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India is not facing 5 per cent economic
slowdown and continues to be the
fastest-growing economy in the world,
Union minister Anurag Thakur said in the
Lok Sabha on Monday. During the Question
Hour, Thakur also said steps were being
taken by the government to strengthen
the economy, including
mergers of banks and tax
concessions to industries.
Debarring audit firms:
Apex court relief to Sebi
YES Bank could extend
deadline on binding offer
JNU protest: 100 students
detained, released later
Around 100 JNU students, including
students union president Aishe Ghosh,
were detained and some were injured
when police allegedly baton-charged
protesters as they marched towards
Parliament on the first day of the winter
session on Monday, demanding a total
roll-back of the hostel fee hike. The police
denied using force with the students and
said those who had been detained were
released later in the evening.
Budget to focus
on tax sops,
pvt investments
New Delhi, 18 November
he government is setting the
tone for 2020-21 Union Budget
with a clear focus on steps to
encourage private investment,
sources in the know said. If welfare
schemes were at the centre of Budgetmaking in the past few years, private
investment, economic growth, and tax
incentives are expected to be the dominant themes now, they pointed out.
The 2019-20 Budget, after the general election, drew flak and several
initiatives had to be rolled back. In that
backdrop, the political leadership is
likely to have a bigger role in preparing
the Budget this time, according to
senior officials.
Among the steps that are being considered for the upcoming Budget on
February 1, long-term capital gains tax
may be scrapped and
the burden of dividend
distribution tax could
perhaps be shifted from
companies to shareholders. Also, the Budget
BUDGET could provide income tax
2020-21 relief for the salaried
classes, while proposing
tax sops for small, medium and micro
enterprises. These measures are expected to revive the animal spirits in the private sector as well as ensure greater liquidity in the system.
“The initiative was somewhat lost
after the last Budget. The amendments
to the Companies Act criminalising
corporate social responsibility lapses
were also rolled back,” said a government official.
All of this just added to the narrative
of economic mismanagement, alongside the slowdown, the person said.
The Narendra Modi government
wants the 2020-21 Budget to serve as a
springboard for reforms in the midst of
a slowdown, the official quoted above
said. In some ways, the next Budget is
being seen as a vision document for the
(Base: September - December 2015 = 100)
Mumbai, 18 November
Source: CMIE
After multiple roll-backs to the
FY20 Budget, the government
looks to seize the initiative
More control
Political leadership has taken
greater control of the
Budget-making process
Tax cuts
Q2 performance
Incumbent telecom operators Vodafone
Idea and Bharti Airtel, bruised by fierce
competition to keep prices low, will hike
tariffs starting December 1, the companies said in a surprise announcement on
Monday. The first telecom tariff hike in
several years follows record second-quarter losses reported by the two operators.
The telcos, however, did not provide
any guidance on the amount of the hike
or the subscriber segments to be impacted by the move. Analysts see the hikes as
a positive for the sector, which has only
witnessed tariff cuts since the launch of
Reliance Jio in September 2016.
The decision of Vodafone Idea and
Airtel to raise tariffs is being seen as a
step to encourage the government to
offer a relief package to the industry,
saddled with mounting losses and piling debt. Telcos, which are awaiting a
potential remedy from the government,
QoQ subscriber
-3 %
112.2mn 124.2mn 355 mn
subscriber addition
Data usage
10.4GB 13.1GB 11.7GB
(per subscriber)
Mumbai, 18 November
The working capital cost for India’s
top-rated companies has fallen significantly since the IL&FS-induced
credit crisis a year ago.
They are now raising money very
close to the overnight repo rate, as
liquidity improves in the banking system to more than ~2.5-trillion surplus.
Rates on AAA-rated papers up to one
year have fallen from 8.51 per cent on
November 27, 2018, to 6.1 per cent
now, much sharper than a 100 basis
points fall in the 10-year bond yield.
“On one hand there is this near
assurance of easy monetary condition
from the RBI (Reserve Bank of India),
and sloshing banking system liquidity, on the other hand skewed preference of investors for safe haven and
Burden of the dividend
distribution tax could be shifted
to shareholders
Proposals to cut income tax or
tweaks in slabs likely
Prime Minister’s aim to make India a
$5-trillion economy by 2024-25.
The government believes public
investment and capital spending commitments from the Centre and stateowned companies won’t be enough to
kick-start economic activity.
So, private investment must also pick
up to revive the economy, according to
another official.
Turn to Page 13 >
Dec 18, ‘18 Mar 13, ‘20
Nov 22, ‘18 Jun 17, ‘20
Dec 3, ‘18 Nov 18,’19
Dec 14, ‘18 Feb 13, ‘20
Jan 10, ‘19 Mar 3,’20
Aditya Birla Finance
Bajaj Finance
Chennai Petroleum
Reliance Industries
For the automobile sector reeling from
slowdown, there could be some
breather from steelmakers lowering
contract prices by 11-14 per cent for the
second half (H2) of the financial year
(2019-20 or FY20).
Some have already sealed half-yearly contracts for the auto segment; others
are in the process of finishing them.
“The auto industry is an important
stakeholder for the steel industry. It is
important for us to support them
when they are facing challenges,” said
a leading steel producer that has
already closed negotiations. It added,
“It’s in the nation’s interests that both
survive and grow. Hence, we support
each other.”
G H Bang, managing director of
Korean firm Posco’s India operations,
said in H1FY20, prices of commercial
Old New
32 121
16 226
41 117
Old New
7.9 5.8
Source: FIMMDA
the market. For example, Reliance
Industries raised 41-day money in
November 2018 at 7.68 per cent. In
November this year, it had raised 117day money at just 5.45 per cent.
Similarly, Aditya Birla Finance
raised 121-day money at 5.75 per
cent, against 7.9 per cent for 32 days
last year.
Turn to Page 13 >
tepid supply of commercial papers
(CP) have brought down money market yields considerably, although, for
limited entities,” said Soumyajit
Niyogi, associate director at India
Ratings and Research. Most highly
rated companies are enjoying rate
benefits of more than 150 basis points
in their working capital raised from
NHAI to pay land cost to states in bonds
New Delhi, 18 November
The National Highways Authority of
India (NHAI) is planning to issue land
bonds to pay for acquiring land from
states or other stakeholders — as part
of a funding mechanism amid escalating land acquisition and compensation cost. Through this mechanism,
the NHAI will not have to make
upfront payments for land acquisition.
“Land bonds are expected to be
interest-bearing instruments but the
issues as to whether they would be listed and how the interest component
would be finalised are being worked
out,” an official said. The financing
model is part of a larger plan to open a
revenue stream for the NHAI, which
includes levying development charges
for appreciating values of land around
national highways. It is called value-
capture financing — which is a type of
public financing that recovers some or
all of the value that public infrastructure generates for private landowners.
Besides issuing bonds, the NHAI
wants states to share the cost of land
for constructing national highways
because the resultant increase in the
real estate price benefits landowners
and states, in the form of higher
stamp duty at the time of sale.
Experts say the approach is being
conceptualised mainly to reduce the
financial burden on the NHAI.
“This way the NHAI will not have
to immediately shell out money and
land can be bought via bonds. The
cost of land acquisition has
increased due to higher compensation and also because land is available in urban areas and is costlier,”
said Kushal Kumar Singh, partner,
Deloitte India.
Turn to Page 13 >
IEBR Borrowings
(in ~ ’000 crore)
Mar ‘16
Mar ‘17
Mar ‘18
IEBR: Internal and extra-Budgetary Report
have in the past got feelers from the
government that they must raise tariffs to cut their losses.
With the incumbent telcos taking
the first step to hike tariffs, the government is expected to offer relief in
terms of lowering the licence fee, a
moratorium in paying spectrum
charges, and perhaps a staggered payout of adjusted gross revenue (AGR)
Mar ‘19
Source: SBI Caps
dues, sources in the know said.
The Telecom Regulatory Authority of
India (Trai) too has been weighing the
option of introducing a floor price for tariffs in the backdrop of rock bottom prices
prompted by competition, according to
reports. But a Trai official said recently
that the regulator had not got any reference from the Department of Telecom
(DoT) on that.
Turn to Page 13 >
Kolkata, 18 November
Long-term capital gains tax could
be abolished
Bharti Reliance
ARPU: Average revenue per user
Source: Companies, Bank of America Merril Lynch, SBICAP Securities
Sops for MSMEs likely
Steel companies reduce prices
by 11-14% for automakers
Top-rated firms tap into
low money market rates
Airtel, Voda bite the bullet;
to hike tariff from Dec 1
Steel prices for the auto sector
Before revision:
~54,000 a tonne
After revision:
~48,000 a tonne
Before revision:
~44,000 a tonne
After revision:
~38,000 a
CRCA: Cold-rolled close-annealed
products; HR: Hot-rolled products
grade steel had dropped by $100 a
tonne, but that had not been factored
in the contracts for the auto segment.
“In the contracts for the second
half, prices are being cut by ~6,000 a
tonne,” he said.
Turn to Page 13 >
> Glenmark Pharmaceuticals
> Bharti Airtel
Brokerage firm CLSA
upgraded stock to 'buy',
citing attractive valuation
~365.50 CLOSE
21.35% UP*
> Wockhardt
> Gayatri Projects
Top gainer among
S&P BSE Sensex
Peers and global PE firms
race to buy select
divisions: Report
CARE revised ratings of
various facilities to 'D'
due to delays in debt
~409.15 CLOSE
4.06% UP*
~296.75 CLOSE
9.50% UP*
~87.35 CLOSE
10.82% DOWN*
> Cadila Healthcare
Received tentative
USFDA nod for
Apremilast tablets
~241.35 CLOSE
2.99% UP*
Pai: IT companies may shed
about 40K mid-level staff
India's information technology (IT) services
firms may shed 30,000 to 40,000 middlelevel employees this year as growth slows, IT
industry veteran T V Mohandas Pai (pictured)
said on Monday. The former chief financial
officer of IT major Infosys termed these job
losses as once-in-five-years normal
phenomenon with maturing of the industry.
"As in all sectors in the West, in India, too,
when a sector matures, so many people will be there in the middle
level who will not be adding value... It’s going to happen again and
again and again every five years,” said Pai, chairman of Aarin
Capital and Manipal Global Education Services.
ICRA downgrades
Karvy Broking’s
loans for lack of info
Bounce partners
Exicom Tele-systems
for electric foray
ICRA has downgraded the
rating for Karvy Stock Broking
and Karvy Data Management
Services because of lack of
adequate information
regarding the performance.
The rating agency has moved
both the entities to noncooperating category and
downgraded some of their
loans to ‘BBB’, from ‘A’.
Bengaluru-based scooter
sharing app Bounce has tied
up with Anant Nahatacontrolled Exicom Telesystems to actualise its plans to
go electric. Bounce provides
first-mile and last-mile
connectivity via dockless
scooters where users are
allowed to pick up and drop
a scooter at their place of
convenience. To help Bounce
go electric, Exicom is providing
its latest generation of
swappable Li-ion batteries
and supporting charging
Jaypee Infra case:
Lenders discuss bids
by NBCC, Suraksha
Lenders to Jaypee Infratech on
Monday discussed the bids
submitted by NBCC and
Suraksha Realty to acquire the
debt-ridden firm in an insolvency process, and decided to
meet again in November last
week to negotiate with the two
contenders, sources said. A
meeting of the Committee of
Creditors was held in Gurugram,
For expansion,
India looks for buys
HeidelbergCement India, a
subsidiary of HeidelbergCement Group, Germany, is
looking at acquisition and debottlenecking of its existing
plants to expand its capacity in
The rise and fall of an Idea
Once a rising star, Voda Idea is squeezed between high debt and poor revenue realisations
Mumbai, 18 November
No collusion
with former
promoters of
Fortis: IHH
Mumbai, 18 November
he possible liquidation of
Vodafone Idea will be one the
fastest declines of an industry
major, which was once one of India’s
top companies in terms of revenue,
assets, and market capitalisation.
Just four years ago, Idea Cellular
(which merged with Vodafone India) was
the most valuable member of the Aditya
Birla Group and the fastest-growing
mobile operator in the country with the
industry’s best financial ratios. At the
end of March 2015, Idea had net debt to
equity of 0.6x, against Bharti Airtel’s 1.8x.
The Aditya Birla Group company was
the biggest beneficiary of the mobile
number portability (MNP) and gained
subscriber base and revenue market At its peak, the company’s ad campaign ‘What an Idea, Sirji’, featuring Abhishek
share from most of its rivals then.
Bachchan, showed novel ways to use mobile telephony to solve India’s complex
The company’s success was most vis- social and economic problems. It was a big hit among users and ad critics
ible in smaller towns and villages and it
had emerged the top operators in many similar levels of financial liabilities, high point for the company when it
non-metro circles such as Maharashtra raising question mark over its survival reported an operating profit of
(ex-Mumbai), Madhya Pradesh, Gujarat, as a going concern (see adjoining chart). around ~6,500 crore and had interest
The biggest issue for the company is liability of ~1,340 crore.
and Eastern Uttar Pradesh, among others.
Analysts say that trouble for the comAt its peak, the company’s ad cam- a steadily widening gap between its revpaign ‘What an Idea, Sirji’, featuring enues and earnings and its financial lia- pany started with the February-March
actor Abhishek Bachchan, showed bilities. In the first half of the current 2015 spectrum auction. The then Idea
novel ways to use mobile telephony financial year, the company reported Cellular was the most aggressive bidder
to solve India’s complex social and operating loss of ~1,037 crore without the and spent ~30,100 crore in buying spececonomic problems. It was a big hit adjusted gross revenue dues, down trum as it had to renew bread and butter
sharply from ~1,773 crore operating prof- 2G spectrum that was about to expire
among users and ad critics.
The stock market recognised its it a year ago and ~6,336 crore profit dur- later that year.
In comparison, Bharti Airtel spent
potential and Idea Cellular’s market ing the first half ended September 2018.
Its operating profits are now inad- ~29,130 crore in that auction, while the
capitalisation nearly tripled between
FY11 and FY15, against 15 per cent rise equate to service interest on its out- amount spent by Reliance Jio was even
in Bharti Airtel market capitalisation standing debt. The company has lower at ~10,078 crore.
Not surprisingly, a senior company
(m-cap) during the period. At its peak, interest liability of ~7,378 crore during
Vodafone Idea’s m-cap was only 40 per the first half of FY20, having doubled official likened the 2015 spectrum auccent less than Bharti Airtel’s. This is in in the last one year. Till about FY15, tion to a shakedown at gun point. “We
line with the revenue gap between the the company’s interest liability was had to choose between shutting our operaround ~500 crore every six months ations or paying through the nose to renew
two companies.
Now, the m-cap of Vodafone Idea against half-yearly operating profits spectrum in circles where we had worked
— the merged entity — is just 5 per of around ~6,000 crore. The six 20 years to create profitable operations.”
Besides, the then Vodafone India
cent of Bharti Airtel’s despite having months ended March 2016 was the
Compiled by BS Research Bureau
Source: Capitaline
had spent ~25,810 crore during 2015
spectrum auction. In all, these two
companies (Vodafone and Idea)
together spent nearly ~1.03 trillion on
acquiring or renewing their spectrum
since 2010. This is as much as the total
spent on spectrum acquisition by rest
of the operators.
“All this liability is now sitting on
Vodafone Idea’s balance sheet whose
interest liability is squeezing the company’s finances dry,” said an analyst, on
the condition of anonymity.
On the business side, discounting
by Reliance Jio hit Vodafone Idea the
hardest as it was the market leader in
smaller towns and rural circles where
mobile users were most susceptible
to lower call rates.
“Idea’s success with pre-paid users in
smaller towns and villages became its
biggest liability as Jio began to entice them
with free calls and rock-bottom 4G data
rates,” said G Chokkalingam, founder and
managing director of Equinomics
Research and Advisory Services.
In comparison, market leader Bharti
Airtel was dominant in metros and big
cities, with large numbers of high paying postpaid customers, who were least
likely to switch to a new operator.
IHH Healthcare Bhd (IHH), a
Malaysian company, has
denied colluding with the former promoters of Fortis
Healthcare, after the Supreme
Court extended its stay on an
open offer that would give it
majority control of the latter.
IHH acquired 31 per cent
stake in Fortis last July, after a
four-month bidding war
involving rival hospital chains
and private equity firms.
However, the subsequent proposed open offer to acquire an
additional 26 per cent in Fortis
is stuck due to the apex court's
order. Last Friday, the
Supreme Court initiated contempt proceedings against
Fortis and held its former promoters, Malvinder Singh and
Shivinder Singh, guilty of contempt of court, in a plea initiated by Japanese drugmaker
Daiichi Sankyo. The court also
extended its stay on the
open offer.
In a stock exchange filing
in Malaysia on Monday, IHH
said: “The board further states
that the subscription (of Fortis
shares) was undertaken and
completed (through a process
run by the reconstituted Fortis
board) after Malvinder Mohan
Singh and Shivinder Mohan
Singh were no longer in control of Fortis. IHH has at no
time dealt with nor colluded
with the erstwhile promoters
or any entities related or controlled by them in relation to
the subscription.”
‘In India’s EV shift, we’ll be there as a partner of choice’
After a merger with Dow Chemical Company in 2015, DuPont, one of the largest
chemical business entities in the world, went through internal change.
ANUPAM JAISWAL, president, DuPont, South Asia, talks to Shine Jacob on its shift
towards a speciality products and solutions major. Edited excerpts:
Real estate got
$14-bn foreign
PE funds in 5 yrs
Indian real estate attracted
nearly $14 billion of foreign
private equity (PE) funding
between 2015 and third
quarter of 2019, says latest
Anarock data.
Sixty-three per cent
(approximately $8.8 billion) of
the total foreign investments
backed commercial real
estate, the real estate services
company said. The residential sector attracted just $1.5
billion of foreign PE in the
same period, trailing even the
retail sector which saw cumulative inflows of $1.7 billion.
Logistics and warehousing
drew over $1 billion.
In stark contrast, domestic PE funds pumped nearly
$2.4 billion into Indian real
estate since 2015, of which
nearly 71 per cent went to the
housing sector, it said.
You underwent some structural
changes this year?
What are the implications of this
split for DuPont?
It began with our merger with Dow.
It was announced in 2015 and came
to fusion in 2017. Then, we kind of
split into three companies in 2019.
Basically, we were trying to create
standalone companies that would
be successful in their own field.
A dedicated agricultural
company called Corteva was
created, Dow was going to
be the materials division
and the new DuPont, an
amalgamation of some
businesses of heritage
DuPont and some
businesses that came
from Dow, were really the
speciality businesses that focused
not on the commodity or the
chemicals space. That is the kind
of genesis of why we did the split.
Emerging from that is the new
DuPont, a $23-24 billion company
with close to 32,000 employees
and more than 200 manufacturing
sites and operations in 70
countries. We invest close to $900
million (annually) in research and
We have come out as a focused
company. We have four industry
verticals — transportation, safety
and construction, nutrition and bio
sciences, and electronics and
communication. The nature of
these industries are such that we are
constantly looking at innovations
and partnerships across the value
chains, so that we can work
on the problems they are
trying to solve... We have
moved away from being a
chemicals firm. We are
more of a speciality
products or solutions firm
today. We expect to be working
much closer with partners than ever.
What growth potential do you see
for DuPont in India?
If you look at our four businesses —
nutrition and biosciences globally is
a $6.5-billion business;
transportation and industry is $5
billion; safety and construction, too,
comes to around $5 billion;
electronics & communication is
$3.5-3.6 billion. Depending on the
“If you look at the
Indian macro space,
a lot of trends are
emerging and aligning
very closely with
the areas DuPont is
focused on. I find India
an exciting market”
relevance of the industry in India,
the penetration could vary
anywhere between 2.5 per cent and 5
per cent. In some, India’s
contribution might be 8-10 per cent.
Strategically, we are looking at
major trends in India. How DuPont
kind of aligns with these mega
trends, from a capability standpoint.
One such trend in India is a lot of
push around lightweighting and
emission norms in the automotive
sector. We play a very significant role
in that space, by converting metals
into plastics. That reduces the weight
of a car, improves fuel consumption
and thereby emissions.
The second area is around the
electrification of vehicles. We have
solutions. Our penetration into
electric vehicles (EVs) will be
probably double our presence in
conventional internal combustion
engine ones. We have solutions
around lightweighting of batteries,
making batteries safer, etc. These are
two mega trends the government is
optimistically talking about. Then,
talk about clean water — in the
safety and construction portfolio, we
have a water business.
We have a whole bunch of
filtration solutions, where we can
provide you clean water, can go
into reverse osmosis solutions, and
also recycle and reuse waste water.
If you look at the Indian macro
space, a lot of trends are emerging
and aligning very closely with the
areas DuPont is focused on. I find
India an exciting market and we
expect the Indian business to grow.
The focus sectors you have
mentioned are not doing well.
Let me take the automotive
industry, where we do have a
significant play. I think it (the
current slowdown) was a
combination of the internal and
external environments. I don’t
think a lot of people have realised
that 60-70 per cent of the credit
that went to auto buyers came
through the NBFC (non-banking
financial companies) sector. We
all are aware of the huge challenge
the NBFC sector is facing and the
huge credit crunch which has
come in there. That is one thing
impacting the auto sector.
The second thing that plays
around is the tightening of norms
around emissions. Auto
manufacturers have had to invest
in technologies. There are
regulations like the shift from
Bharat Stage (BS) IV to BSVI
norms. If you look at the needs
related to emission and the air
quality, those are necessary steps
but adding some amount of cost.
The third element that has come
in is global uncertainty — people
today are not spending money. I
think it was a combination of internal
and external factors that have created
a bit of stress in the market. My
personal view is that it is not really
long-term and we will bounce back.
The area that needs to be
addressed is how to bring back
consumer confidence, so that
people can start spending money.
We actually saw the auto industry
slowing in August of last year. We
saw a similar slowdown in 20112012 and bounced back from there.
If you look at the trajectory, I think
it is positive for the economy.
Do you see EVs as part of your
growth strategy in India?
Electrification of vehicles is a space
where the government has set
higher goals. We are trying to get an
assessment on what is realistically
possible. I don’t think the policy
has taken complete shape. DuPont
is currently contributing to the
internal combustion space, too, in
a very significant manner. It is not
that we are a new entrant; we are
well positioned in most of our
businesses in India. We are
working with all the major
original equipment makers in the
country. We work with almost all
the players in the sector, including
Suzuki, Hyundai, Toyota,
Mahindra, and Tatas.
As they shift towards
electrification, we will be there as
a partner of choice. We will evolve
or help the technology evolve.
Hire hard, manage easy: Essel Propack’s Blackstone makeover starts
Finding the right CEO fast, and expanding
various segments are the key to growth
Mumbai, 18 November
Ninety days after private equity
major Blackstone started running
Essel Propack, a packaging
company that makes one of three
toothpaste tubes worldwide, debt
has reduced, revenue is increasing,
and there’s an uptick in margins.
Now what it needs is to get a
top-flight chief executive officer
(CEO) on board with a new sales
engine to crack open new areas and
grow the business worldwide.
After Blackstone spent ~3,215
crore for a 75 per cent acquisition in
Essel Propack, it has, in trademarkstyle, swiftly revamped the top
leadership. There is a new board of
independent directors including
former Ranbaxy CEO Davinder
Singh Brar; Uwe Roerhoff, a former
CEO of a packaging firm in Europe;
and former PwC audit head
Sharmila Karve.
They have joined senior
shareholder board representatives
from Blackstone including India
Head (Private Equity) Amit Dixit,
Senior Managing Director Alex Yang,
and Managing Director Amit Jain.
On the operational side, Parag
Shah, an executive earlier in supply
chain management at Hindustan
Unilever, has been parachuted in as
chief financial officer.
Also private equity (PE) insiders
say around 12 high-performing
CEOs have been selected in
keeping with Blackstone’s
philosophy of “hire hard, manage
easy” and getting a 10/10 leader to
set the course for the firm in its new
avatar. Earlier that role was
occupied by Ashok Goel, the
largest shareholder at the firm,
which was part of the Essel Group
run by his billionaire brother
Subhash Chandra before it sold.
While Blackstone’s other
acquisitions have been closer to
turnaround stories with cases like
IT firm Mphasis, Essel is a different
animal. While it does make 8
billion laminated tubes a year, and
Essel Propack
funds (~ cr)
(~ cr)
(~ cr)
profit (~ cr)
EBITDA (~ cr) 152.1
Compiled by BS Research Bureau
Source: Capitaline
is the global leader in oral care
packaging, making it a sticky
consumer business in which
“clients take time to get in but
never leave once they do”, the
commercials itself are not
enormous: Essel Propack’s
revenue last year was around
~2,700 crore and Ebitda (earnings
before interest, tax, depreciation,
and amortisation) ~501 crore.
“Part of the challenge for such a
business is that customers are
highly concentrated in one area,
namely oral care and possibly even
in certain geographies only, and
the world is moving away from
plastic,” says a PE executive.
Blackstone did not respond to
queries till the time of going to press.
As example, Essel Propack’s
India business sees almost ~1,400
crore, or half its revenue, come
from oral care, with clients ranging
from Colgate and P&G to Patanjali
and Weimizi of China.
The challenges then for
For one, new “tube-package”
categories have to grow. Those
include pharma, foods, and
personal care products such as
ophthalmic products, cheese tubes,
personal lotions, and lip balms.
The other is to ramp up its other
core markets that include Europe,
China, and the US. Sustainability is
also going to be a challenge for any
company in polymer. However, it’s
also something that packaging
firms are working on by focusing
on optimising recycling
technology. Firms are moving to
single polymer or plastic that is
easier to break down.
For example, a packet of wafer
chips is made of three types of
polymer plastic, which makes it
hard to recycle because you have to
segregate them all before breaking
down, says Ankit Gor, vicepresident, institutional equity
research, Systematix Group. He
goes on to add that while Essel is one
of the few firms that is backwardintegrated to make various
components of single-use polymer,
its global access to technology
through Blackstone’s other
investments shouldn’t be ignored.
Others agree. “The company’s
performance has been way above
expectations, driven by improved
performance across regions. The
influence of Blackstone is clearly
visible. Their global advisors are
engaged with the company on
growth initiatives and operational
improvements. The focus on
growth, especially on personal
care, is visible across regions,” says
Ruzmik Oza, senior vice-president,
head of fundamental research,
Kotak Securities.
During the acquisition,
Blackstone’s Amit Dixit said the
philosophy was to build business,
not be opportunistic.
“The idea is very strategic — to
accelerate the growth of the
company along two vectors. The
first is newer-end segments, which
is beauty, cosmetics, and
pharmaceuticals, and the second
growth vector is emerging markets
of India, China, and Latin America.”
He went on to add that
Blackstone operated a large global
network in the consumer sector, had
owned or currently owned other
packaging companies, and thus
knew the sector and its customers
well. While those are pros, the new
incoming CEO’s biggest challenge
will be to stimulate new hunger
within an old company. That, of
course, is not new to Blackstone.
YES Bank has option
to extend deadline
on binding offer
Mumbai, 18 November
mbattled private sector lender YES Bank
has the option to extend the deadline on
the binding offer made by a US-based
investor to invest $1.2 billion as equity in the
bank. The deadline for the binding offer by
investors to pick up sizeable equity in the bank
expires on November 30.
According to a source close to the development, the bank is still in talks with the investor
would help the bank to shore up its finances and
help mitigate its weakening financial position.
There is no clarity from the Reserve Bank of India
(RBI)forthetransactionasitwouldinvolveacquisitionofsubstantial stakeinthebank-takinginto
account the current market price. "The ball is in
the RBI's court," said a source close to the development. A YES Bank source said both parties
have the option to extend the deadline for the
binding offer and the bank expects fresh capital
to come in by December-end. The bank had
made the announcement on October 31 that it
has received a binding offer from an investor,
but did not disclose the investor’s name.
If the bank fails to shore up its finances in
time, it risks a downgrade by rating agencies as
indicated by global rating firm Moody’s on
November 6. Moody’s had said the bank’s weakening financial position can be offset by the
planned capital raise. But, it said, there are significant execution risks around the timing, price,
and regulatory approvals required for the investment. During its review period for the bank,
Moody’s said it would focus on the bank’s ability to raise new equity capital and warned that an
negatively impact the bank’s credit profile and
rating. The threat of a downgrade has put more
pressure on the bank to finalise the transaction.
An email sent to YES Bank did not elicit a
comment. On Monday, the YES Bank stock closed4percentdownat~65.90ashare—givingittotal market valuation of ~16,807 crore. Since the
offer, its share price has gone up by 16 per cent.
In August this year, the bank had raised
~1,930 crore via qualified institutional placement at an issue price of ~83.55 a share. The
bank is in dire need of capital to not only pro-
Advent to buy
majority stake
in BharatSerums
New Delhi, 18 November
Private equity (PE) firm Advent International has signed
a definitive agreement to
acquire majority interest in
Bharat Serums and Vaccines
(BSV) for an undisclosed sum.
BSV is a biopharmaceutical player in women’s health
care, assisted reproductive
treatment, critical care and
emergency medicine in India
and emerging markets.
which previously held minority positions in Bharat Serums, will fully exit their investments in the firm. The
Daftary family, which founded Bharat Serums, is retaining a meaningful equity stake
and is partnering Advent on
the company’s next stage of
growth, Advent said.
Founded in 1971 in Mumbai, Bharat Serums is one of
the fastest-growing biopharmaceuticalfirmsinIndia.BSV
researches,develops,manufactures and markets specialisedinjectablemedicineswith
a portfolio focused on biotech
and biological products.
It has multiple niche products that are leading brands
across women’s health, assisted reproductive treatment,
critical care and emergency
medicine. With this deal,
Advent has committed $2.2
billion in seven companies
across the health care industry in 2019, further expanding
its depth and commitment to
the sector globally. The firm
has also invested or committed more than $600 million
in five Indian businesses this
year in sectors such as health
care, consumer products and
financial services. “Bharat Serumshasadifferentiatedportfolio of biotech and biological
offerings in high-growth segments,” said Pankaj Patwari, a
director at Advent International in Mumbai.
“We are also excited about
the company’s robust R&D
pipeline, which offers the
potential to capture whitespacebothinIndianandglobal markets,” said Shweta
Advent. “Advent’s high level
of investment activity in India
this year demonstrates the
attractiveness of the market
and our commitment to
investing here,” she said.
Amazon doing very well
in India, says Jeff Bezos
Washington, 18 November
E-commerce giant Amazon is
doing “extremely well” in
India, its founder and CEO Jeff
Bezos has said while expressing hope for regulatory stability in the country.
Bezos’ remarks came in response to a question on Amazon’s concerns over some Indian policies with regard to
“Regulatory stability is the
Moped sales skid
26% in Apr-Oct on
poor rural show
Chennai, 18 November
BSE Price in ~
M-Cap ~ cr
vide for bad assets but also for growth. The
Common Equity Tier 1 capital stood at 8.7 per
cent as of September, close to the regulatory
requirement of 8 per cent till March 2020.
The bank’s asset quality deteriorated sharply
in the September quarter, with its gross nonperforming asset (NPA) ratio at 7.39 per cent in
the second quarter (Q2) of 2019-20 (FY20), compared to 1.6 per cent reported in the September
quarter of 2018-19. The net NPA ratio stood at
4.35 per cent in Q2FY20, against 0.84 per cent in
Q2 of 2018-19. Its gross slippages were ~5,945
crore for September. The bank had lent funds to
almost every stressed company in the past few
years, which finally culminated in the bank
reporting huge losses as these companies
defaulted in repaying loans.
Moped sales in the country
dropped 25.6 per cent in the
first seven months of this
financial year (April-October), hurt by poor demand
in the rural market, where
the cheap and lightly powered vehicle is used for both
travel and carrying goods.
TVS Motor Company, the
only entity in India to make
mopeds, said export dropped by nearly 40 per cent in
the same period. Howevr, it
is confident that sales will
improve after the new BS-VI
emission norms take effect
(from April 1).
Domestic moped sales
dropped to 392,586 units in
April-October from 527,505
units a year before, according to numbers from the
Society of Indian Automobile Manufacturers. Moped
export dropped to 8,232
units, from 13,688 a year
before in that period.
Scooter sales at TVS in
the period dropped 15.9 per
cent to 36,97,553 units;
motorcycle sales fell 15.3 per
cent to 73,63,858 units.
thing that we would always
hope for India. Whatever the
regulations are ... they are stable in time and that’s one of
the things we’re hoping will
now be true. We’ll see,” Bezos,
55, said here on Sunday.
He said Amazon was doing
very well in India. “Our business in India is doing extremely well. It’s growing very rapidly,” Bezos said. He said the
head of his India operations
Amit Agarwal, with whom he
has worked for 20 years, was
an extraordinary leader and is
doing really well.
Responding to another
question, the Amazon head
said he “definitely” wants to go
to space, asserting that he is
having a great deal of fun doing
everything that he does.
Ruling out a 2020 White
House run, Bezos said he has a
lot of other things that he
wants to accomplish and is
currently focused on them.
“Governing and running are
two different skill sets,” he said.
“The government has set a target of taking
India's defence exports to $5 billion by
2025 under the 'Draft Defence Production
Policy 2018”
“During the last five years, the government
has implemented major reforms to build the
investment climate in the country for
becoming a $5-trillion economy"
“I want to assure Delhi that just like we
forced them to pass our CCTV, mohalla
clinics files, we will force the Centre to
regularise the unauthorised colonies”
Defence minister
Finance minister
Delhi chief minister
Low health care expenditure to
impact risk-pooling model: NITI
HC notice to
Centre over
input tax
credit denial
to restaurants
Think tank plans building up system for middle class, which isn’t covered under any health scheme
New Delhi, 18 November
President Ram Nath Kovind administers the oath of office
to Justice Sharad Arvind Bobde after he was appointed the
47th Chief Justice of India, at Rashtrapati Bhavan on Monday
Edelweiss to transfer wholesale
loans worth ~2,000 crore to AIF
Edelweiss Financial Services will
transfer wholesale loans worth ~2,000
crore to Alternative Investment Fund
(AIF) for real estate completion
financing, as it shrinks corporate credit
portfolio by 50-60 per cent over the
next two years. Its corporate loan book
stood at over ~16,100 crore at the end of
September. Of this, the wholesale book
comprised of ~11,000 crore and balance
was structured finance portfolio. Rashesh Shah, chairman and
chief executive, EFSL said the deal with Korean Investor for AIF
was timely, as a lot of real estate projects were economically
viable but had been suffering from last-mile financing. This
gives liquidity window as some of the current loans would get
transferred to this AIF.
Chidambaram moves
SC against HC order
dismissing bail plea
India ranks 59
on IMD World
Talent Ranking
Senior Congress leader P
Chidambaram moved the
Supreme Court on Monday
challenging the Delhi High
Court verdict, which dismissed
his bail plea in the INX Media
money laundering case
filed by the Enforcement
Directorate. The matter
was mentioned before a
bench headed by Chief
Justice of India S A Bobde
where senior advocate Kapil
Sibal, appearing for Chidambaram, sought urgent listing
of the plea. Sibal told the
Bench that Chidambaram
has been in jail for around
90 days.
India has slipped 6 places to
59 rank on a global annual list
of 63 countries, due to low
quality of life and expenditure
on education, according to
the latest edition of IMD World
Talent Ranking, which was
topped by Switzerland.
The ranking, based on the
performance in three main
categories — investment and
development, appeal, and
readiness — noted that India
is lagging fellow BRICs
countries — China ranked
42nd on the list, Russia (47th)
and South Africa (50th). PTI<
Govt notifies steel
scrap recycling
policy: Pradhan
The government has notified
a steel scrap recycling policy
(SSRP) to provide for a
framework to facilitate and
promote establishment of
metal scrapping centres in
India for scientific processing
and recycling. Union Steel
and Petroleum Minister
Dharmendra Pradhan said in
Lok Sabha the framework
provides standard guidelines
for collection, dismantling and
shredding activities in an
organised, safe and environmentally sound manner. PTI<
NBFCs with ~500 crore
assets can go for
insolvency resolution
The Reserve Bank of India (RBI)
can seek resolution of nonbanking financial companies
(NBFCs) having assets worth of
at least ~500 crore under the
insolvency law, a move that is
likely to help in addressing
woes in the NBFC sector. After
discussions with the RBI, the
corporate affairs ministry on
Monday issued a notification
specifying the categories of
financial service providers
that can be taken up for
resolution under the
"generic framework" of
the Insolvency and
Bankruptcy Code.
he country’s low expenditure on
public health care (estimated to
be 0.9-1.1 per cent of GDP) is a big
constraint in growing the subsidised risk
pooling model in health care.
This is particularly true for the poor
and sick and those who need them the
most, a report by NITI Aayog, released
on Monday, said.
The current Pradhan Mantri Jan
Arogya Yojana (PM-JAY), commonly
known as Ayushman Bharat, is an example of a subsidised risk pooling model in
the health care sector.
The report titled, ‘Health Systems for
a New India: Building Blocks – Potential
Pathways to Reforms’ that was released
by NITI Aayog Vice-Chairman Rajiv
Kumar, in the presence of Bill Gates, said
better evidence-based decisions on what
components of the health care package
are to be subsidised for these populations are the need of the hour.
The Aayog, meanwhile, is mulling
building up a health care system for the
middle class, which is still not covered
under any public health care system. The
system would exclude those covered
under the newly-launched Ayushman
Bharat scheme that mainly caters to the
bottom 40 per cent population of the
Meanwhile, the report said that esti-
offiscal allocation to
health care
Expenditure as % of GDP
Germany 9.4
Mexico 3.1
Source :NITI Aayog report
mates suggest that per-capita expenditures in health care for the poor (after
cost-effective public goods are financed
for the entire population) would more
than triple if public funds were to be fully targeted only for the poor. While
India’s public expenditure on health care
has stagnated at around 0.9-1.1 per cent of
GDP, in China it is 3.2 per cent of GDP. In
Chile, it is 4.9 per cent and 9.4 per cent of
GDP in Germany. (see chart)
The report said that out-of-pocket
(OOPs) expenses, that are health care
expenses, aren’t covered by any insurance coverage, are expected to remain
high for the next decade as well unless
substantial improvements are made to
risk pooling models in the country.
Studies show that around 62 per cent
of an individual’s total expenditure on
health care in India is on OOPs, which
the report advocates changing to a more
risk-pooling model.
Complementing the PM-JAY as a
good start, the report said the scheme
targeted well (population and health
interventions) and scaled up properly
(with good contract management systems and capabilities). It has the potential for harnessing the rapidly developing power of private insurance in the
right direction.
“This is a legacy, which today is still at
the initial implementation stages.
However, it can serve as a foundation for
accelerating subsidised risk pooling
growth, rebalancing demand and supply-side financing in the public sector. It
can steer private insurance development
in the right direction (away from its current market failure direction),” the report
said. The report came down heavily on
Employees State Insurance Corporation
(ESIC) hospitals in the country on the
ground that given the lack of expansion
of supply (own or contracted), health
service utilisation for ESIS beneficiaries
is extremely low. It is among the lowest in
India as well as among social insurers in
the world.
“This low performance not only
deprives its members from due access to
services but, is likely contributing to
labour market distortions in the country
as well,” the NITI Aayog report said.
The report also calls for greater synthesis among the Centre’s PM-JAY,
Rashtriya Swasthya Bima Yojana (RSBY),
state health insurance scheme and also
ESIC to ensure that greater benefits
accrue to the poor and the needy.
It has suggested a six-point guideline
for transforming the health sector in the
country. This includes changing the
health system financing structure away
from the predominant undesirable OOP
spending into larger risk pools, with
strong strategic purchasing capabilities.
Panel for further decriminalising in Cos Act
New Delhi 18 November
The government’s committee to
review the law on companies
has recommended further
decriminalising of many
provisions and reducing of
penalties, for both declogging
system and doing more to provide “ease of living for law abiding corporates”.
The panel’s final report was
given on Monday to Union
finance minister Nirmala
Sitharaman and is open for
comments from stakeholders
till November 25 . The 11-member group was chaired by Injeti
Srinivas, secretary of the corporate affairs ministry.
Other members included
Uday Kotak, managing director,
Kotak Mahindra Bank; Shardul
S Shroff, executive chairman,
Mangaldas; Ajay Bahl, founder,
AZB Partners; Sidharth Birla,
chairman, Xpro India; Rajib
Sekhar Sahoo, principal partner,
SRB & Associates; and Amarjit
Chopra, senior partner, GSA
The panel suggests the gov-
ernment be authorised to raise
the thresholds which trigger
applicability of Corporate Social
Responsibility provisions.
It has recommended re-categorising 23 compoundable
offences, to be dealt with in the
in-house adjudication framework and subject to lower penalties. Also, limiting 11 offences to
only fines and removing the
imprisonment requirement.
Government is planning to
introduce the Companies
Amendment Bill with special
focus on decriminalisation in
the winter session of the
“Procedural, technical and
minor noncompliances, especially the ones not involving
subjective determinations, may
be dealt with through civil jurisdiction instead of criminal,” the
committee report said. In recent
amendments to the Companies
Act, as many as 16 sections saw
decriminalisation of breaches.
Most of these cover lapses such
as prohibition on issues of
shares at a discount or failure to
file a copy of a financial statement with the registrar.
“With decriminalisation, the
government is moving in the
Keyrecommendation for offences
6 to have
7to be omitted 5to be dealt with
of penalties
from Companies
in an alternative
11 to be limited to 23 provisions to be shifted to
fine only
in-house adjudication
right direction. Lots of suggestions given by the panel will
reduce the compliance burden
on companies,” said Ankit
Singhi, partner, Corporate
For non-compoundable
offences in the law, the panel
has suggested status quo. And,
to extend the benefit of the provisions on lower penalties for
small and one-person companies to producer companies and
start-ups, to encourage budding
entrepreneurs and farmers.
To improve ‘ease of doing
business’, it has suggested
reducing of timelines, so as to
hasten rights issues for fund
raising by companies and nonlevy of penalties for delay in filing the annual returns and
financial statements in certain
cases. Currently, under Section
62 of the Act, companies are
required to give a notice of at
least 15 days for offering shares.
The panel has also batted for
adequate remuneration to nonexecutive directors in case of
inadequacy of profit, by aligning
these with the provisions for
remuneration to executive
directors, in such cases.
It suggests wider consultation to review the provisions in
respect of debarment of audit
firms and disqualification of
directors. The group has also
called for consultation with the
Securities and Exchange Board
of India (Sebi) for exempting
certain private placement
requirements in Qualified
Institutional Placements.
The panel has also proposed
extending the exemptions from
filing of specified resolutions to
certain classes of non-banking
financial companies, in consultation with the RBI.
New Delhi, 18 November
The Gujarat High Court has
issued a notice to the Centre
seeking to know why the
option of input tax credit
under goods and services
tax (GST) regime is not
available for restaurants,
unlike others.
This was in response to a
writ petition filed by
Hardcastle Restaurants,
which is the master franchisee for McDonald’s,
against the Centre, asking for
the option to avail of input
tax credit by paying a higher
rate of tax.
GST rate on restaurants
was cut from 18 per cent to 5
per cent in November 2017,
but without any input tax
credit. When they were
charged GST at 18 per cent,
they could avail of the input
tax credit.
The National Restaurant
Association of India, which
represents more than
500,000 restaurants, had
this year written to the revenue secretary, arguing that
the denial of input tax credit had adversely impacted
the sector, leading to closure
of 20,000 outlets last year.
The restaurants’ body
suggested for availability of
option to either claim the
input tax credit with a GST
rate of 12 per cent or pay 5
per cent GST without that.
The writ was admitted by
the Gujarat High Court on
November 14. A notice was
issued to the Centre, which
has time till December 11 to
Abhishek Jain, tax partner at EY, said while a lower
rate had optically fared well
with customers, a denial of
input tax credit to restaurant
businesses had increased
their tax costs. “These businesses have for long been
discussing with the government on an optional higher
rate with input tax credit and
would now also look forward
to the final high court ruling
on this,” said Jain.
63% pregnant women in rural areas work till delivery Finance panel may
New Delhi, 18 November
Almost 63 per cent of pregnant women in
rural India work right until the day of
delivery. And, 49 per cent say they felt
exhausted during pregnancy, due to lack of
food and rest, a recent survey has found.
A third of the respondents had to
borrow or sell assets to meet afterpregnancy costs. Symptoms of weakness
included swelling of feet (41 per cent),
impairment of daylight vision (17 per cent)
or convulsions (9 per cent).
The survey was conducted this June in
six states, on 702 women (342 pregnant and
364 nursing, the latter defined as someone
who delivered a baby in the six months
preceding the survey). It is a nongovernment effort, conducted by tams of
student volunteers, coordinated by
academic-activists Jean Dreze and Reetika
Khera, among others.
It says 48 per cent of pregnant women
and 39 per cent of nursing women in Uttar
Pradesh had no idea whether or not they
gained weight during pregnancy. And, 22
per cent of the nursing women reported
they ate more than usual during
The exercise, titled Jaccha BacchaSurvey (JABS), is critical of the Pradhan
Mantri Mantru Vandana Yojana (PMMVY),
launched in 2017 as part of obligations
under the National Food Security Act,
which said all pregnant women are entitled
to maternity benefits of ~6,000, unless they
already received similar benefits under
other laws, e.g as formal sector employees.
Critics say on violation of the NFSA, the
Yojana restricted the benefit to one child
get extension for
J&K and Ladakh
Proportion of respondents unable
to read (%)
Average number of living
Average weight gained during
pregnancy (kg)
Proportion of respondents eating
less during pregnancy (%)
Nursing women
Proportion of respondents who faced
problems during pregnancy (%)
Proportion of respondents who felt
they did not get enough rest during
pregnancy (%)
Source: The Jaccha Baccha-Survey (JABS), a survey of pregnant and nursing women in
rural India, conducted in June 2019; in total, around 702 women were interviewed for
the survey in six states, which included 342 pregnant women and 364 nursing women
It finds the proportion of nursing
per woman – the “first living child” -- and
women who reported eating nutritious
also arbitrarily reduced the benefit from
food (e.g eggs, fish, milk) ‘regularly’ during
~6,000 to ~5,000 per child.
The survey says a query
pregnancy was less than half
Critics say in violation of the sample as a whole, and
under the Right to
only 12 per cent in UP.
Information Act revealed only the NFSA, the Pradhan
half of the eligible women
And, due to poor diet
Mantri Mantru Vandana
during pregnancy, the average
received any PMMVY money
Yojana restricted the
weight gain in the sample was
in 2018-19. And, since 55 per
benefit to one child
cent of pregnant women are
barely seven kg (in UP, four
per woman and also
kg), compared with the norm
not even eligible ('first living
arbitrarily reduced the
of 13-18 kg for women with a
child' condition), this means
benefit from ~6,000 to
low body-mass index. “A
effective coverage of PMMVY ~5,000 per child
is 22 per cent.
significant minority (21 per
cent) of nursing women said no one (not
“PMMVY could have been a promising
even a grown-up child) was available to
scheme but has been ruined by stinginess
help them with household work during
and technocracy. Aside from undermining
women’s rights, this is a major loss for
pregnancy,” the survey says.
Pregnant and nursing women are
children,” the survey report said.
acutely deprived of quality health care.
Many get some basic services (e.g tetanus
injections and iron tablets) at the local
anganwadi or health centre but very little
beyond these.
Against this gloomy picture, the survey
also records some positive changes. Such
as the use of of public ambulance services
that have becomey common. In Odisha, the
government has started giving eggs as
'take-home ration' to pregnant and nursing
women. Himachal Pradesh stands out for
relatively good public services, including
maternal care, for pregnant women and
nursing mothers; Chhattisgarh and Odisha
are improving.
In Jharkhand, Madhya Pradesh and —
especially — UP, the situation is described
as dismal.
New Delhi, 18 November
The 15th Finance Commission
is likely to get an extension, as
the panel has to examine
devolution to Union Territories
(UTs) of Jammu and Kashmir
and Ladakh in the light of
Reorganisation Act, 2019.
Chairman NK Singh, on the
sidelines of an event in New
Delhi, said the government was
yet to give fresh terms of reference to the panel regarding
Jammu and Kashmir and
Ladakh, even after the two UTs
came into being on October 31.
He did not directly say that an
extension would be given.
With the deadline of the
panel’s report submission of
November 30 fast approaching,
it is becoming increasingly likely that an interim report could
be submitted on or before that
day, with a final report later.
Business Standard had
reported that the term of the
extended by six months,
primarily due to uncertainty
regarding how to treat any
devolution of resources.
The interim report will be
Chairman NK Singh says the
government is yet to give
fresh terms of reference to
the panel regarding Jammu
and Kashmir and Ladakh
submitted to enable Finance
Minister Nirmala Sitharaman
and her bureaucrats prepare
the 2020-21 Budget. This
precedence in at least three
On the demand from states
that GST compensation be
extended for the entire tenure
of 15th Financial Commision’s
award period (till 2024-25),
Singh said the Centre had
already committed 14 per cent
compound annual growth rate
in compensation for the states’
revenue shortfall and would
cover the first two years of the
commission’s award period.
TikTok’s chief Alex Zhu is on a
mission to prove it is not a menace
Bombay HC
for ban on
The head of the Chinese-owned viral video app is trying to assuage Washington’s fears. “I am quite optimistic,” he said
ike almost everybody who
runs a big tech company these
Alex Zhu, the head of the of-themoment video app TikTok, is worried about an image problem.
To him — and to millions of
TikTok’s users — the app is a haven
for creativity, earnest self-expression
and silly dance videos. In almost no
time, TikTok has emerged as the
refreshing weirdo upstart of the
American social media landscape,
reconfiguring the culture in its joyful,
strange wake.
But to some people in the United
States government, TikTok is a menace. And one big reason is the nationality of its owner, a seven-year-old
Chinese social media company
called ByteDance. The fear is that
TikTok is exposing America’s youth
to Communist Party indoctrination
and smuggling their data to Beijing’s
The desire to fix this perception
gap is what brought Mr. Zhu last
week to a WeWork in Manhattan,
where a handful of his colleagues are
based. Mr. Zhu, a trim 40-year-old
who speaks fluent if lightly accented
English, helped found Musical.ly, a
Shanghai-based lip-syncing app that
ByteDance acquired in 2017 and folded into TikTok.
In an interview — his first since
taking the reins at TikTok this year —
Mr. Zhu denied, in unambiguous
terms, several key accusations.
No, TikTok does not censor
videos that displease China, he said.
And no, it does not share user data
with China, or even with its Beijingbased parent company. All data on
TikTok users worldwide is stored in
Virginia, he said, with a backup server in Singapore.
But China is a murky place for
companies. Even if TikTok’s policies
are clear on paper, what if Chinese
authorities decided they didn’t like
them and pressured ByteDance?
What if China’s top leader, Xi Jinping,
personally asked Mr. Zhu to take
down a video or hand over user data?
“I would turn him down,” Mr. Zhu
said, after barely a moment’s
Washington at this moment is
suspicious of Chinese tech companies to a degree that can feel like
paranoia. The Trump administration’s biggest target has been Huawei,
the giant supplier of smartphones
and telecommunications equipment. But it has also tried kneecapping Chinese producers of
microchips, surveillance gear and
That a lip-syncing app now finds
itself in the same position shows the
extent to which any Chinese
advancement is seen in Washington
as harmful to American interests.
Over the past year, TikTok’s app has
been downloaded more than 750 million times — more than Facebook,
Instagram, YouTube and Snapchat,
according to the research firm Sensor
The weapon being wielded
against TikTok is the Committee on
Foreign Investment in the United
States. The secretive federal panel,
known as CFIUS, is looking into
ByteDance’s purchase of Musical.ly.
Earlier this year, the committee
forced a different Chinese company
to relinquish control over the dating
app Grindr, which it had bought in
2016. The concern was also that
Beijing might gain access to personal information.
Mr. Zhu said TikTok user data was
segregated from the rest of
ByteDance, and was not even used to
help improve ByteDance’s artificial
intelligence and other technologies.
“The data of TikTok is only being
used by TikTok for TikTok users,” he
It is unclear how such assurances
will be received in Washington.
“If Instagram or Facebook wanted
to be sold to a Chinese firm in some
way, I would 100 percent see the
same issues at hand,” said Clark
Fonda, a former congressional chief
of staff and an author of a 2018 law
that expanded CFIUS’s powers. “It’s
about the underlying distrust of the
Chinese government and what, theoretically, they could do with this
In this tense time, Mr. Zhu is an
unlikely peacemaker. With his long
salt-and-pepper hair and light mustache and goatee, he looks more like
a poet than a tech founder. He seems
to relish a little artsy oddness. On his
LinkedIn profile, he describes himself as a “designtrepreneur” and gives
his work location as “Mars.”
“In the past, my personal focus
was always design and user experience,” Mr. Zhu said. He spent a lot of
time thinking about the colors of buttons.
Now as TikTok’s boss, he reports
to ByteDance’s 36-year-old founder,
Zhang Yiming. Mr. Zhu said dealing
with TikTok’s sudden crisis had been
“very interesting,” if nothing else.
“I am quite optimistic,” he said.
Mr. Zhu grew up in the landlocked Chinese province of Anhui.
After studying civil engineering at
Zhejiang University in eastern China,
RBI rate cut 110 bps, but
lending rates up by 8 bps
Mumbai, 18 November
Despite the Reserve Bank
making credit cheaper, lending rates are rising for borrowers after accounting for
inflation and falling economic growth, a foreign brokerage said on Monday.
The weighted average
lending rate in the system is
up 0.08 percent since April,
economists at Bank of
America Merrill Lynch
(BofAML) said in a report.
Economic growth has fallen
to a six-year-low of 5 percent in
the June quarter and is widely
expected to slip further with
almost all key components of
the economy contracting or
falling since the first three
months. The RBI has responded by cutting rates by
110 basis to a nine-year-low of
5.40 percent since April cour- on all the debt, is up because
higher money supply and
tesy low inflation.
The RBI has been blaming credit demand are unable to
banks for slower transmission ensure banks reduction in
of its policy moves into their marginal cost of funds-based
lending rates and continu- lending rates, which are typically applicable
ously nudging
them to cut more, Analysts say weighted for new loans.
Among the
so that credit pick average lending rate
solutions to push
up can increase to is up because higher
growth up, the
help the broader money supply and
report said the
growth. It has also credit demand are
helped make ade- unable to ensure
authority and
quate liquidity banks reduction in
the finance minavailable.
marginal cost of
istry will have to
“Growth is still funds-based
pull down averfalling as real lend- lending rates
age lending rates
ing rates are still
through measrising,” the report
said. Real lending rate is the ures like starting a 2 percentage
number after calculating for points loan subvention done to
small businesses, which would
In their note, the analysts cost ~21,100 crore next fiscal
said the weighted average year and also a reduction in the
lending rate, which is the cash reserve ratio by 0.25 per
aggregate of the interest paid cent by the RBI in February.
he worked in the United States at
SAP, the German software company.
As he tells it, the idea for
Musical.ly came to him as an
epiphany. On a train once from San
Francisco to Mountain View, Calif.,
he noticed the teenagers around him
listening to music, taking selfies and
passing their phones around. Why
not combine all that into a single
Musical.ly debuted in 2014. It
quickly attracted tens of millions of
monthly users, and Mr. Zhu moved
to Shanghai.
He went to great lengths to learn
about the young — sometimes very
young — Americans flocking to his
platform. He registered fake
Musical.ly accounts so he could comment on videos and understand their
creators, he said in 2016.
Around the same time,
ByteDance was storming phone
screens in China with a news aggregator called Jinri Toutiao. In 2016,
the company released a video app
for China named Douyin; TikTok followed soon after. The platforms are
RBI plans to set
up college of
The Reserve Bank of India
(RBI) is in the process of setting up a 'college of supervisors' to augment the supervisory skills of its key personnel,
RBI Governor Shaktikanta
Das has said.
The development can be
attributed as a response to the
massive scam at Punjab &
Maharashtra Co-operative
Bank, which for three years
hoodwinked the regulator
with cooked up books-something the annual inspection
by the RBI supervisors could
not notice and take preventive action.
The RBI has already created a unified department of
supervision and a unified
department of regulation
from November 1 this year,
which will strengthen the
oversight of commercial
banks, cooperative banks and
NBFCs, Das has said.
Better agri data to
help tackle climate
change: Bill Gates
New Delhi, 18 November
Prime Minister Narendra Modi with Microsoft Co-founder
Bill Gates during a meeting in New Delhi on Monday
Better statistical information
and innovative tools will help
minimise the damage of climate change on the farm sector, billionaire philanthropist
and Microsoft co-founder Bill
Gates on Monday said.
As the effects of climate
change on smallholder farmers will increase in future, there
is an opportunity for engaging
with the private sector in the
field of agriculture and play an
important role in boosting the
crop yields, he said.
“At a time when we have to
increase productivity, climate
change is making it far difficult. Understanding how the
changing weather is affecting
our crops and productivity and
how we can adapt to that —
requires best work in agricul-
ture statistics including use of
new tools,” Gates said in his
keynote address at the 8th
global conference on agri-statistics.
Referring to India’s soil
health card, he said soil quality data helped farmers determine what fertilisers to use.
However, there are opportunities to add additional data to
the existing one and make a
detailed soil mapping.
“Better soil, better information and better statistics will
help minimise the damage of
climate change,” he said.
Gates, who is also co-chair
in the Bill & Melinda Gates
Foundation, said since the
issue of climate change was
“complicated”, interventions
were required to be taken,
including developing new variety of seeds and their distribution to farmers.
similar but separate — TikTok is
unavailable in mainland China and
vice versa.
In late 2017, Musical.ly agreed to
be taken over by ByteDance. Last
year, the Musical.ly app was merged
into TikTok.
Mr. Zhu stayed to help with the
transition. He then took a few
months off last year to rest, go clubbing in Shanghai and listen to jazz.
He rejoined TikTok early this year,
not long after ByteDance raised funding at a valuation of around $75 billion, making it one of the planet’s
most richly valued start-ups.
TikTok surely owes some of its
success to the sunny, fun-for-itsown-sake vibe it has cultivated. But
that has led to suspicions that TikTok
suppresses material, such as clips of
the Hong Kong protests, that could
be a buzzkill. The company says it
previously penalized content that
“promoted conflict.”
Now “we don’t take any action on
any politically sensitive content as
long as it goes along with our community guidelines,” said Vanessa
Pappas, general manager for TikTok
in the United States. Those cover
things like hate speech, harassment
and misleading information.
Mr. Zhu said TikTok, which
makes money by selling ads, was still
drawing up its content policies.
“Today, we are lucky,” he said,
“because users perceive TikTok as a
platform for memes, for lip-syncing,
for dancing, for fashion, for animals
— but not so much for political discussion.”
He acknowledged this could
change. “For political content that
still aligns with this creative and joyful experience, I don’t see why we
should control it,” he said.
The deeper concern is that
ByteDance’s vast business in China
could give Beijing leverage over the
company, and over TikTok. In its
brief existence, ByteDance has had
plenty of run-ins with Chinese
authorities. This month, regulators
hauled up company executives after
finding search results from
ByteDance’s search engine that supposedly defamed a revolutionary
There are other steps ByteDance
could take to try to convince
Washington of TikTok’s independence, such as reorganizing TikTok as
a separate company with a new
board of directors.
Mr. Zhu said the company wouldn’t rule out such possibilities. But
there had been no discussion about
selling off TikTok’s American business, he said. Harry Clark, a CFIUS
specialist at the law firm Orrick, said
that was probably what the committee would end up demanding. CFIUS
might have entertained other options
had the companies applied for a
review before doing the deal, Mr.
Clark said. Now, he said,
Washington’s concerns about China
and data protection are deepening.
“Three years ago, I doubt any
CFIUS expert would have said it’s
crucial that you go to CFIUS here,”
Mr. Clark said. “Now, most would.”
©2019 The New York Times New Service
A public interest litigation
(PIL) has been filed in the
Bombay High Court seeking
a ban on video app TikTok
for being a medium of "unfiltered sexual content, and
harming youths of the country".
The petition was filed on
November 11 by Mumbai-resident Heena Darvesh, a
mother of three children.
Copies of the PIL were
made available on Monday.
claimed that the usage of
TikTok has resulted into several criminal incidents,
including deaths in some
TikTok is an application
used to create, upload or
share short lip-syncing comedy or music videos.
The app was launched in
2017 by China-based developer Bytedance.
Darvesh claimed a similar plea was filed in the
Madras High Court last year
seeking a ban on the app for
its sexual content.
"Unfiltered sexual content
on TikTok causing harm to
the youth of the country. In
July this year, two cases were
registered by the Mumbai
Police against few persons for
posting videos on TikTok
inciting violence and promoting enmity between religious groups," the petition
The plea is expected to
come up for hearing before a
division bench this week.
Not facing 5% slowdown: Govt
NCP, BJD adhered
to parliamentary
norms, says PM
New Delhi, 18 November
mid Opposition protests and demands for a
discussion on economic slowdown, the
Narendra Modi government on Monday said
India did not face a 5 per cent gross domestic product
(GDP) slump. The country continues to be the
fastest-growing economy in the world, it said.
During the Question Hour in the Lok Sabha,
opposition MPs asked questions on the economic slowdown and whether demonetisation and implementation of the goods and services tax (GST) contributed to
the economy having taken a hit. Minister of State for
Finance Anurag Thakur said a
number of steps, including
bank mergers and tax concessions to industries, were being
taken to boost the economy.
According to the National
Statistical Office (NSO),
Thakur said, annual GDP
growth on average was 7.5 per
cent in 2014-19, the highest
among G-20 countries. He
PER CENT SLUMP. said the World Economic
WHERE DID YOU Outlook (WEO) of October
GET THE FIGURE? 2019, projects a significant
slowdown in global output
and trade in 2019. “India,
despite recent deceleration of
MoS, finance
GDP growth, is still projected
by WEO to grow at the fastest
rate in 2019-20 among G-20 countries,” he said.
The minister said the government had been taking
measures to address the moderate levels of fixed
investment rate in the economy, plateauing of private
consumption rate and modest export performance.
“There is no 5 per cent slump. Where did you get the
figure? Show us,” Thakur countered, when Aam Aadmi
Party’s Bhagwant Mann said India was facing slump.
“By 2025, India will be a $ 5-trillion economy,” the
minister said.
‘Incoterms CPT, CIP
terms oblige seller to
contract for carriage’
Prime Minister Narendra Modi speaks in the Rajya Sabha on Monday
Manmohan slams govt for misuse of ‘money bill’ provisions
Former prime minister Manmohan Singh on
Monday bemoaned “instances of misuse of the
Money Bill provision” by the Narendra Modi
government in the recent past. He said the
government “must ensure that such
instances are avoided”.
Speaking on the occasion of the
250th session of the Rajya Sabha, Singh
said a crucial difference between the
Lok Sabha and Rajya Sabha was that
Article 110 of the Constitution allows
the Lok Sabha precedence in matters of
a ‘Money Bill’.
“In the recent past, we have seen instances of
misuse of the Money Bill provision by the
Executive, leading to bypassing the Rajya Sabha
on crucial legislations of importance, without
any deliberation. Those in Treasury benches
must ensure such instances are avoided. It
dilutes the stature and importance of our institutions, including the Rajya Sabha,” Singh said.
In its previous term, the Modi government
did not introduce some of the Bills in the
Rajya Sabha, as it claimed that these
were ‘Money Bills’ as decided by the
Speaker. Congress leader Jairam
Ramesh had moved the SC against the
government decision.
Singh, a Rajya Sabha member since
1991, spoke on the importance in the
constitutional system of checks and
balances. He said the Rajya Sabha “has a central
role to provide checks and balances to a majority
government in the Lok Sabha, along with its
other key role was to represent the interest of the
states in our federal Union.”
Prime Minister Narendra Modi
on Monday said in the Rajya
Sabha that people’s hearts
can be won by political parties
even without rushing to the
Well of the House to register
protest on various issues.
Speaking in the House during
a special discussion marking 250
sessions of the Rajya Sabha, he
said the Nationalist Congress
Party (NCP) and the Biju Janata
Dal (BJD) had wonderfully
adhered to parliamentary norms
by not entering the Well of the
House. “Yet, they have made
their points effectively. Much
can be learnt from this ...
people’s hearts can be won even
without rushing to the Well.”
The PM said Rajya Sabha is
about checks and balances.
“This is absolutely essential ...
here is also a difference between
checking and clogging,” he said.
With some questioning the
effectiveness of Rajya Sabha as
crucial legislative work got stalled
because NDA lacked a majority in
the House, Modi recalled the
then prime minister Atal Bihari
Vajpayee's words that the Upper
House "may be the second house
but no one should think of it as
a secondary house."
In FY18, percentage of 15 yrs Female participation in
& above workers was 46.8 labour force declining
Allow Farooq Abdullah to Shiv Sena takes a dig at
attend House: Opposition Centre over slowdown
Minister of State for Labour and Employment
Santosh Gangwar said on Monday the Periodic
Labour Force Survey (PLFS), conducted by the
National Sample Survey Office, during 2017-18,
showed that the percentage of workers of 15
years and above engaged in work was 46.8 per
cent. While it did not cite any PLFS survey data
for the previous two financial years, it stated
that the survey for 2015-16 put the figure at
50.5 per cent and for 2013-14 at 53.7 per cent.
This was a reply to a question by TMC MP
Mala Roy in the Lok Sabha.
Attacking the government over the detention of
Lok Sabha member Farooq Abdullah, Opposition
members on Monday termed the National
Conference leader’s detention illegal and
demanded he be allowed to attend the House.
Opposition leaders raised the issue of MPs not
being allowed to visit Jammu and Kashmir after
abrogation of its special status, whereas
parliamentarians from Europe have been taken
to the state, with Congress leader Adhir Ranjan
Chowdhury describing the European Union
delegation as hirelings.
The Centre on Monday said surveys depict
“a declining female labour force participation
rate”. The government said this decline could
be attributed to higher participation of women
in education and migration. In a reply to
BJP’s Rita Bahuguna Joshi, Labour and
Employment Minister Santosh Kumar Gangwar
said the government had taken initiatives
to improve women’s participation, like setting
up child care centres, time-off for feeding
children and enhancement in paid
maternity leave.
The Shiv Sena, which has quit the BJP-led
National Democratic Alliance, on Monday
signed a notice moved by the Trinamool
Congress for a discussion on the economic
slowdown. During obituary references to
former finance minister Arun Jaitley in the
Rajya Sabha, Sena member Sanjay Raut took
potshots at the BJP. “We learnt from Jaitley
the importance of relations and how to
maintain them,” he said, which his colleagues
took to mean the recent severing of ties
between old allies.
means the seller must deliver
the goods and transfer the risk
to the buyer when the goods,
once unloaded from the arriving means of transport, are
placed at the disposal of the
buyer at the named place of
destination or at the agreed
point at the destination, if any
such point is agreed. So, the
obligation to unload the cargo is
on the seller.
I refer to your clarification
(Chatroom, Business
Standard, November 5, 2019)
on certain aspects of
FCA/CIP/CPT in Incoterms. My
understanding is that in case
of CPT/CIP terms, the carrier
need not be nominated by the
buyer. Is this correct? Who is
required to contract for
You are right. The Incoterms
CPT/CIP terms cast no obligation on the buyer to nominate
the carrier. It is a matter to be
agreed between the buyer and
seller. The obligation to contract for the carriage from the
agreed point of delivery to the
named place of destination, or,
if agreed, any point at that
place, is on the seller. The cost
for contract for carriage must
be borne by the seller, who
must ensure that it is on usual
terms and usual route as customary for the type of cargo.
He must also ensure that any
requirements are met. To that
extent, the earlier clarification
must be read with this explanation. In any case, it must be
noted that the risk passes upon
delivery of the cargo to the carriers within theagreed date.
In case of DPU Incoterms 2020,
whose obligation is it to
unload the goods at the place
of delivery?
DPU is the abbreviation for
“Delivery at Place Unloaded”. It
Under FOB Incoterms, who
should bear the container
booking charges and BL
First, please note that for containerised cargo, the appropriate Incoterms is FCA and not
FOB, as containers are usually
handed over by the seller to the
carrier at a container yard or terminal and not on board a vessel.
Anyway, in an FOB contract, the
seller must bear all costs till the
goods are delivered by placing
them on board the vessel (nominated by the buyer, unless
agreed otherwise). So, the container booking charges incurred
prior to such delivery will be to
the account of the seller. If the
agreed proof of delivery is a bill
of lading, the seller must bear
the costs for procuring the same.
In the new Rule 36 (4) of the
CGST Rules, 2017, we are
allowed to take 20 per cent
of the eligible credit even if the
seller has not uploaded his
invoices. What is meant by
“eligible credit”? It is
not defined.
Basically, it means the credits
for invoices that have been
uploaded by the seller and that
you find in auto-populated
GSTR-2A. But, there are many
other finer points. The CBIC
has clarified most of them,
with examples, through its circular no. 123/42/2019-GST
dated November 11, 2019. I suggest you go through it for
greater clarity.
Business Standard invites readers’ SME queries related to excise,
VAT and exim policy.
You can write to us at smechat@bsmail.in
Why MNCs are changing their India tune
The reasons are myriad — maturing of markets, change in business strategy —
but there is a clear indication that global firms are not willing to tolerate
any more slack in India
f you are someone who has
firms’ India play in the
heady days of the 1990s and
2000s, the current goings-on are
a big let-down. Back then, for
the globetrotting MNCs India
was the last El Dorado, to be conquered and won at all cost.
Though China, another big consumer market, also beckoned, it
was considered “taken”, by
either government-led local
firms or other MNC peers.
No wonder most played the
Indian market much in the PGA
Tour's Together Anything’s
Possible style, their ambition not
constrained by money, men or
material. The liberalisation and
globalisation-led 90s and
noughties was a time when
western capital markets were
infatuated with a strong emerging market play, and fortunes
were made or lost on mere the
mention of whether the firm
was going in or out of India!
Global firms poured money
into India as if there was no
tomorrow, and often chased losing, thin on strategy ideas and
projects that they would have
been loath to back in most
developed markets. It was clear
that there was a huge error in
estimating the true size of the
addressable Indian market, and
some correction in expectations
did happen in the 2000s and later, but most kept the faith and
the purse strings open.
Something has changed dramatically of late. Though in the
past four-five years alone, there
have been some flight out of the
country by MNCs — such as
French retailer Carrefour closing
down its cash-and-carry business
in 2014 or Japanese drugmaker
Daiichi Sankyo exiting India in
2015 — it is not so much a Quit
India movement as yet. More like
an expectation that India has to
start behaving like any other market and stand up on its own and
stop depending on the parent’s
largesse. The reasons are myriad.
For some, it is the global strategy
at play, but for most it is Indiaspecific issues like regulatory
overhang, underperformance of
the market or the inability to
compete in perhaps of the world’s
most complex market.
After pouring over ~1 trillion
in the last decade or so, British tel-
co Vodafone announced last
week that it has finally closed the
funding spigot to its gasping
Indian subsidiary, and is ready to
face... well... even exit from the
country if it comes to that. One of
the earliest MNC carmakers into
India, American Ford Motors has
agreed to take a junior role in a
partnership with local automaker
Mahindra & Mahindra for its
struggling operations in India.
Why, even General Motors is
learned to be looking for buyers
for its only remaining factory in
India in Pune.
Though not as dramatic as a
retreat from India, there is clear
change of tack among many
others across sectors. Time was
when American beverages
major Coca-Cola was gobbling
bottlers in India, and writing
down losses it had run up to fuel
its aggressive take-markets-atall-cost strategy. Now, the firm
is reportedly hawking those bottling plants to its franchise bottlers in order to generate cash.
Japanese investor SoftBank,
after pouring in almost $10 billion in Indian startups, including
nine unicorns, is demanding all
new funding to be linked to timebound public exits or the chance
to sell stake to any willing buyer.
Singed by huge losses run up by
its Vision Fund globally due to
unprofitable bets on WeWork
and Uber, SoftBank, according to
venture capital tracing firm
Tracxn, has not put even a single
dollar in new investment in India
this year! And after a bitter separation with its partner for half of
the country, McDonald’s has now
reportedly put stricter rules for
prospective new partners with
no leeway to take the operations
public and to hypothecate the
operating company’s shares to
the parent.
The steel scrap recycling policy has opened the door for large steelmakers to enter the recycling
business and meet steel demand in a sustainable manner
honour goes to a Mahindra and MSTC
joint venture, which already has in operata Steel made all its 16.81 million ation two units in Greater Noida and
tonnes (mt) of crude steel in India Chennai — Tata Steel is making an entry
last year through the primary into scrap recycling business to give a
blast furnace-basic oxygen furnace (BF- push to formalising the steel scrap genBOF) route. The company’s production eration industry for the benefit of seccapacity at Kalinganagar in Odisha is ondary sector. The 500,000-tonne recybeing enhanced from 3 mt to 8 mt by cling plant that Tata Steel is building
way of installing a 5,800 cubic metre BF, near Delhi on build, own and operate
to be the largest in the country. Its entire basis will be ready for commissioning
targeted capacity expansion to 30 mt by during this financial year. Steel recycling
2025 is likely to be produced via the BF- is part of the company’s attempt to genBOF channel. Even then, Tata Steel erate 30 per cent revenue from non-core
acknowledges the secondary sector that businesses. Many are seeing in Tata
includes electric arc furnaces (EAFs) and Steel’s entry into recycling work the first
induction furnaces (IFs) where ferrous step to build secondary mills in different
parts of India to tap marscrap is the principal raw matekets far removed from
rial will have an important role
in meeting the country’s growKalinganagar. Smaller
ing demand for steel in a “susmills will enable the comtainable manner.”
pany to make small
Citing examples of many
parcels according to
countries where “very efficient”
requirements of buyers.
relatively small plants in the secThe many recent proondary sector exist focusing on
nouncements by steel
production of “very high quality
minister Dharmendra
special steels” in small lot sizes
ANALYSIS BEHIND Pradhan and steel secreof “40 to 80 tonnes,” Tata Steel
tary Binoy Kumar highCEO and Managing Director TV
light the point that for the
Narendran says: “We in India
first time the central govneed to have a very strong secondary sector... There are roles that are ernment will be closely working with the
specially cut out for the secondary sector states to develop a steel hub covering
like servicing customers who will be dif- Odisha, Jharkhand, Chhattisgarh and
ficult to reach for the primary sector. I West Bengal to address effectively indusdon’t think the country’s steel industry try issues concerning raw materials secucan prosper with just a few large steel rity, logistical hindrances, credit requireplants. Ideally, the primary and sec- ments and skills development. Attempts
ondary sectors should grow in parallel will be made to use the hub for producand both will have to be world class in tion of high value added steel with the
secondary sector playing a major role in
efficiency, cost and product quality.”
Though not the first to be off the the quest. The new initiative coincides
block in steel recycling business — that with release of a “robust” steel scrap pol-
106.56 mt
50.08 mt
56.48 mt
in 2018-19
via BF-BOF
via EAF
& IF
300 mt total steel capacity target for 2030-31.
icy whose implementation will prove to
be a “game changer” for steel’s secondary sector, according to Kumar.
In any case, the secondary sector
already has a major presence in the industry, capacity-wise. During 2018-19, the
combined production of crude steel by
EAFs and IFs was 56.48 mt. This constituted 53 per cent of that year’s total output
of 106.56 mt, the remaining 50.08 mt coming from BF-BOF units. Considering the
usefulness of EAFs and IFs in giving a
boost to steel use by their sheer presence
in proximity to present and potential market, the 2017 steel policy recommends for
secondary sector a share of 35 to 40 per
cent of India’s targeted steelmaking
capacity of 300 mt by 2030-31.
The country has 47 EAFs and 1,128
IFs and their combined capacity is
around 75 mt. No one will doubt Indian
entrepreneurial intelligence in seizing
investment opportunities in the steel
secondary sector provided of course
there is some degree of raw material
security — in the present case, it is about
steel scrap. After all, in the past, businessmen here, seeing the country’s
growing dependence on imports of metallurgical coal, built sponge iron capacity
of 50 mt, the world’s largest, based on
local non-coking coal and gas? A case of
turning a problem into an opportunity.
New Delhi is hopeful that the implementation of the newly announced steel
scrap recycling policy will make the
country self-reliant in ferrous scrap by
2030. Sufficient investments will be
forthcoming in the secondary sector for
capacity to rise, according to steel policy.
At any point in what proportion EAFs
and IFs will be using scrap and sponge
iron will depend on their prices. The fact
that the government is found rigorous
in enforcing quality for most steel products will explain the growing industry
preference for imported scrap. This is in
spite of a 2.5 per cent import duty on foreign origin scrap.
India is spending around ~24,500
crore a year for steel scrap imports, the
shortfall in domestic supply vis a vis
A triple whammy in November?
rom a growth perspective, an
increasing labour participation is
more important than a falling
unemployment rate. It is important to
increase the number of people willing
to work. If fewer people are willing to
work, a low unemployment rate is
meaningless. This is because the unemployment rate is merely the proportion
of those that are willing to work who
cannot find jobs.
Compared to global standards, India
has a very low labour participation rate
and now, it also has a high unemployment rate. This is a classic double
whammy. And to this, we can now add
the misery of a rising inflation rate. Is
there something called a triple whammy? In the world of medicine, the term
is associated with renal failure.
This dispiriting opening para is
inspired by the early signs of labour
market stress in November 2019.
Besides the worrisome rise of inflation
and the elevated unemployment rate,
we now also see a fall in the labour participation rate.
The first half of November 2019 saw
a sharp fall in the labour participation
rate (LPR). In August, September and
October, labour participation rate was a
little over 43 per cent. This was
an improvement over the sub-43
per cent rate prevailing in the preceding
six months.
In comparison, the labour participa-
tion rate in the weeks ended November
3, November 10 and November 17 was
41.6 per cent, 42.6 per cent and 41.8 per
cent. The rate seems to be heading
below 42 per cent in November.
In November 2018, the LPR was
42.8 per cent.
If the LPR ends below 42 per cent in
November 2019, it would be the lowest
LPR witnessed since 2016.
Weekly data is volatile and it is not
wise to generalise from the dip seen in
just one week as was seen in the week
ended November 3. But the week ended
November 17 has once again fallen to
sub-42 per cent levels. This warrants
some concern regarding the strength of
the recovery in the LPR seen in the past
few months.
The LPRs in August, September and
October 2019 were systematically higher
than the levels recorded in the corresponding months of 2018. This is the
first time we have seen such a sustained
year-on-year increase in the LPR. This
was sufficient to start believing in a possible revival of the LPR after a long period of steady fall and then an equally
long period of stagnation at low levels.
Very early signs of November threaten
this belief.
The fall in labour participation in the
week ended November 3 was concentrated in rural India. Here, the LPR fell
204 basis points from 44.2 per cent in
the week ended October 27 to 42.2 per
cent in the week ended November 3.
Rural LPR did recover in the week of
November 10 to 43.3 per cent but, it fell
again to 42.9 per cent in the week ended
November 17.
In urban India, the LPR fell only
marginally in the week ended November
3. But, it fell sharply in the week ended
November 17. This fall was a steep 155
basis points from 41.1 per cent to 39.6
per cent.
Data of the first half of November
2019 also show a sharp fall in the
employment rate. This implies that
there is either a shrinking of employment in the month or at least a slower
growth in employment compared to the
growth in working age population.
The average employment rate in the
three weeks that ended in November
2019 was 38.8 per cent. If the month ends
with an employment rate less than 39
per cent, it would be the lowest employment rate recorded since 2016 when we
began measuring labour statistics.
The employment rate has fallen in
rural and urban India. The fall in urban
India appears to be more worrisome
than the one in rural India.
Urban employment rate appeared to
have bottomed out in August 2019 at
36.9 per cent. It inched up a bit to 37
per cent in September 2019 and then,
it shot up to 37.4 per cent in October.
Now, in the first half of November, it
seems to have slipped again to lessthan 37 per cent.
The long-term trend of the employment rate in urban India is one of steady
decline. August and September 2019
had provided hopes of some respite
from this. However, November 2019
could belie these implying a continuation of a long term trend of falling
employment rates.
Unlike urban India, the country side
has seen a somewhat volatile stabilisation of the employment rate in the past
14 months. The employment rate had
declined steadily from 43 per cent in
cent in August 2018. Thereafter,
the employment rate has remained
around this level with substantial
month-to-month variations. It is possible to read the decline in rural
employment rate in November as part
of these monthly variations.
Nevertheless, early indications of a
decline in overall labour participation
and employment rates in November
is worrisome.
The author is the MD & CEO of CMIE
Chit or cheat?
The Lok Sabha
on Monday took
up a discussion
on the Chit
Funds (Amendment) Bill.
Among Lok
Sabha members
who participated in the
discussion, the
YSR Congress Party’s (YSRCP’s) Raghu
Ramakrishna Raju Kanumuru
(pictured) demanded a change in the
nomenclature of not just the Bill but
also in the way these schemes were
named. The MP from Andhra
Pradesh’s Narsapuram constituency
said the word “chit” was being
pronounced “cheat”, which was
reducing the importance of such
schemes for people with no banking
facilities. He said the name “chit
fund” should be changed to
“fraternity fund”.
Gujral’s centenary
Prime position for secondary steel
demand being 7 mt. Now that the scrappage policy, which has laid ground for
promotion of collection, dismantling
and processing of end-of-life vehicles, a
major source of pollution in our cities,
consumer durables and plant and
machinery on scientific lines, secondary
steelmakers can breathe easy.
Steel as also aluminium and copper
are infinitely recyclable and all these
metals retain their inherent quality on
their being repeatedly recycled.
Tackling greenhouse gas emission
(GHGE) in a major way when steel is
made from scrap and resources conservation involving iron ore, coal and limestone are principal drivers for scrap recycling. But environmental sanctity is
compromised if dismantling of vehicles
and other machines is not done in a sufficiently large gated compound and the
subsequent work of baling and shredding is carried out manually with workers exposed to grave health risk.
Secondary producers are making a
reasonable demand that they should be
able to procure high quality scrap locally
to be able to produce steel for use by
quality demanding sectors such as automobile and machine building. This will
be fulfilled as likes of Tata Steel, MarutiToyota and Mahindra-MSTC emerge as
major players in steel recycling. Leading
steelmaking countries such as China,
Japan and the US are relentless in their
pursuit of using more and more scrap in
producing the metal finding application
in the more demanding sectors. Driven
by growing restrictions on GHGE,
Chinese mills in the first half of 2019
raised its steel scrap use by 20.7 per cent
to 103.28 mt from 85.57 mt in the same
period last year. India will have to catch
up fast.
The 100th birth anniversary of former
prime minister Inder Kumar Gujral is
on December 4. His son Naresh Gujral
and the rest of his family will have a
function at the India International
Centre, New Delhi. Naresh Gujral is a
Rajya Sabha member of the Shiromani
Akali Dal (SAD), an ally of the Bharatiya
Janata Party. Gujral senior, who
passed away in 2012, was in the
Congress and then in the Janata Dal.
For the function, those invited to
speak are former president Pranab
Mukherjee, former prime minister
Manmohan Singh, former vicepresident M Hamid Ansari, and
Congress leader Karan Singh. Given
Gujral senior’s interest in diplomacy
and his stints as India’s ambassador
to Moscow and as the country’s
external affairs minister, there will be
a discussion on India’s foreign policy
titled “Continuity and Change”. Four
former foreign secretaries Shivshankar
Menon, K Raghunath, Kanwal Sibal,
and Shyam Saran will participate in
the discussion.
Proposal drowned
Computer Baba, self-proclaimed godman
and chairman of the river trust for the
Narmada-Kshipra and the Mandakini,
surprised many when he announced that
he would deploy some 2,000 sadhus
(monks) on the banks of rivers in Madhya
Pradesh to stop illegal mining. He said:
“We will surprise the sand mafia.” The
plan was to deploy four to eight groups of
250 to 300 sadhus each on the banks of
the state’s many rivers. His scheme was
shot down by the government. Mining
Minister Pradeep Jaiswal jettisoned the
plan, saying, “Computer Baba is a religious
figure and chairman of a trust but he has
nothing to do with mines and the
minerals department.” Jaiswal said he
should stick to “babagiri” and refrain from
getting involved in the operations of
government departments.
Early detection crucial
This refers to "All you wanted to know
about banking frauds" (November 18).
At a time when the banking sector,
particularly the government-owned
banks, are hamstrung by the undeterred incidents of bad assets, controlling and addressing the creditrelated frauds is crucial to protecting
the banks from financial and credibility damages. Despite robust systems to ensure preventive vigilance,
the banks fail to prevent the occurrence of frauds which indicates that
the strong involvement of the staff
nullifies the existing prevention measures. While loans and advances are
more prone to frauds, banks should
keep a watch on the activities of the
concerned staff who are dealing with
the borrowers of the bank.
Beginning from the receipt of an
application for credit facilities to the
liquidation of the loan, there are various phases which are vulnerable and
that enables fraudsters to cheat the
bank. The risk factors vary with the
nature and type of loan, the economic
activity of the borrower and the securities offered or available to the
lender. As such, any flaws in the
observation of the prescribed checks
and balances defeat the due diligence
and taking advantage of the situation
and the loopholes, the fraudsters are
cheating the banks. Despite the
importance of watching the early
warning signals and accordingly redflagging the loans, many a time these
are wilfully or unintentionally
ignored and cause losses to the bank.
Banks must scrupulously observe
all the systems and procedures prescribed for the conduct of the banking
activities. Violation of the norms by
the functionaries have often jeopardised the interest of the bank and
exacerbated the losses. Early detection and reporting the frauds to the
banking regulator and to the investigating or enforcement agencies are
imperative to curtail losses as well as
to retain the confidence of all
the stakeholders.
VSK Pillai Kottayam
Hydra-headed problem
This refers to the editorial “Saving the
telecom sector” (November 18).
Vodafone and Airtel posting mammoth losses aggregating ~74,000
crore in Q2 of this year is a matter of
deep concern. These two service
providers also have to pay up cumulative licence fees and spectrum user
charges around ~1 trillion within a
short period of time. This will likely
result in these two companies folding
up and the users will be facing a
monopolistic situation. Monopolies
resort to all sorts of anti-consumer
actions like predatory pricing,
restrictive practices, poor service etc
with no other options for hapless
consumer. If these two companies
close down, it will badly impact the
balance sheets of the banks who have
lent to them. The financial system
cannot afford another massive hit
after the PSB saga, NBFC/HFC problems and urban cooperative bank
fiasco. It will result in massive big job
losses and hit associated businesses.
The international image of the country will take a serious beating at a
time when there is growth slump and
high unemployment.
Reckless competition is also
responsible for this situation. There
is a need for the concerned regulatory
body to examine whether unfair practices are being followed in the industry. Assets and businesses of these
two companies which are unrelated
to their core activities need to be
hived off.
The government must allow for
the payments of dues (by these telecos) to be staggered and penalties and
interest need to be waived, if possible.
It cannot allow the golden goose to be
killed. The government has wisely
decided to examine this issue.
Something meaningful needs to be
done quickly lest it will be like bolting
the stable door after the horses have
Arun Pasricha New Delhi
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Volume XXIV Number 68
Beyond deposit insurance
Mechanism should be economically viable
he central board of the Reserve Bank of India (RBI) is expected to raise
the deposit insurance limit from ~1 lakh to ~5 lakh. This should be welcomed as it will cover most retail depositors of banks. As reported by
this newspaper, a new scheme is also likely to be considered to cover
wholesale deposits up to ~25 lakh. Besides, two other important proposals are
expected to be examined. First, it could allow banks to obtain deposit insurance
over and above the enhanced limit for both individual and institutional depositors.
If implemented, it will help boost confidence, especially in the private sector
banks, and help strengthen financial stability. Second, the Deposit Insurance
and Credit Guarantee Corporation (DICGC) will create a separate reserve to protect
depositors of banks hit by frauds, such as in the Punjab & Maharashtra Cooperative (PMC) Bank. However, it has been reported that the premium paid for
deposit insurance will not be increased from the current level of 10 paise per
~100 worth of deposits. The banking regulator should examine the proposal carefully and make sure the insurance mechanism remains economically viable.
It is reassuring that the central bank is looking for ways to protect the
interests of depositors. However, it is also important to address other issues
related to deposit insurance. The biggest beneficiaries of deposit insurance are
cooperatives banks, while over 90 per cent of the premium is paid by commercial
banks. What this essentially means is commercial banks are paying for the
failures of state governments in regulating cooperatives banks. For instance,
between 2009-10 and 2018-19, over 400 claims from cooperative banks were
settled, compared with only one from commercial banks. Now with the increase
in deposit insurance, the payout might go up significantly. It is also likely that a
class of depositors would want to keep more money in cooperative banks because
of higher interest rates.
Thus, it is important to review the regulatory architecture of cooperative
banks. The present system of dual regulation by state governments and the
central bank is not working. Also, it is worth reassessing whether the Indian
financial system needs so many cooperative banks. They served a purpose in the
past, but are perhaps not relevant anymore with the expansion of commercial
banking and adoption of technology. In fact, with a lack of expertise and capital,
it will become increasingly difficult for cooperative banks to compete and survive
in the changing financial landscape. Therefore, the presence of cooperative banks
must be reassessed and reforms should be implemented in an orderly fashion.
Some of the better-run cooperative banks could be merged and converted into
small finance or commercial banks.
The central bank must also strengthen its own regulatory and banking oversight capabilities, so that vulnerabilities in the banking system are addressed in
time. For example, the fraud in PMC Bank remained undetected for years and
was known only after the management itself wrote to the regulator. Therefore, to
protect the interests of depositors, the government and the banking regulator
need to do a lot more than just raising the deposit insurance limit.
Sri Lankan reset
Gotabaya’s election presents challenges and opportunities
ndia’s foreign-policy establishment is unlikely to have viewed with equanimity
the election of Gotabaya Rajapaksa, the feisty former wartime defence minister,
to the Sri Lankan presidency. But the development is not entirely negative
from India’s point of view. Prime Minister Narendra Modi was among the
first leaders to tweet his congratulations to the brother of a former president
(Mahinda Rajapaksa) with whom he scarcely enjoyed warm relations, a strong
signal that the Indian government was keen to reset relations with the islandnation’s most powerful political family. Indeed, it is a little-known fact that as
defence minister, the younger Rajapaksa enjoyed a positive engagement with the
Indian establishment during the civil war against Tamil separatists. India also
conspicuously chose to remain an observer in these polls, addressing a major
grievance voiced by Mahinda Rajapaksa of poll interference in 2014. The opportunities to build on this relationship, then, are manifold, not least because of the
natural personal affinities between two “strong” leaders and the fact that India’s
current foreign minister had wide experience in Sri Lanka during his Indian Foreign
Service days.
For India, however, China is the biggest elephant in the Sri Lankan island. On
Mahinda Rajapaksa’s watch, the country became the biggest foreign investor in
Sri Lanka. Though his successor, Maithripala Sirisena, sought to leaven that relationship — not least by signing an agreement with India and Japan to develop a
deep-sea container terminal at Colombo port — he could do little to stem the tide.
Under him, China took over the strategic Sri Lankan port of Hambantota, and has
moved ahead with plans to develop an international financial centre near Colombo,
which could eclipse Gandhinagar. Gotabaya Rajapaksa is reliably expected to augment this relationship. India can do little to alter these facts on the ground. By
incrementally building on the strong ties between the two countries, New Delhi
could usefully strengthen the relationship. For instance, one little-noticed fact is
that air connectivity between the two countries has grown exponentially over the
past few years — one in four tourists to the island nation is Indian — and there has
been closer integration between India’s southern states and Sri Lanka in terms of
student exchanges and ferry services. India is also Sri Lanka’s largest trading
partner, and the opportunity to augment a Free Trade Agreement signed in 2000
with a wider Comprehensive Economic Partnership Agreement has the potential
to bind the two countries beyond the trade in goods.
Apprehension also arises over Mr Rajapaksa’s overt ethnic nationalism, evident
from the fact that none of the Tamil-speaking areas of the north and Muslimdominated east — the two groups that account for a fifth of the population —
voted for him. It is also significant that Mr Rajapaksa chose to be sworn in at
Anuradhapura, capital of an ancient Sinhala civilisation closely associated with
Buddhism, and emphasised national security as a priority in his inaugural speech.
His message was, no doubt, addressed to the IS terrorists who orchestrated attacks
on tourists earlier this year but the optics for Tamil minorities would not have
been reassuring. India has the opportunity to play a moderating hand. It has
already played a role in building housing for war-displaced people in the north. In
short, emphasising a positive agenda would go a long way in tackling the challenges
embedded in the Indo-Sri Lankan relationship.
Unemployment rate (%)
Youth (15-29) unemployment rate (%)
Labour force participation rate (LFPR) (%)
Female LFPR (%)
Total employment (millions)
Youth (15-29) not in labour force, education/training (NLET) (millions)
Share of agriculture in employment (%)
Share of industry (including construction) in employment(%)
Share of regular salaried workers in employment (%)
Share of self-employed and casual labour in employment (%)
Percentage of regular salaried workers in non-agriculture with
no written job contract
2004 -05 2011 - 12 2017 - 18
s the growing discourse around mental
health yet another social media fad, or
does it reflect that our society has got
rid of the stigma attached to mental illness?
It is difficult to come up with a pat answer
because it can only be based on perception,
feeling and conjecture. On the one hand,
users of mental health services are openly
talking about their diagnoses on Twitter,
Facebook and Instagram. On the other
hand, there are frequent reports about suicide cases involving young people, particularly from marginalised communities.
Sources: PLFS (2017-18) and Santosh Mehrotra and Jajati Parida, "India's Employment Crisis : Rising Education Levels and Falling Non-agricultural
Job Growth", Centre for Sustainable ; Employment Working Paper 2019-04, Azim Premji University.
The jobs crisis
Economic slowdown is only partially to blame for the rise in
unemployment. The principal reason is weak policies
ndia’s large and growing working age popula- Interestingly, and as one would expect, the youth
tion, currently numbering close to a billion, is unemployment rate in 2017-18 rose steeply with
her greatest potential resource for rapid and the level of education, from 7.1 per cent for illitersustained economic development. Sixteen years ates to 14.4 per cent for secondary school and furago, I had warned that this demographic dividend ther to a staggering 36 per cent for graduates and
could be squandered in the absence of the right post-graduates. This data is fraught with potential
policies (Business Standard , November 25, 2003, for serious social and economic distress and dis“Can India grow without Bharat?”, republished in content.
2007 by Academic Foundation in a book with the n Perhaps even more distressing than the trends
in open unemployment are those
same title). Since then, successive
in labour force participation rates
governments have persisted with
(LFPR). This refers to the ratio of
wrong or weak policies and prothose employed or seeking
grammes, including a poor public
employment to the working age
education and skilling system; an
population (above 15). The LFPR
extremely complex and anti-jobhas fallen substantially, from 64
creation maze of labour laws; trade
per cent in 2004-05 to just below
and exchange rate policies that dis50 per cent in 2017-8. That means
courage labour-using exports and
less than half of India’s working
import-competing domestic proage population have jobs or are
duction; poor infrastructure that
seeking work!
undermines productivity and conn Unsurprisingly, total employnectivity; a chronically weak edifice
ment in India actually fell by a
of public sector banks; and avoidfew million between 2011-12 and
able major policy shocks like
2017-18, for the first time since
demonetisation. The recently pub- SHANKAR ACHARYA
1972-73, when the official national
lished (June 2019) Periodic Labour
sample surveys of employment
Force Survey (PLFS) for 2017-18
conditions was first conducted.
brings out the dismal consequences.
The table shows the serious worsening of India’s n Much of the decline in the overall LFPR is
employment situation in the 13 years between because of a steep fall in the female LFPR, from 43
2004-05 and 2017-18, according to nearly all key per cent in 2004-05 to a pathetic 23 per cent in
2017-18. This compares poorly with female LFPRs
indicators, especially after 2011-12:
n The open unemployment rate has almost tripled
(in 2018) of 61 per cent in China, 52 per cent in
since 2011-12 to 6.1 per cent. Since the poor can Indonesia and 36 per cent in Bangladesh. Nor can
rarely afford to be unemployed, much of this this precipitous decline in female LFPR be
increase reflects a surge in educated unemployed. explained away by higher rates of female enrolment
n The youth (15-29) unemployment rate has also
in education, since the 20 percentage point drop
tripled to an unprecedented 17.8 per cent in 2017- in LFPR is observed among both the 30+ age group
18, reflecting the growing paucity of jobs. (down from 46 per cent to 27 per cent) and female
The writer is honorary professor at ICRIER and former chief
economic adviser to the Government of India.
Views are personal.
Bad news: What you say doesn’t matter
ll it took was “loud” allegations from a lenders. The futures and cash prices of stocks
whistle-blower to knock 16 per cent off the crash long before the credit ratings start disapInfosys market value in a single session pearing into the basement, the auditors quit,
just about a month ago. To date, the company says lenders begin to panic or before PILs are filed or
there is still no evidence of alleged wrongdoing investigators come calling at midnight. And once
by the CEO or others. Regardless, the damage to in the reputation glare, it is difficult for most firms
the company’s reputation is done. The ~53,000- and leaders to extinguish the flames before somecrore hit in its market cap and the reputation of one gets badly burnt.
Note the household names —Zee, Yes Bank,
the firm and its leaders will take Infosys some
DHFL, Jet Airways — whose
years and a lot of outperformance
shares now litter the floors of the
to claw back.
bourses, where once they were
Reputation has become the
held in high esteem and rewardbiggest driver of market and brand
ed with frenzied valuations.
value today for investors and cusWhile the underlying causes may
tomers. For PE funds or mutual
be economic and even circumfunds — reputation is increasingly
the touchstone for investment decistantial — excessive promoter
leverage, ill-conceived expansions and a leading indicator of true
sions or just too much real estate
market value.
exposure in a country with 0.7
A 2018 study by Reputation
million empty apartments — the
Institute, a global firm, estimated
that corporate reputation is now
reputational injuries suffered
directly responsible for an average
may be fatal, as far as customer
trust and market valuations are
of 38 per cent of market capitalisation across the FTSE 100 and FTSE
So where did blue-chip Infosys err? In her col250; of that the CEO’s brand accounted for about
40 per cent of the company’s brand. Given the umn, “Infosys Forgot Founder’s Mantra: When In
recent falls in some respectable names, one sus- Doubt, Disclose”, senior journalist Menaka Doshi
pects that for the Sensex 30 or Nifty 50, the repu- says that the key point is not the allegations per
tation weightage would be a few notches higher. se but the manner in which the company chose
While consultants are busy selling fancy envi- not to react or disclose immediately. It was only
ronmental, social and governance (ESG) frame- when two media reports forced their hand, folworks as the new mantra for “responsible corpo- lowed by a sharp stock price fall that it merited
rations”, the reality is that in today’s age of media more detailed explanations from its chairman.
Immediate response and disclosures as well as
polarisation, reputational damage often trumps
a corporate’s ESG score.
a rapid and calibrated resolution path are the only
As ever, equity markets continue to pick up defence left for firms today. The other time-tested
these cues on reputation damage far quicker than tactics, like timing the release of bad news after a
‘What happens when madness descends’
What is going on?
Side Effects of Living: An Anthology of
Voices on Mental Health edited by Jhilmil
Breckenridge and Namarita Kathait is a
book that you might want to pick up in
order to explore these questions. Instead
of privileging the expert opinion of academics or mental health practitioners,
this anthology gives you direct access to
the accounts of people who experience
or have experienced mental health distress. There is a rawness to their narratives, which is presented lovingly by the
editors who hatched a plan to create this
book while speaking about their own
journeys over a shared bowl of noodles
and hot tea in paper cups after an open
mic event on a winter evening in Delhi.
Ms Breckenridge had survived incarceration in a mental institution in the
city, whereas Ms Kathait had grown up
with a mother who had severe
schizophrenia. Their personal histories
Note: All employment data are on Usual Principal and Subsidiary Status (UPSS) basis.
youth (down from 37 per cent to a heartbreakingly
low 16 per cent). The current and future implications for overall female economic and social
empowerment are deeply saddening.
n In their paper last month (see table for full reference), Santosh Mehrotra and Jajati Parida (henceforth MP) attribute the steep declines in India’s
LFPR to the phenomenon of discouraged workers
(they call it “disheartened labour force”); that is
job aspirants simply drop out of the labour force
because of persistent failure to get jobs. Focusing
on youth (15-29), they define this category as equal
to the PLFS-based numbers on youth “Not in
Labour Force, Education and Training (NLET)”.
This number has increased from 70 million in
2004-5 to 100 million in 2017-18. Taking their maximalist definition of disheartened labour force to
its logical conclusion, and adding NLET both to
the usually defined labour force and unemployment, we would have 125 million “unemployed”
out of an “adjusted labour force” of about 240 million, giving an “adjusted youth unemployment
rate” of 52 per cent in 2017-18! Even if only half the
NLET were taken as “disheartened workers”, one
would get a youth unemployment rate of nearly
40 per cent.
n The trajectory of sectoral employment shares
over time also shows distressingly slow shift of
labour from low productivity agriculture to higher
productivity industry and modern services. Even
in 2017-2018, agriculture still accounted for 44 percent of national employment, much higher than
in all other G-20 countries. Worse, the share of
industry (including construction) was stagnant
between 2011-12 and 2017-18. Most disappointingly,
the share of manufacturing stalled at a lowly 12
per cent between 2004-5 and 2017-18.
n The share of self-employed and casual labour
in national employment still totals nearly 80 percent. As Radhicka Kapoor points out
(“Understanding India’s Jobs Challenge”,
www.TheIndiaForum.in, September 6, 2019), this
is worrying for several reasons. These categories
are typically characterised by widespread worksharing arrangements and associated underemployment. They also tend to have low average
earnings, often well below recommended levels
of the national minimum wage.
n On the plus side, the share of regular salaried
workers in employment has risen from 14.4 per
cent in 2004-05 to 22.8 per cent in 2017-18.
However, the percentage of regular salaried workers in non-agriculture with no written job contract
has risen from 59 per cent in 2004-05 to 71 per
cent in 2017-18, reflecting rising insecurity even
in this category.
n In sum, the jobs situation in India has worsened
seriously over the past 15 years. Furthermore, today,
in mid 2019-20, it is almost certainly worse than
the numbers discussed above, since economic
growth has slowed sharply in the 18 months since
PLFS (2017-18).
What can be done to reverse the bleak trends
outlined above? There is no silver bullet. In fact,
there really is no viable alternative to tackling the
policy and programme weaknesses sketched in the
first paragraph of this column. Until we make serious progress along those lines, the rise in unemployment, underemployment, discouraged workers and job insecurity is likely to continue, with
very adverse consequences for the nation’s economic well-being and social cohesion.
kindled a recognition of pain, and a desire
to tell the stories they had kept hidden
out of sheer shame. They set up a notfor-profit trust called Bhor Foundation,
and began to scout for more submissions
to this book. It is a moving compendium
of writing by contributors from Kolkata,
Srinagar, Meerut, Bangalore, Hyderabad,
Pune, Delhi, Tehran, and other places.
Ms Breckenridge writes, “Through the
stories of survivors, writers, poets and
artists, those who have suffered or those
who have watched their loved ones suffer,
we have tried to make sense of what happens when madness descends, why it
descends and what we can do when it does.
Is it the result of a chemical imbalance; is
it a virus that attacks only a few? Why do
some people seem more prone to depression, anxiety and other mental health distress? And can we do anything about it?”
This book challenges the idea of “normalcy” against which society measures
individuals. Those who do not fit in are
often seen as inconvenient or embarrassing. Many of them are bullied, abused,
discarded and gaslighted. Others are
treated with kid gloves, sent to shamans,
or given unsolicited advice that has no
connection with their condition.
Huzaifa Pandit writes about a pir in
Srinagar who pronounced that his mental
health issues could be traced back to a
pari who was besotted with him. The
baba started beating him with a plastic
rod to drive away the pari. When that did
not help, he began to pull Pandit’s hair
and also bore into his calf with a sharp
You might assume that people who
visit psychologists for therapy or psychiatrists for medication are in a better place
but the testimonies in this book show
that the treatments prescribed by these
professionals do not work for everyone.
There are people who have benefited
specific corporate event (like quarterly results in
Infosys’ case) or more generically late on a Friday
evening (“putting out the trash” as PR folks call
it) and expecting it to be forgotten by the Monday
news cycle, don’t work. Equally difficult is “stopping a story”, when news outlets have multiplied
and the need for good content has become insatiable — ergo if one or two don’t publish, the fourth
or fifth outlet will.
The 2019 Crisp Crisis Impact report also underscores this argument. In today’s online frenzy, the
importance of a timely response is key to avoiding
reputation damage. Over 50 per cent of those surveyed said that they expected brands to respond to
a crisis within 60 minutes. A similar number wanted to directly hear from the CEO and not through
an impersonal press note in such situations.
Moreover, there are strong upsides for brands in
responding immediately that many firms and their
leaders don’t seem to appreciate. Ninety per cent of
customers in the Crisp report felt that they would
continue to favour a brand that reacted promptly
to a reputation issue. Investors are less likely to
dump your stock once they are convinced about the
authenticity and immediacy of the response.
For firms, these issues are only going to intensify. Online and social linkages between value and
reputation will continue to strengthen as the next
billion come online. The impact of user-generated
content which takes the brand out of the brand
owner’s control is only growing. Once on social
media, the brand is every Twitter, Insta and TikTok user’s to toy with. They can post about your
brand, meme it, mock it and share it. How well
and how quickly a firm responds will determine
its value.
The writer is a communications professional
immensely from their support but there
are also multiple instances of expert
knowledge being used to invalidate lived
Bharti Manoj was diagnosed with
severe depression and borderline personality disorder at the All India Institute of
Medical Sciences. She writes, “I was given
a cocktail of psychiatric drugs. I think I
became a guinea pig for them — they
constantly experimented with my medication. Sometimes I felt better, sometimes
worse.” The person experiencing distress
is pathologised, reduced to a label
describing their condition, and is stripped
of their autonomy and agency. What does
recovery mean in a context in which the
medical-industrial complex determines
the fate of a person struggling with mental health issues?
This book questions the construct of
recovery as a return to “normalcy”.
According to the editors, and several contributors, this ideal condition is nothing
but a myth that is perpetuated by oppressive social structures. The individual who
does not embody the norm is branded
an outlier while the real problem lies with
families that cannot accept diversity. The
distress these individuals experience
might never go away because of the society they live in but they devise ways to
manage or reduce their distress.
There are people who choose community care over therapy or medication.
They wish to heal through immersion in
activities such as writing, gardening,
quilting, painting, cooking or hiking.
They have the right to decide what to do
with their lives, without being subjected
to what Mr Breckenridge calls “the ableist
lens of a capitalist society which decides
on behalf of everyone else.” That is the
central point of this book. It is made with
remarkable conviction and consistency.
Anthology Of Voices On
Mental Health
Jhilmil Breckenridge and Namarita Kathait
Speaking Tiger, 213 pages, ~299
The Smart
“When markets rise — we
stay out as we are value
investors. When they fall —
we stay out as we are
growth investors
Eventually FD returns!”
The stock of Sanofi India was up over 5% on
expectations that a fast growing chronic portfolio
and leadership position in basal insulin should
help keep growth rates high. Further, margins
could move up further on higher proportion of
domestic branded business after the Advent deal
DSP Mutual Fund
Slew of companies in process of filing, re-filing public issue documents with the regulator
Slow growth, pricey stocks
make brokerages cautious
IPO market sees green shoots
Mumbai, 18 November
Issue size
Affle (India)
Polycab India
Neogen Chemicals
Metropolis Healthcare 1,204.29
Spandana Sphoorty
Embassy Office Parks REIT 4,750.00
Rail Vikas Nigam
fter a dismal year, the market for public share
sales is seeing a few green shoots. In the past
two months, four companies — Route Mobile,
Monte Carlo, Mazgaon Dock Shipbuilders, and Indian
Renewable Energy Development Agency — have
refiled offer documents with the Securities and
Exchange Board of India (Sebi) for initial public offerings (IPOs). Mumbai-based realtor Puranik Builders
may also refile its offer document, said people in the
know. Also, SBI Cards & Payment Services, UTI Mutual
Fund, and a few small finance banks are in the process
of submitting their IPO documents with the market
regulator in the next few months, say industry experts.
So far, 27 firms have IPO approvals from Sebi and
they could raise an estimated ~18,000 crore through
the share sales, data from Prime Database shows. These
include the likes of CSB Bank, Ujjivan Small Finance
Bank, Bajaj Energy, Shriram Properties, and Penna
Cement. Another seven, which include some of the
names cited above, have filed offer documents in the
past three months but are yet to receive the regulatory
nod. “We may see a few deals coming through but it
may not necessarily point towards a revival,” said
Pranav Haldea, managing director, PRIME Database.
This year, 14 companies have raised a little over ~15,000
crore via IPOs. All, except one, are trading in the green
on the bourses, with IRCTC and Affle (India) clocking
gains in excess of 100 per cent. FY17 and FY18 had seen
a combined mop-up of over ~1 trillion through IPOs.
While the markets have run-up a bit since
September, the rally may not sustain owing to lack of
improvement in earnings growth, believes Haldea.
RCom stock
down 8%
over Q2 loss
G/L: General ledger; Source: Basis of allotment
Brokerages are cautious on the markets following a
slump in key economic indicators and a sharp liquidity-driven rally post the government’s move to cut corporation tax rates. The benchmark BSE Sensex is up
12 per cent year-to-date.
And if the secondary market does not see a meaningful rally, the mood in the primary market is unlikely
to see a turnaround. Several companies have let the
approvals for IPOs lapse this year. This may continue
if there is not enough demand at the price they are
looking to raise money, says Haldea. “Valuations
remain tricky and companies will have to ensure they
leave enough money on the table to ensure their IPOs
sail through,” he said.
“For companies, it’s a question of trial and error,”
Compiled by BS Research Bureau
said Dara Kalyaniwala, vice-president, investment
banking, PL Capital Markets. “There is still a great
deal of uncertainty in the market, and a refiling will
enable companies to hit the market as soon as sentiment improves.”
Sebi’s letter of observation is usually valid for 12
months. Give or take a month or two from the date
of filing and getting regulatory approval, companies
are essentially looking at a 14-month window at the
time of filing or refiling to hit the market with their
offerings. According to Kalyaniwala, companies that
refile shell out ~1-1.5 crore by way of fees to the regulator, investment bankers, lawyers, if IPOs are below
~1,000 crore. The amount could be slightly higher
for larger issues.
Morgan Stanley sees global GDP growth
at 3.2% in 2020; says EMs to outperform
Reliance Communications
(RCom) on Monday tumbled
over 8 per cent after the company posted a consolidated
loss of ~30,142 crore for the
September quarter.
The company's scrip
dropped 3.39 per cent to close
at ~0.57 — its record low — on
the BSE. At the NSE, it slipped
8.33 per cent to close at ~0.55.
RCom on Friday posted a
consolidated loss of ~30,142
crore for July-September 2019
due to provisioning for liabilities after the SC ruling on
statutory dues. The company,
which is going through insolvency process, had made a
profit of ~1,141 crore in the corresponding three months a
year ago. The SC last month
upheld the Centre's position
on including revenue from
businesses in calculating the
annual AGR, which has to be
paid as licence and spectrum
fee to the exchequer.
Current G/L
New Delhi, 18 November
Months after cutting their projection for global real GDP
growth for CY19 to a six-year
low of 2.9 per cent in July, analysts at Morgan Stanley now see
a marginal recovery and expect
the year to record 3 per cent
growth. They have retained the
projection for CY20 at 3.2 per
cent and expect growth to
speed up in CY21 at 3.5 per cent.
With the global monetary
easing since the first quarter of
2019 (1Q19) and trade tensions
now subsiding, Morgan Stanley
believes global growth is likely
to trough in the fourth quarter
of 2019 (4Q19), followed by a
recovery from the first quarter
of 2020 (1Q20) onwards.
“Global growth should
recover from 1Q20, reversing
the downtrend of the past seven quarters as trade tensions
and monetary policy are easing
simultaneously for the first
time since the downtrend
began,” wrote Chetan Ahya,
Euro Area
Morgan CLSA
Morgan CLSA Morgan CLSA
5 6.8
All figures in %; NA: Not available
economist and global head of
economics in a recent coauthored report.
Uncertainties relating to
trade wars, macro data from the
US, and the reduced scope of
monetary policy, however, are
the three key risks.
Stanley expects growth in
Sources: Morgan Stanley, CLSA reports
emerging markets (EMs) to be
higher than their developed
market (DM) peers, as central
banks continue cutting rates.
It expects 13 central banks to
ease further in 2020, bringing
the global weighted average
policy rates to a seven-year low
by March 2020. These rate cuts,
it says, will be concentrated in
EMs, with central banks in
India, Brazil and Russia cutting
rates once more.
Regarding India, Morgan
Stanley expects growth to average 5 per cent in CY19 and
improve to 6.3 per cent in CY20
and 6.8 per cent in CY21. On a
financial year basis, its analysts
peg GDP growth at 6.5 per cent
in FY21 and 6.9 per cent in FY22
(versus 5 per cent in FY20).
“We expect growth to
improve in 2020 with the support of past policy measures
and expectations of continued
reform action from the government. Apart from a cyclical
recovery, we expect a policy
focus on improving trend
growth through productivityenhancing measures,” Ahya
said in the co-authored report.
Analysts at CLSA, however,
remain cautious on how the
global economy will pan out in
2020. They see 2019 global
growth at 2.2 per cent, down
from 2.9 per cent in the previous year, and slip to a mere
1 per cent in 2020 before bouncing back to 2.2 per cent in 2021.
Glenmark shines as Q2 marks rebound in earnings
Analysts expect
sales to pick up
in US, domestic
Glenmark Pharmaceuticals’ better-thanexpected July-September quarter performance, after several quarters of weak
results, enthused the Street. The stock
gained more than 21 per cent on Monday,
following brokerage upgrades.
The quarter proved to be good for both
India and US sales, which saw momentum
rebound, and was well supported by other
geographies. Analysts believe that
Glenmark finally seems to be turning the
corner, as is evident from its good operational performance and cost management
in Q2. JPMorgan says that execution missteps, strategy shifts, and weak cash flow
had led to the stock de-rating from 18-19x
last year to 10x currently. While these concerns were known and discounted in the
stock price, data points from Q2 results do
highlight scope for margin improvement
in the coming quarters.
The India business, which is about a
third of revenues, grew more than 15 per
cent year-on-year (YoY) in Q2, led by contribution from diabetes treatment drug,
Remogliflozin. Notably, the momentum
is expected to continue and the run-rate
is expected to double by March 2020, with
annualised revenues of ~70-80 crore versus
~36 crore now. The dermatology portfolio
also continues doing well and so is the
consumer products business, which
recorded 20 per cent YoY growth in Q2.
A little less than a third of revenues,
the US sales grew 4.6 per cent YoY and 15
per cent sequentially in Q2. The eight product approvals helped Glenmark grow,
despite 5-6 per cent sequential erosion in
the prices of its dermatology portfolio.
The oncology generics of Fulvestrant
injection and dermatology Pimecrolimus
topical cream are expected to drive growth,
feel analysts, who expect these products
to attain $30 million annual revenues in
the coming quarters. The start of commercial supplies from the Monroe plant by the
end of March 2020 and pick-up of injectables and nebuliser sales are seen as other
key drivers of US sales.
As capital expenditure requirement of
the Monroe plant moderates, it should also
help improve cash flows. Glenmark has
maintained its guidance to reduce debt by
at least ~700-800 crore by utilising proceeds from the sale of non-core assets (likely in the second half of 2019-20) and cashflow from core business.
While the Street will keep an eye out
on the progress on these fronts, analysts
at HSBC believe the worst is behind and
have upgraded the stock to ‘buy’ from
‘hold’, while those at Nomura have arrived
at a target price of ~653 for the stock trading at ~365.
Is Pidilite losing stickiness with investors?
Stiff competition,
slowdown could
make volume
recovery difficult
With close to 3 per cent decline
in the last two trading sessions
after its July-September 2019
quarter (second quarter, or Q2)
results, the stock of Pidilite
Industries has underperformed the flattish trend on
the Sensex.
From its all-time high of
~1,494.50 on September 23, it
is down 13 per cent, against 3
per cent rise in Sensex. Volume
growth worries in the near
term are making investors jittery about the stock, which is
currently trading at rich valuations of 49x its 2020-21 estimated earnings growth.
The owner of popular adhesive and waterproof brands
such as Fevicol, FeviKwik, Dr
Fixit, and M-seal, among oth-
ers, reported a nine-quarter
low volume growth of 0.6 per
cent in Q2. This was led by a
0.9 per cent volume decline in
consumer and bazaar (C&B)
products, which account for
over 80 per cent of Pidilite’s
revenues. As a result, Pidilite’s
net sales grew by a meagre 2.8
per cent year-on-year (YoY) to
~1,807 crore.
Besides liquidity crunch
and prolonged monsoon, competitive intensity in waterproofing from players such as
Asian Paints weighed on
Pidilite’s C&B volumes in Q2.
Competitive intensity, in fact,
is making the volume and margin outlook gloomier for
Pidilite amid feeble consumer
demand. This is because, competitive intensity would warrant more advertisement and
promotional spends and
restrict its pricing power to
some extent. And this, in turn,
would negate the benefits from
an expected improvement in
gross profit margin, at the
earnings before interest, taxes,
depreciation, and amortisation
(Ebitda) level.
Currently, prices of key raw
material such as vinyl acetate
monomer (VAM) stand at $890
per metric tonne, against $901
per metric tonne in Q2, and
Pidilite has 45 days of VAM
inventory in place.
In Q2 also, higher advertisement expenses led to Pidilite’s
Ebitda margin shrink by 48
basis points (bps) YoY to 20.4
per cent, despite a sharp 398bps improvement in gross profit margin. Advertising spends
in Q2 were 4.8 per cent of sales,
compared to typical levels of
3.9-4 per cent. Pidilite’s profit
before tax rose by 5.8 per cent
YoY to ~376.6 crore. Net profit
growth of 40.6 per cent was
driven by lower corporate tax.
Against this backdrop,
Emkay Research has cut its
2019-20 to 2021-22 earnings
estimates by 3-4 per cent for
Pidilite and believes further
pressure exists from the ongoing slowdown in constructionrelated activities and increase
in competition.
Overall, the stock could
remain under pressure till clear
signs of volume and margin
recoveries emerge, given the
pricey valuation.Overall, the
stock could remain under pressure till clear signs of volume
and margin recovery emerge
given the pricey valuation.
New Delhi, 18 November
The slump in key economic
indicators and a sharp liquidity-driven rally since the government cut corporation tax
rates on September 20 have
made brokerages cautious on
the markets and they now
indicate a limited upside for
the indices in the short-tomedium term.
Since the cut in corporation
tax rates, foreign portfolio
investors (FPIs) have pumped
in ~39,930 crore or $5.6 billion
(as on November 14) in equities, while mutual funds have
invested nearly ~6,000 crore,
data show. The S&P BSE Sensex
and the Nifty 50 have gained
12 per cent and 11 per cent,
respectively, since then.
“Belying our expectations
of recovery starting in the third
quarter, high-frequency indicators have plunged and domestic
credit conditions remain tight
amid weak global demand. As
a result, we now expect India’s
economic recovery to be
delayed and the subsequent
pickup to be sub-par,” wrote
Sonal Varma, chief economist
for India and Asia ex-Japan at
Nomura in a report.
Analysts at CLSA, too,
apprehend that real gross
domestic product (GDP)
growth for FY20 may slip to 5
per cent. Their worst-case scenario stands 50 basis point
(bps) lower than this projection
at 4.5 per cent.
“India is in the middle of a
severe credit contraction that
started with the liquidity
squeeze triggered by the crisis
in the non-banking financial
companies (NBFCs) which has
now spread to deposit-taking
Corporation tax cuts are a bold
move but will take time to gain
traction. India’s recovery will
be postponed to late 2020,”
said Eric Fishwick, chief
economist at CLSA.
Institutional Equities led by
Sanjeev Prasad, MD and cohead for institutional equities,
caution against rich valuations
at which the Indian markets
Markets reverse gains
as winter session starts
Mumbai, 18 November
Indian equities snapped a
three-week advance to end
the day in the red, as investors
turned their attention to the
winter session of Parliament
and uncertainty surrounding
the U.S-China trade talks.
The S&P BSE Sensex Index
fell 0.2 per cent, reversing
from an intraday gain of as
much as 0.5 per cent. The NSE
Nifty50 Index was little
changed at -0.1 per cent. The
markets in Asia were mixed
as investors awaited fresh
developments in trade talks
between the US and China.
While India unveiled rules
on Friday to help creditors
recover loans due from large
shadow lenders, all eyes are
now on the US-China negotiations and the winter session
of Parliament.
Ordinances related to corporate-tax
e-cigarettes are on the agenda. Investors are also turning
their attention to economic
data out later this month for
cues on growth.
are trading despite weak eco- fiscal deficit to slip by around
~1 trillion or around 50 basis
nomic scenario.
“The Indian market is trad- points (bps). We remain cauing at rich valuations in the tious. Overweights in our modcontext of historical valuations el portfolio include financials,
despite a sluggish economy. industrials and technology, and
The Nifty50 trades at 22.4x underweights (are) consumer,
FY2020E EPS and 17.7x materials and energy,” wrote
FY2021E EPS. We remain scep- Somshankar Sinha, managing
tical of a quick recovery in the director and head of equity
Indian economy given several research for India at Jefferies
in a recent report,
structural issues,
which has been cothe limited fiscal The market,
authored with anacapacity to sup- analysts at
lysts Piyush Nahar
port consump- Jefferies say,
and Pratik Chaudhuri.
tion or invest- craves a personal
ment demand, income tax cut but
Securities sees the
and inefficacy of the government
S&P BSE Sensex at
policy rate cuts, has appeared
40,500 by end-2019
given ‘crowding hesitant
— just 0.5 per cent
out’ by high government borrowings,” he wrote higher from the current levels.
in a recent co-authored report. Nomura, on the other hand,
Those at Jefferies also maintains a March 2020
believe it is too early to call a Nifty50 target of 12,545 —
bottom for the macro, necessi- 5.5 per cent higher from the
tating more policy support. The current levels. As an investmarket, they say, craves a per- ment strategy, they prefer the
sonal income tax cut but the corporate bank, insurance,
government has appeared hes- infrastructure and healthcare
itant given fiscal constraints. sectors. They are underweight
“Even without an expendi- on consumer, autos, IT services
ture stimulus, we expect the and NBFCs.
Buying property on
auction is cheaper
Size fails to beat profitability
Mumbai, 18 November
Q2 FY19
New India
(~ crore)
Assurance Lombard
Net premium written
5,019 2,167
% YoY growth
Underwriting profit/(loss)* -1,219
% YoY growth*
-9.4 -19.5
Investment income
% YoY growth
Operating profit
% YoY growth
Operating margin (%)
Net profit
% YoY growth
Insurance Company and New
India Assurance Company
(NIA) hit the bourses around the
same time in SeptemberNovember 2017. While the latter is
the industry leader, the former
rakes the top slot among private
general insurers.
With segments such as motor,
health, fire and crop insurance
being the stronghold of both players, they have nearly the same
product profile. Yet, ICICI
Lombard is more popular among
investors, while fewer people seem
optimistic on NIA. The dichotomy
in investors’ preference is also visible in the stock price movements
(see chart), especially in the past
18 months (since June 2018).
ICICI Lombard stock price has
more than doubled since listing,
while NIA’s has eroded by 62 per
cent. Not surprisingly, valuations,
too, are poles apart, with NIA trad-
But those at HDFC Securities think
otherwise. “We note the company’s
competitive positioning is only
weakening and thus we remain
concerned of its ability to write
high quality business in the near
future,” they said. This perhaps
explains why NIA’s dependence on
investment income is also quite
pronounced and higher than that
of ICICI Lombard.
NIA also suffers from the overhang of a possible merger with
other state-owned companies,
talks of which have been doing the
round of a while. Nonetheless,
analysts at JP Morgan (and perhaps the only brokerage, going by
Bloomberg polls) remain positive
on the NIA stock. “As we do not
expect ICICI Lombard’s combined
ratio to improve much in the next
couple of quarters, NIA’s potential
underwriting gap narrowing with
private players is likely to be the
key investment thesis on the
stock,” the analysts note.
The New India Assurance
ICICI Lombard Gen Ins
Nov 13
Nov 18
*negative figures indicate a loss; Year-on-year decline indicates reduction in loss
Source: Companies
ing at 13 times, and ICICI Lombard
at 33 times their respective FY21
estimated earnings.
So, what explains this wide gap
between the two stocks? Despite
being the leader in the general
insurance space, with a balance
sheet nearly five-times and
September quarter (Q2) premium
about 2.5 times larger than ICICI
Lombard’s, NIA’s ability to grow its
profitability has remained a challenge. When compared against the
20.2 per cent operating profit margin that ICICI Lombard earned in
Q2, NIA’s 7.4 per cent margin
appears insipid. Weak operating
performance driven by elevated
claims ratio and operating expenses, and higher underwriting losses
on the key motor and health insurance segments often lead to high
underwriting losses for NIA.
Positively, in Q2, underwriting
losses narrowed down a bit for
NIA, prompting analysts at JP
Morgan to note that there is perhaps supporting evidence that the
industry is gradually moving
towards an underwriting upcycle.
More on business-standard.com
Apex court relief to Sebi
Mumbai, 18 November
The Supreme Court on Monday stayed
the observations made by the
Securities Appellate Tribunal (SAT)
that the Securities and Exchange
Board of India (Sebi) had no power to
debar auditors from auditing the books
of a listed company.
The apex court made the observation while hearing an appeal by the
market regulator against an order
passed by the SAT in the Price
Waterhouse Coopers (PwC) matter.
Sebi had debarred PwC from auditing
any listed company for two years in
connection with the decade-old
Satyam scandal.
“In a given case, a measure of
debarring a person from entering the
securities market will be justified, but
in our view, banning an audit firm or
an auditor from auditing the books of
a listed company or from certifying
any report of a listed company cannot
be justified,” the SAT had observed on
September 9, while quashing Sebi’s
order in the PwC matter.
The apex court move comes as a big
relief to Sebi as the SAT order had led
to jurisdictional ambiguity when it
came to passing strictures against entities, such as audit firms, which are primarily governed by separate regulatory bodies.
“Debarment of auditors comes
within the purview of the Companies
Act, so the SC move has helped in
streamlining of the regulatory action,”
said Vidisha Krishnan, partner,
MV Kini & Co.
Legal experts said many were waiting for the SC to give a final word in
this matter as SAT observations had
led to a lot of uncertainty.
The regulator had used its powers
under Section 11 and 11B of the
Securities and Exchange Board of
India Act, 1992, which allow it to take
action against any entity to protect
the interests of investors in the securities market.
In January 2018, Sebi had issued an
order banning PwC firms and a couple
of its auditors from providing audit services to listed companies and market
intermediaries for two years for their
involvement in the multi-crore
accounting scam at Ramalinga Rajupromoted Satyam.
The scandal involving overstatement of bank and cash balances by
over ~3,300 crore had come to light in
January 2009.
Sebi had also ordered disgorgement
of over ~13 crore. The SAT partially
upheld the disgorgement, stating PwC
wasn’t justified in retaining the fee it
earned from Satyam.
The apex court on Monday also
issued notices to PwC, its associate
audit firms and two of its auditors on
the appeal filed by Sebi against the SAT
order. The court will take up the matter
once all parties submit their replies.
Exchange-traded funds (ETFs) are gaining
traction as investment vehicles, given their
low-cost structure and better returns to
actively-managed schemes. In the past five
years, assets under management (AUM) of
ETF schemes have jumped more than 30fold to ~1.47 trillion. While ETFs are still a
small fraction of the total AUM, market
players say the share of passive investment
vehicles will only grow in the years ahead.
Also, the market is expected to expand as
more schemes get launched in the debt
segment. In some developed countries, debt
ETFs account for a bigger chunk of the total
ETF market. In India, currently, it is only 2 per
cent. On the equity side, experts say
investors may increasingly prefer ETFs over
actively large-cap schemes as the return
scorecard in recent years has been in favour
of the former.
One has to do serious groundwork, and take
help from a seasoned lawyer
Plagued by non-performing assets,
banks are busy putting properties
up for sale. State Bank of India
alone has auctioned ~700 crore
worth of properties this month.
Samantak Das, chief economist
and head of research and REIS, JLL
India, says, “The offer price of such
properties is linked to the loan outstanding. Usually, you may get the
properties at 10-25 per cent discount-to-market value.”
country head and managing director, Experian
India, says, “Foreclosure
is when an individual prepays his or her loan before
the agreed loan tenure.
However, if an individual
is not able to repay the
home loan, and the lender
has to repossess the home
asset, this will reflect as a
delinquent tradeline in
customers’ credit reports. The case
may even be indicated as ‘written
off’ by the lender. The high delinquency in a report and/or the written-off status indicates gross repayment indiscipline.”
offered at a discount, they may have
pending issues or liabilities, which
need to be adequately investigated.
So, getting a lawyer and property
valuator is essential. Mumbai-based
lawyer Pratibha Bangera says, “A
lawyer can find out if there are other
bank claims or litigations against
the same property, whether the
bank has original title deeds and
loan details and pending dues. In
addition to calculating default price
and market value, the lawyer will
also know if, in reality, these prices
can go beyond the market price if
society dues or other charges are in dispute with the
bank or if it is being sold
on an ‘as is where is’ basis.
Sometimes, there could be
a tenant who may have
adverse possession rights
to the property. Sometimes even society or municipal authorities may have some claim for illegal
additions or alterations. So
such properties should not be purchased without the help of a lawyer
who understands property.” In
short, ensure you do proper due
Number of ways to apply: You can
bid in an auction — online or offline.
Banks usually advertise the sale in
local newspapers inviting the bid.
Distressed property aggregators,
such as Foreclosure.com, NPAsource.com, and bankauctions.com
or direct bank’s auction site like
sbi.auctiontiger.net, list the details
of the property, price, auctioneering
bank, and date of auction on their
websites. Some sites even conduct
online auctions. Das says, “Once you
get preliminary information about
an auction, you should see the property with a bank official. Check for
structure, the physical condition of
the property, etc.”
Buyers need to bear in mind that
though the properties are being
Seal the deal: The bank that forecloses a property sets a ‘reserve
price’ while auctioning it. This is
based on the price at which the
property was bought and the outstanding loan on it. To participate
in the auction, you need to submit
the required paperwork along with
know-your-customer documents.
And, a deposit of 10 per cent of the
reserve price. On sale, the highest
bidder wins. You have to pay onefourth the quotation within 24
hours, and you get a month or so to
come up with the remaining
amount. You can even apply for a
home loan to buy the property, with
your lender of choice, including the
bank auctioning the property. Das
says, “Get a valuator to know the
real value of the property.”
AUM share (%)
Equity ETF break-up (%)
Nifty Next 50
Bharat 22
Bank Nifty
Sources: Amfi, NSE
The balance amount was ~1,820,869 crore in January and there were
14,020,829 active accounts. Of this, 0.7% delayed payments between
90 and 180 days in terms of amount, and 1.4% in terms of accounts
Balance amount 1,820,869 1,808,169 1,882,069 1,894,023 1,911,234 1,938,783
(In ~cr)
14,020,829 14,041,587 14,514,877 14,113,252 14,274,748 14,497,196
Net 90+
% amount
Net 90+
% accounts
* Figures from Jan 2019 to June 2019
Source: Experian India
Capacity utilisation of
edible oil refineries falls
Global mistrust over
buying gold: Survey
Mumbai, 18 November
Stagnant oilseed output, higher refined import hurt
16.8* -1.8
Crude Oil ($/bbl)
Natural Gas ($/mmBtu)
Palm oil
1,485.6* -8.3
1,795.7 -11.9
1,572.9 -8.0
* As on Nov 18, 1800 hrs IST, # Change Over 3 Months
Conversion rate 1 USD = 71.8 & 1 Ounce = 31.1032316 grams.
1) International metals, Indian basket crude, Malaysia Palm oil, Wheat
LIFFE and Coffee Karnataka robusta pertains to previous days price.
2) International metal are LME Spot prices and domestic metal are Mumbai
local spot prices except for Steel.
3) International Crude oil is Brent crude and Domestic Crude oil is Indian
4) International Natural gas is Nymex near month future & domestic
natural gas is MCX near month futures.
5) International Wheat, White sugar & Coffee Robusta are LIFF E future
prices of near month contract.
6) International Maize is MATIF near month future, Rubber is Tokyo-TOCOM
near month future and Palm oil is Malaysia FOB spot price.
7) Domestic Wheat & Maize are NCDEX future prices of near month contract,
Palm oil & Rubber are NCDEX spot prices.
8) Domestic Coffee is Karnataka robusta and Sugar is M30 Mumbai local
spot price.
9) International cotton is Cotton no.2-NYBOT near month future & domestic
cotton is MCX Future prices near month futures.
Source: Bloomberg
Compiled by BS Research Bureau
Silver ($/ounce)
Gold ($/ounce)
1,741.0 -0.8
METALS ($/tonne)
Price %Chg#
(In million tonnes)
Price %Chg#
As on Nov 18
verage capacity utilisation
at Indian edible oil refineries
has fallen to 46 per cent, a
decline by half in the past five years.
The industry says this is due to
stagnant oilseed production and
increase in vegetable oil import, to
meet the country’s rising demand.
Data compiled by the apex
industry body, the Solvent
Extractors’ Association (SEA), says
average capacity utilisation was 65
per cent five years earlier. And, in
that period, expecting consumption to rise, oil mills have created
six to seven million tonnes (mt) of
additional capacity, to around 33
mt annually now.
The decline in utilisation, says
SEA, indicates closure of some
parts of large units and full shutdown of small and medium sized
units, rendering thousands unemployed and idling investment worth
crores. Such closure creates “undue
pressure” on oilseed prices, which
have in the past five years often
slipped to no more than the government’s Minimum Support Price
(MSP), triggering farmer discontent
and protests.
Import of refined oil has
increased by 64 per cent to around
2.7 mt for oil year (NovemberOctober) 2018-19 as compared to
nearly 1.7 mt in 2014-15. Its share in
India’s overall import of refined and
crude edible oil was 18 per cent for
2018-19, from 12 per cent in 2014-15,
though the overall import figure
rose only marginally to 14.9 mt,
India’s availability of oilseeds & edible oil
nOilseeds output nVegetable oil import
Mumbai, 18 November
Note: Oilseed output for June-July; Vegetable oil import for October-November
# 1st advance kharif estimates plus rabi output of last year, * estimates
Sources: Directorate of Economics & Statistics, The Solvent Extractors' Association of India;
Compiled by BS Research Bureau
from 14.4 mt in the period.
Apart from edible oils, India
also imports palm derivatives to
the tune of around 600,000
tonnes annually, for use in soap
and detergent making. Overall
import of palm products was 15 mt
for 2018-19.
The variation in capacity utilisation of Indian edible oil refineries
depends on what is termed oilseed
crushing parity, the profit on making oil from local oilseed versus
imported refined oil. Normally, the
operating capacity of domestic
units declines if this parity turns
negative or unviable (import
becoming cheaper than oil produced from local seeds). In this
case, domestic edible oil refineries
import crude palm oil (CPO), mostly from Indonesia, for blending
with locally produced oil for selling.
When refined oil becomes cheaper
than CPO, refineries shift their
import of refined, bleached and
deodorised (RBD or refined) oil
from Malaysia for repacking in local
units and selling.
Also, capacity utilisation of
Indian refineries depends on
oilseed availability. Output has
stayed at 33 mt annually for five
Import of palm derivatives faces
a 7.5 per cent duty; it is 40 per cent
on crude oil.
Import from Malaysia has
resumed after a month of pause,
with the latter’s exporters offering
a discount of $5 a tonne to pricess
quoted by their competitors in
Indonesia. Earlier, after the
Malaysisan prime minister’s critical
remarks on the Indian parliament’s
abrogation of earlier Constittuional
protections for Jammu & Kashmir,
the trade had asked its members to
stop import from that country, as a
patriotic gesture.
A retail consumer survey by
the World Gold Council has
some surprises.
The survey was done in the
June and September quarters
by the Council, an association
whose members comprise the
world’s leading gold mining
companies. Retail here refers
to individual buyers, as
opposed to institutional ones.
The survey reveals gold to
be the third most consistently
bought investment, with 46
per cent of global retail
investors choosing gold products, behind only savings
accounts (78 per cent) and life
insurance (54 per cent).
Looking at jewellery, the
survey shows 56 per cent have
bought fine gold jewellery,
compared to 34 per cent
who have bought platinum
However, there is also
global mistrust regarding the
buying of gold. The survey
says: “There is some mistrust
among those that have never
bought gold in the past but are
open to the idea of buying it
in the future, with 48 per cent
and 28 per cent of all potential
investment and jewellery consumers, respectively, citing
lack of trust as a significant
barrier. That could be mistrust around fake or counterfeit bars and coins, product
purity or trustworthiness of
some retailers.”
Of the 48 per cent who
have not invested in gold due
to mistrust, 28 per cent said
they were worried about fake
| 18,000 consumers
surveyed across major
| 48% said they will buy
gold again
| 38% new buyers waiting
to buy
| More and more
millennials buy pink and
white gold in US and
China while Indian young
consumers are traditional
| More consumers in
18-22 age group want to
buy gold in India than US
or China
| 31% of urban Indians
prefer to buy with
Govt raises duty drawback rates for
gold, silver jewellery exports
The government has increased
duty drawback rates for gold
and silver jewellery, a move
that would make Indian
exports from these sectors
more competitive in the
global market.
The drawback rates have
been raised to ~372.9 per gram
for gold jewellery from ~272
per gram, according to the
finance ministry notification.
Similarly, for silver jewellery, it
has been raised to ~4,332.2 per
kilogram, from ~3,254.
gold. Of the 28 per cent who
have not bought jewellery, 19
per cent said they stayed away
due to purity being not guaranteed, as they saw it, while
14 per cent did not trust retail
Trust has been a perpetual
issue in India. However, that
has not stopped the buying of
jewellery, albeit largely for
marriage. Hallmarking has
been promoted aggressively
by the Bureau of Indian
Standards and, according to
BIS data provided by the
Hallmarking Centres, 90 per
cent of jewellery manufac-
tured in this country is now
The survey says 48 per
cent of those who had bought
gold in the past are considering doing so again.
Of those who’d never
bought it, 38 per cent are
interested in buying; 13 per
cent want to stay away from
Countrywide, 49 per cent
want to buy again. In
America, 48 per cent of citizens are also considering it;
the proportion is 56 per cent
in China.
More on business-standard.com
Alia, Ranbir make hay
while the brand shines
Curiosity about the relationship between the two actors has translated into
advertiser interest. But will it last?
Mumbai, 18 November
hey look coyly at each
other in a commercial
for a pack of chips, currently on air. Actors Alia Bhatt
and Ranbir Kapoor are the most
stylish couple, according to a
survey by Mumbai-based
Indian Institute of Human
Brands, promoted by ad man
Sandeep Goyal and the latest
entrants into the league of couple-brands. But the question is:
Will their magic last?
The actors, the only unmarried ‘power couple’ presently
around, have a few brands
banking on their star appeal.
This includes Lay’s from
PepsiCo India and Flipkart
Fashion, the latter they endorse
individually as well.
Flipkart has launched at
least two campaigns with the
actors since May, and proposes
to roll out more commercials
and digital videos in the future.
The stars have also done onground events and interviews
together for Flipkart Fashion,
launching their clothing collection and accessories.
Celebrity managers said
that Bhatt and Kapoor will be
tracked closely by prospective
advertisers seeking a new pair
for their brands. “There is a
curiosity factor with AliaRanbir, in part due to their relationship status and a certain
feel-good factor that they bring
to the table. Brands will be
watching them closely as their
relationship evolves,” said a
celebrity manager, who has
worked with Kapoor.
It is nothing new for marketers to tap into “power couples”. For example, apparel
brand Manyavar was among
the early names in the business
to leverage the personal rela-
Alia Bhatt & Ranbir
Kapoor: PepsiCo Lay’s,
Anushka Sharma & Virat
Kohli: Manyavar, Myntra
Deepika Padukone &
Ranveer Singh: Lloyd AC
Twinkle Khanna &
Akshaye Kumar: P C
Jewellers, Fortune Basmati
Gauri & Shahrukh Khan:
Kareena & Saif Ali Khan:
Airbnb, VIP (luggage)
tionship between Virat Kohli
(who had been their ambassador for over a year) and
Anushka Sharma for commercial gains. By releasing an ad
with the two as a couple, just
before they announced their
December 2017, the brand
cashed in on the huge public
interest on the issue.
In recent years, actor couples that have also tied the knot
off the screen—DeepikaRanveer, Twinkle-Akshaye,
Saif-Kareena, Genelia-Ritiesh
and Ash-Abishek have all done
ads together as married couples. So have Sharma and Kohli,
who featured in a new
Manyavar commercial as a
married couple recently.
Bhatt and Kapoor are yet to
take the plunge even though
they have declared their love
for each other, thereby shovelling in huge amounts of attention from fans and followers,
on their social media timelines.
Brands track their profiles
assiduously to see if they can
ride on the popularity of the
actors, cash in on the moments
tent, uploading videos, photos
and Instagram stories of their
time together. He says that
Bhatt and Kapoor are among
the savviest users of social
media and have routinely
trended on Twitter as a couple.
Their high profile and appeal
is what led him, he says, to
include them in his study
despite their unmarried status.
When announcing Bhatt
and Kapoor as brand ambassadors of Lay’s, Dilen Gandhi,
senior director, marketing,
foods category, PepsiCo India,
said, “Both Alia and Ranbir are
youth icons and are talented
actors of their generation.
Combining Lay’s with Alia and
Ranbir’s talents, will enable us
to tell the kind of stories that
resonate with consumers
across the country.”
Both actors demand close
to ~3 crore per brand a day as
endorsement fees and hiring
them as a couple would mean
that advertisers would have to
fork out at least ~6 crore for a
day’s shoot for a brand. For the
time being, advertisers seem
prepared to pick up the tab.
Budget to focus...
“Unlocking private investment will be the
key to beating slowdown. Steps have
already been taken over the past few
months, and there will be more in the budget,” he pointed out. “The last five years were
about making welfare and social sector
schemes more targeted and efficient. The
next five will be about growth and the private sector,” he added. In fact, the proposed
tax measures for the Budget are something
that people in the top levels of the government are taking a keen interest in.
To arrest slowdown, Finance Minister
Nirmala Sitharaman in September
announced steep cuts in corporation tax
rates, effective from April 1 this fiscal,
despite some opposition within the bureaucracy. The rate was cut to 22 per cent from
30 per cent for the existing companies that
do not get any exemptions, and to 15 per
cent from 25 per cent for new manufacturing companies.
Apart from corporation tax cuts,
Sitharaman has in the recent past made
several sector-specific announcements
aimed at MSME, housing, non-banking
financial companies and other sectors to
alleviate the deep consumption slowdown.
The FM has over the last few months
been interacting with tax officials, representatives of industry and MSMEs and other stakeholders across cities. She’s learnt to
have taken extensive feedback from stakeholders during those interactions, much
before the traditional pre-budget meetings.
Real GDP growth for the April-June
in their relationship.
Kapoor is managed by
Kwan Entertainment, while
Bhatt is handled by Matrix
India. Both companies were not
immediately available for their
comment. Lay’s, incidentally,
was the first joint endorsement
deal signed by Kapoor and
Bhatt and the buzz is that more
advertisers are queuing up as
the stars prepare for release of
their films shortly.
Bhatt and Kapoor will be
seen in director Ayan
Mukherji’s movie Brahmastra,
which releases next month. The
film’s publicity team has been
releasing behind-the-scene
videos and sneak peeks of the
film’s shoot for some time now.
It is no coincidence that social
media chatter has been growing around their “wedding” as
Brahmastra’s release draws
near, said several.
Goyal says that Bhatt and
Kapoor have a youthful appeal
and seem to enjoy each other’s
company despite their hectic
schedules. Both actors also
seem to be feeding into social
media’s growing need for con-
quarter was 5 per cent, the lowest since
2013. The nominal GDP growth came in at
8 per cent, the lowest since the third quarter of 2002-03. July-September quarter
numbers could hover around 4 per cent,
estimates suggest. For 2019-20, the growth
could be between 5 and 6 per cent.
Airtel, Voda...
“To ensure its customers continue to enjoy
world-class digital experiences, Vodafone
Idea will suitably increase the prices of its
tariffs effective December 1, 2019,” said the
company’s statement on Monday. It added
that Vodafone Idea will continue to actively invest in making its network future-fit by
embedding new-age technologies and
launching new products/services to cater
to the evolving needs of its over 300 million
“The telecom sector is highly capital
intensive with fast-changing technology
cycles that require continuing investments.
It is, therefore, extremely important that
the industry remains viable to support the
vision of Digital India,” said Bharti Airtel in
a statement soon after. Mobile data charges
in India are by far the cheapest in the world,
even as the demand has grown. From
October 10 onwards, Reliance Jio started
charging customers 6 paise a minute for
making calls to any non-Jio mobile number. Till then, it was for free.
This initiative came at a time when Jio
already commands a bulk of the market
share. The additional charge was introduced soon after Trai moved to
reopen the deadline for ending
charges for terminating calls on
# 2899
rival networks beyond January
Steel firms...
Fill in the grid so
that every row,
every column
and every 3x3
box contains
the digits 1 to 9
Posco, which supplies automotive steel to the domestic market, said some contracts had
been done and some were pending. In the analysts call after the
second quarter results, JSW had
indicated that there would be
some correction because the
first-half prices had been stable
for the automotive customers. It
is in the process of negotiating
The suppliers who meet the
10 million tonne automotive
steel demand are Tata Steel, Tata
Steel BSL, JSW Steel, Essar Steel,
Posco, and some long product
producers. For the past few years,
the industry has been consistently focusing on the valueadded mix, with a focus on the
automotive segment.
The prices of the benchmark
(CRCA) products have been
revised to ~48,000 a tonne from
~54,000 a tonne. CRCA products
are used in a car’s exterior.
Prices of auto-grade hot rolled
products — used in body panels — were
revised to ~38,000 a tonne from ~44,000 a
tonne. Steel accounts for 50 per cent of a
car’s weight. For two-wheelers, it is lower.
Auto sales have been in the slow lane for
the past 11 months which has hurt the steel
industry as well. Most companies have been
resorting to exports to offset the slide in
demand. In October, however, festive
demand bumped up sales marginally.
Passenger vehicle sales in October rose 0.28
per cent to 285,027 units, stemming the
slide. Overall vehicle sales, though, recorded a decline. A steel producer said lower
prices would hopefully support the auto
sector. Bang, however said, “The situation
in the Indian economy needs to get better
for auto sales to pick up.”
NHAI to pay...
Under the value-capture financing mechanism, states can agree to pay 25 per cent
of the acquisition cost and they will get a
priority in project execution.
“One such case is of the government of
Kerala, which has agreed to pay 25 per
cent of the land cost for national highways in the state,” an NHAI official told
Business Standard. The reason for this is
the high cost of land, most of which is in
urban areas, and the state needs better
road connectivity because of floods in the
last two consecutive years.
In addition to this, the upcoming projects under the Bharatmala scheme will
be executed through this mechanism.
The Ministry of Road Transport and
Highways has been grappling with higher land acquisition cost for the past few
years. Approximately, a cost of ~12 crore
per km is incurred in the expansion of a
highway from two-lane to four-lane and
the number would be five-six times higher in a greenfield project like an expressway. The cost of the marquee Eastern
Peripheral Expressway is ~11,000 crore,
of which ~5,673.05 crore was the land cost.
“These are steps to address the larger
issue of increasing land cost,” another
official said. While the allocation for the
NHAI has risen in the past couple of years,
the authority’s IEBR (Internal and Extra
Budgetary Resources) has also gone up.
IEBR is the money the department
raises in the form of profit, debt, and equity. In FY18, the NHAI’s IEBR was
~50,532.41 crore. It went up to ~62,000
crore in FY19 and further to ~75,000 crore
in FY20.
Money market...
A year ago, the credit market nearly froze
as IL&FS started defaulting from
September, and governance concerns
emerged in systematically important
non-banking finance companies (NBFC).
The bond market still gave money to
good companies, but at a high rate. For
average companies though, both the bond
and credit market became inaccessible
as lenders became risk averse.
More on www.business-standard.com
Arcelor hopes to
complete Essar
buy by Dec-end
Driven bylowfares, airlines managed to maintain their capacity
despite sagging demand. According to estimates, demand was
atits peakduring the festive season. On an average, airfares on
metro routes were down by20-25% for tickets booked in the past
seven days, compared to the same period lastyear. This trend has
gained momentum in November also. COMPILED BYARINDAM MAJUMDER
= 10%
Clocks first net profit of ~49 crore
for FY19; sales rise twofold
Bengaluru, 18 November
Source: DGCA
Patanjali stabilises
biz; revenue up 2.4%
New Delhi, 18 November
After completion, ArcelorMittal will jointly own and
operate ESIL in partnership
rcelorMittal is expect- with
ing to complete the Corporation (Nippon Steel),
transaction for Essar Japan's largest steel producer
Steel before the end of and the third-largest steel
producer in the world, in-line
with the joint venannounced that The acquisition of
ture (JV) formafollowing receipt ESIL would make
tion agreement
and review of the its owners the
signed by the two
written fourth-largest
Arcelor has a
player in the
60:40 JV with
Private market for steel
Limited's (AMIPL)
Nippon Steel said
resolution plan for Essar in
Steel India (ESIL) has been “ArcelorMittal and Nippon
unconditionally approved by Steel have agreed that the
the Supreme Court. “The share capital ratio will be 60
Supreme Court approval of per cent for ArcelorMittal
AMIPL's resolution plan is and 40 per cent for Nippon
the final procedural step in Steel and that both compaESIL's corporate insolvency nies will have equal repreprocess. Completion of the sentation and voting rights
transaction is now expected on its board of directors. The
before the end of the year," it JV will be jointly controlled
and be accounted for based
Kolkata, 18 November
on the equity method by
both companies.”
With the Supreme Court
approval of AMIPL’s resolution plan, the last hurdle in
the acquisition of ESIL was
cleared. The corporate insolvency process for the firm has
stretched beyond 835 days.
The acquisition of ESIL
would make its owners the
fourth-largest player in the
second-biggest market for
steel. The ~42,000-crore bid
gives the steel makers an
effective steelmaking capacity of 9.6 million and pellet
making capacity of 20 million tonnes.
The pellet capacity is
spread over Vishakhapatnam
and Paradip - eight million
tonnes is in Vishakhapatnam
and 12 million tonnes in
Paradip - of which six million
However, some last mile
funding will take it to full
After a year of faltering sales,
Patanjali Ayurved has managed
to address the slide.
The ayurveda major clocked
~8,330 crore turnover for 201819, 2.4 per cent higher than
~8,136 crore it had posted in
2017-18, according to its fillings
with the Registrar of Companies. While the company did
not reveal its profit or loss for
the period, according to its fillings, food and beverages was
the largest category — accounting for 62.23 per cent or ~5,184
crore of its total sales.
Chemical-based products,
pharmaceuticals, medicinal
chemicals and botanical products — primarily representing
its personal care range — contributed 34.99 per cent to its top
line. Wood and wood products,
furniture, paper and paper products contributed 2.4 per cent.
The top line growth for Patanjali that once used to grow by
leaps and bounds — between
2012-13 and 2016-17 — has come
down since. However, its performance last year indicates a
turnaround from the downward slope that it found itself
in 2017-18. From ~8,964 crore
operating revenue in 2016-17, it
A paranoid guide to fighting
the ‘bugging epidemic’
With surveillance gear cheaper and easier to use, security experts say
checking your environment for cameras and microphones is not a crazy idea
18 November
People worry that Big Brother
and Big Tech are invading
their privacy. But a more
immediate concern may be
the guy next door or a shifty
A growing array of socalled smart surveillance
products have made it easy to
secretly live-stream or record
what other people are saying
or doing. Consumer spending
on surveillance cameras in
the United States will reach $4
billion in 2023, up from $2.1
billion in 2018, according to
the technology market
research firm Strategy
Analytics. Unit sales of
consumer surveillance
devices are expected to more
than double from last year.
The problem is all that gear
is not necessarily being used
to fight burglars or keep an eye
on the dog while she’s home
alone. Tiny cameras have
been found in places where
they shouldn’t be, like Airbnb
rentals, public bathrooms and
gym locker rooms. So often, in
fact, that security experts
warn that we are in the throes
of a “bugging epidemic.”
It is not paranoid to take
precautions. A lot of spy gear
is detectable if you know what
to look for, said Charles
Patterson, president of Exec
Security, a firm in Tarrytown,
N.Y., that specializes in
corporate counterespionage.
Look for anything in your
surroundings that appears
disturbed, out of place or odd.
Surveillance can be done by
more than clunky nanny
cams. It can be conducted
with wireless microdevices,
some as small as a postage
stamp, that can be stashed in
hard-to-spot places like inside
clocks, light fixtures and air
Be wary of anything with
an inexplicable hole in it, like
a hole drilled into a hair-dryer
mount in a hotel bathroom.
And scrutinize any wires
trailing out of something
that’s not obviously
electronic, like a desk, a
bookcase or a plant.
“A basic physical
inspection is something
everybody can do,” Mr.
Patterson said.
Another low-cost way to
spot surveillance equipment
is turning off the lights and
using a flashlight to scan a
room to see if the lens of a
camera shines back at you. If
you don’t have a flashlight,
look around using the frontfacing camera on your
smartphone (the side you use
for video chats), which may
allow you to see the otherwise
invisible infrared light that
spy cameras emit.
A quick way to see if your
phone’s camera detects
infrared light is to look at your
television remote through the
viewfinder. If you can see a
light flash on the tip of the
remote when you press its
buttons, you’re good to go.
You can also download the
Fing app on your smartphone,
which when activated will
show you all the devices
connected to your Wi-Fi
network. Anything that
includes the name of a camera
manufacturer — like Nest,
Arlo or Wyze — or that the app
flags as a possible camera is
cause for concern. As is
anything that you can’t
readily identify.
More sophisticated
voyeurs may use spy gear that
has its own hot spot for live
streaming. So it’s a good idea
to check for other Wi-Fi
networks in the vicinity that
have a strong signal. But that
won’t help if the device is
recording everything onto a
tiny memory card for the
peeper to retrieve later.
If you want to be more
comprehensive in your
sweep, several do-it-yourself
counter-surveillance tools are
available. Among the easierto-use devices are specially
designed camera lens
detectors. They cost $200 to
$400 and emit a circle of
superbright red LED strobe
lights. When you scan the
room looking through the
viewfinder, even the tiniest
camera lens will appear to
blink back at you, giving away
its location.
“I used to sell mostly
cameras, but in last few years
it’s more detection devices,”
said Jill Johnston, chief
executive of KJB Security
Products in Nashville. “There
are just a lot more things to spy
on you with. It’s really
changing our business model,
to be honest.”
Also popular are radio
frequency, or R.F., detectors
that can pick up signals
emitted by surveillance
devices. While you can get
them for as little as $40, the
better models start at $300
and can cost as much as
$8,000, depending on their
ability to analyze and
differentiate signals.
Like old-fashioned metal
detectors, R.F. detectors often
produce a beep or tone that
Urban Ladder
turns profitable
gets louder the closer you get
to a transmitting radio signal.
The more expensive versions
have digital displays that
detail the various radio
frequencies detected and
where they may be coming
Most environments today
are filled with radio signals.
Unless you get the most
expensive gear and the
associated training offered by
the manufacturer, you’re
going to have a hard time
knowing whether your place
is bugged or you’re picking up
a signal from your neighbor’s
Wi-Fi or your wireless
computer mouse or Bluetooth
speaker. To reduce the
number of false positives,
security experts recommend
first turning off or unplugging
all your devices before you
start your scan.
Browsing Amazon and
other online stores like
Brickhouse Security and
Spygadgets.com can also
help. You’ll see that cameras
and microphones don’t
always look like cameras and
microphones. They can look
like smoke detectors, water
bottles, air fresheners,
cellphone chargers, pens, key
chains, coffee makers, space
heaters, birdhouses and plush
toys. Of course, you can
always get professional help.
But a professional sweep of a
home or an office can range
from $1,500 to more than
$10,000, depending on the
size of the space, the number
of nooks and crannies, and
the amount of clutter.
USA Bug Sweeps, a
surveillance detection firm in
Freehold, N.J., specializes in
residential bug detection and
does as many as three sweeps
a day versus maybe one or two
a week three years ago.
Jimmie Mesis, the company’s
chief executive, attributes the
surge to recent news reports
about cameras being hidden
in homes by creepy landlords
or handymen.
Patanjali’s revenue though
remains lower than FY17 (~ cr)
Source: Registrar of Companies
fell by 9.3 per cent in 2017-18.
According to the firm, introduction of goods and services
tax (GST) in mid-2017, severely
disrupted its operations. The
initial glitches related to GST
and the realignment work required due to its implementation cost the firm two months of
its business in 2017. A report by
CARE Ratings said the decline
was “primarily because of its
inability to adapt in time to the
GST regime and develop infrastructure and supply chain.”
To counter the falling sales,
Patanjali had adopted a multipronged approach in 2018. The
firm, which depended heavily
on branded outlets till 2017,
began going deeper into the
market by adding mom and
pop stores. To strengthen its sales and distribution in general
trade, Patanjali hired 11,000 field personnel in mid-2018, and
set a target of doubling that number within the financial year.
Patanjali Ayurved, which
used to see 70 per cent of its
sales from branded Patanjali
stores till early-2018, set a target of catering to three million
outlets by end-2019.
Patanjali, which was losing
share to its rivals in the market
like Hindustan Unilever and
Colgate, regained some of the
lost grounds during 2018-19.
According to data from Nielsen,
Colgate-Palmolive lost market
share, primarily to Patanjali and
Dabur. HUL’s share dipped by
80 basis points to 16.4 per cent.
According to analyst firm
Jefferies estimates, ColgatePalmolive lost its market share
by eight percentage points since
2015 as Patanjali’s herbal-natural products attracted consumers. Colgate, in fact, launched
a new sub-brand ‘Ved Shakti’
and revived the brand Cibaca
to counter the growing threat.
Online furniture retailer Urban Ladder has joined the
league of select Indian startups such as Byju’s, PolicyBazaar, and OLX by turning
profitable on net basis. The
eight-year-old company posted net profit of ~49.4 crore and
nearly 200 per cent jump in
revenues for the financial year
ended March 31, 2019.
The results showed a turnaround in its fortunes as the
company had suffered a loss
of ~118.6 crore in FY18 and
~458 crore in the previous
financial year. With investors
now cautious of funding lossmaking businesses, start-ups
have turned their focus on
profitability and unit economics.
Urban Ladder could not be
immediately reached for comments.
The Bengaluru based firm,
started by IIM-B alumni
Ashish Goel and Rajiv Srivatsa
in 2012, had been on a major
business realignment on its
way to profitability and this
also resulted in layoffs and
bringing down focus to specific cities and states, instead
of going on an expansion
spree with its offline stores.
Most recently, Srivatsa, who
was also the chief product and
technology officer of the company, announced his exit from
executive roles.
In the year under review,
Urban Ladder’s revenues
jumped 187 per cent to ~434
crore, according to the company’s regulatory filing accessed by business intelligence
platform, Tofler. The overall
revenue in this period was primarily aided by the rise in
'other income', which went up
to ~135.5 crore from ~54 crore
in FY18. Key components of
‘other income’ could not be
immediately ascertained.
The start-up’s total expen-
FY18 FY19
] (% change)
( ~ cr)
] (187)
Source: Company
diture went up 41 per cent to
~382 crore, even as employeerelated expenses dropped 3
per cent to ~51.98 crore. In July
this year, Urban Ladder has
let go around 90 employees
and the move is expected to
further bring down its
employee benefits costs in the
current financial year.
The online furniture market in the country is mostly a
duopoly between PepperFry
and Urban Ladder, where the
latter trails. Even though
PepperyFry has not released
its financial numbers for
FY19, it has reported ~308
crore in revenues in FY18,
though its losses for the period stood at ~258 crore.
The much-desired profitability now puts Urban
Ladder in a unique position
as the company can now fund
business growth from internal accruals, if it is able to
maintain the profitability.
It also comes at a time when
Urban Ladder is witnessing a
dry spell of funding, with the
company failing to attract new
investors. Its last two funding
rounds in 2017 and 2018 were
supported only by existing
investors Sequoia, SAIF, and
Steadview Capital. In total, the
firm has raised ~745 crore,
almost half of what PepperFry
has raised, to date.
More talks are needed
on Maharashtra: Pawar
New Delhi, 18 November
fter a meeting with Congress chief
Party (NCP) chief Sharad Pawar on
Monday queered the pitch for the Shiv Sena
in formation of a new government in
Maharashtra, saying this issue was not discussed and remained non-committal in
forging an alliance with its political rival.
As the deadlock over the government
formation entered the 26th day with no
signs of an early resolution, Prime
Minister Narendra Modi set tongues
wagging when he praised the NCP, the
Congress’ prepoll ally, in the Rajya Sabha
(RS) for strictly “adhering to parliamentary norms”. Maharashtra is currently NCP chief Sharad Pawar with Sunil Tatkare during a press conference after a meeting
under President’s rule.
with Congress President Sonia Gandhi
Addressing the RS on the occasion of
“We will keep an eye on the situation
Pawar, whose meeting with Gandhi at
its 250th session, Modi said, “Today I want
to appreciate two parties, NCP and Biju her residence in Delhi was being billed as a in Maharashtra. Congress and NCP leadJanata Dal (BJD). These parties have strict- major step towards a possible tie-up with ers will hold further talks on the future
ly adhered to parliamentary norms.” The the Shiv Sena, said if the NCP and the course of action,” he added.
The Congress for its part took to
BJD headed by Naveen Patnaik is the ruling Congress have to take a view on forming a
new government they have to first discuss Twitter to say that the representatives of
party in Odisha.
the prepoll allies will meet in Delhi to
Modi said the members of the two par- it between themselves.
Addressing a press conference after discuss the way forward.
ties never rush to the Well of the House to
“Sharad Pawar met the Congress
raise their issues and yet highlight their his 50 minute-long meeting with Gandhi,
he also said there was also no discussion president on Monday and briefed her
points effectively.
on the situation in Maharashtra. It was
Keeping his cards close to his chest, on a common minimum programme.
“There was no talk of government decided that in a day or two, represenPawar said he only discussed the political
situationinMaharashtrawithSoniaGandhi formation in our meeting. This meeting tatives from NCP and Congress will
and that the NCP and the Congress will was all about discussing Congress and meet in Delhi to discuss the way forhold talks with their other allies before tak- NCP and the situation in the state,” ward,” Congress Spokesperson Randeep
Surjewala said in a tweet.
ing a decision on government formation. Pawar said.
Jawaharlal Nehru University
(JNU) students try to break
through police barricades
during a protest march towards
Parliament on Monday, on the
first day of the winter session,
demanding a total roll-back of
the hostel fee hike. Delhi Police
urged the students not to take
law into their own hands and
maintain peace. The HRD
ministry appointed a threemember committee to recommend ways to restore normal
functioning of JNU, officials
said. The entry and exit points
of three Delhi Metro stations
near Parliament were reopened
after a brief closure because of
the ongoing protest, the
authorities said
HK protesters trapped in campus
siege, raising fears of crackdown
Hong Kong police laid siege to a
university on Monday, firing
rubber bullets and tear gas to
pin back anti-government protestersarmedwithpetrolbombs
and other weapons and stop
them from fleeing amid fears of
a bloody crackdown.
Dozens, choking on the tear
gas, tried to leave the
Polytechnic University by
breaking through police lines
after a night of mayhem in the
Chinese-ruled city in which
roads were blocked, a bridge set
on fire and a police officer was
shot by a bow and arrow.
Some protesters were arrest-
ed,tackledtotheground,asothers scrambled and tripped over
barricades and fences as police
pointed guns at them and threw
“The police might not storm
the campus but it seems like
they are trying to catch people
as they attempt to run,”
Democratic lawmaker Hui Chifung told Reuters.
“It’s not optimistic now.
They might all be arrested on
campus. Lawmakers and
school management are trying
to liaise with the police but
failed.” Police said officers had
been deployed “on the periph-
Three dead in shooting at
Walmart store in Oklahoma
Three people were killed in
a shooting early Monday at
a Walmart store in Duncan,
Oklahoma, local media
reported citing the state's
highway patrol and local
According to TNN television, Duncan Police Chief
Danny Ford said the shooting took place in a parking lot
in front of the store and the
suspect is one of those killed.
Schools in the area had
been placed on lockdown
temporarily before being
given an "all clear" by local
police, according to a
Facebook statement from
Duncan Public Schools.
The shooting took place
shortly before 10:00 am on
Monday, police said. They
said two men and a woman
died in the incident.
A gunman killed 22 people in a Walmart store in
August in El Paso Texas,
while another Walmart
store in Mississippi was the
scene of a shooting in July,
employee killed two coworkers and wounded a
police officer.
In the El Paso shooting,
a 21-year-old gunman said
he had launched the deadly attack in response to
what he called a "Hispanic
invasion" of Texas.
Trump: Strongly considering
impeachment testimony
Trump indicated that he
thinks his testimony —
possibly in writing — would
be a way to resolve the
inquiry and get Congress
focused on issues he’d like to
advance before his 2020 reelection campaign, including
a new North American trade
deal and drug prices.
ery” of the campus for a week,
appealing to “rioters” to leave.
“All our warnings were
ignored,” they said in a statement. “Our message was loud
and clear, the violence has escalated to rioting.” They said “toxic and dangerous chemicals”
had been stolen from the university laboratory.
“We must warn that the university campus has become a
powder keg where danger is far
beyond what we can estimate,”
police said.
Police arrested 154 people
aged between 13 and 54 over the
weekend. Police said a car tried
to hit an officer in the nearby
Yau Ma Tei district on Sunday
night, reversing and trying
again. Police fired a shot and the
driver fled.
Thirty-eight people were
wounded overnight on Sunday,
the Hospital Authority said.
Reuters witnesses saw some
protesters suffering from burns
from chemicals in jets fired
from police water cannons.
The High Court ruled on
Monday the ban was unconstitutional and police said they
would suspend all such prosecutions.
Four soldiers, two porters
killed in avalanche in Siachen
Tata Steel plans to cut around
3,000 jobs across Europe
New Delhi, 18 November
Tata Steel plans to cut around
3,000 jobs across its European
operations as it wrestles with
excess supply, a source close
to the discussions told Reuters
on Monday.
European chief executive
Henrik Adam said Tata was
planning to announce job cuts
across the European business,
which employs around
20,000 people, but did not
give figures on job losses.
Following a meeting of
Dutch employees, a source
Four soldiers and two civilian porters died after being
trapped in snow for hours
after an avalanche hit Army
Siachen Glacier on Monday.
The soldiers were part of a
patrolling group of eight;
they died due to extreme
hypothermia, defence officials said. The team was on
patrol when the avalanche
hit them around 3 pm.
The Army launched a
massive search and rescue
operation to bring back the
trapped soldiers.
All the soldiers were
pulled out of the debris; seven were critically injured.
The soldiers were evacuated by helicopters to the nearest military hospital where
they are undergoing treatment.
The Siachen Glacier at the
height of around 20,000 ft in
the Karakoram range is
known as the highest militarised zone in the world
where the soldiers have to
battle frostbite and high
told Reuters around 3,000
jobs would go and details
would be worked out over the
coming weeks.
A Tata spokesman had no
immediate comment on the
Indian-owned Tata Steel,
which launched a transformation programme in June to
strengthen its European business, has operations including steelmaking in the
Netherlands and Wales and
across Europe.