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TUESDAY, 18 SEPTEMBER 2018
20 pages in 1 section www.business-standard.com
MUMBAI (CITY)
~7.00
VOLUME XXIII NUMBER 26

THE MARKETS ON MONDAY Chg#

Sensex 37,585.5 505.1
Nifty 11,377.8 137.5 WORLD P14 TAKE TWO P19
Nifty Futures* 11,407.7 30.0
Dollar
Euro
~72.5
~84.5
~71.9**
~84.0** TRUMP PRAISES TARIFFS AS FOOD TECHNOLOGY’S
CHINA TALKS HANG FIRE INSATIABLE APPETITE
Brent crude ($/bbl)## 78.2## 78.2**
Gold (10 gm)### ~30,600.0 ~40.0
*(Sept.) Premium on Nifty Spot; **Previous close;
# Over previous close; ## At 9 pm IST;
### Market rate exclusive of VAT; Source: IBJA PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE

THE CMIE TRACKER

Consumer Sentiment Index
(Base: September - December 2015 = 100) BoB, Vijaya, Dena to merge Govt action fails
to help market, ~
AMALGAMATED ENTITY TO PROCESS COMPLETION GOVT TO CONTINUE TO
BE THIRD-LARGEST LENDER MAY TAKE 4-6 MONTHS PROVIDECAPITALSUPPORT PAVAN BURUGULA & ANUP ROY SENSEX SLIPS 505 POINTS
Mumbai, 17 September

Unemployment rate (%)

ANUP ROY, SOMESH JHA & ABHIJIT LELE
Mumbai/New Delhi, 17 September MANAGEMENT REACTS The benchmark Sensex tum-
bled more than 500 points on
Monday after the measures
“MY MESSAGE TO “THEREISNOBIGOR “BoBISAHEADIN

T
he central government on Monday pro- announced by the government
posed to create the country’s third- EMPLOYEES IS SMALL.ITISAN TECHNOLOGICAL over the weekend failed to stem
largest bank by amalgamating Mumbai- KEEP DOING WHAT AMALGAMATION.THE INNOVATION.SODENA losses in the currency and
based Dena Bank and Bengaluru-based bond markets. The crash has
Vijaya Bank with much larger Bank of Baroda
YOU ARE DOING. NEWENTITYSHOULD BANK’SCUSTOMERS wiped out over ~1 trillion of
(BoB) in an all-stock deal. The banks’ boards are DON’T THINK MOVE BEBETTERTHANTHE WILLGETANEW investor wealth. ~ AT 72.5 VERSUS US $
expected to meet in 10 days to take a call. The deal, SHOULD IMPACT SUMOFINDIVIDUAL DIGITALBANKING Weakness in the Asian mar- (Inverted scale) in ~
Source: CMIE
though, is almost a certainty since the govern-
ment is the majority owner.
BUSINESS ACTIVITY” ENTITIES” PLATFORM” kets, amid the escalation of
trade tensions between the US
WHY LACK OF JOBS DOESN’T LEAD TO SOCIAL STRIFE 10 > P S JAYAKUMAR, R A SANKARA RAMESH SINGH ,
“The government had announced in the and China, also weighed on
BANK OF NARAYANAN, DENA BANK,
Budget that consolidating banks was on our agen- investor sentiment.
AIR INDIA FLIGHT TO NY da and the first step has been announced,”
Finance Minister Arun Jaitley said. He justified
BARODA
MD & CEO
VIJAYA BANK
MD & CEO
EXECUTIVE
DIRECTOR The Sensex closed at 37,586,
down 1.33 per cent, while the
HAS A NARROW ESCAPE the action, stating that the government and the Nifty50 index shed 137.4 points,
Despitesystemfailure,adverseweatherand Reserve Bank of India (RBI) were forced to take or 1.2 per cent, to close at 11,378.
lackoffuelwhilelandingatNewYork’sJohnF “concrete steps” once the asset quality review of This was the third 1 per cent-
KennedyAirport,anAirIndiapilotsucceeded banks revealed the bad debt rot in Indian banks plus fall for both the indices in
insaving370passengerson-board. 2> was far deeper than what was projected earlier. the past five sessions. G-SECYIELDSENDSAT8.09%
Nine bank unions said they would go on a READ FULL INTERVIEWS P6 Therupee,afterhitting72.69, in %
nationwide demonstration on Tuesday and the closed at 72.5 a dollar, down 65
ECONOMY P6
Non-essential imports to be
course of action will be decided by Wednesday.
Earlier the government merged State Bank of TACKLING SOUR DEBT | BoB | Vijaya | Dena
Total business
Merged entity
in~trn Deposits in~trn
paise, or 0.9 per cent, over its
Friday’s close. The 10-year gov-
India’s associate banks with the parent, and let Life ernment security (G-sec), after
identified by end of week Insurance Corporation take over bad debt-ridden 10.3 hitting 8.19 per cent in opening
Gold, finished steel, electronics and food IDBI Bank. Unions have opposed both the moves. 14.8 5.8
8.4 trade, ended at 8.1 per cent,
items may figure in the list of non-essential Before the asset quality review of the central compared to the previous day’s
imports, to be finalised within this week. bank, the bad debts declared by banks were close of 8.13 per cent.
SUBHAYAN CHAKRABORTY writes ~2.5 trillion. After the review, they turned out to be 2.8 The government on Friday Compiled by BS Research Bureau
1.7 1.6 1.0
~8.5 trillion, as banks resorted to “restructuring announced measures to Source:Bloomberg
and evergreening of loans”. improve capital inflows and
COMPANIES P2 Amid the market ignoring the government’s Net NPAs in% Tier-1 capital in% contain the widening current
GOLDMAN SACHS
Arcelor needs lenders’ nod five-point agenda of stabilising the rupee, Jaitley 9.27 10.35 account deficit. Some of the
DOWNGRADES
to transfer UGSL shares: SBI and Financial Services Secretary Rajiv Kumar held
a surprise press meet to announce the amalgama-
11.0 5.7 8.15
9.3 steps announced include eas-
ing foreign borrowing norms INDIAN EQUITIES P13
SBI, the lead banker to Uttam Galva Steels tion. The finance minister said the Centre was keen
ILLUSTRATION: AJAY MOHANTY
5.4 for local manufacturers, relax-
(UGSL), has told ArcelorMittal, the on saving banks under prompt corrective action 4.1 ation of ceiling on foreign own-
GLOBAL FACTORS TO
co-promoter of the bankrupt firm, that its
transfer of shares in February to the Miglanis
(PCA), possibly by merging them in the same man-
ner. “One of these banks is under PCA and we want
MERGER TO STRENGTHEN ership of individual company
bonds, and limiting non-essen- BE BLAMED FOR ~
CAPITAL AND BUSINESS P6
Source:

violated the non-disposal agreement. to save all such banks,” Jaitley said. Turn to Page 6 >
Government
data tial imports. Turn to Page 6 >FALL, SAYS JAITLEY P6
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official

2 COMPANIES MUMBAI | TUESDAY, 18 SEPTEMBER 2018

STOCKS > Dynemic Products

Company received an
> Sun Pharmaceutical Industries
Top loser among the S&P
> Balrampur Chini Mills
Stockcontinuestotrade
> Sadhana Nitrochem
Boardmeetingon
> Kirloskar Pneumatic
Fixed record date of
IN THE NEWS environment clearance BSE Sensex stocks higherafterethanol Sep24toconsider Sep 27 for stock split
for Dahej project pricehike stocksplit from ~10 to ~2
~141.85 PREVIOUS CLOSE ~665.10 PREVIOUS CLOSE ~88.60 PREVIOUS CLOSE ~1,238.35 PREVIOUS CLOSE ~890.10 PREVIOUS CLOSE
~170.20 CLOSE ~646.15 CLOSE ~95.75 CLOSE ~1,300.25 CLOSE ~914.80 CLOSE
* OVER PREVIOUS CLOSE 20.00% UP* 2.85% DOWN* 8.07% UP* 5.00% UP* 2.77% UP*
> .

Narrow escape for

AI in New York
Arcelor needs lenders’ nod Ola raises $25 mn
from China fund
AGENCIES
New Delhi, 17 September

Even after multiple system fail-

ure, adverse weather conditi-
on Uttam Galva shares: SBI
Sale of shares by Mittal violates non-disposal agreement, says the bank
ALNOOR PEERMOHAMED
Bengaluru, 17 September

Home-grown ride-hailing
major Ola has raised $50 mil-
ons and lack of fuel while strug- lion in funding from two new
gling to land at the John F DEV CHATTERJEE investors, including a Chinese
Kennedy Airport in New York, Mumbai, 17 September state-backed fund that was set
an Air India pilot succeeded in up with a mission for deepen-

saving the lives of 370 passen-
gers on-board. It was Sept-
ember 11, when Air India’s AI-
101 was flying from New Delhi
to New York.
An ANI report said the
plane was suddenly caught in
between the worst flying con-
ditions any pilot would want to
imagine. The pilot reported to
the Air Traffic Control (ATC)
thattheflightexperiencedmul-
tiplesystemfailureandwaslow
on fuel, which also restricted
its time of flying when the sys-
tem failed. The flight also wit-
nessed the malfunctioning of
all three of its Instrument
Landing System receivers on
board the jet. This meant that
the pilots needed to manually
IN BRIEF
AGM of six Anil Ambani
group firms today
SixcompaniesbelongingtotheRelianceAnil
DhirubhaiAmbanigroup(ADAG)willholdtheir
annualgeneralmeetings(AGMs)onTuesday.
FirstoftheblockwillbeRelianceCommuni-
cations,whoseAGMwillbeginat9:30am
followedbyRelianceInfrastructureat10:45am
andReliancePowerat12pm.Afteragapof
Anil Ambani another75minutes,theAGMofReliance
Capitalwouldkickoff.ADAGGroupChairman
AnilAmbaniisthechairpersonforallthefourcompanies.Reliance
HomeFinanceandRelianceNipponLifewillalsoholdtheirfirst
AGMaftergoingpublic.Boththecompanieshavelistedinthepast
fiscalyear.TheirAGMwilltakeplaceafteragapofonehour.Anil
Ambaniisnotontheboardofthesetwocompanies.However,his
sonAnmolAmbaniservesasadirectorontheboardsofReliance
HomeFinanceandRelianceNipponLife.
Another director
of Jaypee
Infratech resigns
JaypeeInfratech,whichisfaci-
nginsolvencyproceedings,
Mondaysaidthefirm'sinde-
pendentdirectorShamLal
Mohanhadresignedcitingper-
sonalreasons.Lastweek,three
independentdirectorsLalit
Bhasin,KeshavPrasadRauand
BasantKumarGoswamihad
resignedfromtheboard.Gos-
wamiresignedbecauseofhis
growingageandindifferent
health,andotherscitedperso-
nalreasons. . PTI<
Micron Technology
keen to enter
Hyderabad
TheTelanganagovernmenton
MondayannouncedthatUS-
basedsemiconductor-maker
MicronTechnologywaskeenon
settingupshophereandwould
beinvestingover~3billionand
generatingdirectemployment
for1,000people.Areleasesaid
thefirmwouldtakeonlease1.8
lakhsqftinanSEZinHyderab-
ad,therebymakingtheprese-
nceofthefirmlargest.Micron
alreadyhaspresenceinSinga-
pore,Taiwan,Japan. PTI<
land the aircraft. The report
said in such conditions and un-
able to land at the JFK Inter-
national Airport, the pilot man-
ningAI-101somehowmanaged
to land at the alternate desig-
nated airport in Newark.
According to the informa-
tion, Air India has set up an
inquiry on aircraft and consti-
tuted an internal inquiry under
the monitoring of airlines flight
safety department.
Confirming the news, Air
India spokesperson Praveen
Bhatnagar said, “For New York
diversion, the flight safety
department is investigating the
matter. The Air India pilots
have successfully handled the
situation.”
BS REPORTER<
Kamal Sharma
takes advisory
role in Lupin
KamalKSharma,wholetime
directorandvice-chairmanof
Lupin,hasnowtakenupan
advisoryroleinthecompany.
Sharmawillfunctionasan
advisorforayearbeginning
October1,LupinsaidonMon-
day.Sharmawillalsoholdthe
postofnon-executivevice-
chairman.Sharmaisaveteran
inthepharmaceuticalsector,
withoverthreedecadesof
experience. BS REPORTER<
Hormusji N Cama
is new ABC
chairman
HormusjiNCama,directorof
MumbaiSamachar,hasbeen
electedthechairmanofAudit
BureauofCirculations(ABC)for
2018-2019.Camahaspreviously
servedaspresidentofIndian
NewspaperSociety(INS)fortwo
termsaswellasthechairman
ofPressTrustofIndia(PTI)and
MediaResearchUsersCouncil.
MadhukarKamath,chairman
emeritius,DDBMudra,has
beenelecteddeputychairman
oftheABCfor2018-2019.
BS REPORTER<
S
tate Bank of India (SBI), the lead ing economic cooperation
banker of Uttam Galva Steels, has between China and the
informed ArcelorMittal — the co-pro- Shanghai Cooperation Organi-
moter of the bankrupt company — that its sation region.
transfer of shares in February this year to Ola issued 250,000 prefer-
the company’s co-promoter, the Miglanis, ence shares divided equally ride-hailing firm. The formal-
violated the non-disposal agreement and between Hong Kong-based pri- ising of the investment comes
hence the shares transferred to the Miglanis vate equity fund Sailing Capital at a time when Ola is in talks
will require lenders’ clearance. and the China-Eurasian Eco- with multiple investors to raise
SBI has also cautioned the L N Mittal- nomic Cooperation Fund as much as $1 billion to take on
owned company that the bankruptcy pro- (CEF), documents filed with rival Uber, not just in India but
ceedings against Uttam Galva will contin- the Registrar of Companies, also overseas markets such as
ue and it cannot be tied to Essar Steel’s which were sourced from Australia and the UK.
debt resolution. Paper.vc, showed. The Economic Times
In February this year, ArcelorMittal The investment was part of reported last month that
Netherlands BV sold its 29 per cent stake in
Uttam Galva to Miglanis for ~1 in order to
THE STORY SO FAR Series I 2 round in which the
company raised $50 million
Singapore’s sovereign wealth
fund Temasek had invested as
become eligible to participate in the bid- July 2011: Sept Feb 2018: Apr 2018: Sept 2018: from the two investors at a val- much as $225 million in Ola to
ding process of Essar Steel. Uttam Galva Uttam Galva 2016: Arcelor sells Lenders say Uttam NCLATasksArcelor uation between $3.7 billion and pick up a high single digital
was declared a non-performing asset (NPA) promoter Uttam 29% stake in Galva bankruptcy topayUttam $4.2 billion. Ola had closed its stake in the company. The deal
in September 2016 after it defaulted on its ArcelorMittal Galva Uttam Galva to proceedings Galva andKSS’s Series I 1 round in September was said to have given exits to
debt obligations worth ~60 billion. SBI has signs credit declared Miglanis for independent of duesandthen 2017 and Series I 3 round in several early investors in Ola,
initiated bankruptcy proceedings against facility NPA by ~1 a share; bids Essar Steel’s bidforEssarSteel; December of the same year. including the buyback of
the company in the National Company Law with SBI lenders for Essar Steel resolution process ArcelormovesSC The CEF was announced by employee stock ownership
Tribunal (NCLT), Mumbai, last year, where Chinese President Xi Jinping plan from some employees.
the proceedings are currently pending. in 2014, with an initial size of $1 Sources say that Ola is look-
In a communication to ArcelorMittal in
April , SBI had said under the credit facility
been in breach of its payment obligations
as well as other conditions as set out in the
the entire amount due to the financial cred-
itors of Uttam Galva and KSS Petron, which
billion, as an investment vehi-
cle for further realising the
ing for money from new
investors to reduce the power
agreement, the sponsors of Uttam Galva,
including ArcelorMittal, duly executed a
credit facility agreement. As a result, Uttam
Galva account has been classified as an
represents unprecedented value to all con-
cerned creditors. This is a commitment that
country’s Belt and Road
Initiative. The Indian govern-
of its largest investor SoftBank,
which now owns a little over
non-disposal agreement in 2011, which NPA in accordance with the Reserve Bank we have reinforced in the past week, both in ment has strongly opposed the 25 per cent stake in the com-
would not let them sell shares unless of India guidelines. We have recalled the the revised offer submitted to the commit- Chinese project as it cuts pany. Last year, Ola founders
cleared by lenders. The communication is entire financial assistance granted by us tee of creditors for Essar Steel and in a stock through the disputed territory Bhavish Aggarwal and Ankit
reviewed by this newspaper. to Uttam Galva and have moved the NCLT, exchangefilingbyArcelorMittalconfirming in Kashmir. Bhati had blocked a move by
“Pursuant to the terms of the non-dis- Mumbai, under the IBC, 2016, and pro- the submission of our revised bid,” the After the investment, the SoftBank Chairman Masayoshi
posal agreement, sponsors of Uttam Galva ceedings are currently pending before the spokesperson said. Chinese state fund along with Son to purchase shares from
shall not create any security interest on the NCLT, Mumbai,” SBI said. ArcelorMittal had told SBI that it had Sailing Capital will own close to the company’s second largest
NDU (non-disposal undertaking) shares When contacted, an ArcelorMittal deposited $48 million (~3.12 billion) in an 1.2 per cent stake in the Indian investor Tiger Global.
and also not transfer, sell, or dispose of the spokesperson said: “ArcelorMittal never accountstandinginArcelorMittal’snamein
NDU shares. However, with the permission considered itself a promoter of these com- SBI, London, against Uttam Galva’s dues.
of the facility agent, sponsors are permitted panies; at no point did we have any man- SBI asked ArcelorMittal on how it could
to transfer the NDU shares among them-
selves, provided no event of default has occ-
urred and sponsors jointly hold 51 per cent
agement involvement or board represen-
tation at Uttam Galva or KSS Petron.” He
added that ArcelorMittal and, in the case of
access funds deposited in its own account.
“Please let us know in what manner lenders
can accept the amounts deposited in an
Infy looks to Europe,
stake in the share capital of Uttam Galva
andcontinuetoretaincontroloverthecom-
KSS Petron, the Mittal family, exited from
these companies by following all due
offshore account maintained by you
towards the dues of Uttam Galva under the Australia after US
in search of talent
pany. Please note that the facility agent is processes, including seeking, and being credit facility agreement — if at all lenders
under no obligation to transfer shares from granted, declassification as a shareholder choose to accept. Further, without preju-
one sponsor to other, if an event of default
has occurred,” the SBI wrote to Arcelor-
from the Indian stock exchanges. “Despite
our firm belief that ArcelorMittal has always
dice to anything stated herein, the accept-
ance of the deposit will be subject to regu- BIBHU RANJAN MISHRA & months,” he said.
Mittal, citing its loan agreement of 2011. been an eligible bidder, we have made a latoryconsents,whichoughttobeprocured ROMITA MAJUMDAR In March, Infosys launched
“As you are aware, Uttam Galva has clear and considerable commitment to pay by Uttam Galva and you,” SBI said. Bengaluru/Mumbai, 17 September its first technology and inno-
vation hub at Indianapolis, in
After the US, Infosys is plan- the US, which was followed by
Numetal: Was ‘ineligibility’ of ArcelorMittal ningtotakeitsdigitalhubmod- another centre in Raleigh last
els to Europe and Australia as month. The Indianapolis hub
withdraws theBengaluru-basedfirmlooks will help the firm work with
Mittal brothers considered? letter against
at expanding its onshore capa- clients in machine learning,
bilities in order to serve these artificialintelligence,userexpe-
markets effectively. The com- rience, and advanced digital
ISHITA AYAN DUTT & DEV CHATTERJEE
Kolkata/Mumbai, 17 September
Limited as a resolution appli-
cant under Section 29A,” the
Vedanta pany plans to begin by setting technologies, including big
up one digital hub in the UK data and cloud. Infosys is also
letter said. ArcelorMittal “inadvertently” for which it has shortlisted four using it as its global training
Numetal, a bidder for Essar An ArcelorMittal spokes- shared a “draft letter” raising locations while it is centre to train,
Steel, has written to Essar person said, “There is absolu- questions about Vedanta’s eligi- also evaluating set- Infosys plans to upskill and reskill its
Steel’s resolution profession- tely no connection between bility to bid for Essar Steel, only ting up such centres significantly own employees as
al (RP) and State Bank of India ArcelorMittal’s eligibility and to retract it later with a dis- in two more Europ- enhance onshore well as those from
(part of the committee of cred- the businesses of Mr Mittal’s claimer that it reserved its right ean countries. In base in key clients in digital
itors), seeking to know whe- brothers. As previously ack- in the matter. Australia, Infosys is markets; launches technologies. The
ther the “ineligibility” of Arce- nowledged by the resolution A letter was sent to the reso- looking at setting up campus firm is planning to
lorMittal promoter L N Mittal’s professional, this has no rele- lution professional (RP) of Essar two hubs before programme opentwomorehubs
brothers — Pramod and Vinod vance to the eligibility or abil- on September 15, drawing his expanding further. in the US, including
Mittal — had been taken into qualified under Section 29A of ity of ArcelorMittal to partici- attention to Vedanta and its “We are building our on- one in Hartford, Connecticut
account in deciding the eligi- the Insolvency and Bankruptcy pate in the resolution process connected persons’ alleged shore capabilities, and to that where it aims to hire 1,000 US
bility of the Luxembourg- Code by virtue of Pramod Mit- for Essar Steel. It is in fact a environment law violations in effect, the digital centers that workers by 2022.
based company. tal and or Vinod Mittal facing tiresome and trivial attempt India (specifically, Tuticorin and we have built in the US and Parekh said the concerns by
Numetal has sought the ineligibility by being promot- to distract from the central fact Lanjigarh), Zambia as well as those we are starting in Europe certain quarters that increased
information preferably by ers of Gontermann-Peipers and that ArcelorMittal is the most other jurisdictions. It also drew and Australia, are actually hiring in onshore locations,
Tuesday, when its application Ispat Profiles India Ltd. Other credible owner of Essar Steel attention on the alleged illegal allowing us to recruit college including the US, would affect
against the National Company companies mentioned in the and that we have the most mining, disregard for safety graduates in those markets,” the profitability negatively. He
Law Appellate Tribunal letter in the same vein were compelling offer on the table standards and human rights said Salil Parekh, chief execu- added that this would, howev-
(NCLAT) order is likely to be Chhattisgarh Energy Ltd, for all stakeholders, particu- violation. The “draft” letter was tive officer and managing er, led the company towards a
taken up in the Supreme Court. Balasore Alloys Limited, GPI larly financial creditors.” for the benefit of the commit- director of Infosys. higher margin trajectory as it
The letter mentions facts Textiles. ArcelorMittal’s application tee of creditors (CoC) to assess “In Europe and Australia, would help in expanding the
that were placed before the “We request you to confirm for a stay on the NCLAT order the eligibility of the resolution we are evaluating a few cities, digital business, which cur-
National Company Law whether the abovementioned mentioned that an affidavit had applicants as well as the feasi- though none of those have rentlystandsat28percentofits
Tribunal (NCLT) and NCLAT facts have been verified by you been submitted on the issue of bility and viability of any reso- been announced. The intent is overall revenues.
to establish that ArcelorMittal to determine the eligibility of Ispat Profiles to the committee lution plan submitted by such to launch digital hubs outside
India Private Ltd (AM) was dis- ArcelorMittal India Private of creditors on May 15. applicants. ISHITA AYAN DUTT the US within the next six More on business-standard.com

IATA launches EasyPay to

ease cash flow of airlines
ANEESH PHADNIS
Mumbai, 17 September
The International Air Trans-
port Association (IATA) has
rolled out a new payment mod-
el for travel agents, which aims
to ease cash flows for airlines.
Currently, travel agents in
India receive seven-day credit
to pay airlines for ticket book-
ings under the IATA's billing
andsettlementplan.Agentsare
requiredtofurnishabankguar-
antee to avail credit. Under the
EasyPay scheme announced
on Monday, agents would be
able to make payments using a
debit card. IATA has tied up
with YES Bank to implement
the scheme.
The EasyPay is a compo-
nent of new generation settle-
ment system (NewGen ISS)
launched by IATA which rep-
resents over 250 airlines
around the world.
EasyPay is voluntary pay-
ment model and agents can
continue to avail seven-day
credit under the existing
process. However, agents may
have to furnish bank guaran-
tee of a higher amount to avail
credit as IATA has reworked
some of its policies governing
the agents' accreditation.
"Digitisation of payments
will increase cash flows into
the airline industry for both
companies and IATA agents in
India with fund realisation
turn-around improvement by
9-10 days. With this partner-
ship YES Bank is targeting an
annual throughput of ~200 bil-
lion in due course," YES Bank
said. An expert, however, said
that scheme could remain a
non-starter unless agents were
offered better deals and dis-
counts by airlines while sell-
ing tickets under EasyPay
scheme.
PhonePetorollbackPoSplanafterfacilityhurdle
Company likely to
stay with QR codes
KARAN CHOUDHURY
New Delhi, 17 September
PhonePe, the digital payments wal-
let of e-commerce major Flipkart, is
rethinking its plan for a million
Point of Sale (PoS) machines in the
country, sources said.
The Bengaluru-based company
faced manufacturing hurdles for
these, as also reluctance from both
sellers and customers. Hence the
rethink. Instead, it might use QR-
code technology to push offline
transactions, it is learnt.
As an experiment, the company
distributed as many as 10,000 PoS
machines in Bengaluru since last
October. PhonePe had said during
the launch that these machines
had been indigenously designed,
being powered by Bluetooth tech-
nology. It was meant to serve mer-
chants of all sizes — traditional
store owners, motor fuel outlets,
food chains, quick service restau-
rants and others. It is claimed that
PhonePe has over 300,000 offline
and online merchant clients — in
food, travel, groceries, movie tick-
eting and other services. “Phone-
Pe, with this unique PoS solution,
makes transactions easier for cus-
tomers. All they need to do is bring
their phone close to the PoS device
and it automatically shows the
merchant details and amount to be
paid. The merchant does not need
Internet to be able to confirm that
a transaction was successful. The
device is the lowest cost PoS device
in the world serving the needs of
small merchants,” the company
had then said.
Yet, and despite not needing an
internet connection, “The compa-
ny has not seen much adoption of
the device,” said a n informed
source. Adding: “In the first phase
the firm distributed the device
among more than 5,000 mercha-
nts. It did not see a greater increase
in the number of transactions hap-
pening via the devices. Also, man-
ufacturing these devices was
becoming a problem. This is the
reason the company is rethinking
its PoS strategy.”
A detailed questionnaire sent
to Flipkart did not elicit any
response.
Sector experts say QR codes are
less cumbersome than Bluetooth
technology. “People have got more
used to QR codes. It is easier to
operate and faster as well. Also, a
merchant does not need to invest
in anything; he just has to have the
QR code pasted in his shop.
Merchants can use their existing
smartphones at no extra cost,”
added one.
Sources say the company is in
the process of distributing QR
codes to its merchant base. This
would help in faster implement-
tion of its offline sale plan. The
company wants to expand
PhonePe’s offline payments option
rapidly, so that it can direct both
online and offline transactions via
the digital wallet.
Alibaba, Paytm and MobiKwik
all use QR codes as a main offline
payment option. PhonePe claims to
have over 90 million installed and
the app drives one of the highest
number of merchant UPI (Unified
Payments Interface) transactions in
the country.
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.
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 COMPANIES 3 <

Amazon eyes big festive sales McLeod locks deal to sell two
more tea estates in Assam
from smaller towns, villages
KARAN CHOUDHURY and discounts in Hindi as well as place
AVISHEK RAKSHIT &
|ISHITA AYAN DUTT
Kolkata, 17 September

Marking its third tranche of sales, McLeod

New Delhi, 17 September Cardless EMIs for orders, pay and manage their accounts Russel, which is on a drive to trim its tea estates

high-value products in the language. portfolio in the country, has concluded an

O
nline marketplace Amazon is
eyeing Tier-III towns this fes-
tive season.
The global brand has about 3,000
affordable large appliance brands on its
portal as well as multiple finance options
for easy monthly instalments. Its new
Hindi option for customers is also like-
ly to help its push into smaller towns.
According to senior officials of the
company, from the Great Indian Sale —
its largest festive season discounts —
this year, the company will make an
effort to provide more affordable goods,
popular in smaller towns and villages.
“We have added more than 6,000
products across brands under the large
appliance vertical,” said Kaveesh
Chawla, director, category management,
Amazon India.
Last year, the company had 5,000
products under the large appliances
category. This year, 500 of the 6,000
products have been added over the
past few months in preparation for
the festive season.
The company said its strategy
included better after-sales services and
multiple finance options.
“While initiatives in Tier-I markets
during the sale season would continue,
we are concentrating on giving Tier-III
and the rest the best festive sale experi-
ence possible,” said Chawla.
He added, “We have a whole range of
affordable appliances that we know
would find takers in these markets. But,
this does not mean that high-end appli-
ances do not sell in these geographies.
Looking to grab a bigger slice of
the festive sales, e-commerce
giant Amazon has introduced
cardless Equated Monthly
Instalments (EMIs) through its
digital payments services
platform, Amazon Pay, for those
who do not own credit cards or
cannot access instalments on
debit cards. It is an invite-only
programme in which customers
will have access to credit for
purchasing high-value products
up to ~60,000 by splitting their
purchases into instalments at low
interest rates. SAMREENAHMAD
We are expanding the ambit of products
available so that people have more
choices.”
Amazon recently launched a Hindi
option on its portal, with plans to reach
out to the next 100 million customers,
who might be more comfortable with
the language than with English.
Now, those going on Amazon will be
able to find product information, deals,
“This is the first Indian language (we
are using)… it will help millions of cus-
tomers who prefer Hindi. Now cus-
tomers can do their Diwali shopping in
Hindi,” Manish Tiwary, vice-president,
category management, Amazon India,
said.
Amazon wants to launch its website
in other languages as well. But, its plans
are more detailed.
Even its video-streaming platform,
Prime Video, has a lot of movies and TV
shows in Bengali, Tamil, Telugu,
Kannada and other languages. Alexa,
its voice-based assistant, will also soon
be talking in other languages.
With as many as 67 fulfillment cen-
tres across 13 states and storage capaci-
ty of over 20 million cubic feet, Amazon
India says it now has the largest ware-
housing capacity among all e-commerce
firms in the country. That apart, the
company has created a whole new wing
of forward logistics providers, which are
small-format warehouses within a city
for two-hour express deliveries.
Amazon now has 17,500 such “I Have
Space” stores across 225 cities and 350
service partners in 320 cities.
agreement to sell two estates in Assam to the
Camellia Plc-owned Goodricke Group and one
of its subsidiary companies, Amgoorie India.
Sources said the valuation of these two tea
estates — poised to be sold to Goodricke and its
subsidiary at ~360 a kilo for the Harchurah tea
estate and ~350 a kilo for the Bargang tea estate
— is likely to fetch McLeod Russel a total of
~912.9 million from this sale’s proceedings. The
Harchurah tea estate will be acquired by
Goodricke under its own portfolio, while the
Bargang estate will be acquired via Amgoorie
upon successful completion of the due dili-
gence process.
Taken together, these gardens contribute
around ~590 million, or 3.73 per cent, of the sell-
er’s annual turnover. The valuation of the pre-
vious gardens sold to Luxmi Tea recently stood
at ~350 a kilo, compared to the ones sold to the
M K Shah Exports at ~340 a kilo.
Sources said McLeod Russel is in talks with
Dhunseri Tea & Industries and James Warren
Tea, apart from some non-tea corporate engi-
neering entities, to sell more gardens in the
Assam-Dooars belt. It may mark an incoming
fourth tranche of garden sales.
On a divestment mode to pare debt, fund a
share buyback, and raise capital to fund its
recent decision to foray into packet tea seg-
ment, McLeod Russel has now upped its target
to ~8 billion as the sale proceedings from its tea
estates. Previously, the company had targeted to
The two tea estates are likely to fetch ~912.9 mn
However, in its annual general meeting this
year, the company’s shareholders approved
the sale of additional tea estates, which exceeds
the initial target.
According to Kamal Baheti, director at
McLeod Russel, shareholders’ nod is needed
for the firm to execute sales, which exceed 20
per cent of the value of fixed assets. Under the
proposal, the company will be suggesting to
offload a maximum of 35 per cent of its fixed
assets, which translates into ~7 billion. Its
standalone fixed assets account for around
~20 billion, while the total assets account for
over ~33 billion. It excludes tea gardens from
Vietnam and Africa.
Under its plan to sell tea gardens, this
Willamson Magor Group has so far con-
cluded agreements to sell 14 estates in
Assam exceeding ~5.6 billion in the cur-
rent fiscal year.
In the recent past, so far, this WMG enter-
prise has sold four estates in the Moran region
in Assam to Luxmi Tea for ~1.41 billion; anoth-
er eight estates in the Doom Dooma region in
Assam were offloaded to M K Shah Exports for

‘ITDC will sell Automation Anywhere raise ~5 billion. ~3.31 billion.

shares to meet eyes bigger global play

Sebi norms’
Government-owned hospitality company, India Tourism Development
Corporation (ITDC), had let go of a few properties as the Centre wants it
to focus on areas outside the hotel business. RAVNEET KAUR, chairp-
erson and managing director, speaks to Ajay Modi on how the firm
wants to grow its other verticals while leveraging brand Ashok. Kaur
said the firm can look to partner IHCL (which holds an eight per cent
stake) and introduce a guest loyalty programme. Edited excerpts:
ThehotelportfolioofITDC
hasshrunk.Howisthefirm
adjustingtothischange?
Over the past two years, we
have undertaken disinvest-
ment of some hotels. Janpath
Hotel (Delhi) and Jaipur Ashok
were transferred last year. This
year, it was Lalitha Mahal
Palace Hotel in Mysore. These
are the three major hotels.
There was also the Bharatpur
Forest Lodge, which was hand-
ed over by ITDC. For joint ven-
tures, it has been Hotel
Lakeview Bhopal, Hotel
Brahmaputra Ashok,
Guwahati, and the third one
which has gone this year is
Hotel Donyi Polo Ashok,
Itanagar. In case of joint ven-
tures (JVs), the model has been
dilution of equity,
where other JV
partners have taken
ITDC equity. As
ITDC hotels were
being run on leased
lands, it was decided in case
states are not willing to extend
the lease, then the hotels
should go back to the state. In
the case of Janpath, it has gone
back to the Ministry of Housing
and Urban Affairs. There has
been some shrinkage, but all
along the major chunk of prof-
its were coming from The
Ashok and Hotel Samrat, and it
continues this way.
WhatdoesthefutureofITDC
looklikeasitseekstobecome
adiversifiedplayer?
We are looking into it and in
fact have conducted an in-
house business plan which is
more like where we want to go.
We are in the process of engag-
ing strategic consultants who
will give us firm options and
the potential relevant to the
organisation. But it is very clear
that we are going to be diversi-
fying more and more to other
verticals outside the hotel busi-
ness. We are moving towards
being a one-stop solution
provider for the tourism and
hospitality sector.
ITDChasalongexperienceof
runningahotel.Canthatskill
setbeusedanywhereelseor
youthinkITDCwouldletitdie
gradually?
We, in fact, face this eventu-
DEBASIS MOHAPATRA and Mumbai. The company, tasks in their bids to optimise
Bengaluru, 17 September which deploys bots (virtual cost and increase operational
robots) to automate processes efficiency. Industries across the
After joining the ‘unicorn’ internally, will also increase spectrum, including manufac-
league following $250 million such deployment to 300 bots turing, financial services, retail,
of fundraising in July, robotic from the present 100. logistics, pharmaceuticals
process automation firm Founded by four friends — among others, are using bots to
Automation Anywhere (AA) is Ankur Kothari, save costs.
aggressively looking to expand Neeti Mehta “We are adequately "We have been
its geographies. Shukla, Mihir funded now. We may growing more than
The company also plans to Shukla, look at raising around 100 per cent in the
raise its headcount three times Rushabh $750 million in the last few years and
to 3,000 by 2019. Parmani — second round” hope it to acceler-
The automation firm, which Automation MIHIR SHUKLA ate further in com-
counts technology giants Anywhere had ing years," said
CEO, Automation Anywhere
Google, Cisco, and Siemens as started its Ankur Kothari,
itsclients, is eyeing around $750 operations from San Jose way another co-founder and the
million of funding in the sec- back in 2003. firm's chief revenue officer.
ond round. The firm has raised one of The company, which has
“After the first round of the largest series A funding of more than 1,100 enterprise cus-
fundraising, we plan to set up $250 million in July, taking its tomers globally, sees verticals
offices in Hong Kong, West enterprise valuation to $1.8 bil- such as banking and financial
Asia, Poland, Germany, and lion. The round was led by services (BFSI), manufacturing,
in African. Currently, we have New Enterprise Associates telecom, and retail as the
a presence in 19 locations, (NEA) and Goldman Sachs growth drivers.
which will go up to 30 next Growth Equity with participa- “Apart from Indian corpo-
year,” said Mihir Shukla, the tion from General Atlantic and rates and captives of global
company’s co-founder and World Innovation Lab. “We are firms in the country, other serv-
ality. Now, the Ashok Events chief executive officer. adequately funded now. We ice providers and government
division is being manned by a The California-based firm may look at raising around agencies are also adopting our
person from the hotel divi- has four offices in the US, three $750 million in the second automation offerings," he said.
sion and so is the case with in India and one each in round,” Shukla said without The company has part-
Ashok Travels and Tours divi- London, Melbourne, and giving any time line. nered with 68 universities and
sion. We are retraining the Singapore among others. In Enterprises across the globe colleges worldwide, including
staff, re-deploying them, get- India, it has presence in cities are fast adopting automation to India, to impart digital skills
ting them to take up some- such as Vadodara, Bengaluru, do away with routine mundane to students.
thing else which they have
expertise in or can acquire.
Also, a lot of internal HR pol-
icy changes are being under-
taken to enable flexibility so
that people can move from
one division to another.
Thegovernmentowns
87percentstakeinITDCas
promoter.Isthecompany
workingtowardsmeeting
Sebi'snormofminimum25
percentpublicshareholding?
We should be in line
for that because the
government has
already appointed
merchant bankers
and we have had
initial discussions with them.
Now, as and when the govern-
ment gives clearance, we'll be
achieving the requirement
of 25 per cent public share-
holding.
Does the revised floor area
ratio (FAR) norm allow for
construction of more rooms
in the Ashok-Samrat Hotel
complex?
One of the big advantages of
the Ashok-Samrat complex is
that it is huge and now ground
coverage norms have gone up.
So, there is possibility of addi-
tional FAR and additional
ground coverage.
The Indian Hotels Company
has a stake of eight per cent
in ITDC. As a large share-
holder, what are their
expectations? Since the two
companies are in same
space, is there scope to work
together?
We are not in regular touch
with it as there is none from
IHCL on the board of ITDC.
IHCL are keeping a watch on
how shares are performing.
Some partnership should be
possible where we collective-
ly look at doing some brand
loyalty programmes because
our presence outside Delhi
has come down.
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4 ECONOMY & PUBLIC AFFAIRS MUMBAI | TUESDAY, 18 SEPTEMBER 2018

“Demonetisation was the biggest scam that the Modi “Did you all expect a change? I don’t know. After all, the “Whether (its) Naxalism or terrorism, our army
government has undertaken in four years which the person (Pak PM Imran Khan) has been propped up by and other security forces are facing them with
Congress had not done in the last 70 years. The scam was the (Pakistan) army. The army still rules. So, let’s wait determination. Terrorism in the Northeast has
aimed at taking out money from the small traders to put and watch how things go - whether the person almost ended and Jammu & Kashmir police
into the pockets of 15 richest persons of the country” remains under army control or doesn’t” are fighting terrorism with coordination”
RAHUL GANDHI, Congress president V K SINGH, Union minister RAJNATH SINGH, Union home minister
>

IN BRIEF
Icra downgrades IL&FS to
the lowest grade
PMO returns draft pharma policy
Paper was presented before PM Modi in a meeting attended by officials from NITI Aayog and pharma pricing authority
Rating agency Icra has downgraded rating for loans and
debentures of Infrastructure Leasing & Financial Services from ‘BB’ SOHINI DAS There is some difference between
to ‘D’ — default grade on delays in plans for liquidity support and
capital injection. The commercial paper has been downgraded
Mumbai, 17 September
GOING BACK TO THE the senior officials on this point,”
the source said.
from ‘A4’ to ‘D’. The ratings have been removed from the watch DRAWING BOARD
T
he Central government is If prices of medical devices are
with developing implications. The company had planned to raise planning to make major „ The proposal on trade margin calculated based on trade margin
~45 billion equity (through rights issue) and ~35 billion long-term changes in the Drug Price calculation for imported medical rationalisation, then, effectively, it
line of credit from its shareholders. These plans, however, are yet to Control Order (DPCO) 2013 and devices was not approved by would come out of the purview of
be finalised, Icra said. The rating revision takes into account recent come out with a new policy soon. the PMO the DPCO, and the NPPA, which is
irregularities in debt servicing by the company. The liquidity However, the draft that was pre- responsible for implementing the
position at group levels remain under challenge on delays in sented before the Prime Minister’s „ Another suggestion was that DPCO. A decision on the same
raising funds from the promoters in accordance with earlier stated Office (PMO) has been sent back for trade margins on medical devices is yet to be taken.
plans. BS REPORTER< reworking, sources said. be calculated on the first point of At present, cardiac stents,
It is learnt that in a meeting at sale. This included imported intrauterine devices, condoms
the PMO sometime back, the draft medical devices and knee implants have been
was presented before Prime brought under price control under
Sanjeev Ranjan Govt may introduce Minister Narendra Modi. The meet- „ This third suggestion from the the DPCO 2013.
appointed draft data protection ing was attended by officials from PMO is on using QR codes for blisters Another suggestion from the
NHAI chairman Bill in winter session the NITI Aayog, the Department of and packs of pharma packaging to PMO is on using QR codes for blis-
Pharmaceuticals, and the National effectively track movement of price revision to consumers July-August. However, it may ters and packs of pharma packag-
Sanjeev Ranjan, 1985 batch The government is hopeful of Pharmaceutical Pricing Authority drugs, so as to check counterfeits, „ The new policy was expected take much longer, as 2019 is an ing to effectively track movement
Tripura cadre, has been introducing the draft pers- (NPPA). Some of the proposals (for and to give immediate benefits of election year of drugs (so as to check the
appointed as the chairman onal data protection bill in example trade margin calculation to see the light of the day in menace of counterfeit) and to give
of the National Highways the ensuing winter session of for imported medical devices) were immediate benefits of price revision
Authority of India (NHAI). Parliament, a senior IT mini- not approved by the PMO and were to consumers.
Ranjan, who currently holds stry official said on Monday. sent back for revisions. a source close to the development. medical devices. The importers’ lob- ket are imported. Therefore, it is Once the price factor is included
the post of chief secretary of The draft personal data “The government is trying to The new policy was expected to by had reasoned with the policymak- being deliberated whether trade in the QR code, the change could be
Tripura, will take charge of protection bill was drafted by bring down prices of commonly see the light of the day around July- ers that they incur several costs while margins should be calculated on the implemented for existing batches
the post from Road Secretary a high-level panel headed used medical devices and drugs. It, August. Sources indicate it might importing and, hence, the trade mar- landed cost of the device. in the market and one can also mon-
Y S Mallik. Previously, by Justice B N Srikrishna and thus, wants to have a policy in place now take much longer, as 2019 is an gins be calculated on the first point of The maximum retail price (MRP) itor if the price change has been
Ranjan has also served the following the submission of that will not only help to roll out election year and the government sale, which is the stockist. would be calculated by adding trade implemented appropriately. “The
central government in the the draft bill and data Modicare (the government’s ambi- would tread carefully. Domestic device makers, how- margin to either the landed cost or government wants the benefits of
capacity of Additional protection report in July end, tious national health insurance One of the proposals, it is learnt, ever, say this would not help bring the price at first point of sale. “In the price reduction (whenever that
Secretary and Financial the IT ministry had sought scheme), but also ensure it is people was that trade margins on medical down the prices of devices, and, as case it is calculated on the happens for drugs under price con-
Advisor to the Ministry of public feedback on the friendly in the sense that it makes devices be calculated on the first such, around 70-80 per of the med- basis of the price on the first point of trol), to reach the consumer imme-
Road Transport and provisions by September 30. drugs and devices affordable,” said point of sale. This included imported ical devices used in the Indian mar- sale, the MRP would be higher. diately,” the source said.
Highways. After R P Singh The draft bill moots seeking
demitted office in June 2015, “explicit consent” for proce-

Headache over for now: SC TOP FIVE

the top spot has witnessed
five changes – Vijay Chibber,
the then Road Secretary
held additional charge of
NHAI office for two months
after which Raghav Chandra
was brought to the helm.
Chandra was in NHAI office
for 15 months before he was
replaced by Y S Mallik
ssing ‘sensitive personal
information’ like religious or
political beliefs, sexual
orientation and biometric FIRMS HIT
details. The senior official,
who did not wish to be
named, told reporters that
the ministry is hopeful that
lifts ban on sale of Saridon BY THE BAN
ON FDCs
the legislation will be introd- SOHINI DAS & PTI The pharma company,
uced in the winter session of THE CASE SO FAR is a mixture of three salts — which claimed to have been

IMAGING: AJAY MOHANTY

(current road secretary) for
seven months and later
Deepak Kumar took charge
of the authority but went
back to his cadre in May
2018. B S REPORTER<
Data theft: CBI
writes to Facebook,
Cambridge Analytica
The CBI has written to
Facebook, Cambridge
Analytica and Global Science
Research in connection with
the illegal personal data
harvesting of Indians from
the social networking
platform, sources said on
Monday. In the letters sent to
the companies, the Central
Bureau of Investigation (CBI)
has sought the details of data
collection exercise adapted
by them, they said. After
reference from the Centre,
the investigative agency had
initiated a preliminary
enquiry against Cambridge
Analytica and Global Science
Research last month over the
alleged data theft. PTI<
Parliament, after taking into
account suggestions and
feedback received. PTI<
‘MSME loans: Pvt
banks, NBFCs eat into
PSU banks’ mkt share’
State-run banks’ market
share in loans to the micro,
small and medium enterpri-
ses (MSMEs), a major thrust
area for the government,
has dipped on aggressive
play by private sector banks
and NBFCs, a report on
Monday said. The share of 21
public sector banks (PSBs)
has fallen to 50.7 per cent as
of June 2018, from 55.8 per
cent in June 2017 and 59.4
per cent in June 2016, a
Transunion Cibil and Sidbi
quarterly report said. The
overall credit to the MSME
segment grew 16.1 per cent
for the year to June 2018, it
said, adding PSBs reported a
5.5 per cent growth,
compared with 23.4 per cent
for the private sector
competitors. PTI<
Mumbai, 17 September
Popular painkiller Saridon will
be available at medical stores
across the country, with the
Supreme Court on Monday
allowing the sale of the drug,
along with three other banned
fixed dose combinations
(FDCs). This, however, is an
interim relief companies said,
as the apex court is yet to take
a final decision on the matter.
A Bench of Justices R F
Nariman and Indu Malhotra
issued notice to the Centre and
sought its reply on the plea
filed by some drugmakers and
pharma associations.
The medicines whose sale
was allowed were Piramal
Healthcare’s Saridon,
GlaxoSmithKline’s Piriton,
Juggat Pharma’s Dart and
another drug, the details of
which could not be immedi-
ately known.
“The court has passed an
interim order permitting us
(and other pre-1988 manufac-
turers who were excluded from
the exempt list) to continue
manufacturing and sale of the
product, subject to its final
„ The medicines whose sale
has been allowed are
Piramal Healthcare’s
Saridon, GlaxoSmithKline’s
Piriton, Juggat Pharma’s
Dart and another drug, the
details of which could not
be immediately known
„ The court has not granted
any relief to the other
medicines in the list of 328
FDC drugs, which were
banned by the health
ministry in its September 7
notification
„ The Delhi HC had earlier
allowed Indian pharma
major Wockhardt to sell its
Ace Proxyvon tablets, which
decision on our application,”
said a GSK Pharmaceuticals
spokesperson.
The top court, however, did
not grant any relief to the oth-
er medicines in the list of 328
FDC drugs, which were
banned by the Health Ministry
by its September 7 notification.
FDCs are two or more drugs
aceclofenac, paracetamol
and rabeprazol — a banned
combination
„ The health ministry had,
through a notification of
March 10, 2016, prohibited
349 FDCs for manufacture,
sale and distribution under
Section 26A of the Drugs
and Cosmetics Act, 1940.
The notification was then
contested by pharma
companies in the Delhi
High Court and the
Supreme Court
combined in a fixed ratio into
a single dosage form.
The Delhi High Court had
earlier allowed Indian pharma
major Wockhardt to sell its Ace
Proxyvon tablets, which is a
mixture of three salts — ace-
clofenac, paracetamol and
rabeprazol — a combination
that is banned.
manufacturing and selling the
drug for over 11 years, had con-
tended that it has not been
provided with the Drugs
Technical Advisory Board
(DTAB) report, based on which
the decision was taken.
It had claimed that the only
reason given in the September
7 notification was that the com-
bination had no therapeutic
value. The medicine is report-
edly prescribed for people with
painful rheumatic conditions,
such as osteoarthritis, rheuma-
toid arthritis and ankylosing
spondylitis.
The health ministry had,
through a notification of
March 10, 2016, prohibited 349
FDCs for manufacture, sale
and distribution under Section
26A of the Drugs and
Cosmetics Act, 1940. The noti-
fication was then contested by
pharma companies in the
Delhi High Court and the
Supreme Court.
The high court in
December 2016 had quashed
the ban on the FDCs, which
was challenged by the Centre
in the apex court.
The health
ministry last
week banned
328 fixed dose
combination
drugs (FDCs)
following
recommendations of the drug technical advisory
board. These drugs were found to be irrational and
without therapeutic justification. Also,
manufacture and sale of six other FDCs have been
regulated. Fifteen FDCs have been exempted from
the ban in accordance with the order of the SC.
Here’s the lowdown on its impact on pharma firms:
Annual domestic Market size of 328 banned
pharmaceutical market FDCs: ~10.40 billion
size: ~1.24 trillion which is 0.8% of the total
ANNUAL SALES OF BANNED FDCs
(sales in ~ billion)
Macleods Pharmaceuticals 2.92
Mankind Pharmaceuticals 0.65
Alkem 0.58
FDC 0.58
Medley Pharmaceuticals 0.41
Source: AIOCD-AWACs

Till death, or annulment, do us part

Many young people are flocking to Jodhpur to get social opprobrium.
their child marriage annulled. Geetanjali Krishna on Dr Kriti Bharti of Jodhpur-based
Saarthi Trust, who orchestrated India’s
a social evil that persists despite a law to root it out first annulment on the grounds of child
marriage, and thanks to whose efforts
Meet 18-year-old Guddi. When she was ‘Aata-Sata’, a traditional exchange in which Jodhpur has emerged as the child
three, her father, in a drunken fit, decided my 10-month old sister and I had been marriage annulment capital of India, says
to get her married off. As the years went by, married off to two siblings!” Ashok and his that shockingly, she often finds the district
it became evident that Guddi had special sister both applied for annulment, and with administration and the police supportive
needs. “When I turned 15, the boy’s family mutual consent, it came through in three of the practice. “Often, when I hear that a
said I was old enough to come and live days — the quickest in Indian legal history. child marriage is about to take place and
with them,” she says. By now her father Guddi, Pinky and Ashok are the lucky approach them for help, they laugh and
was dead and luckily for Guddi, her ones who were able to get their child tell me to keep my nose out of other
mother, Dhapu Devi, intervened. “While marriage annulled quickly. Others are not people’s private lives,” she rues.
my husband was alive I had no say in so fortunate. For despite the Prohibition of Indeed, even though people are aware
anything,” says Devi. “With him gone, I Child Marriage Act (2006), the marriage of that child marriage is an unlawful act, the
wasn’t going to send my little girl off like minors continues to thrive in India. A practice still enjoys a great deal of social
this.” The mother-daughter duo found the recent Unicef report states, 10 years ago 47 sanction. A government school teacher
courage to get the marriage annulled by per cent of India’s married females were (name withheld) says that often when a Kriti Bharti (left) of Jodhpur-based Saarthi Trust with Lakshmi Sargara, who was the first
mutual consent in Jodhpur. Guddi is now below 18 years, whereas today, this has child is absent for a couple of weeks, they person to get her child marriage annulled PHOTO: SAARTHI TRUST
studying in Class X, and she loves to read come down to 27 per cent. In Rajasthan, surmise that she must have been married
and dress up like any other teenager. though, the figure is a staggering 40 per off. “Last month, a Class III student was successfully, her family told her that they the boy’s family demanded that she be
When three-year-old Pinky cent. The state has seen 36 married,” she says. “We laughed to see how didn’t recognise the court’s verdict. sent to live with them, she again pleaded
Kumari’s three older sisters annulments since 2012 — the excited she was.” Perhaps remembering “They’ve said that whenever I go back to that she didn’t want to go. They stopped
were being married, her family maximum for any state in that she was talking about a social evil, she them, they’ll send me back to my ex- stopped sending her to school, she says.
decided to cut costs and India. With more young people adds defensively: “Even though she was in husband’s house,” says Susheela. Eventually, she came to Jodhpur and filed
married her off as well. At 16, growing up to learn that they Class III, she was quite old… at least 12 Recently, her father called Bharti. “He told a plea for annulment. When the case came
she was sent to her marital were married off as a child, years!” Teachers are powerless against me that his daughter would have to return up in court, the boy’s family challenged
home, where she was subje- dozens throng the family court social customs, she says. “Anyway, I wonder to the family fold soon as I may not be her to prove that she was a minor when
cted to all sorts of abuse by her in Jodhpur every week to have whether it is a good idea to go against around too long,” says Bharti wryly. married. “I don’t know how long I have to
husband, 10 years older than their marriages annulled. society and break up these marriages…” For victims of child marriage who are wait to be free,” says the 18-year-old.
her. “I read in the newspaper But not every victim of child In some cases, this clash between the no longer a minor, the fight to get their For girls like Papli, freedom will
that my marriage could be CHILD marriage is able to get a speedy letter of law and the force of tradition has marriage annulled is often a harrowing perhaps remain a distant dream until
annulled,” she says. “So I ran MARRIAGE annulment. For some, the case resulted in people refusing to recognise an one. After her grandfather’s death,15- cultural norms change. Indeed, such cases
away, came to Jodhpur and PART-1 drags on and life comes to a halt. annulment as a dissolution of marriage. year-old Papli was forcibly married in show that simply having a law against
filed a case.” Today, Pinky goes Moreover, the PCMA dictates Take the case of Susheela. When she filed accordance with the regressive cultural child marriage isn’t enough. The law must
to a college in Jodhpur, and dreams of that annulment can only be applied for by for an annulment of her child marriage, practice of mausar, the belief that a also have provisions to help victims get
becoming a teacher or a nurse. those who have not yet reached the legal her family turned her out and said they departed soul will find peace only when all easy annulments and rehabilitate them by
Ashok Bishnoi was 17 when he found out age of majority (18 for girls, 21 for boys). would murder her as well as Bharti, who marriageable relatives are married within providing them with education,
that he had been married when he was just Hence, older appellants have to file for was helping her. In court, her in-laws 13 days of death. “I cried and said that I livelihood training and counselling.
five years old. “I was stunned,” he says. “My divorce, necessitating countless trips to the swore that no wedding had taken place. didn’t want to be married, that I wanted to
parents told me that they’d decided to do court, endless waiting and the inevitable Even after her marriage was annulled study,” she says. No one listened. When Next in the series: Untying the Knot
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6 ECONOMY & FINANCE
>
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 1

MERGER OF BANKS: SENIOR BANKERS CLAIM THIS IS BEST COMBINATION; JOBS WILL NOT BE CUT
Non-essential
‘Staff need not ‘Synergy benefit ‘This is the best import list
worry about relevant in states combination by this week
redundancies’ like Gujarat’ possible’ MOST WANTED
The largest items in the import bill (2017-18)
With the government announcing the merger of Bank of Baroda RAMESH SINGH, Executive Director, Dena Bank, tells Vijaya Bank’s Managing Director and Chief Executive Officer
(BoB), Vijaya Bank and Dena Bank, BoB Managing Director and Chief Abhijit Lele that the merger is a pragmatic proposition and R A SANKARA NARAYANAN said these three banks were the best possible Amount Growth
Executive P S JAYAKUMAR told Abhijit Lele jobs will not be threatened the integration process is expected to be hassle-free. combination for an amalgamation. In an interview with Anup Roy, he ( $ Bn) (%)
owing to the development. Edited excerpts: Edited excerpts: said the existing employees will not be affected. Edited excerpts:
Total imports in 2017-18 465.58 21.13
What message do you have for What does merger move means for What is the ramification of this Processed petroleum oil and crude 87.37 23.57
the employees on the merger? customers and the employees? merger for the sector? Is it going Gold ( In unwrought, semi manufactured
The boards will have to approve It is a pragmatic proposition by to do any good for the industry and powder form) 33.65 22.62
the proposal. My message to the Government of India. and the three banks?
employees is “keep doing what Employees’ interest will not be Definitely yes! The combined Machinery and mechanical appliances 37.82 17.87
you are doing”. harmed. There will be systematic entity gets presence, balance sheet Diamond (Including non-industrial/
communication to help size, brand equity, and it will have industrial diamonds, processed or not) 29.47 52.46
Will there not be any understand entire process. lower non-performing asset (NPA) Electrical apparatus for communication
redundancy? Business Synergies will be ratio than the average. It will have (mostly mobile phones and components) 21.05 30.25
There are a large number of maintained. This is more relevant better profitability, while capital is
Source : Export-Import Data Bank, Commerce Department
employees retiring every month. in Gujarat where Dena and BoB assured. We can also share our
That is a serious issue, so have strong presence. individual expertise in the new
employees need not worry about bank. The skill gaps would be SUBHAYAN CHAKRABORTY Tariffs on 29 US imports
redundancies. Would technology, a key aspect in addressed, sharing knowledge will New Delhi, 17 September deferred by 45 days
merger, pose any challenge? develop operations.
There is an apprehension that the lending process may slow We are on same technology platform Finacle, which will give Gold, finished steel, electron- Higher import duties on 29 key
during the merger? us further synergy. No hurdles are expected in the Why do you think the government went with this ics and food items, such as US products, set to go live from
Dedicated teams will do the integration and the rest of the integration process. BoB is ahead in technological combination? fruits and almonds, among oth- September 18 onwards, has
employees will focus on their work. We will be able to manage innovation, so our customers (Dena Bank) will get new Why not? Among 21 banks, this is the best combination ers, may figure in a compre- been deferred again, this time
that. And it should impact business activity. digital banking platform. available. hensive list of 'non-essential' by 45 days. From Tuesday
imports, to be finalised by the onwards, imports of high value
What is the timeline for the integration process? When will the merger deliberation begin? Vijaya Bank is decidedly a better bank in terms of ratios, but it end of the week. The items had products, such as apples,
The merger will take four-six months and the share-swap We expect work on it to start shortly. We will get to know about is small. Do you think it should not have been merged ? been suggested in a meeting almonds and walnuts from the
ratio for merging the three banks will be decided soon. board meeting in a day or two. The boards of all three banks We are not merging; it is an amalgamation. If you have seen called by the Department of US were set to attract 50 per cent
have to give approval for proposal. the government presentation, we have been considered Economic Affairs on Monday higher tax. Despite both sides
When is the board meeting to consider the merger proposal? equal. What matters is the efficiency and performance of the to rein in the widening current having had three meetings over
People in banking are working on the dates. I think it should Was this the right time for this merger? new entity should be better than the sum of the entities. account deficit (CAD), which the past three months on the
be in 10 days. Absolutely. How can we decide which timing is good and was attended by senior officials issue, a possible solution is yet to
which is not? It is a confidence-building measure. Now, Often, when a large bank merges with a smaller entity then from all economic ministries, be found. BS REPORTER
What are the benefits that the merger will bring for the the banks’ combined customer base would be in excess of the smaller bank employees are treated roughly. Do you according to senior sources.
combined entity? 50 million. There is a definite advantage when you have a worry for your staff? Almost 10 months after the inflows into the country to the
The combined entity will benefit from the better CASA strong bank with robust capital base and network. In the I am confident that will not happen. The government mid-term trade policy was tune of an estimated $10 billion
(current account savings account) ratio from Dena Bank and south, Vijaya Bank is very strong, Dena and BoB put assured that. updated to prioritise the reduc- while reducing the CAD. The
for BoB, the lending will get diversified into retail and MSME, together are strong in Gujarat and Maharashtra. This tion of India’s ballooning trade CAD had risen to 2.4 per cent of
taking its loan book size up by 40 per cent. synergy will be available for customers of all banks. More on business-standard.com deficit and improve exports, the country's gross domestic
the government has swung into product (GDP) in the first quar-
action as the rupee has ter of 2018-19 from 1.9 per cent

Merger to give a fillip to lending capacity
But swap ratio should not be biased against stronger banks, say experts
SHREEPAD S AUTE
Mumbai, 17 September
The merger of Bank of Baroda
(BoB), Vijaya Bank (Vijaya) and
Dena Bank (Dena) will result in
several benefits to the merged
entity in terms of cost efficiency
and ease of operation.
On a cumulative basis, the
adjusted capital (book value
minus net non-performing assets
or NPAs) of the amalgamated
bank will be strengthened,
increasing its lending capacity.
For instance, on a standalone
basis, Dena’s net NPAs are 11 per
cent of its advances as of June
2018 and capital adequacy ratio is
10.6 per cent. The deal improves
this with net NPAs of the amalga-
mated bank standing at 5.7 per
cent versus 12.3 per cent capital
adequacy ratio. Though for
stronger banks, this ratio looks
weak, they remain at satisfactory
levels.
The Street will focus on how
the merged entity will tackle
higher NPAs. Though all public-
sector banks are facing NPA
problem, banks like Dena, which
are under the Reserve Bank of
India’s (RBI’s) prompt-corrective
action, have been badly hit.
Their NPA levels erode major
The Street will focus on how the
merged entity will tackle
higher NPAs. Though details of
the deal like merger ratio are
still unknown, experts believe
the merger policy should not be
biased in favour of the weak
player, Dena Bank
chunk of their capital base, hin-
dering credit growth. However,
this deal would help weaker
banks tackle this issue.
Even for BoB, the deal isn't a
spoiler. “In the long term, it may
not be a bad deal for BoB as it has
received one strong bank (Vijaya)
for the weaker bank (Dena).
Hence, the merged entity will
have marginally better gross
NPAs than that of BoB, which is
notable,” said Lalitabh Srivastava
of Sharekhan.
Moreover, the branch network
of the amalgamated bank indi-
cates huge market accessibility.
Interestingly, the deal provides
access to under penetrated geog-
raphies, improving competitive
advantage. “With Vijaya, the deal
opens business door in the
southern pockets for other two
banks, especially the stronger
bank (BoB), said G
Chokkalingam, founder of
Equinomics Research &
Advisory. He expects similar
deals with other public sector
banks.
Though details of the deal like
merger ratio are still unknown,
experts believe the merger policy
should not be biased in favour of
the weak player Dena, which
could be a spoiler for strong
banks.
“The merger policy and swap
ratio should be on the basis of
present balance sheet strength,
considering the NPAs.
Otherwise, it would be a
major negative for BoB,”
Chokkalingam added.
remained in a free fall and high
global crude prices have
pushed petrol and diesel to be
retailed at near record levels
in the fourth quarter of 2017-18.
On the other hand, trade
deficit reached a whopping
$465.58 billion in 2017-18, up by
across the country. more than 21 per cent. Of this,
A high-level meeting gold imports formed the sec-
chaired by Prime Minister ond biggest chunk of the
Narendra Modi on Friday had import bill just after crude oil
also announced a five-pronged and may see a hike in import
measure to increase dollar duty, according to sources.
Global factors behind ~ fall: FM
Finance Minister Arun Jaitley on Monday blamed the depreciation
of rupee to a combination of global factors, including trade war and
internal policy decisions of the United States. After the government
on Friday evening announced a five-pronged strategy to deal with
the slide in currency and widening current account deficit (CAD), the
Indian rupee on Monday plunged 67 paise to end at 72.51 against
the US dollar. "These are due to significant global phenomena. You
have at least three, if not more, indications globally coming of what
are the nature of things that are happening," Jaitley said.
Elaborating further, the minister said the crude oil prices are
increasing as there has been a squeeze on oil production which has
upset the demand-supply ratio. PTI

CRISIL SME TRACKER Confusion on > FROM PAGE 1

For manufacturing MSEs, it rules stalls
pays to create brands infra projects BoB, Vijaya, Dena rency position to the table, technology is there and a lot asset (NPA) ratio of 11.04 per cent. High bad debts have
of things we are doing in our transformational journey eroded the capital base of the bank, with the core equi-
which can be of value to them,” Jayakumar said. ty ratio (CET1) at 8.15 per cent of the risk-weighted

Micro and small enterprises (MSEs) with retail in Mumbai Bank to merge The combined entity, taking their separate March assets. Vijaya Bank is one of the best performers among
quarter numbers, had assets of ~10.19 trillion. The top public sector banks, having a net NPA ratio of 4.10 per
consumers enjoy a competitive edge and better “The capacity to subsume a weaker bank is a principal two lenders — State Bank of India and HDFC Bank — cent, and a CET1 of 10.35 per cent. BoB, the much larg-
financial metrics compared with peers if they have RAGHAVENDRA KAMATH factor that was weighed in by the government,” the had assets of ~34.55 trillion and ~10.64 trillion, respec- er bank, has a steady profile, a net NPA ratio at 5.40 per
branded products, reveals a CRISIL SME Rating MUMBAI, 17 September finance minister said, adding the government had con- tively. The merged entity will be the second-largest cent and CET1 at 9.27 per cent. The combined entity will
analysis of more than 350 rated MSEs in the textile sulted the RBI on the matter. public sector bank, trumping Punjab have net NPA ratio of 5.71 per cent, and CET1
— readymade garments (RMG), electrical products, Building proposals are Anjali Bansal, current non-executive chairman of National Bank’s asset base of ~7.67 trillion. of 9.32 per cent.
fast-moving consumer goods (FMCG), and food stuck at the Brihanmumbai Dena Bank, is likely to be chairman of the merged enti- Jaitley assured no employee will face Anjali Bansal, The merger proposal will first need to be
products sectors. Municipal Corporation ty. Bansal is an independent director on the boards of any “adverse” service conditions. He said current non- approved by the board of directors of the
This is because creation of brands helps MSEs (BMC) because of confusion several leading companies and prior to that she was a the move was good news for the employees executive three banks. The government will then pre-
build differentiation for their products and earn regarding the new develop- partner and MD at TPG Global and was founder MD at of Dena Bank in particular. “They will prob- chairman of pare an amalgamation scheme, which will
customer loyalty, thereby ensuring they command ment control regulations Spencer Stuart India. ably stand to get conditions better than they Dena Bank, is need to be approved by the cabinet of min-
better prices and greater market penetration. (DCR), property developers. Many, including the bank managements, have sup- have at present,” Jaitley said. likely to be isters and the houses of parliament.
From September 1, DCR ported the choice of the banks being merged. “Of the 21 According to V G Kannan, CEO of the chairman of the The Financial Services Secretary said:
2034 replaced the DCR of banks in the system, this is the best combination,” said Indian Banks’ Association, economies of merged entity “It will be a strong competitive bank with
GEARING PROFILE OF CRISIL-RATED 1991. But rules of the new R A Sankara Narayanan, managing director and chief scale and large players are positives for the economies of scale, network synergies, low-
MSES (times) DCR are yet to be imple- executive officer of Vijaya Bank. banking system. “Three of them have the cost deposits and subsidiaries, and a possi-
„ Branded „ Non-branded mented, developers said, On the sidelines of the press conference in New same core banking platform — Finacle of Infosys. It will bility of greater outreach and expansion.”
4.00 adding that BMC’s engi- Delhi, BoB MD and CEO P S Jayakumar said the merg- make technology integration a smooth process. As for Banking sector reforms are a major plank of Prime
3.75 neers are not processing er would take four-six months and the share-swap ratio impact on employees, many are going to retire over the Minister Narendra Modi's administration to revive
3.00 files due to this. would be decided soon. next few years. Fresh employee intake may slow in the credit growth, which has slowed to multi-decade lows.
1.20 1.56 1.78 “Engineers are not able He said the advantage for BoB is that the lending integrated entity,” Kannan said. The government owns majority stakes in 21 lenders,
2.00
to take decisions. They would diversify into retail and micro, small and medi- It is beneficial for the system to get larger banks but which account for more than two-thirds of banking
1.00 should come out with a um enterprises, taking its loan book size up by 40 per the integration will have to be “managed well to gain assets in Asia's third-biggest economy. But these banks
1.09 1.01 1.28 1.01 0.00 transition policy soon,” said cent. “We would have more branches in states where we business benefits”, said Karthik Srinivasan, group head also account for the lion's share of more than $150 bil-
Electrical FMCG Food Textile Niranjan Hiranandani , are grossly under-represented, such as Andhra Pradesh, of financial sector ratings at ICRA. lion in sour assets plaguing the sector, and need billions
products products RMG chairman and managing Kerala and Karnataka. If you ask me what would be the Among the three, Dena Bank is a laggard. It is under of dollars in new capital in the next two years to meet
director at Hiranandani benefit for Vijaya Bank, BoB brings a huge foreign cur- RBI’s PCA framework and has a net non-performing global Basel III capital norms.
Communities.
ROCE OF CRISIL-RATED MSMES (%) Though BMC has said
„ Branded „ Non-branded the more stringent of the

23
20
19
15 14
11
Electrical FMCG Food
products products
For MSEs, with brands in the analysis, the return
on capital employed (RoCE) was also higher by 300
basis points, driven by superior margins.
Higher margins additionally resulted in
accretion to reserves, helping the MSEs manage a
proper mix of debt and equity to fund capital
expenditure or increased working capital
requirements. This, in turn, resulted in reduced
interest obligations. MSEs with brands also had a
lower gearing, compared with peers.
CRISIL, therefore, believes MSEs should plan and
invest in brand creation. This will help enhance
their visibility, recall and reach, and strengthen
their competitiveness against peers.
23
25
two DCRs will apply to proj-
ect applications under tran-
sition, Hiranandani said
20
19 what is stringent is matter
15
of perception.
10 Developers said the chal-
lenges are mainly with the
5
projects which are under
0 construction.
Textile “It is an industry-wide
RMG issue. Real estate projects
require ongoing permissions
to continue. While transition
has to happen, it will help if
it is done fast,” said Srikant
Joshi, chief executive officer
at L&T Realty, the real estate
arm of L&T.
Another Mumbai-based
developer said the BMC is
asking them to come under
new rules even for projects
which are nearing comple-
tion. “It is virtually impossi-
ble to apply new DCR when
the project is almost com-
plete,” the developer said.
Govt action fails to
help market, ~
Experts said the array of measures would only play
out in the medium term, but would do little to
stem losses in the immediate term, given the risk-
off sentiment among foreign investors.
Worries over the trade war and the 10-year US
Treasury crossing 3 per cent levels have triggered
capital outflows from India and other emerging mar-
kets. The rise in global crude prices has also hurt
India’s macro status.
“The market was expecting bigger measures
that would have an immediate impact. The finance
minister said the measures would bring in $8-10
billion, which is insignificant, compared to market
expectation of measures that would bring at least
$35-40 billion,” said Ritesh Bhansali, assistant vice-
president at Mecklai Financial Services.
The Reserve Bank of India (RBI) intervened
slightly in the morning trade, but the central bank
was largely missing throughout the day, said deal-
ers.
While the 10-year G-sec spiked on opening,
Friday’s open-market operation (OMO) announce-
ment led to value-buying.
“In the morning trade, the yields were reacting
to the market disappointment on the measures
taken with respect to the domestic currency, but
soon the markets started taking comfort in RBI’s
OMO announcement,” said Ramkamal Samanta,
vice-president for investments at Star Union Dai-
Ichi Life Insurance.
The RBI on Friday announced that it will buy
bonds from the secondary market worth ~100 bil-
lion this week.
Banking stocks fell on concerns the RBI would
have to raise rates early next month after the meas-
ures announced by the government fell short.
The overall market breadth, however, was
mixed as the smaller stocks outperformed the
benchmarks. While the BSE mid-cap lost 0.76 per
cent, the BSE small-cap index changed very little.
The foreign portfolio investors sold shares
worth ~1.06 billion, while domestic institutions
sold shares worth ~1.8 billion.
Experts said the markets will remain volatile
till the rupee and bond markets stabilise and glob-
al tensions ease.
“The Indian markets could remain range-bound
until the global volatility settles. The uncertainty
surrounding the state and the general elections is
unlikely to spook the equities any further, as mar-
kets have already factored in the risks involved.
The long-term prospects of the Indian equities are
intact as the economy is expected to grow at a
healthy pace for the next decade,” said Sunil
Singhania, founder, Abakkus Asset Manager.
Monday’s fall was led by index heavyweights
such as Reliance Industries, HDFC, and HDFC
Bank which accounted for a third of the Sensex
declines.
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8 ECONOMY & PUBLIC AFFAIRS
>
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 1

Directors protest disqualification

Claim govt website was not working because of which they could not update KYC details; seek more time from MCA
PTC to roll out
second round of
VEENA MANI
New Delhi, 17 September THE KYC QUESTION
tion will cause damage to the econ-
omy. Disqualified directors are not
allowed to practise for five years,
power purchase
| More than 2 mn directors to
ompany directors who have according to the Companies Act. JYOTI MUKUL & SHREYA JAI in the open market and any

C not authenticated themselves

have written to the secretary
to the Ministry of Corporate Affairs
be disqualified
| They can pay a fine of
~5,000 and get themselves
A senior ministry official said:
“Of the 60 days we gave them, 15
days was an extension. It was ini-
New Delhi, 17 September

At a time when demand con-

(MCA), seeking more time to com-
plete the process.
They said the MCA 21 site was
not working and because of that
they could not complete their know
your customer (KYC) norms.
The MCA is deactivating the reg-
istrations of two million directors
because they did not update KYC
filing.
In 60 days, 1.2 million directors
have completed their KYCs. The
remaining will be disqualified
unless they update their KYC and
pay a penalty to the ministry.
There were 3.2 million active
director identification numbers
(DINs) with the Registrar of
Companies. The ministry is plan-
ning to track down each director
who has not completed his or her
KYC. Stating that the ministry will
not extend the time to update KYC,
sources said it was the directors’
fault and not the ministry’s.
“If they have not done it, they
deserve to pay a fine,” an official
said, adding the system had the
capacity to handle 100,000 compa-
nies each day.
“On the last day, more than
100,000 directors had done their
update. This means that the systems
registered again
| Directors have to update KYC
if they want to register
themselves again
| Disqualified directors cry
foul, say MCA-21 not working
| Only 1.2 million directors
have updated their KYC
| Earlier, 300,000 directors
were disqualified
can take the load. In 60 days, 6 mil-
lion directors could have completed
the process. The fact that they did-
n’t shows how much they lack dis-
cipline.”
Directors have said disqualifica-
tially opened for 45 days.”
In a 60-day drive, the MCA asked
directors to update their KYCs by
linking them to their Aadhaar num-
ber and passport details.
In June, the government had
asked company directors, including
those who were disqualified, and
designated partners in LLPs (limit-
ed liability partnerships) to submit
KYC details by submitting the DIR-
3 KYC e-form.
The last date for complying with
the new norms by way of submit-
ting form 'DIR-3 KYC' without fee
was September 15.
The government is cracking
down on shell firms and their direc-
tors also. When the government first
struck off 200,000 shell companies,
300,000 directors were disqualified.
cerns have dogged the power
sector, Power Trading Corpo-
ration (PTC) is playing the role
of an aggregator and has suc-
cessfully completed bidding for
1,900 Mw of short-term power
contracts. Simultaneously, it is
looking for a second tranche of
power procurement and is pla-
nning to go the whole hog into
trading through power excha-
nge in tie-up with ICICI and
BSE.
TN, Telangana, Haryana,
Punjab, Jharkhand and Bihar
are likely to sign the power sales
agreement (PSA) for the first
tranche of 1,900 Mw, for which
PTC has aggregated bids.
“Through the use of schedul-
ing, we will able to cater to the
demand of the state without
the power plant suffering.
Within a month, the final PSA
under-recovery would be char-
ged to the distribution compa-
ny. If power is sold at a premi-
um, the profit would be divided
equally between discom and
the generating firm. The arran-
gement would be different
from the normal power purcha-
se pact under which a discom
pays fixed charge even if it does
not draw the contracted power.
Power under this mecha-
nism would be mostly from
stressed power assets belong-
ing to RKM PowerGen,
Jaiprakash Associates, IL&FS
and MB Power. With the fate of
these assets hanging and there
being high chances of them
landing in insolvency tribunal,
there is a question mark on
signing of contracts.
Amitabh, however, said sale
of plants under insolvency
should not be an issue. “I don’t
see any difficulty in signing. If
an exemption is required, we

CIL’s export plan on holdover domestic demand
AVISHEK RAKSHIT there and we are in talks with
Kolkata, 17 September them,” a senior CIL official said.
However, keeping the coal
Coal India’s (CIL’s) plans to shortage in mind, CIL has
export coal to SAARC countries decided to first cater to the
has been put on the back-burn- domestic power, steel, cement,
er as the state-owned miner is and ancillary sectors and would
facing a steep challenge to sup- thereafter consider opening a
ply adequate coal to domestic “serious export channel for
power plants. SAARC (South Asian
“Some importers from Nepal Association for Regional
have approached us to open a Cooperation)”.
permanent export channel “The first priority is to feed
power plants. We have under-
taken many rationalisation ini-
tiatives to smoothen the supply
to power plants. Moreover, the
demand from the steel and
cement sector is reviving and
we first need to make enough
coal available to cater to their
demand,” the executive said.
CIL has decided to opt for
exports only if it has surplus
stocks and a negotiated price
with foreign buyers, namely
SAARC countries.
Moreover, the company is
targeting to reduce import of
about 200 million tonnes
(mts) of coal by 50 per cent in
the ongoing fiscal and has set
an internal target of 652 mt
output, which is higher than
the 630 mt target given by the
coal ministry.
However, by the August-
end, CIL’s production stood at
216.23 mt and as many as 15
power plants continue to reel
under severe coal shortage.
In the early parts of last year,
faced with a huge coal invento-
ry of about 69 mt in face of a
severe dip in demand from the
power sector, CIL had initiated
dialogues with Bangladesh,
Bhutan and others. Although
talks with Bhutan fructified, the
total export quantity is extreme-
ly limited and is used by cement
manufacturers there.
On the other hand, talks
with Bangladesh had an incon-
clusive end, although the coal
behemoth began readying its
subsidiary — Mahanadi
Coalfield — to supply coal to
India’s eastern neighbour from
the Paradip port in Odisha to
supply 2-3 mt coal.However, the
coal crisis hit soon during mid-
2017 and CIL began to rout the
black diamond to the power
plants on a war footing.
should be signed,” PTC Chai-
rman and MD Deepak Amitabh
said in an interview with
Business Standard. The pact
would be for three years with a
composite charge and just 1
paise fixed charge in the tariff.
At 55 per cent plant load factor
(PLF), states would be buying
power at ~4.24 a kilowatt an
hour (unit), said Amitabh.
Further, every 5 per cent
increase in PLF would get a 1
per cent discount in tariff under
the agreement. In case PLF
goes below 55 per cent, the dif-
ferential power would be sold
will ask the government,” he
said. According to him, the fact
was that no financial closure
for coal-based power plant has
taken place in the last three-
four years though coal contin-
ued to be important as base
load. “Over a period of time, as
new refineries and other indus-
try come up, demand will
grow.” For the volume of sec-
ond tranche, he said 2,000-
3,000 Mw is the sweet spot
where there is always a
demand.
More on business-standard.com
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10 ISSUES AND INSIGHTS
>
Family & conglomerates
Conglomerates in Asia are in decline, says Bain. Family businesses are
thriving, says Credit Suisse. What’s up?
ACROSS THE BOARD
SHAILESH DOBHAL
I
s it a good time to be a family-owned
business in India? Reports by two
leading global consultancies last week
present a picture of contrast, one gung-ho
and the other, well let’s say, not so good.
The truth though may be more nuanced.
Exports grow but imports remain high
The effects of rupee hammering are being felt in the forex market. Corporates with outstanding ECBs are now seriously
worried about the currency situation
FRONT RUNNING
DEVANGSHU DATTA
T
rade wars and the falling rupee
continue to be top-of-the-mind
concerns for investors. China and
the US continue to trade verbal potshots
while also trying to continue negotia-
tions. The threat of escalation remains
while the US continues to say that it
could impose new tariffs on some $200
billion of Chinese exports.
Meanwhile, as Iran sanctions bite,
the price of crude has risen to $80/ bar-
rel for the benchmark Brent contract.
Since the Central government and the
states say that they will continue to
impose the current excise rates, retail
fuel prices continue to rise. Transporters
and airline operators estimate that their
running costs have risen by approxi-
mately 30 per cent from last year.
Higher inflation on the fuel front
(one volatile component) has been bal-
anced by lower inflation on food (anoth-
er volatile and much larger component).
The consumer price index rose by 3.7
per cent year-on-year (YoY) in August,
which was lower than the 4.2 per cent
YoY in July. Indeed, it was a ten-month
low. Similarly, the wholesale price index
Why lack of jobs does not lead to social strife
MAHESH VYAS
I
n a discussion around employ-
ment organised by IC Centre for
Governance in Delhi last Friday,
former cabinet secretary Prabhat
Kumar made an important observa-
tion. He said that if unemployment is
a big problem then why is there no
social demonstration of its angst?
Upon reflection, I feel the answer to
Prabhat’s question is in the gender
of unemployment.
My presentation at the discussion
showed that demonetisation had led to
a loss of jobs estimated between 12.7
million and 3.5 million. Possibly, the
initial hit was closer to the higher end
of the range and over about four
months, the loss had narrowed down
closer to 3.5 million.
This is not a new finding. I had pre-
sented these results first in December
2017. The paper can be accessed at
https://unemploymentinindia.cmie.co
m/kommon/bin/sr.php?kall=wtab-
nav&tab=4090
What was new in the presentation
was the break-up of the impact of
demonetisation on male and female
members. There are two important
findings here.
First, men did not display much fall
in their overall labour participation
after demonetisation. There was a
small fall in labour participation of
young and old men, but this was offset
by an increase in labour participation
among middle-aged men.
Second, and this is important,
demonetisation reversed an increase
Take the good part first. A global
report on family-owned businesses by
Credit Suisse — Credit Suisse Family
1,000 in 2018 — presents family-owned
businesses’ rude health almost as a
virtue aiding that ultimate capitalist
goal — shareholder return.
The 111 Indian family-owned com-
panies such as Reliance Industries,
Dabur, Marico, Godrej and Page
Industries with $839 billion market cap-
italisation in the Credit Suisse report
generated around 14 per cent annual
average share price return since 2006,
compared to six per cent recorded by
their non-family-owned peers. The
report’s verdict is clear; “Family busi-
nesses in Asia outstrip their non-family-
owned peers with superior financial per-
formance and more robust share price
returns, largely due to their longer-term
rose by 4.53 per cent YoY, lower than
5.09 in July. Again, food was the mod-
erating component of the basket. Core
inflation also eased slightly but this may
be a base effect.
The effects of rupee hammering are
being felt in the forex market of course.
The rupee has continued to slide, with
occasional recoveries as and when, the
RBI intervenes. Corporates with out-
standing ECBs are now seriously wor-
ried about the currency situation.
The government says it’s taking
measures to try and cut “non-essential
imports” and it’s also trying to attract
more forex-denominated investment.
The trade deficit for August remained a
whopping $17 billion plus, though it was
a bit lower than the $18 billion plus of
July. Exports did grow but imports
remained high.
The finance minister says he’s confi-
dent that the fiscal deficit will be held at
3.3 per cent of GDP in 2018-19, due to
better tax collections and rising growth.
However, the current account deficit will
rise, to anywhere between 2.8-3 per cent
of GDP unless crude prices moderate.
The consumption demand will be
crucial to holding the Fisc because gov-
ernment expenditure can’t be stepped
up without ruining that number.
Consumption was decent in Q1 but a
falling rupee inevitably means higher
core inflation going forward because
over 40 per cent of GDP is tied to trade.
In current dollar terms, many Indians
will feel their income has fallen and that
could negatively impact consumption.
There could be a burst of election-
related spending (and dollops of black
money) buoying up the last quarter
(January-March 2019) but the festive
season starts in October and most
ON THE JOB
in labour participation that was seen
among women before demonetisation.
Between the first and second wave of
CMIE’s CPHS we had seen an increase
in labour participation in all age-
groups of women. After demonetisa-
tion, all the gain was lost and in due
course of time, women saw a big fall in
labour participation rates.
Why did women leave the labour
markets in big numbers when men did
not? This is the important question.
There are two leads to answering
that question. First, women find it a
The drop in female labour
participation rates is a reflection of
women suffering quietly
lot more difficult to get jobs than men
do. Male labour participation rate is
much higher than women participa-
tion rate even under normal condi-
tions. And, in spite of a low labour par-
ticipation rate, women face a higher
unemployment rate. Meaning that
even the fewer women who attempt to
get a job, find it much more difficult to
obtain one compared to men. This is
the bias that society has against hir-
ing women compared to men.
Now, when the going gets tough —
as it did after demonetisation — women
move out of the way to make it easier for
men to get the few jobs that were avail-
able. Households took the perfectly
rational decision to move men (and
more experienced men) into the labour
markets rather than have the women,
and particularly young women, com-
pete in the difficult labour markets of
http://www.estore33.com/
focus.” Around 1,000-odd listed compa-
nies with a minimum 20 per cent direct
shareholding and voting rights by
founders or descendants, and $ 250 mil-
lion market capitalisation floor were con-
sidered by Credit Suisse for this study.
A Bain & Company report— Asia’s
Conglomerates: End of the Road? —
released on the same day last week,
though not strictly on family-owned or
run businesses, paints a worrying pic-
ture of decline and decay in conglomer-
ates. For the first time in 15 years, on total
annual shareholder return (TASR) for the
2006-17 period, pure-plays or firms that
focus on a single business pipped Asian
and Indian conglomerates, 12 per cent to
11 per cent, notes the Bain report, which
studied 102 conglomerates and 287 pure-
plays across Asia.
All along, conglomerates were gener-
INCHING UP
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Current (Sep 14, ‘18) Previous (Aug 31, ‘18)
Nifty value
Index PE
Index dividend yield
Index book value
USD INR (RBI ref rate)
FII net equity buys/sales (Sep 1-14) (~bn)
DII net equity buys/sales (Sep 1-14) (~bn)
* = Aug 01-31 Net equity buys/ sales
NB FIIs bought net debt of ~34.1 bn (Aug) & bought net debt of ~0.43 bn (July)
households will do their big-ticket buy-
ing in the next two months. We’ll have to
wait and see if consumption holds up.
The power sector NPA situation
remains unclear. Apart from the legal
tangle, one issue is that much of the
money has gone into incomplete proj-
ects or unviable ones. Unlike steel,
where bankrupt companies have pro-
ductive assets, a power sector bank-
ruptcy might have very little in the way
of assets to auction off. Hence, the hair-
the post demonetisation period.
This point is strengthened by the
second and related lead provided by
the data to answer the question. Post
demonetisation, there was a drop in
households that had two or more per-
sons employed.
Between January and October 2016
(the pre-demonetisation period), the
share of households where two or more
persons were employed was 34.8 per
cent. This dropped to 31.8 per cent in
the period after demonetisation. So, in
the case of three per cent of the house-
holds, the number of working persons
declined from more than one to just
one. In a modern day and age, why
should the number of working persons
of a household decline? Obviously,
women moved out to make way for
men in a difficult situation.
Possibly, women moved out of the
labour force because of the difficult
labour markets after demonetisation;
possibly because households have
become more conservative in response
to fringe religious elements; or they
became more aware of women’s safety
in the face of regular news of gender
violence and harassment.
The drop we see in female labour
participation rates is a reflection of
women suffering quietly. Women do
not indulge in violence or arson — that
is a male preserve. But, since men did
not suffer like women did, they did not
find it necessary to indulge in jobs-
related violence. That is the answer to
Prabhat Kumar’s question of why the
lack of jobs is not translating into any
overt social strife. But, I hope we are
not waiting for that to happen.
The slideshow I presented at the IC
Centre for Governance last week is
available on the website. I welcome
you to download this and take a look
at a measure of a different crime
against women.
The author is managing director and
CEO, Centre for Monitoring Indian
Economy P Ltd
https://t.me/TheHindu_Zone_official
MUMBAI | TUESDAY, 18 SEPTEMBER 2018
ating a higher return in Asia and India
compared to pure-plays. In the 2003-12
period, conglomerates generated 32 per
cent versus 28 per cent for pure-plays.
erations. Lack of founder passion is just
one reason. As businesses get older they
are “less likely to be located in the
“new” more disruptive (that is, tech-
> CHINESE
But as early-mover advantage over large nology) sectors, which by their nature
markets and natural resources — often a offer much stronger growth,” notes the
foundation of many conglomerates in CS report.
the region — wear off, the premium they One of the surest way is to keep refo-
enjoyed is on a downward spiral. Bain’s cusing and redefining the core and/or
prognosis on the future of these largely successful diversification into emerg-
family-owned businesses is harsh; “As ing areas. It could be an active acquisi-
conglomerates’ performance suffers, tion-led strategy like that of Godrej
there will perhaps be calls from sceptical Group to refocus on its core or seeding
investors to break them up. That is what new ‘tech’ businesses such as telecom
happened in the West. Moreover, if it hap- with Reliance Industries.
pens in India and Southeast Asia, a doom What’s heartening, even by the
loop could set in motion: Conglomerates standards of the alarming Bain report,
will be less able to attract talent, money is that the top quartile conglomerates
and opportunities and perhaps further
hurting their performance.”
that includes family groups like such as
Bajaj, Wadia, Murugappa, Lalbhai,
Lean on Bain, and looks like end of Godrej, Emami and Torrent continue
the road for family-owned businesses, to thrive, with an average TASR of 25
right? Or would you rather believe per cent compared to pure-plays’ 11 per
Credit Suisse and bring out the bubbly? cent! So no matter who you pick, Bain
A reality check on both. A family gen- or Credit Suisse, the panacea is the
eration-wise analysis by Credit Suisse same — remaining top of your game it
reveals the familiar pattern of dimin- seems is the best antidote to irrele-
ishing premium for family-owned com- vance and decay, notwithstanding the
panies as businesses move down gen- nature of the shareholding!
shell company and therefore, ineligible
to bid.
The IL&FS situation is also having
an impact on sentiment. The parent is
too big to fail but it’s hard to justify a
bailout without major restructuring.
Defaults could of course, hit the debt
market and the relevant funds hard. The
problem has arisen due to the odd struc-
ture where a holding company is invest-
ed, project-side and finance-side, via
multiple subsidiaries in many projects.
Right now, there is little cash-flow and
no prospects of portfolio divestment to
anywhere near the extent necessary. It’s
also hard to make sense of the balance
sheet, given 160-odd subsidiaries.
The RBI’s Monetary Policy
Committee will make its policy review
Value Equations
on August inflation data, along with
Change % other indicators. Given the lower print,
11515.2 11680.5 -1.42 the MPC could decide to hold rates. On
28 28.4 -1.41 the other hand, it might want to raise
1.16 1.15 0.87 rates in order to give the rupee some
3.71 3.76 -1.33 protection. This is quite logical, given
that the Central bank has already spent
72.56 70.99 -2.21
substantial sums on intervention and
-43.18 *17.75
this could be a factor that tilts it in
22.84 * 28.23 favour of hiking.
It's hard to see banks and other
lenders pulling out of the mess, with-
out more losses if rates are hiked. The
cuts will be very deep, even if the legal G-Sec 2028 continues to rule above 8.1
situation resolves. per cent despite the lower inflation
The market is watching the Essar numbers. It could rise further if the
Steel buyout with interest. The bids have RBI hikes.
been quite substantial but Arcelor Mittal The stock market has juddered
will have to be allowed to cut corners if through the past week, as FPIs pulled
it’s going to be allowed to take over with out money. (Sebi didn’t help until it clar-
its ~420 billion bid, since it will then ified its April 10 circular, which initially
have to retrospectively clear outstand- seemed to debar any portfolio invest-
ing dues. The Numetal JV has also made ments by the diaspora.) Technically, the
a substantial, though lower bid and market is in correction mode after hit-
Arcelor-Mittal has claimed that it’s a ting a new high of 11,760.
> LETTERS
Health, education must minister's new initiative on health care
helps in bridging the gap.
Krishan Kalra Gurugram
Ballooning pensions
We are a country of extremes. There was
a time before 1996 when salaries in the
government sector were meagre and
pensions, just enough for survival. Since
then, things changed dramatically.
Today pension of a retired employee at
the age of 75 is not only double of his
maximum drawn salary but if he has his
own house, the amount is good enough
to take care of his entire family, even the
third generation.
Nobody will grudge if our economy
can absorb some of these benefits with-
This refers to “Positive signals, but” out putting heavy burden in the form of
(September 17). The editorial is a com- taxes on other segments.
mentary on the lack of effort from suc- There is a demand to lower duties on
cessive governments on two out of the fuel to arrest rising petrol and diesel
three factors that add up to the human prices but neither the Centre nor the
development index (HDI) — life states can do so, the reason being mount-
expectancy and years of schooling. This ing salary and pension bills.
is unfortunate for a country which The government should put an upper
aspires to be a superpower and which limit to the pension amount. One of the
seeks — and often gets — a place on the methods can be to stop enhancement in
global high table. pension after an employee attains the age
As pointed out, health and educa- of 75. He should continue to get pension
tion need massive investments as these till he survives but the amount shouldn't
are the primary building blocks of any be revised after the threshold age.
society; and no amount of work on per Bhartendu Sood Chandigarh
capita income (the third factor con-
tributing to the index) can ever make Too harsh
up when the population is not educated
or healthy. Our score of 0.640 must There is widespread resentment over the
embarrass us and force us to introspect, blanket application of the Securitisation
especially when our neighbour China is and Reconstruction of Financial Assets
way ahead with an index score of 0.752.
If China has left us so far behind, it is > HAMBONE
not entirely due to their per capita
income which is almost two and a half
times ours. Our pathetic performance
on the health care and education front
also contributes strongly to the compo-
sition of the HDI. Conversely, if China is
doing so well on the economic front,
credit should go to its emphasis on
health care and education as unless
these two factors are addressed first, a
country would never achieve fast eco-
nomic growth. Let's hope the prime
1
WHISPERS
Samaj versus Samaj
Former Rajya Sabha member Naresh
Agarwal, who had switched from the
Samajwadi Party to the Bharatiya Janata
Party (BJP) is planning to organise a
"Vaishya Samaj" conference in New Delhi
on September 29. Agarwal, a Vaishya or
Baniya, had been all but forgotten in the
BJP; with the Lok Sabha election
approaching, he has felt the need to
underline his relevance in the party.
According to Agarwal, he has invited
Union ministers Piyush Goyal and Harsh
Vardhan as chief guests. Goyal and
Vardhan also hail from the trading caste.
Meanwhile, the Congress had been
organising Brahmin Samaj conferences,
and one such meeting would be held
later this month in Rajasthan.
Bhagwat's competition
The first day of Rashtriya Swayamsevak
Sangh (RSS) chief Mohan Bhagwat's
(pictured) speech at New Delhi's Vigyan
Bhavan didn't attract any non-Bharatiya
Janata Party politician of note. The RSS
said it didn't invite any. Rajya Sabha
member Amar Singh attended, as did
film industry personalities Annu Kapoor,
Madhur Bhandarkar and Gajendra
Chauhan. On social media and television
channels, Bhagwat's speech vied for
space with Finance Minister Arun Jaitley's
press conference, Prime Minister
Narendra Modi spending the evening
with children at a school in his Lok Sabha
constituency Varanasi on the occasion of
his birthday, and Congress chief Rahul
Gandhi addressing party workers in
Madhya Pradesh.
Godman to the rescue
Life is coming full circle for a Delhi
Police inspector. Not so long ago, he
was shunted out from his post of a
police station in-charge after pictures
of a controversial self-styled
godwoman sitting on his official chair
surfaced online. Fast forward to the
present, and the officer, who played a
crucial role in tracing an absconding
self-styled godman last week, is
hoping to be reinstated. This godman
was booked in an alleged rape case
and was on the run till crime branch
sleuths, with the help of clues
provided by the said officer, nabbed
him. Despite not being part of the
investigating team, the inspector
contributed in the operation, thanks to
his network of informers. As his peers
said, his path to redemption followed
the one that led to his fall.
and Enforcement of Security Interest
Act. No one has any complaint against
financial institutions using this Act to
proceed against wilful defaulters and
industrialists who have diverted bank
funds. But people are against the heavy-
handed approach against thousands of
small house owners who have defaulted
repayments due to circumstances
beyond their control. Millions of people,
belonging to the vulnerable section, have
purchased houses using loans but are
unable to repay their equated monthly
installments. Financial institutions are
taking possession of their small houses
and flats to recover their money, and
bring down the percentage of non-per-
forming assets. These people are being
forced out of their homes and have
nowhere to go except the streets.
There are thousands who cannot
repay their loans because of closure of
factories, or because they are affected
by critical illness and are unable to go
to work, or because they have lost their
means of livelihood due to natural dis-
asters. These are situations where the
loss of wages is due to factors much
beyond their control, and these peo-
ple do have any place to go or any
appellate authority who would under-
stand their problems.
Biju Cherian Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone
number
BY MIKE FLANAGAN
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official

>
OPINION 11
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM.

Volume XXIII Number 26 ILLUSTRATION BY AJAYA MOHANTY

MUMBAI | TUESDAY, 18 SEPTEMBER 2018

time it remains within the $60-80 range, there is no
reason to worry, but once it crosses $80, which it is
Truth to power threatening to currently, the government will have
to look at measures to cushion its impact on infla-
tion and economy. The good news is that the cur-
Indian boards need to take fiduciary duties seriously rent spike in the oil prices may not last long and

I
ndia Inc’s relative institutional immaturity is showing in the almost whole- best that can happen here is that it goes down
below $60 in the next few months, or sometime
sale abdication of responsibility by corporate boards in recent months. The next year.
brewing crisis in Infrastructure Leasing & Financial Services (IL&FS), the con- For now, therefore, the more important fact here
flict-of-interest issue involving the chief executive officer (CEO) in ICICI is to ensure that the rupee is fairly priced, which is
Bank, or the sprawling scandal involving Fortis Healthcare and the promoter fam- one of the most important factors to keep India
ily are symbolic of the abject weakness of the India corporate board. All of these competitive in the global marketplace. This may be
examples raise concerns about the vigilance of board members, and, indeed, the benchmark in any RBI-government talks on
deciding the steps to handle the rupee volatility
whether they take seriously their fiduciary responsibilities as clearly set out in
and its fall against the dollar.
Section 166 of the Companies Act, 2013. The truth that appears to reveal itself in case
after case is that corporate boards tend to be moral hostage to promoters or pow- 72-73 may be the fair value of the rupee
erful CEOs. This applies as much to executive directors as to independent directors, In this backdrop, 72-73 may be the right value of the
who have, by virtue of their positions, the unique ability to ask hard questions. rupee to a dollar to ensure competitiveness. I did
But for most, board directorships are well-paid sinecures. Fortis Healthcare’s talk about this last year in February and the propo-
embattled co-founder Shivinder Mohan Singh was honest enough to admit that sition provides a reasonable framework to look at
the current state of rupee movement today. We
boards “know nothing”. Eighty per cent of its time, he added, was spent on ensur-
ing regulatory compliance rather than conducting business. Mr Singh’s statement
RUPEE VS OTHER CURRENCIES IN THE LAST 5/10/15 YEARS should not see a strong rupee as strength but target
a fairly priced rupee for restoring our competitive-
reflects only a partial truth. It is true that much of a company’s integrity depends on Yuan Yen Euro Pound Dollar IDR 100* Brazilian real
ness. We didn’t depreciate while all other curren-
the character of the CEO/promoter and the degree of disclosure they permit, a fact INR/CNY INR/JPY INR/EUR INR/GBP INR/USD INR/IDR INR/BRL cies have. The rupee has been fairly stable in the
that the fraud in Satyam, its board glittering with international luminaries, proved Sept 10, 2003 5.53 0.39 51.23 72.78 45.71 0.54 15.83 last four years prior to the fall this year. When the
so comprehensively. Also, when Indian companies, whether family-owned or wide- inflation has averaged 4-5 per cent in the last few
Sept 10, 2008 6.60 0.42 63.19 79.13 45.14 0.48 25.25 years, the rupee needed to depreciate 7-8 per cent
ly held, tend to structure deals through myriad subsidiaries, it would be impossible
Sept 10, 2013 10.43 0.63 84.60 100.20 63.84 0.57 27.92 to remain competitive.
to expect the board of the holding company to know operational details.
Sept 10, 2018 10.57 0.65 83.78 93.70 72.50 0.49 17.87 Once we are settled with the rupee at 72-73 a dol-
But, as the controversy in ICICI Bank and, before that, Infosys demonstrated, lar, the government and the RBI can attune fiscal
* 100 Indonesian rupiah
boards react ineffectively (and opaquely) even when they do have access to con- and monetary policies, respectively, according to
troversial information. In both companies, for instance, whistle-blowers provided

The fair value

that instead of groping in the dark about the
detailed information about questionable practices. In both cases, the boards chose strengthening of the rupee. It is good that the gov-
to put out opaque statements that satisfied no one. In Infosys’ case, sheer promoter ernment and the RBI together are maintaining a
strong vigil on the rupee movements, but with the
pressure forced the chief executive officer (CEO), Vishal Sikka, to exit; in ICICI Bank’s
economic revival gaining ground and inflation at
case, growing shareholder dissatisfaction forced the board to start a full-scale

of rupee
manageable levels, it is better to avoid any knee-
independent investigation against Chanda Kochhar, which is underway. In IL&FS’s jerk reaction.
case, the board’s role is even more debatable. Here, too, a whistle-blower’s letter con-
cerning corruption in ground companies is in the mix. But that apart, IL&FS’s woes The dollar may only strengthen from here, and
have been attributed to delayed payments by government agencies, stalled proj- the options are limited
Thanks to the rising US interest rates, the dollar is
ects owing to litigation, and similar issues. These, surely, are standard operating con-
ditions for anyone operating in infrastructure in India, and CEO Ravi Parthasarathy,
It is important to ensure that India is competitive. As such, expected to only strengthen further against the
who stepped down in July, citing health reasons, has been in this business for three ~72-73 to a dollar may be the right level emerging market currencies this year and we
should be prepared for this. Any relief on the oil
decades and should have been well aware of these contingencies. prices front could be a mitigating factor here as
Part of the existence of a weak board culture is that corporate institution-build-

W
hile the recent fall of the rupee against
ing in India is still in its infancy and Indian cultural mores, especially in family-man- the dollar has raised concerns, the
aged firms, do not accommodate the practice of speaking truth to power. Though moot point here is
far from perfect, boards have been the capstone of corporate ethos in the developed — has the rupee
really fallen. Leave aside the dol-
world. From Apple’s charismatic co-founder Steve Jobs to Hewlett-Packard’s pow-
lar, which has strengthened
erful CEO Carly Fiorina, there are any number of CEOs who have been sacked by against every currency in the last
the boards for acts of omission, commission, non-performance and fraud. In few months, as rightly pointed
India, such examples are about as easy to find as the dodo. out by Finance Minister Arun
Jaitley, the rupee has maintained
a favourable situation against
almost all other currencies in the
Is there a need to panic, therefore, on account of
the rupee’s fall against the dollar? Finance Minister
Arun Jaitley is bang on target
when he says that it is mainly
because of the external reasons
— the US policies leading to flow
of dollars into the country,
forced shortage of oil that has
led to crude price rise putting
pressure on India, and then
trade war between the US and
China that has resulted in deval-
the scope for taking measures to curb the fall of the
rupee is severely constrained.
The only way to fight this fall against the dollar
is either raise the interest rates, and already the
talks have emerged on this count, which we cannot
afford at this stage of recovery as it will be detri-
mental to the strengthening revival of animal spir-
its in the economy; or to use up the forex reserves,
which, again, may not be prudent, though the RBI
will be under pressure to take this route. The apex
bank will have to avoid this mode as it has done in
the past.

Horticulture challenge last five years.

Take the rupee versus the RASHESH SHAH
pound (see chart). It was 100.20
uation of its currency by the lat-
er — all these factors have con-
tributed to the rupee breaching
Learning to live with the current level of the
rupee would be a more realistic way of dealing with
the fall that is a boon rather than a bane. A com-
Govt needs to play a more proactive role on September 10, 2013, and was the 72-a-dollar-mark. There is petitive export and import milieu for the Indian

T
he agriculture ministry’s latest crop estimates for 2017-18, which indi-
cate that the output of horticulture has outstripped that of foodgrains
for the sixth year in a row, also unfold some significant emerging
trends in agriculture that call for pertinent policy responses. A notable
point in this data is that while the foodgrain harvest has been oscillating, dipping
markedly during the back-to-back drought years of 2014 and 2015, horticulture
93.70 on September 10, 2018. The Chinese yuan
and the Japanese yen are almost at the same level
during this period and the euro is also at a lower
level in 2018 than 84.60 in 2013. The Indonesian
rupiah and the Brazilian real, currencies from the
emerging world, are substantially down today as
compared to 2013.
not much that India can do on these counts rather
than adopting a wait and watch policy.
Yes, if there is an unreasonable movement, like
the one witnessed currently, the government must
take stock with the Reserve Bank of India (RBI)
and see if there is any immediate intervention
required. As far as oil prices are concerned, till the
industry will ultimately benefit trade and, in turn,
provide a much better platform for growth in the
coming years. The rupee has to be at the right lev-
els if the Indian economy has to grow around 8-10
per cent in a sustained manner.
The writer is president, FICCI

has maintained a steady uptrend, regardless of the monsoon’s performance. The

area under vegetables, fruit and other horticultural products, such as spices,

Rupee depreciation is a managed fall

herbs, flowers and plantation crops, has also been expanding. Clearly, agricul-
ture has begun to diversify with farmers and farm land shifting gradually to rel-
atively lucrative and quick cash-yielding fruit and vegetable farming. This is a
desirable drift that needs to be sustained. Horticulture, together with livestock
husbandry and fisheries, comprises the high-value segment of agriculture,

I
f there is no currency crisis, the media may
which, if prompted to grow to its potential, can mitigate farm distress. invent one. It’s in the nature of 24×7 news cov-
This trend assumes significance also because it has come about without erage that every fall in the rupee in recent
much official backing. Had the same kind of attention been paid to horticulture weeks should lead to questions as to whether we
as has been the case with foodgrains, India could have become the world leader were facing a repeat of 2013 or worse. The Reserve
in this field. At present, India’s share in the global bazaar of fresh and processed Bank of India’s (RBI) silence on the subject should
fruit and vegetables is meagre though even today the country is the world’s sec- have been eloquent enough:
What is happening is a managed
ond-largest producer of these items. Horticulture needs to be promoted for
fall in the rupee consistent with
another reason as well. Thanks to gradual rise in income levels, the consumption our fundamentals and develop-
of and, hence, demand for fruit and vegetables are growing while those for cere- ments in the global economy.
als are on the slide. Admittedly, priority to foodgrains was justified in the past to The current account deficit
combat widespread hunger. This goal has, more or less, been achieved. So increased modestly from $15 bil-
emphasis should now shift to augmenting the availability of relatively nutritious lion in April–June 2017 to $15.8
fruit and vegetables to alleviate malnutrition, which still persists. billion in the period April-June
2018. Capital flows to finance the
This can be done by providing assured marketing at remunerative prices for
deficit dropped sharply from $27
horticultural produce the way it is proposed for many other crops. Equally impor-
tant is to facilitate the development of post-harvest value chain of cold stores,
billion to $5 billion in the same
period. It’s not just that we are
FINGER ON THE PULSE
refrigerated transportation and processing of perishable horticultural products. running a deficit on the current TT RAM MOHAN
Promoting organised retail with backward linkages with growers can also help pro- account. We aren’t getting
vide assured marketing at reasonable prices. Unfortunately, none of the fruit or enough capital to finance it.
vegetables figures in the present list of over 20 farm commodities for which the Even under normal circumstances, an annual
depreciation of 4-5 per cent would be in order. In
minimum support prices are routinely announced by the government. It is imper-
the present situation, a depreciation of a higher
ative to include in this list some key fruit and vegetables, notably the three main magnitude is only to be expected.
mass-consumed kitchen staples — tomato, onion and potato (dubbed quite apt- As analysts have pointed out, judging the rupee
ly as TOP). These are the crops whose production and prices fluctuate the most. in relation to the dollar alone is misleading. The
In 2017-18, too, the output of these commodities registered a decline, bucking the dollar has appreciated against all currencies. Data
overall uptrend in horticulture production. The absence of stable import-export from the Federal Reserve Bank of St Louis shows
policies concerning these rapidly decaying products is partly to blame for their that a trade-weighted measure of the dollar has
appreciated from 84.7 on February 1 to 90.6 on
price volatility. Though a price stabilisation fund for perishable farm produce exists September 10. Most analysts ascribe this to the rate
for years, it serves little purpose because of its meagre corpus and shoddy admin- hikes in the US and changes in tax laws that incen-
istration. It is time the government realised the need to create a prudent and tivise American corporations to bring more of their
longer-lasting policy environment to let the output of key vegetables and fruit overseas profits into the US.
move in tandem with their demand in the domestic and export markets. We get a better picture of the rupee’s value from
Otherwise, the welcome trend of farm diversification may not endure. the real effective exchange rate (REER). The 6-cur-
rency REER based on the consumer price index
(CPI) was 100 in January 2017. Thereafter, it appre-
ciated to 105 in August 2017, a real appreciation of
5 per cent. It has since depreciated to 98 in August
2018, a depreciation over the year of 6.6 per cent in
a year. This is just a little beyond the informal band
of 5 per cent for REER that the RBI used to have for
containing rupee volatility.
Effectively, the rupee has
depreciated 2 per cent in real
terms against a basket of six cur-
rencies since January 2017. That
is pretty modest in relation to
changes in the external account.
Small wonder that the RBI has
not moved beyond limited inter-
vention in the currency market
thus far.
The big question for the mar-
kets is whether and when the RBI
will resort to a rate hike in order
to prop up the rupee. The short
answer is that we do not, at the
moment, have a situation on our
hands that requires the RBI to use the interest rate
to deal with rupee depreciation.
In the inflation targeting framework we now
have, the focus of interest rate policy is on inflation.
CPI inflation came in at 3.7 per cent in August.
Most analysts believe that inflation is likely to stay
below 5 per cent this year. For the RBI to use the
interest rate in relation to the exchange rate would
probably require some trigger from the outside —
maybe, a worsening of the trade war between the
US and China or a geopolitical crisis related to full
US sanctions on Iran kicking in in November or
signs of further investor aversion to emerging mar-
kets.
The government has announced measures
aimed at addressing the current account deficit
and capital flows. Withholding tax on rupee-
denominated bonds has been scrapped.
Manufacturing companies can avail of external
commercial borrowings up to $50 million with a
minimum maturity of one year. Mandatory hedg-
ing requirements for infrastructure loans are to be
reviewed. So also the cap of 20 per cent on any cor-
porate group in foreign portfolio investors’ corpo-
rate bond portfolio.
The government will seek to curb inessential
imports (such as electronic items) and boost
exports through incentives. Both are to be wel-
comed. We need import controls to check imports
because key imports are price-inelastic. We need
incentives to boost exports because with manu-
factures increasing in importance in our export
basket relative to commodities, a big chunk of
exports too is price inelastic.
All these are measures that will address the cur-
rent account deficit and capital flows in the medi-
um term rather than in the short term. They send
out a signal that the government believes the
exchange rate situation is under control.
There is some concern that speculators are
responsible for the depreciation in recent days.
Not to worry. The RBI has a comprehensive view of
positions in the forex market and is perfectly capa-
ble of decisive action to snuff out speculation.
Should the external situation worsen, the RBI has
an array of weapons in its arsenal: Issue of bonds to
NRIs, bilateral swaps, tightening liquidity, raising
limits for external commercial borrowings, direct
provision of forex to oil companies etc.
India’s economic fundamentals are in far better
shape than in earlier emerging market crises. The
RBI might want to use its newly started SMS serv-
ice to ask citizens not to allow the fall in the rupee
to dampen the festive season — as long as they
don’t rely on private transport.
The writer is a professor at IIM-Ahmedabad
ttr@iima.ac.in

The cat who solved mysteries
KITABKHANA
T C A SRINIVASA-RAGHAVAN
But it wasn’t just six people who read
the column but a round dozen and they
all said I was a fool to stop it. After some
importuning, I was persuaded to
resurrect it.
After some discussion with a
colleague of nearly 37 years, we agreed
that I should do it differently this time by
doing what I used to do in the early
1980s, namely, reassess established
writers. Back then, the colleague said, it
was presumptuous of you, but no longer.
“Age has its uses.”
So this column will be about writers
who write in English. Fiction, history,
figures. All of them have titles that
started “The Cat Who…”
I was sceptical at first and it took me a
couple of months to start on the first of
copies and had been on The New York
Times bestseller list a few times. One of
these was called The Cat Who Ate Danish
Modern. I have ordered it.
Braun has pancakes and steaks.
In form, her stories are a grownup
version of Enid Blyton’s various series —
Secret Seven, Famous Five and so on.
critiquing newspaper editorials — short them. Then I got hooked and desperately Many people have tried to figure out There is always a mystery, which Koko
but not very nasty and certainly not wanted to find out who this lady with a why she was such a hit. Many the Cat solves.
brutish. triple-barrelled name — but only a single explanations have been offered which The credit, however, goes to his
The intention is merely to write 750 L in her first name — was. mostly centre on the cats. human owner, a slightly goofy but
self-indulgent words and, in In the pre-Google days, But I have a different take on it. detached journalist with long hair who
the process, leave you slightly I think people this would have been a hard has inherited a fortune. He lives in a
amused and perhaps a lot like Mrs Braun’s ask. But now Google Excellent writing huge 100-year-old house with scores of
wiser. So, bon aperitif, here books because instantly revealed that she I think people like Mrs Braun’s books closets that the cats constantly explore.
goes. they instinctively was an established because they instinctively recognise The second, very subtle, reason is
recognise American writer — with 29 something that is done well. The other is that every chapter is complete in itself, a
Catwoman something that is of these cat books dedicated a much subtler one. short story almost. You can read it like
Ok, how many of you have done well. The to her “Husband who…”. Mrs Braun wrote very well indeed. It that because the novel itself is a series of
heard of Lilian Jackson other is a much The first of them is gentle, no-nonsense writing, much incidents, not unlike TV serials.
Braun? I certainly hadn’t until subtler one appeared in 1966 — called of it in conversational form. The It is an extraordinary skill and
a few months ago. The Cat Who Could Read setting is a small American town, in technique because it is a page-turner
Backwards — and the last in 2008. Her

A
few months ago, I had decided to
stop this monthly column
because I had got bored with it
after four years and, I thought, so must
have the half-a-dozen or so readers of it.
economics, politics and the rest of the
caboodle will all be grist for its mill.
It will not be literary criticism.
Instead, it will be modelled on a column I
used to write for a media website
Then a friend who has two cats
presented me with four of Mrs Braun’s
books. All of them were mystery stories
in which two cats —Koko and Yum-
Yum — are the key, if not central
last book, The Cat Who Smelled Smoke
was never published.
In between, before she died in 2011,
aged 97, her books had sold a few million
behaviour rather like the villages of
England but bigger. Everyone knows
everyone else and everyone gossips.
And just as the English have their
buttered scones and seed cakes, Ms
but not in, say, the usual style where
every chapter is left hanging. I have
never come across it before.
If you have, do write a letter to this
paper.
https://t.me/pdf4exams
MUMBAI |
TUESDAY, 18 SEPTEMBER 2018
WWW.SMARTINVESTOR.IN.FOR INFORMED DECISION MAKING
Sebi proposal seeks info
on live-in relationships
Insider trading
provision proposes
disclosure of details
like home address
SACHIN P MAMPATTA
Mumbai, 17 September
A
new proposal on insider
trading requires people
todisclosedetailsoftheir
live-in partners to their compa-
ny.
A report dealing with fair
market practices has proposed
“disclosureofclosepersonalrela-
tionships” along with other
information to make it easier to
crack such cases.
“…inordertofacilitateinves-
tigation, the committee has rec-
ommended mandating disclo-
sures by designated persons of
…persons residing at the same
addressformorethanoneyear,”
said a recent Securities and
Exchange Board of India (Sebi)
report of the committee on fair
market conduct chaired by TK
Viswanathan.
Insider trading is when peo-
ple look to make illegal profits
by trading in shares on the basis
ofnon-publicinformationabout
a company.
However, bringing such
instances to book has been chal-
lenging because of the difficul-
ty in establishing a link between
the people who had access to
such information, and those
trading on it, according to the
report.
It has, therefore, been pro-
posed that persons with access
to such information make a dis-
closure of the names of imme-
diate relatives, persons with
whom they share a material
financial relationship, as well as
Ircon IPO
subscribed
27% on
Day One
SAMIE MODAK
Mumbai, 17 September
State-owned transport infra-
structure company Ircon
International’s initial public
offering (IPO) was sub-
scribed at 27 per cent on
Monday — the first day of
the issue. Most of the bids,
so far, have come from retail
investors, with the portion
allotted to them witnessing
86 per cent subscription. The
price band for the issue is
~470 to ~475 per share. Retail
investors applying in the IPO
will be offered a discount of
~10 per share. Most retail-
focused brokers have
advised their clients to sub-
scribe to the IPO.
“At the IPO price band of
~470-475, the stock is avail-
able at 10.7-10.9 times 2017-18
earnings. Adjusting for sub-
sidiary investments worth
~7 billion, the issue is avail-
able at 9.2 times 2017-18 earn-
ings on higher band, which is
attractive valuation vis-à-vis
its peer companies,” says a
note by ICICI Securities.
Following the IPO, the
government's stake in the
company will decline from
99.7 per cent to 89.2 per cent.
Aavas Financiers'
~17-billion IPO to
open next week
Private equity (PE)-backed
Aavas Financiers' ~17.3-billion
IPO will remain open for sub-
scription between September
25 and September 27. In the
IPO, the housing financecom-
pany will issue fresh shares
worth ~4 billion. The offering
includes secondary share sale
worth ~13.3 billion by PE
investors Lake District, Partn-
ers Group and Kedaara Capi-
tal. The price band for the IPO
is ~818 to 821 per share.
The total share sale is val-
ued at ~17.3 billion at the top
end of the price band. The PE
players are set to make over
three-fold return on their
investments. The average cost
of acquisition for Lake District
and Kedaara is around ~245
per share. BS REPORTER
The Smart
Investor
WHAT’S ON THE TABLE
Report suggests new
provision on insider
trading
Seeks disclosure of those
sharing same address
Essentially, it would mean
disclosure of live-in
partner’s details to
the employer
those sharing the same address.
“This is somewhat excessive
and a certain breach of privacy.
When combined with phone
tapping powers, this is a sure
recipe for excess power without
any accountability,” said
Sandeep Parekh, founder of
Finsec Law Advisors, and for-
merSebiexecutivedirector.The
committee report had also rec-
ommended phone-tapping
powers for the regulator.
“….A blanket attempt to
extend the boundary of insider
trading parameters to persons
living in the same home needs
to be thought through,” said
Sumit Agrawal, Founder,
High realisations to improve NMDC outlook
Analysts revise revenue estimates on price hikes
UJJVAL JAUHARI
Mining major NMDC's stock,
which had been on a down-
trendowingtoweakironprices
sincethebeginningoftheyear,
has bounced back in August
withgainsofabout30percent.
The reason is a rebound in
international iron-ore prices,
strong demand outlook led by
rising steel production, and
expectations of more price
hikes. Iron-ore production,
which remained subdued in
the monsoon season, is now
expected to pick up as well.
Betterrealisationsandvolumes
should help support stock
prices.
The 62 per cent Fe grade
iron-ore prices ex-China that
stood at more than $78 a tonne
in early March had corrected
sharplytolessthan$64atonne
in April, and had remained
range-bound till July. This had
prompted the NMDC to adjust
its pricing. However, prices
have gained to more than $68-
a-tonne levels now. The rising
SVL impact on Shriram Transport is limited
Robust loan growth led by rural recovery is a positive
SHREEPAD S AUTE
ThestockofShriramTransport
Finance Company (STFC) has
been under pressure from
issues related to SVL, the hold-
ing company of the Shriram
Group'snon-financialbusiness,
which has defaulted on non-
convertible debentures (NCD).
STFC, which typically funds
purchase of used commercial
vehicles, had offered a corpo-
rate guarantee of ~8.7 billion to
itsholdingcompany.According
to analysts, STFC's book value
would get hit by
4-5 per cent if the guarantee is
invoked.
MD and CEO of STFC
UmeshRevankarhas,however,
said SVL is trying to resolve the
issuesonitsown,shruggingoff
thepossibilityofanyimpacton
STFC's financials. Even if the
guarantee is invoked, it would
be borne by the promoters, he
said.
Ontheoperationalfront,the
companyreportedarobustper-
formance in the June quarter,
ILLUSTRATION: AJAY MOHANTY
Data to be maintained in
searchable electronic
format
To be made available to
regulator when required
Would apply to employees
with sensitive information
Overreach into individual
privacy, say lawyers
RegStreet Law Advisors and an
ex-Sebi official.
Others sharing the same
address could include spouses,
children,otherrelatives,domes-
tic help in addition to live-in
partners. The company is
required to maintain the infor-
mation in a searchable elec-
tronic format which can be
shared with Sebi when required
for investigations.
A developed market like the
US requires such disclosures
only when a case is being inves-
tigated, and not otherwise.
“In the US, Rule 10b5 enu-
merates a non-exclusive list of
non-business relationships
THE COMPASS
pellet prices on the back of
strong demand from China,
and worldwide supply con-
straints is supporting realisa-
tions. NMDC, a few days ago,
has taken a price hike of ~200/-
tonne for iron ore lumps and
~150/tonne for iron ore fines.
Since July 2018, prices of
NMDC's iron ore lumps have
increased by ~500 a tonne,
while prices of fines have
increased by ~450 a tonne. As
Odisha-based iron ore miners
contemplate further hike after
having raised prices by ~600-
700 a tonne in two tranches in
with the loan book growing by
22.3 per cent year on year to ~1
trillion.Netinterestincomeand
net profit moved up by 19.6 per
centto~18.4billionand24.4per
centto~5.7billion,respectively.
Themanagementexpectsloan
book to grow by 18-20 per cent
in the current financial year on
the back of a strong rural
growth. While there will be
someimpactofaxleloadnorms
and high fuel prices on new
vehicle business, this is unlike-
lytoaffectusedvehicles,which
account for 84 per cent of total
assets under management or
http://www.estore33.com/ https://t.me/TheHindu_Zone_official
1 QUICK TAKE: STRONG Q2 FOR JUBILANT FOODWORKS
TSI P13
In a weak broader market, the Jubilant GOLDMAN
FoodWorks stock was up 1.3% after
brokerages upgraded the stock. DOWNGRADES
Analysts expect the firms to post a INDIAN
strong 18% same store sales growth in
the September quarter EQUITIES
<
Financial services sector has got
$16.6-bn PE/VC deals since 2015
ASHLEY COUTINHO
Mumbai, 17 September UNDERLYING TREND
Half-yearly trend of PE/VC investments
The insurance segment
received a total of 29 PE/VC
investmentsintheperiodunder
under which a sufficient duty of
trustorconfidencewillexistand
In the period from 2015 to the
first half of this year, the finan-
No. of deals Value ($ million) consideration. The average tick-
et size for investments in insur-
1H2015 369 8,589
a live-in or a romantic relation- cial services sector has secured
2H2015 398 11,046
ance companies was high - $226
ship is not included but can be the highest share of private million for life insurance and
asked about in a specific inves- equity/venture capital invest- 1H2016 310 7,968 $60 million for general and
tigation by the regulator,” said
Agrawal.
ments, with $16.6 billion
received through 311 deals, says
2H2016 278 8,235
health insurance. PE funds,
which drew the maximum
This is despite an instance a report filed by EY-IVCA titled 1H2017 293 10,193 investment in the space, were
where a romantic live-in part- ‘PE/VC Agenda — 1H18’. 2H2017 301 15,861 Temasek, KKR, Warburg Pin-
ner’s inside information was The first half of this year has cus, SoftBank, etc.
used to make illegal gains. Toby also seen the highest invest- 1H2018 351 15,191 Fintech reported 96 deals
Source: EY analysis of VCC Edge data
Scammell made insider bets on ment by PE/VCs, with $4.2 bil- during 2015-1H18, pointing to
Walt Disney Company purchas- lion spent in 74 deals, the high- the vast unbanked population 2018(1H18).Abulkofthesedeals the high PE/VC interest in the
ing Marvel Entertainment for a est-ever such half-yearly and low penetration of finan- (15)tookplacein2017compared space.Therewasamarkedspike
windfall gain based on infor- investmentinthefinancialserv- cial products, coupled with a to three in 1H18, six in 2016 and in the deal count after demon-
mationhegleanedfromhislive- ices sector. diversity of investment options four in 2015. Last year saw 55 etisation as the true potential of
in girlfriend who happened to Various segments, including available across banks, NBFCs, deals, each of which was valued digital payments was brought
be working on the deal. pure play banks, specialised microfinance institutions, over $100 million, aggregating to the forefront. About 70 per
The move comes even as NBFCs, small finance banks, insurance companies and pay- to $19.1 billion and accounting cent of these deals (68) in the
debates on privacy have gained online credit platforms, insur- ment companies, the sector is for 72 per cent of the total value fintech space during the period
momentum in recent times. ers, and payment solution com- expected to continue attracting of investments in 2017. were announced after demon-
The Supreme Court ruled priva- panies have basked in the gen- PE/VC investments," said Vivek NBFCs attracted 107 PE/VC etisation, with an average deal
cy to be a fundamental right in erosity of PE/VC investors. Soni, partner and national investments in the same peri- size of $7.8 million. Housing
an August 2017 judgment. "Financial services have wit- leader for private equity servic- od (2015-1H18). The sector has finance saw 18 transactions in
Another ruling over privacy in nessed significant interest from es EY India. Banking witnessed seen a sustained PE interest 2015-1H18, with total deal value
relation to the governments PE/VC investors over the past 28 transactions in the period with 24 deals in 2015, 26 in 2016, of $2.3 billion and average deal
unique identification project- three-and-a-half years. Given between2015andthefirsthalfof 26 in 2017 and 31 in 1H18. size of $135.5 million.
Aadhaar-is still pending.
One lawyer also pointed out
that such a database would be
especially intrusive for people
in same-sex relationships.
There is evidence of the les-
bian, gay, bisexual and trans-
gender (LGBT) community in
India facing discrimination in
terms of employment, health
care, education and access to
social services. This is accord-
ing to a October 2014 World
Bank report entitled ‘The
Economic Cost of Stigma and
theExclusionofLGBTPeople:A
Case Study of India’ authored
by MV Lee Badgett, professor of
economics at the University of
Massachusetts Amherst,
Williams Institute Mandatory
disclosure may reveal such rela-
tionships as an ‘unintended
consequence,’ the lawyer said.
August, there is more room for
price increases by the NMDC,
observe analysts. After the
recent hikes, analysts at ICICI
Securities have already revised
upwards their iron ore realisa-
tion estimates for both 2018-19
and 2019-20 on the back of
higherdomesticironoreprices.
Analystsbelievethatwithbetter
realisations witnessed in
September, the company
should be able to report higher
marginsintheSeptemberquar-
ter.Thesharpincreaseinpellet
prices also augurs well for the
company's recently commis-
sioned pellet plant, which is
expected to produce 0.4-0.5
million tonnes in 2018-19.
Analysts are expecting ~1,500-
2,000 per tonne boost to prof-
itability. Analysts at Motilal
OswalSecuritieshaveprojected
NMDC's iron ore volumes to
grow 5-6 per cent, annually,
over the next four-five years
with operating profit growth of
13 per cent annually over FY18-
22.
AUM for STFC. AUM indicates
size of the loan book.
Focus on increasing the
share of public deposits in bor-
rowings and lower-term loan
dependence should enable
STFC protect its margin amid
rising interest rates, observe
analysts. The management
expects net interest margin to
be at 7-7.5 per cent in 2018-19,
with the company passing on
increased cost of funds to bor-
rowers to protect its margin.
Further earnings support
also stems from lower expect-
ed credit losses (ECLs) on
account of bad loans.
“In the June quarter, non-
performing loans (NPLs)
under IND AS (Indian
Accounting Standards) were
more than IGAAP owing to
higher default probability/loss
given default. However, now
things are improving with
recovery in the rural econo-
my. This should bring down
NPLs and expected losses,”
the MD said.
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official

.
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 THE SMART INVESTOR 13 <

Investors can give

HCL Tech’s buyback
Goldman downgrades Indian equities
a miss: Analysts
PUNEET WADHWA
NewDelhi,17September
US rates ‘boiling the frog’ of
A
fter remaining “strategically
SWATI VERMA
New Delhi, 17 September
overweight” on Indian equities
since 2014, global research and
risk assets: Goldman Sachs
brokerage firm Goldman Sachs has
The buyback offer of India’s cut its India rating to “market-weight” Rising US interest rates are consequences of this divergence
third-largest IT firm, HCL from “over-weight”. It expects the probably just beginning to roil risk in policy rates,” strategists
Technologies (HCL Tech), markets to consolidate ahead of the appetite around the world, Charles Himmelberg and James
opens on Tuesday. general elections and maintains a 12- according to economists at Weldon wrote in a report dated
The Noida-based compa- month Nifty50 target of 12,000, which Goldman Sachs Group Inc. September 16.
ny announced a buyback of is over 5 per cent higher than the cur- Global investors may be “Astherateofreturnonsafe
up to 2.61 per cent at ~1,100 rent levels. underestimating the headwinds assetsrises,theappealofrisky
per equity share for an Indian equities, it says, have dou- to financial assets posed by US assetsfalls,andweincreasingly
amount of up to ~40 billion. bled over the past five years and have rates, they said. While the real rate worrythatrisingtrendinUSreal
The offer closes on October 3. outperformed the region by 60 per- on three-month US. Treasury bills ratesvs.globalratesis‘boilingthe
Most analysts recommend centage points (pp) in dollar terms. — or the nominal rate minus frog’onriskappetite,”theyadded.
investors give the buyback a “Given the elevated valuations and the inflation (or inflation “Anincreaseinthefragilityofrisk
miss. The company, they say, recent strong performance, we believe Here are the five key reasons why year 2017-18 (FY18) and expect the expectations) — remains appetiteisalreadyvisibleinEM,we
remains on a firm fundamen- the risk/reward for Indian equities is Goldman Sachs has downgraded crude oil prices to remain elevated at negative, Goldman forecasts the wouldargue,butitlogicallyextends
tal footing and the rupee’s less favourable at current levels,” wrote Indian equities: $80 per barrel in the next three measure will diverge from other toglobalriskassetsmoregenerally.”
slide against the dollar should Sunil Koul of Goldman Sachs in a months. real rates in the developed and Risk premia on financial
aid financial performance. recent co-authored report. Stretched valuations developing world over the next assets — or the extra cushion
That apart, the stock trades at While a less stable government at Indian equities, Goldman Sachs Earnings recovery year-and-a-half. investors might expect in return
an inexpensive valuation as the Centre as an outcome of the gen- believes, are the most expensive in priced in Decent economic data from for holding onto riskier securities
compared to peers and the eral elections scheduled for 2019 is a Asia (27x average price-to-earnings) Despite unfavourable macros, emerging markets (EMs) helped — has not matched the rise in real
current market price (CMP), key downside risk, any upside in cor- and are trading at a 58 per cent premi- Goldman Sachs says the markets mask the rise in real rates earlier rates, they said. To complicate
too, does not leave much on porate profits and a stronger foreign um to region. At these levels, it says, have priced in growth in corporate this year, but that “changed in matters, risk premia remain low
the table for an arbitrage play institutional (FII) inflow could surprise equities have historically posted a neg- earnings at the current levels. “Nifty April, when a deceleration in EM even as the economic growth
for investors, they say. the markets positively, Goldman Sachs ative return over three-six months. has compounded at 14 per cent over data arguably exposed the risk continues to age. BLOOMBERG
“Despite the recent run-up says. the past five years while earnings
in the stock, valuation still In terms of sectors, it has upgraded Macroheadwinds grew at 5 per cent. While profit recov-
looks inexpensive relative to defensives and exporters and remains Tighter financial conditions, weak ery is underway, this micro ‘catch up’
peers. One can stay invested overweight on private banks, technol- activity data and higher oil prices (in doesn’t warrant a further upside. Slowdown in DII flows Event risk
for a target price of ~1,215 for 71 (from 68/68.5 in ogy and metals. Rural recovery and rupee terms) are likely to see eco- Indian equities are pricing in a 17 per Even though domestic flows have Lastly, the report cites “event risk” aris-
12-15 months,” says Sanjeev FY19E/FY20E), our earnings housing plays, GARP (growth at rea- nomic growth moderate, analysts at cent 10-year earnings growth on a slowed for four consecutive months, ing from likely increase in government
Hota, assistant vice-president per share (EPS) estimates for sonable price) and beneficiaries from Goldman Sachs say. They forecast a compounded basis (CAGR) – the Goldman Sachs believes funds could spending/fiscal deficit ahead of the
for research at Sharekhan by FY19E and FY20E could the rupee’s slide against the US dollar current account deficit (CAD) at 2.6 highest in the region,” the Goldman potentially see lower equity inflows, as elections and possibility of a less stable
BNP Paribas. increase by nearly 3.5-4 per are some of Goldman Sachs’ key per cent of GDP (gross domestic prod- report says. the yield gap between equities and government weighing on the markets
Satish Kumar, senior cent. Further, the company investment ideas. uct) versus 1.9 per cent in financial bonds has dipped to a 10-year low. in the near term.
research analyst at Choice has a higher share from the
Broking, agrees. Since the US (63 per cent), which could
buyback price is now near act as a lever from a margin
the CMP, one needs to evalu-
ate the stock on a funda-
mental basis.
“Given the strong funda-
perspective if the dollar
strengthens against the rupee
further,” says Deepti Tayal,
research analyst at ICICI
Performance of pharma funds improves
mentals of the IT sector and Securities. Outlook positive but bets are likely to be risky which creates opportunities for
HIGH 5- AND 10-YEAR RETURNS Returns (%)
HCL Tech, we recommend On the flip side, Sudip the Indian players. “Many pharma
investors not to tender in this Bandyopadhyay, group chair- TINESH BHASIN & SANJAY KUMAR SINGH Regulatory issues have started companies have also diversified to Fund 3-month 6-month 1-year 3-year 5-year 10-year
buyback offer. At the current man of Inditrade Capital, settling down, and a depreciating various other geographies such as ReliancePharmaFund(G) 13.86 21.36 27.96 3.51 18.36 21.69
levels, HCL Tech is well suggests the offer price is As the outlook for pharmaceutical rupee has also provided a tailwind the UK, Russia, Africa, and so on.
placed on the financial and attractive and is also at a pre- companies improves, returns from to the performance of these funds. They have tried to reduce their SBIHealthcareOppFund-Reg(G) 13.93 11.02 8.07 -2.78 14.83 16.45
valuation front compared to mium to the weighted aver- mutual funds representing the “Until last year we focussed only dependence on the US market, TataIndiaPharma&Healthcare 13.36 16.17 17.03
peers. The company is likely age six-month market price. sector have outperformed all on the domestic companies whose even though it remains the most Fund-Reg(G)
to grow at 12-15 per cent in the That apart, the government equity schemes in the recent past. valuations were 30-40 per cent lucrative market,” says Danesh
next two fiscal years. Given is now taking steps to arrest The average three-month return of cheaper to the other consumer- Mistry, fund manager, Tata
UTIHealthcareFund-Reg(G) 12.75 12.67 14.80 -0.76 12.79 15.46
all these fundamentals, HCL the rupee’s fall. In this back- pharma funds is 13.48 per cent. All driven sectors. We included Mutual Fund. Due to all these Average 13.48 15.30 16.97 -0.01 15.33 17.86
tech’s stock is available at P/E drop, the gains on the rupee other equity schemes have single- companies that are leaders in their factors, the earnings visibility for Source: Ace Mutual Fund
of 15x, which is trading at a front could be limited. The digit returns. domains, and it paid. When these players has improved.
discount to Infosys (18.4x) and stock, he says, factors in most The same holds true for one- pharma companies focussed on As for the domestic-focused says Bhan. exposure to pharma sector
TCS (27.3x). One should stay positives from a near-term month returns. Average returns of the US started correcting, we players, the market has decided to Pharma sector funds have schemes or for that matter any
invested,” Kumar says. perspective. pharma funds are at again went for the re-value them. “Many of them outperformed diversified equity sectoral funds. Even if they do,
Thus far in calendar year “While sharp depreciation 7.63 per cent. Average leaders,” says have branded drugs. In recent schemes even over the long-term they should restrict it to five per
2018 (CY18), HCL Tech has in the rupee has benefited gains of other equity YOUR MONEY Shailesh Raj Bhan, times, the market has re-rated giving annualised 17.86 per cent cent of the equity portfolio,” says
gained 21.16 per cent as com- technology companies schemes are below one deputy CIO, equity these as it feels that these returns as against returns of large- Kaustubh Belapurkar, director,
pared to 38.46 per cent rise in including HCL Tech, it seems per cent except for investments, brands have strong and cap diversified equity funds at fund research, Morningstar
the Nifty IT index. The to have been arrested by the technology funds, Reliance Mutual sustainable equity in the Indian 12.73 per cent over the past Investment Adviser India.
Nifty50, on the other hand, RBI’s active participation. It which are at 4.35 per Fund. Bhan is also market,” says Mistry. decade. Despite the long-term Most sector funds form a small
has moved up 8.42 per cent also seems that the govern- cent. Pharma sector the fund manager While the regulator risks exist track record, mutual fund analysts part of the economy, and they also
during the same period, the ment would not like to see the had faced many for the Reliance for the US-focussed players, fund suggest that if retail investors carry a high concentration risk.
ACE Equity data shows. The rupee depreciating further in challenges between Pharma Fund, managers say that the sector will want to take exposure to these The only sector fund that has a
outperformance of IT stocks the near future. Under the cir- 2015 and 2017. There which is the best continue to perform well. “The funds, they should only do it larger contribution to the
comes on the back of a sliding cumstances, future gains on were regulatory issues for performing pharma fund with valuations of the pharma through an advisor. “The entry economy is banking. “Banking is
rupee, which has depreciated account of rupee depreciation companies focussed on 27.96 per cent returns in the past companies are not high yet. They and exit into these funds need to also broad-based with public
12 per cent thus far in CY18 are to an extent capped. Thus, international markets and also year. are in line with the broader be timed — not an easy task for a sector banks, private banks and
and is the worst-performing the prospect of further rupee there was an impact from Things are further improving markets. We may see earnings retail investor with limited non-banking finance companies
currency in Asia. depreciation should not be emerging market currency for companies focussed on the US. recovery driven by currency resources. Unless there’s and domestically driven,” says
“If we incorporate change the reason for holding back depreciation. But for one year, Many large generic US players are weakness, stabilising US market professional guidance, small Belapurkar.
in currency assumption of to HCL Technologies shares.” things have started improving. moving out of certain drugs, and growing domestic market,” investors can avoid taking

COMMODITIES1
>

> PRICE CARD

Another dose of sweetener Agro-chem firms bet
on higher rabi sowing
for sugar mills on the anvil
As on Sep 17 International Domestic
------------------------------------------------------------------------------ ------------------------------------------------------------------------------

Price %Chg# Price %Chg#

METALS ($/tonne) ON FERTILE GROUND

Aluminium 2,015.5 -10.0 2,275.5 -12.1 Consolidated figures in ~ billion
Net sales
Copper 5,946.5 -16.7 6,592.2 -13.1
MSP may be raised by ~4-5/kg; package for cooperatives under consideration Comnay / Year FY17 FY18 FY19E FY20E FY21E
Nickel 12,515.0 -18.0 12,963.7 -18.4 UPL 163.12 173.78 194.39 357.35 390.20
Lead 2,050.0 -15.7 2,206.6 -14.2 SANJEEB MUKHERJEE said a formal decision regarding PI Inds. 22.77 22.77 25.16 28.21 31.52
New Delhi, 17 September the proposals could be consid-
Tin 19,150.0 -8.4 19,624.9 -8.3 Rallis India 16.36 17.75 19.89 22.46 25.24
ered soon.

A
fter last week’s incentives However, how much impact a Dhanuka Agritech* 8.83 9.63 10.91 12.29 13.73
Zinc 2,327.5 -27.0 2,882.4 -16.9
package which saw ethanol higher base could have on the retail Insecticides India* 9.94 10.73 11.80 12.88 13.97
Gold($/ounce) 1,198.8* -6.3 1,312.6 -7.7 prices being raised, yet price and whether government *Standalone; E: Estimates, compiled by BS Research Bureau Source: HDFC Securities

Silver($/ounce) 14.2* -14.4 15.7 -17.1 another dose of sops are on the bites the bullet ahead of the big fes-
cards for sugar mills. tival season, when consumption of DILIP KUMAR JHA mated at 144.4 million tonnes
ENERGY The package being considered sugar goes up, remains to be seen. Mumbai, 17 September (mt) for 2017-18, from 136.78
include raising the minimum sell- Even if retail prices go up mt the previous year.
CrudeOil($/bbl) 78.4* 8.1 76.9 3.3
ing price (MSP) of sugar by mills to reflecting a rise in MSP, they will be With ample water in reser- Kharif sowing this year
NaturalGas($/mmBtu) 2.8* -7.6 2.8 -6.8 ~34 and loan restructuring or sim- lower than the prevailing ones a voirs, agri-chemical compa- was also more, marginally so,
ilar incentives for mills in the coop- year ago. nies are betting on a sales than last year. The estimate
AGRI COMMODITIES ($/tonne) erative sector. Industry players have been boost during the coming rabi as of end-August was 104.17
Wheat 227.2 14.0 282.6 6.8 Mills have been asking for rais- demanding that the Centre imme- season, following a sharp million hectares, about 0.2 per
ing the MSP to ~37 and earlier, the HOW THE STOCKS MOVED diately raise the MSP of sugar by at recovery in kharif sowing. cent more than a year before.
Maize 206.7* 7.7 184.0 10.6 government of UP, the largest sug- least ~7 per kg and fix a mandatori- The cumulative storage in All this is reported to have
Price in ~
Sugar 335.8* -1.8 456.4 -7.5 ar producing state, had recom- Company Sep 12,’18 Sep 17,’18 % Change ly export quota of 7 million tonnes the country’s 91 major reser- raised the consumption of
mended a price of ~34 as MSP. in 2018-19 to absorb the surplus. voirs as of last Thursday was agricultural inputs, such as
Palmoil 562.5 -9.3 924.0 -11.1 Avadh Sugar 393.9 567.2 44.0
However, the government seems The surplus is poised to reach a 121.7 billion cubic seed, fertiliser and
to be settling for ~34-35 as MSP. The Dalmia Bharat 65.1 93.7 44.0 whopping 10 million tonnes ahead metres of water, The cumulative agro-chemicals.
Rubber 1,330.5* -11.6 1,782.5 -4.0
market price is prevailing closer to Dhampur Sugar 97.7 140.5 43.8 of the the new season, which starts nearly a third storage in the “This increase in
CoffeeRobusta 1,527.0* -10.5 1,958.4 -8.4 this level.A need was also felt for Dwarikesh Sugar 20.6 29.6 43.4 next month. higher than on country’s 91 major consumption is
Cotton 1,805.6 -9.7 1,830.2 -7.9 supporting cooperatives. Bajaj Hindusthan 7.2 10.2 42.7 The increase in MSP will take the same day last reservoirs as of last good news for the
These measures will have a side care of their financial requirements year. This means Thursday was 121.7 agro-chemical
* As on Sep 17, 1800 hrs IST, # Change Over 3 Months
effect in the form of a rise in open
Sh.Renuka Sugar 12.8 17.8 39.2 and they won’t need any addition- there would be billion cubic industry. For one,
Conversion rate 1 USD = 72.5 & 1 Ounce = 31.1032316 grams.
market price of sugar in the whole- Triven.Engg.Ind. 42.6 54.2 27.4 al subsidy from the government. adequate soil metres of water, it indicates more
Notes:
1) International metals, Indian basket crude, Malaysia Palm oil, sale market as well as for con- Balrampur Chini 77.9 95.8 23.0 Sugar export is still unviable and moisture before nearly a third awareness among
Wheat LIFFE and Coffee Karnataka robusta pertains to sumers. Bannari Amm.Sug. 1,503.2 1,789.5 19.0 the industry had also asked for rabi sowing, and higher than on the farmers on judi-
previous days price. However, the idea is to support higher incentives for exports which both plating and same day last year cious use. The
2) International metal are LME Spot prices and domestic metal EID Parry 214.1 236.5 10.5
are Mumbai local spot prices except for Steel. the sugar industry in times of suc- can help reduce the surplus. output are recent hike in MSP
3) International Crude oil is Brent crude and Domestic Crude oil Filtered on top 10 by market cap, Compiled by BS Research Bureau Source:Capitaline, Exchange
is Indian basket.
cessive years of excess production However, for that, the government expected to be higher. (crop support prices) has been
4) International Natural gas is Nymex near month future & and help clear farmers’ cane dues. has to bear the burden of subsidy. If “Crop damage incidence instrumental in triggering the
domestic natural gas is MCX near month futures. The government already sugar companies share price sky- sation have increased around 40 the MSP is raised, mills will get the like white-fly attack have also rise — we need to constantly
5) International Wheat, White sugar & Coffee Robusta are LIFF E
future prices of near month contract. announced a package for sugar rocket in the last seven days. In one per cent in a week. Increase in MSP required support and the burden not occurred so far this year,” educate them about the right
6) International Maize is MATIF near month future, Rubber is
Tokyo-TOCOM near month future and Palm oil is Malaysia FOB mills in early June when the gov- week, sugar mills’ share price com- is a direct increase in factory price will be borne by consumers. said M K Dhanuka, managing type and quantity to use,” said
spot price. ernment announced the creation posite index prepared by Business of mills and recovery will increase “Somebody has to pay – either director, Dhanuka Agritech. Rajesh Aggarwal, managing
7) Domestic Wheat & Maize are NCDEX future prices of near
month contract, Palm oil & Rubber are NCDEX spot prices. of 3 million tonnes of buffer stock standard research bureau near to a level of their cost of pro- the government does it through “Rabi would be better this director, Insecticides India.
8) Domestic Coffee is Karnataka robusta and Sugar is M30 of sugar for a year. It introduced increased 27.5 per cent compared to duction. direct subsidy or consumers pay year as compared to last year,” “We believe recovery in the
Mumbai local spot price.
9) International cotton is Cotton no.2-NYBOT near month future MSP of ~29 per kg below which a 0.35 per cent decline in Sensex. Increase in MSP is also expect- by way of higher retail price – said Madan Sabnavis, chief agro-chemical market is in the
& domestic cotton is MCX Future prices near month futures. mills cannot sell. Share prices of top 10 big sugar ed to indirectly facilitate quicker which will still be lower than last economist at CARE Ratings. offing,” says Archit Joshi, ana-
Source: Bloomberg Compiled by BS Research Bureau
Last week’s package has helped companies from market capitali- export of surplus sugar. Officials year,” a senior industry official said. Rabi grain output was esti- lyst with HDFC Securities.
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official
14 WORLD
>
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 1

IN BRIEF
JLR to cut output at UK car plant
EM rout nearing a turning point: Templeton
after warnings on Brexit, diesel
BLOOMBERG
Sydney, 17 September
DOLLAR CRUNCH managers are after the greenback has
gained more than 5 per cent since Tariff threat rattles
Emerging marketcurrencies slumped as the greenbackclimbed this year
Britain's biggest carmaker Jaguar Land Rover said it will go down Franklin Templeton Investments
mid-April.
JPMorgan Asset Management and
emerging stocks
to a three-day week at its Castle Bromwich plant in central says the rout in emerging markets Man Group are among those expect- Emerging equities fell over one per cent
England just days after its boss warned about the impact of Brexit may be nearing a bottom though ing further strength. Others such as on Monday in the wake of reports that
and diesel policy on manufacturing. The Castle Bromwich facility reckons there are still countries like DoubleLine Capital’s Jeffrey the US was about to announce a new
will operate a three-day week from October until the beginning the Philippines that will suffer. Gundlach see a decline by year’s end. round of tariffs on some $200 billion
of December in a move which will affect around 1,000 staff but Given the uncertainty, the money The greenback’s resurgence has worth of Chinese imports, while Turkey's
avoid job cuts. "In light of the continuing headwinds impacting manager is keeping a net neutral dol- prompted President Donald Trump lira once again led currency losses.
the car industry, we are making some temporary adjustments to lar position, while making trades to previously jawbone the currency. MSCI's benchmark emerging stocks
our production schedules at Castle Bromwich,” the firm said in a including shorting the Philippine That’s not deterring speculative index was down 1.2 per cent as investors
statement. Last week, the firm's boss Ralf Speth warned that the peso, as well as betting the Aussie will EMCI: Emerging market currency Index Source: Bloomberg Compiled by BS Research Bureau investors such as hedge funds that are braced for more measures in the
wrong Brexit deal could cost tens of thousands of car jobs and decline against the New Zealand dol- still betting on further dollar gains, ongoing US-Sino trade war, with the
risks production at the firm. REUTERS< lar, said Chris Siniakov, managing data from the Commodity Futures Wall StreetJournal reporting that Beijing
director of fixed income for Australia Sydney. “We are preferring to choose Treasury yields and US tax cuts, along- Trading Commission show. may reject an offer of new trade talks if
at Templeton. where there’s relative value and who side angst over the escalation of trade It could go either way, Siniakov the US moves ahead with its latest tariff
“We are trying not to make the big we expect to be winners and losers in restrictions between the US and said. The dollar might appreciate round. The new tariffs, reported to be
Saudi wealth fund to Samsung VC to visit dollar decision at the moment the emerging market complex.” China. Still, Templeton’s willingness more if investors continue to seek set at 10 per cent rather than the
invest $1 billion in Pyongyang for because we feel like it could pop either The rout in emerging-market to sit out a directional bet on the dol- haven assets amid worsening US and 25 per cent will cover internet tech
Tesla's rival Lucid Moon-Kim summit way,” Siniakov said in an interview in assets this year was spurred by higher lar highlights how divided money China trade relations. products and other electronics. REUTERS

Saudi Arabia’s sovereign wealth Jay Y Lee, vice chairman of

fund signed an agreement to Samsung Electronics, will join

Trump praises tariffs as Richest economies

invest more than $1 billion in President Moon Jae-in’s
aspiring electric-car maker Lucid delegation to Pyongyang this
Motors, months after building a week in a further sign of
stake in Elon Musk-led Tesla. The
deal clinches crucial funding
thawing relations between the
South Korean government and
enjoy biggest pay
China talks hang fire rise in a decade
needed for Lucid to start making its biggest company. Lee is
its first model, the Air sedan, in among 17 business leaders
2020. The Silicon Valley-based accompanying Moon to a
startup is years behind schedule
in building a plant in Arizona
summit with North Korea’s Kim
Jong Un. SK Chairman Chey Tae-
BLOOMBERG
Hong Kong/Washington,
UP AROUND
and starting production of the won and the head of LG, Koo BLOOMBERG 17 September THE WORLD
car that it said will start at
$60,00. BLOOMBERG<
Kwang-mo, will also join the
delegation. REUTERS<
Hong Kong, 17 September Chinese stocks close at lowest level in nearly 4 years Workers in the world’s richest
Wages are rising in the US,
Europe and Japan
China’s sinking stock market

U
s President Donald countries are getting their
Trump said tariffs reached an unwelcome biggest pay bump in a decade,
have bolstered the US milestone, with the Shanghai a step toward solving a labor
Amazon probes Ferrari to put special bargaining position while cost Composite Index closing at the market puzzle that’s unnerv-
workers leaking edition supercar at increases to consumers have lowest level since 2014, before ing central bankers.
data for bribes heart of 5-year plan been negligible and warned of a stock boom that turned into As shrinking unemploy-
more levies as prospective a $5 trillion bust. The Shanghai ment in the US, Japan and
Amazon.com said on Monday it Ferrari NV is set to unveil a trade talks with China gauge dropped 1.1 per cent to euro zone finally forces com-
was investigating suspected special edition supercar that will appeared in doubt. 2,651.79 at the close. Back panies to lift wages to retain
internal leaks of confidential form an integral part of CEO Louis “Tariffs have put the US in then, officials had just and attract staff, JPMorgan
information by its employees for Camilleri’s highly-anticipated a very strong bargaining posi- introduced and then hastily Chase & Co reckons pay
bribes to remove fake reviews five-year strategy plan. The so- tion, with Billions of Dollars, scrapped a disastrous circuit- growth in advanced
and other seller scams from its called ‘Icona’ project, hinted at and Jobs, flowing into our breaker program as they economies hit 2.5 per cent in
website. Amazon employees are to customers last month in an Country - and yet cost increas- grappled with one of the the second quarter, the most
offering internal data and other invitation, will broaden Ferrari’s es have thus far been almost market’s worst-ever routs. The since the eve of 2009’s world-
classified information through offering of limited edition unnoticeable,” Trump said on losses show that sentiment wide recession.
intermediaries, to independent supercars, a range aimed at Twitter Monday. “If countries toward Chinese equities The bank predicts wages
merchants selling their products boosting profit margins, said the will not make fair deals with US President Donald Trump tweeted that if countries don’t hasn’t recovered from the will accelerate to near 3 per
on the site to help them boost people, who asked not to be us, they will be ‘Tariffed!’” make fair deals with US, they will be ‘tariffed’ PHOTO: REUTERS 2015-16 crash. BLOOMBERG cent next year.
sales in return for payments, the named because details about Trump’s tweet came as Fatter wallets should sup-
Wall StreetJournalreported on the car aren’t yet public. CNBC reported a senior port global economic growth
Sunday. REUTERS< BLOOMBERG< administration official said
the US is ready to go with
$200 billion in additional tar-
said the import barriers may
raise costs, lower earnings or
force employers to dismiss
A new life for US steel: already enjoying its best
upswing since 2011, while
encouraging central banks

Coca-Cola in talks to develop

iffs on Chinese goods and
may announce them as soon
workers or move operations
offshore. Trump pats own back such as the Federal Reserve
to keep tightening monetary
Source Bloomberg
Compiled by BS Research Bureau

as Monday. Beijing will be “Our Steel Industry is the policy before inflation takes
cannabis-infused drinks forced to retaliate if US rolls talk of the World. It has been US President Donald Trump World. It has been given new hold. It may prove less wel- whether the historical rela-
out new tariffs against the given new life, and is thriving. claimed Monday that America’s life, and is thriving. Billions of come news for stock and tionship between tightening
Coca-Cola said on Monday it was closely watching the growing country, Chinese Foreign Billions of Dollars is being steel industry has revived and dollars is being spent on new bond prices. “It’s a good labor markets and rising wages
marijuana-infused drinks market, responding to a media report Ministry spokesman Geng spent on new plants all around attributed this to his economic plants all around the country!” thing: you’re more confident had broken down even as
that the world's largest beverage maker was in talks with Canada's Shuang was cited by the country!” Trump said in policy and decisions. American The US President had in the sustainability of your unemployment in developed
Aurora Cannabis. The discussions over a possible product tie-up, Huanqiu.com as saying. another tweet on Monday. Iron and Steel Institute, in its imposed steep tariffs on steel expansion, you’re more con- economies fell to its lowest
reported by Canadian financial channel could open a new front in Trump also touted the ben- Conflicting messages com- latest report, said that the US’ and aluminum imports from fident that you’re going to get since 1980 by JPMorgan’s esti-
Coke's battle to overcome sluggish demand for its sugar-heavy efits his 25 per cent tariffs on ing from the Trump adminis- steel mills operated above 80 Canada, Mexico and the inflation moving up,” said mation.
sodas by diversifying into coffee and health-focused drinks. The steel imports have had so far tration on tariffs amid the US per cent of their capacity last European Union on national Bruce Kasman, chief econo- Reasons to doubt the reli-
report said there was no guarantee that talks between the firms on US industry, as some com- trade war with China could week. security grounds. mist at JPMorgan in New ability of the Phillips Curve,
would be successful but Aurora shares responded by soaring 22 per panies have deployed promo- sink prospective negotiations Its CEO Thomas J Gibson Gibson wrote in USA Today York. “It is a signal that we’re an economic model created
cent. Coke stock gained slightly on a New York market weakened by tional campaigns in support of between the two nations said that tariffs on foreign steel that “The president’s actions are normalising economic in the 1960s, include the
concerns over trade tariffs. The marijuana industry has been those measures targeting vot- before they begin, damaging have been saving US jobs. working. Steel imports fell 34 cycles.” assimilation of China and
attracting interest from a handful of big corporate names as Canada ers in iron- and steel-produc- prospects for a resolution to Trump said in a tweet: “Our per cent from April to June, If sustained, the pickup in India into the global work-
and a wave of US states move to legalise use of the drug. REUTERS< ing states. Opponents have the growing dispute. steel industry is the talk of the prompting job growth.” PTI pay will settle a debate over force.

STOCKS
IN THE
> STOCK
> Dhampur Sugar Mills > EID Parry (India) > Avadh Sugar & Energy

NEWS Top gainer among the

Sugar stocks
Trading volume jumps
fifteen times
Close at upper circuit
filter of 20 per cent OF THE DAY
JSW Steel: Stock hits new
~117.05 PREVIOUS CLOSE ~219.95 PREVIOUS CLOSE ~472.65 PREVIOUS CLOSE life-time high at ~416.30,
~140.45 CLOSE ~236.45 CLOSE ~567.15 CLOSE up 82 per cent from
S 20.00% UP S 7.50% UP S 20.00% UP 52-week low
> z .

NIFTY 50 ADVANCES/DECLINE
Company Close (~) % Wt PE Company Close (~) % Wt PE
F&0 SNAPSHOT DAY’S TOP GAINERS DAY’S TOP LOSERS
17 Sep ’18 Chg (%) Con Std 17 Sep ’18 Chg (%) Con Std Futures Cash Premium Futures Cash Discount
price price (%) price price (%) Company Day’s high Close % chg* 3mth high 52 wk high Company Day’s low Close % chg* 3mth low 52 wk low
Adani Ports 380.8 0.2 0.6 21.8 34.8 IOC 156.6 0.8 1.4 6.7 6.4
Asian Paints 1308.7 -1.9 1.2 56.3 61.6 ITC 302.0 -1.7 7.7 32.1 32.2 MOST BULLISH MOST BEARISH Avanti Feeds 476.0 464.6 13.1 625.3 1000.0 Bata India 989.1 995.8 -4.3 780.1 656.8
Axis Bank 626.0 -1.6 2.5 352.8 - Kotak Mah Bank 1230.4 -0.7 3.4 36.5 55.9 Balram Chini 99.0 95.8 8.1 99.0 179.0 Future Retail 551.0 553.6 -3.8 453.1 453.1
JP Associat 10.3 10.2 1.0 Hind Zinc 294.2 298.1 -1.3
Bajaj Auto 2860.7 -0.6 0.9 18.7 19.4 MRPL 80.9 78.6 6.3 92.0 146.3 Manapp Finance 83.3 85.0 -3.8 83.3 83.3
L&T 1344.8 -1.0 3.9 22.3 32.8 Infibeam Inc 240.8 239.0 0.7 BEML 766.5 770.9 -0.6
Bajaj Fin 2604.6 -2.5 1.4 56.3 52.3 Oracle Fin 4655.0 4503.1 6.0 4655.0 4655.0 ICICI Prud Life 359.7 364.5 -3.7 347.3 347.3
Lupin 950.2 -1.9 0.5 420.5 30.3 Adani Enter 153.1 152.1 0.7 ONGC 171.1 171.7 -0.3
Bajaj Finsrv 6550.0 -2.4 0.9 30.5 726.2 Indiab Real 152.3 150.3 4.6 173.0 263.6 Delta Corp 258.3 259.9 -3.6 198.1 182.9
Mah & Mah 950.9 -0.1 2.0 14.9 24.5 HCC 15.4 15.3 0.7 Power Grid 201.4 201.9 -0.2
Bharti Airtel 382.1 -0.4 1.1 74.7 - Can Fin Home 328.4 323.0 4.4 377.7 578.4 L&T Finance Hol 155.3 156.1 -3.1 140.6 140.6
Maruti Suzuki 8537.8 -1.0 2.4 32.7 31.7 Oil India 207.5 206.2 0.7 PC Jeweller 83.5 83.7 -0.2
Bharti Infratel 266.9 -2.8 0.5 20.0 19.5 Chennai Petr 307.2 302.6 4.4 344.8 477.1 Cummins (I) 736.1 738.1 -3.0 611.8 611.8
NTPC 172.3 -1.5 1.1 13.5 13.8
BPCL 364.0 2.7 0.8 8.1 8.3 Enginers Ind 138.6 136.1 3.1 139.5 206.2 Ashok Leyland 127.2 127.5 -3.0 105.2 105.2
ONGC 171.7 -0.5 1.5 8.5 9.9 BSE NSE
Cipla
Coal India
664.9
275.0
-0.2
-0.9
0.7
0.8
37.3 33.5
20.2 18.3
Power Grid 201.9 0.9 1.0 12.9 12.5 Index Stock Index Stock PUT-CALL RATIO Syndicate Bank
Vakrangee
40.1
38.8
39.4
37.4
3.1
2.9
49.3
73.3
95.7
515.4
Max Fin Sre
HDFC Std Life
474.0
409.7
474.6
412.9
-3.0
-2.9
403.7
409.7
403.7
307.7
Reliance Ind 1225.9 -2.2 8.8 21.3 22.7 FUTURE Vodafone Idea 48.5 47.7 2.7 63.8 118.0 Sun Pharma 643.2 646.2 -2.8 530.0 434.8
Dr Reddys 2568.5 -0.5 0.7 31.4 47.2 (Open Interest in Mn) Put Call PC Ratio
SBI 285.3 -1.8 2.3 - - Contracts - - 223569 768513 BPCL 367.0 364.3 2.6 428.8 550.0 Godfrey Ph 958.5 964.6 -2.7 671.0 671.0
Eicher Motor 29663.7 1.0 0.8 39.0 44.7 Market 537.3 1273.0 0.4
Sun Pharma 646.2 -2.9 1.5 38.4 147.2 Open Int.(000) - - 30249 5352605 Torrent Phar 1799.0 1782.8 2.6 1872.0 1872.0 Amara Raja 774.0 783.6 -2.7 714.0 665.5
GAIL 372.6 0.7 0.8 17.5 17.3
Tata Motors 260.3 -2.4 1.0 18.7 130.4 Shares(In Mn) - - 13.7 1915.5 Top 5 PC Ratio Bottom 5 PC Ratio Divis Lab 1401.9 1363.8 2.6 1401.9 1401.9 Piramal Entp 2950.0 2961.1 -2.6 2404.5 2279.1
Grasim Ind 1065.2 0.1 0.9 18.3 33.9
Tata Steel 616.4 0.2 1.0 3.7 11.6 Value(~ Mn) - - 210570 544995
HCL Techno 1078.4 0.7 1.3 16.8 19.8 Oracle Fin 1.9 Page Inds 0.0
HDFC 1878.9 -2.4 6.7 19.6 24.8 TCS 2074.2 0.4 4.7 29.1 30.9 OPTIONS
Muthoot Finance 1.0 Nestle India 0.0 * Ranked on the basis of percentage gain/loss on previous close
HDFC Bank 1992.2 -1.8 9.0 29.2 29.7 Tech Mahindra 767.6 0.9 1.0 19.3 18.3 Contracts - - 6513971 725005
Titan Company 823.5 -2.3 0.7 66.3 58.7 DLF 0.9 Berge Paint 0.1
Hero MotoCorp
Hindalco
3127.9
241.4
-1.8
-1.7
0.9
0.7
16.8 16.9
8.9 34.7 UltraTech 4103.5 -2.0 0.9 57.6 58.1
Open Int.(000)
Shares(In Mn)
-
-
-
-
123821 1686484
327.6 1520.5
Infibeam Inc 0.9 GSFC 0.1 MOST TRADED TOP M-CAP TRENDS
Adani Ports 0.8 Strides Arcb 0.2
HPCL 258.4 2.3 0.8 5.5 5.5 UPL 723.5 -1.8 0.6 17.8 60.7 Value(~ Mn) - - 6621869 568440 Value Volume Rank Company Mcap (~ billion) Company % change Company % change
HUL 1605.5 -1.5 2.4 66.5 63.4 Vedanta 234.9 -0.3 0.9 6.3 11.9 BSE+NSE BSE+NSE
1Ç TCS 7931.3 BS200 DOWN 7 DAYS
Wipro 329.9 -0.1 0.8 18.6 19.6 (~ million) (Mn shrs)
ICICI Bank
Indiabulls Hous
325.7
1200.9
-0.8
-2.1
4.4
0.8
27.2 45.5
12.5 13.5 Yes Bank 318.6 -1.4 1.2 17.4 16.3 ACTIVE CALLS ACTIVE PUTS Balram Chini 10760.9 112.2
2È Reliance Ind 7772.5
UP 7 DAYS Tinna Trade -40.3
3 HDFC Bank 5409.4
IndusInd Bank 1877.1 0.2 2.0 - 29.6 Zee Enter 475.3 0.7 0.6 31.1 26.8 DOWN Premier Syn -30.1
Infosys 726.0 -1.1 5.8 19.6 19.5 Nifty 50 11377.8 È-1.2 100.0 21.1 23.7 MARKET OVERVIEW Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Reliance Ind 8783.7 7.1 4
5
ITC
HUL
3692.6
3472.1
HDFC Std Life -9.5 Alfa ICA -24.2
Oracle Fin 7461.8 1.7
INDEX PE Shrs Trds 1 Yr Index Index 6 HDFC 3178.9 Supreme Infr -21.4
AGGREGATES Yes Bank 6286.9 19.7 UP 3 DAYS
S&P BSE SENSEX STOCKS Sensex
C/S
22.1/25.2 9.1
Mn ‘000
139
Adv Dec
5 26
return
16.5
Nifty
Nifty Bank
27/09/18
19/09/18
11500
27000
19.0
18.0
4.0
0.9
26.8
101.3
Nifty
Nifty Bank
27/09/18
19/09/18
11400
26800
15.0
12.6
3.7
0.5
-9.1
43.9 Aurob Pharma 6150.8 7.7
7 Infosys 3173.8
Balram Chini 25.6 Jindal World -14.5
8 Maruti Suzuki 2577.8 Bom.Cycle -13.2
Adani Ports 381.5 0.4 0.7 21.9 34.8 Mah & Mah 947.2 -0.3 2.4 14.8 24.4 Nifty 50 21.1/23.7 207.6 3210 14 36 12.8 Nifty 27/09/18 11600 13.1 4.0 22.1 Nifty Bank 19/09/18 26700 12.1 0.4 36.8 Divis Lab 5889.2 4.3 Enginers Ind 10.0
9 SBI 2548.9
Asian Paints 1305.3 -1.9 1.5 56.2 61.5 Maruti Suzuki 8533.5 -1.2 2.8 32.7 31.7 Nifty Bank 19/09/18 27200 12.3 0.9 122.9 Nifty 27/09/18 11300 11.5 3.2 8.9 SBI 4893.7 17.1 Jindal Steel 9.7 Swaraj Auto -13.2
10 Kotak Mah Bank 2344.9
Axis Bank 626.1 -1.6 3.0 352.8 - NTPC 172.6 -1.4 1.4 13.6 13.8 Cash Derivatives Nifty Bank 19/09/18 27100 12.2 0.6 232.3 Nifty Bank 19/09/18 26500 11.4 0.8 48.8 Tata Steel 4824.8 7.8 Divis Lab 9.5 UP 3 DAYS
TURNOVER BSE NSE BSE NSE 11 ONGC 2204.1
Bajaj Auto 2857.1 -0.7 1.1 18.7 19.4 ONGC 171.8 -0.7 1.8 8.5 9.9 Stock Stock Tata Global 9.1
HDFC Bank 4820.0 2.4 12 ICICI Bank 2094.0 Magadh Sugar 57.8
Bharti Airtel 382.4 -0.3 1.3 74.7 - Power Grid 201.5 0.7 1.2 12.9 12.5 Value(In ~ Min) 30310 291170 - 794587 Suzlon Energy 27/09/18 8 43.9 16.7 17.4 Suzlon Energy 27/09/18 8 8.7 5.6 18.1 Chennai Petr 8.1
Sun Pharma 4539.1 6.9 13 L&T 1884.6 Dhamp Sugar 57.5
Coal India 274.8 -0.9 0.9 20.2 18.3 Reliance Ind 1226.3 -2.1 10.5 21.3 22.7 Shares(In Mn) 212.7 1468.7 - 3777.4 Suzlon Energy 27/09/18 10 29.6 16.0 12.3 Reliance Ind 27/09/18 1200 7.0 1.6 -2.1 Power Grid 7.8
Axis Bank 4483.1 7.2 14 Coal India 1705.8 Avadh Sugar 53.3
HDFC 1878.6 -2.5 8.0 19.6 24.8 SBI 285.6 -1.7 2.7 - - Trades(000) 1470 10988 - 4416 GMR Infra 27/09/18 20 21.6 15.1 8.1 SBI 27/09/18 280 7.0 3.1 -1.5
HDFC 4198.8 2.2 15 Axis Bank 1608.2 DOWN
HDFC Bank 1992.5 -1.8 10.7 29.2 29.7 Sun Pharma 646.2 -2.8 1.8 38.4 147.2 Reliance Com 27/09/18 18 21.5 8.0 3.6 SAIL 27/09/18 75 6.7 2.9 4.3 Dwarikes Sug 51.9
MARKET-CAP (~ billion) 16 Sun Pharma 1550.3 Coal India -2.8
Hero MotoCorp 3132.2 -1.7 1.0 16.8 16.9 Tata Mot-DVR 141.0 -2.2 0.2 - - Traded Total SAIL 27/09/18 80 17.8 6.7 8.1 Reliance Ind 27/09/18 1220 6.7 1.4 5.3 Infosys 4179.7 5.7 Uttam Sugar 50.9
17Ç Bharti Airtel 1528.6 KPIT Technologi -1.4
HUL 1604.1 -1.6 2.9 66.4 63.3 Tata Motors 260.2 -2.3 1.2 18.6 130.4 BSE 154,697 156,272 Bajaj Fin 4002.3 1.5 Dalmia Sugar 48.8
18Ç IOC 1519.9 Mothersons S -1.3
ICICI Bank 325.5 -0.8 5.3 27.2 45.4 Tata Steel 615.7 0.0 1.2 3.7 11.6 NSE 153,048 154,301 Jindal Steel 3990.8 16.8 19È Bajaj Fin 1506.1 SVP Housing 48.0
TCS 2071.6 0.4 5.6 29.1 30.9
IndusInd Bank
Infosys
1877.3
726.6
0.2
-1.2
2.4
6.9
-
19.6
29.7
19.5 Vedanta 234.7 -0.4 1.1 6.3 11.9
Derivatives 115,970 115,970 SPURT IN VOLUMES Maruti Suzuki
BPCL
3912.8
3396.8
0.5
9.4
20Ç HCL Techno 1501.4 OTHERS DOWN 3 DAYS
21È Wipro 1489.1
ITC
Kotak Mah Bank
301.9
1229.9
-1.6
-0.6
9.3
4.1
32.1
36.5
32.2
55.9
Wipro
Yes Bank
329.2 -0.3
318.6 -1.4
1.0
1.5
18.6 19.5
17.4 16.3
TRADING ACTIVITY Company Days
Volume
2-week Avg
Volume
Change Close
price
*Price
%chg
Vedanta 3241.0 13.8 22 NTPC 1423.2 UP 7 DAYS
Indokem 70.9
IRIS Bus Serv
Veljan Denis
-18.8
-16.0
(~ million) FIIs MF Dewan Hsg 3189.4 5.2 23Ç Hind Zinc 1261.7
L&T 1344.3 -1.1 4.7 22.3 32.8 BSE SENSEX 37585.5 È-1.3 100.0 22.1 25.2 Sakthi Sugar 64.1 Victory Paper -14.1
Equity Debt Equity Debt Zodiac Cloth 400163.0 4832.7 8180.4 176.0 19.7 24È Asian Paints 1252.0
Con = Consolidated; Std = Standalone Net Net Net Net JSW Steel 2824.8 6.9 Cosmo Ferr 63.7
MPS Ltd 305089.0 6445.2 4633.6 548.1 0.9 25 Mah & Mah 1177.6 Texmo Pipes -14.1
Bank of Baroda 2684.4 20.1 Sadhana Ntro 40.7
On 14 Sep 6798 -4681 - - Oracle Fin 1686309.0 63080.4 2573.3 4503.0 6.0 26Ç IndusInd Bank 1128.3 Mro-Tek Realty -14.0
Tata Motors 2659.5 10.1 Goldstone Tc 39.3
WORLD INDICES On 12 Sep
On 11 Sep
-10769
-13954
4042
893
11247
9259
8448
-9289
Sunstar Realty 386487.0 18176.0 2026.4 0.3 -3.1
Lupin 2647.8 2.8
27È
28Ç
UltraTech
Power Grid
1127.6
1054.2 Roxy Exports 38.8 Rajkumar Frg -13.5
Ponni Sugar 200986.0 9948.1 1920.3 168.9 13.5 Scan Steels 38.8 Nitco -13.2
Indices Close % Chg* Indices Close % Chg* On 10 Sep -9621 -3381 -760 -13454 ICICI Bank 2508.5 7.7 29È Bajaj Finsrv 1043.0
Ent Network 547207.0 30047.1 1721.2 638.5 1.3
On 07 Sep 1378 -6163 5272 24341 Hindalco 2478.8 10.2 30Ç JSW Steel 993.6 (T+2) cycleStocks which rose/fell continuously
Americas (Sep 14,18) Asia/Pacific (Sep 17,18) Dynmic Prdct 260470.0 14589.3 1685.3 170.2 20.0
Sep till date -7378 -52168 39670 197780
S&P/ TSX Composite 16013.5 0.1 Kuala Lumpur Comp (Sep 14) 1803.8 0.6 EID Parry 4674975.0 270594.7 1627.7 236.4 7.5
2018 till date -61777 -434669 805697 1919963
Comm Eng 363680.0 21267.3 1610.0 14.8 19.5
Dow Jones
Nasdaq Composite
26154.7
8010.0
0.0
-0.1
Stock Exchange of Thai
Taiwan Taiex
1718.4
10828.6
-0.2
-0.4 FIIS IN DERIVATIVES KCP Sugar 4887529.0 320222.1 1426.3 26.8 17.6 BOARD MEETINGS INTRA-DAY
Europe/Africa (Sep 14,18) Straits Times 3141.4 -0.6 (~million) Index Stock Index Index Stock Note : A & B group stocks with the day’s trading volumes at over 100,000 shares, * % change over previous close SEPTEMBER 18 ing the course of the the proposal for the sale
NET Net Fut OI Opt OI OI Autoriders:To approve the Meeting. of Investments of the
IBEX 35 9400.0 0.4 Kospi 2303.0 -0.7
FTSE 100 7285.9 -0.3 Shanghai Se Comp 2651.8 -1.1 On 14 Sep
On 12 Sep
16605
4284
3058
2924
0.3
0.3
1.0
1.0
1.3
1.3
52 WEEK NEW HIGHS/LOWS appointment of Ms. Sneha
Sarang as the Company
Mishtann Fo: To
Reconstitute the following
Company in Beneficent
Knowledge Parks And
CAC 40 5339.2 -0.3 Jakarta Composite 5824.3 -1.8 Company Price Company Price Company Price Company Price Secretary and Compliance Committee : a.Audit Properties Ltd;To consider
On 11 Sep -8962 -3488 0.3 1.0 1.3
DAX 12069.1 -0.5 Volatility (Sep 14,18) On 10 Sep 8854 -8836 0.3 0.9 1.3 Officer of the Committee b.Nomination and approve the Postal
HIGH *Apcotex Ind . . . . . . . . . 668.8 LOW Magma Fincrp . . . . . . . . 133.5
Asia/Pacific (Sep 17,18) CBOE S&P 500 12.7 4.9 On 07 Sep -2531 3380 0.3 0.9 1.3 Company;Any other mat- & Remuneration Ballot Notice;Any other
BS 200 Alembic Pharma . . . . . . 662.0 BS 200 JK Tyre Ind . . . . . . . . . . . . 115.2
Nikkei 225 (Sep 14) 23094.7 1.2 CBOE Dow Jones 12.9 -3.4 Sep till date 91062 -18857 - - - ter with the permission of Committee c.Share business with the permis-
*Oracle Fin . . . . . . . . . . 4655.0 *Most Shares ETF . . . . . 639.5 *Jet Airways . . . . . . . . . . 258.4 *Binny Mills . . . . . . . . . . 115.1
2018 till date 1043220 493514 - - - the Chair. Transfer & sion of chair.
Hang Seng 26932.9 -1.3 * Change over previous close *Divis Lab . . . . . . . . . . . 1401.9 *Kartik Inv . . . . . . . . . . . 613.0 Manapp Finance . . . . . . . 83.3 Gravita I . . . . . . . . . . . . . . 115.0
OI in number of contracts(million) Guj Borosil: to consider Shareholders’/Investor SEPTEMBER 19
*JSW Steel . . . . . . . . . . . 416.3 *Kanchi Karpoora . . . . . 609.2 Others Ashoka Build . . . . . . . . . 113.4
and approve appointment Grievance Committee Goenka Business: to con-
MAJOR INDICES S&P BSE SECTORAL INDICES
*Wipro . . . . . . . . . . . . . . . 335.9
*Infibeam Aven . . . . . . . 240.5
*Sonata Soft . . . . . . . . . . 415.5
*Tanfac Ind . . . . . . . . . . . 383.5
Victoria Mls . . . . . . . . . 2619.0
Johnson Cont . . . . . . . . 1686.0
Elnet Techno . . . . . . . . . . 109.1
*EPC Ind . . . . . . . . . . . . . 103.3
of Mr Milind Gurjar as d.Corporate Social sider and approve
Chief Executive Officer Responsibility Committee; Appointment of Mr. Yasin
Previous Close Open High Low Close Change % chng Others *Sportking India . . . . . . 346.3 Swaraj Engin . . . . . . . . 1631.0 Virat Ind . . . . . . . . . . . . . . . 98.0
and Key Managerial Any other business with Gori as an Additional
S&P BSE Sensex 38,090.6 38,027.8 38,027.8 37,548.9 37,585.5 -505.1 -1.3 Prev close Close % Chg *Bom.Oxygen . . . . . 22175.0 *Vimta Labs . . . . . . . . . . 339.5 Empire Ind . . . . . . . . . . 1570.0 AGC Networks . . . . . . . . . 90.7
Personnel of the the permission of chair. Director of the Company
S&P BSE Sensex 50 12,040.9 12,019.8 12,019.8 11,885.7 11,896.7 -144.2 -1.2 Auto 24,246.9 24,003.8 -1.0 *Monsanto I . . . . . . . . . 3358.0 *Taal Enter . . . . . . . . . . . 328.9 *DSP Blackrock L . . . . 1000.0 Dhabriya Poly . . . . . . . . . . 89.4
Company.on September Ritesh Prpty: To approval Sayaji Hotel: to consider
S&P BSE-100 11,805.5 11,789.4 11,789.4 11,660.4 11,671.0 -134.6 -1.1 Bankex 30,621.6 30,290.8 -1.1 *Morgantie Cr . . . . . . . 2258.2 *Lincoln Pha . . . . . . . . . . 314.0 *MAS Fin Ser . . . . . . . . . 538.1 Specia Rest . . . . . . . . . . . . 86.1
21, 2018. of Scheme of and approve Dear Sir,
S&P BSE-200 4,945.3 4,938.6 4,938.6 4,887.8 4,892.0 -53.4 -1.1 Cons. Durables 20,735.9 20,476.5 -1.3 *JL Morison . . . . . . . . . 2147.2 *Dalal Street . . . . . . . . . 270.1 Jindal World . . . . . . . . . . 390.1 Ganesh Hsg . . . . . . . . . . . . 85.0
KIOCL: to consider and Amalgamation amongst NOTICE is hereby given
S&P BSE-500 15,528.4 15,509.1 15,509.1 15,363.7 15,376.7 -151.8 -1.0 Cap. Goods 18,553.9 18,429.3 -0.7 *Excel Ind . . . . . . . . . . . 1907.0 *Garware Poly . . . . . . . . 269.9 Simplex Infr . . . . . . . . . . 375.0 Indsil Hydro . . . . . . . . . . . . 80.3 66 and other applicable ness that may deem neces- of Securities and Exchange
approve Buy-Back of the Ritesh Spinning Mills that the meeting of the
S&P BSE IPO 4,674.7 4,688.1 4,688.1 4,628.8 4,643.6 -31.0 -0.7 FMCG 12,068.1 11,923.0 -1.2 *Transpek Ind . . . . . . . 1730.0 *Universl Cab . . . . . . . . . 256.8 *S Chand & Co . . . . . . . . 300.0 *RCI Inds & Tech . . . . . . . 80.0 Provisions of the sary with the permission of Board of India (Listing
Healthcare 16,236.5 16,061.9 -1.1 fully Paid-up-Equity Limited, Ritesh Impex Board of Directors of the
S&P Dollex-30 4,356.7 - - - 4,261.8 -94.9 -2.2 *Sadhana Ntro . . . . . . 1300.3 *Grandeur Prod . . . . . . 229.9 Shiva Texya . . . . . . . . . . . 280.0 *Career Point . . . . . . . . . . 78.0 Companies Act, 2013. the chair. Obligations and Disclosure
Infra 208.5 208.7 0.1 Shares of the Company of Private Limited, H.B. Company is scheduled on
Nifty 50 11,515.2 11,465.0 11,465.0 11,366.9 11,377.8 -137.5 -1.2 *DSP Blackrock L . . . . 1000.0 *Sangal Paper . . . . . . . . 219.4 Shreyas Ship . . . . . . . . . 277.6 PBM Polytex . . . . . . . . . . . 76.1 Speciality P: To consider SEPTEMBER 20 Requirements) Regulations,
IT 15,746.7 15,726.1 -0.1 face value of Rs. 10/- Fibres Limited and Ritesh Wednesday, 19.09.2018
Nifty next50 30,022.3 29,901.9 29,920.5 29,641.3 29,769.9 -252.3 -0.8 *WPIL Ltd . . . . . . . . . . . . 987.0 *Permanent Mg . . . . . . 187.2 *Hind Mills . . . . . . . . . . . 217.0 *BGR Energy . . . . . . . . . . . 73.8 and approve the appoint- Genesis IBRC I: Meeting of 2015, we wish to inform
Metal 14,090.5 14,049.6 -0.3 each, including matters Properties and Industries for the approval of com-
Nifty 500 9,792.8 9,754.6 9,754.6 9,687.3 9,696.5 -96.3 -1.0 *ICICI Lombard . . . . . . . 936.0 *Generic Engg Co . . . . . 181.9 Aptech . . . . . . . . . . . . . . . 196.6 *Artemis Gl . . . . . . . . . . 72.5 ment of Internal Auditor of the Board of Directors you that a meeting of the
Oil & Gas 14,873.6 14,843.1 -0.2 related / incidental there- Limited; To consider any posite scheme of amalga-
India VIX 13.8 13.8 14.6 11.7 14.5 0.7 4.7 *Jenburkt Ph . . . . . . . . . 880.0 *Nyogin Finte . . . . . . . . . 164.6 PG Elect . . . . . . . . . . . . . . 147.2 *Ultracab (I) . . . . . . . . . . . 69.0 the Company;To consider Gufic Bios: to consider and Board of Directors of the
Power 2,108.4 2,111.2 0.1 to and any other matter other matters with the mation and arrangement
Nifty CPSE 2,313.4 2,306.3 2,321.1 2,291.3 2,311.7 -1.8 -0.1 *Acrysil . . . . . . . . . . . . . . 685.0 IOL Chem . . . . . . . . . . . . . 150.3 *Pokarna . . . . . . . . . . . . 141.0 Agri-Tech I . . . . . . . . . . . . . 68.7 and approve Resignation of approve Pursuant to the Company is scheduled to
PSU 7,669.6 7,650.2 -0.3 as the Board of the permission of the chair. under section 230 to 232
MCX SX 40 22,212.8 22,463.3 22,463.3 22,203.3 22,203.3 -9.6 0.0 Realty 2,067.3 2,095.3 1.4 * Indicates that the market price of these companies reached two-year highs/lows. Directors may decide dur- Vyapar Inds: To consider read with section 52 and Director;Any other busi- provisions of Regulation 30 be held onThursday,
https://t.me/pdf4exams
16 ECONOMY
>
‘SME loans: Pvt banks, NBFCs eat into PSBs’ market share’
PRESS TRUST OF INDIA
Mumbai, 17 September
State-run banks’ market share
in loans to the micro, small and
medium enterprises (MSMEs), a
major thrust area for the gov-
ernment, has dipped on aggres-
sive play by private sector banks
and NBFCs, a report said on
Monday.
The share of the 21 public
sector banks (PSBs) has fallen to
50.7 per cent as of June 2018,
from 55.8 per cent in June 2017
and 59.4 per cent in June 2016, a
quarterly report by Transunion
Cibil and Sidbi has said. The
overall credit to the MSME seg-
ment grew 16.1 per cent for the
year to June 2018, it said, adding
PSBs reported a 5.5 per cent
growth, compared with 23.4 per
cent for the private sector banks.
A total of 11 PSBs are under
the Reserve Bank of India’s
(RBI’s) prompt corrective action
(PCA) framework because of
earning pressures and networth
concerns, which puts restric-
tions on lending. The share of
private sector banks has grown
to 29.9 per cent in June 2018,
http://www.estore33.com/
against the 28.1 per cent in the
same month last year, while the
same for non-banking finance
companies (NBFCs) has grown
up to 11.3 per cent from 9.6 per
cent, according to the report.
Despite the aggressive growth,
private sector banks and NBFCs
fare better on asset quality as
well, it said. The PSBs’ non-per-
forming assets (NPAs) from the
MSME book increased to 15.2
per cent from the year ago’s 14.5
per cent, while in case of private
sector banks, the ratio decreased
marginally to 3.9 per cent from 4
per cent. There has been an
increase in the turn-around
times (TAT) for loan processing
across all the three segments of
lenders with the NBFCs being
the fastest, the report said,
MUMBAI | TUESDAY, 18 SEPTEMBER 2018
adding that it takes an average of
26 days for a MSME to avail cred-
it from the date of inquiry.
The NBFCs’ TAT has come
down to 18 days from the 24 days
two years ago, while the same
for PSBs is down to 31 days from
41 days earlier. Private sector
banks process loans in an aver-
age of 29 days now as against 32
days two years ago.
https://t.me/TheHindu_Zone_official
Rains retreat
to be delayed
further
SANJEEB MUKHERJEE
New Delhi, 17 September
A
new low pressure over
the Bay of Bengal and a
western disturbance
are likely to further delay the
withdrawal of the southwest
monsoon this year and cause
rainfall over north India over
the weekend. The rains were
supposed to retreat from
September 1.
The revised forecast said
the monsoon withdrawal
would start from September
10-12. Now, it seems this will
take longer.
“The withdrawal will not
start this week,” India
Meteorological Department
(IMD) Director General K J
Ramesh said.
The rains usually start
withdrawing from early
September from western
Rajasthan. The process is usu-
ally complete by end-October,
signaling the end of the four-
month season that starts in
June. For the past few years,
withdrawal has been delayed.
The delay might aide
planting of rabi crops, but if
the showers are more than
expected they might cause
damage to the standing kharif
harvest, particularly crops
sown late.
A likely western distur-
bance over north India during
the weekend might cause
heavy to very heavy showers
in a few places, including New
Delhi.
Credit costs to
stay at 2-3% till
FY20: Report
ABHIJIT LELE
Mumbai, 17 September
Banks will continue to see
their credit costs (amount set
aside for bad loans) stay at 2-3
per cent in FY19 and FY20
because of ageing toxic assets
and accelerated provisioning.
The slippages from the non-
corporate loan book covering
farming, small, micro and
medium enterprises, and
retail segments will also add
to provisions, according to rat-
ing agency India Ratings and
Research.
The need to provide for
assets under new accounting
standards (Ind-As), if imple-
mented from FY20 onwards,
has also decreased to about
~300 billion from ~870 billion.
Banks have already incurred
the substantial credit costs in
FY18. Most of the impact is
likely to be absorbed over the
normal course of business in
FY19, the rating agency said.
The non-performing assets
(NPAs) in agriculture, small and
medium-sized enterprises
(SME) and personal/retail loan
segments have increased sig-
nificantly (in terms of percent-
age). Given that Reserve Bank
of India (RBI) forbearance is
available in some of these seg-
ments in terms of recognition,
part of incremental credit costs
Govt may take steps
to curb gold imports
PRESS TRUST OF INDIA
New Delhi, 17 September
The government is likely to
take certain policy measures
to curb high gold imports
instead of raising customs
duty on the precious metal,
sources said.
The effort is a part of the
exercise by the government
to check fall in rupee value
and control current account
deficit (CAD).
“There is not much scope
for hike in import duty on
gold. Rather, it would be
some kind of policy measures
to reduce gold import. Higher
import duty on gold may
increase smuggling activi-
ties,” they said.
With festive season
around the corner, hiking
import duty on gold at this
juncture might lead to
increase in smuggling.
1
“Heavy to very heavy rain
is likely over north India from
23 September… All states
must be warned for flooding,”
Jatin Singh, chief executive
officer of private weather fore-
casting agency Skymet, tweet-
ed.
Till September 17, the
southwest monsoon has been
9 per cent below normal with
rains deficient in 12 of the 36
meteorological sub-divisions.
These include west Rajasthan,
Saurashtra, Gujarat, north
interior Karnataka,
Rayalseema, Bihar,
Jharkhand, and the entire
Northeast India.
In many parts, the deficit is
largely on account of low rain-
fall in the first half of the mon-
soon, but in others the condi-
tions are staring at a drought.
The data also showed that
out of the 662 districts, the
monsoon was normal in 62
per cent of them between
June 1 and September 16. In
the rest, it was deficient.
Encouraged by the late
withdrawal of monsoon, sow-
ing of kharif crops has also
picked up pace and crossed
last year’s level — almost 1 per
cent more than the area sown
in 2017.
Water levels in the 91 major
reservoirs across the country
were also at a comfortable
131 per cent more than last
year and 114 per cent of its
10-year average. This should
also augur well for the rabi
sowing season.
on such accounts may be
recognised in Q4FY19-FY20, it
added.
The agency has meanwhile
maintained a stable outlook on
private sector banks for the
remainder of FY19 because of
robust capitalisation with high
asset growth, and ability to
gain market share profitably.
The outlook on two large pub-
lic sector banks (PSBs), State
Bank of India (‘IND
AAA’/Stable) and Bank of
Baroda (‘IND AAA’/Stable) is
also stable.
Since the report came out,
the government has decided
to merge Bank of Baroda,
Vijaya Bank and Dena Bank
to create the country’s third
largest lender.
It retained a negative out-
look on the remaining PSBs
owing to their weak capitalisa-
tion and expected aging pro-
visions on the large stock of
non-performing loans.
The provisioning burden
would continue to be a drag on
their performance and impair
their ability to maintain the
market share and systemic
importance. The agency
expects the balance sheet of
most PSBs to remain stagnant,
given increasing capital
requirements under Basel III
transition, despite government
infusions over FY18-FY19.
However, the sources did
not specify those policy
measures. The government
last week announced an array
of steps, including removal of
withholding tax on Masala
bonds, relaxation for foreign
portfolio investments, and
curbs on non-essential
imports, to contain the
widening CAD and check the
rupee depreciation.
According to traders and
experts, if the government
wants to impose curbs on
non-essential items, they can
consider products such as
gold, high-end electronics
goods, refrigerators, watches,
and high-end footwear and
garments.
Gold imports jumped by
about 93 per cent in August
and 41 per cent in July. With
the forthcoming festive sea-
son, demand for gold is
expected to grow further.
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official
18 BRAND WORLD
>
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 1

Kellogg’s, PepsiCo battle

Nestle’s breakfast power
With product innovations and renewed advertising vigour, brands step up the
fight for a bigger slice of the morning meal
VIVEAT SUSAN PINTO
Mumbai, 17 September

ast month, Nestle India,

L among the country's

leading packaged food
companies, indicated it would
now position itself as a break-
fast major. Not surprisingly so,
given that the majority of food
labels under the Nestle brand
umbrella are all part of popular
breakfast menus and; besides,
its longstanding association
with dairy staples automati-
cally lent heft to its new posi-
tioning, the company indicat-
ed. Its entry is being tracked
with keen interest as the other
global majors in the breakfast
ring, Kellogg’s and PepsiCo,
have steadily raised their
stakes in the Indian market
over the years. At the same
time, Indian brands have
leveraged their understanding
of the local palate to offer con-
venient and affordable alter-
natives at the table too.
“Not just Nesplus, the break-
fast cereal we launched in July,
but even coffee, yoghurt, oat
noodles and milk are all break-
fast items. They are part of the
breakfast menu of individuals
in general and can be consid-
ered as breakfast items (from
the firm's portfolio stand-
point),” said Suresh Narayanan,
chairman and managing direc-
tor, Nestle India.
Industry estimates peg the
breakfast cereal market in
India, which includes corn-
flakes, oats and muesli, in the
region of ~18-19 billion, pro-
jected to touch ~25-26 billion
by 2020. Kellogg’s is the leader
in breakfast cereals in India
with an estimated market
share of around 37-38 per cent.
PepsiCo is estimated to have a
share of around 15-20 per cent.
In recent years, local play-
ers such as Bagrry's and
Marico have also stepped into
the category with new and
exciting products (including
oats, muesli etc). The other
side of the domestic breakfast
market are Indian snacks,
companies such as MTR
Foods (owned by Norwegian
major Orkla) are among the
few organised players here
with both a ready-to-eat and
ready-to-cook range, of tradi-
tional snacks.
With a large player like
Nestle around, companies
(L to R) Nestle’s new cereal
brand Nesplus has a campaign
on wholesome breakfast,
Kellogg’s initiative
(#BreakTheHabit)
asks people not to
skip breakfast and
PepsiCo has Chef
Vikas Khanna as
its nutrition
ambassador
have to take strong measures
to ring-fence themselves from
future damage, say experts.
Deepika Warrier, vice presi-
dent, nutrition category,
PepsiCo India, says, “We wel-
come new entrants. They will
contribute in upgrading con-
sumers from unpackaged to
packaged food; also improve
local sourcing economics. We
believe there is much poten-
tial to grow the oats category,
where we are leaders.”
PepsiCo has taken a three-
pronged approach in break-
fast, speaking to millennials
and young adults through the-
matic campaigns and digital
activations, launching small
packs and pushing distribu-
tion into north and east in
addition to the south market, a
strong consumer of oats. The
third part includes tapping
into new consumer trends.
This involves combining the
goodness of oats and Indian
breakfast items in a new ready-
to-cook range, stepping into
the dairy segment with a
ready-to-drink product that
combines oats and milk and
expanding the core oats range
with a whole-grain option.
Kellogg’s, on the other
hand, is looking to make its
products accessible and
affordable. “We continue to
focus on our multigrain,
nutritious and tasty cereals.
Simultaneously, we are
always looking out for oppor-
tunities to serving more con-
sumers,” Mohit Anand, man-
aging director, India and
South Asia, Kellogg’s India,
said. “What is helping us
attract more people is the rise
in the trend of 'health and
wellness'. Breakfast cereals
are at the core of this trend.
With consumers seeking
more convenient meal
options, Kellogg's and hence
the entire category, is only
poised to grow,” he adds.
MTR Foods, in the interim,
is looking to strengthen its
ready-to-eat and ready-to-
cook range of breakfast prod-
ucts. Company executives say
the effort is tied in with the
growing acceptance of con-
venience foods as a meal
option during breakfast.
Warrier endorses this point,
saying that 40 per cent of nutri-
tion needs of an individual are
skewed towards breakfast. “As
more and more consumers
look for healthier options, we
find that they are seeking nutri-
tional benefits combined with
convenience and yet, they do
not want to compromise on
taste,” she says.
Anand, meanwhile,
believes that one in four urban
Indians actually skip breakfast
and nearly 70 per cent have a
nutritionally inadequate
breakfast, led in part by
stressed and busy working
lives. “This presents a strong
case for the increase in con-
sumption of packaged, nutri-
tious and convenient options,”
he says.
Kellogg’s has just unveiled
a campaign called
‘#BreakTheHabit’, aimed at
building awareness among
consumers to stop skipping
breakfast. The initiative comes
as the government puts the
spotlight on nutrition via the
Rashtriya Poshan Maah (or
National Nutrition Month) in
September. Kellogg’s has also
roped in celebrities and chefs
to speak of the need to eat right
and start the day well with a
nutritious diet.
PepsiCo is also a veteran
when it comes to using the
wellness-health card to fortify
its brand as a breakfast offer-
ing. It has been pushing its
campaign 'Fuel for the Real Fit'
(since 2017) to drive home the
message of nutrition and well-
being to its target audience. It
also has Chef Vikas Khanna as
a nutrition ambassador.
Clearly, Nestle has a fight
on its hands. Whatever be the
outcome of the ensuing battle,
the conversation at the morn-
ing table is shaken and stirred.

> THE BS CROSSWORD # 3145

in the walls of the chests
(3,5)
16 Two points in front, as tipped 8 A trouncer trounced in one of
(6)
17 The flight of the illegal
organisation, for instance, at
last (6)
19 Drysdale wore out riding gear
(8)
21 Horrified way-out Turkish
pooh-bah (4)
22 In this sport, do you learn
skills from exercise books?
(10)
25 Mistakes by serving men? (6)
26 A subject of fifty-one, say,
getting call-up (5,3)
27 They must have listeners for a
work by Virginia Woolf (3,5)
28 Awful pity the saint is an
office worker! (6)
7 Get there before, with the
wood and everything (9)
his yarns? (9)
14 Chinese character's thought
in a letter? (9)
15 Country pipe found in
Cornwall (5,4)
18 Georgia girl (7)
19 A politician attends auctions
to obtain such specimens (7)
20 Half made a stand, and
that's most highly valued (7)
23 Article lost by foreign city fool
(5)
24 Boorish people providing
pictures in the civil service (5)
SOLUTION TO #3144

ACROSS
1 Earlier reform movement (6)
5 Down under conflagration
Moses saw (4,4)
9 Ten and sixes go to their
making, of course (8)
10 Mother takes a vehicle up for
use by bandsman (6)
11 Between C and F in written
testimony? (10)
12 Carol was left out of the toss
(4)
13 Expresses great anger about
one opening being cracked
DOWN
2 Work in China perhaps, one
might think (5)
3 Satisfied with spectacles? So
am I (2,3)
4 Three Kings hold rank (7)
5 Superior, Sir. Switch rouses to
action (7)
6 Likely to start something (7)

> BS SUDOKU # 2575

Very hard:  > WEATHER TODAY’S FORECAST
Solution tomorrow Max/min temperatures in C
O

NATIONAL
HOW TO PLAY
Fill in the grid so that every Ahmedabad . . . . . . . . .Partly cloudy 32/25
row, every column and Aizawl . . . . . . . . . . . . . . . . . . . .Thundery 26/19
every 3x3 box contains the Bengaluru . . . . . . . . . . . . . . . . . . .Cloudy 28/18
digits 1 to 9 Bhopal . . . . . . . . . . . . . . . . . . . . . . . . .Rain 26/21
Bhubaneswar . . . . . . . . . . .Thundery 32/25
Chandigarh . . . . . . . . . . . . . .Thundery 31/26
Chennai . . . . . . . . . . . . . .Partly cloudy 35/27
Delhi . . . . . . . . . . . . . . . . . .Partly cloudy 32/27
Guwahati . . . . . . . . . . . . . . . .Thundery 33/26
SOLUTION TO #2574 Hyderabad . . . . . . . . . .Mostly cloudy 31/22
Imphal . . . . . . . . . . . . . . . . . . .Thundery 29/22
Indore . . . . . . . . . . . . . . . . . . . . . . . . . .Rain 25/21
Kochi . . . . . . . . . . . . . . . . . . . . .Thundery 31/23
Kolkata . . . . . . . . . . . . . . . . . . .Thundery 30/26
Lucknow . . . . . . . . . . . . . . . . .Thundery 31/27
Mangalore . . . . . . . . . . . . . . .Thundery 26/24
Mumbai . . . . . . . . . . . . . . . . . .Thundery 29/26
Pune . . . . . . . . . . . . . . . . .Mostly cloudy 27/21
Srinagar . . . . . . . . . . . . . . . . . . . . . . Sunny 29/18
Surat . . . . . . . . . . . . . . . . . . . . . .Thundery 29/26
Thiru’puram . . . . . . . . . . . . . . . .Thundery 28/24
https://t.me/pdf4exams
.
MUMBAI | TUESDAY, 18 SEPTEMBER 2018
Food tech’s insatiable appetite
The flurry of investment activity is reminiscent of the build-up in the sector in 2015
before it went bust. But this time, there is no sign of trouble
PATANJALI PAHWA
Mumbai, 17 September
S
wiggy seems to be on the brink of raising
$500 million from various investors
including Tencent. It is also reportedly
rejecting a $250 million cheque from
Google. Reports indicate that Zomato is talking
to Ant Financial for another round of funding.
Paytm, sources say, has been talking to Domino’s
and McDonald’s and coaxing them to join its
app. The plan, say sector experts, is to get the two
companies on as tiles on the app.
Meanwhile, ola is pumping money into
Foodpanda and the Bhavish Aggarwal found-
ed company plans to move people within the
organisation so Foodpanda has more on-the-
ground support. Uber Eats is throwing around
discounts to snag customers, and Bengaluru-
based cloud kitchen company Freshmenu is
reportedly on the brink of closing another
round of funding. There is a lot of action hap-
pening in the sector. It is almost breathless.
Now, let’s take a quick look at the funding
rounds. In 2018, according to data gathering
company Tracxn, the sector raised over $483
million. Compare that to 2016 and 2017, when the
ecosystem managed to raise just about $131 mil-
lion and $133 million respectively. Take another
step back. In 2015, considered the heydays of
food tech, the entire sector managed to raise
$270 million. (See chart on capital raised)
The year 2018, and it isn’t done yet, is on
track to raise cash that is more than what was
raised in 2015, 2016 and 2017 put together. That’s
a lot of capital. The last time food tech raised
astounding cash was 2015 and what followed
was shutdowns and no-cash acquisitions. Food
tech went into the consolidation mode. Before
capital dried up, customer acquisition cost (CAC)
was high, discount was the only way to convince
a customer to get on board and there was no
mention of a business model. In effect, it was a
land grab. The bubble popped; the conversation
turned to profitability. But that seems to be
changing again.
Foodpanda is offering desserts for single dig-
its, Uber Eats unloads discounts and offers ever
so often. Zomato and Swiggy are both burning
through cash to compete with each other when
it comes to number of deliveries and are offering
cash incentives to the delivery personnel to stay
loyal. The conversation about profitability seems
to have died down, CAC is high again.
http://www.estore33.com/
let’s look at the data once again.
According to Tracxn, there have been just 13
transactions until year-to-date. Transactions
here refer to a company raising money from an
investor. Some companies may have raised mul-
tiple rounds. Compare this to 2015, which saw 66
transactions. (See chart )
This is a time to pause. Why? What has
changed? According to Revant Bhate, partner,
KStart, a lot. “Companies, which have a proven
business model, which can function at scale
have raised money,” he says. There is a distinct
difference from the last time around when cash
was easily available but there was very little focus
on the business model. There were companies
that raised cash, he explains, with little to no
addition to the business model. The moats were
weak or non-existent. “Now, companies are
being built on need,” he adds.
Be it Swiggy or Zomato, the two big boys of
the food tech ecosystem, both have managed to
solidify one part of the food experience. Swiggy
did it through its logistics network and Zomato
through restaurant aggregation (and now also
through logistics). And Swiggy is evolving. It is
trying to be much more than just food delivery.
Zomato, too, has evolved. The ones raising cash
are also cloud kitchens like Faasos and
Freshmenu. Both rely on their own logistics serv-
ices. “There is also a change in the type of
investor. Back in 2015, the capital was not as
patient as it is now,” Bhate adds.
The metrics within companies have changed
too. It isn’t just about customer acquisition any-
more; it is about retention. “In 2015, the dis-
counts were to entice the customers online. Now,
it is to make them use it over and over again,”
HOT AGAIN says Saurabh Kochhar, once a founder of
Foodpanda. And there is a granular difference
Capital raised in million dollars between these two behaviours. One is the simple
483 act of ordering, the other is habit formation. “If
our super user orders twice a week, we are very
270
happy,” says Rashmi Daga, founder, FreshMenu.
And there are more of them.
133 131
“It is good to look at 2018 food tech as e-com-
71.2
merce from 2015,” adds Kochhar. The big com-
panies have settled on the business models and
2014 2015 2016 2017 2018 [YTD] now it is up to them to prove it can work for a pro-
longed period of time on massive scale.
Number oftransactions But just like 2015, e-commerce repeat users
55 42 were driven just by discounts. These discounts
66 did nothing but bleed the company. When the
13 17
discounts were removed, the customers went
away. The companies struggled and many fad-
2014 2015 2016 2017 2018 [YTD] ed into irrelevance. But the argument is that
Source: Tracxn
food tech will do better. According to people at
Swiggy and Zomato, the number of orders a
The question is: Is there another bubble form- month is primarily generated by existing users.
ing? Are there changes from what happened in These companies are adding new customers
2015? Have people learnt? Yes. And not really. every day, but those who stick on order more
Is there a bubble forming? Business often. And if the discounts were removed one
Standard put this question to food tech entre- day, they would be so used to not cooking, they
preneurs and investors. They all said things would keep ordering. Food, they say, is much
may be getting hot, but there is no bubble. So, more habit-forming than buying a phone.
https://t.me/TheHindu_Zone_official
TAKE TWO 19 <
The airport of the
future is here.
And it doesn’t
need humans
BLOOMBERG
17 September
Imagine landing at a major airport and the only human
official you meet on your way through the terminal is a
customs officer. Singapore’s Changi Airport, voted the
world’s best for the past six years by Skytrax, is pursuing that
goal of extensive automation with such vigour that it built
an entire terminal to help test the airport bots of the future.
Here’s an idea of what Asia’s second-busiest
international airport is implementing. As a plane joins the
long line to land, it’s detected, identified and monitored
by an array of cameras and technology that bypass the
traditional control tower. Once at the gate, a laser-guided
aerobridge positions itself to let passengers disembark,
while automated vehicles below unload baggage, dodging
others that are delivering robot-packed meals or
processing cargo. The passengers head to automated
immigration turnstiles that face-scan and thumb-print
them, then head to collect their luggage, which baggage
bots have already delivered to the carousel. Under the
gaze of an actual human — the steely-eyed customs
official — they head out to queue for a driverless taxi.
Changi opened its Terminal 4 last October partly with
the idea of using its smallest and newest facility to test and
Automated immigration control gates at Changi airport's
Terminal 4 in Singapore
develop automation. The goal is to have it all working for
its gigantic Terminal 5, a monster building that would be
able to handle 50 million passengers a year when it opens
at the end of the next decade, making it one of the largest
and most automated passenger terminals in the world.
“Airports are getting bigger and bigger and need to
process higher and higher volumes of passengers,” said
Jeffrey Lowe, managing director at Asian Sky Group in
Hong Kong. “Given the need to provide quick and efficient
— seamless — service to passengers, automation is the
only way to do this on a large scale.”
Singapore has plenty of reasons to embrace airport
bots. The city-state has a limited domestic talent pool
that is aging and increasingly unwilling to do manual
jobs like baggage handling or packing food trays. It also
needs to keep improving Changi to stay ahead of
competition from neighbours that are upgrading and
extending their own airports.
https://t.me/pdf4exams http://www.estore33.com/ https://t.me/TheHindu_Zone_official
20
>
MUMBAI | TUESDAY, 18 SEPTEMBER 2018 1

Time sold to tech couple Benioffs for $190 mn

Salesforce.com founder Marc Benioff gets a new role — that of a media baron
NICK TURNER , GERRY SMITH , & acquisition of The Washington “Time has always been a trust- ously reported on the Time deal,
NICO GRANT Post in 2013. That purchase ed reflection of the state of the which is slated to close in the
17 September brought Bezos a Pulitzer Prize- world, and reminds us that next 30 days. The Benioffs said
winning, 140-year-old newspa- business is one of the greatest they won’t be involved in day-to-

S
alesforce.com founder
Marc Benioff and his wife
Lynne agreed to acquire
Time magazine from Meredith
Corp. for $190 million in cash,
joining Jeff Bezos among tech
billionaires buying venerable
print publications.
The move thrusts the brash
53-year-old entrepreneur, who
helped lead the shift of software
to an on-demand model, into a
new role: media baron.
It’s a transaction reminis-
cent of Bezos’s $250 million
per but also put him in the
cross hairs of President Donald
Trump, who has called the Post
an “expensive lobbyist” for
Amazon.com.
Benioff, who has a net worth
of $6.5 billion, serves as the co-
chief executive officer of
Salesforce, but the deal is unre-
lated to the tech company,
according to the statement. The
Benioffs are buying the media
brand personally. “We are hon-
oured to be the caretakers of
one of the world’s most impor-
Salesforce.com founder Marc
Benioff and his wife Lynne
tant media companies and
iconic brands,” the Benioffs
said in a statement Sunday.
platforms for change.”
Meredith, known for publica-
tions such as Better Homes &
Gardens, acquired Time as part
of its $1.8 billion takeover of
Time in January.
But it soon put some of the
business’s biggest titles up for
sale, including Sports
Illustrated, Fortune and Time
itself.
Meredith said on Sunday
that deals for the other titles are
expected in “the near future.”
The Wall Street Journal previ-
day operations or journalistic
decisions. They also plan to keep
Time’s current leadership team
in charge.
Benioff has tried to bolster
his reputation as a civic leader,
through personal philanthropy
and corporate sponsorship of
public projects in his native San
Francisco. Benioff has criticised
Trump in public appearances
and through his Twitter
account. And now the execu-
tive’s profile is bound to grow.
BLOOMBERG

ASIA CUP

Star India’s ~2-bn

ad revenue target
to take a hit over
Kohli’s absence

PITCHING TARGET
~2bn TVadrevenuetargetofStar ~1to1.3million/10sec
~500mn Digitaladrevenuetarget India-Pakistantie
byStarIndia ad-ratebeforeViratKohli
dropped
Upto~600,000/10sec Targetad-
rate ~800,000to~900,000/
10sec Expectedadratefor
~400,000to~450,000/ India-Pakistantieafter
10sec Expectedad-ratethat ViratKohlirested
advertiserswillpayafterKohli
rested

URVI MALVANIA tournament, especially the

Mumbai, 17 September
The absence of Indian cricket
team captain Virat Kohli is
expected to put a dent in
broadcaster Star India’s
advertisement revenue pro-
jections from the ongoing
Asia Cup. Media buyers in the
know say that while it is diffi-
cult to put a number on how
much the impact on the ad
sales tally could be, it is quite
possible the broadcaster will
not be able to make its ~2-bil-
lion target.
The broadcaster holds the
television (TV) and digital
media rights to the tourna-
ment and was targeting a total
of ~2.5 billion in ad sales rev-
enues — ~2 billion from TV
and ~500 million from digital
ad sales. It had sold 60-70 per
cent of its total advertising
inventory before the start of
the tournament, amounting
to around ~1.2 billion in ad
revenues. The broadcaster
was hoping to cash in on the
higher spot (last-minute buys)
rates to complete its target of
~2 billion in TV ad sales.
However, with Kohli miss-
ing in action, the spot rates for
the remaining 40 per cent
inventory will be affected.
“There is evidence that when
Kohli comes to bat, viewer-
ship moves up and when he
gets out, it comes down. The
fence sitters may have one
more reason to stay out
because of the news,” says
Vineet Sodhani, chief execu-
tive officer, Spatial Access, a
media audit agency. He
explains that while people will
still watch the matches in the
India matches, the incremen-
tal reach that Kohli brings
when he is on the field, will
not be achieved. This may
give the fence sitters reason
to not pay big bucks for the
remaining inventory. Existing
advertisers however, have no
option but to go ahead with
their investment, so no adver-
tiser is pulling out of the tour-
nament as such.
Sponsors on the Asia Cup
include Hero, Byju’s, Google,
Britannia, Gra-Do, Droom,
Coca-Cola, USL, Domino’s,
Unimoni, GSK, Dell, Eureka
Forbes, MP Birla, UltraTech,
Apollo Tyres, Vini Cosmetics,
Parle Agro, and Nerolac.
Star India was hoping to
make up to ~600,000 per 10-
second ad spot during the
series and anywhere between
~1 million and ~1.3 million for
the India-Pakistan tie.
However, this will need to
be revised, and it is more like-
ly to make ~400,000 to
~450,000 per 10 seconds on
an average for the tourna-
ment, while the India-
Pakistan tie would fetch them
~800,000 to ~900,000 for 10
seconds. “India is yet to play
a single match in the series
and its first match is against
Hong Kong. Advertisers are
not interested in it. So there’s
little to impact on whether
Kohli is there. But on the
whole, there will be an impact
since the Asia Cup has tradi-
tionally been a tough proper-
ty to sell. The absence of the
most popular player among
all teams will dampen adver-
tisers’ interest further,” says a
media planner in the know.

PAKISTAN’S AUSTERITY DRIVE

PM Imran puts cars,
buffaloes on the block
REUTERS
Islamabad, 17 September
Pakistan’s new government
on Monday began auctioning
off about 100 government-
owned vehicles as part of new
Prime Minister Imran Khan's
highly publicised cost-cutting
drive, which has drawn mixed
reviews.
Auction official Mo-
hammad Asif told Reuters the
vehicles could bring in about
2 billion rupees ($16 million)
to the cash-strapped govern-
ment’s coffers, although that
estimate depends on finding
buyers for four bullet-proof
Mercedes.
These are estimated in
total value at 1 billion rupees.
The auction has been
billed as part of Khan's drive
to give “the nation’s wealth to
its rightful owners”, though
critics say most of the new
government’s cost-cutting
measures are more symbol-
ism than significant savings.