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THURSDAY, 11 OCTOBER 2018
20 pages in 1 section
MUMBAI (CITY)
~7.00
VOLUME XXIII NUMBER 42
THE MARKETS ON WEDNESDAY
Sensex 34,760.9
Nifty 10,460.1
Nifty Futures* 10,465.8
Dollar
Euro
~74.2
~85.4
Brent crude ($/bbl)## 83.8##
Gold (10 gm)### ~31,055.0
*(Oct.) Premium on Nifty Spot; **Previous close;
# Over previous close; ## At 9 pm IST;
### Market rate exclusive of VAT; Source: IBJA
RAFALE DEAL A
QUID PRO QUO:
FRENCH MEDIA
French news website Mediapart reported
on Wednesday that it had accessed an
internal document from aerospace firm
Dassault which stated that partnering
Anil Ambani’s defence firm was a quid
pro quo to New Delhi for winning a
^7.8-billion contract to supply 36 Rafale
fighters to the Indian Air Force (IAF). A
senior member of the aviation group had
explained to the staff representatives
that the joint venture, Dassault Reliance
Aerospace, was a "counterpart",
"imperative and mandatory" to win the
Rafale market, the report said quoting
the document. AJAI SHUKLA reports 20 >
SC ORDERS GOVT TO GIVE DETAILS OF RAFALE
DECISION-MAKING PROCESS P20
ECONOMY P5
Govt cuts excise
duty on ATF to 11%
The government on Wednesday cut
excise duty on jet fuel, or ATF, to 11 per
cent from current 14 per cent in a bid to
give relief to the aviation industry, which
has been hit hard by high fuel prices. A
notification issued by the revenue
department of the finance ministry said
the duty change would “come into force
with effect from October 11”.
DUTY CUT UNLIKELY TO REDUCE AIRFARES P5
BACK PAGE P20
At least 7 killed as train
derails near Rae Bareli
Five coaches and the engine of the New
Delhi-bound New Farakka Express derailed
near Rae Bareli on Wednesday, killing at
least seven people and injuring nine,
officials said. The accident took place in
Harchandpur area of Rae Bareli district at
6.10 am, Uttar Pradesh Additional Director
General (Law and Order) Anand Kumar said.
https://www.estore33.com/ https://t.
www.business-standard.com
Chg#
461.4
159.1 PERSONAL FINANCE P18 WORLD P14
5.6
~74.4**
~85.1** YOUNG INDIA SAVES EARLY, DON’T DESTROYTRADE, FIX IT:
BUT DOESN’T INVEST RIGHT LAGARDE ON PROTECTIONISM
85.0**
Unchanged
PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE
IL&FS books sent Tatas take control of AirAsia
India with new CEO, board
to audit regulator ARINDAM MAJUMDER
New Delhi, 10 October
Five months after the position fell
night statement, the airline
announced the CEO appointment
but did not respond to queries on the
resignation of Fernandes and Bo
Venkataramanan.
Referring to the restructuring as a
“clean-up act”, a source said the
move would be followed by Tata
Firm needs ~1 billion a month to stay afloat: MCA vacant, AirAsia India is appointing Lingam from the board of directors. Sons increasing its shareholding to 51
Sunil Bhaskaran its next chief exec- Sources have said the restructur- per cent by buying out Ramadorai
VEENA MANI
New Delhi, 10 October SETTING THINGS RIGHT utive officer (CEO). Bhaskaran, a life-
long employee of the Tata group, is
ing implies the Tatas will manage
the AirAsia India operations. This is
and Venkat’s stake.
The Central Bureau of
currently working as vice-president for the first time that the airline’s top Investigation (CBI) had in May
T
he Ministry of Corporate Affairs
| IL&FS will be a test case for the National (corporate affairs) at Tata Steel. appointments are being done named Fernandes, Bo Lingam, and
(MCA) has sent the books of Financial Reporting Authority, which came The airline is also restruc- without consulting Venkataramanan, managing trustee
Infrastructure Leasing & Financial into force on October 1 turing its board, with AirAsia Fernandes. Tata Sons and at Tata Trusts and director at AirAsia,
Services (IL&FS), filled with auditing | Govt does not rule out fraud in the group CEO Tony Fernandes Tony Fernandes-owned in an FIR, alleging they paid money
irregularities, to the newly constituted IL&FS matter and deputy group CEO Bo AirAsia Bhd hold a 49 per to middlemen for bribes to public
National Financial Reporting Authority Lingam stepping down. It is cent stake each in the air- servants for securing an air opera-
(NFRA). “It will be a test case for the NFRA,” a | Firm has reached out to PSUs for learnt that the airline will get line, while the remaining 2 tor’s permit. While AirAsia India was
key source in the ministry said. settlement of dues Banmali Agrawala, who heads per cent is held by Tata vet- under the scanner, there’s been a
Former bureaucrat Rangachari Sridharan is | New board looking at rationalisation Tata group’s defence and erans S Ramadorai and R delay in the Tata group's other airline
the chief of the NFRA, which is responsible aerospace business, as venture, Vistara, getting the govern-
of IL&FS
for the establishment and enforcement of
accounting and auditing stan-
chairman, replacing
S Ramadorai.
Sunil Bhaskaran
will be AirAsia
ment nod for international flights.
Officials denied any link between the
dards and oversight of the work In a late India’s new CEO two developments. Turn to Page 6 >
of auditors.
The Institute of Chartered
Accountants of India has also
sent show-cause notices to the
IL&FS statutory auditors of IL&FS.
The new management at
Market rebounds from 6-month low
CRISIS the beleaguered infrastructure SAMIE MODAK
finance company has also start- Mumbai, 10 October SENSEX RISES RECOVERY BSESECTORALGAINERS
Oct10 Chg(%)*
ed moving on cleaning up the mess.
IL&FS Non-Executive Chairman Uday The stock market rebounded HOPES Realty 1,616 4.4
Kotak on Wednesday met Corporate Affairs
Secretary Injeti Srinivas to apprise him of the
IL&FS may approach sharply from its six-month low on
Wednesday amid a retreat in
Consumer 18,580 3.8
developments in the company. After the meet- banks for loan recast the US dollar, Brent crude, and
durables
ing, Kotak said, “We barely started a week
back. We are consulting the government and
The new board of infrastructure financier IL&FS is
likely to approach public sector banks to
bond yields.
Banking and financial stocks
Finance 5,466 3.6
Bankex 28,382 3.5
making progress.” restructure their debt. The Reserve Bank of led the gains on the back of value
Industrials 2,925 3.4
Sources in the MCA said the government India’s (RBI’s) norms allow restructuring of debt buying on optimism that liquidity
Note:Index value rounded off *1-day change
was still awaiting a complete, reliable picture of by non-banking financial companies registered conditions would ease.
developments that led to the fiasco at IL&FS. as core investment company with the regulator, The benchmark Sensex ended
“Fraud can’t be ruled out,” a key official said. according to a source in the RBI. DEV CHATTERJEE at 34,761, up 461 points, or 1.35 per since April 5. Incidentally, the pre- Bank of India (SBI), HDFC Bank,
Turn to Page 6 > & SURAJEET DAS GUPTA write 4> cent, while the Nifty50 index vious day’s close for the Sensex ICICI Bank, and Axis Bank con-
gained 159 points, or 1.54 per cent, and the Nifty was at a level last tributed to more than half of the
PAGE 4 GOVT READY TO RELAX NORMS
FOR IL&FS’ ZOJILA PROJECT
ICAI SEEKS EXPLANATION
FROM AUDIT FIRMS
to close at 10,460. Both the indices
saw their biggest single-day gain
seen on April 4.
Banking sector biggies State
gains in the benchmark indices.
Turn to Page 6 >
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2 COMPANIES MUMBAI | THURSDAY, 11 OCTOBER 2018

STOCKS > Bandhan Bank

Q2 net profit up 47% at
> NLC India
Announces buyback of
>Adani Power
Top gainer among the
> Tata Consultancy Services
Stock ended lower ahead
>Zee Entertainment Enterprises
Consolidatedrevenue
IN THE NEWS ~4.88 billion y-o-y shares at ~88 per share S&P BSE 500 index of September quarter grew25percentat
through tender offer earnings on Thursday ~19.76billiony-o-y
~484.90 PREVIOUS CLOSE ~73.95 PREVIOUS CLOSE ~24.00 PREVIOUS CLOSE ~2,090.50 PREVIOUS CLOSE ~431.75 PREVIOUS CLOSE
~512.05 CLOSE ~81.85 CLOSE ~29.95 CLOSE ~2,043.05 CLOSE ~459.20 CLOSE
* OVER PREVIOUS CLOSE 5.60% UP* 10.68% UP* 24.79% UP* 2.27% DOWN* 6.36% UP*
> .

IN BRIEF
Air India revival package may
be ready in a month: Official
TheCentreislikelytofinalisea
revivalpackagefortheailingAir
Indiainamonth,atopofficialofthe
civilaviationministryhassaid
assuring“need-based”supportto
thedebt-ladencarrier.CivilAviation
SecretaryRNChoubeyalsosaidthe
safetyauditthattheDirectorGeneralofCivilAviationorderedon
domesticairlines“didnotfindanybacklogofanysafetystepsthat
theyshouldhavetaken.”“Wheneverthereisaneedforfinancial
supporttoAirIndia,itwillbeexaminedonneedbasisandsuch
financialsupportonneedbasiswillbeprovided.Ionlywishtotell
youthatallsupportwillbeprovided.AirIndia’scompetitiveness
andefficiencywillnotbecompromised.Wehavenearlyfinalised
thepackageandtherewillnotbeanyproblemforAirIndia.Within
thismonthyes.Certainly,”Choubeysaid.Hewasrespondingtoa
queryabouttherevivalpackageforAirIndia.
Malabar Gold to Foodpanda eyes
invest ~70 bn to 500,000 partners
triple retail footprint by 2020
3x spurt on first day of festive sales for Amazon
ALNOOR PEERMOHAMED
Bengaluru, 10 October
US online retail giant Amazon said
sales jumped three times during the
first 24 hours of the Great Indian
Festival for 2018 compared to the
same time period last year.
The firm said members of its Prime
loyalty programme bought three times
the number of early access products
they did last year in the initial 12-hour
period. That trend continued into the
first day of Amazon’s festive sale.
“The first day of our open sale has
been our biggest shopping day ever.
Just to call out key milestones — we
estimate that we sold three out of four
smartphones in the country on our
PTI< first sale day, our large appliances
business saw 30 times growth over a
normal business day, and Amazon
fashion was our largest category,” said
Amit Agarwal, country head at Ama-
zon India. He said that customers
availed credit of over ~3 billion during
the first 24 hours of sale to buy large-
ticket items such as television, refrig-
erators, dishwashers and smartph-
ones. While a large chunk of this was
driven by bank credit and debit cards,
Amazon’s own cardless credit prod-
uct saw massive traction.
Smartphones continued to domi-
nate the sale for Amazon, both in
terms of value as well as numbers.
While fashion was the largest catego-
ry in terms of units sold, the Xiaomi
6A smartphone, which retailed for
~5,999 on Wednesday, was the largest
selling product on Amazon. The com-
pany’s own Fire TV Stick was the sec-
ond best selling item, while it did not
disclose the number of units shipped.
Chinese phone manufacturer Xia-
omi ended up selling one million dev-
ices on Amazon in the first 24 hours of
its sale, while premium brand
OnePlus saw over 400,000 orders
being placed for its devices. However,
Amit Agarwal (second from the right), country head at Amazon India, with
his team members on Wednesday
Agarwal said that smartphones would
eventually be eclipsed by other cate-
gories in terms of driving sales, but
they would need to be much larger as
ticket sizes for fashion and others are
still lower. This would take between
three to five years, he said.
In terms of new customers, a lot of
PHOTO: SAGGERE RADHAKRISHNA
whom come to its site to get great
offers on smartphones and electron-
ics, Amazon said it saw three times as
many new customers shop on its plat-
form compared with last year’s sale.
“If you look at a typical day for us, we
get customers from both urban and
semi-urban areas, but almost 80 per
cent of them come from lower tier
cities. I would assume that it would
follow a similar pattern even during
this sale,” Agarwal said.
While rival Flipkart, too, began its
annual BigBillionDays sale on Wedne-
sday, the firm will unveil offers on
smartphones only from Wednesday
midnight. The Walmart-backed firm
did not share indicative sales growth
figures for the first day, failing to prov-
ide a comparison between it and its
biggest rival Amazon. The annual sal-
es have typically been a time when
Amazon and Flipkart get into war of
words, claiming each outdid the other.
Independent analyst RedSeer said
that last year Flipkart was ahead of
Amazon in terms of gross merchan-
dise value during the festive sales.
This year, RedSeer expects the total
industry gross merchandise value
during the festive month to be
between $2.5 billion and $3 billion,
up from $1.5 billion last year.

Tata Motors gears up to

Kerala-basedMalabarGold
andDiamondsislookingto
invest~70billiontotripleits
retailfootprinttoreach750
outletsandraisethegroup
Onlinefoodorderingand
deliveryplatformFoodpanda
onWednesdaysaidithad
onboarded60,000delivery
P&G sets up
innovation fund
partnersinfiveweeksand

cross M&M in car sales

turnoverto$7billionbyFY23,a aimstoexpanditsnetworkto
seniorcompanyofficialsaid. 500,000partnersby2020.The
“Wehaveaglobalgrowth Ola-ownedfirm,which
planthatwillseethefirm
tripleitsretailnetworkfrom
250showroomsthisyearto
competeswiththelikesof
SwiggyandZomato,saidit
hadsetatargetofonboar-
for start-ups
750outletsinthenextfive ding60,000additional AJAY MODI
In a 1st, M&M
yearswiththeGroupturnover
to$6.85billion(~500billion)
partnersacrossIndiaintwo
months.“Onthebackof
New Delhi, 10 October
to offer cars on
VIVEAT SUSAN PINTO
Mumbai, 10 October
PERFORMANCE
OVER PAST 8 YRS
T
by2023,"MalabarGroup increaseddemandonits ata Motors, which
ChairmanAhammedMPsaid,
ontheeveofitssilverjubilee
platformandrapidgeo-
graphicexpansionahead,
recently overtook
Japanese carmaker Ho-
5-year lease The world’s largest consumer
goods company Procter & (~ billion; top line)
celebrations. PTI< thistargetstandsachieved, nda to emerge as the fourth- Inafirstforapassengervehicle Gamble (P&G) on Wednesday P&G Home Products
makingFoodpandaIndia's largest player in the domestic makersinthemasssegment, said that it was setting up an P&G Hygiene & Healthcare
largestfooddelivery passenger vehicles (cars, utility Mahindra&Mahindra(M&M)on innovation sourcing fund in Gillette India 80
Uttam Galva Steels network,”itadded. PTI< vehicles, and vans) market, says Wednesdayintroducedleasing India in a move aimed at iden- 29.0 48.9 60
net loss widens to it could rise to the third spot by forretailbuyers.Ithaspartnered tifying start-ups and organisa- 40
overtaking M&M any day. The withOrixandALDAutomotive, tions that had industry-lead- 24.6
~5.80 bn in Jul-Sep Air Asia lines up country's largest automaker by globallyknownleasingservice ing ideas and solutions.
10.6 20
10.0 16.8 0
UttamGalvaSteels’netloss offers to draw revenue has narrowed the gap companies.Aleasedvehiclewill While P&G did not specify
FY11 FY18
widenedto~5.80billioninthe with Mahindra & Mahindra beavailableforuptofiveyears, the size of the fund, simply say-
quarterendedonSeptember customers (M&M) on the back of a strong Tata Motors CEO & MD Guenter Butschek (left) and president of dependingoncityandmodel. ing that it ran into “multi-mil- Notes: P&G has three firms in India -
P&G Home Products, P&G Hygiene &
30,mainlyduetohighfinance Withthefestiveseasonkicking double-digitgrowthinvolumes. PV business unit Mayank Pareek at the launch of the all new Mercedes-BenzIndiahasbeen lion dollars”, the Cincinnati- Healthcare and Gillette India. P&G Home
Products has an April-March accounting
costandasharpdeclinein inshortly,low-costcarrierAir In the first half of FY19, Tata Tigor in New Delhi on Wednesday PHOTO: SANJAY K SHARMA offeringleasingschemestoretail based company follows its year; figures for FY18 are not available. It
revenue.Thecompanyhad Asiasaidithasaninteresting Motors' domestic PV sales has buyersforsomeyears butno Anglo-Dutch rival Unilever, is an unlisted firm. Other two have a
July-June accounting year.
postedanetlossof~2.13billion offertoattractcustomers. expanded over 31 per cent to had talked about its ambition IN TOP GEAR companyinthemasscarseg- which has been investing in Sources: RoC, Capitaline, Company results
duringJuly-Septemberperiod “Thenext promowillbeinte- 106,865 units (from 81,417 units to become the third-largest menthastillnow.Dependingon Indian start-ups for some time
Domestic passengervehicle
in2017,UttamGalvaSteelssaid. resting.Weknowthatthereis last year) helped by products player by 2019. It was 5th then choiceofmodel,alesseeistopay now. In January, Unilever Ven- and we are confident that
Totalincomeplungedto~1.11 buyingbehaviourrightnow such as the Tiago and Nexon. and subsequently moved up
sales inApril-Sept arentalthatstartsfrom~13,499a tures put ~190 million in Guru- through our (latest) initiatives,
billioninJuly-September2018 withthefestiveseasonin By comparison, M&M’s sales in one spot to fourth. FY18 FY19 % growthYoY month(KUV100NX),goingupto gram-based start-up Milkbas- we will be able to identify and
from~9billionintheyear-ago India.Peoplearelookingto the PV segment has remained The firm, while expanding -0.09 31.2 ~32,999amonth(XUV500).The ket, adding one more firm to a implement cutting-edge solu-
quarter,accordingtothefiling. goout,”saidRajkumar flat in the first six months of the volume, has been focused on pla- benefittoacustomer,M&Msaid, growing portfolio, which inclu- tions that are a strategic fit for
121,849 121,729
Itsfinancecoststoozoomedto Paranthaman,headof year at 121,729 units. "We can making the PV business prof- yer. 106,865 includedlowerornodown des Chennai-based water solu- us," Madhusudan Gopalan,
~3.39billioninthequarterun- marketing,AirAsiaIndia.He change the position any day to itable. The segment posted an payment,zeroriskonresale tionsproviderMorf,Karnataka- MD & CEO, P&G India sub-con-
derreviewfrom~1.74billionin didnotdivulgedetailsofthe become the third player in earnings before interest, tax, 81,417 valueofthevehicleandafixed based dairy brand Hangyo, and tinent, said.
July-September2017. PTI< newoffer. BS REPORTER< domestic market. We have gro- depreciation and amortization equatedmonthyinstalment, Mumbai-based start-up Peel- In August, P&G's global
wn at a rate higher than the (Ebitda) loss of just ~250 mil- inclusiveofmaintenancecost.A Works. P&G’s latest drive will Chief Executive Officer David
industry for 32 months consec- lion in April-June quarter of lesseewillalsobeallowedto see it invest mainly in those Taylor had said India was
utively and October will be FY19 compared to a high corre- M&M Tata Motors upgradethemodel. Oncethe firms who collaborate with it to among two markets, the other
Pepperfry looks to turn another such month. In the first
half of FY19, the industry aver-
sponding number of ~4.61 bil-
lion in FY18. Pareek said the
Source: Companies
leaseschemeisover,thevehicle
mayberetunedtothecompany,
better its domestic operations,
including in areas such as sup-
being Turkey, which grew in
double-digits for the year end-
profitable in 4-6 quarters age growth is 7 per cent while
Tata Motors has grown by 31
company was on track to deliv-
er according to plans. “I have
“We want to remain in the con-
sideration of buyers with our
withoutthehassleofresale,and
getanewvehicle.Theleaseoffer
plychain,sales,marketing,and
packaging.
ed June 30 and that all cate-
gories where the company
OnlinefurnitureandhomeproductsmarketplacePepperfry,ow- per cent. In Q2, the industry achieved my business target in offers. We knew there would be willincludeservicessuchasin- The company kicked off an operated were growing sales in
nedandoperatedbyTrendSutraGroupofCompanies,islooking declined by 3 per cent and all H1 and will do that in H2. You headwinds this festival season. surance,end-to-endmainte- external partner summit in thecountry.P&GfollowsaJuly-
atbecomingprofitableinthenextfourtosixquarters,asenior the players, except Tata Motors, will see the outcome in the We decided to bring four prod- nance,on-roadassistance,acc- Mumbai on Wednesday to help June accounting year.
officialsaid.TheunlistedcompanyonWednesdaysaidithas decreased,” Mayank Pareek, sales, top line, and bottom line,” uct interventions. These are identrepairand24-hourrepla- it identify firms that it could “Twelve of our top 15 coun-
narroweditslossesto~1.69billioninFY18,from~2.48billionin president of passenger vehicle he said. aimed at creating a talk point in cementvehicle. SHALLYSETHMOHILE work with, giving start-ups an tries held or grew organic sales
FY17,whileitsrevenuesrose20percentto~3.08billioninFY18, business at Tata Motors, told Though it may emerge as the market and giving cus- opportunity to pitch their ideas in fiscal 2018, with six of those
from~2.58billioninFY17.Thecompanyalsoreduceditsunder- Business Standard. the third-largest player, the tomers a reason to buy,” he said. are one of the least discounted. to the P&G management. The growing mid-single digits or
lyingEbitdalossby42percentyear-on-yearto~1.39billion.“Our According to Pareek, the company may not find it easy to Tata Motors’ PV division I reduced my per vehicle dis- summit, which will conclude faster. Turkey and India each
revenuegrowthisinlinewiththecountry'se-commercesector, firm must have done something reclaim its long-lost position of has about 750 dealerships and count by 43 per cent over the on Thursday, will be followed delivered strong double-digit
whichisthefastestgrowingglobally.Thegapinourlosseshas differentrighttodeliverthisper- second-biggest segment play- the company plans to double it past three years. Discounting by the launch of an online plat- growth," Taylor said, adding
beennarrowingeverysuccessivefinancialyear,andwearelook- formance. "The argument that er. Hyundai now enjoys that by 2020. “One thing that wor- is not a guarantee of sales. The form that will allow start-ups that the company had more
ingtobeprofitableinthenextfourtosixquarters,”NeeleshTala- we are growing on a low base is position while Maruti Suzuki is ries me is the dealer viability. good thing is service load at to connect with the company work to do in a dynamic envi-
thi,chieffinancialofficerofPepperfy,said.Hesaidthemarket- no longer valid because we are the market leader. Pareek said We wanted them to come to a dealer workshops has started directly when required. ronment. “Changing govern-
placemodelhadbeensuccessfulforthecompanyanditwasalso now the fourth-largest player,” the issue was not about becom- habit of selling without dis- growing at double digits after a “The Indian market is a pri- ment policies include tax,
goingtofocusonitsownprivatebrands. BS REPORTER< he said. In early 2017, the firm ing the second- or third-largest count and today our products long time,” Pareek said. ority for the company globally trade, and privacy.”

Videocon: A brand unravelled by diversification, debt, dubious deals

PAVAN LALL
Mumbai, 10 October
Just days after Videocon Industries’
promoter Venugopal Dhoot sought a
stay at the National Company Law
Tribunal (NCLT) to halt bids for group
companies, Chinese electronics major
TCL made overtures to buy the brand
even as it chalked out plans to set up a
greenfield operation in Bengaluru for
manufacturing all the products
Videocon once had been renowned for
— televisions (TVs), washing machines,
refrigerators, and air conditioners.
Dhoot, the 67-year-old entrepreneur
who was a regular feature on Forbes bil-
lionaires’ list, had tried earlier to pre-
vent Videocon from being pushed into
NCLT with no success. Today, the elec-
tronics manufacturer has consolidated
debts of around ~440 billion and its
stock is trading at ~3.70, down from a
one-year high of ~27. Neither officials at
TCL nor at Videocon responded to
mails and calls as of press time.
The home-grown electronics manu-
facturer, founded in 1979, sold every-
thing from washing machines and air
conditioners to tape-recorders, mobile
phones and TVs, had its roots in agri-
culture — namely, cotton and sugar-
cane. The switch into electronics was
actually spurred on by Dhoot’s father
and group founder Nandlal Madhavlal
Dhoot, whose successors would later
claim to be the first Indian company to
bring colour TVs to India.
Along the way, the company sold
electronics at affordable prices and
brand recognition and sales growth fol-
lowed as it capitalised on India’s transi-
tion from black and white TVs to colour
TVs along with Onida until the foreign
brands entered and the new favourites
become Sony, LG and Samsung.
Rajesh Mishra, founder of market
research firm Thinking Hats Consumer
Insights, says that while the Videocon
brand itself was resilient, its manage-
ment was poor. “They couldn’t hold on
to their positioning, or leap forward fast
enough to changing technology like LCD
and flat panel and customers saw that.”
A CEO, who runs an electronics com-
pany and declined to be named, said
that Videocon excelled in maintaining
distributor relationships, who were able
to push its products over other brands.
The executive says Videocon also exte-
nded unlimited credit lines to dealers,
which would eventually hurt the com-
pany because the tap was only switched
off when an account went bad.
If the market had doubts whether the
Videocon group could withstand the
waves of foreign competition coming
post-liberalisation, the promoters them-
selves confirmed it by venturing into
businesses that were entirely unrelated
or in areas where they did not have much
expertise — oil and gas exploration in
Andhra Pradesh, acquisition of enter-
tainment retailer PlanetM, and even
Venugopal Dhoot, promoter, Videocon Industries
tying up with American telco Verizon for
long distance services in 2007 before
attempting to get into mobile telephony
a couple of years later. In 2013, the group
even entered into a JV with insurance
company Liberty General Insurance.
“When a business house succeeds in
a new industry it has to pay caution to
the fact that it may be short-lived and it
needs to keep its eye on the core busi-
ness,” says Dinesh Jain, founder of man-
agement consulting firm IndianMaze
Advisory. His view is that to a consider-
THINGS FALL APART
Videocon Industries: Consolidated figures in ~ bn
Net worth
Jun’13 47.0
Dec’14 102.1
Dec’15 80.9
Mar’17 59.0
Segment revenue figures in ~ bn
Consumer electronics &
home appliances
Crude oil & natural gas
Telecommunications
Others
Power
*Current M-cap as of Oct 10 is ~1.25 billion
able extent Videocon was basically mak-
ing punts on the next flavour of the sea-
son. “It invested a lot of money in these
new businesses, but clearly dropped the
ball on getting the right talent mix to
support it,” Jain says, clarifying that the
DTH (direct-to-home) business was one
aberration, which merged with Dish TV.
Harsha Razdan, partner and head of
consumer markets, KPMG India, says
the trend applies to most large groups.
“If you look at most Indian players in
the past across any sector that technolo-
its strength diminish.
Videocon’s dominant business all
throughout was its consumer electron-
ics which accounted for as much as 85
Total Net PAT Fixed assets M-cap* per cent of its FY17 turnover but the
debt sales (gross block) blind spots of the company were two-
402.1 188.1 -28.3 175.8 63.4 fold — managing cash flow and invest-
453.1 204.6 51.2 184.9 53.7 ments to upgrade technology and con-
475.5 138.0 -21.9 188.3 40.7 tinue research and development.
In FY08, Videocon’s business regis-
448.3 137.4 -27.1 147.6 34.5 tered profits of ~8 billion but debt was
piling up. The cancellation of licence in
2012 in the 2G telecom scam not only
Jun ‘13 Dec ‘14 Dec ‘15 Mar ‘17 dented the brand but also weighed
down its balance sheet. In due course,
167.8 175.7 121.0 123.5 Dena Bank classified a ~5.2 billion loan
to the group as a non-performing asset
19.7 19.0 7.9 6.2 and to top it all, this year ICICI Bank MD
6.1 12.9 11.0 8.8 and CEO Chanda Kochhar was accused
0.0 1.7 3.1 5.3 of a quid pro quo arrangement that
0.1 0.1 - - involved a ~32 billion loan to Videocon,
which in turn invested in NuPower
Source: Capitaline Renewables, a firm founded by
Chanda’s husband Deepak Kochhar.
gy played a role, the approach has been For a company whose brand is
of a conglomerate and not of a specialist known by almost all consumers irre-
which means that it’s always about spective of economic category across
which business or venture do you take a India, it’s promoter mustn’t have ex-
call to place your money next.” pected that the journey would lead
He goes on to say that once the punt- them down a path that put it on the list
ing starts, the cash-bleed invariably fol- of one of the largest corporate default-
lows as a familiar pattern emerges. The ers in the country and possibly end up
one cash cow that has been supporting in foreign hands. The upside would be
the group starts to feel the pressure, as that the thousands of employees that
it’s leveraged and feeding the rest of the had participated in building the compa-
group’s expansionism until the promot- ny over the years may still remain albeit
ers lose focus and the core business sees with different leadership.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

.
MUMBAI | THURSDAY, 11 OCTOBER 2018 COMPANIES 3 <

IBM India
eyes new
revenue
Seal 9 Amrapali properties: SC Lamborghini looks to
rev up with SUV
for millionaires
PRESS TRUST OF INDIA only the court-appointed forensic audi- in entirety. The Bench directed that its

streams from New Delhi, 10 October tors — Ravi Bhatia and Pawan Kumar
Aggarwal — and persons authorised by
order be telephonically communicated
to the Superintendent of Police of Rajgir

telecom firms
DEBASIS MOHAPATRA
Bengaluru, 10 October
As demand from the tele-
com segment shrinks, with
rising competition eating
into voice rates in a big way,
IBM India is preparing to tap
new revenue avenues from
this segment as telecom
companies eye enterprises
and data space in a big way.
Telecom continues to be
the largest division for IBM
in India, with clients such as
Bharti Airtel and Vodafone.
The second largest business
generating segment for the
company is financial servic-
es.
Despite the disruption
seen in the telecom seg-
ment, the global informa-
tion technology major says
service providers in that seg-
ment are building up huge
war chests to support the
data-demand explosion over
the past two years.
“The interesting fact is
that this telecom disruption
is not capital constraining.
Instead, all telcos are literal-
ly creating war chests. The
Vodafone-Idea merger is
clearly in that direction.
Airtel has a clear focus with
T
he Supreme Court on Wednesday
ordered the sealing of nine prop-
erties of embattled real estate
company Amrapali after its three direc-
tors, who are in police custody, said that
the documents related to the group’s 46
firms were stored there.
The three directors moved an appli-
cation before a Bench comprising
Justices U U Lalit and D Y
Chandrachud stating that they were
willing to hand over all the documents
but the police was unaware about
which one needed to be seized.
The court’s order came a day after
three directors of the group — Anil
Kumar Sharma, Shiv Priya and Ajay
Kumar — were ordered to be taken into
police custody and the firm was casti-
gated for playing “hide and seek” with
the court by not complying with its
orders to hand over all the documents to
the forensic auditors.
These directors told the Bench that
documents related to Amrapali’s 46
group companies were kept in seven
locations at Noida and Greater Noida
and two premises — Rajgir and Buxar
districts in Bihar. “We direct the con-
cerned police, Superintendent of Police
of Noida and Greater Noida to seal all
the seven premises in the presence of
these directors,” the Bench said.
“We direct the Superintendent of
Police of Rajgir and Buxar to immedi-
ately go to these (two) places and seal it,”
the Bench said.
THE RULING
Order came a day after 3 directors
of the group were ordered to be
taken into police custody and the
firm was castigated for not
complying with SC’s orders to
hand over all documents to
forensic auditors
The SC said only court-appointed
persons would enter the nine
premises after they are sealed
The court also asked the three
directors to furnish an
undertaking before it by Thursday
stating that all the documents
were available at these nine
premises only
It further directed that after the seal-
ing of these nine premises, the keys be
handed over to the registrar of the apex
court. The Bench also made it clear that
them would enter these premises after
they were sealed.
The court also asked the three direc-
tors to furnish an undertaking before it
by tomorrow (Thursday) stating that all
the documents were available at these
nine premises only and not a single doc-
ument was lying at any other place.
The three directors also told the
Bench that they be kept at police station
and not in the lock up during this period.
“If the entire exercise of sealing of
these seven premises at Noida and
Greater Noida will be completed today,
the presence of these three applicants
will not be insisted upon by the police,”
the Bench said.
“If the exercise will not be completed,
the present status will continue,” the
Bench said and asked the Delhi Police to
keep these three directors at the police
station but not in the lock up.
The Bench said that compliance
report of its order be placed before the
court and directed that the three direc-
tors would also remain present before it
on Thursday.
The Bench noted the submissions of
thecounselappearingforthethreedirec-
tors that the group has received e-mail
from the forensic auditors indicating the
documents required by them.
The directors also told the court that
company wise list of all bank accounts
were available till 2015 and after that,
raw data was available with them and
they would hand over all the documents
and Buxar so that they could take appro-
priate steps. The court is seized of a
batch of petitions filed by home buyers
who are seeking possession of around
42,000 flats booked in projects of the
Amrapali group. During the hearing, the
counsel appearing for the home buyers
told the Bench that the auditors have
given the list of documents required by
them and the group should hand over,
year wise and company wise, the docu-
ments of all their firms.
“We will ensure the presence of these
three persons (directors) whenever the
forensic auditors want,” the Bench said,
adding, “The basic idea is to have the
documents. We will have the forensic
auditors tomorrow to know about the Owned by the Volkswagen Group, Lamborghini is targeting
modalities and how would they like to India’s wealthy population, from technology entrepreneurs to
proceed”.Thetwoauditors,appointedby Bollywood stars
the court to conduct forensic audit of
Amrapali Group, had yesterday BLOOMBERG Poor quality roads in develop-
(Tuesday) told the court that they have Mumbai, 10 October ing countries such as India
not yet received all the documents. make it virtually impossible to
The Bench had noted that as per the Lamborghini is betting its first drive fast cars like the
two auditors, documents of only two out sport utility vehicle Urus that Aventador or the Huracan.
of 46 firms — Amrapali Zodiac and will help open the door to more Aston Martin, Rolls-Royce,
Amrapali Princely Estates — were hand- customers in India, a market Ferrari and Mercedes-Benz’s
ed over to them despite court’s order to that accounted for less than 1 Maybach sub-brand also have
provide all documents. per cent of its global deliveries plans for SUVs.
The court had also issued notice to all last year. Owned by the Volkswagen
these companies and their directors ask- After selling fewer than 30 Group, Lamborghini is target-
ing why contempt proceedings be not cars in the South Asian country ing India’s wealthy from tech-
initiated against them. It had also direct- in 2017, the Italian maker of nology entrepreneurs to
ed that other directors of the firm shall supercars is aiming to triple the Bollywood stars.
surrender their passport to the police number in two years, Sharad There were 119 billionaires
and would not leave the country. Agarwal, head of Automobili and about 20,700 individuals
Lamborghini SpA’s local unit, with net assets of $10 million
said in an interview. or more in the country as of last
In comparison, the compa- year, said a report by New

Eli Lilly plans to up its game in India

consolidation of assets for
building up a capital base,
which will enable them to
invest for the next three
years,” Karan Bajwa, manag-
ing director at IBM India,
told Business Standard.
“The amount of money
that will go into the net-
work to support the data
explosion, which has risen
around 10 times in two
years, tells you that there is
going to be huge invest-
ment,” he added.
IBM says it has seen ear-
ly signs of renewed interest
from Indian telecom players
on the enterprise business,
traditionally been low as
compared to other seg-
ments.
“Areas like security and
IoT (internet of things) are
going to be big areas of focus
for us,” Bajwa added.
ny sold 265 units in the Greater World Wealth.
China region. The Urus “is the The Urus, which started
right Lamborghini for India,” deliveries this year, account-
Agarwal said in Mumbai. “It is ed for 68 per cent of the reg-
SOHINI DAS & ANEESH PHADNIS ecules and molecule variants). soon as we can.” expanding the market by istrations by first-time
Mumbai, 10 October The US-headquartered company We evaluate the market conditions bringing in customers from Lamborghini buyers in
has a pipeline of seven molecules that and also see whether the partnership premium sedans and premi- India, Agarwal said without
Eli Lilly will bring its pipeline of oncol- are currently in phase III clinical devel- route works to bring in a new drug. We um SUVs.” elaborating.
ogy and diabetes drugs to India as it opment and around ten are in phase II are regularly filing to bring in new Lamborghini is among The showroom price of ~31
looks to grow its pres- clinical testing. drugs. sportscar makers introducing million ($418,000) compares
ence in the market. Eli plans to bring He added that despite several SUVs to appeal to a wider group with an estimated $200,000 in
The US-headquar- Global pharma company Eli some of its mole- options available for rheumatoid arthri- of customers who prefer more the US and 3 million yuan
tered drug maker Lilly that has been relying cules from the glob- tis (an auto-immune disorder that space and a higher suspension. ($433,500) in China.
that has been relying primarily on partnerships to al pipeline to India, leads to inflammation and progressive
on partnerships to sell drugs in India, today especially in the destruction of joints), there is still an
sell its drugs in India, launched its patented oncology and dia- unmet need. Around 4-5 million peo-
on Wednesday molecule Olumiant, for betes space. ple in India have rheumatoid arthritis.
launched its patent- treatment of rheumatoid Currently, dia- In India Eli sells many of its drugs
ed rheumatoid arthritis in India betes is the largest through partnerships with local drug
arthritis drug therapy segment for firms who have greater market access.
Olumiant that they Eli in India. Data For example, it has entered into a part-
plan to market on their own. from AIOCD AWACS showed that Eli include the revenue from partnerships. nership with Cipla earlier this year to
In the last three years it has had clocked a 51.4 per cent growth in Luca Visini, managing director of Eli market Basglar (insulin glargine injec-
launched eight products while in the sales value over the last one year (MAT Lilly and Company, India, Sri Lanka, tion). Earlier this month, it forged a
last 22 years of its presence in the September 2018). Nepal and Bangladesh said that, “We partnership with Lupin to market
country it launched 10 products (mol- This data, however, does not want to launch drugs in any country as Aplevant, diabetes injection.

TATA STEEL DEAL

Usha Martin to seek shareholder nod to sell steel biz
SHAREHOLDING PATTERN ISHITA AYAN DUTT
Kolkata, 10 October
Usha Martin will seek shareholder nod on
Institutions Promoter & November 10 for sale of its steel business
10.88 promoter group to Tata Steel. The resolution will be placed
as a special business before the share-
holders for approval at an extraordinary
general meeting.
The support of the Basant and
50.66 Prashant Jhawar promoter faction — a 25
38.54 per cent shareholder in Usha Martin —
which had not given consent to the deal at
the company’s board meeting that
approved the sale to Tata Steel, would be
the key, said sources.
Non-institutions However, days after the agreement, the
father-son duo had issued a statement
saying that they were encouraged by the
Tatas signing a business agreement with
the current management of Usha Martin.
But at the same time, they raised several
questions on the utilisation of funds.
It is not clear at this point whether
there would be voting for the deal, some
people close to the development said.
The requisite majority for the special
resolution to go through is 75 per cent of
the votes.
The other promoter faction — Brij and
Rajeev Jhawar (currently the managing
director) — which has been at odds with
Basant and Prashant Jhawar, have an
equal shareholding in the company.
Institutions have 10.80 per cent stake.
According to the terms of the agreement
with Tata Steel, if Usha Martin is unable to
obtain shareholder approval, then Tata
Steel will get a right for 30 days to take
Usha Martin back to the shareholders for
approval; if, however, Usha Martin sells
the business to any other person within a
period of one year from the date of non-
approval, then Tata Steel will have the
right of first refusal on the transaction.
The agreed purchase price is Rs 45.25
billion. The company’s EGM notice said
that the condition’s precedents were
expected to be completed within the long
stop date which is 12 months from the
date of agreement.
However, if the company’s condition
precedents are not completed, Tata Steel
will have the right to extend the agree-
ment for a period of three months or can
exercise a right to first refusal for a period
of six months from the long stop date.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

4 ECONOMY & FINANCE MUMBAI | THURSDAY, 11 OCTOBER 2018

“We need to work together to de-escalate and “Women are scared to speak out because they think "Me and politics don't mix at all. I am too
resolve trade disputes. It's tempting to be a people would make fun of them and doubt their outspoken, I am not diplomatic. I don't
bit depressed about this perspective but I'm character but now when they are speaking out we even know what diplomacy is. I would
hopeful as there is an appetite to boost trade” should take action against each and every allegation” cause a third World War. Don't do it”
CHRISTINE LAGARDE MANEKA GANDHI INDRA NOOYI
International Monetary Fund chief Women and Child Development Minister Former Pepsi CEO

>

IL&FS may go to PSBs for loan rejig Banks go slow on

DEV CHATTERJEE & SURAJEET DAS GUPTA
Mumbai/New Delhi, 10 October
government-owned banks agree, the
debt restructuring would help IL&FS
tide over the immediate financial crisis
OUTSTANDING BORROWINGS
1 3
credit, NBFCs bet
on securitisation
Mar ’18 (~ bn)

T
he new board of infrastructure fin- and give more time to the new board to 2
ancier IL&FS is likely to approach make a comprehensive plan for reviving 6 Debentures 242.97
public sector banks (PSBs) to the company. Term loans 558.70
restructure their debt as the Reserve Insiders said that the government was 27
Cash credit from banks 14.52
Bank of India’s (RBI’s) norms allow keen on a quick resolving of the ABHIJIT LELE, ADVAIT RAO PALEPU & ANUP ROY
restructuring of debt by non-bank- IL&FS crisis and a top-level Subordinated debt 13.63 Mumbai, 10 October SECURITISATION
ing finance companies (NBFCs)
registered as core investment com-
meeting has been called in New
Delhi this weekend to sort out
% share Inter-corporate deposits
Commercial papers
23.17
57.52
Liquidity needs of the non-banking MARKET (~ billion)
pany (CIC) with the regulator, any pending issues with financial sector will be addressed to a | PTC | DA
according to a source in the RBI. lenders and other stakeholders Finance lease obligation 0.40 large extent, State Bank of India (SBI)
836
The source said under Section IL&FS of the company. The restruc- Total 910.91 has assured. The bank has also said that
45 of the Reserve Bank of India Act, CRISIS be turing of loans by PSBs will also 61 Source: Annual reports it will more than double its securitisa-
IL&FS can go in for the loan restruc- discussed in the meeting, Compiled by BS Research Bureau tion portfolio. However, the portfolio
turing proposal and the RBI’s said a source close to the devel- itself has to grow so that the sector does-
February 12 circular to refer all non-per- opment. The new board will meet again also been put on hold as there is Soon after the first board meet, the n’t face a liquidity crunch, say experts.
forming accounts above ~20 billion to on October 12 in Mumbai to discuss the no clarity on the company’s financials non-executive chairman of IL&FS’ new Bankers are awaiting RBI’s revised
490
National Company Law Tribunal (NCLT) way forward. and a revised prospectus needs to be board Uday Kotak had said that there guidelines on NBFCs before increasing
will not be applicable in the IL&FS case. One of the shareholders of IL&FS said filed with the Registrar of Companies were 348 related entities and the board their direct credit to the entities.
IL&FS has term loans of nearly ~560 the rights issue by the company, which (RoC) for the fund raising exercise, the was looking at all the options to bring However, banks have told non-banking
323
billion from lenders (see chart). If the was to be launched later this month, has source said. the company back to track. finance companies (NBFCs) that they
would block the money for a higher fee,
also referred to as ‘commitment charges.’

Govt ready to relax norms ICAI seeks

210
On Wednesday, SBI said it will step
up “target for purchase of good quality
portfolio of assets from NBFCs,” by an 346 113

explanation additional ~200-300 billion. Other banks

for Zojila project of IL&FS

will also do so. 2018-19 2019-20 Q1
Union Bank of India’s managing * PTC: Pass Through Certificates;

Firm was lowest bidder for ~49-bn tunnel between Kashmir and Ladakh
MEGHA MANCHANDA
New Delhi, 10 October
In an attempt to ease the
process of project implemen-
tation for the troubled
Infrastructure Leasing &
Financial Services (IL&FS),
the Union road ministry is
ready to relax the stringent
fund-mobilisation norm for
the concessionaire for the
Zojila tunnel project in
Jammu & Kashmir.
According to the norms,
the government releases 10
per cent of the total contract
value to the concessionaire at
the start of the project,
against a bank guarantee 10
per cent of this advance pay-
ment. For instance, if the
total cost of a project is
~50 billion, ~5 billion is
released by the ministry
against a bank guarantee of
~500 million, to be produced
by the concessionaire.
“In the case of IL&FS, we are
ready to relax the norms and
give lower advance of 5 per cent,
so that the required bank
guarantee amount is lower. The
remaining advance amount
can be released to the
contractor in tranches,” an offi-
cial said.
The government is ready to
make certain relaxations in the
case of IL&FS, but it is up to the
company whether or not it
wants to execute the project,
the official said, adding the
work is yet to begin at the proj-
ect site.
In July last year, IL&FS
emerged the lowest bidder for
the ~48.99-billion Zojila pass
ABOUT THE
ZOJILA PROJECT
| The total capital cost of the
project is ~68.08 billion
| The civil construction cost
of the project is
~48.99 billion
| Construction period of the
project is seven years
| The government claims it
will be the country's
tunnel, with the goal of pro-
viding all-weather connectivi-
ty between the Kashmir Valley
and Ladakh.
The Zojila pass is situated
at an altitude of 11,578 feet on
Srinagar-Kargil-Leh National
Highway, which remains
closed during winters
(December to April) because
of snowfall and avalanches
cutting off the Leh-Ladakh
region from the rest of
Kashmir. Once completed,
Zojila would be the country’s
longest road tunnel, with
strategic and socio-economic
importance.
The Zojila pass, at 11,578 feet on
Srinagar-Kargil-Leh National
Highway, remains closed during
winters because of snowfall and
avalanches
longest road tunnel
| The tunnel will have a cut
and cross-ventilation
mechanism, fully
transverse ventilation
system, uninterrupted
power supply, CCTV
monitoring, variable
messaging boards, traffic
The civil construction cost
of the project is ~48.99 billion
and the total capital cost of
the project is ~68.08 billion,
which includes the cost
towards land acquisition,
resettlement and rehabilita-
tion, and other pre-construc-
tion activities as well as
maintenance and operation
cost of the tunnel for four
years.
In January this year,
IL&FS received the letter of
acceptance from the National
Highways and Infrastructure
Development Corporation, a
wholly owned subsidiary of
from audit
companies
logging equipment,
tunnel radio, emergency
telephone system
| IL&FS Transportation had
in July last year said it had
emerged as the lowest
bidder for ~48.99-billion
Zojila tunnel in Jammu &
Kashmir
road ministry, for project
construction.
Besides the Zojila tunnel
project, IL&FS is battling
some arbitration cases with
the road ministry and the
National Highways Authority
of India (NHAI). The debt-
laden company has even chal-
lenged some arbitration cases
at higher courts over lower
claim amount approved by
the arbitration panel.
IL&FS has arbitration
claims of around ~70 billion
with the NHAI, which are
under various stages of
resolution.
PRESS TRUST OF INDIA
New Delhi, 10 October
Chartered accountants' apex body ICAI
has sought explanation from audit
firms that carried out statutory audit
works of crisis-hit IL&FS group in the
past few years.
The crisis at diversified IL&FS, following
loan defaults by some group entities, has
raised concerns about liquidity crunch in
the financial system. Against this backdrop,
the government seized control of the IL&FS
boardearlierthismonth.
The Institute of The institute
Chartered Accountants has also
of India (ICAI) on written to the
Wednesday said it has RBI and the
issued notices to audit Serious Fraud
firms that conducted Investigation
statutory audit works of Office seeking
IL&FS group in the past details about
few years. However, the IL&FS issue
specific details were
not disclosed.
In the recent past, there has been news
reports regarding diversion of loan money
in IL&FS and its subsidiary companies,
the ICAI said in a statement.
"The Disciplinary Directorate of the
ICAI, upon coming across such news
report has suo motu taken cognisance of
the matter and pro-actively issued notices
to the statutory auditors on October 4,
2018 for the relevant years of the con-
cerned company seeking their explana-
tion in the matter," it said.
The institute has also written to the
Reserve Bank of India (RBI) and the
Serious Fraud Investigation Office (SFIO)
seeking details about IL&FS issue.
"Based on the responses received, the
ICAI would be fast-tracking its investiga-
tion on the role of member/ firm of the
institute allegedly involved in terms of
the disciplinary mechanism," the state-
ment said.
director and chief executive director
Rajkiran Rai G said buying portfolio from
finance companies have been a regular
activity for the bank. Union Bank is in the
final stages to acquire loans worth ~20
billion and this can go up to ~50 billion,
he said.
“This time around, when the liquidi-
ty is under severe pressure, selling of
portfolio to banks will release resources
for NBFCs. This money could be used by
them to pay off short-term debt like com-
mercial paper,” Rai said.
The securitsation portfolio of NBFCs
comprise two instruments – pass through
certificates (PTC) and direct assignment
(DA). PTCs are like mortgage instruments
that can be transferred, whereas direct
assignments are sold to entities.
In direct assignment transaction,
banks buy portfolios directly from
finance companies. In case of the Pass
Through Certificates (PTCs), the seller
(of portfolio) issues these PTCs which are
subscribed by banks.
The total securitisation portfolio of
NBFCs was Rs 836 billion on fiscal 17-18,
down from about Rs 900 billion in 2016-
17, according to data from ICRA.
However, in this fiscal, there are signs of
rising securitisation, with the first quar-
ter witnessing issuance of Rs 323 billion,
said Vibhor Mittal, vice-president of
ICRA.
“The immediate liquidity needs of
the NBFC sector get addressed by this
securitisation buyout. Of course, banks
will be selective and the balance sheet of
NBFCs would shrink as a result. But those
in need of money can at least have a sup-
port,” said Karthik Srinivasan, senior
vice-president of ICRA.
According to Mittal, NBFCs that have
priority sector assets would leverage their
direct assignments to tide over their liq-
uidity needs.
“In the current environment, balance
sheet liquidity is very crucial, particular-
ly in the Indian context, where the secu-
ritisation market is relatively small,” said
Soumyajit Niyogi, associate director at
India Ratings and Research. While RBI’s
liquidity measures give ample liquidity to
banks, which they use to buy NBFC loan
DA: Direct Assignments Source: Icra
books, “the current situation also
strengthens the thirst of the developing
securitisation market to ensure sustain-
able funding option along with tradi-
tional sources,” Niyogi said.
However, several NBFCs are still
complaining that banks are averse to
lending long-term money to them. And
that may result in future liquidity shocks.
“There is a liquidity crunch taking
place in the entire industry and wider
system. Banks refrained from lending
to NBFCs and housing finance compa-
nies (HFCs). After speaking to other play-
ers in the market, we are suddenly find-
ing that top PSU banks are not willing to
lend,” said a senior official at a housing
finance company.
According to the official, banks are
saying that they themselves do not have
adequate liquidity, which may not be
true, considering that mutual fund
redemption worth Rs 900 billion has
flown into banks. Also, the RBI is pump-
ing money through bond purchases.
“Companies like ours will always
have an asset-liability mismatch
because we lend for long term, that is,
for 15 years. There is no 15-year term
loan, nor 15-year commercial paper
available,” said the official, adding that
bankers have told NBFCs that banks are
sitting tightly on any exposure to finan-
cial institutions.
NBFCs say that banks are ready to
give loans under sanctioned lines. But
they are going slow on disbursals, await-
ing revision in norms by the RBI for
NBFCs. At the time of the monetary pol-
icy review, the RBI had indicated that it
will tweak norms for finance companies
in light of the liquidity crunch the mar-
ket experienced on defaults by IL&FS
group entities.
Confirming the move to hike com-
mitment charges on sanctioned lines to
NBFCs, one senior public sector execu-
tive said finance companies with high-
er ratings (AAA and AA) used to pay
small fees for keeping the credit lines
blocked.

Gujarat HC stays
DRI notices
to exporters Infrastructure and power sectors continue
The Gujarat High Court has
stayed notices issued by the
Directorate of Intelligence
(DRI) to some exporters for
allegedly misusing an
exports incentive scheme
under the goods and servic-
es tax (GST) regime.
Abhishek Rastogi, coun-
sel of petitioners and partner
at Khaitan & Co, said notices
have been stayed for three
applicants, but there will be
repercussions. Meanwhile,
he said that a similar hearing
in Madras High Court has
been concluded, but it has
reserved its order.
Exporters had earlier
approached various courts
over restrictions imposed for
availing advance authorisa-
tion licences under the GST
regime. The change in condi-
tion has led to directorate of
revenue intelligence (DRI)
issuing notices to exporters.
The Central Bureau of
Indirect Taxes and Customs
had inserted a clause of “pre-
import” for exempting imp-
ortsdoneonadvanceauthori-
sationlicencesfromintegrated
goods and services tax. These
licences are issued to allow
duty-free import of inputs,
which are physically incorpo-
rated in export product.
INDIVJAL DHASMANA
Bank credits: Who gets what
to receive the lion’s share, RBI data shows
ADVAIT RAO PALEPU
Mumbai, 10 October
Total credit growth at the end of August
2018 grew by 12.35 per cent to ~78.2 tril-
lion, compared to ~69.6 trillion in
August-end last year, the data from the
Reserve Bank of India (RBI) shows.
Over the last one year, much of the
credit disbursed by banks flowed to the
personal loan segment, industries and
housing loans. Credit for housing loans
has grown by 17 per cent from
~8.9 trillion as of August 2017 to ~10.4
trillion at the end of August 2018.
While credit towards personal loans,
including credit cards and other instru-
ments, has grown by 18.2 per cent from
~16.9 trillion in August 2017 to almost
~20 trillion as of August 2018. Credit to
industry has grown marginally by less
than 2 per cent, from ~26.1 trillion in
credit disbursed by August 2017 to ~26.6
trillion of credit was disbursed by banks
as of August 2018.
The infrastructure has been consis-
tently receiving the highest proportion
of bank credit from ~8.7 trillion (August
2014) to ~9.2 trillion as of August 2018.
This is followed by the power sector,
which received ~5.3 trillion in credit
and the metals industry that
received ~3.8 trillion in credit by August
this year.
Credit to the metals industry is down
by 7.81 per cent this year, compared to
Category-wise deployment
Bank credit
deployed (~ bn)
~4.1 trillion worth of credit received on Aug ‘17 Aug ‘18 Change %
August 2017. Personal loans 16,854 19,924 18.21
In the services sector, credit to Non- Housing (including priority sector) 8,906 10,419 16.99
Banking Finance Companies (NBFCs) Non-food credit 69,117 77,704 12.42
has crossed the levels of credit deployed
to trade services, for the first time in Gross bank credit 69,599 78,191 12.35
the last five years. Priority sector 23,642 25,633 8.42
Bank credit to the NBFCs has grown Agriculture & allied activities 9,777 10,419 6.57
by 45.8 per cent, year on year, from ~3.4 All industries 26,112 26,621 1.95
trillion in August 2017 to ~4.9 trillion as
of August 2018. Food credit 482 488 1.18 Sources: Reserve Bank of India Database on Indian Economy, PwC
Wholesale trade and retail trade
credit continues to grow by over 10-15 Sectoral deployment Deployment of bank credit to
per cent, year on year.
The non-performing assets (NPA)
of bank credit services sector
crisis that has crippled lending from (~billion) (~billion)
banks is concentrated in the metals,
infrastructure (including power), con-
struction, textiles, and manufacturing
sectors, due to governance, regulatory
and market factors.
For instance, the current situation
of stress and high indebtedness of many
power sector companies requires clari-
ty on larger issue of public-purchase
*Non-banking financial companies
agreements and fuel-supply linkages,
without which there can be no fruitful
resolution for these stressed assets.
While there is some concentration Sector-wise cases
of bank credit to specific sectors such as admitted under
infrastructure, power, minerals and
metal products, it is important for pol- Insolvency and
icymakers to ensure market fundamen- Bankruptcy Code as
tals in terms of regulations and gover-
nance are corrected so that mistakes of of August 2018
the past are not repeated.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

.
MUMBAI | THURSDAY, 11 OCTOBER 2018 ECONOMY & PUBLIC AFFAIRS 5 <

Airfares unlikely to become cheaper Cabinet clears bonus

for 1.2 mn railway staff
Excise duty on In fact, higher Customs duties are likely to push up prices
THE U-CURVE
SHINE JACOB
New Delhi, 10 October OTHER DECISIONS

ATF cut to 11%

ABHISHEK WAGHMARE & | Agreement between
ARINDAM MAJUMDER Month ATF price (~/kl) in Delhi The Union Cabinet on India, Finland on
New Delhi, 10 October Wednesday cleared 78 days’ environment protection
Mar, ’14 74,825 productivity-linked bonus

T
PRESS TRUST OF INDIA prices a relief of about ~5 per litre. he cut in excise duty on avia- Oct, ’14 67,525 (PLB) for 1,191,000 non- | Nod to merger of
New Delhi, 10 October The aviation industry has been tion turbine fuel (ATF) will Oct, ’15 43,184 gazetted railway officials, regulatory bodies
seeking lower taxes to help offset give airline operators, battling Oct, ’16 46,826 which will cost the railway NCVT, NDSA

A
fter petrol and diesel, the
government Wednesday cut
excise duty on jet fuel to 11
per cent to give relief to the avia-
tion industry that has been in recent
weeks hit hard by rising fuel prices
and a plummeting rupee.
Excise duty on aviation turbine
fuel (ATF) has been reduced to 11
per cent from 14 per cent with effect
from October 11, a notification
issued by the revenue department
in the finance ministry said.
Jet fuel prices this month hit
their highest level since January
2014 as rising international oil
prices and plummeting rupee value
pushed rates.
The fuel in Delhi currently costs
~74,567 per kilolitre (~74.56 per litre)
and in Mumbai, it is priced at
~74,177 per kl.
ATF prices, currently cheaper
than petrol and diesel in Delhi, have
spiked up by 9.5 per cent since July.
They have been on upswing since
July last year, rising every month
except in July this year. Jet fuel was
priced at ~47,013 per kl in July last
year and has risen by 58.6 per cent
since then.
Last week, the government cut
excise duty on petrol and diesel by
~1.50 per litre and asked state-
owned oil firms to subsidise the fuel
by another ~1 a litre. That was
matched by Bharatiya Janata Party-
ruled states cutting local sales tax or
VAT by an equal proportion to give
customers hit by high auto fuel
the impact of high oil prices. Among
others, Ajay Singh of Spicejet had
voiced concerns over rising inter-
national oil prices and asked the
government to take up some policy
measures to help the industry.
Unconfirmed reports that the
government announced the excise
duty cut after seeking approval of
the election commission as the
model code of conduct came into
force on Saturday after announce-
ment of elections in states like
Madhya Pradesh and Rajasthan.
Just last month the government
had raise customs duty on ATF and
18 other non-essential import items
in a bid rein in currently account
deficit and shore up the rupee.
Basic customs duty of 5 per cent
was imposed on ATF. It previously
attracted nil duty. This led to an
increase of ~2,000 per kl in prices.
While the twin moves on auto
fuels had led to price of petrol drop
from a record high of ~84 per litre to
~81.50 in Delhi and that of diesel to
all-time high of ~75.45 to ~72.95 a
litre on October 5, rate hikes on sub-
sequent days has pushed prices
upwards. Petrol now costs ~82.26
per litre and diesel to ~74.35.
The government had in 2016
hiked excise duty on ATF to 14 per
cent from 8 per cent.
ATF like petrol and diesel is not
covered by the goods and services
tax (GST) regime that on July 1 last
year amalgamated 17 different cen-
tral and state taxes.
high costs in times of rising crude
oil prices, only a temporary relief.
Fliers are unlikely to see reduced
airfares after the hike in basic cus-
toms duty from September 26 is fac-
tored in the ATF prices in the com-
ing weeks.
The combined impact of higher
Customs duty and reduced excise
duty might cancel each other out,
airline officials and experts said. The
impact on government’s revenue
would also negligible because of the
cross incidence of two duties in
opposite directions, sources said.
SpiceJet Chairman and
Managing Director Ajay Singh said
the real benefit will happen only if
states and oil marketing companies
(OMCs) follow suit and reduce the
price and taxes, as it happened with
petrol and diesel.
“We would request the OMCs to
reduce their margin by ~1 and state
governments to reduce taxes by an
equal amount. Then, it would trans-
late to about a 10 per cent reduction
in fuel cost for airlines. That would
be significant in such conditions,”
Singh said.
According to calculations shared
by an airline, an excise cut of 3 per-
centage points would result in
reduction of unit cost of flying a pas-
senger per kilometre by only ~0.04.
The unit cost for low-cost airlines
ranges near ~1.5 as of now.
In addition to central taxes of
excise and customs, the incidence
of state taxes in the form of value-
Oct, ’17 53,045
Oct, ’18 74,567
Source: Indian Oil Corporation
added tax on ATF ranges from as low
as 3 per cent in some states to more
than 30 per cent in some, such as
Andhra Pradesh.
Unless the state value-added tax
(VAT) is reduced in consonance, the
reduction in ATF prices would not
matter much, airline executives said.
“Thanks to a massive increase in
jet fuel price, states have gained
heavily from VAT, and now is the
time for them to pass some benefit to
the airlines which would also give a
boost to air connectivity in their
states,” Singh added. Experts have
also voiced the concern of cut in
excise coming together with a hike
in customs duty.
“This excise duty rate cut on ATF
comes as quite a sigh of relief for
the aviation industry, especially in
the backdrop of the recent levy of
basic customs duty on import of
ATF. The increased costs on
account of basic customs duty
should to an extent be offset by the
excise duty rate cut,” Abhishek Jain,
tax partner, EY, said.
State OMCs hiked aviation turbine
fuel price by 7.25 per cent in October.
Currently, ATF prices are at their high-
est under the Narendra Modi govern-
ment at ~74,567 per kilo-litre (kl) in
Delhi. The ATF was costliest in
October 2013 at ~77,089 per kl (Delhi).
Operating costs of airlines have
risen by 20 per cent over the last fis-
cal year, primarily because of a 30
per cent rise in crude oil prices and
9 per cent depreciation in the rupee,
CRISIL Research said in a report last
week.
Globally, fuel accounts for 24.2
per cent of an airline’s cost struc-
ture. In India, it is 34 per cent, mak-
ing Indian carriers particularly sen-
sitive in this area, International Air
Transport Association said earlier
this month.
As product prices for petrol and
diesel are benchmarked to interna-
tional prices and are revised on a
daily basis, the rise in crude oil
prices resulted in daily upward revi-
sions in their consumer prices.
However, ATF prices are gener-
ally revised at the beginning of every
month. In the October 1 revision,
ATF suppliers such as Indian Oil
Corporation did not factor in the
basic customs duty hike, since the
new shipment of oil with hiked cus-
toms duties has not entered the
refining cycle yet.
To absorb the impact of customs
and pass on the discount of excise, a
mid-month revision cannot be ruled
out this time.
exchequer ~20.44 billion.
The wage calculation ceil-
ing prescribed for payment of
PLBtotheeligiblenon-gazetted
railway employees is ~7,000 per
month.Themaximumamount
payable per eligible railway
employee is ~17,951 for 78 days,
said a government statement.
Payment of PLB to eligible
railway employees is made
each year before the Puja holi-
days. The decision of the
Cabinet shall be implemented
before the holidays for this year
as well.
This comes at a time when
the Union Budget had cut the
budgetary support for 2017-18
by ~150 billion and provisioned
a lower amount of ~531 billion
for 2018-19, compared to over
~550 billion during the last
budget, leading to a huge short-
fall on the national trans-
porter’s investment plans. In
addition to this, the railways
operating ratio is also expected
India turns down UAE
demand for more flights
ARINDAM MAJUMDER
& ANEESH PHADNIS
Mumbai, 10 October
India has turned down the
request of United Arab
to be the worst ever at close to
98 per cent this fiscal.
Operating ratio is calculated
based on how much money
railways is spending to earn
each rupee — if operating ratio
is 98 per cent, it means it is
spending 98 paise to earn each
rupee.Oneofthemajorreasons
for the operating ratio is con-
sidered to be its social sector
commitments, including sub-
sidies and pensions.
The government also
approved an agreement
between India and Finland on
cooperation in environment
protection in both the
countries.
Besides, the Cabinet also
approved the merger of regula-
tory institutions the National
CouncilforVocationalTraining
and the National Skill
Development Agency into the
NationalCouncilforVocational
Education and Training.
per cent of all international air
traffic. Dubai and Abu Dhabi
are the largest overseas hubs
for Indian travelers.
India has separate air serv-
ices agreements with Dubai,

Exporters fail to reap benefits of a weaker rupee Emirates (UAE) for an increase
in traffic rights and access to
new destinations in the
country.
Abu Dhabi and Sharjah.
Dubai had sought an
increase of 50,000 seats per
week (over the existing 65,000

MISSED OPPORTUNITY SUBHAYAN CHAKRABORTY

| A sustained fall in
the rupee’s value
is expected to
boost export
competitiveness | Exporters are yet to
| But many exporters
complain they
have already
hedged risks
| While the rupee
remains the worst
performing in
Asia-Pacific, many
New Delhi, 10 October
become competitive vis-a-vis com-
peting nations.
input tax credit, which have piled up to
150 billion, he added. Getting states
Civil aviation ministry offi-
cials held talks with their coun-
seats) and access to three desti-
nations, Coimbatore, Goa and
competing | In April-August of "But contrary to popular percep- to pay up their share of the levy has terparts from the UAE in Chandigarh.Sharjahwantedan
economies have FY19, exports have With the import components of major tion, this depreciation has not bene- also remain difficult. States such as Mumbai on Wednesday and increaseofanadditional15,000
seen greater currency risen by 16.13 per exports becoming costlier and signif- fited exports to the extent that the pub- Andhra Pradesh, Uttar Pradesh, Bihar rejected the request, as the seats per week over the existing
icant goods and service tax (GST) lic expects, since a lot of exporters have and Chhattisgarh have said they are demand was opposed by 18,000 seats, plus access to 12
depreciation cent to $136.09
refunds yet to be released, Indian already hedged their risk while out of funds to pay exporters, he domestic carriers. extra destinations.
billion exporters claim the benefits of a weak- exporters taking credit in foreign cur- added. A ministry official said no The number of flights and
receive IGST er rupee are eluding them. rency are being asked to surrender the This continues to disproportion- increase has allowed in seat weekly seats airlines offer are
worth The rupee has reduced by 15 per equal differential in cash owing to ately hit small, medium and micro entitlements and no changes based on these agreements.
~80-100 cent since the start of the year. exchange rate fluctuation," Federation traders, who are still overlooked by made in destinations. He Emirates is the third-largest
billion and Continuously falling for the past six of Indian Exports Organizations banks while providing trade credit, added the two sides might airline on international routes
months — the longest such stretch (FIEO) President Ganesh Kumar Gupta added. On the other hand, meet again in February next to and from India, and
input tax
since 2002 — the currency ended at Gupta said on Wednesday. Exporters competing economies are not far year. In 2017, 60 million pas- accounts for about 9 per cent of
credit to the 74.28 to the US dollar on Wednesday. are also yet to receive Integrated GST behind. sengers flew between India and all international traffic, while
tune of ~150 A weaker currency generally denotes refunds worth ~80-100 billion. On the the UAE, the largest overseas Etihad and Air Arabia have 4.3
billion better prospects for exports as goods other hand, states continue to refuse More on business-standard.com air travel market from India. per cent and 3 per cent share,
The UAE also accounted for 20 respectively.

Kharge tells CAG to hold govt

accountable for note ban, GST
ARCHIS MOHAN
New Delhi, 10 October

Senior Congress leader

Mallikarjun Kharge on
Wednesday asked the
Comptroller and Auditor
General of India (CAG) to hold
the government accountable
for demonetisation and the
goods and services tax (GST),
which caused economic dis-
tress, as well as also defence
purchases.
President Ram Nath
Kovind inaugurated the 29th
Accountants General
Conference. He said the CAG Congress leader Mallikarjun Kharge
is not only the keeper of
national accounts, but the Central Vigilance he said.
conscience keeper to the Commissioner on the issue. Referring to a CAG audit
nation. “Good systems out- Kharge also said the CAG report on the 2G spectrum
last bad men and women. should audit of public-private scam during the Congress-led
This is where you can con- partnership (PPP) projects, United Progressive Alliance
tribute.” including developments sur- years, Kharge said the audi-
Kharge addressed the con- rounding the Infrastructure tor’s reports should not be
ference as the chairman of the Leasing & Financial Services based on presumptions and
Public Accounts Committee (IL&FS). “New challenges are assumptions that cast asper-
of Parliament. emerging for the CAG in cas- sions on other public ser-
His demands echoed the es of PPP projects where pub- vants.
Congress, which has been lic money is used to prioritise The CAG report on 2G
demanding that the CAG con- profits but socialise losses... spectrum allocations in 2012
duct a forensic audit in the Recent events, with respect to had calculated that it had
Rafale fighter jet deal. The IL&FS or LIC show how PPP caused the exchequer a
party’s delegations have twice models without oversight can notional loss of ~1.76 trillion.
met CAG Rajiv Mehrishi in put the country’s financial
the last one month, as also the system at risk,” More on business-standard.com

India’s debt lower than

top and EM economies: IMF
India's debt is lower than the biggest and
emerging market economies in the world, a
top International Monetary Fund (IMF) offi-
cial has said, as he cautioned that the global
debt has reached a new record high of $182 tril-
lion in 2017. Vitor Gasper, IMF director of fiscal
affairs department, said India's debt was sub-
stantially less than the global debt as percent-
age of world gross domestic product (GDP).
In India, private debt in 2017 was 54.5 per
cent of the GDP and the general government
debt was 70.4 per cent of the GDP, a total debt
of about 125 of the GDP, according to the latest
IMF figures. PTI
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
6 PRIVATE EQUITY
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1

Need for liquidity set to drive secondary deals

KEY SECONDARY SALE DEALS IN 2017 RANJU SARKAR secondary deals. ‘‘We expect the secondary oppor- they need to take some money off the table,''
New Delhi, 10 October tunity to rise in India. As the PE and VC market in adds a GP or fund manager. A leading VC firm
Target Company Buyer Seller Exit Value % India matures, the secondary market opportunity had put 8-10 firms in a portfolio (mixed bag) and
($ mn) Sought

H
ong Kong-based secondary specialist New will increase accordingly. India funds also have a partly exited it.
Capital First GIC Warburg Pincus India 275.4 24.9 Quest Capital Partners is in talks to buy long tail, best addressed through innovative sec- To be sure, exits through strategic sales and
Dalmia Bharat Kuwait Investment Authority KKR India Advisors 236.9 8.4 the India portfolio of New Enterprise ondary transactions,” says Amit Gupta, founding Initial Public Offers of equity are more popular.
Associates (NEA). The firm, backed by TPG partner of NewQuest Capital Partners. ‘‘There's no pattern around secondary deals but, as
RBL Bank Norges Bank Investment Norwest Venture, 129.3 3.9 Capital, is also in talks with IDG Ventures to buy Secondary deals are driven the fund cycle gets longer, and
Management Samara Capital four companies from its first fund. These are not by the need to create liquidity, the pressure builds on, it needs
Syngene International Temasek Holdings Advisors India Value Fund IV 105.5 7.2 isolated deals. so that fund managers can SECONDARY DEALS to be relieved,'' says a fund
Intas Pharmaceuticals Capital International In August 2018, Edelweiss’ alternate asset move onto the next fund. VC manager. There are three types
Deal value ($ mn)
Global Emerging Markets ChrysCapital V LLC 105.4 3.0 arm, Edelweiss Alternate Asset Advisors, firms started in India in 2005 of secondary deals: at the com-
Private Equity Fund LP acquired two real estate funds of Milestone and the eco-system is in its pany level (one PE sells to
Capital. US-based General Infrastructure teens. another), at the portfolio level
Partners (GIP) bought PE firm IDFC Alternatives’ ‘‘Limited Partners (LPs, or LP swaps, where one LP
KEY SECONDARY SALE DEALS IN 2018 infrastructure fund. TRG Capital has bought JP investors in PE firms) have a wants out and another wants
Target Company Buyer Seller Exit Value % Morgan’s Asia infrastructure fund, which 10-year window on venture in.

291.4

1,554.6
1,550.7
($ mn) Sought

1,192.3
includes its investments in India. capital and they expect their Sometimes, it is used as a

751.8
GlobalLogic Inc. Partners Group AG Apax Partners 960.0 48.0 Secondary deals — when one private equity money back,'' says Rahul way to create a new platform
(PE) firm sells an asset or a portfolio to another — Khanna, managing partner, and existing fund managers
Continental Warehousing Hindustan Infralog Abraaj, Warburg , 268.4 60.4 are still fewer in India. But as VCs, who are close to Trifecta Capital. He was part 2014 2015 2016 2017 2018YTD continue to manage the port-
Corporation (Nhava Sheva) Aureos, IFC their fund life look for liquidity, secondary deals are of Canaan Partners in India, No. of deals folio. Lightbox Ventures
Sai Life Sciences TPG Asia VII SF Pte Tata Cap H'care Fund, 105.5 35.0 likely to gain ground in India, partly driven by sec- which sold its portfolio to its acquired six firms from
Tata Cap ondary specialists. LP, JPMorgan. 39 50 45 42 28 Kleiner Perkins and Sherpalo
Xponentia Fund Partners, India Equity Partners It often takes time for an investment to mature, Most VC firms in India are Ventures that its founding
Spoton Logistics 100.0 100.0 while a VC fund has a fixed life of 8-10 years. By the on to their third or fourth partner, Sandeep Murthy, had
Samara Capital Partners Fund
end of which it has to start returning capital to its funds, having deployed fund one, called fund two invested in. Similarly, existing fund managers at
ETechAces Marketing Info Edge India, investors, called LPs (Limited Partners). ‘‘Investing and investing from the third fund. NEA could continue to manage the portfolio after
and Consulting SoftBank Vision Fund LP, PI Opportunities Fund I 38.0 3.5 takes 3-4 years, leaving you with 4-5 years to gain ‘‘How are they going to continue to raise equi- New Quest acquires the portfolio. ‘‘A new sponsor
MakeSense Technologies exits. There's pressure on VCs to take money off the ty without making significant distribution? could give more money to deploy. For a fund man-
Temasek Holdings Advisors table,” says angel investor Alok Mittal. Liquidity events like Wal-Mart are fewer and GPs ager, it is easier to raise a fund if you have a port-
Source:VCCEdge
This and the entry of specialists could push are taking a view that every three-four years, folio,” says Khanna.

IDG Ventures renamed

Venture capital firm IDG Ventures India, which has
over $470 million worth of assets in control, has re-
branded itself as Chiratae Ventures, the company
‘The bar to reach mid-stage and get funded has gone up a few notches’
said on Tuesday night. Chiratae was founded in Iron Pillar, a new venture capital entity that invests at Series-B and Series-C levels in mid-stage companies are still growing “THE RELATIVELY TIGHT FUND-
2006 by Sudhir Sethi, TC Meenakshisundaram and start-ups, closed its maiden fund at $90 million (~6.7 billion). Managing partner over 100 per cent year-on-year and are RAISING ENVIRONMENT IN INDIA
Manik Arora, who left in 2015. BS REPORTER ANAND PRASANNA tells Ranju Sarkar why he's targeting this segment and the re-investing profits on growth. This
investors' outlook towards India. Edited excerpts: makes it attractive for PE firms to
(EXCEPT FOR LATE STAGE,
invest in them only in a very late stage. $50 MILLION-PLUS DEALS) ENSURED
KEY DEALS LAST WEEK How is the current deal flow in the real business to scale up from the cur- In over 200 deals we evaluated in the THAT THE BAR TO REACH MID-STAGE
Investor & target Stake (%) Value ($ mn) mid-stage market in India that you rent size to its next few levels. We do past two years for our fund, we have AND SUCCESSFULLY GET FUNDED
are targeting? this using our local and global net- never come across a PE fund evaluat- WAS RAISED A FEW NOTCHES IN THE
Joe Hirao's FamilyOffice We are positively surprised by the works, both in the West and East. Our ing a deal we liked against us. So, the
Droom Technology
NA 30 PAST TWO-THREE YEARS”
steady increase in high quality of man- team also has significant experience gap is wide and probably increasing,
agement teams, scalable business mod- in helping founders and with more good companies Seventy-five per cent of our capital is
Sands Capital Mgmt 1 els and sound unit economics we see. management teams find coming for capital raise. from global investors.
NA 27.3
Zinka Logistics Solutions The relatively tight fund-raising envi- long-term financial part-
ronment in India (except for late stage, ners, through private or Is there any change in LPs' What types of companies are you
Gaja Advisors NA 10.2 $50 million-plus deals) ensured that public markets and strate- (Limited Partners') looking to invest in? What do you
Kooh Sports
the bar to reach mid-stage and suc- gic acquisitions. This skill outlook towards India? look for?
NorwestVenture Partners 2 NA
cessfully get funded was raised a few set is also more relevant at mid-stage. Any of your LPs investing first-time We are more focused on truly
8.0 notches in the past two-three years. in India? innovative businesses, with solid
NTexTransportation Services
Despite that, more companies reaching PE (private equity investor) firms LPs are cautiously optimistic about management teams and execution
Das Capital 3 NA 1.77 there means the eco-system is evolving are also investing in start-ups & India in general, with a better senti- track record to back. Our mantra is
Inner Chef in quality at a very rapid pace. e-commerce. Is there a gap in ment than three-four years earlier. innovation plus performance. If one
1 IncludesAccel India IV LP, Sequoia Capital India VI mid-market? Those with a long-term positive view builds these key moats around solving
2 IncludesKalaari Capital Partners III LLC
3 Includes M and S Partners Pte., Mistletoe Inc. Why did you decide to focus on This is true in late-stage tech deals and of the market are more open to invest- difficult business problems, very valu-
There were 11 deals worth $79.67 million and 3 private equity
this segment? profitable Ebitda (operating earnings) ing now with trusted fund managers. able and long-lasting businesses can
exits in the last seven days ended October 10, 2018 Our team’s background and experi- tech businesses with up to 30-40 per We have multiple LPs investing for be built. We tend to dislike businesses
Source:VCCEdge
ence is in helping companies with a cent growth. But, the vast majority of the first time in an India fund. where capital is the key moat.

ECONOMY & PUBLIC AFFAIRS

>
> FROM PAGE 1

IL&FS... for settlement of dues, they said, adding

settlement of dues with the NHAI would
cent, down 13 basis points from the four-
year high of 8.16 per cent on Thursday — a

Bandhan Bank Q2 net

be a template for other state-owned enter-
prises.
IL&FS and the NHAI are likely to opt
for an out-of-court settlement in a couple
of highway cases entangled in arbitration,
day before the RBI decided to keep the pol-
icy rates unchanged.
The selling by foreign portfolio investors
(FPIs) was relatively less compared to the
past few sessions. On Wednesday, they

up 47% to ~4.8 billion

where the former went to court challeng- pulled out ~11 billion, while their domestic
ing the arbitration amount. counterparts invested nearly ~19 billion,
provisional data showed.
In the past one month, FPIs have pulled
AirAsia... out over ~240 billion ($3.3 billion) from the
Says will submit CFO says Bandhan "Bhaskaran is clearly not Fernandes’
equity markets. Mutual funds have invest-
ed more than ~150 billion during the same
a strategic plan to exposure to IL&FS choice. The new CEO will be asked to set
up a team and steady the ship,” said a per-
period. The boarder market Nifty Midcap
100 and Smallcap 100 indices jumped more
RBI to pare stake standard for now son aware of the development. than 4 per cent each. This was the biggest
The new board, the sources said, was look- Despite Tata Sons having the right to single-day gain for the midcap index since
ABHIJIT LELE NAMRATA ACHARYA ing for professionals to do due diligence appoint CEO, the choice has so far been May 2014. For the small index, the gain was
Mumbai, 10 October Kolkata, 10 October and fact-finding in the company. made by Fernandes. Both former CEOs most since February 2016. The sharp
They said IL&FS needs ~1 billion a Mittu Chandilya and Amar Abrol had no rebound comes after an 18 per cent and 25

B
andhan Bank’s net prof-
it for the second quarter
ended September 2018
(Q2FY19) rose 47.4 per cent to
~4.88 billion on robust growth
in net interest income.
The Kolkata-based private
lender had posted a net profit of
~3.31 billion in the July-Septe-
mber 2017 quarter (Q2FY18).
The net interest income rose
55.6 per cent to ~10.78 billion in
Q2FY19 from ~6.93 billion in
Q2FY18. The bank improved its
net interest margin (NIM) to
10.3 per cent in Q2FY19 against
9.3 per cent in Q2FY18.
Chandrasekhar Ghosh, the
bank’s managing director and
chief executive officer, said
healthy NIM reflects about 51
per cent growth in loan book.
The control on asset quality
also benefitted the bank.
Its loans book rose to
~333.7 billion in September
2018 from ~221.1 billion in
September 2017. Deposits
rose by 29.6 per cent to ~329.6
billion in September 2018.
The share of low cost deposits
(savings account and current
account) went up to 36.9 per
cent in September 2018 from
28.2 per cent a year ago.
The non-interest income
rose marginally by 3.1 per cent
to ~2.3 billion in Q2FY19 from
~2.23 billion in Q2FY18. Its
capital adequacy ratio stood
at 32.6 per cent at the end of
September 2018.
Referring to the issue of
reducing promoter holding in
the bank, Ghosh said the bank
will submit strategic plan to
the Reserve Bank of India
(RBI). Bandhan Bank will keep
in mind the interest of all
stakeholders while chalking
out a strategic plan. The bank
is working on plans internally
and can take some help to firm
them up. Ghosh, however, did
not spell out a timeline for
submitting the plan to the RBI.
More on business-standard.com
Bandhan Bank, which has
generally remained cautious
on corporate lending, has an
exposure of about ~3.88 bil-
lion on IL&FS. Sunil Samdani,
chief financial officer (CFO)
of the bank, told analysts in
an investor call that current-
ly the loan is a standard asset.
It was given in two tranches,
one about two years back and
another about six to eight
months back, he said.
Also, while typically the
bank had shied away from giv-
ing corporate loans, the loan
to IL&FS was an “exception”,
according to Samdani.
At present, about 87 per
cent of Bandhan Bank’s loan
book is concentrated in the
microfinance sector.
month for remaining afloat. The com-
pany has reached out to public sector
units for settlement of dues, they said,
adding settlement of dues with the
NHAI would be a template for other
state-owned enterprises. They said the
new board was looking at rationalisa-
tion in IL&FS. The NCLT has granted it
permission to induct directors in sub-
sidiaries and joint ventures.
IL&FS and the NHAI are likely to opt
for an out-of-court settlement in a
couple of highway cases entangled in
arbitration, where the former went to
court challenging the arbitration
amount.
The National Company Law Tribunal
(NCLT) gave its nod to the government’s
decision to appoint a new board on
October 1. The board’s first meeting was
held last week.
Last month, subsidiaries of IL&FS
began defaulting on loan repayments, as
well as payments on inter-corporate
deposits (ICDs) and commercial papers
experience to run airlines.
Last year, Deepak Mahendra, a former
executive of Tata Power, was appointed
chief financial officer at AirAsia India.
The company currently doesn’t have a
COO.
Fernandes is believed to have stepped
down from the AirAsia India board on
August 2, three days after the FIR linked to
the airline’s Indian business was filed. Bo
Lingam resigned on September 4. An
AirAsia India spokesperson didn’t
respond to queries.
In the past, there have been differ-
ences among the AirAsia India board
members over the choice of senior-level
executives, a former official said. An
exchange of emails reviewed by Business
Standard shows that in 2015, Bharat
Vasani, then chief legal counsel of Tata
Sons, had raised objections about the
selection of at least two senior executives.
The objection was on grounds that exec-
utives were being hired without sufficient
corporate experience.
per cent drop in the midcap and smallcap
index, respectively, in the past one month.
The market breadth was skewed in favour
of gainers, with 2,058 stocks advancing and
only 611 declining. The India VIX index, a
gauge for market volatility, dropped 9 per
cent to 17.9.
Market players said the rebound in
stocks could be due to technical factors and
investors should remain cautious.
“It is a technical bounce back.
Fundamentals haven’t changed much.
Mutual funds have been sitting on cash,
there has been some deployment following
the huge correction,” said Dhananjay Sinha,
head-institutional research, Emkay Global
Financial Services.
The Sensex and the Nifty are down near-
ly 12 per cent from their record highs on
August 28. Experts say despite the sharp
correction, market valuations were still
above their long-term averages.
“We maintain our cautious view on the
Indian markets in the near term, as volatil-
ity is likely to remain high. Focus of market

Saudi Arabia to supply extra oil (CPs). With over 348 subsidiaries, IL&FS is
alleged to have funneled money, raised
either from the debt market or banks, to
these as a form of equity investment and
Since its inception in June 2014,
AirAsia India has seen frequent top-level
churn, including the exit of two chief
executive officers and three chief com-
participants will shift to corporate earnings
season and the domestic macro data, as it
would dictate further course of markets.
Also the movement of currency, crude oil

in Nov as Iran sanctions loom therefore created an unsustainable busi-

JESSICA JAGANATHAN &NIDHI VERMA
Singapore/New Delhi, 10 Oct ober
Saudi Arabia, the world's biggest oil
exporter, will supply Indian buyers with an
additional 4 million barrels of crude oil in
November, several sources familiar with
the matter said on Wednesday.
The extra cargoes indicate a willingness
by Saudi Arabia to increase crude supply to
make up the shortfall once sanctions by the
United States on oil exports from Iran, the
third-largest producer in the Organization of
the Petroleum Exporting Countries (Opec),
start up on November 4. India is Iran's top oil
client after China, though several refiners
have indicated they will stop taking Iranian
barrels because of the sanctions.
Reliance Industries , Hindustan
Petroleum Corp, Bharat Petroleum Corp
and Mangalore Refinery Petrochemicals
Ltd (MRPL) are seeking an additional 1 mil-
lion barrels each in November from Saudi
Arabia, the sources said. Three of the com-
panies did not immediately reply to an
email from Reuters seeking comment.
MRPL replied “no comments” when con-
tacted by email.
State-owned oil producer Saudi
Aramco was not immediately available for
comment. Given their dependence on
Iranian oil supplies, the Indian refiners
are concerned about the loss of Iranian
crude once the sanctions start and are
seeking exemptions. Refiners in the coun-
try have placed orders to buy 9 million
barrels from Iran in November.
One of the reasons for the additional
demand for Saudi oil is that the crude arbi-
trage from the United States is shut so the
Indian buyers have to turn to Middle
Eastern barrels, said one of the sources.
India, the world's third biggest oil
importer, is grappling with a combination of
rising oil prices and falling local currency,
which makes imports of dollar-denomi-
nated oil more expensive. REUTERS
ness structure.
The company has a high leverage ratio,
mercial officers. prices, and global developments will be
actively tracked by investors,” said Jayant
Manglik, president, Religare Broking.
of 13 times, as total borrowings in Market...
September stood at ~910 billion on an TOP 10 NBFC GAINERS Price in ~
equity base of only ~69.5 billion. Outside the benchmark indices, shares of
Sources in the MCA said the govern- non-banking financial companies (NBFCs) Oct 10 Chg (%)*
ment was still awaiting a complete, reli- saw a spurt after SBI said it would increase Centrum Capital 38.95 17.85
able picture of developments that led to the purchase of loans from the NBFC sector.
the fiasco at IL&FS. “Fraud can’t be ruled Shares of several NBFCs have corrected DHFL 282.30 16.08
out,” a key official said. sharply in the past one month on fear of Magma Fincorp 116.15 13.32
The new board, they said, was looking contagion risks from Infrastructure Leasing Shriram Transport Fin. 1,081.45 13.18
for professionals to do due diligence and & Financial Services (IL&FS) and concerns
fact-finding in the company. They said of stricter asset liability mismatch norms Equitas Holdings 125.00 9.99
the new board was looking at rationalisa- from the Reserve Bank of India (RBI). Chola Investment 1,169.85 9.94
tion in IL&FS. Investor sentiment also got a boost after
Bajaj Finance 2,266.05 9.91
The NCLT has granted it permission to the rupee gained for the first time in seven
induct directors in subsidiaries and joint days against the dollar and bond yields con- SREI Infrastructure Fin. 35.55 9.89
ventures. tinued to retreat. The domestic currency M& M Finan Serv 406.10 9.79
Sources said IL&FS needs ~1 billion a closed at 74.21, up 0.23 per cent over its pre-
month for remaining afloat. The compa- vious day’s close of 74.38. The 10-year gov- Bajaj Finserv 5,954.75 9.76
ny has reached out to public sector units ernment security yield stood at 8.03 per Compiled by BS Research Bureau
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
8 COMPANIES
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1

Phones click with Instagram Ashapura Intimates’ MD

missing; stock tumbles
The platform is increasingly shaping the fate of smartphones in India Photo-sharing app In the past two weeks, the stock has crashed more than 60%
ARNAB DUTTA
New Delhi, 10 October
CLEAR PICTURE ups battle against SAMIE MODAK
Mumbai, 10 October ROUGH PATCH
India is the largest market for the
photo-sharing app, with 70 million
cyber-bullying Firm said a missing person

W
hen actor Priya Prakash
Varrier started a social
media storm with an on-
screen wink in February, her follow-
er count on Instagram jumped by
600,000 — making it the third
largest gain in a single day globally.
The frenzy resulted in massive gains
for others too. OnePlus, the country’s
top premium smartphone firm, was
one of the first consumer goods play-
ers to leverage the actor’s influence
by approaching her to advertise their
products on Instagram. And, the firm
saw its follower count cross the 1-mil-
lion mark from 600,000 within days.
India is the largest market for
Instagram (with 70 million active
users) after the US (120 million),
according to market research and
business intelligence portal Statista.
Its user base jumped by 84 per
cent in the past one year and cur-
rently houses equal to 31 per cent of
Facebook India’s user base. It
reached one billion users globally in
2018 from 800 million last year.
From product promotion to con-
sumer connect, handset makers are
increasingly relying on the photo-
sharing app from Facebook’s stable.
Be it Samsung, Vivo, Apple or
OnePlus, Instagram is changing the
way the phone makers conceptualise
and design their products.
Take the case of Samsung, for
example. The Korean electronics
giant, which ruled the local market
for years, identifies behaviour and
needs of Instagram users as a crucial
driver for its innovations in camera
and imaging features. Recently, it
came up with a smartphone with
three rear cameras — for wide angle,
portrait and low-light photography. It
also brought in cutting edge photo
editing and virtual personality driv-
en applications to attract young con-
sumers, 40 per cent of whom never
upload unedited pictures.
Mohandeep Singh, senior vice-
president, mobile business, Samsung
India, said Instagram will increas-
ingly influence the way smartphones
are developed. According to Vikas
Agarwal, General Manager of
OnePlus, Instagram is capable of
deeply engaging with its users like
no other social media platform. “The
habit of photo sharing is a key driver
here. The kind of audience it has —
youngsters, professional photogra-
phers and celebrities — makes it one
of the most important platform.”
OnePlus, the current leader in
above ~30,000 price segment, is
investing heavily to optimise its cam-
eras and software, apart from coming
up with innovative functions like
ultra-slow motion videos that can be
edited and uploaded instantly.
Currently, the brand enjoys active
support of over 2 million or some 3
per cent of all Instagram users in the
country. “Women engage more
actively on Instagram, compared to
popular platforms like Facebook,
active users
The app’s user base jumped 84%
over the past one year
Instagram is changing the way the
phone makers conceptualise and
design their products
Instagram’s appeal to the younger
generations, especially the Gen Z
(18-21 years) and young millennials
(22-28 years), remains high
which has opened up new market
avenues,” said Agarwal.
“Instagram is definitely one of the
ubiquitous platforms amongst the
digital natives. In addition to sharing
pictures, we have been witnessing a
significant rise in Instagram stories,
which are a more fun and secure way
of expressing themselves. Also, with
the rise of brand influencers in the
country, it is fast becoming a potent
platform to promote brands,” said
Nipun Marya, director, brand strate-
gy, Vivo India.
While Vivo is betting on aug-
mented reality to stay ahead, Google
is putting its money on artificially
intelligence modules and synchro-
nised software.
Instagram’s appeal to the younger
generations, especially the Gen Z (18-
21 years) and young millennials (22-28
years), remains high. A recent survey
revealed that while over 70 per cent of
young millennials are active on the
platform, for Gen Z it’s over 80 per cent
— more than Facebook. According to
marketers, it is the active participation
by the younger consumers that helps
drive frequent repeat purchases, is
placing Instagram at the top of the pri-
ority list for smartphone makers.
AGENCE FRANCE-PRESSE
San Francisco, 10 October
Instagram has added more weapons to bat-
tle cyber-bullying, using artificial intelli-
gence (AI) to scan photos for abusive content
at the Facebook-owned service.
The move comes after Facebook also
increased anti-harassment measures, fol-
lowing a survey that said young victims of
online abuse feel social media firms aren’t
doing enough to fight the problem.
Instagram chief Adam Mosseri on
Tuesday said AI is being used to detect signs
of bullying and then automatically flag con-
tent for review by staff from the image-ori-
ented social network.
“This change will help us identify and
remove significantly more bullying,” Mosseri
said in a blog post. “It’s a crucial next step,
since many people who experience or
observe bullying don’t report it.” Rolling the
technology out across the entire social net-
work is expected to take a few weeks.
In another move, a filter that enables
Instagram users to detect and hide bullying
remarks from Instagram feeds or profiles,
was extended to comments on live videos,
according to Mosseri.
In the spirit of inspiring people to be nice
to one another, Instagram also added a cam-
era effect that can be used to adorn images
with hearts or the word “kindness” in a vari-
ety of languages. “Online bullying is com-
plex, and we know we have more work to do
to further limit bullying and spread kind-
ness on Instagram,” Mosseri said.
Last week, Facebook said its users will
be able to hide or delete groups of comments,
including responses, instead of having to
remove them one at a time. The network
also began letting people report bullying or
harassment on behalf of friends reluctant
to complain to the firm themselves.
Shares of Mumbai-based complaint has been filed
innerwear Ashapura Intimates with the Mumbai police for
Fashion are in a free fall, while Harshad Thakkar
Chairman and Managing
The drop in share price has
Director Harshad Thakkar has
resulted in transfer of
gone missing.
ownership of certain shares
In the past two weeks, the
from promoter to IIFL group
stock has crashed more than
60 per cent and continues to Shares acquired by IIFL
hit lower circuit on the bours- don’t have any voting rights,
es everyday. says the disclosure made
On Wednesday, shares of by the group
the company closed at ~171,
valuing the company at ~4.3
billion. A month ago, the stock The slide in the stock price pledged with it against a loan.
traded at ~445. has hit a few institutional This, along with 4.21 per cent
“This is to inform you that investors, including DSP stake already owned by India
a missing person complaint Mutual Fund, which held Infoline Finance, takes the
has been filed with the around 5 per cent stake in the IIFL group holdings in the
Mumbai Police by the family company in the June quarter. company to 32.93 per cent.
of our managing director. The Other institutional Promoters’ stake in the
complaint is being presently investors include Edelweiss company stood at 57 per cent,
investigated,” the company Tokio Life Insurance and which has reduced to around
said in a stock World Investment 24 per cent after the transfer to
exchange notifica- The promoter Opportunities IIFL group.
tion on Wednesday. holding in the Funds. The promot- Market players said a large
“The profes- company stood er holding in the acquisition may trigger an
sional manage- at 57 per cent at company stood at open offer, as it would result in
ment team along the end of the 57 per cent at the change of control at Ashapura
with Darshana June quarter of end of June quarter. Intimates.
Thakkar, who has this fiscal year The latest share- However, the shares
been with the com- holding in the com- acquired by IIFL don’t have
pany since last few years and pany couldn’t be ascertained. any voting rights, says the dis-
has been driving the design A large part of the promot- closure made by IIFL.
and production functions at er holding in the company is Ashapura Intimates got
the company, will be oversee- pledged. listed in April 2013 on the BSE
ing the operations of the com- The recent drop in share SME platform. In June 2015,
pany. The board of the com- price has resulted in transfer the company’s shares were
pany will be meeting in the of ownership of certain shares migrated to the mainboard.
first week of November 2018 from the promoter to the The company is currently val-
to finalise the necessary IIFL group. ued at ~4.3 billion.
actions for continuing the In another notification on Incorporated in 2006,
growth momentum in the Wednesday, IIFL Securities Ashapura Intimates is an
business and capital require- announced the acquisition of innerwear retailer under the
ment,” the notice added. 28.72 per cent stake, which was brand name ‘Valentine’.

Zomato, Swiggy, Foodpanda, 7 others delist over 5,000 ‘unsafe’ restaurants

PRESS TRUST OF INDIA
New Delhi, 10 October
As many as 10 online food
ordering platforms including
Swiggy, Zomato and
Foodpanda have delisted over
5,000 restaurants for not hav-
ing approval from food safety
regulator FSSAI, a top official
said Wednesday.
The platforms include
Swiggy, Zomato, Foodpanda,
Box8, Faasos, FoodCloud,
Foodmingo, JusFood,
LimeTray and Uber Eats.
The move by the compa-
nies comes after FSSAI asked
them in July to stop using edi-
bles supplied by non-licensed
operators after it received con-
sumer complaints of sub-stan-
dard food being served
through these platforms.
“Over 5,000 restaurants aggregators to debar the non- sources in the know said. FSSAI had earlier directed
have been delisted FSSAI licensed/reg- “We have delisted hun- food ordering platforms to fur-
by the e-commerce The move by the istered food opera- dreds of restaurants across the nish their FSSAI licence, agree-
food service plat- companies comes tors and ensure 41 cities in India where we ment signed with Food
forms,” Food Safety after FSSAI asked compliance of food offer our online ordering and Business Operators (FBOs) and
and Standards them in July to safety rules and food delivery services. We their internal checks to ensure
Authority of India stop using regulations. would be happy to relist them that their FBOs hold valid
(FSSAI) CEO Pawan edibles supplied FSSAI asked alongside any of the other FSSAI licences.
Kumar Agarwal by non-licensed them to give state- partners as and when they The food regulator in
said. operators wise list so that furnish their licences,” Zomato February this year opera-
On July 20, enforcement agen- Food Delivery CEO Mohit tionalised guidelines for
FSSAI directed the 10 food cies could take further action, Gupta said. e-commerce FBOs.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
10 ISSUES AND INSIGHTS
>
MUMBAI | THURSDAY 11 OCTOBER 2018 1

A cyber security roadmap

organisations are investing in identi-
fying new approaches that include the
use of advanced cloud-based SaaS serv-
ices and platform-based approaches to
Many of our banks and capital market participants have cyber risk management security risks. Government institu-
tions, such as NCSC in the UK and
plans at an institutional level. What is needed is an industry standard NIST in the US, have established cyber
Corporation and Oliver Wyman, which
includes discussions with 50-plus > CHINESE WHISPERS
domain experts, concluded that effec-
tive response and recovery requires con-
tinued industry collaboration and, in
some cases, common industry utilities No music?
and approaches.

ILLUSTRATION BY BINAY SINHA

data loss, financial losses, regulatory
sanctions, reputational damage, opera-
tional disturbances, among other
things. Increasing global interconnect-
edness and the complexity of systems
make large-scale cyber attacks on finan-
cial market infrastructure even more
pertinent and threaten the stability of
financial markets.
The strategies adopted for cyber risk
management currently focus on two
objectives — one, reducing the risk of a
VIKRAM LIMAYE cyber attack and minimising the impact
of a breach, and two, building resilience,
that is, detecting and recovering quick-
mining the severity and likelihood of
cyber risk in monetary terms. Cyber risk
quantification measures the value-at-
risk (VaR) and helps in the assessment of
the impact in financial terms. Cyber
stress testing framework helps in iden-
tification and quantification of VaR
under various scenarios.
Dashboard: A digital cyber risk dash-
board facilitates monitoring of met-
rics, escalation of risk alerts and sup-
ports management decision making.
The dashboard’s control effectiveness
scorecards show the performance of
control measures, the impact of control
security centres and developed frame-
works. Capital markets players are
recognising that it is sub-optimal when
institutions deal with cyber attacks in
silos and many countries have put in
place central agencies focused on cyber
risk management.
Many of India’s leading banks and
capital market participants have a well-
defined plan for cyber risk management
at the institutional level. However, as
an industry, we can all take a few steps
to ensure greater effectiveness of our
plans. We should consider adoption of a
common set of standards by capital
market participants. They should con-
On their part, Indian regulators
have focused on cyber security as a
core concern for several years now.
Securities market regulator, the
Securities and Exchange Board of
India, issued guidelines on cyber secu-
rity and cyber resilience to market
infrastructure providers in 2015 and
developed guidelines for registrars in
2017. In 2011, the Reserve Bank of India
(RBI) issued comprehensive guidelines
on information security, electronic
banking, technology risk manage- Car launch conferences have moved on
ment, and frauds for risks emerging from their fuddy-duddy push-info-
from digital adoption. In 2016, the RBI move-to-Q&A modules to more festive
released a comprehensive set of formats. So when Tata Motors quietly
launched its new sedan Tigor on

E
merging technologies and waves
of digitisation have brought in
their wake new challenges and
exposed organisations to new risks. It
is estimated that cyber attacks cost com-
panies an estimated $500 billion in
damages every year. Today, cyber risk is
a top agenda item at the board level.
With the cyber risk landscape changing
fast and attacks becoming more fre-
quent, severe and systemic, the primary
concern facing organisations is that
security breaches to technology and
physical infrastructure could lead to
ly from the impact of a breach. Globally,
organisations are investing in develop-
ing a comprehensive set of cyber risk
management capabilities that cover the
entire value chain and ensure the risk is
efficiently managed across the ecosys-
tem. Some parameters of this risk man-
agement framework include:
Cyber risk appetite: This refers to clear-
ly articulated top-of-the-house qualita-
tive statements and quantitative met-
rics to define the acceptance level of
cyber risk.
Risk quantification: This is about deter-
failures and ongoing investments in
mitigating risks.
Operating model: This refers to
clearly articulated roles and respon-
sibilities for cyber risk management
across the three lines of defence in
the organisation.
Cyber risk playbooks: This includes a
comprehensive set of response mech-
anisms and governance for cyber
incidents linked to risk identification
and remediation.
Traditional approaches to cyber risk
mitigation have failed thus far and
tinuously strengthen IT governance,
review policies, processes and systems
to keep pace with changing risks and
attack vectors.
Increasing collaboration among
financial institutions is important.
Traditionally, financial institutions have
operated risk functions in silos.
However, the nature of unknown threats
today requires industry participants to
work together. Industry — wide invest-
ment into a collaborative initiative
would be the first step. A recent report
by The Depository Trust & Clearing
requirements for internal cyber secu-
rity frameworks.
The government has also undertak-
en initiatives including the Information
Technology Act, 2000. It has set up the
nodal cyber security agency, CERT-In, to
respond to computer security incidents.
The National Critical Information
Infrastructure Protection Centre, is the
central agency to facilitate safe, secure
and resilient information infrastructure
for critical sectors of the economy.
The author is MD & CEO, NSE
Wednesday — even cutting out the loud
background music that accompanies
announcement of a product's price
during its launch conferences — it
seemed to disappoint many. Guenter
Butschek, managing director and chief
executive officer, Tata Motors
Worldwide, said the car was so exciting
that the company decided there was
no need to use music to make the
announcement “attractive”. The price
of the car starts at ~520,000.

Navratri spread
Minister of State for Finance Shiv Pratap

Time to harness an unruly horse

Here are five areas in the Competition Act, 2002, that need intense review and intervention
or production coupled with the exis-
tence of a trade association have been
deemed adequate to arrive at the exis-
tence of a cartel. There are also cases
where other facts and circumstances are
meticulously gone in to demonstrate
the requisite “plus factors” for a mean-
ingful inference of the absence of a car-
tel. Court rulings over time have pro-
vided an indication of how to be
equitable and proportionate in inter-
pretation, but it is now time to codify
WITHOUT CONTEMPT these into the law.
Second, the Competition Act has
SOMASEKHAR SUNDARESAN moved from the originally-envisaged
framework of the Commission sitting
in multiple benches to a framework of
penalties continue to be imposed either
on the total revenues of entities alleged
to be violative (including businesses
ILLUSTRATION BY BINAY SINHA
real facts to see if there is real abuse. On
the other hand, when deciding whether
to approve a merger, one may factor in
granted powers of a civil court. Likewise,
under any other law in India, the term
“fine” is used for criminal monetary pun-
ishments, which can only be imposed
by criminal courts pursuant to a criminal
trial. In criminal proceedings, the stan-
dard of proof required for establishing
guilt is one of “beyond reasonable doubt”
while in civil proceedings, the standard
of proof is one of “preponderance of
probabilities” — more a test of what a
reasonable man would reasonably con-
clude about what transpired.
When a “fine” is imposed, because
the standard of proof applied to criminal
proceedings is higher, the legal stigma is
much higher. Disqualifications under
Shukla combined the first day of
Navratri with a housewarming prayer
for his newly allocated official
bungalow which is a stone's throw
away from North Block that houses the
Finance Ministry. A common practice
during Navratri is phalahaar, or an
offering of fruits. There were fruits at
the event, but there was also a lavish
and delicious vegetarian spread in the
lawn. There were chaat stations,
delectable vegetable kababs, Navratri
special dishes and some lip-smacking
desserts. Perhaps Shukla took a leaf out
of his boss' book. Finance Minister Arun
Jaitley is known for his multi-course
lunches. That was before health
complications forced him to go slow.
War of words
Prime Minister Narendra Modi has
had a significant impact on social
media, particularly Twitter, since the
run up to the 2014 Lok Sabha polls. He

T
he government has appointed a
committee to review the work-
ing of the Competition Act,
2002, and to recommend changes. This
is an important opportunity — there
is much to be done. Provisions relating
to market abuse were made effective in
May 2009, while provisions governing
combinations became effective in June
2011. Both these areas need intense
review and intervention. This column
will deal with five facets of what cries
for attention.
First, the law presents a framework
that can be quite ambiguous. The sec-
tion on “appreciable adverse effect on
competition” — a vital ingredient for
either disapproving of a merger or for
finding of market abuse — can be inter-
preted widely. Almost any fact pattern
can be force-fitted into or out of the term
— it all depends on what outcome has
been decided. There are cases where the
existence of parallel movements in price
all available members, participating in
the proceedings. It is time to think about
multiple benches with a minimum size
of each bench — say three members.
Instead, it seems the policy intent is to
prune the very size of the Commission to
just three members. This would be a
blunder. More minds — say, seven com-
missioners — would bring in diversity of
thought but it may be provided that the
Commission would conduct hearings
in benches comprising at least three
members. This would also ease the
workload. In any case, practically, all
members have never been able to hear
every single case. This is a simple but
important area of reform on which a
simplistic approach must be shunned.
Third, the imposition of penalty
remains an unruly horse. The law right-
ly provides for penalty as a percentage of
the revenues from violative conduct —
the penalty must be imposed on the rel-
evant violative revenues. However,
generating non-violative revenues) or
on the revenues of the relevant business
but from territories outside the market
in which the violation was committed
(for example, using worldwide revenues
as the basis of penalty although the vio-
lation relates to one Indian state). The
result is a fantastic headline about a dis-
proportionate penalty, but bad out-
comes potentially following the appeal.
The legislation must lay down the prin-
ciple already made clear by courts, so
that this problem does not recur.
Fourth, the law is not quite clearly
demarcated to ensure discipline in how
to vary the approach between alleged
market abuse where the accused is
already dominant, and potential abuse
that may be averted by rejecting or mod-
ifying a proposed combination or merg-
er. In determining whether someone
who is a large player in a natural oligop-
oly (with very few competitors) is abus-
ing the market, one would need to assess
the likelihood of future abuse to refuse to
approve the merger. Applying the ratios
and principles involved in combination
cases, to cases involving findings of vio-
lation due to abuse of existing dominant
position, can lead to unintended and
unfair consequences. The factors adopt-
ed in assessing a proposed combination
can be useful guides in cases involving
investigation into alleged abuse; but they
can never be an axiom that reasons for
apprehending future abuse from a com-
bination can be adequate and valid rea-
son for punishing someone.
Finally, the Competition Act is the
only statute made by Parliament in
which (purely by blatant error and not by
design) settled legal terminology used
to differentiate between civil and crimi-
nal proceedings have been mixed up.
Specifically, under any other law in India,
the term “penalty” is used for civil mon-
etary punishments. Penalties can be
imposed by regulators that have been
other laws too get fastened. These other
laws (for example, the Company Law) use
the term “fine” to refer to punishments
that would attract a stigma. In the
Competition Act, sections providing for
punishments that may be imposed by
the Competition Commission of India —
which is not a criminal court but is explic-
itly a civil court — provide for imposi-
tion of a “fine”. This is a gross legal error
waiting to be corrected — since it inflicts
a skewed incongruence in the wider fab-
ric of Indian law. The term “fine” has to be
simply changed to “penalty” so that the
Commission can validly apply the civil
standard and impose civil penalty with
appropriate civil consequences, instead
of potentially inflicting criminal conse-
quences without the checks and balances
involved in determining whether a crime
has occurred.
The author is an advocate and independent
counsel. Tweets @SomasekharS
has a dedicated social media team
that has rarely taken a misstep. Once
such rare occurrence took place on
Tuesday after the PM unveiled a
statue of Chaudhary Chhotu Ram, an
iconic pre-independence farmer
leader of undivided Punjab. The PM
tweeted he was honoured to unveil
the statue of a “farmer leader” who
was “a messiah of the Jats”. Congress
spokesperson Randeep Singh
Surjewala lost no time and said the
PM’s description of Ram as a "Jat
leader" was evidence of his “narrow
vote bank politics” and that Ram was
a messiah of farmers across India. By
Wednesday afternoon that tweet had
been deleted from the PM’s Twitter
handle. But Surjewala hit out once
more. “Farmers will not be fooled by
your slogans invoking their caste.
Please apologise to the farmers of
Haryana,” Surjewala tweeted.

BUSINESS LIFE > LETTERS

Why does Google need hardware?
The relatively minuscule sales of the company’s homegrown gadgets like the
Pixel smartphone and a tablet computer limit the spread of its best ideas
SHIRA OVIDE
S
o many internet and software
companies make gadgets now.
Amazon, Microsoft, Google and
Facebook all make some type of inter-
net-connected computing gear. Even
Uber has started to engineer its own
electric scooters.
The one thing all these newcomers
have in common is that their hardware
businesses are irrelevant. That’s
important to remember with Google’s
introduction on Tuesday of the latest
in its growing line of gadgets, including
a new model of its Pixel smartphone, a
tablet-like computer and a voice-acti-
vated video screen for the home.
A central fact gets lost in the hard-
ware hype at Google, Amazon and oth-
er tech giants: These hardware neo-
phytes are definitely not setting sales
records. And the strategic value of
wading into well-established or novel
hardware areas is uneven at best.
In 2017 and the first half of this year,
Google shipped about 5 million Pixel
smartphones worldwide, according to
the research firm IDC. Apple Inc. sells
as many iPhones in about eight days as
Google did in 18 months — and even
Apple has a relatively small minority
market share in smartphones.
Small numbers aren’t confined to
Google, either. Journalists like me
can’t stop talking about the “runaway
success” of the Echo devices,
Amazon.com Inc.’s rapidly expanding
lineup of voice-activated home doo-
dads. Amazon sold about 3.6 million of
the two most popular Echo models
from April to June, Strategy Analytics
estimated. Fitbit, a company that jour-
nalists like me stopped talking about
KING OF THE AD WORLD
The Google unit of Alphabet
generates the vast majority of its
revenue from selling digital
advertisements
Share of
Google's 88.7 87.0 86.2
revenue from
advertising
(figures in %)
2016 2017 2018
Note: Figures for 2018 are through the first six months.
Source: Alphabet disclosures
long ago, sold 2.7 million motion-track-
ing gadgets in the same period.
Yes, Amazon’s hardware sales are
growing and Fitbit numbers are
shrinking, but you get the point. For
most software or internet tech
empires, hardware is a niche hobby,
and it will remain so for the foresee-
able future.
That leaves the question of why
tech companies that built fortunes on
areas other than computing hardware
are bothering at all. I wasn’t sure about
Microsoft’s Surface line for a long time,
but I have been convinced that the
company successfully spurred new
ideas in what a computer could and
should be, even as Microsoft sells rel-
atively few personal computers on its
own. I’m not completely sold on the
strategic merits of Amazon’s Echo
gadgets, but it’s clear that the compa-
ny wants a pole position if computers
controlled by voice become the preva-
lent form of human interaction with
machines.
As for Google, I was unsure of the
merits of the company jumping into
hardware with both feet when the
Alphabet Inc. unit unveiled its first
self-branded smartphone two years
ago, and I’m still not sure what the
company is doing.
Like Amazon and Microsoft, it
seems as if Google is trying to spread
its promising ideas on computer fea-
tures and interactions. But it’s not clear
why Google can’t press its best ideas
through Android, the software brains
of more than 1 billion new smart-
phones sold every year, or through the
company’s ubiquitous smartphone
apps, Chrome web browser, YouTube
on the web and more.
Google technology is already every-
where, and it didn’t need its own hard-
ware line to make that happen. To the
extent that there is special sauce when
Google designs itself a unified package
of software, computer chips and com-
puting hardware on which company
technology runs, the relatively dinky
sales of Google’s homegrown gadgets
limit the influence of the company’s
most promising experiments.
Alphabet’s Google unit generates
86 percent of its revenue from adver-
tisements on web searches, YouTube
videos and other spots all over the dig-
ital world. Google’s dominant and
highly profitable ad empire gives the
company plenty of room to branch out
into new areas, and today’s hobbies in
areas such as life sciences, driverless
cars and cloud computing could very
well become the foundations of
Alphabet’s future empire. But Google’s
best ideas in consumer computing
can’t become dominant from leaning
on the company’s hardware.
© 2018 Bloomberg
Act now
The report by the United Nation’s
Intergovernmental Panel on Climate
Change (IPCC) has come as a stark warn-
ing. Unless drastic action is taken to lim-
it global warming to 1.5 degree Celsius
above pre-industrial levels, as against 2
degrees Celsius agreed on, the future of
the planet will be imperiled. The very
survival of humans and other life-forms
hinges on the efforts made now. It is no
hyperbole to say the accumulation of car-
bon in the atmosphere at the current rate
due to acceleration of the carbon-inten-
sive economy is a recipe for the end of the
human civilisation itself.
Extreme weather patterns and events
advertise the reality of climate change.
The phenomenon is real and not a hoax
as climate sceptics like US President
Donald Trump say. The existential threat
posed by climatic disruption calls for
reduction in coal-fired energy and oil
consumption, greater reliance on renew-
able sources of energy such as wind and
solar power, sustainable land manage-
ment and changes in the modes of
transport and in food habits. Climate
justice demands that the affluent
countries that caused the climate crisis
should adhere to common but differen-
tiated responsibilities.
As inhabitants of this part of the
world, we have more reasons to worry
and push for action to mitigate global
warming. Topographical features such
as the Himalayan glaciers and the lengthy
coastline make the Indian sub-continent
more vulnerable to climate change. There
is no escape from the challenges of cli-
mate change. The upcoming climate con-
ference in Poland must give world leaders
a roadmap to secure the planet.
G David Milton Maruthancode
Share talent
This refers to Archis Mohan’s report “CAG
meet to focus on accounting in the digi-
tal era” (October 10). In addition to sub-
stantial resources, considerable efforts
on the part of hundreds of officers and
staff go into organising conferences like
the once-in-two-years Attorney General’s
meet now being held in Delhi. Celebrity
invitees make speeches that express con-
cerns and anxieties, and make intelligent
suggestions. The structured sessions
deliberate and come up with several find-
ings and recommendations for the
improvement of the functioning of the
system. How far these suggestions and
recommendations are taken seriously by
the government and political leadership
responsible for providing legislative sup-
port is a matter of opinion.
Till the opening of the economy, in
India, the governments and organisa-
tions like the Comptroller and Auditor
General of India (CAG), the Reserve
Bank of India (RBI) and public sector
undertakings (PSUs) including banks
had access to a talent pool in which can-
didates looked for job security with a
long-term perspective and anything
> HAMBONE
above starvation wages was accepted as
compensation by prospective employ-
ees. The position has changed now and
these organisations are now dependent
on candidates not needed in the elite
private sector.
The CAG, since the Vinod Rai days,
and the RBI during the current decade
have taken several initiatives for in-
house skill development. But with the
lines between different streams of reg-
ulatory norms, audit, and inspection
getting blurred, it is imperative that all
professionals speak the same language
forgetting even the public sector-private
sector divide. As the government and
the public sector organisations are not
likely to get a level playing field and
compensation packages comparable
with the private sector anytime soon,
talent exchange is a possible option. The
suggestion is, consider a floating
exchange of executives at all levels up to
a certain percentage, among organisa-
tions willing to participate in the
exchange programme. For example: An
officer from the CAG can work with the
RBI as one from the RBI works with the
CAG for a year or two.
M G Warrier Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone
number
BY MIKE FLANAGAN
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

>
OPINION 11
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Volume XXIII Number 42 ILLUSTRATION BY BINAY SINHA

MUMBAI | THURSDAY, 11 OCTOBER 2018 EFFECTIVE RATE OF PROTECTION (%) IN

ALTERNATIVE SCENARIOS
Halfway house Tariff rate on output (%)
SC order on Rafale doesn’t address key issues Tariff rate on input (%)
(A) (B) (C) (D) (E) (F) (G) (H)
20 20 20 20 40 40 20 0
20 10 10 20 40 10 0 20

W
ednesday’s order of the three-judge bench of the Supreme Court,
led by Chief Justice Ranjan Gogoi, on the Rafale deal left much to
be desired. Hearing writ petitions against the defence aircraft
deal announced by Prime Minister Narendra Modi and then
French President Francois Hollande in 2016, the apex court only asked the gov-
Proportion of value added 50 50 20 20 20 20 20 20
Such a low value added proportion is quite com-
at international prices (%)
mon in industrial activities. The tariff rates appli-
Effective rate of protection 20 30 60 20 40 160 100 -80 cable in scenario B are assumed unchanged. In
this case the ERP shoots up to 60 per cent, three

Low tariffs, high

times higher than the NP. Scenario D simply illus-
ernment to furnish details of the decision making process, that too in a sealed trates that changes in the value added proportion
cover. It clarified that the court did not want any information on the pricing and do not affect the earlier “result”: when tariff rates
technical details of the deal. Even though Attorney General K K Venugopal are uniform across inputs and outputs, there is
objected to the judicial review of a sensitive deal, the court set October 29 as the no difference between the ERP and NP. This result
deadline for the information to be provided. The court also set October 31 as the holds even if the tariff rates are higher, at 40 per

protection
cent, for both input and output (Scenario E).
date for the next hearing. While the court’s demand is a setback for the govern-
The next two scenarios are the most worrisome
ment given that it has refused to divulge crucial details about the deal despite and, regrettably, quite common. In scenario F the
mounting public and political pressure, it does not address critical issues. output tariff rate (40 per cent) is assumed signifi-
The Rafale fighter is a twin-engine medium multi-role combat aircraft man- cantly higher than the input rate (10 per cent),
ufactured by French aerospace company Dassault Aviation, and India’s purchase leading to an ERP of 160 per cent, four times the
of 36 Rafale aircraft in a flyaway condition is part of a process of upgrading the Even relatively moderate tariffs of around 20 per cent can be highly NP of 40 per cent! Similarly, in scenario G, even
with a modest output tariff rate of 20 per cent one
air force’s equipment. However, the deal has been mired in one controversy after protective and distortionary gets an ERP of 100 per cent, five times higher than
another. To begin with, the Opposition alleged that the government had weak- the NP, when there is zero tariff on the input. Both
ened the Indian Air Force (IAF) by scuppering a 126-aircraft contract, which was n a recent column (Wanted: Better trade poli-

I
close to finalisation when the Congress was in power, and instead purchased just cies, August 9, 2018), I lamented that the revival
36 Rafales while short-circuiting due procedure. Moreover, the government of higher protective customs tariffs over the
has been accused of paying a much higher price without necessarily obtaining past year (especially in the February 2018 Union
budget and several times since) has been a dam-
a superior fighter plane. There have also been accusations of crony capitalism aging reversal of the cross-party reform commit-
against the government as a private group has been chosen, ignoring public sec- ment to reducing our tariffs to “East Asian levels”
tor Hindustan Aeronautics Limited, for discharging offsets related to this deal. that had prevailed since 1991. I pointed out that
The government’s stand on Rafale has been perplexing. Last year, the Union such tariffs raise domestic costs and prices, hurt
defence minister promised to reveal what Dassault had bid in the cancelled ten- exports, foster inefficiency, encourage further tar-
der and what India eventually paid. But she subsequently backtracked on iff hikes, invite retaliation and generally weaken
the development of an efficient
grounds of confidentiality. This created confusion and gave an impression that and competitive manufactur-
the government had something to hide. These notions strengthened after for- ing sector. They hurt trade and
mer president Hollande, with whom the Indian PM signed the deal, said that the do little to reduce large trade
private sector partner was India’s choice. Mr Modi’s continued silence only and current account deficits.
worsens the situation for the government. The fact is that in a democracy the gov- Some have noted that most
tariff increases thus far have
ernment must account for the expenditure of public funds, and shirking that
been modest, usually not rais-
duty by citing national security would set a bad precedent. ing duty levels to above 20 per
No questions have rightly been raised about the capabilities of the Rafale jet, but cent and hence may not lead
the corruption allegations have persisted. The unfortunate aspect is that the apex to significant economic dam-
court has not asked the government to come clean on the deal. A fair part of the rea- age. This is wrong, because
son for the concerns about Rafale relates to the process adopted, but even here the even relatively moderate tar-
iffs of around 20 per cent can
A PIECE OF MY MIND
details that have been asked for will be available only to the court. This is unfortu-
be highly protective and dis- SHANKAR ACHARYA
nate as there is no reason why the government should not be asked to disclose the tortionary. To understand this
facts, figures and rationale needed to address the allegations against the deal. one needs to grasp the concept
of “effective rate of protection” (ERP) which comes
into play whenever there are (tradable) interme-
Specifically, ERP for a product or activity is defined
as: ((value added in domestic prices)-(value added
in international prices))/(valued added in inter-
national prices) x 100. Consider an example where
a product (say, cotton garments) is priced at ~100
per unit at international prices, its sole (tradable)
intermediate input (say, cotton fabric) costs ~50 for
the amount used in producing a garment and all
tariffs are zero. Thus value added at international
prices is ~100-Rs 50= ~50 and so is the value added
at domestic prices. Both NP and ERP are zero by
definition. (The currency does
not matter; so “~” will be
dropped henceforth).
Now assume tariffs are
imposed at the rate of 20 per
cent on both the output and
input. The domestic price of the
product goes up to 120, the
domestic cost of the necessary
input goes up to 60 and value
added at domestic (tariff-inclu-
sive) prices rises to 120-60=60.
Hence the ERP, which was zero
pre-tariffs, rises to (60-50)/50 x
100=20 per cent, equal to the
rate of NP. This is Scenario A
(see Table). A key implication is
that when tariffs are imposed at a uniform rate (20
per cent in this case), there is no difference
these scenarios and the earlier scenario C show
how easy it is to have high ERPs even when NPs
look quite “moderate”.
Sometimes, the output tariff is lower than the
input tariff. In scenario H when the output tariff is
zero, the input tariff is 20 per cent and the pro-
portion of value added at international prices is 20
per cent of the unit price, the ERP becomes minus
80 per cent! This illustrates how damaging tariffs
are for exports, which typically do not enjoy pro-
tection or subsidies; that is the “output tariff” is
zero and the input tariff is positive.
These scenarios illustrate some key proposi-
tions for the design of customs tariffs if they are to
be deployed at all:
1) Tariffs , when deployed, should be low and
uniform across inputs and outputs.
2) Since variations in value added proportions
are inevitable across industries, even small dis-
persion in tariff rates can lead to large variation in
ERPs across industries.
3) Even low product tariffs can lead to very
high rates of effective protection, depending on
value addition proportions and input tariff rates.
4) Tariffs on inputs typically lead to negative
(sometimes highly negative) effective protection
(that is, discouragement) of export items, unless
such tariffs are rebated.
5) The complexity and variation in effective
rates of protection, even with low nominal tariffs,

Responding to #metoo diate goods in production activities, which is

almost always the case. The concept was devel-
oped and explained by a number of economists in
The ambit of sexual harassment Act needs to widen the 1960s, including Max Corden, Bela Balassa,
and G Basevi.
between the rates of NP and ERP for the product
or output.
Let us consider some alternative scenarios. In
scenario B the only difference is that the tariff on
the input is lower (10 per cent) than the tariff on
offers large scope for both deliberate and unin-
tended benefits for different industries and firms,
which need to be guarded against.
Clearly, the design of tariffs is a difficult tech-
nical task if the problems above are to be avoided

W
hen the Sexual Harassment of Women at Workplace (Prevention, ERP focuses on the protection afforded to val- the output (20 per cent), which is a very common or minimised. Unfortunately, my 15 year experi-
Prohibition and Redressal) Act, was passed in 2013 it was consid- ue added in producing a commodity. This con- pattern in our customs duty structure. This results ence in the Finance Ministry suggests that cru-
ered a significant expansion of the Supreme Court guideline of 1997 trasts with “Nominal Protection” (NP), which sim- in a ERP of 30 per cent, substantially higher than cial concepts, such as ERP, are not well under-
ply refers to the tariff rate on the product/output. the unchanged NP of 20 per cent. Scenario C is stood in the tariff-making bodies of government.
dealing with sexual harassment in the workplace. The #metoo
A high ERP means that factors of production (cap- especially instructive: the proportion of valued
movement that has gripped the media and the entertainment industry over the ital, labour , land) would be attracted to the pro- added in total unit price/cost (at international The writer is Honorary Professor at ICRIER and former
past two weeks suggests that the law urgently requires further expansion. The duction of that commodity or sub-sector, while a prices) is assumed to be 20 per cent, instead of Chief Economic Adviser to the Government of India.
2013 Act expanded the ambit to cover women in any working environment – low or negative one would not attract resources. the 50 per cent assumed in previous scenarios. Views are personal
from domestic helps to those in the unorganised sector and covers clients and
customers. Critically, it also expanded the sphere of the workplace from the

The missing ‘C’ in Kochhar’s strategy

immediate office environment to include any place visited by the employee dur-
ing the course of employment including transportation, and non-traditional
workplaces which involve telecommuting. What it does not do, principally
because the situation did not arise before, is offer guidelines on how companies

I
should tackle questions raised by the current #metoo tweet-storm. CICI Bank’s former managing director & chief with this paper at that time. It’s blatantly unfair to suggest she or her hus-
The biggest and most obvious gap in the law flows from retrospective accu- executive officer Chanda Kochhar was quite The script, of course, didn’t work out as she band did anything wrong, as nothing has been
fond of talking about her 4C strategy (CASA or wanted, as the bank got into big trouble after bad proved as yet, but it’s amply clear that she under-
sations. The Act offers no clues to how organisations should proceed when, say, current and savings account deposits which are loans ballooned, resulting in huge provisioning. estimated the seriousness of the charges, which
an extant employee stands accused of past transgressions by women with no inexpensive; credit quality; cost; and capital con- It was almost a repeat of the problem ICICI Bank centred around the dealings between her hus-
immediate link to the existing company. There can be little argument that servation). The 4Cs indeed helped the bank get faced when she took over. The task was formida- band Deepak Kochhar and Venugopal Dhoot, the
these, too, should be investigated, not least to send reassuring signals to other back on track. The problem she inherited in 2009 ble, but she perhaps could have set it right if she controlling shareholder of the Videocon group —
women employees within an organisation. The current #metoo tweet-storm, had forced her to go in for a radical reversal in the had more time. which subsequently secured, and defaulted on
bank's strategy. She toned down the earlier exu- The real problem lay elsewhere. Ms Kochhar ~32.5 billion of loans from ICICI Bank. Mr Dhoot’s
however shrill the tonality, reflects a greater sense of empowerment that is cur-
berance (30-40 per cent annual growth in credit should not have stopped by adding just a fifth `C’ apparent generosity towards the spouse of a top
tailed by an understandable hesitation to file complaints with the police. The law, portfolio with consumer loans to her strategy. Somewhere banker did raise serious questions about conflicts
therefore, needs to move in sync with the times. Common sense dictates an obvi- making up two-thirds of its along the way in her long of interest. Several other questions were raised:
ous path of action in such cases, and some organisations have responded by total book) and muscular career with the bank, she for- For example, did Ms Kochhar recuse herself from
mobilising the internal complaint committee mechanism to address backdat- image (bank employees forgot got the sixth `C’ – that lead- the meetings where loans to Videocon were sanc-
ed external claims. But the law should not rely on the subjectively variable ele- that they had to be humble ers, like Caesar’s wife, must tioned? These were all important questions,
and listen to customers). Ms also be above suspicion. And wrongfully dismissed by Ms Kochhar in the initial
ment of collective organisational wisdom or the accumulation of convention to
Kochhar didn’t sit on her ego unfortunately, this is where stages, at least.
redress this use. Explicit steps to deal with such contingencies – including, for and made ICICI Bank a cau- she and the bank faltered big The second mistake was hanging on to the
instance, deposing non-employees – would go a long way towards reassuring tious entity. So risk was out time even though they had chair even after the damage was done. She
women that the Indian legal system, at least, takes their rights seriously. and profitability was in, even enough time to come clean. should have left immediately after the bank
The fact is that for countless ordinary women in the unorganised sector – and if it meant reduction in the The fact of the matter is that appointed the Srikrishna Committee to look
that includes in politics – the path to redressal is non-existent. The laws stipulate balance sheet size. There is no reports about conflict of inter- into the charges against her. All that she did
setting up local complaints committees in every district for organisations with 10
doubt that she indeed cali-
brated a huge change in strat-
POWER POINT est were doing the rounds for
over two years before they
was to proceed on leave. Even more surprising
was her decision to make herself available for
or fewer employees. Currently, their existence is about as evident as the Asiatic chee- egy, got the team to buy into SHYAMAL MAJUMDAR finally became public and hit reappointment on the ICICI Securities board.
tah in India. Where corporations are liable to fines for not setting up complaints com- the vision and executed it the Kochhars like a storm. The bank, which has an 80 per cent stake in the
mittees, there are no penalties for districts that lack such set-ups. In the same vein, well. Though the charges based subsidiary, backed her fully. All this happened
the Act needs to acquire some balance: It rightly offers protection to women who In May, 2014, when she began her second five- on a whistleblower’s letter were directly against in July, indicating neither she nor the bank had
complain; the same rights should be extended to men who stand accused. Ensuring year term, Ms Kochhar added a fifth ‘C’ — credit her and family, Ms Kochhar did not even care any intention of letting go. So what prompted
growth — to her strategy mantra. The new strat- even once to tell her side of the story to the out- her to throw in the towel just two months later?
the principles of natural equity is the best guarantor of women’s rights. Lastly,
egy was to expand not by taking on more risk, but side world and instead left the job to then chair- What changed in the intervening period? There
beyond the changes required in the Act per se, the latest series of episodes have also by building a base of loyal customers and shun- man and a couple of insiders. And all that they are no clear answers to that.
underscored the importance of leadership in the workplace. A crucial reason why ning the pell-mell marketing of credit card and did was to be dismissive about all the charges. Ms Kochhar did play a sterling role in
several women have resorted to public naming and shaming is the deep-set belief personal loans to newcomers that so endangered Media silence after that perhaps made the leader India’s financial sector, but it’s sad that she
that formal channels are unresponsive. This needs to change. Leaders across work- the bank just five years ago. "We are not just back and her team complacent to such an extent that would now be remembered more for this con-
places must ensure that the formal system is both sensitive and responsive enough to growth; we are now actually in a position to when the avalanche of allegations resurfaced, troversy rather than what she had achieved.
grow 2-4 per cent higher than the industry with- the bank just didn’t know how to respond. That That’s the price a leader has to pay for being
for female employees to feel confident in registering a complaint.
out diluting profitability or picking up wrong explains the hurried clean chit by the board a less mindful about the need to be seen as being
credit risks," Ms Kochhar had said in an interview day later. The strategy simply boomeranged. ‘above suspicion’.

Why our freedom is in danger

BOOK REVIEW
SHYAM SARAN
There is little doubt that we live today in
an era of democratic recession. Across
the world, in democracies, new and old,
we witness the relentless rise of populism,
often associated with a lurch towards
authoritarianism. Yascha Mounk, who
teaches politics at Harvard, dissects these
political trends, identifies their structur-
al origins and postulates what could res-
cue liberal democracy from the existen-
tial dilemma that beset it.
Mr Mounk makes an important dis-
tinction between liberalism and democ-
racy. Democracy, he says, is a “set of bind-
ing electoral institutions that effectively
translates popular views into public pol-
icy.” In other words, we are talking about
a representative form of government.
Liberalism, on the other hand, involves
institutions that “protect the rule of law
and guarantee individual rights such as
freedom of speech, worship, press, and
association to all citizens (including eth-
nic and religious minorities)”. A liberal
democracy, therefore, is a polity that
“both protects individual rights and
translates popular views into public pol-
icy”. The crisis liberal democracies con-
front today is because these two compo-
nents are out of sync; they are no longer
held in balance.
Mr Mounk uses a number of case stud-
ies to demonstrate how electoral democ-
racy has, through legitimate means,
brought to power populists who claim to
speak in the name of people. At least in
the initial stages, they convey a sense of
empowerment to significant constituen-
cies and this must be acknowledged and
addressed. It is another matter that when
the simplistic solutions to complex chal-
lenges that populist leaders offer fail to
deliver, as they inevitably do, there is
recourse to deflecting anger towards
domestic and foreign targets, in particu-
lar minorities and migrant communities.
The rule of law and respect for individual
rights then become casualties.
Subsequently, authoritarianism becomes
the instrument to suppress dissent and
loss of popular support.
But what explains the lure of populism
and the support for populist leaders? Mr
Mounk argues that answers lie in tech-
nological advance, globalisation and ris-
ing income inequalities. Technological
advance has empowered and enriched a
relatively limited technocratic and finan-
cial elite, while living standards have
stagnated for most people. Furthermore,
the author shows how relatively speaking,
ethnically homogenous societies have
found their steady evolution into multi-
ethnicity deeply threatening, further
exacerbated by fears of losing jobs and
incomes to migrants. And the rise of
social media has exacerbated these sen-
timents. Political elites are no longer able
to control social messaging as the chan-
nels and instruments of communication
have become democratised, enabling
“many-to-many” messaging, unmediat-
ed by authority.
The process of globalisation has had a
similar impact. There is little doubt that
most of the challenges that the world con-
fronts are cross-border in nature. They
demand collaborative responses from
states and adherence to a common set of
norms and regulations. And yet, this also
leads to a pervasive sentiment that
nations are losing control over their des-
tinies to foreigners and a general mistrust
of international institutions becomes
apparent. This is most starkly evident in
the support for Brexit in the UK and, of
course, Trump’s slogan of America First.
Although the book is a lucid and per-
suasive analysis of the current eclipse of
liberal democracy, it focuses almost
entirely on its Western variant. There are
only passing references to non-Western
democracies, though one may argue that
the future of the liberal democracy will
probably be determined by how sustain-
able it proves to be in countries in Asia —
India in particular — Africa and Latin
America. In the one reference to India, Mr
Mounk puts Prime Minister Modi in the
category of “authoritarian populists” and
argues that, if he is re-elected, “all bets are
off” as to the future of democracy in the
country. This is too sweeping and sim-
plistic an assessment of a deeply com-
plex polity. For example, Mr Mounk links
the success of liberal democracy in the
West to ethnic homogeneity. In India, on
the contrary, it is multi-ethnicity and plu-
rality that has sustained liberal democ-
racy. No authoritarian leader can put a
monochromatic political or religious
frame on what is one of the most diverse
countries in the world.
Mr Mounk’s prescriptions on what
may be required to deal with the crisis in
liberal democracies follow from his diag-
nosis, but disappoint in being largely
exhortatory in nature. Of course, those
who value democracy must stand up and
be counted. We must make our political
institutions more responsive to popular
will. We must use public policy to reduce
economic inequalities. But how do we
respond to the current wave of populism
that is sweeping over us? One would have
also liked to see Mr Mounk address the
challenge of China, the seductiveness of
its model of political authoritarianism and
market capitalism. China’s success and
continuing ascendancy does pose an alter-
native to liberal democracy and it is not an
accident that we see “dictator envy” in
democratic states, India included.
Despite these limitations, The People
Vs Democracy is an important book and a
serious analysis of the existential crisis that
liberal democracies are traversing. But
there are no easy answers, and the future
of liberal democracy hangs in the balance.
(The reviewer is a former Foreign
Secretary and currently Senior Fellow
at CPR)
THE PEOPLE VS. DEMOCRACY
Yascha Mounk
Harvard University Press
328 pages
~699
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Regulatory checks help fund houses Customer additions to support

THE COMPASS

tide over credit and liquidity crises Bandhan's near-term growth

Holders of IL&FS papers would have faced more pain if the sectoral cap norms were not revised Net interest income in Q2 surged 55%; profit jumped 47%
SHREEPAD S AUTE centre (DSC), against a capac-
ASHLEY COUTINHO
Mumbai,10October PERFORMANCE OF LIQUID SCHEMES be asked to set up a separate risk man-
agement team that reports directly to After being under pressure
ity of 3,600 per DCS. In addi-
tion, average customers per
Returns of several liquid schemes were impacted after the ILFS downgrade (%) the trustees rather than the fund’s man- recently, shares of Bandhan branch are 3,000 against

M
utual funds are in a relatively
better position to navigate liq-
uidity and credit setbacks than
they were a few years ago owing to a
slew of regulatory changes effected in
the past few years.
“On the whole, the system has
become much less risky in terms of both
its liquidity and credit profile,” said R
Sivakumar, head – fixed income, Axis
Mutual Fund.
The pain from holding IL&FS papers,
for instance, would have been much
more had it not been for the regulator’s
revised sectoral cap norms, say experts.
In February 2016, the Securities and
Exchange Board of India (Sebi) restrict-
ed investments in debt instruments
issued by a single issuer to 10 per cent of
the scheme’s net asset value from 15 per
cent earlier. The norms were revised fol-
lowing the default by Amtek Auto on
its debt obligations in 2015. Two of JP
Morgan’s schemes were invested in the
company’s debt papers, with JP Morgan
India Short Term Income Fund’s hold-
ing exceeding 15 per cent of its corpus of
~4.3 billion at the time.
The regulator has also been urging
fund houses to reduce dependence on
external credit rating agencies and set
up their own credit teams for better due
diligence. They have to periodically dis-
close portfolio of debt schemes and
details of downgraded securities.
“The industry has increased
resources on the credit research side
3 month 6 month 1 year
Principal Cash Management Fund
Union Liquid Fund
DHFL Pramerica Insta Cash Fund
Reliance ETF Liquid BeES
Taurus Liquid Fund
Sahara Liquid Fund - Fixed Pricing Option
Reliance Liquid Fund
HSBC Cash Fund
Quantum Liquid
Franklin India Liquid Fund
Source: Value Research
After 2013, several MFs are putting their
liquid funds to periodic stress tests to
gauge the impact in case of sudden
redemption pressure or significant
changes in credit quality
but it still relies on public rating. The
tracking for a AAA- or AA-rated paper is
typically less than lower-rated papers,
and the former needs to be tracked more
frequently,” said Kaustubh Belapurkar,
director, fund research, Morningstar
Investment Adviser India.
“Some of the large fund houses that
were able to put a strong credit process
in place have been able to weather the
recent liquidity crisis better than oth-
ers,” added an industry official, request-
ing anonymity.
Last year, Sebi’s MF advisory com-
agement,” said the official. Bank (Bandhan) have seen 25,000-30,000 in case of oth-
-6.8 -5.1 -1.9 MFs typically do not go below A-rat- some recovery this week, fol- er private banks. This indi-
ed papers but they can technically go up lowing the management's cates a good opportunity to
-1.7 0.1 3.4 to BBB, which is considered investment optimistic views on growth expand its customer base.
1.2 2.4 4.4 grade. Going below this requires per- after restrictions over branch "The Q2 result is in line in
mission from the fund’s trustees. Debt expansion by the Reserve with expectations.
1.4 2.7 5.4
schemes investing in lower-rated debt Bank of India (RBI). Good Considering the customer
1.4 2.7 5.4 papers run the risk of sudden down- results for September quarter addition potential and strong
1.4 2.6 5.4 grades or defaults. (Q2) have added to gains, with power in micro credit, we do
Liquid funds, which primarily invest the stock surging 6 per cent not see material impact on
1.6 3.2 6.2 in money market instruments like cer- on Wednesday. led to a 100 bp expansion in Bandhan's growth due to the
1.6 3.2 6.3 tificate of deposits, commercial papers Analysts, thus, now net interest margin to 10.3 per RBI's action in the near term.
1.6 3.2 6.3 and term deposits, have become less believe Bandhan’s short-term cent. Also, with the current tight-
risky as well. growth may not get impacted The rise in share of low- liquidity situation in non-
1.6 3.3 6.4 After 2013, several funds are putting much due to restrictions on cost current and savings banking financial companies,
their liquid funds to periodic stress tests branch expansion, given the account (CASA) deposits ratio Bandhan will benefit in terms
to gauge the impact on these schemes in bank's ability to add cus- to 37 per cent as of September of credit growth as a bank,"
case of sudden redemption pressure or tomers. If Bandhan does live 2018, from 28.2 per cent a year says Kajal Gandhi, analyst at
significant changes in credit quality. up to expectations, its ago, reduced the cost of ICICI Securities.
This was done after several large liq- investors too will benefit. funds. Hence, net profit Stock valuation is likely to
uid schemes saw significant outflows A 64 per cent year-on-year surged 47 per cent YoY to ~4.9 remain at a premium given
after the RBI raised short-term rates to (YoY) rise in loan book to billion. the superior margins, return
defend the rupee in July 2013. ~317.3 billion in Q2, supported Bandhan expects to sus- on assets (4.3 per cent) and
mittee had also deliberated on making Until 2009, liquid funds were by 27 per cent rise in the num- tain its performance with profitability, she adds.
it mandatory for fund houses to form allowed to hold one-year papers and ber of customers, pushed up focus on customer acquisi- A caution, though, is that
internal risk assessment committees even invest in papers exceeding the Bandhan's net interest tion (15-18 per cent annual it has ~3.9-billion exposure to
comprising key fund officials and tenure. Now, they can only invest in income (NII) by 55.4 per cent customer growth target). IL&FS, which has not yet
external consultants. The functioning securities with a residual maturity of 91 YoY to ~10.8 billion. This, According to the manage- been provided for. This may
of the committee was to be directly days or less. Reduction in tenure of along with a 40 basis point ment, Bandhan has 2,700 bor- increase provisioning, which
monitored by the trustees. The regu- papers has significantly reduced risks (bp) fall in the cost of funds, rowers per door-step service could weigh on profits.
lator, however, did not go ahead with associated with these funds, said
making this requirement mandatory. experts.
“The industry is still trying to learn
from its mistakes. Sebi ought to draft Strong growth in base business
powers Zee’s show in Sep quarter
guidelines, enumerating the size of the
credit rating team along with experi-
ence and qualifications. Funds should

Despite pressure, margins much ahead of estimates

BrokingfirmbarredfromsellingDHFLshares RAM PRASAD SAHU

Worries about the higher scale

SHRIMI CHOUDHARY
Mumbai, 10 October
The Securities and Exchange
Board of India (Sebi) has
restrained a Delhi-based bro-
kerage from selling shares of
Dewan Housing Finance
Corporation (DHFL).
The broker had defaulted
on ~2 billion in payment to a
non-banking financial com-
pany (NBFC), which had
pledged shares of DHFL with
it. Sources say the broker used
the shares for proprietary trad-
ing and incurred a huge loss,
following a sudden 60 per cent
drop in shares of the housing
finance company last month.
The source said the broker and
NBFC are at loggerheads over
certain trades in DHFL.
“The NBFC has com-
plained to Sebi that the bro-
ker transacted without its
consent. However, the broker
claims the trades were exe-
cuted at the behest of the
client,” said a source, adding
the default amount could be
as high as ~5 billion.
“A team of Sebi and stock
exchanges officials have vis-
ited the premises of the bro-
kerage to ascertain facts. It
has directed the broker to not
deal in shares until further
notice,” said the person.
Regulatory authorities
suspect similar defaults at
some other brokerages which
were dealing in shares of
Indiabulls Ventures and
Infibeam Avenues, which
have also seen sharp sell-offs
Regulator’s directive
Sebi directive comes after broker
defaulted on ~2 billion payment
to an NBFC
The NBFC had pledged shares of
DHFL with the broker
People in the know say the shares
were used for proprietary trading
and incurred huge loss
Authorities suspect similar default
at few other brokerages
Market players feel these don’t pose
systemic risks; are one-off cases
without any news trigger. dropped 15 per cent and 20
This is the first big default per cent, respectively in a
which has surfaced after month. A little over 40 stocks
shares of several NBFCs had lost a third of their market
crashed last month, on worry capitalisation. Sources say
that liquidity conditions that the market regulator is
could tighten due to conta- examining whether there was
gion risk from the debt-laden intent of manipulation by
IL&FS default. The sharp fall broker and client. Market
in the shares resulted in trig- players said these were one-
gering of margin calls at sev- off cases and did not pose a
eral brokerages. systemic risk. “Given the
The Nifty Midcap 100 and sharp fall in the market, there
Smallcap 100 indices have could be some cases of
default. They don’t pose a
major risk to the markets. All
the risk management systems
continue to be robust,” said
Rajesh Baheti, president of
ANMI, a brokers’ lobby.
According to Baheti, regu-
lator and market intermedi-
aries are working on a new
mechanism, one which
would look to further ring-
fence clients’ money from
any utilisation for proprietary
trading by brokerage firms.
In such trading, a broker-
age trade in stocks, bonds, cur-
rencies and commodities,
among others, with its own
funds rather than the cus-
tomer’s money, to make a prof-
it for itself.
Recently, cases have sur-
faced where brokers were found
to have been in manipulative
activities involving proprietary
trades. In some cases, clients’
money had been misused for
their own trading interests, a
source said. An email sent to
Sebi remained unanswered.
The name of the broker and the
NBFC could not be ascertained.
of investments in the digital
vertical taking a toll on mar-
gins were put to rest, at least
in the September quarter, as
Zee Entertainment reported
better-than-expected finan-
cials. Aided by strong base
business growth, operating
profit margins came in at 34
per cent, up 300 basis points
as compared to the year-ago
number. Analysts had expect-
ed the number to be in the 30-
31 per cent mark.
Profit at the operating lev-
el was up 37 per cent, despite
the continued high program-
ming costs that were up 25
per cent year-on-year. The
cost increase was largely due
to funding of new content for
ZEE5, movie production, and
amortisation costs for the
broadcast business. While
costs are expected to be ele-
vated, given the 500-600
hours of original content the
company plans to create for
the digital venture over the
next one and half years, the
company stuck to its full-year
margin target at upwards of
30 per cent. Reported mar-
gins in FY18 were at 31.1 per
cent.
While the company did
not disclose details of the rev-
enue contribution to overall
sales, the digital venture has
had a good start, with 41.3
million monthly active users
spending about 31 minutes
per day on ZEE5, as of
September.
While the firm has tied up
with Bharti Airtel and
Reliance Jio, it is in talks with
other telecom operators,
broadband service providers,
device manufacturers and e-
commerce companies to
drive traffic to ZEE5. While
the management has given a
3-5 year time frame for the
venture to break even, the
Street will keenly watch out
for revenue uptick from this
medium. The management
expects the platform to get at
least 30 per cent of overall rev-
enues from ZEE5 over the
next five years.
In addition to the digital
vertical, how the advertising
and subscription revenues
scale up will be important. For
the quarter, the firm, on the
back of market share gains,
posted a strong 23 per cent
advertising growth on a lower
base.
The company is confident
of outperforming the sector
growth in the second half of
the fiscal, and expects FMCG
contribution to remain
robust. Subscription growth,
too, benefited from a low
base, early closure of distri-
bution contracts, and phase
III monetisation.
While the results came in
after market hours, the Street
seems to have an inkling of
the performance given the
stock closed 6.4 per cent high-
er in trade. Given the strong
outlook and overall market
sentiment, expect the gains
to continue.

Asian stocks mixed as GARDEN REACH ADDS

treasury yields stabilise TO DULL IPO SCORECARD
from seven-year peak Garden Reach Shipbuilders & Engineers has
joined the league of firms whose shares are
available in the secondary market at a price
ADAM HAIGH AND ANDREEA PAPUC lower than that in their IPO. Shares of the
Sydney, 10 October company ended 13 per cent over their IPO
price after their stock market debut, on Wednesday. Shares of more than
Asian stocks traded mixed on Wednesday, as 60 per cent of companies that have listed since 2017 are currently below
yields on Treasuries retreated from a seven- their IPO price. The latest correction in the market has further weighed on
year peak. The dollar edged lower against major the performance, with shares of almost all 58 stocks coming of at least 15
currencies. per cent from their peak. Barring half a dozen companies, the secondary
Shares in Japan rose after four days of loss-
market performance for most firms has been tepid. This is despite huge
es, while those in China reversed gains. Hong
demand for shares during the IPO. Investment experts say the poor
Kong stocks outperformed their South Korean
counterparts, lagging after a holiday.
scorecard will weigh on investor appetite for forthcoming IPOs. Investors
Earlier, the S&P500 Index was dragged down are better off buying shares of existing companies rather than investing in
by materials shares, after a profit warning in IPOs if there are no gains to be made, said an expert. SAMIE MODAK
the sector, while technology shares rebounded
from a three-day rout. Treasuries steadied with Issue Issue Current Change Fall from
the yield on the 10-year benchmark little
TOP LOSERS size (~ bn) price (~) price (~) (%) peak* (%)
changed at 3.21 per cent, while the greenback New India Assurance 96 800 203 -75 -47
remained under pressure after US President S Chand 7 670 200 -70 -63
Donald Trump said the Federal Reserve is mov-
ing too fast with interest-rate hikes. GIC Re 114 912 318 -65 -29
Asian investors are assessing increasingly ICICI Securities 35 520 240 -54 -48
attractive valuations against a backdrop of
Matrimony.com 5 985 491 -50 -50
deepening US-China tensions and a surge in
volatility for stock and bond markets.
Bear markets for equities in China and Hong
TOP GAINERS
Kong contrast with American equities that Avenue Supermarts 19 299 1,374 360 -18
remain close to all-time highs. China’s yuan AU Small Finance 19 358 581 62 -22
remains weak after steps this week from author-
ities to spur lending in the economy. New lend-
CDSL 5 149 231 55 -42
ing and money-supply data, due as soon as Fine Organic 6 783 1,114 42 -10
Wednesday, will be closely watched as Beijing Dixon Tech 6 1,766 2,440 38 -46
strives to support flagging growth. Universe: IPOs of over ~5 billion since since 2017
Elsewhere, American crude held near $75 a *Change between all-time high and current price Source: Bloomberg
barrel as Hurricane Michael curtailed offshore
oil production and the IEA issued a warning to HIGHLIGHTS
the global market. Total mainboard IPOs since 2017 (any size) 58
The pound nudged up after the Times report-
ed that a group of between 30 and 40 Labour Currently above issue price 23
members of Parliament will defy Jeremy Currently below issue price 35
Corbyn and endorse a less hard-line proposal to
prevent a no-deal Brexit. BLOOMBERG
Average listing-to-date returns (%) 2
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

.
MUMBAI | THURSDAY, 11 OCTOBER 2018 THE SMART INVESTOR 13 <

TCS Q2 RESULTS PREVIEW

New deal wins, margin outlook Use rallies to exit weaker Market falls trigger
different behaviour
key issues to watch out for
Tata Consultancy Services (TCS) is slated to announce its
financial results for the September quarter of financial year
NBFC stocks: Experts among investors
2018–19 (Q2FY19) earnings on Thursday. For the quarter end-
ed June 2018, the information technology bellwether had BajajFinance,HDFCmostpreferred;analystsfavourshifttohigh-qualitybanks is the pure momentum trader.
This includes hedge funds as
reported a 23.5 per cent rise in its consolidated net profit at ILLUSTRATION: BINAY SINHA
well as retail players. They have
~73.62 billion. Most analysts expect TCS’ good performance to HAMSINI KARTHIK already switched to short from
continue in Q2FY19 as well, partly aided by the rupee’s slide. Mumbai,10October long in attitude. If the market
Here’s what leading brokerages expect: falls further, they will put more

S
tocks of non-banking finance com- money into the short side by
MOTILAL OSWAL SECURITIES panies (NBFCs), among the biggest buying puts, selling calls and
On the back of $1.6-billion deal win in banking, financial serv- losers in the recent carnage, undoubt- going short in the stock futures
ices and insurance (BFSI) alone, we expect high growth momen- edly benefitted from Wednesday’s market segment. This creates a
tum from the largest revenue-contributing vertical. The execu- rally, as they gained up to 16 per cent. momentum effect where
tion of recent deal wins and seasonal strength would ensure The good spell did lift these well above INSIGHT prices fall even further.
maintenance of revenue growth trends. We expect 4 per cent their 52-week lows. The third category is the
quarter-on-quarter (QoQ) growth in constant currency (CC) Yet, experts urge investors to use such DEVANGSHU DATTA committed long only buyer
terms. Our Ebit (earnings before interest and tax) margin esti- ralliestoexitfromtheweakernames.“Asliq- who never goes short. This
mate stands at 26.1 per cent - up 100 basis points (bps) QoQ - pri- uidity crunch is here to stay, at least in the The Nifty has dropped over includes some domestic insti-
marily led by rupee depreciation. The profit after tax (PAT) is mediumterm,earningsarelikelytobeweak 1,300 points from its peak, a tutional investors and some
pegged at ~77.9 billion - up 6 per cent QoQ - led by a sequential forthesector.Investorsshouldusereliefral- retraction of 11 per cent. foreign portfolio investors, as
growth in the operating parameters. lies such as Wednesday’s to exit from the Smaller stocks are down even well as some retail investors.
weaker NBFC stocks,” says Pankaj Pandey, FACTS IN FIGURES more. Importantly, all the This category will continue
EMKAY GLOBAL head of research at ICICI Securities. Price in ~ Change (%) major stock indices, the Nifty, investing even if the market
------------------------------------------------------------ ------------------------------------------------------------------
We expect a gain of around 140 bps on operating margins on This comes even after Tuesday’s assur- Sensex, Nifty Next 50, Nifty falls through the next several
Company 52-wk As on 1-day From 52-wk
a sequential basis due to wage/visa impact normalisation and ance by the country's largest lender, State 500, and the Midcaps, months or longer. The logic is,
rupee depreciation. Key monitorables include a demand out- Bank of India (SBI), that it planned to buy
high 10 Oct high Smallcaps , etc, have broken at some stage prices will hit
look, especially in the large US BFSI clients, operating margin loans worth ~450 billion from NBFCs, as HDFC 2,051 1,739 1.5 -15.2 down below their respective bottom and if you keep buy-
levers, if any, and commentary on digital. compared to ~150 billion last year. Bajaj Finance 2,995 2,266 9.9 -24.3 200-day moving averages. ing, you will reduce your aver-
The cautiousness has reason. Experts This indicates a broad bear age acquisition prices since
EDELWEISS SECURITIES say the impact of tight liquidity on prof- Bajaj Finserv 7,200 5,955 9.8 -17.3 market which reflects bearish you will have bought at the bot-
We expect revenue growth of 4.5 per cent QoQ in CC terms, driv- itability and fear of a likely asset-liability Indiabulls Housing Finance 1,439 978 3.6 -32.0 sentiments across most tom or near it. Eventually the
en by ramp-ups in major deal wins and a robust demand envi- management (ALM) mismatch would Bajaj Holdings & Investment 3,250 2,602 2.9 -20.0 investor classes. Sector-spe- market will bounce, and the
ronment. However, the dollar growth is to be restricted to 3.3 per weigh on many of these stocks. Rising cific indices are also down to long term returns will be okay.
cent. Ebitda margin is expected to rise 180 bps QoQ on rupee interest costs over the past few months L&T Finance Holdings 214 134 8.2 -37.2 bear market territory. This is fine if you can consis-
depreciation (90 bps), absence of visa costs (40 bps), and opera- was already seen to impact the margins of Indiabulls Ventures 820 375 -5.0 -54.3 This is the kind of move tently pursue the strategy,
tional efficiencies (50 bps). Commentary on spends by BFSI and NBFCs, while pressure on asset quality that triggers different kinds of however long it takes for the
Aditya Birla Capital 214 110 5.2 -48.4
retail clients, growth in digital, and outsourcing in Europe and was also inching up. behaviour in different investor turn around. That requires
Asia-Pacific are key monitorables. Amongthosewhichcouldwitnessweak M & M Financial 538 406 9.8 -24.4 classes. The vast majority of courage and deep pockets
investor sentiment are Cholamandalam Shriram Transport Finance 1,671 1,081 13.2 -35.3 retail investors are traders by since bear markets can knock
KOTAK INSTITUTIONAL EQUITIES Investments,DewanHousingFinance,Gruh nature. They are looking for 50 per cent off peak prices and
Note: Price rounded off; list of top 10 NBFCs according to market cap
We expect CC revenue growth of 4.1 per cent and cross-cur- Finance, Indiabulls Housing and Repco Compiled by BS Research Bureau Source: Exchanges investments that bear markets can
rency headwind of 105 bps. Growth will be led by seasonal Home Finance, say analysts. will yield quick The committed long last years.
strength and ramp-up of large deals won recently. All verticals The recent developments have in fact returns while investors will make The bear mar-
will report healthy growth. We expect net sales and PAT growth pushed brokerages to slash their earnings appear more attractive over NBFC stocks are better placed to tap low-cost funds, being “long only” money 2 or 3 years ket could intensi-
of 7 per cent and 10.2 per cent. COMPILED BY SWATI VERMA expectations for the segment by seven to 15 inthemediumterm,”saysSiddhartPurohit thanks to their deeply penetrated current by inclination. down the road as fy, given a combi-
percentforFY20.“Weexpectthemarketsto of SMC Global. “Bank stocks have been less and savings account deposits. More, if They lack the they reduce their nation of poor
be more conservative in lending to NBFCs, affected in the recent correction, reflecting growth for NBFCs slows, the lending com- sophistication or acquisition prices. macros, and polit-
RESULTS TODAY: STREET EXPECTATIONS which is likely to push up pricing (interest
costs),” say analysts at Morgan Stanley.
their strength to tap market funds.”
Morgan Stanley, Nomura and CLSA
petition in retail loans could diminish for
banks, helping them increase their lending
the courage They may suffer
required to hold huge losses in the
ical uncertainty
that will last until
Quarter ended September 2018
Net sales Net profit A bigger worry is a decline in their loan have also expressed a preference for bank- margins. “This could help drive up rev- a long portfolio interim, but this at least middle of
Broking houses ~million % chg* ~million % chg* growthrate,onekeyreasonwhyNBFCstrad- ing stocks. enues for retail-funded (meaning, from through a big strategy depends on 2019. The global
TCS ed at valuations much higher than even the Another factor is that the banking sector loans to individuals) banks,” say analysts at bear market. not booking losses negatives - higher
top-notch banks. For now, Bajaj Finance, a isseenatthecuspofastrongbadloanrecov- Morgan Stanley. They will either oil prices, a pro-
Edelweiss Securities 365,850 19.79 80,208 24.43 niche consumer lender, and HDFC, market erycycle.“Overall,banksareexpectedtosee ICICI Bank, IndusInd Bank, Axis Bank, sell their holdings, or reduce tectionist US, Brexit, tighten-
Kotak Securities 366,711 20.07 80,792 25.34 leader in housing loans, emerge as top ana- a robust drop in gross non-performance HDFC Bank and SBI are the top picks for future exposures, while hold- ing money supply, etc, will not
Motilal Oswal 364,394 19.30 77,907 20.90 lysts’ picks in the NBFC space. assets as resolutions pick pace,” analysts at brokerages in the banking space. A valua- ing onto current portfolios. go away. The momentum
Emkay 361,525 18.37 79,685 23.62 Apart from these two names, experts Kotak Institutional Equities say in their tion reset of 20-25 per cent after the recent This will affect both direct traders who go short will stand
say now is a good time to mop shares of September quarter earnings preview. stock price correction also boosts their equity holdings and also equi- to make a good deal of money
*Change over y-o-y; the list comprises Nifty companies. The above are results
estimates of some leading research houses Source: Research Reports banks, “On a more sustainable basis, banks Also, in a tight liquidity situation, banks appeal. ty fund behaviour. as prices go lower.
We should see reflections of The committed long
this in changing mutual fund investors will make money 2 or
allocations in October. Many 3 years down the road as they

Downgrade risks mount for earnings outlook on oil, rupee equity focused SIPs which reduce their acquisition prices.
comeupforrenewalwillnotbe They may suffer huge losses
renewed, or will be renewed in the interim but this strategy
NUPUR ACHARYA But history suggests the higher import bills. Add to expects earnings growth for by a systemically important at ICICI Securities, wrote in a with smaller quantum. It’s depends on not booking loss-
Mumbai, 10 October divergence won’t extend for that the tighter local-funding Nifty companies to be 2.8 per non-banking finance compa- note this week. “There could worth noting that the mini- es. So they must hold and add,
long, and the growing stress conditions, and profit cent on year in the fiscal sec- ny aggravated the sell-off in be a downward revision in mum period of a SIP is six to their holdings.
The rupee’s longest rout since in Asia's third-largest econo- estimates begin to appear ond quarter, much slower than stocks, which were already earnings across sectors post months,andasignificantnum- The uncommitted long
2000 and oil’s surge to a four- my may soon translate into optimistic. the 13 per cent expansion seen reeling under a tumbling the adverse movement in berofSIPsweretakeninAprilat only players will lose huge
year high have put earnings lower projections. “Key factors are rising in the April-June period. rupee and elevated prices macro parameters.” the beginning of the fiscal. sums. First, they will not add
estimates of Indian companies Not that a weaker rupee is input costs, volatile crude Demand in the world’s of crude oil — the nation’s Here’s what brokerages LowerSIPsandhigherredemp- to their holdings as prices fall,
at the risk of downgrades. bad for all Indian companies prices, rupee depreciation and fastest-growing major econo- top import. and investors expect from the tions will create some selling so their acquisition prices
Analysts have boosted the — exporters including soft- tightening liquidity, all cata- my is cooling after back-to- “Rupee depreciation and September-quarter results pressures for equity mutual remain high. Second, this class
average profit forecast for NSE ware producers and drugmak- lysts for market de-rating,” back rate increases by the cen- higher crude prices will fur- season that kicks off Thursday funds, which will be hard since tends to sell close to the bot-
Nifty50 Index companies by ers will gain in local-currency analysts led by Dhirendra tral bank, prompting policy ther widen the current- with Asia’s top software the industry has already been tom as prices fall and patience
9.2 per cent this year, shrug- terms. Still, the net impact on Tiwari at Mumbai-based makers to pause the hiking account deficit and pose a risk exporter Tata Consultancy adversely affected by poor runs out. Unfortunately most
ging off a 12 per cent slump in the broader corporate sector Antique Stock Broking wrote cycle in October despite the of higher inflation,” Pankaj Services. returns in the debt segment. retail investors are in this class.
the gauge since August. may be negative because of in a note. The brokerage currency’s free fall. A default Pandey, the head of research BLOOMBERG Another class of “investor”

COMMODITIES1
>

> PRICE CARD

Rising oil price Slump in rupee, stable demand
As on Oct 10

METALS ($/tonne)
International
Price %Chg# Price
Domestic
------------------------------------------------------------------------------

%Chg#
------------------------------------------------------------------------------

makes plastic spur prices of domestic iron ore

items costlier
Aluminium 2,031.5 -5.1 2,398.3 -1.8
IRON ORE PRICES JAYAJIT DASH of $58 a tonne and then potentially correct (fall) by
Bhubaneswar, 10 October (~/tonne) remain flat through 2020, at seven to nine per cent by next
Copper 6,219.0 -1.4 6,588.5 -9.3 an average of $56. “This is fiscal (FY20), led by a domes-
The rupee’s slump and strong Material June Sept mainly demand-driven. We tic supply surplus as merchant
Nickel 12,660.0 -9.3 13,406.1 -10.0 demand from end-use indus- Odisha see steel-intensive activity producers capitalise on peak
Lead 1,934.0 -15.3 2,182.7 -11.1 DILIP KUMAR JHA days,” said Pradip Thakkar, vice- tries will keep domestic iron ore Iron ore lumps 4,094 5,300 slowing in China, leading to production capacity before
Mumbai, 10 October chairman at Mechemco Industries prices elevated in the near term, Iron ore fines 1,862 3,350 peak steel demand in the near (ore mining) leases expire.”
Tin 18,975.0 -4.4 19,536.5 -4.6 here, a maker and exporter of plas- unlike the trend in internation- future. China already has a Currency erosion in the

P
lastic manufacturers are set tic products. al prices. Karnataka large stock of iron ore and past few months has con-
Zinc 2,691.5 1.3 3,233.6 1.2 Iron ore fines 2,367 2,800*
to raise their prices by two to Brent crude has become costlier A report from ratings steel to absorb a capping tributed. While the global
Gold($/ounce) 1,186.2* -5.5 1,301.4 -5.2 three per cent this month, on and the rupee has also fallen by 7.7 agency CRISIL says the price in Chhattisgarh regional price,” the report price of 62-Fe grade ore
top of earlier rises, to offset cost per cent since August. As a sequel, the country have been shored Iron ore lumps 3,540 4,260 explained. declined by 15-17 per cent
Silver($/ounce) 14.3* -10.7 15.9 -9.9
increases. Reliance Industries has raised PP up by robust growth in demand * Price for August Sources: Indian Bureau of
The price outlook in the between January and August
ENERGY A derivative of crude oil, poly- prices by ~2,000 a tonne this month; and elevated prices of pellets, Mines, industry, PMAI domestic market is the this year, landed costs have
mer prices move in line with the so has Indian Oil Corporation. Also, an intermediate product. Over reverse. Rahul Prithiani, direc- declined by only three to five
CrudeOil($/bbl) 84.9* 8.6 81.2 6.2 movement in the prices of Brent both have raised their LLDPE (basic) six years, benchmark prices of to the landed price, compared tor at CRISIL Research, says: per cent. This has a bearing on
NaturalGas($/mmBtu) 3.4* 20.1 3.3 19.1 crude, fluctuation in the rupee prices by ~2 a kg. 62 per cent iron ore fines with a 45 per cent discount in “Domestic prices will stay ele- the 62 per cent of crude steel
against the dollar and cost of labour. “Apart from crude oil price abroad have remained $65-70 FY17 and 31 per cent in FY18. vated in the near term, led by production that is entirely
AGRI COMMODITIES ($/tonne) All three factors have worked to increase and rupee depreciation, a tonne. But, domestic prices An international report on opportunities linked to dependent on merchant ore
Wheat 232.8 4.5 276.9 2.1 make crude oil cost of labour has also have risen 40-45 per cent over performance of commodities healthy demand growth, weak procurement.
refineries raise their gone up significantly last year and this grade of ore by Natixis predicts iron ore currency and rising pellet
Maize 199.4* 0.3 186.2 6.7 polymer prices inter- over the past few trades at a 16 per cent discount prices would fall to an average prices. However, prices will More on business-standard.com
Sugar 357.1* 5.1 453.7 -9.4 mittently over the years. Engagement of
past two months. skilled and unskilled
Palmoil 550.0 -5.6 907.5 -10.1
Logistics woes drive mills to import iron ore
Data compiled by labour has become
Rubber 1,400.4* -6.5 1,731.3 -6.4 plastemart.com costlier in the last
shows prices of all couple of years.
CoffeeRobusta 1,684.0* -5.9 2,196.2 -4.3 varieties of polymer Another labour cost
Cotton 1,696.5 -12.1 1,766.6 -9.1 have moved up since
August.
increase is on the
cards in the next three
SWANSY AFONSO
Mumbai, 10 October
director of Essel Mining &
Industries, said in an interview in
that China's demand is poised to
shrinkassteelproductiontopsout.
SHOPPING ABROAD
* As on Oct 10, 1800 hrs IST, # Change Over 3 Months Ironoreimports(mntonnes)
Polypropylene (PP) months. Hence, we New Delhi. Freight and passen- Fortescue Metals Group doubled
Conversion rate 1 USD = 74.2 & 1 Ounce = 31.1032316 grams. Year Quantity
Notes: has become costlier Brent crude has would raise our prod- Steel mills in India are increas- ger trains in Asia's third-largest iron ore sales outside China to 8
1) International metals, Indian basket crude, Malaysia Palm oil, by 4.6 per cent and become costlier and ucts’ prices by at least ingly tapping the global market economy jostle for space on the per cent in the year through June, FY14 0.1
Wheat LIFFE and Coffee Karnataka robusta pertains to linear low density the rupee has also two-three per cent,” for iron ore as they find it diffi- same tracks, and goods carriers and has experienced strong FY15 11.4
previous days price. polyethylene(LLDPE) fallen 7.7% since said an official with a cult to transport the key raw often have to make way for pas- growth in cargoes to India, Chief FY16 6.8
2) International metal are LME Spot prices and domestic metal
are Mumbai local spot prices except for Steel. by 5.4 per cent. August. As a sequel, leading plastic manu- material from local mines, and senger traffic, prolonging turn- ExecutiveOfficerElizabethGaines
3) International Crude oil is Brent crude and Domestic Crude oil “We have no RIL has raised PP prices facturer. demand for the metal surges in around time for wagons hauling said in an interview in August.
FY17 4.2
is Indian basket. FY18 8.1
4) International Natural gas is Nymex near month future & option but to raise by ~2,000 a tonne this This apart, India’s response to the government's commodities. More supplies of “If iron ore is available at
domestic natural gas is MCX near month futures. prices of plastic prod- month; so has Indian plastic export ambitious plans to build out the iron ore will be required as the competitive prices domestically, FY19* 5.3
5) International Wheat, White sugar & Coffee Robusta are LIFF E
future prices of near month contract. ucts in proportion to Oil Corporation jumped by 17 per nation’s infrastructure. South Asian nation is set to over- it won’t happen,” Seshagiri Rao, * Up to July, Note: Iron Ores & Concentrates Non-
6) International Maize is MATIF near month future, Rubber is the increase in poly- cent in 2017-18 over “Today, India is a net importer take Japan as the world's second- Agglomerated other than roasted Iron Pyrites
joint managing director of the Compiled
Tokyo-TOCOM near month future and Palm oil is Malaysia FOB by BS Research Bureau
spot price. mer prices. While we often pass on the previous year, to $8.85 billion. of iron ore,” as producers along biggest steel producer this year. country's top mill JSW Steel, said Source:Department of Commerce
7) Domestic Wheat & Maize are NCDEX future prices of near the raw material price increase to America was the largest importer the coast buy from overseas More demand from India for in an interview, referring to
month contract, Palm oil & Rubber are NCDEX spot prices.
8) Domestic Coffee is Karnataka robusta and Sugar is M30 consumers, we also factor in labour from India, taking 12 per cent of because they face domestic logis- imports will help global mining imports. “That’s why we are ore. But the problem today is that
Mumbai local spot price. cost, which has gone up consis- our total shipment, followed by tics challenges, mainly as a result companies, especially as some requesting the domestic mining eventhoughtheironoreisgetting
9) International cotton is Cotton no.2-NYBOT near month future
& domestic cotton is MCX Future prices near month futures. tently. Thus, plastic products are China (nine per cent) and the UAE of an overloaded railway system, forecasters including the companies to adjust the prices in mined, transportation is the
Source: Bloomberg Compiled by BS Research Bureau set to become costlier in the coming (five per cent). Tuhin Mukherjee, managing Australian government expect line with the quality of the iron issue.” BLOOMBERG
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
14 WORLD
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1

Amazon lands $1 bn N IMF REPORT N

in cloud deals with

SAP and Symantec Further trade tensions may Don’t destroy trade,
fix it: Lagarde’s dig
hit global growth, markets at protectionism
BLOOMBERG
San Francisco, 10 October

Amazon Web Services, the

cloud-computing division of AGENCE FRANCE-PRESSE
Amazon.com, signed new PRESS TRUST OF INDIA somewhat over the past six months. Bali, 10 October
deals with customers SAP SE Washington, 10 October “Trade tensions have escalated, policy
and Symantec worth a com- uncertainties have increased in a number of International Monetary Fund

T
bined $1 billion, according to he International Monetary Fund countries, and some emerging market (EM) chief Christine Lagarde has
an internal memo, underscor- (IMF) on Wednesday warned that economies are facing financial-market pres- called on world leaders to fix
ing the company’s growing global growth and stock market may sures,” Tobias Adrian, financial counsellor global trade systems instead of
momentum in the market for and Alphabet's Google have all be significantly harmed with further esca- and director of the monetary and capital trying to tear them down in a
internet-based computing tried to woo organisations and lation of trade tension, which is a result of markets department of the IMF, said. rebuke to nationalist politicians
power and storage. companies by touting the capa- the uneven global economic recovery that Looking further ahead, risks remain pushing tariffs and protection-
The contracts are each bilities and performance of has fuelled inward-looking policies and con- elevated, he said. To be sure, the financial ism. “We need to work togeth-
worth $500 million over five their services, which help tributed to increased policy uncertainty. system is stronger today than before the er to de-escalate and resolve
years, the text of an Amazon organisations store and process A decade since the economic crisis, while Short-term risks to financial system have global financial crisis, thanks to a decade the current trade disputes,”
email from September data remotely, build new appli- there has been an undeniable progress increased in the past six months, says IMF of reform and recovery. “However, vul- Lagarde said at am IMF and
showed. Both transactions cations and adopt new tech- towards a safer global financial system, nerabilities continue to build, and the World Bank gathering in Bali.
represented expansions of nologies, including artificial clouds appear on the horizon, the IMF said undermine confidence in policymakers’ new financial system remains untested. “We need to join hands
existing partnerships. intelligence. AWS has so far in its latest fiscal stability report. “The glob- ability to respond to future crises,” the report Additional steps are needed to improve its to fix the current trade
Microsoft, the No.2 cloud-serv- maintained the lead, winning al economic recovery has been uneven and said. Nonetheless, despite trade tensions resilience,” Adrian said. system not destroy it,” she
ices provider, had also com- $17.5 billion in sales last year. inequality has risen, fuelling inward-looking and continued monetary policy normalisa- If pressures on EM economies were to added on Monday.
peted for the Symantec deal, That's out of a market estimat- policies and contributing to increased poli- tion in a few advanced economies, global broaden and intensify, financial stability Finance ministers and cen- International Monetary Fund
according to the memo. ed to have been worth $30 bil- cy uncertainty. Trade tensions have financial markets have remained buoyant risks would increase significantly, he said. tral bankers from many of the chief Christine Lagarde
Some of the world's largest lion in 2017, and expected to emerged, and a further escalation may dam- and appeared complacent about the risk of “Our analysis suggests that — in the IMF’s 189 member nations are
technology companies have balloon to $83.5 billion by 2021, age market sentiment and significantly a sudden, sharp tightening in financial con- medium term — there is a 5 per cent prob- meeting in Bali this week growth forecast down 0.2 per
been duking it out for suprema- according to research firm harm global growth,” it said. ditions, the world body said. ability that EM economies will experience where concerns about protec- cent to 3.7 per cent for 2018 and
cy in the cloud. AWS, Microsoft Gartner Inc. “Support for multilateralism has been The IMF report finds that short-term portfolio debt outflows of $100 billion tionism have taken centre 2019 — citing trade tensions,
waning, a dangerous undercurrent that may risks to the financial system have increased or more. stage — especially the escalat- protectionism and rising debt
ing trade war between the levels as the main causes.
United States and China. Lagarde’s warnings were
IPCC REPORT
GLOBAL CLIMATE CHANGE BELIEFS US may lose trillions in case of recession Lagarde said she remained
optimistic that disputes
between nations could be
echoed by OECD General
Secretary Angel Gurria, who
said trade tensions had
The United Nation’s scientific panel, the AGENCE FRANCE-PRESSE Chances of a recession in the World Bank, cut its outlook mounting interest rates. ironed out, citing the Trump already begun to impact
Washington, 10 October the US growing because of for global GDP on Monday by Beyond tax revenues and administration's recent suc- commerce since 2017.
Intergovernmental Panel on Climate Change, released a
several factors, says IMF two tenths to 3.7 per cent sovereign debts, a govern- cessful renegotiation of the “This year the growth does-
report on Tuesday predicting how different climate A severe recession would slash through next year. ment’s balance sheet contains NAFTA agreement between n't look so good, what is differ-
change scenarios will go on to play out, concluding that US public wealth by about $5 tril- International Monetary Fund The fund pointed to rising a range of other assets and lia- the US, Canada, and Mexico. ent, is the trade, the tensions,
to avert the consequences — including severe droughts lion, causing vastly more dam- said in a new report on Tuesday. trade tensions as a cause for wor- bilities, such as the state enter- “It’s tempting to be a bit protectionism, the tit-for-tat,
and swamped coastlines — the world economy would age to Washington's finances This creates a potential blind ry and also predicted slower prises, land and natural depressed about this perspec- the retaliations,” Gurria said.
have to turn itself around in an unprecedented away. than just an increase in debt and spot for policymakers who could growth in the United States next resources it owns as well as the tive but I’m actually hopeful In the middle of a recovery
The report was commissioned by the Paris Agreement, deficits, the IMF has warned. use this knowledge to head off year and beyond. Economists money it has to pay to fund because there is a clear period he added, “we started
the 2015 pact by nations to address global climate change Yet governments around the economic risks, it said. now say the chances of a reces- public-sector employee pen- appetite to improve and doing these things and we
and written by 91 scientists from 40 countries. world, many of which face sim- The global crisis lender, sion in the United States are sions. The difference between expand trade,” she said. slowed down.” The OECD has
South Korea has a high share of people ilar dangers, do not clearly pub- which in Indonesia this week is growing due to several factors, the two sides of the ledger is a Ahead of the Bali gathering, also revised down its global
who believe climate change is licise their overall net worth, the staging its annual meetings with including trade tensions and country’s net worth. the IMF reviewed its global growth forecasts.
primarily caused by human activity.
The United States remains one of
the countries where a minority of
people hold this same belief.

UNDER THE
Nikki Haley may still pose a challenge to Trump
WEATHER
Those who believe climate change is mainly caused
PRESS TRUST OF INDIA
Washington, 10 October
the Indian-American politician
said, seated next to the president in
boasting both executive experience
in her home state and foreign China hails Haley for 5 people on shortlist
by human activity in select countries* (%)
Nikki Haley’s abrupt resignation as
the Oval Office. “I can promise you
what I’ll be doing is campaigning
policy chops from two years as
one of Trump’s top diplomats,” the
cooperation at UN to replace Nikki
72

the US ambassador to the United for this one. So, I look forward to influential paper said. China on Wednesday praised the US President Donald Trump has
65

Nations has sparked intense specula- supporting the President in the next “She's a rising star and he’s king, so outgoing US Ambassador to the UN said he has five persons in mind,
62
59
58

tion about the moderate Republican election,” she said. there's always an inherent tension Nikki Haley for maintaining dialogue including his former deputy national
53

there,” the Post quoted Mike Murphy, and cooperation with Beijing on security adviser Dina Powell, to
52

politician’s next move and the politi- The blunt statement underscores
49
47

cal complications she could still pose both the loyalty demanded by a long-time Republican strategist and key issues. The 46-year-old replace Nikki Haley as the US
to President Donald Trump, US media Trump and the political complica- Trump critic, as saying. Indian-American leader announced ambassador to the UN.
39
38

reported on Wednesday. tions Haley could pose to the “Politically, any star in the party Tuesday that she would resign from Haley’s abrupt decision left many
33

In a sign of her rising profile, President, the Post said. is a threat to Trump because in her post as the US ambassador to the in the White House in shock as there
Haley on Tuesday simultaneously At 46, Haley has built her own his Stalinesque way, there’s only one UN by the end of the year. was no indication that she planned to
announced her resignation at the end political brand and has a long poten- sun god and it has to be Trump,” Haley had, as the US ambassador leave office. Haley had submitted her
of this year while also reassuring tial career ahead of her, it said. Murphy said. to the UN, maintained dialogue and resignation on October 3.
South Brazil Mexico France China India South Germany UK Saudi Japan US President Trump that she has no “The former South Carolina gov- The New York Times noted that cooperation with China on many Trump said Haley would assist in
Korea Africa Arabia plans to challenge his re-election in ernor mixes homespun Southern Haley's resignation marked the depar- issues, Chinese Foreign Ministry the search for her replacement, and
2020, the Washington Post noted. charm with hard-boiled political ture of one of the few high-profile spokesman Lu Kang told a media that he plans to settle on a pick in the
* As of August 2018 Source: Visual Capitalist Racounteur, Ipsos, World Bank “No, I’m not running for 2020,” savvy — a daughter of immigrants women in the Trump administration. briefing on Wednesday. PTI next two to three weeks. PTI

STOCKS
IN THE
> STOCK
> HEG > Goa Carbon > Centrum Capital

NEWS Close at upper circuit

filter of 20 per cent
Trading volume jumps
four times
Top gainer among the
S&P BSE Finance index OF THE DAY
Bharti Airtel: Stock hits
~3,225.90 PREVIOUS CLOSE ~554.10 PREVIOUS CLOSE ~33.05 PREVIOUS CLOSE new two years low at
~3,871.05 CLOSE ~664.90 CLOSE ~38.95 CLOSE ~284.10, down 50 per cent
S 20.00% UP S 20.00% UP S 17.85% UP from 52-week high
> z .

NIFTY 50 ADVANCES/DECLINE
Company Close (~) % Wt PE Company Close (~) % Wt PE
F&0 SNAPSHOT DAY’S TOP GAINERS DAY’S TOP LOSERS
10 Oct ’18 Chg (%) Con Std 10 Oct ’18 Chg (%) Con Std Futures Cash Premium Futures Cash Discount
price price (%) price price (%)
Adani Ports 327.1 2.6 0.6 18.7 29.9 IOC 124.0 1.1 1.2 5.3 5.1 Company Day’s high Close % chg* 3mth high 52 wk high Company Day’s low Close % chg* 3mth low 52 wk low
Asian Paints 1226.0 2.0 1.3 52.8 57.7 ITC 270.1 0.6 7.5 28.8 28.8 MOST BULLISH MOST BEARISH
Adani Power 32.0 30.0 24.8 36.1 47.8 Indiabulls Vent 374.9 375.0 -5.0 374.9 208.9
Axis Bank 589.2 6.6 2.6 332.1 - JSW Steel 376.8 1.5 1.2 11.6 13.9 Adani Power 30.4 30.0 1.3 Just Dial 447.4 478.8 -6.5 HEG 3871.1 3871.1 20.0 4559.8 4559.8 Bharti Infratel 257.2 259.0 -2.9 241.8 241.8
Bajaj Auto 2581.8 1.3 0.9 16.9 17.5 Kotak Mah Bank 1137.8 2.6 3.4 33.8 51.7 HCC 12.6 12.5 1.2 TVS Motor 519.0 533.1 -2.6 Dewan Hsg 291.3 282.3 16.1 690.0 690.0 Infosys 695.4 700.3 -2.4 642.3 457.6
Bajaj Fin 2271.0 10.2 1.3 49.1 45.6 L&T 1250.7 2.4 4.0 20.8 30.5 Repco Home 389.5 385.7 1.0 Dewan Hsg 280.8 284.5 -1.3 Shriram TrFn 1098.8 1081.5 13.2 1476.0 1670.6 TCS 2030.2 2043.1 -2.3 1894.0 1228.8
Bajaj Finsrv 5961.5 9.8 0.9 27.8 661.0 Mah & Mah 764.1 -0.1 1.7 11.9 19.7 Adani Enter 145.1 143.8 0.9 Ramco Cements 596.4 602.0 -0.9 Just Dial 483.9 476.2 11.9 603.7 648.0 HCL Techno 1039.5 1050.4 -1.5 944.6 825.1
Bharti Airtel 295.1 2.1 0.9 57.7 - Maruti Suzuki 6985.9 4.3 2.1 26.8 25.9 Reliance Com 11.6 11.5 0.9 Voltas 511.1 515.6 -0.9 Piramal Entp 2450.0 2394.9 10.9 3302.6 3302.6 Mothersons S 224.9 232.2 -1.3 221.0 221.0
Bharti Infratel 258.3 -3.1 0.5 19.4 18.9 NTPC 164.4 1.6 1.2 12.9 13.1 MRPL 71.0 70.0 10.2 86.2 146.3 Sun Pharma 593.5 603.0 -1.1 530.0 434.8
BPCL 265.4 3.2 0.6 5.9 6.1 ONGC 148.6 1.3 1.4 7.3 8.6 BSE NSE Balram Chini 97.9 94.0 10.2 99.0 179.0 Wipro 311.0 316.9 -1.0 263.9 253.5
Cipla
Coal India
639.6
272.7
0.0
-0.5
0.7
0.8
35.8 32.2
20.0 18.1
Power Grid 187.2 0.3 1.0 11.9 11.6 Index Stock Index Stock PUT-CALL RATIO Arvind 332.3 330.1 10.0 438.8 477.9 Shree Cement 15310.0 15552.5 -1.0 15310.0 15015.2
Reliance Ind 1102.1 1.1 8.5 19.1 20.4 FUTURE Edelweiss Finan 164.0 164.0 10.0 329.7 342.0 Rajesh Exp 655.0 662.6 -0.9 562.0 562.0
Dr Reddys 2484.6 1.2 0.7 30.4 45.7 (Open Interest in Mn) Put Call PC Ratio
SBI 278.7 6.0 2.4 - - Contracts - - 336613 1023932 Equitas Hold 127.2 125.0 10.0 163.2 173.4 Infibeam Aven 56.8 58.5 -0.8 38.4 38.4
Eicher Motor 22582.4 7.1 0.7 29.7 34.0 Market 465.6 895.9 0.5 Chola Inv 1196.9 1169.9 9.9 1618.0 1760.8 Fortis Health 131.5 131.7 -0.8 131.2 106.7
Sun Pharma 603.0 -1.1 1.5 35.8 137.4 Open Int.(000) - - 24326 4724551
GAIL 336.4 0.9 0.8 15.8 15.6 Bajaj Fin 2300.4 2266.1 9.9 2995.1 2995.1 Lupin 855.6 859.4 -0.7 788.9 723.6
Tata Motors 188.8 2.4 0.8 13.5 94.6 Shares(In Mn) - - 19.8 2252.6 Top 5 PC Ratio Bottom 5 PC Ratio
Grasim Ind 909.7 0.8 0.8 15.6 29.0 SREI Infra Fin 36.9 35.6 9.9 63.8 124.6 Coal India 270.4 271.6 -0.5 258.8 256.0
Tata Steel 583.7 1.9 1.0 3.5 11.0 Value(~ Mn) - - 297952 630518
HCL Techno 1051.8 -1.6 1.3 16.4 19.3 Repco Home 3.5 GSFC 0.1
HDFC 1737.0 1.4 6.8 18.4 23.3 TCS 2043.6 -2.3 4.9 28.1 29.8 OPTIONS
Oil India 2.5 Chennai Petr 0.1 * Ranked on the basis of percentage gain/loss on previous close
HDFC Bank 1967.2 1.4 9.6 28.9 29.4 Tech Mahindra 699.3 0.5 1.0 17.6 16.6 Contracts - - 11009522 653105
Titan Company 788.6 5.2 0.7 63.5 56.2 Ajanta Phar 1.4 Granules 0.1
Hero MotoCorp
Hindalco
2920.1
226.9
1.0
1.2
0.9
0.8
15.7 15.8
8.4 32.6 UltraTech 3778.0 -0.1 0.9 53.0 53.5
Open Int.(000)
Shares(In Mn)
-
-
-
-
128008 1233470
515.3 1245.6
Zee Enter 1.3 Tata Comm 0.1 MOST TRADED TOP M-CAP TRENDS
Rural Elect 1.0 United Brew 0.1
HPCL 180.7 5.5 0.6 3.8 3.9 UPL 622.5 3.0 0.5 15.3 52.3 Value(~Mn) - - 10576355 437623 Value Volume Rank Company Mcap (~ billion) Company % change Company % change
HUL 1527.7 1.0 2.5 63.3 60.3 Vedanta 218.2 2.9 0.9 5.8 11.0 BSE+NSE BSE+NSE
1 TCS 7666.3 BS200 DOWN 7 DAYS
Wipro 316.0 -1.8 0.8 17.8 18.8 (~ million) (Mn shrs)
ICICI Bank
Indiabulls Hous
319.9
978.3
4.4
3.4
4.7
0.7
26.7 44.7
10.1 11.0 Yes Bank 233.9 4.1 1.0 12.8 12.0 ACTIVE CALLS ACTIVE PUTS Bajaj Fin 17223.9 7.7
2 Reliance Ind 6987.2
UP 7 DAYS Ashapura Intima -50.0
3 HDFC Bank 5342.8 IDBI Bank 18.1 Umiya Tubes -30.5
IndusInd Bank 1638.0 1.9 1.9 - 25.9 Zee Enter 459.8 6.2 0.6 30.1 26.0
Infosys 700.5 -2.4 6.0 18.9 18.8 Nifty 50 10460.1 Ç1.5 100.0 19.0 21.6 MARKET OVERVIEW Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Expiry
Date
Strike Traded
Price
Open
Qty Interest
% Chg
(OI)
Dewan Hsg 15610.2 56.3 4
5
ITC
HUL
3305.9
3305.6
Bombay Dyng -30.1
Yes Bank 13043.7 56.7 DOWN 8K Miles Softwa -30.1
INDEX PE Shrs Trds 1 Yr Index Index 6 Infosys 3059.2 Indiabulls Vent -30.1
AGGREGATES Reliance Ind 10913.1 9.9
S&P BSE SENSEX STOCKS Sensex
C/S
20.4/23.3 25.2
Mn ‘000
247
Adv Dec
26 5
return
8.9
Nifty Bank
Nifty Bank
11/10/18
11/10/18
25500
25200
23.5
22.0
1.3
0.2
31.8
-70.6
Nifty Bank
Nifty Bank
11/10/18
11/10/18
24500
24800
18.7
14.9
1.0
0.8
192.0
933.9 TCS 9711.0 4.7
7 HDFC 2986.1 Mothersons S -9.6 Kisan Mould
Risha Digha
-30.0
-30.0
8 SBI 2481.9
Adani Ports 326.3 2.6 0.7 18.7 29.8 Mah & Mah 764.2 0.0 2.1 11.9 19.7 Nifty 50 19.0/21.6 373.8 5485 41 9 4.4 Nifty Bank 11/10/18 25300 20.2 0.5 -12.8 Nifty Bank 11/10/18 25000 14.4 0.8 691.5 SBI 9080.9 33.5 UP 3 DAYS Central Bank -29.7
9 Kotak Mah Bank 2170.0
Asian Paints 1226.0 2.0 1.5 52.8 57.7 Maruti Suzuki 7011.2 4.8 2.5 26.9 26.0 Nifty Bank 11/10/18 25000 19.9 0.2 -82.2 Nifty Bank 11/10/18 24700 13.9 0.6 401.2 Maruti Suzuki 8734.9 1.3 10 Maruti Suzuki 2117.9 Adani Power 28.0
Axis Bank 589.4 6.6 3.1 332.2 - NTPC 164.8 2.0 1.4 12.9 13.2 Cash Derivatives Nifty Bank 11/10/18 25400 18.3 0.4 7.4 Nifty Bank 11/10/18 24600 13.8 0.5 243.0 Axis Bank 8388.3 14.5 11 ICICI Bank 2052.2 Balram Chini 23.8
TURNOVER BSE NSE BSE NSE UP 3 DAYS
Bajaj Auto 2582.0 1.5 1.0 16.9 17.5 ONGC 148.7 1.2 1.7 7.3 8.6 Stock Stock HDFC Bank 8351.2 4.3 12 ONGC 1907.7 Vakrangee 15.2
New Light App 35.5
Bharti Airtel 295.7 2.4 1.1 57.8 - Power Grid 187.3 0.4 1.2 11.9 11.6 Value(In ~ Min) 35161 377286 - 1194245 SBI 25/10/18 280 13.2 2.7 -7.4 SBI 25/10/18 260 7.7 2.2 -6.3 13 L&T 1756.0 Yes Bank 13.5
ICICI Bank 7894.8 25.0 Dhamp Sugar 28.6
Coal India 271.6 -0.5 1.0 19.9 18.1 Reliance Ind 1102.4 1.1 10.2 19.2 20.4 Shares(In Mn) 229.4 1727.4 - 4033.3 Nat Alum 25/10/18 70 11.4 3.0 0.3 Yes Bank 25/10/18 220 7.5 2.3 10.2 Bandhan Bank 12.1
Tata Motors 7751.1 41.2 14 Coal India 1685.9 Universl Cab 25.9
HDFC 1738.7 1.5 8.1 18.4 23.3 SBI 278.1 5.9 2.9 - - Trades(000) 1657 14566 - 6860 ICICI Bank 25/10/18 320 11.1 2.3 -5.8 ICICI Bank 25/10/18 300 7.3 2.2 18.5 PVR 11.5
Indiabulls Hous 7190.5 7.4 15Ç Axis Bank 1514.2 Adani Enter 11.0
HDFC Bank 1966.3 1.2 11.5 28.9 29.4 Sun Pharma 603.0 -1.1 1.8 35.8 137.4 Tata Motors 25/10/18 200 10.1 3.7 43.0 Tata Motors 25/10/18 180 7.1 2.1 84.8 Filatex 23.3
MARKET-CAP (~ billion) 16È HCL Techno 1462.6
Hero MotoCorp 2914.4 1.1 1.0 15.6 15.8 Tata Mot-DVR 103.7 2.4 0.1 - - Traded Total SAIL 25/10/18 75 9.0 3.9 -7.3 SBI 25/10/18 270 5.7 1.8 62.5 Infosys 6992.1 9.9 Dwarikes Sug 21.8
17È Sun Pharma 1446.8 DOWN
HUL 1527.1 0.8 2.9 63.2 60.3 Tata Motors 188.8 2.4 0.9 13.5 94.6 BSE 138,248 139,907 Mah & Mah 5962.3 7.8 AMJLAND 21.1
18È Wipro 1433.5 HCL Techno -3.0
ICICI Bank 318.9 4.2 5.6 26.6 44.5 Tata Steel 583.1 1.9 1.2 3.5 11.0 NSE 136,964 138,228 Titan Company 5958.3 7.6 Acknit Ind 20.6
19 NTPC 1358.4 Fortis Health -2.2
TCS 2043.1 -2.3 5.8 28.1 29.8
IndusInd Bank
Infosys
1639.5
700.3
2.0
-2.4
2.3
7.2
-
18.9
25.9
18.8 Vedanta 218.0 2.9 1.1 5.8 11.0
Derivatives 105,212 105,212 SPURT IN VOLUMES L&T
Tata Steel
5536.0
4403.3
4.4
7.6
20 Bajaj Fin 1309.7
OTHERS DOWN 3 DAYS
21 IOC 1207.2
ITC
Kotak Mah Bank
270.1
1137.9
0.6
2.7
9.0
4.1
28.8
33.8
28.8
51.7
Wipro
Yes Bank
316.9 -1.0
234.1 4.4
1.0
1.2
17.9 18.8
12.8 12.0
TRADING ACTIVITY Company Days
Volume
2-week Avg
Volume
Change Close
price
*Price
%chg
HDFC 4216.0 2.4 22 Bharti Airtel 1181.8 UP 7 DAYS IL&FS Tran -22.8
(~ million) FIIs MF IndusInd Bank 4137.8 2.5 23Ç Asian Paints 1175.9 Pushpa.Flori 39.9 Swan Energy -18.5
L&T 1252.4 2.5 4.8 20.8 30.6 BSE SENSEX 34760.9 Ç1.3 100.0 20.4 23.3
Equity Debt Equity Debt Winsome Yarrns 715723.0 5975.3 11878.0 1.5 0.6 24È Hind Zinc 1172.1 Shukra Jewl 39.3 Ind Bank Hsg -17.2
Con = Consolidated; Std = Standalone Net Net Net Net Kotak Mah Bank 4017.2 3.5
Capri Global 4304577.0 107392.1 3908.3 80.6 -3.6 25 UltraTech 1039.5 Calcom Vis 29.4 Ravalgaon S -14.3
Zee Enter 3808.9 8.5 Pooja Enter 27.2
On 09 Oct -8234 -7250 10639 -11301 Ador Welding 212038.0 12049.0 1659.8 346.2 17.9 26Ç IndusInd Bank 985.8
Bank of Baroda 3737.6 39.2 Dhoot Ind -14.2
WORLD INDICES On 08 Oct
On 05 Oct
-11703
-50096
-22315
5908
9802
15257
55709
62964
Future Mar Net 562218.0 44427.9 1165.5 63.6 11.7
HUL 3668.8 2.4
27È
28
Power Grid
Mah & Mah
979.6
950.0
Sportking India
TAHL
25.3
15.9 Maris Spin -14.2
One Point One S 194000.0 19200.0 910.4 51.9 16.9 Dalal Street 14.8 Dhanvar Fin -14.1
Indices Close % Chg* Indices Close % Chg* On 04 Oct -22608 -4973 11319 37597 Eicher Motor 3661.0 0.2 29Ç Bajaj Finsrv 947.6
Rollatainers 173100.0 17529.9 887.5 3.5 19.0
On 03 Oct -15267 859 8876 50026 Bharti Airtel 3647.6 12.5 30È Nestle India 918.5 (T+2) cycleStocks which rose/fell continuously
Americas (Oct 09,18) Asia/Pacific (Oct 10,18) Mohini Health 147000.0 15000.0 880.0 23.5 4.7
Oct till date -123989 -39572 72894 223268
Nasdaq Composite 7738.0 0.0 Stock Exchange of Thai 1721.8 1.5 Mercator 12292554.0 1352186.2 809.1 12.1 -12.0
2018 till date -274616 -527353 955221 2131467
Jay Bhar Ma 111913.0 12894.8 767.9 319.9 0.5
Dow Jones
S&P/ TSX Composite
26430.6
15854.1
-0.2
-0.6
Jakarta Composite
Shanghai Se Comp
5820.7
2725.8
0.4
0.2 FIIS IN DERIVATIVES NLC India 4675984.0 604351.6 673.7 81.8 10.7 BOARD MEETINGS INTRA-DAY
Europe/Africa (Oct 09,18) Taiwan Taiex (Oct 09) 10466.8 0.1 (~million) Index Stock Index Index Stock Note : A & B group stocks with the day’s trading volumes at over 100,000 shares, * % change over previous close QUARTERLY Group XT Pitti Engg Group XT ICICI Securitie
NET Net Fut OI Opt OI OI RESULTS I-Power Sols Rel Ind Infra Jyotirgamya Group X
FTSE 100 7233.6 -0.1 Straits Times 3131.5 -1.1
IBEX 35 9245.0 -0.2 Kospi 2228.6 -1.1 On 09 Oct
On 08 Oct
-13675
-6774
3609
14315
0.3
0.3
0.9
0.9
1.4
1.4
52 WEEK NEW HIGHS/LOWS OCTOBER 11
BS 200
OCTOBER 13
BS 200
Zee Learn
Zee Media
Ent
Menon Piston
LKP Finance
VTM
DAX 11927.3 -0.4 Kuala Lumpur Comp 1735.2 -2.2 Company Price Company Price Company Price Company Price
On 05 Oct -1672 1882 0.3 0.9 1.4 TCS Au Small Fin Corpo OCTOBER 17 OCTOBER 20
CAC 40 5290.5 -0.5 Volatility (Oct 09,18) On 04 Oct 53524 -2979 0.3 0.8 1.3 Group B Avenue Group M BS 200 BS 200
HIGH *Thirdwave Fin . . . . . . . . 28.3 LOW *Voltamp Tran . . . . . . . . 735.0
Asia/Pacific (Oct 10,18) CBOE Dow Jones 16.3 1.4 On 03 Oct -20569 -25 0.2 0.8 1.3 *Shailja Comm Tr . . . . . . 22.4 *TCI . . . . . . . . . . . . . . . . . . 715.0 GM Breweries Supermar Meera Inds ACC HDFC Bank
BS 200 BS 200
Nikkei 225 23506.0 0.2 CBOE S&P 500 16.1 0.9 Oct till date 30545 20333 - - - NONE *Neeraj Paper . . . . . . . . . 21.4 Ramco Cements . . . . . . 589.5 *OMDC . . . . . . . . . . . . . . . 669.2 Group X Group B Group T DCB Bank Group A
Hang Seng 26193.1 0.1 * Change over previous close 2018 till date 1074030 513877 - - - Others *Shukra Jewl . . . . . . . . . . 20.2 Godrej Ind . . . . . . . . . . . . 440.7 *Nippo Batry . . . . . . . . . 651.0 Amal Jay Bhar Ma Monnet Ispat Havells I ICICI Lombard
OI in number of contracts(million) Crown Tours . . . . . . . . . . . 18.8 *Khadim India . . . . . . . . 609.2 Group XT OCTOBER 14 Group X MindTree OCTOBER 21
*Bom.Oxygen . . . . . 29700.0 Bharti Airtel . . . . . . . . . . 284.1
MAJOR INDICES S&P BSE SECTORAL INDICES
*Most Shares ETF . . . . . 655.9
*Sportking India . . . . . . 498.0
*UTL Inds . . . . . . . . . . . . . . 17.7
*Spicy Ent Media . . . . . . 15.1
Others
Rasoi . . . . . . . . . . . . . . 24321.0
Timken India . . . . . . . . . 550.1
*Birla Corpn . . . . . . . . . . 542.0
Kore Fo
OCTOBER 12
Prime Sec
OCTOBER 15
JK Agri Genert
Group XT
Mphasis
NIIT Techno
Persistent S
OCTOBER 22
Previous Close Open High Low Close Change % chng *Dalal Street . . . . . . . . . 363.2 Shalimar Agen . . . . . . . . . 14.3 Paul Mercha . . . . . . . . . 3337.0 *Super Sales . . . . . . . . . 483.1 BS 200 BS 200 Dhruv Est Group A BS 200
S&P BSE Sensex 34,299.5 34,493.2 34,858.4 34,346.5 34,760.9 461.4 1.3 Prev close Close % Chg *Grandeur Prod . . . . . . 258.7 KZ Leasing . . . . . . . . . . . . . 13.5 *Blue Dart E . . . . . . . . . 2620.0 *Rane Brake . . . . . . . . . . 483.0 HUL Delta Corp Ikf Techno Cyient Asian Paints
S&P BSE Sensex 50 10,771.0 10,833.0 10,957.7 10,792.8 10,932.1 161.2 1.5 Auto 19,594.4 20,146.2 2.8 *Coast Corp . . . . . . . . . . 187.2 NDA Sec . . . . . . . . . . . . . . . 10.6 *TVS Srichakr . . . . . . . 2287.5 Godrej Prpty . . . . . . . . . . 462.0 Karnataka Bk Indiabulls Victory Paper Group B Can Fin Home
S&P BSE-100 10,494.9 10,556.3 10,710.4 10,521.0 10,688.7 193.8 1.8 Bankex 27,413.4 28,381.6 3.5 *TAHL . . . . . . . . . . . . . . . 155.5 *Dalmia Inds Dev . . . . . . 10.6 Pilani Investme . . . . . . 2056.0 *Aksharchem . . . . . . . . . 424.0 Group B Hous OCTOBER 16 Aditya B Mny Group A
S&P BSE-200 4,358.3 4,383.1 4,454.8 4,370.2 4,446.6 88.3 2.0 Cons. Durables 17,904.6 18,580.3 3.8 *Sindhu Trade . . . . . . . . 152.4 Orient Trade . . . . . . . . . . . . 8.0 Elantas Beck . . . . . . . . 1850.0 *Vadilal Ind . . . . . . . . . . . 400.0 3i Infotech IndusInd Bank BS 200 Group XT Alembic
S&P BSE-500 13,585.4 13,661.9 13,904.7 13,625.9 13,882.4 297.0 2.2 Cap. Goods 16,334.2 16,890.1 3.4 *KRL . . . . . . . . . . . . . . . 111.3 ASISL . . . . . . . . . . . . . . . . . . . 6.6 Florence Invest . . . . . . 1350.0 *Insectcides . . . . . . . . . . 393.7 Atishay South Ind Bk Federal Bank Pratik Panel Pharma OCTOBER 23 Indian Metal BS 200 M & M Fin Agro Tech Fd
S&P BSE IPO 3,906.3 3,923.6 4,030.2 3,908.0 4,011.7 105.4 2.7 FMCG 10,602.7 10,778.8 1.7 *Punjab Alkal . . . . . . . . . . 78.6 Apoorva Leas . . . . . . . . . . . 6.0 *Empire Ind . . . . . . . . . 1350.0 Sobha Ltd . . . . . . . . . . . . 380.5 Tata Sponge TV18 Hero OCTOBER 18 GSK Pharma BS 200 PPAP Auto Bajaj Auto Wipro Everest Inds
Healthcare 14,414.0 14,673.1 1.8 *Pooja Enter . . . . . . . . . . 56.4 *Quantum Buil-Te . . . . . . . 5.5 *GRP . . . . . . . . . . . . . . . . 1070.2 PPAP Auto . . . . . . . . . . . . 363.1 Group T Broadcast MotoCorp BS 200 Kansai Nerol
S&P Dollex-30 3,792.3 - - - 3,844.1 51.8 1.4 Bajaj Fin Rane Brake Bharat Fin Incl Group A Intl Pap APPM
Infra 178.6 183.7 2.8 *Monnet Ispat . . . . . . . . . 48.1 *Mid East Pro . . . . . . . . . . . 5.1 *Prataap Snacks . . . . . . 981.5 *Monte Carlo Fas . . . . . 335.0 Quintegra Sl Group A Infosys Mphasis LMW
Nifty 50 10,301.1 10,331.9 10,482.4 10,318.3 10,460.1 159.0 1.5 Bajaj Finsrv Sasken Comm Hexaware Tch Bajaj Hold Rane Eng Val
IT 15,121.9 14,891.6 -1.5 *New Light App . . . . . . . . 38.5 *Mukat Pipes . . . . . . . . . . . 5.0 Thermax . . . . . . . . . . . . . 885.0 *Somany Cera . . . . . . . . 330.4
Nifty next50 25,500.0 25,591.8 26,356.7 25,591.8 26,324.4 824.4 3.2 Group X Network 18 M Group A OCTOBER 19 Group B HDFC Std Life Tejas Networks IDFC Bank Lakshmi Vilas B Security & Inte
Metal 12,857.3 13,099.3 1.9 *Gogia Cap . . . . . . . . . . . . 36.8 Trans Asia . . . . . . . . . . . . . . 3.3 *ZF Steering . . . . . . . . . . 842.1 Jindal World . . . . . . . . . . 330.0
Nifty 500 8,563.0 8,590.5 8,762.3 8,588.4 8,748.5 185.5 2.2 Oil & Gas 12,303.3 12,519.6 1.8 Amal Trident CRISIL UltraTech Maha Scoot ICICI Prud Life Zensar Tech Jubilant Fd Sundaram Cly OCTOBER 25
India VIX 19.8 19.8 19.8 17.7 17.9 -1.9 -9.4 *Rama Paper . . . . . . . . . . 31.1 Samtel India . . . . . . . . . . . . 2.9 Ratnamani Met . . . . . . . 781.1 Andhra Sugar . . . . . . . . . 306.5 Biopac India Group B Mahindra CIE Group A Group XT
Power 1,875.8 1,926.2 2.7 TVS Motor Group X KPIT Syngene Intl BS 200
Nifty CPSE 2,044.1 2,043.7 2,097.3 2,043.7 2,076.1 32.0 1.6 *Uv Der Horst . . . . . . . . . . 29.8 *Vikas Proppant . . . . . . . . 1.6 *HAL . . . . . . . . . . . . . . 767.4 EIH Asso Ht . . . . . . . . . . . 303.1 ICSL Alkali Met Group B SBI Life Ins Chemo
PSU 6,633.2 6,839.9 3.1 Group B Super Sales Technologi TTK Prestige Biocon
MSE SX 40 20,201.7 20,201.7 20,472.3 20,201.7 20,472.3 270.5 1.3 Realty 1,547.4 1,616.1 4.4 * Indicates that the market price of these companies reached two-year highs/lows. Rasoi MT Educare Shakti Pumps Group B Pharma Aksh Optifib OCTOBER 24 L & T Infotech Group B JSW Steel
https://t.me/pdf4exams https://www.estore33.com/
16 BRAND WORLD
>
How brands can get
smart with smartphones
By tracking handset prices, brands can engage customers better and
bring down the dropout rates: Nielsen
ROMITA MAJUMDAR
Mumbai, 10 October
D
id you know that the
smartphone you use
could give advertisers
key insights into what adver-
tisements you see and how
you navigate your online pres-
ence? A recent study by mar-
keting analytics firm, Nielsen,
points out that the price of
handsets is turning into a very
important metric for busi-
nesses to profile and target rel-
evant content to users.
Nielsen noted that the aver-
age spend on smartphones in
India has risen from ~7,700 in
2015 to ~9,960 in 2017.
Consequently the report found
that the engagement level of
users with these devices also
increased depending on the
price of handsets. Entry level
smartphones are priced below
~5,000, mid-segment are
worth ~5,000 to ~ 15,000 and
premium phones are priced
between ~15,000 to ~25,000, as
considered for this study.
While an entry level user
spends 91 minutes on an aver-
age on online activities, pre-
mium users spend over 130
minutes doing the same on
their smartphone.
What this means is users
with premium phones are like-
ly to engage better and for
longer online and can be tar-
geted with services and prod-
uct ads. The type of apps
usage also varies across
phones (despite a few univer-
sal apps) and the adoption of
lighter version of apps and
browsers is more prevalent
among cheaper handsets.
“Almost half of India’s entry-
level users are between 15 and
24 years old, mostly students,
and can be assumed to be
data-hungry, though less afflu-
ent than premium handset
owners. Among premium
handset users, 60 per cent are
over 24 years old, primarily
working professionals or self-
employed. These users are
usually affluent and data-
hungry,” noted the report.
These numbers barely
scratch the surface of the user
complexity on the ground
when one looks at the spread of
Indian language users within
this. Reverie Language
Technology’s report also not-
> THE BS CROSSWORD
ACROSS
9 A number about to join a
cricket team so a raven
suffers loss of appetite (8,7)
10 Bound to get into suitable
theatre (4-3)
12 Somewhat inadequate
> BS SUDOKU
MUMBAI | THURSDAY, 11 OCTOBER 2018
IMAGE:iSTOCK
AVERAGE SMARTPHONE
PRICE (in ~)
7,700 8,420 9,960
2015 2016 2017
KNOW THE PHONE, KNOW THE CUSTOMER
| The price of handsets is emerging as a
remarkable surrogate for monitoring the
ever-widening set of users and their
smartphone usage, thereby facilitating
business and marketing strategy for
better return on investment (ROI)
| There is a strong correlation between the
ed that even among Indian
language internet users, almost
54 per cent use mid-range
phone models, 22 per cent of
users use high end device mod-
els, disproving the assumption
companies have that Indian
language internet users have
low purchasing power. This
data shows how essential it is
for phone manufacturers and
OEMs to ensure that phones
across all price bands have
accurate, legible fonts and ren-
dering in Indian languages for
a seamless user experience.
Online furniture market-
place Pepperfry is among the
growing band of companies
that keep a close watch on
consumer data and mobile
usage. Pepperfry Chief
Product Manager Abhimanyu
demand to be regarded as
on the level (7)
13 To plunder another
subordinate scheme (9)
14 100 lads go for a burn-up (5)
15 Say about the broken dome
sometimes soon (7)
18 Might the referee give hers a
# 2592
Easy:
Solution tomorrow
HOW TO PLAY
Fill in the grid so that every
row, every column and
every 3x3 box contains the
digits 1 to 9
SOLUTION TO #2591
https://t.me/TheHindu_Zone_official
Proportion
of >~15,000
handsets
higher among
women
TIME SPENT IN MINUTES/DAY
130
116
91
25 27 32
Online Offline
activities activities
amount of time people use their handsets
and the evolution of the usage
| Among premium handset users,
60 per cent are over 24 years old, primarily
professionals or self-employed. These
users are usually affluent and
data-hungry
Sources: What handsets say about consumers, Nielsen
Lal said during an earlier
interaction with Business
Standard that the company
gets almost 70 per cent of all
online traffic from mobile
users and it has made a num-
ber of changes in the way
users experience the platform
on their mobiles over the past
year to accommodate chang-
ing digital usage patterns
across the country. It realised
the need for customising the
app/website for lower end
phones and is seeking to pro-
vide premium AR technology
at a lower app size. “The
transaction size on apps is
twice as much as compared to
the mobile site, which is still
lower than desktop transac-
tion values,” said Lal.
Brands are increasingly
rest? (7)
21 The dog lets us know when
Kay’s at the pub (5)
23 Does it make everything
sweet and clean? (5,4)
25 Play the guitar, supporting
Harold at center stage (7)
26 Gardener’s plot for growth? (7)
29 Literary sister offering an
apple dish? (9,6)
DOWN
1 Enthusiast taken aback by
loud, tasteless slang (4)
2 Not quite all there, that's the
difficulty ! (4)
3 Meddled with mad Peter ? (8)
4 As Falstaff’s follower, one
could be fired (6)
5 Free marketeer who isn’t over
crashes? (8)
6 Pop’s executors? (6)
7 Computer programs for waste
disposal (8)
8 Hi lad! Had moved
around? Well whoop-dee-
doo! (3-2-3)
11 “Log-in failed”, in technical
terms (5)

WHAT HANDSET PRICES
REVEAL ABOUT THE
PROFILE OF USERS
>~15,000
handset users are
mainly from large
towns while
<~5,000 handset
users are from small
towns
Preference for
<~ 5,000
handsets is
relatively higher
among 15-24
year olds
Entry level
Mid-segment
Premium segment
14 17 19
7 12 16
Calls and Games
messaging
breaking down the data to
understand how to bait,
retain and get the online con-
sumer to spend on their apps.
The learning curve is still a
steep climb as a recent
Facebook report showed that
friction accounts for approxi-
mately two-thirds of con-
sumer dropouts while buying
smartphones. Interestingly,
friction faced by consumers
can be reduced with the high-
er use of mobile in the media
mix and this can create close
to $3.1 billion worth of poten-
tial revenue for smartphone
brands by 2022. The Nielsen
report is an indication of how
brands can sharpen their
mobile strategies to identify
and target their customers
more efficiently.
# 3165
15 Make a deduction (8)
16 Sniper who makes an
impression on his target,
perhaps? (8)
17 Moist eye after viewing this
national park in California (8)
19 Refrains from supporting
market speculators (8)
20 Not light, but it may go on one
(5)
22 Painfully secretive about
foreign money (6)
24 Effusive lady much sought
after by oil men (6)
27 An explosion on the fringe? (4)
28 A day in ancient Rome (4)
SOLUTION TO #3164
> WEATHER TODAY’S FORECAST
O
Max/min temperatures in C
NATIONAL
Ahmedabad . . . . . . . . . . . . . . . . .Sunny 39/23
Aizawl . . . . . . . . . . . . . .Thunderstorm 21/18
Bengaluru . . . . . . . . . . .Partly cloudy 31/18
Bhopal . . . . . . . . . . . . . . .Partly cloudy 35/22
Bhubaneswar . . . . . .Thunderstorm 28/24
Chandigarh . . . . . . . .Thunderstorm 29/18
Chennai . . . . . . . . . . . . . .Partly cloudy 36/27
Delhi . . . . . . . . . . . . . . . . . . . . . . . . . .Sunny 31/21
Guwahati . . . . . . . . . .Thunderstorm 29/23
Hyderabad . . . . . . . . . . .Partly cloudy 34/20
Imphal . . . . . . . . . . . . . . . . . . . .Showers 23/19
Indore . . . . . . . . . . . . . . . .Partly cloudy 34/22
Kochi . . . . . . . . . . . . . . . .Thunderstorm 32/24
Kolkata . . . . . . . . . . . . .Thunderstorm 28/24
Lucknow . . . . . . . . . . . . .Mostly Sunny 34/23
Mangalore . . . . . . . . .Thunderstorm 31/24
Mumbai . . . . . . . . . . . . . .Partly cloudy 34/27
Pune . . . . . . . . . . . . . . . . . .Partly cloudy 35/22
Srinagar . . . . . . . . . . . . . . . . . . .Showers 18/06
Surat . . . . . . . . . . . . . . . . .Mostly cloudy 38/26
Thiru’puram . . . . . . . . . .Thunderstorm 29/25
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official

.
MUMBAI | THURSDAY, 11 OCTOBER 2018 STRATEGY 17 <

LG’s localisation game GUEST COLUMN

Optimising outcomes
With increased local sourcing, LG hopes to cut cost and time to market AI can translate into meaningful outcomes
SANGEETA TANWAR with a focus on personalisation

T T
he country’s largest white goods mak- he cool factor and buzzword tation programme. From knowing
er LG finds itself in a sweet spot. status of Artificial Intelligence how much you spent in that bar last
Today, 90 per cent of its household (AI) aside, there is a genuine Saturday night to how much your
goods are made in India. Better still, by case to be made for leveraging AI in electricity bill was last month, the
increasing the use of locally sourced com- solving one of the biggest focus areas banks know everything. This data is
ponents by 5 per cent year on year, it has in the Indian retail banking today - from actual transactions and hence
already reached a localisation level of 90 per making the transition from product factual. Yet clean, formatted and
cent. Given that, LG India appears to have a focus to customer centricity. usable data is still a challenge in
clear advantage over competitors as many of However, the reality remains that almost all banks. Interestingly AI
them are still working their way upwards except for a few use cases such as itself can play a critical role in clean-
with localisation levels of anywhere between chatbots and back-office automa- ing up and enriching the raw data to
50 and 80 per cent. As things stand, the com- tion, AI’s foray into Indian retail make it ready for deeper AI insights
pany manufactures products like air condi- banking is yet to truly succeed in in a virtuous cycle.
tioners (ACs), washing machines, and ovens translating that magic sauce into a Process enablement: Would you
from scratch here in India. Televisions (TVs) personalised experience for cus- ever buy a shirt just because it was
and smartphones are the only two product tomers or material business result blue? Clearly not! The price, the
categories where import and localisation for the banks. brand, the tailoring design and the fit
ratios are to the tune of 50:50. I will attempt to explain four key all need to appeal to you in tandem to
Amit Gujral, chief marketing officer, LG enablers that banks can provide to make that final purchase decision.
Electronics India, says, “We are building ensure that their AI So why should it be
capacities to increase local sourcing. To pro- efforts translate into any different with
duce locally, one needs to strengthen R&D. meaningful and mate- respect to banking
Our teams are working towards bringing rial outcomes with a cross-sell? Banks in
learnings from one product focus on personalisa- India have traditionally
to another and from global markets tion and enhancing used data science to
to India.” client experience. build propensity and
The company has two R&D facilities in Structural enable- risk models focused on
the country — in Bengaluru and Delhi. ment : The heart of the answering "what" to
The total team strength at these two facil- structural issue is that offer to an existing cus-
ities is about 1,700. In a crowded white often AI is just another tomer, that is, the
The firm has two R&D facilities in the country — in Bengaluru and Delhi. The total team strength at these two facilities is about 1,700
goods market like India, the level of local- initiative within the proverbial 'next best
isation coupled with product innovation digital initiatives or RAGHU MOHAPATRA offer'. But this is just one
will determine a player's ability to move through product innovation. ers. LG’s Golden Eye TV is one such product data science depart- Group chief operating axis of the full person-
ahead of the completion. The durables “To sharpen their focus on localisation, that targets rural consumers and addresses ments rather than the officer, Goals 101 alisation experience.
market in the country stands at ~700 bil- organisations need to focus on two areas —
POWERING INNOVATION their concerns regarding small spaces etc. It core of business deci- Data Solutions As individuals, we
lion (up from ~250 billion in R&D and marketing. Global com- „ LG is building capacities to increase local has also launched innovations/solutions sions. This has led to a also have distinct per-
2008) and is estimated to grow LG claims to be panies that aim to innovate sourcing. To produce locally, it is such as the mosquito-away technology to lot of AI projects becoming use case sonal preferences with respect to the
at 10-12 per cent per annum. the first white ignore local know-how and bring strengthening its R&D team offer products that mitigate weather-relat- and department-specific rather than channel via which we want to con-
India is expected to rank fifth goods player to only technical know-how,” he ed health risks. LG also claims to be the first a conscious attempt to rethink and sume banking communication (e.g.
globally in this space by 2025, commercially says. „ The company is working towards white goods player to commercially power re-engineer the entire end-to-end SMS, e-mail, digital etc), as well as
according to a joint report by power household LG has been in India for bringing learnings from one product to household products with artificial intelli- client journey. Enabling this struc- content that appeals to us and the
Consumer Electronics and products with 20 years. Gujral points out that another and from global markets to India gence and internet of things technology. turally is not easy and much effort time in which we would prefer to
Appliances Manufacturers artificial the company has always been Talreja suggests that one of the chal- needs to be invested in changing consume it. The "when (time of send-
Association (CEAMA) and intelligence and big on meeting local needs „ LG India is experimenting with both lenges impacting the localisation plans of how we manage of not just the AI ing)", "how (dynamic personalised
consultancy firm EY. internet of things by offering them products size and format of the products to cater to multinational companies could arise from processes but the entire organisa- content)" and "which (channel)" are
The industry growth rate technology geared to serve Indian condi- the needs of Indian buyers the global leadership’s reluctance in giving tion’s thought process. To achieve often left out of the AI-led personali-
slipped to 4-5 per cent in tions. It is continuously scouting local leaders full freedom to take decisions. this, we need a potent mix of con- sation, reducing the true potential
financial year 2016-17 as sales were hit in for use cases to drive product innovation. „ Even as LG goes for higher localisation, it Companies may have to also deal with chal- tinuous education, evangelisation, impact of the communication.
the months following the demonetisation For example, the company’s focus on may have to deal with challenges like lenges like product and technology know- bottom-up feedback, up-skilling and Cultural enablement : The prioriti-
announcement in November 2016. The localisation saw it launching microwaves product and technology know-how or how or functional issues related to R&D. re-skilling across all functions and sation of traditional gut instinct and
South Korean major posted sales of ~161 that help consumers prepare delicacies such functional issues But all these can be addressed effectively departments. domain experience over AI is still a
billion in India for the year through as dosa and roti, consumed regularly in with the help of in-house capabilities or by Data enablement: In AI, the algo- challenge when it comes to applying
March 2017, compared with ~144 billion Indian homes. Similarly, in-depth research reaching out to consultants. rithms are just the cooking process AI to front-end client engagement
the year before. of urban markets which are dominated by has redesigned its refrigerators so that they While its localisation strategy will but finally it's all about the quality of use cases. While AI is still far from
According to business coach Rajiv Talreja, working couples led the company to design able to store more. The same philosophy is help it offer more relevant products, experts the main ingredient -data. Solving replacing human contextualisation
a lot of businesses go in for localisation with refrigerators that promise to keep food, veg- applied to other products as well. say it will also help in cutting for data architectures and availabil- or emotional intelligence fully, the
a view to save costs. To be able to deliver a real etables and fruits fresh up to 15 days. Taking In a nutshell LG India is experimenting cost to market. The impact of its recent ity is the single most important pre- use of AI to even aid opinion is still
impact, organisations must see localisation as into account the fact that most Indians buy with both size and format of the localisation efforts will be felt in the com- requisite of any large AI implemen- significantly underutilised.
a means to fulfill the local needs of consumers products in bulk and store — the company products to cater to the needs of Indian buy- ing quarters.

SNIPPETS STATSPEAK
Digital experience ENGAGEMENT
USER BEHAVIOUR TO RETENTION
As over-the-top (OTT) applications continue their growth in terms of user Retention rate or percentage of
engagement, there is a decisive shifttowards consuming contenton these users who stay active over a
platforms compared to TV, according to a newstudy. Analysing 8.7 billion data certain period of time
points across 100 million devices and 80 million unique users, CleverTap has
WEEK1
collated data thatcould help design the customer engagementstrategyfor
these OTT apps. Highlights: 41.8%
WEEK2
78% 26% 31.8%
Across industries, at least 84 per cent of New users who New users who engage
consumers say their experiences with using with media at least three
register within a WEEK3
digital tools and services fall short of times in the first month
week of installation
expectations, according to the Gartner, Inc. 22.6%
Digital Consumer Experience Index. To gauge the
current state of consumers’ perception of key 8 Average time it takes a new user 72 Average time taken by users to play WEEK4
characteristics of their digital experiences, minutes to register after first app launch hours media at least three times
Gartner conducted an in-depth survey of their 22.0 %
engagement with and reactions to common
UNINSTALL
digital use cases across 11 industries. Those digital
use cases included actions such as placing a retail
order, submitting a service request to a bank,
RATES 35% Uninstall within 30
days of first app launch 20% Reinstall within 30 days
of app uninstall
Source: Mobile marketing platform
CleverTap

purchasing life insurance, paying a government

bill, and checking the status of healthcare
benefits. The specific elements of total digital
experience probed were consumers’ level of
trust, perceived ease of use, and benefits
received, such as saving time or money.
“Customer focus is a top business priority for CEOs
and subsequently a large investment area for
CIOs,” said Brad Holmes, managing vice-
president at Gartner.
SHUBHOMOY SIKDAR
MY BEST CAMPAIGN
Which is your best campaign and why
have you chosen it? When was it
launched?
A fresh Being part of the industry for many
years, I have worked on several
memorable campaigns for clients such
as Unilever, Colgate-Palmolive,
ingredient and we had to tell the
consumer that it would give a
“brighter” start to their day. We roped
in Nitish Bhardwaj, who was
immensely popular in Indian
households thanks to his popularity as
the onscreen Hindu deity Krishna that
he played in the TV serial
Mahabharata, and hence he was the
Club awards that year. This was well
before Effies were introduced in India
and effectiveness was the criteria for
which the award was won.
What were the execution challenges?
The biggest challenge was to shake off
the legacy of a highly westernised
brand and transform it into a brand of

approach Britannia, Tata group, Hyundai and so

on. But the one that I remember the
most was the re-launch of the
toothpaste brand Close Up in the early
nineties when Colgate was the
undisputed market leader and to
challenge its impregnable fortress in
the toothpaste market was truly special.
Back then, I used to work at Lintas
where I headed the personal products
business of Unilever for a decade.
Incidentally, I had also worked for
Colgate-Palmolive earlier, for five years
The pill before that.
The pharmaceutical industry is in a state of flux What did the campaign achieve for the
as it tries to maintain a delicate balance between brand? Could you also share some
the need for novel blockbuster drugs and the numbers to corroborate your claim?
need for improved operational efficiencies in an
increasingly competitive market space, Close Up was historically a niche
according to Frost & Sullivan’s. As healthcare is product that was the English-speaking
becoming increasingly democratized, patients MY TAKE youth’s choice, a brand that was mainly
are emerging as key decision makers—digitally cosmetic and thus was not considered
enabled by the entry of non-traditional tech
We had to take on the market leader without naming as an alternative to Colgate for mush of
companies such as Apple, Facebook, and it. So, it was a tongue-in-cheek message — we were middle-class India. I do not remember
Google—pushing pharmaceutical companies to taunting the market leader in an entertaining way to the numbers but we certainly managed
go beyond-the-pill. However, in the midst of to position the brand the way we
this chaos, there are pioneering companies remind people that you can change your habit. wanted it to and made it immensely
offering solutions that apply cutting-edge popular.
technologies to build digital convergence across
BRAND: Close Up
the pharmaceutical value chain. Disruptive What was the key idea behind
innovations driving growth within the YEAR OF LAUNCH: Not available the campaign?
pharmaceuticals industry include: Application of AGENCY: Lintas Close Up was differentiated being a
AI and big-data analytics by firms Benevolent AI. coloured gel where mouthwash was an
ideal choice to take across the message
to people from all age groups. In the ad
film, he is shown getting up in the
morning and saying, “White
toothpaste doesn’t get me up but Close
Up Red and Close Up Blue do.” We
designed the message to
make the brand more
mainstream and serious
in order to strengthen its
product story and rise
above cosmetic claims.
Vijay Vij, who is a
filmmaker now, was the
creative director of the
television commercial.
Since mouthwash was
important to the whole
message, I remember for
the still advertisements,
AJAYCHANDWANI,
we showed mouthwash
director, Percept and
being squeezed out of
independentstrategic
the bottles and entering
the coloured tubes of the engagementConsultant
toothpaste.
What was the industry response to the
campaign?
The brand found new middle-class
consumers and went on to dramatically
improve market share, especially in
south India where it was test marketed.
Close Up also won the Outstanding
Brand of the Year Gold Abby at the Ad
substance for the more mass-market
middle India. Also, we had to take on
the market leader without naming it.
So, it was a tongue-in-cheek message —
we were taunting the market leader in
an entertaining way to remind people
that you can change
your habit. We also had
to replace the old brand
ambassadors, Salman
Khan being one of them,
to execute the new
strategy for Close Up.
Given a chance, what
would you do
differently?
I don’t think I would like
to change anything about
the campaign not only
because it was successful
but also because it was
done in a rush or in a
haphazard manner. From
the conceptualisation to
execution, we had nine
months so we could do our research
about consumer preferences as well as
the competitors. Also, since we ran it
through the test markets called sensors,
the feedback on how it could potentially
do in those markets was useful in
designing the message and tweak it after
proper discussions.
https://t.me/pdf4exams
18 PERSONAL FINANCE
>
Youngsters save early,
but don’t invest right
Matching the financial goal with appropriate instruments is key to success
PRIYADARSHINI MAJI
A
rnav Deshmukh, 22, who
recently graduated from IIT-
Madras and is a scientist with
the Indian Space Research
Organisation, plans to go on an
extended tour of Europe after two
years. And while many in his age
group might be quite happy to swipe
their credit cards or take personal
loans to achieve this goal,
Deshmukh has started saving 30 per
cent of his monthly salary in equity-
linked savings schemes (ELSS).
The only problem with this plan
is the choice of instrument. While
ELSS is an excellent tax-saving
instrument for long-term saving, it
is not the best instrument for meet-
ing short-term goals. Also, ELSS has
a lock-in of three years, and each of
Don’tditchyourwalletjustyet
UPItransactionsaregrowingfaster,but
walletsremainrelevantforthosewithouta
bankaccountandseekingcashbacks
TINESH BHASIN
If you shop, order food, and book cabs
online, there’s a good chance that you
have two-three or even more pay-
ment apps on your phone. But you
may not have used a few of them for
the past few months, with new play-
ers coming up with better offerings.
Things are changing
rapidly in the country’s
payments space with
global technology giants YOUR MONEY
entering the segment.
Google Pay and
Amazon Pay are already
trying to win con-
sumers’ attention.
WhatsApp is gearing up
to enable users to send
money to others
through its chat app.
Most of the new entrants are using
the Unified Payments Interface (UPI)
for their offerings. As these global
companies resort to the UPI platform,
LIFE INSURANCE
Readers’ Corner
PANKAJ RAZDAN
I am 24 and have just started
earning. My father is advising
me to purchase a life insurance
policy as a tax-saving tool. How
do I decide on the right policy?
Will the policy serve any
purpose five years down the
line when I earn more and am
married?
Financial protection decisions
taken early always prove to be
wise. As you have just started
your career, it is absolutely the
right time for you to purchase a
life insurance policy. Identify
your financial goals and the
lifestyle needs you would like to
achieve at different stages of
your life and then opt for a suit-
able plan. As you mentioned
rightly, your responsibilities and
expenses will only go up in the
future. To ensure that your loved
ones and you are adequately pro-
tected at all times, you should
his instalments will have to be
locked in for this period.
Deshmukh will need ~250,000-
300,000 for his trip. Mumbai-based
financial planner Pankaaj Maalde
suggests that Deshmukh should
either start a recurring deposit of
~8,000 per month or start a system-
atic investment plan (SIP) of ~8,000
in ultra-short term funds.
There are many well-intentioned
young people who want to take con-
trol of their finances at an early age.
However, they need to either take
good financial advice or be ade-
quately informed about the instru-
ments they invest in.
Short-term goals: Goals like buy-
ing a car or travelling abroad are
short-term goals whereas purchas-
ing a house or retirement planning
many believe that mobile wallets,
which saw exponential growth in the
past few years, may soon become
redundant.
The rise in UPI transactions has
been enormous compared to wallet
transactions over the past year (See
table). The UPI platform is evolving
and offers more features than wal-
lets, but those are all
meant for someone
with a bank account.
Unlike wallets, you
don’t need to load up
money first in UPI-
based apps. You can
transact using a simple
identifier that looks
like an email address.
Payments can be
scheduled, and UPI
can now be linked to
overdraft accounts. “But all this is pos-
sible if you have a bank account. You
can use wallets even without having
a bank account. That’s why they are
opt for an increasing term plan,
which will increase your insur-
ance cover by a certain percent-
age every year. Besides offering
tax benefits, early purchase of
policy will ensure that you pay
much lower premiums.
My friend purchased a policy
four years ago for which he pays
monthly premiums. It is
difficult for him to keep tab of
this payment. Can he start
paying the premiums
annually?
Yes, your friend can change his
premium paying mode from
monthly to annual at the time of
policy purchase anniversary.
However, the change will be
subject to the particular prod-
uct’s guidelines. These can differ
from one insurance company to
another.
I am planning to purchase a
policy online and not through
an agent. However, my concern
is that there will be no agent to
assist my family at the time of
the claim, in case they need any
support.
You should not worry about the
servicing of your policy if you
have purchased it online. Most
insurers today offer instant
online help through chatbots
and call centres. Either a repre-
are medium and long-term goals.
And to fulfil these goals, different
instruments are required. Business
development professional Devenish
Chopra, 23, has started working
recently and wants to buy a car in
three-four years. He will need
around ~800,000 to ~900,000 for
this goal. He puts aside 20-25 per
cent of his take-home salary in long-
term mutual funds. Says Pradeep
Agarwal, CEO, Meri Punji IMF: “To
buy a car in the next three-four
years around ~150,000 should be
invested each year in short-term
debt funds.” He adds that the car
should not cost more than 60 per
cent of his investments. At the time
of purchase, he should compare the
loan rates with the returns he is get-
ting on his investments. If the
investment returns are better than
used extensively in rural areas for
money transfers and by the younger
population in metros, which may not
have a bank account,” says Vinay
Kalantri, founder and managing
director, The Mobile Wallet.
Wallets gained popularity due to
discounts and cashbacks. That lure
still remains. In fact, many compa-
nies are using this to build loyalty pro-
grammes. If you look at online travel
sentative is available for an
online chat or an artificial intel-
ligence enabled chatbot takes
down all your details and then a
representative gets back to you.
Life insurance companies also
extend customer care services
through their call centres. You
can connect with them anytime
to discuss your queries, or for any
help that your family or you seek.
To ensure that the process is has-
sle-free, keep the policy docu-
ments, website and call centre
details handy, updated and in a
place where they are easily acces-
sible to your family members.
I am 58 and have a life
insurance policy for which my
wife was the nominee. Now she
is no more. I do not keep well
either and my childhood friend
and his family take care of me.
Can I make him the nominee
for my life insurance policy?
Yes, you can appoint your friend
as the nominee for your life
insurance policy. The nominee
holds the money in trust for the
actual legal heir, if any. Section
39 of The Insurance Act, 1938
allows the holder of a life insur-
ance policy to nominate a per-
son or persons to whom the
money shall be paid in the event
of his death. This can be done
while purchasing the policy, or at
https://www.estore33.com/ https://t.me/TheHindu_Zone_official
MUMBAI | THURSDAY, 11 OCTOBER 2018 1
IMAGE:ISTOCK
~five million for 20 years and the
interest (a guesstimate) is 10 per
cent, she will have to pay an EMI of
~47,852. She should try to max-
Rules for forfeiting
imise her savings to meet this goal.
“From the current take-home
salary, deduct the non-discre-
earnest money
tionary expenses. She should aim Vivek Kumar Gupta and
to save 50-60 per cent of the his wife Kavita had
amount that is left,” says Deepesh booked a flat in a project
Raghaw, a Sebi-registered invest- ‘Prateek Laurel’ in Noida
ment advisor and by Prateek Realtors. The
PersonalFinancePlan.in founder. Guptas had paid a total
The bigger challenge, according amount of ~2.17 million in
to Raghaw, will be whether she will instalments. However,
be able to get a loan of ~five million. when the builder sent a
Generally, banks are reluctant to demand letter dated
lend an amount for which the December 9, 2010, asking
equated monthly instalment is for another instalment of
more than 40 per cent of a person’s CONSUMER ~496,240 to be paid within
take-home salary. This means that
her salary must touch about
PROTECTION a month, the Guptas failed
to make timely payment.
~120,000 in five years. Of course, if JEHANGIR B GAI The Guptas later
she gets married, she can take a joint claimed that they were
loan with her husband, and this will entitled to a 5 per cent rebate, which was disputed by the
make the task of affording the home builder. In May 2011, Gupta remitted a cheque for payment
loan quite easy. of the instalment. However, the builder did not present the
cheque for payment and instead sent an email on June 4,
Long-term goals: Mumbai-based 2011, intimating that their allotment had been cancelled on
entrepreneur Bhargavi Vijaykumar's April 9, 2011. Aggrieved by this, the Guptas filed a complaint
key goal is to retire early. “Any before the UP State Commission seeking that their allot-
household income that is over and ment be restored, or their money be refunded with interest.
above the average requirement, we The builder contested the case, contending that allot-
split it into two parts. For short-term ment had been rightly cancelled due to default in making
goals such as to create an emer- payment despite two reminders. The builder stated that the
gency corpus or an appliance pur- flat had already been allotted to some other buyer. As the
chase, we invest in liquid funds. State Commission allowed the com-
Where the investment horizon is plaint, the builder appealed to the
more than two years, we invest in National Commission, which The builder can
equity mutual funds,” says observed that possession of the flat forfeit the
Vijaykumar. This 30-plus profes- had to be given by September 2012, earnest money,
sional plans to retire after 20 years. subject to clearance of all dues on but it cannot
She plans to retire with a corpus of time without default.So the failure to exceed 10 per cent
loan rates, he should consider part- ~50 million. Currently, she is put- pay the instalment of ~496,240 of the total cost
financing the car through a loan. ting around 10 per cent of her counted as default in making pay- of the house
income into equity mutual funds to ment. This entitled the builder to
Medium-term goals: Management meet this goal. cancel the allotment under the terms and conditions stipu-
consultant Preeti Bhatt from Pune Malhar Majumder, founder of lated in the allotment letter.
plans to buy a house after five years. Positive vibes consulting and The Guptas argued that cancellation of the allotment
The cost of the three-BHK she Advisory, says that given her cur- merely for non payment of one instalment was not justified.
intends to buy is five million at pres- rent life stage, Vijaykumar can Rejecting this argument and differentiating the facts of the
ent. She sets aside around 20 per expect aggressive growth in her case, the National Commission pointed out that in their
cent of her salary each month in family income for the next few case default had continued despite two reminders. The
fixed deposits to make the down- years. If her income grows at 7-12 Commission also observed that a private builder would
payment. She has so far accumulat- per cent, she should be able to meet require money to complete construction in a time-bound
ed ~300,000. her goal. Vijaykumar, he suggests, manner so it would be necessary to ensure timely payment
Bhatt should be prepared for the should build a well-diversified port- of the instalments. Failure to make payment by the due date
cost of the house to rise to at least folio, a process already initiated would leave the builder with no alternative but to cancel the
~6.5 million in five years. Suppose through regular SIP investments allotment and forfeit the earnest money.
that she buys a ready to move in into mutual funds. She can expect a Accordingly, by its order of October 3, 2018, delivered by
apartment. She will have to pay 20 return of 12-15 per cent from her Justice V K Jain, the National Commission set aside the
per cent of the cost, or at least ~1.5 equity funds portfolio over the long State Commission's order and held the cancellation of the
million as down payment. She can term. Any annual surplus should allotment to be valid and justified. However, it held that the
borrow the balance ~five million also be allocated towards this goal, amount which could be forfeited would be merely the
from a bank. If she takes a loan of via SIPs of equity mutual funds. earnest money (defined as the amount paid at the time of
concluding the contract), subject to a maximum of 10 per
cent of the agreed price of the flat. Going by this interpreta-
tion, the Gupta had paid only ~350,000 as earnest money
before the issuance of the allotment letter. Hence, the
Rapid Rise in UPI Transactions Commission concluded that the builder would be entitled
Volume(inmn) Value(in~bn) to forfeit this amount, and be liable to refund the balance
UPI Mobilewallets UPI MobileWallets amount of ~1.8 million along with 10 per cent interest.
IMAGE:ISTOCK Aug 17 16.61 225.43 41.27 72.62 The writer is a consumer activist
Sep 17 30.78 199.48 52.93 81.54
Oct 17 76.77 201.23 70.58 86.60
Nov 17 104.84 186.67 96.41 93.88
Dec 17
Jan 18
145.46
151.83
288.37
326.30
131.44
155.71
125.68
125.63 TIPPING POINT
Feb 18 171.40 310.01 191.26 131.04
Should you invest in Blockbuster return
Mar 18 178.05 268.79 241.73 100.97 the IT sector now? over past year
Apr 18 190.08 279.29 270.22 116.95 The information technology Period IT funds category
May 18 189.48 325.41 332.89 140.47 sector has had a tremendous average return (%)
Jun 18 246.37 309.62 408.34 146.32 run on the markets. The 3-month 3.96
Nifty IT Index has given a 1-year 42.49
Jul 18 235.65 325.18 458.46 152.02
return of 41.67 per cent over 3-year 11.14
Aug 18 312.02 340.65 542.12 155.73 the past year. The category
Sep 18 405.87 - 598.35 - 5-year 16.11
average return of IT sector
Source: RBI and NPCI funds over the same period
10-year 18.43
Source: Valueresearchonline.com
has been 42.49 per cent,
agents, most of them offer cashback tional layer that doesn’t involve a according to data from Value Research. Several factors
in their wallets on booking. A portion bank account. Many wallet compa- are responsible for this. One is the rupee’s depreciation
of this can be used for future transac- nies have also added the UPI interface against the dollar, which is expected to boost the earn-
tions. Online shopping websites and for peer-to-peer money transfer. ings of all export-oriented sectors, including IT. Strong
some app-based taxi services also use Wallets have managed to grow despite economic growth in the US means that the discre-
wallets for cashbacks to make cus- the Reserve Bank of India making it tionary spending of US corporates on information tech-
tomers spend more on their websites. mandatory for them to carry out full nology will be strong. However, after such a strong
Kalantri points out that many cus- know-your-customer (KYC) compli- run-up, investors need to be extremely wary about
tomers use wallets as they don’t want ance. Wallets have added support for valuations when picking individual stocks, especially
to involve their bank account in pay- many regional languages whereas with the markets turning turbulent.
ments. They rather prefer an addi- UPI supports Hindi and English only.
BUDGET: ~10 MILLION-15 MILLION
any time before the policy Realty check
matures for payment. Business Standard bringsyou a snapshotofaveragecurrentrates and unit sizes in localities
that offer propertyin the pricerange of ~10 million-15 million. Ifyou are looking at buyingreal
My brother has worked in a estate, an idea aboutprevailingrateswould come in handy
company for 15 years and is
about to quit in order to start Avg price (~/sq ft) Avg unit size (sq ft) Avg price (~/sq ft) Avg unit size (sq ft)
his own venture. His
organisation covered him AHMEDABAD Kakkanad 4,566 2,601
under a group life policy. Will it Jodhpur Village 6,032 1,997 Panampilly Nagar 7,112 1,719
be possible for him to transfer Science City Road 4,740 2,518 KOLKATA
the group policy into an Vastrapur 5,892 1,908 Mukundapur 7,254 1,907
individual one?
Mani Nagar 5,825 1,964 Saltlake-V 6,084 1,899
No, your brother will not be able
to transfer the group policy into Gota 4,233 3,344 Kankurgachi 8,162 1,410
an individual policy. If need be, Bopal 4,312 2,578 New Town 6,291 1,937
he can purchase an individual Naryanpura 5,248 2,176 Beleghata (Beliaghata) 6,768 1,851
life insurance policy for himself. JAIPUR Tangra 5,928 1,998
Vaishali Nagar 4,856 2,433 NAGPUR
I have purchased a critical
Civil Lines 6,000 2,100 Gandhi Sagar Lake 8,347 1,475
illness policy. In case I am
detected with one, how can I get Bani Park 6,432 1,887 Rambagh 7,000 1,639
my claims? Mansarover 6,329 2,061 Narendra Nagar 6,500 1,770
In case a policyholder is detected Jagatpura 6,500 1,850 Dharampeth 8,357 1,557
to be having a critical illness, the SC Road 6,750 1,585 Raj Nagar 7,500 1,896
claim settlement for critical ill- Nirman Nagar 6,705 1,811 New Colony 6,022 2,205
ness policies is relatively simpler
than for life insurance. You will KOCHI Ganeshpeth 6,350 1,783
require the specialist doctor’s Palarivattom 6,887 1,899 VISAKHAPATNAM
certificate and other medical Maradu 5,838 1,990 MVP Colony 6,421 2,164
reports citing the detection. Edapally 5,770 2,127 Seethammadhara 5,500 2,427
Once you contact your insurer Kaloor 5,951 1,786 Peda Waltair 5,600 1,980
and submit all the documents,
Kadavanthra 5,643 1,975 Rushikonda 3,000 3,695
the claim will be settled.
Note
·Ticket price range considered for the above data points is between ~ 10 million and ~ 15 million
The writer is MD & CEO, Aditya Birla
· All the data points discussed in the above table refer to primary market only
Sun Life Insurance. The views · Above residential data set comprises of residential apartments only
expressed are the expert’s own. Send · Above residential data is representative of organised real estate developers only
your queries to yourmoney@bsmail.in · The top performing micromarkets based on sales during August 2017 to July 2018 is represented in the table
· Data points are updated till July 2018 Source: PropEquity
https://t.me/pdf4exams
.
MUMBAI | THURSDAY, 11 OCTOBER 2018
India’s climate
change dilemma
With the idea of a fair burden-sharing formula out of the game,
India could be asked to take yet deeper emission cuts without
any financial support at the Poland summit
NITIN SETHI
New Delhi, 10 october
I
n 2015, the Paris Agreement was crafted to suit
the demands of the then US government. The
agreement, taking the bottoms-up approach,
left it to each country to volunteer its best pos-
sible effort in the global fight against climate
change. No one would dictate how much effort
each country must make to reduce greenhouse gas
emissions. By now, 177 countries, including India,
have submitted their targets, which are called the
Nationally Determined Contributions or NDCs.
But the latest report of the UN Inter-govern-
mentalPanelonClimateChange(IPCC)haswarned
that the targets are inadequate to ensure that the
global average temperatures do not rise more than
1.5 degree Celsius above the pre-industrial era. The
panel of scientists has concluded that the emis-
sion reduction efforts of countries for the period
between now and 2030 need to be ratcheted up in
order to have a good chance of keeping the tem-
perature rise under check.
Not keeping the temperature rise under check
could have substantial economic and ecological
impacts on the planet, and countries such as India
are likely to face some of the worst consequences.
This is set to put India and other emerging
economies in a challenging spot.
The report’s conclusions have triggered a
demand from the global civil society that coun-
tries should ratchet up their emission reduction
targets. This demand will soon snowball into a
political slug-fest at the upcoming climate change
negotiations in December in Poland.
On the face of it, the demands for deepening the
emission cuts reads as an easy and perfect global
response to the dire warnings of the IPCC report.
But the report does not answer two critical ques-
tions. One: What are the estimated economic costs
of topping up the existing emission reduction tar-
gets? Two: On what basis would these additional
emission reduction cuts and the attendant addi-
tional economic burden be apportioned between
countries? These issues are particularly when the
US has decided to sit out the Paris Agreement.
https://www.estore33.com/
With the idea of a fair burden-sharing formula
— contested by the developed world and the US—
entirely out of the game, the pressure to take yet
deeper emission cuts without any financial support
is likely to be focused on large emerging economies
such as India and China.
This leaves India in a bind. If the entire global
community does not heed the IPCC report to
enhance emission-cutting targets, climate change
is certain to become more acute, leading to massive
economic and ecological disruption in India, even
though its contribution to the problem so far has
been much less than all other large economies. But
taking on disproportionally higher emission reduc-
tion targets would mean more investments and
financial resources being drawn away from short-
andmedium-termobjectivesofpovertyeradication
and economic growth to long-term social and eco-
nomic security.
Some experts contend that the continuous
falling prices of clean technology, such as solar
power, permits countries like India to reassess
where the new golden mean may lie between these
contesting demands on resources. Chandra
Bhushan, deputy director general, Centre for
Science and Environment, recently said such a
“sweet spot” exists for India to be more ambitious.
Others contend that negotiations cannot take
place on the basis of an acceptance that developed
countries are not to be held accountable for their
At Paris, India took a rather ambitious first step existing commitments.
with the understanding that the first set of targets “There will be pressure on developing coun-
under the agreement going from 2020 onwards up tries to ratchet up their ambition and present
to 2030 would not be ratcheted up. The agreement revised and more ambitious NDCs by 2020.
providesforareviewandupwardrevisionofthetar- However, it is important to ensure that the conver-
gets for the next phase after 2030. sation on the IPCC report is premised on equity
India committed to reduce the emissions inten- and fairness and in the answering of the who and
sity of its GDP by 33 to 35 per cent of the 2005 lev- the how, these principles must not be forgotten,”
el by 2030. To do so, by 2030 the country would says Indrajit Bose of the Third World Network, an
derive 40 per cent of its power capacity from non- international NGO that tracks the negotiations.
fossil fuel. Domestically, the government fixed a “Developing countries have to invest large
tough target of setting up 100 Gw of solar power by amounts for adaptation. How does one ratchet up
2022, to be topped up by 25-50 Gw NDCs without seeing accompa-
by 2030. This won India accolades nyingincreaseinsupportforadap-
for taking a leadership role on the The US and the EU tation or finance for developing
global stage even as some histori- have argued hard countries?” he adds.
cal emitters took on relatively to not let the With the Paris Agreement now
modest commitments. principle of equity the template to move forward,
By August 2018, the country and fair distribution developing countries are unlikely
has installed 23 GW of solar pow- of responsibility to give the US and EU an easy walk
er capacity and the 100 GW target become a firm over in Poland on this count.
looks tough to achieve within the central basis for the Bose says, “The US spent sev-
next four years. implementation of eral hours at the IPCC meeting to
The new IPCC report has said the Paris Agreement ensure the words ‘principle of
that when looked at cumulatively equity’ do not find mention in the
all such targets of the 177 coun- report. They did not endorse the
tries are not adequate. But the panel was neither final report. During the Bangkok climate talks held
tasked with nor has answered the politically sig- in September 2018, developed countries were quite
nificant question of who needs to do more and how aggressive about not wanting to talk about finance
this additional responsibility will be apportioned. under the Paris Agreement. In such a scenario,
ThisdebateisgoingtorageatthePolandclimate pushing certain developing countries to revise their
change talks in December. Two factors are likely to NDCs upwards without the developed countries
wedge India into a corner. The US — the biggest his- doing their fair share is going to be a challenge.”
torical emitter — has stepped away from its existing The agenda for Poland negotiations in
commitments on emission reductions as well as December is crammed tight with dozens of deci-
providingfinance.TheUS,andtheEuropeanUnion sions to be taken for implementing the Paris
toalesserextent,havearguedhardatthetalkstonot Agreement from 2020. With the new IPCC find-
let the principle of equity and fair distribution of ings also to be addressed at these negotiations, the
responsibility become a firm central basis for the geo-political significance of the upcoming talks
implementation of the Paris Agreement. has gone up several notches.
https://t.me/TheHindu_Zone_official
TAKE TWO 19 <
Hong Kong will
add artificial
islands to tackle
housing crisis
BLOOMBERG
10 October
HongKongwilladdartificialislandstocountera
runawaypropertymarketthat’smadethecitythe
world’sleastaffordableforhousing.
Thegovernmentwillaimtoreclaim1,700
acresoffLantauIsland,thecity’sChiefExecutive
CarrieLamsaidWednesdayinapolicyaddress.
Thatcompareswiththe1,670acresofextraland
thatapreviousgovernmentreportestimatedthe
cityneededthrough2046.
“Findinglandisthepressingproblemthatwe
needtotackleurgently,”Lamtoldthecity’s
legislators.“Wemustmakebolddecisions.”
Landreclamationinnotoriouslycrowded
People could start to move to the artificial islands
by 2032
HongKonghaslongbeenacontroversialoption
toboostthesupplyofhomesdueto
environmentalconcerns.Butpublicoutrageover
acrisisinhousingaffordabilityisencouraging
officialstoact,evenasthepropertymarketis
showingsignsofcoolingafteryearsof
stratosphericgains.
Tomitigateoppositiontoreclamation,Lam
hassaidmostofsuchlandwillbeearmarkedfor
subsidisedhousing.Asmanyas1.1millionpeople
couldliveontheartificialislands,shesaid.That’s
about15percentofHongKong’scurrent
population.Thefirstphaseofreclamationwork
wouldstartin2025,withpeopleabletomoveinby
2032,Lamsaid.
Othermeasureswouldinclude:allocating
about70percentofnewlandtopublichousing;
movingfastertoconvertso-calledbrownfields
sites,suchasdesertedrurallandintheNew
Territories,toresidentialuse;andsettingupa
landsharingpilotprogrammethatcouldturn
landheldbydevelopersintoprojectsthat
accommodatebothpublicandprivatehousing.
Analmost15-yearbullruninpricesprompted
UBSGrouptolastmonthnameHongKongasthe
citymostatriskofahousingbubble.Still,rising
mortgagecosts haveweakenedsentimentand
banksarebeginningtotrimtheirproperty
valuations.
https://t.me/pdf4exams https://www.estore33.com/ https://t.me/TheHindu_Zone_official
20
>
MUMBAI | THURSDAY, 11 OCTOBER 2018 1

N ROW OVER FIGHTER JETS CONTRACT N

Rafale deal a quid pro quo: French media

Mediapart, a French news website, says it has accessed an internal document
from Dassault which states that partnering Anil Ambani’s defence firm was a Did govt’s move to buy jets from
quid pro quo to New Delhi for winning a ^7.8-bn contract to supply fighters
Dassault meet norms, asks SC
AJAI SHUKLA
New Delhi, 10 October
AJAI SHUKLA
New Delhi, 10 October
SC SEEKS DETAILS equipment cannot be evalu-
ated” in the kind of user trials
that India demands.
| The SC has asked for of the steps in the

F
rench news website, Mediapart, On Wednesday, the Supreme This condition does not
reported on Wednesday Court (SC), in dealing with
details of the decision decision making apply to the Rafale either,
that it had accessed an the three petitions filed making process in the process leading to the which was extensively
internal document from aero- against the purchase of 36 Rafale deal with France award of the order for tested and evaluated in
space firm Dassault, which Rafale fighters from France, to be submitted in three the defence equipment user trials by the Indian Air
stated that partnering Anil asked for details of the gov- separate sealed covers in question' Force.
Ambani’s defence firm ernment decision-making on or before October 29 | The conditions in which Paragraph 105 of DPP-
was a quid pro quo to that scuttled an ongoing pro- 2016 caters for an IGA that
| The apex court made it the govt can process a
New Delhi for winning a curement of 126 Rafale fight- would bind the OEM’s gov-
^7.8 billion contract to sup- ers and replaced that with the clear that it would not deal through an ernment to ensure “product
ply 36 Rafale fighters to the Indian purchase of 36 Rafales from examine the technical Inter-Governmental support over a long period of
Air Force (IAF). French vendor, Dassault. and commercial aspects Agreement is detailed in time” and to “provide for the
The Mediapart report states: The SC has asked for the of the purchase Paragraphs 104-105 of assistance of the foreign gov-
“According to an internal Dassault doc- details to be submitted in | All that the judges will Defence Procurement ernment in case the con-
ument obtained by Mediapart, a senior three separate sealed covers Procedure of 2016 tract(s) runs into unforeseen
scrutinise is: 'the details
member of the aviation group had on or before October 29. The problems”.
explained to the staff representatives matter will next be heard on Paragraph 106 provides
that the joint venture was a ‘counter- October 31. for “procurement on strate-
part’, ‘imperative and mandatory’ to win The apex court made it dure, i.e., DPP-2006. the case with the Rafale pro- gic considerations”, where
the Rafale market.” The Rafale deal has come under a concerted attack from Opposition parties clear that it will not examine The conditions in which curement, which was already “major diplomatic, political,
The joint venture referred to was the technical and commer- the government can process a being pursued under a global economic, technological or
Dassault Reliance Aerospace (DRAL), proposed this service group (Reliance ernment with paying an inflated price cial aspects of the purchase deal through an IGA are tender. military benefits deriving
which Anil Ambani’s Reliance Group Group), and Dassault who negotiated for 36 Rafales; with endangering nation- – that is to say, the suitability detailed in Paragraphs 104- The second contingency from a particular procure-
had formed with Dassault, with the for- with Ambani. We did not have a choice, al security by cancelling an ongoing of the Rafale or the price at 105 of DPP-2016. Paragraph is “where a very large value ment may be the principal
mer holding 51 per cent and the latter 49 we took the interlocutor who was tender for 126 Rafales; and with “crony which it was bought. 106 stipulates the conditions weapon system/platform, factor determining the choice
per cent of the equity. DRAL was set up given to us.” capitalism” in selecting the Reliance All that the judges will for “procurement on strate- which was in service in a of a specific platform or
just days before Prime Minister Hollande was France’s president in Group as a partner to Dassault. scrutinise is “the details of gic considerations”. friendly foreign country, is equipment on a single ven-
Narendra Modi and then-President April 2015, and he hosted Anil Ambani has not the steps in the decision- Paragraph 104 notes: “There available for transfer or sale.” dor basis.”
François Hollande made the shock Prime Minister Modi in Opposition parties in denied benefitting from making process leading to may be occasions when pro- This clause does not apply to This also provides for buy-
announcement in Paris, on April 10, Paris when the latter pub- India have charged Rafale-linked offsets. the award of the order for the curements would have to be the Rafale either, since it stip- ing equipment from an OEM
2015, that the IAF would buy 36 fully- licly announced his decision the National However, the Reliance defence equipment in ques- done from friendly foreign ulates that the purchase who is “not necessarily the
built Rafale fighters from Dassault. to buy 36 Rafales from Democratic Alliance Group – in a series of legal tion, i.e., Rafale jet fighters countries, which may be “would normally be at a lowest bidder (L-1).”
Opposition parties in India have Dassault in “flyaway” (or ful- (NDA) government with injunctions issued to vari- (36 in number).” necessitated due to geo- much lesser cost than the “Decisions on all such
charged the National Democratic ly built) condition. “crony capitalism” — ous media houses — has Effectively, the apex court strategic advantages that are cost of the original plat- acquisitions would be taken
Alliance (NDA) government with “crony Paris and Dassault have alleging that claimed that it benefited will establish whether, in likely to accrue to our coun- form/weapon system, mainly by the Cabinet Committee on
capitalism” — alleging that government issued statements indicat- government pressure only from ^778 million going in for an Inter- try. Such procurements… due to its present condition.” Security (CCS) on the recom-
pressure was put on Paris to discharge ing that the decision to part- was put on Paris to worth of business, not Governmental Agreement would be based on mutually This condition applies for sit- mendations of the Defence
offset obligations — worth 50 per cent of ner Ambani was taken by discharge offset ^3.9 billion. (IGA) with France, the gov- agreed provisions between uations like India’s purchase Procurement Board (DPB),”
the value of the contract, or ^3.9 billion them. But none of those obligations — worth 50 While all 36 Rafale ernment met the conditions the governments of both the of INS Vikramaditya from says DPP-2016.
— through DRAL. carefully worded statements per cent of the value of fighters are being manu- and procedures stipulated in countries.” Russia. One analyst says the gov-
This was endorsed by former French directly contradict the contract, or factured in France, an off- the Defence Procurement This paragraph then The third contingency ernment could use Paragraph
President Hollande, who told Mediapart Hollande’s explicit allega- ^3.9 bn — through DRAL set requirement, which is Procedure of 2016 (DPP- describes three contingencies relates to the purchase of “a 106 to justify the 36 Rafale
on September 22 that the Indian gov- tion. a part of all Indian defence 2016). when an IGA can be resorted specific state-of-the-art procurement on the grounds
ernment had left Paris with no choice Now the Dassault document report- procurements worth more than ~20 bil- DPP-2016 governs the pro- to. The first is when India’s equipment/platform, howev- of French willingness to
but to do business with DRAL. ed by Mediapart reinforces Hollande’s lion, requires French companies that curement of 36 Rafales, while military identifies “equip- er, the government of the equip them with nuclear
Asked by French news website, words. build the Rafale — Dassault, Thales, the aborted procurement of ment of proven technology original equipment manu- weapons delivery ability.
Mediapart, “Who selected Reliance as a The Rafale deal has come under con- Safran Aero Engines, and MBDA — to 126 medium multi-role com- and capabilities… (while) par- facturer’s (OEM’s) country However, the DPB note and
partner and why?” Hollande respond- certed attack from the Opposition par- plough back 50 per cent of the contract bat aircraft was being pur- ticipating in joint interna- might have imposed restric- the CCS note would have to
ed: “It was the Indian government who ties, which have charged the Modi gov- value into Indian defence production. sued under an earlier proce- tional exercises.” This is not tions on its sale and thus the support such a contention.

STAFF CRUNCH, SAFETY WOES HAUNT RAILWAYS

At least 7 killed as train derails in UP

SHINE JACOB
New Delhi, 10 October

The rail accident at Rae Bareli in

UttarPradeshthatsofarclaimed
seven lives came as a jolt to the
railways that is yet to fill up
vacanciesofaround141,000safe-
ty staff and is in the process of
replacing age-old tracks.
According to the latest
report, at least seven persons
lost their lives and over 20 were
injured as the Malda Town-New
Delhi Express derailed near
Harchandpur railway station in
Uttar Pradesh’s Rae Bareli. The
incident took place around 6:05
am on Wednesday. A Northern
Railway source, however, put
the death toll at six. Eight coaches and the engine of New Farakka Express derailed near Rae Bareli PHOTO: PTI
The railways said in a state-
ment that the train engine and accidents came down to 16, ly in safety categories. Going by funds in the DRF to replace the
five coaches have derailed and a claiming only 18 lives during the another data with the railways, over-aged assets is indicative
rescue team has been sent to first six months of 2018. the number of derailments dec- of weak financial health of the
the location. A team of officials However, Wednesday’s acci- reased in the last few years with railways.
headed by railway board chair- dent shows that this relief by the average derailmentbetween The plans formulated to
man Ashwani Lohani also went the railways was short-lived, as 2014 and 18 falling to 65 a year, check train accidents include
to the accident site. Railway the national transporter is yet to down 25 per cent from 86.7 a replacement of over-aged
minister Piyush Goyal has fill up 141,565 vacancies of non- year between 2004 and 2014. assets, adoption of suitable
ordered an inquiry by the gazetted staff in the safety cat- “Lots of work is happening technologies for upgradation
Commission of Railway Safety. egory. Further delay in filling now in the track renewal area. and maintenance of track,
According to the latest data, vacancies may hurt the railways However, I would suggest that rolling stock, signaling and
the number of accidents and more though it is on a hiring maintenance should also be interlocking systems. There
related deaths has come down spree (coming out with 1,20,000 given priority. The money for must be more emphasis on
in the last two years. While rail- vacancies this year). depreciation reserve fund training officials and inspec-
way accidents saw 192 deaths in Early this year, the railways (DRF) should not be diverted tions must take place at regular
314 accidents in 2016, it came came out with two employ- for any other purpose,” said intervals to monitor and edu-
down to 97 deaths in 187 acci- ment notifications to fill up Shanti Narain, former mem- cate staff for adopting safe
dents in 2017, posting an over 89,409 vacancies. These ber traffic of the Railway practices. In 2017-18, the rail-
40 per cent drop in the number include 26,502 vacancies of Board. Earlier this year, the ways achieved 4,023 km of
of accidents. After the massive assistant loco pilots and tech- Comptroller and Auditor track renewal, which is its high-
track renewal works conducted nicians and 62,907 vacancies General had highlighted that est ever and it has targeted
by the railways, the number of for various level-1 posts, main- non-availability of sufficient 4,400 km during 2018-19.

WhatsApp bug let hackers take over app on a video call

REUTERS
New York/London, 10 October
Facebook’s WhatsApp messen-
ger service said on Wednesday
it has fixed the latest bug on its
platform that allowed hackers
to take over users’ applications
when they answered an incom-
ing video call.
The announcement fol-
lows reports from technolo-
gy websites ZDnet and The
Register that the vulnerabili-
ty, which affected WhatsApp
applications on Apple and
Android smartphones, was
discovered in late August and
was fixed by Facebook in ear-
ly October.
“We routinely engage with
security researchers from
around the world to ensure
WhatsApp remains safe and
reliable. We promptly issued
a fix to the latest version of
WhatsApp to resolve this
issue,” Ann Yeh, spokes-
woman for WhatsApp, told
Reuters in an email.
WhatsApp is used by
more than 1.2 billion people
around the world and is a key
tool for communications and
commerce in many coun-
tries. The service was
acquired by Facebook in 2014
for $19 billion.
“This is a big deal,” Travis
Ormandy, a researcher at
Google Project Zero which
discovered the bug, said on
Twitter. “Just answering a
call from an attacker could
completely compromise
WhatsApp.”
Facebook has suffered a
string of security-related
problems in the last year.
The social media company
last week disclosed its worst-
ever security breach affect-
ing nearly 50 million
accounts.
Facebook shares were
down 1.8 per cent at $155.02
on Wednesday.