NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 15 NO.

167

Thursday, July 15, 2021

livemint.com

mint primer QUICK EDIT

How are shares Zomato’s

divided among hot plate
A day after Zomato saw as many
investors in IPOs? as 186 anchor investors pump
around ₹4,195 crore of fresh
equity capital into the company,
BY SWARAJ SINGH DHANJAL its initial public offering of
In the first six months of 2021, as many as 22 firms launched initial shares worth nearly ₹5,200
public offerings (IPOs) to raise a total of ₹27,417 crore. Retail investors crore got fully subscribed. The
flocked to share sales, but many were left disappointed as they failed online food-delivery platform
to get any share allocation in heavily subscribed IPOs. Mint explains: received bids for 1.05 times its
issue size on Wednesday, with
Most-subscribed IPOs of 2021 two days still to go. With this, its
India’s IPO market has been buzzing since late last year as surplus liquidity market value is estimated to
and rising stocks create a great environment for companies to raise capital. have risen to nearly $8 billion.
No. of times subscribed This is an eye-popping num-
Issue size (in  cr) Overall subscription* Retail
201 ber for any company, let alone
MTAR Technologies 596.4 one that began just over a dec-
28
175 ade ago. That investors are
Nazara Technologies 582.9 75 upbeat about its prospects is
160 amply clear, but this enthusiasm
Easy Trip Planners 510
71 is inseparable from a broader
121 investor appetite for slices of
Shyam Metalics and Energy 909
12 tech startups. Many fortunes in
117 the US have been made on early
Indigo Paints 1,170
16 stock bets in this space, but India
*Includes QIBs and non-institutional investors apart from retail investors Source : Mint research has seen the benefits of app suc-
cesses accrue mostly to private
How are shares How is it decided who equity players. That has begun
1 allocated to investors?
There are three broad categories
2 gets how many shares?
Let’s say there are 1 million shares
to change, with several unicorns
ready to go public. Expected
of IPO investors—qualified on offer with a minimum lot size of soon is the IPO of Paytm, a pay-
institutional buyers (QIBs) or 100 shares. So the maximum ment app that hit a near jackpot
simply institutional investors, number of investors who can get at after demonetization. More are
non-institutional buyers who are least one lot in this IPO is 10,000 (1 on their way. These are busi-
largely high net-worth individuals million shares/100 lot size). In the nesses attracting money, not for
(HNIs) and retail investors. Firms case of small oversubscription, say,
dividends, which may take time
that have had three straight years 9,000 investors have bid but 7,000
of profit must allot 50% of the have bid for one lot and remaining to materialize, but market value
share sale to QIBs, 35% to retail 2,000 have bid for two lots; so total appreciation. So long as people
and 15% to HNIs. Companies that shares bid for are 1100,00 shares get a serving of all this hot new
don’t meet this criterion must allot (7,000 x 100 + 2,000 x 200). Here, wealth creation, that’s fine.
75% of the shares on offer to QIBs, one lot will be distributed among
15% to HNIs and only 10% to retail. all bidders i.e all 9,000 investors
Shares can only be bid for in lot will get one lot each and then the
sizes, which are mandatorily fixed remaining shares will be assigned
between ₹10,000 and ₹15,000 and
retail investors can bid for shares
proportionally to the investors
who have bid for more than one
MINT METRIC
only up to ₹2 lakh in any IPO. lot. by Bibek Debroy
HT

Santosh Verma’s desire for promotion

3 What happens when an IPO
is oversubscribed?
Assume that in the above IPO, 50,000
Caused some commotion.
investors have bid for the shares. In this
With the IAS as his dream
scenario, all investors cannot be allocated He took a step extreme,
at least one lot each as per the Sebi norms.
In this scenario, the allocation will be
Forging a court order for upward locomo-
based on a lottery draw—computerized, tion.
and, thus impartial. In this scenario, some
investors will manage to get one lot each,
while many will not be allocated any shares. QUOTE OF THE DAY
What is relevant today, may be
4 Who are anchor
investors?
Anchor investors are institutional
5 How are shares
allocated to them?
It is a discretionary allocation, and
obsolete tomorrow. From an IT
investors or QIBs. Sebi allows firms the firm and merchant banks can
perspective, I definitely see a
and merchant banks to allocate decide how many shares to allocate shift towards the demand of AI-
60% of the overall QIB category to which investor. Typically, the
shares to institutional investors in decision would be based on
trained resources.
an anchor allotment one day prior negotiations between the banks Organizations must
to the IPO and the names of these and the firm as each banker will
investors are disclosed to stock bring in their own set of investors.
prepare their workforce
exchanges. Shares sold to anchor The decision can also be based on for an AI-enabled future!
investors are locked in for 30 days the brand of the investor. Since
after the listing of the IPO, so it anchor book allocations are used
also helps bring in serious investors as a signal to the broader investor
into the IPO who will not dump universe, the merchant bankers
the shares immediately after the and the firm may choose, say a long C.P. GURNANI
listing, which can impact the firms’ only investor over a hedge fund to MD & CEO,
post-listing performance. show a high-quality anchor book. Tech Mahindra

S TO C K TA L K DOWNLOAD THE
MINT APP
ASHOK LEYLAND MINDTREE
The company Mindtree’s Q1FY22
remains a pure-play revenue perform-
on the commercial ance was ahead of
BUY SELL
vehicles recovery our expectations,
TARGET PRICE TARGET PRICE
cycle. Unlike the pre- while margins came
₹156 ₹2,200
vious cycles, it is on a in a tad lower. We
CURRENT PRICE CURRENT PRICE
₹127.95 strong footing (lean ₹2,702.15 maintain sell on the
cost structure and stock considering
reasonable debt) and is focused on rich valuations and anticipated pres-
adding new revenue/profit pools. sure on margins.
Motilal Oswal Financial Services (on 14 July) Emkay Global Financial Services (on 13 July)

NMDC CUMMINS INDIA

With NMDC’s board From a near to mid- SUBSCRIBE TO
approving the term perspective, OUR NEWSLETTER
scheme of demerger the government TOP OF THE MORNING
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 PLAIN FACTS

Should India be wary of

hosting the Olympics?
BY ARJUN SRINIVAS, HOWINDIALIVES.COM

T
he 32nd edition of the Summer Olympics is scheduled to begin in Tokyo on 23 July. The event, which has already been
deferred from last year because of the covid-19 pandemic, is set to take place in the shadow of the virus. Japan has spent
$15.4 billion to host the event, though government audits suggest it might be twice as much.
Hosting mega sporting events has both upsides and downsides. The upsides are a bump in infrastructure investments,
economic activity, global profile, and tourist traffic. The downsides, especially for poorer nations, is the reallocation of public
funds that could have been better used elsewhere. As Indian cities dream of hosting the Summer Olympics in the future,
money will be a major factor.
The Summer Olympics are the largest and most expensive global sporting events. The last seven editions, going back to
Barcelona in 1992, have incurred sporting costs of an average of $8.2 billion, according to a 2020 study titled ‘Regression
to the Tail: Why the Olympics Blow Up’ by scholars from Oxford University. The study finds that sporting costs in every
Olympics since 1960 have run over budget, at an average of 172% in real terms. Non-sporting costs, such as costs on road,
rail, airport, and other infrastructure, often exceed sporting costs.
All cost overruns are incurred by cities and governments, according to their agreement with the International Olympic
Committee (IOC), the custodian of the Olympics. This can severely strain their economies. For instance, the sporting cost
of the 2016 Rio Olympics was $13.7 billion, a cost overrun of more than 352%. This plunged an already beleaguered Brazilian
economy into severe contraction.

Mounting sporting costs and overruns are

becoming endemic to the Summer Olympics
Sporting costs ($ billion) 10 of the 19 Olympics analysed saw an overrun
in sports-related cost of above 100%
1992 Barcelona 9.7 Number of Olympics by extent of overrun
1996 Atlanta 4.1 in sports-related costs
2000 Sydney 5.0 Up to 50%
2004 Athens 2.9 50% to 100%
2008 Beijing 6.8 100% to 200%
2012 London 15 Above 200%
2016 Rio de Janeiro 13.7

Cost overrun (in %)

1992 Barcelona 266

1996 Atlanta 151
2000 Sydney 90 1. Data for 19 Olympics: 8 Summer Olympics
2004 Athens 49 between 1976 and 2016, and 11 Winter Olympics 4 4
between 1968 and 2014. 2. Cost overrun is
2008 Beijing 2 calculated in local currencies and is not adjusted
for inflation. 5
2012 London 76
2016 Rio de Janeiro 352 6
1. Cost in US dollars at 2015 level. 2. Cost overrun is calculated Source: 2020 paper by Bent Flyvbjerg, Alexander Budzier and Daniel
in local currencies and is not adjusted for inflation. Lunn titled 'Regression to the Tail: Why the Olympics Blow Up’

Taxpayer Funded Taxpayers are funding 57% of the

expenditure on the Tokyo Olympics
COSTS INCURRED to host the event begin with the bidding Break-up of expenditure for Tokyo Olympics ($ billion)
process. Host nations typically spend $50 million-$100 million in
0 1 2 3 4
fees for consultants, event organizers, and travel. Selection itself
Temporary/overlay venue
is a multi-year process that happens well in advance. Last month,
Permanent venue expenditure
Brisbane was unofficially declared as the host city for the 2032
Games operation
Games. Then come the Games themselves. The $15.4 billion that
Marketing
Tokyo is spending on the sporting side has two sources of
Technology Organizing
funding. The first is the Organizing Committee of the Olympic
Covid-19 counter-measures Committee of
Games (OCOG). This is formed by the host nation’s Olympic the Olympic
Security
association and is the event organizer. The second is provincial General affairs/communication
Games
and national governments, which is essentially taxpayers’ money. Transport
Other entities
In Tokyo’s case, Japanese taxpayers are funding about $8.4 (largely,
Energy governments)
billion, or 57%, on the sporting side alone. This is equivalent to Others
what the Indian government spent on health alone in 2019-20, Discretionary expenses
Source: Olympics.com
which underscores the trade-offs in play for developing nations.

Local sponsorship is the largest source

of revenues for the organizers
Revenue Balance
Break-up of revenues for Tokyo Olympics ($ billion) WITH SUCH high costs, trade-offs and risks involved, why are
International countries still keen to host the Olympics, especially the
Expected
Olympic additional
developing ones?
Committee revenue Revenues from the sporting side flow to the OCOG (and not
contribution
Local
to governments). In Tokyo’s case, for example, the OCOG
sponsorship expects to balance its $6.7 billion spending, principally through
0.8 3.3 0.7 local sponsorship and the sale of tickets. Payback to
governments is, however, difficult to pin down. There is a case
made that the investment in infrastructure for the Games will
The Olympic have long-term legacy benefits for countries. However, benefits
Ticket 0.8 0.5 Partners arising from upgraded infrastructure, increased tourism or
sales Sponsorship global prominence are difficult to quantify.
0.1
Licensing 0.1
Yet, the pull remains. This March, Delhi chief minister
0.3 Adjustment Arvind Kejriwal announced a possible bid to host the 2048
Others
by all parties Games. In June, the Ahmedabad Urban Development
Authority invited proposals from consultants to assess possible
Source: Olympics.com sporting venues to host an Olympics.

Commonwealth Caution In the Delhi Commonwealth Games,

52% of the spend was on the sporting side
GIVEN THE controversies surrounding the 2010 Delhi Expenditure on 2010 Delhi Commonwealth Games ( crore)
Commonwealth Games (CWG), the last mega sporting event Non-sporting Sporting side
hosted by India, governments will have to tread with extra side
Sports Conduct of
caution. According to the government’s auditor, the final cost of infrastructure the Games
hosting the 2010 CWG was ₹18,532 crore (about $4 billion, based (venue development)
on the exchange rate then). That’s a 15-fold overrun over the City 4,590 Broadcasting
₹1,200 crore proposed in Delhi’s bid. About half this spend was infrastructure
Preparation
on the sporting side. The report highlighted “several instances of 8,925 2,390
of Indian
lack of financial prudence and propriety across the range of team
implementing agencies” as the principal reason for the cost 865
escalation. The disastrous financial impact some recent Olympics 678
have had on host economies could be a reason to restrict them to
cities that already have the necessary infrastructure. For a Others 623
developing country such as India, the opportunity cost will be (including security)

immense considering the productive expenditure that taxpayers’ Commonwealth 461

Source: Performance Audit of XIXth Youth Games
money can alternatively be allocated to. Commonwealth Games: Comptroller
www.howindialives.com is a database and search engine for and Auditor General of India (2011)

public data. AHMED RAZA KHAN/MINT

PEANUTS by Charles M. Schulz

 NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 15 NO. 167 Rs 5.00 IN DELHI-NCR; Rs 6.00 OUTSIDE DELHI-NCR. PRICE WITH HINDUSTAN TIMES Rs 9.50 (FOR DELHI & NCR) 16 PAGES

Thursday, July 15, 2021

The new battle zone of ‘I won’t start a film till I can shut
livemint.com need-based e-tail uP10 my eyes, see it backwards’ uP14

SENSEX 52,904.05 134.32 NIFTY 15,853.95 41.60 DOLLAR ₹74.59 ₹0.10 EURO ₹87.94 ₹0.01 OIL $76.06 $0.43 GOLD ₹47,965 ₹207

Small investors place Earnings snapshot

Profit jumped 23% in Q1 to ₹5,195 crore from a year ago, while
revenue grew 17% in constant currency to ₹27,896 crore.
June quarter Year-on-year change (in %)
RBI bars
Mastercard
DON’T MISS

from issuing
a large Zomato order Profit after tax

Revenue
₹

₹
5,195crore
27,896crore 17*
23
new cards
Gopika Gopakumar
The segment was subscribed 2.9 times at the end of Day One of IPO Revenue growth
*in constant currency gopika.g@livemint.com
guidance for FY22 14-16%** ** up from 12-14% projected
in the March quarter MUMBAI
Wholesale inflation eases in June
Source: Company
Nasrin Sultana &

Infosys raises FY22 B

arely three months after as food and fuel prices drop
Ravindra Sonavane GRABBING A SLICE SARVESH KUMAR SHARMA/MINT
cracking the whip on
American Express and
India’s wholesale price inflation eased in June
to 12.07% from a record 12.94% a month ago
MUMBAI While retail participation in the initial public offering was robust, the portion Diners Club for non-compli- as food and fuel prices fell while those of
of the share sale reserved for non-institutional investors was subscribed just ance with local data storage manufactured items accelerated. Data

R
14%, while that for qualified institutional buyers was subscribed 1.03 times. released by the industry department showed
etail investors snapped up norms, the Reserve Bank of
shares of Zomato Ltd on the
first day of its much-awaited
Subscribed amount (₹ cr)*
(No. of times) SWEET SPOT
THE overall sub-
revenue projection India (RBI) on Wednesday
barred Mastercard Asia from
food inflation in June decelerated to 3.1%. >P2

initial public offering, main- Employee signing up new card custom-

scription was 1.11 Ayushman Baruah An unflattering FY21 is a risk for
taining their enthusiasm for Qualified 8.8 panies to adapt quickly. ers on similar grounds.
times on Day 1 of the MobiKwik’s tryst with markets
the primary market manifest in every institutional buyer
(0.2)
ayushman.b@livemint.com The upgrade in sales forecast The multinational card net-
2,895.4 three-day share sale
IPO of the year. BENGALURU followed robust fiscal first- work will not be allowed to One MobiKwik Systems Ltd, all set for raising
Within minutes of opening, the (1.0) quarter earnings. Profit rose on-board new credit, debit or money through an IPO, has a tall task ahead
THE keen interest

retail segment of the Zomato IPO was
fully subscribed, and by the end of the
day, small investors had bid for 2.85
times the number of shares on offer.
At the upper end of the ₹72-76
price band, the IPO drew retail bids
worth roughly ₹2,655 crore. Retail
investors were also enthused by the
previous day’s ₹4,196 crore anchor
investment, where marquee inves-
tors were allotted 552.17 million
shares at ₹76 each.
The portion of shares reserved for
non-institutional investors was sub-
scribed just 14%, while that for quali-
fied institutional buyers (QIB) was
subscribed 1.03 times.
The overall subscription was 1.11
times on the first day of the three-day
share sale, with bids for 756.43 mil-
lion shares received against the
681.38 million shares on offer.
Zomato is India’s first major new-
age technology company to go pub-
lic. The keen retail interest seen in
Non-institutional
investor
190
(0.1)
Source: BSE, NSE * upper band
the Zomato IPO on the first day is
likely to bode well for other technol-
ogy companies preparing their IPOs,
including Paytm, MobiKwik, Nykaa
and PolicyBazaar.
The IPO, which aims to raise
₹9,375 crore at the top of the price
band of ₹72-76, will close for sub-
scription on 16 July.
“Strong participation by institu-
tions in the anchor book bodes well
for the IPO, and we expect continued
strong demand for the IPO from both
institutional and retail investors alike.
Given the strong delivery network,
I
nfosys Ltd on Wednesday 22.7% in the three months prepaid card customers in of it. The fintech firm has to convince
may bode well for raised its annual revenue fore- ended 30 June to ₹5,195 crore India beginning 22 July, an investors that FY21 was an aberration and
Retail other tech firms
investor cast as clients continued to from a year ago. Revenue grew RBI press release said, adding that its wallet will grow by leaps and bounds
preparing their IPOs spend heavily to digitize their 16.9% in constant currency to the order will not affect exist- despite the intense competition. >P4
2,654.8
(2.9) SOME analysts say processes to save costs and reach ₹27,896 crore. That compares ing Mastercard customers.
the IPO is richly new customers, spurred by the with Bloomberg earnings and The regulator asked all card-
pandemic. revenue estimates of ₹5,358.8 issuers to follow its directions.
valued, and may not Advertising regulator keeps
sustain in the long run India’s second-largest soft- crore and ₹27,634.5 crore, “Notwithstanding the lapse tabs on social media influencers
ware services company now respectively. of considerable time and ade- The Advertising Standards Council of India
SARVESH KUMAR SHARMA/MINT
expects revenue to rise 14-16% Dollar revenue grew 16.9% quate opportunities being (ASCI) has started monitoring digital and
high barriers to entry, expected turn- in constant-currency terms annually and 4.8% sequentially given, the entity has been social media platforms for violations of its
around and significant growth oppor- from the 12-14% it forecast to $3.78 billion on the back of found to be non-compliant influencer advertising guidelines from
tunities in tier-II and tier-III cities, we three months ago. large deal wins worth a total with the directions on Storage Wednesday. This comes a month after it
believe Zomato will command a pre- Widespread disruptions contract value (TCV) of $2.6 bil- of Payment System Data,” it introduced new rules for digital content. >P5
mium to global peers,” Jyoti Roy, caused by the pandemic have lion during the quarter. Out of said.
equity strategist at Angel Broking Ltd, forced companies to accelerate these large deals, 30% were net Mastercard did not
said. their digital transformation. new signings. “This is the fast- respond to an email seeking Taj aims to unlock potential of new
Equity markets have witnessed Changes in behaviour that est growth we have seen in 10 comments till the time of and reimagined brands in its stable
frenetic participation by small inves- would have taken years to years. We continue to gain sig- going to press.
The Taj Group of Hotels, the flagship brand
tors of late. However, the Zomato unfold have happened within In April 2018, RBI set a six- of the Tata Group-run Indian Hotels Corp.
retail subscription is a bit pale com- months. Some of these new TURN TO PAGE 6 month deadline for all system Ltd (IHCL), will focus on unlocking the
pared to the Burger King India Ltd habits picked up during the providers to store all their pay- potential from reimagined and new brands,
IPO in December. The ₹810 crore pandemic, such as online shop- Infosys beats TCS but margin ments data solely in India. besides pursuing an asset-light growth
ping and remote working, are pressure rears its head >P4
model to strengthen its balance sheet. >P6
TURN TO PAGE 6 likely to be sticky, forcing com- TURN TO PAGE 6

In the fast lane

Dispatches of vehicles to dealerships picked up pace in June
from May, when the deadly second covid wave peaked in India.
Cabinet hikes DA of central govt ITC sees subdued urban
Cumulative wholesale of vehicles in June (month-on-month change, in %)

651.2 employees after 18-month freeze recovery post covid 2.0

Asit Ranjan Mishra estimate, freeing up funds to Suneera Tandon ₹48,151.24 crore in FY21, while
380.6
asit.m@livemint.com fight the outbreak. suneera.t@livemint.com profit after tax stood at ₹13,031.64
192.2 199.3 NEW DELHI Information and broadcast- NEW DELHI crore. ITC said the progressive
163.1 163.2
123.1 ing minister Anurag Thakur easing of restrictions and

T I
he Union cabinet on told reporters on Wednesday TC Ltd has flagged “height- improvement of mobility led to a
Passenger Utility Passenger Three- Motorcycles Scooters Two- Wednesday increased that DA and DR from 1 January ened uncertainty” around pick-up in economic activity in
cars vehicles vehicles wheelers wheelers
Source: Siam
the dearness allowance 2020 to 31 June 2021 shall the timing and shape of the second half of FY21.
(DA) and dearness relief (DR) remain 17%, signalling that no India’s economic recovery tra- Meanwhile, the “ferocity” of
SARVESH KUMAR SHARMA/MINT
for 11.4 million central govern- arrears will be paid for the jectory following the second the second wave since Febru-

Car wholesales ment employees and pension-

ers to 28% of basic pay from 17%
effective prospectively from 1
18-month period. Thakur said
the DA hike will cost the exche-
quer ₹34,400 crore annually.
wave of covid-19 infections.
Urban recovery could be
muted compared with the first
ary has adversely impacted the
country’s projected economic
prospects for FY22, it said.
July. “The DA/DR hike amount is wave, and the spread of infec- That’s because most states
rise amid fuel, However, three instalments
of DA and DR held back from
last year will not be paid at the
Union minister Anurag Thakur
at a press briefing on cabinet
decisions in New Delhi. PTI
substantial and will give a boost
to consumption even if 20% is
saved. Fiscal deficit will increase
tion to villages may impact
rural demand, said the hotels-
to-cigarettes conglomerate.
ITC expects rural and urban
consumption to be hit. MINT
imposed partial restrictions to
contain the spread of the virus.
This has slackened the recov-

chip concerns new rate, despite a demand by

Malyaban Ghosh more than tripled domestic dis-
malyaban.g@livemint.com patches sequentially to 124,280
NEW DELHI units in June from just 35,293
units in the preceding month.
central government staff.
The three additional instal-
ments of DA to central govern-
ment employees and DR to
pensioners, which were due
from 1 January 2020 till June
2021, were frozen in April, just
On Wednesday, it said the
decision to defer the three
instalments for 18 months
saved the Centre ₹37,530 crore
and helped it create fiscal space
to build a ₹1.2 trillion war chest
to combat the coronavirus pan-
marginally, maximum 0.1% of
GDP,” said Madan Sabnavis,
chief economist at Care Ratings.
Several employees’ unions,
including central secretariat
workers, teachers and corpora-
tion workers, wrote to Prime
Minister Narendra Modi earlier
A rapid pace of vaccination
and a stronger healthcare infra-
structure would be critical to
mitigating the impact of any
impending outbreaks, it said in
its annual report for FY21.
It expects rural demand,
robust in FY21, to be impacted
urban-led recovery may be rel-
atively muted compared to the
first wave as consumers switch
to precautionary savings mode
and rising healthcare costs eat
into household spending.
Rural demand, which
remained strong in FY21 on
ery momentum significantly.
ITC’s varied business interests
were impacted to different
degrees. Its fast-moving con-
sumer goods business benefited
on account of increased con-
sumption of health-hygiene
products such as soaps and sani-

P
assenger car makers
increased wholesale dis-
patches in June from
May after states eased mobility
restrictions. However, indus-
try experts are worried over
how the sharp rise in fuel and
steel prices, semiconductor
shortage and a possible third
wave will impact vehicle sales.
Dispatches of passenger
vehicles to dealerships more
than doubled to 231,633 units
in June from 41,536 units in
May, when India’s deadly sec-
ond wave peaked. Passenger
car sales nearly tripled to
Hyundai Motor India Ltd
reported a 62% month-on-
month rise in wholesale dis-
patches to 40,496 units in June.
Tata Motors’ passenger vehi-
cle wholesales rose 59% to
24,110 units in June, and Mahin-
dra and Mahindra’s more than
doubled to 16,913 units com-
pared to just 8,002 units in May.
Automakers are not being
able to predict demand for the
coming months due to a signifi-
cant increase in commodity pri-
ces, shortage of semiconductors
and the fear of the third wave of
covid infections, said Kenichi
a month after the cabinet
approved a hike to 21% of basic
pay from 17%.
The government said this
was because the pandemic had
put central government finan-
ces under stress.
Amrita Sher-Gil’s Ladies’ Enclosure sets a new auction record
Avantika Bhuyan
avantika.bhuyan@htlive.com
demic and for the stimulus
spending needed to revive a
stalled economy.
State governments saved an
additional ₹82,566 crore by
freezing the payments, accord-
ing to the Union government’s
before her sudden death at the
age of 28.
In the Ladies’ Enclosure also
this month, seeking restoration
of DA and DR. They said given
the high food and fuel prices,
their dues should be settled.
Separately, the cabinet also
TURN TO PAGE 6
because of the virus spreading
to rural areas on a relatively
larger scale than the first wave.
Consumers are also setting
aside resources for medical
needs, it said.
“On the consumption side,
the back of robust agricultural
output, government support
and reverse migration, may
also be blunted by the spread
of the virus to the hinterland in
the second wave,” it added.
ITC’s gross revenue stood at
played a part in creating a new
benchmark with this auction,”
Vazirani said.
tizers as well as staples such as
TURN TO PAGE 6
ITC’s Puri sees 47% jump
in FY21 salary, perks >P7
her style: her palette began to
reflect earthy tones, and her
immediate surroundings

121,378 units, while sales of
utility vehicles more than dou-
bled to 100,760 units during
the month, according to data
compiled by the Society of
Indian Automobile Manufac-
turers (Siam) on Wednesday.
In the quarter ended March,
most passenger vehicle makers
reported sustained recovery in
retail sales, while supply con-
straints due to a shortage of
semiconductors led to a longer
waiting period for certain
models. Many of them have
started production in all three
shifts from June and have set
higher targets for July.
Maruti Suzuki India Ltd, the
country’s largest carmaker,
Ayukawa, president of Siam.
“Due to high fuel prices, peo-
ple will hesitate to use their
vehicles, and that is not very
good for us. However, we will
have to see how it impacts
demand. With such uncer-
tainty, it is difficult to predict
demand for vehicles,” said Ayu-
kawa, who is also the managing
director of Maruti Suzuki.
Ayukawa said some states
are yet to reopen fully, and
auto dealers are not able to
function properly.
The auto industry came
under pressure in the first
week of April when Maharash-
TURN TO PAGE 6
A
rare Amrita Sher-Gil
painting from her India
period, painted just
three years before her death,
fetched ₹37.8 crore at a Mum-
bai auction on Tuesday, mak-
ing it the second-most expen-
sive artwork by an Indian artist
globally.
The 1938-work, titled In the
Ladies’ Enclosure, is one of the
largest Sher-Gil canvasses at
21.5x31.5 inches and depicts a
group of women sitting in a field.
Sher-Gil painted it four
years after returning to India
from Europe—a period
marked by her embracing sub-
jects from the Indian country-
side—and just three years
became the most valuable
Sher-Gil painting. V.S. Gait-
onde’s Untitled (1961) contin-
ues to be the most expensive,
having sold for ₹39.98 crore
in March at auction house Saf-
fronart.
Sher-Gil’s paintings are
highly coveted by collectors
and art lovers, as they rarely
come up for auction. When
they do, they are works of
much smaller size than Ladies’
Enclosure.
The record-breaking sale of
Sher-Gil’s seminal painting
clearly indicates her artistic
merit, said Dinesh Vazirani,
c hi ef ex ec u t i v e a nd
co-founder of Saffronart,
The Indo-Hungarian artist
blended European and Indian
styles in her work and captured
the lives and experiences of
women in early 20th century
India. “Her paintings are lauded
for their timeless themes and
qualities that powerfully reso-
nate with women’s narratives
even today,” notes a blog post on
Saffronart, published on 8 July.
Sher-Gil, born to Hungarian
The work fetched ₹37.8 crore at a Saffronart auction in Mumbai, making opera singer Marie Antoinette
this the highest-ever price achieved by the artist in an auction. Gottesmann and Sikh aristo-
crat, scholar and photogra-
which auctioned her painting. as an artist of repute. It is, addi- pher Umrao Singh Sher-Gil
“The work highlights her tionally, a rare work of the art- Majithia, studied art at the
growth and development as an ist from that particular period École des Beaux-Arts in Paris.
artist and is a culmination of to emerge in the art market, Her return to India in 1934
years of coming into her own and we are honoured to have marked a significant change in
inspired her paintings.
The subjects of this particu-
lar painting are believed to have
been inspired by members of
the Majithia family who had
been living on the family estate
at Saraya in Uttar Pradesh and
would have been known to
Sher-Gil, according to her
nephew and noted contempo-
rary artist Vivan Sundaram.
“The bride’s profiled features
are drawn schematically: on a
pale pink skin colour, four nota-
tional lines for the eye and a tiny
dot for the pupil. This is to
de-romanticize he face–mod-
ern art’s agenda to get rid of the
TURN TO PAGE 6
02 THURSDAY, 15 JULY 2021
NEW DELHI ECONOMY & POLICY LIVEMINT.COM

m MINT SHORTS
Delhi HC issues notice to formulate
Wholesale inflation eases in India reviews
progress of
ad guidelines for crypto exchanges
New Delhi: The Delhi high court on Wednesday has issued
notice to Centre, Securities and Exchange Board of India (Sebi)
and others on a plea seeking issuance of guidelines or rules to be
June as food, fuel prices dip projects in
Maldives
framed against the cryptocurrency exchanges in India advertis- Elizabeth Roche
ing on televisions without adequate disclaimers, stated a report elizabeth.r@livemint.com
by legal website Bar and Bench. A bench of justices D.N. Patel and NEW DELHI
Jyoti Singh has also sought responses multiple crypto platforms Food and fuel inflation decelerated to 3.1% and 32.8%, but prices of manufacturing items rose
I
such as Wazir X, and Coinswitch Kuber. SAUMYA TEWARI ndia and the Maldives on
Wednesday reviewed
Asit Ranjan Mishra elevated inflation will put pressure on progress on development
Piyush Goyal named Leader of asit.m@livemint.com Recovery signs RBI, it is expected to maintain policy projects in the Indian Ocean
India’s wholesale price inflation eased in June to 12.07% from a record rates unchanged at the next monetary atoll nation, which have been
the House in Rajya Sabha NEW DELHI
12.94% a month ago. policy review in August to protect the undertaken with help from

New Delhi: Bharatiya Janata Party (BJP) leader Piyush
Goyal was on Wednesday appointed as leader of the House
in Rajya Sabha, an elevation that makes him the face of the
government in the Upper House. With the ruling BJP not
having a majority in Rajya Sabha, Goyal will be tasked with
navigating various political challenges in the House while
delivering on the government’s legislative agenda. PTI
SAT asks Sebi’s adjudicating officer
to hold Kochhar matter till 15 Sep
New Delhi: The Securities Appellate Tribunal (SAT) has
restrained Sebi’s adjudicating officer from proceeding till 15 Sep-
tember in a matter related to former ICICI Bank chief Chanda
Kochhar. The matter pertains to a show-cause notice issued by
the regulator to Kochhar on the basis of an analysis of a report by
retired Justice B.N. Srikrishna.
PNB seeks restoration of Nirav
Modi firms’ assets seized by ED
I
HT
ndia’s wholesale price inflation WPI CPI WPI-Food nascent economic recovery from the New Delhi and are seen as lying
eased in June to 12.07% from a 18 12 devastating impact of the pandemic. within its sphere of influence.
11.3
record 12.94% a month ago as food (Year-on-year change, in %) (Year-on-year change, in %)
Aditi Nayar, chief economist at The review of projects took
and fuel prices fell while those of 12.07 ICRA Ratings said while not a central place during a telephone call
manufactured items accelerated. 12 8 driver, the continuing double-digit between Prime Minister Nar-
Data released by the industry WPI inflation and its potential future endra Modi and President of
7.59
department showed food inflation in spillovers into the CPI inflation will Maldives Ibrahim Mohamed
June decelerated to 3.1% from 4.3% a 6 4 inject uneasiness into the tone of Solih, the government said.
month ago while fuel inflation eased 6.26 monetary policy. “President Solih thanked
3.1
to 32.8% from 37.6% despite the recent 3.52 “With the CPI inflation likely to Prime Minister Modi for India’s
increase in prices of petrol, diesel and 0 0 have peaked, we expect policy nor- cooperation and support in the
cooking gas. malization to commence in Q4 FY22, fight against the covid pan-
Manufactured products saw a mar- after the growth revival solidifies. demic,” it said. “Both leaders
ginal increase in inflation to 10.9% -6 4 However, the change in stance to neu- reviewed the progress of the
from 10.8% in May due to rising price Jan 2020 Jun 2021 Jan 2020 Jun 2021 tral may be advanced to the December India-supported development
pressure in textiles, apparel, leather, Source: National Statistical Office (NSO), Department for Promotion of Industry and Internal Trade (DPIIT) 2021 policy review, if inflation springs projects in the Maldives and
wood, chemicals, pharmaceuticals, a negative surprise,” she added. expressed satisfaction at the
SARVESH KUMAR SHARMA/MINT
cement, basic metals and fabricated On the escalating inflationary situa- rapid pace of implementation
metal products. weight to fuel and other commodities The elevated WPI inflation implies tion, the finance ministry last week despite the constraints of the
Core inflation excluding food and while CPI gives a higher weight to that cost push pressures will gradually said the localized restrictions due to covid pandemic,” the govern-
fuel items hardened further to 10.4% food and services, both of which are seep into CPI inflation as capacity util- the second wave of the pandemic ment said. The “conversation
in June from 10% a month ago. driven more by domestic dynamics. ization improves,” she added. could have led to some supply-side between the two leaders pro-
The wholesale price index (WPI) disruptions, contributing to price vided them an opportunity to
data will provide a breather to both pressures. take stock of the overall state of
the government and the central MUCH-NEEDED BREATHER “With the encouraging bilateral relations and provide
bank after consumer price index THE wholesale price THIS comes after RBI’S monetary THE high WPI progress of the southwest mon- further momentum and gui-
(CPI) data released on Monday also index (WPI) data will CPI data showed policy committee inflation will inject soon, supply-side interventions dance to the ongoing substan-
showed retail inflation marginally provide a breather retail inflation aims to achieve a retail uneasiness into the in the pulses and edible oils mar- tive cooperation between the
eased to 6.26% in June while to both the govt and marginally eased to inflation target of 4%, tone of monetary ket, and gradual unlocking of two countries”, it added.
the central bank 6.26% in June plus or minus 2% policy, says Icra
remaining above the upper limit of states with declining caseload Modi noted that “Maldives is
PTI the central bank’s inflation target would mitigate cost pressures a central pillar in India’s
for the second straight month. going forward. However, rising ‘Neighbourhood First’ policy
Gaura Sengupta, India economist at “Hence, inflation pressures were The Reserve Bank of India’s (RBI) global commodity prices, especially of and its maritime vision of Secu-
IDFC First Bank said WPI inflation first visible in WPI (since March 2021), monetary policy committee (MPC) crude and logistics costs, pose upside rity and Growth for All in the
tends to reflect global inflation pres- while upward pressure on CPI became aims to achieve a retail inflation target risks to the inflation outlook,” it Region (SAGAR),” the govern-
sures more fully as it gives a higher more visible from May 2021 onwards. of 4%, plus or minus 2%. Even though added. ment said.
HT

‘Centre’s high fuel cess is hurting states’ BRICS nations eye

Gireesh Chandra Prasad
gireesh.p@livemint.com
NEW DELHI
closer customs ties Kerala is also facing a high states’ rights. It is affecting the
unemployment rate and a revenue of states and is
drop in remittances, mainly impacting the consumer,” he
from Gulf countries as many said. The Centre needs to cor- Staff Writer powerful tool in tax adminis-

T
he Centre’s excessive people have lost their jobs rect this and Kerala is open to a feedback@livemint.com tration, as it allows probes out-
taxation of petrol and because of the pandemic. discussion on this, the minis- NEW DELHI side a country’s jurisdiction.
diesel amounts to an Balagopal’s worries reso- ter said. “The meeting was also suc-

B
Mumbai: The Punjab National Bank (PNB) on Wednesday indirect infringement of the nate with the concerns The political debate over RICS nations are work- cessful in seeking commit-
moved multiple applications before a special Prevention of taxation rights of states and is expressed by some other fuel taxes is becoming louder ing on reducing red tape ments from member countries
Money Laundering Act (PMLA) court here, seeking restora- curtailing their ability to spend states. In May, Punjab finance even as MPs are gearing up for in cross-border trade for initiating exchange of pre-
tion of the assets of two firms owned by fugitive diamond on health, administration and minister Manpreet Singh the monsoon session of Parlia- and devising a system to pro- arrival customs data on a real-
merchant Nirav Modi, who is accused of duping the bank. justice delivery, Kerala finance Badal and Odisha chief minis- ment. Already, the GST Coun- vide advance information on time basis, which will facilitate
The Enforcement Directorate (ED) had earlier confiscated minister K.N. Balagopal said in ter Naveen Patnaik had criti- cil has seen heated debates shipments for effectively con- genuine trade and curb trade
assets worth over ₹329.66 crore of Nirav Modi under the an interview. cized the Centre’s practice of over state finances. taining tax evasion. mis-declaration,” it added.
fugitive economic offenders law. PTI The Union government is levying cess on petrol and die- “The Union government on Last week, the customs Recently, India’s customs
levying a big part of the central sel. its own should correct the chiefs of Brazil, Russia, India, administration had made sev-
excise duty on auto fuels as At present, the anomaly in its China and South Africa eral changes to its procedures
RBI cancels licence of Dr Shivajirao cess, which is not being shared K.N. Balagopal, finance bulk of the central The excessive taxation of petrol (BRICS) met virtually to dis- to cut red tape and avoid phys-
with state governments, the minister of Kerala. excise duty on taxation on fuel is and diesel. If rev- cuss an adminis- ical interface
Patil Nilangekar Urban Co-op Bank minister said. auto fuel, ₹20.5 a The members
curtailing states’ enue is shared trative assistance between officials
Mumbai: The Reserve Bank of India (RBI) on Wednesday said “The central government’s the Centre does not share pro- litre on petrol and ability to spend with states in a programme that are devising a and merchants.
it has cancelled the licence of Dr Shivajirao Patil Nilangekar stance on taxation of petrol ceeds of cess with state gov- ₹22 a litre on die- fair manner, it is acceptable to all system to provide For inbound
on health and
Urban Co-operative Bank Ltd, Nilanga, Latur, as it does not have and diesel is far from perfect. It ernments. It transfers 41% of its sel, are levied col- will be a big relief nations, accord- advance info on covid-related
adequate capital and earning prospects. The bank ceases to carry is the central government that net tax revenue, excluding the lectively in the administration, to states,” said the ing to a notifica- medical supplies,
shipments for
on banking business, with effect from the close of business on has unilaterally set high taxes collection of cess, to states, form of agricul- the Kerala FM said Kerala finance tion on the web- a separate simpli-
Wednesday. on petrol and diesel in such a according to a formula created ture infrastruc- minister. site of the Central the prevention fied mechanism
way that the entire proceeds by the Fifteenth Finance Com- ture development High taxes on Board of Indirect of tax evasion has been put in
from it do not go to the pool of mission. cess and road and infrastruc- fuel is leading to high retail Taxes and Cus- place. The gen-
India looking to oppose scrapping tax revenue to be shared with The trend of the Centre ture cess. price, he added. toms (CBIC). eral trend in indi-
states,” he said. increasingly relying on cess for Select petroleum products Union finance minister Nir- It said significant progress rect tax administration is to
of fishing subsidy at WTO “The Centre’s tax on petrol revenue collection has irked and liquor were kept out of the mala Sitharaman has argued was made to finalize the agree- keep track of the movement of
India will oppose any immediate move to scrap subsidies for fish- and diesel, which were earlier many states. In the FY22 ambit of the goods and servi- that both central and state ment for cooperation on goods using information from
ermen in developing nations as the World Trade Organization less than ₹10 a litre, has now Union budget, a part of the ces tax (GST) as these are the governments have been levy- mutual administrative assist- various sources and intercept-
discusses ways to preserve global fish stocks, including ending breached ₹30 a litre,” he said. customs duty on many items only limited sources of reve- ing taxes on auto fuel and that ance among the countries. The ing only when the analysis of
government funding that enables overfishing, people with the Kerala’s concerns about the got converted into agriculture nue mobilization by states, there is a need for a dialogue to meeting on 8 July was chaired data suggests discrepancies.
knowledge of the matter said. At a meeting of trade ministers high central excise duty bur- cess. Balagopal said. address this. by CBIC chairman Ajit Kumar. CBIC is introducing major
Thursday, India will insist for more time to phase out subsidies den on auto fuel, a part of Tax transfers from the Cen- “Excessive taxation of these Retail petrol price has been India has similar treaties changes to its procedures from
to cushion the impact on local industry and protect livelihood of which is levied in the form of tre to states is significant for products by the Centre is an above ₹100 a litre in four with other countries on mat- 15 July to make customs clear-
millions of poor fishermen, the people said. BLOOMBERG cess, stems from the fact that state budgets. indirect infringement of metro cities since 7 July. ters relating to income tax, a ance easier for businesses.

Slow pace of vaccination at private centres is a cause for concern: govt CORRECTIONS AND
CLARIFICATIONS
Mint welcomes comments,
Neetu Chandra Sharma West Bengal, Delhi, Punjab state government, payment Bhushan said information In a letter to the chief secre- suggestions or complaints
neetu.s@livemint.com and Haryana. The nodal repre- has not been made for the on the supply of covid-19 vac- taries of all states, Union home about errors.
NEW DELHI sentatives of Bharat Biotech entire indented quantity. State cines must be shared with the secretary Ajay Bhalla said that
Readers can alert the
and Serum Institute of India governments and private cen- Centre so that the health min- officers concerned should be
newsroom to any errors in the

F
ollowing concerns over
low turnout at private
covid vaccination cen-
tres, the Centre has asked
states to review vaccine pro-
curement by private entities.
On Wednesday, Union
health secretary Rajesh
Bhushan chaired a meeting
with the health secretaries and
immunization officials of 15
states—Uttar Pradesh, Rajast-
han, Odisha, Telangana, Mad-
hya Pradesh, Arunachal Pra-
desh, Karnataka, Tamil Nadu,
Maharashtra, Kerala, Gujarat,
also attended the meeting.
The government reviewed
the progress on procurement
and administration of vaccines
by private centres since the
revised guidelines on univer-
salizing the countrywide vac-
cination programme and advi-
sories were issued. States were
asked to use the Co-Win plat-
form as the management tool
for ordering vaccines.
Bhushan said the slow pace
of vaccination at private cen-
tres was a “cause for serious
worry”. He also urged states to
tres were advised to ensure the
gap between indented quan-
tity and payment towards their
procurement was reduced to
zero,” said Bhushan.
“In some states, the quantity
of vaccines paid for has not
been lifted by states and pri-
States have been urged to coordinate between private centres vate centres. They have to
and vaccine makers to remove bottlenecks in procuring jabs. AP ensure the lifting of dis-
patched doses. In some states,
ensure effective coordination status on a daily basis to ensure wherever vaccine doses were
between private centres and that orders were placed well in lifted by private centres, the
vaccine manufacturers to advance. “In many cases, while actual administration of covid
remove bottlenecks in vaccine the indent for the covid-19 vac- vaccines is seen to be less than
procurement and review the cine has been placed with the the quantity lifted,” he added.
istry can, in turn, inform the
citizens about the availability
of vaccines well in advance.
The covid vaccination cov-
erage had exceeded 387.6 mil-
lion as of Wednesday.
The Centre also expressed
concerns over violations in
covid-appropriate behaviour
by the masses following the
easing of lockdown restric-
tions, and urged states to issue
strict directions to district and
local authorities for regulating
crowded places to contain the
spread of covid-19.
made personally responsible paper by emailing us, with your
for any laxity in the enforce- full name and address to
ment of covid-appropriate feedback@livemint.com.
behaviour. If the norms are not
followed by establishments It is our policy to promptly
respond to all complaints.
and regions, restrictions must Readers dissatisfied with the
be reimposed, and action must response or concerned about
be taken against the Mint’s journalistic integrity may
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India reported 38,792 fresh asktheeditor@livemint.com
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LIVEMINT.COM DEALS, TECH & STARTUPS THURSDAY, 15 JULY 2021
NEW DELHI 03

Capital SFB starts process

for ₹450-700 cr share sale
Amicus Capital Partners-backed lender is close to appointing bankers to manage the IPO
Joseph Rai
joseph.rai@hindustantimes.com
NEW DELHI

A
micus Capital Partners-
backed Capital Small
Finance Bank is preparing
for an initial public offer-
ing (IPO) and is close to
appointing bankers to manage it, three
people aware of the matter said.
Mahesh Parasuraman, partner and
Motilal Oswal PE to launch its
co-founder of Amicus Capital Partners,
said the bank is planning an IPO of
₹450-700 crore ($60-94 million). He
fourth sector-agnostic fund
said his mid-market PE firm has not yet
decided on partially exiting the com-
pany via the proposed IPO, as that will Debjyoti Roy tics Pvt. Ltd. The second fund,
be a function of the final price, valua- debjyoti.roy@hindustantimes.com launched in 2012, had a corpus
tions and timing of the public float. He NEW DELHI of ₹1,000 crore and invested in
did not provide further details. 11 companies across sectors

M
A second person aware of the matter otilal Oswal Private such as financial services, life
said on condition of anonymity that the Equity (MOPE) is set sciences, niche manufacturing
bank has zeroed in on Edelweiss and to launch its fourth and consumption.
Axis Capital to manage the IPO, and sector-agnostic fund that will MOPE’s first fund, launched
plans to hire one more. Cyril Amar- be at least 55% bigger than the in 2007, had a corpus of ₹550
chand Mangaldas and J Sagar Associ- third vehicle, three persons crore and invested in 13 com-
ates are expected to be roped in as legal In the past year, many small finance banks had also announced IPO plans or have already gone public. HT aware of the matter told panies across sectors. The
counsel, the person added. VCCircle. asset manager has already
Capital Small Finance Bank, founded three years, this person said. ICICI Bank and Axis Bank have a cred- Rajasthan, Haryana and Delhi-NCR. It The target corpus is about made 10 exits from that vehi-
by Sarvjit Singh Samra in 2000, started The person explained that the bank’s it-to-deposit ratio of around 90%. plans to increase its presence in Rajast- $500 million (₹3,727 crore) cle.
as a local area bank and became a small business has increased because of an The person also said that 95% of Cap- han and Haryana and enter Himachal and MOPE is reaching out to The target corpus for MOPE’s The PE fund is also in the
finance bank in 2016. The following improvement in fee income and the ital Small Finance Bank’s deposit is cat- Pradesh and Uttarakhand. placement agents and institu- fund is about $500 million. MINT process of making a few exits
year, ICICI Prudential Life Insurance, credit-to-deposit ratio, and the cost-to- egorized as retail, and its book is highly In the past year, other small finance tional limited partners (LPs) from its second fund. It is said
HDFC Standard Life Insurance and Pi income ratio coming down. secured with its loan-to-value ratio not banks had also announced IPO plans or for fundraising, one of the per- response till the time this to be mulling a full exit from a
Ventures invested in the company. The bank’s credit-to-deposit ratio more than 60-70%. have already gone public. sons said. report was published. non-bank lender that it had
In 2019, Amicus Capital joined as In May, private equity-backed Another person said some The asset manager finished invested across two funding
a new investor. The same year, CAPITAL PLAN Fincare Small Finance Bank filed sponsors have already contrib- raising capital for its third sec- rounds in 2015 and early 2018.
Capital Small Finance Bank raised for an IPO worth ₹1,330 crore. In uted $50 million tor-agnostic fund at In February, VCCircle
₹84 crore ($12 million) from Oman CAPITAL SFB IN 2017, ICICI Pru Life IN 2019, private THE bank has a March, Varanasi-based Utkarsh (₹372.7 crore) for over ₹2,300 crore in reported MOPE had roped in
India Joint Investment Fund. started off as a local Insurance, HDFC equity firm Amicus network of 158 SFB filed a draft red herring pro- the fund. 2018. Investments investment bank Rothschild &
area bank in 2000 Standard Life and Capital Partners branches across
A third person said that Capital and became a small Pi Ventures invested joined the company Punjab, Haryana, spectus for a ₹1,350 crore IPO. The asset man- from the fund include Co to exit another second-
Small Finance Bank’s IPO plans finance bank in 2016 in the company as a new investor Rajasthan and NCR Suryoday SFB received regula- ager will register those in MAS Finan- fund investment in a staple
come in the wake of healthy growth tory approval in December 2020 to the fund in India soon after cial Services, a non-bank len- food maker.
on various metrics in FY21 despite float an IPO, while Kerala-based securing a certain amount of der based out of Gujarat; Mys- The coronavirus pandemic
the coronavirus pandemic. Capital stood at 72-73% at the end of last fiscal, As of 31 March 2021, total advances EASF SFB filed its draft IPO proposal in initial commitments from LPs, uru-based N. Ranga Rao & has thrown a spanner in the
Small Finance Bank’s net interest an increase from 65% at the end of the were ₹3,763 crore and total deposits January last year. AU Small Finance the third person said, and Sons, India’s largest maker of works of fundraising efforts by
income grew a little over 15% to around previous year. The credit-to-deposit ₹5,221 crore. The CASA (current Bank floated its IPO in 2017, while added that the theme of the incense sticks; and Ludhiana- private equity and venture
₹200 crore in the last fiscal. Net profit ratio is an important first indication to account savings account) ratio was 40% Equitas Small Finance Bank and Ujji- vehicle will remain the same as based Happy Forging Ltd. capital firms in India over the
surged 60% to around ₹41 crore. gauge a bank’s health, as it shows how of the total deposits. van Small Finance Bank Ltd listed their that of previous funds. MOPE’s last bet came in past year. Hence, not many PE
The company expects to grow net much of a bank’s core funds are being The bank has a network of 158 bran- shares in November and December An email query sent to March 2020 when it invested firms have been keen to hit the
profit over 50% annually in the next used for lending. Big banks such as ches and 160 ATMs across Punjab, 2019, respectively. MOPE didn’t elicit any ₹240 crore in Molbio Diagnos- market for securing capital.

‘Local capital should be incentivized to take risks’ Pratilipi raises $48 million in
Beena Parmar
beena.parmar@hindustantimes.com
Series D round led by Krafton have sectoral expertise. Due to
the long gestation period, the
There is a need to incentiv-
ize local capital to take risk.
MUMBAI assets have to undergo a wide- The incentives can be tax sops
spread lack of alignment in for investing if their bets go Tarush Bhalla ings across various formats, we have seen a lot of progress,

M
umbai-based Brescon business interest. Add to this against the investing wisdom. tarush.b@livemint.com including audiobooks, pod- expanding into some new for-
Corporate Advisors, the legal and administration We need to allow existing pro- BENGALURU casts, comics, web series, mov- mats as well as finding newer
which had aborted its costs. Not surprisingly, these moters to be in the race to ies and games. ways for our creators to be suc-

efforts to launch a fund, now
aims to facilitate distressed
deals worth up to $400 million
in FY22. In the past year, the
debt-restructuring and turn-
around advisory firm facili-
tated two large deals worth
$500 million, involving Jayas-
wal Neco Industries and Pana-
cea Biotec. In an interview
with VCCircle, Nirmal Gang-
wal, managing partner, Bre-
scon & Allied Partners, said
the insolvency resolution
process must focus on luring
domestic capital to generate a
new class of investors. Besides,
tax sops should be rolled out,
and existing promoters be
allowed to acquire enterprises.
Bankers should also be per-
mitted to lend through finan-
cial investors under the Insol-
vency and Bankruptcy Code
(IBC), he said. Edited excerpts:
What is your assessment of
five years of IBC?
Nirmal Gangwal, managing partner, Brescon & Allied Partners.
The resolution of distressed
assets has not improved even
after five years. Despite all the
amendments and path-break-
ing judgments, delays and low
recovery continue to mar the
IBC regime. Banks and finan-
cial institutions have so far
taken a haircut of over 60% on
an average in Q4FY21, and the
recovery rate was a paltry
26.45%. The average time
taken to resolve cases is 459
days, much more than the stip-
ulated 330 days. Time and
again, concerns have also been
raised over the high percent-
age of liquidation after compa-
nies failed to get viable plans.
To put this into perspective,
1,277 of the total 4,376 compa-
nies undergoing insolvency
proceedings have been liqui-
dated. That is 30% of all cases.
From the globally-followed
practice of debtor-in-posses-
sion, we introduced a concept
of the creditor-in-possession.
Our law bestowed this respon-
sibility of managing the asset
on the resolution professional
who, in all probability, may
have limited experience in
running industrial units, or
activities have resulted in asset
value erosion and have heavily
added to lenders’ costs.
What are the bottlenecks
for investors who bid for
distressed assets?
A lot of time is consumed in
cross-litigation, which results
in loss of time, value
of money and efforts.
Two, the size of the
businesses is at a
sub-optimal level and, there-
fore, exits often become diffi-
cult and illiquid. Three, we
don’t have focused sectoral
investors. The majority are
sector-agnostic, hence, they
factor in extremely high-risk
discounts on the assets. This,
in turn, reduces lenders’ inter-
est to resolve the assets at
throwaway prices.
How to improve valuations
of good companies and
reduce haircuts for len-
ders?
D
acquire enterprises freely. We
should also have regulatory
forbearance, wherein bankers
can lend money to such acqui-
sitions through another inves-
tor, ARC (asset reconstruction
company), or financial inves-
tor, subject to an optimal debt-
equity mix.
How to get domes-
tic investors inter-
ested in buying out
distressed firms?
There is a two-fold solution.
One, investors, including cor-
porates, high net-worth indi-
viduals and family offices must
be able to set off the losses of
investing in distressed assets
from their regular income if
domestic capital is made avail-
able for such acquisitions.
Two, there should be a well-
regulated market to trade such
high-yield instruments. This
will generate a new class of
investors in India.
igital vernacular con-
tent platform Pratilipi
on Wednesday said
that it has raised $48 million as
part of a Series D round led by
South Korean gaming giant
Krafton Inc.
Existing investors including
Omidyar Network India also
participated in this round,
along with startup founders
including Unacademy’s Hem-
esh Singh and Gaurav Munjal,
Delhivery co-founder Sahil
Barua, Meesho co-founder
Vidit Aatrey and Udhyam’s
Mekin Maheshwari.
Pratilipi co-founder and
CEO Ranjeet Pratap Singh also
invested in this fundraise.
With this, the total amount
raised by Pratilipi stands at
$78.8 million.
Pratilipi said it will use the
proceeds of this round to
strengthen its intellectual
property and develop its offer-
A part of the investment will cessful. We are both pleased
also be utilized for expansion and privileged to partner with
in overseas markets. Krafton, who shares our love
Through the investment, for great stories and intellec-
Krafton will also work with tual property,” Singh said.
Pratilipi to identify the best Over the past 18 months,
stories that can be Pratilipi has
translated for its Pratilipi said it will launched two
global gaming use the proceeds new products,
franchises. to develop Pratilipi FM and
The six-year- offerings across Pratilipi Comics,
old firm is a story- and acquired two
platforms such as companies, IVM
telling platform
that primarily audiobooks, Podcast and The
focuses on Indian podcasts, comics Write Order.
languages, Its Comics and
including Ben- FM offerings have
gali, Marathi, Malayalam, 850,000 and 300,000
Tamil, Kannada, Urdu and monthly active users, respec-
Telugu. tively, the company said ear-
It started as an online read- lier last month.
ing-writing platform in Indian It has also started partnering
languages and now claims to with its ecosystem partners to
have over 370,000 writers and bring engaging, high-quality
30 million monthly active literary content in other for-
readers in 12 Indian languages. mats such as traditional books,
“Over the last 12-18 months, web series and animation.

Indian AI startup fractal weighs IPO

m MINT SHORTS
Multiplier raises $4 million led by
Sequoia Capital India’s Surge
Mumbai: Professional employment organization platform Mul-
GETTY tiplier on Wednesday ann-
ounced $4 million (about ₹29.8
crore) funding led by Sequoia
Capital India’s Surge, which
also saw participation from
co-investors and angel inves-
tors. Multiplier co-founder and
chief executive officer Sagar
Khatri said the company was
looking to focus on its presence
in the Asia Pacific region. PTI
Uniform Junction to invest $1 mn to
partner with int’l edtech firms
Mumbai: Uniform Junction, a part of the Arvind Mafatlal group,
on Wednesday announced that it will invest $1 million (about
₹7.45 crore) in forming international partnerships with edtech
companies to further strengthen its positioning as the largest
school tech solutions provider. The company also announced
that it has partnered with Israel’s learning analytics solution pro-
LSV Capital to invest $100 mn in
Indian startups over next 10 yrs as covid pandemic fuels growth
ISTOCK
vider x10ed to bring in diverse and holistic learning solutions to MINT India’s Fractal Analytics Inc., a
schools. Uniform Junction co-founder and chief executive officer provider of artificial intelli-
Gagan Jain said the funds will be raised through venture capital- gence and analytics solutions to
ists, and that the company is in talks with several firms. PTI global firms, is exploring an ini-
tial public offering (IPO)to fuel
its growth as the pandemic
TCS adds over 7K employees in UK, boosts demand for its services-
Fractal is also assessing interest
now employs over 18,000 persons from investors valuing the com-
New Delhi: India’s largest IT firm Tata Consultancy Services pany at significantly more than
(TCS) on Wednesday said it has added over 7,000 employees in $1 billion, Srikanth Velamakanni, co-founder and chief executive
the UK, including 1,800 trainees, over the past five years. The officer, said on Tuesday. BLOOMBERG
Mumbai-based company currently employs over 18,000 people
in the UK. TCS said women make up 28% of its employees, much
higher than the 17% average in the UK IT sector. “TCS has New Delhi: Life Science Vision Capital, the UK-based ear- Startup FuelBuddy delivers fuel at
upskilled more than 90% of its ly-stage healthcare and investment firm, on Wednesday
MINT
UK staff in the last two years, said it will invest over $100 million (about ₹745 crore) in
doorsteps in UAE and Saudi Arabia
reflecting its commitment to Indian startups over the next 10 years. The firm plans to Mumbai: Delhi-based fuel delivery startup FuelBuddy has
nurturing local IT talent. It has invest in transactions with deal size in the range of $1.4 mil- begun doorstep delivery of fuel in the UAE and Saudi Arabia. The
been named the Top Employer lion to $14 million. The venture capital firm said it has app-based, IoT and cloud-enabled fuel delivery service has
in the UK by the Top Employers onboarded physician and scientist Satish Prasad Rath as entered into a joint venture with Sudhir Power for Gulf countries.
Institute and among the Top 25 partner for India. LSV Capital has till date conceptualised The foray provides FuelBuddy with access to newer geographies
Best Big Companies to Work for and invested in 21 start-ups globally. PTI and customers as part of its global expansion plan, the company
in the UK,” it said. PTI said. KALPANA PATHAK
04 THURSDAY, 15 JULY 2021
NEW DELHI MARK TO MARKET LIVEMINT.COM

S&P BSE Sensex Nifty 50 Nifty 500 Nifty Next 50 Nifty 100 S&P BSE Mid-cap S&P BSE Small Cap
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m MINT SHORTS
UK inflation surprises with the
Infosys beats TCS by a mile in Q1,
strongest reading since 2018
UK inflation accelerated to the highest level in three
years in June, driven by widespread price increases that
challenge the Bank of England’s argument that the surge
but margin pressure rears its head
will be temporary. Consumer prices climbed 2.5% from Harsha Jethmalani upgrades will get negated by downward ing margins, IT services firms will have
a year earlier, exceeding all but two estimates in a Bloom- harsha.j@livemint.com revisions on the margin front,” said an
a case for negotiating price hikes with Racing ahead
berg survey of 35 economists. Prices rose from May in the analyst at a domestic institutional bro-
some customers. “We see a case for Infosys has performed better than TCS post-covid.

I
vast majority of 12 broad divisions, the Office for National T services firm Infosys Ltd reported kerage, seeking anonymity. higher offshore pricing (for the niche Infosys TCS Sequential growth in constant currency revenue (in %)
Statistics said on Wednesday. The jump will strengthen stellar revenue growth in the June Infosys’s operating margin fell 80 and the right digital skills to start with),
6
views among investors and a growing minority of econo- quarter. Its constant currency reve- basis points sequentially, even thoughaided by strong growth/demand, off- 4.8
mists that the Bank of England will raise interest rates as nue growth of 4.8% sequentially eas- its salary hikes were due only in Q2. shore shift (reflected in higher offshore 4
soon as next year as the economy recovers from the pan- ily beat the consensus estimate of Wage inflation, reflected in higher delivery and strong pick-up in hiring), 2.4
demic. It also shows how inflation is emerging as a test for 3.6% growth. Infosys’s growth also hap- employee and sub-contracting costs, which could negate some of the margin/ 2
central banks in major economies, coming a day after US pened to be double of what was reported was still the culprit. Given the strong
cost related concerns for the Street Q1FY21
0
consumer price growth unexpectedly surged to 5.4%. by industry leader Tata Consultancy demand, there is a war for good talent in
(including us),” analysts at JM Financial Q2FY21 Q3FY21 Q4FY21 Q1FY22
The pound rose 0.2% to $1.3843, reversing some of Tues- Services (TCS), which had missed esti- some segments, leading to higher attri-
Institutional Securities Ltd said in a -2
day’s declines. BLOOMBERG mates to report only 2.4% note, adding that in ear- -2.0
growth last week. PERSISTING DOMINANCE lier periods, such as -4
What’s more, Infosys between FY05 and FY08,
-6
raised its FY22 revenue INFOSYS’S growth BUT the firm’s profit HOWEVER higher offshore pricing had
Bond rush growth guidance to on a sequential basis margins were hit due digital pricing and increased on the back of -6.5
was double than that to sub-contracting automation can act -8
Foreign fund mangers say China bonds remain appealing. 14-16% from 12-14%. Most of Tata Consultancy costs as well as wage as margin levers, the strong demand. Source: Reliance Securities, Company
Yield on China’s 10-year government bonds (in %) analysts had expected the Services (TCS) inflation company says The management said
3.4 company to raise the tar- that it has a few margin SATISH KUMAR/MINT

get to a 13-15% range. levers, which include in digital transformation among large pointed out earlier, Infosys is clearly
3.3
Infosys’s American Depository tion and higher employee costs. automation and pyramid management, deals; putting all these together gives us leading on revenue growth, and the
3.2 Receipts (ADRs), which are listed on the Infosys saw its voluntary attrition rise and pricing on digital could be raised. the confidence to increase our revenue trend has accelerated post-covid. Info-
New York Stock Exchange, were up from 10.9% in Q4FY21 to 13.9% in But there are no clear signs of this hap- growth guidance to 14-16%. We expect sys’s quarterly dollar revenues are 16.6%
3.1 3.06 only about 2% at press time. Q1FY22. “A 300 basis points rise in attri- pening yet, which explains the muted pricing to remain stable.” ahead of pre-covid levels (Q3FY20),
While the strong revenue growth and tion and the related monetary measures reaction of the Infosys stock, despite the Analysts at Jefferies India Pvt. Ltd while in the case of TCS, they are up
3
deal wins were big positives, profit mar- to contain it will pose a threat to the strong outlook on revenue growth and said the revised revenue guidance 10.2%. In the past one year, the Infosys
2.9
2.93 gins took a beating, and poured cold company’s margins in the coming quar- deal wins. In a post-earnings conference reflects its strong growth visibility. stock has rallied by 101%, massively
water on investors’ hopes of an earnings ters as well,” said another analyst, also call, the management said: “We have Another highlight was Infosys’s robust beating TCS, which rose 48%. The valu-
2.8 upgrade. “Earnings revisions are seeking anonymity. Some analysts said seen strong growth in Q1, the deal pipe- deal wins. Its large deal bookings rose ation gap between the two stocks has
13 Jul 2020 13 Jul 2021 expected to be marginal, as revenue that since wage inflation is visibly hurt- line is good, we are seeing good traction 22% sequentially to $2.6 billion in Q1. As also narrowed considerably.
Source: Bloomberg

SATISH KUMAR/MINT

Bullish China bond investors

debate how far rally can run
NMDC’s steel plant demerger An unflattering FY21 is a risk for
Foreign investors are sticking with their bullish views on
Chinese debt after Beijing’s dovish tilt, though most see
the current rally as more or less done. JPMorgan Asset
nod lifts investor sentiment MobiKwik’s tryst with markets
Management, Fidelity International and Pictet Asset
Management don’t see benchmark yields falling much Ujjval Jauhari Aparna Iyer riorate in FY21. Its draft red-her- But MobiKwik’s big challenge
Under pressure
further than 2.9-3.0%, but see the bonds as attractive due ujjval.j@livemint.com aparna.i@livemint.com ring prospectus reveals that its is to increase the bang for the
Cash balance, which remained low due to the capital expenditure
to their low correlations with the rest of the world and on NMDC's steel plant, may get some boost post demerger.
gross merchandise value (GMV) buck from each wallet user and

N O
premium to peers. UBS Asset Management is more bull- MDC Ltd is rewarding ne MobiKwik Systems fell 30% last fiscal year and its net also grow the base by keeping
ish, saying China’s 10-year yield, which has fallen to a investors with a value 47
Cash balance per share (in ₹) Ltd, all set for raising loss widened. Besides, the com- wallets relevant amid a wide
12-month low of 2.93% after Beijing’s shift towards mone- unlocking opportu- 37 money through an initial pany couldn’t add as many new range of digital payment and
tary easing last week, could drop as much as 100 basis nity. The final clearance to the public offering (IPO), has a tall users as it did in FY20. credit options.
points to a record if officials cut rates this year. China’s much-awaited steel plant task ahead of it. The fintech firm Of course, none of this has The pandemic may have
government bonds have defied expectations of a sell-off demerger was given by the has to convince investors that impacted its valua- boosted digital pay-
all year, as global investors snapped up the debt to take company’s board on Tuesday. 20 FY21 was an aberration and that tion. When the MobiKwik’s big ments, but it hasn’t
advantage of their yield premium over the rest of the The NMDC stock has risen 17 17 its wallet will grow by leaps company raised $20 helped wallet com-
15 challenge is to
world. BLOOMBERG about 4% in the past two trad- despite the intense competition. million from Abu grow its base by panies. Moreover,
ing sessions, undoing some of 8 Unlike other e-commerce Dhabi Investment global majors such
keeping wallets
the corrections earlier in the businesses in India, the fintech Authority (ADIA) as Alphabet Inc.’s
relevant amid a
Crypto miners’ woes in China run-up to an offer for sale
FY15 FY16 FY17 FY18 FY19 FY20 FY21
space is highly fragmented with last month, the
bevy of digital
Google Pay and Flip-
(OFS) by the government. many payment and credit effective per-share kart’s PhonePe have
rising amid fresh crackdown “We expect the demerger to
Source: Kotak Institutional Equities
options that overlap with each price was more than payment options cornered a huge
China dealt another blow to its beleaguered cryptocur- lead to value unlocking as the SATISH KUMAR/MINT
other. “The biggest task for wallet double, compared share of payments
rency industry, with Anhui province becoming the latest market is not ascribing any share. The demerger is also multiple approvals are companies is to explain the long- to a small fund-raise riding on the unified
to pledge to crack down on the practice of using power- value to the steel plant cur- positive as it limits the liability required. The shares of NMDC term relevance post-UPI (unified pre-covid in February 2020. payments interface.
hungry machines to mint bitcoin and other virtual cur- rently,” said analysts at Motilal of NMDC investors of any fur- Steel Ltd will have to be listed payments interface). That goes ADIA bought shares at an Meanwhile, MobiKwik has for-
rencies. Anhui plans to shut down all crypto mining pro- Oswal Financial Services Ltd. ther investments and/or any and the plant has to be com- for every wallet company, be it effective price of ₹896 per share, ayed into credit, also called buy-
jects within the next three years due to a power supply The company has been delay in commissioning of the missioned after a strategic Paytm or MobiKwik,” said a while the February 2020 share now-pay-later (BNPL)—a silver
shortage, hf365.com reported. The province, which is less investing in setting up a 3 mil- steel plant. investor is roped in. It is only financial services analyst, sale was for ₹457. lining for the company. “BNPL is
than three hours away from Shanghai via high-speed lion tonne per annum steel The demerger would also after this that investors reap requesting anonymity. The frenzy for internet stocks a fast-growing segment and the
train, will also curb new projects that require large unit at Nagarman in Chhattis- strengthen NMDC’s balance the complete benefits of the This partly explains why Mob- among investors may well ensure most promising one right now. It
amounts of energy or power consumption and build data garh. The com- sheet (transfer of demerger. iKwik saw its performance dete- that the uptrend continues. is also picking up at the right
centres in an orderly manner, according to the news por- missioning is The company has debt to NMDC NMDC’s prospects remain time,” said another analyst also
tal, which belongs a media group affiliated with the gov- expected by the been investing in Steel and reduce sound with iron ore demand A thinning wallet requesting anonymity.
ernment of Hefei, Anhui’s capital. It did not cite anyone. end of 2021. setting up a 3 cash burn for the and realizations in India Going by MobiKwik’s FY21
MobiKwik’s performance deteriorated in FY21 despite an increase in
Bitcoin has been trading towards the lower end of a However, look- million tonne per steel plant) and remaining firm. The firm is performance, it is clear that the
digital transactions during the pandemic.
recent range around $30,000 to $40,000. BLOOMBERG ing at the need of
annum steel unit improve return expected to report about 15% (in ₹ crore) Gross merchandise value (GMV)
company needs funds to grow.
a strategic part- ratios, said ana- Ebitda per tonne growth in Q1, The ₹1,500 crore that it seeks to
ner for running at Nagarman in lysts at Share- according to analysts at Moti- Net profit/loss Total income Total expenses
(right-hand scale)
raise from the IPO will help, and
the steel plant, Chhattisgarh khan. T h e lal Oswal Financial Services. 600 24,000 also give it an opportunity to
Risk premium analysts were increasing cash The company is estimated unlock value for existing inves-
The spread on South Africa’s dollar debt widens after expecting some flows could lead to report per tonne realiza- 400 18,000
tors. As pointed out earlier, the
narrowing to a record level. delays in commissioning. to higher dividend pay-out, tions of around ₹8,167 against growing frenzy for new-age
200 12,000
South Africa 2030 bond spread to benchmark (in basis points) NMDC has invested too. Last year, the dividend ₹6,174 in Q4FY21 and ₹3,088 internet firms among Indian
900
₹18,000 crore in the steel stood at ₹7.8 a share, implying in the year-ago period. 0 6,000
investors may give a push to
plant and Motilal Oswal Finan- a 4.5% yield. And the expected rebound FY19 FY20 FY21 MobiKwik. But whether the valu-
700 cial Services expects a market Investors, however, will in steel demand after the eas- -200 0
ation of about ₹5,100 crore based
valuation at 25% of the book have to wait for the demerger ing of lockdowns is expected Source: MobiKwik’s draft red herring prospectus (DRHP)
on the latest fund-raising in June
500
value, which is about ₹16 per process to get completed as to support its volumes. would swell remains to be seen.
SATISH KUMAR/MINT

279 276
300

100
17 May 2018 14 Jul 2021
Consumer staples cos set for steady Q1 sales amid margin pressure
Source: Bloomberg
Pallavi Pengonda CAGR for most staples compa- tion transitioning impact in icant dent to operating margin as
SATISH KUMAR/MINT Smooth sailing
pallavi.p@livemint.com nies. Tata Consumer Products Consumer staples to see decent y-o-y growth in Q1, although Kotak GSK,” said JM Financial Institu- well; these factors are expected
Ltd, Godrej Consumer Products tional Securities Ltd’s analysts in to more than negate the operat-
South African rand is no longer expects an organic 2-year revenue CAGR of 6.4% for the quarter.

I
ndian consumer staples firms
the top currency among EMs are likely to report steady rev-
Deadly riots. Sky-high unemployment. A surge in virus enue performance for the
infections. Add to that rising US inflation and prospects June quarter (Q1FY22). This will
of Federal Reserve tapering, and South Africa’s rand is in be helped by a favourable base
a tight place. The currency plunged this week, ceding its considering that Q1FY21 was far
position as the year’s top emerging market performer. more adversely impacted by the
Deadly protests that erupted following the imprisonment pandemic-induced curbs.
of former president Jacob Zuma showed no signs of let- In this backdrop, it makes
ting up, disrupting South Africa’s covid-19 vaccination more sense to look at the two-
programme and threatening food shortages as supply year compounded annual
chains buckled. The nation’s dollar debt is headed for the growth rate (CAGR) perform-
biggest three-day drop since May. Investors are con- ance. Kotak Institutional Equi-
cerned that the unrest, the sternest test yet to President ties expects consumer staples
Cyril Ramaphosa’s authority, will derail South Africa’s firms under its coverage to regis-
efforts to rebuild the economy in the wake of the pan- ter a 6.4% revenue CAGR on a
demic. Citigroup Inc. reduced its overweight South Afri- two-year CAGR basis (organic).
can government bond position in its model portfolio and “We expect mid- to high sin-
recommended selling the rand. BLOOMBERG gle-digit two-year revenue
Ltd (GCPL) and Nestlé India Ltd
are expected to lead the pack
with 10-12% two-year revenue
CAGR,” added Kotak’s analysts
in a report on 6 July.
GCPL’s update on the June
quarter said it expects its India
business to deliver sales growth
in the high teens, driven by
strong volume growth and cali-
brated price increases. It derives
around 55% of its revenues from
India. GCPL expects consoli-
dated sales growth for the quar-
ter on a two-year CAGR basis to
be in double digits.
Marico Ltd said in its June
quarter update that its India
business delivered 30% plus rev-
Year-on-year change in revenue growth 2-year revenue CAGR** (in %)
a report on 9 July. ing leverage benefits of a good
30
The broker estimates HUL to top-line growth,” they added.
report year-on-year revenue Meanwhile, investors should
20
growth of 16%. However, given closely track management com-
14.4 the higher raw material cost mentary on demand and input
8.7
10 environment, margin perform- price trends. So far this calendar
8.0 ance would be crucial to watch. year, the Nifty FMCG index has
0
6.4 Overall, analysts expect most increased by 5.5%, underper-
Q1FY20 Q1FY22E* consumer staples firms to face forming the Nifty 100 index,
-10 margin pressure due to higher which has risen by 14%. Even so,
Note: These are like-to-like numbers for consumer staples firms under Kotak’s coverage. input costs. “We expect the June its not as if valuations of con-
*E is for estimates. quarter to be the sixth straight sumer firms are cheap.
**CAGR is compound annual growth rate. Source: Company, Kotak Institutional Equities
quarter of gross profit margin Shares of HUL, Dabur India
SATISH KUMAR/MINT
compression for HPC and foods Ltd and Marico trade at around
enue growth, backed by robust “Hindustan Unilever Ltd businesses,” said JM Financial 52, 48 and 46 times estimated
double-digit volume growth. (HUL)’s underlying volume analysts. HPC is short for home earnings for FY23, respectively,
Note that Marico’s India busi- growth would have been around and personal care. “The sharp based on Bloomberg data.
ness had contributed 77% of its mid-teens if not for the localized growth in A&P (advertising and This should keep meaningful
total FY21 revenues. lockdowns in May and distribu- promotion) would cause a signif- upsides at bay in the near future.

Mark to Market writers do not have positions in the companies they have discussed here
LIVEMINT.COM CORPORATE THURSDAY, 15 JULY 2021
NEW DELHI 05

ASCI enforces fresh norms Fund houses bet on consumer

stocks as new covid wave ebbs
for social media influencers Nasrin Sultana
nasrin.s@livemint.com
MUMBAI

D
omestic mutual fund
(MF) managers have
It has begun monitoring digital platforms for violation of new rules for promotional content begun betting big on
consumer-centric stocks,
anticipating a surge in demand
Saumya Tewari gram) I shared has clearly mentioned as restrictions ease with the
saumya.t@livemint.com that I will prefer to use #collaboration or number of covid-19 cases
NEW DELHI #sponsored if a lot of my followers find declining aided by higher vac-
#ad hashtag to be scripted or something cination numbers across the

T
he Advertising Standards as I never did scripted collaborations/ country, data for June showed.
Council of India (ASCI) has ads - that was just to let them know that Consumer-focused stocks
started monitoring digital I take my own sweet time to test the such as those of TVS Motor
and social media platforms products and share honest thoughts on Company and ITC were the
for violations of its influencer the same, be it #ad or not.” most bought by mutual fund
advertising guidelines from Wednes- Ashutosh Harbola, the founder of houses in June, according to
day, it said a month after introducing the influencer marketing company Buz- data sourced from Edelweiss Consumer-focused stocks such as TVS Motor Company were the
new rules for promotional content in zoka, said the biggest issue with influen- Alternative Research and Ace most bought by mutual fund houses in June. MINT
digital. cer marketing is the way PR firms push MF.
The ad regulator has partnered with for barter deals (exchange of product/ TVS Motor Company 1QFY21. Key trends are price fell by half from the previous
a French technology provider, Reech, service expecting a positive review), received a net inflow of ₹1,275 increases aiding revenue month, as many investors
which will use artificial intelligence to often urging creators to not use the crore, while there was a net growth and cushioning infla- chose to book profits when the
scan digital content across platforms. ‘sponsored’ tag or put out any disclaimer investment of ₹1,210 crore in tionary pressure across most markets hit record highs.
Since the launch of the guidelines on about products being gifted by a brand. ITC in June. companies, some weakness in Net inflows into these
14 June, ASCI has received 46 consumer “In most such barter deals, influencers Newly listed stock Sona personal care and modest schemes stood at ₹4,608.75
complaints regarding non-disclosure of are often not paid upfront but are pro- BLW Precision Forgings Ltd, uptick in in-home consump- crore in June, down from
what appears to be a paid promotion by vided with products in an expectation of also known as Sona Comstar, tion and health/hygiene cate- ₹9,235.48 crore in May,
influencers. Personal care and beauty a positive review which is where most received the highest inflow of gories, and strong resilience in according to data released by
was the most cited category, and the The ad regulator ASCI has partnered with a French technology provider, Reech, violations are happening,” he added. ₹2,469 crore in June. decorative paints demand,” it the Association of Mutual
highest number of complaints were which will use artificial intelligence to scan digital content across platforms. MINT A set of advertisers across automobile, Consumer demand is likely said in a report on 6 July. Funds in India. The figure was
against Instagram influencers. tech and FMCG, among other catego- to gain momentum following Other stocks ₹225.25 crore in
The influencer ecosystem in India digital agencies have issued a diktat to referring to barter collaboration where ries, are also part of the problem, said unlocking by most states, with bought by mutual With the easing of June 2020.
covers social media platforms such as their influencers to abide by the guide- a brand sends products to an influencer Neel Gogia, co-founder, IPLIX Media, the decline in covid cases and funds in June are covid lockdowns, Redemptions
Twitter, Instagram, Facebook, Snap- lines. However, key challenges remain. and, based on their personal experience an influencer marketing and talent the vaccination drive continu- HDFC Bank, signs of a faster rose to ₹18,974.82
chat, YouTube and a host of short video While most big influencers with over of using those products, the influencer management agency. ing at a healthy pace, accord- which saw a net recovery are crore in June
platforms such as Chingari, Moj and MX one million followers have started using posts content around it. Gogia said his agency took a revenue ing to analysts. inflow of ₹1,190 from ₹14,169.63
Taka Tak. disclaimers and hashtags such as #AD or “Why should I name this an #AD hit because a few campaigns have been “With the easing of lock- crore, Reliance
visible across
crore in the previ-
“Although disclosures have started to #Sponsored, a large number either post when there is real effort that went locked before the guidelines were downs since June, signs of a Industries discretionary, ous month and
appear, there is an equal number of without using tags or openly defy the behind creating the piece of content and issued. Now advertisers are not comfort- faster recovery are visible (₹1,038 crore), said Emkay Global ₹13,520.03 crore
posts where they are not being used able using the paid promotions tag across discretionary,” said ICICI Bank in June 2020.
as well. We have received com- PLAYING BY THE RULES that has left influencers stranded. Emkay Global Financial Servi- (₹1,021 crore), Domestic insti-
plaints about both Stories (on Insta- “They either have to let go of the ces Ltd. Shriram Transport (₹918 tutional investors, including
gram) and regular posts across social SINCE 14 June, ASCI PERSONAL care THE influencer STAKEHOLDERS money or flout the norms. As of Kotak Institutional Equities crore), newly listed Krishna mutual funds, insurance com-
media platforms,” said Manisha has received 46 was the most cited
complaints regarding category, and most
ecosystem in India have told influencers now, there is no clarity on penalties
covers platforms such to abide by the
expects modest supply-chain Institute of Medical Sciences panies and banks, invested
Kapoor, secretary-general, ASCI. non-disclosure of plaints were against as Twitter, Instagram, guidelines, but or the repercussions that an adver- disruptions for consumer (₹863 crore), SBI Cards and ₹7,043.51 crore in equity
“In most of these cases, as soon as we paid promotion Instagram influencers FB, Snapchat, YouTube challenges remain tiser /influencer/agency may face companies because of the sec- Payment (₹834 crore) and schemes in June, much higher
write to influencers and advertisers, for not adhering to the guidelines. ond covid wave and lockdown Tech Mahindra (₹830 crore). than the ₹2,067.23 crore
the posts are modified within a cou- ASCI should communicate clearly restrictions. The three stocks that were invested in May.
ple of hours. Our suo-moto monitoring norms. when the promotion is not scripted? I’ll about the penalties in case of non-com- The brokerage firm expects sold most by mutual funds in Both Sensex and Nifty indi-
will start in full force from 14 July, and A beauty blogging account on Insta- be terming this as a #collaboration or pliance. Only then will it be taken more steady demand trends in con- June are Infosys, with an out- ces gained 1% in June, touch-
there will be an increased number of gram that goes by the name Skinslayer #Sponsoredforthework going forward,” seriously,” he added. sumer staples, given the mod- flow of ₹3,081 crore, ONGC ing record highs. Inflows into
complaints.” with over 28,000 followers recently Skinslayer’s Instagram story read. While ASCI doesn’t have the author- est disruptions. (₹636 crore) and NTPC (₹600 monthly systematic invest-
As stakeholders start to implement the posted a story refusing to use #AD in its Responding to Mint’s query over ity to penalize violators of its guidelines, “The discretionary/retail crore). ment plans rose slightly to
guidelines, many influencer marketing posts. The account, which is managed email, creator Madhuri of Skinslayer it can inform government departments pack would be significantly Net inflows into equity ₹9,155.84 crore in June from
agencies, talent management firms and by Madhuri and Yamini Swetha, was account clarified, “the story (on Insta- about non-compliance. impacted, though less than mutual fund schemes in June ₹8,818.90 crore in May.

Electronics sales bounce back post unlock 2

Prasid Banerjee crippling shortage of chips glo- Despite all these constraints,
prasid.b@livemint.com bally and other supply chain consumers seem to continue
NEW DELHI constraints. buying electronics and con-
Smartphone makers, includ- sumer durables. “There is a

E
lectronics and consumer
durables have bounced
back post lockdowns, sell-
ing despite a rise in prices and
short supply, and surprising
retailers and experts.
Retailers, having feared a
bleak year ahead, say post-lock-
down recovery has been sur-
prising and that they now
expect to meet their targets for
the year. That’s if a third wave of
the pandemic doesn’t happen.
“It has been a very pleasant
surprise that recovery has been
better than last year,” said
Nilesh Gupta, director of Mum-
bai-based retail chain Vijay
Sales. “If I compare post-un-
lock last year to this year, this
year has been better. I have no
clue why, because logic told us
that it will not happen and it
will be a tough recovery.”
Gupta said he has seen
growth “over last year” in lap-
ing Xiaomi, Realme and Oppo supply shortage, but it’s not at
increased prices of some devi- the category level,” said Gupta.
ces earlier this month. Industry He said while consumers may
executives said that prices of not get a specific brand, they
smartphones in India could go still have other brand options to
up by ₹100-1,000. choose from. He said the fear of
Vijay Sales expects to hit its In a statement a possible third
targets for the year if there’s earlier this The fear of a wave is pushing
no third wave. HT month, Xiaomi possible third some people to
India said it plans wave is pushing buy consumer
tops, a market that saw massive to increase the some people to durables now,
growth last year due to remote price of smart TVs instead of waiting.
buy consumer
work requirements. Overall by 3-6% from 1 To be sure, Nav-
growth has been 10-15%, he July, while a Twit- durables now, say kendar Singh,
said, adding that sales are good ter post from retailers research director
across categories. Vijay Sales Mahesh Telecom at the Interna-
expects to hit its targets for the earlier this month tional Data Corpo-
year if there’s no third wave. shows ₹500-1,000 hikes in the ration, cautioned that the num-
Manish Khatri, partner at price of some phones by Oppo. bers are only good compared to
Mahesh Telecom, said demand Gupta noted that this rise in 2020. Second quarter ship-
hasn’t waned, so the only prob- prices improved top-line per- ments for 2020 dropped by
lem retailers may face is shorta- formance for retailers, which is almost 50% as compared with
ges. The consumer electronics perhaps why they have seen 2019, while the third quarter was
industry has struggled to keep larger growth since the 2021 the largest ever for the country.
up with demand since lock- lockdowns as compared with Those numbers will likely be
downs ended last year, due to a 2020. missed this year.

At least nine firms eye taking over power

distribution business in Puducherry
Utpal Bhaskar after facing opposition. Unlike crisis that followed the corona-
utpal.b@livemint.com discoms run by state govern- virus outbreak.
NEW DELHI ments, discoms for Union terri- A Deloitte spokesperson in
tories are administered by the an emailed response said, “We

A
t least nine firms,
including Italy’s Enel
Group, the Adani
Group owned by billionaire
Gautam Adani, Torrent Power
Ltd, Greenko, ReNew Power
Ventures, Sterlite Power, and
state-run NTPC Ltd, are inter-
ested in taking over the elec-
tricity distribution functions of
Puducherry, according to two
people aware of the develop-
ment.
The other firms eyeing the
electricity distribution privati-
zation plan of Puducherry are
Kolkata-based RP-Sanjiv
Goenka group’s CESC Ltd and
Tata Power Co. Ltd. The
request for proposal (RFP) is
likely to be floated next month.
Deloitte is running the sale
process for the Puducherry
Deloitte is running the sale
process for the Puducherry
electricity department and the
discom is to be carved out
before the handover. MINT
electricity department with the
electricity distribution com-
pany (discom) to be carved out
before the handover.
The plan has been referred
to the Union home ministry
Centre. “The decks have been
cleared. A meeting of the
empowered committee is
expected to be called shortly.
The committee will also have a
central government represent-
ative and will decide upon
floating the RFP for divesting
100% stake,” said one of the two
people mentioned above
requesting anonymity.
Mint reported earlier about
India’s plan to privatize elec-
tricity discoms in Union terri-
tories. India is working to priva-
tize discoms for eight Union
territories, the plans for which
were articulated by Union
finance minister Nirmala
Sitharaman when she
announced the fourth tranche
of the ₹20 trillion stimulus
package to tackle the economic
are bound by confidentiality
obligations and are unable to
comment on client-specific
matters.”
An Adani Group spokesper-
son in an emailed response
said, “As a part of the company’s
business growth strategy, we
continue to evaluate various
viable options. The company,
however, does not comment on
speculation.”
Spokespersons for Enel
Group and Sterlite Power
declined comment. Queries
emailed to the spokespersons
for the ministries of home
affairs and power, Torrent
Power, Greenko, ReNew
Power Ventures, NTPC Ltd,
CESC Ltd and Tata Power Co.
late on Tuesday remained
unanswered.
06 THURSDAY, 15 JULY 2021
NEW DELHI CORPORATE LIVEMINT.COM

Carmakers
Taj to unlock potential from Retail investors
wary of chip gulp down Zomato
shortage,
fuel prices
reimagined and new brands shares on Day One
MINT

FROM PAGE 1 FROM PAGE 1

tra implemented strict lock-
down measures. Delhi, Hary-
ana, Karnataka and Tamil
Nadu, among others, followed
as covid cases surged.
Auto majors, including Mar-
Hospitality firm hopes to offset the impact of the pandemic with the help of its new strategy issue of the quick service res-
taurant (QSR) chain was sub-
scribed over three times at the
Kalpana Pathak end of the first day of bidding.
kalpana.p@livemint.com The retail segment was finally
MUMBAI subscribed 68 times with an
overall subscription of 157

uti Suzuki, Hero MotoCorp
Ltd and Hyundai, either
stopped production or
reduced output significantly.
However, some others, such as
Bajaj Auto Ltd, continued to
operate with limited capacity
for exports. With a steady drop
in infections, especially in
north and south India, most
automakers had resumed
operations from mid-May.
Vehicle sales are usually
compared on a corresponding
basis, but considering that
March 2020 was a near wash-
out as automakers were forced
to close down their factories
and showrooms following the
imposition of a stringent
nationwide lockdown,
monthly comparisons hint at a
revival in demand.
Operations had remained
suspended till the first week of
May 2020 and returned to
normal only in July 2020.
A sharp decline in covid
cases in rural markets and the
easing of curbs led to an almost
twofold jump in dispatches of
two-wheelers to 1.06 million
units in June compared to
352,717 units in May. Wholesa-
les of motorcycles increased
by 163% to 777,100 units, while
scooter wholesales rose nearly
fivefold to 241,689 units.
According to ICICI Securities
analysts, original equipment
manufacturers (OEMs) have
started replenishing channel
inventories as enquiries and
retail demand improved.
T
he Taj Group of Hotels, the times. To be sure, the size of the
flagship brand of the Tata Zomato IPO is far more than
Group-run Indian Hotels that of Burger King India.
Corp. Ltd (IHCL), will focus Among IPOs in the past year,
on unlocking the potential the retail segment of Nureca Zomato is yet to turn profitable.
from reimagined and new brands, Ltd was subscribed the highest
besides pursuing an asset-light growth at 167 times. Similarly, IPOs of being Swiggy—and has created
model to strengthen its balance sheet others such as Nazara Technol- strong entry barriers with a
and improve return on capital. ogies, Happiest Minds Tech- widespread network.
At the recently held analysts’ meet- nologies, Easy Trip Planners, “We believe a better service
ing, the management said Taj’s exclu- Burger King India, Chemcon mix and a robust operating
sive business club, The Chambers, has Speciality Chemicals, Mazagon model will accelerate the reve-
been relaunched with new features. The Dock Shipbuilders, Mrs Bect- nue growth momentum. With
firm plans to increase its member count ors Foods and MTAR Technol- growth expected to pick up in the
from 2,200 to 4,000. Seven Chambers ogies all saw their retail seg- forthcoming years after a pan-
are operational now and two more are in ments subscribed between 28 demic, and the rising use of the
the pipeline. The company expects it to and 166 times. However, ana- online platform, we expect the
become a ₹150-crore business. lysts have flagged Zomato’s company to break even at oper-
The group’s food delivery business steep valuation, which may ating levels in FY22, making the
Qmin, which is present in 15 cities, will pinch investors later. IPO more lucrative,” said Naveen
be expanded to 25 cities. For Qmin, the The group will pursue an asset-light growth model to strengthen its balance sheet and improve return on capital. BLOOMBERG “In our view, the Kulkarni, chief
orders are prepared in existing restau- Zomato IPO is The Zomato investment officer,
rants and hotels or management con- through as marketing costs. With a reve- help improve overall profitability,” said owned. With higher rooms coming richly valued, which retail subscription Axis Securities.
tract hotels in India. The business, thus, nue potential of ₹500 crore, Ama Stays Sharekhan by BNP Paribas in a report. under the management contract model may not sustain in is a bit pale Zomato is yet to
runs on high operating margins of 50%. is expected to generate a profit of ₹75 IHCL said this new strategy will ena- and an expected improvement in busi- the long run. Retail compared to the turn profitable.
Of all the food orders booked on crore, it added. ble it to beat the impact of the covid-19 ness fundamentals, management fee investors may apply
Burger King India Over FY18-21, the
Qmin app, 22% are from partner hotels “New initiatives (Qmin, Ama, The pandemic. It plans to add capacity via revenues are expected to rise to ₹350 for this IPO for company grew its
and 50% from hotels operated by IHCL. Chambers) are expected to contribute management contracts and will be crore from the present ₹219 crore. short-term listing share sale in revenue at a com-
With a revenue of ₹70 crore, it may ₹450-500 crore or 10% of revenue over selective in owned-room additions. Besides, the firm’s Ebitda margins are gain. However, December pound annual
achieve ₹15-20 crore in profit. The likely to get a boost from its cost-sav- these gains may not growth rate of 62%.
firm said Qmin has the potential to TURNING THE TIDE ing initiatives. In FY21, IHCL’s oper- sustain themselves While business is at
reach ₹500 crore in revenue. ating costs declined by 45% to in the long run,” said Amit Jain, a nascent stage and began gain-
Taj Sats, an airline catering com- NEW initiatives by THE company wants THE company’s IHCL’S operating ₹1,920 crore, primarily driven by a chief strategist and co-founder of ing traction since FY18, Ebitda
pany, has also been expanded to IHCL are likely to management Ebitda margins are
contribute ₹450-500 contracted hotels to also likely to get a
costs in fiscal 2021
declined by 45% to
28% reduction in fixed costs. Ashika Wealth Advisory. losses have come down signifi-
include new food and beverage tar- crore over the next account for 50% of boost from its cost- ₹1,920 crore, owing While IHCL’s net debt stood at Analysts feel that given its cantly. In FY21, Zomato recorded
get markets such as offices under a two three years its existing portfolio saving initiatives to lower fixed costs ₹1,857 crore in FY20, it increased to first-mover advantage, Zomato 32.1 million average monthly
new brand called Anuka. As of ₹3,110 crore in FY21. The firm seeks is in a sweet spot, as the online active users, of which 6.8 million
Q4FY21, the company had a market to reduce debt to pre-pandemic lev- food delivery market is just tak- MTUs (monthly transacting
share of 50% in the aviation sector. the next two-three years from 5% cur- While in FY18, management con- els by hiving off non-core assets. ing off. The company enjoys a users) placed transactions. It is
The group’s branded homestays, Ama rently. Around 60% of incremental rev- tracted hotels formed around 33% of IHCL does not have plans to acquire couple of moats, and with econ- present in 525 cities in India,
Stays and Trails, which operates 44 bun- enue growth through these new initia- IHCL’s portfolio, it has now increased to assets through debt and, instead, if any omies of scale playing out, with almost 150,000 active food
galows, is an asset-light initiative that tives would directly flow through earn- 46% with a target to take it to 50%. About attractive opportunity comes through, losses have reduced substan- delivery restaurant listings and
will be scaled up to 500. IHCL collects ings before interest, depreciation, tax 78% of the hotels in pipeline are under it will acquire it through its tie-up with tially. Zomato operates in a 170,000 active delivery partners
15% as management fees and 3% pass and amortization (Ebitda), which will management contract and only 6% are GIC Singapore, the company added. duopoly—the other entity at the end of FY21.

RBI bars Mastercard from Infosys raises FY22 ITC sees

subdued
issuing new cards in data row revenue projection recovery
FROM PAGE 1 FROM PAGE 1 the June quarter narrowed to FROM PAGE 1
23.7% from 24.5% in the pre-
They were also required to nificant market share, which is ceding quarter due to an pulses, spices, flour and conve-
report compliance to RBI and essentially organic growth, increase in subcontracting nience foods in the first half of
submit a board-approved sys- especially in the area of digital costs and other expenses FY21, while the discretionary and
tem audit report conducted by transformation. This is a clear related to employee retention out-of-home portfolio reported
a CERT-In (Indian Computer reflection of Infosys’s resilience and hiring. Infosys retained its strong recovery in the latter half.
The cabinet also approved a scheme to provide ₹1,624 crore over five Emergency Response and client relevance,” said Salil operating margin guidance for The company that sells
years as a subsidy to shipping firms in global tenders floated by central Team)-empanelled auditor Parekh, chief executive and FY22 to be in the range of Aashirvaad flour, Bingo! chips,
public sector enterprises for import of government cargo. HT within specified timelines. managing director of Infosys. 22-24%. YiPPee! noodles, Sunfeast bis-
The regulator had said this was The digital business, which Financial services and retail cuits and Classmate notebooks

Cabinet okays hike to ensure improved oversight

over licensed entities in case of
fraud or money laundering.
comprises cloud and other segments, which contribute
emerging technologies, grew close to half of Infosys’s reve-
42.1% in constant currency to nue, grew 22.6% and 22.2%
called for policy interventions
with a focus on supporting sus-
tainable livelihoods and inclu-

in DA of central Several entities had resisted

this rule on the grounds that
much of their processing was
Mastercard will not be allowed to on-board new credit, debit or
prepaid card customers in India beginning 22 July, an RBI release said,
adding the order will not affect existing Mastercard customers. REUTERS
$2.04 billion and contributed annually, respectively.
53.9% to the total
revenues for the Dollar revenue
North America,
the largest market
sive growth, along with sup-
port to sectors such as MSME,
travel and tourism.
centralized and it was not fea- quarter ended grew 16.9% for Infosys, grew ITC rolled out over 120 new
govt staff to 28% sible to restructure global
operations.
RBI later clarified that while
necessary,” an official aware of sector lender, HDFC Bank Ltd,
the matter said on condition of from issuing credit cards after
anonymity. it witnessed repeated outages
June.
demand outlook
is strong and
“ T h e annually and 4.8% 21.1% annually.
sequentially to Europe, the sec-
ond-largest mar-
products last fiscal. Its over-25
consumer-facing brands rep-
resent annual consumer
$3.78 billion on
FROM PAGE 1 including semi-skilled, rural data can be stored only locally, In April, RBI barred Ameri- across two years. focused on digital ket, grew 12.2% spends of over ₹22,000 crore.
youth, migrants and women in it can be sent overseas during can Express In a Mint edito- and cloud areas the back of large annually. The business also saw a shift
approved the continuation of the MSME segment. the day for processing but Banking Corp. In April, RBI barred rial on Wednes- such as Infosys deal wins Infosys’s volun- in consumption habits on
Rebate of State and Central “The scheme will help check should be deleted from off- and Diners Club American Express day, Deep Muk- Cobalt…and pric- tary attrition rate in account of the pandemic.
Taxes and Levies (RoSCTL) the declining trend being wit- shore servers in 24 hours. International Ltd and Diners Club herjee, a risk man- ing remains sta- the IT services unit Within the packaged con-
with the same rates as notified nessed in apparel exports. “This 2018 regulation came from on-board- from on-boarding a g e m e n t ble,” Parekh said. rose to 13.9% from 10.9% in the sumer goods business (excluding
by the textiles ministry on India’s apparel exports have about after law enforcement ing new domes- professional, “Infosys managed to maintain preceding quarter, indicating cigarettes)—sales through the
new customers
exports of apparel/garments been losing market share to and regulatory agencies faced tic customers noted that RBI has its growth trajectory in competi- strong demand in the industry. e-commerce channel more than
and made-ups by excluding competitors, falling 20.8% in difficulties in getting data from from 1 May, cit- from 1 May, citing started charging tive and difficult situations. The Infosys plans to hire 35,000 doubled during the year, taking
such items from the Remission one year to $12.3 billion in FY21. such entities for investigative ing the same rea- the same reason hefty penalties on company has been increasing its college graduates in FY22. “As its salience to over 5% of segment
of Duties and Taxes on The scheme is all set to reverse purposes. RBI gave enough son. banks. dependency on digital revenue for the demand for digital talent revenue. ITC stepped up efforts
Exported Products (RoDTEP) the trend,” he added. time and opportunity to the RBI has The Reserve quite some time, which now con- explodes, rising attrition in the to build more digital channels to
scheme which is still in the The Cabinet Committee on entities for complying with the recently handed out stiff pun- Bank had levied a penalty of stitutes more than half of its over- industry poses a near-term reach shoppers. In the last fiscal
works. The scheme will con- Economic Affairs approved the new regulations. Despite this, ishment to banks and other ₹10 crore on HDFC Bank fol- all income, with healthy growth challenge. We plan to meet this ITC also scaled up its direct-to-
tinue till 31 March 2024. implementation of a special live- if these companies have not entities for violating regula- lowing a whistleblower com- contributing to overall increase in demand by expanding our hir- consumer channel—ITC e-Store.
“Continuation of RoSCTL stock sector package by revising been able to achieve the tions. plaint about irregularities in top line,” said D.D. Mishra, senior ing programme of college grad- Launched in March 2020, the
for apparel/garments and and realigning various compo- requirement, the regulator The central bank had barred HDFC Bank’s vehicle loan director analyst, Gartner. uates,” said U.B. Pravin Rao, e-store’s reach was extended to 11
made-ups is nents of central found such punitive actions the country’s largest private division. The operating margin for chief operating officer, Infosys. cities during the year.
expected to make Three instalments g o v e r n m e n t
these products of DA and DR held schemes for the
globally competi- back from last year next five years
tive by rebating all
embedded taxes/
levies, which are
will not be paid at starting from FY22
the new rate, to further boost
growth in the live-
Amrita Sher-Gil’s ‘Ladies Enclosure’ sets a new auction record
currently not despite a demand stock sector and
being rebated by govt staff thereby making FROM PAGE 1 the device of miniatures to Artery India, an art market he said. demic portraits, but her paint- painted in 1934, was auctioned
under any other animal husbandry depict the women in bright pri- intelligence firm, 68 of Sher- While European sensibili- ings started developing a clear for ₹18.7 crore,” Vijaymohan
mechanism. It more remunera- shackles of realist painting. mary colours. However, there Gil’s works have come up for ties influenced her early “Indianness” during this said. According to him, these
will ensure a stable and predict- tive to 100 million farmers Amrita’s flat application of paint are unique contrasts. While the auction in the past 34 years, understanding of art, what phase. Paintings from the portraits are not “qualita-
able policy regime and provide engaged in the sector. This pack- and minimal drawing gives this colours are deeply vivid, there with only 16 makes Sher-Gil’s 1930s, such as Bride’s Toilet tively” comparable to the
a level playing field to Indian age envisages the central gov- person a remote presence, a is a certain sense of isolation being canvases. The Indo-Hungarian work important and Bhrmacharis, are consid- painting that sold on Tuesday.
textiles exporters. Further, it ernment’s support, amounting quiet austerity,” the blog post and loneliness in the profile of “When she artist blended from an art-his- ered to bear the quintessential “The composition, per-
will promote startups and to ₹9,800 crore over a period of quotes Sundaram. the women. passed away, her European and Indian tory perspective Sher-Gil stamp. spective and density of this
entrepreneurs to export and five years for leveraging invest- Art historian Yashodhara “It seems as if people are pre- family handed
styles and captured is her quest for Given the scarcity of her canvas haven’t been seen at
ensure the creation of lakhs of ments of ₹54,618 crore. Dalmia, author of Amrita Sher- paring for a forthcoming mar- over a collection her roots, which works, every time an impor- auction since 2006 when
jobs,” the cabinet secretariat In order to achieve self-reli- Gil: A Life, finds the colour pal- riage. But the woman’s face and of Sher-Gil paint- the experiences of she embraced tant painting is featured in an another qualitatively richer
said in a statement. ance in the shipping sector, the ette reminiscent of early Rajput demeanour show loneliness as i n g s t o t h e women in early 20th through her work auction, the bar is raised. painting by Sher-Gil titledVil-
Apparel Export Promotion cabinet also approved a scheme miniatures. “This is an impor- if wondering about what the National Gallery century India while travelling “2015 was a breakthrough lage Scene sold for ₹6 crore. In
Council (AEPC) chairman A to provide ₹1,624 crore over five tant painting in her oeuvre, cre- future will hold. In a subtle of Modern Art, extensively across year when three small-format the Ladies’ Enclosure is, all the
Sakthivel said the scheme will years as a subsidy to Indian ship- ated during the later period of way, Amrita Sher-Gil is show- Delhi. Hence, India. In the self-portraits were auctioned same, a thoroughly collecta-
prove to be a major strategic ping companies in global tend- her practice. She had achieved ing the condition of women at you will find very few works Ladies’ Enclosure was painted in March, June and October, ble, historically significant
decision towards generating ers floated by ministries and cen- a certain level of understanding that time,” Dalmia added. available for sale in private during this important phase, achieving ₹53 crore collec- canvas that, in my opinion,
new employment, particularly tral public sector enterprises for and perception,” Dalmia said. According to Arvind Vijay- hands, primarily the few that in the late 1930s. tively. In 2018, an academic has sold under its justifiable
for the vulnerable sections, the import of government cargo. In Ladies’ Enclosure, she uses mohan, chief executive, were sold during her lifetime,” She continued to paint aca- portrait, The Little Girl in Blue, value,” he added.
LIVEMINT.COM CORPORATE THURSDAY, 15 JULY 2021
NEW DELHI 07

MILLENNIALS AND GENZ VIBE

WITH DIFFERENTIATED BRANDS
‘Consumer, SME loans to be
ORDINARY
goods (FMCG) brands popular among older
cohorts are not seeing similar penetration
among the young, he explained.
“If you look at the 40-60 years age group
focus after merger with LVB’
POST where a brand holds 60% market share, and if
Gopika Gopakumar
you go to the 20-30 years age group, it may have lenging. And finally, (getting) the two do think that some of these loans may be
SHUCHI BANSAL barely 20% market share. The rest is captured gopika.g@livemint.com banks or LVB onto the same (digital) recoverable. But there are other loans
by a bunch of new brands that have come up,” MUMBAI platform as DBS. which we don’t think have intrinsic
Respond to this column at explained Mangesh Panditrao, co-founder, What will be your areas of growth in value. So it’s not that there will be a mas-

D
shuchi.b@livemint.com Shoptimize, in an earlier chat with Mint. What BS Bank India Ltd is terms of credit? sive amount of recovery from the loans
these consumers are looking for in terms of focused on growing its con- We have not been doing much lend- which are either fully provided for or

I
ndia’s premier hospitality group, Oberoi
Hotels & Resorts, said that it is open to look-
ing at launching newer hotel brands for
younger customers. In a recent chat with Mint,
the group’s newly appointed president, Sanjiv
product, pricing and messaging is very different
from what traditional FMCG brands offer.
The standout trait among young consumers
in terms of their purchase habits is that they are
more confident, explorative and experimenta-
sumer and MSME (micro, ing business from the LVB book, as we substantially provided for.
small and medium enter- started only post February-March DBS had infused ₹2,500 crore into
prises) portfolio by leverag- because it had stopped before the the bank. Would you be looking at
ing the branch footprint of Lakshmi merger. Because LVB had negative capi- infusing more capital?
Vilas Bank (LVB), which merged with tal. So their ability to write new loans We continue to be comfortable with

Kapoor, said that the company will look into
adjusting the customer value proposition of its
existing brands (Oberoi, Trident and Vilas) too
because consumer demographics are changing.
A new generation of corporate leaders is emerg-
ing with a different set of needs and preferences.
Additionally, the group could explore poten-
tial new lifestyle segments as there is a reluc-
tance among the younger lot to be associated
with any known brand. They want their brands
to be supercool and exclusive.
Older hotel guests may want to order room
service at night after a tiring day; millennials
and GenZ consumers want to get out and social-
ize and not have meals in the room. Globally,
some new hotel brands have done away with
room service, but created lobbies that are like
networking hubs with mood lighting and music.
“We need to make sure we have something
that appeals to them. There is no one size fits all.
That concept has started to go away and we will
become even more differentiated across indus-
tries and not just in hotels,” Kapoor said.
The demography of the business-class travel-
ler in airlines has changed, too, he pointed out.
The traditional business-class passenger shud-
ders at the sight of millennials travelling in
shorts and sneakers. “However, these are own-
ers of unicorns… they are looking for different
experiences. They have the money to spend,”
Kapoor explained. It is for these customers that
differentiated hotels may come up “with a
cooler experience, but more luxurious”.
The search for cooler products and services
goes beyond hospitality and travel. The prolifer-
ation of direct-to-consumer (D2C) or internet-
first brands across categories such as apparel,
beauty and personal care is another example of
what the new-age consumer is looking for.
An expert who helps drive growth for D2C
brands agreed with Kapoor that millennials and
GenZ are not interested in brands used by their
parents. Traditional fast-moving consumer
‘
tive and look for an immersive experience, said DBS last November. During the fiscal was substantially impacted. The capital. Our objective is that the busi-
Amit Adarkar, chief executive, Ipsos India. year 2020-21 (FY21), the wholly owned only product they were ness is profitable
Millennial/GenZ consumers are comfortable subsidiary of the Singapore lender doing because of low enough to be self- suf-
with technology and are active participants of reported a surge in net profit to ₹312 capital charge was gold Given we are in a turn- ficient. But for now, we
the shared economy. This cohort also finds crore compared with ₹111 crore a year loans. LVB’s strengths around story, there will think that given we are
higher credibility with sources of customized or ago. In his first interview post the were consumer busi- be requirements of in a turnaround story,
pulled information (via social friends, networks, merger, DBS India head Surojit Shome nesses and SME. Their there will be require-
influencers) instead of sources of mass dissemi- said the bank is looking to revive the rev- tum of the LVB part of our network. As problems were in the capital & that’s factored ments of capital and
nated push information (print, television). “D2C enue from LVB which currently stands our financials show, while we had a large corporate busi- into our plan over the that’s factored into our
brands are able to leverage this very well. I don’t at only 7-8% of DBS’s Indian operations. sharp increase in net income through ness, (and) a substantial next several quarters. plan over the next, say,
think new millennial/ GenZ consumers’ accept- What is the progress made on the the year, not a lot of that came from the part of that portfolio is several quarters; we
Surojit Shome
ance of D2C brands is integration with LVB? LVB branch. In fact, only about seven badly impaired. We MD & CEO, DBS Bank India have projected what
The search for a statement of rebel- Our first task was to stabilize the 7-8% of our entire revenue came from already do mid-cap and capital might be
cooler products lion against using deposit base. And I’m happy to say that LVB. So fourth, our objective is to divide large corporate busi- required and that capi-
their parents’ brands. during this period, since the business lines and get ness in DBS, so we merged that business tal—as has been stated even by DBS
and services The proposition and January 1, we’ve been able m INTERVIEW revenue momentum in unit with our business units. group—that capital will be available.
goes beyond delivery of D2C to able to actually grow the LVB branches. And DBS India’s gross NPA stood at DBS now has nearly 600 branches.
hospitality brands just vibes our deposit base and assure customers then three key other agendas we’ve 12.8% and net NPA at 1.8% as of Are you looking at branch rationali-
and travel more with these con- of the safety. On the lending side, LVB been focused on: one, getting the net- March 2021. How do you expect to zation?
sumers,” he said. had a large gold loan portfolio. So we work upgraded but also starting to take recover these bad loans? Our primary objective would be to
The pandemic has managed to reopen that product within control of the network in terms of regu- Through the amalgamation process locate those branches in places where
changed millennial/GenZ consumers, making about 10 days of the amalgamation. The latory branding. We are anticipated to we have adequately provided. So from a they can become profitable—not so
them more conscious of personal health and third, of course, is to assess the business take us about a year. But with the second risk to the balance sheet, and the profit much to say how many branches are
well-being, as well as the environment. This lines and revive the financial momen- wave of covid, it’s been a bit more chal- & loss, it is substantially addressed. We rationalizable.
does not mean that they will be automatically
drawn to sustainable or organic brands. How-
ever, here too, D2C brands hold an advantage
because of higher message credibility through
social influencers, he said.
With a year of being closeted because of the
pandemic, young consumers are actively look-
ing for new experiences and explorations.
“Our research shows that millennial/GenZ
consumers have ‘travel around the world/coun-
try’ as one of their top priorities after the pan-
demic. The startup ecosystem is abuzz with the
possibilities of sharply positioned hospitality
brands. To me, the clincher will be to create
Airbnb-like communal, hi-tech experiences to
attract this cohort,” Adarkar said.
Shuchi Bansal is Mint’s media, marketing and
advertising editor. Ordinary Post will look at pre-
ssing issues related to all three. Or just fun stuff.

ITC’s Sanjiv Puri Marico

sees 47% jump in acquires
60% stake
FY21 salary, perks in Apcos
Suneera Tandon
suneera.t@livemint.com
Naturals
NEW DELHI
Suneera Tandon

K
olkata-based ITC Ltd suneera.t@livemint.com
increased chairman and NEW DELHI
managing director

F
(CMD) Sanjiv Puri’s total remu- ast-moving consumer
neration in FY21 by 47% to goods company Marico
₹10.10 crore. Puri’s salary Ltd on Wednesday
increase was on account of a announced the acquisition of a
revised structure announced in 60% equity stake in Apcos Nat-
2019, the effect of which was urals Pvt. Ltd, which sells skin
seen for the full year in 2020. ITC CMD Sanjiv Puri’s pay hike and hair care products under
Puri’s remuneration for the is based on revision in 2019. MINT the Just Herbs brand for an
last fiscal includes basic salary undisclosed amount.
of ₹2.64 crore, a performance sation of key managerial per- The move is in line with the
bonus and long-term incen- sonnel, including the CMD and company’s strategy to build
tives of ₹6.98 crore, apart from the whole-time directors. This scalable digital-first offerings
a perquisites and other benefits was approved by the share- and a premium portfolio of per-
of ₹48 lakh, according to infor- holders of the company sonal care brands. The equity
mation made available in the through postal ballot on 23 stake will be acquired over two
company’s report and accounts September 2019, effective 1 years, through primary infu-
for the financial year ended 31 October 2019 onwards. sion and secondary buyouts,
March 2021 released late on As a result, Puri’s remunera- the company said in a filing to
Tuesday. tion for FY20 reflected the the exchanges.
In FY20 Puri’s total remu- increase in remuneration only Marico, which sells Para-
neration stood at ₹6.86 crore. for part of the year, whereas his chute hair oil and Saffola cook-
In 2019, the company had remuneration for FY21 ing oil, intends to build a port-
announced that it is set to reflected the effect for the folio of at least three ₹100-crore
restructure remuneration of entire year. plus digital brands within three
some key personnel, including Puri, an alumnus of the years.
Puri, over limited availability of Indian Institute of Technology, The company shall acquire
stock options Kanpur, and 52.4% of the total paid-up share
under t h e The remuneration Wharton School capital by 31 July 2021 and thus
employee stock of Puri included of Business, US, Apcos Naturals shall become its
option plan, or basic salary of was appointed subsidiary. Marico will acquire
ESOP, available to ₹2.64 crore, and chief executive the remaining 7.6% by 31 March
the company. The officer of the 2023, according to the condi-
committee and
bonus and long- hotels-to-ciga- tions set out in the shareholders
the board, while term incentives rettes conglomer- agreement signed between the
recommending of ₹6.98 crore ate in February parties, Marico said in its filings.
revision of Puri’s 2017. He was Acquisition of the shares of
remuneration, redesignated as Apcos Naturals will be done at a
also took into account his larger the managing director of the mutually agreed pre-money
role as company chairman company in May 2018. He was enterprise valuation. Marico
effective 13 May 2019. Histori- also appointed as chairman said it wants to accelerate its
cally, ITC’s remuneration effective 13 May 2019. digital transformation and
structure has been a mix of sal- In FY21, ITC’s gross revenue effectively participate in new-
ary and ESOPs. stood at ₹48,151.24 crore, up age internet first brands that
The move came after British 3.9% from the year-ago period. are fast filling the gap in the
American Tobacco (BAT), a It reported a profit after tax of branded premium personal
shareholder in ITC, decided ₹13,031.64 crore. The company care or packaged foods space,
not to support the company’s has more than 26,000 employ- with products that appeal to
proposal to continue ESOP in ees. In its annual report for millennials.
2018 to avoid dilution of BAT’s FY21, ITC said that the operat- Just Herbs, which was
shareholding in the company. ing environment during the founded by Arush Chopra and
This prompted ITC’s nomina- year was extremely challenging Megha Sabhlok in 2018, sells a
tion and compensation com- because of the outbreak of the range of bespoke, Ayurvedic
mittee to restructure compen- pandemic. skin and hair care offerings.
08 THURSDAY, 15 JULY 2021
NEW DELHI GLOBAL LIVEMINT.COM

Inflation will moderate but

may remain elevated: Powell
Crude prices fell soon after news of the deal, though they quickly Federal Reserve is still ‘a ways off’ from reducing asset purchases, the central bank chairman tells US Congress
recovered and were little changed in early New York trading. REUTERS

OPEC to lift UAE Nick Timiraos

feedback@livemint.com
did during the previous expansion.
“That is not at all the current situa-
tion. We have many millions of peo-

output baseline so
F
ederal Reserve chairman ple who are unemployed, and we
Jerome Powell said inflation have inflation running well above our
had increased notably and target,” he said.
would likely remain elevated For months, Mr. Powell had used
it can pump more in the coming months before
moderating.
Pandemic-related bottlenecks and
pre-pandemic employment levels as
a guide for what might meet a work-
ing definition of “maximum employ-
Summer Said drives and moderating new other supply constraints have led to ment.” But the Fed’s monetary policy
feedback@livemint.com caseloads in many places. The rapid price increases for certain report, released last Friday, suggested
group, called OPEC+, has pre- goods and services “which should officials might be growing less confi-

O
PEC reached a com-
promise with the
United Arab Emirates,
agreeing to lift the amount of
oil the cartel member can
eventually pump as part of a
wider agreement with Russia-
led producers to boost global
supplies, according to people
familiar with the matter.
Crude prices fell immedi-
ately after news of the deal,
though they quickly recovered
and were little changed in
early New York trading. Brent,
the international benchmark,
was essentially flat at about
$76.50 a barrel. West Texas
Intermediate was trading
around $75.10 per barrel.
Earlier this month, the
Organization of the Petroleum
Exporting Countries agreed
with a Russia-led group of pro-
ducers to increase production
to meet soaring demand and
tame climbing prices. The
group early last year cut 9.7
million barrels a day of crude,
the equivalent of about 10% of
demand at the time.
Demand has suddenly
accelerated as many econo-
mies, particularly in the devel-
oped world, start to hum again,
after wide-scale vaccination
viously agreed to add back
about 4 million barrels a day.
Early this month, most dele-
gates agreed to a deal that
would call for OPEC+ to
increase production by
400,000 barrels a day each
month through late 2022,
which would undo the
remaining curbs. But over sev-
eral days of talks, the U.A.E.
refused to sign on.
The country, one of OPEC’s
biggest producers and usually
a strong ally of the group’s de
facto leader, Saudi Arabia,
insisted its
own quota
be lifted as
part of any
deal.
The U.A.E. had asked for its
so-called baseline—or the max-
imum amount of oil the group
would recognize the country as
being capable of producing—
to be raised to 3.8 million bar-
rels a day from 3.2 million bar-
rels a day. In the compromise
reached Wednesday with
Saudi Arabia, the group agreed
to increase that to 3.65 million
barrels a day starting in April,
according to people familiar
with the matter.
©2021 DOW JONES & COMPANY, INC.
partially reverse as the effects of the
bottlenecks unwind,” Mr. Powell said
in imony prepared for delivery later
Wednesday before the House Finan-
cial Services Committee.
Mr. Powell is set to present the
Fed’s semi-annual monetary-policy
report to members of the committee
on Wednesday and to members of the
Senate Banking Committee on
Thursday.
US.consumer prices continued to
accelerate in June at the fastest pace
in 13 years as the recovery from the
pandemic gained steam. The Labour
Department reported Tuesday that
its consumer-
price index
increased 5.4% in
June from a year
earlier. Excluding volatile food and
energy categories, prices rose 4.5%
from a year earlier, the most in 30
years.
While the Fed and many private
sector forecasters had expected infla-
tion to rise this year as a surge in con-
sumer spending collided with pan-
demic-related shortages and bottle-
necks, the strength of the last three
monthly inflation readings has been
greater than many anticipated. While
inflation is expected to decline, ques-
tions abound over how soon and how
low inflation will fall relative to the
Fed’s 2% target.
Powell will present the Fed’s semi-annual monetary-policy report to the Senate Banking Committee on Thursday.
Since the coronavirus pandemic
hit the US economy in March 2020,
the Fed has set interest rates near
zero. It has said it expects to keep
rates there until it is confident infla-
tion will hold at its 2% target and the
labor market has healed, or returned
to what it calls “maximum employ-
ment.”
The central bank is also buying
$120 billion a month in Treasury and
mortgage securities to hold down
long-term rates, and it has committed
to continue those purchases until
achieving “substantial further
progress” toward its inflation and
employment goals.
Mr. Powell said the economy “is
still a ways off” from reaching that
standard, but that officials expect
progress to continue.
Fed officials are set to ramp up
their discussions over how and when
to reduce bond purchases at their
meeting in two weeks, but decisions
aren’t imminent. Mr. Powell said the
Fed would continue their discussions
“in coming meetings.” Several Fed
bank presidents have indicated they
are eager to start shrinking, or “taper-
ing,” the pace of those purchases.
Other senior Fed officials have sug-
gested the central bank shouldn’t be
in a rush.
Investors and Fed officials are
grappling not only with an unex-
pected blast of price pressures but
also with implementing a new policy
framework, unveiled in August 2020,
designed to seek periods of inflation
moderately above 2% after periods
below that level. Officials have been
vague around exactly what would be
an acceptable period or magnitude of
above-target inflation.
At last month’s meeting, 13 of 18
officials projected they would need to
raise interest rates from near zero by
2023, with most expecting to raise
their benchmark rate by 0.5 percent-
age point. Seven expected to raise
rates next year. The projections sur-
prised many investors because in
March, most officials expected to
BLOOMBERG
hold rates steady through 2023.
The projections, along with com-
ments from Mr. Powell after the
meeting, suggested more officials
thought inflation pressures might
prove more stubborn than initially
anticipated and wanted to guard
against that risk by penciling in ear-
lier rate increases. The Fed often
changes its policy outlook in
response to changes in the balance of
risks to growth or increased uncer-
tainty around the most likely out-
comes.
Some investors thought that any
policy pivot risked undercutting the
Fed’s new framework and its toler-
ance for temporarily higher inflation.
“The question we face with this
inflation has nothing to do with our
framework,” Mr. Powell said at a news
conference last month. The Fed’s
framework indicated officials
wouldn’t raise interest rates simply
because unemployment fell to low
levels to pre-empt anticipated infla-
tionary pressures, as the central bank
dent about the possibility of return-
ing to the labour market conditions of
February 2020 without accepting
higher inflation.
The Fed flagged the risk that the
pandemic had left “long-lasting
effects on the structure of the labour
market,” including by accelerating
the adoption of new technologies or
the pace of worker retirements. “The
post-pandemic labour market and
the characteristics of maximum
employment may well be different
from those of early 2020,” the report
said.
Because many Fed officials are
likely to have concluded that their
inflation goals have been met, their
analysis of what constitutes “maxi-
mum employment” could be the
deciding factor in determining when
to raise rates.
Officials have also said they could
raise interest rates before the econ-
omy meets their employment objec-
tives if consumers’ and businesses’
inflation expectations accelerated.
The Fed pays close attention to infla-
tion expectations because they can
become self-fulfilling. Mr. Powell said
Wednesday that longer-term infla-
tion expectations have moved up
from their pandemic lows and are in
a range consistent with the commit-
tee’s longer-run inflation goal.
©2021 DOW JONES & COMPANY, INC

·ffSX°fe¹f ÀMZXMX ¶f`ÔIY

Microsoft China to launch world’s largest
State Bank of India
6th Floor, Local Head Office, 11, Parliament Street New Delhi-110001
TENDER NOTICE
unveils new emissions-trading programme
Sealed proposals are invited for enlistment of Vendors in two panels (i) For
Facility Management Services of Network Maintenance, VC facility and EPABX
and (ii) For Data Cabling work at Branches/Offices under SBI Delhi, Details of
Windows to Sha Hua
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co.in/Procurement News.
Last Date: 04.08.2021 AGM (ITS)
ease WFH feedback@livemint.com

Bloomberg
feedback@livemint.com
M
icrosoft Corp.
unveiled a new ver-
sion of its flagship
operating system called Win-
dows 365 that is stored in the
company’s data centers and
delivered for users to access a
version of the software that is
fully set up on their personal
computers or tablets.
The cloud-based product
C
hina is set to launch its The bank’s revenue fell 12% to
long-planned national $17.47 billion. BLOOMBERG
emissions-trading pro-
gram—a system that would
Citigroup
create the world’s largest car-
bon market and double the
share of global emissions cov-
ered under such programs.
Q2 profit
The carbon market will help
the country lower green-
house-gas emissions and
at $6.2 bn
achieve its goal of reaching
peak emissions before 2030 David Benoit
and carbon neutrality, or net feedback@livemint.com
zero emissions, by 2060, offi-

frees companies and users
from having to install Win-
dows and their various apps,
data and settings on every
machine they’d use. It will be a
good choice for employees
working from home, as well as
interns or contractors who
need a fast and temporary
setup that can easily be wiped
when they leave, Jared Spa-
taro, a Microsoft vice presi-
dent, said in an interview.
The software will work on
machines running Google’s
Android or Apple Inc.’s iOS and
Mac operating systems. Win-
dows 365 is intended for users
who just want to point and click
to set up their cloud-based ser-
vice, Spataro said. Microsoft
will charge a monthly per user
fee and there will be three pre-
set tiers depending on comput-
ing power and storage,
although that can be custom-
ized more specifically for dif-
ferent prices. Users can size up
and down without having to
buy a new PC, and can also
choose between Windows 10
and the next version, Windows
11, when it’s available later this
year.
A Microsoft survey earlier
this year found 73% of workers
want flexible work options to
remain after the pandemic.
Windows 365, not to be
confused with Microsoft 365,
or Office 365, goes on sale 2
August. Microsoft is announc-
ing the product Wednesday at
its Inspire conference for part-
ners.
cials said. China is the world’s
largest carbon emitter.
Invitations for launch cere-
monies set for Friday were
sent out, according to people
familiar with the situation.
The program will initially
involve 2,225 companies in the
power sector. Those compa-
nies are responsible for a sev-
enth of global carbon emis-
sions from fossil-fuel combus-
tion, according to calculations
by the International Energy
Agency.
Under the trading program,
emitters such as power plants
and factories are given a fixed
amount of carbon they are
allowed to release a year. They
can in turn buy or sell those
allowances. That pushes emit-
ters to think of controlling and
reducing emissions in terms of
a market.
Bloomberg earlier reported
that the carbon market would
start trading on Friday.
Over the next three to five
years, the market is set to
expand to seven additional
high-emissions industries:
petrochemicals, chemicals,
building materials, iron and
steel, nonferrous metals,
paper, and domestic aviation.
Rather than be subject to
the absolute caps on emissions
in other trading programs and
proposed by environmental
officials, Chinese companies
will start off with allowances
that use benchmarks based on
previous years’ performances,
giving them more wiggle
China is the world’s largest carbon emitter.
room. They can be traded by
negotiation or auction, among
other means.
China’s officials have sig-
naled that they plan to add the
cement, aluminum and steel
sectors to the program next
year. The program is expected
to adopt stricter caps in the
future, although the timing
and scope hasn’t been deter-
mined, the people say.
It isn’t known how much an
allowance, equivalent to 1 met-
ric ton of carbon emissions,
will trade for. Based on
regional pilot projects in the
previous two years, the aver-
age price on the national mar-
ket is expected to be the equiv-
alent of $6.18 to $7.73, Zhao
Yingmin, China’s deputy envi-
ronment minister, said
Wednesday.
The starting price is much
lower than the roughly $59 to
$70 a metric ton in Europe’s
emissions trading program
and the $55 to $69 a ton in the
UK’s system. It would put
China’s carbon-emissions pri-
ces in line with those of a simi-
lar program in the US.
Emissions-trading experts
expect a slow start for the pro-
gram and for the first year to be
focused on ensuring basic
market functionality. “But
once it’s all in place, it’ll be one
of China’s best mechanisms to
C
GETTY
incentivize economically sus-
tainable carbon reductions
over the long term,” consult-
ing firm Trivium China told
clients in a note this week.
China’s ministry of ecology
and environment will act as
the trading platform’s regula-
tor and supervisor. Companies
are expected to compile and
submit their emissions data to
the provincial branches of the
ministry, which is charged
with veri-
fying the
informa-
tion and
ensuring the system works as
planned.
Failure to comply could
result in a maximum fine of
$4,600 or a reduction in future
allowances.
First floated in 2011, plans
for a nationwide program were
confirmed in a US-China joint
climate statement in the
run-up to the Paris climate
talks in 2015. The Covid-19
pandemic delayed plans for a
soft launch in 2020.
With high-level officials
busy before the Chinese Com-
munist Party’s centennial on 1
July, authorities had to post-
pone the targeted launch date
in late June by a few weeks,
people familiar with the mat-
ter said.
©2021 DOW JONES & COMPANY, INC.
itigroup Inc. said
Wednesday its second-
quarter profit soared
thanks to an increasingly
bright view of consumer
health.
The bank posted a profit of
$6.19 billion, or $2.85 per
share, compared with $1.06
billion, or $0.38 per share a
year earlier. That topped the
$1.97 per share that analysts
had expected, according to
FactSet.
Revenue fell 12% to $17.47
billion. That still topped ana-
lysts’ expectations of $17.22
billion.
A year
ago, Citi-
group and
other big
banks were socking away
funds to prepare for huge
losses on loans to consumers
and businesses. But those
losses haven’t materialized,
and banks have been shrink-
ing their rainy-day funds. In
the second quarter, Citigroup
freed up about $2.4 billion in
loan-loss reserves, boosting its
profit. That switch particularly
benefited Citigroup’s global
consumer bank. That unit
swung to a profit of $1.83 bil-
lion compared with a loss a
year ago. Consumer revenue
fell 7%. In the institutional cli-
ents group, which includes
investment banking and trad-
ing, profit more than doubled
to $3.82 billion and revenue
fell 14%.
©2021 DOW JONES & COMPANY, INC
LIVEMINT.COM NEWS WRAP THURSDAY, 15 JULY 2021
NEW DELHI 09

TWEETS OF THE DAY Kunal Bahl Kavin Bharti Mittal Melinda French Gates
Hiten Shah @hnshah @1kunalbahl @kavinbm @melindagates
The line between A product belongs to Business leaders can make a
When a market full of products is
customers and inves- only one company. return and a difference in the
on a quarterly or longer develop-
tors gets blurred Though a company #CareEconomy, a sector even
ment cycle, it’s a sign that disrup-
starting today. can have more than larger than the U.S. pharma-
tion is coming soon. And incum-
#Zomato one product. ceutical industry.
bents won’t be able to do much
about it without significant
shifts in their internal culture.

IL&FS may recover MONSOON MESS Shein to re-enter

₹58,000 cr by 2022 India via Amazon

D C
ebt-laden Infrastructure Leasing and hinese fashion brand Shein is making a
Financial Services (IL&FS) Ltd on comeback in India through marketplace
Wednesday said it expects to address Amazon—18 months after the fashion
₹58,000 crore or 95% of its estimated debt site, popular for its latest styles and accessible
recovery target by March 2022. price points, was temporarily barred from
In April this year, the group had revised its selling goods in India, along with Clubhouse
estimates for aggregate debt recovery to and Ali Express, for evading tax rules. The site
₹61,000 crore beyond September 2021. was also later banned by the home ministry as
The group’s overall debt stood at ₹99,000 part of India’s crackdown on Chinese apps in
crore as of October 2018. 2020. In 2019, the site had to temporarily stop
In a presentation released on Wednesday, shipping orders and initiate customer refunds
the group said a significant portion or ₹50,000 after crackdown by Mumbai Customs’
crore of estimated recovery will be addressed department over allegations that Chinese
by September 2021. “95% (₹58,000 crore) of shopping sites were paying lower duties than
estimated recovery (to be addressed) by March actually due. Now Amazon Fashion has listed
2022,” it said. As of 31 May 2021, Rs 43,600 Shein as part of its Prime Day 2021 sale that is
crore or 44% of estimated recovery have been set to go live between 26 and 27 July.
addressed, the group said. Of the total 347 Meanwhile Shein’s own site for Indian
entities under IL&FS Group (as of October shoppers is still unreachable.Queries sent to
2018), a total of 211 entities have been resolved Amazon remained unanswered. STAFF WRITER
as of 31 May 2021, the presentation showed. PTI

Traffic snarls were seen in several areas of New Delhi after heavy rains on Wednesday. PTI

‘Maadhyam’ to facilitate quick The company will add about 15.4GW of solar, wind

The order comes amid the Franklin Templeton row.

Shareholders’ nod
online regulatory approvals and hydropower plants by March 2030. BLOOMBERG

JSW to spend $10 bn

must to shut MF: SC on clean power

P
ower generator JSW Energy Ltd has laid

I
n a key verdict, the Supreme Court
Wednesday held that the consent of majority
unitholders will be required before closing
debt schemes, and markets regulator Securites
and Exchange Board of India (Sebi) will have
the power to intervene if the trustees violate
the regulations. The apex court’s judgment
came on pleas including the appeal filed by
out a $10 billion (₹75,000 crore) plan to
The ease of doing business initiative will be launched by the end of this month or in Aug shift away from coal, joining other Indian
thermal producers who are beginning to seek
growth in renewable power.
Rajeev Jayaswal approvals through a single interface, and track the “know the approvals required to establish a par- The company will add about 15.4 gigawatts
letters@hindustantimes.com status in real time. The system provides for secure ticular business and let them apply for those (GW) of solar, wind and hydropower plants by
NEW DELHI storage and access of documents for applying for approvals, see the status of those approvals, and March 2030, the company said in its annual
multiple regulatory approvals at the Union and provide/seek clarifications” through the plat- report for the year ended March. It also aims to

I
Franklin Templeton against the Karnataka
high court order restraining the company from
winding up its six of mutual fund (MF) schemes
without obtaining the consent of its investors
by a simple majority.
A bench of justices S. Abdul Nazeer and
Sanjiv Khanna dealt with the interpretation of
rules and regulations on the issue, and not with
the facts of the case related to the winding up of
the six mutual fund schemes of Franklin
Templeton. “We have interpreted the statutory
provisions. We have agreed with the views
expressed by the high court” on consent of the
majority of shareholders for shutting down the
debt schemes, the court said, adding that “this
requirement will be post publication of notice”.
PTI
ndia will soon launch a national single-win-
dow system (NSWS) for regulatory clearances
that will help domestic and global investors
get more than 560 types of regulatory approv-
als online, including permission to start a fuel
retail business, get a permanent exporter licence,
set up a unit in special economic zones (SEZs),
register a copyright, start a power exchange, or
obtain a licence to start a private security agency.
The ease of doing business initiative, named
‘Maadhyam’, is under trial and will be launched by
the end of this month or in the next, a commerce
and industry ministry official said, requesting
anonymity.
The applicant has to first fill the ‘know your
approval’ (KYA) form by answering a set of ques-
tions pertaining to the business, then apply for
state government levels. form, commerce minister Piyush Goyal had said become carbon neutral by 2050. It expects
“The portal has more than 560 approvals/ on 22 June. generation capacity to rise to 20GW by March
licences across 28+ India is making 2030, from 4.6GW now, with all the additions
central ministries/ efforts to ensure coming in clean energy, according to the report.
departments and The system provides for secure ease of doing busi- Coal-fired generation capacity will remain static
approvals across 14 storage and access of documents for ness for investors to at 3.2GW, with its share in JSW’s portfolio
states,” the official help global firms shrinking to 16% by the end of the decade from
said. Maadhyam is applying for multiple regulatory that want to shift 70% now. JSW Energy’s shift away from coal
also integrated with approvals at the Centre and in states their bases from reflects a growing trend among companies to
states’ single win- China to another realign their business ambitions with the need
dow systems. The country, a second to curb global warming. BLOOMBERG
participating states are Maharashtra, Andhra Pra- official said. “India is one of the most open econo-
desh, Tamil Nadu, Assam, Goa, Gujarat, Karna- mies in the world and is inviting all multinational
taka, Himachal Pradesh, Odisha, Madhya Pra- companies to set up their business in India,”
desh, Punjab, Uttar Pradesh, Uttarakhand and Prime Minister Narendra Modi had said at the
Telangana. inaugural session of India Global Week though
Reliance Power gets
The single- window system will help investors video conference on 9 July 2020.
nod to issue shares

R
eliance Power on Wednesday said it has
‘Airlines to bounce received shareholders’ approval to issue
Maruti plans new plant in Haryana shares and warrants worth ₹1,325 crore to
back in Q3FY22’ its promoter firm Reliance Infrastructure (R-
Infra) on a preferential basis. The issue of
expected to have an installed production shares and warrants to R-Infra is aimed at

T
he Indian aviation industry will bounce
back to 80% of pre-covid capacity during
the October-December 2021 period as 92
million domestic passengers are expected to
take to the skies during the fiscal year and 144
million during FY23, Morgan Stanley Research
said in a recent report on the aviation sector.
“Overall, we estimate 92 mn (million) domestic
passengers in India in FY22 vs 141 mn in FY20,”
the report said, adding that “India can witness
50%, 65%, 83%, and 90% of average pre-covid
capacity in F1Q22, F2Q22, F3Q22 and F4Q22,
respectively, assuming that there are no
further impact from the pandemic”.
The government had earlier in July allowed
The carmaker is planning to invest around
₹18,000 crore on the new facility. MINT
capacity of 750,000-100,000 units per
annum.
While confirming the ₹18,000 crore
investment plan, Maruti Suzuki chairman
R.C. Bhargava told PTI that the company
had always planned to shift the Gurugram
facility to a nearby location.
He, however, declined to share details
about the location finalized by the
company. “We had said a long time ago
that we will shift our Gurugram plant and
we will shift it close by somewhere in
Haryana... So that is there,” he said.
The auto major, however, remains wary
of the state’s new policy that has
External affairs minister S. Jaishankar.
India discusses
reducing Reliance Power’s standalone debt by
₹1,325 crore.
According to a company statement, Reliance
Power will allot 595 million equity shares and
7.3 million warrants convertible into
equivalent number of equity shares of the
company at a price of ₹10 each by conversion of
debt, aggregating up to ₹1,325 crore, to R-Infra,
a listed promoter company.
R-Infra and other promoter group holding in
Reliance Power will increase to 24.98% and
HT shall further increase to 38.24% on conversion
of warrants, benefiting 800,000 shareholders
of R-Infra, it said. PTI

T
airlines to sell seats up to 65% of their total
capacity on domestic flights, up from 50%.
Air traffic picked after lockdowns were lifted
in May 2020, and rose every month till March
2021 before the second wave of covid-19 hit the
country. Air passenger traffic rose for the sixth
straight week during the week ending 10 July.
he country’s largest carmaker
Maruti Suzuki India Ltd is planning
to invest around ₹18,000 crore on a
new manufacturing facility in Haryana,
according to a top company official.
The new plant would replace the
company’s Gurugram-based facility and is
Afghanistan at SCO
mandated 75% job reservation for the
locals in business and factory
establishments.
NSEIT secures stake
I
“Those issues still remain, they have ndia’s external affairs minister S. Jaishankar
not been solved so nothing has changed
there as well,” Bhargava said when asked
on Wednesday outlined a three-point road
map for what he described as “an end state” in in Cloudxchange.io
about the matter. PTI Afghanistan that included the cessation of

RHIK KUNDU violence, a political dialogue for a settlement
and ensuring that Afghanistan’s neighbours are
not threatened by terrorism. Jaishankar
presented the Indian viewpoint at a meeting of
Taj Hotels among top 3 brands in YouGov’s 2021 India rankings the China and Russia led Shanghai Cooperation
Organisation (SCO) Contact Group on
Afghanistan in Dushanbe. He warned the world
N
SEIT, a wholly owned subsidiary of
National Stock Exchange, has acquired a
majority stake in Cloudxchange.io for an
undisclosed amount. Cloudxchange.io is a
leading multi-cloud managed services provider
and an established player in cloud-based
services. “Cloudxchange.io augments NSEIT’s

T
ravel and hospitality brands in India dominated the first edition of the top
10 list of most recommended brands in 2021 released by market research
firm YouGov on Wednesday. While Amazon Pantry topped YouGov’s
Recommend Rankings 2021 in the country, at least six travel and hospitality
brands were featured in the list. The rankings are based on YouGov
BrandIndex’s positive recommend score, which measures the percentage of
customers who would recommend a brand in their circle. The ranking is based
on the average data available from 1 June 2020 to 31 May 2021. Taj Hotels &
Palaces has been ranked third (83.3), followed by MakeMyTrip at the fourth
spot (83.0). Hyatt has been ranked sixth (81.9). “Despite being among the worst-
effected sectors due to the pandemic, travel and hospitality brands can take
heart that their brand advocacy scores remain high and healthy. We see hotels,
booking sites and airlines enjoy strong advocacy among urban Indian
consumers indicating that consumers wanderlust has not dimmed,” said Deepa
Bhatia, general manager, YouGov India. SAUMYA TEWARI
Taj Hotels & Palaces secured a score total of 83.3 in the rankings.
community was against the “seizure of power by
violence and force” and wouldn’t “legitimize”
the Taliban’s tactics of using force to secure a
stronger position at the negotiations table. “The
world, region and the Afghan people all want the
same end state: 1. An independent, neutral,
unified, peaceful, democratic and prosperous
nation,” Jaishankar said in a series of Twitter
posts after the meeting. “2. Ceasing violence
and terrorist attacks against civilians and state
representatives, settle conflict through political
dialogue, and respect interests of all ethnic
groups, and 3. Ensure that neighbours are not
threatened by terrorism, separatism and
HT extremism,” he said. ELIZABETH ROCHE
vision of becoming a cloud native, niche &
innovative digital solution provider for
enterprises. The addition of new age cloud
offerings of Cloudxchange.io to NSEIT’s digital
transformation portfolio will further enhance its
offerings to provide 360° digital transformation
suite for its enterprise clients. In recent times,
the entire industry has witnessed an exponential
surge in cloud adoption especially during the
pandemic,” NSE said in a release. With this
addition of Cloudxchange.io, NSEIT will offer
end-to-end digital transformation solutions
from Cloud to Security. This is NSEIT’s second
acquisition after acquiring Aujas Cybersecurity
Ltd in 2019. RAVINDRA N. SONAVANE
10 THURSDAY, 15 JULY 2021
NEW DELHI LONG STORY LIVEMINT.COM

REPORTAGE | TALKING POINTS | IDEAS | INSIGHT | THE BOTTOMLINE

THE NEW BATTLE ZONE

OF NEED-BASED E-TAIL
Amazon, Flipkart, Reliance and the Tatas are vying for dominance in e-grocery and e-pharma. Who will lead?

Having delivery hubs near customers, through kiranas or partners, is key to the launch of express deliveries for perishables such as fruits and vegetables. HT

Tarush Bhalla the medicine and grocery market might
tarush.b@livemint.com seem a bit perplexing. The grocery retail
BENGALURU market also happens to be dogged by
wafer-thin margins of 15-20%, which can
of developed markets like the UK, US and
China, where groceries contribute to
30-40% of overall retail spends, according
to estimates. The factors driving the
on board, he adds. “As per a recent survey,
mint BRIGHT OUTLOOK
SHORT kiranas are frustrated by digital players
STORY selling them products. The real value-add
Chart 1: Online grocery and e-pharma
for the kirana is essentially the margins
currently have a small footprint, but

R
ashmi Chawla, 59, a resident of
Hauz Khas in New Delhi, isn’t
new to the Indian e-commerce
phenomenon. Before the onset
of the pandemic, Chawla used to
buy almost 60% of her home essentials
from online grocery platforms like BigBas-
ket, relying on a nearby supermarket for
the rest of her needs.
The pandemic, however, has shifted the
pie dramatically—95% now comes in via
the online route. Even her daily behaviour
has changed. “Earlier, I used to make shop-
ping lists but now I keep adding items to my THE OPPORTUNITY COST
hardly cover the logistics and inventory
management cost, shows research done by
financial services firm Motilal Oswal. To
top it all, of the overall addressable user
base in e-grocery, about 65% of the house-
holds, are price sensitive and value-seeking
buyers.
So, why have these sectors become the
most sought-after ground for disruption in
India for both traditional conglomerates
like Tata and Reliance, as well as the e-com-
merce giants like Flipkart and Amazon?
e-pharmacy pivot is also similar. “The (cur-
rent) penetration is low and the headroom
for growth is high. Further, just like e-gro-
cery, online pharmacy also sees a high
repeat purchase behaviour. For instance,
about 40 million Indians will shop
the chronically ill user base today drives
most of the repeat behaviour and contrib-
utes to 70% of sales for e-pharmacies,” says
RedSeer’s engagement manager Kushal
Bhatnagar.
RELIANCE VS TATA
D uring its 44th annual general meeting
held in June, RIL made heads turn
WHAT
In 2021, management
consultancy Redseer predicts,
online for the first time ever—
almost double the number of
new online customers in 2020.
AND
A pitched battle is on to acquire
these new customers via hooks
they can make on the products they sell.
are expected to grow rapidly.
That is the starting point…after which
Gross merchandise value (in $ billion) other services such as credit, and (other)
E-grocery E-pharmacy digital products can be enabled,” said
Agrawal.
24
A wholesale arm allows e-retailers to
13.3
understand regional demand better and
improve stocking operations at hyperlocal
delivery hubs, besides offering them white
3.3
spaces in popular grocery categories. Flip-
1.9 kart’s Ravichandran says that the firm’s pri-
1.2
0.5 0.7 0.9 vate label already contributes to 20% of the
2018 2019 2020 2025* 2018 2019 2020 2025*
overall staples bought through its e-gro-
cery business.

A
*based on estimates
online ‘basket’. Online grocery is just more ccording to Rohan Agarwal, associate when chairman Mukesh Ambani stated
convenient,” said Chawla. partner at Redseer, online penetration that JioMart had registered over 6.5 lakh like grocery and e-pharma and POLICY CONUNDRUM
Chart 2: In a marked shift compared to
retain them as regular customers,
The shift is present, although less palpa- of mobile and electronics has reached its
ble, even in small-town India. Take the case threshold, making e-grocery the biggest
of Pooja Shetty, 28, whose pandemic-in- growth lever for large conglomerates and
peak orders in a single day, clocking 80% in
repeat rates for the one-year-old platform.
RIL’s biggest announcement, however,
who may then go on to buy other
high-value goods.
2016, a majority of India's e-tail users are
based in smaller towns.
Spread of total e-commerce users across
A s the big four—Amazon, Flipkart, Reli-
ance and Tata—fine tune their strate-
gies and approaches in the months ahead,
duced return to her native town of Brah- horizontal e-commerce players. was its integration with its investor What- different geographies (in %) the most important player that may ulti-
mavar, a taluk in Karnataka’s Udupi dis- “Today, e-grocery has a large addressa- sApp (owned by Facebook), allowing users 2016 2020 mately determine the eventual leader is a
trict, induced her family to try out e-gro- ble market, coupled with very low penetra- to place JioMart orders via the messaging MOREOVER Tier 1
fifth entity: the Union government. On 21
cery. The e-tailing experience is far from tion. Further, grocery as a segment contin- app, which will subsequently be fulfilled by Metro Tier 2+** June, the Union consumer affairs ministry
perfect though. “There is no concept of ues to be high-frequency in nature—much local kiranas. Reliance has already held Reliance, Flipkart and Amazon 19 16 36 proposed a set of controversial amend-
31
next-day delivery or online fresh groceries higher than electronics, fashion and early trials in Maharashtra’s Navi Mumbai India have all launched kirana-led ments to the Consumer Protection (E-com-
deliveries over the past year. 53
in smaller towns,” Shetty says. Yet, 40% of mobile phones. It gets customers to the and Thane districts to test the WhatsApp- 45 merce) Rules to address complaints against
the family’s monthly purchases (especially platform more frequently, which helps in led commerce model. Flipkart has also invested in fresh the “unfair trade” of e-tailers. The proposed
longer shelf-life items) have moved online. building better retail-customer relation- JioMart’s early-success has been pre- produce supply chain Ninjacart **Data includes tier-3 and tier-4 geographies
amendments, which are still being dis-
For both the Chawlas and the Shettys, ships and (also) cross sell other items,” dominantly driven by its omni-channel and logistics firm Shadowfax. Source: Redseer Analysis, Frost & Sullivan, Mint research
cussed, included tightening the rules on
the ramp-up in online purchases was Agrawal said. approach, as it migrates offline customers ‘flash sales’ and a proposed ban on the sale
driven by one category that has acted as a Earlier this year, Tata Sons bought a of Reliance Retail stores towards its digital of goods by related parties in the market-
hook—groceries. For many others who majority 64% stake in India’s largest e-gro- channel. RIL data shows that 90% of the the massive supply chain infrastructure of over the past year. place.
ventured into the world of e-commerce for cer, BigBasket. Sources close to the matter deliveries (on JioMart) are fulfilled by its Reliance Retail,” said a second analyst who Flipkart is also leveraging its invest- The ministry has also proposed to
the first time in 2020, there was yet other told Mint that the Tatas shelled out over $1 growing network of 12,711 stores, including also requested anonymity. “The larger ments in fresh produce supply chain Nin- tighten the rules on ‘private labels’ by dis-
such “need-based” category—medicines. billion. Additionally, the conglomerate Reliance Fresh, Smart and Trends. question for the Tata ‘super-app’ strategy jacart and logistics firm Shadowfax to set up couraging the use of brand entity for the
In 2021, management consultancy Red- made a commitment to invest an additional “Reliance wants to become the every- continues to be how well they manage to sourcing hubs closer to customer deliveries promotion and sale of such goods. For now,
seer predicts, about 40 million Indians will $219 million. Parallelly, billionaire Mukesh thing store, but each category (grocery, integrate these (diverse) offerings.” “The and build hyperlocal delivery strength for e-commerce players are pushing for an
shop online for the first time ever—almost Ambani-led Reliance Industries Ltd (RIL) apparel, medicines, electronics) has its own Tatas are already late-entrants and to bring the margin-starved e-grocery business. active dialogue with the government.
double the number of new customers who has been making its foray into the e-gro- supply chains, specificity, motivator and different organizations to pace with one “Ninjacart has direct access to farmers and “In the short-term at least, the govern-
came online in 2020. A pitched battle is on cery space via JioMart, with particular occasions of purchase for the customer. So, vision and platform is going to be an ardu- has close to 200 collection points across ment will be dictating Amazon and Flip-
to acquire these new cus- focus on smaller tier-2 how do you manage those and nudge cus- ous task,” the analyst added. the country,” said Smri- kart’s strategies in the
tomers via hooks like and tier-3 towns. Smaller tomers to one platform?” wondered an ana- Both Reliance and Tata Digital didn’t thi Ravichandran, who country as it prepares to
grocery and e-pharma Smaller towns are expected towns are expected to lyst at a consulting firm, who spoke on con- respond to Mint’s queries. was recently appointed With the pandemic, kiranas finalize consumer pro-
and retain them as regu- to account for about 55% of account for about 55% of dition of anonymity. “Reliance could be as the vice-president and have been overwhelmed with tection and data privacy
lar customers, who may the addressable market, spreading itself thin by entering different THE KIRANA UNLOCK head of grocery opera- rules, along with the final
then go on to buy other
high-value goods. Cur-
rently, e-grocery
the addressable market, making the first mover
making the first mover tag a tag a particularly valuable
asset in the months
categories all at once. The question is
whether it wants to be a market leader in
some categories or just have an e-com-
A s the e-grocery industry continues to
be plagued by complex supply chains
and thin margins, e-commerce has inevita-
tions at Flipkart. “We
have worked with Nin-
jacart to ensure that the
online players approaching
them in droves, but low risk
policy that will guide
e-commerce in the coun-
try,” said the second ana-
accounts for a minuscule particularly valuable asset in ahead. “Need-based merce share in all of them,” he added, bly turned to partner with their biggest harvest-to-sale time is as appetite and patchy digital lyst quoted above. This
0.6% of the country’s online retail, including Particularly problematic for Reliance is rival— the kiranas. The kirana-strategy has narrow as possible will also offer an oppor-
overall retail pie (about the months ahead daily essentials and medi- its limited digital delivery experience. It several benefits such as enabling an expan- through demand plan- penetration pose challenges tunity to other players
8.6% of overall online cines, is a big boys club will inevitably have to play catch-up with sion of the segment’s delivery network to ning. In line with this, we who wish to contest the
retail). E-pharmacy, on the other hand, now,” said Ankur Bisen, senior vice-presi- more established rivals—BigBasket, Gro- remote corners, saving infrastructure cost, will also be opening 200 dark stores (out- need-based retail space. “A large part of
contributes about 4-5% of the overall medi- dent, retail and consumer, Technopak. fers, Flipkart and Amazon— that have and reducing the delivery time, especially lets used only for deliveries) around the retail in India is driven by households that
cine buys in the country by value, industry “These are inflation-proof segments, taken close to a decade to build their online in larger cities. Having delivery hubs near country by 2021-end.” earn less than ₹5 lakh per annum. Owing to
estimates show. meaning, demand for these categories will play. The answer that the Tatas have come customers, through kiranas or partners, is However, with the pandemic, kiranas their high-value seeking behaviour, exist-
Compared to the other dominant e-retail never fall through even as prices rise.” up with is ‘buy and build’, which explains key to the launch of express deliveries for have been overwhelmed with online play- ing online models aren’t necessarily fine-
categories such as mobile phones, elec- The nature of the Indian consumer is the string of acquisitions. “The Tatas might perishable goods such as fruits and vegeta- ers approaching them in droves, said Red- tuned for this segment,” said Redseer’s
tronics and fashion—where the online also driving some of these moves. In terms have an edge over Reliance in terms of the bles. seer’s Agrawal. Low risk appetite and Agarwal. “We will perhaps see newer mod-
share in overall retail value stands at 54%, of basket share, the average spending on superior digital and delivery experience of Reliance, Flipkart and Amazon India patchy digital penetration adds to the chal- els like social or community-led commerce
36% and 12%, respectively—the battle for grocery in India is almost double (70%) that BigBasket, but they will still need to build have all launched kirana-led deliveries lenge of bringing kiranas from tier-2 cities emerging now.”
LIVEMINT.COM MINT MONEY THURSDAY, 15 JULY 2021
NEW DELHI 11

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make lenders and card issuers roll out the
red carpet for you? FLEXI CAP (CORE)
Usually, 750 is considered a “good” Aditya Birla Sun Life Flexi Cap Fund 14.73 15.30 15.53 14,571 1.86
credit score. But it’s still not a guarantee Kotak Flexi Cap Fund 13.28 14.30 15.45 36,355 1.60
that lenders and credit card issuers will not Parag Parikh Flexi Cap Fund 21.23 20.01 NA 11,360 2.04
reject your application. NIFTY 500 TRI 14.31 14.84 13.03
“Some lenders or card companies can be Category average 14.23 14.50 14.25
conservative. For specific products, they
could demand a higher score,” said Nikunj MID-CAP (CORE)
Bhagat, senior vice-president, products DSP Midcap 17.35 16.27 17.07 12,869 1.86
and innovation, CRIF India.
Kotak Emerging Equity 19.82 17.46 19.50 14,133 1.82
Bhagat explains with an example: “For
L&T Midcap Fund 11.89 15.29 17.54 6,726 1.89
premium cards with a high credit limit, a
card company can decide to have a higher NIFTY MIDCAP 150 INDEX TRI 17.74 18.02 16.84
score of, say, 800 depending on the kind of Category average 16.18 15.18 17.49
customer profile it wants to underwrite.”
Besides, a lender or a card issuer looks at Most banks usually use the service of one Suppose someone needs an auto loan to SMALL-CAP (SATELLITE)
many other parameters to decide on an bureau to evaluate an application for a loan purchase a car. The credit score require- Axis Small Cap Fund 25.87 20.59 NA 6,009 1.98
application. or credit card. But some, which use more ment would differ depending on whether Nippon India Small Cap 21.28 21.65 22.46 15,353 1.77
A “good” credit score is, therefore, sub- than one bureau, correlate scores from dif- the borrower needs 40% of the car’s costs as SBI Small Cap 22.28 22.40 23.49 9,091 1.97
jective. It depends on the lender, product ferent bureaus based on their internal a loan or 85% of the price. In the latter case, NIFTY SMALLCAP 250 INDEX TRI 15.46 14.42 14.00
and the funding requirement of a bor- parameters. the score requirement would be higher. Category average 17.97 17.48 19.06
rower. As a banking customer looking for Take Central Bank of India, for instance. Lenders also tend to tighten their credit
the best rates on a loan or a specific credit According to its website, for Cent Home evaluations depending on economic VALUE/CONTRA (SATELLITE)
card, here are a few things that you need to Loans, the bank doesn’t lend events. Many increased their Invesco India Contra 14.33 16.33 16.02 7,529 1.83
know about credit scores. to customers with CIBIL and Many lenders score requirement last year
L&T India Value 12.99 13.77 16.94 7,285 1.86
Score from each bureau is different: CRIF High Mark credit scores tend to offer their during the lockdown due to
There are four credit bureaus in India— below 675 and Experian best interest rates the covid-19 pandemic. Tata Equity PE 7.83 13.05 14.08 4,677 1.97
TransUnion CIBIL, Experian, Equifax and scores below 700—a differ- on home loans to Highest credit score NIFTY 500 TRI 14.31 14.84 13.03
CRIF High Mark. Each credit information ence of 25 points. For its inter- achievable: The perfect Category average 12.78 13.89 14.56
borrowers with a
company (CIC) uses its proprietary algo- nal risk rating, there is a simi- score of 900 is rare. Accord-
rithm to give credit scores. Therefore, they lar difference in scores from CIBIL score of 750 ing to most industry experts, FOCUSED (SATELLITE)
differ from one bureau to another. How- the three bureaus. and above they are not aware of some- Axis Focused 25 Fund 13.40 17.39 NA 17,336 1.83
ever, each CIC gives a score between 300 Score requirement dif- one with a 900 score. SBI Focused Equity 16.80 16.58 17.20 16,857 1.79
and 900. fers based on product: A “Around 850 is considered a Motilal Oswal Focused 25 Fund 12.78 14.27 NA 1,747 2.19
TransUnion CIBIL is more popular lender’s credit score requirement may dif- near-perfect score. For practical purposes, NIFTY 500 TRI 14.31 14.84 13.03
among the four, being the first CIC in the fer from product to product. The same len- there won’t be much difference if someone Category average 13.91 14.03 13.16
country. Many lenders offer their best der can have different credit score require- has a score of 800 or 850,” said Manu Seh-
home loan rates to borrowers with a CIBIL ments for auto loans, home loans and per- gal, business development leader, emerg- ELSS (CORE)
score of 750 and above. Punjab National sonal loans. ing markets, Equifax. Aditya Birla Sun Life Tax Relief 96 8.14 11.72 13.82 14,044 1.81
Bank, for example, has segmented custom- “Usually, the credit score requirement Industry experts say that most lenders
IDFC Tax Advantage 15.37 16.66 16.13 3,295 1.97
ers in four categories of scores: 750 and for secured products such as home loans is would offer the same treatment to custom-
above, between 700 and 749, between 650 lower than unsecured products such as ers with a CIBIL score of 800 and above. Invesco India Tax Plan 14.31 15.11 15.51 1,708 2.11
and 699 and less than 650. personal loans,” said Pankaj Bansal, chief The difference between someone with an Tata India Tax Savings 13.18 13.51 NA 2,708 1.99
According to its website, the cheapest business officer, BankBazaar.com. 800 or 850 score could be that the latter NIFTY 500 TRI 14.31 14.84 13.03
rates are for those above the score of 750. It According to Bansal, the lender could has a lower credit utilization, or could have Category average 12.96 13.26 14.08
charges higher rates to those with lower even change the credit score requirement a longer credit history, or there has been no
scores. based on the funding a borrower needs. recent loan inquiries. H Y B R I D
AGGRESSIVE HYBRID (CORE)
Canara Robeco Equity Hybrid 14.85 14.15 14.00 5,636 1.97
DSP Equity & Bond 15.03 13.82 12.82 6,966 1.87
Liquid funds Employees without HRA can get SBI Equity Hybrid
CRISIL HYBRID 35+65 - AGGRESSIVE INDEX
13.72
13.61
12.89
13.12
14.17
11.98
41,265 1.62

best to park tax deduction on rent they paid

Category average 12.08 11.57 12.35

CONSERVATIVE HYBRID (SATELLITE)

savings for ISTOCKPHOTO
Canara Robeco Conservative Hybrid
BNP Paribas Conservative
10.90
7.50
9.03
7.35
9.22
8.58
655
411
1.93
2.12

emergencies Renu Yadav

renu.yadav@livemint.com
IDFC Regular Savings Fund
CRISIL HYBRID 85+15 - CONSERVATIVE INDEX
7.22
10.72
6.99
9.47
8.69
9.54
178 2.15

Category average 7.34 7.29 8.77

F
ASK MINT or most employees, house
m MUTUAL FUNDS rent allowance (HRA) is I N T E R N A T I O N A L #
part of their salary Franklin India Feeder - Franklin U.S. Opp. 24.92 23.79 NA 3,610 1.55
income. However, some small- ICICI Prudential Global Stable Equity 11.87 9.02 NA 104 1.38
Srikanth Meenakshi and medium-sized companies
ICICI Prudential US Bluechip Equity 21.21 18.89 NA 1,662 2.32
may give a lump sum amount to
S&P 500 INTL. TOTAL RETURN NET INDEX na na na
I have ₹50,000 to invest their employees without any
per month for 12-15 years, break-up. For an employee Category average 14.53 12.97 8.30
which can be almost dou- staying on rent, to claim deduc-
1-year return 3-year return 5-year return Corpus Expense
bled in a few years. I aim to tion, HRA should be part of his D E B T (%) (%) (%) (₹ cr) ratio (%)
create a corpus (₹4 crore) or her salary income.
SHORT DURATION (CORE)
for my retirement, and However, the Income Tax
have some fixed deposits as Act, 1961, also provides for IDFC Bond Fund - Short Term 4.09 8.25 7.43 13,701 0.77
emergency funds. How employees to claim deduction L&T Short Term Bond 3.63 7.94 7.34 4,732 0.75
should I divide the amount against house rent paid even if SBI Short Term Debt 3.68 7.90 7.33 22,579 0.84
in equity mutual funds to HRA is not part of their salaries. CRISIL SHORT TERM BOND FUND INDEX 4.96 8.62 7.84
maximize my corpus? Such employees can claim Category average 4.31 7.60 7.16
—Name withheld on request deduction against the house
rent paid under Section 80GG CORPORATE BOND (CORE)
As of now, you are investing of the Act. The rules also apply any other city different from his income, c) a maximum of Aditya Birla Sun Life Corporate Bond 5.32 9.18 8.34 24,168 0.46
₹50,000 a month in, let us to self-employed people. Let us occupation, but it shouldn’t be ₹5,000 per month. Therefore, ICICI Prudential Corporate Bond 4.78 8.52 7.86 20,276 0.58
assume, an aggressive portfo- understand the limits and the self-occupied or left empty. It the maximum deduction Kotak Corporate Bond 4.78 8.16 7.94 9,849 0.67
lio that could return 12% per conditions under which one should be a let-out property,” allowed during the year is
CRISIL CORPORATE BOND COMPOSITE INDEX 5.69 9.40 8.51
year on average. If you will be able to claim tax deduc- said Prakash Hegde, a Bengalu- ₹60,000. The total income for
increase your investments tion under Section 80GG. ru-based chartered account- the purpose of calculation has Category average 4.84 8.76 7.89
more or earlier, there is a good Conditions: To claim ant. “This restriction is limited to be considered after claiming
1-month 3-month 1-year return Corpus Expense
likelihood that you will reach deduction under Section to the assesses only. The family all deductions from the gross LIQUID (FACILITATOR) return (%) return (%) (%) (₹ cr) ratio (%)
your target and retire comfort- 80GG, you should not have members can own a property in income of the taxpayer.
DSP Liquidity 0.27 0.79 3.17 11,424 0.24
ably. Regarding your portfolio, received HRA during the finan- another city,” added Hegde. So, for example, if the total
IDFC Cash 0.27 0.80 3.14 8,490 0.19
please do use index funds for cial year. “The taxpayer claim- The taxpayer has to file a income of the person is ₹15 lakh
large-cap funds and for the ing exemption of HRA can’t form 10BA; only then, he/she for a year and the person is Kotak Liquid 0.27 0.79 3.15 29,526 0.32
part of your portfolio that is claim deduction for rent paid will be able to claim this deduc- claiming deductions of around CRISIL LIQUID FUND INDEX 0.29 0.88 3.69
investing in international under section 80GG,” said tion. It is a decla- ₹2 lakh under var- Category average 0.27 0.80 3.19
funds as well. For domestic Tarun Kumar, a Delhi-based ration made by A person claiming ious other sec-
small- and mid-cap funds, you chartered accountant. the person that all deduction under tions, including ULTRA-SHORT (FACILITATOR)
can go with managed funds The person claiming deduc- the conditions of Section 80GG 80C, then ₹13 lakh Kotak Savings 0.27 0.85 3.55 10,545 0.77
from Mint 50. And about your tion under Section 80GG the section are should not be will be considered L&T Ultra Short Term 0.29 0.86 3.39 2,769 0.39
emergency funds, liquid funds should not be owning any met. The taxpayer
would be your best bet—they house in the city of residence. who has opted for
owning any house a s t h e t o t a l SBI Magnum Ultra Short Duration 0.29 0.87 3.70 12,142 0.49
income of the per-
will help you access your funds In fact, there should be no the alternative, or in his/her city of son. So, if the per- CRISIL ULTRA SHORT TERM DEBT INDEX 0.31 1.08 4.41

in one business day, and will be house in the name of spouse, new tax regime, residence son is paying rent
Category average 0.52 1.24 4.11

tax advantageous if you leave it
invested for more than 3 years.
Srikanth Meenakshi is
founder of Prime Investor.
Do you have a personal
finance query? Send in your
queries at
mintmoney@livemint.com
and get them answered by
industry experts.
minor child or Hindu Undi- will not be able to of ₹12,000 per
LOW DURATION (FACILITATOR)
vided Family (HUF) of which claim this deduc- month (₹240,000
the person is a member of, in tion. annual rent), then he/she will Canara Robeco Savings 0.23 0.85 3.51 1,459 0.60
the city where the office is How deduction is calcu- be able to claim the least of the IDFC Low Duration 0.20 0.96 3.89 9,169 0.51
located or business is carried lated: The deduction has to be three: a) ₹110,000 (10% of ₹13 SBI Magnum Low Duration 0.22 0.90 3.70 13,167 0.95
out. So, if you have a family calculated based on a formula. lakh minus ₹240,000), b) CRISIL LOW DURATION DEBT INDEX 0.25 1.17 4.81
house in the city where you The amount of deduction ₹60,000 and c) ₹325,000. Category average 0.23 1.02 4.31
work, you won’t be able to under this provision shall be Therefore, the lowest
claim this deduction. lower of the three: a) the rent amount is ₹60,000 that the Returns as on 12 July 2021; Expense ratio data as of May 2021 and Corpus data as of June 2021; #For satellite portfolio; NA: Not applicable because the fund has not completed the
requisite period; na: Data was not available; Growth option in regular plans has been used; Data up to 31 March 2019 considered for evaluation; Opp: Opportunities; INTL: International.
“The deduction is allowed to paid in excess of 10% of total person will be able to claim Data and analysis from Quantix by CRISIL Research Compiled by Sunita Abraham
a person who owns a house in income, b) 25% of the total under Section 80GG.
12 THURSDAY, 15 JULY 2021
NEW DELHI VIEWS
OUR VIEW
MINT
Take vaccines to people instead
of drawing them to vax centres
Countryside observations highlight the need for a thorough rehaul of India’s vaccination campaign
ANURAG BEHAR
is CEO of Azim Premji Foundation
Our credit trends point
O
ur capacity to vaccinate will
soon hobble our campaign to
tackle the pandemic. The disad-
to a worsening problem vantaged and vulnerable will be hit the
hardest. India’s shortage of vaccines has
till now obscured the question of our
vaccine delivery system’s capacity, as
also the matter of public demand for
vaccination. As the supply of doses
Individuals are set to overtake Indian industry on what they owe our banks, a sign of a retail improves, these gaps will get clearer.
Getting everyone in India to take
lending upswing amid an industrial slump. Our economy, though, needs an investment boom covid vaccines requires much more
than addressing ‘vaccine hesitancy’.
People need to be mobilized to get vac-
cinated—enabled by convenient access
I
ndia will soon be in a piquant situation throws up patterns that anecdotes would cor- and accurate information—matched by
as far as credit allocation goes, with indi- roborate. While home loans remain stable at delivery. In a few places, these matters
are being dealt with effectively. The rest
viduals set to owe Indian banks more around half the retail pie and education loans of the country can learn from them.
money than industrial borrowers. This is have lost share over the past decade, ‘personal Before anything else, let’s banish a
not a good sign for an economy at our loans’ have been on an upswing. Typically free dysfunctional notion from our midst.
stage of development. Our services sector of collateral and therefore priced high, these The phrase ‘vaccine hesitancy’ is
also has a sizeable chunk of loans, so retail debt add up to about 28% of retail debt now. Covid imputed with value judgements. Of irra-
tional behaviour—often leading to dis-
isn’t about to eclipse the sum of loans taken for distress, meanwhile, has led to a post-2020-21 missal and disdain. But if we truly listen
business purposes per se, but current trends surge in cash borrowed against gold. It is to people, we realize that most people
indicate a slump in capital uptake by manufac- nobody’s case that people at large should have good reason for their behaviour.
turers. According to a Wednesday report in borrow less, so long as they take care not to slip Their concerns must be addressed. An
Mint, based on data from the Reserve Bank of into debt traps. The worry is our squishy state empathetic approach is essential to deal
with this phenomenon effectively.
India, the share of outstanding retail loans in of investment in productive capacity. Taking a vaccine shot is a difficult
all advances made by our banks has been As a proportion of India’s economy, gross exercise for the majority today, and
expanding steadily, even as Indian industry’s fixed capital formation—an indicator of funds nightmarish for many. The closest vac-
slice shrinks. Back in March 2012, individuals going into projects that create jobs and crank cination centre is often a few kilometres
accounted for 18% of our lenders’ loan books. up national output—slipped from 34.3% in away. For most people, this is a day’s
investment—whether they walk or use
By March 2021, they made up 29%. In contrast, 2011-12 to 27.1% in 2020-21, by the Centre’s
the share of industrial loans shrivelled from data. To achieve the economic expansion
45% to 30% over that period. Fiscal 2021-22 is we’re aiming for, however, a rate closer to
likely to be the year that households overtake 40% should be our target. Proportionally less
industrial entities as our top bank debtors, savings going into value generation, as retail
though we must note that the latter do have domination increases, would push our dream
other avenues to raise money, both equity of a $5 trillion economy further away. A high www.livemint.com
and debt, and large enterprises can easily rate of growth in 2021-22 on last year’s covid-
access cheaper credit from overseas. Still, the shrunken base won’t suffice to regain the
numbers reveal a problem that the pandemic momentum we lost after 2016-17. This was a SENSEX 18,618.20 Æ 22.18
MUMBAI BLASTS
PM vows
has accelerated. year marked by the shock of a currency switch
relentless
A sectoral break-up of pending loans before from which informal businesses, prodded soon
pursuit
and after covid shows agriculture having taken after to go formal by a new taxation system,
As examiners analyse
CCTV footage and
interrogate suspects,
cracks appear in
investigative efforts
on about 11% more debt till May 2021. Retail have struggled the hardest to recover. While
B Y S AHIL M AKKAR,
M AKARAND G ADGIL & AFP
·························
MUMBAI
P rime Minister Manmo-
han Singh said India
would “relentlessly pur-
sue” those who carried out the
three Wednesday evening
borrowers follow closely, with 9% more than consumption kept us going for some time after
rush-hour blasts that killed 17
people and injured 133 in
Mumbai.
Singh said he understood the
“shock and outrage of the peo-
ple” of Mumbai over the bomb-
ings, which marked the deadli-
est terrorist action in the city
since the 2008 attacks in which
they had in March 2020, having cut back for a that shake-up, covid has cast its long shadow
166 people died. “Perpetrators
of the Mumbai blasts shall be
pursued relentlessly and
brought to justice quickly,”
Singh said after flying to India’s
financial capital. “I understand
the shock and outrage of the
people of Mumbai, I share
their pain, anguish and anger.”
few initial months before loading up. Services on this component of aggregate demand too.
Singh’s statements came as
investigators turned to CCTV
(closed-circuit television cam-
era) footage in their struggle to
identify who was behind the at-
tack.
Meanwhile, cracks seemed
to appear in the investigation
into the blasts, with the Union
and industry stayed largely flat on this chart of In this context, swelling retail credit should
home minister disagreeing
with state police over who
could have been responsible
for the act of terrorism.
Maharashtra police officials
were convinced that a home-
grown outfit was behind the
blasts, but home minister P.
Chidambaram contradicted
pandemic-period outstandings, though the serve as a token of assurance, especially if
that contention, asking them
not to jump to hasty conclu-
sions and look into other terror
groups as well.
“We strongly believe that it’s
the handiwork of a local group
because one blast was of low
intensity and (the) other two
had a huge impact. We shared
latter slid into a trough from which it emerged much of it is for contingencies. But credit that
the same finding with the Un-
ion home minister,” said a top
intelligence officer of the
Maharashtra police, who didn’t
want to be named. “We differ
with (the) home minister when
he said all terror groups and
organizations should be
probed.”
only after this year’s budget was unveiled in creates real assets, yielding real returns, is
A senior Mumbai police offi-
cer involved in the investiga-
tion confirmed this.
Mint is also available for R5.50 with Hindustan Times under a combo offer
February. Delving deeper into the retail data what our economy needs rather more acutely.
GUEST VIEW
The US must play champion of open world trade again
South Asia and other emerging markets, and and aluminium imports that were imposed
ANOOP SINGH trade in services is lagging. Besides, pre-pan- by the Trump administration for unrelated
demic trade growth had become sluggish. security considerations. These have led to
US trade restrictions may not be immedi- counter-tariffs and have wider employment,
ately central to the American recovery plan trade and growth implications. The US
but, as Anne Krueger recently explained, needs to start rolling them back.
M
y piece on America’s economic they have broader implications which have Second, the Biden administration has
resurgence in Mint on 9 July high- damaged US commitment to international- committed to prioritizing
lighted its growth drivers, especially ism and multilateralism. Domestically, they US producers in public
higher infrastructure spending within an have affected the competitiveness of US procurement and
overall expansionary fiscal agenda, raising its companies that have been shut out of multi- strengthening the ‘Buy
deficit and debt to record levels. In the short lateral agreements, and, globally, the disar- American’ requirements
run, real output will likely rise sharply, with ray in the trading system has led firms to put in place by Trump.
risks for the current account deficit and infla- delay investment plans and spend resources These policies are coun-
is a distinguished fellow at the
tion, and with global implications. This
makes it essential that broader structural
to diversify supply chains.
It helps that the Biden administration has
terproductive to the
administration’s aim of
Centre for Social and Economic
Progress, New Delhi and was a
reforms be undertaken quickly by the Joe
Biden administration, thereby convincing
committed to a “worker-centric” trade
agenda, which would ensure that the bene-
improving domestic pro-
ductivity. At a minimum,
member of the 15th Finance markets that the overall agenda will address fits of global trade benefit US workers. Such the ‘Buy American’ provi-
Commission these risks. Crucially, they must be designed an agenda requires Trump’s protectionist sions should be made con-
to help global growth recover sustainably. measures to be reversed. sistent with the US’s inter-
Among the needed reforms is a trade However, the US has not yet begun doing national obligations, espe-
agenda that removes Biden’s predecessor so. Many trade distortions introduced over cially vis-a-vis an open
Donald Trump’s protectionist measures, the past four years remain in place. Emerg- trade regime.
which have had significant domestic effects ing markets risk losing more from capital Third, the growing entanglement of trade
on US trade and production, as well as a mul- outflows than they will gain through exports and currency issues—such as investigations
tilateral impact (as countries have retaliated) when US monetary conditions tighten. into currency-based countervailing duties
that has constrained global trade. Although There are at least four aspects of the trade on China and Vietnam and the inclusion of
global trade has recovered to pre-pandemic policy agenda that need to be taken forward. currency provisions in trade agreements—
levels, the recovery is uneven, especially in First, tariffs have been retained on steel presents a significant risk. Treating cur-
New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Hyderabad, Chandigarh*, Pune*
EXCLUSIVE PARTNER
NIFTY 5,599.80 Æ 14.35
“The leads which we have
got so far indicate some kind of
localized group who don’t have
financial muscle,” the officer
said.
Police officials said that peo-
ple allegedly belonging to the
home-grown terror group Indi-
an Mujahideen (IM) and the
proscribed Student Islamic
Movement of India (SIMI) are
being interrogated by various
agencies for possible leads.
Two IM members were arrest-
ed two days before the blasts
and several others, including
those belonging to SIMI, have
been picked up since. They are
being questioned at a secret lo-
cation, according to police offi-
cials.
Chidambaram, who visited
the blast sites early on Thurs-
day morning and met victims
in hospitals, told reporters in
Mumbai that all groups “hos-
tile to India” are on the “radar”
and did not rule out the possi-
bility of the blasts being an at-
tempt to derail the coming In-
dia-Pakistan talks. He said it
was too early “to point a finger
at any one group”.
He denied that the attack
was an intelligence failure on
the part of Central and state
agencies.
“Intelligence is collected ev-
ery day, every hour. It (blasts)
is not a failure of intelligence
agencies. Whoever has perpe-
trated the attacks has worked
in a very clandestine manner,”
Chidambaram said, reiterating
it was a “coordinated terror at-
tack”. Ammonium nitrate was
used in the improvised explo-
sive devices and timer devices
were used to trigger them, he
said.
The blasts can’t be construed
as an attack on India’s com-
mercial capital, the minister
said.
“India will continue to pros-
per. I don’t think the blasts yes-
terday can be interpreted to be
an attack on markets,” he said.
“Blasts have taken place in Da-
dar, in Opera House and Zaveri
Bazaar. I think they chose the
places because of the density of
the population and very con-
gested nature of these areas.”
Rakesh Maria, chief of the
TURN TO PAGE 3®
ALSO SEE
>Many promises made after 26/11,
not all kept >P4
>Dreamliner skips Mumbai, but it’s
business as usual at Maximum City >P4
>OurView: Why India needs Natgrid >P22
DOLLAR `44.50 æ `0.02
Double-digit inflation looms
Ahead of the quarterly monetary policy review by the Reserve Bank of
India on 26 July, data released by the department of industrial policy and
promotion (DIPP) showed annual headline inflation rate rose to 9.44% in
June. Analysts say with revisions in the provisional inflation numbers
ranging well above 100 basis points, inflation may already have crossed
the double-digit mark, leaving little choice for the central bank but to
hike the policy rate later this month to curb inflationary expectations.
10.88
9.59
PROVISIONAL
CORE INFLATION
5.8
Apr May Jun Jul Aug
2010
Fairfax enters
India to invest
in local firms
B Y S HRADDHA N AIR
shraddha.n@livemint.com
·························
MUMBAI
F airfax Financial Holdings
Ltd, a $30 billion (`1.3 tril-
lion)-plus diversified financial
services company that owns
stakes in Kraft Foods Inc. and
Dell Inc., is entering India to
invest in listed and unlisted In-
dian companies, a senior com-
pany official said.
It will buy both minority as
well as controlling stakes.
Founded by Indian-born
Prem Watsa, 61, popularly
known as the Warren Buffett of
Canada, Fairfax has appointed
Harsha Raghavan, former In-
dia head of private equity firm
Candover Investments Plc, as
head of the unit.
The investments in Indian
companies will be made
through Fairbridge Capital Pvt.
Ltd, an affiliate of Fairfax.
“We have the ability to in-
vest long-term, patient capital
into Indian businesses,” said
Raghavan who, before moving
to Candover, was executive di-
rector at the Principal Invest-
ment Area (PIA), the flagship
$20 billion private equity fund
sponsored by Goldman Sachs.
“We are free of any con-
TURN TO PAGE 2®
A reversal of
aberrative
Trump policies
is critical not
just to world
trade but also
US interests
Friday, July 15, 2011
Q&A:Uday Kotak on retail
business, slowdown signs >8
MEDIA: Murdochs bow to pressure, agree
to appear before UK parliament >24
POLICY: EPFO appoints four fund
managers, drops ICICI Prudential >4
WSJ: JP Morgan second quarter
profit jumps 13% >19
EURO `63.34 Æ `0.56
See Page 3
Year-on-year (in %)
9.74
(Apr)
10
FINAL
9 nomic uncertainties continued
9.44
8
7.3
7 for the first time.
6
5 are not sustainable.
Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2011
Source: DIPP, Mint research
AHMED RAZA KHAN/MINT
BRIDGING THE GAP
Realtors forced to borrow at
36-40% amid fund shortage
B Y D INESH U NNIKRISHNAN
M ADHURIMA N ANDY
·························
MUMBAI/BANGALORE
I ndian real estate developers
facing a severe shortage of
funds are approaching private
lenders, including HNIs (high
networth individuals), and
borrowing money at interest
rates as high as 36-40%.
Such behaviour was last
seen in 2008-09 during the li-
quidity crunch in the wake of
the global economic crisis.
Analysts and executives in
the business say the trend has
re-emerged in recent months,
with the money being used to
fund ongoing projects or repay
bank loans. They are raising
these loans against the guar-
antee of certificates of allot-
ment to prospective buyers,
land or property titles, or other
collateral.
Bank lending has slowed af-
ter a November revelation of a
bribes-for-loans scam involv-
ing realtors, banks and a well-
connected intermediary.
Property prices remain high,
and many prospective buyers
are waiting for them to fall.
The developers themselves are
loath to reduce prices, so sales
are slow.
Vol.5 No.167 `3.00
TCS beats
GOLD `22,750 ®
QUICK EDIT
forecast, warns A sinking
of economic feeling
uncertainties
B Y J OHN S ATISH K UMAR
john.k@livemint.com
·························
MUMBAI
T ata Consultancy Services
Ltd (TCS), India’s largest
software services exporter by
revenue, beat Street expecta-
tions on Thursday, with its fis-
cal first quarter (Q1) net profit
remaining flat sequentially,
while warning that global eco-
to cast a shadow on the de-
mand environment.
TCS reported a 0.02% se-
quential fall in net profit for Q1
at `2,380.32 crore and a 6.3%
rise in revenue to `10,797.02
crore, according to interna-
tional financial reporting
standards that it has moved to
The software exporter’s
shares on Thursday fell 2.2% to
`1,125.25, underperforming
the Bombay Stock Exchange’s
10-stock IT Index’s 1.5% fall
and the broader benchmark
Sensex’s 0.1% gain. The earn-
ings numbers were declared
after the close of trading.
TURN TO PAGE 3®
ALSO SEE
>MARK TO MARKET: TCS beats Street,
but not by much >P14
& REALTY BITES
THE NEWS
Cash-strapped small and medium
developers are borrowing short-term
money at 36-40% from private
lenders.
THE BACKGROUND
This trend, last seen in 2009, has
resurfaced in recent months as banks
are not too willing to lend money and
property sales have slowed.
THE IMPACT
High-cost funds can hit the
profitability of realtors and a
few may even collapse unless
sales pick up.
“Builders are raising money
at 32-36% from private lenders
as there are no funds available
from banks. This level of depen-
dency has started only in the re-
cent months and possibly the
first time in the last three
years,” said Arun Kumar Kedia,
director of Mumbai-based de-
veloper Garnet Construction
Ltd. “As of today, banks are not
willing to lend and there is no
private equity money coming.
That leaves a lot of room for pri-
vate people (lenders).”
A real estate consultant
paints a grim picture. “The cost
of borrowing has been spiral-
LIVEMINT.COM
MY VIEW | OTHER SPHERE
public transport—which means a day’s community education, would be key.
wage lost. At the centre, experiences The very rational bases for many peo-
vary from long queues to the schedule ple’s unwillingness to take a covid shot is
being cancelled because of vaccines not visible in depressed demand for the
reaching—given the unpredictability- required second dose. In essence, those
ridden supply of doses. Waiting for 8-10 who have faced problems with the first
people to gather for a vaccine vial to be dose don’t want to face these another
opened—since each has 10 doses—is time. Noticeable on the ground almost
also common. Often, the required num- everywhere, it is also observable in
bers don’t show up for hours, and then our aggregate country-level data: The
people return home exasperated, asked country-wide second dose count today is
to come another day. estimated at around 20% less than what
Many of the vaccination centres offer it should have been, if one looks at time
uncomfortable experiences, bordering gaps from the first dose.
on the unpleasant. Few have decent An all-India ‘vaccine-to-people’
waiting places or toilets, with people approach instead of our ‘people-to-vac-
having to brave the heat, rain and other cine’ model, along with adequate post-
elements. The struggle to upload the vaccination medical support, would be
identification details in the central app essential to improve delivery and
is a common stress-point for everyone.
Not everywhere, but in too many places,
vaccination teams treat those who have
come to get vaccinated without ade-
address the issues curtailing demand.
We need rigorous planning and flexible
scheduling of camps and door-to-door
delivery, with the detailing done on the
quate dignity or with bureaucratic non- basis of relevant data at the level of each
chalance, instead of care and sensitivity. village and mohalla. Many other pieces
Loss of wages—not only on the day of need to be orchestrated in tandem:
vaccination, but also as a result of even a Systematic and sustained community
mild reaction to the injection with 2-3 education and mobilization efforts, the
days or more of fever—is a possibility sensitization and proper training of vac-
now widely recognized. For most, there cination teams, thoughtful selection and
is no (or inadequate) medical support management of camp sites, and efficient
available in the event of any reaction to programme management at the level of
the vaccine—understandably evoking primary health centres to match popular
deep apprehension. mobilization with delivery.
Though it’s not as widespread as often Current poor delivery practices,
presumed, misinformation also feeds ineffective communication, inadequate
existing fears. Vaccines cause infertility, post-vaccination support and all-too-
alcohol after a shot can maim you, those real economic losses, all combine to dis-
who do hard physical work don’t need suade people from taking vaccines. This
vaccines, someone in the next village imagery of the vaccination drive seems
died after taking the vaccine... these are etched in public consciousness. Making
the sort of things one hears most often. vaccination predictable, convenient and
But such misinformation is rarely the dignified is necessary to offer a better
determining factor of behaviour; these experience and alter these perceptions.
only add to a complex mix of reasons. Not just in large urban centres, but in
Misinformation has merely filled a vac- the remotest corners of our country.
uum of good information; we have done After 12 weeks on the road across
a shoddy job of public communication so the country, all I can say is that we need
far. Fostering a patient, personalized a total revolution in our approach if
dialogue with individuals who have we have to vaccinate our population
taken the vaccine and have high local- fast. Else, third and fourth waves would
area credibility, along with sustained be inevitable.
32
24 PAGES
+ 4 MARKETS PAGES
OIL $118.35 æ $0.92
F or the past year,
the Europeans have
A society can be Pareto
been busy in an act that
would be comic if it were
not so genuinely tragic.
They have spent a lot
of time stamping out
one fire only to see
another one flare up
behind their backs.
Italy is the latest to be
singed, even as Greece
and the others continue
optimal and still
to be in trouble. Italian
credit default swap rates
have soared of late and
government borrowing
costs have climbed. The
euro area is once again
tottering into a crisis.
Financial markets have
already seen selling of
risk assets while gold
has moved to record
perfectly disgusting.
levels. Yet another
bailout by the Germans
and the French seems
to be on the cards.
But a bailout will only
buy time. The noxious
combination of very
low growth and rising
interest rates suggests
that current debt levels
Turning around these
economies will require
hard decisions. It’s going
to be a long battle.
A MA RT YA SE N
ling. Short-term money from
private investors, HNIs or
bridge financiers is at a high of
3-4% a month, while long-term
borrowing from institutions is
at 20-22%,” said Amit Goenka,
national director (capital trans-
actions) at Knight Frank India
Pvt. Ltd, a property advisory.
The Knight Frank and Anand
Rathi Financial Services Ltd
rental yield fund is planning to
raise `400 crore this year from
HNIs, family office trusts and
pension groups, said Goenka. It
has already raised `220 crore in
the first round.
Most of the developers and
analysts Mint spoke with said
companies are seeking private
money from wealthy individu-
als, diamond merchants, jewel-
lery makers and family offices
looking to deploy their money
in high-yielding transactions to
secure bridge finance to tide
over the current cash crunch.
Rajesh Mehta, chairman of
Bangalore-based jewellery
maker Rajesh Exports Ltd, who
does some private lending, said
he is seeing a lot of demand
from real estate developers
largely to complete projects and
to launch those that they can’t
TURN TO PAGE 2®
rency undervaluation as a subsidy also tariff races. Renewed US engagement at the
undermines the mandate of the Interna- World Trade Organization (WTO)—includ-
tional Monetary Fund (IMF) to assess the ing restoring the proper functioning of its
equilibrium of exchange rates. In short, cur- dispute settlement system—is a critical step
rency-related trade responses must be to rebuild confidence in the WTO. How-
avoided. Instead, the IMF should use its ever, sustainably dealing with the apparent
mandate to address the underlying macro- dysfunctionality of the WTO requires wider
structural distortions. multilateral support, including from India.
Finally, new trade The bottom line for the Biden administra-
agreements need to be tion is that a removal of obstacles to free
negotiated. The Trade trade would not only help create more and
Promotion Authority, better US jobs, they would also have mirror
under which trade agree- effects globally if done in consistency with
ments can be ratified faster the US’s international obligations towards
under US law, expired on 1
June. Its extension is nec-
an open and transparent trade regime.
These are critical issues for India and
essary. For the US, follow-
ing Trump’s withdrawal
other emerging markets, which are torn
between joining bilateral or regional trade
from the Trans-Pacific agreements and enforcing tariffs at levels
Partnership (TPP), there is inconsistent with supporting productivity,
significant loss from also competition and exports.
staying out of the alterna- India, in particular, is deeply affected by
tive Comprehensive and the lack of multilateral rules for services,
Progressive Agreement for Trans-Pacific e-commerce and environmental protec-
Partnership. It hurts US exporters of agri- tion—areas where the US had planned to set
cultural and manufactured goods. international rules for trade under the TPP.
In addition, there are global trade and And it would be in India’s interest to work
investment distortions in areas such as tar- closely with America towards rebuilding the
iffs, farm and industrial subsidies, and servi- WTO’s role in these areas of its comparative
ces trade, where risks have risen of counter- advantage.
LIVEMINT.COM VIEWS THURSDAY, 15 JULY 2021
NEW DELHI 13

THEIR VIEW M I N T C U R AT O R

The ‘stability’ of stablecoins is The ECB faces a big credibility

test on its new inflation target
just another financial illusion Its ‘symmetric 2%’ aim allows policy flexibility but is rather vague

They’re unlikely to replace Federal Reserve money, let alone revolutionize finance and realize any grand libertarian dreams

ISTOCKPHOTO

LENA KOMILEVA
is managing partner and chief economist at
G+ Economics, an international market
research and economic intelligence
BARRY EICHENGREEN consultancy based in London.
is professor of economics at the University of
California, Berkeley.

T
he European Central Bank’s (ECB’s)
first strategy review in 18 years is
about to get its first credibility test.

T
he debate over stablecoins has come a
long way since Facebook announced
the creation of Libra (now rebranded
Diem) almost exactly two years ago. An
obscure corner of the digital sphere
that was poorly understood then is now
subject to increasingly intense scrutiny by central
bankers, regulators, and investors. The stakes,
including for financial stability, are high. Market
capitalization, or circulating supply, of the
four leading US dollar stablecoins alone exceeds
$100 billion.
But more intense scrutiny does not mean better
understanding. Start with the belief that stable-
coins are intrinsically stable because they are
‘fully collateralized’. The question, of course, is:
collateralized by what?
Naive investors in dollar-linked coins assume
that the collateral takes the form of dollars held
in federally-insured US banks or their close equiv-
alent. But that is only partly correct. After being
criticized for its opacity, the leading stablecoin
issuer, Tether Ltd, recently revealed that it held
barely a quarter of its reserves in cash, bank
accounts and government securities, while
holding nearly half in commercial paper and
another tenth in corporate bonds. The second
leading stablecoin by capitalization, USD Coin,
says only that it holds its reserves in insured US
depository institutions and other “approved
investments.” Whatever that means.
Such murkiness creates risks for stablecoins
themselves, for their investors, and, critically, for
the stability of financial markets. Lack of transpar-
ency on what quality of commercial paper, what
kind of corporate bonds, and what other ‘approved
investments’ are held as collateral is a source of
fragility. This kind of information asymmetry,
where investors don’t know exactly what has
been done with their money, has given rise to bank
runs and banking crises through the ages. In this
setting, a fall in the value of commercial paper
or in the corporate bond market could easily spark
a stablecoin run. And the fact of falling bond prices
would mean that the stablecoin issuer lacked the
wherewithal to pay off its holders.
In addition, there is the danger of contagion: a
run on one stablecoin could spread to others.
What are the chances that a run on Tether would
leave confidence in USD Coin intact? The Euro-
pean Central Bank, which knows a thing or two
about financial contagion, has warned against just
this scenario.
To limit such problems in the banking system,
governments insure retail deposits, and central
banks act as lenders of last resort to depository
institutions. Some commentators, such as former
Bank of England Governor Mark Carney, have
suggested that central banks should provide
similar support to issuers of stablecoins.
The authorities would agree to this, of course,
only if those issuers were subject to stringent
supervision designed to limit the incidence of
problems. Stablecoin purveyors would have to
apply for the equivalent of bank charters and be
subject to the relevant regulation. A stablecoin
would then be nothing but a so-called narrow
bank, authorized to invest only in Treasury bills
and deposits at the central bank, with a Paypal-like
payments mechanism built on top.
Alternatively, stablecoins could be regarded as
the digital equivalent of prime money market
funds, which similarly invest in commercial paper.
The problem with this model, as we learnt during
the 2007-08 global financial crisis, is that normally
liquid commercial paper can abruptly become
illiquid. When this happened in 2008, the US
government sought to quell the ensuing panic by
temporarily guaranteeing all money market funds.
To prevent that from happening again, the US
Securities and Exchange Commission then issued
rules requiring that funds, rather than maintaining
a $1 share price, post floating net asset values as a
reminder to investors that money market funds are
not without risk. It allowed money funds to insti-
tute redemption gates, under which they can limit
withdrawals and charge temporary fees of up to 2%.
Revealingly, Diem’s latest white paper similarly
foresees redemption gates and conversion limits to
protect the stablecoin against runs. But a stable-
coin that is redeemable only for a fee or that can’t
be redeemed for dollars in unlimited amounts
won’t be an attractive alternative to US Federal
Reserve money, just as shares in money market
mutual funds are an imperfect substitute for cash.
The more worrisome financial stability problem
is that the market capitalization of the four largest
US dollar stablecoins already approaches that of the
largest institutional mutual fund, JPMorgan Prime
Money Market Fund. A panic that forced these
coins to liquidate a significant share of their com-
mercial paper and corporate bond holdings would
jeopardize the liquidity of those markets. And dis-
locations to short-term money markets can disrupt
the operation of the real economy, as we also
learned at considerable cost in 2008.
The upshot is that the stability of stablecoins is
an illusion. They are unlikely to replace Federal
Reserve money, unlikely to revolutionize finance,
and unlikely to realize the dreams of their
libertarian enthusiasts. ©2021/PROJECT SYNDICATE
President Christine Lagarde has fired the
starting gun for the implementation of the
ECB’s new policy framework. It will soon
issue its updated guidance on policy rates,
in preparation for a fresh programme of
quantitative easing (QE) to replace the cur-
rent pandemic sovereign bond purchases,
which runs out in March 2022. The centre-
piece is the ECB’s revised inflation target.
It replaced its 2% upper inflation limit,
based on its 2003 “below but close to 2%”
formulation, with a “symmetric 2% over
the medium term” target. This requires
“especially forceful or persistent monetary
policy action to avoid negative deviations
from the inflation target becoming
entrenched,” it said. And it allows for “a
transitory period” of inflation above target.
Markets yawned when the metrics were
announced last week. They aren’t wrong to
be sceptical. In a likely attempt to achieve
unanimity between the hawks and doves on
its governing council, the ECB language has
been left vague. We don’t know what “force-
ful or persistent monetary policy action”
means or how long the “medium-term”
horizon for hitting the target will be—or the
“transitory” period of an inflation over-
shoot. We also don’t know anything about
how the ECB plans to achieve its target.
But establishing a credible target for
anchoring inflation expectations in the euro
region is ground zero for rebuilding the
central bank’s credibility. The cost of failure
has been high. Core euro-zone inflation
(excluding volatile items) has averaged just
1% over the past decade—less than half the
ECB’s target and at the threshold of defla-
tion risk territory. Worse, downward pres-
sures on both headline and core inflation
expectations have built up after the euro
sovereign debt crisis.
During the ECB presidencies of Wim
Duisenberg and Jean-Claude Trichet, from
1998 to 2011, the euro-zone medium-to-
long-term inflation expectations were
“firmly anchored”, a pronouncement that
proudly appeared six times in the last ECB
strategic review of 2003. That measure was
dropped from the governing council’s state-
ments during the sovereign debt crisis in
2015 and hasn’t made a return since. Persist-
ent expectations that the ECB wouldn’t
meet its inflation targets reflect the central
bank’s consistent failure to move early and
forcefully enough to counter deflationary
risks in the debt crisis era.
The remedy can’t simply be another firm
target, not in a union of countries experi-
ECB chief Christine Lagarde needs to keep
inflation expectations anchored REUTERS
encing chronic demand shortages, excess
savings and low inflation, that is set to
emerge from the pandemic with near-
record budget deficits and sharply higher
debt levels. The ECB needs a credible policy
framework to reach its inflation target and
to stay in sync with the EU’s broader policies
aimed at full employment, environmental
protection and financial stability.
By shrugging off the Bundesbank’s leg-
acy of hawkishness, the policy review takes
up the ethos of Lagarde’s predecessor Mario
Draghi (of “whatever it takes” fame) and cre-
ates much needed room for flexibility. By
correcting the asymmetry in the inflation
target, the ECB has been forced to tackle the
asymmetry of its own tools, namely the ina-
bility to stimulate inflation when rates are
already at the lower bound. To that end,
while interest rates remain the chief policy
tool, the extraordinary stimulus levers
introduced since the financial crisis—bond
purchases, long-term bank loans and for-
ward guidance—are now considered ‘inte-
gral’ features of the ECB’s toolkit.
Covid threw the ECB back into depths as
dire as the debt crisis. The shock to growth
and sharply rising public debt—at a time
when inflation is so low that rate cuts
couldn’t stimulate—forced it to adopt a dual
objective: Easing financial conditions to
counter the demand shock in real econo-
mies and to fight signs of fragmentation in
sovereign markets via direct bond pur-
chases. The policy review and preparations
for a new format for QE stimulus after 2022
in effect recognize the significance of Euro-
pean sovereign bond yields and spreads for
the ECB’s price stability mandate.
The purpose is to reset ECB policy for the
post-covid era. What’s left for ECB hawks
and doves is to decide how forcefully they
are prepared to act in the trade-off between
more stimulus now versus a longer period of
unconventional policy to meet its inflation
target. By preparing to keep its monetary
stimulus after the €1.85 trillion pandemic
bond-buying ends, the ECB can buy some
credibility by diverging from other central
banks that are discussing tightening. This is
significant as markets begin to assess the
credibility of the ECB’s inflation target, and
as the European Council begins to evaluate
the conditions for fiscal and growth sustain-
ability in the coming years. Now, all the ECB
has to do is deliver. ©BLOOMBERG

MY VIEW | PARALLAX VIEW

Beijing’s new quest for central control of Chinese apps

every move they make is watched and
SANDIPAN DEB recorded. The only frontier that Xi had not
tamed fully till now was the Chinese private
sector and the billionaires it spawned. But
their time, he may have decided, has come.
The crackdown started with the Alibaba-
ment cancelled it.
In all fairness, Beijing may have had
enough economic reasons to do so. Ant’s
gigantic consumer credit business, through
a three-minute automated process, had
approved loans for millions of borrowers,
There could be a China-US angle here. US
regulators have been threatening to delist
Chinese companies from US stock markets
for refusing to comply with auditing and dis-
closure rules mandatory for all US-listed
companies. There are reports that Didi and
On 10 July, CCP mouthpiece Global Times
reported “a sweeping set of draft rules for
cybersecurity reviews over domestic inter-
net companies that seek overseas listings…
Businesses holding information of more
than a million users in China must undergo

O
n 30 June, Chinese ride-hailing
giant Didi raised $4.4 billion on US
stock markets, the second-largest
overseas listing of a Chinese company, after
e-commerce colossus Alibaba’s $25 billion
share issue in 2014. Two days later, the Chi-
nese government ordered all app stores in the
country to take the Didi app off.
promoted Ant Group. Ant is a spectacular
company. In just six years, it became the
highest-valued financial technology firm in
the world, the planet’s largest money market
fund, and in 2020, processed more payment
transactions ($17.6 trillion) than Mastercard
and Visa combined. Within China, Alibaba’s
founder Jack Ma was a folk hero. Ant planned
most of whom would possibly have had their the other two firms being investigated for a regulatory review before applying for an
loan applications rejected ‘national security issues’ overseas IPO… (This is) another crucial step
by a standard bank, and got were asked by Beijing to list in China’s efforts to ensure data security
banks to disburse these It’s using tools in Hong Kong instead of amid growing risks from the US as it contin-
loans, charging a manage- the US. The Ant initial pub- ues to crack down on Chinese firms.” The
ment fee of around 2.8%. of regulation lic offer (IPO) was hyped as ‘national security’ investigations of Didi and
Ant had no skin in the “the crowning glory of the two other companies could be a warning.
game—it collected its fees,
to show tech China’s home-grown Firms planning a New York IPO will now

is a former editor of ‘Financial

Express’, and founder-editor of
‘Open’ and ‘Swarajya’
magazines
Beijing says it is investigating Didi for vio-
lating data privacy and national security
laws. The allegation is that Didi has been
sharing personal and sensitive data collected
from hundreds of millions of its drivers and
users (including movement of government
and Communist Party officials) with the US.
Two other recently-US-listed companies are
being probed too: Full Truck Alliance,
known as China’s ‘Uber for trucks’, and
recruitment site Boss Zhipin.
Xi Jinping is the supreme leader of the Chi-
nese government, the Chinese Communist
Party (CCP) and also the People’s Liberation
Army. People in China live under a surveil-
lance regime unparalleled in history. Almost
history’s largest ever share issue, worth $34.4
billion, in November 2020, to be listed on the
Shanghai and Hong Kong stock exchanges.
In September, Beijing issued stringent
guidelines that would in effect regulate Ant
more like a bank than a fintech company. Ma
was enraged. Speaking at a conference, he
called the Chinese financial establishment a
“club for the elderly”, accused the big banks
of having a “pawnshop mentality” and said:
“We cannot regulate the future with yester-
day’s means.”
The die was cast. Ma and his top execu-
tives were called in for what Communist jar-
gon refers to as ‘re-education’. Days before
the Ant share issue was to open, the govern-
while the banks took on all
the credit risk. This could
billionaires
have led to a bubble, whose
bursting would have
who’s boss and
plunged China’s banking might go in for
sector into a crisis.
The Ant offering had a big data grab
been oversubscribed 870
times—with $2.8 trillion of
orders just from retail investors in China.
Had Ant listed on stock exchanges, its price
could have nosedived, now that it had to
obey strict banking regulations and would
be treated as a bank stock, not a tech star.
Banks typically attract much lower valua-
tions than tech firms just about everywhere.
financial technology” and
its listing in Shanghai and
Hong Kong was intended
to tell the world that China
no longer needed US capi-
tal markets. But a post-IPO
tanking of the Ant share
would have been embar-
rassing.
Beijing may have been compelled to act,
although it may not have gone straight for
the kill if it did not also want to show Ma his
place. A big head needed to roll to make the
power hierarchy clear to China’s billion-
aires. “North, south, east, west, and centre,
the Party is leader of all,” Xi has announced.
need government permission, preceded by
tough scrutiny.
The recent moves may serve another key
aim: Total control of the data lying with
these firms. Hardliners already demand full
nationalization of data. The logic is that
tech giants owe much to government sup-
port, from loan write-offs to banning West-
ern competition. The payback for this kind-
ness, they argue, should be the data the
firms collect.
China may be on the verge of a new finan-
cial system with Xi Jinping characteristics.
Jack Ma, meanwhile, is said to be spending
his time painting. A business partner has told
CNBC that his creations are “pretty good”.
14 THURSDAY, 15 JULY 2021
NEW DELHI BUSINESS OF LIFE CULTURE LIVEMINT.COM

‘I won’t start a film till I can

shut my eyes, see it backwards’
Rakeysh Omprakash
Mehra on why his new
boxing film, ‘Toofan’, is a
balm for troubled times
Udita Jhunjhunwala
businessoflife@livemint.com
A still from The Mandalorian

T
wo decades after his debut fea-
ture, Aks, Rakeysh Omprakash
Mehra is ready with his seventh
movie and his second sports-
based drama. In 2013, along with
It’s Netflix vs
actor Farhan Akhtar, Mehra helmed Bhaag
Milkha Bhaag, a biopic on the life of athlete
Milkha Singh. Now Akhtar and Mehra have
Disney at the
reunited for Toofaan, a fictional story about a
boxer named Aziz Ali. In his brief filmography,
Mehra’s most celebrated works are the National
Award-winning Rang De Basanti (2006) and
Emmys this year
Bhaag Milkha Bhaag. Mehra spoke to Mint
Lounge about crafting a boxing drama and his Agencies
process for visualizing a film. feedback@livemint.com

‘Toofaan’ came to you as a story conceptu-
alised by Farhan Akhtar, with Anjum
Rajabali shaping the script and screen-
play. In what way did you influence the
script?
Farhan and I really enjoyed our journey on
Bhaag Milkha Bhaag, including the love, critical
acclaim and box office returns the film got.
Since then there has been a want and hunger to
work with each other. Farhan and I were keen
to raise the bar for ourselves so when he shared
the thought behind Toofaan I said the story is
talking to me. I can have a conversation with the
story, so let’s do it and give it all we have.
Then I had a detailed narration with Anjum
[Rajabali] who elaborated on the story idea and
screenplay. Some months of development fol-
lowed because the director has to make the
story her or his own. Then the journey contin-
ued with Vijay Maurya, who added to the
screenplay and dialogue and sprinkled gold
dust all over. Later, the cast and crew inter-
preted the script in their own way and owned it.
Actors Farhan, Mrunal Thakur, Paresh Rawal,
Hussain Dalal, plus all those behind the camera,
came together with one vision.
What were some things you had to keep in
mind when shooting a boxing/sports
drama?
There is no rulebook for this. I approach film-
making very organically. First the story really
needs to resonate with me. Then I completely
dive into the screenplay. For me, filmmaking
begins when I work on the screenplay. That’s
when I started seeing the film.
I need to be able to shut my eyes and see the
entire film backwards. Until I can do that, I
won’t start the film. Boxing in particular was
extremely new to me. I have not been a fan of the
sport so it became very important that I under-
stand boxing and in order to do that you have to
understand the sportsman or sportswoman.
Did you take on some research into the
sport and the psyche of the boxer?
My research included speaking to a lot of box-
ers at state and national level as well as interna-
tional boxers. I read biographies of boxers and
I watched a lot of documentaries. They taught
me a lot about the fighters and the Ring Warri-
ors, as they are called. I didn’t see movies on
boxing.
Very early in the day I understood that boxing
is not a rich man’s sport, even though the prize
Rakeysh Omprakash Mehra (top) and a still from ‘Toofaan’
money is wow. In America, which is the Mecca
for boxing, the fighters come from neighbour-
hoods like the Bronx, or outside of New Orleans
and Chicago. They have faced racial discrimina-
tion, class discrimination. They have faced
abuse. They also come from Cuba and Russia,
from a village in Haryana and a forgotten town
in the northeast of India. Then I realised, boxing
is not just a sport—it is an expression. It is their
way of fighting back into life. I brought all that
back into the character of Aziz Ali.
What did it require to create the frenzy
and excitement of what happens in the
ring? Given that boxing is a violent contact
sport, was there a focus on designing the
fights, rehearsal and choreography?
I must give full marks to Farhan for his effort
and dedicated approach. Boxing is a contact
sport, but more importantly you should know
how to take pain. More than giving the hits, you
should be able to take the punches. And in the
end all that matters is the last man standing in
the ring.
So we did boxing training for Farhan first and
then I decided that he would not fight another
actor but only real boxers from the national
level or pro boxers on the international circuit.
With choreographed boxing you don’t actually
hurt your opponent, but that only happens 50
percent of the time. The rest of the time you are
actually giving and taking the hits. We needed
to be very alert because you cannot have actors
do those takes again and again. It is exhausting
for them.
D
We were blessed to have Darrell Foster, a
former boxer, on our team. He used to be in the
corner for former world champion Sugar Ray
Leonard and has choreographed some of the
best boxing films in Hollywood, including Ali
and Bleed for This. He held the camps and more
than teaching Farhan how to box, it was teach-
ing the real professional boxers—whose natural
instinct is to hit—how to act. All I had to do was
film.
You recently said that if you put your previ-
ous films Rang De Basanti and Bhaag
Milkha Bhaag into a mixer grinder you get
Toofaan. What did you mean by that?
For me a film is very personal. Rang De Bas-
anti was partly autobiographical, about my col-
lege days, and the bigger picture was about the
socio-political situation in the country. Bhaag
Milkha Bhaag was a response to my affinity for
sports but also while growing up Milkha Singh
was a larger than life hero. Also, growing up in
Delhi, I had heard stories about Partition. I have
lived in Partition rehabilitation colonies like
Lajpat Nagar.
These films reflected two very different times
in my life. Milkha Singh was fighting with his
own demons. Rang De Basanti was about an
expression. The things I was trying to say in that
film find a manifestation and a completion in
Toofaan. Toofaan presented me with a mix of
these films. It has a huge socio-political rele-
vance in today’s times. Lately I have been feel-
ing that we are nurturing a lot of wounds. We
are making ourselves suffer a lot. In Toofaan I
found a very soothing balm, which I hope we
can apply over these open wounds and get on
with life.
Toofaan will stream on Amazon Prime Video
from 16 July.
Udita Jhunjhunwala is a Mumbai-based
writer, film critic and festival programmer.
isney’s Star Wars series The Mandalorian on Tuesday tied
for the most Emmy nominations with Netflix royal drama
The Crown at 24, as the Mouse House stormed television’s
version of the Oscars. Disney’s new streaming service, in only its
second year, also topped the prestigious limited series category,
where Marvel superhero spin-off WandaVision earned 23 nomi-
nations. Apple TV, another streamer in its sophomore year,
topped the comedy categories with Ted Lasso on 20, while NBC
sketch comedy series Saturday Night Live, a perennial Emmys
favourite, extended its all-time record number of nominations
to 306 with 21 new nods.
The 73rd Emmy Awards—the small-screen equivalent of the
Oscars—will be handed out at a live, in-person ceremony in Los
Angeles broadcast by CBS on September 19. The show—set to fea-
ture a “limited audience of nominees and their guests”—will
mark a welcome return to some normality. Last year’s edition was
broadcast from an empty theatre, with winners beaming in via
video call. Hosted by US actor-comedian Cedric the Entertainer,
the gala will honour the best in television from a unique, pandem-
ic-plagued year in which producers scrambled to film under tight
Covid restrictions.
Like the rest of us, the Television Academy’s 25,000 voters
spent several months stuck at home, leaving them ample time to
sift through a stripped-down selection of series from their sofas.
Disney increased its share of Emmy nominations from 19 in its
debut year to 71 this time. Combined with the parent company’s
other platforms such as ABC and Hulu, Disney topped the overall
nominations with 146. HBO and its own streamer HBO Max man-
aged 130, just pipping last year’s record-breaking leader Netflix
on 129. The Mandalorian and The Crown will compete for best
drama against Hulu’s dystopian drama The Handmaid’s Tale,
which scored 21 nods, and the likes of Netflix’s buzzy period rom-
com Bridgerton.
Season two of The Mandalorian, a space-set neo-Western spun
off from the wildly popular sci-fi Star Wars films, scored strongly
across technical categories, in addition to multiple acting nomi-
nations for the likes of Giancarlo Esposito—though sadly Baby
Yoda was not eligible. All three previous seasons of monarchy
saga The Crown have been nominated for best drama series, but
the show—like all other Netflix dramas—has never won the top
prize. The show also boasts leading contenders in the drama act-
ing categories, including Emma Corrin as Princess Diana, Josh
O’Connor as Prince Charles, and Gillian Anderson as Margaret
Thatcher. Ted Lasso—about a hapless American football coach
thrust into English soccer—is the hot favourite to win best com-
edy series, where Michael Douglas’s The Kominsky Method is the
sole comedy nominee from last year again in the running.
The limited series field has arguably the most competitive and
prestigious lineup of all, making the success of Disney ‘s Marvel
series WandaVision all the more impressive. It will compete with
shows including Kate Winslet’s small-town murder mystery
Mare of Easttown, and the Barry Jenkins-directed slavery tale The
Underground Railroad.

TURNING THE TABLES

How a specialty restaurant pivoted to comfort food

Kappa Chakka Kandhari ingredients and traditional cookware. know-style Awadh biryani. Our ingredi- Magic’, to name a few. This also allowed us
However, with the pandemic bringing ents come in from the north. In early 2021, to create pairings, and give customers a
has managed to straddle about a nationwide lockdown last year, we launched the Thalassery and Lucknow unique taste of Kerala. During the pan-
both delivery and dine-in the restaurant had to pivot to a delivery- biryanis under a new delivery-only, Dum demic, there was scarcity of ingredients as
only model in Chennai from dine-in-only. Bir. We have a centralised kitchen, with a well, due to the supply chain being ham-
during the pandemic, The focus of the delivery menu was plan to open 8-10 outlets in the city meant pered. So, we created menus based on
comfort food with dishes that might not as delivery and pick up points. Dum Bir is what was available. These set menus are
and recently launched a have been on the restaurant menu. Its suc- currently operational in Chennai and we back in Chennai and will be restored in
new takeaway vertical cess led the partners to set up KCK Food- are hoping to launch in Bengaluru soon. Bengaluru by the month-end.
Pack as a branch of the parent company, The packaging makes it safer and practical Lessons from the pandemic that will
specialising only in delivery and catering for the food to travel, and for individuals to continue to inform logistics and oper-
Avantika Bhuyan services for people entertaining in small consume it on the go, or at home. ations?
avantika.bhuyan@htlive.com numbers at home. Mathew, Paul and Kur- With restrictions easing after the Whether it is delivery or dine-in, the
ian talk to Mint Lounge about launching lockdown last year, both Kappa same principles of quality of ingredients

B
etween 2015 and 2017, chef Regi
Mathew and his friends, John Paul
and Augustine Kurian, undertook a
unique journey across Kerala. They ate at
toddy shops and visited home cooks to
understand flavours and dishes whipped
up by different communities across the
state. By the end of this journey, they had
met nearly 265 home chefs and collected
close to 800 recipes, in an endeavour to
understand unique techniques and hyper
local ingredients.
The three friends then opened Kappa
Chakka Kandhari (KCK), first in Chennai
in July 2018 and then in Bengaluru in
December 2019, to serve authentic Kerala
style food. With a team of professional
chefs, and toddy shop and home cooks,
Mathew put up dishes such as the Ramass-
ery idli and pidi kozhi curry, using local
new verticals during the pandemic and
moving to a set menu at the restaurant:
Based on the needs of the clientele,
what were the kind of changes you
made to the KCK delivery menu?
When we started Kappa Chakka Kan-
dhari, we never intended to have delivery.
It was meant to be a dine-in space. How-
ever, during the first wave, we observed a
demand for comfort food, so we launched
a menu with comfort food from across the
southern states. That’s how KCK Foods
came about in April 2020 for delivery and
takeaways. We also included some favour-
ites from the restaurant menu, keeping in
mind dishes which could travel well.
You recently launched Dum Bir as an
independent business vertical, focus-
ing on biryanis. How did this shift to
north Indian flavours come about?
When we launched the KCK FoodPack
delivery menu, we included the Thalas-
sery biryani in it. Although immensely
popular in Kerala, biryani and parotta was
never a part of the offering at Kappa
Chakka Kandhari, which focussed more
on traditional homestyle food and toddy
shop cuisine.Over time, we realised just
how popular biryani is as a delivery
option. So, by December, when we
opened the restaurants in Chennai and
Bengaluru again, we thought of starting
another vertical and getting specialised
cooks for more variants of biryanis. So, we
got a specialty chef from Delhi for the Luc-
(top, from left) Augustine Kurian, Regi
Mathew and John Paul; (above) from the
Dum Bir menu COURTESY: KAPPA CHAKKA KANDHARI
Chakka Kandhari restaurants
reopened with a set menu for dine-in.
Will this continue when the restau-
rants open again?
After the first lockdown, when we
opened the restaurants, we organised the
menu in a way that would be conducive to
customers. We launched seven non-veg
and three vegetarian set menus, each fea-
turing 8 to 9 dishes. This was planned as a
minimal interactive menu. When the cus-
tomers made a reservation, they would be
sent the menus, so that they could plan
their meals. Once they came in, after ther-
mal screening and other protocols, the
food would be served as per their choice.
These set menus became immensely pop-
ular. These were based on concepts such
as ‘Nadan Memories’, ‘Toddy Shop Mem-
ories’, ‘Ammachi’s Specials’, ‘Monsoon
and production inform our work. Custom-
ers come to our restaurants with a lot of
confidence. They seek the same qualities
in delivery as well. That is the ethos we fol-
low. Secondly, our operations have been
based on the comfort of our staff. These
are cooks from Kerala. Entire families
depend on their earnings. During the first
lockdown, we shifted the staff to Chennai,
provided them with accommodation, and
took care of their meals. When the Benga-
luru eatery also opened up in December,
half the staff shifted there. The entire staff
is now vaccinated. During the lockdowns
this year, we have also supported meals for
frontline workers. This has kept our team
engaged during this time.
Turning the Tables is a series on how food
entrepreneurs are coping with covid-19.
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