FRIDAY, 13 SEPTEMBER 2019
28 pages in 2 sections
NEW DELHI (CITY)
~8.00
VOLUME XXVI NUMBER 107
THE MARKETS ON THURSDAY
Sensex 37,104.3
Nifty 10,982.8
Nifty futures* 10,996.5
Dollar
Euro
~71.1
~78.4
Brent crude ($/bbl)## 60.1##
Gold (10 gm)### ~37,656.0
*(Sept.) Premium on Nifty Spot; **Previous close;
# Over previous close; ## At 9 pm IST;
### Market rate exclusive of VAT; Source: IBJA
ECB CUTS KEY RATE,
TO RESTART BOND
PURCHASES
The European Central Bank (ECB)
approved a fresh stimulus package as
expected on Thursday, cutting interest
rates and approving a new round of
bond purchases to prop up euro zone
growth and halt a worrisome drop in
inflation expectations. The ECB cut its
deposit rate to a record low -0.5per cent
from -0.4 per cent and will restart bond
purchases of ^20 billion a month from
November, it said. 18 >
THE SMART INVESTOR P10
Market breadth in 2019
worst in six years
The market breadth — the ratio of the
number of stocks rising to those falling
— this year is the worst in six years, amid
sluggish economic growth and
disappointing corporate earnings. In
the first eight months of 2019, 70 per
cent of the BSE500 stocks were down.
These account for 94 per cent of India’s
total market capitalisation.
SUNDAR SETHURAMAN writes
ECONOMY & PUBLIC AFFAIRS P6
On 75th I-Day, Parliament
may get a new look
If things go according to plan, the central
administrative district in the heart of the
capital could get a new look, with added
grandeur, in the next couple of years.
The government is working on modernising
the central administrative district at the
capital — a plan that includes setting up a
more grandiose Parliament building, a new
central secretariat complex and
redevelopment of the central vista.
ECONOMY & PUBLIC AFFAIRS P6
Goyal trolled for Einstein
comment on gravity
Commerce and Industry Minister Piyush
Goyal was on Thursday
trolled over an
apparent gaffe in
explaining that
achieving the target
of nearly doubling the
size of the economy to
$5 trillion should not be
looked through the
prism of maths.
PAGE 6
> GOVT WORKING TO EASE EXPORT
CREDIT AVAILABILITY: GOYAL
E-paper
Since the Mumbai office of Business
Standard was closed on Thursday
(12 September) on account of
Ganesh Puja, the Delhi edition
is available for the e-paper.
TO OUR READERS
The eight-page commercial feature on
PWD Maharashtra, being carried as a sepa-
rate section, and one-page commercial fea-
ture on ACMA: 59th Annual Session on Page
5 are equivalent to a paid-for advertise-
ment. No Business Standard journalist was
involved in producing them. Readers are
advised to treat them as an advertisement.
REPO-LINKED LOANS: ELIGIBILITY MAY REDUCE BY AS MUCH AS A QUARTER
Home buyers to see higher outgo in initial years
ANUP ROY & ABHIJIT LELE
Mumbai, 12 September
Happy about getting a rate
relief on home loans as soon as
the Reserve Bank of India
(RBI) cut the policy repo rate?
Wait, first check with your
bank if you are even eligible
for the loan. Chances are that
your eligibility has reduced by
as much as a quarter.
The repo rate-linked home
loan being offered by State
Bank of India (SBI), the only
bank to offer such a product so
far, has brought down the
eligibility criteria drastically
for the initial years.
Interestingly, assuming the
interest rate remaining
unchanged, the absolute
monthly outgo falls as income
rises. The outgo is the highest
when the customer’s income
is low in the initial years, and
is low when income is higher
down the years. This is how
the structure is right now, as
being offered by the bank at
8.05 per cent, confirmed a
Chg#
166.5
52.9 BACK PAGE P18
13.7
~71.7**
~78.9** PIKETTY RETURNS WITH 1,200-PAGE
GUIDE TO ABOLISHING BILLIONAIRES
61.6**
~165.0
PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE
States rule out
GST rate cut on
automobiles
Point out their grim revenue position;
say slowdown in sector not linked to GST
DILASHA SETH
New Delhi, 12 September
K
ey states have expressed
reservations on a cut in the
goods and services tax
(GST) rate for the auto sec-
tor because of the grim revenue situ-
ation, after the fitment panel
refrained from recommending any
such reduction.
Facing a deepening slowdown, the
auto sector is pinning hopes on the
GST Council meeting on September
20 for a rate cut from 28 per cent to 18
per cent.
However, states including Bihar,
West Bengal, Kerala, and Punjab are of
the view that the slowdown in the auto
sector is not because of the GST rate
but structural issues in the economy.
“Bihar will not support any rate
reduction on the auto sector, because
the revenue position does not allow
this,” said Sushil Modi, deputy chief
minister, Bihar.
Sushil Modi even ruled out sup-
porting the sector by abolishing the
cess component. “Where will the
Centre get funds to compensate
states? The revenue position is grim,”
he said.
The fitment committee in its meet-
ing last week had stated a potential
revenue loss of around ~50,000 crore
annually in case the rate was reduced
from 28 per cent to 18 per cent.
The cess on the auto sector is 1-22
per cent on the 28 per cent. It is used
to compensate states for the revenue
shortfall for five years since the GST
rollout, assuming a growth rate of 14
per cent annually.
Minister of State for Finance
Anurag Thakur last week urged the
industry to individually reach out to
the state governments as the Council
took decisions unanimously.
Turn to Page 17 >
IIP GROWTH RISES TO 4.3%;
RETAIL INFLATION INCHES UP
Industrial production may give the
government some respite, bogged down by
criticism over low gross domestic product
(GDP) growth numbers for the first quarter of
2019-20 (FY20). The Index of Industrial
Production (IIP) rose by 4.3 per cent in July,
against 1.2 per cent in the previous month.
However, consumer durables continued to
print contraction in July. The consumer price
index (CPI)-based inflation rate for August
crept up slightly to 3.21 per cent year-on-year,
compared with 3.15 per cent in July, driven by a
sharp rise in food prices.
senior SBI official.
Under the new structure, CASE IN POINT
SBI has divided the principal
amount of the loan by the
tenure. So, for a ~30-lakh loan
for 20 years, the yearly outgo Loan amount
on principal would be
~1,50,000 — substantially
Number of years
higher than the current Rate of interest
system, where principal is Total outgo
much smaller, but the interest
component higher.
Since interest is calculated Yearly payment pattern (principal+interest)
on the principal outstanding,
the initial years’ interest
component will also be high.
However, it may not be as high
as the current structure
because banks frontload the
interest due while keeping the
principal component low.
The net result is that the
initial years’ outgo will be far
higher under the repo-linked
structure than what is being
offered now, potentially
leaving out a significant
chunk of first-time customers as the repo rate is revised,
from buying a property. there is no fixed and equated
Since the principal is fixed, monthly instalment (EMI)
and interest fluctuates as soon concept. Rather, SBI and other
www.business-standard.com
COMPANIES P2
DISNEY REVEALS REVENUE
PLANS FOR HOTSTAR
HUL emerges front-runner
for Dinshaw’s Dairy Foods
Negotiating all-cash deal at ~1,000 crore, which is two times its FY19 sales
ASHLEY COUTINHO & VIVEAT SUSAN PINTO
Mumbai, 12 September
Hindustan Unilever (HUL), the country’s
largest consumer goods company, is lead-
ing the race to pick up Nagpur-based
Dinshaw’s Dairy Foods, which has been
on the block since April.
HUL is negotiating an all-cash deal at
TAXING TIMES ~1,000 crore with the promoters of
Dinshaw’s, one of India’s oldest ice cream
makers, valuing the company at two
times its estimated FY19 sales of ~450
crore, people in the know have told
Business Standard.
Some of the other contenders that
HUL might have edged out are private
equity firms Carlyle and Blackstone, and
South Korea’s Lotte Confectionery.
HUL said it could not comment on
market speculation. Jimmy Rana, man-
aging director of Dinshaw's Dairy, said the
news was speculative. “We are in the
process of evaluating various options for
funding future growth of the company,” he
said in response to an email on the matter.
Informed sources, however, said the
Vehicle category Cess Applied
(%) duty (%)
PASSENGER VEHICLES
(petrol, CNG, LPG)<4m in 1 29 Facebook counters RIL’s e-auction
Ambani: Data isn’t oil mechanism for
length and <1200cc engine
PASSENGER VEHICLES
3 31
(diesel) <4m in length and
<1500cc engine
NEHA ALAWADHI
MID-SIZE PVs
(>4m in length with 17 45
New Delhi, 12 September
<1501cc engine) Countering Reliance Industries
LARGE PVs
Chairman Mukesh Ambani, Facebook
Inc on Thursday said data was not the
20 48
(>4m in length with
>1500cc engine)
new oil, and countries like India
should allow its free flow across bor-
SUVs ders instead of attempting to hoard it
(>4m in length with as a finite commodity within nation-
>1500cc engine & >169mm 22 50 al boundaries.
“Data isn’t oil — a finite commod-
ground clearance)
ity to be owned and traded, pumped
HYBRID VEHICLES from the ground and burned in cars
(except small) 15 43 and factories...a better liquid to liken
it to is water, with the global internet
>350cc two-wheelers 3 31 like a great borderless ocean of cur-
10 – 13 SEATER
15 43
rents and tides. The value of data
comes not from hoarding it or trading
public transport vehicles
it like a finite commodity, but from
Source: CBIC allowing it to flow freely and encour-
aging the innovation that comes from
that free flow of data — the algo-
rithms and the services and the intel-
GROWTH BOOST
IIP growth (yoy %)
ligence that can be built on top of it,”
said Facebook Vice-President of
Global Affairs and Communications
Nicholas Clegg, who is also a former
deputy prime minister of Britain.
He said the internet was built on
this principle of cross-border data
flow and India should work with its
“natural allies” to encourage the free
COMFORT ZONE flow of information.
CPI inflation (yoy %) “To contain the data — to fix it geo-
graphically and to restrict its flow to
national borders — would be to turn
this great ocean of innovation (inter-
net) into a still lake. The global inter-
net is built on this principle of cross-
4> border data flows — just as the global
economy relies on capital, human
RBI slashes risk
SBI
repo-linked
SBI
non-repo-linked
weight on
~ 30,00,000 ~ 30,00,000
consumer credit
The Reserve Bank of India on
20 20 Thursday said it had reduced the
8.05% 8.40% risk weight requirement for
54,25,065 62,02,530 consumer loans to 100 per cent, a
move that will reduce the cost of
such loans. Currently, the risk
weight requirement for such
loans is 125 per cent. The relaxed
requirement would not be
applicable to credit cards.
Banks' loan exposure limit
to single NBFC increased P16
the account by the bank.
The conservative approach
of calculating eligibility is
considering 60 per cent of net
in-hand fund as loan servicing
capability. Under the repo-
banks will have to offer the linked loan format, this dips to
loan product only to own less than 40 per cent since the
customers so that the amount first-year outgo would be
can be debited directly from much higher.
INDIA'S
DAIRY
MARKET
Size (Organised) Key players
~9,000 cr NATIONAL:
Amul, HUL,
Mother Dairy
~6,000 cr REGIONAL:
Arun, Cream
Bell, Heritage,
Vadilal,
Havmor,
2018 2023*
Dinshaw's
*Projected Source: Industry
deal with HUL was almost done, and that
an announcement was expected soon.
Deloitte was tasked with finding buyers
for the business, they said, which is co-
“The value of data comes not
from hoarding it or trading it
like a finite commodity, but
from allowing it to flow freely
and encouraging the
innovation that comes from
that free flow of data”
NICHOLAS CLEGG
Head of Global Affairs
& Communications, Facebook
resources, and technological innova-
tion to cross-borders in order to flour-
ish,” said Clegg on Thursday.
He was speaking at a session
organised by Ananta Aspen Centre
and Facebook on ‘New Rules for the
Internet: Shaping the Digital
Economy’.
Clegg acknowledged that India’s
concerns about national security
related to data-sharing were valid, and
suggested that the two countries
revive their bilateral relationship on
“cyber cooperation and for India to
seek access to these existing mecha-
nisms for data sharing”.
Turn to Page 17 >
In simple words, if a
borrower was considered
creditworthy for an EMI of
~60,000 per month, the same
customer would be considered
for only ~40,000 EMI under
the repo-linked structure, and
thus the loan amount
sanctioned would fall
accordingly.
From October 1, all banks
will have to shift to a repo-
linked structure, as directed
by the RBI. And if the SBI
structure becomes the
standard, then the housing for
all scheme of the government
would take a serious hit,
bankers fear.
All the banks have linked
their home loans to repo at a
time when it is already at a
decade low and is expected to
go up again in a year or two.
Considering the loans would
run for 20-30 years, the
customer would likely bear a
higher interest rate than what
they are being offered now,
pointed out analysts.
Turn to Page 17 >
owned by the Ranas and Bapunas, both
Parsis from Nagpur.
The two families own 50 per cent each
in Dinshaw’s Dairy and had sounded out
potential buyers in 2015 as well, but did
not go ahead with the sale. Sources said
management differences between the
promoters and succession issues were rea-
sons for the sale.
For HUL, the acquisition of Dinshaw’s,
if it happens, will be its second transaction
in ice creams in a year. Last August, the
company had picked up the ‘Adityaa Milk’
ice creams and frozen desserts brand from
Karnataka-based Vijaykant Dairy and
Food Products for an undisclosed amount.
The aim was to get a larger slice of the
~6,000-crore organised ice cream market
in India, sector experts said. HUL, which
already sells ice creams and frozen
desserts under the Kwality Wall’s,
Magnum and Cornetto brands, competes
with rivals Gujarat Co-operative Milk
Marketing Federation (GCMMF), which
makes the Amul brand of ice creams, and
Mother Dairy at the national level.
Turn to Page 17 >
new KG-D6 gas
Brent-linked bidding likely
on Oct 11, conducted by CRISIL
JYOTI MUKUL
New Delhi, 12 September
Thirteen years after it first undertook a price
discovery exercise for natural gas, Reliance
Industries, along with UK partner BP, will be
selling 5 mscmd (million standard cubic
metres a day) from its R-cluster field in the
Krishna-Godavari (KG) basin through an
e-auction mechanism.
This discovered price would, however, be
capped by a ceiling set by the government
every six months for gas produced from dif-
ficult fields.
The base price would be 9 per cent of the
average Brent price for three months preced-
ing the delivery date. “We chose this base
price because imported LNG (liquefied natu-
ral gas) from Qatar is benchmarked to 12.53
per cent of the Brent average plus 60 cents,
which roughly translates into 13.5 per cent at
the current rate,”
said an RIL execu-
tive. He said the
company was look-
ing to maximise
value for itself and
the government
through the
process.
The bidding is
likely on October
11. CRISIL Risk and
Infrastructure
Solutions has been
appointed manag- This discovered
er for the auction, price would,
to be conducted on however, be
the platform of capped by a
ProcureTiger, a ceiling set by
brand of Gujarat-
based E-procure-
the government
every six
ment months for gas
Technologies. produced from
RIL will sign gas difficult fields
sales purchase
agreements
(GSPAs) with the buyers, assuring them a
minimum quantity. "If we are not able to
meet that volume from R-Cluster, we will
make an alternative arrangement," said the
executive. The R-Cluster field in the KG-D6
block is expected to commence production in
the first half of 2020.
The draft GSPA has proposed a ship or pay
clause for 80 per cent of the volume, as against
the industry benchmark of 90 per cent. Both
buyer and seller are required to lift and supply
80 per cent of the contracted gas, failing
which they will have to pay for that volume.
Bidders would be able to see the price
emerging during the e-auction and the lowest
bidder can better his offer by at least 0.1 per
cent (ticker rate) of the Brent price. Others
can then bid an even higher price.
This process will go on till no one wants to
increase the price.
The bidding will be based on price, tenure,
and volume. Bidders can choose the tenure of
two to three years. The minimum quantity
for which a bid can be placed is 0.05 mscmd.
The bidding process is initially planned
to run for three hours. The dynamic nature of
auction could see bidders changing their
parameters, in which case the auction will be
extended by half an hour.
Turn to Page 17 >
2 COMPANIES NEW DELHI | FRIDAY, 13 SEPTEMBER 2019

STOCKS > Walchandnagar Industries

76 Wins order from Isro
> SBI Life Insurance company
831.20 840 SBI to sell 4.5% stake via
> Apollo Hospital Enterprise
1,510 Promoter reduces
> Granules India
106 Gets EIR from USFDA for
> Alkem Laboratories
1,848.50 1,855 Receives four form 483
IN THE NEWS 72.15
68 worth ~77 crore 822 offer-for-sale at floor
1,496.55
1,490 stake in the company
104.20
101 its Hyderabad unit 1,846.65 1,835 observations from USFDA
price of ~770 per share 1,495.40 by 3.6% via block deal 99.00 for its St Louis, US, unit
60.15 60 804 1,470 96 1,815
54.45 798.75 92.40 1,825.90
791.90 786 1,459.10 1,450 ~104.20 CLOSE
52 ~72.15 CLOSE ~791.90 CLOSE ~1,459.10 CLOSE 91 1,795 ~1,825.90 CLOSE
Sep 2019 Sep Sep Sep 2019 Sep Sep Sep 2019 Sep Sep Sep 2019 Sep Sep Sep 2019 Sep Sep
* OVER PREVIOUS CLOSE 5 11 12 19.95% UP* 5 11 12 0.86% DOWN* 5 11 12 2.43% DOWN* 5 11 12 5.25% UP* 5 11 12 1.22% DOWN*
> .

M&M offers subscription-based SUVs

IN BRIEF
DHFL reports fresh default of
~196.6 cr on bond repayment Joins automakers Tata Motors, Volkswagen, WHAT’S AVAILABLE
from subscription? Leasing is for those
looking for an asset-light way of expe-
Crisis-riddennon-bankingfinancial
company(NFBC) DHFLonThursday
Nissan in launching services on select models Alturas riencing a vehicle. With a lock-in peri-
od of three to four years, the lessee
~87,000
reportedafreshcaseofdefaultamounting SHALLY SETH MOHILE shared mobility space. Amid rising should be comfortable using the same
Monthly
to~196.65croreonbondrepayment Mumbai, 12 September ownership costs and an upwardly Marazzo model through the tenure of the lease.
obligation.AnotherNBFCAlticosaidit mobile lifestyle, the new-age car own- subscription It targets those looking for a compre-
~34,000

M
haddefaultedoninterestpaymentof ahindra & Mahindra (M&M) ers are looking for a hassle-free access fee for hensive coverage on insurance, road
~19.97croreonexternalcommercial on Thursday launched a to ownership, instead of being saddled XUV3OO fouryears tax with the possibility of buying back
borrowings(ECBs)ithadavailedfromMashreqbankPSC.The subscription-basedservicefor with a financial burden. ~26,000 the vehicle at the end of four years,
defaultbyDHFListowardsprincipalandinterestonnon- its select SUV (sport utility vehicle) “We have been exploring multiple said Nakra.
convertibledebenturesworth~350croreissuedbyit,DHFLsaidin models in a bid to target the young ways by way of which we can get KUV1OO Both the models, he claimed, offers
aregulatoryfiling.ThestockofDHFLclosed0.79percent,upat customers who give preference to people to explore our brands,” said ~19,720 an attractive proposition over owning
~51.25ontheBSE.Inaseparateregulatoryfiling,Alticosaid,“With experience over ownership. Veejay Ram Nakra, chief of sales and Source: Company a vehicle as one doesn’t have to pay
respecttopaymentofinterestundertheECBfacilityavailedbyus The initiative, in partnership with marketing, automotive division, M&M, the margin money or go through the
fromMashreqbankPSC...AlticoCapitalIndiadefaultedoninterest Revv Cars, comes a year after the in a conference call. rigors of getting the CIBIL score.
paymentof~19.97croreongrossprincipalamountof~340crore.” company introduced leasing for retail With this flexible and affordable for 10 months straight amid a liquidity between ~15,000 and ~50,000, depend- Moreover, the financier offers cred-
Alticoaddeditstotalborrowingfrombanksandfinancial customers through a tie-up with ORIX. offering, M&M hopes to help its crunch, rising ownership costs, and ing on the model. The monthly sub- it on the basis of ex-showroom price
institutionsis~4,361.55croreasonSeptember12,2019. PTI< M&M joins automakers such as customers fulfil their aspiration of driv- an economic slowdown. scription includes regular mainte- and not on-road price that includes
Nissan Motor India, Tata Motors, and ing their desired vehicles without nec- Under the subscription scheme, a nance, 24x7 road assistance, accident road tax, insurance, etc.
Volkswagen, which offer subscrip- essarily owning them. This, in turn, customer can use an M&M model for a repair, and insurance. Even though the monthly fee is
Yamaha signs 3-year Fire breaks out in tion for select models on the will also attract a new set of customers monthly subscription fee for a mini- At the end of a year, the user can marginally higher than the equated
Zoomcar’s platform as they seek to to the brand. “It also aligns with our mum of one year. The fee ranges either renew the subscription of the monthly instalment one will pay when
wage settlement HPCL’s LPG plant in tide over the structural shift larger vision of transforming the face of between ~21,000 and ~87,000, depend- same model, chose another model or getting a vehicle financed, the extra
deal with workers UP, three injured witnessing the car market. mobility in India,” said Nakra. ing on the model and the duration for surrender it. The surrendered vehicle cost doesn’t pinch, as everything else
IndiaYamahaMotorhas A fire broke out in an LPG plant After cab aggregation, subscription M&M is launching a subscription- which it’s being subscribed. will get added to Revv’s fleet of (repair, maintenance, insurance, and
signedathree-yearwage of Hindustan Petroleum and self-drive cars are expected to based service at a time when passenger The subscriber also has to pay a self-driven cars. road tax) is covered by the monthly
settlementwiththecompany’s Corporation (HPCL) in Unnao emerge as prominent trends in the vehicle sales have been in the slow lane refundable security deposit that ranges So, what makes leasing different fee, said Nakra.
internalemployees’union.The on Thursday, leaving three
settlementwillbeapplicable people injured, officials said.
toallthepermanentworkers Unnao District Magistrate

Promoters infuse Titan to raise ~900 crore

inYamaha'sChennaifactory. Devendra Kumar Pandey
Thecompanydidnotdisclose and Police Superintendent
anydetail.Thewagesettle- M P Verma rushed to the spot

via commercial paper

mentwillbeimplemented along with senior officials and

~500 cr into Vistara

withretrospectiveeffectfrom
April1,2019,andwillremain
effectiveuntilMarch31,2022.
Accordingtothedeal,the
staffwouldbeeligibletogetan
additionalincreaseintheir
CTC,dependingontheir
productivity,levelofskills
attained,andexperience
overtheperiod. BSREPORTER<
LOT Polish Airlines
launches flights on
Delhi-Warsaw route
LOTPolish
Airlines,
theflag
carrierof
Poland,startedflightson
theDelhi-Warsawrouteon
Thursdayandstateditplans
toexpandoperationsto
otherIndiancitiesifthe
bilateralagreementbetw-
eenthecountriespermits.
“Westartverysignificantly
withfiveflightsperweek.
Normally,wewouldnotdo
itifwedon’tbelieveinthe
asked people in a radius of
1.5 km to vacate their homes.
Pandey said the fire was
noticed at 10.30 am. He said
fire tenders rushed from
nearby police station areas
and they took two hours to
douse the flames. SDRF teams
were also requisitioned. PTI<
Biocon enters China
market with generic
drug products
Bioconhassignedalicenceand
supplypactwithasubsidiaryof
ChinaMedicalSystem(CMS)for
threegenericformulationpro-
ductsinChina.Withthis,the
companygetsaccesstothe
second-biggestpharmamar-
ketintheworld.Accordingto
thedeal,Bioconwillberespo-
nsibleforthedevelopment,
manufacturing,andsupplyof
theproducts,whileCMSwillbe
responsibleforregistrationand
commercialisationofthe
productsintheneighbouring
country.It,however,didnot
ANEESH PHADNIS
Mumbai, 12 September
Vistara has received ~500-crore
fund infusion from its pro-
moters, Tata Sons and
Singapore Airlines, at a
time when the loss-making
airline is making international
foray to fill the vacuum caused
by Jet Airways’ closure.
The airline’s board
approved the allotment of 500
million shares of ~10 each to
the two promoters earlier this
month. The board had in July
increased the authorised share
capital of the company from
~5,000 crore to ~12,000 crore.
The authorised share capital
indicates the maximum share
capital a company can raise.
A Vistara spokesperson
declined to comment on the
fundraising, but said the airline
continued to grow its opera-
tions. “In this financial year, we
Air India Assets Holdings to raise
~22,000 crore through bonds
Air India Assets Holdings
(AIAHL), a special purpose
vehicle of national carrier Air
India, will issue bonds worth
~22,000 crore in the coming
weeks, with the first tranche
worth ~7,000 crore set to hit
the market on September 16,
according to a senior official.
It is planning to raise the
amount by issuing bonds
with different tenures.
As part of the efforts to
clean up the balance sheet of
Air India, which has a debt
and three months. Banks and
mutual funds are expected to
participate in the first tranche
of the bond offering, the
official said. AIAHL would
issue 10-year bonds worth
~15,000 crore in the coming
weeks. The proceeds from the
bond offering would be used
to repay debt, he said.
Pilot under ED scanner
Senior Air India pilot
Atul Chandra, who was called
back from deputation from
ABHIJIT LELE
Mumbai, 12 September
Titan Company, a Tata Group
unit, plans to raise about ~900
crore through commercial
paper, a short-term money
market instrument.
It has comfortable liquidity
with healthy cash accruals of
~1,000 crore and financing
through customer advances
(deposits). Also, the Tata Group
company has healthy cash and
liquid investment reserves of
over ~900 crore as on March
31, 2019. This excludes restrict-
ed cash and inter-corporate
deposit investments.
Rating agency ICRA has
assigned an ‘A1+’ to commer-
cial paper. Its operations are
working capital intensive.
However, these are largely
funded by customer advances
and credit through gold metal
The firm’s watch segment
has reported improvement
in profit margins during
the past two years
loans with negligible cash
credit/overdraft utilisation by
the company. Also, the gold
inventory hedging practices
followed by Titan protect its
earnings against volatility in
gold prices.
Referring to its market
strengths in various segments,
ICRA said the company had
leadership position in the
organised jewellery, watches,
and eyewear segments.
Titan’s jewellery segment
has witnessed healthy revenue
growth and margin expansion
in 2017-18 and 2018-19, aided
by improving market share as
well as additions to the store
network. The watch segment
has also reported improve-
ment in profit margins during
the past two years.
Titan has a robust financial
profile with strong cash accru-
als, moderate capital expendi-
ture requirements, and
comfortable leverage metrics.
The ratings, however, con-
tinue to be constrained by the
regulatory risks and the com-
petition in the domestic jew-
ellery retail space, with all
major players expanding
across markets. Regulatory
actions in the jewellery seg-
ment have impacted Titan in
the past, both on the demand
and supply side.

NCLAT to hear Shapoorji Pallonji’s

market...Wewillsoon
increaseourfrequenciesas
soonasitispractical,”said
RafalMilczarski,theairline’s
chiefexecutiveofficer. PTI<
MDH Sambhar
Masala’s lots
recalled in US
DifferentlotsofMDHSambhar
Masalahavebeenrecalledby
HouseofSpices(India)inthe
USonaccountofsalmonella
contamination,according
totheUSFoodandDrug
Administration (USFDA).
According toastatementby
HouseofSpices(India)tothe
USFDA,theproductisproduced
byR-PureAgroSpecialities
anddistributedbyHouseof
Spices(India). PTI<
citethethreeproductswhich
arepartofthedeal.
BS REPORTER<
Bennett Coleman
buys ~241-cr shares
in Future Retail
Media company Bennett
Coleman and Company on
Thursday picked up shares
worth over ~241 crore in Future
Retail through open market
transactions. According to the
block deal data available with
the BSE, Bennett Coleman
and Company bought a total
of 5.94 million shares or
1.18 per cent stake in the retail
chain. The scrips were
purchased on an average price
of ~406, amounting to a total
of ~241.18 crore. PTI
have scaled our network signif-
icantlybymorethan50percent
in the domestic market and
have also forayed into the inter-
national market,” she said.
So far, the two joint venture
partners have infused over
~4,500 crore into the airline and
analystsbelievethelatestround
of funding will make it battle-
ready for the medium-haul and
long-haul operations.
Vistara, which began opera-
tions in January 2015, launched
its international services last
month, with flights to Bangkok,
Dubai, and Singapore. Further
international expansion
is scheduled in early 2020,
when it receives two of its
wide-body Boeing 787.
The airline has indicated it
would launch flights to London
and Tokyo next year. It has
burden of more than ~58,000
crore, a little over half the
amount is to be repaid by way
of proceeds from the issuance
of bonds by AIAHL. The official
said AIAHL would issue bonds
worth ~7,000 crore on Septe-
mber 16. These bonds would
have a tenure of three years
already sought traffic rights for
London, which were allocated
to Jet Airways.
AmeyaJoshi,founderofavi-
ation blog NetworkThoughts,
said wide-body international
operations would require a lot
of investments and Vistara may
even have to acquire slots at
London’s Heathrow airport and
invest in lounges. This week,
the airline announced a tie-up
with Panasonic for in-flight
the DGCA, has come under the
ED scanner for alleged fina-
ncial irregularities, a source
said on Thursday. The ED has
sought documents from
Air India regarding financial
transactions by Chandra
after receiving a complaint
against him in June. PTI
entertainment system
on its Airbus A321 and Boeing
787 planes. It also plans to
make further product enhance-
ments for its proposed wide-
body routes.
Vistara’s losses doubled to
~831 crore in 2018-19, amid a
tough operating environment.
While revenue increased 38 per
cent to ~3,045 crore in the last
financialyear,itslosseswidened
due to increase in fuel costs.
plea on Korba West Power on Oct 15
AASHISH ARYAN
New Delhi, 12 September
Construction to shipping con-
glomerate Shapoorji Pallonji
Group has approached the
National Company Law
Appellate Tribunal (NCLAT)
against a judgment of Ahme-
dabad Bench of the National
Company Law Tribunal app-
roving a resolution plan that
gave no funds to the company.
The NCLAT will hear the case
on October 15.
The Ahmedabad Bench
had in June approved a reso-
lution plan for Korba West
Power, which gave the unse-
cured financial creditor its
entire claim while handing the
secured lenders only 32.84 per
cent of their claimed amount.
Shapoorji Pallonji, which had
constructed the Korba
West Power plant, got ‘nil’
amount against its total claim
of ~45 crore.
The resolution professional
of the corporate debtor had said
as arbitration proceeding was
ongoing between the Shapoorji
Pallonji and Korba West when
the moratorium period kicked
in, the former would be entitled
to no-zero per cent payment for
the construction company.
The company, on the other
hand, said as operational cred-
itors had been paid
35.79 per cent of their admitted
claims, they should also have
been either paid that much or
be allowed to pursue the arbi-
tration proceedings and claim
their due accordingly.
Secured financial creditors
of the company have received
~1,100 crore, against their total
admitted claim of ~3,346 crore,
while unsecured lenders have
been provided 100 per cent of
their ~1,685 crore claim under
the approved plan.

Disney reveals revenue plans for Hotstar Facebook withholding info

Targets 50% of live-streaming platform’s revenues from subscriptions in the next three to four years
SURAJEET DAS GUPTA
New Delhi, 12 September
Justafewmonthsafteracquiringlive-
streamingplatformHotstarfromRupert
MurdochinIndia,WaltDisneyCompany
haschartedoutanaggressiveplantopush
forgreatersubscriptionrevenuesforthe
over-the-top(OTT)player.Disneyis
targeting50percentofHotstar’stotal
revenuesfromsubscriptionsinthenext
threetofouryears—ahugeincreasefrom
thecurrent7-8percent.
ForDisney,whichboughttheOTT
businessaswellastheStarTVchannelsas
partofaglobaldeal,theshiftfromalargely
advertising-ledOTTmodeltoonethatis
subscription-led,isamongthefirstkey
decisionsittookafteritpickedupHotstar.
Themoveissignificantasitfliesinthe
faceofthemodestprojectionsmadeby
Ficci-EYinitsMediaandEntertainment
Report,2019.ThereportpredictsthatOTT
channels’shareofsubscriptionrevenues
intheindustry’stotalrevenueswillgoup
slowly. Theshare,whichgrewfrom
3.3percentin2017to8.4percentin2018,
isexpectedtogrowto17.5percentby2021,
saysthereport.
Disney’smovecomesatatimewhen
themarkethasbecomemorecompetitive.
ThenumberofOTTplayersinIndiahas
goneupto33-35—fromjustninein2012.
ThenewbigboyontheblockisApple,
whichannouncedthelaunchofits
ownOTTplatform.This,analystssay,
couldsparkapricingwaramongstthe
bigplayerstowoosubscribers.
AccordingtotheBostonConsulting
Group,Hotstar—byfarIndia’slargestOTT
channel—spentover~4,000crorefor
content(includingsport)in2017,against
~500-600crorespentbyNetflixand
~500crorebyAmazonthesameyear.
Hotstar,whichhasthebroadcastingand
digitalrightstopropertiesliketheIndian
PremierLeagueandtheICCWorldCricket
Cup,hasputtogetherastrategytoreduce
itsover-dependenceonsport,especially
cricket. “Currently,one-thirdofouruser
KEY OTT PLAYERS
Monthlyactive subscribers
Hotstar
Zee5
Voot 50.0
Amazon Prime 2.51
Netflix 1.2
*Includes customers who pay for the channel. In the case of
Hotstar and Amazon Prime, all are paid customers
Sources: Companies, industry estimates
revenuescomefromsport,whichismainly Sourcessayitplanstoinvestinoriginal
cricket.Anotherone-thirdcomesfrom Hindiandregionalcontentinabigwayto
simpleTVprogramming,andtherestis becomeamassOTTplayerinthecountry.
fromourHotstarspecials,”saysasource. Towoomoresubscribers,‘HotstarVIP’,
Settingspeculationtorest,sourcessay whichincludessport,television
thenewownerswillnotlaunchtheirglobal programmesandspecials(original
OTTplatformsDisney+orHuluinIndia. content),hasbeenpricedat~365annually.
Instead,theywillintegratetherelevant Thismeansthatthesubscriberpaysonly
contentintoHotstar.Hence,inIndia, ~1aday,whichismuchcheaperthana
DisneywillhaveoneOTTplatformtotake newspapersubscription.Unlikesomeofits
onNetflix,Amazon,andprobably,Apple. competitors,Hotstarhasgoneforan
AlltherelevantcontentfromDisney+ annual,ratherthanamonthlysubscription
andHuluwillbeavailableonHotstar model.However,HotstarPremium,which
throughitspremiumprogramming. alsooffersthelatestAmericanTVshows
Hotstarhasbeenabletogarnerover andHollywoodmovies,isavailablefor
300millionactivemonthlysubscribers. ~999ayearor~299amonth.
in police cases: Tamil Nadu
AASHISH ARYAN
New Delhi, 12 September
was not heard expeditiously, firms such
as Facebook would continue to operate
(inmillion*)
without following the country’s laws.
300.0 Tamil Nadu on Thursday approached “In this regard, it may be noted that
the Supreme Court (SC) seeking that the local law enforcement authorities
76.4 the Madras High Court (HC) be allowed have attempted to seek information
to hear and pass orders on Facebook’s from these companies for the investi-
petition to transfer all its cases to the gation and detection of crimes on sev-
apex court. eral occasions. These
Last month, the social companies, instead of
media company had moved replying and providing
theSCseekingtogetallcases information in a bona fide
related to linking of Aadhaar manner, have asked the
number to social media pro- authorities to send letters
files pending before various rogatory etc, despite oper-
highcourtstotheapexcourt. ating on Indian soil, and
A two-judge Bench of have in all cases failed to
Justices Deepak Gupta and The state has provide complete infor-
Aniruddha Bose had agreed moved SC seeking mation,” the state said.
to hear the matter. Though modification of Listing 34 such cases
the top court had said it SC order passed where Facebook or its sub-
would not stop the Madras in Facebook’s sidiary WhatsApp had
HC from hearing the matter, transfer petition refused to provide infor-
it had directed that no final mation citing one reason
orders should be passed in the case. or the other, Tamil Nadu has said if the
This,TamilNadusaidinitspleafiled SC did not modify its earlier order in
on Thursday, had effectively meant a which it had asked the HC not to pass
stay on proceedings in the HC despite final orders, “the people of Tamil Nadu
the SC having refused to entertain the will suffer grave and irreparable harm
stay petition. Alleging that Facebook and injury”.
hadincorrectlystatedinitstransferpeti- There are several public interest lit-
tion the stage in which the cases were igations filed in the case, with the earli-
pending in various high courts, the state est being moved before the Madras HC
has in its plea before SC said if the case in July 2018.
.
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 COMPANIES 3 <

Flipkart’s BBD plans: IT,e-commmerce to lead job Zomato layoffs

erase $360 mn

Big Billion branded growth despite slowdown from Info Edge

Info Edge India saw its market
value erode by about ~26 bil-
AVISHEK RAKSHIT BFSI, health care and e-com- lion ($360 million) after a

aircraft and burgers

KARAN CHOUDHURY and around 70 planes would have BBD tags and
Bengaluru, 12 September stickers on the passenger seats. The move would
help in reaching out to easily around 7 million
Kolkata, 12 September merce sectors.
The evolution of technology
The segments of information in these sectors has trans-
technology (IT), BFSI (banking, formed jobs and created the
financialserviceandinsurance), need to hire more professionals
education and new-age aggre- who possess top-notch tech-
gators are maintaining their nological skills, along with tra-
pace of hiring of entry and mid- ditional ones. For instance, a
level professionals, says jobs typical BFSI position would
news report said a food-deliv-
ery unicorn the job-posting
website is invested in fired
more than 500 employees.
Zomato Media, in which
Info Edge holds a 26.3 per cent
stake, laid off 541 people
September 7, the Business
StandardreportedonSunday.

W
earing a T-shirt that read ‘BBD is bet- people and informing them about the sale,” said portal Indeed India. require a professional to be Info Edge shares, which
ter than amazing’ Kalyan Krish- a source close to the company. Sashi Kumar, managing equipped with sales, actuarial, rose 1 per cent September 9,
namurthy took the stage on Thursday Not only air, sources said that this year BBD director at the portal, says dep- goods and services tax and have since fallen 10 per cent as
to address the biggest Townhall meeting organ- planstotargetsplatesaswell.Flipkarthasgotinto site the current economic slow- skills. Similarly, a professional investors saw the layoffs as a
ised to date by Flipkart. atie-upwithBurgerKing.Theburgergiantwould down, the IT sector is hiring Average salary in information technology sector has also in retailing would be given sign the slowdown in con-
The word ‘amazing’ on his T-shirt was in be launching a special ‘Big Billion Day’ Whopper significantly. The financial sec- increased by 30 per cent from 2014, say analysts preference and even a higher sumption is spreading.
the same font as the brand in 50 cities and 225 stores. tor and new-age technology package if he possesses a basic “This adds to the growing
name of its biggest com- The firm is also launch- aggregators have maintained ated in the education and train- machine learning (ML), artifi- knowledge of AI, ML, automa- noise about a slowdown affec-
petitor. The 1,400 odd ing a host of offers and in the earlier pace of job creation. ing sector. Professionals across cial intelligence (AI), block- tion or robotics. ting revenue of consumer
‘Flipsters’, or employees, partnership with other “The slowdown is a global the country are also upskilling chain, augmented/virtual real- Shine.com says cross-func- companies,” said Purvesh
attending the meeting apps including Ola, Oyo, phenomenon. In the IT seg- or reskilling themselves. ity and natural language tional skills will be the key req- Shelatkar, head of institution-
were amused to see that. Urban Clap, PhonePe, and ment, hiring has been signifi- “As more professionals processing are already creating uisite for employees in the al brokering at Monarch
Another few thousand Zomato, among others. cant and these companies are acquire the skills to fulfill the millions of jobs. coming years. “As businesses Networth Capital in Mumbai.
employees joined the The company has tied looking for experienced profes- increasing tech-centric job However, these domains continue to go digital, we can “Newsaboutlayoffsisanover-
meeting through live- up with banks including sionals having domain expert- roles, demand in the education also need people with a spe- expect a sharp rise in digital hang on the stock now.”
stream at more than 26 Axis Bank and ICICI Bank ise about the Java program- sector is likely to increase fur- cific set of skills that Indian marketing, content writing and Unlisted Zomato clocked
locations, including offices and plans to extend credit ming language. BFSI and the ther,” says Zairus Master, chief graduates lack. Therefore, social media marketing dom- a revenue of ~13.1 billion in the
and warehouses. to more than 50 million aggregators have also been hir- executive at Shine.com. there is a dire need for gradua- ains. Avenues from coding and year ended March 2019, a near
In the run-up to the customers this year during ing,” he says. Company officials He says IT and IT-enabled tes and professionals to upskill programming in Python and threefold jump from a year
company’s biggest sale BBD. Close to 30 brands, estimate that not only has the services (ITeS) remains the themselves by unlocking the Django to UI/UX development ago, according to the recent
event of the year, Big Billion including Samsung, Xia- IT sector has been able to regis- highest growing sector across potential of online learning and data visualisation are also annual report of Info Edge.
Days (BBD), Krishnamur- omi, GoPro, Titan, Life- ter net growth in job creation the globe. In India, there is this platforms. Such platforms set to gain momentum in Thecompanypostedaloss
thy laid out plans in front of
his employees. Krishna-
BIG BILLION FIREWORKS style, and Under Armour,
among others, would be
despite high attrition levels but
average salary in the sector has
accelerated growth of innova-
tive technologies such as cloud
allow professionals to combine
traditional and new-age com-
India,” Master says.
In its biannual survey
of ~10 billion, up about 10-fold
from 2018. In comparison,
murthy and his team are 10% instant discount and 5% launching everything also increased by 30 per cent computing, data science, the petencies to strengthen their report, Shine.com says despite Info Edge’s revenue increased
planning a major adver- unlimited cashback for Flipkart starting from mobiles from 2014 to date. With several internet of things (IoT) and position in the job market. Be- the slowdown, mid-level hir- 20 per cent to about ~11 billion
tisement and marketing Axis Bank co-brand card customers phones, fashion, and other tech-backed educational start- mobile app development, sides IT/ITeS, a major chunk ing is set to witness a signifi- while its net income climbed
blitzkrieg over the next two products during the six- ups entering the market, many among others. of such professionals will be cant surge in the coming 53 per cent to ~2.8 billion.
weeks — some of the props Games and contests with rewards day sale. high-value jobs are being cre- According to his portal, absorbed by the retailing, months. BLOOMBERG
are aircraft wrapped in worth ~100 crore According to sources,
decals of BBD advertise- 100 plus offers for SuperCoins and discounts might go down
ments to special burgers in 4X Coins for all partners like Ola, on the platform this year
the name of the magnum
opus sale, slated to start on
Oyo, PhonePe, UrbanClap, 1mg and the company would be
focusing on providing the
Privacy-based models may
September 29.
According to sources
Exclusive rewards and free flight
offers during the BBD
best experience they can.
With the launch of Hindi
generate $12 billion by 2025
close to Flipkart, the com- language on the platform, Newbusinessmodelsbasedonprivacy,ifimplementedwell,could
pany has charted out an Flipkart hopes to bring in a generaterevenueofupto$9-12billionby2025,astudyfocusedon
ambitious plan and believes that this year its whole new set of users this BBD. datapracticesandgovernanceofprivateenterpriseshasfound.Omi-
gross merchandise value (GMV) would be 11 Consumers will have access to the widest dyarNetworkIndia,theinvestmentfirmfocusedonsocialimpact,
times more than what it was on a non-sale days. selection of brands and products across cate- andMonitorDeloittelaunchedareporttitled“Unlockingthepotential
According to sources, in a first, Flipkart has gories from lakhs of sellers, brands and arti- ofIndia’sDataEconomy:Practices,PrivacyandGovernance”.The
tied-up with SpiceJet to hold a massive “mar- sans. There would be deals in key categories reportfoundthatamongbusiness-to-consumer,upcomingprivacy
keting in the air” campaign. “More than 10 air- such as mobiles, gadgets, TVs, appliances, fash- modelsarelikelytoconsistofplatformsandtoolsthatenableindivid-
craft would be wrapped in Flipkart BBD deals ion, personal care, furniture. ualstoown,manageandmonetisetheirpersonaldata. BS REPORTER

Blackstone’s proposal for Coffee Day park soon

DEBASIS MOHAPATRA & BIBHU RANJAN MISHRA
Bengaluru, 12 September
Private equity major Blackstone is like-
ly to submit its final proposal for
acquiring Global Village Tech Park, ow-
ned by Coffee Day Enterprises’ (CDE)
subsidiary Tanglin Developments, in
the next three days. The board of CDE
is awaiting the final proposal after
which it will take a call, sources privy to
the discussion, said.
On August 14, CDE had announced
its intent to sell Global Village Tech
Park to Blackstone for a valuation of
~2,600-3,000 crore.
Once done, the deal would provide
substantial relief to the group by reduc-
ing its debt, which stood at ~4,970 crore.
Several persons privy to company’s
deleveraging efforts said IDFC
Securities had started renegotiating
with lenders on the repayment terms.
“IDFC has started negotiating with
banks and lenders. It has to be negoti-
ated with each of the lenders (after
which the due diligence will happen),”
said one of the persons cited above.
Last week, CDE had appointed IDFC
Securities as a consultant to advise the
company on refinancing existing debt
and repaying of current debt. It will
also evaluate strategic options for the
firm, including divestment of CDE’s
holding in Coffee Day Global and oth-
er group companies.
“The process of finding out suitors
will begin once refinancing of debt is
completed,” the person said.
Strategic alternatives being
explored for reduction of
~1.5K-cr debt: Sical Logistics
Sical Logistics has said it has an
external debt of ~1,488 crore, which
has been secured by the personal
guarantees of late Coffee Day Group
promoter V G Siddhartha, and
‘strategic alternatives’ are being
worked out to deleverage the firm. The
Coffee Day Group company took the
decision to deleverage at its board
meeting held on August 2. PTI
Sources said Sical Logistics was
zeroing on its deleveraging steps with
the help of ICICI Securities. “Any con-
crete proposal is yet to come. However,
the company is likely to submit some
proposals to the board in the next two-
three days,” the person said.
Meanwhile, the probe for finding
the truth behind the purported letter
written by Coffee Day Group founder V
G Siddhartha has already started by
former DIG of Central Bureau of
Investigation Ashok Kumar Malhotra.
Late last month, the company had
hired Malhotra to investigate the con-
tents of the letter.
“The work has started and he had
sought for certain information, which
has been provided by company offi-
cials. He has been authorised to take
help of legal or chartered accountants.
There are issues beyond the realm of
accountancy and he is a professional
investigator of high repute (who can
get to the roots of the matter),” anoth-
er person said.
After the death of V G Siddhartha,
CDE is pursuing many steps to reduce
its debt liability and has earlier app-
ealed its creditors and lenders to pro-
vide sufficient time for honouring its
repayment obligations.
By the end of July, Coffee Day Gro-
up’s total liability stood at ~4,970 crore.
While its subsidiary Tanglin Develo-
pments’ debt stood at ~1,622 crore, and
its flagship coffee retailing arm, Coffee
Day Global’s total debt was at ~1,097
crore by the end of this period.

SC cancels bail of
Bhushan Steel’s
former CFO
AASHISH ARYAN Neeraj Singal had been
New Delhi, 12 September arrested and granted bail,
and thus it made no sense
The Supreme Court (SC) to not grant Johari bail.
on Thursday cancelled the On May 2, Johari was
bail of the former chief arrested by the SFIO for
financial officer (CFO) of his role in the fraudulent
Bhushan Steel Nittin activities within Bhushan
Johari and remanded him Steel, including filing false
back in the custody of documents with various
Serious Fraud Inves- banks.
tigation Office (SFIO). The SFIO has also
Johari had been grant- alleged that Johari, who as
ed bail by the Delhi High CFO signed off on the
Court in a case company’s
filed by the Nittin Johari, accounts book
SFIO, which has arrested by SFIO till 2016-17, had
named him and for alleged role indulged in
the former chief in fraudulent maintaining
executive offi- activities at inflated inven-
cer and Mana- Bhushan Steel, tories of raw
ging Director has been in materials so as
Neeraj Singal judicial custody to avail enh-
for alleged since May 2 anced working
irregularities, capital from
including manipulating lenders.
accounts of the company. The SFIO had said that
The Delhi High Court the company had obtained
had on August 14 granted Letters of Credit (LoC)
bail to Johari and said the worth nearly ~20,000 crore
main accused, Brij Bhu- by providing false docu-
shan Singal and Neeraj ments to banks.
Singal, were the promoters The LoCs had been
and had actually been issued by Johari and other
controlling the firm. While top executives of the com-
Brij Bhushan Singal had pany, the probe agency
never been arrested, had said.
4 ECONOMY & FINANCE NEW DELHI | FRIDAY, 13 SEPTEMBER 2019

“Those who thought they are above law and “We must encourage and foster collaboration across “What India needs isn't propaganda,
above courts of the country are now approaching education and research institutions, industry, civil manipulated news cycles & foolish
courts praying bail; some people have already society and government… the role and contribution of theories about millennials, but a
gone inside (jail)... never has the country has good and open-minded institutions in society cannot concrete plan to #FixTheEconomy that
seen such acceleration in development” be measured in money terms” we can all get behind”
NARENDRA MODI, prime minister AZIM PREMJI, founder, Wipro RAHUL GANDHI, Congress leader
> .

Some IIP solace after Aug CPI inches

IN BRIEF
Saab to meet Indian firms for
making Gripen E aircraft up on back of
weak GDP concerns
Swedish defence major Saab is
planning to hold meetings with
Indian companies in October to
develop ecosystem in the
country for manufacturing
food prices
multi-role fighter aircraft, a top ARUP ROYCHOUDHURY non-food items, education and
official of the company said. INDIVJAL DHASMANA New Delhi, 12 September personal care and effects saw a
Saab is in the fray for a contract New Delhi, 12 September rise of 6.10 per cent and 6.38
to supply around 110 fighter Consumer price index-based per cent, respectively, health

I
planes to India under the Multi ndustrial production may give the gov- inflation (CPI) for August saw an increase of 7.84 per cent,
Role Fighter Aircraft (MRFA) programme. The Indian Air Force ernment some respite, bogged down crept up slightly to 3.21 per and housing 4.84 per cent.
in April 2018 issued an initial tender or Request for by criticism over low gross domestic cent year-on-year, compared “Food inflation has
Information (RFI) for the billion dollar procurement deal. Saab product (GDP) growth numbers for the first with 3.15 per cent in July, driv- increased to 3% which is inter-
responded to the initial tender in July 2018 with its Gripen E quarter of 2019-20 (FY20). The Index of en by a sharp rise in food esting as it means farmers are
MRFA. Mats Palmberg, VP Industrial Partnerships and Head of Industrial Production (IIP) rose by 4.3 per prices. The latest print is still getting higher incomes which
Gripen India Campaign said that the company has cent in July, against 1.2 per cent in the pre- comfortably below the will help rural consumption
undertaken surveys for aerostructures parts, such as sub- vious month. Reserve Bank of India’s (RBI’s) if sustained. However, the fact
assemblies, machined parts and sheet metal parts. PTI< However, consumer durables contin- 4 per cent mark, and thus ana- that food inflation has been
ued to print contraction in July. Within that lysts continue to expect fur- increasing can lead to higher
category, commercial vehicles, auto parts, ther rate cuts by the Monetary headline inflation with core
Gujarat retains top BoB seeks to sell and television sets saw fall in dispatches to
ISSUES REMAIN Policy Committee. inflation being stable at 4.3
dealers, revealed the IIP numbers released Consumer food per cent,” said
slot on logistics Dena Bank HQs in by the Central Statistics Office on Thursday. Manufacturing output Mining output growth Auto components/spare price inflation Madan Sabnavis,
performance index BKC for over ~530 cr Economists however, cautioned against rose by 4.2% in July accelerated to 4.9% parts, accessories (CFPI) for August Among the chief economist
Gujarat has retained the top Bank of Baroda has put on over-interpreting the data as a revival of from 2.3% in June against 1.5% pulled down IIP by rose to 2.99 per cent food items, the with Care Ratings.
slot on the logistics index block the erstwhile head- industrial production. Some even expect- 0.21% in the month from 2.36 per cent sharpest YoY Sabnavis added
chart, an indicator of the quarters of Dena Bank in edthemonetarypolicycommittee(MPC)of Electricity generation Commercial vehicles in July, official data uptick was for that if vegetable
efficiency of logistical services the financial capital at a the Reserve Bank of India to cut its policy growth reduced to contributed to 0.24% TV sets dragged down released on vegetables at and pulses prices
necessary for promoting reserve price of ~530 crore. rate in the October review to bolster eco- 4.8% from 8.2% fall in IIP in July IIP by 39.6% Thursday showed. 6.9%, pulses increase, inflation
exports and economic Dena Bank and Vijaya nomic growth rate. Source: MoSPI CPI for August 2018 and products may move up fur-
growth, says a government Bank got amalgamated A bit of consolation is that consumer was 3.69 per cent, at 6.94%, and ther but will
report. Gujarat occupied the with Bank of Baroda from durables saw a fall in the rate of contraction while CFPI was 0.29 meat and fish remain under the
first spot among 22 states, this April. The property at 2.7 per cent in July, against 10.2 per cent be muted,” said Aditi Nayar, principal econ- Electricity generation grew at 4.8 per per cent. at 8.51% 4 per cent mark as
followed by Punjab and situated in the tony in the previous month. omist, ICRA. cent in July, against 8.2 per cent in the pre- “With the CPI long as crude oil
Andhra Pradesh. Meanwhile, Bandra Kurla Complex Commercial vehicles with sub-1 per cent As such, she expected the MPC to go for vious month. inflation recording prices remain
Himachal Pradesh stood last central business district weight pulled down the IIP by 0.24 per- another rate cut next month. Unlike their durables counterpart, fast- only a mild increase in August benign.
on the chart. Bihar ranked at has a land area of 2,878.36 centage points in July, while parts and Devendra Pant, chief economist at India moving consumer goods witnessed a high- 2019 despite the sharp uptick “Core-core inflation, a
20th position. PTI< sqm with a built-up area accessories with 2.6 per cent weight con- Ratings, said it will be too early to term the er growth rate at 8.3 per cent in July, against in the food inflation, we con- proxy for demand conditions
of 9,953.73 sqm. PTI< tributed to 0.21 percentage points. IIP data for July as recovery and one has to 7.1 per cent in the previous month. Also, tinue to expect the MPC to in the economy has remained
Another bleak point was that capital wait for some more time to see whether intermediate goods output expanded by reduce the repo rate by 15-25 less than 5 per cent since
Four bank officers’ goodsproduction—signifyinginvestments industrial revival is there for real. double digits for the third month in a row. basis points in the October April 2019. Inflation for
unions threaten Sebi imposes ~12 lakh — fell for the seventh month in a row. It The two broad categories — manufac- It rose 13.9 per cent in July, compared to 12.6 2019 policy review, given the household goods and servic-
strike from Sept 26 fine on ICICI Bank for declined by 7.1 per cent in July, higher than turingandmining—showedhighergrowth per cent in the previous month. continuing concerns related es is on declining trend from
6.8 per cent in the previous month. in their output in July, compared to the pre- Primary goods output recovered by to economic growth,” said January 2019 and for trans-
Four unions of officers of disclosure lapses Due to all these reasons, economists vious month. growing at 3.5 per cent in July, against 0.39 Aditi Nayar, principal econo- port and communications
public sector banks have Capital markets regulator Sebi believed that revival in IIP growth would be Manufacturing output rose 4.2 per cent, per cent in the previous month. mist, ICRA Ltd. has declined in August 2019
threatened to go on a two- on Thursday levied a total fine not be sustained. against 2.3 per cent in June, while mining “Continued double-digit growth of Among the food items, the to 1.2 per cent from 1.6 per
day strike from September 26 of ~12 lakh on ICICI Bank and its “This trend is likely to be short-lived. growth was over thrice of June growth at 4.9 intermediate goods and acceleration of sharpest year-on-year uptick cent in June 2019. This sug-
to protest against the compliance officer Sandeep Early data reveals a contraction in the out- per cent vis-à-vis 1.5 per cent. growth in primary goods in July gives a was for vegetables at 6.9 per gests weak demand condi-
announced consolidation of Batra for disclosure lapses, put of Coal India and automobiles, as well Within manufacturing, food products, glimmer of hope of minor industrial cent, pulses and products at tions in the economy,” said
10 state-run lenders into including delayed disclosure as electricity generation in August 2019, apparel, and basic metals grew by double recovery in the coming months,” 6.94percent,andmeatandfish Devendra Kumar Pant, chief
four. In a notice serviced to of binding agreement signed suggesting that the next IIP print is likely to digits in July. said Pant. at 8.51 per cent. Among the economist at India Ratings.
the Indian Banks’ with Bank of Rajasthan. The
Association, the officers’ regulator during an investig-
unions said that they propose ation found that a "binding
to go on strike. United Forum
of Bank Unions, the umbrella
body of nine bank employees
implementation agreement"
was signed between ICICI
Bank and Bank of Rajasthan
‘RCEP issues can be solved by Nov deadline’ Finance secy
to hold review
unions, are staging dharna on May 18, 2010 in order to
Australian negotiator says all issues to
on September 20 outside
Parliament to oppose the
procure cooperation and
support of dominant be discussed in full and all nations to
IMPORTS FROM RCEP NATIONS FAR ly focused on services trade
norms, such as those allowing meeting with
government's recent mega
PSB merger plan. PTI<
shareholders of Bank of
Rajasthan. PTI< be on board, before deal is signed
OUTWEIGH EXPORTS the free movement of trained
professionals across national public sector
Imports Exports ($ bn)
boundaries. This would allow
banks
172.93
165.48

SUBHAYAN CHAKRABORTY tries. Senior leaders from the Indian professionals — such as
Licence rules relaxed Action plan to do
139.62

NewDelhi,12September Association of the Southeast charteredaccountants,teachers

135.89
133.95

for some sections of away with single-use Asian Nations (Asean) bloc, and nurses — to work in other SOMESH JHA
67.61
56.83

61.18
52.48

manufacturers plastic in works: FSSAI The various issues of contention including Malaysian Prime RCEP nations without the need NewDelhi,12September
45.89

ThegovernmentonThursday
saidnocompulsorylicence
willberequiredfor
manufacturerofgoods
exceptingfoursegmentsof
tobaccoitems,defence
equipment,hazardous
chemicalsandindustrial
explosives."ASDPIIT
(DepartmentforPromotionof
IndustryandInternalTrade)
isnotissuinglicenceinany
othercase,PressNote17(1984
series)hasbecome
irrelevant.Accordingly,this
PressNoteiswithdrawn,"the
commerceandindustry
ministrysaid. PTI<
Mutual funds add
around 500,000
folios in August
Themutualfundindustryhas
Food regulator FSSAI on
Thursday said it has taken a
number of steps to cut plastic
consumption, including
permitting hotels to use
paper-sealed glass bottles
for captive use instead of
packaged drinking water.
"Aligned with the prime
minister's call for action to
eliminate single-use plastic
in coming years, FSSAI is
developing a concrete action
plan in partnership with all
the stakeholders," the
regulator said in a
statement. PTI<
CommMin should
approve hallmarking
before Diwali: Paswan
Thecommerceministry
shouldapproveonapriority
in the proposed Regional
Comprehensive Economic Par-
tnership (RCEP) agreement can
be addressed within November,
the deadline decided on by all
negotiating countries, includ-
ing India, the lead trade nego-
tiator from Australia, has said.
In Delhi to discuss ideas on
moving forward on the deal,
James Baxter on Thursday said
the last ministerial meet in
Bangkok had seen all negotiat-
ing trade ministers unanimous-
lydecidedtocompletethenego-
tiations in full by November,
seven years after talks started.
He also stressed the final
agreement deal will be signed
only after discussions are com-
pleted on each of the chapters
and that any deal will necessar-
ily include all negotiating coun-
Minister Mahathir Mohamad,
had said the mega Asia-Pacific
deal can be negotiated without
India “for the time being”.
Sources have clarified that
seven of the 20 negotiating
chapters in the deal, while dis-
cussions on two more are tech-
nically completed. Also, three
of the eight annexes have also
been decided upon. These
chapters deal with reduction
of tariffs, investments, servic-
es trade, movement of profes-
sionals across borders, invest-
ments, dispute resolution and
rules of origin, among others.
Baxter, however, added that
major discussions have been
concluded and the remaining
issues can be smoothened out
within the end of the year.
The RCEP secretariat had
2014-15 2015-16
Source : Commerce Department
internally set up a date of
November 4 for concluding
the deal. “As long as India’s
domestic industry and our
national interests is protect-
ed, the faster it (the RCEP) is
done, the better it is for India,”
Commerce and Industry
Minister Piyush Goyal, said on
Wednesday.
Thorny issues
The RCEP is India’s most ambi-
tious trade pact currently under
negotiation. It includes the 10-
nation bloc and their six free-
2016-17 2017-18
trade agreement (FTA) partners
— China, India, Japan, South
Korea, Australia and, most
importantly, New Zealand. So
far, 28 rounds of talks have con-
cluded, apart from eight minis-
ter-level meetings.
Baxteralsosaidrulesforserv-
ices trade will not be different
for each nation. On the other
hand,thecommitmentsbyeach
nation to provide market access
to other members through the
reduction of import tariffs, will
vary on case-to-case basis, he
said. New Delhi has consistent-
for bilateral mutual recognition
agreements.
Internal opposition
2018-19 Domestic industry has repeat-
edly complained that the deal
would disproportionately
increase imports from manu-
facturing powerhouse China
and the Asean economies.
After repeated calls by indus-
try to abandon the deal, India
had told Asean nations in July
that the domestic industry is
not convinced of a ‘win-win
situation for all’. However, on
Wednesday, Goyal said most
industries are in favor of the
deal, Goyal said some of the
opposing industries have not
understood the details yet.
More on business-standard.com
Finance Secretary Rajiv
Kumar will hold a review
meeting with public sector
banks (PSBs) on September 19
todiscussissuesincludingfol-
lowing up on transmission of
monetary policy rates.
The government is set to
ask PSBs to expeditiously
introduce repo-rate linked
products “to step up afford-
able credit”, according to an
agenda item of the meeting.
The Reserve Bank of India
(RBI) had earlier this month
made it mandatory for banks
to link all their fresh retail
loans to an external bench-
mark, effective October 1 —
the central bank’s repo rate
being one such benchmark.
Following the move, banks
such as Punjab National Bank
and Allahabad Bank
announcedlinkingtheirretail

500 wilful default cases worth ~18,500 cr in Q1

addedaround500,000 basisaproposaltomakeBIS loans with the RBI’s repo rate.
investors'accountinAugust, hallmarkingmandatoryfor The finance ministry will
takingthetotaltallyto85.3 goldjewellerybeforeDiwali, discuss ways in which PSBs
million,amidvolatilemarket ConsumerAffairsMinister can offer doorstep banking
conditions.Incomparison,
theindustryhadadded10.29
RamVilasPaswanonThur-
sday.Thehallmarkingof
SACHIN P MAMPATTA
Mumbai,12September
PSBs ACCOUNT FOR MOST manyPSBexecutivesmaytakeinsuch
circumstances.
facility. Some PSBs offer
doorstep banking for citizens
lakhnewfoliosinJuly.Folios gold,whichisvoluntaryin WILFUL DEFAULTERS Theremaybeacaseforanincrease over 70 years of age and dif-
arenumbersdesignatedto natureatpresent,isapurity Atleast19lendershavefiled529wilful Rise inwilful defaulter amount inthenumberofsuchcases.Samir ferently-abled customers.
individualinvestoraccounts. certificationoftheprecious defaultcasesworth~18,548.4crorein outstanding (%) Paranjpe,partner,GrantThornton Additionally,theministrywill
Aninvestorcanhavemultiple metal.TheBureauofIndian thethreemonthsendedJune2019. India,saidthatthecurrenteconomic discuss ways in which banks
13.5
folios.Accordingtodatafrom Standards,underthecons- Thisstretchesacrossprivateandpublic situationmayalsoplayarole. canhelpcustomersintracking
AssociationofMutualFunds umeraffairsministry,isthe sectorbanks(PSBs).Foreignbanksare 12.0 “Typically,thereisanincreasein online loan applications for
inIndia,thenumberoffolios administrativeauthorityof alsorepresentedonthelist,asistheco- badloanswheneconomicconditions retail,MSME(micro,smalland
with44fundhousesroseto hallmarking.Ithassetstan- operativebanksegment. arestressed.This,inturn,leadstoa mediumenterprise),housing,
8,52,81,222attheendof dardsforhallmarkingjewe- Thenumbersarebasedonan greaterscrutinyontheseaccounts andvehicleloans,amongoth-
August,from8,48,00,409in lleryinthreegrades--14car- analysisofthedatafromTransUnion duringsuchtime,whichresultsin ers. The finance ministry will
theendofJuly. PTI< at,18caratand22carat. PTI< CIBIL.Thefirmmaintainsinformation greateridentificationofwilful ask the top management of
onindividualsandentitiesdefinedas defaulters.So,onecanexpectmore banks to closely monitor
3.5
wilfuldefaulters,orentitiesthathave suchcasestobereportedinthis “loans to MSMEs, small
DRI, DGGI carry out joint operations thecapacitytopaybacktheirloansbut
stilldefaultonthem. Itisupdatedwith
economiccycle,”hesaid.
TheReserveBankofIndia(RBI),
traders,SHG(self-helpgroups)
andmicrofinanceInstitutions
against GST violators at 336 locations alagandnotalllendersprovide
numbersatthesametime.Theanalysis Nationalised Others Private
whichregulatesbanksinIndia,
recordedanincreaseinbankfraudsin
borrowers and collaboration
of banks with non-banking
The Directorate General of GST Intelligence (DGGI) and the lookedatlenderswhorecordedan banks sector banks itslatestannualreport. financial companiesfor co-
Directorate General of Revenue Intelligence (DRI) carried out increaseintheJunequarterover Note:Based on 19 lenders which recorded an increase in amounts outstanding for the June quarter. Data “Thenumberofcasesoffrauds origination of loans.”
pan-Indian searches at 336 locations against exporters March.Itincludeddefaulterswherethe extracted on 12th September, 2019. Source:TransUnion Cibil, Business Standard calculations reportedbybanksincreasedby15per TheCentrewillalsoreview
fraudulently claiming refund of IGST. This was the biggest-ever valuewas~1croreormore. centin2018-19onayear-on-year the announcement made by
joint operation by the two premier intelligence agencies of the Thelendersunderconsideration increaseinthevalueofamount associatedwiththepublicsector,said basis…withtheamountinvolvedrising Finance Minister Nirmala
Central Board of Indirect Taxes and Customs, officials said. The hadoutstandingamountsof~2.03 outstanding.PSBsshoweda13.5per officialsmaybeerringonthesideof by73.8percent,thoughmostlyrelated Sitharaman last month to
operation, involving about 1,200 officers from both the agencies, trillionwiththewilfuldefaultertag. centincrease.Others,whichinclude cautionwhenitcomestosuchcases. tooccurrencesinearlieryears,”itsaid. mandate release of security
covered entities in Delhi, Haryana, Uttar Pradesh, Gujarat, Thelatestquarterrepresentsa10per foreignbanksandlenders,showeda12 Theywouldratherdeclareanaccount Bankstookanaverageof22months documents within 15 days of
Maharashtra, Tamil Nadu, West Bengal, Karnataka, Madhya centincreaseoverathree-month percentrise.Theirbaseislowerthan asawilfuldefaulterifthereisthe todetectfraud,accordingtothereport. loan closure. It is intended to
Pradesh, Telangana, Punjab, Rajasthan, Himachal Pradesh, periodforthesample. boththeprivateandpublicsector. The slightestdiscrepancy,ratherthanface Itis55monthsforlargefraudsof~100 help customers, especially in
Uttarakhand and Chhattisgarh, they said. On specific intelligence Thereisadifferencebetweenbanks highestvalueremainswithPSBsforthe questionsfrominvestigativeagenciesif croreormore.PSBsaccountforthe the corporate sector, who face
that some exporters were exporting goods on payment of tax, basedontheirownership.Private sampleunderconsideration.Thisis thereissubsequentscrutiny. largestamountoflending.Theyalso difficultiesinapplyingforvar-
being done almost entirely out of the Input Tax Credit availed on sectorbankswithanincreaseinwilful followedbytheprivatesector. “EvenasmalldeviationIwill accountforthebulkofthefrauds, iousclearancesduetopending
the basis of ineligible/fake supplies. PTI< defaultersonlyrecordeda3.5percent Aseniorbanker,previously declare,”hesaid,ofthestancethat notedtheRBI. loan repayment.
6 ECONOMY & PUBLIC AFFAIRS
>
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 1

Easier export credit soon: Goyal By 75th I-Day, expect

Parliament to get
Schemetoeaseavailability added. This will result in cheaper foreign

ofexportcredit,especially
currency loans.
The ministry has also discussed in detail
the possibility of easing norms for banks,
a brand new look
forsmallbusinesses when it comes to lending export credit. The
cap on export credit for banks — at 2 per
SUBHAYAN CHAKRABORTY cent of the total loans disbursed — may
New Delhi, 12 September also be relaxed to boost export credit flows,
the official added.

A
scheme to augment the availability Merchandise exports recovered slightly
of export credit — at affordable to post growth of 2.2 per cent in July, com-
terms and in sufficient volume — pared to a huge contraction of 9.7 per cent
will soon be unveiled, said Commerce and in June. This was despite outbound ship-
Industry Minister Piyush Goyal. This ment of high foreign exchange earners,
scheme will include forex credit. such as refinery products, engineering
The scheme, which aims to ease avail- goods, and gems and jewellery falling.
ability of export credit especially for small
businesses, will likely lead to rates Issues galore
dropping to the sub-4 per cent category, The minister called for speedy redressal of
said Goyal. key issues related to imports. These include
He also warned against getting bogged unfair competition through dumping and The plan encompasses building a new Parliament complex or
down in numbers that may demotivate subsidies, as well as import of sub-standard redevelopment of the existing structure by August 2022
exporters. He said there is needless specu- products due to lack of set standards, while
lation on the government’s target of grow- enabling smooth import of key inputs and ARNAB DUTTA placed sources at the MOHUA said.
ing the economy to the $5-trillion level. raw material. New Delhi, 12 September Incidentally, last month Lok Sabha
“Do not get into calculations that you The Export Promotion Council has Speaker Om Birla had urged Prime
see on television... Oh if you are looking at raised issues such as GST refunds, declining If things go according to plan, the cen- Minister Narendra Modi to modernise
the $5-trillion economy, the country will Commerce and Industry Minister Piyush Goyal addresses the Board of Trade meeting, in export credit, requirement of collateral, and tral administrative district in the heart Parliament, following a similar call
have to grow at 12 per cent. Today, it is New Delhi on Thursday PHOTO: PTI inverted duty structure. of the Capital could get a new look, from Vice-President and Chairman of
growing at 6-7 per cent, do not get into Further, participating states on with added grandeur, in the next Rajya Sabha Venkaiah Naidu.
that maths,” he said. nesses. The government has, hence, should be able to take more export credit in Thursday raised the matter of special pack- few years. The existing Parliament House —
Goyal was speaking at the meeting of zeroed in on specific measures for the foreign currency. Subsequently, the min- ages for automobile, textiles, diamonds, The government is working on built between 1921 and 1927 by British
the Board of Trade, which advises the same, to boost outbound trade. istry now aims to raise the share of foreign and fisheries, given that these sectors are modernising the central administra- architect duo Sir Edwin Lutyens and
Centre on policy measures connected to currency in total export credit much facing problems resulting in lay-offs, the tive district at the Capital — a plan Sir Herbert Baker — was inaugurated
the Foreign Trade Policy and finds ways to Credit woes beyond the present level of 50 per cent, said commerce department said. that includes setting up a more by then Viceroy of India, Lord Irwin, to
boost exports. It includes officials of var- Export credit disbursal by public sector a senior official. Extension of the sunset clause with grandiose Parliament building, a new house the legislative council. Later, on
ious states, industry representatives, and banks fell 45 per cent in FY19 to ~156 billion, Therefore, it has asked the RBI to con- respect of SEZs, technology park for ancil- Central Secretariat complex and rede- January 26, 1950, it was renamed
export promotion councils. Easy accessi- down from ~283 billion a year before, shows sider whether its foreign exchange reserves lary industries in the defence sector, and velopment of the central vista. Parliament of India, when the
bility of export credit for small exporters the Reserve Bank of India (RBI) data. could be used for providing a line of credit promotion of border trade from While the Ministry of Housing and Constitution came into force.
has been a key concern for small busi- In June, Goyal had stated that exporters for swap to good banks for this purpose, he Northeastern states were also discussed. Urban Affairs (MOHUA) floated a req- Given the age of the buildings, cost
uest for proposal for this last week, it of maintenance run high as mishaps
has also invited architecture firms for such as short-circuit or leakage occur

Internet in splits over Goyal’s ‘gravity’ remark
PRESS TRUST OF INDIA
New Delhi, 12 September
Commerce and Industry Minister
Piyush Goyal was on Thursday
trolled on the internet over an
apparent gaffe in explaining that
achieving the target of nearly dou-
bling the size of the economy to
$5 trillion should not be looked
through the prism of maths.
At the meeting of the Board of
Trade, he remarked that maths
did not help Albert Einstein dis-
cover gravity.
The slip-up was not lost on the
netizens who quickly took to
Twitter to point out that gravity
was discovered by Isaac Newton
and Einstein is credited for his the-
ory of relativity. Some even made
fun of the statement.
“Do not get into the calcula-
tions that you see on television...
Oh, if you are looking at $5 tril-
lion economy, the country will
have to grow at 12 per cent, today
it is growing at 6-7 per cent. Do
not get into those maths. Those
maths have never helped
Einstein discover gravity. If he
had only gone by structured for-
mulae and what was past knowl-
edge, I do not think there would
have been any innovation in this
world,” he said, wrongly attribut-
ing the discover of gravity to
Einstein.
This came within days of
Finance Minister Nirmala
Sitharaman blaming millennials'
preference for ride-hailing serv-
ices such as Uber and Ola over
owning cars, and not high taxes,
for slumping vehicle sales.
Some even linked the two
statements.
“India’s GDP is going down
because millennials are not
doing GDP maths anymore,” one
of them commented.
“Boss, first of all, it’s not 6%,
it’s 5%. Both have a very big dif-
ference Mr Commerce Minister,"
another said.
Opposition Congress had on
Wednesday hit out at the finance
minister over her millennials
remark, saying it reflected the
“inefficiency, immaturity, and
inexperience” of the BJP in gov-
ernance and demanded that
Prime Minister Narendra Modi
apologise for it.
Congress spokesperson
Abhishek Singhvi, at a press con-
ference, said Sitharaman’s state-
ment was a grave joke on the
poor state of the economy.
“Yes, Mr Minister. Einstein
did not need maths to discover
gravity since Newton already
had. Now wait for HRD Minister
to say that long before Newton
our ancients knew all about grav-
ity (or has he already?) With such
ministers, only God can
#FixTheEconomy,” Congress
leader Jairam Ramesh tweeted.
CPI(M) general secretary
Sitaram Yechury tweeted: “The
govt shouldn’t wait for an apple
to fall on its head before it realis-
es that the math about the econ-
omy is all bad. It doesn’t even
need an Einstein (due apologies
to Newton) to tell us that. Instead
of focusing on distant dreams,
minister would do well to focus
on reality”.
the rest of the two projects. A pre-bid
meeting has been held by ministry offi-
cials with several architecture firms on
Thursday. Sources said the government
will be flouting a global tender for a
grand project by mid-October.
The government is yet to arrive
at the estimated cost for the project,
sources in the ministry said, adding
that a majority of it will be met
through MOHUA’s funds. “Once
completed, we will save over ~1,000
crore a year from office rentals and
maintenance”, a senior ministry offi-
cial said.
The plan encompasses building a
new Parliament complex or redevelop-
ment of the existing structure by August
2022. It aims to hold a special session on
August 15, 2022, marking the 75th
anniversary of India’s Independence —
in the new Parliament building, highly
frequently. The new buildings, on the
other hand, will be more energy-
efficient, fitted with all modern
amenities like multi-level parking
facility, centralised air conditioning
systems and solar panels.
Over four dozen central govern-
ment ministries are located in more
than a dozen buildings and com-
plexes, spread across Lutyens’ Delhi.
The new plan aims to bring all of
them inside a newly built central sec-
retariat complex. This might require
razing parts of the existing Central
Secretariat complex, such as the
Shastri Bhavan.
Setting up of a new Central
Secretariat and redevelopment of the
central vista — a 3-kilometre stretch
between India Gate and Rashtrapati
Bhavan in and around the Rajpath —
is expected to be completed by 2024.
8 ISSUES AND INSIGHTS
>
NEW DELHI | FRIDAY 13 SEPTEMBER 2019

Distant thunder and Sher Khan

There has to be a dialogue of alternatives, which would help generate ideas for action
Pather Panchali, Jalsaghar and, rele-
vant to this article, Ashani Sanket
(pronounced in Bengali as Awshani
Shongket). Ashani Sanket means sig-
nals of thunder, shortened as distant
thunder. Satyajit Ray made the story
authored by 3Bs, Bibhuti Bhushan
Bandopadhyay, into an award-win-
ning film.
The film was set in 1940s Bengal
THE WISE LEADER which was being mishandled by the
government into an unnecessary
R GOPALAKRISHNAN famine. A Brahmin and his wife led an
idyllic life in a village, where they were
respected for their service to the com-
tions of pride: India was the world’s
fastest growing... roast the Khan Market
crowd... reject every report of unfavor-
able social/economic news... troll writ-
ers of ‘open letters’ on governance and
economy... and confidently depict
India as the don’t-dare-touch-me goril-
la. The election results and general
mood both rose in defiance of gravity,
as share traders drove up the Sensex.
Political sages benignly smiled their
Mona Lisa smile, silently affirming the
impending Ram rajya.
However, “the visitor from the
neighbouring village” appeared at least
Pakistan. Last week a former DG of
Police wrote an oped, deprecating the
investigative agencies as stooges of
those in power. Recalling stories about
rare, principled officers the DG con-
cluded with a patriotic wake-up call to
the civil service: “Let us break out of
our slumber and stand erect in the ser-
vice of our nation”. Five business lead-
ers called out the truth about the econ-
omy, and reportedly receiving friendly
advice to refrain. A former Prime
Minister was scoffed at for suggesting
that fractious political differences be
set aside to work together on the worri-
natives, which would help generate > CHINESE WHISPERS
ideas for action. India desperately
needs three remedies: first,
economists and businessmen should Switzerland through Bollywood
speak up constructively without drop-
ping voice or glancing around furtive-
ly. Second, policy makers should be
more amenable to alternative view-
points for, after all, all criticism cannot
be bad. Third, we need all upright cit-
izens to behave like Vibhishana of
Lanka and Sher Khan of Malerkotla.
We all know the story that
Vibhishana expressed disagreement
with the mighty Ravana regarding the
proposed execution of Hanuman. Less If you are a Hindi movie buff, you will
known is Sher Khan, who strongly probably not require Google Maps.
expressed Malerkotla’s disagreement Watch Bollywood movies and you will
with the Council of Punjab chieftains figure out the topography of
in 1750 when they decided to incarcer- picturesque Switzerland, President
ate Guru Gobind Singh’s minor sons. Ram Nath Kovind (pictured) said on
Sher Khan walked out in protest. Thursday. Kovind, who is visiting the

I
responded to an event organiser’s
request for an unconventional bio-
data about myself by sending
something like, “Born in Bengal
Presidency during the reign of Lord
Wavell at about the time of the grue-
some Calcutta riots... studied in the
same school as Rabindranath Tagore
and Jagdish Chandra Bose...” The
organiser immediately asked for the
standard CV.
Bengali literature and cinema were
an early influence on me: for example,
munity. The first sign of an impending
crisis arose when a visitor devoured a
hearty rice meal after reporting that in
his neighbouring village, there was a
shortage of rice. Very quickly, the short-
age spread like wildfire and panic set
in. The organised life of the village
underwent unexpected turmoil.
Until May this year, the public nar-
rative was oozing with molasses of
hyper confidence — economic papers
were blushing pink and the television
screens cracked due to noisy declama-
18 months ago. “What distant thunder?”
was the initial injured scowl on the pug-
nacious faces of the bhakts. However
for those who track India’s economic
and social developments, the distant
thunder was getting louder and closer.
Major players in aviation, telecom,
infrastructure and automobile were on
the ropes. Bank NPAs were bubbling.
More recently, two officers from the
prized civil services resigned as a mat-
ter of conscience and, promptly, a saf-
fron apparatchik ordered them to go to
some economy. The Weekend
Ruminations column of this newspaper
exhorted the key personages in the gov-
ernment “…to engage directly and
actively to prevent the current down-
turn from morphing into a 1980s-level
growth rate”.
Why do those in power generally
not engage with critics with appropri-
ate urgency? Because they mistake
Ashani Sanket as dissent or political
opposition designed to stall progress.
But there has to be a dialogue of alter-
During my recent visit to Punjab, I
learnt that Malerkotla, near Patiala, is
the only place in all of undivided
Punjab where Hindus, Sikhs and
Muslims have coexisted peacefully
since 1750s, right through partition and
till today. To me, that is nationalism.
The author is a corporate advisor and
distinguished professor of IIT Kharagpur. He
was a director at Tata Sons and a vice-
chairman at Hindustan Unilever.
Email: rgopal@themindworks.me
country, addressed a group of
students and faculty at the University
of Berne. While speaking on the topic
“India-Switzerland new age
partnership”, the president said,
“Bollywood has taken Switzerland to
every nook and corner of India.
Whether it is the snow-clad Jungfrau
or the ITU Monument in front of
Einstein Museum in Berne, the Indian
movie industry has captured it all ...
The scenes from Indian movies can be
as effective as Google Maps in
understanding the topography
of Switzerland.”

Networked Bharat
The benefits are obvious. There is a
range of research that shows the huge Where’s the party?
economic benefits that accrue from Former finance
simply enhancing connectivity minister
between nodes in the grid, for example, P Chidambaram
when remote areas are provided easier (pictured) will
Vast networking programmes are overshadowing traditional infrastructure projects connectivity (both physical and elec- spend his 74th
tronic) to core economic hubs. birthday in Tihar
The rest of the investment will be on Transaction costs fall. Retailers can Jail because the
connecting the ‘spokes’. penetrate much deeper into rural India Delhi High Court on
And while roads are the most obvi- than they hitherto could. Conversely, Thursday directed
ous example of this new ‘network’ companies, who would earlier not have the CBI to file its
paradigm in Indian infrastructure, invested in such areas because of the status report on his bail plea in the INX
other programmes emphasise the infrastructure problems, can now do Media corruption case within a week.
point — water, electricity, fibre-con- so, thus creating jobs. Electricity con- Chidambaram, who is in judicial custody
nectivity, gas, regional airports, and nections open up a world of possibili- till September 19 in the case, will turn 74
EV charging stations. ties. And piped water in homes on September 16 and the high court has
The Ministry of Jal Shakti was removes centuries of deprivation. set September 23 as the next date to hear
INFRA TALK formed by merging the Ministry of
Drinking Water and Sanitation, with
But the challenges in these ‘last
mile’ connectivity projects are enor-
his bail plea. Chidambaram will be
produced before the trial court in the case
VINAYAK CHATTERJEE the Ministry of Water Resources, River mous as well. Nal se Jal will require on September 19. Other important
Development and Ganga Rejuvenation extraordinary levels of handling by the political birthdays this month are that of
on May 31, 2019. And through Jal centre, given that water is a state sub- Prime Minister Narendra Modi, on

T
he warp and weft of India’s
infrastructure-delivery fabric is
being woven together at a hec-
tic pace, overshadowing single-loca-
tion, lumpy investments of
yesteryears. And this decade and the
next will see infrastructure companies
and construction companies make the
unexpected move from building large
capex, location-based, standalone pro-
jects such as highways, bridges, power
plants, ports and airports to linking up
utilities delivery. The action has clear-
ly shifted to a wave of investments in
providing connectivity and delivering
utilities to the masses.
Take the case of the Bharatmala
Pariyojana. The earlier generation of
highway projects focused on trunk
roads. Bharatmala’s aim is to build con-
nections to district headquarters,
industrial and logistics hubs, and ports.
In fact, of the 34,800 km of roads envis-
aged under phase 1 of the programme,
only 10,000 km will be on trunk routes.
Shakti, the government has promised
its biggest-ever delivery to the aam aad-
mi — 100 per cent piped-water to all
households by 2024. Nal se Jal (rechris-
tened Har Ghar Jal in Budget 2019-20)
is a hugely ambitious programme. A
NITI Aayog report last year pointed out
that “three-fourths of the households
in the country do not have drinking
water at their premises”. Given that as
per the census of 2011, there were
around 23 crore households in the
country, and assuming that this statis-
tic has not changed at all, Nal se Jal will
have to cover 19 crore households.
Towards the end of April 2018,
Prime Minister Narendra Modi
announced that the electrification of
all 640,000 villages in India had been
completed. Immediately thereafter was
announced the scheme of electrifying
all of India’s households, and the
Saubhagya initiative got off the ground.
According to saubhagya.gov.in, a gov-
ernment site which tracks household
electrification, around 31.5 million
households were still left to be electri-
fied. Much of the target has since been
achieved — a record of sorts.
The Bharat Net project, launched in
2011, is the national optical fibre net-
work to provide connectivity to all
250,000 gram panchayats.
Implementation is currently underway
across most states in India.
Equally impactful, City Gas
Distribution is set to transform the lives
of millions of Indians. Starting from
April 2020, and up to 2029, winners of
the various GA (geographical area) bids
have promised to deliver over 2 million
piped gas connections per year, a total
of 3,500 CNG stations across the coun-
try, and 58,000 km of pipelines. The lat-
est round of bidding in city gas will
result in close to 70 per cent of the pop-
ulation being covered by piped gas over
the ensuing years.
As part of the government’s drive
to accelerate adoption of electric vehi-
cles and to create the necessary infras-
tructure, the ministry of power had
issued guidelines and standards for
charging stations in December 2018.
The Department of Heavy Industry
has invited proposals from urban local
bodies, municipal corporations, PSUs
(state/central) and public/private enti-
ties that are interested in developing
EV charging infrastructure in differ-
ent states and cities. The proposal's
eligibility covers cities that have mil-
lion-plus population, according to the
2011 census.
Then there are the airport projects
under the UDAN Regional Connectivity
Scheme of the Ministry of Civil Aviation
that seeks to operationalise 100 fresh
remote and regional airports. The aim
is to put air travel within the reach of
those living outside large cities.
ject. Similar challenges exist in city gas
projects where the cooperation of
municipalities and state governments
in areas such as land acquisition and
approvals is absolutely critical.
In fact, the biggest obstacle to the
new networked infrastructure model is
the “right-of-way” they need, over and
above the managerial challenge of daily
operations with scattered and disaggre-
gated labour forces.
And what about funding? Public
finances are currently stressed.
Institutional funding to networking
infrastructure requires a completely
different set of evaluation and servicing
parameters.
These challenges are indeed daunt-
ing, but if Indian infrastructure has to
deliver utilities to the end-user, it is a
challenge that will have to be grappled
with. After all, infrastructure is ultimate-
ly about enhancing the quality of life.
The author is chairman, Feedback Infra
September 17, which the Bharatiya Janata
Party will celebrate as “seva parva” and
that of former Prime Minister Manmohan
Singh on September 26.
Raining trouble
So it’s not just you and I who feel we are
powerless and are not being heard.
Often the powerful also feel the same
way. After days of uninterrupted
showers inundating parts of Madhya
Pradesh, some ministers in Bhopal have
taken to social media to complain about
their agony. Tribal Development Minister
Omkar Singh Markam complained that
even after repeated requests the
“concerned authorities” did not heed
his cry for help. Independent MLA
Surendra Singh tweeted, “Heavy rain
has flooded my bungalow and I am also
troubled by mosquitoes. I have
complained but no one responded.”

INSIGHT > LETTERS

Bring rigour in economic policymaking Traffic education must

goods and services) is taken up on pro-
ject mode or mission mode with clear
targets and monitoring, such as
improving India’s ranking in the World
Bank’s Ease of Doing Business survey,
the outcomes are very positive.
Executing schemes or projects is
only one part of the government’s
work. An equally important part is the
making of economic policies. Success
DHIRAJ NAYYAR
in policymaking requires a different
approach from success in project exe-
cution. Currently, the process of poli-
plete electrification of its plying vehicles
before 2045. It’s surprising that our pol-
icy makers do not review such details
is junked altogether. before setting the ambitious target.
A different, committee-based What’s even more lopsided is the
approach may be considered which fact that the charging stations would
involves some of the key advisory bod- still be managed through non-renew-
ies of the government from the start. It able and polluting sources such as
will bring a broader vision and checks coal. The strategy of tackling air pol-
and balances. The NITI Aayog could be lution is a complete eyewash with little
given an important role with seats on or no thought on the real causes.
the table for its vice-chairman/mem- Vehicular pollution accounts for a of the killers; yet the ruling dispensa-
bers (depending on sectoral exper- minuscule percentage of air pollution tion has been far too lenient with them.
tise)/CEO. Similarly, the chief economic in Delhi when the winter is setting in. In both the cases of lynching, heart
advisor, who has a macro view of the Yet, there is no focus on resolving the attack was cited as the cause of death.
economy, could be closely involved as matter of crop burning. The waste The logic is that the lynching (captured

W
ho misses the Planning
Commission? Hardly any-
one, barring a handful of
nostalgists. Its two most important
roles — formulating five-year plans for
India and approving the spending
plans of its 29 states — were either
irrelevant or counter-productive in the
post 1991 economy and polity whose
orientation had become more market-
based and more federal. Remarkably,
almost every state continued to oper-
ate its own mini-Planning
Commission — the State Planning
Board — even while frowning on the
national one. Perhaps there was, and
is, a felt need for some sort of strategic
planning, not so much in terms of the
allocation of resources but in the
domain of policy. Clear, predictable
and well thought-out policies are crit-
ical for a high-growth economy.
The Modi government has done
remarkably well in shaking up a mori-
bund state machinery to enable effi-
cient delivery (particularly in the last
mile) of government goods and ser-
vices, particularly to those who need
them the most. The Prime Minister
personally ensures the setting of ambi-
tious targets and then monitors those
targets. Failure is not an option. His
government has deployed the best
available technological solutions and
managerial processes to ensure that
government schemes are executed bet-
ter than ever before. In fact, whenever
a subject (other than the delivery of
cymaking is not always put through
the kind of rigour that project execu-
tion is. It must.
Policy is what determines the envi-
ronment in which a particular sector
of the economy operates. It is funda-
mental to whether a sector will thrive
or be subdued. Policies, once imple-
mented, tend to last for the medium
term, at least five to 10 years, before
they are revised. So errors can be costly.
Because of the long-term nature of
policies, strategic goals of the economy
as a whole need to be incorporated.
Needless to say, policies can have unin-
tended consequences which need to
be foreseen.
Since most policies are sectoral,
they are drafted by line ministries.
Often, the imagination of line min-
istries is constrained either because of
their necessarily narrow remits, or bud-
get constraints, or limited manpower
or the limited tenures of their key offi-
cials. Line ministries, usually manned
by career bureaucrats, can be nudged
and pushed to deliver on execution of
projects and schemes. But policies are
not about targets and monitoring, not
exclusively anyway. In theory, min-
istries consult experts and relevant
stakeholders but those consultations
are usually perfunctory. Other min-
istries and the NITI Aayog are usually
asked for opinions at a late stage once
the policy has been fully drafted. Only
minor changes are made at this stage
or in case of major objections, the policy
could the economic advisory council
— its chairman and members.
It is not necessary to have represen-
tatives from each of these institutions
on all committees. It is possible to pick
and choose depending on the nature
of the policy. If policies cut across min-
istries, one of these experts can be a
“neutral” chairperson. None of these
persons is a career government official.
Nor do they have to protect any turf.
The excellent new policy regime for oil
exploration was formulated by a com-
mittee of the NITI Aayog, line ministry
and finance ministry officials. There
are other examples. The practice can
become the norm.
And then this needs to trickle down
to the states. For that, states need to
invest in building their own NITI-like
policy commissions and possibly insti-
tute an office of chief economic advisor
or economic advisory council to the
chief minister. Many policy reforms in
critical sectors like agriculture, land,
labour, education and health have to be
done at the state level. The career
bureaucracy needs to be supported by
expert advice in the making of progres-
sive policy.
The implementation of policy, like
that of projects, will still be in the
hands of the career bureaucracy. It is
much easier to implement a sound,
well thought-out policy. It is also
more rewarding.
The author is chief economist, Vedanta
This refers to the editorial "Safety on
road” (September 12). In addition to the
points raised, I am of the opinion that
nothing much has been done about
educating the children on traffic rules.
Once I asked a couple of traffic men on
the difference between yellow line and
white line on the road, or a firm line and
broken line, single line or double line,
they could not answer. I am sure half of
India cannot answer these.
If we insert a chapter on traffic rules
for students of classes 6 and 7, teaching
them all about road safety, road signs,
dos and don’ts with the help of visuals,
it will make an impact on their growing
minds and temperament. They’ll learn
about the rules and might follow them
of their own accord. Further, the qual-
ity of roads needs to improve, the traf-
fic signs on the road need to be visible.
Our roads cannot match international
standards unless measures are taken
to improve their quality and the safety
of people.
Pramod Dixit Baroda
Identify the problem
This refers to “EV no answer to air pol-
lution: Chicago prof” (September 11).
An interesting comment from Michael
Greenstone regarding the insufficiency
of electric vehicles (EVs) to bring down
air pollution levels prompts one to
pause and ponder over the whole issue
of air pollution. The article captures
that one of the richest nations in the
world is also not ready to target com-
management process in each so-called
metropolitan city is nothing short of
archaic. It’s akin to preparing for an
examination when the student is not
even aware of the syllabus.
Paresh Uppal Gurugram
Subversion of justice
Attempts being made to help those who
committed the murder of Tabrez
Ansari in cold blood is subversion of
justice. Like the Pehlu Khan case, the
Ansari case now does no credit to
India’s criminal justice system.
Something must be terribly wrong if
even open-and-shut cases go the way
they do without a glimmer of hope for
justice to the victims of hate crime. By
dropping the murder charges and
choosing to slap culpable homicide not
amounting to murder, the Jharkhand
police has shown utter lack of profes-
sionalism and naked partisanship.
The footage of the mob lynching a
person clearly establishes the identity
> HAMBONE
on camera) does not matter because
the alleged victims would have been
dead anyway due to cardiac arrest. The
attribution of heart attacks to stress,
drug and injuries is a vain attempt at
impartiality. Obfuscation, by mixing up
head injuries with heart attack and
vice-versa, convinces nobody. The
adjectives "light" and "minimal" intro-
duced by the police to describe the
brain haemorrhage sustained by Ansari
in the mob attack says it all.
By the prosecution's logic, death
must occur on the spot for a crime to
be treated as murder. The way the
lynching cases are going have under-
lined the need for a special anti-lynch-
ing law.
G David Milton Maruthancode
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
 >
OPINION 9
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXVI Number 107 ILLUSTRATION: BINAY SINHA

NEW DELHI | FRIDAY, 13 SEPTEMBER 2019

Apple’snewbite
are thriving today.
Finally, the policy of public-private partnership
in infrastructure etc ushered in the new millennium
led to liberal use of public sector banks by govern-
It is eyeing TV and gaming as new areas of growth

A
ment to intensify crony capitalism.
pple has tweaked its focus and marketing strategy in its bid to seek In the post 2008 crisis era, all banks in India tem-
new revenue streams and markets. The trillion-dollar company this porarily benefited from excess or prolonged stimulus
week announced the launch of many new products, such as several and regulatory forbearance. The farm loan waivers
on a national scale also had an impact on the fiscal-
models of the much-anticipated iPhone11 — including a high-end,
public sector bank interface.
four-camera Pro version — a redesigned iPad, the Apple Watch 5 and so on. It Everyone was happy till the serious problems
also revealed details about its new streaming TV and gaming services. The in the system belatedly came into the open. In
gaming services will be launched on September 19. 2016, it became evident that public sector banks
It is evident that the company is now pricing many of its offers more com- had greater share of the problems, warranting the

Thelegacyissuesof
petitively, rather than simply targeting high-end customers with premium injection of additional capital by government. In
products. It also seems to be laying renewed emphasis on India as a market, contrast, private sector banks performed better as
with special prices and rapid rollouts. It has already started diversifying its per standard indicators.
The policy focus since 2016 on problems rather
supply chain with India being a new production hub as iPhones are now being
than solutions made matters worse. The prolonged

publicsectorbanks
put together in the country. Apple’s revenues in the last quarter (April-June uncertainty about the future of public sector banks
2019) indicated that it was no longer tying its fortunes completely to the iPhone, has persisted. The popular perception of the efficacy
though that device remains its most iconic product and the largest revenue of public sector banks relative to private sector banks
contributor. Overall, revenues and market capitalisation increased, even though has been replaced by scepticism, if not despair.
iPhone sales dropped by 12 per cent in the quarter. Revenues from the wearable The political consensus continues to be in favour
division (AirPods, Apple Watch, and headphones) increased by 48 per cent, Disappearance of public sector banks will be resented by of continuing with public ownership and control of
while services revenues rose by 13 per cent. As Apple TV and gaming take off in existing public sector banks. The owner, regulator,
the next few months, a surge expected from these products.
the common man the management and the large borrowers blame one
another for the sorry state of these banks, while the

O
The streaming services for gaming and TV are very competitively priced
n bank recapitalisation, Finance Minister
with subscriptions set substantially lower than those charged by competitors. Nirmala Sitharaman had this to say in her
It has announced a new video streaming service, Apple TV+, priced at ~99 a Budget speech: “Having addressed legacy
month in India, making it cheaper than the cheapest plan offered by its rivals issues, public sector banks are now proposed to be
in India. Apple may have had no choice here, given that it is a newcomer with further provided ~70,000 crore capital to boost credit
a far smaller video library, compared to Netflix or Amazon Prime. Apple TV for a strong impetus for the economy.”
will launch in November, only a week or 10 days before Disney (which has But what are the legacy issues? The basic objec-
more content than everyone else) also launches its streaming service. tive of nationalisation of banks in 1969 was to estab-
lish supremacy of the prime minis-
Apple’s suite of proprietary games and its new TV content will have to
ter of the day in the Congress Party.
gain enough traction to give it a foothold in these crowded markets. Apart That objective was well-served.
from charging lower subscriptions, it is also offering a bundled deal with 12 The far-reaching consequences
months’ free subscription. Clearly, it is hoping to convert those users into of that particular decision unrav-
loyal long-term customers. The basic versions of the devices have also been eled over time. It provided an extra
priced competitively, compared to similar offers from competitors. In some budgetary source of immense and
sense, Apple may be playing catch-up here because it is offering several features growing magnitude to the govern-
(such as multi-cameras) that are already available in competing devices. ment, which was outside parlia-
However, its new chip, the Bionic A13, has 8.5 billion transistors — that’s mentary control and not contem-
plated in the Constitution. The
a huge update compared to the A12 Bionic, which had 6.9 billion transistors,
offering unprecedented power and a much longer battery life. The AI-driven
government also obtained a spread
of functionaries in the states who WHAT NEXT
features of that chip will allow the 4-camera Pro model to zoom out and in, could be used by it for a range of Y V REDDY
take slow selfies, record from all four cameras simultaneously, and process activities, tilting the balance
those images or videos. In essence, this would be like a hand-held TV studio, between the Union and the states
carrying the potential to disrupt the business of visual content creation. The in favour of the Union government.
change in direction makes sense as global smartphone sales have been plateau- As if this was not enough, there was a second
ing and new revenue streams are needed. It is to be seen if the changed mindset round of nationalisation of banks in 1980. Three
private sector banks that had grown in size since
on pricing allied to the unmatched power of the Apple brand can help the
1969 were nationalised. The signal was clear: Any
company muscle into these new areas successfully. private sector bank which tries to grow will be
nationaised. That action virtually put an end to
and the Reserve Bank of India (RBI). This led to the
politicisation of public sector banking. The public
sector banks were also used for managing fiscal
stress, which, to an extent, was shifted to public sec-
tor banks and hidden there.
The reforms of 1991 saw a new paradigm in the
banking system regarding ownership, regulation
and competition. First, the banking industry was
opened to privately-owned banks
enhancing competition, while pub-
lic sector banks were expected to
compete among themselves.
Second, ownership of public
sector banks became mixed, with
majority ownership and control by
government through statutory pro-
visions. Reduction in the share-
holding of the government in pub-
lic sector banks, however, did not
dilute government’s role in gover-
nance since they are not governed
by Company Law, but by relevant
nationalisation legislation.
Competition between public sector
banks was constrained by common rules and pro-
cedures governing public sector banks.
Third, prudential regulation and supervision by
RBI was gradually oriented to global best practices.
Fourth, the dual control of public sector banks,
namely by the government and RBI was not ended,
while consolidation of public sector banks took place
tax payer pays for the losses. The share of public
sector banking is shrinking. That is why there is
budgetary support in 2019.
Experiments by governments under several polit-
ical formations in improving governance and con-
solidation have not yielded results so far. When cap-
ital infusion was undertaken, the conditions
imposed for it could not be enforced.
Experience shows that there are inherent limi-
tations to enforcing conditions stipulated at the time
of injecting equity. Will the Budget package of 2019
be different? What do we get out of the ~70,000 crore
earmarked for them? Does the assurance of strength-
ening public sector banks include governance of
these banks as well?
From the point of view of public sector banks,
the old questions remain: When will they have a
board of directors that commands the trust and
respect of the professionals? When will the dual con-
trol over them exercised by the government and the
RBI end? When will the future of the banks and their
professionals be determined by their performance
rather than the uniformly applied government poli-
cies towards public sector banks?
For the common man, particularly in rural areas,
public sector banks command trust and are more
accessible. Therefore, he/she would resent the dis-
appearance or marginalisation of these banks. The
policies relating to public sector banks have to con-
sider the costs and benefits of alternatives as well.
Are there similar problems with regulation and pub-

Eradicating malnutrition
growth of private sector banking in India.
With nationalisation in 1969, banking became a
bureaucratic system that collected deposits, admin-
Business as usual approach hasn’t helped istered interest rates and disbursed loans as per plan
in an adhoc manner. lic ownership of non-bank financial institutions?
Fifth, all political formations remained — and To sum it up, some legacy issues have been
have continued to remain — circumspect in detail- addressed, but several fundamental issues remain
ing the reforms for public sector banking. that need to be tackled.

P
priorities. Also, it became part of the broader public Meanwhile, several private sector banks were
rime Minister Narendra Modi’s recent call in his monthly “Mann ki sector system comprising the various governments licensed, and some of them not just survived but The writer is former governor, Reserve Bank of India
Baat” radio programme to intensify the drive against malnutrition
by making it a mass movement is a well-judged and need-driven

TurmoilinHongKonganditsimpactonChina
move to curb this scourge. The incidence of malnourishment remains
worryingly high despite perceptible economic progress, decrease in poverty,
surplus foodgrains, and an array of government programmes to facilitate
access to food. Going by the Food and Nutrition Security Analysis Report

T
2019 of the United Nations (UN) World Food Programme (based on 2015-16 he political unrest in Hong Kong grinds on, Kong’s stock market capitalisation is $5 trillion, only system enjoyed credibility and familiarity in a Anglo-
data), 38.4 per cent of the Indian population suffers from chronic malnutrition. taking on an increasingly violent and anti- slightly less than China’s $6.3 trillion. The total vol- Saxon dominated world economy. The prolonged
While about 35.7 per cent children are underweight, 58.5 per cent of them are China character. The prospect of a brutal and ume of foreign currency deposits in its banks are political unrest and violence on its streets, whatever
anaemic. Worse still, malnutrition is prevalent among both the poor and the bloody crack-down of the mounting protests by $850 billion and much of these are held by mainland the causes, has gravely undermined confidence in its
Chinese troops is becoming more proximate. The entities. There are over 1,300 foreign multi-nationals future. It is unlikely to be restored. China may have
rich, though in the latter case it is manifested in the form of obesity, nutritional
recent march by protesters holding US flags, to the registered in the city, doing business with China but held its hand in suppressing the riots to avoid eco-
imbalance, and attendant health disorders. American consulate, openly urging intervention in also with the entire Asia-Pacific region. China has nomic damage but in its calculus, the threat to its
Clearly, the ongoing food security initiatives, including the right-to-food their favour, is a provocation that, unanswered, will used the Hong Kong financial market to enable step sovereignty and even greater blows to its prestige
law and the Mahatma Gandhi National Rural Employment Guarantee Act, be a huge loss of face for Beijing and President Xi by step liberalisation of its own financial sector and makes further restraint unlikely.
have not dented undernourishment and disguised hunger to the desired Jinping. China is now confronted with a choice for the internationalisation of its currency, the This also marks the demise of Deng Xiaoping’s
extent, though these have warded off starvation deaths, which were quite among equally unpleasant alternatives. The lesser Renminbi(RMB). There is the Hong Kong Stock advocacy of “one country, two systems” as an inno-
common in the past. Retarded growth, low body weight, inadequate brain evil in China’s playbook will be violent suppression Connect enabling foreign institutional investors to vative instrument to facilitate the gradual integration
development, and poor immunity among children are the prominent signs of followed by fully incorporating Hong Kong as an gain entry into stock markets of Shanghai and of formerly detached territories like Hong Kong,
improper, imbalanced and insufficient nourishment. Low productivity of entity no different from Shanghai, Guangdong or Shenzhen. There is now a Bond Connect through Macao and Taiwan into the motherland. In Taiwan,
Shenzhen. It will be ruled by laws drawn from the which they can invest in China’s massive bond mar- resistance to incorporation into China will persist and
labour in India is also attributed partly to undernourishment.
Chinese Constitution and not its own Basic Law ket now worth $12 trillion and the third in volume grow. There will be stronger voices in China calling
A National Nutrition Mission was launched in March last year by the incorporating its colonial legacy of behind the US and Japan. Hong for its unification through military means. We may
government. It aimed at a 2-3 per cent annual reduction in the rate of low British jurisprudence. This will spell its Kong is also the largest RMB expect rising tensions in the South China Sea region.
birth weight, stunted growth, undernourishment and anaemia among chil- end as the third most significant inter- offshore market. What is the outlook for the future? There is likely
dren, adolescent girls and women. The Mission, subsequently upgraded and national financial market in the world. More importantly, Hong to be a serious setback to China’s quest for integra-
renamed Poshan Abhiyaan (nutrition drive), was given even a more daunting Its role in China’s integration with global Kong is unique in being formal- tion with the global financial market and the inter-
task of creating a “Kuposhan Mukt Bharat” (malnutrition-free India) by 2022. markets will diminish. It will exacerbate ly part of China but enjoying an nationalisation of its currency. The Hong Kong crisis
With business as usual, this ambitious goal seems hard to attain. Most of the growing trade war with the US, autonomous status as a WTO will worsen US-China relations and make it more
intensify political tensions and deliver member and enjoying privi- difficult to seek compromises in their ongoing trade
the nutrition-oriented schemes are focused narrowly on achieving just one or
a serious setback to China’s ambitions leges as a market economy war. While it will be difficult to unravel the dense
couple of objectives at a time rather than striking simultaneously at all the to assume a global financial status in which China itself does not. economic and trade ties which bind the US and
facets of this menace. Besides, there is no coordination between them to tap keeping with its emergence as the Under the US-Hong Kong China together, there is an incipient de-coupling
their synergies. The funds earmarked for them often remain underutilised. world’s second largest economy. Policy Act of 1992, Hong Kong already in progress and this may be accelerated
Moreover, many of them, including the mid-day meal in schools and supple- While it is true that Hong Kong no SHYAM SARAN has access to the US market despite its economic costs. China is likely to turn
mentary feeding in Anganwadis, tend to concentrate just on providing food longer plays the outsize role it did dur- which go beyond what China its attention to greater regional integration in Asia-
with least regard to its nutritional aspect. ing the initial phase of China’s growth does. This enables China to Pacific through trade agreements like the RCEP and
Thus, the basic strategy to combat malnutrition would have to be cast trajectory, it has remained critical to acquire, through Hong Kong, through currency arrangements such as the Chiang
afresh with greater stress on scientific approaches. One way to do this is to China as its key intermediary in expanding trade, high-tech items and services which may be denied Mai initiative. The latter is being re-activated to aim
banking and financial connectivity with the rest of to it otherwise. With growing concern in the US and at a RMB currency zone among China, Japan, South
diversify the supply of foods under the government schemes by including more
the world. With its already well-established trade the West over intellectual property leakage to China, Korea and the 10 Asean nations. Some analysts are
nutritious items, such as millets (hailed commonly as nutri-cereals), eggs, milk, channels, its sophisticated banking infrastructure Hong Kong is of great value as an entrepot. US with- beginning to talk of a world divided into three zones,
soybean products, and other nutrient-dense fresh and processed foods. Methods and its own highly developed financial and securities drawal of the special legislation will be a severe blow one dominated by the US dollar, the other by the
are now known to fortify mass-consumed foods, such as rice, wheat, salt, edible markets, Hong Kong provided China with a pre- to Hong Kong and indirectly to China. euro and then a RMB zone dominated by China.
oils, and milk, with essential minerals and vitamins like iron, iodine, zinc, and existing and dense web of interconnections which Even if the demonstrations are dealt with without These may also constitute the three geopolitical
vitamin A and D. This can help stave off health disorders resulting from defi- enabled the globalisation of its economy in mea- large-scale violence, it is unlikely that Hong Kong will zones of the future competing and collaborating
ciencies of these nutrients. Technologies are also available to evolve bio-fortified sured and less risky increments. Even today, over go back to what it was before the latest unrest erupted. with one another in an essentially multi-polar world.
crops having an inherent capability to synthesise the desired vitamins or min- 60 per cent of total foreign direct investment (FDI) Its success as an international financial centre was Where would India find itself in this new scheme
into China goes through Hong Kong. Its banks have rooted in the confidence it enjoyed internationally of things?
erals. The Golden Rice having a higher Vitamin A content is a typical case in
raised much needed finance for Chinese state- as a safe and well managed regional trade and logistic
point. It is helping to alleviate blindness in many countries. India, too, can take owned and private companies and served as a base hub, with a stable currency, a sophisticated banking The writer is a former Foreign Secretary and currently a
advantage of such technologies to eradicate malnutrition. for their expanding international activities. Hong system and well developed financial market. Its legal Senior Fellow, CPR.

Symptoms of success
It is clear even from the book that Mr
Shanghvi is a man of few words. After all,
his only reaction after becoming the coun-
try’s richest man in 2015 was that he felt
“very uncomfortable”. But in some ways
perhaps, her subject’s obsession to stay
away from the limelight has worked to the
BOOK REVIEW author’s advantage. For, virtually every-
thing about his private life and his days of
SHYAMAL MAJUMDAR struggle is unknown.
In that sense, Ms Das was lucky, as she
from many other biographies. Consider
this story that demonstrates Mr Shanghvi’s
business acumen. The senior manage-
ment of Sun once received an email from
the CMD asking them to report a list of
products which they had never discussed
with doctors, did no promotions the whole
year, didn’t print a single piece of literature
about, and which needed to be phased out.
The message, the senior management
thought, was clear: The big boss wanted
to prune the product basket.
At the meeting, Mr Shanghvi turned
over all the pages of the reports that all
divisions had submitted, and asked: “So
signature pauses before his stunned audi-
ence, Mr Shanghvi asked them to knock
on the doors of doctors to tell them these
products still exist.
There are examples galore of such
interesting anecdotes. For example, the
bulk of Mr Shanghvi’s big thought dis-
cussions took place not in some swanky
boardroom, but in a nondescript office
in Ville Parle, away from the main office
so as not to be disturbed and distracted.
On those special days, early in the morn-
ing, his executive assistant would pile
up medical journals and books contain-
ing a list of medicinal drugs with their
that if a Sun representative goes to a car-
diologist, his offering must include what-
ever the doctor prescribes. He wanted
Sun’s menu card to be complete for each
category of therapy specialists it was
working with. That meant not leaving out
even minor drugs with inconsequential
market sizes.
In the US, however, the “cafeteria”
approach was dumped, as Mr Shanghvi
was canny enough to realise that the strat-
egy wouldn’t work in a mature healthcare
market. So Sun moved to a portfolio
approach, which meant it had to have an
attractive basket of complex generics to
which they did finally.
However, one of the biggest shortcom-
ings of the book is its fleeting reference to
the concerns over Sun’s corporate gover-
nance following a whistle blower’s com-
plaint. The author casually says, after the
narrative was wrapped up in 2017, Mr
Shanghvi ’s life saw many ups and downs.
As a matter of fact, it was more downs than
ups, and the book seems to have found a
convenient excuse to maintain a studied
silence on it. That’s a blemish for an oth-
erwise excellent book.
Nevertheless, if there is one lesson read-
ers would take from the book, it’s this:

W
riting 500 pages of interesting
stuff on somebody who is as
painfully shy as Dilip Shanghvi
is no mean achievement, and Soma Das
deserves credit for bringing to life the
remarkable story of Mr Shangvi’s journey
from a tiny shop in the bylanes of Dawa
Bazar in Calcutta of the seventies to create
the world’s fourth largest speciality gener-
ics maker and India’s most valuable phar-
ma company — Sun Pharma.
managed to spend some time with the
man who also gave her access to friends
and company colleagues to an extent that
he had never before done. Add meticulous
research to that. The Reluctant Billionaire
is an assimilation of over 150 interviews
of employees, former employees, relatives
and friends.
The author has been able to capture
brilliantly the essence of the man through
countless stories, which sets the book apart
these are the products you wanted to phase
out. How much is the turnover of our com-
pany?” Someone answered, “~9,000 crore”.
“Sales from all these products (that
were on the culling wish list) add up to
~1,600 crore, that is 16 per cent of our rev-
enue and all that comes without spending
a single penny on their marketing and pro-
motion. One way to look at it is that these
products sustain your salaries and daily
expense of the company.” After one of his
effects and directions for use. There, the
two of them, sitting across the table,
pored over every page, discussed the
merits and demerits of every product
they came across in the therapy verticals
Sun was present in or was planning to
enter, topping the experience with idlis
ordered from Ram Krishna Restaurant
for lunch.
It was actually what Mr Shanghvi calls
a cafeteria approach. His philosophy was
enticethewholesalerswhocontrollednear-
ly 75 per cent of the US generic market. He,
however, didn’t change his old habit of
cherry-picking distressed assets and
extracting value rather than making big
bang moves.
It is to the author’s credit that the
acquisition of TDPL, Caraco, Taro and
Ranbaxy read like thrillers, and readers
would secretly wish that Mr Shanghvi
and his team came out as winners,
Success in any field comes after much
struggle, hard work, heartbreaks, and sac-
rifice. And you don’t have to have it in your
genes to become one of India’s richest.
THE RELUCTANT BILLIONAIRE
Soma Das
Penguin Random House India
500 pages; ~799
 The Smart
QUICK TAKE: ZINC RALLY TO CONTINUE AS STOCK FALLS “Corporate India is paying the price for ‘Single

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After touching a 3-year low in early September, domestic market, ignoring rest of the
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FRIDAY, 13 SEPTEMBER 2019 fresh supplies are also falling, which will keep SHANKAR SHARMA,
zinc prices firm in the medium term Co-founder, First Global
WWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING <

Market breadth in CY19 worst in 6 yrs Sebi may defer

SUNDAR SETHURAMAN
Mumbai, 12 September
T
he market breadth — ratio of
the total number of stocks rising
to those falling — this year is
theworstinsix,amidsluggisheconom-
ic growth and disappointing corporate
earnings. In the first eight months of
2019, 70 per cent of BSE500 stocks were
down. These account for 94 per cent
of India’s total market capitalisation.
Stocks had fallen the most in the
first eight months of a calendar in 2013,
when the US Federal Reserve had
announced tapering of the bond-buy-
ing programme.
The weak market breadth this year
is despite returns for the benchmark
Sensex and the Nifty holding in posi-
tive territory. Further, the weakness in
a large number of stocks comes on the
back of a poor show in 2018. During
the same period in 2018, 335 stocks in
the BSE500 universe declined.
Deteriorating global growth outlook
amid the US-China trade tussle has
kept market participants on tenter-
hooks and forced investors to pull their
money out of risky assets.
Domestically, the looming crisis in
the non-banking financial companies
sector, concerns over corporate debt
and defaults, and lack of earnings
growth have weighed on stock perfor-
Settle dues before
filing scheme of
ILLUSTRATION: BINAY SINHA
mance. Global factors, too, have
weighed on sentiment.
In July, the International Monetary
Fund (IMF) had reduced its global
growth outlook. The IMF had said the
world economy would expand 3.2 per
cent in 2019 — the lowest in 10 years.
Disappointment over lack of stim-
ulusintheBudgettoshoreuptheecon-
omy,andthesurchargeonforeignport-
folio investors, further upset entities.
Though the surcharge was rolled
back on August 23, foreign investors
continue to remain net sellers.
Tide turning for mid, small-caps: Analysts
TESTING TIMES
Weakglobal outlookhas been a major factor
*For first 8 months of every calendar; **% declining stocks in BSE500
Sources: Exchanges, Bloomberg
From its June 2019 highs, the
Sensex has fallen 7.8 per cent. The
decline in the broader market has been
sharper, with the BSE Midcap and BSE
Smallcap declining 16.7 per cent and
23 per cent, respectively, from levels
seen last year.
Expertssaydisappointingcorporate
earnings have kept shares depressed.
“Earnings were subdued in the June
quarter, with the Nifty earnings growth
coming in at 5 per cent, compared to
our expectations of 12 per cent growth.
Instances of earnings downgrade
increased, with 90 firms seeing more
than 3 per cent earnings cut for FY20,
and only 30 firms seeing their earnings
beingupgraded,”saidGautamDuggad,
headofresearch(institutionalequities),
Motilal Oswal Financial Services.
Further, market players say disrup-
tions caused by the regulator and tech-
nological changes have affected busi-
nessmodelsofalotofcompanies,apart
from the after-effects of demonetisa-
tion and the goods and services tax.
“Companies carrying a lot of debt
on their books have seen issues on debt
servicingonaccountofeconomicslow-
down, and have later faced credit rating
downgrade. A combination of the
above has led to poor market breadth,”
said Deepak Jasani, head of retail
research, HDFC Securities.
Investors’ preference towards select
large-caps has also led to a decline in
many stocks. In addition, investors
have punished firms that have posted
disappointing earnings. Market players
said the high valuation commanded
by equities — despite the correction —
limits the possibility of a sustainable
rebound in the market.
On the contrary, the valuations
make the market more vulnerable to
further downside if global sentiment
worsens. Experts say the market
breadth will not improve unless the
government announces further proac-
tive measures to revive demand and
ease liquidity pressure in the market.
However, experts believe investors
with risk appetite can use the weakness
in the market as a buying opportunity.
“After a certain point, valuations
of a lot of these companies might
become attractive, and they may see
a bounce — especially if the economy
also turns around. What is important
for investors, however, is to not get
carried away but try to bottom-fish
stocks after due diligence and accu-
mulate them,” said Jasani.
proposal for
35% public float
SHRIMI CHOUDHARY
New Delhi, 12 September
The Securities and Exchange
Board of India (Sebi) is likely
to defer the Budget proposal of
raisingminimumpublicshare-
holding in listed companies to
35 per cent, said a person with
knowledge of the matter.
The markets regulator is
learnt to have received sugges-
tions, including from its expert
panelonprimarymarkets,say-
ing this is not the appropriate
time to widen the public float. WHAT’S AT STAKE?
“Theregulatorhasapprised
theboardabouttheviewpoints n Over 1,300 actively-traded
of market participants and firms have promoter
experts who are not in the holding above 65%
favour at this time,” said the n Several PSUs have not
person cited above.
complied with existing 25%
Finance Minister Nirmala
Sitharaman (pictured) had
public float norms
announced the proposal for n ~4-trillion share sale
raising the minimum public needed to meet the norm
shareholding in her Budget
n Divestment of ~2 trillion
speech. The government was
of the view that a higher float required in top 20 firms
would limit market manipula- n Over55PSUshavepromoter
tion, promote equity culture, holdingofover65%
and improve tax mobilisation
through capital gains.
People in the know said
the Primary Market Advisory
Committee (PMAC) unani-
mously decided to postpone
from 15 to 25 per cent in most
countries. In the US, the crite-
rion is not percentage but the
size of the free float by the

arrangement: Sebi PUNEET WADHWA

PRESS TRUST OF INDIA
New Delhi, 12 September
The Securities and Exchange Board of
India (Sebi) on Thursday asked listed
firms to settle their outstanding dues
to the regulator, bourses, and deposi-
tories before filing ‘schemes of
arrangement’, such as mergers and
demergers, with the exchanges.
It also said listed entities would be
liable for punitive action in case of fur-
nishing false information.
“All listed entities shall ensure that
all dues to, and/or fines/penalties
imposed by Sebi, stock exchanges and
the depositories have been paid/settled
before filing the draft scheme with the
designated stock exchange,” the mar-
kets regulator said in a circular.
In case of unpaid dues/fines, the
listed entity will have to submit to
bourses a report having details of such
unpaid dues in a prescribed format,
before obtaining an ‘observation let-
ter’ from the stock exchanges on the
draft scheme. PTI
New Delhi, 12 September
Thetideseemstobeslowlyturning
forthemid-andsmall-cap
segments.Afterasharpcorrection
followingtheBudgetinJuly,which
draggedtheBSEMidCapandBSE
SmallCapindiceslowerby9.8per
centand12.6percent,respectively,
tillAugust30(theSensexdeclined
6.5percentduringthisperiod),
sentimentinboththesesegments
hasstartedpickingupinSeptember.
ThusfarinSeptember,theBSE
SmallCaphasgainednearly3per
cent,againstamodest0.2percent
dipintheSensex.Asimilarstoryis
playingoutinthemid-capuniverse,
withtheBSEMidCapgaining
around1.3percenttillSeptember12.
Analystssaythefallinmid-and
small-capshasbeenverysharpover
theyears,andthispresentsagood
opportunityforinvestorstogetin
nowandstayinvestedforthelong
term.They,however,docaution
againstintermittentvolatility,but
remainconvincedaboutthelong-
termprospects.
BSE MIDCAP
14,933
13,610 14,030
Jul 4 2019
BSE SMALLCAP
14,337
12,908 13,250
Jul 4 2019
Compiled by BS Research Bureau
“Thecumulativemarket
capitalisation(m-cap)ofBGroup
stocks,whichmostlycomprisethe
mid-andsmall-caps,hasslipped
from~20trilliontwoyearsagoto
~8.87trillionnow.Thistranslates
intoasharpfallofaround56per
cent,andisunprecedented.That
said,therecentupmoveishereto
15,080
stayandthosewhoarewillingto
stayinvestedfor12-24monthscan
looktobuyqualitystocks,”says
14,555
GChokkalingam,founderandMD
ofEquinomicsResearch.
Gainsinsomestocksin
13,505 Septemberhavebeensharp.
ShankaraBuildingProjects(up81
12,980
Sep 12 percent),GoaCarbon(48percent),
3IInfotech(44percent),StarPaper
14,550 Mills(43percent),RuchiraPapers
(41percent),BajajHindusthan(39
13,900 percent),andErosInternational(34
percent)areamongthekeygainers.
Some,however,havebeennews-
12,600 driven.PrabhatDairy,forinstance,
moveduponreportsthatthe
11,950 companyplanstodelist.
Sep 12 Avisibleslowdowninthe
Source: Exchange economy,especiallyintheauto
industry,liquidityissues,stretched
workingcapitalcycles,andthe
wealth-erosioneffecthurting
promotersaresomeoftheissues,
analystssay,plaguingthemid-and
small-capsegments.However,the
marketreactiontotheseissues,they
say,hasbeenoverdone.
“Themarket,asalways,is
overreactingwiththesmall-cap
indexunderperformancesharpest
inlast15years.Whilethesmall-cap
indexiscurrentlyatJuly2016levels,
Niftyisuparound35percent,
Sensexaround40percentandthe
mid-capindexaround17.5percent
vis-à-visJuly2016.Therelative
valuationofNiftyandsmall-cap
indicesistouchingpost-Lehman
and2013lows.Thedowntrendfrom
hereoncanbeonlyinlinewith
Nifty,”saysareportfrom
EquirusCapital.
AKPrabhakar,head(research),
IDBICapital,too,remains
optimisticontheroadaheadforthe
mid-andsmall-capsegmentsand
advisesinvestorsbuyselectively
nowandkeepthefaithintactforthe
next12-24months.
“Mid-andsmall-capstockshave
seenasharpfallforthepast21
monthsandthevaluationofselect
stockshasturnedattractive.
Investorsshouldnotworryifthey
buygrowthandqualitynames.Life
insurance,hotels,fertiliser,power,
selectbankingnamesandthe
infrastructuresectoraretheonesI
ambullishon,”Prabhakarsays.
this “disruptive” proposal
until more research and
impact analysis was done, like
what was done before the 25
per cent mandate.
An estimate says an
increase in the public float
could result in companies
offering to the public approxi-
mately 1 trillion shares, cur-
rently owned by promoters.
Further, companies should
have at least three years to give
effect to this proposal and
there should be a concept of
minimumfloatbyamount,the
panel is learnt to have said.
The Sebi expert panel also
observed that more than half
the PSUs had not fulfilled the
25 per cent minimum public
shareholding criterion, and
had been seeking deadline
extensions. It suggested it
would be a good signal if these
companies first complied with
the 25 per cent requirement.
“Globally, there is no prece-
dent for a 35 per cent mini-
mum public float. It ranges
number of shares and
amount,” said Prithvi Haldea,
founder, PRIME Database. He
is also a member of the PMAC.
Citing the example of Tata
Consultancy Services, Haldea
said the new rule could force
the IT giant to issue additional
stocks of ~60,000 crore.
For firms listed on the NSE,
an additional huge stock of
about ~3.43 trillion would flood
the market. “I wish a thorough
think-through, as also consul-
tation with Sebi, had been
done before making such a
high-impact announcement,”
Haldea added.
Another panel member
said there might be several
benefits of large floats, like
more liquidity, better price dis-
covery, less market manipula-
tion, and better corporate gov-
ernance. However, it could also
make acquisition costly,
becausebuyerswhobreachthe
65 per cent promoter holding
might be forced to again
offload shares in the market.

THE COMPASS

Slow growth, execution remain Wipro’s Achilles heel

Analysts expect RAM PRASAD SAHU
the 44% valuation The Wipro stock has underper-
fored its larger IT peers and the
discount to stay sector over the last year.
Since its lows in November,
Wipro has clawed back with
gains of just 4 per cent, while
the sector has bounced back by
18percent.Whilethelargebuy-
back has supported the stock,
Base=100 sluggish performance in recent
130
quarters and a muted guidance
have kept the lid on the upside.
120 Manik Taneja and
Wipro Devanshu Bansal of Emkay
110 Global believe the relative
underperformance will contin-
100 ue in FY20, as sectoral weak-
ness could lead to moderation
Sensex in growth in the financial ser-
90
vicesvertical(32percentofrev-
enues). The firm did well in this
S&P BSE IT 80 vertical in FY19, reporting 16
Sep 3,‘18 Sep 12,’19
per cent year-on-year growth
Compiled by BS Research Bureau
in constant currency terms.
Wipro had guided for 0-2
per cent sequential growth in
the September quarter, factor-
ing in the slowdown in finan-
cial services, delays in client
decision-making, and the com-
pletion of large projects.
The company’s growth in
financial services was lower in
the June 2019 quarter as com-
pared to last year, given the
challenges in the capital mar-
kets segment and European
banking.Inadditiontothesoft-
er growth in larger segments of
financial services and con-
sumer, the sluggish perfor-
mance in technology and
health care in FY19 continued
in the June 2019 quarter.
Although Wipro’s digital
growth has been healthy, pres-
sure on the legacy part of the
business has been the highest
as compared to its peers.
As a result, the share of dig-
ital services in overall revenues
has more than doubled over
the last three years to 37 per
cent. While growth in this seg-
ment is on a par or better than
peers, the same isn’t reflected
in the overall growth rate. This
is because Wipro is losing mar-
ket share in the legacy business
and has not been able to arrest
the decline much.
Analysts believe the weak
revenue growth guidance for
thecurrentquarterreflectsexe-
cution problems that the com-
pany is faced with.
CLSA expects the firm to
remain at the bottom of the
peer growth range in FY21.
The brokerage believes that
the 44 per cent one-year for-
ward price-to-earnings dis-
count that the stock is trading
at, is warranted considering
weakgrowth,margins,andper-
sistent execution challenges.

Pharma industry gets booster dose from domestic sales

Strongshowin UJJVAL JAUHARI
Indiahelping The BSE Healthcare index has outper-
offsetchallenges formed the broader markets for the past
3-4 weeks, as drug makers posted double-
inUSmarket digit growth in the domestic market on an
aggregate basis in July and August.
The domestic pharma market grew
9.4 per cent in August — following 13 per
Base=100
110
cent growth in July — which has helped
Sensex drive up investor sentiment. Among com-
panies, Dr Reddy’s, Lupin, Sun Pharma,
100 and Cadila Healthcare have outperformed
the pharma market in August, say analysts
citing AIOCD data.
90 In fact, Dr Reddy’s has significantly
outperformed the IPM for the sixth con-
secutive month, in line with the manage-
80 ment guidance, say analysts at SBI Capital.
The company is changing its strategy with
S&P BSE Healthcare increased focus on India, and rationalising
70 its portfolio in the US by shifting focus to
Sep 3,‘18 Sep 12,’19
only niche products and injectables.
Compiled by BS Research Bureau
Though an anticipated delay in a key
product approval in the US had kept
investors’ confidence subdued, the stock
has rebounded with gains of more than
8 per cent in September.
Lupin, too, posted domestic sales that
were ahead of the market’s growth.
According to analysts, this was driven by
its high exposure to chronic therapies (half
of its domestic revenue).
This should help mitigate concerns,
regarding growth in the US market, led by
regulatoryhurdlesandconsequentlyprod-
uct approvals.
Both Dr Reddy’s as well as Lupin
featured in the list of top 10 growing com-
panies in the country.
The Street is also positive on Cadila
Healthcare’s comeback. The company has
clocked double-digit growth for the third
consecutive month. Earlier, with Cadila
rationalising its domestic portfolio, sales
grew only in single digits.
However, not only does its sales growth
instil confidence now, but it also gives cre-
dence to the management’s earlier com-
mentary that portfolio rationalisation will
be done by Q1FY20 and growth will return
to normal.
Sun Pharma, the largest player by mar-
ketvalue,grewaheadofthedomesticphar-
ma market for the second consecutive
month, say analysts. They, however,
remain cautious on Sun Pharma awaiting
the outcome of a forensic audit by Sebi.
Among others, Alkem Laboratories
appeared in the list of the top 10 fastest
growing companies, while Ajanta Pharma
and Torrent Pharmaceuticals, too, are
expected to benefit from strong growth in
the domestic market, considering their
focus and exposure to India.
All this is helping firms offset chal-
lenges that they face in the world’s largest
healthcare market — US.
Domestic sales are expected to remain
healthy for them, which, along with rea-
sonable valuations, suggests some of these
quality names could be good investments.
.
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 THE SMART INVESTOR 11 <

Multiplexes still a hit amid slowing economy Sensex ends

167 pts lower;
YES Bank
Strong footfall and good-quality content expected to offset growth pressure on advertising revenue down could hurt advertisement rev-
enues of multiplexes. sheds 5%
SHREEPAD S AUTE STRONG MOMENTUM Inox’s management highlighted
Mumbai, 12 September
n Revenue (~cr) LHS Growth (%) RHS
that the slowdown has weighed on its
advertisement revenue growth, with
SENSEX 37,450

N
obody seems willing to give 5,000 20 lower spends by customers. PVR, too,
entertainmentamiss,despite 19 14 17 mentionedsomemoderationinadver- 37,350
slowing economic growth 15 tisement revenue growth.
anditsimpactonhouseholdincomes. 4,000 16 However, given the advertisement 37,250
At least that’s what the recent updates segment’ssmallerrevenueshareof10- 37,270.8
fromthetwokeylistedmultiplexplay- 11 per cent, overall top line growth will 37,150
ers — PVR and Inox Leisure — are
3,000 12 remain intact, led by the expected 37,104.3 37,050
indicating.Theupcomingnewreleas- strong footfall as mentioned above.
es also underline that the possibility “We expect strong performance
Sep 11 2019 Sep 12
2,000 8 Compiled by BS Research Bureau
of lower footfalls in multiplexes is during Q2FY20 despite anticipated
unlikelyevenintheforeseeablefuture. lower ad revenues, driven by strong
“We have not seen any impact of 1,000 4 footfall led by healthy content and PRESS TRUST OF INDIA
consumption slowdown impacting 3,659 4,175 1,971 2,273 robust growth in the F&B business,” Mumbai, 12 September
box-office collections. The box-office 0 0 analysts at Sharekhan said in their
is doing well as the quality of content recent note on Inox. The BSE Sensex ended
over the last couple of years has sig- FY20E FY21E FY20E FY21E PVR expects 15-20 per cent rev- 167 points lower after a
nificantly improved, driving people enue growth for FY20 with double- highly volatile session on
to cinemas,” said Nitin Sood, chief PVR Inox Leisure digit growth, excluding the perform- Thursday, dragged by losses
finance officer, PVR. ance of SPL (which it acquired). in RIL, Axis Bank, Maruti
E: estimated Sources: Brokerage reports and Bloomberg
Therefore, although the PVR and While there are worries over the Suzuki, ITC, and TCS ahead
Inox stocks have declined 7-8 per cent OTT, among others, which has been fact, could play in favour of multi- likely slower screen additions by mul- of key macroeconomic
in line with the leading indices (the good movie content and reasonable Advertising accounts for the rest. maintained by producers. plexes if the past is anything to go by. tiplexes — given the stress in the real data releases.
Sensex down 7 per cent) in the last ticket size (vs other entertainment Moreover, unlike as expected ear- Besides customers’ preference for Sood said: “During similar eco- estate space — the jury is still out on After swinging 386 points
three months amid worries over first- medium), customer footfall in the lier, the impact of Jio’s first-day first- theatrical experience, price differen- nomic cycles in the past, PVR has not the same. For now, multiplex stocks during the day, the 30-share
day first-show movie offers by Jio movie theatre will remain strong. This show movie offering is not expected tialcouldbeanothersupportivefactor, seen any impact on attendance at its are likely to see good investor support index settled 166 points, or
Fiber, as well as the overall consump- should propel box office and food and to be meaningful. According to both in this case, for multiplex or single theatres. In fact, in a few studies done in the near term. While PVR is trading 0.45 per cent lower at 37,104.
tion slowdown, they could find favour beverage (F&B) revenue segments.” the companies, there is a release gap cinema theatre. For instance, current- abroad, during similar stress periods, at eight times its FY21 estimated It hit an intra-day high of
with investors once again. While move ticket segment (typically eight weeks) between the ly, Jio’s offer is only to premium cate- indicate that people look at avenues enterprise value to earnings before 37,435 and a low of 37,048.
Analysts also echo similar views. accounts for 53-56 per cent of overall theatrical release date and the date of gory of subscribers with monthly to go stress free and a movie break is interest, tax, depreciation and amor- Similarly, the broader
According to Bhupendra Tiwary, ana- revenues of PVR and Inox, F&B’s rev- making movies available on other plans ranging from ~2,499 to ~8,499. one of the best options.” tisation (EV/Ebitda), the same for NSE Nifty fell 52.9 points,
lyst at ICICI Securities: “Given the enue share is 26-27 per cent. platforms such as DVD, DTH, TV, What’s more, the slowdown, in Thereisacaveat,though.Theslow- Inox stands at five times. or 0.48 per cent, to close
at 10,982.
Top laggards in the

Tech and pharma funds to the rescue

Sensex pack included YES

SBI Life offer Bank, Tata Motors, Maruti,

Axis Bank, Bharti Airtel, RIL,

for sale to US businesses have started stabil-

NTPC, Bajaj Auto, Asian
Paints, ITC, Kotak Bank,
Bajaj Finance, and TCS,
These two sectors can be good defensive
fetch ~3,500 cr plays in a bad market
ising. On the domestic side, there
were headwinds arising from the
falling up to 5 per cent.
On the other hand, ICICI
goods and services tax imple- Bank, Sun Pharma,
SAMIE MODAK mentation, national list of essen- IndusInd Bank, HDFC
Mumbai, 12 September SANJAY KUMAR SINGH been volatile due to economy- tial medicines implementation, twins, SBI, Tech Mahindra,
related concerns. Hence, experts and so on. But now growth is and ONGC lost up to
State-owned lender State Bank of At a time when most categories say investors may have shifted coming back. Companies’ efforts 2.13 per cent.
India (SBI) has successfully divested of equity funds are giving nega- some money to these export-ori- to rationalise costs have also Despite opening on a
4.5 per cent stake in SBI Life tive returns, technology funds ented sectors. begun to show results,” says positive note, benchmark
Insurance Company. The share sale (up 4.2 per cent on an average) The IT sector is experiencing Vrijesh Kasera, fund manager, indices gave up all gains
will fetch SBI nearly ~3,500 crore and pharma funds (up 2.2 per some tailwinds. Mirae Asset Healthcare Fund. He amid stock-specific selloff,
which will help the state-owned cent) have managed to According to Meeta adds that pharma companies traders said.
institution augment its capital base. remain in the positive Shetty, assistant fund have not seen earnings down- Domestic investors
The offer for sale (OFS) on territory over the past manager at Tata Mutual grade during this quarter. turned cautious ahead of
Thursday saw nearly two times few months. Investors, Fund (manages Tata Over the past few years, phar- factory output and inflation
more demand than the shares on however, need to under- Digital India Fund): “The ma players have been investing data, they added.
offer. Institutional investors sub- stand their prospects sector has shown a jump heavily in research and develop- Elsewhere in Asia,
mitted bids for 85.2 million shares before deciding to raise in deal wins over the past IT FUNDS HAVE FARED BETTER IN THE PAST ment to develop complex gener- Shanghai Composite Index
against 45 million on offer, data pro- their exposure to these few quarters. Most com- IT funds Pharma & health care ics and specialty drugs. These and Nikkei settled in the
vided by stock exchanges showed
the maximum bids came in at ~781,
export-oriented sectors.
Several factors are
YOUR panies are experiencing
above-25 per cent growth
1-year 3-year 5-year 1-year 3-year 5-year
products have begun to get
approvals in the US. On the
green amid hopes of a res-
olution in the US-China
slightly higher than the base price responsible for the MONEY in the digital segment.” Maximum 2.34 18.07 11.14 -5.34 -0.6 3.75 domestic front, the fear of the trade conflict and expecta-
of ~770 per share. recent upswing. Shetty adds that Average -1.5 16.05 9.84 -10.58 -4.54 1.5 list of medicines whose prices tions that the European
Following the share sale, SBI’s One, is the depreciation of the mobility, internet of things, and are controlled by the govern- Central Bank would kick off
stake in SBI Life will fall from 62.1 rupee. “Over the past six weeks, cybersecurity are areas where Minimum -3.03 13.86 8.67 -15.32 -8.57 0.08 ment being expanded has not monetary easing. Hang
per cent to 57.6 per cent. The share the rupee has depreciated from Indian IT majors have consider- Source: mutualfundindia.com materialised. Seng, on the other hand,
sale was handled by SBI Cap around 66-67 to about 71-72 able headroom for growth. Among risks, plants of pharma ended a tad lower.
Securities, HSBC, and Nomura. against the dollar. Whenever Upadhyaya expects large-cap players exporting to the US will Exchanges in Europe
Shares of SBI Life fell 0.9 per cent to there is rupee depreciation, it IT companies to deliver better sectors are facing issues, which es, affecting their margins. continue to be monitored inten- were trading higher in their
end at ~792 on Thursday. Another provides a short-term boost to performance than mid-caps. could lead to them slashing their Finally, valuations are not cheap. sively by the US Food and Drug respective early sessions.
4.5 million shares meant for retail the profitability of information “Some amount of support to IT spending. Shetty informs that Currently the BSE IT index is Administration. In the domestic The Indian rupee appre-
investors will be auctioned on Friday. technology (IT) and pharma stock prices could also come from the manufacturing and financial trading at around 18x its one-year market, an expansion of the list of ciated by 34 paise (intra-
Shares of SBI Life have rallied 32 per companies,” says Harsha buybacks, or expected buybacks, sector account for 45-50 per cent forward earnings — higher than medicines under price control day) to trade at 71.32 per US
cent this year even as the benchmark Upadhyaya, chief investment in this cash-rich sector,” he adds. of the revenue of most IT majors. its 10-year average. would hamper profits. Kasera is dollar. Global oil bench-
indices have remained flat. The stock officer-equity, Kotak Asset As for the risks, globally, bank- Due to visa-related issues, most The outlook for pharma is also of the view that investors with a mark Brent crude was trad-
has been among the top picks for Management Company. ing, financial services and insur- companies have seen an increase improving. “Most pharma com- three-five-year horizon may bet ing 1 per cent lower at $60.18
many brokerages this year. Two, domestic markets have ance, manufacturing, and retail in their sub-contracting expens- panies have reported that their on this sector. per barrel.

COMMODITIES1
>

Heavy rain affects urad, Gems & jewellery exports

> PRICE CARD

lose sheen in August

As onSep 12 International Domestic

soybean crop in MP
------------------------------------------------------------------------------ ------------------------------------------------------------------------------

Price %Chg# Price %Chg#

METALS ($/tonne)
Aluminium 1,792.5 2.2 1,982.0 -3.9 RAJESH BHAYANI The industry has asked for
Copper 5,765.0 -1.1 6,199.0 -6.7 Mumbai, 12 September government help. “To be glob-
SANJEEB MUKHERJEE ally competitive, we urgently
Nickel 18,330.0 56.1 18,344.1 46.2 New Delhi, 12 September Export data for the month of need a reduction in duty on
August has deepened worry in gold and polished diamonds.

A
Lead 2,102.0 9.6 2,066.3 -5.7
fter the monsoon revived in the gem and jewellery industry. We also urgently need ease of
Tin 17,400.0 -10.0 18,555.0 -9.4 July, he expected a good July had seen a 11.2 per doing business on the GST
Zinc 2,364.5 -10.5 2,642.7 -12.3 harvest. However, the cent fall in its shipment. (goods and services tax) and
relentless and heavy rain that has August saw another fall, of 14.4 Customs side,” said Shah.
Gold ($/ounce) 1,520.4* 14.0 1,646.4 12.7 been pounding several parts of MP per cent from a year before, to The industry has also
Silver ($/ounce) 18.4* 24.5 20.4 24.2 for the past few days has dashed his $2.8 billion. In the current asked for a progressive policy
hopes. “I’m now looking at big loss. financial year, which began on importing from China has also for units in Special Economic
ENERGY Almost all the crop has been sub- April 1, the sector’s gross given optimism to the Indian Zones, with a stable set of rules
Crude Oil ($/bbl) 60.0* -1.1 61.8 2.0 merged and there is no let-up in rain,” export is down 8.9 per cent, to gem and jewellery trade. on domestic area sales and
Sinam said over telephone from $15.3 billion, according to the The rest of the picture is, property transfer (when they
Natural Gas ($/mmBtu) 2.5* 5.4 2.5 5.6 Mandsaur. He said the rains could Gem and Jewellery Export however, not bright. “An exit an SEZ), with an e-com-
AGRI COMMODITIES ($/tonne) not have come at a worse time. Due Promotion Council’s provi- industry which took 50 years merce policy.
to late sowing, the soybean crop was Lakhichand Sinam (left) with damaged soybean crop in field in Mandsaur sional data. to build global leadership is in It says delay in state help
Wheat 165.8 -11.5 285.6 1.6 just starting to bear fruit. Now, with The bright spot in this is the turmoil. This is due to the will worsen the situation.
Maize 177.9* -10.3 287.7 10.9 extensive submergence, it has turned large tracts standing soybean and NCDEX-SOYBEAN FUTURES American market, where unfavourable perception of Thailand and Vietnam are
pale, with no chance of revival. urad crops across Hoshangabad, ~/Qtl 3,920 inquiries and orders are com- bankers and government already aggressive, with
Sugar 310.8* -6.9 486.6 1.7 Sinam and 30 of his fellow vil- Mandsaur, Indore, Ujjain, Neemuch, 3,880 ing for the Christmas sale, as about the trade, due to the Thailand’s jewellery export
Palm oil 535.0 5.9 875.9 7.5 lagers went to the district collector’s Ratlam and other places, except the 3,825 also to Europe. Gold jewellery wrongdoing of a few,” said having risen 29 per cent in
office recently to demand compen- Gwalior-Chambal division. export to the US in August Colin Shah, vice-chairman of April- July.
Rubber 1,541.0* -27.9 1,939.8 -13.2 3,730
sation. “So far, no one has come to According to the weather office, increased 5.6 per cent to $911 the Council. “We cannot possibly be
survey our fields and the patwari says rainfall in MP has been 28 per cent
3,606 million. The April-August With the diamond industry world leaders in export with
Coffee Robusta 1,321.0* -5.6 2,066.3 -4.8 3,635
he doesn’t have orders from the top,” above normal so far. Between June 1 export figure to that country is in turmoil globally, export of such a high duty structure and
Cotton 1,317.9 -10.2 1,628.1 -9.8 he said. For hundreds of thousands andSeptember30,thenormalrainfall 3,540 now lower than the year before cut and polished diamonds taxation regime. We hope to
* As on Sep 12, 1800 hrs IST, # Change Over 3 Months in MP, the relentless rain has washed in the state is 952 mm. This year, till Jul 31 2019 Sep 12 by only 4.3 per cent, to $5 bil- fell sharply in August, by 24.9 get some respite soon,” Shah
Conversion rate 1 USD = 71.1 & 1 Ounce = 31.1032316 grams. Compiled by BS Research Bureau Source: Exchange
away hope of a good harvest and an Thursday, it was 1,100 mm. lion. Higher US tariffs on per cent to $1.64 bn. said.
Notes: accompanying improvement in “A proper assessment of the loss
1) International metals, Indian basket crude, Malaysia Palm oil,
income after years of low prices. can be made only when the rains stop crop; in Rajasthan, farms in areas
Wheat LIFFE and Coffee Karnataka robusta pertains to previous days

UP hikes molasses quota for country liquor

price. Of the 11.2 million hectares where and surveyors are able to venture into adjoiningMPhaveseensomeimpact.
2) International metal are LME Spot prices and domestic metal are soybean was sown in 2019, around thefields,”said DNPathak,executive “Initial reports from the ground
Mumbai local spot prices except for Steel. 5.5 mn ha was in MP. In the case of director of the Soybean Processors show that of the total standing pulses
3) International Crude oil is Brent crude and Domestic Crude oil is
Indian basket.
urad (black gram), of the 3.75 mn ha Association of India (Sopa). crop,0.5-1mnhamighthavegotdam- The UP government has raised Against the molasses’ mar- been demanding the state abol-
4) International Natural gas is Nymex near month future & domestic sown, 44 per cent is in MP. Sopa had, in an assessment on aged due to heavy rain. But this will the reservation quota for ket price of ~480-500 a quintal ish the system of reserving
natural gas is MCX near month futures. Soybean prices have turned August 30 (when the rains started be compensated from good yield in molassesto16percentfrom12.5 (100 kg), state distilleries lift molasses for distilleries. Liquor
5) International Wheat, White sugar & Coffee Robusta are LIFF E volatile on the National Commodity pounding MP), estimated that of the others areas, such as Uttar Pradesh,” percentforstatemanufacturers their reserved quota at a sub- is a commercial commodity
future prices of near month contract.
6) International Maize is MATIF near month future, Rubber is Tokyo- and Derivatives Exchange (NCDEX) 5.5 mn ha on which the crop was N P Singh, director of the Indian of countrymade liquor. sidised rate of ~70 a quintal. and produced by business enti-
TOCOM near month future and Palm oil is Malaysia FOB spot price. Futures, following reports of rain, and sown, the condition of almost 79 per Institute of Pulses Research, told This is in the backdrop of a Private sugar millers say the ties, they argue.
7) Domestic Wheat & Maize are NCDEX future prices of near month crop damage. In the past week, prices cent was normal; it was poor in the Business Standard. In total, all the shortfall in molasses produc- decision will hit their cash flow Molasses is a sugarcane
contract, Palm oil & Rubber are NCDEX spot prices.
have risen 4.5 per cent in Indore, with rest. This was before the current bout kharif pulses (urad, moong, arhar — tion from 5.5 million tonnes and also lower availability for byproduct, generated during
8) Domestic Coffee is Karnataka robusta and Sugar is M30 Mumbai
local spot price. reports of crop damage turning real. of relentless rain. It has also pounded black gram, green gram, pigeon pea) (mt) last year to about 4.7 mt making ethanol, affecting the sugar production. Molasses is
9) International cotton is Cotton no.2-NYBOT near month future & No full-fledged assessment has parts of Gujarat and Rajasthan. Trade are grown on around 12 mn ha. Kharif this year, state sugarcane com- amountavailablefortheCentre’ processed to make ethyl alcohol
domestic cotton is MCX Future prices near month futures. been done, with a wait for the rains sources in Gujarat say there is some pulses are 40 per cent of India’s total missioner Sanjay Bhoosreddy petrol blending programme. and methyl alcohol.
Source: Bloomberg Compiled by BS Research Bureau to stop, but sources said there were impact on the cotton and groundnut annual production. told Business Standard. UP sugar mills have long VIRENDRA SINGH RAWAT
16 ECONOMY & PUBLIC AFFAIRS
>
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 1

Rlys defers 15% freight surcharge RBIcutsriskweighton

Hikesnumberof working on a special wagon
design for transportation of
rakesforauto four-wheelers as well as two
wheeler as we expect to get
sectortoboost more traffic from this sector,”
freightloading he said.
He also said that while the
Railways has seen a slowdown
PRESS TRUST OF INDIA in freight traffic in some sec-
New Delhi, 12 September tors such as coal, with the waiv-
ing of surcharges, the volumes
growth has not been at the
leave we had expected.” In the
first five month of the year
(April-August), the Railways
hauled 500 million tonnes
(mt) on freight, but major
chunk of growth usually
comes in the second half of
the year, Mishra said.
In 2018-19, the Railways
transports 1,223 mt of freight,
consumercreditto100%
PRESS TRUST OF INDIA
Mumbai, 12 September
RBI increases banks’ loan
The Reserve Bank of India
(RBI) on Thursday said it has exposure limit to single NBFC
reduced the risk weight The RBI increased loan expo- banks’ boards under excep-
requirement for consumer sure limit of banks to a single tional circumstances.
loans to 100 per cent, a move NBFC (excluding gold loan “It has been decided that a

T
he Railways has might go up. Mishra also said earning revenues of about ~1.25 that will reduce cost of such companies) from 15 per cent bank’s exposure to a single
deferred its busy season the Railways has come out with trillion. Mishra said he expects loans.Currently,theriskweight to 20 per cent of its capital NBFC (excluding gold loan
surcharge of 15 per cent freight, the Railways has taken been hiked to 26 and the nation- a scheme for round-trip charg- to surpass both the volume and requirement for such loans is base, a move that will help companies) will be restricted
on freight and hiked the num- measures to facilitate indus- al transporter has plans to pro- ing on container traffic under revenues numbers this year. 125 per cent. increase credit supply to the to 20 per cent of that bank's
ber of rakes to be provided for try, especially in reducing rail vide as many as 50 rakes to the which the haulage charges for However, the growth in rev- The relaxed requirement crisis-ridden shadow banking eligible capital base," the RBI
the auto sector in a bid to transport cost,” Railway Board sector to transport their goods 0-100 km slab will be charged enuesisestimatedtobeinsingle would not be applicable to sector. According to the said in a circular. The govern-
increase freight loading, which Member (Traffic) P S Mishra by this year end. “This is being for total to and fro movement, digit he said. credit cards. Risk weight refers extant ‘Large Exposures ment on its part has also been
is likely to take a hit due to the said. Additionally, a further done on the request of the auto instead of charging for 0-50 km Meanwhile, IRCTC is offer- to the capital banks keep aside Framework (LEF)’, banks’ taking steps to increase liq-
economic slowdown. waiver of 5 per cent will be giv- sector,” Mishra said. slab each way which will come ing passengers on board its as provisioning to cover any exposure to a single non- uidity in the NBFC sector,
The national transporter on en on loading mini rakes or In fact, the Railways is hop- out to be about 35 per cent Delhi-Lucknow Tejas Express a loan defaults. banking financial company which was hit after default by
Thursday announced that it smaller parcel size. ing that this would increase its cheaper per twenty-foot equiv- host of services, albeit at a cost, The RBI's move is likely to (NBFC) is restricted to 15 per IL&FS Group. The liquidity
was suspending its busy sea- For the beleaguered auto present share of two per cent in alent unit for the complete as part of its efforts to promote boost consumer spending in cent of their available eligible crunch in the NBFC sector
son surcharge of 15 per cent, sector, which is looking to cut loading auto freight to around round-trip. its first train next month. It will the coming festive season. capital base, while general hashittheretailloansegment
levied between October 1 and costs, the Railways has decided 8-10 per cent by end of this fis- “We have not see any neg- provide free rail travel insurance Under the standardised singlecounter-partyexposure in the country leading to
June 30, for the current sea- to offer more rakes for the trans- cal, successfully moving part ative impact till now. In the of ~25 lakh each, luggage pick approach for credit risk man- limit is 20 per cent, which can slowdown in key consumer
son. “Considering the current portation of automobiles. of the sector away from roads first five months of the current and drop service, exclusive agement, all unsecured con- be extended to 25 per cent by sector lending. PTI
economic scenario, to give a Earlier, it used to provide to railways. “On the industry’s fiscal we have loaded more lounges to relax and taxi and sumer credit, including per-
boost to the industry and eight auto rakes, which has now request, the Railways is also freight that last year... but the hotel bookings. sonal loans and credit card
receivables, which are both Bank credit growth RBI turns net seller
unsecured lending, attract a
SEASON’S GREETINGS FROM INDIAN RAILWAYS higher risk weight of 125 per
declines to 10.24% of US dollars in July
Busy season charge Waiver of supplementary charges Round-trip charging on container traffic Discount on De-notification of cent or higher, if warranted by Bank credit and deposits The RBI has turned a net seller
an external rating of the count- growth slowed to 10.24 percent of dollars for first time this fiscal
levied at 15% from | The 5% supplementary charges | Haulage charge for0-100 km slabwill be movement of commodities for
er-party. "On a review, it has and 9.73 per cent to ~96.80 year in July, having sold $93
October 1-June 30 applicable on loading on mini- and charged forto-fro movementinstead of 0-50 km empty containers container traffic
been decided to reduce the risk trillion and ~127.80 trillion, million in the month on a net
deferred except for iron two-point rakes waived | This is about 35% cheaper per TEU for the and empty flat Ninety more commodities weight for consumer credit, respectively, in the fortnight to basis in the spot market, show
ore and port of loading | Likely to boost loading of complete round-trip wagons have been de-notified, including personal loans, but August 30, according to the the latest data from the central
| Coal, coke and smaller cargo sizes and help | It is expected to especially give a fillip to Discount of 25% in which brought down their excluding credit card receiv- latest RBI data. In the year-ago bank. During the reporting
container traffic are cement, steel, food grains and EXIM traffic between ports and inland haulage charge of haulage charge from CCR to ables, to 100 per cent. Other fortnight, advances were at month, the RBI had purchased
already exempt fertilisers loading container depots container freight all kinds (FAK) rates stipulations remain the same," ~87.80 trillion, while deposits $1.592 billion but sold $1.685
the RBI said in a statement. stood at ~116.46 trillion. PTI billion in the spot market. PTI

SC: Transfer HC judges on cogent reasons

In an apparent bid to douse the row
over shifting of the Madras High Court
Chief Justice V K Tahilramani to the
Meghalaya High Court, the Supreme
Court on Thursday said each of the rec-
ommendations for transfer of Chief
Justices and Judges of various High
Courts was based on “cogent reasons”.
Without naming Justice
Tahilramani, a statement issued by the
office of apex court’s Secretary General
Sanjeev S Kalgaonkar said the reasons
of transfer of judges were not disclosed
in the interest of the institution but the
apex court collegium would not hesi-
tate to disclose them in the circum-
stance it becomes necessary. The state-
ment was released against the back-
drop of media reports and speculation
on the transfer of Justice Tahilramani.
The judge resigned on September 6,
days after the Supreme Court
Collegium declined her request for
reconsideration of her transfer.
She sent her resignation letter to
President Ram Nath Kovind, a copy of
which was sent to Chief Justice of India
Ranjan Gogoi. The resignation is yet to
be accepted or rejected.
Her transfer also led to massive
protests by lawyers both at the Madras
High Court and Bombay High Court,
where she was a judge before being
appointed as the Chief Justice. PTI
Chidambaram knocks the
door of Delhi HC, trial
court in INX Media cases
Former finance minister P Chidambaram, who is
in Tihar jail, knocked the door of the Delhi High
Court and a trial court on Thursday in connection
withcorruptionandmoneylaunderingcasesaris-
ing out of the INX Media scam. Chidambaram,
who will spend his 74th birthday on Monday in
the prison, pleaded for bail in the corruption case
in the high court and sought permission from
the trial court to surrender in the money laun-
dering case. A battery of senior advocates includ-
ing his party colleagues from Congress, Kapil
Sibal, A M Singhvi, Vivek Tankha and Salman
Khurshid appeared for Chidambaram in the high
court before Justice Suresh Kait.
Ayushman Bharat: A year on,
states, Centre still not in sync
VEENA MANI
New Delhi, 12 September
As Ayushman Bharat nears
completion of its first year, the
team implementing the
scheme is planning to stream-
line it during its second year.
Even though the IT plat-
form of Ayushman Bharat is
up and running, the bottle-
PTI necks are at the state level.
Also, as part of the agenda,
all state-run schemes are
required to amalgamated into
Ayushman Bharat.
Many states like Tamil
Nadu and Maharashtra,
among others, continue to run
their schemes as well the
Centre’s Ayushman Bharat
parallelly.
Those at the Centre feel that
states do not want to let go of
older schemes. One of the rea-
sons for states to not merge
their schemes with Ayushman
Bharat is because the state
plans connect with the masses.
The Centre is also planning
to work its way around states
that have not signed up for
Ayushman Bharat. A senior
government official said, “We
are planning to ask states that
have subscribed to the scheme
to directly empanel hospitals
18,059 4,406,461
Beneficiaries admitted
Total number
of hospitals 100 mn Number of
empanelled beneficiary cards issued
in other states that have not
signed up (for Ayushman
Bharat), so that patients of the
home state do not suffer. For
example, Assam can empanel
hospitals in West Bengal.
Patients from Assam, if suffi-
cient infrastructure is not
available, can go to a hospital
in West Bengal to get treat-
ment.” The Ayushman Bharat
team has also started empan-
elling hospitals in West Bengal
and Odisha.
Another goal of the national
More than 90
per cent cases
have been
verified using
Aadhaar
health agency and state health
agencies running the central
scheme is to market it and tell
the people about its benefits.
In states like Tamil Nadu, it
seems there is 40 per cent
awareness of the national
scheme. Most patients who
avail this scheme are from oth-
er states.
An official coordinating the
scheme at the state level said,
“Labourers from Assam, who
come to Tamil Nadu for work,
use this scheme. We get calls
from neighbouring Telangana
and Andhra for the scheme.”
Those belonging to Tamil
Nadu use the chief minister’s
health scheme and other
health care products provided
by the state government.
Another thing on the
Centre’s agenda is to make
Ayushman Bharat protocols
for empanelment, payment
and treatment the standard for
other government health
schemes like CGHS, said a sen-
ior official.
The Centre rolled out
Ayushman Bharat last
September. The intention was
to provide health care upto
~500,000 to those who feature
in the socio-economic caste
census (SECC) data.
Meanwhile, medical device
manufacturers have asked the
government to consider spe-
cial sops for them.
The Confederation of
Indian Industry’s medical
technology head Himanshu
Baid told the press that the
chamber has asked the gov-
ernment to consider separat-
ing the device price and treat-
ment price under the scheme.
This will ensure quality prod-
ucts are available under the
health plan.

Congress to turn to agitational politics

ARCHIS MOHAN
New Delhi, 12 September
The Congress on Thursday said it planned
to launch a series of protests and demon-
strationsacrossthecountryfromOctober15
to 25, in the midst of the festive season, to
highlight the poor state of the economy.
Faced with the challenge of revitalising
the party and arrest erosion in its ranks,
and also to find the common touch to con-
nect with the people, particularly the youth,
the Congress unveiled a slew of pro-
grammes. It will have conventions to high-
light the “economic slowdown” from
September 20 to 30. It will hold padyatras
across the country on October 2, and organ-
ise other events from October 3 to 9, to mark
the 150th birth anniversary of Mahatma
Gandhi and spread the message of the val-
ues that he dedicated his life to.
The Congress will launch a programme
to train party workers to explain its vision of
nationalism and secularism and carry out a
membership drive. It claimed that its cur-
rent membership was 20 million.
At a meeting of party leaders in the
national Capital, Congress President Sonia
Gandhi implored them to have a “concrete
agitational agenda”togodirectlyto the peo-
ple instead of merely being aggressive on
social media. Thursday’s was the first par-
ty meeting Gandhi chaired after taking over
as president a month ago. As many 32 lead-
ers spoke at the meeting. A notable speech
was of Tripura Congress unit chief Pradyot
Deb Barman. The 40-year-old said it had
become difficult to explain the values
Mahatma Gandhi and Jawaharlal Nehru
stood for to people who were 10 years
younger than him, and the challenge was to
be able to communicate with the youth.
Gandhi said those who quit the
Congressinrecenttimeshad“revealedtheir
opportunistic character”. She asked
Congress-run state governments to start
implementing the party’s manifestos or
else the party “will lose people’s support
“The country today is in the midst of
a dangerously protracted
slowdown. The dangerous thing
about the present situation is that
the government is complacent
enough to not realise that we are
in the midst of a protracted
economic slowdown”
MANMOHAN SINGH
Former prime minister
with obvious consequences”.
Former prime minister Manmohan
Singh said the country was today in the
midst of a “dangerously protracted slow-
down”. He said an atmosphere of “gloom
and doom” prevailed with at least a million
on the brink of losing jobs unless the gov-
ernment intervened with a stimulus pack-
age, in only the automobile sector. He said
there was no sign the government was
thinking of a clear plan of action to arrest
this economic slowdown, and indulging
only in “cosmetic” measures.
In his speech, Singh said the economic
situation in the country was “going from
bad to worse”, and the “dangerous thing
about the present situation is that the gov-
ernment is complacent enough” not to
acceptthattherewasaprotractedeconomic
slowdown.HespokeofGDPinthelastquar-
ter dropping to 5 per cent, and that it had
declined for five successive quarters.
Singh recalled how his government had
turned the economic crisis of 2008-09 into
an opportunity to revitalise the economy.
He said there was gloom in agriculture,
manufacturing, and real estate. Singh said
worse would follow if the situation, partic-
ularly in jobs, was not reversed. He spoke of
the drop in agricultural growth from 3.5 per
cent last year to 2.7 per cent, and the “dan-
gerous point” being that the real wage rate
in the agriculture sector had been static in
the past five years under the NDA regime.
Similar, he said, was the state of manu-
facturing with demand declining. In the
real estate sector, he said there were
450,000 dwelling units lying vacant in the
eight major metropolitan centres.
Singh said the rupee was “getting weak-
er and weaker” “and one would take advan-
tage” of the weakening of the rupee to push
up exports, but exports in the last five years
had been sluggish or stagnant, with the
result that the balance of payment situa-
tion was getting worse. The former PM said
investment was not picking up, and the
automobile sector was “crying for help from
the government”. He said the perception in
industry was that if the present trend was
not reversed, there would be a million peo-
ple who might lose their jobs in the sector.
Singh said the expectation is that the
government would come up with a package
to stimulate demand to promote invest-
ment, but the feeling in the industry is that
there is tax terrorism in place of incentiviz-
inginvestment.Hesaidthisisthereasonfor
sluggish private sector investments, and no
sign that it will pick up, and the stock mar-
kets showing the sign of this atmosphere of
gloom. He said the responsibility of the
Congress to tell the people that the promis-
es made by the BJP are being ignored. On
the PM’s announcement of India becoming
a $5-trillion economy by 2024, Singh said it
now looked like a “pipe dream”. He said
India would need to grow by 12 per cent
each year in nominal terms and by 9 per
cent in real terms to achieve that.
Moreonbusiness-standard.com
.
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 BRAND WORLD 17
<

Audio OTT brands look

to perfect the pitch
Small sachets, daily subscriptions and bundled offers, Spotify, Amazon Prime,
YouTube, Gaana are going all out to woo mass audiences
URVI MALVANIA music in two languages. We
Mumbai, 12 September curate language packs and tar-
get those segments,” he adds.

L
ong trapped in a vicious
circle of piracy and big
Bollywood studios, the
music business is breaking free
of its shackles under sustained
push from the growing band of
audio over-the-top (OTT)
brands. Keen to muscle their
way into the multi-lingual lis-
tening routines of audiences
with varying tastes, Amazon
Music, Spotify, YouTube and
local players Gaana, Jio Music
and Hungama are using data
and technological innovations
to package their music for audi-
ences across age and
income groups. But as
they do that, the big
challenge will be dif-
ferentiating the listen-
ing experience even as
they spin their music
from a common spool.
“In India, we've customised
our pricing for two reasons.
First, the consumer is value
conscious, and second, India is
yet to transition from a largely
piracy-based market to one that
streams music legally,” says
Amarjit Batra, managing direc-
tor India, Spotify.
The Indian music market
holds out huge potential. A
recent report by Deloitte
(Economic impact of music)
estimates the valuation of the
audio OTT industry in India at
~2,700 crore and its annual rev-
enues at ~270 crore. Experts say
that audio OTT brands expect
the market to grow from 150
million users now to 400 mil-
lion users over the next two
years. While there is ample
room for growth, the brands are
also conscious of the need to
keep an unrelenting eye on
affordability.
The market has shifted sig-
nificantly from earlier years as
says Siddharth Roy, CEO,
Hungama that was one of the
early investors in the business,
“The Indian consumer today is
comfortable with streaming
music. Increasingly, this con-
sumer is opening up to the idea
of paying as well.”
However, the other chal-
lenge is classifying the Indian
customer. Music is accessed in
many languages. Also listeners
are fickle, switching between
brands while seeking a cheap
entry into the ecosystem. The
apps therefore have to offer a
wide variety of packages; on
Spotify there is a free (ad driven)
or a subscription (ad free) mod-
el that is further sliced into dai-
ly, weekly, monthly, and annu-
al plans, starting from as low as
~13, Batra said.
At Gaana, where CEO
Prashan Agarwal says, sub-
That Hindi is not the only
language spinning the music
tracks for Indian listeners is well
known. However the data sets
gathered by the audio compa-
nies helps them classify audi-
ences more finely. For instance,
Bhojpuri audiences tend to be
single-language users while the
rest are largely two-language
listeners. The South Indian lan-
guages make an easy combina-
tion for most too.
Regional music also helps
build up content at a fraction of
the cost of building the Hindi
music library. Many are also
looking at launching new artists
in different languages. Agarwal
says that this is a good way to
offset costs of acquiring Hindi
film music, which
“We've customised still has the largest
our pricing for two share in the con-
reasons. First, the sumption pie.
consumer is value Apart from
scriptions have conscious, and advertising, the
boomed under second, India is yet platforms are also
increased adop- to transition from a looking at monetis-
tion of digital largely piracy-based ing their libraries
payments, there market to one that and product assets
is significant streams music through brand
experimentation legally” partnerships and
with innovative AMARJIT BATRA sponsorships.
monetisation Hungama for
MD, Spotify India
models. “I feel example has brand-
the Indian con- ed playlists where a
sumer is not price-conscious, product or service is integrat-
but value-conscious. If we’re ed into the playlist. Others use
able to deliver significant val- podcasts for the same.
ue for their money, they will be “We do see immense poten-
more than happy to sign up,” tial in the podcast domain.
he says. According to a global research
All OTT brands are using in 2018, half of the podcast lis-
data to profile their listeners. teners said that podcast ads are
Agarwal says, “Data goes a long more relevant, seamless, or
way in evaluating our business entertaining. In India, maybe
decisions. For example, we it's a bit early, but yes, we've had
know that more than 80 per brands and advertisers show
cent of our listeners listen to interest,” Batra says.

FROM PAGE 1
pensation given to states. “In the first place,
there should be no tinkering with rates for
RIL’s e-auction...
the auto sector. If the Centre wants to com- The timeline will be extended if there is

States rule out... pensate them via abolishing the cess, it may
go for borrowing,” Kerala Finance Minister
Amit Mitra, West Bengal finance minister, Thomas Isaac told Business Standard.
said the rate cut decision could not be con- Isaac tweeted on Thursday, “To all
sidered till there was a proper study on its votaries of abolishing 28 per cent slab in
revenue elasticity and cross elasticity. GST: You are hooting to make Indian tax
“With a week to go for the Council meeting, system one of the most iniquitous. Average
the agenda has not been circulated yet. rate on consumer durables in pre GST peri-
There is no study that has been done. od was around 35 per cent. You want to
Revenue is an issue that is a big concern reduce it to 18 per cent. A cardinal principle
right now,” Mitra said. He added he would of taxation is equity. Refer to Dalton.”
raise the matter on “GST fraud worth The shortfall in the central GST (CGST)
~45,680 crore” in the Council meeting. in 2018-19 stood at ~50,000 crore, as much
Subdued GST collection poses a chal- as the projected revenue loss on account of
lenge for the growth target of 16 per cent for a cut in the rate for auto.
the central GST in 2019-20. GST collection
needs to grow by at least ~1.17 trillion to
achieve the target for the fiscal year. HUL emerges...
Collection failed to touch ~1 trillion in At the regional level, a brands such as
August, indicating persisting slowdown, Cream Bell, Heritage, Vadilal and
which was also reflected in GDP growth Havmor, acquired by Lotte in 2017, com-
plummeting to a 25-quarter low of 5 per pete with each other and national players.
cent in the first quarter of 2019-20. “MNCs are keen on buying local brands
Mitra said he was yet to get any repre- and businesses as a pre-emptive meas-
sentation from the auto industry for a rate ure to wrest greater market share of the ice
cut. Of the ~50,000 crore revenue loss pro- cream market,” said Deepak Jasani, head
jectedfortheautosector,~22,000croreisfor of retail research at HDFC Securities.
auto parts alone. The revenue from the auto
sector comes to about ~3 trillion annually.
Punjab, too, is of the view that the rate FB counters...
cut was not feasible and had resisted a rate “Data-sharing is crucial for national secu-
reduction on electric vehicles (EVs) in the rity too. Yet, right now India finds itself
last Council meeting. The rate on EVs was locked out of major global data-sharing
cut to 5 per cent from 18 per cent in July. initiatives aimed to clamp down on serious
Kerala has opposed any rate reduction crime and terrorism, like the Clarifying
for vehicles and said in case the benefit is Lawful Overseas Use of Data (CLOUD) Act
passed on by way of a cut in the cess, it and the Budapest Convention on
should not have any bearing on the com- Cybercrime,” he said.
The Budapest Convention is
one of the most important multi-
> BS SUDOKU # 2842 lateraltreatiesaddressingtheissue
of cybercrime and international
cooperation. It was drafted by the
Council of Europe along with
Canada, Japan, South Africa, and
the US. India is currently not a sig-
natory to the convention. The
CLOUD Act allows US agencies to
access data stored abroad.
Clegg met Home Minister
Amit Shah and Communications
and Information Technology
Minister Ravi Shankar Prasad lat-
er in the day. Over the past two
years, the call for data localisation,
or storing data in local servers in
India, has picked up pace, and is a
feature of several new policies and
legislation that deal with sensitive
or personal data of Indian citizens.
Businesses in India and abroad
SOLUTION TO #2841 Easy: have opposed the call for man-
dating data localisation and
Solution restricting cross-border data
flows. Even as the data-handling
tomorrow
continues to be a global issue for
HOW TO PLAY Facebook, India has been asking
Fill in the grid so WhatsApp to find a solution to
that every row, trace the origin of fake messages
every column on the platform, after a series of
and every 3x3 mob lynchings last year, fuelled
box contains by what were later found to be
the digits 1 to 9 fake messages circulated on
WhatsApp.
change in volume allocation, based on a
bid received in the last 10 minutes before
closure time. In the event of a price tie, the
one offering longer tenure will get the vol-
ume. If price and tenure are the same, the
bidders will be given allocations in the ratio
of the quantities they have bid.
RIL has conveyed to the bidders that it
will make gas available to them between
April1,2020,andMarch31,2021.Buyerswill
also have to notify when they will be taking
the delivery. The gas will be transported
through the East-West Pipeline owned by
Pipeline Infrastructure.
Home buyers...
“While under the repo-linked structure,
higher principal repayment leads to faster
amortisation, which in turn results in a low-
er interest outflow for the tenure of the loan,
the rate of interest rises immediately as
against a quarterly rate revision cycle asso-
ciated with a non-repo rate-linked home
loan, which could come as a shock to the
customer,” said a senior banker.
Economists do not see the repo rate
falling much from the present level, while
the rates will rise from here if inflation flares
up. The RBI is mandated to keep inflation
contained between 2 per cent and 6 per
cent, and the primary tool to do that is the
repo rate. It is not that the customer can
chuck this particular loan structure and get
loans from housing finance companies.
Theyarealsoconsideringlinkingtheirlend-
ing rate to an external benchmark.
Keki Mistry, vice-chairman of Housing
Development Finance Corp (HDFC), told a
paper that the firm’s asset liability com-
mittee (ALCO) would consider linking lend-
ing rates to an external benchmark, but
“only when we are able to match the same
mechanism on our liabilities side”.
Others are also gearing up for similar
products. Siddhartha Mohanty, MD and
CEO of LIC Housing Finance, said his com-
pany was examining a proposal on linking
lending rates to an external benchmark,
and the ALCO would take a call on this.
“While taking the decision, we will have
totakeintoaccountissueslikecostoffunds.
The company will respond to the changes
in the ecosystem,” Mohanty said.
A spokesperson of Indiabulls Housing
Finance also said their ALCO would take a
call on this issue in two weeks.
Private banks, however, are in a fix about
the product. They cannot force a floating
rate deposit product, but they are now
forced to give a floating rate loan product.
“We don’t have the capital support like a
government bank enjoys. So an asset liabil-
itymismatchcanbedangerous,”saidasen-
ior banker with a large private bank. The
banker also said SBI’s loan structure could
not be replicated by others, and possibly
even SBI would have to revise it, since it ran
counter to the government’s intention.
SBI is already thinking on those lines.
“This is not going to be the only option.
Based on market feedback and regulatory
requirements, we will review the scheme,”
said the SBI official.
18
>
NEW DELHI | FRIDAY, 13 SEPTEMBER 2019 1

Fresh stimulus: ECB cuts key 100 days a trailer, film

toh abhi baaki hai: PM
rate, to restart bond buying
BLOOMBERG CUSHIONING THE EUROZONE
PRESS TRUST OF INDIA
Ranchi, 12 September

Prime Minister Narendra Modi

12 September on Thursday said development
FROM A GLOBAL SLOWDOWN and the fight against corruption

T
he European Central Bank Deposit rate cut by 10 basis points and terrorism during the first
(ECB) cut interest rates further to a record low of -0.5% 100 days of the NDA 2.0 gov-
below zero and revived bond ernment was just a “trailer” of a
purchases after President Mario
Bond purchases to restart at a rate fast-pacedfilm,addingpurifilm
Draghi overcame critics of his stimulus of ^20 billion/month from Nov 1 toh abhi baaki hai, suggesting
policies to make a final run at reflating Banks will get an exemption more steps are on the anvil.
the euro-area economy. from negative rates for some of Modi also took a dig at for-
The ECB reduced the deposit rate to their deposits mer Union finance minister P
minus 0.5 per cent from minus 0.4 per Chidambaram, saying some
cent, and said it’ll buy debt from News triggered a rally in people facing allegations of
November 1 at a pace of ^20 billion ($22 Eurozone bonds and pushed the corruption have already been
billion) a month for as long as necessary euro below $1.10 put in their “rightful place”, a
to hit its inflation goal. US President Donald Trump reference to him being sent to
“We have headroom to keep going on jail early this month.
accused the ECB of deliberately
for some time at this rhythm,” Draghi, The PM was in poll-bound
whose eight-year term ends next month, depreciating the euro Jharkhand’s Ranchi after
said at his press conference in Frankfurt. The Fed is likely to lower launching a slew of measures
“Westillthinktheprobabilityofrecession ECB President Mario Draghi at a news conference on the outcome of the meeting borrowing costs next week including ambitious pension
fortheeuroareaissmall,butit’sgoneup.” of the Governing Council, in Frankfurt, Germany, on Thursday PHOTO: REUTERS schemes for farmers, shop-
The ECB also cut the cost of its long- keepers and self-employed
term loans to banks, and lenders will ously expected borrowing costs to stay Denmark’sratebacktorecordlow the US and China and after the ECB’s persons. He also inaugurated a
get an exemption from negative rates unchanged until mid-2020. It also Following the ECB’s policy decision, move. Elsewhere, European equities new building complex for the
for some of their deposits after an out- scrapped a 10-basis point rate premium the Danish central bank lowered its edged higher. Turkey’s lira rallied after state Assembly and a multi-
cry from the industry about the previously attached to its long-term deposit rate to minus 0.75 per cent, tak- its policy makers cut interest rates by modal cargo terminal, which
squeeze on profitability. loan programme. ing it back to an historic low as it seeks more than forecast. is expected to ease transporta-
After initially rallying on the news, “Draghi has continued to push the to defend the currency peg. tion in the mine-rich state.
European government bonds’ enthusi- envelope despite the opposition from The 10 basis-point cut brings the Draghi hits back at critics “Development is our pledge Prime Minister Narendra Modi launched several schemes in
asm for the measures rapidly faded, with some Governing Council members to nation’s deposit rate to minus 0.75 per Draghi hit back at criticism of his insti- and commitment; never has Ranchi on Thursday PHOTO: PTI
short-term securities in particular com- restarting QE,” said Ken Wattret, chief cent and increases the likelihood that tution’s negative interest rates by the country seen such acceler-
ing under pressure due to the limits of European economist at IHS Markit. Denmark’s experiment with negative Deutsche Bank AG and other major ation in development,” he said. to different welfare projects, he building 100 million toilets and
the ECB’s rate cuts and bond-buying The actions prompted US President rates will last for more than a decade. It lenders, saying they should focus on cost “In sabhi mamlo mein, desh said 4,400,000 people availed giving free LPG connections to
plans. The euro, having weakened on the Donald Trump to tweet that the ECB is also ends the longest period of reductions and technology instead of ne abhi sarkar ka bas trailer benefits under the ‘Ayushman 80 million beneficiaries under
headlines, reversed losses, while stocks “acting quickly” while the Federal unchanged rates in Denmark — 3 1/2 getting worked up over monetary policy. dekha hai, puri film toh abhi Bharat’ health insurance Ujjwala Yojana, he said.
swung between gains and losses. Reserve “sits, and sits, and sits.” years — since the krone was anchored “Banks would like to have positive baaki hai (The country has just scheme in the last one year. Among the schemes
The ECB changed its guidance on The Fed is likely to lower borrowing to the euro, in 1999. rates, unquestionably,” Draghi said. But seen the trailer of the function- More than 20 million hous- launched were Pradhan Mantri
interest rates to say they’ll stay at pres- costs next week for the second time this banks’ profitability is much more affect- ing of the government(in 100 es were constructed under Kisan Maan Dhan Yojana, the
ent or lower levels until the outlook for year. Questioned on that tweet, Draghi Stocksadvance ed by costs, and adapting to new tech- days), the entire film still Pradhan Mantri Awas Yojana Pradhan Mantri Laghu Vyapari
inflation “robustly” converges to its said “we don’t target exchange rates. Stocks climbed on optimism about the nology would be “much more com- remains to be seen). and 20 million more houses are Maan Dhan Yojana and
goal of just below 2 per cent. It previ- Period.” outlook for a trade agreement between pelling than being angry”, he said. Reeling out figures related under construction, besides Swarojgar pension scheme.

Gone in 3 mins:
Investors race for
SoftBank bonds
BLOOMBERG
Tokyo, 12 September
Monex Group’s online bro-
kerage sold out 500 million
yen ($4.6 million) of SoftBank
bondstoJapaneseindividuals
in less than three minutes, a
sign of strong demand for the
conglomerate’s debt despite
skepticism about some of the
firm’s recent investments.
Tokyo-based Monex start-
ed selling the bonds at 9 am
on Monday and ran out at
9:02:26, said Shinichiro
Yamada, general manager in
the firm’s products depart-
ment. That’s despite a fierce
typhoon that hit the nation
that day, disrupting trains and
airplane schedules. It takes
the brokerage about two
weeks to sell out on average.
SoftBankfounderMasayo-
shi Son has relied heavily on
local investors, particularly
individuals, to raise capital as
hehasexpandedintowireless
services and, more recently,
investments in start-ups like
UberandWeWork.SoftBankis
raising a total of 400 billion
yen in the most recent bond
sale by Monex and other bro-
kerages,pricingtheseven-year
notesata1.38percentinterest
rate. It sold another 500 bil-
lion yen of bonds in April.
“The quick sellout, despite
the typhoon, shows how
strong the demand is for high-
er interest rates,” Yamada said
in an interview.
US delays Chinese tariff hike
BLOOMBERG
Hong Kong, 12 September China welcomes
US President Donald Trump
Trump’s move
(pictured) on Wednesday said ChinaonThursdaywelcomed
he was postponing the imposi- UnitedStates’PresidentDonald
tion of 5 per cent extra tariffs on Trump’s“goodwill”gestureto
Chinese goods by two weeks, a postponeaplannedtariffhike
move that delays the next esca- onChineseproducts,asthetwo
lation of the trade war and countrieswarmeduptoeach
brightens the backdrop for otheraheadofthenext
upcoming trade negotiations. month’stalkstoendthe
“At the request of the Vice bruisingtradewar. PTI
Premier of China, Liu He, and
due to the fact that the Trump wrote on Twitter. ing into its second year. At the
People’s Republic of China will S&P 500 futures climbed 0.5 same time there’s little sign that
be celebrating their 70th per cent and the offshore yuan substantive progress is being
anniversary on October 1st, we strengthened 0.3 per cent made on their differences,
have agreed, as a gesture of against the dollar. The yen fell. while Trump still has further
goodwill, to move the Negotiators from the two tariff increases lined up.
increased tariffs on $250 bil- countries are due to meet in On Wednesday, China
lion worth of goods (25 per Washington in the coming announced a range of US goods
cent to 30 per cent), from weeks to push forward talks to tobeexemptedfrom25percent
October 1st to October 15th,” end the trade war that’s stretch- extra tariffs enacted last year.
AB InBev set to revive UK could block Hong
Budweiser Asia IPO Kong’s bid for LSE
Anheuser-Busch InBev The plan by Hong Kong Exchanges & Clearing
is planning to raise Ltd(HKEX) totakeoverLondonStockExchange
about $5 billion from a (LSE) is running into multiple obstacles a day
revived float of its after the surprise bid was launched, with the
Asian operations after UK bourse leaning toward rejecting the offer in
the world’s largest beer its current form.
maker shelved a Hong LSE and its advisers have wide-ranging con-
Kong IPO in July, peo- cerns, including the possible influence of China
ple with knowledge of on the HKEX, and the deal could face pushback
the matter said. AB InBev, which had aimed to from UK and US officials over security concerns,
raise as much as $9.8 billion through an IPO of according to people familiar with the matter.
BudweiserBrewingCompanyAPACtohelpwith LSE is also wary of a bid that is structured main-
its heavy debt burden of over $100 billion, aims ly in stock and has exposure to the volatile situ-
to re-launch the float as soon as next week, the ation in Hong Kong, the people said.
sources said. It is tentatively looking to price the The Asian bid also faces skepticism from
deal on September 23 and list the unit on LSE’s British-based shareholders.
September 30, sources said. REUTERS BLOOMBERG

How to abolish billionaires? Piketty

back with book on ending inequality
WILLIAM HOROBIN
Paris, 12 September
Thomas Piketty’s last
blockbuster helped put
inequality at the centre of
economic debates. Now he’s
back with an even longer
treatise that explains how
governments should fix it —
by upending capitalism.
The French edition of
Capital and Ideology,
weighing in at 1,232 pages,
comes out on Thursday
(English speakers will have to
wait till next year for a
translation). It’s a sequel to
Capital in the 21st Century,
which has sold more than 2.5
million copies in 40
languages since 2013,
according to its publisher.
Nobody can be sure how
many of that book’s buyers
actually got through all 900-
something pages. But its
impact has been undeniable.
Sixyearson,therearemore
politicianspledgingtoredress
theskeweddistributionof
incomeandwealth.(Oneof
Thomas Piketty’s conclusion is it’s a mistake to see inequality
as rooted in nature, or driven by changes in technology. Its real
causes are to be found in politics and ideology
them,USpresidentialhopeful
ElizabethWarren,workedwith
twoformerPikettyaidesto
designawealth-taxproposal.)
Andit’sbecomecommonto
hearinequalitydescribedasan
urgentproblembybillionaires
likeWarrenBuffettandRay
Dalio.Allthatsuggestspolicy
makersandinvestorswoulddo
welltoacquaintthemselves
PHOTO: REUTERS
withPiketty’slatestthoughts
—whichsoundprettyradical.
Sacredproperty
“Thetimehascometoexitthis
phaseofmakingproperty
sacred,togobeyond
capitalism,”theeconomisttold
FrenchmagazineL’Obs.
Piketty says he’s improved
as a writer. “If you read one of
them, read this one,” he told
L’Obs. And he says his new
book addresses two
shortcomings of the last one,
which was too focused on
Western economies, and
didn't give enough space to the
political ideologies that lie
behind inequality.
Capital and Ideology
ranges across time and
geography, with analysis of
colonial, slave-owning and
communist economies, and
references to India, China and
Brazil. “In this book I will try
to convince the reader that
the lessons of history can be
leaned upon to define a more
demanding norm of justice
and equality,” he writes,
in an extract from the new
book published by Le Monde
newspaper.
Piketty says his conclusion
is that it’s a mistake to see
inequality as rooted in nature,
or driven by changes in tech-
nology. Its real causes are to be
found in politics and ideology
— and that makes it easier to
challenge. BLOOMBERG