ECONOMY & PUBLIC AFFAIRS P6

RBI sticks to stiff stance on defaultThe Reserve Bank of India has shown its reservation on reviewing thedefinition of default. This is a keyparameter for credit rating agencies toassign ratings to commercial papers ofcorporates, even as a parliamentarypanel insisted on relaxing the norms,writes SHRIMI CHOUDHARY

ECONOMY & PUBLIC AFFAIRS P7

Govt to link Aadhaarwith voter ID soon The Centre is working on a Bill to amendthe election law for linking Aadhaar withthe voter identity card. The objective is toclean up electoral rolls, removeduplication, and facilitate migrantworkers to vote remotely. According tosources, the law ministry is likely toprepare a Cabinet note soon to amend theRepresentation of the People Act, 1951.

COMPANIES P2

Aurobindo jumps 20%post nod from USFDAAurobindo Pharma got a huge relief with its Unit IV, an injectables plant located in Hyderabad, receiving an establishmentinspection report from the USFDA. Investors,too, celebrated, with the company’s shareprice surging 20.4 per cent on Wednesday,leading to an increase of ~5,980 crore in itsmarket value to ~35,288 crore on the BSE,writes UJJVAL JAUHARI

INDICES SNAP 4-DAYLOSING STREAKThe benchmark indices snapped their four-session losing streak as sentiment towardsrisky assets improved on hopes that Chinawould take measures to boost its economy.The Sensex closed at 41,323, up 429 points or1.1 per cent — the most since February 5. The Nifty closed at 12,126 — up 133 points or1.15 per cent —recouping more than half the losses accumulated over the previousfour sessions. 12 >

RAGHAVENDRA KAMATH & NAMRATA ACHARYAMumbai/Kolkata, 19 February

US-based private equity investor Blackstone has emerged asthe front-runner to buy South City Mall, one of the largest mallsin eastern India, said sources in the know.

A dozen investors, including Blackstone, Xander, andGIC, have put in bids forthe mall, measuringabout 1 million squarefeet (sq ft), the sourcessaid, adding that thedeal is expected to bearound ~2,000 crore.

If the deal goesthrough, it will be one ofthe biggest mall deals inthe past five years. In2017, Blackstone boughtElante mall inChandigarh from theCarnival group for~2,200 crore, the largestsuch deal in recentyears.

Some of the currentowners, including theEmami group, SurekhaGroup, Merlin Group,Shrachi group,Rameswara group, andJB group, want to exit themall they set up in 2008,said the sources.

Blackstone and itsmall company did notcomment on the matter.A mail sent to Xanderdid not elicit any response. GIC could not be contacted forcomments. The Emami group also declined to comment onthe story. Turn to Page 17 >

SURAJEET DAS GUPTANew Delhi, 19 February

The deal between SubhashChandra’s Essel group, the pro-moters of direct-to-home (DTH))company Dish TV, and Sunil

Mittal’s Bharti Airtel has been called offdue to differences over valuation.

The promoters are now in talks with aglobal financial investor, which has nooperations in the country, to pick up halftheir stake.

The cash generated from such a salewill be used as part of the plan by the Esselgroup to buy back 5 per cent in flagshipcompany Zee Entertainment Enterprises(ZEEL) in the next 12 months.

According to sources close to the discussions, it expects to get around ~2,000crore from the deal. The talks with BhartiAirtel were over the latter buying the pro-moters’ stake.

The first offer to buy the Zee shares willbe given to the existing financial investors,which include Oppenheimer with a 19.86per cent stake, as well as GIC, which hasaround 10 per cent, besides others.

With this, the promoters, who are cur-rently in a minority, will be able to increasetheir stake from the current 5 per cent.

The game plan is eventually to go up to26 per cent, say top sources close to theEssel group though a group spokesmandeclined to comment on the issue.

The promoters of ZEEL are also in talkswith a US-based strategic investor to pick upa 26 per cent stake in the company. Sourcessay the potential investor is willing to allowthe promoters to manage the company aspart of the tentative discussions for a deal.

With operating revenues of ~6,166.1crore, Dish TV has a market capitalisationof ~2,046 crore. It has a subscriber base of23.94 million, putting it neck-and-neckwith Tata Sky, which is just a whiskerahead. But Dish TV’s subscriber base isfar ahead of Bharti Airtel’s 23.39 per centshare of the 69 million subscribers in theDTH market.

Bharti Airtel has been looking atexpanding its DTH operations in order totake on Reliance Jio’s aggressive strategy toreach homes through fibre-to-the-homeand bring in high speed broadband.

Had it worked out, the acquisition ofDish TV would have catapulted BhartiAirtel into the position of the largest play-er in the DTH market with a market shareof over 54.62 per cent, overtaking Tata Sky.

Turn to Page 17 >

Essel promoters are now in talks with a globalfinancial investor to pick up half their stake

Dish-Airtel deal falls throughover valuation

SUBHAYAN CHAKRABORTYNew Delhi, 19 February

Dashing hopes of a possible bilateraltrade deal during his upcoming visit toIndia, US President Donald Trump onWednesday said a comprehensive agree-ment would take much longer to finalise.

“Well, we can have a trade deal withIndia, but I’m really saving the big deal forlater on. We’re doing a very big trade dealwith India. I don’t know if it’ll be donebefore the election,” Trump said inWashington DC. The US is set to hold itspresidential elections in November.

Trump, who will be on his maiden vis-it to India on February 24 and 25, alsohinted that he remained unhappy withthe current levels of import tariffs placedby India on American goods. “We’re nottreated very well by India, but I happen tolike Prime Minister Modi a lot,” he said.

Trump has earlier repeatedly calledIndia a “tariff king”, arguing that classicAmerican exports like the HarleyDavidson motorcycles were unable tocompete in India owing to high marketaccess barriers. Diplomatic source sayfurther trade talks are planned duringthe visit itself with US TradeRepresentative Robert Lighthizer and USCommerce Secretary Wilbur Ross accom-panying Trump. Turn to Page 17 >

Trump dashes trade pact hopes,says ‘saving big deal for later’

Blackstone leadsrace to buy largestmall of Kolkata

More than three years after it was launched byPrime MinisterNarendra Modi with much fanfare, the Union Cabinet onWednesdaydecided to make the much-criticised PradhanMantri Fasal Bima Yojana (PMFBY) optional for loanee farmers as well and also incorporated a host of other changes to the scheme to make it more farmer-friendly. The scheme would bevoluntary for loanee farmers from kharif 2020 onwards. So far, since inception, the central government has spent almost ~50,000 crore as its share of premium subsidy under the scheme. 4 >

CABINET MAKES CROP INSURANCESCHEME VOLUNTARY FOR FARMERS

TO OUR READERSThe one-page commercial feature on Prosperity: The Organic Way, beingcarried on Page 5, is equivalent to apaid-for advertisement. No BusinessStandard journalist was involved inproducing it. Readers are advised totreat it as an advertisement.

THE MARKETS ON WEDNESDAY CChhgg##

Sensex 41,323.0 428.6Nifty 12,125.9 133.4Nifty futures* 12,142.7 16.8Dollar MARKET CLOSE ~71.6**Euro MARKET CLOSE ~77.5**Brent crude ($/bbl)## 58.2## 57.3**Gold (10 gm)### ~41,469.0 ~499.0

ECONOMY & PUBLIC AFFAIRS P7

INDIA TO SWITCH TO CLEANESTPETROL, DIESEL FROM APRIL 1

BRAND WORLD P17

www.business-standard.com

*(Feb.) Premium on Nifty Spot; **Previous close; # Over previous close; ## At 9 pm IST; ### Market rate exclusive of VAT; Source: IBJA PUBLISHED S IMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL) , NEW DELHI AND PUNE

BRAND ALIA BHATTPERFECTS HER PITCH

THURSDAY, 20 FEBRUARY 202020 pages in 1 sectionMUMBAI (CITY)~9.00VOLUME XXIV NUMBER 134

Deal size could be around ~2,000 cr

PERSONAL FINANCE:Repatriate property saleproceeds to India 15 >Since there will be tax incidence in the foreign country, an investor has to seek credits in India, writes SSAANNJJAAYY KKUUMMAARR SSIINNGGHH

TECHNOLOGY:Learning via QR codes 16 >BBIIBBHHUU RRAANNJJAANN MMIISSHHRRAA explains how thedigital learning contents integratedinto the school learning system aretransforming education

ON THURSDAY

SPECIALS

Preparations underway for the Namaste Trump event in Ahmedabad. US PresidentDonald Trump will be on a two-day visit to India on Feb 24-25 PHOTO: PTI

MEGHA MANCHANDANew Delhi, 19 February

Almost three weeks after the UnionBudget, two top representatives of IndiaInc visited the North Block office ofFinance Minister Nirmala Sitharaman onWednesday. Bharti Airtel Chairman SunilMittal and Vodafone Idea ChairmanKumar Mangalam Birla were not there totalk about issues related to the Budget,but to seek relief for the deeply stressedtelecom sector.

For Birla, this was the second straightday of reaching out to the government. OnTuesday, he along with Vodafone Idea CEORavinder Takkar had met top officials ofthe Department of Telecommunications(DoT), including Secretary Anshu Prakash,seeking relief from coercive action if thecompany failed to pay up the dues linkedto adjusted gross revenue (AGR).

After meeting the FM on Wednesday,

Mittal told reporters that the AGR issuewas not discussed. He said the telecomsector was under stress for the last three-and-a-half years and that the governmentshould focus on its sustainability.

“The only thing the government needsto do is to focus on how to ensure sustainability of the sector,” Mittal said.He also met the telecom secretary onWednesday.

Mittal said Bharti Airtel had alreadyannounced plans to pay the dues arisingfrom the Supreme Court ruling and wascurrently calculating its liability. The com-pany has paid ~10,000 crore out of its esti-mated liability of ~35,500 crore. VodafoneIdea, which has maintained that it wouldbe tough to continue as a going concern,has paid ~2,500 crore and has committedto pay another ~1,000 crore this week.Vodafone Idea’s AGR dues work outto more than ~50,000 crore.

Turn to Page 17 >

Mittal, Birla meet FM on telecomcrisis as AGR deadline closes in

“THE ONLY THING THEGOVERNMENT NEEDS TO DO IS TO FOCUS ON HOW TOENSURE SUSTAINABILITY OFTHE (TELECOM) SECTOR”

SUNIL BHARTI MITTAL, CHAIRMAN, BHARTI AIRTEL

ARNAB DUTTANew Delhi, 19 February

As China reels from the coronavirusepidemic, Korean mobile phone makerSamsung seems to be recovering some ofthe lost ground.

While the outbreak has forced mostleading brands like Apple, Xiaomi, Oppo,Vivo, and Realme to rework their launchdates and pricing strategies, Samsung,which struggled to maintain its hold overthe market last year, has taken the lead.

The data from the Bureau of IndianStandards (BIS) shows that the local unitof the Korean major has lined up nine newhandset models for launch in early 2020.Among major brands, only Redmi (fromXiaomi) and LG have registered twomodels each since January 1 with thenational standards body, followed byMotorola and Coolpad (one each).

Delhi-based local brand Cellecor,which has a presence in the entry-levelsegment, tops the chart with 15 modelsregistered since January 1. Hitech, anotherIndian brand, holds the third spot witheight models registered over this period.

According to Faisal Kawoosa, leadanalyst at TechArc, the trend clearlyindicates that “major OEMs (originalequipment manufacturers) are delaying their launches.Typically, after the BISregistration, models arelaunched in 4-6 weeks”.

He said, “As of now itgives advantage to Samsungamong major OEMs as it can procure from Korea and other countries,resulting in low impact on itssupply chain.”

With manufacturingsuspended in China andsupply of key componentsand handset models injeopardy, Chinese firms arefeeling the heat. Though many of themhave set up facilities in India, theycontinue to depend heavily on suppliesfrom China.

Samsung, however, is somewhatimmune to supply disruptions in theneighbouring country. This is becausethe firm, which has been manufacturing

most of its handsets locally, ramped upits capacity in 2018 by adding new linesand product categories at its Noidafacility, doubling its installed capacity to

120 million units from 68million a year.

Moreover, unlike itsrivals, Samsung has an in-house supply chain of keycomponents like printedcircuit board and displaypanels. And its largestproduction base is inVietnam.

Navkendar Singh,research director at IDC,said Samsung was lesslikely to be impacted bythe recent crisis.

“Unlike its Chineserivals, Samsung’s operations are spreadacross continents. Thus, it has a largerinventory level and its plans are not solely dependent on China or India.Supply crunch from China, thus, may help it during the first quarter here,” he said.

Turn to Page 17 >

Virus pain for Chinese players may be Samsung’s gainKorean firm lining up nine launches as rivals crumble under supply chain disruption

Source: TechArc

Cellecor Samsung Hitech Jivi Redmi (Xiaomi)

LEADERS OF THE PACK

Registrations atBureau ofIndian Standards since

January1, indicating planned launches

Number of handset models15

98

6

2

BIGGEST MALL DEALSIN RECENT YEARS

Deal size (~cr)

*GIC bought 50% in Viviana Mall Source: Reports

BLACKSTONEElante Mall,

Chandigarh (2017)

BLACKSTONESeawoods GrandCentral Mall, NaviMumbai (2016)

BLACKSTONETreasure Island;

Treasure Island Next,Indore (2017)

GICViviana Mall*

(2016)

BLACKSTONEAlphaOne, Amritsar

& Ahmedabad(2015)

INVESTORMall (Year)

2,200

1,450

1,200

1,000

800

MODI GOVT DOES NOT ACKNOWLEDGETHE WORD ‘SLOWDOWN’: MANMOHAN

Formerprime ministerManmohan Singh onWednesdayslammed the economic policies of hissuccessorNarendra Modi, saying the government wasnot acknowledging there was a slowdown. “The realfiscal deficit is as high as 9 per cent and that is detrim-

ental to a 9-10 per cent growth,” Singh said after releasingthe book authored by erstwhile Planning Commission

deputy chairman Montek Singh Ahluwalia.He said 8 percent economic growth was feasible, but it required a

revamped fiscal policy and bold tax reforms. 7 >

THE DEALBREAKERS Issues thatare holding up an India-UStrade pact

INDIA'S DEMANDS| Resumption of benefits

under the US tradepreference scheme

| Exemption from high import tariffson steel and aluminium products

| Promise of no further reciprocaltariffs

US' DEMANDS| Reduced import duties

on engineering goodsand automobiles

| Concessions on high-value ITgoods, industrial components

| Greater market access for medicaldevices, farm & dairy products

STRONG CONNECT

Figures for quarter ended September 2019 Source: Trai

*As of December 2019 Source: Capitaline

Marketshare of DTHproviders

31.23%Dish TV

31.60%Tata Sky

1.91%Foreign promoter

53.04%Indian promoter

11.24%FPI

2.66%MF/UTI

13.13%Retail

18.02%Others

23.39%Airtel

13.78 %SunDirect

Dish TV shareholdingpattern*100

80

60

40

20

0

4

DEATH TOLLMOUNTS TO 2,000

NO BAN ON DRUGEXPORTS IN WAKEOF CRISIS: CENTRE

LIMITED IMPACTON INDIA, SAYSRBI GOVERNORPAGE 18

OBAMA OR NIXON: WHICH TEMPLATE WOULD TRUMP’S VISIT FOLLOW?

PRESS TRUST OF INDIANewDelhi, 19February

The Department ofTelecommunications (DoT) isstillworkingon final adjustedgross revenuedues that serv-ice providers have to pay as ithas detected variation inaccountingpractices adoptedby different circle offices,according to official sources.

The licence finance wingof the DoT on February 3issueda letterwithguidelinesto all controller generals ofcommunication accounts toreconcile adjustedgross reve-nue (AGR) dues and askedthem to give 15 days time tooperators for the submissionof appeals and documentsrelated to deductions theymake in the final payment,sources said.

The letter was a follow upto a previous note sent by thelicence finance wing onDecember 4 and a follow-uponDecember 13 to the circlesfor re-verification of debitvoucher reports (DVR).

“The department hasbeen facing a challenge incarrying out the revisedassessments due to variousissues related to DVRs.Telecomoperators, includingAirtel and Vodafone Idea,have challengedmanyDVRs.

“Also, circle offices havenot adopteduniformpracticein accounting. The DoT hasasked themto re-verifyDVRsat the earliest in the light ofSupreme Court judgement,”an official source said.

Telecom operators havebeensubmitting twoseparateaudited details of deductiontowards interconnectionusage charges and roamingfee to the DoT. In one set,deductions have been

claimedby telecomoperatorson a paid basis while on anaccrual basis on the other.

“DoT noticed that manycontrollers of communica-tion accounts have beencherry picking the figuresclaimedby telecomoperatorsin their final DVRs. In somecases,DoTguidelines regard-ing deduction verificationissued in 2014, 2015 and 2016have not been followed.There have been caseswhereone CCA has allowed onekind of deduction andanother has disallowed,” thesource said.

2 COMPANIES

>

STOCKSIN THE NEWS

*OVER PREVIOUS CLOSE

>Torrent PharmaceuticalsBecomesfourthmostvaluablepharmastock;surpassesBiocon,Cipla

~2,241.65 CLOSE

p5.14% UP*

>Hindustan UnileverAnalystsbelieveresilientearningsgrowthtodriveperformance

~2,293.50 CLOSE

p2.71%% UP*

> Shree CementInclusioninNifty50indexwitheffectfromMarch27

~24,552.20 CLOSE

p3.17% UP*

> Vodafone IdeaTopgaineramongfuture&optionsstocks

~4.20 CLOSE

p37.70% UP*

>Granules IndiaUp50%in2020sofaronexpectationofrise inactiveAPIprices

~ 187.85 CLOSE

p 4.89% UP*

MUMBAI | THURSDAY, 20 FEBRUARY 2020

First 5G phone inIndia likely to bepriced at ~50,000The first5G-enabledhandsetin India tobe launchedbyChinesesmartphonemaker,Realme, is likely tocostaround~50,000,acompanyofficial said.Realme is set tobecomethe firstbrandtounveil 5G readysmartphonein IndiaonFebruary24,hesaid. PTI

Google-backedDunzo raises ~78 crfrom Alteria CapitalGoogle-backeddeliveryande-commerce firmDunzo saidithas raised $11million (over~78 crore) fromAlteriaCapital. It saidAlteria Capitalhasbeenacrucial peg inDunzo’smission tobecomeaprofitable local e-commercecompany. PEERZADA ABRAR

L&T Infotech boardevaluates CEO SanjayJalona’s extensionL&T Infotech's CEO&MDSanjay Jalona is likely togetanother termto leadthe ITservices firmafterhis tenureis comes toanend inAugust.Sources saidboardof the firmisweighinganextensionproposal.DEBASIS MOHAPATRA

ClarificationInresponsetoareport,AbbottIndiaMDAmbatiVenucalls itquits (publishedonFebruary19), thefirmhasclarifiedthatwhileVenuhasresignedasMDofAbbottIndia,hewillcontinueasitsdirector,andwillalsotakeoverasvice-presidentofAbbott'spharmaceuticalbusiness inIndia,whichincludesthelistedAbbottIndiaandtheunlistedbusiness, fromMarch1.

IN BRIEF

McLeod Russel defaults onpayments of ~1,187 crore

WilliamsonMagorGroup-ownedMcLeodRusselonWednesdaysaid ithasdefaultedonpaymentsof~1,187.09croretillDecember31, 2019.Accordingtoaregulatory filing, thefirmsaidwhile itstotal indebtness, inclusiveof long-term

andshort-termloans,standsat~2,189.85crore,adefaultof~1,187.09hasbeenmadebythefirm.Thedisclosure followsSebitightening itsdisclosurenormsfor reporting loandefaults.Accordingto law,anydefault inrepaymentofeither theprincipalor the interestamountto lendersborneby listedfirmswhichcontinuesbeyond30daysof thepre-arrangedrepaymentdatehastobemadepublic. AVISHEKRAKSHIT

SUDIPTO DEYNewDelhi, 19February

Kiran Mazumdar-Shaw,chairperson and managingdirector of Biocon, wasnamed the EY Entrepreneurof the Year (EoY) 2019. Shewill represent India at the EYWorld Entrepreneur of theYear Award in Monte Carlo,Monaco, in June this year.

The21st editionof theEoYawards in India also felici-tated industrialistAdiGodrej,chairman of Godrej Groupwith the LifetimeAchievement Award.

Winners in other cate-gories includedTuhinParikh,seniormanagingdirector-realestate, Blackstone India(Transformational ImpactPerson of the Year); FalguniNayar, founder&chief execu-

tive officer (CEO), Nykaa E-Retail (Start-up);ArunBharatRam, chairman, SRF(Manufacturing); SridharVembu, founder&CEO,ZohoCorp (Services); YashishDahiya,CEOandco-founder,PolicyBazaar (FinancialServices); Kuldip SinghDhingra, chairman, andGurbachan Singh Dhingra,vice-chairman,BergerPaints(Consumer Products andRetail); ArvindLal, chairmanand managing director, andOmManchanda, CEO, Dr LalPathLabs (Life Sciences andHealthcare); KBS Anand,managing director and CEO,AsianPaints (EntrepreneurialCEO); and Ravi Raheja andNeel Raheja, group pres-idents, K Raheja Corp(Energy, Real Estate andInfrastructure).

Kiran Mazumdar-Shaw isEYEntrepreneurof theYear

UJJVAL JAUHARINewDelhi, 19February

A urobindo Pharma gota huge relief with itsUnit IV, an injectables

plant located in Hyderabad,receiving an establishmentinspection report (EIR) fromthe US Food and DrugAdministration (FDA).Investors, too, celebrated,with the company’s shareprice surging 20.4 per cent onWednesday, leading to anincrease of ~5,980 crore in itsmarket value to ~35,288 croreon the BSE.

An EIR with voluntaryaction indicated statusmeansthe FDA is not likely to takeany action, which couldotherwise have hampereddrug supplies to the US fromthis facility. The Street wassurprisedas analystswere fac-toring in a much adverseUSFDA action onUnit IV.

The facility remainsimportant as it contributesmore than 10 per cent toAurobindo’s overall sales andabout 20 per cent of the USsales (amajority of injectablessupplied to the US market).Further, there were about 46pending new drug applica-tions (about 30per cent of 154pending; see chart) and50-60per cent of pending injectablefilings from this facility.

Since injectables are com-plex-to-manufacture limited-competition products, thecompany also garners highermargins.Hence, anynegativeregulatory outcome wouldhave impacted the company’searnings by about a fifth andalso delayed new productapprovals and future growth.

Analysts at ICICISecurities now expect thecompany’sUS injectables seg-ment to grow 22 per centannually over 2018-19 and2021-22, driving overall reve-nue by 17.1 per cent annuallyduring the period.

The firm has been report-ing stronggrowth inkeygeog-raphies. The US, which is

about half of Aurobindo’ssales, had grown by 22 percent year-on-year (YoY) in theDecember quarter (23.5 percent in constant currencyterms), driven by injectables,orals, and other drugs. Theinjectables business reportedrobust growth of 24 per centto $76 million, contributingabout a fifth to US revenue.

European revenue, con-tributing a fourth to overallsales, grew 14.2 per cent YoY(19 per cent in euro terms) inthe December quarter.

AnalystsremainpositiveonAurobindo’s future prospects,including the US, despite ahigherbase.Lowproduct con-centration (less dependenceon a particular product) alsoprovides comfort on the com-pany,whichcontinues togrowonthebackofastrongpipelineand the launch of new drugs.

The acquisition ofSandoz’s portfolio in the USwill further diversifyAurobindo’sdermatology seg-ment. The acquisition thoughhas been slightly delayed andis now expected to close bythe end of 2019-20 (FY20). Itis lookedas amajor trigger forAurobindo and is to furtherboost its earnings.

Analysts at Motilal OswalFinancial Services hadalready raised their earningsestimates for FY20 and 2020-21 to factor in better tractionin existing products in theUSand the European Union andtheir price-to-earnings (P/E)multiple to 9x (from 8x ear-lier) to include the synergybenefits from Sandoz acqui-sition and improving pro-spects in Europe. After theclearance of Unit IV, analystsat ICICI Securities haveincreased their P/E multiplefor the stock to 10x.

Meanwhile, after the res-olution of regulatory issues ofUnit IV, the firm still requiresto resolve USFDA issuesrelated to Unit XI (now underwarning letter) and Units VII,I, and IX, which have officialaction indicated (OAI) status.

Aurobindo soars 20% onrelief from US regulatorUnit IV,accounting fora thirdofproductspendingFDAapprovals,getsnod

120

100

80

60

40

20

Aurobindo PharmaSensex

Base price=100

75.42

113.31

Feb 19,‘20Feb 1,‘19

BREAKTHROUGHUnit IVaccountsformostpendingdrugapprovalsUnit-wiseANDAfilingsasonDecember31,2019

Site Details ApprovalsunderreviewUnit III Oral formulations 2Unit IV Injectables&opthalmics 46UnitVIB Cephalosporinsoral 1UnitVII (SEZ) Oral formulations 18UnitX Oral formulations 42UnitXII Penicillinoral&injectables -Aurilife&Aurolife II Orals&topicals 11AuroNext Peneminjectables -Eugla Oral&injectableformulations 20APLHealthcare Oral formulations 12Total 154

Source: Company

ON THE RISE

CEO’S DANCE VIDEO GOES VIRAL

AvideoofDipali Goenka, CEOand jointMDofWelspunIndia, dancingwith employees to the remixedversionofMuqablawent viral onWednesday

SAMREEN AHMADBengaluru, 19February

Making its second bet in theIndian start-up space, socialnetworkinggiantFacebookhasparticipated in a $110-millioninvestment round in edtechstart-upUnacademy.

The round, which was ledby General Atlantic, was alsoparticipated by Sequoia India,Nexus Venture Partners,Steadview Capital and BlumeVentures. Flipkart’s ChiefExecutive Officer KalyanKrishnamurthyandUdaanco-founder Sujeet Kumar alsotook part in the round, which,according to sources, valuedthe company between $400million and$500million.

In June last year, Facebookhad invested an undisclosedamount in social commerceplatform Meesho, a start-upthat connects resellers withcustomers through channelssuch asWhatsApp. “Facebookis an ally for India’s economic

growth and social develop-ment,andweareexcitedaboutIndia and it’s rapidly risinginternet ecosystem. With thisinvestment inUnacademy,weare reinforcing our commit-ment to the Indian start-upecosystemaswell as investingin a firm that is transforminglearning in India,” said AjitMohan, vice-president andMD,Facebook India.

With the fresh funding,

Unacademyalsoprovidedexitsto someof its earlier investors,whichbackedit inearlystages.Thecompanyhadsofar raised$88.5million in six rounds.

Founded in 2015, theBengaluru-based start-uppro-vides online lessons and spe-cialised courses to crack var-iouscompetitiveexaminationssuchasUPSC,CATandJEE.

“Ourgoal fromdayonehasbeentodemocratiseeducationand make quality educationaccessible to everyone. We dothat by bringing the best edu-catorsandcontentonourplat-form and ensuring it is acces-sible to everyone across thecountry,” said Gaurav Munjal,co-founder and CEO,Unacademy.

FBmakes2ndbet inIndianstart-upspace

DoTstillworkingonfinal calculationofpendingAGRdues

Vodafone Ideashares surgeover 38%VodafoneIdea'ssharesonWednesdaygained38percentamidreportsthatthegovernmentisunlikelytoinvokethefirm’sbankguaranteesasofnow.

OnBSE,thestockgainedasmuchas48.18percentto~4.49intra-day. Itclosed38.28percenthigherat~4.19.

OntheNationalStockExchange(NSE), thescriprose48.33percenttotouchahighof~4.45.Later,aftersheddingsomegains, itsettled40percentupat~4.20.

Thestockhasendedthedayingreenafterdecliningforsevenconsecutivesessions.

TheNSEsawanexchangeofmorethan100croresharesofVodafoneIdea,andover14croreunitsweretradedontheBSE. PTI

SuzukiMotorcycleonroad tobeat slump,hopes to logdouble-digit growthSHALLY SETH MOHILEMumbai, 19February

Suzuki Motorcycle India, the two-wheeler arm of Suzuki MotorCompany, is eyeing double-digitgrowth in sales during the financialyear 2020-21.

It expects to end the ongoingfinancial year with a 7.5 per centincrease in sales over last year, saidthe company’s topofficials.

The growth will come from vol-ume ramp up of newly introducedBS-VI compliant scooter modelssuch as the Burgman Street andAccess Gixxer series ofmotorcyclesas well as greater focus on motor-cycles, they said.

Though on a low base, it comesat a time when rest of the two-wheeler makers are staring at a fallinsales.Theydonotexpectvolumes

topickupforanotherthreequarters,that is, before the festive season.

Unlike most peers at rival two-wheeler companies, Koichi Hirao,managing director at SuzukiMotorcycle India, isconfidentof theroad ahead.And for a reason–afteryears of struggle in a highly-com-petitivemarket, dominated by fourcompanies, thingshavestartedlook-ing up for Suzuki. Amid one of themost prolonged slowdowns facingthe automobile market in India,Suzuki Motorcycle has seen a con-sistentgaininmarketshareandvol-umes since the last three years.

Its share in the segment hasinchedupto3.88percent inthefirst10months of financial year 2019-20from1.90per cent inFY16.Volumesin the same period have grown to592,646units from313,000units.

Hirao attributes the success to

the change in tack in terms of pro-ducts andnetwork strategy.

“We attribute this success to theconnect with buyers we have man-aged to establish,” Hirao toldBusiness Standard on the sidelinesof the Auto Expo in Greater Noidaearlier thismonth.

Hiscompanywas the lone two-wheeler maker in the mass seg-ment to participate in the show.The slowdown pains forcedothers, including market leaderHero MotoCorp, to give the show amiss.Astrategiccall threeyearsagoto vacate the mass commutermotorcycle market (110 cc) andinstead focus on the so-called per-formance segment (150 cc andabove) also helped.

“We realised, globally, we areknown for performance products.Hence, we will rather focus on that

andmovedoutofthecommuterseg-ment,” said Hirao. The turnaroundefforts gathered momentum afterlaunchofthenewgenerationAccessscooter.

An exit from the commuter seg-mentmeantthecompanynolongerneeded to have a very strong pres-ence in rural and semi-urban mar-kets. Hence, it reworked network

strategy and expanded it in areaswhich mattered, said DevashishHanda, vice-president, sales andmarketing,at the firm.Thenetworkhas grown to 520 now from 300 in

2016andcloseto70percentofsalesnow come from the urbanmarkets,he said.

Meanwhile, Suzuki is looking toreducedependenceonscootersandsees the ratio between scooters tomotorcycles settle at 80:20 in thenextoneyearfromthecurrent90:10.

ThoughSuzukiMotorcyclehasalong distance to cover to catch upwith bigger rivals, including TVSandBajaj, the consistent increase involumes has given it a lot of confi-dence.

Theoverall two-wheelermarket,in the first 10months of the currentfinancial year, has contracted to 1.5million units from 1.8 million unitsin the correspondingperiod.

“Wewerenotonthegrowthpathearlier. We have seen double-digitgrowth in the last three years. Mostof the growth in the months aheadwill come from the Gixxer series –150 and250,” saidHanda.

Saleshavebeengrowingsteadily

IN TOP GEAR

nVolumes(units)

FY16 FY17 FY18 FY19 FY20

Marketshare(%)1.90 1.99 2.48 3.05 3.88

Two-wheeler domestic sales; * Ten months of FY20domestic sales Source: Siam

313,

000

350,

520

501,20

3

552,

918

592,

646*

ExpectstoendFY21witha7.5%increaseinsalesonvolumeramp-upofBS-VIcompliantmodels

NEW ARENAFundsraisedbyedtechcompanies inFeb2020

(Figuresin$mn)

Byju’s 200Unacademy 110Vedantu 24Classplus 2.5

Leads$110-millioninvestmentroundinUnacademy DEBASIS MOHAPATRA

Bengaluru, 19February

Baby and mother care pro-ducts retailer FirstCry hassecured around $400million(~2,824.23 crore) fromSoftBank Vision Fund as partof its Series E funding.

While theJapan-basedpri-vate equity fund has infused$296 million (~2,120.5 crore)upfront, it has committedanother $100million (~703.71crore) in the second tranche.

According to financialdataaccessed by business intelli-gence platform Tofler,

FirstCry’s holding entityBrainBees Solutions hasallotted 73.1 million series Eshares at a price of ~386 eachto SVF Frog, a CaymanIslands-registered entity ofSoftBank as part of the deal.

Though how much stakeSoftbank will hold post thisround of funding is not givenby the company, mediareports had earlier suggestedthat SoftBank was looking ataround40per centholding inthe company in lieu of $400million investment.

Founded in 2010 bySupam Maheshwari and

Amitava Saha, FirstCry hasemerged as the leader in thesunrisebabyandmother caresector segment, promptingrising interest of global inves-tors.

The funds raised fromSoftbank are expected to beused by FirstCry to expandboth its offline and onlinepresence as well as tostrengthen its technologyplatform.

The company posted arevenue of ~535 crore in FY19,which it expects to grow toaround ~2,000 crore in thecurrent finacial year.

SoftBanktoinvest$400mninFirstCry

FooddeliveryplatformSwiggyonWednesdaysaid it raised $113 million as part of Series Ifunding round. The latest round was led byexisting investor Prosus NV (earlier calledNaspers) and included participation fromMeituan-Dianping and WellingtonManagement Company.

Having grown beyond food delivery,Swiggy aims to use the funds to furtherdevelop its new lines of business, addressing

visible gaps in the market. The company willcontinue to invest innewgrowthareas (Stores,Go and SuprDaily).

“Wehave createdmultiple growthavenuesfor our partners while continuing to invest innew lines of business,” said SriharshaMajety,chief executive officer of Swiggy.

“We are laser-focused on continuing toexecute on our vision while building a sus-tainable path to profitability.” PEERZADA ABRAR

Swiggy raises $113mn inSeries I funding

MUMBAI | THURSDAY, 20 FEBRUARY 2020 COMPANIES 3. <

JYOTI MUKULNew Delhi, 19 February

Faced with the looming threat of lossof exclusivity in the National CapitalRegion (NCR), Indraprastha Gas

(IGL) is looking to rake in revenue from gasdistribution networks in other cities overthe next five years. The firm says viability oftariff will be more crucial for its survivalthan the loss of exclusivity.

According to E S Ranganathan, manag-ing director of IGL, it is the price of gas andnot the end of exclusivity that is the chal-lenge. “Our margins are fixed by the regu-lator, but there should be a fair return oninvestment.”

The NCR market has been the founda-tion of firm’s growth, though it has baggedsix geographical areas outside this region forcity gas distribution (CGD) through auc-tions conducted by the Petroleum andNatural Gas Regulatory Board.

“This has increased our area of opera-tion to 16 districts in three states of UttarPradesh, Haryana and Rajasthan. Theircontribution to our growth will be visible infive years,” Ranganathan told BusinessStandard. “Beyond NCR, we have to seedthe market and create awareness, since cur-rently only areas surrounding NCR haveawareness about gas use. We will have todevelop commercial and industrial con-sumers,” he added.

According to a Moitlal Oswal Researchreport published Wednesday, assumingthat the competition takes away 20 per centof current sales volumes, as mandated inthe PNGRB’s draft, it would result in 200-360-basis point reduction in return on equi-ty of the CGD players. IGL’s marketingexclusivity expired in Delhi in 2012.

The company has planned for capitalexpenditure of ~1,100 crore in financial year

2019-20 (FY20), ~1,400 crore for FY21 and~1,200 crore for FY22.

Half of this capex would be outside NCR.In cities like Ajmer and adjoining areas, IGLaims to have 100,000 piped gas customersin eight years.

IGL currently has 1.24 million domestic,over 4,000 commercial, and 2,500 indus-trial consumers. The target is to reach 2 mil-lion domestic consumers in three years,and over 2.5 million in eight years.Compressed natural gas (CNG) currentlycontributes 75 per cent to the company’srevenue and this is likely to continue foranother five years. “There is more than 10per cent growth in the CNG business, whichwill continue since electric vehicles havenot taken off in a big way,” he said.

Though electric charging is likely to dis-rupt the market for CNG, IGL plans to installcharging points at all new CNG stations.IGL has a signed a memorandum of under-standing with Tata Power, one of the twodistribution companies in Delhi, for thesecharging points.

The CGD segment was expected to playa big role in the coming years, but Ranga-nathan said the pre-condition for naturalgas to grow is to bring it within the goodsservice tax (GST) net. “Since consumers donot get GST input credit, use of gas becomesmore expensive in comparison to coal andother industrial fuel. Even industrial LPG isin the GST.”

IGL looks beyond NCR togive a boost to revenue

“Our margins are fixed by theregulator, but there should be afair return on investment”

E S RANGANATHANManaging director, IGL

REUTERS19 February

Reliance Industries (RIL), a keybuyer of Venezuelan oil, said itwas assessing the impact of thelatest US sanctions on RosneftTrading SA (RTSA), the Gen-eva-based trading unit ofRosneft that supplies oil to theprivate refiner.

US President Donald Tru-mp on Tuesday imposed sanc-tions on the trading arm ofRussian oil major Rosneft,which has been the largestintermediary of Venezuelanoil, as Washington targetedMoscow over its backing ofVenezuelan President NicolasMaduro’s government.

“Reliance will continue itsdirect communications withthe US government to ensurethat Reliance’s purchases ofVenezuelan oil after the RTSAsanctions are both compliantwith US sanctions and consis-tent with US policies regard-ing Venezuelan oil sector,” theIndian refiner said.

Apart from Reliance, India’s Nayara Energy, part-owned by Rosneft, also importsVenezuelan oil.

Rosneft accepts oil fromVenezuelan state oil companyPDVSA as payment for billionsof dollars in loans extended toVenezuela over the past decadeand then ships the barrels ontorefineries that used to buydirectly from Venezuela, in-cluding Nayara’s facilities.

“In its dealings withRosneft and otherwise, Rel-iance will continue to act incompliance with US sanctionsand policy guidelines,” thecompany said.

Reliance, the operator ofthe world’s biggest refiningcomplex, said its purchases ofVenezuela crude oil are report-ed to and permitted by the USgovernment.

Gauging impact ofUS sanctions onRosneft unit: RIL

ADITYA KALRA & ADITI SHAHNew Delhi, 19 February

The antitrust watchdog, Com-petition Commission of India(CCI), has found no evidencethat the country’s biggest air-line, IndiGo, and four rivalcarriers colluded to fix ticketprices, three sources with kno-wledge of the matter toldReuters.

The CCI in 2015 ordered aprobe into allegations of anti-competitive practices aftersimilar fares were being off-ered on certain routes by Indi-Go, SpiceJet, GoAir, state-runAir India and now-defunct JetAirways. The CCI inquiry,which included an analysis ofthe algorithms airlines todetermine ticket fares, foundthat all five airlines were work-ing independently, the threesources said. “No direct evi-dence of cartelisation wasfound,” said one of thesources, who added the inves-tigation also did not revealany communication amongstairline executives to fix prices.

IndiGo said “the case iswithout merit” and added ithas been cooperating with theprobe. The second-biggest air-line, SpiceJet, GoAir, Air Indiaand Jet did not respond to arequest for comment. The CCIdid not respond to questionsfrom Reuters. An adverse find-ing could have led to a fine ofup to three times the profitmade in each year prices werefixed, or 10 per cent of annual

revenue, whichever is higher.Indian airlines are alreadygrappling with slow growth inair traffic.

Details of the CCI case,which was probed in twophases, have not been madepublic in line with the watch-dog’s practice. The agency,whose senior members arereviewing the investigationfindings, has not made a finalruling and could furtherextend the investigation. Buttwo of the sources said the air-lines were likely to be cleared.

The CCI’s investigationarm had already produced areport in 2016 saying no anti-trust practices were detected.The agency directed a furtherprobe into fare-determiningsoftware and seat-allocationpatterns, a second source said.

REUTERS

No proof of collusionby IndiGo, SpiceJetand others, says CCI

CCI agrees to addFab Hotels againstGo-MMT, Oyo probeThe CCI has included Fab Hotelsin the ongoing investigationinto Oyo and Go-MMT (GoIbiboand MakeMyTrip). The regulatorhad launched a probe into Oyo Hotel and Homes andMakeMyTrip on alleged chargesof predatory pricing, creating amonopoly and deep-discoun-ting in October. The complaintagainst the two firms was filedFederation of Hotel andRestaurant Associations of India. BS REPORTER

NEHA ALAWADHINew Delhi, 19 February

The US Department of Justice(DoJ) has dropped all chargesagainst Sandeep Aggarwal, thefounder of Droom, an online mar-ketplace to buy and sell used auto-mobiles, in a 2013 insider tradingcase. “This lasted for almost sevenyears. But I am very grateful thatin the end it was the rightful andjust call by the DoJ to drop allcharges unconditionally,” saidAggarwal.

Aggarwal, who had co-foundedonline marketplace ShopClues —which was sold to Singapore-based e-commerce platformQoo10 last year — also settled with

the US Securities and ExchangeCommission (SEC) relating to thesame case.

A civil penalty of $32,500 waslevied by SEC, which Aggarwal haspaid. The SEC had barredhim from working as asecurity market analyst oras an investment advisor,which will continue.

In 2015, Aggarwal hadto step down as chief exec-utive of ShopClues afterbeing charged with insid-er trading allegations inthe US. He was charged bythe DoJ and sued by theSEC in July 2013, relating to eventsthat took place in July 2009. Hefounded Droom in 2014.

Aggarwal was a Wall Street ana-lyst before he co-foundedShopClues with his then wifeRadhika in 2011. One of theyoungest and most promising uni-

corns valued at $1 billionand above, ShopClueshad its share of contro-versies — the most publicof which was a falloutbetween its co-founders.

Automobile market-place Droom onWednesday said thecompany is confident ofhitting profit by the endof this year, and said it

plans to raise about $150 millionbefore it launches an IPO in 2021.

According to Aggarwal, Droom

did $1.2 billion in gross merchan-dise value (GMV) in 2019 — anincrease of 65 per cent from theyear-ago period. Droom recordedrevenue of $32 million last year andthis year expects $2.1 billion inGMV, $63 million in net revenue,followed by a $3 billion GMV and$120 million in net revenue. “Weplan to get listed on the Nasdaq.Unless we pick new battles, weshould be fully profitable by theend of this year,” added Aggarwal.

Beginning November 2018,Droom launched in Malaysia,Singapore, and Thailand. In thenext 18 months, Aggarwal plansto expand to three SoutheastAsian countries and three WestAsian countries.

US drops charges against Droom, ShopClues co-founder

In 2015, SandeepAggarwal had to step down asCEO of ShopCluesafter beingcharged withinsider tradingallegations in the US

Sandeep Aggarwal’s Droom aims to hit profit by year-end, to raise $150 million before IPO

4 ECONOMY & PUBLIC AFFAIRS MUMBAI | THURSDAY, 20 FEBRUARY 2020

> .

“You want 10 per cent growth rate, theninvestment rate to the GDP should be 37 percent and 3.7 per cent should be your efficiencyfactor and not five per cent as it is today”

SUBRAMANIAN SWAMYBJP leader

“Political parties that have been insulting theConstitution are today trying to preach us the Constitution. Better they keep off orthey will be badly exposed”

YOGI ADITYANATHUttar Pradesh chief minister

“There is no possibility of my becoming the chiefministerial candidate. I, for my part, have beeninvolved in national politics all through my life.And I am not going to change course at this stage”

SHARAD YADAVLoktantrik Janata Dal leader

Cabinet makes crop coveroptional for loanee farmersTo spend ~6,865 crore on promoting 10,000 new FPOs over five years

SBI Cards to raise tier-II capital of ~250 crore

SBI Cards andPaymentServices (SBICards), which is floating aninitial publicoffering forequity shares,

will raise debt capital of ~250crore via sub-ordinated bonds.These bonds form part of tier-IIcapital structure. The move toraise money via tier-II instrum-ent is aimed at strengtheningcapital adequacy for the StateBank of India subsidiary. PTI<

Prez’s secy Kotharinext CVC, former IASofficer Julka to be CICSanjay Kothari, the secretaryto the President, has beenselected as the new chiefvigilance commissioner by acommittee headed by PrimeMinister Narendra Modi,officials said on Wednesday.The committee has alsochosen, by a majority dec-ision, former Information andBroadcasting Secretary BimalJulka, currently serving as aninformation commissioner, asthe new chief informationcommissioner in the CentralInformation Commission. PTI<

The government will frame rules and set up an authority to imple-ment the new Consumer Protection Act by April this year, Food andConsumer Affairs Minister Ram Vilas Paswan said on Wednesday.He stressed on the regulation of the e-commerce sector with a risein online transactions. Parliament last year approved ‘The Consu-mer Protection Bill 2019’, replacing the Consumer Protection Act,1986. The law seeks to revamp the process of administration andsettlement of consumer disputes, with strict penalties, includingjail term for adulteration and misleading ads by firms. Paswan helddiscussions with industry representatives on provisions of the pro-posed Central Consumer Protection Authority as well as rules andregulations being formed under the Consumer Protection Act. PTI<

Govt to set up authority forConsumer Protection Act

IN BRIEF

Obama or Nixon: Which template would Trump’s India visit follow?

T R VIVEK

While it wasn’t an official visit, the first occupant ofthe White House to land on the shores of India wasUlysses S Grant, and likely not the last with, let’s saya dodgy sense of aesthetics. The 18th President ofthe United States, Grant served two consecutiveterms in office between 1869 and 1877 and was alsothe Commanding General of the US Army whenthe Civil War was won. Soon after his term ended,Grant and his wife Julia set forth on a two-and-a-half-year world tour that aimed to project the US asan outward looking power ready to engage with theworld. Grant arrived in Mumbai in February 1879aboard USS Richmond and undertook thecustomary trip, on elephant back, to the Taj Mahalin Agra, whereupon the Grants thought it beautifulbut not more than the Capitol Hill building. Grantmet the then Viceroy Robert Lytton in Kolkata andprofessed admiration for his father EdwardBulwer-Lytton’s novels. In 1982, the San Jose StateUniversity instituted the annual, tongue-in-cheekBulwer-Lytton Fiction Contest to award the worstpossible opening lines of a novelas a tribute to Bulwer-Lytton’s “Itwas a dark stormy night” in his1830 work Paul Clifford.

It remains to be seen whatreluctant traveller Donald JTrump, the 45th President of theUS, on his two-day visit betweenFebruary 24-26 makes of thespartan Sabarmati Ashram, theTaj Mahal, or the ‘Namaste,Trump’ rally in Ahmedabadwhere PM Narendra Modiassures there would be “millionsand millions” in attendance.

Beyond the bearhugs andprotestations of great personalbond between the two leaders,this visit carries a more transactional flavour thanother recent presidential trips to India. Unlike inthe past, a trade deal between the two occupiescentre stage, given the context of Trump’sdomestic policy priorities.

Trump, the self-professed master of dealmaking has in recent months dubbed India “tariffking” in a tweet pointing towards India’spropensity to heavily tax US exports such as thehigh-end Harley Davidson motorcycles. India,wary of trade deals, has more reason to worryconsidering the deteriorating health of exportssector after sector, from gems and jewellery totextiles. India’s inability to take meaningfuladvantage in return for greater American accessto its domestic markets perhaps explains its lackof enthusiasm on this front. But hey, we’re at leasttalking business. It wasn’t like this always.

The first-ever visit of a serving US President was12 years in the making after India’s independence.Dwight D Eisenhower, a decorated war hero, was

welcomed in India as a “Prince of Peace”. The week-long visit was a big success, with Eisenhowertravelling in an open car with thousands lining thestreets. Despite India fronting the distinctly anti-West Non-Aligned Movement, PM JawaharlalNehru, the romantic statesman, and Eisenhower,the soldier, seemed to have hit it off. Just as Modimight personally show Trump around theSabarmati Ashram, Nehru in 1959 offered theEisenhowers a guided tour of the Taj. Eisenhowerwas lavish in his praise for India from the get-go. “Infulfilling a desire of many years, I pay in personAmerica’s tribute to Indian people, to their culture,to their progress and to their strength amongindependent nations,” he declared on arrival,adding that it was a personal pilgrimage of sorts.Not only that, in his address to a joint session ofParliament, Eisenhower spoke about support toIndia in the face of any external acts of aggression.

It could be that the two had cultivated morethan an acquaintance when Nehru was conferredan honorary doctorate by Columbia University in1949, when Eisenhower was its president. But

matters of commerce hardlyfigured. Perhaps knowingNehru’s not-so-charitable viewson US wealth, there was nobusiness delegation thataccompanied Eisenhower —something that’s an essentialpart of bilateral head of statevisits in the twenty first century.

In the rising heat of the ColdWar the bonhomie evaporated.Nehru’s reciprocal visit to the USin 1961 during John F Kennedy’spresidency was a testy affair,given India’s embrace of theSoviet Union. Richard Nixon’svisit a decade after Eisenhowercould charitably be described a

disaster. It was more a 22-hour stopover than a full-fledged state visit. You only need to scan the NewYork Times’ pages on the eve of Nixon’s visit to get asense of its lack of purpose. So wide was the gulf ofdistrust between the two nations, and India’sinconsequence in the larger scheme of things, thatnone of the issues you’d normally expect — SouthAsian regional stability, the Indo-Pakistan armsrace, unrest in East Pakistan or the Chinese threat— made the headlines. The touring party wasmore worried about droppings from Delhi’s trees.

“If Mr Nixon rides under clear skies with thetop of his bubblecar down, he will have to bewarethe fallout from Delhi’s ubiquitous Jamun trees.Their purplish bounty, a semi-sour cherry likefruit with a big, hard pit, splattersindiscriminately on heads of passers by thesedays,” noted NYT. Not many were surprised whendeclassified US papers showed the contemptNixon had for PM Indira Gandhi. The sentimentwas certainly mutual. A year later, she returned

the favour by not attending Nixon’s banquet forheads of state on the sidelines on the UN’s 25thanniversary celebrations. Jimmy Carter’s visit in 1978, too, wasn’t any more memorable thanNixon’s. Carter said he loved reading the BhagwatGita presented to him by PM Morarji Desai. Carterin return offered Desai the two-volume journal ofAmerican writer Henry Thoreau.

From 1947 to 2000, there had only been threeUS presidential visits to India. Since 2000, coun-ting Trump’s, there would be five. It was perhapsan acknowledgement of India’s growing economicand strategic importance. While Bill Clintoncharmed Indians in 2000 in the backdrop of theKargil war and signalled the end to post-Pokhrannuclear test sanctions, substantive gains weremade during George W Bush’s visit in 2006, withthe signing of the landmark civilian nuclear deal.

Barack Obama is the only US president to maketwo state visits to India in 2010 and 2015. The

second, a hastily arranged special invitation aschief guest on Republic Day. In 2010, withManmohan Singh as PM, who Obama had referredto as a “Global Guru” at a G20 Summit for hisleadership in diffusing the global financial crisis,the expectations were understandably high. Bothhad a reputation of being cerebral. While Obama’scelebrity quotient, having become the first BlackPresident of the US with a landslide win, was at itspeak, Singh too had won a second term in officewith a bigger mandate for the Congress Party. Thegush of warmth seemed unstoppable. If Clintonde-hyphenated India and Pakistan, Bush investedplenty of personal political capital on getting thenuclear deal through, Obama followed the path ofthe predecessors with greater vigour. At least that’swhat it looked like back in 2010. Moreover, in hisaddress to the joint session of Parliament, Obamapublicly endorsed India’s candidacy for apermanent seat in the UN Security Council — the

first US President to do so. By 2015, the Modibearhug had well and truly arrived on the globaldiplomatic arena and Obama was one of its earlyrecipients. There was to be no parliamentaryaddress during this short visit, but enough time forthe man derided as chaiwalato personally make acup of tea over a televised tete-a-tete in the lawnsof the PM’s residence. Pomp, pageantry andsymbolism trumped over substance.

With a decelerating economy that weakensIndia’s hands on geopolitical issues, wouldTrump’s visit too go down that route? Maybe, justmaybe, unlike the Grants, Melania and DonaldTrump might think the Taj more beautiful thanTrump Towers. One wouldn’t bet on it, though.

TR Vivek is a journalist based in Bengaluru

Disclaimer: Views expressed are personal. They do notreflect the view/s of Business Standard

With a decelerating economy that weakens India’s hands on geopolitical issues, it will be interesting to know which way this visit will go

1. Prime Minister Jawaharlal Nehru receiving US President Dwight D Eisenhower at Parliament House in 1959 2. US President Richard Nixon with Prime Minister Indira Gandhi at Rashtrapati Bhavan in 1969 3. Bill Clinton during his visit to India in 2000 in the backdrop of the Kargil war 4. President Barack Obama and Prime Minister Manmohan Singh during the State Dinner at Rashtrapati Bhavan in 2010

21

43

KEJRIWAL CALLS ON SHAH

Delhi Chief Minister Arvind Kejriwal (left) met Union HomeMinister Amit Shah for the first time after taking oath as CM. Taking to Twitter, Kejriwal said both agreed to worktogether for the development of the national capital

PHOTO: PTI

Donald Trump’s firstvisit carries a moretransactional flavourthan other presidentialtrips to India

No matter whether India managesto sign a deal with US PresidentDonald Trump or not, bothcountries look headed for ashowdown on various pendingissues in the regulatory space. Theabsence of a bilateral investmentprotection treaty, Americanconcerns with India's datalocalisation norms and India'sattempts to rein in the e-commerce sector are set tobecome major battle arenasbetween the two nations once thewrangling over tariff duties ends.

The lack of an investment pactbetween the two has been raisedby US investors for leaving theirinvestments in India withoutrequisite legal protection. Indiadecided to terminate its existinginvestment pacts with othercountries in 2016 with thegovernment maintaining that allfuture pacts will be negotiatedunder the framework of the model Bilateral Investment Treatyissued by the government in 2015. This was meant to form thebasis for individual deal agreements to be negotiated withother nations. However, four years after unilaterally terminatinginvestment pacts in 2016, only four BITs — with Bangladesh,Belarus, Colombia, and Taiwan — have materialised. Since thenegotiations are not time-bound, there’s no deadline toconclude ongoing talks with 11 other nations, an official said.

SUBHAYAN CHAKRABORTY & NEHA ALAWADHI

WITH OR WITHOUT US TRADE DEAL,REGULATORY ISSUES REMAIN

FDI FROM THE US SEES SLOW RISEUSforeign directinvestmentoutflows

DATA ON THE RISEIndia’s data usage persmartphone 9.8 GB/month(Ericsson report)

Most data now storeddigitally

India has over550 millionInternet users

Internet users expected to reach 800 millionby2023 (McKinsey)

E-COMMERCEIndia’s e-commerce market2018-19: $54 billion(Nasscom)

E-commerce market sizeprojected in 2020: $120billion (IBEF)

Amazon investment: $5 bn inlast5 yrs, $1 bn committed

Walmart: Bought Flipkartfor $19 bn in 2018

54321

2014-15 2019-20(Apr-Sep)

1.82

2.15

Source: Department for Promotionof Industry and Internal Trade andUS-China Investment Hub

16141210

86

2014 2019

14.62

6.80

INDIA ($ BILLION)

CHINA ($ BILLION)

SANJEEB MUKHERJEENew Delhi, 19 February

O ver three years after Prime MinisterNarendra Modi launched thePradhan Mantri Fasal Bima Yojana

(PMFBY, the Union Cabinet on Wednesdaymade it optional for loanee farmers andalso incorporated a host of changes in anattempt to make it farmer-friendly.

The scheme would be voluntary for loa-nee farmers from the kharif season of 2020.

Since the scheme’s inception, the centralgovernment has spent about ~50,000 croreas its share of premium subsidy. AgricultureMinister Narendra Singh Tomar saidaccording to government estimates, 58 percent of total farmers are loanees.

The share of non-loanee farmers, forwhom the scheme is voluntary, has been steadily rising, which shows thatthere a vast section of growers are infavour of the scheme.

Data shows that in kharif 2016, around10.2 million non-loanee farmers enrolledin the scheme, which rose to 12.4 million bykharif 2018, a jump of about 22 per cent. Inrabi 2016-17, the share of non-loanee farm-ers was 3.4 million, which rose to 7.9 millionby rabi 2018-19, an increase of 132 per cent.

Total enrollement under the scheme, though, has been falling. It was40.4 million in kharif 2016, dropping to34.8 million by kharif 2018, a fall of about14 per cent.

The government blamed loan waiverschemes announced by state govern-ments along with mandatory Aadharlinkage for the dwindling interest in PMF-BY. Critics, however, said delayed com-pensation payment and improper func-tioning of the scheme were some reasonsfor farmers preferring to opt out.

Some critics feel that making thescheme voluntary could lead to higheractuarial premium under PMFBY, result-ing in higher subsidy outgo for the gov-ernment. However, others said it couldimprove efficiency as nowhere across theworld could farmers avail of crop insur-ance at such low rates.

Under PMFBY, farmers pay 2 per centof the sum insured as their share of pre-mium for kharif crops, 1.5 per cent for rabi

crops, and 5 per cent for horticulture andcommercial crops. If the actuarial premi-um is lower than, the lower of the two rateswould apply. The difference between theactuarial premium rate and the premiumpaid by farmers is the subsidy sharedequally by the Centre and states.

The proposal to make PMFBY volun-tary for all was, in fact, part of the BharatiyaJanata Party’s 2019 election manifesto.

The Union Cabinet also made otherchanges to the scheme, including intro-ducing cut-off dates for states to releasetheir share of premium subsidy. If statesdon’t release their share before March 31for the kharif season and September 30for rabi, they won’t be allowed to imple-ment the scheme.

That apart, the Cabinet also decidedthat states will have to keep insurancecompanies enrolled in PMFBY for a min-imum of three years as against the currentprovision of one year to three years.

In 2019-20, more than three listed pri-vate insurance companies opted out ofPMFBY, questioning the viability of thescheme. “This is good decision in favour of the farmers by the governmentand we express our gratitude,” BhartiyaKisan Union said.

The Cabinet also decided to launch anew scheme for promoting and creating10,000 new farmer producer organisa-tions (FPOs) in the next five years, startingfrom 2019-20. A total budgetary provisionof ~6,865 crore was allocated for this.

The Union CabinetonWednesday approved theassisted reproductivetechnology (regulation) Bill thatproposesestablishmentof a nationalregistry and registrationauthority forall clinics andmedical professionalsserving in the field

LawCommission: Cabinetapproved the constitution

of the 22nd LawCommission, which advisesthe governmentoncomplex legal issues

Second phase of SwachhBharatMission (Rural) to focus on managementof solid and liquid waste to be implemented with an estimated budgetof ~52,497 crore from nextyear

Interest subvention onloans given to the dairysector raised from 2 per cent to 2.5 per centto benefit9.5 millionfarmers

Empowered TechnologyGroup constituted torender timely policy adviceon latest technologies;mapping of technologyand technology products

OTHER CABINET DECISIONS

MONEY MATTERS On Pradhan Mantri Fasal Bima Yojana...

Claims reported Claims approvedClaims paid (~crore)

2016-17 2017-18 2018-19**Claims of some crops/areas for rabi 2018-19 are not finalisedSource: Parliament questions

16,7

74

16,7

74

16,7

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6 ECONOMY & PUBLIC AFFAIRS MUMBAI | THURSDAY, 20 FEBRUARY 2020 1>

Gujarat HC sendsnotice to Centreover input taxcredit on gifts

MPs’ panel for dilution of defaultdefinition, but RBI flags concerns The Gujarat High Court has

issued notices to the Centre,state government, GST (goodsand services tax) Council, andindirect tax board in a caserelated to denial of input taxcredit on gifts or free samplesgiven by companies.

A petitioner sought decla-ration of the section 17 (5) (h)of the Central GST Act andassociated circular as uncon-stitutional to the extent that itrestricts input tax credit ongifts and free samples. Thesection provides a list of itemswhere input tax credit cannotbe given such as rent a cab.However, the section does notmention gifts and samples.

As the confusion arosewhether the credit would alsobe blocked for gifts and freesamples, firms, includingpharma ones, approached thegovernment for clarification.

The CBIC came out with acircular in March, which stat-ed samples that are suppliedfree without any considera-tion do not qualify as supplyunder the GST.

INDIVJAL DHASMANA

Kotak Bankgets RBI nodto trim stakeof promotersSUBRATA PANDAMumbai, 19 February

Private sector lender KotakMahindra Bank onWednesday informed stockexchanges that the ReserveBank of India (RBI) had givenfinal approval to the bank’sproposal on reducing pro-moters’ stake and cappingtheir voting rights.

“Further to our intimationdated January 30, 2020, pleasenote that the Reserve Bank ofIndia has granted its finalapproval vide its letter datedFebruary 18, 2020 in the matterrelating to dilution of promot-ers’ shareholding in the bank,”the bank said in a statement.

The RBI had conveyed tothe bank on January 29 thatits promoters would have tobring down their sharehold-ing to 26 per cent of the paid-up voting equity share capi-tal within six months ofgetting its final approval.

According to RBI rules, thebank was mandated to reducepromoter shareholding to 20per cent by December 31, 2018,and to 15 per cent by March2020. This has been relaxed.

Promoters, led byManaging Director and ChiefExecutive Officer Uday Kotak,owned 29.96 per cent of theshare capital as of December2019. However, the promoters’voting rights will stand cur-tailed. RBI said the promoterswould have 20 per cent of thepaid-up voting equity sharecapital until March 31, and itwould be brought down to 15per cent from April 1. The bankhad withdrawn a petition filedin the Bombay High Courtagainst the regulator lastmonth. In December 2018, ithad moved the HC against theRBI after the central bank didnot accept the reduction ofpromoter shareholding via anissue of perpetual non-con-vertible preference shares.

Disclosure: Entities controlled bythe Kotak family have asignificant holding in BusinessStandard Pvt Ltd

SHRIMI CHOUDHARYNew Delhi, 19 February

T he Reserve Bank of India(RBI) has shown itsreservation on review-

ing the definition of default.This is a key parameter for

credit rating agencies (CRAs) toassign ratings to commercialpapers of corporate houses,even as a parliamentary panelinsisted on relaxing the norms.

The parliamentary commit-tee on subordinate legislation,in a meeting held on Monday,had raised the issue with regu-lators and the ministry offinance. It sought to soften thestance on default criteria, whichrestricts banks from financinglow-rated firms.

Further, such classificationof firms into the default catego-ry also prohibits them fromcoming out with debt papers.

The commercial or debtpaper is the favourite route ofcorporate houses to raise fundscompared to bank loans. Theyhelp meet short-term workingcapital requirements.

Sources said companiesonce categorised in the “default”or “poor” ratings category donot get finance from banks.

People who attended themeeting are learnt to have citedcertain examples where com-panies are on the verge of col-lapse because of the strictapproach by banks. Besides RBI,the meeting was also attendedby officials from the Securitiesand Exchange Board of India(Sebi), department of financialservices, public sector banksand rating firms.

The meeting also high-lighted the whole ratingprocess and discussed howonce the instrument of a com-

pany gets downgraded, it takestime to upgrade it.

A rating takes at least a year’stime to come back to investmentgrade from default status.

According to the CRA guide-

lines, BB and below ratings areconsidered speculative gradeand above BBB is consideredinvestment grade. The RBIguidelines deal with the defini-tion of curing period, while the

time-frame of curing are underSebi rules.

Based on the RBI guidelines,the capital market regulator, too,has defined default differentlyacross various instruments.

For instance, in case of termloans, working capital loans, bonds, fixed deposits,certificate of deposits and commercial paper, a default issaid to have occurred if therehas been a delay of even oneday of even ~1 (of principal orinterest) from the scheduledrepayment date.

For buyer’s credit, packingcredit and bill purchase overdueof over 30 days is considereddefault. Rating agencies nor-mally follow a rating scale thatranges from AAA (highest safe-ty regarding timely servicing ofdebt) to D (default or expected todefault soon).

Rating agencies have been

largely blamed for their lax poli-cies and oversight for the 2008global financial crisis.

This primarily spawnedfrom junk-type mortgage bonds and their derivativesworth trillions of dollars that the Wall Street bankers inventedand hawked across the globe to get AAA ratings and finally imploded. In the IL&FSmatter, rating agencies India Ratings, ICRA and CARE had given its debt papersAAA/AA+ ratings a monthbefore it defaulted in September2018.

In the 25th edition of theFinancial Stability Report (FSR),the RBI warned of rating shop-ping by companies for long-term bank loans.

This is based on indicativeratings given by CRAs which arenot available to banks orinvestors.

The committee sought softening of criteria as it restricts banks from financing low-rated companies

ANUP ROYMumbai, 19 February

As the Reserve Bank of India (RBI)engages in an internal review of themonetary policy framework, econo-mists are of the view that there isscope for certain fine-tuning, espe-cially in fixing the level of inflationthat would be consistent with thepotential output of the country.

Besides, whether the monetarypolicy committee (MPC)should focus on core inflationor the headline inflation, con-sisting of fairly unstable foodand fuel prices, should alsobe debated, economists say.

However, the issue here is findingout the potential output of the econ-omy itself is a difficult task to beginwith. But the general consensus is itshould be the level where the capac-ity utilisation hits near about 85 percent, or crosses it, from the present

low-70 per cent level. There can alsobe a debate whether the frameworkshould follow single policy objectiveor multiple. In every aspect though,economists are divided on the rightapproach.

State Bank of India (SBI) groupChief Economic Advisor SoumyaKanti Ghosh said the MPC cannotafford to only have inflation as theobjective. There should be multipleobjectives, with growth mandate

firmly embedded in it. “The mandate for the

MPC is a little restricted.There is a clear distinctionbetween the MPC and theRBI now. Targeting inflation

cannot be the sole mandate in acountry like India. It is somethingfor the developed country wheregrowth is not a concern anymore,”said Ghosh.

But Gaurav Kapur, chief econo-mist of IndusInd Bank, differs on

that. “India had multiple indicatorapproach before the MPC, but it didnot produce desired results. A mon-etary policy has to be clear and clear-ly stated and communicated.Monetary policy globally is gettinglimited in its ability topush growth, as the cen-tral banks tinker with oth-er macroprudential tools,”Kapur said.

Generally, economistsside with the latter’sthinking. “Multiple objec-tives are not a good thing.They confuse the mar-kets,” said a senior economist, whodid not wish to be named.

In August, the three-year tenureof external members in the MPC alsocomes to an end. Economists saythey see no reason for a changeamong the members as they showedindependence and offered divergentviews, in the true spirit of a commit-

tee approach. However, three mem-bers being from the RBI itself meansit is always the view of the centralbank that gets translated into action.

It is, however, the consensus thatthe policy framework has served the

country well, as in thethree-and-half-yearsof it being in the oper-ation, inflation hasremained largelyunder control exceptfor the latest prints.According to the man-date given by the gov-ernment, the RBI has

to maintain inflation at between 2and 6 per cent, with the mid-point at4 per cent.

Economists have also varied opinion about whether a 4 per centinflation is good enough.

According to Kapur of IndusInd,there is a scope to lower the inflationtarget.

“Inflation is not a good thing.Inflation globally is going down, foodand fuel shocks are essentially short-term. The oil dynamics globally havechanged in our favour as supply hasoutstripped demand, and the fossilfuel concerns will keep oil pricesunder check,” Kapur said, adding theweightage given to food in inflationneeds some revision, but that is not atask of the RBI.

According to Kapur, 3.5-4 per centlevel for CPI is a healthy target tomaintain for the MPC.

However, some other economistssay the MPC should be allowed tokeep inflation at a slightly higher level than what the present target of4 per cent is.

“A slightly higher level of infla-tion for a developing economy isactually good. It improves the nom-inal growth and improves tax col-lections for the government.Inflation at 4 per cent may not be

that appropriate to go with India’spotential growth rate. The biggerquestion here is whether the MPCshould target headline inflation atall, or just focus on the core,” saidthe economist quoted above.

They say it won’t be an easy taskfor the RBI to review an establishedframework. The central bank willhave to calculate the neutral rate,the global environment, unem-ployment rate, wage growth andoutsized geo-political risks thatpop up frequently.

They have to consider currencymovement, and an ideal exchangerate. Economists say the growth andinflation tradeoff is no longer oper-ative because of the central bankinterventions.

Instead, the RBI must considerthat apart from the headline infla-tion, inflationary expectations andinflation as cost of funds are alsoassuming an equal importance.

Core or headline inflation? RBI must debate, say economists

Some economistssay the MPC shouldbe allowed to keepinflation at a slightlyhigher level than the current target of 4%

Sources say companies once categorised as ‘default’ or ‘poor’rating category do not get finance from banks

MUMBAI | THURSDAY, 20 FEBRUARY 2020 ECONOMY & PUBLIC AFFAIRS 7. <

ARCHIS MOHANNew Delhi, 19 February

The Centre is working ona Bill to amend the elec-tion law to mandatorily

link Aadhaar with voter iden-tity card. The objective is toclean up electoral rolls, removeduplication, and facilitatemigrant workers to voteremotely.

Sources in Opposition par-ties said the government —when the Bill is introduced anddebated in Parliament —would need to allay their fearsthat this might become a tool todisenfranchise people.

According to sources, theUnion law ministry is likely toprepare a Cabinet note soon toamend the Representation ofthe People Act, 1951.

The issue came up for dis-cussion on Tuesday at a meet-ing between ElectionCommission (EC) officials andthose of the Ministry of Lawand Justice. The meeting wascalled to discuss pending elec-toral reforms.

Chief ElectionCommissioner Sunil Arora andElection Commissioners AshokLavasa and Sushil Chandra dis-cussed the issue at a meetingwith senior officials from thelegislative department of theMinistry of Law and Justice,including Secretary NarayanRaju and Additional SecretaryRita Vashishth.

The law ministry is workingon a Cabinet note to amendexisting laws to empower theEC ‘statutory authority’ to col-

lect Aadhaar numbers of bothexisting voter card holders andnew applicants.

In August, the EC had writ-ten to the law ministry that theRepresentation of the PeopleAct be amended to allow it tocollect Aadhaar numbers ofcurrent/new voters. It couldalso entail amending theAadhaar Act to allow for shar-ing the unique identificationnumber.

In 2015, the Supreme Court(SC) had restricted the use ofAadhaar, which had also halt-ed the EC’s project to linkAadhaar numbers with voters’electoral data as part of its national electoral rollpurification and authentica-tion programme.

At the time the EC aban-doned the project, it had seed-ed 320 million voter cards withAadhaar. The EC sent the pro-posal again after the SC

allowed for mandatory collec-tion of Aadhaar last year.

At the meeting, Arora saidthere are more than 40 differ-ent proposals of electoralreforms which are pending andthe EC is currently discussingsome of these.

He suggested meetings atregular intervals between theEC and the legislative depart-ment of the ministry to “pursue all such pendingproposals”.

The officials also discussedthe possibility of more thanone qualification date in ayear for becoming an elector,paid news and false affidavitas electoral offence/corruptpractice and substituting theterm ‘wife’ with ‘spouse’ inRepresentation of the PeopleAct to facilitate electoral reg-istration of the spouse ofwomen service officials in thecategory of service voter.

Govt working onlaw to link Aadhaarwith voter ID card

ARUP ROYCHOUDHURYNew Delhi, 19 February

Former prime ministerManmohan Singh onWednesday slammed the eco-nomic policies of his succes-sor Narendra Modi, saying thegovernment was not acknowl-edging that there was a slow-down, and that there was aneed to rethink the reformprocess afresh to deal with thecountry’s challenges.

“Today we have a govern-ment which does notacknowledge that there is aword as slowdown. And I feelthis is not good for our econo-my. If you do not recognisethe problems that you face,you are not likely to find cred-ible answers to take correctiveactions measures and that isthe real danger,” Singh said atthe launch of a book authoredby former planning commis-sion deputy chairmanMontek Singh Ahluwalia.

“And therefore, as Montekhas also pointed out in hisbook, the (target of) $5-trillioneconomy by 2024-25 is wish-ful thinking. Also, there's noreason to expect that farmers'incomes can be doubled inthree year period.”

Singh said while an annu-al gross domestic productgrowth of 8 per cent wasachievable; it required arethinking about the role offiscal policy, and bolder taxreforms. “As Montek says (inthe book) if you look at thereal fiscal picture, the real fis-cal deficit of states and Centrecombined is as high as 9 percent and that's not good forsatisfying our ambition ofhaving a dynamic economy,growing at the rate of 8-10 percent,” Singh said.

Govt doesn’tacknowledgeslowdown:Manmohan

The law ministry is likely to prepare a Cabinet note soon toamend the Representation of the People Act, 1951

PRESS TRUST OF INDIANew Delhi, 19 February

India will switch to the world’s cleanest petrol and diesel fromApril 1 as it leapfrogs straight toEuro-VI emission compliantfuels from Euro-IV grades now— a feat achieved in just threeyears and not seen in any ofthe large economies aroundthe globe.

India will join the selectleague of nations using petroland diesel containing just 10parts per million of sulphur asit looks to cut vehicular emis-sions that are said to be one ofthe reasons for the choking pol-lution in major cities.

Sanjiv Singh, chairman ofIndian Oil Corp (IOC), the firmthat controls roughly half of thecountry’s fuel market, saidalmost all refineries began pro-ducing ultra-low sulphur BS-VI(equivalent to Euro-VI grade)petrol and diesel by the end of2019 and oil companies havenow undertaken the tedioustask of replacing every drop offuel in the country with thenew one.

“We are absolutely on trackfor supplying BS-VI fuel fromApril 1. Almost all refinerieshave begun supplying BS-VIfuel and the same has reachedstorage depots across the coun-try,” he said.

From storage depots, thefuel has started travelling topetrol pumps and in the nextfew weeks all of them will onlyhave BS-VI grade petrol anddiesel, he said. “We are 100 percent confident that fuel thatwill flow from nozzles at all thepetrol pumps in the country onApril 1 will be BS-VI emissioncompliant fuel.” India adoptedEuro-III equivalent (or BharatStage-III) fuel with a sulphurcontent of 350 ppm in 2010 andthen took seven years to moveto BS-IV that had a sulphur content of 50 ppm.

From BS-IV to BS-VI it took justthree years.

“It was a conscious decisionto leapfrog to BS-VI as firstupgrading to BS-V and thenshifting to BS-VI would haveprolonged the journey to 4 to 6years. Besides, oil refineries, aswell as automobile manufac-turers, would have had to makeinvestments twice — first toproducing BS-V grade fuel andengines and then BS-VI ones.”State-owned oil refineries spentabout ~35,000 crore to upgradeplants that could produce ultra-low sulphur fuel. This invest-ment is on top of ~60,000 crorethey spent on refineryupgrades in the previousswitchovers.

BS-VI has a sulphur contentof just 10 ppm and emissionstandards are as good as CNG.

Originally, Delhi and itsadjoining towns were to haveBS-VI fuel supplies by April2019 and the rest of the countrywas to get same supplies fromApril 2020. But oil marketingcompanies switched over tosupply of BS-VI grade fuels inthe national capital territory ofDelhi on April 1, 2018.

The supply of BS-VI fuelswas further extended to fourcontiguous districts ofRajasthan and eight of UttarPradesh in the National CapitalRegion (NCR) on April 1, 2019,together with the city of Agra.BS-VI grade fuels were madeavailable in 7 districts ofHaryana from October 1.

India switches toworld’s cleanest petrol,diesel from April 1

China’sresponseThis refers to "Beijing’s dan-gerous groupthink epidemic"byRahul Jacob (February 12).This articlemadeaccusationsabout China’s efforts in com-bating Novel CoronavirusPneumonia and has attackedChina’s leadershipand its sys-tem.TheChineseEmbassy inIndiaexpressesour strongdis-satisfaction to the article.

The Chinese governmentputs people's life and healthas its top priority. Actingwith openness, transparencyand a high sense of respon-sibility, it has been sharinginformation in a timelymanner and taking themoststrict and thorough meas-ures to fight the outbreak.The National HealthCommission and theWuhanhealth authorities hold dailybriefings to keep the publicupdated. China's decisiveand effective measures havebeen recognised by the inter-national community. As theDirector-General of theWorld Health Organization(WHO) Tedros AdhanomGhebreyesus said, the speedwith which China detectedthe outbreak, isolated thevirus, sequenced thegenome and shared it with

WHO and the world are veryimpressive.

It is China's strong leader-ship and system whichenable us to mobilise all theresources for big undertak-ings. PresidentXi Jinpinghasattached great importance tothe epidemic and repeatedlygiven important instructions.The Central Committee ofthe Communist Party ofChina has set up a leadinggroup for comprehensiveprevention and control of theepidemic. The central andlocal governments have builtan all-round,multi-level pre-vention and control systemfocusing on Wuhan city andHubei province as core areas.The entire nation has beenmobilised, PLA soldiers,experts,medical teams, engi-neers, construction workersand many more have beendeployed to the worst-hitareas. We have full confi-dence and capability to winthe battle against the epi-demic. With the strength ofChina’s system and the unityof Chinese people, we havefull confidence and capabil-ity to win the battle againstthe epidemic.

JiRongPress Counsellor

Chinese Embassy in India

GreatdecisionThis refers to “Permanentcommission, command rolesfor women in Army get SCnod” (February 18). It is a his-toric decision by the apexcourt to grant permanentcommission to women inIndianArmy’snon-combativeroles. Itwill have a significantimpact onbridging thedividebetween men and womenofficers. It is shocking thatdespite having shortage ofofficers in support services,the army is letting go oftrained women officers onlydue togenderdiscrimination.Thatunfortunatepracticewillhopefully end now. Time andagain, women in all spheresof our society have provenbeyond doubt that they arenot inferior to their malecounterparts.

BalGovind Noida

CHINESE WHISPERS

O'Brien bats for KamraOnWednesday,atameetingof theparliamentary standing committeeontransport,whichalso looksataviation-related issues,members flagged the"unlawful"and"arbitrary"banimposedonstand-upcomedianKunalKamra (pictured) by fourmajorairlines.Ina letter to the committee ChairmanTGVenkatesh,memberDerekO'Briensaid IndiGo,Air India, SpiceJet andGoAirimposed thebanonKamrawithoutanyinquiry, and that theUnionMinister forCivil Aviationendorsed theban.O'Brien,a Trinamool CongressMP, said thebanonKamraviolated the"rules forhandlingofunrulypassengersandprinciplesofnatural justiceandwasextremelyarbitrary".With several othermembers supporting the issue,O'Brienurged thecommittee to take cognisanceof the incidentbecause"occurrenceofsuch incidents canhaveanegativebearingon theaviationpolicyofthenation".

Presidential suiteTradersoften try tomakemoneybyspreadingpositivenewspertaining toacompanyas it canpotentiallydrive stockprices. Lately, someof themareattempting to createapositivesentimentabout ITC,whose shareshavebeensoft since theBudget, followinganincrease in cigarette tax. “USPresidentDonald Trump’s Indiavisit is apositivefor ITC. Previously, fourUSpresidentshave stayedat the ITCMaurya inDelhi.This time, too, it shouldbenoexception.US Secret Servicebooksanentirehotelfor itsdelegationand thepresident staysin thepresidential suiteon the 14thfloor,” saysoneSMSdoing the rounds.

Cross connectionConsumer rantsaboutbadmobilenetworksarenothingnewbut thewhole thing canassumenewsignificance in thesevolatile times.AsAirtel andVodafone Idea struggle topaythedues linked toadjustedgrossrevenues,orAGR, to theDepartmentofTelecommunications (DoT), a telecomexecutive trudgingdownthecorridor intheDoTofficewas seenwringinghishands frustratedly: "DoTmeinhi signalnahinhai (I amnot receivingmobilesignals even inside theDoToffice),"hesaidashe steppedoutside to completethe call. Theoretically, theDoT softeningits stanceon thepaymentofAGRoronthe termsofpaymentprocess is anobvious step toameliorate the situation.Butmaking subscribers struggle forsignals isn't thebestway for strugglingtelecoms toargue their case.

INSIGHT

My first glimpse of entre-preneurship at closequarters was when myhusband’s father, H

Vasanth Rao or HVR started a busi-ness tomake electronic voltage sta-bilisers anddigital energymeters inthe late eighties.His retirement sav-ings formed the seed capital.Hehadworked till he was 52 in senior lead-ership positions with the centralgovernment and has been a highlyregarded inventor with several pat-ents to his credit. At a time whenstate electricity utilities wereencouraging industries to sign upfor more electrical energy, HVRforesaw the inevitable demand-supply gap that would emerge cre-ating the need for accurate digitalenergy metering so industrieswould know exactly howmuch wasbeing consumed/wasted.

In the early years, the enterprisewas small but successful. The stabil-isers were of excellent quality andsoon had the largest market share.In a few years, however, the com-pany hit bad times when its exclu-sive selling agency (which hadretained control of the brand name

and customers) terminated the con-tract overnight and began to com-pete. I had some experience inmar-keting and sales and I foundmyselfout in the field trying to fill the vac-uum the agency had created, untilwe could hire a head of sales. I hadto learn the basics of electrical engi-neering and energymanagement.

The end of the relationshipwiththe selling agency led to the startof a new one – we were discoveredby the late T Thomas, former chair-man of Hindustan Lever Ltd (nowHindustan Unilever Ltd ), who hadjust then set up India’s first venturecapital fund, Indus VentureManagement Ltd. The company gotthemuch-needed capital but in theform of equity. This unfortunatelymeant the family ownership wentdown to 26 per cent.

My husband Ashok took over asmanaging director when his fatherwished to takea stepback fromoper-ations. Ashok, however, quicklygrew tired of all that running thebusiness entailed so he asked TThomas or TT tomakeme the CEO.

My first mandate from TT was“Make the business professionaland profitable”.

The business had accumulatedlosses. Its net worth was wiped out.Moraleof the familyand theemploy-ees was low. The venture capitalistinvestors were expecting a returnafter four years of waiting. It did nothelp that Iwasanon-engineer tryingto run a tech company in the busi-ness-to-business space of digitalenergymeters and asking industrialcustomers to conserve energy!

Two things helped — theunflinching support of Ashok ashead of R&D and of T Thomas as

chairman. My determination wasprobably bornout of nervous excite-ment: I had been handed the oppor-tunity of a life-time... how could Imake sure the business wouldprosper so everyonewouldwin?

Dramatic changes were neededin almost every facet of the organi-sation. I also had to balance workwith being a new mother (my sonhad just turned one when I becameCEO). I took the following steps,some in series and some in parallel:■Culture: A family business had togrow up and get professional. Thefocus had to shift to high-efficiencyperformance and at top speed. I hadto find direct ways of telling peoplewhat would change andwhy.■Finding my voice and my leader-ship style: As a first-time leader, Itried to be decisive and becameobsessively interested in listeningand learning from wiser, moreexperienced people. I learnt later Iwas called an "inkblotter". Iwas alsodemanding and impatient and ittook many years before I realised Ihad become the biggest block toopen communication.■Building the senior team beyondjust Ashok and me: This turned outto be the most difficult task andseemingly an endless one.■Developing shared vision andvalues: We were all aligned that thebusiness would be run ethically ornot at all. This “sticking to princi-ples” stance made for very interest-ing experiences not all of themsavoury. The frontline teams in par-ticular had to bear the brunt of the“no-bribe” policy.■Crafting and executing a strategyfor profitable growth.■Establishing systems and pro-

cesses, designing the organisationstructure, setting up a proper pro-duction and delivery system, build-ing the brand and setting up salesand distribution networks.

Our efforts paid off. We becameprofitable anddividend-paying from1998 and the brand gained a pres-ence in the marketplace, quicklyachievinga35per centmarket share.We started exporting to demandingoriginal equipment manufacturersoverseas andalso setupourowndis-tribution in South-East Asia, theMiddle East and in theUS.

Through this journey,webecameknown for some unique HR prac-tices: If I foundout that a salesman-ager’s highly qualified engineerwifewas sitting at home I would go outof the way to enable her to come foran interview and to take a job withus. Fathers and sons, mothers anddaughters, have all built careerswith Conzerv.

Conzerv also became known forthought leadershipandsocial respon-sibility. Wewere the first evermeter-ing company to introduce and suc-ceed in energy consulting services.

In 2009, we sold Conzerv to theglobal giant Schneider Electric andstayed for a year to help overseeintegration.

Mostmergers andacquisitionsdonot succeed. Conzerv’s integrationinto Schneider, however, has beenseamless both for people and pro-duct. Today, we see the Conzervrange going global and the seniormembers of the management teamtaking theirplaceat the table in Indiaand beyond.

I have documented the story oftransforming Conzerv in my recentbookLiftOff, publishedbyWestlandBooks.

Theauthorhas servedas chief executiveofficer of SchneiderElectricConzervIndiaPvt.Ltd. (formerly,ConzervSystemsPvt.Ltd.)

From SME to MNC

HEMA HATTANGADY

Who wins and who loses isa logical question to askwhen a globally reputedcompany such as

Vodafone is counting its days in India.The question comes against the back-drop of the government failing to stepin effectively when the telecom sectorneeded it themost, the SupremeCourt

standing its groundwithout looking atthe ramifications of a possible shut-down of Vodafone Idea, and the regu-lator Telecom Regulatory Authority ofIndia or Trai remaining absent fromthe scene even as the world watchesone of the biggest telecomdebacles. Allthis while the phrase “adjusted grossrevenue” (AGR)may well be on its wayto be among the most searched terms.

If sources are to be believed, theonce-celebrated telco ispreparing to filefor bankruptcy as both joint venturepartners—UK-headquarteredVodafoneand Kumar Mangalam Birla-led Idea—havesaid innouncertain termsthat theywould not put good money after bad.That’s good enough reason for its closeto 340million customers to start think-ing of porting their numbers to a saferplatform. They have a choice betweenthe twoprivate players left in the fray—Bharti Airtel and Reliance Jio. Vodausershavebegunportingalreadyso that

they are not caught without a mobileconnection later as in all likelihoodAirtel and Jio (with 327million and 369millionusers, respectively)won’tbeableto make room for every subscriber get-ting dropped from the financially-stressed telco’s platform.

That brings us to the question ofwinnersand losers.Whilepopularbeliefis that Jio andAirtel will gain by gettingto share the Voda Idea subscriber baseat a time when tariffs will only headnorth, things may not exactly pan outtheway it is being imagined. Let’s beginwith Bharti Airtel, a telco in which themarket has shown immense faith. Truethat it’s got the funds to pay up its~35,500-crore AGR-linked dues to thegovernment. It’s also true that it wouldbag a good share of the Voda-Idea sub-scriberbase, at least till thepoint itsnet-workcapacityallows.But theburdenonSunil Mittal-led group would go up sig-nificantly onmany counts.

If threeoperators—Airtel,Voda-Ideaand Jio—have been together investingin the range of ~45,000-50,000 croreannually so far, the onus is now on twotelcos. And that’s a challenge. Even ontower tenancy, the load will bemore onthe remaining two players. Also, BhartiGroup, which earlier had a partnershipwith Vodafone, has shared a specialbondwith theUK-headquarteredserviceprovider. That has been evident in theirjoint representations in many forumsincluding on theAGRdispute in courts.When Jio came as a disruptor changingthe telecomgame,Bharti andVoda-Ideastuck together on several issues.

That explains why Mittal accompa-niedVoda-Ideabrass, includingBirla, tomeetministers and bureaucrats severaltimes in the past one year. OnWednesday, too, he did the same, topress for relief and help Voda-Idea stayin business. So, Mittal may not exactlybe a winner in the duopoly system forsome time to come.

Reliance Jiomay share similar con-cerns, but it has the technology edgefor the simple reason that it entered the

scene much later. Also, for RelianceIndustries, telecom is one of its manybusinesses, unlike Bharti Airtel. Jio,which is not burdenedwith legacy net-work and user base, may find it easierto increase its capacity to accommo-date Voda-Idea subscribers faster. So,Jio is unlikely to feel lonely withoutVoda-Idea being around. That’s morelike a winner.

But the government, which hasbeen fighting the telecom industry ontheAGR issue for 16 years, will be a realloser. The deeply bleeding telecomindustry and the absence of a strongplayer would adversely impact theupcoming spectrum auction and thegovernment’s signature project DigitalIndia. That’s not something the gov-ernment would have bargained forwhen telcos shifted to the revenue-share regime in 1999 and the AGR dis-pute began in 2003.

In the winner-loser debate, anotherquestionkeeps comingup: Is there any-thing that can be done to save Voda-Idea? Well funds that can give loans tostressed telcos are being keenlywatched. Also, the government couldgo for retrospective amendment of theAGR law. But will it, as thousands losejobs and the equipment/network uni-verse feels the heat?

Anewstar seems tohavearisenin India. Sprinting alongsidea pair of buffaloes, construc-tion worker Srinivasa Gowda

wowedanaudienceduringa local sport-ing event, when he covered a distanceof 142.5 m in the paddy fields of ruralKarnataka in just 13.62 seconds.Equivalent to 100min9.55 seconds, onecan claim that this is better than UsainBolt’sworld recordof9.58 seconds.Doesthis make Gowda the fastest manon earth?

Cynics urge us to pause for amoment. It is possible that some ofGowda’s speed was generated by theraging buffaloes running alongside.Others say that the slushy fields mayhave instead slowed him down. Thetruth is that in order to make any com-parison, Gowda will need to be timedand tested in an environment whereprofessional athletes compete. Thatalonewill resolve the issue.

All of this seems to oddly resonatewith India’s growthprospects. Last yearwas rough. GDP growth slid, as every-thing that couldgowrong,didgowrong.The year 2020 could be better. The buf-faloes running alongside the country’seconomy could provide a helping hand

inmoreways than one.One, if the rain during monsoon is

normal, the rural economy couldimprove. Itwouldcement thegains thatthe sectorhas garneredover the last fewmonths as food prices have risen. Two,thepositive supply shock fromoil pricessliding down to $53/barrel, from$61/barrel a year ago, couldalso supportgrowth. Three, India's wobbly shadowbanks seem to have stabilised as theavailability of funds, both local andinternational, have improved.Thecoststhat non-banking financial companiesborrow at are beginning to normaliseafter skyrocketing in 2019.

Four, on thepolicy front, theBudgethas come and gone, with nomajor dis-ruption. If the equity market perform-ance is an indicator, the Budget did notseem to be as disruptive this year as itwas perceived to be last year. Finally,following the large but conventionallending rate cuts last year, the centralbank has forayed into unconventionalmethods, to try to get the markets tomirror the moves. In the recent policymeeting on February 6, it offered toinject cash throughone- and three-yearfunding operations to try to keep short-term borrowing costs low. It also loos-ened regulations on loans made tosmall businesses, real estate and theauto sector.

Of course, the deterrents to growthshould also be acknowledged. Just asthe slushy paddy fields could haveslowedGowda, the fallout fromthe cur-rent coronavirusoutbreakcould impactIndia, both directly and indirectly.Around 14 per cent of India’s importscome from China, and are spread outacross investment, industrial and con-sumer goods. Persistent supply disrup-tion couldhurt India’s economic recov-ery. And a slowdown in global growth

may harm the country’s exports.Considering both the positives and

negatives,we think India’s economywillrevive gently, from an expected sub-5per cent growth clip in December 2019to about 6 per cent by December 2020.

But will the recovery last? And is itgood enough? If one argues that thebrisk rise in themanufacturing indicesover the last fewmonths reflects inven-tory re-stocking, onemustalsonote thatthis canbeaone-off, unlessdemandris-es to use up the new supply. Also, 6 percent growth pales, when put alongsidethe 8 per cent growth achieved just afew years ago. How can India get to ahigher growth trajectory, sustainably?

This is where India’s economy facesthe real test. External positives can beshort-lived. Is the domestic economy

structurally strong enough to supporthigher growth?

In previous research, we haveargued that nationwide balance sheetsare stretched. Companies have toomuch debt, banks are battling a largepile of bad loans, the finances ofshadowbanks remain lopsided, house-holds may not want to take on toomuch more debt when wage growth islow, and the government debt and def-icit situation is tight. Thepolicypriorityis clear. The balance sheet clean-upneeds to be expedited. That alone canpush India sustainably to a high-growth trajectory.

Thankfully, the country is workingwith the right ingredients. For example,the new bankruptcy code can lead to afaster resolution of bad assets. The new

coal policy can help untangle somestalled investmentprojects.Thegovern-ment's ambitious disinvestment planscanhelp improvegovernment finances.The successof these important reforms,however,will dependonexecution.Thelatter can be tardy in India.

If Gowda wants to prove himselfamong other athletes, he will have toperform by himself, on a professionaltrack. If India wants to get on a highergrowth path sustainably, it will haveto build its internal potential. If itcleans up its impaired balance sheetswithmuch-needed reforms, it canwinthe race.

Theauthor is chief Indiaeconomist,HSBCSecuritiesandCapitalMarkets(India)PvtLtd

Whogains ifVoda-Ideafails

India's race for higher growth

Jio,whichisnotburdenedwithlegacynetworkanduserbase,mayfinditeasiertoincreaseitscapacitytoaccommodateVoda-Ideasubscribersfaster

Alocalbuffaloraceholds lessonsforgrowth—internalstrengthmaybemoreimportantthanexternalsupport

NOT FOR PROFITNIVEDITA MOOKERJI

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Letters can be mailed, faxedor e-mailed to:The Editor, Business StandardNehru House,4 Bahadur Shah Zafar MargNew Delhi 110 002Fax: (011) 23720201 · E-mail:letters@bsmail.inAll letters must have a postaladdress and telephone number

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MUMBAI | THURSDAY, 20 FEBRUARY 2020

PRANJUL BHANDARI

ThetransformationofConzervoffers important lessonsonscalingup

Kambala jockeySrinivasGowdacreated a stormrecently by covering 100metres in9.55 seconds

OPINION 11> STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

The landscape will change for investment advisers due to decisionstaken by the Securities and Exchange Board of India (Sebi) at itslatest board meeting. The regulator has decreed that the same entityshould not provide both advisory services and products such as

mutual funds to a client (defined here as a family with dependent children,parents, etc). Sebi has also put a cap of ~75,000 per account on the fees thatmay be charged from a single client for advisory services, with a maximumcharge of 2.25 per cent of assets under management for smaller portfolios.However, separate subsidiaries owned by the same entity may sell and advisethe same client. Sebi has also said that it will raise the eligibility criteria interms of both net worth and qualification for registration of advisers, whileallowing existing registrations to continue to practice.

This move, aimed at preventing mis-selling, however, will favour companiesthat can create subsidiaries to use the same brand to sell and advise clients.Individual advisers, who commonly work through limited liability partnerships(LLPs), will find it difficult to stay in the segment. They will either have to bepure advisers, or stick to simply selling products. Moreover, the cap on advisorycharges will severely limit the upside in terms of income from such services. Italso ignores the fact that advisory requirements of different clients may differ intheir level of complexity. Indeed, the cap could make purely advisory servicesunviable commercially.

In practice, too, the segregation of advice from sales is impractical. While itis theoretically possible for seasoned investors to invest without advice, it is adifficult proposition, given the proliferation of schemes. Most clients will haveto work with two separate entities, rather than a one-stop shop. This will likelymake them gravitate to the same brand, favouring large companies, rather thanseeking out two entirely separate entities. There may also be a situation wheresellers offer “informal” advice off the books, while advisers create complicatedcorporate structures to try and get a slice of the sales commission. That sort ofscenario would increase opacity and, possibly, even mis-selling — the very thingthat Sebi is attempting to curb. A more optimal solution would have been toaddress the concerns about mis-selling directly, rather than imposing a cap onadvisory services and segregating sales and advice since those services fit togetherorganically. Stringent penalties could have been imposed on mis-selling, promisesof extravagant returns, and other common malpractices. Sebi could have lookedto create a more transparent format for adviser interactions which clearly delin-eated the commission payable.

On the positive side, Sebi cleared the concept of regulatory sandboxes atthe same meeting. This is a good step since it will allow financial service providers,including fintechs, to experiment with new products without having to worrytoo much about the fine print at the initial stages. It should spur innovationwithout creating larger market risks and, therefore, allow the regulator to makeinformed decisions about any such new products after reviewing their impactin practice within the sandbox.

Inadequate legislation

The Pesticides Management Bill, 2020, approved by the Cabinet forintroduction in Parliament, is unlikely to live up to the expectations ofstakeholders in the agro-chemicals sector despite having been draftedafter prolonged deliberations over 12 years, and inputs from the par-

liamentary standing committee. In a bid to shield the farmers’ interests, the Billseems to have willy-nilly tilted the scales against the industry. To ensure speediercompensation for losses suffered by farmers due to spurious, substandard orineffective pesticides, the Bill moots setting up a dedicated fund of ~50,000crore, raised from the fines charged from the defaulting pesticide companiesand contributions from the Central and state governments. The penalties forthe supply of prohibited or poor-quality pesticides are proposed to be increasedto ~50 lakh and between three and five years of imprisonment. At present, theseare pitched at a measly ~2,000 fine and a jail term of up to three years. The pro-duction, trade, and use of pesticides are sought to be regulated through a centralpesticides board comprising representatives from the Centre, states and farmers.Promotion of environment- and health-friendly organic pesticides is among theother notable features of this Bill.

The need for putting in place an effective legal regulatory regime for the pes-ticides sector has been felt for long because the archaic Insecticides Act of 1968has proved incapable of doing so. The pesticides industry has grown haphazardly,resulting in the emergence of many fake, poor-quality and highly perilous chem-icals. Though only around 300 pesticides have been formally registered for pro-duction and use in the country, the number of chemical formulations in circulationis far larger because of the production and sale of unregistered molecules. Severaldangerous pesticides banned abroad continue to be used in India, causing deathsand grievous injuries to hundreds of farm workers every year. The new law isexpected to deter the manufacture and sale of such hazardous chemicals and for-mulate stricter norms for approving new molecules.

However, the proposed legislation seems to have created a few apprehensionsamong sections of the pesticides industry. The CropLife India, an association of16 research- and development-oriented crop science companies, has demandedthe Bill to be referred to a Select Committee of Parliament to facilitate fresh con-sultations with players in this sector. It has also favoured decriminalisation ofagro-input manufacturing by removing the applicability of the Code of CriminalProcedure, 1973, arguing that it creates a negative investment climate. Many ofthese misgivings could have been avoided by seeking public comments on thefinal draft of the Bill before sending it to the Cabinet for approval. Going by theofficially disclosed limited information about the Bill, this measure appears to bewanting in laying adequate stress on checking pesticide residues in farm productswhich pose grave health hazards for human beings, livestock, and wildlife. Theindiscriminate, as also injudicious, use of pesticides is causing widespread air,soil and water pollution. The proposed law, therefore, should not end at ensuringthe availability of less-hazardous pesticides but go a step further to oblige thefarmers to use them cautiously and in the recommended manner to avoid leavingany traces in the farm produce.

Volume XXIV Number 134

MUMBAI | THURSDAY, 20 FEBRUARY 2020

The goods and services tax (GST) finally becamelaw in 2016, with cross-party support in bothHouses of Parliament, and all state legislatures

passing it. The GST has come in for a lot of criticism,but it is useful to step back and view it as a whole. Toreplace excise duty, sales tax, luxury tax, octroi andmyriad others taxes and duties, which varied acrossstates in quantum and implementation,with one tax was fundamental progress.To provide a complete set-off for all inputtaxes, was an essential contribution tocompetitiveness. Thanks to these twochanges from what we had earlier, GSTis a landmark policy reform that has tak-en the country forward.

Having said that, several major prob-lems must be addressed. We took the pathof “fitting” the multiple old taxes into aset of rates. This eased implementation,but has led to too many rates — seven inall, 0, 3 per cent, 5 per cent, 12 per cent, 18per cent, 28 per cent and then the cessitems. By fitting, instead of unifying, wehave repeated the earlier complexity. To take just twoexamples — of something that is even more complexthan when GST started — a restaurant can carry a dif-ferent GST rate if it is in a hotel with a room tariff over~7,500 or an independent restaurant. Footwear thatsells for less than ~1,000 carries a GST of 5 per cent,with other footwear of 18 per cent. Further, as the pas-sage of GST required their support, states insisted thatGST returns be filed separately in each state whereone wanted to claim set-offs.

Multiple rates combined with multiple registrationsand filings of returns have hugely complicated theGST. This has had two consequences: Smaller firmshave struggled to cope with the system, and the GSTsystem has struggled to automate the matching ofinput invoices with output invoices. The GST Councilhas responded by postponing when returns must befiled for smaller firms, reduced micro, small and medi-um enterprises (MSME) filing to once in three monthsinstead of each month, and raised the exemption limit

repeatedly so that a turnover up to ~1.5 crore can beexempt by paying a 1 per cent tax. Electronic invoicematching is still not done. And the onus of the cor-rectness of the supplier’s invoice and actual tax pay-ment has been transferred to the receiving firm (howa firm can be held responsible for the accuracy of someother firm’s invoice and accounts will probably end

up being settled in court). This complex system creates

a large incentive to stay out ofthe tax net (there are stories offirms whose business is fakeinvoices). The net effect is thatGST collections have consistent-ly underperformed — missingtheir budgeted target this yearby ~1.5 trillion (or almost 1 percent of GDP). So GST must bereformed. How? Our principlesshould be simplicity, compre-hensiveness and low rates.

A simpler structureWe should have at the most three or four rates — 0per cent for essential food items, 12 per cent foreverything else, and a high tax for “sin goods” suchas aerated drinks, tobacco and alcohol (I’m open tobeing convinced that getting from here to thereneeds the additional 28 per cent rate in the interim).Registration and filing of all returns should be withone authority — with the Union government andstates having equal access to the data. Then makeGST comprehensive: Bring the remaining items —fuel, construction, alcohol — in its fold. Have every-one file every month, but in one place alone insteadof 29, and drastically lower exemption limits — from~1.5 crore to, say, ~10 lakh. Use the economic censusof business enterprises to ensure all firms are regis-tered for GST, and prompt an inspection only if afirm is not paying GST broadly in line with itsdeclared number of employees. Let us close thedoor to the exemptions that facilitate evasion,instead of bringing in draconian penalties to deter

walking through an open door. Bring everyone intothe net, and make the filing — and therefore e-link-ing— of invoices simple.

Lower the stakes as we learnWhen GST came in, the GST Council insisted on settingup an authority whose remit was to ensure firmspassed on any immediate benefits from a reduced taxrate to consumers. This, apart from being a throwbackto the 1970s socialism, was always a bad idea: The bestway to control one firm’s behaviour is through com-petition from another firm. But at least the NationalAnti-profiteering Authority (NAA) was to have a lifeof two years, and then vanish. Come July 2019, insteadof vanishing, its term was extended by another twoyears. This last Budget had a (welcome) section ontrust, and decriminalising commercial offences. Itthen diluted this powerful message, by criminalisingthe “fraudulent availing” of input credits under GSTon the mere grounds of the tax authorities having a“reason to believe”. Shouldn’t they prove it first beforearresting someone? So let’s make the stakes lowerwhile we learn how to make GST a huge success—scrap the NAA now, and decriminalise all offencesunless fraud is proven in a court of law.

The GST Council is chaired by the Union financeminister with membership of all state finance minis-ters. This is a unique institution, where Arun Jaitley’sexpert initial chairmanship established principles ofdiscussion and consensus. It is exactly how a federaldemocracy like us should make major policy. Frequentmeetings and vibrant discussion are good to buildconsensus and conviction. But they have one big dis-advantage. When senior politicians get together oncein three months, they seem to think they must, always,Do Something. So they listen to industry and then tin-ker with rates, change forms, and twiddle exemptionlimits. The finance minister perceptively suggestedearlier this month that rates should be reviewed onlyonce a year — “once a year” should apply to all it does.It also needs a strong technical secretariat that doesthe homework and proposes improvements to theCouncil. A 30-member Council trying to devise solu-tions reminds one of the saying that a camel is a horsedesigned by committee.

GST was a major reform, an essential platform forfirms to be efficient. It was also intended to lead togreat tax buoyancy that would raise the tax-to-GDPratio above the 10 per cent or so it has been stuck atfor 30 years. It still has the potential to do so, providedwe simplify, lower and make GST comprehensive.And we must make the administration benign — byscrapping the NAA and decriminalising commercialoffences. It can then truly be a tax that illustrates howless government delivers great results.

ndforbes@forbesmarshall.com. The writer is co-chairmanForbes Marshall, past president CII, chairman of Centre forTechnology Innovation and Economic Research and AnantaAspen Centre

Corporate India’s well-established aversion toengaging with controversy involving the ideol-ogy of the ruling regime — any ruling regime —

is being tested in unexpected ways. These engagementsare the direct result of this ruling dispensation’s ideo-logical mobilisation of society. Three incidents in therecent past show that this process of profound politicalevangelism has had the unintended consequence ofimpacting relations between cus-tomers and service providers, forcingthem to show their ideologicalcolours (or not)

First, in August last year oneAmit Shukla from Jabalpur,Madhya Pradesh proudly tweetedthat he had cancelled an order onfood delivery app Zomato becausethey had allocated a non-Hindudelivery boy and had declined tochange the rider or refund the cus-tomer for cancelling. Zomato’s wittyresponse: “Food doesn’t have a reli-gion, it is religion.” FounderDeepinder Goyal backed this upwith a politically correct message about India’s diver-sity. “We aren’t sorry to lose any business that comesin the way of our values,” he said, a tactful way oftelling customers to like it or lump it.

Perhaps Zomato was lucky that the incidentoccurred in a non-BJP state. So the police respondedby slapping Mr Shukla with a ~10,000 bond for goodbehaviour on grounds that his tweet could have dis-turbed the peace in a communally sensitive city likeJabalpur.

Ride hailing service Uber — whose food deliverysubsidiary had tweeted its support of Mr Goyal — didnot enjoy the same sort of support earlier this month

in Mumbai, that multicultural metropolis under thethrall of saffron groupthink. One of its drivers sum-moned the police to arrest a passenger for discussingprotests against the Citizenship Amendment Act.The driver had recorded his client’s conversation andwas reporting him for “anti-national activities”, whichis being increasingly tucked into the wide-rangingcounter-terrorism law, the Unlawful Activities

(Prevention) Act. That the policeresponded at all was notable — thattoo, not to the driver’s invasion ofhis client’s privacy. Instead, theyinterrogated the passenger and lethim off with a paternal warningagainst wearing a red scarf in these“troubled times”.

Uber’s response was as mild asyou can get. It suspended the driverfor 72 hours while it conducted areview, then reinstated him anddecided to send him to “re-sensitisa-tion classes” — meaning he will haveto re-attend the compulsory sensiti-sation programme for drivers before

they start work with Uber. This course of action begs several questions. First,

did Uber not consider it reprehensible that a serviceprovider should record a client’s conversation withoutpermission (there was no statement to this effect).Second, what does this sensitisation programme entail?Does not snooping/snitching on a passenger — cour-teously minding your own business, in other words —not form a part of a driver’s basic training? If it does,then this driver clearly hadn’t got the message the firsttime. Is he likely to absorb it now that the local BJPworkers had feted him for being “an alert citizen”? It isworth wondering whether the cab company would

have responded in the same way had the incidentoccurred in the US.

In January, an Ola driver took issue with his client’sphone conversation criticising the Modi government.An argument ensued, the client complained but theOla management’s response was that it would take“corrective action” (unspecified) and not dismiss thedriver in the interests of respecting India’s democraticprinciples and encouraging “a healthy exchange ofthoughts”. True, this was not an incident worthy ofdismissal and, absolutely, everyone in India shouldhave the right to express their views. Back in 2018, Olaunderlined its secular platform when a Hindu clientdeclined a Muslim driver and proudly tweeted the fact.

Meanwhile, the private airlines’ heavy-handednessin the case of comedian Kunal Kamra raises discom-fiting questions. Mr Kamra accosted the famouslyobstreperous anchor of a BJP-cheerleading channelon an IndiGo flight. For this, he was banned for sixmonths immediately. A tweet from the civil aviationminister encouraged other private airlines and state-owned Air India to do the same. The locus standi of apolitical leader interfering in a row between a privateairline and its customers remains unclear.

So far so bad. Soon it transpired that all airlineswere guilty of overkill. Three months was the maximumban for an offence that, while not to be condoned, didnot disrupt services or delay the flight in the same wayas some politicians had done in the not so distant past.Worse, the pilot complained that he had not been con-sulted, and the aviation watchdog backed him up bysaying due process had not been followed. Mr Kamrahas since sued the airline for “mental harassment”.

All these incidents go to show that the day of theanodyne, apolitical corporation is running out fast.How they respond will determine the politico-businessdynamic in the days to come.

“How do we make sense of theenormous expansion of educational

institutions and desires to access thesespaces despite them being exclusionary,disciplining and alienating? How docaste-blind assumptions and caste-driven practices impact everydayschooling and institutional cultures?How do educational ideals such asequality, autonomy and respect begin tochange as they begin their institutionallives?” asks Shivali Tukdeo in her bookIndia Goes to School: Education Policyand Cultural Politics. She is an AssociateProfessor in the School of Social

Sciences at the National Institute ofAdvanced Studies in Bangalore whereshe has been researching socialexclusion and changing modes ofpublic education in India, with specialattention to new policy regimes andhow these are shaped by theinternational development discourse aswell as nationalism.

What makes this book riveting is MsTukdeo’s view of policy as socially andculturally constructed. She draws onfeminist, post-colonial and anti-casteliterature to critique policy frameworksthat masquerade as apolitical whilethey diligently serve “neoliberaldirectives...using technologicalinterface and the rhetoric of efficiencyand transparency.” She writesscathingly about “the non-profitindustrial complex,” which has beenresponsible for mainstreaming“capitalist solutions to social problems”by replacing mass struggles for socialchange with donor-driven agenda. The

broader context is a diminished role forthe state as provider and manager ofeducation, and ample opportunities forprivate players to be involved inadministration, curriculum design,assessment and teacher education.

Apart from undertaking an extensivereview of academic literature and policydocuments concerning her area ofresearch, Ms Tukdeo has spoken topeople in the field. She reports aconversation with a municipal schoolteacher who said, “We are not sure if wewill have enough supply of chalk fornext week, but there will always be anorganization visiting us, teaching ushow to manage our classrooms, how toimprove, develop leadership skills.” MsTukdeo learnt how educational reformsintroduced in government schools areoften invasive and top-down as theyhave become spaces forexperimentation by start-ups,foundations, and various kinds of non-state actors. Unfortunately, this book

does not engage with how students andparents perceivethese reforms.

Mr Tukdeo isconcerned aboutthe impact globalintegration has hadon education inIndia, where it isbeing increasingly“thought in terms ofemployability,certification,authenticity andvalidation.” She makes a reasonableargument about being wary of policyideas that are presented as easilytranslatable across cultural and politicalcontexts, particularly those generatedby the World Bank, the Organisation forEconomic Co-operation andDevelopment and UNESCO. Her bookexamines the intellectual hegemonyinherent in the specific targets set up byEducation for All, and the generic

standards laid down in the MillenniumDevelopment Goals. She writes, “Thecontinuation of target-drivenprogrammes in India points out thesteady gain of ground by neoliberal

ideas of goodeducation...the poorare constructed asaspiring andentrepreneurial,almost removingpoverty from itsmaterial andhistoricaldeterminants andtransposing it in therealm of businessopportunities.”

Ms Tukdeo has also studied theengagement of diasporic groups infundraising for educationalinterventions in India. According to her,their work is based on the assumptionthat access to schooling will overcomeinequality, enhance civic participation,and grow an educated workforce thatwill secure India’s national interests.However, they shy away fromacknowledging the kind of politics this

work is informed by and feeds into.Referring to the work of the EkalVidyalaya Foundation, she remarks,“What is crucial here is how educationand development have become vehiclesto consolidate the base for the Hinduright, and Ekal schools essentiallyprovide a cover for transnationalHindutva organizing.”

Ms Tukdeo’s book could not havecome at a better time. It invites thereader to think about how educationpolicy is a tool for creating consensusaround ideas of citizenship. These aresome of the questions that came up inmy mind as I was reading: What doesnation-building mean in thecontemporary moment where citizensare not up against colonial oppressorsbut against democratically electedleaders who slap sedition charges onstudents upholding constitutionalrights? Will excessive privatisation inthe education sector furthermarginalise Dalit, Adivasi and Muslimstudents or will it open up the space fordissent and protest? How beneficial isour critical consciousness if it does notgive us the tools to build alternatives?

Goodbye, apolitical corporations

Education’s ‘non-profit industrial complex’

Curbs on investment advisers may not address mis-selling

Regulatory confusion

Reforming GST

Pesticides Bill fails to address key issues

ILLUSTRATION: BINAY SINHA

BOOK REVIEWCHINTAN GIRISH MODI

INDIA’S WORLD?NAUSHAD FORBES

We must simplify, lower and make GST comprehensive to fulfil its promise

INDIA GOES TO SCHOOLAuthor:Shivali Tukdeo

Publisher:Springer

Price: ~9,436

Pages: 138

SWOTKANIKA DATTA

ASHLEY COUTINHOMumbai, 19February

Though mutual funds (MFs) may still behesitant to take on India Inc head-on,their share of votes against shareholder

resolutionshasseenanuptickoverthepreviouscalendar year.

Thepercentageof ‘against’votesroseto4.23per cent in 2019 — the highest in the past fiveyears for which data was analysed. It was 3.4percent in2018. Indevelopedmarkets, institu-tional investors typically vote against 5-10 percentofshareholderresolutionsfloatedbyfirms.

Only 3.3 per cent votes of the top 10 fundhouses, however, were cast against manage-ments. Six of these — Aditya Birla Sun Life,HDFCMF,ICICIPrudentialMF,KotakMF,IDFCMFandAxisMF—cast less than0.1per centoftheirvotesthisway,datafromprimemfdatabaseshows.Thepercentageof ‘abstain’votes,ontheother hand, dipped to 10.9 per cent last yearfrom 12.5 per cent a year ago. This was a hugereductionfromthehighsof80-90percentseenin the early 2010s.

“More thanhalf the industrydidnot vote inthe past. Given that, the drop in abstain votesto11percentandthenominal surge in ‘against’votes should be viewed very positively,” saidDhirendraKumar,chiefexecutiveofficer,Value

Research. Voting at general meetings is a toolavailable tominority shareholders to influencedecision-making.

“Fromameretick-the-boxapproach,votinghas become a lot more thoughtful now, withfunds engaging with companies on decisionsthey take,” saidAmitTandon, founder, IiAS.

The way Indian MFs vote assumes signifi-cance, as they have grown in clout over theyears.Withanequitycorpusofover~7.8 trillion,

MFsareincreasinglydictatingmarketdirection.NetMF inflows totalled ~1.65 trillion in thepasttwo years, about 2.5 times the ~67,098 croreinflows from foreignportfolio investors.

According to experts, it’s not just the per-centage but the type of ‘against’ votes thatmatter. “Indian institutional investors shouldtake a stand on important corporate matterssuchas appointment of directors andauditors,rather than confining themselves to matters

pertaining to change in capital structure suchas issuance of equity or raising debt,” saidShriram Subramanian, founder and MD ofInGovernResearchServices.

MFs manage liquid assets for several com-panies. This could, say experts, dissuade fundhouses from going against managements, asthecompaniesinquestionmightthenwithdrawtheamountsparked inthese funds.Also,manyMFs are themselves owned by large corporatehouses,whichcouldresult inaconflictof inter-estduringvoting. “Sincemore than50percentof the shares are held by promoters in India,voting on resolutions may not yield as muchresults as, say, in the US, where institutionalholding is high,” saidKumar.

Franklin Templeton MF, a foreign fundhouse, has taken the lead in voting on share-holder resolutions. In the past two years, thefund house has voted on about 14,400 resolu-tions, which is 22 per cent of the total numberof resolutions of the top 10 fundhouses. It alsotopswith 1,259 or 8.7 per cent of ‘against’ votes.A mandatory 'stewardship code’ for MFs fromApril 1 couldalsohelp improveparticipationoffunds in shareholder resolutions in future.

“Franklin Templeton has a clearly definedproxy votingpolicy basedonwell-knownprin-ciples of governance such as independence oftheboard,prudentcapitalallocationdecisions,minorityshareholderfriendlinessandfairprac-tices and adherence to well-established envi-ronmental, social and governance principles,”saidAnandRadhakrishnan,managingdirector& chief investment officer, Emerging MarketsEquity—India, FranklinTempleton.

InvestorWWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING <

The Smart ThestockofBharti Infratel rose7percentonWednesday.ThegainscameonexpectationsthatthegovernmentisunlikelytoencashbankguaranteesofVodafoneIdea,whichisakeytenantof its towers.Thetoweroperatorwillbeimpactedif thereisadropintenancyratios

QUICK TAKE: BHARTI INFRATELUP ON VODA RELIEF “Government dumped 51% of HPCL ontoONGC in January 2018 for ~37,000 cr.ONGC had a market cap of~260,000 cr on that day.Today, it is ~125,000 cr.Massive destruction of value”SANDIP SABHARWAL,Investment Advisor

MUMBAI |THURSDAY, 20 FEBRUARY 2020

PMSschemesexperimentwithpay-only-for-profitmodel

MFs: ‘Against’ votes hit a 5-yr high

THE COMPASS

Power plant acquisition value-accretive for JSW Energy

UJJVAL JAUHARI

JSW Energy’s share purchase agree-ment to acquire GMR KamalangaEnergy — which owns and operatesa 1,050-Mw coal-fired power plant—enthused the Street.

The acquisition is in the rightdirection as it puts JSW Energy’srobust balance sheet and cash flowsto better use, and gains are expectedto accrue from the first day.Valuations appear reasonable too,and the deal does not change JSWEnergy’s debt-equity ratio, whichremains at less than 1x.

The acquisition of three units of350 Mw each is valued at an enter-prisevalue (EV)of ~5,321 crore, imply-ing an EV per Mw of ~5.1 crore.Analysts feel this is in line withexpectations.

Since the plant islocated near the coalbelt in Odisha withdedicated rail trans-portation and easyaccess to watersupply, variable costsare low. Analysts pegthe same at ~1.5-1.6per Kwh. Anotherpositive is that 84 percent of the capacitiesare tied up underlong-term power pur-chase agreements(PPA) of 25 years, forwhich coal linkages of 3.64 milliontonnes per annum are in place. ThePPAs are with the Odisha, Bihar, andHaryanagovernments,while 170Mwis available formerchantpower sales,which could further improve finan-

cials.“Most of the fixed

cost gets recovered inthe PPAs, while mer-chant capacity oper-ates at a variable costof ~1.5-1.6 per Kwh.Hence, even at lowmerchant realisationof ~2.5 per kWh, theplant canearncontrib-ution of ~1 per kWh,”note analysts at JMFinancial.

Gains, though,depend on JSW’s

execution. The earlier owner wasunable tobuycoal and run theuntiedcapacity (170 Mw), due to workingcapital crunch. JSW believes it caneasily utilise this capacity for mer-chant sales.With theplant load factor

rising to 90 per cent (from 75 percent), JSW expects an Ebitda of ~900crore for FY21, led by contributionfrom open merchant capacity (~125crore).GMRKamalangahad reportedrevenue of ~2,195 crore in FY19.

Most analysts remainpositiveandsee the development as favourable.Analysts at Motilal Oswal FinancialServices have raised FY21 and FY22earnings estimates by 15 and 8 percent, respectively, to factor in theacquisition.

On the acquisition, SwarnimMaheshwari and Ashutosh Mehta ofEdelweiss Securities estimate a pay-back period of five years and a 200-basis-point accretion toJSWEnergy’sreturn on equity. “We envisage a re-ratingpotentialwith themissing link—inorganic growth—now inplace,”they note.

Lower costs could spur margins for high-flying SpiceJetExpansioninregionalconnectivity, inductionofMAXaircraftmajortriggersRAM PRASAD SAHU

The SpiceJet stock gained4.3 per cent, thanks to theintroduction of new regionalroutes and expectations ofimproving profitability fromFY21. The carrier launched20 new flights effectiveMarch-end, which will addto its existing network and,more importantly, to a cou-ple of regional routes.

With the latest additions,flights under the regionalconnectivity scheme havenow increased to 52 destina-tions — the highest in thesector. Yields from regionaldestinations tend to behigher, given the shorter dis-tance and lower competi-tion, compared to the pric-ing pressures in busierroutes including metros.

Analysts said that thenew routes could enhanceutilisation for the Boeing737-800 and BombardierQ400 aircraft, which will bedeployed for these routes.

The company now has atotal of 82 Boeing 737s, twoAirbus A320s, and 32Bombardier Q-400 aircraftas part of its fleet.

While the addition of newroutes is a positive, the keytrigger for the stock is theinduction of Boeing 737MAX to its fleet.

Analysts at EdelweissResearch said while therevenue passenger kilome-tre growth of 46 per cent —expected in FY20 — hasbeen boosted by theaddition of 30 B737 NGsfrom Jet Airways, FY21growth is likely to be but-

tressed by the addition of737 MAX.

Higher capacity (220seats against 180 for the 737NG), along with 20 per centhigher fuel efficiency isexpected to boost profitabil-ity. Non-fuel unit costsslipped 10.6 per cent sequen-

tially in the Decemberquarter to ~2.7 per kilometre,a figure expected to dropfurther as new planesreplace the older 737s. Withthese costs expected toreduce by a further 4 percent over the next couple ofyears, the firm is expected to

bridge the 7 per cent gapwith market leader IndiGo.

In addition to efficienciesfrom the induction of theMAX aircraft, the fuel bill islikely to decline on accountof lower crude oil prices anda higher international mix.

ICICI Securities expectsunit fuel costs to decline by9 per cent during FY19-22.While there is uncertaintyover traffic growth becauseof the coronavirus outbreak,analysts believe that yieldson international routes arebetter, as some of the slotsvacated by Jet Airways havenot yet been replaced.

On the domestic front,the delay in ramping up ofcapacity across carriers isalso a major positive, giventhe muted growth in pas-senger traffic.

Debt/equityratiotoremainintactatbelow1xfollowingtakeover

SACHIN P MAMPATTA & SAMIE MODAKMumbai, 19February

Peoplewhomanage investmentportfoliosof therichareincreasinglypitching foramodelwhere theyareonlypaid for theprofits theymake.

Investors typicallypayportfoliomanagementservices(PMS)providersanannual fixedfeeofaround2percentof themoneytheymanage.Theyalsopaythemashareof theprofitsmade.This isusuallyaround20percentofgainsaboveacertain threshold.This ‘twoand20’model isgivingwaytoa ‘zeroand20’model,according to industryexperts.

“Weare increasinglyseeingatrendwhereinaserviceprovider iswilling to forgo fixedfeesandagree toonly ‘profit-share’.Essentially, the investorhas topayonlywhenthereturnsareabove

thehurdle rate.Under this, there isonusonthe fundmanager togenerate returns,” saidRoopaliPrabhu,director-headofinvestmentproducts,SanctumWealthManagement.

“Wehaverecently launchedazero fixed feemodel,” saidAkhil

Chaturvedi, associatedirector-head-salesanddistributionatMotilalOswalAssetManagementCompany—oneof India’s largestPMSplayers.

Hesaid themodel,which isonaselectdistributionchannelbasis,wasstarted threemonthsago.Theideawas toencourage investors tonotdesist frominvesting inequitiesmerelydueto feesbeinglevied involatile times.Suchinvestorswouldpayacertainpercentageonprofitsonannualbasisonlywhenacertainbasichurdleonreturn isachieved,which in thiscase is6percent.

Typically, thehurdle ratecanvarybetween6percentand10percent,dependingondifferentvariable feemodels.Others in theindustryarealso likely toseesimilarzero fixed feemodels, saidChaturvedi.

DanielGM, founder-directorat

industry trackerPMSBazaar, saidthebalancehasshifted in favourofinvestors fromportfoliomanagers.Regulatorychanges, suchas theintroductionofadirectoption,arealsoa tailwind.Theemergenceofapay-only-for-profitmodel tochallenge the fixedfeemodelwillnotbea temporary trend,asinvestorsarenowevaluating feesandnot just theperformance.“Thiswill alsoco-exist,”hesaid.

Themodelhasemergedduringaperiodof regulatorychange.

TheSecuritiesandExchangeBoardof India (Sebi) recentlydoubledtheminimuminvestmentsize to~50 lakh. Italso raisedthenetworthrequirement from~2crore to~5crore.

Acircularonrecentchangesalsomentioned introducingadirectplan.Thiswouldmeaninvestorscanenter intoaschemewithout recourse toadistributor.

“Portfoliomanagers shallprovideanoption toclients tobeon-boardeddirectly,withoutintermediationofpersonsengaged indistributionservices.Portfoliomanagers shallprominently disclose in theirdisclosuredocuments,marketingmaterial andon theirwebsite,about theoption fordirecton–boarding,” said thecirculardatedFebruary 13.

A largeportionof the fixed feein the first threeyearsafteraninvestorcameonboardoftenwenttodistributors, according toindustrysources.Thecreationofadirectplanremoves theneedforhighfixedfees.However,othersalso feel thatgiventhe limitedpresenceandemployeestrengthoftheseassetmanagers, adistributionnetworkandappropriate feesmaybenecessarytogarnerassets.

Shareholder resolutionssawhigheropposition,withabstentionat 11%

SAMIE MODAKMumbai, 19February

The benchmark indicessnapped their four-sessionlosing streak as sentimenttowards risky assetsimproved on hopes thatChina would take measuresto boost its economy.

Gains in index heavy-weights such as RelianceIndustries andHDFC helpeddomestic indices posts theirbiggest jump in two weeks.Further, short-covering fol-lowing successive days oflosses accentuated gains,even as overseas investors’selling exceeded buying bynearly ~200 crore.

The Sensex closed at41,323, up 429 points or 1.1per cent — the most sinceFebruary 5. The Nifty closedat 12,126 — up 133 points or1.15 per cent —recoupingmore than half the lossesaccumulated over the pre-vious four sessions. MostAsian markets traded about0.5 per cent higher.

Reports suggested thatChinawas consideringmeas-ures such as direct cash infu-sion and bail-outs for indus-tries worst hit by the virusoutbreak, like aviation.China’s central bank hasalready lowered interest ratesand opened a medium-termlending facility for banks.

“Market sentiment turnedpositive after new cases ofcoronavirus showedadeclineand Finance MinisterNirmala Sitharaman said thegovernment would soonannounce measures to dealwith its impact on industry.The government also hintedat somerelief for the troubledtelecom sector, whichuplifted the market,” saidSiddhartha Khemka, head

(retail research), MotilalOswal Financial Services.

Vodafone Idea rose asmuchas48per centonhopesthat the government wouldoffer relief on AGR (adjustedgross revenue) dues. Thestock closed at ~4.2, up 38.3per cent. Analysts saidVodafone Idea will continueto exhibit extreme volatilityas various market forces beton its future.

Reliance Industries rose2.6 per cent on reports thatthe firmwas inching close toa deal with Aramco. The

stock made a 115-point con-tribution toSensexgains.Thebroader market outper-formed the benchmarks.

“The markets willcontinue tracking globaldevelopments around coro-navirus,” said Khemka.Another key event is theminutes of the US FederalReserve.

Marketplayers said inves-tors are eyeing the centralbank’splansonbalance sheetexpansion. Any indication toend liquidity support wouldbe a negative, they added.

Indices snap losingstreakonChina fillip

STREET TALK

12,150

12,100

12,050

12,000

11,950Feb 18,’20 Feb 19,’20

11,992.5

12,125.9

NIFTY41,400

41,200

41,000

40,800Feb 18,’20 Feb 19,’20

40,894.4

41,323.0

41,400

41,200

41,000

40,800Feb 18,’20 Feb 19,’20

40,894.4

41,323.0

Shree Cement could see ~700-cr inflowSharesofShreeCementgainedonWednesdayaftertheNSEannouncedits inclusiontotheNifty.Thestockrose2.6percenttoendat~24,406.AnalystsatEdelweissestimateinflowsof$96million(~700crore) intothestockonaccountoftheNiftyinclusion.TheKolkata-basedcementmakerwill replaceYESBankintheindex.Theprivatesector lender isexpectedtoseesellingof$24million(~170crore)duetotheexclusion.ChangesintheNifty indexwillcomeintoeffect fromMarch27.Onanabsolutebasis,ShreeCementwillbethemostexpensivestockinthe50-shareindex.Atpresent,Nestlé India,whichtoowasrecentlyadded,hasthehighestsharepriceat~16,758.

BS REPORTER

SLOW GROWTH

TAKING A STAND‘Against’votesstill fewandfarbetween,despiterise

For Against———————————————————————————————————— ————————————————————————————————————

Numberof % Numberof %resolutions resolutions

FranklinTempletonMF 7,202 10.3 559 0.8

NipponIndiaMF 3,816 5.5 83 0.1

AdityaBirlaSunLifeMF 3,340 4.8 9 0.0

UTIMF 2,924 4.2 149 0.2

ICICIPrudentialMF 2,645 3.8 19 0.0

HDFCMF 2,560 3.7 14 0.0

IDFCMF 2,186 3.1 18 0.0

SBIMF 1,898 2.7 239 0.3

AxisMF 1,726 2.5 45 0.1

KotakMahindraMF 762 1.1 8 0.0Source: primemfdatabase.com

SENSEX

OVERNIGHT SCHEMES CROSS~50,000-CRORE MARK

Overnightschemesarenowincludedinthelarger-sizedcategory,giventheshiftbyinvestors—withdaily liquidityneeds—tosuchschemes, followingtheSecuritiesandExchangeBoardof India's (Sebi's) restrictionsonliquidschemes.Averageassetsundermanagement(AAUM)oftheseschemesstoodat~52,524croreinJanuary—amorethan4xjumpsincethebeginningofthecurrentfinancialyear.TheAAUMofovernightschemesinApril2019was~11,566crore.Accordingtoindustryplayers, institutional investorsareshowingappetiteforthesefundsconsideringthelow-riskandhigh-liquidnatureoftheunderlyingportfolio.

Suchschemescaninvest indebtpaperswithmaturityasshortasoneday.Further, theseschemesinvest inthecollateralisedborrowingandlendingobligation(CBLO)market,whichoffersahighdegreeofsafety.Lastyear,Sebitightenednormsfor liquidschemestocurbrisks intheunderlyingportfoliosofsuchschemesandpreventvolatilityininvestor flows.

Tothisend,gradedexit loadswereintroducedincaseofinvestmentsbeingredeemedwithinsevendays. Inaddition,suchschemesweredirectedtohold20percentofcorpusingovernmentsecurities,whilerestrictingexposuretohigh-yielddebtpapers. JASH KRIPLANI

Jul ‘19 Aug‘19 Sep‘19 Oct ‘19 Nov‘19 Dec‘19 Jan‘20

16,187 20

,717

19,3

25

22,3

28

AverageAUM(~crore)

Source: Amfi

39,2

19

49,5

12

52,5

24

020,00040,00060,00080,000

100,000120,000140,000160,000180,000

Discretionary Non-discretionaryAdvisory

Sep‘19

Jun‘19

Mar‘19

Dec‘19

Figures denote absolute no. of clients in everysegment as of quarter-end, compiled by BSSource: Sebi Bulletin

“FROM A MERE TICK-THE-BOX APPROACH, VOTINGHAS BECOME A LOT MORETHOUGHTFUL NOW, WITHFUNDS ENGAGING WITHCOMPANIES ON DECISIONS”

AMIT TANDON,FOUNDER, IiAS

COMMODITIES1>

Select base metals,energy rise onChina stimulusDILIP KUMAR JHAMumbai, 19 February

Prices of select base metalsand energy rose on the backof hopes of a demand revival,on Wednesday, followingexpectations of further eco-nomic stimulus from China.

The Chinese governmentinfused $250 billion last weekto support the economy,which was hit by the coron-avirus outbreak.

While crude oil price ininterna-tionalmarketssurged1.5 percent totrade at$58.20 abarrel,silverand goldpricesjumpedby 1 percent (to$1,610per ounce) and 0.5 per cent (to$18.37 per ounce), respectively,in the benchmark Londonspot market. At the ZaveriBazaar here, standard gold inphysical markets hit all-timehigh of ~41,400 per 10 gramsand silver firmed up at ~47,600 a kg.

Started with the trade warbetween the US and China, fol-lowed by the political instabil-ity in West Asia and Brexit,and now the coronavirus pan-demic in China, the global eco-

nomic growth is at stake. Consequently, leading

progressive world economieshave already started theprocess of economic stimulus.Japan, for example, hasannounced a ¥26-trillion($239 billion) package to boostits economy and preventrecession. Now, analysts fore-cast China, India and otherlarge economies to follow suit.

“Prices of sensitive com-modities are up today, predom-inantly on expectations of eco-

nomicstimulusbeingplannedby thegovern-ment ofChina.

Whilepositivetradesenti-ment isbuilding,econom-ic stimu-

lus will be negative for currencyand thereby positive for gold,energy and some base metals,”said Naveen Mathur, Directorat Anand Rathi Shares andStockbrokers. Non-investmentlinked sensitive commoditiesincluding nickel, lead and alu-minium on the benchmarkLondon Metal Exchange, how-ever, declined marginally.

On the MCX, crude oilfutures for delivery inFebruary jumped 1.78 per centto ~3,764 a barrel.

BLOOMBERGHong Kong, 19 February

Nomura Holdings’ investment bankingbusiness in Asia is set to return to profitthis year after more than a decade of lossessince its Lehman Brothers Holdings acqui-sition, according to its division chief.

Cost cuts and fees from financing willdrive the profit rebound in the year endingMarch 31, said Kenji Teshima, head of i-banking for Asia (excluding Japan).Revenue is set to rise by about one third,led by private financing and dealmakingin India and Australia, he said, while warn-ing that some transactions in China maybe affected by the coronavirus outbreak.

Japan’s biggest securities firm last yearunveiled plans to cut $1 billion of costs atits struggling global wholesale operation,helping to revive profit that’s been underpressure from years of losses abroad.Teshima’s group is benefiting from thefirm-wide savings even as he keeps netheadcount largely unchanged.

The cost cuts “will indirectly have apositive impact in terms of cost to my busi-ness,” he said in an interview in HongKong. Coupled with the revenue gains,that means “all of a sudden, it’s a game-changer year.”

Nomura’s 2008 purchase of Lehmanassets in Asia swelled costs as it took onbankers. For global firms in the region, itcan be harder to make money from investment banking than in Europe andAmerica because of lower fees and highcosts of running operations in multiplecountries.

Teshima has shifted Nomura’s focusin several nations since taking the rolefour years ago. In India, he increased theemphasis on financing and the capitalmarkets business rather than mergersadvice, because many companies thereneed access to funds for growth. InAustralia, he built a sponsor business fromscratch, helping private equity funds exe-cute deals.

While Nomura doesn’t split out region-al earnings figures for its investment bank-ing unit, wholesale revenue — which alsoincludes global markets — in Asia ex-Japan jumped 53 per cent in the ninemonths ended December 31. Pretax profitfrom the region was 23.1 billion yen ($210million) in the period, compared with a3.7 billion yen loss a year earlier.

Shares of Nomura closed 0.3 per centhigher on Wednesday in Tokyo. Thestock has gained about 68 per cent sinceearly June on renewed optimism overthe profit outlook.

Private financing, which involves giv-ing loans against collateral, has been grow-ing in India and Australia in the past fewyears, Teshima said. India has provided“a very good mix” of revenue as the bankbolsters its margin lending business there,enabling it to compete with foreign play-ers, he said.

The bank set up a joint entity with themarkets division two years ago to betterstructure financing deals when advising

clients on mergers and stock and bondtransactions. One growth area is to provideleverage to hedge funds and insurers topurchase high-yield bonds underwrittenby the bank, allowing it to earn multiplefees from one transaction, he said.

Mergers advisory between Japan andAsia and cross-border activity betweenthe region and the rest of the world “hasalso made a step up,” contributing to thegrowth, Teshima said. Nomura wasranked 12th in Asia ex-Japan M&A lastyear, up from 30th a year earlier, data com-piled by Bloomberg show.

In Australia, there are opportunitiesstemming from Japanese companies’appetite for acquisitions. “Australia is acountry where there’s a hot eye fromJapan in terms of foreign investment,”he said. Australia and India contributeabout 20 per cent and 15 per cent of ex-Japan Asia investment banking revenuerespectively, while China is the biggestmarket, making up about 40 per cent,Teshima said.

Deals involving public fund raisingin China may be affected by the coron-avirus outbreak and the trade war asmarket valuations shrink, Teshimasaid. Still, that will lead to more dealswhere companies need to raise fundsprivately, he said, adding that heexpects inbound mergers and offshorefinancing for Chinese clients toincrease. Investors will switch to invest-ment-grade issuance due to higher per-ceived risks, he added.

Nomura findingits feet in Asian I-banking venture

> TODAY’S PICKS BY DEVANGSHU DATTA

NiftyCurrent: 12,125 (fut: 12,148)Target: NA

Stop long positions at 12,250. Stop shortpositions at 12,050. Big moves could gotill 12,325, 11,975. Strong resistancesbetween 12,200-12,250. A long Feb 2712000p ( 33), short 11900p (19) could gain10-15 if the index tests 12,000.

Bank NiftyCurrent: 30,838 (fut: 30,862)Target: NA

Stop long positions at 30,700. Stopshort positions at 31,000. Big movescould go till 31,200, 30,500. Short-covering driving uptrend – it could gonegative against towards end oftoday’s settlement.

HULCurrent: ~2,292 Target: ~2,320

Keep a stop at 2,275 and go long.Add to the position between2310-2315. Book profits at 2,320.

Sun PharmaCurrent: ~404 Target: ~397

Keep a stop at 407 and go short.Add to the position between398-399. Book profits at 397.

BPCLCurrent: ~475 Target: ~468

Keep a stop at 479 and go short.Add to the position between469-471. Book profits at 468.

Target prices, projected movements in terms of next session, unless otherwise stated

JASH KRIPLANIMumbai, 19 February

The Securities and ExchangeBoard of India’s (Sebi’s) move tocap fees for advisory services

could force players to move out of theadvisory business and switch to com-mission-linked services, with advisorsseeing the move as detrimental to busi-ness viability.

In its board meeting on Monday, themarkets regulator laid down norms foradvisors. It barred them from offeringdistribution services and stated therewill be an upper limit on the fee advisorscan charge from their clients.

Industry participants say this couldmake life difficult for advisors offeringservices to high net-worth investors,where operating costs are on the higher side.

“If there is a big client, the amountof work involved is likely to be huge.Typically, it entails 30-45 days ofintense work with that client. The feeinvolved for such a client can easily sur-pass ~75,000 per annum,” said SureshSadagopan, founder of Ladder7Financial Advisories.

“Running a business can becomeunviable. Several costs are involved per-taining to office, staff, salaries, etc. Anadvisor may be forced to consider exit-ing or switching to commission-linkedmodels,” added Sadagopan.

“On the one hand, Sebi has enhancedthe eligibility criteria for an advisor interms of qualification and experience.At the same time, it expects profession-als to enter the industry where fees aregoing to be curbed,” said another advisor.

While a detailed circular on the mat-ter has not yet been issued, Sebi in itsconsultation paper had said the maxi-mum fee an advisor can charge from a

client can be ~75,000 per annum. Andif the client comes through the assetsunder administration (AUA) model, theadvisor can charge 2.5 per cent of AUA.Further, the advisor cannot use a hybridmodel, but choose between the two.

Advisors say this can pose anotherset of challenges. Some clients wouldlike to continue after theinitial two-month engage-ment, and would prefer theAUA model — it is morecost-efficient.

Market observers saythat capping of fees at~75,000 can force some toswitch to the AUA model.

Advisors are of the viewthat the regulator wouldneed to offer more clarification as tohow this model can work.

“While we need to wait for the fine

print, the consultation paper saysclients can be charged in AUA mode.What about instances where there areno assets involved? There can be caseswhere the client wants to consult forcoming out of a debt trap, makinghis/her Will or the family budget,” saidGaurav Mashruwala, certified financial

planner.He says there is uncer-

tainty around theseaspects and whetherclients would need to becharged separately forsuch engagements andnot in AUA mode.

Mashruwala currentlyoffers advisory servicesthrough the fixed fee

model. Another proposal in Sebi’s con-sultation paper that advisors are worriedabout is the requirement to corporatise

once the client limit reaches 150 oradvised assets exceed the ~40-crore mark.

“While the provision didn’t find anymention in the board meeting minutesreleased by Sebi, such a move could cre-ate high entry barriers and deter newplayers,” said Melvin Joseph, founderof Finvin Financial Planners.

The consultation paper says thatwithin six months of reaching either ofthe above two marks, the individualadvisor would need to mandatorily havea net-worth of ~50 lakh and re-registeras a corporate advisor.

In its consultation paper, the capitalmarkets regulator also proposed that anadvisor could charge only half the feein advance, which, advisors have said,could make the process of recoveringany outstanding dues from clients anonerous task.

Regulator’s move couldforce players to shift toalternative businessmodels, they say

Advisors miffed at cap on fees

2014

2015

2016

2017

2018

2019

2020

CASH COWNomura has been profitable in Asiadespite struggles in I-banking

n PBT for Asia/ Oceania (ex-Japan)(Figures in ¥ billion)

Note:Fiscal years to March 31; figures for 2020 are forfirst nine months Source:Nomura

-5.2

34.6

19.8

23.7

22.8

5

23.1

Industry participantssay this could make lifedifficult for advisorsoffering services tohigh net worthinvestors, whereoperating costs are on the higher side

AVISHEK RAKSHITKolkata, 19 February

The government is working on a revivalpackage for the tea industry, which has been under severe stress because of

the rising production costs and low availabilityof credit. The package may include a one-timegrant of ~300 crore to improve the cash flowsituation, besides clearing subsidies, whichhave been pending for over five years, to thetea firms. A relaxation of 1-1.5 years can alsobe provided to the plantation companies toenforce the Labour Code once passed by theParliament.

The package is likely to be sanctioned dur-ing April-May this year.

“A revival package is in the making and weare consulting with the industry as well. Anincrease in wages, as a result of the LabourCode, will further complicate matters for thealready stressed tea companies, and so somehelp is needed,” A K Ray, deputy chairman ofthe Tea Board of India, told Business Standard.The package comes at a time when severallarge companies, such as McLeod Russel,Warren Tea, and Jay Shree Tea among others,are selling tea estates to pare debt. In the lastfive years, the production costs have increasedby 15-20 per cent, while the prices have risenby only 5-7 per cent, leading to a sharp fall intea firms’ profitability, industry officials said.Considering stress in the sector, banks havealso been unwilling to extend the lines of credit.For instance, Warren Tea reported a net lossof ~15.92 crore in the financial year 2018-19,compared to a net profit of ~20.24 crore in FY14.McLeod, which had posted a ~257.15 crore netprofit during FY14, posted a net loss of ~4.42crore in the last financial year.

Similarly, Goodricke’s net profit shrank to~9.49 crore during the financial year endedMarch 31, 2019, from ~22.24 crore in the calen-dar year 2014. Rossel India too had posted a~20.40-crore profit during FY14, which fell to

~57 lakh in FY19.The tea firms are also faced with the

prospect of input costs going up after theimplementation of the Labour Code. Officialssaid increase in wages will lead to a collapseof around 65 per cent of tea estates in WestBengal and Assam.

Currently, under the Plantation Labour Act(PLA), 1951, apart from a cash component,which is around 50 per cent of the total wage,tea workers are also provided with in-kind ben-efits like housing, sanitation, education andration, among others.

The officials claimed that, under the newwage structure, the non-cash benefits cannotbe more than 15 per cent, and also the newwages will be based on the Minimum WagesAct, 1948, which will lead to an effectiveincrease of around 40 per cent in wages.

On an average, wages alone account foraround 40 per cent of the total input costs fora tea company.

According to the Tea Board, the revivalpackage can provide the tea firms with cash toopt for better plantation techniques and meth-ods as well as improve cash flow and clear debtsto an extent. Also, a relaxation in enforcing theLabour Code will help the firms adjust to thenew laws gradually.

Centre readying revivalpackage for tea sector

Higher exports of whole-leaf tea, particularly toIran, helped Indian tea exports grow by 2.05 percent in terms of value. However, total exportsdipped by 3.03 per cent in terms of volumeunder volatile market conditions.

In absolute terms, total export value last yearstood at $796.36 against $780.34 in 2018. Thevolume stood at 248.29 million kg (mkg) ascompared to 256.06 mkg registered in 2018.

Exporters as well as planters attributed therise in export income to higher production ofwhole-leaf or orthodox tea variety whichfetches much better prices than the crush, tear,curl (CTC) variety. Data from the Tea Boardshowed that while production of CTC teaincreased by 2.06 per cent last year to 1,233.73mkg, orthodox tea production grew 25.9 percent at 138.83 mkg. “Higher orthodoxproduction is good as nearly this entire teavariety is exported,” Vivek Goenka, chairman,Indian Tea Association told Business Standard.

While the average price for CTC tea rangesbetween $2.25 and $3 per kg while orthodox teasare exported at prices between $4 and $5 per kg.“The improvement in prices is primarily onaccount of higher volume of whole-leaf exports.Quality of CTC has also improved in somemarkets, leading to better prices,” said ArunKumar Ray, deputy chairman of the Tea Board.

Exports of whole-leaf tea to Iran increasedby around 74 per cent at 53.45 mkg while in caseof Germany, it stagnated at 10 mkg.

On the other hand, exports of Darjeeling teaalso increased to 4.97 mkg to Japan from theearlier export of 3.69 mkg. In the US, anotherorthodox and premium CTC market, exportsincreased to 12.22 mkg from the earlier volumeof 11.03 mkg. AVISHEK RAKSHIT

Higher whole-leaf tea output boostsincome from exports

$/tonne % change*

Aluminium 1,716.0 -0.3

Lead 1,881.0 -0.3

Nickel 12,815.0 -0.3

Zinc 2,146.0 0.1

Copper 5,785.5 0.4

Brent crude ( $ / BBL) 58.2 1.5*Change over previous close Sources: LME, Bloomberg

WHERE THEY STAND

EXPECTEDCURBS

~75,000 capfor fixed fee modelproposed by Sebi

2.5% of advisedassets (AUA)

150 client limitbreach, advisor needsnet worth of ~5 million

SEBI CONSULTATIONpaper on advisorswas issued lastmonth

ADVISORS WILL BEforced to opt foreither of the twomodels

ILLUSTRATION: BINAY SINHA

13 THE SMART INVESTOR> l

MUMBAI | THURSDAY, 20 FEBRUARY 2020

> PRICE CARD

As on Feb 19 International Domestic ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------

Price %Chg# Price %Chg#

METALS ($/tonne)

Aluminium 1,681.0 -3.1 1,970.4 4.7

Copper 5,728.0 -1.6 6,302.4 2.7

Zinc 2,128.0 -9.9 2,403.6 -11.1

Gold ($/ounce) 1,608.4* 9.2 1,802.4 9.2

Silver ($/ounce) 18.3* 6.8 20.7 6.7

ENERGY

Crude Oil ($/bbl) 58.1* -4.7 55.8 -10.3

Natural Gas ($/mmBtu) 2.0* -21.9 2.0 -22.1

AGRI COMMODITIES ($/tonne)

Wheat 196.2 5.8 290.0 -3.5

Maize 182.8* 1.1 247.2 -4.1

Sugar 421.9* 25.6 485.5 -0.4

Palm oil 675.0 6.3 1,077.8 6.8

Cotton 1,506.9 7.7 1,575.0 0.7* As on Feb 19, 20 1800 hrs IST, # Change Over 3 MonthsConversion rate 1 USD = 71.6 & 1 Ounce = 31.1032316 grams.

Notes:1) International metals, Indian basket crude, Malaysia Palm oil, Wheat LIFFE and Coffee

Karnataka robusta pertains to previous days price.2) International metal are LME Spot prices and domestic metal are Mumbai local spot

prices except for Steel.3) International Crude oil is Brent crude and Domestic Crude oil is Indian basket.4) International Natural gas is Nymex near month future & domestic natural gas is MCX

near month futures.5) International Wheat, White sugar & Coffee Robusta are LIFF E future prices of near

month contract.6) International Maize is MATIF near month future, Rubber is Tokyo-TOCOM near month

future and Palm oil is Malaysia FOB spot price.7) Domestic Wheat & Maize are NCDEX future prices of near month contract, Palm oil &

Rubber are NCDEX spot prices.8) Domestic Coffee is Karnataka robusta and Sugar is M30 Mumbai local spot price.9) International cotton is Cotton no.2-NYBOT near month future & domestic cotton is MCX

Future prices near month futures.Source: Bloomberg Compiled by BS Research Bureau

Gold has performed very well over the past year, givinginvestors a return of 22.11 per cent. The strong performancedoes not mean that the bull run in the yellow metal has run

its course. Thecoronavirusepidemic has lentfresh impetus tothis safe-havenasset class, and ithas run up 7.45per cent over thepast threemonths. Bull runs in thiscommodity tendto last for three-four years.However, in viewof its strongperformance inthe recent past,

investors entering the yellow metal now need to exercisesome caution. They should either buy on corrections ormake systematic purchases.

TIPPINGPOINT

The trend in Budget 2020seems to be towards areduction in tax rates in lieuof giving up exemptionsand deductions. Currently,it is only an option for indi-viduals, but the direction isclear. This affects manyindustries such as realestate and insurance.

In case of realestate, the impactof limiting inter-est deduction upto ~2 lakh has hada detrimentaleffect. For exam-ple, if a persontakes a loan of~1.4 crore to buy aproperty for ~2crore. His rental incomewould be around 2.4 per centor ~4.8 lakh a year. He willpay 8 per cent on his homeloan or ~11. 2 lakh a year. So,renting out would mean aloss of ~6.4 lakh a year. Ofthis, he can offset ~2 lakh asinterest income underSection 24(b). This loss canbe carried forward but is lostif there is no real incomefrom the property in future.If the property is self-occu-pied, his actual loss is theentire interest cost minus ~2lakh, and the balance inter-est is not even allowed to becarried forward.

This brings into focus theso-called ‘concession” ofallowing the rental value ofself-occupied property beingallowed to be treated as nil.Due to this concession, thededuction for home loaninterest was restricted. Theoriginal provisions wereintroduced in 1960s whenrental yields were 6-7 percent a year. Few owned a

house and taking homeloans was unheard of.

Allowing owners whostayed in their own housesto treat the annual incomeas nil was a real concessionin those days, especiallysince the deductible expens-es were not high. To ensurethis “concession” was notmisused, this treatment wasrestricted to one self-occu-pied house. A second self-occupied house was taxed asif it had been rented out.

Later, more people start-ed borrowing. As the num-ber of people who startedclaiming interest deductionincreased, the amount ofdeduction was restricted tothe one self-occupied prop-erty. Meanwhile, the rentalyields fell to around two percent, and since interest costswere high, it always resulted

in a loss evenafter consideringa deemed rental.Taxpayers dis-covered that theso-called tax dis-advantaged sec-ond “self-occu-pied property”was a significantadvantage. So

many started buying secondproperties. To plug this loop-hole, the overall allowanceof loss on house propertywas restricted to ~2 lakh. Thewhole “concession” thinghad come full circle now.

Allowing a full deductionfor the expenditure of inter-est in the year in which it isincurred while taxing therental derived from theproperty is not a “conces-sion”. In any case, not evenallowing such disallowedinterest expenditure to bedeductible at the time offinal sale of the property isentirely unjustified. Thefinance ministry should lookinto allowing this legitimatedemand from the real estateindustry to enable thededuction of interest insome form and not club thiswith other “deduc -tions/exemptions” that arebeing phased out.

The writer is a Sebi RegisteredInvestment Advisor

The newoptional taxregime is likelyto become theonly oneavailable in afew years. Thiswill affect realestate

SARBAJEET K SEN

With the Bombay Stock ExchangeSensitive Index or Sensex, continuingto oscillate due to the onset of thecoronavirus in China and other globalheadwinds, investors would bewondering how to play this market.While the disciplined investor shouldtake the systematic investment route,many would like to dabble in the stockmarket directly. There is more buzz nowbecause the fortunes of mid-and small-cap indices, after two years of badperformance, are beginning to look up.However, remember that mostinvestments come with varying degreeof risks, with equities ranked right at thetop. So, equity investors need to adopt afew strategies to reduce investment riskin their portfolios.

Don’t go lock, stock and barrel onequities: With the Sensex close to41,000 points and falling interest ratescenario, the urge will be toinvest in stocks moreaggressively. But it just mightbe a good idea to book someprofits on equities and investmore in debt or even sit oncash. This will ensure that theportfolio isn’t overexposed toequities. Your own personalsituation plays a big role. Forexample, a financial advisorwould advise differentallocation between debt and equity to a25-year old and a 50-year old. In fact,the advice on allocation will differ forthe same age group for a marriedperson, those having children, asagainst an unmarried person. “Ininvesting, divide and rule is better.Instead of embracing equities alone,

diversify investments across stocks,bonds, real estate, and so on. In times ofvolatility, when one asset classunderperforms, the other holds up,thus reducing wealth erosion. Asuccessful investment strategydemands proper asset allocations,” saysAbhinav Angirish, founder,Investonline.in.

More stocks or mutual funds: Aconcentrated portfolio in one or twostocks has a high potential of wealtherosion. In case of mutual funds, too,many chose to have only a few funds.“Diversification ensures you do not putall your eggs in one basket; the aim is toreduce risk. For example, withinequities, investors should invest in a

mix of large-cap stocks, mid-cap stocks, small-cap stocks,international securities andemerging markets. Someportion should be in fixed-income securities, the moneymarket, real estate investmenttrusts (REITs), gold funds andsome government schemes. Donot build a portfolio using ultra-safe government schemes likePPF, NSCs and RBI bonds only,”

says Ankit Agarwal, managing director,Alankit Ltd.

Be price-conscious: Yes, a good stockwill be expensive. But the question is,how expensive? So, if you are investingdirectly in stocks, you need to do yourhomework well. The stock market can

punish people who take investmentcalls through tips from unreliablesources without doing their ownresearch. In general, it is good to avoidstocks with high price-earningsmultiples (P/E multiples) as it indicatesthat they are ruling at high valuations.“We can minimise our investment riskby staying away from stocks with highP/E ratios and unstable management,”Agarwal says.

Cost averaging is important, butonly to an extent: With the help ofrupee cost-averaging method, the costat which you buy units of astocks/mutual fund gets averaged out.So, basically, you get a higher number ofthe units/shares when the market isdown, and when the market is up, youget a lower number of units or shares.Since the equity market remainsvolatile, reflecting the ups and downs ofthe economy, it becomes important toaverage out the units making yourinvestment portfolio less risky. But if astock, especially one without greatfundamentals or management record, ison a free fall, don’t try this. “SystematicInvestment Plans (SIP) help to mitigatethe risk associated with volatility. SIPshelp you to save part of your income andamass decent corpus in the long run. It isan ideal way to reach one’s investmentgoals,” says Angirish.

Evaluate and exit: The capital marketand the situation with different assetclasses are going through constantchange. At times the asset allocationyou did six months or a year ago mightnot work as per the current marketsituation. If you do not monitor yourinvestment periodically, investmentrisks that did not exist at some pointmay creep into your portfolio.Therefore, it becomes important tokeep an eye on your investmentholdings and evaluate themperiodically to assess whether there is aneed for any change to get theallocation right according to yourcurrent risk tolerance.

YOURMONEY

I purchased a new car last year. I tookinsurance from the dealer. I have No ClaimBonus (NCB) on it. Will my NCB migrate if Ichange my insurance company?Yes, you will be eligible for NCB based on theslab mentioned in the India Motor Tariff. Toget it, however, you will have to renew within90 days of the expiry of your old policy. Toavoid any problems at a later date when mak-ing a claim, it is best to get an NCB certificatefrom your previous insurer.

I am 35, my wife is 31, and we have a five-yearold daughter. I am looking for a healthinsurance policy for my family. My daughter has a congenital heart problem.She was operated for VSD closure (open-heart surgery) when she was three monthsold. A health insurance agent said I wouldnot be able to get a policy for my daughterbecause of her condition. What should I donow?Pre-existing illness or condition plays a vitalrole while accepting an insurance proposal.The congenital heart problem will generallybe treated as a pre-existing condition whileevaluating your family’s proposal. I suggestthat you consult or visit the branch office ofan insurance company for greater clarity onyour child’s situation, and its implication onwhether you will be able to get insurance, theassociated premium, and the exclusions, if any.

I am 24 years old and live in Mumbai. Mymother owns the car that I drive. Whilerenewing the insurance policy, can I buy itunder my name? Can the insurance and

vehicle ownership be in different names?No, the insurance must be in the name of theregistered owner of the vehicle. As yourmother is the registered owner of the car, theinsurance must be purchased in her name toensure that there is insurable interest.

I am a 53-year-old male trying to lead ahealthy life. I plan to run a marathon nextmonth. If I buy a health insurance policynow and something happens to me duringthe marathon, will it be covered by myhealth insurance policy?Staying fit and healthy is the way forward forall of us. Insurance companies do providecoverage for any mishaps during such events.However, I suggest you go through the stan-dard exclusions section of the policy wordingbefore buying the health insurance policy, orseek clarity from the insurance companydirectly before purchasing the policy.

I’m 32 years old and live in New Delhi. Lastweek I was in Paris on vacation. Due to someemergency at home, I had to come backhome five days before my trip ended. Can I

claim a refund for my curtailed trip?Yes, you can. But this will happen providedyou have a travel insurance policy that offersthe trip curtailment cover. Also, your tripshould have been cut short due to certainpre-defined conditions defined in the policy.Before raising a claim, read the policy docu-ment issued to you carefully and checkwhether trip curtailment is covered, and thecircumstances under which you can make aclaim for it.

There are frequent riots and protests indifferent parts of the country. Will mymotor insurance policy cover any damagethat happens to my vehicle due to such adevelopment? Yes, damages due to riots and strikes are cov-ered under the own damage section of themotor policy. It is one of the ten perils coveredunder this section.

The writer is CEO & Whole Time Director, LibertyGeneral Insurance Limited. The views expressed arehis own. Send your queries toyourmoney@bsmail.in

Avg price (~/sq ft) Avg unit size (sq ft)

BENGALURUHennur Road 6,802 2,368 Carmelram 5,815 2,690 Kanakpura Road 7,651 2,153 Haralur Road 7,060 2,546 Jakkur 8,300 1,996 Sahakara Nagar 7,589 2,264 J.P.Nagar 7,245 2,360 Rajajinagar 10,314 1,826 CHENNAI Saligramam 9,781 1,783 Anna Nagar 11,485 1,492 Pallavaram 6,150 2,555 karapakkam (OMR) 6,542 2,686 Vadapalani 10,454 1,753 Kodambakkam 12,915 1,475 Kolathur 5,250 3,217 Sholinganallur (OMR) 6,408 2,591GHAZIABAD Indirapuram 6,567 2,513 Vaishali 7,000 2,488 Vasundhara 5,575 3,250 GURUGRAM Sector 65 8,955 1,932 Sector 81 7,413 2,348 Sector 108 8,080 1,976 Sector 109 6,380 2,669 Sector 89 A 6,637 2,478 Sector 22 11,000 1,380 Sector 36 A 8,111 1,965 Sector 48 16,596 1,065 HYDERABAD Yapral 5,054 3,503 Kondapur 6,931 2,431 Nanakramaguda 6,215 2,734 Nallagandla 6,390 2,546 Shaikpet 6,626 2,622 Kokapet 6,469 2,500 Moosapet 5,927 2,847 Kothaguda 7,133 2,386 MUMBAI Mulund(W) 14,861 1,193 Andheri(E) 16,126 1,079 Malad(W) 14,409 1,208 Andheri(W) 17,658 1,008 Chembur 16,076 1,098 Kandivali(E) 13,861 1,251

Note· Ticket price range considered for the above data points is between 1.5 Crand 2 Cr

· All the data points discussed in the above table refer to Primary Marketonly

· Above residential data set comprises of Residential Apartments only

· Above residential data is representative of organized real estatedevelopers only

· The top performing micromarkets based on sales during last year Jan-2019to Dec-2019) is represented on the above table

· Data points are updated till Dec-2019

Source: PropEquity

BUDGET: ~1.5 CRORE -~2 CRORE

REALTYCHECK

Business Standardbrings you a snapshot of averagecurrent rates and unit sizes in localities that offerproperty in the price range of ~1.5 crore and ~2 crore. If you are looking at buying real estate, an idea aboutprevailing rates would come in handy

Does gold remain a goodinvestment?

READER’SCORNER

GENERA L I N SURANCE

ROOPAMASTHANA

PLAINLY SPEAKING HARSH ROONGTA

Do the simple thingswell to ensure thatthere is no suddenwealth erosion

SANJAY KUMAR SINGH

With Indian real estate, espe-cially its residential segment,caught in a prolonged slump,high net worth individuals(HNIs) are increasingly grav-

itating towards foreign markets. Knight Frank,a real estate consultancy, had recently reporteda rise in the number of Indian home buyers inthe London market. Indian HNI investors arealso making a beeline for properties in the US,Canada, Australia, the United Arab Emirates(UAE), and so on.

Alongside, the Income Tax (I-T) Departmentin India has also become more vigilant abouttracking foreign transactions. India has signedthe double taxation avoidance agreement(DTAA) with around 90 countries. This agree-ment allows the tax authorities to ask their for-eign counterparts for information on transac-tions done by their country’s residents. Thismakes it essential for HNIs investing in realestate abroad to be fully aware of the rules thatgovern the purchase of foreign property.

Remitting money abroad: Under the ReserveBank of India's (RBI) liberalised remittancescheme (LRS), a resident Indian can remit $250,000 in each financial year to buy immov-able property abroad. “Over the years, the RBIhas relaxed the norms pertaining to invest-ments made outside, which has led Indians toconsider property buying abroad. In 2015, itdoubled the limit under LRS for resident indi-viduals to the current level,” says Anuj Puri,chairman, ANAROCK Property Consultants.

Form A2 has to be filled at a bank for remit-ting money via LRS. Details of all LRS transac-tions done during that financial year have to beprovided in it (so that a person doesn't breachthe ceiling). "If multiple members of the familyplan to buy the property jointly, then each onecan remit up to $250,000. In such a case, eachmember must also get a share in the propertyin the proportion contributed," says Sonu Iyer,tax partner & national leader, people advisoryservices, EY India. Another form called 15CAalso has to be filled. In this form, a charteredaccountant certifies that the money beingremitted has been subject to tax in India.

Declaration of foreign property: If an indi-vidual is a resident and ordinarily resident(ROR) in India, he needs to provide details ofany foreign property he owns while filing hisincome-tax return (ITR). This has to be providedin Schedule FA of the ITR form. "Non-residentsand resident but not ordinarily resident (RNOR)are exempted from providing this information,"says Naveen Wadhwa, DGM, Taxmann.com.Details like the address of the property, date ofacquisition, the amount invested, etc. have tobe provided. Failure to disclose foreign incomeand assets invites penalties under the provi-sions of the Black Money Act (see table).

Taxation of rental income and capital gains:An ROR's global income is taxed in India,including income from property. The taxationnorms on rental income and capital gains aresimilar to those that apply to resident Indians.

First, the rental income for the year is takenand a standard deduction of 30 per cent isapplied to it. The amount after deduction isadded to the head "income from house proper-ty" to calculate total income, and then the indi-vidual is taxed at the applicable slab rate.

If a resident sells a property abroad, he willhave to pay capital gains tax on it in India. Ifthe property has been held for more than two

years, the seller will get indexation benefit andwill be taxed at 20 per cent. If the property hasbeen held for less than two years, short-termcapital gains tax rate will apply. The gain willbe added to the individual’s income and will betaxed at the slab rate.

Both rental income and capital gains willalso be taxed in the country in which the prop-erty is situated (holds true for most countries).“The Indian resident will have to look up theprovisions of the double taxation avoidanceagreement (DTAA) with that country, or get anexpert to do so, to see what credits he can claimin India on tax paid overseas,” says Wadhwa.

Repatriation of money back to India: Whenyou purchase a property by sending moneythrough the LRS route, there is no specificrequirement to bring the money back to India.“The investor can retain abroad the incomeearned from an LRS investment. He can rein-vest that money overseas,” says RupaliSinghania, partner, Areete Consultants LLP. Theauthorities in India have already ensured thattax has been paid on the money going abroad,and it is going out for a bona fide purpose.

However, if a person is a resident of Indiaunder the Foreign Exchange Management Act(FEMA) and the I-T Act, and he sells a foreignproperty that he has inherited, the money fromsuch a sale must be brought back into India.

How to respond to a tax notice: First, theassessee must review his I-T return to see ifhe had reported his foreign income and assetsin the concerned year. Next, he should provideall the supporting documents to show hissources of income. Rental income from a prop-erty owned abroad would, for instance, havebeen reported under the head “income fromhouse property”. The bank statement of theaccount into which rental income was credit-ed can be produced. If asked to disclose thesource of funds used for purchase, the personwill have to show his salary or businessincome, as declared in his tax returns over theyears. If he had sold a property in India to pur-chase a property overseas, he will have to digup the trail of documents showing this sale.Note that loans cannot be taken in India topurchase a property abroad.

Repatriate sale proceeds to India Since there will be tax incidence in the foreign country, an investor has to seek credits in India

Five ways to reduce investment risk

BLACK MONEY ACT: STRINGENT PENALTIES

Whenconcession is a penalty

Period Return (%)

1 month 2.32

3 months 7.45

6 months 8.66

1 year 22.11

3 years 11.46

5 years 8.84

Less than 1-year returns are absolute, greater than or equal to 1 year are CAGR

Source: mutualfundindia.com

RUN UP CONTINUES

Whom does it apply to Resident ordinarilyresident (ROR)

What is its purpose To tax or penalise RORs havingundisclosed foreign asset orincome

Fine on foreign property ~10 lakhbought with reported income

Tax on undisclosed Flat 30 per centincome/value of asset

Penalty on property 300% of tax computed.purchased using Imprisonment ofunreported income six months to 10 years

"If family members buy aproperty jointly, theneach one can remit up to $ 250,000. Each membermust then get a share inthe property in theproportion contributed"

SONU IYER, Tax Partner &National Leader, PeopleAdvisory Services, EY India

DIVERSIFY WITH US FUNDS Returns (%)

1 Year 3 Years 5 Years

nMaximum n Average nMinimum

1-year AND ABOVE returns are in CAGRSource: mutualfundindia.com

37.0

24.3 16.5 2

3.9

16.3

9.3

19.8

13.0

8.4

MUMBAI | THURSDAY, 20 FEBRUARY 2020 PERSONAL FINANCE 15. <

Many of us are familiar withthe electrocardiogram ofthe heartbeat. But have youever wondered what the

heartbeat of a nation’s learning mightlook like? Especially, the learning graphsof those who are still in school?

Thanks to the efforts of the ministryof human resources development(MHRD) at the Centre and also individ-ual states, QR code-based learning plat-forms for school students and teachershave made it quite easy to gauge this inthe form of a graph in real time. A QR orQuick Response code is a two-dimen-sional barcode which contains specificinformation and can be read digitally.

Sunbird, an open source platformfor creating learning content developedby the Nandan Nilekani-run EkStepFoundation, is quietly empoweringschool education through MHRD’s proj-ect Diksha. Every time a student access-es content by scanning the QR codesgiven in the textbook using the Dikshaapp, his/her learning preferences andpatterns get recorded at the backend.

The app captures the learning data ofa 30-day period through a centraliseddashboard and gives a fair idea about thetypes of content being used and the pop-ularity of various subjects. It also helps indiscerning the learning ability of stu-dents, why they have not fared well incertain subjects, and accordingly fine-tunes the digital learning content.

Launched in 2017 in just five states,today, the Diksha project has beenimplemented in as many of 28 states(and union territories), in some form orthe other, for schools affiliated to stateboards, up to Class 10.

Even the CBSE is also looking at QR-coding all NCERT text books for Classes1 to 10 to offer digital learning content.Besides, CBSE is also creating teacherand student resources by crowdsourcingthe material from over 100 schools. Thisincludes teaching resources such as les-son plans, power points and teach expla-nation videos, and student resourcessuch as experiential learning videos,multiple type questions, and long andshort answers.

A brainchild of the MHRD andsteered by CBSE, project Diksha aims atproviding a digital learning platform toempower both students and teachers.They can download the Diksha app,scan the QR codes given at the end ofeach chapter, and get access to multi-

media content in text, audio and video.Diksha’s USP is that it has the flexibilityto create content, depending on therequirement of the students and teach-ers, and can even update it in the middleof the academic session.

For example, with the secondaryschool board exams just around the cor-ner, the Karnataka school educationdepartment is offering the studentsprobable questions and their answersthrough the QR codes. While the codesare already there at the end of everychapter, the department is now linkingthese with around 40-45 questionsalong with the best answers to them.

“Besides, the content which has

been developed by one state can now beeasily consumed by another state. Allthey need to do is put a subtitle or avoice- over, and reuse the video by put-ting it in their QR codes — and this ishappening a lot,” says Anita Karwal,chairperson of CBSE.

The technology underlying QR code-based digital learning is an open-sourceplatform called ‘Sunbird’. Initially builtand developed by EkStep Foundation, anot-for-profit organisation run by for-mer UIDAI chairman and Infosys co-founder Nandan Nilekani and his wifeRohini, Sunbird is the fabric on whichhuge volumes of digital learning con-tent have been created. And these are

being offered to students via the QRcodes printed in the text books.

“Think of it as an equivalent ofLinux for learning or open-source soft-ware for learning. But this is a tech-nology which has been made in andfor India, keeping in view the diversi-ty of the country,” says ShankarMaruwada, CEO of EkStepFoundation. “Sunbird is not the solu-tion itself, but a digital infrastructurewhich gives you the ability to solve.One can go to the platform and use it tocreate content for learning as theMHRD has done for Diksha and sever-al other states and NGOs are doing.”

The content can be accessed

online or offline, through a smart-phone or a personal computer. TheMaharashtra government, for exam-ple, is using Sunbird platform to createcontent on financial technologies forcollege students. The ministry ofhousing and urban affairs (MoHUA)has contracted an agency to launch aNational Urban Learning Platform byusing this platform.

Advaith Foundation, a non-profit setup by Infosys co-founder SD Shibulaland his wife Kumari Shibulal, has usedSunbird to create a learning platformfor school teachers calledShikshaLokam. In fact, the World Bankhas also shown an interest to take thesoftware to several other countries suchas Peru and Costa Rica.

But the best use case of Sunbird hasbeen in school education through proj-ect Diksha. So far, the Diksha app hasseen over 7 million downloads in PlayStore while over 500 million textbookshave been published across 15 lan-guages, which are being accessed byroughly 110-120 million children and30-40 lakh teachers.

“The way we look at it is, use tech-nology as an enabler and see what prob-lems we can solve through it. We have tofirst understand the problem which wewant to solve and then use technology todistribute the ability to solve which wecall ‘societal platform thinking’,” saysRohini Nilekani.

Typically, each chapter in a textbookhas 1-3 pieces of QR codes. Each of thesecodes has 1-3 pieces of content in it. Forproject Diksha, along with the QR codes,the students have been furnished with aunique set of numbers. These numbers,when entered on the Diksha website,lead to the contents that are linked to theQR code.

Certain states have done quite well inimplementing the project. Maharashtra,for example, has QR-coded every text-book across all classes and subjectsacross eight languages. Some states likeAndhra Pradesh and Chhattisgarh areworking on using the platform for teach-ers’ training as well.

Then there are states that are think-ing beyond text and video. Tamil Naduis said to be experimenting with 3Dcontent, especially for explaining theintricacies of human organs such asthe heart.

From January this year, CBSE haslaunched another initiative called ‘crit-ical and creative thinking practice’.Under this, five questions are put upevery week on Diksha. Focussed on foursubjects — Science, Maths, English andHindi — these questions test a student’sconceptual clarity.

“We will also have online assessmentof students on the Diksha portal andapp. This way, we will get to know the‘hard spots’, depending on which, morecontent will be created on these sub-jects,” says a senior official in the MHRD.

16 TECHNOLOGY 4.0 MUMBAI | THURSDAY, 20 FEBRUARY 2020 1>

In the season of schoolexaminations, it isworth reflecting on thetyranny of rote learn-ing which still hobblesIndian students.

Rooted in obsoleteBritish era objectives,our education is stag-nating in the era offourth industrial revo-lution. Rote basedlearning is preventingeducation institutionsfrom riding the bene-

fits of the technology. Tinkering labs set up under the Atal Innovation

Mission of the government have provided a glimpseof what could be done to revamp the learningecosystem. Embedded in schools, these labs helpstudents to learn while they tinker with scientificexperiments using robotics 3D printers etc. Over5,400 schools and 6 million students have benefit-ed from this initiative according to the government.

This is but a drop in the ocean. Digital classescombined with do-it-yourself (DIY) learning is ourbest hope. India is struggles to prepare hundredsof millions to survive in an age where automationis everywhere.

The Global Learner Survey by Pearson has sur-prising insights for educators. About 81% of peoplearound the world believe that "learning will get moreDIY the older they get." In many countries DIY edu-cation starts at an early age. Bringing private tutorsfor home studies is common form of DIY in Indiawhich supplements and sometimes even replacesclassroom teaching.

DIY education is transforming with the rise ofonline courses and digital learning materials.Personal tutors are being replaced by their digitalavatars. Moreover, school and college students arerealizing that is integral to their future.

Respondents were asked in the Pearson surveyabout the languageconsidered mostimportant for future ofwork. English, Chineseand Spanish wereamong the top fourpreferences, as expect-ed. The number twochoice was surprising:coding. A choice whichwas often the preserveof technology students,is now considered amainstream option bymost. Coding is the newsecond language.

About 30% ofrespondents feel thatknowledge of coding is

more important than learning Chinese or Spanish.This sentiment will only increase with time. Alreadythe top business schools in US and elsewhere arebeginning to offer coding for management students.

Coding and digital learning will reinforce eachother as they spread across schools and colleges inIndia as well. Educators should now ensure thatcoding is offered to everyone and not just comput-er science students.

The good news from the Pearson survey is thatIndia is high on upskilling. A global upskillingdivide is emerging, but India is on its right side."People in China, India, Brazil and Hispano-America are more likely to upskill or retrain thanworkers in the US and UK," says the survey. Over76% respondents from India said they felt the needfor further education for their job. And most ofthese took a course, self-taught themselves oraccepted a training programme from their employ-er. Indians are realizing the futility of depending ondegrees and academic education and

From schools to colleges to mid-career educa-tion. There is a crying need to foster DIY learningand digital classrooms. In many ways this approachis age and sector agnostic. Corporate and govern-ment employers must reduce their fixation ondegrees while emphasizing on ability and skills. Arecent six-month course in data science can be morevaluable than a 10-year-old degree in mechanicalengineering. A student who can recite poetry andcode as well, can be more valuable to an organizationthan one that scores 99% in a school board exam.

Indian learning ecosystem should step awayfrom rote and tighten its embrace of DIY learning.

The Global LearnerSurvey by Pearsonhas surprisinginsights foreducators. About81% of peoplearound the worldbelieve that“learning will get more DIY theolder they get.” In many countries,DIY educationstarts at an early age

Digitalcontent, DIYlearning

KRANTI NATIONPRANJAL SHARMA

Apart from the public healthemergency of the Coronavirusspread, China also madeheadlines last week for building amakeshift hospital in a record 10-days to accommodate 1,000patients infected with the virus.

Hundreds of miles away, in asmall town of Tamil Nadu, a US-based startup called Katerra isalso executing building projectswith great speed. It is buildinghouses, offices and malls almostthree times faster than the timeusually taken. Using state-of-the-art technology, the company ismaking building blocks whichcan be fitted into each other likeLego pieces, facilitatingconstruction which is dust freeand at least 50 per cent faster thanthe traditional method.

Nestled in the picturesquerocks of Krishnagiri, some twohours from Bengaluru, thecompany’s 43-acre plant lookslike a huge park at first sight.However, when you pick up one of

the bicycles parked at the gate andreach the batching facility, yourealise the complexity of thisautomated factory. You find greenshuttles carrying concrete mix tothe pre-cast factory, from where aline of concrete walls can be seento come up one after another.

“We are a full-stack company,right from design to delivery,which is converting theconstruction site into aninstallation site as we do not buildanything on site,” says NajeebKhan, who heads Katerra’s Indiabusiness. The company enteredIndia in June 2018 after acquiringan offsite manufacturingcompany, KEF Infra.

The SoftBank-backed startupbegins the manufacturing processwith a design for manufacturingand assembly technology. Theentire project is sliced intodifferent parts, to bemanufactured in the plant andlater installed at the site.

For its 1.6 million square feet

Infosys project at Electronic City,the building’s design was split into48,000 pieces on the designsoftware before the actualmanufacturing began. Katerra islooking at completing the projectin 16 months, whereas it wouldhave taken at least 25 months tobuild it via the traditional method,claims Khan.

Once design optimisation isdone, the assembly line productionof each element begins. There arefour facilities — pre-cast, joinery,aluminium blazing and podsfactory — which work in sync tocomplete the project.

First, the concrete mix isprepared at the batching plantand taken by automated shuttlesto the pre-cast bay. A meshwelding machine cuts the longiron rods and prepares theskeleton for the slabs according tothe required length and breadth ofthe design. The welded mesh isthen bound to a metal bed by ashuttering robot. The bed has

magnets which keep the mesh inplace. The shuttles take theconcrete mix to the concretespreading machines which haveattached sensors. So if the mesh isfor a wall with windows, themachine makes sure that it doesnot to pour concrete in thatregion.

The bed then starts vibratingto settle the concrete mixture and

smoothen the surface. The slab istaken to the steam curatingchamber where it is kept for eighthours to achieve the strength ofthe concrete. Every eight hours, anew batch of slabs for walls,ceilings and flooring comes out ofthe curating chamber. Each slab istagged with a barcode, which isscanned by the production teamonce transported to the project

site, to keep track of the shipment. Located next to the casting

factory is the joinery room whichdoes all the woodwork such asdoors, windows and furniture.The cutting line of the factory hasall machineries connected to acentral dust collector, hence thework is sawdust free. The cutwood pieces are fed into a CNC(computer numerical controlled)machine to produce woodwork inthe desired style.

Next comes the aluminiumand glazing set-up, whichfabricates panels for the doors andwindows as per the project’srequirements. Here too, CNCmachines do the cutting andpolishing of the panels.

The entire pre-castmanufacturing and onsiteinstalling activities are supervisedby Katerra Apollo, the company’sin-house software.

"Use of precast construction isoffering added advantages bysignificantly reducingconstruction time as well asproviding sustainable and betterquality. With components beingmanufactured in a controlledenvironments, they offer humanand environmental benefits suchas site safety, waste reduction,improved air quality and qualitymanagement," said Gurjot Bhatia,

Managing Director, ProjectManagement, CBRE South Asia.

Katerra’s pods factory willsoon have automated lines forprefabricated bath, kitchen andconference kits. Theseprefabricated kits are currently inthe R&D stage and will be slowlyrolled out from this year.

Katerra is also looking atlaunching a product in theaffordable housing segment.Called K-10, the one and two bhkapartments will be manufacturedas blocks at the flagship plant andcan then be fixed on top of eachother, going up to 10 storeys.These buildings can be set up in aspan of 20 days to 2 months,depending on the requirement ofthe client, says Katerra.

The company has two morefactories coming up — one inHyderabad and another onebetween Pune and Mumbai — tocater to its growing client list insouthern and western India,including Embassy, Bosch, andthe Vaishnavi Group. For projectsin north India, the company hasbeen installing portable factories.

A temporary factory inLucknow is building the 2 millionsquare feet Lulu mall, which islikely to be completed in twoyears. Katerra also plans to set up aplant in Delhi-NCR by 2021.

Bibhu Ranjan Mishraexplains how the digital learning contents integrated into the school learning system are transforming education

Silicon Valley startup Katerra is making buildings in India in halfthe usual time taken, reports SSaammrreeeenn AAhhmmaadd

ALGO RHYTHM

Even though different reports throwvaried numbers, one thing that allagree that the internet user base inIndia is bound to rise, at a fasterpace. While the recent annualinternet report by Cisco predicted amore than two-fold increase ininternet user base in the country by2023 at 903 million, the IndiaStatista Digital Market Outlook pegsthis at 666.4 million by the sameperiod. Much of this growth isexpected to come from rural India,propelled by greater proliferation ofinternet enabled smartphones. TheMobile Marketing Ecosystem Report2020 for India prepared by tradebody Mobile Marketing AssociationIndia, in collaboration withGroupM, gives a deeperunderstanding into the usagepattern of mobile internet, bankingon some external as well as its ownresearch data.

MOBILISING INTERNET, THE INDIAN WAY

Learning via QR codes

Building the Lego way

MOBILE, THE MOST PREFERREDDEVICE TO ACCESS INTERNET

Mobile phone

Laptop Desktop Tablet

Source: India internet 2019 Report: IMAI

Report: IMAI

Urban Rural Figures in %

TOP APPS (monthly active usersin India, 2019)

Whatsapp messenger Facebook

Facebook Facebook

Truecaller Truecaller

Facebookmessenger Facebook

Shareit SHAREIT

Amazon Amazon

MXGroupTimes Group

Instagram Facebook

Paytm One97

Hotstar DisneySource: App Annie-State ofmobile 2020

KATERRA INDIA FOOTPRINTProject Area (sqft) Completion time

Infosys building (Electronic city, Bengaluru) 1.6 mn 16 months

Embassy3A (Bengaluru) 1.62 mn 19 months

Bosch (Naganathpura) 210,000

Vaishnavi tech park (Bengaluru) 700,000 12 months

Lulu Mall (Lucknow) 2 mn 2 years

99 99

62

41 1 0

Home

94

Work Travelling Studying Internetcafe

Other

POINT OF ACCESSAll India Urban Rural Figures in %

9045 25 30 20

9 107

2 2 1

10 10 10

3228

92

LEADER IN MOBILE APP DOWNLOADSThe cheaper mobile internetaccess and smartphone has madeIndia to see the highest growth interms of app downloads. In thepast three years while the globalgrowth in app downloads was45%, India witnessed astaggering 190% growth. In 2019,consumers worldwidedownloaded 204 billion apps ofwhich Indian users downloaded40 million apps, alone. Source:App Annie-State of mobile 2020

Coun

try le

vel d

ownl

oads W

orldwide dow

nloads

2016

Growth from 2016 to 2019

2017 2018 2019

120B

100B

80B

60B

40B

20B

0B

120B

100B

80B

60B

40B

20B

0B

United Kingdom

China India 190%

United States 5%Brazil 40%

Indonesia 70%

45%

QR (Quick Response)codes are basically anupgraded version ofbarcodes

When scanned usinga smartphone, it leadsto the landing page

and give access tothose information

HRD Ministry isencouraging states toprovide digital contentto students, throughproject Diksha

States are using QRcodes in textbooks toprovide digitalcontent to schoolstudents

These content hasbeen created using an

open source platformcalled Sunbird

Multi-media contentlike audio, video, textand PDF can beembedded in a QR code

LEARNING DIGITALLY

SOHINI DASMumbai, 19 February

What does a 60-plusbrand do when itneeds to infuse fresh

energy into its promise? Or ayouthful cola brand look forwhen it needs to ratchet up theengagement on video-sharingplatforms, or how does astodgy electrical goods makerfind a millennial connection?Increasingly, over the past yearand more, brands across dis-parate categories and targetaudiences, have chosen actorAlia Bhatt for the job.

The face that every brandwants, has seen a meteoric riseup the endorsement tables.According to the recent Duff &Phelps celebrity valuationreport, Bhatt is the onlywoman, apart from DeepikaPadukone, in the top 10 in thelist of top paid endorsers in

the country. She has dislodgedveteran actor, AmitabhBachchan, to take the seventhspot and has beaten M SDhoni, Ranbir Kapoor, HrithikRoshan and a host of herfemale peers, PriyankaChopra, Kareena KapoorKhan and Anushka Sharma atthe endorsement races.

Bhatt earned herBollywood spurs with a stringof hits through 2018 and 2019and currently endorses brandsworth $45.8 million. She backseverything from high fashionto food and beverages and hasalso invested in a start-up, apersonal styling platformcalled Stylecracker. What is fir-ing up the brand allure of the26-year-old actor?

Her ability to hold her ownin Bollywood that is still largely a male-dominatedindustry sticks out in herfavour, according to N

Chandramouli, chief execu-tive officer of brand intelli-gence and data insights com-pany, TRA. The celebritydesire quotient is made up offour components, rational,emotional, communicationand aspirational he said, andBhatt stands tall on the aspi-rational track. Her choice ofmovies, refusal to be typecastand her willingness to experi-ment with her roles has meantthat her movies are not justbox office successes, butappeal to a diverse audienceset. This makes her an endearing choice for brands, said marketers.

Known to charge aroundone crore rupees per brand peryear, for her endorsements,Bhatt is also more affordablethan many others. Her priceadds to the attraction of herreach, but marketers said theywere drawn to her as much for

the fact that she fits the budget as for her ability toappeal across demographic,geographical and genderdivides. Plus her vibrant andactive social media presencehelps brands gain visibility online.

Harish Bijoor, founder-CEOHarish Bijoor Consults believesthat Bhatt has a clear slot to fill,now that Priyanka Chopra isout of the running (given herinternational commitments).Plus her advantage is that shecan make her appeal workacross brands that are very dif-ferent from each other. She isthe perfect new age brandendorser according to him.“Young, approachable andlooks like the pretty girl nextdoor. Add a dash of the modernand the versatile and that isher,” he added.

Brands say they are drawnby the buzz around her, be it inthe movies she has chosen orthe way she conducts her per-sonal life. She connects withthe millennial consumer.Sanjeev Pendharkar, director,Vicco, speaking to the mediaat the launch of a new cam-paign had said, “ViccoVajradanti has been a house-hold name since 1952. It has alarge base of loyal users. Themarketing task was to appeal tothe younger generation, themillennial and who better thanAlia (Bhatt) as a brand ambas-sador to do this.”

Like Vicco, brands arekeen to leverage her hugesocial media presence. Bhatthas 43 million Instagram fol-lowers, 1.3 million YouTubesubscribers and over 20 mil-lion Twitter followers. Shepromotes her brands on hertimelines, sharing their storieswith a personal touch. ForVicco for instance, she postedthat she was thrilled to be apart of a jingle she has grownup on (The toothpaste brand’sjingle has unprecedented nos-talgic recall and has beenretained in the new ads).

Her social media platformscan do better with some pro-fessional management, how-ever, say experts. If that isfixed, it is likely that the actorwill find her brand value soarand the endorsement list swelleven more.

MUMBAI | THURSDAY, 20 FEBRUARY 2020 BRAND WORLD 17. <

Brand Alia Bhattperfects her pitchFrom colas and toothpaste to travel and fashion, the actorhas become the go-to endorser for brands of all shades

MakeMyTrip (Travel)Nokia (Smartphones)PhonePe (Fintech)Caprese, VIP Industries (Handbags)Flipkart (Fashion, e-commerce)Maybelline (Beauty)Garnier (Hair care)Vicco Vajradanti (Toothpaste)Sunfeast Dark Fantasy (Biscuits)Pepsi Lay’s (Snacks)Coca-Cola (Beverages)Cadbury Perk (Chocolates)Philips (Hair dryers)Standard, Havells (Fans)

THE A LIST *

Bhatt has just been signed on as endorser for Vicco Vajradanti, one of the oldest toothpastebrands in the country which is keen to broaden its appeal among the young

*This is not an exhaustive list, only a sample of the total endorsements

Dish-Airtel deal... Bharti Airtel has followed a dual strategy.Apart from DTH services, it is also the sec-ond largest player in fibre-to-the-home with2.2 million broadband users. This puts itbehind BSNL but far ahead of Reliance Jiowhich has over one million users. However,last year Reliance Jio bought Hathway andDen Cable which both have fixed broad-band customers. The Essel group has beengripped by serious financial crises due to itsforay into infrastructure projects for whichit took loans by pledging ZEEL shares. Ithas been trying to improve its finances.

Currently, it has to pay back loans ofaround ~2,500 crore which it hopes tofinance through the sale of 14 road projects.If it fails to sell some of these assets, it will,as a last resort, go to the IBC for redress.

The Dish TV deal is important for Esselbecause it will generate the cash it needs tobuy back part of the shares in ZEEL.

Trump dashes... Hope on agri pactOfficials say India is now hoping to sign asmaller pact, focusing on agriculture goods."Talks on agri are still open and a limitedtrade cooperation pact arising out of thesemay be included in the joint statementannounced by both leaders," a commercedepartment official said.

This may see India systematically rollingback duties on high-value farm importssuch as almonds, walnut, apples, and wine,which were among 29 items on which thegovernment had hiked duties by up to 50per cent last year, he added. Trump's core

constituency of American farmers has losttheir prime foreign markets after nationsretaliated to Trump's unilateral tariff hikesby making it equally expensive to buyAmerican products.

But talks remain deadlocked over NewDelhi’s decision to saddle medical deviceimports with an additional health cessannounced in the last Budget. Despiteremaining the largest source of shipments,US-made devices have continued to losemarket share in India to cheaper alterna-tives from China and Germany. ThoughIndia has said it won’t roll back the tax,sources said the Centre was consideringallowing a trade margin policy for certainhigh-value items such as coronary stents.

“Discussions on other issues — lowerduties for US industrial components, engi-neering products, and information technol-ogy goods like smartwatches and iPhones— are lengthy and will need to be taken uponly after Trump's visit," an official said.

GSP not yet

New Delhi's biggest demand — the rein-statement of trade benefits under the US'Generalized System of Preferences (GSP)scheme — has been rebuffed by US offi-cials. "They made their position clear lastweek by classifying India as a developedeconomy, which we don't support," a seniortrade department official said.

The GSP is America’s oldest preferentialtrade scheme, which offered Indianexporters tariff-free access to the US untilJune 2019, when all benefits were sus-pended. India was the largest beneficiarynation with tariff exemptions amounting to$260 million in 2018, which covered exportsworth $6.35 billion, according to the datafrom the US Trade Representatives.

India’s merchandise exports to the UShave risen in the past four years,reaching $52.4 billion in FY19, upfrom $47.8 billion in FY18. But in-bound shipments too have jumpedto $35.5 billion last year from $26.6billion in FY18, reducing India'strade surplus.

Blackstone...“We are doing the valuation forSouth City Mall. At this stage, it istoo early to comment on the mat-ter,” said Pradeep Sureka, promoter,Sureka Group. “There are no plansfor a stake sale. South City Mall isone of our prized projects,” said Sus-hil Mohta, MD, Merlin Group. Themall underwent a massive revampin the past two years and saw theentry of global brands such asStarbucks and Harley Davidson.The average monthly footfall at themall is around 2 million, among thehighest in the region.

The mall had many firsts to itscredit. It was the first mall in thecountry with a multi-level roof topcar park facility, with a capacity of1,500 cars. It was also the first mall(when launched) with six moviescreens (Inox cinemas). It also hadthe largest food court, spread over40,000 sq ft with a seating capacity

of 850 people.Global investors have bet big on malls in

the country due to fixed rental income andlow risk involved. Total inflows in the retailreal estate sector in 2019 were $970 million,the highest since 2015, real estate consultantAnarock said in a recent report. Of the PEinvestments of $5 billion in Indian realestate in 2019, retail comprised 19 per cent,it said. Blackstone-owned Nexus Malls,which started investing in 2016, has a port-folio of 5.4 million sq ft. It owns malls inMumbai, Pune, Ahmedabad, Chandigarh,Indore, and Amritsar.

Singaporean sovereign fund GIC hasbought stakes in Viviana mall and Runwalgroup’s malls in Mumbai. It has also part-nered DLF to build malls. Virtous RetailSouth Asia (VRSA) in December last yearbought malls in Nagpur and Amritsar fromTata Realty & Infrastructure for ~700 crore.The deal took its portfolio from 5.4 millionsq ft to 7.1 million sq ft.

Virus pain...“We not only produce most of our compo-nents in India, but also, we have a hugefacility in Vietnam. Thus, we are not expect-ing any major impact on operationsbecause of the coronavirus crisis,” said asenior executive of Samsung India.

According to the person, the firm is oncourse to roll out its two new flagships —Samsung Galaxy Z Flip and SamsungGalaxy S20+ — by March. It has openedpre-booking for the models.

Samsung had steadily lost marketshare last year — from 25.3 per cent in theJune quarter to 15.5 per cent in theDecember quarter. Samsung, which wasonce the market leader, was pushed to thethird spot by the end of 2019 — behindXiaomi and Vivo. With its rivals pushed tothe corner, it has a chance to extend regainlost ground by April.

Mittal, Birla...It is learnt that the two telcos have proposeda few options to the Union government forconsideration. This includes creating a tele-com fund to give soft loans to the serviceproviders and extending the payment time-line. A relaxed AGR law was also suggestedto bring some relief in the sector.

SC on Monday had dismissed VodafoneIdea’s petition seeking relief from invoca-tion of bank guarantee by DoT in case itfailed to pay its AGR dues in the stipulatedtime. According to the unified licence agree-ment, the licensor or DoT can invoke bankguarantees and convert the same into cashsecurity if the service provider violates anyterm of the licence.

On February 14, SC had rejected themodification applications of Bharti Airteland Vodafone Idea seeking relaxed pay-ment scheme for the AGR dues. The apexcourt directed the companies to make pay-ments immediately. The issue dates back to2003 when the AGR dispute had started. OnOctober 24, 2019, the SC ruled that AGR fortelcos should include all revenues accruedto carriers, including that from non-coreactivities, upholding the DoT's stance.

> FROM PAGE 1

TENDER CARE Commercial Feature

LIC Housing Finance Ltd, the housing finance major, organised a megaaward ceremony, Mahasammelan, to applaud its agents and market-

ing officials on 17th February 2020 at Ramoji Film City, Hyderabad. Therewere over 1200 stakeholders, including agents, marketing officials andtop management of LIC HFL, in attendance. The top performing agentsand Area Managers were felicitated in a grand award ceremony by Mr. Harbhajan Singh and Ms. Geeta Basra, who were the chief guests atthe event.

LIC HFL applauds its agents

Amitabh Akhauri takes charge as Executive Director &State Head, Maharashtra & Goa State Office, IndianOil

Amitabh Akhauri has taken charge as ExecutiveDirector & State Head, Maharashtra State

Office, IndianOil, which caters to the POL(Petroleum, Oil & Lubes) needs ofMaharashtraand Goa State.With more than threedecades of rich and diverse experience in theEastern Region and Head Office of MarketingDivision, Mr. Akhauri brings with him an experi-

ence of working at various states across the country and in the MiddleEast where he was ranked amongst top 100 Indian business leadersFORBES listing for Middle East 2015-16.

(Left to right) Mr. Siddhartha Mohanty, MD & CEO of LIC HousingFinance Ltd + Mr. Harbhajan Singh and Ms. Geeta Basra as the chiefguests at Mahasammelan of LIC HFL in Hyderabad

BoM launches 'Mahabank Cashback Scheme' Bank of Maharashtra (BoM) launched 'Mahabank Cashback Scheme'

for New Debit Card Issuance, Internet Banking and Mobile Bankingregistration during campaign period from 15th February to 15th March,2020. Digital Payments are emerged as most convenient and secure pay-ment system. Debit Card issuance is the backbone of all Digital Channelsas the Debit Card credentials are required for Mobile Banking, InternetBanking and UPI registrations. Under cashback schemes, customer per-forming one POS/E-com purchases using 'Mahabank Debit Card for min-imum of Rs. 1000/- during campaign period, will get Rs. 100/- as cash-back in customer's linked account. Similarly, those customers registeringfor Internet Banking and Mobile Banking during campaign period per-forming one financial transaction of minimum Rs. 100/- will receive Rs.100/- as cashback in their linked account. Mahabank Cashback Schemeis applicable for first 5 lakh customers only. GRSE delivers the 4th Anti-Submarine Warfare

Corvette, Yard 3020 (Kavaratti)Garden Reach Shipbuilders and Engineers Ltd., (GRSE), a leading

Warship builder and Miniratna Category 1 Company under the admin-istrative control of the Ministry of Defence delivered Yard 3020(Kavaratti),to the Indian Navy on 18 Feb 20.The ship is the 104th Warship built anddelivered by GRSE since its inception in 1960 and is the Last in the Seriesof 04 Anti-Submarine Warfare Corvettes (ASWC) under the Project 28.

"Kavaratti" was handed over by Rear Admiral VK Saxena, IN (Retd.),Chairman & Managing Director, GRSE to Cdr. Sandeep Singh,Commanding Officer (Desig) of the ship, in the presence of Cmde. DKGoswami, CEO, Chairman, D448 Eastern Naval Command, Shri S S Dogra,Director (Finance), Cmde. Sanjeev Nayyar, IN (Retd), Director(Shipbuilding) and Cmde. P R Hari, IN (Retd), Director (Personnel) andother Senior Officials of Indian Navy and GRSE.

Incentivization of local industries/MSMEs around DSPDurgapur Steel Plant in collaboration with CMO, SAIL, Kolkata organ-

ized an informative session to create awareness towards the newscheme of SAIL named"Incentivization oflocal industries/MSMEsaround five IntegratedSteel Plants, committedfor socio-economicdevelopment of theregion" on 14.02.2020.The session saw wideparticipation of digni-

taries from State administration, representatives of local chamber of com-merce, entrepreneurs from Paschim Bardhhaman region and other seniorofficials from different units of SAIL, i.e. CMO, ISP, ASP and DSP etc. Thesession was chaired including delivering of the welcome address by ED(MM), DSP. It was followed by a detailed presentation by RM, CMO afterwhich wide discussions took place on topics ranging from objectives toincentives being provided under the scheme (both price based and non-price based), eligibility & process to avail benefits. During the meeting var-ious queries of the entrepreneurs were also addressed and answered bysenior officials of DSP.

Oriental Bank of Commerce celebrates 78th Foundation DayThe 78th Foundation Day of Oriental Bank of Commerce was celebrated

with much pomp and camaraderie at its Circle Office, Ghaziabad prem-ises. Bank’s higher Management officials including Deputy GeneralManager Manik Kumar, other senior functionaries, retired officials, youngofficers and workmen in large numbers were present on this occasion. Acake was cut to commemorate the occasion. Circle Head Manik Kumar

gave opportunity to all who were present to speak and put forth theirviews. Retired comrades shared their experience and advised their youngcounterparts about future strategies to be adopted. Manik Kumar dweltin brief about glorious past of the bank and also said that all will keepOBC in their hearts. A Blood Donation Camp was organised with helpfrom District MMG Hospital, Ghaziabad. An eye check-up camp was alsoorganised with help from M/s Lawrence & Mayo, Ghaziabad wherein cus-tomers and bank employees got their eyes checked and availed consulta-tion services.

18 MUMBAI | THURSDAY, 20 FEBRUARY 2020 1>

No ban on drug exportsin wake of crisis: Centre SOHINI DASMumbai, 19 February

The government on Wednesday decidednot to ban or curb drug exports, in thewake of the coronavirus crisis that has

created supply disruption of raw material. It alsosaid that contractors will not face any action ifthey fail to honour contractual obligations onaccount of disruption in supplies caused by delayin shipment from China.

In a meeting thatindustry captains hadwith various governmentdepartments and theNITI Aayog, it was decid-ed to grant speedy envi-ronment clearances forbulk drug units to enablethem to tweak their prod-uct portfolio.

A committee formedby the government underthe chairmanship of thejoint drug controller gen-eral of India had recom-mended a ban on exportsof 12 key APIs. Theseincluded APIs for somevitamins and antibiotics.In the high-level meeting,however, the governmentdecided against the ban.

As a long-term meas-ure, the governmentdecided to build large-scale manufacturing ofbulk drugs and interme-diates used to make med-icines. “Instead of havingmultiple bulk drug parks, the industry and gov-ernment are in consensus that there should beonly a handful (two to three) of large manufac-turing clusters, where power and water would beavailable at competitive rates. A larger scalewould make manufacturing of these low-valueactive pharma ingredients (APIs) more viable,and focus would be on those APIs where ourdependence is very high on China,” said anindustry executive.

India sources almost its entire requirement offermentation-based APIs from China. These areused to make key antibiotics and vitamins.

For the immediate crisis at hand, the envi-ronment ministry will grant speedy approvalsto bulk drug units to alter their product portfolioas long as the effluent load did not change. Atpresent, state pollution control boards grantapprovals, and industry claims these approvalstake months at times.

Indian drugmakers will,however, not halt exports andmeet their commitments aslong as they have their sup-ply of raw materials.

“The industry was againsta blanket export ban, as thiswould have had long-termimplications. The govern-ment, too, felt it would hurtthe country’s image if such aknee-jerk reaction was taken,”added a senior member of apharma lobby group. Headded that the governmenthad cautioned everyone notto hoard medicines or rawmaterial. India’s drug marketis staring at a crisis as uncer-tainties over supply of rawmaterial from China havestarted causing disruption.

Small drug manufactur-ers, who do not hold largeinventories, say their stockswould only last 15-20 days.

Contract manufacturers,too, say that order flow hasdipped in the past fortnightas big pharma firms are in a

wait-and-watch mode as prices of key raw mate-rials have increased. The data shows that tradeinventory of key medicines is not high either.Trade inventory, however, is not very high, giventhat replenishment has slowed.

The data from market research firm AIOCDAWACS showed that for a pouplar antibiotic(amoxycillin and clauvulanic acid, which is soldunder several brands like Augmentin), the tradeinventory was 39 days as on January 20.

Limited impact on India; global GDP to suffer: RBIPRESS TRUST OF INDIANew Delhi, 19 February

The outbreak will have a limitedimpact on India but global GDPand trade will definitely getaffected because of the large sizeof the Chinese economy, RBIGovernor Shaktikanta Das hassaid. Only a couple of sectors inIndia are likely to see some dis-

ruptions, but alternatives arebeing explored to overcomethose issues, he said.

The deadly virus hasbrought a large part of theworld’s second-largest econo-my to a standstill, and its impacthas been felt across industries.India’s pharmaceutical and elec-tronic manufacturing sectorsare dependent on China for

inputs and they may be impact-ed, Das told PTI in an interview.

“It is definitely an issuewhich needs to be closely mon-itored, whether in India or anyother country. The coronavirusissue needs to be closelywatched,” he said.

A similar problem, per-haps on a lower scale,occurred last time during the

outbreak of the Severe AcuteRespiratory Syndrome (SARS)in 2003, he said, adding thatthe Chinese economy hadslowed down by about 1 percent during that time.

At the time of SARS out-break, China was the sixth-largest economy and accountedfor only 4.2 per cent of theworld’s GDP.

CORONAVIRUS OUTBREAK

Death toll mounts to 2,000 India to send its largest militaryaaiirrccrraafftt ttoo eevvaaccuuaattee mmoorreeIInnddiiaannss ffrroomm WWuuhhaann ttooddaayy

Third patient in Kerala has nowtested negative; PPuunnee’’ss SSeerruummIInnssttiittuuttee ssaayyss vvaacccciinnee ttoo bbeerreeaaddyy bbyy 22002222

Globally, ccoonnffiirrmmeedd ccaasseess hhaavveeeexxcceeeeddeedd 7755,,000000

IIrraann hhaass rreeppoorrtteedd ttwwoo ddeeaatthhssbecause of the virus

CChhiinnaa iiss ttaakkiinngg oovveerr tthhee HHNNAAGGrroouuppto contain the economicfallout of the outbreak

Sanofi said it will leverage itsprevious work to develop apotential vaccine

Chinese firms say economic tollhas left them unable to covertheir labour costs

Infections on the Diamond Princess cruise ship, moored near Tokyo,rose to 621 on Wednesday, even as passengers began disembarkingfollowing a contentious two-week quarantine that some foreignhealth experts said appeared insufficient. Japan said it haddiscovered 79 additional cases of the flu-like disease on the ship

ANOTHER INDIAN TESTS POSITIVE ONCRUISE SHIP, NUMBER RISES TO 7

Anti-infectives 43Amoxycillin + clavulanic acid 39Ceftriaxone 51Anti-diabetic 31

Glimepiride + metformin 32Voglibose + metformin + glimepiride33Human pre-mix insulin 29Paracetamol 52

Source: AIOCD AWACS

CLOSING STOCKAS ON JAN 20 (days)

INDICES RALLY ON HOPE

Major indices Country % change*Asia (as of 21:55 IST)

Sensex India 41,323 1

Nifty India 12,125.9 1.1

Nikkei Japan 23,400.7 0.9

America (as of 21:55 IST)

DowJones USA 29,375.6 0.5

S&P 500 USA 3,389.6 0.6

Nasdaq USA 9,823.8 0.9

Europe (as of 21:55 IST)

FTSE 100 Britain 7,459.4 1

DAX Germany 13,776.3 0.7*Change over previous day’s closeCompiled by BS Research Bureau Source: Bloomberg

Adecline in the number ofnewcases in China,along with mounting expectations ofmorepolicy stimulus, boosted global stockmarketson Wednesday. Oil rose more than 2 per centto $58.82 (as of 22:36 IST)

Job offers delayed in Asia’s biggest financial hubsBLOOMBERG19 February

Financial firms operating inSingapore and Hong Kong aredelaying hiring as the coron-avirus outbreak disrupts theirbusinesses.

Both domestic and foreigninstitutions have slowed recruit-ment, according to head-hunters in the financial hubs.They’ve been impacted byquarantines, restrictions ontravel to and from China,remote working arrangementsand decisions not to conductface-to-face interviews.

It’s another aspect of thefallout from the virus, whichhas also caused factory clo-sures, disrupted supply chainsand initiated the world’slargest work-from-homeexperiment. Recruiting hasbecome less of a priority asfirms including DBS GroupHoldings Ltd. have highlight-ed the revenue impact of wors-ening business conditions.

“Everybody is distracted,”said Gurj Sandhu, a managingdirector at Morgan McKinleyGroup Ltd. in Singapore.Hiring is falling down the“pecking order,” he said, whileadding that nobody is cancel-ing roles yet.

Bloomberg spoke with sixrecruitment firms, all of whichconfirmed the slowdown.Hiring processes and relocationplans are taking longer at mostcompanies because of logisti-cal difficulties. While somefinancial firms are conductinginterviews by video conferenceor phone, closing the deal ismore problematic, especially atinvestment banks and wealth-management units.

Bankers are “big-ticketitems,” said Hubert Tam, amanaging partner at Sirius

Partners Ltd. in Hong Kong.Private banks and investmentbanks are holding off on hiringuntil they can meet candidatesin person, “even if they per-formed well last year,” he said.

What’s more, many privatebankers covering China wouldhave to travel to the country tomeet clients and “get theirblessings” before they movebanks, according to Amod Jain,a Morgan McKinley consultantin Singapore. “Not everythingcan be done by phone.”