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THURSDAY, 1 AUGUST 2019
24 pages in 1 section www.business-standard.com
MUMBAI (CITY)
~8.00
VOLUME XXIII NUMBER 250
T
he board of Coffee Day Enterprises on Oppenheimer for ~4,224 crore.
Wednesday decided to probe the past The deal, at ~400 per share, THIS IS A BETTER DEAL
ECONOMY & PUBLIC AFFAIRS P4 financial transactions allegedly made values Zee at a premium of 10.6 AS IT MEETS TIMELINES:
Core sector growth by V G Siddhartha,
apart from evaluating various
per cent over the current market
price and will be used to pay off
PUNIT GOENKA PAGE 2
CRISIS AT CCD
at 50-month low options to deleverage the bal- PAGE 22 part of the promoter-level debt, ZEE ENTERTAINMENT
Growth in the eight core sectors of the ance sheet. MORE BUYERS which stands at ~11,000 crore. On Shareholding pattern after
economy collapsed to 0.2 per cent in June A letter purportedly written MAY LINE UP Wednesday, Zee closed trade at Oppenheimer deal
— a 50-month low — dragged down by by the founder chairman days FOR CCD ~361.45 per share, down 5.18 per
major contraction in the energy segment before his death had said his cent over the previous day’s close
and weak performance across industries. team, auditors, and senior
OPPN PARTIES Coffee Day workers make arrangements to pay last respects to V G Siddhartha in on the BSE.
CALL FOR
The data released by the commerce and management were “totally DEBATE IN Chikkamagaluru, Karnataka. The CCD founder’s body was found on the banks of After tax, the deal would be
industry ministry on Monday showed unaware” of his personal finan- PARLIAMENT the Netravathi river on Wednesday PHOTO:PTI valued at ~4,000 crore, said Punit
that coal, crude oil, natural gas, refinery cial transactions. Goenka, managing director, Zee
LENDERS
Debt profile worsens for
products, fertiliser, steel, cement, and Siddhartha’s body was Entertainment.
electricity industries saw the rate of found on Wednesday on the STARING AT This means the balance —
growth take a sudden hit in June after a banks of the Netravathi river LEGAL ~7,000 crore — of promoter debt
QUAGMIRE
slight dip in May.
SPECIALS
THURSDAY the same and resolved to thoroughly investi-
gate this matter,” the board said in a regulatory
debt profile. The amount of debt on the
books of the unlisted companies rose in
meet short-term obligations. The total bor-
rowings rose 76.4 per cent year-on-year
lyst, LKP Securities.
He added, “We expect the
holds 7.74 per cent stake in Zee;
now, it will now hold 18.74 per
filing. The board also appointed law firm Cyril recent times, in line with rising borrow- from ~992 crore in FY17 to ~1,749 crore in management to achieve success cent. Promoter stake in Zee, on
STRATEGY: Amarchand Mangaldas its legal counsel to ings at the listed CDEL, show the latest FY18, the most recent filings available with in meeting this deadline by doing the other hand, will fall to just
advise it on the related matters. financial statements. the Ministry of Corporate Affairs (MCA). a further stake sale and sale of under 25 per cent post the deal.
Diversity is key for Netflix 19 >
Turn to Page 22 > Credit rating agencies have either down- Turn to Page 22 > non-media assets.” Turn to Page 21 >
The OTT player hopes to steal the show
with local collaborations, innovative
pricing, writes URVI MALVANIA
PERSONAL FINANCE: Buy
only ready-to-move home
Though there is a lot of under-
18 > Govt softens stance on
construction inventory, buyers
should stay away from them,
writes SANJAY KUMAR SINGH
EV roll-out time frame
PRIVATE EQUITY: SHALLY SETH MOHILE battery-operated EVs. The industry
“Commercialrealestate Mumbai, 31 July had said the move was not well-
willremainanimportant thought-out and would create
The government seems to have soft- unwanted disruptions in a market
areaforCPPIB” 11 >
ened its stance on the time frame for where infrastructure and ecosystem
ALAIN CARRIER, senior managing
transition to electric vehicles (EVs). for EVs was non-existent.
director and head of international The Ministry of Heavy Industries, “We are awaiting a road map that
CPPIB, and VIKRAM GANDHI, a senior the Ministry of Road Transport and the industry is supposed to submit.
advisor, tell RAGHAVENDRA KAMATH Highways, the power min- We are clear about our
their strategy and views on economy istry, and the NITI Aayog goals and targets. We want
— tasked with the policy- Now, a softer, to do this in partnership
making and implementa- pragmatic, with the private sector,”
tion of the government’s phase-wise Amitabh Kant, CEO, NITI
e-mobility plan — have approach will be Aayog, told Business
> RESULTS RECKONER extended an olive branch adopted. Under Standard.
to the beleaguered auto- the revised plan, "We have become a ful-
Quarter ended Jun 30, 2019; common sample mobile industry by agree- highly-polluted ly importing nation in
of 470 companies (results available of 529) ing to a “softer, pragmatic, urban cities will mobiles, telecom equip-
SALES phase-wise approach”. be targeted first ment, and PV Solar
Under the revised plan, because of the wrong poli-
Jun 30, ’18 22.2% ~6.86 trillion highly-polluted urban cies pursued earlier. We
Jun 30, ’19 10.5% ~7.58 trillion cities will be targeted first. will never allow this to happen in the
The change in stance follows a case of electric vehicles. We will build
NET PROFIT
strong opposition by automakers of size and scale, and pursue Make in
Jun 30, ’18 3.5% ~60,877 crore the proposed government plan to ban India for both domestic and export
Jun 30, ’19 6.8% ~64,994 crore two-wheelers (below 150cc) and markets. We will make India an EV
Companies which have reported zero sales are excluded
three-wheelers by 2023 and 2025, hub for global markets," he added.
Data compiled by BS Research Bureau; Source: Capitaline respectively, and replace them with Turn to Page 21 >
~1,500.05 CLOSE ~172.35 CLOSE ~1,166 CLOSE ~674.40 CLOSE ~2,356.20 CLOSE
* OVER PREVIOUS CLOSE 9.74% UP* 5.35% UP* 1.23% DOWN* 4.55% DOWN* 4.29% UP*
> .
.
MUMBAI | THURSDAY, 1 AUGUST 2019 COMPANIES 3 <
T
he founder and managing For the year ended March 31, 2019, ~3.36 crore (including a salary of ~2.79 a non-executive director of Sun icy, it noted. The deal with Shanghvi The firm posted a consolidated Personal stake (%)
director (MD) of the country’s he received perquisites worth ~2.62 crore). In comparison, Sharvil Patel, Pharma, also drew a ~1 salary and the and Valia is for their present term are net sales of ~28,686 crore in FY19, a 10 Sun Pharma 9.6 9.6 9.6
largest pharmaceutical firm lakh. The valuation of his stake (9.6 the MD of Cadila Healthcare drew a remaining remuneration in the form for a period of five years (April 2018 to per cent rise. Its consolidated net SPARC 11.2 10.72 10.72
SunPharmaceuticals,DilipShanghvi, per cent in Sun Pharma) remained remuneration of ~25 crore, Nilesh of perquisites. Valia’s remuneration March 2023) and remuneration for a profit grew 27 per cent. The fourth Net worth (~ cr)
took a 99 per cent cut in remunera- flat between March 31, 2018 (~11,411 Gupta, MD of Lupin had a remuner- in2017-18wasthesameasShanghvi’s. period from April 2018 to March 2021 quarter profit, however, saw a 52 per Sun Pharma 11,411 11,039 9,830
tion in 2018-19 when the company’s crore) and March 31, 2019, (~11,039 ation of ~9 crore while G V Prasad, “Remuneration of Dilip Shanghvi (for Shanghvi) and from April 2019 cent fall. The firm said the result was
earnings grew by 27 per cent. crore). As on July 31, the valuation of co-chairman,MDandCEOofDrRed- and Sudhir Valia is ~1 each for the to March 2024 (for Valia). not comparable due to one-time im-
SPARC 1,063 539 449
Meanwhile, the firm also guided for a his shareholding in the firm stood at dy’s Lab had a remuneration of ~7.7 financial year 2018-19 and the rema- The pay cut came in a year, which pact of ~1,085 crore, owing to change Dividend (~ cr)
low- to mid-teens growth in revenue ~9,830 crore. crore in 2017-18. While Gupta saw an ining amount of ~2,62,800 and saw Sun Pharma navigate through in distribution strategy in India. Sun Pharma 46.1 63.3 -
for FY19-20 and said its research and For the last financial year, how- 80 per cent drop in his remuneration ~79,200, respectively, pertain to not- several allegations of questionable Shanghvi said Sun Pharma SPARC Nil Nil -
development cost would remain at ever, Shanghvi is set to earn a divi- for 2018-19 to ~1.8 crore, Patel’s remu- ional value of perquisite, according to corporate governance practices. Its would continue to focus on opti- Remuneration (~)
8-9 per cent of sales. dend income of ~63.3 crore as against neration remained the same. Prasad, I-T Act,” Sun Pharma’s annual report sharesfelltoasix-yearlowinJanuary. mising costs “given the tough phase Sun Pharma 3.01 cr ~1 -
Shanghvi, one of the lowest-paid anincomeof~46.1croreinFY18.This, however, took a 60 per cent jump in said. The perquisites include house In a damage control mode, the com- that the global generics industry is SPARC Nil Nil -
chief executive officers (CEOs) in however, is subject to shareholder remuneration to ~12.38 crore. rent allowance, leave travel assis- pany had to announce that it would passing through.” Source: Company
‘Trying to democratise
opportunity for all’
Flipkart, the e-commerce major, locked in an intense battle for leadership in the Indian market, has
partnered five non-governmental organisations to help artisans use the online marketplace to sell
their products. Flipkart Samarth has been designed to support artisans in their e-commerce journey
from onboarding till they get familiar to selling products online, Group Chief Executive Officer
KALYAN KRISHNAMURTHY told Neha Alawadhi. Edited excerpts:
“Our Indo-Pacific strategy is well on its way to bearing “Moving forces in and out of Kashmir... is an “Can Atal Community Innovation Centres
fruit for not only them but for the United States, and we ongoing process. Extra forces are brought in come up with innovative methods which
have watched these coalitions build out. We're working for Amarnath Yatra or elections... But will help India in reducing its fossil fuel
hard with the Indian government to provide them with linking the movement of forces with other import bill? ... India will not become
opportunities to grow their economy as well” issues is being done for personal interests" $5-trillion economy without innovation”
MIKE POMPEO, US Secretary of State RAM MADHAV, BJP leader DHARMENDRA PRADHAN, Petroleum minister
> .
IN BRIEF
Electricity bill relief in Delhi
UK, France rise; India now 7th largest economy
as regulator revises tariffs INDIVJAL DHASMANA
NewDelhi,31July
my grew to $2.82 trillion and
the French economy expand-
ed to $2.78 trillion in 2018,
THE GLOBAL GIANTS
2016 2017 2018
data, Japan’s economic size was
$4.97trillionin2018,higherthan
India’s by $2.24 trillion.
20.49
GDPatcurrentprices($trillion)
19.48
Delhi's power regulator announced on The UK and France have top- against India’s $2.73 trillion, India planned to increase
18.71
Wednesday the new electricity tariff for pled India from the position of showed the data. its economic size to $5 trillion
2019-20, significantly bringing down the fifth-largest economy in It means that India’s econo- by 2024-25.
13.61
fixed charges while raising energy 2018, according to data com- my grew a mere 3.01 per cent in For this, the Economic
12.14
11.14
charges. Delhi Electricity Regularity piled by the World Bank. dollar terms in 2018 against 15.72 Survey estimated that India
4.86
4.97
4.93
Commission (DERC) chairman Justice Earlier data had shown that per cent in 2017. would have to grow by 12 per
3.99
3.69
3.49
2.64
2.66
2.82
2.65
2.59
2.78
2.47
2.29
2.73
(retired) S S Chauhan said the new rates India had become the sixth On the other hand, the UK’s cent at current prices a year.
would be applicable from August 1. largest economy in 2017, push- economy grew 6.81 per cent Assuming the Reserve Bank of
According to the new rates, the fixed ing France to the seventh place. against a contraction of 0.75 per India’s inflation growth pro-
charges up to 2 kilowatts (kW) has been reduced from ~125 to ~20, However, the latest data showed cent in this period. The French US China Japan Germany UK France India jections of 4 per cent, the
while the charges above 2 kW but less than 5 kW has been slashed that India had in fact become economy expanded by 7.33 per ILLUSTRATION BY BINAY SINHA Source: World Bank national accounts data, and OECD National Accounts data Survey said the economy need-
from ~140 to ~50. The fixed charges for more than 5 kW and less the fifth-largest economy that cent against 4.85 per cent. ed to grow 8 per cent at con-
than 15 kW has been reduced from ~175 to ~100, Chauhan said. PTI< year, ahead of even the UK. Economists attributed this cent the following year. “This per cent in 2017-18. For India’s IHS Markit said in a recent stant prices a year to make this
In2017,India’seconomicsize to a movement of the Indian has resulted in slower growth of official statistics, financial report that India will overtake target possible.
Reviewing exposure LS passes Inter-State stood at $2.65 trillion, followed
by the UK at $2.64 trillion and
rupee against the dollar.
Devendra Pant, chief econo-
India’s economy in dollar terms
in 2018 against 2017,” he said.
years start on April 1 and end at
March 31.
the UK this year to become the
world’s fifth-biggest economy,
At constant prices, India’s
economy expanded by 6.8 per
to auto dealers and River Water Disputes France at $2.59 trillion. mist at India Ratings, said the In rupee terms, India’s The new data has come andispoisedtosurpassJapanto cent in 2018-19 and is projected
car loans, says SBI (Amendment) Bill However, this status was rupee appreciated 3 per cent in economy grew 11.2 per cent in when there were talks of India be the third largest in 2025. to grow by 7 per cent in the cur-
short lived as the UK’s econo- 2017, while it depreciated 5 per 2018-19, a shade lower than 11.3 overtaking Japan by 2025. According to the World Bank rent fiscal year.
StateBankofIndia(SBI)on ABillseekingtoexpediteand
Wednesdaysaiditiscontin- streamlineresolutionofinter-
T
New Delhi, 31 July
to allow companies to raise fer to take assets that provide yields of debt component could be “The market is huge and there is
loans under external commer- 20 per cent and above, say experts. converted into equity and scope for both funds and ARCs,” said The government on
cial borrowing (ECB) route — to repay Interestingly, the RBI said the assets taken up by foreign investors R K Bansal, managing director and CEO Wednesday notified the sub-
banks their dues categorised as non- could be sold by banks on an “assign- of Edelweiss ARC. sidy on most non-urea fer-
performing assets (NPAs) — will likely ment basis”. That means that if a com- “ARCs typically don’t do big deals, tilisers and kept them
pique interest of foreign stressed asset pany has a debt of ~1,000 crore, and it even as some of the big deals are routed unchanged from their 2018-
funds once again. So far, such investors agrees to pay ~400 crore, the bank will through ARCs. Considering there are 19 levels, except for sulphur,
have remained non-committal in pick- transfer the entire rights for ~1,000 crore tenure and yield restrictions on ECB which it raised from ~2.72 per
ing up Indian assets after seeing legal to the buyer. This pushes up yields sig- loans, domestic ARCs should not face kg to ~3.56.
obstacles in the resolution process nificantly for the buyer, unless the RBI much of a problem.” The decision will cost the
under the Insolvency and Bankruptcy clarifies that the deal and rights of the Experts expect some deals to hap- exchequer ~22,875 crore in the
Code (IBC), say experts. assets are limited to only ~400 crore. pen with a mixture of equity and debt, 2019-20 fiscal year.
The RBI on Tuesday said NPAs, or “This is a replacement avenue where the debt component could be A decision in this regard Subsidy for nitrogen has been fixed at ~18.90 per kg, phosphorous
loans heading towards the NPA stage, given to open up Indian assets to converted to equity and taken up by was taken at the meeting of at ~15.11 per kg and potash at ~11.12 per kg for current fiscal year
could also be sold off by banks to recov- foreign debt. This will encourage foreign investors. However, if the for- the Cabinet Committee on
er their domestic rupee loans. Such those stressed assets funds that eign funds do get a hold on Indian Economic Affairs (CCEA)
transactions will have to be carried out were interested in Indian assets at Cerberus Capital, Silverpoint, Varde, assets, it will also have interesting ram- headed by Prime Minister OTHER CABINET DECISIONS
with entities permitted to give loans the initial stages of the IBC, but had Centre Bridge, and Davidson Kempner ifications for the companies in ques- Narendra Modi. | Nod to Bill seeking excluding the CJI. The
under ECB, the RBI said. These are typ- stayed away due to litigations and Capital Management had shown inter- tion, given that these firms will also “The CCEA approved NBS
reduction in compliance move also comes against
ically regulated entities, banks, and reg- uncertainties, to have a fresh look at est in India, but did not fully commit to take a proactive role in the manage- (nutrient-based subsidy) rates
istered foreign investors. the assets,” said Harry Parikh, Associate their plans of investment as the IBC ment of those companies. for phosphatic and potassic burden of registered chit the backdrop of rising
Transactions cannot be carried out Partner at legal firm BDO India. processes hit roadblocks by frivolous “The permissibility to use ECB (P&K) fertilisers for the year funds industry and cases in the top court,
with overseas branches of banks present Initially enthusiastic about India’s bidding, or other legal challenges, say under the one-time settlement scheme 2019-20; expected expenditure protection of interests of which stands at nearly
in India. Most of the stressed assets ~10-trillion stressed assets market, people in the know. would mean that risks will get trans- during 2019-20 to be ~22,875 subscribers. The Bill is 60,000. At present, the
funds are private and not regulated. many of the foreign stressed assets If investors can pick up assets ferred from financial creditors to new crore,” information and broad- aimed at fulfilling the sanctioned strength of
However, they can tie up with banks not firms are looking to put their money directly overseas through their arrange- creditors/strategic creditors who may casting minister Prakash objectives of reducing the the apex court is 30,
present in India to enter indirect deals. into assets at various levels of stress, ment with permitted ECB lenders, they have a say in the management, and Javadekar told the media after regulatory or compliance excluding the CJI
However, there is a restriction on including declared NPAs. won’t have to face lengthy legal battles will have better skills in recovering the meeting. burden of the registered
the rate at which these firms can pro- Distressed assets specialists such as while recovering dues. This will likely their loans,” Parikh said. The subsidy for nitrogen | Go-ahead to the setting up
chit funds industry as well of ISRO Technical Liaison
has been fixed at ~18.90 per kg,
phosphorous at ~15.11 per kg,
as protecting the interest Unit in Moscow. The unit
potash at ~11.12 per kg and sul- of subscribers will enable effective
HDFC reduces prime lending Allahabad Bank back in phur at ~3.56 per kg for the cur-
rent fiscal, he said.
This will help in promot-
| Acting on the request of
the Chief Justice of India,
technical coordination for
timely interventions on
T
enure protection for public ser- Now that the Central government will that the trial of those accused of rewarding loyal police officers with inexorably find its way into other areas. the Raj Bhawan. He has to wait because
vants is under attack. decide both the tenure and the terms of demolishing the Babri Masjid had appointment to the post of Director The erosion of tenure protection for the former governor of the state,
Amendments to the Right to remuneration of information commis- dragged on for a quarter of a century, General on the eve of their retirement information commissioners could well Anandiben Patel, who is now governor
Information Act, 2005, passed in this sioners at the Centre and at the states, in 2017, it set a deadline of two years so that they could enjoy another two be a cancerous cell that may turn into a of Uttar Pradesh, is yet to move out.
session of Parliament have blown off two the Central government will get to wield for completion of the trial with the years of legally-protected service malignant subversion for any other Also, the whole compound is being
fundamental statutory protections full political leverage over information judge being protected against any tenure. Governments and their incum- statutory or regulatory institution. renovated in accordance with Tandon's
enjoyed by information commissioners commissioners all over the country. transfer. Last month, when it found bents (both political and bureaucratic) specifications. Once the renovation
all over the country — first, a statutory How the incumbents deal with enforc- that the judge would retire in two have the deepest vested interests in The author is an advocate and independent work is completed, Tandon hopes to
protection of tenure for information ing the citizen’s right to information will months, the court directed that the resisting tenure reform. counsel. Tweets @SomasekharS move in after performing a puja and
some rituals to ward off the evil eye.
Case in point
L
ast week, the GST council cut push the buying decision in favour of 80 per cent of EV charging points. So Petroleum, BHEL, “Nineteen”. As an Opposition MP
rate cuts on electric vehicles EVs,” said Maxson Lewis, managing far the only progress here has been a Energy Efficiency Services struggled to understand its significance,
(EVs) from 12 per cent to 5 per director, Magenta Power, an EV mobil- suggestion from the power ministry to (EESL), Union housing the MPs explained “19” was the number
cent and on electric chargers from 18 ity solutions provider. state power utilities to facilitate such ministry of cases their party chief faced.
to 5 per cent, a clear signal that it pro- What kind of infrastructure is need- private charging points.
poses to forge ahead with its target of ed to achieve the government’s man- The availability of lithium-ion bat- PRIVATE SECTOR:
reducing urban pollution and crude oil date that all three-wheelers and two- teries will also be a critical determi- Tata Power, Ather Energy,
import bill. Both rate cuts will consid- wheelers go electric by 2023 and 2025 nant of EV adoption by consumers. Vakrangee, Magenta No time for press freedom
erably narrow the price differential respectively, and others except com- Batteries account for over half an EV’s Power, ABB, Acme On July 4, members
between EVs and petrol and diesel vehi- mercial vehicles, by the year 2030. One cost and, currently, are almost entirely Industries, Fortum India, of 15 political
cles. EV prices are expected to drop 7 estimate by Nomura Research puts the imported from China. India would parties requested a
per cent. investment requirement of charging require six plants of 10GWh each by "short-duration
But narrowing the price differential stations at ~13,000-14,000 crore. 2025 and 12 by 2030 to cater to this Companies getting into battery manufacturing discussion" in the
is just one of the challenges to achiev- Private sector start-ups alone are emerging market. ESTABLISHED PLAYERS: NEW AGE COMPANIES: Rajya Sabha on
ing the government’s grand expected to add 50,000 to Niti Aayog CEO Amitabh Kant said Suzuki Motor Corporation, BHEL, Exicom, Greenfuel Energy Solutions, "how to strengthen
mandate. The lack of a 60,000 charging stations the objective was to “first work on about Adani, Group, Amara Raja, Exide Trontek, Coslight India, Napino Auto & the freedom of the
robust ecosystem, principal- over the next three years. 80 per cent of components of two and press, as the media
Industries, Greaves Cotton, Electronics, Trinity Energy Systems and
ly recharging stations, and Their contention is that giv- three-wheelers and buses and also push is the fourth pillar of democracy". A
domestic battery manufac- en the initial low viability manufacturing of batteries in India". Tata Chemicals Versatile Auto Components. majority of those who requested the
turing capabilities, could of the business, some sort To this end, the government is likely to discussion are members of Opposition
well short-circuit the gov- of viability gap funding issue tenders to set up 50 GWh of bat- of the challenge. As Amara Raja pack assembly capability and looking parties, but Bharatiya Janata Party
ernment’s stiff electric would be in order. In the tery manufacturing in India, which Batteries CEO S Vijayanand points out, at backward integration into cell man- Rajya Sabha MP Subramanian Swamy
mobility targets. Most two- TAKE second edition of its electric would attract around $50 billion in only a high level of localisation will ufacturing. Right now, its localisation (pictured) also signed the notice. The
wheeler makers — Bajaj
Auto, TVS, Hero and others
TWO mobility policy (known as
FAME 2), the government
investment. “At present India depends
on China for EV parts. However, by
make the business viable. Currently, the
raw material for batteries are not avail-
level is 25-30 per cent at the battery
pack level.
government, however, suggested a
short-duration discussion on "the
— have been vocal on this ANALYSIS BEHIND says it will allocate Rs 2022, local production of cells will go able in India. Battery chemicals Exercises such as these are, howev- need to ensure basic facilities and
point. Steffen Knapp, direc- THE HEADLINES 10,000 crore to set up charg- up and even fuel cell might come to account for 30-40 per cent of the costs er, time consuming and unlikely to affordable treatment to cancer
tor, Volkswagen Passenger ing stations to both public India,” says a Tata Motors Ltd of a battery pack, and the cell accounts match demand. Yet they are vital to the patients". The Rajya Sabha took up the
Cars, recently said his company doesn't and private sector players. spokesperson. for 25-30 per cent. Even a cell-to-bat- success of the government’s EV plans. discussion on the issue of cancer on
think it possible to be part of India's “As a standalone business, EV charg- One of the Tata group companies, tery assembly plant would improve val- As Vijayanand puts it, “India missed Wednesday and another "half-an-
electrification plan in the absence of ing stations is still a sunrise venture. It Tata Chemicals, has already ue addition by 30-40 per cent. But India the magic of manufacturing consumer hour" discussion on the "clean Ganga
supporting infrastructure. could be the future version of what gas announced that it will set up a 10 Gwh has such annual assembly capacity electronics and we also missed the drive". The Opposition was told that
Things could be changing now, with stations are today, a money spinner, but plant at Dholera, Gujarat. Several com- worth just 1 Gwh. magic of manufacturing in the renew- the Rajya Sabha would not have the
several public sector enterprises, pri- only if investors are willing to wait," panies — established ones and new-age Companies like Amara Raja have, able sector, such as the solar panels, but time during the current session, which
vate sector engineering and automobile says a Tata Power executive. start-ups — are venturing into this busi- however, started back-end integration I think if you were to look at EVs, then ends on August 7, to have a discussion
companies as well as new-age start-ups Others suggest pushing for low- ness (see table). to accelerate the pace of localisation. as a country we cannot afford to miss on the "freedom of the press".
venturing into the EV infrastructure grade charging at home, offices and Setting up local plants is only part The company established a battery the magic of manufacturing.”
I
t is lazy and wrong to view the latest tracking technology. Those which in any case was later revoked on feel that the last person he should have
goals of economic growth and who attempt to illegally kill them, Siddhartha’s request. According to them, associated with is Bear Grylls. Anyone
conservation of the environment that is, poachers, or those who even though Siddhartha had admitted to who has watched even a few of this
as inherently contradictory. It may destroy their natural habitats, for huge unaccounted for income, he did not adventurer's Man vs Wild episodes
even be convenient for some interests. instance, illegal logging/deforesta- include the entire admitted concealed knows the kind of wanton destruction
The reality is different. Just look at tion, can be caught and deterred income in his IT return. The action of IT of wildlife he perpetrates, in order to
how India has succeeded in doubling through the deployment of appropri- India has succeeded in doubling the population of its tigers in the last decade, a authorities ordering provisional attach- obtain food for his survival in the course
the population of its tigers in the last ate technology. In industries like period in which the economy has also registered high growth Photo: PTI ments of Siddhartha’s assets are in accor- of the futile "explorations" he under-
decade, a period in which the econo- mining, for example, which have tra- dance with the law, which may possibly takes on a variety of inhospitable ter-
my has also registered high growth ditionally been viewed as damaging ously high — both flora and fauna not get carried away and give economic cause financial hardship, but cannot be rains. One just doesn't understand what
rates. In fact, the population of tigers to nature, technology has advanced have reappeared to reclaim the area. growth unfettered priority over nature called “harassment”. At the same time, Gryll proposes to achieve or teach
declined drastically over the long to enable successful transplantation With planning and management, the because the quality of that growth will tax authorities must also exercise such through them. He must realise that dis-
decades when economic growth was of flora and fauna to alternative loca- regeneration can be achieved without be poor and it will be unsustainable. powers judiciously so as not to bring a cretion is the better part of valour and
not so high. Now, every stakeholder, tions. It is not unusual for mining large-scale human displacement Worse, it will adversely affect the liveli- business entity’s legitimate business to a imagine the number of innocent ani-
whether the government, judiciary, companies to have bio-diversity offi- necessitated by disaster. hoods and health of all citizens which grinding halt leading to a chain of adverse mals that can be spared if he can carry
industry, NGOs and citizens must cers in-house or to partner with inter- It is already happening. The posi- would negate the hard-won prosperity. economic consequences. non-perishable food items with him in
accept, in principle, that India can national organisations working in the tive news on the tiger population is The admittedly tough challenge S K Choudhury Bengaluru his backpack.
grow rapidly while preserving the field of the environment to achieve not the only reason to be optimistic for the government and courts is to CV Krishna Manoj Telangana
environment — forests and fauna, air this. Importantly, once the mining in India. According to the Union strike the right balance. Stalling eco- The real tragedy
and water. work has been completed and the Minister for Environment and Forests, nomic activity, by invoking the envi- Letters can be mailed, faxed or e-mailed to:
Often, it is unhelpful to put envi- area vacated by man and machine, India’s forest cover has grown by ronment is likely to be counter-pro- Apropos "CCD founder missing, massive The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
ronment before economic growth. the entire ecosystem can return to its 16,000 square kilometers in the last ductive unless, of course, there are search on (July 31)", before one could fin-
New Delhi 110 002
Poverty, or the lack of prosperity, leads original state. There is evidence of five years. India’s experience in suc- very pressing reasons to do so. At the ish reading the news about missing V G Fax: (011) 23720201 · E-mail: letters@bsmail.in
to much greater environmental degra- this in India (in Goa) and abroad (in cessfully expanding its forest cover is very least, the possibilities of miti- Siddhartha, owner of coffee shop chain All letters must have a postal address and telephone
dation. If the majority is living a sub- South Africa) where industry is man- not unique. Europe has achieved gation with the use of technology Cafe Coffee Day, the news that his body number
sistence livelihood, if industries are dated to spend the resources to make impressive rates of reforestation and ample financial commitment
primitive (in a technological sense) sure that the regeneration happens adding an estimated 90,000 square must be heard before a final decision
and if government is starved of at a very fast pace. kilometres (approximately the size of is made. Industry must become > HAMBONE
resources — all the characteristics of But what of damage already done? Portugal) in the 25 years since 1990. responsible. And civil society must
under development — the conse- The good news is that nature regen- Perhaps, it is easier for advanced not be irresponsible.
quences for the environment are erates itself. Damage can be reversed. economies for the obvious reason that India, which is already charting a
severe and the possibilities of mitiga- Often, the absence of human beings they are rich and have greater unique economic trajectory, has an
tion or upgradation near zero. helps as the curious case of the resources and fewer polluting indus- opportunity to show the world that it
Prosperity is good for the environ- Chernobyl disaster zone in Ukraine tries — those have been outsourced is possible to become richer and
ment. For a start, it endows the gov- has proved. Three decades after a to the emerging economies. But the greener at the same time. A 21st cen-
ernment with greater financial catastrophic nuclear accident ren- point is that deliberate intervention tury tiger economy.
resources to address the challenge of dered a large zone unfit for human can aid regeneration.
environmental degradation. It also habitation — radiation is still danger- Needless to say, it is important to The author is Chief Economist, Vedanta
>
OPINION 9
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM
T
AMP 2016-2026 (http://www.siamindia.-
he revised norms for end-use of money raised through external com-
com/cpage.aspx), aiming to increase exports more than
mercial borrowings (ECBs), announced by the Reserve Bank of India double to 35-40 per cent of output, and employment
(RBI) on Tuesday, have brought in significant changes. Under the by 65 million. Momentum has declined in the last
new norms, ECBs with a minimum average maturity period of 10 year, however, because of a number of adverse factors.
years can be used for working capital and general corporate purposes as also by These include confusion and uncertainty regarding
non-banking finance companies for on-lending. The RBI, in consultation with
the central government, has also permitted firms to raise ECBs for repaying rupee
loans taken from domestic sources for capital expenditure in the infrastructure
and manufacturing sectors, classified as SMA-2 or non-performing asset (NPA),
Automotive slump policies on diesel and electric vehicles, trade tensions,
slowing gross domestic product (GDP) growth here
and abroad, higher costs from mitigation strategies
and taxes, and funding constraints arising from prob-
M
lenders will also enable banks to lend to smaller businesses which are not in a ention “industrial policy” and there are those that are not). The opposite is state planning and ership in India was under 27 per 1,000 in 2017, compared
position to borrow from external sources. In view of the fact that the cost of money strong reactions: An angry buzz from free- control for verticals (picking winners). In between is a with several hundred in the OECD countries. That’s
market enthusiasts, or approval from the mix of degrees of enabling government regulations and the potential for employment to grow, provided indus-
in the global financial markets is expected to come down further, some companies
diminishing ranks of believers in government inter- support (tax incentives and disincentives, labour regu- try stays profitable, and investments happen as planned
may be able to reduce their interest burden by borrowing abroad or by swapping vention. But as economist Dani Rodrik observed over lations, financial consideration, land allotment/zoning (without denying the downsides: Of mitigating for envi-
their rupee loans with foreign-currency debt. But they will need to carefully a decade ago, reality has not been kind to either set — or acquisition) and of coordination with the private sec- ronmental impact, fuel imports, and having to build
manage the currency risk. Also, instead of heading for the Insolvency and neither the belief that the way forward (for developing tor. These can be limited to industry and manufacturing, more roads).
Bankruptcy Code (IBC) solution, banks and companies can now get into an OTS economies) is through strong government interven- or more broadly, extend to all economic activity, includ- There is little doubt that India needs the automotive
scheme, the funds for which have to be raised abroad. tions, nor the belief that it is best for the government to ing agriculture, dairy farming, and services. sector as a growth engine. Given its impact on employ-
stay entirely away from the economy. Although there Historically, a degree of industrial policy has been ment in manufacturing and the economy through all
The latest move appears to be part of an overall strategy that Indian companies were successes sometimes with import substitution, practiced everywhere. In the US for example, in the the feeder industries and ancillaries, if there is a risk of
should tap global resources to lower cost. However, potential benefits at the com- planning, and state ownership (a case in point is Indian Reagan years (1980s), the Defense Advanced Research collapse as in telecommunications, construction, and
pany level should not make policymakers lose sight of the broader macro picture Space Research Organisation), these Projects Agency (DARPA) created con- finance, it needs to be averted if possible. With corporate
because increasing reliance on foreign capital can be dangerous. It is correct that practices were often overdone or sortiums of government and private profits down to 3 per cent of GDP in 2018 from 7.8 per
there are problems in the Indian financial sector and the corporate balance sheet became inflexible, leading to failures sector participants for coordinated cent in 2008, the government needs to deal with ground
is also stressed. But depending on foreign debt to address some of these issues and crises. Likewise, liberalisation action. One was the Semiconductor realities. The facts must be evaluated to take corrective
benefitted some sections of the econ- Manufacturing Technology (SEMAT- action if necessary.
can exacerbate difficulties for India and should be avoided. For instance, higher omy such as exporters, financial ECH) consortium with companies such There are relevant case studies on possible correc-
foreign borrowings would put upward pressure on the rupee, which anyway is intermediaries, and some skilled as Intel and Texas Instruments, to revi- tive action, such as a report on steps the USA, France
excessively overvalued, and affect exports. The other problem is the reluctance workers, but often fell short of econ- talise the US semiconductor industry and China took after 2008: “Shifting Gears: Industrial
of Indian companies to hedge their risks. Unhedged exposure can become a omy-wide growth.1 by reducing manufacturing costs and Policy and Automotive Industry after the 2008
threat not only to individual companies, but to the system and its stability. Another topic on which opinions product defects. Another was The Financial Crisis”.4 Our primary requirement is a stable
differ strongly is whether develop- National Center for Manufacturing and supportive regulatory environment. Changes,
Experience in many countries have shown that corporate crisis can turn into a
ment should focus on comparative Sciences (NCMS) for the development such as policies for electric vehicles or for diesel vehi-
macro-economic risk in no time. advantage based on factor endow- SHYAM PONAPPA of an advanced machine tools and cles, need to be through collective consultation
Further, this will increase India’s foreign debt exposure and, in the absence ments, or if structural changes automation industry. Another, Project processes. The automotive sector has the Automotive
of consistent inflows, servicing can become a problem. This can result in significant should be attempted through the support and extension Socrates3, was a classified programme to ascertain the Mission Plan 2016-2026.
volatility in the currency market and, among other things, increase the repayment of infant-industry protection, as for example in manu- causes for America’s declining competitiveness, and to
burden for Indian companies. India’s foreign debt which needs to be repaid by facturing electronics and telecom (ICT) equipment in develop solutions to re-establish US dominance. Their 1.Rodrik, Dani: “What’s Driving Populism”, Project Syndicate,
India. In 2009, the Overseas Development Institute in conclusion was that the US was losing its technology- July 9, 2019,https://www.project-
the end of this fiscal year is over 43 per cent of the total external debt and 57 per
London organised a debate between Justin Yifu Lin, based ability to compete, because decision-making after syndicate.org/commentary/economic-and-cultural-
cent of foreign currency reserves. This is not to suggest that India should not tap then chief economist at the World Bank and formerly World War II transitioned from technology-centric plan- explanations-of-right-wing-populism-by-dani-rodrik-2019-07
foreign funds to supplement domestic savings. India should target higher direct the director of the China Centre for Economic Research ning to finance-centric planning. Success for the latter 2. Lin, Justin and Chang, Ha-Joon: “Should Industrial Policy in
equity investments, which are more stable and will help augment growth. at Beijing University, in favour of comparative advan- is measured by financial returns, whereas for technolo- Developing Countries Conform to Comparative Advantage or
Increasing dependence on debt, as the relaxation in ECB norms shows, will make tage, and Cambridge University’s Ha-Joon Chang gy-based planning, the objective is to use technology to Defy it? A Debate Between Justin Lin and Ha-Joon Chang”,
the Indian economy more vulnerable to external shocks and increase risks to speaking for infant-industry protection. Interestingly, gain competitive advantage and satisfy customer needs Development Policy Review 27 (5), 2009, pp 483-502,
both favoured strong government intervention, (which presumably leads in the long run to better http://siteresources.worldbank.org/INTRANETTRADE/Reso
financial stability.
although in different ways.2 Mr Lin was for facilitating returns). The Bush administration terminated Project urces/Internal-Training/287823-
comparative advantage, while Mr Chang was for treat- Socrates in 1990, as it was considered an interventionist 1256848879189/LinChangeDPRDebateIndustrialPolicy.pdf
ing comparative advantage as a base line to be defied industrial policy (picking winners) when free-market 3. See http://quadrigy.com/background.html for the private
for a country to upgrade its industry. ideology was ascendant. sector successor corporation
T
he government’s much-hyped crop insurance scheme, the Pradhan itself create biases for the favourably affected and against on an initiative conceived in 2002 in consultation with =1028&context=polisci_pubs
Mantri Fasal Bima Yojana (PMFBY), has remained an underperformer
since its inception in 2016. Some critical structural flaws and inept
implementation have proved its nemesis, though the scheme is better
than all the risk-mitigation systems tried out since the early 1970s. Complaints
have been mounting about the delayed clearance of claims and, more importantly,
The G-Minus-2 threat find it increasingly difficult to export their products or
their excess labour. American repudiation of the Paris
climate agreement does not bode well for the poorer
countries who will bear the brunt of the consequences
F
meagre reimbursements of losses. Farmers’ organisations and even some political or an all-too-brief period between the late 1980s inequality, declining mobility, and greater concentration of global warming. That situation is dire enough. But
parties, notably the Shiv Sena, have threatened to launch agitations against the and the late 2000s, the world was characterised of economic power — have called into question the ben- perhaps the most critical “bads” provided by the US and
by convergence, both ideological and economic. efits of globalisation. In addition, the 2008 global financial China are the most subtle. America’s unilateral measures,
insurance companies to press for adequate compensation to the farmers for the
The West and the Rest agreed that an open liberal order crisis and its aftermath have undermined faith in which flout the global rules that it helped to devise, have
crop damage because of aberrant weather, pests, diseases, and other calamities. was the best way to increase prosperity. Now, however, American-style capitalism. China’s rise, and the perceived begun to damage the Bretton Woods institutions and
The Estimates Committee of Parliament, headed by Murli Manohar Joshi, acknowl- this ideological order threatens to unravel, with adverse consequences for America, has also stoked US skepticism the associated system of international cooperation. China,
edged in its 30th report (December 2018) that the PMFBY suffered from several consequences for the world economy. about globalisation. A broad swath of US elite and public meanwhile, is a hobbled hegemon, having become dom-
problems that have shaken the farmers’ faith in it. Inordinate delay in loss assess- The two-decade-long “golden age” opinion believes that China has abused inant without acquiring genuine international appeal.
ment, belated or non-payment of claims, and lack of transparency are among the was one of trade hyper-globalisation, America’s largesse, via currency manip- Moreover, hegemons need to provide open markets.
reflected in an unprecedented increase ulation, intellectual-property theft and Yet China is not offering enough export opportunities for
faults pinpointed by this panel.
in the ratio of world exports to gross espionage, and forced technology poorer countries, even though it previously benefited
The waning interest of the farmers in the PMFBY is borne out by the downtick domestic product (GDP). It was also transfer. Furthermore, China’s recent greatly from deeper trade links with more advanced
in the insured area from 57.2 million hectares in 2016-17 to 47.5 million hectares, an era of economic convergence: For tilt toward statism and political repres- economies. The Chinese government’s recent turn toward
or just 24 per cent of the gross cropped area, in 2017-18. The area coverage is esti- the first time in centuries, living stan- sion adds to a broader US sense of self-sufficiency and promoting domestic champions is
mated to have shrunk further in 2018-19, though the final figures are not yet out. dards in a broad cross-section of devel- betrayal, and of an investment in contributing to the rapid decline in the country’s imports.
The claims for the last year’s kharif and rabi seasons have not yet been fully paid. oping countries started catching up shared prosperity that has gone badly To be clear, China is entitled to pursue a development
with advanced-economy indicators. wrong. This discordant G2 world and strategy that has aided its extraordinary rise. But the coun-
The government intends to expand the PMFBY coverage to 50 per cent of the Moreover, globalisation and conver- the end of ideological convergence now try cannot be a benevolent hegemon if it insists on main-
cropland. This may not be possible unless the scheme is suitably revamped to gence were handmaidens: Open mar- threaten economic convergence, and taining a protectionist stance that deprives the global sys-
make it attractive for farmers. Since 85 per cent farmers are small and marginal kets enabled developing countries to ARVIND SUBRAMANIAN thus developing countries’ prospects. tem — and other developing countries — of key public
landholders have hardly any loss-bearing capacity, the need for a sound risk- prosper by building up modern, effi- & JOSH FELMAN The “golden age” of convergence had, goods. The US-dominated G1 world is long gone, and the
hedging system is paramount. cient, export-based industries. And no in any case, already started to face head- G2 system in which the US and China shared hegemonic
Viewed from this angle, the PMFBY can be rated high because it covers country benefited more from hyper- winds. First, climate change poses risks responsibilities is now fading into memory. Instead, we
globalisation than China. to developing countries’ agriculture. Problems in this live in a G-Minus-2 world in which the two hegemons,
almost all major crops, requires farmers to pay only a nominal premium, and The liberal order underpinning this era was largely sector will reverberate throughout these economies, instead of providing the Kindleberger global public goods
takes care of a wide range of perils, from prevented sowing to post-harvest damage created by the US. Exactly 75 years ago, when both the because high and rising agricultural productivity has of cooperation, are doing exactly the opposite.
to the produce from localised calamities. However, making the states a 50 per economic turmoil of the 1930s and World War II were been the key to successful structural transformations Understandably, developing countries have begun
cent partner in expenditure sharing and involving banks in its operation for the fresh in the collective consciousness, the US was able from farming to manufacturing. In addition, the spread to ask some pointed questions. What will happen to the
loanee farmers have been among the key mistakes. The blame for delay in claims and willing to supply three vital global public goods of technology-enabled automation is replacing unskilled global economy? How will we weather the next round of
through the postwar institutions created at Bretton labor with machines, directly threatening the ability of global turbulence? And does it even make sense to talk
clearance is often put on the states for their failure to pay their share of funds to
Woods. Emergency finance would come from the poorer countries to lift incomes through labor-intensive about cooperation when the two leading global protag-
the insurance companies and belated communication of crop-cutting experiment International Monetary Fund, and long-term lending manufacturing. But the biggest threat comes from an onists are undermining multilateralism and the insti-
data to enable the assessment of losses and computation of compensation. The from the World Bank. Above all, open markets would ideological decoupling between the West and the Rest. tutions that sustain it? Consumed by their quarrel, the
involvement of banks, on the other hand, blocks direct contact between farmers flourish under the General Agreement on Tariffs and The G2 of China and the US, instead of supplying the US and China have so far provided no answers to these
and the insurers. The farmers often do not get to see the policy documents or Trade (and its successor, the World Trade Organization). key global public good of open markets that the economic questions. There is an old African proverb that says “when
receipts of the premium paid on their behalf. It was a G1 world, and America was the unchallenged historian Charles Kindleberger saw as the responsibility the elephants fight, it is the grass that suffers.” Right now,
hegemon. Today, we have neither a G1 world nor ideo- of hegemons, is now providing global public “bads.” the rest of the world is very afraid.
The government is now making crop insurance voluntary, rather than manda-
logical convergence. Because of its spectacular growth As the US and China impose tariffs and trade restric-
tory, for the indebted farmers; removing high-premium crops from its ambit; since 1978, China has become the second dominant eco- tions on each other’s goods, and as the US undermines Arvind Subramanian, former chief economic advisor to the
and allowing flexibility to states to devise their own models for offsetting farmers’ nomic power alongside the US (Europe is still too decen- multilateral trade rules and institutions, world trade is Government of India, is a senior fellow at the Peterson Institute for
losses. If that happens, it would rid the scheme of many of its ills. But greater use tralised and beset with internal problems to wield strate- slowing markedly, threatening developing countries’ International Economics and a visiting lecturer at Harvard’s
of technology, including drones and satellite imagery, is vital to expedite damage gic influence). And the consensus about what constitutes export sectors and the viability of their overall develop- Kennedy School of Government. He is the author of Eclipse:
assessment and ensure prompt and realistic claims settlement. good economics has broken down. ment strategies. At the same time, the US and other Living in the Shadow of China’s Economic Dominance. Josh
In the West, and especially the US, a series of negative Western governments are clamping down on migration. Felman is director of JH Consulting
economic trends — including slower growth, rising As a result, developing countries are boxed in, and will Copyright: Project Syndicate, 2019
the diversity of Muslim citizens who live in their community. Mr Khurshid frames this as ings and Commissions of Inquiry. The country’s population, but only 8 per cent of
Investor
The Biocon stock hit its 52 week-low on
the selloff started. Mkt cycles Despair
Wednesday. While there are concerns over
(at bottom)-Disbelief (rally starts)
start of the investments phase & competition
MUMBAI | in biologics impacting margins, the recent
-Belief (rally plays out)-Euphoria
THURSDAY, 1 AUGUST 2019 correction offers an opportunity given the (at top)-Disbelief (correction )...”
robust outlook for the biologics segment SANDIP SABHARWAL
Investment advisor
WWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING <
~28,921 crore ($3.93 billion) from the Reserve (the Fed) also likely to follow (IPO) by a third to realign with IPOs to affect retail
21,193
17,220
equity market. Between February and an accommodative monetary policy, market conditions, said market conditions demand
10,218
33,981
7,161
-12,419
7,920 this could impact FPI flows into emerg- sources in the know.
-28,921
6,232
5,981
5,243
5,163
-7,396
-4,600
3,143
2,917
-4,262
2,173
2,596
($12.7 billion) into equities, according to ing markets, including India going To hit the market next
the depository data. ahead, said analysts. week, the two IPOs will raise a declined 8.2 and 11 per cent, ing to be an irritant for compa-
“Higher taxation for FPIs has been a “Corporate earnings in the June cumulative ~4,300 crore, down respectively. nies that are launching their
disappointing measure. There is a lack quarter have not been great and the from nearly ~6,000 crore Investment bankers said IPOs. Starting with the IPO of
of clarity from the government on the second quarter will be equally tough. planned earlier. there is a lot more comfort from Affle India, which closed on
policy front, which has somehow upset FPI flows into India will also depend The IPO of Sterling & investors at reduced valuations Wednesday, the market regu-
the overseas institutional investors,” said Oct ‘18 Nov ‘18 Dec ‘18 Jan ’19 Feb ‘19 Mar ‘19 Apr ‘19 May ‘19 Jun ‘19 Jul ’19 upon the global environment. Wilson Solar, a solar power despite weak sentiment in the lator has made electronic pay-
Ajay Garg, managing director at Equirus Compiled by BS Research Bureau Source: Sebi/NSDL The Fed is also likely to cut rates engineering, procurement, and secondary market. There is ments compulsory for retail
Securities. and one needs to assess their com- construction company, is healthy demand from institu- investors.
The FPI sell-off during the month has remained positive. FPIs have Going ahead, their allocation to India mentary. A lot of damage has already entirely an offer for sale (OFS). tional investors, including for- Investment bankers say the
has seen the benchmark indices like the pumped in ~66,228 crore in the first sev- will depend on global cues, performance been done at the index level (down The issue size has been cut eign portfolio investors for small investors have not entire-
Sensex (down around 5 per cent) and en months of calendar year 2019. They of key domestic macroeconomic indi- around 7 per cent since the Budget from ~4,500 crore to ~3,150 these IPOs, they said. A recent ly warmed up to make pay-
Nifty 50 (down around 6 per cent) reg- were net sellers of ~3,411 crore during cators and policies pursued by the gov- in July). So, relatively, if the global crore. rule change by markets regu- ments through so-called
ister their sharpest monthly fall since the same period of 2018. ernment, they said. markets fall, the Indian benchmarks Meanwhile, Spandana lator Securities and Exchange Unified Payments Interface
September 2018, when they tanked 6.2 Besides the tax proposals, foreign “Over the short-term, we believe the are likely to fall less. FPIs, in my view, Sphoorty Financial Services Board of India (Sebi) has (UPI), mandated for IPOs. Most
per and 6.4 per cent, respectively. investors, experts suggest, are also wor- second quarter is likely to remain a are not in a hurry to come back to has retained the fresh issue allowed these companies to bankers are expecting muted
However, despite the announce- ried about the economic growth amid washout, with the slowdown since the India,” said Andrew Holland, chief component of ~400 crore but alter their IPO size without hav- response from retail investors
ment, the total cumulative net FPI falling consumption, weak corporate first quarter intensifying in consump- executive officer at Avendus Capital cut the OFS component from ing to refile their IPO docu- on account of teething issues
inflow so far in the current calendar year earnings and a patchy monsoon so far. tion and services. This is a result of the Alternate Strategies. ~1,200 crore to ~800 crore, with ment. Earlier, companies had with UPI-based applications.
private equity firm Kedaara to refile their IPO document to Sources said a group of
Capital deciding to offload less. Sebi to tweak the issue size by investment bankers have
“To align with the challeng- more than 20 per cent. sought a meeting with the mar-
DSP MF takes 50% haircut; CCD firms ask for 2 wks ing market conditions, compa-
nies have to scale back their
valuation expectations. Both
In January, Sebi allowed
issuers to change the OFS com-
ponent of an IPO by as much
kets regulator to discuss better
implementation of UPI pay-
ments for IPOs.
JASH KRIPLANI Ratings downgraded CDNL cies issue any sharp down- Sterling and Spandana have as 50 per cent.
Mumbai, 31 July and Tanglin Developments
SEEKING COVER grade, we will anyway have to cut the OFS component after Investment
from A-minus to BBB, placing n Quality of security cover affected take a haircut as per the regu- some investors didn’t want to bankers say the
Coffee Day group firms have the entities on ‘credit watch by erosion in CDEL’s share price latory norm,” he added. sell more shares at reduced val- rule change has
sought two weeks from deben- with negative implications’. DSP MF added: “While we uations,” said an investment come in handy for
n Promoters had pledged CDEL
ture holders exposed to the The rating action is likely await the CDNL plan, an ero- banker in the know. a lot companies
companies, people in the to lead to 3-4 per cent mark- shares as security sion in the value of cover mer- The public offerings are looking to hit the
know have said. to-market impact on some of n CDEL tanked 40% in 2 days its a relook at the scheme’s coming at a time when equity markets in these
Two of the group compa- the MF schemes exposed to following news of Siddhartha's exposure. Hence, we have markets have hit a downward challenging mar-
nies — Coffee Day Natural Coffee Day entities. ICRA also disappearance and later his death taken 50 per cent haircut on slope. In July, the benchmark ket conditions.
Resources (CDNL) and placed the rating on CDEL’s our exposure.” Nifty declined 5.7 per cent, Another rule
Tanglin Development — term loans on ‘watch with neg- n At the end of June 28, MFs' CDEL has dropped 40 per while the broader market Nifty change by Sebi,
apprised the debenture hold- ative implications’ while main- exposure to the three Coffee Day cent in two days following news MidCap 100 and SmallCap 100 however, is prov-
ers of the recent developments taining a BBB-plus rating. group firms stood at ~192 crore of Siddhartha’s disappearance,
and sought time to come back The quality of security on and confirmation of his death
with a plan. these exposures has come on Wednesday. As of July 29,
A debenture holder has the under pressure following the The haircut led to a 1.3 per cent munication from CDEL, DSP MF’s exposure to CDNL
option to invoke and sell sharp decline in the stock of hit on the net asset value of DSP seeking time and informing stood at ~69 crore. Apart from
pledged shares if the promoter holding company CDEL, Credit Risk Fund, which held about the board changes. the promoters’ pledged
is unable to restore the secu- which was pledged by promot- these debentures. Industry sources said other shares, the exposure was
rity cover in accordance with ers for these exposures. In the investor note, DSP fund houses with exposures secured by a land parcel.
terms of a debenture issuance. Among the fund houses, MF said: “CDNL has asked to the Coffee Day group were At June-end, BOI AXA MF’s
Selling of pledged shares by DSP Mutual Fund (MF) has tak- for two weeks to come back also considering haircuts on exposures to CDNL’s deben-
creditors could add to the sell- en a 50 per cent haircut on its with a concrete plan regard- their exposures. “We are in tures stood at ~16 crore; it is yet
ing pressure on Coffee Day exposure to CDNL, which was ing the exposure.” A senior talks with our trustees on the to take a call on haircut.
Enterprises (CDEL). a fully-owned entity of Coffee executive of another fund next course of action,” said a
On Wednesday, Brickwork Day founder V G Siddhartha. house also confirmed a com- fund manager. “If rating agen- More on business-standard.com
THE COMPASS
Replacement segment gives smooth ride to Apollo Tyres
Slowing auto RAM PRASAD SAHU tive season in India. In Europe, the
company is outperforming the market
sales, higher The stock of Apollo Tyres gained over and this trend is expected to continue
5 per cent after its June quarter results, for now.
commodity costs which came marginally ahead of ana- While consolidated earnings before
remain major lysts’ estimates. Revenues, on the back
of robust growth in both Indian and
taxes, depreciation, interest and amor-
tisation (Ebitda) fell 10 per cent to ~475
areas of concern European operations, stood at ~4,272 crore, it was still above analysts’ esti-
crore, slightly more than the ~4,249 mates.
crore last year. Margins, however, came in at 11 per
Indian operations, which account cent — up 103 basis points on a sequen-
for over 70 per cent of revenues, were tial basis — which was higher than esti-
Base=100 120
up 1 per cent; the European business mates that had pegged the same at the
saw 5 per cent growth. 10 per cent-mark. Though product mix
Sensex Growth in India was led by the able to buck the trend — on the back has improved, flat volumes and higher
100 replacement segment, both in the com- of growth in replacement demand — costs (employee, other expenses) as a
mercial and passenger vehicles seg- despite headwinds in the Indian mar- percentage of revenues restricted the
ments. This is the largest segment and ket. It has been focussing on the truck improvement in margins.
80 accounts for over two-thirds of the replacement segment and had While Apollo Tyres is expanding its
company’s sales. launched fuel-efficient tyres. In addi- presence across product categories and
Apollo Tyres
60
Higher sales in the replacement tion, the firm had increased its volumes segments, the Street will watch out for
market have helped offset the weak- in the truck and bus radial segments, the impact of slowdown in the auto seg-
ness in supplies to auto makers and and gained market share. ment on volumes.
40 original equipment manufacturers Chairman Onkar S Kanwar is hope- Further, raw material costs, which
Jul 2,‘18 Jul 31,’19 (OEM). ful that the markets will recover and continue to remain elevated, could also
Compiled by BS Research Bureau The company indicated that it was sales will bounce back close to the fes- be an overhang on margins.
>
MUMBAI | THURSDAY, 1 AUGUST 2019 THE SMART INVESTOR 11
T
he management commen- investors are shying away from 52.0* companies, which have declared
tary from most fast-moving them and FMCG is perceived as a 54.0 results so far, reported a decelera- 11,085.4
consumer goods (FMCG) relatively safe sector. We do not see Britannia Industries 38.9 tion in volume growth on a sequen- 11,100
majors for the April-June 2019 sharp valuation correction in the tial basis. And the volume offtake
49.6
quarter (first quarter, or Q1) FMCG space, despite lack of visibil- Dabur 39.6 could remain poor in the ensuing 11,050
results so far, with respect to ity of near-term demand recovery.” quarters on the back of weak con-
41.7 11,118.0
demand recovery, has not been In fact, even after six months of Marico sumption.
very positive. moderation in consumption, the 36.3 Thus, how the companies con-
11,000
42.9 Jul 30,’19 Jul 31,’19
For instance, the management average current valuation of major trol their advertising and promo-
Colgate-Palmolive 35.5
of India’s largest FMCG company FMCG players is still 12-13 per cent tional spending and their impact
— Hindustan Unilever (HUL) — premium to their own historical 53.3 on profitability will be key. In Q1, PRESS TRUST OF INDIA er, dropping 4.55 per cent, fol-
during a Q1 analyst call said, average one-year forward valua- Average 41.3 benign input costs and new lease Mumbai, 31 July lowed by Bharti Airtel,
“Looking ahead, we expect tions in the past five years. This 23.8 accounting standard — IndAS 116 Reliance, NTPC, Maruti, Tech
near-term demand to remain sub- clearly indicates that FMCG is Nifty 15.4 — offered strong margin support The benchmark indices Mahindra, ONGC, HDFC, and
dued, given the macroeconomic being considered the most defen- to the companies. closed marginally higher on HDFC Bank.
conditions.” sive bet; the situation though in
124.3 Overall, investors, who can Wednesday, propelled by ban- “The market reversed
Premium (%) 168.4
The question is, will this lead to other major sectors is far worse. stomach some risks, can bet on king and auto stocks, ahead of after testing the psychologi-
*CY20 estimated Source: Bloomberg
a significant correction in FMCG This is also reflected in the FMCG on a selective basis. Experts the US Federal Reserve’s inter- cal 11,000-mark, supported
valuations? Analysts believe that 2020-21 earnings estimates of the believe the valuation correction est rate decision. by short covering in banks
might not be the case. FMCG sector, which is at a 168 per risk for FMCG could be high if other After a choppy session, the and auto after recent days of
According to Dhananjay Sinha, cent premium to broader markets, recover in the second half of the for the slowdown has been weak sectors see some recovery. On the Sensex settled 83.88 points or fall and prospects of dovish
head of strategy and chief compared to 124 per cent for the financial year, a lot will depend on rural consumption. basis of Q1 numbers so far, HUL 0.22 per cent higher at Fed policy. “Investors’
economist at IDFC Securities: trailing 12 months. factors such as monsoon and rural HUL highlighted that rural and Dabur are analysts’ top picks 37,481.12. The broader Nifty appetite for mid- and small-
“Major sectors such as automobile, Though some expect demand to spending. One of the key reasons growth is now on a par with urban in the FMCG space. ended 32.60 points or 0.29 per caps is yet to find confidence
cent up at 11,118.00. despite consolidation as lack-
“Market sentiment lustre earnings and high beta
improved somewhat on impacted the sentiment. A
PRIVATE EQUITY
>
17,269
1,420
622
1,059
Canada Pension Plan Investment Board (CPPIB) has invested around CA$8.2 billion (nearly USD $6.24 billion) in India since it started know what those explorations will Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19
investing here in 2009, with a focus on infrastructure, real estate and financial services. It has invested in companies such as EdTech lead to. Jan 1-Jul31 Jan 1-Jul31 Deal
2018 2019 2018 2019 volume 82 72 105 106 88 83 86
Byju’s and recently backed IndInfravit Trust’s move to acquire the road projects of Sadbhav Infrastructure. ALAIN CARRIER, its senior
managing director and head of international, and VIKRAM GANDHI, a senior adviser, spoke to Raghavendra Kamath on their strategy You have been searching for a
and views on the economy. Edited excerpts: partner to co-invest in rent-yielding Sector-wise allocations Key deals last week
office properties. Any progress on
The non-banking financial and real in infrastructure. As an example, Vikram Gandhi: In public markets, that?
The diversified financial sector attracted the There were 13 deals worth 270.66 mn & 1
estate sectors have gone through a China is a much bigger market but we have Kotak and others. Our strat- Gandhi: While we have a partner- most investments, accounting for 25.49% of exit in the last six days ended July 31
lot of stress in the past year or so. we have not invested a single dollar egy is to go with partners. The ship with Shapoorji Pallonji, we exit- the total investments in deal value. Software Investor & target Stake (%) Value ($ mn)
You have been an active investor in in Chinese infrastructure, since they impediment in increasing our expo- ed an asset we had over there. We are & Services was the second (17.39%), followed
both sectors. Are you looking to don’t need our capital. They use sure to India is finding the right part- happy and satisfied with that. We by energy, utilities & transportation sectors AION India 1
NA 122.5
Future Lifestyle Fashions
revisit your investment strategy in infrastructure as a tool of economic ner — that is really critical. The sec- have been in dialogue with some Sectors Percentage (%)
these? policy. ond is finding opportunities and firms but nothing has been publicly
Alain Carrier: We are here for the transactions where we can put announced. Hopefully, there will be Diversified financials 26 Jungle Ventures Pte.2
NA 45.0
long term and India is an attractive Why are you bullish on the Indian meaningful amounts of money. some announcement soon. Software & services 17 Commeasure Pte.
market. Market dislocations, by and infrastructure story? Third, with the right partner and Commercial real estate will remain Energy 8 Accel India 3
large, offer more opportunities. I Carrier: Because there is a massive large transaction, whether risk- an important area for us. NA 40.0
Utilities 8 MindTickle Inc.
cannot specifically comment on our infrastructure deficit, as a require- return meets our criteria. We are
investment strategy but we think ment for the country to keep grow- patient and wait for the right oppor- Your joint venture (JV) with Transportation 6
there will be a lot of opportunities ing and achieve its potential. There tunities to come along. Shapoorji for rent-yielding assets Retailing 5 ASK Real Estate Fund-I NA 21.8
for us in India, in terms of credit, is shortage of local capital to finance and another with Piramal did not Gulshan Homz 4
stressed assets and so on. the infrastructure and the Indian Are you looking to enter residential progress much. What went wrong? Insurance 5
government does not use infrastruc- real estate or alternative properties Gandhi: Nothing wrong with both Real estate 4
The macro-economic indicators ture as a tool of economic policy. It such as student housing, co-living the JVs. Basically, in the JV with Omidyar Network India5 21.0
Consumer services 4 Indifi Technologies
NA
here are not showing a great picture. does not have capital to deploy it by and so on? Shapoorji, we bought a big asset in
Does that make you worried as a itself. This means it needs to be care- Gandhi: Our current exposure to Chennai and sold it. That was the Others 17 1
Includes Blackstone, 2 Includes Susquehanna
global investor? ful about the regulatory environ- real estate is around malls, logistics objective. Since we sold the asset, we Others include banks, health care equipment & services, materials, International Group, IFC, Qiming Venture 3 Includes New
capital goods, commercial & professional services, pharmaceuticals, Enterprise Associates, Qualcomm Ventures, Canaan
Carrier: When you look at India ment for infrastructure and welcom- and commercial real estate. We con- continue to explore other opportuni- biotechnology & life sciences, household & personal products, food, Advisors, Norwest Venture 4 Noida Residential Project
from the prism of a long-term ing of foreign capital. tinue to explore opportunities in sec- ties in commercial real estate. In the beverage & tobacco, consumer durables & apparel, media 5
Includes Elevar Equity, Accel, CDC, Fair Finance Fund
investor, there are a lot of positive tors such as student housing, co-liv- JV with Piramal, a lot of liquidity
aspects, like where India is in the If you look at foreign investors in ing and so on. But, we have not done came into the market at that time Top five PE deals this year
whole cycle. Gross Domestic India, Blackstone has done anything in this so far and do not and brought down the returns. The top five deals this year accounted for 38.62% of the total investments in terms of deal
Product per capita is at a asset-by-asset investment, Hence, we decided not to go ahead value. In the largest deal this year, Brookfield Asset Management invested $3.6 billion in Tower
higher elevation as compared Brookfield has done with investments. We have a won- Infrastructure Trust. This was followed by $1.8 billion investment by Brookfield in Pipeline
to 10-15 years ago but the sto- buyouts. You have done derful relationship with them. Infrastructure Ltd and $1.15 billion bet of GIC,SSG Capital in GMR Airports Ltd
ry is not exactly the same. platform deals. Why have Recently, we announced a JV for a
You can see the levers now, you chosen this model? renewables InvIT (infra investment Investor Investee Stake (%) Deal value ($mn)
that in the long term, will bring a lot Carrier: Partnership is our model trust) and will continue to explore Brookfield Asset Management Tower Infrastructure Trust NA 3,666
of people in the economy. The tech- in most countries. Infrastructure other opportunities with them.
nology, the Jio story..India is on the we do directly in many. In India, Brookfield Asset Management Pipeline Infrastructure NA 1,824
cusp of a transformative growth since we are new to the market, we Would you look at floating GIC, SSG Capital Management HK1 GMR Airports 44.4 1,153
story where, for the addressable decided to invest with part- a real estate
market, consumer companies go ners. In real estate, our investment trust Baring Asia Private Equity Fund VII NIIT Technologies 69.5 872
beyond the initial $100 million. strategy globally is to (Reit) here? GIC, Abu Dhabi Investment Council Greenko Energy Holdings NA 824
Once you get up that curve and get align with partners, as it Gandhi: As you 1
Includes TRIL Urban Transport Pvt. Ltd.
the tools to enable you to reach is a very domestic and know, we have done
deeper into the population, the long- local business; it is bet- an InvIT with L&T Liquidity events/exits this year
term story is going to be very posi- ter to do with trusted IDPL as sponsor, and The year has seen 83 exits. There were 21 open market exits worth $1602.42 million. Nalanda
tive in India. If you take a long-term partners. In interna- we and Allianz as India Fund I sold its 16.57% stake in MindTree Ltd. for $389.34 million
perspective, the macros are right. tional markets, the investors. We have Secondary Sale Open Market
Exit type Deal volume Deal value ($mn)
We think there is less capital biggest decision we given many inputs.
Open Market 21 1602.42 0.23 63.84
available in India today from domes- make initially is to It is a useful struc-
tic sources or, to some extent, for- pick the right partner. ture for that asset. We Initial Public Offering 4 825.63 %
Buyback
eign sources. But, this makes large Our first infrastructure have a similar view on M&A 39 69.3
0.27 IPO
pools of capital like us more attrac- investment in India was Reits. At the right Buyback 5 6.74
M&A 32.90
tive and yield more opportunities. Larsen & Toubro — we ALAIN VIKRAM opportunity, we will Secondary Sale 14 5.76
We have been big investors and are took a lot of time in pick- look at it but not right Snapshot of PE activity & deal appears on the first Thursday of every month
2.76 Source: VCCEdge
CARRIER GANDHI
still looking at many opportunities ing the right partner. now.
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18 PERSONAL FINANCE
>
MUMBAI | THURSDAY, 1 AUGUST 2019
CHECK SARBAJEET K SEN duration funds at this point. The risk-taker can go for
conditions). The tripartite nudge economics, and at
agreement between the least signal the less-risky
Short-maturity papers are STRATEGIES credit-risk funds but given housing finance company nature of buying ready-to-
Business Standard brings you a snapshot of average In the past year, a series of available at an attractive the current situation, it (HFC), the developer and move houses by reducing
defaults, downgrades and yield, and also the risk- n Invest for a minimum of would be better to avoid the buyer is loaded against the risk weight on such
current rates and unit sizes in localities that offer
delayed payments have left reward return doesn’t work three years; tax benefit 20 them or invest in them in the buyer. While the buyer properties. Like elsewhere
property in the price range of ~1 crore-~1.5 crore. If
debt fund investors scarred. in favour of long-term debt per cent after indexation small quantities. Currently, is under the impression in the developed world,
you are looking at buying real estate, an idea about
But debt funds do provide funds,” he said. n Look at corporate bond the credit spread is very low, that the developer is solely retail buyers should only
prevailing rates would come in handy
some amount of stability to a However, there is a minor funds, as 80 per cent of and quality papers are responsible for paying the purchase ready properties
Avg price (~/sq ft) Avg unit size (sq ft) portfolio. And bonds funds hiccup here. Market corpus is invested in available at a better rate. interest during the con- and not under-construc-
MUMBAI investing in private sector regulator, the Securities and AAA-rated papers Secondly, most of the mutual struction period, the agree- tion properties.
corporate bonds could offer Exchange Board of India funds barring IDFC have ment provides that the
Andheri(E) 16,698 1,311 good risk-reward to investors (SEBI), does not specify the n Banking and PSU bond exposure in the range of 10 buyer will have to pay the The writer is a Sebi-registered
Powai 19,166 1,184 who are keen to take some credit profile of the funds. So, funds are another option per cent - 40 per cent in less interest if the developer investment advisor
Mulund(W) 15,091 1,441 measured exposure. you will come across than AA papers. This carries
Borivali(E) 14,859 1,615 But you should have a schemes that offer varying high risk at this juncture. The
clear strategy. Short- risk-reward options. Some interest rate sensitivity. credit risk category has
Andheri(W) 18,510 1,194 duration funds could be a stick to only high-rated bond Considering these, good witnessed a whopping 18 per
Ghatkopar(E) 14,752 1,490 good investment bet at this and some of them go for low- quality AAA-rated corporate cent fall in their AUM
Chembur 17,662 1,270 point. Simply put, here fund rated bonds to give a boost to bond funds could be the between September and
Goregaon(W) 15,816 1,413 managers invest in bonds
that mature in one to three
the portfolio. That may make
the decision a bit difficult for
better alternative to credit-
risk funds. If one has a time
June,” Sridharan points out
And last but not the least,
TIPPING
BANGALORE
TKanakpura Road 7,688 2,713
years. In these schemes, the investors and they may have horizon of two years or more, invest for a minimum three- POINT
impact of interest rates to rely on expert advice. it is ideal to invest in year time frame. These funds
Hennur Road 6,975 2,890 movement is not much. In Even the risk-averse can corporate bond funds. The are expected to deliver over Is my balanced hybrid fund worth sticking to?
the bond market, if interest take this route yield-to-maturityy the three-to four-year time
Jayanagar 12,017 1,891 Many investors are feeling disappointed that their aggressive
rates move up, bond prices through corporate on most of the funds frame, as that is the typical
Haralur Road 7,158 3,069 fall, and so does the scheme bond funds. These in this category is average maturity of most of hybrid fund (popularly known as balanced fund) is showing
Rajajinagar 12,035 1,899 net asset value (NAV) and funds invest at least around 8 per cent,” these schemes. It is better to negative return over the past year. Many investors were sold
vice-versa. Short-term bond 80 per cent of the says Sridharan. match your holding period these products as being
Bannerghatta Road 8,158 2,903
funds look good given the money in AAA-rated Another good bet with the average maturity safer than pure equity
Koramangala 11,104 2,013 ongoing attractive yields. bonds. Though the for the risk-averse profile of the portfolio to HOLD ON funds. Clearly, these
Hoodi 7,304 3,110 “The rally in G-Secs has investments are investor could be the ensure that there are no n Category average return(%) investors have been
CHENNAI happened; hence duration is
not advisable for fresh
made in private
sector entities, a
YOUR banking and public
sector unit bond
negative surprises due to
changes in interest rates. 6.39
8.74 10.9 mis-sold the product.
Aggressive hybrid funds,
Kotturpuram 15,500 1,433
Saligramam 9,600 2,294
entrants. Short-duration significant MONEY funds. These funds Another advantage is the tax according to Sebi’s
funds offer better defence allocation to AAA- invest in bonds benefit that comes with -3.82 -2.8 definition, invest 65-80
Egattur (OMR) 6,504 3,479 against interest-rate rated bonds offers some issued by banks, certificate holding for three years. per cent of their
Thiruvidandhai 6,500 3,700 volatility than long-term comfort for investors. “At of deposits of banks and Keeping it for this period 3 mths 1 yr 3 yrs 5 yrs 10 yrs portfolio in equities.
funds,” says Joydeep Sen, this juncture, investors are bonds issued by public entitles the investor to long- Source: Value Research
Such a portfolio is
Anna Nagar 11,500 2,062 bound to be volatile. To
founder, Wiseinvestor.in. extremely cautious. If one sector undertakings. Some of term capital gains tax.
Vadapalani 11,150 1,925 Agrees S Sridharan, head, wants to invest in safe debt the portfolios do hold some Gains on funds held for at their credit, these funds have on average declined less than
Muttukadu 5,637 3,938 financial planning, Wealth funds, they need to look at long-term bonds, which least three years are taxed at pure equity funds. Dividends, too, were bound to stop once
Saidapet 12,500 1,807 Ladder Investment Advisors: high credit rating, low reward investors in a falling the rate of 20 per cent after the markets turned. Investors need to realign their
“We don’t recommend long- average maturity and low- interest rate regime. indexation. expectations and ride out the downturn.
HYDERABAD
Kondapur 7,155 3,012
Kokapet 6,420 3,459
Manikonda 6,230 3,481
Nanakramaguda
Banjara Hills
6,201
8,682
3,334
2,479
READER’S However, ELSS creates a lot of wealth over a
long period of time and personally I wish that
be conservative, and to add a cushion to your
calculations.
pened. My suggestion is that you continue your
SIP and continue to accumulate units.
Pragathi Nagar 8,000 2,570 CORNER ELSS had a section of its own in the Income
Tax Act. Due to this incentive, people would If I look at the current scenario, there are no
Remember you were doing this for a 10-20-
year period and to multiply your money. If you
Madhapur 7,404 2,920 FINANCIAL PLANNING invest a significant portion of their savings gains in equity or debt. Most of the choose to simply grow your money marginally,
here. Returns from ELSS are not guaranteed, predictions are that things will get worse. then FDs should be your vehicle. Other similar
Hitech City 8,600 2,595 but what is certain is that over a long period The one single factor that supports growth – vehicles could be corporate FD and PPF.
PUNE of 10 years it will make maximum wealth for government policies – seems to be falling
Kharadi 7,660 2,861 you. Although the lock-in period in ELSS is short. I have never seen such a market in the What are your thoughts on peer-to-peer
Baner 8,384 2,591 KARTIK just three years, if you are considering invest- last two decades. I am tempted to stop my lending as an investment product? Many
JHAVERI ing in it, stay invested for many, many years. systematic investment plans (SIPs) in equity platforms talk about giving over 12 per cent
Bibwewadi 7,834 2,739 funds and opt for fixed deposits (FDs) of returns. I do understand that there would be
Koregaon Park 11,285 1,911 When advisors make a financial plan, what small banks that offer better interest rates. defaults and returns can get hampered.
Bavdhan 7,916 2,888 is the range of inflation they consider? I was Are there other safer options like FDs that That’s true, there will definitely be defaults.
calculating education and medical inflation can give me 8 per cent return? But that is the risk you are taking to earn a
Aundh 10,003 2,390
I am 42. Out of the ~1.5 lakh limit under and realised that both have been at an These days we are all so performance driven higher return. Having said that, also under-
Wakad 8,823 2,410 Section 80C, my home loan and Employee average of over 10 per cent. How much that we want continuous performance at any stand that most of the people applying for a
Pimple Nilakh 7,696 2,843 Provident Fund combined get me around inflation should individuals with children cost and at all times. Every investment market loan on these platforms will generally be find-
~1.2 lakh deduction. For the remaining consider when saving for a goal? is driven by its nuances. Most retail investors ing it very difficult to get loans through the
Note
· Ticket price range considered for the above data points is between 2-2.5 crore ~30,000, should I go for equity-linked savings I would like to consider a five-year average of only chase performance, they do not ride per- regular banking channel. The saving grace is
·All the data points discussed in the above table refer to Primary Market only scheme (ELSS), Public Provident Fund (PPF) inflation based on the consumer price index. formance. They see historical performance and that Indians generally are quite honest people
·Above residential data set comprises of Residential Apartments only or National Pension Scheme (NPS)? Over long periods of time, financial plans then decide to do a fund SIP, or invest in the and honour commitments well. The ticket
·Above residential data is representative of organized real estate developers NPS, definitely not. Ordinarily people derive should also incorporate changing levels of stock markets. But if they don’t see quick size is also reasonably small, so you may
only a lot of comfort from investing into PPF, and inflation. Therefore, it is a good idea to keep returns, they stop the investment and once experiment.
·The top performing micromarkets based on sales during last year (Jun-2018 to
May-2019) is represented on the above table rightly so. It is a good investment and one of reviewing your financial planning annually. again come back after a large part of the next
·Data points are updated till May 2019 the few guaranteed types of investments. You may want to add 1-2 percentage points to rally or performance cycle has already hap- The writer is director, Transcend Consulting
Source: PropEquity
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MUMBAI | THURSDAY, 1 AUGUST 2019 STRATEGY 19 <
Building a culture
lion users in 2017, growing at a
compound annual growth rate of
12.9 per cent. This would also
explain Netflix’s bet on the
mobile platform.
So how does the OTT player
decide its content mix?
of success
The key, the team at Netflix Why we need Silicon Valley’s sharing spirit in India
realised early on, is to focus on a
mix of international originals, n 2008, while scaling business insights with me was
Indian entertainment content
sourced through output deals,
and creating world class original
I Games2win, my fourth start-up, because Jameson knew that their
my partner and I encountered a knowledge and expertise was the
terrifying problem. Almost all our best in the world. There was noth-
shows and movies. In its first year online games (made in Adobe ing I could have taken away from
in India, the streaming platform Flash) were getting stolen from our him.Sharing makes you super
signed two significant alliances websites by pirates across the capable because it's a natural
in the country — one with Shah world. Our revenues evaporated, counter to your vulnerabilities. By
Rukh Khan-promoted Red and we felt utterly helpless. Just being 'secretive', you hide behind a
Chilies entertainment, and the then, a new innovative company veil of weakness.
other with what was then called called Mochi Ads from San
Phantom Films (co-owned and Francisco developed a technology Sharing makes you learn
run by four filmmakers includ- that helped track such pirated Jameson and I became friends and
ing Anurag Kashyap and games. We innovated on their idea we ran a series of trials and exper-
Vikramaditya Motwane). and created an ad solution inside iments together. Mochi had a great
Thanks to these collabora- our games that would travel with exit while we scaled our audience
Dragon’s share CEOs are concerned about three factors related Believe acting with
agility is the new
The combined market share of Chinese smartphone to “return to territorialism”
currency
majors Huawei, OPPO, Vivo, Xiaomi, and Realme (or
HOVXR) attained its highest ever market share in CHALLENGING TIMES
India by cornering 42 per cent of the sales in the just KPMG’s fifth annual India CEO growth for their companies About 69 per cent CEOs in 33
concluded quarter. Releasing these numbers for Q2
2019 on Wednesday, Counterpoint Research
Outlook, which has made its and the country. They realise India, the same as CEOs 38% 38% 24%
deductions based on the that for their businesses to be globally, now have structures Likely to undertake
attributed those and the continuous ascent of the views received from 125 CEOs resilient, they have to be in place to review their acquisitions to
brands from the neighbouring country to heavy transform their
marketing, faster portfolio refresh, high spec
in the country across comfortable with disrupting business models and ensure
devices at aggressive prices and multi-channel industries, shows how the their business models for they stay competitive in the Rise of political parties with business model
US-China trade war
presence. "These brands have been aggressively leaders see the prospect of which agility is the key. face of disruption. Brexit protectionist policies Source: KPMG
expanding outside China and achieving growth
offsetting the saturation in their home market.
Their strategies and product portfolios are more
while buying — something which is proactively identify and address any regional markets within the states
Consumers from tier-II/III/IV geographies still only possible in brick-and-mortar gaps. Moreover, by automating the that we are operating. We are
stores. An inability to return products internal procurement processes such planning to open 40 stores in newer
prefer making planned purchases that are easily and delayed product deliveries as purchase order tracking, RFX geographies by 2020, and are also
affordable, Shukla tells Shubhomoy Sikdar to small towns are two other pain
points that make these customers
events and supplier evaluation, we
are able to achieve higher operational
focusing on nearby catchments in the
locations where we have a strong
A bulk of your business comes from business performance ahead of us, hesitant about shopping online. efficiency. Since these activities can presence. If we notice that a new store
tier-II, III and IV cities, but of late and as the season progresses, we Our brand attempts to meet the be completed without human in such localities will not hamper the
consumer demand across categories believe that there is going to be a trust and assurance that these intervention, it further reduces sales of the existing store, we would
has been sluggish in the country. considerable increase in demand. shoppers expect, while also ensuring transaction time and helps expedite probably go ahead with the same.
How do you see it shaping up in the Besides, we also have an end of a refreshingly different offline downstream processes.
next few months? season sale coming up, followed by experience. We are leveraging Since the Northeast is one of your
Well, we did experience weak sales the festive season in the next couple cutting-edge technology to manage How will you go about opening the focus markets, do you also see the
Stay connected last year due to erratic weather
conditions during winter, which
of months. So, we have high hopes
that the business will scale up in UP,
our operations in a better manner,
such as automating supply and
100 new stores that you have
announced recently? Will
potential of procurement from
neighbouring countries such as
According to Gartner, Inc. business and IT leaders will affected the business. However, this Bihar, Jharkhand, Chhattisgarh and procurement processes to more stores come up in Bangladesh or Myanmar thus
have to develop an understanding of new wireless fiscal year, we are witnessing healthy in the Northeast region. enable greater the cities/towns where making logistics easier?
technologies as new trends are emerging which has growth in the demand for productivity, visibility you already have a The procurement of our logistics is
extended the realm well beyond Wi-Fi. Beyond Wi-Fi products that are trendy Internet connectivity and and cost efficiency. foothold or the focus centralised and situated in India. But,
and 5G, there are areas such as vehicle-to-everything and cater to the young. affordability have Technologies such will be entering new considering e-procurement supports
through which conventional and self-driving cars will Thanks to growing improved hugely in what as e-procurement territories? various currencies, languages and
communicate with each other as well as with road smartphone penetration, you describe as “remote structures Our business logistics options, sourcing from
infrastructure or low-power wide-area networks that cheap data rates and locations” and the e- centralise the development team countries across the globe, especially
provide low-bandwidth connectivity for internet of increasing digital
JP SHUKLA, commerce giants are doing tracking and help us is exploring newer from the neighbouring countries, will
things applications in a power-efficient way to connectivity, consumers co-founder & chief brisk business. What then in leveraging volume territories where indeed be stress-free.
support things that need a long battery life. “Many from tier-II/III/IV executive officer, gives you the edge? and lowering costs for there is growth However, at present, we feel it is
areas of wireless innovation will involve immature geographies are now able
1-India Family Mart Our target consumers hail the buyer. potential for a better to source our inventory
technologies, such as 5G and millimetre wave, and to track the latest fashion from tier-II/III/IV cities. This also allows us business such as requirements from within the
may require skills that organisations currently don’t and style trends. However, these Most of the population from these to track cost reductions on ours, besides country instead of importing
possess. EA and technology innovation leaders consumers still prefer making markets still have trust issues with e- a continuous basis evaluating products from neighbouring
seeking to drive innovation and technology planned purchases that are commerce platforms. One of the key and to newer countries such as Bangladesh and
transformation should identify and pilot innovative affordable. Our retail chain is here to reasons that force small town Myanmar. Doing so allows us to
and emerging wireless technologies to determine plug that gap and provide reasonably shoppers to drop out of online support and drive the growth for local
their potential and create an adoption roadmap,” priced fashion to the lower income shopping is poor product quality. manufacturers in India.
said Nick Jones, distinguished research vice president consumer group. This reinforces a perception that it is
at Gartner. We are anticipating better better to “touch and feel” the product More on www.business-standard.com
US Bill would ban scrolling on social media The debate features 20 candidates over criticism that he did not know whether it Buttigieg, a military veteran, largely
two nights in Detroit, Michigan, a battle- would provide better coverage than poli- remained above the fray.
ground state Trump snatched in 2016. cies offered through labour unions. But he attacked the "incompetence"
Republican Senator Josh Hawley tiative by Hawley targeting large technol- for the user content they host if they don’t Frontrunner Joe Biden takes the stage "I do, I wrote the damn bill," he of Trump's immigration crisis, and
introduced a bill on Tuesday to ban ogy platforms as he emerges as one of the demonstrate political neutrality. Wednesday with senators Kamala Harris steamed. assailed Republicans who have stood
unlimited scrolling on pages by social sector’s foremost Republican foes. Earlier “Big tech has embraced a business and Cory Booker, prominent African- But while the self-proclaimed silent despite the president's rhetoric on
media sites such as Facebook in July, he addressed President model of addiction,” Hawley said in a American candidates who have strongly Democratic socialist said he wants to race. "When the sun sets on your career...
and Google’s YouTube. Hawley has Donald Trump’s gathering of statement. “Too much of the ‘innovation’ criticized the former vice president on whip up a "political revolution," the thing you will be remembered for is
The bill would ban infinite, proposed other conservative anti-tech voices, in this space is designed not to create bet- racial issues. Hickenlooper cautioned against abolish- whether in this moment, this president,
automatic content additions Bills targeting which also attracted conspiracy ter products, but to capture more atten- The stakes are sky-high. The debate is ing private health insurance for hundreds you had the courage to stand up to him,"
when users approach the end of the industry theorists and internet trolls. tion by using psychological tricks that likely to winnow the sprawling field by as of millions of people. Buttigieg said.
feeds on sites. It wouldn’t apply Hawley has proposed other make it difficult to look away.” much as half, ahead of the next one in Expanding healthcare ought to be "an Trump's disparaging comments this
to music-streaming sites or pre- bills targeting the industry, Hawley’s bill would require that social September. evolution, not a revolution," Hickenlooper week about Baltimore and an African-
compiled playlists. including one to ban allegedly addictive media companies set a 30-minute limit Underperformers like Senator Amy said. Divisions also emerged on immi- American member of Congress has inten-
The proposed legislation, which is features of video games and another for time on spent on their platforms Klobuchar and Colorado ex-governor gration and trade. sified talk about the country's racial
unlikely to pass, represents the latest ini- requiring that companies face lawsuits BLOOMBERG John Hickenlooper, both polling at below Warren's plan to decriminalize border divide.
two percent, scrambled for breakout crossings by undocumented migrants Several candidates pointed to the need
moments to keep their struggling cam- brought an animated response from to inspire voters, not just with economic
paigns alive. Montana Governor Steve Bullock, who optimism but moral clarity.
"I have bold ideas, but they are ground- warned that would only exacerbate prob- "We need to talk about the fact that
ed in reality," asserted Klobuchar. lems. "A sane immigration system needs the United States has sacrificed our
Warren and Sanders — who are essen- a sane leader, and we can do that without moral leadership," said Marianne
tially tied for second, at about half Biden's decriminalizing" such crossings, said Williamson, an author who has never
support — share similar political plat- Bullock, who told viewers his mission was run for public office. Trump's
forms: both back universal healthcare, to "win back the places we lost" to Trump Republican Party painted the Democrats
tuition-free public college, tax hikes on in 2016. With moderate rivals savaging as too extreme. Chairwoman Ronna
wealthy Americans and aggressive Wall ambitious but costly liberal policies, McDaniel tweeted that voters witnessed
Street regulation. Warren lost her patience. "a doubling down on Democrats radical,
They parried attacks throughout the "I don't understand why anybody goes socialist proposals."
.
MUMBAI | THURSDAY, 1 AUGUST 2019 BRAND WORLD 21 <
M
ondelez India is Inderpreet Singh, associate good overlap and match.” of physical and mental devel-
measuring its way director–Marketing (Gum, Singh is confident the opment—that is the core need
around the exten- Candy and Powdered brand is on strong ground, giv- that the mother brand is cater-
sions trail for its 70-year-old Beverages), Mondelez India. en that across the food and ing to. “If you continue catering
brand Cadbury Bournvita. As it beverage category, healthier to the same set of needs, but in
looks to take the next step with Eatanddrinkhealthy brands are growing faster than a new category, it is a very good
the brand’s extension into bis- Given increasing consumer the rest. And he adds, the trust extension. Because, you then
cuits (launched in 2016) and concerns over a healthy that Bournvita has accrued borrow from the mother brand
expand its appeal to other age lifestyle, the company sees over the years, stands it in what it is known for. And then
groups, the company that has potential in expanding the good stead today as it expands through ads and sales revenue,
several iconic products in its brand’s health promise into in scope and reach. you pay back the mother brand.
portfolio such as Cadbury new forms and areas. Singh K V Sridhar, founder and They are in perfect harmony
(chocolates) and Oreo (biscuits) explains that the macro trend is chief creative officer at with each other.”
says that it is keen to keep the about health and wellness and HyperCollective believes that Currently Bournvita is a key
promise of health unchanged, it can help the brand across the brand extensions must be com- player with 14.5 per cent share
even as it takes Brand Bournvita two domains that it is in at plementary or a natural exten- of the ~7000-crore healthy food
into uncharted territories. present. sion of the core category. “You and drink market. And in keep-
The company believes that Bournvita can grow within cannot be a hair oil and turn ing with its extension ambi-
brand extensions, while the category of health bever- into a deodorant. Brand equity tions, it has been wrapping a
addressing new consumer ages, by tapping into a wider will get diluted if the extension larger purpose of wholesome
segments, could also end up age group. As it has done by is not complementary or natu- parenting for children’s success
diluting the brand image. But stepping into the toddler mar- ral,” he adds. To him Bournvita around its communication.
if done sensitively, extensions ket and targeting women con- has been able to pick its way The narrative is now being tak-
can pay back the mother sumers, thus stepping beyond through the extensions trail en forward for Bournvita Lil
brand in spades. the core group of 5-15 year olds. quite efficiently so far. Champs, where the ads ask
“We have a team to study Health is also an effective mothers to think beyond height
this and look at how Bournvita plank for biscuits, where Speakinonevoice and weight under the banner
can be more relevant among Bournvita is a relatively new The product may fit the health of ‘Badhao Andar Ki Takat’
the (new) consumer base. entrant and where consumers box but the brand could still (Make them strong within).
FROM PAGE 1
on EV roll-out Standard.
He said he recently met officials in the
small additional stake in Zee if needed,” he
said, adding the current transaction had
time frame
The Society of Indian Automobile
heavy industries, road transport, and pow-
er ministries and was assured that the gov-
ernment was not banning ICE vehicles.
given the group more flexibility to negoti-
ate harder on its infrastructure asset sale.
Manufactures (Siam) has commissioned They clarified that they were keen on EVs
global consulting firm Boston Consulting
Group (BCG) to prepare a comprehensive
butithadtobedoneinapragmaticwayand
had to be a win-win for all. “For a complete
Apple clocks
report on EVs encompassing challenges
and opportunities, and the approach India
closure, I also wanted to have the confir-
mation from the NITI Aayog as the propos-
double-digit
should adopt for e-mobility. BCG is likely to
submit its report in a month. Alluding to
al had originally come from their side. And
I was very pleased to hear the very same
revenue growth
the incentives announced by the govern-
ment to spur EV adoption, Kant said the
stand from the NITI Aayog,” he said.
The calibrated approach of first target-
in India
government had done everything possible ing the large polluted cities will put to rest “ThatindicatesthatifApplegetsthepricing
to clean up its cities, improve the quality of the fears of making the capacity for ICE right in a market like India, there is always
life for citizens, reduce oil imports, drive vehicles redundant and potential job loss- demand for an iPhone, as it is a very aspi-
Make in India, and create size and scale. es, Bajaj pointed out. “While the urban mar- rational brand in the country. This is a little
“It is now for the private sector to do its bit. ket will move to EVs in a phased manner, glimpse of what they can achieve in India if
It must take leadership position in becom- growth of rural, semi-urban and exports they can get the pricing right,” said Pathak.
ing the champions of clean mobility,” Kant will more than compensate for that. This India is one of the most sought desti-
said, without making any reference to the will ensure utilisation of the current nations for smartphone firms, with as
earlier proposal of an outright ban on inter- installed capacity and save current jobs. many mobile users as the entire population
nal combustion engine (ICE)-powered vehi- India sold 211 million two-wheelers, of America. The number of smartphone
cles. Rajiv Bajaj, managing director at Bajaj 700,000 three-wheelers in 2018-19,” accord- users in India is expected to double to 859
Auto, who has been vocal in his criticism of ing to Siam. million by 2022 from 468 million in 2017,
the government’s e-mobility road map, said growing at a compound annual growth rate
Oppenheimer to
he was relieved to learn the government of 12.9 per cent, according to an Assocham-
didn’tplantobanICEvehicles,andsatisfied PwC joint study.
with the policymaker’s nuanced stance It is already the world’s second-largest
involving a phase-wise roll-out.
“The previous expectation of a hard
buy 11% in Zee for market for smartphones, after China.
“OnePlus remains the number one brand in
stop from 2023 and 2025 seems to be no
more there. Rather, a very pragmatic
~4,224 crore India in the premium segment, driven by
the strong initial response of the OnePlus 7
approach to take India to a leadership role “The fund has been a financial investor in series. But, overall, the competition is set in
in electric two- and three-wheelers is what Zee Entertainment for 17 years,” said thepremiumsegment.BesideOnePlus,you
the government is looking at. I am all for it, Justin Leverenz, portfolio manager, have brands Oppo, Google and Huawei,”
Invesco Oppenheimer said Pathak. “The good thing these brands
Developing Markets Fund. “This have done is that they have expanded the
> BS SUDOKU # 2805 additional financial investment
underscores our continued con-
category, and all of them have the possibil-
ity to grow and co-exist. I think the oppor-
fidence in the management’s tunity is big for Apple in India.” he said.
ability to deliver long-term Apple posted quarterly revenue of $53.8
growth and financial returns.” billion, an increase of 1 per cent from the
Despite being the largest pub- year-before period. Quarterly earnings per
lic shareholder in Zee, Invesco diluted share was $2.18, down seven per
Oppenheimer will not hold a cent. International sales accounted for 59
board seat, Goenka clarified in per cent of the quarter’s revenue.
an analyst call on Wednesday. “This was our biggest June quarter ever.
“While interest had come Driven by all-time record revenue from
from strategic and financial services, accelerating growth from wear-
investors for the stake sale in Zee, ables, strong performance from iPad and
we chose to go ahead with the Mac, and significant improvement in
offer from the financial investor iPhone trends,” said Cook. “These results
since timelines did not permit us are promising across all our geographic seg-
to delay the process,” Goenka ments and we’re confident about what’s
said in the analyst call. ahead. The balance of calendar 2019 will
He added, “An investment by be an exciting period, with major launches
a strategic partner would have on all of our platforms, new services and
taken longer than the September several new products.”
SOLUTION TO #2804 Very hard: 30 deadline that we’ve given to “Our year-over-year business perform-
lenders for debt repayment.” ance improved compared to the March
Solution The Essel group had signed a quarter and drove strong operating cash
formal agreement with lenders flow of $11.6 billion,” said Luca Maestri,
tomorrow in February to pare debt. chief financial officer. “We returned over
HOW TO PLAY Goenka also said the group $21 billion to shareholders during the quar-
was working out deals with ter, including $17 billion through open mar-
Fill in the grid so
prospective investors for its ket repurchases of almost 88 million Apple
that every row,
infrastructure assets in roads, shares, and $3.6 billion in dividends and
every column
and every 3x3 solar and power transmission equivalents.”
box contains and that “non-binding offers” Apple also provided a forecast for its fis-
the digits 1 to 9 were on the table. cal 2019 fourth quarter, where it expects
“The process of sale of non- revenue of $61-64 billion.
FROM PAGE 1
Coffee Day Ram Mohan, who is group CFO. Among other things, the
“The main focus was how to company is considering mon-
The board is also evaluating
several other strategic assets, Debt profile worsens for Siddhartha’s pvt firms
board to probe bring back the ship to the shore etising the Global Village tech including 12,000 acres of coffee
business tycoon. The commit- crore.Theboardwill Director 5mnsqftofoffice other ingredients to clients. FY18 (in ~ cr) debt for CDEL has risen too, ment, as well as the extent of development may have a crit-
FY19
tee is expected to play a signifi- discuss S V Ranganath space. “The esti- Once the grieving family comes from ~4,449 crore in FY17 to impact on the business and ical bearing on the group’s
5,049.9
4,449.2
1,748.7
cant role given that Siddhartha those in details in interim chairman matedvalueofthe to terms with the reality, the ~6,547 crore in FY19. credit profiles of the firm, operations and credit profile.
is learnt to have not left behind the next meeting asset could be board is planning to meet them In a note purportedly writ- Brickwork Ratings has “ICRA will continue to
991.5
any succession plan. scheduled on August 8.” The ~3,500-4,000crore.So,ifthissin- to discuss if any of them would ten by him, Siddhartha had placed the rating of the bank monitor further develop-
The board appointed Bengaluru-headquartered con- gle thing (Blackstone deal) goes be keen to take up the mantle. NA said that “tremendous pres- loan facilities of Mrs ments and finalise the rating
Independent Director S V glomerate’s debt shot up to through, then the debt will be Siddhartha’s elder son, sure from lenders” had led Malavika Hegde on credit action once more clarity
Total borrowing Total debt for
Ranganath interim chairman, ~6,500 crore as of March 2019 reducedsharplyandcomeunder Amartya Hegde, an MBA from for unlisted firms listed firm him to “succumb”. Rating watch with negative implica- emerges,” said the statement,
whileNitinBagmane,chairman from ~5,100 crore in the previ- a manageable level,” the person Columbia Business School, agencies have approached the tions,” the note said. The rat- dated Tuesday.
Based on six privately held firms
of subsidiary Tanglin, was ous year. Analysts expect this said.The company has another has started coming to office. associated with V G Siddhartha group’s debt with caution fol- ing agency said it would Share prices of CDEL and
named as group COO. The exec- number to come down as the 21acresofunutilisedlandparcel Siddhartha’s other son, Ishaan, Sources:Ministry of Corporate Affairs, lowing the developments. monitor the developments Sical Logistics declined 20 per
utive committee will comprise proceeds of Mindtree sale are near Bengaluru which it may is also an MBA from a US uni- Capitaline, Business Standard On Wednesday, Brickwork and review the rating once cent each, on both Tuesday
calculations
Ranganath, Bagmane, and R accounted in the ongoing fiscal. consider de-leveraging. versity. Ratings placed the ~87.75- there was more clarity. and Wednesday.
.
MUMBAI | THURSDAY, 1 AUGUST 2019 ECONOMY & PUBLIC AFFAIRS 23 <
ALL IN A DAY
Sitharaman to
Now, you’ll have to pay hefty fines for traffic violation
meet CEOs of RajyaSabhaclearsMotorVehicles(Amendment)Billthataimstoweedoutcorruptionthroughtechnology,amongotherthings
PSBs tomorrow MEGHA MANCHANDA
| ~500 Traffic violations | ~2,000 Disobedience | ~20,000 Overloading juveniles, with 3-year
the facilitation of citizens while deal-
Finance
Minister
NewDelhi,31July DRIVING FORCE | ~1,000 Drivingwithout of orders of authorities vehicles imprisonment and
ing with transport departments.
The GoM was headed by Yoonus
Nirmala The Upper House of Parliament Proposals are based on helmetwith3-month | ~5,000 Dangerous | ~5,000 Unauthorised cancellation of Khan, the then transport minister of
Sitharaman on Wednesday cleared the Motor recommendations of licencesuspension driving use of vehicles without registration Rajasthan, and had 18 state transport
will meet the Vehicles (Amendment) Bill that transport ministers licence ministers from different political par-
from 18 states, | ~1,000- 2,000 Penalties | ~10,000 Drunken | Up to ~1 lakh
CEOs of public proposes stiffer fines for offend- ties as members.
sector banks ers and aims to weed out corruption which were vetted by for overspeeding driving | ~25,000 Penalty on Aggregators found On the basis of recommendations
on Friday to review the in India’s road transport system. The a Standing Committee | ~2,000 Driving | ~10,000 Driving despite guardian/owner in violating licensing oftheGoMandotherpressingrequire-
financial performance of the Bill has been cleared by the Rajya of Parliament without insurance disqualification case of road offence by conditions ments, the MoRTH introduced the
lenders and discuss ways to Sabha (RS), with riders. Motor Vehicles (Amendment) Bill,
increase credit growth to The passage of the Bill can be 2016. This, along with amendments,
propel the economy, sources termed a victory for Road Transport 2014, when he took charge of the and 13 against it, Gadkari said, “The computerisation, and online servic- The LS had already passed the Bill on was passed by the LS on April 10, 2017.
said. The meeting will also and Highways Minister Nitin Ministry of Road Transport and much needed amendments will es.” He added that the Bill will provide July 23. The Motor Vehicles (Amen- The Bill as passed by the LS was intro-
review the progress of Gadkari, who was instrumental in Highways (MoRTH) in the first improve road safety, facilitate citizens an efficient, safe, and corruption-free dment) Bill, 2019, is based on the rec- duced in the RS and was referred to a
resolution of NPA cases under bringing in a new legislation on National Democratic Alliance gov- in their dealings with transport transport system in the country. ommendations of the Group of Select Committee of the RS on August
the Insolvency and road safety. ernment. departments, strengthen rural trans- TheBillhasbeenpassedwiththree Ministers (GoM) on transport of states 8, 2017. The Select Committee pre-
Bankruptcy Code, the sources He first promised amendments to After the passage of the Bill in the port, public transport, and last-mile government amendments and will constituted by the MoRTH to address sented its report to Parliament on
added. It is expected to take a the Motor Vehicles Act, 1988, in May Upper House with 108 votes in favour connectivity through automation, need to go back to the Lok Sabha (LS). the issue of road safety and to improve December 22, 2017.
stock of the banking sector,
and discuss ways to improve
M
22,000 Large excess (60% or more)
pactthattheunionfearscould ahanagar Telephone debt-laden entities.
spurimportsofcheaper Nigam (MTNL) will While overall budgetary Excess (20% to 59%)
176,000 Normal (-19% to 19%)
produce,underminingits have to wait for at allocation for telecom PSUs RAINFALL
agriculturalsector.Ateamof least 18 months to become a has gone down by 15 per cent, DISTRIBUTION Deficient (-59% to -20%)
topgovernmentofficialswill part of Bharat Sanchar Nigam the one for BSNL and MTNL Large deficient (-99% to -60%)
beinBeijingbetweenAugust2 (BSNL) as a joint panel will 20,000 has gone up for the current fis- Period: 01-06-2019 to 31-07-2019
and3tonegotiatethetermsof decide the fate of the two PSUs, 14,000 cal (2019-20).
theRegionalComprehensive post merger. Total investment in the six
EconomicPartnership. REUTERS The joint committee will telecom PSUs for the current
have representatives from both MTNL BSNL year is ~14,025.90 crore against
the companies and the depart- Source: Industry numbers an allocation of ~16,468.39
India Post ment of telecommunications
(DoT). It will deliberate on the BSNL includes a voluntary
crore in the revised estimates,
last financial year (2018-19).
Payments Bank outstanding human resource retirement scheme of ~6,365 The same was ~12,186.9 crore
Central tax pool demand by Delhi, Puducherry denied Tax Act has been pushed
back by a fortnight. The task-
force, set to submit the report
on July 31, was handed a 15-
ence included faceless and
anonymised scrutiny, mech-
anism for system-based cross
verification of the financial
15th Finance Commission will not “We cannot sections of media that the It was suggested that a “suit- day extension at the last transactions, reduction in lit-
consider demands Centre had decided to treat able amendment be made in minute to incorporate views igation and expeditious dis-
consider their memorandums of states that Puducherry “at par with states” the terms of reference to ensure of the new members, said the posal of appeals.
are outside the for the purpose of devolution that the award of Fifteenth official statement. This is the second exten-
ARUP ROYCHOUDHURY & dance with the Constitution,” purview of our of funds. This came about after Finance Commission must “The government has sion for the taskforce under
INDIVJAL DHASMANA Singh had said in an interaction terms of reference. governments in seven states apply to UTs with legislature allowed the task force to sub- the Central Board of Direct
NewDelhi,31July earlier this month. This is not and Union Territories had joint- also.” mit its report by August 16, in Tax (CBDT) member Akhilesh
Delhi and Puducherry are something which ly written to President of India However, according to light of the fact that the new Ranjan. Earlier, the commit-
The Fifteenth Finance formally Union Territories with is our preference” Ram Nath Kovind seeking Singh’s statement, that will not members… requested for tee was supposed to submit
Commission is not considering legislatures and elected parties N K SINGH amendments to some of the happen. As reported in more time to provide further its report by May 31, but then
the demands of Delhi and in power. They have never been contentious terms of reference. BusinessStandard earlier, Singh inputs,” the government said finance minister Arun Jaitley
15th Finance Commission
Puducherry to give them a considered by any of the Chairman A memorandum, signed by said in the aforementioned in a release. gave a two-month extension
share of the divisible central tax finance commissions when it chief ministers or finance min- interaction that the Comm- The government had last to complete the exercise.
pool in line with other states, comes to determining share in year 2000, when a isters of Andhra Pradesh, ission’s report will have tailor- month expanded the scope of In fact, the earlier report
Chairman N K Singh told central taxes. It is assumed that of reference. This is not some- Constitutional Amendment was Puducherry, Karnataka, Delhi, made fiscal road map for states, the taskforce to look into five led by former CBDT member
Business Standard. all UTs are a responsibility of thing which is our preference, it made, under which the Union Bengal, Kerala, and Punjab, said depending on their current fis- more areas and nominated Arbind Modi with same terms
“We are not formally con- the Centre, and that their funds is something on which the Territories were left out. There the terms were disruptive and cal situation, and that buoyan- two new members — Chief of reference was not accepted
sidering the memorandum of will come from the Centre’s Commission has little flexibili- are UTs with legislatures, some causes of concern. The primary cy and stability of goods and Economic Advisor (CEA) by then finance minister in
Puducherry and Delhi because share of the divisible pool. ty because we can only go by without legislatures. There are issue was that of use of the 2011 services tax was still a concern, Krishnamurthy Subramanian September last year, on the
under the Constitution, we are “We cannot consider what the Terms of Reference some UTs that don’t have full Census, but they also asked that and that the Commission is and Joint Secretary grounds that all members
not enjoined to do so, and we demands of states that are out- say,” Singh said. statehood yet,” he explained. Delhi and Puducherry be con- looking to meet the GST (Revenue) Ritvik Pandey. could not arrive at a consen-
have to strictly act in accor- side the purview of our terms “All of this follows after the In 2018, it was reported by sidered for devolution. Council soon. “The report was all set to sus.
Railways,DoTondifferentbandwidthover700Mhzallotment Non-subsidised
gas price cut by
The transporter wants premium spectrum for free; government reluctant to lose revenue ~62.50/cylinder
MEGHA MANCHANDA & SHINE JACOB trum available with the Railways cial said Railways had said it would It slashed the base price for 700 PRESS TRUST OF INDIA
New Delhi, 31 July for signalling and WiFi services. surrender all the 900 Mhz spec- Mhz airwaves by 43 per cent to New Delhi, 31 July
All over the world, the 900 Mhz trum it currently uses for the GSM- ~6,568 crore per unit, as the spec-
The Telecom Regulatory Authority frequency is used for railway sig- R — an international wireless com- trum went unsold in 2016 auc- Non-subsidised cooking
of India (Trai) is reviewing allot- nalling and internet services.” munications standard for railways, tions. Besides GSM-R, other tech- gas (LPG) price was on
ting the premium 700 Mhz spec- Sources said only Samsung had offering a secure transmission of nologies are also used by railways Wednesday cut by
trum to the Indian Railways for the technology to develop an eco- voice, data and applications. in different countries. ~62.50 per cylinder on
signalling and WiFi services, but system for such services. It is lob- Telecom players Airtel, For instance, South Korea softening international
the Centre is not bying with the Reliance Jio and Vodafone Idea offers the long-term evolution — rates.
happy to give it for Railways to give it had together opposed the idea of railways or the LTE-R services. Non-subsidised or mar-
free. Instead, the Telecom players the project. But, it allocating 700 Mhz spectrum to They feel the GSM-R has limited ket priced LPG, which con-
Department of Airtel, Reliance Jio, did not answer the Railways for free. They said the capacity. sumers buy after exhaust-
Telecommunication and Vodafone Idea emailed queries on spectrum had significant commer- In April 2017, Samsung part- ing their quota of 12
(DoT) wants to had together this. cial value and could earn substan- nered with SK Telecom, South cylinders of 14.2-kg each at
assign a higher opposed the idea of The telecom offi- tial revenue for the government. Korea’s largest wireless operator) subsidised rates, will now
quantum of 900 Mhz allocating 700 Mhz cial also said, “The The telecom industry, in to offer a LTE-R wireless railway cost ~574.50 with effect
spectrum — that the spectrum to the 700 Mhz should be response to a Trai consultation management system. from midnight tonight, IOC
Railways already Railways for free sold for a premium paper, said spectrum allotted to The system has been officially said in a statement.
uses — for seamless in the coming auc- the Railways for captive use should deployed on the 41-km-long Busan "It may be noted that the
connectivity. tions. If some of it be utilised for commercial services Metro Line 1 between Sinpyeong price of non-subsidised
At present, the Railways has remains unsold, it can be sold lat- provided to passengers, as one and Nopo. LPG was reduced by
2.5-3 Mhz of 900 Mhz spectrum. er. Why should the government exchequer at regular intervals. occupies the 900 Mhz frequency. needs a licence to do so. It claims that the new technol- ~100.50/cylinder earlier in
But, it is available only in some lose out on revenue by giving it for Also, if the Railways were to The railway ministry had first In August 2018, Trai suggested ogy would offer enhanced com- July 2019 also. Considering
places, and so Railways cannot free to the Railways?” shift to the 700 Mhz spectrum, it requested the DoT to reserve 15 sale of 8,644 Mhz spectrum across munication capabilities, where this, the price of non-sub-
provide seamless WiFi connectivi- According to a set of estimates, if would mean a complete overhaul Mhz of spectrum in the 700 Mhz eight key bands, including 4G air- the train operator can, in case of sidised LPG cylinder has
ty, as it is not contiguous. the same quantum of 700 Mhz is of the signalling system. band on February 27, and allocate waves in the 700 Mhz, 800 Mhz, an accident, transmit real-time come down by
A telecom ministry official sold, it will give the exchequer about At present, the Global System 10 Mhz for free. The DoT referred 900 Mhz, 1,800 Mhz, 2300 Mhz video between him and the ~163.00/cylinder cumula-
aware of the matter said, “We can ~1 trillion. Spectrum usage charges for Mobile Communications- the proposal to Trai. and 2,500 Mhz bands, and 5G control centre, thanks to the LTE- tively in two
double the quantum of the spec- and licence fees will also add to the Railways (GSM-R) that it uses A senior telecom ministry offi- spectrum in the 3.3-3.6 Ghz band. R’s low latency. months," it said.
QS RANKINGS
BJP’s assets saw 22%
Bengaluru best student city in rise in FY18, says ADR
India, London tops global list
Report says the Congress HOW MUCH THEY HAVE
reported a 15% decline Assets declared byparties (in ~cr)
FY17 FY18 % change
ARCHIS MOHAN
New Delhi, 31 July BJP 1,213.13 1,483.35 22.27
Congress 854.75 724.35 15.26
cut,butchallengesahead’
theAssociationofDemocraticReforms(ADR),an
independent election watchdog. TMC 26.25 29.10 10.86
The ADR has analysed the assets and liabili-
ties declared by the seven national parties — the NCP 11.41 9.54 16.39
The share of Indian universities in the QS BJP, the Congress, the Nationalist Congress Party
World University Rankings has risen to (NCP), the Bahujan Samaj Party (BSP), the
CPI 10.88 11.49 5.60
2.4 per cent this year, from 1.4 per cent in Communist Party of India (CPI), the CPI (Marxist) Source: ADR report
2016. But challenges persist, BEN SOWTER, and the Trinamool Congress (TMC).
senior vice-president and research director The assets include fixed assets, loans and (44.83 per cent of total assets), respectively.
of QS, tells Vinay Umarji. Edited excerpts: advances, deposits made, investments, etc. The total capital/reserve fund set aside by the
Liabilities include bank borrowings, sundry cred- national parties during FY17 was ~2,745.81 crore,
How has Indian institutes’ itors, overdrafts, other liabilities, etc. and ~3,082.04 crore for FY18, after adjusting for
Bengaluru’s debut came on the back of its affordability as well as presence representation grown in the The assets declared by national parties fall liabilities for the respective years, from the total
of globally ranked institutes like IISc (pictured) and IIM-Bangalore rankings in the past 5-10 years? under six major heads — fixed assets, loans and assets of the parties. For FY18, the BJP has the
Because of the QS’ steady expansion of advances, FDR (fixed deposit receipt)/deposits, highest capital after declaring ~1,461.97 crore. In
VINAY UMARJI
Ahmedabad, 31 July
HOW INDIAN CITIES FARED the QS World University Rankings over
the last decade, it is not possible or
TDS (tax deducted at source), investments and
other assets. During FY17 and FY18, the national
FY17, this was ~1,193.10 crore. For BSP, this was
~714.97 crore in FY18, from ~679.13 crore in FY17.
2018 2019 Change desirable to compare raw figures. parties declared maximum assets under FDR/ For the CPM, it was ~479.58 crore in FY18 and
D
ebuting at 81st position globally, Bengaluru — 81 — However, it is possible to compare deposits which amounted to ~1,442.19 crore ~458.22 crore in FY17. The Congress had ~400.15
Bengaluru has been ranked Mumbai 99 85 14 Indian representation as a percentage What other challenges do Indian (44.23 per cent of total assets) and ~1549.53 crore crore in FY18 and ~393.02 crore in FY17.
India’s best city for students in of overall institution count. In 2016, institutes face?
the global ranking agency QS’
Delhi 107 113 -6 India’s contribution to the world’s best Institutions will need to improve
(Quacquarelli Symonds) latest Best Chennai 117 115 2 universities was only 1.4 per cent. In teaching provision, and make the
Student Cities Ranking 2019. However,
in terms of affordability, Bengaluru is
Source: QS the past two years, it has increased to
well over 2 per cent. However, we would
country more attractive to interna-
tional students. India’s scores for our
Mumbai had
ranked seventh globally.
The other top Indian cities include
lar, to the international ones. As India’s
main priority is to meet its domestic,
urge some caution in interpret-
ing these results. Most of India’s
faculty/student ratio — which
measures teaching capacity — 2nd-wettest
Mumbai (85), Delhi (113), and Chennai
(115). Among these, while Mumbai
rapid growth access to higher educa-
tion, some of our criteria penalise the
newentrieshaveoccurredinthe
801-1,000 category.
are among some of the lowest
recorded by the 1,000 institu- July of 60 yrs
gained ground, moving 14 places up on Indian megalopolis featured. tions in the ranking.
a year-on-year basis, Delhi dropped by Nevertheless, it is encouraging to see What parameters have been the Though the monsoon arrived
six places in this year’s edition. Chennai Bengaluru’s debut at the top of the strong points for Indian institutes? What steps by the Indian in Mumbai late, the city
ranked at 115, an improvement of two national list and to see Mumbai grow- Citations per faculty is relatively the government are helping institutes? recorded second-highest rain-
places from last year. ing in popularity among students. Both strongest point for Indian institutions, There are correlations between fund- fall for the month of July in
In the sixth edition of the QS Best Delhi and Chennai perform very well the QS’s measure of research perform- ing and university performance in our the last 60 years, the India
Student Cities Ranking compiled by on the affordability criterion, an aspect ance. Three of India’s universities are rankings… the tertiary sector in India Meteorological Department
QS, cities were ranked according to the that it is essential to sustain the internal among the top 50 globally for research continues to be troublesomely under- (IMD) said on Wednesday.
number and performance of their uni- demand for university education,” said impact — IISc Bangalore, IIT-Roorkee funded, given the nation’s lofty intel- The Santacruz and Colaba
versities, the extent to which employers Ben Sowter, research director at QS. andIIT-Kanpur.Conversely,Indianinsti- lectual and economic ambitions. observatories in the city
are actively hiring there, the city’s Globally, London emerged the tutions are struggling reputationally. recorded 1,464.8 mm and
affordability, the city’s desirability and world’s best student city for the second What could prove detrimental? 1,175.1 mm rainfall, respec-
quality of life, and the diversity of a consecutive year, followed by Tokyo What parameters do Indian Though India’s government has adopt- tively, this month.
city’s student body. and Melbourne. According to the QS, institutes fall short in and why? ed the correct approach in identifying Five years ago, the city had
Bengaluru’s strong debut, however, London remains the world’s leading Indian institutions haven’t shown institutions that it wishes to elevate to witnessed even more rainfall
came on the back of its affordability as student city due to the high number of enoughcompetitivenessininternation- world-classstatus,~1,000croreoverfive in July, setting a record.
well as presence of globally ranked top universities present in the city, its alisation metrics. The international fac- years is unlikely to make India’s uni- TheSantacruzobservatory
institutes like the Indian Institute of high levels of employer activity and ulty ratio of India’s top ten institutions versities globally competitive. hadrecorded1,468.5mmrain-
Science and the Indian Institute of student diversity, and the regard in has declined further compared to the The draft National Education Policy fall in July 2014, said K S
Management-Bangalore. which it is held by the global student global average, while some of the new recognises the need to create larger uni- Hosalikar, Deputy Director
“Our ranking looks at cities that are body. London’s top rank came despite entrantshelprecoverthelossinthisindi- versities dedicated primarily towards General of the Regional
attractive to students and in particu- its low affordability score. cator in the two most-recent editions. teaching, and this is a good thing. Centre of the IMD. PTI