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THURSDAY, 11 OCTOBER 2018
20 pages in 1 section www.business-standard.com
MUMBAI (CITY)
~7.00
VOLUME XXIII NUMBER 42
RAFALE DEAL A
QUID PRO QUO:
FRENCH MEDIA
IL&FS books sent Tatas take control of AirAsia
India with new CEO, board
French news website Mediapart reported
on Wednesday that it had accessed an
internal document from aerospace firm
Dassault which stated that partnering
Anil Ambani’s defence firm was a quid
to audit regulator ARINDAM MAJUMDER
New Delhi, 10 October
T
that the joint venture, Dassault Reliance he Ministry of Corporate Affairs
| IL&FS will be a test case for the National (corporate affairs) at Tata Steel. appointments are being done named Fernandes, Bo Lingam, and
Aerospace, was a "counterpart", (MCA) has sent the books of Financial Reporting Authority, which came The airline is also restruc- without consulting Venkataramanan, managing trustee
"imperative and mandatory" to win the Infrastructure Leasing & Financial into force on October 1 turing its board, with AirAsia Fernandes. Tata Sons and at Tata Trusts and director at AirAsia,
Rafale market, the report said quoting Services (IL&FS), filled with auditing | Govt does not rule out fraud in the group CEO Tony Fernandes Tony Fernandes-owned in an FIR, alleging they paid money
the document. AJAI SHUKLA reports 20 > irregularities, to the newly constituted IL&FS matter and deputy group CEO Bo AirAsia Bhd hold a 49 per to middlemen for bribes to public
National Financial Reporting Authority Lingam stepping down. It is cent stake each in the air- servants for securing an air opera-
SC ORDERS GOVT TO GIVE DETAILS OF RAFALE (NFRA). “It will be a test case for the NFRA,” a | Firm has reached out to PSUs for learnt that the airline will get line, while the remaining 2 tor’s permit. While AirAsia India was
DECISION-MAKING PROCESS P20 key source in the ministry said. settlement of dues Banmali Agrawala, who heads per cent is held by Tata vet- under the scanner, there’s been a
Former bureaucrat Rangachari Sridharan is | New board looking at rationalisation Tata group’s defence and erans S Ramadorai and R delay in the Tata group's other airline
ECONOMY P5 the chief of the NFRA, which is responsible aerospace business, as venture, Vistara, getting the govern-
of IL&FS
Govt cuts excise for the establishment and enforcement of
accounting and auditing stan-
chairman, replacing
S Ramadorai.
Sunil Bhaskaran
will be AirAsia
ment nod for international flights.
Officials denied any link between the
duty on ATF to 11% dards and oversight of the work In a late India’s new CEO two developments. Turn to Page 6 >
The government on Wednesday cut of auditors.
excise duty on jet fuel, or ATF, to 11 per The Institute of Chartered
cent from current 14 per cent in a bid to Accountants of India has also
give relief to the aviation industry, which
has been hit hard by high fuel prices. A
notification issued by the revenue
sent show-cause notices to the
IL&FS statutory auditors of IL&FS.
The new management at
Market rebounds from 6-month low
department of the finance ministry said CRISIS the beleaguered infrastructure SAMIE MODAK
the duty change would “come into force finance company has also start- Mumbai, 10 October SENSEX RISES RECOVERY BSESECTORALGAINERS
Oct10 Chg(%)*
with effect from October 11”.
DUTY CUT UNLIKELY TO REDUCE AIRFARES P5
ed moving on cleaning up the mess.
IL&FS Non-Executive Chairman Uday The stock market rebounded HOPES Realty 1,616 4.4
Kotak on Wednesday met Corporate Affairs
Secretary Injeti Srinivas to apprise him of the
IL&FS may approach sharply from its six-month low on
Wednesday amid a retreat in
Consumer 18,580 3.8
BACK PAGE P20 developments in the company. After the meet- banks for loan recast the US dollar, Brent crude, and
durables
At least 7 killed as train ing, Kotak said, “We barely started a week
back. We are consulting the government and
The new board of infrastructure financier IL&FS is
likely to approach public sector banks to
bond yields.
Banking and financial stocks
Finance 5,466 3.6
Bankex 28,382 3.5
derails near Rae Bareli making progress.” restructure their debt. The Reserve Bank of led the gains on the back of value
Industrials 2,925 3.4
Five coaches and the engine of the New Sources in the MCA said the government India’s (RBI’s) norms allow restructuring of debt buying on optimism that liquidity
Note:Index value rounded off *1-day change
Delhi-bound New Farakka Express derailed was still awaiting a complete, reliable picture of by non-banking financial companies registered conditions would ease.
near Rae Bareli on Wednesday, killing at developments that led to the fiasco at IL&FS. as core investment company with the regulator, The benchmark Sensex ended
least seven people and injuring nine, “Fraud can’t be ruled out,” a key official said. according to a source in the RBI. DEV CHATTERJEE at 34,761, up 461 points, or 1.35 per since April 5. Incidentally, the pre- Bank of India (SBI), HDFC Bank,
officials said. The accident took place in Turn to Page 6 > & SURAJEET DAS GUPTA write 4> cent, while the Nifty50 index vious day’s close for the Sensex ICICI Bank, and Axis Bank con-
Harchandpur area of Rae Bareli district at gained 159 points, or 1.54 per cent, and the Nifty was at a level last tributed to more than half of the
6.10 am, Uttar Pradesh Additional Director
General (Law and Order) Anand Kumar said.
PAGE 4 GOVT READY TO RELAX NORMS
FOR IL&FS’ ZOJILA PROJECT
ICAI SEEKS EXPLANATION
FROM AUDIT FIRMS
to close at 10,460. Both the indices
saw their biggest single-day gain
seen on April 4.
Banking sector biggies State
gains in the benchmark indices.
Turn to Page 6 >
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
IN BRIEF
Air India revival package may
3x spurt on first day of festive sales for Amazon
ALNOOR PEERMOHAMED availed credit of over ~3 billion during cent of them come from lower tier
be ready in a month: Official Bengaluru, 10 October the first 24 hours of sale to buy large-
ticket items such as television, refrig-
cities. I would assume that it would
follow a similar pattern even during
TheCentreislikelytofinalisea US online retail giant Amazon said erators, dishwashers and smartph- this sale,” Agarwal said.
revivalpackagefortheailingAir sales jumped three times during the ones. While a large chunk of this was While rival Flipkart, too, began its
Indiainamonth,atopofficialofthe first 24 hours of the Great Indian driven by bank credit and debit cards, annual BigBillionDays sale on Wedne-
civilaviationministryhassaid Festival for 2018 compared to the Amazon’s own cardless credit prod- sday, the firm will unveil offers on
assuring“need-based”supportto same time period last year. uct saw massive traction. smartphones only from Wednesday
thedebt-ladencarrier.CivilAviation The firm said members of its Prime Smartphones continued to domi- midnight. The Walmart-backed firm
SecretaryRNChoubeyalsosaidthe loyalty programme bought three times nate the sale for Amazon, both in did not share indicative sales growth
safetyauditthattheDirectorGeneralofCivilAviationorderedon the number of early access products terms of value as well as numbers. figures for the first day, failing to prov-
domesticairlines“didnotfindanybacklogofanysafetystepsthat they did last year in the initial 12-hour While fashion was the largest catego- ide a comparison between it and its
theyshouldhavetaken.”“Wheneverthereisaneedforfinancial period. That trend continued into the ry in terms of units sold, the Xiaomi biggest rival Amazon. The annual sal-
supporttoAirIndia,itwillbeexaminedonneedbasisandsuch first day of Amazon’s festive sale. 6A smartphone, which retailed for es have typically been a time when
financialsupportonneedbasiswillbeprovided.Ionlywishtotell “The first day of our open sale has ~5,999 on Wednesday, was the largest Amit Agarwal (second from the right), country head at Amazon India, with Amazon and Flipkart get into war of
youthatallsupportwillbeprovided.AirIndia’scompetitiveness been our biggest shopping day ever. selling product on Amazon. The com- his team members on Wednesday PHOTO: SAGGERE RADHAKRISHNA words, claiming each outdid the other.
andefficiencywillnotbecompromised.Wehavenearlyfinalised Just to call out key milestones — we pany’s own Fire TV Stick was the sec- Independent analyst RedSeer said
thepackageandtherewillnotbeanyproblemforAirIndia.Within estimate that we sold three out of four ond best selling item, while it did not Agarwal said that smartphones would whom come to its site to get great that last year Flipkart was ahead of
thismonthyes.Certainly,”Choubeysaid.Hewasrespondingtoa smartphones in the country on our disclose the number of units shipped. eventually be eclipsed by other cate- offers on smartphones and electron- Amazon in terms of gross merchan-
queryabouttherevivalpackageforAirIndia. PTI< first sale day, our large appliances Chinese phone manufacturer Xia- gories in terms of driving sales, but ics, Amazon said it saw three times as dise value during the festive sales.
business saw 30 times growth over a omi ended up selling one million dev- they would need to be much larger as many new customers shop on its plat- This year, RedSeer expects the total
normal business day, and Amazon ices on Amazon in the first 24 hours of ticket sizes for fashion and others are form compared with last year’s sale. industry gross merchandise value
Malabar Gold to Foodpanda eyes fashion was our largest category,” said
Amit Agarwal, country head at Ama-
its sale, while premium brand
OnePlus saw over 400,000 orders
still lower. This would take between
three to five years, he said.
“If you look at a typical day for us, we
get customers from both urban and
during the festive month to be
between $2.5 billion and $3 billion,
invest ~70 bn to 500,000 partners zon India. He said that customers being placed for its devices. However, In terms of new customers, a lot of semi-urban areas, but almost 80 per up from $1.5 billion last year.
triple retail footprint by 2020
.
MUMBAI | THURSDAY, 11 OCTOBER 2018 COMPANIES 3 <
IBM India
eyes new
revenue
Seal 9 Amrapali properties: SC Lamborghini looks to
rev up with SUV
for millionaires
PRESS TRUST OF INDIA only the court-appointed forensic audi- in entirety. The Bench directed that its
streams from New Delhi, 10 October tors — Ravi Bhatia and Pawan Kumar
Aggarwal — and persons authorised by
order be telephonically communicated
to the Superintendent of Police of Rajgir
telecom firms T
he Supreme Court on Wednesday them would enter these premises after and Buxar so that they could take appro-
ordered the sealing of nine prop- they were sealed. priate steps. The court is seized of a
erties of embattled real estate The court also asked the three direc- batch of petitions filed by home buyers
DEBASIS MOHAPATRA company Amrapali after its three direc- tors to furnish an undertaking before it who are seeking possession of around
Bengaluru, 10 October tors, who are in police custody, said that by tomorrow (Thursday) stating that all 42,000 flats booked in projects of the
the documents related to the group’s 46 the documents were available at these Amrapali group. During the hearing, the
As demand from the tele- firms were stored there. nine premises only and not a single doc- counsel appearing for the home buyers
com segment shrinks, with The three directors moved an appli- ument was lying at any other place. told the Bench that the auditors have
rising competition eating cation before a Bench comprising The three directors also told the given the list of documents required by
into voice rates in a big way, Justices U U Lalit and D Y Bench that they be kept at police station them and the group should hand over,
IBM India is preparing to tap Chandrachud stating that they were and not in the lock up during this period. year wise and company wise, the docu-
new revenue avenues from willing to hand over all the documents “If the entire exercise of sealing of ments of all their firms.
this segment as telecom but the police was unaware about THE RULING these seven premises at Noida and “We will ensure the presence of these
companies eye enterprises which one needed to be seized. Order came a day after 3 directors Greater Noida will be completed today, three persons (directors) whenever the
and data space in a big way. The court’s order came a day after of the group were ordered to be the presence of these three applicants forensic auditors want,” the Bench said,
Telecom continues to be three directors of the group — Anil will not be insisted upon by the police,” adding, “The basic idea is to have the
taken into police custody and the
the largest division for IBM Kumar Sharma, Shiv Priya and Ajay the Bench said. documents. We will have the forensic
in India, with clients such as Kumar — were ordered to be taken into
firm was castigated for not “If the exercise will not be completed, auditors tomorrow to know about the Owned by the Volkswagen Group, Lamborghini is targeting
Bharti Airtel and Vodafone. police custody and the firm was casti- complying with SC’s orders to the present status will continue,” the modalities and how would they like to India’s wealthy population, from technology entrepreneurs to
The second largest business gated for playing “hide and seek” with hand over all documents to Bench said and asked the Delhi Police to proceed”.Thetwoauditors,appointedby Bollywood stars
generating segment for the the court by not complying with its forensic auditors keep these three directors at the police the court to conduct forensic audit of
company is financial servic- orders to hand over all the documents to The SC said only court-appointed station but not in the lock up. Amrapali Group, had yesterday BLOOMBERG Poor quality roads in develop-
es. the forensic auditors. persons would enter the nine The Bench said that compliance (Tuesday) told the court that they have Mumbai, 10 October ing countries such as India
Despite the disruption These directors told the Bench that premises after they are sealed report of its order be placed before the not yet received all the documents. make it virtually impossible to
seen in the telecom seg- documents related to Amrapali’s 46 court and directed that the three direc- The Bench had noted that as per the Lamborghini is betting its first drive fast cars like the
ment, the global informa- group companies were kept in seven The court also asked the three tors would also remain present before it two auditors, documents of only two out sport utility vehicle Urus that Aventador or the Huracan.
tion technology major says locations at Noida and Greater Noida directors to furnish an on Thursday. of 46 firms — Amrapali Zodiac and will help open the door to more Aston Martin, Rolls-Royce,
service providers in that seg- and two premises — Rajgir and Buxar undertaking before it by Thursday The Bench noted the submissions of Amrapali Princely Estates — were hand- customers in India, a market Ferrari and Mercedes-Benz’s
ment are building up huge districts in Bihar. “We direct the con- stating that all the documents thecounselappearingforthethreedirec- ed over to them despite court’s order to that accounted for less than 1 Maybach sub-brand also have
war chests to support the cerned police, Superintendent of Police were available at these nine tors that the group has received e-mail provide all documents. per cent of its global deliveries plans for SUVs.
data-demand explosion over of Noida and Greater Noida to seal all premises only from the forensic auditors indicating the The court had also issued notice to all last year. Owned by the Volkswagen
the past two years. the seven premises in the presence of documents required by them. these companies and their directors ask- After selling fewer than 30 Group, Lamborghini is target-
“The interesting fact is these directors,” the Bench said. The directors also told the court that ing why contempt proceedings be not cars in the South Asian country ing India’s wealthy from tech-
that this telecom disruption “We direct the Superintendent of It further directed that after the seal- company wise list of all bank accounts initiated against them. It had also direct- in 2017, the Italian maker of nology entrepreneurs to
is not capital constraining. Police of Rajgir and Buxar to immedi- ing of these nine premises, the keys be were available till 2015 and after that, ed that other directors of the firm shall supercars is aiming to triple the Bollywood stars.
Instead, all telcos are literal- ately go to these (two) places and seal it,” handed over to the registrar of the apex raw data was available with them and surrender their passport to the police number in two years, Sharad There were 119 billionaires
ly creating war chests. The the Bench said. court. The Bench also made it clear that they would hand over all the documents and would not leave the country. Agarwal, head of Automobili and about 20,700 individuals
Vodafone-Idea merger is Lamborghini SpA’s local unit, with net assets of $10 million
clearly in that direction. said in an interview. or more in the country as of last
Airtel has a clear focus with In comparison, the compa- year, said a report by New
“We need to work together to de-escalate and “Women are scared to speak out because they think "Me and politics don't mix at all. I am too
resolve trade disputes. It's tempting to be a people would make fun of them and doubt their outspoken, I am not diplomatic. I don't
bit depressed about this perspective but I'm character but now when they are speaking out we even know what diplomacy is. I would
hopeful as there is an appetite to boost trade” should take action against each and every allegation” cause a third World War. Don't do it”
CHRISTINE LAGARDE MANEKA GANDHI INDRA NOOYI
International Monetary Fund chief Women and Child Development Minister Former Pepsi CEO
>
T
he new board of infrastructure fin- and give more time to the new board to 2
ancier IL&FS is likely to approach make a comprehensive plan for reviving 6 Debentures 242.97
public sector banks (PSBs) to the company. Term loans 558.70
restructure their debt as the Reserve Insiders said that the government was 27
Cash credit from banks 14.52
Bank of India’s (RBI’s) norms allow keen on a quick resolving of the ABHIJIT LELE, ADVAIT RAO PALEPU & ANUP ROY
restructuring of debt by non-bank- IL&FS crisis and a top-level Subordinated debt 13.63 Mumbai, 10 October SECURITISATION
ing finance companies (NBFCs)
registered as core investment com-
meeting has been called in New
Delhi this weekend to sort out
% share Inter-corporate deposits
Commercial papers
23.17
57.52
Liquidity needs of the non-banking MARKET (~ billion)
pany (CIC) with the regulator, any pending issues with financial sector will be addressed to a | PTC | DA
according to a source in the RBI. lenders and other stakeholders Finance lease obligation 0.40 large extent, State Bank of India (SBI)
836
The source said under Section IL&FS of the company. The restruc- Total 910.91 has assured. The bank has also said that
45 of the Reserve Bank of India Act, CRISIS be turing of loans by PSBs will also 61 Source: Annual reports it will more than double its securitisa-
IL&FS can go in for the loan restruc- discussed in the meeting, Compiled by BS Research Bureau tion portfolio. However, the portfolio
turing proposal and the RBI’s said a source close to the devel- itself has to grow so that the sector does-
February 12 circular to refer all non-per- opment. The new board will meet again also been put on hold as there is Soon after the first board meet, the n’t face a liquidity crunch, say experts.
forming accounts above ~20 billion to on October 12 in Mumbai to discuss the no clarity on the company’s financials non-executive chairman of IL&FS’ new Bankers are awaiting RBI’s revised
490
National Company Law Tribunal (NCLT) way forward. and a revised prospectus needs to be board Uday Kotak had said that there guidelines on NBFCs before increasing
will not be applicable in the IL&FS case. One of the shareholders of IL&FS said filed with the Registrar of Companies were 348 related entities and the board their direct credit to the entities.
IL&FS has term loans of nearly ~560 the rights issue by the company, which (RoC) for the fund raising exercise, the was looking at all the options to bring However, banks have told non-banking
323
billion from lenders (see chart). If the was to be launched later this month, has source said. the company back to track. finance companies (NBFCs) that they
would block the money for a higher fee,
also referred to as ‘commitment charges.’
from audit
director and chief executive director DA: Direct Assignments Source: Icra
Rajkiran Rai G said buying portfolio from
finance companies have been a regular
Firm was lowest bidder for ~49-bn tunnel between Kashmir and Ladakh
companies
activity for the bank. Union Bank is in the books, “the current situation also
final stages to acquire loans worth ~20 strengthens the thirst of the developing
billion and this can go up to ~50 billion, securitisation market to ensure sustain-
MEGHA MANCHANDA he said. able funding option along with tradi-
New Delhi, 10 October PRESS TRUST OF INDIA “This time around, when the liquidi- tional sources,” Niyogi said.
New Delhi, 10 October ty is under severe pressure, selling of However, several NBFCs are still
In an attempt to ease the portfolio to banks will release resources complaining that banks are averse to
process of project implemen- Chartered accountants' apex body ICAI for NBFCs. This money could be used by lending long-term money to them. And
tation for the troubled has sought explanation from audit them to pay off short-term debt like com- that may result in future liquidity shocks.
Infrastructure Leasing & firms that carried out statutory audit mercial paper,” Rai said. “There is a liquidity crunch taking
Financial Services (IL&FS), works of crisis-hit IL&FS group in the The securitsation portfolio of NBFCs place in the entire industry and wider
the Union road ministry is past few years. comprise two instruments – pass through system. Banks refrained from lending
ready to relax the stringent The crisis at diversified IL&FS, following certificates (PTC) and direct assignment to NBFCs and housing finance compa-
fund-mobilisation norm for loan defaults by some group entities, has (DA). PTCs are like mortgage instruments nies (HFCs). After speaking to other play-
the concessionaire for the raised concerns about liquidity crunch in that can be transferred, whereas direct ers in the market, we are suddenly find-
Zojila tunnel project in The Zojila pass, at 11,578 feet on the financial system. Against this backdrop, assignments are sold to entities. ing that top PSU banks are not willing to
Jammu & Kashmir.
According to the norms,
ABOUT THE Srinagar-Kargil-Leh National the government seized control of the IL&FS
boardearlierthismonth.
In direct assignment transaction,
banks buy portfolios directly from
lend,” said a senior official at a housing
finance company.
the government releases 10 ZOJILA PROJECT Highway, remains closed during
winters because of snowfall and The Institute of The institute finance companies. In case of the Pass According to the official, banks are
per cent of the total contract avalanches Chartered Accountants has also Through Certificates (PTCs), the seller saying that they themselves do not have
value to the concessionaire at of India (ICAI) on written to the (of portfolio) issues these PTCs which are adequate liquidity, which may not be
the start of the project, Wednesday said it has RBI and the subscribed by banks. true, considering that mutual fund
| The total capital cost of the longest road tunnel logging equipment,
against a bank guarantee 10 issued notices to audit Serious Fraud The total securitisation portfolio of redemption worth Rs 900 billion has
per cent of this advance pay- project is ~68.08 billion | The tunnel will have a cut tunnel radio, emergency firms that conducted Investigation NBFCs was Rs 836 billion on fiscal 17-18, flown into banks. Also, the RBI is pump-
ment. For instance, if the | The civil construction cost and cross-ventilation telephone system statutory audit works of Office seeking down from about Rs 900 billion in 2016- ing money through bond purchases.
total cost of a project is of the project is mechanism, fully | IL&FS Transportation had IL&FS group in the past details about 17, according to data from ICRA. “Companies like ours will always
~50 billion, ~5 billion is ~48.99 billion transverse ventilation in July last year said it had few years. However, the IL&FS issue However, in this fiscal, there are signs of have an asset-liability mismatch
released by the ministry | Construction period of the system, uninterrupted emerged as the lowest specific details were rising securitisation, with the first quar- because we lend for long term, that is,
against a bank guarantee of not disclosed. ter witnessing issuance of Rs 323 billion, for 15 years. There is no 15-year term
project is seven years power supply, CCTV bidder for ~48.99-billion
~500 million, to be produced In the recent past, there has been news said Vibhor Mittal, vice-president of loan, nor 15-year commercial paper
by the concessionaire. | The government claims it monitoring, variable Zojila tunnel in Jammu & reports regarding diversion of loan money ICRA. available,” said the official, adding that
“In the case of IL&FS, we are will be the country's messaging boards, traffic Kashmir in IL&FS and its subsidiary companies, “The immediate liquidity needs of bankers have told NBFCs that banks are
ready to relax the norms and the ICAI said in a statement. the NBFC sector get addressed by this sitting tightly on any exposure to finan-
give lower advance of 5 per cent, tunnel, with the goal of pro- The civil construction cost road ministry, for project "The Disciplinary Directorate of the securitisation buyout. Of course, banks cial institutions.
so that the required bank viding all-weather connectivi- of the project is ~48.99 billion construction. ICAI, upon coming across such news will be selective and the balance sheet of NBFCs say that banks are ready to
guarantee amount is lower. The ty between the Kashmir Valley and the total capital cost of Besides the Zojila tunnel report has suo motu taken cognisance of NBFCs would shrink as a result. But those give loans under sanctioned lines. But
remaining advance amount and Ladakh. the project is ~68.08 billion, project, IL&FS is battling the matter and pro-actively issued notices in need of money can at least have a sup- they are going slow on disbursals, await-
can be released to the The Zojila pass is situated which includes the cost some arbitration cases with to the statutory auditors on October 4, port,” said Karthik Srinivasan, senior ing revision in norms by the RBI for
contractor in tranches,” an offi- at an altitude of 11,578 feet on towards land acquisition, the road ministry and the 2018 for the relevant years of the con- vice-president of ICRA. NBFCs. At the time of the monetary pol-
cial said. Srinagar-Kargil-Leh National resettlement and rehabilita- National Highways Authority cerned company seeking their explana- According to Mittal, NBFCs that have icy review, the RBI had indicated that it
The government is ready to Highway, which remains tion, and other pre-construc- of India (NHAI). The debt- tion in the matter," it said. priority sector assets would leverage their will tweak norms for finance companies
make certain relaxations in the closed during winters tion activities as well as laden company has even chal- The institute has also written to the direct assignments to tide over their liq- in light of the liquidity crunch the mar-
case of IL&FS, but it is up to the (December to April) because maintenance and operation lenged some arbitration cases Reserve Bank of India (RBI) and the uidity needs. ket experienced on defaults by IL&FS
company whether or not it of snowfall and avalanches cost of the tunnel for four at higher courts over lower Serious Fraud Investigation Office (SFIO) “In the current environment, balance group entities.
wants to execute the project, cutting off the Leh-Ladakh years. claim amount approved by seeking details about IL&FS issue. sheet liquidity is very crucial, particular- Confirming the move to hike com-
the official said, adding the region from the rest of In January this year, the arbitration panel. "Based on the responses received, the ly in the Indian context, where the secu- mitment charges on sanctioned lines to
work is yet to begin at the proj- Kashmir. Once completed, IL&FS received the letter of IL&FS has arbitration ICAI would be fast-tracking its investiga- ritisation market is relatively small,” said NBFCs, one senior public sector execu-
ect site. Zojila would be the country’s acceptance from the National claims of around ~70 billion tion on the role of member/ firm of the Soumyajit Niyogi, associate director at tive said finance companies with high-
In July last year, IL&FS longest road tunnel, with Highways and Infrastructure with the NHAI, which are institute allegedly involved in terms of India Ratings and Research. While RBI’s er ratings (AAA and AA) used to pay
emerged the lowest bidder for strategic and socio-economic Development Corporation, a under various stages of the disciplinary mechanism," the state- liquidity measures give ample liquidity to small fees for keeping the credit lines
the ~48.99-billion Zojila pass importance. wholly owned subsidiary of resolution. ment said. banks, which they use to buy NBFC loan blocked.
Gujarat HC stays
DRI notices Bank credits: Who gets what
to exporters Infrastructure and power sectors continue Category-wise deployment
The Gujarat High Court has
stayed notices issued by the
to receive the lion’s share, RBI data shows Bank credit
deployed (~ bn)
Directorate of Intelligence
(DRI) to some exporters for ADVAIT RAO PALEPU ~4.1 trillion worth of credit received on Aug ‘17 Aug ‘18 Change %
allegedly misusing an Mumbai, 10 October August 2017. Personal loans 16,854 19,924 18.21
exports incentive scheme In the services sector, credit to Non- Housing (including priority sector) 8,906 10,419 16.99
under the goods and servic- Total credit growth at the end of August Banking Finance Companies (NBFCs) Non-food credit 69,117 77,704 12.42
es tax (GST) regime. 2018 grew by 12.35 per cent to ~78.2 tril- has crossed the levels of credit deployed
Abhishek Rastogi, coun- lion, compared to ~69.6 trillion in to trade services, for the first time in Gross bank credit 69,599 78,191 12.35
sel of petitioners and partner August-end last year, the data from the the last five years. Priority sector 23,642 25,633 8.42
at Khaitan & Co, said notices Reserve Bank of India (RBI) shows. Bank credit to the NBFCs has grown Agriculture & allied activities 9,777 10,419 6.57
have been stayed for three Over the last one year, much of the by 45.8 per cent, year on year, from ~3.4 All industries 26,112 26,621 1.95
applicants, but there will be credit disbursed by banks flowed to the trillion in August 2017 to ~4.9 trillion as
repercussions. Meanwhile, personal loan segment, industries and of August 2018. Food credit 482 488 1.18 Sources: Reserve Bank of India Database on Indian Economy, PwC
he said that a similar hearing housing loans. Credit for housing loans Wholesale trade and retail trade
in Madras High Court has has grown by 17 per cent from credit continues to grow by over 10-15 Sectoral deployment Deployment of bank credit to
been concluded, but it has
reserved its order.
~8.9 trillion as of August 2017 to ~10.4
trillion at the end of August 2018.
per cent, year on year.
The non-performing assets (NPA)
of bank credit services sector
Exporters had earlier While credit towards personal loans, crisis that has crippled lending from (~billion) (~billion)
approached various courts including credit cards and other instru- banks is concentrated in the metals,
over restrictions imposed for ments, has grown by 18.2 per cent from infrastructure (including power), con-
availing advance authorisa- ~16.9 trillion in August 2017 to almost struction, textiles, and manufacturing
tion licences under the GST ~20 trillion as of August 2018. Credit to sectors, due to governance, regulatory
regime. The change in condi- industry has grown marginally by less and market factors.
tion has led to directorate of than 2 per cent, from ~26.1 trillion in For instance, the current situation
revenue intelligence (DRI) credit disbursed by August 2017 to ~26.6 of stress and high indebtedness of many
issuing notices to exporters. trillion of credit was disbursed by banks power sector companies requires clari-
The Central Bureau of as of August 2018. ty on larger issue of public-purchase
*Non-banking financial companies
Indirect Taxes and Customs The infrastructure has been consis- agreements and fuel-supply linkages,
had inserted a clause of “pre- tently receiving the highest proportion without which there can be no fruitful
import” for exempting imp- of bank credit from ~8.7 trillion (August resolution for these stressed assets.
ortsdoneonadvanceauthori- 2014) to ~9.2 trillion as of August 2018. While there is some concentration Sector-wise cases
sationlicencesfromintegrated This is followed by the power sector, of bank credit to specific sectors such as admitted under
goods and services tax. These which received ~5.3 trillion in credit infrastructure, power, minerals and
licences are issued to allow and the metals industry that metal products, it is important for pol- Insolvency and
duty-free import of inputs, received ~3.8 trillion in credit by August icymakers to ensure market fundamen- Bankruptcy Code as
which are physically incorpo- this year. tals in terms of regulations and gover-
rated in export product. Credit to the metals industry is down nance are corrected so that mistakes of of August 2018
INDIVJAL DHASMANA by 7.81 per cent this year, compared to the past are not repeated.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
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MUMBAI | THURSDAY, 11 OCTOBER 2018 ECONOMY & PUBLIC AFFAIRS 5 <
T
PRESS TRUST OF INDIA prices a relief of about ~5 per litre. he cut in excise duty on avia- Oct, ’14 67,525 (PLB) for 1,191,000 non- | Nod to merger of
New Delhi, 10 October The aviation industry has been tion turbine fuel (ATF) will Oct, ’15 43,184 gazetted railway officials, regulatory bodies
seeking lower taxes to help offset give airline operators, battling Oct, ’16 46,826 which will cost the railway NCVT, NDSA
A
fter petrol and diesel, the the impact of high oil prices. Among high costs in times of rising crude exchequer ~20.44 billion.
government Wednesday cut others, Ajay Singh of Spicejet had oil prices, only a temporary relief.
Oct, ’17 53,045 The wage calculation ceil- to be the worst ever at close to
excise duty on jet fuel to 11 voiced concerns over rising inter- Fliers are unlikely to see reduced Oct, ’18 74,567 ing prescribed for payment of 98 per cent this fiscal.
per cent to give relief to the avia- national oil prices and asked the airfares after the hike in basic cus- Source: Indian Oil Corporation PLBtotheeligiblenon-gazetted Operating ratio is calculated
tion industry that has been in recent government to take up some policy toms duty from September 26 is fac- railway employees is ~7,000 per based on how much money
weeks hit hard by rising fuel prices measures to help the industry. tored in the ATF prices in the com- month.Themaximumamount railways is spending to earn
and a plummeting rupee. Unconfirmed reports that the ing weeks. added tax on ATF ranges from as low October 2013 at ~77,089 per kl (Delhi). payable per eligible railway each rupee — if operating ratio
Excise duty on aviation turbine government announced the excise The combined impact of higher as 3 per cent in some states to more Operating costs of airlines have employee is ~17,951 for 78 days, is 98 per cent, it means it is
fuel (ATF) has been reduced to 11 duty cut after seeking approval of Customs duty and reduced excise than 30 per cent in some, such as risen by 20 per cent over the last fis- said a government statement. spending 98 paise to earn each
per cent from 14 per cent with effect the election commission as the duty might cancel each other out, Andhra Pradesh. cal year, primarily because of a 30 Payment of PLB to eligible rupee.Oneofthemajorreasons
from October 11, a notification model code of conduct came into airline officials and experts said. The Unless the state value-added tax per cent rise in crude oil prices and railway employees is made for the operating ratio is con-
issued by the revenue department force on Saturday after announce- impact on government’s revenue (VAT) is reduced in consonance, the 9 per cent depreciation in the rupee, each year before the Puja holi- sidered to be its social sector
in the finance ministry said. ment of elections in states like would also negligible because of the reduction in ATF prices would not CRISIL Research said in a report last days. The decision of the commitments, including sub-
Jet fuel prices this month hit Madhya Pradesh and Rajasthan. cross incidence of two duties in matter much, airline executives said. week. Cabinet shall be implemented sidies and pensions.
their highest level since January Just last month the government opposite directions, sources said. “Thanks to a massive increase in Globally, fuel accounts for 24.2 before the holidays for this year The government also
2014 as rising international oil had raise customs duty on ATF and SpiceJet Chairman and jet fuel price, states have gained per cent of an airline’s cost struc- as well. approved an agreement
prices and plummeting rupee value 18 other non-essential import items Managing Director Ajay Singh said heavily from VAT, and now is the ture. In India, it is 34 per cent, mak- This comes at a time when between India and Finland on
pushed rates. in a bid rein in currently account the real benefit will happen only if time for them to pass some benefit to ing Indian carriers particularly sen- the Union Budget had cut the cooperation in environment
The fuel in Delhi currently costs deficit and shore up the rupee. states and oil marketing companies the airlines which would also give a sitive in this area, International Air budgetary support for 2017-18 protection in both the
~74,567 per kilolitre (~74.56 per litre) Basic customs duty of 5 per cent (OMCs) follow suit and reduce the boost to air connectivity in their Transport Association said earlier by ~150 billion and provisioned countries.
and in Mumbai, it is priced at was imposed on ATF. It previously price and taxes, as it happened with states,” Singh added. Experts have this month. a lower amount of ~531 billion Besides, the Cabinet also
~74,177 per kl. attracted nil duty. This led to an petrol and diesel. also voiced the concern of cut in As product prices for petrol and for 2018-19, compared to over approved the merger of regula-
ATF prices, currently cheaper increase of ~2,000 per kl in prices. “We would request the OMCs to excise coming together with a hike diesel are benchmarked to interna- ~550 billion during the last tory institutions the National
than petrol and diesel in Delhi, have While the twin moves on auto reduce their margin by ~1 and state in customs duty. tional prices and are revised on a budget, leading to a huge short- CouncilforVocationalTraining
spiked up by 9.5 per cent since July. fuels had led to price of petrol drop governments to reduce taxes by an “This excise duty rate cut on ATF daily basis, the rise in crude oil fall on the national trans- and the National Skill
They have been on upswing since from a record high of ~84 per litre to equal amount. Then, it would trans- comes as quite a sigh of relief for prices resulted in daily upward revi- porter’s investment plans. In Development Agency into the
July last year, rising every month ~81.50 in Delhi and that of diesel to late to about a 10 per cent reduction the aviation industry, especially in sions in their consumer prices. addition to this, the railways NationalCouncilforVocational
except in July this year. Jet fuel was all-time high of ~75.45 to ~72.95 a in fuel cost for airlines. That would the backdrop of the recent levy of However, ATF prices are gener- operating ratio is also expected Education and Training.
priced at ~47,013 per kl in July last litre on October 5, rate hikes on sub- be significant in such conditions,” basic customs duty on import of ally revised at the beginning of every
year and has risen by 58.6 per cent sequent days has pushed prices Singh said. ATF. The increased costs on month. In the October 1 revision,
since then. upwards. Petrol now costs ~82.26 According to calculations shared account of basic customs duty ATF suppliers such as Indian Oil
Last week, the government cut
excise duty on petrol and diesel by
~1.50 per litre and asked state-
per litre and diesel to ~74.35.
The government had in 2016
hiked excise duty on ATF to 14 per
by an airline, an excise cut of 3 per-
centage points would result in
reduction of unit cost of flying a pas-
should to an extent be offset by the
excise duty rate cut,” Abhishek Jain,
tax partner, EY, said.
Corporation did not factor in the
basic customs duty hike, since the
new shipment of oil with hiked cus-
India turns down UAE
owned oil firms to subsidise the fuel
by another ~1 a litre. That was
cent from 8 per cent.
ATF like petrol and diesel is not
senger per kilometre by only ~0.04.
The unit cost for low-cost airlines
State OMCs hiked aviation turbine
fuel price by 7.25 per cent in October.
toms duties has not entered the
refining cycle yet. demand for more flights
matched by Bharatiya Janata Party- covered by the goods and services ranges near ~1.5 as of now. Currently, ATF prices are at their high- To absorb the impact of customs
ruled states cutting local sales tax or tax (GST) regime that on July 1 last In addition to central taxes of est under the Narendra Modi govern- and pass on the discount of excise, a ARINDAM MAJUMDER per cent of all international air
VAT by an equal proportion to give year amalgamated 17 different cen- excise and customs, the incidence ment at ~74,567 per kilo-litre (kl) in mid-month revision cannot be ruled & ANEESH PHADNIS traffic. Dubai and Abu Dhabi
customers hit by high auto fuel tral and state taxes. of state taxes in the form of value- Delhi. The ATF was costliest in out this time. Mumbai, 10 October are the largest overseas hubs
for Indian travelers.
India has turned down the India has separate air serv-
request of United Arab ices agreements with Dubai,
Exporters fail to reap benefits of a weaker rupee Emirates (UAE) for an increase
in traffic rights and access to
new destinations in the
country.
Abu Dhabi and Sharjah.
Dubai had sought an
increase of 50,000 seats per
week (over the existing 65,000
H
ong Kong-based secondary specialist New will increase accordingly. India funds also have a partly exited it.
Capital First GIC Warburg Pincus India 275.4 24.9 Quest Capital Partners is in talks to buy long tail, best addressed through innovative sec- To be sure, exits through strategic sales and
Dalmia Bharat Kuwait Investment Authority KKR India Advisors 236.9 8.4 the India portfolio of New Enterprise ondary transactions,” says Amit Gupta, founding Initial Public Offers of equity are more popular.
Associates (NEA). The firm, backed by TPG partner of NewQuest Capital Partners. ‘‘There's no pattern around secondary deals but, as
RBL Bank Norges Bank Investment Norwest Venture, 129.3 3.9 Capital, is also in talks with IDG Ventures to buy Secondary deals are driven the fund cycle gets longer, and
Management Samara Capital four companies from its first fund. These are not by the need to create liquidity, the pressure builds on, it needs
Syngene International Temasek Holdings Advisors India Value Fund IV 105.5 7.2 isolated deals. so that fund managers can SECONDARY DEALS to be relieved,'' says a fund
Intas Pharmaceuticals Capital International In August 2018, Edelweiss’ alternate asset move onto the next fund. VC manager. There are three types
Deal value ($ mn)
Global Emerging Markets ChrysCapital V LLC 105.4 3.0 arm, Edelweiss Alternate Asset Advisors, firms started in India in 2005 of secondary deals: at the com-
Private Equity Fund LP acquired two real estate funds of Milestone and the eco-system is in its pany level (one PE sells to
Capital. US-based General Infrastructure teens. another), at the portfolio level
Partners (GIP) bought PE firm IDFC Alternatives’ ‘‘Limited Partners (LPs, or LP swaps, where one LP
KEY SECONDARY SALE DEALS IN 2018 infrastructure fund. TRG Capital has bought JP investors in PE firms) have a wants out and another wants
Target Company Buyer Seller Exit Value % Morgan’s Asia infrastructure fund, which 10-year window on venture in.
291.4
1,554.6
1,550.7
($ mn) Sought
1,192.3
includes its investments in India. capital and they expect their Sometimes, it is used as a
751.8
GlobalLogic Inc. Partners Group AG Apax Partners 960.0 48.0 Secondary deals — when one private equity money back,'' says Rahul way to create a new platform
(PE) firm sells an asset or a portfolio to another — Khanna, managing partner, and existing fund managers
Continental Warehousing Hindustan Infralog Abraaj, Warburg , 268.4 60.4 are still fewer in India. But as VCs, who are close to Trifecta Capital. He was part 2014 2015 2016 2017 2018YTD continue to manage the port-
Corporation (Nhava Sheva) Aureos, IFC their fund life look for liquidity, secondary deals are of Canaan Partners in India, No. of deals folio. Lightbox Ventures
Sai Life Sciences TPG Asia VII SF Pte Tata Cap H'care Fund, 105.5 35.0 likely to gain ground in India, partly driven by sec- which sold its portfolio to its acquired six firms from
Tata Cap ondary specialists. LP, JPMorgan. 39 50 45 42 28 Kleiner Perkins and Sherpalo
Xponentia Fund Partners, India Equity Partners It often takes time for an investment to mature, Most VC firms in India are Ventures that its founding
Spoton Logistics 100.0 100.0 while a VC fund has a fixed life of 8-10 years. By the on to their third or fourth partner, Sandeep Murthy, had
Samara Capital Partners Fund
end of which it has to start returning capital to its funds, having deployed fund one, called fund two invested in. Similarly, existing fund managers at
ETechAces Marketing Info Edge India, investors, called LPs (Limited Partners). ‘‘Investing and investing from the third fund. NEA could continue to manage the portfolio after
and Consulting SoftBank Vision Fund LP, PI Opportunities Fund I 38.0 3.5 takes 3-4 years, leaving you with 4-5 years to gain ‘‘How are they going to continue to raise equi- New Quest acquires the portfolio. ‘‘A new sponsor
MakeSense Technologies exits. There's pressure on VCs to take money off the ty without making significant distribution? could give more money to deploy. For a fund man-
Temasek Holdings Advisors table,” says angel investor Alok Mittal. Liquidity events like Wal-Mart are fewer and GPs ager, it is easier to raise a fund if you have a port-
Source:VCCEdge
This and the entry of specialists could push are taking a view that every three-four years, folio,” says Khanna.
B
andhan Bank’s net prof- Bandhan Bank, which has month for remaining afloat. The com- experience to run airlines. per cent drop in the midcap and smallcap
it for the second quarter generally remained cautious pany has reached out to public sector Last year, Deepak Mahendra, a former index, respectively, in the past one month.
ended September 2018 on corporate lending, has an units for settlement of dues, they said, executive of Tata Power, was appointed The market breadth was skewed in favour
(Q2FY19) rose 47.4 per cent to exposure of about ~3.88 bil- adding settlement of dues with the chief financial officer at AirAsia India. of gainers, with 2,058 stocks advancing and
~4.88 billion on robust growth The control on asset quality at 32.6 per cent at the end of lion on IL&FS. Sunil Samdani, NHAI would be a template for other The company currently doesn’t have a only 611 declining. The India VIX index, a
in net interest income. also benefitted the bank. September 2018. chief financial officer (CFO) state-owned enterprises. They said the COO. gauge for market volatility, dropped 9 per
The Kolkata-based private Its loans book rose to Referring to the issue of of the bank, told analysts in new board was looking at rationalisa- Fernandes is believed to have stepped cent to 17.9.
lender had posted a net profit of ~333.7 billion in September reducing promoter holding in an investor call that current- tion in IL&FS. The NCLT has granted it down from the AirAsia India board on Market players said the rebound in
~3.31 billion in the July-Septe- 2018 from ~221.1 billion in the bank, Ghosh said the bank ly the loan is a standard asset. permission to induct directors in sub- August 2, three days after the FIR linked to stocks could be due to technical factors and
mber 2017 quarter (Q2FY18). September 2017. Deposits will submit strategic plan to It was given in two tranches, sidiaries and joint ventures. the airline’s Indian business was filed. Bo investors should remain cautious.
The net interest income rose rose by 29.6 per cent to ~329.6 the Reserve Bank of India one about two years back and IL&FS and the NHAI are likely to opt Lingam resigned on September 4. An “It is a technical bounce back.
55.6 per cent to ~10.78 billion in billion in September 2018. (RBI). Bandhan Bank will keep another about six to eight for an out-of-court settlement in a AirAsia India spokesperson didn’t Fundamentals haven’t changed much.
Q2FY19 from ~6.93 billion in The share of low cost deposits in mind the interest of all months back, he said. couple of highway cases entangled in respond to queries. Mutual funds have been sitting on cash,
Q2FY18. The bank improved its (savings account and current stakeholders while chalking Also, while typically the arbitration, where the former went to In the past, there have been differ- there has been some deployment following
net interest margin (NIM) to account) went up to 36.9 per out a strategic plan. The bank bank had shied away from giv- court challenging the arbitration ences among the AirAsia India board the huge correction,” said Dhananjay Sinha,
10.3 per cent in Q2FY19 against cent in September 2018 from is working on plans internally ing corporate loans, the loan amount. members over the choice of senior-level head-institutional research, Emkay Global
9.3 per cent in Q2FY18. 28.2 per cent a year ago. and can take some help to firm to IL&FS was an “exception”, The National Company Law Tribunal executives, a former official said. An Financial Services.
Chandrasekhar Ghosh, the The non-interest income them up. Ghosh, however, did according to Samdani. (NCLT) gave its nod to the government’s exchange of emails reviewed by Business The Sensex and the Nifty are down near-
bank’s managing director and rose marginally by 3.1 per cent not spell out a timeline for At present, about 87 per decision to appoint a new board on Standard shows that in 2015, Bharat ly 12 per cent from their record highs on
chief executive officer, said to ~2.3 billion in Q2FY19 from submitting the plan to the RBI. cent of Bandhan Bank’s loan October 1. The board’s first meeting was Vasani, then chief legal counsel of Tata August 28. Experts say despite the sharp
healthy NIM reflects about 51 ~2.23 billion in Q2FY18. Its book is concentrated in the held last week. Sons, had raised objections about the correction, market valuations were still
per cent growth in loan book. capital adequacy ratio stood More on business-standard.com microfinance sector. Last month, subsidiaries of IL&FS selection of at least two senior executives. above their long-term averages.
began defaulting on loan repayments, as The objection was on grounds that exec- “We maintain our cautious view on the
well as payments on inter-corporate utives were being hired without sufficient Indian markets in the near term, as volatil-
deposits (ICDs) and commercial papers corporate experience. ity is likely to remain high. Focus of market
Saudi Arabia to supply extra oil (CPs). With over 348 subsidiaries, IL&FS is
alleged to have funneled money, raised
either from the debt market or banks, to
these as a form of equity investment and
Since its inception in June 2014,
AirAsia India has seen frequent top-level
churn, including the exit of two chief
executive officers and three chief com-
participants will shift to corporate earnings
season and the domestic macro data, as it
would dictate further course of markets.
Also the movement of currency, crude oil
W
hen actor Priya Prakash Shares of Mumbai-based complaint has been filed
Varrier started a social active users AGENCE FRANCE-PRESSE innerwear Ashapura Intimates with the Mumbai police for
media storm with an on- The app’s user base jumped 84% San Francisco, 10 October Fashion are in a free fall, while Harshad Thakkar
screen wink in February, her follow- over the past one year Chairman and Managing
The drop in share price has
er count on Instagram jumped by Instagram is changing the way the Instagram has added more weapons to bat- Director Harshad Thakkar has
resulted in transfer of
600,000 — making it the third phone makers conceptualise and tle cyber-bullying, using artificial intelli- gone missing.
ownership of certain shares
largest gain in a single day globally. design their products gence (AI) to scan photos for abusive content In the past two weeks, the
from promoter to IIFL group
The frenzy resulted in massive gains at the Facebook-owned service. stock has crashed more than
for others too. OnePlus, the country’s Instagram’s appeal to the younger The move comes after Facebook also 60 per cent and continues to Shares acquired by IIFL
top premium smartphone firm, was generations, especially the Gen Z increased anti-harassment measures, fol- hit lower circuit on the bours- don’t have any voting rights,
one of the first consumer goods play- (18-21 years) and young millennials lowing a survey that said young victims of es everyday. says the disclosure made
ers to leverage the actor’s influence (22-28 years), remains high online abuse feel social media firms aren’t On Wednesday, shares of by the group
by approaching her to advertise their doing enough to fight the problem. the company closed at ~171,
products on Instagram. And, the firm also brought in cutting edge photo which has opened up new market Instagram chief Adam Mosseri on valuing the company at ~4.3
saw its follower count cross the 1-mil- editing and virtual personality driv- avenues,” said Agarwal. Tuesday said AI is being used to detect signs billion. A month ago, the stock The slide in the stock price pledged with it against a loan.
lion mark from 600,000 within days. en applications to attract young con- “Instagram is definitely one of the of bullying and then automatically flag con- traded at ~445. has hit a few institutional This, along with 4.21 per cent
India is the largest market for sumers, 40 per cent of whom never ubiquitous platforms amongst the tent for review by staff from the image-ori- “This is to inform you that investors, including DSP stake already owned by India
Instagram (with 70 million active upload unedited pictures. digital natives. In addition to sharing ented social network. a missing person complaint Mutual Fund, which held Infoline Finance, takes the
users) after the US (120 million), Mohandeep Singh, senior vice- pictures, we have been witnessing a “This change will help us identify and has been filed with the around 5 per cent stake in the IIFL group holdings in the
according to market research and president, mobile business, Samsung significant rise in Instagram stories, remove significantly more bullying,” Mosseri Mumbai Police by the family company in the June quarter. company to 32.93 per cent.
business intelligence portal Statista. India, said Instagram will increas- which are a more fun and secure way said in a blog post. “It’s a crucial next step, of our managing director. The Other institutional Promoters’ stake in the
Its user base jumped by 84 per ingly influence the way smartphones of expressing themselves. Also, with since many people who experience or complaint is being presently investors include Edelweiss company stood at 57 per cent,
cent in the past one year and cur- are developed. According to Vikas the rise of brand influencers in the observe bullying don’t report it.” Rolling the investigated,” the company Tokio Life Insurance and which has reduced to around
rently houses equal to 31 per cent of Agarwal, General Manager of country, it is fast becoming a potent technology out across the entire social net- said in a stock World Investment 24 per cent after the transfer to
Facebook India’s user base. It OnePlus, Instagram is capable of platform to promote brands,” said work is expected to take a few weeks. exchange notifica- The promoter Opportunities IIFL group.
reached one billion users globally in deeply engaging with its users like Nipun Marya, director, brand strate- In another move, a filter that enables tion on Wednesday. holding in the Funds. The promot- Market players said a large
2018 from 800 million last year. no other social media platform. “The gy, Vivo India. Instagram users to detect and hide bullying “The profes- company stood er holding in the acquisition may trigger an
From product promotion to con- habit of photo sharing is a key driver While Vivo is betting on aug- remarks from Instagram feeds or profiles, sional manage- at 57 per cent at company stood at open offer, as it would result in
sumer connect, handset makers are here. The kind of audience it has — mented reality to stay ahead, Google was extended to comments on live videos, ment team along the end of the 57 per cent at the change of control at Ashapura
increasingly relying on the photo- youngsters, professional photogra- is putting its money on artificially according to Mosseri. with Darshana June quarter of end of June quarter. Intimates.
sharing app from Facebook’s stable. phers and celebrities — makes it one intelligence modules and synchro- In the spirit of inspiring people to be nice Thakkar, who has this fiscal year The latest share- However, the shares
Be it Samsung, Vivo, Apple or of the most important platform.” nised software. to one another, Instagram also added a cam- been with the com- holding in the com- acquired by IIFL don’t have
OnePlus, Instagram is changing the OnePlus, the current leader in Instagram’s appeal to the younger era effect that can be used to adorn images pany since last few years and pany couldn’t be ascertained. any voting rights, says the dis-
way the phone makers conceptualise above ~30,000 price segment, is generations, especially the Gen Z (18- with hearts or the word “kindness” in a vari- has been driving the design A large part of the promot- closure made by IIFL.
and design their products. investing heavily to optimise its cam- 21 years) and young millennials (22-28 ety of languages. “Online bullying is com- and production functions at er holding in the company is Ashapura Intimates got
Take the case of Samsung, for eras and software, apart from coming years), remains high. A recent survey plex, and we know we have more work to do the company, will be oversee- pledged. listed in April 2013 on the BSE
example. The Korean electronics up with innovative functions like revealed that while over 70 per cent of to further limit bullying and spread kind- ing the operations of the com- The recent drop in share SME platform. In June 2015,
giant, which ruled the local market ultra-slow motion videos that can be young millennials are active on the ness on Instagram,” Mosseri said. pany. The board of the com- price has resulted in transfer the company’s shares were
for years, identifies behaviour and edited and uploaded instantly. platform, for Gen Z it’s over 80 per cent Last week, Facebook said its users will pany will be meeting in the of ownership of certain shares migrated to the mainboard.
needs of Instagram users as a crucial Currently, the brand enjoys active — more than Facebook. According to be able to hide or delete groups of comments, first week of November 2018 from the promoter to the The company is currently val-
driver for its innovations in camera support of over 2 million or some 3 marketers, it is the active participation including responses, instead of having to to finalise the necessary IIFL group. ued at ~4.3 billion.
and imaging features. Recently, it per cent of all Instagram users in the by the younger consumers that helps remove them one at a time. The network actions for continuing the In another notification on Incorporated in 2006,
came up with a smartphone with country. “Women engage more drive frequent repeat purchases, is also began letting people report bullying or growth momentum in the Wednesday, IIFL Securities Ashapura Intimates is an
three rear cameras — for wide angle, actively on Instagram, compared to placing Instagram at the top of the pri- harassment on behalf of friends reluctant business and capital require- announced the acquisition of innerwear retailer under the
portrait and low-light photography. It popular platforms like Facebook, ority list for smartphone makers. to complain to the firm themselves. ment,” the notice added. 28.72 per cent stake, which was brand name ‘Valentine’.
E
merging technologies and waves ly from the impact of a breach. Globally, failures and ongoing investments in tinuously strengthen IT governance, requirements for internal cyber secu-
of digitisation have brought in organisations are investing in develop- mitigating risks. review policies, processes and systems rity frameworks. Wednesday — even cutting out the loud
their wake new challenges and ing a comprehensive set of cyber risk Operating model: This refers to to keep pace with changing risks and The government has also undertak- background music that accompanies
exposed organisations to new risks. It management capabilities that cover the clearly articulated roles and respon- attack vectors. en initiatives including the Information announcement of a product's price
is estimated that cyber attacks cost com- entire value chain and ensure the risk is sibilities for cyber risk management Increasing collaboration among Technology Act, 2000. It has set up the during its launch conferences — it
panies an estimated $500 billion in efficiently managed across the ecosys- across the three lines of defence in financial institutions is important. nodal cyber security agency, CERT-In, to seemed to disappoint many. Guenter
damages every year. Today, cyber risk is tem. Some parameters of this risk man- the organisation. Traditionally, financial institutions have respond to computer security incidents. Butschek, managing director and chief
a top agenda item at the board level. agement framework include: Cyber risk playbooks: This includes a operated risk functions in silos. The National Critical Information executive officer, Tata Motors
With the cyber risk landscape changing Cyber risk appetite: This refers to clear- comprehensive set of response mech- However, the nature of unknown threats Infrastructure Protection Centre, is the Worldwide, said the car was so exciting
fast and attacks becoming more fre- ly articulated top-of-the-house qualita- anisms and governance for cyber today requires industry participants to central agency to facilitate safe, secure that the company decided there was
quent, severe and systemic, the primary tive statements and quantitative met- incidents linked to risk identification work together. Industry — wide invest- and resilient information infrastructure no need to use music to make the
concern facing organisations is that rics to define the acceptance level of and remediation. ment into a collaborative initiative for critical sectors of the economy. announcement “attractive”. The price
security breaches to technology and cyber risk. Traditional approaches to cyber risk would be the first step. A recent report of the car starts at ~520,000.
physical infrastructure could lead to Risk quantification: This is about deter- mitigation have failed thus far and by The Depository Trust & Clearing The author is MD & CEO, NSE
Navratri spread
Minister of State for Finance Shiv Pratap
T
he government has appointed a all available members, participating in generating non-violative revenues) or the likelihood of future abuse to refuse to other laws too get fastened. These other
committee to review the work- the proceedings. It is time to think about on the revenues of the relevant business approve the merger. Applying the ratios laws (for example, the Company Law) use has a dedicated social media team
ing of the Competition Act, multiple benches with a minimum size but from territories outside the market and principles involved in combination the term “fine” to refer to punishments that has rarely taken a misstep. Once
2002, and to recommend changes. This of each bench — say three members. in which the violation was committed cases, to cases involving findings of vio- that would attract a stigma. In the such rare occurrence took place on
is an important opportunity — there Instead, it seems the policy intent is to (for example, using worldwide revenues lation due to abuse of existing dominant Competition Act, sections providing for Tuesday after the PM unveiled a
is much to be done. Provisions relating prune the very size of the Commission to as the basis of penalty although the vio- position, can lead to unintended and punishments that may be imposed by statue of Chaudhary Chhotu Ram, an
to market abuse were made effective in just three members. This would be a lation relates to one Indian state). The unfair consequences. The factors adopt- the Competition Commission of India — iconic pre-independence farmer
May 2009, while provisions governing blunder. More minds — say, seven com- result is a fantastic headline about a dis- ed in assessing a proposed combination which is not a criminal court but is explic- leader of undivided Punjab. The PM
combinations became effective in June missioners — would bring in diversity of proportionate penalty, but bad out- can be useful guides in cases involving itly a civil court — provide for imposi- tweeted he was honoured to unveil
2011. Both these areas need intense thought but it may be provided that the comes potentially following the appeal. investigation into alleged abuse; but they tion of a “fine”. This is a gross legal error the statue of a “farmer leader” who
review and intervention. This column Commission would conduct hearings The legislation must lay down the prin- can never be an axiom that reasons for waiting to be corrected — since it inflicts was “a messiah of the Jats”. Congress
will deal with five facets of what cries in benches comprising at least three ciple already made clear by courts, so apprehending future abuse from a com- a skewed incongruence in the wider fab- spokesperson Randeep Singh
for attention. members. This would also ease the that this problem does not recur. bination can be adequate and valid rea- ric of Indian law. The term “fine” has to be Surjewala lost no time and said the
First, the law presents a framework workload. In any case, practically, all Fourth, the law is not quite clearly son for punishing someone. simply changed to “penalty” so that the PM’s description of Ram as a "Jat
that can be quite ambiguous. The sec- members have never been able to hear demarcated to ensure discipline in how Finally, the Competition Act is the Commission can validly apply the civil leader" was evidence of his “narrow
tion on “appreciable adverse effect on every single case. This is a simple but to vary the approach between alleged only statute made by Parliament in standard and impose civil penalty with vote bank politics” and that Ram was
competition” — a vital ingredient for important area of reform on which a market abuse where the accused is which (purely by blatant error and not by appropriate civil consequences, instead a messiah of farmers across India. By
either disapproving of a merger or for simplistic approach must be shunned. already dominant, and potential abuse design) settled legal terminology used of potentially inflicting criminal conse- Wednesday afternoon that tweet had
finding of market abuse — can be inter- Third, the imposition of penalty that may be averted by rejecting or mod- to differentiate between civil and crimi- quences without the checks and balances been deleted from the PM’s Twitter
preted widely. Almost any fact pattern remains an unruly horse. The law right- ifying a proposed combination or merg- nal proceedings have been mixed up. involved in determining whether a crime handle. But Surjewala hit out once
can be force-fitted into or out of the term ly provides for penalty as a percentage of er. In determining whether someone Specifically, under any other law in India, has occurred. more. “Farmers will not be fooled by
— it all depends on what outcome has the revenues from violative conduct — who is a large player in a natural oligop- the term “penalty” is used for civil mon- your slogans invoking their caste.
been decided. There are cases where the the penalty must be imposed on the rel- oly (with very few competitors) is abus- etary punishments. Penalties can be The author is an advocate and independent Please apologise to the farmers of
existence of parallel movements in price evant violative revenues. However, ing the market, one would need to assess imposed by regulators that have been counsel. Tweets @SomasekharS Haryana,” Surjewala tweeted.
Why does Google need hardware? Act now more vulnerable to climate change. There above starvation wages was accepted as
is no escape from the challenges of cli- compensation by prospective employ-
The relatively minuscule sales of the company’s homegrown gadgets like the mate change. The upcoming climate con- ees. The position has changed now and
ference in Poland must give world leaders these organisations are now dependent
Pixel smartphone and a tablet computer limit the spread of its best ideas a roadmap to secure the planet. on candidates not needed in the elite
G David Milton Maruthancode private sector.
SHIRA OVIDE
KING OF THE AD WORLD hardware with both feet when the
Alphabet Inc. unit unveiled its first Share talent
The CAG, since the Vinod Rai days,
and the RBI during the current decade
The Google unit of Alphabet
S
o many internet and software self-branded smartphone two years have taken several initiatives for in-
companies make gadgets now. generates the vast majority of its ago, and I’m still not sure what the This refers to Archis Mohan’s report “CAG house skill development. But with the
Amazon, Microsoft, Google and revenue from selling digital company is doing. meet to focus on accounting in the digi- lines between different streams of reg-
Facebook all make some type of inter- advertisements Like Amazon and Microsoft, it tal era” (October 10). In addition to sub- ulatory norms, audit, and inspection
net-connected computing gear. Even seems as if Google is trying to spread stantial resources, considerable efforts getting blurred, it is imperative that all
Uber has started to engineer its own Share of its promising ideas on computer fea- on the part of hundreds of officers and professionals speak the same language
electric scooters. Google's 88.7 87.0 86.2 tures and interactions. But it’s not clear The report by the United Nation’s staff go into organising conferences like forgetting even the public sector-private
The one thing all these newcomers revenue from why Google can’t press its best ideas Intergovernmental Panel on Climate the once-in-two-years Attorney General’s sector divide. As the government and
have in common is that their hardware advertising through Android, the software brains Change (IPCC) has come as a stark warn- meet now being held in Delhi. Celebrity the public sector organisations are not
businesses are irrelevant. That’s (figures in %) of more than 1 billion new smart- ing. Unless drastic action is taken to lim- invitees make speeches that express con- likely to get a level playing field and
important to remember with Google’s
2016 2017 2018 phones sold every year, or through the it global warming to 1.5 degree Celsius cerns and anxieties, and make intelligent compensation packages comparable
introduction on Tuesday of the latest Note: Figures for 2018 are through the first six months. company’s ubiquitous smartphone above pre-industrial levels, as against 2 suggestions. The structured sessions with the private sector anytime soon,
Source: Alphabet disclosures
in its growing line of gadgets, including apps, Chrome web browser, YouTube degrees Celsius agreed on, the future of deliberate and come up with several find- talent exchange is a possible option. The
a new model of its Pixel smartphone, a on the web and more. the planet will be imperiled. The very ings and recommendations for the suggestion is, consider a floating
tablet-like computer and a voice-acti- long ago, sold 2.7 million motion-track- Google technology is already every- survival of humans and other life-forms improvement of the functioning of the exchange of executives at all levels up to
vated video screen for the home. ing gadgets in the same period. where, and it didn’t need its own hard- hinges on the efforts made now. It is no system. How far these suggestions and a certain percentage, among organisa-
A central fact gets lost in the hard- Yes, Amazon’s hardware sales are ware line to make that happen. To the hyperbole to say the accumulation of car- recommendations are taken seriously by tions willing to participate in the
ware hype at Google, Amazon and oth- growing and Fitbit numbers are extent that there is special sauce when bon in the atmosphere at the current rate the government and political leadership exchange programme. For example: An
er tech giants: These hardware neo- shrinking, but you get the point. For Google designs itself a unified package due to acceleration of the carbon-inten- responsible for providing legislative sup- officer from the CAG can work with the
phytes are definitely not setting sales most software or internet tech of software, computer chips and com- sive economy is a recipe for the end of the port is a matter of opinion. RBI as one from the RBI works with the
records. And the strategic value of empires, hardware is a niche hobby, puting hardware on which company human civilisation itself. Till the opening of the economy, in CAG for a year or two.
wading into well-established or novel and it will remain so for the foresee- technology runs, the relatively dinky Extreme weather patterns and events India, the governments and organisa- M G Warrier Mumbai
hardware areas is uneven at best. able future. sales of Google’s homegrown gadgets advertise the reality of climate change. tions like the Comptroller and Auditor
In 2017 and the first half of this year, That leaves the question of why limit the influence of the company’s The phenomenon is real and not a hoax General of India (CAG), the Reserve Letters can be mailed, faxed or e-mailed to:
Google shipped about 5 million Pixel tech companies that built fortunes on most promising experiments. as climate sceptics like US President Bank of India (RBI) and public sector The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
smartphones worldwide, according to areas other than computing hardware Alphabet’s Google unit generates Donald Trump say. The existential threat undertakings (PSUs) including banks
New Delhi 110 002
the research firm IDC. Apple Inc. sells are bothering at all. I wasn’t sure about 86 percent of its revenue from adver- posed by climatic disruption calls for had access to a talent pool in which can- Fax: (011) 23720201 · E-mail: letters@bsmail.in
as many iPhones in about eight days as Microsoft’s Surface line for a long time, tisements on web searches, YouTube reduction in coal-fired energy and oil didates looked for job security with a All letters must have a postal address and telephone
Google did in 18 months — and even but I have been convinced that the videos and other spots all over the dig- consumption, greater reliance on renew- long-term perspective and anything number
Apple has a relatively small minority company successfully spurred new ital world. Google’s dominant and able sources of energy such as wind and
market share in smartphones. ideas in what a computer could and highly profitable ad empire gives the solar power, sustainable land manage-
Small numbers aren’t confined to should be, even as Microsoft sells rel- company plenty of room to branch out ment and changes in the modes of > HAMBONE BY MIKE FLANAGAN
Google, either. Journalists like me atively few personal computers on its into new areas, and today’s hobbies in transport and in food habits. Climate
can’t stop talking about the “runaway own. I’m not completely sold on the areas such as life sciences, driverless justice demands that the affluent
success” of the Echo devices, strategic merits of Amazon’s Echo cars and cloud computing could very countries that caused the climate crisis
Amazon.com Inc.’s rapidly expanding gadgets, but it’s clear that the compa- well become the foundations of should adhere to common but differen-
lineup of voice-activated home doo- ny wants a pole position if computers Alphabet’s future empire. But Google’s tiated responsibilities.
dads. Amazon sold about 3.6 million of controlled by voice become the preva- best ideas in consumer computing As inhabitants of this part of the
the two most popular Echo models lent form of human interaction with can’t become dominant from leaning world, we have more reasons to worry
from April to June, Strategy Analytics machines. on the company’s hardware. and push for action to mitigate global
estimated. Fitbit, a company that jour- As for Google, I was unsure of the warming. Topographical features such
nalists like me stopped talking about merits of the company jumping into © 2018 Bloomberg as the Himalayan glaciers and the lengthy
coastline make the Indian sub-continent
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
>
OPINION 11
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM.
W
ednesday’s order of the three-judge bench of the Supreme Court, Proportion of value added 50 50 20 20 20 20 20 20
led by Chief Justice Ranjan Gogoi, on the Rafale deal left much to Such a low value added proportion is quite com-
at international prices (%)
be desired. Hearing writ petitions against the defence aircraft mon in industrial activities. The tariff rates appli-
deal announced by Prime Minister Narendra Modi and then
Effective rate of protection 20 30 60 20 40 160 100 -80 cable in scenario B are assumed unchanged. In
this case the ERP shoots up to 60 per cent, three
French President Francois Hollande in 2016, the apex court only asked the gov-
protection
cent, for both input and output (Scenario E).
date for the next hearing. While the court’s demand is a setback for the govern-
The next two scenarios are the most worrisome
ment given that it has refused to divulge crucial details about the deal despite and, regrettably, quite common. In scenario F the
mounting public and political pressure, it does not address critical issues. output tariff rate (40 per cent) is assumed signifi-
The Rafale fighter is a twin-engine medium multi-role combat aircraft man- cantly higher than the input rate (10 per cent),
ufactured by French aerospace company Dassault Aviation, and India’s purchase leading to an ERP of 160 per cent, four times the
of 36 Rafale aircraft in a flyaway condition is part of a process of upgrading the Even relatively moderate tariffs of around 20 per cent can be highly NP of 40 per cent! Similarly, in scenario G, even
with a modest output tariff rate of 20 per cent one
air force’s equipment. However, the deal has been mired in one controversy after protective and distortionary gets an ERP of 100 per cent, five times higher than
another. To begin with, the Opposition alleged that the government had weak- the NP, when there is zero tariff on the input. Both
ened the Indian Air Force (IAF) by scuppering a 126-aircraft contract, which was n a recent column (Wanted: Better trade poli-
I
Specifically, ERP for a product or activity is defined these scenarios and the earlier scenario C show
close to finalisation when the Congress was in power, and instead purchased just cies, August 9, 2018), I lamented that the revival as: ((value added in domestic prices)-(value added how easy it is to have high ERPs even when NPs
36 Rafales while short-circuiting due procedure. Moreover, the government of higher protective customs tariffs over the in international prices))/(valued added in inter- look quite “moderate”.
has been accused of paying a much higher price without necessarily obtaining past year (especially in the February 2018 Union national prices) x 100. Consider an example where Sometimes, the output tariff is lower than the
budget and several times since) has been a dam- a product (say, cotton garments) is priced at ~100 input tariff. In scenario H when the output tariff is
a superior fighter plane. There have also been accusations of crony capitalism aging reversal of the cross-party reform commit- per unit at international prices, its sole (tradable) zero, the input tariff is 20 per cent and the pro-
against the government as a private group has been chosen, ignoring public sec- ment to reducing our tariffs to “East Asian levels” intermediate input (say, cotton fabric) costs ~50 for portion of value added at international prices is 20
tor Hindustan Aeronautics Limited, for discharging offsets related to this deal. that had prevailed since 1991. I pointed out that the amount used in producing a garment and all per cent of the unit price, the ERP becomes minus
The government’s stand on Rafale has been perplexing. Last year, the Union such tariffs raise domestic costs and prices, hurt tariffs are zero. Thus value added at international 80 per cent! This illustrates how damaging tariffs
defence minister promised to reveal what Dassault had bid in the cancelled ten- exports, foster inefficiency, encourage further tar- prices is ~100-Rs 50= ~50 and so is the value added are for exports, which typically do not enjoy pro-
der and what India eventually paid. But she subsequently backtracked on iff hikes, invite retaliation and generally weaken at domestic prices. Both NP and ERP are zero by tection or subsidies; that is the “output tariff” is
the development of an efficient definition. (The currency does zero and the input tariff is positive.
grounds of confidentiality. This created confusion and gave an impression that and competitive manufactur- not matter; so “~” will be These scenarios illustrate some key proposi-
the government had something to hide. These notions strengthened after for- ing sector. They hurt trade and dropped henceforth). tions for the design of customs tariffs if they are to
mer president Hollande, with whom the Indian PM signed the deal, said that the do little to reduce large trade Now assume tariffs are be deployed at all:
private sector partner was India’s choice. Mr Modi’s continued silence only and current account deficits. imposed at the rate of 20 per 1) Tariffs , when deployed, should be low and
worsens the situation for the government. The fact is that in a democracy the gov- Some have noted that most cent on both the output and uniform across inputs and outputs.
tariff increases thus far have input. The domestic price of the 2) Since variations in value added proportions
ernment must account for the expenditure of public funds, and shirking that
been modest, usually not rais- product goes up to 120, the are inevitable across industries, even small dis-
duty by citing national security would set a bad precedent. ing duty levels to above 20 per domestic cost of the necessary persion in tariff rates can lead to large variation in
No questions have rightly been raised about the capabilities of the Rafale jet, but cent and hence may not lead input goes up to 60 and value ERPs across industries.
the corruption allegations have persisted. The unfortunate aspect is that the apex to significant economic dam- added at domestic (tariff-inclu- 3) Even low product tariffs can lead to very
court has not asked the government to come clean on the deal. A fair part of the rea- age. This is wrong, because sive) prices rises to 120-60=60. high rates of effective protection, depending on
son for the concerns about Rafale relates to the process adopted, but even here the even relatively moderate tar-
iffs of around 20 per cent can
A PIECE OF MY MIND Hence the ERP, which was zero
pre-tariffs, rises to (60-50)/50 x
value addition proportions and input tariff rates.
4) Tariffs on inputs typically lead to negative
details that have been asked for will be available only to the court. This is unfortu-
be highly protective and dis- SHANKAR ACHARYA 100=20 per cent, equal to the (sometimes highly negative) effective protection
nate as there is no reason why the government should not be asked to disclose the tortionary. To understand this rate of NP. This is Scenario A (that is, discouragement) of export items, unless
facts, figures and rationale needed to address the allegations against the deal. one needs to grasp the concept (see Table). A key implication is such tariffs are rebated.
of “effective rate of protection” (ERP) which comes that when tariffs are imposed at a uniform rate (20 5) The complexity and variation in effective
into play whenever there are (tradable) interme- per cent in this case), there is no difference rates of protection, even with low nominal tariffs,
W
hen the Sexual Harassment of Women at Workplace (Prevention, ERP focuses on the protection afforded to val- the output (20 per cent), which is a very common or minimised. Unfortunately, my 15 year experi-
Prohibition and Redressal) Act, was passed in 2013 it was consid- ue added in producing a commodity. This con- pattern in our customs duty structure. This results ence in the Finance Ministry suggests that cru-
ered a significant expansion of the Supreme Court guideline of 1997 trasts with “Nominal Protection” (NP), which sim- in a ERP of 30 per cent, substantially higher than cial concepts, such as ERP, are not well under-
ply refers to the tariff rate on the product/output. the unchanged NP of 20 per cent. Scenario C is stood in the tariff-making bodies of government.
dealing with sexual harassment in the workplace. The #metoo
A high ERP means that factors of production (cap- especially instructive: the proportion of valued
movement that has gripped the media and the entertainment industry over the ital, labour , land) would be attracted to the pro- added in total unit price/cost (at international The writer is Honorary Professor at ICRIER and former
past two weeks suggests that the law urgently requires further expansion. The duction of that commodity or sub-sector, while a prices) is assumed to be 20 per cent, instead of Chief Economic Adviser to the Government of India.
2013 Act expanded the ambit to cover women in any working environment – low or negative one would not attract resources. the 50 per cent assumed in previous scenarios. Views are personal
from domestic helps to those in the unorganised sector and covers clients and
customers. Critically, it also expanded the sphere of the workplace from the
I
should tackle questions raised by the current #metoo tweet-storm. CICI Bank’s former managing director & chief with this paper at that time. It’s blatantly unfair to suggest she or her hus-
The biggest and most obvious gap in the law flows from retrospective accu- executive officer Chanda Kochhar was quite The script, of course, didn’t work out as she band did anything wrong, as nothing has been
fond of talking about her 4C strategy (CASA or wanted, as the bank got into big trouble after bad proved as yet, but it’s amply clear that she under-
sations. The Act offers no clues to how organisations should proceed when, say, current and savings account deposits which are loans ballooned, resulting in huge provisioning. estimated the seriousness of the charges, which
an extant employee stands accused of past transgressions by women with no inexpensive; credit quality; cost; and capital con- It was almost a repeat of the problem ICICI Bank centred around the dealings between her hus-
immediate link to the existing company. There can be little argument that servation). The 4Cs indeed helped the bank get faced when she took over. The task was formida- band Deepak Kochhar and Venugopal Dhoot, the
these, too, should be investigated, not least to send reassuring signals to other back on track. The problem she inherited in 2009 ble, but she perhaps could have set it right if she controlling shareholder of the Videocon group —
women employees within an organisation. The current #metoo tweet-storm, had forced her to go in for a radical reversal in the had more time. which subsequently secured, and defaulted on
bank's strategy. She toned down the earlier exu- The real problem lay elsewhere. Ms Kochhar ~32.5 billion of loans from ICICI Bank. Mr Dhoot’s
however shrill the tonality, reflects a greater sense of empowerment that is cur-
berance (30-40 per cent annual growth in credit should not have stopped by adding just a fifth `C’ apparent generosity towards the spouse of a top
tailed by an understandable hesitation to file complaints with the police. The law, portfolio with consumer loans to her strategy. Somewhere banker did raise serious questions about conflicts
therefore, needs to move in sync with the times. Common sense dictates an obvi- making up two-thirds of its along the way in her long of interest. Several other questions were raised:
ous path of action in such cases, and some organisations have responded by total book) and muscular career with the bank, she for- For example, did Ms Kochhar recuse herself from
mobilising the internal complaint committee mechanism to address backdat- image (bank employees forgot got the sixth `C’ – that lead- the meetings where loans to Videocon were sanc-
ed external claims. But the law should not rely on the subjectively variable ele- that they had to be humble ers, like Caesar’s wife, must tioned? These were all important questions,
and listen to customers). Ms also be above suspicion. And wrongfully dismissed by Ms Kochhar in the initial
ment of collective organisational wisdom or the accumulation of convention to
Kochhar didn’t sit on her ego unfortunately, this is where stages, at least.
redress this use. Explicit steps to deal with such contingencies – including, for and made ICICI Bank a cau- she and the bank faltered big The second mistake was hanging on to the
instance, deposing non-employees – would go a long way towards reassuring tious entity. So risk was out time even though they had chair even after the damage was done. She
women that the Indian legal system, at least, takes their rights seriously. and profitability was in, even enough time to come clean. should have left immediately after the bank
The fact is that for countless ordinary women in the unorganised sector – and if it meant reduction in the The fact of the matter is that appointed the Srikrishna Committee to look
that includes in politics – the path to redressal is non-existent. The laws stipulate balance sheet size. There is no reports about conflict of inter- into the charges against her. All that she did
setting up local complaints committees in every district for organisations with 10
doubt that she indeed cali-
brated a huge change in strat-
POWER POINT est were doing the rounds for
over two years before they
was to proceed on leave. Even more surprising
was her decision to make herself available for
or fewer employees. Currently, their existence is about as evident as the Asiatic chee- egy, got the team to buy into SHYAMAL MAJUMDAR finally became public and hit reappointment on the ICICI Securities board.
tah in India. Where corporations are liable to fines for not setting up complaints com- the vision and executed it the Kochhars like a storm. The bank, which has an 80 per cent stake in the
mittees, there are no penalties for districts that lack such set-ups. In the same vein, well. Though the charges based subsidiary, backed her fully. All this happened
the Act needs to acquire some balance: It rightly offers protection to women who In May, 2014, when she began her second five- on a whistleblower’s letter were directly against in July, indicating neither she nor the bank had
complain; the same rights should be extended to men who stand accused. Ensuring year term, Ms Kochhar added a fifth ‘C’ — credit her and family, Ms Kochhar did not even care any intention of letting go. So what prompted
growth — to her strategy mantra. The new strat- even once to tell her side of the story to the out- her to throw in the towel just two months later?
the principles of natural equity is the best guarantor of women’s rights. Lastly,
egy was to expand not by taking on more risk, but side world and instead left the job to then chair- What changed in the intervening period? There
beyond the changes required in the Act per se, the latest series of episodes have also by building a base of loyal customers and shun- man and a couple of insiders. And all that they are no clear answers to that.
underscored the importance of leadership in the workplace. A crucial reason why ning the pell-mell marketing of credit card and did was to be dismissive about all the charges. Ms Kochhar did play a sterling role in
several women have resorted to public naming and shaming is the deep-set belief personal loans to newcomers that so endangered Media silence after that perhaps made the leader India’s financial sector, but it’s sad that she
that formal channels are unresponsive. This needs to change. Leaders across work- the bank just five years ago. "We are not just back and her team complacent to such an extent that would now be remembered more for this con-
places must ensure that the formal system is both sensitive and responsive enough to growth; we are now actually in a position to when the avalanche of allegations resurfaced, troversy rather than what she had achieved.
grow 2-4 per cent higher than the industry with- the bank just didn’t know how to respond. That That’s the price a leader has to pay for being
for female employees to feel confident in registering a complaint.
out diluting profitability or picking up wrong explains the hurried clean chit by the board a less mindful about the need to be seen as being
credit risks," Ms Kochhar had said in an interview day later. The strategy simply boomeranged. ‘above suspicion’.
Investor
TSI P13
Dr Reddy’s, which is up about 19 per cent after its June
quarter results, gained 1.5 per cent on Wednesday after
USE RALLIES TO
the firm got an approval to launch the generic of EXIT WEAKER
MUMBAI |
THURSDAY, 11 OCTOBER 2018
cholesterol-lowering drug in the US. This may add $40- NBFC STOCKS:
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launch of bigger products is crucial to drive earnings EXPERTS
WWW.SMARTINVESTOR.IN.FOR INFORMED DECISION MAKING <
M
utual funds are in a relatively 3 month 6 month 1 year agement,” said the official. Bank (Bandhan) have seen 25,000-30,000 in case of oth-
better position to navigate liq- Principal Cash Management Fund -6.8 -5.1 -1.9 MFs typically do not go below A-rat- some recovery this week, fol- er private banks. This indi-
uidity and credit setbacks than ed papers but they can technically go up lowing the management's cates a good opportunity to
they were a few years ago owing to a Union Liquid Fund -1.7 0.1 3.4 to BBB, which is considered investment optimistic views on growth expand its customer base.
slew of regulatory changes effected in DHFL Pramerica Insta Cash Fund 1.2 2.4 4.4 grade. Going below this requires per- after restrictions over branch "The Q2 result is in line in
the past few years. mission from the fund’s trustees. Debt expansion by the Reserve with expectations.
Reliance ETF Liquid BeES 1.4 2.7 5.4
“On the whole, the system has schemes investing in lower-rated debt Bank of India (RBI). Good Considering the customer
become much less risky in terms of both Taurus Liquid Fund 1.4 2.7 5.4 papers run the risk of sudden down- results for September quarter addition potential and strong
its liquidity and credit profile,” said R Sahara Liquid Fund - Fixed Pricing Option 1.4 2.6 5.4 grades or defaults. (Q2) have added to gains, with power in micro credit, we do
Sivakumar, head – fixed income, Axis Liquid funds, which primarily invest the stock surging 6 per cent not see material impact on
Mutual Fund. Reliance Liquid Fund 1.6 3.2 6.2 in money market instruments like cer- on Wednesday. led to a 100 bp expansion in Bandhan's growth due to the
The pain from holding IL&FS papers, HSBC Cash Fund 1.6 3.2 6.3 tificate of deposits, commercial papers Analysts, thus, now net interest margin to 10.3 per RBI's action in the near term.
for instance, would have been much Quantum Liquid 1.6 3.2 6.3 and term deposits, have become less believe Bandhan’s short-term cent. Also, with the current tight-
more had it not been for the regulator’s risky as well. growth may not get impacted The rise in share of low- liquidity situation in non-
revised sectoral cap norms, say experts. Franklin India Liquid Fund 1.6 3.3 6.4 After 2013, several funds are putting much due to restrictions on cost current and savings banking financial companies,
In February 2016, the Securities and Source: Value Research their liquid funds to periodic stress tests branch expansion, given the account (CASA) deposits ratio Bandhan will benefit in terms
Exchange Board of India (Sebi) restrict- to gauge the impact on these schemes in bank's ability to add cus- to 37 per cent as of September of credit growth as a bank,"
ed investments in debt instruments After 2013, several MFs are putting their case of sudden redemption pressure or tomers. If Bandhan does live 2018, from 28.2 per cent a year says Kajal Gandhi, analyst at
issued by a single issuer to 10 per cent of liquid funds to periodic stress tests to significant changes in credit quality. up to expectations, its ago, reduced the cost of ICICI Securities.
the scheme’s net asset value from 15 per gauge the impact in case of sudden This was done after several large liq- investors too will benefit. funds. Hence, net profit Stock valuation is likely to
cent earlier. The norms were revised fol- redemption pressure or significant uid schemes saw significant outflows A 64 per cent year-on-year surged 47 per cent YoY to ~4.9 remain at a premium given
lowing the default by Amtek Auto on changes in credit quality after the RBI raised short-term rates to (YoY) rise in loan book to billion. the superior margins, return
its debt obligations in 2015. Two of JP defend the rupee in July 2013. ~317.3 billion in Q2, supported Bandhan expects to sus- on assets (4.3 per cent) and
Morgan’s schemes were invested in the but it still relies on public rating. The mittee had also deliberated on making Until 2009, liquid funds were by 27 per cent rise in the num- tain its performance with profitability, she adds.
company’s debt papers, with JP Morgan tracking for a AAA- or AA-rated paper is it mandatory for fund houses to form allowed to hold one-year papers and ber of customers, pushed up focus on customer acquisi- A caution, though, is that
India Short Term Income Fund’s hold- typically less than lower-rated papers, internal risk assessment committees even invest in papers exceeding the Bandhan's net interest tion (15-18 per cent annual it has ~3.9-billion exposure to
ing exceeding 15 per cent of its corpus of and the former needs to be tracked more comprising key fund officials and tenure. Now, they can only invest in income (NII) by 55.4 per cent customer growth target). IL&FS, which has not yet
~4.3 billion at the time. frequently,” said Kaustubh Belapurkar, external consultants. The functioning securities with a residual maturity of 91 YoY to ~10.8 billion. This, According to the manage- been provided for. This may
The regulator has also been urging director, fund research, Morningstar of the committee was to be directly days or less. Reduction in tenure of along with a 40 basis point ment, Bandhan has 2,700 bor- increase provisioning, which
fund houses to reduce dependence on Investment Adviser India. monitored by the trustees. The regu- papers has significantly reduced risks (bp) fall in the cost of funds, rowers per door-step service could weigh on profits.
external credit rating agencies and set “Some of the large fund houses that lator, however, did not go ahead with associated with these funds, said
up their own credit teams for better due were able to put a strong credit process making this requirement mandatory. experts.
diligence. They have to periodically dis-
close portfolio of debt schemes and
in place have been able to weather the
recent liquidity crisis better than oth-
“The industry is still trying to learn
from its mistakes. Sebi ought to draft Strong growth in base business
powers Zee’s show in Sep quarter
details of downgraded securities. ers,” added an industry official, request- guidelines, enumerating the size of the
“The industry has increased ing anonymity. credit rating team along with experi-
resources on the credit research side Last year, Sebi’s MF advisory com- ence and qualifications. Funds should
.
MUMBAI | THURSDAY, 11 OCTOBER 2018 THE SMART INVESTOR 13 <
S
tocks of non-banking finance com- money into the short side by
MOTILAL OSWAL SECURITIES panies (NBFCs), among the biggest buying puts, selling calls and
On the back of $1.6-billion deal win in banking, financial serv- losers in the recent carnage, undoubt- going short in the stock futures
ices and insurance (BFSI) alone, we expect high growth momen- edly benefitted from Wednesday’s market segment. This creates a
tum from the largest revenue-contributing vertical. The execu- rally, as they gained up to 16 per cent. momentum effect where
tion of recent deal wins and seasonal strength would ensure The good spell did lift these well above INSIGHT prices fall even further.
maintenance of revenue growth trends. We expect 4 per cent their 52-week lows. The third category is the
quarter-on-quarter (QoQ) growth in constant currency (CC) Yet, experts urge investors to use such DEVANGSHU DATTA committed long only buyer
terms. Our Ebit (earnings before interest and tax) margin esti- ralliestoexitfromtheweakernames.“Asliq- who never goes short. This
mate stands at 26.1 per cent - up 100 basis points (bps) QoQ - pri- uidity crunch is here to stay, at least in the The Nifty has dropped over includes some domestic insti-
marily led by rupee depreciation. The profit after tax (PAT) is mediumterm,earningsarelikelytobeweak 1,300 points from its peak, a tutional investors and some
pegged at ~77.9 billion - up 6 per cent QoQ - led by a sequential forthesector.Investorsshouldusereliefral- retraction of 11 per cent. foreign portfolio investors, as
growth in the operating parameters. lies such as Wednesday’s to exit from the Smaller stocks are down even well as some retail investors.
weaker NBFC stocks,” says Pankaj Pandey, FACTS IN FIGURES more. Importantly, all the This category will continue
EMKAY GLOBAL head of research at ICICI Securities. Price in ~ Change (%) major stock indices, the Nifty, investing even if the market
------------------------------------------------------------ ------------------------------------------------------------------
We expect a gain of around 140 bps on operating margins on This comes even after Tuesday’s assur- Sensex, Nifty Next 50, Nifty falls through the next several
Company 52-wk As on 1-day From 52-wk
a sequential basis due to wage/visa impact normalisation and ance by the country's largest lender, State 500, and the Midcaps, months or longer. The logic is,
rupee depreciation. Key monitorables include a demand out- Bank of India (SBI), that it planned to buy
high 10 Oct high Smallcaps , etc, have broken at some stage prices will hit
look, especially in the large US BFSI clients, operating margin loans worth ~450 billion from NBFCs, as HDFC 2,051 1,739 1.5 -15.2 down below their respective bottom and if you keep buy-
levers, if any, and commentary on digital. compared to ~150 billion last year. Bajaj Finance 2,995 2,266 9.9 -24.3 200-day moving averages. ing, you will reduce your aver-
The cautiousness has reason. Experts This indicates a broad bear age acquisition prices since
EDELWEISS SECURITIES say the impact of tight liquidity on prof- Bajaj Finserv 7,200 5,955 9.8 -17.3 market which reflects bearish you will have bought at the bot-
We expect revenue growth of 4.5 per cent QoQ in CC terms, driv- itability and fear of a likely asset-liability Indiabulls Housing Finance 1,439 978 3.6 -32.0 sentiments across most tom or near it. Eventually the
en by ramp-ups in major deal wins and a robust demand envi- management (ALM) mismatch would Bajaj Holdings & Investment 3,250 2,602 2.9 -20.0 investor classes. Sector-spe- market will bounce, and the
ronment. However, the dollar growth is to be restricted to 3.3 per weigh on many of these stocks. Rising cific indices are also down to long term returns will be okay.
cent. Ebitda margin is expected to rise 180 bps QoQ on rupee interest costs over the past few months L&T Finance Holdings 214 134 8.2 -37.2 bear market territory. This is fine if you can consis-
depreciation (90 bps), absence of visa costs (40 bps), and opera- was already seen to impact the margins of Indiabulls Ventures 820 375 -5.0 -54.3 This is the kind of move tently pursue the strategy,
tional efficiencies (50 bps). Commentary on spends by BFSI and NBFCs, while pressure on asset quality that triggers different kinds of however long it takes for the
Aditya Birla Capital 214 110 5.2 -48.4
retail clients, growth in digital, and outsourcing in Europe and was also inching up. behaviour in different investor turn around. That requires
Asia-Pacific are key monitorables. Amongthosewhichcouldwitnessweak M & M Financial 538 406 9.8 -24.4 classes. The vast majority of courage and deep pockets
investor sentiment are Cholamandalam Shriram Transport Finance 1,671 1,081 13.2 -35.3 retail investors are traders by since bear markets can knock
KOTAK INSTITUTIONAL EQUITIES Investments,DewanHousingFinance,Gruh nature. They are looking for 50 per cent off peak prices and
Note: Price rounded off; list of top 10 NBFCs according to market cap
We expect CC revenue growth of 4.1 per cent and cross-cur- Finance, Indiabulls Housing and Repco Compiled by BS Research Bureau Source: Exchanges investments that bear markets can
rency headwind of 105 bps. Growth will be led by seasonal Home Finance, say analysts. will yield quick The committed long last years.
strength and ramp-up of large deals won recently. All verticals The recent developments have in fact returns while investors will make The bear mar-
will report healthy growth. We expect net sales and PAT growth pushed brokerages to slash their earnings appear more attractive over NBFC stocks are better placed to tap low-cost funds, being “long only” money 2 or 3 years ket could intensi-
of 7 per cent and 10.2 per cent. COMPILED BY SWATI VERMA expectations for the segment by seven to 15 inthemediumterm,”saysSiddhartPurohit thanks to their deeply penetrated current by inclination. down the road as fy, given a combi-
percentforFY20.“Weexpectthemarketsto of SMC Global. “Bank stocks have been less and savings account deposits. More, if They lack the they reduce their nation of poor
be more conservative in lending to NBFCs, affected in the recent correction, reflecting growth for NBFCs slows, the lending com- sophistication or acquisition prices. macros, and polit-
RESULTS TODAY: STREET EXPECTATIONS which is likely to push up pricing (interest
costs),” say analysts at Morgan Stanley.
their strength to tap market funds.”
Morgan Stanley, Nomura and CLSA
petition in retail loans could diminish for
banks, helping them increase their lending
the courage They may suffer
required to hold huge losses in the
ical uncertainty
that will last until
Quarter ended September 2018
Net sales Net profit A bigger worry is a decline in their loan have also expressed a preference for bank- margins. “This could help drive up rev- a long portfolio interim, but this at least middle of
Broking houses ~million % chg* ~million % chg* growthrate,onekeyreasonwhyNBFCstrad- ing stocks. enues for retail-funded (meaning, from through a big strategy depends on 2019. The global
TCS ed at valuations much higher than even the Another factor is that the banking sector loans to individuals) banks,” say analysts at bear market. not booking losses negatives - higher
top-notch banks. For now, Bajaj Finance, a isseenatthecuspofastrongbadloanrecov- Morgan Stanley. They will either oil prices, a pro-
Edelweiss Securities 365,850 19.79 80,208 24.43 niche consumer lender, and HDFC, market erycycle.“Overall,banksareexpectedtosee ICICI Bank, IndusInd Bank, Axis Bank, sell their holdings, or reduce tectionist US, Brexit, tighten-
Kotak Securities 366,711 20.07 80,792 25.34 leader in housing loans, emerge as top ana- a robust drop in gross non-performance HDFC Bank and SBI are the top picks for future exposures, while hold- ing money supply, etc, will not
Motilal Oswal 364,394 19.30 77,907 20.90 lysts’ picks in the NBFC space. assets as resolutions pick pace,” analysts at brokerages in the banking space. A valua- ing onto current portfolios. go away. The momentum
Emkay 361,525 18.37 79,685 23.62 Apart from these two names, experts Kotak Institutional Equities say in their tion reset of 20-25 per cent after the recent This will affect both direct traders who go short will stand
say now is a good time to mop shares of September quarter earnings preview. stock price correction also boosts their equity holdings and also equi- to make a good deal of money
*Change over y-o-y; the list comprises Nifty companies. The above are results
estimates of some leading research houses Source: Research Reports banks, “On a more sustainable basis, banks Also, in a tight liquidity situation, banks appeal. ty fund behaviour. as prices go lower.
We should see reflections of The committed long
this in changing mutual fund investors will make money 2 or
allocations in October. Many 3 years down the road as they
Downgrade risks mount for earnings outlook on oil, rupee equity focused SIPs which reduce their acquisition prices.
comeupforrenewalwillnotbe They may suffer huge losses
renewed, or will be renewed in the interim but this strategy
NUPUR ACHARYA But history suggests the higher import bills. Add to expects earnings growth for by a systemically important at ICICI Securities, wrote in a with smaller quantum. It’s depends on not booking loss-
Mumbai, 10 October divergence won’t extend for that the tighter local-funding Nifty companies to be 2.8 per non-banking finance compa- note this week. “There could worth noting that the mini- es. So they must hold and add,
long, and the growing stress conditions, and profit cent on year in the fiscal sec- ny aggravated the sell-off in be a downward revision in mum period of a SIP is six to their holdings.
The rupee’s longest rout since in Asia's third-largest econo- estimates begin to appear ond quarter, much slower than stocks, which were already earnings across sectors post months,andasignificantnum- The uncommitted long
2000 and oil’s surge to a four- my may soon translate into optimistic. the 13 per cent expansion seen reeling under a tumbling the adverse movement in berofSIPsweretakeninAprilat only players will lose huge
year high have put earnings lower projections. “Key factors are rising in the April-June period. rupee and elevated prices macro parameters.” the beginning of the fiscal. sums. First, they will not add
estimates of Indian companies Not that a weaker rupee is input costs, volatile crude Demand in the world’s of crude oil — the nation’s Here’s what brokerages LowerSIPsandhigherredemp- to their holdings as prices fall,
at the risk of downgrades. bad for all Indian companies prices, rupee depreciation and fastest-growing major econo- top import. and investors expect from the tions will create some selling so their acquisition prices
Analysts have boosted the — exporters including soft- tightening liquidity, all cata- my is cooling after back-to- “Rupee depreciation and September-quarter results pressures for equity mutual remain high. Second, this class
average profit forecast for NSE ware producers and drugmak- lysts for market de-rating,” back rate increases by the cen- higher crude prices will fur- season that kicks off Thursday funds, which will be hard since tends to sell close to the bot-
Nifty50 Index companies by ers will gain in local-currency analysts led by Dhirendra tral bank, prompting policy ther widen the current- with Asia’s top software the industry has already been tom as prices fall and patience
9.2 per cent this year, shrug- terms. Still, the net impact on Tiwari at Mumbai-based makers to pause the hiking account deficit and pose a risk exporter Tata Consultancy adversely affected by poor runs out. Unfortunately most
ging off a 12 per cent slump in the broader corporate sector Antique Stock Broking wrote cycle in October despite the of higher inflation,” Pankaj Services. returns in the debt segment. retail investors are in this class.
the gauge since August. may be negative because of in a note. The brokerage currency’s free fall. A default Pandey, the head of research BLOOMBERG Another class of “investor”
COMMODITIES1
>
METALS ($/tonne)
International
Price %Chg# Price
Domestic
------------------------------------------------------------------------------
%Chg#
------------------------------------------------------------------------------
P
lastic manufacturers are set tic products. al prices. Karnataka large stock of iron ore and past few months has con-
Zinc 2,691.5 1.3 3,233.6 1.2 Iron ore fines 2,367 2,800*
to raise their prices by two to Brent crude has become costlier A report from ratings steel to absorb a capping tributed. While the global
Gold($/ounce) 1,186.2* -5.5 1,301.4 -5.2 three per cent this month, on and the rupee has also fallen by 7.7 agency CRISIL says the price in Chhattisgarh regional price,” the report price of 62-Fe grade ore
top of earlier rises, to offset cost per cent since August. As a sequel, the country have been shored Iron ore lumps 3,540 4,260 explained. declined by 15-17 per cent
Silver($/ounce) 14.3* -10.7 15.9 -9.9
increases. Reliance Industries has raised PP up by robust growth in demand * Price for August Sources: Indian Bureau of
The price outlook in the between January and August
ENERGY A derivative of crude oil, poly- prices by ~2,000 a tonne this month; and elevated prices of pellets, Mines, industry, PMAI domestic market is the this year, landed costs have
mer prices move in line with the so has Indian Oil Corporation. Also, an intermediate product. Over reverse. Rahul Prithiani, direc- declined by only three to five
CrudeOil($/bbl) 84.9* 8.6 81.2 6.2 movement in the prices of Brent both have raised their LLDPE (basic) six years, benchmark prices of to the landed price, compared tor at CRISIL Research, says: per cent. This has a bearing on
NaturalGas($/mmBtu) 3.4* 20.1 3.3 19.1 crude, fluctuation in the rupee prices by ~2 a kg. 62 per cent iron ore fines with a 45 per cent discount in “Domestic prices will stay ele- the 62 per cent of crude steel
against the dollar and cost of labour. “Apart from crude oil price abroad have remained $65-70 FY17 and 31 per cent in FY18. vated in the near term, led by production that is entirely
AGRI COMMODITIES ($/tonne) All three factors have worked to increase and rupee depreciation, a tonne. But, domestic prices An international report on opportunities linked to dependent on merchant ore
Wheat 232.8 4.5 276.9 2.1 make crude oil cost of labour has also have risen 40-45 per cent over performance of commodities healthy demand growth, weak procurement.
refineries raise their gone up significantly last year and this grade of ore by Natixis predicts iron ore currency and rising pellet
Maize 199.4* 0.3 186.2 6.7 polymer prices inter- over the past few trades at a 16 per cent discount prices would fall to an average prices. However, prices will More on business-standard.com
Sugar 357.1* 5.1 453.7 -9.4 mittently over the years. Engagement of
past two months. skilled and unskilled
Palmoil 550.0 -5.6 907.5 -10.1
Logistics woes drive mills to import iron ore
Data compiled by labour has become
Rubber 1,400.4* -6.5 1,731.3 -6.4 plastemart.com costlier in the last
shows prices of all couple of years.
CoffeeRobusta 1,684.0* -5.9 2,196.2 -4.3 varieties of polymer Another labour cost
Cotton 1,696.5 -12.1 1,766.6 -9.1 have moved up since
August.
increase is on the
cards in the next three
SWANSY AFONSO
Mumbai, 10 October
director of Essel Mining &
Industries, said in an interview in
that China's demand is poised to
shrinkassteelproductiontopsout.
SHOPPING ABROAD
* As on Oct 10, 1800 hrs IST, # Change Over 3 Months Ironoreimports(mntonnes)
Polypropylene (PP) months. Hence, we New Delhi. Freight and passen- Fortescue Metals Group doubled
Conversion rate 1 USD = 74.2 & 1 Ounce = 31.1032316 grams. Year Quantity
Notes: has become costlier Brent crude has would raise our prod- Steel mills in India are increas- ger trains in Asia's third-largest iron ore sales outside China to 8
1) International metals, Indian basket crude, Malaysia Palm oil, by 4.6 per cent and become costlier and ucts’ prices by at least ingly tapping the global market economy jostle for space on the per cent in the year through June, FY14 0.1
Wheat LIFFE and Coffee Karnataka robusta pertains to linear low density the rupee has also two-three per cent,” for iron ore as they find it diffi- same tracks, and goods carriers and has experienced strong FY15 11.4
previous days price. polyethylene(LLDPE) fallen 7.7% since said an official with a cult to transport the key raw often have to make way for pas- growth in cargoes to India, Chief FY16 6.8
2) International metal are LME Spot prices and domestic metal
are Mumbai local spot prices except for Steel. by 5.4 per cent. August. As a sequel, leading plastic manu- material from local mines, and senger traffic, prolonging turn- ExecutiveOfficerElizabethGaines
3) International Crude oil is Brent crude and Domestic Crude oil “We have no RIL has raised PP prices facturer. demand for the metal surges in around time for wagons hauling said in an interview in August.
FY17 4.2
is Indian basket. FY18 8.1
4) International Natural gas is Nymex near month future & option but to raise by ~2,000 a tonne this This apart, India’s response to the government's commodities. More supplies of “If iron ore is available at
domestic natural gas is MCX near month futures. prices of plastic prod- month; so has Indian plastic export ambitious plans to build out the iron ore will be required as the competitive prices domestically, FY19* 5.3
5) International Wheat, White sugar & Coffee Robusta are LIFF E
future prices of near month contract. ucts in proportion to Oil Corporation jumped by 17 per nation’s infrastructure. South Asian nation is set to over- it won’t happen,” Seshagiri Rao, * Up to July, Note: Iron Ores & Concentrates Non-
6) International Maize is MATIF near month future, Rubber is the increase in poly- cent in 2017-18 over “Today, India is a net importer take Japan as the world's second- Agglomerated other than roasted Iron Pyrites
joint managing director of the Compiled
Tokyo-TOCOM near month future and Palm oil is Malaysia FOB by BS Research Bureau
spot price. mer prices. While we often pass on the previous year, to $8.85 billion. of iron ore,” as producers along biggest steel producer this year. country's top mill JSW Steel, said Source:Department of Commerce
7) Domestic Wheat & Maize are NCDEX future prices of near the raw material price increase to America was the largest importer the coast buy from overseas More demand from India for in an interview, referring to
month contract, Palm oil & Rubber are NCDEX spot prices.
8) Domestic Coffee is Karnataka robusta and Sugar is M30 consumers, we also factor in labour from India, taking 12 per cent of because they face domestic logis- imports will help global mining imports. “That’s why we are ore. But the problem today is that
Mumbai local spot price. cost, which has gone up consis- our total shipment, followed by tics challenges, mainly as a result companies, especially as some requesting the domestic mining eventhoughtheironoreisgetting
9) International cotton is Cotton no.2-NYBOT near month future
& domestic cotton is MCX Future prices near month futures. tently. Thus, plastic products are China (nine per cent) and the UAE of an overloaded railway system, forecasters including the companies to adjust the prices in mined, transportation is the
Source: Bloomberg Compiled by BS Research Bureau set to become costlier in the coming (five per cent). Tuhin Mukherjee, managing Australian government expect line with the quality of the iron issue.” BLOOMBERG
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
14 WORLD
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1
T
bined $1 billion, according to he International Monetary Fund countries, and some emerging market (EM) chief Christine Lagarde has
an internal memo, underscor- (IMF) on Wednesday warned that economies are facing financial-market pres- called on world leaders to fix
ing the company’s growing global growth and stock market may sures,” Tobias Adrian, financial counsellor global trade systems instead of
momentum in the market for and Alphabet's Google have all be significantly harmed with further esca- and director of the monetary and capital trying to tear them down in a
internet-based computing tried to woo organisations and lation of trade tension, which is a result of markets department of the IMF, said. rebuke to nationalist politicians
power and storage. companies by touting the capa- the uneven global economic recovery that Looking further ahead, risks remain pushing tariffs and protection-
The contracts are each bilities and performance of has fuelled inward-looking policies and con- elevated, he said. To be sure, the financial ism. “We need to work togeth-
worth $500 million over five their services, which help tributed to increased policy uncertainty. system is stronger today than before the er to de-escalate and resolve
years, the text of an Amazon organisations store and process A decade since the economic crisis, while Short-term risks to financial system have global financial crisis, thanks to a decade the current trade disputes,”
email from September data remotely, build new appli- there has been an undeniable progress increased in the past six months, says IMF of reform and recovery. “However, vul- Lagarde said at am IMF and
showed. Both transactions cations and adopt new tech- towards a safer global financial system, nerabilities continue to build, and the World Bank gathering in Bali.
represented expansions of nologies, including artificial clouds appear on the horizon, the IMF said undermine confidence in policymakers’ new financial system remains untested. “We need to join hands
existing partnerships. intelligence. AWS has so far in its latest fiscal stability report. “The glob- ability to respond to future crises,” the report Additional steps are needed to improve its to fix the current trade
Microsoft, the No.2 cloud-serv- maintained the lead, winning al economic recovery has been uneven and said. Nonetheless, despite trade tensions resilience,” Adrian said. system not destroy it,” she
ices provider, had also com- $17.5 billion in sales last year. inequality has risen, fuelling inward-looking and continued monetary policy normalisa- If pressures on EM economies were to added on Monday.
peted for the Symantec deal, That's out of a market estimat- policies and contributing to increased poli- tion in a few advanced economies, global broaden and intensify, financial stability Finance ministers and cen- International Monetary Fund
according to the memo. ed to have been worth $30 bil- cy uncertainty. Trade tensions have financial markets have remained buoyant risks would increase significantly, he said. tral bankers from many of the chief Christine Lagarde
Some of the world's largest lion in 2017, and expected to emerged, and a further escalation may dam- and appeared complacent about the risk of “Our analysis suggests that — in the IMF’s 189 member nations are
technology companies have balloon to $83.5 billion by 2021, age market sentiment and significantly a sudden, sharp tightening in financial con- medium term — there is a 5 per cent prob- meeting in Bali this week growth forecast down 0.2 per
been duking it out for suprema- according to research firm harm global growth,” it said. ditions, the world body said. ability that EM economies will experience where concerns about protec- cent to 3.7 per cent for 2018 and
cy in the cloud. AWS, Microsoft Gartner Inc. “Support for multilateralism has been The IMF report finds that short-term portfolio debt outflows of $100 billion tionism have taken centre 2019 — citing trade tensions,
waning, a dangerous undercurrent that may risks to the financial system have increased or more. stage — especially the escalat- protectionism and rising debt
ing trade war between the levels as the main causes.
United States and China. Lagarde’s warnings were
IPCC REPORT
GLOBAL CLIMATE CHANGE BELIEFS US may lose trillions in case of recession Lagarde said she remained
optimistic that disputes
between nations could be
echoed by OECD General
Secretary Angel Gurria, who
said trade tensions had
The United Nation’s scientific panel, the AGENCE FRANCE-PRESSE Chances of a recession in the World Bank, cut its outlook mounting interest rates. ironed out, citing the Trump already begun to impact
Washington, 10 October the US growing because of for global GDP on Monday by Beyond tax revenues and administration's recent suc- commerce since 2017.
Intergovernmental Panel on Climate Change, released a
several factors, says IMF two tenths to 3.7 per cent sovereign debts, a govern- cessful renegotiation of the “This year the growth does-
report on Tuesday predicting how different climate A severe recession would slash through next year. ment’s balance sheet contains NAFTA agreement between n't look so good, what is differ-
change scenarios will go on to play out, concluding that US public wealth by about $5 tril- International Monetary Fund The fund pointed to rising a range of other assets and lia- the US, Canada, and Mexico. ent, is the trade, the tensions,
to avert the consequences — including severe droughts lion, causing vastly more dam- said in a new report on Tuesday. trade tensions as a cause for wor- bilities, such as the state enter- “It’s tempting to be a bit protectionism, the tit-for-tat,
and swamped coastlines — the world economy would age to Washington's finances This creates a potential blind ry and also predicted slower prises, land and natural depressed about this perspec- the retaliations,” Gurria said.
have to turn itself around in an unprecedented away. than just an increase in debt and spot for policymakers who could growth in the United States next resources it owns as well as the tive but I’m actually hopeful In the middle of a recovery
The report was commissioned by the Paris Agreement, deficits, the IMF has warned. use this knowledge to head off year and beyond. Economists money it has to pay to fund because there is a clear period he added, “we started
the 2015 pact by nations to address global climate change Yet governments around the economic risks, it said. now say the chances of a reces- public-sector employee pen- appetite to improve and doing these things and we
and written by 91 scientists from 40 countries. world, many of which face sim- The global crisis lender, sion in the United States are sions. The difference between expand trade,” she said. slowed down.” The OECD has
South Korea has a high share of people ilar dangers, do not clearly pub- which in Indonesia this week is growing due to several factors, the two sides of the ledger is a Ahead of the Bali gathering, also revised down its global
who believe climate change is licise their overall net worth, the staging its annual meetings with including trade tensions and country’s net worth. the IMF reviewed its global growth forecasts.
primarily caused by human activity.
The United States remains one of
the countries where a minority of
people hold this same belief.
UNDER THE
Nikki Haley may still pose a challenge to Trump
WEATHER
Those who believe climate change is mainly caused
PRESS TRUST OF INDIA
Washington, 10 October
the Indian-American politician
said, seated next to the president in
boasting both executive experience
in her home state and foreign China hails Haley for 5 people on shortlist
by human activity in select countries* (%)
Nikki Haley’s abrupt resignation as
the Oval Office. “I can promise you
what I’ll be doing is campaigning
policy chops from two years as
one of Trump’s top diplomats,” the
cooperation at UN to replace Nikki
72
the US ambassador to the United for this one. So, I look forward to influential paper said. China on Wednesday praised the US President Donald Trump has
65
Nations has sparked intense specula- supporting the President in the next “She's a rising star and he’s king, so outgoing US Ambassador to the UN said he has five persons in mind,
62
59
58
tion about the moderate Republican election,” she said. there's always an inherent tension Nikki Haley for maintaining dialogue including his former deputy national
53
there,” the Post quoted Mike Murphy, and cooperation with Beijing on security adviser Dina Powell, to
52
politician’s next move and the politi- The blunt statement underscores
49
47
cal complications she could still pose both the loyalty demanded by a long-time Republican strategist and key issues. The 46-year-old replace Nikki Haley as the US
to President Donald Trump, US media Trump and the political complica- Trump critic, as saying. Indian-American leader announced ambassador to the UN.
39
38
reported on Wednesday. tions Haley could pose to the “Politically, any star in the party Tuesday that she would resign from Haley’s abrupt decision left many
33
In a sign of her rising profile, President, the Post said. is a threat to Trump because in her post as the US ambassador to the in the White House in shock as there
Haley on Tuesday simultaneously At 46, Haley has built her own his Stalinesque way, there’s only one UN by the end of the year. was no indication that she planned to
announced her resignation at the end political brand and has a long poten- sun god and it has to be Trump,” Haley had, as the US ambassador leave office. Haley had submitted her
of this year while also reassuring tial career ahead of her, it said. Murphy said. to the UN, maintained dialogue and resignation on October 3.
South Brazil Mexico France China India South Germany UK Saudi Japan US President Trump that she has no “The former South Carolina gov- The New York Times noted that cooperation with China on many Trump said Haley would assist in
Korea Africa Arabia plans to challenge his re-election in ernor mixes homespun Southern Haley's resignation marked the depar- issues, Chinese Foreign Ministry the search for her replacement, and
2020, the Washington Post noted. charm with hard-boiled political ture of one of the few high-profile spokesman Lu Kang told a media that he plans to settle on a pick in the
* As of August 2018 Source: Visual Capitalist Racounteur, Ipsos, World Bank “No, I’m not running for 2020,” savvy — a daughter of immigrants women in the Trump administration. briefing on Wednesday. PTI next two to three weeks. PTI
STOCKS
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NIFTY 50 ADVANCES/DECLINE
Company Close (~) % Wt PE Company Close (~) % Wt PE
F&0 SNAPSHOT DAY’S TOP GAINERS DAY’S TOP LOSERS
10 Oct ’18 Chg (%) Con Std 10 Oct ’18 Chg (%) Con Std Futures Cash Premium Futures Cash Discount
price price (%) price price (%)
Adani Ports 327.1 2.6 0.6 18.7 29.9 IOC 124.0 1.1 1.2 5.3 5.1 Company Day’s high Close % chg* 3mth high 52 wk high Company Day’s low Close % chg* 3mth low 52 wk low
Asian Paints 1226.0 2.0 1.3 52.8 57.7 ITC 270.1 0.6 7.5 28.8 28.8 MOST BULLISH MOST BEARISH
Adani Power 32.0 30.0 24.8 36.1 47.8 Indiabulls Vent 374.9 375.0 -5.0 374.9 208.9
Axis Bank 589.2 6.6 2.6 332.1 - JSW Steel 376.8 1.5 1.2 11.6 13.9 Adani Power 30.4 30.0 1.3 Just Dial 447.4 478.8 -6.5 HEG 3871.1 3871.1 20.0 4559.8 4559.8 Bharti Infratel 257.2 259.0 -2.9 241.8 241.8
Bajaj Auto 2581.8 1.3 0.9 16.9 17.5 Kotak Mah Bank 1137.8 2.6 3.4 33.8 51.7 HCC 12.6 12.5 1.2 TVS Motor 519.0 533.1 -2.6 Dewan Hsg 291.3 282.3 16.1 690.0 690.0 Infosys 695.4 700.3 -2.4 642.3 457.6
Bajaj Fin 2271.0 10.2 1.3 49.1 45.6 L&T 1250.7 2.4 4.0 20.8 30.5 Repco Home 389.5 385.7 1.0 Dewan Hsg 280.8 284.5 -1.3 Shriram TrFn 1098.8 1081.5 13.2 1476.0 1670.6 TCS 2030.2 2043.1 -2.3 1894.0 1228.8
Bajaj Finsrv 5961.5 9.8 0.9 27.8 661.0 Mah & Mah 764.1 -0.1 1.7 11.9 19.7 Adani Enter 145.1 143.8 0.9 Ramco Cements 596.4 602.0 -0.9 Just Dial 483.9 476.2 11.9 603.7 648.0 HCL Techno 1039.5 1050.4 -1.5 944.6 825.1
Bharti Airtel 295.1 2.1 0.9 57.7 - Maruti Suzuki 6985.9 4.3 2.1 26.8 25.9 Reliance Com 11.6 11.5 0.9 Voltas 511.1 515.6 -0.9 Piramal Entp 2450.0 2394.9 10.9 3302.6 3302.6 Mothersons S 224.9 232.2 -1.3 221.0 221.0
Bharti Infratel 258.3 -3.1 0.5 19.4 18.9 NTPC 164.4 1.6 1.2 12.9 13.1 MRPL 71.0 70.0 10.2 86.2 146.3 Sun Pharma 593.5 603.0 -1.1 530.0 434.8
BPCL 265.4 3.2 0.6 5.9 6.1 ONGC 148.6 1.3 1.4 7.3 8.6 BSE NSE Balram Chini 97.9 94.0 10.2 99.0 179.0 Wipro 311.0 316.9 -1.0 263.9 253.5
Cipla
Coal India
639.6
272.7
0.0
-0.5
0.7
0.8
35.8 32.2
20.0 18.1
Power Grid 187.2 0.3 1.0 11.9 11.6 Index Stock Index Stock PUT-CALL RATIO Arvind 332.3 330.1 10.0 438.8 477.9 Shree Cement 15310.0 15552.5 -1.0 15310.0 15015.2
Reliance Ind 1102.1 1.1 8.5 19.1 20.4 FUTURE Edelweiss Finan 164.0 164.0 10.0 329.7 342.0 Rajesh Exp 655.0 662.6 -0.9 562.0 562.0
Dr Reddys 2484.6 1.2 0.7 30.4 45.7 (Open Interest in Mn) Put Call PC Ratio
SBI 278.7 6.0 2.4 - - Contracts - - 336613 1023932 Equitas Hold 127.2 125.0 10.0 163.2 173.4 Infibeam Aven 56.8 58.5 -0.8 38.4 38.4
Eicher Motor 22582.4 7.1 0.7 29.7 34.0 Market 465.6 895.9 0.5 Chola Inv 1196.9 1169.9 9.9 1618.0 1760.8 Fortis Health 131.5 131.7 -0.8 131.2 106.7
Sun Pharma 603.0 -1.1 1.5 35.8 137.4 Open Int.(000) - - 24326 4724551
GAIL 336.4 0.9 0.8 15.8 15.6 Bajaj Fin 2300.4 2266.1 9.9 2995.1 2995.1 Lupin 855.6 859.4 -0.7 788.9 723.6
Tata Motors 188.8 2.4 0.8 13.5 94.6 Shares(In Mn) - - 19.8 2252.6 Top 5 PC Ratio Bottom 5 PC Ratio
Grasim Ind 909.7 0.8 0.8 15.6 29.0 SREI Infra Fin 36.9 35.6 9.9 63.8 124.6 Coal India 270.4 271.6 -0.5 258.8 256.0
Tata Steel 583.7 1.9 1.0 3.5 11.0 Value(~ Mn) - - 297952 630518
HCL Techno 1051.8 -1.6 1.3 16.4 19.3 Repco Home 3.5 GSFC 0.1
HDFC 1737.0 1.4 6.8 18.4 23.3 TCS 2043.6 -2.3 4.9 28.1 29.8 OPTIONS
Oil India 2.5 Chennai Petr 0.1 * Ranked on the basis of percentage gain/loss on previous close
HDFC Bank 1967.2 1.4 9.6 28.9 29.4 Tech Mahindra 699.3 0.5 1.0 17.6 16.6 Contracts - - 11009522 653105
Titan Company 788.6 5.2 0.7 63.5 56.2 Ajanta Phar 1.4 Granules 0.1
Hero MotoCorp
Hindalco
2920.1
226.9
1.0
1.2
0.9
0.8
15.7 15.8
8.4 32.6 UltraTech 3778.0 -0.1 0.9 53.0 53.5
Open Int.(000)
Shares(In Mn)
-
-
-
-
128008 1233470
515.3 1245.6
Zee Enter 1.3 Tata Comm 0.1 MOST TRADED TOP M-CAP TRENDS
Rural Elect 1.0 United Brew 0.1
HPCL 180.7 5.5 0.6 3.8 3.9 UPL 622.5 3.0 0.5 15.3 52.3 Value(~Mn) - - 10576355 437623 Value Volume Rank Company Mcap (~ billion) Company % change Company % change
HUL 1527.7 1.0 2.5 63.3 60.3 Vedanta 218.2 2.9 0.9 5.8 11.0 BSE+NSE BSE+NSE
1 TCS 7666.3 BS200 DOWN 7 DAYS
Wipro 316.0 -1.8 0.8 17.8 18.8 (~ million) (Mn shrs)
ICICI Bank
Indiabulls Hous
319.9
978.3
4.4
3.4
4.7
0.7
26.7 44.7
10.1 11.0 Yes Bank 233.9 4.1 1.0 12.8 12.0 ACTIVE CALLS ACTIVE PUTS Bajaj Fin 17223.9 7.7
2 Reliance Ind 6987.2
UP 7 DAYS Ashapura Intima -50.0
3 HDFC Bank 5342.8 IDBI Bank 18.1 Umiya Tubes -30.5
IndusInd Bank 1638.0 1.9 1.9 - 25.9 Zee Enter 459.8 6.2 0.6 30.1 26.0
Infosys 700.5 -2.4 6.0 18.9 18.8 Nifty 50 10460.1 Ç1.5 100.0 19.0 21.6 MARKET OVERVIEW Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Dewan Hsg 15610.2 56.3 4
5
ITC
HUL
3305.9
3305.6
Bombay Dyng -30.1
Yes Bank 13043.7 56.7 DOWN 8K Miles Softwa -30.1
INDEX PE Shrs Trds 1 Yr Index Index 6 Infosys 3059.2 Indiabulls Vent -30.1
AGGREGATES Reliance Ind 10913.1 9.9
S&P BSE SENSEX STOCKS Sensex
C/S
20.4/23.3 25.2
Mn ‘000
247
Adv Dec
26 5
return
8.9
Nifty Bank
Nifty Bank
11/10/18
11/10/18
25500
25200
23.5
22.0
1.3
0.2
31.8
-70.6
Nifty Bank
Nifty Bank
11/10/18
11/10/18
24500
24800
18.7
14.9
1.0
0.8
192.0
933.9 TCS 9711.0 4.7
7 HDFC 2986.1 Mothersons S -9.6 Kisan Mould
Risha Digha
-30.0
-30.0
8 SBI 2481.9
Adani Ports 326.3 2.6 0.7 18.7 29.8 Mah & Mah 764.2 0.0 2.1 11.9 19.7 Nifty 50 19.0/21.6 373.8 5485 41 9 4.4 Nifty Bank 11/10/18 25300 20.2 0.5 -12.8 Nifty Bank 11/10/18 25000 14.4 0.8 691.5 SBI 9080.9 33.5 UP 3 DAYS Central Bank -29.7
9 Kotak Mah Bank 2170.0
Asian Paints 1226.0 2.0 1.5 52.8 57.7 Maruti Suzuki 7011.2 4.8 2.5 26.9 26.0 Nifty Bank 11/10/18 25000 19.9 0.2 -82.2 Nifty Bank 11/10/18 24700 13.9 0.6 401.2 Maruti Suzuki 8734.9 1.3 10 Maruti Suzuki 2117.9 Adani Power 28.0
Axis Bank 589.4 6.6 3.1 332.2 - NTPC 164.8 2.0 1.4 12.9 13.2 Cash Derivatives Nifty Bank 11/10/18 25400 18.3 0.4 7.4 Nifty Bank 11/10/18 24600 13.8 0.5 243.0 Axis Bank 8388.3 14.5 11 ICICI Bank 2052.2 Balram Chini 23.8
TURNOVER BSE NSE BSE NSE UP 3 DAYS
Bajaj Auto 2582.0 1.5 1.0 16.9 17.5 ONGC 148.7 1.2 1.7 7.3 8.6 Stock Stock HDFC Bank 8351.2 4.3 12 ONGC 1907.7 Vakrangee 15.2
New Light App 35.5
Bharti Airtel 295.7 2.4 1.1 57.8 - Power Grid 187.3 0.4 1.2 11.9 11.6 Value(In ~ Min) 35161 377286 - 1194245 SBI 25/10/18 280 13.2 2.7 -7.4 SBI 25/10/18 260 7.7 2.2 -6.3 13 L&T 1756.0 Yes Bank 13.5
ICICI Bank 7894.8 25.0 Dhamp Sugar 28.6
Coal India 271.6 -0.5 1.0 19.9 18.1 Reliance Ind 1102.4 1.1 10.2 19.2 20.4 Shares(In Mn) 229.4 1727.4 - 4033.3 Nat Alum 25/10/18 70 11.4 3.0 0.3 Yes Bank 25/10/18 220 7.5 2.3 10.2 Bandhan Bank 12.1
Tata Motors 7751.1 41.2 14 Coal India 1685.9 Universl Cab 25.9
HDFC 1738.7 1.5 8.1 18.4 23.3 SBI 278.1 5.9 2.9 - - Trades(000) 1657 14566 - 6860 ICICI Bank 25/10/18 320 11.1 2.3 -5.8 ICICI Bank 25/10/18 300 7.3 2.2 18.5 PVR 11.5
Indiabulls Hous 7190.5 7.4 15Ç Axis Bank 1514.2 Adani Enter 11.0
HDFC Bank 1966.3 1.2 11.5 28.9 29.4 Sun Pharma 603.0 -1.1 1.8 35.8 137.4 Tata Motors 25/10/18 200 10.1 3.7 43.0 Tata Motors 25/10/18 180 7.1 2.1 84.8 Filatex 23.3
MARKET-CAP (~ billion) 16È HCL Techno 1462.6
Hero MotoCorp 2914.4 1.1 1.0 15.6 15.8 Tata Mot-DVR 103.7 2.4 0.1 - - Traded Total SAIL 25/10/18 75 9.0 3.9 -7.3 SBI 25/10/18 270 5.7 1.8 62.5 Infosys 6992.1 9.9 Dwarikes Sug 21.8
17È Sun Pharma 1446.8 DOWN
HUL 1527.1 0.8 2.9 63.2 60.3 Tata Motors 188.8 2.4 0.9 13.5 94.6 BSE 138,248 139,907 Mah & Mah 5962.3 7.8 AMJLAND 21.1
18È Wipro 1433.5 HCL Techno -3.0
ICICI Bank 318.9 4.2 5.6 26.6 44.5 Tata Steel 583.1 1.9 1.2 3.5 11.0 NSE 136,964 138,228 Titan Company 5958.3 7.6 Acknit Ind 20.6
19 NTPC 1358.4 Fortis Health -2.2
TCS 2043.1 -2.3 5.8 28.1 29.8
IndusInd Bank
Infosys
1639.5
700.3
2.0
-2.4
2.3
7.2
-
18.9
25.9
18.8 Vedanta 218.0 2.9 1.1 5.8 11.0
Derivatives 105,212 105,212 SPURT IN VOLUMES L&T
Tata Steel
5536.0
4403.3
4.4
7.6
20 Bajaj Fin 1309.7
OTHERS DOWN 3 DAYS
21 IOC 1207.2
ITC
Kotak Mah Bank
270.1
1137.9
0.6
2.7
9.0
4.1
28.8
33.8
28.8
51.7
Wipro
Yes Bank
316.9 -1.0
234.1 4.4
1.0
1.2
17.9 18.8
12.8 12.0
TRADING ACTIVITY Company Days
Volume
2-week Avg
Volume
Change Close
price
*Price
%chg
HDFC 4216.0 2.4 22 Bharti Airtel 1181.8 UP 7 DAYS IL&FS Tran -22.8
(~ million) FIIs MF IndusInd Bank 4137.8 2.5 23Ç Asian Paints 1175.9 Pushpa.Flori 39.9 Swan Energy -18.5
L&T 1252.4 2.5 4.8 20.8 30.6 BSE SENSEX 34760.9 Ç1.3 100.0 20.4 23.3
Equity Debt Equity Debt Winsome Yarrns 715723.0 5975.3 11878.0 1.5 0.6 24È Hind Zinc 1172.1 Shukra Jewl 39.3 Ind Bank Hsg -17.2
Con = Consolidated; Std = Standalone Net Net Net Net Kotak Mah Bank 4017.2 3.5
Capri Global 4304577.0 107392.1 3908.3 80.6 -3.6 25 UltraTech 1039.5 Calcom Vis 29.4 Ravalgaon S -14.3
Zee Enter 3808.9 8.5 Pooja Enter 27.2
On 09 Oct -8234 -7250 10639 -11301 Ador Welding 212038.0 12049.0 1659.8 346.2 17.9 26Ç IndusInd Bank 985.8
Bank of Baroda 3737.6 39.2 Dhoot Ind -14.2
WORLD INDICES On 08 Oct
On 05 Oct
-11703
-50096
-22315
5908
9802
15257
55709
62964
Future Mar Net 562218.0 44427.9 1165.5 63.6 11.7
HUL 3668.8 2.4
27È
28
Power Grid
Mah & Mah
979.6
950.0
Sportking India
TAHL
25.3
15.9 Maris Spin -14.2
One Point One S 194000.0 19200.0 910.4 51.9 16.9 Dalal Street 14.8 Dhanvar Fin -14.1
Indices Close % Chg* Indices Close % Chg* On 04 Oct -22608 -4973 11319 37597 Eicher Motor 3661.0 0.2 29Ç Bajaj Finsrv 947.6
Rollatainers 173100.0 17529.9 887.5 3.5 19.0
On 03 Oct -15267 859 8876 50026 Bharti Airtel 3647.6 12.5 30È Nestle India 918.5 (T+2) cycleStocks which rose/fell continuously
Americas (Oct 09,18) Asia/Pacific (Oct 10,18) Mohini Health 147000.0 15000.0 880.0 23.5 4.7
Oct till date -123989 -39572 72894 223268
Nasdaq Composite 7738.0 0.0 Stock Exchange of Thai 1721.8 1.5 Mercator 12292554.0 1352186.2 809.1 12.1 -12.0
2018 till date -274616 -527353 955221 2131467
Jay Bhar Ma 111913.0 12894.8 767.9 319.9 0.5
Dow Jones
S&P/ TSX Composite
26430.6
15854.1
-0.2
-0.6
Jakarta Composite
Shanghai Se Comp
5820.7
2725.8
0.4
0.2 FIIS IN DERIVATIVES NLC India 4675984.0 604351.6 673.7 81.8 10.7 BOARD MEETINGS INTRA-DAY
Europe/Africa (Oct 09,18) Taiwan Taiex (Oct 09) 10466.8 0.1 (~million) Index Stock Index Index Stock Note : A & B group stocks with the day’s trading volumes at over 100,000 shares, * % change over previous close QUARTERLY Group XT Pitti Engg Group XT ICICI Securitie
NET Net Fut OI Opt OI OI RESULTS I-Power Sols Rel Ind Infra Jyotirgamya Group X
FTSE 100 7233.6 -0.1 Straits Times 3131.5 -1.1
IBEX 35 9245.0 -0.2 Kospi 2228.6 -1.1 On 09 Oct
On 08 Oct
-13675
-6774
3609
14315
0.3
0.3
0.9
0.9
1.4
1.4
52 WEEK NEW HIGHS/LOWS OCTOBER 11
BS 200
OCTOBER 13
BS 200
Zee Learn
Zee Media
Ent
Menon Piston
LKP Finance
VTM
DAX 11927.3 -0.4 Kuala Lumpur Comp 1735.2 -2.2 Company Price Company Price Company Price Company Price
On 05 Oct -1672 1882 0.3 0.9 1.4 TCS Au Small Fin Corpo OCTOBER 17 OCTOBER 20
CAC 40 5290.5 -0.5 Volatility (Oct 09,18) On 04 Oct 53524 -2979 0.3 0.8 1.3 Group B Avenue Group M BS 200 BS 200
HIGH *Thirdwave Fin . . . . . . . . 28.3 LOW *Voltamp Tran . . . . . . . . 735.0
Asia/Pacific (Oct 10,18) CBOE Dow Jones 16.3 1.4 On 03 Oct -20569 -25 0.2 0.8 1.3 *Shailja Comm Tr . . . . . . 22.4 *TCI . . . . . . . . . . . . . . . . . . 715.0 GM Breweries Supermar Meera Inds ACC HDFC Bank
BS 200 BS 200
Nikkei 225 23506.0 0.2 CBOE S&P 500 16.1 0.9 Oct till date 30545 20333 - - - NONE *Neeraj Paper . . . . . . . . . 21.4 Ramco Cements . . . . . . 589.5 *OMDC . . . . . . . . . . . . . . . 669.2 Group X Group B Group T DCB Bank Group A
Hang Seng 26193.1 0.1 * Change over previous close 2018 till date 1074030 513877 - - - Others *Shukra Jewl . . . . . . . . . . 20.2 Godrej Ind . . . . . . . . . . . . 440.7 *Nippo Batry . . . . . . . . . 651.0 Amal Jay Bhar Ma Monnet Ispat Havells I ICICI Lombard
OI in number of contracts(million) Crown Tours . . . . . . . . . . . 18.8 *Khadim India . . . . . . . . 609.2 Group XT OCTOBER 14 Group X MindTree OCTOBER 21
*Bom.Oxygen . . . . . 29700.0 Bharti Airtel . . . . . . . . . . 284.1
MAJOR INDICES S&P BSE SECTORAL INDICES
*Most Shares ETF . . . . . 655.9
*Sportking India . . . . . . 498.0
*UTL Inds . . . . . . . . . . . . . . 17.7
*Spicy Ent Media . . . . . . 15.1
Others
Rasoi . . . . . . . . . . . . . . 24321.0
Timken India . . . . . . . . . 550.1
*Birla Corpn . . . . . . . . . . 542.0
Kore Fo
OCTOBER 12
Prime Sec
OCTOBER 15
JK Agri Genert
Group XT
Mphasis
NIIT Techno
Persistent S
OCTOBER 22
Previous Close Open High Low Close Change % chng *Dalal Street . . . . . . . . . 363.2 Shalimar Agen . . . . . . . . . 14.3 Paul Mercha . . . . . . . . . 3337.0 *Super Sales . . . . . . . . . 483.1 BS 200 BS 200 Dhruv Est Group A BS 200
S&P BSE Sensex 34,299.5 34,493.2 34,858.4 34,346.5 34,760.9 461.4 1.3 Prev close Close % Chg *Grandeur Prod . . . . . . 258.7 KZ Leasing . . . . . . . . . . . . . 13.5 *Blue Dart E . . . . . . . . . 2620.0 *Rane Brake . . . . . . . . . . 483.0 HUL Delta Corp Ikf Techno Cyient Asian Paints
S&P BSE Sensex 50 10,771.0 10,833.0 10,957.7 10,792.8 10,932.1 161.2 1.5 Auto 19,594.4 20,146.2 2.8 *Coast Corp . . . . . . . . . . 187.2 NDA Sec . . . . . . . . . . . . . . . 10.6 *TVS Srichakr . . . . . . . 2287.5 Godrej Prpty . . . . . . . . . . 462.0 Karnataka Bk Indiabulls Victory Paper Group B Can Fin Home
S&P BSE-100 10,494.9 10,556.3 10,710.4 10,521.0 10,688.7 193.8 1.8 Bankex 27,413.4 28,381.6 3.5 *TAHL . . . . . . . . . . . . . . . 155.5 *Dalmia Inds Dev . . . . . . 10.6 Pilani Investme . . . . . . 2056.0 *Aksharchem . . . . . . . . . 424.0 Group B Hous OCTOBER 16 Aditya B Mny Group A
S&P BSE-200 4,358.3 4,383.1 4,454.8 4,370.2 4,446.6 88.3 2.0 Cons. Durables 17,904.6 18,580.3 3.8 *Sindhu Trade . . . . . . . . 152.4 Orient Trade . . . . . . . . . . . . 8.0 Elantas Beck . . . . . . . . 1850.0 *Vadilal Ind . . . . . . . . . . . 400.0 3i Infotech IndusInd Bank BS 200 Group XT Alembic
S&P BSE-500 13,585.4 13,661.9 13,904.7 13,625.9 13,882.4 297.0 2.2 Cap. Goods 16,334.2 16,890.1 3.4 *KRL . . . . . . . . . . . . . . . 111.3 ASISL . . . . . . . . . . . . . . . . . . . 6.6 Florence Invest . . . . . . 1350.0 *Insectcides . . . . . . . . . . 393.7 Atishay South Ind Bk Federal Bank Pratik Panel Pharma OCTOBER 23 Indian Metal BS 200 M & M Fin Agro Tech Fd
S&P BSE IPO 3,906.3 3,923.6 4,030.2 3,908.0 4,011.7 105.4 2.7 FMCG 10,602.7 10,778.8 1.7 *Punjab Alkal . . . . . . . . . . 78.6 Apoorva Leas . . . . . . . . . . . 6.0 *Empire Ind . . . . . . . . . 1350.0 Sobha Ltd . . . . . . . . . . . . 380.5 Tata Sponge TV18 Hero OCTOBER 18 GSK Pharma BS 200 PPAP Auto Bajaj Auto Wipro Everest Inds
Healthcare 14,414.0 14,673.1 1.8 *Pooja Enter . . . . . . . . . . 56.4 *Quantum Buil-Te . . . . . . . 5.5 *GRP . . . . . . . . . . . . . . . . 1070.2 PPAP Auto . . . . . . . . . . . . 363.1 Group T Broadcast MotoCorp BS 200 Kansai Nerol
S&P Dollex-30 3,792.3 - - - 3,844.1 51.8 1.4 Bajaj Fin Rane Brake Bharat Fin Incl Group A Intl Pap APPM
Infra 178.6 183.7 2.8 *Monnet Ispat . . . . . . . . . 48.1 *Mid East Pro . . . . . . . . . . . 5.1 *Prataap Snacks . . . . . . 981.5 *Monte Carlo Fas . . . . . 335.0 Quintegra Sl Group A Infosys Mphasis LMW
Nifty 50 10,301.1 10,331.9 10,482.4 10,318.3 10,460.1 159.0 1.5 Bajaj Finsrv Sasken Comm Hexaware Tch Bajaj Hold Rane Eng Val
IT 15,121.9 14,891.6 -1.5 *New Light App . . . . . . . . 38.5 *Mukat Pipes . . . . . . . . . . . 5.0 Thermax . . . . . . . . . . . . . 885.0 *Somany Cera . . . . . . . . 330.4
Nifty next50 25,500.0 25,591.8 26,356.7 25,591.8 26,324.4 824.4 3.2 Group X Network 18 M Group A OCTOBER 19 Group B HDFC Std Life Tejas Networks IDFC Bank Lakshmi Vilas B Security & Inte
Metal 12,857.3 13,099.3 1.9 *Gogia Cap . . . . . . . . . . . . 36.8 Trans Asia . . . . . . . . . . . . . . 3.3 *ZF Steering . . . . . . . . . . 842.1 Jindal World . . . . . . . . . . 330.0
Nifty 500 8,563.0 8,590.5 8,762.3 8,588.4 8,748.5 185.5 2.2 Oil & Gas 12,303.3 12,519.6 1.8 Amal Trident CRISIL UltraTech Maha Scoot ICICI Prud Life Zensar Tech Jubilant Fd Sundaram Cly OCTOBER 25
India VIX 19.8 19.8 19.8 17.7 17.9 -1.9 -9.4 *Rama Paper . . . . . . . . . . 31.1 Samtel India . . . . . . . . . . . . 2.9 Ratnamani Met . . . . . . . 781.1 Andhra Sugar . . . . . . . . . 306.5 Biopac India Group B Mahindra CIE Group A Group XT
Power 1,875.8 1,926.2 2.7 TVS Motor Group X KPIT Syngene Intl BS 200
Nifty CPSE 2,044.1 2,043.7 2,097.3 2,043.7 2,076.1 32.0 1.6 *Uv Der Horst . . . . . . . . . . 29.8 *Vikas Proppant . . . . . . . . 1.6 *HAL . . . . . . . . . . . . . . 767.4 EIH Asso Ht . . . . . . . . . . . 303.1 ICSL Alkali Met Group B SBI Life Ins Chemo
PSU 6,633.2 6,839.9 3.1 Group B Super Sales Technologi TTK Prestige Biocon
MSE SX 40 20,201.7 20,201.7 20,472.3 20,201.7 20,472.3 270.5 1.3 Realty 1,547.4 1,616.1 4.4 * Indicates that the market price of these companies reached two-year highs/lows. Rasoi MT Educare Shakti Pumps Group B Pharma Aksh Optifib OCTOBER 24 L & T Infotech Group B JSW Steel
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
16 BRAND WORLD
>
MUMBAI | THURSDAY, 11 OCTOBER 2018
D
id you know that the
smartphone you use handset users are
could give advertisers mainly from large
key insights into what adver- towns while
tisements you see and how
you navigate your online pres-
<~5,000 handset
ence? A recent study by mar- users are from small
keting analytics firm, Nielsen, towns
points out that the price of Proportion
handsets is turning into a very of >~15,000 Preference for
important metric for busi- handsets
nesses to profile and target rel- <~ 5,000
evant content to users. higher among handsets is
Nielsen noted that the aver- women relatively higher
age spend on smartphones in
among 15-24
India has risen from ~7,700 in
2015 to ~9,960 in 2017. year olds
IMAGE:iSTOCK
Consequently the report found
that the engagement level of
users with these devices also
increased depending on the
TIME SPENT IN MINUTES/DAY
Entry level
price of handsets. Entry level 130
smartphones are priced below AVERAGE SMARTPHONE 116 Mid-segment
~5,000, mid-segment are PRICE (in ~) 91 Premium segment
worth ~5,000 to ~ 15,000 and
premium phones are priced 25 27 32 14 17 19
between ~15,000 to ~25,000, as 7,700 8,420 9,960 7 12 16
considered for this study.
While an entry level user Online Offline Calls and Games
spends 91 minutes on an aver- 2015 2016 2017 activities activities messaging
age on online activities, pre-
mium users spend over 130 KNOW THE PHONE, KNOW THE CUSTOMER
minutes doing the same on
their smartphone. | The price of handsets is emerging as a amount of time people use their handsets
What this means is users remarkable surrogate for monitoring the and the evolution of the usage
with premium phones are like- ever-widening set of users and their | Among premium handset users,
ly to engage better and for smartphone usage, thereby facilitating 60 per cent are over 24 years old, primarily
longer online and can be tar- business and marketing strategy for professionals or self-employed. These
geted with services and prod- better return on investment (ROI) users are usually affluent and
uct ads. The type of apps
| There is a strong correlation between the data-hungry
usage also varies across
phones (despite a few univer- Sources: What handsets say about consumers, Nielsen
sal apps) and the adoption of
lighter version of apps and ed that even among Indian Lal said during an earlier breaking down the data to
browsers is more prevalent language internet users, almost interaction with Business understand how to bait,
among cheaper handsets. 54 per cent use mid-range Standard that the company retain and get the online con-
“Almost half of India’s entry- phone models, 22 per cent of gets almost 70 per cent of all sumer to spend on their apps.
level users are between 15 and users use high end device mod- online traffic from mobile The learning curve is still a
24 years old, mostly students, els, disproving the assumption users and it has made a num- steep climb as a recent
and can be assumed to be companies have that Indian ber of changes in the way Facebook report showed that
data-hungry, though less afflu- language internet users have users experience the platform friction accounts for approxi-
ent than premium handset low purchasing power. This on their mobiles over the past mately two-thirds of con-
owners. Among premium data shows how essential it is year to accommodate chang- sumer dropouts while buying
handset users, 60 per cent are for phone manufacturers and ing digital usage patterns smartphones. Interestingly,
over 24 years old, primarily OEMs to ensure that phones across the country. It realised friction faced by consumers
working professionals or self- across all price bands have the need for customising the can be reduced with the high-
employed. These users are accurate, legible fonts and ren- app/website for lower end er use of mobile in the media
usually affluent and data- dering in Indian languages for phones and is seeking to pro- mix and this can create close
hungry,” noted the report. a seamless user experience. vide premium AR technology to $3.1 billion worth of poten-
These numbers barely Online furniture market- at a lower app size. “The tial revenue for smartphone
scratch the surface of the user place Pepperfry is among the transaction size on apps is brands by 2022. The Nielsen
complexity on the ground growing band of companies twice as much as compared to report is an indication of how
when one looks at the spread of that keep a close watch on the mobile site, which is still brands can sharpen their
Indian language users within consumer data and mobile lower than desktop transac- mobile strategies to identify
this. Reverie Language usage. Pepperfry Chief tion values,” said Lal. and target their customers
Technology’s report also not- Product Manager Abhimanyu Brands are increasingly more efficiently.
.
MUMBAI | THURSDAY, 11 OCTOBER 2018 STRATEGY 17 <
Optimising outcomes
With increased local sourcing, LG hopes to cut cost and time to market AI can translate into meaningful outcomes
SANGEETA TANWAR with a focus on personalisation
T T
he country’s largest white goods mak- he cool factor and buzzword tation programme. From knowing
er LG finds itself in a sweet spot. status of Artificial Intelligence how much you spent in that bar last
Today, 90 per cent of its household (AI) aside, there is a genuine Saturday night to how much your
goods are made in India. Better still, by case to be made for leveraging AI in electricity bill was last month, the
increasing the use of locally sourced com- solving one of the biggest focus areas banks know everything. This data is
ponents by 5 per cent year on year, it has in the Indian retail banking today - from actual transactions and hence
already reached a localisation level of 90 per making the transition from product factual. Yet clean, formatted and
cent. Given that, LG India appears to have a focus to customer centricity. usable data is still a challenge in
clear advantage over competitors as many of However, the reality remains that almost all banks. Interestingly AI
them are still working their way upwards except for a few use cases such as itself can play a critical role in clean-
with localisation levels of anywhere between chatbots and back-office automa- ing up and enriching the raw data to
50 and 80 per cent. As things stand, the com- tion, AI’s foray into Indian retail make it ready for deeper AI insights
pany manufactures products like air condi- banking is yet to truly succeed in in a virtuous cycle.
tioners (ACs), washing machines, and ovens translating that magic sauce into a Process enablement: Would you
from scratch here in India. Televisions (TVs) personalised experience for cus- ever buy a shirt just because it was
and smartphones are the only two product tomers or material business result blue? Clearly not! The price, the
categories where import and localisation for the banks. brand, the tailoring design and the fit
ratios are to the tune of 50:50. I will attempt to explain four key all need to appeal to you in tandem to
Amit Gujral, chief marketing officer, LG enablers that banks can provide to make that final purchase decision.
Electronics India, says, “We are building ensure that their AI So why should it be
capacities to increase local sourcing. To pro- efforts translate into any different with
duce locally, one needs to strengthen R&D. meaningful and mate- respect to banking
Our teams are working towards bringing rial outcomes with a cross-sell? Banks in
learnings from one product focus on personalisa- India have traditionally
to another and from global markets tion and enhancing used data science to
to India.” client experience. build propensity and
The company has two R&D facilities in Structural enable- risk models focused on
the country — in Bengaluru and Delhi. ment : The heart of the answering "what" to
The total team strength at these two facil- structural issue is that offer to an existing cus-
ities is about 1,700. In a crowded white often AI is just another tomer, that is, the
The firm has two R&D facilities in the country — in Bengaluru and Delhi. The total team strength at these two facilities is about 1,700
goods market like India, the level of local- initiative within the proverbial 'next best
isation coupled with product innovation digital initiatives or RAGHU MOHAPATRA offer'. But this is just one
will determine a player's ability to move through product innovation. ers. LG’s Golden Eye TV is one such product data science depart- Group chief operating axis of the full person-
ahead of the completion. The durables “To sharpen their focus on localisation, that targets rural consumers and addresses ments rather than the officer, Goals 101 alisation experience.
market in the country stands at ~700 bil- organisations need to focus on two areas —
POWERING INNOVATION their concerns regarding small spaces etc. It core of business deci- Data Solutions As individuals, we
lion (up from ~250 billion in R&D and marketing. Global com- LG is building capacities to increase local has also launched innovations/solutions sions. This has led to a also have distinct per-
2008) and is estimated to grow LG claims to be panies that aim to innovate sourcing. To produce locally, it is such as the mosquito-away technology to lot of AI projects becoming use case sonal preferences with respect to the
at 10-12 per cent per annum. the first white ignore local know-how and bring strengthening its R&D team offer products that mitigate weather-relat- and department-specific rather than channel via which we want to con-
India is expected to rank fifth goods player to only technical know-how,” he ed health risks. LG also claims to be the first a conscious attempt to rethink and sume banking communication (e.g.
globally in this space by 2025, commercially says. The company is working towards white goods player to commercially power re-engineer the entire end-to-end SMS, e-mail, digital etc), as well as
according to a joint report by power household LG has been in India for bringing learnings from one product to household products with artificial intelli- client journey. Enabling this struc- content that appeals to us and the
Consumer Electronics and products with 20 years. Gujral points out that another and from global markets to India gence and internet of things technology. turally is not easy and much effort time in which we would prefer to
Appliances Manufacturers artificial the company has always been Talreja suggests that one of the chal- needs to be invested in changing consume it. The "when (time of send-
Association (CEAMA) and intelligence and big on meeting local needs LG India is experimenting with both lenges impacting the localisation plans of how we manage of not just the AI ing)", "how (dynamic personalised
consultancy firm EY. internet of things by offering them products size and format of the products to cater to multinational companies could arise from processes but the entire organisa- content)" and "which (channel)" are
The industry growth rate technology geared to serve Indian condi- the needs of Indian buyers the global leadership’s reluctance in giving tion’s thought process. To achieve often left out of the AI-led personali-
slipped to 4-5 per cent in tions. It is continuously scouting local leaders full freedom to take decisions. this, we need a potent mix of con- sation, reducing the true potential
financial year 2016-17 as sales were hit in for use cases to drive product innovation. Even as LG goes for higher localisation, it Companies may have to also deal with chal- tinuous education, evangelisation, impact of the communication.
the months following the demonetisation For example, the company’s focus on may have to deal with challenges like lenges like product and technology know- bottom-up feedback, up-skilling and Cultural enablement : The prioriti-
announcement in November 2016. The localisation saw it launching microwaves product and technology know-how or how or functional issues related to R&D. re-skilling across all functions and sation of traditional gut instinct and
South Korean major posted sales of ~161 that help consumers prepare delicacies such functional issues But all these can be addressed effectively departments. domain experience over AI is still a
billion in India for the year through as dosa and roti, consumed regularly in with the help of in-house capabilities or by Data enablement: In AI, the algo- challenge when it comes to applying
March 2017, compared with ~144 billion Indian homes. Similarly, in-depth research reaching out to consultants. rithms are just the cooking process AI to front-end client engagement
the year before. of urban markets which are dominated by has redesigned its refrigerators so that they While its localisation strategy will but finally it's all about the quality of use cases. While AI is still far from
According to business coach Rajiv Talreja, working couples led the company to design able to store more. The same philosophy is help it offer more relevant products, experts the main ingredient -data. Solving replacing human contextualisation
a lot of businesses go in for localisation with refrigerators that promise to keep food, veg- applied to other products as well. say it will also help in cutting for data architectures and availabil- or emotional intelligence fully, the
a view to save costs. To be able to deliver a real etables and fruits fresh up to 15 days. Taking In a nutshell LG India is experimenting cost to market. The impact of its recent ity is the single most important pre- use of AI to even aid opinion is still
impact, organisations must see localisation as into account the fact that most Indians buy with both size and format of the localisation efforts will be felt in the com- requisite of any large AI implemen- significantly underutilised.
a means to fulfill the local needs of consumers products in bulk and store — the company products to cater to the needs of Indian buy- ing quarters.
SNIPPETS STATSPEAK
Digital experience ENGAGEMENT
USER BEHAVIOUR TO RETENTION
As over-the-top (OTT) applications continue their growth in terms of user Retention rate or percentage of
engagement, there is a decisive shifttowards consuming contenton these users who stay active over a
platforms compared to TV, according to a newstudy. Analysing 8.7 billion data certain period of time
points across 100 million devices and 80 million unique users, CleverTap has
WEEK1
collated data thatcould help design the customer engagementstrategyfor
these OTT apps. Highlights: 41.8%
WEEK2
78% 26% 31.8%
Across industries, at least 84 per cent of New users who New users who engage
consumers say their experiences with using with media at least three
register within a WEEK3
digital tools and services fall short of times in the first month
week of installation
expectations, according to the Gartner, Inc. 22.6%
Digital Consumer Experience Index. To gauge the
current state of consumers’ perception of key 8 Average time it takes a new user 72 Average time taken by users to play WEEK4
characteristics of their digital experiences, minutes to register after first app launch hours media at least three times
Gartner conducted an in-depth survey of their 22.0 %
engagement with and reactions to common
UNINSTALL
digital use cases across 11 industries. Those digital
use cases included actions such as placing a retail
order, submitting a service request to a bank,
RATES 35% Uninstall within 30
days of first app launch 20% Reinstall within 30 days
of app uninstall
Source: Mobile marketing platform
CleverTap
18 PERSONAL FINANCE
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1
IMAGE:ISTOCK
A
rnav Deshmukh, 22, who Deshmukh will need ~250,000- instruments are required. Business income into equity mutual funds to ment. This entitled the builder to
recently graduated from IIT- 300,000 for his trip. Mumbai-based development professional Devenish Medium-term goals: Management meet this goal. cancel the allotment under the terms and conditions stipu-
Madras and is a scientist with financial planner Pankaaj Maalde Chopra, 23, has started working consultant Preeti Bhatt from Pune Malhar Majumder, founder of lated in the allotment letter.
the Indian Space Research suggests that Deshmukh should recently and wants to buy a car in plans to buy a house after five years. Positive vibes consulting and The Guptas argued that cancellation of the allotment
Organisation, plans to go on an either start a recurring deposit of three-four years. He will need The cost of the three-BHK she Advisory, says that given her cur- merely for non payment of one instalment was not justified.
extended tour of Europe after two ~8,000 per month or start a system- around ~800,000 to ~900,000 for intends to buy is five million at pres- rent life stage, Vijaykumar can Rejecting this argument and differentiating the facts of the
years. And while many in his age atic investment plan (SIP) of ~8,000 this goal. He puts aside 20-25 per ent. She sets aside around 20 per expect aggressive growth in her case, the National Commission pointed out that in their
group might be quite happy to swipe in ultra-short term funds. cent of his take-home salary in long- cent of her salary each month in family income for the next few case default had continued despite two reminders. The
their credit cards or take personal There are many well-intentioned term mutual funds. Says Pradeep fixed deposits to make the down- years. If her income grows at 7-12 Commission also observed that a private builder would
loans to achieve this goal, young people who want to take con- Agarwal, CEO, Meri Punji IMF: “To payment. She has so far accumulat- per cent, she should be able to meet require money to complete construction in a time-bound
Deshmukh has started saving 30 per trol of their finances at an early age. buy a car in the next three-four ed ~300,000. her goal. Vijaykumar, he suggests, manner so it would be necessary to ensure timely payment
cent of his monthly salary in equity- However, they need to either take years around ~150,000 should be Bhatt should be prepared for the should build a well-diversified port- of the instalments. Failure to make payment by the due date
linked savings schemes (ELSS). good financial advice or be ade- invested each year in short-term cost of the house to rise to at least folio, a process already initiated would leave the builder with no alternative but to cancel the
The only problem with this plan quately informed about the instru- debt funds.” He adds that the car ~6.5 million in five years. Suppose through regular SIP investments allotment and forfeit the earnest money.
is the choice of instrument. While ments they invest in. should not cost more than 60 per that she buys a ready to move in into mutual funds. She can expect a Accordingly, by its order of October 3, 2018, delivered by
ELSS is an excellent tax-saving cent of his investments. At the time apartment. She will have to pay 20 return of 12-15 per cent from her Justice V K Jain, the National Commission set aside the
instrument for long-term saving, it Short-term goals: Goals like buy- of purchase, he should compare the per cent of the cost, or at least ~1.5 equity funds portfolio over the long State Commission's order and held the cancellation of the
is not the best instrument for meet- ing a car or travelling abroad are loan rates with the returns he is get- million as down payment. She can term. Any annual surplus should allotment to be valid and justified. However, it held that the
ing short-term goals. Also, ELSS has short-term goals whereas purchas- ting on his investments. If the borrow the balance ~five million also be allocated towards this goal, amount which could be forfeited would be merely the
a lock-in of three years, and each of ing a house or retirement planning investment returns are better than from a bank. If she takes a loan of via SIPs of equity mutual funds. earnest money (defined as the amount paid at the time of
concluding the contract), subject to a maximum of 10 per
cent of the agreed price of the flat. Going by this interpreta-
tion, the Gupta had paid only ~350,000 as earnest money
Don’tditchyourwalletjustyet
before the issuance of the allotment letter. Hence, the
Rapid Rise in UPI Transactions Commission concluded that the builder would be entitled
Volume(inmn) Value(in~bn) to forfeit this amount, and be liable to refund the balance
UPI Mobilewallets UPI MobileWallets amount of ~1.8 million along with 10 per cent interest.
UPItransactionsaregrowingfaster,but IMAGE:ISTOCK Aug 17 16.61 225.43 41.27 72.62 The writer is a consumer activist
walletsremainrelevantforthosewithouta Sep 17 30.78 199.48 52.93 81.54
Oct 17 76.77 201.23 70.58 86.60
bankaccountandseekingcashbacks Nov 17 104.84 186.67 96.41 93.88
TINESH BHASIN many believe that mobile wallets,
which saw exponential growth in the
Dec 17
Jan 18
145.46
151.83
288.37
326.30
131.44
155.71
125.68
125.63 TIPPING POINT
If you shop, order food, and book cabs past few years, may soon become Feb 18 171.40 310.01 191.26 131.04
online, there’s a good chance that you redundant.
Should you invest in Blockbuster return
Mar 18 178.05 268.79 241.73 100.97 the IT sector now? over past year
have two-three or even more pay- The rise in UPI transactions has
ment apps on your phone. But you been enormous compared to wallet Apr 18 190.08 279.29 270.22 116.95 The information technology Period IT funds category
may not have used a few of them for transactions over the past year (See May 18 189.48 325.41 332.89 140.47 sector has had a tremendous average return (%)
the past few months, with new play- table). The UPI platform is evolving Jun 18 246.37 309.62 408.34 146.32 run on the markets. The 3-month 3.96
ers coming up with better offerings. and offers more features than wal- Nifty IT Index has given a 1-year 42.49
Things are changing lets, but those are all Jul 18 235.65 325.18 458.46 152.02
return of 41.67 per cent over 3-year 11.14
rapidly in the country’s meant for someone Aug 18 312.02 340.65 542.12 155.73 the past year. The category
payments space with with a bank account. Sep 18 405.87 - 598.35 - 5-year 16.11
average return of IT sector
global technology giants YOUR MONEY Unlike wallets, you Source: RBI and NPCI funds over the same period
10-year 18.43
entering the segment. don’t need to load up Source: Valueresearchonline.com
Google Pay and money first in UPI-
has been 42.49 per cent,
Amazon Pay are already based apps. You can used extensively in rural areas for agents, most of them offer cashback tional layer that doesn’t involve a according to data from Value Research. Several factors
trying to win con- transact using a simple money transfers and by the younger in their wallets on booking. A portion bank account. Many wallet compa- are responsible for this. One is the rupee’s depreciation
sumers’ attention. identifier that looks population in metros, which may not of this can be used for future transac- nies have also added the UPI interface against the dollar, which is expected to boost the earn-
WhatsApp is gearing up like an email address. have a bank account,” says Vinay tions. Online shopping websites and for peer-to-peer money transfer. ings of all export-oriented sectors, including IT. Strong
to enable users to send Payments can be Kalantri, founder and managing some app-based taxi services also use Wallets have managed to grow despite economic growth in the US means that the discre-
money to others scheduled, and UPI director, The Mobile Wallet. wallets for cashbacks to make cus- the Reserve Bank of India making it tionary spending of US corporates on information tech-
through its chat app. can now be linked to Wallets gained popularity due to tomers spend more on their websites. mandatory for them to carry out full nology will be strong. However, after such a strong
Most of the new entrants are using overdraft accounts. “But all this is pos- discounts and cashbacks. That lure Kalantri points out that many cus- know-your-customer (KYC) compli- run-up, investors need to be extremely wary about
the Unified Payments Interface (UPI) sible if you have a bank account. You still remains. In fact, many compa- tomers use wallets as they don’t want ance. Wallets have added support for valuations when picking individual stocks, especially
for their offerings. As these global can use wallets even without having nies are using this to build loyalty pro- to involve their bank account in pay- many regional languages whereas with the markets turning turbulent.
companies resort to the UPI platform, a bank account. That’s why they are grammes. If you look at online travel ments. They rather prefer an addi- UPI supports Hindi and English only.
LIFE INSURANCE
Readers’ Corner BUDGET: ~10 MILLION-15 MILLION
opt for an increasing term plan, sentative is available for an any time before the policy Realty check
which will increase your insur- online chat or an artificial intel- matures for payment. Business Standard bringsyou a snapshotofaveragecurrentrates and unit sizes in localities
ance cover by a certain percent- ligence enabled chatbot takes that offer propertyin the pricerange of ~10 million-15 million. Ifyou are looking at buyingreal
age every year. Besides offering down all your details and then a My brother has worked in a estate, an idea aboutprevailingrateswould come in handy
tax benefits, early purchase of representative gets back to you. company for 15 years and is
policy will ensure that you pay Life insurance companies also about to quit in order to start Avg price (~/sq ft) Avg unit size (sq ft) Avg price (~/sq ft) Avg unit size (sq ft)
much lower premiums. extend customer care services his own venture. His
through their call centres. You organisation covered him AHMEDABAD Kakkanad 4,566 2,601
My friend purchased a policy can connect with them anytime under a group life policy. Will it Jodhpur Village 6,032 1,997 Panampilly Nagar 7,112 1,719
four years ago for which he pays to discuss your queries, or for any be possible for him to transfer Science City Road 4,740 2,518 KOLKATA
monthly premiums. It is help that your family or you seek. the group policy into an Vastrapur 5,892 1,908 Mukundapur 7,254 1,907
PANKAJ RAZDAN difficult for him to keep tab of To ensure that the process is has- individual one?
Mani Nagar 5,825 1,964 Saltlake-V 6,084 1,899
this payment. Can he start sle-free, keep the policy docu- No, your brother will not be able
I am 24 and have just started paying the premiums ments, website and call centre to transfer the group policy into Gota 4,233 3,344 Kankurgachi 8,162 1,410
earning. My father is advising annually? details handy, updated and in a an individual policy. If need be, Bopal 4,312 2,578 New Town 6,291 1,937
me to purchase a life insurance Yes, your friend can change his place where they are easily acces- he can purchase an individual Naryanpura 5,248 2,176 Beleghata (Beliaghata) 6,768 1,851
policy as a tax-saving tool. How premium paying mode from sible to your family members. life insurance policy for himself. JAIPUR Tangra 5,928 1,998
do I decide on the right policy? monthly to annual at the time of Vaishali Nagar 4,856 2,433 NAGPUR
Will the policy serve any policy purchase anniversary. I am 58 and have a life I have purchased a critical
Civil Lines 6,000 2,100 Gandhi Sagar Lake 8,347 1,475
purpose five years down the However, the change will be insurance policy for which my illness policy. In case I am
line when I earn more and am subject to the particular prod- wife was the nominee. Now she detected with one, how can I get Bani Park 6,432 1,887 Rambagh 7,000 1,639
married? uct’s guidelines. These can differ is no more. I do not keep well my claims? Mansarover 6,329 2,061 Narendra Nagar 6,500 1,770
Financial protection decisions from one insurance company to either and my childhood friend In case a policyholder is detected Jagatpura 6,500 1,850 Dharampeth 8,357 1,557
taken early always prove to be another. and his family take care of me. to be having a critical illness, the SC Road 6,750 1,585 Raj Nagar 7,500 1,896
wise. As you have just started Can I make him the nominee claim settlement for critical ill- Nirman Nagar 6,705 1,811 New Colony 6,022 2,205
your career, it is absolutely the I am planning to purchase a for my life insurance policy? ness policies is relatively simpler
right time for you to purchase a policy online and not through Yes, you can appoint your friend than for life insurance. You will KOCHI Ganeshpeth 6,350 1,783
life insurance policy. Identify an agent. However, my concern as the nominee for your life require the specialist doctor’s Palarivattom 6,887 1,899 VISAKHAPATNAM
your financial goals and the is that there will be no agent to insurance policy. The nominee certificate and other medical Maradu 5,838 1,990 MVP Colony 6,421 2,164
lifestyle needs you would like to assist my family at the time of holds the money in trust for the reports citing the detection. Edapally 5,770 2,127 Seethammadhara 5,500 2,427
achieve at different stages of the claim, in case they need any actual legal heir, if any. Section Once you contact your insurer Kaloor 5,951 1,786 Peda Waltair 5,600 1,980
your life and then opt for a suit- support. 39 of The Insurance Act, 1938 and submit all the documents,
Kadavanthra 5,643 1,975 Rushikonda 3,000 3,695
able plan. As you mentioned You should not worry about the allows the holder of a life insur- the claim will be settled.
rightly, your responsibilities and servicing of your policy if you ance policy to nominate a per- Note
·Ticket price range considered for the above data points is between ~ 10 million and ~ 15 million
expenses will only go up in the have purchased it online. Most son or persons to whom the The writer is MD & CEO, Aditya Birla
· All the data points discussed in the above table refer to primary market only
future. To ensure that your loved insurers today offer instant money shall be paid in the event Sun Life Insurance. The views · Above residential data set comprises of residential apartments only
ones and you are adequately pro- online help through chatbots of his death. This can be done expressed are the expert’s own. Send · Above residential data is representative of organised real estate developers only
tected at all times, you should and call centres. Either a repre- while purchasing the policy, or at your queries to yourmoney@bsmail.in · The top performing micromarkets based on sales during August 2017 to July 2018 is represented in the table
· Data points are updated till July 2018 Source: PropEquity
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
.
MUMBAI | THURSDAY, 11 OCTOBER 2018 TAKE TWO 19 <
India’s climate
countries are not to be held accountable for their
At Paris, India took a rather ambitious first step existing commitments.
with the understanding that the first set of targets “There will be pressure on developing coun-
under the agreement going from 2020 onwards up tries to ratchet up their ambition and present
to 2030 would not be ratcheted up. The agreement revised and more ambitious NDCs by 2020.
providesforareviewandupwardrevisionofthetar- However, it is important to ensure that the conver-
change dilemma
gets for the next phase after 2030. sation on the IPCC report is premised on equity
India committed to reduce the emissions inten- and fairness and in the answering of the who and
sity of its GDP by 33 to 35 per cent of the 2005 lev- the how, these principles must not be forgotten,”
el by 2030. To do so, by 2030 the country would says Indrajit Bose of the Third World Network, an People could start to move to the artificial islands
derive 40 per cent of its power capacity from non- international NGO that tracks the negotiations. by 2032
fossil fuel. Domestically, the government fixed a “Developing countries have to invest large
With the idea of a fair burden-sharing formula out of the game, tough target of setting up 100 Gw of solar power by amounts for adaptation. How does one ratchet up HongKonghaslongbeenacontroversialoption
2022, to be topped up by 25-50 Gw NDCs without seeing accompa- toboostthesupplyofhomesdueto
India could be asked to take yet deeper emission cuts without by 2030. This won India accolades nyingincreaseinsupportforadap- environmentalconcerns.Butpublicoutrageover
for taking a leadership role on the The US and the EU tation or finance for developing acrisisinhousingaffordabilityisencouraging
any financial support at the Poland summit global stage even as some histori- have argued hard countries?” he adds. officialstoact,evenasthepropertymarketis
cal emitters took on relatively to not let the With the Paris Agreement now showingsignsofcoolingafteryearsof
NITIN SETHI Not keeping the temperature rise under check modest commitments. principle of equity the template to move forward, stratosphericgains.
New Delhi, 10 october could have substantial economic and ecological By August 2018, the country and fair distribution developing countries are unlikely Tomitigateoppositiontoreclamation,Lam
impacts on the planet, and countries such as India has installed 23 GW of solar pow- of responsibility to give the US and EU an easy walk hassaidmostofsuchlandwillbeearmarkedfor
I
n 2015, the Paris Agreement was crafted to suit are likely to face some of the worst consequences. er capacity and the 100 GW target become a firm over in Poland on this count. subsidisedhousing.Asmanyas1.1millionpeople
the demands of the then US government. The This is set to put India and other emerging looks tough to achieve within the central basis for the Bose says, “The US spent sev- couldliveontheartificialislands,shesaid.That’s
agreement, taking the bottoms-up approach, economies in a challenging spot. next four years. implementation of eral hours at the IPCC meeting to about15percentofHongKong’scurrent
left it to each country to volunteer its best pos- The report’s conclusions have triggered a The new IPCC report has said the Paris Agreement ensure the words ‘principle of population.Thefirstphaseofreclamationwork
sible effort in the global fight against climate demand from the global civil society that coun- that when looked at cumulatively equity’ do not find mention in the wouldstartin2025,withpeopleabletomoveinby
change. No one would dictate how much effort tries should ratchet up their emission reduction all such targets of the 177 coun- report. They did not endorse the 2032,Lamsaid.
each country must make to reduce greenhouse gas targets. This demand will soon snowball into a tries are not adequate. But the panel was neither final report. During the Bangkok climate talks held Othermeasureswouldinclude:allocating
emissions. By now, 177 countries, including India, political slug-fest at the upcoming climate change tasked with nor has answered the politically sig- in September 2018, developed countries were quite about70percentofnewlandtopublichousing;
have submitted their targets, which are called the negotiations in December in Poland. nificant question of who needs to do more and how aggressive about not wanting to talk about finance movingfastertoconvertso-calledbrownfields
Nationally Determined Contributions or NDCs. On the face of it, the demands for deepening the this additional responsibility will be apportioned. under the Paris Agreement. In such a scenario, sites,suchasdesertedrurallandintheNew
But the latest report of the UN Inter-govern- emission cuts reads as an easy and perfect global ThisdebateisgoingtorageatthePolandclimate pushing certain developing countries to revise their Territories,toresidentialuse;andsettingupa
mentalPanelonClimateChange(IPCC)haswarned response to the dire warnings of the IPCC report. change talks in December. Two factors are likely to NDCs upwards without the developed countries landsharingpilotprogrammethatcouldturn
that the targets are inadequate to ensure that the But the report does not answer two critical ques- wedge India into a corner. The US — the biggest his- doing their fair share is going to be a challenge.” landheldbydevelopersintoprojectsthat
global average temperatures do not rise more than tions. One: What are the estimated economic costs torical emitter — has stepped away from its existing The agenda for Poland negotiations in accommodatebothpublicandprivatehousing.
1.5 degree Celsius above the pre-industrial era. The of topping up the existing emission reduction tar- commitments on emission reductions as well as December is crammed tight with dozens of deci- Analmost15-yearbullruninpricesprompted
panel of scientists has concluded that the emis- gets? Two: On what basis would these additional providingfinance.TheUS,andtheEuropeanUnion sions to be taken for implementing the Paris UBSGrouptolastmonthnameHongKongasthe
sion reduction efforts of countries for the period emission reduction cuts and the attendant addi- toalesserextent,havearguedhardatthetalkstonot Agreement from 2020. With the new IPCC find- citymostatriskofahousingbubble.Still,rising
between now and 2030 need to be ratcheted up in tional economic burden be apportioned between let the principle of equity and fair distribution of ings also to be addressed at these negotiations, the mortgagecosts haveweakenedsentimentand
order to have a good chance of keeping the tem- countries? These issues are particularly when the responsibility become a firm central basis for the geo-political significance of the upcoming talks banksarebeginningtotrimtheirproperty
perature rise under check. US has decided to sit out the Paris Agreement. implementation of the Paris Agreement. has gone up several notches. valuations.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
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MUMBAI | THURSDAY, 11 OCTOBER 2018 1
F
rench news website, Mediapart, On Wednesday, the Supreme This condition does not
reported on Wednesday Court (SC), in dealing with
details of the decision decision making apply to the Rafale either,
that it had accessed an the three petitions filed making process in the process leading to the which was extensively
internal document from aero- against the purchase of 36 Rafale deal with France award of the order for tested and evaluated in
space firm Dassault, which Rafale fighters from France, to be submitted in three the defence equipment user trials by the Indian Air
stated that partnering Anil asked for details of the gov- separate sealed covers in question' Force.
Ambani’s defence firm ernment decision-making on or before October 29 | The conditions in which Paragraph 105 of DPP-
was a quid pro quo to that scuttled an ongoing pro- 2016 caters for an IGA that
| The apex court made it the govt can process a
New Delhi for winning a curement of 126 Rafale fight- would bind the OEM’s gov-
^7.8 billion contract to sup- ers and replaced that with the clear that it would not deal through an ernment to ensure “product
ply 36 Rafale fighters to the Indian purchase of 36 Rafales from examine the technical Inter-Governmental support over a long period of
Air Force (IAF). French vendor, Dassault. and commercial aspects Agreement is detailed in time” and to “provide for the
The Mediapart report states: The SC has asked for the of the purchase Paragraphs 104-105 of assistance of the foreign gov-
“According to an internal Dassault doc- details to be submitted in | All that the judges will Defence Procurement ernment in case the con-
ument obtained by Mediapart, a senior three separate sealed covers Procedure of 2016 tract(s) runs into unforeseen
scrutinise is: 'the details
member of the aviation group had on or before October 29. The problems”.
explained to the staff representatives matter will next be heard on Paragraph 106 provides
that the joint venture was a ‘counter- October 31. for “procurement on strate-
part’, ‘imperative and mandatory’ to win The apex court made it dure, i.e., DPP-2006. the case with the Rafale pro- gic considerations”, where
the Rafale market.” The Rafale deal has come under a concerted attack from Opposition parties clear that it will not examine The conditions in which curement, which was already “major diplomatic, political,
The joint venture referred to was the technical and commer- the government can process a being pursued under a global economic, technological or
Dassault Reliance Aerospace (DRAL), proposed this service group (Reliance ernment with paying an inflated price cial aspects of the purchase deal through an IGA are tender. military benefits deriving
which Anil Ambani’s Reliance Group Group), and Dassault who negotiated for 36 Rafales; with endangering nation- – that is to say, the suitability detailed in Paragraphs 104- The second contingency from a particular procure-
had formed with Dassault, with the for- with Ambani. We did not have a choice, al security by cancelling an ongoing of the Rafale or the price at 105 of DPP-2016. Paragraph is “where a very large value ment may be the principal
mer holding 51 per cent and the latter 49 we took the interlocutor who was tender for 126 Rafales; and with “crony which it was bought. 106 stipulates the conditions weapon system/platform, factor determining the choice
per cent of the equity. DRAL was set up given to us.” capitalism” in selecting the Reliance All that the judges will for “procurement on strate- which was in service in a of a specific platform or
just days before Prime Minister Hollande was France’s president in Group as a partner to Dassault. scrutinise is “the details of gic considerations”. friendly foreign country, is equipment on a single ven-
Narendra Modi and then-President April 2015, and he hosted Anil Ambani has not the steps in the decision- Paragraph 104 notes: “There available for transfer or sale.” dor basis.”
François Hollande made the shock Prime Minister Modi in Opposition parties in denied benefitting from making process leading to may be occasions when pro- This clause does not apply to This also provides for buy-
announcement in Paris, on April 10, Paris when the latter pub- India have charged Rafale-linked offsets. the award of the order for the curements would have to be the Rafale either, since it stip- ing equipment from an OEM
2015, that the IAF would buy 36 fully- licly announced his decision the National However, the Reliance defence equipment in ques- done from friendly foreign ulates that the purchase who is “not necessarily the
built Rafale fighters from Dassault. to buy 36 Rafales from Democratic Alliance Group – in a series of legal tion, i.e., Rafale jet fighters countries, which may be “would normally be at a lowest bidder (L-1).”
Opposition parties in India have Dassault in “flyaway” (or ful- (NDA) government with injunctions issued to vari- (36 in number).” necessitated due to geo- much lesser cost than the “Decisions on all such
charged the National Democratic ly built) condition. “crony capitalism” — ous media houses — has Effectively, the apex court strategic advantages that are cost of the original plat- acquisitions would be taken
Alliance (NDA) government with “crony Paris and Dassault have alleging that claimed that it benefited will establish whether, in likely to accrue to our coun- form/weapon system, mainly by the Cabinet Committee on
capitalism” — alleging that government issued statements indicat- government pressure only from ^778 million going in for an Inter- try. Such procurements… due to its present condition.” Security (CCS) on the recom-
pressure was put on Paris to discharge ing that the decision to part- was put on Paris to worth of business, not Governmental Agreement would be based on mutually This condition applies for sit- mendations of the Defence
offset obligations — worth 50 per cent of ner Ambani was taken by discharge offset ^3.9 billion. (IGA) with France, the gov- agreed provisions between uations like India’s purchase Procurement Board (DPB),”
the value of the contract, or ^3.9 billion them. But none of those obligations — worth 50 While all 36 Rafale ernment met the conditions the governments of both the of INS Vikramaditya from says DPP-2016.
— through DRAL. carefully worded statements per cent of the value of fighters are being manu- and procedures stipulated in countries.” Russia. One analyst says the gov-
This was endorsed by former French directly contradict the contract, or factured in France, an off- the Defence Procurement This paragraph then The third contingency ernment could use Paragraph
President Hollande, who told Mediapart Hollande’s explicit allega- ^3.9 bn — through DRAL set requirement, which is Procedure of 2016 (DPP- describes three contingencies relates to the purchase of “a 106 to justify the 36 Rafale
on September 22 that the Indian gov- tion. a part of all Indian defence 2016). when an IGA can be resorted specific state-of-the-art procurement on the grounds
ernment had left Paris with no choice Now the Dassault document report- procurements worth more than ~20 bil- DPP-2016 governs the pro- to. The first is when India’s equipment/platform, howev- of French willingness to
but to do business with DRAL. ed by Mediapart reinforces Hollande’s lion, requires French companies that curement of 36 Rafales, while military identifies “equip- er, the government of the equip them with nuclear
Asked by French news website, words. build the Rafale — Dassault, Thales, the aborted procurement of ment of proven technology original equipment manu- weapons delivery ability.
Mediapart, “Who selected Reliance as a The Rafale deal has come under con- Safran Aero Engines, and MBDA — to 126 medium multi-role com- and capabilities… (while) par- facturer’s (OEM’s) country However, the DPB note and
partner and why?” Hollande respond- certed attack from the Opposition par- plough back 50 per cent of the contract bat aircraft was being pur- ticipating in joint interna- might have imposed restric- the CCS note would have to
ed: “It was the Indian government who ties, which have charged the Modi gov- value into Indian defence production. sued under an earlier proce- tional exercises.” This is not tions on its sale and thus the support such a contention.