MONDAY, 28 OCTOBER 2019 14 pages in 1 section www.business-standard.com MUMBAI (CITY) ~8.00 VOLUME XXIV NUMBER 53

How markets performed last week % Chg over Dec 31, ‘18 Index on *One- --———————————————————————————————————————————————————————— Oct 251, ‘19 week Local currency in US $ Sensex 39,250 -0.12 8.82 7.10 Nifty 11,627 -0.30 7.04 5.35 Dow Jones 26,958 0.70 15.56 15.56 BACK PAGE P14 COMPANIES P2 Nasdaq 8,243 1.90 24.23 24.23 Hang Seng 26,667 -0.20 3.18 3.11 Nikkei 22,800 1.37 13.91 15.01 PAK DENIES USE OF AIRSPACE INDIGO’S WIDENING FTSE 7,324 2.43 8.86 9.46 DAX 12,895 2.07 22.12 18.02 TO MODI’S FLIGHT INTERNATIONAL GAMBIT Sensex Nifty Data on Oct 27, *Change (%) over previous week, Source Bloomberg; Compiled by BS Research Bureau PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, , , KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND

NOT SELLING GOLD FROM RESERVES: RBI ‘ is The Reserve (RBI) hasn't sold Markets start Samvat any gold recently, nor is it trading in the metal, the monetary authority said in a growing, tweet on Sunday. Newspapers had reported on Friday that the RBI started trading in gold actively since July, buying gold worth $5.1 billion and selling $1.15 billion worth. News 2076 on positive note with reports cited data from the RBI's Weekly Statistical Supplement.”The fluctuation in Sensex gains 192 points; mid- and small-caps outperform benchmarks value depicted in Weekly Statistical tremendous Supplement is due to change in frequency of SUNDAR SETHURAMAN revaluation from monthly to weekly basis Mumbai, 27 October and is based on international prices of gold and exchange rates,” the RBI said. PTI amvat 2076 started on a positive note potential’ for the equity markets with the S benchmark Sensex ending the cere- monial one-hour-long trading session with a gain of nearly 200 points on Sunday. Across-the-board buying was seen with Blackstone's co-founder STEPHEN A SCHWARZMAN has recently published his first book, the broader market mid- and small-cap What It Takes: Lessons In the Pursuit of Excellence, where he shares takeaways on how indices outperforming the benchmarks. he helped build the world's largest private equity firm. He tells Pavan Lall why he is After gaining as much as 344 points, the still bullish on India, how loss makes for the deepest learnings, and the reason Sensex settled at 192 points, or 0.5 per cent, corporate culture is the difference between winning and losing. Edited excerpts: higher at 39,250, while the Nifty 50 index logged gains of 0.38 per cent, or 44 points, In your book, you mention how Tuhin Please explain the consistent focus to end at 11,628. Parikh’s (senior managing director, and support on education that you A lot of individual stocks witnessed Blackstone India) comments on India's fund globally (Yale University, Oxford high trading activity, reacting to news booming realty prices as a turning University, and institutions in flow over the weekend. Shares of Tata point grabbed your attention during a China)? And, will you be looking to set Motors rallied 16.5 per cent, the most morning call. Given the scene now, up something in India soon? among Sensex components, buoyed by have those wild swings in prices I believe that education is the promoter Tata Sons’ decision to infuse Actor Rajkummar Rao rings the opening bell for Samvat trading at the BSE on Sunday, changed the way you see India’s real passport to a better life. We have a ~6,500 crore into the company by way of along with other officials PHOTO: KAMLESH PEDNEKAR estate market? responsibility to not only preserve BACK PAGE P14 rights issue. Anywhere in the world, sudden jumps the knowledge that has been passed Khattar, Chautala take gained 5 per cent — extend- SENSEX INTRA-DAY in prices are signs to be down to us, but to ing the monthly gain to 70 per cent — to Street thumbs up to cautious of. However, our develop it and make it oath in Haryana end at ~55. Shares of business model isn't as more relevant for Manohar Lal Khattar on Sunday took oath as ended with gains of only 0.24 per cent RIL’s ‘debt-free Jio’ sensitive to market “WITH THE future generations. I'm chief minister for the second time and even as the company announced the plan The Reliance Industries (RIL) stock gained 0.4 per cent fluctuations. We're more INTRODUCTION hopeful that my Dushyant Chautala was sworn-in as his to make its telecom venture Jio debt-free in Mahurat trading, as the Street concerned with finding OF THE GST, contributions in deputy as the BJP formed the government by transferring liabilities of ~1.08 trillion cheered the company’s plans of a high conviction, long- THE BOOM IN education — from with the help of the JJP in Haryana. to a new entity. new structure that will make its term opportunities. India E-COMMERCE, building a first-of-its- Governor Satyadeo Narain Arya The move is seen as a precursor to list- telecom arm Reliance Jio debt-free, is one of the fastest- AND A RISING kind student and administered oath to them at a ceremony ing Jio. Shares of Infosys gained nearly 2 which could be followed by its growing economies, with YOUNG cultural centre at Yale, held at the Raj Bhavan here on Diwali. Other per cent as concerns around corporate gov- potential listing. Sunday’s reaction tremendous potential. POPULATION, to working with global ministers of the Khattar Cabinet are ernance lapses eased. Overall, 23 Sensex was the first following Friday's With developments IT’S AN academic institutions expected to be sworn-in after a few days. stocks ended with gains and only eight announcement. such as the introduction OPPORTUNE to study the ended with losses. Source: Industry Turn to Page 5 > of the goods and services TIME TO implications of On the BSE, the advance-decline ratio tax (GST), the boom in e- STRENGTHEN artificial intelligence, was three-to-one in favour of the gainers. SEEKING QUALITYIN TOUGH TIMES commerce, and a rising OUR PORTFOLIO to establishing a The Nifty Midcap 100 and Smallcap 100 MARKETS young population, we scholarship program ON added 0.64 per cent and 1.22 per cent, The kicker for the market as a whole could come through if the feel it’s an opportune HERE” bridging China and respectively. The outperformance trig- IN SAMVAT ongoing reforms, tax cuts, further fall in interest rates and likely time to strengthen our the world — will help MONDAY pick-up in investment/consumption cycle boost GDP growth. This SPECIALS gered hopes among investors present at 2076 portfolio here. future generations the BSE that the New Year could lead to a could be a trigger for earnings growth and a market-wide re-rating. We’re now the largest commercial maximise their full potential. BUSINESS LAW: reversal in prospects of stocks outside the RAM PRASAD SAHU, HAMSINI KARTHIK, UJJVAL JAUHARIand landlord in India, with a portfolio of I approach my philanthropy and Decrypting the intermediary large-cap universe. In Samvat 2075, the PAGE 12 SHREEPAD AUTEwrite more than 115 million square feet. We pursuits outside of Blackstone with norms 11 > small index had hugely underperformed have also recently launched Asia’s the same principles I apply at the Arguments on data decryption fuelled a the Sensex, with the former dropping 10 Damani, member, BSE. largest and India’s first REIT with our firm: Identify and address complex debate on primacy of national security per cent and the latter gaining 12 per cent. The return expectations remain modest EDIT: FAITH IN THE local partner, the Embassy Group. We’re challenges by developing creative over individual privacy “After tough two years, we will have a much stepping into the new Hindu calendar year. proud of our work in India over the and thoughtful solutions, whether in GEETIKA SRIVASTAVA writes broader-based rally this year,” said Ramesh Turn to Page 5 > STOCK MARKET P7 last decade. India or elsewhere. Turn to Page 5 > POLITICS & PUBLIC AFFAIRS: A bit down but not out 8 > How Vasundharam, Chouhan and Raman Singh are placed in the post-defeat scenario GVK keeps Adanis out of Mumbai airport New rules on RADHIKA RAMASESHAN writes Group sells 79% PLAN TO SELL The GVK group owns 50.5% in Mumbai airport and 74% in Navi cards to govern stake in airport biz Mumbai airport, which is being developed > RESULTS RECKONER to 3 investors PURPOSE LEGAL BATTLE EARLIER EXIT OTC medicines Quarter ended Sep 30, 2019; common sample Money from stake sale GVK and Adani are The GVK group of 382 companies (results available of 431) ANEESH PHADNIS Mumbai, 27 October will help pare debt locked in a legal exited Bengaluru SALES and buy 23.5% in battle for International Sep 30, ’18 22.5% ~7.13 trillion Ò The GVK group will raise ~7,614 Mumbai airport from acquisition of Airport selling 43% Sep 30, ’19 4.2% ~7.43 trillion Ò crore by selling 79.1 per cent stake in Bidvest and Airports Bidvest shares in to Fairfax in 2 its airport business to three Company South Africa Mumbai airport tranches PROFIT BEFORE TAX investors to pare debt and stave off Sep 30, ’18 7.6% ~95,861 crore Ò the Adani group’s proposed acqui- sition in Mumbai airport. The The proceeds from the trans- An arbitration tribunal has giv- After the stake sale, the GVK Sep 30, ’19 % ~1.13 trillion 18.5 Ò group on Sunday announced sign- action will be used by GVK to retire en the GVK group time till October group will continue to have man- NET PROFIT ing off a definitive agreement with around ~5,500-crore debt of its 31 to deposit ~1,248 crore for agement control of its airport busi- Sep 30, ’18 2.0% ~65,238 crore Ò the Abu Dhabi Investment holding companies and fund the acquiring Bidvest’s 13.5 per per ness. GVK Reddy will continue as Authority (ADIA), PSP Investments purchase of additional shares in cent stake. A GVK spokesperson executive chairman and G V Sep 30, ’19 24.0% ~80,863 crore Ò of Canada, and the National Mumbai International Airport said funds required for purchas- Sanjay Reddy as managing direc- Companies with zero sales excluded; Given the change in corporate Investment and Infrastructure (MIAL) from two South African ing shares in MIAL will be trans- tor in both MIAL and Navi tax rates, to give a fair comparison the profit before tax has been considered; Compiled by BS Research Bureau; Source: Capitaline Fund (NIIF) for selling stake in its entities — Bidvest and Airports ferred to an escrow account before Mumbai International Airport, he airport business holding company. Company South Africa. October 31. said. Turn to Page 5 > TURNING A SOHINI DAS NEW LEAF Mumbai, 27 October The government is If you have fever, you need to go to coming up with a new a pharmacy to get even a paraceta- schedule for over-the- mol, a common drug for fever and AGR shocks to Vodafone Idea balance sheet counter (OTC) drugs pain. But, the government plans to soon make such drugs available at ILLUSTRATION: AJAY MOHANTY under the Drugs and Promoters unlikely to fund dues; telecom firm will have to raise funds on its own Cosmetics Act local retail outlets, with their labelling containing important KRISHNA KANT & DEV CHATTERJEE worth of around ~80,000 crore at the end of Emails sent to Vodafone PLC and the CURRENT STATUS information — preferred dosage Mumbai, 27 October Q1FY20, accounting for ~25,000 crore worth Aditya Birla group did not elicit any „Multiple categories, and side effects — in local lan- of rights issue and company’s net loss during response. depending on risk factor guages. The promoters of Vodafone Idea have the quarter. Analysts said the post the Supreme Court and therapeutic value This is expected to help people indicated they are not liable for the ~28,300- Analysts say that additional borrowings judgment on the AGR, the company will now „No clear definition in rural and far-flung areas, where crore dues imposed on the company by the company to fund the AGR levy have to go back to the drawing board pharmacies are rare. because of the Supreme Court decision on would wipe out the financial gains that regarding its finances. FUTURE PLANS “A new schedule is likely to be the adjusted gross revenue (AGR) for mobile accrued to the company after the rights “Vodafone Idea has indicated that it „Govt plans to govern created under the Drugs and operators. This is likely to adversely impact issue. The fund infusion by the promoters could also look at filing a review application sale, quality, prices and Cosmetics Act for OTC (over-the- Vodafone Idea balance sheet as the post the rights issue led to a sharp fall in the if there are any technical or procedural advertising norms of counter) drugs so that these com- company will have to raise funds on its own company’s leverage ratio and provided it grounds to do so. Assuming no relief comes OTC drugs monly used medicines that are not books. According to the apex court the surplus cash to fund capex for next two through, the outstanding liability (and „ ‘prescription only’ and are relative- judgment, telecom operators have three years. The company spent around ~2,840 another potential large demand for past SUC To increase ly safe to use can be governed,” said A BIG GAP months to pay the AGR dues. crore on capex during the first quarter of (spectrum usage charges underpayment) availability; make these a senior government official who BETWEEN The promoters of Vodafone Idea, FY20 and reported a net loss of ~4,874 crore would make the already-stressed situation available at retail stores did not want to be named. Vodafone PLC and the Aditya Birla group in the first quarter. even tougher for Vodafone Idea. The „Labelling in local He added: “There is a need to DEBT AND entities, are of the opinion that the liability is Vodafone Idea net debt declined to company may need to resort to another large languages, with make such drugs available to more EQUITY VALUE on the company and the promoters’ liability around ~99,000 crore at the end of June this equity raise round to fund these payouts. information on safety, people. This will reduce the cost of Trend in Vodafone is now limited to the equity exposure. year from ~1.18 trillion at the end of March This may not be easy, however, given that the how to use, expiry and treatment.” The official said many Idea net debt and The pending licence fee dues of this year. In the same period, the company’s amounts we are talking about are a multiple common side effects people preferred to self-medicate market combined entity of Vodafone Idea amount net debt to equity ratio improved to 1.2 times of the company’s current market „Drug packs could be instead of going to a doctor, which to nearly ~28,300 crore equivalent to more — the lowest in the past five years, from capitalisation,” said analysts, Rohit Chordia is expensive for them. capitalisation according to desirable than a third of the company's estimated net twice at the end of March this year. The and Aniket Sethi of Kotak Institutional Paracetamol is an OTC drug. (~crore) worth at the end of June this year. According company reported cash and equivalent Equities Research. dosages to avoid There are no norms at present to prolonged use *Market capitaisation as on October 25, 2019 Source: Capitaline, company to analysts estimate, the company had a net worth ~21,180 crore at end of the first quarter. Turn to Page 5 > regulate these. Turn to Page 5 > 2 COMPANIES MUMBAI | MONDAY, 28 OCTOBER 2019 1 > CASES UNDER BANKRUPTCY IndiGo’s widening international gambit CODE STAY ELEVATED IN Q2 The number of insolvency cases admitted by the Despite warnings from aviation experts, IndiGo is taking small but confident steps into foreign sectors bankruptcy court continued to stay elevated, with ANJULI BHARGAVA its fleet, there is no intention at pres- of its international routes to break New Delhi, 27 October ent to “separate” the operations of even in the short term. 369 companies alone admitted in the Sept quarter. the A320/321 aircraft from the ATRs “We don’t factor in losses in The number of insolvency alf of the total growth that the way many international carriers advance as market behaviour often cases admitted by the domestic aviation market tend to do at some stage. surprises on the upside,” said a con- bankruptcy court contin- H leader IndiGo expects this Again, contrary to market fident Boulter. Most international ued to stay elevated, with financial year will be in internation- rumours, the airline is not setting routes, he pointed out, take six to 12 369 companies alone al sectors, said the airline’s chief com- up any hubs per se. The strategy is months to mature. IndiGo withdrew admitted in the Sept- mercial officer William Boulter. to have “gateway cities” as and its direct connection to Hong Kong IndiGo has chalked out a cautious where it makes sense. For instance, recently, but that was more on ember quarter. but well thought out approach for its Kolkata is being developed as a gate- THE PLAN AHEAD account of the political unrest in the The March international foray, he added. way for flights from Yangon, Hanoi, region. quarter of FY19 “As of today, we are operating a Ho Chi Minh City and Guangzhou to „ IndiGo is adding routes using its A320/321 aircraft from the ATRs According to Shakti Lumba, a for- had seen the little above twice the capacity inter- connect to multiple cities within present fleet — A320s and A321s „ IndiGo is developing Kolkata as a mer IndiGo employee and a stalwart highest nu- nationally that we were at this time India, including those on the including the neos — which gateway for flights from Yangon, in the sector, “IndiGo has the maxi- mber (374) last year. We still see much opportu- “Buddhist circuit”. typically allow four to five-and- Hanoi, Ho Chi Minh City and mum to gain from international taken by the nity and are proceeding accordingly,” “We are offering connectivity a-half hours’ flying with a full Guangzhou to connect to operations owing to their extensive Benches of the said Boulter. from over 30 cities in India through aircraft load multiple cities within India domestic network, which can feed Though there have been repeated Kolkata to various Asian points and traffic into the metros to carry for- National Com- „ rumours that IndiGo was going for are confident that we will stimulate Indigo says despite a sharp rise in „ According to the airline, there is ward.” However, he said that the air- pany Law wide-bodied aircraft in a big way, the markets sufficiently to achieve the number of aircraft in its fleet, a lot of business, tourist and MICE line must avoid a “hit and miss strat- Tribunal (NCLT), revealed Boulter clarified that there were no profits in due course,” Boulter said. there is no intention at present to demand between India and egy — introducing new routes and data by the Insolvency and inting. Of the total number plans to induct aircraft other than Experts, investors and analysts in “separate” the operations of the Vietnam withdrawing due to poor loads — at Bankruptcy Board of India of cases admitted by the the current A320/321 (and ATRs) in the aviation sector have been con- all costs.” (IBBI). The number of firms NCLT (2,542), only 6 per cent the airline’s fleet. cerned over IndiGo’s choice of routes Boulter dismissed warnings of to go for liquidation in have yielded resolution. “We have always said wide-bod- and expansion plans into new mar- ment and more recently, a bitter spat ly connections between Kolkata and observers, saying that “industry ana- Q2FY20 stood at 96. While 23 per cent have ied aircraft are an “aspiration” and kets. The closure of Jet Airways has between the founders. both Hanoi and Ho Chi Minh City, lysts are a mixed bunch” with a vari- Operational creditors wound up in liquidation, not a firm commitment at this left a wide gap in domestic and inter- Many analysts have been of the with two separate flights. ety of competencies and experience have triggered 48.5 per cent close to 4 per cent have stage.” Hence, fears that IndiGo national capacity. While the domes- view that the viability of some of the According to the airline, there and that what may seem “a bit hasty” would hastily jump in whole hog tic capacity vacated by Jet has been routes chosen by the airline is ques- is a lot of business, tourist and to one can look like classic, flexible, of the corporate insolvency been withdrawn under into international sectors appear to largely filled by the Indian carriers, tionable in view of the fact that the MICE demand between India nimble low-cost carrier behaviour to resolution processes (CIRPs) Section 12A of the IBC. Almost be unfounded. the latter remains a tempting void airline’s present network does not and Vietnam, a route which has so far another. The airline is happy that it so far, followed by 43 per 59 per cent are still under IndiGo is adding routes using its for many players. offer any further connectivity. been underserved and directed over has been able to start five new desti- cent by financial creditors. the resolution process. present fleet — A320s and A321s The timing has also been a worry Experts say that as things stand, bar- cities like Bangkok, Kuala Lumpur nations in three countries in the past The Insolvency and Of the 1,497 cases still including the neos — which typical- for analysts and industry observers. ring Dubai, Bangkok and Singapore, or Singapore. five weeks. bankruptcy code (IBC), under CIRP, 35 per cent have ly allow four to five-and-a-half hours’ IndiGo has been going through its very few cities in the region offer What is giving the airline more The good news is that the viabili- under which cases are exceeded the time prescr- flying with a full aircraft load. The own share of troubles since 2016 — enough point-to-point traffic from confidence is that both Istanbul and ty of new routes — especially on referred to the NCLT, is ibed under the IBC to wrap delivery of its new A321neos may be be it engine problems, a series of PR even the main Indian metros. They Chengdu routes are performing international sectors — becomes evi- almost three years old now, up the resolution process delayed somewhat but the airline will disasters, a creeping arrogance, a also point out that several interna- “ahead of expectations”. In the first dent rather quickly and allows for during which the experie- (270 days). lease aircraft from the market as and faster than anticipated growth, a new tional carriers have tried other direct few weeks of operations, flights rapid course correction. As for when required. aircraft type (ATR) to deal with, connections but have often burnt departing from Chengdu have had IndiGo, as long as the giant treads nce has been disappo- COMPILED BY SUBRATA PANDA The airline says that despite a unhappy pilots, sulking Indian staff, their fingers in the process. 90 per cent loads — far higher than gently, it should not find itself falling CORPORATE INSOLVENCY RESOLUTION PROCESS sharp rise in the number of aircraft in entry and exits of top level manage- At present, IndiGo is offering dai- anticipated. The airline expects some into a deep crevice. Quarter Admitted Resolution Commencement plan approved of liquidation Jan-Mar,2017 37 0 0 Apr-Jun,2017 129 0 0 Ranitidine cancer scare: Firms Railways try to hail Jul-Sep,2017 233 2 8 Oct-Dec,2017 147 7 24 Uber, Ola cab again Jan-Mar,2018 195 11 59 that clear quality tests to gain Apr-Jun,2018 246 14 52 SOHINI DAS Ride so far too costly, say the latter; Jul-Sep,2018 243 29 87 Mumbai, 27 October THE SHARE attempt now to sweeten parking | Ranitidine sales Oct-Dec,2018 275 17 82 With the Australian drug reg- account for 2 per cent spot deal for the cab aggregators Jan-Mar,2019 374 22 86 ulator allowing sale of antacid ranitidine made by Strides of Strides sales and SHINE JACOB & KARAN CHOUDHURY firmed their exit from the allot- Apr-Jun,2019 294 27 93 Pharma, analysts say clarity 6 per cent of its New Delhi/Bengaluru, 27 October ted space at Bengaluru station. Jul-Sep,2019 369 27 96 will emerge in the ensuing profit after tax “In most of these stations, the weeks as most companies A revenue churning plan for companies had gone for higher Total 2542 156 587 | For Dr Reddy’s would have submitted their Laboratories, Indian Railways (IR) that would bids. For example, in Beng- test results to the regulators. ranitidine sales are have hitched a ride with cab aluru, they are of the opinion STATUS OF CIRPs ONGOING CIRPs In September, several less than 1 per cent of service aggregators Uber and that the ~7 crore for which the companies, including British Ola seems to have got derailed. contract was awarded is unvi- „figures in no. of days as of September30, 2019 drugmajor GlaxoSmithKline sales and profit According to sources in the able," said the official. The com- 535 after tax No. of CIRPs 362< = Pharma (GSK), Hyderabad- know, the two companies have panies have also said they are >270 days Status of CIRPs 2,542 90 days based Dr Reddy’s Laboratories | For JB Chemicals, the informed IR that they will be not ready to take up more sta- (DRL) had withdrawn their same is about 10 per unable to continue managing tions under the programme. Admitted 186 ranitidine products from the the designated spaces allotted During 2018-19, the railways 1,497 cent of sales and Closed on appeal markets after the US Food by the national transporter for earned around ~21 crore from Total 18 per cent of /review/settled 116 and Drug Administration profit after tax parking in key stations such as parking slots for cab aggrega- (USFDA) raising concerns over Bengaluru and Mumbai. tors. Sources said they might Closed by withdrawal the presence of a cancer-caus- Multiple sources said talks give some cost benefits to the undersection 12A 156 276 324 ing substance in some raniti- report noted most Indian sup- informed the stock exchanges Rathi, analyst, ICICI Securities, are on between IR and the aggregators and larger desig- Closed by resolution 587 >90 days >180 days < dine products. pliers of ranitidine had already that their API vendors have got felt the TGA order would be companies to revive the deal. nated spaces to keep the asso- <=180 days = 270 days Following this, ranitidine submitted their test results. their products analysed. positive for Strides as it could “We have been in talks with ciation and the contracts going. Closed by liquidation 1,497 manufacturers in different “A few have reported posi- “Our API vendors have got easily increase market share railway officials. However, we As of now, contractors get a countries (including the US, tive outcomes. JB Chemicals their product analysed accord- in Australia. “If USFDA too tes- are unsure if we will continue fenced demarcated area, with a INITIATION OF CIRPs the EU, and India) were asked announced that NDMA level ing to international guidelines tifies that the NDMA level in with the plan. There are vari- booth and permission to park by the respective drug regula- in its ranitidine is within to verify the presence of Strides’ API is within accept- ous logistical factors; also, the not more than 10 taxis in major Quarter Operational Financial Corporate Total tors to conduct tests for deter- acceptable limits. SMS Pharma NDMA. They have reported able limits, it would be a fur- return on investment was not stations at a given point of time. creditors creditors debtor mining the concentration of also announced the same and that the NDMA is well within ther booster to the company, what we expected. Logistical Sources claim that over the Jan-Mar,2017 7 8 22 37 an impurity (N-nitrosodi- TGA Australia reported that 20 the permissible limits. In addi- which already has the highest issues include cabs getting past year, the transfer of non- methylamine or NDMA) in the of 23 ranitidine batches from tion, the company has also ini- market share,” he added. stuck in railway parking lots fare operations to zones had Apr-Jun,2017 58 37 34 129 ranitidine they supply. This Strides Pharma had NDMA tiated analysis of the samples Analysts thus said it for hours and our driver part- slowed the allotment process Jul-Sep,2017 100 94 39 233 order came in the wake of a cit- within acceptable limits where- of all Rantac formulations for expected clarity to emerge in ners complaining of tussles of parking space to app-based Oct-Dec,2017 67 66 14 147 izen petition filed by Valisure as it was higher for most other the presence of NDMA. We coming weeks. Regulators in with prepaid taxi and auto cab service providers. Earlier (a US pharmacy that chemi- companies,” the report said. have to inform that initial most countries are investigat- operators. We are undecided this year, cab aggregators began Jan-Mar,2018 89 84 22 195 cally validates all the products Companies whose raniti- report received indicate ing this matter and we believe on whether we will continue,” going slow on their plans to Apr-Jun,2018 129 99 18 246 it delivers to end users). dine products had higher NDMA is well within the per- clarity would emerge in ensu- said a top executive in one of acquire additional parking NDMA is a known environ- NDMA concentration have missible limit,” it said. ing weeks, as most companies the cab aggregators. rights. They said drivers do not Jul-Sep,2018 132 95 16 243 mental contaminant and been directed by TGA Ranitidine sales account would have submitted their Uber and Ola had spent prefer to park their vehicles and Oct-Dec,2018 153 106 16 275 found in water and foods, Australia to recall the batches. for 2 per cent of Strides sales test results to the regulators. ~100 crore each in setting up wait for customers; instead, including meats, dairy prod- A GSK Pharma spokesper- and 6 per cent of its profit after The companies had parking spots and kiosks at sta- they believe in staying mobile Jan-Mar,2019 166 187 21 374 ucts, and vegetables. The USF- son informed they were await- tax (PAT), for DRL it is less stopped fresh shipments of tions. They had taken space at to find passengers. The invest- Apr-Jun,2019 154 127 13 294 DA, however, has not asked ing results from tests. than 1 per cent of sales and ranitidine products to regulat- various stations, including ments by Uber and Ola includ- Jul-Sep,2019 177 183 9 369 patients to stop taking raniti- GSK’s British parent has PAT, while for JB Chemicals, it ed markets while several com- Mumbai Central, New Delhi ed setting up of kiosks, incen- dine at this time. sent the samples for testing. is about 10 per cent of sales panies have started voluntary and Bengaluru. tivising drivers for parking at Total 1232 1086 224 2542 ICICI Direct in a recent Meanwhile, JB Chemicals had and 18 per cent of PAT. Sriraam recall pending clarity. A government official con- stations, and payments to IR. Income share agreement start-ups catch students’ fancy company is focusing on training software engi- Kumar, founder of KredX and LetsVenture. It is still a nascent market but neers to break into international tech careers, Agarwal of SOAL says though the ISA model a growing one, which has through full-time remote jobs. In its programme, is nascent in India, it has huge potential. There the student has to share 17 per cent of the salary is a young population which wants to keep investors interested for three years. InterviewBit operates on a dif- upgrading by studying but faces a lack of ade- ferent model. There is a prepaid one, with upfront quate funds to do so. Says Nikhil Rungta: “Over T E NARASIMHAN ~2 lakh payment for a six-month course with job 60 per cent of the engineering students who Chennai, 27 October guarantee. And, a postpaid model where the stu- pass out every year are either unemployed or dent has to pay 17 per cent of the base salary for stuck in unrelated jobs. If we go beyond engi- Assume you want to do a course but don’t have two years if he or she gets a job with more than neers, this problem multiplies 10 times.” enough for the fees. A company comes forward to the minimum guarantee on CTC (cost to compa- Challenges include ensuring repayment of pay not only the fee but also offers a job placement ny). The maximum total payment is ~3 lakh, says the fee, considering a legal dispute on this could with decent income — from which they will deduct the company website. derail the business. Getting more numbers placed what they have lent, with a small interest rate. Nova Semita says the same way investors in good jobs also becomes a responsibility of the This is actually happening in India and gain- gain only when their start-ups grow, ISA start- start-up, it being a requisite to ensure proper ing traction from customers and investors. ups gain only when a student’s career acceler- repayment. Trust is very important in this busi- Termed the Income Share Agreement (ISA) edu- ates. “We invest in resources for you and take the ness, while quality is essential to keep it a success, cation model, students can defer fee payment for re-skilling freshers and engineering graduates. Goel, co-founder and chief executive at AttainU. risk on ourselves. In return, we get 12 per cent of say Agarwal and Goel. for higher education till they get a job. The mod- The post-college skilling market in India was They have a little over 500 students enrolled your income for three years upon you earning AttainU says it has a rigorous assessment el has been popular in America and parts of pegged at $370 million (~26,300 crore) this year across five batches of software engineering, with above ~5 lakh per annum. In case we fail to get process and selects only 1.4 per cent of total Europe. In India, around half a dozen start-ups and the post-college tech skilling at $180 mil- specialisation in full-stack web development. The you there, ASAP, you don’t have to pay us any- applicants for its 30-week course. SOAL has are in the segment, focusing mainly on re-skilling lion, growing at almost 50 per cent annually. first batch is ready to graduate and 40 per cent of thing,” says the company. enrolled a tenth of its 1,100 applications to date. for now. Every year, around nine million students gradu- them have pre-placement offers, he claims. “It isn’t an unlimited fee that the student “ISA has emerged as the most exciting inno- ate from colleges but 85 per cent do not make it The segment is expected to grow and see How the Investors benefitted needs to pay. People cap it at varying amounts, vation to finance a college degree,” says Pratik to a well paying and white collar job. The data investor interest, with financial technology open- Data by Venture Intelligence shows that since April, of ~4-7 lakh,” said Agarwal. These companies Agarwal, co-founder of the School of Accelerated shows half of all BE/BTech graduates and 60 per ing up. Fintech entities and non-bank finance SOAL, Pesto, InterviewBit Academy and Masai follow different revenue models; some have been Learning (SOAL). cent of MBAs are still considered not employ- companies are increasingly open to collaborating School have raised a little over $4 million, from experimenting with more than one. “ISA allows able by reputed tech organisations. with ISA, is the observation. Matrix Partners, Sequoia Capital, Astrac Ventutres, institutes to admit meritorious students who How it works “The ISA model makes quality education Pesto Tech says it assures that if it does not get India Quotient and others. Angel investors include otherwise might not be able to afford the course The contract obliges a student to pay back a portion accessible. Around 80 per cent of our students the student a job paying at least ~15 lakh a year, its Shailesh Rao, ex-mananging director at Google fee. This loan structure involves institutes and of future income for a set number of years, rather are dependent on their families and the family training programme was not good enough and India; Nikhil Rungta, former head of Intuit India; promises good placements…this adds another than take a student loan. These start-ups pay fees income is less than ~5 lakh (a year),” says Divyam the student should not have to pay for it. The Anil Gelra, founder of SnapMint and Manish layer of security,” he adds. MUMBAI | MONDAY, 28 OCTOBER 2019 COMPANIES 3 . <

Barclay family puts Telegraph Consumers flock to modern Jio’s IUC is likely newspaper up for sale: Times trade during slowdown HEATHER BURKE & JIM SILVER to help telcos London, 27 October Rate of growth nearly double that of traditional trade in July-Sept: Nielsen data The Barclay family has put VIVEAT SUSAN PINTO the Daily Telegraph and Mumbai, 27 October MODERN TRADE OUTPACES Sunday Telegraph newspa- TRADITIONAL TRADE increase tariffs pers up for sale as part of a Footfalls at the neighbour- (figures in %) (rate of growth) review of their British hood supermarket are grow- Traditional trade Modern trade ROMITA MAJUMDAR investments, Times of ing in contrast to the kirana 16 14 14 Mumbai, 27 October London reports, citing an or corner shop, considered 12 13 unidentified senior execu- the backbone of the fast-mov- 10 fter announcing that tive close to the family. ing consumer goods (FMCG) 8 7 subscribers will have Financial advisers are market. Nielsen data sourced A to get additional top- expected to be appointed to from the retail industry up recharges to make off-net value the portfolio of busi- shows modern trade as a calls to compensate for inter- nesses, including The Ritz channel for carrying food and Dec ‘18 Mar ‘19 Jun’19 Sep ‘19 connect usage charges (IUC) hotel and online retailer grocery products has grown Source: Nielsen data from industry officials paid by the operator, Reliance Shop Direct, and seek buy- at nearly double the rate of Jio has launched plans that ers, the newspaper said. traditional trade in July- CHANNEL CONTRIBUTION TO come bundled with IUC The family hopes the September (Q2), coming at a OVERALL FOOD AND GROCERY SALES usage. review can be complete in time when the overall mar- (figures in %) Analysts largely see this as 12 to 18 months, according ket remains weak. 90 a positive for the sector, say- to the Times. Potential buy- Specifically, the rate of Traditional trade ing it will allow Bharti Airtel ers could include Daily growth of modern trade, says 10 and Vodafone Idea to increase current traffic) by paying ~25, hikes and this also lowers IUC Mail and General Trust and industry officials, in Q2 is 13 Modern trade their rates as well. without the need to pay an gains. Jio could instead have Alexander Lebedev, owner per cent versus traditional Source: Industry “We think all-in-one plans additional ~73 for 1,000 off- taken a clean price hike, as it of the Evening Standard trade’s 7 per cent. This is the ease some of these concerns net minutes. has become the market and The Independent, the first time in four quarters that (on the older majors’ opera- Note that the new plans leader. The move to charge for Times said. the rate of growth of modern executive officer, Avenue DMart’s EDLP model will not consumer insight. This way tional issues), by bundling provide daily data allowance IUC with a sunset clause indi- The Barclay family have trade has outstripped that of Supermarts, which runs the change despite competitive the strike rate in terms of 1,000 IUC minutes. Also, the of 2 GB a day as compared to cates its sustained focus on owned the Telegraph news- traditional trade, they say, DMart chain of stores in intensity. sales is better," he says. new plans provide relief to the the current popular plans at subscribers and that tariff papers since 2004. pointing to the initiatives India, said the company’s Future group, which runs Big Bazaar also keeps its price hike (brought by IUC 1.5 GB daily. (rate) increase is not a near- The review was prompt- that organised retailers are revenue mix was better this the Big Bazaar brand of ears to the ground to under- fees) in one of Jio’s most pop- Under the new plan, Jio term focus. Indeed, this move ed by the realisation the taking to buck the overall year from last year and that supermarkets and hypermar- stand shopper behaviour and ular plan, the ~399 (1.5GB/day, customers will not have to buy encourages voice-only sub- family is no longer as unit- slowdown. the retailer remained com- kets, on the other hand, has change in habits accurately. validity 84 days) one,” wrote IUC top-up vouchers for mak- scribers to move to Jio’s net- ed on strategy, in what an “Most modern traders, mitted to opening more been pushing more sale days For instance, when the price Varun Ahuja, research analyst ing voice calls to other opera- work,” says Piyush Nahar, insider called a genera- especially in food and gro- stores across the country to in Q2 to get footfalls into its of essential commodities at . tors. The new ones come with research analyst, Jefferies. tional shift, the Times said. cery, offer an assortment of improve its reach. It has 189 stores, say analysts. such as potatoes and onions The brokerage notes Jio’s 2 GB free daily data, along Jio has alleged that Trai’s A Barclay family spokes- products today at competi- stores currently. Kishore Biyani, founder began shooting up recently, new plan (~444 with 84 days with free unlimited Jio-Jio review of the call connect man declined to comment tive price. This increases con- DMart’s revenue growth and chief executive officer, Big Bazaar ran an offer saying validity) is almost 7 per cent voice calls and 1,000 minutes charges “sabotages” the gov- to the Times. venience,” says Arvind for Q2 stood at 22 per cent Future group, say the retailer it would sell these items at lower than the potential rate of voice calling to all non-Jio ernment’s Digital India initia- Shop Direct could also Singhal, chairman, year-on-year, which analysts is focusing on understanding ~10 per kg. after factoring in the IUC fee numbers. tive. And, that it will hit not be sold, although it is Technopak. “They are also say is due to the chain’s consumer trends and insights The chain runs a regular (~479, with 84 days validity). From October 10 onward, only the regulator's credibility understood Aidan and pushing more sale days and aggression on discounts. during offer periods to get the ‘Wednesday Bazaar’ offering The ~399 + ~80 for 1,000 IUC Jio started charging cus- but also investor confidence, Howard Barclay want to offers and matching dis- DMart is among the country’s best out of it. food and grocery products at minutes (in line with the cur- tomers six paise a minute for as the move protects vested stay investors, the newspa- counts offered by e-tailers,” key value retailers in food “While sale periods have even greater discounts than rent rate pattern) is only a 11 making calls to any non-Jio interests of the earlier opera- per said. The Times report- he says. and grocery and follows the become longer and their fre- on regular days and has spe- per cent price hike (over the mobile number. tors. “Jio’s plan to recover IUC ed earlier this month that When announcing the ‘everyday low price’ quency has also grown across cial weekends offers for pre-IUC period) versus an esti- It comes after Jio had tak- from subscribers provides an the Barclay family was con- company’s Q2 results this (EDLP)model, based on retail chains. The strategy for those planning their shop- mated 20 per cent potential en the bulk of market share. opportunity for the (older) sidering a sale of the Ritz in month, Neville Noronha, sourcing and backend effi- us is to have interesting tie- ping trips on Saturdays and price hike without the all in- The additional charge was incumbent operators to dif- London. BLOOMBERG managing director and chief ciencies. Noronha has said ups with companies, led by Sundays. one plans. introduced soon after the ferentiate their offerings and However, for the 28 days Telecom Regulatory Autho- gain smartphone subscriber validity plan, the new one rity of India (Trai) moved to addition. This might prompt (~222) is 49 per cent more reopen the deadline for end- the others to take a price hike Louis Vuitton maker is looking to buy Tiffany expensive than the current ing charges for terminating in the near future. That said, LVMH is exploring an acqui- has approached Tiffany with a one of ~149. It does not look calls on rival networks beyond after charging for IUC, Jio sition of US jeweler Tiffany. in takeover proposal earlier this like this plan is likely to see a the earlier deadline of might not immediately raise what would be the biggest month, said the people, who lot of traction, as customers January 2020. its tariff,” says Pranav purchase by the French own- asked not to be identified can get an additional 315 min- “With this move, we see Kshatriya, research analyst at er of Louis Vuitton, according because the discussions are utes of off-net calls (based on limited space for further price Edelweiss. to sources. The luxury group private. BLOOMBERG Pvt firms open to power supply franchise model

AMRITHA PILLAY chisees to incentivise, discount through PPP (public-private panies that wish to participate. steps in to collect electricity Mumbai, 27 October and set rates (within a stipu- partnership).” A spokesperson Both models should be expl- charges and help cut aggregate lated range) for supply in an for Tata Power said they’d like ored,” said an official from a pri- technical and commercial The central government plan area. Industry officials say to pursue all opportunities in vate company, who did not (AT&C) loss. But, does no invest- for a new franchise model to there is interest in the model the power distribution busi- wish to be identified. ment in core infrastructure. In attract private companies into but full privatisation ness. These two enti- The spokesperson for Adani the full privatisation model, a the power supply in various in the supply seg- However, some ties are both distrib- Transmission says a privatisa- private company collects states will interest them, say ment would be a bet- say the benefits uting power in tion model is better. “Full pri- charges, is free to source power sector officials and experts. ter step. have not been Mumbai. vatisation is more akin to sup- from buyers of its choice, invests However, they add, more “Adani encouraging An e-mail query to porting the transformation in in infrastructure and files peti- needs to be done for making Transmission would and full TorrentPower, power management processes, due to tions to the regulator on what this viable. The Union ministry be open to pursuing privatisation franchisee for a developer directly working the supply rates should be. of power has drafted a model any model of reforms might be better Bhiwandi, close to under an independent regula- Some officials from state dis- plan, for multiple private fran- in retail electricity Mumbai, was not tor and there being flexibility coms agree full privatisation is chisees as power suppliers in distribution,” said a spokesper- answered. “It is a good move to of arranging capital expendi- more viable. “In a franchise states. Business Standard son. Adding: “s long as it is sup- open more distribution oppor- ture and power supply in a com- mode, my strength and my reported on this earlier in the portive of the change manage- tunities to private companies. petitive manner,” the weakness become that of the month. ment process in prudent and However, the choice should be spokesperson said. franchise operators — there is It proposes a “light-hand- viable ways, whether it’s left to the discoms (state distri- Under the existing franchise less room for vast improve- ed approach” towards fran- through a franchise model or butioin entities) and the com- model, the private company ment,” one said. September quarter not cheery for most mid-size IT companies Barring hi-tech, AT A GLANCE media and BFS, all QoQ revenue other segments Companies growth (%) Highlights Broadbased growth and strong demonstrated strong LTI 3.5 deal ramp-ups growth for it Fewerdeal renewals butBFSI Mindtree 4.4 performed well ROMITA MAJUMDAR Steep BFS impactdue to a client Mumbai, 27 October Hexaware 13.2 buthealthy deal wins Revenue tooka hitdue to Mid-cap information technology Zensar 0.6 impactfrom two large clients (IT) services companies have large- Core verticals tooka hitbutare ly underperformed in the July- Cyient 6.4 September quarter. expected to see a pick-up by Q4 Except for L&T Infotech (LTI), they have been invariably unable to keep up on growth. Slower growth in with momentum in deal pipeline, is in BFSI was NIIT Technologies. issues, which caused a two per cent the key banking and financial serv- expected to lead to H2 (the second In the September quarter, it saw drop in revenues in the quarter, and ices (BFS) segment, and client-spe- half of this financial year) being bet- the insurance segment growing expect a further hit from this. Some cific issues, are major reasons. ter as compared to the first half. 15.3 per cent over the June one in pockets within BFS are growing nor- “We would strictly advise against Additionally, ramp-ups of recently constant currency (CC) terms, mally but there is cautiousness investing in mid-caps in Indian IT at won large deals provides the base while banking and financial serv- around spending. Non-BFS verticals this point. We see greater revenue for revenue growth acceleration in ices grew 9.4 per cent. Strong are doing exceedingly well,” said R and margin volatility in a likely no- FY21,” said Devang Bhatt, research sequential growth in verticals was Srikrishna, chief executive at growth scenario for the industry in analyst at ICICI Securities, in a note also due to a $6-million revenue Hexaware. “Participation in deals FY21,” went a note from Girish Pai, on the performance. contribution from the acquisition across the board has continued to head of research at equity research Even Mindtree, despite the of Wishworks. increase at a good pace.” firm Nirmal Bang. uncertainty it faced in the past quar- On the other hand, performance Engineering services firm Cyient LTI did have client-specific issues ter due to a management shuffle, of some other mid-sized companies is also seen struggling with issues in but reported a strong quarter. reported recovery in the BFSI (bank- such as Zensar, Hexaware and its core aerospace and communica- Largely contributed by broad-based ing, financial services and insur- Cyient disappointed the market. tion verticals. growth across verticals and steady ance) segment. Hexaware again reduced its forecast Slower ramp-up of deals signed deal ramp-ups. Barring hi-tech, The Bengaluru-based company for this calendar year, to 17-18 per in previous quarters was another media and BFS, all other segments reported stable pricing, though deal cent (from the earlier 19 per cent). issue for the companies. Zensar demonstrated strong growth for it. ramp-ups look slower. There was Key factors include likely client fur- reported lower than expected finan- The L&T group company also stronger operational efficiency, in loughs in the next quarter, apart cial numbers. In CC terms, sequen- expects its BFS business to do well in terms of reduced staff cost, lower from anticipated reduction in rev- tial revenue growth for the Pune- coming quarters. subcontractor cost and increased enue from top BFS clients and based entity was only 0.3 per cent, “We believe the receding of automation. adverse foreign exchange impact. lower than analyst estimates, due to client-specific challenges, coupled Another company that did well “We had a few client-specific slower ramp-up of news deals. 4 ECONOMY & PUBLIC AFFAIRS MUMBAI | MONDAY, 28 OCTOBER 2019 1 > Experts wary of exams for directors Let’s dwell on Say online proficiency tests for independent directors may be counterproductive and some may not want to take it brighter notes

RUCHIKA CHITRAVANSHI their sector. Company Law, code. We need to create a mar- Exporters who have got New Delhi, 27 October Securities Law, Basic TURNING ON THE ket for corporate control. If a used to the documentation Accountancy and other rele- HEAT ON DIRECTORS promoter is not performing requirements under the ndependent directors will vant areas are likely to be part | Test is being designed by Indian well there should be incentives Goods and Services Tax (GST) soon have to return to the of the online proficiency self- Institute of Corporate Affairs for others to take over who can regime are happy that their books to qualify for a seat assessment test though the better manage the company,” a refund of taxes paid on export I | Each person will have to score a on the board of companies. exact format is yet to be legal expert said. are now automatic and quick. minimum of 60% to qualify Come December, the govern- announced. The board of com- The IICA at Manesar in That has significantly ment will start giving them an panies will have to disclose the | No cap on number of attempts an Haryana has been notified as improved their working capi- online proficiency self-assess- results of these tests in their individual may take for passing the institute to create and tal. Even the refund of ment test meant to ensure bet- annual reports. | Boards will have to disclose results maintain a data bank contain- EXIM MATTERS unutilised credit, involving ter standards in the overall cor- “I have taken many tests in of these tests in annual reports ing names, addresses, qualifi- manual intervention, has porate governance. my life, this one cannot be cations of persons who are eli- been speeded, although at | Directors will have to apply for T N C RAJAGOPALAN However, experts feel the tougher. If a requirement has gible and willing to act as some cost for exporters. The renewal within a period of 30 move may be counterproduc- been placed by the govern- independent directors, for the government has announced days from the expiry of their term tive since it can shrink the ment, one has to take the test. use of the company making Deepavali or Diwali, the festi- that this refund will also already low pool of independ- We are waiting for the details,” such appointments. val of lights, is a time when be dealt with online, reducing ent directors. “It might become said Vibha Rishi, who has Pingle, company secretary. a test for managing directors Recent corporate scams The proficiency test would we forget our anxieties and the need for manual an academic exercise just to served on various boards The test is being designed and chief executives who run have turned the heat on com- have to be taken only once problems and look at the pos- intervention. tick a box. Many independent including PepsiCo, and Max by the Indian Institute of companies? The one challenge pany directors, who the gov- after registration and the inde- itives to enjoy the day, shar- The GST law has been suit- directors may not want to take India, among others. Corporate Affairs (IICA). Each that still needs to be addressed ernment feels have failed to pendent directors will have to ing our happiness with oth- ably amended to allow input a test,” Shriram Subramanian, The test could also cover person will have to score a is ensuring independent direc- detect any signs of trouble. apply for renewal within a peri- ers. So, let us look at the tax credit to the extent of 20 managing director, InGovern topics, including risk man- minimum of 60 per cent to tors are truly independent,” The current law requires all od of 30 days from the date of encouraging developments in per cent of the eligible credit Research Services, said. agement, succession plan- qualify. There is no cap on the said Ankit Singhi, partner, listed companies to have a expiry of their term. recent days. during a period, even in the According to the National ning, insolvency and bank- number of attempts an Corporate Professionals. third of their board members Recent data indicates that The cuts in income tax rates case of invoices that are not Stock Exchange database, ruptcy law, corporate individual may take for However, the preparation as independent directors. the rate of resignation of inde- for corporate entities have uploaded by suppliers. This is there are over 5,500 individu- governance in family-man- passing such test. and the test itself could be Their role is to ensure that the pendent directors from the shored up the bottom line of a lot better than not allowing als who hold 7,066 posts of aged companies, internation- Besides, an individual who helpful for the professionals interests of minority share- boards of listed companies has many companies. And, bright- credit till the invoice details independent directors. Since al corporate governance prac- has served as director in a list- with non-accounting back- holders are protected and act increased significantly in com- ened the prospects for appear in the returns 2006 more than 8,000 direc- tices, judgment of the court ed company or an unlisted ground. “They will be more as overseers outside the influ- parison to previous years. A increased investment in the uploaded by the supplier. A tors have given up office either dealing with rights, duties public company having a paid- aware of their roles, responsi- ence of the firm. total of 606 independent direc- coming years. That has buoyed committee of officers is due to the end of term or by and responsibilities of direc- up capital of ~10 crore or more, bilities, duties and importance The government may be tors resigned from NSE-listed sentiment in the equity mar- looking at ways to improve the their own choice. tors and senior management. for a period of not less than 10 of each document placed way off the mark if it wants to company boards during the kets. Consequently, many GST regime. The Companies Act “Corporate trainings, work- years, need not qualify the test. before them at board meetings, improve corporate governance calendar year 2018. In compar- investors feel richer and will The Directorate General of requires independent directors shops, interaction with direc- “India is perhaps the only audit committee meetings or by putting independent direc- ison, 412 independent direc- hopefully spend more, con- Foreign Trade (DGFT) has to be trained every year and tors and senior management country to have introduced an remuneration committee tors to test, experts say. “India tors resigned between January tributing to revival decided not to sensitised about new topics in on practical,” said Gaurav exam for its directors. Why not meetings,” said Pingle. needs to liberalise the takeover 1, 2019, and July 22, 2019. in demand for Businesses have impose late cuts goods and services. offered attractive on applications Rain has been discounts to lure under the Merc- good this year, buyers and reduce handise Exports raising the inventory. With from India Sch- prospects of a lower prices, eme where the ‘Slowdown hasn’t hurt small finance banks’ bumper kharif abundant liquidity original applica- harvest. With sen- in the system and tion could not ESAF , which began operations in March 2017, saw an over threefold deposits which gave us momentum in prevalent when we had launched too. sible procurement lower interest be processed jump in its net profit to ~90 crore in 2018-19. Managing Director and Chief Executive terms of retail deposits. In 15 months, Though the RBI has allowed urban co- and trade policies, rates, the fall in due to system Officer K PAUL THOMAS tells Somesh Jha that small finance banks (SFBs) are robust and we crossed ~1,000 crore in NRE operative banks to convert into SFBs the income of demand might be problems and have not been impacted by the economic slowdown. Edited excerpts: deposits which is a big achievement. but none of them has done it so far. A farmers can go up, arrested, at least in had to be Otherwise, 90 per cent of our deposits new bank will take 1.5-2 years to set up boosting rural the short run resubmitted The regulatory deadline to launch an don’t require additional funding this of ~6,150 crore are small ticket. and by that time, our customer base demand for con- after activation initial public offering (IPO) for some year. Anyway we are planning to go to will be stronger. In India, there is a huge sumer durables and farm of the shipping bill. Similar SFBs, including ESAF Small Finance market and will raise money through How will a cut in corporation tax market opportunity as a large number implements. The festive sea- facilitation measures are Bank, is approaching. How are you the IPO. Before that, we haven’t decid- benefit you? of low- and middle-income segments, son has also added to the being regularly taken by the preparing for it? ed on capital and we are comfortable on We will see a 3 per cent increase in prof- which account for around 600 million demand for consumer goods. Customs and DGFT. Our deadline is July 2021 since we the assets side. itability as we are a start-up bank and people, are still underserved. Businesses have offered India’s ranking in the crossed net worth of ~500 crore in will fall in the 25 per cent bracket. attractive discounts to lure World Bank’s latest ‘ease of July 2018 (so it should be three years We have seen a credit slowdown when How are you seeing recent more buyers and reduce doing business’ report on 190 from that time). We have started it comes to commercial banks. What The RBI has issued draft guidelines developments in the financial sector? inventory. With lower prices, countries has gone up by internal preparations and hired a happened in the SFB segment in the for on-tap licence for SFBs recently. There are some uncertainties in finan- abundant liquidity in the sys- 14 notches, from 77 to 63. merchant banker. last one year? How do you see the move? cial services sector. When you talk tem and lower interest rates, There are significant All SFBs are growing on the credit side Maharashtra. Good monsoon will Barring the minimum capital require- about NBFCs, small and medium-sized the fall in demand might be improvements in the resolu- When we had last met in December also. We saw a credit growth of 30 per help the rural market. I was in ments — which was ~100 crore when ones, which were not totally dependent arrested, at least in the short tion of insolvencies, dealing 2017, you said you were looking to cent last one year. SFBs have multiple recently, interacting with we applied and now it has been on market funding, were not impacted. run. The short vacation in with construction permits, raise money from foreign players too. options for liquidity mobilisation so farmer group companies who were changed to ~200 crore — nothing much For large NBFCs, structural issues still some parts of the country in trading across borders and How has it progressed? the sector remained unaffected. Most optimistic about crop output because has changed. Further, promoters’ stake persist and it may take some time for the coming days is likely to registering of property. We raised two rounds of capital in 2018 SFBs transformed from micro finance of good rains this year compared to has to be brought down, over a period them to get out of it. In the past, we help the tourism sector. This comes on the back of totalling ~364 crore, mostly from institutions so majority of the books last year. As a result, in another six of 15 years, to 15 per cent, in line with have seen failure of co-operative banks Interest rates have been similar improvement by 23 domestic insurance companies, includ- remain small ticket in nature and non- months, rural demand will improve. the draft norms. In our case it stood at but not at this scale. I hope and expect brought down significantly, and 30 places, respectively, in ing PNB Metlife, Bajaj, ICICI Lombard performing assets are low. 25 per cent. Otherwise, I haven’t that there will be stricter regulations which means cheaper loans the past two years. and a few high-net-worth individuals. The (RBI) observed much of a change. for co-operative banks in future. for housing, consumer Overall, the second half of So, we found good opportunity in What about recent months? gave you nod in December 2018 to durables and fresh this financial year promises domestic investors. We have been disbursing monthly operate as a scheduled bank. So are you bracing for competition in Do you think converting investment. The lower to be better than the first half. loans of ~450-500 crore on an aver- What has changed? the sector? co-operative banks into SFBs outgo on interest is expected On that note, let me wish you Do you need further capital this age. In July and August, few districts The advantage is that we will be able to Even today, there are non-banking can be a viable solution? to show up in more profits all a Happy Diwali. financial year? in Kerala saw impact because of reach out to registered trust and soci- financial companies (NBFCs), co-oper- It is a viable solution but I doubt how for businesses, even if top- At present, we are well placed and our floods and similar was the case in eties. In July 2018, the RBI permitted us ative banks, micro-finance institutions they will be able to meet the criteria line growth does not go up email: capital adequacy is at 26 per cent. We parts of Madhya Pradesh and to access NRE (non-resident external) to compete with. Competition was while being co-operative in nature. by much. [email protected]

HC notice 1: DIRECT TAXES ASSUME GREATER 2: MORE TAX COLLECTED AT SOURCE 3: DIRECT TAXES AS SHARE OF to govt, GST STATSGURU IMPORTANCE AFTER GST Share in total direct taxes GDP BEST SINCE FY08 Share in total tax revenue (% ) „TDS „Advance tax „ Self assessment (% ) Ratio of direct taxes to gross domestic product (% ) Council over 100 Low income 90 80 refunds 70 INDIVJAL DHASMANA returns on 60 New Delhi, 27 October 50 The Gujarat High Court has 40 issued notices to the union gov- the rise 30 ernment and the GST Council THE TAX DEPARTMENT HAS 20 over the alleged breach of RELEASED the data on the 10 refund norms by field officers source-wise collection of 0 under the goods and services income tax and corporate tax (GST) regime. taxes for the assessment ‘07-08 ‘08-09 ‘11-12 Under the Rule 92 of the year 2018-19, which pertains ‘04-05 ‘05-06 ‘06-07 ‘09-10 ‘10-11 ‘12-13 ‘13-14 ‘14-15 ‘15-16 ‘16-17 ‘17-18 Note: * Provisional data Central GST (CGST) Act, the to direct tax revenue collected on incomes ‘18-19* ILLUSTRATION: AJAY MOHANTY claim of the refund has to be earned in the financial year 2017-18. It offers made in the RFD 04 form. some interesting insights. 4: BUOYANCY OF DIRECT TAXES REDUCES Thereafter, the officer con- Direct taxes, as a share of total tax revenue, Growth in taxes vis-a-vis growth in the economy (%) cerned can accept or reject the rose to 55 per cent, close to its average level in claim after his investigations. the last few years (Chart 1). This ratio had If the claim is accepted, he declined for a brief period due to a higher would issue refund in the form collection from excise duties on petrol and RFD 06. In case the refund is diesel. More and more direct tax is now required to be adjusted, the offi- deducted directly from the income account of cer would withhold it in the the individual (Chart 2). Advance tax collection form RFD 07. If the refund is has settled at a lower normal of 40 per cent. not admissible, partly or whol- The share of direct taxes as a share of the ly, this would be communicat- economy is now at an 11-year high of 6 per cent ed through the form RFD 08. (Chart 3). The rise in part is also due to slower If the amount is rejected, it indirect tax collections, especially the goods would be credited to the gov- and services tax (GST). Buoyancy in direct taxes ernment account under the has remained above one for three year now Rule 93 of the CGST Act, but (Chart 4), or in simple terms, taxes grew 1.21 for that, due process of RFD times faster than GDP in 2018-19, and 1.59 forms has to be followed. times in 2017-18. A petitioner moved the high But more importantly, income tax returns 5: I-T RETURNS IN THE LOWEST INCOME SLAB GROW 6: INCOMES IN LOWEST SLAB 7: OVERALL AVERAGE INCOMES court, saying the field officer (I-T returns) that declared incomes below Growth in number of returns REBOUND GROW SLOW concerned rejected his claim of ~ 2.5 lakh per year grew for the first time in „AY 2015-16 „AY 2016-17 „AY 2017-18 „AY 2018-19 (% YoY) Growth in average income of individuals earning Growth in average income of all refunds without resorting to many years in 2017-18 (Chart 5). Number, as less than ~ 2.5 lakh/yr (% YoY) individuals (% YoY) RFD forms. He reversed it well as incomes declared in the bracket below 55 8.0 10.9 under the Rule 93, which, he this level, was reducing till 2016-17. 32 27 25 36 argued, could not be done with- But in 2017-18, average income among a 24 23 22 21 21 21 20 20 20 19 18 18 out following the due process. group of individuals earning less than 17 13

Abhishek Rastogi, coun- ~ 2.5 lakh per year, rose 8 per cent, after 9 selor of the petitioner and part- consistently contracting for at least three years ner at Khaitan & Co, said many (Chart 6). Yet, average incomes among all 3.6 4.2 petitioners were keen to move individuals filing I-T return rose at 2.4 per cent, -2

-9 2.4

the court over the lapses. “The the slowest pace in the past four years (Chart 7). -24 law provides that the denial of Drastically lower nominal growth at 8 per the refund has to happen only cent in the first quarter of 2019-20 now pose a -40 -4.9 -4.3 after compliance with the pro- serious threat to growth in government’s Less than 2.5 lakh to 5 lakh to 10 lakh to 50 lakh to more than -7.2 cedure laid down. We have revenue through income taxes. 2.5 lakh 5 lakh 10 lakh 50 lakh 1 cr 1 cr challenged the rejection order, ABHISHEK WAGHMARE AY15-16 AY16-17 AY17-18 AY18-19 AY15-16 AY16-17 AY17-18 AY18-19 "Range of individual gross total income" Source: Income tax department which has not followed the due process of law,” he said. StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines Source: International Monetary Fund, Ministry of Commerce; Compiled by BS Research Bureau MUMBAI | MONDAY, 28 OCTOBER 2019 ECONOMY & PUBLIC AFFAIRS 5 . < Six more airports to be privatised by January Govt may tweak rule to cap number mandatory condition for bidders. Under this model, airport devel- In the new round, airports would opers compete to win contracts of airports an investor can bid for FOOTFALLS IN THE AIRPORTS be bid for a period of 50 years with based on the amount of revenue per Airports April-August April-August freedom on land usage of airports passenger to be shared with the ARINDAM MAJUMDER The government may, however, FY20 FY19 for non-aeronautical purposes. authority that gives the contract, New Delhi, 27 October tweak a rule to cap the number of The process is being initiated instead of the current norm of airports an investor can bid for. A BHUBANESWAR 1,607,730 1,686,796 even though awarding airports to developers sharing a part of the he Centre has decided to pri- finance ministry recommendation Adani group from the previous profit from the venture. vatise six more airports – not to award the same player more INDORE 1,175,128 1,190,066 round is yet to be completed. The government has envisaged T Bhubaneswar, Indore, than two airports, out of six to be TRICHY 710,506 661,918 In February, after a bidding process, that airports are better managed Trichy, Amritsar, Raipur, and privatised by the Centre, was six airports — Ahmedabad, by private entities and the process Varanasi – as early as January next among key suggestions brushed AMRITSAR 985,322 923,328 Lucknow, Jaipur, Guwahati, helps in generating big revenue year. A draft cabinet note proposing aside by the government , and for AAI. The revenue can be to put up the airports for sale has panel for public-private partner- RAIPUR 875,267 835,239 Mangalore — were awarded to the used to develop airports in been circulated and the Cabinet is ships — the PPP Appraisal VARANASI 1,183,672 1,060,922 company. Legal cases have, however, remote areas. likely to approve it by the first week Committee (PPPAC) — effectively delayed the process of transfer of the In FY19, more than 25 per cent of December. leading to Adani Enterprises *Includes both domestic and international traffic airports. The Union Cabinet in June of AAI’s revenue was generated “The board of Airports Authority emerging the winning Source: Airports Authority of India approved leasing out three airport from private operators at Delhi of India (AAI) has approved the pro- bidder for all airports. projects to the company. and Mumbai airports. In the pre- posal and sent it to the finance min- “The group of ministers will The airports will be bid out vious round, too, Adani group bid istry. A draft cabinet note has been take a call on this but there are purpose of privatising them,” the and expenditure, headed by NITI privatisation in India in 12 years. according to the revenue-per-pas- aggressively in terms of revenue prepared, which will be put up for deliberations that awarding so official said. Aayog Chief Executive Officer When Delhi and Mumbai airports senger model, which is different share to AAI. According to an esti- approval after the go-ahead from law many airports to a single entity A group of secretaries from the Amitabh Kant, will decide the con- were privatised in 2006, airport from the model that was followed mate, AAI will earn more than ministry,” said an official aware of may slow down the process of the Ministry of Civil Aviation and tours of the sale. operation experience, either stand- for privatisation of Delhi and ~3,000 crore as upfront payment the development. airports’ development, which is the departments of economic affairs This is the first wave of airport alone or in a consortium, was a Mumbai airports. from Adani group.

FPIs remain Silver to outshine gold net buyers Shutdown effect: Biz in Kashmir in new year, says report in October takes ~10,000-cr hit in 3 months PRESS TRUST OF INDIA PRESS TRUST OF INDIA the moment. Who will think RAJESH BHAYANI New Delhi, 27 October Srinagar, 27 October about this? The government has Mumbai, 27 October to take the responsibility and Indian capital markets wit- The shutdown in Kashmir, fol- it has to come out with the The Samvat that has ended nessed a net inflow of over lowing the abrogation of ways,” he said. He said the was good for both gold and sil- ~3,800 crore by foreign port- Article 370, has crippled the development of the valley has ver, where the return was 21.3 folio investors (FPI) in October Valley’s economy as the busi- come to a standstill. and 22.4 per cent, respectively. so far on the back of steps tak- ness community has suffered “We had about ~2,000 crore However, with high prices, en by the government to losses amounting to over worth of development projects demand this Dhanteras and revive domestic demand cou- ~10,000 crore in three months, which have been pushed back Diwali took a hit. pled with positive global cues. a trade body said here. because the workforce has left According to the Indian The depositories data The deadlock in Kashmir, the valley. Now, we have to Bullion and Jewellers showed that overseas after the Centre announced the assure them, like tourists, and it Association, demand shrank investors pumped in a net abrogation of Article 370 on will take time,” he said. this time to 30 tonnes, from amount of ~3,769.56 crore into August 5, completed 84 days on Ashiq said it was the respon- 40 tonnes last year, despite equities and ~58.4 crore in the Sunday with the Valley in sibility of the government to some pick-up in the past week. debt segment, taking the total shutdown as the main markets come out with various measures In the new year, silver is net investment to ~3,827.9 continued to remain shut and like certain packages for the expected to glitter more than ingly, most investors are still leaves room for silver to out- crore in this month so far. public transport off the roads. The deadlock in Kashmir, after the Centre announced the business community in the pre- gold. According to global not betting on a sustained cor- perform gold.” FPIs have been net buyers Some shops open for a few abrogation of Article 370, completed 84 days on Sunday vailing circumstances. research agency Metal Focus, rection.” He feels this investor Silver production is again for the second consecutive hours early in the morning and “They have not approached while the average price of gold sentiment will eventually expected to reach its previous month. In September, FPIs late in the evening in certain fied the suspension of internet products around Christmas and us yet, but they may in the com- will rise eight per cent in the change in favour of defensive peak and supplies will be high- invested a net ~6,557.8 crore in areas, including in the city services as the main factor for New Year. When they can ing month,” he said. year, to $1,520 an oz, “silver is assets, including gold. er. Its industrial demand and the domestic capital markets centre of Lal Chowk in Srinagar, the losses. implement these orders, only Asked about the detention projected to see a stronger 14 Silver follows wider funda- jewellery offtake are both fore- (both equity and debt). but the main markets are shut. “In today’s times, the basic then would they be served. of some business leaders, Ashiq per cent lift, to $18.5 an oz, mentals, as 55 per cent of its cast to post small gains over Investment in September Sheikh Ashiq, president of need of any business is the inter- There is no connectivity, so said it was unfortunate and although this will only repre- buying is for use by other 2019-20. had come following net out- the Kashmir Chamber of net which is missing on the there were no orders resulting in believed that businesses in sent a six-year high”. industries. Hence, Metals In this country, silver has flows in July and August. Commerce and Industry (KCCI), ground. We have conveyed it to loss of jobs to over 50,000 arti- Kashmir valley should not be Neil Meader, its research Focus believes a global eco- been a preferred asset for Considering the extreme said while it was difficult to the governor’s administration sans and weavers,” he said. politicised. “Let business be a and consultancy manager, nomic slowdown and its neg- traders and stockists. Chirag negative trends witnessed in assess the nature of losses as the that the businesses will suffer The KCCI president said the separate thing. This is what said: “The macro economic ative impact on base metal Thakker, director of the the month of July and August, situation was not normal yet, in Kashmir, the economy will government should own KCCI believes in. Let there be backdrop will become increas- prices will weigh on silver over Amrapali Group in Gujarat, where FPIs went on a selling the business community has weaken. Which will have huge responsibility for the losses and no politicisation,” he said. ingly favourable for invest- the next 12 or so months. Still, among the largest silver spree, the scenario in the received a jolt from which it was consequences in the longer take steps to mitigate the suf- He said the KCCI had taken ment in gold in the coming says Meader, silver has signif- importers in India, says: “If we months of September and very difficult to recover. run,” he said. ferings of the traders. up the release of Kashmir months. This includes an end icantly underperformed in compare gold to silver in India, October so far, directs towards “The running business loss- Giving examples of several “This is not about losses in Traders and Manufacturers to sustained dollar strength, recent years, compared to its silver’s market demand has the emergence of a positive es for Kashmir region have sectors, Ashiq said the IT sector business only. We will be facing Federation (KTMF) president further rate cuts by the Fed all-time high, and hence, “on recovered faster, in terms of trend, said Himanshu crossed ~10,000 crore and all was an upcoming sector and technical issues like GST, online Mohammad Yasin Khan, whose (the US central bank), more balance, silver is likely to ben- discount to premium (in the Srivastava, senior analyst sectors have been severely hit. It there are companies which were returns, whether you make mother passed away a few days accommodative monetary efit more from rising invest- past few months). It will sure- manager research at has been nearly three months providing services in the US, in business or not, we will face ago. “At least, he should be policies from other major cen- ment inflows into gold”. ly perform better this year, as Morningstar Investment now and yet the people are not Europe and their business has them and other issues like that. released on humanitarian tral banks and the continued Adding: “In early consumption has increased in Adviser India. doing business because of the been affected by the suspension We are not falling under certain grounds.” Ashiq said the busi- rise of negative-yielding debt.” September, gold was only 12 industrial usage. Silver jew- “The steps taken by the prevailing situation. There has of internet facilities. guidelines because we are miss- ness community in Kashmir He also cautioned: “In spite per cent below its all-time ellery demand is also set to government to revive domes- been some activity in the recent “If we take the handicraft ing them. So there should be a was not against outside invest- of growing risk aversion this high, while silver remained far grow much faster than gold, tic economic activity has final- weeks, but the feedback that we sector, people associated with system for these sort of things ments in the valley and KCCI year, equities have remained below its $50 peak. Given sil- as silver prices have bigger ly found favour among foreign are getting is that the business is the trade receive orders in July- for this region. would always be at the forefront near all-time highs and, seem- ver’s higher volatility, this room to appreciate.” investors,” he added. dull,” Ashiq told PTI. He identi- August and have to deliver the “We are disturbed even at in inviting foreign investments.

> FROM PAGE 1 AGR shocks to Markets start Samvat 2076... GVK keeps ‘India is growing, with Voda Idea... “The markets are likely to remain Adanis out... range-bound in near term till eco- tremendous potential’ “The latest AGR levy is a kind nomic recovery is visible. The econ- Upon completion of the transaction, of financial shock to the com- omy and earnings are showing ear- GVK Airport Developers will hold India’s largest corporate entities es were flawed. For all our entre- pany for which the company ly signs of improvement as we step 20.9 per cent in GVK Airport are seeing tectonic shifts as they preneurial strengths, our drive, our was not prepared. There is no into new Samvat,” said Motilal Holdings. The rest will be equally near cross roads at multiple levels. ambition, our skills, and our work clarity as to how Vodafone Oswal, managing director and chief shared between the investors, said Do you find Blackstone challenged ethics, we still weren’t building

Idea will clear the dues unless executive officer, Motilal Oswal PHOTO:KAMLESH D PEDNEKAR the company. It added that the clo- in that regard? Blackstone into a great organisa- they get additional equity Financial Services. sure of the transaction was subject Blackstone has become what it is tion. This incident became an support from their promoters During mid-September, the to regulatory approvals and consent today because of our culture. Our important catalyst that led us to shareholders,” says an ana- benchmark indices had dropped to of lender. core founding values — meritocracy, completely revamp our processes. lyst on the condition of seven-month lows amid concerns Initially, the group had proposed excellence, openness, and integrity We put in place a rigorous system anonymity. At its current over low economic growth, corpo- 49 per cent sale in its airport busi- — are still at the heart of our firm to evaluate all deals, which is the stock price of ~4.11 per share, rate defaults and stress in the finan- ness to ADIA and NIIF to reduce or today. We place heavy importance foundation of much of our success the company has a market cial sector. However, the surprise refinance debt. A term sheet was on hiring only those who share our today. You must not bury your fail- capitalisation of ~11,810 crore, reduction in corporate tax proved to signed with two investors in April. beliefs and fit into the culture we ures — they can often be the best down 77 per cent from ~52,154 be a short in the arm for the mar- of public sector units,” said Damani. The GVK group owns 50.5 per cent have carefully built over the years. teachers. crore at the end of March this kets. Currently, the Sensex is only “Leading up to the budget, the RIL’s ‘debt-free Jio’... in MIAL and is also developing the As we enter a new decade, this year. Fresh equity funding 2.5 per cent of its previous all-time markets could be buoyant because As part of the plan, RIL will transfer Navi Mumbai International Airport. will not change. We’ll continue to Where do you get the drive to do including rights issues are highs of 40,268 made in early June. there is a hope in markets that the its telecom business and other dig- The group is locked in a legal bat- look for people who have excep- what you do, decade after decade? always done in a fraction of “In spite of all the issues, the market government is understanding of its ital initiatives to a wholly-owned tle to prevent the Adani group’s entry tional talent, are intellectually I don’t regard what I do as work. the company’s existing mar- is near the all-time highs, which problems and will do the needful to subsidiary. While Jio’s debt — worth in Mumbai airport. curious and are considerate of oth- Each new investment we consider ket capitalisation. suggests many believe a turn- address the concerns,” he added. ~1.08 trillion — will move to RIL, Earlier this year, the GVK group ers. We remain committed to pass- or business we launch at the firm is On October 24, the around is around the corner. There Shares of many state-owned the ownership of all telecom and had exercised its right of first refusal ing our culture on to each new gen- a unique challenge and an intellec- Supreme Court ruled in are expectations of a pick-up in the companies have been gaining in digital businesses will be trans- to acquire Bidvest’s 13.5 per cent eration of employees, finding tually stimulating experience. I love favour of the Department economy, supported by adequate recent months of hope of some gov- ferred to the arm. stake in Mumbai airport for ~1,248 inventive methods to communi- learning and finding creative solu- of Telecom (DoT) in a rainfall and steps taken by the gov- ernment action. The latter will receive ~1.08 tril- crore. But it was unable to conclude cate our shared customs and poli- tions to issues alongside the talented decades-old dispute on the ernment to revive growth,” said U R Also, global factors will be big lion in investment from RIL as well the deal and instead filed a plea in cies. It is a mistake to assume that teams we have at Blackstone. This definition of adjusted gross Bhat, director, Dalton Capital India. drivers. “The other significant fac- as its ~65,000-crore equity holding Delhi High Court to prevent stake new joiners will automatically constant pursuit is what keeps me revenues (AGR). Many believe more bold steps tor is foreign flows which will in Jio. RIL’s consolidated debt will sale to third party. inherit a culture. going. I don’t feel a day over 38 years, Operators pay licence fee are needed. “The key driver for the depend on how the trade wars remain unchanged. The matter is now under arbitra- the age I was when I started this firm. and SUC on the AGR and the markets domestically over the next develop and how the crisis in the tion after GVK group lost its plea in In reference to the buying of I still sleep the same five hours dispute pertained to inclu- 12 months will be the privatisation middle-east pans out,” said Bhat. More on www.business-standard.com the court. The arbitration tribunal Edgcomb Steel, which then didn’t I always have. sion and exclusion of receipts has also restrained the transfer of perform later, you say you came from non-licensed activities Bidvest shares till the next date of close to tears when taken to In the book you say, “I like having a like treasury income, divi- hearing in November. task by your partners. You say you hand in creating beautiful things.” dend, capital gains, scrap New rules on cards to govern OTC medicines Separately Adani group which still remember the humiliation Kindly explain… sales, forex income, etc. and Making such essential drugs easily its therapeutic value and risk pro- mass-advertised brands, drugs out- signed a share purchase agreement and go on to exemplify the incident I’m passionate about both the design certain other items like bad available is important, especially file,” said the official quoted above. side Schedule H but not mass with Bidvest for 13.5 per cent stake in as a hyperbolic example of losing and function of spaces, and put debt recovery, trade/con- because in India there is less than The policy to govern OTC drugs advertised (referred to as deemed MIAL moved the Bombay High investor money. Why did it hurt tremendous care into creating them sumer discounts, rental one doctor per 1,000 people. Also, has been in the works for nearly a OTC), and also drugs in Schedule H Court last month staking it’s claim so much? whenever I have the opportunity. income on infra sharing. nearly 74 per cent of doctors in the year now, said industry sources. but sold without a prescription to on the shares. The two sides What happened with Edgcomb was Whether it is Blackstone’s own The SC has opined that country cater to a third of the urban Several senior executives of phar- patients upon repeat purchase had extended the long stop date or one of the toughest moments in my offices, Schwarzman College in the DoT’s claims on the defi- population. maceutical majors as well as the (after an initial prescription by the deadline for share acquisition till career, but also an important learn- Beijing — the home of the nition of AGR as well as The government, however, is Organisation of Pharmaceutical doctor), and referred to as OTx November 7. ing experience. I had been respon- Schwarzman Scholars program, the applicability of interest, cautious to ensure that the regula- Producers of India (OPPI) are pro- products. Deemed OTC drugs (such The Adani group has won the sible for signing off on a deal that renovation of the New York Public penalty and interest on tions are stringent enough to pre- viding inputs to the government on as common calcium supplements) rights to develop five airports — resulted in millions of dollars in Library, or the new student center penalty are both valid and vent misuse or overuse of these the matter. comprise almost 60 per cent of Ahmedabad, Jaipur, Lucknow, losses for our investors and I still at Yale, it’s inspiring to see beautiful that the operators are liable to drugs, which might compromise In its paper, “Shaping India’s India’s OTC market, estimated to Thiruvananthapuram, and vividly remember how helpless I spaces come to life to serve great pay 100 per cent of the safety of patients. OTC Policy 2018”, the OPPI said be about ~25,000 crore. Mangaluru airports in an auction ear- felt. It was also a moment where I institutions. It is similar to the demand that the DoT “There could be multiple cate- OTC drugs here are a mix of the fol- lier this year and was eyeing large came face-to-face with the reality process of “building” new things at has raised. gories of OTC drugs depending on lowing — widely available and More on www.business-standard.com stake in Mumbai airport. that our decision-making process- Blackstone. 6 ISSUES AND INSIGHTS MUMBAI | MONDAY 28 OCTOBER 2019 >

that while the government should retain vide disclosure on which refinery’s fuel > its power to authorise the entry of new the consumer is buying, there is no rea- CHINESE WHISPERS Enter new oil retailers players in the oil marketing sector, it son why they are being mandated to sell should now relax those rules by letting fuel purchased from different refineries any entity with a minimum net worth only through different outlets. Backdoor politics The move to allow new players in fuel marketing can be more of ~250 core to set up fuel retail outlets. The more troubling question is that As the Bharatiya effective if refinery pricing is made transparent In line with the committee’s findings, if the objective of the policy liberalisa- Janata Party (BJP) the government also set a condition that tion is to usher in more competition in faced criticism for retail marketing of petroleum products liberalisation in 2002. In these 17 years, the new players will have to set up at fuel marketing, then the government taking support provided its net worth is valued at over only 6,700 fuel retail outlets were least 5 per cent of their retail outlets in should also take the next step to remove from Haryana ~250 crore. opened by the private sector, including notified remote areas within five years opacity in the way public sector oil Lokhit Party leader The expectation is that many non- 5,128 by Nayara Energy Limited (earlier of the grant of authorisation. refineries are pricing petroleum prod- Gopal Kanda, an petroleum players would be interested known as Essar Oil), 1,400 by Reliance There are, however, many questions ucts. Effective competition will be intro- accused in in retail marketing of petrol and Petro and 145 fuel outlets by Shell India. over the effectiveness of the new policy. duced once the new players, which have criminal cases, it diesel. Global giants like Total and The absence of a market-linked pricing Monitoring how the new players will ful- no access to their own refineries, can was the friendship Saudi Aramco may enter the Indian system for many products during much fil their obligation of setting up 5 per actually buy the fuel from the existing between Jannayak market. Even big retail chains could of this period was one of the reasons for cent of the new fuel retail outlets in noti- refineries. Such purchases will be diffi- Janata Party (JJP) chief Dushyant consider opening fuel outlets. This is the private sector’s lukewarm response. fied remote areas would introduce an cult without a transparent pricing mech- Chautala (pictured) and Minister of State because the earlier condition that a Thus, the demand for more fuel mar- element of discretion that can always anism at the refineries. for Finance Anurag Thakur that helped it RAISINA HILL new player must have investments in keting outlets has been largely met by become problematic and lead to politi- Yes, the new players can import petrol save some blushes. Chautala and Thakur the petroleum sector has been the state-controlled petroleum market- cisation in the grant of authorisation of and diesel and sell them at a price that are known to be good friends. He visited AK BHATTACHARYA scrapped. But how successful will this ing companies. The compound annual new fuel retail outlets. The chances of can create competition for the public- Thakur’s residence on the evening of policy liberalisation be? growth rate (CAGR) in the sales of petrol such obligations-based policy incentives sector oil refineries. But why not use this vote counting on Thursday to wish him few days before Diwali, the It is clear that the retail policy liber- and diesel in the last 17 years is estimat- being misused are also quite high. Past opportunity to introduce more reform in on his birthday. It was by then apparent Union government took a major alisation of 2002 did not yield the ed at 6 per cent. The CAGR of fuel retail instances of how the scheme for import retail oil pricing by India’s state-con- that the BJP was set to fall short of a A step towards liberalising its pol- desired outcome. In 2002, the retail outlets in the same period is just 7.5 per concessions linked to export obligations trolled refineries. A consequence of such majority. According to sources, the icy on retail marketing of petroleum marketing network for petrol and diesel cent. And this growth could be main- was misused and poorly monitored transparency would also facilitate the discussion veered towards politics and products. It is the biggest decision taken was monopolised by public-sector oil tained largely because of the public-sec- should not be forgotten. next move to allow different public-sec- Thakur could sense that Chautala would in this area in the last 17 years. In 2002, companies. There were 18,924 retail tor oil retail outlets. Similarly, there is room for further tor refineries to compete with each other be amenable to an alliance. Next day as retail marketing of petroleum products outlets then. In the last 17 years, these Last week’s decision followed the liberalisation in the new policy. There on the final price at which they sell the the BJP faced criticism from within and was thrown open to the private sector companies have added 39,000 outlets, government accepting the recommen- is no reason why the new players should petroleum products through their out- outside about Kanda and understood provided the applicant would commit taking the public-sector fuel retail out- dations of an expert committee that not be allowed to sell petroleum prod- lets. Once such reforms are introduced, the difficulties it would face managing to investing at least ~2,000 crore in the lets to 57,924. examined how the 2002 policy liberali- ucts, obtained from different refineries, the effectiveness of the latest move to so many independents, Thakur let it be petroleum sector. Last week’s decision In contrast, the private-sector initia- sation impacted the oil marketing net- from the same outlet. As long as the new allow new players to set up fuel outlets known to the party leadership that has allowed any entity to undertake tive has been poor in spite of the policy work. The committee had concluded outlets maintain transparency and pro- would improve enormously. Chautala would be willing to join the government. BJP President Amit Shah returned from Gujarat early, and Thakur got Chautala to meet Shah, ensuring that the two enter through the back gate of Shah’s residence in Delhi to evade How safe is your money with Indian banks? television cameras. The deal was struck and conveyed to the media at a press conference later on Friday evening. Either the DICGC cover should be raised or we need an independent as there is a moral haz- ard — once the full resolution body to protect depositors. The FRDI Bill can ensure that amount enjoys insur- Enterprising think tank ance cover, a bank will In an example of how think tanks the Deposit Insurance and Credit Lehman Brothers Holdings Inc. not be meticulous in affiliated to political parties can reach Guarantee Corporation (DICGC), a plunged a large part of the world into its health care. out to experts from all walks of life, the wholly-owned subsidiary of the RBI. recession, there were discussions on The FDIC, an inde- Rajiv Gandhi Institute for Contemporary The post-Independence banking crisis raising the insurance cover but the RBI pendent federal agen- Studies will host Ministry of MSME in West Bengal had set the ball rolling refrained from doing so as it did not cy insuring deposits in (micro, small and medium enterprises) but the deposit insurance scheme came want to create an impression that the at least 5,400 US banks Secretary Arun Kumar Panda for a book into force in 1962 after the collapse of Indian banking system was unsafe. and thrifts, also exam- launch and panel discussion in the first , triggering a run on Indeed, not a single commercial bank ines and supervises week of November. Panda will launch all banks in Kerala. The insurance cov- has been allowed to fail ever since India certain financial insti- Story of Indian MSMEs: Despair to Dawn er, ~1,500 in 1962, rose to ~1 lakh in 1993 embraced economic liberalisation in tutions for safety and of Hope, written by B Yerram Raju, who after its fifth revision. Since then, the 1991. There have been cases of a few soundness, performs is adviser at the Telangana Industrial BANKER’S TRUST amount has not changed. Adjusting for banks teetering on the verge of collapse should be 4-4.5 per cent. So it needs to certain consumer-protection functions, Health Clinic. The event will also have a TAMAL BANDYOPADHYAY inflation, the value of ~1 lakh in 1993 is but on every occasion the RBI stepped raise the premium. Under its Act, it can and even manages receiverships of panel discussion on the issues in access ~5.74 lakh now. in and stitched together mergers of the be raised to Re0.15. failed banks. DICGC does not do any- to social equity. National Small The insurance cover in most other weak banks with the stronger peers to Should it be raised for all or DICGC thing beyond offering the cover. Industries Corporation Director P ill Infrastructure Leasing & countries is far higher. For instance, up protect depositors. should opt for risk-based premiums — An independent resolution corpo- Udayakumar, among others, will Financial Services Ltd and to 500,000 pesos ($9,500) is insured per Between 1963 and 1992, DICGC the more vulnerable the bank, the high- ration can take care of all this. In fact, participate in the discussion. T Diwan Housing Finance Corp. depositor in the Philippines; the equiv- offered full insurance cover to the er the premium? There could be a the Financial Sector Legislative Ltd stole the limelight in the second alent sum in China is 500,000 yuan depositors of seven commercial banks hybrid model too where after a certain Reforms Commission has recommend- half of 2018 for all the wrong reasons, ($70,000) and in Thailand it is about 5 and another 20 banks’ depositors got limit, the graded system kicks in. While ed creation of such a body but this has ballooning bad loans in the Indian million bahts ($160,000). In developed part of their money. Cooperative banks the high street banks may not like the been kept on hold. The Financial Swinging fortunes in Kerala banking system held centre stage. The markets such as the UK, the first started coming under the cover in the idea of subsidising the UCBs forever, Resolution and Deposit Insurance Voters in Kerala have given both the ruling mis-governance of a multi-state urban £85,000 of one’s savings is protected if late 1960s. Since then the depositors of there is a flip side to the risk-based pre- (FRDI) Bill, which has envisaged this, Left Democratic Front (LDF) and the cooperative bank (UCB), which was run a bank/building society goes bust; for 351 such banks have received ~5,118 mium arrangement. The riskier banks is pending before a Joint Parliamentary opposition United Democratic Front (UDF) by a real estate developer, leading to its a joint account, the limit doubles. The crore as full or part payment from the will have to pay more and this will Committee. The objective of the Bill is reasons to cheer in the recently concluded collapse, has changed the narrative. banks in Europe offer €100,000 com- DICGC, which takes care of depositors affect their already fragile health. Also, resolution of deposit-taking bankrupt by-elections in five constituencies. The Since the Reserve Bank of India (RBI) pensation to the savers and the Federal when a bank goes bust or when a bank even though the premium will be based financial intermediaries, while the ruling LDF won two seats, and UDF won the clamped down on the bank and Deposit Insurance Corporation (FDIC) gets merged or reconstructed by the on the confidential rating of a particu- Insolvency and Bankruptcy Code takes remaining three. The LDF wrested two seats restricted withdrawal of deposits in the US insures up to $250,000 per regulator. lar bank, people will know how much care of the resolution process for ailing from the Congress and managed to narrow (capped at ~40,000 now), at least four depositor. In neighbouring nation Sri Clearly, the depositors of coopera- the bank is spending for the insurance non-financial firms. Media reports sug- the margin in the Ernakulam constituency, depositors have died because of stress Lanka, the cover is for ~2 lakh per tive banks need the maximum protec- cover from its balance sheet and other gest that the finance ministry has start- which is a Congress bastion. The UDF and the fear of losing their life's savings. depositor; in Bangladesh, ~1 lakh. tion. There are 1,545 UCBs with a ~4.7 regulatory filings and this will affect its ed work on reviving the Bill more than retained two seats. In Aroor, it managed to There is panic all around and everyone The ~1 lakh limit covers at least 90 trillion deposit portfolio and 44 of them deposit flow. Incidentally, Bangladesh a year after the proposed insolvency elect Shanimol Usman, who was the only seems to be wondering how safe is per cent of the accounts (barring gov- are present in more than one state. How has opted for risk-based premia — 0.10 law for financial institutions was with- Congress candidate in Kerala to lose the Lok depositors’ money in the - ernment deposits, all other accounts does DICGC raise the cover? It charges per cent for the so-called problem drawn by the government. Sabha elections last May. The BJP seems to ing system. are mandatorily covered) and 29 per Re0.10 or 10 paise premium per Rs100 banks, 0.09 per cent for early warning be the only party left out in the cold by the All deposits are insured but not for cent of the deposits but it is pretty low in deposit as insurance premium. banks and 0.08 per cent for others. The writer, a consulting editor with Business voters. K Surendran, who led the BJP’s the entire amount. If a bank fails, a vis-à-vis most other countries in rela- DICGC’s reserve ratio or money avail- What’s the ideal level of insurance Standard, is an author and senior adviser to Sabarimala campaign, bit the dust in Konni depositor (irrespective of the number tion to per capita income. able with it as a percentage of insured cover? Certainly, a depositor’s full expo- Ltd. Twitter: and was pushed to third position. of deposits) can get up to ~1 lakh from In 2008, when the collapse of deposits is just 2.7 per cent. Ideally, it sure to a bank should not be guaranteed @TamalBandyo

INSIGHT > LETTERS

ty profitable or is it to extend the tele- Big data. Humanised. All’s well that end’s well com services to every nook and cor- ner of the country — even inaccessi- The recent Supreme Court judgment ble and non-profitable locations. If How it can help vulnerable people get a handle on their health and their lives upholding the definition of adjusted the answer to the question is to make gross revenue (AGR) as set by the gov- the organisation profit oriented, the yesterday, measure your pulse rate, and only 60 per cent of the students graduate ernment has brought finality to the following steps should also be con- even take real time measurement of your within six years. Current approaches issue. The inclusion of various non- sidered. First, the government blood pressure. such as student grades and demographic telecom revenue in the AGR has long should permit the shut-down of Two, big data is so defined because information was of limited value, espe- been disputed by telecom service around 13,000 telephone exchanges it comes with “time and geo stamp”. We cially since a student often decided to providers (TSP). However, the final in rural areas that are incurring a loss are collecting a lot of data that is not drop out within the first 12 weeks of start- word from the apex court has settled of ~3 lakh on an average per month. just data but it comes with a clear mark- ing at a University. How does one predict the issue of AGR definition completely. Else, 100 per cent compensation er about when it was collected and who would drop out and who needed This also means the TSPs will have to must be allowed. Second, the BSNL where it was collected. Take real time help? The academic research had shown shell out a big amount to the govern- management must function inde- traffic measurement that is happening that two key factors predicted if student ment as spectrum charges and licence pendently without any hindrance. on Google maps. The data is getting col- would continue or drop out -- the ability fee pending for years. Third, allow BSNL to participate in AMBI PARAMESWARAN lected real time with clear geographical to make social connections and regular- The telecom industry is going the auction of spectrum, adhering to tags (Google has some catching up to ity of activity. How does one measure through its worst crisis ever. With the all the terms and conditions, such as do on predicting travel times in Indian these two in a non-invasive manner? aggressive entry of Jio a few years ago, repayment holidays, applicable to cities like Mumbai; for that it probably Professor Ram’s team had at its dis- the tariffs hit rock bottom, resulting in private operators. Also allow the hat is big data anyway? There needs Big Big Data that goes into the posal the data from student identity cards huge losses for most incumbent play- company to choose the circles that are many definitions. The sim- realm of divinity). (smart cards) which were used for entry ers. The industry is beset with a debt are profitable. W plest one I came across says The question is, how do you use all into the mess halls, library, dorms, class burden of ~7 trillion. Payment of If the government's aim is to have that big data stands for information that this big data. Professor Ram shared two room buildings etc. This data was being licence fee/spectrum charges by TSPs a strong arm to protect telecom cus- goes beyond what could be squeezed interesting examples with us. collected live, real time by the university. because of the judgement would exac- tomers from exploitation, monopoly into a large spreadsheet. Big data cannot The university was approached by a By mapping card transactions that occur erbate the situation. Under the circum- and pressure tactics from private oper- be filled into a spreadsheet simply leading Dallas hospital to see if the MIS link this data with incidence of asthma- very near in time and at the same loca- stances, the regulator and the govern- ators and to fulfill the dream of digital because it is no longer numbers. It department could predict the admis- related emergency department visits. tion, researchers could make inferences ment must look for ways to protect the India, then it should not be so keen on includes words, visuals, pictures, videos sions that can be expected in the emer- By mining the tweets and linking it to about a student’s implicit friends group industry. profitability. Some balance, without and more. Add to that the enormous gency room. A well-manned emergency emergency room visits and atmosphere and social networks. They could also Hopefully this will bring the indus- burdening tax payers, is welcome. amount of information we share on room can save lives. But it is expensive data, the researchers could build a build a model around the regularity of the try back on the path to profit. Venu K P via email social media platforms, Google searches, to have additional medical or para-med- robust model. As they say in the article students activities, in an anonymous Sanjeev Kumar Singh Jabalpur blog posts, online reviews, personal pho- ical staff on standby. The data analysis published in IEEE Journal of fashion. According to Ram the model that Letters can be mailed, faxed or e-mailed to: tographs, videos etc and you have the took several steps. First was the simple Biomedical and Health Informatics, was build was able to predict at the end What’s the priority? The Editor, Business Standard big mass that is big data, I was told. analysis of past three years' emergency “Rapid progress has been made in gath- of the first 12 weeks the potential for a stu- Nehru House, 4 Bahadur Shah Zafar Marg At a recent seminar hosted by IIM room records. To their surprise the ering non-traditional digital informa- dent to drop out to the extent of 85-90 per This refers to “BSNL, MTNL to New Delhi 110 002 Fax: (011) 23720201 · Calcutta Alumni Association Mumbai researchers from the university found tion to perform disease surveillance. We cent accuracy. By providing selective merge, to get ~70,000 crore in deal” E-mail: [email protected] Chapter, Professor Ram gave us a new that the most critical cases were not from introduce a novel method of using mul- help, the University was able to hit a reten- (October 25). First and foremost, the All letters must have a postal address and definition. She should know; she is gun shootings or traffic accidents but tiple data sources for predicting the tion rate of 86.5 per cent, the highest in government must state whether the telephone number Anheuser-Busch Endowed Professor of from domestic accidents, cardiac and number of asthma-related emergency its history. While questions of privacy aim of the merger is to make the enti- MIS, and Entrepreneurship & Innovation asthma cases. They narrowed down to department visits in a specific area. remain, here is a case where big data was in the Eller College of Management at study asthma since that department was Twitter data, Google search interests used to help a very vulnerable cohort > the University of Arizona. In her scheme keen on finding out more. Their search and environmental sensor data were manage their lives better. HAMBONE of things, big data needs to be seen for predictive links led them to many collected for this purpose... Our model As you would have learnt by now, big through just two simple lenses. One, big places including Google searches, weath- can predict the number of asthma ED data is not just about Big Brother watch- data has led to ‘datafication’ of what till er data, pollution data (particulate mat- visits based on near-real-time environ- ing you. When used sensibly, it can save now that was not in the realm of data. ter in the atmosphere) and even Twitter mental and social media data with lives and help build better future citi- Take for example the smart watch you postings relating to asthma attacks. approximately 70 per cent precision”. zens. One human bit at a time. are wearing. By merely wearing it you Researchers collected tweets posted In yet another case the researchers are able to convert a lot of signals from between October 2013 and June 2014 were posed the question of addressing The author is an independent brand strategist, your body that has always existed into and narrowed down to 3,810 tweets that student drop-outs in the under-graduate author, and founder Brand-Building.com. data. You can count the steps you took mentioned asthma attacks. They could programme at the University. In the US Email: [email protected] OPINION 7 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM.

Volume XXIV Number 53 ILLUSTRATION BY BINAY SINHA MUMBAI | MONDAY, 28 OCTOBER 2019 Faith in the stock market Banks and NBFCs continue to remain cause for concern quity prices have displayed unusual patterns in Samvat 2075. Between November 7 last year and October 26, the Nifty and Sensex have gained over 9 per cent each. But while the headline indices have done well enough, the of the proceedings. mid- and small-cap indices have suffered capital losses, and the majority We expect that certain procedural and substan- tive legal defences will be frequent fliers in class Eof listed stocks have lost ground. As a result, most equity investors have suffered and actions. The procedural side includes defences that that has perhaps been a contributory factor in the weak consumption patterns wit- the minimum representation of members is not met, nessed this festive season. Despite this and the steady stream of negative news on the the applicant is not acting in good faith, or that the corporate and macro-economic front through the past 12 months, most investors cause of action is personal and not of a “class”. A friv- appear to have kept faith with the stock market. Equity mutual funds have received olous or vexatious suit could attract a penalty on stable inflows and assets under management continue to grow. Overseas investors have the applicant which could extend to up to ~1 lakh. On the substantive defences, arguments and evidence retained their optimism about the Indian economy, with foreign portfolio investors would need to demonstrate that the corporate action (FPIs) continuing to contribute substantially to both the equity and debt segments. This was not unlawful, wrongful or prejudicial, or entitled is at least partly due to political continuity, with the BJP retaining its grip on governance to the benefit of the defence of the “business judge- by winning handsomely in the Lok Sabha elections this year. ment rule”. The individual liability of directors may Apart from weak consumption, the worries in Samvat 2076 centre round the pat- be defended based on the lack of knowledge, record- ed dissent, satisfaction of the duty of care, loyalty and tern of default that has become increasingly common in the debt market. The NBFC diligence, etc. Often, the company’s defence may and banking sector continues to cause concern with fresh cases of default unearthed Opening bell for seek to ringfence the wrongful act to a single “rogue” with depressing regularity. What’s more, credit-rating agencies have clearly failed to actor by demonstrating that the internal controls of identify risks, with many of the defaults emanating from entities with high ratings. This the company were otherwise robust. A key point to has caused a crisis of confidence in the debt segment. Lenders have turned cautious. note is that “market practice” or “everyone does it” Debt funds have been forced to rejig schemes and book losses. Investors have pulled class-action suits is unlikely to hold water as a valid defence. For instance, in an action in the United States in the back from the income segment. Even as the Reserve Bank of India has adopted an easy The Companies Act does not prescribe a maximum cap on the damages matter of Vaalco Energy Inc., it was observed that money policy, with an accommodative stance and a sequence of six successive poli- that may be awarded “Just as ‘all the other kids are doing it’ wasn’t a good cy rate cuts, it has not managed to turn sentiment around. That could be the central argument for your mother, the idea that 175 other bank’s most challenging task in the months to come — both consumption demand steep sudden fall in share price can now trig- violations (Petrobas, Enron and WorldCom), internal companies might have wacky provisions isn’t a good and credit offtake will depend to a large extent on the return of confidence. ger much more than uncomfortable investor control weaknesses (Costco and LendingClub), mis- argument for validating your provision”. Corporate results and macro-economic growth have now been poor for the A calls for the management of a listed compa- leading/delayed disclosures (Fiat Chrysler and The Companies Act does not prescribe a maxi- ny. Recent moves by the government have resulted Yahoo), related-party transactions (Altisource mum cap on the damages that may be awarded. past five quarters. Corporate advisories and macro-estimates from investment in game-changing developments for the securities Portfolio Solutions), regulatory issues (Danske Bank) Given current Indian jurisprudence, it is unlikely banks and multilateral institutions suggest that there could be an uptick in the earn- regime in India, making listed companies vulnera- and acquisition/merger integration issues that there will be punitive damages to the extent ings pattern in the next six months, given a reasonable monsoon. Corporate earn- ble to class-action lawsuits by investors on the back (DaimlerChrysler, AOL Time Warner and Bank of that have made class actions headline news in the ings may receive a boost now, if only due to the low base effect. A few factors now of big losses in share value. America). United States, though we would have to wait and favour investors looking at India. One is that global energy prices remain weak, lim- The scope of issues that can attract a class action An application for a class action must be made by watch. While the liability of the company itself may iting the outgo of forex on that account. Another positive is that inflation remains under Section 245 of the Companies Act, 2013, is the requisite number of shareholders/depositors be limited because of the nature of a body corporate, fairly wide, and includes any matters pertaining to before the National Company Law Tribunal (NCLT). there are no obvious limitations on the liability of the benign, giving the central bank room to ease monetary policy further if there is the conduct of management that is In May this year, the government directors, auditors and experts. need. The economy continues to grow, albeit at a slower pace. Given a large econ- prejudicial to the interests of the notified the regulations whereby a The US securities holders of Satyam received a omy like India, there will always be pockets of resilience and interesting investment company or its shareholders. A sud- “class” for listed companies can now settlement of $125 million pursuant to a class action plays for those who look hard enough. But investors would also like to see signs that den stock price drop often links to a be formed by the lesser of: (A) 2 per in the US. In contrast, the Indian shareholders the government is looking at a combination of tax code reforms and the simplifying specific event, action or inaction by cent of the issued share capital, (B) received no compensation and were only left to of corporate regulations to encourage investment and consumption. Investors have the company, and allows sharehold- 100 shareholders, or (C) 5 per cent of observe the regulatory actions taken against the ers to quantify the loss suffered for the total number of shareholders. company and its auditors. This situation will like- had to hold their nerve through almost two years of lacklustre equity returns compensation purposes. If the iden- The government is also reportedly ly not repeat. Investors now have rights of restitu- after the markets peaked in early 2018. The data indicates that most of them have tified event is proven to result from a considering a proposal to extend tion that will change the principal-agent relation- kept faith with the markets despite all the bad news. That gives hope that Samvat wrongful act or a breach in fiduciary financial support to minority share- ship, as well as the power balance between 2076 would provide more joy than what Samvat 2075 did. responsibility or a lapse in the duty of holders seeking to pursue class- shareholders and management. Going forward, we care and loyalty for instance, it could action lawsuits. At the admission also expect that there will be an activist arbitrage result in significant monetary com- CYRIL SHROFF & AMITA stage, the NCLT will review the that will come in, that will become a much more pensation payable by the listed com- GUPTA KATRAGADDA application to determine whether sophisticated and essential product in India, and pany and its directors/auditors to the action requires a “class action” that governance matters and liability concerns will Now, the hard part investors. From international expe- and whether the applicants are act- take up more mind space for directors, manage- Stable policy must back the EoDB momentum rience, the typical corporate actions that attract secu- ing in good faith. If the action is admitted, the NCLT ment and auditors. rities class litigation include misrepresentations in will order a public notice to be issued to all share- ndia has made creditable progress in the World Bank’s Ease of Doing Business financial documents/prospectus (Facebook, Lyft, holders, after which the matter will be heard on mer- Cyril Shroff is managing partner of Cyril Amarchand (EoDB) rankings, clocking in at number 63 in 2019 from 77 in 2018, and bet- Alibaba and Wells Fargo), false forward-looking state- its. A shareholder, who forms part of a “class”, would Mangaldas. Amita Gupta Katragadda is a partner in the tering its position on seven of the 10 parameters. The EoDB has been one index ments (Electronic Arts Inc.), accounting standards need to seek the permission of the NCLT to opt out firm’s disputes, governance and policy practice in which the National Democratic Alliance government has recorded con- sistentI improvements. Since 2014, the country has jumped 79 notches up the rank- ings, a reflection of one of Prime Minister Narendra Modi’s key initiatives. The prin- cipal drivers of this improvement has been the Insolvency and Bankruptcy Code, which saw India move up 56 ranks on the parameter “Resolving insolvency” Why govt is responsible for PMC between 2018 and 2019. Technology has also played its part, with the move towards e-filing of construction permits, property registration, and paying taxes accounting t is a month now that the Reserve Bank of India Cooperative Bank, Kolhapur-based Youth issue credit cards or sell mutual funds and insurance, (RBI) has suspended the fraud-ridden normal Development Cooperative Bank, Shivam Sahakari the RBI signalled that they are fit and proper. for improvements on these parameters. Taken together, these are impressive I functioning of the Punjab and Maharashtra Bank of Ichalkaranji, The City Cooperative Bank, By allowing bank interest to be paid without tax- achievements and in that sense, India has earned its position on the list of Cooperative (PMC) Bank. The RBI has appointed an Mumbai, Maratha Sahakari Bank, Karad Janata deducted at source, the MoF encouraged depositors “economies with the most notable improvements” for the third year in a row at num- administrator who, with all due respect to his other Sahakari Bank all “under directions” of the RBI. with lower income (below the minimum taxable total ber nine. The cautionary note, perhaps, is that it shares this listing with countries skills, has not run a bank, far less a bank that has been income) to invest in fixed deposits of such banks. They that can be scarcely described as open, liberal economies — Saudi Arabia, Bahrain, hit by a massive fraud. His job, were naturally keen to avoid the trouble of filing tax Why is the government and Kuwait, all monarchies, Pakistan, a failed state, and China, a dictatorship. assisted by three others bankers, is returns and then claiming refunds. not to find a solution, but follow responsible? The revolving door between the RBI’s urban The obvious anomaly in India’s eye-catching EoDB performance is that little procedure. If the past is any guide, This process harms depositors, the banks department and advisory positions at coopera- of this is reflected in growth and employment-accelerating investment. Stripped of this will turn PMC Bank into a zom- stakeholders who matter the most. tive banks is scandalous. Senior RBI officials who are reinvested and other capital — a definition that was introduced during the United bie bank, neither living, nor dead. They are victims of fraud, commit- sitting on critical information about shady cooperative Progressive Alliance — growth in foreign direct investment (FDI) has been anaemic I gather that some ~27 crore a ted by politicians in most cases; in banks become advisors to the same banks after retire- at best, and in 2018-19 it actually shrank, albeit by a marginal 1 per cent. The data month is needed, just to keep PMC PMC Bank’s case it was a business ment. Why, senior RBI officials are even gracing the on industrial investment proposals recorded by the Secretariat of Industrial Bank’s 137 branches open across six house. But who is responsible for boards of large crooked finance companies. states while the administrator and allowing rampant crony capital- For the past 25 years, every single payout of Assistance shows that the number of proposals and investment, though rising, is his advisors move slowly through ism, fraud and political influence to deposit insurance has been to cooperative banks while still to reach even the modest 2013 levels, an indication that investor confidence has the thicket of rules and procedures. destroy the savings of millions of the bulk of the premium is from scheduled commer- never matched the buoyancy of the EoDB rankings. Exports have scarcely grown. The cost of its zombie-like exis- IRRATIONAL CHOICE depositors in one cooperative bank cial banks. Both the MoF and the RBI have known Though the improvements in the disaggregate rankings are commendable, they are tence, nearly ~1 crore a day, will DEBASHIS BASU after another? It is the government how cooperative banks work and yet have done noth- in, a sense, low-hanging fruit. Weaknesses on three EoDB parameters on which India steadily eat up depositors’ money. (Ministry of Finance or MoF, and ing about it. has made no progress or done worse — enforcing contracts (163, no change), get- The longer the bank remains in this the RBI). Consider this: These are only a few of important issues; lack of state, the more money it loses, because the core bank- The government has overtly encouraged the space prevents me from going into more. I am also ting credit (22 to 25), protecting minority investors (7 to 13) — suggest themselves ing business of lending money has been halted. growth of cooperative banks. At no time has it made quite struck by how callous the RBI has been in han- as the more difficult agendas that the government needs to tackle on a war footing. This is what happens every time a cooperative bank customers aware of any additional risk in such banks, dling a failed bank. If a bank has intangible assets, it can They reflect the serious flaws in India’s judicial system and a crisis in the financial is put “under directions” from the RBI. Kapol over scheduled commercial banks. be a takeover target. If so, it needs to be treated as a sector. Recapitalising zombie state-owned banks, merging poor and well-per- Cooperative Bank became a zombie bank on March 31, On an average one cooperative bank fails every going concern with strategies that are appropriate for forming banks without detaching them from government interference, and pro- 2017, with a withdrawal cap set at ~3,000 per depositor. few months. The RBI has not learnt any lessons from it. Instead of a retired central banker, it should be led posing to amalgamate defunct public sector telecom companies do not reflect the The bank will remain “under directions” till January previous failures and has not taken any steps to prevent by someone with deal-making skills that lead to 2020. Rupee Cooperative Bank became a zombie bank cooperative bank failures. takeover of assets or mergers. If it doesn’t have such kind of bold, reformist mindset that India had come to expect from this regime. on February 22, 2013. The depositors don’t have access The RBI never made customers aware that it was assets, it is a gone concern. Such banks need a hardcore The mismatch between India’s EoDB performance and economic growth is also to their money but the staff gets its salary. The RBI has not regulating them in the same manner as other com- banker who can call back the loans, salvage what he the result of variables that are not captured by the index. Maverick economic poli- allowed the bank to release some money for excep- mercial banks. can, liquidate investments, pay back the depositors cy must rank as the principal failing: The twin shocks from the 2016 demonetisa- tional cases. Cooperative banks were allowed to provide and shut down the bank. In either case, speed and tion and the accelerated timetable for introducing a poorly designed goods and serv- The 103-year-old CKP Cooperative Bank was put many of the services that commercial banks provide. direction is the key. But both MoF and the RBI remain ices tax in mid-2017 followed by rising protectionism are all part of the problem. The under directions on May 2, 2012. The RBI-appointed PMC Bank, for instance, was permitted to open non- apathetic. They would rather convert all failed coop- board of administrators ran the bank until April 2015, resident accounts and have foreign currency dealings. erative banks into zombie banks. This is another rea- most recent example of sending, at the behest of a domestic lobby, investigatory let- after which a new board was elected. The depositors It could give bank guarantees, enter into forward con- son why they should take full responsibility for their ters to foreign-owned ecommerce majors Amazon and Flipkart for details of their converted a part of their money into share capital in tracts, and issue credit cards. All these permissions inaction and compensate the depositors. festive season sales is unlikely to enhance investor confidence. In short, the gov- 2015. The bank is still “under directions” after several came from the RBI, presumably after adequate due dili- ernment needs to look beyond the EoDB for sustained economic growth. extensions over the years. Every few months more gence. The writer is the editor of www.moneylife.in; Twitter: zombie banks join the list: The Needs of Life In permitting specific cooperative banks to @Moneylifers

faith is great,” he writes. “There are more encourage the refugees to stay. Egan writes, than 50 per cent more nuns and sisters in “A religion whose leaders once called on fol- Timothy Egan makes room for the Holy Spirit the world than priests.” He’s sick of the lowers to wage savage war against faraway church’s censorious attitude about sex — cities held by people of a different religion longer comfortable in the squishy middle” the Abbey of St. Paul in Wisques, Egan “A Pilgrimage to Eternity” is also a little basis for which can be found in Jesus’ now fights to feed and protect forsaken and so he undertakes this journey willing must pass an amusing entrance exam. In stunningly comprehensive history of both teachings — and harbours a healthy skep- members of that same faith from those same to be led to deeper belief. He writes, “Until a series of rapid-fire questions, the abbot Christianity and Western Europe. It’s all ticism about Mary’s perpetual virginity faraway cities.” atheism can tell a story, it will always have asks, “How are things in America?” here: from St. Maurice, “believed to be ‘the and Jesus’ celibacy. He sees misogyny in After traveling through England, trouble packing a house.” Egan answers, “Troubled.” first black saint’” (wrote Henry Louis Gates this history, and in the revisionist deni- France and Switzerland, bedraggled and But this isn’t just a book about religion: “Why is that?” Jr.), and the 1,500-year-long uninterrupt- gration of Mary Magdalene, and traces this untouched by strangers, Egan finally BOOK REVIEW It’s also one about family. Egan is visited in “Trump.” ed prayer at the abbey named for him; to thread from St. Paul — an “early celibate” receives a hug from a woman in Italy. She his travels by his son, his daughter and, “What’s wrong with him?” the 1518 Treaty of London forever outlaw- — to SS. Jerome and Augustine, who is no longer a Catholic — but she still asks MATTHEW THOMAS finally, for the last leg, his wife. He writes of “Everything.” ing war between Christians (it lasted “bare- preached celibacy after long careers of Egan to say a prayer for her when he sees how the two of them tried to expose their “I’ll show you to your room,” the abbot ly two years”); to Mencken on Puritanism: debauchery, and to St. Benedict, who Pope Francis. “I like this pope,” she says. If you’re looking for something to believe in, children to the basics of major religions says, satisfied. “The haunting fear that someone, some- “feared sex so much that whenever he was The woman would never know if Egan you could do worse than Timothy Egan’s and then “let the free market of ideas set- Then there are the meals — many good, where may be happy.” In fact, there’s so aroused he threw himself into a patch of failed to utter that prayer, but he keeps his particular blend of intelligence and empa- tle the debate as they thought it through.” some spartan. And the mishaps: Egan much history that the plot can sometimes nettles or a bed of thorns.” Of the 1968 promise at a Mass at St. Peter’s Basilica. Of thy. In his ninth book, A Pilgrimage to Now full-fledged adults, Egan’s children doesn’t properly tape his toes in the Alps feel like an excuse to get the background in, Vatican encyclical against birth control, course he does, you think at the end of this Eternity, this self-described “lapsed but lis- have “a reasonable person’s skepticism and carries on, blistered and mangled, though one hardly complains; Egan is so Egan writes that it “is almost universally marvelous account. Reading it, you feel tening” Irish Catholic makes the 1,200-mile toward the supernatural claims of reli- until his discomfort finally forces him into well informed, he starts to seem like the ignored by Western Catholics — and has yourself in the presence of goodness — journey from Canterbury to Rome along gion.” Egan expresses some misgivings a car. At this point, the reader shares his world’s greatest tour guide. You follow little basis in the philosophy of Christ.” the kind you might simply have to decide the Via Francigena “on foot, on two wheels, about his own flexibility as a parent, want- sense of relief and defeat. along as much to hear him talk as to see the Egan also turns a critical eye on those to believe in. four wheels, or train — so long as I stay on ing his children “not to foreclose on the Along the way, Egan sets a goal for him- sights. It feels as if there’s nothing he has- who treat refugees poorly. For instance, he the ground,” as he attempts to decide what idea that a great faith, though flawed, can self: To get enough stamps in his pilgrim n’t digested for the reader, and his extraor- describes how the police in St.-Omer, France, © The New York Times, 2019 he believes. If this book doesn’t quite settle contain great truths.” passport to earn a special seal from the dinary reliability is reminiscent of that of “fired tear gas at volunteers” who were dis- the question of belief for you, it will at least His journey can also be enjoyed as a Vatican at the end of the journey. the monks he describes so evocatively tributing food and clothing to refugees. PILGRIMAGE TO ETERNITY fortify your faith in scrupulous reporting travelogue, complete with the kinds of Considerable energy builds around the throughout the book. Representatives of Secours Catholique, the From Canterbury to Rome in Search and captivating storytelling. absurdities that happen on any long trip. lengths he goes to to get those stamps. Egan doesn’t shy away from con- charity behind the effort, pleaded, “Didn’t Egan was educated by Jesuits and is a For instance, Egan learns that Canterbury When he finally lands the hard-won cer- tentious subjects. He calls for more women Christ say we have an obligation to help ‘the of a Faith “skeptic by profession.” He says he has Tales is not sold at Canterbury Cathedral; tificate, he says: “It’s official. I know how in the church’s hierarchy. “The desire least of these brothers of mine’?” The author- Timothy Egan arrived at a point in life where he is “no the book is too bawdy. When he arrives at the Scarecrow felt when he got his brain.” among women to be a guiding part of this ities’ response: Such assistance would only Viking; 384 pages; $28 8 POLITICS & PUBLIC AFFAIRS MUMBAI | MONDAY, 28 OCTOBER 2019 1

“When the PM raised the issue of RCEP “Every interest of domestic industry “Once the negotiation process moves forward, (Regional Comprehensive Economic and the people of India has to be and both sides are happy that we have enough Partnership) with Xi Jinping, he was very protected before we execute any safeguards to ensure nobody’s interests are clear it has to cover goods and services” free-trade agreement” affected, I think it will be a reality” HARDEEP PURI, Union Minister PIYUSH GOYAL, Commerce Minister RAM MADHAV, BJP General Secretary

> .

“It was an unkind cut but our top leaders said nothing,” said a Rajasthan office-bearer. Vasundhara expectedly did not campaign in the by-polls. A legislator from west Rajasthan believed A bit down, but not out to close to her said: “Knowing her, she will rise like a phoenix. She embodies glamour, hard work, and success. That’s a rare package in my state.” How Vasundhara, Chouhan Even a known Vasundhara detractor conceded the point: “If she moves around in Rajasthan, a and Raman Singh are placed majority of the legislators will gravitate towards her. Her drawback is she forgets that it’s the party that in the post-defeat scenario brought her to power.” Chouhan is quite the antithesis of Vasundhara. RADHIKA RAMASESHAN “He made it clear to New Delhi that he wished to confine himself to MP,” a source close to him said, he Bharatiya Janata Party (BJP) has seam- emphasising that Chouhan’s “self-enforced limit” lessly raised its next generation of leaders — was to allay a perception Tits fourth since Atal Bihari Vajpayee, L K that he had nursed Advani, and Murli Manohar Joshi constituted the The Centre’s national ambitions. first line-up that took the party to power — in the assessment on the Setting aside a health shape of Devendra Fadnavis, Pramod Sawant, Jai former CMs varies, issue, he campaigned Ram Thakur, Sarbananda Sonowal, Trivendra Singh depending on tirelessly in the October Rawat, and Raghubar Das. their continued 21 Jhabua assembly by- Between them, the chief ministers of “utility”, and most election, which the BJP Maharashtra, Goa, Himachal Pradesh, Assam, critically their lost to the Congress. Uttarakhand, and Jharkhand have either justified equation with While canvassing, Gopal their appointment by the BJP high command or are Narendra Modi and Bhargava, the yet to earn their stripes. Their predecessors, who Amit Shah Opposition leader who’s belonged to a more secure era when the BJP would rumoured to be a not experiment with its regional chiefs, have gone “favourite” of New Delhi, into political oblivion or taken up gubernatorial used the tag line that a vote for the BJP was a vote to assignments and ministries at the Centre. return Chouhan as chief minister, ominously hinting Could the defeat of Vasundhara Raje, Shivraj at a design to topple the Congress government. Singh Chouhan, and Raman Singh in last year’s polls Clearly the slogan did not work. in Rajasthan, Madhya Pradesh, and Chhattisgarh, In the 230-member legislature, the Congress was respectively, augur a transition in the command precariously ahead of the BJP. However, by winning structure of these states, where they reigned supreme (Clockwise from left) Vasundhara Raje, Raman Singh and Shivraj Singh Chouhan, former chief ministers of Rajasthan, Chhattisgarh and Madhya Pradesh Jhabua, it is slightly better-placed now. as chief minister or Opposition leader, as in “Chouhan is the only mass leader we have. MP Vasundhara’s case, for 15 years, or will the BJP brass tionary said. On its part, the BJP high command gave BJP member, never passed up a chance to denounce has a huge population of the Other Backward Classes keep them on? There are no straight answers because Vasundhara went into a shell when the BJP lost Vasundhara short shrift. Gulab Chand Kataria, Vasundhara, who ensured he was ousted from the (OBCs). As long as the BJP was controlled by the right now the Centre’s assessment varies, depending Rajasthan. She disregarded her appointment as Opposition leader in the legislative assembly, is an party. Because of Beniwal’s assumed clout among upper castes, we experienced limited success. OBC on the former chief ministers’ continued “utility”, national vice-president, as did Chouhan and Singh. old adversary and, while left to herself, sources said the Jats of Nagaur, from where he is an MP, and leaders like Uma Bharti and Chouhan took us to their perceived mass base and popularity, the ability However, while the former MP and Chhattisgarh she would not have endorsed the anointment of north-west Rajasthan, Shah cemented a pact with new heights,” said an MP from Baghelkhand, adding, to take the cadre along, and, most critically, their chief minister reconnected with the voters through Satish Poonia as Rajasthan party president. There the RLP before the 2019 elections. “it’s not easy to identify and nurture leaders. The equations with Prime Minister Narendra Modi and programmes, Vasundhara was not seen or heard of was more to come. The BJP gave Khinswar, in Nagaur, to the RLP high command knows it.” BJP President and Home Minister Amit Shah. until she surfaced on Facebook. Her posts picked In the recent assembly by-elections in Khinswar and Beniwal fielded his brother, Narayan Lal. He Singh is out of place in the BJP’s changed tack in “On a scale of one to 10, Vasundhara is the most her “achievements” as chief minister and mentioned and Mundawar, the BJP’s central leadership kept took potshots at Vasundhara, saying that the Chhattisgarh, which places greater emphasis on pro- vulnerable, followed by Singh. Chouhan has the her recent visits to Jhalrapatan, her assembly con- its deal with the Rashtriya Loktantrik Party (RLP), renewed alliance demonstrated that she “no longer moting the Kurmis, other OBCs, and tribals, and not greatest survival potential,” a central BJP func- stituency. helmed by Hanuman Beniwal. Beniwal, a former mattered”. Narayan Lal won from Khinswar. Rajputs, the caste to which Singh belongs.

NEWSMAKER / DUSHYANT CHAUTALA STORY IN NUMBERS The ‘gentleman’ Despite strong measures taken vulnerable to credit card fraud, customer data, are considered by the Reserve Bank of India to according to the 2016 Global more vulnerable to cloning. CARD THEFT BUG BITING prevent credit and debit card Consumer Fraud Report published In 2017-18, the sum total of fraud, the National Crime Records by payments technology money that went into the wrong of Chautala clan INDIA DESPITE MEASURES Bureau — in its 2017 report on company ACI Worldwide. The RBI hands stood at ~65.26 crore. crime in India — has captured has made chip-enabled credit The central bank changed its ARCHIS MOHAN great grandfather Devi Lal. credit card fraud in its statistics for and debit cards (which in some norms to limit the liability of Dushyant was unmoved amid the first time. cases double as ATM cards) customers to card fraud, in July Among his followers, Dushyant attempts by some ‘khaps’ and former India was ranked among the mandatory. Cards with magnetic 2017. Under the revised Chautala is known as a risk taker. Punjab CM Parkash Singh Badal — Last December, he risked the ire a family friend of the Chautalas — top five countries globally that are strips, which store all important guidelines, liability would be of his uncle when he split from the for reconciliation. The JJP debuted shared by banks and Indian National Lok Dal (INLD) to in the electoral arena by contesting CREDIT/DEBIT CARD FRAUD customers, depending on launch the Jannayak Janata Party the Jind by-poll. Its candidate The top five states where they were caught were reported circumstances under which the (JJP). The gamble succeeded, with Digvijay Chautala, Dushyant’s fraud took place. n Cases reported n Victims the new outfit winning 10 seats in younger brother, lost to the BJP but NUMBER OF CASES Most card frauds were targeted the Haryana Assembly polls. pushed the Congress’ Randeep Singh (All India) at ICICI Bank customers during During his campaign, Dushyant Surjewala to third. CASES REPORTED VICTIMS 2017-18. As many as 348 cases galvanised the Jat community The JJP then fought on seven were reported, with ~7 crore against the Manohar Lal Khattar-led seats in the 2019 Lok Sabha polls, 1,543 1,601 Bharatiya Janata Party (BJP) govern- leaving three for the Aam Aadmi embezzled. ment’s “poor governance”. On Friday, Party. However, the BJP won all 10. customers were defrauded to the however, he risked his nascent polit- For the Assembly polls, Dushyant tune of ~10 crore, in 144 reported ical career to form a coalition gov- severed his alliance with the AAP to cases, according to information ernment with the BJP. explore an alliance with the Bahujan available in Parliament 564 605 216 216 128 128 143 143 73 73 At 31, he is set to be the youngest Samaj Party. questions. deputy chief minister of Haryana, He decided to go solo when the Source: Lok Sabha questions, NCRB 2017 and has sparked hopes of inheriting alliance did not materialise. The JJP Maharashtra Jharkhand Haryana Delhi Uttar Pradesh report on Crime in India the legacy of his great grandfather succeeded in supplanting the INLD, — the Jat stalwart Devi Lal. which won only one seat in compar- However, the JJP’s alliance with ison to the JJP’s 10, and secured a the BJP also gave ammunition to the paltry 2.44 per cent vote share versus Congress — which, under Bhupinder the JJP’s nearly 15 per cent. Singh Hooda, commands allegiance Dushyant contested and won Infighting, turncoats mar grand alliance dreams of the majority of Jats — to attack it from the tough Uchana Kalan seat for being the BJP’s “B team”. against senior BJP leader and former R KRISHNA DAS with senior bureaucrats and police offi- In the years to come, Dushyant Union Minister Birender Singh’s wife, cials, joined the league. may need to compete for the leader- Prem Lata, who had defeated him When Sukhdeo Bhagat, a sitting legislator “The five sitting legislators joining the ship of the Jat community with last time. and former president of the Jharkhand BJP is secondary, though the develop- Hooda’s son Deepender, and other He had made headlines in 2014, Congress Committee, avowed that Umang ment has added to five seats for the party. Jat leaders. The decision to align with after becoming the youngest mem- Sir (referring to Madhya Pradesh minister What is of significance, however, is the the BJP has the potential to both ber of the Lok Sabha at 26. “Name in Umang Singhar) was like a guardian to blow inflicted on the Congress and JMM,” make or break his career. Limca Book of Records as The him, the party heaved a sigh of relief. This said a political observer. While both par- Fluent in English and having not Youngest Ever Elected Member of is because Singhar has been on the job to ties had been pursuing the idea of a grand lost his earthiness, he is known as Parliament of India”, his profile on pacify Bhagat, who has raised a revolt alliance, the BJP succeeded in splitting it the “gentleman Chautala” among his the Lok Sabha website states. within the party. by pulling its top leaders and senior legis- followers. He studied at Lawrence During his tenure, Dushyant The Madhya Pradesh minis- lators into its fold. School in Sanawar (Himachal impressed with his well-prepared ter, also the deputy person in The Mahagathbandhan Pradesh), and graduated in business speeches, and cogent interventions charge of the Congress party’s (grand alliance), which is administration from California State on a wide array of issues. He asked affairs in Jharkhand, went to already on a sticky wicket, University. He also has a law degree. 677 questions on railway and high- Bhagat’s residence in received a big jolt before it could In December, Dushyant and his way projects, crime against women, Lohardaga, and held a even take off. father, Ajay Chautala, walked out of child labour, and drug trafficking. To marathon closed-door meeting. Though an alliance with the the INLD — the party of his grand- highlight farmers’ concerns, he drove When Singhar came out, he Jharkhand Vikas Morcha father Om Prakash Chautala and a tractor to Parliament in 2017. appeared unmoved while (Prajatantrik), or JVM(P), and As a public representative, Bhagat seemed excited. the JMM was not rewarding for Dushyant says he has organised “Besides family, we have emo- STATE the Congress in the Lok Sabha Sukhdeo Bhagat (right) gave a huge jolt to the Congress by crossing over to the BJP blood donation camps, awareness tional relations,” said Bhagat, elections, the party knows it will about organ donation, and tree plan- hinting that everything was in SCAN not be able to take on the BJP’s rate identity in the state and would go partner does not take place,” a political tation drives. He has also reached order regarding party affairs, JHARKHAND might in the Assembly polls solo. He also denied any parleys going on observer said. Tribal votes of the JMM will out to other castes in Haryana to be and that the Congress had no without support. for joining the grand alliance. In the 2014 not go to the Congress or any other ally, seen as a leader not just of Jats but reason to worry. However, many issues per- Assembly polls, the JVM(P) had secured they said, adding that non-tribal votes of all the “36 biradari” of the state. Bhagat has made no secret The only taining to the formation of a 10 per cent of the votes, winning eight the Congress would not go to the JMM. Recalling his journey over the last of his differences with the party challenge for grand alliance still await resolu- seats. Six of its legislators, however, later A pre-poll alliance in Jharkhand to five years, he says: “There has been high command after he was the BJP in the tion, the most prominent of split to support the minority government challenge the BJP appears difficult. The a lot of change. I had to leave my edu- unceremoniously removed state is to which is seat sharing. of the BJP, led by Raghubar Das. only option left is a post-poll alliance that cation and get into politics, and today from the post of party chief. A keep its The Congress had reportedly A senior JVM(P) leader said Marandi may not be as effective. I am leading a party. It requires dras- senior Congress leader said that own house claimed above 30 seats, includ- had reservations over projecting a leader The only challenge for the BJP is to tic effort and big changes.” during the meeting, Bhagat was in order ing those where the sitting MLAs of the grand alliance. Hemant Soren, the keep its own house in order. JMM He sees himself as a farmer furious and in no mood to lis- of the JMM were in a strong working president of the JMM and former spokesperson Suprio Bhattacharya said leader who can fill his great ten to Singhar. position. “I have met Babulal Marandiji chief minister, is desperate to lead. The the BJP was banking on leaders from “out- grandfather’s shoes, and Within a week, Bhagat gave a big jolt to [chief of JVM(P)] and have initiated talks,” Congress is prepared to project him as the side” for electoral gains, by inducting invokes his memory in the Congress, by crossing over to the BJP said Jharkhand Congress President leader of the grand alliance. The party them. all his public meetings. on Wednesday along with another party Rameshwar Oraon. They have an under- knows any alliance without the JMM, “This will cause resentment among its The tractor featured legislator Manoj Yadav. standing with the JMM and will hold fur- which secured a 20.4 per cent vote share own cadre and leaders, and the party will on the polling day Jharkhand Mukti Morcha (JMM) legis- ther talks regarding seats later, he added. and 19 seats, would fail to take on the BJP. have to pay a heavy price,” he added. too. Along with wife, lators Kunal Sarangi and Jaiprakash Bhai Initial discussions, however, hit a The JMM has a strong hold on the 26 Bhagat and former IPS officer-turned- Meghna, and MLA- Patel, along with Independent MLA roadblock when Marandi gave a contra- tribal seats. Another daunting task for the Congressman Arun Oraon were consid- mother, Naina Bhanu Pratap Sahi, also followed them. dictory statement. grand alliance would be the transfer of ered a bête noire in the party, with a com- Chautala, he rode Besides the sitting lawmakers, senior “We will contest all 81 seats,” said votes among allies. “It is a precedent in mon base in Lohardaga. Now, both are in one to cast his vote. leaders from both political parties, along Marandi, adding that the JVM had a sepa- Jharkhand politics that vote transfer to a the BJP. MUMBAI | MONDAY, 28 OCTOBER 2019 WORLD 9 . < Islamic State leader Baghdadi dead: Reports Will broadcast footage from the US raid, was discovered when he tried to get his family out of Idlib towards the Turkish Turkey says coordinated Paved way for Baghdadi says Iraqi state media border,” one of the Iraqi officials said. with US on raid raid: Iraq intel official Iraqi state television said it would REUTERS was successful. A commander of one of broadcast footage from the raid. US mag- Turkey on Sunday said there was “coordination” Iraq’s intelligence service provided the US-led Baghdad/Washington, 27 October the militant factions in the northwestern azine Newsweek, which first reported between Ankara and Washington before the coalition with the exact coordinates of Islamic Syrian province of Idlib said Baghdadi the news, said it had been told by a US operation which US media reports said targeted and State leader Abu Bakr al-Baghdadi’s location, Islamic State leader Abu Bakr al- was believed to have been killed in a raid Army official briefed on the raid that killed Islamic State chief Abu Bakr al-Baghdadi. paving the way for the raid that reportedly killed Baghdadi is believed to have been killed after midnight on Saturday involving Baghdadi was dead. It said the operation “Prior to the US Operation in Idlib Province of him, an Iraqi intelligence official told Reuters on in a US military operation in Syria, helicopters, warplanes and a ground was carried out by special operations Syria last night, information exchange and Sunday. The agency learned of Baghdadi’s sources in Syria, Iraq and Iran said on clash in the village of Brisha near the forces after receiving actionable intelli- coordination between the military authorities of location from documents found at a secret Sunday, as US President Donald Trump Turkish border. gence. The Pentagon did not immedi- both countries took place,” the Turkish defence location in Iraq’s western desert after arresting prepared to make a “major statement” at Two Iraqi security sources and two ately respond to a request for comment. ministry said in a tweet. The elusive chief of IS was an Iraqi man and woman, the official said. the White House. Iranian officials said they had received Abu Bakr al-Baghdadi FILE PHOTO The Britain-based war monitor the believed to be dead after a US military raid in the “We have been constantly coordinating A US official, speaking on condition confirmation from inside Syria that Syrian Observatory for Human Rights Idlib region. The helicopters targeted a home and with the CIA, providing valuable information of anonymity, told Reuters that Baghdadi Baghdadi had been killed. tasked with pursuing Baghdadi that he said nine people were killed during the a car outside the village of Barisha, the UK-based that the Iraqi National Intelligence Service has was targeted in the overnight raid but “Our sources from inside Syria have has been killed alongside his personal two-hour raid, including two women and Syrian Observatory for Human Rights said, in the on Baghdadi’s movements and place of was unable to say whether the operation confirmed to the Iraqi intelligence team bodyguard in Idlib after his hiding place likely at least one child. operation which killed nine people. AFP hiding,” the official said. REUTERS

IN BRIEF HONG KONG PROTESTS CONTINUES Texas shooting outside Dallas Stop holding UK hostage: Govt results in at least 2 deaths Two people have been killed in a shooting at UK Opposition parties an off-campus Texas A&M University- suggest Dec 9 vote Commerce party that also left at least 14 others injured, a sheriff’s official said. The shooting Two British opposition parties want to hold took place just before midnight Saturday in elections even earlier than Prime Minister Greenville, around 15 miles (24 kilometers) Boris Johnson has proposed as they try to southwest of the Commerce campus, Chief ensure the country doesn’t leave the Deputy Buddy Oxford of the Hunt County European Union without an agreement. Sheriff’s Office said. The shooter remains at The Scottish National Party and the large, Oxford said. He said the shooting began Liberal Democrats say they will push around 15 minutes after deputies arrived for a December 9 election, three days outside the venue, responding to reports of earlier than Johnson has proposed illegal parking.Deputies heard gunshots and years earlier than the next coming from the back of the building, but scheduled vote in 2022. could not tell whether the shots were fired They also plan to ask EU leaders to from inside or outside, Oxford said. AP/PTI< extend the Brexit deadline to at least A protester receives medical attention after being hit with a pepper spray as he is UK PM Boris Johnson. More than three years since Britain voted to leave the EU, January 31 to provide more time to debate being detained during an anti-government protest in Hong Kong’s tourism the divided country and its parliament are still debating over it FILE PHOTO Johnson’s withdrawal agreement. REUTERS district of Tsim Sha Tsui, in China, on Sunday PHOTO: PTI Warned Trump on impeachment, says former WH chief of staff REUTERS date, few expect Johnson to meet his But a source at Johnson’s Downing London, 27 October “do or die” promise to deliver Brexit Street office said the prime minister > BS SUDOKU # 2880 President Donald Trump’s former chief of staff, on October 31 after the bloc agreed to would do all he can to force an election John Kelly, says he advised the president not to Boris Johnson’s government stepped another delay. to “get Brexit done”, including consid- Very Hard: fill the job with someone who wouldn’t be up pressure on lawmakers on Sunday More than three years since Britain ering options offered by other opposi-  honest with him and provide a check on his to back the prime minister’s bid to hold voted to leave the EU, the divided tion parties. Solution SOLUTION TO #2879 impulses because he would end up being an early election and break the Brexit country and its parliament are still “Parliament cannot hold the coun- tomorrow impeached. “That was almost 11 months ago, impasse, saying Britain was being held debating over how, when and even try hostage any longer,” Johnson said and I have an awful lot of, to say the least, sec- “hostage” by parliament. whether Brexit, Britain’s biggest policy late on Saturday. “Millions of busi- HOW TO ond thoughts about leaving,” Kelly said.”It But with the main opposition shift for more than 40 years, should nesses and people cannot plan their pains me to see what’s going on because I Labour Party waiting for the European happen. futures, this paralysis is causing real PLAY believe if I was still there or someone like me Union to grant a Brexit delay and two All Britain’s political parties agree damage and the country must move Fill in the grid was there, he would not be kind of, all over the other parties launching their own bid an election is needed to break the on in 2020.” His culture minister, so that every place.” “I said, whatever you do just don’t hire for an even earlier election, the gov- standoff over Brexit, but do not see Nicky Morgan, doubled down on the row, every a ‘yes man,’ someone who won’t tell you the ernment’s bid so far looks set to fail. eye-to-eye on its timing. For many law- message on Sunday, warning lawmak- column and truth — don’t do that. Because if you do, I beli- Britain was due to leave the EU on makers, an attempt by Johnson to set ers that Thursday was still “the default every 3x3 box eve you will be impeached,” Kelly recalled in Thursday, but despite the government the terms of a new election raises con- leaving date”. “So that should focus contains the an interview at the Sea Island Summit. AP/PTI< arguing this is still the legal default cerns that he might renege. minds,” she told Sky News. digits 1 to 9 10 PERSONAL FINANCE MUMBAI | MONDA Y, 28 OCTOBER 2019 VALUE OF ~1 LAKH SENSEX GOLD SILVER FD (SBI) PPF INVESTED IN VARIOUS ASSET 1-YEAR 1,15,933 1,21,403 1,21,446 1,06,650 1,08,000 CLASSES 1-YEAR 1,15,933* 1,14,983 1,15,012 1,04,655 1,08,000 POST-TAX RETURNS *Note: Cumulative equity gains up to ~1,00,000 in a financial year are tax-free. 5-YEAR 1,45,462 1,42,847 1,20,707 1,50,366 1,51,757 All post-tax returns are calculated for an individual in the 30 per cent tax bracket, 5-YEAR 1,45,462* 1,38,562 1,18,636 1,33,507 1,51,757 without considering the indexation benefit POST-TAX RETURNS As on October 25 2019, in ~; compiled by BS Research Bureau > . Take a joint loan to buy property

of any reason, such as loss of a job, one of the Besides increasing the spouse’s part in repayment does not come in lead- eligibility, tax benefits will ing to default, the credit records of both partners get impacted. “As co-applicants, a couple takes also double joint responsibility of repaying the loan in full. Failure to repay by one partner will impact the SARBAJEET K SEN credit scores of both partners,” says Shetty.

n 2013, when Aditya Nitsure, 40, software Divorce or death: If partners decide to divorce engineer and Smita Barve, 37, a private sector during the pendency of the loan, it is important employee bought a property on a joint home for both to understand that the loan still needs to Iloan from LIC Housing Finance, their main be paid and figure out ways to pay up in full. “To reason was the rate of interest. Says Nisture: “There recover its dues, the bank can repossess the prop- was an offer of a lower interest rate of 10 per cent erty and, where necessary, also initiate necessary on a joint loan of ~44 lakh. Currently, the rate is 9.5 legal action against the borrowers. Therefore, co- per cent. It also increased our eligibility.” borrowing spouses would do well to arrive at a clear While Nisture and Barve got a lower rate, one agreement beforehand on how they will manage of the main reasons for going a joint home loan is Smita Barve and Aditya Nisture their debts should they need to split in the future,” eligibility. It allows the family to buy a bigger house, says Shetty. In the unfortunate event of the death and many times even in a better locality. So, if you of one of the partners, the surviving partner is are a young couple looking to buy a home and both “There was an offer of a lower interest rate of responsible for the timely payment of instalments. are earning members, clubbing both spouses’ 10 per cent on a joint loan of ~44 lakh. income makes a lot of sense. “The cost of buying Currently, the rate is 9.5 per cent. It also Follow these simple rules: It is important to make real estate is high, and home ownership may often increased our eligibility.” a will so as to avoid legal obligations if the owner elude some families on a single income. However, ADITYA NITSURE dies during the loan repayment tenure. Also, while with your spouse as a co-borrower, it may be pos- Software engineer this may be difficult to imagine when the marriage sible for you to leverage your combined incomes is going well, one should consider signing a legal and individual credit scores to borrow more at a be around ~70,000. Since the bank would usually sources of income, from time to time. This will agreement about the share of the property, repay- lower interest rate,” says Adhil Shetty, CEO, allow 50 per cent of the take-home salary to be enable them to try closing the loan account at the Tax benefit: Getting higher tax concession while ment of the loan, and other key factors. This will Bankbazaar.com. However, a home loan is a long used as EMI, you need to earn around ~1.4 lakh a earliest, and also help reduce the interest burden. taking joint loans adds to a bigger advantage for help the spouses in case they get divorced during commitment of repayment running over the years month (post-tax and other benefits). If your wife is couples taking loan altogether. A couple can avail the loan tenure. and needs financial disciple. There could be events an earning member, her salary will come in handy. Lower registration cost for women: Several combined tax benefit of ~7 lakh. That is, ~3 lakh It is also advisable while taking a loan that one midway that can impact the borrowers. The advan- You can buy a better and more spacious house by banks offer lower interest rates to women appli- (~1.5 lakh deduction each) under Section 80C and should also buy an adequate loan protection cover. tages include: taking a higher loan, irrespective of the fact that cants. Further, across some states, women get the ~4 lakh (~2 lakh each) for interest payments under A term loan to cover large liabilities is a must for you may have a lower income individually. facility to avail of the lower stamp duty fee for the Section 24(b). those who have dependants and are likely to leave Larger loan amount: This is the most obvious purpose of registration of the house/flat. The stamp While the thought of owning your own home is behind liabilities in case of untimely demise. The benefit when you jointly file a loan application, Faster loan repayment: When you avail of a joint duty fee differs from state to state. “By having your exciting, there are things you should be careful insurance cover will ensure that the burden of the eligibility becomes bigger. Hence, the lender loan, repayment can be faster. Given that there is wife as the primary applicant in a joint home loan, about while taking the joint loan or during the home loan does not fall on one spouse in case of can sanction a bigger loan amount clubbing the no restriction on prepayment of the overall loan you can substantially save on the overall cost. You tenure of the loan. death. “Buying a home loan insurance to cover incomes of both husband and wife. For instance, amount, a person can choose the best possible can enjoy a concessional interest rate for a home repayment obligations is strongly recommended. if you want to purchase a property of ~1 crore, and option to pay. Spouses can make pre-payments loan as well as the stamp duty fee for the property Impact of default on credit score: Both husband Furthermore, execute a legal agreement specifying need a loan of ~80 lakh for 20 years. The equated from their bonuses, the variable payments that registration,” says Raj Khosla, founder and man- and wife share equal liabilities and obligations as liability distribution in case of disputes,” Khosla monthly instalment at 8.5 per cent interest would they receive from their employers, as well as other aging director of MyMoneyMantra.com co-borrowers of a joint home loan. Hence, in case advises.

Be judicious in asset OVERDRAFT ON LAP REDUCES BORROWING COST allocation Interest has to be LOAN AGAINST SECURITIES - RATES & CHARGES paid only on the Lender Interest rate (%) Processing fee amount used take it as an overdraft Both debt and equity look unattractive at the account 10.5-12.75 0.15% moment, but one cannot stop investing nThe overdraft option lets 14.85 ~100-250 you use the funds when UCO Bank 11.65 ~250 credit squeeze continues. needed, so you pay lower 12.5-13 Up to 0.25% So we have lower policy rates, charges coupled to a trend of defaults and a Oriental Bank of Commerce 10.35 Minimum ~50 n corporate slowdown as the financial Banks offer fixed as well as IIFL 12—18 0.25%-1% sector turns cautious. Where does floating interest-rate that leave a debt investor? If you go options. Interest rates are Tata Capital 10.5 onwards Up to 1% by policy rate cuts, at some stage this cheaper than on personal Bajaj Finserv 9.5-12 0.1%-1% should result in transmission to com- loans mercial rates. In that case, medium- Indian Bank 10.95 0.308% BINDISHA SARANG not been put up as security MARKET INSIGHT term and long-term debt funds nWith a LAP, you can get a 11.55 0.250% should do well. n for any other purpose You can take a Loan Against loan of 40-75 per cent of the 9.25-13 Up to 2% DEVANGSHU DATTA But the trend of defaults and the Property (LAP) on a residential nYou can take the full loan property's market value, with lack of transmission are both red or commercial property amount as a lump sum and a maximum tenure of Citi Bank 10.75-13.25 Up to 1% The situation in India’s debt markets flags that suggest debt funds are owned by you provided it has 15 years *Processing fee is percentage of loan amount, except where it is an absolute number. is puzzling. The Reserve Bank of actively dangerous assets. It’s hard repay it as an EMI, or you can Source: Paisabazaar.com India (RBI) has cut rates multiple to judge if a given fund is exposed to times in succession. That should in default by a specific entity and every general, be good for debt investors long-term and medium-term debt (and for equity). However, the RBI fund is surely exposed to contagion. admits that the policy rate cuts have Short-term funds are not exposed not been transmitted. Bond yields because they deal in money market Needed: A sinking fund for expenses have barely fallen while banks have instruments. However, it’s equally marginally reduced commercial true that short-term funds don’t pos- rates. sess too much upside even if rates It ensures that you SIPs. Those in low tax brackets At the same time, there has been do continue falling. may use recurring deposits to set an increasing trend of defaults. One of the reasons why rate cuts don’t mess up the up a sinking fund, while others According to a Bloomberg study, have not translated into lower bond may start an SIP in a debt mutual there have been a record ~7,600 crore yields and lower commercial rates is monthly budget fund." The instruments used worth of defaults in 2019, and the simply the government’s rising need can also vary depending on your defaulting entities have roughly 17x for borrowed funds. There are esti- BINDISHA SARANG time horizon. Says Mathpal: "For that amount outstanding in loans. mates that the Fiscal Deficit may be expenses between one and three What’s more, the credit rating agen- overshot considerably. Most readers would be familiar years, invest in debt-oriented cies have failed to flag these risks, The corporate tax cut is projected with the concept of an emergency hybrid funds. For a time horizon with many defaulters having excel- to lead to a drop of ~1.4 trillion in fund, but few would perhaps of more than three years, equity- lent ratings. This means we have few direct tax collections, while Goods know about a sinking fund, much oriented hybrid funds like dyna - benchmarks beyond market gossip and Services Tax is expected to less have one. But keeping aside a mic asset allocation or balanced to judge if a given corpo- undershoot Budget esti- part of your monthly income to advantage funds work well." rate is about to default. Rate cuts have mates by at least the set up this fund will put you in Sentiment has been not translated same amount, probably much better control of your Use best estimates: For things affected across the finan- more. Government bor- finances. like a vacation or home renova- cial sector. The recent into lower rowings will crowd out tion, it's easy to estimate the cost. mess in PMC Bank bond yields & other demand, especially Fund your predictable expens- Divide the amount by the number shocked depositors, for commercial where corporate bonds es: Sinking fund is the money we of months left until you plan to instance. The RBI’s data rates are due to look risky. Also, the sheer keep aside for predictable expens- use the fund, and set up an SIP for March 2019 versus the govt’s quantum of government es that are not incurred monthly ACHIEVING TARGETS BECOMES EASY accordingly. Expenses on gadget March 2018 shows that borrowing (Centre but may come at a date in the repair or replacement, yearly den- rising need for NPAs in public sector States) is large enough to future. In the case of some expens- Goal Amount (~) Years SIP Expected rate Total Surplus tal work, or car maintenance can, borrowed banks have reduced ensure yields don’t fall. es, we expect them but don’t know amount (~) of return (%) collected (~) (~) however, vary. Says Telang: "Even mainly due to write offs funds On balance, debt is when they will arise. Says if you do not know the exact cost, on bad loans. Gross NPAs looking really risky Mumbai-based certified financial Home Renovation 7,50,000 (10% of 5 12,500 12 10,13,793 2,63,793 it's still a good idea to set up a sink- at around ~7 trillion was despite the rate cuts. planner Pankaj Mathpal: "A sink- home value) ing fund for a major expense. That still above 12.5 per cent to advances Equity presents a different type of ing fund is simply a strategic way Gadgets Rolling amount 2 5,000 7 1,28,860 8,860 way, at least a part of the expense despite ~1.7 trillion being written off. paradox. There are good, even great to save money by setting a little will get covered." Provisioning had actually increased, companies, operating across the bit aside each month. For Specific Gadget — Laptop 60,000 2 2,500 7 64,430 4,430 The size of the sinking fund to ~4.25 trillion from ~3.99 trillion in Indian landscape. instance, in a humid place like Specific Gadget — 7500 (50% of 1 625 7 7,781 281 you need will be specific to each March 2018. Write-offs were twice However, the elite list is over-val- Mumbai, the air conditioner Repairs mobile gadget value) goal. But certain thumb rules help. the amount of loan recoveries. Given ued, perhaps massively over-valued, needs to be replaced every fourth When it comes to renovation, the a slowdown that is now in its sixth given so many quarters of sub-par or fifth year. If you are lucky, it rule of thumb is not to spend more quarter, it’s not surprising that cor- growth. Smaller firms are struggling may last longer. You don't know budget hard in one month." In a medical emergency. According it hardly gives any return." than 10 per cent of the value of porates are struggling to service and more at risk, although they have the exact day, but it has to be short, sinking funds spread out to Mumbai-based certified finan- Mathpal, too, is of the view that your property. So, if your house is loans. also seen corrections. There isn’t a replaced someday in the future. your significant expenses over a cial planner Kiran Telang, "In an assets in a sinking fund should not worth ~75 lakh, do not spend more There is a huge drop in commer- single sector which looks like being Maybe you want to renovate your long period. For instance, if you emergency fund, you usually keep be very liquid. “I am not saying than ~7.5 lakh on a renovation. cial credit. New lending as a propor- an outperformer. Even the export- house every three or five years to know you have a ULIP premium a minimum of six months' they should be in an illiquid That would be ~12,500 a month. tion of gross domestic product (GDP) oriented IT service firms have issued keep up with your family’s chang- of ~24,000 coming every expenses set aside. This includes instrument like Public Provident At the end of five years, you will may dip to 6.6 per cent this fiscal year gloomy advisories pointing at ing needs." Planning for Diwali November, instead of taking a monthly living expenses, lifestyle Fund (PPF), but they should not get the required ~7.5 lakh, along from 9.5 per cent in 2018-19 owing to reduced demand as the world econ- expenses or the yearly visit to your huge chunk out of your October expenses, as well as EMIs for your be as liquid as an emergency fund with a small surplus. a large squeeze in credit from non- omy slows down. hometown can also be done using salary or using your credit card, loans. A sinking fund can be used either. Here, you need some liq- If the cost of repairing a gad- banking financial companies As asset classes, debt and equity a sinking fund. save a little in a sinking fund to pay for planned expenses such uidity, but you must also earn get is more than half its price, it (NBFCs). Again, drawing upon the both look unattractive at the every month so that you can pay as a holiday or annual expenses decent returns." is better to go for a new one. You RBI data, credit (bank and non-bank) moment. But an investor cannot Even out cash outflows: By set- the lump sum in November with- like school fees." To set up a sinking fund, must ideally create a sinking fund to commercial sector dropped from avoid exposure to both and it would ting aside a little bit each month, out too much stress. some planners suggest just to buy a new device, but when the ~7.36 trillion in April-September 2018 be sensible to continue investing. you can spend big without hurt- May invest in less liquid assets: increasing the amount being time arises, see if only a repair to ~909 billion in Apr-September Going into the new Samvat, you’ll ing your cash flows. Says Mrin Not the same as emergency Do not use your savings account invested via systematic invest- will do. Says Telang: "For gadgets, 2019. That’s 87 per cent reduction. need to be very judicious in asset Agarwal, financial educator and fund: Don't confuse a sinking to set up a sinking fund. Says ment plans (SIPs) to set up an you can put aside ~5,000-10,000 It’s inconceivable that growth rates allocation to navigate the apparent director, Finsafe India: "The cost fund with an emergency fund. Agarwal: "Since the money is eas- emergency fund. Says Telang: as SIP, since every year some- can be maintained if this trend of a dangers. Happy investing! gets spread out over the entire The latter is kept aside for unex- ily accessible, you could divert the "To keep the two types of funds thing or the other breaks, needs year rather than hitting your pected events such as a job loss or funds to meet other needs. Also, separate, you may have separate repairs or renovation." MUMBAI | MONDAY, 28 OCTOBER 2019 BUSINESS LAW 11 . <

BRIEF CASEN l M J ANTONY A weekly selection of key court orders Decrypting the intermediary norms ONGC contract workers’ claim to be reviewed The Supreme Court (SC) has revived a question looming over a 1994 Arguments on data decryption have fuelled a debate on primacy of national security over individual privacy notification on contract labour in Oil and Natural Gas Corporation (ONGC) units, and impleaded trade unions to erate a key. Only the intended recipient of the be a mass surveillance threat. decide the issue anew. The central message has the unique public key to unlock it, As the Centre has only prescribed a limit of government’s notification had and the company says it does not have access to 72 hours to take down a post that it deems as prohibited 13 categories of work under Section 10(1) of the this key. The ‘extent possible’ provision in the “threatening public health or safety” (which Contract Labour (Regulation and Abolition) Act. Rules, Facebook argues, could only mean the many have argued is a vague term), it could prove It was challenged in the Uttarakhand High Court (HC) by ability of the platform to decrypt the same, which, to be quite onerous for social media platforms. the public sector corporation. The HC allowed ONGC’s in this case, it lacks. In the Shreya Singhal petition and quashed the notification. Appealing against The argument has, there- KEY PROVISIONS UNDER case, the Apex Court had laid the order, the ONGC Labour Union defended the fore, transformed into a mat- down that it was against pre- notification in the SC. The union alleged it was not heard ter of national security versus DRAFT GUIDELINES censorship and any kind of by the HC, which went by one-sided arguments of ONGC. individual privacy. “National nIntermediaries with over blanket ban. “Actual knowl- The apex court stated that the HC had drawn wrong security is paramount, but 5 million users must be locally edge of the content being ille- inferences, given that it had not studied the background. after the Puttaswamy case, incorporated, with a physical gal needs to be established,” “The prohibition notification undoubtedly impacts the ‘Right to Privacy’ has been address in India says Simranjeet Singh, part- livelihood of contract labourers, but unfortunately declared a fundamental ner at Athena Legal. neither the ONGC Labour Union nor other recognised right. This case tests the nThey must provide response to Companies argue that the unions in the ONGC were represented or heard in the high applicability of this right vis- a request from a government guidelines pose problems for court,” the apex court underlined. Therefore, the SC à-vis the former,” says Dhruv agency within 72 hours smaller businesses as well as asked the HC to take up the case again, and implead ONGC Suri, partner at PSA Legal. nThey must use currently start-ups. While the IT Act is labour unions in Uttarakhand, Gujarat, Assam, Many groups have argued silent, the draft Rules say Maharashtra and Andhra Pradesh. The HC was asked to that these guidelines could available technological tools intermediaries with over conclude the case within four months of completing have a chilling impact on the to identify and remove 5 million users must be local- the formalities. freedom of speech under unlawful content ly incorporated. This, along >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Article 19. “We cannot jeop- nThey must remove any content with the fact that the Rules BPCL’s appeal in arbitration dismissed ardise the right to privacy of that harms public health seem to have an extra-terri- citizens of this country, or safety torial application, have been The Supreme Court last week dismissed either. There should not be a argued to be violations of the the appeal of public sector oil company GEETIKA SRIVASTAVA situation where the govern- nThey must be able to decrypt parent Act. “The government BPCL against the judgment of the ment has easy access to each and trace origin of the content must keep in mind that Bombay High Court, which had held he Supreme Court and every chat just because Rules, being secondary legis- that the arbitrator had jurisdiction to last week allowed the petition filed by the Rules are vague,” says lation, cannot override the consider the counter-claim made by TFacebook Inc to transfer all cases concern- data decryption, which would allow the Centre Kazim Rizvi, founding director of The Dialogue, main legislation, which is the IT Act,” says Pavan Go Airlines (India), relating to CENVAT ing regulation of social media, pending in three to trace the origin of content that could be fake a policy think-tank. Duggal, advocate, Supreme Court. credit. The HC had set aside the order passed by the different high courts, to itself. This marks the news, hate speech, or linked to terror. The Centre says the liability to decrypt always Such Rules may also act as a barrier to the arbitrator. The dispute arose over the Aviation Fuel Supply beginning of a decisive phase for the legal inter- The Centre’s stance is in alignment with lay with intermediaries under provisions of the markets. Further, stringent decryption mecha- Agreement between the two parties, when BPCL raised a pretation of intermediary guidelines, as well as Section 69 of the Information Technology Act, IT Act. However, firms cannot create a mecha- nisms are extremely hard to set up for start-ups. claim for interest on delayed payments of the fuel supplied. the resolution of contentious issues surrounding 2000 (IT Act), based on which an intermediary nism of encryption and, subsequently, say that “These Rules may affect venture funding in The airlines did not accept any amount payable towards data decryption. Experts say the next 2-3 months is supposed to provide ‘all facilities and technical they cannot decrypt. “The intermediaries, how- India, and could also pose risks to start-ups trying interest. The matter was referred for arbitration by a former could potentially have far-reaching implications assistance’ to the government to decrypt data. ever, say they don’t have a problem with decryp- to establish their businesses with limited Supreme Court judge. She rejected the counter-claim on for tech businesses in the country. The same was supplemented by the IT Rules, tion, but the government must do it,” adds Suri. resources,” says Manuj Garg, co-founder of CENVAT. The HC and the apex court held that rejection of the The bone of contention has been interpreta- 2009 under Section 2(g), which states that these Policy experts have argued that end-to-end myUpchar.com. counter-claim at the threshold, on the ground that the tion of the IT [Intermediaries Guidelines decryption facilities must be provided by such encryption is not a technology restricted to inter- The case, therefore, boils down to proportion- arbitrator has no jurisdiction, would not be proper. (Amendment) Rules] 2018, which lays out certain platforms to the ‘extent possible’. mediaries, and forcing them to decrypt would ality, as laid down in the Puttaswamy case. The The arbitration will proceed and determine this among conditions for social media intermediaries oper- Facebook Inc has argued that messages on its lead to criminals creating a new encrypted serv- Centre says it will come up with the final guide- other issues. ating in India. These have been fiercely contested mobile application WhatsApp are secured by ice. As the government has widened the scope lines in another couple of months. Whether the

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> by the social media giants, on multiple grounds. end-to-end encryption. The technology works of those who could request access to “any gov- guidelines turn out proportional to the threat, is Rushing to high courts discouraged One of the most contentious issues is that of like this: Once users sends a message, they gen- ernment agency”, they say this could potentially what remains to be seen. In cases where there is a remedy for a litigant under the Code of Civil Procedure and the forum is a civil court, they should not rush to the high court. The latter, on its part, should not Changing the face of the competition law entertain such petitions — not merely as a measure of self-imposed RUCHIKA CHITRAVANSHI offences under the Companies Act. The other issue that is high on the restriction but as a matter of discipline and prudence. The The objective is to considerably to-do list of the Commission is to rise apex court observed this in its judgment on the Amendments to the Competition de-clog the National Company Law up to challenges faced by policymak- Virudhunagar Hindu Dharma Sabai vs Tuticorin Educational Act, which were long overdue, are Tribunal from frivolous litigations. ers, with the rapid growth and influ- Society case. In this peculiar case, election to the executive finally on the horizon. After close This will also help release regulatory ence of the digital economy. The committee of a society led to innumerable petitions and to a decade, the Centre is taking capacity, which could be deployed to Competition Act, for the first time, appeals in a number of courts, including the Madras HC. steps to tweak the law in tune with improve corporate governance. would add a deal value test in its In order to cut short the litigation, the SC appointed a the new-age digital economy, while In the same spirit, say experts, quiver. Deals, such as Facebook’s commissioner to conduct the election, according to also easing provisions to reduce the the CCI is working towards more multi-billion-dollar acquisition of the court’s guidelines. burden of litigation. Together, they optimal use of its regulatory capaci- WhatsApp, which fell outside the

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> should serve to create a more busi- ty. It also aims to deploy its inves- purview of CCI, will now require gov- ness-friendly regime. tigative resources better and serve ernment nod following amendments IPAB requires emergency treatment: Delhi HC NITI Aayog Vice-Chairman Rajiv the intention of the law — to pre- to the Competition Act. The Delhi HC last week reiterated its Kumar recently highlighted the need serve competition. “Bringing deal value is good, but concern over the non-functioning of for the Competition Commission of While industry has cautiously thresholds should not be diluted,” the Intellectual Property Rights India (CCI) to develop oversight capa- lauded many of the government’s points out Kumar. Some experts, like Appellate Board (IPAB), because of the bilities on data-related businesses, so CCI’S PERFORMANCE: ideas towards revamping the com- Kumar, are not happy with the dilu- government’s neglect. “The manner in as to prevent the amassing of power A MIXED VIEW petition law, there are concerns over tion some provisions of the compe- which the IPAB has been functioning in a single conglomerate. some of the changes that are being tition law. during the last 15 years shows that at Though alteration to the threshold 2016-17 2017-18 proposed. One such move is the Kumar says niche companies every stage, there has been delay in appointments made to of “deal size” — a parameter for decid- merger of the offices of the Director could create monopolies and thresh- the IPAB — both of judicial members and technical ing whether a case comes under the Alleged anti-competitive conduct noticed 161 72 General and the CCI. olds have to be dynamic in certain members,” the HC lamented. It added: “Further, adequate ambit of the competition law — is one Prima facie order passed 167 74 Experts say the move is worri- sectors. At present, the Commission infrastructure and autonomy is also not granted to the IPAB step towards keeping the law in pace some. “The two offices have to be at looks into a deal when an acquired in order to make its functioning efficient and smooth.” These with the new-age economy, the CCI Investigations completed by DG 23 36 arm’s length and the DG office can- company has a turnover of at least remarks came in an order in the Novartis AG vs Union of India is now in the process of identifying Orders passed in anti-competitive conduct 78 72 not be guided by the CCI. Sanctity ~1,000 crore and assets worth ~350 case. The pharma company moved HC, alleging that its highly dynamic and evolving sectors, Amount of penalty levied (in ~ crore) 288.28 436.65 of the investigation has to be main- crore or more. patent case was not moving because the working of the such as telecom, to study anti-com- tained,” says Amitabh Kumar, part- However, with data becoming a Source: CCI board had come to a standstill — given there was no petitive behaviour and how the mar- ner at J Sagar Associates. valuable commodity, the Commi- chairman and only one technical member was available. kets might get distorted. ment and settlement clause — high need to fill these gaps,” says Anand The amendment would effective- ssion is also amending its laws to There is no judicial member. Responding to the complaint, “We need to be aware of issues on the wish list of corporate India — Pathak, managing partner at P&A ly mean the appointment for the DG cover this aspect of the new-age the court stated: “Under these circumstances, some faced by certain sectors. As and when is an indicator of things to come. The Law Offices. office will fall in the domain of CCI. economy. It will look into the deal emergency steps need to be taken by the government to we come across a case, we could take government felt it was time to give a Over the past few months, the The antitrust watchdog, however, size of any acquisition beyond a cer- ensure that the IPAB functions in an efficient and smooth a call,” says Ashok Kumar Gupta, way out to erring companies that were government has been moving wants to create single-point tain threshold. manner, for the purpose it has been constituted.” chairman of CCI. From telecom to e- willing to make market corrections. towards a corporate governance and accountability for investigations and How the competition law deals

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> commerce, the CCI is in the process “Some concepts they had missed oversight regime that allows for faster implement strict timelines, while with data-based businesses is some- of creating a series of market studies. out on are now being included, after resolution of violations by compa- staying away from the process of thing the Commission is still grap- Signing order without hearing is unfair: HC The plan to introduce a commit- studying global trends. There was a nies, through decriminalisation of investigation. pling with, according to experts. The Bombay HC has set aside an order of the National Anti-Profiteering Authority, constituted under the Goods and Services Tax Act, as one member of the panel did not attend the hearings but only signed the order later. The HC ‘Govt, businesses want greater tax certainty’ stated that it was in violation of the principle of natural justice. The case arose out of a The Organization for Economic Co-operation and Development (OECD) has been dealing with different measures litigation. Could you give us a sense the euro 750 million turnover complaint by a consumer, who alleged that McDonald’s at the forefront of international negotiations in adopting a “Unified Approach” across the world. They want stability of how you plan to address that threshold. This threshold is under had not passed on the benefit of a lower GST to consumers. to tax large and highly profitable multinational enterprises, including digital in the international tax system issue? negotiation among countries). More The matter was heard by the chairman and two members, companies. The OECD is seeking public comments on its proposals to arrive at a increased. In our public Circumscribing the application of importantly, we are trying to who passed an order. The fourth member merely signed global framework to tax firms based on where they have significant consumer- consultations, we received tax the rules to large multinationals incorporate as part of the package the order without hearing the arguments. The firm facing activities and generate their profits. GRACE PEREZ-NAVARRO, deputy proposals from big businesses — limits the number of taxpayers binding dispute-resolution challenged it before the HC. It stated in the judgment of director of the OECD’s Centre for Tax Policy and Administration, tells Sudipto Dey this is a first. They all want certainty caught in the new rules. (The mechanisms to ensure that there is Hardcastle Restaurants Ltd vs Union of India that as the how the proposed tax regime would look like. Edited excerpts: (in tax interpretations) with proposal is to apply the new rules to no lengthy, costly litigation. three members had heard the firm and the fourth member standardised rules, and spend less companies that are over and above only joined in for signing the order, “it has resulted in How would the new global tax It is also a challenge to make time on compliance. How hopeful are you of a consensus violation of the principles of natural justice and fairness, regime look like if the proposals countries give up some of their fair on all issues, and by when? and is liable to be set aside”. The court rejected the are accepted by all countries? tax rights. But we find countries are So, these proposals will apply to First, we are trying to get a high-level argument of the authorities that signing of the order by the There are fundamental changes that willing to do this if they get in even brick-and-mortar, non-digital political commitment to the way fourth member was “superfluous”, when the other three are being proposed. For highly exchange greater tax certainty, companies? forward. We hope by January next had signed it. digitised and consumer-facing better dispute prevention, and The proposal we have put forward in year we get the political agreement

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> businesses, we are proposing to look binding dispute resolution the “Unified Approach” applies not on the outline of the architecture at the enterprise as a whole for mechanisms. The tax certainty only to digital companies but also even if we have not sorted out the Travel agency restrained in trademark row taxation, as distinct from traditional component is a very important part large consumer-facing businesses. technical details. By June we hope to In a trademark case, the Delhi HC has arm’s length transfer- of the package. We recognise that while the big focus have a political commitment to the passed a permanent injunction against pricing principles, which are The fact is if we do not is on digital companies, there are whole package. Our deadline is a travel agency. In the order pertaining based on a separate-entity reach an agreement, we some unresolved issues with large November 2020 — at the time of to the Make My Trip Ltd vs Make My approach. would have a proliferation of non-digital companies. After the G20 meet — where we present Travel (India) Ltd case, the former Another big change is unilateral measures, which discussion with a lot of countries we the final solution. The questions complained that the opposite party that we would apply a formula- will stifle investment and growth looked at what it is about digital around implementation will come was using similar names such as ‘Make based approach to tax profits, as and lead to increased compliance companies that is enabling them to after that. All the core components My Travel’, the MMT logo, and domain name, among other distinct from an arm’s length costs for companies. Businesses engage heavily in an economy and the key elements (of the new tax things. The judgement observed that the adoption of the principle using facts and may then spend more on without having a physical presence. regime), including the carve-outs, mark by Make My Travel was “without any cogent circumstances. That would simplify compliance than innovation. A lot of that has to do with the binding dispute resolution explanation, and prima facie appeared to be dishonest”. In the process of tax calculation, which engagement with the consumer. So, mechanism, should be ready by case the latter was permitted to continue using the is very complicated now. These two What has been the feedback of our proposals would capture some June next year. infringing marks, grave and serious prejudice was likely to are very important differences (from companies to these proposals? traditional businesses — mostly be caused to Make My Trip. The court did not accept the the current regime). During the BEPS (Base Erosion and business-to-consumer but also So you expect all the countries to rival’s submission that Make My Trip had acquiesced in the Profit Shifting) project, we had a lot some business-to-business activity. sign a joint agreement (once they use of the infringing marks and had allowed it to continue Many countries have to give up of companies opposing that project. The new tax regime is not only arrive at a consensus)? its use of the marks. The court emphasised that in order to some part of their tax jurisdiction Paradoxically, we find a lot of about consumption, but also of We feel there should be a separate claim defence of acquiescence, there should be tacit or rights (to agree to the proposals). Do support from companies, including sustained and significant economic agreement that will enable all express assent by the trademark holder to another, and in a you see that as a challenge? big digital companies and non- activity. countries to jump into the pool at way encouraging the opposite party to continue with the Yes, it is a challenge to get 134 digital ones. And the reason is that the same time. But this is still under business. That was not the case here. countries and jurisdictions to agree. they want tax certainty, and not The current tax regime is marred by discussion. 12 MARKETS IN SAMVAT 2076 MUMBAI | MONDAY, 28 OCTOBER 2019 > Seeking quality in tough times Investors seem to have little to complain about Samvat cent over the last couple of years, including 10 per cent in those companies that exhibit earnings visibility, stability 2075, as it ended with double-digit returns compared to a the previous Samvat. In comparison, the Sensex and Nifty in cash flows and return ratios. The kicker for the market mid-single digit performance in the previous Hindu have generated positive returns in the range of 13-18 per hereon, as a whole, could come through if the ongoing calendar year. However, the better show by leading cent. The preference for large-caps has come in the reforms, tax cuts, further fall in interest rates and a likely benchmarks Sensex and Nifty masks the pain in sectoral aftermath of the IL&FS crisis, a slowing economy, and pick-up in investment/consumption cycle boost GDP indices, as well as in the small- and mid-cap companies, demand woes. While value has emerged in some pockets, growth. This could be a trigger for earnings growth as well which registered their second straight year of negative investors continue to seek refuge in safety and quality. The as a market wide re-rating. returns. The Nifty SmallCap, for example, has shed 33 per list of stocks mentioned here, therefore, is tilted towards Ram Prasad Sahu, Hamsini Karthik, Ujjval Jauhari and Shreepad S Aute TOP LARGE CAP PICKS AXIS BANK BRITANNIA INDUSTRIES RELIANCE INDUSTRIES HINDUSTAN UNILEVER Price (~) 708 Price (~) 3,267 Price (~) 1,431 Target price (~) 865 Target price (~) 4,030 Price (~) 2,143 22.2% Target price (~) 1,610 12.5% Price to book (x) 2.7 PE (x) 67.7 23.4% Target price (~) 2,422 PE (x) 21.4 PE (x) 76.6 13.0%

| Reliance Industries’ (RIL’s) prospects are being driven by higher | Having demonstrated its commitment to | Though the biscuit segment is witnessing | Leader in the FMCG space with presence across home care, growth in consumer and retail, and digital services. Their shares remaining on the path of stabilising asset some slowdown due to shift in price personal care, food and refreshment categories are expected to rise to 50 per cent in the coming years (from 33 per quality, it won back some lost investor points at the lower end of the pyramid, | A 5-per-cent volume growth in Q2 amid weak demand underlines cent in Q2FY20), led by market share gains faith after September quarter (Q2) results analysts believe it is a temporary phase company’s brand power as well as its market position | In the medium term, growth for digital services will be aided by | Core interest income growing 16 per cent | Higher share of premium products | Biggest beneficiary of the expected demand recovery in rural RIL’s focus on kirana digitalisation. Likely hike in telecom tariffs year-on-year in Q2 and strong loan (cookies at 35-40 per cent of sales) and India, which accounts for close to 40 per cent of its revenues should boost revenues and margins of the wireless business growth, particularly retail loans (now relatively lower dependence on the | Gaining traction in home and personal care segments, with focus | Refining business to gain from implementation of International over half of loan book), are key positives wholesale channel should help Britannia on premiumisation, new launches such as ‘Love & Care’ fabric Maritime Organization regulations on sulphur content | As for asset quality, bank’s ability to curb recover faster than the sector wash, and market development | Petrochemicals segment to benefit from start of the petcoke the share of low-rated corporate loan | Britannia expected to gain market share | Implementation of Goods and Services Tax and strong distribution gasification project (currently under stabilisation phase) and accounts to less than 2 per cent of the friven by new launches, innovations, network will help improve market share across segments should help from the second half of FY20 total book a positive signal wider distribution, and better pricing | GlaxoSmithKline Consumer Healthcare’s acquisition to increase | With major capex behind, RIL now looking to become zero | Recently concluded capital raising | Improvement in overall realisations presence in food category, and improve margins and earnings net-debt company by March 2021 positions the lender to grow attractively should improve margin profile | Healthy return ratios of over 80 per cent and dividend payout | Value unlocking in retail and digital businesses the other triggers once demand revives | Steps to reduce inter-corporate deposit of around 79 per cent in FY19 the other positives | Valuations attractive at 2x its FY21 book exposure should also lift sentiment

HDFC LIFE INSURANCE COMPANY | The recently concluded ICICI BANK September quarter was a good | With the new management Price (~) 610 one for the insurer. With a having demonstrated success favourable product mix and eye Price (~) 469 in terms of bringing stability Target price (~) 733 on profitability, HDFC Life stands Target price (~) 502 to operations and cleaning up PE (x) 96.2 20.2% out in the pack Price to book (x) 2.6 7.0% the bank’s books, a lot goes in | With focus on retail products favour of ICICI Bank catering to individuals, margins | ICICI Bank most recommended earned on value of new stock in the sector at present, business increased by 130 basis with attractive valuations of points year-on-year to 26.3 per 1.7 times its FY21 book cent in the quarter, the best in | Being the first mover among the industry troubled banks four years ago | Despite the slowdown in unit- to chase retail loans, share of linked insurance plan (ULIP) these loans have swiftly risen products and a higher focus on from 45 per cent in FY15, to non-par products, analysts 60 per cent today believe the company is well | With asset quality issues well placed to grow its premiums at behind, it should gain the over 40 per cent in FY20 most among private peers, | The stock is trading at 4 times its when courts pronounce their FY21 embedded value, which is verdict on large cases lined up a reasonable premium for this for resolution. This should quality stock further boost the financials

INDIAN HOTELS LARSEN & TOUBRO TITAN COMPANY ULTRATECH CEMENT

Price (~) 151 Price (~) 1,425 Price (~) 1,334 Price (~) 4,194 Target price (~) 215 42.4% Target price (~) 1,875 31.6% Target price (~) NA NA Target price (~) 5,000 19.2% PE (x) 62.6 PE (x) 22.4 PE (x) 84.3 PE (x) 47.3

| Has a diverse | L&T’s order flow | Though subdued | UltraTech’s timely portfolio across key remains strong jewellery sales in Q2 capacity expansions locations, with amid a challenging cloud near-term should lead to strong expansions largely environment, led by prospects, long-term gains once cement through the asset- its overseas business potential stays intact demand picks up light management | Order backlog of over | Strong brand, store | Limited limestone contract route ~3 trillion and a additions, market deposits in India | With 65 per cent healthy pipeline share gains with GST likely to slow down occupancy and during H2FY20 to implementation, expansions by peers expectations of help sustain top line and new launches in years to come improvement in momentum amid are long-term | Cement demand, demand amid near-term macro growth levers which remained moderate supply, uncertainties | Expected strong sluggish in first half room rentals likely | Services businesses, same-store-sales of FY20 on account of to pick up too, providing strong growth will propel general elections and | Strategic partnership momentum to operating margin monsoon, should with GIC to expand L&T’s consolidated and earnings pick up with the luxury portfolio while revenue and profit | Month-on-month government’s focus keeping debt levels | Analysts say the improvement in on housing for all, in control management’s retail sales in August higher infrastructure | Repositioning of discipline to balance and September to spending, and Ginger Hotels to help growth and debt will continue, led by higher rural spends improve occupancies help L&T sustain its festive and wedding | Falling energy and and revenue competitive edge seasons logistics costs bode | Improvement in and mitigate risks, | Decision to pass on well for margins global operations, as its internation tax cut benefits to | Company’s plan to cost control efforts presence grows consumers should monetise non-core should help boost | Remains top pick of further drive growth overseas assets to margins most analysts in near term help pare debt

Price is current market price as on October 25, 2019; Current price-to-earnings (P/E) and price-to-book (P/BV) is based on trailing-12 month financials ended June 2019 (or September 2019, where results have been declared) and the latest share price; figures inside arrows indicate potential upside for the next 12 months, based on target price of brokerages; For banks, NII is net interest income; Sources: Motilal Oswal Securities, HDFC Securities, , Centrum Broking, , Prabhudhas Lilladher, Anand Rathi, IIFL, Nirmal Bang, Broking, by BNP Paribas and JM Financial Data compiled by BS Research Bureau 14 MUMBAI | MONDAY, 28 OCTOBER 2019 >

READY FOR REBOOT Uddhav now Corporate greed the has remote control: Sena

PRESS TRUST OF INDIA fodder for terrorism Mumbai, 27 October The Shiv Sena on Sunday Nexus between corporates and the underworld now in the spotlight said it now had the “remote control of power” in Maharashtra, despite get- PAVAN LALL ting fewer seats in the 2019 Mumbai, 27 October Assembly polls as compared to 2014. he arrest of Humayun Merchant, In his column Rokhthok a close aide of late gangster in Sena mouthpiece TMuhammad Iqbal Memon, alias Saamana, Sanjay Raut said, Iqbal Mirchi, by the Enforcement “The Sena won less seats Directorate (ED), has once again turned Haryana Chief this time, 56 compared to 63 the spotlight on the unholy nexus Minister in 2014, but it has the between the underworld and the powers Manohar Lal remote control of power.” that be. Khattar and “The dream that the Shiv Days before Merchant’s arrest and the Deputy Chief Sena will drag itself behind confiscation of property involved in Minister the BJP is busted (after poll alleged money laundering, the ED had Dushyant results). A cartoon showing questioned former aviation minister Chautala after a tiger (Sena’s identity) hold- Praful Patel. Patel’s reality firm taking oath ing a lotus (BJP’s symbol) in Millennium Developers allegedly built during the its hand tells a lot about the CeeJay House, a building in Worli swearing-in current scenario. Not taking (Mumbai), with undeclared assets owned MONEY MENACE in Mumbai, the points of ceremony, in anyone for granted is the by Mirchi, who was one of the top associ- connection almost always Chandigarh on message,” Raut wrote in his ates of India’s public enemy No. 1 — | History shows links between involve the use of ‘black money’ Sunday. PHOTO: PTI column. Dawood Ibrahim. corporate powerhouses and and a few select industries History shows that links between cor- terror financing not restricted | In March, the UN Security Council porate powerhouses and terror financing to cinema or real estate alone are not new. Nor are they restricted to called upon member states to industries such as cinema or real estate | Aviation is another industry, stiffen the fight against PM lauds ‘maturity’ after Ayodhya verdict — sectors that were slow to be classified with Jet Airways having been terror financing as official business verticals and, hence, subject to scrutiny of the nature | India’s last update at the UN PRESS TRUST OF INDIA Pak denies use slow to get legitimate financing. of its true ownership and sources pegged the number of persons New Delhi, 27 October Aviation is another industry that has of funding of airspace to thrown up such allegedly dubious con- accused of terrorist financing Ahead of the expected nections. The now-grounded Jet Airways | Whether it is the Colombian and the number of cases under Supreme Court verdict on the Modi’s flight was once subjected to a multi- drug cartels, the Italian mafia, or investigation at 470 and 143, Ayodhya case, Prime Minister pronged scrutiny of the nature of its what was once the underworld respectively Narendra Modi on Sunday Pakistan on Sunday said it has true ownership and sources of funding. recalled how the government, denied India’s request to allow The speculation was that the Naresh political parties, and civil soci- Prime Minister Narendra Goyal-led airline was being funded by tels, the Italian mafia, or what was once done,” he adds. ety prevented attempts to cre- Modi’s VVIP flight to use its Dawood Ibrahim and his henchman, the underworld in Mumbai, the points of Recently, Finance Minister Nirmala ate fissures when the 2010 airspace for his upcoming visit Chhota Shakeel. connection almost always involve the use Sitharaman welcomed the integration of Allahabad High Court ruling to Saudi Arabia, citing the The accusations could not be proved of ‘black money’ and a few select indus- the International Monetary Fund’s lend- on the disputed land in alleged human rights and while some cases were dismissed, tries. Colonel Samrendra Mohan ing policies with specific provisions for Ayodhya was to be delivered. violations in Jammu and others are still in court and Goyal remains Kumar, co-founder of risk consultancy anti-money laundering and anti-terror He described it as an exam- Kashmir. under investigation by the Serious Fraud MitKat Advisory, says: “In India, these financing steps. Her remarks came dur- ple of how a united voice could In a statement, Foreign Investigation Office (SFIO) as well as businesses or industries have historically ing the IMF’s annual meeting. strengthen the country. Minister Shah Mahmood income tax authorities. been the film world, real estate and In March this year, the United In his monthly Mann ki Prime Minister Narendra Modi celebrates Diwali with jawans Qureshi said Pakistan has Political and economic commentator the aviation business. That is because in Nation’s Security Council had called upon Baat address, Modi asked peo- in Rajouri district on Sunday PHOTO: PTI decided not to allow Prime Swaminathan Gurumurthy, who is also a these industries the risk of failure is high member states to stiffen the fight against ple to jog their memory and Minister Modi to use the part-time director at the Reserve Bank of and liquid cash is required more often,” the financing of terrorists and their activ- recall the days ahead of the interest groups were playing machinations went on to gen- country’s airspace, state-run India, says: “There is no doubt that there Kumar says. ities and adopted a resolution on the issue Allahabad High Court judg- games to take advantage of erate tension. When the deci- Radio Pakistan has reported. is high level of political involvement Apurva Agarwal, managing partner at under Chapter VII of the United Nations ment of September 2010. that situation in their own sion was delivered, the govern- He said the decision had been wherever terror financing is present.” corporate law firm Universal Legal Charter. “I remember when the way,” the prime minister said. ment, political parties, social taken in context of the “black He goes on to say that there are several Advocates, says the Real Estate When India had last updated the fig- Allahabad High Court gave its He referred to the “kind of organisations, civil society, day” and in view of the alleged past examples of individuals and firms Regulation and Development Act (RERA) ures at the United Nations, the number verdict on Ram Janmabhoomi language” used to “generate representatives of all sects and human rights violations in with links to criminal factions, and adds has come down hard on illicit funding of of persons accused of terrorist financing in September 2010. You could tension in the atmosphere”. saints, on the other, issued bal- Jammu and Kashmir, it added. that companies have started crossing real estate because it contains stringent and the number of cases under investi- jog your memory a bit and He said some loudmouths anced statements. There were Qureshi added that the Indian lines that they never did earlier and that requirements across various stages of gation were 470 and 143 respectively as reflect about the atmosphere had the sole intention of hog- attempts to reduce the tension High Commissioner was being this culture needed to change. development. “However, it isn’t 100 per of 2013. The number of people convicted then. Various kinds of people ging the limelight at that time. in the socio-political environ- informed of this decision in Whether it is the Colombian drug car- cent successful and more needs to be stood at a mere five. took to the arena. Various On the one hand, the ment, he pointed out. writing. PTI US-India co-development fiasco forces new approach to DTTI

AJAI SHUKLA are some small, very New Delhi, 27 October innovative companies here in India that have [this] The US-India agreement on technology.” Thursday to co-develop Similarly, it was decided seven cutting-edge defence to co-develop a “Virtual systems marks the formal Augmented Mixed Reality” burial of six co-development platform to teach aircraft projects announced with maintenance, because fanfare in 2015, but never several Indian start-ups concluded. have already developed The agreement marks VAR technology. the reorientation of the US- A second lesson has been India Defence Technology the need for Pentagon-MoD and Trade Initiative (DTTI) control of DTTI to allow from a narrow, government- more space for industry-to- focused approach, to a new industry collaboration. The realisation that joint first step was taken on development projects be Monday, when seven piloted by defence industry American and 20 Indian on both sides, while the US Under Secretary of Defense Ellen Lord, in Delhi to co-chair defence firms attended the Pentagon and India’s the ninth DTTI meeting, acknowledged that in the past, there new “DTTI Industry Ministry of Defence (MoD) were frustrations with progress under DTTI PHOTO: BLOOMBERG Collaboration Forum”, oversee progress and deals chaired by mid-level with regulatory roadblocks understanding of what critical engine technology. defence bureaucrats from that arise. exportable technology The best that could be both sides. US Under Secretary of would be useful to the hoped for was the transfer of Admitting that this was Defense, Ellen Lord, who Indians. And, we did run manufacturing line “helping us better visited Delhi this week to into a challenge in terms of blueprints for building understand challenges and co-chair the ninth DTTI the US export control”. engines in India. That would opportunities”, Lord said meeting with her Indian In fact, there was little advantage US fighter this would be “formalised counterpart, Secretary for that India could ever vendors in on-going into an industry-to-industry Defence Production contribute to this “co- procurements of fighter framework” by the time the Subhash Chandra, development”, with US aircraft for the Indian Air two defence and foreign acknowledged: “In the past, entities already masters of Force and navy. ministers met in the “2+2 there have been frustrations aero engine technologies. At The MoD understood dialogue” in December in with progress under DTTI, the same time, Indian that this would provide a Washington. but… we are making scientists and controversial back A third lesson has been considerable progress.” technologists door into India’s that the military, rather than There are few takers for were at an early aircraft the DTTI, is often the better this, however, given the stage of the procurement platform for projects abandonment of projects learning curve, cycle. New Delhi involving operational taken up earlier (with the struggling to has also cooperation. The American exception of aircraft carrier develop the understood that and Indian navies are now cooperation), and their Kaveri jet engine. US engine-makers largely driving “aircraft replacement with seven new What the Defence R&D are guided by commercial carrier technology co-development projects on Organisation (DRDO) and not strategic cooperation” (ACTC), which Thursday. wanted was US solutions for considerations. Although involves a US-India The MoD and Pentagon unsolved technology India remains a strategic partnership in developing officials have drawn lessons challenges, such as high partner, the US defence the next indigenous aircraft from earlier DTTI failures. A temperature alloys and industry, which resides in carrier. Lord specifically key reason was that, in single crystal blades for the the private sector, would not lauded the “high level of entering co-development “hot end” of the Kaveri. hand over “hot end” engagement” between projects, New Delhi and Meanwhile, the US side technology to score a the parties. Washington had divergent expected that working with success in DTTI. Finally, there is a motivations, with neither the DRDO would create a The new approach to recognition of the need for side focused on co- relationship that would lead DTTI, and the choice of the DTTI to diligently developing usable products. to building US aero engines products and technologies monitor projects and time- An example is the co- in India. US engine makers now being co-developed, targets. The newly signed development of “jet engine like Pratt & Whitney, or recognises that the Indian Statement of Intent technology”, for which both General Electric, would partner must bring credible specifies “the need for sides constituted a joint never part cheaply with technological capability to detailed planning and working group (JWG) in intellectual property (IP) the table. In announcing the measurable progress on 2015. On Thursday, Lord that had cost billions to co-development of “air- specific short, middle, and admitted that this had been develop over decades. Nor launched, small, unmanned long-term DTTI projects suspended because “we would Washington grant airborne systems (UAS)”, that are identified in the could not come to an export control licences for Lord acknowledged: “There document”.