of narrative and that’s our rec- from that of the US, Japan or any the Tata Sons chairman. player. However, emerging players Verizon, AT&T, T- three areas, including skill to achieve $350 billion in $97 billion in FY20 — a ommendation to the govern- other country. We don’t have With appropriate skilling, markets have some common- Mobile and a new player in development, which will revenue, which requires the growth of 6.7 per cent over ment. The US administra- problems with age or numbers, India can contribute more to its alties — a large chunk of their Dish apart from TracFone take care of demand for dig- industry to grow at a com- the last financial year. tion has to realise that 90 per but we lack skill and qualifica- GDP by converting informal jobs subscribers are on prepaid, amongst others supporting 351 ital and technology solu- pound annual growth rate of Similarly, revenues from cent of the H1B visas are tion,” said Chandrasekaran. into formal ones. unlike advanced markets million customers. tions. Murugesh, also the close to 13 per cent for the the e-commerce sector are going to US companies and “Our approach to automation “Indian workforce is over- where postpaid subscribers Many analysts, however, CEO of WNS Global Services, next five years. expected to be $54 billion, a not Indian ones,” said has to be deliberately and dis- whelmingly informal. It does are the norm. said the Chinese model of added that the industry Nasscom, which has dis- rise of 25.6 per cent over the Ghosh. tinctly different from the US and not have consistent wages, con- Consolidation, especially keeping the number of players aspires to reach $350 billion continued the practice of same period last year. “High-skill talent mobil- other countries. When you look tract or other safety nets. If after Reliance Jio’s entry and limited —it has only three in revenue by 2025. providing annual growth In FY20, exports from ity is critical for a company’s at the developing markets, we informal jobs become formal, it the subsequent price war, has players for 1.6 billion cus- However, after missing projections citing the chang- the sector are likely to touch growth and this shouldn’t be have distinctly different charac- will be a huge advantage for the shrunk the number of players tomers — made each of them Nasscom’s 2020 collective ing nature of business, said $147 billion — 8.1 per cent treated as immigration.” teristics. And, the technology will economy.” from a peak of 16 to just four, a behemoth. The Maharaja’s jewels to be housed in National Museum AI’s collection of art Ela Menon, Jitish Kallat and Sakti all of its offices internationally as (Left to right) A collage Barman. It also includes textiles, well. “The collection, which is a and memorabilia displaying the attire sculptures, wooden artefacts and store of Indian heritage and his- of Air India’s air even ashtray sculptures that were tory, would be best served by goes on display hostesses; pictures of created by artist Salvador Dali. being housed in museums across employees; a poster; The collection also includes the country, given that it is after PAVAN LALL and an original Royal diaries, posters and sketches by all government property,” he Mumbai, 12 February Doulton Style Award Goan artist Mario Miranda. added. How many pieces does the Is there a valuation to the Debt-ridden Air India, which is to PHOTOS: KAMLESH PEDNEKAR collection consist of? While spec- entire collection? Experts say it’s go under the hammer, will see a ulation in public domain has hard to narrow it down to a single part of its art and collectibles ranged from estimates of number because of the diversity showcased at the Nehru Centre in 10,000 to 40,000 pieces, of artefacts in the portfolio. Mumbai from Thursday. it’s not known as to “The original posters of Air The exhibition titled how many exactly India itself sell for between Maharaja of the Skies – An Indian there are in the ~50,000 and ~60,000 each which Heritage is being organised by the catalog of col- is high for just a poster,” said Society for Culture and lectibles. Ashvin Rajagopalan, director of Environment. Air India the Piramal Art Foundation. The collectibles consist of officials “The original masters like hundreds of memorabilia that declined to Husain and Raza are in the mostly include reproductions but offer specifics, crores,” he added. The entire col- also a few originals from Air saying even let- lection is hard to zero down in India, the organisers said. aging director Ashwani Lohani the art and memorabilia will not Despite its troubles, he said, ised young terheads, annual value but its scope and expanse The originals include a book told Business Standard that ear- go on the block. the airline still flies to over 40 talent who diaries and are legendary, he further said. with JRD Tata’s flight records, lier plans to house the entire col- He went on to add that the international destinations and is went on to coasters were col- Meera Dass, the official who Royal Doulton porcelain plates lection of art and collectibles in a exhibition was a powerful operating 450 flights daily. become estab- lectibles and hence curated the exhibition, said the with the carrier’s logo, flight new museum built just for it have reminder of Air India’s past glory. Air India was also renowned lished artists and the number was high but point of the display was to recorders and scale model aero- been shelved. He said, “One cannot but help for having a strong culture of include B. Prabha, whose not available off-hand. encourage a look-back at the his- planes. The reproductions com- “Now, the entire collection of remember what a great culture investing in art to promote the paintings were first bought by the Dinesh Vazirani, CEO of art tory of India’s only state-owned prise posters and photographs of art work will be housed at the Air India was imbibed with in the airline with department budgets carrier. The original collection gallery and auction house airline whose mascot is depicted calendars, diaries, coasters and National Gallery of Modern Art in past, from having its own glam- and personnel specifically ded- includes six-feet long paintings Saffronart, said Air India’s collec- by a turbaned Maharaja. It carried paintings. Delhi in the near future,” he said. our and style quotient, to its own icated to achieve that. by MF Husain, and other large tions happened over decades and a tagline ‘The airline that treats Air India chairman and man- In other words, divestment or not, engine works.” Its art department had patron- works by V S Gaitonde, Anjolie they were not just in India but in you like a Maharaja’. MUMBAI | THURSDAY, 13 FEBRUARY 2020 COMPANIES 3

. < KEC to tap Swiggypartnerseateriesto civil works Old timer Srinath to take in oil & createdelivery-onlybrands gas sector overas CEO of Tata Trusts NEHA ALAWADHI New Delhi, 12 February AMRITHAPILLAY Mumbai, 12 February Pramit Jhaveri inducted as trustee of Dorabji Tata Trust with immediate effect Food ordering and delivery aggregator Swiggy has part- With the central government’s DEV CHATTERJEE fold. One of the immediate chal- nered some restaurants on thrust on developing a gas- Mumbai, 12 February lenges before Srinath will be to its platform to create deliv- based economy, engineering handle the litigation with the ery-only brands, with a sep- company KEC International rinath Narasimhan, a income tax department. arate identity from the par- is aiming to tap civil work Tata Group veteran, was On October 31 last year, the ent eatery. opportunities in the oil and S on Wednesday appoint- I-T department cancelled the The aim is to cater to a gap gas segment. “We are looking ed chief executive officer registration of six trusts (not in the food delivery require- at the sector, which will (CEO) of Tata Trusts with the bigger ones) operating ment of particular areas. The include projects like tankages, effect from April 1. under Tata Trusts. It cited vio- initiative, called related infrastructure and Srinath joins at a time when lation of norms applicable to ‘BrandWorks,’ offers a differ- pipelines,” said Vimal Kejri- the trusts are facing litigation charitable institutions. This ent menu, images, packaging wal, managing director. with the income tax department may result in a tax liability of and pricing from the restau- Union petroleum minister over its tax status. Also, the about ~12,000 crore. rant’s usual menu. The aim is to cater to a gap in the food delivery requirement in Dharmendra Pradhan said in group is in the middle of a legal The Tatas are challenging Run experimentally over some particular areas December that the country dispute with its former chair- the date of the order, which five-odd months, Bengaluru- was moving to a gas-based man Cyrus Mistry. makes the trusts liable to pay a headquartered Swiggy now chief executive of New Supply Bercos brand,” said Kabir economy. He put the invest- Tata Trusts owns 66 per cent much higher amount of tax has 100 BrandWorks brands Business at Swiggy. Advani, managing partner of ment planned for developing stake in Tata Sons, the holding under the new tax provision across 13 cities. It plans to For instance, he said, deliv- Bercos Restaurant. gas-based infrastructure at company of the group. Srinath Narasimhan (left), MD of Tata Teleservices, joins at a time introduced in June 2016 con- triple the number by the end ery-friendly Chinese food con- House of Chow is currently $60 billion (~4.3 trillion). Narasimhan is currently when the trusts are facing litigation with the I-T department over cerning charitable trusts. of the year. tinues to be a gap in Delhi. available at six Bercos outlets, Kejriwal sees this as an managing director of Tata its tax status; Former Citibank CEO Pramit Jhaveri Tata Trusts is of the view “We approached these Swiggy has, accordingly, part- and the restaurant plans to opportune time to enter the Teleservices, which sold its that the cancellation should restaurants with consumer nered with Delhi-based Chinese expand it to 15 by June. oil and gas engineering seg- loss-making wireless telepho- man of banking, capital mar- employees as well as profes- apply retrospectively, as it had need gaps, knowing their and Thai food chain Bercos to Bhatia’s team is also the ment, in the absence of IL&FS ny business to Bharti Airtel for kets and advisory for Asia- sionals from elsewhere to select offered to surrender the regis- (restaurants’) culinary capa- create a delivery-only brand, one that takes care of the and Punj Lloyd. Owing to free. But Tata Tele paid its bank Pacific of the American bank, a CEO and finally zeroed in on tration in 2015. This is about a bilities. We said, let us co-cre- called House of Chow. Swiggy Access initiative, financial concerns at both debt and government dues was inducted as a trustee of the Srinath by November. year before the new tax provi- ate a brand in terms of menu, “It will be the same team which was begun three years these, KEC sees no major worth ~60,000 crore. Sir Dorabji Tata Trust with After Venkat’s resignation, sion became effective. images, pricing, packaging. and the existing kitchen (of earlier. This involved taking company vying for the same Narasimhan has held covet- immediate effect. Tata Trusts was managed by Srinath will have to contin- The brands are operated out Bercos). The packaging and on lease on a property, refur- set of orders. ed positions in the Tata Group, In February last year, R Ratan Tata along with a core ue the work by the trusts in the of the partner’s existing some different products are bishing into small, shared, To test the waters, Kejriwal including the post of managing Venkataramanan (popularly group of officials. Among other field of education, health, envi- kitchens — so, its an asset- the only extra cost for this kitchens and sub-letting to says they’ll bid for smaller director of Tata Communic- known as Venkat) had stepped recent changes in the organisa- ronment and sanitation, light, minimalistic, incre- brand. The portion sizes are restaurant chains. projects worth ~50-250 crore. ations. He had joined Tata down as managing trustee of tion, Noel Tata, Ratan Tata’s among others. Tata Trusts mental expenditure for the also different — we have meals It had, it earlier said, spent With discussion on gas grids Administrative Services in 1986. Tata Trusts. half-brother, was appointed a today runs some of India’s partner to do more out of for one, individual meals and about ~250 crore for opening and new refinery complexes, In another top appointment, Subsequently, a search trustee of the Sir Ratan Tata mega charitable programmes their existing kitchens, while so on. We’ve also kept this as a little over 1,000 such civil orders from this segment Pramit Jhaveri, former CEO of committee led by Ratan Tata, Trust, which is the second from the money it earns as div- consumer needs are getting an independent brand, as we ‘cloud kitchens’ on a million should rise. Citi India and former vice-chair- interviewed several internal biggest trust in the Tata Trusts idend from Tata Sons. met,” said Vishal Bhatia, don’t want to cannibalise the sq ft of space. Godrej to challenge NGT order quashing green nod for project

PRESS TRUST OF INDIA New Delhi, 12 February

Realty firm Godrej Properties on Wednesday said it will challenge the NGT order quashing envi- ronmental nod granted to one of its housing project in Bengaluru, saying no con- struction work has been done in the buffer zone of Godrej Properties is the lake. The National Green real estate arm of diversified Tribunal (NGT) quashed the Godrej Group. environmental clearance Earlier, a Bench of NGT (EC) granted to a high-rise Chairperson Justice Adarsh residential project being Kumar Goel and Justice S P built by Godrej in Bengaluru Wangdi said no environ- for raising construction in mental clearance could the buffer zone of have been granted which Kaikondrahalli lake. permitted construction in “NGT has passed an the buffer zone of order concerning our proj- Kaikondrahalli lake and ects in Bengaluru. We reit- drains merely by imposing a erate that as a responsible condition that no such con- corporate, we follow all struction will be raised. concerned regulations and “Stand of the project pro- are confident of our com- ponent that the project is pliance in this project,” permissible cannot be Godrej Properties said in a accepted. It is clear that the statement. project stipulates construc- “There has been no con- tion in the buffer zone, in struction in the buffer zone violation of zoning plan and and we are confident of our judgment of this tribunal as merits and compliances in affirmed by the Supreme the case. We are in the Court. Accordingly, the process of challenging the appeal is allowed and the EC said order,” it added. is quashed,” the Bench said. 4 ECONOMY & PUBLIC AFFAIRS MUMBAI | THURSDAY, 13 FEBRUARY 2020 “RBI’s role as the regulatorhas been enhanced. We trust “I am not going to increase the cost (of the Zojila project )... “Keeping in mind the directions of the that this will determalpractices and make our financial There is a need fortunnels to provide all-weather Supreme Court, certain agreements have systems more credible... I will request all bankers to keep connectivity. In the next five years, we will undertake work been signed, which will resolve Sahara’s a keen eye and not let a good idea die forlackof funding” worth more than ~1 trillion fortunnels” problems within this year, that is 2020” RAM NATH KOVIND NITIN GADKARI SUBRATA ROY President Union minister for road transport and highways Sahara group chief

> . Q3 brings much-neededrespite for state-run banks

NPA ratio declines even as PBT improves for Easing slippages (%) said MSME loans could soon pose REDUCING NPAs, RISING PROFITS the twin risk of asset quality deterio- most; MSMEs, agri and retail segments Net NPA(%) Change PBT (~ crore) 7.4 ration and lower pace of growth for though may see fresh stress, warn experts Q3FY19Q3FY20 (bps) Q3FY19Q2FY20 Q3FY20 PSBs. “What if the underlying eco- Allahabad Bank 7.7 5.1 -260 -726 -2,108 -2,195 nomic situation doesn’t recover even after the dispensation, that is also HAMSINI KARTHIK & ABHIJIT LELE Q3, compared to the year-ago peri- Andhra Bank 7.0 6.4 -63 -424 141 235 equally a concern,” he adds. Mumbai, 12 February od. Even on a sequential basis (over Bank of Baroda 4.3 4.1 -21 744 1,127 -2,197 S S Mallikarjuna Rao, Punjab Q2FY20), nine saw their net NPA Bank of India 5.9 6.0 10 -6,728 408 120 National Bank managing director Improvement in the profile of public ratios decline or remain flat. The Canara Bank 6.4 5.1 -132 380 507 531 3.7 and chief executive officer, has 2 .5- 3.5 sector banks (PSBs) became visible decline was aided by increased pro- Central Bank 10.3 9.3 -106 -1,097 103 170 already guided for elevated stress in in the December quarter (Q3). Most visions by banks, as well as improved 3.0 Q4 and probably for the first quarter have either reported a higher profit recovery of bad loans. IOB 13.6 5.8 -780 -609 -2,250 -5,902 of FY21 coming from MSME and agri- before tax (PBT) or moved into the Slippages (loans turned bad) in Indian Bank 4.4 3.5 -92 223 592 390 cultural loans. Interestingly, SBI’s black, besides reporting a dip in net corporate loan book have come down Oriental Bank 7.2 6.0 -120 -2,717 212 256 chief, Rajnish Kumar, in a post-results non-performing assets (NPAs), com- compared to the year-ago period. PNB 8.2 7.2 -104 346 633 -383 conference call indicated that debt pared to a year ago, even as overall There were two finance accounts in wavier schemes have impacted State Bank of India 4.0 2.7 -130 6,619 5,060 10,970 credit growth remained muted. Q3, including Dewan Housing recoveries and renewal of agri loans, In Q3 of financial year 2019-20 Finance Limited (DHFL), which Syndicate Bank 6.8 5.9 -81 136 317 291 and slippages in this segment stood at (FY20), for instance, five of the 13 turned into NPAs and partly offset Union Bank 8.3 7.0 -128 133 -1,618 582 Pre-AQR FY18 FY19 FY20 (E) ~2,900 crore in Q3FY20. banks — led by State Bank of India the gains arising from the reduction NPAs: Non-performing assets; source: Capitaline Compiled by BS Research Bureau E: Estimates; AQR: Asset quality review Source: CRISIL The uncertainty for the banking (SBI) — reported a year-on-year (YoY) in bad loans to the tune of ~40,000 system and for PSBs, in particular, is rise in PBT, while four others — crore because of resolution of Essar past years. These have brought them ing system at large. “The overall posi- 2.5-3 per cent seen before asset qual- viding for these loan exposures. on recoveries. Analysts say Q3 num- Andhra Bank, Bank of India, Central Steel loan account. to a comfortable level in terms of han- tion on PCR is much better now than ity deterioration about four-five years Clarity on nearly ~2.5 trillion loan bers were significantly comforted by Bank and Oriental Bank of “Corporate loan NPA was 18-19 dling the asset quality, particularly before and much of the stress is well ago. This also means that while large accounts covered under ICA will be recoveries from Essar Steel. “Going Commerce — reported PBT as com- per cent in FY18 and now they are on their corporate book. recognised. Additions, hence, could corporate bad loans may not be a known in the March quarter as the into March quarter, there are no big pared to a loss before tax (LBT) in the trending down to 15-16 per cent. Jindal Haria, director, banking be limited,” says Haria. headache for PSBs any more, it validity of these ICAs would have recoveries to help the financials of December 2018 quarter. These numbers are likely to further and financial institutions, India What’s also providing comfort is remains to be seen if incremental lapsed starting January 2020 and banks,” Purohit adds. The combined profit figures would come down and I see a clear trend of Ratings & Research, says provisioning the declining trend of slippages ratio stress will add up from small loans. banks would have to provide for them There is some bit of stress building have been higher but for the contin- asset quality easing in corporate that PSBs have taken on corporate or accretion of fresh NPA as a per- Two factors will matter for PSBs starting from March 2020 quarter. up on the retail loans front, too, for the ued losses (before tax) of Allahabad loan,” says Krishnan Sitaraman, sen- gross NPAs is 70 per cent or upwards centage of total loan book. According among others. The inter-creditor Similarly, while loans to micro, entire banking sector, private banks Bank (~2,195 crore) and a 162 per cent ior director of Financial Sector (excluding technical write-offs). In to CRISIL, the slippages ratio for FY20 agreement or ICA signed small and medium enterprises included. Therefore, while Q3 does surge in LBT of Indian Overseas Bank Ratings and Structured Finance fact, most PSBs currently work with a is pegged at 3.5 per cent, which is a lit- among banks to resolve stressed (MSMEs) get a one-year window for instill confidence on the asset quali- to ~5,902 crore in Q3FY20. Ratings at CRISIL. provision coverage ratio (PCR) tle lower than the 3.7 per cent level loan accounts since June 2019 restructuring, stress is fast building in ty front, the ability to sustain this is The asset quality — NPAs as a per- Experts say, two factors are help- upwards of 80 per cent and IDBI seen in FY19 and nearly half the peak haven’t proved successful so far. this segment warranting higher more critical for PSBs. With the centage of loan book as well as provi- ing these banks — an overall reduc- Bank, in particular, has PCR of 94 per slippages ratio of 7.4 per cent. Examples such as Cox and extent of caution. Pointing out that finance minister recently nudging sions for bad loans — also shows tion in systemic stress, mainly lumpy cent (including technical write-offs). That said, Sitaraman warns that Kings, Dewan Housing Finance the recent regulatory dispensation banks to raise capital on their own, it improvement. Of 13 lenders, 12 accounts and high provisioning costs These are record levels of PCR, for even at current levels, the slippages and Jain Irrigation bear testimony only concerns standard assets, is imperative for PSBs to sustain the reported a decline in net NPA ratio in that these banks have taken over the state-run banks and the Indian bank- ratio is far from the steady level of of this and banks have started pro- Siddharth Purohit of SMC Capital, improvement in their financials.

IN BRIEF MERGER OF STATE-OWNED GENERAL INSURANCE FIRMS Govtinsurers’ Maharashtra govtstaff to have 5-day work week from Feb 29 Cabinetokays infusion of marketshare The Maharashtra government on Wednesday announced five-day work week for its officers and employees beginning February 29 and extended the current work hours by 45 minutes. The loss continues government is of the view that the new structure would not only ~2.5Kcrinto 3 PSU insurers improve the quality of life of its employees but will also cut down NAMRATA ACHARYA In the February 2018 expenses on fuel and electricity. State employees have been Kolkata, 12 February Budget, the government had demanding the five-day work week since the last many years. The Centre takes steps to make insurance merger bill less than Budget Estimates announced a plan to merge decision was taken at the state Cabinet meeting chaired by Chief Public sector general insur- National Insurance, United Minister Uddhav Thackeray, which will benefit nearly 2 million SUBHOMOYBHATTACHARJEE know the details of the compli- ance companies continue to India Insurance and Oriental officers and employees. The employees currently get holidays on New Delhi, 12 February cated cases and the extent of lose market share to private Insurance, and list the every second and fourth Saturday. PTI< losses that might need to be paid peers. As of January, the merged entity on the stock fter the Cabinet up by these three firms. This is a cumulative market share of exchanges. approved a ~2,500-crore surprise for the sector where the the four PSU general insur- However, there has little E-cigarettes, similar JM Financial to A infusion into three state- Ombudsman scheme has lan- ance companies stood at 38.2 progress on the merger since, products banned launch NCD issue owned general insurance com- guished owing to lack of respo- per cent, against 40.23 per even as the financial health of panies on Wednesday, the nse by the insurance firms, gov- cent in January 2019, accord- the firms deteriorated in terms at airports, aircraft of ~300 cr today finance ministry is hoping the ernment run or privately held. ing to the data released by the of losses, falling market share The aviation security regulator JM Financial Products will additional bill will be far lower The bringing together of the Insurance Regulatory and and poor solvency ratios. BCAS has banned e-cigarettes launch on Thursday the third than ~6,950 crore announced in claims department of each firm Development Authority of National Insurance’s sol- and similar products on all tranche of its non-convertible Budget 2020-21. would also help to improve the India (Irdai). vency ratio, a key measure of airports and aircraft in India. debenture (NCD) issue for up to The CMDs of the three com- ILLUSTRATION: AJAY MOHANTY public perception of these com- National Insurance, financial strength, stood at 1.04 “E-cigarettes includes all forms ~300 crore, including green- panies, Oriental Insurance, panies which might otherwise Oriental Insurance, United at the end of FY19, against the of electronic nicotine delivery shoe option of ~200 crore. The United India Insurance and OTHER DECISIONS IN THE CABINET face dwindling business, rapid- India Insurance and New India regulatory requirement of 1.5, system, heat not burn produ- minimum application size National Insurance have been Toprovideautonomytothe NodtoIndia-Icelandpactin ly. Unlike life insurance, non- Assurance are the four PSU according to the data. cts, e-hookah...," said a would be ~10,000 collectively advised by the government to top12majorports,and thefisheriessector life policies are written for just a insurers, and barring New India It was 1.05 for United India circular, adding sale, storage, across all series for a tenor quickly bring their claims settle- year, though the Supreme Court Assurance, the others have in the second quarter (Q2) of improvetheirefficiency PesticidesManagementBill, distribution and advertisement ranging between 24, 40, 60 ments in each line of business — andcompetitiveness,the has last year ordered that third been losing market share for FY20. The company posted of these is prohibited. PTI< and 120 months. The annual motor, health and fire — in sync 2020,approved.Itwill party motor insurance compa- some time now. However, com- pre-tax loss of ~1,091 crore in coupon rate ranges between with each other. The companies governmentapprovedthe regulate thepesticidesector nies to be issued for three years. pared to December 2019, Q2FY20, according to the data 9.29 per cent and 10 per cent. would soon announce the for- much-awaitedMajorPorts byfixingpricesandsetting Unlike the merger of banks, United India Insurance has from the General Insurance CIA spied on India, The company has an AA rating. mation of joint Lok Adalats as AuthorityBill upanauthority where it was important to marginally gained market Council. Oriental Insurance’s othernations for BS REPORTER< well as take the help of the insur- ensure that their IT framework share in January. solvency ratio was 1.56 in ance Ombudsman. This would work seamlessly with each oth- New India Assurance con- Q1FY20. The company had decades: Report bring the claims handling grants for 2019-20, which has their claims with each other, the er so that the depositors face no tinues to have the highest mar- posted net loss before tax of The CIA read the encrypted City Union Bank departments of the firms closer been cleared by the Cabinet now. finance ministry and Irdai sus- difference in their experience, ket share in the general insur- ~330 crore in Q2FY20. messages of several countries, pre-taxprofit to each other’s best practice. This is the first time ever when pect that a lot of the resultant the government-run insurance ance space at 14.28 per cent, The three insurers, under including India, for decades The CMDs have already held the government has had to put claims are duplicates. The companies are primarily judged followed by United India the aegis of GIPSA (General through its secretly owned drops to ~227 cr one round of meetings. “The money into the insurance com- claims ratio — claims paid over by the experience of their claims Insurance at 9.19 per cent, Insurance Public Sector Switzerland-based company Kumbakonam-based City exercise will also tell us more panies as their owner. Going net earned premium for the settlement practices. National Insurance at 7.67 Association), earlier appointed trusted by governments all Union Bank has posted a accurately how much of their ahead while each company has three companies — is 108.54 per In, say, a motor accident case, per cent, and ICICI Lombard at consultant EY to draw a blue- over the world to keep the marginal decline in profit money is locked up as provi- put up a large bill towards merg- cent compared with 74 for the the owner of the vehicle is not 7.22 per cent. print for the merger plan. communications of their spies, before tax at ~227.43 crore sioning for these cases,” said a er, the ministry feels the addi- private sector companies (2018- too bothered with the techno- soldiers and diplomats secret, during the quarter ended government official, aware of tional support needed would be 19). The number for the state- logical interface as much with said an American daily. PTI< December, 2019, compared to the developments. This will reasonable. It will depend on owned firms has deteriorated the swiftness with which her ~228.10 crore during the same determine how much money improving what is called the sol- over the past few years with claim is settled. “It has little to do AMIXED TREND

period last year. BS REPORTER< the government may need to vency ratio, a measure of the bal- United India at one stage having with the technological practices Market share up to Jan ‘19 Dec ‘19 Jan ‘20 BS staffer dies provide the merged entity to ance between assets and liabili- stopped taking out fresh group but a lot to do with the efficien- 14.2414.58 14.28 Assistant art director of bring its solvency ratio in line ties of the companies. medical insurance business. cy of the practices the compa- Business Standard Sunil I-T dept to share all with the yardsticks of the insur- The biggest drain on the sol- To bring clarity in the claims nies have put in,” said a source. 9.85 8.83 9.19 Kumar Girota passed away in ance regulator, the Insurance vency ratio of these companies business, beginning with the The differences crop up 8.42 taxpayers’ PAN and 7.78 7.67 7.72 7.09 7.06 New Delhi on Wednesday. He Regulatory and Development comes from the claims from the motor portfolio, which is usual- because of competition with was 54. On Tuesday, he was otherdata with Sebi Authority of India (Irdai). third-party motor insurance ly the second-largest business of each other as well as with pri- admitted to Safdarjung The Income-Tax (I-T) Finance Secretary Rajiv business. According to Irdai these firms, the government has vate firms. The plan now is to Hospital after a brain Department will share all Kumar recently said the merger data, the total third-party pre- also decided to involve the insur- build on the strengths and weak- haemorrhage. He is survived taxpayers' data like PAN would happen next year. The mium booked by these three ance Ombudsman in each nesses in different markets of by his wife, son and daughter. information with Sebi to help finance ministry had provided companies in 2018-19 was region. There are 17 such general insurance of each of National Oriental United India NewIndia He joined Business Standard the regulator in its probe the ~2,500 crore through the first ~11,860.58 crore. Since no insur- Ombudsmen spread across these firms which would also InsuranceInsuranceInsuranceAssurance in 2008. BS REPORTER< against various entities. PTI< supplementary demands for ance companies share data on India. They are expected to take down the merger bill. Source: Irdai ‘Giventhepositionofbalancesheets,banksmaynotbeabletogotothemarket’

United Bank of India (UBI), one of the oldest banks in eastern India, is set to be amalgamated with Oriental Bank of success, that should be car- other areas/pockets. In the current scenario, Commerce and Punjab National Bank on April 1. ASHOK KUMAR PRADHAN, managing director and chief executive officer of the ried forward. what is the overarching bank, in conversation with Namrata Acharya and Ishita Ayan Dutt, shares his views on the banking sector and the current What is your view on the concern? status of the merger. Edited excerpts: What will be the cost steps taken to boost Stalled projects is a major of the merger? credit growth in the last issue. In the power industry, What is your assessment their balance sheet, they may of the three banks. needed is codification and syn- Initially the cost will be most- monetary policy? more than ~2 trillion is stuck. of the Budget, especially not be in a position to go to the chronisation of products’ fea- ly on IT integration. The real It was an excellent monetary Solution in the power sector its impact on public market just yet. Has the swap ratio tures and processes to give clar- picture will be clear after a policy. Definitively, credit would unlock massive funds. sector banks? been decided? ity in the amalgamated entity. year or so. There will be sav- growth will get a big boost. Increasing the deposit insur- What is the progress The valuation has been ings, in terms of administra- How has the credit offtake ance limit to ~5 lakh is a positive, on the merger? done. Some reconcilia- What is the progress of tive cost. The overlap of Is agri loan a cause been this financial year? but it will largely impact the All the 34 committees tion process is on. the information technology branches in Punjab, Haryana, for concern? Credit offtake has been poor operating profit of banks. have given their reports. It is (IT) merger? Himachal Pradesh, and Delhi It is considered as a loan in this financial year, 7-7.5 per Regarding their recapitalisation, being evaluated by the advisor What are the broad We understand Infosys is could be rationalised. It is not perpetuity. Now the regulator cent for the banking sector. the government has assured (meanwhile, the anchor bank recommendations of working on the merger of that we need to close the is suggesting it should be liq- At UBI, we have been rela- that capital will be provided to has appointed one advisor). the committees? Bank of Baroda. Hopefully branches, but some of them uidated and given afresh. We tively better. In retail, our banks, as and when required. It They will be in a better position All banks draw guidelines from they have come out with some can be merged and the have suggested a part of the credit growth is 14 per cent. is expected that banks will raise to standardise/harmonise, as the Government of India. The sort of solution for BoB. If they licence, which is freed, can be loan be continued and the In micro, small and medium money from the market. Given they have the combined views framework is the same. What is find a reasonable amount of utilised to open branches in rest be closed/allowed again. enterprises, it is 7-8 per cent. 6 COMPANIES MUMBAI | THURSDAY, 13 FEBRUARY 2020 1 >

N Q3 RESULTS N Ashok Leyland No proof against us: Amazon Hindalco Q3 PBT at PBT drops by PEERZADA ABRAR giving deep discounts on online 89% in Q3 Bengaluru, 12 February sales of smartphones, and cher- CCI rejects complaint of ~1,481 cr, down 23% Ashok Leyland has reported a ry-picking sellers. unfair business practices Hindalco Industries — an down 13 per cent sequentially, 89 per cent in PBT at ~54.17 crore he counsel representing Amazon on Monday had Aditya Birla group firm — while year-to-date (YTD), it fell during the quarter ended Dec- Amazon on Wednesday filed a writ petition in the high against Voda, Jio & Airtel posted a consolidated profit 5 per cent. Both aluminium ember 31, as against ~483.57 cr- T told the Karnataka High court pleading for an interim The Competition Commission (CCI) has dism- before tax (PBT) of ~1,481 crore and copper witnessed a fall in ore a year ago. Total income of Court that the Competition stay on the probe. While Flipkart issed a complaint against Vodafone Idea, in the December quarter demand in Q3,” said Satish Pai, the firm dropped to ~4,037.98 Commission of India (CCI) did has not yet taken any legal Reliance Jio, Airtel and Sify Technologies, wh- (third quarter, or Q3), down 23 managing director, Hindalco crore from ~6,346.04 crore on not have prima facie evidence to recourse on the probe, Amazon ich alleged that they were charging higher per cent from the same period Industries. According to Bloo- the backdrop of slowdown in order a probe against some of has made the homegrown e- rates for overseas inbound calls as compared last year on the back of weak mberg estimates, the compa- overall sales. BS REPORTER its business practices. The mat- commerce company one of the to the ceiling fixed by telecom regulator Trai. revenue. In the period under ny’s top line was expected to ter has been listed for further respondents, apart from CCI The order came on a complaint filed by Tele- review, revenue of the compa- be at ~30,073 crore in the quar- hearing on Thursday. and DVM, in its petition. club, which is an international telecom carr- ny stood at ~29,197 crore, down ter gone by. Despite a lowered Power Finance Amazon, which was repre- According to legal experts, ier. The complainant alleged that the Indian 12 per cent from the same peri- cost of production, mainly in sented by senior advocate Gopal this could be a move to strength- telecom operators together decided to charge od last year as realisations took aluminium, the company’s sees profit dip Subramanium, argued that it is en its case given that Flipkart is standard rate of $0.0053 for inbound calls a hit, mainly because of a weak Ebitda declined 10 per cent on Power Finance Corporation just a marketplace entity and the only other large e-com- terminating on their network in India, demand scenario across seg- a year-on-year (YoY) basis to (PFC) reported a 13.6 per cent has no preferred sellers while it merce player in the country. instead of the rates fixed by the Trai. PTI ments. “Demand in Q3 was ~3,676 crore in Q3.ADITI DIVEKAR slide in profit before tax at does not have exclusivity deals CAIT on Wednesday said it ~2,395 crore in the December with brands. Arguing that the has moved an application for court by saying that it is a witch- practices,” alleged Khandelwal. findings are perverse, arbitrary, quarter, from the same per- probe is a complete abuse of the impleadment in the case. The hunt led by CAIT to malign The investigation ordered by untenable in law”. iod a year before. Total inco- process of law, he said the CCI’s traders’ body also alleged that Amazon,” said Praveen Khan- the CCI covers Amazon and rival Amazon has filed a “Writ of Rattan India turns profitable me rose to ~15,878 crore, from informant Delhi Vyapar Maha- Amazon’s legal counsel is try- delwal, Secretary General, CAIT. Flipkart which is now owned by Certiorari” under Article 226 of Rattan India Power reported a agreements (PPAs) in the ~14,051 crore. BS REPORTER sangh (DVM) is an affiliate of ing to mislead the court by say- Khandelwal said it’s quite Walmart. Amazon had asked the Constitution, by which there pre-tax profit of ~2,106 crore market. Aman Singh, chief the Confederation of All India ing that the company does not evident and clear that Amazon the court that an interim stay be can be a judicial review of a deci- in the December quarter. It executive officer of Rattan India P&G Hygiene Traders (CAIT) that had previ- have any preferred sellers. “Not has violated and flouted India’s granted on the proceedings, or sion of a lower court or an adm- had a loss of ~188 crore in the Power, said the turnaround was ously levelled similar accusa- only did Amazon make frivo- FDI and anti-competitive laws else a probe would cause “irre- inistrative agency. year-ago period. This comes because of the one-time settle- PBT slips 4% tions against Amazon. But it did lous claims of not engaging in openly by indulging in preda- parable loss and injury” to the e- The company decided to file after the conclusion of debt ment of debt. The project, he Procter & Gamble Hygiene and not stand in the court of law. business malpractices and FDI tory pricing and deep discount- commerce player’s “reputation the petition in the high court resolution for its 1,350 Mw said, had everything in place Healthcare posted a 4.2 per Last month, the CCI had (foreign direct investment) vio- ing. “When they have openly /goodwill”. In its petition, the since Amazon India’s registered Amravati power project. but power procurement was cent YoY decline in PBT to ~182 ordered an investigation against lations by stating that they do been saying that they are fully company stated that the CCI office is located in Bengaluru. The company, however, not happening. “We are shelv- crore for the October-Decem- e-commmerce firms, including not enter into any preferential compliant with all laws, let there order “has been passed without In the past, the CCI, after study- has decided to not construct ing the second phase because ber period.The drop in PBT ca- Amazon and Flipkart, based on seller agreements and do not be an investigation. The very prima facie application of mind ing deep discounts in e-com- the envisaged second phase of this. No long-term PPAs are me as total expenses increased a complaint filed by DVM. It control any inventory, they also effort to stop the investigation is and will cause serious prejudice merce, said it was not a matter of of this project, owing to lack being issued by any state,” he 7.28 per cent from a year ago to alleged that these players are tried their best to misdirect the a testimony to their unethical to the petitioner (Amazon). Its competition. of long-term power purchase explained.. SHREYA JAI ~686.29 crore. BS REPORTER Asia’s biggest motor show comes to a close, draws 608,526 visitors

SHALLY SETH MOHILE & the exposition included 352 the Volkswagen Group, Renault, been able to convince the public and owns a Maruti Vittara ARINDAM MAJUMDER product displays from 108 Mahindra and Mahindra, among that we are a British brand,” said Brezza, said he liked the new Mumbai/Delhi, 12 February exhibitors. others, also did their bit to draw Gaurav Gupta, chief commercial SUV concept showcased by This included eight global the crowd. officer at MG Motors, which Maruti. “I will wait for when Asia’s biggest motor show drew premiers and over 70 launches Manohar Bhat, vice president designed its pavilion with a Maruti brings in a car based on to a close on Wednesday bring- and unveils. It also comprised and head of sales and marketing London theme. that,” he said. ing the curtains down on the six- introduction of 35 electric vehi- at Kia Motors, said it got an Gupta’s suggestion to the Some like Shawn Milton, a day extravaganza. Even though cles and 15 concepts. “overwhelming response,” at the organisers was that the expo New Delhi-based freelance film- it fell short of the overall num- Though many manufacturers expo. Among other models, Kia should be spread out across maker, had a suggestion as well. ber of participation, it was one of gave the show a miss, those who launched the Carnival at the cities in India and should show- “Being there is a fantastic expe- the biggest in terms of partaking participated believed in it as a show. It has garnered over 4,000 case future technologies. rience. But I lose out on lot of by new entrants. platform to rekindle interest in a bookings for the premium mod- The expo also appeared to money that I can earn. I think Beating the slowdown that slowing market. el and drew huge interest from have made many visitors consid- now time has come to show the has sapped buyer’s sentiments Rajan Wadhera, president of visitors. It also showed the Sonet ering purchasing new cars. One fair to us in Delhi through virtu- and hit volumes at auto compa- Siam, said this was the highest Concept at show. such buyer, Sanket Gupta, a al presentation. May be we could nies for the past year-and-a-half, footfall at the Motor Show held Adding to the glamour quo- Bengaluru-based IT professional sit at home or on the move and a total of 608,526 people visited in Greater Noida, “a testimonial tient, like in previous editions, who had delayed buying a sec- yet enjoy it.” the show at the Great Noida of customer’s aspiration and The expo included 352 product displays from 108 exhibitors. This were many celebrities including ond car, said: “I read and heard The organisers took the first Expo Mart between February 7 affection for the automobile included eight global premiers and over 70 launches Shah Rukh Khan, Huma about all the new cars and SUVs step in that direction. This year’s and 12, according to Society of Industry.” Rajesh Menon, Siam Qureshi, Gul Panag, Narain on display at the show on social show had Facebook India as its Indian Automobile director general, added the Though smaller, as compared new entrants — MG Motors, Kia Karthikeyan, Daler Mehndi, media and am now considering partner for wider reach. It also Manufacturers (Siam). “show will help to revive con- to last year in terms of participa- Motors, Great Wall Motors and among others. test drives.” boasted of various virtual reality With a peek into the future of sumer sentiment which is cru- tion, there was enough to catch FAW. Incumbents such as “Our biggest takeaway from Vikram Malhotra, 32, IT pro- and augmented reality booths mobility via green technologies, cial for the auto industry.” buyers’ fancy from the stables of Maruti, Hyundai, Tata Motors, this expo has been that we have fessional who visited the show present across the venue. 8 PERSONAL FINANCE MUMBAI | THURSDAY, 13 FEBRUARY 2020 >

help investors claim inflation indexation benefit for one extra year.” For instance, if FMP has a duration of 1,159 Compensate if Take some risk in a soft days in March 2020. Investors can claim inflation indexation benefit for four years – 2019- insured hasn’t 20, 2020-21, 2021-22 and 2022- 23 even though the invest- ments would be held for only interest-rate scenario a little more than three years been negligent between March 2020 and April The other option is to go for instruments with a higher lock-in 2022. and there was no reason for Adds Chakrabarty: “At the the insured to anticipate period, which give better returns time of investing, you know that this time a spark would the indicative yield on the port- emanate from the truck's si- BEST BANK FD RATES Interest rate ATTRACTIVE GOVERNMENT SCHEMES folio. It is suited for those kinds lencer. So the Commission 1-year 3-year Product Return-annual (%) of investors who do not want concluded that it would be Bank Name tenure (%) tenure (%) any volatility in returns. incorrect to hold the insured Senior Citizen Savings Scheme 8.60 Through FMPs, they can know to be negligent as contended Small Finance Banks Pradhan Mantri Vaya Vandana Yojana 8.00 on day one the kind of returns by the insurance company Fincare Small Finance Bank 7.75 9.00 that they can hope to achieve. on the basis of the survey Public Provident Fund 7.90 The actual return they earn report. Suryoday Small Finance Bank 8.25 8.50 RBI Bonds 7.75 will be very close to the indica- CONSUMER On the question of quan- Jana Small Finance Bank 8.00 8.40 tive yield on the FMP.” PROTECTION tum, the National Commis- Five-year monthly income account 7.60 sion observed that the Private Sector Banks Tenure versus returns: There JEHANGIR B GAI insured had claimed for a DCB Bank 6.95 7.60 DEBT FUNDS YOU MAY CONSIDER are many small savings loss of 350 quintals of sugar scheme products that are offer- A sugar factory, Dr Babasa- while the surveyor had as- Lakshmi Vilas Bank 7.50 7.50 Category average return (%) ing over 7 per cent: five-year heb Ambedkar Sahkari sessed it to be 250 quintals. Yes Bank 7.25 7.25 Fund 1-year 3-year time deposit (7.7 per cent), Sakhar Karkhana, was cov- Since no evidence had been Corporate bond 9.21 7.00 Senior Citizen Savings scheme ered under the Government produced by the insured to Public Sector Banks (8.6 per cent), National Savings Insurance Fund for risk to show that the assessment Punjab & Sind Bank 6.45 6.45 Fixed Maturity Plans 5.55 6.47 Certificate (7.9 per cent), Kisan plant and machinery as well was not correct, the Com- Vikas Patra (7.9 per cent) and as stocks kept in its factory mission held that the loss Union Bank of India 6.30 6.30 Ultra short duration 6.57 6.22 Sukanya Samridhi Account premises. The insurance quantified by the surveyor United Bank of India 6.50 6.25 Short-duration fund 5.55 5.74 Scheme (8.4 per cent). But all policy was valid from No- would have to be accepted. “Source: Paisabazaar.com. Rates as on February 12, 2020” Source: Indiapost, Valueresearch of them have a lock-in period. vember 29, 2007 to Novem- The insured contended For senior or risk-averse cit- ber 29, 2008. that the damaged sugar had BINDISHA SARANG AND SANJAY based on the Reserve Bank of should ladder their fixed They may have to go into Mumbai-based certified finan- izens, an appropriate asset On April 25, 2008, a truck not been segregated when KUMAR SINGH India’s diktat, deposit rates will deposit portfolios. They AA-rated papers and even A- cial planner, Moneyworks allocation mix, with even was taken inside one of the the surveyor had visited the come under further pressure. should invest in products of rated papers, depending on Financial Advisors suggests some amount of equity for godowns to load premises to assess ast week, the coun- In such a scenario, investors different tenures because their risk appetite.” matching the average maturity long-term money, may help. the sugar. Sud- The National the loss and that try’s largest bank – need to take some calculated that will help average out the In case you are a conserva- of the debt fund with one’s Maheshwari says, “The denly, a spark Commission did the surveyor State Bank of India risks. Here are some of the rate at which he reinvests his tive investor, Renu investment horizon. right asset allocation is the emanated from not accept the should have come L(SBI) – cut the margin- options they should consider. deposits (since interest rates Maheshwari, Sebi-registered only way senior citizens will the truck's ex- contention of for a fresh assess- al cost of lending rate by five Experts say this is still a tend to move in cycles). investment advisor, advises Fixed maturity plans be able to live in comfort haust silencer, the insured that ment after segre- basis points, which is good good time to get locked into There are other options, of sticking to short-to-medium- (FMPs): A lot of fund houses during retirement.” which ignited the assessment gation to verify news for borrowers. But it good rates before other banks course. But they would come term debt funds and corporate launch FMPs during this peri- Chakrabarty has a strategy: one of the sugar of damage had the quantity of the slashed deposit rates by 10-50 also start cutting them with some amount of risk. bond funds. For those who are od because of the tax advan- “Suppose that most of their bags, and the fire been done damaged sugar. basis points. Clearly, fixed aggressively (see table of willing to take higher risk, tage that they give. That is, money is in a certain bank. began to spread incorrectly by The Commission deposit (FD) investors would banks offering FD high rates). The alternatives: Depending Maheshwari recommends there will be 14-month, 26- They may buy the bonds quickly. The fire the surveyor did not accept this take a bigger knock. Others like While hunting for good rates, on your investment horizon, credit risk funds, which can month or other kinds of plans issued by that bank. Buying a brigade was sum- argument as the Bank of Baroda have also however, you should also look at other debt instruments. potentially give good returns. that will lock in your money bond is a better way of invest- moned, which sprayed insured had failed to request revised their rates downwards. bear in mind the stability of Sousthav Chakrabarty, co- But given that these funds for slightly more than two or ing. Bonds are secured. If a water to extinguish the fire. for a revisit for reassessment And there are expectations the bank, and hence take lim- founder and chief executive have been under the cloud due three years so that there is a bank is wound up, bondhold- The resultant loss was esti- after segregation. that with banks moving to ited exposure to FDs of small officer, Capital Quotient says: to the failure or delay by many double indexation benefit. ers will have priority access to mated by the insured at The cost for reprocess- repo-based lending rates for finance banks. “Investors will have to look at companies to repay, it would Says Mamaji: “By launching money over deposit holders. ~45,95,794. ing the damaged sugar was retail and micro small and As a strategy to deal with higher-yielding corporate better if you restrict your expo- FMPs towards the fag end of Bonds typically have a higher Upon lodging of a claim, estimated by the insured to medium-scale enterprises, reinvestment risk, investors deposits and corporate bonds. sure. Nisreen Mamaji, the financial year, fund houses coupon than fixed deposits.” the insurer appointed a sur- be ~400/quintal while the veyor who assessed the loss surveyor had computed it at ~7,60,000 but recom- at ~160/quintal. The Com- mended repudiation on the mission pointed out that BUDGET: ground that loss had oc- there was no evidence to ~1 CRORE -~1.5 CRORE New guidelines will not impact premiums curred due to the negligence prove the cost to be higher of the insured in allowing a than what was assessed, so down such a proposal, or they truck to be driven inside the it held that the assessed rate REALTY General insurers accept it with a loading. They godown. would be applicable. also impose a waiting period The insured then filed a Accordingly, by its CHECK would wait to of two-four years on PEDs. consumer complaint, but order of January 31, 2020, see whether In the earlier circular, the the Maharashtra State Com- delivered by Justice V K Business Standard brings you a snapshot of average regulator had stipulated that mission upheld the insurer's Jain, the National Com- current rates and unit sizes in localities that offer claims rise if a customer is diagnosed contention and dismissed mission set aside the order property in the price range of ~1 crore and ~1.5 crore. sharply after the with a condition within the the complaint. The insured of the State Commission If you are looking at buying real estate, an idea about first three months of buying appealed against the order. and directed the insurer to prevailing rates would come in handy removal of the the policy, such a condition The National Commis- settle the claim by paying would be treated as a PED and sion observed that the quan- ~7,60,000. Since six months Avg price (~/sq ft) Avg unit size (sq ft) three-month insurers could apply a tity of 10,815 quintals of was considered a reason- AHMEDABAD clause waiting period to it. This sugar stored in the godown able time to settle the claim Naranpura 5,548 2,048 clause had created a grey made it evident that it was from the time it was DISCLOSURE IS THE BEST POLICY area. Many customers felt quite large, making it im- lodged, the Commission Chandkheda 3,484 3,133 SANJAY KUMAR SINGH cheated about not being practical to park the truck awarded 9 per cent interest Science City Road 4,985 2,516 nIf you are less nIf a claim nIn case of any covered for an ailment they outside and carry the stacks for the period of delay in Vastrapur 5,835 1,992 The Insurance Regulatory than 45, insurers arises soon new condition had contracted after buying of sugar bags for loading. making payment. and Development Authority the policy. “It would have led More importantly, it was the Paldi 5,759 2,087 are not likely to after buying the that develops after of India’s (IRDAI) February ask you to policy, insurers buying a policy, it to claim rejections, and each customary practice to drive The writer is a consumer Motera 3,747 3,351 10, 2020 circular is likely to undergo medical turn suspicious is not essential to case such case would have the truck into the godown, activist Thaltej 5,768 2,200 cause more than a flutter in tests. Nonetheless, and tend to reveal it to the created customer the general insurance dissonance,” says Amit Jodhpur Village 6,185 2,039 reveal all pre- investigate it insurer, but it is industry. The amendment in Chhabra, business head, KOLKATA the definition of pre-existing existing diseases more better to do so health insurance, New Town 6,238 2,007 disease (PED) allowing claims Policybazaar.com. Tangra 5,736 1,996 to be made within three nChanges in lifestyle, like smoking, that could impact your The regulator has TIPPING Mukundapur 7,624 1,750 months of buying a policy health should also be voluntarily revealed removed this clause. Now, may result in a higher any condition that gets POINT Kankurgachi 8,469 1,337 number of claims. But diagnosed after the issuance Beleghata (Beliaghata) 6,734 1,830 experts say insurers are customers, may be specific impact of rising claims. Most of the policy will not be Are banking and PSU funds for you? New Alipore 7,238 1,860 unlikely to hike their steps can be prescribed for insurers are likely to absorb treated as a PED and will be Banking and PSU funds have given a return of 10.92 per Sealdah 7,364 1,667 premium rates immediately these first three months, but a the cost initially, as the covered. Things are more cent over the past year. They invest mostly in bank and will in all probability blanket removal may not be regulator frowns upon black-and-white now—if a JM Avenue 7,000 1,889 certificates of absorb the impact, for now. advisable,” says Joydeep K frequent revisions in customer had a condition deposit and bonds KOCHI In insurance parlance, Roy, Partner & Leader India premium rates,” says Kapil before buying the policy, it HIGH ONE-YR RETURN of public sector Kadavanthra 6,208 1,940 claims made soon after the Insurance Practice & Mehta, co-founder would be classified as a PED. companies. These purchase of a policy are Global Leader for and managing Any ailment he contracts Time horizon Return (%) Maradu 6,189 1,821 funds are much in referred to as ‘early claims. Insurance Digital director, Secure Now after buying the policy will be 1-month 1.54 demand currently Kakkanad 4,951 2,426 And such claims tend to be Assets, PwC. Insurance Broker. covered. because investors prone to frauds. The three- While the In the guidelines Slow-growing ailments 3-month 2.70 Palarivattom 6,763 1,926 have been worried month barrier served as a number of claims on exclusions in like cataract, hernia, knee 1-year 10.92 Kaloor 5,942 1,934 about credit risk for safeguard against fraudulent may rise, experts do health insurance replacement and others are 3-year 7.88 the past year or so. Vyttila 7,139 1,859 claims. “If you remove this not expect an that had appeared in not covered for the first Edapally 6,060 1,912 barrier, there is the possibility immediate change September 2019, couple of years. That 5-year 8.19 These funds do a YOUR good job of Vennala 5,292 2,171 of a rise in the number of in premium rates. IRDAI had provided provision remains. Source: Valueresearchonline.com minimising credit NAGPUR fraudulent claims. That “First, insurers have MONEY a definition for PEDs, Another change that has could, in turn, result in the ability to detect which it has happened is that if a customer risk. However, they Gandhi Sagar Lake 8,534 1,519 insurers raising their fraudulent claims. Second, of modified now. A PED is a goes for treatment to a do carry some degree of interest rate risk. In an Narendra Nagar 6,425 1,770 premiums, which would not the ~100 that insurers collect health condition that the blacklisted hospital in case of environment where rates are rising, these funds could give negative returns. Hence, investors should not make New Colony 6,000 2,300 be in the interest of good as premium, they pay out insured already has at the an accident or a life- the mistake of thinking that these funds are completely Dharampeth 7,500 1,465 customers. To prevent about ~60-75 as claims. So, time of buying a health threatening situation, he will harassment of genuine they have room to absorb the policy. Insurers either turn receive payout from insurer. without risk. Raj Nagar 7,500 1,896 Rambagh 7,176 1,762 Pratap Nagar 6,250 2,002 Wardha Road 6,825 1,543 ment term, the sum assured, applicable Ulip funds based on your investment needs I am a 48-year-old professor at a private VISAKHAPATNAM READER’S charges (if any), and other benefits under the and risk appetite. This feature allows you to university. I bought a term insurance plan. I Yendada 4,859 2,571 CORNER policy. Two, review the product’s sales litera- move your investments from one fund to am unable to pay the premium now because Murali Nagar 6,000 1,741 ture and policy document that are available another within the same Ulip plan. of some unexpected expenses. What option LIFE INSURANCE on the insurer’s website. Three, respond to the do I have other than to surrender the policy? MVP Colony 6,400 1,897 verification call that your insurer makes when I am a 33-year-old single mother with a We have had instances where people were Seethammadhara 6,000 2,170 it receives your premium. This enables the three-year-old daughter. I save up to unable to pay insurance premiums due to Peda Waltair 5,600 2,000 company and you to be on the same page. And ~25,000 every month. I don’t have an unforeseen expenses. Check if in your policy Madhurawada 3,700 2,820 finally, there is a 15-day (30 days in the case of insurance plan and want to buy one. What is there are other premium payment modes. If TARUN distance marketing) policy cancellation win- the ideal coverage I should buy? Is there an annual payout seems like a burden on China Waltair 7,000 1,563 CHUGH dow, which you can use if you feel the policy anything in particular that I should be your finances, opt for a monthly payment JAIPUR does not match your life goals. mindful of? mode (if available in your product), where Vaishali Nagar 4,844 2,455 I will not be able to suggest an exact sum the premium amounts will be smaller. In Mansarovar Extension 5,178 2,207 I am not pleased with my existing life assured. Use any of the calculators available case your cash crunch will last for just a few insurance company. Is there a way I can online to come up with the ideal life cover days, you may pay the premium during the Jawahar Circle Garden 8,287 1,348 I want to invest my savings in an insurance transfer to another? based on your current financial strength and grace period, which is usually 15 or 30 days Vidhyadhar Nagar 5,572 1,976 plan but am afraid of mis-selling. How can I Currently, there aren’t any provisions for future goals. Keep in mind all your future (depending on your current premium pay- Note identify and avoid this? migrating a life insurance policy from one needs, especially those of your daughter, infla- ment mode) from the premium date. If you ·The ticket price range considered for the above data points is between ~1 crore and ~1.5 crore To ensure that customers’ interests are well insurer to another. If you wish to discontinue tion, health costs, and so on. Be true while fail to pay the premiums within the grace ·All the data points discussed in the above table refer to primary protected, the regulator has laid out stringent a policy before its maturity period, you can making these calculations. Your insurance period, your policy will lapse, but you can market only guidelines and processes regarding how insur- surrender it. However, do read and under- policy can not only be a pure term plan. You revive it subject to the terms and conditions ·Above residential data set comprises of residential apartments only ance products are sold. Here are some quick stand your current policy features and the can even think of investing in Ulips that help for revival. ·Above residential data is representative of organised real estate checks you can run. One, ask for the Benefit benefits available to you before surrendering. build a corpus for any significant life goal you developers only ·The top performing micromarkets based on sales during last year Illustration of the product. Check for discrep- For instance, if you have a unit-linked insur- may have in mind, such as your child’s edu- The writer is MD & CEO, Bajaj Allianz Life (December-2018 to November-2019) is represented on the above table ancies in the policy information provided— ance plan (Ulip) and you feel that the returns cation. Don’t buy in haste. Do all the necessary Insurance. The views expressed are the expert’s own. ·Data points are updated till November 2019 premium amount, policy term, premium pay- are low, you have the option to switch between checks before investing in a plan. Send your queries to [email protected] Source: PropEquity 10 ISSUES AND INSIGHTS MUMBAI | THURSDAY 13 FEBRUARY 2020 >

against, but may well consider a sale of judiciary without proper support in > the investment — in other words, vote terms of infrastructure, manpower and CHINESE WHISPERS A change for the better with its feet. This would, in turn, give a systems to that the executive arm of the signal to those involved in governance state is not lightly interfered with, has Blame game Tensions from stewardship code will aid corporate governance of the investee companies that they had the same effect for the executive might be faced with a situation of an branch of corporate India too. Even A blame game has started within the investor selling off shares or an investor today, when one speaks of institutional Congress party a day after it was decimated recognition that a space exists for inter- aware of their approach to what is con- voting against — now the size of the intervention in a corporate, lawyers in the Delhi Assembly polls. After senior action between institutional investors sidered material by them and how they investor and its approach to how ag- would hark back to a discussion of the Congress leader P Chidambaram lauded the and those involved in corporate gover- would handle communication of infor- gressive it would be, would be a pointer Supreme Court in LIC v/s Escorts, deliv- Aam Aadmi Party for its win, the party's Delhi nance — a space that has been increas- mation to the world at large. to the corporate on how to handle the ered in the 1980s, a totally different era unit leader, Sharmistha Mukherjee, ingly shrinking because of fear of insid- The clash of the approach between risk of the intervention by the investor. with far less complexity of stakeholder tweeted: "With due respect, Sir, just want to er trading allegations. This is a truthful the two — institutional investors on the While a regulatory stipulation for interests in listed companies. know, has the Congress outsourced the task approach and an important departure one hand and corporate management doing the right thing is not a good Of course, the stewardship code is of defeating BJP to state parties? If not, then from pretending that there is no need on the other — would lead to the req- approach, given the sheer lack of effi- not a panacea at all. One can already why are we gloating over AAP victory rather for such an interaction at all. Put dif- uisite tension that would make direc- cacy of rule-based law in India for achi - see how it is enforced against institu- than being concerned about our drubbing? ferently, this space for interaction, now tors on corporate boards conscious of eving the objective of good governance, tional investors, who breach the prin- And if 'yes', then we (Pradesh Congress recognised under the stewardship code, their need to be mindful of the serious- the attempt with a principles-based ste- ciples, would pose problems. The Sebi Committees) might as well close shop!" Delhi WITHOUT CONTEMPT would enable institutional investors to ness of their role in governance of the wardship code must be given a chance would do well to let the code run its Congress in-charge PC Chacko quit his post, engage with corporate boards, without companies they preside over. to see how it delivers on the objective course and use its oversight to have dis- but also said the Congress lost ground during SOMASEKHAR SUNDARESAN diluting the requirement of corporates Another principle provides that of good governance. Most matters of cussions with the industry on how the Sheila Dikshit's tenure in 2013 to AAP and to handle their communications with institutional investors must have a pol- corporate governance are handled code fares instead of treating it as failed to recover since. Congress leaders said he Securities and Exchange the external world in a fair, transparent icy on their “interventions”, their rather lightly with a heavy burden of another rule-based law to be enforced it was intriguing that neither Mukherjee, Board of India (Sebi) has made and a need-to-know basis. approach to voting, and must collabo- form and light burden of substance. with penal sanctions. It would be easy daughter of former president Pranab T a significant and interesting One of the principles for stewardship rate with other institutional investors. The sense of entitlement of the pro- to game this code into another checklist Mukherjee, nor Chacko, referred to the inroad into improving corporate gov- stipulated by the Sebi is that institution- The voting policy of institutional moter-shareholder is so deeply en - to be ticked off without letting its objec- internal sabotage that both the Manmohan ernance by stipulating a stewardship al investors must “monitor” the investee investors would bring in transparency trenched socially that it seeps into judi- tives being achieved. An approach of Singh government at the Centre and the code for the mutual fund industry and companies. Indeed, listed co mpanies about the approach of the institutional cial attitude as well. The absence of a being more circumspect than is the Dikshit government in the state had faced. alternative investment funds. Ess- and their insiders would need to comply investors. It may be perfectly alright for robust tort regime, crippled as it is by norm, would lead to better prospects entially, a principles-based law (not a with regulations prohibiting insider a mutual fund, for example, to adopt a an under-resourced judiciary, has led for its objectives. prescriptive set of rules), the code takes trading. They are required to have com- policy that if it is dissatisfied with a pro- to jurisprudence too having stagnated. Convenient amendments! effect from April 1. munication policies and materiality posal from an investee company, it Ef forts by successive governments of The author is an advocate and an After Delhi, the The framework is the first statutory policies so that the world at large is would not spend time voting for or all political colour to undermine the independent counsel. Tweets@SomasekharS political scene in Bihar has warmed up with the Assembly polls due by October. Speculation on In space age, India awaits a lift-off whether Bihar Chief Minister The lack of an enabling regulatory environment for SPACE STATS lenge that needs to be ironed out. turing of vehicles as such a move will Nitish Kumar “I feel that the time is ripe for an over- free up Isro’s time and resources into would continue private players to thrive in the industry keeps India’s Global space economy: $360 bn haul of space regulations, considering more research-related work. In this re - to stay in an the potential of Indian companies to step gard, two steering committees have been alliance with the n Commercial satellite market, share of the global space business grounded up and gain a sizeable share of the space set up by the Isro to create a comprehen- Bharatiya Janata Party (BJP)-led National launch market and institutional business,” says Sasibhushan. sive strategy for collaboration with the Democratic Alliance or walk out are rife. T E NARASIMHAN Today, the need of the hour is for the budgets: $100 bn Private players can bring in the nec- industry. The committees are engaged However, any eventuality of Kumar joining industry to graduate from vendor to part- n Operators revenues, ground essary capital, technical know-how and in discussions with private players on opposition forces would need the assent of ndia’s frugal pitch in the global space ner and provide end-to-end solutions, infrastructure and business acumen, and will free precious helping them transition from being ven- former Bihar chief minister and Rashtriya sector can be gauged by the fact that says Ratan Shrivastava, an independent operations: $33 bn Isro resources for it to concentrate on dors to integrators of launch vehicles and Janata Dal (RJD) chief Lalu Prasad Yadav how the missions cost less than the aerospace and defence consultant at R&D, inter-planetary missions and coop- satellites. The launch of the first such ve - who is currently serving a jail term on I n budget to make Hollywood films. The FICCI’s space division. Space services and consumer eration with other agencies for space hicle, a PSLV completely built by indus- corruption charges in neighbouring classic example was of the Mars Orbiter This has not yet seen the light of equipment $219 bn exploration, he says. tries, is planned for 2021. Jharkhand. Opposition leaders are keen to Mission (MOM), which cost $74 million, day despite the intent and a wide gap Neel Ratan, regional managing part- A consortium led by L&T and HAL meet Yadav, but the jail manual has made less than Hollywood movie Gravity’s in the capacity available and the Indian space economy ner-north and government leader, PwC will be the prime contractors for this pro- this difficult. The current manual allows $100 million bill. Launching a satellite requirements for services such as n Estimated to be around $7 bn, India, says the private industry could ject. The vehicle will be fully assembled only three visitors per week to a jail inmate, from India typically costs a third of what direct-to-home (DTH), where India is expects to touch $50 bn by 2024 bring multiple benefits for India, includ- by them with the help of other ecosystem and that too for barely an hour. Since law it would in Western markets. filling the gap by hiring capacity from n 2% of global space economy ing development of a self-sufficient in - partners, which will play under them. and order is a state subject, these leaders Still, India’s share in the estimated Luxembourg-based satellite operator dustry contributing significantly to na- The space agency has also formed a con- are hopeful the Hemant Soren-led Source: PwC analysis $360 billion global space industry is less SES. “Even to meet the needs of tional income and foreign exchange sortium of private players for assembly, Jharkhand Mukti Morcha-Congress-RJD than two per cent. Currently, the market Doordarshan, we are at less than half reserves. What is required, he says, is an integration and testing of 30-35 satellites coalition government would soon amend is dominated by the US fol- the capacity to have a players are not covered by insurance ecosystem of numerous small manufac- and set up a new facility, spread over 24 the jail manual. lowed by Europe. pan-Indian DTH footprint,” companies. The framework for how to turers and expansion of existing ones so acres in Bengaluru where the amenities The reasons include not says Shrivastava. conceive, adopt and implement a space as to ensure a greater share of the global can be used by the industry. much emphasis on enhanc- Ambitious schemes such project is also missing. space economy for India. The government too is pitching in Exam fever ing commercial activities, as BharatNet and Digital In - Rakesh Sasibhushan, CMD of Isro’s Space projects currently in pipeline by setting up a separate arm for com- Not just kids, even India Inc boardrooms are which has resulted in mini- dia need more satellites and commercial arm Antrix Corporation, in the country are estimated to be worth mercial operations of Isro. The New wary of exams. An independent director of a mal participation of private launches. This gap can be fi - sa ys though the space-based service re- $1.5-1.6 billion, and nearly 70 per cent of Space India Ltd, which was set up in small-sized pharma company quit this sector, being closely regulat- lled by investment and par- quirements of India have been met by it will go to the private sector. Cu rrently, March 2019, has entered into a licensing week saying she doesn’t want to appear for ed and controlled by the ticipation of the industry, for Isro, the burgeoning demand from var- 80 per cent of Isro’s workhorse Polar arrangement with Isro to build Small a “proficiency test” made mandatory by the Department of Space (DOS). both the launch vehicles and ious stakeholders is far beyond the cur- Satellite Launch Vehicle production is Satellite Launch Vehicle, which will lift Ministry of Corporate Affairs (MCA) for all Although several compa- later manufacturing of com- rent capacity. This necessitates greater outsourced to private industries. This satellites up to 500 kg into the earth’s independent directors. “I am finding it nies, including Godrej and munication, earth observa- inclusion of the private sector in all could get a fillip once the Space Ac tivities low orbits. difficult to comply with the new norms laid L&T among others, have en - tion and navigation satellites, areas of the space domain, including Bill is cleared by Parliament as it would Given the scale of opportunity, there down by the MCA. In view thereof, I would gaged with the Indian Space Research if there is a level playing field and a legal end-to-end design and manufacture of pave the path for private participation is enough room for both private and pub- like to vacate my seat in favour of another Organisation (Isro) as suppliers and com- and regulatory framework. space systems. This will not only by clearly enunciating the laws related lic sector companies to co-exist. A PwC director who could satisfy the norms laid ponent manufacturers, they have never The legal and regulatory framework improve capacity, but also result in to intellectual property rights. report pegs the industry could be worth down by the MCA,” said Anjali Dalvi, a been vested with the responsibility of is a must to cater for aspects of liability, increased economic activity, contribut- Although Isro is doing its bit in roping $50 billion by 2024 if it plays to its stre- chartered accountant, who served as an end-to-end manufacturing of space sys- insurance, safety, launch risks, debris ing to the state exchequer. in private players for its production vehi- ngth. What is required is an enabling reg- independent director on BSE-listed tems, despite private sector engagement and protection of intellectual property The absence of an enabling regulato - cles, it is not enough. It is keen to partner ulatory environment for private players Jenburkt Pharmaceuticals. going back to the 1970s. rights. Currently, launches by private ry framework is perhaps the biggest chal- with component suppliers for manufac- to thrive.

INSIGHT > LETTERS

seriously to ascertain the causes for The determinants of household savings in India the losses it suffered and reverse the trend. The Congress has perished and is nowhere in the picture. GROSS TAXABLE INCOME that were, on an average, investing a sig- Candidates losing their deposits indi- Individual Total number of taxpayers Total gross taxable income nificant amount in PPF. cates it has little credibility and the income in million share in % in ~ trillion share in % Interestingly, when we had looked at chances of a revival appear bleak. age-wise distribution in PPF investments Srinivasan Umashankar Nagpur Upto ~ 10 lakh 67.05 90.0 28.5 61.9 before and after 2014, we found that Above ~10 lakh 7.49 10.0 17.5 38.1 investors in the 56-plus age group Wrong move Total 74.54 - 46.1 - increased after 2014, with some investors among them being 75-plus. It was further This refers to the article Tax saving for salaried class under new tax regime n Saving without observed that those who were at the low- “Remittances abroad could face dou- est quantile of income distribution were ble tax” (February 12). It is irrational housing loan SOUMYA KANTI GHOSH & PULAK GHOSH (Considering only ~1.5 lakh craving to invest more by stretching the to tax remittances sent out under the & standard deductions) 15,600 10,400 number of PPF payments in a year. For Liberalised Remittance Scheme. It’s 5,200 people with higher income, the objective a backward step. Many people send he Union Budget aims to usher in was more towards saving tax. Clearly, the out remittances to their family mem- a major reform in the personal -7,800 -2,600 incentive to invest is a crucial factor bers and children abroad as gifts on T income tax structure in India. It -13,000 impacting household savings in India. birthdays/anniversaries and other has made a beginning by introducing In the end, while the proposed cha - occasions. To impose tax on these two tax slabs, one with exemptions and -33,800 nges in tax laws are applauded it is not remittances is absurd as the source the other without. The government has clear how household savings will move of these funds are already subject to also made it clear it aspires to eventually ~7 lakh ~8 lakh ~9 lakh ~10 lakh ~13 lakh ~14 lakh ~15 lakh in India in the future. It is also true that taxation. To say that after paying tax move towards a clutter-free simplified to ~12 lakh onwards Indian middle-class investors, account- Lessons from Delhi polls on remittances the tax payer can seek tax regime. While such a move is appre- ing for at least 30 per cent of our popu- a refund makes no sense. If that is so, ciated, it comes against declining house- lakh stand to gain in the new tax regime. save more. Similarly, as the number of lation, are smart enough to take deci- Apropos the editorial “AAP’s hat- why double tax them in the first hold financial savings. Household finan- Now juxtapose the tax savings with the bank branches increases, households sions on their own, as India is the only trick” (February 12). There is a adage, place? On the one hand, the govern- cial liabilities have jumped ~3 trillion for distribution of people having taxable tend to save more. country to score more than 7.3 against “It is easy to reach the top but it is ment wants to simplify tax rules, the two-year period ended FY19 with net income up to ~10 lakh — at ~74.9 lakh. As the rate of inflation increases, the global average of 5.9 in the Aegon difficult to maintain it”. Winning the while on the other, it has introduced financial savings declining by ~80,000 Thus, the total consumption boost will households in India insisting on main- Retirement Readiness Index. However, Delhi Assembly elections the third a measure that will complicate it. It’s crore in FY19 and it might have declined be ~15,600 X 74.9 lakh = ~11,700 crore. taining a certain standard of living dis- incentives do matter in our society as we time in a row was difficult indeed, true that there is a huge shortfall in further in FY20. Against this back- This implies around 8 per cent could save in order to bear the additional nom- don’t have a social security system or but the Aam Aadmi Party (AAP) did revenues because of the slowdown in ground, it is important to understand shift to the new tax regime. (~3,510 crore inal expenses. Results also show that in retirement benefits for our citizens. manage to leave the two major polit- the economy, but that is no reason the determinants of household savings revenue loss to the government against the long run a higher dependency rate To conclude, if the tax proposals are ical parties far behind. A relatively for the government to introduce in India in terms of macroeconomic and ~40,000 crore budgeted) increase savings. It is possible that as any indication, the Budget seems to have small party like the AAP taking on absurd measures and make taxpay- qualitative factors/incentivisation. That Interestingly, people in the lower in - parents care more about the quality of a clear imprint of the nudge theory in the might of the BJP in the national ers’ life more difficult. This proposal is because we require an estimated ~568 come slabs are unable to take incentives life for children, they save more in antic- behavioural economics propounded by capital and notching up a victory is needs to be revisited. trillion in domestic investment during (different from not taking incentives) like ipation of increased future expenses on Nobel Laureate Richard Thaler in 2008. no mean achievement. Kejriwal is a Arun Pasricha New Delhi FY20-25, of which ~102 trillion must go housing loan exemptions as they might children. Also, a heavier burden of older The nudge theory propounds a relatively well read man — he maintained a into infrastructure alone. The mobilisa- be in the unorganised sector with low family members may make the working subtle policy shift to encourage people to steady silence and refrained from tion of household savings is a prerequi- compensation. For the record, the prices age population aware of their future make decisions in their broad self-interest loose talk. The result is for all to see. Letters can be mailed, faxed or e-mailed to: site to enable that. of low-end house in India are at least 29 needs and requirements. People nowa- — and it is not about penalising them Indeed, he is now a much-trans- The Editor, Business Standard The Budget postulates a revenue fore- times higher than the per capita income days tend to have longer retired lives. So financially. The use of the nudge theory formed politician and a shrewd tac- Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 gone of ~40,000 crore if all taxpayers (in the US the figure is 10 per cent). they may save more. With respect to the also does not eliminate the need for vig- tician. The BJP has reason to worry Fax: (011) 23720201 · E-mail: [email protected] shift to the new tax regime. Assuming a We also need to understand the typi- real interest rate, as it increases, the orous democratic debate. For example, with Assembly elections round the All letters must have a postal address and marginal propensity to consume of 0.7, cal determinants of household savings prospect of higher lifetime income per- studies in the US, Chile, Mexico, De n ma - corner in a few states. It has to work telephone number this should result in a consumption in India as this can give a complete pic- suades them to increase their current rk, and Sweden show that enrolling indi- boost of ~1.33 trillion. However, this is ture of the impact of the proposed tax consumption and to reduce saving. viduals automatically onto retirement > HAMBONE based on the assumption that everyone structure on such savings. As discussed However, these are macroeconomic plans and allowing them to opt out (rather will migrate to the new regime. earlier, household savings in India are a factors. In a 2015 study (Ghosh and than expecting them to opt in to existing To understand this in greater detail, function of macroeconomic as well as Ghosh, Business Standard, December 28, systems) is a highly-effective way of in - based on the income tax calculator pro- qualitative factors. An analysis of over 2015) had found that soon after the creasing pension savings. Let us now set vided by the government post the an- five decades of data (Ghosh & Nath, ~50,000 increase in PPF was notified in up a “Behavioural Insights Team” within nouncement of the Budget, we estimat- forthcoming paper) indicate that per August 2014, the incremental deposit the Ministry of Finance to have a perma- ed the tax liabilities by just considering capita real income, dependency ratio, amount had nearly tripled over the nent imprint of “nudge” in policy making. ~1.5 lakh and standard deduction, but inflation, real interest rate and access to August 2014 deposit level for a sample assuming no housing loan exemptions banking are the most important of of accounts. State-wise data had shown Soumya Kanti Ghosh is group chief economic whatsoever for any taxpayer. The results household saving rates in India. As peo- that Bihar, Uttar Pradesh, West Bengal advisor, SBI; Pulak Ghosh is professor, show that people with income over ~10 ple earn more in real terms, they tend to etc each had a sizeable rural population IIM Bangalore OPINION 11 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXIV Number 129 ILLUSTRATION: BINAY SINHA MUMBAI | THURSDAY, 13 FEBRUARY 2020 Power populism States should resist the temptation to hand out free electricity

n India, the ultimate accolade for any policy is to be seen as being instrumental to an electoral success. The re-election of Delhi’s Aam India allocation from emerging markets, Asia or Aadmi Party would have highlighted to politicians around the country, global funds. These are benchmarked to equity particularly at the state level, the usefulness of the party’s signature indices, and most necessarily have some India posi- I tions. As these benchmarked funds get inflows, a policy of subsidised power. In Delhi, power up to 200 units every month is free for households and up to 400 units is subsidised by 50 per cent. Already reflection of strength in global equity markets, at some other states have jumped on to the power subsidy bandwagon. After least some flows end up in India. India’s weight can be lower than the benchmark if the fund manager taking control of the Maharashtra power ministry in December, state Energy does not like India’s prospects, but is rarely zero. Minister Nitin Raut said he had launched a feasibility study into free elec- India dedicated funds, by anecdotal evidence, have tricity for consumers who use up to 100 units, though he was at pains to struggled to raise money. Over the past year a large say that there might “not be too many consumers”. Meanwhile, in West part of FPI purchases have been financials — these Bengal — where tightly contested Assembly elections are due next year — still have reasonable earnings growth, and strong this year’s state Budget was replete with giveaways. Headlining these was medium-term prospects. a plan budgeted at ~200 crore to hand out subsidies for power consumption Signals from the market Domestic institutional ownership of the stock up to 75 units every quarter for households. market is at a record high, courtesy the steady These schemes even at the proposed level are less ambitious than The narrower stock market indices may stay disconnected from inflows into mutual funds. This gain in share has occurred at the expense of the government, whose Delhi’s, but they are nevertheless a harbinger of trouble. One of the achieve- prospects of the Indian economy share is now at a record low of 8 per cent, down from ments of the past decade has been the understanding that consumers are 28 per cent a decade ago, mostly due to poor perfor- willing to pay for electricity in return for reliable supply. The troubles of he stock market is widely believed to be a for- up well despite the economic slowdown. In the Market mance of government-owned stocks, and partly due the power sector are now an intermediation problem — consumers are ward-looking indicator of the economy. While Share category we place the private banks, which con- to continuous sales of stake. Remarkably, retail own- willing to pay, and there is enough power being generated, policy-makers Tone may struggle to find an individual who tinue to grow at a double-digit pace despite a slow- ership of stocks is also at a record low of 14.2 per just need to connect one to the other. The drift back towards the day of has perfect foresight, the market, some believe, is a down in bank credit growth, as they are taking away cent, though the decline here is less steep. Our anal- politically motivated power subsidies threatens to undermine these hard “neural network” of many individuals who through market share from public sector banks. ysis suggests that this could be due to savers moving won gains, and further delay — if not make impossible — reform of the their collective buying and selling of stocks, end up What this reveals is that less than a fifth of the assets from managed portfolios (i.e. PMS or portfolio power transmission sector. State electricity boards owe over ~80,000 crore reflecting economic trends months, and at times market capitalisation is in the Macro category, management services) to mutual funds. This is to power producers. years before they happen. This under-scoring the disconnect because the assets under management (AUM) of the learning machine, people assume, between the stock market and the small and mid-cap funds is at an all-time high, and In addition, there are multiple other calls on state government purses can be smarter than the individuals economy. 29 per cent higher than the lows seen 15 months that should be given priority by responsible governments. Healthcare and participating in it. Stock prices are also affected ago, despite the weakness in small and mid-cap primary schooling lead that list. Power subsidy promises are eye-catching This is a tempting proposition, by capital flows. In theory this indices, whereas PMS assets have declined. One rea- and might make for good campaign slogans. But there is no real political and for those of us who have spent should not be for long, and for- son could be lower fees charged by mutual funds uniqueness to such subsidies — if one party promises free power up to 100 a long time in the markets, several ward earnings should have a role compared to PMS. units, its opposition can always promise free power up to 200 units. Thus, examples come to mind of stock to play. Market participants’ deci- FPIs remain focused on the larger and liquid populism of this sort always becomes a competitive race to the bottom, prices moving well in advance of sion to deploy funds should also stocks. Remarkably, even for domestic mutual funds, with no party retaining an advantage for long. When compared to the fundamental changes that no one be affected by their expectations passive funds now account for 15 per cent of AUM: harder work of building a productive workforce and checking the spilling saw coming. At the same time, long from the market. On this count, in Four years back this was nearly zero. Investors timers also remember irrational addition to the steady inflows into choose these funds to save on management fees, state populations, giveaways of this sort are a waste of public money. pricing (both on the higher and the TESSELLATUM domestic mutual funds, which has and to place a longer-term bet on the market; these It is also relevant to note that even in Delhi there could be better lower side), and of the mania and NEELKANTH MISHRA been well flagged, one must note flows have also been boosted by the Employees' uses found for the money that goes into free power. Increasing pressure the panic of crowds, to not buy into that foreign portfolio investors Provident Fund Organisation. Such flows create a on public transport and infrastructure in the capital means that the gov- this fully. So where does one put the (FPIs) have also net bought more strong bias towards the narrower 30 or 50 stock ernment needs to spend a lot in these areas. One reason Delhi is able to current disconnect between weak economic than $16 billion in the last 12 months, a four-year indices as against the broader 200 or 500 stock offer free power is that the national capital’s privatised power distribution momentum and soaring stock markets? Are the mar- high. This is despite sharp downgrades to India’s indices. Small and mid-caps have been underper- network has largely reduced transmission and distribution losses, so kets forecasting an economic recovery, or will they economic growth expectations by forecasters, and forming the narrower indices for two years now. there is very little leakage. The city-state’s finances are also more stable soon start reflecting the weakness in the economy foreign investors that one talks to being wary of They bounced back strongly on a relative basis in than those of debt-ridden West Bengal, for example. Thus, the giveaways and correct meaningfully? several unresolved risks, including in the financial January, as they have in seven out of the last eight At this juncture, it is worth remembering that the system. It does not appear likely that flows would Januaries. But, like in most Februaries, they have which have not burdened Delhi to a large extent might have severe fiscal constitution of the stock market differs widely from reverse meaningfully. again begun to lag, and may continue doing so. consequences elsewhere — alongside being more inefficient. This slide that of the economy. To demonstrate this we split the To understand this, let us look at the nature of Among the small and mid-cap stocks the expo- towards power populism must be corrected. top 500 stocks into four categories: Global, Macro, ownership of the stock market: About half of it is sure to the domestic economy is higher than in the Penetration and Market Share. For global stocks, fun- owned by “promoters”, which includes the govern- large-cap stocks. Their ownership too is more damentals are driven by global trends, like metals, oil ment and private promoters. Foreign ownership of domestic, and thus less affected by foreign fund- refiners, pharmaceutical exporters, global auto majors the top 500 stocks rose to 21.2 per cent at the end of flows. For those looking at forward-looking signals listed in India, etc. The stocks in Macro category are December 2019, a 30-month high. About a fifth of for the economy from the stock markets, the relative Imperfect law the ones most impacted by domestic economic growth, this is owned by sovereign wealth funds, foreign performance of small and mid-caps may be a better including industrials, public sector banks, cement and central banks and pension funds: These funds have indicator of the future than the index levels of the Changes in food security Act imperative utilities. The Penetration category has companies that a standard India allocation, and they also keep see- narrower and more popular indices. can grow faster than the economy due to factors like ing inflows. Another fifth is owned by “broad-based he counsel by a committee of secretaries to restrict the application formalisation and improved distribution. Demand for funds” (such as hedge funds), and of the half that is The writer is co-head of Asia Pacific Strategy and India of the National Food Security Act (NFSA) chiefly to the deserving insurance and air-conditioners, for example, has held owned by mutual funds, a significant part is the Strategist for Credit Suisse sections of the population seems sound and logical. This legisla- Ttion, though meant to ensure the poor an easy access to basic food, has some ill-advised provisions that make its implementation an economic burden. The most imprudent of these is the arbitrarily determined norm of covering about two-thirds of the entire population (75 per cent Missing fiscal deficit target is in Budget DNA rural and 50 per cent urban) under this law. This seems too high considering that the poverty level is now much lower. Equally questionable is the stip- ow that the din over the Union Budget has died introduced the concept of “effective revenue deficit” 3 per cent will not be met. Missing the fiscal deficit ulation of supplying foodgrains to the beneficiaries at just ~3 per kg for down, it’s worth asking: Does the fiscal deficit and proposed that this deficit be eliminated by March target is now built into the Budget’s DNA. rice, ~2 for wheat and ~1 for coarse cereals and putting down these rates in Ntarget of 3 per cent of gross domestic product 31, 2015. The FRBM Act was amended accordingly in What is the way out? How do we make fiscal the law itself. That virtually precludes any revision in prices in sync with (GDP) make any sense at all? May 2013. The Act was amended again through the deficit targets more credible? an increase in the cost of grain acquisition without altering the law. This The finance minister told us in her Budget speech Finance Bill of 2015 and the deadline of March 31, One possibility is to accept the reality of our fiscal apart, the categorisation of the beneficiaries under this statute is also not that we will miss the targets for 2019-20 and 2020-21 2015, was moved to March 31, 2018. The same Bill set position and simply set the target higher than 3 per indisputable. The NFSA classifies all beneficiaries in just two groups — by 0.5 per cent. Nirmala Sitharaman sounded prim 2017-18 as the year for reducing the fiscal deficit to 3 cent. The danger in this approach should be obvious. Antyodaya Anna Yojana Households, representing the poorest of the poor, and proper on the subject. The deviations, she said, per cent of GDP. Instead of fudging around deficits of 3 per cent or and the Priority Households, where people living below poverty line (BPL) were in accordance with the “trigger mechanism” pro- The story doesn’t end there. In May 2016, the gov- thereabouts, governments will end up fudging vided by section 4(2) in the Fiscal Responsibility and ernment constituted a committee headed by N K Singh around higher targets. Getting governments to work are clubbed, quite inexplicably, with those living above poverty line (APL). Budget Management (FRBM) Act. to review the FRBM Act. It submitted its report in notionally towards a 3 per cent target is better. The prices of the grains have also, unjustifiably, been kept the same for all The section allows the government to deviate from January 2017. The Singh committee proposed that the Some have proposed that the government aim at classes of beneficiaries irrespective of their income. the FRBM target for any number of fiscal deficit target be reduced to 3 a target of 3 per cent over the entire business cycle. This is, indeed, not the first time that a cogent plea has come from a reasons: National security, act of war, per cent by 2017-18 and further to 2.5 The deficit will be higher in years in which growth is credible source for the amendment of the food law and rationalisation of national calamity, collapse of agri- per cent by 2022-23. weaker and lower when growth is stronger. The prob- the prices of grains distributed under it. The recently released Economic culture severely affecting farm out- It was the Singh committee that lem is that we don’t have a handle on the length of a Survey 2019-20 has also suggested such a move, acknowledging the short- put and incomes, structural reforms proposed the “escape clause”, business cycle in India, unlike in the advanced comings of the food security law and its adverse impact on the food econ- in the economy with unanticipated whereby a deviation of 0.5 per cent economies. So it’s hard to specify the period over omy. It wants the law to be confined to the bottom 20 per cent of the pop- fiscal implications, and decline in from the specified target was per- which the fiscal deficit must average 3 per cent. ulation. The others could be supplied grains under the normal public real output growth of a quarter by at mitted. The committee had Moreover, tenures of governments tend to be least 3 per cent points below its aver- attached an important proviso to shorter than the business cycle. The government of distribution system (PDS) at the prices linked to the cost of procurement. age of the previous four quarters. the escape clause: There must be a the day won’t be able to resist the temptation to err Another high-level committee, headed by former food minister Shanta From the above list, Ms clear commitment to return to the on the side of expansion and leave it to its successors Kumar, appointed in 2014 by the Narendra Modi government, had also Sitharaman invoked “structural original fiscal deficit target in the to pay for its excesses. gone into this issue. Its report had categorically stated that a 67 per cent reforms in the economy with unan- FINGER ON THE ensuing year. This proviso has fallen A third suggestion is to allow for a deviation that population coverage under the NFSA was on the higher side and should ticipated fiscal implications” to jus- PULSE by the wayside. is larger than 0.5 per cent in a given year, say up to be trimmed to around 40 per cent. That would suffice to cover all the BPL tify the present deviations. Now, In his Budget for 2017-18, 1.5 per cent, so that the stimulus is truly meaningful. families and, perhaps, some non-poor as well, it had maintained. structural reforms will be work-in- T T RAM MOHAN ArunJaitley referred to the recom- The date for returning to the committed targets can One of the significant observations made by this panel that did not progress in the foreseeable future. mendations of the Singh committee be specified. Again, governments will be tempted get due attention was that the NFSA had actually proved disadvantageous Any finance minister could fall back but chose to move the target date for to avail of the large deviation when it suits them— on structural reforms to justify deviations. the fiscal deficit of 3 per cent of GDP to 2018-19. In and then fail to return to committed targets. The for the BPL families. For it entitled them only to 5 kg of subsidised cereals There’s no escaping the reality: Deviations from his Budget for 2018-19, Jaitley proposed a “glide path” real check on the government, it seems, is not the per head per month, against 7 kg per person they were getting earlier under fiscal deficit targets have become the norm. The ulti- under which the target of 3 per cent was now pushed FRBM Act but the fear of being downgraded by the the targeted PDS. They, therefore, need to supplement the supplies by pur- mate target of 3 per cent of GDP now appears to be out further to 2020-21. The Budget for 2020-21 envis- rating agencies. chasing food from the market at higher prices. The committee also sug- something of a mirage.Here’s the story in brief. ages a target of 3.5 per cent of GDP for 2020-21 and There seems to be no way out. Managing rev- gested keeping the grain prices for the priority sector households under Under the FRBM Act of 2003, the target of 3 per 3.1 per cent of 2022-23. The target of 3 per cent is not enues and expenditure to get the numerator in the the NFSA at 50 per cent of the minimum support prices. Now that the gov- cent of GDP for the fiscal deficit was to have been met even on the horizon! fiscal deficit-to-GDP ratio down seems a Herculean ernment has at least three sensible reports to fall back upon, it should not by March 31, 2008. In 2004, the target was moved to The picture should be clear enough. The govern- task. The best we can hope for is that the denomi- lose more time in taking the final call on amending the NFSA. This is vital March 31, 2009. In 2008, came the global financial cri- ment can propose a path towards the target of 3 per nator, the GDP, gets a boost, either from a global to tame the ever-burgeoning food subsidy. sis. In 2009, the fiscal deficit targets were suspended. cent. It may deviate by up to 0.5 per cent from inter- recovery or a greatly improved export performance. In 2011-12, the government announced a return to mediate targets along the path. It may even propose the targets of the FRBM Act. The Finance Bill of 2012 a fresh path when it appears that the target date for The writer is a professor at IIM Ahmedabad

Central Asian states asked then UN growth with its own distinct and unique borders and affect us all. As with the Secretary- General Ban Ki-moon to liberal traditions, will be the heir to and earlier SARS epidemic, the Chinese The pangs of transition circulate their proposed International guarantor of the international liberal authorities initially tried to suppress Code of Conduct for Information Security system. Although India’s economic information only to discover that it was Ever since the Peace of Westphalia context that the chapter on “Making as a formal document at the 66th session reforms have paled in comparison to very easy for the virus to hop a plane and (1648), the industrialised countries of the space in cyber space” is a compelling one, of the UN General China, the fact arrive in Toronto and suddenly become a West have not only dominated the world although the other chapters are equally Assembly. This code THE NEW WORLD remains that with a global threat. The second development economy and set its agenda but have also insightful. This chapter comprehensively of conduct was really DISORDER AND THE near $3 trillion was the assassination of Iranian general directed the political narrative and the covers the evolution of information the first step in what INDIAN IMPERATIVE economy, India has Qassem Soleimani by the US as an act of discourse in favour of western liberalism, communication technology including was to become surpassed several reprisal. The third is President Donald Author: BOOK REVIEW leading to what is known as the the all-pervasive internet in the US and China’s assault on G7 states in Trump’s recent reiteration that the WTO “Washington Consensus”. Today, China. The disruptive potential of the the idea of internet Shashi Tharoor & economic heft. needed reform. RUP NARAYAN DAS however, it is an irony of history that it is internet, particularly Twitter and the freedom. The Samir Saran Three world The book, authored along with the United States, the world’s sole Facebook, was demonstrated in ample authors also observe Publisher: Aleph developments after academic Samir Saran, is yet another he title of the book is not only superpower, that seeks to overhaul the measure during the Arab Spring of 2010. that if the Arab the publication of opus from writer-politician and provocative but also suggestive of global governance structure that the West For many in the West, the authors Spring exemplified Price: ~700 the book add parliamentarian Shashi Tharoor, who Tits contents and insights. created — the United Nations (UN) and observe, it was an affirmation of the the democratic additional won this year’s Sahitya Akademi award Transitions in society or politics are not especially the World Trade Organization democratic potential of the internet. The potential of the evidence to its for his non- fictional work An Era of new nor abnormal. This is an inexorable (WTO) — because the East, China in western media glorified the role that their internet … the Snowden revelations central arguments. The first is the Darkness in English literature. As with law of nature; but the problem arises particular, has benefited from them and technology companies had to play in ultimately shed light on this hypocrisy, outbreak of the coronavirus epidemic in some of his other bestselling books such when the established order refuses to emerged as the world’s fastest growing bringing democracy to West Asia. The and irreparably damaged the ideal of China. The heavy toll of human life and as Why I am a Hindu, this book is adjust with the emerging order or when region. The narrative of the book revolves Arab Spring and the disruptive potential “internet freedom” as espoused by the US its impact on the Chinese economy in certainly poised to receive wide acclaim the rising power becomes hegemonic; round the trajectory of current geo- of the internet, however, also sounded a and its allies. particular attests to the authors’ as a critique of the contemporary there lie the pangs of transition. The irony politics, geo-economics and the warning alarm to some authoritarian As for the Indian imperative, the observation that global governance rests world order. of the contemporary “new world emerging information order. regimes. The authors say it is authors opine that if Asia is going to be the on the realisation that security is not just disorder” is that a multi-polar world order The way technology has impacted the unsurprising, then, that in 2011, almost defining region of our times then it must about threats from enemy states or The reviewer is a senior fellow of the Indian is yet to be firmly established, ending global order ever since the invention of immediately after the spread of be intuitively evident that India, which hostile powers; there are common Council of Social Science Research (ICSSR) at American unilateralism. the wheel is no less significant. It is in this discontent, China, Russia, and a few has successfully combined economic phenomena that really cut across the Indian Institute of Public Administration 16 CORONAVIRUS OUTBREAK MUMBAI | THURSDAY, 13 FEBRUARY 2020 1 > Opec cuts demand forecast by a third amid virus worries BLOOMBERG members made a strong start China situation 12 February with fresh output curbs that took effect last month, the an opportunity pec slashed forecasts virus’ impact on consumption for global oil demand will leave them with a new for India: CEA O as coronavirus hits fuel overhang. The group collec- AVISHEK RAKSHIT use in China, leaving the group tively pumped 28.86 million Kolkata, 12 February facing a renewed glut despite barrels a day in January, and if its recent production cuts. it maintains that rate there Amid concerns of a supply The cartel reduced projec- will be a surplus of 570,000 slump of raw materials and tions for demand growth in the barrels a day during the sec- goods from China owing to the first quarter by 440,000 bar- ond quarter, when consump- coronavirus outbreak there, rels a day, or about a third, in its tion slows down seasonally. Chief Economic Advisor monthly report. Oil prices sank The monthly report is com- Krishnamurthy Subramanian to a one-year low on Monday piled by Opec’s Vienna-based (pictured) on Wednesday said as the infection leaves busi- research department. the situation presents an nesses idle and millions quar- Opec doesn’t see the effects opportunity for India to boost antined in the world’s biggest of the disease confined to the its exports and emerge as a crude importer. start of the year, bringing down hub for assembling. Oil’s slump has spurred the its growth estimate for global On the sidelines of an Organization of Petroleum oil demand in 2020 as a whole event organised by Indian Exporting Countries’ (Opec’s) by about 230,000 barrels a day Institute of Management- biggest exporter, Saudi Arabia, to just under 1 million a day. Calcutta, Subramanian said, to press fellow members and Still, the increase remains “India can follow an export- allies to hold an emergency slightly higher than last year’s. driven model, especially meeting and consider new out- Though crude futures have integrating the assembly in put cutbacks. Yet the proposal recovered on speculation the India. In this context it’s a has so far met resistance from spread of the disease could be good opportunity. Because Russia, the group’s most impor- nearing its peak, prices of about of the uncertainties being tant ally, which is able to weath- $55 a barrel in London remain faced by China, it is a good er lower prices more easily. well below the levels most Opec opportunity for india to The report showed that, members need to cover gov- utilise that”. He said that even though many Opec ernment spending. during the Severe Acute Respiratory Syndrome out- break in 2002, India wasn’t much impacted. Toll soars past 1,100 According to Subra- manian, China itself imports The coronavirus outbreak in China has led to rare open calls for components from rest of the freedom of speech in the Communist nation amid growing world, assembles them in public discontent over the handling of the epidemic, as the China and exports them. death toll continued to climb which prompted the government “If we look at what hap- on Wednesday to announce fresh restrictions in top cities. pened in mobile manufac- So far, the virus outbreak has claimed 1,115 lives with 97 new turing in China, India has fatalities reported mostly in the worst-affected Hubei province been following the same pat- on Tuesday while the confirmed cases of infection jumped to tern. So if you look at in 44,763, the state-run CGTN TV reported. The number of con- terms of the components in firmed cases abroad rose to 440 with one death so far in the some of these network prod- Philippines. Japan reported the highest number of 203 cases ucts, its actually an opportu- with a majority of them from a cruise ship. PTI nity for us”, he said. DBS evacuates 2 Indian crew on cruise off 300 employees Japan coast test positive after virus case Two Indian crew on board a Princess with 3,711 people on cruise ship off the Japanese board arrived at the Japanese Singapore’s largest bank DBS coast have tested positive for coast early last week and on Wednesday evacuated the novel coronavirus, the was quarantined. A total of 300 staff from its head office Indian Embassy in Japan said 138 Indians, including pas- and told them to work from on Wednesday. sengers and crew, were on home after an employee The cruise ship Diamond board the ship. PTI was found to be infected with coronavirus. The infected employee was tested on Tuesday and the bank was informed of the confirmation on Wednesday morning, the DBS bank said in a statement. PTI MUMBAI | THURSDAY, 13 FEBRUARY 2020 BRAND WORLD 19

. < Ola builds a safety pitch forits London ride The SoftBank-backed firm keeps the name, hones its tech features and driver management skills for a global roadshow

that could potentially (and lit- erally) halt the brand in its tracks, if their demands are ignored. As an inaugural offer, Ola drivers will retain 100 per cent of their earnings for the first six weeks. “Ola will be the market leader in a year,” says Srinivas. The company, which is expand- ing as a global brand, says its differentiated focus on drivers, safety and a collaborative approach with local authorities and regulators will help crack the London market open. Ola claims it has over 25,000 drivers registered on the T E NARASIMHAN good- quality driver.” These Ola is present in currently but is platform, close to half the total Chennai, 12 Febuary are universal desires that Ola expected to ramp up its reach in drivers with ‘private hire vehi- hopes to fulfil. coming months. cle license’, a ticket that allows ow does a brand, built Safety is high on its mind Bijoor believes that Ola them to drive cabs in London. for India’s uniquely and Ola is bringing in an AI must infuse courtesy into its To woo drivers, the company H chaotic roads and dis- enabled safety feature, driver training programmes, he is offering them six weeks of count-seeking riders, break ‘Guardian’. The tool automati- sees it as an intangible loyalty zero commission and market- into the fragmented ride-hail- cally detects irregular vehicle factor that most ride-hailing leading commission rates ing market in London? activity. Another feature that app cabs lack in London. thereafter, enabling them to Especially, since this is a mar- the app is flaunting is a ‘Start Reinventing customer service keep more of their earnings. ket where its flashier counter- Code’ that ensures is the task at hand, To ensure safety and quali- part, Uber, has struggled to customers and “Three keythings and that calls for ty of service, Ola has partnered keep its wheels on. drivers are correctly a customerlooks training. It is with DriveTech (the UK-based At Ola, the Bengaluru- matched. The app forin this market equally a function fleet risk, safety management headquartered ride-hailing also has a ‘panic are safety and of getting in and driver training company) firm, the answer has been to button,’ a 24/7 voice comfort, clean younger driver to create an additional training stick to the knitting. Launched support for riders cars, and a good- partners. platform for their drivers. in London this week, it has and drivers and a quality driver” “However, there is Additionally, through a tie-up retained the brand name and, cap of six penalty ARUN SRINIVAS nothing to leverage with Pearson, Ola is making in advertising campaigns, Ola points for drivers in its Indian roots sure its drivers learn to com- COO and Global CMO, Ola is highlighting the safety fea- on its platform. and in fact, it must municate clearly and politely tures it developed for Indian Besides, Uber the leave its Indian with passengers. roads. For instance, the two- closest rivals for Ola include roots here while going to other The London foray is part of step identification for Indian Bolt and Kapten in London. countries,” he added. the company’s expansion plan passengers whereby they share Harish Bijoor, founder London will be the twenty- in the international market. Ola an OTP code with the driver to Harish Bijoor Consults said, eighth city in UK that Ola oper- launched in February 2018 ensure that the cab they “Ola fulfils a need gap in ates in, where Srinivas claims, from Australia, followed by the booked is the cab they are rid- London. Uber has had a bumpy the app download numbers UK in August 2018 and New ing in, makes its way to the ride there. To that extent, Ola have already breached the six- Zealand in November 2018. The ride’s London experience. has a lot to learn from Uber’s figure-mark. While promising company says that over 85,000 Arun Srinivas, COO and hits and misses.” Both compa- riders safety, Ola is also luring driver-partners have registered Global CMO, Ola, says, “Three nies are backed by SoftBank them with £25 of ride credit for on the Ola platform across 33 key things a customer looks for and are going head to head on signing up in the first week. It is cities. In the UK, over 30,000 in this market are safety and Indian roads too; Uber is pres- also going all out to woo its drivers have signed up on the comfort, clean cars, and a ent in a fraction of the cities that driver-partners, a community platform, Ola said.

double taxation avoidance agreement are In fact, the Budget has estimated rev- > FROM PAGE 1 still out of the purview of the scheme. Also, enues of ~1.33 trillion from telecommuni- a person facing prosecution under the cations for the financial year 2020-21, while Indian Penal Code, Prevention of Money not specifying the source. Taxresolution... Laundering Act, or Prohibition of Benami While a finance ministry official, in a On the inclusion of small-value search cas- Property Transactions Act cannot avail of post-Budget interaction, had clarified that es, he said, “This will unlock stuck tax rev- the scheme. the expected revenue from telecom had not enues and help in reducing the pending lit- The Budget scaled down the direct tax factored in the AGR dues, it may be chal- igation. A lot of search cases end up in collection target to ~11.7 trillion from ~13.35 lenging for the Centre to meet the telecom litigation and this is a welcome step.” trillion, achieving which will require 2.9 per revenue target just from spectrum auction. While the scheme is open till June 30, cent growth. However, even that seems The AGR-linked dues of ~1.47 trillion, as those availing of it will be given a complete challenging, considering that the growth ordered by Supreme Court, have to be paid waiver of interest and penalty if they pay the in the first 10 months stands at a negative by 15 telecom companies, though many of entire amount by March 31. In the case of 6 per cent. them have sold out their business or shut tax arrears pertaining to only disputed down operations. Reliance Jio is the only interest or penalty, 25 per cent of the dis- telco to have paid up. puted penalty/interest will need to be paid Retail inflation... In an interim relief to telcos, DoT had in while settling appeals till March 31, and a circular said on January 23 that it would 30 per cent if payment is made after that. Madan Sabnavis, chief economist at CARE not take any “coercive” action against Bharti Rajat Mohan of AMRG Associates said Ratings, said this is a reflection of low Airtel and Vodafone Idea when they failed that after the debacle of the dispute resolu- investment activity due to low capacity util- to comply with the SC order on repayment tion scheme of indirect taxes, the govern- isation (70 per cent in the second quarter of of AGR dues. The circular from the ment was leaving no stone unturned to 2019-20, according to the Reserve Bank of Licensing Finance Policy Wing (LFPW) of make the Vivad se Vishwas scheme a suc- India, or RBI) and banks’ reluctance to lend. the DoT was sent out to the Controller of cess and collect enough taxes to justify the Consumer goods — both fast-moving Communications Accounts (CCA) in dif- time and energy spent on the scheme advo- and durables — contracted. Sabnavis said ferent circles that no “coercive action” must cacy and bridge the current revenue deficit. this reflects low demand due to stagnant be taken against telecom operators. The scheme will apply to cases irre- incomes and torpid job creation, further The telecom operators had filed the spective of whether demand in such cases activated by high food inflation. modification plea in the Supreme Court in is pending or has been paid. The pending On Tuesday, Sitharaman had said ‘green January, seeking an extension of the appeal may be against disputed tax, interest shoots’ were visible in some sectors, includ- January 23 deadline to pay the dues. or penalty in relation to an assessment or ing industrial production. Bharti Airtel and Vodafone Idea had reassessment order or against disputed Sunil Kumar Sinha, principal economist informed the Union government that they interest or fee where there is no disputed at India Ratings and Research, said the turn- would comply with the Supreme Court tax. Appeal may even be against tax deter- around in industrial production is still not order on AGR dues, while stating that they mined on defaults in respect of tax deduct- visible and the wait for green shoots is get- would make the payment after their “mod- ed or collected at source. ting longer. ification” petition is heard by the court. However, it appears that cases related to The inflation rate in vegetables came Earlier on January 16, a Bench headed undisclosed foreign income/assets and down from 60 per cent in December, but it by Justice Arun Mishra had rejected telcos’ assessment or reassessment made on the still stood at 50 per cent in January. review petitions in the AGR case. basis of information received under the Pulses saw the inflation rate rising to 16.71 per cent in January, from 15.44 per cent in December. In its India's IT... > BS SUDOKU # 2972 monetary policy statement, the RBI had pointed to rising pressure Reflection of this trend is already visible on inflation rate of pulses. globally, said Gopinathan. "If you see the top The core inflation, which is three banking platforms globally, they non-food and non-fuel one, rose belong to Indian IT services players," he to 4.1 per cent in January from 3.7% said. Echoing similar views, Infosys’ Parekh in December. said there were different ways in which “Core inflation, driven by vari- product business would grow in the coming ous services, is a cause for con- years. “(For instance) platform-led service cern,” said Aditi Nayar, principal offerings in insurance and mortgage (seg- economist at ICRA. She said ment) or automation are some of the chan- regardless of the level of CPI infla- nels,” he said. tion, the stance of the monetary Infosys’ Finacle and TCS’ BaNCS are the policy is likely to be retained as two most popular core banking platforms ‘accommodative’, for as long as the used by the majority of banks globally. monetary policy committee (MPC) Once seen as pure-play services play- considers the output gap to be neg- ers, Indian IT firms are slowly building up ative. their own product and platforms in order “The timing and magnitude of to better serve their clients. This approach the next rate cut will depend on not only provides better pricing power to how quickly inflation appears to them, but also gives an opportunity to SOLUTION TO #2971 Very easy: be reverting towards 4 per cent,” monetise these assets separately in said Nayar. the future. The MPC has pegged average While this strategy would result in a Solution CPI inflation in the fourth quarter bit of cannibalisation to traditional rev- tomorrow at 6.5 per cent. For this to fructify, enues in the near term, it should not be a HOW TO PLAY inflation must decline in the next matter of concern for investors, they said. two months. Noting the changes in Indian tech in Fill in the grid so the past one decade, these leaders also that every row, said India was no longer a destination of every column global firms for saving costs. “India sits at and every 3x3 DoT may... the forefront of global tech innovation. If box contains the digits 1 to 9 DoT doesn’t want the telcos’ pay- you look at the cloud ecosystem, Indian IT ments to get delayed any further. firms are leading the race,” said Parekh. 20 STRATEGY MUMBAI | THURSDAY, 13 FEBRUARY 2020 1 >

SHUBHOMOYSIKDAR GUEST COLUMN isleri is looking to double its core business of mineral water during the coming sum- mer by sprucing up distribution and it is Fine tune the opportunity just as bullish about its fizzy drinks. B Uniquely developed “healthier” products with natural ingredients in the mix, a focus on gener- In part one of a two-part series, the author talks al trade channels and scaling up a small bouquet about how startups can identify a need gap instead of going for multiple offerings are what would help it grow, says the company. The assertion of Anjana Ghosh, director, marketing ntrepreneurship is fascinating and priate technologies. and business development, Bisleri International, that is increasingly becoming a career the company eventually aims to lead the ~16,000 soft E option for many people. Success of Howtofinetuneanidea? drink market (source: Bisleri, Euromonitor firms such as OYO and Uber have given con- The starting point for an entrepreneur is to International pegged it at a much higher ~92, 419 crore fidence to young people to set up their start- begin thinking like possible customers and in 2019) in India, is too futuristic at this time even if it ups. With lowering entry barriers for enter- determine segments where customer dis- comes from the category leader in packaged water. prise startups, there is renewed confidence satisfaction is high and maximum potential The immediate goals remain two-fold: To double the in students to be entrepreneurs. lies for the proposed product or service. sales of its carbonated drinks — the spiced Spyci, the What is not often discussed is that most Entrepreneurs who define their target mango juice-based Fonzo and the minty lemon drink startups fail! The failure rate has gone up groups too early may miss other more Limonata — by this summer and in three years, take the from about 50 per cent in the first five years attractive segments. Focus group discus- cumulative share of these three in sales to 20 per cent to close to 90 per cent in recent years, thanks sion that involves free wheeling exploration (up from 5-7 per cent last year) of what the flagship min- to the growth in online venturing options. It of possibilities including potential target eral water business both in terms of volume and value. will be interesting to discuss what makes the groups is a very effective method to identi- This sounds challenging because the current few survive and succeed and become brand fy attractive customer groups. This is espe- share is 5-6 per cent and the company has aggressive ambassadors of entrepreneurship. Insights cially so for novel ideas that are significant plans for water too which means the drinks sales from such analysis help entrepreneurs fine improvement on existing alternatives or will have to not just keep pace but show a much tune their ideas and build com- completely new solutions. higher momentum. mercially viable ventures. Entrepreneurs should go And recent history is not very flattering to say the SecSeconondd titimeme beyond intuitive assessment least. In 2016, the company first launched four drinks Customerdissatisfaction of opportunities to looking as variants of the umbrella brand name Pop only to see asthesourceofan more objectively from cus- them fizzle out soon after. It returned with Fonzo in attractive opportunity tomer (and consumer) 2018 and then the others were relaunched. Zomato has become success- angles; that should also cover So what gives the company hope that it will be ful, thanks to major changes in assessment of the potential second time lucky? Ghosh says that their products lucluckyky?? lifestyles in urban living. The size of the market, possibili- do not compare with any existing brands. “We have demand for food from restau- ties countering any imitators. ensured that Fonzo is much thicker than any existing rants delivered home grew Many of these may not be brands, the fizz is rightly combined to give the uplift suddenly due to rapid rise in KAVIL RAMACHANDRAN obvious and needs further and body to the drink. Spyci has distinctive masalas youth employment, traffic examination. Simultaneou- which are not commonly found in any exiting spiced Bisleri is banking on a new recipe for growth of its soft drinks jams and growing interest in sly, the entrepreneur should flavour drink that are either boringly jeera or lemony. trying out variety of foods. Consumers sud- find answers to the variety of challenges of I can challenge there is nothing similar in the market. business but low initial offtake, intense competition and gaps denly found it easy to analyse online eating accessing and managing the supply chain. It not only has the Indian green lemon and lime juice, options thanks to a spurt in availability of The principle of customer dissatisfaction it has fresh pudina oil extract which leaves a very in distribution may make the going tough bandwidth for internet users. Creation of applies to the entire supply chain. A good refreshing taste in the mouth. The mint flavour drinks multiple payment options gave customers entrepreneur defines oneself in the busi- available in the market taste like toothpaste, chewing additional convenience in ordering. In ness of eliminating customer dissatisfac- gums,” she doesn’t hold back while discussing com- Ghosh identifies general trade or GT as the pre- channels, the colour and appearance of the beverage essence, what Zomato did was to identify tion across one or more links on the supply petitors’ offerings. ferred vehicle for sales for the sheer volumes they plays a part and this is the case at the customer end too. a growing segment of dissatisfied cus- chain. All these constitute not only a good But the real challenge is that the company is pitted bring. This will be followed by bakeries, fast food and So when the company launched a red coloured ener- tomers and eliminate multiple sources of understanding of operations and technol- against two giants — Coca Cola and Pepsi that have eating joints, she adds. The sales team is also in talks gy drink recently, the bottles attracted children and the dissatisfaction. Zomato worked on the ogy and clarity about deciding how much diversified their portfolios and are even launching with many quick-service restaurants (QSRs), she says. translated into those being picked up from the sales entire chain of processes from selection of and what of marketing and operations. hyper local drinks. Asked if that approach will make Dutta of Third Eyesight says these tie-ups are a good counter instantly while its blue can failed to have the food to ordering and delivering at the The third leg of this tripod (besides mar- life tougher for Bisleri, Ghosh says: “…In India each proposition for any brand as they ensure captive sales same impact. And these field insights came from an choice location of the customer. Since the keting and operations) is availability of state has different palate, within the state there dif- and improved brand visibility. area where the company itself did not have much hope. criticality of the need to have such bought funds in adequate measure. A smart entre- ferent food habits. So up to what level does one hyper- An area sales manager or ASM associated with one Bisleri soft drinks have some way to go as far as out food is very high for a large number of preneur knows that even conservative esti- localise? We are confident we have brands with of the two cola giants — who has recently made a tran- sampling is concerned, she points out. Perhaps the customers, the intensity of dissatisfaction mates of funds go astray often. flavours and taste that are appreciated across the coun- sition to GT from modern trade (MT) for the company company itself has sensed this and is running a is high. In other words, where the customer It is the entrepreneur who converts the try. National brands like us should concentrate on in one of the biggest urban territories in the country — buy 1-get 1 offer as part of its sampling drive, apart discontent and need criticality are high, tripod into a diamond and iteratively unifying taste.” has some advice based on field insights. Having wit- from associating with youth events and shows, as their dissatisfaction will also be very high. sharpens and shines the four corners and Yet the opportunity is immense in beverages, say nessed the brand entering the said market, she found some recent reports suggest. Such situations lead to a pull from the mar- edges of the diamond. In the process, the Devangshu Dutta, chief executive, Third Eyesight and that while the shelf occupancy at MT was good, in GT Was that the case when Bisleri's products re- ket. The intensity of pull will be greater if entrepreneur keeps a balance among mar- Harish Bijoor, founder of Harish Bijoor Consults Inc. channels it hasn’t been as aggressive so far. “Also, a new entered the market as standalone brands but the pina- the entrepreneur is able to identify all pos- ket, operations, finance and team that will Dutta says that given per capita consumption in India player has to incentivise sellers through distribution of colada flavour was dropped? Or was it because the sible sources of dissatisfaction and offer a involve a constant process of fine tuning. is low and soft drinks are seen as aspirational products, branded refrigerators. These can be game changers in consumer is shy in trying out unfamiliar names? bundle of solutions. All these processes help identify and elim- people tend to consume more as income grows. Bijoor, some low-income areas. Then again merely entering dis- Ghosh says that this was done despite a positive Disruptions in various technologies and inate existing and emerging customer dis- on the other hand, cites his research to say that there tribution channels is not enough. For example, a Thums response because the company thought there would their inter linkages have created variety of satisfaction and create customer pull for are at least 11 new options for a new soft drink con- Up or a Pepsi are far more popular in bars as drink mix- be too many brands to handle — each new offering possibilities to create a feeling of dissatis- a startup. sumer. And those are exclusive of the three offerings ers whereas a parent at a shopping mall would hesitate needs nurturing and time to flourish. In fact, she adds, faction among existing customers or cre- from Bisleri. That said, the scope for growth is still high. buying her kid a strong drink and go for a milder one. So a pinacolada drink may be added in the near future. ation of new customers. Startups should The author is professor and executive director, The per capita consumption in India is low when you have to distribute accordingly,” she adds. identify opportunities to eliminate cus- Thomas Schmidheiny Centre for Family compared to developed markets. The ASM says that deep down in the distribution More on www.business-standard.com tomer dissatisfaction by applying appro- Enterprise, Indian School of Business

SNIPPETS STATSPEAK Indian urban youth is enthused about the future and feels a lot more privileged than parents in terms of opportunities POSITIVE OUTLOOK Better off personally Peers better off All numbers in % vis-à-vis parents vis-à-vis parents of respondents The WEF-Ipsos Social MobilitySurvey prepared by the World Economic Forum 85 84 85 83 78 79 76 76 (WEF) and market research company Ipsos throws up an interesting dichotomy. This is about the approach of the Indian workforce towards Access to good Access to Being able to Having a Love aaj kal automation. Whereas nearly two-third education information travel abroad successful career believes that their current jobs will be With Valentine's Day upon us, international dating 76 71 75 75 70 68 service OkCupid has come up with a report after replaced by automation, they are the 60 57 having surveyed millennials in India about love, most confident in the world when it romance and relationships in the 21st century. comes to the prospects of retaining Despite the technological advancements, face to their jobs riding on the skills they face interactions are still very popular. An possess or will possess. Being free to be Enough money Having a Being safe from overwhelming 85 per cent of OkCupid's millennial true to oneself to live well secure job crime & harm users across India are unanimously in love with the idea of a quaint coffee date when they meet Expect their jobs to be automated Confident about retaining their jobs in the future 84 86 someone for the first time. Some findings conform 75 72 72 69 Source: to the prevailing views on how men and women TOP THREE BOTTOM THREE TOP THREE BOTTOM THREE perceive love and marriage. A high percentage, 71 to be precise, of women say they will only get hitched INDIA 71 HUNGARY 14 INDIA 84 JAPAN 23 Ipsos if they are in love with their partner, whereas 61 per SAUDI ARABIA 56 GERMANY 14 THE NETHERLANDS 83 SOUTH KOREA 33 cent of men do not consider marriage out of love a Access to entertainment, Being able to own Being able to live comfortably CHINA 55 THE NETHERLANDS 16 US 82 RUSSIA 50 sacrilege! But some trends based on gender are also like films, music, books one’s own home when you retire from work changing. An interesting finding in the survey is that as 35 per cent of men love the concept of falling in love and really want it to happen to them compared to only 25 per cent of women, a The RailYatri app is a complete departure from the previous surveys. ‘Discountingiseasybutabadidea’ solution for a train traveller and not just a train ticket booking platform. Our understanding of the domain With standardisation of service and convenience, more customers have started transactions. Is that segment also in and the predictive algorithms we your scheme of things? have built help a traveller make an considering buses as an intercity travel option, Rathi tells Shubhomoy Sikdar You have rightly stated that while informed decision when they travel there is a large base of travellers who intercity. The problems we solve for Has the travel app industry reached just reaching their destination, it is use digital booking platforms, there travellers are wide. A long-distance a certain threshold where deep the experience during their journey is still a sizeable segment that traveller is worried about historical discounting is no longer a that makes a difference. We make prefers to avail of services offered performance of the same train, the prerequisite for expansion? So what sure that our passengers have the offline. We have been in discussion availability of a pantry car, are the new drivers of loyalty? best experience when they travel with IRCTC officials to create a confirmation probability, just to We believe that the deeper quest is to with us. All our buses come service that allows travelers to book name a few. The post booking needs understand your customer and equipped with tracking systems, on- through call centres. In order to are another set in itself and that is create solutions which address a board washroom, WiFi and make it easy for them to book our where our live train status tool strong need of a customer segment. infotainment besides the IntrCitySmartBus, we have tied up comes handy for both travellers and Discounts are always an easy tool personalised service by trained staff. with offline resellers across the their family or friends who need to High growth available to achieve conversions We ensure that most of our country. Our bus lounges also help pick them up at the destination. however it will always be short lived customers repeat their travel with us such customers walk-in to the Second, we have always taken a The speech and voice recognition industry is set to since someone else will by providing three lounges and book the services. The multi-modal approach. In the event grow by 41 per cent in the ongoing year. This is outnumber you soon. promises consistently — approach to outreach and awareness that a user cannot find a train that among the many findings of the report titled "Voice Hence we need to look at on-time performance, should be thought of in the offline fits her schedule, we provide Technology in India: Now and Future - Consumer what is the bigger moat safety assured and mode. Our offline partners have alternative ways for her to travel and business perspective" and compiled by digital that my product or service personalised assistance. signages, hoardings, brochures in and that is where InterCity buses agency WATConsult. The main objective of this report has for which the MANISH RATHI their outlets so that intercity come in. We believe that this is to share deep insights on voice-tech usage consumer today is more CEO & co-founder How has the integration even at later stages when they need travelers can understand our integration of multiple modes of patterns, to consult brands and to help businesses than happy to pay a little RailYatri with IRCTC affected the repeat bookings or wish to take services and book them travel sets us apart from of our make better decisions. The report focuses on the more. We follow three margins and another mode of travel. The conveniently. Our lounges exist in competitors. We are still in our market of voice technology in India, the perception primary pivots to generate customer consequently, revenue? integration with IRCTC has helped high traveler footfall zones and primary growth phase, yet we have of voice assistants, home management with use of loyalty — offer great product and We have a profitable train ticketing us provide multi-modal mobility hence they can find us easily and witnessed a 500 per cent year on voice and data security concerns. "Speech and voice service, ensure easy digital business even with existing margins options for intercity travellers. meet at the lounge. year growth with over 4 million recognition technology market stands at ~149.95 interaction to consume the product provided by IRCTC. However, train transactions taking place on our crore as of December 2019 and it is expected to grow and communicate regularly post the ticketing and train information also The railways are still used by many Travel ticket bookings is an area platform in a year. at 40.47 per cent to reach ~210.63 Cr by the end of first experience of the traveller. The help us acquire customers up- who are not well versed with or are where a host of players compete. 2020," says the report. customer is looking for more than stream and then be relevant to them sceptical of using online Where do you stand? More on www.business-standard.com MUMBAI | THURSDAY, 13 FEBRUARY 2020 ECONOMY & PUBLIC AFFAIRS 21

. < Registering a firm BUSINESS STANDARD BEST B-SCHOOL PROJECT AWARD 2019 SolvingrealworldproblemsatIndiaInc online to be easier Management students save cost and drive revenue in manufacturing, retail and finance sectors

Companies may soon be able to fill info online directly BS REPORTER PHOTOS: KAMLESH PEDNEKAR Mumbai, 12 February RUCHIKA CHITRAVANSHI New Delhi, 12 February Projects tackling real world chal- lenges in the corporate world, ompany incorporation including those on efficient hyper- is about to become eas- local delivery, sales technique for C ier with the corporate perfumes in malls, data analytics in affairs ministry planning to microfinance, and improvements introduce online forms sub- in automotive manufacturing were mission. Moving away from among the winners of the Business e-forms that had to be down- Standard Best B-school Project loaded and then filled, in the Award 2019 in Mumbai. new format companies will The top prize went to Kapil be able to directly fill their Gavali of National Institute of information online, a senior Industrial Engineering, Mumbai, government official told for his project on the ideal picking, Business Standard. routing and storage policy for The initiative is one among hyperlocal warehouse. many aimed at improving the Using algorithms, Gavali devel- MCA21 portal, which is in dire oped a capability model for Flipkart need of an upgrade. for efficient and time-bound deliv- The Ministry of Corporate ery to customers by reducing Affairs has shortlisted L&T search and picking time in the (Left to right) Jury members Sunil Panjwani, global head (internal audit), CG Power; Rajat Gupta, senior partner, McKinsey; Infotech to launch version 3 warehouse, and also providing Nishi Vasudeva, former CMD, Hindustan Petroleum Corporation; Rajkamal Vempati, HR head, Axis Bank; Ajit Balakrishnan, of the portal, according to peo- solutions of how the process can be jury chairman and founder and chairman, Rediff.com; Ambi Parameswaran, founder, Brand-building.com; and Ashish ple in the know. The first and improved further. "In a hyperlocal Chauhan, MD and CEO, BSE, at the Business Standard Best B-School Project Award 2019 in Mumbai on Wednesday second were spearheaded by delivery model, timing is crucial. A Tata Consultancy Services and documents take considerable step being planned is also to business could lose a customer if it Financial Intermediation, which Kumar, co-founder of B2B e-com- Infosys, respectively. time to open. The time limit of make the process of name reg- is unable to deliver on time. My provides financial and non-finan- merce unicorn Udaan, shared the The new incorporation three hours for one login needs istration AI based and remove project addressed this challenge," cial solutions in agri value chain. secret of his success, which is a method, part of version 2, is to be extended,” Pingle added. all discretion from the exercise. Gavali said. Trivedi used machine learning algo- hunger for knowledge, hiring indi- being implemented by Infosys Work on the third version is Besides, MCA will work G Teja of Vinod Gupta School of rithms for business expansion and viduals more capable than himself and is likely to be launched on likely to begin soon. While the closely with other government Management, at the Indian credit risk by gauging the propensi- and giving space to them to grow. February 15. The new web form long-term plan is to rollout a departments to create what it Institute of Technology-Kharagpur, ty of default and reasons for default. Kumar headed operations in would facilitate on-screen filing mobile app, holding registrar calls “a single source of truth”. was the first runner-up for his proj- Rediff.com founder and chair- Flipkart and left the e-commerce and real time data validation for office proceedings through “Through application pro- ect on sales and marketing tech- man Ajit Balakrishnan said it was company in 2015 to set up Udaan seamless incorporation. video conferencing, a data gramming interface we want niques for Titan Skinn perfumes in refreshing to see students tackling with an aim to connect wholesalers “Incorporation will analytics feature, the govern- that when one fills the company large format stores. Teja used a real world issues of Indian manage- with retailers. Kumar said in his become quick… It will take ment will first get down to incorporation number all other novel approach of distributing per- ment referring to challenges in Flipkart days he would look up to less time to start a business. urgent business. information should get auto- fume sprayed blotter cards to mall manufacturing and retail sector. study the Amazon or Alibaba mod- Some e-forms are not The government is also try- populated. People need not file visitors to increase footfalls and “Historically management students els but now companies in South approved by the MCA within a ing to fix the problem of the the same details everywhere,” drive sales and also took steps to tend to focus on financial analysis, East Asia want to study the Udaan period of two-three weeks. It considerable amount of time it the government official added. attract and retain counter staff. financial forecasting or market model. “This is a validation of our takes considerable time for takes to reply to queries. “We The MCA21 portal, where a The second runner-up prize was research but today we saw students idea,” he said. approval,” said Gaurav Pingle, want to use artificial intelli- company makes all its filings, shared by Vivek Sathiamoorthy of analysing manufacturing work Business Standard instituted the company secretary. gence and bring in chatbots to is also a minefield of data that Xavier Institute of Management flow, method of scheduling stock awards in 2007 to honour excel- Approvals are linked to the address queries in real time. the government wants to use and Entrepreneurship, Chennai, arrivals, and a hyperlocal ware- lence among students from India's next activity: increasing share This will take time, but we will for early detection of fraud in and Ayush Trivedi of Symbiosis housing and logistics project in best business schools. The event's capital followed by further issue do it as it will improve the ease version 3. It will also make the Centre of Management and Human retail,” he said. India has a crisis in 13th edition saw participation of 174 and allotment of shares. At pres- of doing business,” the senior data accessible to users for Resource Development. In his keynote address, Sujeet Kumar, manufacturing because the sector entries for top honour, which were ent, an e-form with a size of government official said. research purposes. Sathiamoorthy developed an effi- co-founder of Udaan, shared the is unable to attract enough talent to narrowed down to 15 projects first, 6MB can be uploaded on the India improved marginally MCA is also planning to pro- cient model for transport of parts at secret of his success which is hunger tackle these problems, he added. and further shortlisted to five final- MCA21 portal. However, com- by one rank in the World Bank’s vide a company with a bank BMW’s plant in Chennai as a part of for knowledge, hiring individuals “Typically, management students ists. A seven-member jury chose panies find it difficult to upload Doing Business ranks and account number at the time of his route train project and it led to more capable than himself and have turned their face away from the awardees based on individual forms with legible attachments. stands in the 136th spot among registration along with a direc- better allocation of workforce, giving space to them to grow these sectors and prefer consulting presentations and question and “In my experience, there are 180 countries on the starting tor identification number, improved stock availability, or Wall Street jobs. I am so glad answer session at a power-packed frequent issues while making business parameter. India’s name, incorporation certificate, reduced downtime and increased project on credit risk assessment their eyes are turning to these event attended by deans and facul- public search of documents… overall rank improved from 77 PAN, TAN, GST registration production. and loan default prediction model issues,” he said. ties of management schools and In a single login system, the to 63 last year. An important number among other things. Trivedi was recognised for his that he developed for Samunnati In his keynote address, Sujeet students across the city. Lookingforward Officialsrushingtocreatetradepact tofirstIndiavisit, SUBHAYAN CHAKRABORTY products. “Discussions on other New Delhi, 12 February American demands — lower duties for industrial compo- Officials are scrambling to cre- nents, engineering products, says USPrez ate a trade pact, to be signed and tech goods like smart- with US President Donald watches and iPhones — are Trump, before his visit. lengthy and not expected to be On Tuesday, Trump said he completed by the time of PRESS TRUST OF INDIA would sign a trade agreement Trump’s visit,” an official said. Washington, 12 February with India during his visit only While both sides are work- if it was the “right deal”. ing on a “comprehensive trade S President Donald However, with the US demand- package”, US trade officials have Trump has said he is ing broad trade concessions expressed their displeasure with Ulooking forward to his across multiple sectors such as New Delhi’s decision to saddle YES Bank to delay first visit to India this month, agriculture, information tech- medical device imports with an and signalled his willingness nology, and automobiles, talks additional health cess. to sign a trade agreement with have reached a stalemate, mul- India has refused to roll it Dec quarter results New Delhi “if we can make the tiple officials said on back, but people in the know right deal.” Trump will pay a Wednesday. say the government may allow Ind-Ra cuts issuer rating to ‘A-’ state visit to India on February A visit by Trump’s right a trade margin policy for spe- 24 and 25 at the invitation of “Modi said we will hand man for trade negotia- cific high-value items like ABHIJIT LELE BSE. India Ratings has down- Prime Minister Narendra have millions and tions — United States Trade coronary stents. Further, the Mumbai, 12 February graded YES Bank’s long-term Modi, who on Wednesday said millions of people. My Representative Robert Both sides are working on a “comprehensive trade package”, US US on Tuesday classified India issuer rating to ‘A-’ from ‘A’, on the US president’s visit will be only problem is that Lighthizer — also remains trade officials have expressed their displeasure with New as a developed economy, mak- YES Bank will delay the account of the continued delay a “very special one” and will last night we probably uncertain. Lighthizer was set Delhi’s decision to saddle medical device imports with an ing it ineligible for trade ben- announcement of its and inconclusive quantum of go a long way in further had 40-50,000 to attend a crucial meeting in additional health cess efits to developing nations. As December quarter (Q3) the anticipated equity infusion. cementing India-USA friend- people... I’m not New Delhi this week to iron out a result, chances of India results as it is in talks with It remains on Rating Watch ship. going to feel so trade issues, but no official con- trade, which may see India sys- which New Delhi had raised reclaiming trade benefits potential investors, includ- Negative (RWN). This could “He (Modi) is a great gen- good... There will be firmation was put out, as of tematically revoking high duties by up to 50 per cent last under the US’ Generalized ing J.C. Flowers and Silver adversely impact the bank’s tleman and I look forward to five to seven million Wednesday. People in the know import duties on key agricul- year. Farm lobbies have pres- System of Preferences (GSP) Point Capital, for raising franchise and potentially cre- going to India. So, we’ll be people just from the say the government is now bet- tural produce such as almonds, surised the government to that it has hitherto received equity capital. ate challenges on asset and lia- going at the end of the month,” airport to the new ting on a compromise on agri walnut, apples, and wine, on restrict market access for these has been quashed. In a filing to the BSE, the bility side, the rating agency Trump told reporters in his stadium (in lender said it had received non- said in a statement. Oval Office on Tuesday, a day Ahmedabad)” binding expressions of inter- It has sizable foreign cur- after the White House est (EoIs) from several rency liabilities and institu- announced dates of his much- Donald Trump, 15 CEOs in US delegation, biz investors including J.C. tional deposits. The required anticipated India trip. US President Flowers & Co, Tilden Park capital infusion is critical for Responding to a question, Capital Management, OHA providing sufficient cushion the president indicated that he tors including agriculture, auto- (UK) LLP (part of Oak Hill from the possible credit cost is willing to sign a trade deal mobile, auto components and talks likely on February 25 Advisors), and impact due to with India if it is the right one. engineering. Silver Point the stressed “They (Indians) want to do On the other hand, the US Capital. The bank and its asset pool on something and we’ll see... if we wants greater market access for NIVEDITAMOOKERJI pared and itineraries of the business Alexander Holmes, Encore Capital CEO & The bank and financial advisors regulatory capi- can make the right deal, (we) its farm and manufacturing New Delhi, 12 February guests are being fine-tuned, changes are President Ashish Masih, Qualcomm CEO its financial advi- are in discussions tal requirement, will do it,” said Trump, a fort- products, dairy items and med- possible later, an official pointed out cau- Steve Mollenkopf, Hewlett Packard sors are in discus- with investors on in the short- and night ahead of his first visit to ical devices, and cut on import A trade deal is not the only part of US tiously. The plan now is that invites would Enterprise President & CEO Antonio Neri, sions with these commercial terms. medium-term. India as the 45th US president. duties on some ICT products. President Donald Trump’s visit that is be sent this weekend once there’s a go- S&P Gobal CEO Douglas L Peterson, Varex investors on com- The investments, The capital is The two countries are nego- The US has also raised con- shrouded in mystery. With just about 10 ahead from the White House. Stay tuned, Imaging CEO Sunny Sanyal, Aquatech mercial terms. including pricing also crucial for tiating a trade package to iron cerns over high trade deficit days to go before Air Force One lands at is all that officials want to commit at this Chairman & CEO Venkee Sharma, The investments, and size of the serving its cus- out differences and promote with India which was $16.9 bil- Ahmedabad airport for a Howdy Modi- point. American Tower including pricing stake to be tomers ade- the two-way commerce. lion in 2018-19. like show that had wowed Houston and But sources in the know Corporation CEO James and size of the acquired, are all quately, said In New Delhi, an official “Just spoke with Prime then flies Trump and his team to New said Trump’s business dele- An American team Taiclet, and PayPal President stake to be subject to India Ratings. said India and the US were Minister Modi,” Trump told Delhi for a round of hard talk, even the gation with around 15 CEOs will reach India in & CEO Dan Schulman, acquired, are all regulatory YES Bank’s engaged in hectic parleys for a reporters on Tuesday in list of business delegation accompanying would represent sectors the next two days among others. When asked subject to regula- approval liquidity posi- proposed trade deal between response to a question on his Trump has been kept under wraps. ranging from finance and forthe next level of about leading names of India tory approval. tion seemed the countries, ahead of the vis- India visit. An official dealing with the arrange- banking to information checks, it is learnt. origin such as Sundar Pichai The current adequate as of it of President Trump. “He (Modi) said we will have ments said “there’s complete silence in technology and retail. The With both sides and Satya Nadella, officials capital raising process is engag- September 2019 (liquidity cov- However, the official said millions and millions of peo- the US”. In fact, an American team will top names doing the rounds expected to keep refused to confirm if they too ing the bank’s attention and erage ratio of 114 per cent). that as of now, there is no clar- ple. My only problem is that last reach India in the next two days for the include Mastercard theirrespective would be part of the delega- hence it will publish its results However, in the absence of ity if the trade pact will be night we probably had 40 or next level of checks, it is learnt. With both President & CEO Ajay interests in mind, tion. On the India side, lead- for Q3 and the nine months any swift capital raise, the signed during Trump’s visit. 50,000 people... I’m not going sides expected to keep their respective Banga, WaterHealth hard-nosed ing businesses likely to be ended December 31, on or bank’s ability to manage its India is demanding exemp- to feel so good... There will be interests in mind, hard-nosed negotiation International President & negotiation on all invited to the CEOs’ round before March 14, 2020. The asset and liability maturities tion from high duties imposed five to seven million people just on all critical issues, including on US-India CEO Sanjay Bhatnagar, critical issues table during Trump’s visit bank added that this exceeds could get tested further. The by the US on certain steel and from the airport to the new sta- trade, is likely a day or two ahead of AECOM Chairman & CEO include Mukesh Ambani, the 45-day period from the end lender continues to remain in aluminium products, resump- dium (in Ahmedabad),” Trump Trump’s arrival. Michael S Burke, Cisco Ratan Tata, N of the relevant quarter to discussions with potential tion of export benefits to cer- said. “And you know (it) is the The last-moment talks on trade will Chairman Emeritus John Chambers, OSI Chandrasekaran, Anand Mahindra, A M announce results, as stipulat- investors. However, raising tain domestic products under largest stadium in the world. have a bearing on the business delegation Systems CEO Deepak Chopra, Amway Co- Naik, and Sunil Mittal, among others. ed by the Securities and sizeable capital in the near their Generalized System of He’s (Modi) building it now, It’s as well as on the discussions at the chief Chairman Douglas DeVos, AES The caveat is there’s nothing official Exchange Board of India. YES term could be challenging and Preferences, greater market almost complete and it’s the executive officers’ (CEOs’) meet scheduled Corporation President & CEO Andrés about it as yet, except that Trump will be Bank shares closed 4.5 per cent could require various access for its products from sec- largest in the world,” he added. for February 25. While a list has been pre- Gluski, MoneyGram Chairman & CEO in India on February 24 and 25. lower at ~35.2 per share on the approvals. 22 MUMBAI | THURSDAY, 13 FEBRUARY 2020 1 > Average salary offeratIIM-Calcutta at record ~28 lakh

AVISHEK RAKSHIT termed ‘Superset’, enabling one to auto- venture capital (PE-VC) firms made 83 were in product management, IT/ WHO OFFERED WHAT Kolkata, 12 February mate campus placements end-to-end offers, comprising 17 per cent of the analytics and operations. Recruiters Consultancy sector made for 31% of and help employers hire from colleges total offers. included Microsoft, Google, Salesforce, all offers; BCG, McKinsey & Co, Bain ndian Institute of Management- across the country. Abhishek Goel, Bank of America Merrill Lynch, Amazon, Flipkart, Udaan, EXL Service, & Co were top recruiters Calcutta (IIM-C) has seen an all-time chairperson of the institute’s career dev- Barclays, Goldman Sachs, Arga American Express, HCL, UnitedHealth I high average salaries for the top 10 elopment and placement off- Investment Management, Group (Optum) and Mastercard. PE-VC firms made 17% of all per cent and top quartile of the class ice, said its introduction “ma- 439 students Gaja Capital and JP Morgan Anju Seth, director of IIM-C, said, offers, with BofA, Merrill Lynch, for the outgoing batch of 2020. The fig- de our processes even more Chase also recruited from the “Such coveted employment offers Barclays as top recruiters secured ures stand at ~54.5 lakh and ~41.8 lakh transparent and efficient”. 492 offers campus. demonstrate the high value of the edu- 30% of total offers were from (annual), respectively. Continuing the trend wit- from 136 firms General management and cation here and our students’ skills and general management and The annual average salary is also a nessed in summer intern sales and marketing roles capabilities.” sales departments, with TAS, record at ~28 lakh, with the median figure placements, held in October comprised 30 per cent of the IIM-C was established as the first at ~25.5 lakh. In all, 439 students secured 2019, consultancy firms were the largest total offers. Those recruiting for such national institute for post-graduate AB Group, M&M as top recruiters 492 offers from 136 firms. recruiters with 31 per cent of all offers. roles included TAS, Aditya Birla Group, studies and research in management 22% of all offers were from product Recruiters could also select from a The Boston Consulting Group, McKi- Mahindra & Mahindra, Reliance, by the Centre in November 1961, in col- management, IT/analytics, and larger pool and make offers to the most nsey & Co, Bain & Co, Kearney, Price- Vedanta, TrueNorth, Hindustan laboration with the Alfred P Sloan operations domains; with Microsoft, suitable candidates in accordance with waterhouseCoopers and Accenture Unilever, Colgate-Palmolive, ITC, School of Management, MIT, the gov- Google, Salesforce as top recruiters their choice. were the top recruiters in the sector. Mondelez and FIIT-JEE. ernment of West Bengal, the Ford The institute adopted a platform Marquee finance and private equity- The other 22 per cent of overall offers Foundation and Indian business. Wendell Rodricks diesat59

PRESS TRUST OF INDIA Panaji, 12 February

Renowned fashion design- er Wendell Rodricks (pic- tured) died at his residence in Colvale village in Goa on Wednesday, a police official said. Deputy Superintendent of Police, Mapusa, Gajanan Prabhudesai confirmed the death of Rodricks, who was 59. Prabhudesai said Rodricks died after collapsing at his residence in North Goa. A Padma Shri awardee, Rodricks was also an author, environmen- talist and gay rights activist. Goa Health Minister Vishwajit Rane tweeted, “Deeply saddened to hear about the sudden demise of my very good friend and designer, Wendell Rodricks. His excellency in his work and skills are irreplaceable and shall always be cherished.” “We will truly miss him. My heartfelt con- dolences to his family and dear ones,” Rane added in the tweet. Union minister Smriti Irani paid tributes to Rodricks and hailed him as one of Indias most renowned design- ers. Shocked to hear about the untimely demise of Wendell Rodricks, one of the Indias most renowned designers. My heartfelt condolence to his loved ones, May his soul rest in peace," she tweeted. Vision Fund losses wipe out profit of SoftBank SoftBank Group reported a near-total wipe out in quar- terly profit on Wednesday, after the Japanese technology investor was whiplashed for a second consecutive quarter by losses at its $100 billion Vision Fund. The dire result is likely to deepen concern about founder Masayoshi Son's abil- ity to secure funding for a sec- ond Vision Fund, and give more ammunition to activist investor Elliott Management, which has recently emerged as a prominent shareholder. The numbers are also the latest reminder of the inher- ent risk in Son's strategy of betting big on untested start- ups. The Vision Fund posted an operating loss of 225 billion yen ($2.05 billion) for October- December compared to 176 billion yen profit in the same period a year earlier. But Son, who is known for his ebul- lience and charisma said his company was already turning the corner. REUTERS QUICK TAKE: MORE PAIN AHEAD FOR BOSCH “There is a lesson for the 50% who are The underperformance of the Bosch stock vis-a-vis struggling with their The Smart portfolios. Leave your the broader markets is expected to continue on account of muted December quarter results and a losers early. Those who did likely are in the top” MUMBAI | weak outlook. Higher competition and transition ALOK JAIN, THURSDAY, 13 FEBRUARY 2020 to the electric vehicle space will likely hamper Investment Investor growth and margins advisor WWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING < PMS firms knock on Sebi door Indices extend gains Seek clarity over the tation that may favour certain providers. “Sebi should come out with a template. as virus fears recede move to provide That will ensure the confusion is taken standardised returns care of,” said a second person. PRESS TRUST OF INDIA SENSEX The report had noted the multiplicity Mumbai, 12 February Intra-day of reporting standards that exist for PMS 41,800 SACHIN P MAMPATTA providers. “Currently, there are wide The Sensex soared 350 points Mumbai, 12 February divergences across PMS providers with while the Nifty reclaimed the 41,565.9 regard to the way performance is report- 12,200-mark on Wednesday 41,600 he move to provide standardised ed to existing clients, prospective clients, on widespread buying in returns across portfolio man- and to Sebi. Non-standard reporting for- FMCG, bank and IT counters T agers may be experiencing some mats make it difficult for prospective amid a positive trend in global 41,400 teething troubles. Lack of granularity in clients to compare the performance of equities on hopes that new the regulations has some portfolio man- PMS providers and make informed deci- coronavirus cases have 41,216.1 agement services (PMS) providers sions with regard to the choice of their plateaued. 41,200 scrambling to figure out how they PMS provider,” the report had said. Extending its gains for the Feb 11,’20 Feb 12,’20 should showcase returns, said three peo- An email sent to the regulator did second session, the 30-share ple in the know. This included a portfolio ROADBLOCKS not elicit a reply. BSE Sensex soared 349.76 manager, a distributor, and a service Ashish Shanker, associate director points, or 0.85 per cent, to China on Wednesday of coronavirus has already provider to the industry. | Lack of granularity in regulations how portfolio managers are and head (investments), Motilal Oswal close at 41,565.90. Similarly, reported its lowest number on affected the supply chains and They are looking for clarity on how has left PMS providers wondering governed, raising minimum Wealth Management, said most of the the broader NSE Nifty jumped new coronavirus cases since factory activities across the it should be approached and are in the how to showcase returns investment size to larger players have returns that are large- 93.30 points, or 0.77 per cent, late January as authorities globe, but the ground reality process of seeking advice from the ly comparable. It is the smaller ones that to 12,201.20. scrambled to contain its is improving in China and we | Industry has approached Sebi, ~50 lakh and warranting Securities and Exchange Board of India minimum net worth of ~2-5 crore may be more affected by the transition, HUL was the top gainer in spread. can expect improvement in (Sebi) on the matter, said industry seeking clarity on norms he said. “I think it’s good for customers the Sensex pack, rallying 5 per However, WHO head the next quarter. sources. | Move to provide standardised | Working committee report on the because you’ll get standardised data,” cent, followed by Kotak Bank, Tedros Adhanom “The domestic market is The move follows the publication of said Shanker. Nestle India, ICICI Bank, Ghebreyesus had on Tuesday awaiting the January inflation returns follows revised PMS matter had noted the multiplicity the revised portfolio manager regula- guidelines issued last month Virendra Jain, founder, Midas Touch Mahindra and Mahindra, said that although 99 per cent and consensus show a spike tions last month. It seeks to change how of reporting standards that exist Investors Association, said Sebi could Asian Paints and RIL. of cases are in China, where it in inflation which is expected portfolio managers are governed, | New regulation seeks to change for PMS providers help investors decide by collating the On the other hand, State remains “very much an emer- to impact rate-sensitive increasing the minimum investment returns data better. It is not currently Bank of India, IndusInd Bank, gency,” it also “holds a very stocks,” said Vinod Nair, head size to ~50 lakh, and warranting a min- possible to easily obtain information Sun Pharma, Ultratech grave threat for the rest of the of research, Geojit Financial imum networth for PMS players from performance indicators shall also be dis- there is no decimal point difference. You which would point to the best perform- Cement, PowerGrid and world.” Investors were also Services. ~2 crore to ~5 crore. It also made changes closed,” said Sebi (Portfolio Managers) want to compare apples to apples,” said ing fund managers, based on the data NTPC fell up to 1.34 per cent. awaiting inflation and factory BSE FMCG, Bankex, to the way returns are shown. Regulations, 2020. one person. and the way it is being made available Traders said domestic output data, scheduled for Energy, IT, Metal, Teck and “…the performance of a discre- A service provider said there was Another person said a working com- on the regulator’s website, said Jain. equities took positive cues release later in the day. Auto sectors rose up to 1.90 tionary portfolio manager shall be cal- more than one way in which TWRR mittee report on the matter had men- Improving the ease of comparison from the global markets that “Investors’ appetite for risk per cent, while Power, Realty, culated using time-weighted rate of could be calculated. Clarity on the tioned a uniform format. Sebi could of this collated PMS returns data on the climbed on optimism that improved as coronavirus Consumer Durables and return (TWRR) for the immediately pre- methodology can ensure marginal kinks operationalise it through a circular, so regulator’s website can help the cus- spread of the coronavirus has concerns receded for the sec- Capital Goods fell up to ceding three years and in such cases, are ironed out. “We want to make sure there is no scope for creative interpre- tomer better, said Jain. been contained. ond day in a row. The impact 0.96 per cent. Sebi may widen mid-cap basket for MFs

JASH KRIPLANI SEEKING MORE OPTIONS could take another year. Mumbai, 12 February Commonality between benchmark and MF “While the move would give schemes may impact ability to outperform some leeway, money managers The Securities and Exchange will yet again have to adjust Board of India (Sebi) is likely to nSebi-mandated nOverlap with their portfolios to account for expand the mid-cap investable universe benchmark the changes. Several changes universe for mutual funds l Overlap in percentage (%) had to be made after the frame- (MFs) by 150 companies, 81 work was introduced a couple according to people in the 79 of years ago,” said a senior exec- 150 121 know. This decision, likely to 100 utive of another fund house. be made in the upcoming 79 Experts say managing board meeting on February 17, small-cap funds could become will effectively double the num- more difficult. “Including more ber of stocks available for mid- Mid-caps Large-caps top stocks in the large- and cap selection to 300. Source: Association of Mutual Funds in India, mid-cap universe would effec- Further, the large-cap uni- BSE 150, MidCap BSE 100 tively mean small-cap funds verse could get expanded by 25 will have to pick from stocks stocks, taking the total available classified as large-caps, while with even lower market cap,” to 125. MFs have, in the past, CEO of a fund house. per cent for the benchmark those from 126-425 will be clas- said a fund manager, request- approached the markets regu- Alpha stands for the outper- BSE100 index. sified as mid-caps, according ing anonymity. lator seeking more flexibility in formance that fund managers Mid-cap funds are required to the people. The remaining In October 2017, Sebi had stock picking. generate against the bench- to invest at least 65 per cent of will form the small-cap pool. laid down the scheme categori- “Within mid-caps, most of mark returns. their corpus in mid-cap stocks, While allowing more stocks sation norms for MFs to make the MF flows were chasing the An analysis of the BSE150 whereas large-cap funds are could provide flexibility, some it easier for investors to select same set of stocks on account MidCap Index and the Sebi- required to invest 80 per cent fear that a realignment could from the wide array of MF prod- of the cap of 150. This was mak- mandated investable universe in large-cap stocks, according lead to challenges. Some say a ucts. Sebi said the top 100 ing it difficult for fund man- of mid-caps shows an overlap to the current framework. change in the categorisation stocks would be classified as agers to generate alpha. Sebi of 121 firms — an 81 per cent The new framework would framework will force fund man- large-caps, those from 101-250 could widen the mid-cap uni- overlap. In the case of large- effectively mean the top 125 agers to adjust their portfolios considered mid-cap, and the verse by 100-150 stocks,” said a caps, the overlap stands at 79 stocks (in m-cap terms) will be again, and the re-shuffling remaining as small-caps.

THE COMPASS HUL’s premium valuation to sustain on Street’s thumbs up Revised target SHREEPAD S AUTE Brokerages believe HUL’s return on This was mainly on account of premi- equity will improve substantially over the umisation and cost efficiency programs, price indicates Hindustan Unilever (HUL) seems to have next two years. What makes it stand out which are expected to continue. braved the slowdown storm that has in comparison to peers is its distribution From 25.2 per cent in Q3, HUL’s Ebitda upside of 7-10% impacted some consumption stocks. reach, focus on innovation, and a strong margin is expected to improve to 26.6 per from current level The HUL stock, which hit its all-time product portfolio. In Q3, when consump- cent in FY22, according to Motilal Oswal high of ~2,271 on Wednesday, has gained tion demand had worsened, HUL had Financial Services estimates. over 11 per cent since January-end, com- maintained volume growth at 5 per cent. HUL’s strategies, such as introduction pared to a sub-1 per cent rise in the Nifty This reflects the underlying strength of small units and relatively higher mar- FMCG index. Its current market capitali- of its products, and should help it grow keting spends, has made its premium sation is close to the ~5-trillion mark. faster when recovery gathers pace in FY21. brands affordable. While HUL’s share in What is making the stock tick is the Besides volume growth, an improve- premium products is 1.3x its overall market expectation of healthy profitable growth ment in realisation is also expected as HUL share, it targets close to 6 per cent savings despite a large base, and strong return had hinted at a 5-6 per cent price hike in every year from its cost saving program. ratios. This should support valuation, the soaps segment. This apart, the acquisition of GSK which, at 56x its FY21 estimated earnings, Further earnings strength also stems Consumer and removal of dividend dis- is at a 24 per cent premium to its long- from a strong operating margin profile. tribution tax should further support HUL’s term average. Analysts at JPMorgan HUL has shown sturdy earnings before overall performance. believe premium multiples should sustain, interest, taxes, depreciation and amorti- Brokerages have recently revised HUL’s given HUL’s superior portfolio, execution, sation (Ebitda) margin improvement (830 target price, which indicates 7-10 per cent and the best-in-class return ratios. basis points) over the last 5 years. upside in the stock from current levels. Novelis continues to cushion Hindalco Industries Analysts have UJJVAL JAUHARI YoY, on the back of lower reali- erate at 2 per cent, highlighted aluminium metal into value- sations, which were partially Hindalco. Outlook remains added products, continues to maintained ‘buy’ After a decent showing by US offset by lower coal costs and subdued as the treatment and clock strong performance, subsidiary Novelis on Tuesday, restart of alumina production refinancing charges for calen- thereby supporting Hindalco. rating on stock the Q3 show of Hindalco’s India at the company’s Muri plant dar year 2020 have settled at Novelis is now contributing business, albeit weak com- (after maintenance). 15.9 cents per pound — 23 per more than half to Hindalco’s pared to the year-ago period, While aluminium prices are cent lower YoY. Though some consolidated Ebitda, and the beat expectations. The decline likely to remain volatile, support to profitability will management continues to in revenue and profit was Hindalco’s continued efforts on come from lower input costs guide for sustainable Ebitda per expected, given the weak base cost control and downstream and rising sales of value-added tonne of over $400 ($430 in Q3, metal prices and demand. expansion should sustain prof- products, the overall near-term absolute Ebitda was up Average global aluminium itability. The set-up of the outlook remains soft. 7 per cent YoY). prices had dropped 11 per cent Dumri mine will further Overall, Hindalco’s stan- The acquisition of Aleris is to $1,754 a tonne in Q3, while a improve coal security, while dalone Q3 revenues came in at in the final stages. Also, its new slowdown also meant the ramp-up at Utkal Alumina ~10,230 crore, and profit before automotive finishing plant in Indian market for the metal (where costs are half, compared tax profit at ~318 crore, ahead Kentucky is in the commission- contracted 14 per cent year-on- to the company’s Renukoot or of ~10,207 crore and ~291 crore, ing process. year (YoY) and 5 per cent dur- Muri plants), too, will help. estimated by Motilal Oswal Analysts at Motilal Oswal ing first nine months of FY20. The performance of the Securities. have retained their ‘buy’ rating Hence, the aluminium copper segment continued to While challenges persist, on the Hindalco stock trading business (including Utkal oper- be muted, with subdued sale Hindalco’s low-cost integrated at attractive valuations and ations) reported 9 per cent volumes due to operational domestic operations make it maintaining forward estimates. decline in revenue. The seg- issues, and Ebitda down 48 per less vulnerable, compared to Reacting to the results, the ment’s operating profit bore the cent YoY. Domestic copper peers. More importantly, stock closed 0.13 per cent up on brunt, declining 18 per cent market growth, too, was mod- Novelis, which is a converter of Wednesday. 2 THE SMART INVESTOR MUMBAI | THURSDAY, 13 FEBRUARY 2020 1 >

> TODAY’S PICKS BY DEVANGSHU DATTA NCDEX files for Nifty UltraTech, ACC stocks remain ~500-crore IPO Current: 12,201 (Fut: 12,227) Target: NA a tale of contrasts in Dec qtr Stop long positions at 12,125. Stop short positions at 12,325. Big moves could go till 12,400, 12,000. Some profit-booking likely today. A long UJJVAL JAUHARI Feb 20, 12,100p (38) versus a short 12,000p (20) could gain 10-15 if the New Delhi, 12 February index react to 12,100 level. CC’s lower-than-expected Bank Nifty performance in the Current: A December quarter (Q3), led 31,492 (Fut: 31,563) by a sharper-than-expected fall in Target: NA realisations, has disappointed the Street. This has had a domino effect Stop long positions at 31,400. Stop short positions at 31,700. Big moves on the bourses. The company’s could go till 31,900, 31,150. Trend could be biased down. A long Feb 20 share prices have shed over 3 per 31,200p (140), short 31,000p (94) could double in value if the index dips cent in the last three trading ses- till 31,200. sions after results. PRESS TRUST OF INDIA ACC’s results were announced Mumbai, 12 February YES Bank after market hours on Friday. In contrast, over a fortnight ago, National Commodity and Derivatives Exchange Current: ~35.2 UltraTech’s shares had gained 2.5 Limited (NCDEX) has filed its offer document with Target: ~33.5 per cent after it posted relatively markets regulator Sebi for an initial public offering better numbers for the October- tions, but it was down 3.8 per cent freight expenses also declined that new plants worth 5.9 mt per to raise about ~500 crore. Keep a stop at 36 and go short. Add to the position between 33.75-34. December period. Although (and up 3 per cent YoY) due to its sharply, but higher inventory costs annum (18 per cent of current The IPO comprises a fresh issue aggregating up Book profits at 33.5. UltraTech is far bigger in size, the more diversified geographical pres- were a key drag on profitability, say capacity) will gradually come on to ~100 crore and an offer for sale of up to 1,44,53,774 two are comparable given their ence. Consequently, ACC’s sales at analysts. UltraTech saw higher stream over CY20-22. equities by shareholders, according to the draft pan-Indian presence. ~3,980 crore came lower than reduction in operating expendi- However, analysts at Nomura red herring prospectus (DRHP). ACC’s cement volumes grew Bloomberg’s consensus estimate of ture, which was down 3 per cent say that there may not be much The issue is expected to raise about ~500 crore, Eicher Motors 4 per cent year-on-year (YoY) to 7.8 ~4,089 crore. The company’s per YoY and 4.3 per cent sequentially. benefit from new capacity in CY20 including fresh offering, merchant banking sources Current: ~19,278 million tonnes (mt) during the tonne profitability, too, declined 19 Thus, at ~1,008 per tonne for the and, in their view, ACC is not fully said. After BSE and MCX, this would be the third quarter, but realisations fell by per cent sequentially to ~697, December quarter, UltraTech con- geared to benefit from potential listing by an exchange. Target: ~19,500 more than 5 per cent sequentially according to analysts’ calculations. tinues to report better profitability. demand pick-up. Build India Capital Advisors, Canara Bank, and were flat YoY, thereby offset- Earnings before interest, tax, depre- Moving forward, analysts According to HDFC Securities’ Indian Farmers Fertiliser Cooperative, Investcorp Keep a stop at 19,225 and go long. Add to the position between ting the volume gains. ciation and amortisation (Ebitda) at expect the cement industry’s out- analysts, ACC operated at 98 per Private Equity Fund I are among the selling share- 19,400-19,475. Book profits at 19,500. Cement prices remained under ~541 crore also missed estimates of look to improve on higher demand. cent capacity utilisation in the holders. Jaypee Capital Services, National Bank for pressure across the country with ~614 crore. And, net profit at ~273 It has been a drag for most of December quarter. Agriculture and Rural Development, Oman India per 50 kg average price down from crore also came lower than ~357 CY2019. Moreover, fall in costs of UltraTech, however, should Joint Investment Fund and Punjab National Bank Hind Unilever ~351 in the September quarter to crore estimated by analysts. pet coke along with lower diesel benefit more, given its already will also sell their stakes. Some of the key investors ~341 in the December quarter. It In comparison, while UltraTech prices (led by decline in crude expanded capacities. Moreover, it in NCDEX include National Stock Exchange of Current: ~2,260 was led by weakness in South, East saw a relatively lesser pressure on prices) should benefit the logistics has more capacities in North and India, Life Insurance Corporation of India, National Target: ~2,300 and West India (by ~10-17 a bag). realisations, it has also seen better and energy expenses of all cement Central India, which is expected to Bank for Agriculture and Rural Development. North and Central India saw cost reductions. The unitary cost players. As a result, despite a weak see an improvement in utilisations Indian Farmers Fertiliser Cooperative, Oman lower pressure, with cement prices for ACC declined by a per cent YoY show in the December quarter, compared to other regions. India Joint Keep a stop at 2,240 and go long. Add to the position between 2,285- down ~3-4/50 kg bag. For ACC, and 2 per cent sequentially to many analysts maintain their pos- Consequently, the ACC stock, Investment Fund, 2,290. Book profits at 2,300. which has more capacities in South ~4,536 per tonne. This was due to itive outlook on ACC. which had seen some catch up in Punjab National OPEN TO Target prices, projected movements in terms of next and East India, it meant a sharper source mix optimisation, logistics Also, concerns over slower pace the last six months after years of Bank, Canara Bank, PUBLIC session, unless otherwise stated decline in realisations. UltraTech, efficiency and better supply chain of its capacity addition should underperforming UltraTech, may Build India Capital Target to raise ~500 crore too, had seen pressure on realisa- management. Power/fuel and resolve, starting end-2020, given remain a laggard. Advisors LLP, and includes fresh offering Investcorp Private Equity Fund I also IPO comprises fresh issue have stakes in the aggregating to about exchange. ~100 crore and an offer NSE holds 15 per for sale of up to 14,453,774 QIP-related stocks rule the roost, outperform markets cent stake in the lead- equities by shareholders ing agricultural com- DEEPAK KORGAONKAR & explains G Chokkalingam, likely to touch an all-time high modity exchange, After the BSE and MCX, this PUNEET WADHWA HIGH RETURNS founder and CIO, Equinomics during FY20. So far in FY20, 13 while LIC and would be the third listing Mumbai/New Delhi, 12 February QIP size Price in ~ Research. firms have raised ~51,216 crore NABARD has 11.10 by a stock exchange Name ~crore QIP Feb 12, 2020 % chg Some of these companies via the QIP route. Fundraising per cent each, IFFCO Some of the key investors Investors who subscribed to comprise the mid- and small- via this route had hit a record 10 per cent, OIJIF 10 Varun Beverages 900 612.0 814.1 33.0 of NCDEX include the qualified institutional place- cap segments that have done high in FY18, with 51 entities per cent and Punjab National Stock Exchange, ment (QIP) issues have recorded Shree Cement 2,400 19,300.0 24,688.2 27.9 well, say analysts. According to raising ~57,524 crore, according National Bank 7.29 LIC, and NABARD handsome returns on account Bajaj Finance 8,500 3,900.0 4,769.6 22.3 them, there is more headroom to PRIME Database. per cent among oth- of a run-up in the market price for stocks in these two seg- YES Bank on Saturday said ers, according the of stocks. Bharti Airtel 14,400 445.0 539.6 21.2 ments. “The Nifty MidCap and it has received shareholders’ DRHP. The exchange A sharp recovery in equity Avenue Supermarts 4,098 2,049.0 2,481.6 21.1 SmallCap have been relatively nod to raise capital up to proposes to utilise the net proceeds towards con- markets has seen nine out of 12 outperforming the benchmark ~10,000 crore via issuance of tribution to the core settlement guarantee fund, firms that raised money via the PVR 500 1,719.0 2,063.8 20.1 since the beginning of calendar equity shares or other convert- towards net worth requirements of National QIP route in the past six months Axis Bank 12,500 629.0 755.2 20.1 year 2020 (CY20). We expect ible securities. Commodity Clearing Limited and general corporate (since August) outperform the Source: Exchange; Compiled by BS Research Bureau both to keep outperforming. At Torrent Pharmaceuticals, purposes, as per the document. market, surging up to 33 per present, both indices have Piramal Enterprises, Adani The book running lead managers to the offer are cent against their issue price. bounced back after retracing Power, Adani Transmission, ICICI Securities and SBI Capital Markets. YES Bank (down 58 per cent), ~57,371 crore. In comparison, the In all, seven firms including QIP is quite low when the going 61.8 per cent of their mid- and Adani Enterprises are The exchange offers services across the entire RBL Bank (down 5 per cent) and Sensex recorded an average Avenue Supermarts, Bajaj is good. In some cases, there is January rise. The secondary among those to have passed a post-harvest agricultural commodities value chain Prestige Estates Projects (down return of 3.8 per cent. Finance, Shree Cement, PVR, no other alternative for raising corrective phase has helped board resolution to raise up to by utilising a varied presence, which has enabled it 0.04 per cent) are the only three The BSE SmallCap index (up Axis Bank, Varun Beverages, funds, given business opera- indices undergo healthy con- ~7,000 crore each via QIP, to create a wide network of stakeholders and mar- counters to trade below their 23 per cent) and BSE MidCap and Bharti Airtel were up in the tions may not be on a strong solidation,” wrote analysts at shows data. ket participants. It also engages in research, train- respective QIP prices. (up 22 per cent) have rallied range of 20-33 per cent to their footing. Firms performing well, ICICI Securities in a recent Chokkalingam expects more ing and building awareness in agricultural com- These 12 entities collectively more than 20 per cent from QIP price. on the other hand, have done report. firms, especially from the top modities market through NCDEX Institute of raised close to ~49,117 crore via their lows on August 23. In com- “Some of these stocks are well by lapping up financial 250 stocks (in terms of market Commodity Markets and Research. the QIP route, with the amount parison, the Sensex rose 13 per trading at a premium. The cost resources through QIPs at the New high cap) to accumulate financial The shares are proposed to be listed on the BSE now valued 17 per cent higher at cent during the same period. of servicing the funds raised via peak of their valuations,” Fund raising via the QIP route is resources through QIPs. and NSE.

COMMODITIES1 > Jewellery exporters stare at prolonged slowdown

RAJESH BHAYANI Mumbai, 12 February > PRICE CARD he festive cheer for the gems and jewellery sector came to T an end in January, with As on Feb 12 International Domestic exports declining 9.17 per cent to ------Price %Chg# Price %Chg# $29.6 billion. Exports in the first 10 months of Showing love costlier METALS ($/tonne) this fiscal year fell 5.68 per cent to $30.66 billion. Aluminium 1,689.5 -4.3 1,976.5 3.1 With the coronavirus outbreak, Copper 5,696.0 -2.4 6,335.9 3.1 prospects for the sector look dim this Valentine’s Day with a key event to promote gems Zinc 2,145.0 -15.6 2,411.0 -13.4 and jewellery in Hong Kong being Roses to become pricier by 20-25% as demand rises Gold ($/ounce) 1,565.8* 7.5 1,762.3 6.6 postponed. LOSING SHEEN While cut and polished diamond | Exports in the gems | Key event to promote getting back DILIP KUMAR JHA aggressively abroad. Silver($/ounce) 17.6* 4.7 19.9 3.3 exports continued their downward Mumbai, 12 February “With the Mahatma Gandhi National and jewellery sector gems and jewellery receivables on ENERGY journey, one of the best performing Rural Employment Guarantee Act (the segments – gold jewellery exports – declined 9.17 per cent in Hong Kong being account of the Offering roses is among the cheapest ways scheme ensuring employment for a mini- Crude Oil ($/bbl) 55.2* -11.8 53.2 -15.0 also fell in January by 2.96 per cent to $29.6 billion postponed because protests in to ‘express love’ on Valentine’s Day. This mum number of days), labour availability Natural Gas ($/mmBtu) 1.8* -30.5 1.8 -30.7 to $889.10 million. | Exports in the first 10 of the coronavirus Hong Kong time, however, doing so would mean pay- has become scarce. Even after promising It increased in the first 10 months months of this fiscal outbreak | Gold jewellery ing 20-25 per cent more. higher wages, field workers are not ade- AGRI COMMODITIES ($/tonne) of the fiscal by 4.17 per cent to $10.21 year fell 5.68 per cent, | Many exporters are exports fell by 2.96 The reason given is sharp increase quately available. Therefore, we could not billion. in demand on the occasion (it is this dispatch consignments as per requirement Wheat 195.2 5.9 290.9 -1.8 to $30.66 billion facing the issue of per cent in January Cut and polished diamond Friday) and reduced supply from major from overseas; we booked less orders this Maize 181.9* 0.9 256.0 -7.1 exports fell 5.67 per cent in January growing centres. year,” said Bipul Jain, director of Fauna Sugar 447.0* 36.5 487.9 0.2 2020 to $1.65 billion. competitive.” Budget proposal increasing import “There was huge damage of plants in International, a Kolkata–based exporter. In the first 10 months of this fiscal The GJEPC has asked the gov- duty. last year’s flood across major growing The central government also reduced Palm oil 697.5 9.8 1,130.2 12.2 year, it was down 16.8 per cent to ernment to relax norms for SEZs that The council has requested the regions, including Pune and Kolhapur in the subsidy granted under the Cotton 1,504.4 5.4 1,574.9 0.4 $16.32 billion. have a huge potential to attract jew- finance ministry to reconsider this Maharashtra and Bengaluru in Karnataka. Merchandise Exports from India Import of rough diamonds in the ellery companies in China to India. proposal. We are selling rose between ~12-15 a piece Scheme to five per cent, from seven per * As on Feb 12, 20 1800 hrs IST, # Change Over 3 Months Conversion rate 1 USD = 71.3& 1 Ounce = 31.1032316 grams. first 10 months also declined 15.54 Earlier, the slowdown was due to The coronavirus outbreak has (per stem) ex-farm this year as compared to cent earlier. Notes per cent to $10.92 billion. the US-China trade war and now it’s prompted Hong Kong to postpone ~9-10 a piece around the same time last “Unfortunately, the realisation from 1) International metals, Indian basket crude, Malaysia Palm oil, Wheat LIFFE and Coffee Karnataka robusta pertains to previous days price. Colin Shah, vice-chairman, Gem due to the virus. the exports show from March to May. year,” said Idrees Saifee, director, Vibrant flowers has not increased significantly due 2) International metal are LME Spot prices and domestic metal are Mumbai local spot & Jewellery Export Promotion The council has also requested This was one of the significant Fresh Farms, a Pune–based rose farmer, to competition in overseas markets. Hence, prices except for Steel. 3) International Crude oil is Brent crude and Domestic Crude oil is Indian basket. Council (GJEPC), said, “The export duty relaxation in rough diamonds. events to promote exports. Many wholesaler and exporter. the profitability of rose exporters has 4) International Natural gas is Nymex near month future & domestic natural gas is MCX near month futures. industry’s downward trend contin- Silver jewellery exports during exporters are facing the issue of get- Retailers, he adds, are selling at ~20-22 declined significantly this year, due to a 5) International Wheat, White sugar & Coffee Robusta are LIFF E future prices of near ues. We hope that the policy respite April 2019-January 2020 went up ting back receivables due to the a piece, as compared to ~15-16 at the same sharp increase in cost of procurement and month contract. 6) International Maize is MATIF near month future, Rubber is Tokyo-TOCOM near month we expect in customs duty happens. 78.14 per cent to $1.22 billion and Hong Kong protests. time last year. steady realisation. Rose export is not a future and Palm oil is Malaysia FOB spot price. We also expect that an e-commerce coloured gemstone exports in the Now, China’s health epidemic has Demand has also jumped from abroad, good business as it used to be until a few 7) Domestic Wheat & Maize are NCDEX future prices of near month contract, Palm oil & Rubber are NCDEX spot prices. policy, comprehensive gold policy same period was down 9.53 per cent further added to their woes. Besides including the European Union and years ago,” regretted Jain. 8) Domestic Coffee is Karnataka robusta and Sugar is M30 Mumbai local spot price. and amendments to the special eco- to $289.90 million. the Centre, the industry has also America. While exporters completed their India’s rose export is estimated to have 9) International cotton is Cotton no.2-NYBOT near month future & domestic cotton is MCX Future prices near month futures. nomic zone (SEZ) Act are considered The scene for coloured gem- sought several concessions from the shipment deliveries well in time, they are declined by 10-15 per cent this financial Source: Bloomberg Compiled by BS Research Bureau as it will make the industry globally stones may get worse with the Reserve Bank of India. unhappy at the inability to push business year for these reasons.