MONDAY, 13 JUNE 2022

20 pages in 1 section
www.business-standard.com
NEW DELHI
~11.00
VOLUME XXIX NUMBER 41

How markets performed last week

% chg over Dec 31, ‘21
Index on *One- --————————————————————————————————————————————————————————

June 10, ‘22 week Local currency in US $

Sensex 54,303 -2.6 -6.8 -11.0
Nifty 16,202 -2.3 -6.6 -10.8
Dow Jones
Nasdaq
Hang Seng
31,393
11,340
21,806
-4.6
-5.6
3.4
-13.6
-27.5
-6.8
-13.6
-27.5
-7.4
CREDIT CARD ROUTE TO UPI MAY IPL MEDIA RIGHTS: BIDS
Nikkei
FTSE
27,824
7,318
0.2
-2.9
-3.4
-0.9
-17.3
-9.8 COME AT A PRICE FOR MERCHANTS WORTH ~43K CR ON DAY 1
DAX 13,762 -4.8 -13.4 -19.9
*Change (%) over previous week Source: Bloomberg P U B L I S HE D S I MU L T A N E O USL Y F R O M AH M E D AB AD , B E NG AL UR U, B H UB ANE SW AR , CH AND I G AR H , CH E NNAI , H Y D E R AB AD , KOCHI, K OL K ATA, L UCK N OW , MUMBA I (AL SO P R IN TE D IN BHOP AL ), N E W DE L HI AN D P UN E
 NEW DELHI | MONDAY, 13 JUNE 2022
>

Government of Jammu & Kashmir

OFFICE OF THE EXECUTIVE ENGINEER PWD (R&B) DIVISION RAMBAN
(Short Term ) NOTICE INVITING TENDER
Fresh e-NIT No: 39 of 2022-23 Dated: 08-06-2022 to Fresh e-NIT No: 27 of 2022-23 Dated: 27-05-2022
& e-NIT No: 08 of 2022-23 Dated: 27-04-2022 (E-tendering).
(Double Cover System )
For and on behalf of the Lt. Governor of Jammu and Kashmir UT, the Executive Engineer PWD (R&B) Division FULLERTON INDIA HOME FINANCE COMPANY LIMITED
Ramban invites tenders by e-tendering mode on % age rates from approved and eligible Contractors/Firms Corporate Off. : Flr. 5 & 6, B-Wing, Supreme IT Park, Supreme City, Powai, Mumbai - 400 076
registered with J&K UT. CPWD, MES & Railways for the following work:- Regd. Off. : Megh Towers, Flr. 3, Old No. 307, New No. 165, Poonamallee High Road, Maduravoyal, Chennai - 600 095
S. Name of Work Name of Estimated Cost of Earnest Time Time & Date Class of SALE NOTICE FOR SALE OF IMMOVABLE PROPERTIES
No Tender Money/Bid allowed of Opening Contractor
Division cost of E-AUCTION SALE NOTICE OF 15 DAYS FOR SALE OF IMMOVABLE ASSETS UNDER THE SECURITISATION AND RECONSTRUCTION
Work (in Doc. Security for of tender OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 READ WITH PROVISION TO RULE 9(1) OF THE
Lacs) (in Rs) (In Lacs) completion (Technical Bid) SECURITY INTEREST (ENFORCEMENT) RULES, 2002.
1 2 3 4 5 6 7 8 9 Notice is hereby given to the Public in General and in particular to the Borrower(s) and Guarantor(s) that the below listed immovable
properties (“Secured Assets”) mortgaged/charged to the Secured Creditor, the Possession of which has been taken by the Authorised
1 Construction of Govt. PWD 352.52 6000 @ 2% 24 Months 17-06-2022 at “A” Class Officer of Fullerton India Home Finance Company Limited (“Secured Creditor”), will be sold on “As is where is”, “As is what is”
High School at (R&B) of Adv. 14.00 P.M and “Whatever there is” on the date and time mentioned herein below, for recovery of the dues mentioned herein below and further
Sumber under Division Cost interest and other expenses thereon till date of realization, due to Fullerton India Home Finance Company Limited/Secured Creditor
USBRL Railways. Ramban from the Borrower(s) and Guarantor(s) mentioned herein below. The Reserve Price, Earnest Money Deposit (EMD) and Last Date of EMD
Position of AAA= ACCORDED deposit is also mentioned herein below:
Position of funds = AVAILABLE 1) Date & Time of E-Auction : 28.06.2022 at 11.00 AM to 01.00 PM (with unlimited extensions of 5 minute each)
Technical Sanction = UNDER PROCESS 2) Last Date & Time of Submission of Request Letter of Participate/KYC Documents/Proof of EMD, etc. : 27.06.2022
1. Date of Issue of Tender Notice 08-06-2022 Sl. Name of the Borrower(s)/ Demand Notice Description of the
2. Period of downloading of bidding documents From From 09-06-2022,10.00 A.M to 16-06-2022, 4.00 P.M No. Guarantor(s) LAN Date & Amount Properties
3. Date, Time and place of pre-bid meeting LAN : 609107510484594 Date : 04.03.2019 ALL PIECE AND PARCEL PROPERTY
4. Bid submission Start Date 09-06-2022 From 10.00 A.M (1) Aditya Jain, S/o - Praveen Kumar Jain (2) Reena Jain, Rs. 27,93,227.27/- BEARING : ENTIRE FIRST FLOOR
5. Bid Submission End Date 16-06-2022 up to 4.00 P.M D/W/o Praveen Kumar Jain, (3) Swaran Card Gallary (Rupees Twenty Seven WITHOUT ROOF RIGHTS AREA
Through proprietor Aditya Jain, (4) Praveen Kumar Jain Lakh(s) Ninety Three MEASURING 70 SQ. YARDS PLOT
6. Submission of hard copy of tender documents Only successful bidder who is declared as L1 should Thousand Two Hundred NO. 1/10732, KHASRA NO. 1603/61
submit the hard copy after opening of financial bids Add. 1 : R/O 1/11102A, Second Floor, Street No. 7b,
Twenty Seven And Twenty VILLAGE ULDHANPUR SUBHASH
01 Subash Par, Shahdara, Delhi - 1100321
7. Date & time of opening of Technical Bids (Online) 17-06-2022 at 14.00 P.M in the Office of the Seven Paise Only) due as on PARK, NAVIN SHAHDARA DELHI-
Add. 2 : R/O 161, Galibatashan Chawri Bazar, Delhi-110006 27.05.2021 SURROUNDED BY BOUNDARIES AS
- [The date should be one day after deadline Superintending Engineer PWD (R&B) Circle, Doda PER DEED & SITE: EAST: PROPERTY
for receiving of hard copies] 1/10806, WEST: ROAD, NORTH:
8. Date & time of opening of Financial Bids (Online) To be notified after technical bid evaluation is completed PROPERTY 1/10733, SOUTH:
PROPERTY 1/10731
1. The Bidding documents Consisting of qualifying information, eligibility criteria, specifications, Drawings, bill of
Reserve Price : Rs. 22,00,000/- Earnest Money Deposit : Rs. 2,20,000/- Bid Incremental Value : Rs. 22,000/-
quantities (B.O.Q), Set of terms and conditions of contract and other details can be seen/downloaded from the (Rupees Twenty Two Lakhs Only) (Rupees Two Lakh Twenty Thousand only) (Rupees Twenty Two Thousand Only)
departmental website www.jktenders.gov.in as per below schedule:
Sd/- Details terms and conditions of the sale are as below and the details are also provided in our/secured creditor’s website at the following
No: 9258-80
link/website address (https://disposalhub.com and https://www.grihashakti.com/pdf/E-Auction.pdf). The Intending Bidders can
Dated: 08-06-2022 (Er. Vinod Kumar Gupta)
also contact Mr. Ashok Manda, on his Mob. No. 9892294841, E-mail : ashokkumar.manda@grihashakti.com
DIP No:DIP/J-2991/22 Executive Engineer Place : Delhi Sd/-
DIP/J-2991/22 PWD (R&B) Division Ramban Date : 13.06.2022 Authorized Officer, FULLERTON INDIA HOME FINANCE COMPANY LIMITED
Dated: 09.06.2022
MONDAY, 13 JUNE 2022
20 pages in 1 section
www.business-standard.com
NEW DELHI
~11.00
VOLUME XXIX NUMBER 41

How markets performed last week

% chg over Dec 31, ‘21
Index on *One- --————————————————————————————————————————————————————————

June 10, ‘22 week Local currency in US $

Sensex 54,303 -2.6 -6.8 -11.0
Nifty 16,202 -2.3 -6.6 -10.8 COMPANIES P2 TECHNOLOGY 4.0 P16
Dow Jones 31,393 -4.6 -13.6 -13.6
Nasdaq
Hang Seng
Nikkei
11,340
21,806
27,824
-5.6
3.4
0.2
-27.5
-6.8
-3.4
-27.5
-7.4
-17.3
TENCENT BUYS BINNY BANSAL’S GOOD MONEY PROSPECTS MAKE
FTSE
DAX
7,318
13,762
-2.9
-4.8
-0.9
-13.4
-9.8
-19.9
~2,060-CR STAKE IN FLIPKART GAME STREAMING SERIOUS BIZ
*Change (%) over previous week Source: Bloomberg P U B L I S HE D S I MU L T A N E O USL Y F R O M AH M E D AB AD , B E NG AL UR U, B H UB ANE SW AR , CH AND I G AR H , CH E NNAI , H Y D E R AB AD , KOCHI, K OL K ATA, L UCK N OW , MUMBA I (AL SO P R IN TE D IN BHOP AL ), N E W DE L HI AN D P UN E

GOYAL: WTO COULD

NOT RESPOND WITH Credit card route to Bidding score for IPL media
ALACRITY ON COVID
rights tops ~43K cr on Day 1
India ramped up its supplies of medical
products to different countries to deal with the
Covid-19 pandemic, but the WTO could not
react with alacrity and the members need to
UPI may come at a That's more than 2.5 times higher

price for merchants

bow their heads in “shame” for their inability
to respond in time, Commerce and Industry than the value of previous cycle
Minister Piyush Goyal said in Geneva. He is VIVEAT SUSAN PINTO
leading the Indian delegation for the 12th Mumbai, 12 June
Ministerial Conference of the WTO. 4>

Smaller merchants can be subsidised to make it work The first day of the e-auction for the media rights of the
Indian Premier League (IPL) concluded on Sunday, with

ON
SUBRATA PANDA
Mumbai, 12 June
RISE AND RISE OF UPI the combined value of television (TV) and digital rights
surpassing the ~43,000-crore mark, according to people in
Volume (bn) Value (~ trn)
MONDAY 7 5.99 12
the know.

T
he Reserve Bank of India’s (RBI’s) recent At this rate, the combined value of TV and digital
SPECIALS decision to allow credit cards for pay- 6
5
10 rights, so far, has crossed the previous rights value of IPL RIGHTS: NEXT ONLY TO NFL
ments through the Unified Payments 8 ~16,347.50 by more than two and | Total value# | Per-match value (~ cr)
BANKER’S TRUST Interface (UPI) is likely to attract a mer- 4 IPL FRANCHISEES a half times.
Both customers and banks to 6
chant discount rate (MDR), said a top payment 3 10.4 On a per-match basis, the IPL is Sony
feel pain in new regime industry source. For smaller merchants, a sub- 2 1.30 4 SET TO MAKE now just behind the US' National (2008-2017)
8,200
NA
The banks have a balm for their pain. sidy for MDR could be provided. 1 2 A KILLING Football League (NFL) in terms of
Probably, shifting to floating rate deposits can “With credit card-UPI linkage, UPI will not 0 2.1 0 PAGE 18 cost to a broadcaster at $13.5 mil-
work as an anaesthetic gel for some of the only be a payment instrument but also a lending Jan 2020 May 2022 lion (~ 105 crore). The NFL com- Disney Star 54.5
Source: NPCI 16,348
customers. TAMAL BANDYOPADHYAY writes 17 > platform. How can banks lend without a com- mands a per-match value of $17 million (~ 132.26 crore), (2018-2022)
mercial model? Also, the government has said
MDR will be zero for payment products
JUMP IN CREDIT CARD SPENDS while the Premier League (English football league) has a
per-match value of $11 million (~ 85.58 crore).
STATSGURU Amount (in ~ cr) 120,000 Day 1 of e-
Renewed Covid concerns 17 > but not for lending products,” the 107,101 The combined TV and digital value is also ~10,000 crore auction 43,050 105.0
source said, indicating the MDR 100,000 more than the reserve price of nearly ~33,000 crore, which (2023-27)*
regime for credit card-linked was set by the Board of Control for Cricket in India (BCCI)
#Sony's winning bid was for television rights of IPL; #Star's winning bid
UPI payments. 80,000 for the current media rights cycle (2023-27 period). included TV and digital rights; #~43,050 cr is the combined TV & digital
MDR is a fee calculated as Turn to Page 6 > bid on Day 1 of e-auction; *Winner is yet to be declared Source: Industry
a percentage of the transaction 60,000
which is paid by merchants to 59,049
banks for processing payments. The 40,000
card-issuing bank, after retaining part of
Apr 2021 Mar 2022
Source: RBI INSOLVENCY FRAMEWORK IDBI SALE: RBI MAY NOT RELAX
it, shares the rest among the payment network COST & OPPORTUNITY NEEDS A BOOSTER DOSE BUYER’S STAKE-DILUTION TIMELINE
and point-of-sale terminal providers.
“…one thing is for sure, this will not work with-
out charges. There has to be a commercial model.
2% 0% 2-4 mn The debt resolution of sick companies or
ones that have failed to repay their dues
The central bank may not grant any special
dispensation to the new buyer of IDBI Bank
MDR on MDR merchants
If the commercial model is viable for merchants, has slowed down considerably under over the post-acquisition glide path for
they will accept credit card transactions”, he said.
credit card currently accept the Insolvency and Bankruptcy Code reducing promoter shareholding in the long
Scan to Open transactions on UPI credit card
In the past, the central government had pro- (IBC), 2016, in the past two years after term. The intermediaries had sought
FREE Demat (non-RuPay) payments payments
vided ~1,300 crore to promote RuPay debit cards initial euphoria saw several successful relaxations in the RBI’s guidelines that
Account
and low-value UPI transactions up to ~2,000 by 5 YEARS acquisitions by top firms, including the require promoter shareholding to be
reimbursing MDR to banks which was brought
down to zero in December 2019. Turn to Page 6 >
50mn merchants take payments via UPI OF IBC Tatas, Reliance and ArcelorMittal.
DEV CHATTERJEE writes 2>
reduced to 26 per cent in 15 years.
NIKUNJ OHRI writes 7>
2 COMPANIES
>
NEW DELHI | MONDAY, 13 JUNE 2022

IN BRIEF
Byju’s-owned Aakash eyes
60-70% growth this year
Tencent acquires
Aakash Educational Services (AESL), owned
by Byju’s, is confident of growing at 60-70
per cent this year, with its business
momentum driven by market demand,
hirings, addition of new centres, and rise
stake in Flipkart
in student count, a top official said. AESL’s
positive commentary assumes significance
given that reopening of schools and
colleges in the offline mode has hit the business models of many
from Binny Bansal
new-age edtech startups. In fact, the market is rife with reports of
layoffs, and some edtech startups — that had announced ambitious
plans and fundraising at the peak of the pandemic — have shut
down operations over the last few months. PTI
Bansal holds 1.84% in Flipkart after ~2,060-cr stake sale
PEERZADA ABRAR
Bengaluru, 12 June
India’s first display fab coming
C
hinese tech giant
Tencent has bought
up in Telangana for ~24,000 cr a stake worth $264
million (about ~2,060 crore)
Elest, a subsidiary of gold retailer Rajesh Exports, will be setting up in Walmart-owned Flipkart
the country's first display fab facility in Telangana with investments from its co-founder Binny
worth ~24,000 crore. Telangana IT Minister K T Rama Rao along with Bansal through its European
Chairman of Rajesh Exports Rajesh Mehta announced setting up of subsidiary, according to
Generation 6 AMOLED Display FAB, an official release said here on sources.
Sunday. The government signed an MoU with Karnataka-based Elest The transaction was com-
for the proposed fabrication unit which will manufacture next-gen pleted on October 26, 2021.
displays for smartphones, tablet computers, and laptops. PTI However, it was shared with
government authorities at
the beginning of this finan-
480,000 homes worth over cial year. Flipkart is regis-
tered in Singapore and has
~4.5 trn stuck in top 7 cities operations in India only.
Bansal now holds about
Construction work of nearly 480,000 homes worth ~4.48 trillion 1.84 per cent in Flipkart after
are currently stuck or significantly delayed across seven major citi- selling part of his stake to
es, although builders have completed 37,000 such units so far this Tencent Cloud Europe BV.
year, according to property consultant Anarock. For its research, The story was first reported
Anarock has taken only those projects that were launched in 2014 by news agency PTI.
or before across seven cities — Delhi-NCR, Mumbai Metropolitan “Tencent is an early
Region, Kolkata, Chennai, Bengaluru, Hyderabad, and Pune. PTI investor in Flipkart and this
transaction happened last
year when SoftBank, along
Zara’s India revenue in with various sovereign
funds, invested $3.6 billion
FY22 grows to ~1,815 crore in the e-commerce firm,”
said a person familiar with
Spain's Inditex, which owns luxury fashion brand Zara, posted a the matter. “That time Binny
net profit of ~148.76 crore and revenue of ~1,815 crore for the Bansal diluted some of his
financial year ended on March 31, 2022, according to the latest stake in Tencent.”
annual report of Trent. In FY21, Inditex Trent Retail India, a JV which After this transaction, the
is engaged in the operation of Zara stores in India, had reported a Tencent arm holds 0.72 per
net loss of ~41 crore and its revenue fell 28.3 per cent to ~1,126 crore stake in Flipkart, valued at
in the pandemic-impacted year. PTI around $264 million.
A Flipkart spokesperson
declined to comment on this
Maruti despatches 233,000 development.
The government had
units through Railways in FY22 brought press-note
(2020 series) during the ini-
3 2020, Tencent invested
Maruti Suzuki India has shipped 233,000 units through Railways last tial days of the pandemic in
fiscal, its highest ever dispatch in a financial year so far, since April 2020. It was an imme-
commencing the initiative eight years ago, as per a senior company diate reaction to the con-
official. The company’s dispatch in 2021-22 was 23 per cent up from cerns of Indian companies
189,000 units it transported using Railways in the 2020-21 financial being vulnerable to oppor-
year. Cumulatively, the auto major has transported close to 1.1 million tunistic takeovers during the
vehicles through Indian Railways in the last eight years. PTI pandemic. Press-note 3
requires that all investments
from entities, which are
Vedanta to modify waste based in a land-bordering
country, or when the benefi-
heat recovery plant in Goa cial owner of the investment
is based in a land-bordering
Vedanta plans to modify the design of one of its waste heat recovery country, will have to be made
power plants in Goa and reoptimise its turbines through the use of a under the ‘approval route’
specialised technology in order to increase power generation by and will require a security
another 5 MW, a top official of the company said. This is in line with clearance.
Vedanta's efforts towards reducing the carbon footprint. Vedanta However, the Tencent-
has already used this technology to increase the power generation of Bansal deal does not fall
one its power plants in Rajasthan. PTI under the purview of 'Press
TOP INVESTMENTS
OF TENCENT IN
INDIAN COMPANIES
Company Line of business
Byju’s Edtech
Dream Sports Gaming
Flipkart E-commerce
Ola Mobility
Swiggy Food delivery
Ibibo Group* Travel
KhataBook Fintech
MyGate
Practo
Home security
Digital healthcare
ShareChat Social media
* Merged with MMT; Source: Various reports
Note 3', according to the Indian start-up ecosystem,
sources. “This is because backing several of the prom-
Tencent’s stake is less than 1 ising start-ups through their
per cent and also Flipkart has personal funds and family
been a Singapore-registered offices.
entity,” said a person. Chinese investors, such as
Last year in July, Flipkart
Group carved a niche for
Alibaba, Tencent, and
Xiaomi, are also active in the
itself in the global league by
raising $3.6 billion, including
Indian start-up space, and
have collectively invested
from SoftBank, which had billions of dollars. Tencent
exited the firm. The fund- has invested over $2 billion
raise valued the company at in Indian start-ups since
$37.6 billion, which was more 2016. Last year, it also
than a 50 per cent rise in a invested over $200 million in
year. the Indian social media plat-
In July 2020, Walmart led form ShareChat.
a $1.2-billion round in India is considering eas-
Flipkart, valuing the ing scrutiny on certain for-
e-commerce firm
$24.9 billion. In September
at eign direct investments, after
rules mainly aimed at China
$62.8 million in Flipkart,
created a bottleneck for
inflows, according to a
according to a report by busi- Bloomberg report.
ness intelligence platform The report said the
Paper.vc. government currently scru-
The investment comes tinises all investment propo-
amid Sino-India tensions, sals from companies that
including the Chinese app are either based in countries
ban, the changes to the for- that share a land border
eign direct investment (FDI) with India or have an
norms, and pre-clearance investor from one of these
mechanisms on investments
from China.
nations. The also report said
the government is now con-
Walmart’s acquisition of
Flipkart for $16 billion in
sidering exempting propo-
sals where the so-called
2018 not only provided beneficial ownership is less
blockbuster exits to its inves- than 10 per cent, which
tors but also turned the means the investor may be
founders — Sachin and from a neighbouring country
Binny Bansal — into billion- but holds only a small stake
aires. Both Sachin, as well as in the firm proposing the
Binny, are now active in the investment.
The RBI had identified 12 large companies under the
Insolvency and Bankruptcy Code (IBC) in June 2017. As
June 13 marks the completion of five years since the
announcement of the first such list of loan defaulters,
we bring you a series capturing the IBC journey
Insolvency framework
needs a booster dose
Debt resolutions have
slackened in 2 yrs; digitise
courts, advise experts
DEV CHATTERJEE
Mumbai, 12 June
The debt resolution of sick companies or
ones that have failed to repay their dues has
slowed down considerably under the
Insolvency and Bankruptcy Code (IBC), 2016,
in the past two years after initial euphoria
saw several successful acquisitions by top
companies, including the Tatas, Reliance,
and the world’s largest steelmaker,
ArcelorMittal.
The problems, as identified by the par-
liamentary committee on finance in August
last year, include a very high haircut – as
much as 95 per cent in some cases for banks
- and delay in the resolution process beyond
180 days in 71 per cent of the cases admitted,
signalling a deviation from the original
objectives of the Code.
According to the latest statistics by the
Insolvency and Bankruptcy Board of India
(IBBI), since the provisions of IBC came into
force in December 2016, as many as 5,258 STATUS REPORT
insolvency cases have been filed by lenders.
Of these, 3,403 cases have been closed until 14
March this year. Of the resolved cases, nearly
47 per cent of companies have been liqui-
Approval of
resolution plan
dated; 17 per cent of the cases withdrawn
after 90 per cent of lenders agreed, following 17 (in %)
an offer made by the promoter under Section Settled with
promoters
12A of the Code. Around 22 per cent of the 47
cases are still ongoing, while in 14 per cent 22 By
of the cases, the resolution plan has been In appeal/ liquidation
approved. review/settled
“The IBC has been a mixed bag thus far. Source: IBBI (as on March 2022
Currently, there is no law as effective as the
IBC to resolve bad-loan issues. The IBBI did
a good job in setting up the system, but the
CASE STUDY
absence of institutional strength and train-
ing still needs to be addressed,” says Anoop
Cases filed 5,258
Admitted 3,406
Rawat, senior partner, Shardul Amarchand
Ongoing 1,852
Mangaldas.
Apart from a creaking infrastructure in
courts, a serious problem faced by lenders “The haircut by banks in the IBC process
was when asset reconstruction companies should be looked at from the perspective of
(ARCs) were not allowed by the Reserve Bank the value of the asset/business today and not
of India (RBI) to bid for bankrupt companies. what banks had lent it a few years ago. For
The RBI argued that ARCs came under the example, in relation to an insolvency process
framework of the Securitisation and for a technology (tech) company, the tech
Reconstruction of Financial Assets and
Enforcement of Securities Interest (SAR-
may have advanced over the years and one
cannot value the company based on tech
FAESI) Act and not the IBC Act, leading to
‘regulatory lacunae’.
used 10 years ago and banks lending at that
time,” clarifies Rawat.
An RBI committee allowed ARCs to bid The IBC’s track record has been better
for bankrupt companies, in a recommenda- than the earlier laws. This is described
tion in November last year. aptly by RBI Governor Shaktikanta Das in
“I would suggest ARCs be immediately an interview to Business Standard in
allowed to bid for IBC companies, July last year.
apart from increasing the In response to a question on
number of members and over- how happy he was with the way
hauling the digital infrastructure IBC was progressing, Das had
at courts,” adds Rawat. said, “The main concern around
Experts observe that statistics IBC resolution is that it is taking

M&M setting up 1st tractor plant in a decade reveal a delay in the insolvency
process beyond prescribed time
lines as one of the major issues
too much time — more than a
year. It happens because of liti-
gation and counter-litigation.
Investing ~400 crore in Mohali project plaguing IBC. 5 YEARS The average time for resolution

SHALLY SETH MOHILE
Mumbai, 12 June
Mahindra & Mahindra (M&M)
is setting up a greenfield trac-
tor plant in Mohali. Fueled by
a strong domestic demand,
the expansion is the first in a
decade by the world’s largest
tractor maker.
In 2012, the company had
set up a facility at Zaheerabad
in Telangana.
The demand for tractors in
the world’s largest market has
seen a sharp 44 per cent jump
year-on-year in the first two
months of 2022-23, after some
moderation in growth in 2021-
22. M&M, which controls 40
per cent of the market, is lead-
ing the growth chart.
“We have grown faster than
the industry in the last two
months. To further our overall
capacity, we are setting up a
brand new greenfield plant in
Punjab near Mohali. We are
investing ~400-crore in this
plant and the construction has
been going on in full swing.
We should be getting our first
tractor out of this plant by the
end of this year,” Hemant
Sikka, president, tractor and
farm equipment sector, M &
M, told Business Standard.
The plant will be 35 kms
from its existing ..unit of
Swaraj Tractors. In the first
phase, it will have a capacity
to make 30,000 tractors per
annum. Mahindra’s current
tractor plants in Maharashtra,
Gujarat, Haryana, and
Telangana are running at 90
per cent capacity utilisation
rate, leaving no room for
further expansion, Sikka said.
While the new facility will
only feed the domestic dema-
nd, the units in Zaheerabad
and Nagpur will continue to
address the export demand.
The move to invest in a new
unit comes at a time when the
company’s market share grew
to 40 per cent in financial year
2021-22 (FY22) from 38.2 per
cent YoY. Its domestic sales for
FY22 declined 2 per cent to
337,052 units in the same
period. M&M’s tractor sales for
DRIVEN BY DEMAND
n Demand for tractors has seen an
upswing for a couple of months now
n Mohali unit to have a capacity of
30,000 units in the first phase
n Tractors to start rolling out by the end
of this year
n Facility to feed domestic demand
the first two months of FY23 of the road ahead for the trac-
increased 50 per cent to 73,558 tor market in India. He sees
units YoY. the company's newly
A spike in minimum sup- launched models like the
port prices of crops, the fore- YUVO to see a 100 per cent
cast of a good monsoon, and growth YoY in the coming
other positive indicators for months. He expects the trac-
the rural economy boosted tor industry to end the finan-
the company’s tractor vol- cial year with a low single-
umes in April and May much digit growth. The forecast
the same way it did for other may be revised upwards if the
manufacturers. monsoon turns out to be
Sikka sounded confident good, he said
The National Company Law
Tribunal (NCLT) and the National
OF IBC-PART I
Company Law Appellate Tribunal
(NCLAT) will need to approve resolutions in
a time-bound manner. Frivolous challenges
and interference by erstwhile promoters -
directly or indirectly - to delay the process
must not be entertained, weigh in lawyers.
“The need for judicial intervention on set-
tled principles like the commercial wisdom
of the committee of creditors by NCLT or
NCLAT should be avoided, as is enshrined
in the principles of IBC and has been advo-
cated by the Supreme Court (SC) from time
to time,” says Ajay Shaw, partner, DSK Legal
— a Mumbai-based law firm.
The lofty haircut taken by banks in
several cases like Siva Industries and
Videocon Industries also came up for criti-
cism by the lower courts, but the SC made it
clear that if lenders, in their commercial wis-
dom, think the offer is good for all stake-
holders, then the NCLT and the NCLAT must
not interfere.
Haircut is the amount banks forego to
make an account standard.
under IBC needs to be com-
pressed. That is something we
expect should happen because
this is a new law, which was enacted and
implemented in 2016. The jurisprudence
around the new law is also getting estab-
lished. The average resolution time taken
under IBC needs to be quicker.”
He further added, “If we look at the
numbers for the comparable period (2014-
15 through 2019-20), the average recovery in
the case of Lok Adalat was 5 per cent. In the
case of the debt recovery tribunal, it was 6
per cent. In the case of SARFAESI, it was 20
per cent. In the case of IBC, the average is
still 40 per cent. If you exclude 2020-21 —
the pandemic year — the average recovery
under IBC was 45 per cent.”
We should judge the success of IBC not
just from the point of view of recovery
percentage. There are other parameters to
judge its success.
IBC has spurred banks to recognise their
bad debts in time. It has also instilled a
strong credit and repayment culture by both
banks and borrowers, Das had said.

Ford India lines up ‘non-negotiable’ severance package for workers

Warns early closure of unit, legal action against workers starting June 14
SHINE JACOB
Chennai, 12 June
Giving a fresh twist to the
Ford India employees’ strike at
the firm’s Maraimalai Nagar
factory, the company has set the
deadline for Monday evening
for workers to accept a
‘non-negotiable’ severance
package it is offering.
It also indicated the possibil-
ity of legal action against workers
from June 14 (Tuesday) and
warned of early closure of the
unit, before completing remain-
ing export volume production.
For the past 14 days, some
For the past fortnight, some 2,000 employees at the unit have struck work, 2,000 employees at the unit had
seeking a better package from the company struck work, seeking a better
package from the company.
Under the new package, for
which the acceptance deadline is
Monday, employees were offered
115 days of gross wages for each
completed year of service. The
company claims the package will
be significantly higher than the
statutory severance package or 15
days of wages for each completed
year of service. One of the Union
leaders told Business Standard
that the workers are not ready to
accept it, as it was offered with-
out the Union’s consent.
Through a notice to the
employees, the Union it was told
that the package will be applica-
ble to only those who resume
production on June 14 (Tuesday)
and support the company in
completing the production
schedule. Employees who
wanted to opt for the package
were asked to inform their
acceptance to the management
by 5 pm on June 13.
The package offered includes
an ex-gratia amount equivalent
to 87 days of last drawn gross
wages (May 2022) and a fixed
amount ~50,000, both being for
every completed year of service.
In addition, benefits equivalent
to a lumpsum amount of
~2,40,000 and continuation of
current medical insurance until
March 2024 were offered. As per
the notice, the cumulative
amounts for components set out
will be subject to a minimum
amount of ~30 lakh and a maxi-
mum cap of ~80 Lakh.
“The above package is not
negotiable, and the terms of this
notice shall not be construed as
forming part of any service con-
ditions. If employees do not opt
for the severance package, the
company will be forced to take
legal steps/proceedings,” the
notice added.
Ford Motor Company
announced in September last
year it was shutting its factories
in India. The next round of talks
between the Union and the man-
agement is on June 14, the date
on which the company is intend-
ing to restart production. As pro-
tests are happening within the
plant premises, employees were
informed that only those who are
willing to support production
will be allowed entry to the fac-
tory area from Tuesday. The
company also warned about tak-
ing appropriate actions against
those who continue with the
‘illegal strike’ within the factory
premises, even making loss of
pay option applicable.
“The Company has very lim-
ited export production left to
complete. In case employees do
not resume production from
June 14, there is a high likelihood
that the Company will be
required to call off production of
remaining export volumes and
bring vehicle production to a
close,” the information to the
employees added.
>
NEW DELHI | MONDAY, 13 JUNE 2022 COMPANIES 3

$111-MN ARBITRATION AWARD

Centre loses appeal in

dispute with RIL, Shell
PRESS TRUST OF INDIA
New Delhi, 12 June

T
he government has lost its appeal
in the English High Court against
a $111 million arbitration award
in favour of Reliance Industries and
Shell in a cost recovery dispute in the
western offshore Panna-Mukta oil field
and Tapti gas field.
High Court judge Ross Cranston on
June 9 ruled that the government should
have brought its objections, over the arbi-
tration tribunal not meeting the required
thresholds, when issuing the 2021 award
earlier, two sources with knowledge of the
matter said.
Rejecting the government's argu- existed earlier. the issue back to the Arbitration Tribunal,”
ments, the court said the objections are It also upheld that the cost recovery it added. The final award on the issue came
barred by an English law principle where- in the contract is fixed at $545 million in in January 2021, it had stated.
by a party cannot raise matters in new Tapti gas field and $577.5 million in Subsequently, both sides filed clarifi-
proceedings that could have been raised Panna-Mukta oil and gas field. The two cation applications before the tribunal,
in earlier proceedings. firms wanted that cost provision be raised which on April 9, 2021 granted minor cor-
While an email sent to the Ministry by $365 million in Tapti and $62.5 million rections requested by Reliance and Shell
of Petroleum and Natural Gas for com- in Panna-Mukta. and rejected all of the government's clar-
ments remained unanswered, officials Royalty, it said, had to be calculated ification requests.
said the government would study the after inclusion of marketing margin Thereafter, the government challenged
court order and look for appropriate charged over and above the wellhead the award before the English High Court.
forums for remedy. price of natural gas. The court gave its ruling on June 9,
A separate email sent to The government used 2022, they said. The government had
Reliance for comments too this award to seek $3.85 bil- used the 2016 partial award not just to
remained unanswered. In 2010, Reliance lion in dues from Reliance raise a $3.85 billion demand on Reliance
Reliance and Shell- and Shell-owned and BG Exploration & and Shell but also sought to block
owned BG Exploration & BG Exploration & Production India (BGEPIL). Reliance's proposed $15 billion deal with
Production India on Production India The two firms challenged Saudi Aramco on grounds that the com-
December 16, 2010, dragged had dragged the the 2016 FPA before the pany owed money to it. Following this,
the government to arbitra- government to English High Court, which the court asked company directors to file
tion over cost recovery pro- arbitration over on April 16, 2018, remitted affidavits listing assets.
visions, profit due to the cost recovery one of the challenged issues Reliance and Shell had countered
State and amount of statu- provisions, profit back to the Arbitral Tribunal the government petition in the Delhi
tory dues including royalty due to the state, for reconsideration. High Court saying the petition is an
payable. They wanted to and amount of The arbitration tribunal abuse of process as no arbitration award
raise the limit of cost that statutory dues ruled in favour of the two in has fixed any final liability of dues on
could be recovered from a January 29, 2021 award. the company.
sale of oil and gas before “The Arbitral Tribunal “GoI has also filed an execution peti-
profits are shared with the government. decided in favour of the Claimants tion before the Delhi High Court... seek-
The government of India also raised (Reliance and BGEPIL) in large part vide ing enforcement and execution of the
counter claims over expenditure its final partial award dated October 1, 2016 FPA,” the annual report had said.
incurred, inflated sales, excess cost recov- 2018. Government of India and “The Claimants contend that GoI's
ery, and short accounting. Claimants filed an appeal before the Execution Petition is not maintainable.”
A three-member arbitration panel English Commercial Court against this The government's Execution Petition is
headed by Singapore-based lawyer 2018 FPA,” Reliance had said in its annual currently sub judice.
Christopher Lau by majority issued a final report last year. “Claimants have also filed an applica-
partial award (FPA) on October 12, 2016. “The English Commercial Court reject- tion for recall /modification, challenging
It upheld the government view that the ed GoI's challenges to the 2018 Final Partial the Orders of Delhi High Court wherein
profit from the fields should be calculated Award and upheld Claimants' challenge directors were directed to file affidavits
after deducting the prevailing tax of 33 that the Arbitration Tribunal had jurisdic- of assets. The matter is listed on July 13,
per cent and not the 50 per cent rate that tion over the limited issue and remitted 2021, for hearing,” it had said.
4 ECONOMY & PUBLIC AFFAIRS
>
NEW DELHI | MONDAY, 13 JUNE 2022

IN BRIEF
BSF jurisdiction: Final report on Goyal backs people-first Export curbs
new 50-km limit, logistics ready
can blow up
A blueprint that defines the extended jurisdiction of the Border
Security Force (BSF) and its new logistical requirements in various
frontier states has been prepared and is soon expected to be
submitted to the Union home ministry, officials said. The BSF
guards over 6,300 km of the Indian fronts with Pakistan on the
approach to world trade global food
Seeks a permanent solution to the issue of public stockholding for food security
crisis: D-G
West and Bangladesh on the Eastern flank of the country. The
Centre in October 2021 had issued a notification to amend a July,
2014 enabling provision for the BSF personnel and officers while SHREYA NANDI
they operate in the border areas. While in Punjab, West Bengal New Delhi, 12 June
and Assam the BSF jurisdiction, from the border towards the SHREYA NANDI

hinterland, was enhanced from 15 km to 50 km, in Gujarat the
same limit has been reduced from 80 km to 50 km, while in
Rajasthan the limit has been kept unchanged at 50 km. PTI
FinMin issues draft SoP for e-com
jewellery exports via courier route
The finance ministry has come out with a draft SoP for
facilitating e-commerce jewellery exports through courier
route, as it looks to provide a simplified regulatory framework
for manufacturers and traders who want to export jewellery.
The Central Board of Indirect Taxes and Customs (CBIC) has
invited feedback and suggestions from stakeholders by June 14
on the Standard Operating Procedure (SoP) for to facilitate
export of jewellery made of precious metals and imitation
jewellery through e-commerce in courier mode. PTI
Good relationship in interest
of both nations: China minister
China and India are neighbours and maintaining a good
relationship meets the interests of both countries, Chinese
Defence Minister General Wei Fenghe said on Sunday,
stressing that the two nations were working together for
peace along the Line of Actual Control (LAC). Addressing the
Shangri-La Dialogue in Singapore, Wei also called for peaceful
means for settling territorial disputes including those in the
South China Sea. PTI
Sonia admitted to Delhi hospital
over post-Covid health concerns
C
ommerce and Industry Minister New Delhi, 12 June
Piyush Goyal on Sunday said the 12th
ministerial conference (MC12) of the World Trade Organization (WTO) Director-General
World Trade Organization (WTO) must send Ngozi Okonjo-Iweala said on Sunday that member
a strong message that the rich care for the nations should not ‘underestimate’ the impact of
poor. He also said that all member nations
have come together to deliver solutions
export restrictions, as such measures, when imple-
mented by countries, can exacerbate the ongoing
towards the polycrisis the world is facing.
Speaking at the plenary session of the
global food crisis.
“You saw that in the 2008-2009 food crisis, just
MC12, Goyal lashed out at rich nations. those kinds of actions did lead to price spikes. In
He said that they need to ‘introspect’ for the food security declaration, our members are try-
letting down the poor and developing coun- ing to speak about how they would try to restrain
tries amid lack of consensus on the issue of themselves from taking these kinds of actions. And
Covid vaccine equity. this is a very important contribution that they can
“The pandemic reinforced the importance make to keep the price of food products from rising
of ‘One Earth One Health,’ calling for global even higher. So I think that’s a very important con-
solidarity and collective action. My country tribution,” Ngozi said at the opening press confer-
ramped up supplies of medical products to ence of the four-day
provide medical and health items globally. ministerial that
Unfortunately, the WTO could not respond started on Sunday
with alacrity. We need to bow our heads in
shame for our inability to respond to the pan-
in Geneva.
The world is cur-
demic in time,” the minister said.
Goyal further said that finding a perma-
rently staring at a
shortage of food-
THE ROAD WILL BE
nent solution to the issue of public stock- grains, skyrocketing
BUMPY AND ROCKY...
holding for food security should be the top- crude prices and WE’LL HAVE TO
most priority of the MC12. The world is soaring inflation,
witnessing high food prices, threatening the triggered by a con-
NAVIGATE THOSE
survival of millions and subjugating the poor flict between Russia LANDMINES AND SEE
and vulnerable nations to imperfect markets, and Ukraine that
he added. started this year in
HOW WE CAN
“Our collective moral obligation is to February. These SUCCESSFULLY LAND
ensure that no person, anywhere in the world, developments have
goes to bed hungry and WTO rules should Union Minister for Commerce and Industry Piyush Goyal with World Trade Organization hit poor nations the
ONE OR TWO
facilitate this. The Covid-19 pandemic has (WTO) Director-General Ngozi Okonjo-Iweala, in Geneva on Sunday PHOTO: PTI hardest, especially DELIVERABLES
reinforced once again the need and efficacy
of food stockholding for public good,” he said. manent solution to the issue of public stock- lectively to retain the cohesion of this coali-
countries that have
been dependent on NGOZI OKONJO-IWEALA
An important issue for India at the WTO
pertains to protection of its food grain
holding for food security. tion and strengthen it further by reaching
India co-sponsored a G-33 propos- out to other like-minded countries. We must
the two former
Soviet nations for
WTO DIRECTOR-GENERAL

Congress president Sonia Gandhi was admitted to the Sir Ganga
Ram Hospital in New Delhi on Sunday owing to post-Covid issues.
Congress general secretary and chief spokesperson Randeep
Surjewala said Gandhi is stable and will be in the hospital for a
few days. ”She is stable and will be kept at the hospital for
observation,” Surjewala wrote on Twitter. Earlier, sources said
Gandhi visited the facility for a routine medical check-up.
5 LeT terrorists killed in
three encounters in J&K
Lashkar-e-Taiba (LeT) terrorist Adil Parray, who was involved in
the recent killings of two police personnel, was killed in a
“chance” encounter with a “small team” of police in Srinagar
procurement programme at mini- al for a solution to the permanent secure their support for a fair, balanced and such supplies.
mum support prices (MSP). MSP stock holding for food security development-centric outcome, which must As many as 23
is the price at which the govern- at the WTO, on September 15, include a permanent solution to public stock- countries, includ-
ment buys crops from farmers if 2021. It had the co-sponsorship holding and the special safeguard mecha- ing India, have
the market price falls below it. The of 38 member nations. nism (SSM),” he said. imposed regulations on food exports to secure
WTO’s agreement on agriculture On the sidelines of the min- India is pitching for SSM that aims to pro- their food supplies. Last month, India had also
PTI rules limits the subsidy that can isterial meeting of G-33 nations, tect poor farmers from rise in import or sharp imposed curbs on export of wheat and sugar, stat-
be provided to the products that Goyal said that the group has decline in prices. ing that the government didn’t want any surplus
are procured. been calling for an accessible He also said that the agreement on agri- to go into the hands of hoarders who would then
This issue is being negotiated WTO MC12 and special safeguard mecha- culture is riddled with deep imbalances and charge a huge amount from poorer nations. The
at the WTO by the G-33 — a coali-
tion of least developing and devel-
JUNE 12-15 nism to address the destabilising favour developed nations.
effects of import surges and Goyal feels this created the rules against
decision on export curbs saw reaction from politi-
cians across the world urging India to reconsider
oping countries of which India is a key downward price movement largely due to many developing countries, which is evident
member. These countries, along with other huge subsidies by developed nations. from what's happening in different parts of
its decision, amid surging global food prices.
The D-G further said achieving even one or
nations, are submitting a proposal for a per- “Let me stress that all of us must work col- the world. two deliverables at this meeting can be called a
success. However, she warned that even having
consensus on one or two agreements will not

Low expectations from the meet

on Sunday, taking the number of ultras killed in Jammu and be an easy road.
Kashmir in the last 24 hours to five. Parray’s killing took the “The road will be bumpy and rocky. There may
number of terrorists killed in the last 24 hours to five and the be a few landmines on the way. We’ll have to navi-
number of ultras killed in the valley so far this year to 100. PTI gate those landmines and see how we can success-
Tariffs (GATT). Its three main China, Europe and many other The contentious issues at fully land one or two deliverables,” she said, adding
functions are to provide a forum countries under the pretext of MC12 include stockholding limits that now there is a need for a political will for min-
for negotiations to reduce or elim- security considerations provoking under public procurement pro- isters to go the last mile and agree on key issues —

Some state govt inate tariff and non-tariff barriers

to trade and other trade-distort-
ing measures like subsidies, mon-
itor the implementation of the
retaliatory actions. The dispute
resolution system at the WTO has
been rendered dysfunctional due
to the failure of the United States
grammes for food security, rules
for grain exports from official
reserves, patent waivers during a
pandemic, reducing subsidies in
increasing access to Covid-19 vaccines, reducing
fishing subsidies negotiations, agriculture issues
including public stockholding for food security, and
look at ways to introduce reform at the WTO.

portals to start EXIM MATTERS

trade agreements, and settle trade
disputes among the member
countries. On trade in goods, the
to appoint enough judges to hear
the appeals. Thanks to the unwill-
ingness of its members to take the
the fisheries sector, taxation of e-
commerce, special and differen-
tial treatment for developing WHAT CAN AGRICULTURE AND FOOD
SECURITY: The main

integration with T N C RAJAGOPALAN

WTO members have concluded
only the trade facilitation agree-
ment. On most other issues, con-
sensus has eluded the members,
negotiations forward
strengthen the dispute-settle-
ment mechanism, the WTO has
and

been struggling for its relevance.

countries, unilateral financial
sanctions, abrupt export restric-
tions, selective denial of the most-
favoured nation (MFN) treatment
WE EXPECT
FROM MEET
issues could include
public stockholding for
food security purposes,

ONDC soon The trade ministers of its member

SHARLEEN D’SOUZA
Mumbai, 12 June
Some state governments are
looking to integrate their por-
tals and also get micro, small
and medium enterprises
(MSMEs) in their states on to
the Open Network Digital
Commerce (ONDC), which is
set to roll out by August.
The Kerala government is
expected to begin on-board-
ing its consumer-facing por-
tals with the network this
month, according to a source
in the know.
Along with Kerala state
portals, local start-ups are
working on solutions to
bring industries on
to the ONDC plat-
form. This will
especially facili-
tate MSMEs in
the state.
and Coimbatore.
ONDC is also in talks
with various e-commerce
platforms and websites to
integrate with the network.
It has also received funds for
the first stage of the project
from 17 banks and financial
institutions amounting to
~157.5 crore.
The project is sponsored
by the Department for
Promotion of Industry and
Internal Trade (DPIIT) and
has been set up as a Section 8
company (non-profit organi-
sation).
ONDC intends to increase
the gross merchandise value
(GMV) of digital trans-
actions from ~4.5
trillion annually
to over ~7.5 tril-
lion in the next
five years. It
also intends to
countries are meeting this week
(June 12-15) in Geneva for the
World Trade Organization’s
(WTO’s) 12th Ministerial
Conference (MC12), amid low
expectations. The meet takes
place under the shadow of global
inflation, supply chain disrup-
tions, lingering pandemic, slow-
ing growth momentum, the
Russia-Ukraine war, food crisis,
backlash against globalisation
and general distrust and deterio-
rating relations among some
member countries.
The WTO was established in
1995 after eight years of negotia-
tions at the Uruguay Round of the
General Agreement on Trade and
US hopes to kick off trade talks under IPEF soon
Too early for India to say whether it will join the negotiations, say government sources
as they are at different stages of
development and face different
types of challenges, and so have
very divergent views. The trade
ministers have been meeting
every two years (except that after
2018, meetings could not be held
in 2020 and 2021 due to the
Covid-19 pandemic). In these
meetings, they have mainly
reiterated their well-known posi-
tions on various issues. Given the
impasse, many countries have
opted for plurilateral agreements
on some issues and
regional/bilateral trade agree-
ments with select countries.
Since 2016, the United States
has taken many unilateral actions
like raising tariffs on goods from
Against the backdrop of gen-
eral apathy of its members, the
WTO secretariat has, after due
deliberations in its various nego-
tiating groups, prepared three
draft texts for consideration by
the trade ministers at the MC12.
These texts include draft minis-
terial decisions on agricultural
trade reforms, on trade and food
security, and on exemptions from
export bans of food bought under
the United Nations World Food
Programme (WFP) for humani-
tarian purposes. These three texts
are complementary and have to
be considered together, as they
reflect the difficulties members
face in narrowing negotiating
gaps on key issues.
to some countries, carbon tax,
rules allowing some undeserving
countries to enjoy a developing
FISHERIES
AGREEMENT
trade-distorting
domestic subsidies,
market access, the special
country status and so on. safeguard mechanism,
The WTO is a member-driven A revised draft export restrictions and
organisation where nothing agreement exists
prohibition, and
moves forward unless everyone for negotiation. The
transparency
agrees. So, the major trading agreement, if
powers like the United States, passed, will
European Union and China prohibit all except
should go beyond merely talking low-income VACCINE PATENT WAIVERS:
of strengthening the multilateral countries from If the agreement is
trading system. They need to providing subsidies accepted by the 164 WTO
work together taking into account
to overfished stocks members, it would
the concerns of smaller trading allow so-called
and those that
countries and evolve workable
solutions acceptable to all the
contribute to illegal developing countries to
and unregulated produce Covid-19
WTO members.
fishing and vaccines without being
Email: tncrajagopalan@gmail.com overfishing sued by the developers
contrasting views. India strongly
resists putting such standards in any
PHOTO: TWITTER/ AMBASSADOR KATHERINE TAI

At Vyapar
2022, the state’s
business-to-busi-
ness (B2B) event for
MSMEs, there will be a
presentation on what the
open network will offer.
Other states that are in talks
to integrate their portals
include Delhi, Uttar
Pradesh, Tamil Nadu,
Telangana and Maharashtra,
the source said.
“We will be talking to
MSMEs at Vyapar 2022 and
will also work with around 20
local portals to help them
integrate their platforms with
ONDC,” T Koshy, chief execu-
tive officer (CEO) of ONDC
told Business Standard.
He added, “We will help
these companies sell their
products through the sellers’
network on ONDC.”
The network is currently
running its pilot in five cities,
which include New Delhi,
Bengaluru, Bhopal, Shillong
expand the
coverage of
retailers using
digital commerce
from 15,000 to more than
2 million in five years. It
wants to expand the share of
Indians using e-commerce
from 90 million to more than
250 million users.
The network aims to pro-
vide more access to busi-
nesses by increasing discov-
erability at a low cost.
Also, it will enhance
autonomy (due to multiple
choices for being digitally vis-
ible) as well as value-chain
services (like logistics) to sup-
port business growth.
For buyers, ONDC’s pro-
tocol will provide access to
more sellers, enhanced serv-
ice levels and faster deliveries
due to access to hyper-local
retailers. For technology plat-
forms, ONDC will provide
lower time-to-market and
time-to-scale.
ASIT RANJAN MISHRA
New Delhi, 12 June
The 14 members of the Indo-Pacific
Economic Framework (IPEF) held
their first informal meeting in Paris,
with the US hoping to start negotia-
tions on the trade pillar that would
include contentious issues such as
labour and environmental standards.
While United States Trade
Representative (USTR) Katherine Tai
chaired the meeting on Saturday,
India’s trade minister Piyush Goyal
could not attend as he was on his way
to Geneva for the World Trade
Organisation (WTO) 12th Ministerial
Conference (MC12). India was repre-
sented at the meeting by the
additional secretary in the Ministry of
Commerce and Industry Amit Yadav.
A senior government official, under
the condition of anonymity, said it was
too early for India to comment on
whether it would join the negotiations
on the trade pillar or not.
Last month, India joined 13 other
countries to establish the IPEF, led by
the US to counter China’s growing
clout in the Indo-Pacific region. The
other countries that joined the IPEF
are Australia, Brunei, Indonesia,
Japan, South Korea, Malaysia, New
Zealand, the Philippines, Singapore,
Thailand, Vietnam and Fiji.
After the meeting, USTR Tai in a
statement on Sunday said the US
looked forward to launching negotia-
tions under the trade pillar, which
would help fuel economic activity and
investment, promote sustainable and
inclusive economic growth, and bene-
fit workers and consumers across the
region. The joint statement released
last month talked about four pillars of
the IPEF: Trade; supply chains; clean
energy, decarbonisation and infras-
tructure; and tax and anti-corruption.
Tai hoped the US and the IPEF
partners that choose to join the trade
pillar “will seek to build high-stand-
ard, inclusive, free, and fair trade com-
mitments and develop new and cre-
ative approaches in trade and
technology policy that advance a
broad set of objectives related to:
labour; environment; the digital econ-
omy; agriculture; transparency and
of the free trade agreements it signs.
India didn’t join the Osaka track on
the digital economy at the G20
leaders’ summit in 2019, as it remains
reluctant on setting global rules on
e-commerce, holding that this may
deny policy space to developing
countries to expand their nascent e-
commerce space.
Speaking at the launch event in
Tokyo last month, Indian Prime
Minister Narendra Modi had said that
India would work with other members
to build an “inclusive and flexible”
IPEF, highlighting the supply chain
pillar. “The Indo-Pacific Economic
Framework is a declaration of our col-
lective will to make the region an
After the meeting, United States Trade Representative Katherine Tai said she engine of global economic growth. I
hoped the US and the IPEF partners that choose to join the trade pillar “will believe that there should be three
seek to build high-standard, inclusive, free, and fair trade commitments” main pillars of resilient supply chains:
Trust, transparency, and timeliness. I
good regulatory practices; competi- deal at the last minute. It also takes am confident that this framework will
tion policy; and trade facilitation.” care of India’s concern about China help strengthen these three pillars,
The IPEF gives India an opportu- being part of the RCEP, as the IPEF, and pave the way for development,
nity to be part of the supply chain in by design, excludes China. peace, and prosperity in the Indo-
the Asia-Pacific region after it exited However, on issues such as digital Pacific region,” Modi said, without
the Regional Comprehensive commerce, labour, and environmen- mentioning the other three pillars of
Economic Partnership (RCEP) trade tal standards, India and the US have the proposed trade deal.
>
NEW DELHI | MONDAY, 13 JUNE 2022 5
Advertisement

SKOCH STATE OF GOVERNANCE REPORT 2021

ASSESSMENT BASED ON PRIMARY RESEARCH & OUTCOMES STUDY

Gujarat 33.15

info@skoch.in skochgroup skochgroup skochtv @skochgroup @skochsameer

Andhra Pradesh

West Bengal
43.8

Gujarat thrice, Andhra Pradesh twice,

41.1

Madhya Pradesh 16.1

Maharashtra 22.05
Odisha 37.35

Madhya Pradesh, Rajasthan, Telangana and West Bengal

Telangana 20.95

have once topped the SKOCH State of Governance Report

Uttar Pradesh 17.25
131.6
91.25

Tamil Nadu 3.45

Rajasthan 4.4
128.3

Cumulative Score 2014-19 Cumulative Score 2020-21 Rank & Score 2021
Himachal Pradesh 7.55
58.55

Haryana 5.2
74.5

Karnataka 3.85
Jammu & Kashmir (UT) 4.6
Assam 10.6
54.9

Chhattisgarh 4.45

1.7 Arunachal Pradesh 1.05

48.71 14.85 Kerala 2.75
13.15

8.25 Uttarakhand 2.55

43.33 12.6 Punjab 2.65

2.65 Jharkhand 1.25

2.3 Chandigarh (UT) 1.1

Bihar 6.5
45.85

0.1 Daman and Diu .05

57.8

6.2 Delhi 2.15

Manipur 3.05
23.9

2.25 Nagaland 1.15

120.32

60.3

114.52

105.98

27.75

1.2 Mizoram .1
1.7 Tripura .15

2.2 Sikkim .05

4.25 Goa 1.1
90.74
86.59
92.6
80.81

11
55.1

16.66 17.1

22.65

59.27

11.34
36.7

6.44

6.06
16.15

9.27

37.82
6.1

3.4
44.4

6.91
46.42
6.16

3.05

9.65

15.83

17.24
1.05
RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK RANK
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 26 27 28 29 29
Animal Husbandry & Fisheries

Women & Child Development

Rankings

Social Justice & Security

General Administration
Disaster Management

Municipal Governance
Forest & Environment

 Up
Handlooms & Textiles
Food & Civil Supplies

Urban Development
District Governance

Rural Development
Finance & Revenue

Skill Development

Tourism & Culture

Geology & Mining

 Down
Ease of Business

Sports & Justice

Power & Energy
Police & Safety
Order-of-Merit

Infrastructure
eGovernance

Horticulture
Cooperation

n Equal
Agriculture

Sanitation
Education

Transport
Irrigation
State / UT

Housing

v New
Awards

Labour
Health

Water
S/N

O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A O A 2021 2020 2019 2018 2017 2016 2015

1 ANDAMAN & NICOBAR - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 24 - -
2 ANDHRA PRADESH 56 25 2 2 4 2 - - 1 - 11 4 - - 1 - 2 1 - - - - - - - - - - - - - - - - - - - - - - - - 1 1 5 1 23 9 - - 4 3 1 - - - - - - - 1 1 - - - - - - n 1 1 4 2 10 9 13
3 ARUNACHAL PRADESH 1 1 - - - - - - - - 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  26 20 - 18 16 - 20
4 ASSAM 12 6 - - - - - - - - 6 3 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 1 1 - 1 - - - - - - - - - 1 1 - - 1 1 - - 9 23 14 27 23 14 -
5 BIHAR 10 4 - - - - 1 - - - 4 - - - - - - - 1 1 - - - - 1 1 - - - - - - - - - - - - - - - - - - - - 1 - - - 1 1 - - 1 1 - - - - - - - - - - - - n 11 11 17 20 21 - 23
6 CHANDIGARH UT 2 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - 1 1 - - - - - - - - - - - - - -  25 26 25 25 19 12 16
7 CHHATTISGARH 9 2 1 1 - - 1 - - - 5 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - 1 - - - - - - - - - - - - - - - - - - - - - - - - -  14 21 18 6 14 13 22
8 DAMAN AND DIU 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - - -  29 30 - - - - 23
9 DELHI 3 2 - - - - - - - - - - - - - - - - - - - - - - 1 1 - - - - 1 - - - - - - - - - - - - - - - - - 1 1 - - - - - - - - - - - - - - - - - -  22 17 19 15 15 15 -
10 GOA 2 1 - - - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 1 - - - - - -  25 30 22 24 - - 19
11 GUJARAT 43 14 - - - - - - - - 6 1 6 1 2 - 4 1 1 - - - 1 - 2 1 4 4 - - 1 - - - - - - - - - 2 - 2 1 - - 3 2 4 1 - - - - 2 - 1 1 - - - - 1 - 1 1 - - 4 2 1 5 13 5 2
12 HARYANA 24 2 - - - - - - - - 10 - 1 1 - - - - 2 - - - - - - - - - - - 3 - - - - - - - - - - - 2 - 1 - 2 - 3 1 - - - - - - - - - - - - - - - - - -  12 14 9 14 4 10 8
13 HIMACHAL PRADESH 31 6 1 - 1 - - - - - 9 3 2 - 2 - 3 - 3 1 2 - - - - - - - - - 1 - - - - - - - - - - - - - - - 2 1 - - 1 - - - - - - - 1 - - - 3 1 - - - -  10 16 15 19 18 10 10
14 JAMMU & KASHMIR UT 12 4 1 1 1 - - - - - 1 - - - - - 4 1 - - 1 1 - - - - - - - - 1 - 1 1 - - - - - - - - 1 - - - - - 1 - - - - - - - - - - - - - - - - - - -  13 25 23 - - - -
15 JHARKHAND 5 1 - - - - - - - - 2 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - 1 - - - - - 1 - - - - - - - - - - - - - - - - -  23 19 20 16 18 6 16
16 KARNATAKA 17 3 - - 1 - - - - - 5 - - - - - - - - - - - - - - - - - 1 1 3 - - - - - - - - - 2 - 2 1 - - - - 2 1 - - - - - - - - - - 1 - - - - - - -  16 10 8 11 11 11 7
17 KERALA 15 2 - - - - - - - - 1 - - - - - 2 - - - - - - - 2 - - - - - 4 1 - - - - - - - - 1 - 3 1 - - 1 - - - - - - - - - - - - - - - 1 - - - - -  19 15 13 9 17 7 5
18 LADAKH UT - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30 - - - - -
19 MADHYA PRADESH 22 7 - - - - 1 - - - 4 3 3 - 1 - - - 1 - - - 1 - - - - - - - 1 1 - - - - - - - - - - 3 - 1 - 1 - - - - - - - 1 - 1 - 2 2 1 1 - - - - - - 8 5 7 10 7 4 1
20 MAHARASHTRA 41 12 1 - - - - - - - 6 - - - - - - - - - - - - - - - - - 1 1 - - - - - - - - - - 1 1 9 3 1 - 7 1 3 2 2 2 1 - - - - - - - 4 1 3 1 1 - 1 - 5 7 2 8 3 3 4
21 MANIPUR 1 1 - - - - - - - - 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  18 29 - - - - -
22 MEGHALAYA - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 29 - 21 22 16 17
23 MIZORAM 2 - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - - - v 28 - 23 22 - 14 -
24 NAGALAND 3 1 - - - - - - - - 2 1 - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  24 28 24 - - - -
25 ODISHA 67 12 5 1 1 - - - 2 - 7 - 4 - 1 1 1 - 2 - - - 1 1 1 - 2 1 3 - - - - - - - 1 - 2 1 1 - 4 1 2 - - - 3 - - - 1 1 5 1 1 - 1 - - - - - 11 1 5 3  3 8 10 13 12 14 11
26 PUDUCHERRY - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 22 - - 25 - -
27 PUNJAB 13 2 - - - - - - - - 4 - - - - - - - 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 1 - - - - 1 1 - - 1 - - - 4 - - -  20 12 16 7 5 8 19
28 RAJASTHAN 8 2 - - - - - - - - 1 - - - - - 1 - - - - - - - - - - - - - - - - - 1 1 - - - - - - - - - - - - - - 3 1 - - - - - - - - 1 - - - 1 - - -  15 18 12 4 1 14 6
29 SIKKIM 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - - -  29 27 24 23 20 17 21
30 TAMIL NADU 9 3 1 - - - - - - - 3 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3 1 - - 1 1 - - - - - - - - - - - - - - - - - - - -  17 4 5 17 6 2 14
31 TELANGANA 39 13 - - - - - - - - 7 2 - - - - - - - - - - - - - - - - 2 1 - - - - - - - - 1 1 1 - 1 1 - - 20 6 3 1 - - - - - - - - - - 1 1 1 - 1 - 1 -  6 9 6 2 2 1 18
32 TRIPURA 3 - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - - - - - - 2 - - - - - - - - - - - - - - - - - - -  27 24 - 26 26 - 12
33 UTTAR PRADESH 25 8 - - - - 1 - - - 6 1 1 - - - 1 1 1 1 - - - - - - 1 - - - 1 - - - - - - - - - - - 6 2 1 - - - 3 1 - - - - - - - - - - 1 1 1 1 - - - - 7 6 11 12 8 9 9
34 UTTARAKHAND 11 2 - - - - - - - - 4 - - - 1 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - 2 1 2 - - - - - - - - - - - - - - - - - - -  21 13 21 - - 14 15
35 WEST BENGAL 42 20 5 3 3 1 - - - - 3 1 4 4 2 2 3 - 1 - 1 - 1 1 1 1 - - - - - - - - - - - - - - - - 5 2 - - 1 - 2 1 1 - 4 2 - - - - 1 1 1 1 2 - - - - - 2 3 3 1 9 14 3
TOTAL 530 157 17 8 11 3 4 0 3 0 110 24 23 6 10 4 22 4 15 3 4 1 5 2 9 4 7 5 7 3 17 2 1 1 1 1 1 0 3 2 9 1 46 14 13 1 65 22 30 9 15 8 8 4 9 2 4 2 6 3 14 8 12 3 20 3 7 3

STAR STATES PERFORMERS CATCHINGUP

1 ANDHRA PRADESH 6 TELANGANA 11 BIHAR
2 WEST BENGAL 7 UTTAR PRADESH 12 HARYANA
3 ODISHA 8 MADHYA PRADESH 13 JAMMU & KASHMIR
CENTRE AND STATE GOVERNMENTS MAY APPLY
4 GUJARAT 9 ASSAM 14 CHHATTISGARH AGRICULTURE GEOLOGY & MINING POWER & ENERGY
ANIMAL HUSBANDRY & FISHERIES GENERAL ADMINISTRATION RURAL DEVELOPMENT
5 MAHARASHTRA 10 HIMACHAL PRADESH 15 RAJASTHAN COOPERATION HANDLOOMS & TEXTILES SANITATION
DISASTER MANAGEMENT HEALTH SKILL DEVELOPMENT
1. Well performing projects are submitted by out by those doing similar projects. 10. Merit listed projects garner expert votes
DISTRICT GOVERNANCE HORTICULTURE SOCIAL JUSTICE & SECURITY
METHODOLOGY

States for evaluation. 6. Based on an average score, a cut off is through exhibition and live polls to get an
2. First round of vetting and shortlisting is done decided and a second shortlist derived. eventual score. EASE-OF-DOING BUSINESS HOUSING SPORTS & YOUTH
by our research analysts. 7. Field research is done to evaluate impact 11. Each project therefore gets a comprehensive EDUCATION INFRASTRUCTURE TOURISM & CULTURE
3. Shortlisted projects go through primary through benefits received by intended score. Total of these decide state and sectoral
evaluation by a jury of three domain experts. targets. performances.
e-GOVERNANCE IRRIGATION TRANSPORT
4. Overall impact is measured for new projects 8. These projects are put to a popular vote by 12. Top performers are STARS, states with FINANCE & REVENUE LABOUR URBAN DEVELOPMENT
whereas ongoing projects are evaluated on registered users only on our website. commendable work are PERFORMERS, FOOD & CIVIL SUPPLIES MUNICIPAL GOVERNANCE WATER
incremental improvement. 9. Based on cut-off, the projects qualify for states that are making good efforts are
5. At the same time a peer evaluation is carried semi-final Order of Merit. CATCHING UP. Rest are others. FOREST & ENVIRONMENT POLICE & SAFETY WOMEN & CHILD DEVELOPMENT
6 POLITICS & PUBLIC AFFAIRS
>
NEW DELHI | MONDAY, 13 JUNE 2022 1

PAN-INDIAN PROTESTS OVER PROPHET ROW CONTINUE FOR A SECOND DAY: PROTESTERS ATTACK RAILWAY STATION, DAMAGE TRAIN IN BENGAL

Hundreds held, house of accused razed in UP

Jharkhand police file 25 FIRs against 'thousands' after violent protests
AGENCIES tion in West Bengal’s Nadia district on Ranchi after nearly 33 hours even as
12 June Sunday evening. around 2,500 personnel of Rapid Action
Among those arrested, 304 were held Force, anti-terrorism squad, special task

O
ver 400 people have been arrested
so far in a clampdown on those
involved in the violent protests on
Friday in several states, with authorities
in Uttar Pradesh razing "illegal" houses of
the accused for the second day. The
protests had taken place against the con-
troversial remarks on Prophet
Mohammad by two now-sacked BJP func-
tionaries. There were a few sporadic inci-
dents of violence and protests, with a
group of people attacking and damaging
a local train at Bethuadahari railway sta-
in eight districts in Uttar Pradesh and 100
in Howrah and Murshidabad districts in
West Bengal, while the Ranchi police reg-
istered 25 FIRs against “thousands” of
people for the clashes that left two dead
and scores of others injured in the
Jharkhand capital, and stepped up secu-
rity in other parts of the state also.
In Prayagraj, the civic body on Sunday
demolished the house of the alleged mas-
termind of Friday’s violence amid heavy
police deployment.
Internet services were restored in
force and district police remained
deployed at strategic locations, including
“38 identified vulnerable pockets”.
Jharkhand Chief Minister Hemant
Soren ordered a high-level probe into the
deadly violence that rocked Ranchi, a sen-
ior official said.
In West Bengal’s Nadia district, a large
number of protestors put up a road block-
ade and when they were chased by
the police, some of them entered the sta-
tion and threw stones at the train, an offi-
cer said.

In Prayagraj, the civic body on Sunday demolished ‘illegally constructed’ residence of Javed Ahmed, a local leader who was
allegedly the key conspirator of violent protests against now-suspended BJP leaders PHOTO: PTI

Iran starts transfer of Russia goods

to India by using new trade corridor
BLOOMBERG
12 June

Iran’s state-run shipping com-

PLENTY OF NEW OPPORTUNITIES FOR INDIAN
pany said it started its first BUSINESS IN RUSSIAN MARKET, SAYS ENVOY
transfer of Russian goods to
India, using a new trade cor-
ridor that transits the Islamic
PRESS TRUST OF INDIA
New Delhi, 12 June
‘S-400 delivery proceeding well’
Republic, an Iranian port offi- Russia’s delivery of S-400 Triumf air defence missile systems
Corporate Identity Number (CIN): L24239MH1924PLC001151 cial said. Russia deeply cherishes its to India is “proceeding well” in accordance with the
Dr. Annie Besant Road, Mumbai 400030 • Telephone: 022-24959595
Fax: 022-24959494 • Email: askus@gsk.com • Website: www.gsk-india.com
The Russian cargo consists “equal and respectful” schedule, Russian ambassador Denis Alipov has said.
of two 40-foot (12.192 meters) relations with India, and The comments of the envoy came amid concerns in New
NOTICE TO MEMBERS containers of wood laminate the multidimensional Delhi over possible delays in the supply of major military
WITH RESPECT TO sheets, weighing 41 tons, that cooperation between the hardware to India by Russia in view of its military invasion of
97 ANNUAL GENERAL MEETING
th
departed St. Petersburg two strategic partners is Ukraine. “The best-of-a-kind S-400 systems delivery is
NOTICE is hereby given that the 97th Annual General Meeting (“AGM”) for the Caspian Sea port among the world’s “most proceeding well according to the schedule,” Alipov said. PTI
of the Company will be held on Tuesday, July 26, 2022 at 01.30 p.m.
through Video Conferencing (‘’VC”) or Other Audio-Visual Means
city of Astrakhan, the state- elaborate” ones, Russian
(“OAVM”), to transact the business set out in the Notice of the AGM run Islamic Republic Ambassador Denis Alipov opportunities for the Indian number of western business
which will be circulated for convening the AGM. The AGM will be held News Agency said on has said. The envoy has also business in the Russian entities are leaving Russia
without the physical presence of the Members at a common venue. This Saturday, citing Dariush said the positions of the two market, especially against over its attack on Ukraine as
is in view of the continuing COVID-19 pandemic and in compliance with Jamali, director of a joint- countries on “core issues the backdrop of the well as the subsequent
the General Circular No. 20/2020 dated May 5, 2020 read with General owned Irania Russian termi- remain similar or withdrawal of many economic sanctions
Circular No. 14/2020, 17/2020 and 02/2021, 21/2021, 02/2022 dated
April 8, 2020, April 13, 2020, January 13, 2021 December 14, 2021 and
nal in Astrakhan. coinciding” and that there western companies from imposed against it by the
May 5, 2022 respectively (collectively referred to as “MCA Circulars”), The report didn’t say when are plenty of new the country. A significant United States and Europe.
Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/19 dated May 12, 2020 the cargo, which it described
and SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021 & as an initial “pilot” transfer to
May 13, 2022 (collectively referred to as said SEBI Circulars”) issued by test the corridor, left or give Abbas on the Persian Gulf. Shipping Lines Group and its called North-South Transit
the Securities and Exchange Board of India and relevant provisions of any more details about the From there it will be loaded regional offices in Russia and Corridor that uses Iran to link
the Companies Act, 2013 and Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015. goods in the shipment. onto a ship and sent to the India and is expected to take Russia to Asian export mar-
The instructions for joining the AGM are provided in the Notice of the
From Astrakhan, the cargo Indian port of Nhava Sheva, 25 days. kets. The plan involves even-
AGM and attendance of the Members attending the AGM through VC / will cross the length of the IRNA said. Since Russia was sanc- tually building a railroad line
OAVM will be counted for the purpose of reckoning the quorum under Caspian to the northern Jamali said the transfer tioned over its war on that can transfer goods arriv-
Section 103 of the Companies Act, 2013. Iranian port of Anzali and will was being coordinated and Ukraine, Iranian officials have ing at Iranian Caspian Sea
The Notice of the AGM along with the Annual Report for the Financial be transferred by road to the managed by the state-run been keen to revive a stalled ports to the southeastern port
Year 2021-22 (“Annual Report”) is being sent only by electronic mode southern port of Bandar Islamic Republic of Iran project to develop the so- of Chabahar.
to those Members whose email addresses are registered with the
Company / Depository Participants in accordance with the aforesaid
MCA circulars and said SEBI Circular.
with tech giants, such as Amazon, Google, ture, T Rabi Sankar, deputy governor,
The Notice of the AGM and Annual Report will also be available on
> FROM PAGE 1 and Apple, opting out of the e-auction RBI, said: “The pricing structure is some-
the website of the Company at www.gsk-india.com and websites process. “Amazon and Google did not sub- thing that banks and system entities have
of BSE Limited and National Stock Exchange of India Limited i.e. at
www.bseindia.com and www.nseindia.com respectively. IPL media rights... mit technical bids (on Friday), though they
had picked up the bid documents (last
to work out. At this point, we will intro-
duce the arrangement and see how the
The Company is pleased to provide the facility of e-voting to its month),” a BCCI official had said. pricing goes.”
Members, to enable them to cast their votes on the resolutions The bidding for TV and digital rights has “Companies that submitted technical Brokerages have raised concerns that
proposed to be passed at the AGM by electronic means, using remote not concluded yet, according to the bids included Disney-Star, Sony, Zee, in case there is MDR for UPI-credit card
e-voting system (e-voting from e-place other than venue of the AGM) as
well as e-voting during the proceeding of the AGM (collectively referred
sources, implying that the combined value Viacom18, Times Internet, Supersport transactions (vs no MDR on debit UPI), the
to as e-voting”). The Company has engaged the services of NSDL, may breach the ~50,000-crore-mark on from South Africa, and FunAsia, which is uptake of this product outside of the exist-
for providing the e-voting facility to the Members. The instructions for Monday. Bidding for the special rights a media company based in North ing merchant base that uses PoS devices
e-voting are provided in the Notice of the AGM. package and the rest-of-world rights will America,” the official said. (and pays MDR on card transactions) shall
Members who wish to register their email address / bank account also happen on Monday. The final winners remain muted.
mandate may follow the below instructions – are expected to be announced by the end
of the day, they said.
Credit card route... While there is no MDR on UPI pay-
ments, MDR on debit card transactions is
Dematerialized Register / update the details in your demat account,
Holding as per process advised by your Depository While the e-auction platform does not “Technically, digital payments in the unor- capped at 0.9 per cent. There is, however,
Participant (DP) allow participants to see who is placing ganised sector generate more volume; the no cap on MDR for credit cards. Usually,
Physical Register / update the details in prescribed form bids, according to people in the know, organised sector generates more value and credit cards (non-RuPay) attract MDR up
Holding ISR-1 with Registrar and Transfer Agents of the Disney-Star, Sony Pictures Networks India, it is the one that pays MDR. Perhaps, a sub- to 2 per cent of the transaction amount
Company, KFin Technologies Limited at einward. SUNIL HITECH ENGINEERS LIMITED (IN LIQUIDATION) and Viacom18 have set their sights on the sidy could be provided to smaller mer- versus 0.5 per cent in the case of debit
ris@kfintech.com Liquidator’s Address : 416, Crystal Paradise Co-op. Soc. Ltd. Dattaji Salvi Marg, Above Pizza Express, Off TV rights for the Indian subcontinent for chants,” the payment industry source said. cards. RuPay debit cards attract no MDR,
Members may download prescribed forms from the Veera Desai Road, Andheri West, Mumbai-400 053; Contact : +91 9137058928; Email : auction.shel@gmail.com all games, which is the package A. For dig- In the monetary policy announcement whereas RuPay credit cards typically have
Company’s website at https://india-pharma.gsk. E-AUCTION – SALE OF ASSETS UNDER IBC, 2016
Date and Time of Auction : 14th July 2022 (Thursday) at 12:00 P. M. to 3:00 P. M.
ital rights for the Indian subcontinent, last week, the RBI said it would allow the lower MDRs than Visa/Mastercard cards.
com/en-in/investors/shareholder-information/
download-forms/ (with unlimited extension of 5 minutes each) which is package B, Zee was competing linking of RuPay credit cards to UPI, there- Also, usually, the issuing bank takes 60
Sale of Assets owned by SUNIL HITECH ENGINEERS LIMITED (In Liquidation) with Disney+ Hotstar and Jio, part of the by introducing a credit payments facility per cent of MDR, and the balance is shared
The Board of Directors has recommended for consideration of the forming part of Liquidation Estate under sec. 35 (f) of IBC 2016 read with Regulation Reliance-backed Viacom18 combine. on the interface, currently being used as a between the network provider (such as
Members a dividend of Rs. 90 per share (including special dividend 33 of Liquidation Process Regulations. E-Auction will be conducted on “AS IS
WHERE IS AND AS IS WHAT IS BASIS”.
The TV rights per match are estimated “pay now” facility, wherein money is deb- Visa, Mastercard) and the acquirer.
of Rs 60 per share) on face value of Rs 10 each for the year ended
March 31, 2022. The Company has fixed Friday, July 8, 2022 as The Sale will be done by undersigned through e-auction service provider to have crossed ~55 crore per match at the ited from the customer’s bank account “This move (credit card-UPI linkage)
the “Record date” for determining the entitlement of members E-PROCUREMENT TECHNOLOGIES LIMITED-AUCTION TIGER via website end of Day 1 of the e-auction, higher than directly for any transaction. will give a huge boost to the economy
to final Dividend. The Dividend, if approved, will be payable on or https://ncltauction.auctiontiger.net. (Amount in INR) ~49 crore per match set by the BCCI as base Though credit card-UPI linkage is a because today UPI allows the customer to
after Wednesday, July 27, 2022 to those Members whose names are Sr. Incremental price. Digital rights cost neared ~50 crore novel move that is expected to expand the use his/her own money. Now, the cus-
Particulars Reserve Price EMD
registered as such in the Register of Members of the Company as No. Bid Amount per match at the end of bidding on Sunday, universe of digital payments, industry tomer can use the lender's money for pay-
on Record date i.e. Friday, July 8, 2022 provided by the depository, Option A : Sale of Corporate Debtor as a Going Concern
subject to deduction of tax at source, where applicable.
the sources said. This is over 50 per cent players are currently engaged in seeking ment. Currently, credit cards are accepted
Date and Time of Auc tion : 14 th July 2022 at 12:00 P. M. to 1:00 P. M.
higher than the ~33 crore per match base clarification from the RBI and the National by 2-4 million merchants. Now, the 50-
The Company provides the facility to Members for remittance of Sale of Corporate Debtor as a whole on a going concern basis
dividend directly in electronic mode trough National Automated Clearing price set by the cricketing body before the Payments Corporation of India (NPCI) on million UPI merchants can be part of the
including Land and Building, Plant & Machinery, Financial Assets,
House (NACH). In view of the outbreak of tile COVID-19 pandemic 1 40,00,00,000 4,00,00,000 50,00,000 e-auction. the pricing structure for a smooth rollout credit economy. So, this will drive con-
Legal matters and Ongoing /upcoming Arbitration Matters
and resultant difficulties involved in dispatching of physical dividend (Under regulation 32(e) of Liquidation Regulations, 2016) Following Day 1 of bidding, the com- of this facility. sumption in a very big way,” said the pay-
warrants, Members holding shares in physical form and desirous of bined TV and digital rights value on a per- When asked about the pricing struc- ment industry source.
Option B : Sale of Assets in parcels
availing this facility of electronic remittance are requested to provide match basis has surpassed the ~100-crore
Date and Time of Auc tion : 14 th July 2022 at 02:00 P. M. to 3:00 P. M.
their latest bank account details (Core Banking Solutions Enabled
1 Assignment of Ongoing /upcoming Arbitration Matters 1,00,00,000 10,00,000 1,00,000 mark, up from ~54.5 crore during the 2018-
Account Number, 9 digit MICR and 11 digit lFSC Code), along with their
Folio Number, to the Company or the Registrar & Transfer Agent of the Plant & Machinery (Block wise) 2022 media rights cycle, experts said. BS SUDOKU #3688
Company viz. KFin Technologies Limited. Members holding shares in 2 Jhabua – Hydra Crane ESCORT 14TON HR38M0880 1,70,000 17,000 10,000 “We believe that the digital segment
dematerialized form are requested to provide the said details to their 3 Firozabad – Honda City UP 83 AQ 3771 will be at par with TV, at best, on a per- Easy:
1,65,000 16,500 10,000
respective Depository Participants.
4 Movable Assets at Butibori 5,10,000 51,000 30,000
match basis. We do not see it moving ««
Pursuant to Finance Act 2020, dividend income will be taxable in the beyond TV though. This is because TV still Solution on Monday
hands of Members with effect from April 1, 2020 and the Company is 5 Inventory at Chandrapur 44,000 4,000 5,000
has a lot of large fast-moving consumer
required to deduct tax at source from dividend paid to the Members at Last date for Inspection : 08th July 2022 (Friday)
the prescribed rates. For the prescribed rates for various categories, Last date of EMD submission : 12th July 2022 (Tuesday) up to 5:00 p. m.
goods advertisers. The digital segment, SOLUTION TO # 3687
the Members are requested to refer to the Finance Act, 2020 and Date and time of E-Auction : 14th July 2022 (Thursday) at 1:00 P.M. to 4:00 P.M. despite strong growth, has concerns
amendments thereof. Members are also requested to refer to the Note : The detailed Terms & Conditions, E-Auction Bid Document, Declaration & around monetisation, as India is a price-
other details of online auction sale are available on https://ncltauction.auctiontiger.net
Notice of the AGM for more details on process to be followed from their
& website of Sunil Hitech Engineers Limited https://sunilhitech.com
sensitive market with tepid average rev-
side, if any, in this regard. In case of any clarifications, please contact the undersigned at auction.shel@gmail.com enue per user,” Karan Taurani, senior vice-
In case the Company is unable to pay the dividend to any shareholder Sd/- president, research, Elara Capital, said.
by the electronic mode, due to non-availability of their latest bank Avil Menezes Taurani said that he expected the other
account details, the Company shall dispatch the dividend warrant / As Liquidator of Su nil Hitec h Engineers Limited
two bundles (special package and rest-of-
cheque to such shareholder in due course. vide order dated 25th June 2019
For GlaxoSmithKline Pharmaceuticals Limited IP Registration No. IBBI/IPA-001/IP-P00017/2016-17/10041 world) to command a premium of almost
Ajay Nadkarni Address : 416, Crystal Paradise Co-op. Soc. Ltd., Dattaji Salvi Marg, 40-45 per cent over the base price, which
Place : Mumbai Vice President – Administration, Date : 13th June 2022 Above Pizza Express, Off Veera Desai Road, Andheri (West), Mumbai-400 053. means total value of the media rights shall
Dated : 10th June, 2022 Real Estate & Company Secretary Place : Mumbai Email : auction.shel@gmail.com breach the ~50,000-crore mark at the end
of the auction.
HOW TO PLAY
The build-up to the e-auction, inciden- Fill in the grid so that every row,
tally, was eventful, with at least 10 compa- every column and every 3x3 box
nies picking up bid documents last month. contains the digits 1 to 9
However, just seven remained in the race,
>
NEW DELHI | MONDAY, 13 JUNE 2022 ECONOMY & PUBLIC AFFAIRS 7

India’s per capita power Millions of Covid vaccines

output rebounds sharply set to expire in September
SOHINI DAS
SACHIN P MAMPATTA & SHINE JACOB Mumbai, 12 June DELHI’S POSITIVITY
Mumbai/Chennai, 12 June
Owing to low shelf life and fall RATE RISES TO 4.3%

I
ndia’s per capita electricity generation
has gone further past its 2019
level than seen in many other lower
middle-income countries.
The World Bank defines a lower mid-
dle-income economy as one where per
capita gross national income (GNI), or the
amount earned per person in a year, was
between $1,046 and $4,095 in 2020. India
falls in this category, along with nearby
countries, including Sri Lanka, Pakistan,
and Mongolia — which all are facing
power shortages like India amid higher
energy prices. India’s per capita electricity
generation is up 3.8 per cent in 2021 over
the 2019 level. It is up only 0.2 per cent on
average for lower-middle-income coun-
tries. India’s per capita electricity genera-
tion had dropped from 1,173 kilowatt-hours
(kWh) in 2019 to 1,131 kWh in 2020. Then
it rose to 1,218 kWh in 2021.
The change in per capita electricity
generation vastly differed among other
lower middle-income nations —while
some reported a decline of over 10 per cent
in 2021 as against 2019, several others wit-
nessed double-digit growth.
The analysis looked at the median
number for 12 nations in the group and
compared that with India. The 12 countries
for which data was available are
Bangladesh, Bolivia, El Salvador, Kenya,
Mongolia, Pakistan, the Philippines,
Senegal, Tajikistan, Tunisia, Ukraine, and
Vietnam. It used numbers from the tracker
Our World in Data, which collated statistics
from the BP Statistical Review of World
Energy, Ember Global Electricity Review
(2022), and Ember European Electricity
Review (2022). Both rural and urban areas
are facing power shortages in Pakistan,
leading to a scheduled power cut of at least
3.5 hours per day. Mongolia has imposed
usage restrictions for its industrial sector
since March, while Sri Lanka is witnessing
extreme power shortages.
“We need to find energy solutions from
time to time, depending on our require-
ments. We are going at a faster pace com-
pared to a lot of other countries. We are a
large country and in capacity terms, we
will be the third or fourth in the world.
These numbers will be dependent on how
fast the economy and the manufacturing
sector grows,” said Mohit Kumar, a
research analyst at IDFC Securities.
Experts indicate that the sector has grown
only 4-5 per cent in India against an expec-
tation of 6-7 per cent.
Industry analysts are blaming lack of
additional coal-based capacity as a major
reason for the current power shortage. “If
in demand, millions of Covid Delhi on Sunday reported
vaccines in India are set to 735 new Covid-19 cases and
AHEAD OF SEVERAL expire over the next three-four three deaths due to the
LOW-MIDDLE-INCOME months. disease while the positivity
Vaccine industry sources rate rose to 4.35 per cent,
COUNTRIES indicated that they seek shelf according to data shared by
life extension from time to the city health department.
time as more stability data is The city had on Saturday
generated. reported 795 Covid-19 cases
Players like Bharat Biotech with a positivity rate of 4.11
have been working proac-
tively with private hospitals
TAKING per cent and zero death.
Maharashtra on Sunday
INDIA’S ELECTRICITY GENERATION INDIA HAS OUTDONE PEERS SINCE 2011
HAS BOUNCED BACK FASTER India’s per capita electricity
for the past few months to liq- STOCK reported 2,946 fresh
uidate stocks. coronavirus cases, including
Growth in per capita electricity generation as % of overall A company source said, Country Stock (mn) | SII has 200 million 1,803 in Mumbai, and two
generation from 2019 (In %) low-middle-income countries “Bharat Biotech has been doses that will fatalities, while the number
115 working proactively with pri- High-income expire in September of active cases rose to over
600
108.58 110 vate hospitals to liquidate countries 16,000, the health depa-
India stocks and reduce the quan- | Private hospitals rtment said. The case fatality
3.8 Upper-middle-
105 tum of expired vaccines. We going slow on rate in the state stands at
613
are replacing expired doses income countries fresh orders 1.86 per cent. On Saturday,
100 and also helping liquidate the state had recorded 2,922
Low-middle - 95.45 Low-middle- | Companies working
income peers 95 their stocks.” 657 with hospitals to cases and one fatality. India
0.2 The company did not income countries logged 8,582 new cases,
(median) 90 liquidate stocks
2000 2020 divulge the volume that is while the active cases rose
Low-income | Bharat Biotech
nearing expiry. 109 to 44,513, according to the
Note: Analysis considered 12 lower-middle-income Note: Analysis considered all lower-middle-income
Covaxin has a shelf life of
countries ministry data updated at
countries (in addition to India) for which per capita countries with data as of 2020. replacing expired
electricity consumption data was available for 2019 Source: Our World in Data based on BP Statistical Review 12 months, while Covishield Source: Airfinity Data as of May 31, 2022 stocks at hospitals 8 am on Sunday. PTI
and 2021. The countries include Bangladesh, Bolivia, of World Energy, Ember Global Electricity Review (2022)
El Salvador, Kenya, Mongolia, Pakistan, Philippines, &Ember European Electricity Review (2022)
— that accounted for nearly
Senegal, Tajikistan, Tunisia, Ukraine and Vietnam Business Standard calculations 80 per cent of India’s vaccina-
tions — has a shelf life of nine tion at its site from December claimed. retains its potency and stabil-
months. as they had already created a Around 241 million Covid ity at a given storage tempera-
POWER DEMAND JUMPED BY 45K Mw IN A YR: MINISTER Pune-based Serum stockpile of 250 million fin- vaccines may have been ture, and therefore, its effec-
India's power demand this year has jumped by a record Institute of India (SII) is sitting ished doses. It also had wasted due to expiry of shelf tiveness.
40,000-45,000 Mw per day as an intense heat wave sweeps on 200 million doses of around 200-250 million doses life in the G7 countries last The shelf life is used to
through northern parts of the country, the economy expands, Covishield that were man- in the bulk form. year, according to estimates establish the expiry date of
and electricity reaches millions of unelectrified homes, Power ufactured in December 2021 From there on, the com- by global health analytics firm each batch of the vaccine.
Minister RK Singh has said. and are set to expire in pany has liquidated some of Airfinity. “Expiry dates do not affect
A massive addition in the generation capacity, integrating September 2022. The com- its stocks through exports, In September last year, the safety of the vaccine. They
the country into one transmission grid and strengthening of the pany is likely to destroy these supply commitments interna- Airfinity had noted in its are related to the potency or
distribution system during eight years of the Modi government is vaccines if nothing works out. tionally and to the private and report that G7 could waste 241 amount of protection the vac-
ensuring the 23 to 23.5 hours of electricity supply, he said in an Serum refused to comment on public sector in India. million doses by the end of cine gives,” WHO said.
interview with PTI. India's electricity demand on June 9 the matter. Besides this inventory with 2021 without immediate redis- Private hospitals in
was recorded at an all-time high of 2,10,792 megawatts, However, speaking to the the company, even states have tribution. Mumbai said they were flush
and 4,712 million units of electricity were consumed. PTI media at the World Economic significant doses lying with Low shelf life of Covid vac- with stocks as vaccine makers
Forum (WEF) in Davos last them that are nearing expiry. cines is a challenge for man- gave free doses to compensate
month, Adar Poonawalla, Maharashtra is a case in ufacturers if there is low for the price differential after
the generation is not enough, there will be consumption distribution: Signs of con- chief executive officer (CEO) point. It has 3.4 million demand and vaccines cannot they slashed prices recently.
a shortage. Shortages happen from time vergence? — by Adolfo Maza and José of SII indicated that the com- Covishield doses lying with be re-distributed fast. However, the Centre had
to time because we are not adding firm Villaverde of the University of Cantabria pany would lose a minimum it that is set to expire in However, it is for the drug written to states in March ask-
capacity, coal-based capacity. We are look- (Spain), but this was expected to take time 200 million doses of vaccines. August. And, around 9,895 regulator to take a call on the ing them to take up vaccine
ing at renewables which are viable or suf- to play out fully. These may have to be doses of Covaxin are set to matter. Despite several stocks lying with private hos-
ficient available all the time,” Kumar said. An analysis of the data shows lower destroyed as they are nearing expire in June. attempts, the Drugs Controller pitals that are nearing expiry.
India consistently reported higher per middle-income countries had per capita their expiry by August- State immunisation officer General of India (DCGI) could Desai said Maharashtra is
capita power generation than other lower power generation of 1,041 kWh in 2020. September this year. Sachin Desai said the state will not be reached. open to taking stocks from the
middle-income countries for a decade. It This was 1,131 kWH for India. For high- SII has not approached the consume the stocks as the rate The World Health private sector and use them
exceeded their per capita consumption in income countries, it was 8,728 kWH. A kilo- Union ministry of health to of vaccination has picked up. Organization (WHO) had for public immunisation if
2011. It was 8.58 per cent higher as of 2020. watt-hour is the amount of power required take these doses for free and “In the last 10 days, we are noted last May that any vac- these doses are nearing
A degree of convergence in the per cap- to have a 100-watt bulb burning for 10 use them in the national averaging around 1 lakh daily cine past expiry date should expiry. The government sector
ita consumption of electricity has been hours. For every such bulb that an Indian immunisation programme. doses, up from 60,000 a day. not be administered. is witnessing a faster turn-
noted by earlier studies, including a 2008 can turn on, the resident of a high-income The Pune-based vaccine Therefore, we will exhaust the The shelf life of a vaccine around than paid vaccination
study — The world per capita electricity country can turn on nine. maker had stopped produc- stock much before expiry,” he is a reflection of how long it at private centres.

IDBI Bank divestment: RBI may not relax Dhanlaxmi’s

stake-dilution timeline for new buyer low-key EGM
Banking regulator and
Centre talk possibility of
corporate ownership
NIKUNJ OHRI
New Delhi, 12 June
The Reserve Bank of India (RBI) is unlikely
to grant any special dispensation to the new
buyer of IDBI Bank over the post-acqui-
sition glide path for reducing promoter
shareholding in the long term.
The government-appointed intermedi-
aries had sought relaxations in the RBI’s
guidelines that require promoter sharehold-
ing to be reduced to 26 per cent in 15 years.
In its deliberations with the government
and its advisors, the banking regulator had
communicated that its extant guidelines
would prevail, said an official.
Queries sent to the RBI spokesperson
did not elicit a response.
As promoters are required to reduce
their shareholding in the long term, the
Centre has been seeking some relaxation
for the new owner to maintain continuity
in running operations. Another round of
discussions with the RBI is expected to take
place soon after the roadshows with inves-
tors are complete, the official said.
Requests made by investors, along with
their feedback, would be discussed with
the RBI again, said the official.
With the Centre looking to invite expres-
sions of interest (EoI) for strategic divest-
ment of IDBI Bank by the end of July, delib-
erations with the RBI are expected to be
over soon.
The Centre has recently concluded road-
shows in the US with senior government
officials meeting potential investors to seek
feedback on the sale.
With this feedback, the Centre will
knock on the doors of RBI again to structure
the transaction in the best way possible,
that is acceptable to both regulator and
investors. Extensive discussions are
expected to take place as this is the first-
ever strategic divestment of a bank, the offi-
cial said. This is expected to be a test case
for privatisation of two other public sector
banks.
Discussions with the banking regulator
have also involved allowing corporations to
participate in the strategic divestment of
IDBI Bank. However, the RBI has responded
that its current norms for the banking sec-
tor shall prevail.
The RBI, in November 2021, accepting
several recommendations of an internal
working group had said it was still examin-
ing one of the suggestions of the group on
whether industrial houses be allowed to run
banks.
Besides this, the request to remove the
voting rights cap for promoters at 26 per
cent currently was also declined by the RBI;
the Centre has agreed to this. This means
the voting rights of the new promoter shall
be capped at 26 per cent, even if an investor
picks up a 50 per cent stake or more in IDBI
Bank. However, the Centre is clear that
management control will be transferred to
the new buyer, and the government and LIC
will not interfere in the management of the
lender even if they both continue to hold a
residual stake. The new buyer will get
powers to appoint the new management
and key personnel, and implement the best
management practices at the lender.
The government currently owns 45.48
per cent in IDBI Bank, while LIC holds a
49.24 per cent stake.
The government also has to finalise the
eligibility criteria for investors, which has
to meet the RBI’s fit and proper criteria and
the exhaustive screening of shortlisted bid-
ders interested in acquiring IDBI Bank.
turns into a
‘Q&A session’
Financial metrics, low capital adequacy,
rights issue discussed at general meeting
SHINE JACOB
Chennai, 12 June
Contrary to expectations, Thrissur-
based Dhanlaxmi Bank saw a sub-
dued extraordinary general meeting
(EGM) on Sunday that got over
within an hour’s time. The meeting
discussed all issues raised by a group
of 11 minority shareholders, includ-
ing rising expenses, low capital ade-
quacy, and the overall financial per-
formance of the bank.
In addition, the planned rights
issue was also discussed at the EGM,
which had only three registered
speakers. There was no resolution
or outcome at the meeting. It was
more of a question-and-answer ses-
sion, said a source aware of the
provision for 11 members.
The Securities and Exchange
Board of India’s guidelines for listed
companies require them to have at
least six members on their boards.
A case open before the High
Court of Kerala prevents the bank
from appointing new directors. The
current directors on the bank’s
board are C K Gopinathan, who
holds 10 per cent equity, Chief
Executive Officer J K Sivan, inde-
pendent director G Rajagoplan Nair,
and two RBI nominees: D K Kashyap
and Jayakumar Yarasi.
After the announcement at the
EGM, the bank had filed police cases
(Thrissur, Mumbai, and Chennai)
against those said to be spreading
rumours about its financial situation

Rains to revive next week, may boost kharif sowing development.

SANJEEB MUKHERJEE
New Delhi, 12 June
After a slow start, the southwest
monsoon, which reached
Mumbai over the weekend, is
expected to gather steam, leading
to possibilities of a decline in the
seasonal deficit and kharif sowing
being spurred, according to
weathermen.
“From June 14-15 we should
see a significant uptick in the
rains with the monsoon expected
to cover most of East India and
the beginning of good pre-
monsoon activity over Vidarbha,
Madhya Pradesh, and Gujarat,” R
K Jenamani, senior scientist at
the India Meteorological
Department (IMD), told Business
Standard.
He said with the rains picking
up, the seasonal cumulative
deficit would go down. The deficit
as on June 11 stood at 43 per cent
less than normal (see chart).
The rains gathering strength
and the monsoon’s smooth
advance over Central and
Northern parts of the country
should step up kharif sowing,
which till the first week of this
month was low for several crops.
The expectation is that if the rains
turn out to be good, there could be
more than an average increase in
the acreage of several crops
because prices were
remunerative in the last season.
STATUS CHECK
Rainfall across India from June 1-11 (In mm)
Regions
East and N-E India
South Peninsula
Central India
North-West
All India
*LPA stands for Long Period Average; Source: India Meteorological Department (IMD)
“From next week onwards,
North India, particularly Punjab,
Haryana, and Delhi, will start
getting good pre-monsoon
showers and if the momentum is
maintained the shortage can be
wiped off by the end of June,” said
Mahesh Palawat, vice-president
(meteorology and climate
change), Skymet Weather said.
The IMD, while releasing its
second-stage forecast for the 2022
monsoon season on May 22, had
The EGM was called by a group
of minority shareholders unhappy
with the workings of the bank and
on social media.
The bank’s management was of
the opinion that there were no major
concerns and the bank had been
should aid the monsoon.
Ahead of the kharif planting
its financials. Together, they hold a
sizeable 13.67 per cent of the bank’s
reporting profits for several quarters
with a liquidity coverage ratio of 365
season, the government last week equity. The leader of the group is B per cent.
Actual Normal % Departure from LPA* announced the minimum Ravindran Pillai, who holds 9.99 per The bank was looking to raise
88.4 93.3 -5 support prices (MSPs) for the cent equity. ~127 crore as equity capital through
2022-23 crop season, which will This is not the first time the bank a 2:1 rights issue to improve its CAR,
30.9 49.6 -38 start in July, raising them by 4-9 is seeing shareholder activism which fell to 12.98 per cent as of
6.6 30.5 -78 per cent, with the highest hikes against the management; there were March 2022. The capital raised
1.9 16.9 -89 for pulses and oilseeds. several in the past. There have been through the rights issue is expected
“Though in the case of tur and top-level exits as well. to improve CAR by 50 basis points
23 40.1 -43 urad the MSP has been increased Calling for the EGM, the share- (bps).
by 4.76 per cent, the area now holders had said the bank’s cost-to- 1 bps is one hundredth of a per-
under pulses might shift to income ratio had increased to alarm- centage point.
oilseeds, specially soybean in MP, ing levels in the quarter ended During the fourth quarter of
said in June rains in the country Maharashtra, and Rajasthan, December 2021 and it seemed to 2021-22 (FY22), the bank posted a
were expected to be “normal” at while in Gujarat there will be have no control over expenditure, fourfold rise in net profit to ~23.42
92-108 per cent of the long-period competition among groundnut, especially legal and administrative. crore, driven by a dip in its bad loan
average. soybean and cotton for acreage They were concerned with the way ratio and improvement in interest
In June, India gets around this kharif,” Rahul Chauhan, recruitments were happening and income.
16.54 cm of the estimated 87 cm. commodity analyst at iGrain new branches being opened, For FY22, its net profit dipped 3.5
Palawat said precipitation India, told Business Standard. although the ‘capital adequacy ratio per cent to ~35.9 crore. During the
might be good in the next four In Karnataka, pulses acreage (CAR) has been adversely com- January-March quarter, the bank’s
months because according to may shift to maize, soybean, mented on by the Reserve Bank of operating expenses rose to ~397
latest weather models, La Nina, and marginally cotton, while in India (RBI)’. crore, from ~366 crore — an increase
which was expected to weaken in Andhra Pradesh and The bank has five board of about 9 per cent. Provisions more
the coming weeks, might remain Telangana, the area under members now, including two nomi- than doubled to ~97 crore, from
cool at least till August, which groundnut might rise. nated by the RBI, although it has ~43 crore.
8 WORLD
>
NEW DELHI | MONDAY, 13 JUNE 2022

IN BRIEF Lockdown fears linger as China looks to check cluster

Bitcoin nosedives Reopening for most schools in the capital delayed, while most districts in Shanghai suspend dine-in services
below $28K mark, BLOOMBERG
12 June
Lockdowns have already
roiled global supply chains
and impacted the operations
Sunday, while some districts
will be allowed to resume
dine-in services on a trial
Jinping preparing for a
Communist Party leadership
reshuffle later this year at

Ether tumbles 5% Beijing’s local government

said a Covid-19 outbreak
linked to a popular bar is prov-
Bitcoin and Ether fell on Sunday amid a broader retreat by
ing more difficult to control
the cryptocurrency complex in the wake of data showing
than previous clusters, in a
US inflation hitting a fresh 40-year high.
weekend that saw mass testing
Ether declined as much as 5 per cent to $1,445.56, its
and rising infections both in
lowest level since March 2021, while Bitcoin dropped to as
the city and Shanghai.
low as $27,264.65, its lowest since May 12. Virtually all top
Authorities delayed the
tokens tracked by Bloomberg were down Sunday, with
reopening for most schools in
the likes of Dogecoin and Avalanche down more than 7
the capital planned for
per cent as of 11 a.m. Singapore time.US inflation data
Monday, while most districts
Friday, dashed any hopes that rising prices may have
in Shanghai suspended dine-
peaked. Stocks sank while two-year Treasury yields
in services at restaurants.
climbed to the highest since 2008. BLOOMBERG
Beijing reported 33 new local
Covid cases as of 3 p.m.
Ukraine, US-China ties Sunday, all of which were
found in quarantine. In
The Chaoyang district in eastern Beijing will begin a three-day
mass Covid testing drive from Monday
two cities eased social curbs
that had been in place for
months. The quick rebound in
cases once restrictions were
shows the difficulties of fully
nating transmission.
Its zero-tolerance approach
leaves the country stuck in a
cycle of disruptive shutdowns
and reopenings that hint at
of global giants from Sony
Group Corp. to Tesla Inc.
The Chaoyang district in
eastern Beijing, where the bar
is located, will begin a three-
day mass Covid testing drive
from Monday. All 65 cases dis-
covered on Saturday were
linked to the bar cluster.
Authorities didn’t set a new
date for schools to restart.
Shanghai lifted its two-
month lockdown on June 1,
but briefly shut down most of
the city Saturday to undertake
mass testing. Residents earlier
rushed to stock up on basic
supplies in fear a positive case
basis.
Shanghai’s worst outbreak
began in March in part stem-
ming from lapses at a quaran-
tine hotel. A dozen officials
from Xuhui district were dis-
missed from their posts or
given warnings after malprac-
tice in implementing quaran-
tine measures led to infections
at Hua Ting Hotel in the same
month, the Shanghai govern-
ment said late Saturday. They
included a party secretary, the
district chief and two district
vice governors.
China Business Conditions
Worsening in ‘Every Way,’
which he’s expected to secure
a precedent-breaking third
term as president. China’s
leader has called on his gov-
ernment to adhere “unwaver-
ingly” to its virus strategy,
while striking a balance with
the needs of the economy and
social stability.
Defense Minister Wei
Fenghe on Sunday praised
China’s virus policy, saying the
country is one of the safest in
the world with the lowest
Covid-19 induced death rate.
In a speech to Asia’s biggest
security conference
Singapore, Wei called China’s
in

dominate at Shangri-La Shanghai, cases continued to

be detected in the community.
stamping out more contagious
virus variants, and explains
lingering economic pain. Most
economists predict the coun-
in their compound would
mean they’re sealed into their
Survey Shows
China is unlikely to shift its
Covid response a miracle and
said its success is a major con-
The war in Ukraine and China's increasingly tense Outbreaks have re- why only China is still try will fail to meet its annual homes. Five cases were found Covid-Zero approach any time tribution to the global fight
relationship with the United States featured in nearly emerged just days after the engaged in the effort of elimi- growth target for this year. in the community as of 5 p.m. soon, with President Xi against the pandemic.
every session of the Shangri-La Dialogue in Singapore,
which ended on Sunday after three days of
discussions.Chinese Defence Minister Wei Fenghe, who

Russia hits chemical plant Sri Lanka set to

gave one of the featured speeches on the meeting's final
day, said it was up to the United States to improve the
bilateral relationship with his country, as ties were at a
critical juncture. REUTERS

introduce fuel
Iran currency hits record low
amid nuclear deal uncertainty with hundreds of civilians ration scheme
Iran's currency Sunday dropped to its lowest value ever as Officials estimate that as many as 800 civilians are hiding in the plant
talks to revive the country's tattered nuclear deal with
world powers remained deadlocked.Traders in Tehran
exchanged the rial at 332,000 to the US dollar, up from
327,500 on Saturday. That marked more than a 4.4%
AGENCIES
12 June
R
change compared to June 1 when it traded at 318,000 to ussian shelling has caused a
the dollar. Iran's currency was trading at 32,000 rials to the huge fire at a chemical plant in
dollar at the time of Tehran's 2015 nuclear deal with world Ukraine's Severodonetsk city
powers. REUTERS where "non-stop" fighting
rages, the regional head says.
Serhiy Haidai told Ukrainian TV that
TotalEnergies wins stake Saturday's blaze started after a leak of
tens of tonnes of oil from damaged radi-
in $29-bn Qatar gas project ators at the Azot plant.
Hundreds of civilians are reportedly
TotalEnergies SE became the first foreign company to win a sheltering at the plant.
stake in a multi-billion dollar project to boost Qatar’s gas Severodonetsk has become the focal
exports.Qatar is expanding production of liquefied natural point of Russia's efforts to advance in
gas amid a worldwide energy crunch. Global demand for eastern Ukraine.
the fuel is soaring as European nations race to wean Fighting has lasted more than three
themselves off Russian gas supplies in the wake of months. Russia's early attempt to capture
Moscow’s attack on Ukraine.TotalEnergies will get a 6.25 per
cent equity stake in the first phase of the plan. BLOOMBERG
major cities including the capital Kyiv
faltered and is now instead trying to cap-
ture the Luhansk and the Donetsk
regions — a vast mostly industrial area
Pak, China reaffirm ‘strategic collectively known as Donbas.
Seizing Severodonetsk and its twin
relations in challenging times’ city of Lysychansk would move Russia
closer to its goal as it would give them
Pakistan and China have stepped up their defence control over Luhansk.
cooperation by reaffirming on Sunday their "strategic In his statement, Haidai admitted
partnership in the challenging times" as Army chief Gen most of Severodonetsk was now in
Qamar Javed Bajwa, accompanied by top defence officials, Russian hands. The Russian military says
held talks with the Chinese team led by Vice Chairman that all of Severodonetsk's residential
Central Military Commission General Zhang Youxia. The tri- areas are now under its control.
service military delegation of Pakistan visited China from "The Azot chemical plant has been
June 9 to 12. PTI under heavy shelling for hours," Mr
Haidai said on Saturday.
He did not say whether there were any
Apple to offer other payment casualties and whether the blaze was lat-
er extinguished.
options in Dutch dating apps Ukrainian officials estimate that as
many as 800 civilians are hiding in under-
The Netherlands' antitrust watchdog on Saturday said ground bomb shelters at the Azot plant.
Apple Inc will allow different payment methods in Dutch Describing the current situation in
dating applications, ending a dispute that resulted in the Severodonetsk, Mr Haidai said it was "dif-
company being fined 50 million euros ($52.58 ficult, but under control".
million).The Authority for Consumers and Markets (AMC) "Our soldiers are winning in street
saidthat with this concession, Apple will meet the fights, but, unfortunately, the enemy's
requirement that the regulator had set under the artillery is simply dismantling - floor-by-
European Union and Dutch competition rules. AGENCIES floor — the houses used by our troops as
shelters.
"So, when we push the enemy out of
Queen becomes world’s 2nd one street, they start using their tanks
and artillery to destroy the area house-
longest-reigning monarch by-house," the Luhansk regional head
said.
Britain's Queen Elizabeth II on Sunday overtook Thailand's "No one can say whether and how
King to become the world's second-longest reigning many victims there have been in the last
monarch in history, after France's Louis XIV. The UK has 24 hours in Sievierodonetsk, where
been celebrating the 96-year-old Queen's Platinum intense fighting continues," Gaidai said
Jubilee to mark 70 years of service to the nation with on the Telegram messaging app on
grand events taking place last weekend. Now she has Sunday.
overtaken Thailand's King Bhumibol Adulyadej, who Ukrainian President Volodymyr
reigned for 70 years and 126 days between 1927 and 2016, Zelensky said that Russian troops have
to set another record. Louis XIV of France remains the suffered "very significant" casualties in
longest-reigning monarch, with a 72-year and 110-day Donbas.
reign from 1643 until 1715. PTI He also said Ukrainian forces had
A new era for Russia’s fast-food and economic scene dawned on Sunday, as McDonald’s
restaurants flung open their doors in Moscow under new Russian ownership and with
the new name, which translates as ‘Tasty and that’s it’
Russia destroys depot ‘Don’t know how long
containing weapons the war will last; forces
from Europe and US defying predictions’
Russian forces fired cruise missiles to destroy
a large depot containing US and European
weapons in western Ukraine's Ternopil
region, Interfax reported on Sunday. The
governor of the Ternopil region said a rocket
attack on the city of Chortkiv fired from the
Black Sea had partly destroyed a military
facility, injuring 22 people.
Russia using overmatch to seize Sieverodonetsk: UK
Russia is using its overmatch in force ratio and artillery to gradually seize territory in and
around Ukraine's Sieverodonetsk, Britain's Defence Ministry said on Sunday. Russia has
likely started preparing to deploy the third battalion from some combat formations in
recent weeks, the ministry said in its latest intelligence update posted on Twitter.
recaptured villages and towns in the
south-eastern regions of Kherson and
Zaporizhzhia.
Ukraine has been pleading for more
weapons from its allies, warning that
Russia has at least 10 times more artillery
pieces.
Russia is using its overmatch in force
ratio and artillery to "gradually seize ter-
ritory in and around Severodonetsk"
from Ukrainian control, the UK's defence
ministry says in its latest update.
It says Russia continues to seek to gen-
erate combat units to deploy to Ukraine.
In recent weeks, Russia probably started
preparing to deploy the third battalion
from some combat formations, the mini-
stry says, while most brigades normally
Ukrainian President Volodymyr Zelenskyy said no
one knows how long the war in his country will
last but that Ukrainian forces are defying
expectations by preventing Russian troops from
overrunning eastern Ukraine, where the fighting
has been fiercest for weeks. Zelenskyy said he
was proud of the Ukrainian defenders managing
to hold back the Russian advance in Donbas.
only committed a maximum of two of
their three battalions to operations at any
one time.
Third battalions within brigades are
often not fully staffed, the MOD notes,
and Russia will probably have to rely on
new recruits or mobilised reservists to
deploy these units to Ukraine.
"Deploying all three of their battalions
simultaneously will likely reduce forma-
tions’ longer term capacity to regenerate
combat power after operations," the UK
defence ministry says.
After being forced to scale back its ini-
tial campaign goals Moscow has turned
to expanding control in the Donbas,
where pro-Russian separatists have held
a swathe of territory since 2014.
next month
PRESS TRUST OF INDIA
12 June
The Sri Lankan government
plans to introduce a fuel
rationing scheme from next
month, under which regis-
tered consumers at filling sta-
tions would be guaranteed a
weekly quota, a senior min-
ister said on Sunday.
The island nation has
been experiencing long lines
for fuel refilling since mid-
February with pressure com-
ing on the diesel supplies for
thermal power generation.
Open to buying
By early April, the island more oil from
was experiencing 10-hour
Russia: Lanka
power cuts due to shortages
of diesel and furnace oil for Sri Lanka may be compelled
power generation.
“We have no choice but to
to buy more oil from Russia
as the island nation hunts
register consumers at filling desperately for fuel amid an
stations and give them a unprecedented economic
guaranteed weekly quota crisis, the newly appointed
until we are able to prime minister said. Prime
strengthen the financial sit- Minister Ranil
uation, restore 24 Hour Wickremesinghe said he
Power and a steady Supply of would first look to other
fuel. I hope to have this sys- sources, but would be open
tem in place by the 1st week to buying more crude from
of July,” Energy Minister Moscow. Western nations
Kanchana
tweeted on Sunday.
Wijesekera largely have cut off energy
imports from Russia in line
The minister said that the
supply of fuel should be man-
with sanctions over its war
on Ukraine.
aged until there is a round-
the-clock 24-hour uninter-
rupted supply of electricity The shortage in gas
and fuel. supply has increased the
This paucity has led to demand for electricity and
reports of stockpiling and kerosene, and the monthly
hoarding of fuel. Wijesekera fuel bill that was $200 million
hoped that this measure of four months ago, now stands
imposing a fuel quota would at $550 million, the minister
go a long way in addressing added.
the crisis.
“With the financial
Meanwhile, the last of the
fuel shipments due under the
restrictions in place, the
Ceylon Petroleum
Indian Line of Credit are
arriving in Sri Lanka later this
Corporation imports fuel to month, with no indications
manage for a week, but some on the sustenance of future
consumers stockpile fuel for supplies, which are depend-
a month or more for their ent on India's assistance.
machinery and generators,” “We are expecting the last
he said in another tweet. diesel shipment under ILC
He said that 24-hour (Indian Line of Credit) on
power supply costs an June 16 and the last petrol
additional $100 million shipment on June 22,"
monthly for diesel, furnace Wijesekera told reporters
oil and naptha. on Saturday.

World’s first production-ready solar car to take the road later this year
The $263,000-priced Lightyear 0 model uses power derived from the sun to add as much as 70 kilometres (43 miles) of driving range per day
CAGAN KOC
12 June
A Dutch company is starting deliveries
of the world’s first production-ready
solar car to customers later this year,
promising months of charge-less
driving in summer conditions.
Lightyear, founded in the
Netherlands in 2016, is making 949 of
the models featuring curved solar
panels across the car’s hood and roof.
Power derived from the sun will add as
much as 70 kilometers (43 miles) of
driving range per day from the sun.
“Electric cars are a step in the right
direction, but they are dependent on
the grid, which is still dependent on
mostly fossil fuel energy,” Chief
Executive Officer and Co-Founder Lex
Hoefsloot said at the reveal of the
250,000-euro ($263,000) Lightyear 0
model. “Adding a new source, the sun,
adds certainty that you will always have
that charge and you will have to charge
a lot less often.”
According to Lightyear the
optimised solar roof and holistic design
mean that the car can drive for weeks,
even months, without charging. In
cloudy climates, based on the average
commute of around 35 kilometres per
day, the car can drive for up to two
months before needing to be
charged. In sunnier countries, that
could be up to seven months.
Plugged into a regular home
socket, Lightyear 0 can still charge 32
kilometres of range per hour.
The sustainable interior of the
vehicle is vegan and eco-friendly,
featuring plant-based leather, fabrics
made from recycled PET bottles and
wooden deco elements from
sustainably-restructured rattan palm.
Lightyear 0's outer body panels are also
made from reclaimed carbon; residual
carbon fibre materials that would
otherwise go to waste.
In June, the first test drives will be
offered. In fall Lightyear will start-up
production, with the first cars reaching
POWERING UP
their drivers in November. Lightyear
hasn't said anything about an India
launch.
The company claims that the car,
which will be made in Finland by
Valmet Automotive, allows two months
of driving without charging in
Amsterdam during summer and as
many as seven months in Portugal. Cars
“Did you see it? The moment we
> The sedan prototype of Lightyear 0 was first revealed in 2019 shared Lightyear 0 with the world!
We're still all charged up after a truly
> Lightyear 0 will come equipped with the patented five incredible premiere. Thank you all for
square metres of double-curved solar arrays making it so special,” tweeted Lightyear
on June 10.
> Vehicle has a range of 388 miles (around 624 km)
The sedan prototype of Lightyear 0
> Cars will be powered with a 60-kWh battery pack and four was first revealed in 2019. The company
electric motors that supply 174 horsepower unveiled the final design and the car's
unique specification and enhanced
> Lightyear is making 949 of the models featuring curved capabilities in the online premiere on
solar panels across the car’s hood and roof June 9.
The vehicle has 388 miles (around
>The company claims that the car allows two months of
624km) of range of which 44 miles
driving without charging (70km) can be derived from its solar
panel technology.
Lightyear 0 will come equipped with
powered by the sun have struggled to make a more affordable model at a the patented five square meters of
make it beyond the prototype stage starting price of 30,000 euros. double-curved solar arrays.
because of the large area solar panels Production is set to start in late 2024 or The vehicles will be powered with a
require. early 2025. 60kWh battery pack and four electric
Lightyear has driven the car more The Netherlands-based start-up, motors that supply 174 horsepower.
than 700 kilometers on a single charge which specialises in scalable grid- The Lightyear 0 features five square
of a 60 kilowatt-hour battery. independent solar electric vehicles, will metres of proprietary, double-curved
Following the small production run accept pre-orders for the Lightyear 0 solar panels, allowing it to charge itself
of the Lightyear 0, the company plans to towards the end of this year. while driving or simply parked outside.
 >
OPINION 9
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

VOLUME XXIX NUMBER 41 ILLUSTRATION: AJAY MOHANTY

Let's connect higher energy prices to macroeco-
NEW DELHI | MONDAY, 13 JUNE 2022 nomics. For energy-importing countries worldwide,
in the short term, there is negligible price elasticity.
Therefore, higher import prices are tantamount to a
Shifting cycle consumption tax and reduction of savings. There is
then a need for a corresponding increased capital
inflow to finance the enhanced gap between invest-
Investors should be prepared for further turmoil ment and savings.
Long years of sustained low interest rates in the

B
ond yields have risen and equity valuations have fallen as financial
world economy, coupled with the pandemic, have
markets adjust to the reality of the Reserve Bank of India’s (RBI’s) move
led to a significant build-up of debt. Unexpected
towards policy normalisation. The central bank has increased the repo
inflation has inflated some of this debt. It is not hard,
rate by 90 basis points in the past two months and investors must brace however, to construct scenarios for many borrowers
themselves for more hikes as well as other measures such as raising the cash where the foundation of debt stability, the compari-
reserve ratio to tighten surplus liquidity. The RBI’s projections imply inflation as son between nominal growth and the cost of capital,
measured by the consumer price index will average 6.7 per cent —well above its turn adverse in 2023. As an example, in the short
upper limit of tolerance of 6 per cent — for the rest of FY23. The wholesale price run, Italy has gained when high inflation eased its
index inflation is at 15 per cent. The RBI’s estimates of high inflation imply interest debt burden, but by 2023 it could be in the grip of an
rates will have to be increased significantly. It also says there is surplus liquidity expanding debt /GDP ratio.
in the system. A combination of higher interest rates and lower liquidity is strongly Central banks worldwide are freshly conscious

Global macro
associated with lower valuations for risky assets like equity. Investors don’t look about the problems of inflation and are tightening
at price-earnings (PE) discounts in isolation; they compare these to known returns monetary policy. In the rest of 2022, while the US
Fed is expected to hike interest rates by about 200
from debt. As debt returns rise, the expected returns from equity must also rise
basis points (bps), the European Central Bank is likely
for valuations to remain in sync. This means that PE discounts usually fall when to raise it by 130 bps. This adds up to an unusual

in 2022/2023
interest rates rise. period, when compared with recent decades, of a
The past two years have seen an extraordinary situation where the RBI flooded sharp increase in the short rate.
the economy with liquidity and maintained low interest rates to compensate for When developing markets’ (DM) interest rates go
the pandemic. As a result, real returns net of inflation from debt turned negative, up, global capital retreats from exotic risks and illiq-
and equity valuations shot up. The benchmark indices — the Nifty and Sensex — uidity the world over, and increases holdings in main-
were trading at a PE of 31 (last four quarters’ earnings) in early 2022, and the five- We are in new terrain, with four problems coming together stream assets in DMs, such as index funds and liquid
year average multiple was 26. A combination of earnings growth and share price debt. The required rate of return in emerging markets

B
corrections has pulled that down to PE of 23 in the past two months. But even PE efore invading Ukraine, Russia was the
of 23 is high by historical standards — the 10-year average PE is in the range of 19- world’s biggest exporter of oil, at about 8
20. million barrels a day. In addition, about a
third of Europe's gas supply came from Russia.
Investors use some rule-of-thumb measures to judge if a stock market is fairly
There is regret among European leaders about
valued. One is to compare the earnings yield to price (the inverse of the PE) to the mistakes made in energy policy in the past, where
return from risk-free debt such as government treasuries. Another related measure pipelines were built to the Russian oil fields. While
is to compare the difference between the two yields. Both measures suggest that Russia is sometimes thought of as a superpower,
the stock market is currently still overvalued. The 10-year government bond is its gross domestic product (GDP) is of Spain’s size,
trading at a yield of 7.5 per cent — the equivalent fair-value PE would be 14, which with strengths in two fields:
is roughly 35 per cent lower than the actual market PE. The differential between Natural resources and food.
the 10-year government bond yield and the market earning yield is at 260 basis The energy export cash flow
points and this difference has historically sustained at around 105 basis points. is critical to the Russian econ-
Most investors are hoping for earnings growth of around 16 per cent this fiscal omy and funds the war
year — taking inflation (6.7 per cent) plus real gross domestic product growth (7.3 in Ukraine.
The West is chipping away
per cent) plus an expected outperformance of corporate earnings of around 2
at crimping it. Building a liq-
percentage points. But even if earnings do rise at 15 per cent, and interest rates
uefied natural gas (LNG) ter-
don’t harden too much from here, the market valuation can be expected to fall minal, storage or pipeline
somewhat. Changes in asset valuations are normal in cyclical terms. But the past takes over two to three years,
few years have seen extreme volatility due to easy central bank policy, global so changing course is hard.
supply chain issues, inflation arising from the pandemic, and the Ukraine war. So far, the rise in prices has SNAKES & LADDERS
Many of those problems remain. Investors should be prepared for further turmoil more than offset the decline
across financial markets as monetary policy normalises. in quantities, and Russian AJAY SHAH
exports (expressed in billion
dollars) have grown compared with pre-war con-
Finland have been shut off. Russia might desire a
stronger military position by October, followed by
a disruption of European support for Ukraine in
November, by threatening a gas supply interrup-
tion in December. But at the same time, the Russian
army needs to make it till October, for which the
export proceeds are essential.
The optimal strategy for Russia is perhaps: (a)
roil the world oil market, and drive up energy
prices, (b) influence European foreign
policy by threatening supply inter-
ruptions, but (c) actually negotiate an
outcome where suzerainty over
Eastern Europe is achieved alongside
high revenues from energy sales.
Europe wants to cut back on ener-
gy imports from Russia. LNG imports
into Europe have surged. There is a
rush to establish LNG facilities.
Carbon transition investments are
taking place with unprecedented
zeal, as this kills two birds with one
stone. The pace of implementation
of these projects will influence the
European spine on Ukraine. The
European demand for LNG is also driving up its
(EMs) has to go up to justify unchanged capital flows
into them. This requires a combination of exchange
rate depreciation and asset price declines.
The world economy then faces an unusual com-
bination: (a) The need for enlarged capital inflows
to fund the gap between investment and savings in
many energy importing countries, (b) At a time when
debt levels are unprecedentedly high, (c) At a time
of slow global growth in GDP and trade, and (d) In a
period of unprecedented DM monetary tightening.
This combination is new to us. Our datasets and esti-
mated models have not seen this.
In countries with good institutions, there is cap-
ital account convertibility and inflation targeting.
When investment goes up or savings go down, the
exchange rate depreciates, and more foreign capital
without any friction comes in. This happy outcome
requires the “modern system” of a floating exchange
rate, capital account convertibility, inflation target-
ing, and government borrowing which faces market
discipline. In many places of the world, this machin-
ery is not in place, and we may get some episodes
of distress.
Some firms will face credit stress. Some ponzi
schemes will get unveiled. There will be a winter in
high-risk and illiquid assets. Some countries will mis-

Controlling the hard sell

ditions. But the restrictions are slowly
getting through.
While authoritarian political parties are present
New guidelines toughen advertising standards usefully all over Europe, 85 per cent of individuals favour
reducing energy dependence on Russia. The anal-
global price, which influences all users, including handle macro policy and experience
ones in India. macroeconomic/financial crises.
Strong men often see democracies as effete. On January 7, 2009, the Satyam scandal erupted.
We should not underestimate the intellectual, It was not just a story of one person or one firm: This
technological, economic and cultural might of unveiling was linked to the macro events from the

T
he new guidelines toughening the standards of information in adver- ogy between Austria, Czechoslovakia and then democracies. While reducing energy imports from choking of the London money market in 2007 to the
tisements, especially those aimed at children, in all major media Poland, versus Georgia, Crimea and then Ukraine, Russia is hard, Europe will achieve a lot towards Lehman Brothers default in 2008, and then the ter-
platforms have been long overdue. Under the new rules, penalties is widely seen. The political leadership is able to that goal. Crimping Russian energy exports will rorist attack in Mumbai on November 26, 2008. There
for misleading advertisements have been linked to the definition of justify the economic pain of the transition as part create sustained stress in the global energy market. are causal connections between macroeconomic
such infractions and the punitive measures provided under Section 2 (28) of of the required "blood, toil, tears and sweat". What this dive into energy thinking tells us is that stress and practical outcomes.
the Consumer Protection Act. For manufacturers, advertisers, and endorsers, A game of chicken is underway. In recent barring a rapid end to the war, we are in for sus-
months, Russian gas sales to Poland, Bulgaria and tained high energy prices for a year. The writer is a researcher at XKDR Forum
the penalties are ~10 lakh for the first offence and ~50 lakh for a second infringe-
ment. The Central Consumer Protection Authority can also prohibit an endorser
of a misleading advertisement for up to one year, and three years for a repeat

Inconvenient questions
offence. Two other critical points about the new guidelines are that they clearly
define “bait” and “free claims” advertising and strictly set limits to advertising
for children, including those with celebrity endorsements. The guidelines
also require a disclaimer to be published in the same language as the claim

I
made in the advertisement and the font used must be the same as that used write this with considerable anguish. In June,
in the claim. the world came together in Stockholm to mark
These guidelines were long overdue and will undoubtedly introduce a greater 50 years of global environmental conscious-
measure of caution among manufacturers and endorsers of products, given that ness. The meet was to celebrate interdependence
and the need for a global compact for planet Earth.
the advertising industry’s well-meaning attempts at self-regulation have proven
But more than ever, such events have virtually
inadequate so far. The proliferation of advertising for online gaming sites and
become a dialogue of the deaf. The world, it seems,
mutual fund products has magnified the problem of misleading advertising. A lives in two different planets. There is deep divi-
requirement slowing the pace at which disclaimers are read on TV ads would sion, polarisation, and a lack of understanding of
also be useful. Tightening standards of advertising for children, including disal- each other’s concerns.
lowing celebrity advertising in some cases, are welcome, given that children are Let me tell you what has left me so troubled
key purchase influencers in middle-class Indian households. Indeed, the authority and has, once again, told me just how much we
may have done better had it gone one courageous step further and banned the must learn to listen to one another. As you know,
advertising of junk food and drink, just as it has done for fairness creams, alcohol, parts of India have been going through an intense,
cigarettes, and chewing tobacco. The volume of junk food advertising — from burning heatwave. It has been a living hell in my
deep-fried snacks and fast food to sugar-laden aerated water targeted at children city Delhi as temperatures have touched 47˚
and teenagers — has played a key role in the exponential rise of childhood Centigrade. Even as I say this, I
know that people like me, who live
obesity and diabetes among middle-class Indians. As with alcohol, for which
in relative thermal comfort, are
surrogate advertising has sensibly been banned as well, point-of-purchase pub-
not so badly hit. It is the millions
licity for junk food should be considered sufficient publicity. who work out in the sun — from
The key question, however, is how the government will enforce these farmers to construction workers
guidelines. The Central Consumer Protection Authority, which was formed to all those who cannot afford
in 2020, is responsible for regulating false and misleading advertisements electricity to even power a fan —
and punishing offenders, the functions that the Advertising Standards Council are the worst sufferers. They are
of India used to perform. The authority has an investigation wing, headed bearing the brunt of the inferno
by a director general, and it relies not only on individual consumer complaints that has hit work, made people ill,
but also reports from district authorities. This considerably widens the catch- taken lives, and burnt and shriv-
ment area for tracking misleading advertising. Tracking advertising in India’s elled up part of the wheat crop.
Scientists point out that this
DOWN TO EARTH
more than 10,000 print publications and 850-plus TV channels in multiple
time the temperature rise was way SUNITA NARAIN
languages is challenging enough. But the principal problem today is the pro-
too early in the year — in March
liferation of online advertising, not all of it originating in India. This will as against May — making the heat impact more
require a gargantuan organisation to track effectively. It would also make devastating. They connect it to the abnormal
sense for the Authority to work closely with other similar authorities to behaviour of Pacific Ocean currents, La Niña, which
regulate claims on health and personal product packaging and include health have been unusually prolonged, leading to the heat-
warnings as is done on tobacco products. In that sense, the new guidelines waves. There is also evidence about changes in the
could be considered a good starting point. Western Disturbance — the winds from the
Mediterranean — which are, in turn, influenced by
the changes in the Arctic jet stream. The Western
Disturbance would bring rain to the Indian sub-
continent during this early summer period, reduc-
ing the heat’s impact. But this year, the Western
Disturbance has been weak. It is still not clear if
this is a long-term trend, but what is absolutely cer-
tain is that there are clear and attributable links
between the heatwave and global climate change.
So, things are bad, very bad. It is also certain
that we in India must learn to do things differently,
knowing that this heat will only get worse. “The
State of the Global Climate 2021” report by the
World Meteorological Organization, released in
May 2022, grimly tells us that the four key indica-
tors of climate change — greenhouse gas (GHG)
concentration, sea level rise, ocean heat, and ocean
acidification — reached record lev-
els in 2021.
What, then, are the options? One,
provide affordable electricity to all
so that people can cope with these
temperatures; two, build homes
with better insulation and ventila-
tion to improve thermal comfort;
three, plant trees for shade; and
four, increase the storage of water
for drinking and irrigation. These
will also cool our cities’ microcli-
mate. But there are enormous limi-
tations. There is no way we can live
or adapt to the rising temperatures
that we are beginning to see. It is
also clear that the poor in our world are the ones
most impacted by this.
But my anguish is not only because of the dire
conditions I see in the world around me. As a cli-
mate change activist and environmentalist, it
makes me realise that I have failed — we all have
failed — to make things better. What rubs salt into
the wound is when I get interview calls from the
western media wanting to find out more about the
devastating heat conditions. The most predictable
question, after the first few enquiries about life
and death, is what India is doing to combat climate
change. Then comes the query: Why does India
continue to use coal for its electricity? And then
the final one — this one takes the cake — is to ask
(or say) that power demand in this heat will go up,
which will mean more coal burning. What do I
have to say about that?
What can I say?
How do I explain that India’s contribution to green-
house gas emission (GHG) is insignificant by any
parameter? How do I explain that the stock of emis-
sion in the atmosphere, which is tipping us over
and leading to this heatwave, is not of India’s mak-
ing? How do I explain that we need to discuss repa-
rations and not blame the poor, or even the rela-
tively rich, in India? How do I explain the global
media powerhouses need to get real about the
impacts of climate change on countries like India
— my country? That we must and will do more to
reduce GHG emissions in our own interests, but
what we must discuss today is how the richest
countries — their countries — are the cause of the
problem, and that we must begin to discuss not
just how they will reduce emissions at scale but
also the need for paying for this loss and damage
to the rest of the world. This is the inconvenient
truth that is not heard. We can scream, but that
part of the world is not listening. This has to change
if we want a better world and if we want our world
to survive.
The writer is at the Centre for Science and Environment
sunita@cseindia.org
Twitter: @sunitanar

Four women who took on the Oxford establishment
This conviction put them at odds with the
prevailing trend of philosophy at Oxford, a
trend pioneered by A J Ayer, a logical
positivist who insisted that statements that
cannot be verified by logic or
measurement are statements of value and
BOOK REVIEW therefore essentially meaningless.
Clare Mac Cumhaill, an associate
LAURA MILLER professor of philosophy at Durham
University, and Rachael Wiseman, a
person offering a friendly greeting — refers
to the violation of a shared norm of a
human community: It is polite to
acknowledge and return such greetings.
Human beings will instantly recognise that
rudeness as a fact, even if it has no material
existence and isn’t inherent in the act of
walking away.
The least
well-known of
competitive, and also less likely to
degenerate into a “set of games” built “out
of simple oppositions.” Mac Cumhaill and
Wiseman write that the interviews they
conducted with Midgley at the retirement
home where she lived became the
springboard for the book.
As this origin
METAPHYSICAL ANIMALS: story suggests,
How Four Women Brought the heart of this
Philosophy Back to Life
the birth of her second child and insisted on
furnishing her spartan lodgings. Many
people didfind Anscombe rude, especially
the university authorities who objected to
her delivering lectures in trousers instead of
the required skirts.
Foot, who would become Murdoch’s
“lifelong best friend,” endured a
loveless upper-class childhood in a
milieu where one of the worst things a
woman could do was appear intelligent.
She would go on to become a professor
of philosophy at UCLA and is
considered one of the inventors of the
The biographical material in
Metaphysical Animals is evocative and
sparkling. What’s less persuasive is the
book’s overall thesis that the four friends
somehow redirected the course of British
philosophy or even that they shared a
distinct cause or approach. Anscombe,
for example, was a committed Catholic
who opposed both birth control and
abortion. Foot was an atheist who told
Anscombe that she saw no good reason
to believe otherwise. Murdoch was
drawn to existentialism and published
the first English-language book on Sartre.

I
n 1948, four young women, all close
friends, met in the Lyons’ tearoom in
Oxford to discuss philosophy. In a talk
that grew out of that conversation with Iris
Murdoch, Elizabeth Anscombe and Mary
Scrutton (who in two years would become
Mary Midgley), Philippa Foot would
explain that “the whole of moral
philosophy, as it is now widely taught, rests
on a contrast between statements of fact
and evaluations.” Very simply put, all four
women believed that morality had some
kind of reality outside of individual feelings
and choices and that this reality existed
somewhere beyond, behind or beneath the
observable facts of the physical universe.
lecturer at the University of Liverpool,
recount the history of this remarkable
friendship in Metaphysical Animals: How
Four Women Brought Philosophy Back to
Life — the second of two books about the
quartet (after Benjamin J B Lipscomb’s The
Women Are Up to Something ) to be
published in less than a year. In the chapter
on the tearoom gathering, it explains Foot’s
insight about the word “rude,” which is
most certainly employed in value
statements, but also, Foot pointed out,
can’t be applied to just any action, such as
“walking up to a front door slowly or sitting
on a pile of hay.” “Rudeness” — for
example, simply walking away from a
the four friends, book resides in “trolley problem,” a thought Midgley became increasingly interested
Midgley Author: Clare Mac the friendship experiment that poses the question of in the similarities between human
survived the Cumhaill and Rachael among the four whether it is ethical to deliberately beings and animals. Many of the ideas
longest. She died Wiseman women and the sacrifice one person’s life to prevent the touched on are too challenging to
at the age of 99 in Publisher: Doubleday ways they accidental deaths of five others. summarize in a book with so many other
2018, an supported and During the time when they were balls in the air. The four unconventional
influential figure
Price: $32.50 influenced one both employed in the war effort, Foot friends are delightful enough company
in the area of Pages: 398 another. and Murdoch shared a peculiar but that their story doesn’t require the “How
animal rights, Anscombe, the beloved attic flat near Whitehall. It X changed the world” overlay. To impose
but not before writing a letter to The most brilliant and gifted philosopher of the had no running water in the kitchen, that theme on their story is to reduce it to
Guardian in which she asserted that group, was a protégée and friend of Ludwig and became even less comfortable one of those “simple oppositions” that
women philosophers flourished in Oxford Wittgenstein. Married to a conscientious when each woman took up with one of Midgley herself complained about, a
during and just after World War II because objector who had difficulty finding the other’s ex-lovers, a situation, the form that could never do justice to these
“there were fewer men about then.” remunerative work after the war, authors note, providing Murdoch with four fascinating women.
Furthermore, she added, the women’s style Anscombe was so poor that Wittgenstein “the archetype of a tangled erotic
of philosophizing was less aggressive and paid for her stay in a maternity hospital after muddle for her novels.” ©2022 The New York Times News Service
10 POLITICS & PUBLIC AFFAIRS NEW DELHI | MONDAY, 13 JUNE 2022 0
"I CAN TELL YOU THE NAMES OF MLAS WHO "ED SEIZED AROUND ~2.80 CR CASH AND 133 GOLD "I BELIEVE IT IS HIGH TIME THE PM BROKE HIS SILENCE ON THE
DITCHED US. WE KNEW THAT IT WAS A COINS WEIGHING ABOVE 1 KG FROM SATYENDAR PROLIFERATION OF HATE SPEECH AND ISLAMOPHOBIC INCIDENTS
TIGHT RACE, BUT WE LOST (IN THE RAJYA JAIN'S AIDES. DOES HE (ARVIND KEJRIWAL) STILL IN OUR COUNTRY, BECAUSE HIS SILENCE IS INTERPRETED BY
SABHA POLL) DUE TO HORSE-TRADING,” THINK THAT SATYENDAR JAIN IS INNOCENT?” SOME AS CONDONING WHAT HAS BEEN HAPPENING”
SANJAY RAUT, Rajya Sabha member, Shiv Sena SMRITI IRANI, Union Minister of Women and Child Development SHASHI THAROOR, Lok Sabha member, Congress
> .

Not prophesied
BJP stands at a crossroads after the Nupur Sharma imbroglio
NATIONAL HERALD-AJL DEAL

RADHIKA RAMASESHAN icy towards the minorities. We expect

New Delhi, 12 June more focused questions to come up
and we must have the answers,” a

A
s the dust set off by an
upheaval over the Nupur
Sharma episode settles over the
Bharatiya Janata Party (BJP) and the
Narendra Modi government, the polit-
ical fallout was described variously as
a “minor turmoil” and “undeniably a
setback” that placed the BJP at an ide-
ological crossroads. Indeed, a party
functionary went to the extent of com-
paring it to the dilemma that confront-
ed the BJP in 2002, when then prime
minister Atal Bihari Vajpayee was pres-
sured to “take action” against
Narendra Modi, who was then Gujarat
chief minister, for allegedly not con-
taining the post-Godhra violence.
However, Vajpayee, who preached the
tenet of “raj dharma” (ethics of gover-
nance) to Modi, capitulated to the over-
whelming sense within his party that
Modi was the new ideological mascot
who had to stay.
Sharma, a former loose-tongued
spokesperson from Delhi, is no Modi
by a long shot. But her suspension
from the BJP’s primary membership
following her combustible comments
on Prophet Muhammad in a TV debate
evoked a groundswell of support for
her and indignation against the brass
for throwing her under the bus. The
anger was the more intense because
the “action” against Sharma seemed
prompted by a strong reaction from
West Asia, particularly when Qatar,
Kuwait, and Saudi Arabia registered
protests at a diplomatic level and
painted the Indian government into a
corner. More than one BJP supporter
accused Qatar of “duplicity” because
it gave the late artist M F Hussain citi-
zenship when he was forced to leave
India after the Bajrang Dal and Vishwa
Hindu Parishad (VHP) remonstrated
violently against his depiction of
Hindu deities. The BJP votaries felt
Qatar’s stand on Sharma was “unwar-
ranted”.
Asked how the events would pan
out politically, a senior BJP official
said: “We are aware of the distress
caused to our Hindutva social media
army and our rank and file, but at this
juncture the choice before the BJP is
clear. We must focus on development
and the pro-poor agenda.
Development and Hindutva are two
sides of the same coin. Our back-to-
STORY IN NUMBERS
AIMIM activists stage a protest demanding arrest of former BJP spokesperson
Nupur Sharma over her alleged comments against Prophet Muhammad, outside
Parliament Street Police Station, in New Delhi
back election victories proved this
point. As far as articulating the
Hindutva viewpoint is concerned, we
have the courts that are doing the job
in their own way, so there’s no need
for the BJP to take to the streets. We
have the VHP and the Hindu Jagran
Manch to voice our cadre’s senti-
ments.”
Anil Baluni, Rajya Sabha MP and
head of the media department,
stressed: “Vikas (development) and
garib kalyan (welfare of the poor) are
our Gita.”
Despite the official sanguineness,
it is apparent that the BJP and the gov-
ernment are fumbling for a clear
response. If on a day, the Delhi police
(under the Centre’s jurisdiction) pro-
vided Nupur and her family security
because they reportedly received
PHOTO: PTI
“death threats”, the next day, she was
served an FIR for purveying hate mes-
sages on the social media. “It’s a set-
back which is not entirely insurmount-
able but we must step up our
diplomatic engagements,” a BJP offi-
cial said.
The BJP’s sense was that if, hereto-
fore, the “burden” of damage control
fell on the Centre, the party would have
to “shoulder the responsibility”. “It is
important to decouple the government
from the party because the situation
was created by a spokesperson who
took off (on the Prophet) on her own,”
a source said. Anticipating questions
on Sharma in the scheduled meetings
BJP President JP Nadda was expected
to hold with envoys, his aides were
marshalling the defences. “So far,
generic queries were asked on our pol-
source said.
If convincing the Islamic bloc of
countries of India’s “inclusive” credi-
bility was one aspect of the Centre’s
problem, particularly because remarks
such as those from Sharma jeopardised
India’s commercial relations with West
Asian nations, managing domestic dis-
sent could be a bigger issue, especially
because the BJP’s hardcore votaries
refused to understand the pulls and
pressures under which the govern-
ment laboured.
“The PM and his cabinet should
resist bureaucratic influence. It seems
the action against Nupur was also
because the vice president (M
Venkaiah Naidu) was in Qatar around
the same time and the officials in his
secretariat did not want any embar-
rassment,” a source in the Rashtriya
Swayamsevak Sangh (RSS) said. A din-
ner for the vice president which Qatar’s
Deputy Emir was to host was called off
ostensibly because the host had sus-
pected exposure to a The Congress party has promised a blitzkrieg Companies Act, 1956.
Covid-positive person.
However, on the same day Qatar
Deputy Foreign Minister Lokwah
Alkhater put out a tweet warning that
the “Islamophobia discourse has
reached dangerous levels in a country
long known for its diversity and co-
existence”.
As the BJP struggled to bring about
coherence among its spokespersons,
one of them ascribed the Sharma con-
troversy to “over-amplification by the
anti-BJP ecosystem, harbouring a hid-
den agenda”.
From 2014, the Centre and the BJP
did little to intervene when the minori-
ties were attacked, verbal assaults were
mounted, and state leaders freely
bashed them in statements. In the
Rajya Sabha, the BJP does not have a
single Muslim MP after the tenure of
M J Akbar, Mukhtar Abbas Naqvi, and
Syed Zafar Islam ends in July. When
asked, a Sangh source replied in a
scoffing manner: “Has this trio, singly
or collectively, brought the BJP even
one Muslim vote?”
The developments triggered by
Nupur have long-term implications for
the BJP and the direction it will pursue
before the next slew of elections. Can
the riders get off the horse pulling the
BJP one way?
Congress blitzkrieg at
ED offices over Centre’s
‘egregious’ behaviour
ADITI PHADNIS the assets of the National Herald in a
New Delhi, 12 June ‘malicious’ way. The charge was that the direc-
tors had violated the provisions of the
at the offices of the Enforcement Directorate “After having considered the entire case in
(ED) later on Monday when party leader Rahul its proper perspective, this court finds no
Gandhi appears before the body. Sonia Gandhi hesitation to put it on record that the modus
is expected to testify later. operandi adopted by petitioners in taking
Rahul and his lawyers believe that the case control of AJL via special purpose vehicle, i.e.,
is politically motivated and has no merit. They YIL, particularly, when the main persons in
further point to the egregious conduct of the the Congress party, AJL, and YIL are the same,
government in the use of the ED against polit- evidences a criminal intent. Questionable con-
ical opponents and cite circumstances of the duct of petitioners needs to be properly exam-
extension given to the chief of the investigative ined at the charge stage to find out the truth,”
body, so that the institution is compliant with observed the Delhi High Court in its judgment.
the wishes of the government. While dismissing the petition of the
The ED says there is enough evidence to Gandhis, the judge added he was not taking a
warrant an investigation. call on the merits of the case. “Without casting
Here are the plain, unvarnished facts: any reflection on the merits of this case and
In 1937, Jawaharlal Nehru started a com- while leaving the larger questions raised in
pany, Associated Journals (AJL), with 5,000 these petitions open, to be considered at the
other freedom fighters as its shareholders. The charge stage, these petitions and the pending
company did not belong to any person in applications are dismissed with aforenoted
particular. Leaders like Kailash Nath Katju clarification,” he noted.
were shareholders. The lawyers for YIL argue that the transac-
In 2010, the company had 1,057 sharehold- tion was a simple conversion of debt into equi-
ers. Actually, this number is a matter of dispute, ty. But the ED came into the picture after the
because as Business Standard reported in 2016, Gandhi family was found to be owing taxes
senior lawyers, including Kapil Sibal and P amounting to around ~250 crore.
Chidambaram, claimed the The income-tax (I-T) depart-
number of shareholders was 761. The ED has issued ment, which passed an order in
The number of shareholders is summons against October 2017 under Section
crucial as later events show. the Gandhis 12AA(3) of the I-T Act, said the
Business Standard’s research in a money- company needed to pay tax on a
showed the largest minority share- laundering case transaction amounting to ~413
holders of the company included linked to the crore. The last appeal by the family
hoteliers (the Lalit Suri family) and National Herald- against the order was dismissed
Abhim Investment, an entity oper- Associated on March 31.
ating out of Amitabh Bachchan’s Journals deal According to the ED investi-
Pratiksha bungalow in Mumbai. gation into the matter, the objec-
AJL published the National Herald news- tive of the takeover was twofold: ‘to obtain
paper in English, Qaumi Awaz in Urdu, and valuable benefits embodied in the business
Navjivan in Hindi until 2008. It had dues assets of AJL; and not pay any tax on the
amounting to ~90 crore and was closed down. business income from them’.

Reluctant to stub it out: India has
over 186 million tobacco users
India has the largest tobacco-
chewing population in the world
and the second-largest
population of those who smoke
it, reveals Global Burden of
Disease 2019 by the Institute for
Health Metrics and Evaluation.
With over 186 million tobacco
users in India, two in every three
people who chew dry snuff
tobacco the world over are
Indians — 22.4 per cent men in
the age group of 15-54 years in
the country are tobacco smokers.
One in every two men and two
in five women smoke more than
five bidis (cigarettes made from
tobacco wrapped in leaves) a day.
Tobacco use is the single
leading preventable cause of
death worldwide, according to
the Global Adult Tobacco Survey
conducted by the Ministry of
Health and Family Welfare, World
Health Organization, and Tata
Institute of Social Sciences.
Globally, around 8 million
deaths are attributed to the use of
tobacco every year. One in every
five deaths is due to the harmful
effects of tobacco.
It has been shown that around
50 per cent of long-term smokers
die from causes directly linked to
smoking, such as cancer, lung
ailment, cardiovascular diseases,
and stroke.
A smoker’s average life
expectancy is 10 years lower than
a non-smoker’s.
Tobacco kills nearly 1.35
million people every year in
India. That’s 3,699 deaths a day
on average, or 154 every hour.
The National Cancer Registry
Programme 2020, released by
the Indian Council of Medical
Research, revealed that 27 per
cent of all cancer cases in the
country can be directly linked
to the use of tobacco and/or
consumption/inhalation of
tobacco products.
SOURCE: INDIASPEND
But it owned valuable real estate in Delhi,
Mumbai, Lucknow, Patna, and Panchkula.
They say the takeover included a
‘fraudulent transaction involving the purchase
In 2010, Young Indian (YIL) was set up, with of a non-existent loan of ~90.21 crore by the
Rahul, then a general secretary of the Congress, Congress party for ~50 lakh’.
as director. While Rahul and his mother Sonia The loan was actually a book entry,
STATES WITH HIGHEST AND held 76 per cent of the company’s shares, the designed to transfer 99 per cent of the shares
remaining 24 per cent were held by Congress of AJL to YIL (held by the Gandhi family), for
LOWEST PERCENTAGE OF leaders Motilal Vora and Oscar Fernandes, both which ‘the assessee company had taken
TOBACCO CONSUMPTION dead. The company was said to have no com- accommodation entries of ~1 crore from a
mercial operations. hawala entry operator located in Kolkata called
Mizoram 72.9 Soon after its formation, YIL took over AJL. Messrs Dotex Merchandise’. A commission of
Heirs of some of the shareholders said they ~1 lakh was paid by cheque for the hawala entry
Manipur 58.1
had no information on AJL being taken of ~1 crore by the Gandhis, says the ED.
Meghalaya 57.7 over. This could be a violation of the Lawyers for the Congress and the Gandhi
Tripura 56.9 Companies Act, 1956. family say this is simply not correct.
The number of shareholders is central to “There is no money. There is no transfer of
Assam 51.8
the extraordinary general meeting that allowed property. There is no transfer of money. Yet a
Telangana 22.3 a non-profit company like YIL to take a majority charge of money laundering is made out,” says
Tamil Nadu 20.1 shareholding in AJL. Abhishek Manu Singhvi, adding, “YIL cannot
In 2012, Bharatiya Janata Party leader and use money in any form which it gets, because
Goa 18.2 advocate Subramanian Swamy filed a com- it can neither pay dividend nor accumulate
Kerala 16.9 plaint before a trial court, alleging that some profit by which it can give out the money.”
Congress leaders were involved in cheating This is the issue that Rahul – and later
Punjab 12.9 and breach of trust in the acquisition of AJL Sonia – will have to hammer out with the
Source: IndiaSpend by YIL. He alleged that YIL had ‘taken over’ ED in a case that begins today.

Kerala’s ‘Captain’ on a sticky wicket

Bypoll setback, gold scam queer CM Pinarayi Vijayan’s pitch
SHINE JACOB
Chennai, 12 June
A ‘Captain comrade’ who has led
Kerala in times of crises in the past,
steering the Left ship to safe waters
in the 2021 Assembly elections
with a thumping win and rewriting
the state’s political history of voters
swinging between the Congress
and Communists once in five
years, Chief Minister (CM) Pinarayi
Vijayan is seen as both an able
administrator and a slick
propagandist by his followers.
But his personality cult needs
careful examination.
His detractors call him ‘Modi in
Mundu’, owing to his style of
functioning. But the Communist
Party of India (Marxist), or CPI(M),
strongman is facing one of the
biggest political crises in the past
two weeks: first, through the loss of
the Thrikkakara Assembly by-
election; two, a fresh set of
allegations against him and his
family in the sensational Kerala
gold scam case.
In the political scheme of
things, the Thrikkakara bypoll is
irrelevant since the
government has 99 of
the 140 seats in the
Assembly. However,
experts indicate that
where the CPI(M) may
have flubbed is by
giving it more
prominence than
originally intended.
Pinarayi, 20 of his STATE
ministers, and
members of the
legislative Assembly
SCAN
KERALA
camped in the region
for several days at a
stretch - even doing
door-to-door campaigns.
One more seat would have
made little or no difference to the
stability of the government, but the
election management of the
CPI(M) came unstuck when the
ambitious K-Rail project was
made the main poll plank in
the by-election.
Making the proposed rail
corridor, strongly
opposed by the
Congress-led United
Democratic Front (UDF),
a major campaign topic
in the constituency,
Pinarayi said it was a
battle between the
proponents of pro-
development and anti-
development.
Also known as the
SilverLine project, it is a
200-kilometre per hour
semi-high speed rail
connecting Kasaragod
and Thiruvananthapuram at an
investment of around ~63,941
crore. Even as attempts to lay the
survey stones for the state
government’s ambitious
SilverLine rail corridor triggered
clashes between local residents
and the police near Kaniyapuram
in the capital district, the
government still underscored K-
Rail as its flagship development
project during the first phase of the
bypoll campaign.
To Pinarayi, a victory in
Thrikkakara would have come as
public endorsement of his
development initiatives, including
the controversial K-Rail project,
which has witnessed widespread
Opposition-led protests across the
state. “But voters in Thrikkakara
snubbed the CPI(M)’s overtures
and handed yet another win to
the Congress,” said Sunnykutty
Abraham, a senior
political analyst.
Justifying the poll debacle in
the Thrikkakara by-election, the
CPI(M) said the UDF won the
election as it was able to unite the
anti-Left elements.
“The people of Thrikkakara
have spoken resoundingly against
‘Mundu Modi’s’ arrogance and his
pet K-Rail project, reflecting the
sentiment of hundreds of
Police use water cannons to disperse Youth Congress activists as they
protest demanding the resignation of Pinarayi, in Kochi
thousands across Kerala,” said
senior Congress leader Jairam
Ramesh, after the victory.
Following the elections, in
which Congress candidate Uma
Thomas won by a margin of 25,000
votes, it was the CM’s widespread
campaign that led to the people
calling Opposition leader V D
Satheesan the ‘real Captain’.
However, the real crisis for
Pinarayi was about to flare-up in
PHOTO: PTI
the form of Swapna Suresh - a key
accused and a former employee of
the United Arab Emirates
consulate in the ‘diplomatic
baggage’ gold smuggling scam.
Before her media outreach,
Suresh had given 164 statements
before the court about the
involvement of the CM, his former
principal secretary M Sivasankar,
Pinarayi’s wife Kamala, daughter
Veena, his additional private
secretary C M Raveendran, former
bureaucrat Nalini Netto, and
former minister K T Jaleel.
She claimed that a baggage
containing currency was even sent
to Pinarayi when he was in Dubai in
2016. The state Congress unit
staged protests in Kannur, Kochi,
and Pathanamthitta, seeking his
resignation over his alleged
involvement in the case.
Satheesan, too, also asked for
Pinarayi’s dismissal.
She said biryani vessels holding
heavy metals used to be taken to
Cliff House, the official residence of
the CM, from the Consulate
General’s house, following
Sivasankar’s directives.
The case hit national headlines
after Customs seized over 30
kilograms of gold worth ~14.8 crore
at Thiruvananthapuram
international airport in July 2019 in
a ‘diplomatic baggage’.
“Although Pinarayi was
allegedly involved in the SNC-
Lavalin case as well, there were no
allegations against his family. This
seems to be the biggest political
calamity he’s faced after
becoming CM,” Abraham told
Business Standard.
 QUICK TAKE: TURNAROUND TRIGGER FOR EMAMI “The US Fed will now

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MONDAY, 13 JUNE 2022 ED MOYA,
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STREET
SIGNS

slice out of Jubilant's profit this year.

Aggressive expansion, raw The management believes it
can maintain the current margin
material inflation, and trajectory (given the stable com-
modity costs), increasing invest-
competitive pressures to hit ments for network expansion
QSR player’s profitability across brands in its portfolio not-
withstanding.
Macquarie Capital Securities’
Avi Mehta and Shashank
Krishnakumar are, however, not
convinced of the management
guidance of a flat margin perform-
ance (at current levels) in FY23.
They cite historical trends, store
expansion, and dine-in recovery
to back their contention of margin
pressures in the future.
The last food inflation cycle
(2011-12 through 2016-17) saw
sharp price hikes and competitive
RAM PRASAD SAHU of Axis Capital have cut their 2022- pressure driving moderation in
Mumbai, 12 June 23 (FY23) earnings estimates of the
PROFIT ESTIMATES LOWERED transaction volumes and, in turn,
company by 16 per cent and FY23E FY24E forcing the company to re-eval-
ramping up their presence.
After opening 250 stores in
FY22, Devyani International (fran-
chisee of Pizza Hut, Kentucky
Fried Chicken) has guided for 200-
250 stores in FY23.
Similarly, Restaurant Brands
Asia (formerly known as Burger
King India) is increasing its store
count by 50 per cent by 2023-24
(FY24), from the current 315 stores.
Favourable rental deals,
demand shift from the unorga-
nised to the organised, and
expansion into new towns and
cities offering healthy demand
prospects have prompted these
expansions, reveals Elara Capital.
However, Axis Securities
believes there will be some drag in
the operating profit margin due to
aggressive store expansion guid-
ance of 250 Domino stores and
20-30 Popeyes stores (lower
throughput in the initial years).
Given the rapid expansion, the
Street will also keep an eye out for
execution under a new CEO
Sameer Khetarpal.
Enter the dragon
With China’s market trying to bounce back
after this year’s rout triggered by rising Covid-
19 cases, many foreign brokerages are turning
positive on Chinese stocks, citing attractive
valuation. The change in sentiment is
underpinned by the easing of regulatory
crackdown and the government’s efforts to
boost the economy. Going ahead, China’s
market could attract a higher share of flows
earmarked for emerging markets (EMs), say
experts. Also, some funds could reallocate
from other EMs to China, posing fresh
headwinds for markets like India, which
commands a steep valuation premium to
other EMs.
Will LIC find buying support?
Shares of LIC— down 25 per cent from their IPO
price of ~949 apiece — could come under fresh
selling pressure
on Monday as the
30-day freeze on (in `~)
LIC STOCK SLIPS
shares held by
anchor investors
has ended.
Anchor investors
hold over a fourth
of LIC’s public
Source: Exchange

A
fter a sharp 22 per cent rally
in the last week of May, the
stock of India’s largest
quick service restaurant player,
Jubilant FoodWorks, has shed a
third of those gains. While an
aggressive store expansion plan
and appointment of a new chief
executive officer (CEO) are
positives from a growth perspec-
tive and clear the leadership over-
hang, margin worries could sus-
tain the downside pressures on the
stock in the near term. These con-
cerns have led to a revision of
profit estimates by brokerages.
Analysts, led by Anand Shah,
reduced their target price from
~750 to ~630 after the January-
March quarter (fourth quarter, or
Q4) results. The downward
revision is on account of sharp
inflation in raw material and cut
in same-store sales growth (SSSG)
estimates for FY23.
The company reported an
operating profit margin of 25 per
cent in Q4 of 2021-22 (FY22). This
was up 73 basis points (bps)
year-on-year (YoY), while falling
158 bps on a sequential basis.
Some of the gains YoY were on
account of operating leverage,
with the company cataloguing 13
Revised Earlier % change Revised Earlier % change uate its SSSG and margin Normalisation of costs, with float. “Some Compiled by BS Research Bureau
Stores (number) 1,858 1,780 4.4 2,058 1,955 5.3 guidance, they point out. A 10 per recovery led by the dine-in anchor investors
Revenue (~cr) 5,399 5,418 0.4 6,453 6,376 1.2 cent-plus price hike typically segment (as compared to delivery- had to subscribe to more shares than they
signals the start of margin focused model of Jubilant), intended to. This was due to lukewarm
Operating profit (~cr) 1,365 1,442 -5.3 1,678 1,685 -0.4
moderation, they add. besides increased competition, demand and last-minute bid cancellation by
Margin (%) 25.3 26.6 -130 26 26.4 -40 What could add to costs is the could weigh on margins that one FPI. Selling pressure from domestic funds
Net profit (~cr) 562 673 -16.5 760 835 -9.0 acceleration in store additions. are near lifetime highs, believe can’t be ruled out,” said an analyst. Market
E: Estimates; margin change in basis points Source: Axis Capital After a record 80 Domino’s Pizza analysts. players say this week will be the litmus test for
store additions in the quarter, tak- At the current price, the stock LIC on whether the stock finds buying support
per cent sales growth. offset by driving business effi- ing the total store count at the end is trading at 53x its FY24 earnings from institutional investors like mutual funds
The company’s outgoing CEO ciencies and productivity, lower of FY22 to 1,567, the company is estimates. at these lower valuations.
Pratik Pota in an investor call high- and more targeted discounting, planning to add 250 more stores While sales on the back of store
lighted that the company faced and calibrated price increases. to its pizza network in FY23. The additions and price hikes are Dairy stocks on investor radar
intense and broad-based inflation- The company took a 5-6 per additions will add 15 per cent to its expected to be strong, investors The stocks of dairy companies are likely to
ary headwinds across commod- cent price hike in the October- existing base. The company is also should await profitable gain, as these companies have raised milk
ities, fuel, and other costs during December quarter and repeated a adding 25-30 stores of fried growth/improving margin trends selling prices by 5-8 per cent in the past five
the past quarter. However, this was hike of a similar quantum in April chicken brand Popeyes in the cur- before considering the stock. months. They will need to raise prices again
in coming quarters to pass on higher milk
procurement prices, say analysts. With higher
inflation and likely better volumes with

Advance-decline ratio remains New SIP openings in May lowest in 12 mths higher sales to hotels, restaurants and
catering, revenue growth is likely to remain
strong. "Considering the strong return ratios
and growth potential, we remain positive on
below 1 for 2nd month in a row CHIRAG MADIA
Mumbai, 12 June
the dairy sector. We also expect migration
from the unorganised to organised sector to
THE ADVANCE-DECLINE RATIO (ADR) for stocks traded on the BSE
The spike in volatility may not have impacted
APPLYING BRAKES SIPs accounts (in mn) steadily generate value," said a note by ICICI
Securities. Heritage Foods and Dodla Dairy are
has remained below 1 for the second straight month until June 10% few SIP accounts were opened in May
10. If the market trend fails to improve, this will be the first time equity inflows, but it has weighed on new among the stocks expected to gain.
investors coming via the systematic New Discontinued* COMPILED BY SAMIE MODAK & SUNDAR SETHURAMAN
since March 2020 when ADR has remained below 1 for two
investment plan (SIP) route. Dec 21 2.21 0.95
successive months. ADR gives an indication of market breadth.
In May, 1.97 million new SIPs got registered Jan 22 2.65 1.25
An ADR less than 1 indicates more stocks have fallen than those - nearly 15 per cent lower than the previous Feb 22 2.35 1.10 EVENTS THIS WEEK
that have gained during the month. So far this month, ADR is five-month average of 2.3 million - reveals the
0.93, with 1,777 stocks advancing and 1,912 declining, reveals the Mar 22 2.09 1.05 Date Events
data provided by the Association of Mutual
data by BSE. The ADR for May was 0.84, with 1,718 stocks Funds in India. Apr-22 2.18 1.05 Jun-13 n India - CPI figures
advancing and 2,037 declining. Since April 2020, this is only the Since June 2021, new SIP registrations May-22 1.97 1.03 n UK - Monthly GDP figure
fifth month when ADR has been below 1. Strong retail flows have been upwards of 2 million each calendar Note: *Also includes tenure-completed SIPs Source: Amfi n UK - Industrial &
through direct investing have underpinned positive market month. The new SIP tally in May was the manufacturing production
breadth subsequent to the pandemic, say market experts. A lowest in 12 months. n UK - Trade balance
drop in ADR is also an indication that retail interest could be Market participants say a drop in tally Jun-14 n India - WPI figures
could be due to investor fatigue, besides the n India - Imports, exports &
waning, they add. SAMIE MODAK
impact of market fall on investor sentiment. have given returns of 5.4 per cent and 8.14 per - at fixed intervals, say once a month - instead trade balance #
BREADTH ANALYSIS Over the past few months, stocks have cent, respectively. of making a lump sum investment. n UK - ILO Unemployment rate
Jun-15 n US - FOMC rate decision
Market trend continues to be weak as more stocks decline seen wild swings due to concerns over rising Market players say the rolling 12-month However, inflows through SIPs have
inflation, the potential impact of the ongoing returns could turn negative for many inves- continued to remain resilient, even as the n US - Import/Export Price Index
than advance even in June n Advances nDeclines nRatio
war in Ukraine, and a hawkish pivot by the tors and influence new investor flows. pace of new account openings has declined. n US - NAHB Housing Market
US Federal Reserve. Until now, the impact on net inflows has Sustained inflows through this route have Index
2,163

2,052

2,037
2,038

1,952
1,712

“Investors tend to look at past perform- been negligible. Inflows through the SIP route provided the domestic MF industry a solid n China - Industrial production
1,912
1,841
1,794

1,783

1,718
2,038

ance and invest in mutual funds (MFs). The have been on an upward trajectory since foundation for growth. Jun-16 n US - Jobless claims
2,023
1,570

equity markets in the past year have given
lower single-digit returns and have been
wobbly of late. We expect investors to start
investing in SIPs again once there is clarity
on issues swaying markets,” said a chief
executive officer of a mid-sized fund house.
In the past year, large-cap funds on
Dec ‘21 Jan ’22 Feb ’22 Mar ’22 Apr ’22 May ’22 Jun ’22*
average have given returns of 4.5 per cent,
1.38 1.14 0.83 1.06 1.13 0.84 0.93 while mid-cap funds and small-cap funds
Notes: upto 10 June, 2022 Source: BSE
September 2021. In May, the industry saw
inflows of ~12,286 crore, compared with
~11,863 crore in April.
In 2021-22, inflows through SIPs stood at
~1.24 trillion, against ~96,080 crore seen in
2020-21.
SIP is a disciplined investment method-
ology offered by MFs wherein one can invest
a fixed amount in an MF scheme periodically
D P Singh, deputy managing director and n UK - Bank of England bank
chief business officer at SBI MF, says, rate
“Investors have continued to stay on, market Jun-17 n US - Industrial &
volatility notwithstanding. We have always Manufacturing production
said that investors should not move out when # tentative between June 14-15
markets are down. I think they have now Source: Bloomberg
understood the narrative.” Compiled by BS Research Bureau
The number of SIPs discontinued or whose
tenure completed stood at 1.03 million in May.

TOP BULK DEALS

‘Mkt coming to terms with structural inflation narrative’ Date
Jun 09
Jun 10
Scrip
GMR Infra
Client
Dvi Fund Mauritius (S)
IIFL Finance
Cdc Group Plc (S)
Price
36
325
Over the past few months, global markets have danced to the tune of central fight macro headwinds? we also have select consumer Jun 07 PB FintechYashish Dahiya (S) 610
bank moves. MANISHI RAYCHAUDHURI, Asia-Pacific equity strategist at BNP Over the past two-three years, the discretionary companies —
Paribas, in conversation with Puneet Wadhwa says he expects the current central government has been primarily market-leading Jun 10 IIFL Finance
Cdc Group Plc (S) 335
volatility in Asian and Indian equities to continue over the foreseeable time working on a strategy to boost automotive and energy Jun 09 GMR Infra Veda Investors 36
horizon. Edited excerpts: domestic manufacturing and companies — as buoyancy in fuel Fund (B)
capital expenditure (capex). prices seems set to last longer. We
Do you think the risks to markets Have the markets overreacted to An ambitious infrastructure are currently overweight on India Jun 09 GMR Infra Deccan Value (B) 36
are mounting and rallies will the central bank moves? investment plan — combining and have maintained this stance Investors Fund
eventually get sold into? BNP Paribas economists estimate central government spending, since late last year. Jun 10 IIFL Finance Nomura India 325
The current volatility in Asian three 50-bp hikes by the Fed state government spending, and Investment Fund (B)
and Indian equities is likely to between June and September. public-private partnership — is What is the ideal portfolio
continue over the foreseeable The market is gradually coming part of that strategy. construct you advise at this Jun 09 GMR Power & Deccan Value Advisors 22
time horizon. Accelerated to terms with the narrative of Investors are keen to see a juncture? Urban Fund Iv (S)
monetary policy tightening by structural inflation and the Fed’s continuance of this investment- What we have seen recently is a Jun 09 GMR Infra A/D Investors Fund (B) 36
global central banks and the just- articulated intention to control boosting strategic thrust. The coordinated decline in financial
commenced quantitative inflation by any means. However, major macro headwind centres assets — fixed income and equity. Jun 09 GMR Infra C/D Investors Fund (B) 36
tightening (QT) by QT, which the Fed had around inflation, and the Reserve Except commodities, more or less Jun 10 IIFL Finance Max Life Insurance 325
the US Federal engaged in only once Bank of India’s recent monetary all asset classes have Company (B)
Reserve (Fed) could before, could RETAIL INVESTORS policy stance clearly seeks to underperformed.
Jun 09 GMR Infra Dvg 1740 Fund (B) 36
continue to drive depress financial ARE UNDER-INVESTED contain inflationary pressures. Over the long term, equities
fund outflows assets further. While fiscal policy may need to are the best inflation hedge, Jun 09 GMR Infra H/D Investors Fund (B) 36
from emerging IN EQUITIES, RECENT retail investors continue to align with monetary policy to recent underperformance
Jun 06 RBL Bank Bofa Securities 107
markets (EMs). MANISHI Do you think foreign EXUBERANCE support in the backdrop of control inflation, we do not notwithstanding, and should
Europe Sa (B)
Spike in fuel RAYCHAUDHURI institutional persistent FII selling? expect curtailment of the constitute a major part of
prices, accelerated Asia-Pacific equity investors (FIIs) have
NOTWITHSTANDING” Retail investors are under- government’s capex plan. investors’ financial portfolio. Jun 09 GMR Power Veda Investors 22
by persistent strategist, BNP Paribas actually ‘oversold’ invested in equities, recent & Urban Fund (B)
geopolitical India? benchmark — a situation they exuberance notwithstanding. What has been your investment Does it make sense to diversify
Jun 09 GMR Infra Deccan Value 36
tensions, could be an additional Since October 2021, FIIs have sold had reached only twice before, Over the long term, the strategy? into other markets?
headwind for India, widening $28 billion Indian equities — over the past 20 years. This does participation of DIIs and retail Rising interest rates are usually Geographical diversification is an
Investors Bpi Fund (B)
trade deficit and depreciating the about 0.8 per cent of India’s not imply that FII selling would in Indian equities should good for banks’ interest margins appropriate risk-mitigation Jun 09 GMR Power & Deccan Value 22
currency in the near term. market capitalisation (m-cap). reverse in the near term as remain robust. and we are playing that theme strategy, especially during the Urban Investors Fund (B)
We anticipate some degree of This is higher than the previous fundamental headwinds That said, increasing interest through private sector banks. present time of heightened
Jun 07 Saregama India Quest Capital 428
stability in the markets in the last episodes of sharp FII selling still persist, but it does provide rates could make fixed-income Depreciation of the rupee is a volatility.
quarter of 2022. (0.4-0.5 per cent of m-cap) and a rationale for FII’s appetite investments relatively attractive tailwind for information Asian currencies are
Markets (B)
By then, the most severe Fed almost as high as the selling for India to return once the in the near term — a potential technology (IT) services depreciating against the US dollar Jun 07 Saregama India Sarala Real Estate (S) 428
rate hikes — a series of 50-basis during the global financial crisis. dust settles. headwind for retail participation. companies and front-line IT and investing in the developed Jun 08 Selan Rohini Kapur (S) 199
point (bp) increases — should Global EM investors are companies are reporting robust markets, albeit in select sectors,
Exploration
likely be behind us and so would significantly underweight on Until when will domestic Do you think the government is deal wins. could be a suitable diversification
the initial jolt of QT. India relative to the MSCI EM institutional investors (DIIs) and running out of ammunition to In our Asian model portfolio, plan at this juncture. (B) -Buy (S) -Sell Source: Exchanges
12
>
NEW DELHI | MONDAY, 13 JUNE 2022 1
NOTICE CUM ADDENDA

NOTICE is hereby given to the investors/Unit Holders of DSP Quant Fund (‘Scheme’) that the Board of Directors of DSP Trustee Private Limited, Trustee to
DSP Mutual Fund (‘Fund’), have approved change in fundamental attribute of the Scheme as summarized below which would be effective from Monday, July Clause of SID
Sl. Particu-
18, 2022. (Chapter and Existing Provision in SID Proposed Provision in SID Changes made
No. lars
A. Background - Section) (d) (e) (f)
(a) (c)
(b)
DSP Quant Fund (‘Scheme’) is an open ended equity scheme investing based on quant model theme. The investment objective of the Scheme is to
deliver superior returns as compared to the underlying benchmark over the medium to long term through investing in equity and equity related securities.
The portfolio of stocks will be selected, weighed and rebalanced using stock screeners, factor-based scoring and an optimization formula which aims to 6 SECTION E – What What is a factor model and why do factors What is a factor model and why do factors Changes as de-
enhance portfolio exposures to factors representing ‘good investing principles’ such as growth, value and quality within risk constraints. The AUM of the V - INFORMA- are In- work and why the preference for a multi-factor work and why the preference for a multi-factor scribed in column
Scheme as on May 31, 2022 was Rs. 1283.4 crores. TION ABOUT vestment approach? approach? e
THE SCHEME strategies Factor strategies (also known as smart beta) Factor strategies (also known as smart beta)
B. Proposal - today combine active and passive invest- today combine active and passive invest-
i) Change the frequency of Model Rebalancing Period: Currently, the quant model in terms of disclosure made in the Scheme Information Document ing models providing the investors with the ing models providing the investors with the
(‘SID’) of the Scheme has a half yearly-balancing frequency where the entire quant model is run every March and September It is proposed to move to tools to express investment preferences and tools to express investment preferences and
a Quarterly rebalancing frequency instead of half yearly. At each model re-balance, the automated stock picking and weighting process that generates philosophies in an efficient manner. philosophies in an efficient manner.
the portfolio as described in the investment strategy will be run based on latest available data.
Driven primarily by underperformance and Driven primarily by underperformance and
ii) Enable writing of call options under a covered call strategy: In accordance with SEBI (Mutual Funds) Regulations, 1996 and SEBI circular shrinking alpha particularly in the large cap shrinking alpha particularly in the large cap
no. SEBI/HO/IMD/DF2/CIR/P/2019/17 dated January 16, 2019, schemes are allowed to write call options under a covered call strategy subject to space, such strategies have, in recent years, space, such strategies have, in recent years,
guidelines issued by SEBI from time to time. It is proposed to enable writing of call options under a covered call strategy for the purpose of generating gained tremendous popularity particularly in gained tremendous popularity particularly in
additional returns in the form of option premium in a range bound market. developed markets. developed markets.
(iii) Other modifications to be made in SID of the Scheme: We also propose to make certain modifications in the clauses of the SID of the Scheme
Globally, some of the most researched factors Globally, some of the most researched factors
which are listed below:
and the reasons for the risk-premia associat- and the reasons for the risk-premia associat-
a. Negative exclusion criteria ed with them are the following: ed with them are the following:
b. Stock level constraints
c. Weighting scheme Table 1: Illustration of globally most re- Table 1: Illustration of globally most re-
d. Inclusion criteria searched factors and reasons for associated searched factors and reasons for associated
risk premia risk premia
Rationale for the proposed changes:
a. Change in rebalancing period to make the quant model more dynamic and allow for re-balancing of portfolio weights that may have drifted higher or Factor Performance/Risk drivers Factor Performance/Risk drivers
lower due to extreme price moves
b. Enabling writing of call options under a covered call strategy since this allows for generating additional returns in the form of option premium in a range Growth • Premium associated with Growth • Premium associated with
bound market companies that have consis- companies that have consis-
c. Additions to stock selection and exclusion criteria incorporating data inputs such as ESG data, insider share sales data, trading volumes etc. tently delivered on Earnings tently delivered on Earnings
d. Removal of cap on stock weights in the portfolio currently capped at 10x of their respective weight in BSE 200 index. This is because a sizeable growth. growth.
number of stocks within BSE 200 TRI have very small weights below 10 basis points. The 10x constraint results in sub-optimal weights in the portfolio • Since most of the present • Since most of the present
for stocks that score well on selected factors. The portfolio will continue to have a single stock concentration cap of 10% value of these compa- value of these companies
e. Weighting scheme will additionally incorporate price and volume-based inputs to improve outcomes. Extensive back tests and research reveal the nies comes from future comes from future cash-
benefits of capturing behavioural factors since market behaviour is not driven only by stock fundamental but also by investor behavior cash-flows, they are most flows, they are most suscep-
f. Inclusion criteria used for assigning percentile score for each company across selected factors may deviate from an equal weighted approach based susceptible to changes in tible to changes in interest
on macro-economic data or if any of the selected factors exhibit extreme price moves interest rates (discount rate) rates (discount rate) and the
The appended table proposes to reflect existing and proposed changes to the SID of the Scheme along with rationale for such change are as follows: and the growth outlook. growth outlook.
Quality • Well run companies with Quality • Well run companies with
Clause of SID high earnings visibility. high earnings visibility.
Sl. Particu-
(Chapter and Existing Provision in SID Proposed Provision in SID Changes made • Companies that typically • Companies that typically
No. lars
Section) (d) (e) (f) avoid over leveraging and avoid over leveraging and
(a) (c)
(b) are perceived as being less are perceived as being less
risky. risky.
1. Name DSP Quant Fund DSP Quant Fund No change • Perception of lower risk • Perception of lower risk
of the brings down cost of capital, brings down cost of capital,
Scheme improving margins and improving margins and
2. SECTION I. Type An Open ended equity Scheme investing An Open ended equity Scheme investing No change increasing return on equity. increasing return on equity.
HIGHLIGHTS/ of the based on a quant model theme based on a quant model theme Value • Typically highly leveraged Value • Typically highly leveraged
SUMMARY Scheme companies with lower ability companies with lower ability
OF THE to withstand macro shocks. to withstand macro shocks.
SCHEME • Value premium can be • Value premium can be
3. SECTION I. Invest- The investment objective of the Scheme is The investment objective of the Scheme is No change viewed as a compensation viewed as a compensation
HIGHLIGHTS/ ment to deliver superior returns as compared to to deliver superior returns as compared to for macro risk. for macro risk.
SUMMARY Objective the underlying benchmark over the medium the underlying benchmark over the medium
OF THE to long term through investing in equity and to long term through investing in equity and
SCHEME equity related securities. The portfolio of equity related securities. The portfolio of
stocks will be selected, weighed and rebal- stocks will be selected, weighed and rebal- How to measure factor exposures? How to measure factor exposures?
anced using stock screeners, factor-based anced using stock screeners, factor-based Stock level exposures to various factors can Stock level exposures to various factors can
scoring and an optimization formula which scoring and an optimization formula which be measured by one or any of the following be measured by one or any of the following
aims to enhance portfolio exposures to fac- aims to enhance portfolio exposures to fac- descriptors. The below list is not an exhaus- descriptors. The below list is not an exhaus-
tors representing ‘good investing principles’ tors representing ‘good investing principles’ tive list. As markets evolve and data availabil- tive list. As markets evolve and data availabil-
such as growth, value and quality within risk such as growth, value and quality within risk ity as well as academic research becomes ity as well as academic research becomes
constraints. constraints. more sophisticated, the understanding and more sophisticated, the understanding and
However, there can be no assurance that the However, there can be no assurance that the definitions of factors may keep evolving. definitions of factors may keep evolving.
investment objective of the scheme will be investment objective of the scheme will be Table 2: Commonly used descriptors for fac- Table 2: Commonly used descriptors for fac-
realized. realized. tors (this is not an exhaustive list. The DSP tors (this is not an exhaustive list. The DSP
4. SECTION I. Bench- S&P BSE 200 TRI Index S&P BSE 200 TRI Index No change Quant Fund uses 5 factors out of the below Quant Fund uses 5 factors out of the below
HIGHLIGHTS/ mark list) list)
SUMMARY Index Factor Fundamental measures Factor Fundamental measures
OF THE
SCHEME Growth • Historical Earnings Growth Growth • Historical Earnings Growth
• Estimated Consensus • Estimated Consensus
5. SECTION How Indicative Indicative Changes as de-
Earnings Growth Earnings Growth
V - INFORMA- will the allocations allocations scribed in column
• Growth in revenues • Growth in revenues
TION ABOUT Scheme (% of total (% of total Risk e
Risk Instruments • Growth in assets • Growth in assets
THE SCHEME allocate Instruments assets) assets) Profile
Profile
its assets Quality • Return-on-Equity (ROE) Quality • Return-on-Equity (ROE)
Mini- Maxi- Mini- Maxi-
• Earnings Growth Variability • Earnings Growth Variability
mum mum mum mum
• Return-on-Invested Capital • Return-on-Invested Capital
A. Equity & 95% 100% Medi- A. Equity & 80% 100% Very (ROIC) (ROIC)
Equity um to Equity High
related in- High related Value • Price/Book ratio Value • Price/Book ratio
struments instruments • Estimated FY1 Price/Earn- • Estimated FY1 Price/Earn-
including including ings ratio ings ratio
derivatives derivatives • IDCW Yield • IDCW Yield
B. Debt and 0% 20% Low • Free-Cashflow Yield • Free-Cashflow Yield
B. Debt and 0% 5% Low
money • EV/EBITDA • EV/EBITDA Price/Sales ra-
money
market • Price/Sales ratio tio
market
instru- instruments
DSP Quant Fund: Investment Strategy and The 5 factors used in the quant model have
ments C. Units 0% 5% Very Model Implementation been selected based on extensive back-tests
C. Units 0% 5% Medi- issued by High
REITs & Our aim is to create a model based fund that to establish whether they have historically
issued by um to
InvITs is anchored around fundamental principles of generated excess returns over time. The
REITs & High
good investing. The endeavor is to create an factors are also selected such that there is
InvITs The Scheme may also invest in derivatives
automated stock picking and weighting model a combination of factors corresponding to
instruments to the extent of 50% of the equity
The Scheme retains the flexibility to invest
and debt component respectively as permit- that generates portfolios which maximize char- Quality, Value and Growth styles to create a
across all the securities in the debt and money acteristics of the chosen factors while adhering multi-factor model. The selected factors need
markets as permitted by SEBI / RBI from time ted vide SEBI Circular no. DNPD/Cir 29/2005 to have a low correlation with each other with
dated September 14, 2005 and SEBI Circular to liquidity and risk concentration constraints.
to time, including schemes of mutual funds. both pro-cyclical and defensive factors in
No. DNPD/ Cir-30/2006 dated January 20, Why BSE 200 as benchmark?
The scheme may also invest in derivatives order to have a more balanced performance
2006, SEBI circular No. SEBI/DNPD/ Cir-
instruments to the extent of 80% of the Net 31/2006 dated September 22, 2006 and SEBI The Scheme will invest in stocks selected from across both ‘bull’ and ‘bear’ markets.
Assets as permitted vide SEBI Circular no. Circular No. Cir/IMD/ DF/ 11/ 2010 dated a universe of S&P BSE 200 (half-yearly rebal- At every re-balance, the latest factor data for
DNPD/Cir 29/2005 dated September 14, 2005 August 18, 2010. The Scheme may use fixed ance). We opine that BSE 200 represents a each company is refreshed and a percentile
and SEBI Circular No. DNPD/ Cir-30/2006 income derivative instruments, subject to the universe of reasonably liquid, well researched score is assigned for each company across
dated January 20, 2006, SEBI circular No. guidelines as may be issued by SEBI and RBI companies. The vast number of active funds the selected 5 factors, which is combined into
SEBI/DNPD/ Cir-31/2006 dated September and for such purposes as maybe permitted in the large cap space are also benchmarked an aggregate score for relative company per-
22, 2006 and SEBI Circular No. Cir/IMD/ DF/ from time to time, including for the purpose of
11/ 2010 dated August 18, 2010. The Scheme to BSE 200 for the same reason. centile ranking. The aggregate scores are
hedging and portfolio balancing, based on the used for determination of final portfolio con-
may use fixed income derivative instruments, opportunities available. Importance of negative ‘exclusion’ criteria:
subject to the guidelines as may be issued stituents and weights.
by SEBI and RBI and for such purposes as Our backtests suggest that not owning ‘poorly
An investment committee review of the model
maybe permitted from time to time, including run companies’ is also a significant source of
including the selected factors is done annu-
for the purpose of hedging and portfolio bal- outperformance over the long term.
ally. The AMC may review and modify the
ancing, based on the opportunities available. We narrow down the universe by applying ob- scheme’s investment strategy if such chang-
The Scheme shall not lend securities amount- The Scheme will not lend securities more than jective pre-defined criteria that excludes the es are considered to be in the best interest
ing to more than 50% of the net assets of the 20% of its corpus and the Scheme shall not following from the investable universe; of unit holders.
Scheme. The Scheme will enter into securi- lend securities more than 5% of its corpus to • Exclude companies that fail to pass
ties lending in accordance with the framework a single counterparty. The Scheme will enter through proprietary earnings quality and DSP Quant Fund: Investment Strategy and
specified by SEBI in this regard. into securities lending in accordance with the forensic accounting screeners based on Model Implementation
The Scheme may enter into short selling framework specified by SEBI in this regard. reported accounting statements
transactions in accordance with the frame- The Scheme may enter into short selling • Exclude companies exposed to higher de- Our aim is to create a model based fund that
work relating to short selling specified by transactions in accordance with the frame- fault risk (higher than a predefined lever- is anchored around fundamental principles of
SEBI. The Scheme may also participate in work relating to short selling specified by age threshold, ex-Financials) good investing. The endeavor is to create an
repo of money market and corporate debt SEBI. The Scheme may also participate in • Exclude companies with higher than a pre- automated stock picking and weighting mod-
securities. repo of corporate debt securities, Government defined volatility threshold el that generates portfolios which maximize
The cumulative gross exposure through eq- securities and T-bills not more than 5% of the • Exclude companies which do not meet cer- characteristics of the chosen factors while
uity, debt, derivative positions (including fixed corpus. tain pre-defined ownership/shareholding adhering to liquidity and risk concentration
income derivatives), Real Estate Investment The cumulative gross exposure through eq- criteria constraints.
Trusts (REITs), Infrastructure Investment uity, debt, derivative positions (including fixed
Trusts (InvITs), other permitted securities/as- income derivatives), Real Estate Investment Benefits of Multi-factor portfolio construc- Why BSE 200 as benchmark?
sets and such other securities/assets as may Trusts (REITs), Infrastructure Investment tion approach: The Scheme will invest in stocks selected from
be permitted by the SEBI from time to time Trusts (InvITs), other permitted securities/as- • We select 5 factors (corresponding to the a universe of S&P BSE 200 (half-yearly rebal-
should not exceed 100% of the net assets of sets and such other securities/assets as may Factors that represent Quality / Value / ance). We opine that BSE 200 represents a
the scheme. The Scheme will not have a lev- be permitted by the SEBI from time to time Growth) that have historically delivered high universe of reasonably liquid, well researched
eraged position in derivatives. The Scheme subject to approval, if any should not exceed risk adjusted returns and have low correla- companies. The vast number of active funds
will not invest in equity linked debentures. 100% of the net assets of the scheme. The tion with each other. We also try to balance in the large cap space are also benchmarked
Scheme will not have a leveraged position in out the factors such that the combination to BSE 200 for the same reason.
derivatives. The Scheme will not invest in eq-
can be expected to have a balanced perfor-
uity linked debentures.
mance in both ‘bull’ and ‘bear’ markets.
1
>
NEW DELHI | MONDAY, 13 JUNE 2022
Clause of SID
Sl. Particu-
(Chapter and Existing Provision in SID
No. lars
Section) (d)
(a) (c)
(b)
• Since individual factors go through phases
of outperformance and underperformance
over a business cycle, it is imperative for
a multifactor strategy to have a mix of
‘pro-cyclical’ and ‘defensive’ factors to
have a balanced performance in different
market conditions. Our final factor selec-
tion is also influenced by this fact.
• Combination of these 5 factors helps the
resultant portfolio have balanced return
profile across all market regimes and
avoids cyclicality of performance often as-
sociated with single-factor models.
• Score for each company across above
factors gives aggregate score for relative
company ranking
Optimization Engine for determination of
final portfolio constituents and weights:
Maximizing portfolio level factor exposures
and minimizing risk
• Stock level constraints
» Stock level weights in the portfolio to be
capped at 10%, or 10x of weight in BSE
200 index, whichever is lower (avoid
concentration, ensure liquidity/capacity)
• Sector level constraints
» The optimizer tries to minimize active
sector risks by keeping max sector
active weight to 10% (diversification,
avoids risk of sector rotation)
• Weighting scheme
» Maximize portfolio level factor ex-
posure such that portfolio level factor
exposure is highest for the given set
of constraints to get the optimized
weights for each stock
• Re-balancing frequency
» Semi-annual
Formal review at Investment Committee:
An investment committee review of the model
will be done annually. The AMC may review
and modify the scheme’s investment strategy
if such changes are considered to be in the
best interest of unit holders. However, such
changes shall be within the overall contours
of the Investment Strategy.
Unscheduled and out-of-turn portfolio rebal-
ances will not be undertaken unless extreme
circumstances necessitate the same. Out of
turn/ unscheduled rebalance can occur only
under below circumstances:
• Merger/Acquisition of a portfolio constitu-
ent
• Issuer level ratings downgrade to non in-
vestment grade or default status
• Adverse news-flow that would completely • Stock level constraints
negate original investment thesis, such as
regarding misstatement of reported finan-
cial information
• Notification to exchanges regarding signif-
icant changes to the composition of board • Sector level constraints
of a portfolio constituent, change of audi-
tors, earnings restatement, adverse out-
come in pending litigation proceedings
The decision to do an unscheduled re-balance • Weighting scheme
must be ratified by the investment committee.
The impacted portfolio constituent would be
removed and the weight will be re-distributed
across the remaining portfolio constituents.
Step-wise description of the investment
strategy
Step 1: Universe
• Start with the BSE 200 index Universe
(200 stocks)
Step 2: Exclusion criteria
• Exclude companies that fail to pass
through proprietary earnings quality and Formal review at Investment Committee:
forensic accounting screeners based on
reported accounting statements
• Exclude companies exposed to higher de- will be done annually. The AMC may review
fault risk (higher than a predefined lever- and modify the scheme’s investment strategy
age threshold, ex-Financials)
• Exclude companies with higher than a pre- best interest of unit holders. However, such
defined volatility threshold
• Exclude companies which do not meet cer- of the Investment Strategy.
tain pre-defined ownership/shareholding
criteria
• After applying the exclusion criteria for re- circumstances necessitate the same. Out of
cent backtests, the universe is reduced to
about 80-100 companies
Step 3: Inclusion criteria
• For the remaining set of companies in the • Issuer level ratings downgrade to non-in-
universe:
• Percentile score assigned for each com- • Adverse news-flow that would completely
pany across selected factors, which is
combined into an aggregate score for rel-
ative company percentile ranking (equally
weighted for each factor). The factors in- • Notification to exchanges regarding signif-
clude 5 metrics capturing Quality, Growth
and Value characteristics through objec-
tive ratios.
• Include for consideration only top ranked
companies (highest aggregate score)
which constitute 50% of BSE 200 index The decision to do an unscheduled re-balance
by weight. This further reduces the stocks must be ratified by the investment committee.
that will be considered for inclusion in the The impacted portfolio constituent would be
portfolio to about 30-50 stocks in recent removed and the weight will be re-distributed
rebalances as per back-tests.
Step 4: Portfolio construction: Optimizer Step-wise description of the investment
inputs and constraints strategy
• Inputs for selected stocks: Respective
weights in BSE 200 index, aggregate
score (output of Step 3)
• Stock constraints embedded: Stock lev-
el:10 times its weight in the BSE 200 index Step 2: Exclusion criteria
or maximum weight of 10%, whichever is
lower
• Sector constrains embedded: active
weight of +/- 10% deviation allowed from
sector weight in BSE 200 index. If no stock
is eligible from a sector, that sector would
be absent from the portfolio
Step 5: Optimizer objective function and
Output
• Run the optimizer with the utility function
of maximizing portfolio level aggregate
score (using output of step 3) and con- • After applying the exclusion criteria for re-
straints as described in Step 4
• Output: stock level weight for the portfolio
Proposed Provision in SID
(e)
Importance of negative ‘exclusion’ criteria:
Our backtests suggest that not owning ‘poorly
run companies’ is also a significant source of
outperformance over the long term.
We narrow down the universe by applying ob-
jective pre-defined criteria that excludes the
following from the investable universe;
• Exclude companies that fail to pass
through proprietary earnings quality and
forensic accounting and governance
screeners based on reported accounting
statements and other data sources includ-
ing ESG ratings, shareholding data etc.
• Exclude companies exposed to higher de-
fault risk (higher than a predefined lever-
age threshold, ex-Financials)
• Exclude companies with higher than a pre-
defined volatility threshold based on price
and liquidity.
• Exclude companies which do not meet cer-
tain pre-defined ownership/shareholding
criteria or which show poor capital alloca-
tion
• Exclude companies which show trend of
steadily weakening growth and margins
Benefits of Multi-factor portfolio construc-
tion approach:
• We select 5 factors (corresponding to the
Factors that represent Quality / Value /
Growth) that have historically delivered
high risk adjusted returns and have low
correlation with each other. We also try
to balance out the factors such that the
combination can be expected to have a
balanced performance in both ‘bull’ and
‘bear’ markets.
• Since individual factors go through phases
of outperformance and underperformance
over a business cycle, it is imperative for
a multifactor strategy to have a mix of
‘pro-cyclical’ and ‘defensive’ factors to
have a balanced performance in different
market conditions. Our final factor selec-
tion is also influenced by this fact.
• Combination of these 5 factors helps the
resultant portfolio have balanced return
profile across all market regimes and
avoids cyclicality of performance often as-
sociated with single-factor models.
• Score for each company across above
factors gives aggregate score for relative
company ranking
Optimization Engine for determination of
final portfolio constituents and weights:
Maximizing portfolio level factor exposures
and minimizing risk
» Stock level weights in the portfolio to be
capped at 10%, or 10x of weight in BSE
200 index, whichever is lower (avoid
concentration, ensure liquidity/capacity)
» The optimizer tries to minimize active
sector risks by keeping max sector
active weight to 10% (diversification,
avoids risk of sector rotation)
» Maximize portfolio level factor exposure
such that portfolio level factor exposure
is highest for the given set of constraints
to get the optimized weights for each
stock
• The optimization process will also include
technical factors that capture behavioural
attributes reflecting in the stock price
movement such as liquidity, stock price
momentum, volatility
• Re-balancing frequency
» Quarterly
An investment committee review of the model
if such changes are considered to be in the
changes shall be within the overall contours
Unscheduled and out-of-turn portfolio rebal-
ances will not be undertaken unless extreme
turn/ unscheduled rebalance can occur only
under below circumstances:
• Merger/Acquisition of a portfolio constitu-
ent
vestment grade or default status
negate original investment thesis, such as
regarding misstatement of reported finan-
cial information
icant changes to the composition of board
of a portfolio constituent, change of audi-
tors, earnings restatement, adverse out-
come in pending litigation proceedings
across the remaining portfolio constituents.
Step 1: Universe
• Start with the BSE 200 index Universe
(200 stocks)
• Exclude companies that fail to pass
through proprietary earnings quality and
forensic accounting screeners based on
reported accounting statements
• Exclude companies exposed to higher de-
fault risk (higher than a predefined lever-
age threshold, ex-Financials)
• Exclude companies with higher than a pre-
defined volatility threshold
• Exclude companies which do not meet cer-
tain pre-defined ownership/shareholding
criteria
cent backtests, the universe is reduced to
about 80-100 companies
13
NOTICE CUM ADDENDA
Clause of SID
Sl. Particu-
Changes made (Chapter and Existing Provision in SID Proposed Provision in SID Changes made
No. lars
(f) Section) (d) (e) (f)
(a) (c)
(b)
Step 6: Rebalance the portfolio end of ev- Step 3: Inclusion criteria
ery March and September • For the remaining set of companies in the
universe:
• Percentile score assigned for each com-
pany across selected factors, which is
combined into an aggregate score for rel-
ative company percentile ranking (equally
weighted for each factor). The factors in-
clude 5 metrics capturing Quality, Growth
and Value characteristics through objec-
tive ratios.
• Include for consideration only top ranked
companies (highest aggregate score)
which constitute 50% of BSE 200 index
by weight. This further reduces the stocks
that will be considered for inclusion in the
portfolio to about 30-50 stocks in recent
rebalances as per back-tests.
Step 4: Portfolio construction: Optimizer
inputs and constraints
• Inputs for selected stocks: Respective
weights in BSE 200 index, aggregate
score (output of Step 3)
• The optimization process will also include
quantitative inputs that capture behavioral
attributes such as price and volume-based
measures
• Stock constraints embedded: Stock lev-
el:10 times its weight in the BSE 200 index
or maximum weight of 10%, whichever is
lower
• Sector constrains embedded: active
weight of +/- 10% deviation allowed from
sector weight in BSE 200 index. If no stock
is eligible from a sector, that sector would
be absent from the portfolio
Step 5: Optimizer objective function and
Output
• Run the optimizer with the utility function
of maximizing portfolio level aggregate
score (using output of step 3) and con-
straints as described in Step 4
• Output: stock level weight for the portfolio
The Optimiser refers to the automated pro-
cess for assigning weights to the selected
portfolio companies. This is not a discretion-
ary process and is done based on set rules
without human intervention.
Step 6: Rebalance the portfolio on a quar-
terly basis
Enable writing of call options under a cov-
ered call strategy:
Enable scheme to write call options under
a covered call strategy in accordance with
SEBI (Mutual Funds) Regulations, 1996
and SEBI circular no. SEBI/HO/IMD/DF2/
CIR/P/2019/17 dated January 16, 2019
Benefits of Writing of Call Option Under a
Covered Call Strategy
A call option gives the holder (buyer) the right
but not the obligation to buy an asset by a cer-
tain date for a certain price. Covered calls are
an options strategy where a person holds a
long position in an asset and writes (sells) call
options on that same asset.
The strategy offers the following benefits:
1) Generating additional returns in the form
of option premium in a range bound mar-
ket.
2) Down side protection to the extent of
premium collected - Since the fund man-
ager sells a call option on a stock already
owned by the mutual fund scheme, the
downside from fall in the stock price
would be lower to the extent of the pre-
mium earned from the call option.
Thus, a covered call strategy involves gains
for unit holders in case the strategy plays out
in the right direction.
Illustration I - Covered Call strategy using
stock call options:
A fund manager buys equity stock of ABC
Ltd. for Rs. 1000 and simultaneously sells a
call option on the same stock at a strike price
of Rs. 1100. Further. it is assumed that the
scheme has earned a premium of Rs. 50 and
the fund manager is of the opinion that the
stock price will not exceed Rs. 1100, during
the expiry period of the option
Scenario 1: Stock price exceeds as 1100 The
call option will get exercised and the fund
manager will sell the stock to settle his obli-
gation on the call at Rs. 1100 (earing a return
of 10% on the stock purchase price. Also,
since the scheme has earned a premium of
Rs. 50, this has reduced the purchase cost of
the stock Rs. 1000 - Rs. 50 - Rs 950. Hence,
the Net Gain - Rs. 150 (Rs 100 stock appreci-
ation + Rs 50 call option premium) (However,
please note that in a scenario where the stock
once reaches Rs. 1300, investment in long
only equity would be more beneficial than a
covered call strategy as the net gain under
the covered call strategy would be Rs. 150,
against a net gain of Rs. 300 under a pure
long only equity strategy
Illustration II: Stock prices stays below
Rs.1100
The call option will not get exercised and will
expire worthless. The premium earned on call
option will generate alpha for the scheme.
Hence, the Net Gain is Rs. 50
7. SECTION Invest- NIL Mutual Fund schemes (excluding ETFs and New provision
V - INFORMA- ment Index funds) can write Call options under a added as ex-
TION ABOUT Restric- covered strategy for constituent stocks of plained in column
THE SCHEME tions for NIFTY 50 and BSE SENSEX subject to the e.
I – What are Covered following:
the Investment Call
a) The total notional value (taking into
restrictions strategy account strike price as well as premi-
um value) of call options written by a
scheme shall not exceed 15% of the total
market value of equity shares held in that
scheme
b) The total number of shares underlying
the call options written shall not exceed
30% of the unencumbered shares of a
particular company held in the scheme.
The unencumbered shares in a scheme
shall mean shares that are not part of
Securities Lending and Borrowing Mech-
anism (SLBM), margin or any other kind
of encumbrances.
2
14
>
Clause of SID
Sl. Particu-
(Chapter and Existing Provision in SID Proposed Provision in SID
No. lars
Section) (d) (e)
(a) (c)
(b)
c) At all points of time the Mutual Fund
scheme shall comply with the provisions
at points (a) and (b) above.
In case of any passive breach of the require-
ment at paragraph (a) above, the respective
scheme shall have 7 trading days to rebal-
ance the portfolio. During the rebalancing pe-
riod, no additional call options can be written
in the said scheme.
d) In case a Mutual Fund scheme needs
to sell securities on which a call option
is written under a covered call strategy,
it must ensure compliance with para-
graphs (a) and (b) above while selling
the securities.
e) In no case, a scheme shall write a call
option without holding the underlying eq-
uity shares. A call option can be written
only on shares which are not hedged
using other derivative contracts.
f) The premium received shalt be within
the requirements prescribed in terms
of SEBI circular dated August 18, 2010
i.e. the total gross exposure related to
option premium paid and received must
not exceed 20% of the net assets of the
scheme.
g) The exposure on account of the call op-
tion written under the covered call strat-
egy shall not be considered as exposure
in terms of paragraph 3 of SEBI Circular
no. Cit/IMD./DF/11/2010, dated August
18, 2010.
h) The call option written shall be marked to
market daily and the respective gains or
losses factored into the daily NAV of the
respective schemes until the position is
closed or expired.
The Securities and Exchange Board of India
vide its email dated August 24. 2020 has not-
ed the above changes.
8. SECTION IV Risks of Nil 1) Writing call options are highly specialized
– INTRODUC- Writing of activities and entail higher than ordinary
TION Call Op- investment risks. In such investment strat-
A – Risk tion Under egy, the profits from call option writing is
factors a Covered capped at the option premium, however
Call Strat- the downside depends upon the increase
egy in value of the underlying equity shares.
This downside risk is reduced only to the
extent of premium received by writing cov-
ered call options.
2) The Scheme may write covered call op-
tion only in case it has adequate num-
ber of underlying equity shares as per
regulatory requirement. This would lead
to setting aside a portion of investment
in underlying equity shares. If covered
call options are sold to the maximum
extent allowed by regulatory authority,
the scheme may not be able to sell the
underlying equity shares immediately
if the view changes to sell and exit the
stock. The covered call options need to
be unwound before the stock positions
can be liquidated. This may lead to a loss
of opportunity or can cause exit issues if
the strike price at which the call option
contracts have been written become
illiquid. Hence, the scheme may not be
able to sell the underlying equity shares,
which can lead to temporary illiquidity of
the underlying equity shares and result in
loss of opportunity.
 
NEW DELHI | MONDAY, 13 JUNE 2022 1
NOTICE CUM ADDENDA
Clause of SID
Sl. Particu-
Changes made (Chapter and Existing Provision in SID Proposed Provision in SID Changes made
No. lars
(f) Section) (d) (e) (f)
(a) (c)
(b)
3) The writing of covered call option would
lead to loss of opportunity due to appre-
ciation in value of the underlying equity
shares. Hence, when the appreciation in
equity share price is more than the option
premium received the scheme would be
at a loss
4) The total gross exposure related to op-
tion premium paid and received must not
exceed the regulatory limits of the net
assets of the scheme. This may restrict
the ability of Scheme to buy any options.
5) Increased volatility in the market may
result in higher premium and marked to
market losses in NAV for all the existing
short option position even at the same
price of underlying stock
Further Investors take a note that appropriate changes shall be carried out to the SID, Key Information Memorandum of the Scheme to reflect the above
propose changes. All the other provisions of the SID, KIM of the Scheme, except as specifically modified herein above remain unchanged.
Further, SEBI vide its email dated June 02, 2022 has taken note of the change in fundamental attribute of the Scheme.
As the above proposal would constitute a change in Fundamental Attributes of the Scheme, in accordance with Regulation 18(15A) of the SEBI
(Mutual Funds) Regulations, 1996, the existing unitholders under the Scheme are hereby given an option to exit, i.e. either redeem their in-
vestments or switch their investments to any other scheme of the Fund, within the 30 days exit period starting from Thursday, June 16, 2022
till Friday, July 15, 2022 (both days inclusive) and upto 3.00 pm on Friday, July 15, 2022 at applicable NAV, without payment of any exit load,
by filling up the requisite transaction slip and submitting the same at any of our designated Official Points of Acceptance (list available on
www.dspim.com) and other modes as given in the offer document. If you have no objection to the proposed change, no action needs to be taken and it
would be deemed that you have consented to the above change. The offer to exit from the Scheme is optional, at the discretion of the Unit Holder, and not
compulsory. The Scheme will adopt the proposed change with effect from Monday, July 18, 2022.
Thus, all the applications for redemptions/switch-outs received under the Scheme shall be processed at applicable NAV of the day of receipt of such redemp-
tion / switch request, without payment of any exit load, provided the same is received during the exit period of 30 days mentioned above.
Unitholders who have pledged their units will need to procure a release of pledge prior to submitting their redemption request. In case a lien is marked on units
held by a unit holder or units have been frozen/locked pursuant to an order of a governmental authority or a court, redemption/switch-out can be executed
only after the lien/order is vacated/revoked within the period specified above.
Unitholders should ensure that their change in address or pay-out bank details are updated in records of DSP Mutual Fund as required by them, prior to
exercising the exit option for redemption of units.
The redemption proceeds shall be dispatched within 10 business days of receipt of valid redemption request to those unitholders who choose to exercise
the exit option.
TAX IMPLICATIONS
New provision
Redemption / switch-out of units from the Scheme, during the exit period, may entail capital gain/loss in the hands of the unitholder. Similarly, in case of NRI
added as ex- investors, TDS shall be deducted in accordance with the applicable Tax laws, upon exercise of exit option and the same would be required to be borne by such
plained in column investor only. In view of individual nature of tax implications, unitholders are advised to consult their tax advisors. For details on Tax implications,
e. please refer to SID of the Scheme and Statement of Additional Information available on our website www.dspim.com.
We look forward to your continued support.
Product Labelling Riskometer
This open ended equity Scheme is suitable for investors who are seeking* Scheme Benchmark (S&P BSE 200 TRI)
• Long term capital growth
• Investment in active portfolio of stocks screened, selected, weighed and
rebalanced on the basis of a pre-defined fundamental factor model
* Investors should consult their financial advisers if in doubt about whether the
Scheme is suitable for them.
Any queries/clarifications in this regard may be addressed to:
DSP Investment Managers Private Limited (“AMC”)
CIN: U74140MH1996PTC099483
Investment Manager for DSP Mutual Fund
Mafatlal Centre, 10th Floor, Nariman Point, Mumbai 400 021
Tel. No.: 91-22 66578000, Fax No.: 91-22 66578181 Toll-free: 1800 208 4499 or 1800 200 4499
Email ID: service@dspim.com Website: www.dspim.com
Unit holders are requested to update their PAN, KYC, email id, mobile number and nominee details with the AMC as well as check for any unclaimed
redemptions or IDCW payments.
Place: Mumbai
Date: June 10, 2022
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
3
REVISED FORM G

  EXTENSION OF TIMELINES TO THE INVITATION FOR EXPRESSION OF INTEREST Business Standard
 

    
 
 
  
ISSUED ON 28.05.2022 DELHI EDITION
    
  

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2 Date of Incorporation of Corporate Debtor 14.12.1988 Gautam Budh Nagar-201301 and
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The Registrar of Companies Chennai, Tamil Nadu Shah Zafar Marg, New Delhi 110002

 ;  !* 7 +* ;  /" 
incorporated /registered
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L65910TN1988PLC016616

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RNI NO. 57376/1994
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!
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NEW DELHI | MONDAY, 13 JUNE 2022 PERSONAL FINANCE 15 <

Make nomination the Disclose all foreign assets

third route of succession
very made-in-India, made-for-India solu-
tion. However, it has a severe limitation. As
and incomes meticulously
Mention interest on contribution above ~2.5 lakh to EPF under idends are available with the
a nominee, my spouse’s access to my assets tax authorities in Form 26AS,
will only be as a trustee for the eventual
heirs. She will still have to go through the
‘income from other sources’ in the income-tax return form this change seems to be adding
to the compliance burden of
long, tedious, expensive tarikh pe tarikh BINDISHA SARANG Sources’ schedule. Such taxpayers with little additional
court process to get final access to the assets. employees must report the benefit to the I-T authorities.”

T
There is one exception to this rule. As he Central Board of amount of excess contribution
the nominee in my life insurance policy, she Direct Taxes (CBDT) and interest earned from it.” Disclosure of interest paid
will receive the policy money on my death had notified the Thus, the taxable interest The new ITR forms have
and will not be accountable to my two chil- income-tax return (ITR) forms income from EPF will be added inserted a new row in Part A-
TRUTH BE TOLD dren for the policy proceeds, thanks to the for FY 2021-22 (Assessment under the head income from OI (Other Information) requir-
progressive amendment brought about in Year 2022-23) in the first week other sources. ing the assessee to disclose the
HARSH ROONGTA the Life Insurance Act in 2015. Life insur- of April. These new forms con- amount of interest paid on
ance nomination speeds up access to assets tain around 30 changes. Foreign assets in Schedule FA loan or advance taken from a
I recently participated in a panel discussion but can give rise to friction between the Taxpayers should understand In the old ITR forms, Schedule deposit-taking non-banking
organised by the Department of Economic nominees and the successors. the ones relevant to them FA (Foreign Assets) required a financial company (NBFC) or
Affairs and the Securities and Exchange The unduly tedious succession process before they file their returns. taxpayer to report foreign a systemically important non-
Board of India on June 8, 2022, at Vigyan is one reason for the mountain of unclaimed assets only if she had held deposit taking NBFC. Maneet
Bhavan, New Delhi. It was part of the Azadi assets of around 1.6 lakh crore consisting of Old and new tax regime them at any time during the Pal Singh, partner, IP Pasricha
Ka Amrit Mahotsav celebrating 75 years of unclaimed dividends, shares, mutual fund Taxpayers can choose between “relevant accounting period”,
DECLARE COST INCURRED ON IMPROVING & Co says, “With such disclo-
independence. Finance Minister Nirmala units, bank accounts, insurance policies, the old and the new tax regime. which was not defined. The LAND OR BUILDING sures, the taxpayer will be able
Sitharaman spoke on the growth in the provident fund dues, etc. Now, in ITR Form 3, the tax- new ITR forms have replaced n Taxpayers are required to capital gains, this cost has to report the amount deduct-
number of retail investors in our country To examine these issues, the Association payer can specify: the chosen the expression “relevant provide three pieces of to be indexed and deducted ible in the current financial
and the challenges faced by them. In the of Registered Investment Advisors (ARIA) tax regime; whether the tax- accounting period” with information: cost of from the sale price of the year which was disallowed in
panel discussion that followed, I shared my had published a white paper written by payer wants to choose the new “calendar year ending as on the preceding financial year
improvement, year of land or building
thoughts on the issue of ease of succession Pramod Rao, group general counsel of ICICI tax regime now; and whether December 31, 2021”. under the specific head, miti-
planning. (acting in his personal she wants to continue with the Naveen Wadhwa, deputy
improvement, and indexed n If the cost of improvement gating the chances of furnish-
The white paper’s main cost of improvement has been incurred in
Even in an august gather- capacity) with inputs from new tax regime or opt out of general manager, Taxmann ing inaccurate particulars.”
recommendation was
ing such as the one at Vigyan ARIA. K V Kamath had it. To provide this information, says, “The assessee must fur- n Expenses towards different financial years,
to change banking,
Bhavan, the percentage of
corporate, and other
written its foreword mention the Form 10IE nish details of all foreign assets renovation or improvement then year-wise details Significant Economic
people who had made their (https://bit.ly/3NKLaKp) and filling date. held between April 1, 2021 and done on land or building have to be provided Presence of NRI
laws to make
Will would be in the low dou- had also released it last year. Moiz K Rafique, managing December 31, 2021 in the return will be taken as cost while filing ITR The new ITR forms require
nomination the third
ble-digit. In the general pop- Its key recommendations partner, Privy Legal Services to be filed for AY 2022-23.” Source: SKV Law Offices non-resident Indians (NRIs) to
way of succession, n To calculate long-term
ulation, the percentage would are as follows: centralised LLP, says, “This gives a tax- This change removes the disclose whether they have a
which is easy,
be close to nil. People are reporting of death, centra- payer the flexibility to choose scope for misunderstanding or Significant Economic Presence
economical, and quick
reluctant to write their wills lised processing of death the tax regime that works best miscalculating the reporting relief has been claimed under capital gains tax. (SEP) in India. Aditya Chopra,
because it is unpleasant to contemplate claims, pro-active outreach by investee com- for her. And in the same form, period. Reporting is required Section 89A. managing partner, Victoriam
death. The pandemic has, however, brought panies to nominees, alternative nominees if you don’t opt for the pre- even if the taxpayer is a bene- Deemed dividend Legalis-advocates and solici-
us face to face with our own mortality and (in my case, my two children if wife prede- sumptive tax scheme, you’ll ficial owner of foreign assets or Purchase and sale of land Earlier, no separate disclosure tors says, “Significant
focused the spotlight on ease of succession. ceases) and nomination for incapacitation. now have to provide further has a financial interest in a for- or building was required of dividend Economic Presence will be
If I were to die today, and I was a lazy per- But the main recommendation was to information that will help in eign entity. Foreign assets such If you sold land or building in income taxable under the law. determined on the basis of the
son who had not written his will, then change the relevant banking, corporate and checking the applicability of as depository account, immov- 2021-2022, then it is mandatory Suvigya Awasthy, associate following parameters: transac-
according to the personal law applicable to other laws to provide for making nomination audit more efficiently.” able property, trust created to declare the purchase and partner, PSL Advocates & tion of goods, services or prop-
me—the Hindu Succession Act—my assets the third way of succession which is easy, outside India, etc, must be dis- sale dates in the ‘Capital Gains’ Solicitors says, “Under the new erty carried out by an NRI with
would be distributed equally between my economical and quick, just like it is in the Interest from Employees closed in Schedule FA. schedule of the amended ITR regime, such type of dividend a person in India, including the
spouse and my two children. But I have Life Insurance Act. This would be in contrast Provident Fund (EPF) Wadhwa says, “The reporting forms. Bharath Gangadharan, has to be separately disclosed provision of download of data
written a will actively choosing my spouse to the other two routes—succession through An employee whose contrib- requirement is mandatory senior associate, SKV Law in the form of ‘deemed div- or software in India, if the
as my sole successor. If she predeceases me, personal law or through will—which are ution to EPF exceeds ~2.5 lakh only for a taxpayer who is a res- Offices says, “This additional idend’. This move reflects the aggregate of payments arising
my two children will be equal successors. In long, tedious and expensive. per financial year (from FY ident. One who is not ordi- disclosure will help the tax exhaustive approach being from such transactions exceeds
either case—whether the successors are In the 75th year of our independence, we 2021-22) will be liable to pay tax narily resident or is a non-res- authorities verify the tax- adopted by the government ~2 crore; systematic and con-
chosen by personal law or according to my should be able to provide freedom to Indian on interest earned on contrib- ident doesn't need to file payer’s eligibility for exemp- and increases the work for tinuous soliciting of business
will—they will have to go through the long, Citizens to choose their successors in an ution above this limit. The limit Schedule FA.” tion under sections 54, 54EC, assessees. But it is also likely to activities or interaction with
tedious, expensive and tarikh pe tarikh court easy, economical, and quick manner. will be ~5 lakh if the employer In all ITR forms, new rows and 54F of the I-T Act, 1961.” benefit them.” 300,000 users in India.”
processes to get access to my assets. doesn’t make a contribution. have been included where These amendments have come Kumarmanglam Vijay, NRIs must ascertain
My spouse is the nominee in all my The writer heads Fee-Only Investment Advisors LLP, Suresh Surana, founder, details have to be reported of into force with effect from partner, JSA, however, says, whether they fall under the
assets. She will be able to get easy, quick and a Sebi-registered investment advisor; Twitter: RSM India says, “The new ITR income accrued on foreign April 1, 2022. Section 54 and its “Given that tax is deducted on purview of SEP and make the
economical access to them. Nomination is a @harshroongta forms have made changes in retirement accounts, and any sub-sections offer a seller of such deemed dividends and necessary disclosures in the
the ‘Income from Other such income on which tax residential property relief from details of such deemed div- new ITR forms.
16 TECHNOLOGY 4.0
>
KRANTI NATION
PRANJAL SHARMA
Emerging
organ tech
helps drug
testing
U
nderstanding the inner workings of
the human body and its various
complex organs is a continuing
effort for scientists. Medical experts
are deploying various types of emerging tech-
nologies to deepen their understanding of
organs.
Organ-on-a-chip (OOC) technologies
have been allowing researchers to test the
impact of chemicals on human tissue for
specific objectives. Tissues placed on a chip
can be made to mimic specific organs. These
tissues are then subjected to various
situations to test their reaction and response.
A critical application of organ-on-a-chip
is to test new medicines on the chip to reduce
the dependence on animal testing. Organ-
on-a-chip systems can be used to study many
biomedical phenomena in drug
development and toxicity testing as well as in
personalised medicine (where stems cells
derived from individual patients can be used
to identify which therapies are likely to
succeed), says a report by
MarketsandMarkets.
There are different types of OOC systems,
including lung-on-a-chip, liver-on-a-chip,
heart-on-a-chip, brain-on-a-chip, and gut-
on-a-chip. Some systems have tried to mimic
multiple organs within one chip.
The Indian
pharmaceutical
A recent study by
the Vienna
industry can Technical
leverage the new University (VTU)
organ-on-chip has reported new
technologies breakthroughs. To
powered by create tissue at a
artificial micro level,
intelligence to researchers have to
accelerate and work with great
improve its precision. A
innovation
processes
scientist at VTU has
begun using lasers
to guide the tissue to
interact in the desired manner. “Tissue parts
are created, which then interact with each
other. They are placed on a chip of a few
centimeters in size and can be supplied with
very specific nutrients or also with
pharmaceutical compounds in a highly
precise manner. In this way, one can gather
important information about the effect of
drugs without having to resort to animal
testing,” the VTU study says.
The use of artificial intelligence (AI) is
further boosting OOC systems to create new
breakthroughs in drug discovery and testing.
An AI company, Quris, has launched the first
clinical prediction AI platform to predict
which drug candidates will safely work in
humans, dramatically improving efficacy
and cutting drug development costs. The Tel
Aviv-based company says that it uses AI-
powered miniaturised “patients-on-a-chip”
to avoid the risks and costs of failed clinical
trials and eliminate the reliance on
ineffective animal testing.
“While AI applications in pharma have
surged, a core piece needed to solve the drug
discovery puzzle has been missing and most
novel drugs still fail clinical trials — costing
pharma companies more than $30 billion
annually,” says Quris Chief Executive Officer
Isaac Bentwich. “Quris is the first AI platform
to predict which drug candidates will safely
work in humans, filling a critical gap in
clinical prediction.”
The market for OOC is growing rapidly,
too. “When it comes to developing
medications and vaccines in clinical trials,
organ on chip technology is one of the most
promising technologies. As a result, the
importance of organ on chip technology has
risen, propelling the market forward,”
according to Market Data Forecast. “The
global organ-on-chip market is expected to
rise at a CAGR of 36.4 per cent from 2022 to
2027 and be worth $284.65 million by 2027
from $60.29 million in 2022.”
The Indian Council for Medical Research
(ICMR), too, is encouraging the use of new
technologies like OOC for drug discovery and
testing. An ICMR paper says animal testing
data does not always lead to successful
clinical outcomes. This is visible in the
failure rates of over 90 per cent between
phase I clinical trials and approval of new
drugs. The Indian pharmaceutical industry
can leverage the new AI-powered OOC
technologies to accelerate and improve its
innovation processes.
A Fun, games, and more
bhijeet Singh, a second-year
engineering student from
Naihati in West Bengal, earns
~20,000-25,000 a month
from live-stream gaming. But, he says,
he plans to drop out of college and
build a career in content creation.
Becoming a full-time game streamer
will fetch him a regular income.
It’s been over two years since Singh
began game streaming (he watched it
on YouTube), and he now streams on
Rooter, a homegrown game streaming
app. “Unlike YouTube, you can gain an
audience on Rooter easily and fast. We
just need to hold that audience with
our creativity and content,” he says.
Or take the case of Udaipur-based
Mansha Kunwar Rathore (‘Gaming
with Laila’), who took up gaming as a
career when she lost her job during the
pandemic-induced lockdown. “I start-
ed playing games to pass the time, but
then realised that one can earn too, and
began my career as a gamer. I started
with YouTube, drew a good response
and also secured brand endorse-
ments,” she says. She has 2.1 million
followers on YouTube.
With such a large following on
YouTube she was approached by
Glance, the lock screen platform from
unicorn InMobi, and she streams on
both platforms. She does not disclose
numbers, but reckons her salary is sim-
ilar to that of a chartered accountant.
Likewise, Salman Ahmad from
Uttar Pradesh (‘8Bit Mumba’), who
streams on Loco — another home-
grown app — says that on average he
spends 8-9 hours a day playing games
for both YouTube and Loco. Ahmad
has 1.2 million followers on YouTube
and 256,000 on Loco.
It’s all about money
Game-streaming is becoming a serious
professional choice for youth, as it
allows them to make good money —
anything between 30,000 and a few
hundred thousand rupees a month.
Live-streaming gaming, which
includes video games as well, is now a
$1-billion industry in India, and is
expected to be worth $5 billion by 2025.
Platforms like Rooter offer multiple
revenue sources, including sponsor-
ships and advertisements, which add
to a player’s income. There are also
‘Super Chats’ through which the
audience can pay the player, if they
wish to. “YouTube takes 40 per cent of
that revenue, but Rooter gives you as
much as 90 per cent,” says Singh, or
ALGO RHYTHM
INDIA-BASED DEVELOPERS MAY
LEAVE THEIR JOBS IN DROVES
A survey by DigitalOcean reveals that 44 per cent of India-based
software developers are considering leaving their jobs this year,
compared to 42 per cent globally. The survey covered over 2,500
developers from 94 countries (including the US, India, Germany,
Canada, and UK) on their participation in the open source (OS)
community, job
satisfaction, and
challenges. The
Great Resignation
of 2020-2021 has
led to a shortage of
developers,
motivated largely
by compensation
and a desire for
remote work, the
survey reveals.
Developers are also
leaving jobs to start
their own firms.
Entrepreneurship,
clearly, is strong
among this group.
Uber India builds products for global markets
PEERZADA ABRAR
Ride-hailing giant Uber’s tech journey
in India started in 2014 at a bungalow
in Hyderabad’s Jubilee Hills. Its tech
centres in Hyderabad and Bengaluru
are now the second-largest in the
world, next only to those in the US.
They handle critical functions such as
rider engineering, Eats engineering,
infra-tech, data, maps, Uber for
Business, fintech, customer
obsession, and growth and marketing.
“The India tech centres are
building products for the global
markets,” says San Francisco-based
Praveen Neppalli Naga, vice-president
and head of mobility engineering at
Uber, who recently visited India to
inaugurate a new office.
For instance, an engineering team
in Hyderabad is helping grow the
delivery business globally, including
scaling a business line that allows
merchants to join Uber Eats while
using their own delivery staff. Today, it
is a successful end-to-end business
catering to restaurants in 23 countries.
The feature offers flexibility to
restaurant partners that prefer using
their own delivery staff to deliver
orders to still do so, while securing
orders from the Uber Eats platform.
Uber’s delivery business, says
Naga, was “turbocharged” during the
pandemic. “We leveraged our
Game streaming is becoming a serious professional choice for youth, since it enables
them to make good money, report Shivani Shinde and Sourabh Lele
Abhijeet Singh (left) streams on Rooter, a homegrown streaming app, while Mansha Kunwar Rathore has 2.1 million followers on YouTube
‘the Singh Babu’, his username.
Game-streaming is a huge category
internationally, but in India it began
making a dent only when PUB-G was
launched around 2018, and gamers got
the flavour of live multiplayer gaming.
Cheaper smartphones and data pack-
ages fuelled demand.
The real push was provided by the
Covid-19 lockdowns. “We had more of
an audience during the pandemic, as
people spent more time on entertain-
ment. We used to stream for as long as
seven to eight hours a day, as we were
free and enjoyed it,” says Ayushmann
Rawat, a second-year B. Pharm student
from Ghaziabad.
Advantage local platforms
While YouTube continues to be the
largest platform for user-generated
content, the surge in the number of
gamers has given rise to local stream-
ing platforms like Rooter, Loco, Glance
and Turnip. With monetisation not
easy on YouTube, these platforms have
attracted gamers.
engineers during that slump time to
build some core technologies on the
mobility side.”
Uber Technologies recently said it
plans to hire 500 more tech employees
by December for its India facilities, to
add to its 1,000-member tech team.
Manikandan Thangarathnam,
Uber’s senior director of engineering,
says the firm is expanding its portfolio
of programmes for customers. This
entails a big role for the tech team.
For instance, Uber’s India-based
Global Scaled Solutions team is
scaling the “Uber for Business”
product globally, making return-to-
office seamless for employers and
employees. Supporting transport
needs for working professionals across
NEW DELHI | MONDAY 13 JUNE 2022
For gamers to gain endorsement and to 2,000 by year’s end. which had 64 colleges participating in
from YouTube or a team from the plat- Rooter has some 35 million sub- Glance College Battleground. While the
form to work with, they need at least scribers, 10 million of them monthly winning team took home ~200,000 in
1,000 subscribers, and their content active users (MAU), of which 1 million prize money, almost 600,000 people
should have been watched for at least are daily viewers who spend about 22 turned up to watch.
4,000 hours. Once a creator crosses minutes on the platform. It has a total Yashashvi Takallapalli, vice-pres-
these twin thresholds, YouTube starts gamer base of 1 million, 300 of them ident (gaming) at Glance, says that last
paying them serious attention. female. December, the company started with
Rooter has reached out to every Kumar believes that within the one game stream a day, and this is now
gamer who was not gaming segment, game- 30 streams a day, or 20 hours of game-
growing fast enough on LIVE-STREAMING streaming is the fastest- streaming daily. Glance gaming’s live-
YouTube, and brought GAMING IS NOW growing sub-set. “When we stream has 20 million MAU. Game-
them on board. A ded- entered gaming, India had streaming is currently part of Glance’s
icated company team of
A $1-BILLION 250-300 million gamers. overall game offerings, but the recent
40-45 works with these INDUSTRY IN Today there are 450 million. increase in interest in live games has
gamers to increase their INDIA, AND IS Second, the Indian made the platform revisit its oeuvre.
users and enable better EXPECTED TO BE audience is either consum- “We want to invest more in tourna-
monetisation. WORTH $5 ing content on YouTube, or ments like the Glance LIVE festival.
Piyush Kumar, who short-form videos, or play- Two, as a tech platform, we want to be
founded Rooter in 2016 BILLION BY 2025 ing games. And we bring at the forefront of creating amazing
and pivoted to game- lll together both gamers and streaming experiences, as well as
streaming in 2020, says an audience who likes this increase monetisation opportunities.
that the top 100 gamers on the plat- content,” he says. Finally, we also want to increase the
form earn ~50,000-75,000 just through The other instance of rising number of streams on a daily basis,”
brand endorsements or influence mar- demand for live game-streamers is the Takallapalli adds.
keting. His goal is to take this number recently concluded Glance LIVE Fest,
to 500 people in the next few months India’s first live interactive festival, More on www.business-standard.com
Developers in Motivation to leave jobs Top 10 challenges
short supply n Higher compensation for developers
32% of those working more
than a year have started a new
n Full-time remote/flexible work n Better benefits
n Started a company n More inclusive work
l Technical debt
l Lack of
job in the past year, and 44%
are considering leaving, or
environment n More time to contribute
to open source n Others
resources/time
l Time needed to
may consider leaving their 19
10 11 maintain/manage
jobs this year 5
27 9 28 service
9 Started 18
42% of those who haven’t 8
a job 8 Considering
(%)
Challenges l Team members
left their jobs yet are either (%) 8 11 leaving
(%)
considering leaving, or may 17 24 15 21 l Working with
11
consider leaving their current outdated technology
jobs this year
Key role of open source 10 l Ensuring everyone
64% of those with less than > Half of developers 50% or more of their
9 is trained to use
technical resources
a year’s experience, and 32% 7
reported software 3 6 6
of those with 1–5 years’ participating in OS in l Keeping up with
> 35% of startups threats to security
experience, left a job recently. the past year, a little
By comparison, only 21% with and SMBs use OS in
more than in 2021 50% or more of l Working remotely
more than 15 years of
> 64% of those their software, l Cost of services
experience have done so
surveyed said their compared to 28%
l Reliability/uptime
firm uses OS code for of enterprises of cloud services
Emerging trends
> Containers: > Server-less >Low-code/no-code > Blockchain and respondents plan to use
68% are using technology: 43% tools: In India, 23% say automation (AI/ML): OS for blockchain tech
containers for some of respondents are these make their job 55% of those in India next year (7% in the
project; 22% of using it, and of easier, and 18% say they (33% in total sample) total sample), while
those not using those using it, 61% allow them to focus on are already using 68% are using
them will start expect their usage more vital tasks; 15% say blockchain tech. Also, automation (57% in
using them this year to increase they are overhyped 13% of India-based the total sample)
Compiled by Shivani Shinde
Multimodal and shared transport
is a big part of the mandate being
driven by the company’s twin tech
centres, with products (including
Uber Bus and micromobility) being
developed in the country. Uber’s
multimodal transport model
envisages travel within cities a single
click, without having to worry about
booking the next leg of the journey.
The opportunities, says
Thangarathnam, are big in other
modes of transportation. This is
because ride-sharing penetration is
just 0.5 per cent in India and the firm
aims to tap the rest of the space.
Uber is already stepping up its bus
] Praveen Nepalli Naga, Uber’s
the globe, the product is translated service in India. The Uber app will
Vice-President and Head of Mobility
into over 50 languages, leveraging enable customers to book bus seats as
Engineering (extreme left), with
technologies such as machine the company works with private firms
senior members of his tech team
translation and natural language and state-run services to put their
processing. vehicles on its platform.
The Hyderabad-based Uber Eats from their Uber Eats app. Leveraging The Gurugram Metropolitan
Engineering team also led the Uber Eats’ delivery expertise, the Development Authority plans to start
integration of prescription delivery partnership ensures medicines reach an ‘Uber’ bus service that will run on a
company NimbleRx’s backend onto residents in time, at the tap of a button. pilot basis for nine months. Uber is
the Eats platform, to help launch one Last year, an Uber team in also testing a new service that
of the company’s latest products — Hyderabad also enabled timely guarantees a seat to customers in air-
delivery of prescription medicines — payments to driver-partners for conditioned buses in Delhi. Outside
in parts of the US in late 2020. getting vaccine shots. The payments India, this is also being tested in Cairo.
The team completed the were to compensate them for time “Uber will play a very significant
integration process in just three spent getting inoculated. The team role in defining disruption in the
weeks, allowing customers to order leveraged ‘Sherlock’, an in-house tool, transportation industry,” says
their prescription medication from to scan vaccination certificates Thangarathnam.
neighbourhood pharmacies or uploaded by driver-partners, verify
transfer their existing prescriptions credentials, and manage the payouts. More on www.business-standard.com
.
NEW DELHI | MONDAY, 13 JUNE 2022
How Airtel took a
long call on profit
The country’s second-largest mobile service provider extended its profitable
run with a focus on the basics — costs and customers
ANEESH PHADNIS
Mumbai, 12 June
S
ix consecutive profitable quarters
after an equal number of losses —
for Bharti Airtel, the turnaround
has been quick. But it is not a result of
higher tariffs or absence of exceptional
items alone. Execution and strategy are
playing a part, too.
Bharti Airtel’s Chief Executive Officer
Gopal Vittal summed it up in a post-result
conference call last month. “We track the
profit in each of our 237,500 (cell) sites.
We know exactly what the problem is: Do
we need more customers on that site or
do we need to lower the cost structure on
that site? This allows us to be targeted in
terms of intervention — go-to market,
network improvements or a leaner site
with lower cost structure,” Vittal said.
Airtel reported nearly a three-fold
year-on-year increase in its net profit to
~2,008 crore in the fourth quarter of FY22.
Its average revenue per user per month
(ARPU), which is the highest in the indus-
try (see table 1), grew 9.2 per cent sequen-
tially and 22 per cent on a year-on-year
basis to ~178.
The company has been growing its
customer base, too, in the face of stiff com-
petition from Reliance Jio (see table 2).
The 4G customer base crossed the 200-
million mark at the close of fourth quarter
as it added 5.2 million new customers. Its
4G customer base now accounts for 62 per
cent of its total subscriber base in India.
Airtel crossed the 100-million mark in
the 4G segment in the second quarter of
FY20 and has, thus, doubled the figure in
two and a half years. In contrast, rival
Vodafone Idea’s 4G customer base moved
up from 90 million in Q2 FY20 to 118 mil-
lion at the end of the fourth quarter FY22.
During the fourth quarter FY22, Airtel
also added 200,000 post-paid sub-
scribers. Though the segment accounts
for less than 5 per cent of total customer
base for Airtel, it is ARPU-accretive,
meaning it will contribute incrementally
to growth, due to higher base charges and
lower churn.
So, what did Airtel do to sustain
growth while Vodafone Idea faltered in
execution? Its investments in capacity
and network through acquisition of sub-
GHz spectrum in 2021 and the rollout of
towers have given it a wider coverage.
“Our expansion of mobile coverage
footprint allows us to provide broadband
connectivity across 795,000 villages and
towns. Even more quietly we have spent
the last five years bringing our data into
a massive platform that stores over 100
petabytes of data (one petabyte equals a
million gigabyte). This entire platform
talks to a very thin customer 360 plat-
form, which can respond in milliseconds
to any request or offer to be served to a
customer,” Vittal informed analysts.
Investments in digital infrastructure
coupled with the use of artificial intelli-
gence and machine learning tools have
helped India’s second-largest telecom
STATSGURU
Renewed Covid concerns
ISHAAN GERA
Although nearly 90 per
cent of the population
aged 18 years and
above has been fully
vaccinated — the
administration of the first dose is
even higher, at 97 per cent — and
over half the children aged 12 years
and above have received the first
Covid vaccine dose, cases in India are
rising again (chart 1).
On Sunday, data from the Ministry
of Health and Family Welfare showed
that the country reported 8,582
infections. The last time infections
had crossed the 7,000 mark was on
March 2 (chart 2).
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines
MOBILE NUMBERS n Airtel n Reliance Jio
Comparison of average revenue per user per month (in ~)
178
167.6
163
124
Q4 FY 22
Source: Companies
WIRELESS SUBSCRIBER
MARKET SHARE DATA FOR
MARCH 2022
Service provider Market share ( in %)
Reliance Jio 35.37
Bharti Airtel 31.55
Vodafone Idea 22.83
BSNL had a market share of 9.96 %
Source: Telecom Regulatory Authority of India
company to gain 4G customers as well as
fix network experience in case of glitches.
Simultaneously, organisational restruc-
turing has helped it to serve customers
better and lower costs.
“In the last four years, we have
stripped out $1.2 billion of waste in our
business, making it leaner and swifter.
We do this through applying rigour, lev-
eraging tools and technology, and sensi-
ble win-win negotiations with our part-
ners,” Vittal said.
“Airtel has managed to keep its cost
structure lean, offer better experience
through 4G investments and raise funds,”
a telecom sector analyst pointed out.
Airtel has raised over $18 billion to
strengthen its balance sheet in the last
few years.
“Our operating cash flow is more than
adequate to cover all our capex needs and
with improved tariffs the operating lev-
Even as cases in the country are
rising, the pace of vaccination is
falling. The average daily vaccination
in the past five days has been
1.6 million; a month ago, India
administered nearly 2 million
Covid-19 vaccine doses daily. In
February, the average daily dose
administration was higher than
4.5 million (chart 3).
Precautionary dose
administration has risen in the past
few days, but it is still lower as a
share of the eligible population.
Only a fifth of the population eligible
for the precautionary (booster) dose
has been vaccinated. As time
progresses, the falling ratio of
precautionary doses as a proportion
n Vodafone Idea
151.6
145
138.2
115
107
Q3 FY 22 Q4 FY 21
erage of our business model will release
even more cash,” the Airtel CEO said.
Investors and analysts remain upbeat
about the Sunil Mittal-led telecom
company.
Last month, Moody’s upgraded Bharti
Airtel and changed the outlook from pos-
itive to stable in view of strengthening of
the company’s operational metrics, lower
leverage and improved profitability. “We
expect that these improvements can be
sustained given Bharti’s solid market
position, rising profitability at its core
Indian mobile business and prudent
financial management,” Moody’s senior
vice-president Annalisa Di Chiara said.
Earlier this week, Morgan Stanley in
its report said that Airtel is well positioned
to absorb the incremental investments
related to 5G without compromising its
balance sheet strength. “Over the next
two years, we expect Airtel to generate
cumulative free cash flow to equity (post-
lease, spectrum and interest payments)
of $6.7 billion. This along with potential
inflows from a partly paid rights issue
should help keep net debt in check. We
expect return on capital employed to
improve to 16 per cent by FY24 from 9 per
cent in FY22,” it said.
The key risks going forward, it added,
was higher than expected capex in FY23,
delays to price hikes and requirements
for further investments in group com-
panies like Indus Towers.
of the eligible population indicates
hesitancy (chart 4).
However, some states/UTs have
performed better. Ladakh had until
June 10 vaccinated 56 per cent of the
eligible population — people due to
receive the precautionary dose.
Andhra Pradesh had vaccinated
37.1 per cent, while Delhi had
vaccinated 28.1 per cent (chart 5).
As a proportion of the overall
population, India has administered
a booster dose to only 2.7 per cent of
people. In contrast, Singapore has
administered booster doses to 76 per
cent of its population, the United
States has covered 36 per cent of its
people. The global average is
25.8 per cent (chart 6).
Both customers and banks to
feel pain in new regime
The banks have a balm for their pain. Probably, shifting to floating rate deposits can
work as an anaesthetic gel for some of the customers
BANKER’S TRUST
TAMAL BANDYOPADHYAY
In the rising interest rate regime,
both banks and their customers have
started feeling the pain, although for dif-
ferent reasons.
Let’s talk about the customers first.
The Reserve Bank of India (RBI) last
week raised its policy rate by half a per-
centage point to 4.9 per cent. This is the
second rate hike since May 4, when the
Indian central bank had raised its policy
rate by 40 basis points. One basis point
is a hundredth of a percentage point. A
series of rate hikes is set to follow to fight
high inflation.
What does it mean for the customers?
Their cost of borrowing is rising — faster
than before.
I don’t have the latest figures but as of
December 2021, little over 39 per cent of
banking industry’s loans are linked to
external benchmark-based lending rate
(EBLR), introduced in December 2019. All
loans given to the micro, small and
medium enterprises (MSME) as well as
retail loans are linked to EBLR. The banks
primarily use the repo rate and, for some
products, the 364-day T Bill rate as an
external benchmark.
The repo rate has risen 90 basis points
in the past two months. And the 364-day
T Bill yield, which was 4.56 per cent
around the time the first 40 bps rate hike
was announced, has crossed 6 per cent
(6.12 per cent). Many banks immediately
raised their EBLR, each time the repo rate
was raised.
This means if one had taken a home
loan at say 6.7 per cent in April, one will
have to pay 7.6 per cent now. For certain
loans, linked to the 364-day T Bill yield,
the rise is even steeper.
A study by the State Bank of India (SBI)
research says the impact of the first round
of 40 bps rate hike on the MSME and retail
borrowers is ~12,152 crore, annually. As the
rates rise, the burden will increase. For
every 1 bp rise in the repo rate, the interest
cost for the borrowers will rise ~305 crore.
This, of course, is the combined impact of
EBLR as well as MCLR or marginal cost-
based funding rate.
MCLR was introduced in April 2016,
replacing the base rate that had been
operational since July 2010. A miniscule
part of the banking system’s ~120.27-tril-
lion credit is linked to base rate. They are
legacy loans.
For every ~100 loan in SBI, the nation’s
largest lender, ~22 is given on fixed rates
and ~78 on floating rates. Out of ~78, loans
linked to MCLR are ~42, EBLR ~35 and base
rate ~1. Out of ~35 EBLR loans, ~23 is linked
to repo rate and ~12 to T Bill. The overall
1: A LARGE PROPORTION OF
POPULATION IS VACCINATED
(Vaccine administration as % of total eligible population)
n First dose n Second dose
97.4
88.6
80.9 63.5
18+ 15-17-year-olds
Source: MoHFW, BS analysis
3: THE PACE OF VACCINATION IS
SLOWING DOWN (Five-day moving average of daily
Covid-19 vaccine doses administered; figures in millions)
0.24
Jan 24 2022
Source: MoHFW
5: SOME STATES/UTs HAVE DONE WELL
(Top 10 states/UTs by booster doses as % of eligible population)
Ladakh 55.92
Andhra Pradesh 37.06
Delhi 28.14
Bihar 27.07
Manipur 25.47
Uttarakhand 25.40
Gujarat 24.88
West Bengal 23.24
Odisha 22.46
A & N Islands 22.35
Eligible population is calculated by estimating the number of people who became eligible based on
second dose administration. Data for June 10, 2022
industry scene won’t be very different.
The main source of funds for banks is
deposits. The base rate took into account
the average cost of deposits while MCLR
has been set on the marginal cost or the
rate offered on new deposits. It was done
to bring in more transparency and make
the lending rates more responsive to the
central bank’s policy rate changes.
Banks do change the MCLR every
month. They are required to reset the
EBLR at least once a quarter but all of
them have been doing this instantly, in
the rising interest rate scenario. In
December 2019 when EBLR was intro-
duced, the repo rate was 5.15 per cent. By
June 2020, it was cut to 4 per cent and
remained there for two years till the rate
hike cycle started this May.
The banks have been faster in raising
their loan rates when the policy rate goes
up, but not so prompt in paring rates when
it goes down. Why? They can cut their loan
rates only after paring their deposit rates,
but that cannot happen overnight as the
lower rates are applicable to only the new
deposits while old deposits continue to
cost more.
For close to three decades now,
Indian banking has been in
search of a transparent,
customer-friendly external
benchmark rate that reflects
changes in the policy rate.
EBLR is the answer but in a rising
interest rate scenario it will pinch
the borrowers hard
For MCLR, the banks are required to
calculate their marginal cost of funds
across maturities of deposits. They also
add the so-called negative carry on cash
reserve ratio (the portion of deposits that
banks keep with the RBI on which they
don’t earn any interest), operating cost
and a tenure premium for the risk asso-
ciated — the longer the tenure, the
higher the risk. The final loan rate is
decided on the spread over MCLR that
banks charge.
No bank is allowed to price a loan below
MCLR and the spread over MCLR can
widen if the risk profile of a borrower dete-
riorates. Of course, fixed rate loans can be
given below MCLR — something they had
indulged in when the benchmark prime
lending rate or BPLR was in vogue.
The base rate was introduced in July
2010 with an understanding that no bank
would lend below its base rate. It was sup-
posed to be more transparent and fairer
to MSMEs that had for so long been subsi-
dising top-rated corporate borrowers.
Before BPLR, there was PLR or prime
2: BUT CASES ARE RISING AGAIN
48.1
26.6
6,915
12-14-year-olds Mar 1
Source: MoHFW
4: BOOSTER DOSE ADMINISTRATION
HAS NOT BEEN ENOUGH
(Precautionary doses administered as
12 % of eligible population)
10
8 40
6
4
1.60
Jun 12
2
0 Jan 11
6.9
Eligible population is calculated by estimating the number of people who became eligible based on
second dose administration. Data for June 10, 2022
6: INDIA RANKS LOWER IN BOOSTER DOSE
ADMINISTRATION
Singapore
Italy
United Kingdom
Brazil
United States
World
Bangladesh
Russia
India
Source: MOHFW, BS analysis Source: OWID
TAKE TWO 17 <
lending rate, introduced in October 1994.
It was the rate at which banks used to lend
to their top-rated clients and it had no rela-
tion to their cost of funds. Sometime early
this century, RBI replaced PLR with BPLR.
For close to three decades now, Indian
banking has been in search of a transpar-
ent, customer-friendly external bench-
mark rate that reflects changes in the pol-
icy rate. EBLR is the answer but in a rising
interest rate scenario it will pinch the bor-
rowers hard. Typically, when the rates rise,
for the existing borrowers, the banks
lengthen the tenure of the loan instead of
raising the amount of equated monthly
instalments.
The rising cost can dampen the loan
demand and also dent a borrower’s ability
to service the loans. Particularly, the
MSME sector, which is yet to get over the
shock of the Covid pandemic, will be hit
hard. It’s a double whammy — affecting
both economic growth and the quality of
assets of the banking system.
The banks will also feel the pinch as
their treasury income will be hit. In fact,
many will end up booking losses as the
yield on government bonds is on the rise.
Prices and yields of bonds move in oppo-
site directions.
The 10-year bond yield, which was 5.52
per cent on March 30, 2021, has crossed
7.5 per cent. At the shorter end, the spike
in yield is even sharper. For instance, the
364-day T Bill yield has risen from 3.83 per
cent to 6.12 per cent during this period.
The banks are required to invest 18 per
cent of their deposits in government secu-
rities but the average investment is
around 26 per cent now. Theoretically, 23
per cent is covered from any notional
losses as they can be kept in the held to
maturity (HTM) basket but most banks
have been keeping less than 21 per cent
in HTM. For the rest, when the prices
drop, they need to book mark to market
(MTM) losses. MTM is an accounting prac-
tice whereby an asset is valued at the mar-
ket price and not at the price it is bought.
So, when the prices drop, the difference
between the purchase price and market
price has to be provided for.
Of course, the extent of treasury loss
depends on the pace of rate hike. In the
first quarter of FY23, when the rate has
risen by 90 bps, most bank treasury is star-
ing at losses as the 10-year bond yield has
risen from 6.18 per cent to 7.51 per cent
during this quarter. If the rise in rate is
gradual, they can stomach it. Also, as only
new deposits earn higher rates but most
floating-rate loans are instantly repriced,
banks’ interest earning rises to even it out.
In fact, higher interest income can more
than compensate for treasury losses.
So, the banks have a balm for their pain.
Probably, shifting to floating rate deposits
can work as an anaesthetic gel for some of
the customers.
The writer, a consulting editor with Business
Standard, is an author and senior adviser to
Jana Small Finance Bank Ltd
His latest book: Pandemonium: The Great
Indian Banking Story
To read his previous columns, please log on to
https://bankerstrust.in
Twitter: TamalBandyo
(Daily Covid-19 infections)
10,000
8,582
8,000
6,000
4,000
2,000
0
2022 Jun 12
50
21.0 30
20
2022 Jun 12
10
0
Source: MOHFW, BS analysis
(% of total population)
75.9
67.4
58.3
46.5
35.8
25.8
14.4
9.8
2.7
18
>
IPL franchisees set
to make a killing
Each might garner ~500 cr annually from media rights, up from
~201.65 cr that all 10 of them made in 2022
SURAJEET DAS GUPTA
New Delhi, 12 June
T
he future has just got rosier for
Indian Premier League (IPL) fran-
chises. The owners of the 10 fran-
chises, including two new ones that
joined this year, might see their revenue
from the IPL’s media rights shoot up
two-and-a-half times, raising their
Ebitda (earnings before interest, taxes,
depreciation and amortisation) income
as well as valuations to new highs.
This, at a time when broadcasters
were slugging it out for the media
rights of the coveted cricket tourna-
ment today.
Franchisees make most of their rev-
enues from a central pool that accounts
for 85-90 per cent of their revenues.
Under this, they get a 50 per cent share
of what the Board of Control for Cricket
in India (BCCI) earns from media rights
and official sponsors’ rights. The money
earmarked for franchisees is then divid-
ed among them all.
If the media rights hit around
~50,000 crore (as many, including the
BCCI, are expecting for the upcoming
2023 edition of the league), each fran-
chise will on average make ~500 crore
annually as its share, up dramatically
from the ~201.65 crore that all 10 fran-
chisees made in 2022.
At the base price, each franchise
would have seen its revenues go up by
63 per cent to ~328 crore in 2023 over
this year. But by the end of the first day
of auction, it had already hit ~43,050
crore. However, that is good news for
the franchisees because their revenues
from media rights will more than double
to ~450 crore if the winning bid is at
~45,000 crore.
In 2022, Disney Star paid around
~4,033 crore for 74 matches for the IPL
media rights based on a per match price
of ~54.5 crore.
The number of matches went up
from 60 to 74 because the new teams of
Ahmedabad and Lucknow were added
to the IPL. Half of that money, ~2016.5
crore, went to the ten franchisees.
However, for the next five years, the
TEAM SPORT (annually, in ~cr)
Year Revenue from media
rights for each franchisee
2008-2017 77
2018-2021 204
2022+ 201
2023 (at base price) 329
2023 (at ~40,000 cr) 400
2023 (at ~45,000 cr) 450
2023 (at ~50,000 cr) 500
+ while the number of teams went up from 8 to 10 and
number of matches to 74 (increase of 14 matches), the
media rights share had to be divided with more
teams, so it went down marginally
Source: Franchisees and industry estimates
number of matches promised under the
bid conditions is 410 (at 74 matches per
year it would have been 370 overall).
This means the BCCI has left the option
for more teams to join and add to the
number of matches. However, for 2023
the total number of matches has been
pegged at 74.
As far as BCCI revenue from sponsors
is concerned, in 2022 it was around ~708
crore according to estimates; each fran-
chisee received over ~35 crore.
In the upcoming IPL, the BCCI
increased the base price to ~32,890 crore
for five years — double of what Disney
Star paid in 2017 for the media rights.
According to Forbes Research, the
average revenue of the eight franchisees
stands at around $35.2 million and an
EBITDA of $9 million. With media rights
expected to rise sharply, so will valua-
tions. Seven of the 10 franchises already
have valuations of over $1 billion.
PE funds have clearly seen a big
opportunity and have started putting
money in franchises. CVC Capital (which
has sports investments in the Spanish
La Liga, a top soccer tournament, and
Volleyball World) grabbed the
Ahmedabad franchise at ~5,625 crore.
This is more than three times what
Sahara paid for the Pune Warriors in
2010, which was the previous highest
bid for a team.
Compared with the Mumbai Indians,
which paid the highest in 2008 when
the IPL began, CVC Capital is paying
over twelve times that amount.
But there is a method to the madness.
PE funds are seeing media rights as an
assured return business, with returns
virtually guaranteed by the BCCI.
Average valuations are already at
around $1.1 billion. A top executive of a
PE fund, which is looking at investment
in sports, said the high media rights that
are on auction “will add another incre-
mental revenue of ~100-300 crore every
year and their share of sponsor rights
will also go up”.
He added: “But your costs will go
much slower as your big contributor to
cost (buying players) is capped at ~90
crore. So, margin improvement and
increased profitability are guaranteed.”
Parth Gandhi, founder, India Media
and Entertainment Fund, also said that
only specialised global PE funds — that
are a small minority — with experience
in sports investments and an ability to
tackle the reputational risks in teams
will come in.
NEW DELHI | MONDAY, 13 JUNE 2022 1
Smokescreen around surrogate
advertising clears with govt ban
New guidelines stipulate
that indirect ads of
regulated products such
as liquor and tobacco will
not be permitted
VIVEAT SUSAN PINTO
Mumbai, 12 June
Last month, actor Akshay Kumar found him-
self at the centre of a controversy when he
appeared alongside peers Ajay Devgn and
Shah Rukh Khan in an advertisement
for Vimal Elaichi.
Cardamom seeds, pearl and saffron pods the issue has to be resolved. According to market research company
have long been positioned as surrogates “Surrogate advertising has flourished IMARC, the pan masala market in India
for pan masala, a smokeless tobacco prod- despite regulation in place. The Cable reached a value of ~41,821 crore in 2021 on
uct whose advertising is not permitted in Television Networks (Regulation) Act, 1995, the back of celebrity endorsements and pro-
the country. clearly prohibits direct or indirect promotion motions. By 2027, this market would touch
For an actor, who had publicly stated a few and advertising of cigarettes, tobacco products, ~53,081.5 crore, IMARC said, as brands con-
years ago of the need for celebrities to stay wine, alcohol, liquor and other intoxicants. tinued using popular faces to drive home
away from surrogate advertising, the U-turn Yet, surrogate advertising by alcohol and tobac- their message.
was striking. co product companies are visible to this day “The issue of surrogate advertising would
Kumar was mercilessly trolled on social on television and digital media. The rules have have never emerged if categories such as alco-
media. So was Amitabh to be strictly enforced in hol and tobacco, which are legitimately man-
Bachchan, who terminated “THE BIGGER CHALLENGE IS my view,” said Sandeep ufactured and taxed in the country, were
his contract with a pan Goyal, managing director restrained from direct advertising,” argues
masala brand after commer-
MONITORING SOCIAL MEDIA, of ad agency Rediffusion. Abhijit Avasthi, founder, Sideways Consulting.
cials featuring him and actor WHERE THESE BRANDS ARE Shweta Purandare, “Indirect advertising is happening because
Ranveer Singh appeared on DIRECTLY REACHING advertising compliance there are consumers of these products. How
television late last year. expert and former secre- do you reach this audience?” he asks.
On Friday, the govern-
CONSUMERS THROUGH tary-general of the But some experts point to the social respon-
ment took the decisive step THEIR TWITTER HANDLES Advertising Standards sibility of advertising, saying “sin” categories
of banning surrogate ads. AND INSTAGRAM PAGES. Council of India (ASCI), such as alcohol and tobacco require regulation.
Consumer affairs secre- said the law (Cable The government concurs with this view.
tary Rohit Kumar Singh said,
ALSO, SPONSORSHIP OF Television Networks “The idea of these guidelines is to prevent
“Advertisements have great EVENTS BY THESE BRANDS (Regulation) Act) defines misleading advertisements of any kind. This
interest for consumers. REMAINS A GREY AREA” what a genuine brand includes surrogate ads. Moreover, it aims to
Under the Consumer extension is versus one empower consumers and consumer organi-
Protection Act (2019), there that is not for products sations to file complaints against these adver-
are provisions to handle mis- SHWETA PURANDARE whose advertising is tisements,” Singh said.
Advertising compliance expert
leading ads. However, to curbed in the country. N Chandramouli, chief executive officer of
make it more explicit, clear “Alcohol and tobacco brand insights and consultancy firm TRA
and aware to the industry, the government has brands, however, have circumvented the rules Research, said surrogate advertising is simply
come out with guidelines for fair advertising. to pass off products such as bottled water, not right. “There is no excuse for surrogate
This includes prohibiting surrogate ads.” music labels, soda and flavoured condiments advertising. It is wrong because the advertiser
The new guidelines state that an advertise- (in the case of masala pan and gutkha) as exten- is sidestepping the rules to promote a product.
ment, which directly or indirectly indicates sions of their flagship. The bigger challenge is This should not be happening,” he said.
that it is a promotion for a product or service monitoring social media, where these brands For now, Kumar, Devgn and Khan’s Zubaan
that is prohibited or restricted by law, will be are directly reaching consumers through their Kesari commercial for Vimal Elaichi is not vis-
regarded as a surrogate ad. Twitter handles and Instagram pages. Also, ible on national television, though
Also, advertisements using any brand sponsorship of events by these brands remains Rajnigandha and Raj Niwas pan masala have
name, logo, colour, layout and presentation a grey area,” said Purandare. their commercials running on air.
associated with a product or service whose While ASCI has banned surrogate ads of At the same time, actor Sanjay Dutt con-
ads are restricted will be considered as sur- liquor brands in the past and has even revised tinues to endorse All Seasons club soda, a sur-
rogate ads. the criteria for surrogate advertising as part of rogate for All Seasons whisky, on television.
Experts have welcomed the move, but insist its advertising code, challenges with regard to Clearly, the fight against surrogate advertising
that the rules have to be enforced strictly, if enforcement remain. is not over yet.