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Relief for banks Jalan panel proposes ‘nominal’
transfer of RBI funds to govt
as govt clears
In a major victory
for India, the
Court of Justice
Transfer to be done in REAPING DIVIDENDS

changes to IBC
on Wednesday
ruled that
Pakistan must
a period of 3-5 years Surplus capital transferred byRBI to govt ( in ~cr)
review the death 2016-17 65,876
sentence for SOMESH JHA
Indian national New Delhi, 17 July 2017-18 40,659
Jadhav, who has been sentenced to death Secured lenders set to get preference; resolution The Union government may not get the
2018-19* 68,000
by a Pakistani military court. Jadhav, 49, a windfall gain it was expecting from the
retired Indian Navy officer, was sentenced gets maximum 330 days including litigation Reserve Bank of India (RBI) reserves as
2019-20** 90,000
*Includes interim dividend transfer of ~28,000 crore
to death by the Pakistani military court on the Bimal Jalan committee, tasked with #Finance ministry's expectations from the RBI
charges of "espionage and terrorism" after
a closed trial in April 2017. His sentencing
New Delhi/Kolkata, 17 July
KEY AMENDMENTS reviewing the central bank’s economic
capital framework, has proposed a “nom-
Sources: Rajya Sabha, finance ministry

evoked a sharp reaction in India. 24 > | Dissenting financial creditors inal” transfer of surplus to the central dend annually,” a person close to the The report would likely include a dis-

n a big relief for banks, the govern- and operational creditors to government in a phased manner, accord- development said. sent note by Finance Secretary Subhash
HAFIZ SAEED ARRESTED FOR ment is bringing in multiple reforms accept liquidation value or sum ing to a source in the know. The person said the panel members Chandra Garg, who is the government’s
FINANCING TERRORISM P24 to the three-year-old Insolvency and “The report has proposed a formula might “not be unanimous” on the sug- representative on the panel.
offered in the resolution plan
Bankruptcy Code (IBC), providing for a nominal transfer of a portion of the gestions the committee made. These will The committee has recommended a
clarity about preference to secured lenders | Overall deadline increased to RBI’s reserves to the central government be submitted to RBI Governor periodic review of the RBI’s economic
RESULTS CORNER over operational creditors, to be applicable 330 days, including litigation in a period of three-five years. This is in Shaktikanta Das “in a few days”. The capital framework, according to the
retrospectively; strict timelines for the res- period line with the current practice being fol- RBI’s central board, headed by Das, will source.
YES Bank net olution and litigation process; and pow- | Commercial consideration to lowed by the RBI for transferring divi- take up the matter. Turn to Page 23 >

profit falls 91% ers of the committee of creditors (CoC).

Lenders and legal experts say that the
drive distribution of sums
realised, and within the
in Q1 to ~114 cr amendments, especially regarding the

Review Budget plan for surplus transfer: Sebi chief

powers of CoC
treatment of operational creditors, will
YES Bank reported a 91 per cent decline in help end the uncertainty around recovery | Liquidation after formation
its net profit at ~113.8 crore in the April- for the financial creditors of Essar Steel. of CoC but before information
June quarter (Q1) of 2019-20 (FY20) “The amendments aim to fill critical memorandum's preparation SHRIMI CHOUDHARY & SOMESH JHA amendment to the Sebi Act, through the remained unanswered.
because of a mark-to-market gaps in the Code and clarify the intent of gets nod New Delhi, 17 July Finance Bill, could have waited until the The Sebi chairman is learnt to have
provisioning of ~1,109 crore for bad loans the law,” Union minister Piyush Goyal said Council's final decision. met Finance Minister
| Comprehensive restructuring,
and decline in non-interest income. In during the Cabinet briefing on Wednesday. Securities and Exchange Board of India Tyagi argued on the ration- Nirmala Sitharaman earlier
including M&A, as part of the In a letter to the
the same quarter of the last financial Addressing one of the biggest criticisms (Sebi) Chairman Ajay Tyagi has written to ale for the regulator keeping this week on the issue.
resolution plan allowed finance ministry,
year (2018-19 or FY19), the bank’s profit of the IBC, the Cabinet also approved set- the finance ministry, seeking a review of a reserve fund and its impor- “Two provisions — one
Tyagi said the
was ~1,260 crore. The bank had posted its ting strict timelines for the corporate insol- | Approved resolution plan will the Budget proposal that mandates trans- tance in protecting the inter- related to the surplus transfer
proposed move
first-ever quarterly loss in the January- vency resolution process. From the earlier be binding on central and state ferring 75 per cent of the market regula- ests of investors.
would affect the
and the other related to seek-
March quarter of FY19 at ~1,507 crore. 20 > time limit of 270 days set only for the CoC government tor's surplus funds to the central govern- The move has also been ing prior approval from the
functioning of
to approve the plan, the government has authorities ment, it is learnt. opposed by the Sebi finance ministry for raising
WIPRO Q1 NET PROFIT UP extended the deadline to 330 days includ- In a letter to the ministry on July 10, Employees Association
Sebi as well as the
expenses — haven’t gone
securities market
12.5% AT ~2,388 CR P2 ing the litigation and judicial process. Tyagi said the proposed move, part of the (SEA), brokers' forum, and down well with the markets
A senior State Bank of India (SBI) Finance Bill, 2019, would affect the func- many other market partici- regulator. The provision is
official said the bank would pursue tioning of Sebi as well as the securities pants, saying it potentially amounts to an under review,” said an official, request-
its petition against a National market. He said the proposal was already infringement of the independence of the ing anonymity.
Company Law Appellate being discussed by the Financial Stability regulatory body. Another argument from Sebi's side is
ON Tribunal (NCLAT) ruling in the
Essar Steel case, in the Supreme
and Development Council (FSDC), regu-
lator for the financial sector, and that the
An e-mail sent to Sebi did not elicit a that the new provision is like an addi-
response. A text message to Tyagi tional tax.
Turn to Page 23 >
Court. “An amendment doesn’t
SPECIALS make it a law immediately.
Hopefully, the SC will take cog-
nizance of today's amendment,”
PERSONAL FINANCE: the official said. The plea will come
File long-term capital gains up for hearing on July 22.
from this year 18 > Turn to Page 23 >
The calculation process is tricky.
However, there are service providers
OPINION: Sovereign bonds:
The big picture 9>
India must work on a road
map towards capital account
openness, in which sovereign
bond is back-loaded, not
IndiGo headed for a stormy
YV REDDY writes board meet tomorrow
the wheel turns full circle 4 > WHAT TO EXPECT ARINDAM MAJUMDER
New Delhi, 17 July
50 years after 14 state-run banks were | Expansion of the
nationalised, the debate is on whether size of the board In normal circumstances, the meeting on July 19
we should reverse it. RAGHU MOHAN writes would have been a happy rendezvous between the
| Appointment of
architects of IndiGo. The country’s most profitable air-
STRATEGY: Grofers brands woman director line is expected to register its highest profit—more
the last mile 22 > | Rakesh Gangwal to than ~1,000 crore.
attend the But on Friday, Rahul Bhatia and Rakesh Gangwal
meeting in — the founders of IndiGo — will possibly face
person each other with deep mistrust, which the
CARE sends MD & CEO | Rahul Bhatia
board chairman, M Damodaran, will attempt
Rajesh Mokashi on leave group and
to defuse.
Damodaran has proposed to include at
After ICRA, the board of CARE Ratings has directors least two of the proposed demands made
asked its MD & CEO Rajesh Mokashi to go on may pass a by Gangwal, according to a source in the
indefinite leave, pending completion of resolution to know. The IndiGo board meeting is likely to
the examination of an anonymous question take up the proposal of expanding the size
complaint received by Sebi in connection Gangwal of the board, he said.
with the IL&FS case. The rating agency has Also, appointing a woman director
appointed Executive Director (Ratings) T N AJAY MOHANTY would be discussed.
Arun Kumar interim chief operating officer. Turn to Page 23 >

Investigators may grill banks

on Jet forensic audit closure
SOMESH JHA & SHRIMI CHOUDHARY programme. The SFIO recently
New Delhi, 17 July questioned Jet founder Naresh Goyal
after the Ministry of Corporate Affairs
Investigativeagenciesexaminingthe (MCA) referred the case to it.
booksofJetAirwaysarelikelyto A letter by SBI Chief General
seekanexplanationfromtheState Manager Partha Sen to the bank’s chief
BankofIndia(SBI)-ledconsortium vigilance officer on May 22 stated that
afterthelenders“closed”theforensic the forensic audit report by EY,
auditreportonthebasisofthe“more- submitted on March 1, “had pointed to
CLOSURE THAT WASN'T than-adequate”responsesbythe
certain issues of provisioning, billing,
and related-party payments, which
| SBI conducted forensic audit of Jet “Bankshavesharedtheforensicaudit though not substantial, required
Airways to ascertain diversion of funds reportwiththeEnforcementDirectorate clarifications from the company”.
| Auditor EY submitted its report on (ED)andtheSeriousFraudInvestigation “The matter was subsequently
March 1, pointing out issues of Office(SFIO).Sincethelendersdecided discussed in a lenders’ meeting on April
provisioning and billing toclosetheforensicauditreportdespite 23, 2019, and it was felt that the
| SBI said the issues were "not substantial" someobservationsmadebyEY(forensic responses provided (by Jet Airways) so
auditor),anexplanationwillbesought far were largely adequate in nature and
but sought clarifications from Jet fromthem,”anofficialsaid. accordingly, the lenders decided to
| On April 23, lenders discussed the The SFIO is probing the Jet accounts treat the forensic audit report as
airline's view and decided to treat it for allegedly violating the Companies closed,” Sen said in the communique,
"closed" after "responses provided Act, while the ED is looking into the which was reviewed by Business
were largely adequate in nature" stake sale of the carrier’s loyalty Standard. Turn to Page 23 >



250 Q1 loan growth at 13%
> Multi Commodity Exchange of India
860 Q1 net profit at ~44 crore,
> YES Bank
105 Q1FY20 gross NPA at
> Tata Elxsi
865 Q1 net profit down
> Strides Pharma Science
380 Received warning letter
IN THE NEWS 238.80
230 YoY, slowest in the
842 as against ~7 crore in the
100 5.01 per cent from 849.30 820 31 per cent to 374.90
375 from USFDA for
231.80 past five years 815.70 year-ago quarter 3.22 per cent in Q4FY19 814.95 ~49 crore YoY Puducherry facility
210 824 93.00 98.45 95 775 370
199.65 190 813.55 742.40 730 366.15 365
~199.65 CLOSE 806 ~854.35 CLOSE 90 ~98.45 CLOSE ~ 742.40 CLOSE ~366.15 CLOSE
Jul 2019 Jul Jul Jul 2019 Jul Jul Jul 2019 Jul Jul Jul 2019 Jul Jul Jul 2019 Jul Jul
* OVER PREVIOUS CLOSE 10 16 17 16.39% DOWN* 10 16 17 5.02% UP* 10 16 17 5.25% DOWN* 10 16 17 8.90% DOWN* 10 16 17 3.08% DOWN*
> .


Premji helps create India’s
newest tech unicorn Icertis Wipro registers tepid ‘It’s continuity and
change at Wipro
revenue growth in Q1
Icertis, which provides
contract management

with Rishad at helm’

software to customers such
as planemaker Airbus and
pharma giant Merck,
announced the closing of a
$115-million Series E round. DEBASIS MOHAPATRA A change of guard is in the offing at
The funding made it India’s Bengaluru, 17 July information technology (IT) services major
latest unicorn. The financing Wipro — founder and Chairman Azim Premji

round was co-led by T services major Wipro contin- will step down next month and his elder
Greycroft and Premji Invest, ued to witness tepid revenue son Rishad Premji will take over. Chief
the family investment arm of growth in the first quarter of the Executive Officer ABIDALI NEEMUCHWALA tells
Wipro Chairman and billionaire Azim Premji (pictured). Existing ongoing financial year owing to Bibhu Ranjan Mishra & Debasis Mohapatra
institutional investors including B Capital Group, Cross Creek, uncertainty in the macro environ- that a good succession plan will take the
Eight Roads, Ignition Partners, Meritech Capital Partners and PSP ment apart from delay in closure of company to greater heights and Rishad has
Growth participated in this round. It would use the funding to large projects. all the values of his father. Edited excerpts:
scale up its operations globally. It would also invest more in Operating margins also dipped
technologies such as artificial intelligence and blockchain. The becauseofrisingwagecostandhigh- What changes can be expected at
US-based company was founded by tech industry veterans er expenses due to changing Wipro from July 31 when Rishad
Samir Bodas and Monish Darda in 2009. PEERZADAABRAR< onshore-offshore mix, in spite of the Premji takes over as the new
company reporting forex gains. chairman?
In the quarter ended June 30, the (From left) CFO Jatin Dalal, COO & President Bhanumurthy BM, CEO The succession planning has been
ICRA downgrades FDA faults Strides Bengaluru-headquartered compa- Abidali Neemuchwala and Chief Human Resources Officer Saurabh
ny reported a 12.6 per cent rise in Govil in Bengaluru on Wednesday PHOTO: SAGGERE RADHAKRISHNA
going on for a while. It’s a very smooth
transition. So you should not expect least once in a quarter, but operational-
Reliance Power Pharma for records consolidated net profit (at ~2,387.60 that something is going to be very dif- ly he’s not there. He has no executive
to default in scrapyard crore) compared with the corre- KEY FINANCIALS ferent after July 31. Of course, every responsibility in the company.

Long-term rating for Reliance TheUSFoodandDrug

sponding period in the previous fis-
cal. Net profit declined 3.86 per cent Revenue (~crore) 14,716 L&T’s A M Naik to new leader brings a new energy to the
company, so I am expecting Growth seems to be missing
Power has been downgraded Administration(USFDA)has on a sequential basis owing to high- YoY change (%) 5.3 lead Mindtree as much more energy in the com- Wipro for quite some time now
er tax outgo apart from lesser rev- QoQ change (%) -194.00
to default, ICRA said on
Wednesday. The downgrade
PharmaScienceastherewere enue from operations. Net profit (~crore) 2,388 non-executive pany. That’s the change we are
looking for.
and Q1FY20 was no different
also. You have seen decline in
follows the lenders signing an
inter-creditor agreement.
Consolidated revenues of the YoY change (%)
firm rose 5.3 per cent year-on-year QoQ change (%)
chairman How do you see Rishad as a successor
growth in most geographies
and verticals. What is holding the
“The rating which was ‘C’ documentsandrecordsinthe (YoY) basis to ~14,716 crore while it MindtreeonWednesdaysaid to Azim Premji in the company? company back?
Operating margin (%) 18.4
Issuer Non-Cooperating has scrapyardofitsplantin declined around 1.94 per cent on a L&TGroupChairmanAMNaik Rishad has all the values of Mr Premji If you see the numbers on year-on-year
been downgraded to ‘D’ on Puducherry.Thewarningissued sequential term.
QoQ change (basis points) -60 hadbeenappointednon- and Wipro, and he’s also been part of basis, our BFSI segment has grown by 11
Source: Company
confirmation of delays in debt throughalettersentonJuly1 IT services revenue, which con- executivechairmanoftheIT Wipro for almost 12 years now. And, he per cent. I will certainly not read much
servicing,” ICRA said. The saidthequalitysysteminthe tributes more than 95 per cent of its company.Naik'sappointment understands the generation of millen- into the quarterly blip. Consumer (busi-
agency added,” The liquidity facilitydidnotensurethe gross revenues, witnessed a sequen- enues grew 10.6 per cent YoY on con- issignificantastheL&Tbosswas nial. So there’s a lot of continuity in ness unit) has grown about 8 per cent.
profile of the firm, along with accuracyandintegrityofdatato tial decline of 0.7 per cent at $2.038 stant currency term, it was 12.4 per seenasthekeypersondriving terms of basic values and there’s also a We have a large engagement which was
its arms, continues to remain supportthesafety, billion in constant currency terms. cent for Infosys in the quarter under thetakeoverattempt.The lot of new thinking based on the gener- expected to ramp up but it is taking lit-
stretched as evident from effectiveness,andqualityof On a YoY basis, it grew 5.9 per cent. review. “We had a slower start to the companyreportedasharpdrop ational shift… it’s a combination of con- tle longer. Wipro has shown double dig-
considerable decline in the thedrugs. PTI< The constant currency growth num- year than expected, though it (IT initsnetprofitforthefirst tinuity and change. it growth in the US. That way, the areas
net cash accruals in FY18-19 bers were arrived at after adjusting services revenue growth) remained quarterofFY20,missingStreet on which we are focussed on have
and net worth erosion the impact from the company’s within our guided range of -1 per estimates.TheITfirmon What sorts of change? shown growth. Our client mining efforts
due to impairment of assets.” GoAir hires ex-Airbus divestment of its hosted data centre cent to +1 per cent for the quarter,” Wednesdayreported41percent It’s not any sudden change but in terms are showing dividends with growth in
BS REPORTER< executive Miranda business along with Workday and said Abidali Neemuchwala, chief dipinnetprofitonYoYbasisto of new thinking, on a long-term basis. $100 million clients (Wipro added 3
Cornerstone businesses. executiveofficer&executivedirector ~92.7crore,whileitsrevenues It’s around technology — how to use $100 mn client in the quarter).
Mills as COO IT services revenues of $2.038 bil- at Wipro. “Q1 typically is a weak grew12percentto~1,834.2crore technology and invest in technology Similarly, we are focussed on BFSI, in
Correction TheWadiagroup-runGoAir, lion was below Bloomberg estimates quarter for us and we entered the forthequarterendedJune30. because they are changing so fast. which we have historically under pen-
AION Capital did not say that whichhasbeenheadlesssince for the quarter. It had pegged the fig- quarter with macro uncertainties,” Aftertheexitofitsco-founders, etrated. Now we are gaining market
it was not interested in DHFL February,hashiredindustry ure at $2.16 billion. Wipro's constant Neemuchwala added. thesharepriceoftheITfirmlost Will you miss the presence of Azim share in this space. So, over time, we
stake, as indicated in the veteranMirandaMills,aformer currency growth numbers were also For the second quarter, Wipro aboutaquarterofitsvaluein Premji to seek the guidance from, on have prioritised our growth and are the
headline of a report yesterday executiveofAirbusandRolls lower when compared with larger predicted its revenue to be 0-2 per thelastfortnight. DEBASIS daily basis? taking the path that we have chosen.
(Wednesday). What the Royce,asitschiefoperating peers like Tata Consultancy Services cent, translating into $2.039 billon MOHAPATRA & ROMITA MAJUMDAR He’s there on the board and he’s the
company had said was that it officer.Millswillbeheadingthe (TCS) and Infosys. While TCS’s rev- to $2.080 billion for the period. founder chairman. So he will be there at More on
did not have any comments operationsofthethatis
to offer on our report. The reportedlyplanninganinitial
error is regretted. sharesalethisyear. PTI<

bidding for Jaypee Infratech goods
The ~3-trillion fast-moving consumer
market is facing a slowdown as
Volumegrowth Price-ledgrowth
lower consumption in rural market (%YoYgrowth)
AASHISH ARYAN bids would mean that the door
affected retail offtake and brought rural
New Delhi, 17 July would be open for all and not
growth on a par with that in urban Value growth#
just a select few, said the appel- 16.2 15.7 13.4 10.0
With banks having rejected late tribunal. Apart from this, it areas. Further, tough market conditions SURAJEET DAS GUPTA
state-owned NBCC India’s plan also asked the banks, led by have hurt small manufacturers, who, in 3.0 3.8 New Delhi, 17 July
for Jaypee Infratech, the IDBI Bank, to file an affidavit turn, have contributed significantly 3.6
National Company Law listing out new terms and con- (about 50%) to the sliding growth in Making a case for increasing
the sector. A drop in India’s GDP 3.8
Appellate Tribunal (NCLAT) ditions if a fresh round of bid- 13.2 11.9 9.9 the number of directors, espe-
on Wednesday suggested ding was to be conducted. growth, backed by lower spending by 6.2
cially the independent ones, on
terms for fresh bids to be con- The NCLAT will also con- households, and concerns over a spike the IndiGo board, proxy advis-
sidered for the latter. One of sider on July 22, the next date in inflation rate may pull the market ory firm IiAS has pointed out
the primary conditions, the of hearing, the plea of Jaypee
Jul-Sep Oct-Dec Jan-Mar Apr-Jun that the current board is
further down. ARNAB DUTTA 2018 2019
appellate tribunal observed, Infratech’s lenders to exclude a “silent” and its “ability to pro-
should be that the builder-buy- period of nearly 250 days from tect the company from its pro-
er agreements that were origi- being considered a part of the moters is limited”.
nally signed must not be Corporate Insolvency Subdued growth inrural market Poor growth in small & medium firms Fewer number of small The firm has criticised the
changed. Resolution Process. contributed 57% to slowdown contributed 67% to overall slowdown manufacturers entering promoters’ low engagement in Attendance at the promoters’
“All allottees will be given This period of nearly 250 Volumegrowth Price-ledgrowth (%YoYgrowth) Large(revenue>~600cr) Medium(revenue~100-600cr) marketdue to slowdown board meetings, saying this is board meeting was less than
flats according to their builder- days, between September 17, Small(revenue<~100cr) Newentrants Exits less than acceptable and cause 40% in 2015-16, according to
Value growth# growth(in,000)
buyer agreements. The con- 2018 and June 4, 2019, was tak- for concern. Attendance at the proxy advisory firm IiAS
14.1 9.7 20.0 10.3 27
tract terms cannot be changed. en by the National Company Net gain** promoters’ board meeting was
If the allottee is not present, Law Tribunal (NCLT) to decide 3.7 24 2.8 0.2 less than 40 per cent in 2015-16, independent directors would
the committee of creditors on the voting rights of the according to IiAS. also provide checks and bal-
3.2 19
(CoC) will decide on how the homebuyers.
13 14 13 13 12 13 5.8
This improved only slightly ances to the control rights that
flat is to be adjusted,” said a A two member bench of 10 to 63 per cent in 2017-18 as dif- the promoters have embedded
two-member Bench of the NCLT had given split opinion 3.3 4.4 10 4.6 ferences between the two fac- in the Articles of Association.
10.9 16.3 7
NCLAT, led by Chairperson on whether homebuyers in the 6.4 tions began to simmer, despite The promoters — Rahul
5.9 7.4 6.0
Justice S J Mukhopadhaya. Jaypee Infratech case should the Kotak committee recom- Bhatia of InterGlobe Enterpri-
Other than this, the land be considered a part of the CoC Jul-Sep Apr-Jun Jul-Sep Apr-Jun mending a harsh criterion for ses (IGE) and Gangwal — are
attached to the buildings and and whether they should be 2018 2019 2018 2019 Apr-Jun Apr-Jun reappointing absentee direc- in dispute, with the latter
Jul-Sep Oct-Dec Jan-Mar Apr-Jun
the common area amenities construed as one or a be seg- 2018 2019 tors. This shows the promoters questioning the former’s cor-
Urban (63%)* Rural (37%)* 2018 2018 2019 2019
will also remain the allottees, mented class-wise, for compu- **Net gain= new entrants-exits controlled the business and the porate governance standards,
said the NCLAT. Inviting fresh tation of voting share. #Value growth= Volume growth + price-led growth; *Contribution of the market to the total FMCG market in India Source: Nielsen FMCG Growth Snapshot board had a limited role, IiAS apart from raising issues on
says.Itpointsoutissuesonrela- relate-party transactions.
ted-party transactions, raised Bhatia has said his partner
by promoter Rakesh Gangwal, wants more control.

MakeMyTrip gears up to cash in on long weekends might not be material, but sta-
keholders will be wary of giving
IndiGo their money just yet —
they would want to know who
IiAS says the allegations of
due process not being fol-
lowed in related-party trans-
actions carry momentum,
NEHA ALAWADHI whichwillstartshowinguptwo four days. wins this battle before increas- considering the composition
New Delhi, 17 July weeksbeforealongweekend. Ifthejourneydoesnotincludea ing their exposure. So, pur- of the IndiGo board and its
“It(theoffering)isdomesticand flight,MakeMyTripwillprovidetwo chases of new aircraft, engine board committees. Even so,
Planningtogoonashortholidayona international.Itcanbetwo,threeor options—self-drivingoraninter- replacements, and any other there is an argument that they
longweekend?MakeMyTrip(MMT) fournights.Weexpectmostofthe citycabthroughtheapporportal. material expansion might be might not be material, given
willsoonofferconsolidated bookingstobe(for)threeorfour Dependingonwhetherauserselects delayed. Investors might not be the size of the airline and the
packagesallowingyoutobooka nights.Fromeachofthecitieswewill todrivethemselvesortakeacab,the as concerned with related-par- fact that the Annual Reports
holidayin“justfourclicks”. haveroughly30-40choicesandthey priceofthepackagewillbedecided. ty transactions as with poten- (for FY16, FY17, and FY18) have
Analysingpopularsearchtrends willallbedifferent.Everythingwill Tomapthedestinationsbeing tial delays in value creation. confirmed that these were on
onitsapp,MMThascuratedalistof bewithina2-hourflightora5-hour offered,MakeMyTriplookedat The proxy advisor has an arm’s length basis. The
domesticdestinationsonecandrive cabjourney.Typically,itwillbeflight historicaldata.“Welookedatlasttwo pointed out that expanding the FY17 and FY18 reports have
tointhree-fourhours,or (orcab),ahotelandoneattractionor years’searchdataonourapp.Ifyou boardcouldallowthecompany specified that the related-par-
internationalonesthatdonot adventure,”saidPrakash. seelastAugust,wecheckedsearches to distance itself from the pro- ty transactions were reviewed
requireavisaorprovideoneon For example, if the user wants to forwhichareaswentup,”said moters’ dispute. With more and approved by the audit
arrival. take a trip between Delhi and Prakash. teeth, the board can give its committee, as required by the
“Werealisedtherewasamajor Rishikesh, Weekend Getaway will Tokeepitinterestingforallkinds viewsintheinterestsofthefirm company’s guidelines. But
gapinthemarketwhenpeopletryto provide a package with a cab, hotel, oftravellers,80percentdestinations and its shareholders, much in IiAS says these bits are getting
makebookingsforlongweekends. and one rafting and one trek inthepackagesbeingofferedare the way Mindtree’s committee lost in the wrangle, with each
Manypeopledon’tevenrealisethat option, leaving the customer free basedonpopularsearches,and20 ofindependentdirectorsdecid- highlighting its role in build-
thereisalongweekendcoming.By to do what they like on percentdestinationsprovidedare ed on the fairness of Larsen & ing the business and its brand.
thetimetheydo,itistoolate.Mostof Getaways,’wewilltrytodoyourhard packagescovering80-100 other days. offbeat,suchasAlmatyin Toubro’s offer price to share- Had the board been expanded
usaretime-starvedandmostofus workandheavyliftingandserveiton destinations,acrossdifferentprice Or if the user opts for a trip to Kazakhstan. holders in spite of its (Mind- and had it been more effec-
don’thavethetimetogetintodetails. aplatter,”saidVipulPrakash,chief points. the wine valley in Nasik, Weekend Theofferingwillbepromotedvia tree’s) promoters’ opposition to tive, the allegations would
Soplansfallthroughbecausethereis operatingofficer,MMT. Theonlinetravelagentwillhavea Getaways will suggest one wine- popularsocialmediaplatformssuch the acquisition bid. It has said have been seen with more
noreadyreckoner.With‘Weekend MakeMyTriphasdesigned400 separatelinkortileonthetheapp tasting tour on one of the three- asInstagram. an expanded board with more scepticism.



Ebix set to acquire ‘After deal, shopkeepers eBAY BUYS 5.5% STAKE IN PAYTM

Yatra for ~2,327 cr toUSsellandproducts

EbixCash IPO offering,”
New Delhi, 17 July he said. E-commerce player eBay has bought 5.5 per cent stake in Paytm Mall.
The transaction has been While the deal size has been kept under wraps, sources say eBay

S-based software firm unanimously approved by invested $160 million in Paytm Mall, which is valued at $3 billion.
Ebix is set to acquire each of Ebix’s and Yatra’s Numbers aside, VIJAY SHEKHAR SHARMA, founder of One97
Gurugram-based on- directors and is expected to Communications, in a conversation with Karan Choudhury says while
line travel agent Yatra Online conclude in October-Decem- other e-commerce players act as proxy retailers, Paytm Mall is working
for an enterprise value of ber quarter after receiving with offline retailers. Edited excerpts:
$338 million or ~2,327.4 crore regulatory approvals.
in an all-stock deal. Assuming a value of $4.90 Whatarethebroadcontours
Once the transaction is per ordinary share of Yatra, oftheeBaydeal?Howdidit
completed, Yatra will be a the transaction implies an happen?Whendidthetalks
part of Ebix’s travel portfolio, enterprise value of $337.8 mil- begin?
EbixCash. Ebix has offered to lion at the Ebix collar price In the beginning of the year,
pay $4.90 per share of Yatra, of $59 per share and after there was mutual introduction
a premium of 26 per cent adjustment Yatra’s net equity to do things together as we had
over Yatra’s Tuesday closing ROBIN RAINA, value would be $239 million, been doing cross-border com-
price, and 32 per cent over its Ebix Chairman the companies said in a joint merce. One of our board mem-
closing price on March 8, statement on Wednesday. ber introduced us to eBay, which
when Ebix first made an offer “Over the past few “Fundraising was not the has been trying to do cross-bor-
to buy the Indian firm. months, we have objective behind the transac- der commerce with Indian com-
Ebix Chairman and Chief evolved a detailed tion,” said Dhruv Shringi, co- panies. It invested in Flipkart
Executive Officer (CEO) synergistic plan, which founder and CEO of Yatra and Snapdeal but was still look-
Robin Raina said the acquisi- once fully executed, can Online. He said Yatra would ing for a partner. eBay wanted
tion of Yatra would lend itself provide between 40 continue to exist but a deci- ustotakeitscataloguesintheUS
to significant synergies and and 75 cents of sion on merging it with other and Europe to India. We said we betterconnectwithtraders
the emergence of EbixCash accretion to the Ebix Ebix group companies in arefocusingonofflineshopsand whokeepcomplainingaboute-
as India’s largest and most non-GAAP EPS” India is yet to be taken. “We this could be a good supply commerceplayerstakingatoll
profitable travel services will be better capitalised now source for our shopkeepers. The ontheirbusiness?
company. as a part of a larger group but good thing is that our consumer Our focus has been to empower
“Over the past few 75 cents of accretion to the we will continue to take a traffic is growing rapidly, shopkeepers compared
months, we have evolved a Ebix non-GAAP EPS. We are measured approach to so eBay was interested in to other e-commerce
detailed synergistic plan, excited by the cross-selling growth. We don’t need to do becoming a strategic players who are proxy
which once fully executed, opportunities while further deep discounting to get cus- shareholder. In the last retailers themselves.
can provide between 40 and strengthening our future tomers,” he said. three months, we carved Brands love us as we are
out the finer points of the deal. driving store walk-ins and sales,
unlike other ecommerce play-
Therehasbeennewsaround ers who buy and sell themselves.
Spencer’s plans ESOP in first year of ops as separate entity PaytmMallnotdoingwell.
We have much better connect
with the retailers as they do not
AfterdemergingfromCESC,Spencer'sRetailissetto shalllapseforthwith,”thenoticeread.Spencer’s I can only say that we have a see us as a threat, unlike other e-
comeoutwithanemployeestockoption(ESOP) saidESOP,besidesbeinganincentive,isalsoa rock solid business which is commerce players. Our way of
schemeinitsfirstyearofoperationsasaseparate meansforadditionalmotivationforthe spending very less money. We doing digital commerce is dif-
listedentity.Earlierthisyear,Spencer’shadgot employeesandaligninterestsofemployeeswith are doing millions of dollars in ferent from that of others and
DevendraChawla,formerchiefoperatingofficerof theinterestofthefirm. business this year. This year, we that is one of the reasons why
WalmartIndia,asitschiefexecutiveofficerand “ESOP is considered as an effective tool to have done a great job of con- research reports think that our
managingdirector. attract and retain the best talent and also serves verting our business momen- numbers are not good. They do
Anoticetothefirm’sshareholdersstatethe to attract, incentivise and motivate professionals tum into good revenue and con- not take into account the busi-
maximumnumberofstockoptionsavailablefor and reward exceptional performance. In order to sumer growth. Paytm Mall is ness done by our shopkeepers
grantundertheESOPschemewillbe3,976,711.This attract, reward and retain talented and key em- focused solely on shopkeeper via the app. The reports mostly
represents5percentequitysharesofthefirmwith ployees in the competitive environment and en- commerce. We showcase the monitor data of the courier serv-
afacevalueof~5.Eachofthestockoptions,when courage them to align individual performance supplies that they have. We sell ices. Our shopkeepers may not
exercised,willbeconvertedintooneshareofthe with the company's objectives, the firm intends for them online and also bring be always using third party logis-
company.“Ifagrantee’semploymentwiththe to implement Spencer's ESOP 2019,” it said. About customers to their shop. We tics. We are doing around 2.25
firmstandsterminatedduetovoluntary a month after Spencer’s was carved out of CESC as have the element of supplying lakh orders per day which tells
resignationonpartofthegranteeordueto a result of the demerger and subsequently listed, through the shop. me that we are in a great shape.
completionofhisdeal,thenallstockoptionsnot Chawla joined Spencer's in February after a 15-
vestedintheemployeeasondateoftermination month stint in Walmart India. AVISHEK RAKSHIT DoyouthinkPaytmMallhasa More on

Uniqlo set to BP, RIL investing

debut with $5 bn in KG-D6
to produce
three stores 1 bcf of gas
in India British energy giant BP and its
partner Reliance Industries
VIVEAT SUSAN PINTO (RIL) will invest $5 billion in
Mumbai, 17 July bringing to production three
sets of natural gas fields in the
Japanese retailer Uniqlo on Krishna Godavari basin block
Wednesday announced it was in the Bay of Bengal by 2022.
launching three separate stor- BP’s Chief Executive (Up-
es in India as part of its debut stream) Bernard Looney said
plans, coming at a time when the partners were also dis-
the government proposes to cussing the development of
ease local sourcing rules in natural gas found in Maha-
single-brand retail. On July 5, nadi basin, off the Odisha
Finance Minister Nirmala coast. “Together we are
Sitharaman had said the 30 spending up to $5 billion or
per cent local sourcing norms ~35,000 crore in three gas
in single-brand retail would development projects in the
be relaxed as she sought to KG-D6 block and together we
make India an attractive des- are expected to bring about
tination for foreign players. one billion cubic feet per day
Retail industry sources of new domestic gas on stre-
had said Uniqlo would be am by 2022,” he said.
among the first to launch out- Thethreeprojectswillhelp
lets this year in a bid to capi- reverse the falling gas output
talise on the environment, from what was once the
accelerating its India store biggest gas-producing block
plans, which have been in the in the country.
works for months now. Last month, the two part-
On Wednesday, Tadashi ners had announced invest-
Yanai, Uniqlo founder and ment sanction for develop-
chairman, said the three ment of their deepest natural
stores would be located in the gas discovery in the KG-D6
Delhi-NCR region and the block. The MJ, or D-55, gas
first outlet would open its find will be developed in sync
doors to consumers in Octo- with the previously approved
ber. “The opening of our first ‘R-Series’ and the Satellites
store in Ambience Mall, Vas- Cluster development to add
ant Kunj, followed by a sec- 30-35 million standard cubic
ond and third store in DLF, metres per day of natural gas
Saket, and DLF Cyberhub, production in phases. PTI
Gurugram, represents a sig-
nificant step in our compa-
ny’s global strategy. We will
offer affordable apparel wear,
targeting men, women and
kids,” he said.
Uniqlo has already begun
hiring staff for its first store
in Delhi and is also in the
process of putting its back-
end in place. The company
may also push its presence
into other cities once the
Delhi store launches happen,
persons in the know said.
According to experts, the
need to act quickly also
comes as Uniqlo is looking to
gain a strong foothold in India
as it competes with rivals
Inditex and Hennes & Mau-
ritz (H&M) globally. To put
things in perspective, Uniqlo
is the world’s third-largest
fashion retailer after Spain’s
Inditex, which owns Zara,
and Sweden’s H&M.


“Electric vehicles are a sunrise opportunity “The NRC is part of the Assam Accord and was also in (BJP's) “I am not in favour of continuing with
as India has over 72 per cent election manifesto based on which the government has MNREGA forever because it is for the
two-wheelers; our endeavour should be came to power. The government will identify illegal poor and government wants to
to make these electric, and also immigrants living on every inch of the country's soil and eradicate poverty from India and is
manufacture EVs for the world, in India” will deport them as per the international law” working in this direction”
AMITABH KANT, NITI Aayog CEO AMIT SHAH, home minister NARENDRA SINGH TOMAR, agriculture minister
> .

15th finance panel gets extension

India can tap London market
for sovereign bond, says May
The commission will now submit its report on separate funding mechanism on November 30, instead of October 31
India could tap London's capital market when it decides to raise its
first-ever international sovereign bond later this year, British Prime ARUP ROYCHOUDHURY included after the Cabinet decision,
Minister Theresa May has suggested. Describing India and the UK as
twin pillars of the Commonwealth built on shared values of
NOD TO LARGEST may or may not be examined by the
FC. It could even examine issues out of
democracy and the rule of law, she called on the government to he Union Cabinet on the ToRs.
raise its proposed international sovereign bond later this year in Wednesday extended For example, the FC may recom-
the financial hub of London. Prime Minister May on Tuesday the term of the 15th The Cabinet Committee on Economic Affairs (CCEA) mend giving greater financial free-
announced the creation of a new 40-million pound Fast-Track Finance Commission (FC), on Wednesday cleared the decks for the dom and powers to panchayats and
Start-up Fund, focussed on India's and added a new term of ref- country’s largest hydro-electric project, urban local bodies, as reported earlier.
emerging technology enterprises as part erence, which requires the 2880 Mw Dibang Multipurpose Project To that effect, it may suggest an
of the wider UK-India Tech Partnership. commission to examine if a separate (MPP), in Arunachal Pradesh. In addition, increase in property tax rates around
The announcement came as she mar- mechanism for funding of defence and various railways projects worth over ~6,000 crore the country.
ked the 'India Day' in London. "We internal security ought to be set up. – including doubling, tripling and coming up of It is also likely to bring back per-
have opened a £40 million Fast-Track
Start-Up Fund, supported by both the
This means that the FC will submit
its report to the government on
OTHER new lines — were given nod. The CCEA approved
the expenditure on pre-investment activities and
formance-based incentives for states,
wherein they will be assessed on cer-
UK and Indian governments, to invest in
Indian start-ups focussed on
November 30 this year, instead of
October 31.
DECISIONS various clearances for Dibang Multipurpose
Project (MPP) in Arunachal Pradesh for ~1,600
tain parameters. Performance-based
incentives were recommended by the
emerging technology," “The Cabinet chaired by Prime Nod to setting up of a Panel declare them as institutions crore. The estimated cost of the project is 13th FC but omitted by the 14th.
May said in a keynote Minister Narendra Modi has approved of ministers to look into of national importance ~28,080.35 crore. Some stated parameters, howev-
address. PTI< the proposed amendment to enable closing of Indian Drugs and Approved the National The Cabinet has also given its approval to er, have been opposed by seven states
15th Finance Commission to address Pharmaceutical and Medical Commission Bill, construct a third railway line between Prayagraj- and union territories, including how
serious concerns regarding the allo- Rajasthan Drugs and Mughalsarai (now Pt DeenDayal Upadhyaya Jn) well states implement the flagship
which seeks to replace the
Finance Bill to Centre likely to cap cation of adequate, secure and non- Pharmaceuticals. The Medical Council of India Act,
covering 150 km with an estimated cost of schemes of the central government,
~2,649.44 crore. The project is expected to be
be taken up in overseas borrowing lapsable funds for defence and inter-
nal security of India,” said a statement
committee will also decide
1956, and usher in mega completed by 2023-24. Railways minister Piyush
and control or lack of it in incurring
expenditure on populist measures,
on the strategic sale of
Lok Sabha today at $5 bn in FY20: DBS after the Cabinet decision. Hindustan Antibiotics and
reforms in the medical Goyal said the move will help reduce the capacity progress made through direct benefit
FinanceBill,2019,isslatedto Singaporean “Under the Terms of Reference of education sector constraints on this route, where the current transfers and in promoting ease of
Bengal Chemicals. Earlier
betakenupbytheLokSabha bankDBSon the Commission, it is proposed to Approved a Bill to scrap capacity utilisation is 159 per cent. doing business.
onThursday,followingapp- Wednesday ensure an assured allocation of
decision to sell surplus land Amendment to Companies Act While some of the more contro-
of these 4 firms to pay dues 58 laws that have lost
rovalofdemandforgrantsfor said resources towards defence and inter- The Cabinet cleared a Bill for amendments to versial parameters like those on pop-
FY20bytheHouse.Alleyesare governmentis nal security imperatives. The amend- of employees modified their relevance Companies Act to replace ordinance promulgated ulist schemes and implementing the
onwhethertheCentrewould likelytolimit ment provides, which the 15th FC shall Approved a Bill to amend Approved Dam Safety Bill, in this regard in February. The Companies Centre’s schemes may be left out, the
tweaktheBillforsuperrich itsoverseasbondsaleat$5 also examine if a separate mechanism the National Institutes of 2019 for surveillance, (Amendment) Bill, 2019 will re-categorise 16 15th FC is likely to advise the Centre to
surchargeonforeignportfolio billionthisyear,butsuggested for funding of defence and internal Design Act, 2014, to include inspection, operation, and minor offences as purely civil defaults that will reward states based on other parame-
investorsstructuredastrustsor hikingthecaponforeignfunds' security ought to be set up and if so four new such centres and maintenance of dams de-clog special courts. SHINE JACOB ters, such as effectiveness of capital
not. ThelowerhouseonWed- investmentindomesticdebtis how such a mechanism could be oper- spending, efforts made by them in
nesdaypassedaBill,allowing abetteroptionconsideringthe ationalised,” it said. deepening goods and service taxes,
theCentretowithdraw~98.18 hugetherisksinvolvedinthe An official told Business Standard elected back to power. The official said The only ToRs mandated by the should govern the grants-in-aid of the progress in increasing revenues,
trillionfromtheconsolidated former.Thepotentialpitfallsof that this decision was informed to the the FC could examine ways to provide Constitution for the Finance revenues of the states out of the con- progress made in achieving replace-
fundtomeetitsexpenditure suchanissuanceinclude 15th FC recently, and was in line with additional funding for defence, para- Commission are to recommend the solidated fund of India and the meas- ment rate of population growth, and
duringFY20. BS REPORTER< exchangeraterisksbeingborne the ruling Bharatiya Janata Party’s military and police forces. distribution between the Union and ures needed to augment the funds of a achievements in infrastructure and
bythegovernment,smallnet stated commitment in its election The FFC’s recommendations will the states of the net proceeds of divis- state to supplement the resources of social sector schemes, said officials
savingsoncostbecauseof manifesto to provide further resources be in force from April 1, 2020 for a ible pool of taxes and the allocation panchayats and urban local bodies. aware of the work going on in the com-
Guatemala calls for hedgingrequirements, for defence and internal security, if five-year period. between states, the principles, which The other ToR’s, including the one mission.
WTO panel against exposingthedomestic
India sugar subsidy volatilitiesandcannibalising
Guatemala has sought
establishment of a dispute
panel under the aegis of the
portfoliodebtflows,itsaid. PTI<
Essar Steel case: Centre likely to Betterbusinessclimate
Indian passport
bat for financial creditors in SC
World Trade Organization
(WTO) in a case against India's holders to get UAE
India attract FDI: IMF
sugar subsidies to farmers. In
February, Guatemala and visit visa permit
several other countries, Indianpassportholderswith RUCHIKA CHITRAVANSHI fresh challenges and would be interesting
including Australia and Brazil theUnitedKingdomand New Delhi, 17 July to see how the courts react to the same,”
dragged India into the WTO's EuropeanUnionvisascangeta said Diwakar Maheshwari, dispute reso- PRESS TRUST OF INDIA ance sheets of banks and cor-
dispute settlement mech- visitvisapermitatalltheUAE The Ministry of Corporate Affairs (MCA) lution partner, Khaitan & Co. Washington,17July porates.
anism alleging its sugar sub- ports,theauthoritieshere is likely to implead in the Supreme According to people in the know, oper- "Improving the business cli-
sidies to farmers are incon- havesaid.TheGeneral Court (SC) against the recent ational creditors in nearly 200 cases Easing business climate and mate, easing domestic supply
sistent with global trade DirectorateofResidencyand National Company Law Appellate have approached the NCLAT to seek relaxing trade related norms bottlenecks, and liberalising
rules. PTI< ForeignersAffairs(GDRFA)in Tribunal (NCLAT) judgment in a stay on the resolution plan in the will help India attract foreign trade and investment will be
Dubaipostedavideotweeton the Essar Steel case treating hope that they would get a better investors and improve the cur- important to help attract FDI
Mondaythatlaysdownthe secured lenders and operational deal after the Essar Steel case. rent account deficit (foreign direct
Govt to prepare conditionsunderwhichthis creditors on a par, said a senior In the case of Bhushan Power situation, according investments),
national data on facilitywilloperate. PTI< government official. & Steel, some of the operational to International India’s trade improve the CA
The order, the government creditors, too, had moved against Monetary Fund barriers remain (current account)
unorganised sector said, is not in line with the the resolution plan filed by JSW Steel (IMF). significant, IMF financing mix, and
Shrinkingof Over 14.6 mn I-T Insolvency and Bankruptcy Code in the National Company Law Tribunal The IMF in its said, adding contain external
unorganised returns filed so far; (IBC). “We will clarify the intent of the in March this year. JSW had offered to India section of the steps to contain vulnerabilities," the
sectorisa law in the apex court. The latest order is official said, adding, “All options are open pay operational creditors a sum of ~350 External Sector fiscal deficit IMF said.
"positive" 9 mn file ITR-1 deviating from the Code,” said a senior in front of the government.” crore against their admitted claims of Report has said that should be Current
indicatorof Over 14.6 million income tax official. Operational creditors — supplier of ~733 crore. although progress accompanied by account deficit
development returns have been filed so far, Lenders to Essar Steel have appealed goods and services such as vendors — are The latest proposed amendment, how- has been made on measures to (CAD), which is the
andtheCentrewillpreparea of which 9 million have been against the NCLAT order in the SC, which kept at a different footing from secured ever, could put a lid on these cases. “The foreign direct invest- enhance credit net of foreign
separatedataonunorganised filed by individuals with total will be heard next week. lenders who bring in finances into the proposed clarification that how much dis- ment (FDI) liberalisa- availability exchange inflows
workersinIndia,Labourand income up to ~50 lakh. The Cabinet on Wednesday approved company and have greater risk exposure. senting financial creditors and opera- tion, portfolio flows and outflows,
EmploymentMinisterSantosh According to the data amendments to the IBC to give prefer- Experts feel that the proposed retro- tional creditors will get after comparing remain controlled. increased to $57.2
KumarGangwartoldthethe compiled by the revenue ence to secured lenders over operational spective amendment will have far-reach- under the resolution plan and in liquida- India'stradebarriersremain billion or 2.1 per cent of GDP in
RajyaSabhaonWednesday. department, a total of over creditors effective retrospectively. ing impact. “It will directly affect even tion will definitely reduce the litigation significant, it said, adding steps FY19 as against 1.8 per cent in
Thegovernmenthastaken 794000 tax returns were The MCA wants to make it ‘abundant- such plans which have long ago attained which were initiated because of issues in to contain fiscal deficit should the previous year.
severalmeasurestowards alone filed on July 16, of ly clear’ in the law, the limit to the pro- judicial finality, on merely there being an respect of distribution of value between be accompanied by measures
expansionoftheorganised which over 526,000 tection available to unsecured and oper- appeal pending against such finality. This the stakeholders,” said Ashish Pyasi, prin- to enhance credit availability
sector,hesaid. PTI< was ITR-1 or Sahaj. PTI< ational creditors, a senior government may result in opening the floodgates to cipal associate, Dhir & Dhir Associates. through faster cleanup of bal-

And the wheel “We may examine whether

through legislation or
“If you wanted a change in the Finance
Ministry, you could have discussed it

turns a full circle

otherwise we can prevent with me. You know very well that I
such men from continuing never discussed any matter with you in
on the board. The chief an improper manner. Even when I have
executives of the banks will differed from you on some matters, I
not then feel obliged to the have never been guilty of impropriety or
50 years after 14 state-run banks were nationalised, former chairmen, and they discourtesy. But now you have behaved
may be expected to take an towards me in a manner in which no
the debate is on whether we should reverse it independent line in regard one would behave even with a clerk''
to lending” MORARJI DESAI
RAGHU MOHAN “Straythoughtsonbanknationalisation”,a INDIRA GANDHI After his portfolio as finance minister was taken
Mumbai,17July paperbyIndiraGandhi,sowedtheseedsofbank
Former prime minister away when nationalisation was put through
Whatisthepointofacircle?Well,itispointless.On Congressparty.Itwaswelcomedbyall.Italso
themidnightofJuly19,1969,14bankswerenation- helpedstymiethepoliticalchallengeshefaced THE ROAD TO FIFTY
alised;and50yearstotheday,thedebateisonifwe fromtheYoungTurksandtheSyndicate,which
aretoretracethepathandprivatiseourstate-run eventuallyledtothesplitofthepartyin1969,the 1969: First round of nationalisation Second The politics behind it: While the Left parties and a few
banks—thewheelhasindeedturnedafullcircle. yearofthefirstroundofnationalisation;the — Allahabad Bank, Bank of Baroda, round: Punjab radicals in the Congress had mooted nationalisation to prevent
Asanidea,banknationalisation secondhappenedatadoveradecade Bank of India, Bank of Maharashtra, and Sind Bank, concentration of economic power in the hands of the wealth, the
tickedalltherightboxes.Itwasto laterin1980. Central Bank of India, Canara Bank, Vijaya Bank, Oriental political challenge faced by Indira Gandhi from the Young Turks
shifttheconcentrationofcreditfrom Thepoliticsbehind Dena Bank, Indian Bank Indian, Bank of India, and the Syndicate also played its part in bank nationalisation. The
thebiggerborrowerstotheless nationalisationiscapturedinMorarji Overseas Bank, Punjab National Bank, Corporation Bank, polarisation within eventually led to the split of the party in 1969,
privileged,widenthebranchnetwork Desai’swords,whohadopposedit(he Syndicate Bank, UCO Bank, Union Bank Andhra Bank, and the year of the first round of nationalisation; the second
tothehinterlandandbringthe wasreplacedasfinanceminister United, Bank of India New Bank of India happened a tad over a decade later in 1980
unbankedunderformalchannelsof whennationalisationwasgiven
banking.Halfacenturylater,we effectto).“Ifyouwantedachangein
theunbanked. 50 YEARS theFinanceMinistry,youcouldhave
discusseditwithme.Youknowvery TrendandProgressofBankinginIndia(2017-19) thepathofprivatisationofstate-runbanksasa Centremakesitdifficultforitpourmoneyinto
Asforgovernance,thisiswhat OF BANK wellthatIneverdiscussedanymatter saysthatasinthepreviousyears,state-runbanks panaceafortheillsfacingthesector,itisunlikely state-runbanks,itisnotthecolourofownership
thenPrimeMinisterIndiraGandhi NATIONALISATION withyouinanimpropermanner. missedtheiroverallpriority-sectorlendingtargets thatwewillreachabetterormoresecureplace. whichistheissue,butgovernance.Perhaps,itis
observedontheboardsofdirectors. EvenwhenIhavedifferedwithyou inFY18,eventhoughtheywereabletoachieve TheLehmancrisis,anditsaftermathhaveshown timefortheCentretotransferitsstaketoaholding
Pastchairpersonsofthebankswhichwere onsomematters,Ihaveneverbeenguiltyof varioussub-targetsexceptinrespectofmicro- thatwhenbankscomeunderstrainorcollapse, companyasrecommendedbythePJNayak
nationalisedcontinuetoresideontheboards.“We improprietyordiscourtesy.Butnowyouhave enterprises.DuringQ1FY19,bothstate-runand thegovernmentofthedayhastostepinwithtax- CommitteeReport;andalsotakeupthethusfar
mayexaminewhetherthroughlegislationor behavedtowardsmeinamannerinwhichnoone privatebanksmanagedtoachievetheoverallPSL payersmoney.Thefundamentaldifference duckedissueofa“Goldenshare”instate-run
otherwisewecanpreventsuchpeoplefrom wouldbehaveevenwithaclerk.” target,buttherewereshortfallsinthesub-sectors. betweenbanksandotherpartsofthecorporate banks—whereintheCentrecancontinuetooffer
continuingontheboard.Thechiefexecutivesof Sowhereareweonprioritysectorlending Inthecaseofstate-runbanks,itwasinlendingto worldisthattheformerarecustodiansoftrustin “guidancetothesebanks”,andcanalsocareofthe
thebankswillnotthenfeelobligedtotheformer (PSL)?Despitetheexponentialgrowthinthe micro-enterprises,andinprivatebanks,itwasto sofarastheyraisepublicdeposits;andarealso furoreonthepoliticalturfifitweretoembarkon
chairpersons,andtheymaybeexpectedtotakean networkofstate-runbanks,andtheadventofnew agriculture,smallandmarginalfarmers;non- partofthesettlementsystem. thewholesaleprivatisationroute.
independentlineinregardtolending”.Well,such ageprivatebanksinthepost-reformperiod,we corporateindividualfarmers;andweakersections Tothatextent,adebateonwhetherstate-run AGoldenshareintheGoldenjubileeyearof
“directedlending”iswhathaslandedourstate- continuetostruggle. ofthesociety. banksneedtoprivatisedornotisasuperficial banknationalisationisanideawhosetimehas
runbanksinthemesstheyarein. TheReserveBankofIndia’s(RBI’s)Reporton Fiftyyearson,ifweareindeedtogodownon debate.Whileitistruethattheindebtednessofthe come;it’sbetterthangoingaroundincircles.

Coal mine auctioning may be Bullish bonds point to

an uncertain economy
restricted to commercial use ANUP ROY & SAMIE MODAK
Mumbai, 17 July

Govt also looking to mines and blocks) could then be auc- While government bonds
CAPTIVE tioned again for commercial mining, have rallied in the recent past
privatise and split MINES STATUS
within six months of being returned.
A high-level committee, constitut-
on domestic rate cut expecta-
tions and comfortable liquid-
Bharat Coking Coal No. of
mines Total production*
ed by the government to lay out the
road map for the sector, has found that
ity, the rupee has remained
relatively choppy. The cur-
JYOTI MUKUL & SHREYA JAI 3 L ess than 25% there is discrimination between public rency is mirroring the equity
New Delhi, 17 July and private companies on various market, reflecting a slowdown
4 Between 25-50%
issues, including land acquisition and in the global and domestic
6 Between 50-75%

ith miners, which took coal grant of lease. It was, therefore, felt that economies.
blocks for own use, perform- 4 More than 75% the Coal Bearing Areas Act, 1957, should Indeed, global bond yields
ing poorly, the government is *As a percentage of envisaged be amended to give private companies have fallen quite substantial-
planning not to auction mines to cap-
tive users. Instead, it will allot or auction
production plan submitted to the
government. Note: Peak rated
capacity or highest annual
a level-playing field in land acquisition.
Besides, provisions in the Minerals &
ly, with some in Europe hit-
ting sub-zero levels, an early
production achieved by only one
rights only for commercial use of coal. coal mine Source: Ministry of Coal Mines Development Regulation Act and sign of a global slowdown. 10-yr G-sec yield (%) ~ vs $
The allocation would be decided Coal Mining Special Provisions Act that Investors rush to buy fixed (inverted scale)
based on the production plan and rev- give preference to government compa- income investment during 8.50 64
enue share to the government. nies should be removed. uncertain times. As yields fall,
The Union ministry of coal is also Prior to the enactment of Coal prices of bonds rise. 8.00
looking at a proposal to privatise and Mining (Special Provisions) Act in The yields on the 10-year 68
split Bharat Coking Coal (BCCL) that 2015, coal mines were never given out bond fell to a 31-month low
holds lease to the Jharia coalfields. through bidding. The previous gov- on Tuesday, and closed at 7.00
The lease areas of the Coal India sub- ernments had amended the Coal almost same level at 6.34 per 7.33 72
sidiary could be divided into five to six Mining Nationalisation Act to specify cent. However, rupee fell to 6.50 65.01
6.35 68.82
parts, each held by a different company. government after the Supreme Court cial year. The companies owning these specific sectors that were given mines 68.83 a dollar, from its previ-
Each of these companies could be pri- judgment cancelled 204 coal mine allo- mines — from state agencies of attached to their units. ous close of 68.72 a dollar, fol- 6.00 76
vatised. The privatisation could take cations in 2014. Of the 85 firms award- Rajasthan, Telangana, and Companies in sectors like steel, lowing its Asian peers. So far Apr 4,’18 Jul 17,’19 Apr 4,’18 Jul 17,’19
place through a profit-sharing model. ed through four tranches of auction, Chhattisgarh to NTPC, and private com- cement, power, coal-to-gas and coal-to- this year, the rupee has Source Bloomberg; compiled by BS Research Bureau
The proposal is to ask existing cap- 29 were already producing coal when panies Balco as well as Hindalco – have liquid used to apply for coal blocks and gained 1.38 per cent.
tive mining lease holders, which have their licences were cancelled. listed challenges faced by their mines at rights were given to them after scrutiny “Global dollar strength and caps performing well but mid- in a report.
not yet started production, to surrender There are only three mines that have a recent meeting with the coal ministry. by an inter-ministerial committee. weak risk sentiment amid and small-caps correcting. “The recent rally has been
their blocks and pay a penalty of 10 per met their annual peak-rated capacity Only a three-month window could The committee is in favour of escalation of trade tensions This is nothing but flight to quite fast and dramatic,” said
cent of the bid security. in 2018-19 and only one is sticking to be given to the lease holders, including only a one-stage competitive bidding weighed on the domestic cur- safety. Investors are seeking Suyash Choudhary, head,
These blocks were given out its mining plan. More than a dozen had state government-owned companies, for with a maximum mining lease dura- rency,” said currency consult- refuge in companies perceived Fixed Income, IDFC AMC.
through e-auction by the earlier NDA seen zero production in the last finan- starting production. These (returned coal tion of 50 years. ant IFA Global in a market to be relatively safe, having “The recent three rate cuts
wrap. Most of the other Asian low debt and strong corporate undertaken by the RBI and the
currencies also weakened governance practices. expectations of a further rate
against the dollar, while the Similarly, in the bond market cut in the forthcoming MPC
benchmark Sensex rose investors are buying sovereign meeting has been key factors
KARNATAKA CRISIS 0.22 per cent, or 84.6 points, paper amid rising defaults,” which have pulled 10-year
to close at 39,215.64 points. said an analyst with a foreign GSec yields…,” said CARE
The bond market, mean- brokerage. Ratings.

Rebel MLAs can’t be forced to take part in trust vote: SC while, has fully factored in a
rate cut in the August policy,
say bond dealers. While the
So far this year, Nifty has
gained 7.6 per cent, while the
Nifty Midcap 100 and Nifty
According to Choudhary,
comparing the recent fall with
demonetisation level may not
AASHISH ARYAN & ARCHIS MOHAN In its interim order on be forced to take part in the pro- should be given to them that port to the coalition govern- difference between the repo Smallcap 100 have declined be the right comparison.
New Delhi, 17 July Wednesday, though the ceedings of the House sounded they can take part in the pro- ment. With 99 MLAs by his side, rate and bond yields has 5 per cent and 7 per cent, “…the current phase is that
three-judge Bench the death knell for ceedings or opt to remain out of it will take a mammoth effort remained around 100 basis respectively. of a synchronised global slow-
With the Supreme Court on led by Chief Justice the Kumaraswamy the same. We order according- on part of the Kumaraswamy to points, the difference is about But the rally in government down, where local fiscal policy
Wednesday ruling that the 15 Ranjan Gogoi said Kumaraswamy government. ly,” the three-judge Bench said. save the coalition from falling 58 basis points. bonds has surprised many. so far has been relatively dis-
rebel Members of Legislative that legislative govt’s fate hangs “We also make The Congress-JD (S) govern- when he takes the trust vote on Many are attributing the Since the Budget ciplined,” Choudhary said.
Assembly (MLAs) of the Con- Assembly Speaker in the balance it clear that until ment had a total of 117 MLAs in July 18 to save his 14-month-old drop in bond yields to risk announcement on July 5, the The bond market has been
gress-Janta Dal (Secular) gov- K R Ramesh after the apex further orders, the its fold before 16 of these elected government. The Opposition aversion among investors, GSec yields have declined by aided by massive liquidity
ernment in Karnataka cannot Kumar was free to court order 15 members of the representatives — 13 from the Bharatiya Janata Party has 107 while others said say this is 36 basis points, and the support by the secondary mar-
be forced to take part in decide on the res- Assembly ought Congress and three from JD(S) MLAs in the 225-member Ho- akin to what has been playing decline in yields was 60 basis ket bond purchases by the
Assembly proceedings, the state ignation of the 15 not to be com- — resigned about 10 days ago. use, which includes the nomi- out in the equities market points in the previous one RBI. In the last fiscal, the gov-
government led by Chief MLAs within a time-frame he pelled to participate in the pro- Two other independent MLAs, nated MLA and the Speaker. since last year. month (from 6.93 per cent on ernment purchased a record
Minister H D Kumaraswamy considered appropriate, the rid- ceedings of the ongoing session S Shankar and H Nagesh have “Equity markets have been 17 June to 6.33 per cent on ~3 trillion of bonds from the
looked all set to fall. er that these MLAs should not of the House and an option also since withdrawn their sup- More on huge polarisation with large- July 16), noted CARE Ratings secondary market.


Brace for new ‘crudities and inequities’
applicable to operational creditors is
that when resolving a company, they
ought not to get lesser than what they
would get in a liquidation. The NCLAT Focus on Priyanka
How the IBC transformed into a tool to stigmatise business failure has ruled that this would not mean that
operational creditors must get nothing
Consensus has eluded the Congress party
in selecting the successor to outgoing
higher than the liquidation value. After president Rahul Gandhi. The latest
Lauded and feted by bankers, and bringing to bear their judicial sense inequitable, intervention follows — at a strong push from the bench, the speculation now revolves around party
lawyers and judges as a “game chang- of how to resolve inequities and iron times, politically and therefore legisla- Committee of Creditors came up with general secretary Priyanka Gandhi Vadra.
er”, the IBC is now facing yet another out ambiguities. tively, but often, also judicially, with a marginal reduction in what the finan- She is also the in-charge for Uttar
challenge. This law that was essential- Every trade and operational counter- creative interpretations aimed at doing cial creditors would take away and an Pradesh, and several Congress leaders
ly meant to enable smooth and non- party in the running of a business (say, justice while administering the law. increase in what operational creditors from the state have pushed for her to
stigmatised death of corporates. the supplier of raw material or distrib- For example, the sensitivity of the roti- would get. The Tribunal, dissatisfied become the party chief. A few in the
However, it has been transformed into utor of finished goods) may extend kapda-makaan concept led to home with the equity of the proposal, reject- party believe that she might take over as
a tool of actually stigmatising business credit or avail of credit, and thereby also buyers being acknowledged as not ed it, and came up with a ratio of dis- the Congress faces difficult Assembly
failure, thanks to the scaling up of play a financial function. However, the being mere operational creditors — tribution that would, in its view, be fair polls in Maharashtra, Haryana and
non-performing assets on banks’ core cause of providing or availing of first judicially, and then legislatively, and appropriate. Jharkhand. According to party sources,
books. Courts have coded into the such credit is not the provision of the constituency of home-buyers kept In appeal, financial creditors would with the Nehru-Gandhi dynasty and the
WITHOUT CONTEMPT interpretation of the IBC the Indian finance. Such persons are operational getting addressed. Arguments can obviously push hard for protecting old guard in the Congress unable to agree
social reluctance to embrace business creditors in the eyes of the IBC. always be found — since builders get their right to determine an appropriate on a name, party general secretary Mukul
SOMASEKHAR SUNDARESAN death. Judicial observations about the The IBC is substantially a law that substantially funded by those buying distribution, as a sovereign right. Even Wasnik continues to be the frontrunner
importance of reincarnation of a mori- works on the premise that financial the products (homes), it was felt it regulators are disrupting the IBC — as the interim chief. Meanwhile,
bund business being preferred to an creditors know best as to whether to let would be logical for home-buyers to now Sebi wants to argue that dues owed Priyanka on Wednesday tweeted a

he term “structural reform” is at orderly pulling the plug off the venti- an insolvent business continue in a new be treated as financial creditors. In to it are not covered by resolution plans. photograph of herself from over two
the heart of political debate -- it lator, abound. avatar or if it is best consigned to the much the same way, buyers of soap Whatever may happen in legal proceed- decades back. "Morning puja on the day
is the phrase over which lead The concept of “silences” in the law grave. In either decision, other stake- can be financiers of soap-manufactur- ings, legislative intervention may even- of my wedding (22 years ago)," she said.
Opposition speaker in the Rajya Sabha has a major role to play here. Matters holders such as operational creditors ing company — but dare compare buy- tually follow, in the name of structural While others handle Rahul's Twitter
and former Finance Minister P that are so obvious to a society that talk- would be affected, and the IBC entails ing soap with buying homes, and you reform. Newer “crudities” and account, and post only after he approves
Chidambaram and current Finance ing about it would be unnecessary are a quasi-judicial oversight of the deci- will find the power of the sub silentio “inequities” will emerge. While uncer- a tweet, Priyanka is known to tweet
Minister Nirmala Sitharaman sparred routinely left to resolution by common sion of the Committee of Creditors, the facet in interpreting law. tainty over viability of resolutions herself in Hindi and English.
after the Budget Speech. Meanwhile, sense, justice, equity and good con- statutory decision-making forum in The latest ironing of such perceived would go up, one can only hope the
the one piece of structural reform that science. If something is so evident that which financial creditors have an over- inequity is a ruling of the National ecosystem will learn to embrace imper-
the NDA government truly executed one does not need the law to articulate whelming and overriding power. This Company Law Appellate Tribunal manence and death with grace. ‘India’s promise’
from scratch — the Insolvency and it explicitly is said to have been left out is in sharp contrast to the role envis- (NCLAT) adjusting equities to make the Former president
Bankruptcy Code, 2016 (IBC) — is once “sub silentio”. The silences in the law aged for operational creditors. IBC work for the interests of opera- The author is an advocate and independent Pranab Mukherjee
again crying for attention. can lead to judges filling in the gaps When any legal position looks tional creditors. The principle of law counsel. Tweets @SomasekharS (pictured) will deliver
a lecture in New Delhi
on ‘Furthering India’s
Promise’ on

A rail journey on an uphill track

Thursday. The event
will mark the first
anniversary of the
Samruddha Bharat Foundation, which
describes itself as an independent
socio-political organisation but is
Railways needs private investments urgently, Railways Station Development
Corporation. NBCC and Ircon would
ideologically inclined to the Congress
party’s worldview. The event will launch
but few players might be interested because take over two stations. Most of the other the foundation’s monthly lecture series,
stations are undergoing upgrades which aims to engage India’s leading
of ownership and operational problems rather than redevelopment. policymakers, academics, and activists
If station redevelopment projects, “in a dialogue on ways to safeguard and
JYOTI MUKUL clear the government is not in a posi- which have the incentive of real estate further the constitutional idea of
tion to hand-hold it for any major development attached to them, are India”. The foundation will also

he Narendra Modi government expansion or upgrade. The issue, how- finding it hard to get private investors, announce the publication of 14 volumes
has set the Indian Railways on ever, is how far the Railways can func- getting them to run rail service would of more than 120 policy-oriented essays,
course for private participation tion within the PPP format. Recent his- be even tougher because of legal and which Penguin Random House will
to meet its funding needs, underlining tory highlights some of the challenges. operational challenges. The Railway publish, to propose innovation and
the long understood realisation that the In the 90s, for instance, the Indian Act does not allow private companies disruptive ideas.
exchequer alone cannot finance infras- Railways created partnerships with pri- to operate, though there are reports of
tructure building and its operations. vate companies for sidings, warehous- the government inviting private invest-
But unlike other infrastructure sectors, ing and wagons, and then extended the ment in running premier trains, such
the Railways’ public-private participa- tie-ups for port railway lines. But oper- as the Tejas, Shatabdis and Rajdhanis Pranab replaces Ansari
tion (PPP) record has been patchy and ating the service under the law and tourist trains. A few days after the Lok Sabha election
difficult to implement. remained with the Indian M Ramachandran, a former secre- results were announced on May 23, Prime
Yet the need for some Railways. tary in the Union urban development Minister Narendra Modi visited former
sort of partnership is becom- This was the reason the WHAT AILS THE RAILWAYS Even the much-touted station redevelopment could ministry, says since the ownership of president Pranab Mukherjee at the latter’s
ing urgent. In her July 5 Pipavav Railway not take off on account of low investment appetite in the construction sector tracks remains with the Railways run- residence to seek his blessings. Neither
Budget speech, Union Corporation Limited (PRCL) ning only a passenger service even as former Congress president Rahul Gandhi
Finance Minister Nirmala was set up as a special pur- entitled to the rights, obligations and with the government. the same tracks are used for freight nor his sister and party General Secretary
Sitharaman said the pose vehicle (SPV) in May duties of a railway administration. So why does the Railways struggle makes the task difficult for investors. Priyanka Gandhi Vadra has visited
Railways needed ~50 trillion 2000 as a 50 per cent joint These PPP initiatives were insignif- with PPPs? According to Vishwas “The Railways will need to resolve these Mukherjee, one of the oldest and most
in five years to 2030. But she venture between the Indian icant when seen in the larger context Udgirkar, partner, Deloitte India, the issues. A lot would depend on the terms distinguished of Congressmen, since the
admitted to the govern- Railways and the Gujarat of the Indian Railways. Attempts at get- institution’s complicated and complex of contract.” elections. Sources said the family was yet
ment’s inability to meet the Pipavav Port Limited ting big-ticket private investment in structure is the principal cause. “The Rather than actually running trains, to overcome the souring of relations after
requirement: Current rail- (GPPL). The SPV was given locomotive manufacturing took eight proposed revenue models and the way private operators could be acting as Indira Gandhi’s assassination, when
way capital expenditure has the task of converting a long years, when the Indian Railways the Railways responds and wants to aggregators, taking bookings and own- Mukherjee indicated that he wished to be
been ~1.5-1.6 trillion annually. meter gauge line between under Suresh Prabhu awarded two mar- remain in control make it difficult,” ing the rolling stock, on the lines of pri- her successor. Now, it appears, the
“Completing even all sanctioned Surendranagar and Rajula City to broad que contracts for manufacturing loco- he says. vate container trains. Even so, any form Congress is keen on reclaiming Mukherjee
projects would take decades. It is, there- gauge and extending it to the Pipavav motives in 2015 to GE Transportation Even the much-touted station rede- of private investment will need a viable as an elder member of the party. So while
fore, proposed to use public-private port. The company also manages all and Alstom. Part of the reason for the velopment could not take off on fare model requiring tariff revisions former vice-president M Hamid Ansari was
partnership to unleash faster develop- operations and commercial functions delay was lack of investor interest. The account of low investment appetite in and bankable contracts. This, however, designated keynote speaker for Thursday’s
ment and completion of tracks, rolling relating to freight traffic on the 271-km contracts went through several rounds the construction sector. After altering raises the need to first put in place a lecture, he had to make way for
stock manufacturing and delivery of line. A special dispensation from the of bidding because there were either no the terms for station redevelopment at regulator. The fact that private opera- Mukherjee. The party felt Mukherjee's
passenger freight services,” Sitharaman Cabinet Committee on Economic bids or a single bid. The two locomotive least twice, the Railways had to finally tors could not run the much-smaller address at the Rashtriya Swayamsevak
said in the speech. Affairs allowed PRCL to undertake con- projects, however, are more in the sign on with government companies metro services in Delhi and Gurugram Sangh headquarters in Nagpur in 2018
Though the Railways is yet to struction, operations and maintenance nature of contract manufacturing and for the job. There are some 22 stations makes successfully-run private rail ser- must not come in the way of this.
declare any five-year action plan, it is of the broad gauge railway system. It is not equity investment in partnership that are being taken up through Indian vices a distant dream.


Cake or taxes? policy should incentivise firms to get

bigger, not to remain micro and small.
The current regime, by giving conces- Regulate & supervise
alism at all levels in the financial sector.
M G Warrier Mumbai
sions to firms with a turnover of less
The size of the cake cannot increase if the makers of the cake than ~400 crore, incentives them to This refers to “Not home alone” by Anup The real culprit
not grow beyond that. Roy (July 17). The article has raised rele-
are squeezed into discomfort ILLUSTRATION BY BINAY SINHA
Of course, even in the event that vant questions on the duality of control Another déjà
firms do become large, they are still over financial institutions including vu in Mumbai
not likely to be globally competitive banks and non-banking financial corpo- — as usual
because they have to pay a higher top rations (NBFCs) at the ground level and some buildings
tax rate than in competitor countries, answered them referring to the evolution will collapse
particularly in East Asia. The emer- of the regulatory and supervisory system during mon-
gence of a competitive large industrial in the financial sector over the years. soon. Most of
sector is the only route to fast growing There is no use lamenting the omis- them are illegal
economy which creates productive sions and commissions of the past. The or tenants
jobs for an aspirational population. FSLRC (Financial Sector Legislative refuse to
Now that the Modi government Reforms Commission) took a tangential vacate. Now, in
has stated an ambitious goal of a $5 route trying to reinvent the central bank such a sce-
trillion economy — and we know the and truncate its functional limbs. The nario, why
DHIRAJ NAYYAR Prime Minister is determined to FSLRC failed to listen to professionals should com-
achieve targets — its tax policies must among its own members. The piecemeal pensation be paid to the victims? These
focus primarily on increasing the size approach to policy formulation affecting buildings are secular vote banks spon-

day after the Union Budget, of the cake. Obviously, this means that the financial sector during the second sored by the local mafia and politicians.
while speaking in Varanasi to both income and corporate taxes half of the current decade is attributable In order to assuage their feelings and
an audience of BJP workers, should be lower. For individuals, the to the diversion by the FSLRC from its ensure they continue to vote as before,
Prime Minister Narendra Modi was rich will still pay a higher rate, but ide- real mandate. they have to be compensated by the
emphatic when he said “the size of the ally the top rate should be no higher Having said that, there is no denying hard earned money of tax payers. Thus,
cake matters”. In a country whose than the top corporate tax rate which that the government of India and the people who vote for their living are com-
political economy has traditionally is 30 per cent now, but which should Reserve Bank of India (RBI) have been pensated by those who need these votes
been more concerned about slicing be brought down to 25 per cent in the deftly building the institutional system in for their living, who in turn rob Peter to
and distributing the cake it was won- next Budget for all firms. Surcharges the financial sector to meet the changing pay Paul. And those who remain silent
derful to hear a Prime Minister publicly must be abolished. needs. The setting up of IDBI, NABARD, on such issues, they who say they are
accord priority to growth. The new philosophy should also NHB, SIDBI and Exim Bank at the apex free and fair, and a so-called pillar of
The comment was made in the con- ical optics because they can obviously micro, small and medium enterprises make clear to the tax administration level and also the SBI, the public sector democracy, are the biggest culprits.
text of skepticism expressed by some afford to pay more. are often trumpeted as the biggest job that it must not try to meet its targets banks, regional rural banks and small T R Ramaswami Mumbai
about the government’s ambition of a Unfortunately, the arithmetic of creators, which may be true, but these by trying to (unfairly) squeeze those banks should be seen in this perspective.
$5 trillion economy by 2024. It is a Budget revenue targets is an anathema are usually low paid, low quality, who already pay taxes. The harassment The missing link is an HR initiative to Letters can be mailed, faxed or e-mailed to:
comment which also needs to be made to the Prime Minister’s philosophy of informal sector jobs. In fact, the of taxpayers (both individual and cor- ensure professionalism in the functioning The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
in the context of India’s tax policies. expanding the size of the cake. The biggest chunk of the MSME sector in porate) is a deterrent to investment as of all these institutions. The RBI board's
New Delhi 110 002
Just a day earlier, Finance Minister super-rich — entrepreneurs, CEOs, India is micro, not small or medium. much as the high rates are. Instead, the decision “to create a specialised supervi- Fax: (011) 23720201 · E-mail:
Nirmala Sitharaman had announced CFOs — are generators of wealth. They India’s challenge is to create good tax administration should be instruct- sory and regulatory cadre” should be per- All letters must have a postal address and telephone
an increase in tax rates on the “super already contribute their fair share of jobs, with high wages, benefits and ed at expanding the tax base and brin- ceived as a message to infuse profession- number
rich”. Also, she had not extended the taxes while millions of others evade or security which will only be provided ing into the net those who have stayed
benefit of a lower corporate tax rate of avoid. By imposing further taxes on by large companies and perhaps away. One way to do this is to end
25 per cent to large companies, that is, this group, the government is only medium-sized companies, certainly exemptions of all kinds. > HAMBONE
those with turnover greater than ~400 penalising wealth creation and honest not micro enterprises. In the medium term, maximum
crore. It is likely that the government paying of taxes. The super-rich are also Also, scale matters if companies buoyancy to tax collection will be pro-
was largely guided by arithmetic in its the most foot loose — they can shift have to compete in global markets or vided by a robust growth rate which in
tax decisions. It needed to meet its fis- their residence and even business to in domestic markets against foreign turn requires massive investment by
cal target of 3.3 per cent of GDP. And it an overseas jurisdiction with lower tax competition. India is absent from glob- the rich (individuals and firms). The
had already committed spending, both rates. India cannot afford a flight of its al and regional value chains because size of the cake cannot increase if the
investment and redistribution. best entrepreneurs, managers and cap- it doesn’t have enough firms that have makers of the cake are squeezed into
Revenue had to be shored up. More ital. It is happening. the necessary scale to be efficient play- discomfort in the short term.
taxes on the rich makes for a good Large companies not only create ers in such value chains. For the sake
political argument and excellent polit- wealth but also good jobs. In India, of a competitive industrial sector, tax The author is chief economist, Vedanta




Future demographic shocks

The declining sex ratio points to behavioural regression

he growing prosperity of India’s population has had a mixed impact
on its demographics. The latest data from the Sample Registration kets in general is in the public domain. The size of
System shows that Indians are planning smaller families — but also the economy of India and geopolitical setting in
which India is placed makes it difficult to assume
prefer fewer daughters. The upshot is that India’s total fertility rate
that we will get adequate support in case risks on
(TFR) — or the number of children expected to be born to a woman during her sovereign debt materialise.
reproductive period — has fallen from 2.3 in 2016 to 2.2 in 2017, with both rural From a macro-economic point of view, there are
and urban Indiaregistering a steady fall. This is marginally more than the World some basic features of our economy that we should
Health Organization’s recommended replacement-level fertility of 2.1 children not ignore while considering the issue. First, we
per woman; in urban India, in fact, the TFR is well below this average, indicating have been financing our investments predominantly

Sovereign bonds:
improving education levels and access to health among urban Indian women. (well over 90 per cent) through domestic savings.
Our basic approach to the external sector has been
The obvious and encouraging implication of this is slowing population growth.
to access foreign savings to supplement and not to
As a result, projections for India’s population overtaking China have been post- substitute domestic savings. It is inconceivable that
poned by five years to 2027. sovereign bonds can make up for the shortfalls.

The big picture

This good news, however, is leavened by the alarming deterioration of the Second, there is a limit to our dependence on
sex ratio at birth, where Indians’ traditional preference for the male child appears foreign savings. The aggregate level of a sustainable
to have reinstated itself to startling effect. After steadily improving for two trien- current account deficit of 2 per cent represents the
niums (three-year periods) between 2009-11 and 2011-13, the sex ratio has plum- acceptable level of aggregate foreign savings. If this
meted from its peak of 909 females per 1,000 males to 896 in the triennium limit is accepted, sovereign borrowings by way of
ending 2017. Behind the broad all-round deterioration is the potent point that India must work on a road map towards capital account openness, bonds can only be a substitute to some other form
of foreign savings — say external commercial bor-
the sex ratio in cities is worse than in rural areas: 890 and 898, respectively, in in which sovereign bond is back-loaded, not front-loaded rowings. Similarly, if the fiscal deficit is pre-deter-
the 2015-17 triennium. As before, it is the relatively prosperous states that have mined, there is a substitution of funding from
recorded the worst fall: Telangana, Delhi, and Kerala join backward Bihar in the

lot has been said about the case for and the doctrine of odious debt, also known as illegiti- domestic sources with foreign savings to the extent
top rankings. Both the urban and state-wise data confirm the established trend against the Budget proposal to issue mate debt— that is, national debt incurred by a of issue of sovereign bonds.
that sex selection is being practised with greater frequency among affluent sovereign foreign currency denominated despotic regime. Both, international law and the Third, there is a hierarchy of desirable sources
Indians who have the wherewithal to use technology (illegal, legal, or semi-legal) bonds. It is difficult to add much to the debate by IMF, hold governments strictly liable for all debt of foreign savings that has served us well. The most
to ensure the delivery of a male child. way of arguments. Yet, there is a big picture con- incurred by their predecessors. preferred is the green field foreign direct invest-
sisting of bits and pieces that may help in finding Global finance needs some “safe assets” in its ments. A second source is foreign direct investment
This ingrained gender prejudice has implications for the India demographic
a wise way forward. portfolio. Financial conglomerates are willing to in the existing enterprises. Another is portfolio flows
dividend as well. With the TFR slowing and longevity increasing owing to access In global financial markets, sovereign debt is subscribe to a sovereign bond of a country even if it in equities. The fourth is external commercial bor-
to better health care, India’s population will also begin ageing a little over a very different from non-sovereign debt. Crucially, borrows for day-to-day expenses (revenue deficit) rowings by non-financial corporate sector for financ-
decade from now. According to the Economic Survey, the share of India’s young, the sovereign is not a limited liability entity. It exists and has to borrow externally to pay for its imports ing their investments. The fifth is external commer-
i.e. 19 years and below, is projected to drop from 41 per cent in 2011 to 25 per cent in perpetuity and its assets are somewhat indeter- (current account deficit). History is replete with cial borrowings by the financial sector. Sixth, there
by 2041. In the same timeframe, the share of the elderly population (60 years minate. Its liabilities to non-resi- precedents. The reason is simple: is surrogate sovereign borrowings—that is, borrow-
and above) will nearly double from 8.6 per cent to 16 per cent. Not only does this dents in global financial markets Those subscribing to sovereign ings by public sector financial and non-financial
have implications for the dependency ratio, but with fewer women producing are, in most cases, governed by laws bonds are privileged creditors rela- enterprises which involve an implicit sovereign guar-
other than those in its own jurisdic- tive to others. antee. They also help establish implicit sovereign
fewer children the trend could worsen rapidly.
tion. (While issuing bonds, the juris- Experience shows that a rating for India.
All of this suggests the need to augment such creative missions as Beti diction is defined.) Voluntary sovereign debt crisis does not hap- Since until now sovereign bonds do not find a
Bachao, Beti Padhao, designed to alter behavioural models by incentivising the agreements with debtors are not pen in isolation. It is accompanied place in this scheme, how will they fit into this hier-
birth of the girl child. Beti Bachao, Beti Padhao was launched in 2015 in Panipat, legally binding on all. As a debtor, by others, such as, banking, politi- archy? In brief, the decision on sovereign bonds in
Haryana, the region with the country’s worst sex ratio. But the scheme is targeted the sovereign is vulnerable to hos- cal and external sector crisis. Policy- many ways, amounts to a basic change in policy
at poorer people, for whom a girl is traditionally seen as a cost and burden. It is tile creditor legal action. makers’ freedom to manage a crisis towards a more open capital account.
unclear why richer, more educated Indians should harbour what the Economic In short, there is no legally bind- is severely constrained if the
ing debt restructuring mechanism sovereign has debt obligations to The way forward
Survey calls a “meta preference for boys”. These biases have deep social and
economic roots and there is an urgent need for messaging targeted at more
in respect of sovereign debt. Efforts
by the International Monetary
WHAT NEXT non-residents, especially in foreign
currencies. History also shows that
We should aim for a day when foreigners can freely
buy our sovereign paper and simultaneously our
sophisticated audiences so that India is able to regain some measure of demo- Fund (IMF) to evolve one have not Y V REDDY recourse to sovereign foreign cur- citizens can freely buy other country’s sovereign
graphic balance. succeeded. rency debt is seldom constrained bonds. But that needs a road map which captures
Sovereign debt is good as long as good times by prudence; especially if political economy tilts in the evolving state of global financial system and our
last. When they cease, a sovereign workout in the favour of profligacy. domestic strengths as well as vulnerabilities in fiscal,

Trade trouble existing non-system can be extremely painful for

the debtor country and its citizens. It makes no dif-
ference whether the country happens to be mid-
Sovereign debt typically starts with small doses
and then becomes a dangerous addiction and often
results in repeated approaches to the IMF for suc-
finance, and external sectors. It may be wise to start
work on a road map towards capital account open-
ness, in which sovereign bond is back-loaded and
Lower exports reflect structural weaknesses dle-income or not, as examples of Greece, Turkey cour. The record of developing countries being dis- not front-loaded.
or Argentina show. ciplined by sovereign debt markets is poor and

n yet another blow to the prospects of the Indian economy in the medium Incidentally, international law does not recognise India’s record in being disciplined by financial mar- The writer is former governor, Reserve Bank of India
term, the data released this week revealed that export growth has hit a
41-month low. According to the Union Ministry of Commerce and
Industry, exports contracted by 9.7 per cent, year-on-year, in June, after
a small increase in May.
There is no immediate concern about the external account, as imports con-
tracted by a larger amount in absolute terms, and the trade deficit thus decreased.
Europe’s 5G wake-up call
But that is not relevant. The issue is that exports are now a drag on growth, as

ow times change. Not so long ago, the next big than supporting European champions in 5G technol- European Union member state performs its own,
distinct from being a significant engine of economic expansion. This has been thing in telecommunications was 4G mobile ogy (such as Nokia and Ericsson). often quite different, security check on Huawei
the case for some years now, with the occasional green shoots perceived by opti- networks, which promised massive data trans- In any case, US and European security concerns equipment, with many of them having only limited
mists in the sector failing to mature. A closer study of the data does not provide fers and cheap voice calls. Now comes 5G, which will should extend well beyond Huawei and the Chinese resources and experience to do so. The security of
much foundation for optimism. It is true, as officials have reportedly pointed potentially spur all sorts of new digital innovations, government. The new 5G networks present a unique the future 5G networks could be much better
out, that one major contributor to the fall was a decrease in the export of refined thanks to its greater speed (200 times faster than 4G), security challenge, because their main functions ensured if an EU agency carried out a common check
petrochemicals, and that this might be temporary. Two major refineries — faster data transfers from wireless broadband networks, depend on software, not hardware. This makes 5G on all equipment suppliers.
Reliance’s in Jamnagar, and the state-owned one in Mangaluru — were partially and, most important, the ability to connect cyber- much faster than legacy wireless networks, but also More generally, Europe’s potential 5G vulnera-
physical objects in the context of the Internet of things. leaves it vulnerable to potentially malicious attacks. bility stems mainly from the desire of each member
shut for maintenance for some time in the relevant period.
Moreover, 5G is expected to enable the much more Today’s information-technology systems are state to keep its own mobile network under nation-
However, this alone cannot explain the slowdown — non-oil exports still rapid reaction times required for driverless cars, highly complex: Current smartphone chips have al control. For example, the allocation of 5G fre-
contracted by around 6 per cent. For example, the gems and jewellery sector advanced factory automation, smart cities, e-health, more than eight billion transistors, and operating quencies has been conducted entirely at the nation-
continues to be plagued with inconsistent export growth, and the export of and many other applications. systems have more than 50 million al level, according to widely different rules and
engineering goods — one of the bright sparks in the previous financial year — But there is another key differ- lines of code. Moreover, many of conditions. This, of course, makes the emergence
contracted by 2.65 per cent in June. ence. Whereas the battle over 4G these systems contain components of “European champions” in the telecoms industry
Part of the slide can be attributed to global headwinds for trade, and it is was essentially commercial, focus- supplied by hardware and software less likely.
true that there are concerns surrounding the US-China trade war. But many ing on job creation and profits, the vendors from around the world. In In addition, the defence of (national) networks
ongoing 5G debate is about geopol- practice, this creates multiple pos- against cyberattacks is also managed at the national
peer economies correctly see this as an opportunity. Vietnam, for example, has itics, technological leadership, and sible entry points for malicious level. The EU Agency for Cybersecurity (ENISA), which
posted 6.7 per cent export growth in the first five months of 2019. Bangladesh national security. Here, Europe attacks and data leaks, using “back- still has fewer than 200 staff even after a recent budget
clocked double-digit growth in apparel exports last financial year, while Indian must develop a much stronger com- doors” that can be exploited to gain increase, plays only a weak coordinating role.
apparel exporters have struggled. In 2014-15, exports of textile and apparel from mon approach to the new 5G tech- control of a device. And if backdoors Yet telecommunications networks within the EU
India were valued at $40.1 billion; in 2018-19, exports from this sector were nology to make itself less vulnerable cannot be detected and monitored, are highly integrated across national borders. Future
$40.4 billion. This is a sign of a failure to inject competitiveness into a crucial, to security risks. then entire 5G networks are poten- cyberattacks may well target more than one member
Most of the current 5G controver-
DANIEL GROS tially vulnerable, too. state, and a blackout in one country would severely
labour-intensive sector.
sy centres on whether US and The key national-security risk, affect others. Europe thus urgently needs a powerful,
The government needs to acknowledge that its various trade-focused
European mobile operators should buy equipment then, is that a vendor for all or part of a 5G network (or integrated cybersecurity agency. Over the longer
schemes have not worked, including sector-specific packages and higher tariffs from the Chinese telecoms giant Huawei. The US gov- its national government) could vacuum up all the traf- term, the entire regulatory framework for telecom-
on imports. All these have done is to render Indian tradable sectors less com- ernment previously banned the firm from its telecoms fic passing through, or even disrupt the operation of munications networks, including spectrum auctions,
petitive. The shortage of credit and a poorly implemented goods and services market because of espionage concerns (although it the entire network with a digital kill switch. Extensive should be centralised at the EU level. This would
tax have further retarded growth in exports. Therefore, the first step must be to has yet to produce evidence of this publicly), and security reviews of Huawei equipment have failed to finally create the “single digital market” that has so
ensure that tax procedures are simplified drastically. Instead of doing this, the strongly urged its European allies to do the same. uncover any such backdoors. That is not surprising: far eluded Europe.
government has declared that “manual checks” will be reintroduced before Both the US and European positions toward Huawei (or any other company) would be out of busi- European leaders would be wrong to regard a
tax credit is provided to exporters, which might mean that the gap between Huawei seem to be at odds with their commercial ness if it were caught doing this even once. But it is Chinese supplier of 5G network equipment as the
interests. By banning the Chinese company, US also logically impossible to prove the absence of mali- biggest threat to the continent’s cybersecurity and to
filing a return and getting a refund would triple. For low-margin exporters,
President Donald Trump is favouring existing cious code. its ability to develop telecoms champions. Europe’s
this will be a further constraint on expansion. But tax issues are only part of European (and South Korean) equipment suppliers, Although Europe has its own suppliers of 5G equip- real vulnerabilities are its still-fragmented telecoms
the story. The longer-term story is one of eroding competitiveness, aided by even as he complains about America’s trade deficit ment and could simply shut Chinese vendors like market and its lack of a common cyber-defence sys-
an overvalued rupee. Challenges on the export front reflect the structural with Europe. (More recently, Trump has indicated a Huawei out of the market, such a move is unnecessary. tem. The looming introduction of 5G should be a wake-
weaknesses of the Indian economy and should be addressed through struc- possible softening of his stance toward Huawei.) In many European countries, Huawei provides just up call to policymakers across the continent. One can
tural reform. Clearly, this should be one more pressing concern for the new Although European governments have differing one part of the mobile network. Moreover, having mul- only hope they heed it.
government to address. views, most do not want to exclude Huawei. Each tiple vendors provides some protection against a kill-
national government regards lower equipment prices switch risk to the entire system. The writer is Director of the Centre for European Policy
for its national telecoms operator as more important Diversity also constitutes a liability, because each Studies. © Project Syndicate, 2019.

Scientists who broke the gender barrier

thing in common,  quite apart from Although the authors say they tried
being extraordinarily gifted in their to treat their subjects as “ordinary wom-
respective disciplines:  they all pos- an” who survived family tragedies and
sessed a quality best described as disasters and did extraordinary things,
assertive about narrating their  experi- In 1964, Dorothy Hodgkin was hailed out the technique of fortifying food with bloody-mindedness.  these were obviously very unusual peo-
ences.  The discrimination is so deeply as the “Oxford housewife and mother” vitamins; Dorothy Hodgkin, crystallog- They refused to take no for an answer. ple. It is frankly, impossible to do justice
ingrained that it is utterly normalised in who had somehow won a Nobel Prize rapher (and housewife!); Gertrude Elion They smashed academic barriers by to the lives of 10 such personalities in an
the way popular culture treats women in for developing x-ray crystallography who revolutionised drug design meth- insisting on learning things that women average of 30 pages each.  It is even more
STEM. It shows up at school when girls techniques that helped define protein ods; Rita Levi-Montalcini who worked weren't allowed to learn.  They broke difficult since it is necessary to get
are told that they are intrinsically bad at molecular structures. Rachel Carson, out nerve growth; Chien- glass ceilings in their abstruse scientific concepts across, and
BOOK REVIEW maths; it shows up in poor gender ratios who pioneered the environmental Shiung Wu who worked on Although the authors workplaces, they survived every essay involves getting into different
in higher education. It showed up, circa movement, was ridiculed as a “ romantic the Manhattan Project and say they tried to treat racial persecution and subjects at that. 
DEVANGSHU DATTA 2015 with a distinguished male scientist writer” despite her credentials as a subsequently produced a their subjects as discrimination in several This book does a fair job of compress-
“joking” that he couldn’t work in the lab marine biologist. Trudy Elion, another string of important experi- “ordinary woman” instances.  ing those lives and careers, without read-

his book consists of short profiles with “ distractingly sexy” women who Nobel laureate, was denied a research mental results in physics; who survived family Meitner had to flee ing like Wikipedia entries. It is an excel-
of ten extraordinary scientists who “fall in love and cry when you criticise position literally because she was and Marie Curie, who was, tragedies and Nazi Germany; Chien lent introduction to  the lives of some of
happened to be women. Each in them”.  “too pretty”.  among other things, the first disasters and did faced racial suspicion as the smartest people you might never
their own individual way broke through Each of the women profiled here had to The women profiled include anaes- woman professor in France.   extraordinary an Asian American while have heard of, written in easy prose with
glass ceilings and all of them changed deal with this all pervasive problem in thesiologist, Virginia Apgar, who invent- Given the diversity of things, these were working on a top secret reasonably lucid explanations of the sci-
the world. The authors decided that they their own life. To take one famous instance, ed the Apgar Score, which is used the fields and backgrounds, it’s obviously very American military pro- ence. But each of these women deserves
would focus on people who were dead, when the widowed Marie Curie won her world over for the instant assessment of hardly surprising that these unusual people ject. Curie’s daughter, a full-length biography to themselves
perhaps because it is easier to place a second Nobel Prize in 1911, (Chemistry for neo-natal health; Rachel Carson, whose ten women had very differ- Irene, (herself a Nobel lau- rather than this set of very brief lives.
completed life in context. In other isolating radium) the Nobel Committee bestseller Silent Spring sparked envi- ent personalities and enormous varia- reate) once lamented that her mother
respects, their choice of subjects range actually requested her to decline the hon- ronmental consciousness; astronomer, tions in their life experiences. These live- was “a brave daughter of France” in pop-
across different fields.   our! The reason: She was in a relationship Henrietta Leavitt, who work on cepheid ly accounts make that very evident. ular reckoning when she won interna- TEN WOMEN WHO CHANGED
Gender discrimination across the with a married colleague. She was always variable stars led to methods for judging Some of them were strongly combative tional recognition, and she was a “ Polish SCIENCE AND THE WORLD
STEM disciplines  has become a “hot but- referred to in academia and media the expansion of the universe; physicist, people,  others quieter and more self immigrant” at other times, such as when
Catherine Whitlock, Rhodri Evans
ton” issue in the past few years as women as “Madame” rather than docteur or Lise Meitner, who was a nuclear fission effacing. However, despite being differ- she was refused admittance to the
working in these areas have become more professor.  pioneer; Elsie Widdowson, who worked ent personality types, they all had one Academie Francaise.  Hachette; ~599; 320 pages
QUICK TAKE: SPICEJET FLIES HIGHER “President Aquino created a North

The Smart Star for the Philippines policy

The SpiceJet stock is up 17% over the last makers by setting the goal of
week on expectations that issues at IndiGo, becoming Investment Grade...
strong capacity addition, Jet’s shutdown, Hope $5-trillion GDP vision
MUMBAI | and high PLF will reflect on revenue growth
THURSDAY, 18 JULY 2019 becomes North Star for India.''
& margins. Market share, which hit a 5- NILESH SHAH,
year high in May, is expected to improve. MD, Kotak Mahindra Bank

FPIs net sellers since Budget... Inter-scheme

transfers see
SURCHARGE Foreign investors have pulled out close Advisors. The slowdown in the economy, including the there. If the pre-Budget tax

over 50% fall

corporate earnings and one related to FPI taxation, budgets regime is restored, you
DAMPENS MOOD to ~6,000 crore from equities in July India’s economic growth is profit-booking could contin- could see better flows to India,”
FPIs have been net-buyers on also worrying foreign ue,” added Bhat. said Andrew Holland, chief
only two occasions this month SUNDAR SETHURAMAN and 37 per cent on income investors. According to ana- The pull-out by FPIs executive officer, Avendus
n Total flows (~cr) Mumbai, 17 July above ~5 crore. While the lysts, index companies are comes amidst a decline in Capital Public Markets CUTTING DOWN ON
7/1/2019 -863 higher surcharge has been expected to report a slip in bond yields in India as well Alternate Strategies LLP. SELF-TRADES
verseas investors originally aimed at the ultra- earnings during the first quar- as across the developed FPIs had started to invest
7/2/2019 -1,553 have been on a selling rich, foreign portfolio ter. Moreover, a world. Typically, a aggressively in India in 2019 n FY19 n FY20 Value (in ~ crore )
7/3/2019 -1,281 spree this month. investors (FPIs), especially lack of stimulus lower return on after slamming the brakes a 46,958
7/4/2019 556 Month-to-date (MTD), they those with non-corporate package in the treasury yields year ago. Influential foreign
have pulled out ~5,673 crore structures, are caught in the Budget to revive lowers the attrac- brokerages such as Goldman 22,429
7/5/2019 600 from domestic equities, being crosshairs. Market players growth has disap- tiveness of the Sachs and BNP Paribas
7/8/2019 -330 net sellers on 11 out of the 13 said the tax proposal has pointed foreign investment in risk- upgraded their stance on
7/9/2019 -877 trading sessions. impacted FPI participation, investors. free assets, push- India in the hope of stability
They have been on an particularly those who active- “A fillip by way ing investors to in corporate profit growth (1,641) (1,185)
7/10/2019 -460 unbroken selling streak since ly trade in the futures and of a stimulus pack-
BUDGET put their money in and resolution of the non-per- Number of transactions
7/11/2019 -177 the Union Budget, spooked options segment. age expected in the IMPACT equities. This has forming asset crisis. Note: FY20 data as of May-end
Comparable data taken for FY19
7/12/2019 -723 by increase in income-tax sur- “Quite a few FPIs are inter- Budget has not hap- been seen playing “Globally, interest rates are Source: Sebi
charge, taxes on buybacks, national mutual funds struc- pened. Moreover, the valua- out in other emerging mar- falling and equity markets
7/15/2019 -190 and lack of stimulus to prop tured as trusts. The increased tions are stretched. Good kets, which have reported will get the benefit for those
7/16/2019 -358 up the economy. surcharge has affected them companies are too expensive; positive foreign flows this looking for better yields. If SACHIN P MAMPATTA above proposals,” shows a
7/17/2019 -17 The government has pro- since funds are floated based others not doing well are month. “Other emerging mar- you did not have this prospect Mumbai, 17 July statement following the Sebi
posed to levy a surcharge of on a stable and predictable hardly investment-worthy. kets with falling interests are of tax, they will be more board meeting on June 27.
MTD -5,673 25 per cent on incomes tax regime,” said U R Bhat, Till a resolution is found for getting the same benefits, and inclined to invest in India,” The mutual funds (MF) indus- The need for such transfers
Source: Bloomberg/NSDL between ~2 crore and ~5 crore director, Dalton Capital the various issues plaguing there is more incentive to go said Holland. try is witnessing a change in become more pronounced
the practice of transferring when there is a change in
securities between a firm’s own investor preferences, with peo-

...Morgan Stanley sees $25-bn inflow potential

schemes, with fewer fund ple looking to switch from one
houses doing so nowadays. scheme category to another,
Shifting securities within said Dhirendra Kumar, chief
the same fund house rather executive officer of fund track-
Illustration: Binay Sinha than selling in the open market er Value Research.
SAMIE MODAK MSCI RANK VS MARKET REALITY and Switzerland have foreign free float has more than halved since last “There is a need for inter-
Mumbai, 17 July India’s MSCI free float market cap rank is 13, despite it being of above 90 per cent. India’s weight in year, shows the regulatory data. scheme transfers when
sixth-biggest globally in terms of aggregate market cap the MSCI EM index is 8.8 per cent, low- The value of transactions investors move their money
The domestic equities market could er than its peer group, and its market has fallen 52.2 per cent to very dramatically,” he added.
M-cap Rank Foreign free Free float GDP M-cap to
expect an overseas flow bonanza to the cap is not concurrent with its GDP. ~22,429 crore so far this year, This has not happened in the
tune of $25 billion (~1.72 trillion at the ($ trn) float (%) rank ($ trn) GDP (%) “This under-representation in from ~46,958 crore for the same last year. So, there has been
current exchange rate) if the govern- US 30.28 1 95 1 20.49 148 index weight versus GDP is unique to duration last year. The number limited scope, he suggested.
ment is able to implement three key India and a consequence of a low for- of transactions, too, fell from Dwijendra Srivastava, CIO
China 7.10 2 34 4 13.41 53
proposals pertaining to foreign portfo- eign free float factor of 38 per cent,” 1,641 to 1,185. Such transactions (debt), Sundaram Asset
lio investors (FPIs). Japan 5.75 3 74 2 4.97 116 said the report. The proposal to typically invite attention Management, said such trans-
These include increasing the public UK 3.33 4 95 3 2.83 118 increase the free float in listed firms is because of the possibility of actions make sense on many
float in listed companies to 35 per cent being examined by the Securities and malpractice, when both the occasions. They could cut
from 25 per cent, increasing the mini- France 2.46 5 69 5 2.78 89 Exchange Board of India. buyer and seller of the security down on costs such as broker-
mum statutory limit for FPI investment India 2.29 6 38 13 2.78 82 In the note, Morgan Stanley has are the same entity. age and other transaction fees
in a firm from 24 per cent to the sectoral Sources: Bloomberg, MSCI, IMF, Morgan Stanley Research
highlighted key risks to its projections This decline comes during that would otherwise have to
foreign investment, and lowering gov- of the $25 billion in FPI flows. Some of a period of higher regulatory be paid if securities were
ernment holding in listed public sector them include dilution of the proposals, scrutiny. The dynamics of bought and sold in the open
undertakings. The announcements, if converted into in FPI flows — $11.4 billion in active market cap, India is ranked 13th in a delay in adoption, as well as a “change investor preferences at a time market, as opposed to trans-
Foreign brokerage Morgan Stanley policy, will have a far-reaching impact and $2.8 billion in passive inflows. terms of free-float market cap. in foreign investors’ view on India’s of relative turbulence in the ferring it from one scheme that
says India’s weight in the MSCI on India’s free float, its weight in the The brokerage adds that the Switzerland and Australia have a high- growth story”. fixed income market is also needs cash to another that
Emerging Market (EM) index could MSCI indices, foreign flows, and supply increase in public float will help er weight in the MSCI global indices It says L&T, Bajaj Finance, Bajaj seen as a major factor. needs the security in question.
increase by 146 basis points (bps) if all of equity,” said equity strategists Sheela address the mismatch between India’s despite their total market cap being Finserv and Hero MotoCorp could see The Securities and The average AUM for the
these measures are implemented. Rathi and Ridham Desai in a note. aggregate market cap rank and free- below India’s. This is on account of low the highest increase in their MSCI Exchange Board of India (Sebi) debt segment was ~12 trillion
“In the Budget, Finance Minister The brokerage says the proposal to float market cap rank. ‘foreign free float’ of 38 per cent weight if the proposal to subsume FPI has, in the past, warned firms in FY19, shows Value Research
Nirmala Sitharaman made an explicit increase free float by 10 percentage Despite, being the sixth-biggest assigned by MSCI to India. investment limit with foreign sectoral against using such transac- data. This includes closed-
effort to lift free float of Indian stocks. points itself could yield over $14 billion equity market globally in terms of total In comparison, the US, Australia limit goes through. tions for manipulative activi- ended and open-ended
ties. It moved to restrict the use schemes. Investors can exit
of such transactions for valua- when they want in the latter,

THE COMPASS Indices gain for 3rd straight session tion purposes, last month.
“In order to increase the
while they have a lock-in peri-
od in case of the former.
Extending gains for the third 24.9 points or 0.21 per cent up robustness of valuation and Majority of the assets are
session in a row, the Sensex at 11,687.50. During the day, it address possible misuse, var- held under open-ended

Food aggregators could keep QSRs hungry rose 85 points on Wednesday,

driven by gains in banking and
IT stocks. After a volatile trade,
hit a high of 11,706.65 and low
of 11,651.15.
Top gainers in the Sensex
ious proposals related to val-
uation of inter-scheme trans-
fers (ISTs) disallowing the use
schemes, accounting for over
~11 trillion as of March-end.
The value of inter-scheme
High competitive SHREEPAD S AUTE during the IPL — to predict the winner and
earn a huge discount if the prediction came
the index settled 84.6 points
or 0.22 per cent higher at
pack included SBI, Tech
Mahindra, HCL Tech and Kotak
of own trades for valuation,
etc, were approved. Suitable
transfers in FY19 was ~2.3 tril-
lion, shows Sebi data. The val-
pressure may hit Listed quick service restaurants (QSRs) Jubilant true — was one such offering. Though Jubilant 39,215.64. It swung 203 points Bank, rising up to 2.31 per cent. grandfathering, wherever ue of transactions account for
FoodWorks and Westlife Development are and Westlife are also expected to have benefited intra-day, hitting a high of YES Bank was the biggest loser, applicable, and adequate a fifth of the average debt
same-store sales expected to report steady growth for the June from online aggregators, these portals have 39,284.73 and low of 39,081.14. cracking 5.25 per cent ahead of time period shall be provided AUM, show back-of-the-enve-
growth of QSRs, quarter (Q1), despite moderation in consump-
tion. However, with parent Domino’s Pizza indi-
plenty of other options based on customers’
preferences and at relatively better pricing.
The broader Nifty ended its first quarter results. PTI for implementation of the lope calculations.

dent stock cating competitive pressure from online aggre- As a result, rising competitive intensity for
gators, the same-store sales growth (SSG) of listed QSRs is a negative. Vishal Gutka, AVP at
performance Indian QSRs could fall short of expectations. Phillip Capital, said that customers get a variety
This could hurt their stock performance, of options based on their pricing and food pref-
given SSG is a key performance measure for erences from online aggregators, which have
retailers and restaurants. While Jubilant runs relatively more promotional offers. This could
stores of Domino’s Pizza in the country, disturb the business of QSRs to some extent.
Westlife-owned Hardcastle Restaurants runs However, price hikes, cost efficiency, a bev-
Base=100 McDonald’s outlets in West and South India. erage contract with PepsiCo, and profit contri-
The Indian Premier League (IPL) and Cricket bution from Dunkin’ Donuts, should all help
Westlife Sensex World Cup were expected to give a fillip to the on the profitability front as well as earnings of
Development 120
overall growth of QSRs over the last few months, Jubilant, despite high input prices (wheat and
with support from promotional offers to aid cheese) and promotional spending.
growth. This included, for instance, a 30 per Westlife, on other hand, is likely to have wit-
100 cent discount on online orders of Domino’s piz- nessed margin pressure.
zas. Therefore, despite a high base of 24-26 per Jubilant is expected to report close to 15 per
90 cent in the June 2018 quarter (Q1FY19), analysts cent year-on-year (YoY) growth in net profit in
expect Jubilant and Westlife to report 6-8 per Q1. Net profit of Westlife, on the other hand, is
80 cent same-store sales growth (SSG) in Q1FY20. expected to have declined by 41 per cent YoY,
Jubilant However, even online food aggregators such according to IIFL.
FoodWorks 70 as Zomato were aggressive on the marketing Overall, management commentary on com-
Jul 2,‘18 Jul 17,’19 front during the cricket tournaments. petitive pressure and store expansion plans will
Compiled by BS Research Bureau For example, the Zomato Premier League be key for the stocks.

Steel players continue to be under the pump

As realisations for UJJVAL JAUHARI remains cautious
prospects of the major pro-
on the monsoon season, with a
pick-up in demand. Higher
most products News of the government ducers. What compounds realisations are also neces-
recommending anti-dump- the problem is the rise in sary for taking care of cost
remain under ing duty on aluminium and raw material costs (iron ore), pressures. Domestic iron ore
zinc-coated flat steel prod- which will put pressure on prices are expected to rise
pressure, rising ucts has failed to lift the profitability of steel compa- and non-integrated players
iron ore prices stock prices of steel majors.
Tata Steel, JSW Steel,
nies, especially the non-
integrated players.
will feel more heat.
CRISIL Research says
pose threat to SAIL, and Jindal Steel and The near-term pricing non-integrated steel players
Power (JSPL) continued outlook, too, is not encour- are on course for a 300-400
profitability their downtrend and are aging, given the weak mon- basis point decline in Ebitda
trading 11-19 per cent lower soon and lower demand. margins, as iron ore mining
since the end of April. Global steel prices are leases — accounting for 30
The anti-dumping duty under pressure on account per cent of India’s and half
will be on products that of concerns over the trade of Odisha’s production —
comprise a small portion of war. China’s inventory is expire in March 2020.
Base=100 India’s steel consumption, also rising, adding to worries This shall translate into
which only JSW Steel and on realisations as well as a price hike of 15-20 per cent
Tata Steel produce (about increasing the threat of in FY21, feels CRISIL, given
110 0.5 million tonnes or mt, say cheap imports into India. that fresh bidding is likely
analysts). The downward China’s finished steel to be at some premium.
100 pricing trend in majority of inventories rose for the fifth Among steel manufac-
steel product prices contin- successive week, surpassing turers, while Tata Steel has
ues with costs down 7-15 per 12 mt yet again. The onset captive mines, JSW Steel is
cent since March 31, shows of a seasonally weak period more dependent on exter-
data from Motilal Oswal could lead to further build- nal ore.
80 Financial Services. up in inventory, according Analysts, however
With domestic steel to Edelweiss Securities. believe that JSPL’s earnings
BS Steel Index 70 prices below ~40,000 per Therefore, the only improvement will continue
Jul 2,‘18 Jul 17,’19 tonne for the first time since respite for Indian steel mak- on account of rising produc-
Compiled by BS Research Bureau December 2017, the Street ers may come by the end of tion and operating leverage.


HDFC AMC rides on cost optimisation Tax heat on Cyprus,

ty schemes at about ~7,663 crore,
it was still 20 per cent lower than
Singapore investors
all-time high; FY20E Growth (%) FY21 Growth (%)
the previous year. Analysts at
Emkay Global Financial Services ASHLEY COUTINHO
leadership in Total revenues 2,313 10.3 2,641 14.5 say mutual fund houses have Mumbai, 17 July
turned somewhat cautious with
retail AUMs augurs Total expenses 584 -22.6 623 5.9 cash position up to 2.3 per cent, Investors from Singapore and Cyprus,
well for firm Net profit 1,159 24.5 1,357 17.1
the highest in 10 months.
“Flows are improving, but we
who have availed an exemption or
concessional rate of taxation for invest-
E: Estimates; Growth is year-on-year; Figures in ~ crore Source: Brokerages prefer to remain cautious,” says a ments made before this financial year,
HAMSINI KARTHIK fund manager. While the larger may come under scrutiny under a
Mumbai, 17 July positives such as market global tax framework that was recently
However, HDFC AMC has For investors, the important in June, it is still far from com- positioning and tight cost ratified by India.

n the past four quarters since been able to pass on a large part takeaway is that the share of indi- forting. Reports suggest that equi- structures are a long-term posi- Last month, the Centre ratified the
its listing, June quarter (first of the reduction in TER to distrib- vidual AUMs (retail plus high net ty inflows in Q1 (excluding those tive, sustenance of inflows is multilateral instrument (MLI) to pre-
quarter, or Q1) has been the utors. Most AMCs resorting to a worth individuals) rose to 59 per into arbitrage schemes and important for HDFC AMC to repli- vent base erosion and profit shifting
best so far for HDFC Asset price hike in liquid funds had also cent, against the exchange-traded cate Q1’s performance. (BEPS). BEPS is the framework by the FLOWS FOR FY19
Management Company (AMC). cushioned the impact of a TER industry levels of 54 funds) was nearly 72 Another factor to watch out Organisation for Economic n Flows ($ billion)
While revenues from operations cut. Phasing out upfront commis- per cent in Q1. It would be per cent lower than for is how the company’s bal- Cooperation and Development (OECD)
grew only 7 per cent year-on-year sion expenses from HDFC AMC’s HDFC AMC lead- important to keep 2018-19 average. ance sheet exposure to Essel countries to prevent tax evasion by Singapore 16.2
(YoY) to ~504 crore, the net profit profit-and-loss statement has also ership across seg- an eye on the The industry was Group will pan out in the coming multinationals, particularly digital
growth at 42 per cent YoY to ~287 helped the company bring in sig- ments such as equity, overall inflows faced with significant months. Fund houses’ ‘stand- companies, which could shift their Mauritius 8.1
crore in Q1 was sizeable. nificant cost efficiencies. debt, and liquid funds into mutual fund redemption of ~16,200 still’ arrangement with promot- profit to low tax countries. One of the
Consequently, the stock of Q1’s fees and commission with 15.8, 13.4, and industry. While the crore in Q1 in equity ers of Essel Group expires on anti-abuse provisions in the MLI is the Netherlands 3.8
HDFC AMC rose by 4 per cent on expenses declined by 86 per cent 16.9 per cent market environment schemes, while debt September 30. Principal Purpose Test (PPT). 3.1
Wednesday reacting to positive YoY, thus, explaining the share, respectively, turned funds saw an outflow If the Essel entities are unable Under the domestic General Anti-
numbers. The Street’s expecta- improvement in net profit, adds strength to its incrementally of ~14,700 crore, to meet their repayment obliga- Avoidance Rules (GAAR) norms, Japan 2.9
tions have moved a notch higher, despite only a 7 per cent revenue financials. conducive in June, according to a HDFC tions, the probability of HDFC investments before April 1, 2017, are
given the company’s ability to growth.While higher efficiencies However, it would it is still far from Securities report. AMC taking a hit on its exposure kept out of the tax net. This is after Source: DIPP
handle cost-related pressures are an internal factor, the asset be important to keep comforting While the June is likely; an event that will have India renegotiated its tax treaties with
quite effectively. These pressures management company’s ability an eye on the overall 2019 performance was a bearing on its financials. Mauritius, Singapore and Cyprus in
cropped up, owing to the recent to grow its assets under manage- inflows into the mutual fund better than a month ago, with a Trading at 36 times its FY20 2016. Based on the new arrangement, to an approving panel comprising out-
changes in norms governing the ment (AUMs) by 18 per cent YoY industry. While the environment near-42 per cent month-on- earnings, there is limited scope Indian equities acquired prior to April side experts, will also not be available
total expense ratio (TER). in Q1 is also a positive. turned incrementally conducive month increase in flows into equi- for any misses by the company. 1, 2017, were granted capital gains tax under the MLI, he added. Provisions
exemption. Shares acquired on or after of GAAR, for instance, do not apply to
this period, and sold before April 1, arrangements where the tax benefit in
2019, had concessional tax at 50 per the relevant assessment year does not

Six of seven 2019 IPOs trading above issue price cent of the domestic rate. The MLI,
however, does not recognise these
exemptions or concessions.
And, since both Singapore and
exceed ~3 crore. There is no such
threshold under the MLI.
“Right now, there is no guidance on
the issue from the government. India
In comparison, the S&P BSE
Sensex gained an average 1 per
SHINING BRIGHT need to check the business
prospects and stock valuation
Cyprus are signatories to the MLI frame-
work, any exemption in capital gains or
will have to clarify that grandfathered
investments from these jurisdictions
Mumbai/New Delhi, 17 July cent. Analysts say the outperfor- Price in ~ before they take this call,” says G a concessional rate of tax availed by will not be additionally subject to the
mance has been mostly on Name Latest Offer % Change Chokkalingam, founder and man- investors from these regions for the said PPT test, once the MLI is enforced,”
The initial public offering (IPO) account of a healthy response aging director, Equinomics periods could be questioned by the tax said a tax expert. MLI could be a game
market may not have seen much from institutional investors, rea- Neogen Chemicals 347.65 215 61.7 Research. authorities. The impact on Singapore changer and lead to increased litiga-
action in H12019, but stocks of six sonable pricing, and the overall Rail Vikas Nigam 25.15 19 32.4 On a corresponding-period investors could be significant, consid- tion between investors and tax author-
of the seven companies that weakness in the mid- and small- basis, 18 companies had mobilised ering the country was India’s top source ities owing to its wider applicability
raised funds via the primary mar- cap segments. IndiaMart InterMESH 1,252.60 973 28.7 ~23,452 crore from the primarily for foreign direct investment (FDI) in than the domestic GAAR.
ket route during this period have “The returns witnessed by Metropolis Healthcare 1,032.75 880 17.4 market, according to PRIME the last financial year. The country put According to experts, it may be pos-
given handsome returns. The recent IPOs are in stark contrast Database. an estimated $16.2 billion in 2018-19 into sible that in situations where there is
outperformance of these stocks to the poor performance in CY17
Polycab India 621.55 538 15.5 “The hangover of elections India via the FDI route compared with a conflict between GAAR and the MLI,
comes at a time when fund and CY18. This is largely on Chalet Hotels 310.05 280 10.7 and the Budget is behind us. $8.1 billion put by Mauritius. the latter could prevail. This is because
mobilisation via the IPO route hit account of recalibration of both MSTC 98.35 120 -18.0 However, a slowdown in con- Mauritius is yet to notify its treaty GAAR provisions are triggered when
the lowest amount raised in the investor and promoter expecta- Latest price on BSE as on July 16, 2019
sumer demand has emerged as an with India as a covered treaty. So, the main purpose of an arrangement
last four years at ~5,509 crore. tions to the fall in valuations in important consideration for both investors coming from the region will is to obtain tax benefit. The PPT rule,
These stocks have beaten the mid- and small-caps. The margin Neogen Chemicals is trading “There is a lot of institutional issuers and investors. We expect not be impacted under the MLI. on the other hand, is applicable even
benchmark index S&P BSE Sensex of safety that issuers, bankers and at ~346 levels, 61 per cent higher investor interest in some of these the Reserve Bank of India to “Unlike GAAR, which does not if one of the main purposes is to obtain
by gaining up to 61 per cent investors work with has increased as against the issue price of ~215 stocks. One also needs to see how reduce interest rates and the gov- apply to income arising from certain a tax benefit. Moreover, tax authorities
against their issue price. significantly, which has led to the per share. Rail Vikas Nigam much floating stock is available ernment to take pro-active steps pre-2017 structures, the PPT can be could get a free hand in applying the
These six companies are cur- returns that have been witnessed (RVNL) and IndiaMART with the retail investors to trade. to accelerate the gross domestic invoked for older structures as well,” latter since there is no guidance on
rently valued at ~6,272 crore, 19 per in most IPOs in CY19,” explains InterMESH are trading 32 per cent Given the run-up, it is a good time product, which should help issue said Punit Shah, partner, Dhruva how the PPT rule will be applied by
cent higher than the ~5,275 crore Munish Aggarwal, director (capi- and 29 per cent higher, respective- to partially book profit in some of activity in the second half of the Advisors. Safeguards under GAAR, them and what constitutes “principal
they collectively raised via IPOs. tal markets), Equirus Capital. ly, as against their issue price. these counters, but investors do calendar year,” Aggarwal says. such as a monetary threshold or access purpose.”



Investor and target Stake (%) Value ($ mn)
Advent to look for more deals, bigger investments
Saama Capital II 1 PAVAN LALL increased, along with allocation,” said Jalan Fullerton-India, Whirlpool’s Arvind Uppal and
Mountain Trail Foods NA 8.78
Mumbai, 17 July who joined in 2009. others. Care Hospitals, in which Advent invest-
One private equity analyst who did not want ed $110 million, was sold in 2012 at a value of NV

Investment Holdings LLC
ver a decade after it set up shop in India, to be named said the allocations for global funds 2.2 times. This is the sole exit of Advent under
0.51 7.45 Boston-based Advent International is were typically between 5 per cent and 7 per cent, Jalan till now.
QDigi Services
geared to accelerate the number of deals but varied based on market dynamics. Are there transactions Advent won’t consid-
VH Capital and size of investments across key focus areas Jalan said it was difficult to find $100-million er? Jalan said Advent would not chase dis-
Evato Technology NA 2.1 such as consumer industries, financial services, deals earlier, and the firm had reduced invest- tressed assets and deals.
health care and information technology. ments to $50 million. Now, the minimum PE deals have seen a surge in value, with
Last month, Advent closed its largest global investment is for $100 million, and can be scaled several transactions ranging between a half-bil-
New Delhi Television 2 fund called “GPE IX” at $17.5 billion. up to $500 million per transaction. lion and a billion dollars (Brookfield-Leela
One Mobikwik Systems NA 1.27
The fund will adopt the same strategy as its Globally, Advent’s speciality areas are finan- Hotels; Blackstone-Mphasis; Brookfield-RIL
eight earlier funds — buyouts, corporate carve- cial services, health care, technology, telecom, East West Pipeline; KKR-Ramky Enviro
Birju Gala out, public-to-private, and growth equity trans- media, industry, and retail. In India, the focus Engineers) but typically like Advent, most
Northmist NA 0.15 actions, especially in Europe and North has been narrower. American firms such as General Atlantic, TA
America, and selectively in Latin America and Common themes for all of Advent’s deals Associates invest between $100 million and
Eight Roads Ventures India, DSG Consumer Partners I, Milestone Capital
Asia. Historically, in the subcontinent, Advent have been backed by consumption-driven sto- $400 million. Advent's India advisory board
Advisors Ltd.; 2Trifecta Capital has been cautious with its investments, some- ries in which the companies are market leaders chairperson Naina Lal kidwai notes that one
Advisors LLP; times only making an investment per fund. But, — Manjushree Technopak makes packaging for shift over the years has also been the opportu-
Note: There were 9 PE deals worth $19.75 million with 2 private equity exit in the the number of transactions has increased in the consumer items, Dixcy Scott makes innerwear, nity to do larger deals, especially in areas like
last seven days ended July 17, 2019
Source: VCCedge past three years. and Crompton Greaves are makers of electrical Shweta Jalan, MD of Advent India PHOTO:ADVENT pharma.
Fund VI, for example, was small. There was products such as fans, pumps and light bulbs. “There will be more such deals in the future.
only one investment — $110 million in Care There’s another common thread. Most of the shoes of four directors as soon as the deal Another area where deal sizes will be large is
Hospitals. Fund VII resulted in a carve-out in Advent’s India punts — which total $1 billion was done. the financial services space where Advent is
PremjiInvest backs enterprise Crompton Greaves and Quest. Fund VIII accel-
erated investments in Manjushree Technopack
— have been in companies run by promoters.
This means decision making in these firms is
Helping Advent make all that happen are 10
investing partners and an advisory board whose
underinvested presently, and is interested in
investing,” she said. “Advent has both the inter-
contract lifecycle management firm ($190 million), ASK ($130 million), and Dixcy highly centralised and transition to professional chairperson is former HSBC banker Naina Lal est and the ability to do a range of both smaller
Scott ($125 million). management can be challenging. Kidwai. and large deals across industries.”
PremjiInvest, the family office of Wipro’s billionaire Azim Premji, Advent India Managing Director Shweta Jalan said two things have to be done in syn- Senior advisors include former PepsiCo boss Is that something Advent will buck the trend
and US-based Greycroft Partners, led a $115-million funding Jalan did not share how much of the global fund chronicity for deals. “We bring in a CEO and Manu Anand and other operating partners who on? Jalan said, “I would like to invest at least
round in US-based enterprise contract lifecycle management will be allocated to India, but she said the com- CFO and set up a strong board,” she added. include former Wipro executive Girish $500 million if not a billion but the opportunity
company Icertis Inc. The funding has propelled it into the club of pany was “opportunistic”. In the case of Manjushree, the promoter and Paranjape, Bhaskar Iyer ex-Abbott, Shantanu has to be right, and there’s lots happening in
technology unicorns with a valuation of at least $1 billion. “With every passing fund, deal sizes have his brother both had sons, which meant filling Mitra, former CEO of non-bank lender financial services.”

Led by Tiger Global, B2B start-ups catch attention of investors

RANJU SARKAR The shift is best captured by Tiger backed ‘‘B2C businesses market size for these businesses is
New Delhi, 17 July Global’s investments this year. require a lot of cash for building a billions of dollars. It gives a huge GAINING IN POPULARITY
The US-based investor, best known mass market brand and acquiring market size for a B2B start-up to serve B2B B2C
Last week, business-to-business (B2B) for backing and then exiting Flipkart, customers. B2B businesses are the value chain and bring efficiency
Funding % age of Funding % age
industrial goods marketplace Moglix has invested in over a dozen start-ups relatively more capital-efficient,’’ he into the system and therefore, attract # of Amount total # of Amount of total Total
raised $60 million, in a funding round till mid-July. Ten of these are in B2B says. investor attention/capital Year Rounds ($mn) funding Rounds ($mn) funding Funding
led by Tiger Global and Sequoia India. start-ups. ‘‘For Tiger Global, it majorly Sector watchers estimate food tech [logistics, retail].
Moglix is not alone. Several B2B due to a change in leadership. Lee firms Swiggy and Zomato are burning For instance, logistics is a $150-bn
2016 707 1,678 34 1085 3,238 66 4,916
start-ups — Delhivery, Blackbuck, (Fixel) used to focus a lot on consumer. $30-40 million a month, while e- market, with the long-haul market 2017 666 3,359 28 876 8,829 72 12,188
Enzen, Ninjacart — have raised good Scott (Shleifer, who now looks after the commerce firms are burning a lot alone estimated at $100 bn. 2018 561 3,153 28 732 7,966 72 11,119
money this year, on the back of Indian market) focuses more on B2B,’’ more. ‘‘The eco-system has matured
renewed interest from investors. The says ShareChat founder Farid Ahsan. ‘‘B2B businesses (enterprise enough to enable a lot of B2B 2019 YTD 218 2,257 38 318 3,648 62 5,905
total in 2019 has been $2.25 billion Fixel, who steered Tiger Global’s software makers) have the potential to companies to start finding traction in Data for 2019 till July 10 Source: Tracxn
across 218 deals — 61 per cent of the early bets in India, is leaving to start his tap a relatively more lucrative US India. Plus, the positive examples of
$3.65 bn raised by business-to- own firm. But, even Tiger Global has market or other foreign markets, in companies like Zoho, Freshworks,
consumer (B2C) start-ups across 318 been shifting gears. Four of its eight addition to the domestic market. Druva, etc, have validated that high
deals. investments in 2018 were in the B2B Besides, the prospect of a B2B business quality B2B companies are not just
B2B start-ups had also accounted space. ‘‘If you look at percentage becoming profitable relatively sooner possible but highly valuable, with
for 39-40 per cent of the money raised change, Tiger’s change in behaviour is is higher,’’ says Agarwala. strong structural advantages,’’ says
by B2Cs in 2017 and 2018, according to a key reason, as a lot of large consumer It’s not only enterprise software but Prashant Tandon, founder and chief
data from Tracxn. funding that Tiger used to do has other B2B businesses that investors are executive of online pharmacy 1mg.
B2B deals accounted for 38 per cent shifted to B2B,’’ adds Ahsan. bullish on today. Logistics firms ‘‘There is now an opportunity to
of the $5.9 bn raised by start-ups till What is driving this change? Funds Delhivery, Blackbuck and Rivigo, for develop and mature quality products
July 10 this year, up from 28 per cent in are realising that the B2C market is instance, raised a lot of capital this year for a very demanding eco-system out
the past two years . Investment in the hyper-competitive, with strategics (see table). here. When these products are
B2C space still accounts for the bulk of such as Amazon, FlipKart and Jio Supil Chachan, Director, presented to the global market, they
deal flow -- 62 per cent of the total value spending a lot of capital, says Dhruv BlackBuck, says the Indian economy have started to look highly nuanced,
this year, down from 72 per cent last Agarwala, founder and Group CEO at goes through a long value chain (B2B) plus a great value offering,’’ adds
year. PropTiger, which acquired SoftBank- before serving an end-customer. The Tandon.

File long-term capital

stocks bought from after April 1,
2018, the “grandfathering” provision
does not apply. The gains will be cal-
culated based on the buying and sell-
RBI as housing
ing price.
finance regulator
gains from this year Bonus shares and stock split:
Explains Samir Kanabar, tax partner,
EY India: “For bonus and stock split,
the calculation would differ based
on the date they happened. If they
happened before January 31, 2018,
Most of the discussion around
the Union Budget has hap-
pened around the hike in sur-
charge for the ultra high net
The calculation process is tricky. However, there are service providers available at a price the price on this day is considered worth individuals and foreign
as cost of acquisition.” portfolio investors. I am writ-
TINESH BHASIN For split and bonus after February 1, ing about a much less noticed
2018, the calcualtion is as follow. An and talked about item – mov-

or the first time, equity investor does not pay any money to ing the regulatory baton for
investors will have to acquire bonus shares. The cost of housing finance companies
declare details of stocks and acquisition is, therefore, zero. But the (HFCs) from National Hous-
mutual funds sold in their CBDT clarified that bonus shares FRANKLY ing bank (NHB) to the Reserve
income tax returns. And calculating would be taxed. The same formula Bank of India (RBI).
the gains/losses is a tricky process, has to be followed to calculate the SPEAKING NHB as a separate regula-
and quite different from other cost of acquisition of bonus shares. HARSH ROONGTA tor for HFCs was never really a
instruments. It is especially compli- The original buying price would, good idea. It doubled up as a
cated if you have received bonus however, be zero. The investor has financier to the HFCs as well as was their regulator – which
shares or a systematic withdrawal to consider the lower of the fair mar- is a clear conflict of interest. Secondly, NHB just did not have
plan (SWP) in a mutual fund. ket value and selling price to get the the size, status or heft to be able to regulate large HFCs such
In the previous financial year (FY cost of acquisition. as a Housing Development Finance Corporation, which are
2018-19), the government started In case of a stock split, the origi- several times NHB’s size. So the move to combine the entire
imposing a 10 per cent long-term nal cost of acquisition will change regulatory regime in the hands of the RBI is a good move.
capital gains tax (LTCG) on sale of depending on the number of stocks Home loans tend to be provided
listed stocks and equity mutual allotted. If a person had initially pur- for long tenures such as 15-20 years In the long run,
funds after one year. While capital chased, say, 100 shares of a company and even though most home loans the integration
gains of ~1 lakh are tax-free, any at a total price of ~10,000. Each stock are paid off early most HFCs will run of regulations
amount above that would be fully would cost ~100. After the stock split, a major timing mismatch between between banks
taxable. “It was to ensure that long- he has a total of, say, 500 shares. The their lending (home loan tenures) and HFCs will
term investors don’t get adversely hit cost of purchase will be divided and their own borrowing (which prove beneficial
due to the new regime,” says Archit among by the units held tends to be far shorter term in na- for the industry
Gupta, founder and CEO, ClearTax. (~ 10,000 / ~500 = ~20). The original ture). Most of the time the HFCs are and borrowers
For investors, the choice is to cal-
culate the gains themselves.
acquisition and selling price, the
investor would have had to pay a
COMPLICATED CALCULATION purchase price for each will be ~20.
And gains on the sale of stocks will
able to roll over their shorter-term
borrowings, but in current times when the lenders are risk
However, there are a slew of service higher LTCG tax. To lower the tax Computation of long-term capital gains on equity investments. The be calculated, accordingly. averse, HFCs have a serious problem in their hands. Even
providers which help achieve the outgo, the Central Board of Direct date of acquisition is Jan 1, 2017, and date of transfer is April 1, 2018. where the HFCs lend for the short term, they are basically
same end, but they may come at a Taxation (CBDT) introduced the Case 1 Case 2 Case 3 Case 4 Systematic withdrawal are loans for real estate developers which are a risky bet espe-
price. Many stockbrokers offer this FMV. The FMV of stocks or units of Cost of acquisition higher of (a) and (b) (~) complicated: Usually, an individ- cially in the current environment where most developers are
service and also tax filing platforms. a mutual fund as of January 31, 2018, (a) Cost at which shares ual invests in mutual funds using under severe stress. Provisioning requirements for such
rationalises the cost of acquisition were acquired 500 500 500 500 a systematic investment plan (SIP). types of loans to developers are likely to be made stricter by
What does the new rule entail? and, thereby, lowers the capital gains (b) Lower of the following: He puts little money regularly over the RBI and in line with those prevailing for other NBFCs.
There are three critical numbers in tax. a period of time. Now, if he opts The RBI is currently in the process of overhauling the en-
- FMV as on 31 Jan 2018 1,000 1,000 750 1,000
the calculation –original cost of In the example, the FMV of for an SWP, the calculation of gains tire risk management eco-system for NBFCs and it is imper-
acquisition, fair market value (FMV) ~1,000 is lower than the selling price.
- Consideration accruing can be complicated and lengthy as ative that a most important segment, such as the HFCs, is
arising on transfer 1,500 750 1,500 250
of the stock as on January 31, 2018, In the second step - when you com- well. Say, the investor had pur- not left out of such an overhaul. This is also important con-
Cost of acquisition under
and the selling price (See table: pare it with the original buying price new taxation regime 1,000 750 750 500 chased 100 units and paid ~10 for sidering the large exposure that the banking industry has on
Complicated calculation). According of ~500 – the FMV is still higher. The each unit in the first month and HFCs. The integration of regulatory oversight with the RBI
LTCG 500 - 750 -250
to the formula, an investor needs cost of acquisition of the stock, there- ~12 in the second. Later, he is with- is good as a single regulator will be responsible for entities
first to compare FMV and selling fore, will be the FMV. Subtract it from
Effective tax rate for shares and equity oriented mutual fund as proposed in drawing only 30 units each month in the financial system.
Budget 2019 (~) (In %)
price and choose the lower of the two the selling price, and you will get the through an SWP. “He needs to fol- Can home loan borrowers expect to benefit from the
Total Income < 50 lakh 10.40 - 10.40 -
values. Then, take this figure and gains (~1,500 – ~1,000 = ~500). And low the first-in-first-out (FIFO) change in regulator? The answer is a qualified yes. In the
compare it with the original cost of the tax, at 10 per cent, will be ~ 50 Total Income > 50 lakh 11.44 - 11.44 - method to compute the original long run, (meaning after the crisis in NBFCs has abated and
acquisition and take the higher of per share. Total Income > 1 cr to 2 cr 11.96 - 11.96 - price of purchase. In the LTCG for- the overhang of non-performing assets has bottomed out)
the two values. If the taxpayer incurs a loss on Total Income > 2 cr to 5 cr 13.00 - 13.00 - mula, the investor has to take the the consumer facing regulations will need to be equated
Say, a person bought stocks of a selling the equity investment, he can Total Income > 5 cr 14.25 - 14.25 - purchase price as ~10 until he with- between banks and HFCs and also improved for both sets
company for ~500 on January 1, 2017. carry forward the loss or set it off Source: EY draws the first 100 units. For the of lenders. The long standing proposal to link home loan
On January 31, 2018, the stock price against the gain. If you have sold next 100 units the buying price will rates to an external benchmark will eventually have to be
was ~1,000. He sells the stock for long-term equity investments be zero as the new provisions are incurred losses before the start of the be ~12 and so on,” says Naveen rolled out at some point of time and there will be very little
~1,500. If the gains were to be calcu- between January 31, 2018, and applicable from April 1, 2018, financial year 2018-19; they cannot Wadhwa, a chartered accountant justification for allowing any relaxation to the HFCs on this
lated based on the original cost of March 31, 2018, the tax liability will onwards. Similarly, if you have be carried forward or set off. For with score after it has been rolled out for banks. The minimum
down payment requirements are also likely to be similar
between banks and HFCs with some leeway being provided
to the HFCs.

Co-branded cards provide good benefits shopping online, then get a card
that rewards online
shopping. There are a few cards that
offer higher points to the customer
All in all, while retail home loan borrowers are unlikely
to see any significant change in the immediate future, the
integration of the regulation function between banks and
HFCs will prove to be beneficial for the industry and the bor-
There are significant cashbacks, but opt for one only if you use ecommerce sites aggressively for spending online, irrespective of rowers in the long run.
the platform.
TINESH BHASIN offered to customers An individual needs to segre-
through such tie-ups GET A CARD BASED ON YOUR gate his monthly spending and
The writer is a Sebi-registered investment advisor

Ecommerce companies are increas-

ingly offering co-branded credit
increases their brand loyal-
ty,” says Sahil Arora, director
SPENDING BEHAVIOUR check the categories and brands
where he spends the most. Out of
cards that offer their users dis- and group business head– nDon’t enrol for a card and then try to the total expenditure, if 50-60 per
change your spending pattern
counts and cashback on their plat-
forms. Flipkart is the the latest one
to join this trend. The e-commerce
In the recent partnerships
n Evaluate three-four months’
cent is with one brand or one cate-
gory, accordingly opt for credit
cards that help to reward the
platform has partnered with Axis – of banks and tech platforms –
behaviour. If spends are on airline Are pharma funds a GOOD LONG-TERM BET
n Co-branded cards work best if there’s
Bank. Before this, Paytm had the cardholder gets a cashback on tickets and e-commerce shopping, good contra bet? Period Category average
launched Paytm First every spend. Ola loyalty to a brand for example, enrol for two cards Pharma funds have been return (%)
Card with Citi, Ola Money SBI Credit n Many users spend based on discounts that offer higher air miles and laggards over the past year,
joined hands with SBI Card, for example, more points for online spending. 1 year 1.7
YOUR MONEY instead of sticking with a band with a category average
Credit Card, and offers 7 per cent cash- If you are a big spender on both return of a meagre 1.74 per 3 years -3.2
n For such individuals, a card that
Amazon India has back on cab spends, 5 Flipkart and Amazon, it does make cent. They have also yielded 5 years
been offering a co- per cent on flight rewards for spending on a category works better sense to enrol for co-branded cards 4.9
meagre returns of only 4.90
branded credit card booking, 20 per cent on both the platforms, according 10 years 15.9
per cent compounded
with ICICI Bank. on domestic hotels, through vouchers, one-time dis- mostly on one e-commerce plat- to experts. Source: Value Research
annually over the past five
So, how do these and so on. Similarly, in count, or free subscriptions to vari- form or with one taxi-hailing com- Experts also point out that e-
cards work? Co-brand- Paytm First card, ous services. The partnering banks pany. Only if the past spending commerce players are opting for years. However, experts say
ed cards are like loyalty Amazon Pay ICICI also provide extra benefits such as pattern indicates loyalty to one plat- co-branded cards due to recent these funds can prove to be good contra bets for
programmes. The Bank card and Flipkart movie tickets and discounts on form should the user opt for these government regulations. “Foreign- investors willing to hold them for three-five years. One
more cardholders spend with a Axis Bankcard, customers get restaurants. “Co-branded cards cards. But if there's no loyalty to one owned market places have been good reason for investing now is that the negatives are
company, the more benefits they between 1 per cent and 5 per cent work for individuals who are loyal brand or platform, then the individ- bogged down by recent govern- already factored into the prices. Indian companies
get. “Through such tie-ups, banks unlimited cash back on every spend to a brand. But a customer should ual should give such cards a pass. ment guidelines, which deter them have got better at handling USFDA strictures. Moreover,
get to increase their credit card base on the respective platform. not opt for one of these cards and “Look at whether the spends are on from giving deep discounts to cus- Indian pharma companies are global leaders in gener-
through cashback offers and lever- Most of these co-branded cards then change his spending behav- a brand or a category. Accordingly, tomers. Tie-ups can help such ics. One in every three generic pill consumed in the US
age digital footprint left behind by have a joining and annual fee, iour,” says Navin Chandani, chief sign up for a co-branded card and market places skirt regulations as is supplied by an Indian company. And now they are
newly-acquired customers to cross- which is waived off if a customer’s business officer, BankBazaar. segregate the spending,” says banks provide the cashback and also venturing into complex generics.
sell other products. As far as tech spends cross the specified thresh- A customer needs to first evalu- Chandani. If you are not loyal to any not the e-commerce platforms,”
companies are concerned, cashback old. Some also offer joining benefits ate whether he has been spending brand, but spend significantly on says Arora.


Buying health insurance for claim, and the hospital to my premium? Business Standard brings you a snapshot of average current rates and unit sizes in localities
your family is indeed a very authorities are blaming the Usually, insurance companies that offer property in the price range of ~1 crore-~1.5 crore. If you are looking at buying real
good decision. Usually a family insurance company. What don’t apply any loading due to estate, an idea about prevailing rates would come in handy
floater health insurance plan should I do? family history of diabetes.
available in the market allows You may handle this issue with However, if you are already Avg price (~/sq ft) Avg unit size (sq ft) Avg price (~/sq ft) Avg unit size (sq ft)
you to include self, spouse and ease if you have the precise diabetic, then there are high AHMEDABAD Narendra Nagar 6,425 1,770
up to a maximum of three requirements from your insur- chances that there will be load- Vastrapur 5,830 1,992 New Colony 6,000 2,300
dependent children in a single ance company. Once you ing on your premium.
policy. For your parents, you become aware of the gaps in Naranpura 5,654 2,059 Rambagh 7,176 1,762
should buy a separate family documentation based on the My father, 65, is a pensioner Science City Road 5,121 2,453 Raj Nagar 7,500 1,896
floater policy. The premium of list of documents that your and in good health. He has a Jodhpur Village 6,256 1,998 Dharampeth 7,965 1,566
ROOPAM ASTHANA a family floater plan is lower insurer requires, you health cover of ~1 lakh a year
Chandkheda 3,440 3,151 VISAKHAPATNAM
than the cumulative premium can arrange for the balance from his employer, which
I am 38 years old and was of multiple individual policies, documents to be provided by will last until he turns 75. Thaltej 4,976 2,584 MVP Colony 6,200 1,897
recently divorced. My health as the sum insured offered in the hospital and doctors. We Should I buy health insurance Paldi 5,942 2,051 Madhurawada 3,700 2,820
insurance plan was bought in a floater policy is the maxi- can assure you that the docu- now or wait until the KOLKATA Yendada 4,541 2,877
my husband’s name. Now that mum that can be utilised ments required for claims pro- employer discontinues its
my marital status has together by all the members in cessing are those that are cover? Are there good plans
Tangra 5,730 1,975 Seethammadhara 6,000 2,170
changed, what will happen to a given year. If your goal is to required to be prepared by all for seniors? New Town 6,249 1,944 Peda Waltair 5,600 2,000
my health insurance policy? buy a health insurance cover hospitals during the course With medical expenses rising Kankurgachi 8,215 1,396 JAIPUR
You may request the insurance for your family by paying a of treatment. We also suggest year-on-year due to high med- Mukundapur 7,624 1,750 Vaishali Nagar 4,843 2,455
company to endorse the policy premium that is easy on that you keep a copy of all doc- ical inflation, a health insur-
for change in ‘proposer or pay- your pocket while not uments submitted and the ance cover of ~1 lakh is woeful- Hussainpur 6,300 1,916 Mansarovar Extension 4,669 2,386
er’ name by writing an email compromising on the benefits master list of required ly inadequate. Thus, you need Beleghata (Beliaghata) 6,809 1,851 Jagatpura 6,500 1,845
or letter. Also, you may port offered, we recommend that documents with you for to go for a higher cover as early New Alipore 7,148 1,870 Civil Lines 6,255 2,063
the policy to any other insur- you go for a family floater future reference. as possible. Various insurance KOCHI Vidhyadhar Nagar 5,572 1,976
ance company with the insurance policy. companies offer good health
above change for continuous I am 40, and my parents are in insurance plans for persons up Kakkanad 4,851 2,554 Durga pura 6,600 1,970
policy benefits. My father had a cardiac arrest their seventies. Both have to the age of 65 years. After the Kadavanthra 6,217 1,935 Pratap Nagar 4,800 2,238
and was hospitalised. The diabetes. While filing a health age of 65, you may find it diffi- Vyttila 7,139 1,859
I live in a joint family of six treatment is over now. insurance application, there cult to get him enrolled in Note
Palarivattom 6,941 1,852 · The ticket price range considered for the above data points is between ~1 crore
members, which includes my However, the health was a question on family equivalent plans. and ~1.5 crore
working wife, two children insurance company has medical history. Since both Kaloor 5,948 1,901
· All the data points discussed in the above table refer to primary market only
aged less than 10, and my rejected his claim saying that my parents have diabetes, will The writer is CEO and whole-time Maradu 6,189 1,821 · Above residential data set comprises of residential apartments only
retired parents. Will a family the hospital’s documentation it affect my chances of getting director, Liberty General Insurance. Edapally 5,878 1,984 · Above residential data is representative of organised real estate developers only
floater health plan be a better is not in order. Nobody is health insurance? Can t The views expressed are his own. Send · The top performing micromarkets based on sales during last year (June-2018 to
option for me? helping me file my father’s he insurer add loading your queries to
NAGPUR May-2019) is represented on the above table
Gandhi Sagar Lake 8,276 1,580 · Data points are updated till May 2019 Source: PropEquity

YES Bank net falls 91% on MTM

provisioning, lower income
Second consecutive quarter of hit on bottom line since management took charge
SUBRATA PANDA ter of the previous financial
Mumbai, 17 July year, it was ~1,694 crore.
The provisioning coverage

ES Bank reported 91 per ratio, an indicator of the provi-
cent decline in net prof- sion made against bad loans
it to ~113.8 crore in the from the profit generated, stood
April-June quarter (Q1) of 2019- at 43.1 per cent. On a year-on-
20 (FY20), because of a mark- year basis, the PCR has come
to-market provisioning of ~1,109 down significantly but quarter
crore for bad loans, and decline on quarter, it remained the
in non-interest income. same. YES Bank closed 5.25 per
In the same quarter of the cent lower at ~98.45 on the BSE.
last financial year (2018-19 or The net interest margin
FY19), the bank’s profit stood at NO SILVER LINING (NIM), a measure of profitabil-
~1,260 crore. The bank had post- Net profit (~ cr) (%) YoY chg BSE price (~) ity of the banks, stood at 2.8
ed its first-ever quarterly loss in Jun ’18 1,260 30.5 per cent. The NIM in the first
the January-March quarter of Sep ’18 965 -3.8 quarter of FY19 stood at 3.3 per
FY19, at ~1,507 crore. cent. The credit cost of the
Dec ’18 1,002 -7.0
This is the second consecu- bank during the June quarter
tive quarter the bank has shown Mar ’19 -1,507 - was 32 basis points (bps) while
a big hit on the bottom line since Jun ‘19 114 -91.0 it was 15 bps in the June quar-
the new management under Compiled by BS Research Bureau Source: Capitaline ter of FY19. In the March quar-
Ravneet Gill took over in March ter of FY19, the credit cost of
after the forced exit of promoter- crore, compared to 0.59 per cent set aside contingency provi- bank was 137 bps.
chief executive Rana Kapoor in the same quarter last year. It sions of ~2,100 crore. Of this, The capital adequacy of the
over governance concerns by sold one account with an expo- the bank used ~1,399 crore for bank stood at 15.7 per cent with
the Reserve Bank of India. sure of ~412 crore to an asset specific provisioning against total capital funds at ~50,569
In the quarter under review, reconstruction company (ARC) NPAs in Q1FY20. crore. The bank is looking to
YES Bank’s provisions stood at during the June quarter. The net interest income of raise close to $1 billion to boost
~1,784 crore. In the same quarter The bank reported gross the bank grew marginally by the capital adequacy.
of FY19, the bank provided ~625 slippages of ~6,232 crore dur- 2.8 per cent to ~2,280 crore in About probe into whistle-
crore. In Q4FY19, the banks pro- ing Q1FY20. Q1FY20 versus ~2,219 crore in blower complaints, the bank
visions stood at ~3,661 crore. “Net corporate slippages the Q1FY19. However, the total said it conducted an internal
The bank’s gross non-per- were entirely from the income of the bank declined enquiry of the allegations. The
forming assets (NPAs) rose 5.01 accounts classified as ‘BB’ and 9.2 per cent to ~3,553 crore internal enquiry of the allega-
per cent to ~12,092 crore. In below at the end of Q4FY19,” opposed to ~3,913 crore in tions resulted in a report
Q1FY19, the bank’s gross NPAs said the bank. same quarter last year. reviewed by the board of direc-
stood at 1.31 per cent. In the last quarter, the The non-interest income of tors. The bank further engaged
The net NPAs soared to 2.91 bank had a stress book of the bank fell 25 per cent to an external firm to independ-
per cent in Q1FY20 at ~6,883 ~10,000 crore for which it has ~1,272 crore; in the same quar- ently examine the matter.

Fewer orders, piling losses Punjab & Sind

Bank reports
take toll on turbine makers ~238-cr fraud
by Bhusan
Foreign firms and Chinese imports seeing a rise in India
Power and Steel

The troubles at Suzlon Energy,

PROJECT New Delhi, 17 July

the largest player among INSTALLATIONS (Mw) Punjab & Sind Bank on
domestic turbine makers, are 2013-14 2,094 Wednesday reported a fraud
symptomatic of what ails the over ~238 crore by Bhushan
industry. 2014-15 2,311 Power and Steel, a third such
Leading turbine manufac- 2015-16 3,423 instance after similar dis-
turers with more than 80 per 2016-17 5,502 closures made by PNB and
cent market share are staring Allahabad Bank recently.
2017-18 678
at weak order pipelines, losses, “On the basis of forensic
and regulatory niggles. At the 2018-19 742 audit investigation findings
same time, foreign companies Source: Ministry of New & Renewable Energy and the CBI filing an FIR on
and imports from China are a suo-moto basis against the
increasing their footprint in the company and its directors,
country, sparking worries of alleging diversion of funds
cost escalation among power from the banking system, a
producers. fraud of ~238.3 crore is being
At the same time, commis- reported by the bank to the
sioning of wind power projects RBI. In the accounts of the
has slowed down to a historic company (BPSL), the
low. Last financial year, 742 MW power production and India’s slow death of three-decade-old bank has already made pro-
of wind projects were commis- overall renewable target as Indian wind manufacturing visions amounting to ~189.35
sioned. This is when the Centre well,” said Sunil Jain, chief sector. crore, as per prudential
has tendered out close to 7,000 executive officer, Hero Future Vestas recently announced norms,” said Punjab & Sind
Mw of wind power projects in Energies. a new nacelle and hub (a com- Bank (PSB) in a regulatory
the past two years. Wind proj- Hero and ReNew Power ponent of a wind turbine) filing. It was observed that
ects installation was 5,000 Mw recently started operations and assembly line in Chennai last the company had misappro-
in 2016-17. management of their wind week. It already has a blade priated bank funds, manip-
On Tuesday, Suzlon default- units, as turbine companies fail plant in Ahmedabad. GE ulated books of accounts to
ed on payment of $172 million to oblige contracts because of Energy was recently awarded raise funds from consortium
in foreign currency convertible financial stress, said industrial India’s largest turnkey 300-MW of lender banks, it added.
bonds (FCCBs). Inox Wind suf- sources. wind power project of ReNew “At present, the case is
fered a net loss of ~31 crore in The Solar Energy Power. China’s Envision, a fair- at the NCLT, which is at an
the quarter ending March 2019. Corporation of India (SECI) ly recent entrant in India, has advanced stage, and the
Regen Powertech closed down cancelled a 2,000-Mw tender around 300 MW of turbine bank expects good recov-
its Udaipur unit in 2017 and owing to fewer bids of 800 Mw orders, said a source. ery in the account,” it fur-
reduced staff strength, follow- against it. Andhra Pradesh has The Indian government in ther said.
ing slowdown in orders. It cur- recently decided to overturn all 2017 retired the 25-year-old Last week, Allahabad
rently has no new order, said the wind projects awarded in Feed-in-Tariff (FiT) mecha- Bank had reported a fraud
an executive. the state, thereby impacting nism to award wind projects of about ~1,775 crore by BSPL
The Indian arm of German investment in close to 4,000 and introduced competitive to the RBI, alleging diversion
major Enercon (erstwhile Wind Mw projects. Windy states such bidding. The capacity addition of funds.
World), which was one of the as Tamil Nadu, Telangana and fell to a record low of 650 Mw “The bank has already
earliest investors in Indian AP also delay payment to wind during the same period. But the made provisions amounting
wind sector, has halted opera- power producers, which in turn tariffs also fell by half from to ~900.2 crore against the
tions in India. hurts the margins of turbine existing rates to ~2.5/Mw. Under exposure of the bank in
Wind power producers makers. the FiT mode, the electricity BPSL,” Allahabad Bank had
which procure turbines from In what could be another regulator decides the tariff. said on Saturday. Earlier,
these companies said this has challenge for domestic compa- Wind turbine manufactur- Punjab National Bank (PNB)
created a vacuum in the wind nies, global turbine makers ers then declared an unsold had also reported a fraud
energy sector. such as GE Energy, Vestas and inventory of close to ~10,000 worth ~3,805 crore by the
“Policy irregularities and Chinese Envision are increas- crore with no outlook on new firm. Around
retrospective changes are hurt- ing footprint in India. projects. Leading domestic 85 per cent of PNB’s
ing the wind manufacturing “Though the cost econom- wind turbine manufacturers ~4,399-crore exposure was
sector in India, especially ics do not favour the low-tariff including Suzlon Energy suc- siphoned off. It is
indigenous players. The health expectations of the Indian gov- cumbed to cost cutting and expected more banks will
of the Indian turbine makers is ernment,” said a leading pri- employee retrenchment with report a fraud committed by
in bad state and it will impact vate power producer, ruing a dry order books. BPSL.

Indians got lion’s share Safety audit: Aviation regulator

of H1B visas in last 5 yrs red flags lapses in five airlines
Aviation regulator DGCA has quate knowledge to handle
PRESS TRUST OF INDIA holders and engaged with the conducted safety audits of Air “dangerous goods” despite be-
New Delhi, 17 July US administration and the India Express, SpiceJet, ing trained in Dangerous Good
Congress on issues related to AirAsia, IndiGo and GoAir and Regulations, he said in a writ-
Indians received between 67 the movement of Indian pro- it found the implementation of ten response to a question in
per cent and 72 per cent of the fessionals, including those their safety management sys- the upper house. In a serious
total H1B visas issued by the pertaining to the H1B pro- tem “to be deficient,” the gov- lapse, the regulator found, th-
US in the last five years, the gramme,” he said. ernment informed Rajya Sabha ere was a delay in carrying out
External Affairs Ministry said. “Recently, issues of H1B visa Wednesday. Civil Aviation the corrective actions for the
Replying to a question in were raised during the visit of Minister Hardeep Singh Puri “FOQA exceedances”, Puri said.
the Lok Sabha, External the US Secretary of State, said the audits also found that Flight Operations Quality
Affairs Minister S Jaishankar Michael R Pompeo, to India on the flight crew rostering soft- Assurance (FOQA) is the
said no comprehensive June 26. In our engagements, ware was not upgraded and process of obtaining and ana-
changes have been made to we have emphasised this has untrained staff were manning lyzing all kinds of data from
the H1B visa programme so been a mutually beneficial check-in counters. flights to improve the safety
far. “The Indian government partnership that should be nur- The “other staff” at check-in and efficiency of flight opera-
has closely consulted all stake- tured,” he added. counters too did not have ade- tions. PTI


Nestlé creates chocolate Musk shows off progress on

brain-machine interface
without any added sugar
BLOOMBERG a way to alter the structure of
17 July

Futurist entrepreneur Elon

for the high-precision task.
“They are tiny electrodes
and the robot is delicately
implanting them,” Musk said,
of next year.” An early focus
of the team is using the tech-
nology to address brain dis-
eases and paralysis, but the
17 July sugar to boost its sweetening Musk late on Tuesday noting there could be thou- longer aim is to make
power. revealed his secretive sands of the electrodes con- implants so safe, reliable and

estle SA has found a The world’s largest food Neuralink start-up is making nected to a brain. easy that they could be elec-
way to create chocolate company plans to use the pulp progress on an interface link- “This is something that is tive surgery options for peo-
without adding any technique for other confec- ing brains with computers, not going to be stressful to put ple seeking to enhance their
sugar, relying on leftover mate- tionery brands in additional and said they hope to begin in; will work well, and it is brains with computing pow-
rial from cocoa plants for sweet- countries next year. testing on people next year. wireless.” The chip will com- er, according to a neurosur-
eningasconsumerslookfornat- “Using pulp makes it a more Musk has long contended municate wirelessly with an geon on the Neuralink team.
ural and healthier fare. premium chocolate,” von that a neural lace meshing earpiece, which relays infor- Musk said the goal was to
The food company is using a Maillot said. “Sugar is a cheap minds with machines is vital if mation to a smartphone appli- make adding the brain-
patented technique to turn the ingredient.” Nestle’s new 70% people are going to avoid cation, according to enhancing implants as easy a
white pulp that covers cocoa chocolate, and usually it’s most- Nestle’s confectionery business, dark chocolate will have as being so outpaced by artificial more. Neuralink. procedure as laser eye surgery.
beans into a powder that natu- ly thrown out. said in a phone interview. much as 40% less sugar than intelligence that, under the "Ultimately, we can do a For now, the goal is to let a “I've said a lot about AI
rally contains sugar. This fall in These Asian Chocolatiers The food and beverage most equivalent bars with best of circumstances, full brain-machine interface," person with the implants con- over the years; I think that
Japan, Nestle will start selling Are Spicing Up the Global industry is under pressure from added sugar. Nestle’s existing humans would be akin to Musk said. trol a smartphone with even in a benign scenario, we
KitKat bars with 70% dark Sweets Scene consumers and governments dark chocolate KitKats have 12.3 "house cats." Musk and mem- "Achieve a sort of symbiosis thought, but the technology will be left behind,” Musk said.
chocolate under the new recipe, alike to make healthier prod- grams of sugar per serving. bers of the Neuralink team with artificial intelligence." could eventually extend to oth- “With a high bandwidth
which doesn’t include any Pulp-coveredcocoabeans ucts amid rising obesity and “The sugar reduction is inci- laid out progress they have Neuralink unveiled an early er devices such as robotic arms. brain-machine interface we
added sugar, the Vevey, Nestle could use the same diabetes rates. Nestle’s move dental, not a focus,” von Maillot made on their mission at an version of a tiny sensor with “This has tremendous can actually go for the ride
Switzerland-based firm said. process to make milk or white may bolster its position as a said. “It’s more about a novel event held in San Francisco to hair-thin strands that could be potential,” Musk said. and have the option of merg-
Until now, the pulp has never chocolate in the future, leader in the industry, and it way to produce chocolate and recruit talent in software, implanted in a brain through a “We hope to have this in a ing with AI. This is very
been used as a sweetener for Alexander von Maillot, head of comes three years after finding use the best of the cocoa pod.” robotics, neuroscience and small incision by a robot built human patient before the end important.”

Feeding 10 bn people 71 mn forcibly displaced New York is bracing

will require genetically globally last year: UN for hottest day of yr
modified food: Report BLOOMBERG
17 July
In the US, the United
Nations classified more than
17 July

Brace yourself for the hottest

last weekend. Anyone out-
doors should stay hydrated
and seek shade when possi-
ble, the elderly and sick
DEENA SHANKER Persecution, conflict, vio- one million as “persons of day of the year. It could reach should be monitored and
New York, 17 July lence and human rights vio- concern” for the first time. 100 degrees Fahrenheit (38 pets and children shouldn’t
lations. These were the rea- The U.S. figures were broken Celsius) on July 20 as the be left unattended in cars,
Like it or not, genetic modifi- sons why 70.8 million down to 719 thousand asy- U.S. East Coast slides into the the weather service warned.
cation is going to be an impor- individuals were forcibly dis- lum-seekers and 313 thou- weekend. When you add in Chicago could peak at 98
tant tool to feed the planet’s placed worldwide last year, sand refugees. The U.S. is the humidity, it could feel degrees Fahrenheit Friday,
growing population. according to a UN report. among a dozen countries like 110. with New York’s Central Park
If we want to feed 10 billion This equates to 37,000 dis- which hosted 200,000 or The East Coast isn’t reaching that on Saturday.
people by 2050, in a world beset placements daily. The num- more refugees last year. alone, according to the Washington will touch at
by rising temperatures and ber of refugees has almost Based on resettled National Weather Service. A least 100 this weekend.
scarcer water supplies, we will doubled over the 2008-2018 refugees, the U.S. ranked sec- “dangerous and widespread” “Excessive heat warnings
needtodramaticallychangethe period, and 3.5 million peo- ond with 22,900, following heat wave is forecast for two- cover a pretty considerable
wayweproducefood.Increased ple were awaiting a decision displaced. Venezuelan Canada’s 28,100. The U.S. is thirds of the U.S., with a high number of states today,” said
public investment in technolo- on their application for asy- accounts for 0.4% of world the largest recipient of new pressure dome holding the Alex Lamers, a forecaster
gies like genetic engineering is a lum — a 300 per cent change total population. asylum applications, with heat in place. At night, temps with the U.S. Weather
vital piece of that, according to from 2008. About 350,000 254,300 pending in 2018 -- will struggle to fall below 80. Prediction Center in College
a report published on In 2018, displaced Venezuelans sought asylum about 27,500 or 11% of these The heat wave will stress Park, Maryland.
Wednesday by the World An Indian scientist holds a genetically modified rapeseed crop Venezuelan refugees and last year, including 227,300 were from Venezuelan. Midwest crops and boost “Then we are expecting
Resources Institute. under trial in New Delhi PHOTO: REUTERS asylum seekers increased 2.6 in Peru and 81,000 in Brazil. Salvadorans and Hondurans energy demand, including in the heat wave to ramp up on
Not only must crops be million to reach 3.4 million - Globally, about one in five accounted for 33,400 and New York where an outage the East Coast in the next
more productive, but the agri- engineering,” the report says. on them for their food security. - or 5% of the world’s total asylum seekers come from 24,400, respectively. darkened part of Manhattan couple of days.”
cultural challenges of climate Instead, the report points Finally, researchers should use
change—including disease, out that genetic modification genetic engineering, including
pests and periods of both saved the Hawaiian papaya Crispr, to develop more crop
drought and flooding—mean
they must be more resilient
as well.
population from a deadly virus,
and says it may be able to do
the same for potatoes in
resiliency. The 500-plus page
report lays out a 22-item “menu
for a sustainable food future,”
Netflix earnings to prove if price hikes are working
“We have to increase yields Uganda, soybeans in Brazil and that explores ways to reduce
dramatically, at an even higher tomatoes in Florida. demand, increase production, BLOOMBERG Wall Street is projecting much as 1.2% intraday. But
rate than we’ve done historical- “Everyone exaggerates the restore forests and wetlands, 17 July revenue of $4.93 billion for the Netflix’s June content slate
ly,” said Tim Searchinger, lead benefits and costs of these two increase the fish supply and period, up 26%. Analysts also should lift some spirits as the
author of the report. “It’s got to traits of GMOs,” Searchinger reduce greenhouse gas emis- Netflix Inc.’s earnings should will be closely watching the bank has seen increased web
be done by growing smarter.” said. “There are so many other sions from agriculture. Action help answer a key question for growth in average revenue per searches for original series like
The Green Revolution of the things we can do, it’s hard to items range from reducing the streaming giant: whether user, international profitabili- “When They See Us” and
20th century boosted food pro- imagine why we’d be against it.” meat consumption by as much customers are willing to pay ty, domestic streaming contri- “Black Mirror,” Thornton told
ductionusing manytools,some The report also emphasizes as 40% in the U.S. to improving more in an increasingly com- bution margins and user clients in a note.
of which are no longer available the need for better breeding, African women’s access to petitive market. engagement. Things should get more
to most of today’s farmers. laying out a four-pronged health care and education. After boosting prices in Netflix is the dominant interesting for Netflix in the
Fertilizer use has largely been approach for increasing yields, But genetic modification, markets around the world, the paid video streaming service, second half. On the plus side,
maxed out, Searchinger said, each of which will require more according to critics, has serious company will deliver its sec- but it has reason to shore up its the Los Gatos, California-based
and available water is running public funding. First, breeding limitsandresearchfundswould ond-quarter results on position right now. Walt company will get a boost from
dry. Now, researchers need to cyclesneedtobespedup,focus- be better spent elsewhere. The Wednesday afternoon. Disney Co., AT&T Inc.’s new seasons of “Stranger
find new ways to “grow ing not just on major improve- report is “too optimistic” about Analysts don’t expect much WarnerMedia and Comcast Things” and “Orange Is the
smarter,” including through the ments but also smaller, incre- the potential of the technology, growth at home -- they’re pre- Corp.’s NBCUniversal are all New Black.” Earlier this
use of genetic modification. mental ones. Second, crop said Bill Freese, science policy dicting a mere 309,240 sub- racing to deliver their own month, “Stranger Things” got
Whilepublicdebatehascen- breeders should increasingly analyst at the Center for Food scriber additions in the U.S. on online services, ushering in a off to a record start, with 40
tered on its two primary uses— utilize marker-assisted breed- Safety. As evidence that it’s both average -- but the hope is that new era of intense competi- million household accounts
in soybeans and corn for resist- ing, a technology that allows unnecessary and too costly, he the increases and more users tion. watching in the first four days
ance to the pesticide glyphosate them to map crop DNA and cut points to a 2014 report in sci- overseas will let Netflix sustain Against that backdrop, of the new season.
and production of a natural down the number of breeding ence journal Nature that found the expansion investors have Netflix is building its presence have risen 36% this year, near- priced subscription tier for But Disney’s highly antici-
insecticide, Bacillus thuringien- cycles. Third, research must conventional breeding was come to expect. overseas. The company is ly double the gain of the S&P users with less disposable pated $6.99-a-month stream-
sis (Bt), in corn and cotton—the move beyond crops like corn, faster than genetic engineering “Recent price increases in expected to report the addition 500. But it’s still unclear how income. ing service, called Disney+,
WRI implores us to look further. soy and wheat, and focus on in developing drought-resistant multiple countries should of 4.75 million subscribers many customers globally are SunTrust analyst Matthew arrives in November. Though
“We do not believe that debate “orphan crops” such as corn and a 2011 report that put result in revenue acceleration internationally in the second willing to pay for its product. Thornton views investor sen- no one is expecting a large-
over these particular GM traits sorghum, millet, peas and bar- a $136 million price tag on a starting this quarter,” Citigroup quarter, according to analyst Greg Peters, the company’s timent as neutral-to-cautious scale defection from Netflix to
should dictate policy about the ley, especially because regions genetically modified crop trait. Inc. analyst Mark May said in a data compiled by Bloomberg. chief product officer, has hint- heading into earnings, partic- Disney+, it should shake up the
entire technology of genetic in sub-Saharan Africa depend BLOOMBERG research note. Shares in the company ed at the need for a lower- ularly with the stock down as industry.

Robots scaling shelves to speed up delivery New Mini Cooper SE is BMW’s

BLOOMBERG urban areas where land is scarce and best electric effort yet
A logistics company partly owned by At the California center, in La BLOOMBERG screen. Some differences: the body of the new
Related Cos., the developer behind Palma, robots designed by Quiet 17 July Mini Cooper sits 18 mm (less than an inch) high-
Manhattan’s Hudson Yards, is Logistics spinoff Locus Robotics will er than its counterparts, due to some engineering
searching for locations across North be able to travel long distances This past Saturday in Red Hook, Brooklyn, after requirements with the placement of the electric
America to build its multistory across the building and scale high the first day of Formula E races, when the heat battery and motor. And it has short overhangs
robotic warehouses. shelves that are out of reach of had so baked into the city’s asphalt it felt like and widely set wheels to set it apart as the first
Robots — and humans —started humans. With the rise of same-day being inside a cast-iron pot, I, too, was able to get purely electrically powered Mini, though I don’t
working this month at Quiet and next-day delivery options made behind the wheel of the future: the all-electric expect you’ll notice right away—I certainly did-
Logistics’ new 440,000-square-foot popular by Inc., the Mini Cooper SE. n’t. The production version will offer three dif-
(41,000-square-meter) fulfillment automation is necessary to meet the BMW Group’s next shot at the all-electric, dai- ferent trim levels and a host of sporty color mix-
center in the Los Angeles area. It’s expectations of the company’s ly-driving market for the mass- es.
the firm’s first property on West fashion clients, who have large es—their 2013 release of the i3 There will also be a distinc-
Coaast, and a model for as many as customer bases in the L.A. area, city car was an underpowered tive sound created especially
seven more the company aims to Welty said. flop—is positioned as a $36,400 for the Mini Cooper SE gener-
build near population centers by Fast Fulfillment challenger to the Tesla Model 3, ated via a speaker system that
2022, with the goal of getting goods That doesn’t mean robots are the current segment leader. guarantees “an acoustic pres-
to consumers faster. taking over. In fact, the demand for Idroveanear-productionpro- ence on the road that is typical
“Some people assume these large fast fulfillment will require more totype for some laps on the 2.5- of Mini,” as BMW puts it.
facilities should be in rural areas human labor than ever before, mile track built to host the That evening in Brooklyn, I
with more open space, but they work according to Welty. Quiet Logistics Formula E cars all weekend and didn’t hear anything. And due
better in cities that are close to more aims to hire about 500 full-time can safely report: it’s a Mini. It’s to the controlled nature of the
people and more labor,” Chief employees who will work in tandem neither imposing to behold nor session—it was a lead-and-fol-
Executive Officer Bruce Welty said in with the robots at the two-story La bold from behind the wheel. low exercise with a few fellow
an interview. Palma center, the company’s fifth What you expect is what you get, journalists—I can’t speak to
Quiet Logistics -- which fulfills U.S. warehouse. segment of the property market this properties in existence, most of the minus a bill at the pump. day-to-day nature of this little beaut. But the 181-
orders for fashion and lifestyle Related -- known for its $25 year, according to a Bloomberg savings and benefits are theoretical, With its endearing round headlights, the horsepower front-wheel-drive coupe has the
brands such as Bonobos, M. Gemi billion Hudson Yards project, with index of real estate investment he said. miniature two-door, rear-hatch body, and the acceleration (0-62 mph in 7.3 seconds), low cen-
and Outdoor Voices -- is scouting office and residential skyscrapers trusts. “We don’t know what the friendly flat roof of every other Mini you’ve come ter of gravity, and intense agility of a go-kart,
locations in the U.S. Southwest, and a $2 billion mall -- in March But landlords should take economics look like,” Egan said. to know and love, the brand-new electric Mini even if the top speed is limited to a paltry 93.2
Midwest and Southeast and also teamed up with Greenfield Partners caution before expanding “We don’t know what the rents are Cooper SE is as familiar as ever, down to the pre- mph. I can hit that on my buddy’s Vespa.
exploring the possibility of building to buy Quiet Logistics, extending the aggressively into vertical fulfillment going to be, and we don’t know mium accoutrements that come standard—LED Speed aside, I liked how the 135kW battery sits
in Canada and Mexico. Multilevel developer’s reach into e-commerce. centers, according to David Egan, what’s going to happen when the headlamps, multi-zone automatic air condi- deep in the car, so there’s no obstructions along
construction uses less real estate The soaring popularity of online global head of industrial and users’ lease runs out and the spaces tioning, auxiliary heating, electric parking, and the bottom center of the floor, and the luggage
than traditional sprawling, single- shopping has helped make logistics research at CBRE Group have to be taken over by a second connected navigation looped through a futuris- compartment at the back is just as welcoming
story warehouses, an advantage in warehouses the best-performing Inc. Because there are few such generation of renters.” tic central and very Mini-esque round touch- and spacious as any other Mini.



oday, almost all boardroom that highlight how engaged
discussions are buzzing with employees can boost productivity,
the phrase “digital transfor- drive innovation and enhance prof-
mation”. Strategies are in place, roll- itability. And if we are talking about
outs are underway, with much focus a change that will revolutionise
on agility and speed-to-market. In every aspect of our businesses,
the recent past, what we have wit- without engaging employees, we
nessed is dispersed implementation will face the risks associated with
of technology, primarily focusing on resistance, impacting the entire
operational efficiencies. This is cer- transformation agenda.
tainly going to change at a pace only
afewcanforesee.Theseroll-outswill What needs to be addressed?
be more ambitious, changing the First, we need to help employees
business dynamics completely, fur- understand that digitisation is not

Grofers brands the last mile

therrevolutionisingthewayweinter- aboutIT,butrevisitingandredesign-
act as a customer or as a provider. ing the existing processes powered
Digital transformation will help by technology to make them more
us unlock new revenue streams, efficient in order to deliver a unique
deliveranexperience-basedinterac- customer experience. This is a criti-
tionandcreatenewbusinessmodels cal aspect to address, as a lot has
withshorterproductlife-cyclesdriv- been written and spoken about peo-
Here'showtheonlinegrocerisropinginkiranastoresinitsfightagainstharddiscounters another way — by being able to en by self-destructive ple losing their positions
push its private labels. Today, technology. To most, it and jobs, creating a hos-
SHUBHOMOY SIKDAR looked at areas where our online ing assortment. So, the money is about 15-20 per cent of the stocks soundslikeapicture-per- tile environment. These
delivery was in demand as we NEWER GROUNDS locked in that inventory and the of these kirana stores comprises fect situation. However, insecurities and uncer-

n alliance between small understoodtheconsumerneeds.A space is also limited for them to Grofers’ labels. “The more they who exactly is going to tainties can derail the
kiranastoresandamajor lot of our online volumes are com- Grofers looks to push its stock anything else.” sell, the more margins we make roll out these plans. process. Once we
online grocer — two ing from the NCR region, such as private labels through kirana He adds that in some of these and we are creating more brand Typically, digital address the “mindset-
competitors at extreme east Delhi, old Gurgaon or Noida,” and add another channel in stores,thecompanyhasmanagedto visibility for ourselves.” transformation-related related” changes, this
ends of the fragmented universe says Kumar. areas where its online cutdowntheinventorybyhalfwhile The company wants more discussion revolves transformation agenda
of Indian retail — will sound puz- However, the Softbank-backed increasing their turnover, though stores to stock its private labels around technology, NIRANJANXXXXXXX needs to address
business has done well
zling, more so when the former is company is not looking at this not proportionately. Besides, the but has no projections as far as infrastructure and NADKARNISSSS “skillset-related” aspects
trying to hold its own in the face of channel only as an avenue for top- The incentives for the stores attractivepricepointscreateavalue the revenue from these offline processes with very little TÜV SÜD with a clear roadmap of
organised competition and the lat- up purchases by its consumer are inventory management propositionfortheconsumeraswell. stores is concerned. or no mention about upskilling and reskilling
ter is trying to usurp their territory. base. “We are looking at a future and better price points In other words, thanks to unhin- Integrating kiranas in some employees. As leaders, the existing employees
But by branding 100 mom-and- where online and offline will co- deredavailabilityandbetterpricing, way is a strategy being considered do we have a plan in place to get the while we hire the digital native tal-
Once spruced up, it takes
pop stores already and aiming to exist. So, our aim is to remove thecustomerinthecatchmentarea — or even employed — by most teamsfromthetopfloortoshopfloor ent. I think the starting point is to
take that figure to 1,000 by the end channel as a hurdle, and use our three months for a store to wouldbeinclinedtovisitthesestores modern retailers, including engaged in this entire process? Most assess our “employee readiness”
of this financial year, Grofers plans brand equity to attract higher foot- adapt to Grofers’ technology rather than, say, a D-Mart or a Big Amazon. So what happens when change management initiatives towards digital transformation.
to take on a slightly underestimat- falls for offline shops.” Bazaar, says Kumar. those with deeper pockets and revolvearoundemployeeswithwell- Successfulimplementationofany
ed piece of the puzzle — the hard As many as 200 new Grofers Kumar says getting the shop own- As things stand, modern trade with a far bigger store footprint crafted interventions to address the strategy or change initiative is only
discounters who swear by no-frills stores will come up in Bengaluru ers on board wasn’t much of a chal- holds only a 10 per cent share of become more aggressive in this mindsetchangerequiredandensure possiblewhenouremployeesseethe
stores, limited assortment, and do and the NCR by the end of the lenge as his firm explains the ben- overall retail in India (estimated at area?Kumarremainsunfazed,and high engagement levels. Somehow, value it adds and acknowledge that
not stock many national brands. ongoing quarter. Some of the run- efits of the deal to them right $500 billion); about 3-5 per cent is there is a good reason for that. As I feel this aspect needs to be disruption caused by this change is
Grofers will help the kirana stores ning/upcoming stores have been upfront. “At the end of the day, with the e-commerce players and Devangshu Dutta, CEO at consul- addressed more prominently while good for them. We as leaders under-
with inventory management, chosen from 6,000 partner stores what they want is to earn more and the balance 85 per cent is with the tancy firm Third Eyesight, points we talk about digitisation. stand that disruption is imperative
using its insights from online retail that are helping the online vertical using our data mining and analyt- kirana stores. So, the opportunity out, the numbers targetted by Companies like Apple, Netflix, and see this as an opportunity to
trends and, in turn, leverage the deliver. There is no transaction ics-poweredinsights,wehelpthem forGrofersisimmense.“Thekirana Grofers — 1,000 stores — is a drop Google, and Dell are 40 per cent move up the value chain. But it's
trust these stores enjoy in the local involved — the co-operation is get rid of dead inventory and equip storesaremostlystagnantanddon’t intheocean.Inotherwords,there's more productive than the average when our employees, the key cata-
neighbourhoods.Asub-plothereis based exclusively on exchange of them to stock the units that sell seemajormonth-by-monthgrowth a huge market to be conquered. company, according to a research lysts, act as a tailwind instead of a
also to mirror the “attractive price- know-how. Additionally, Grofers more in those areas. For a local but our aim is to help them grow in However the company, he adds, from the leadership consulting firm headwind,thechangetowardsdigital
points” that drives Grofers' online doesthemarketingfortheseshops. store, cash-flow management is double digits in the first three should aim to increase volumes Bain & Company. What sets them transformation will witness the right
business, says Grofers founder Yes, that would work for extremely important but is ham- monthsafterthebranding.Thecost rapidly and look for dominance in apart is the engagement level of the tractionandspeedtogaintheadvan-
Saurabh Kumar. Grofers, but what does the neigh- pered because the distributors of operations is reduced by 4-5 per select geographies. “You have to employees - here, I am just talking tagethatyourorganisationenvisages.
The exercise started last year bourhood grocer get in return? make them stock a minimum cent when we help them get rid of acknowledge you cannot domi- about an engaged team, leave alone
and the key criterion for the selec- How easy or difficult is it to con- quantity of SKUs and that restricts their dead inventory.” nate everywhere,” he sums up the what an inspired team can do! ThewriterisCEO,SouthAsia,South-East
tion of stores was location. “We vince him to come on board? their ability to add the fast mov- Grofers stands to gain in challenge for Grofers. There are many research reports Asia,MiddleEastandAfrica,TÜVSÜD

3 out of 10 consumers today are digitally 2outof10 consumers today are digitally
influenced for high average selling price durables influenced for comparatively lower ASP products
such as ACs, televisions, refrigerators and washing such as small appliances, water purifiers and
machines microwaves
Boston Consulting Group and
1 in 3 buys these products online 1 in 2 buythese products online
Google India recently released a
report Digital Powers Consumer
Durables: A $23 billion Opportunity 23 % Urban Digitally influenced 12.5*
by 2023 which projects healthy consumers digitally
growth in sales of televisions, influenced today Online sale in-store sale
refrigerators, washing machines, 10.4*
(figures in%) *Estimated
air conditioners, microwaves and
water purifiers. The report predicts 55 % Urban
the consumer durables industry consumers expected
will grow at a rate of 13 per cent and to become digitally
Rapid acceleration touch the $36 billion mark in the influenced by 2023
According to Gartner, Inc., the average number of next four years. But even within
artificial intelligence (AI) projects in place, in the overall optimistic 84% in-store buyers
organisations which are currently working with AI picture, it talks hadn’t decided their
and machine learning (ML), will grow nine times in about a bigger brand when they 3.0
the next three years. These are findings of The opportunity in started their search
GartnerAI and MLDevelopmentStrategies study “digitally influenced 1.7 1.7
conducted via an online survey in December 2018 sale”, that is, a sale 1.0 0.9
with 106 Gartner Research Circle Members — a where the buyer uses 74% online buyers .3
Gartner-managed panel composed of IT and internet during any stage of hadn’t decided their
IT/business professionals. The findings were brand when they 2013 2015 2017 2023
released recently and it revealed that today, the
the purchase cycle.
started their search Source: Boston Consulting Group and Google India
average number of AI projects in place is four, but
respondents expect to add six more projects in the
next 12 months, and another 15 within the next
three years. This means that in 2022, those SNEHA BHATTACHARJEE I’m sure it won more awards. I believe before approaching any campaign.
organisations expect to have an average of 35 AI or MY FAVOURITE CAMPAIGN that an award is a strong motivation for
ML projects in place. Which is your favourite campaign and both the agency and the client to push Do you remember some of the names
why? their limits and do better. who worked on the campaign?
I would name Kaun Banega Crorepati’s Some of the names associated with the

A question of answers (KBC’s) Koi sawal chhota nahi hota as

one of my all-time favourite cam-
paigns. While KBC had always done
campaign include Nitesh Tiwari,
Piyush Gupta, Nikhil Mehrotra,
Shreyas Jain, and Ashwini Iyer Tiwari.
good advertising earlier, this one serviceadvertised.Isthatarealfear, It was conceptualised and written by
stands out for me because it marries especiallywithregardstothiscampaign? Nitesh Tiwari and Nikhil Mehrotra.
entertainment with a very strong We see that happen in a lot of cam- The films are directed by Nitesh Tiwari
insight and leaves you with some food paigns. However, it all depends on what and Ashwinyer Tiwari.
for thought. Any question that anyone product insights you base
around you asks could make you a win- the campaign on. Here “Koi What else could have been
ner on the show tomorrow. So, it’s best sawal chhota nahi hota” done to make the
not to take any questions lightly. That came from the product, campaign better?
was projected brilliantly through that is KBC and hence the I feel that season two end-
everyday characters — using human brand was not missed. ed abruptly since Amitabh
Here & now truth with a creative twist. Since the time KBC was Bachchan fell ill. The way
launched in the year 2000, Mr Bachchan connected
Asian markets have demonstratedastrong On what parameters did you base your it has captivated millions with the audience seemed
predominanceofsmartphonesasatooltosearch decision? not just through its quiz as real as its campaigns.
andobtainonlinefinance,findsanewstudy.These My decision centered around four format but also its innova- BRIJESH PARMAR Season three saw Shah
findingsfromtheinternationalfinancialholding parameters: Creativity, effectiveness, tive campaigns. Further, its Executivecreative Rukh Khan take over as
RobocashGrouphasbeenobtainedafterspeakingto memorability and extendibility. host being the biggest director, Fulcro (earlier the host. The tagline for
arelativelyhugesamplesizeofalmost1.8million Bollywood star has drawn Interface Business the campaign was kuch
customersinthePhilippines,VietnamandIndiaand What do you think was the key idea the more viewers than ever. It Solutions) sawal zindagi badal dete
Shariah-compliantfundinginIndonesia.This campaign was trying to drive home? saw Amitabh Bachchan on hain. This too again
correlationhasbeenformedbyhighpenetrationof I believe the key idea came from the the small screen become a regular affair. emphasised on how a question can
themobileinternetandtheintentionofonline fact that KBC is all about answering The ads were socially relevant helping change one’s life, and perhaps make you
customerstoconsume"hereandnow"withoutany questions. While people may say that them connect with the common man, a “crorepati”. Thereon, the show moved
geographicalorotherhurdles.Itisapplicablebothin MY TAKE your answers matter, it is actually the who was also a participant on the show. to Sony and the channel waited for a few
caseofunexpectedexpensesandoccasional questions that matter more. years and brought back Bachchan with
Itwascreative,effective,memorableandextendable Did this campaign inspire any of your a bang and an impressive campaign. I
smartphonestoavailfinancemaycorrelatewithan Do you remember the campaign work? What are your takeaways from believe the campaign was the best for its
agefactorthatmayhavebiasedthefindingsbecause BRAND: KBC winning any advertising awards? Do the campaign? time — to entertain and enthuse the
oftheageprofileoftheparticipants.Theanalystsof you think these awards serve any Yes. The key takeaway from this cam- entire family to come together to watch
YEAR OF LAUNCH: 2010 purpose? paign was to never let entertainment take and play the game while delivering on
yearsarethemainpotentialcustomersofdigital AGENCY: Leo Burnett The campaign won a Silver at Goafest, a backseat for the sake of an insight or vice the show’s core proposition of combin-
financialservices. an award that I particularly remember. versa. I try to keep that as table stakes ing knowledge with entertainment.


Sheraton turns back the

years under Marriott
SHALLY SETH MOHILE that Brand Sheraton is being
Mumbai, 17 July led through. It started with
Sheraton Saint-Hyacinthe

lose to three years after (Canada) in August 2018, and
Sheraton entered the travelled to Sheraton hotels
family of Marriott worldwide with pit stops at
International brands, as part of Sheraton Grand Seattle,
the acquisition of Starwood Sheraton Grand Sydney Hyde
Hotels & Resorts Worldwide, it Park, Sheraton São Paolo WTC
is getting a new lease on life. Hotel, Sheraton Cairo and
Marriott International is inject- Sheraton Bengaluru
ing zest and localising the Whitefield Hotel &
brand ethos by adapting the Convention Center.
properties to the homegrown The seventh and final stop
cultures and cuisines, instead will take place at a Sheraton
of driving a uniform global (Above) The Bengaluru property is part hotel in China later this year.
identity for the Sheraton brand of a six-city brand transformation trip. Sheraton properties in each
that has been in India, nearly (Right) The new logo retains the ethos of of the cities hosted engag-
all of its 82 years. the old one, but tweaks the symbol ing events in open public
Often perceived by trav- spaces such as a conven-
ellers as tired and dated, the themselves in “Within Marriott, it tion centre. The events and
world’s largest hotel chain entirety or choose (Sheraton) is one of campaign have been tai-
operator is getting a fresh and a particular brand the biggest brands lored to convey the local
contemporary look. It has a within its folio to in the APAC region flavour of a global brand.
new logo and a global cam- stand out and with 122 hotels. said, “We wanted The event in Bengaluru for
paign aimed at defining the reflect the evolv- It’s incredibly to develop a instance, included a talk and
new ethos kicked off in August ing needs of the important for us vision for the stand-up comedy sketch by a
last year. The campaign called travellers. For that the world is brand. Not just city-based performer and a
the “Heart of the City,” is a cel- instance, in 2018, able to differentiate reinvent through dance performance and work-
ebration of communities French hospitali- this from other repositioning but shop by Terence Lewis, dancer
around the world — the diverse ty major Accor, brands in our also raise its pro- and choreographer of The
people, places and cultures in changed its com- portfolio” file in APAC to Terence Lewis Contemporary
more than 70 countries and ter- pany name back MIKE FULKERSON show it as our pri- Dance Company.
ritories where Sheraton Hotels to Accor from ority.” Presently, The guests were also giv-
Vice-president, brand &
has a presence. Accor Hotels as it marketing (Asia Pacific), Marriott en a preview of the Sheraton
Mike Fulkerson, vice pres- wanted to reposi- Marriott International has lobby space through an inter-
ident, brand and marketing tion the group as 450 hotels in 72 active transformation room
(Asia Pacific) at Marriott “an augmented hospitality countries and is set to expand installation. And true to the
pointed out that Sheraton has company” focusing attention to 80 countries by 2020. The digital age that the brands live
a global heritage that dates on the significant investment ongoing transformation will in today, the occasion offered
back to 1937 and given its that it had made in home and also mark the way the brand up Instagrammable vignettes
scale within Marriott, it was villa rentals. is modernising its design that helped spread the brand’s
inevitable that they would Back home in India, in ethos, community connec- story through social media
look for a distinct position- March this year, Oberoi Hotels tion and service culture, he hotlines. As Brand Sheraton
ing. “Within Marriott, it is & Resorts unveiled a new added. The key objective of transforms itself, the events,
one of the biggest brands in brand identity and renamed the campaign is to show the the pitch and tone of the cam-
the APAC region with 122 itself as “Oberoi Sun,” which new Sheraton brand promise paign and the experience will
hotels. It’s incredibly impor- according to the Oberoi Group and transformation. “The be sharply tuned to local
tant for us that the world is means the warmth, energy guest will be able to look, feel, tastes. Its properties too will
able to differentiate this from and sense of well-being of its touch this experience as it reflect the shift. And as the
other brands in our portfo- guest experience. As part of gets carried out across all exercise unfolds in its entirety,
lio,” said Fulkerson. this, it is now focusing on its properties,” he said the brand will have to master
It is not uncommon for guest experience. A part of the ongoing cam- the art of wearing many faces
hotels to re-position, re-brand For Sheraton, Fulkerson paign is a six-city road trip under one hat.

FROM PAGE 1 Jalan panel... DEA had apparently held several rounds
of discussions with Sebi on this, without

Changes to IBC... Initially, the finance ministry had expected succeeding.

IndiGo headed...
around ~3 trillion from the RBI’s reserve
A lender to Essar Steel said the move should funds, which were at the heart of a conflict
plug the gaps in the insolvency process for between the regulator and the government
Essar since it would apply retrospectively. last year. “Besides approving the results, these two
“The amendment covers two important On the insistence of the finance min- items have been included in the agenda of
aspects, that Section 53 can be applied and istry, the central board of the RBI formed a the meeting. This is not because of
it would have retrospective effect where the six-member committee — headed by Jalan Gangwal’s demands but these issues have
resolution plan has not attained finality or and co-chaired by former RBI deputy gov- been deliberated for a long time in order to
has been appealed against. Also, it clarifies ernor Rakesh Mohan — in December to improve the corporate governance of the
that commercial consideration in the mat- review the central bank’s economic capital company and meet regulatory norms.
ter of distribution proposed in resolution framework. Gangwal, who usually attends board meet-
planiswithinthepowersofCoC,”thelender The main difference of opinion within ings through video conference, is flying
said. the panel was over transferring the RBI’s down from London to attend it in person
The Cabinet decision comes days after “excess” capital reserves. While most pan- this time.
an NCLAT ruling, seeking to put different el members are in favour of a phased trans- Indra Nooyi, former CEO of beverage
classes of creditors on a par, said since it fer of the RBI’s capital reserves to the gov- giant Pepsico, has been approached by the
(Essar) was not a distribution of assets from ernment over the years, the government's company to be appointed a director on the
the proceeds of sale of liquidation, the res- view, voiced by Garg, was for a one-time board, it is learnt. Nooyi is currently on the
olution applicant could not take advantage transfer. board of e-commerce giant Amazon.
of Section 53 to determine the manner in For this financial year, the government However,despiteincreasingthenumber
which distribution of the proposed upfront had accounted for around ~20,000 crore as of directors, Bhatia-owned InterGlobe
payment was to be made. “additional dividend” from the RBI, a Enterprises (IGE) will continue to hold its
Anshul Jain, partner, PwC, said, “This is finance ministry official said. This, the offi- controlling rights over the company. While
a classic example where tribunals are taking cial said, is unlikely to happen. the chairman is expected to propose expan-
different views of interpreting laws, and In the Receipts Budget, allocation sion of the board to 12 members, the IGE
law is catching up so fast that appellate towards the “dividend or surplus of RBI, group would get the right to appoint six
authority (the Supreme Court) is not getting nationalised banks and financial institu- directors and Rakesh Gangwal group two.
a chance to review its decision.” tions” was increased by ~23,130 crore to Four of the directors will be designated
The Cabinet decided that a specific pro- ~1.06 trillion in 2019-20, compared to the independent. According to corporate gov-
vision would be added to the IBC saying all Interim Budget. ernance norms, at least one-third of the

Sebi chief...
dissenting financial creditors and opera- directors should be independent. “The
tional creditors would receive an amount Article of Association (AoA) will be hon-
notlessthantheliquidationvalueofthecor- oured at any cost and hence IGE’s right to
porate debtor or the amount in accordance “Sebi levies fees on intermediaries for ren- appoint more directors will stay,” the source
with Section 53 of the Code – whichever is dering services but the move to transfer said.
higher.Section53referstoawaterfallmech- funds would become an additional tax on However, a person close to co-pro-
anism for distribution of assets in the event market participants,” said another person moter Gangwal said he would reiterate
of liquidation. aware of the development. his demand of amending the article of
Sebi’s general reserve was esti- association, which forces him to vote in
mated at ~3,500 crore as of March favour of the IGE’s choice of appointing
> BS SUDOKU # 2794 2018 and ~3,800 crore in March key executives. “The larger issue that
2019, according to sources. Gangwal has raised cannot be rectified
The Finance Bill proposes a 75 with Bhatia having all critical powers.
per cent cash transfer from the Gangwal would request the chairman to
Sebi’s general fund to the govern- include a special item to discuss the
ment’s books, after creating a same,” the person said.

Jet forensic...
‘reserve fund’ of the annual sur-
plus. The transfer is proposed to
take place after Sebi incurs all
expenses mandated under the law SBI Chairman Rajnish Kumar declined to
establishing it. comment on the matter. He didn’t respond
Going by the provisions, Sebi to a set of questions sent to him over e-mail
might have to transfer around on Tuesday.
~2,800 crore to the central gov- EY had flagged the issue of unverified
ernment in the current financial invoices raised by Jet Privilege, which it
year. saidledto“excessbilling”ofaround~1crore,
Finance ministry sources said monthly invoice of ~14.1 crore towards pro-
the Department of Economic motional activities without supporting doc-
Affairs’ (DEA's) idea behind the uments, and fraudulent JPMiles worth
move was to “address the issue of ~46.3 crore, among others. Jet’s loyalty pro-
accumulation of huge surplus gramme is managed by Jet Privilege Private
SOLUTION TO #2793 Hard: funds” with Sebi. The DEA had Limited(JPPL),asubsidiarywhichismajor-
checked with the law ministry, ity owned by Etihad.
Solution which felt the funds received by However, Jet Airways pointed out that
tomorrow Sebi “are public money and all all these observations were drawn from the
public money received on behalf internal audit report of the airline that was
HOW TO PLAY of the government would be part provided to the forensic auditor.
Fill in the grid so of the public account”. Significantly, the airline accepted the obser-
that every row, Sources said it had been a long- vations made by the forensic auditor on
every column pending demand of the govern- non-disclosure of related-party transac-
and every 3x3 ment to transfer surplus funds to tions.
box contains the public account; Sebi had not
the digits 1 to 9 agreed. In the past six months, the More on

Review death sentence of Aadhaar-like database

for health on the cards
Kulbhushan, ICJ tells Pak
New Delhi, 17 July
geographic area and so on to
help in regional planning and
monitoring of health services.
The government has pro- “For the NDHM to be suc-
PRESS TRUST OF INDIA posed mapping health data of cessful, it will be important to
The Hague/New Delhi, 17 July citizens and building a undertake outreach activities
National Digital Health with public and private sector

T Hafiz Saeed
he International Court of Justice Mission (NDHM) on the lines players. The NDHM will have
(ICJ) on Wednesday ordered of the Aadhaar database, and to co-opt market players like

arrested for
Pakistantomakean“effectivereview set up ‘digital health as public medtech companies, non-gov-
and reconsideration” of the conviction and infrastructure’. ernmental organisations, foun-
death sentence of Indian national In a detailed National dations working in health
Kulbhushan Jadhav and also grant con-
sular access, in a verdict that was hailed in
financing Digital Health Blueprint,
which is open for comments
space as they build the public
utilities in the form of reg-
India as a “big victory” for the country.
In a reprieve for Jadhav, 49, a retired
terrorism until August 4, the Ministry of
Health and Family Welfare
istries, personal health record,
health ID, and health informa-
Indian Navy officer sentenced to death by a Mumbai terror attack mas- (MoHFW) has laid out stan- tion exchange, etc,” the blue-
Pakistanimilitarycourtonchargesof“espi- termind and JuD chief Hafiz dards, framework, and data print proposes. The blueprint
onage and terrorism” after a closed trial in Saeed was arrested on analytics principles for a tech- CREATING A has proposed a ‘consent man-
continued the stay on the execution and
Wednesday on terror financ-
ing charges by the Counter-
nology-based infrastructure.
Authored under the chair-
DATA VAULT ager’ mechanism, so that indi-
viduals can control the data
held that Islamabad violated New Delhi’s Terrorism Department (CTD) manship of the ex-Unique | Digital framework will they would like to be collated
rights to consular visits after his arrest. of Punjab Province, just days IdentificationAuthorityofIndia help address enormous or used for other purposes.
A Chinese judge was part of the majori- ahead of Pakistan Prime (UIDAI) chairman J amount of digital data The idea of explicit consent
ty verdict while the ad hoc judge from Minister Imran Khan’s maid- Satyanarayana, the blueprint is part of several other govern-
generated by Ayushman
Pakistan on the bench headed by President en visit to the US. proposes that the NDHM be a ment proposals, including the
oftheCourtJudgeAbdulqawiAhmedYusuf Saeed, a UN designated hybrid of the goods and servic- Bharat scheme soon-to-be tabled in
of Somalia gave a dissenting opinion. A man sports ‘India with Kulbhushan’ T-shirt in Mumbai PHOTO: KAMLESH PEDNEKAR terrorist whom the US has es tax network, UIDAI (the | Personal identifiers Parliament Data Protection Bill
Rejecting Pakistan’s objec- placed a $10 million boun- agency that administers could be a combination and Reserve Bank of India’s
tion to admissibility of the Pakistan on its part said it Jadhav, to visit him in detention and to ty on, was travelling to Aadhaar), and the National of Aadhaar number and guidelines for account aggre-
Indian application in the case, will now proceed “as per law”. arrange for his legal representation”. Gujranwala from Lahore to Payments Corporation of India, another attribute gators.
the court in its 42-page order The Bench observed that there was a get a pre-arrest bail in ter- given that health is a state sub- The blueprint has said that
held that “a continued stay of Friends and family rejoice three-week delay in informing India about ror financing cases regis- ject, and to incorporate private | Blueprint proposes this digital framework will be
execution constitutes an indis- With relief writ large on their Jadhav’s arrest on March 3, 2016, leading to tered against him there sector, including service leveraging mobile apps, designed keeping in mind
pensable condition for the faces, Jadhav’s childhood a “breach” of Pakistan’s obligations under when he was arrested, a providers and insurance. social media and call smartphones as the end device
effective review” of the sen- friends in Mumbai released the convention. CTD official told PTI. The NDHM has proposed centres for effective being used by citizens.
tence of Jadhav that had "We welcome colourful balloons. Noting that India has made a number of Saeed was sent on judi- to provide the technology plat- service delivery It also has detailed propos-
strained relations between the today's verdict At Parel in south Mumbai, requests for the consular access, the court cial remand for seven days. form for collection of core als for setting up state and
two neighbouring countries. in the @CIJ_ICJ. where Jadhav spent his child- said it was “undisputed” fact that Pakistan He was subsequently shift- health data from the providers | Proposes using open national-level repositories of
Truth and justice hood, his friends watched the did not accede to India’s appeals. The court ed to Lahore’s high-security and patients and interoper- standards, open APIs health data and methods of
India hails verdict have prevailed. ICJ proceedings live on a TV, said Pakistan has not explained how any of Kot Lakhpat jail where for- ability of health care data | Focus on security collecting data and so on.
External Affairs Minister S Congratulations to with a prayer on their lips. the wrongful acts allegedly committed by mer PM Nawaz Sharif is serv- through a unique identifier and privacy Other members of the com-
Jaishankar said he spoke to the ICJ for a verdict India may have prevented it from fulfilling ing seven years imprison- called the Unique Health mittee set up in November last
Jadhav’s family and applauds based on extensive Pakistan broke law its obligation. The judges said there was no ment, the official said. Identifier. year to propose the blueprint
their courage. “Satyameva study of facts" Recalling that it had directed basis to conclude that India abused its pro- Reacting to it, US Other components include consent, and health analytics. include Dr Manoj Singh, pro-
Jayate,” he tweeted. PRIME MINISTER Pakistan to take all measures cedural rights when it requested indication PresidentDonaldTrumpsaid: The Health Cloud, on the lines Another component is the fessor, All India Institute of
TheExternalAffairsMinistry at its disposal to ensure that of provisional measures in this case. “After a ten year search, the of the government community geographic information sys- MedicalSciences,NeetaVerma,
said the “landmark judgement” Jadhav is not executed pend- On Pakistan’s argument that India has so-called ‘mastermind’ of the cloud of the Ministry of tem or visualisation services director general of National
validatedIndia'spositiononthematter“fully” ing the final decision in the case, the ICJ failed to prove Jadhav’s nationality, the Mumbai Terror attacks has Electronics and Information that could be used to map the Informatics Centre, Alok
andaskedPakistantoimplementthedirective said Islamabad “deprived the Republic of court said it was satisfied that the evidence been arrested. Great pressure Technology, a Health Locker nearest hospital with a partic- Kumar, advisor (health), NITI
of the ICJ immediately. Opposition parties India of the right to communicate with and before it leaves no room for doubt that has been exerted over the last that will serve as a personal ular specialty, or map the Aayog and other members of
also hailed the decision. have access to Mr Kulbhushan Sudhir Jadhav is of Indian nationality. two years to find him!”. PTI health record repository with occurrence of a disease in a the MoHFW.


JEFF KEARNS China’s government said this week
Washington, 17 July ‘Regulators must address risks from Libra’ that the economy eased to the weak-
est pace since quarterly data began
The International Monetary Fund Facebook's planned economist said on in 1992, highlighting effects of the
(IMF) said more work is needed to fur- cryptocurrency, Libra, Wednesday. Gita ongoing trade dispute with the US.
ther reduce global trade imbalances could help boost Gopinath (pictured) said “With prolonged trade uncertainty,
amid increasing tensions, while issu- financial inclusion, but the IMF was flagging it’s weighing on business sentiment
ing a fresh warning that such conflicts also raises concerns risks and concerns everywhere in the world, which then
are weighing on the global economy. about consumer about Facebook’s plans, has implications for global demand,”
“It is imperative that all countries protection, data and said it was import- IMF Chief Economist Gita
avoid policies that distort trade,” the privacy, and potential ant for regulators to pay Gopinath said at a press conference
IMF said in its annual External Sector “backdoor dollaris- close attention to such Wednesday. “We welcome the trade
Report released Wednesday in ation,” the IMF's chief developments. REUTERS truce between the US and China that
Washington. “Against a backdrop of came toward the end of June at the
escalating trade tensions, greater that’s seen dragging on global growth, European Central Bank. G-20 meetings, and we would hope
urgency is needed in tackling persist- withoutputslowinginmajoreconomies While the US trade war with China that the world would continue to work
ent excess imbalances.” from China to Europe and Mexico. IMF has cooled with a recent truce and cooperatively to not only not trigger
The report comes as the leadershipalsoisinfluxwithManaging renewed talks, the world’s second- these trade tensions but also to
Washington-based fund confronts a Director Christine Lagarde set to suc- largest economy has slowed amid address the issues with the multilat-
surgeinprotectionismaroundtheworld ceed Mario Draghi as president of the President Donald Trump’s tariffs. eral trading system.” BLOOMBERG

Louis Vuitton’s US House slams

Donald Trump’s El Chapo sentenced
Arnault topples ‘racist’ tweets
The US House voted on
to life in US prison
Gatesas2ndrichest Tuesday to condemn com-
ments from President
Donald Trump that have
New York, 17 July

been criticised as racist. The Mexican drug kingpin

The 240-187 vote backed Joaquin “El Chapo” Guzman
a resolution that “strongly has been sentenced to life
condemns Trump’s racist behind bars in a US prison, a
comments that have legit- humbling end for a drug lord
imised and increased fear once notorious for his ability
and hatred of new to kill, bribe or tunnel his way
Americans and people of out of trouble.
colour.” BLOOMBERG A federal judge in
Brooklyn handed down the
sentence Wednesday, five
Arnault’s LVMH advanced to a record, pushing his net worth
to $107.6 billion, ahead of Gates’ by $200 million PHOTOS: REUTERS
Amazon under months after Guzman’s con-
viction in an epic drug-traf-
to the US to stand trial after
he twice escaped from
EU antitrust fire ficking case. Mexican prisons.
er than No. 2 in the seven-year
extended their gains on
Wednesday, rising 0.7 per cent over use of data The 62-year-old drug lord,
who had been protected in
Before he was sentenced,
Guzman, complained about
history of the Bloomberg at 1.54 pm in Paris. Arnault has Amazon became the target Mexico by an army of gang- the conditions of his confine-
Billionaires Index. That run added about $39 billion to his of an antitrust investigation sters and an elaborate corrup- ment and told the judge he
ended on Tuesday when the fortune in 2019 alone, the by the EU on Wednesday tion operation, was brought was denied a fair trial.
Microsoft co-founder dropped biggest individual gain by far over its use of merchants'
to No. 3 behind France’s among the 500 people in data, underlining
Bernard Arnault.
LVMH, Arnault’s luxury-
Bloomberg’s ranking.
Arnault, 70, joined Gates
regulators' increasing focus
on how tech companies
Boris smashes record for most
goods maker, advanced to a
record on Tuesday and pushed
and founder Jeff
Bezos, the world’s richest per-
exploit customer inform-
ation. US tech giants Amaz-
money raised by UK politician
his net worth to $107.6 billion son, in the most exclusive on, Google and Facebook
and ahead of Gates by more wealth club last month. have been in the regulatory
than $200 million. The shares BLOOMBERG spotlight. REUTERS


Google slammed
over limits on
content liability
US senators used a
Congressional hearing to REUTERS chairman of a football club, a
pushtheideaofoverhauling London, 17 July director of companies based
alawthatprotectsYouTube, in tax havens, and a fox hunt-
Facebook and other inter- Boris Johnson (pictured) has ing enthusiast are among the
netservicesfrombeingsued brokentherecordforthemost donorswhohavepouredhun-
for the content users post. money raised by a British dreds of thousands of pounds
The hearing featured accu- politician in his bid to become into Johnson's campaign.
sations Republicans have PM, winning the backing of More than half the dona-
A British Airways plane flew perilously close to the ground at been making for months: eurosceptic financiers after tions came from financiers
the Skiathos Airport in Greece. A video of the landing was that Google manipulates hardening his Brexit stance and businessmen who fund-
uploaded on a YouTube channel which shows people search results. with a "do or die” pledge. ed the campaign to leave the
ducking for cover as the plane flies over them PHOTO: YOUTUBE BLOOMBERG Hedge fund managers, the European Union.

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