https://t.me/EStore33
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MONDAY, 29 JANUARY 2018
22 pages in 1 section
MUMBAI (CITY)
~6.00
VOLUME XXII NUMBER 120
How markets performed last week
Index on *One- --————————————————————————————————————————————————————————
Jan 26, ‘18 week Local currency
Sensex 36,050** 1.5
Nifty 11,070** 1.6
Dow Jones 26,617 2.1
Nasdaq
Hang Seng
Nikkei
7,506 2.3
33,154 2.8
23,632 -0.7
FTSE
DAX
7,666 -0.8
13,340 -0.7
*Change (%) over previous week
**As on January 25, 2018
Compiled by BS Research Bureau
FINANCE MINISTRY NOT
TO RECREATE OMNIBUS
DEVELOPMENT BANK
The finance ministry has decided not to
recreate an omnibus development bank.
Instead with at least one international
rating agency having pushed up India’s
credit rating, it will push state-owned and
supported entities to take advantage of the
favourable conditions to raise more money.
SUBHOMOY BHATTACHARJEE writes 10 >
COMPANIES P2
Nod for generics up, US biz
shrinks for home firms
The share of US biz in the overall revenue of
big pharma firms shrank in FY17 and in the
first half of FY18, the data shows. The trend
is likely to continue for the next few quarters
before the benefits from new drug launches
start to accrue. SOHINI DAS writes
ON
SPECIALS
MONDAY
BRAND WORLD: Thechanging
faceofsportswearbrands
How brands such as Puma, Wildcraft,
and Woodland are rewriting the
marketing playbook to cater to women
consumers. T E NARASIMHAN writes 12 >
BUSINESS LAW: The contract
worker conundrum
Govt is trying to resolve the tug-of-war
between employers and unions over
contract workers. SOMESH JHA writes 13 >
PERSONAL FINANCE:
HNIs target companies at
pre-IPO stage
They can earn super-normal profits, but
any delay in the offer would mean a longer
holding period. TINESH BHASIN writes 11 >
POLITICS & PUBLIC AFFAIRS:
Gender gap in schools
fading away
Eight years after implementation of RTE,
girls are finally catching up with boys in
schooling; most big states reduce regional
variations in ‘children with no education’.
ABHISHEK WAGHMARE writes 18 >
START-UP CORNER:
Going vernacular in
social networking
ShareChat offers content consumption
in 10 languages; needs to fix bugs in
video uploading and downloading.
SHAMEEN ALAUDDIN writes 19 >
STATSGURU: BS analyses
fiscal math and
Budget expectations
Rush to find ‘suitable’ car dealers
AJAY MODI
New Delhi, 28 January
Maruti Suzuki, the country’s biggest
carmaker, was looking to appoint
a fifth dealership in Lucknow, the
capital of Uttar Pradesh.
It spent a few months last year
trying to find a ‘suitable’ investor, but
could not find one. With the rising
cost of land and capital, no investor
with an automobile background
came forward to invest.
The search is still on. “There is no
such challenge of finding the partners
for Maruti Suzuki. This (Lucknow)
may be a one-off,” said a company
spokesperson, in response to queries.
This may be a one-off for the
company, whose dealer partners are
better off (compared to most other
companies) and enjoy the edge of
being associated with the most
sold brand in the country.
But challenges are beginning to
emerge in finding dealer partners
because investors have multiple
avenues to park their money outside the
automobile business. “A new dealer in
Lucknow may have had to invest
~150 million in setting up a Maruti
Suzuki sales, service, and spares
network. This excludes the cost of
land. Adequate returns could have
been tough,” said a person familiar
with the development.
At least 4,000 car sales service outlets
could be set up over the next three years
with the entry of three carmakers —
Kia, Peugeot, and MG Motor — and the
network expansion plans of the existing
players, and by the end of the three-year
% chg over Dec 29, ‘17
in US $
5.9 6.4
5.1 5.7
7.7 7.7 BACK PAGE P22
8.7
10.8
3.8
8.7
10.8
7.8
UNADKAT BECOMES COSTLIEST
-0.3
3.3
4.5
6.9 INDIAN PLAYER IN IPL AUCTION
Source: Bloomberg
FRDI Bill’s bail-in clause
worries labour ministry
Officials say move TAKING COVER
Employees’ State Insurance
may impact medical Corporation (ESIC) corpus
benefits under ESIC Fund amount (~ billion)
SOMESH JHA
New Delhi, 28 January
T
he Union labour and
employment ministry has
raised concerns about
the ‘bail-in’ clause — under
which bank deposits can be used for
helping failing public sector banks
(PSBs) to stay afloat — in the
Financial Resolution and Deposit
Insurance (FRDI) Bill.
This is perhaps the first time the
clause has drawn flak from within
the government, which is facing
criticism from other quarters as well.
The ministry has represented that
a substantial chunk of money kept in
fixed deposits of PSBs for providing
medical benefits under the Emplo-
yees’ State Insurance (ESI) scheme to
around 30 million employees will be
rendered unsafe due to this clause.
Union Finance Minister Arun
Jaitley had in August last year intro-
duced in the Lok Sabha the FRDI Bill,
which proposes a comprehensive
resolution framework to ensure that
in the case of financial institutions,
including banks and insurance com-
panies, failing, there was a system of
resolution for their revival or closure.
This is for the first time that a Bill
has proposed a clause that involves
using depositors’ money to infuse cap-
ital into ailing financial institutions.
Turn to Page 10 >
NEW TAXES SPARK WITH ESOPs, 200
JOBS BOOM AT TOP PAYTM STAFF ARE
ACCOUNTING FIRMS MILLIONAIRES
The Big Four
multinational
accounting firms
have doubled the
size of their indirect
tax teams in India to
cater to the sharp rise in demand arising
from implementing the goods and
services tax (GST) and introduction
of the value-added tax in West Asia.
PwC India, EY, Deloitte, and KPMG have
expanded the size of their indirect tax
teams by 100 per cent over the past 12
to 18 months. Rolled out on July 1 last
year, the GST is yet to stabilise with the
rules. This is leading to exponential
rise in workload for tax professionals.
4> DILASHA SETH reports 4>
ACCELERATING
SALES
| Almost 4,000 new car add up to 1,000 outlets
sales service outlets | Maruti Suzuki to add
expected to be another 1,000, besides
set up by 2020 expansion by Tata
| Kia, Peugeot, and Motors, Hyundai,
MG Motor together could Mahindra & Mahindra
period, India may become the
third-biggest market.
Besides Maruti and Tata Motors,
players such as Hyundai, Mahindra &
Mahindra, Ford, Renault, Honda, and
Škoda will add dealerships. There
will be addition in the luxury car
segment too. The 4,000 new outlets
do not even include the expansions
that will take place in two-wheelers
and commercial vehicles. A limited
number of dealer investors will be
wooed by multiple brands.
https://www.estore33.com/ https://t.
www.business-standard.com
WORLD P6
TRUMP SAYS HE WOULD BE TOUGHER
THAN THERESA MAY IN BREXIT TALKS
IndiGo to fly to Europe
from next winter
ARINDAM MAJUMDER
New Delhi, 28 January
India’s most profitable airline, IndiGo, will
start low-cost flights to major European
cities next winter. IndiGo will be the first
Indian airline to do long-haul low-cost
operations, which are already catching up as
Fixed deposits with public sector banks (PSBs) a global trend.
Special deposits with central government The airline has sought regulatory approval
460
to operate flights to London, Paris,
Madrid, and Hong Kong from New Delhi
369 with Airbus A330 aircraft.
According to a senior IndiGo executive,
the airline will begin with direct flights to
124 134 these cities and price them at least 30 per
cent lower than the prevalent rate. “The low-
As on As on cost structure of IndiGo makes it ideal to
March 31, 2016 March 31, 2017 offer a long-haul service. An airline’s cost is
primarily towards fuel burn, aircraft
TOTAL acquisition, and labour — all of which are
493 594 among the lowest for IndiGo,” he said.
IndiGo’s cost per available seat kilometre
Source: ESIC Annual Report
Concerns raised by labour institutions, including banks
is ~1.94, while the same for its low-cost rival
SpiceJet is ~2.33. Among the global low-cost
ministry on proposed | Depositors’ money can be carrier (LCC) majors, American airline
FRDI Bill’s bail-in clause used to infuse capital into Southwest burns ~3.52, while Ryanair in
| 77% of ESIC funds deposited ailing financial institutions Europe spends ~1.45.
as fixed deposits in PSBs The airline may go in for dense economy
Safeguards seating with a few premium seats (with more
| If large sums of ESIC funds are | Insured deposits of banks leg space) along with unbundled products
converted into bank’s equity, cannot be used for exercising like meal, priority boarding, and seat
it will hamper ESI scheme that bail-in clause (up to ~100,000 selection for economy passengers. With
provides medical benefits to under existing law) A330-200, Level-International Airlines
workers in organised sector Group’s (IAG’s) low-cost airline provides
| Using depositor’s money
314 seats and 21 premium economy seats and
| ESIC funds are workers’ money beyond insured amount will has a six-level fare structure. Also, it’s likely
that needs to be protected be possible only with prior to fly to secondary airports to take advan- vide a convenient network to passengers.
from bail-in clause consent of depositor tage of low-airport charge. For instance, in “Layovers boost the economics of long-haul
What is bail-in clause? Centre’s views London, it will fly to Gatwick Airport instead flights by providing new points for traffic.
| Open to changes in of Heathrow and to Orly Airport in Paris And, centrally located hubs allow airlines to
| Bail-in is proposed as one of the
bail-in clause instead of Charles de Gaulle Airport. shuffle passengers between short- and
resolution tools under Financial The IndiGo official quoted above said that long-haul routes,” the official said.
Resolution and Deposit | Bail-in will be sparingly the airline was also exploring to operate The company did not respond to
Insurance (FRDI) Bill, 2017, in used and depositors’ money onward connectivity to North American and queries sent on Saturday about its
case of failure of financial will be fully protected other European destinations in order pro- long-haul operations. Turn to Page 10 >
It is not just Paytm
boss Vijay Shekhar
~
Sharma whose cash
register has not
stopped ringing for
the past one year.
Thanks to a commanding valuation of
~635.8 billion, 200 of the firm’s current
and former employees have also
become richer by ~5 billion. The firm,
run by One97 Communications, recently
announced completing a secondary
share sale round that valued the
company close to ~635.8 billion, gave
an opportunity to Paytm employees to
liquidate their vested employee stock
ownership plan, and earn ~5 billion.
KARAN CHOUDHURY reports 2>
| Market has limited
number of automobile
investors who can be
suitable dealers
| Multiple brands
woo investors
Tata Motors, which has an aggressive
network expansion plan, is also
concerned about the challenges. “Apart
from the suitable partner who has
adequate finance, network coverage,
business experience, and management
bandwidth, the real challenge in this
scenario is real estate for showroom
and workshop, especially in metros,”
said a company spokesperson.
The company has 675 sales touch
points and plans to add 200 every year
for the next few years. Turn to Page 10 >
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2 COMPANIES
>
MUMBAI | MONDAY, 29 JANUARY 2018 1

IN BRIEF
Nod for generics up but US biz shrinks for home firms
‘India Inc announced M&A, PE
deals worth $60 bn in 2017’
SOHINI DAS
Ahmedabad,28January
continue for the first few quar-
ters of FY19.
TOTAL REVENUE FY19, which will lead to further
pricing pressure and keep gen-
Moreover, thanks to the gro- % share of US business eric drug prices down.”
% share of domestic business*
CorporateIndia’sdealtallyincludingmergerand Indian pharmaceutical firms wing pricing pressure in the WiththeshareoftheUSbusi-
acquisitionandprivateequityamountedto$60.5 are upbeat about the success world’slargestgenericdrugmar- 44.1 42.8 38.8 ness going down, the share of
billionin2017drivenbybig-ticketconsolidation, they had in 2017 — 300 gener- ket, the US, revenue growth has 24.5 24.4 27.5 domestic business in the overall
andtheoutlookforthisyearlooksbullishtoo,a ic drug approvals (an all-time beenslow.AccordingtoanICRA turnover is going up. But,
reporthassaid.Accordingtoassurance,taxand high) from the US Food and note, domestic players are according to the industry, this is
advisoryfirmGrantThornton,therewere1,147deals Drug Administration (FDA). expected to face a 10-12 per cent H1FY17 FY17 H1FY18 not because the domestic for-
(M&AandPE)worth$60.54billionin2017against1,485suchtran- However, the share of US pricing pressure on their US mulations business has grown
sactionsworth$57.85billionin2016.“Thismomentumwaslarg- business in the overall revenue genericbusiness,whichmaysus- Overall revenue growthrate (%) at a faster clip. In fact, the over-
elydrivenbybigticketconsolidationacrosssectorsascompanies of big pharma firms shrank in tain for the next 12 months, Q4FY17 Q1FY18 Q2FY18 all revenue growth has slipped
divesteddistressedassetsinanefforttoreducedebt.Ontheother 2016-17 and in the first half of thereby, negatively impacting into a negative territory for the
hand,corporateswithstrongbalancesheetsdroveacquisitions 2017-18, data shows. And, the profitability and cash flows -2.2 -1.7 ICRA sample — -2.2 per cent in
tocapturethemarketshareandincreasecompetitiveness,” trend is likely to continue for before tapering off gradually. -9.5 Q4 FY17, -9.5 per cent in Q1 FY18,
GrantThorntonIndiaLLPPartnerPrashantMehrasaid.Onthe the next few quarters before the Shah said, “The US share in rev- *Does not include Aurobindo Pharma Source: ICRA and -1.7 per cent in Q2 FY18.
M&Afront,theyearsaw411dealsvaluedat$40billion,continuing benefit from new drug launch- enues of big pharma firms has Analystsdonotexpectthetrend
thedecliningtrendafterpeakingin2015.Thefallinthedealtally es start to accrue. shrunk, as the absolute export ICRA, said, “The US generic to low teens in Q2 FY18 con- May 2016, McKesson (whole- to change in the third quarter
ismainlyduetotheabsenceofmulti-billion-dollardeals. PTI< There is usually a time gap of value to that country, too, has market is characterised by buy- tributed by consolidation of dis- saler) and Walmart (retailer) either.CreditSuissesaid,“Inour
6-12monthsfromthedateofthe come down. Between January ing bulk volumes at lower tribution supply chain (trade announced a joint purchasing view, the impact on base US
approval to the date of billing and August 2017, there was a 20 prices and tend to have price partners) and faster ANDA arrangement, while in May 2017 sales should be 2-4 per cent. Full
(after a launch in the US), said D per cent year-on-year (y-o-y) erosion historically. However, approvals by the US FDA after the tie-up between Walgreens impact should be visible over
UK cocktail brand Essar Power to G Shah, secretary-general of the dropinexportstoUSfromIndia. pricing pressure on the US the implementation of Generic Boots Alliance Development next two quarters as the com-
HappyDown set to surrender Tokisud IndianPharmaceuticalAlliance, Incalendaryear2016,theexports generic business has intensi- Drug User Fee Act.” (WBAD) and Econdisc bined entity starts sourcing
enter Indian market coal mine which represents large Indian to US (valued at roughly $7.4 bil- fied over the past 12 months. Over the past one-and-a- Contracting Solutions (group together.”
drug makers such as Sun lion)hadgrownby25percenty- The yearly price erosion, which half year there have been two purchasing organisation) took Cadila (which is leading the
UK-based cocktail Facedwithdelaysinkeyapp- Pharmaceutical Industries, and o-y.” There are two reasons stood at 5-7 per cent during Q2 major announcements that led effect. ICRA said, “The impact pack, with 66 drug approvals in
start-up rovalsandsuddenchangein Dr Reddy’s Laboratories. behind the price erosion- con- FY17 for our sample companies to consolidation in the US dis- of the McKesson-Walmart tie- 2017) has been the only excep-
HappyDown is tariffterms,EssarPowerhas The chairman of a leading solidation in the distribution (Dr Reddy’s, Torrent Pharma, tribution supply chain, with 85 up on prices has started to tion. Analysts expect its third
planning to enter decidedtosurrendertheToki- drug exporter to the US said the channelandentryofnewplayers Cadila Healthcare, Lupin, Sun per cent of the generic drug reflect in FY18, though the quarter performance to be go-
India by June this year sudNorthcoalblockinJhar- trend was unlikely to change (more drug approvals). Pharma, Glenmark, and Auro- purchases controlled by three impact of WBAD-Econdisc is od, riding on Tamiflu and gen-
and will raise about $2 million khandinwhichithasalready anytime soon and would likely Gaurav Jain, vice-president, bindo) has gradually increased large buying consortiums. In expected to be fully reflected in eric Lialda sales.
to be used for the launch and invested~4.90billion.The
expansion of its beverages. movewillcripplethefirm’s

Thanks to Esops, 200 Paytm

Tipple Brands Ltd, which owns
the brand HappyDown, was
launched in the UK last year.
The brand, which is focused on
craft alcohol, is looking to tap
1,200-MwMahanplantin
MadhyaPradesh.TheRuias-
runcompanyhasmadesig-
nificantprogressindeveloping JSW, Vedanta,
Tata Steel to bid
thecoalblock,whichhas

staff become millionaires

all the major metros of India extractablereservesof52
and will be targeting the milliontonne,andwonthro-
millennial. “Indian consumers ughacompetitivebidding

are experimental and there
are different set of consumers
who don’t mind paying a
premium for any good
product. The mindset is we will
consume less but will
consume better,” Tipple
Brands co-founder Paritosh
Bhandari told PTI.
HealthCare Home
to hire 4,500 in
India by FY19-end
Home health care service
provider HealthCare at Home
(HCAH) plans to hire around
processinFebruary2015offer-
ing~1,100atonne,thehighest
intheindustry.Surrendering
thecoalblockwillhitits1,200-
mw,~80-billionMahanPower
Plant,whichhadbeenshut
betweenSeptember2014and
May2016aftertheSupreme
PTI< Courthadcancelledallthe204
coalblocksallottedbythepre-
viousManmohanSinghgover-
nmentcitingcorruption. PTI<
MSI to get 250,0000
units from Suzuki’s
Gujarat plant in FY19
for Bhushan
KARAN CHOUDHURY
New Delhi, 28 January DEV CHATTERJEE & ISHITA AYAN DUTT
Mumbai/Kolkata, 28 January FINANCIALS
I
t is not just Paytm boss Vij- Bhushan Power &Steel
ay Shekhar Sharma whose Tata Steel, Vedanta, and JSW FY16
cash register has not stop- Steel have finalised their plans
Netsales: ~77 billion
ped ringing for the past one to make financial bids for Bhu-
year. Thanks to a commanding shan Power & Steel, which has Loss: ~24.36 billion
valuation of ~635.8 billion, 200 defaulted on loans worth ~470 Debt: ~372 billion
of the firm’s current and former billion to Indian lenders. Besi- FY17
employees have also become des, the big three metal maj-
richer by ~5 billion. ors, Edelweiss Asset Recon-
Debt: ~470 billion
Plantsize: 3 million tonnes
The mobile-first financial struction Company and a
services firm, run by One97 Dubai-based investor are also
Communications Ltd, recently expected to bid.
Source: Company

4,500 employees by the end of
next fiscal as it undertakes
aggressive expansion plans
across the country. The
company backed by promo-
ters of Dabur, the Burman
family, and founders of
HealthCare at Home (HAH) UK,
has around 1,300 employees at
present. “We plan to hire
around 4,500 employees by
the end of next financial year,
taking our total strength to up
to 6,000,” HCAH Co-Founder
and CEO Vivek Srivastava
told PTI. PTI<
Radical Minds
plans to hire
1,300 in 15 months
BPO firm Radical Minds
Technologies is looking to hire
around 1,300 to take its total
headcount to 4,000 in the
next 15 months in view of
current order books and near-
term business growth
prospects. “We have over
2,700 employees at present.
Based on the orders that we
have and discussions with
some of the customers, we
expect to have workforce of
around 4,000 people in next 15
months,” Radical Minds
Managing Director Sanjoo
Sharma said. The company
claims to be a leading BPO
partner for online food and
restaurant booking firm
Zomato and online tour and
travel booking firm Goibibo
(now acquired by
MakeMyTrip). PTI<
Maruti Suzuki India (MSI)
expects easing of waiting
period pressure on its popular
models as it is slated to receive
250,0000 units in 2018-19 from
parent Suzuki's Gujarat plant,
a senior company official said.
In the ongoing fiscal year
ending March 31, the company
will get 150,0000 units from
the Gujarat plant, from where
the popular premium hatch-
back Baleno is being rolled
out. “Currently it (the plant) is
on full swing in A and B shifts
and in 2018-19 it will give us
full production across the year.
So, that would be 250,0000
units,” MSI Senior Executive
Director (marketing and sales)
R S Kalsi told PTI. PTI<
BSNL stops free
Sunday calls on
landlines
Telecom company Bharat
Sanchar Nigam Ltd (BSNL) has
said it would withdraw its free
voice calling benefits from
landlines on Sundays from
February 1. The decision comes
soon after the company
decided to curb free night
calling benefits.”BSNL is going
to withdraw the free Sunday
calling benefit from February 1.
This will happen nationally.
But, from Calcutta Telephones,
we are working on some plans
which I think will mitigate the
impact for our customers,”
Calcutta Telephones (CalTel)
Chief General Manager S P
Tripathi told PTI. PTI<
announced completion of a
secondary share sale round that
valued the company close to
~635.8 billion, gave an opportu-
nity to Paytm employees to liq-
uidate their vested employee
stock ownership plan (Esop)
and earn around ~5 billion in
total. An Esop is a benefit plan
to enable employees to acquire
shares in the company.
Paytm, which was valued at
around ~445.09 billion in May
2017 when it raised around
~114.45 billion from Japanese
telecom giant SoftBank Group,
got a bump in valuation after
its most recent rounds of sec-
ondary sale of shares, most of
which, according to sources,
were sold to Discovery Capital.
“Over 200 former and existing
Paytm employees across vari-
ous verticals including busi-
DLF may launch QIP by April; raise ~50 bn
RAGHAVENDRA KAMATH
Mumbai, 28 January
DLF, the country’s largest dev-
eloper by market value, is look-
ing to launch its qualified insti-
tutional placement (QIP) of
shares by April this year, a
source said.
DLF has already received
approval from shareholders to
sell 173-million equity shares,
which will be determined by
the formula laid down by mar-
ket regulator Securities and
Exchange Board of India.
Paytm employees at the One97 Communications headquarters in Noida, near Delhi PHOTO: BLOOMBERG
ness, technology, product, ad-
ministration, human resources,
sales, and finance have liqui-
dated ~5 billion worth of shares
through secondary sale till date.
These employees, most of
whom have been with the com-
pany since inception, have ben-
efitted,” the firm said.
The company said that it
calculates the eligibility for
awarding Esops based on an
individual’s contribution to
the firm, long-term potential,
and duration of employment.
“Esops are one of the most
effective reward and retention
tools, and the success of Paytm
has helped create unparallel
According to a source, the
company may raise ~45 -50 bil-
lion from the QIP. When con-
tacted, Saurabh Chawla, DLF
group chief financial officer,
said, “The board has not taken
any decision yet. We have to do
the QIP in the next 12 months
and we will do it.” He, however,
did not comment on the quan-
tum of the QIP.
The company has already
said that its development arm,
which has a debt of ~130 bil-
lion, will be a zero-net debt
company by March 31, 2019.
wealth among its employees.
The company’s open culture
and values based on empow-
erment and ownership have
attracted and retained the best
talent in the industry, helping
it drive strong growth,” the
company said.
Last year in December, on-
line marketplace biggie Flipkart
had completed buyback of
Esops worth ~6.5 billion from
its present and former employ-
ees. “About 3,000 present and
former employees of Flipkart,
Myntra, Jabong, and PhonePe
participated in the fourth Esop
buyback programme in five
years,” the company had then
According to a recent
CRISIL report, the firm has
already repaid a debt of ~66 bil-
lion from the ~90 billion that
the promoters had infused in
December 2017.
According to the source, the
company has already clocked
sales to the tune of ~ 5 billion in
two months of resuming sales
in November last year. DLF had
a gross debt of ~290 billion as of
September 30, 2017. Fund infu-
sion by the promoters resulted
in debt reduction by around
~66 billion so far in FY18. “With
said. The buyback is till-date
the largest liquidity provided
by an unlisted firm to its Esop
holders for encashing an un-
specified percentage of their
vested stock options. “Employ-
ees are our strength and with-
out them we could not have
built the e-commerce industry
in India. As an organisation, we
believe they are equal partners
in our success,” Flipkart Chair-
man Sachin Bansal had said in
a statement.
Flipkart had this Esop buy-
back after it successfully raised
about ~254.3 billion from Soft-
Bank and Chinese Internet con-
glomerate Tencent.
additional proceeds from the
offering of equity shares and
the balance payment of 75 per
cent against warrants issued to
promoters, the debt is expected
to reduce further by FY19,”
CRISIL said. “DLF is focusing
on selling its ready-to-move-
in apartments to fund its
future plans and reducing
debt,” said DLF Chief Exe-
cutive Officer Rajeev Talwar.
DLF has completed inven-
tory worth ~150 billion in Del-
hi, Gurugram, Lucknow, Kochi
and Punjab.
The last date for accepting
the bids has been extended to
February 8 as bidders seek
more clarity on the income
tax (I-T) liabilities. The Budget
on February 1 is likely to clar-
ify I-T liabilities of stressed
assets. The liquidation value
of the firm is ~120 billion and
lenders expect bidders to
make at least this sum as up-
front payment to them aga-
inst the loan when they make
their bids.
Among the bidders, the
lenders are expecting cash-
rich Vedanta to make the
most aggressive bids for Bhu-
shan Power, while JSW Steel is
expected to put its might beh-
ind Bhushan Steel’s assets,
which runs a five-million ton-
nes per annum plant in Odi-
sha. Tata Steel is expected to
make conservative bids for
both Bhushan assets consid-
ering that it has its own expa-
nsion plans at Kalinganagar
in Odisha. When asked whe-
ther Tata Steel would be bid-
ding for Bhushan Power, a
Tata Steel spokesperson said,
“As a process, we do assess
and evaluate various strategic
opportunities for growth. This
is an ongoing process in the
company.” Vedanta and JSW
Steel did not comment.
Sources close to the devel-
opments said ArcelorMittal has
withdrawn from the bidding
process for Bhushan Power.
The firm is likely to focus on
Bhushan Steel and Essar Steel.
According to a PTI report
quoting a source, JSW Steel is
expected to double its bid val-
ue for debt-laden Bhushan
Steel. “The liquidation value
has set been set at ~150 billion,
below that the bid will not be
accepted. Looking at the com-
petition, JSW Steel is expected
to double its bid amount. It
can be between ~250 billion
to ~300 billion,” the source
told PTI.
The unlisted Bhushan Po-
wer & Steel has a steelmaking
capacity of three million
tonnes across Odisha, West
Bengal, and Chandigarh. A
hot-rolled steel facility is in
Odisha and cold-rolling facili-
ties are in Kolkata and Cha-
ndigarh. Bhushan also has a
captive power plant, a pellet
plant and an iron ore benefici-
ation plant.
Bhushan’s debt in FY16
stood at ~372 billion, net sales
were at ~77 billion and losses
were ~24.36 billion. The dues
have ballooned to ~470 billion.
Bhushan Power & Steel ran
into trouble after its licences
for the iron ore and coal mines
were cancelled. The company
was allotted a coal mine, with
reserves of around 250 million
tonnes, but this was deallocat-
ed in 2014. The iron ore mines
were committed by the Odisha
government. Two mines were
allocated in 2012 and 2014
after an intervention of the
Supreme Court. Subsequently,
the amended Mines and Min-
erals (Development and Reg-
ulation) Act was passed in 2015
and as a result, Bhushan’s iron
ore mines were cancelled.

‘DiscriminationagainstIndianITnullifiesbenefitsofproposedUSlaw’
What is Nasscom’s view
on the Bill?
There are positive and
negative aspects. First, it
clearly recognises a sub-
stantial skill shortage in the US, which
requires urgent and substantive steps.
Second, an acknowledgement of the val-
ue provided to the US economy by IT
services companies that employ H1B visa
holders.
This is very much in sync with what
Nasscom has been saying. We have
always advocated the need to ensure
availability of needed technical skills in
the US economy, both by supporting
skill development there and employ-
ment of such workers, as well as supple-
menting that with the entry of foreign
skill workers. These are positive aspects.
The negative ones?
The unnecessary and counter-intuitive
provisions that target the so-called H1B-
dependent companies. Any measures
that make it harder and expensive for US
companies to fill their skills gap weakens
their economy and puts American jobs
at risk. In fact, it creates pressure to send
more IT work out of the country. This is
something on which we will continue to
The proposed Immigration Innovation (I-Squared) Act, a Bill introduced in the US Senate, now disincentivises outsourcing to a
advocates increasing the cap for H1B visas to 85,000, more liberal policies for the US green card, related party. That, in a sense, is a count-
and allowing people with H4 visas (spouses and children of H1B holders) to work in the US. While er. If talent is not there, companies have
these provisions make it attractive for Indian workers to migrate to the US on work visas, the Bill, to pay whatever extra cost is involved.
which has the support of Microsoft and Facebook, if passed in the current format discriminates We have to see the combined effects of
against Indian information technology (IT) service firms, R CHANDRASHEKHAR, president of all of these.
Nasscom, the apex association of the industry, tells Raghu Krishnan. Edited excerpts:
Indian IT firms have struggled to transi-
work with the authorities in the US, ingly committed to hire local workers in tion to getting into digital in the past 12-
including the champions of this Bill. the US and investing in STEM (science, 18 months. Most top companies say they
The other thing is the number of new technology, engineering, mathematics) are positive of growth coming back.
restrictions being put on H1B visa hold- education in the US to address skill gaps. The industry has shown that firms have
ers. There is a discriminatory thing With this, it makes very little sense to necessary resilience, as well as capacity,
against India-centric IT firms by persist- impose restrictions which only apply to to meet challenges and take global com-
ing with the language of H1B-dependent dependent companies. petition head on. It is also a good indica-
companies, based solely on arbitrary dis- tion of the confidence they have been
tinctions that have no impact on US jobs Firms such as Facebook and Microsoft able to build in their clients that even
or on employment opportunities. We are backing this Bill. Is it actually when it comes to enabling their clients
have maintained, while we understand counter-productive for Indian to undertake the digital transition, they
the objective of ensuring jobs for skilled companies? are not saying it was IT, digital transfor-
Americans, any restrictive measures that Yes, because of the artificial distinction ndent firms nullify some of the beneficial Essentially, the US might not get access to mation, and so we are going to some-
don't apply uniformly doesn’t protect being drawn (in the Bill). There is no logic impact of the proposed reform. the best in the world. We are engaging with body else. On the contrary, they say
any American worker. for this whole category of dependent Changes in the lottery system might the relevant parties. Indian IT firms have helped us in our IT
The US customs and immigration companies and super-dependent compa- have the unintended consequence of con- efforts, they understand our business
services data clearly provides evidence nies. Our view is there should be no dis- straining access to the best and the bright- Wouldthismakecaptivesexpandmore completely, they're our right partners to
that the number of H1B visa petitions crimination. The overall increase in H1B est in the world, by assigning the overrid- orcreatenewcaptivesinIndiafortalent? undergo the digital transformation.
filed by the top seven India-centric IT visas, eliminating the country cap for ing priority to US education. For example, a If you restrict talent coming in, it pro-
firms dropped 37 per cent in a year and 50 green cards, making statutory provision person with a bachelor’s degree from a US vides an incentive for jobs going out. More on business-standard.com
per cent in two years, whereas the peti- for employment for dependents on H4 university, irrespective of where he has fin- From that point of view, the (case for)
tions by US-centric firms is increasing. visas — these are all positives. Selective ished in the class, could be assigned higher captives expanding becomes stronger.
Indian IT services firms are increas- application of new restrictions on depe- ranking than a topper from an IIT in India. However, the tax changes in (the US)
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.
MUMBAI | MONDAY, 29 JANUARY 2018 COMPANIES 3 <

Jyothy open to new Metro Cash &

Carry expects
faster growth
partnerships post PRESS TRUST OF INDIA
New Delhi, 28 January

Henkel break-up
Metro Cash & Carry is
expecting its hotels, restau-
rants and caterers (HoReCa)
segment to have a faster
growth post goods and serv-
Says not looking for strategic investment, but want ices tax (GST) implementa-
tion, said a top official.
alliances in research, development, technology Besides, Metro is also
helping its customers in
VIVEATSUSANPINTO While, the company is likely Kirana and traders segment
Mumbai, 28 January to close this financial year with to digitise their business.
a topline of ~18 billion after tak- “Post GST, HoReCa seg-

C
onsumer goods major
Jyothy Laboratories —
best known for brands
such as Ujala and Henko — is
open for new partnerships fol-
lowingabreakdownintalkswith
German company Henkel last
year. Henkel's window to invest
in Jyothy lapsed on October 31
after it failed to exercise the
optionforpickingup26percent
stake in the firm.
Speaking with Business
Standard, Ullas Kamath, joint-
managing director, Jyothy
Labs, said: “We are not looking
for strategic investors because
our experience tells us that they
would want to get involved in
the running of the business.
This could result in a culture
clash, which could be detri-
mental to the company. What
we are instead open to is a
financial investment or even
alliances in research, develop-
ment and technology. We are
also open to brand alliances
with companies keen to set up
base in India. This is a more
acceptable arrangement to us.”
The breakdown in talks
between Henkel and Jyothy
was ascribed to their inability
to arrive at a consensus on the
way forward for the firm.
Jyothy, sources said, wanted
more brands from the Henkel
stable in addition to Pril and Fa
BY 2021, WE
WANT TO TOUCH
A TURNOVER OF
~40 BILLION
ULLAS KAMATH
Joint-managing director,
Jyothy Labs
for which it pays a 2 per cent
royalty to the German major.
Jyothy was also seeking greater
leeway in running the business,
while the German company
wanted more say in day-to-day
management.
Kamath said the “Henkel
chapter is over” and that the
focus would now be on the next
level of growth. “By 2021, we
want to touch a turnover of ~40
billion. For this, we are looking
at both organic and inorganic
growth,” he said.
ing into account the goods and
services tax, the next financial
year may see it cross ~20 billion
in turnover, Kamath said. “We
should consistently grow over
the next two years thereafter,
but we will need to support this
growth with a few regional
acquisitions,” he said.
The acquisitions, he said,
would be in Jyothy’s existing
areas of operations, including
fabric care, home care, per-
sonal care and surface clean-
ers. “We wish to consolidate
our presence in our existing
areas of operation. The acqui-
sitions will act as bolt-on trans-
actions, intended to push
topline. Once we touch
~40 billion in turnover, the
next level of growth would be
for the ~80-billion-mark in
terms of topline.”
Jyothy is also looking to ride
the herbal revolution in con-
sumergoods,usingbrandssuch
as Margo soap and Neem tooth-
paste. For the quarter ended
December, Margo soap, with a
turnover of ~1.75 billion, report-
ed a 44 per cent year-on-year
growth, emerging among the
fastest growing brands within
Jyothy’s portfolio. While Neem
toothpaste is a smaller brand
(~300 million turnover), Jyothy
hasplanstotakeitnational,and
also export it to south-east Asia.
ment has started growing
much faster and on the basis
of that we are going on
HoReCa in a big way,” Metro
Cash & Carry India Chief
Executive Officer and
Managing Director Arvind
Mediratta told PTI.
It is presently 15 to 16 per
cent of our total sales and we
believe that this is a segment
in the years ahead, he said
further. People are now pre-
ferring more to dine outside
as disposable income is on
rise here, he added.
“Our estimate is that
there are around 130 million
HoReCa businesses in the
country, which is more than
the number of kirana shops
in the country, which is
around ~120 million,” said
Mediratta.
Metro plans to help its B2B
customers with HoReCa dig-
ital under, which it set up
websites for small restaurants
and also help in developing
their menu and improving
their quality free of cost. “We
can help them with their food
cost by modernising their
supply chain. Right now they
follow basic practices,” he
said, adding that it would also
share the practices followed
by big global firms in
supply chain.

TCS more than top

IT exporter: COO
PRESS TRUST OF INDIA
Davos, 28 January

Describing Tata Consultancy Services (TCS) as much

more than India's biggest IT exporter, its Chief Operating
Officer N Ganapathy Subramaniam has said the world's
biggest corporations consider it a 'strategic partner' for
helping them run and transform their operations — a
standing that has helped the firm sign deals worth over
$6 billion within a matter of 2-3 weeks.
Subramaniam, known as NGS within the firm, was
in Davos to attend the World Economic Forum Annual
Meeting. He said these deals may have come around the
same time, but a lot went through in getting these deals
and as always the company put all its capabilities in get-
ting them. In an interview, Subramaniam told PTI that
TCS remains the country's biggest IT exporter in terms
of revenue, but it is way beyond the exports.

Steelmakers want
NMDC to roll back
iron ore price hike
DILIP KUMAR JHA
Mumbai, 28 January

Steel mills and sponge iron

manufacturers, both users
of iron ore, have urged gov-
ernment-owned miner
NMDC to immediately can-
cel its latest price hike.
In a new representation
to it, they have said the ~500
a tonne rise for January in
prices of both grades of ore,
lumps and fines, has raised
input cost proportionately
and they’re unable to pass
this on to user industries.
There is further worry of
another increase in ore
prices by NMDC for
February.
“Weareinconstanttouch
with NMDC officials for a
price cut. The steep rise in
January made survival of
many small and medium
size units difficult. We hope
NMDC cuts ore prices for
February,” said R K Goyal,
managing director, Kalyani
Steel, also vice-president of
the Karnataka Iron
and Steel Manufacturers
Association. With the
increase of ~500 across all
varieties, lump ore was quot-
edat~3,100atonneandfines
at ~2,760 a tonne, an increase
of19percentand22percent,
respectively.
After this increase, Sajjan
Jindal, chairman of JSW
Group, had said in a Twitter
post: “The recent increase
in ore price by NMDC and
Odisha’s private miners are
forcing steel companies to
pass on the increased cost
of production. The
increased cost of other raw
materials like coal, refracto-
ry and electrodes are further
fuelling this.” Steel mills had
raised their product prices
by six per cent for January.
Steel industry sources
say international iron ore
prices fell by six per cent or
$4.48 a tonne, while NMDC
raised ore prices by 36 per
cent or ~880 a tonne on a
spot basis. This increase
works out to 42 per cent of
the differential between
prices of domestic and
imported iron ore. Hence,
there is scope to cut prices.
“Before the January
increase, we were selling
pellets at ~5,000 a tonne.
The increase in iron ore
price has made our cost of
pellet production ~6,900 a
tonne, along with a conver-
sion cost of around ~900 a
tonne. The same pellet,
however, we would not be
able to sell beyond ~6,800 a
tonne,” said M V Subba
Rao, chairman, KIOCL.
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4 ECONOMY
>
MUMBAI | MONDAY, 29 JANUARY 2018 1

1: CENTRE STRUGGLES TO MEET ITS TAX COLLECTION TARGET

STATSGURU AS INDIRECT TAXES FALL SHORT (~ billion)

Fiscal math and Budget expectations

FY18 Actuals % of % of Actuals
Budget up to Actuals to in FY17 to
Estimates Nov ‘17 BE (FY18) FY17 BE
Gross tax revenue 19,115.8 10,873.0 57 55
Corporation tax 5,387.5 2,498.3 46 45
DESPITE REPEATED assurances from Disinvestment proceeds, however, provide some With revenue falling short of expectations, Income tax 4,412.6 2,151.8 49 53
the government, it is highly likely cheer. As shown in Chart 3, the Centre has mopped up analysts said the Centre was unlikely to meet its fiscal
Customs 2,450.0 1,028.4 42 61
that the Centre may not be able to ~523.8 billion till the end of November as against a deficit target of 3.2 per cent in FY18. As shown in Chart 7,
meet its gross revenue target in budgeted target of ~725 billion. With ONGC’s purchase it has already surpassed the fiscal deficit target by the Union Excise duties 4,069.0 1,651.7 41 52
FY18. As shown in Chart 1, the of the government’s stake in HPCL for ~369.15 billion, end of November. Service tax 2,750.0 791.3 29 53
indirect tax collection target was the Centre will surpass its disinvestment target for the By all accounts, the upcoming Union Budget is likely
~926 billion for FY18. But to date collections under the first time since 2009. Reports suggest the Centre could to focus on the rural economy and boosting public Taxes on Union territories 46.8
goods and services tax (GST) have been below ramp up stake sales, pushing disinvestment proceeds sector capital expenditure. Charts 8 and 9, respectively, Central GST - 854.2
expectations. Only 66.7 per cent of assessees filed to ~1 trillion this year. show the Centre has upped its allocations to the Mini- Integrated GST** - 1,383.4
returns in December, while collections under the On the expenditure side, as shown in Chart 4, the stry of Agriculture and Farmers Welfare as well as to the
compensation scheme also were subdued. government has spent 69 per cent of the budgeted schemes focused on rural areas over the past few years. GST compensation cess*** - 309.1
Non-tax revenue collection also appears to be amount by November. But capital spending, which was As far as public investment is concerned, spending in Other taxes* - 203.9
under pressure, with the Reserve Bank of India (RBI) ramped up in the first quarter of FY18, has slowed sectors such as roads, railways, defence and urban UT GST - 1.0
transferring a lower than expected dividend, as shown subsequently (Chart 5). On the other hand, as shown in development has already soared by close to 50 per cent
in Chart 2. But recent reports suggest Chart 6, 86 per cent of the subsidies budget has been in the past two years (Chart 10). Both these trends are * Includes Securities Transaction Tax, Banking Cash Transaction Tax, Fringe Benefit Tax, Wealth Tax etc
**Integrated GST collections are to be shared between the centre and states
the RBI may well transfer a higher amount. exhausted by November. likely to sustain in the coming Budget. ISHAN BAKSHI ***Compensation cess is paid to states for loss of revenue due to GST

2: NON-TAX REVENUE COLLECTION ALSO 3: GOVERNMENT LIKELY TO EXCEED ITS 4: GOVT SPENDS MORE THAN TWO-THIRDS 5: BUT CAPEX SLOWS OF LATE 6: CENTRE SPENDS 86% OF BUDGETED
UNDER PRESSURE WITH RBI DISINVESTMENT TARGET OF BUDGETED EXPENDITURE BY NOV (% y-o-y) SUBSIDY ALLOCATION BY NOVEMBER
TRANSFERRING A LOWER DIVIDEND (~ bn) Non-debt capital receipts (~ bn) (~ bn) (~ bn)

190.2 15.2 202.3 250.0

FY18
FY18
FY18 (BE) 119.3 465 150 110 844.3
FY18 1,453.4 497.7 2,403.4
1,424.3 1,257.9 2,887.6 18,375.1 21,467.4 (BE)
(BE) 41.5 (BE)
175.4 214.2
69.5 Actuals up to 94.7 308.7 173.6 618.5 1,841.2 3,092.3
Actuals up to
Actuals up to Nov ‘17 Actuals up to 1,353.0 2,060.8
500.6 1,054.6 Nov ‘17
Nov ‘17 471.1 % of % of Actuals Nov ‘17
12,947.0 14,788.2
13.4 318.2
Actuals to in FY17 to
BE (FY18) FY17 BE % of % of Actuals
% of % of Actuals Actuals to in FY17 to
Actuals to in FY17 to Recoveries of loans and advances % of % of Actuals BE (FY18) FY17 BE
BE (FY18) FY17 BE Net recoveries of loans & advances 79.0 85.0 Actuals to in FY17 to
Miscellaneous capital receipts BE (FY18) FY17 BE Food subsidy 93 91
Interest receipts 37 30
Dividends and profits 33 70 Disinvestment of govt’s Nutrient-based
66.0 60.0 Revenue expenditure 70.5 66.1
equity holdings fertilisers subsidy 87 84
Non-tax revenue of UTs 89 71 Capital expenditure 59.5 57.7
Strategic disinvestment 28.0 10.0 Urea subsidy 64 78
Other non-tax revenue 40 47 Other listing of insurance firms 158.0 0.0 Total expenditure 68.9 65.0 Petroleum 86 65
Non-tax revenue 37 54 TOTAL 73.0 49.0
Note: This does not include ONGC’s purchase of government share in HPCL for ~369.15 billion
Total major subsidies 86 85

7: WITH REVENUE FALLING 8: AGRICULTURE BUDGET HAS BEEN RISING 9: ALLOCATIONS TO RURAL SCHEMES HAVE BEEN INCREASING 10: GOVT’S CAPEX HAS RISEN OVER THE
SHORT OF EXPECTATIONS, (~ bn) (~ bn) PAST FEW YEARS (~ bn)
FISCAL DEFICIT CONCERNS MOUNT 467.5 455.4
FY16 FY17 (BE) FY17 (RE) FY18 (BE) FY16 FY17 (BE) FY17 (RE) FY18 (BE)
(~ bn) 426.3
480.0
385.0
475.0

864.9
373.4

% of % of

785.9
716.8
Actuals Actuals Actuals in

717.0
FY18 up to to BE FY17 to
230.0

(BE) Nov ‘17 (FY18) FY17 BE

550.0

541.8
211.9
194.6
190.0
190.0

190.0

180.9
182.9

461.6
450.0
182.5
160.0

203.4

411.0
Fiscal
150.0

5,465.3 6,121.1 112 85.8

139.5
137.4

350.1
125.6

deficit

105.0
103.6

101.2

275.3
90.0
97.8

77.8

73.8

60.5
60.0

193.3
67.0
50.0

174.5

171.8
51.9
57.7

45.0
43.7

Revenue 3,217.3

30.0

105.9
115.0
30.0
4,898.4 152 98.2

25.1
deficit

Primary MGNREGP Green PMKSY PMGSY PMAY NRDWM SBM NHM NRLM
234.5 3,023.1 1,288.9 464 Capital outlay Ministry of Ministry of Ministry of
deficit FY16 FY17 FY17 FY18 revolution
on defence Railways Road Transport Urban
(BE) (RE) (BE) MGNREGP: Mahatma Gandhi National Rural Employment Guarantee Programme; PMKSY: Pradhan Mantri Krishi Sinchayee Yojana; PMGSY: Pradhan services & Highways* Development#
Note: In FY17, interest subsidy for short-term credit to farmers totalling ~150 Mantri Gram Sadak Yojana; PMAY: Pradhan Mantri Awas Yojana; NRDWM: National Rural Drinking Water Mission; SBM: Swachh Bharat Mission; *National Highway Authority of India and Road works; #Metro Projects
billion transferred from the finance ministry to the agriculture ministry NHM: National Health Mission; NRLM: National Rural Livelihood Mission; Only rural component of schemes has been taken Note: Reports suggest the Centre has cut budgetary support to the Indian
Railways by ~150 billion in FY18

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines Sources: Union Budget Fy18; Compiled by BS Research Bureau

NEW INDIRECT TAXES

Small PSBs in drive to shed corporate loans
Jobs boom at top NAMRATA ACHARYA, T E NARASIMHAN
& ABHIJIT LELE
Beside stepping up recov-
ery, sale of non-performing DECODING THE PLAN RBI did not put any restric-
tion on loan size, the bank as

accounting firms
Kolkata/Chennai/Mumbai, 28 january
The government has asked
small public sector banks
(PSBs) to reduce corporate loan
assets, especially big exposure, Limiting further exposure a matter of policy had almost
is top on the agenda. Similarly, stopped giving bigsize loans,
Sale of stressed assets
banks would engage in sale of said an official.
performing loans through Recoveries from loans A senior executive with
securitisation and assignment using one time Chennai-based Indian Overs-
settlement

in India & Gulf

exposure but many of them are
under a Prompt Corrective
Action (PCA) plan and already
at work to sell bigsize bad
loans, limit further exposure
and trim the loan book
DILASHA SETH through securitisation.
New Delhi, 28 January Top PSB executives said the
government had asked for a
(direct sale), said a head of cor- eas Bank (IOB) said the Joint
porate credit with a Mumbai- Sale of loans Lenders Forum was created so
based PSB. through that decisions could be faster
Bankers caution that this and monitoring easier.
securitisation or
would be a lengthy affair and Ultimately, banks with less
assignment
cutting of corporate exposure than 10 per cent share will pass
by at least 15 per cent by March this on to other members in
2019 was very tough. the consortium. As a result,
Kolkata-based UCO Bank corporate exposure of the

T
he ‘Big Four’ multina-
tional accounting firms
have doubled the size of
their indirect tax teams in this
country, to cater to the sharp
rise in demand arising from
implementation of the goods
and services tax (GST) here and
introduction of value-added
tax (VAT) in West Asia.
PwC India, EY, Deloitte, and
KPMG have expanded the size
of their indirect tax teams by
100 per cent over the past 12 to
18 months.
Rolled out from July 1 last
year, GST is yet to stabilise with
the rules. Rates and filing
requirements are undergoing
frequent changes. This is lead-
ing to exponential rise in work-
load for tax professionals.
“Our indirect tax employee
strength has doubled from
2016 till date to 900-plus prac-
titioners,” the EY spokesper-
son told Business Standard.
PwC India’s indirect tax
team has grown from 300 a
year before to about 750.
Deloitte’s has grown from 250
to 550 professionals. At KPMG,
the indirect tax team has
grown from 200 to 450 during
the period.
“GST changed the way
businesses are managed,
from manufacturing to dis-
tribution. It offered unprece-
dented opportunities not
only to consultants but also
to industry,” said Pratik Jain,
partner, PwC India.
He said while the one-time
transition is over, things are yet
to stabilise. “Aspects such as
anti-profiteering, compliance-
related changes and vendor
management are occupying
the minds of senior manage-
ment in businesses. With the
role of technology becoming
more important in taxes, we
HIGH DEMAND
Indirect tax employee strength in accounting firms in India
Pre-GST Post-GST
750
450
300
PwC India
believe the role of consultants
are also changing. We would
continue to grow at a fast
pace,” said Jain.
Another expert said while
the size of the indirect tax mar-
ket had seen a tremendous
increase, it would shrink once
GST stabilises. “We were work-
ing even on Sundays till two
months ago. On Saturdays, we
still go in to work,” he said.
The slew of changes on
account of introduction of GST
like anti-profiteering, e-way
bill and rules meant compa-
nies have had to take help from
professionals.
West Asian demand
Close to 200 indirect tax pro-
fessionals from the Big Four
combined are posted in West
Asia, to keep up with the
demand after implementation
of VAT for the first time in
900
550
250
EY Deloitte
Saudi Arabia and the United
Arab Emirates from January
1, 2018. The six-member Gulf
Cooperation Council (GCC)
has started implementing VAT
in order to diversify their
source of income beyond oil
reserves.
While Saudi Arabia and
UAE have led with a five per
cent VAT, others like Bahrain,
Kuwait, Oman and Qatar will
be introducing it over the next
two years.
“The Gulf countries had no
tax before and are now relying
on India for professional sup-
port, due to cultural similarity.
We are catering to a lot of
demand there. It will only
grow once other member-
counties of GCC introduce
VAT,” said an indirect tax
leader of a top accounting firm
in India, who did not wish to
be named.
cut in corporate and big busi-
ness loans by at least 15 per
cent by March 2019, as part of
its recapitalisation plan.
However, the process of part-
ing with corporate loans and a
virtual halt to further exposure
has been on since the early
part of this financial year,
when the Reserve Bank began
to place PSBs under a PCA.
Global tech start-ups to gain from
proposed mining policy
450
200
MEGHA MANCHANDA
New Delhi, 28 January
KPMG Under the draft national mineral poli-
cy, the planned set of incentives for pri-
vate investment are likely to be more
beneficial to companies providing
ancillary services in the mining space,
mainly start-ups from abroad, than
core mining companies.
The draft policy is yet to be
finalised.
“Companies engaged in the prelim-
inary stages of mineral exploration
stand to benefit the most from the
financial incentives proposed,” said
Kameswara Rao, leader — energy util-
ities and mining — at PwC.
He said companies that can provide
data repository on the potential explo-
ration sites, do aerial surveys and col-
late the data to be sold to potential
investors will benefit from the policy.
So, too, with consultancy assignments
on policy structure sharing and mon-
etisation of the resources.
Research identification and infor-
mation on probable mining and explo-
ration sites can be sold in the market.
“There are many Australian and
Canadian firms already involved in
has over the past year reduced smaller banks gets reduced.
its corporate loan exposure by IOB’s corporate exposure
five to six per cent, said R K was about 50 per cent a few
Takkar, chairman. At present, quarters earlier; it is now 42
corporate debt is 55 per cent of per cent and work is on to curt
the loan book. enterprise lending, while ject to a PCA, in 2014. Earlier, this to 40 per cent. The bank
Another Kolkata-based reducing exposure to corpo- the bank was not allowed to will selectively take exposure
bank, United Bank of India, rate lending, the latter a third give a loan more than ~100 to top-rated corporates. “We
has also been refocusing on of its loan book. million to a single borrower. will focus on AA & AA- rated
retail (small borrower) and United Bank of India was Last month, it wase again ones, where risks are less,” an
micro, small and medium one of the first PSBs to be sub- subjected to PCA. While the IOB official added.
WHO WILL BENEFIT
Companies providing
ancillary services in the
mining space, mainly
start-ups from abroad
Companies that can provide
data repository on the
potential exploration sites
Companies that can do
aerial surveys and collate
the data to be sold to
potential investors
such activities,” Rao added. approved amending the Mines and The revenue sharing could be in the
Australia-based start-ups Vayeron, Minerals (Development and form of a lump sum or an annuity, to be
FDP Mining, XDR, Quick Safety and Regulation) Act to allow transfer of cap- paid through the period of mining
Artemis Intelligent Robotic Systems tive mining leases issued prior to lease, with transferable rights.
are some of these. According to January 12, 2015, in the case of mergers Beside encouraging private par-
Australian media reports, mining tech- and acquisitions. However, under the ticipation in exploration, the draft
nology or tech start-ups are on the rise, National Mineral Exploration Policy of mineral policy talks about involving
especially across Queensland, the state 2016, private agencies would be states for facilitation and regulation
which hosts mining potential. engaged to carry out exploration with of such activity. Grant of clearances
According to a former Union mines the right to a certain share in the rev- for commencement of operations
secretary, core mining companies like enue (by way of royalty/premium to be shall be streamlined, with simpler
Rio Tinto and DeBeers might not be accruing to the state government) from and time-bound procedures. The
able to gain, mainly due to absence of the successful bidder of a mineral block country’s exclusive economic zone
a clear policy on exploration. after e-auction, which would be dis- should be explored and exploited, the
In March 2016, the Union Cabinet covered by that private explorer. draft said.
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.
MUMBAI | MONDAY, 29 JANUARY 2018 ECONOMY 5 <

With delays in land acquisition, RANJAN KAPUR FROM 1942 TO 2018

Goodbye, advertising’s
Shree Cement ventures abroad
AVISHEK RAKSHIT hand, has initiated the process
gentleman
Kolkata, 28 January of acquiring land in different Ranjan Kapur was not only among the
parts of India for future projects doyens of Indian advertising, but also a

W
ith slow pace of land and some are already underway great conversationalist, painter, writer,
acquisition in India in Jharkhand and Odisha. and thorough gentleman. Among lead-
delaying its projects Besides these two projects in ing figures of the advertising industry to
for new plants, Shree Cement India, the company has been have died in the past few years — a list
has decided to venture abroad expanding its capacity in that includes veterans like Mike Khanna
in the UAE after acquiring Rajasthan by two mtpa and in of JWT (2015) and AG Krishnamurthy of
Union Cement Company (UCC) Bihar by 1.6 mtpa. It has recent- Mudra (2016) — Kapur continued as
for an enterprise value of ly augmented capacity in WPP India chairman until his death.
$305.24 million. Chhattisgarh by another 2.6 He was as an astute advertising pro-
H M Bangur, managing mtpa. The completion of UCC’s fessional, credited for taking Ogilvy &
director of Shree Cement, said acquisition would increase Mather (O&M) India to the number one
the company had about ~40 bil- Shree Cement’s capacity from position after coming on board as man-
lion cash balance and it faced the current 29.3 mtpa to 33.3 aging director in 1994.
with two options — either invest mtpa. Its some domestic proj- Kapur, the erstwhile country manag-
in some venture that would ectsexpectedtobecompletedin er of WPP, who handed over the reins to
assure growth and higher 2018 would augment capacity CVL Srinivas, chief executive, GroupM
returns for shareholders or pay- by at least 5.6 mtpa. Asia, in October 2017, died on Saturday
off the balance as dividends.
“In India, we could not
KEY FINANCIALS time and you need to have a lot
of patience besides planning at
In line with the firm’s philos-
ophy of greenfield expansion,
in Mumbai at the age of 75. He is sur-
vived by his wife Lorraine, and
All figures in ~ billion
invest so much money as land least five years in advance.” Bangur had initially opted for daughter Tina.
purchase will require nearly five Nine months ended Year ended A~5-billionprojectinPurulia putting up a fresh project in the Piyush Pandey, executive chairman
years. And, after the 3-million Dec 31,’17 Dec 31,’16 Mar 31,’17 district of West Bengal — pro- UAE, but changed his mind and creative director, O&M South Asia,
tonne per annum (mtpa) project Net income 73.31 69.06 96.43 jected to strengthen the compa- after he felt that the valuation termed Kapur's death as "the end of an
in Karnataka, we didn’t have ny’s eastern market share — is of UCC, which was up sale, was era and a great loss".
Total expenses 62.46 59.59 84.73
anything big in sight in India. yet to see the light of day. For “right”, and it would have a mu- Rightly so. Kapur was responsible for
The cash balance with the com- Net profit 9.85 10.35 13.39 this two-mtpa project, Shree ch lower gestation period com- not only helping Oglivy grow as a cre-
pany would have started piling Total comprehensive income 9.82 10.30 13.39 Cement has already acquired 95 pared to a greenfield project. ative powerhouse under Pandey, but
up unless we came up with a Source: Shree Cement per cent of the requisite 100 Analysts have been remain also helping it expand into newer busi-
plan to use it profitably,” Bangur acres. But acquisition of the skeptical about Shree Cement’s ness areas, such as below-the-line and
told Business Standard. A 22-25 pany’s investments in India. pleted in the forthcoming remaining five per cent land has foray into the UAE, expecting a rural communication, outdoor and
per cent operating margin is Three years ago, Shree October-December quarter. been lingering. low return on royalty. But, the health care advertising, putting into Ogilvy and moved to south-east Asia lat-
expected from UCC in the next Cement had targeted 40-mtpa Asked if land acquisition “In West Bengal, the biggest company acquired UCC for $76 practice the concept of one-stop shop, er to head operations in markets, such
five years, he said. capacity by 2020 and the UAE delays continued to be a deter- problem was the pace of pur- a tonne, which was lower than long before other agencies as Singapore, before coming
Bangur termed the acquisi- foray was part of that plan. rent despite ease of doing busi- chase because the average land $84 a tonne that UltraTech took to it. Kapur was born back to India in the 1990s.
tion as “one-of-its-kind” and For the ~20-billion project in ness improving in the country, parcel size is 500 sq feet and in Cement had incurred in 2010 Kapur, who was born in in Lahore in Apart from his business
said he was open to more such Gulbarga district of Karnataka, Bangur said, “It remains an some cases, it is as low as 100 sq while acquiring the 3.2-mtpa Lahore in undivided India in undivided India skills, Kapur was a great man-
global ventures in the long-run, which marked the cement com- issue throughout India, be it feet. For every acre, there are 70- Dubai-based ETA Star Cement 1942 and subsequently moved in 1942. He moved manager, allowing talent to
based on the success of UCC’s pany’s maiden south Indian for- West Bengal, Karnataka or 80 registries on account of the for $269 million. It was also low- to Delhi after partition, was an to Delhi after grow under his watch. Post-
acquisition and if return on cap- ay, the process of land acquisi- Bihar, where plants have taken a fragmented nature of the land,” er than $95 a tonne Shree alumnus of St Stephens partition, and was liberalistation, India saw not
ital in global ventures ensured tion had started seven years ago. lot more time than expected. Bangur noted. Cement has been spending on College in the capital. An MA an alumnus of only international businesses
returns comparable to the com- The plant is expected to be com- Greenfield projects take a lot of The company, on the other the Karnataka unit. in English, he began his pro- St Stephens make a beeline for the coun-
fessional life as a banker with College in the try, but also local giants chart
Citibank in New York. capital. An MA in out plans to grow.
It was a chance encounter English, he Kapur led from the front to
Budget should allocate more funds for research, says Kris Gopalakrishnan in 1966 with advertising leg- began his
end David Ogilvy in New York professional
pitch for local and interna-
tional businesses, along with
that convinced the 24-year- life as a banker his team of professionals,
GIREESH BABU ishnan Symposium on Innovation and adding that while, basic research will Budget was addressing the issue of angel old that advertising was the with Citibank backing it up with a strong
Chennai, 28 January Entrepreneurship in Chennai, Gopala- deliver a long-term value, it is equally tax, which is impacting the start-up career for him. He had joined in New York creative product under
krishnan said, "I strongly believe that important to focus on both basic and ecosystem. Commenting on the transla- Ogilvy from Citibank having Pandey.
The upcoming Union Budget should funding for research has to increase. It is applied research. tional research and industry collabora- responded to his creative call- Following his retirement
allot more funding for both basic and currently 0.8 per cent of GDP and I think The organisations should also be tion in educational institutions, he said, ing, realising that the life of a banker from Ogilvy in end-2003, Kapur headed
translational research, and address the we should take it up to two to three per empowered to have budgetary control in the country a system should evolve to was not for him, but, like most young- WPP agency Bates in India and was also
issueofangeltax,saidInfosysco-founder cent." The private sector also has to con- over the funding, he said. "It is not only measure contribution of the faculty in sters, he was unsure whether the move chosen to lead the overall group as coun-
and angel investor Kris Gopalakrishnan. tribute as it gives only 0.2 per cent, he about allocating the money, but also to translational research and industry aca- would click. try manager in 2004. Kapur replaced
Speaking on the sidelines of the inau- said. Funding should be both for basic give authority to spend that money." demia collaboration, including working His meeting with Ogilvy changed all marketing guru Shunu Sen, who had
gural function of Deshpande Gopalakr- research and applied research, he said, His another expectation from the with incubation centres and start-ups. that. He spent time in the US office of died a year earlier. VIVEAT SUSAN PINTO
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6 WORLD
>
MUMBAI | MONDAY, 29 JANUARY 2018 1

IN BRIEF EUROPE CLOSES IN ON

BREXIT TALKS
FRESH DEAL AS US PREZ
Coincheck to repay users who
lost money in $400-mn hack
Japanese cryptocurrency exchange
Trump criticises May, says PUTS UP BARRIERS

‘would’ve been tougher’

Coincheck said it will use its own
capital to reimburse customers
who lost money in Friday’s $400
million theft. The Tokyo-based
company will repay all 260,000
users impacted by the theft of NEM
coins, at a rate of 88.549 yen (82 US ANDREW MACASKILL
cents) for each coin, according to a London, 28 January
statement posted on its website
after midnight local time on

U
S President Donald Trump would
Sunday. A total of 523 million coins take a “tougher” approach to Brexit
were stolen, it said. “The timing of negotiations than Britain’s Prime
the reimbursement and the application process are currently under Minister Theresa May, he said in a television
consideration,” Coincheck said in the statement. “The source of the interview to be broadcast later on Sunday.
refunded money is being carried out using our own capital." NEM In the interview with British channel
prices surged 21 per cent to $1.03 as of 12:31 pm Tokyo time, according ITV, Trump said the European Union was Europe is approaching the next stop in its global
to prices on coinmarketcap.com. “not cracked up to what it’s supposed to market-opening drive aimed at countering US President
BLOOMBERG< be” and claimed he had predicted the result Donald Trump’s protectionist tilt. Top officials from the EU
of the June 2016 referendum in which will meet with the Mercosur group of Argentina, Brazil,
Britons voted to leave the EU. Trump was
Paraguay and Uruguay on January 30 in Brussels to gauge
China's Weibo US to make streaming elected to the US presidency later the same
year. When asked if May was in a “good
the prospects for a free-trade deal that would follow
suspends portals services pay more position” regarding the ongoing Brexit talks, Theresa May was the first foreign leader to visit President Donald Trump after his
groundbreaking commercial pacts with Japan and Canada.
The EU-Mercosur talks began almost two decades ago,
after reprimand for music over 5 yrs Trump replied: “Would it be the way I nego- inauguration in January last year PHOTO: REUTERS
faltered and were re-started in 2010.
tiate? No, I wouldn’t negotiate it the way
China’s Sina Weibo was ordered
to move several portals offline
US copyright authorities on
Saturday decided to increase
it’s [being] negotiated ... I would have had a
different attitude.”
Trump for major ‘Door is open’ for With EU-Mercosur trade worth almost ^85 billion ($105
billion) in 2016, a market-opening agreement would be
for a week after spreading
obscene and wrongly oriented
over the next five years the
royalty payments music
Pressed on how his approach would change in Paris deal Britain: EU's Moscovici among Europe’s biggest. Mercosur says an EU offer to open
be different, he said: “I would have said further its agricultural markets, including for beef, is
content, the internet watchdog streaming companies like the European Union is not cracked up to AFP REUTERS inadequate. BLOOMBERG
said. The government has been Spotify and Apple must what it’s supposed to be. I would have London, 28 January Paris, 28 January
tightening controls over make to songwriters and taken a tougher stand in getting out.” FLAGGING THERE'S THE BEEF
internet content as part of music publishers, a trade May was the first foreign leader to visit President Donald Trump would be willing The “door is open” should Britain want to EU-Mercosur trade needs
efforts to maintain “social association for music Trump after his inauguration in January to sign the US back up to the Paris climate reverse its 2016 vote to leave the European Sources of EU imports of
a boost beef and veal in 2016
stability”, taking on “vulgar” publishers said. The last year and they were filmed emerging accord, but only if the treaty undergoes Union, Pierre Moscovici, the European
and pornographic content as Copyright Royalty Board of from the White House holding hands. But major change, he said in comments Commissioner for Economic and Monetary „EU exports „EU imports (Figures in metric tonnes)
well as the unauthorised the US Library of Congress the “special relationship” between the two published Sunday. Union, told French media in an interview (Figures in ^ billion)
dissemination of news. issued a written decision nations has since faced several ups and Trump was met with global on Sunday. Brazil 141K

49.2
that altered the formulas condemnation when he announced in Some British politicians have said

44.8
REUTERS<

51.2
downs, including Trump rebuking May on

44.3
Others 88K

China will join 1st
Japan, South Korea
summit since 2015
Chinese Premier Li Keqiang will
travel to Tokyo for his country’s
first joint summit with Japan
and South Korea since 2015, the
clearest sign yet of improving
ties between the three
neighbours. The meeting was
announced by China and Japan
used to determine how
much of their revenue
streaming companies must
share with songwriters and
the music publishing
companies they typically
hire to collect licensing fees
on their behalf. REUTERS <
VW issues apology
for testing of diesel
fumes on monkeys
43.2
41.6
Twitter after she criticised him for retweeting June 2017 that the US was pulling out of the another referendum should be held on
British far-right anti-Islam videos. He said Paris climate agreement. While Trump whether to leave the EU once the terms of Uruguay 57K
in an earlier extract from the same inter- remains firm in his criticism of the historic departure and likely future relationship Argentina 44K
view that he had not intended to cause accord, which was signed by his between Britain and the economic bloc
Paraguay 6K
offence in Britain by sharing the videos and predecessor Barack Obama, he said he are known. When asked about that , former 2014 2015 2016
that he would apologise if the original would be willing to sign up to a French finance minister Moscovici said: Mercosur data also include Venezuela Source: Copa-Cogeca
posters were horrible racists. REUTERS revamped deal. “The door is open.” Source: European Commission
First ‘jackpotting’
HUNDREDS RAISE VOICE IN RUSSIA AGAINST PUTIN

attacks hit US ATMs

late Sunday, as Japanese
Foreign Minister Taro Kono
concluded a two-day visit
aimed at repairing his country’s
strained relationship with
China. BLOOMBERG<
Wynn resigns after
sexual misconduct
allegations
Las Vegas casino mogul Steve
Wynn resigned as finance
chairman of the Republican
Party’s fundraising arm on
Saturday, a day after a
newspaper reported that he
routinely subjected women
who worked for him to
unwanted sexual advances.
“Today I accepted Steve Wynn’s
resignation as Republican
National Committee finance
chair,” RNC chair Ronna Romney
McDaniel said . REUTERS<
Kushner firm sued
by tenants ordered
to reveal partners
A rental apartment
management firm run by
Jared Kushner’s family was
ordered by a federal judge to
disclose theidentities of its
business partners in an ongoing
lawsuit filed by Maryland
tenants. BLOOMBERG <
Volkswagen added another
twist tothe controversy over
diesel-emissions cheating,
apologising for a test that
exposed monkeys to engine
fumes to study effects of the
exhaust. The study was a
mistake, the carmaker said.
The New York Times reported
earlier about a 2014 trial in a
US laboratory in which 10
monkeys inhaled diesel
emissions from a VW Beetle.
BLOOMBERG <
Israel slams Bill that
blames Poles for
Holocaust-era crimes
Israel and Poland are feuding
over a bill that would make it
a crime to blame Poles for
Holocaust-era atrocities. The
spat broke out late Saturday
after the Polish lower house
of parliament approved the
proposed legislation on a
date heavy with resonance.
AFP <
Roger Federer wins
Australian Open
for 20th Slam title
Roger Federer powered home
to beat Marin Cilic in five sets
to win his sixth Australian
Open and 20th Grand Slam
title in a riveting final
Sunday. The Swiss defending
champion dropped his only
sets of the tournament
before completing a 6-2, 6-7
(5/7), 6-3, 3-6, 6-1 win over
the 6th seeded Croatian in
3hour 3minutes. AFP <
People gather in a square during a rally, held by supporters of Russian opposition leader
Alexei Navalny for a boycott of a March 18 presidential election, in Moscow, Russia on
Sunday. Navalny was detained soon after joining a rally in Moscow on Sunday, the
anti-corruption activist wrote on Twitter
Freed, Alwaleed’s biz stock gains
FILIPE PACHECO
28 January
Kingdom Holding surged after
its chairman, Prince Alwaleed
bin Talal, was released from the
Ritz-Carlton in Riyadh, which
served as a prison for billion-
aires and princes since the
nation started its anti-corrup-
tion campaign in November.
The shares gained 10 per
cent, the most since November
2014 and the maximum
allowed in a day. The billion-
aire, who also owns stakes in
Citigroup Inc. and Twitter,
returned home on Saturday
after reaching a settlement with
authorities, a senior govern-
ment official said on condition
of anonymity. He will remain
PHOTO: REUTERS
at the helm of his company, the
official said.
His departure from the
hotel, along with other promi-
nent Saudi businessmen, marks
the end of the first phase of
Crown Prince Mohammed Bin
Salman’s anti-corruption cam-
paign. Hundreds of suspects
were arrested or summoned for
questioning. BLOOMBERG
JIM FINKLE
28 January
Diebold Nixdorf and NCR, two
of the world’s largest ATM mak-
ers, have warned that cyber-
criminals are targetting US
cash machines with tools
that force them to spit out
cash in hacking schemes
known as “jackpotting.”
The two ATM makers did
not identify any victims or say
how much money had been
lost. Jackpotting has been rising
worldwide in recent years,
though it is unclear how
much cash has been stolen
because victims and police Cybercriminals are targeting US cash machines with tools that
often do not disclose details. force them to spit out cash, known as “jackpotting”
The attacks were reported
earlier on Saturday by the secu-
rity news website Krebs on Diebold Nixdorf said in a endoscope to depress an
Security, which said they had separate Friday alert that US internal button required to
begun last year in Mexico. authorities had warned the reset the device.
The companies confirmed company that hackers were tar- Reuters was unable to
to Reuters on Saturday they had geting one of its ATM models, obtain a copy of the Secret
sent out the alerts to clients.
NCR said in a Friday alert
that the cases were the first con-
known as Opteva, which went
out of production several years
ago. A confidential US Secret
Service report and an agency
representative declined com-
ment. Officials with the
firmed “jackpotting” losses in Service alert sent to banks said Federal Bureau of
the US. It said its equipment the hackers targeted stand- Investigation could not imme-
had not been targeted in the alone ATMs typically located diately be reached.
recent attacks, but that it in pharmacies, big box retail- Russian cyber security firm
was still a concern for the ers and drive-thru ATMs, Group IB has reported that
entire ATM industry. Krebs on Security reported. cyber criminals remotely
“This should be treated by Diebold Nixdorf’s alert attacked cash machines in
all ATM deployers as a call to described steps that criminals more than a dozen countries
action to take appropriate had used to compromise ATMs. across Europe in 2016.
steps to protect their ATMs They include gaining physical Similar attacks were also
against these forms of attack,” access, replacing the hard reported that year in Thailand
the alert said. drive and using an industrial and Taiwan. REUTERS

INGVAR KAMPRAD (1926 - 2018)

Founder of Ikea and creator of a global empire dies at 91

Ingvar Kamprad (pictured), a Swedish
entrepreneur who hid his fascist past and
became one of the world’s richest men by
turning simply-designed, low-cost furni-
ture into the global Ikea empire, died on
Saturday at his home in Smaland,
Sweden. He was 91.
His death was confirmed by the com-
pany in a statement on Sunday.
He grew up on a farm in the lake-dot-
ted province of Smaland, in southern
Sweden, a dyslexic boy who milked cows
and found it hard to concentrate in
school. His family was poor, and he
earned money selling matches and pen-
cils in villages. At 17, he registered his
mail-order business in household goods,
calling it Ikea, formed of his initials and
those of his farm, Elmtaryd, and village,
Agunnaryd.
Over the next seven decades,
Kamprad built Ikea into the world’s
largest furniture retailer — an archipelago
of more than 350 stores in 29 countries
across Europe, North America, the
Caribbean, the Middle East and Asia, with
sales of ^38.3 billion ($47.6 billion),
more than 930 million store visits and
210 million recipients of catalogs in 32
languages.
It made him wealthy beyond imagin-
ing. Bloomberg Billionaires Index listed
him as the world’s eighth-richest person,
worth $58.7 billion. But his driving
ambition led to alcoholism, years of
fascination with fascism and, trying to
lead his employees by example, into
a life of almost monastic frugalities.
All his life, Kamprad practiced thrift
and diligence, and he portrayed those
traits as the basis for Ikea’s success.
He lived in Switzerland to avoid
Sweden’s high taxes, drove an old Volvo,
flew only economy class, stayed in budget
hotels, ate cheap meals, shopped for bar-
gains and insisted that his home was
modest, that he had no real fortune and
that Ikea was held by a charitable trust.
It was not exactly so, as reporters
found. His home was a villa overlooking
Lake Geneva, and he had an estate in
Sweden and vineyards in Provence. He
drove a Porsche as well as the Volvo. His
cut-rate flights, hotels and meals were
taken in part as an exemplar to his execu-
tives, who were expected to follow suit, to
regard employment by Ikea as a life’s
commitment — and to write on both
sides of a piece of paper. Ikea was indeed
operated through a charitable trust in the
Netherlands, and a complex series of
holding companies, all controlled by the
Kamprad family to avoid any chance that
Ikea might be taken public or broken up.
It also provided tax shelters and a struc-
ture for preserving the company in tact
after Kamprad’s death.
He sought to control his work force,
too. In 1976, he wrote a manifesto, “The
Testament of a Furniture Dealer,” with
biblical-style commandments listing
simplicity as a virtue and waste as a
sin. Employees were expected to
absorb “the Ikea spirit,” to be humble,
clean-cut and courteous, not just
knowledgeable about Ikea’s products
but enthusiastic about its corporate
ideology — principles to work and live
by. Kamprad was, like his designer
wares, a studied Everyman. He culti-
vated a provincial openness: curious
about everything, but a face lost in
the crowd. He was thin, bespecta-
cled and baldish, with wisps of gray-
ing hair plastered down the sides,
jowls and a pointed chin.
His blue denim shirts and khaki
pants might have been a gardener’s,
but there was hard individuality in
the dark eyes and compressed lips.
While he lived mostly in seclusion,
he travelled to Ikea stores around
the world, sometimes strolling in
anonymously and questioning
employees as if he were a customer.
@2018The New York Times News Service
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8 ISSUES AND INSIGHTS
>
MUMBAI | MONDAY, 29 JANUARY 2018 1

Exchange rates, jobs & external vulnerability — is he referring to capital flight and
a currency crisis? To be sure I did not
follow many other points in the pres-
entation. To quote a couple:
> CHINESE WHISPERS

Before our political masters talk of a sovereign wealth fund, we need a far better balance between
external assets and liabilities
Mexico and everybody else for the
deficit, but not the vaunted “strong
dollar” policy of the US, which keeps
up the consumption level of the
worse off through cheap imports.
Recently, there seems to have been
a policy change: the Treasury
Secretary said last week in Davos that
he welcomes the dollar’s recent fall in
international markets, as it will help
domestic industry. But the US deficit
THE OTHER SIDE does not lead to external vulnerabil-
ity or a balance of payments crisis as
A V RAJWADE
the dollar remains the world’s prin-
cipal reserve currency: in effect, the
ecently, The Observer news-
higher than most of our trading part-
ners, and when the oil price is rising.
The central bank’s REER index
stands at 132, evidencing 30 per cent
overvaluation. Apart from the loss of
output and jobs which persistent
external deficits represent, does this
policy make our external situation
vulnerable to capital flight?
Remember Mexico, Thailand,
Argentina etc? Recently even surplus
countries like China, South Korea and
Taiwan, have expressed worries over
the rise of their respective currencies
against the dollar. This apart, labour
eigners running away (that is, capital
flight), he correctly refers to the need
to consider all reversible “hot
money” flows;
— But in his measure of “external
sector resilience”, meant to answer
the question “if foreigners run, does
the country have adequate FX
reserves?” he seems to consider only
short-term external debt. His meas-
ure is (reserves – short term
debt)/GDP. I have not understood the
rationale for dividing by GDP: If a
divisor is needed, surely total trade is
more relevant?
„ “firms have two markets to undo
the central bank reserves”; Mumbai locals vs bullet trains
„ “If tax on foreign currency debt
is high, then firms switch to domestic
currency debt in spite of higher cost.
Hence, central bank has to tax both
margins of arbitrage”.
Perhaps the presentation was
meant for a far more sophisticated
audience of US students, not igno-
rant Indians!
In my view, our most serious
weakness is the exchange rate policy
being followed for the past decade.
The best way of ensuring resilience
to capital flight is an exchange rate The crumbling infrastructure
policy aimed at a balanced primary supporting Mumbai’s local train
income and expenditure account (i.e. network has been a talking point for
long; corporate India leader Harsh

R
paper of UK criticised
President Donald Trump for
his “petulant, childish behaviour
combined with a staggering lack of
knowledge and contempt for facts”.
While I agree with most epithets, on
one point Trump is surely right: that
the huge and persistent trade deficit
of the US has led to much lower
employment in the domestic indus-
trial sector than what it otherwise
would have been. He blames China,
rest of the world’s central banks
finance the deficit by buying and
holding US government securities in
their reserves.
One sometimes wonders whether
we are following a “strong rupee” pol-
icy to help meet the inflation target,
which I described in the last article as
possibly a major policy blunder of the
present government. The exchange
rate against the dollar has appreciat-
ed from a low of ~68 to ~64 in two
years despite our inflation being
intensive exports, like garments and
leather goods, require a competitive
exchange rate even more than tech-
nology intensive exports.
In order to understand the cen-
tral bank’s policy perspectives bet-
ter, I recently went through the
PPTs of a presentation by Dr Viral
Acharya, in New York last month
on the topic of “Global Spillovers:
Managing capital flows and forex
reserves”. Two points struck me:
— To measure “resilience” to for-
In my view, we need to look at FPI
(in both debt and equity markets)
also to measure our “external
resilience”. And as of September 9,
2017, the potential outflows were $348
bn, including short term debt of $94
bn, as compared to reserves of $400
bn — and our IIP was a negative $400
bn as on that date. Are these num-
bers not enough to measure our
external resilience to capital flight?
I could also not follow what exact-
ly he means by “retrenchment state”
excluding secondary income like
remittances). Before our political
masters talk of a sovereign wealth
fund, we need a far better balance
between external assets and liabili-
ties, that is, IIP. And, this will not be
possible if we give priority to money
as a store for value, which benefits
the better off, over money as a means
of exchange.
The author is chairman, A V Rajwade & Co
Pvt Ltd; avrajwade@gmail.com
Goenka and Indian cinema legend
Amitabh Bachchan brought it back
into focus after tweeting a video of
passengers trying to enter a Mumbai
local train as they put their lives in
danger. The video immediately went
viral as it struck a chord among daily
commuters. While most brushed it off
saying it was a daily ritual for them,
many said the government should
first set up a world class local train
service for Mumbai and then start on
the bullet train project.

Is GST connected to equity taxation? Meghalaya, cynosure of all eyes

There will be much action in the hilly
state of Meghalaya the next couple of
weeks. Congress president Rahul
A revenue building measure is badly needed by the fiscally constrained government in a pre-election year where GST Gandhi will reach the poll-bound
state on January 30 for a two-day
collections are running significantly below the expected trend meeting with party workers and
supporters though he will not address
FY19 and why it is not visible in FY18 any public rally during his visit. The
itself. The primary reason is that the Bharatiya Janata Party is also
GST system results in upfronting of finalising the visit of its star
tax payment as compared to the pre- campaigners which include Prime
vious regime. The IGST (50 per cent of Minister Narendra Modi, who had
the total GST collections) part of the visited the state only last month. The
GST is applicable to inter-state Congress had faced a major setback
trade/movement of goods/services just weeks ago when five of its MLAs
and also on imports. In the case of resigned from the assembly and
inter-state movement of goods joined the National People’s Party
MAHESH NANDURKAR between company depots, even and two other legislators moved to
though the goods are not “sold”, IGST the BJP and the newly formed
People’s Democratic Front. Meghalaya

A
lot has been said about whether
capital gains taxes on equities
will be raised in the upcoming
Budget. The common response from the
fund management community has been
“unlikely, because Mr Modi doesn’t want
to create one more big disruption before
election and the government wouldn’t
get much out of it anyway”. Without
going into the politics or rationality of
the potential tax increase, let us focus
on the latter part of it. How much can the
government get out of it? Our analysis
suggests that this number could be as big
as ~300-500 bn (US$4.5-8 bn). This is a
meaningfully large number for the gov-
ernment to consider as a revenue build-
ing measure. Is a revenue building meas-
ure really needed by the government? It
can be argued that this is badly needed
for the fiscally constrained government
in a pre-election year where GST collec-
tions are running significantly below the
expected trend and our calculations sug-
gest that GST collection shortfall will be
even bigger than FY19, to the tune of
nearly ~1.5 trillion (US$23 bn) or almost
90 bps of GDP.
Let’s take a look why GST revenue
shortfall will be such a big number in
is levied. The same applies to imports.
As soon as goods are imported into
the country, IGST is levied aside from
the customs duties. One might argue
that excise duties or countervailing
duties were also levied in a similar
manner earlier but the point to keep in
mind is that GST rates are higher than
excise duty rates and subsume VAT
also. There was no upfronting of VAT
in the earlier regime. A secondary rea-
son is, in the run up to the implemen-
tation of the GST, several businesses
had reduced the inventories and a lot
of those inventories are getting rebuilt
post July. And hence, a part of IGST
collections is associated with this
inventory build-up and unsustainable.
In simpler words, FY18 GST collec-
tions include some portion of taxes
that would have been recognised as
revenues for FY19 under the earlier
regime. Also inventory building after
GST implementation in June 2017 has
further inflated GST collection num-
bers. This unsustainable portion of col-
lections in FY18 is the ‘IGST float’. The
estimated IGST float for FY18 would
be about ~1.5 trillion (US$23 bn).
According to the data released by the
government for July-November 2017,
that is, for five months, this IGST float
is already ~1.4 trillion. While this IGST
float would sustain, the IGST float
‘income’ should fall by 90 per cent YoY
in FY19, creating a big revenue shortfall
for the government in FY19.
The key question here is, why is the
sustainable rate of GST collections signif-
icantly lower than the expected number.
There are four possibilities. 1. The econo-
my slowed down meaningfully. 2. Tax
compliance has gone down. 3. GST rates
are lower than the effective tax rates vis-
à-vis earlier regime. 4. IGST settlement
number is understated due to systemic
issues and the real IGST float is much
smaller and the sustainable rate of tax
collections is not as bad as it appears to be.
The last one is the most bullish pos-
sibility and then we need not worry
about FY19 GST collections so much.
No. 1 should be ruled out looking at
the various economic indicators. My
base case is some combination of No. 2
and 3. Tax compliance has possibly
weakened because the government has
suspended three of the most potent
aspects of the GST: invoice matching
mechanism, reverse charge mecha-
nism and e-way bill. Tax compliance
will likely remain weak till these three
aspects of the GST are resumed. The
situation as per No. 3 could be due to
the underestimation of the negative
impact of input tax credit. Please note
that in the previous regime, the extent
of input tax credit was quite limited,
now businesses can claim input tax
credit on virtually each and every
expense item, whether spurious or real.
The best case, however, is that the
government would reinstate the com-
pliance improvement measures as
soon as possible thereby driving a big
increase in the sustainable rate of GST
collections in FY19 but that might be a
politically sensitive issue. The gov-
ernment might need to weigh the
political sensitivity of these compli-
ance enhancement measures vis-à-vis
the raising of equity taxation. The lat-
ter appears like an easier option. We
don’t have to wait for too long to know
which way the government will go.
The author is India Strategist, CLSA
will go to polls on February 27 and the
results will be announced on March 3.
Tipu, controversy travel to Delhi
On Republic Day, Delhi Chief Minister
Arvind Kejriwal unveiled portraits of
70 eminent individuals at the Delhi
Assembly, including those of
Ashfaqulla Khan, Bhagat Singh, Birsa
Munda, Rani Chennamma, Subhas
Chandra Bose and Tipu Sultan, which
will be put up in the galleries of the
Delhi Assembly. Next day, as BJP MLA
Om Prakash Sharma lamented,
“people’s sentiments hurt if we put
up a portrait of a controversial
personality”, it set off a war of words.
Delhi Assembly speaker and AAP
member Ram Niwas Goel retorted,
“The Constitution carries a picture of
Tipu Sultan on page 144, so either the
people who fought the British to free
the country and wrote this
Constitution were traitors or BJP is.”
Surely, not the end of story.

AS I SEE IT > LETTERS

Simply a bad idea
If state and national elections are held together, important state leaders
would be unable to challenge national leaders and their parties
dicts the federal character of the
Indian political system. We have 29
states and 2 Union Territories with
their own assemblies. Each have their
own assembly and it’s separate from
the national parliament. If their
longevity were to be co-terminous
with that of the Lok Sabha it would
impose on them an artificial time-
KARAN THAPAR frame and, thus, restrict their con-
stitutional power to determine their
own fate.
particular to India.
If state and national elections are
held at the same time important state
leaders will be restricted to cam-
paigning for their state assemblies
and unable to participate fully in the
national election. Thus a Mamata
Banerjee, Mulayam Singh Yadav,
Nitish Kumar, Mayawati, Sitaram
Yechury along with their regional
parties would be pinned down at
state level and unable to effectively
Fix duty drawback rates
The all-industry rates of duty drawback
revised on Thursday shows only a margin-
al raise on 102 export items. The increase
does not fully offset the taxes levied on raw
materials, components, consumables that
goes into export production.
The government should immediately
look into raising duty drawback further to
fully cover all the levies to make exports
more competitive. With oil prices going
up, rupee appreciating, there is hardly any
workable profit for export trade. The suf-
ferings of the leather industry can be
wiped out if 100 per cent taxes is compen-
sated by way of duty drawback, not a mere
ernment to another. It is difficult to call it
disinvestment in the strict sense of the
term, though technically, it may be so. Both
them over also at some stage, this deal
does not make much sense.
Krishan Kalra Gurugram
Raise deposit insurance
Once the Financial Resolution and
Deposit Insurance (FRDI) Bill is passed,
the Resolution Corporation will take
over the functions of Deposit Insurance
from the Deposit Insurance and Credit
Guarantee Corporation (DICGC), a sub-
sidiary of RBI. The RBI has, till date, by
and large, ensured no loss to the fully
protected accounts of the depositors
which constitute 92.1 per cent of the

I
n India foolish ideas rarely fade
away. There is always someone
willing to reiterate and revive
them. That seems to be the case with
the proposal state and national elec-
tions should be held simultaneously
every five years. In terms of saving
time and money it makes practical
sense but there’s a lot more wrong
with it than can be said in its defence.
It’s said when state and national
elections are held at different times
the country is pushed into an
almost semi-permanent period of
political campaigning. The model
code is almost always in implemen-
tation somewhere or the other.
Governance, as a result, suffers.
Political rhetoric and election bom-
bast, instead, take its place.
What this overlooks is the fact
Germany has a system similar to
ours. And as happens in India, state
elections in that country do not
coincide with national elections.
Indeed, often the verdict of one rais-
es questions about the other. But so
what? Surely this is a way of dip-
stick checking the popularity of the
national government and not a rea-
son for changing the system?
However, my concerns go further.
To begin with, the proposal contra-
But this is only the first of my
concerns. What would happen if a
government loses its majority and
the assembly cannot throw up an
alternative? In an age where coali-
tion governments have become
common this could happen fre-
quently. So, if an assembly has to be
dissolved early, would the state
have to wait several years till the
next Lok Sabha elections before
another is elected? In the mean-
time what would happen to popular
representation? Wouldn’t this leave
the state electorate effectively dis-
enfranchised?
Connected to this is the preroga-
tive of prime ministers and chief
ministers to call early elections. It’s
only happened infrequently in India
but under Margaret Thatcher and
Tony Blair it was a regular feature in
Britain. This is a power all heads of
government have both to discipline
supporters as well as take advantage
of an unprepared opposition or oth-
er factors in their favour. It’s part of
the democratic system of our con-
stitution. How would we justify
doing away with it?
These are all well-rehearsed con-
cerns. There is, however, one other
consequence that applies in
challenge Narendra Modi and Rahul
Gandhi and their national parties. At
a time when some of the fiercest
opposition to the national parties
comes from regional leaders would
this not confer an unfair and unwar-
ranted advantage on the BJP and
Congress? And, you could ask, is this
why the BJP is pushing the idea?
If my suspicions are wrong and
the BJP believes its commitment to
this concept is genuinely in the
national interest then I would sug-
gest Narendra Modi prove this to be
the case. With 19 state governments
under BJP control all he needs to do
is ensure they hold their respective
state elections to coincide with the
next national election. This would
mean the national election will have
to be held early to coincide with the
Madhya Pradesh, Rajasthan and
Chhattisgarh elections due by
December. It also means the other 16
states would have to bring forward
their polls.
If the BJP truly believes in this
concept, this is a small sacrifice for
what it claims is a big national gain.
And if this is done it would be hard
for the hold-out states or parties to
keep resisting. But will the BJP take
this drastic first step? I doubt it.
0.3 per cent. Further, in line with ease of
doing business, the Ministry of Commerce
and Industry should recommend a pro-
posal to the Ministry of Finance, which can
be incorporated in the Budget — a self-fix-
ation of brand rates of drawback by
exporters themselves. Wherever duty
drawback rates are not fixed as all-industry
rate category, exporters have to seek brand
rate fixation which takes a lot of time and
a plethora of documents have to be sub-
mitted to get the rates fixed. Instead,
exporters can self-calculate the duties that
have gone into export production and
straightaway claim the brand rates similar
to all-industry rates. Such an easy method
of claiming brand rate duty drawback will
alleviate exporters’ difficulties and save
time. There are a host of items where
import and re-export happen with value
addition, but all-industry rates are not
available. A serious thinking on these lines
will enhance trade among Asean countries
and may even double the total export val-
ue with these countries..
A Sathyanarayana New Delhi
Deal or no deal
This is with reference to “ONGC-HPCL deal
has logic, but can’t address fiscal woes”
(January 26). I think the ONGC-HPCL
mega deal is merely a case of transferring
money from from one pocket of the gov-
the entities are state controlled; so how
does this deal qualify as disinvestment,
which should really mean sale to the pri-
vate sector or to retail investors? This deal
fails on this criterion. The deal only makes
ONGC an owner of the stake that the gov-
ernment held earlier in HPCL.
The fact that the government is a major
shareholder in ONGC means that really
nothing has changed. Admittedly, there
is merit in the deal due to obvious benefits
of synergy; an excellent case of vertical
integration which should lead to savings in
operational costs and will hopefully make
ONGC more competitive. But, again, who
are ONGCs competitors? Primarily Indian
Oil and BPCL. No private sector company
is really into retailing of fuels in a big way.
So, unless the long-term plan is to weaken
these two giants and for ONGC to buy
> HAMBONE
total deposits as of March, 2017, if war-
ranted by merger and amalgamation of
banks. The FRDI Bill is silent about the
likely increase in the deposit insurance
coverage. The DICGC had last increased
the limit of deposit insurance 25 years
back in 1993 from ~30,000 to ~100,000.
As per Inflation Calculator India,
~490,000 of 2017 is equal to ~100,000 of
1993 and hence, the limit of deposit
insurance should be increased to a min-
imum amount of ~500,000.
Ramanath Nakhate Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone
number
BY MIKE FLANAGAN
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

>
OPINION 9
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM.

Volume XXII Number 120

ILLUSTRATION BY AJAY MOHANTY
MUMBAI | MONDAY, 29 JANUARY 2018

Hold your horses

Equities are expensive but there aren’t enough reasons to exit

T
he stock market rally since the beginning of 2016 has been extraordi-
nary. At a time when the economy was reeling from extreme stress after
System and related map data, which detects your
the note ban, the stock market started rallying, with foreign investors
location and gives you helpful directions. For that
buying stocks of over ~300 billion in March last year, the highest they matter, practically all that makes the Information
have bought ever in a single month. The goods and services tax (GST) regime, Age possible is also thanks to the US Department of
which started in July, disrupted the economy further, but the stock markets were Defense funding: The internet itself, the micro-
in a zone of their own as money kept coming. Retail investors, who began invest- processor that drives computers and mobile phones,
ing aggressively in mutual funds since 2014, kept oiling the liquidity in the mar- as well as the cellular technology that makes all
mobile phones possible.
ket as they poured in ~1.8 trillion through the year.
Another area in which Indians’ show their aver-
The Sensex is up over 35 per cent since the end of 2016, while the BSE MidCap sion to technology is what is being noticed on a large
index is up 48 per cent and the BSE SmallCap by over 60 per cent. Corporate earn- scale among software developers in India: They try
ings recovery has been around the corner for three years, but is yet to materialise. The their best to wriggle out of hands-on coding once
price-earnings multiple, a key indicator, puts the market in an expensive, over- they cross the mid-30s ... they want to be “man-
bought zone — signs of which are evident in the recent fall of many small- and mid- agers” who will supervise other programmers but
won’t “dirty” their own hands with writing pro-
cap stocks from their stratospheric levels, though the large-caps continue their jour-
grammes. Except that this is like a novelist stopping
ney towards uncharted territories. Cocktail party conversations have moved on from to write and moving to be a “manager” in a publish-
war stories of multi-baggers to hushed conversations of when the party is likely to end. ing house. Here, again, a societal level question:
A comparison with the heady bull market of late 2007 and the subsequent Does Indian society reward hands-on creators less
bear market keeps cropping up. However, there are clear differences between then than it does “supervisors” and “managers”?
and now. There were signs of possible dangers in the sub-prime market in the US This phenomenon runs from even deeper socie-
tal sources. I have recounted this story before, but it
and concerns of global growth, which isn’t the situation this time. The global econ-
probably needs another recounting: A 20-something

Are we Indians
omy is on a strong wicket. In India, there are no runaway capital expenditure plans, colleague told me that in the arranged marriage
large-scale acquisitions, or mounting debt beyond the distressed companies. market he was fishing in, many of the young women
Bank credit growth to companies, which has been at a multi-decade low, is more he was meeting as a prospective life partner were ask-
likely to go up than stay at current levels. There are indications that a double-dig- ing him “how many people report to you” as a way of
it earnings recovery for the corporate sector is not far. Automobiles, consumer
goods, private sector banks, non-banking finance companies, and even real estate
stocks are doing well. If the government’s infrastructure spending rises, there are
technology-averse? assessing whether he was a success in his job!
We should not also forget that the creation of the
independent Indian state was based on an anti-tech-
nology stance: The choice of the charkha as the sym-
strong chances that private sector capex will start in the next 12-18 months.
It’s not that there aren’t risks to markets — the extent of increase in interest
Some examples that show we may be call for introspection bol on the Independence Era Congress Party flag. It
is almost as if Gandhiji, that astute politician, want-
rates in the US will have a bearing on the risk premium on equities, and overall ed to trigger an anti-textile-machinery-automation

J
risk appetite and crude oil prices. Legendary global investors have called a bub- ust the other day, a very senior banker I was in pany to try this — you just won’t win. instinct in the Indian psyche.
conversation with said to me, “I just don’t Or is there a bigger issue that the larger ecosystem Do the traditional business families which so
ble formation and have advised investors to shift their stance from aggressive to understand technology”; in the same noncha- needed to wean young technology companies: dominate the business scene in India actively dis-
defensive. On the other hand, many Asia and India strategists are yet to talk lant way I could probably say, “I don’t understand Knowledgeable and patient customers, a patient courage their offspring to enter technologically chal-
about risks. For investors who are concerned about valuations, it could be a tantra” — I mean, accepting its existence but not domestic venture capital industry and, most of all, a lenging business opportunities? There is some evi-
tempting choice to sell now and come back when prices are down, but this is eas- being bothered enough to dig deep big enough domestic market for tech- dence that this is possibly true. Is it that they are
ier said than done. Had this view been taken three months or even a month ago, enough to understand it. In a similar nologically innovative products, more comfortable in their method of “competition”
vein, the founder and head of a mul- which just doesn’t exist in India? — not to produce superior or less expensive products
investors would have lost some of the gains as the market has gone up since then.
timillion-dollar venture capital fund The evolution path of a technology — but by getting access to some natural resource
Also, equity as an asset class is likely to continue attracting new investors, given looked at me, exasperation writ large company is by now fairly clear from (spectrum, coal, iron ore, etc), organising the licences
that there aren’t other avenues for wealth creation. Thus, investors are likely to be on his face, and said: “If you can think studies done across the world. First, an and capital for it, and letting some outsourced com-
better off holding on to the bulk of their investments after booking minor profits. you can see the next five years and entrepreneur hatches an idea in a sun- pany worry about the technology platform, let alone
A small price correction should not be cause for concern, and a time correction predict where this technology is rise industry, then he wins a few early worry about technical innovation. This division of
(where prices don’t move much for the next few months as they adjust earnings going, you are pretending to be god.” sophisticated customers (sophisticat- labour, where the Indian partner provides the con-
Is this kind of aversion to tech- ed because the young company needs nections and the government the licences, and the
and valuation) after the December quarter results is an ideal scenario.
nology the reason why, when a new to solve some big tech problems early foreign technology partner worries about the tech-
tech paradigm like the personal com-
AJIT BALAKRISHNAN on and not meet them later). This ear- nology, is so inscribed in our societal psyche that this

Act fast on RCEP puter revolution arrived in the late ly sophisticated customer very often is
1980s, making computing affordable to the mass- the defence R&D groups. Once the prototype is
es (just as the mobile phone is doing today), this proven in demanding defence conditions, the entre-
is baked into the structure of major government
contracts.
As the Information Age dawns and we are wit-
India-Asean trade growth has been underwhelming opportunity was converted into a vast body-shop- preneur brings it to the lay market in his country and nessing an outburst of technology evolution in
ping enterprise? What underlay this? An unwill- then takes it worldwide. machine-learning and artificial intelligence, it is too

L
ast week, India played host to the leaders of 10 Association of Southeast Asian ingness to take on the fledglings of that period, Many have documented how much the iPhone crucial a period not to examine and cure the Indian
Nations (Asean) in a commemorative summit as the country celebrated 25 Microsoft, Oracle, etc, which grew in that period owes the US Department of Defense for bringing psyche of its aversion to technology.
and became world-dominant giants? Or a sense of into being the very pieces that have made it the
years of its association with Asean. It was even more special because Asean
pragmatism in the air which tells you in a dozen dif- most desired phone brand in the world: Its touch- The writer is the author of The Wave Rider, A Chronicle of
is celebrating 50 years of its existence. The Delhi Declaration talked about ferent ways: There is no point for any Indian com- screen display, and the Geographic Positioning the Information Age. ajitb@rediffmail.com
a wide range of issues — from cultural to political and from geo-strategic to economic
— over which India and Asean are expected to collaborate more closely in the near
future. Barring a couple of Asean partners, most countries have deep cultural ties with
India and, as such, it was a fitting end to the summit meeting as the Asean leaders
presided over this year’s Republic Day parade as chief guests. On the face of it, Prime
Minister Narendra Modi’s government has taken a bold step towards reaffirming its
commitment to its Act East policy. However, among all the concerns that were dis-
Why ‘illegal’ is the norm
I
am writing an incomplete story. But I need you analyse the water. The test report showed that there permissible industrial activities in such non-con-
cussed, the central worry was India’s inadequate economic integration with Asean. to follow me as I learn more. Shiv Vihar is a “non- was virtually no contamination in the area. forming areas would be stopped. It gave detailed
To be sure, a coming together on trade and investment is a necessary requirement not conforming” — where industrial activities are The results of the 42 samples tested showed that directions that water and electricity connections
just for the sake of the economic benefits that will accrue to both sides but also for happening, which is not in conformity with its stip- pollution was negligible and contaminants were “not would be severed and if “illegal” activities contin-
ulated land-use — colony located in the eastern part detected”. I then asked for the chromatograms of the ued the units would be sealed. Textile dyeing was a
India’s larger ambitions of being a force in the global economy.
of Delhi. Some months ago, a leading daily newspa- tests to understand more. By the time this article “not permissible” activity. It should have been
By all accounts, India’s achievement in terms of growing trade relations with per did an exposé of the high cancer incidence in this goes to press, the chromatograms will have been stopped, and certainly not allowed.
Asean has been underwhelming. As a trading partner of Asean, India is ranked a low- area, which investigations linked to pollution from sent; these show impurities but it is still difficult to This direction was reiterated in MPD 2021, which
ly seventh — well below rivals such as China, the European Union (EU), Japan, the the many small-scale industrial units engaged in conclude anything. I have asked for more informa- was first issued in 2007 and amended in 2008 and
US, South Korea, and Australia. The India-Asean free trade agreement (FTA), which dyeing jeans. The water had turned tion. As I said, this story is in 2009. It also provides a list of household industries
came into force in 2010, has seen trade grow from $45 billion in 2008-09 to $71 billion blue. This shocking story got the progress. I will update you as I gath- that are permitted in “residential” areas. But this list
attention of the Delhi High Court. er something from these reports. also does not include textile dyeing.
in 2016-17. But trade with Asean still accounts for roughly the same share in India’s
The acting chief justice took suo But this is the nub of the matter The catch is that nobody knows (or rather, nobody
total trade — around 10 per cent. Moreover, against expectations, the composition of motu notice of the matter and the — in many such cases we know wants to say) who will regulate the “permissible” and
India’s trade with Asean has shown very little improvement in manufacturing goods. case is going on. where pollution exists, we can see it ensure what is not permissible does not flourish.
In fact, the data suggests that trade in goods like mechanical appliances, and elec- The issues of enquiry are as fol- but we cannot prove it. The prob- Also, in the DPCC’s view, industrial activity is per-
tronics and electrical equipment has declined since the FTA came into effect. These lows. First, who is responsible for lem can be the sampling procedure; mitted only in authorised and designated areas and
goods are traded in big volumes between Asean and the rest of the world. allowing this industry in a colony the problem can be the testing so, if it is operating outside, it is illegal, irrespective of
where this use is strictly banned? The method; or the problem can simply whether it is polluting or not. So, it is the task of the
India has been further blamed by Asean partners as well as trade observers for Central Bureau of Investigation has be that the tests were not done with land-owning agency — in this case the municipality
not being proactive in moving ahead with greater trade integration with the region- been asked by the court to examine adequate precision or care. The — to stop it.
al bloc. A key element is the long-pending negotiations of the Regional Comprehensive witnesses and to establish the culpa- DOWN TO EARTH problem is also that laboratories that The charade continues. Because even if the
Economic Partnership (RCEP). The RCEP is a proposed FTA between the 10 Asean bility of the officials who allowed this can do such tests are few. But with- municipality stops it because of “misuse”, the penal-
partner countries and six other nations — Australia, New Zealand, China, South Korea, to happen. Second, what can be done SUNITA NARAIN out good quality and rigorous foren- ty in court is a mere ~6,000. So, pay and get away. In
Japan, and India — with which Asean has individual FTAs. The RCEP negotiations to provide health care to the victims? sic science, there can be no proof this way, there is absolutely no regulation of the pol-
The Delhi State Legal Services Authority has been and hence no conviction. This is the pollution story lution caused by these industries.
were initially expected to be concluded in 2015 but continue to drag on. India’s insis- asked to work with agencies to ensure this. Third, of not just Shiv Vihar, but of the many Shiv Vihars The reason this becomes such a serious enquiry is
tence on differentiated tariff schedules and its demand for concessions in services lib- what can be done to clean the contaminated ground- that exist in the country. that if the “illegal” is allowed to happen, indeed flour-
eralisation, in particular, in mode 4 have been key stumbling blocks. water on the site? I have been asked by the court to Then there is the question of why this massive ish and expand, all the actions to mitigate and man-
The Delhi Declaration promises to “intensify efforts in 2018 toward the swift assist in finding solutions on this issue. contamination in Shiv Vihar occurred in the first age pollution in the legal areas come to naught. This
conclusion” of the RCEP. It is important that India walks the talk on this crucial bit. Before we can suggest solutions, we have tougher place. What is the institutional and regulatory failure one case of Shiv Vihar opens up important questions
questions: What is the state of pollution and how bad that has led to this situation? The fact is Shiv Vihar, with huge ramifications. So, will there be no more
For one, the RCEP is important because it will help shore up India’s poor backward
is the contamination? Only after knowing the answer under the Master Plan of Delhi 2021 (MPD), is under Shiv Vihars? Or will the pollution business continue
and forward linkages in global value chains. Moreover, the RCEP is necessary to bol- can there be a plan for remediation. For this, under the the category of unauthorised/regularised unautho- as usual? The outcome of this case will tell us and I
ster India’s case for its long-pending candidature of the Asia-Pacific Economic Water Act, 1974, only authorised agencies can collect rised colonies. In other words, it is an unplanned will keep you informed.
Cooperation. At a time when the multilateral trading system is under threat, India samples and only authorised laboratories can test the area. But its land-use is residential. Therefore, indus-
cannot afford to miss the bus on regional trading opportunities. samples to check for contamination. In this case, the trial activities are not allowed here except those that The writer is at the Centre for Science and Environment
Delhi Pollution Control Committee (DPCC) appoint- are classified as permissible “household” industry. sunita@cseindia.org
ed a third-party agency authorised by it to collect and In 2004, the Supreme Court directed that all non- Twitter: @sunitanar

Discontents of Trumpism
BOOK REVIEW
ADRIAN WOOLDRIDGE
Donald Trump is the oddest president
America has ever elected. He lived in a
gilded tower on New York’s Fifth Avenue
but nevertheless became the voice of the
left-behind. He made his public reputa-
tion as a reality-TV star but nevertheless
defeated one of the most experienced
politicians in the land. Trump has done
so many extraordinary things in his first
year in office, from tweeting about nuc-
lear war to conducting public business in
sight of paying guests in a resort he owns,
it’s easy to forget that, unless impeach-
ment intervenes, he still has another
three years — and perhaps seven — to go.
Trump’s election has set off a furious
competition among America’s pundits to
explain what is going on: The most
depressing political story of our time is
also the most exciting. David Frum has
usually been at or near the front of the
pundit pack with a succession of articles
in The Atlantic, where he is a senior edi-
tor. Most commentators are dyed-in-the-
wool liberals who exhausted the language
of fulmination during George W Bush’s
presidency. Frum worked for Bush and
even had a hand in writing his “axis of
evil” speech. Most commentators regard
conservative America as an alien land
inhabited by monsters. Frum has been
writing sharp but sympathetic books on
that land since his first, Dead Right, on
the weaknesses of Reaganism, in 1994.
The central theme in Frum’s excellent
new book, “Trumpocracy,” which draws
on his Atlantic articles, is what Trump’s
career tells us about the deeper structural
problems of America in general, and con-
servative America in particular.
Frum argues that Trump’s greatest tal-
ent — his genius really — is spotting and
exploiting weaknesses. The Republican
establishment spent $100 million to put
the crown on Prince Jeb Bush’s head.
Trump incinerated Bush (and all that
cash) with his gibe about “low energy.” He
then proceeded to incinerate “little”
Marco Rubio and “lyin’” Ted Cruz.
Trump’s campaign against Hillary
Clinton was in some ways a model of how
not to run campaigns — he lurched from
crisis to crisis and never bothered to enu-
merate any detailed policies. But he
understood her great limitation: that she
represented the nexus between meritoc-
racy and plutocracy, indebted to Big
Money and divorced from millions of
heartland Americans.
Trump’s political operatics worked
because he understood deeper weak-
nesses in American society. Trump
grasped that America is suffering from
an epistemological weakness as well as
economic ones: The line between truth
and falsehood is becoming dangerously
blurred. Again, America’s knowledge
elite is partly responsible for this:
Armies of postmodern academics had
prepared the way for Trump by arguing
that truth is a construct of the power
elite. But the biggest culprit is techno-
logical progress. Digitalisation is not
only creating a deafening cacophony of
voices. It is also making it harder to
finance real journalism while simultane-
ously making it easier to distribute tripe.
What does Trump want to do with all
his power? The answer, Frum argues,
certainly does not lie in helping the
white working class that put him in the
White House. His tax cuts will widen
America’s already high levels of inequal-
ity. It lies instead in “the aggrandise-
ment of one domineering man and his
shamelessly grasping extended family.”
The essence of Trumponomics is run-
ning a country just as you run your fami-
ly business: appointing people with
whom you have strong personal ties,
ideally ties of DNA, directing business to
your properties, using public resources
to avenge private grudges.
Frum thinks the combination of
Trump’s drive for self-aggrandisement
and America’s current weaknesses is
nothing less than a threat to the demo-
cratic order. “The thing to fear from the
Trump presidency is not the bold over-
throw of the Constitution, but the
stealthy paralysis of governance; not the
open defiance of law, but an accumulat-
ing subversion of norms; not the deploy-
ment of state power to intimidate dissi-
dents, but the incitement of private
violence to radicalise supporters.”
Trump isn’t alone in the weakness-
exploitation business. Some of the most
eye-catching investors in his real estate
empire since he won the Republican
nomination hail from countries where
there is a faint line between business and
politics. Hanging over everything is the
figure of Vladimir Putin, a man who has
devoted his career to accumulating infor-
mation on weaknesses, both personal
and political, and turning that informa-
tion into power. Rather than Russia turn-
ing into America, as America’s policy-
makers argued in that great age of
illusion, the 1990s, America seems to be
turning into Russia.
The immediate task facing the
American republic is to limit the dam-
age that Trump can cause: Here the
checks and balances are already playing
the role that the founders intended. But
the bigger task is to eliminate the weak-
nesses that have produced Trumpism.
Frum rightly points out that these are
broad as well as deep. The travails of the
white working class are symptoms of a
bigger problem: the concentration of
wealth in a narrow range of industries
and companies. Likewise, the corrup-
tion embodied in Trump Inc. is the
product of a broader corruption of
America’s governing class, which has
allowed Bill and Hillary Clinton to trans-
form themselves into public-service mil-
lionaires and Barack and Michelle
Obama to negotiate a reported $65 mil-
lion book deal for their autobiographies.
Getting tough on Trump is going to be a
picnic compared with getting tough on
the causes of Trumpism.
© 2017 The New York Times News Service
TRUMPOCRACY
The Corruption of the American Republic
By David Frum
HarperCollins
301 pages; $25.99
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

10 ECONOMY & PUBLIC AFFAIRS

>
MUMBAI | MONDAY, 29 JANUARY 2018 1

IN BRIEF
FinMin to conduct review of FinMin not to recreate Real estate may
finally get
heads of 12 banks under PCA
The finance ministry would soon initiate a
performance review of heads of public sector
banks that are under the RBI’s Prompt
omnibus development bank industry status
Corrective Action (PCA) as part of the reform SUBHOMOY BHATTACHARJEE rowing by state-owned and pri- KARAN CHOUDHURY nessed a lot of change in the
process, official sources said. So far, the New Delhi, 28 January vate sector entities. It is not New Delhi, 28 January sector, with enforcement of
Reserve Bank has put 12 public sector banks clear, however, for which of the the Real Estate Regulatory

(PSBs) under watch in view of lagging on
certain performance parameters like unexpected level of high
non-performing assets (NPAs), low capital level, low return on
assets etc. These parameters indicate weak financial health of
lending institutions and a need to initiate remedial measures
to put them on a right course. Performance review of the top
level management of all such banks would be undertaken
soon, official sources said.
Govt may bring
more amendments
in insolvency law
Theinsolvencylawmightbe
amendeddependingon
recommendationsofthepanel
reviewingissuesrelatedtothe
legislation,includingthose
pertainingtohomebuyers,a
seniorgovernmentofficialsaid.
Whileeverythingistime-
boundundertheInsolvency
andBankruptcyCode(IBC),
CorporateAffairsSecretaryInjeti
Srinivassaidtheissueishowthe
interestsofstakeholdersareto
bebalanced.A14-member
panel,alsochairedbySrinivas,
isworkingtoidentifyand
suggestwaystoaddressissues
facedintheimplementationof
theIBC—whichcameintoforce
inDecember2016. PTI<
Flex-engine bikes to
hit markets soon,
says Gadkari
Twomajor
bikemakers
areexpected
tosooncome
upwith
electricand
flexengine
motorcyclesintheIndian
markets,accordingtoUnion
ministerNitinGadkari
(pictured).Aflex-fuelordual
fuelvehicleiscapableof
operatingonbothpetroland
ethanol.Keentopromote
electricvehiclesfleetaswellas
vehiclesonalternativefuellike
ethanol,Gadkarihasalsobeen
emphasisingtheneedto
enhanceethanoloutputina
bidtomovetowardsethanol-
basedtransportation. PTI<
PTI<
Govt may consider
import duty hike on
few medical devices
Thegovern-
mentmay
consider
increasing
importduty
oncertain
medicaldevicesintheforth-
comingBudgetwithanaimto
boostdomesticmanufacturingof
thosegoods,sourcessaid.The
movewouldalsohelppromote
thegovernment’sambitious
‘MakeinIndia’initiative,saidthe
source.Thedomesticindustry,
includingtheAssociationof
IndianMedicalDeviceIndustry,in
itshaspre-Budgetmemo-
randumhasaskedthe
governmenttoraisebasic
Customsdutyonmedicaldevices
intherangeof5-15percent.The
currentslaboftheimportdutyis
0-7.5percent. PTI<
UIDAI says Aadhaar
an identification,
not a profiling tool
TheUIDAIonSundaysoughtto
allayfearsoverdataprotection
andprivacyissuesaroundthe12
digitbiometricidentifier,asser-
tingAadhaarisanidentification
notaprofilingtool.Italsostress-
edthattheAadhaardatais
governedbystronglaws.
FieldingquestionsonTwitterin
alivechat,UIDAICEOAjay
BhushanPandeysaidthe
Aadhaarisbasedonminimum
informationandbiometrics
whichis"leastintrusive".Toa
specificqueryonwhetherthe
UIDAIwillgoforDNAprofilingin
future,Pandeysaid. PTI<
India cheapest
T
he word from North
Block just before the
Budget is that the
finance ministry has decided
not to recreate an omnibus
development bank. Instead,
with at least one international
rating agency having pushed up
India’s credit rating, it will push
state-owned and supported
entities to take advantage of the
favourable conditions to raise
more money from the markets.
For this purpose, the min-
istryhasclearedaproposalfrom
at least one line ministry to cre-
ate a specialised financing arm,
quite like the Indian Railway
Finance Corporation.
When state-owned institu-
tions raise money
from the markets on
their own steam to
finance their capital
needs, those qualify as
off-Budget borrow-
ings. Prime Minister
Narendra Modi and
Finance Minister
Arun Jaitley are convinced that
even for financing the needs of
the soft infrastructure sectors,
the same strategy could be
applied. This would keep the
government borrowing within
prudent limits. Keeping the
government borrowing within
limits will also retain the cur-
rent soft interest trends for bor-
All eyes on Economic Survey as Budget Session begins today
ARCHIS MOHAN
New Delhi, 28 January
All eyes will be on the Economic
Survey on Monday, the first day
of the crucial Budget session of
Parliament. The last full Budget
session of the 16th Lok Sabha
will begin with President Ram
Nath Kovind’s address to a joint
sitting of the Lok Sabha and the
Rajya Sabha — his first after
being elected to the office.
Finance Minister Arun
Jaitely will table the Economic
Surveyfor2017-18,daysaheadof
the fifth and final full Budget of
the current term of the
social sector expenditures the
government will use this route
to raise money, though both
education and health sectors
demand huge increase.
The money to be raised will
show up in the aggregate
expenditure of the government,
but will not push the borrowing
figures askew. It will also show
up as part of the aggregate cap-
ital expenditure (capex) plans.
How much money the govern-
ment pushes for capex in FY19
will be a keenly watched metric
in the Budget the finance min-
ister will table in Parliament on
Thursday (February 1). The per-
centage of gross fixed capital
formation in the economy (at
current prices) has
slipped to 26.4 per
cent of gross domes-
tic product for FY18,
according to the first
dataset released by
the government this
month. It was 29.3 per
cent in FY16. A turn-
around here is considered
essential for the Indian econo-
my to regain its growth
momentum.
A possible way to do this is
the route adopted by the gov-
ernmentfortherecentlyformed
National Industrial Corridor
Development & over the scorecard for FY16.
Implementation Trust
voters. An important sideshow
will be a meeting of opposition
parties on Monday. Nationalist
Congress Party (NCP) chief
Sharad Pawar has convened the
meeting of all the leading oppo-
sition parties to discuss their
parliamentary strategy for the
Budget session as well as elec-
toral strategy for the forthcom-
ing Assembly and Lok Sabha
elections.
On Friday, Pawar had led a
‘save the Constitution’ rally in
Mumbai on the occasion of the
Republic Day. Several opposi-
tion leaders participated in the
rally. The first half of the Budget
(NICDIT). The Trust has taken
over the building of the Delhi-
Mumbai Industrial Corridor
Project. NICDIT is being used
as a revolving corpus into which
investments into the project-
specific vehicles is being routed.
All debt service payments made
by the vehicles or money raised
from their disinvestment are to
be ploughed back into the cor-
pus, enabling the NICDIT to
support the development of
more industrial cities in future.
Themoneywillalsoraisethe
capex profile of the state-owned
enterprises. In FY18, the Budget
Estimates for state-owned
enterprises to raise money from
the debt markets were estimat-
ed at ~3?.?85 trillion. It was a five
per cent dip from the impres-
sive ~4?.?06 trillion raised in
FY17 by the same entities in
FY17, a 30 per cent rise achieved
While the final figures for FY18
“Number of ‘full’ working days
in the first phase of the Budget
session are February 5, 6, 7 and
8. Just four days. This govern-
ment cares two hoots about
Parliament,”saidDerekO’Brien,
Trinamool Congress (TMC)
leader in the Rajya Sabha. While
January 30 is martyrs’ day, there
is a parliamentary holiday on
January 31 on account of Guru
Ravidas birth anniversary.
Some of key Bills slated to be
taken up include the controver-
sial ‘triple talaq’ Bill. The gov-
ernment on Sunday said it will
“leave no stone unturned” to
ensure the Bill is passed in the
will be released in the Budget
papers on Friday, the difference
is expected to persist.
For FY19, Jaitley is expected
to ask these companies to be
more aggressive in their capi-
tal-raising plans and exceed the
levels for FY17. Other than the
off-Budget nature, borrowings
by the state-owned entities will
also spur them to use the mon-
ey to set up projects quickly
since they run an interest cost.
The push will be despite the
extensive cash reserves built up
by some of these companies
that has made them reluctant
to approach the capital markets.
In the absence of investment
plans, the government has been
soaking up some of this money
to meet its fiscal balance. Yet,
there are several sectors of the
economy like transport and civ-
il aviation within the infra-
structure sectors where there is
an acute fund constraint.
Bandhopadhyay (TMC), Tariq
Anwar (NCP) and Dushyant
Chautala (INLD).
“We will leave no stone
unturned for the passage of the
triple talaq Bill in the Rajya
Sabha... We will approach vari-
ous political parties to evolve a
consensus for its passage. Like
the GST (goods and services tax)
was passed by consensus, this
Bill seeking to ban the practice
of instant triple talaq (Talaq-e-
Biddat) among the Muslims will
be passed,” parliamentary
affairs minister Ananth Kumar
said. About the demand raised
byvariouspartiesduringthelast
On the argument that real
estate development is the
best driver for mass job cre-
ation in a short span of time,
the government might final-
ly give industry status to the
sector in its Budget for 2018-
19. This has been the real
estate industry's long-stand-
ing demand.
“A midsize affordable
housing project gives
employment to at least 2,000
to 3,000 people, direct and
indirect. Bigger projects
require more people. This is
a two-pronged plan. Not
only we will help get more
people affordable housing
but also help millions get
employment. We think this
year the finance ministry
would give its nod (for indus-
try status),” said a senior
urban development ministry
official. If the status was
granted, the official added,
developers would be able to
get finance at single-digit
interest rates, between five
and nine per cent. At pres-
ent, it is 10-15 per cent.
Other sources say the
finance ministry, under-
standing the need to boost
the numbers of indirect and
ancillary jobs, has decided to
grant the demand.
“The past year has wit-
KEY BUDGET SESSION BILLS TO BE TAKEN UP
DATES DURING THE SESSION
| Key Bills likely to be taken up
| Jan 29 — President’s address
to joint sitting
| Jan 29 — Tabling of Economic
Survey
| Feb 1 — Presentation of the
Union Budget
| Jan 29 to Feb 9 — first half of
the Budget session
| Feb 10 to Mar 4 — recess
| Mar 5 to Apr 6 — second half
of the Budget session
Act. The sector has stream-
lined a lot and mostly players
who fulfill all criteria remain.
There is seriousness in the
sector that might have been
missing earlier,” added an
official. “We estimate in the
next two years itself, over 1.5
million new jobs can be cre-
ated as more real estate
development projects will
come up.” Experts say real
estate has been marred by a
lack of consumer confidence
due to stalled projects, lead-
ing to a fall in demand and
demonetisation, among oth-
er things. The hope is that
industry status might help a
turnaround.
“Real estate is one of the
key gross domestic product
contributors and fourth
largest employment genera-
tor in India. Extending
industry status to the entire
sector will help developers
to raise funds at lower rates
and, in turn, reduce their
project costs, which will help
in pushing demand,” said
Anuj Puri, chairman,
Anarock Property
Consultants. Additionally, its
inclusive growth will help in
generating employment
across various sectors which
are directly or indirectly
related to it.”
during the session
| Muslim Women (Protection of
Rights on Marriage) or Triple
Talaq Bill (passed by LS)
| Consumer Protection Bill
(pending in LS)
| Negotiable Instruments
(Amendment) Bill
(pending in LS)
| State Banks (Repeal and
Amendment) Bill
(passed by LS)

EXIM Bank raises
$1 bn in LSE bond issue
TheExportImportBankofIndia
hasraised$1billionwithabond
issuanceontheLondonStock
Exchange(LSE).The10-year
dollarbondswerenearlytwo
timesoversubscribed.The
proceedsraisedwillbeusedby
theEXIMBanktosupportIndian
projectexports,overseas
investmentbywayoflongterm
creditanditslinesofcredit
portfolio. PTI<
country to live in
after S Africa: Survey
Indiaisrankedsecondonlyto
SouthAfricaasthecheapest
countrytoliveorretire,
accordingtoarecentsurveyof
112countries.Thesurveyby
GoBankingRatesranked
nationsonthebasisoffourkey
affordabilitymetricsprovided
byonlinepricingdatabase
Numbeo.Themetricsare:local
purchasingpowerindex,rent
index,groceriesindex,and
consumerpriceindex. PTI<
Narendra Modi government on
Thursday. Chief Economic
Adviser Arvind Subramanian
has announced a survey-dedi-
cated webpage — #economic-
survey18. Amid speculation that
the Modi government is think-
ing of advancing the Lok Sabha
election from April-May 2019 to
November-December 2018, the
Economic Survey and the
Budget will be gleaned for any
such indication, and whether
the Budget attempts to reach
out to key constituencies of
urban middle class and rural
session is from January 29 to
February 9. After nearly a
month-long break to give stand-
ing committees time to study
Budgetary grants, the two
Houses will meet again for the
second half of the session from
March 5 to April 6. The session
will have 31 sittings — eight in
the first half and 23 in the sec-
ond.
After a truncated Winter ses-
sion, which ended on January 5,
the first half of the Budget ses-
sionisalsoslatedtobeoneofthe
shortest in recent times.
Budget session.
The government also con-
vened an all-party meeting on
the eve of the session and it was
attended by Modi, union minis-
ters Rajnath Singh, Arun Jaitley
and Ananth Kumar, and lead-
ers of opposition parties among
others. The Opposition was rep-
resented at the meeting by
Ghulam Nabi Azad, Mallikarjun
Kharge and Jyotiraditya Scindia
(Congress), Mulayam Singh
Yadav (SP), D Raja (CPI),
Kanimozhi (DMK), Derek
O’Brien and Sudip
session that the Bill be referred
to a select committee, he said it
was now the property of the
Rajya Sabha. “Let the House
decide,” Kumar said.
Political considerations will
weigh with the government in
pushing the Bill. While elections
to Nagaland, Tripura and
Meghalaya will take place dur-
ing the session recess, the
Karnataka Assembly poll is
scheduled within weeks of the
session ending in the first week
of April.
The opposition is set to raise
issues of rape and atrocities on
women, alleged attacks on the
Constitution and constitutional
institutions, plight of traders,
farm distress and the recent
incident of communal violence
in Uttar Pradesh. Opposition
parties will discuss their strate-
gy at the meeting that Pawar has
called.
The BJP parliamentary par-
ty executive will also hold a
meeting on Monday, which will
be followed by one of the NDA
constituents, to deliberate on
strategy for the session.
| National Medical
Commission Bill (standing
committee to submit report
on Friday)
| National Commission for
Backward Classes 123rd
Constitution Amendment
Bill (returned to LS with
amendments)
| Financial Resolution and
Deposit Insurance Bill
(standing committee to give
its report on the last day of
the Budget session)

NSE to finalise list > FROM PAGE 1

of commodity
derivatives soon
PRESS TRUST OF INDIA
Mumbai, 28 January
As it awaits Sebi guidelines on
universal exchanges, NSE has
said it will finalise its list of
commodity derivatives prod-
uctstolaunchonitsplatformin
next 1-2 months.
Theleadingboursealsosaid
it has made the required tech-
nological changes for such
trades. The National Stock
Exchange (NSE), which is look-
ing to offer trade in commodi-
ty derivatives such as energy
and metals, is currently engag-
ing brokers and other market
participants for shortlisting
such products with an aim to
bring in a diversification in the
segment. On December 28 last
year, the markets watchdog
Securities and Exchange Board
of India (Sebi) had announced
that from October 2018, the
country will have a unified
exchangeregimewhereinstock
exchanges will be allowed to
offer trading in commodities
derivatives. Detailed guidelines
are awaited.
“Our technology platform is
ready for commodity deriva-
tive trading. Whatever techno-
logical changes were required
has already been made for the
segment,” NSE Chief of
Business Development Ravi
Varanasi said.
The exchange is in the
process of shortlisting com-
modity derivative products,
which would be fit for trading
in the market, the NSE official
added. It is planning to launch
trading in energy and metals.
“We are engaging with bro-
kers and other market inter-
mediaries for the purpose. The
process of finalising the prod-
ucts should be completed in 1-
2 months. We do not want to
restrict ourselves from trading
in any asset class or product in
the segment,” he added.
While noting that many
brokerages are in process of
consolidating their commodity
and equity businesses,
Varanasi said any plans to offer
commercial incentives to trad-
ing members for transactions
in commodity derivatives will
be taken closer to the launch of
the segment. “Besides, we are
also going to conduct pro-
grammes to help brokers
understand the segment and
its potential as well as make
them aware of its usefulness,”
he said.
FRDI Bill’s...
“A large portion of ESIC
(Employees’ State Insurance
Corporation) deposits is kept as
fixed deposits in PSBs. This is
money collected from employers
and employees for extending med-
ical benefits to workers that will
come under threat. A bail-in clause
is different than bail-out where the
government steps in to rescue fail-
ing financial institutions. The for-
mer is a hands-off approach,” said
a senior labour and employment
ministry official.
Around ~460 billion, which
constitutes 77 per cent of its cor-
pus, was invested by the ESIC in
PSBs’ fixed deposits till
March 31, 2017.
The remaining money, in the
fund of ~594 billion, was invested
as special deposits with the cen-
tral government in 2016-17.
“The ESIC is supposed to look
after the interests of the workers,
who are its contributors. If a por-
tion of the ESIC’s corpus is con-
Rush to find ‘suitable’ car dealers
Realising the need to reduce the
burden on future investments in
dealerships, especially in cities,
Maruti Suzuki has ventured into cre-
ating a pool of land parcels. The
company is learnt to be investing ~8
billion in land parcels in the current
financial year (FY18). Maruti has a
network of 2,500 sales outlets
(including Nexa) and is planning to
add another 1,000 by 2020.
verted into equity of banks through
the bail-in clause, it will become
difficult to extend medical bene-
fits committed to stakeholders as
the money will become inaccessi-
ble,” said a senior ESIC official.
The ESIC is mandated to invest
75 per cent of its funds in PSBs. “This
is workers’ money, which should be
protected,” the official said.
The ministry has raised these
concerns before a joint parliamen-
tary committee of both the
Houses, which is examining the
Bill and holding discussions with
stakeholders and the finance min-
istry, according to government
sources.
The panel, headed by Rajya
Sabha Member Bhupender Yadav,
will likely present its report to
Parliament on the last day of the
upcoming Budget session.
The central trade unions, too,
have opposed the clause. “We have
demanded the finance ministry
withdraw clause 52 (related to bail-
Brands like Maruti have a policy
of not letting their dealers invest in
rival brands and this also limits the
number of eligible investors.
Recently, Hyundai (which has a lib-
eral dealership policy) stopped its
60 dealers from applying for deal-
erships of Kia, its sister brand. Kia,
Peugeot, and MG are likely to start
retailing cars in 2019.
Industry experts say there will
in)... This should be only applica-
ble to private sector banks. Workers
stand a risk of losing their hard-
earned money because of this pro-
posal. We have strongly opposed
it,” said Rashtriya Swayamsevak
Sangh-affiliated Bharatiya
Mazdoor Sangh President C K Saji
Narayanan.
The ESI scheme applies to all
factories and establishments,
including shops, hotels, restau-
rants, cinemas, and road transport
undertakings, employing at least
10 workers. While 4.75 per cent of a
worker’s monthly salary goes
towards ESI as the employer’s con-
tribution, 1.75 per cent of the
income is the employee’s share.
Workers drawing a monthly salary
of up to ~21,000 are entitled to
medical benefits owing to sickness,
disability, and death due to an
occupational disease or work-relat-
ed injury along with maternity
benefits. ESIC dispensaries and
hospitals are present in 503 of the
be a shortage of right and experi-
enced dealer partners who under-
stand the business and are commit-
ted to it. The disappointment of
dealers of brands like General
Motors and Fiat Chrysler
Automobiles has turned investors
cautious. Amit Kaushik, managing
director for India at Urban Science
(a company advising carmakers in
network development), says it is not
686 districts in India and around
29.3 million workers were insured
under the ESI scheme till March
31, 2017.
The Union government has, in
the last couple of months, issued a
series of clarifications to allay con-
cerns over the clause. Jaitley had
assured the Lok Sabha last month
that “the government is very clear”
that it would “fully protect” depos-
itors’ money in case a PSB fails.
“Bail-in will be only sparingly
used. PSBs will effectively not be
subject to bail-in provisions.
Depositors need not have any
apprehensions,” Department of
Economic Affairs Secretary
Subhash Chandra Garg said earlier
this month.
Bail-in amounts to holders of
liabilities bearing a part of the cost
of resolution and it is one of many
resolution tools in the FRDI Bill,
including acquisition and merger,
the finance ministry had said in a
statement on January 2.
always lucrative to invest in the auto
dealership business as the market
is crowded and there is competition
from the same brand as well as rivals
in the same city. “We have been reg-
ularly observing that most players
open touch points without ade-
quately evaluating the region’s
potential and the viability of the
investor. This has created a loss-
making business in many cases,” he
IndiGo...
Globally, long-haul operations for LCCs are
growing rapidly. According to OAG, an air
travel Intelligence company, this summer
there will be more than 1,454 long-haul flights
operated per week by 20 LCCs.
Last year, IAG, owner of British Airways,
launched Level, a low-cost brand. Lufthansa
is expanding its low-cost subsidiary
Eurowings to new destinations. In Asia, Tony
Fernandes-ledAirAsiahassuccessfullyimple-
mented the long-haul low-cost model
through AirAsia X. The finalisation of long-
haul operations through an organic way is
perhapsanindicationofIndiGo’sdiminishing
interest in acquiring state-owned Air India.
IndiGo is the only airline which has so far for-
mally expressed interest to invest in the
national carrier. “We remain interested in
acquiring the international operations of Air
India, but as we have said previously, we will
explore the long-haul opportunity with or
without Air India,” IndiGo president Aditya
Ghosh said in last week’s post-results call with
analysts.
Minister of State for Civil Aviation Jayant
Sinha recently said the government would
not carve out the international business and
instead look to sell it as an integrated airline.
said.
Puneet Anand, general manager
and group head (marketing) at
Hyundai, says financial health,
understanding the automobile busi-
ness and customers, and local mar-
ket conditions are key to running
automobile dealerships in India.
The company has 490 dealerships
and will add another 100 in three
years.
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

MUMBAI | MONDAY, 29 JANUARY 2018 PERSONAL FINANCE 11

VALUE OF ~1 LAKH SENSEX
1-YEAR
GOLD SILVER FD (SBI) PPF
INVESTED IN VARIOUS ASSET 130,108 104,532 96,028 106,900 1,08,000
CLASSES 1-YEAR 130,108 103,173 NA# 104,830 1,08,000
POST-TAX RETURNS
# Gold and silver prices suffered losses;
All post-tax returns are calculated for an 5-YEAR 179,324 99,574 66,826 152,106 1,47,614
individual in the 30 per cent tax bracket,
without considering the indexation benefit 5-YEAR 179,324 NA# NA# 134,613 1,47,614
POST-TAX RETURNS
As on January 25, in ~; data compiled by BS Research Bureau
> .

HNIs target companies at

at least three years. “Investors should

Budget: A treat these investments just like they

would look at listed companies,” says
Bhave. Sebi also mandates that share-
holders cannot sell their holdings for

tightrope walk one year after the listing date. Only

If the BJP is not confident about its
re-election prospects, it's more
likely to push things in a hurry
Barring black swan events,
the Budget will be the chief
topic of concern this week.
Expectations include
measures designed to
accelerate infrastructure
pre-IPO stage
specific category of shareholders, like
employees with stock options, are
permitted to sell before one year of
listing. By the time an investor can
sell there is a possibility that market
starts correcting and so does the com-
They can earn super-normal profits, pany’s stock.
As wealthy investors are eyeing
but any delay in the offer would mean this space in a big way there has also
been proliferation if intermediaries.
a longer holding period Investors need to be careful of the
intermediaries they are dealing with.
TINESH BHASIN Investment management compa-
nies point out that such transactions

F
creation, and lots of give- or high net-worth individu- are fraught with risk of fraud. There
aways for farmers and the als (HNIs), getting the have been cases of unscrupulous
rural hinterland. There are desired allotment in initial intermediaries collecting money
fears that fiscal prudence public offerings (IPOs) has become from investors and not delivering
MARKET INSIGHT will be compromised and difficult. In Amber Enterprises shares. Investors should stock to bro-
some long-term capital India issue, for example, the non- kers known to them or their invest-
DEVANGSHU DATTA gains (LTCG) tax on equity institutional category was sub- ment advisors.
may be introduced. There scribed 519.26 times. Consequently, Wealth managers also say that as
are hopes that corporate tax rates will be cut, and that many HNIs are actively looking at more and more investors chase pre-
personal income tax slabs will be upgraded. other places for hefty returns. One IPO deals, the sellers are offering it at
The market will not react negatively to sops for rural cit- option, which has emerged in aggressive valuations. Going for-
izens. Indeed, there is already an investor focus on com- recent times, are companies which ward, it may get difficult to get a high
panies that may be good plays in terms of affordable hous- are planning to go for an IPO in a discount to the listing price. Even at
ing, tractors, tillers, fertilisers, cement, steel etc. The market few months. present price discovery can be a
will also respond positively to construction and infra devel- Getting shares in the unlisted
Not all public offers make money Top 5 IPO subscriptions in HNI category challenge for an investor if he does-
opers if there's some attempt to speed up project financ- companies at the pre-IPO stage After one year Company IPO size Subscription* n’t have professional help as little
ing and implementation. Even an expansion of the MNRE- means an investor can get a higher Year Number Stocks below Stocks above (~ mn) (times) information is available about
of IPOs issue price issue price
GA budget could be discounted positively as a rural number of shares than in an IPO and Apollo Micro Systems 1,585 966.4 unlisted companies.
consumption-booster. at a lower price. “To get a higher expo- 2012 5 4 1
However, if the rural focus comes at the cost of an sure, wealthy investors they are hap- 2013 3 0 3 Capacit'e Infraprojects 4,000 647.1 Spread risks though funds: Those
expanding fiscal deficit (FD), foreign portfolio investors py to go up the risk curve and take an 2014 5 1 4 CDSL 5,240 558.0 investors who don’t have the time and
(FPI) in particular, will be unhappy. The FD will be the exposure at an early stage of the IPO 2015 19 8 11 inclination to analyse the companies
most-watched macro-number in this election-year Budget cycle – even 12-18 months before the Astron Paper & Board Mills 700 394.1 in depth, are better off with funds
2016 28 21 7
because there is the temptation to abandon prudence and planned listings, at times,” says MAS Financial Services 4,608 380.8 focussed on such deals. A few com-
Note: Only companies raising above ~500 million are considered
just spend. The rupee has strengthened a lot over the past Prateek Pant, head of products and Source: Exchanges Compiled by BS Research Bureau *Number of times IPO oversubscribed, Note: Subscription figures only for panies such as IIFL Asset
non-institutional bidders for past one year. Source: Exchanges
year against the dollar. If the FD does expand, it may trig- solutions at Sanctum Wealth Management and Edelweiss Group,
ger an FPI sell off, leading to a rebound for the dollar. Management. have such AIF funds, where mini-
In addition to fears of higher expenditure, there is an Investment managers point out Getting into the game: Most HNIs in managing partner and head of fam- global institutions in the company, mum investments as mandated by
apprehension that indirect tax collections might under- that there’s high demand for compa- the pre-IPO space acquire shares ily office, ASK Wealth Advisors. If it gives them comfort. Sebi is ~10 million.
shoot. The Goods and Services Tax (GST) hasn’t yet settled nies in banking, financial services through intermediaries. The inter- investors expect to make 12-15 per By investing in a fund, the
down and it's unclear what the split of state-Centre allo- and insurance (BFSI) space. At pres- mediaries can be stockbrokers or cent in equities, return expectations Liquidity will be an issue: There’s investor can diversify across compa-
cations will be, as well. Given a trend of falling GST col- ent, investors are scouting for oppor- individuals who have acquired a sig- from pre-IPO investment should be also the risk of the delay in IPOs due nies at a smaller amount. “Funds get
lections in the last three months, and the short-term dis- tunities in companies such as Hero nificant number of shares from an 17-20 per cent. to regulatory clearance or the com- better deals from institutional
ruption (we hope) it has caused, indirect tax estimates Fincorp, UTI Asset Management existing investor or employees with While there are could be many pany calling off the fund-raising plans investors looking to sell a significant
will be carefully studied. Company, HDB Financial Services (a stock options, and then sell them in opportunities available, investment due to market conditions. Wealth stake. Even their evaluation criteria
In 2017-18, investors assumed there would be a large subsidiary of HDFC Bank), parts at a profit. At times an existing advisors say that they first look at the managers point out the case of are far superior to what individual
error factor in indirect tax estimates as GST was impend- Metropolitan Stock Exchange of investor wants to offload part of his uniqueness of the sector. They usu- National Stock Exchange where the investors can do,” says Prashasta
ing. The error factors are also likely to be pretty large in India, FINO Paytech and Smaaash stake and a group of HNI investors ally prefer companies that don’t have IPO got delayed due to its pending Seth, CEO, IIFL Asset Management.
2018-19. There’s been a vast amount of chopping and Entertainment, according to indus- acquire them. Promoters selling a many or no listed peers at all. “If there co-location case with Securities and Seth says that the fund looks at his-
changing, which makes it impossible to guess the collec- try sources. part of their stake is not common. are many listed peers available, return Exchange Board of India (Sebi) has torical data, there are multiple
tion trends. As the disruptive effect eases off, collections While there’s potential to make These deals can give investors expectation should be close to listed caused uncertainty. “Exiting compa- rounds of discussions with the seller,
should climb but we don’t know how long it will take. higher returns to listed equities, it high returns when markets are doing equities,” says Agarwal. At present, nies whose IPOs are delayed can be view on industry experts are sought,
The other question-mark is about imposts on petrol, carries much higher risks compared well. Investors, however, need to one can look at stock exchanges, difficult as there’s no formal mecha- there are meetings with the manage-
diesel, etc. if crude prices continue to climb, high retail to listed companies. Investors need to keep return expectation practical small banks and so on. nism to trade shares in unlisted com- ment, there are checks on the sup-
prices will become a political hot-potato. This may put tread with caution. If they don’t have from the bouquet of investments Apart from doing the valuation panies,” says Abhijit Bhave, CEO at pliers and so on.
pressure on indirect tax collections, and therefore, the the time to evaluate the companies, they make. “These investments and evaluating future earnings, Karvy Private Wealth. Wealth managers do agree with
Budget might seek other revenue channels. they can look at a few Alternative should give an alpha (risk-adjusted analysts looking at such deals then Bhave also suggests that when an the reasoning, they say that AIFs can
That brings us to a possible change in the LTCG tax. Investment Funds (AIF) launched returns) over listed equities of three- look at other investors in the com- investor gets into such deals, he have high fee and profit sharing that
There have been rumours that LTCG tax will be imposed that focus on this space. five per cent,” says Nishant Agarwal, pany. If there are well-known should be willing to stay invested for investors need to bear in mind.
in some form or another, on equity. Now, LTCG is a tax-cat-
egory with complex and variable tenures and rates. Across
assets such as real-estate, equity, jewellery and debt,
accepted tenures for classification as ‘long-term’ are all dif-
ferent; the tax rates are also different. GST & YOU
LTCG for equity (and equity mutual funds) isn’t subject
to any tax if assets are held for over 12 months. That tenure respectively. GST law also pro- of goods/inputs used for making invoice series for the same year, deposit tax under reverse charge.
might be bumped up to two years. Or, there could be a tax vides an option to supply the such goods which are subse- so long as the same series is not In such cases, the registered per-
imposed. In compensation, the double tax on dividend inputs or capital goods from the quently supplied as samples used across financial years. You son is required to issue a self-
may be cut, or the securities transaction tax might be cut place of business of the job work- without charging any considera- may have a different invoice invoice at the time of receipt of
or removed. er subject to the condition that tion, shall not be available as series for each location having goods or services and a payment
Another possibility: short-term equity profits will be you have to declare the place of input tax credit. consecutive serial numbers run- voucher at the time of making
added to other income for tax computation instead of business of the job-worker as ning across that series. payment to the supplier.
being taxed at a flat rate of 15 per cent. This could more your additional place of business, GST law prescribes that a dealer
than double collections since the average equity investor if the job-worker is not a regis- should maintain a consecutive Are there any prescribed limits Will GST be applicable on air
is in the highest income tax bracket. Taxing equity would- tered person. serial number for invoices issued below which a registered per- travel undertaken on or after
n’t bother FPIs, who work out of tax havens. But it may hurt in respect of supply of goods. If a son is not liable to deposit tax July 1, 2017, on tickets issued
the retail segment. What are the requirements for dealer is supplying goods from under the reverse charge before July 1, 2017, on which
Political promises mean little, but Mr Jaitley said he clearance of physician samples multiple locations, will there be mechanism? Also, what are the service tax was collected and dis-
would lower corporate tax rates to 25 per cent, all of three AMIT BHAGAT distributed free of cost? any requirement to maintain the documents that need to be charged?
years ago. This is his last chance. If he does, that could lend Under the GST law, supplies with- serial number of the invoice issued in case of a deposit of As the service tax has already
some upwards impetus. Start-ups are also praying that the I am a manufacturer of ready- out consideration to unrelated centrally? tax under reverse charge? been collected and discharged by
tax department will iron out dodgy interpretations of treat- made garments. If I send any parties are not liable to GST. CGST rules provides that an the airlines on the tickets issued
ing equity investments as capital gains. Individuals also inputs to the job worker, will it Generally, samples are supplied invoice shall have 'a consecutive Reverse charge on supply of prior to July 1, 2017, airlines shall
hope that the income tax exemption limit and tax brack- be treated as taxable supply? Can on a free of cost basis. Such sup- serial' number not exceeding six- goods or services received by a not be required to charge GST on
ets would be rationalised upwards to some degree. I supply the goods after comple- plies shall not be liable to GST as teen characters, in one or multi- registered person from an unreg- such tickets even though the trav-
Beyond this, the Budget could give us some clues about tion of job work from the place of long as these are supplied to an ple series, containing alphabets istered person has been deferred el date is on or after 1 July 2017.
the disinvestment process and bank recapitalisation plans. business of the job worker? unrelated party. or numerals or special characters till March 31, 2018. For other sup-
My take is that the degree of urgency in these areas You can send your inputs or capi- The GST law specifically hyphen or dash and slash sym- plies of goods or services which The writer is tax partner, PwC India.
depends on the degree of the government's confidence tal goods to a job worker without restricts input tax credit in bolised as '-' and '/' respectively, are subject to a mandatory Aditya Khanna, associate director, PwC
about being re-elected in 2019. If the BJP is less than con- payment of tax and also bring respect of goods disposed of by and any combination thereof, reverse charge, no limit has been contributed to this column. The views
fident about its re-election prospects, it's more likely to back the same, after completion, way of free samples. The tax paid unique for a financial year. A sup- prescribed below which a regis- expressed are experts’ own. Send your
push through things in a hurry. within one year or three years by the supplier for procurement plier can maintain multiple tered person is not liable to queries to yourmoney@bsmail.in

Newbies in small- and mid-cap space

and valuations in the mid and small- cult to zero in on quality stocks that
cap segment become more attrac- are available at a discount to their
tive, the fund manager should have intrinsic value. Experts think that
the flexibility to move down the the Indian market still offers oppor-

should invest for at least five years

With fund managers beginning to sound warning signals, it is best to be extra careful
SANJAY KUMAR SINGH
Recently, ICICI Prudential Asset
Management decided to shut down
two schemes run by its portfolio
management services (PMS) arm.
The two schemes are PIPE and
Small Cap Portfolio Series 1.
Together these funds will return
around ~7 billion to investors.
According to the asset manage-
ment company, valuations within
the small-cap space have become
very expensive. Says Nimesh Shah,
managing director and chief execu-
tive officer (CEO), ICICI Prudential
Asset Management Company:
“Small-cap stocks tend to outper-
form if you invest in them at an ear-
ly stage when valuations are cheap
and earnings growth is at a cyclical
bottom. At the current juncture, we
believe that valuations in small caps
is pricing in most of the positives,
including a sharp earnings recov-
ery.” When the fund was launched
(November 1, 2013), the price to book
value ratio of the Nifty Free Float
Small-Cap Index stood at 0.85 (P/E
was 24.75), while now it has risen to
around 1.93 (P/E 79.95; source: NSE).
“We are in a situation where valua-
tions are very rich and too much
money is chasing very few quality
small-cap companies,” says Shah.
While the practice of returning
money is not common, ICICI
Prudential AMC has earlier distrib-
uted capital along with profits in
ICICI Prudential PMS Wellness
Portfolio and ICICI Prudential PMS
Exports Portfolio. “This course of
action was in tandem with our phi-
losophy of identifying a dominant
theme, riding it, and then distribut-
ing profits and capital at an oppor-
Several fund houses have
restricted inflows
Date Name of fund
Dec 11, 2017 L&T Emerging Business
Dec 4, 2017 IDFC Focused Equity
Feb 20, 2017 DSP BlackRock Microcap
Oct 25, 2016 Mirae Asset Emerging Bluechip
Oct 17, 2016 Edelweiss Tax Advantage
Source: Clearfunds.com
tune time,” adds Shah. with a horizon of three-five years.
We also inform them that their
Others won't follow suit: Other money will be deployed gradually,
portfolio management service over a period of time, as and when
providers said that they don’t plan opportunities arise,” says Ajay
to shut down their funds or restrict Bodke, CEO and chief portfolio
inflows. “At present when investors manager (PMS), Prabhudas
come into our small-cap strategy, Lilladher. He adds that they zero in
we tell them that they must invest on the right valuation for investing
in a stock and then wait for those
valuations to become available.
Sanctum Wealth Management
currently runs a large-cap strategy
and a multi-cap strategy, and doesn’t
offer a small-cap strategy. It is cur-
rently advising investors to bet on
the multi-cap strategy. “There is a
dichotomy in the current market
environment. While valuations are
not as expensive in the large cap
space, they have not delivered high
growth. Mid and small cap compa-
nies have the potential to deliver
higher growth, but a large part of that
segment has become prohibitively
expensive. In such an environment,
we are recommending investors with
a moderate risk appetite to invest in
the multi-cap strategy,” says Roopali
Prabhu, head of investment prod-
ucts, Sanctum Wealth Management.
According to her, fund managers
need flexibility at this point to per-
form. If there is a sharp correction,
market cap curve, she says.
A welcome move: Financial plan-
ners think that returning of money
to investors is a positive step. “There
is a large amount of risk in the small-
and mid-cap space at present. It has
given fantastic returns in the past,
but if there is some negative news,
either on the global or domestic
front, this space could see a sharp
correction. This move of closing
down the fund and returning mon-
ey to investors is a very appropriate
one for managing investor expecta-
tions,” says Arvind A Rao, financial
planner and founder, Arvind Rao
and Associates. Currently, investors
say that if there is a correction they
will pump more money into the
markets. But when such a correc-
tion actually happens, the same peo-
ple may regret investing in the
small- and mid-cap space.
Be wary of the small- and mid-
cap space: The larger implication
for investors is that after the run up
over the past few years, fund man-
agers are finding it extremely diffi-
tunities over the long term, so
investors should not exit equities
entirely. “However, they need to
ensure that their asset allocation
doesn't get skewed. To achieve this
they should rebalance their portfo-
lios aggressively,” says Prabhu.
Any profit booked in the small-
and mid-cap space should be invest-
ed in a well diversified manner. “If
an investor has an investment hori-
zon of six to eight years, he could
make a 50 per cent allocation to
large-cap funds (higher if his risk
appetite is low) and 50 per cent to
mid- and small-cap funds. But if
someone needs the money in the
next two to three years, he should
invest in debt funds. Given the
uncertainty surrounding interest
rates, investors should not expose
themselves to high duration risk at
this stage and should stick largely
to accrual-oriented funds having an
average maturity of one-two years,”
says Rao.
Above all, treat this as a year for
defensive investing. Do not take
short-term bets on the small- and
mid-cap space.
https://t.me/EStore33
12 BRAND WORLD
>
ANALYSIS
The changing face of
sportswear brands
How brands such as Puma, Wildcraft, Woodlands are rewriting the marketing
playbook to cater to women consumers
T E NARASIMHAN
Chennai, 28January
F
or years sportswear
brands have had their
eyes trained on men. But
now women, with their grow-
ing engagement with the cate-
gory and rising purchasing
power, are forcing global and
local labels to realign their gaze.
While some companies are
using women’s voices to con-
vey their brands’ messages and
some are aligning with women
achievers in sports, the chang-
ing gender play is forcing
everyone to take a fresh look at
branding, product design and
retail strategies.
Debosmita Majumder,
head of Marketing, Puma
India, says “We saw a poten-
tial in women as a category to
grow way back in 2016 and the
brand has been capitalising on
that through marketing and
(targeted) offerings.” Others
are doing that too. “Today not
ECONOMY
>
Isro to transfer technology for its
GPS alternative to local firms
T E NARASIMHAN
Chennai, 28 January
India’s space agency will
transfer technology to build
devices for navigation,
including on smartphones.
This is part of an aim to
get more users for the home-
grown Navic (Navigation with
Indian Constellation) net-
work, a constellation of seven
navigation satellites and
India’s alternative to the US
GPS network. So far, Indian
Space Research Organisation
(Isro) has used these for
strategic purposes. It is now
slowly opening this for gen-
eral use; accuracy, it says, is
as close as five metres
(against 20-30 metres for
GPS).
The Space Application
Centre (SAC) at Isro said it
had developed the hardware
and firmware for intended
application. It will provide
technical details to Indian
> THE BS CROSSWORD
only for the products, even in
our campaigns we focus on
women customers,” Harkirat
Singh, managing director of
Aero Group that owns the
Woods and Woodlands brands
says. He adds that 40 per cent
of the products in his company
are being designed for women.
While the Indian market for
sportswear and gear for
women is still a small percent-
age of the total, companies say
that it is growing so rapidly
that they would be foolish to
ignore its potential.
Not just pink and shrink
For a long time men were the
sole focus of sportswear mar-
keters. Women bought from
the men’s section or not at all.
And then came the ‘shrink and
pink’ strategy, which meant
offering the same designs and
choices as men but, in smaller
sizes and feminine colours.
“Typically, it used to be
around 90 per cent of the
Isro is using Navic for strategic purposes. It is now slowly
opening this for general use. Navic’s accuracy, it says, is as close
as five metres (against 20-30 metres for GPS)
industry on request, for a
non-disclosure agreement.
User-trials are commenc-
ing for fisherfolk, with equip
500 fishing vessels to be
store was for men, now there
is equal division with a full
floor catering to women as
well as for men,” says Harish
Bijoor, a Bengaluru based
brand consultant.
Today women have more
spending power and are more
inclined towards sportswear,
casual athletic wear and fitness
and training gear say the com-
panies. Abhishek Ganguly,
managing director, Puma
India, speaking to the media
last year had stated that he
expects good growth in the
women’s wear category and the
segment to cross 30 per cent of
the business by 2018. Puma has
roped in Bollywood actor Disha
Patani as endorser and will
soon launch a women-focused
campaign in the country.
Both Reebok and Nike have
done that in the past. A year
ago, Reebok brought in
Kangana Ranaut as brand
ambassador and set up stores
managed only by women. Nike
equipped with Navic
receivers by the end of the
month. One can target big
shoals, based on the fishing
zone advisory that is part of
ACROSS
8 Sportingly Mr. Brookes came in
gay surroundings ! (6)
9 There’s no confusion after the
go-ahead (3-5)
10 Hardworking princess with tin
leg, perhaps ? (8)
11 Fashionable national leader,
outwardly young and vigorous
(6)
12 Head back in a wild rage, here
comes someone like the Major !
(8)
13 Whose is the change, sir? (6)
14 Teeming with support for illegal
Mexican immigrant (7)
17 From Rochester maybe, not from
Canterbury (7)
20 Face it, it’s just an
advertisement about a cafe (6)
22 Not put off, tackled crossword
again? (8)
25 Puts the lid on C, more than S (6)
26 What market traders pay for
https://www.estore33.com/
PHOTO: ISTOCK
Companies say that women
consumers could bring in
almost half the sales revenue
in the sports and fitness
wear and gear category
ran a campaign with women
athletes and had Deepika
Padukone helm its initiative to
promote sports among women.
Women are more demand-
ing, cost conscious and at the
same time loyal consumers,
says Singh and adds that both
Woods and Woodland used to
get around 15-20 per cent of
their business from women but
today it is already around 35
per cent. “Women will bring in
50 per cent and then overtake
men in the segment in the next
one or two years,” Singh says.
The owners of Wildcraft, an
Indian outdoor and adventure
products brand, Siddharth
Sood and Gaurav Dublish are
bullish on women consumers
too. Their brand is growing at
30-35 per cent and they see
women accounting for close to
40-50 per cent of sales.
Fitness, fashion and
social causes
The heightened attention from
the Navic system. The satel-
lite constellation’s coverage
area is up to 1,500 km around
the mainland. These also
allow broadcast of short mes-
sages — alerts, forecast,
directives, dangers — for
boats.
The receiver transmits raw
data over a Bluetooth link. An
application running on a
smart device like a mobile
phone or tablet having
Bluetooth connectivity can
decode and display the mes-
sages for users. This receiver
is designed as a battery-oper-
ated device. An Android
application has also been
developed to display mes-
sages on mobile phone or
tablet.
“Packaging is to be
designed by the vendor,
along with a battery charging
option. Vendor participation
is invited for production of
the hardware in large num-
bers,” said SAC.
everything in coach (8)
27 Place of fancy ? (5,3)
28 Bird seems quietly affectionate
(6)
DOWN
1 A daughter in jolly pickle (8)
2 A negative which, if flat isn’t
developed (6)
3 Stimulate with increased
intensive publicity (4,2)
4 A few cells together is what the
artillery has (7)
5 Great affinity with keenly
contested cup match (5,3)
6 Lace nets of superlative
neatness? (8)
7 A man of stone (6)
15 Gymnasium event finishes poor
people on them (4,4)
16 They may well be employed in
checking (8)
18 Assassin said to be a winter-
https://t.me/TheHindu_Zone
MUMBAI | MONDAY, 29 JANUARY 2018 1
DATA TRACKER
sportswear brands has come
with increasing awareness and
involvement in fitness and
sports among women.
Trust and the brand
The digital age has seen the trust between brands and consumers waning as
Wildcraft is cashing in on this
data has been used invade customers’ privacy just as much as it has helped
with a full-fledged women’s
footwear range for ‘active
personalise the brand promise. A recent study by Kantar TNS looks at the
lifestyle’ that includes boots for contentious issue of data exchange and what it means for brands. Anusheel
hiking/trekking/commuting. Shrivastava, executive vice president, India, Kantar TNS said, “The desire to
“We expanded our range for connect via social media has been the driving force behind a substantial part of
women in winter. That saw a the digital revolution in India, and as a result, engagement and trust on social
lot of good traction,” says platforms continues to be high. Brands need to act responsibly online to
Siddharth Sood. He and maintain the trust that they currently hold”
Gaurav Dublish say that 2018
will see the brand get more 5 steps to build trust with “To build and way up with the
women-centric. consumers and data protect trust,consumer
“Going forward I would see | Show your hand: Be | Offer the right
the tilt is going to be more brands need
transparent and tell people personal benefit: Ensure
towards women, with almost
why you need their data
to put the that there is a culturally
60 per cent of the shop floor
allocated to women’s wear and | Play up safety cues:
customer first”
appropriate incentive
40 per cent for men,” says Showcase high safety ANUSHEEL for the data share
Bijoor. With women on the standards and ability to SHRIVASTAVA | Give back: Brands that
radar, the companies say that resist breaches Executive VP, India, are ready to share
design will play a bigger role in Kantar TNS processed data develop
their scheme of things this | Stagger data requests: Start
with the safest and most more meaningful
year. Puma’s Majumder says,
“Just because we are sports fit- relevant information, and work your relationships with customers
ness brand, we are not shying
away from getting into fash-
ion.” Puma sys it sees itself as a CONCERN AROUND USE OF PERSONAL INFORMATION
brand that is not just aspira-
tional, but also one that is fash-
ionable and innovative.
By listening to what women
40% of global users are concerned about
the amount of personal infromation
that companies know about them
want, Singh believes that
brands can widen their scope 60%
of influence. It is a matter of 51% 45%
changing the mindset and if 32% 20%
brands can really do that, he 15%
adds, they will find that they
can reach out to the entire fam- USA France Hong Kong Nigeria Thailand Philippines
ily of consumers. Women are
also more experimental with
their tastes and that means that OBJECT TO CONNECTED DEVICES OPENNESS TO SHARING
brands have to pay more atten-
tion to design and variety with-
MONITORING ACTIVITIES INFORMATION FOR A REWARD
of people globally of people globally are
in the labels.
Most brands believe that
marketing for women also
43% object to connected
devices monitoring
39% open to sharing more
information online, if
means aligning the brand to a their activities they are offered a reward in return
gender-related social causes.
Puma for instance says that Indonesia 18% Brazil 63%
it wants to bring in independ-
ent voices to take up issues Thailand 22% India 48%
that women face on a routine
basis. Such communication, Kenya 35% Nigeria 41%
Majumder believes has a cer-
tain amount of stickiness. 54% 35%
UK Australia
Earlier Reebok had used
Kangana Ranaut to speak up 54%
against eve-teasing gender- HongKong Greece 23%
related pay discrimination. 59%
Wildcraft too plans to go down USA Denmark 12%
the same route, a campaign
around women’s issues is on Source: The Data Debate: Creating fairer value exchanges between people and brands, Kantar TNS
the cards.
1
Recent changes in central GST
as the case may be, issued in respect of the
said consignment. It shall also include the
central tax, state or Union Territory tax,
bills will now not be required for exempted
goods (except de-oiled cake), non-GST
goods and goods transported that are not
integrated tax and cess charged, if any, in considered as supplies. The refund claims
the document. of many exporters are held up due to mis-
Where the goods are transported by rail, matches thrown up by computer systems.
air or vessel, the registered person generat- So, the government has allowed Customs
ing the e-way bill, as a supplier or recipient, officers to process the claim of refund of
should furnish on the common portal not IGST paid on export goods. This welcome
only the information in Part B of EWB-01 decision will help clear refund claims of
but also the serial number and date of the many exporters where the mismatch has no
EXIM MATTERS railway receipt or air consignment note or material bearing on the eligibility for
bill of lading. The consignor or recipient refund. Detailed instructions from the
T N C RAJAGOPALAN who has furnished the information in Part- Central Board of Excise and Customs
A of EWB-01, or the transporter, may assign should clarify the extent of discretion vest-
The government has revised the Goods and the e-way bill number to another registered ed with the officers. It would have been bet-
Services Tax (GST) Rules for e-way bills, or enrolled transporter for updating the ter if the government had ordered refunds
allowed Customs officers to process the information in Part-B of EWB-01 for fur- based on the shipping bills and later taken
refund claims of exporters and restrained ther movement of consignment. However, up matters relating to mismatch.
advance authorisation holders who import once the details of the conveyance have Advance authorisation holders and
their inputs without payment of Integrated been updated by the transporter in Part B of export-oriented units which import their
GST (IGST) from exporting their final prod- EWB-01, the consignor or recipient who inputs without IGST payment may now
ucts on payment of IGST under refund has furnished the information in Part-A of export the goodsy without payment of IGST
claim. These and many more changes were EWB-01 shall not be allowed to assign the e- under letter of undertaking or bond. This
brought about through notification 3/2018- way bill number to another transporter. change is effective from October 23. The
Central Tax, dated January 23, that amends Henceforth, the unique number gener- status of export already made on payment
many provisions of the CGST Rules, 2017. ated shall be valid for 72 hours for updating of IGST is not known. Strangely, the same
E-way bills are required to be generated of Part B of EWB-01 but the validity of the e- treatment is given for import made under
where the value of consignment exceeds way bill will remain the same as notified ear- the Export Promotion Capital Goods
~50,000. The value shall now be determined lier. The details of the will be communicat- scheme.
by Section 15 of the CGST Act, declared in an ed to the supplier and recipient, who have
invoice, a bill of supply or a delivery challan to convey acceptance or rejection. E-way E-mail: tncrajagopalan@gmail.com
# 2948 > BS SUDOKU # 2411 > WEATHER TODAY’S FORECAST
O
Max/min temperatures in C
sports enthusiast (8)
NATIONAL
19 Disasters in which little credit
remains (7) Ahmedabad . . . . . . . . . . .Sunny 31/3
Aizawl . . . . . . . . . . . . . . . .Sunny 17/3
21 I see he is beastly, yet with great
power (6) Bengaluru . . . . . . . . . . . .Sunny 29/14
23 Dies when one tramples on it (6) Bhopal . . . . . . . . . . . . . . .Sunny 29/13
24 Bound to have lines in the circuit Bhubaneswar Partly cloudy 30/14
(6) Chandigarh . . . . . . . . . . .Sunny 23/11
Chennai . . . . . . . . . . . . . .Sunny 29/22
Delhi . . . . . . . . . . . . . . . . .Sunny 23/11
Guwahati . . . . . . .Partly cloudy 23/14
Hyderabad . . . . . . . . . . . .Sunny 32/17
SOLUTION to #2946
Imphal . . . . . . . . . . . . . . .Sunny 21/8
Indore . . . . . . . . . . . . . . . .Sunny 29/14
SOLUTION TO #2410
Very easy:  Kochi . . . . . . . . . . . . . . . . .Sunny 33/22
Solution tomorrow Kolkata . . . . . . . . . . . . . . .Sunny 24/11
Lucknow . . . . . . . . . . . . . .Sunny 21/7
HOW TO PLAY
Mangalore . . . . . . .Partly cloudy 33/22
Fill in the grid so
that every row, Mumbai . . . . . . . . . . . . . .Sunny 32/22
every Pune . . . . . . . . . . . . . . . . .Sunny 33/21
column and every Srinagar . . . . . . . . . . . . . .Sunny 11/-2
3x3 box contains
Surat . . . . . . . . . . . . . . . . .Sunny 35/22
the digits 1 to 9
Thiru’puram . . . . . . . . . . .Sunny 32/23
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

.
MUMBAI | MONDAY, 29 JANUARY 2018 BUSINESS LAW 13 <

BRIEF CASEN z M J ANTONY

A weekly selection of key court orders

SC suggests change in arbitration law

The Supreme Court last week suggested
The contract worker conundrum
Govt is trying to resolve the tug of war between employers and unions over contract workers
an amendment to the Arbitration and
Conciliation Act to avoid unnecessary REUTERS
delay and additional expenses in this SOMESH JHA Federation of India.
alternative dispute resolution Ten central trade unions, including
mechanism. As the law stands, it

T
he Union government’s move to
allows piecemeal appeals against allow industries to hire contract
interim awards. The court prefers a consolidated appeal. workers in ancillary businesses
The recommendation was made in its judgment, IFFCO vs and non-core activity has not found
Bhadra Products. In the dispute between IFFCO and Bhadra takers among both employers and
over a tender for defoamers, a retired Supreme Court judge trade unions.
was appointed arbitrator. He passed an interim order on The labour and employment min-
the question of limitation. This was challenged before the istry held a discussion on January 19
Orissa High Court by IFFCO. The question was whether the with businesses and unions on its pro-
interim order on limitation could be challenged as an posals to amend the Contract Labour
interim award. The Attorney General said yes, but Bhadra (Regulation and Abolition) Act, 1970.
argued it was only a question of jurisdiction and could not In a bid to strike a balance between
be called an interim award. The high court dismissed the the contrasting demands, the govern-
IFFCO appeal. The Supreme Court, however, set aside the ment had proposed amending Section
high court view and stated that the interim award could be 10 of the Act that deals with abolishing
challenged. The law says that an award includes an interim of contract workers as and when
award. But, in a given case, more than one award may be demanded by the workers.
necessary. In such cases, the arbitrator should consider The aim of the 1970 Act is “to regu-
“whether there is a real advantage in delivering an interim late the employment of contract labour
award or in proceeding with the matter as a whole and in certain establishments and to pro-
delivering one final award. Ultimately a fair means for vide for its abolition in certain circum-
resolution of all disputes should be uppermost in the mind stances.” According to Section 10, a
of the arbitration tribunal,” the judgment said. Central Advisory Contract Labour
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Board recommends abolishing of this
category in certain areas of an entity
Notice before cancelling trademark based on various parameters, including
The Bombay High Court has ruled that whether the work was of perennial
the registration of a trademark cannot nature or not. The central government,
be removed without giving notice to based on the Board’s recommenda-
the company owning it. Even if the tions, bans hiring of contract labour
owner of the trademark neglects to through an official notification.
apply for renewal of the trademark, the The ministry had proposed on the
Registrar of Trade Marks cannot one hand, discouraging hiring of con-
unilaterally remove the name, the high court stated in its tract workers in “core activity” of
judgment, Kleenage Products Ltd vs Registrar of Trade businesses and, on the other, allow-
Marks. In this case, the company was using its registered ing hiring of such workers in “non-
trademark Klitolin for its washing and cleaning core activity”. The present law sug-
preparations for a long time. But in 2009, it inadvertently gests a firm cannot hire contract
failed to apply for renewal of registration. The registrar then workers in jobs perennial in nature or
removed the trademark from the list. He also did not permit round-the-clock.
the company to renew or re-register the name. The “The issues arising out of the pres-
company moved the high court against the denial and ent law were that the industry was
succeeded. The judgment emphasised that if the registered apprehensive in hiring contract workers
proprietor did not apply for renewal, the Registrar must for non-core activities such as house-
notify him of the approaching expiry of the trademark. Prior keeping, gardening, security, catering
notice is a mandatory requirement because loss of the and maintenance of establishment,”
trademark has serious consequences for the company. The said a senior ministry official “And,
court directed the Registrar to consider the company’s these are activities in which an estab-
application for renewal of the trademark. lishment requires workers throughout
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> the year. So, trade unions argue that it’s
perennial in nature in a way.”
Samsung gets relief on VAT However, all the employer bodies
The Allahabad High Court has ruled unanimously opposed the move in the
that Samsung (India) Electronics is not January 19 meeting, sources said. “It is
liable to pay VAT (value-added tax) highly unlikely that the proposal will
separately on the mobile phone pack go through. Industry hires a signifi-
which also contains its charger. The cant proportion of contract workers in
commissioner of commercial taxes
had maintained that the charger,
although sold as part of a composite package, was liable
CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970
Objective: To regulate
the employmentof
contractlabour in
certain establishments
and to provide for its
abolition in certain
circumstances
Criterion for
abolishing contract
labour: Based on
whether workin an
establishmentis of
perennial nature or
not. Lawdiscourages
contractlabour
hiring in perennial
nature ofwork
its core businesses, too. In an automo-
bile company, nearly one-third of the
workers are on its payroll and the rest
are contract workers. So, for instance,
in the car assembly department, there
are both permanent and contract
What the govt wants: abolished in perennial nature of work,
„ To change the criterion based on core irrespective of whether it is in core or
and non-core activity in an establishment non-core area in an establishment
„ Allow contract labour in non-core „ Contract labour should be made
activity and discourage contract labour permanent if employed continuously
in core activity in an establishment for more than two years
Why business is opposing this: Where govt and unions do not
„ Difficult to distinguish between core see eye-to-eye:
and non-core activity in changing „ Former thinks business should get a
business environment free hand to hire contract workers for
activities such as housekeeping,
„ The move will tie its hands in employ-
gardening, security, catering and
ing contract labour in core areas of work.
Will impact automobile firms the most maintenance of establishment
„ As these activities are carried out
How trade unions see it: throughout the year, unions are making
„ Contract labour should continue to be a case for permanency in these areas
workers,” said an industry executive, ment. “With technological advances,
on condition of anonymity. what is core and non-core activity is
Another executive said the biggest becoming fuzzy. Hence, wrong inter-
worry will be distinguishing core and pretation (of the definition) can lead to
non-core activity in an establishment challenges and disputes,” said Pradeep
in the changing business environ- Bhargava, president, Employers’
the Left-affiliated Centre of Indian
Trade Unions and the Congress-affili-
ated Indian National Trade Union
Congress strongly opposed the move
and said both core and non-core activ-
ities were essential in “integrated
activities” of an establishment. The
RSS-supporting Bharatiya Mazdoor
Sangh said hiring of contract labour in
work of perennial nature should be
banned in both core and non-core
activities in an establishment.
While unions have been demand-
ing a prohibition on the hiring of con-
tract labour in various categories of
jobs, business has always demanded
flexibility in hiring of labour.
The government’s proposal was
based on the recommendations of the
Second National Commission on Labour
in 2002. “Contract labour shall not be
engaged for core production, services or
activities. However, for sporadic season-
al demand, the employer may engage
temporary labour for core production or
service activity,” it had said.
However, both unions and the
staffing industry cheered the govern-
ment’s proposal for mandating con-
tractors to obtain a one-time national
licence, valid for three years, from the
central government, to work anywhere
in the country. Under Section 13 of the
present contract labour law, contrac-
tors are required to obtain a licence
for undertaking each project from dif-
ferent state governments.
“Local contractors often exploit
workers and monitoring them
becomes an issue for the government.
A three-year national licence for con-
tractors will lead to transparency,
avoid duplication of efforts and will
ensure staffing organisations are cau-
tious about conducting its business,”
Rituparna Chakraborty, co-founder
and executive vice-president at
TeamLease Services said. Adding the
move was in line with the
International Labour Organisation’s
Convention 181 on private employ-
ment agencies.
“The move will ensure contractors
with a good track record and highest
level of compliance are able to obtain
a licence from the central govern-
ment,” she added.

‘We expect India to improve its rank’

to be taxed at the higher rate of 14 per cent. The tribunal
upheld the view. But on appeal, the high court set aside
the authorities’ view. The judgment explained that the
primary intent of the contract appeared to be the sale of
the mobile phone and the supply of the charger was at India has fared poorly in the US Chamber of Commerce’s International Intellectual Property Index over the past five Do you think India will be able to break the jinx of
best collateral. The predominant intent of the transaction years. This year could be different, says PATRICK KILBRIDE, vice-president, international, Global Innovation Policy featuring in the bottom 10 per cent of the Index
must be recognised. The charger can possibly be Center (GIPC). On a recent visit, he shares with Sudipto Dey what makes him optimistic on India’s performance in the over the past five editions?
purchased separately also. However, in case it is placed in latest edition of the index, slated for release first week of February. Edited excerpts: I don’t have the final results but I will not be sur-
a single retail package along with the mobile phone, the prised if India improves its score. We have also gro-
primary intent is the purchase of the mobile phone. Also, GIPC recently went through a re-branding exer- preneurs, streamlining of registration rates and wn the Index – it started with 11 countries and 25
the composite package bears a singular MRP, the court cise. What is the idea behind the changes? measures put in place to use IP as an economic indicators. This year, in its sixth edition, we have 50
pointed out. Instead of Global Intellectual Property Center, it asset. In all these indicators, we expect India to do countries and 40 indicators. The Index has become
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> is now Global Innovation Policy Center. The focus relatively well. Our expectation is that India will more sophisticated, with bigger sample size. In fact,
is more on outcomes than means. We talk to gov- improve its rank, both in absolute terms and in India’s performance will be in line with the World
New owner not liable for past power bill ernments about how they achieve innovation relation to other countries. Bank’s Ease of Doing Business rank.
The Delhi High Court last week outcomes; what governments are doing to help
dismissed the appeal of Tata Power domestic innovators to succeed. Do you see a perceptible change in Any implementation concerns around the
which demanded from an auction In the process of re-branding, we India’s IP regime over the past year or National IP Policy?
purchaser the electricity dues of the realised there is a broader space in the so? There is a degree of uncertainty fostered by gov-
previous owner. The consumer forum knowledge economy. Patents and On the positive side, we are very ernment rhetoric, political rhetoric. There is still
had directed the power company to trademark are only the tip of the impressed with the effort to implement some legacy of defensiveness to international IP
give a new connection to Neeraj Gulati, iceberg. There is a broad class of PATRICK KILBRIDE the National IP Policy. There has been rights. Price controls are something the US indus-
who had bought a shop in an auction by the debt recovery intangible assets that is facilitating Vice-president, a lot of effort to raise IP awareness, try is concerned about.
tribunal under the Income Tax Act. Tata Power contested it in innovation and becoming increasingly international, Global appointment of new examiners, etc.
the high court arguing that she was liable to pay the dues. important. These need to be accounted Innovation Policy These are positive steps that will help Are you planning any fresh effort to re-engage
Rejecting the prayer, the high court upheld the consumer for, they need to be valued, protected Center, US Chamber build a domestic constituency for IP- with Indian government and the industry?
forum ruling which had explained that she had purchased and promoted. We are trying to help of Commerce led innovation. GIPC has been running for several years a USIP
the property by way of auction on "as is where is and governments define what the new On the negative side, we continue cooperation dialogue with China. In this, a group “There has been a lot of
whatsoever there is basis". It did not constitute a charge or economy requires in terms of public policy. to see Indian representatives in multilateral of senior US and Chinese policy experts have effort to raise IP
liability to make the payment of outstanding dues raised by space pushing the rhetoric that criticises IP as a informal discussion on the future of IP and inno- awareness, appointment
Tata Power. She cannot be made responsible to clear the Is this change also reflected in the annual interna- barrier to access. There is a bit of disconnect vation policy. This helps to arrive at some com- of new examiners, etc.
electricity arrears, the high court ruled. tional IP Index? between what India is doing in its home and the mon understanding on how IP could help pro- These are positive steps
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> That might be so in the future. Right now, the message it is giving out through multilateral mote innovation in a domestic economy. We that will help build a
index is more focused on IP. This year, we have agencies. We hope what India is doing in the think the same model could be replicated for domestic constituency
Gratuity immune from attachment expanded the matrix. We added a seventh category domestic market will mark the beginning of India. When the private sector sits in a dialogue for IP-led innovation”
A division bench of the Calcutta High on systemic efficiency. This includes government bigger domestic investments in IP-led innovation table, along with the government, the conversa-
Court has ruled that United Bank of India effort to raise IP awareness among domestic entre- and creativity. tions could be more result-driven.
cannot attach the gratuity payable to its
employee on the ground that he owed
money on account of a housing loan
that had been advanced by the bank to
him while in service. He was dismissed
from service though he had not caused any financial loss to
the bank. But, his gratuity was not paid. When he moved the
Why India’s capital gains regime needs a change
court, the bank deposited the sum in his bank account, them, all have seen amendments to the following reasons: the factors is ex-ante calculation of to an amendment in the 2016 Budget,
which was frozen. He again moved the single judge of the the regime. 1. India’s thirst for capital will grow post-tax returns. Though other com- calming the market nerves. In sum-
high court, who stated that the banker's lien could not be In December 2016, Prime Minister and a stable regime will attract an petitive factors such as the growth of mary, for fund managers (and indi-
exercised over the terminal benefits of an employee. Gratuity Narendra Modi hinted at change in incremental dosage of capital to mar- the economy, the performance of the rectly all forms of investors, institu-
under the Payment of Gratuity Act had immunity. The bank the capital gains tax regime. “… those kets and business enterprises. financial markets, rule of law, stable tional and non-institutional) a
also could not adjust that amount for arrears of the housing who profit from financial markets Domestic, listed enterprises with and predictable government policies predictable tax regime is essential.
loan. The obligation is based on public policy. Even the must make a fair contribution to proven business models and credible do play an equally important role, tax Bold domestic tax and treaty policy
employee cannot sign away his right under duress. nation-building through taxes ... To governance will continue to attract certainty, particularly in the context steps in 2016 and 2017 have created a
Upholding the order of the single judge, the division bench some extent, the low contribution of FPI. of India, is an important factor. level-playing field, a point made by
characterised the bank’s action in depositing the amount in a taxes may also be due to the structure 2. A material part of corporate and 4. FPIs and domestic mutual funds are PM Modi.
frozen account as “sharp practice” and deprecated it.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SIMPLY TAX of our tax laws … We should consider
methods for increasing it in a fair, effi-
domestic savings will find its way into expected to determine their net asset
investments in entrepreneurial busi- value on a daily basis. Hence, it is of
Therefore, any rejig in the regime
will require a degree of consistency in
MUKESH BUTANI cient and transparent way...” nesses and capital markets. India has paramount importance to ascertain holding period (across a class of assets
Interest after maturity date of deposits The extant law has six rates of tax witnessed a visible its tax obligations (for or specified class of assets), stable and
The National Consumer Commission has The capital gains regime is due for a (nil, 10, 15, 20, 30, and 40) without fac- rise in the post-demo- the investors) with pre- low tax rate with clarity on withdraw-
ruled that the postal department was change and here are the reasons why toring in rates that are derived due to netisation period in India’s thirst for cision. al/reduction of STT.
bound to pay interest at the rate of six — the extant law is complex, unwieldy, indexation benefits coupled with the assets under man- capital will grow 5. Changes in the 2017 In conclusion, simplicity should
per cent on deposits which were lying and far from simple. The rates of tax securities transaction tax (STT) levy agement of domestic and a stable regime Budget address tax- guide the lawmakers to have:
with it after the maturity date and not vary for various classes of taxpayers for listed securities traded on the floor mutual funds and FPI will attract an evasion concerns of „ One rate or an exemption for all
received by depositors of public — residents, non-residents, and for- of the exchange. investments. Despite incremental dosage the government on the forms of taxpayers.
provident fund (PPF). Several ‘Hindu eign portfolio investors (FPI) — and Though the principle of horizontal fears of the US inter- of capital to markets circulation of unac- „ Let the holding period stabilise at 24
Undivided Families’ had started PPF accounts though it was differing rates are prescribed based on equity should guide the policymakers est regime, the global and business counted income months for all forms of assets.
not permissible. But, the postal staff were negligent and the options to claim indexation benefits. in taxing passive income (such as cap- outlook towards enterprises through misuse of cap- „ Levy tax at moderate rate and reduce
deposits were received. Even after maturity they were not The holding period for characterising ital gains on asset class, in general) emerging economies ital gains exemption the slabs to three — exempt, 5 and 10
paid with interest. This led to several complaints before the short and long terms varies — 12 and active income (such as salaries is indicative of confi- for listed securities per cent, with a corresponding reduc-
Raipur district consumer forum. They were all dismissed on months for listed securities, 24 months and business profits) at comparable dence in India’s capital markets. through the trading of penny stocks. tion or withdrawal of the STT.
the ground that the deposits were not valid. But on appeal, for unlisted and real estate, and 36 rates, most nations, depending on eco- 3. Any form of tax (levied on transac- A case in point is the controversy „ Any upward revision of the tax rate,
the Chhattisgarh state commission ordered the postal months for other classes of assets. nomic considerations, either exempt tions or on gains) is a pass-through on levying the minimum alternate tax or the holding period, should be suit-
authorities to pay the depositors the amounts with nine per Focusing on the capital gains regime them or tax them at concessional rates. cost for FPIs and domestic mutual (MAT) on FPIs as a result of actions of ably grandfathered.
cent interest. The department appealed to the National for securities (listed and unlisted) India follows the latter except exempt- funds as investors eventually bear the the tax administration in 2015. It’s only
Commission. It reduced the rate of interest to six per cent. But transactions, in the last 26 ing gains from listed securities. cost of such levy. For fund managers, at the intervention of the senior-most The author is founder, BMR legal and views
it upheld the finding of deficiency of service on the part of the Budgets/Finance Acts since econom- The regime needs to address sim- the capital gains tax does become a political leadership that the Justice AP are personal
authorities. ic reforms of 1991, barring nine of plicity, stability and predictability for matter of competitive choice, as one of Shah Panel was constituted, and it led Twitter @mukeshbutani
https://t.me/EStore33
14 STRATEGY
“We are competing with big pharma
companies but do not have similar
resources. We have to find a way to
succeed with very limited resources”
HABIL KHORAKIWALA
Chairman, Wockhardt
> .
Insurers warming to wearables
VANTAGE POINT
INSIGHTS FROM CUTTING-EDGE RESEARCH
Time for governments to
transform online experiences
Citizens want governments to transform online services
to be more like the private sector, according to a global study
released by Adobe and WPP’s government and public sector
practice. The research found that governments in the
countries represented in the survey need to look beyond a
presence online, and more on delivering experiences that
are personal and relevant to the user, in line with the
experiences widely delivered by private organisations.
While the need for modernisation of government
services is recognised across countries, this study examines
citizens’ perspectives on what impacts their interactions
with government online. Some of the most popular specific
improvements to
government services
requested were: pre-
filled tailored inform-
ation; instant online
communication for
help; and being offered
additional relevant
information. “We know
trust in government is
generally low, and that positive digital experiences increase
citizens’ trust,” said Jace Johnson, vice president, global
government relations and public policy at Adobe.
To understand what drives a positive experience of
online public services, researchers explored five dimensions
of experience: citizen journey, mobile, design, relevance and
relationship. Researchers found that citizens ranked the
more advanced and emotive dimensions, including
relevance, relationship and design, as “most important” to
their overall satisfaction with online government services.
Yet across countries, respondents said their governments
are performing better on the more functional components
of experience — citizen journey and mobile functionality.
Telecom market perceived as
too complex by consumers
Consumers perceive the telecom market to be too
complex. With six in 10 smartphone users grappling with
the complexity of mobile data plans, there is considerable
misalignment between what users buy and what they use.
With only three in 10 smartphone users satisfied with the
way their operator presents plans online, the digital
telecom experience is neither simple nor effortless. This is
one of the six calls to action from consumers that
operators need to act upon to provide a foundation for
adoption of 5G technology, according to an Ericsson
report titled Towards a 5G consumer future. The report
represents the views of 800 million smartphone users.
Consumers also
aren’t counting on
unlimited data plans,
but are looking for a
sense of the unlimited.
The average
smartphone user has
31 gigabytes of unused
mobile data left over
per year. Two in five
consumers would like to use this excess as currency and
expect to be able to save, trade or gift unused data.
Faster broadband speeds and fair wireless contracts
are considered more important than the data buckets that
dominate the market. Also, contrary to the belief that
consumers are uninterested in 5G, globally the idea of 5G
services appeals to 76 per cent smartphone users; 44 per
cent are in fact willing to pay for 5G. Over a third expect 5G
to offer capabilities beyond speed, network coverage and
lower prices: improvements such as better battery life and
the ability to connect not only devices but also Internet of
Things. Moving towards a 5G future, consumers are
calling on operators to avoid baseless marketing slogans
and instead focus on real network experience.
https://www.estore33.com/
“The main model workshop business failed.
We came at a time when real estate prices
were very high. The same locations are
today available at 50 per cent rent”
JAGDISH KHATTAR
Chairman and managing director, Carnation Auto
STATSPEAK
TALENT HUNT
Finance (100 per cent) and IT
(87 per cent) sectors in India feel
the need for a highly skilled and
stable talent pool, and aptly
skilled workforce, thus moving
away from meeting basic needs
to addressing different
priorities, according a survey
report by assessment and skill
measurement company Mettl
WILL TALENT
ACQUISITION
BE A PROBLEM
IN YOUR
ORGANISATION
IN 2018?
14.3 85.7
No Yes
‘We offer every consumer ‘meri waali chai’’
Unlike coffee where standardisation to some
extent is possible, tea preferences vary greatly
across regions, NITIN SALUJA tells Sangeeta Tanwar
NITIN SALUJA
Founder & CEO, Chaayos
How did you identify the business
opportunity in chai cafés?
We are a tea drinking nation. A tea café chain
was possibly something that was waiting to
happen. Imagine, in terms of business
opportunity on the consumption side, we are
looking at about 30 cups of tea and one cup of
coffee. Today, all the coffee brands put
together account for 2,000 cafés. In the
evolution of coffee cafés, Starbucks has been
able to achieve what it has in the West
because they are coffee drinking nations.
Back in India the question that we asked
ourselves was, what is it that the bulk of India
is looking for? In the West people wake up
and head for their favourite brewery. In India,
most of us reach out for a cup of tea. Talk of
tea and we realise that Indian kitchens end up
with the same brand of tea year after year on
their shelves. Unlike coffee where
standardisation to some extent is possible,
tea preferences vary greatly across north,
south, east and west. In fact, within families,
every member has a variant of “meri waali
chai” (my cup of tea).
Since the tea palate of Indian varies vastly,
from day one we decided that however
arduous a task it may be but we will offer our
customers “meri waali chai”.
https://t.me/TheHindu_Zone
MUMBAI | MONDAY, 29 JANUARY 2018
“It is important for enterprises to
make investments in reskilling and
upskilling employees and prepare
them for digital-age careers”
RAJESH GOPINATHAN
Chief executive officer and managing director, TCS
way to engage with young customers and encourage
them to buy insurance. “The segment of customers
under 35 years is very active digitally and is turning
to technology to stay fit,” he says, adding that by
2019 two out of five Internet users are expected to be
using a health app with likely engagement with such
Private RITWIK SHARMA tools of up to 50 per cent. “This gives us a huge oppor-
tunity to promote holistic wellness by leveraging
companies
L
ess than one-third of India’s population enjoys personal health care devices that are capable of track-
any form of health insurance, with private ing and relaying medically useful information.”
are looking players reportedly penetrating merely five per Last year, Max Bupa announced a tie-up with fit-
cent. Given the vast challenges and opportunities ness technology firm GOQii to provide users access
to work offered by the country’s health care sector — served to the latter’s personalised wellness engine. Accor-
with fitness largely by private companies — insurers view tech-
nology as a key tool to innovate products and there-
ding to the International Data Corporation, as of Q1
2017, GOQii led the wearables market in India with
trackers to by exploit an untapped market. No wonder, private 20.8 per cent share, followed by Xiaomi and Fitbit.
health insurers are looking to work with fitness track- Abhishek Sharma, chief marketing officer and
incentivise ers and wearables firms to help design coverage plans co-founder, GOQii, explains the opportunity for com-
a healthy that incentivise a health-conscious audience.
Sandeep Patel, CEO and MD, Cigna TTK Health
panies in this space is not in the hardware aspect, giv-
en that devices like smartphones can perform func-
audience Insurance, points out apps and wearables help mon- tions like wearables. “Where the fitness tracker or
itor a user’s health and a healthy customer is consi- wearable add value is as a data capturing device, and
dered a low-risk one. “A healthy profile of customers the ecosystem approach which we have is the one
is always beneficial for a health insurance firm. The that can help users in defining any kind of mean-
data captured from apps/wearable devices can help ingful intervention for their health.” The impact on
KEEPING predict the health of the customer and take necessary
steps if the health needs any improvement.”
the health of the user is therefore critical.
The scope of the wearable device is in capturing
TRACK On December 6, 2017, the Insurance Regulatory the relevant information. GOQii defines itself as a
and Development Authority of India constituted a smart preventive health care platform, as against a
„ Wearables help working group to examine innovations in the insur- tracker, and it gives wearables free as part of the sub-
monitor a user’s health ance sector that involve wearable or portable devices. scriptions to customers. It also provides the services
and a healthy customer This, Patel feels, is an encouraging step that will pro- of a care team that includes doctors and experts to us-
is considered low-risk pel the use of wearable devices that can be synced ers. “That’s what the user wants today,” says Sharma.
with health insurance. The partnership with Max Bupa is based on the
„ By 2019, two out of Cigna TTK’s product called “Get ProActiv” is de- proposition that a healthy customer gets a better in-
five Internet users are signed to reward people to be physically active. It is surance premium. “Insurance is still a push product
expected to be using a integrated with Cigna TTK’s innovative Healthy in India, and not a pull product primarily because we
health app with likely Rewards Program allowing customers to earn valu- don’t feel the need of it. The problem is that a healthy
engagement of up able incentives by tracking their activities through consumer is subsiding the cost of an unhealthy con-
to 50 per cent “Get ProActiv” by integrating select wearable devices. sumer,” says Sharma, adding that a fit consumer
Healthy Reward points are earned on the basis of the being bracketed into a particular based on age, gen-
„ The opportunity for quantum of physical activity, which then translate der et al is unfair. The tie-up with Max Bupa therefore
wearables is not in into lower health insurance premiums or increased aims to better profile consumers — enabling them to
terms of hardware, benefits of up to 10 per cent of the premium amount. get healthier and also the insurance industry to have
but in adding value as According to Ashish Mehrotra, MD & CEO, Max a better understanding of the consumer base.
data capturing devices Bupa Health Insurance, offering pre-emptive well-
ness solutions for maintaining health is an effective More on business-standard.com
SKILLED WORKFORCE IN DEMAND
2
11
System
admin/
office admin
Blue collared
12
Lower skill level
39
Technical/ 36
trade Higher skill
management level
NEED FOR STABLE TALENT POOL AND
SKILLED WORKFORCE
Finance 100
Pharma 82
ORGANISATIONS Manufacturing 81
THAT HAVE 67.8 87.6 Retail 76
AN INCREASED 2016-17 2017-18 IT/ITeS 87
HIRING BUDGET
SOURCES FOR FINDING TOP TALENT
Social media recruitment 36.17
ORGANISATIONS External recruiting* 23.83
THAT WILL HAVE 64.5 76.3 Talent sourcing firms 18.64
AN INCREASED 2016-17 2017-18 Internal referrals 13.36
HIRING VOLUME Talent pipelining 9.00
* (job fairs, campus)
All figures in % Source: State of Talent Acquisition in India 2018, Mettl
Having started in late 2012, Chaayos now has
an extensive food menu as well. This has
seen your average ticket size go up. So, what
are the innovations driving your food
experiments?
Our average ticket size with tea and food
included is ~250. It is natural behaviour for
Given the varying palate of Indians how have people to ask for something to eat with tea.
you developed standardised products for We have been tapping into this need. Over the
consumers with individual choices? last five years, our food menu has become
Our starting point was to figure out what kind more conducive for all day consumption.
of tea the country drinks. And the answer to Now we have food offerings that consumers
that is, there is no one tea that India drinks. can pick from morning to night to go with tea.
Tea made in my house would be different This roundness of the food menu has come
than that in yours. Within families people about as a result of constant innovation. For
make and consume different types of tea. example, we wanted to come up with a
There is no one type of chai. Thus, we decided paratha offering for a good two years.
that we are not going to give you Chaayos tea, Initially, we came up with a stuffed paratha
rather we will give each consumer “meri but soon realised that we could not keep it
waali chai”. So, we custom-make every tea crisp and super savoury. After working on it
and this calls for extensive training for two years, we ditched it. Next,
of our boys and girls in the café. We With changing we got a Malabar paratha saying
have invested heavily in consumption we will not put anything inside the
technology in the background so behaviour and paratha but put the stuffing on top
that we can consistently come up preferences, of it. People lapped it up calling it a
with your (consumer’s) version of consumers today desi pizza with the stuffing on top.
cup of tea. With access to a lot of are open to With changing consumption
consumer data, we have been able experimentation. behaviour and preferences,
to standardise and perfect our This works in consumers today are open to
internal processes of picking the our favour experimenting and trying new
right tea leaves, quantity of ginger, things. And this works in our
sugar and other ingredients to serve up “meri favour. Our Malabar paratha goes well with
waali chai”. This way ordering becomes easy. lunch and dinner. We also have mutton
The objective is to perfect the ability of cutlet and bun samosa. The entire spread
making the same cup of tea (according to of the menu is centred on chai. We run our
individual preferences) over and over again. own kitchen spread across 2,000 square
The idea is to ensure that every customer feet with 35 people. The food is directly
looks at Chaayos with a high degree of delivered to our cafés from this
reliability of getting her own variant of a cup centralised kitchen.
of tea every time she visits Chaayos. The
moment we do this, it is game won for us. More on business-standard.com
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

16 THE SMART INVESTOR MUMBAI | MONDAY, 29 JANUARY 2018

BSE 200: TOP 5 GAINERS OF LAST WEEK QUICK TAKE: STREET CONFIDENCE RISING ON L&T “A NEW LONG-TERM GAINS TAX ON EQUITIES WOULD
BSE price in ~ Jan 19, ‘18 Jan 25, ’18 % chg The stock of Larsen & Toubro (L&T) scaled to new highs and NOT ONLY HURT MARKET SENTIMENT, BUT ALSO
Vakrangee 445.6 505.4 13.4 was among the top Sensex gainers on Thursday. Rising order
Escorts 771.1 835.5 8.4
DOMESTIC EQUITY INFLOWS. OUR BASE CASE IS THE
inflows is providing confidence on the company’s prospects
Tech Mahindra 552.6 598.6 8.3 and analysts believe that a revival in execution of large DEFINITION COULD BE INCREASED TO THREE YEARS”
IDBI Bank 60.4 65.0 7.6 domestic orders secured by L&T in recent times will drive SANJAYMOOKIM
ONGC 193.6 208.3 7.6 earnings India equity strategist, Bank of America Merrill Lynch
<

Life insurance stocks can

the major concern for HDFC Life
isn’t its financials, but steep valu-
ations, due to the recent stock
rally. Analysts say that it trades at
a significant premium to SBI Life
been an underperformer lately.
Initially the Street wasn’t per-
turbed when the merger with
STREET
HDFC Life was called off last year.
SIGNS
In the September’17 quarter how-

secure your portfolio

and I-Pru Life. Citi, for instance, ever, there were signs of slowing
has initiated ‘sell’ on the stock pri- growth, even as overall numbers Galaxy Surfactants at30% premium
marily for its valuations. Those at met expectations. Growth was Shares of chemicals manufacturer Galaxy
Nomura also feel that this factor optically lower due to a tilt Surfactants are changing hands in the grey
could restrict HDFC Life stock’s towards lower-ticket protection market at 30 per cent premium. The
near-term performance. A decent business and muted growth in company’s ~9.3-billion initial public offer,
Better prospects due to faster WHAT LIES AHEAD correction, however could pro-
vide entry to long-term investors.
higher-ticket Ulips, a fast-grow-
ing segment. This apart, if the dis-
the biggest this year, will open for
subscription on January 29. The price band
financialisation FY19 estimates (~ billion) I-Pru Life SBI Life HDFC Life Max Life
I-Pru Life: Improving
tribution channel with Axis Bank, for the IPO is ~1,470 to ~1,480 per share but
Net earned premium 322.0 343.0 282.0 149.0 which accounts for over half of grey market operators are willing to pay as
of savings Year-on-year growth (%) 20.1 27.5 19.5 18.3
product profile Max Life’s new business is dis- much as ~2,000 apiece, said market
Nearly six quarters after listing, turbed, it could affect financials players. Meanwhile, the premium on the
and fewer Net profit 18.6 12.7 12.0 7.1 investors are acknowledging that further. With this likely overhang, recently-concluded IPO of Newgen
listed players Year-on-year growth (%) 11.9 13.9
Return on equity (%) 23.4 18.1
26.3
24.1
18.3
22.6
it could be foolhardy to avoid I-
Pru Life for its high exposure to
Nomura recently said that Max is
the lowest in their pecking order
Software and Amber Enterprises have come
off slightly. Traders say this is because the
augur well Price/Embedded value (x) 2.5 3.0 4.2 1.7 equity-oriented Ulips. The latest among the listed life insurers. small and mid-cap stocks have not
Source: Nomura Q3 results stand testimony to the participated in the recent rally.
HAMSINI KARTHIK same. Despite 82 per cent of its SBI Life: Helped by diverse PAVAN BURUGULA
Mumbai, 28 January YEAR-T0-DATE NEW BUSINESS APE (%) revenues coming from Ulips, I- products
30 Pru Life’s VNB margin stood at Despite being the second largest Marketplayers getbullish on Praj
With the Centre making its intention clear

I
nsurance was 24.4 17.5 per cent; a near two-fold player, SBI Life is Citi’s top pick in
among key themes 22.4 increase over the past year. While the sector. Its strong distribution that cars would, sooner or later, have to run
that played out last 20 the share of high-yielding partici- network led by State Bank of on bio-fuels or batteries, many market
year, whether life or pating policies increased from 10 India and balanced product mix players are seeing an opportunity in Praj
ILLUSTRATION:BINAY SINHA

general. Yet, barring
HDFC Standard Life,
which more than dou-
bled since its listing, not
all stocks received the
same investor interest.
That phase is slowly
changing and foreign bro-
kerages, such as Nomura
and Citi, feel life insurers could be
a viable option in the financial sec-
tor. Analysts at Citi defend their
premium valuations and say they
are in line with the superior multi-
ples enjoyed by private sector
banks and non-banking finance
companies. “Life insurance is a
retail financial services product
with significant under-pene-
tration in India. With a shift
towards financial savings, which
is under way, the life insurance sec-
tor should deliver healthy growth,”
the analysts add. Given that there
are only four listed players,
investor interest is expected to be
well-spread between them. For
Nomura though, the pecking order
is ICICI Prudential Life (I-Pru Life),
13
10 7.9
0 sistency ratio (reflects business
I-Pru Life SBI Life HDFC Life Max Life
* APE is annualised premium equivalent; Source: Brokerage reports
SBI Life, HDFC Standard Life value of new business (VNB) mar-
(HDFC Life) and Max Life. gin of 22 per cent, a rise in unit
linked insurance plans (Ulips)
HDFC Life: Too much, too fast from 50 per cent in FY17 to almost
With strong listing gains, HDFC 59 per cent in Q3 came as a sur-
Life was quick to grab the atten- prise. While Ulips are still within
tion of many analysts. While its the guided range of 50-60 per
December quarter (Q3) numbers cent of HDFC Life’s total portfolio,
didn’t disappoint, with the insur- analysts say they would monitor
er yet again posting superior it’s performance on this front. Yet,
per cent last year to 13.5 per cent
in Q3, better realisations of newly
launched products (including
Ulips) and improvement in per-
retained) have also played a key
role in bettering the margins.
Analysts at JP Morgan, who are
overweight on the stock, say I-Pru
Life has emerged from a tough
six-seven years of low growth.
“We see 20 per cent top line
growth in FY16-20, driven by
improving penetration and
robust markets,” they note.
Max Life: Uncertainties remain
Unlike others, the Max stock has
work in its favour. Increasing the
share of Ulips in the past few
years and reducing dependence
on low-yielding non-participative
products has helped SBI Life sub-
stantially improve its financials.
Likewise, increased business
from individual products, which
tend to have better realisations, is
also positive. While its Q3 num-
bers are awaited, analysts at Citi
expect SBI Life to deliver annu-
alised premium equivalent (APE)
growth of 28.1 per cent in FY17-
FY20 and VNB growth of 32.4 per
cent helped by a well-diversified
product portfolio and multichan-
nel distribution strategy.
Industries. The company manufactures
bio-fuel technology machines. Shares of
the company have been rising steadily in
the past three months and are up 54 per
cent – from ~71 to ~110. Union transport
minister Nitin Gadkari has been pushing for
greater usage of bio-fuels to reduce the
~7-trillion oil import bill.
JOYDEEP GHOSH
Nifty 11,500 on the cards?
The rally in the Indian market seems far
from over. According to derivatives data,
one of the highest open interest for Nifty is
currently at 11,500 strike. This means traders
are not ruling out another 400-point (3.6
per cent) rally in February. Meanwhile, the
10,800 strike too has high open interest.
“The market could see huge fluctuations
following the Budget announcements.
Traders will have to brace for high

‘Heightened uncertainty puts bond

thing you’ve seen in the past. Some very volatility,” said a derivatives analyst.
important state elections are coming in. SAMIE MODAK
A lot is at stake. So, if they start taking
some of these populist measures, bond
markets will really take it badly.

markets in uncharted territory’

A sharp reversal in expectation has led to high volatility in the domestic bond markets, says
What would be the impact on bond
yields, if say crude oil ends at levels
higher than expectations?
For FY19, the average crude oil price
> EVENTS

AMANDEEP CHOPRA, group president and head-fixed income, UTI Mutual Fund. In an
interview to Vishal Chhabria, he says if there are no mitigating factors in the Union Budget
and the Reserve Bank of India’s (RBI’s) policy review, the 10-year government security (g-
sec) yields could rise to 7.75 per cent. Edited excerpts:
AMANDEEP CHOPRA
Group president and head-fixed income,
UTI Mutual Fund
Bond markets have seen a lot of action
on concerns over the government’s
fiscal math. Your take?
Bond markets are seeing a fair amount
of volatility, led largely by a reversal in
expectation, driving both rates and
volatility.
What I mean is till about September,
the inflation and crude oil outlook was
largely benign. There was an assump-
tion of better tax mobilisation after the
goods and services tax (GST) and no
fiscal slippage. So, stable policy bias
was expected from the RBI. Quite
abruptly, these expectations began col-
lapsing as data flow became negative,
forcing the markets to recalibrate their
expectation. The revised calendar with
additional borrowing of ~500 billion
was the tipping point for sentiment to
Date
THIS WEEK
Particulars
estimate is around $65. A $10 average 29-Jan US - personal income &
rise, increases the CPI (consumer price spending data
index) by 60-70 bps and the CAD (cur- Results: HDFC, Tech Mahindra
rent account deficit) by 35 bps of gross 30-Jan Eurozone - GDP, consumer
domestic product. With higher infla- confidence data
become completely negative. tionary expectation and its impact on Japan - jobless rate, retail sales
Heightened uncertainty, with frac- the rupee, it will lead to bond yields Results: Indian Oil
tured market sentiment, puts the bond moving up. The worry in all this is if RBI 31-Jan India - Eight Infrastructure
markets in uncharted territory. becomes hawkish and hints at rate hike. Industries, GDP, fiscal deficit
Against this backdrop, the reduction US - ADP employment change,
in additional borrowing (to ~20 billion) What returns could investors expect Chicago purchasing managers,
is only marginally positive and isn’t in 2018? MBA mortgage applications
helping improve the sentiment when Given the many concerns, a long dura- Eurozone - CPI data
the other drivers remain unsupportive. tion strategy might not outperform. So, China - manufacturing PMI
A 20-30 basis point (bps) shift in the the focus will remain on being low on Japan - industrial production,
fiscal deficit target doesn’t seem a big duration, such as short-term income housing starts
number but adding ~300-500 billion fund, income opportunity fund and Results: ICICI Bank, NTPC,
of excess (paper) supply when senti- ultra-short-term fund, unless these risks Larsen & Toubro, Vedanta
ment is already not conducive, exag- start plateauing. If the negative trends in 1-Feb India - Nikkei India PMI Mfg
gerates the market moves. The bond
FROM A ONE-YEAR PERSPECTIVE, IF THERE ARE NO RATE HIKES AND 10-YEAR crude oil, inflation, etc, start peaking, it
G-SEC YIELDS STAY AT 7.25-7.50%, INVESTORS CAN GET 8-8.25% FOR US - FOMC rate decision, initial
markets will remain somewhat scep- might offer some trading opportunities. jobless & continuing claims,
tical on the deficit numbers for FY19 as THE YEAR IN SHORT-DURATION FUNDS WITHOUT TAKING ON RISK In such a cycle, it is a good time for Markit US Mfg PMI, ISM Mfg,
well, since India heads into elections. investors to start systematic investment construction spending data
7.5–7.75 per cent. We were looking at a rel. Finally, how global central banks plans in income funds. UK - Markit UK PMI Mfg
So, where do you see bond yields band between seven and 7.4 per cent react. They are already either shrinking From a pure one-year perspective, if Eurozone - Markit Eurozone
ending by March and by December? earlier, but it’s already tested that. And, their balance sheet or initiating a rate there are no rate hikes and the 10-year g- manufacturing data
That’s a tough call, as there are too many this is still in a backdrop where crude oil hike, if not already done. sec yields stay at 7.25-7.5 per cent, China - Caixin China PMI Mfg
moving parts. The yields by March and is hovering around $69. investors can get 8-8.25 per cent for the Japan - Nikkei Mfg PMI,
December will be more a result of certain The only way I see it coming down is Apart from the pressure on Union year in short-duration funds without vehicle sales
outcomes. If there are no mitigating fac- if the Budget does not indicate a slip- government’s fisc, states are also taking on risk. With a bit of risk, maybe Results: Bajaj Finance,
tors in the Union Budget and the RBI page of more than 10-20 bps in fiscal talking of farm loan waivers. Their slightly higher; they will outperform Power Grid
policy thereafter, the band for the 10- deficit. Second, if the RBI does not budgets are also in a mess... bank fixed deposits and beat inflation.
2-Feb US - change in nonfarm
year g-sec is clearly heading upwards. I change its stance and remains neutral. It is a big worry. The populism that mar- payrolls, unemployment rate,
will not be surprised if yields rise to Third, if crude oil stays below $70 a bar- kets are worried about today is some- More on www.business-standard.com factory orders
UK - Markit / CIPS UK construction
Results: Bajaj Auto, Hindalco
Source: exchange/websites/Bloomberg

MFs raise bets, FIIs trim Cash levels at MFs

Compiled by BS Research Bureau

exposure in BSE 500 remain steady > COMMODITY PICKS

PAVAN BURUGULA STOCKS THAT SAW HIGHEST Bharat Financial, Cyient and
CASH HOLDING AT TOP MFS SUGAR
Mumbai, 28 January National Aluminium Company in ~ bn Cash Equity Cash as %
INCREASE IN MF HOLDING (Nalco) saw the highest increase holding AUM of AUM
The average shareholding of MF holding (%) Change in MF holdings. “MFs have been
SBI MF 27 889 3.0
mutual funds (MFs) in the BSE Company Sep-17 Dec-17 (bps) lapping up several small and
500 companies went up by 38 mid-sized stocks, despite con- HDFC MF 17 788 2.1
Bharat Fin 9.64 17.05 741
basis points (bps) during the cerns about valuations. Unlike ICICI Pru MF 52 742 7.0
December quarter, even as for- Cyient 11.92 18.78 686 FIIs, which deploy resources in a
Nalco 3.17 8.96 579 Reliance MF 14 724 2.0
eign institutional investors (FIIs) different country if Indian equi-
Aditya Birla MF 20 613 3.2 NO NERVOUSNESS YET (in ~ bn) Sugar is trading at ~3,090 per quintal in Kolhapur.
trimmed theirs by 16 bps, GHCL 2.86 7.92 506 ties don’t look attractive, MFs can
Capitaline data showed. Cash Equity Cash as Sensex For the week ahead, prices are expected to head
NLC India 0.10 5.10 500 only invest in Indian equities. Data as on Dec 2017; Open-ended equity schemes only;
towards ~3,000 per quintal. Higher selling
In the three months to Hence, they are in constant Source: Value Research For 2017 holding AUM % of AUM chg (%)
STOCKS THAT SAW HIGHEST pressure due to intensified competition among
December, MFs had invested search for good bets in the broad- SAMIE MODAK January 191 4,457 4.3 3.4 mills, subdued demand from stockists and higher
~240 billion in domestic stocks, INCREASE IN FII HOLDING er markets,” said a fund manager.
February 214 4,685 4.6 3.9 production outlook may keep the undertone
whereas FII buying was relative- Bharat Financial was the top Cash levels at mutual funds remained
FII holding (%) Chg bearish during the coming days.
ly muted at ~83 billion. bet of MFs during the quarter, as below one-year average level of 4.3 per March 205 4,959 4.1 3.1
MF ownership in Indian com- Company Sep-17 Dec-17 (bps) their shareholding jumped 7.4 cent in December. At ~271 billion, cash April 215 5,169 4.2 1.0 SOYBEAN
panies has nearly doubled since Indian Hotels 9.01 24.08 1,507 percentage points to 17.05 per holdings were at 3.9 per cent of equity
2014, thanks to huge consistent cent. MFs also increased their May 221 5,273 4.2 4.1
Bajaj Hind 37.32 48.00 1,068 assets under management (AUM) of ~6,867
buying. FIIs, biggest non-pro- stake in Cyient and Nalco by 6.8 June 236 5,350 4.4 -0.7
Delta Corp 10.09 18.38 829 billion (open-ended equity schemes), data
moter shareholders, have seen percentage points and 5.79 per- July 243 5,665 4.3 5.2
HPCL 20.07 27.95 788 provided by Value Research showed. The
their holdings dip during the centage points, respectively.
Sunteck Realty 10.1 17.35 725 benchmark Sensex gained 28 per cent in August 271 5,715 4.7 -2.4
same period. Market players pre- Indian Hotels was the top bet
dict the trend to continue, as for FIIs, where their sharehold- 2017, while the broader markets rallied even September 274 5,809 4.7 -1.4
domestic financial savings could MFS GAIN GROUND ing went up 15.07 percentage more. On an absolute basis, however, cash October 260 6,243 4.2 6.2
rise further and the share of equi- Average holding (%) Change points. Bajaj Hindusthan and holdings rose by ~14 billion in December
over the previous month. These could be on November 257 6,542 3.9 -0.2 Soybean prices at Indore markets are trading at
ties in domestic savings could Category Sep-17 Dec-17 (bps) Delta Corp saw their FII owner- ~3,685 per quintal. The week ahead could see
also rise on the current low base. ship go up by 10.68 percentage the back of high net inflows in equity December 271 6,867 3.9 2.7
FIIs 15.81 15.65 -16 prices head towards ~3,800. Low arrivals along
Retail investors’ holding in the points and 8.29 percentage schemes during the month. An analysis of with low output for the season would continue
December quarter dipped 18 bps. MFs 6.87 7.25 38 points, respectively. cash levels at mutual funds don’t point to have come on the back of foreign investor to drive prices higher in the days ahead. Also
Experts say these investors are Insurance 2.40 2.42 2 Unichem, Castrol India and any nervousness or caution among fund inflows of close to $2 billion. It will be supporting prices are firm global cues due to
increasingly accessing the mar- Retail 12.63 12.45 -18 Shankara Building Materials saw managers even after last year’s stellar rally. interesting to see if the recent gains have ongoing dry weather concerns in Argentina.
ket through the MF route, instead the steepest fall in MF holding, The markets have extended gains this triggered any profit-taking by domestic
of directly investing in stocks. mid- and small-cap stocks. Fund while FIIs pruned their stakes in month by another six per cent. The gains money managers. Prerana Desai,
During the December quarter, managers were seen preferring Cyient, Shilpa Medicare and VP-Research -Edelweiss Agri Services and Credit,
MFs were seen betting on several financial and commodity stocks. Kaveri Seed. Edelweiss Agri Value Chain
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

18 POLITICS & PUBLIC AFFAIRS MUMBAI | MONDAY, 29 JANUARY 2018

"Some world powers don't just "He is saying that why not "Dear PM, Welcome to
want to shun globalisation; they create a new world at the Switzerland! Please tell Davos
want to stall it. An example of same time when we create a why 1% of India's population
this is new tariff barriers" new India” gets 73% of its wealth"
NARENDRA MODI, Prime MInister, at Davos SURESH PRABHU, trade minister, at Davos RAHUL GANDHI, Congress President, in a tweet

> .

Gender gap in schools fading away NEWSMAKER | ASHOK LAVASA

Author, teacher,
Eight years after implementation of RTE, girls are finally catching up with boys in
schooling; most big states reduce regional variations in ‘children with no education’
BRIDGING THE GENDER DIVIDE
„2005-06 „2015-16 „2006 „2017 bureaucrat, and
now at poll panel

42.0
ABHISHEK WAGHMARE
New Delhi, 28 January

32.1
31.0

27.8
G
irls are catching up with boys in terms

22.0
of attending school over the last
decade, with improvements in the

6.9

7.5
15.0

5.8
5.7
4.9
4.4

4.7
years of schooling and proportion of unedu-

1.9

NA

NA
cated children. The regional variation among
states in ensuring that no child remains une- Girls Boys
-------------------------------------------------
Girls Boys
-------------------------------------------------
Girls Boys
-------------------------------------------------
Girls Boys
-------------------------------------------------

ducated has declined, while that in ensuring Median years Proportion of Proportion not Proportion not
they attend college has increased. of schooling uneducated enrolled atage 14 enrolled at
These are among the findings in a report by Source: NFHS 2015-16, ASER 2017 (Class 8) age 18 (college)
the National Family Health Survey (NFHS-4)
for 2015-16. STUDYING MORE GROWING TREND
The median years of schooling for girls Median years of schooling (F)
underwent a faster change from 1.9 years in Enrolment
„2005-06 „2015-16 Govt Pvt Higher No.
2005-06 to 4.4 years in 2015-16, while that for
boys went up from 4.9 years to 6.9 years in the 4.2Maharashtra schools schools edu- of
6.1 (mn)# (mn)# cation* colleges
same period. The proportion of girls with no
schooling declined from 42 per cent to 22 per 3.4 2012-13 -6.5 2.6 3.1 1.9
Karnataka
cent, and that of boys from 31 per cent to 15 per 5.1 2013-14 -3.5 0.0 7.3 3.1 ARUP ROYCHOUDHURY
cent in the decade. 1.4 New Delhi, 28 January
Andhra Pradesh 2014-15 -3.6 0.0 3.1 5.1
The narrowing of the gender gap is being 3.9
reflected eight years after the implementa- 2015-16 -2.5 0.0 3.9 1.5 New Election Commissioner Ashok Lavasa wears
Tamil Nadu 4.5
tion of Right to Education (RTE) Act, 2009, # Elementary education many hats —author, erstwhile teacher, bureaucrat,
6.7 *Higher education, enrolment in
though the process started much before, nature lover. What he loves the most is photography.
according to Suman Bhattacharjea, director at Kerala 7.5 colleges and universities (mn)
Wherever he has taken office, he has adorned it with
Source: AISHE 2016-17, NITI Aayog
ASER Centre. “Though the gender gap has 8.7 photographs clicked by him. He says his camera is
reduced in enrolment, there is no concrete 1.6 one thing he has never forgotten to pack when on
evidence that the gender gap in school atten-
Odisha
4.0
A WORK IN PROGRESS foreign tours. Go to his Twitter account and you will
dance has reduced,” she added. „2005-06 „2015-16 find some of the pictures clicked by him.
Rajasthan 0 Men Women
States are converging towards a lower pro- 1.7 Lavasa, who retired from the Indian Administrative

85
portion of uneducated but are diverging in Service in October, is now also a quiz question. He is the
4.9

75

70
women marrying after completing 18 years of Himachal Pradesh

36
terms of access to education at and above the veys companies and not households. The answer to the query: Who was India’s finance secretary

57
6.7

24
19
degree level. Most big and populous states NFHS is more representative in that respect,” age—the legal age—with the median age for when the government implemented demonetisation

reduced regional variation among themselves
in ‘children with no education’. In terms of
college education, the inequality of educa-
tional attainment among states increased dur-
ing the decade.
Again states’ performance in basic educa-
tion differs from that in higher education.
Maharashtra ranks third best in basic educa-
tion coverage but sixth best in the proportion
of children entering degree education.
From 85 per cent in 2005-06, the propor-
tion of men who are currently employed—
regular employees and those who have
worked in the last seven days of the survey—
came down to 75 per cent in 2015-16. For
women, the proportion declined from 36 per
cent to 24 per cent.
“As the NFHS is a community-based ran-
dom survey, its data differs from employment
surveys by the Labour Bureau. The latter sur-
PERISCOPE
Wait for Budget
The central government on Thursday will
present its last full Budget of this term. Will the
13
said SK Singh, professor at the Indian Institute women at the time of first marriage improving UttarPradesh 0 and goods and service tax?
3.0 Currently Not Currently Not
of Population Sciences, the organisation that from 17.2 years to 19 years. But, the median age employed employed employed employed A 1980 batch Haryana cadre officer, Lavasa was
prepared the NFHS. of marriage for uneducated women is 17.2 Bihar 0 during in last12 during in last12 indeed one of only 10 people at the top of the central
Further, the proportion of unemployed years, same as the average in 2006, compared 0.9 lastweek months lastweek months government who were aware of the plans and
persons was more in the well-educated cohort to 22.7 years for college-educated women. 0 contours of demonetisation before it was
(eight+ years) for both men and women than The reduction in the fertility rate among Jharkhand announced. As the secretary in charge of
in the less educated (less than eight years) Indian women from 2.7 in 2005-06 to 2.2 in
2.3 INTRINSIC INEQUALITY expenditure, he had the biggest role, among
cohort consistently for 2005-06 and 2015-16. 2015-16 is associated with an intrinsic Madhya Pradesh
0.1 „Women „Men fertility rate/ bureaucrats, in shaping the 2017-18 Budget, when
Employment shares this inverse correla- inequality. Rural women tend to have 2.4 3.6 (Unemployed in last12 months) 1,000 births Finance Minister Arun Jaitley bit the proverbial
tion not just with education, but also with children per woman, while urban women Chhattisgarh 0.1 Lowest 60 3.2 bullet and went for a fiscal deficit target of 3.2 per
wealth. While women from 60 per cent of the tend to have 1.8. 4.2 13 cent of gross domestic
households from the poorest quintile were Among wealth quintiles, the poorest quin- WestBengal 2.6 Second 64 2.5 product, instead of an advised Lavasa was
unemployed in the 12 months preceding the tile has a fertility rate of 3.2 children per 4.5 16 three per cent. responsible for
survey, 80 per cent of women from the richest woman, while women in the richest quintile 7.0 Middle 67 2.1 This was the first Budget allocations to
quintile households were unemployed. give birth to 1.5 children on average, suggest- Delhi 7.4 18 which to be presented on various
Among men, 13 per cent from the poorest ing clearly that wealthy households in India Fourth 74 February 1 and, hence, allowed ministries and
India 1.9 21 1.8 schemes, joking
quintile households were unemployed while are increasingly preferring a single child. passage of the Finance Bill
4.4 that he was one
the proportion was 25 per cent from the rich- In all, 23 states and Union Territories have a Highest 80 1.5
before the start of a new
est quintile. fertility rate lower than the population replace-
All figures in percentage
25 financial year. Hence, of the most
In a first, India has less than 50 per cent ment rate of 2.1 children per woman. Source: NFHS 2015-16 All figures in % Source: NFHS 4 expenditure was massively disliked men in
frontloaded and at the start of bureaucracy
the 2017-18 financial year,
disbursements for some projects were as high as 400
STORY IN NUMBERS per cent year-on-year.
Lavasa was directly responsible for allocations to
various ministries and schemes, joking that he was
one of the most disliked men in bureaucracy. Indeed,
JAMMU & KASHMIR SECTORWISE GROWTH RATE IN J&K
„ Agriculture „ Industry „ Services
when ministries see their allocations getting cut or
sums not being disbursed, they blame the ‘all-

BUDGET BUGLE
24.7
26.2
10.8

government keep to its fiscal deficit target?

8.2

powerful’ expenditure department. The buzz was

Will its revenue collections meet
6.8

that Lavasa always handled meetings with

6.4

6.0
8.4

expectations? Will it report sufficient counterparts using charm and grace. Traits which
5.7

disinvestment? Will tax slabs at the lower end Jammu and Kashmir Finance Minister Haseeb BUDGET PROVISION IN 2018-19 will hold him in good stead as he helps to ensure the
Drabu presented the 2018-19 Budget for the state on
~62 bn is budgeted to be spent
3.5

of the spectrum be rejigged? All these coming state elections, and the big one, the 2019
January 11. Gross State Domestic Product (GSDP) is
2.5

questions will answered on the Budget Day. on power. This includes power general election, go off relatively smoothly.
estimated to be ~1166.37 billion or 6.9 per cent
1.4

A fiscal conservative, Lavasa also believes

higher than the 2017-18 estimate. bonds worth ~15 bn
‘Achievements’ rally „ Total expenditure for 2018-19 is estimated to be
~803.13 billion, a 15.2 per cent increase over the ~24.11 bn is allocated for Sarva
departments should be able to monetise their
resources through capital markets as much as
Prime Minister Narendra Modi will travel to 2015-16 2016-17 2017-18 2018-19 possible, instead of depending completely on
Bengaluru to address a rally next Sunday. revised estimates of 2017-18. In 2017-18, there was Shiksha Abhiyan finance ministry allocations. He also oversaw the
~97.44 billion (12.3 per cent) decrease in EXPENDITURE ON MAJOR DEPARTMENTS (~bn)
His visit to mark the conclusion of the
Bharatiya Janata Party's Parivarthana expenditure in the revised estimates. ~1 bn is for modernisation switch from an output-based budget to an outcome-
based one. This essentially helped in improving the
„ Total receipts (excluding borrowings) are 2016-17 2017-18 2018-19 % change from of police forces
Yatra was earlier scheduled for January 28, quality of expenditure and made spending a better
but the party's central unit asked the state estimated to be ~711.80 billion — 14.4 per cent higher actuals revised budgeted RE 2017-18 to
unit to put off the event. "He (PM) may be than the revised estimates of 2017-18, when receipts
fell short of the Budget estimate by ~35.53 billion.
BE 2018-19 ~5.03 bn is for National targeted exercise.
Lavasa has also headed a panel was tasked with
in a better position to refer to his Power 74.36 129.21 130.53 1.0 Rural Health Mission examining the 7th pay commission’s
„ Revenue surplus is targeted at ~130.84 billion, or
achievements if he addresses the rally recommendations on allowances for the central
after presentation of the Budget,”a party 8.3 per cent of GSDP. Fiscal deficit is targeted at
~96.73 billion (6.1 per cent of GSDP).
Education 40.96 74.88 77.35 3.3 ~4.99 bn is for MGNREGS. government’s 4.7 million employees.
leader said. A federation of Kannada Home 42.99 56.34 59.54 5.7 ~7.79 bn of Finance Commission Before North Block, he was environment
„ Power, home, education and health and medical
organisations has decided to hold a Grants allocated towards capital secretary. He was a crucial part of the team which
demonstration in Bengaluru during the education departments saw a significant increase Health &
went to Paris to negotiate the historical COP21
in allocations. Medical 18.98 33.68 35.29 4.8 outlay under Panchayati Raj
visit, seeking intervention in the Mahadayi agreement. Environment protection and sustainable
water sharing row with Goa. Policy highlights
education
~10.54 bn on capital outlay for development are topics close to his heart. He also
featured in actor Leonardo DiCaprio’s documentary
Rural drainage. ~2.98 bn of Finance
„ Uniform employment code: The Code will 3.31 27.14 31.21 15.0
A fraught session provide a framework for the terms of employment
Development Commission Grants is budgeted for
local bodies
on global warming, Before the Flood.
He has that rare ability, to engage journalists in
The West Bengal Assembly will begin its and service of all workers, except domestic workers Housing 6.9 15.72 22.01 39.9 long conversations without revealing news. He has
Winter session on Tuesday. By-elections in and agricultural labourers. A multi-disciplinary come across as patient, by-the-book, upright and
Uluberia for a Lok Sabha seat and Noapara committee will be set up to frame Jammu and warm individual. Even when stories on him have
for an Assembly seat will be held on Kashmir Employment Code. panel was constituted in 2011. accounts approved by the Reserve Bank of India; ~2 gone wrong, he has laughed these off. This
Monday and results will be out on „ State Finance Commission:It will recommend „ Chief Minister's Business Interest Relief Scheme: billion has been allocated towards this scheme, correspondent once wrote that Lavasa could be
Saturday. Expect a fraught session. rules and regulations for panchayats and The government will provide one-third of the operative for two years from January 2018. made the next defence secretary. That did not come
BS REPORTERS municipalities to receive funds. Previously, such a interest payments of borrowers with restructured — Data and Analysis: PRS to pass, and he always recalls that story, in mirth.

BJP loses its natural friend

SUNIL GATADE
New Delhi, 28 January
The decision of the sulking Shiv Sena
to go solo by parting ways with the
Bharatiya Janata Party (BJP) for next
year’s Lok Sabha and Assembly
elections in Maharashtra has been in
the making for long.
The move by the Sena will jolt the
ruling National Democratic Alliance
(NDA) at the Centre and in
Maharashtra, becoming the first major
partner to give notice to Prime
Minister Narendra Modi and BJP
President Amit Shah that it is quitting.
The Sena is the oldest ideological
ally of the BJP and their partnership
has been for nearly 30 years from the
Hindutva resurgence in the late 1980s.
With 18 Lok Sabha members, the Sena
is the second largest constituent of the
NDA, after the BJP.
It sends the signal that politics in
Maharashtra, electorally a key state
for saffron parties, is set to change.
Uddhav Thackeray and his party
have struck after drawing conclusions
in the wake of the Gujarat electoral
verdict, which did not exactly see the
BJP coming out with flying colours on
the Modi-Shah home turf. It was no
surprise that Saamna, the Sena
mouthpiece, praised Rahul Gandhi for
the way he led the Congress’s charge in
Gujarat.
No political observer believes that
the parting will have any impact
immediately, either at the Centre or in
the state, as the Sena has been playing
the politics of sharing power and also
occupying the opposition space by
the Sena. being a soft-spoken and mild- growing by the day. The two had
It would not be wrong to say the mannered man, unlike his father. contested separately the last
BJP was the Sena’s junior partner The prominence the Sena had Assembly polls.
when it came to power in the Congress changed since the BJP parted ways The BJP in Maharashtra is
targeting the BJP. There has been no bastion in 1995, when the word of Bal with it in the Assembly polls in reneging on the promises it had made
word from the Sena on when it plans to Thackeray, the Sena founder, was law. October 2014, four months after the to voters in the state. Suicides of
pull out of the Centre and He was the unchallenged Lok Sabha victory. Modi’s aggressive farmers continue, reflecting agrarian
the Devendra Fadnavis ‘Hindu Hriday Samrat’, campaigning resulted in the BJP distress. Caste tensions are growing in
government in the state. when Modi was taking baby securing 120-plus seats in the the countryside due to rural unrest
Party leaders merely say steps in politics. 288-member House, while Sena got while the issue of general price rise
that their supremo would The Sena founder was 63 seats. and the rising prices of fuel are
take an appropriate the prominent non-BJP Since then, the two parties have affecting all.
decision at an appropriate leader who had rallied contested separately a number of With diverse forces at work,
time. This means nothing. behind Modi in the wake of elections in the state, including the Maharashtra appears to be becoming
How much fire the Sena the Gujarat riots in 2002, Brihanmumbai Municipal politically volatile ahead of the polls
could have by remaining in when a section of the BJP Corporation elections last year, which next year. A section of the ruling
the governments at the led by the then Prime have generally seen a rise in the alliance believes that if Modi and Shah
Centre and in Maharashtra Minister Atal Bihari fortunes of the BJP. fail to keep the Hindutva forces intact,
is another question. Vajpayee wanted him to be Politics has its own dynamic and it the BJP and the Sena could be the
The BJP, a laggard in replaced as chief minister. would be simplistic to believe that loser. The Sena has the capacity to
state politics for long, owes Much has changed since 2019 would be the same as 2014. While do much harm even if it does not
its rise as much to social then. Modi and Shah the NDA is coming unstuck in benefit electorally.
engineering by bringing to the fore revered the Sena founder but have Maharashtra, the talk of the Congress Pawar is watching the
backward caste leaders, such as failed to strike the right chemistry and Sharad Pawar’s Nationalist developments keenly and so is the
Gopinath Munde, as to the tie-up with with his successor despite Uddhav Congress Party (NCP) joining hands is Congress.
https://t.me/EStore33 https://www.estore33.com/ https://t.me/TheHindu_Zone

.
MUMBAI | MONDAY, 29 JANUARY 2018 START-UP 19 <

Going vernacular in Create, edit and share

With Reliance Jio, internet penetration
is increasing in tier-I and tier-II cities, and
most people now own either a smartphone
or a feature phone. Moreover, as Jio offers
almost free unlimited data, rivals such as
Airtel, Vodafone, and Idea, too, have
video online
social networking
slashed their rates. In turn, the data
consumption of an average user has
rocketed, with video streaming eating up a
large part of it. As a result, Sharechat, which
had two million users per month at the end
of 2016, has quadrupled its user base.
ShareChat offers content Revenue
consumption in 10 Three years into the social media industry,
the company is “focusing on growing its
languages; needs to fix user base, as of now”, and is yet to
bugs in video uploading monetise.
Mayank Khanduja, from SAIF Partners, (From left) Hippo Video founders Srinivasan S, Nilam Chand Jain and
and downloading, writes says: “ShareChat is geared to become a
unique problem solver for the mass
Karthi Mariappan

Shameen Alauddin vernacular audience in India. Having NIRMALYA BEHERA Shubhankar Bhattacharya, venture
closely worked with the team over some partner at Kae Capital.
time, we are extremely pleased with their It would take an individual more Its sale proposition includes

“M
editation and yoga runs focus on using technology to connect these than five million years to watch the online video creation, editing and
through my veins, but my lack new internet users, and are pleased to amount of video that will cross glob- contextual integration with
of command over English partner in their next phase of growth.” al Intellectual Property (IP) net- Freshdesk and Zendesk for support,
prohibited me from sharing that gift with “Since the beginning of the start-up works each month in 2021, says a and Google Classroom, Google
everyone,” says Paramjot Kaur, 43, a boom in India, we have been told by the Cisco study. Slides, Google Docs and D2L for
housewife in Punjab. “ShareChat has wise that we have to learn Every second, a million minutes education.
helped me provide daily tips in Punjabi and from Facebook. Hope now of video content will cross the net- The business to consumer (B2C)
garner 4,000 followers in a year.” FAC T B OX they will say ‘learn from works by 2021. Globally, IP video traf- video market is pegged at $60 billion.
The social media platform has raised ShareChat’,” says Anand fic will be 82 per cent of all consumer The business to business (B2B) mar-
Inception:
$18.2 million funding in Series-B from Lunia, another investor from internet traffic by 2021. ket –collaboration and communica-
Shun Wei Capital and Xiaomi Singapore. October 2015 India Quotient. This is the space where Chennai- tion – is estimated at $2.2 billion.
This follows $4 million in a Series-A round Area of business: Social based Hippo Video is see- With 30,000 users
from Lightspeed India Partners, SAIF Challenges ing a big opportunity. globally, Hippo’s users
network
Partners, India Quotient and Venture As most people in India are Founded in 2016, by have created more than
Highway. (From left) ShareChat founders Farid Ahsan, Bhanu Singh and Ankush Sachdeva Funding: $18 million in trilingual, if not more, the Karthi Mariappan, Nilam 150,000 videos. Over 80
Series-B round from company needs to enable Chand Jain and per cent of its user base is
Concept Facebook and Instagram, English is not an Lanka, Canada, the US and Shunwei Capital, them to choose multiple Srinivasan S, it is a plat- in America, followed by
Founded by Ankush Sachdeva, Farid option. west Africa, and 20 million Xiaomi Singapore, languages instead of one form aiming to take care India and Britain. The
Ahsan and Bhanu Singh, the Bengaluru- If one opts for Hindi, he or she will be downloads on Google Play, Lightspeed India while signing up. This will of the entire life cycle of With 30,000 company aims to focus
based social media platform began as a taken to the feed generating content only ShareChat seems to be Partners, SAIF Partners, amplify the content. Besides, video — creating, editing, users globally, more in Britain and
content repository application for sharing in that language.If you are proficient with grabbing eyeballs. On an users have complained on hosting, sharing, tracking. Hippo's users Australia. The majority of
India Quotient &
on WhatsApp. Owing to the massive and other vernaculars, you can follow users average, five million content Google Play about facing The company recently have created Hippo Video users are cus-
“unbelievable” response for mostly light- who have opted for them as their base pieces get shared daily from
Venture Highway 'bugs' while uploading more than
raised an undisclosed pre- tomer support staff, edu-
hearted material, such as jokes, memes, language, and create, discover, and share ShareChat, mostly finding its Userbase: 8 million videos and photos. “Several Series A round from Kae 150,000 videos. cators, freelancers, stu-
celebrity updates and health tips, the IIT- content with each other. way to WhatsApp groups. per month times, when I try uploading a Capital. Over 80 per dents, gamers and
Kanpur graduates launched the free The content includes news, general “Vernacular content video, the app hangs before With Hippo Video, a cent of its user YouTubers. Currently
Android application in October 2015. knowledge, political memes, viral videos, consumption in India has Team strength: 50 finally enabling it,” says browser-based video base is in the attracted more towards
Signing into the app is a two-step movie updates, beauty tips, regional witnessed a meteoric rise, Rohan Munglur. “Moreover, tool, anyone with access US, followed the education (K-12) sec-
process. First, the user has to type in his or poetry, devotional messages and other growing from 42 million in it takes several attempts and to the internet is able to by India and tor and its support market,
her name and number. Following which, things. 2011 to 234 million in 2016. These numbers consumes too much time to download a create professional the UK it aims to move to other
he or she is required to select one language are a great indication of a huge opportunity video.” The start-up faces a threat from videos instantly and segments as well.
out of the 10 available — Hindi, Punjabi, Opportunity available for products focused on the established giants like Facebook and share it to GDrive, Google “We are integrating with the
Gujarati, Marathi, Bengali, Odia, Telugu, With over eight million monthly active vernacular audience,” says Sachdeva, the Pinterest because of these issues. Classroom, YouTube and other existing system contextually. We
Tamil, Malayalam, and Kannada. Unlike users in India, Bangladesh, Nepal, Sri chief executive. business software. “This is the rev- want ensure video as a service, be it
Ahead olution that is expected by 2021. in any vertical. By 2020, we want to
EXPERT The new round of investment will be used Videos by common users is the be part of the whole B2B video cycle
TA K E
Keep evolving for success to continuously do product
improvements in line with that.
What the first time users want
to strengthen the company’s machine
learning effort. “We aim to use innovative
technology to optimise social media
future and we are already here with --including sales, marketing, sup-
Hippo Video,” says Mariappan. port and development,” said one of
“The online video market for the founders.
The local language market is a big phenomenon. India is on a now and what they would content for this new set of Indian users. To small businesses and independent The start-up works on a freemium
opportunity. I love companies, growth path and users are want tomorrow (and the gap solve day-to-day problems of consumers professionals is a rapidly growing model for revenue. For B2C cus-
which are providing for the needs becoming economically better between today and tomorrow is dealing with technology, our algorithms space. Hippo Video’s value proposi- tomers its charges a maximum $30 a
of this market and impacting and modern, and their tastes as blurring very fast) could be the are efficiently designed to reduce language tion as an all-in, easy-to-use, and year. For B2B clients, $10 a month for
users. ShareChat is doing this in well as consumption habits will same or different and evolving hassles and make the platform intuitive highly affordable solution appears to customer support with a restricted
VIRENDRA GUPTA an innovative way and has evolve rapidly. with that will be the key and convenient for all,” says Sachdeva. have resonated with its target audi- bandwidth. Users from the educa-
Founder, Dailyhunt tapped into the content sharing All of us in the ecosystem have to success. ShareChat aims to reach 50 million ence and we see signs of product- tion sector have to cough up $3,200 a
monthly active users by the end of 2018. market fit being established,” says year for 1,000 students.
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20 ECONOMY & PUBLIC AFFAIRS
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MUMBAI | MONDAY, 29 JANUARY 2018 1

Indian subsidiaries deliver Increased containerisation

demand lifts volumes
more value for multinationals Container cargo up 17% in December, volume
share a fifth of total traffic
KRISHNA KANT ADITI DIVEKAR
Mumbai, 28 January GROWING CONTRIBUTION Relative price FY13 17.5 Mumbai, 28 January TRAFFIC HANDLED AT ALL PORTS
The marketcapitalisation share of to earnings 31.6 (In ‘000 tonnes for Dec 2017)
he Indian subsidiaries With demand for containerisation on the rise,

T Indian subsidiaries ofMNCs in the multiple FY14 17.8

of global multination-
als such as Unilever,
Suzuki, Siemens, Colgate-
Palmolive, and ABB are run-
ning at double the pace of
their parents. Multinational
companies’ arms listed on
Dalal Street now account for
6.3 per cent of their parents’
total market capitalisation
(m-cap), up from 3.1 per cent
in the beginning of 2013.
Maruti Suzuki and
Hindustan Unilever are the
biggest contributors to this
surge. At its current stock
price, Maruti’s m-cap is near-
ly 50 per cent more than its
Japanese parent’s (Suzuki
Motor Co’s), while HUL’s
market capitalisation is 28
per cent of Unilever’s.
The combined m-cap of
52 Indian subsidiaries in our
sample is up 120 per cent in
dollar terms in the past five
years, as against 10 per cent
rise in the combined m-cap
of their parents during the
period. As a result, Indian
subsidiaries are now trading
at a 150 per cent premium to
their parents on the price-
earnings multiple basis com-
pared to 80 per cent at the
start of the current rally in
2013.
Analysts attribute it to a
more powerful rally on Dalal
Street compared to other
major markets. “The stock
rally in India has been much
stronger than in most of the
developed markets. This gre-
atly benefited MNCs as most
of them are leaders in con-
sumer segments, where
investors’ interest has been
the greatest,” said Dhananjay
Sinha, head of research,
Emkay Global Financial
Services.
Indian subsidiaries have
raised their financial contri-
bution to the parents’ coffers
during the period, but the
proportionate rise in rev-
enues and profits is much
less than the rally in their
stock prices. Their revenue
contribution was up 40 basis
points, while net profit con-
tribution was up 60 basis
points during the period.
And the momentum is now
waning as growth revives in
the developed world.
Indian subsidiaries (list-
ed) now account for 2.4 per
cent of global revenues of 47
global multinationals in the
marketcap oftheir parent
All MNCs
4.8
3.1
FY13 FY14 FY15
Business Standard sample,
up from 2 per cent five years
ago. In the same period,
Indian subsidiaries’ contri-
bution to profits increased to
2.4 per cent from 1.8 per cent
in 2013.
The analysis is based on
the annual revenue and prof-
it of listed MNCs in India and
their global parents. The m-
cap data is at the end of peri-
od for the respective finan-
cial year. The current year
data is on trailing 12-month
basis. For MNCs with more
than one listed subsidiary in
India, the numbers have
been consolidated. All num-
bers are in US dollar terms.
“Developed economies
took much longer to come
out of the recession triggered
by the Lehman crisis com-
pared to India. Besides,
Indian economy never sto-
pped growing even at the
depth of the economic slow-
down unlike many developed
economies, which are the
ofMNCs and 44.4
(in %)
their Indian FY15 20.5
40.6
5.4 subsidiaries
4.7 6.3 FY16 18.9
(P/E ratios) 44.8
Current 21.0
„MNCs-parent 53.0
„MNCs Indian
subsidiary Source: Capitaline; compiled by
FY16 Current BS Research Bureau
home markets for MNCs," cent ex-Hindustan Unilever,
said G Chokkalingam, fou- respectively.
nder & MD, Equinomics However, Indian sub-
Research & Advisory. sidiaries will have to grow
The relatively better faster to stay ahead of their
financial performance of parents. Recovery is expected
Indian subsidiaries over their to be quicker in developed
parents in the past five years countries than in India, where
is evident. The combined growth has been hit by
global revenues of MNCs are demonetisation and the goods
down 6.9 per cent since FY13, and services tax (GST).
as against 12.6 per cent rise “Corporate earnings are likely
in Indian subsidiaries’ rev- to grow faster (in constant cur-
enues in dollar terms during rency) in developed countries
the period. The combined than India, where MNCs are
revenues for Indian sub- now reporting low single-dig-
sidiaries are, however, down it growth in volumes and rev-
0.3 per cent during the period enues,” said Chokkalingam.
if Maruti Suzuki were to be The combined global rev-
removed. enues of MNCs were up 1.7
The combined net profit per cent on a trailing 12-
of global MNCs is down 4.4 month basis in 2017, as
per cent during the period, against 1.4 per cent growth
as against 30.6 per cent reported by their Indian sub-
growth in the combined net sidiaries during the period.
profit of their Indian sub- Excluding Maruti and
sidiaries. The profit growth Hindustan Unilever, Indian
for Indian arms, however, subsidiaries’ combined rev-
drops to 4.9 per cent ex- enues are down 4.3 per cent
Maruti Suzuki and 1.1 per in the current fiscal year.
share of container cargo to the total traffic Containers Total Container as
handled by major ports has been the highest Tonnage TEUs % of total
in December.
2016 9,933 690 56,912 17.5
According to the Indian Port Association
(IPA) data, container cargo contribution to the 2017 11,664 784 59,748 19.5
total traffic handled grew 19.5 per cent in Growth (%) 17.4 13.6 5.0
December from 18.7 per cent in October, which TEU: Twenty-foot equivalent unit
was also much higher from 17.5 per cent in Source:Indian Port Association
December 2016.
Container traffic by tonnage grew 17.4 per Kandla port has privatised its container
cent year-on-year (Y-o-Y) at Indian ports in terminal to JM Baxi group, which has been
December 2017. For the April-December 2017 aggressively marketing the facility to improve
period, container traffic grew 7.6 per cent Y-o- occupancy.
Y. “In order to bring down multiple handling Kandla’s container terminal faces stiff com-
charges for a cargo, consumers are increasing- petition from neighbouring Mundra Port,
ly preferring containerisation of their goods located 60 km from the port.
and this has led to increased container vol- “We are not focussing on earning from
umes at ports in the last few months,” Praveen Kandla’s container terminal at present as our
Somani, director (strategy and new business fixed cost is high and we need to look at having
development), Inland World Logistics told the facility better utilised than anything else,”
Business Standard. “Containerisation of cargo said Balani, explaining the port’s decision not
is also ensuring the much-needed safety and to charge the state-owned SCI. However, the
security of the packaged commodity,” he said. port is charging Shreyas Shipping and other
Kolkata-based Inland World Logistics is a export/import cargo vessels with a sizeable
logistics and supply chain company into ship- rebate. Meanwhile, JNPT and Chennai Port
ping, warehousing and express distribution. continue to top container cargo contribution as
While Jawaharlal Nehru Port Trust (JNPT), the direct-port-delivery (DPD) scheme gains
Chennai, and VO Chidambaranar (Tuticorin) traction at these ports.
ports have been witnessing a gradual increase “Not only DPD (direct port delivery), but
in their container cargo segment since continuous improvement in JNPT’s ecosys-
October, Kandla entered the list in the past tem is also making this cargo growth possible.
few months, witha some shipping companies Every area of port performance, such as
starting container operations. import-export dwell time, de-congestion,
“Shipping Corporation of India (SCI) and clearances and gross berth productivity, is
Shreyas Shipping are calling Kandla’s contain- showing marked improvement,” said Neeraj
er terminal since the last few months for coastal Bansal, deputy chairman of JNPT, the coun-
shipping cargo,” informed MS Balani, traffic try’s largest container port.
manager at Kandla Port. “Our aim is to gradu- According to the JNPT website, share of
ally build container volumes as the terminal DPD volume handled in December 2017 has
has low utilisation and hence we will not be gone up to 36 per cent from 27 per cent in
charging SCI until March 2018.” February the same year.
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22
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MUMBAI | MONDAY, 29 JANUARY 2018 1

Science, Osama, and calls IPL AUCTION: UNADKAT COSTLIEST INDIAN PLAYER Respecting
Attheendofthetwo-dayVivoIndianPremierLeagueplayerauctionforthe2018season,the
eightcricketfranchiseshadspentnearly~4.25billionbuildingtheirsquads.Thetotalmoney
women our
tradition: PM
for fearless journalism
availablefortheauctionwas~4.35bn.Manyteamsfoundtheirpursessignificantlydepleted,
withKolkataKnightRidersendingtheauctionbyspendingitslastpennyonWestIndiesall-
rounderJavonSearless.KingsXIPunjabemergedthebiggestspenderofthisyear’sauctionwith ARCHIS MOHAN
~674millionspentonacquiring24players(theteamhadretainedaplayerbeforetheauction)to New Delhi, 28 January
completeitssquadof25.RajasthanRoyals,havingretainedaplayerbeforetheauction,also
splurged~673.35mntoacquire22players.KolkataKnightRidersacquired17playersfor~590mn, In his first Mann Ki Baat
MIHIR S SHARMA havingretainedtwoaheadoftheauction.Ahighlightwastheteams’thrustonyoungerplayers. radio address of 2018, Prime
Jaipur, 28 January ThehighestbidswereplacedforplayerswithhigherreservepricessuchasBenStokes,Manish Minister Narendra Modi
Pandey,ChrisLynnandJaydevUnadkat.Unadkatwasthecostliest,withtheRoyalsbidding spoke of women’s empower-

O
n the fourth day of ~115mntogethimontheseconddayoftheauction.Uncappedplayers,however,didseealotof ment and his government’s
the 11th edition, efforts at making health care
interest,withKrunalPandyagoingfor~88millionandJofraArchertotheRoyalsfor~72mn
the Jaipur Literature affordable. He said the
Festival turned back to its COMPILED BY URVI MALVANIA salient feature of India’s
roots — with sessions on the society was its cultural lega-
craft of novel writing, on the cy of a “self-correction mech-
methods of investigative jour- anism”, where unending
nalism, seabirds, music cul- endeavours have taken place
ture, botany, Egyptian queens, against social ills and evil
maritime policy, and rivers, practices, both individually
tigers and Virginia Woolf. and collectively.
Early in the day, Suki Kim He also remembered
and Michael Rezendes were Mahatma Gandhi, appeal-
in conversation with Charlie ing to people to walk on the
English. Kim is a South (From left) Journalists Michael Rezendes and Suki Kim in conversation with Charlie English on path shown by the Father of
Korean journalist who went Piercing the Veil of Secrecy at the Jaipur Literature Festival on Sunday PHOTO: @ZEEJLF the Nation, whose martyr-
undercover in North Korea to 1 2 3 4 5 dom day is on Tuesday.
report how the Pyongyang cuss the past, in a session called guage, performed creditably Shaw and Namita Bhandare. In his 40th Mann Ki Baat
elite lived their lives and saw Those Were the Days; Sanghvi as he went again through his Mazumdar-Shaw was acerbic
the world; Michael Rezendes tried to push De into admitting thesis about perfidious about the ladder of success in
TOP FIVE BUYS broadcast, the PM spoke at
length about woman power
is, of course, the reporter herearlypotboilers,likeSocialite English colonisers and the science, pointing out that while Team Player Speciality Price Reserve price in diverse fields. He paid
who worked on investiga- Evenings,werewildlyunrealistic “age of darkness” they near equal numbers of men (~ mn) (~ mn) tributes to astronaut
tions of child abuse in the but De was willing to brought to India. and women enter scientific RajasthanRoyals Ben Stokes All-rounder 125 20 Kalpana Chawla, whose
Roman Catholic Church admit only to “slight It seemed likely at and technical fields, men death anniversary is on
that were depicted in the exaggerations”. the fourth day of the seemed to find it easier to rise
RajasthanRoyals Jaydev Unadkat Bowler 115 15
February 1.
movie Spotlight. Sanghvi was on festival that, among to the top of a peer-reviewed SunrisersHyderabad Manish Pandey Batsman 110 10 As for the political con-
Multiple other sessions of stage again shortly younger attendees, profession in which most of KingsXIPunjab K L Rahul Batsman 110 20 text, the PM’s reference to
interest were on early in the thereafter, in an incar- there were as many reviewers and others in author- KolkataKnightRiders Chris Lynn Batsman 96 20 woman power comes at a
morning. The writers of two nation more familiar girls as boys — and ity were male. time of the Congress party
books on the search for to younger festival- perhaps more. Notably, the organisers had demanding his government
JAIPUR
Osama bin Laden and his life goers: As a food writer. Unusual in an Indian to shift around sessions to fill
after 9/11 — Adrian Levy and He moderated a ses- LITERATURE public space, this may a hole created by the absence
BUILDING SQUADS ensure the passage of the
long-pending Bill to reserve a
Cathy Scott-Clark, writers of sion with Kota FESTIVAL have been because of censor board chief Prasoon Team Purse Purse at start Money spent Number of Highest bid third of Parliament and leg-
The Exile: The Stunning Inside Neelima, Sarah Raven JLF is very clearly a Joshi, who kept away because remaining of auction on auction players in (players; bid islative assembly seats for
Story of Osama bin Laden and and Lathika George. Neelima safe space, with a very visible of threats from violent Rajput (~ mn) (~ mn) (~mn) the squad in ~ mn) women.
Al Qaeda in Flight and Peter has written one about prasad police presence. Best-selling outfits, incensed by his deci- Chennai Super Kings 65 470 405 25 Kedar Jadhav; 78 While former Congress
Bergen, who wrote Manhunt: in Indian temples, Raven — a author Chetan Bhagat — who sion to clear the movie Delhi Daredevils 16 470 454 25 Glenn Maxwell; 90 party chief Sonia Gandhi had
The Search for Osama bin doctor — has written a book dashed in and out of the festi- Padmaavat. In one of the ses- written to Modi on the sub-
Laden in 2012 — were in con- about healthy, vegetarian val arena over the weekend like sions that replaced Joshi’s,
Kings XI Punjab 1 675 674 21 K L Rahul; 110
ject a few months earlier, cur-
versation with India’s former recipes. And, George has pro- a movie star, surrounded by comedian Mallika Dua said it Kolkata Knight Riders 0 590 590 19 Chris Lynn; 96 rent chief Rahul Gandhi has
ambassador to Islamabad, duced two masterful books private security, police, and was unfortunate that she had Mumbai Indians 6.5 470 463.5 25 Krunal Pandya; 88 also appealed to the PM to
T C A Raghavan. Naturally, about Kerala cuisine — specif- adoring fans — tweeted his to be on stage at all. The Rajasthan Royals 1.65 675 673.35 23 Ben Stokes; 125 ensure its passage. The
the subject of Pakistan’s com- ically of her own Syrian thanks to the Jaipur police, say- theme of threats and violence Budget session of Parliament
plicity with bin Laden came Christian community, which ing they were “doing an excel- was taken up at other points;
Royal Challengers Bangalore 1.5 490 488.5 24 Chris Woakes; 74
begins on Monday.
up, though the panelists sug- she said she began to lent job at the crowded ZEE De had already compared the Sunrisers Hyderabad 6.5 590 583.5 25 Manish Pandey; 110 In reference to his govern-
gested incompetence was per- understand better through JLF, quietly providing security current Delhi media nega- ment’s slogan of Beti bachao,
haps a more compelling the recipes. at every corner of the fest”. tively to those who resisted beti padhao (save and edu-
explanation. At lunchtime, Shashi The strong female presence the Emergency. For many, PLAYERS WHO WON’T BE SEEN IN IPL 2018 cate the girl child), the PM
Meanwhile, historian Victor Tharoor, hardest-working added an additional savour to a the highlight of the day was said respecting women has
Sebestyen took the audience speaker at the festival, took session on Women on Science institution of an award by been a tradition in India. He
through recent discoveries and the stage to discuss his past that closed the day, with the writers’ organisation PEN for pointed that Lopamudra,
old truths about the life and bestseller, Inglorious Empire. British journalist and author of courageous reporting, in Gargi and Maitreyi con-
career of Lenin, 100 years after This discussion, however, was Inferior: How Science Got memory of murdered jour- tributed verses to the Vedas,
theRussianRevolution.But,the in Hindi; the MP from Women Wrong, Angela Saini, nalist Gauri Lankesh. James Cameron Corey Hashim Shaun Ishant Lasith Tymall and quoted Skanda Purana
crowds flocked to listen to Thiruvananthapuram, known Harvard physicist Lisa Randall, Faulkner White Anderson Amla Marsh Sharma Malinga Mills which said that a daughter is
ShobhaaDeandVirSanghvidis- for his use of the English lan- Biocon’s Kiran Mazumdar- The festival will conclude Monday Source: IPLT20.com the equivalent of 10 sons.