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THURSDAY, 1 AUGUST 2019
24 pages in 1 section www.business-standard.com
MUMBAI (CITY)
~8.00
VOLUME XXIII NUMBER 250

THE MARKETS ON WEDNESDAY Chg#

Sensex 37,481.1 83.9
Nifty 11,118.0 32.6 BACK PAGE P24 COMPANIES P2
Nifty futures* 11,132.2 14.2
Dollar
Euro
~68.8
~76.7
~68.9**
~76.8** BENGALURU BEST STUDENT THE TALE OF THE INFAMOUS
CITY IN INDIA: QS RANKING TRIO OF AMRAPALI
Brent crude ($/bbl)## 64.7## 64.7**
Gold (10 gm)### ~34,783.0 ~84.0
*(Aug.) Premium on Nifty Spot; **Previous close;
# Over previous close; ## At 9 pm IST;
### Market rate exclusive of VAT; Source: IBJA PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE

US FED CUTS INTEREST

RATES BY 25 BPS Coffee Day board to probe Oppenheimer to
buy 11% in Zee
Siddhartha’s transactions
The Federal Reserve cut interest rates on
Wednesday for the first time since 2008,

for ~4,224 crore

citing concerns about the global
economy and muted US inflation, and
signalled a readiness to lower
borrowing costs further if needed.
Financial markets had widely expected URVI MALVANIA
the quarter-percentage-point rate cut, Firms up plans to monetise Mumbai, 31 July
which lowered the US central bank's
benchmark overnight lending rate to a assets, appoints Ranganath Putting all speculation to rest, the
target range of 2 per cent to 2.25 per
cent. The Fed said it had decided to cut
interim chairman Subhash Chandra-led Essel group
on Wednesday said it had
rates "in light of the implications of offloaded 11 per cent of the nearly
global developments for the economic BIBHU RANJAN MISHRA & DEBASIS MOHAPATRA 36 per cent promoter stake in Zee
outlook as well as muted inflation Bengaluru, 31 July Entertainment Enterprises to
pressures." REUTERS existing investor Invesco

T
he board of Coffee Day Enterprises on Oppenheimer for ~4,224 crore.
Wednesday decided to probe the past The deal, at ~400 per share, THIS IS A BETTER DEAL
ECONOMY & PUBLIC AFFAIRS P4 financial transactions allegedly made values Zee at a premium of 10.6 AS IT MEETS TIMELINES:
Core sector growth by V G Siddhartha,
apart from evaluating various
per cent over the current market
price and will be used to pay off
PUNIT GOENKA PAGE 2
CRISIS AT CCD
at 50-month low options to deleverage the bal- PAGE 22 part of the promoter-level debt, ZEE ENTERTAINMENT
Growth in the eight core sectors of the ance sheet. MORE BUYERS which stands at ~11,000 crore. On Shareholding pattern after
economy collapsed to 0.2 per cent in June A letter purportedly written MAY LINE UP Wednesday, Zee closed trade at Oppenheimer deal
— a 50-month low — dragged down by by the founder chairman days FOR CCD ~361.45 per share, down 5.18 per
major contraction in the energy segment before his death had said his cent over the previous day’s close
and weak performance across industries. team, auditors, and senior
OPPN PARTIES Coffee Day workers make arrangements to pay last respects to V G Siddhartha in on the BSE.
CALL FOR
The data released by the commerce and management were “totally DEBATE IN Chikkamagaluru, Karnataka. The CCD founder’s body was found on the banks of After tax, the deal would be
industry ministry on Monday showed unaware” of his personal finan- PARLIAMENT the Netravathi river on Wednesday PHOTO:PTI valued at ~4,000 crore, said Punit
that coal, crude oil, natural gas, refinery cial transactions. Goenka, managing director, Zee
LENDERS
Debt profile worsens for
products, fertiliser, steel, cement, and Siddhartha’s body was Entertainment.
electricity industries saw the rate of found on Wednesday on the STARING AT This means the balance —
growth take a sudden hit in June after a banks of the Netravathi river LEGAL ~7,000 crore — of promoter debt
QUAGMIRE
slight dip in May.

APRIL-JUNE FISCAL DEFICIT

in Karnataka, with police
saying it appeared to be a case
of suicide.
PAGE 10 Siddhartha’s private firms would have to be bridged via a
saleofinfrastructureassetsaswell
as an additional stake sale in Zee,
DSP MF TAKES
AT 61.4% OF FY TARGET 4> “While the authenticity of 50% HAIRCUT; SACHIN P MAMPATTA graded or placed under watch the borrow- said analysts.
the letter is unverified and it is CCD FIRMS ASK Mumbai, 31 July ings of CDEL, some of its group companies, “We believe this development
unclear whether these state- FOR 2 WEEKS and Siddhartha’s wife Malavika Hegde. tobe a positive step towards meet-
Source: BSE Compiled by BS Research Bureau
ments pertain to the company The privately held firms of deceased Coffee The financials of six privately held com- ing Zee’s desired target of stake
or the personal holdings of Mr Day Enterprises (CDEL) founder V G panies associated with Siddhartha show sale by September 30,” said
ON V G Siddhartha, the board took a serious note of Siddhartha show evidence of a worsening an increase in debt and falling ability to Ashwin Patil, senior research ana- InvescoOppenheimeralready

SPECIALS
THURSDAY the same and resolved to thoroughly investi-
gate this matter,” the board said in a regulatory
debt profile. The amount of debt on the
books of the unlisted companies rose in
meet short-term obligations. The total bor-
rowings rose 76.4 per cent year-on-year
lyst, LKP Securities.
He added, “We expect the
holds 7.74 per cent stake in Zee;
now, it will now hold 18.74 per
filing. The board also appointed law firm Cyril recent times, in line with rising borrow- from ~992 crore in FY17 to ~1,749 crore in management to achieve success cent. Promoter stake in Zee, on
STRATEGY: Amarchand Mangaldas its legal counsel to ings at the listed CDEL, show the latest FY18, the most recent filings available with in meeting this deadline by doing the other hand, will fall to just
advise it on the related matters. financial statements. the Ministry of Corporate Affairs (MCA). a further stake sale and sale of under 25 per cent post the deal.
Diversity is key for Netflix 19 >
Turn to Page 22 > Credit rating agencies have either down- Turn to Page 22 > non-media assets.” Turn to Page 21 >
The OTT player hopes to steal the show
with local collaborations, innovative
pricing, writes URVI MALVANIA
PERSONAL FINANCE: Buy
only ready-to-move home
Though there is a lot of under-
18 > Govt softens stance on
construction inventory, buyers
should stay away from them,
writes SANJAY KUMAR SINGH
EV roll-out time frame
PRIVATE EQUITY: SHALLY SETH MOHILE battery-operated EVs. The industry
“Commercialrealestate Mumbai, 31 July had said the move was not well-
willremainanimportant thought-out and would create
The government seems to have soft- unwanted disruptions in a market
areaforCPPIB” 11 >
ened its stance on the time frame for where infrastructure and ecosystem
ALAIN CARRIER, senior managing
transition to electric vehicles (EVs). for EVs was non-existent.
director and head of international The Ministry of Heavy Industries, “We are awaiting a road map that
CPPIB, and VIKRAM GANDHI, a senior the Ministry of Road Transport and the industry is supposed to submit.
advisor, tell RAGHAVENDRA KAMATH Highways, the power min- We are clear about our
their strategy and views on economy istry, and the NITI Aayog goals and targets. We want
— tasked with the policy- Now, a softer, to do this in partnership
making and implementa- pragmatic, with the private sector,”
tion of the government’s phase-wise Amitabh Kant, CEO, NITI
e-mobility plan — have approach will be Aayog, told Business
> RESULTS RECKONER extended an olive branch adopted. Under Standard.
to the beleaguered auto- the revised plan, "We have become a ful-
Quarter ended Jun 30, 2019; common sample mobile industry by agree- highly-polluted ly importing nation in
of 470 companies (results available of 529) ing to a “softer, pragmatic, urban cities will mobiles, telecom equip-
SALES phase-wise approach”. be targeted first ment, and PV Solar
Under the revised plan, because of the wrong poli-
Jun 30, ’18 22.2% ~6.86 trillion highly-polluted urban cies pursued earlier. We
Jun 30, ’19 10.5% ~7.58 trillion cities will be targeted first. will never allow this to happen in the
The change in stance follows a case of electric vehicles. We will build
NET PROFIT
strong opposition by automakers of size and scale, and pursue Make in
Jun 30, ’18 3.5% ~60,877 crore the proposed government plan to ban India for both domestic and export
Jun 30, ’19 6.8% ~64,994 crore two-wheelers (below 150cc) and markets. We will make India an EV
Companies which have reported zero sales are excluded
three-wheelers by 2023 and 2025, hub for global markets," he added.
Data compiled by BS Research Bureau; Source: Capitaline respectively, and replace them with Turn to Page 21 >

Apple clocks double-digit

revenue growth in India
iPhone shipments fell
11% in the quarter
globally; in India they
grew 19% YoY
PEERZADA ABRAR
Bengaluru, 31 July
Apple, the global information
technology major, has recorded double-
digit growth in revenue in India over the
last year. Also, its growth in the country
bounced back in the company’s fiscal
2019 third quarter (Q3; its accounting
year begins October 1), said Chief
Executive Tim Cook.
“India bounced back during the
quarter. We returned to growth there.
We are very happy. We grew in Brazil as
well,” said Cook on Wednesday.
On a geographic basis, the US-based
giant saw marked improvement in its
year-on-year (YoY) comparisons from
emerging markets, relative to the first
half of this financial year. Particularly in
the BRIC (Brazil, India, Russia, China)
‘We returned to growth in
mainland China, grew strong
double-digits in India and in
Brazil, and we set new Q3
records in Thailand, Vietnam,
and the Philippines’
TIM COOK
Chief executive, Apple
countries, where YoY performance
went from a 25 per cent revenue decline
in the first half to 3 per cent growth in
the June quarter. Cook said the firm set
June quarter revenue records in several
major developed markets — America,
Canada, Germany, France, Japan, Aus-
tralia, Korea. “In emerging markets, we
returned to growth in mainland China,
grew strong double-digits in India and
in Brazil, and set new Q3 records in
Thailand, Vietnam, and the
Philippines,” said Cook.
Analysts tracking Apple said the
India results were glimpses of what the
company could achieve in emerging
markets with a right pricing strategy for
its products and does local
manufacturing. Apple iPhone
shipments fell 11 per cent in the quarter
globally; in India, these grew 19 per cent
(YoY), according to Counterpoint
Research. “The iPhone XR was their
leading model in terms of shipment in
Q2, as compared to the iPhone 6 last
year. This is comparatively a new series
of iPhone and became one of the top
models for Apple. The key reason why it
happened is that they slashed prices in
the middle of the quarter, which helped
sales to grow,” said Tarun Pathak,
associate director, Counterpoint.
Turn to Page 21 >

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 https://t.me/TheHindu_Zone_official

2 COMPANIES MUMBAI | THURSDAY, 1 AUGUST 2019

STOCKS > Zydus Wellness

Q1 net profit at ~80 crore
> Gujarat Gas
Q1 net profit up
> Reliance Industries
At six-month low
> Axis Bank
Lower-than-expected Q1
> Hero MotoCorp
Management expects
IN THE NEWS against ~26 crore in 92 per cent at after seventh straight net at ~1,370 crore due H2FY20 to be better
the year-ago quarter ~234 crore YoY day of fall to higher provisioning than H1FY19

~1,500.05 CLOSE ~172.35 CLOSE ~1,166 CLOSE ~674.40 CLOSE ~2,356.20 CLOSE
* OVER PREVIOUS CLOSE 9.74% UP* 5.35% UP* 1.23% DOWN* 4.55% DOWN* 4.29% UP*
> .

‘This is a better deal as Firms upset

IN BRIEF
eBay buys 5.5% stake in
Paytm Mall for $160 mn with harsh
USbasede-commercefirmeBayhasboughta5.59percentstake
inPaytmMallfor$160million(around~1,101crore),accordingtoa
regulatoryfilingbyPaytmE-commerce.PaytmE-commerce,the
parentfirmofPaytmMall,hasissuedpreferentialshareson
privateplacementbasistoe-Bay.“E-bayhasinvestedaround
it meets my timelines’ CSR norms,
$160millioninPaytmMallfora5.59percentstake.Themoneywas
receivedfromtheSingaporearmoftheUS-basede-commerce
juggernaut,"asourcetoldPTI.Withthisround,PaytmMallhas
raisedabout$805millioninfundingacrossthreerounds. PTI<
PUNIT GOENKA sounds relieved
as the process of divesting
promoter stake in the ~7,933-cr
Zee Entertainment Enterprises
a strategic investor). But since
the black Friday in January
(when the Zee stock crashed by
over 30 per cent) we have been
prison term
is finally over. Soon after the fighting. And my conjecture is
deal was finalised, he spoke that strategic investors were
Automakers cut Chandrasekaran to Vanita Kohli-Khandekar.
Edited excerpts:
looking for a bargain. They were
not willing to pay for the intrin-
output by 11% in reappointed sic value of the asset (that is over
Apr-Jun: Report TaMo director Why Invesco? and above the market price of
There were several options (He ~360 per share). Zee is not worth
Automobilemanufacturers Tata Motors on Tuesday said its refuses to discuss the details of ~400 (per share), it is more than
slashedproductionby11per shareholders had approved these). But this was a pure-play that. If Star was valued at $16 bil-
centintheApril-Juneperiod the reappointment of equity deal. Also, we had an lion (in the Disney-Fox deal)
overtheyear-agoperiodasthe N Chandrasekaran as a existing relationship with then how can Zee be only
industryfacedtheworst director on the company's Oppenheimer (which Invesco $5.5billion (~40,000 crore)? Our
slowdownwithsalesdeclining board. He is chairman of Tata bought in 2018) for 17 years. peak share price was ~630. That
monthaftermonth,saidIndia Motors. The company said They own 8 per cent in Zee. This gives Zee a valuation of ~60,000
Ratings&Research'sreport. Nasser Munjee, Vinesh Kumar takes their holding to 19 per crore or about $9 billion. Finally
Vehiclesalesacrossallcate- Jairath and Falguni Nayar had cent. I have known Justin It is very disappointing to hear could have announced the it was only Oppenheimer which RUCHIKA CHITRAVANSHI
goriesdeclined12.35percentto ceased to be independent Leverenz (portfolio manager, that the buyer is not a strategic Invesco deal on the day of the knew the intrinsic value of this New Delhi, 31 July
6millionunitsintheperiod,as directors upon completion of Invesco Oppenheimer investor like the consortium results (July 23), but we waited asset. They have known us for 17
against6.9millionunitsinthe their terms. PTI< Developing Markets Fund) per- led by Comcast… How was this an additional five days for years. It gave a premium over Corporate India is worried over mandatory spending on
sameperiodoflastyear. PTI< sonally. And this deal happened deal better? Comcast. the market because it knows corporate social responsibility (CSR) under the new amend-
over a casual conversation dur- We would have liked it to that once our pressure is over, ments to the Companies Act, which now provides for a
Zomato says ing a general investor meeting a be Comcast too but this For many months Zee this asset will give returns. three-year jail term if the new CSR norms are not followed.
Wipro buyback food doesn’t month and a half back. is a better deal because has been saying that the “We had not anticipated penal provisions. Equating
proposal gets have religion it was meeting my time- stake sale is also What does this mean for the unspent amount to a criminal offence is a harsh step. This
What does Invesco bring? How lines. Comcast was tak- intended to get in a debt reduction at the group is an indication that we are focusing on spending rather
Sebi approval Zomato is winning the do things change for Zee? ing much longer to complete the strategic investor and take the level? than the outcome,” said Rumjhum Chatterjee, chairper-
WiproonWednesdaysaidthe internet after it refused on Nothing changes for the com- deal; it would have gone beyond company global… did the Of the promoter’s 36 per cent son-national committee of CSR, Confederation of Indian
companyhadreceived Wednesday to resolve a pany. Invesco is a pure financial the deadline of September 30. promoter debt and the stake in Zee, 11 per cent goes to Industry.
approvalfromtheSebiforits customer's complaint equity investor. They have no deadline then mean that you Invesco. The remaining 25 per According to the new CSR norms under Section 135 of the
proposedsharebuybackworth about being assigned a rights other than those of a Wouldn’t the consortium led were negotiating from a cent remains with the investors. Companies Act, a company has to earmark a part of its prof-
~10,500crore.Therepurchase Muslim delivery executive shareholder; they have no board by Comcast (containing among position of weakness? Because As of date the total debt stands at it towards social activities and transfer all unspent amount
ofshares,whichwillhappenat for his food order. "Food seat. The agreement does not others a fund set up by James this brings nothing to the ~11,000 crore. With this stake into an escrow account (if it is an ongoing project). This
~325apiece,willopenon doesn't have a religion. It is restrict Zee; we don’t have to go Murdoch) have been a better fit company… not even the sale and the sale of non-media account will be opened by the company concerned in a
August14andcloseonAugust a religion," the firm to them for permissions except strategically… money. assets (roads and solar) already bank and be called the ‘unspent CSR account’.
28,thefirmsaid. BS REPORTER< tweeted. PTI< for approvals required from It would have certainly been bet- Absolutely. If we had more time under due diligence the debt In case the money remains unspent in three years, it
shareholders under regulation. ter. But we waited for them. We we could have done that (got in will be cleared. will be transferred to any fund specified in Schedule VII of
PGIM completes buyout of DHFL's MF arm the Act. Experts feel this ‘over-regulation’ may not go down
well with the industry and that the government may enforce
Global asset manager PGIM on Wednesday completed the its agenda through CSR obligations of corporates.
buyout of its crippled local partner DHFL to take full ownership
of DHFL Pramerica Asset Managers. The deal was first DLF sales guidance in BookMyShow will “India is moving back to Inspector Raj. By making CSR
spending mandatory, the government has made it into a

bring NBA to India

announced last December as DHFL's troubles increased, and has statutory due like tax but with none of its democratic qual-

FY20 at ~2,700 crore

now received necessary approvals including from the Securities ity,” said a corporate law expert.
and Exchange Board of India. Following the troubles at the Funds, which are available to companies under this
domestic partner, DHFL Pramerica MF's assets under URVI MALVANIA Schedule, include the Swachh Bharat Kosh, Clean Ganga
management plunged by ~2,216 crore in the June quarter to a Mumbai, 31 July Fund, and the Prime Minister’s National Relief Fund, among
low of ~5,412 crore. PTI< VINAY UMARJI others. In case the project concerned is not ongoing, the
Ahmedabad, 31 July After bringing Canada-based variety show Cirque unspent amount will go to the funds cited earlier.
CORPORATE SCORECARD On the back of an expected sales
du Soleil to India last year, online ticketing com-
pany BookMyShow (BMS) is bringing the first
Corporate Affairs Minister Nirmala Sitharaman said the
Bill is being brought in to “ensure more accountability and
launch of the second phase of its live National Basketball Association (NBA) game better enforcement to strengthen corporate governance
ASHOK LEYLAND PROFIT DROPS 45% Ultima project in New Gurugram in
the last quarter of 2019-20, India’s lead-
to India. The pre-season game will be played
between the Sacramento Kings and Indiana
norms and compliance management in the corporate sec-
tor”. “Gandhi’s trusteeship principle is with which profit-
AshokLeyland’sprofitdropped45percentto~230croreduringthe ing real estate developer DLF has pro- Pacers on October 5 at the NSCI Dome arena in making cannot be devoid of social responsibility. The
quarterendedJune30,from~421.63croreayearago.The vided a sales guidance of ~2,700 crore Mumbai. The match will be telecast live in India amendments we are bringing now are only to sharpen focus
company'smarketsharegrew4percentto34.1percentintheMHCV this year. on the Sony sports cluster, and in 200 countries and make it far more effective,” Sitharaman told the Rajya
segmentduringthequarter.Revenuedropped9percentto~5,684 Of these, ~1,000-1,200 crore is like- globally. Sabha on Tuesday.
crorefrom~6,263croreintheyear-agoquarter. BS REPORTER< ly to come from its Phase 5 project, The partnership with NBA is among BMS’ The amendment mentions that if a company fails to
another ~800-1,000 crore from the rest many efforts to grow the non-movie or live enter- comply with the norms stated above, it will be punishable
TATA GLOBAL EICHER MOTORS of Gurugram projects, and another tainment pie in its business. Currently, the live with a fine between ~50,000 and ~25 lakh, and “every officer
BEVERAGES NET NET DIPS 22% ~600 crore from its National Devco
business, Ashok Tyagi, whole-time Talking about some of the capital
entertainment business accounts for 35 per cent
of the company’s revenues, and it intends to take
of such company who is in default shall be punishable with
imprisonment for a term, which may extend to three years
RISES 10.5% TO ~452 CRORE director and group chief financial offi- expenditure lined up this year, Tyagi this number up to 50 per cent over the next two or with fine or both”. “The industry seems a bit startled with
Tata Global Beverages on Eicher Motors on cer at DLF, told analysts in a post-earn- said the Chennai project of DLF, which years. the imposition of penalty for non-compliance with CSR
Wednesday posted a 10.56 Wednesday reported a 21.52 ings call. will be later transferred to DLF Cyber Sports played an important part in the devel- provisions, especially when one of the objectives of the Bill
per cent increase in its per cent decline in its DLF has earmarked a capital City Developers (DCCDL), will see a opment of the non-movie business at BMS with was rationalisation of offences under the Companies Act,”
consolidated net profit to consolidated profit after tax expenditure of ~200 crore this year for capex of ~200 crore in the current a variety of domestic leagues kicking off in the saidAtulPandey,partner,Khaitan&Co. Companiesalsosaid
~141.68 crore during the first at ~452 crore for the quarter its Chennai project. The office space financial year. past decade or so. Starting with the Indian that social sector capacity needs to be built up in order to
quarter of 2019-20, on the ended June 30. The project, which will be transferred to DLF holds 66.66 per cent in its Premiere League, the ticketing platform has part- absorb higher CSR spending. “There can be a delay in spend-
back of strong sales. Its net company reported a PAT of DLF’s rental arm, DLF Cyber City rental arm DCCDL, after promoters nered with numerous sporting events as ticketing ing if the project is designed in such a way or due to extra-
profit was ~128.14 crore in ~576 crore in the year-ago Developers, will see 4 million sq ft of sold 33.34 per cent for ~9,000 crore in partner, driving engagement within its consumer neous reasons like natural disasters. This area has to be self-
the year-ago quarter. PTI< period. PTI< development. 2017 to Singapore’s GIC. community, beyond movie ticketing. regulated and incentivised,” said an industry expert.

The tale of the infamous trio of Amrapali

Anil Sharma, Ajay Kumar and
Shiv Priya’s gigantic fraud
that shattered the dreams of
thousands of homebuyers
ARNAB DUTTA
New Delhi, 31 July
Nearlythreeyearsbeforethepromotersof
AmrapaliGroupwereputbehindbarsfor
defraudinghomebuyers,cricketerMohammed
Kaifhadraisedaredflag.InApril2016,alleging
financialirregularitiesbythegroup,Kaifhad
draggeditsthreekeydirectors—AnilKumar
Sharma,AjayKumarandShivPriya—tocourt.
MahendraSinghDhoni,Indiancricketerand
Amrapali’sbrandambassadorforyears,had
severedtieswiththegroupafewdaysbeforethat,
evenasasocialmediacampaignragedagainstthe
groupforthenon-deliveryofflats.
Meanwhile,thethreekeypromotershadbeen
busydivertinghomebuyers’moneyfromthe
groupmostlytoUltraHomeConstruction
(UHCPL),whichwasbeingusedasitsmother
entity—forcross-holdingstosiphonofffunds.
TheSupremeCourt-appointedforensicauditors
havefoundthatofthe~11,652crorethegrouphad
collectedfromhomebuyers,~3,500crore,orover
30percent,wassiphonedoff.While~3,000crore
wasdivertedthroughgroupentities,therestwas
donevia“trustedpartners”.
Moreover,thepromotershaddivertedfundsto
thetuneof~1,500-1,600crorethroughover-
billing.Altogether,bogusmethodssuchasloans
andadvancesbetweengroupcompaniesat
inflatedratesandunaccountedtransferoffunds
tothepromoterswerefrequentlyusedbythetrio.
Thisinvolveddozensofcompaniessuchas
AmrapaliInfrastructureandAmrapali
Healthcare.
InAmrapaliInfrastructure,SharmaandShiv
HOW IT UNFOLDED Kumarhadbeendirectorsforoverayear.
TheSharmafamilyhailsfromruralBihar.Anil
2003: Madan Mohan Sharma, 2010: Amrapali sings M S Dhoni as 2016: Homebuyers angry against KumarSharma’srisefromhishumbleoriginin
PundarakhvillageinBegusaraidistrictisnothing
Ajay Kumar and Shiv Priya form brand ambassador; I-T dept raids Amrapali's rise; M S Dhoni quits as shortofafairytale.MadanMohanwantedhisson
Amrapali’s mother entity Ultra group firms for fraudulent ambassador, Mohammad Kaif
Home Construction related-party transactions sues promoters for financial fraud
tobeanengineer.AftercompletinghisBTechin
civilengineeringfromNationalInstituteof
2004: Anil Kumar Sharma joins 2013: Another round of I-T raids; 2017: Ritik Sinha, Sharma's son-in Technology,Calicut,SharmadidhisMTechfrom
UHCPL as director; first residential trouble emerges in Noida property law & CEO of Amrapali Healthcare, IIT-Kharagpur.HeputintwobriefstintsatNTPC
project with 107 affordable units, market as National Green Tribunal and group director Nishant Mukul andthentheNationalProjectConstruction
Corporation(NPCC).HebrieflyservedintheBihar
gets under way in Noida cracks the whip on developers arrested
CivilServicesaswellbeforemovingtoDelhiin
2005-09: Amrapali launches 2014: Sharma diverts crores for 2019: Supreme Court sends the early-2000.
thousands of units in Noida, daughter’s star-studded three promoters to jail for Whilethebackstoryofthetwootherpromoters
Greater Noida region; leases wedding; unsuccessfully contests diverting over ~5,000 crore of —ShivPriyaandKumar—islesswellknown,
over 100 acres of land Lok Sabha election homebuyers' money sourcessaythatbothhadbeenclosetothe
Sharmasforyears.ShivPriya,sonofoneKM
Sharma,isarelative,whileKumaralsohailsfrom
Priyaused~113.54croretopurchasesharesof projectaccordingtoschedule,thetrio’scloutwas MohanSharma,fatherofAnilKumarSharma,set Bihar.Infact,theAmrapalisagainvolves
UHCPLintheirownnamesinsteadofthenameof intact. upUHCPL.DocumentsavailableattheRegistrar hundredsofrelated-partytransactions,wherethe
thefirmfromwhichtheyhadtakenoutthe AttheextravagantpartieshostedbySharma, ofCompaniesandfiledinthecourtshowthaton relativesoftheSharmasplayedkeyroles.
money.Inanotherinstance,groupcompany thegroup’scharismaticchairmanandmanaging April2,2003,aformalmemorandumof Accordingtotheauditreport,atleast~107crore
JhambFinance&Leasing,whichdidnothaveany director,Amrapali'spromoterswereseenrubbing associationagreementwassignedbetween havebeendivertedthroughtheirrelatives.
operationsorexpenses,sawitsassetbookswellto shoulderswiththewho’swhoofDelhi’spolitical MadanMohan,KumarandShivPriyatoformalise WhilebothShivPriyaandKumarweremostly
~883.24crorebyMarch2017,thankstotheloans circle,thefilmindustryandsports.In2014,the theentity. involvedinbackendoperationsandbusiness
andadvancespouringinfromgroupentities. galaweddingreceptionforSharma’sdaughter WhileMadanMohanandShivPriyaeachheld expansionbybringingininvestorslikeKaif,
Whileitisunclearifthepromotershad SwapnilandAmrapaliHealthcareCEORitik 4,500sharesofUHCPL,Kumarhad1,000shares. AnilKumarSharmawasthefaceofAmrapali.
plannedtodupehomebuyersfromtheoutset,the Sinhawasattendedbysuchpolitical UHCPLwasregisteredfivedayslateronApril7, Thegroup’sjourneyintotherealestatemarket
forensicauditrevealedthatovertheyears,they heavyweightsastheRaviShankarPrashad,Rajiv 2003,with~1lakhasitspaid-upsharecapital.Its beganwithoneprojectinNoidaundertakensoon
hadcreatedawebofmorethan150companies,of PratapRudiandSyedShahnawazHussain,Lalu registeredaddress,atleasttill2007,wasthesame aftertheformationofUHCPL.Atthetime,their
whichabout100wereusedtodivertfunds. PrasadandShatrughanSinha.Dhoniandhiswife, asMadanMohan’shome—E19,BahubaliEnclave, aimwastodeliveraffordablehomes.By2013,the
Thoughthedoubledealingsbythegroupstarted cricketer-turned-politicianKirtiAzad,andformer NewDelhi. AmrapaliGrouphaddiversifiedintofast-moving
becomingapparentonlyafter2015,twoincome- SupremeCourtjudgeMarkandeyKatjuwerealso Overthenextfewyears,thenowaccused consumergoods(AmrapaliMum’swaslaunched
taxraidsinSeptember,2010andAugust2013 present,alongwithBollywoodmusiccomposer NishantMukul,MohitGupta,AdhikariDas,and inBihar),hospitalityandentertainment.The
revealedthatthetriohadbythensiphonedoff duoSajid-Wajidandsinger othertrustedpartnersand/orexecutivesjoinedin. grouppromotedtwoHindifilms,GandhitoHitler
fundsworth~842.42crorethroughbogusbillings RekhaBharadwaj,whoperformedonstage. Anotheraccused,ChanderWadhwa,achartered andIDon’tLuvU, throughAmrapaliMediaVision,
tosuppliers.Atpresent,another~450croreworth TheauditorshavenowfoundthatSharmahad accountant,underwhosesupervisionUHCPLwas whereSharma’swife,PallaviMishra,wastheCEO.
ofrelated-partytransactionsareunderscrutinyby helpedhimselftoasmuchas~13.5crorefrom formedin2003,laterbecamechieffinancialofficer Sharma’sdaughterSwapnilwasalsoinvolved
theincometaxdepartment. Amrapalitomeettheweddingexpenses. ofthegroup.SourcessaythoughAnilKumar inthebusinessandhadaminoritystakeinatleast
However,untilFebruary2014,thepromoters TheAmrapaliGroup,whichrosetobeoneof Sharmawasthearchitectofthefirm,itwasnot oneentity—AmrapaliHealthcare.Whenthe
weresittingpretty.Thoughthepropertymarketin thelargestrealtydevelopersintheDelhi-NCR untilJuly2004thathewasformallybroughton giganticfinancialwrongdoingbythegroupfinally
theNoidaregionwasinthemidstofaslowdown, regionby2010,isatypicalrags-to-richesstory.It board.OnJuly22,2004,MadanMohanappointed camehometoroost,herhusbandRitikSinha,too,
andAmrapalihadnotcompletedanymajor wasfoundedintheearly-2000swhenMadan hissonadirectorofUHCPL.Bythen,ShivPriyaand wasarrestedonchargesoffraud.

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.
MUMBAI | THURSDAY, 1 AUGUST 2019 COMPANIES 3 <

Dilip Shanghvi takes 99% cut in remuneration

SOHINI DAS India’s pharmaceutical sector, drew a approval. Among peers, Shanghvi Shanghvi’s brother-in-law, Sudhir tance, medical bill, contribution to constitute a corporate governance
AT A GLANCE
Mumbai, 31 July salary of ~1 during 2018-19, the firm’s was one of the lowest-paid CEOs. Valia, who stepped down as whole provident fund and other perquisites and ethics committee to oversee cor-
annual report said. His remuneration in 2017-18 was time director and would continue as payable to directors, according to pol- porate governance related matters. Mar ‘18 Mar ‘19 Jul 31

T
he founder and managing
director (MD) of the country’s
largest pharmaceutical firm
SunPharmaceuticals,DilipShanghvi,
took a 99 per cent cut in remunera-
tion in 2018-19 when the company’s
earnings grew by 27 per cent.
Meanwhile, the firm also guided for a
low- to mid-teens growth in revenue
for FY19-20 and said its research and
development cost would remain at
8-9 per cent of sales.
Shanghvi, one of the lowest-paid
chief executive officers (CEOs) in
For the year ended March 31, 2019,
he received perquisites worth ~2.62
lakh. The valuation of his stake (9.6
per cent in Sun Pharma) remained
flat between March 31, 2018 (~11,411
crore) and March 31, 2019, (~11,039
crore). As on July 31, the valuation of
his shareholding in the firm stood at
~9,830 crore.
For the last financial year, how-
ever, Shanghvi is set to earn a divi-
dend income of ~63.3 crore as against
anincomeof~46.1croreinFY18.This,
however, is subject to shareholder
~3.36 crore (including a salary of ~2.79
crore). In comparison, Sharvil Patel,
the MD of Cadila Healthcare drew a
remuneration of ~25 crore, Nilesh
Gupta, MD of Lupin had a remuner-
ation of ~9 crore while G V Prasad,
co-chairman,MDandCEOofDrRed-
dy’s Lab had a remuneration of ~7.7
crore in 2017-18. While Gupta saw an
80 per cent drop in his remuneration
for 2018-19 to ~1.8 crore, Patel’s remu-
neration remained the same. Prasad,
however, took a 60 per cent jump in
remuneration to ~12.38 crore.
a non-executive director of Sun icy, it noted. The deal with Shanghvi The firm posted a consolidated Personal stake (%)
Pharma, also drew a ~1 salary and the and Valia is for their present term are net sales of ~28,686 crore in FY19, a 10 Sun Pharma 9.6 9.6 9.6
remaining remuneration in the form for a period of five years (April 2018 to per cent rise. Its consolidated net SPARC 11.2 10.72 10.72
of perquisites. Valia’s remuneration March 2023) and remuneration for a profit grew 27 per cent. The fourth Net worth (~ cr)
in2017-18wasthesameasShanghvi’s. period from April 2018 to March 2021 quarter profit, however, saw a 52 per Sun Pharma 11,411 11,039 9,830
“Remuneration of Dilip Shanghvi (for Shanghvi) and from April 2019 cent fall. The firm said the result was
and Sudhir Valia is ~1 each for the to March 2024 (for Valia). not comparable due to one-time im-
SPARC 1,063 539 449
financial year 2018-19 and the rema- The pay cut came in a year, which pact of ~1,085 crore, owing to change Dividend (~ cr)
ining amount of ~2,62,800 and saw Sun Pharma navigate through in distribution strategy in India. Sun Pharma 46.1 63.3 -
~79,200, respectively, pertain to not- several allegations of questionable Shanghvi said Sun Pharma SPARC Nil Nil -
ional value of perquisite, according to corporate governance practices. Its would continue to focus on opti- Remuneration (~)
I-T Act,” Sun Pharma’s annual report sharesfelltoasix-yearlowinJanuary. mising costs “given the tough phase Sun Pharma 3.01 cr ~1 -
said. The perquisites include house In a damage control mode, the com- that the global generics industry is SPARC Nil Nil -
rent allowance, leave travel assis- pany had to announce that it would passing through.” Source: Company

‘Trying to democratise
opportunity for all’
Flipkart, the e-commerce major, locked in an intense battle for leadership in the Indian market, has
partnered five non-governmental organisations to help artisans use the online marketplace to sell
their products. Flipkart Samarth has been designed to support artisans in their e-commerce journey
from onboarding till they get familiar to selling products online, Group Chief Executive Officer
KALYAN KRISHNAMURTHY told Neha Alawadhi. Edited excerpts:

How does this programme fit in with your

2019-20 strategy?
It is in direct alignment with what we’ve been
doing so far. It is part of our strategy to grow our
micro, small and medium enterprises (MSME)
seller base. We’re trying to democratise the
opportunity for everyone. We have launched
the store shop front on the Flipkart app, with all
the merchandise from the five partners.

You said this is aligned with the government’s

effort to generate jobs.
Through the five partners that we have already
onboarded, we are already connected to 30,000
artisans. We are in talks with many, many more
as we scale this further. These 30,000 sellers
will create a few million jobs.
What parameters will you use to track the
success of the programme?
This is not a driver of metrics or financials for
us. The more people who get on the platform,
the more empowered they get, and the more
they sell.
Is there an investment number for the
training you are putting into this?
We have invested a huge amount in the
last several years. It is a meaningful
number. Most of it is on technology and supply
chain and both of these will help Samarth.
Do you plan to take this global?
At this point in time, no. The Minister of State
for Finance Anurag Thakur wanted us to think
about it. Right now, it is only in India.
Will this initiative help you get more
hyperlocal?
The concept of e-commerce is democracy. E-
commerce, in general, is not a hyperlocal con-
cept. There are some categories and
businesses in e-commerce which are
more hyperlocal friendly — groceries,
televisions, appliances. So the cus-
tomer value proposition is if you live in
Delhi, how do we get you a good selec-
tion from Tirupur, Durgapur, or Surat? We’re
not going to push any kind of artificial hyper-
local (through Samarth). That is not how we
think about e-commerce.

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4 ECONOMY & PUBLIC AFFAIRS MUMBAI | THURSDAY, 1 AUGUST 2019

“Our Indo-Pacific strategy is well on its way to bearing “Moving forces in and out of Kashmir... is an “Can Atal Community Innovation Centres
fruit for not only them but for the United States, and we ongoing process. Extra forces are brought in come up with innovative methods which
have watched these coalitions build out. We're working for Amarnath Yatra or elections... But will help India in reducing its fossil fuel
hard with the Indian government to provide them with linking the movement of forces with other import bill? ... India will not become
opportunities to grow their economy as well” issues is being done for personal interests" $5-trillion economy without innovation”
MIKE POMPEO, US Secretary of State RAM MADHAV, BJP leader DHARMENDRA PRADHAN, Petroleum minister
> .

IN BRIEF
Electricity bill relief in Delhi
UK, France rise; India now 7th largest economy
as regulator revises tariffs INDIVJAL DHASMANA
NewDelhi,31July
my grew to $2.82 trillion and
the French economy expand-
ed to $2.78 trillion in 2018,
THE GLOBAL GIANTS
2016 2017 2018
data, Japan’s economic size was
$4.97trillionin2018,higherthan
India’s by $2.24 trillion.

20.49
GDPatcurrentprices($trillion)

19.48
Delhi's power regulator announced on The UK and France have top- against India’s $2.73 trillion, India planned to increase

18.71
Wednesday the new electricity tariff for pled India from the position of showed the data. its economic size to $5 trillion
2019-20, significantly bringing down the fifth-largest economy in It means that India’s econo- by 2024-25.

13.61
fixed charges while raising energy 2018, according to data com- my grew a mere 3.01 per cent in For this, the Economic

12.14
11.14
charges. Delhi Electricity Regularity piled by the World Bank. dollar terms in 2018 against 15.72 Survey estimated that India

4.86
4.97
4.93
Commission (DERC) chairman Justice Earlier data had shown that per cent in 2017. would have to grow by 12 per

3.99
3.69
3.49

2.64
2.66

2.82

2.65
2.59
2.78
2.47

2.29

2.73
(retired) S S Chauhan said the new rates India had become the sixth On the other hand, the UK’s cent at current prices a year.
would be applicable from August 1. largest economy in 2017, push- economy grew 6.81 per cent Assuming the Reserve Bank of
According to the new rates, the fixed ing France to the seventh place. against a contraction of 0.75 per India’s inflation growth pro-
charges up to 2 kilowatts (kW) has been reduced from ~125 to ~20, However, the latest data showed cent in this period. The French US China Japan Germany UK France India jections of 4 per cent, the
while the charges above 2 kW but less than 5 kW has been slashed that India had in fact become economy expanded by 7.33 per ILLUSTRATION BY BINAY SINHA Source: World Bank national accounts data, and OECD National Accounts data Survey said the economy need-
from ~140 to ~50. The fixed charges for more than 5 kW and less the fifth-largest economy that cent against 4.85 per cent. ed to grow 8 per cent at con-
than 15 kW has been reduced from ~175 to ~100, Chauhan said. PTI< year, ahead of even the UK. Economists attributed this cent the following year. “This per cent in 2017-18. For India’s IHS Markit said in a recent stant prices a year to make this
In2017,India’seconomicsize to a movement of the Indian has resulted in slower growth of official statistics, financial report that India will overtake target possible.
Reviewing exposure LS passes Inter-State stood at $2.65 trillion, followed
by the UK at $2.64 trillion and
rupee against the dollar.
Devendra Pant, chief econo-
India’s economy in dollar terms
in 2018 against 2017,” he said.
years start on April 1 and end at
March 31.
the UK this year to become the
world’s fifth-biggest economy,
At constant prices, India’s
economy expanded by 6.8 per
to auto dealers and River Water Disputes France at $2.59 trillion. mist at India Ratings, said the In rupee terms, India’s The new data has come andispoisedtosurpassJapanto cent in 2018-19 and is projected
car loans, says SBI (Amendment) Bill However, this status was rupee appreciated 3 per cent in economy grew 11.2 per cent in when there were talks of India be the third largest in 2025. to grow by 7 per cent in the cur-
short lived as the UK’s econo- 2017, while it depreciated 5 per 2018-19, a shade lower than 11.3 overtaking Japan by 2025. According to the World Bank rent fiscal year.
StateBankofIndia(SBI)on ABillseekingtoexpediteand
Wednesdaysaiditiscontin- streamlineresolutionofinter-

Core sector growth hits

uouslyreviewingitsexposure
toautomobiledealersaswell
asindividualloansand
ensuringthattheautosector
doesnotfaceanystress.The
clarificationcomesinthe
wakeofreportsthatSBIis
seekingtoreduceitsexposure
toriskfromasectorinthe
midstofaslowdown. PTI<
Remove hurdles in
‘Housing for All by
2022’ mission: PM
Inthefirst'Pragati'review
meetingofhissecondtermin
office,PrimeMinisterNaren-
draModireiteratedonWedn-
esdayhisgovernment'scom-
mitmentforthe"Housingfor
Allby2022"missionandurged
bureaucratstoremovehurdl-
estoachievetheobjective.PTI<
Correction
United Bank of India (UBI)
has not cut its marginal cost
of funds based lending rate
(MCLR) by 20 basis points, as
incorrectly mentioned in a
report on Wednesday. The
error is regretted.
statewaterdisputeswas
approvedbyLokSabhaon
Wednesday.Akeyfeatureof
theInter-StateRiverWater
Disputes(Amendment)Bill,
2019istheconstitutionofa
singletribunalwithdifferent
benches,andthesettingupof
stricttimelinesfor
adjudication.TheLowerHouse
approvedthebill,whichseeks
toamendtheInterStateRiver
WaterDisputesAct,1956,bya
voicevote. PTI<
SC to govt: Amend
law if needed but
regulate Ola, Uber
TheSupremeCourtaskedt
heCentreonWednesdayto
considerframinglawto
regulateapp-basedtaxiservice
providerslikeOlaandUber,
keepinginmindthesafetyof
womenpassengers.Theapex
courtwastoldbytheCentre
thatsucharegulationwould
requireamendmentinlaw.
Thebenchaskedthepetitioner
tomakearepresentation,
alongwithsuggestions,tothe
Centreonregulatingapp-
basedtaxiserviceproviders.PTI<
Q1 fiscal deficit at
61.4% of FY target
four-year low of 0.2%
Thefiguretouched~4.32trillionforJunequarter
Growthratewas ARUP ROYCHOUDHURY
CAUTIOUS COUNTING
4.3%inMay New Delhi, 31 July
Figures in ~ trillion unless
The Centre’s fiscal deficit for the first specified otherwise
SUBHAYAN CHAKRABORTY quarter of the 2019-20 fiscal year was 2019-20 Apr-Jun
NewDelhi,31July ~4.32 trillion, or 61.4 per cent of the (BE) 2019-20*
full-year budgeted estimate of ~7.04
G
rowth in the eight core sec- trillion. This is significantly less than Net tax revenue 17.05 2.51 (14.7)
tors of the economy col- the same period last year, when the Non-tax revenue 2.72 0.33 (12.3)
lapsed to 0.2 per cent in June fiscal deficit as a percentage of full- Non-debt capital
— a staggering 50-month low — year target was 68.7 per cent. receipt 1.02 0.05 (4.6)
dragged down by major contraction The lower fiscal deficit for the April-
in the energy segment and weak per- June quarter was achieved due to a
Total revenue 20.80 2.89 (13.9)
formance across industries. slowdown in capital expenditure owing Revenue expenditure 24.48 6.59 (26.9)
Data released by the commerce to the Lok Sabha elections, as well as Capital expenditure 3.36 0.63 (18.8)
and industry ministry on Wednesday the Narendra Modi government seem- Total expenditure 27.84 7.22 (25.9)
showed that the coal, crude oil, natu- ingly reversing the usual trend of front
ral gas, refinery products, fertiliser, loading expenditure, as it looks to meet Fiscal deficit 7.04 4.32 (61.4)
steel, cement, and electricity indus- an increasingly challenging full-year BE: Budget Estimates; *percentage of full-year
target in brackets Source: cga.nic.in
tries saw the rate of growth take a target of 3.3 per cent of the gross domes-
sudden hit in June after a slight dip in tic product.
May when it was 4.3 per cent.
Four of the eight industries mak-
STAGNATED GROWTH Steel output growth was slashed
by more than half in June, with
Data by the Controller General of
Accounts showed that total expendi-
departments, where expenditure was
higher — fertilisers 39 per cent of tar-
% YoY core sector growth in the last 1 yr
ing up the core sectors, which con- growth rate standing at 6.9 per cent, ture for April-June was ~7.22 trillion, or get (24 per cent last year) and food 49
tribute almost 40 per cent to the down from 15.3 per cent in May. 25.9 per cent of the total Budget size of per cent (51 per cent last year),” said

Indian Oil Q1 net

country’s total industrial production, Another sector indicating the health ~27.84 trillion, compared with 29 per Madan Sabnavis, chief economist
registered a contraction in the of construction and infrastructure cent for the same period last year. with CARE Ratings.
month. This is symptomatic of stag- development — cement — saw pro- Revenue expenditure was 26.9 per cent Tax collections have been lower this

profit drops 47%

SHINE JACOB
NewDelhi,31July
State-run Indian Oil Corpo-
ration (IOC) has posted a 47.3
per cent drop in consolidated
net profit for the first quarter
of the financial year 2019-20 to
~3,737.50 crore as compared to
~7,092.42 crore during the same
periodlastfinancialyear,owing
to lower refining margin and
inventory gains.
The company’s total
income almost remained flat
with an increase of only 0.48
per cent during the quarter
under review to ~1.53.11 trillion
versus ~1.52.38 trillion during
the April-June quarter of 2018-
19. The gross refining margin
(GRM) during the first quarter
of FY19-20 was $4.69 per bbl as
compared to $10.21 per bbl in
the corresponding quarter of
the previous financial year, IOC
Chairman Sanjiv Singh said in
a statement. During the April-
TRENDING UP
BSE price in ~
142
133.55
138
134
139.30
130
Jul 30,’19 Jul 31,’19
Compiled by BS Research Bureau
June period, the company had
an inventory gain of ~2,362
crore against ~7,065 crore dur-
ing the first quarter of the pre-
vious financial year.
“Indian Oil sold 22.658 mil-
lion tonnes of products, includ-
ing exports, during the first
quarter of financial year 2019-
20. Our refining throughput for
Q1FY20 was 17.283 million
tonnes (mt) and the through-
put of the corporation’s coun-
trywide pipelines network was
21.851 mt during the year,”
Singh said.
nation setting in the domestic indus-
try, said economists.
June’s free-fall growth rate is
blamed largely on refinery produc-
tion, which commands almost 30
per cent of the index, by weight. The
sector saw a 9.3 per cent contraction
in the latest month, much more than
the 1.5 per cent fall in May. The clo-
sure of key refining units and sudden
changes to the oil import value chain
has led to repeated volatility in the
sector in 2019.
“The fall in petro products can
be attributed both to internal issues
as well as declining prices of crude
oil, which makes imports cheaper
under a stable exchange rate
regime,” Madan Sabnavis, chief
economist at CARE Ratings, said.
Barring a two-month growth spree
beginning March, sectoral output
has contradicted every month in
the current year.
The same was true across the
energy space. Crude oil production
went down by 6.8 per cent in June,
compared to 6.9 per cent in May,
the highest margin of contraction
in the past 12 months. In June, nat-
ural gas production also contracted
by 2.1 per cent, after registering
duction contract by 1.5 per cent, after compared with 29 per cent, while capi- year as percentage of the budgeted
rising by 2.8 per cent in May. Growth tal expenditure was 18.8 per cent, com- amount. Consequently, both revenue
had tapered off after hitting an 11- pared with 29 per cent. and capex have been lower this year.
% YoY sector-wise growth for June ‘19 month high of 15.7 per cent in March. A breakdown of ministry-wise Lower capex also gets reflected in the
Coal 3.2
Electricity generation rose by 7.3
per cent in June, slightly lower than
expenditure on the CGA website shows
thatexpenditurebytheagriculturemin-
core sector data as just before elections,
there was a slowdown in spending.
Crude oil -6.8 7.4 per cent growth in May. Growth in istryforApril-Junewas15percentofthe Capex may be expected to
Natural gas -2.1 the electricity sector had dipped to its full year target compared with 37 per pick up in the coming months,”
Refinery products -9.3 lowest point in the last 71 months in cent last year. Civil aviation spent 14 per Sabnavis said.
Fertiliser 1.5 January. A low growth in coal output cent of the full-year allocation com- Total revenue for the April-June
Steel 6.9 had been blamed then. However, pared with 60 per cent last year. Power quarter was around ~2.9 trillion, or 13.9
Cement -1.5 growth has steadily risen since then. was 28 per cent, compared with 53 per per cent of the full-year target of ~20.80
“The marginal core sector cent, railways was 25 per cent, com- trillion. Net tax revenues came in at 14.7
Electricity 7.3
growth, combined with the contrac- pared with 33 per cent, while road trans- per cent, compared with 16 per cent,
Overall 0.2 tion in both auto production and port and highways was just 1 per cent of non-tax revenue was 12.3 per cent,
Source : Commerce and Industry Ministry non-oil merchandise exports, sug- full-year allocation, compared with 35 broadly similar to the same period last
gests that Index of Industrial per cent. On the other hand, the year, while non-debt capital receipts
zero growth in May. Production growth would be muted Ministry of Chemicals and Fertilizers, were 4.6 per cent versus 11.8 per cent.
However, coal output growth at around 1 per cent in June 2019. and Petroleum and Natural Gas saw “While the first quarter tax collec-
gained pace, rising by 3.2 per cent in Overall, there is limited visibility of a higher spending compared to the same tions are affected by tax refunds of pre-
June, up from May’s growth of 1.8 per broad-based improvement in the period last year because of clearing of a vious year, current growth momentum
cent. Production had hit a high of 9.1 Indian industrial outlook. The part of subsidy dues. will have an impact on tax collections.
per cent in March. core sector data further strengthens “A post-election and pre-Budget lull On the whole, unless the consumption
The cement and steel sectors also the likelihood of a repo rate cut in in spending in June, contributed to the slowdown is reversed quickly, it will be
saw their performance weaken in the August 2019 policy review,” Centre’sfiscaldeficitinQ1FY2020print- a tough task for the government to
June. “The government spending Aditi Nayar, principal economist, ing largely in line with the year-ago lev- achieve the FY20 fiscal deficit,” said
has also been lower this quarter, ICRA, said. el, even as tax growth was subdued,” Devendra Kumar Pant, chief economist
which may explain why cement has Fertiliser production rose in June said Aditi Nayar, principal economist at India Ratings.
turned negative this month — by 1.5 per cent, after going down by 1 with ICRA. “At present, we can't rule out that
though there was the base effect per cent in May. The sector had “The rollover of last year’s subsidy expenditure cuts may be required to
here where growth was 14.2 per cent grown four months out of the six in is evident, as can be seen by the prevent a fiscal slippage, if the revenue
last year,” added Sabnavis. the current calendar year. expenditure on fertilisers and food targets are missed,” said ICRA’s Nayar.

‘By 2024, we intend to achieve 90% accuracy in detecting heavy rain’

MRUTYUNJAY MOHAPATRA, 54, popularly known as the Cyclone Man of India, will today take up the top job system to help farmers make informed every 10 minutes, and we aim to reach the 1-km wrong. We are very serious in our quest to
at the India Meteorological Department (IMD) as its director general. Mohapatra, who hails from a coastal decisions on crop selection, water use, radius by then. reduce the initial value errors.
village in Odisha, has experienced numerous cyclones. Now, as a specialist, he aims to become an able fertiliser application. To do that, we are augmenting our network of
generalist and be an “institution builder” at the Met department. He speaks to Abhishek Waghmare We are in the process of rain gauges and observation stations, and plan to
about his goals during his term, which continues till 2024. Edited excerpts: There have been repeated complaints institutionalising “urban have one observation every
from the public on the accuracy of meteorological support” system 25x25 km.
How do you look at this year’s monsoon, This is a fresh challenge. forecasts, especially from the urban for our growing cities.
especially in the context of climate change? class. How would you address that? But economic activity is rising, Coming back to data on monsoon, will you
This year, though the monsoon started late, it The biggest casualties of this are farmers. How Compared to five years ago, probability and small towns, villages too need revise the onset and withdrawal dates of
sprung back to normal, courtesy better-than- do you plan to tackle the problem? of detection of heavy rainfall event has accurate forecast now. monsoon rains for different states and cities?
normal rains in July. The El-Nino conditions The quality of our forecasts has been risen from nearly 40 per cent to 70 per Our Nowcast system is working We are in the process, and an expert panel is
prevailing in the beginning of June have improving. We give impact-based forecast in cent now. only in 400 blocks of nearly 7,000 looking at extensive research already
weaned out, and the outlook all districts now. From 3 million We intend to improve it beyond 90 per blocks (sub-districts) in the completed on the topic. If required, we would
looks normal till September, as farmers under our SMS advisory cent by 2024. country. We need to ramp it up to change it, but it would take time. On the other
other major indicators are in the “The El-Nino system, we have come to 41 But the critical issue here is the cover all blocks, and all hand, we have already made changes to the
positive. In the longer term, conditions million now. We plan to reach 90 “mesoscale” (spread over a very villages would then get rainfall climatology, and reduced the normal
India’s monsoon is going through prevailing in the million farmers by 2024. small area) nature of these accurate information June-September rainfall by 2 per cent.
an epochal trough: a three- beginning of June In addition, we will transform rains, where detection three hours before
decade period where rainfall falls have weaned out, the static crop calendar to a becomes difficult. Heavy any extreme event. What are your other initiatives?
below normal quite frequently. and the outlook dynamic crop calendar rains at one place and We are working on the “South Asia Flash Flood
But a bigger worry is the intra- looks normal till at the district level (which will drizzle two miles What are the real Guidance Project” where flood forecast on each
seasonal variability. September, as other take into account the changing ahead, is a issues in erroneous watershed in the country will be given every six
major indicators are climatic conditions to give frequently forecasting? hours, every day. Within a year, this project will
Do you mean the extreme events? in the positive” suggestions on sowing time and encountered See, what you predict be implemented. This will help minimise
Yes, the number of effective rainy the variety of crops). Climatology situation. We plan depends on the initial losses from extreme flood events like the one
days has reduced in consonance as well as crop pattern vary across to cover the entire data that you input to happened in Kerala last year.
with rise in heavy rainfall days. Some areas in districts. We will give advisories based on the country with your model. If initial We are building a Common Alert Protocol,
Mumbai clocked more than 30 cm a day twice type of crop and the stage of growth of crop, Doppler radar values (observations) are wherein the advisory reaches intended people
this season. If it is not raining, it is not raining which is not done now. We will also build a network in five years. It incorrect, errors add up through all media: TV, SMS, commercial
at all, and if it is raining, it is raining heavily. decision support will give us observations and forecast results are messaging platforms and social media.

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6 ECONOMY & PUBLIC AFFAIRS
>
MUMBAI | THURSDAY, 1 AUGUST 2019 1

Stressed assets funds may return Most non-urea fertiliser

subsidies unchanged
to India after relaxed ECB norms
Companies seek returns of over 20 per cent but RBI has put restrictions on yields and tenure
Centre to spend
~22,875 crore on
ANUP ROY vide loans, which is LIBOR (London put pressure on domestic asset recon- the sops in FY20
Mumbai, 31 July Inter-bank Offered Rate) plus 400-450 Experts expect some deals to struction companies (ARCs) unless
basis points, or roughly 6.0-6.5 per cent. happen with a mixture of more clarity on the assignment rule SANJEEB MUKHERJEE
he Reserve Bank of India’s move However, the stressed assets funds pre- equity and debt, where the is provided.

T
to allow companies to raise
loans under external commer-
cial borrowing (ECB) route — to repay
banks their dues categorised as non-
performing assets (NPAs) — will likely
pique interest of foreign stressed asset
funds once again. So far, such investors
have remained non-committal in pick-
ing up Indian assets after seeing legal
obstacles in the resolution process
under the Insolvency and Bankruptcy
Code (IBC), say experts.
The RBI on Tuesday said NPAs, or
loans heading towards the NPA stage,
could also be sold off by banks to recov-
er their domestic rupee loans. Such
transactions will have to be carried out
with entities permitted to give loans
under ECB, the RBI said. These are typ-
ically regulated entities, banks, and reg-
istered foreign investors.
Transactions cannot be carried out
with overseas branches of banks present
in India. Most of the stressed assets
funds are private and not regulated.
However, they can tie up with banks not
present in India to enter indirect deals.
However, there is a restriction on
the rate at which these firms can pro-
fer to take assets that provide yields of
20 per cent and above, say experts.
Interestingly, the RBI said the assets
could be sold by banks on an “assign-
ment basis”. That means that if a com-
pany has a debt of ~1,000 crore, and it
agrees to pay ~400 crore, the bank will
transfer the entire rights for ~1,000 crore
to the buyer. This pushes up yields sig-
nificantly for the buyer, unless the RBI
clarifies that the deal and rights of the
assets are limited to only ~400 crore.
“This is a replacement avenue
given to open up Indian assets to
foreign debt. This will encourage
those stressed assets funds that
were interested in Indian assets at
the initial stages of the IBC, but had
stayed away due to litigations and
uncertainties, to have a fresh look at
the assets,” said Harry Parikh, Associate
Partner at legal firm BDO India.
Initially enthusiastic about India’s
~10-trillion stressed assets market,
many of the foreign stressed assets
firms are looking to put their money
into assets at various levels of stress,
including declared NPAs.
Distressed assets specialists such as
debt component could be
converted into equity and
taken up by foreign investors
Cerberus Capital, Silverpoint, Varde,
Centre Bridge, and Davidson Kempner
Capital Management had shown inter-
est in India, but did not fully commit to
their plans of investment as the IBC
processes hit roadblocks by frivolous
bidding, or other legal challenges, say
people in the know.
If investors can pick up assets
directly overseas through their arrange-
ment with permitted ECB lenders, they
won’t have to face lengthy legal battles
while recovering dues. This will likely
“The market is huge and there is
scope for both funds and ARCs,” said
R K Bansal, managing director and CEO
of Edelweiss ARC.
“ARCs typically don’t do big deals,
even as some of the big deals are routed
through ARCs. Considering there are
tenure and yield restrictions on ECB
loans, domestic ARCs should not face
much of a problem.”
Experts expect some deals to hap-
pen with a mixture of equity and debt,
where the debt component could be
converted to equity and taken up by
foreign investors. However, if the for-
eign funds do get a hold on Indian
assets, it will also have interesting ram-
ifications for the companies in ques-
tion, given that these firms will also
take a proactive role in the manage-
ment of those companies.
“The permissibility to use ECB
under the one-time settlement scheme
would mean that risks will get trans-
ferred from financial creditors to new
creditors/strategic creditors who may
have a say in the management, and
will have better skills in recovering
their loans,” Parikh said.
New Delhi, 31 July
The government on
Wednesday notified the sub-
sidy on most non-urea fer-
tilisers and kept them
unchanged from their 2018-
19 levels, except for sulphur,
which it raised from ~2.72 per
kg to ~3.56.
The decision will cost the
exchequer ~22,875 crore in the
2019-20 fiscal year.
A decision in this regard Subsidy for nitrogen has been fixed at ~18.90 per kg, phosphorous
was taken at the meeting of at ~15.11 per kg and potash at ~11.12 per kg for current fiscal year
the Cabinet Committee on
Economic Affairs (CCEA)
headed by Prime Minister OTHER CABINET DECISIONS
Narendra Modi. | Nod to Bill seeking excluding the CJI. The
“The CCEA approved NBS
reduction in compliance move also comes against
(nutrient-based subsidy) rates
for phosphatic and potassic burden of registered chit the backdrop of rising
(P&K) fertilisers for the year funds industry and cases in the top court,
2019-20; expected expenditure protection of interests of which stands at nearly
during 2019-20 to be ~22,875 subscribers. The Bill is 60,000. At present, the
crore,” information and broad- aimed at fulfilling the sanctioned strength of
casting minister Prakash objectives of reducing the the apex court is 30,
Javadekar told the media after regulatory or compliance excluding the CJI
the meeting. burden of the registered
The subsidy for nitrogen | Go-ahead to the setting up
chit funds industry as well of ISRO Technical Liaison
has been fixed at ~18.90 per kg,
phosphorous at ~15.11 per kg,
as protecting the interest Unit in Moscow. The unit
potash at ~11.12 per kg and sul- of subscribers will enable effective

HDFC reduces prime lending Allahabad Bank back in phur at ~3.56 per kg for the cur-
rent fiscal, he said.
This will help in promot-
| Acting on the request of
the Chief Justice of India,
technical coordination for
timely interventions on

rates on home loans by 10 bps black with ~128-cr profit

SUBRATA PANDA
Mumbai, 31 July
Mortgage lender HDFC has
cut its retail prime lending
rates on housing loans by
10 basis points (bps) with
effect from August 1 for all
existing customers.
For new customers, inter-
est charged on loans up to ~30
lakh will be 8.6 per cent from
August 1. Similarly, for loans
above ~30 lakh and up to ~75
lakh, interest rate charged
will be 8.85 per cent and
for loans above ~75 lakh, the
interest charged will be
8.9 per cent.
For women borrowers,
there is an extra 5 bps discount
in each category of loans.
Union Bank cuts MCLR
by up to 20 bps
On Tuesday, public sector
lender Union Bank of India cut
its marginal cost of funds-
based lending rate (MCLR) by
up to 20 basis points.
The overnight and one-
month MCLR stands reduced
to 8.1 per cent from 8.25 per
cent and 8.3 per cent, respec-
tively. Three months and six
months’ MCLR has been
reduced by 10 bps to 8.25 per
cent and 8.35 per cent.
One-year MCLR would be at
8.5 per cent, from 8.55 per
cent earlier, the bank said in a
statement. All loans linked to
MCLR also stand reduced by
20 bps, effective August 1, the
bank said in a statement.
NAMRATA ACHARYA
Kolkata, 31 July
Allahabad Bank has reported
a net profit of ~128 crore in
Q1FY20, against a loss of
~1,944 crore in the same peri-
od last financial year.
According to S S Malli-
karjuna Rao, MD and CEO of
Allahabad Bank, good credit
growth and lower provision-
ing, helped the bank book
profit. In February this year,
the bank came out of the
prompt corrective action by
the Reserve Bank of India,
which had restrictions on
certain categories of lending.
The bank registered a
year-on-year credit growth
of 8.75 per cent in the last
quarter. The total provisions
of the bank in the last
quarter stood at about
~732 crore, against ~2,774
crore in the same period
last year.
Rao said the bank had
already provided for around
95 per cent for all accounts
referred to the NCLT, with a
total exposure of about
~18,000 crore.
ing balanced use of fertilisers,
the minister added.
“Usually, the government
fixed the non-urea fertiliser
subsidy in the months of
February and March, but this
year, it has been delayed. So, in
a way, it is good that big
changes haven’t been made.
In the case of sulphur, the sub-
sidy component has gone up
as international market rates
have firmed up,” a senior
industry executive said.
In 2010, the government
had launched the NBS pro-
gramme under which a fixed
amount of subsidy, decided on
an annual basis, is provided
the government on diversified matters with
Wednesday decided to Russia and other neighb-
increase the number of ouring countries for realis-
Supreme Court judges to ation of the programmatic
33 from 30 at present, targets of ISRO
ON RESERVATION
| Approval to Bill to provide up to 10 per cent
reservation to Jammu and Kashmir’s economically-
weaker sections in jobs and educational institutions
on each grade of subsidised um phosphate (DAP), muriate
P&K fertilisers. This is except of potash (MoP) and NPK are
for urea, based on the nutri- decontrolled and determined
ent content present in them. by manufacturers, while the
Retail prices of non-urea Centre gives a fixed subsidy
fertilisers such as di-ammoni- each year.

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8 ISSUES AND INSIGHTS
>
MUMBAI | THURSDAY 1 AUGUST 2019

> CHINESE WHISPERS

Tenure erosion can be a subversive tool
If the law protects the tenure, the office-bearer is ring-fenced
from acting under fear of being sacked
WITHOUT CONTEMPT
SOMASEKHAR SUNDARESAN
commissioners, and second, protection
of their remuneration.
Both, tenure and remuneration for
information commissioners at the cen-
tral level and the state level, will hence-
forth be “as may be prescribed” by the
Central government. Before the amend-
ment, there was a tenure of at least five
years unless the incumbent reached the
age of 65. Likewise, remuneration of the
commissioners was on par with those
available to the members of the Election
Commission (and in the states with the
chief secretary of the state) — which also
underlined the importance of this office.
be determined by how the reins are
wielded by the government in power.
Tenure protection lies at the heart of
protecting public office. If the law pro-
tects the tenure, the office-bearer is ring-
fenced from acting under fear of being
sacked. Our Constitution protects the
tenure of the higher judiciary (the only
way to remove a judge is through
impeachment) only to ensure indepen-
dence of the judge. It is because tenure
of the judge is protected, that the man-
ner of selection becomes the core issue
with judicial appointments.
When the Supreme Court found
judge’s tenure be extended to let him
focus on and complete the trial in nine
months. At the heart of the issue was
protecting the tenure for the junior
judge to ensure that a very important
trial was indeed completed.
Prakash Singh, a retired police offi-
cer, pursued public interest litigation,
which led to the Supreme Court stipu-
lating a two-year tenure protection for
every police officer, right from the
Director General of Police of a State to
the Station House Officer heading a
police station. Repeated attempts by
state governments to have this dis-
turbed, have so far been broadly
repelled by the Supreme Court.
Diabolically, some states were found
Officers of regulatory agencies too
are meant to have tenure protection. The
law governing the office of the governor
of the Reserve Bank of India, historically Tandon must wait
the most fiercely independent regulator,
does not have age stipulations. That is
why the term for which the governor is
appointed by the government is a strong
tool for exercise of governmental influ-
ence, if not control, over this sensitive
office. An obnoxious practice of regula-
tory appointments for a specific term,
extendable by another term at the dis-
cretion of the government, has also
developed. This practice enables keep-
ing the incumbent on leash — a “safe
pair of hands”, particularly towards the
end of tenure. The Bharatiya Janata Party's Lalji
Central bankers are wont to say hav-
ing a little inflation is like being a little
Tandon (pictured) took oath as the new
governor of Madhya Pradesh earlier this
pregnant. This adage is equally true with week. But he will have to wait a while
legislation. Once a subversive measure before shifting to his official residence
is introduced in an area of law, it will and is staying in the President Suite of

T
enure protection for public ser-
vants is under attack.
Amendments to the Right to
Information Act, 2005, passed in this
session of Parliament have blown off two
fundamental statutory protections
enjoyed by information commissioners
all over the country — first, a statutory
protection of tenure for information
Now that the Central government will
decide both the tenure and the terms of
remuneration of information commis-
sioners at the Centre and at the states,
the Central government will get to wield
full political leverage over information
commissioners all over the country.
How the incumbents deal with enforc-
ing the citizen’s right to information will
that the trial of those accused of
demolishing the Babri Masjid had
dragged on for a quarter of a century,
in 2017, it set a deadline of two years
for completion of the trial with the
judge being protected against any
transfer. Last month, when it found
that the judge would retire in two
months, the court directed that the
rewarding loyal police officers with
appointment to the post of Director
General on the eve of their retirement
so that they could enjoy another two
years of legally-protected service
tenure. Governments and their incum-
bents (both political and bureaucratic)
have the deepest vested interests in
resisting tenure reform.
inexorably find its way into other areas.
The erosion of tenure protection for
information commissioners could well
be a cancerous cell that may turn into a
malignant subversion for any other
statutory or regulatory institution.
The author is an advocate and independent
counsel. Tweets @SomasekharS
the Raj Bhawan. He has to wait because
the former governor of the state,
Anandiben Patel, who is now governor
of Uttar Pradesh, is yet to move out.
Also, the whole compound is being
renovated in accordance with Tandon's
specifications. Once the renovation
work is completed, Tandon hopes to
move in after performing a puja and
some rituals to ward off the evil eye.

Case in point

Powering the EV mandate

Public and private sector enterprises have started investing in the
Only one of the two MPs of a political
party that rules a southern state voted
against the ‘triple talaq’ Bill in the Rajya
Sabha on Tuesday. Sources said the
ELECTRIC Companies setting up
EV charging stations
party’s other MP absented himself when
the vote took place to signal that it was
eco-system for electric vehicles but viability remains an issue RESPONSE PUBLIC SECTOR:
the party’s political compulsion to oppose
the Bill. When Opposition leaders
T E NARASIMHAN business (see table). “Having such full- other locations where vehicles stop – BSES Rajdhani Power, demanded the party MPs explain their
scale infrastructure would definitely globally, these touch points account for IOC, Hindustan conduct, they had a one-word answer:

L
ast week, the GST council cut push the buying decision in favour of 80 per cent of EV charging points. So Petroleum, BHEL, “Nineteen”. As an Opposition MP
rate cuts on electric vehicles EVs,” said Maxson Lewis, managing far the only progress here has been a Energy Efficiency Services struggled to understand its significance,
(EVs) from 12 per cent to 5 per director, Magenta Power, an EV mobil- suggestion from the power ministry to (EESL), Union housing the MPs explained “19” was the number
cent and on electric chargers from 18 ity solutions provider. state power utilities to facilitate such ministry of cases their party chief faced.
to 5 per cent, a clear signal that it pro- What kind of infrastructure is need- private charging points.
poses to forge ahead with its target of ed to achieve the government’s man- The availability of lithium-ion bat- PRIVATE SECTOR:
reducing urban pollution and crude oil date that all three-wheelers and two- teries will also be a critical determi- Tata Power, Ather Energy,
import bill. Both rate cuts will consid- wheelers go electric by 2023 and 2025 nant of EV adoption by consumers. Vakrangee, Magenta No time for press freedom
erably narrow the price differential respectively, and others except com- Batteries account for over half an EV’s Power, ABB, Acme On July 4, members
between EVs and petrol and diesel vehi- mercial vehicles, by the year 2030. One cost and, currently, are almost entirely Industries, Fortum India, of 15 political
cles. EV prices are expected to drop 7 estimate by Nomura Research puts the imported from China. India would parties requested a
per cent. investment requirement of charging require six plants of 10GWh each by "short-duration
But narrowing the price differential stations at ~13,000-14,000 crore. 2025 and 12 by 2030 to cater to this Companies getting into battery manufacturing discussion" in the
is just one of the challenges to achiev- Private sector start-ups alone are emerging market. ESTABLISHED PLAYERS: NEW AGE COMPANIES: Rajya Sabha on
ing the government’s grand expected to add 50,000 to Niti Aayog CEO Amitabh Kant said Suzuki Motor Corporation, BHEL, Exicom, Greenfuel Energy Solutions, "how to strengthen
mandate. The lack of a 60,000 charging stations the objective was to “first work on about Adani, Group, Amara Raja, Exide Trontek, Coslight India, Napino Auto & the freedom of the
robust ecosystem, principal- over the next three years. 80 per cent of components of two and press, as the media
Industries, Greaves Cotton, Electronics, Trinity Energy Systems and
ly recharging stations, and Their contention is that giv- three-wheelers and buses and also push is the fourth pillar of democracy". A
domestic battery manufac- en the initial low viability manufacturing of batteries in India". Tata Chemicals Versatile Auto Components. majority of those who requested the
turing capabilities, could of the business, some sort To this end, the government is likely to discussion are members of Opposition
well short-circuit the gov- of viability gap funding issue tenders to set up 50 GWh of bat- of the challenge. As Amara Raja pack assembly capability and looking parties, but Bharatiya Janata Party
ernment’s stiff electric would be in order. In the tery manufacturing in India, which Batteries CEO S Vijayanand points out, at backward integration into cell man- Rajya Sabha MP Subramanian Swamy
mobility targets. Most two- TAKE second edition of its electric would attract around $50 billion in only a high level of localisation will ufacturing. Right now, its localisation (pictured) also signed the notice. The
wheeler makers — Bajaj
Auto, TVS, Hero and others
TWO mobility policy (known as
FAME 2), the government
investment. “At present India depends
on China for EV parts. However, by
make the business viable. Currently, the
raw material for batteries are not avail-
level is 25-30 per cent at the battery
pack level.
government, however, suggested a
short-duration discussion on "the
— have been vocal on this ANALYSIS BEHIND says it will allocate Rs 2022, local production of cells will go able in India. Battery chemicals Exercises such as these are, howev- need to ensure basic facilities and
point. Steffen Knapp, direc- THE HEADLINES 10,000 crore to set up charg- up and even fuel cell might come to account for 30-40 per cent of the costs er, time consuming and unlikely to affordable treatment to cancer
tor, Volkswagen Passenger ing stations to both public India,” says a Tata Motors Ltd of a battery pack, and the cell accounts match demand. Yet they are vital to the patients". The Rajya Sabha took up the
Cars, recently said his company doesn't and private sector players. spokesperson. for 25-30 per cent. Even a cell-to-bat- success of the government’s EV plans. discussion on the issue of cancer on
think it possible to be part of India's “As a standalone business, EV charg- One of the Tata group companies, tery assembly plant would improve val- As Vijayanand puts it, “India missed Wednesday and another "half-an-
electrification plan in the absence of ing stations is still a sunrise venture. It Tata Chemicals, has already ue addition by 30-40 per cent. But India the magic of manufacturing consumer hour" discussion on the "clean Ganga
supporting infrastructure. could be the future version of what gas announced that it will set up a 10 Gwh has such annual assembly capacity electronics and we also missed the drive". The Opposition was told that
Things could be changing now, with stations are today, a money spinner, but plant at Dholera, Gujarat. Several com- worth just 1 Gwh. magic of manufacturing in the renew- the Rajya Sabha would not have the
several public sector enterprises, pri- only if investors are willing to wait," panies — established ones and new-age Companies like Amara Raja have, able sector, such as the solar panels, but time during the current session, which
vate sector engineering and automobile says a Tata Power executive. start-ups — are venturing into this busi- however, started back-end integration I think if you were to look at EVs, then ends on August 7, to have a discussion
companies as well as new-age start-ups Others suggest pushing for low- ness (see table). to accelerate the pace of localisation. as a country we cannot afford to miss on the "freedom of the press".
venturing into the EV infrastructure grade charging at home, offices and Setting up local plants is only part The company established a battery the magic of manufacturing.”

INSIGHT > LETTERS

Tigers and growth Exercise caution

had been found on the shores of Netravati
river has come as a big shock. The inves-
tigation agencies should look his death
enables the population to be more Even without verifying the facts, some from all angles including the recent
educated and aware — without citizen leading Bengaluru business tycoons have Karnataka horse trading exercise wherein
participation, government efforts to jumped in to crucify the Income Tax some half a dozen rebels were kept in a
preserve the environment will amount authorities for Cafe Coffee Day (CCD) hotel, all expenses paid by some unknown
to nothing. It makes industry more chain founder VG Siddhartha's unfortu- entity far away from the scene. After all,
advanced, profitable and able to use nate decision to end his life. In a letter the deceased happens to be the son-in-
the best in class technologies to min- purportedly signed by him, while taking law of a former chief minister of
imise adverse impact in terms of air the entire blame on himself for the “mis- Karnataka who switched over to the
and water pollution and dislocation of takes”, he has accused the former DG, Bharatiya Janata Party in 2017.
flora and fauna. Income Tax, for harassing him by attach- N Nagarajan Secunderabad
The most significant gain from ing his shares that caused serious liquid-
rapid economic progress is on the ity crunch. On the other hand, the IT Do something useful
DHIRAJ NAYYAR technology front. That helps directly authorities have clarified that the search-
in conservation of the environment. es were based on solid evidence of tax While I welcome Prime Minister
Among other things, tigers have been evasion and that the attachments were Narendra Modi's participation in
protected and nurtured through the ordered to safeguard interest of revenue, Discovery's wildlife show, I however,

I
t is lazy and wrong to view the
goals of economic growth and
conservation of the environment
as inherently contradictory. It may
even be convenient for some interests.
The reality is different. Just look at
how India has succeeded in doubling
the population of its tigers in the last
decade, a period in which the econo-
my has also registered high growth
rates. In fact, the population of tigers
declined drastically over the long
decades when economic growth was
not so high. Now, every stakeholder,
whether the government, judiciary,
industry, NGOs and citizens must
accept, in principle, that India can
grow rapidly while preserving the
environment — forests and fauna, air
and water.
Often, it is unhelpful to put envi-
ronment before economic growth.
Poverty, or the lack of prosperity, leads
to much greater environmental degra-
dation. If the majority is living a sub-
sistence livelihood, if industries are
primitive (in a technological sense)
and if government is starved of
resources — all the characteristics of
under development — the conse-
quences for the environment are
severe and the possibilities of mitiga-
tion or upgradation near zero.
Prosperity is good for the environ-
ment. For a start, it endows the gov-
ernment with greater financial
resources to address the challenge of
environmental degradation. It also
latest tracking technology. Those
who attempt to illegally kill them,
that is, poachers, or those who
destroy their natural habitats, for
instance, illegal logging/deforesta-
tion, can be caught and deterred
through the deployment of appropri-
ate technology. In industries like
mining, for example, which have tra-
ditionally been viewed as damaging
to nature, technology has advanced
to enable successful transplantation
of flora and fauna to alternative loca-
tions. It is not unusual for mining
companies to have bio-diversity offi-
cers in-house or to partner with inter-
national organisations working in the
field of the environment to achieve
this. Importantly, once the mining
work has been completed and the
area vacated by man and machine,
the entire ecosystem can return to its
original state. There is evidence of
this in India (in Goa) and abroad (in
South Africa) where industry is man-
dated to spend the resources to make
sure that the regeneration happens
at a very fast pace.
But what of damage already done?
The good news is that nature regen-
erates itself. Damage can be reversed.
Often, the absence of human beings
helps as the curious case of the
Chernobyl disaster zone in Ukraine
has proved. Three decades after a
catastrophic nuclear accident ren-
dered a large zone unfit for human
habitation — radiation is still danger-
India has succeeded in doubling the population of its tigers in the last decade, a
period in which the economy has also registered high growth
ously high — both flora and fauna
have reappeared to reclaim the area.
With planning and management, the
regeneration can be achieved without
large-scale human displacement
necessitated by disaster.
It is already happening. The posi-
tive news on the tiger population is
not the only reason to be optimistic
in India. According to the Union
Minister for Environment and Forests,
India’s forest cover has grown by
16,000 square kilometers in the last
five years. India’s experience in suc-
cessfully expanding its forest cover is
not unique. Europe has achieved
impressive rates of reforestation
adding an estimated 90,000 square
kilometres (approximately the size of
Portugal) in the 25 years since 1990.
Perhaps, it is easier for advanced
economies for the obvious reason that
they are rich and have greater
resources and fewer polluting indus-
tries — those have been outsourced
to the emerging economies. But the
point is that deliberate intervention
can aid regeneration.
Needless to say, it is important to
Photo: PTI
not get carried away and give economic
growth unfettered priority over nature
because the quality of that growth will
be poor and it will be unsustainable.
Worse, it will adversely affect the liveli-
hoods and health of all citizens which
would negate the hard-won prosperity.
The admittedly tough challenge
for the government and courts is to
strike the right balance. Stalling eco-
nomic activity, by invoking the envi-
ronment is likely to be counter-pro-
ductive unless, of course, there are
very pressing reasons to do so. At the
very least, the possibilities of miti-
gation with the use of technology
and ample financial commitment
must be heard before a final decision
is made. Industry must become
responsible. And civil society must
not be irresponsible.
India, which is already charting a
unique economic trajectory, has an
opportunity to show the world that it
is possible to become richer and
greener at the same time. A 21st cen-
tury tiger economy.
The author is Chief Economist, Vedanta
which in any case was later revoked on
Siddhartha’s request. According to them,
even though Siddhartha had admitted to
huge unaccounted for income, he did not
include the entire admitted concealed
income in his IT return. The action of IT
authorities ordering provisional attach-
ments of Siddhartha’s assets are in accor-
dance with the law, which may possibly
cause financial hardship, but cannot be
called “harassment”. At the same time,
tax authorities must also exercise such
powers judiciously so as not to bring a
business entity’s legitimate business to a
grinding halt leading to a chain of adverse
economic consequences.
S K Choudhury Bengaluru
The real tragedy
Apropos "CCD founder missing, massive
search on (July 31)", before one could fin-
ish reading the news about missing V G
Siddhartha, owner of coffee shop chain
Cafe Coffee Day, the news that his body
> HAMBONE
feel that the last person he should have
associated with is Bear Grylls. Anyone
who has watched even a few of this
adventurer's Man vs Wild episodes
knows the kind of wanton destruction
of wildlife he perpetrates, in order to
obtain food for his survival in the course
of the futile "explorations" he under-
takes on a variety of inhospitable ter-
rains. One just doesn't understand what
Gryll proposes to achieve or teach
through them. He must realise that dis-
cretion is the better part of valour and
imagine the number of innocent ani-
mals that can be spared if he can carry
non-perishable food items with him in
his backpack.
CV Krishna Manoj Telangana
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Volume XXIII Number 250 ILLUSTRATION: BINAY SINHA

the automotive sector. The Automotive Mission Plan

MUMBAI | THURSDAY, 1 AUGUST 2019 (AMP) 2006-2016 was a programme across government
agencies, industry participants, and academics, to
Piling foreign debt make India a global hub for the automotive industry.
It was successful despite the slumps of 2008 and 2013-
14, and employment increased from 10 million to 32
New ECB norms can make India more vulnerable to external shocks million by 2016. The next phase is under way through

T
AMP 2016-2026 (http://www.siamindia.-
he revised norms for end-use of money raised through external com-
com/cpage.aspx), aiming to increase exports more than
mercial borrowings (ECBs), announced by the Reserve Bank of India double to 35-40 per cent of output, and employment
(RBI) on Tuesday, have brought in significant changes. Under the by 65 million. Momentum has declined in the last
new norms, ECBs with a minimum average maturity period of 10 year, however, because of a number of adverse factors.
years can be used for working capital and general corporate purposes as also by These include confusion and uncertainty regarding
non-banking finance companies for on-lending. The RBI, in consultation with
the central government, has also permitted firms to raise ECBs for repaying rupee
loans taken from domestic sources for capital expenditure in the infrastructure
and manufacturing sectors, classified as SMA-2 or non-performing asset (NPA),
Automotive slump policies on diesel and electric vehicles, trade tensions,
slowing gross domestic product (GDP) growth here
and abroad, higher costs from mitigation strategies
and taxes, and funding constraints arising from prob-

& industrial policy

lems in the financial sector.
in order to make a one-time settlement (OTS) with lenders. Besides, banks have With a slowing automotive sector and reports of
been allowed to sell such loans to eligible foreign lenders. At the company level, possible layoffs in large numbers, is urgent policy inter-
the revised norms can potentially help raise funds more freely from external vention needed? Some observers think so, while others
dismiss the slowdown as cyclical, and reports of distress
sources. Since the Indian banking system is still struggling with NPAs and may
as exaggerated, to seek concessions to improve profits.
not be in a position to fund the requirement of the Indian corporate sector, the The sector is needed as a growth engine and a risk of collapse Let us recognise that India isn’t comparable to
new norms will enable companies to diversify their borrowings.
The possibility of Indian companies borrowing overseas to repay domestic
needs to be averted Organisation for Economic Co-operation and
Development (OECD) markets. For instance, car own-

M
lenders will also enable banks to lend to smaller businesses which are not in a ention “industrial policy” and there are
position to borrow from external sources. In view of the fact that the cost of money strong reactions: An angry buzz from free-
market enthusiasts, or approval from the
in the global financial markets is expected to come down further, some companies
diminishing ranks of believers in government inter-
may be able to reduce their interest burden by borrowing abroad or by swapping vention. But as economist Dani Rodrik observed over
their rupee loans with foreign-currency debt. But they will need to carefully a decade ago, reality has not been kind to either set —
manage the currency risk. Also, instead of heading for the Insolvency and neither the belief that the way forward (for developing
Bankruptcy Code (IBC) solution, banks and companies can now get into an OTS economies) is through strong government interven-
scheme, the funds for which have to be raised abroad. tions, nor the belief that it is best for the government to
stay entirely away from the economy. Although there
The latest move appears to be part of an overall strategy that Indian companies were successes sometimes with import substitution,
should tap global resources to lower cost. However, potential benefits at the com- planning, and state ownership (a case in point is Indian
pany level should not make policymakers lose sight of the broader macro picture Space Research Organisation), these
because increasing reliance on foreign capital can be dangerous. It is correct that practices were often overdone or
there are problems in the Indian financial sector and the corporate balance sheet became inflexible, leading to failures
is also stressed. But depending on foreign debt to address some of these issues and crises. Likewise, liberalisation
benefitted some sections of the econ-
can exacerbate difficulties for India and should be avoided. For instance, higher omy such as exporters, financial
foreign borrowings would put upward pressure on the rupee, which anyway is intermediaries, and some skilled
excessively overvalued, and affect exports. The other problem is the reluctance workers, but often fell short of econ-
of Indian companies to hedge their risks. Unhedged exposure can become a omy-wide growth.1
threat not only to individual companies, but to the system and its stability. Another topic on which opinions
differ strongly is whether develop-
Experience in many countries have shown that corporate crisis can turn into a
ment should focus on comparative
macro-economic risk in no time. advantage based on factor endow- SHYAM PONAPPA
Further, this will increase India’s foreign debt exposure and, in the absence ments, or if structural changes
of consistent inflows, servicing can become a problem. This can result in significant should be attempted through the support and extension
volatility in the currency market and, among other things, increase the repayment of infant-industry protection, as for example in manu-
burden for Indian companies. India’s foreign debt which needs to be repaid by facturing electronics and telecom (ICT) equipment in
India. In 2009, the Overseas Development Institute in
the end of this fiscal year is over 43 per cent of the total external debt and 57 per
London organised a debate between Justin Yifu Lin,
cent of foreign currency reserves. This is not to suggest that India should not tap then chief economist at the World Bank and formerly
foreign funds to supplement domestic savings. India should target higher direct the director of the China Centre for Economic Research
equity investments, which are more stable and will help augment growth. at Beijing University, in favour of comparative advan-
Increasing dependence on debt, as the relaxation in ECB norms shows, will make tage, and Cambridge University’s Ha-Joon Chang
the Indian economy more vulnerable to external shocks and increase risks to speaking for infant-industry protection. Interestingly,
both favoured strong government intervention,
financial stability.
although in different ways.2 Mr Lin was for facilitating
comparative advantage, while Mr Chang was for treat-
ing comparative advantage as a base line to be defied
for a country to upgrade its industry.
those that are not). The opposite is state planning and
control for verticals (picking winners). In between is a
mix of degrees of enabling government regulations and
support (tax incentives and disincentives, labour regu-
lations, financial consideration, land allotment/zoning
or acquisition) and of coordination with the private sec-
tor. These can be limited to industry and manufacturing,
or more broadly, extend to all economic activity, includ-
ing agriculture, dairy farming, and services.
Historically, a degree of industrial policy has been
practiced everywhere. In the US for example, in the
Reagan years (1980s), the Defense Advanced Research
Projects Agency (DARPA) created con-
sortiums of government and private
sector participants for coordinated
action. One was the Semiconductor
Manufacturing Technology (SEMAT-
ECH) consortium with companies such
as Intel and Texas Instruments, to revi-
talise the US semiconductor industry
by reducing manufacturing costs and
product defects. Another was The
National Center for Manufacturing
Sciences (NCMS) for the development
of an advanced machine tools and
automation industry. Another, Project
Socrates3, was a classified programme to ascertain the
causes for America’s declining competitiveness, and to
develop solutions to re-establish US dominance. Their
conclusion was that the US was losing its technology-
based ability to compete, because decision-making after
World War II transitioned from technology-centric plan-
ning to finance-centric planning. Success for the latter
is measured by financial returns, whereas for technolo-
gy-based planning, the objective is to use technology to
gain competitive advantage and satisfy customer needs
(which presumably leads in the long run to better
returns). The Bush administration terminated Project
Socrates in 1990, as it was considered an interventionist
industrial policy (picking winners) when free-market
ideology was ascendant.
ership in India was under 27 per 1,000 in 2017, compared
with several hundred in the OECD countries. That’s
the potential for employment to grow, provided indus-
try stays profitable, and investments happen as planned
(without denying the downsides: Of mitigating for envi-
ronmental impact, fuel imports, and having to build
more roads).
There is little doubt that India needs the automotive
sector as a growth engine. Given its impact on employ-
ment in manufacturing and the economy through all
the feeder industries and ancillaries, if there is a risk of
collapse as in telecommunications, construction, and
finance, it needs to be averted if possible. With corporate
profits down to 3 per cent of GDP in 2018 from 7.8 per
cent in 2008, the government needs to deal with ground
realities. The facts must be evaluated to take corrective
action if necessary.
There are relevant case studies on possible correc-
tive action, such as a report on steps the USA, France
and China took after 2008: “Shifting Gears: Industrial
Policy and Automotive Industry after the 2008
Financial Crisis”.4 Our primary requirement is a stable
and supportive regulatory environment. Changes,
such as policies for electric vehicles or for diesel vehi-
cles, need to be through collective consultation
processes. The automotive sector has the Automotive
Mission Plan 2016-2026.
1.Rodrik, Dani: “What’s Driving Populism”, Project Syndicate,
July 9, 2019,https://www.project-
syndicate.org/commentary/economic-and-cultural-
explanations-of-right-wing-populism-by-dani-rodrik-2019-07
2. Lin, Justin and Chang, Ha-Joon: “Should Industrial Policy in
Developing Countries Conform to Comparative Advantage or
Defy it? A Debate Between Justin Lin and Ha-Joon Chang”,
Development Policy Review 27 (5), 2009, pp 483-502,
http://siteresources.worldbank.org/INTRANETTRADE/Reso
urces/Internal-Training/287823-
1256848879189/LinChangeDPRDebateIndustrialPolicy.pdf
3. See http://quadrigy.com/background.html for the private
sector successor corporation

Insurance flaws Industrial policy has many interpretations. There is

the “horizontal” notion of basic infrastructure, that is
like a rising tide for all aspects of the economy (although
PMFBY fails to live up to the hype the sheer location, proximity and form of infrastructure
Industrial planning and India’s
automotive sector
4. Seung-Youn Oh: “Shifting Gears: Industrial Policy and
Automotive Industry after the 2008 Financial Crisis”,
https://repository.brynmawr.edu, 2014,
In 2006, the Ministry of Heavy Industries embarked https://repository.brynmawr.edu/cgi/viewcontent.cgi?article

T
he government’s much-hyped crop insurance scheme, the Pradhan itself create biases for the favourably affected and against on an initiative conceived in 2002 in consultation with =1028&context=polisci_pubs
Mantri Fasal Bima Yojana (PMFBY), has remained an underperformer
since its inception in 2016. Some critical structural flaws and inept
implementation have proved its nemesis, though the scheme is better
than all the risk-mitigation systems tried out since the early 1970s. Complaints
have been mounting about the delayed clearance of claims and, more importantly,
The G-Minus-2 threat find it increasingly difficult to export their products or
their excess labour. American repudiation of the Paris
climate agreement does not bode well for the poorer
countries who will bear the brunt of the consequences

F
meagre reimbursements of losses. Farmers’ organisations and even some political or an all-too-brief period between the late 1980s inequality, declining mobility, and greater concentration of global warming. That situation is dire enough. But
parties, notably the Shiv Sena, have threatened to launch agitations against the and the late 2000s, the world was characterised of economic power — have called into question the ben- perhaps the most critical “bads” provided by the US and
by convergence, both ideological and economic. efits of globalisation. In addition, the 2008 global financial China are the most subtle. America’s unilateral measures,
insurance companies to press for adequate compensation to the farmers for the
The West and the Rest agreed that an open liberal order crisis and its aftermath have undermined faith in which flout the global rules that it helped to devise, have
crop damage because of aberrant weather, pests, diseases, and other calamities. was the best way to increase prosperity. Now, however, American-style capitalism. China’s rise, and the perceived begun to damage the Bretton Woods institutions and
The Estimates Committee of Parliament, headed by Murli Manohar Joshi, acknowl- this ideological order threatens to unravel, with adverse consequences for America, has also stoked US skepticism the associated system of international cooperation. China,
edged in its 30th report (December 2018) that the PMFBY suffered from several consequences for the world economy. about globalisation. A broad swath of US elite and public meanwhile, is a hobbled hegemon, having become dom-
problems that have shaken the farmers’ faith in it. Inordinate delay in loss assess- The two-decade-long “golden age” opinion believes that China has abused inant without acquiring genuine international appeal.
ment, belated or non-payment of claims, and lack of transparency are among the was one of trade hyper-globalisation, America’s largesse, via currency manip- Moreover, hegemons need to provide open markets.
reflected in an unprecedented increase ulation, intellectual-property theft and Yet China is not offering enough export opportunities for
faults pinpointed by this panel.
in the ratio of world exports to gross espionage, and forced technology poorer countries, even though it previously benefited
The waning interest of the farmers in the PMFBY is borne out by the downtick domestic product (GDP). It was also transfer. Furthermore, China’s recent greatly from deeper trade links with more advanced
in the insured area from 57.2 million hectares in 2016-17 to 47.5 million hectares, an era of economic convergence: For tilt toward statism and political repres- economies. The Chinese government’s recent turn toward
or just 24 per cent of the gross cropped area, in 2017-18. The area coverage is esti- the first time in centuries, living stan- sion adds to a broader US sense of self-sufficiency and promoting domestic champions is
mated to have shrunk further in 2018-19, though the final figures are not yet out. dards in a broad cross-section of devel- betrayal, and of an investment in contributing to the rapid decline in the country’s imports.
The claims for the last year’s kharif and rabi seasons have not yet been fully paid. oping countries started catching up shared prosperity that has gone badly To be clear, China is entitled to pursue a development
with advanced-economy indicators. wrong. This discordant G2 world and strategy that has aided its extraordinary rise. But the coun-
The government intends to expand the PMFBY coverage to 50 per cent of the Moreover, globalisation and conver- the end of ideological convergence now try cannot be a benevolent hegemon if it insists on main-
cropland. This may not be possible unless the scheme is suitably revamped to gence were handmaidens: Open mar- threaten economic convergence, and taining a protectionist stance that deprives the global sys-
make it attractive for farmers. Since 85 per cent farmers are small and marginal kets enabled developing countries to ARVIND SUBRAMANIAN thus developing countries’ prospects. tem — and other developing countries — of key public
landholders have hardly any loss-bearing capacity, the need for a sound risk- prosper by building up modern, effi- & JOSH FELMAN The “golden age” of convergence had, goods. The US-dominated G1 world is long gone, and the
hedging system is paramount. cient, export-based industries. And no in any case, already started to face head- G2 system in which the US and China shared hegemonic
Viewed from this angle, the PMFBY can be rated high because it covers country benefited more from hyper- winds. First, climate change poses risks responsibilities is now fading into memory. Instead, we
globalisation than China. to developing countries’ agriculture. Problems in this live in a G-Minus-2 world in which the two hegemons,
almost all major crops, requires farmers to pay only a nominal premium, and The liberal order underpinning this era was largely sector will reverberate throughout these economies, instead of providing the Kindleberger global public goods
takes care of a wide range of perils, from prevented sowing to post-harvest damage created by the US. Exactly 75 years ago, when both the because high and rising agricultural productivity has of cooperation, are doing exactly the opposite.
to the produce from localised calamities. However, making the states a 50 per economic turmoil of the 1930s and World War II were been the key to successful structural transformations Understandably, developing countries have begun
cent partner in expenditure sharing and involving banks in its operation for the fresh in the collective consciousness, the US was able from farming to manufacturing. In addition, the spread to ask some pointed questions. What will happen to the
loanee farmers have been among the key mistakes. The blame for delay in claims and willing to supply three vital global public goods of technology-enabled automation is replacing unskilled global economy? How will we weather the next round of
through the postwar institutions created at Bretton labor with machines, directly threatening the ability of global turbulence? And does it even make sense to talk
clearance is often put on the states for their failure to pay their share of funds to
Woods. Emergency finance would come from the poorer countries to lift incomes through labor-intensive about cooperation when the two leading global protag-
the insurance companies and belated communication of crop-cutting experiment International Monetary Fund, and long-term lending manufacturing. But the biggest threat comes from an onists are undermining multilateralism and the insti-
data to enable the assessment of losses and computation of compensation. The from the World Bank. Above all, open markets would ideological decoupling between the West and the Rest. tutions that sustain it? Consumed by their quarrel, the
involvement of banks, on the other hand, blocks direct contact between farmers flourish under the General Agreement on Tariffs and The G2 of China and the US, instead of supplying the US and China have so far provided no answers to these
and the insurers. The farmers often do not get to see the policy documents or Trade (and its successor, the World Trade Organization). key global public good of open markets that the economic questions. There is an old African proverb that says “when
receipts of the premium paid on their behalf. It was a G1 world, and America was the unchallenged historian Charles Kindleberger saw as the responsibility the elephants fight, it is the grass that suffers.” Right now,
hegemon. Today, we have neither a G1 world nor ideo- of hegemons, is now providing global public “bads.” the rest of the world is very afraid.
The government is now making crop insurance voluntary, rather than manda-
logical convergence. Because of its spectacular growth As the US and China impose tariffs and trade restric-
tory, for the indebted farmers; removing high-premium crops from its ambit; since 1978, China has become the second dominant eco- tions on each other’s goods, and as the US undermines Arvind Subramanian, former chief economic advisor to the
and allowing flexibility to states to devise their own models for offsetting farmers’ nomic power alongside the US (Europe is still too decen- multilateral trade rules and institutions, world trade is Government of India, is a senior fellow at the Peterson Institute for
losses. If that happens, it would rid the scheme of many of its ills. But greater use tralised and beset with internal problems to wield strate- slowing markedly, threatening developing countries’ International Economics and a visiting lecturer at Harvard’s
of technology, including drones and satellite imagery, is vital to expedite damage gic influence). And the consensus about what constitutes export sectors and the viability of their overall develop- Kennedy School of Government. He is the author of Eclipse:
assessment and ensure prompt and realistic claims settlement. good economics has broken down. ment strategies. At the same time, the US and other Living in the Shadow of China’s Economic Dominance. Josh
In the West, and especially the US, a series of negative Western governments are clamping down on migration. Felman is director of JH Consulting
economic trends — including slower growth, rising As a result, developing countries are boxed in, and will Copyright: Project Syndicate, 2019

the diversity of Muslim citizens who live in their community. Mr Khurshid frames this as ings and Commissions of Inquiry. The country’s population, but only 8 per cent of

Half-hearted angst India. While addressing the possibility of a

BOOK REVIEW
CHINTAN GIRISH MODI
The jacket of Salman Khurshid’s new book
proclaims that “Visible Muslim, Invisible
Citizen explains Islam to those non-Muslims
who do not know enough about it, places the
identity of the Indian Muslim in the context
of Indian democracy, and deciphers the
Muslim mind in social and political contexts,
beyond theology.” Only a man with credentials
as impressive as Mr Khurshid’s could venture
to write a book so ambitious in scope. He is an
illustrious Muslim politician who has served
the Government of India on multiple occa-
sions, holding important portfolios such as
external affairs, law and justice, and minority
affairs. He also runs the Zakir Husain Memorial
Trust named after his maternal grandfather,
who was not only the third President of India
but also Vice-Chancellor at Jamia Millia
Islamia and Aligarh Muslim University.
Despite all that access and influence, Mr
Khurshid has churned out a book that offers
nothing new, insightful or thought-provoking
by way of historical analysis or a vision for
the future. He comes off as an apologist for
the Indian National Congress, the political
party to which he owes allegiance, and not
as an enlightened commentator who can
speak authoritatively on matters concerning
uniform civil code for India, which might
conflict with Muslim personal law in relation
to marriage and separation, he wonders if
India is ready to legalise same-sex marriage
following the lead of other countries. He does
not take into account the fact that a significant
number of young Muslims are now organis-
ing around LGBTQ rights. These are Muslims
who are negotiating with their faith on the
one hand, and their sexual orientation or
gender identity on the other, through dem-
ocratic institutions. Their voices are absent
from Mr Khurshid’s book.
Mr Khurshid engages with the question of
citizenship only insofar as it concerns the equa-
tion between the individual and the state. He
seems fairly uncritical of the role of patriarchy
in determining how Muslims — women in
particular — access their rights as citizens. The
book makes a passing reference to the work of
Bohra women who have begun to challenge
the practice of female genital mutilation in
an issue of faith versus claims of constitutional
right to dignity, instead of clarifying his position
on this issue or providing space to the per-
spectives of these women. They are actively
resisting oppression, and creating spaces of
solidarity for survivors. Mr Khurshid refers to
gender justice only while engaging with the
triple talaqdebate and, here too, he dismisses
it as a ploy by the Bharatiya Janata Party (BJP)
to inflict injustice on Muslim men.
The fact that Muslims are more vulner-
able to violence as a result of cow vigilantism,
and the paranoia around the so-called love
jihad, is well-documented. It is crucial to
bear witness to what is happening right now
under the watch of the BJP but it is shocking
to see Mr Khurshid use it as a ruse to cover
up his party’s complicity in the Sikh genocide
of 1984. He writes, “It was not easy to stifle
the careers of Jagdish Tytler and Sajjan
Kumar, both of whom retain considerable
popularity, including among a section of
Sikhs, despite decades of criminal proceed-
dogged pursuit by activists and the expec-
tation of politically correct behaviour by par-
ty colleagues forcing conspicuous aloofness
about them must have had a heavy impact
on their morale.” He makes a connection
between Indira Gandhi’s assassination and
this genocide but conveniently omits any
mention of Operation Blue Star.
Visible Muslim, Invisible Citizen appears
half-hearted, insincere, and hastily written.
It reproduces large chunks of material from
Mr Khurshid’s previously published writing,
and also from newspaper columns written
by various commentators. Instead of explor-
ing policy mandates and civil society respons-
es that would uphold the rule of law, improve
socio-economic indicators for Muslims, and
also address deeply entrenched societal prej-
udices, Mr Khurshid ends up using this book
as a platform to come clean on controversies
that have got him into trouble with his own
party members, fellow Muslims, or the media.
“Muslims constitute 14 per cent of the
the police force. On the other hand, they rep-
resent 21 per cent of the total under-trials and
16 per cent of all convicted prisoners,” writes
Khurshid. What are the structural barriers
faced by Muslims who want to enter the
police force? How can this situation be reme-
died? What kinds of offences are these people
undergoing trial for? How can anti-discrim-
ination training for the police force ensure
that Muslims are not falsely implicated? Mr
Khurshid leaves us with the statistics but
does not ask any of these questions even as
he talks about Muslim men killed in fake
encounters. The weakest part of this book,
however, is the moment when Mr Khurshid
advocates the urgency to modernise Islam,
and the model he comes up with is Crown
Prince Mohammed bin Salman Al Saud of
the Kingdom of Saudi Arabia.
VISIBLE MUSLIM, INVISIBLE CITIZEN
Salman Khurshid
Rupa; pages: 308; price: ~595

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WWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING
FPI outflow at 9-month high
Overseas investors have pulled out over ~12,000 crore in July
PUNEET WADHWA & DEEPAK KORGAONKAR
New Delhi/Mumbai, 31 July
O
verseas investors have pulled
out over ~12,000 crore (nearly
$2 billion) from Indian equities
in July, the steepest outflow in nine
months, on account of multiple head-
winds, including tax on the ‘super-rich’
announced in the Budget.
After turning net buyers for the fifth
straight month till June, foreign port-
folio investors (FPIs) withdrew a net
~12,419 crore ($2.03 billion) in July.
This was their highest outflow since
October 2018, when they had pulled out
~28,921 crore ($3.93 billion) from the
equity market. Between February and
June 2019, they pumped in ~82,910 crore
($12.7 billion) into equities, according to
the depository data.
“Higher taxation for FPIs has been a
disappointing measure. There is a lack
of clarity from the government on the
policy front, which has somehow upset
the overseas institutional investors,” said
Ajay Garg, managing director at Equirus
Securities.
The FPI sell-off during the month
has seen the benchmark indices like the
Sensex (down around 5 per cent) and
Nifty 50 (down around 6 per cent) reg-
ister their sharpest monthly fall since
September 2018, when they tanked 6.2
per and 6.4 per cent, respectively.
However, despite the announce-
ment, the total cumulative net FPI
inflow so far in the current calendar year
DSP MF takes 50% haircut; CCD firms ask for 2 wks
JASH KRIPLANI
Mumbai, 31 July
Coffee Day group firms have
sought two weeks from deben-
ture holders exposed to the
companies, people in the
know have said.
Two of the group compa-
nies — Coffee Day Natural
Resources (CDNL) and
Tanglin Development —
apprised the debenture hold-
ers of the recent developments
and sought time to come back
with a plan.
A debenture holder has the
option to invoke and sell
pledged shares if the promoter
is unable to restore the secu-
rity cover in accordance with
terms of a debenture issuance.
Selling of pledged shares by
creditors could add to the sell-
ing pressure on Coffee Day
Enterprises (CDEL).
On Wednesday, Brickwork
Replacement segment gives smooth ride to Apollo Tyres
Slowing auto
sales, higher
commodity costs
remain major
areas of concern
Base=100 120
Sensex
100
80
Apollo Tyres
60
40
Jul 2,‘18 Jul 31,’19
Compiled by BS Research Bureau
Street positive on Sanofi despite pricing pain
Strong domestic
portfolio, export
volumes to
drive earnings
Base=100 140
Sanofi India
120
100
Sensex
80
Jul 2,‘18 Jul 31,’19
Compiled by BS Research Bureau
https://t.me/SSC4Exams
The Smart
Investor
FLIGHT MODE
24,047
-28,921
5,981
5,243
3,143
2,917
Oct ‘18 Nov ‘18 Dec ‘18 Jan ’19 Feb ‘19 Mar ‘19 Apr ‘19 May ‘19 Jun ‘19 Jul ’19
Compiled by BS Research Bureau
has remained positive. FPIs have
pumped in ~66,228 crore in the first sev-
en months of calendar year 2019. They
were net sellers of ~3,411 crore during
the same period of 2018.
Besides the tax proposals, foreign
investors, experts suggest, are also wor-
ried about the economic growth amid
falling consumption, weak corporate
earnings and a patchy monsoon so far.
Ratings downgraded CDNL
and Tanglin Developments
from A-minus to BBB, placing
the entities on ‘credit watch
with negative implications’.
The rating action is likely
to lead to 3-4 per cent mark-
to-market impact on some of
the MF schemes exposed to
Coffee Day entities. ICRA also
placed the rating on CDEL’s
term loans on ‘watch with neg-
ative implications’ while main-
taining a BBB-plus rating.
The quality of security on
these exposures has come
under pressure following the
sharp decline in the stock of
holding company CDEL,
which was pledged by promot-
ers for these exposures.
Among the fund houses,
DSP Mutual Fund (MF) has tak-
en a 50 per cent haircut on its
exposure to CDNL, which was
a fully-owned entity of Coffee
Day founder V G Siddhartha.
RAM PRASAD SAHU
The stock of Apollo Tyres gained over
5 per cent after its June quarter results,
which came marginally ahead of ana-
lysts’ estimates. Revenues, on the back
of robust growth in both Indian and
European operations, stood at ~4,272
crore, slightly more than the ~4,249
crore last year.
Indian operations, which account
for over 70 per cent of revenues, were
up 1 per cent; the European business
saw 5 per cent growth.
Growth in India was led by the
replacement segment, both in the com-
mercial and passenger vehicles seg-
ments. This is the largest segment and
accounts for over two-thirds of the
company’s sales.
Higher sales in the replacement
market have helped offset the weak-
ness in supplies to auto makers and
original equipment manufacturers
(OEM).
The company indicated that it was
UJJVAL JAUHARI
The Sanofi stock has rebounded close to
15 per cent from its lows in June. The
firm’s growth momentum continues as
expected, and this is evident from its
June quarter performance. The 9.4 per
cent year-on-year (YoY) growth was bet-
ter than the industry growth rate of 9 per
cent. This was largely driven by its
domestic portfolio.
The company’s four key products —
Lantus, Amaryl M (both for diabetes),
pain relief medication Combiflam, and
anti-allergic Allegra — which feature
among the top 100 pharma brands, post-
ed robust performance.
The anti-diabetic portfolio, with
Amaryl and its line extensions Toujeo
and Lantus, contributes about 30 per
cent to domestic sales. Analysts at Elara
Capital say the company’s portfolio being
skewed toward the high-growing chronic
products, coupled with its leadership
https://t.me/TheHindu_Zone_official
IILLUSTRATION: BINAY SINHA
n FPIs n Mutual fund
21,193
17,220
33,981
7,161
-12,419
7,920
6,232
5,163
-7,396
-4,600
-4,262
2,173
2,596
Source: Sebi/NSDL
Going ahead, their allocation to India
will depend on global cues, performance
of key domestic macroeconomic indi-
cators and policies pursued by the gov-
ernment, they said.
“Over the short-term, we believe the
second quarter is likely to remain a
washout, with the slowdown since the
first quarter intensifying in consump-
tion and services. This is a result of the
SEEKING COVER
n Quality of security cover affected
by erosion in CDEL’s share price
n Promoters had pledged CDEL
shares as security
n CDEL tanked 40% in 2 days
following news of Siddhartha's
disappearance and later his death
n At the end of June 28, MFs'
exposure to the three Coffee Day
group firms stood at ~192 crore
The haircut led to a 1.3 per cent munication from CDEL,
hit on the net asset value of DSP seeking time and informing
Credit Risk Fund, which held about the board changes.
these debentures. Industry sources said other
In the investor note, DSP fund houses with exposures
MF said: “CDNL has asked to the Coffee Day group were
for two weeks to come back also considering haircuts on
with a concrete plan regard- their exposures. “We are in
ing the exposure.” A senior talks with our trustees on the
executive of another fund next course of action,” said a
house also confirmed a com- fund manager. “If rating agen-
THE COMPASS
able to buck the trend — on the back
of growth in replacement demand —
despite headwinds in the Indian mar-
ket. It has been focussing on the truck
replacement segment and had
launched fuel-efficient tyres. In addi-
tion, the firm had increased its volumes
in the truck and bus radial segments,
and gained market share.
Chairman Onkar S Kanwar is hope-
ful that the markets will recover and
sales will bounce back close to the fes-
position in basal insulin, gives it an edge
over its peers.
Besides, Sanofi derives 18 per cent
of its revenues from price-controlled
products that are now seeing price hikes
(about 4.9 per cent hike in April 2019).
Analysts at Centrum Broking expect
Sanofi to maintain the growth momen-
tum on the back of new product launch-
es. They also expect the firm to take up
a 10 per cent price increase in non-
DPCO products.
Exports contribute 30 per cent to
Sanofi’s revenues. The 25 per cent
growth in exports during CY18 was led
by volume growth, and aided by a 10
per cent rise in the euro against the
rupee (given most exports are directed
towards Europe).
The company expects to maintain
volume growth, even though the
favourable currency movement may not
repeat in CY19.
However, concerns remain over ris-
https://t.me/Banking4Exams
“From the bottom in Feb 2016, the Nifty
QUICK TAKE: BIOLOGICS KEY TO BIOCON’S GROWTH
Midcap Index rose 120% till Jan 2018 before
The Biocon stock hit its 52 week-low on
the selloff started. Mkt cycles Despair
Wednesday. While there are concerns over
(at bottom)-Disbelief (rally starts)
start of the investments phase & competition
in biologics impacting margins, the recent
-Belief (rally plays out)-Euphoria
correction offers an opportunity given the (at top)-Disbelief (correction )...”
robust outlook for the biologics segment SANDIP SABHARWAL
Investment advisor
<
Firms slash IPO issue size
amid tough mkt conditions
ongoing shadow banking crisis and Sterling & Wilson,
weak global growth,” said Sonal Varma,
managing director and chief India Spandana have
economist at Nomura in a recent co-
authored report with Aurodeep Nandi.
cut share sale
On the other hand, domestic mutual
funds have been accumulating stocks
price by a third
at lower levels. Their net inflow in equi- SAMIE MODAK
ties crossed the ~10,000 crore mark for Mumbai, 31 July
the first time since October 2018. They
were net buyers of ~10,218 crore till Shapoorji Pallonji Group com- FALLING APPETITE
Tuesday (July 30), shows the latest avail- pany Sterling & Wilson Solar | Spandana, Sterling to | Markets have witnessed
able data. and microfinance company launch IPOs next week huge drop in July
FPI flows are more volatile in nature Spandana Sphoorty Financial
| Both firms have cut their
(~ cr) compared to the foreign direct invest-
ment (FDI) flows. With the US Federal
Services have cut the size of
their initial public offering issue size
| Introduction of UPI-
based payments for
| Move to align with tough
Reserve (the Fed) also likely to follow (IPO) by a third to realign with IPOs to affect retail
an accommodative monetary policy, market conditions, said market conditions demand
10,218
this could impact FPI flows into emerg- sources in the know.
ing markets, including India going To hit the market next
ahead, said analysts. week, the two IPOs will raise a declined 8.2 and 11 per cent, ing to be an irritant for compa-
“Corporate earnings in the June cumulative ~4,300 crore, down respectively. nies that are launching their
quarter have not been great and the from nearly ~6,000 crore Investment bankers said IPOs. Starting with the IPO of
second quarter will be equally tough. planned earlier. there is a lot more comfort from Affle India, which closed on
FPI flows into India will also depend The IPO of Sterling & investors at reduced valuations Wednesday, the market regu-
upon the global environment. Wilson Solar, a solar power despite weak sentiment in the lator has made electronic pay-
The Fed is also likely to cut rates engineering, procurement, and secondary market. There is ments compulsory for retail
and one needs to assess their com- construction company, is healthy demand from institu- investors.
mentary. A lot of damage has already entirely an offer for sale (OFS). tional investors, including for- Investment bankers say the
been done at the index level (down The issue size has been cut eign portfolio investors for small investors have not entire-
around 7 per cent since the Budget from ~4,500 crore to ~3,150 these IPOs, they said. A recent ly warmed up to make pay-
in July). So, relatively, if the global crore. rule change by markets regu- ments through so-called
markets fall, the Indian benchmarks Meanwhile, Spandana lator Securities and Exchange Unified Payments Interface
are likely to fall less. FPIs, in my view, Sphoorty Financial Services Board of India (Sebi) has (UPI), mandated for IPOs. Most
are not in a hurry to come back to has retained the fresh issue allowed these companies to bankers are expecting muted
India,” said Andrew Holland, chief component of ~400 crore but alter their IPO size without hav- response from retail investors
executive officer at Avendus Capital cut the OFS component from ing to refile their IPO docu- on account of teething issues
Alternate Strategies. ~1,200 crore to ~800 crore, with ment. Earlier, companies had with UPI-based applications.
private equity firm Kedaara to refile their IPO document to Sources said a group of
Capital deciding to offload less. Sebi to tweak the issue size by investment bankers have
“To align with the challeng- more than 20 per cent. sought a meeting with the mar-
ing market conditions, compa-
nies have to scale back their
valuation expectations. Both
In January, Sebi allowed
issuers to change the OFS com-
ponent of an IPO by as much
kets regulator to discuss better
implementation of UPI pay-
ments for IPOs.
cies issue any sharp down- Sterling and Spandana have as 50 per cent.
grade, we will anyway have to cut the OFS component after Investment
take a haircut as per the regu- some investors didn’t want to bankers say the
latory norm,” he added. sell more shares at reduced val- rule change has
DSP MF added: “While we uations,” said an investment come in handy for
await the CDNL plan, an ero- banker in the know. a lot companies
sion in the value of cover mer- The public offerings are looking to hit the
its a relook at the scheme’s coming at a time when equity markets in these
exposure. Hence, we have markets have hit a downward challenging mar-
taken 50 per cent haircut on slope. In July, the benchmark ket conditions.
our exposure.” Nifty declined 5.7 per cent, Another rule
CDEL has dropped 40 per while the broader market Nifty change by Sebi,
cent in two days following news MidCap 100 and SmallCap 100 however, is prov-
of Siddhartha’s disappearance,
and confirmation of his death
on Wednesday. As of July 29,
DSP MF’s exposure to CDNL
stood at ~69 crore. Apart from
the promoters’ pledged
shares, the exposure was
secured by a land parcel.
At June-end, BOI AXA MF’s
exposures to CDNL’s deben-
tures stood at ~16 crore; it is yet
to take a call on haircut.
More on business-standard.com
tive season in India. In Europe, the
company is outperforming the market
and this trend is expected to continue
for now.
While consolidated earnings before
taxes, depreciation, interest and amor-
tisation (Ebitda) fell 10 per cent to ~475
crore, it was still above analysts’ esti-
mates.
Margins, however, came in at 11 per
cent — up 103 basis points on a sequen-
tial basis — which was higher than esti-
mates that had pegged the same at the
10 per cent-mark. Though product mix
has improved, flat volumes and higher
costs (employee, other expenses) as a
percentage of revenues restricted the
improvement in margins.
While Apollo Tyres is expanding its
presence across product categories and
segments, the Street will watch out for
the impact of slowdown in the auto seg-
ment on volumes.
Further, raw material costs, which
continue to remain elevated, could also
be an overhang on margins.
ing raw material costs, which continued
to be higher during the June quarter —
continuing the trend seen in the March
quarter. Earnings before interest, tax,
depreciation, and amortisation thereby
missed analyst estimates and declined
4 per cent YoY.
This has led analysts to tweak their
forward estimates. Centrum Stock
Broking has reduced earnings estimates
by 6.5-12.0 per cent for CY19/20, adjusting
for higher material cost.
Motilal Oswal Financial Services, too,
has cut its earnings estimates by 4-6 per
cent for CY19/20. However, broad-based
growth in legacy and smaller brands,
along with evenly spread growth at the
portfolio level in terms of volume, price
hikes and new launches, makes them
positive on the stock.
Analysts also expect domestic-orient-
ed pharma companies to attract higher
valuation compared to those having a
US exposure.
https://t.me/UPSC4Exams

>
FMCG valuations may not decline
Seen as a relatively safer bet as prospects in
other sectors are not very encouraging
SHREEPAD S AUTE
Mumbai, 31 July
T
he management commen-
tary from most fast-moving
consumer goods (FMCG)
majors for the April-June 2019
quarter (first quarter, or Q1)
results so far, with respect to
demand recovery, has not been
very positive.
For instance, the management
of India’s largest FMCG company
— Hindustan Unilever (HUL) —
during a Q1 analyst call said,
“Looking ahead, we expect
near-term demand to remain sub-
dued, given the macroeconomic
conditions.”
The question is, will this lead to
a significant correction in FMCG
valuations? Analysts believe that
might not be the case.
According to Dhananjay Sinha,
head of strategy and chief
economist at IDFC Securities:
“Major sectors such as automobile,
Gold, silver spread in futures at historic high
RAJESH BHAYANI
Mumbai, 31 July
In an unusual development,
gold and silver futures in the
near and far months are
trading at a spread of
between 2 per cent and 3 per
cent, a historic high.
In silver, very high
spreads were seen last year
in April-May; it had later
moderated and has re-
emerged. Traders and vyaj
badla (a financing mecha-
nism on the BSE exchange,
where money is provided for
financing carry-forward
deals) players in bullion were
squeezed and were rolling
over deliveries to the next
contract.
Gold’s August (maturing
on 5th) contract is entering
the delivery tender period
from Thursday. Those not
prepared to take delivery will
square off or roll over their
positions to the next matu-
PRIVATE EQUITY
>
‘Commercial real estate will remain
an important area for CPPIB’
Canada Pension Plan Investment Board (CPPIB) has invested around CA$8.2 billion (nearly USD $6.24 billion) in India since it started
investing here in 2009, with a focus on infrastructure, real estate and financial services. It has invested in companies such as EdTech
Byju’s and recently backed IndInfravit Trust’s move to acquire the road projects of Sadbhav Infrastructure. ALAIN CARRIER, its senior
managing director and head of international, and VIKRAM GANDHI, a senior adviser, spoke to Raghavendra Kamath on their strategy
and views on the economy. Edited excerpts:
The non-banking financial and real
estate sectors have gone through a
lot of stress in the past year or so.
You have been an active investor in
both sectors. Are you looking to
revisit your investment strategy in
these?
Alain Carrier: We are here for the
long term and India is an attractive
market. Market dislocations, by and
large, offer more opportunities. I
cannot specifically comment on our
investment strategy but we think
there will be a lot of opportunities
for us in India, in terms of credit,
stressed assets and so on.
The macro-economic indicators
here are not showing a great picture.
Does that make you worried as a
global investor?
Carrier: When you look at India
from the prism of a long-term
investor, there are a lot of positive
aspects, like where India is in the
whole cycle. Gross Domestic
Product per capita is at a
higher elevation as compared
to 10-15 years ago but the sto-
ry is not exactly the same.
You can see the levers now,
that in the long term, will bring a lot
of people in the economy. The tech-
nology, the Jio story..India is on the
cusp of a transformative growth
story where, for the addressable
market, consumer companies go
beyond the initial $100 million.
Once you get up that curve and get
the tools to enable you to reach
deeper into the population, the long-
term story is going to be very posi-
tive in India. If you take a long-term
perspective, the macros are right.
We think there is less capital
available in India today from domes-
tic sources or, to some extent, for-
eign sources. But, this makes large
pools of capital like us more attrac-
tive and yield more opportunities.
We have been big investors and are
still looking at many opportunities
https://t.me/SSC4Exams
MUMBAI | THURSDAY, 1 AUGUST 2019
non-banking financial companies,
steel and metal, among others, are
going through stress. Thus,
investors are shying away from
them and FMCG is perceived as a
relatively safe sector. We do not see
sharp valuation correction in the
FMCG space, despite lack of visibil-
ity of near-term demand recovery.”
In fact, even after six months of
moderation in consumption, the
average current valuation of major
FMCG players is still 12-13 per cent
premium to their own historical
average one-year forward valua-
tions in the past five years. This
clearly indicates that FMCG is
being considered the most defen-
sive bet; the situation though in
other major sectors is far worse.
This is also reflected in the
2020-21 earnings estimates of the
FMCG sector, which is at a 168 per
cent premium to broader markets,
compared to 124 per cent for the
trailing 12 months.
Though some expect demand to
rity (October) contract. The physical market and sell on
maturing contract is termed Multi Commodity Exchange
near-month and the next (MCX) futures, which were
contract is called the far- trading higher than the spot
month one. price, to give delivery. June-
After the import duty July being lean months, buy-
hike in the Union Budget, ers on the MCX were jobbers
the physical market in gold and vyaj badla players who
has been quoting at a huge bought gold.
discount. This enabled arbi- Since the market is now
trageurs to buy from the entering the delivery period,
in infrastructure. As an example,
China is a much bigger market but
we have not invested a single dollar
in Chinese infrastructure, since they
don’t need our capital. They use
infrastructure as a tool of economic
policy.
Why are you bullish on the Indian
infrastructure story?
Carrier: Because there is a massive
infrastructure deficit, as a require-
ment for the country to keep grow-
ing and achieve its potential. There
is shortage of local capital to finance
the infrastructure and the Indian
government does not use infrastruc-
ture as a tool of economic policy. It
does not have capital to deploy it by
itself. This means it needs to be care-
ful about the regulatory environ-
ment for infrastructure and welcom-
ing of foreign capital.
If you look at foreign investors in
India, Blackstone has done
asset-by-asset investment,
Brookfield has done
buyouts. You have done
platform deals. Why have
you chosen this model?
Carrier: Partnership is our model
in most countries. Infrastructure
we do directly in many. In India,
since we are new to the market, we
decided to invest with part-
ners. In real estate, our
strategy globally is to
align with partners, as it
is a very domestic and
local business; it is bet-
ter to do with trusted
partners. In interna-
tional markets, the
biggest decision we
make initially is to
pick the right partner.
Our first infrastructure
investment in India was
Larsen & Toubro — we ALAIN
took a lot of time in pick-
CARRIER
ing the right partner.
https://t.me/TheHindu_Zone_official
IN DEMAND
Price-to-earnings (times)
n Trailing 12-month n FY21 estimated
63.5
Hindustan Unilever 45.8
68.3
Nestlé
52.0*
54.0
Britannia Industries 38.9
49.6
Dabur 39.6
41.7
Marico
36.3
42.9
Colgate-Palmolive 35.5
53.3
Average 41.3
23.8
Nifty 15.4
124.3
Premium (%) 168.4
*CY20 estimated Source: Bloomberg
recover in the second half of the
financial year, a lot will depend on
factors such as monsoon and rural
spending. One of the key reasons
WIDENING GAP
MCX Gold futures price ~/10g
Aug ‘19 Oct ‘19
34,206 35,414 36,000
34,420
34,599 34,000
Jun 28,’19 Jul 31,’19
Source: Exchange
Compiled by BS Research Bureau
ahead of the August 5 settle-
ment date, absence of
demand in the physical mar-
ket has created panic among
futures buyers. If they do not
roll over positions to the next
contract by the end of
Wednesday, they will have to
take delivery. This means
their money gets stuck, as
they will not find buyers.
Vikram Gandhi: In public markets,
we have Kotak and others. Our strat-
egy is to go with partners. The
impediment in increasing our expo-
sure to India is finding the right part-
ner — that is really critical. The sec-
ond is finding opportunities and
transactions where we can put
meaningful amounts of money.
Third, with the right partner and
large transaction, whether risk-
return meets our criteria. We are
patient and wait for the right oppor-
tunities to come along.
Are you looking to enter residential
real estate or alternative properties
such as student housing, co-living
and so on?
Gandhi: Our current exposure to
real estate is around malls, logistics
and commercial real estate. We con-
tinue to explore opportunities in sec-
tors such as student housing, co-liv-
ing and so on. But, we have not done
anything in this so far and do not
https://t.me/Banking4Exams
THE SMART INVESTOR 11
Banking, auto
growth. Earlier, rural was growing
lift indices ahead
of Fed decision
around 1.3-1.4x faster than urban.
Thus, companies with higher rural
exposure could see more pain if the
situation does not improve.
In Q1, barring Dabur and United NIFTY REVERSES TREND
Spirits, all other consumer staple
11,150
companies, which have declared
results so far, reported a decelera- 11,085.4
tion in volume growth on a sequen- 11,100
tial basis. And the volume offtake
could remain poor in the ensuing 11,050
quarters on the back of weak con-
11,118.0
sumption.
Thus, how the companies con-
11,000
Jul 30,’19 Jul 31,’19
trol their advertising and promo-
tional spending and their impact
on profitability will be key. In Q1, PRESS TRUST OF INDIA er, dropping 4.55 per cent, fol-
benign input costs and new lease Mumbai, 31 July lowed by Bharti Airtel,
accounting standard — IndAS 116 Reliance, NTPC, Maruti, Tech
— offered strong margin support The benchmark indices Mahindra, ONGC, HDFC, and
to the companies. closed marginally higher on HDFC Bank.
Overall, investors, who can Wednesday, propelled by ban- “The market reversed
stomach some risks, can bet on king and auto stocks, ahead of after testing the psychologi-
FMCG on a selective basis. Experts the US Federal Reserve’s inter- cal 11,000-mark, supported
believe the valuation correction est rate decision. by short covering in banks
risk for FMCG could be high if other After a choppy session, the and auto after recent days of
for the slowdown has been weak sectors see some recovery. On the Sensex settled 83.88 points or fall and prospects of dovish
rural consumption. basis of Q1 numbers so far, HUL 0.22 per cent higher at Fed policy. “Investors’
HUL highlighted that rural and Dabur are analysts’ top picks 37,481.12. The broader Nifty appetite for mid- and small-
growth is now on a par with urban in the FMCG space. ended 32.60 points or 0.29 per caps is yet to find confidence
cent up at 11,118.00. despite consolidation as lack-
“Market sentiment lustre earnings and high beta
improved somewhat on impacted the sentiment. A
expectations that the US Fed decisive up move will depend
will reduce rates in its policy upon ease in liquidity crunch
meeting for the first time in a and improvement in funda-
decade,” traders said. mentals,” said Vinod Nair,
These players are, there- tract is higher by ~900 a kg YES Bank was the biggest head of research, Geojit
fore, selling their buy posi- as compared to the near- gainer in the Sensex pack, Financial Services.
tions in August contracts at month (September maturity) soaring 6.04 per cent, followed Foreign investors sold
whatever price is available contract, 2.15 per cent high- by IndusInd Bank, Tata Steel, equities worth ~644.59 crore
and buying October posi- er. Usually the preferred dif- Hero MotoCorp, Sun Pharma, on a net basis on Tuesday,
tions. As a result, August ference for vyaj badla players Bajaj Auto, Power Grid, Tata according to provisional data
near-month gold has fallen (who finance the two posi- Motors, SBI, and Kotak Bank with stock exchanges. On the
35,500 below the spot market price tions of different maturities that gained up to 5.32 per cent. currency front, the rupee was
35,000 and the October with their money) On the other hand, Axis trading almost flat at 68.84
far-month con- is 1.3-1.5 per cent, Bank emerged the biggest los- against the dollar.
34,500
tract is selling After the import which is the inter-
higher by ~900 per duty hike in the est they earn in
33,500 10g as compared to Union Budget, derivatives.
the August con- the physical
tract. In percent- market in gold
Spreads in gold
began moderating
Affle India subscribed 87x
age terms, the dif- has been since Wednesday Mobile marketing firm Affle Experts said investors were
ference is 2.6 quoting at a afternoon. India’s IPO was subscribed 87 attracted to Affle’s niche busi-
points, unusually huge discount In base metals, times. The 3.4-million share ness and growth prospects,
high. April-June spreads offering saw bids for 292 mil- despite high valuations.
The physical were high when the lion shares. Most of the bids The IPO comprised fresh
market continues to trade at contracts were entering the came from institutional inv- equity issuance worth ~90
a discount (to the cost of delivery period. The spreads estors and high networth indi- crore and offer for sale worth
import) of ~500 per 10g. are still high but moderated viduals. The price band for the ~350 crore by promoter Affle
Futures which were higher from where these were a few issue was ~740-745 per share. Holdings. Ahead of the IPO,
than the spot price in the months earlier. However, liq- At the top end, Affle India will Affle India had allotted ~224
past fell below the latter on uidity in all contracts where have a post-issue market cap crore of shares to anchor inve-
Wednesday. spreads are rising has of ~1,900 crore. At ~745, the stors. ICICI Securities and No-
Similarly, silver for the shrunk; in metals, overall issue was priced at 39 times its mura were investment ban-
far-month (December) con- volumes are falling. FY19 consolidated earnings. kers to the issue. SAMIE MODAK
A SNAPSHOT OF PE ACTIVITY & DEALS
The year so far...
n Deal volume n Deal value ($mn)
Month-wise PE activity
4,690
n Deal value ($mn)
4,806
3,518 3,226 2,841
21,564
801
17,269
1,420
622
1,059
know what those explorations will Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19
lead to. Jan 1-Jul31 Jan 1-Jul31 Deal
2018 2019 2018 2019 volume 82 72 105 106 88 83 86
You have been searching for a
partner to co-invest in rent-yielding Sector-wise allocations Key deals last week
office properties. Any progress on
that?
The diversified financial sector attracted the There were 13 deals worth 270.66 mn & 1
Gandhi: While we have a partner- most investments, accounting for 25.49% of exit in the last six days ended July 31
ship with Shapoorji Pallonji, we exit- the total investments in deal value. Software Investor & target Stake (%) Value ($ mn)
ed an asset we had over there. We are & Services was the second (17.39%), followed
happy and satisfied with that. We by energy, utilities & transportation sectors AION India 1
NA 122.5
Future Lifestyle Fashions
have been in dialogue with some Sectors Percentage (%)
firms but nothing has been publicly
announced. Hopefully, there will be Diversified financials 26 Jungle Ventures Pte.2
NA 45.0
some announcement soon. Software & services 17 Commeasure Pte.
Commercial real estate will remain Energy 8 Accel India 3
an important area for us. NA 40.0
Utilities 8 MindTickle Inc.
Your joint venture (JV) with Transportation 6
Shapoorji for rent-yielding assets Retailing 5 ASK Real Estate Fund-I NA 21.8
and another with Piramal did not Gulshan Homz 4
progress much. What went wrong? Insurance 5
Gandhi: Nothing wrong with both Real estate 4
the JVs. Basically, in the JV with Omidyar Network India5 21.0
Consumer services 4 Indifi Technologies
NA
Shapoorji, we bought a big asset in
Chennai and sold it. That was the Others 17 1
Includes Blackstone, 2 Includes Susquehanna
objective. Since we sold the asset, we Others include banks, health care equipment & services, materials, International Group, IFC, Qiming Venture 3 Includes New
capital goods, commercial & professional services, pharmaceuticals, Enterprise Associates, Qualcomm Ventures, Canaan
continue to explore other opportuni- biotechnology & life sciences, household & personal products, food, Advisors, Norwest Venture 4 Noida Residential Project
ties in commercial real estate. In the beverage & tobacco, consumer durables & apparel, media 5
Includes Elevar Equity, Accel, CDC, Fair Finance Fund
JV with Piramal, a lot of liquidity
came into the market at that time Top five PE deals this year
and brought down the returns. The top five deals this year accounted for 38.62% of the total investments in terms of deal
Hence, we decided not to go ahead value. In the largest deal this year, Brookfield Asset Management invested $3.6 billion in Tower
with investments. We have a won- Infrastructure Trust. This was followed by $1.8 billion investment by Brookfield in Pipeline
derful relationship with them. Infrastructure Ltd and $1.15 billion bet of GIC,SSG Capital in GMR Airports Ltd
Recently, we announced a JV for a
renewables InvIT (infra investment Investor Investee Stake (%) Deal value ($mn)
trust) and will continue to explore Brookfield Asset Management Tower Infrastructure Trust NA 3,666
other opportunities with them.
Brookfield Asset Management Pipeline Infrastructure NA 1,824
Would you look at floating GIC, SSG Capital Management HK1 GMR Airports 44.4 1,153
a real estate
investment trust Baring Asia Private Equity Fund VII NIIT Technologies 69.5 872
(Reit) here? GIC, Abu Dhabi Investment Council Greenko Energy Holdings NA 824
Gandhi: As you 1
Includes TRIL Urban Transport Pvt. Ltd.
know, we have done
an InvIT with L&T Liquidity events/exits this year
IDPL as sponsor, and The year has seen 83 exits. There were 21 open market exits worth $1602.42 million. Nalanda
we and Allianz as India Fund I sold its 16.57% stake in MindTree Ltd. for $389.34 million
investors. We have Secondary Sale Open Market
Exit type Deal volume Deal value ($mn)
given many inputs.
Open Market 21 1602.42 0.23 63.84
It is a useful struc-
ture for that asset. We Initial Public Offering 4 825.63 %
Buyback
have a similar view on M&A 39 69.3
0.27 IPO
Reits. At the right Buyback 5 6.74
M&A 32.90
VIKRAM opportunity, we will Secondary Sale 14 5.76
look at it but not right Snapshot of PE activity & deal appears on the first Thursday of every month
2.76 Source: VCCEdge
GANDHI
now.
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18 PERSONAL FINANCE
>
MUMBAI | THURSDAY, 1 AUGUST 2019

Buy only ready-to-move home R.I.P. interest

Though there is a lot of under-construction inventory, buyers should stay away from them
SANJAY KUMAR SINGH
P
atna-based businessman
Rohit Karna, 50, and his
school teacher wife Garima,
46, have been scouting for
an apartment in the National Capital
Region (NCR) for the past six
months. The news of the crisis in
non-banking financial companies
(NBFC) and the consequent fund
crunch real estate developers are fac-
ing has got the couple worried.
“When you go house hunting, you
see so many projects where construc-
tion been at a standstill for some
time. If fund supply to the sector
grows tighter, more projects could
meet the same fate,” says Rohit. The
Karnas have decided to proceed only
after weighing all their options.
Liquidity crisis stifles recovery:
Experts say the liquidity crisis, which
began from around September 2018,
has put an end to the nascent recovery
in sales. The market is saddled with a
large number of heavily delayed or ter-
minally stuck projects. “Currently, 1.74
lakh homes in 220 projects are stalled
across the top seven cities. There are
more in the smaller cities. Their col-
lective value is a staggering ~1,774 bil-
lion. Of the stalled units, 66 per cent
or over 1.15 lakh units have already
been sold,” says Anuj Puri, chairman,
ANAROCK Property Consultants. He
adds that the predominant reason is
the lack of liquidity with developers.
With banks saddled with non-per-
forming assets (NPAs), NBFCs had
stepped into the breach. From
~64,000 crore in 2011-12, credit by
NBFCs/HFCs (housing finance com-
panies) to developers increased by
more than 3.5 times to about ~233,000
crore in 2017-18. Lending by
NBFCs/HFCs slowed down consider-
ably in October-March 2018-19. “Net
disbursals by NBFCs/HFCs to devel-
opers declined by almost half from
~52,000 crore in 2017-18 to an estimat-
ed ~27,000 crore in 2018-19,” says
Samantak Das, chief economist and
head of research & REIS, JLL India.
NBFCs/HFCs have put in more strin-
gent guidelines for lending. “Interest
B U D G E T:
~1 CRORE - ~1.5 CRORE
REALTY
cost charged from developers is also
moving up,” says Gagan Randev,
national director, capital markets and
investment services, Colliers
International India.
The silver lining is that funding has
not stopped entirely. “At a recent event,
big institutional investors said they are
still willing to lend to developers who
have managed their balance sheets
well,” says E. Jayashree Kurup, head-
content and advisory, Magicbricks.
Das adds that small and medium
NBFCs/HFCs continue to lend, but the
ticket size of their loans is smaller.
NHB ban on subvention schemes:
The National Housing Bank (NHB)
recently directed HFCs to avoid
extending housing loans where devel-
opers service the loans on borrowers’
behalf. According to Mani
Rangarajan, group chief operating
officer, Elara Technologies (which
owns Housing.com), “About 30-35 per
cent of sales in new launches were
through subvention schemes.”
A low-cost source of financing has
closed down for developers.
“Developers were able to get financ-
ing at 9-10 per cent via this route,
compared to the 13-20 per cent they
Go for short-duration bond funds
Given the risks being faced by credit-risk funds, these are safer bets
have to pay if they borrow from the
debt market,” adds Rangarajan.
Private-equity funding for real
estate developers had already dried
up in the wake of the NBFC crisis,
according to Puri, and now one more
funding avenue has been shut down.
Randev adds that second-tier devel-
opers, who relied more on subvention
schemes, will find the going difficult.
Buyers benefited from these
schemes by just making the down
payment after which they did not
have to worry about making further
payments till possession. Many buy-
ers who may not be able to bear the
burden of both rent and pre-EMI
could postpone their purchases.
Rangarajan says developers have
gone back to the drawing board and
may come up with alternative offers
over the next 15-30 days.
Ready-to-move-in is risk-free: In
the current environment, inexperi-
enced and risk-averse investors
should opt for ready-to-move-in
properties. “You are able to circum-
vent development risk and you also
don’t have to pay goods and services
tax on a ready house,” says Randev.
Such properties are costlier than
subvention
INVENTORY STILL HIGH IN
SEVERAL MARKETS scheme
Average has fallen from four years at does not. Secondly, most
the end of 2018 to 3.4 at the end of contracts will also ensure
the first half of 2019 that the buyer will need to
pay the interest after two
City Unsold YTS* years, even if the developer
inventory (No.) (yrs) delays the project han-
Delhi NCR 132,605 5.8 dover. If the developer
does not pay during the
Kolkata 31,302 5.2 two years or delays pay-
Mumbai 111,194 4.0 ment, the credit record of
the buyer is adversely
Bengaluru 80,787 2.9
Chennai 35,040 2.7 FRANKLY impacted. These hidden
gems only become visible
Hyderabad 23,988 2.0 SPEAKING when the project is
delayed.
Pune 31,273 1.6 HARSH ROONGTA No wonder, NHB has
Overall 446,189 3.4 banned this product. But
*YTS stands for years-to-sell. Source: JLL India Imagine this scenario: You why now? It was already
want to buy a dream flat in seized of the situation. In
LOW PRICE APPRECIATION, an under-construction 2013 and 2016, it issued
BARRING IN HYDERABAD project. It promises every- warnings against this prac-
thing you need, but you are tice. And in 2019, it has
under-construction ones, but not too City Basic sales Change worried that the developer finally banned it.
much more. “The difference is not price (~/sqft) YoY (%) will not hand over the proj- Developers and HFCs
more than 5-8 per cent in today's mar- Hyderabad 5,131 17 ect within the guaranteed like this product because
ket,” says Kurup. She says you can off- tenure of two years. No construction is a signifi-
set this difference by negotiating for Bengaluru 5,157 3 problem. The salesperson cant risk in India, given the
discounts and freebies. Das says that MMR 9,396 3 from the developer’s office minefield of regulatory
the premium paid for ready proper- gives you a win-win pro- approvals and on-site
Pune 4,821 2
ties will partly be offset by the fact posal. You pay 20 per cent inspection a project has to
that you stop paying rent right away. Kolkata 3,936 1 now, and XYZ go through. So, if
Chennai 5,174 0 Home Finance Though the a developer were
Under-construction projects will provide a builder lobby is to take a loan for
require due diligence: The current Noida 3,899 0 loan for the bal- crying hoarse constructing a
issues of the sector have not affected Ahmedabad 2,857 -1 ance amount. that this move project, the loan
all developers equally. “Strong, finan- The developer will further hit rate stands at 12
cially sound players will not only Gurugram 4,950 -3 will pay the the real estate per cent to 18 per
Source: PropTiger Data Labs. Data is for Q12019
complete their projects but also interest on the sector, no cent. On the oth-
launch new ones. They will even get loan till the con- industry can er hand, the buy-
private-equity backing for them. portfolio. “Any developer who has struction is demand a er who is putting
Under-construction projects by them three or more projects scheduled for completed, and licence to cheat his risk profile to
can be considered,” says Puri. He sug- completion in the next year is going after two years, the customer acquire a loan
gests avoiding under-construction to need a lot of working capital. Going you start paying gets a loan at 8.75
projects by smaller developers with with such a player would be a risk,” the regular equated per cent to 9 per cent. The
no visible construction progress. says Kurup. monthly instalment on the system worked perfectly
If you decide to invest in the Also check the developer’s track loan. All that you need to fine till real estate prices
under-construction project of a mid- record of completed projects. Ask him do is sign the tripartite kept rising. But in the last
level player, check his financials (eas- whether he has got project funding. agreement between your- decade, prices are stagnat-
ily available for listed players). Avoid The web site of the Registrar of self, the developer and XYZ ing, projects have been
heavily-leveraged ones. In case of Companies also has information on Home Finance. delayed, and buyers are
unlisted players, go to the web site of loans given by various entities to So why has this so- feeling the pinch.
the state Real Estate Regulatory developers, informs Randev. Finally, called fantastic offer that The builder lobby is cry-
Authority (RERA). It will have infor- visit the project site to check the pace supports home buying ing hoarse that this will be
mation on the developer’s project of construction. been banned by the one more impediment in
National Housing Bank the recovery of the real
(NHB)? estate sector, but no indus-
The reasons are con- try can demand a licence
tained in the ‘asterisk’ to cheat.
mark of the advertise- It’s a shame to waste a
ments publicising such good crisis. The Reserve
offers. The famous “T&C Bank of India, the new reg-
apply” (read terms and ulator of HFCs, should use

CHECK SARBAJEET K SEN duration funds at this point. The risk-taker can go for
conditions). The tripartite nudge economics, and at
agreement between the least signal the less-risky
Short-maturity papers are STRATEGIES credit-risk funds but given housing finance company nature of buying ready-to-
Business Standard brings you a snapshot of average In the past year, a series of available at an attractive the current situation, it (HFC), the developer and move houses by reducing
defaults, downgrades and yield, and also the risk- n Invest for a minimum of would be better to avoid the buyer is loaded against the risk weight on such
current rates and unit sizes in localities that offer
delayed payments have left reward return doesn’t work three years; tax benefit 20 them or invest in them in the buyer. While the buyer properties. Like elsewhere
property in the price range of ~1 crore-~1.5 crore. If
debt fund investors scarred. in favour of long-term debt per cent after indexation small quantities. Currently, is under the impression in the developed world,
you are looking at buying real estate, an idea about
But debt funds do provide funds,” he said. n Look at corporate bond the credit spread is very low, that the developer is solely retail buyers should only
prevailing rates would come in handy
some amount of stability to a However, there is a minor funds, as 80 per cent of and quality papers are responsible for paying the purchase ready properties
Avg price (~/sq ft) Avg unit size (sq ft) portfolio. And bonds funds hiccup here. Market corpus is invested in available at a better rate. interest during the con- and not under-construc-
MUMBAI investing in private sector regulator, the Securities and AAA-rated papers Secondly, most of the mutual struction period, the agree- tion properties.
corporate bonds could offer Exchange Board of India funds barring IDFC have ment provides that the
Andheri(E) 16,698 1,311 good risk-reward to investors (SEBI), does not specify the n Banking and PSU bond exposure in the range of 10 buyer will have to pay the The writer is a Sebi-registered
Powai 19,166 1,184 who are keen to take some credit profile of the funds. So, funds are another option per cent - 40 per cent in less interest if the developer investment advisor
Mulund(W) 15,091 1,441 measured exposure. you will come across than AA papers. This carries
Borivali(E) 14,859 1,615 But you should have a schemes that offer varying high risk at this juncture. The
clear strategy. Short- risk-reward options. Some interest rate sensitivity. credit risk category has
Andheri(W) 18,510 1,194 duration funds could be a stick to only high-rated bond Considering these, good witnessed a whopping 18 per
Ghatkopar(E) 14,752 1,490 good investment bet at this and some of them go for low- quality AAA-rated corporate cent fall in their AUM
Chembur 17,662 1,270 point. Simply put, here fund rated bonds to give a boost to bond funds could be the between September and
Goregaon(W) 15,816 1,413 managers invest in bonds
that mature in one to three
the portfolio. That may make
the decision a bit difficult for
better alternative to credit-
risk funds. If one has a time
June,” Sridharan points out
And last but not the least,
TIPPING
BANGALORE
TKanakpura Road 7,688 2,713
years. In these schemes, the investors and they may have horizon of two years or more, invest for a minimum three- POINT
impact of interest rates to rely on expert advice. it is ideal to invest in year time frame. These funds
Hennur Road 6,975 2,890 movement is not much. In Even the risk-averse can corporate bond funds. The are expected to deliver over Is my balanced hybrid fund worth sticking to?
the bond market, if interest take this route yield-to-maturityy the three-to four-year time
Jayanagar 12,017 1,891 Many investors are feeling disappointed that their aggressive
rates move up, bond prices through corporate on most of the funds frame, as that is the typical
Haralur Road 7,158 3,069 fall, and so does the scheme bond funds. These in this category is average maturity of most of hybrid fund (popularly known as balanced fund) is showing
Rajajinagar 12,035 1,899 net asset value (NAV) and funds invest at least around 8 per cent,” these schemes. It is better to negative return over the past year. Many investors were sold
vice-versa. Short-term bond 80 per cent of the says Sridharan. match your holding period these products as being
Bannerghatta Road 8,158 2,903
funds look good given the money in AAA-rated Another good bet with the average maturity safer than pure equity
Koramangala 11,104 2,013 ongoing attractive yields. bonds. Though the for the risk-averse profile of the portfolio to HOLD ON funds. Clearly, these
Hoodi 7,304 3,110 “The rally in G-Secs has investments are investor could be the ensure that there are no n Category average return(%) investors have been
CHENNAI happened; hence duration is
not advisable for fresh
made in private
sector entities, a
YOUR banking and public
sector unit bond
negative surprises due to
changes in interest rates. 6.39
8.74 10.9 mis-sold the product.
Aggressive hybrid funds,
Kotturpuram 15,500 1,433
Saligramam 9,600 2,294
entrants. Short-duration significant MONEY funds. These funds Another advantage is the tax according to Sebi’s
funds offer better defence allocation to AAA- invest in bonds benefit that comes with -3.82 -2.8 definition, invest 65-80
Egattur (OMR) 6,504 3,479 against interest-rate rated bonds offers some issued by banks, certificate holding for three years. per cent of their
Thiruvidandhai 6,500 3,700 volatility than long-term comfort for investors. “At of deposits of banks and Keeping it for this period 3 mths 1 yr 3 yrs 5 yrs 10 yrs portfolio in equities.
funds,” says Joydeep Sen, this juncture, investors are bonds issued by public entitles the investor to long- Source: Value Research
Such a portfolio is
Anna Nagar 11,500 2,062 bound to be volatile. To
founder, Wiseinvestor.in. extremely cautious. If one sector undertakings. Some of term capital gains tax.
Vadapalani 11,150 1,925 Agrees S Sridharan, head, wants to invest in safe debt the portfolios do hold some Gains on funds held for at their credit, these funds have on average declined less than
Muttukadu 5,637 3,938 financial planning, Wealth funds, they need to look at long-term bonds, which least three years are taxed at pure equity funds. Dividends, too, were bound to stop once
Saidapet 12,500 1,807 Ladder Investment Advisors: high credit rating, low reward investors in a falling the rate of 20 per cent after the markets turned. Investors need to realign their
“We don’t recommend long- average maturity and low- interest rate regime. indexation. expectations and ride out the downturn.
HYDERABAD
Kondapur 7,155 3,012
Kokapet 6,420 3,459
Manikonda 6,230 3,481
Nanakramaguda
Banjara Hills
6,201
8,682
3,334
2,479
READER’S However, ELSS creates a lot of wealth over a
long period of time and personally I wish that
be conservative, and to add a cushion to your
calculations.
pened. My suggestion is that you continue your
SIP and continue to accumulate units.

Pragathi Nagar 8,000 2,570 CORNER ELSS had a section of its own in the Income
Tax Act. Due to this incentive, people would If I look at the current scenario, there are no
Remember you were doing this for a 10-20-
year period and to multiply your money. If you
Madhapur 7,404 2,920 FINANCIAL PLANNING invest a significant portion of their savings gains in equity or debt. Most of the choose to simply grow your money marginally,
here. Returns from ELSS are not guaranteed, predictions are that things will get worse. then FDs should be your vehicle. Other similar
Hitech City 8,600 2,595 but what is certain is that over a long period The one single factor that supports growth – vehicles could be corporate FD and PPF.
PUNE of 10 years it will make maximum wealth for government policies – seems to be falling
Kharadi 7,660 2,861 you. Although the lock-in period in ELSS is short. I have never seen such a market in the What are your thoughts on peer-to-peer
Baner 8,384 2,591 KARTIK just three years, if you are considering invest- last two decades. I am tempted to stop my lending as an investment product? Many
JHAVERI ing in it, stay invested for many, many years. systematic investment plans (SIPs) in equity platforms talk about giving over 12 per cent
Bibwewadi 7,834 2,739 funds and opt for fixed deposits (FDs) of returns. I do understand that there would be
Koregaon Park 11,285 1,911 When advisors make a financial plan, what small banks that offer better interest rates. defaults and returns can get hampered.
Bavdhan 7,916 2,888 is the range of inflation they consider? I was Are there other safer options like FDs that That’s true, there will definitely be defaults.
calculating education and medical inflation can give me 8 per cent return? But that is the risk you are taking to earn a
Aundh 10,003 2,390
I am 42. Out of the ~1.5 lakh limit under and realised that both have been at an These days we are all so performance driven higher return. Having said that, also under-
Wakad 8,823 2,410 Section 80C, my home loan and Employee average of over 10 per cent. How much that we want continuous performance at any stand that most of the people applying for a
Pimple Nilakh 7,696 2,843 Provident Fund combined get me around inflation should individuals with children cost and at all times. Every investment market loan on these platforms will generally be find-
~1.2 lakh deduction. For the remaining consider when saving for a goal? is driven by its nuances. Most retail investors ing it very difficult to get loans through the
Note
· Ticket price range considered for the above data points is between 2-2.5 crore ~30,000, should I go for equity-linked savings I would like to consider a five-year average of only chase performance, they do not ride per- regular banking channel. The saving grace is
·All the data points discussed in the above table refer to Primary Market only scheme (ELSS), Public Provident Fund (PPF) inflation based on the consumer price index. formance. They see historical performance and that Indians generally are quite honest people
·Above residential data set comprises of Residential Apartments only or National Pension Scheme (NPS)? Over long periods of time, financial plans then decide to do a fund SIP, or invest in the and honour commitments well. The ticket
·Above residential data is representative of organized real estate developers NPS, definitely not. Ordinarily people derive should also incorporate changing levels of stock markets. But if they don’t see quick size is also reasonably small, so you may
only a lot of comfort from investing into PPF, and inflation. Therefore, it is a good idea to keep returns, they stop the investment and once experiment.
·The top performing micromarkets based on sales during last year (Jun-2018 to
May-2019) is represented on the above table rightly so. It is a good investment and one of reviewing your financial planning annually. again come back after a large part of the next
·Data points are updated till May 2019 the few guaranteed types of investments. You may want to add 1-2 percentage points to rally or performance cycle has already hap- The writer is director, Transcend Consulting
Source: PropEquity
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MUMBAI | THURSDAY, 1 AUGUST 2019 STRATEGY 19 <

number of smartphone users in

the country is expected to touch GUEST COLUMN
859 million by 2022 from 468 mil-

lion users in 2017, growing at a
compound annual growth rate of
12.9 per cent. This would also
explain Netflix’s bet on the
mobile platform.
So how does the OTT player
decide its content mix?
The key, the team at Netflix
realised early on, is to focus on a
mix of international originals,
Indian entertainment content
sourced through output deals,
and creating world class original
shows and movies. In its first year
in India, the streaming platform
signed two significant alliances
in the country — one with Shah
Rukh Khan-promoted Red
Chilies entertainment, and the
other with what was then called
Phantom Films (co-owned and
run by four filmmakers includ-
ing Anurag Kashyap and
Vikramaditya Motwane).
Thanks to these collabora-
Building a culture
of success
Why we need Silicon Valley’s sharing spirit in India
n 2008, while scaling business insights with me was
I Games2win, my fourth start-up, because Jameson knew that their
my partner and I encountered a knowledge and expertise was the
terrifying problem. Almost all our best in the world. There was noth-
online games (made in Adobe ing I could have taken away from
Flash) were getting stolen from our him.Sharing makes you super
websites by pirates across the capable because it's a natural
world. Our revenues evaporated, counter to your vulnerabilities. By
and we felt utterly helpless. Just being 'secretive', you hide behind a
then, a new innovative company veil of weakness.
called Mochi Ads from San
Francisco developed a technology Sharing makes you learn
that helped track such pirated Jameson and I became friends and
games. We innovated on their idea we ran a series of trials and exper-
and created an ad solution inside iments together. Mochi had a great
our games that would travel with exit while we scaled our audience

Diversity is key for Netflix

tions, the platform has churned our games and remain "invisible" 5X, thanks to our collaboration. We
out a number of films and until the pirate sites actually learned so much from our mutual
shows from India. Its first major launched our games. Our tech- sharing, which resulted in millions
success came in the form of Saif nology was called "Invizi-Ads". of dollars of value being created for
Ali Khan and Nawazuddin With a stroke of innovation, we both companies.
Siddiqui-starrer Sacred Games beat the pirates at their own game.
The OTT player hopes to steal the show with local collaborations, innovative pricing which premiered last year. It
fast became one of its most suc-
I travelled to San
Francisco and connect-
Sharing attracts top
talent
URVI MALVANIA “Our members in India watch cessful original shows, gaining ed with Mochi Ads. In Smart, young and
CONTENT APPETITE more on their mobiles than appreciation not only among my mind, I was their bright people have mul-
n the three years since its members anywhere else in the Indian audiences, but also potential competitor. I tiple job options today.

I launch in India, global video

streaming giant Netflix has
seen the Indian over-the-top
(OTT) services landscape under-
go a huge spurt in growth — not
only in terms of the number of
competitors it faces, but also in
terms of the scale of consump-
tion of digital video content. So
how do Reed Hastings and Co
plan to stay in the game, and
ensure a permanent place in the
Indian viewers’ share of wallet?
Srishti Behl Arya, director,
international original film, India,
Netflix, says the firm’s focus is to
create as diverse and appealing
content out of India as possible.
“Diversity of content is the key,"
Arya says. “India is a diverse mar-
ket and it is important we have
quality content that can be
enjoyed by the various kinds of
viewers we have. Of course, it is
important to stay true to the con-
cept, and tell the best stories in
the best way possible. We have
been lucky to have collaborated
with some of the best creators.”
To that end, the company is
working with various Indian cre-
Netflix members in India
watch more on their
mobiles* than members
anywhere else in the world
 Almost half of the
platform's members in
India downloaded at least
one film or episode-in-a-
series in June 2019
 In India more people**
sign up on the mobile than
*Mobile viewing as a percentage of overall viewing across devices (TV, laptop, tablet
etc) for Netflix members in a country, **Mobile signups as a percentage of all signups
for Netflix in a country
ators across genres to compile a
library of original films that can
be served to its global audience.
Netflix’s content partners include
Zoya Akhtar, Karan Johar, Farah
Khan and Anurag Kashyap,
among others. While the compa-
ny didn’t comment on the matter,
media reports suggest that Netflix
could be spending around $100
million on originals from India
over the next two years.
Apart from ensuring content
diversity, the platform has also
anywhere else in the
world. They then move on
to discover Netflix on other
devices as well
 70 % of Netflix users in
India watch at least one
film a week
 The number of films
watched per month/per
member in India has grown
50% since January2018
adapted to the Indian ecosystem in
case of pricing. Last week it
announced a mobile-first sub-
scription plan at ~199 a month. This
is the first time that the streaming
platform has changed its pricing
strategy for an individual market.
According to Kalagato, a data intel-
ligence agency, the average order
value for Netflix for the month of
March 2019 was ~640. The num-
ber has hovered between ~640 and
~660 for the period between
October 2018 and March 2019.
world — and they love to down-
load our shows and films. We
believe this new plan will make
Netflix even more accessible and
better suit people who like to
watch on their smartphones and
tablets — both on the go and at
home,” said Ajay Arora, Director,
Product Innovation, Netflix.
Netflix’s strident focus on India
is understandable. According to
study titled “Video on Demand:
Entertainment reimagined”
released by ASSOCHAM-PwC in
May, the Indian video OTT market
will be amongst the top 10 mar-
kets globally with a market size of
$823 million (~5,363 crore) by 2022.
“The five fundamental driv-
ers of this convergent business
model are uninterrupted con-
nectivity, mobile devices becom-
ing the primary source of content
consumption, the need to move
away from traditional revenue
streams, value shifting from con-
tent creators to platforms, and
ability to provide a personalised
offering to the consumer,” the
report said.
During the same time, the
internationally. A statistic given
out by the platform reveals that
one in three viewers of the show
was non-Indian.
The streaming platform has
wanted to meet them to
"sniff around" and
understand how they
really worked.
Mochi Ads CEO and
With such a range of
choices, they want to
work for an organisa-
tion that makes them
ALOK KEJRIWAL SSSS future leaders, not just
produced a number of films in the Founder Jameson Hsu CEO & co-founder digital workers. It is
country through different models met me warmly. While I Games2win only when there is a
of production. In some cases like kept my cards close to deep manifestation of
the Ronnie Screwvala-produced my chest, Jameson sharing that you can
Love Per Square Foot, Netflix spoke freely and answered all my hope to attract the best.
shopped for the product when questions. Then, he said, "Alok,
Screwvala’s production house you guys are so bright! You should Sharing creates culture.
RSVP went to market with it. In be based in the Valley!" I meekly Culture creates an industry
other cases like Brahamanam, it said, "Jameson, I don't know where Peter Drucker, one of the world's
picked up titles at various film fes- to start…" Jameson interrupted me greatest management gurus,
tivals. Yet another model it has and said, "Alok, you can start right famously said: “Culture eats strat-
adopted is co-producing films — here, in our office! Just occupy a egy for lunch.” In India, if we have
like Class of 83 in association with couple of desks and you can later to figure a strategy to succeed, we
Red Chilies. make your plans." need to foster culture first.
That apart, in India, and glob- That day, that moment, I under- And that culture begins by giv-
ally, Netflix has given emphasis to stood why Silicon Valley succeed- ing first, getting later. That is
local collaborations. This helps the ed the way it did. It gave, shared what we have to learn from
platform in multiple ways. Local and lent whatever it had, no holds Silicon Valley. If you read the sto-
partners come with an under- barred. What is the secret sauce of ries of the most successful entre-
standing about the preferences sharing? What has Silicon Valley preneurs of Silicon Valley, they
and culture nuances in a market, discovered that we need to rapidly were helped by fellow entrepre-
helping Netflix then choose scripts imbibe? neurs, some who were also their
that will cater to both the local and fiercest competitors!
the global markets. Sharing happens when When sharing becomes our kar-
you are the best: ma, we can create a culture that
More on www.business-standard.com The reason Mochi Ads shared their will perpetuate success forever.

SNIPPETS STATSPEAK Year-on-year All figures in percentage of respondents Growth factors

See growth See growth Actively disrupting
prospects for the
81
prospects for their their respective sectors
Indian economy company instead of being Agree that growth will
disrupted be determined by the
91 94 ability to anticipate
79 and navigate the
69 66
global shift to a
31 low-carbon, clean
technology economy

2018 2019 2018 2019 2018 2019

67

Dragon’s share CEOs are concerned about three factors related Believe acting with
agility is the new
The combined market share of Chinese smartphone to “return to territorialism”
currency
majors Huawei, OPPO, Vivo, Xiaomi, and Realme (or
HOVXR) attained its highest ever market share in CHALLENGING TIMES
India by cornering 42 per cent of the sales in the just KPMG’s fifth annual India CEO growth for their companies About 69 per cent CEOs in 33
concluded quarter. Releasing these numbers for Q2
2019 on Wednesday, Counterpoint Research
Outlook, which has made its and the country. They realise India, the same as CEOs 38% 38% 24%
deductions based on the that for their businesses to be globally, now have structures Likely to undertake
attributed those and the continuous ascent of the views received from 125 CEOs resilient, they have to be in place to review their acquisitions to
brands from the neighbouring country to heavy transform their
marketing, faster portfolio refresh, high spec
in the country across comfortable with disrupting business models and ensure
devices at aggressive prices and multi-channel industries, shows how the their business models for they stay competitive in the Rise of political parties with business model
US-China trade war
presence. "These brands have been aggressively leaders see the prospect of which agility is the key. face of disruption. Brexit protectionist policies Source: KPMG
expanding outside China and achieving growth
offsetting the saturation in their home market.
Their strategies and product portfolios are more

‘Trust continues to be a deterrent in smaller markets’

aligned to the local needs and preferences, which is
one of their key strengths," said Varun Mishra,
research analyst at Counterpoint Research.

Consumers from tier-II/III/IV geographies still
prefer making planned purchases that are
affordable, Shukla tells Shubhomoy Sikdar
A bulk of your business comes from
tier-II, III and IV cities, but of late
consumer demand across categories
has been sluggish in the country.
How do you see it shaping up in the
next few months?
Well, we did experience weak sales
Stay connected last year due to erratic weather
conditions during winter, which
According to Gartner, Inc. business and IT leaders will affected the business. However, this
have to develop an understanding of new wireless fiscal year, we are witnessing healthy
technologies as new trends are emerging which has growth in the demand for
extended the realm well beyond Wi-Fi. Beyond Wi-Fi products that are trendy
and 5G, there are areas such as vehicle-to-everything and cater to the young.
through which conventional and self-driving cars will Thanks to growing
communicate with each other as well as with road smartphone penetration,
infrastructure or low-power wide-area networks that cheap data rates and
provide low-bandwidth connectivity for internet of increasing digital
JP SHUKLA,
things applications in a power-efficient way to connectivity, consumers co-founder & chief brisk business. What then
support things that need a long battery life. “Many from tier-II/III/IV executive officer,
areas of wireless innovation will involve immature geographies are now able
1-India Family Mart Our target consumers hail
technologies, such as 5G and millimetre wave, and to track the latest fashion
may require skills that organisations currently don’t and style trends. However, these
possess. EA and technology innovation leaders consumers still prefer making
seeking to drive innovation and technology planned purchases that are
transformation should identify and pilot innovative affordable. Our retail chain is here to
and emerging wireless technologies to determine plug that gap and provide reasonably
their potential and create an adoption roadmap,” priced fashion to the lower income
said Nick Jones, distinguished research vice president consumer group.
at Gartner. We are anticipating better
business performance ahead of us,
and as the season progresses, we
believe that there is going to be a
considerable increase in demand.
Besides, we also have an end of
season sale coming up, followed by
the festive season in the next couple
of months. So, we have high hopes
that the business will scale up in UP,
Bihar, Jharkhand, Chhattisgarh and
in the Northeast region.
Internet connectivity and
affordability have
improved hugely in what
you describe as “remote
locations” and the e-
commerce giants are doing
gives you the edge?
from tier-II/III/IV cities.
Most of the population from these
markets still have trust issues with e-
commerce platforms. One of the key
reasons that force small town
shoppers to drop out of online
shopping is poor product quality.
This reinforces a perception that it is
better to “touch and feel” the product
while buying — something which is
only possible in brick-and-mortar
stores. An inability to return products
easily and delayed product deliveries
to small towns are two other pain
points that make these customers
hesitant about shopping online.
Our brand attempts to meet the
trust and assurance that these
shoppers expect, while also ensuring
a refreshingly different offline
experience. We are leveraging
cutting-edge technology to manage
our operations in a better manner,
such as automating supply and
procurement processes to
enable greater
productivity, visibility
and cost efficiency.
Technologies such
as e-procurement
structures
centralise the
tracking and help us
in leveraging volume
and lowering costs for
the buyer.
This also allows us
to track cost reductions on
a continuous basis
and to
proactively identify and address any
gaps. Moreover, by automating the
internal procurement processes such
as purchase order tracking, RFX
events and supplier evaluation, we
are able to achieve higher operational
efficiency. Since these activities can
be completed without human
intervention, it further reduces
transaction time and helps expedite
downstream processes.
How will you go about opening the
100 new stores that you have
announced recently? Will
more stores come up in
the cities/towns where
you already have a
foothold or the focus
will be entering new
territories?
Our business
development team
is exploring newer
territories where
there is growth
potential for a
business such as
ours, besides
evaluating
newer
regional markets within the states
that we are operating. We are
planning to open 40 stores in newer
geographies by 2020, and are also
focusing on nearby catchments in the
locations where we have a strong
presence. If we notice that a new store
in such localities will not hamper the
sales of the existing store, we would
probably go ahead with the same.
Since the Northeast is one of your
focus markets, do you also see the
potential of procurement from
neighbouring countries such as
Bangladesh or Myanmar thus
making logistics easier?
The procurement of our logistics is
centralised and situated in India. But,
considering e-procurement supports
various currencies, languages and
logistics options, sourcing from
countries across the globe, especially
from the neighbouring countries, will
indeed be stress-free.
However, at present, we feel it is
better to source our inventory
requirements from within the
country instead of importing
products from neighbouring
countries such as Bangladesh and
Myanmar. Doing so allows us to
support and drive the growth for local
manufacturers in India.
More on www.business-standard.com

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>
MUMBAI | THURSDAY, 1 AUGUST 2019 1

FB defeats case claiming Warren, Sanders vs moderates:

it aided Hamas attacks Liberals under firein 2nd debate
AFP/PTI
Detroit, 31 July
CHRIS DOLMETSCH The appeals court said that
Manhattan, 31 July if Facebook were even partly a The ideological divide between
creator or developer of the ter- Democratic presidential hopefuls came
acebook doesn’t have to rorism-related content, it into focus on Tuesday as leading pro-

F face a lawsuit by victims

of Hamas attacks and
their relatives who claimed
wouldn’t be protected under
the law. But it disagreed with
the plaintiffs’ arguments that
gressive candidates Bernie Sanders and
Elizabeth Warren defended their liberal
policies on healthcare and immigration
that the social network unlaw- the company helped devel- against surprisingly energetic attacks
fully assisted the terror group, oped Hamas’s content by from moderate rivals.
a federal appeals court ruled. directing it to users who are The fault lines emerged immediately
In a 66-page ruling issued interested in the group and its in the second debate of the 2020
Wednesday, a divided court terrorist activities even if they Democratic primary race, with lesser-
upheld a judge’s decision to aren’t seeking it. known candidates taking sharp digs and
throw out the case, saying an “The algorithms take the warning that forcing radical change could
interactive computer service information provided by ensure President Donald Trump's re-elec-
is not the publisher of third- Facebook users and ‘match’ it tion.
party information when it uses to other users -- again, materi- Warren demanded "big, structural
tools that are designed to ally unaltered -- based on change" and warned that political "spine-
match content with consumer objective factors applicable to lessness" over radical reforms will per-
interests. The plaintiffs sued the Mark Zuckerberg company in 2016 any content, whether it con- petuate a "rigged system that has helped
“Facebook does not edit (or cerns soccer, Picasso or the wealthy and well-connected and
suggest edits) for the content hold social-media companies provided Hamas with a com- plumbers,” the court wrote. kicked dirt in the faces of everyone else." US Senators Bernie Sanders and Elizabeth Warren speak on the first night of the
that its users — including to account for allowing violent munications platform that One of three judges on the But she and Sanders faced dramatic push- second 2020 Democratic US presidential debate in Detroit, Michigan, US, on Tuesday
Hamas — publish,” the Second extremists to use their plat- enabled the attacks. A district panel, Robert A. Katzmann, back including from ex-congressman PHOTO: REUTERS
Circuit Court of Appeals said, forms to recruit followers. The judge dismissed the case in partly disagreed in a 35-page John Delaney who delivered a scathing
noting that the company only terrorism victims attempted 2017, finding that the dissent, saying the decision rebuke to their "fairy tale economics" that two-and-a-half-hour debate that touched to all the trouble of running for president
requires users to provide basic for the first time to argue that Communications Decency Act takes a law intended to encour- risk bankrupting the economy. on everything from jobs and foreign pol- of the United States to talk about what we
information and therefore acts social-media companies could of 1996 prevents civil liability age service providers to shield Sanders and Warren, Delaney said in icy to gun violence, taxes and how old is really can't do and shouldn't fight for,"
as a “neutral intermediary.” be held liable under the U.S. for claims that treat computer minors from obscene material the most visible moment of his candida- too old to be president. she said, in one of the night's biggest
The lawsuit was among Anti-Terrorism Act. service providers or users as “so that it now immunizes cy, are peddling "bad policies like "I don't care how old you are. I care applause lines. The 10 candidates unified
several around the U.S. testing The plaintiffs sued the the publisher or speaker of those same providers for Medicare for All, free everything, and about your vision," South Bend, Indiana against Trump's combative and controver-
whether victims of terrorist company in federal court in information provided by allegedly connecting terrorists impossible promises that will turn off Mayor Pete Buttigieg, 37, said of 77-year- sial presidency.
attacks and their families can New York in 2016, alleging it someone else. to one another.” BLOOMBERG independent voters and get Trump re- old Sanders. "We'll call his racism out for what it
elected." Tuesday marked the most sus- The veteran senator from Vermont is," said Beto O'Rourke, an ex-congress-
tained assault yet by centrists on the pro- offered a staunch defense of his Medicare man seeking to thread the needle between
gressives' big-idea platforms. for All plan, at one point shutting down the moderate and liberal camps.

US Bill would ban scrolling on social media The debate features 20 candidates over criticism that he did not know whether it Buttigieg, a military veteran, largely
two nights in Detroit, Michigan, a battle- would provide better coverage than poli- remained above the fray.
ground state Trump snatched in 2016. cies offered through labour unions. But he attacked the "incompetence"
Republican Senator Josh Hawley tiative by Hawley targeting large technol- for the user content they host if they don’t Frontrunner Joe Biden takes the stage "I do, I wrote the damn bill," he of Trump's immigration crisis, and
introduced a bill on Tuesday to ban ogy platforms as he emerges as one of the demonstrate political neutrality. Wednesday with senators Kamala Harris steamed. assailed Republicans who have stood
unlimited scrolling on pages by social sector’s foremost Republican foes. Earlier “Big tech has embraced a business and Cory Booker, prominent African- But while the self-proclaimed silent despite the president's rhetoric on
media sites such as Facebook in July, he addressed President model of addiction,” Hawley said in a American candidates who have strongly Democratic socialist said he wants to race. "When the sun sets on your career...
and Google’s YouTube. Hawley has Donald Trump’s gathering of statement. “Too much of the ‘innovation’ criticized the former vice president on whip up a "political revolution," the thing you will be remembered for is
The bill would ban infinite, proposed other conservative anti-tech voices, in this space is designed not to create bet- racial issues. Hickenlooper cautioned against abolish- whether in this moment, this president,
automatic content additions Bills targeting which also attracted conspiracy ter products, but to capture more atten- The stakes are sky-high. The debate is ing private health insurance for hundreds you had the courage to stand up to him,"
when users approach the end of the industry theorists and internet trolls. tion by using psychological tricks that likely to winnow the sprawling field by as of millions of people. Buttigieg said.
feeds on sites. It wouldn’t apply Hawley has proposed other make it difficult to look away.” much as half, ahead of the next one in Expanding healthcare ought to be "an Trump's disparaging comments this
to music-streaming sites or pre- bills targeting the industry, Hawley’s bill would require that social September. evolution, not a revolution," Hickenlooper week about Baltimore and an African-
compiled playlists. including one to ban allegedly addictive media companies set a 30-minute limit Underperformers like Senator Amy said. Divisions also emerged on immi- American member of Congress has inten-
The proposed legislation, which is features of video games and another for time on spent on their platforms Klobuchar and Colorado ex-governor gration and trade. sified talk about the country's racial
unlikely to pass, represents the latest ini- requiring that companies face lawsuits BLOOMBERG John Hickenlooper, both polling at below Warren's plan to decriminalize border divide.
two percent, scrambled for breakout crossings by undocumented migrants Several candidates pointed to the need
moments to keep their struggling cam- brought an animated response from to inspire voters, not just with economic
paigns alive. Montana Governor Steve Bullock, who optimism but moral clarity.
"I have bold ideas, but they are ground- warned that would only exacerbate prob- "We need to talk about the fact that
ed in reality," asserted Klobuchar. lems. "A sane immigration system needs the United States has sacrificed our
Warren and Sanders — who are essen- a sane leader, and we can do that without moral leadership," said Marianne
tially tied for second, at about half Biden's decriminalizing" such crossings, said Williamson, an author who has never
support — share similar political plat- Bullock, who told viewers his mission was run for public office. Trump's
forms: both back universal healthcare, to "win back the places we lost" to Trump Republican Party painted the Democrats
tuition-free public college, tax hikes on in 2016. With moderate rivals savaging as too extreme. Chairwoman Ronna
wealthy Americans and aggressive Wall ambitious but costly liberal policies, McDaniel tweeted that voters witnessed
Street regulation. Warren lost her patience. "a doubling down on Democrats radical,
They parried attacks throughout the "I don't understand why anybody goes socialist proposals."

China, US hold ‘frank’ talks to end trade war

Chinese and US officials held
"frank" and "constructive" talks
in Shanghai on Wednesday and
agreed to meet again in
September to negotiate a trade
deal to end the ongoing trade
war between the world's two
largest economies even as their
meeting was eclipsed by
President Donald Trump’s (pic-
tured) Twitter tirade against
Beijing. Since the commence-
ment of trade war last year
China and US have so far hit
each other with punitive tariffs
covering more than $360 bil-
lion in two-way trade.
Trump kicked off the trade
war demanding China to
reduce massive trade deficit
which last year climbed to over
$539 billion. He is also insisting
on China to workout verifiable
measures for protection of
intellectual property rights
(IPR) technology transfer and
more access to American goods
to Chinese markets.
The 12th round of talks
between top trade negotiators
from China and US, the first
after they broke down in May,
lasted just half a day and ended
with no sign of a breakthrough,
but a willingness to continue
discussions.
The talks were held in
Shanghai unlike the previous
rounds which took place in
Beijing and Washington. The
abrupt end of talks sparked
speculation that a trade deal
was unlikely before the 2020
US presidential elections.
US Trade Representative
Robert Lighthizer and
Treasury Secretary Steven
Mnuchin took part in the talks
with a Chinese delegation
headed by Vice Premier Liu He.
The talks were relatively brief
and the US officials left for the
airport without speaking to
reporters.
"The meetings were con-
structive, and we expect nego-
tiations on an enforceable
trade deal to continue in
Washington, D.C., in early
September," White House
Press Secretary Stephanie
Grisham said in Washington.
PTI

Oil jumps to two-week

high as stockpile draw
eases demand worry
Oil climbed to its highest lev- in early September, as the lat-
el in more than two weeks as est round of talks to resolve a
strong summer demand in trade dispute ended with
the US continued to drain signs that the top two
stockpiles. economies discussed the
Futures rose as much as 1.3 Asian nation’s purchases of
per cent after the Energy American farm products.
Information Administration “The EIA report in and of
reported American crude itself was constructive, but
inventories fell by 8.5 million these factors outside the mar-
barrels last week, a seventh ket are weighing prices down,”
straight decline that was high- said Andy Lipow, president of
er than all industry and ana- Lipow Oil Associates LLC in
lyst estimates. Houston.
Stockpiles of gasoline Brent crude West Texas
and distillate fuels also for Intermediate for
shrank, helping ease September September delivery
concerns about slow- added 46 rose to as high as
ing consumption. cents to $58.82 a barrel on the
Still, oil surren- $65.18 a New York Mercantile
dered some of its gains barrel on the Exchange and trad-
after an initial burst ICE Futures ed up 32 cents at
following the EIA data, Europe $58.37 at 12:43 p.m.,
as investors waited to exchange on track for its fifth
see if the Federal straight advance.
Reserve will cut U.S. interest Brent crude for
rates as expected to boost the September, which expires
economy. Wednesday, added 46 cents
Prices are ending July little to $65.18 a barrel on the ICE
changed, after a volatile Futures Europe exchange.
month in which growth con- The more-active October
cerns competed with sim- contract was at $65.06, up 43
mering Middle East tensions cents. The September con-
that risk disrupting global tract traded at a $6.82 premi-
supplies. U.S. and Chinese um to WTI for the same
negotiators plan to meet again month. BLOOMBERG

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MUMBAI | THURSDAY, 1 AUGUST 2019 BRAND WORLD 21 <

Bournvita finds its way

around the wellness track
Mondelezticksthehealthboxasitplotsanextensiongraph fumble with a new set of con-
sumers. As Sridhar points out,
forthebrand,hopestoexpanditscacheofconsumers Bournvita has great equity with
mothers, but when they
address the mother with anoth-
er product, they need to be
careful about how they play it in
the communication. Health for
a toddler has a set of attributes
but the brand does not carry
them along when it moves into
a new product or age group.
Mothers want a different prod-
uct than what they would buy
for their children.
Singh is aware of the chal-
lenges. “We take a fair degree of
time to understand consumer
insight, evaluate the potential
and then launch the product.
We have been known as a
strong health nutrition brand
and we will continue making it
Kareena Kapoor Khan is the endorser for the brand’s offering for toddlers, Bournvita Lil Champs bigger and better for our con-
sumer,” he added, hinting that
T E NARASIMHAN In line with these trends, are increasingly seeking the list of extensions is likely to
Chennai, 31 July we have made some exten- healthy options. grow in the coming years.
sions or expansions,” said Singh says, “It (Biscuits) is a For Singh, the right amount

M
ondelez India is
measuring its way
around the exten-
sions trail for its 70-year-old
brand Cadbury Bournvita. As it
looks to take the next step with
the brand’s extension into bis-
cuits (launched in 2016) and
expand its appeal to other age
groups, the company that has
several iconic products in its
portfolio such as Cadbury
(chocolates) and Oreo (biscuits)
says that it is keen to keep the
promise of health unchanged,
even as it takes Brand Bournvita
into uncharted territories.
The company believes that
brand extensions, while
addressing new consumer
segments, could also end up
diluting the brand image. But
if done sensitively, extensions
can pay back the mother
brand in spades.
“We have a team to study
this and look at how Bournvita
can be more relevant among
the (new) consumer base.
Inderpreet Singh, associate
director–Marketing (Gum,
Candy and Powdered
Beverages), Mondelez India.
Eatanddrinkhealthy
Given increasing consumer
concerns over a healthy
lifestyle, the company sees
potential in expanding the
brand’s health promise into
new forms and areas. Singh
explains that the macro trend is
about health and wellness and
it can help the brand across the
two domains that it is in at
present.
Bournvita can grow within
the category of health bever-
ages, by tapping into a wider
age group. As it has done by
stepping into the toddler mar-
ket and targeting women con-
sumers, thus stepping beyond
the core group of 5-15 year olds.
Health is also an effective
plank for biscuits, where
Bournvita is a relatively new
entrant and where consumers
good overlap and match.”
Singh is confident the
brand is on strong ground, giv-
en that across the food and
beverage category, healthier
brands are growing faster than
the rest. And he adds, the trust
that Bournvita has accrued
over the years, stands it in
good stead today as it expands
in scope and reach.
K V Sridhar, founder and
chief creative officer at
HyperCollective believes that
brand extensions must be com-
plementary or a natural exten-
sion of the core category. “You
cannot be a hair oil and turn
into a deodorant. Brand equity
will get diluted if the extension
is not complementary or natu-
ral,” he adds. To him Bournvita
has been able to pick its way
through the extensions trail
quite efficiently so far.
Speakinonevoice
The product may fit the health
box but the brand could still
of physical and mental devel-
opment—that is the core need
that the mother brand is cater-
ing to. “If you continue catering
to the same set of needs, but in
a new category, it is a very good
extension. Because, you then
borrow from the mother brand
what it is known for. And then
through ads and sales revenue,
you pay back the mother brand.
They are in perfect harmony
with each other.”
Currently Bournvita is a key
player with 14.5 per cent share
of the ~7000-crore healthy food
and drink market. And in keep-
ing with its extension ambi-
tions, it has been wrapping a
larger purpose of wholesome
parenting for children’s success
around its communication.
The narrative is now being tak-
en forward for Bournvita Lil
Champs, where the ads ask
mothers to think beyond height
and weight under the banner
of ‘Badhao Andar Ki Takat’
(Make them strong within).

FROM PAGE 1

Govt softens stance as we are the largest two- and three-wheel-

er market in the world,” Bajaj told Business
media assets should conclude in the next
few weeks and we may have to sell a very

on EV roll-out Standard.
He said he recently met officials in the
small additional stake in Zee if needed,” he
said, adding the current transaction had

time frame
The Society of Indian Automobile
heavy industries, road transport, and pow-
er ministries and was assured that the gov-
ernment was not banning ICE vehicles.
given the group more flexibility to negoti-
ate harder on its infrastructure asset sale.

Manufactures (Siam) has commissioned
global consulting firm Boston Consulting
Group (BCG) to prepare a comprehensive
report on EVs encompassing challenges
and opportunities, and the approach India
should adopt for e-mobility. BCG is likely to
submit its report in a month. Alluding to
the incentives announced by the govern-
ment to spur EV adoption, Kant said the
government had done everything possible
to clean up its cities, improve the quality of
life for citizens, reduce oil imports, drive
Make in India, and create size and scale.
“It is now for the private sector to do its bit.
It must take leadership position in becom-
ing the champions of clean mobility,” Kant
said, without making any reference to the
earlier proposal of an outright ban on inter-
nal combustion engine (ICE)-powered vehi-
cles. Rajiv Bajaj, managing director at Bajaj
Auto, who has been vocal in his criticism of
the government’s e-mobility road map, said
They clarified that they were keen on EVs
butithadtobedoneinapragmaticwayand
had to be a win-win for all. “For a complete
closure, I also wanted to have the confir-
mation from the NITI Aayog as the propos-
al had originally come from their side. And
I was very pleased to hear the very same
stand from the NITI Aayog,” he said.
The calibrated approach of first target-
ing the large polluted cities will put to rest
the fears of making the capacity for ICE
vehicles redundant and potential job loss-
es, Bajaj pointed out. “While the urban mar-
ket will move to EVs in a phased manner,
growth of rural, semi-urban and exports
will more than compensate for that. This
will ensure utilisation of the current
installed capacity and save current jobs.
India sold 211 million two-wheelers,
700,000 three-wheelers in 2018-19,” accord-
ing to Siam.
Apple clocks
double-digit
revenue growth
in India
“ThatindicatesthatifApplegetsthepricing
right in a market like India, there is always
demand for an iPhone, as it is a very aspi-
rational brand in the country. This is a little
glimpse of what they can achieve in India if
they can get the pricing right,” said Pathak.
India is one of the most sought desti-
nations for smartphone firms, with as
many mobile users as the entire population
of America. The number of smartphone
users in India is expected to double to 859
million by 2022 from 468 million in 2017,
growing at a compound annual growth rate

he was relieved to learn the government
didn’tplantobanICEvehicles,andsatisfied
with the policymaker’s nuanced stance
involving a phase-wise roll-out.
“The previous expectation of a hard
stop from 2023 and 2025 seems to be no
more there. Rather, a very pragmatic
approach to take India to a leadership role
in electric two- and three-wheelers is what
the government is looking at. I am all for it,
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Oppenheimer to
buy 11% in Zee for
~4,224 crore
“The fund has been a financial investor in
Zee Entertainment for 17 years,” said
Justin Leverenz, portfolio manager,
Invesco Oppenheimer
Developing Markets Fund. “This
additional financial investment
underscores our continued con-
fidence in the management’s
ability to deliver long-term
growth and financial returns.”
Despite being the largest pub-
lic shareholder in Zee, Invesco
Oppenheimer will not hold a
board seat, Goenka clarified in
an analyst call on Wednesday.
“While interest had come
from strategic and financial
investors for the stake sale in Zee,
we chose to go ahead with the
offer from the financial investor
since timelines did not permit us
to delay the process,” Goenka
said in the analyst call.
He added, “An investment by
a strategic partner would have
taken longer than the September
30 deadline that we’ve given to
lenders for debt repayment.”
The Essel group had signed a
formal agreement with lenders
in February to pare debt.
Goenka also said the group
was working out deals with
prospective investors for its
infrastructure assets in roads,
solar and power transmission
and that “non-binding offers”
were on the table.
“The process of sale of non-
of 12.9 per cent, according to an Assocham-
PwC joint study.
It is already the world’s second-largest
market for smartphones, after China.
“OnePlus remains the number one brand in
India in the premium segment, driven by
the strong initial response of the OnePlus 7
series. But, overall, the competition is set in
thepremiumsegment.BesideOnePlus,you
have brands Oppo, Google and Huawei,”
said Pathak. “The good thing these brands
have done is that they have expanded the
category, and all of them have the possibil-
ity to grow and co-exist. I think the oppor-
tunity is big for Apple in India.” he said.
Apple posted quarterly revenue of $53.8
billion, an increase of 1 per cent from the
year-before period. Quarterly earnings per
diluted share was $2.18, down seven per
cent. International sales accounted for 59
per cent of the quarter’s revenue.
“This was our biggest June quarter ever.
Driven by all-time record revenue from
services, accelerating growth from wear-
ables, strong performance from iPad and
Mac, and significant improvement in
iPhone trends,” said Cook. “These results
are promising across all our geographic seg-
ments and we’re confident about what’s
ahead. The balance of calendar 2019 will
be an exciting period, with major launches
on all of our platforms, new services and
several new products.”
“Our year-over-year business perform-
ance improved compared to the March
quarter and drove strong operating cash
flow of $11.6 billion,” said Luca Maestri,
chief financial officer. “We returned over
$21 billion to shareholders during the quar-
ter, including $17 billion through open mar-
ket repurchases of almost 88 million Apple
shares, and $3.6 billion in dividends and
equivalents.”
Apple also provided a forecast for its fis-
cal 2019 fourth quarter, where it expects
revenue of $61-64 billion.

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22 CRISIS AT CCD
>
MUMBAI | THURSDAY, 1 AUGUST 2019 1

INDIA INC REACTS

“MY DEEPEST
CONDOLENCES TO
More buyers may line up for CCD Oppn parties
call for debate
V G SIDDHARTHA’S Tata Global Beverages, Jubilant FoodWorks likely to join the fray; Coca-Cola already in talks
WIDOW
MALAVIKA
VIVEAT SUSAN PINTO
Mumbai, 31 July
and McCafé, respectively, in the west and
south of India.
in Parliament
Last month, Siddhartha, who, along ARCHIS MOHAN & AVISHEK RAKSHIT
AND HIS SONS
T
he family of V G Siddhartha, the withfamilymembersandpromotergroup New Delhi/Kolkata, 31 July
AND TO S M founder of Café Coffee Day (CCD) entities, owned nearly 54 per cent of
KRISHNA who was found dead on Coffee Day Enterprises, pledged an addi- Leading Opposition parties and trade bodies on
AND FAMILY” Wednesday after going missing on
Monday in Mangaluru, may accelerate
tional 1.6 million shares to lenders, tak-
inghistotalpledgedsharesasapercentage
Wednesday expressed concern at the circum-
stances that led to the death of Café Coffee Day
KIRAN MAZUMDAR-SHAW,
CMD, BIOCON the process of finding buyers for the retail of promoter stake in the company to near- founder V G Siddhartha. They also flagged the
chain. Coca-Cola, the world’s largest bev- ly 76 per cent from 72.32 per cent in the alleged harassment he and other businessmen
erage maker, is already in the fray, per- March quarter. On March 18, Siddhartha are facing from tax authorities.
sons in the know said. had sold his entire 20.41 per cent stake in The Congress has given adjournment
Some names of interested players Mindtree for ~3,200 crore to Larsen & notices in the Lok Sabha to discuss what led to
“MISTAKES ARE ALWAYS doing the rounds include Tata Global Toubro, in a step to focus on the coffee the death of Siddhartha. The Trinamool
FORGIVABLE, IF Beverages and Jubilant FoodWorks. Mails retail business. Congress moved a notice demanding a discus-
ONE HAS THE sent to the two companies elicited no With 1,752 stores, CCD competes with sion in the Rajya Sabha on Thursday on the
COURAGE TO response till the time of going to press.
Coca-Cola declined comment. The
the likes of Starbucks, Barista, and McCafé
in India. It has slowed down store addi-
“need to create a conducive atmosphere for
entrepreneurs to flourish”. In a Facebook post,
ADMIT THEM. American beverage major had initiated A security guard at a closed Cafe Coffee Day outlet, in Bengaluru on Wednesday. Seen tions over the past few quarters even as West Bengal Chief Minister Mamata Banerjee
A LOT CAN preliminary talks for a substantial stake inside is a photograph of founder V G Siddhartha placed for paying tributes PHOTO: PTI demand for retail space from multiple appealed to the government, to “work in a
HAPPEN OVER buy in CCD last month. brands grows across cities. Starbucks has peaceful manner”, now that it has been elect-
As of March 31, 2019, Coffee Day written by him emerged stating he was stores, something it needs to expand its 150 outlets in India and proposes to keep ed, “so that people are
COFFEE. KEEP Enterprises’ total debt stood at ~6,547 under “tremendous pressure from presence in ~2,500-crore domestic coffee store additions at around 25-30 this finan- confident and that polit-
SHINING, SIR!” crore, two-and-a-half times its net worth lenders” and that he was facing “harass- retail market. cial year. McCafé was present in 197 ical vendetta and agen-
VISHAL GONDAL, of ~2,529 crore. Its market capitalisation ment” from tax authorities — the stock Jubilant FoodWorks, on the other McDonald’s outlets at the end of the June cies do not destroy the
FOUNDER, GOQII after Wednesday’s closing price stood at has fallen about 36 per cent. Tata Global hand, has been looking to go beyond fast quarter and intends to keep store addi- future of the country.”
~2,593 crore. has a JV with US coffee chain Starbucks food where its rival Westlife Development tions at 40-50 this year, while Barista has “I hear from sources
Inthepasttwodays—afterSiddhartha since 2012. Acquisition of CCD, said is already present. Westlife is present in 200 outlets in the country with plans to that captains of industry “I hear from
went missing and a letter purportedly sources, would give the JV access to more both burgers and coffee with McDonald’s double the store count in three years. in the country are under sources that cap-
“I KNOW THAT pressure; some of them tains of industry
ENTREPRENEURS have left the country and in the country
MUST NOT ALLOW
Lenders to group firms For PEs, buybacks
some are contemplating are under
moving out,” she said.
BUSINESS FAILURE pressure; some
Congress’ Manish of them have left
TO DESTROY
THEIR
SELF-
nottopmodeofexit
stare at legal quagmire BREAKDOWN
Tewari demanded a the country and
probe into the alleged some are
harassment, as men- contemplating
tioned in his suicide moving out”
ESTEEM. BY VALUE (Figures in $ mn) note, by income tax offi-
THAT WILL MAMATA
BRING ABOUT SHARE MOVEMENT DEV CHATTERJEE
Mumbai, 31 July
tioned pressure from a PE without
elaborating. A banker said several
2017 2018 2019YTD
Deal value %age Deal value %age Deal value %age
cials. Congress leader
Abhishek Singhvi
BANERJEE
BSE price in ~ accused PM Narendra West Bengal CM
THE DEATH OF Lenders are staring at a legal
PEs signed quasi debt agreements
with Indian promoters with Strategic sales (M&As) 2,587.91 20.6 7,190.53 59.9 69.3 2.8 Modi of betraying the
ENTREPRENEURSHIP” labyrinth as loans to Coffee Day mandatory IRRs (internal rate of Initial public offering 1,802.12 14.4 883.36 7.4 825.63 32.9 people who voted for an
ANAND MAHINDRA, Enterprises group companies and return) of 15 per cent in dollars. Open market 6,513.63 51.9 2,170.15 18.1 1,602.42 63.8 independent and hassle-
CHAIRMAN, MAHINDRA GROUP V G Siddhartha were backed by As rupee fell versus the dollar, lia- free economy.
Buyback 442.02 3.5 166.18 1.4 6.74 0.3
the personal guarantee of the late bilities of Indian promoters rose. Praveen Khandelwal
promoter and some of these loans “Many of these debt deals were Secondary sales 1,192.86 9.5 1,588.16 13.2 5.76 0.2 of the Confederation of
were raised by giving real estate signed to avoid RBI’s ECB (exter- Total 12,538.54 11,998.38 2,509.85 All India Traders, a “Ease of Doing
“ONE MORE assets as collateral. nal commercial borrowings) 2019 data till July-end Source: VCCEdge traders’ body consid- Business” under
According to FY18 annual guidelines,” said a banker with- ered close to the BJP, BJP translates
STARRY-EYED reports of Coffee Day Enterprises out naming Coffee Day RANJU SARKAR value. Followed by exits said Siddhartha’s death into “Ease of
MESSIAH and its listed subsidiary, Sical Enterprises. New Delhi, 31 July through the stock market (18 “is an alarm bell for the Ending Business”
MEETS A Logistics, almost all top banks, In February last year, KKR sold per cent), secondary sales (13 economy and entrepre- and termed it a
VIOLENT non-banking financial compa- 4.25 per cent of its total stake of The term ‘buyback of shares’ per cent) and IPOs (7.4 per neurship in India”. He “worrying
FAREWELL” Lakshmi Vilas Bank nies (NBFCs) and private equities 10.3 per cent. Similarly, StanChart has got publicity on being cent). The share of exit said benefits of the gov- trend.”
refutes allegations (PEs) had debt/equity exposure PE holds 5.7 per cent stake and mentioned in Café Coffee Day through strategic sale rose ernment’s assistance to SHASHI
VIJAY SHEKHAR SHARMA, to both the entities with real sold about 1 per cent in April 2018. founder V G Siddhartha’s from five per cent in 2015 to start-ups and entrepre- THAROOR
FOUNDER, PAYTM on lending to group estate as collateral. In his last In 2015, the compulsorily con- alleged suicide note. 44.7 per cent in 2016 and 60 neurs were not reaching Congress leader
LakshmiVilasBankhasrefuted note, Siddhartha had listed a vertible preference shares and Buyback of shares is one per cent in 2018. “down the line”.
allegationsthatitissuedloansto series of real estate which, he said, compulsorily convertible deben- way a promoter can offer an Sale through the open mar- “Earlier, it was the farmers and now entre-
“SOME OF US WERE CoffeeDayGroupwithoutdue
diligence.Reportsattributingto
could be sold off to repay banks.
But bankers say it could be a
tures issued to StanChart PE, KKR
Mauritius and Arduino Holdings
exit to a private equity (PE)
investor. However, it has been
ket has also been strong,
accounting for 58 per cent of
preneurs and tomorrow may be some other
section. It is a dangerous trend and needs to be
DAYDREAMING I-Tofficialshadallegedthebank nightmare to enforce the collat- were converted into equity shares the least preferred and has all exits in 2015, 30 per cent in stopped,” Khandelwal said, asking the gov-
THAT HE MAY issued~145croretobogusfarmers eral — considering land prices just before the IPO. According to declined as a mode of exit in 2016, 52 per cent in 2017 and 18 ernment to come up with a scheme to hand-
NOT HAVE andsomecompaniessituatedin have hit a new low and there are the subscription agreement, the the past five years, shows data per cent in 2019, in tandem hold entrepreneurs.
thegroup’sheadquarters.Rejecting
JUMPED OFF theclaims,Parthasarathi
no takers for large parcels of land.
Besides,withthealmost40per
CCD holder was not entitled to
receive any interest, however, it
from VCCEdge.
Preferredmorearefindinga
with rise and fall in the stock
market. The share of exits
The Congress’ Karnataka unit sought an
investigation into Siddhartha’s death to uncov-
THE BRIDGE... Mukherjee,MDandCEO,said,“All cent fall in the share price of provided that if Coffee Day strategicbuyer,sellingsharesin through buybacks came down er “the invisible hands that ended his life”.
WISH HE HAD loansweregivenasperdue Coffee Day Enterprises and Sical Enterprises declared any divi- the open market or through an to 1.4 per cent in 2018, gradu- “The result of the harassment by IT officials
STAYED ALIVE TO FIGHT. appraisaltofarmersandsuppliers
ofcoffeebeanwhoweresupplying
since Tuesday, banks are looking
at a significant haircut on their
dend, the CCD holder was enti-
tled to receive the economic
Initial Public Offer (IPO) and
selling to another investor (sec-
ally falling from 7.7 per cent in
2015 to 4.9 per cent in 2016 and
and decline of India’s entrepreneurial position
turning virulent by the day, with tax terror and
MY HEART GOES OUT TO toCoffeeDay.Thebankalways exposureworth~6,500croretothe equivalent of the amount of divi- ondary sale). So far, 2019 has 3.5 per cent in 2017. collapse of the economy,” the state unit said.
HIS FAMILY” checkedwithCoffeeDaywhether group firms. Documents show dend on a fully diluted basis by seen only five buyback deals; In 2019, there have been Former CM Siddaramaiah said Siddhartha’s
C P GURNANI, thesecoffeebeanswerebeing that three PE funds led by KKR, way of interest. 2018saw10,accountingforonly fewer exits through strategic letter talked about “tax terrorism”, which is the
MD & CEO, TECH MAHINDRA actuallysuppliedtothem.”VG Standard Chartered PE and NLS Coffee Day Enterprises’ con- 1.4 per cent of total deal value. sale. Exits through the open ugly face of politically-motivated institutions”.
Siddharthahadanominalstakein Mauritius made investments in solidated net debt as on March In 2018, the most popular market accounted for two- The Karnataka BJP unit accused the
thebank.A2014reportsaidhe Coffee Day Enterprises in 2010 was ~4,200 crore, while V G mode of exit for PEs was thirds of all by deal value. Congress of turning into “opportunistic politi-
pickedup4percentinthebankfor and made partial exits since its Siddhartha’s personal debt is esti- strategic sale through merger Despite a difficult market, cal vultures”. “Investigation will reveal the facts.
“EXCELLENT HUMAN ~65crore.Nowthestakewouldbe IPO in November 2015. mated at around ~3,500 crore as & acquisition. These account- IPOs accounted for a third of Until then, respect the sentiment of the mass-
AND BRILLIANT lesser,thebanksaid. BS REPORTER In his note, Siddhartha men- on December, MCA filings show. ed for 60 per cent of total deal all exits. es and display some humanity,” the BJP said.
ENTREPRENEUR… THE
GOVT AGENCIES
AND BANKS
CAN DRIVE Family, friends bid adieu to tycoon
ANYONE TO YUVRAJ MALIK mentioned pressure from busi- A voluntary bandh was Sivakumar were also among
DESPAIR. SEE Bengaluru, 31 July ness partners and harassment observedacrossChikkamagaluru those who were present.
WHAT THEY ARE by tax authorities. “I fought for as commercial establishments Karnataka Chief Minister
DOING TO ME DESPITE The worst fears came true on a long time but today I gave up shut down in a mark of respect B S Yediyurappa said: “We
Wednesday morning when as I could not take any more forthebusinessleader.Ataround have found the body..... I
OFFER OF FULL local fishermen found V G pressure….’’ 5 pm, the body was moved back have no words to comfort the
REPAYMENT. VICIOUS Siddhartha, founder of Café Crowds thronged to pay to his native village— family. He had more assets
AND UNRELENTING” Coffee Day, floating in Netravati homage to the billionaire entre- Cheekanahalli—where the final than liabilities.”
VIJAY MALLYA, FUGITIVE BUSINESSMAN river, some distance away from preneur at the Wenlock Hospital rites were performed. A senior police official told
the Mangaluru bridge where in Chikkamagaluru, where his S M Krishna, father-in-law PTI, “Investigation is going on.
he was seen last some body was taken for post-mortem of Siddhartha and a politician, Prima facie every thing points
“THANKYOUV G on Monday night. The at 8.30 am. The body was taken and Siddhartha’s wife Malavika out to that (suicide) only. But
coffee tycoon had gone to Cheekanahalli village (near and their sons Amartya we still we can’t rule out any-
SIDDHARTHA FOR missing Monday evening, after Chikkamagaluru), where his and Ishaan were present at the thing. We will have to finish the
YOUR LEADERSHIP which a massive search opera- parents live, and then to the family estate. investigation”. The family
AND GREAT LEGACY” tion was launched. office premises of Amalgamated Former Karnataka chief owned over 350 acres of coffee
CAFE COFFEE DAY In a note purportedly writ- Bean Coffee, the parent compa- minister H D Kumaraswamy estate and had been in the busi- Karnataka CM B S Yediyurappa pays his respects to the mortal remains of CCD
ten by him, Siddhartha had ny of CCD, for public viewing. and Congress leader D K ness for over 140 years. founder V G Siddhartha, in Chikkamagaluru, on Wednesday PHOTO: PTI

FROM PAGE 1

Coffee Day Ram Mohan, who is group CFO. Among other things, the
“The main focus was how to company is considering mon-
The board is also evaluating
several other strategic assets, Debt profile worsens for Siddhartha’s pvt firms
board to probe bring back the ship to the shore etising the Global Village tech including 12,000 acres of coffee

Siddhartha’s safely,” a source privy to

transactions
The crucial board meeting that
took place after the demise of
Siddhartha took several deci-
sions, including the appoint-
ment of interim chairman and
chief operating officer (COO),
and the constitution of an exec-
utive committee to take over all
the responsibilities of the late
the board discussion
park located off Mysore
Road in Bengaluru,
said. “The board
took cognizance of
for which private
equity major
the fact that there Blackstone was
are several assets said to have
in the group shown interest.
which, if part mon- The 91-acre cam-
etised, will signifi- pus with a built-
cantly reduce the
debt burden to a
up area of around
4 mn sq ft has a
manageable level of The board appointed further scope to
around ~3,000 Independent build another
plantation and bringing in
strategic investors into the
Coffee Day chain. The coffee
plantation also houses 900,000
silver oak trees, which can be
money spinner given that each
tree costs around ~10,000.
The company also has the
option of boosting its cash flow
by increasing the number of
vending machines from 54,000
to around 100,000, given that it
also supplies coffee powder and
The current ratio — a meas-
ure of the firm’s ability to meet
short-term obligations with
current assets — has declined
in four of the six firms.
This analysis is based on
data, accessed from the MCA,
of Coffee Day Resorts, Sivan
OBLIGATIONS ROSE Securities, Ittiam Systems,
FOR LISTED AND Devadarshini
Technologies,
Info
Gonibedu
UNLISTED ENTITIES Coffee Estates, and Coffee
FY17 Day Consolidations. The total
6,547.4
crore loan, extended to
Siddhartha’s wife Malavika
Hegde, under watch after
news of the death. It also put
on watch some of the group
companies, and downgraded
the debt of Coffee Day Natural
Resources and Tanglin
Developments.
“In view of the above
material development and
the consequent uncertainty
with respect to the manage-
A February 2018 docu-
ment from the same agency
noted that loans worth ~33.12
crore, which was taken by V G
Siddhartha, were meant to
meet fund requirements for
his coffee estate.
On Tuesday, ICRA had put
CDEL and other group com-
panies including Sical
Logistics, another listed firm,
on watch with negative impli-
cations. It stated that the

business tycoon. The commit- crore.Theboardwill Director 5mnsqftofoffice other ingredients to clients. FY18 (in ~ cr) debt for CDEL has risen too, ment, as well as the extent of development may have a crit-
FY19
tee is expected to play a signifi- discuss S V Ranganath space. “The esti- Once the grieving family comes from ~4,449 crore in FY17 to impact on the business and ical bearing on the group’s
5,049.9
4,449.2
1,748.7

cant role given that Siddhartha those in details in interim chairman matedvalueofthe to terms with the reality, the ~6,547 crore in FY19. credit profiles of the firm, operations and credit profile.
is learnt to have not left behind the next meeting asset could be board is planning to meet them In a note purportedly writ- Brickwork Ratings has “ICRA will continue to
991.5

any succession plan.
The board appointed
Independent Director S V
Ranganath interim chairman,
whileNitinBagmane,chairman
of subsidiary Tanglin, was
named as group COO. The exec-
utive committee will comprise
Ranganath, Bagmane, and R
scheduled on August 8.” The ~3,500-4,000crore.So,ifthissin- to discuss if any of them would ten by him, Siddhartha had placed the rating of the bank monitor further develop-
Bengaluru-headquartered con- gle thing (Blackstone deal) goes be keen to take up the mantle. NA said that “tremendous pres- loan facilities of Mrs ments and finalise the rating
glomerate’s debt shot up to through, then the debt will be Siddhartha’s elder son, sure from lenders” had led Malavika Hegde on credit action once more clarity
Total borrowing Total debt for
~6,500 crore as of March 2019 reducedsharplyandcomeunder Amartya Hegde, an MBA from for unlisted firms listed firm him to “succumb”. Rating watch with negative implica- emerges,” said the statement,
from ~5,100 crore in the previ- a manageable level,” the person Columbia Business School, agencies have approached the tions,” the note said. The rat- dated Tuesday.
Based on six privately held firms
ous year. Analysts expect this said.The company has another has started coming to office. associated with V G Siddhartha group’s debt with caution fol- ing agency said it would Share prices of CDEL and
number to come down as the 21acresofunutilisedlandparcel Siddhartha’s other son, Ishaan, Sources:Ministry of Corporate Affairs, lowing the developments. monitor the developments Sical Logistics declined 20 per
proceeds of Mindtree sale are near Bengaluru which it may is also an MBA from a US uni- Capitaline, Business Standard On Wednesday, Brickwork and review the rating once cent each, on both Tuesday
calculations
accounted in the ongoing fiscal. consider de-leveraging. versity. Ratings placed the ~87.75- there was more clarity. and Wednesday.

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.
MUMBAI | THURSDAY, 1 AUGUST 2019 ECONOMY & PUBLIC AFFAIRS 23 <

ALL IN A DAY
Sitharaman to
meet CEOs of
PSBs tomorrow
Finance
Minister
Nirmala
Sitharaman
will meet the
CEOs of public
sector banks
on Friday to review the
financial performance of the
lenders and discuss ways to
increase credit growth to
propel the economy, sources
said. The meeting will also
review the progress of
resolution of NPA cases under
the Insolvency and
Bankruptcy Code, the sources
added. It is expected to take a
stock of the banking sector,
and discuss ways to improve
Now, you’ll have to pay hefty fines for traffic violation
RajyaSabhaclearsMotorVehicles(Amendment)Billthataimstoweedoutcorruptionthroughtechnology,amongotherthings
MEGHA MANCHANDA
NewDelhi,31July
The Upper House of Parliament
on Wednesday cleared the Motor
Vehicles (Amendment) Bill that
proposes stiffer fines for offend-
ers and aims to weed out corruption
in India’s road transport system. The
Bill has been cleared by the Rajya
Sabha (RS), with riders.
The passage of the Bill can be
termed a victory for Road Transport
and Highways Minister Nitin
Gadkari, who was instrumental in
bringing in a new legislation on
road safety.
He first promised amendments to
the Motor Vehicles Act, 1988, in May
DRIVING FORCE
Proposals are based on
recommendations of
transport ministers
from 18 states,
which were vetted by
a Standing Committee
of Parliament
2014, when he took charge of the
Ministry of Road Transport and
Highways (MoRTH) in the first
National Democratic Alliance gov-
ernment.
After the passage of the Bill in the
Upper House with 108 votes in favour
| ~500 Traffic violations | ~2,000 Disobedience | ~20,000 Overloading juveniles, with 3-year
the facilitation of citizens while deal-
| ~1,000 Drivingwithout of orders of authorities vehicles imprisonment and
ing with transport departments.
The GoM was headed by Yoonus
helmetwith3-month | ~5,000 Dangerous | ~5,000 Unauthorised cancellation of Khan, the then transport minister of
licencesuspension driving use of vehicles without registration Rajasthan, and had 18 state transport
licence ministers from different political par-
| ~1,000- 2,000 Penalties | ~10,000 Drunken | Up to ~1 lakh
ties as members.
for overspeeding driving | ~25,000 Penalty on Aggregators found On the basis of recommendations
| ~2,000 Driving | ~10,000 Driving despite guardian/owner in violating licensing oftheGoMandotherpressingrequire-
without insurance disqualification case of road offence by conditions ments, the MoRTH introduced the
Motor Vehicles (Amendment) Bill,
2016. This, along with amendments,
and 13 against it, Gadkari said, “The computerisation, and online servic- The LS had already passed the Bill on was passed by the LS on April 10, 2017.
much needed amendments will es.” He added that the Bill will provide July 23. The Motor Vehicles (Amen- The Bill as passed by the LS was intro-
improve road safety, facilitate citizens an efficient, safe, and corruption-free dment) Bill, 2019, is based on the rec- duced in the RS and was referred to a
in their dealings with transport transport system in the country. ommendations of the Group of Select Committee of the RS on August
departments, strengthen rural trans- TheBillhasbeenpassedwiththree Ministers (GoM) on transport of states 8, 2017. The Select Committee pre-
port, public transport, and last-mile government amendments and will constituted by the MoRTH to address sented its report to Parliament on
connectivity through automation, need to go back to the Lok Sabha (LS). the issue of road safety and to improve December 22, 2017.

It’s at least an 18-month wait

their financial health. PTI
MONSOON DEFICIENCY AT 9%
Farm union The southwest monsoon has reached its halfway mark
and after two months, the deficiency has narrowed
warns govt over

before BSNL, MTNL are merged

down to just 9% (actual rainfall in June & July 2019 is
joining RCEP 410 millimeters while normal is 452.2 millimeters). This
is a big improvement from 33% shortfall at the end of
Aleading June. The gap has narrowed mainly due to sharp
farmers'
organisation,
improvement in showers in July. However, there are
Bhartiya still some dark spots in Gujarat, parts of Karnataka,
Jharkhand in the east and Marathwada, where the
KisanUnion,
onWedn-
HRandotherissuesneedtobesortedoutbythepanelthatwilldecidethefateofthetwoPSUs monsoon shortfall is still more than 25%. August rains
esday in these parts will be crucial. On Wednesday, Vadodara
warnedthegovernment
againstjoiningamajor16-
MEGHA MANCHANDA
New Delhi, 31 July
UNDER PRESSURE the current financial year as it
prepares a revival package to
received 442 mm from 8 am to 8 pm. Flights and trains
were cancelled due to the downpour
Debt (~cr) No.ofemployees
memberAsia-Pacifictrade de-stress these

pactthattheunionfearscould
spurimportsofcheaper
produce,underminingits
agriculturalsector.Ateamof
topgovernmentofficialswill
beinBeijingbetweenAugust2
and3tonegotiatethetermsof
theRegionalComprehensive
EconomicPartnership. REUTERS
India Post
Payments Bank
M
22,000 Large excess (60% or more)
ahanagar Telephone debt-laden entities.
Nigam (MTNL) will While overall budgetary Excess (20% to 59%)
176,000 Normal (-19% to 19%)
have to wait for at allocation for telecom PSUs RAINFALL
least 18 months to become a has gone down by 15 per cent, DISTRIBUTION Deficient (-59% to -20%)
part of Bharat Sanchar Nigam the one for BSNL and MTNL Large deficient (-99% to -60%)
(BSNL) as a joint panel will 20,000 has gone up for the current fis- Period: 01-06-2019 to 31-07-2019
decide the fate of the two PSUs, 14,000 cal (2019-20).
post merger. Total investment in the six
The joint committee will telecom PSUs for the current
have representatives from both MTNL BSNL year is ~14,025.90 crore against
the companies and the depart- Source: Industry numbers an allocation of ~16,468.39
ment of telecommunications
(DoT). It will deliberate on the BSNL includes a voluntary
crore in the revised estimates,
last financial year (2018-19).
outstanding human resource retirement scheme of ~6,365 The same was ~12,186.9 crore

to become SFB issues of the two sick public

The postal
department
said it has
decided to
convert the
India Post
Payments
Bank into a small finance
bank, enabling it to offer
small loans to customers.
Besides, the department
looks to open 10 million
accounts for IPPB in 100 days.
The decisions were taken at
the annual Heads of Circles
Conference held at Srinagar in
Jammu & Kashmir from July
29-31, 2019. PTI
sector units, it is learnt.
“The pay scales of both the
companies are very different
and have to be brought on a
par for a smoother transition
process,” a person in the know
told Business Standard.
The pay scale of MTNL is
lower than that of BSNL and
therefore some parity needs to
be brought in. Otherwise, it
will have HR issues in the
future.
The central government,
which holds 56.89 per cent in
MTNL, will also buy back
shares of the company before
de-listing the entity, the offi-
cial said.
Since MTNL is a listed firm
and BSNL is unlisted, syner-
gies can be brought in the
merged entity only when these
issues are ironed out.
Subsuming MTNL with BSNL
is part of the larger revival
package for the two compa-
nies.
To expedite the revival of
BSNL and MTNL, a group of
ministers, headed by home
minister Amit Shah, has been
constituted. In its first meet-
ing last week, Shah took stock
of the current situation per-
taining to the future of these
two companies.
Several revival measures
and plans were discussed in
the meeting, including merg-
ing the two companies.
Both BSNL and MTNL had
sought relief from the central
government in the form of
financial stimulus to survive
the competitive telecom space.
The proposed package for
crore and equity infusion of
~6,767 crore for allotment of 4G
spectrum.
About half of the 176,000
employees at BSNL are esti-
mated to retire in the next five-
six years. If only about 50 per
cent of eligible employees
(those about 50 years) opt for
VRS that would be 40,000 peo-
ple.
For MTNL, the VRS pack-
age could have a revenue
impact of ~2,120 crore. The
company has 22,000 employ-
ees. Of this, 16,000 employees
with retire in the next five-six
years.
The Centre’s financial sup-
port to the PSUs has risen in
in 2017-18.
The rise in allocation for
BSNL and MTNL can be seen
as a step towards reviving the
two companies, which are
grappling with financial stress.
A ~6,725 crore fundraising
exercise has been planned for Source: IMD
BSNL and for MTNL a sum of
~498.26 crore may be raised.
The proceeds of the
fundraising will be used for the
benefit of MTNL and BSNL New direct tax code panel
report delayed by 15 days
employees.
IT & telecom minister Ravi
Shankar Prasad, in his first
press conference after assum- DILASHA SETH be submitted today
ing charge, had said that the New Delhi, 31 July (Wednesday), but CEA
government will revive BSNL Subramanian wanted to give
and MTNL. The much-anticipated report additional inputs, hence the
on the new direct tax code deadline was extended,” said
(DTC) to overhaul and sim- a government official.
plify the 58-year-old Income The new terms of refer-

Central tax pool demand by Delhi, Puducherry denied
15th Finance Commission will not
consider their memorandums
ARUP ROYCHOUDHURY &
INDIVJAL DHASMANA
NewDelhi,31July
The Fifteenth Finance
Commission is not considering
the demands of Delhi and
Puducherry to give them a
share of the divisible central tax
pool in line with other states,
Chairman N K Singh told
Business Standard.
“We are not formally con-
sidering the memorandum of
Puducherry and Delhi because
under the Constitution, we are
not enjoined to do so, and we
have to strictly act in accor-
dance with the Constitution,”
Singh had said in an interaction
earlier this month.
Delhi and Puducherry are
formally Union Territories with
legislatures and elected parties
in power. They have never been
considered by any of the
finance commissions when it
comes to determining share in
central taxes. It is assumed that
all UTs are a responsibility of
the Centre, and that their funds
will come from the Centre’s
share of the divisible pool.
“We cannot consider
demands of states that are out-
side the purview of our terms
of reference. This is not some-
thing which is our preference, it
is something on which the
Commission has little flexibili-
ty because we can only go by
what the Terms of Reference
say,” Singh said.
“All of this follows after the
“We cannot sections of media that the
consider demands Centre had decided to treat
of states that Puducherry “at par with states”
are outside the for the purpose of devolution
purview of our of funds. This came about after
terms of reference. governments in seven states
This is not and Union Territories had joint-
something which ly written to President of India
is our preference” Ram Nath Kovind seeking
N K SINGH amendments to some of the
contentious terms of reference.
15th Finance Commission
Chairman A memorandum, signed by
chief ministers or finance min-
year 2000, when a isters of Andhra Pradesh,
Constitutional Amendment was Puducherry, Karnataka, Delhi,
made, under which the Union Bengal, Kerala, and Punjab, said
Territories were left out. There the terms were disruptive and
are UTs with legislatures, some causes of concern. The primary
without legislatures. There are issue was that of use of the 2011
some UTs that don’t have full Census, but they also asked that
statehood yet,” he explained. Delhi and Puducherry be con-
In 2018, it was reported by sidered for devolution.
It was suggested that a “suit-
able amendment be made in
the terms of reference to ensure
that the award of Fifteenth
Finance Commission must
apply to UTs with legislature
also.”
However, according to
Singh’s statement, that will not
happen. As reported in
BusinessStandard earlier, Singh
said in the aforementioned
interaction that the Comm-
ission’s report will have tailor-
made fiscal road map for states,
depending on their current fis-
cal situation, and that buoyan-
cy and stability of goods and
services tax was still a concern,
and that the Commission is
looking to meet the GST
Council soon.
Tax Act has been pushed
back by a fortnight. The task-
force, set to submit the report
on July 31, was handed a 15-
day extension at the last
minute to incorporate views
of the new members, said the
official statement.
“The government has
allowed the task force to sub-
mit its report by August 16, in
light of the fact that the new
members… requested for
more time to provide further
inputs,” the government said
in a release.
The government had last
month expanded the scope of
the taskforce to look into five
more areas and nominated
two new members — Chief
Economic Advisor (CEA)
Krishnamurthy Subramanian
and Joint Secretary
(Revenue) Ritvik Pandey.
“The report was all set to
ence included faceless and
anonymised scrutiny, mech-
anism for system-based cross
verification of the financial
transactions, reduction in lit-
igation and expeditious dis-
posal of appeals.
This is the second exten-
sion for the taskforce under
the Central Board of Direct
Tax (CBDT) member Akhilesh
Ranjan. Earlier, the commit-
tee was supposed to submit
its report by May 31, but then
finance minister Arun Jaitley
gave a two-month extension
to complete the exercise.
In fact, the earlier report
led by former CBDT member
Arbind Modi with same terms
of reference was not accepted
by then finance minister in
September last year, on the
grounds that all members
could not arrive at a consen-
sus.

Railways,DoTondifferentbandwidthover700Mhzallotment Non-subsidised
gas price cut by
The transporter wants premium spectrum for free; government reluctant to lose revenue ~62.50/cylinder
MEGHA MANCHANDA & SHINE JACOB trum available with the Railways cial said Railways had said it would It slashed the base price for 700 PRESS TRUST OF INDIA
New Delhi, 31 July for signalling and WiFi services. surrender all the 900 Mhz spec- Mhz airwaves by 43 per cent to New Delhi, 31 July
All over the world, the 900 Mhz trum it currently uses for the GSM- ~6,568 crore per unit, as the spec-
The Telecom Regulatory Authority frequency is used for railway sig- R — an international wireless com- trum went unsold in 2016 auc- Non-subsidised cooking
of India (Trai) is reviewing allot- nalling and internet services.” munications standard for railways, tions. Besides GSM-R, other tech- gas (LPG) price was on
ting the premium 700 Mhz spec- Sources said only Samsung had offering a secure transmission of nologies are also used by railways Wednesday cut by
trum to the Indian Railways for the technology to develop an eco- voice, data and applications. in different countries. ~62.50 per cylinder on
signalling and WiFi services, but system for such services. It is lob- Telecom players Airtel, For instance, South Korea softening international
the Centre is not bying with the Reliance Jio and Vodafone Idea offers the long-term evolution — rates.
happy to give it for Railways to give it had together opposed the idea of railways or the LTE-R services. Non-subsidised or mar-
free. Instead, the Telecom players the project. But, it allocating 700 Mhz spectrum to They feel the GSM-R has limited ket priced LPG, which con-
Department of Airtel, Reliance Jio, did not answer the Railways for free. They said the capacity. sumers buy after exhaust-
Telecommunication and Vodafone Idea emailed queries on spectrum had significant commer- In April 2017, Samsung part- ing their quota of 12
(DoT) wants to had together this. cial value and could earn substan- nered with SK Telecom, South cylinders of 14.2-kg each at
assign a higher opposed the idea of The telecom offi- tial revenue for the government. Korea’s largest wireless operator) subsidised rates, will now
quantum of 900 Mhz allocating 700 Mhz cial also said, “The The telecom industry, in to offer a LTE-R wireless railway cost ~574.50 with effect
spectrum — that the spectrum to the 700 Mhz should be response to a Trai consultation management system. from midnight tonight, IOC
Railways already Railways for free sold for a premium paper, said spectrum allotted to The system has been officially said in a statement.
uses — for seamless in the coming auc- the Railways for captive use should deployed on the 41-km-long Busan "It may be noted that the
connectivity. tions. If some of it be utilised for commercial services Metro Line 1 between Sinpyeong price of non-subsidised
At present, the Railways has remains unsold, it can be sold lat- provided to passengers, as one and Nopo. LPG was reduced by
2.5-3 Mhz of 900 Mhz spectrum. er. Why should the government exchequer at regular intervals. occupies the 900 Mhz frequency. needs a licence to do so. It claims that the new technol- ~100.50/cylinder earlier in
But, it is available only in some lose out on revenue by giving it for Also, if the Railways were to The railway ministry had first In August 2018, Trai suggested ogy would offer enhanced com- July 2019 also. Considering
places, and so Railways cannot free to the Railways?” shift to the 700 Mhz spectrum, it requested the DoT to reserve 15 sale of 8,644 Mhz spectrum across munication capabilities, where this, the price of non-sub-
provide seamless WiFi connectivi- According to a set of estimates, if would mean a complete overhaul Mhz of spectrum in the 700 Mhz eight key bands, including 4G air- the train operator can, in case of sidised LPG cylinder has
ty, as it is not contiguous. the same quantum of 700 Mhz is of the signalling system. band on February 27, and allocate waves in the 700 Mhz, 800 Mhz, an accident, transmit real-time come down by
A telecom ministry official sold, it will give the exchequer about At present, the Global System 10 Mhz for free. The DoT referred 900 Mhz, 1,800 Mhz, 2300 Mhz video between him and the ~163.00/cylinder cumula-
aware of the matter said, “We can ~1 trillion. Spectrum usage charges for Mobile Communications- the proposal to Trai. and 2,500 Mhz bands, and 5G control centre, thanks to the LTE- tively in two
double the quantum of the spec- and licence fees will also add to the Railways (GSM-R) that it uses A senior telecom ministry offi- spectrum in the 3.3-3.6 Ghz band. R’s low latency. months," it said.

https://t.me/SSC4Exams https://t.me/Banking4Exams https://t.me/UPSC4Exams

 https://t.me/TheHindu_Zone_official
24
>
MUMBAI | THURSDAY, 1 AUGUST 2019 1

QS RANKINGS
BJP’s assets saw 22%
Bengaluru best student city in rise in FY18, says ADR
India, London tops global list
Report says the Congress HOW MUCH THEY HAVE
reported a 15% decline Assets declared byparties (in ~cr)
FY17 FY18 % change
ARCHIS MOHAN
New Delhi, 31 July BJP 1,213.13 1,483.35 22.27
Congress 854.75 724.35 15.26

‘More varsities make the

The Bharatiya Janata Party’s (BJP’s) assets rose
over 22 per cent in the financial year 2017-18 BSP 680.63 716.72 5.30
(FY18),comparedtoFY17,accordingtoareportby
CPM 463.76 482.1 3.95

cut,butchallengesahead’
theAssociationofDemocraticReforms(ADR),an
independent election watchdog. TMC 26.25 29.10 10.86
The ADR has analysed the assets and liabili-
ties declared by the seven national parties — the NCP 11.41 9.54 16.39
The share of Indian universities in the QS BJP, the Congress, the Nationalist Congress Party
World University Rankings has risen to (NCP), the Bahujan Samaj Party (BSP), the
CPI 10.88 11.49 5.60
2.4 per cent this year, from 1.4 per cent in Communist Party of India (CPI), the CPI (Marxist) Source: ADR report
2016. But challenges persist, BEN SOWTER, and the Trinamool Congress (TMC).
senior vice-president and research director The assets include fixed assets, loans and (44.83 per cent of total assets), respectively.
of QS, tells Vinay Umarji. Edited excerpts: advances, deposits made, investments, etc. The total capital/reserve fund set aside by the
Liabilities include bank borrowings, sundry cred- national parties during FY17 was ~2,745.81 crore,
How has Indian institutes’ itors, overdrafts, other liabilities, etc. and ~3,082.04 crore for FY18, after adjusting for
Bengaluru’s debut came on the back of its affordability as well as presence representation grown in the The assets declared by national parties fall liabilities for the respective years, from the total
of globally ranked institutes like IISc (pictured) and IIM-Bangalore rankings in the past 5-10 years? under six major heads — fixed assets, loans and assets of the parties. For FY18, the BJP has the
Because of the QS’ steady expansion of advances, FDR (fixed deposit receipt)/deposits, highest capital after declaring ~1,461.97 crore. In
VINAY UMARJI
Ahmedabad, 31 July
HOW INDIAN CITIES FARED the QS World University Rankings over
the last decade, it is not possible or
TDS (tax deducted at source), investments and
other assets. During FY17 and FY18, the national
FY17, this was ~1,193.10 crore. For BSP, this was
~714.97 crore in FY18, from ~679.13 crore in FY17.
2018 2019 Change desirable to compare raw figures. parties declared maximum assets under FDR/ For the CPM, it was ~479.58 crore in FY18 and

D
ebuting at 81st position globally,
Bengaluru has been ranked
India’s best city for students in
the global ranking agency QS’
(Quacquarelli Symonds) latest Best
Student Cities Ranking 2019. However,
in terms of affordability, Bengaluru is
ranked seventh globally.
The other top Indian cities include
Mumbai (85), Delhi (113), and Chennai
(115). Among these, while Mumbai
gained ground, moving 14 places up on
a year-on-year basis, Delhi dropped by
six places in this year’s edition. Chennai
ranked at 115, an improvement of two
places from last year.
In the sixth edition of the QS Best
Student Cities Ranking compiled by
QS, cities were ranked according to the
number and performance of their uni-
versities, the extent to which employers
are actively hiring there, the city’s
affordability, the city’s desirability and
quality of life, and the diversity of a
city’s student body.
Bengaluru’s strong debut, however,
came on the back of its affordability as
well as presence of globally ranked
institutes like the Indian Institute of
Science and the Indian Institute of
Management-Bangalore.
“Our ranking looks at cities that are
attractive to students and in particu-
Bengaluru — 81 — However, it is possible to compare
Mumbai 99 85 14
Delhi 107 113 -6
Chennai 117 115 2 universities was only 1.4 per cent. In
Source: QS
lar, to the international ones. As India’s
main priority is to meet its domestic,
rapid growth access to higher educa-
tion, some of our criteria penalise the
Indian megalopolis featured.
Nevertheless, it is encouraging to see
Bengaluru’s debut at the top of the
national list and to see Mumbai grow-
ing in popularity among students. Both
Delhi and Chennai perform very well
on the affordability criterion, an aspect
that it is essential to sustain the internal
demand for university education,” said
Ben Sowter, research director at QS.
Globally, London emerged the
world’s best student city for the second
consecutive year, followed by Tokyo
and Melbourne. According to the QS,
London remains the world’s leading
student city due to the high number of
top universities present in the city, its
high levels of employer activity and
student diversity, and the regard in
which it is held by the global student
body. London’s top rank came despite
its low affordability score.
Indian representation as a percentage
of overall institution count. In 2016,
India’s contribution to the world’s best
the past two years, it has increased to
well over 2 per cent. However, we would
urge some caution in interpret-
ing these results. Most of India’s
newentrieshaveoccurredinthe
801-1,000 category.
What parameters have been the
strong points for Indian institutes?
Citations per faculty is relatively the
strongest point for Indian institutions,
the QS’s measure of research perform-
ance. Three of India’s universities are
among the top 50 globally for research
impact — IISc Bangalore, IIT-Roorkee
andIIT-Kanpur.Conversely,Indianinsti-
tutions are struggling reputationally.
What parameters do Indian
institutes fall short in and why?
Indian institutions haven’t shown
enoughcompetitivenessininternation-
alisation metrics. The international fac-
ulty ratio of India’s top ten institutions
has declined further compared to the
global average, while some of the new
entrantshelprecoverthelossinthisindi-
cator in the two most-recent editions.
What other challenges do Indian
institutes face?
Institutions will need to improve
teaching provision, and make the
country more attractive to interna-
tional students. India’s scores for our
faculty/student ratio — which
measures teaching capacity —
are among some of the lowest
recorded by the 1,000 institu-
tions in the ranking.
What steps by the Indian
government are helping institutes?
There are correlations between fund-
ing and university performance in our
rankings… the tertiary sector in India
continues to be troublesomely under-
funded, given the nation’s lofty intel-
lectual and economic ambitions.
What could prove detrimental?
Though India’s government has adopt-
ed the correct approach in identifying
institutions that it wishes to elevate to
world-classstatus,~1,000croreoverfive
years is unlikely to make India’s uni-
versities globally competitive.
The draft National Education Policy
recognises the need to create larger uni-
versities dedicated primarily towards
teaching, and this is a good thing.
deposits which amounted to ~1,442.19 crore ~458.22 crore in FY17. The Congress had ~400.15
(44.23 per cent of total assets) and ~1549.53 crore crore in FY18 and ~393.02 crore in FY17.
Mumbai had
2nd-wettest
July of 60 yrs
Though the monsoon arrived
in Mumbai late, the city
recorded second-highest rain-
fall for the month of July in
the last 60 years, the India
Meteorological Department
(IMD) said on Wednesday.
The Santacruz and Colaba
observatories in the city
recorded 1,464.8 mm and
1,175.1 mm rainfall, respec-
tively, this month.
Five years ago, the city had
witnessed even more rainfall
in July, setting a record.
TheSantacruzobservatory
hadrecorded1,468.5mmrain-
fall in July 2014, said K S
Hosalikar, Deputy Director
General of the Regional
Centre of the IMD. PTI

Future Group to launch cloud-based PoS system

KARAN CHOUDHURY
Bengaluru, 31 July
Future Group, on of the country's largest
retailers, is to launch a new point-of-sale
(PoS) system, with payments technology
company LivQui. The latter, in turn, has
partnered with US-based Poynt, an open
commerce platform.
The platform, based on Poynt’s 'Smart
Terminals', would be an Android-based
operating system and have cloud-enabled
management tools. “It provides an appli-
cation eco-system that empowers mer-
chants to grow their businesses with better
inventory management, supply chain inte-
gration, and loyalty programmes. For con-
sumers, it will provide a fast and secure
checkout process, using their payment
method of choice,” the company said.
According to sources, Future is trying to
bring in a host of merchants, traders and
shopkeepers, to counter Reliance
Industries' (RIL's) integrated omni-chan-
nel retail plan, via Jio’s e-commerce, which
is to launch later this year. With over 10,000
stores under the various Reliance retail
brands and 2.5 million kirana (traditional)
stores already tying up with it, Jio’s online
marketplace would have a huge hyperlocal
logistics network.
The secret sauce in RIL’s e-commerce
recipe is kirana stores and GST (goods and
services tax) and inventory management
services powered via its PoS system. It plans
to offer kirana stores GST services attached
to a PoS machine.
Poynt and Future Group, through pay-
ments entity LivQuik, will form a joint ven-
ture, SabPe. This would be a full-service
omni-channel payments technology plat-
form for merchants, banks, and other
acquirers in India. SabPe, based in Mumbai,
will enable acceptance of both traditional
and emerging payment methods, and pro-
vide access to curated business applications
and support for merchants.
“Digital and physical interfaces are
seamlessly merging, and the payments
infrastructure is a focal point for this seam-
less convergence. Poynt’s commerce plat-
form transforms the billing or PoS terminal
into a smart device that empowers busi-
nesses to lead their digital transformation
and gives customers moreconvenience and
choice,”saidKishoreBiyani(pictured),chief
executive at Future Group.
He says they'd be introducing Poynt
smart terminals across Future Group stores.
Poynt, according to the company,
surpassed $9 billion in gross payments
volume (GPV) in the past 12 months, up
200 per cent over the previous year. The
partnership with Future will further
accelerate this.

Office space absorption may

touch record 42 mn sqft this yr
PRESS TRUST OF INDIA
Mumbai, 31 July
Office space absorption is likely
torecordanewhighofnearly42
million sqft by the end of 2019
mainly on the back of steady
economic growth, a favourable
policy environment and grow-
ing preference of global occu-
piers for Indian offices, a report
said.
According to a study by
property consultant Knight
Frank, the office space absorp-
tion across seven cities includ-
ing Delhi NCR, Mumbai,
Bengaluru, Chennai,
Hyderabad, Pune and Kolkata
grew 21 per cent during H1 2019
to 21.8 million as compared to
18.1 million sqft in correspon-
ding period last year.
At the same time, going by
the new launches during H1
2019, which stood at 24.3 mil-
lion sqft as against 21 million
sqft in H1 2018, the total launch-
es by the end of the calendar
year is expected to reach 46.9
million sqft.
"Steady economic growth,
favourable policy environment,
growing preference of global
occupiers for Indian offices and
The Mumbai office market in H1 2019 witnessed net
absorption of 2.94 million sqft
listing of first Real Estate
Investment Trust (REIT) in the
country have put the India
office market on a growth path.
This indicates optimism
amongst occupiers with conti-
nuityofgovernanceandastable
government," it said.
It further said a ramp-up by
co-working players, which is of
overall leasing, and occupiers
in the IT/ITeS space (37 per cent
of overall leasing) drove the
strong growth in demand, the
report said.
"The current business sce-
nario offers a favourable expan-
sion environment to occupiers.
Moreover,italsooffersinvestors
the option to look at maximiz-
ingtheirreturnsthroughinvest-
ment into completed properties
underREIT,"JLLIndiaCEOand
CountryHeadRameshNairsaid.
He said the REIT listings by
the Embassy-Blackstone sug-
gests that the commercial real
estate in the country has
matured and evolved in the past
decade, post the global finan-
cial crisis. "However, there is still
a dearth of investment-worthy
properties in the country. As a
result, developers are focusing
on increasing the supply of
Grade A properties. We expect
the momentum to remain
robust in the second half of 2019
too," Nair said.
According to the report,
vacancy levels dropped mar-
ginally from 14 per cent in H1
2018 to 13.3 per cent during
January-June 2019.
As per the report,
Hyderabad witnessed a signifi-
cant surge with net absorption
multiplying almost four times
as compared to the correspon-
ding same period last year to 5.8
million sqft in H1 2019 from 1.5
million sqft in H1 2018.
The Mumbai office market
in H1 2019 witnessed net
absorption of 2.94 million sqft
along with a strong demand
from the BFSI sector in the
MMR and IT/ITES in Navi
Mumbai and Thane. However,
this was nine per cent lower
than net absorption in H1 2018.

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