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THURSDAY • JUNE 15, 2017 CHENNAI: ₹6; Outstation: ₹8 Pages 18 • Volume 24 • Number 142 ߯ä×þ
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TECHNOPHILE Are technology’s big five going to make sure we do and think nothing? p10
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ECONOMY
From Friday: daily fuel price revision New Delhi, June 14
From June 16, petrol and diesel prices will be revised every morning. The current practice is to revise prices fortnightly, at midnight. “There were some concerns of dealer associations with regards to the daily pricing mechanism. It was decided that the price of petrol and diesel will be revised from 6 am every day,” Petroleum Minister Dharmendra Pradhan said. p4
COMMODITIES
Monsoon shows signs of fatigue Thiruvananthapuram, June 14
The monsoon covered Coastal Andhra Pradesh, and parts of South Chhattisgarh and Odisha on Wednesday, braving signs of fatigue after misdirecting a rain-laden deep depression into Bangladesh a couple of days ago. The Bay of Bengal is expected to take time to organise the flows after the ‘flash’ deep depression churned its waters to a scale rarely witnessed at this time of the year and laying to waste a lot of kinetic energy in the process. p16
Ahmedabad Bengaluru Chennai Coimbatore Hubballi Hyderabad Kochi Kolkata Madurai Malappuram Mangaluru Mumbai Noida Thiruvananthapuram Tiruchirapalli Tirupati Vijayawada Visakhapatnam
Uncertainty over smooth transition to the new tax regime chokes up inventory flows OUR BUREAU Chennai, June 14
Recently, pharmacists in many cities sent out mailers to some of their regular clients, especially senior citizens. Stock up on your essential drugs, the customers were told. The ‘advisory’ was not triggered by any trouble at the manufacturing end, but by apprehensions arising from the July 1 rollout of the Goods and Services Tax (GST), India’s biggest-ever indirect tax reform. The druggists were not sure if they would have adequate stocks of medicines, as they were worried about how consignments manufactured before July 1 would be treated under the new tax regime. This concern over tax credit for old stocks cuts across sectors. More
Insolvency framework soon for banks, insurers OUR BUREAU New Delhi, June 14
After putting in place a legal framework to resolve insolvency in non-financial entities, the Centre has moved a step closer towards creating a similar apparatus for specified financial sector bodies such as banks and insurance companies. The Cabinet on Wednesday gave its nod for the introduction of the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI), in Parliament. It will create a framework to deal with bankruptcy in banks, insurance companies and financial sector entities. Once enacted, it will also lead to the establishment of a Resolution Corporation. The proposal is aimed at giv-
ing comfort to consumers of financial service providers in instances of any financial distress by strengthening and streamlining the current framework of deposit insurance for retail depositors. According to an oicial statement, the Bill will also result in the repeal of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, and the transfer of deposit insurance powers and responsibilities to the Resolution Corporation. The Resolution Corporation will protect the stability and resilience of the financial system by protecting consumers of covered obligations up to a “reasonable limit” and by protecting public funds “to the extent possible,” an oicial release said. The Bill also seeks to cut down the time and costs involved in resolving the problem of distressed entities.
Why mid-rung IT staff must get cracking at code Companies want them to learn new tech skills, not just manage people VARUN AGGARWAL PRIYANKA PANI Mumbai, June 14
If you’re a team leader or a manager in an Indian IT services company and you’ve forgotten how to code, reenter the classroom or you may not have a job very soon. Take the case of Sunil Srinivasan, a senior solutions consultant at a leading IT services company in India. The 38-year-old manager is worried that if he doesn’t teach himself new technical skills, he may soon be jobless. Srinivasan’s taken on four online courses, including the Cisco Certified Network Professional course. The technological shift towards analytics, automation, cloud and the like has created a vacuum of talent on the one hand, and a large workforce with obsolete skills on the other. Organisations are, therefore, looking for multi-skilled employees for a particular tech job role. “Given the scale of job losses we see today, it is important to re-skill yourself, as it all boils down to the survival of the fittest,” he says. Srinivasan’s fear is not unfounded. IT companies are nudging their layers of middle management professionals to learn technical skills to remain relevant. Although no overt warnings have been issued, the smarter ones are reading between the lines and getting the message: shape up, or ship out. CM YK
GREEN BLANKET Paris climate deal’s ‘beauty’ is its holistic approach, says former UNFCCC Executive Secretary Christiana Figueres p18 Regd. TN/ARD/14/2012-2014, RNI No. 55320/94
Ahead of rollout, producers & traders feel taxed
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UNANIMOUS CHOICE? Senior Union Ministers are reaching out to the Opposition ahead of the Presidential polls p11
“What we are trying to do is to nudge them into taking roles that are non-managerial, because there are only so many managerial roles that we [can] have,” says Sucharita Palepu,Global Head (People Practices) at Tech Mahindra. Last year, the company introduced a programme for managers to return to coding. Similarly, a TCS app tells its employees if their skills are relevant, while it downgrades them with time unless they reskill. “Technologists need to be generalists. We want people to learn a wide set of skills while specialising in one or two,” says Ashok Krish, Head, Workplace Re-imagination Practice, TCS. “Today, a technologist needs to know how to design a UI (user interface); how to code the UI; how to build the back-end; and how to put it on cloud. This is the bare minimum. Five years ago, there would be someone doing only coding, or only back-end, or only UI design. Not any more,” he says. Over the last few years, several online training companies such as Simplilearn, Coursera, have sprung up to cater to the reskilling demand, which many companies are not able to fulfil internally. “The biggest impact would be felt in the middle level, where people are not engaged in hardcore IT roles any more, but are managing people. The skills they learnt belong to a time when processes and skills were not mature; now automation is leading the way,” says Vikalp Jain, whose Acadguild works with several IT companies to reskill employees.
importantly, manufacturers are not sure how the GST rates that have been announced will afect prices. In fact, some two-wheeler manufacturers are even wooing customers by asking them to beat the GST and purchase bikes for a lower price now instead of buying in July. While most sectors seem to be welcoming of the GST, they are unsure of how the implementation would take place. A few pharmacists BusinessLine spoke to, however, were sure that the confusion would be sorted out within a few days of the GST kicking in. There is also the worry that not everyone in the value chain is GSTcompliant. Chandrakant Salunkhe, President, SME Chamber of India, says the B2B business is being af-
fected due to the switch-over. Large companies want their suppliers to be GST-compliant, while many of them are not geared up for the new tax system. Some companies, he says, have postponed their procurement to get the benefit of lower taxes when GST kicks in. Large-volume businesses such as paper and cement trade are going slow due to concerns over losses in compensation during the transition. Traders prefer to keep stocks low to avoid confusion when GST kicks in. Dealers and distributors, especially in the FMCG sector, have restricted fresh purchase of stocks from manufacturers. In the consumer durables industry, retailers are running discounts and special promotional schemes to dispose of existing stocks. It is the same with branded apparels. Says Ashok Goel, Vice-Chairman and Managing Director, Essel Propack, a leading manufacturer of packaging material, “Companies
TROUBLING SIGNS There is widespread apprehension that if GST keeps its date with July 1, the economy will witness a disruption, albeit a temporary one Concerns How will goods manufactured prior to July 1 be taxed? What happens when not everyone in the supply chain is GST-compliant? Will the market have no room for small players once GST is rolled out? What has been happening Traders keep stocks of goods to a minimum Some of them await GST rollout for procurement of new stock Discounts being offered to dispose of existing inventory
are doing inventory correction before the [GST] rollout. We saw this in May and we are seeing it in June. We believe that in the final10-15 days before the GST kick-of, we will see a complete lull as dealers will stop picking up stocks. But we expect to see a quick recovery in July and we
anticipate a huge surge in demand.” Automobile parts suppliers say there will be no major change in their supply to the vehicle manufacturers. However, a few vehicle manufacturers want to make invoices only till June 25, due to concerns
over credit as a consequence of the transition. The CEO of a leading tier-2 supplier to Tata Motors says there has been no rescheduling of parts supply, but feels there will be a slowdown in the last week of June. At the same time, there is fear that the GST will push out smallscale traders in the retail business and the space will be dominated by larger players. “This would pose a bigger threat to small-scale traders and the situation may lead to a trade imbalance,” warns KM John, Secretary, Ernakulam Merchant Chamber of Commerce. (With inputs from Rahul Wadke, Suresh P Iyengar and Tanya Thomas in Mumbai; Meenakshi Verma Ambwani and TV Jayan in New Delhi; R Balaji, G Balachandar and Swathi Moorthy in Chennai; V Sajeev Kumar in Kochi; Vinson Kurian in Thiruvananthapuram; Ch RS Sarma in Visakhapatnam; V Rishi Kumar and KV Kurmanath in Hyderabad; and Abhishek Law in Kolkata) Also read p5, 16
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BusinessLine THURSDAY • JUNE 15 • 2017
Despite Brexit woes, Lodha Group upbeat on London projects
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Realtor has already sold £130 million worth of properties in central London VIDYA RAM London, June 14
Ravi Chopra, Chairman, Piaggio Vehicles Pvt Ltd, and Diego Graffi, new CEO, during the launch of Piaggio Porter 700 in Mumbai on Wednesday. The new small commercial vehicle is priced at ₹3.18 lakh (ex-showroom Maharashtra) SHASHI ASHIWAL
Refiners pact for joint venture New Delhi, June 14
Public sector oil refiners have signed an agreement for setting up a joint venture refinery-cum-petrochemical complex on Wednesday. The refinery will be set up in Ratnagiri with a capacity of 60 million tonnes. Indian Oil Chairman Sanjiv Singh said that the company will hold 50 per cent stake in the joint venture project. Hindustan Petroleum and Bharat Petroleum will hold 25 per cent stake each. An official privy to the discussions said that the joint venture is in the process of acquiring 15,000 acres for the project. The project is expected to see $35-40 billion investment. OUR BUREAU
Real estate developer the Lodha Group hopes to continue to build its British business with projects across price points and sectors, as it remains optimistic about London’s prospects despite the uncertainties posed by Brexit. The company last week launched sales of apartments at No.1 Grosvenor Square, the former Canadian embassy the group acquired in 2014 and which it is converting into 39 high-end apartments, and five duplexes. Abhishek Lodha, Managing Director said the group believed London remained attracted as a long-term invest-
ment, and that while it would focus on its two current acquisitions in the short-term, it hoped to soon expand its portfolio to new price categories and beyond the residential sector. “The internationalisation of London over the past 70 or 80 years has been a constant process…some things have moved forward but the long term trend is for it to become a more important and global city,” he said at a meeting at the show apartments for Grosvenor House and Lincoln Square in central London last week. The company has already sold £130 million worth of properties out of an anticip-
The group believed London remained attracted as a long-term investment, it hoped to soon expand its portfolio to new price categories and beyond the residential sector.
Abhishek Lodha, MD, Lodha Group (file photo)
ated £500 million, at Lincoln Square, also in central London and due to be completed by the end of 2018. Lodha expects
75 per cent of properties to be completed by that date. He added that sales were also boosted by the slump in
Bidders raise concerns over NTPC’s Andaman storage-linked solar project
Fortis to extend services at home Bengaluru, June 14
Fortis Hospital has tied up with HealthCare at home (HCAH) to provide healthcare services at door step. The hospital will extend their services to the patients in need of postoperative or rehabilitation care, according to Fortis officials. Manish Mattoo, Zonal Director, Fortis Hospitals said, “Through this new partnership, our patients will have a better access to postoperative and rehabilitation care, reduce readmission risks and associated costs.” OUR BUREAU
Dr Reddy’s recalls acne drug from US New Delhi, June 14
Drug firm Dr Reddy’s Laboratories Inc is recalling over 3.25 lakh cartons of Zenatane (isotretinoin) capsules, used for treatment of severe acne, from the US market due to failed dissolution specifications. The drug is manufactured by pharma firm Cipla at its Pune facility for Dr Reddy’s Laboratories. The product is being recalled due to “Failed Dissolution Specifications: out of specification results observed for low dissolution”, the USFDA said. PTI
Rays Power Infra, Hero Future Energies, Renew Power and Amplus Solar in fray TWESH MISHRA New Delhi, June 14
NTPC’s storage-linked solar project in the Andaman & Nicobar Islands is facing hiccups at the inception stage itself. The Centre wants to shift the power eco-system of the islands from diesel power to a 24-hour solar power. But, bidders interested in the project told BusinessLine that they are sceptical there are financial concerns in the project viability. Those interested in the project include Rays Power Infra, Hero Future Energies and Renew Power and Amplus Solar. Developers say that the currently available technologies in the storage sphere do
Solar power project of NTPC Ramagundam in Karimnagar district, Andhra Pradesh
not allow for a reliable cost projection beyond 10 to 12 years. While the bid asks for 25-year project life of the 17-MW storage-linked power system. “The batteries will have to be replaced every four years and it will be very diicult to estimate the cost of replacing them for 25 years right now,” a bidder in the NTPC
Singareni Collieries miners to strike work from today Demand revival of the dependant employment scheme OUR BUREAU Hyderabad, June 14
Several trade unions have decided to strike work in the coal mines of Singareni Collieries Company Ltd from Thursday over the implementation of the dependant employment scheme. Following the failure of talks between the management of the state-owned SCCL, several national trade unions in the presence of Deputy Chief Labour Commissioner for revival of the dependant employ-
X W Various trade unions, AITUC, INTUC, CITU, HMS and BMS, have decided to go ahead with the strike
ment scheme, the miners have decided to strike work. Various trade unions, AITUC, INTUC, CITU, HMS and BMS have decided to go ahead with the strike seeking revival of the dependant employment scheme which was an election promise made by the TRS. This was in vogue in the past up to 1998. With the trade unions serving notice to the SCCL management on March 31 demanding revival of the dependant employment
Andaman project said. Another bidder in the project said that the bank guarantee and upfront payments are based on the 25-year life cycle. He said: “If the cost of maintaining these storage linked projects comes down in the future, there is no clarity of whether the bank guarantee and upfront payments will be refunded.”
Azure Power commissions 100 MW NTPC project in AP OUR BUREAU Hyderabad, June 14
scheme, several rounds of discussions were held in the presence of the labour department oicials. The High Court had stayed a circular issued by the SCCL management on the dependant employment scheme. While the management of the mining company sought additional time to resolve the pending issue after seeking legal opinion, the trade unions decided to go ahead with the strike. Sources indicated that the strike is likely to be partial as one of the trade unions Telangana Boggu Ghani Karmika Sangham, which is a major union, is not party to the other trade unions who have decided to strike work.
Unlike storage, purely solar power generation project does not require replacing components regularly. This is why developers are comfortable with a longer project cycle of 25 years in those cases. Electricity in the Islands is produced through diesel-powered generators. The cost of generation is as high as ₹35 a unit. Comparably, the cost of diesel generated power in the metro cities is around ₹16 a unit. The higher cost is because diesel is transported to the islands from the mainland through ships and this raises expenses. Director, India Energy Storage Alliance (IESA), Debi Prasad Dash, said: “More than 40 companies are interested in the Indian market. Renewable companies who are struggling with low prices of solar now want to diversify to storage and start a new line of business.”
Azure Power has commissioned a 100-megawatt (MW) solar power plant in Andhra Pradesh. The project, auctioned by the state-owned power major NTPC, has been set up at Kurnool Ultra Mega Solar Park coming up with a total capacity of 1,000 MWs. The solar park is being developed by Solar Park Implementation Agency (SPIA) and Andhra Pradesh Solar Power Corporation Ltd (APSPCL). Azure Power will supply power to NTPC for 25 years at a tarif of ₹5.12 per kWh. Spread across 500 acres in Andhra Pradesh, the project will help in electrifying the nearby areas.
Inderpreet Wadhwa, Founder and Chief Executive Oicer, Azure Power, in a statement said, “With the commissioning of this plant, we have once again demonstrated our strong project development, engineering, and execution capabilities. We are delighted to make a contribution towards realisation of Prime Minister’s commitment towards clean and green energy, through solar power generation.” Azure Power has a portfolio of over 1,000 MWs across 18 States. With over 100 MWs of high quality, operating and committed solar assets, the company has one of the largest rooftop portfolios in the country.
In millennials, developers see market for compact homes BINDU D MENON Mumbai, June 14
Developers in key metros such as Mumbai, Delhi and Bengaluru are targeting millennials and youngsters with compact home projects. They are launching projects targeted at such buyers who have the purchasing ability and a key desire for investment. Even though compact homes are similar to afordable housing projects in term of configuration, they difer in terms of amenities such as clubhouses, gyms and so on, and even construction qualities. Prices in such projects vary between ₹25 lakh and ₹99 lakh with an area starting from 300 sq feet to 650 sq feet. Last month Mumbai-based Omkar Realtor and Developer, a premium and luxury developer, sold close to 450 units in a 700-unit project on the launch day itself. Omkar’s Signet project was priced between ₹72 lakh and ₹99 lakh for 318 sq ft and 462 sq ft, respectively. “With approx 700 units on CM YK
sale, we have seen an overwhelming response from the buyers in Mumbai, MMR region, Delhi, Kolkata, Ahmedabad, Dubai, Singapore, London, Hong Kong with 50 per cent inventory already sold on Day 1 of the launch,” said Devang Varma, Director, Omkar Realtors & Developers. Varma said its objective was to bring compact homes aimed at rising appetite of 1 & 2 BHKs in this market keeping 3 Rs in mind Right Location, Right price and Right size to fit the budgets. Industry watchers says that the trend for smaller homes is driven by high real estate prices. Dharmesh Jain, MD, Nirmal Lifestyle, says: “Overall compact housing is an underserved market and developers are doing some quick marketing to build consumers in the segment. Sales too, are happening in this category”. Another Mumbai-based developer Xrbia, with strong presence in afordable housing too, launched its compact
Compact homes differ in terms of amenities such as clubhouses, gyms and so on, and even construction qualities
home project in Mumbai targeted towards the next generation of homeowners. Xrbia Developers had entered into an alliance with Mumbai-based realty developer Crystal Group to develop a compact-home project in Chembur suburb of Mumbai. Xrbia said its compact homes are complemented by shared infrastructure, including commercial facilities, open green spaces, gyms and swimming pools to ensure that compact does not mean claustrophobic. “We are extremely pleased to bring in compact housing
to Mumbai and are confident that it will be a turning point in the real estate sector in Mumbai,” said Rahul Nahar, Chairman of Xrbia Developers. CapitaLand’s wholly owned serviced residence business unit, The Ascott Ltd (Ascott) too, is launching its brand Lyf. It is looking to build 10,000 homes by 2020. The company plans to have presence in Delhi, Hyderabad and Goa among others. Ashutosh Limaye, National Director, Research, JLL India says, “While many developers in the city are trying to rightprice and right-size their of-
ferings to suit the end users’ requirements, some have gone ahead and started launching compact housing projects across key suburbs of Mumbai. He said, moreover, with slower sales seen in the bigger ticket sizes in recent months and demand for apartments priced under ₹1 crore remaining intact in the city, it makes good business sense for developers to ofer this new product category. A CBRE survey on Millennials too, points that a large majority of millennial look at real estate as a sound investment opportunity. Anshuman Magazine, Chairman –India & South East Asia, CBRE, said: “Given that by 2020, 65 per cent of our population will be under the age of 35, it is critical that we gain insights into the behaviour of this population class. For instance, 82 per cent of the millennials stay with their parents, saving for the future is among their top priorities and a large majority look at real estate as a sound investment opportunity”.
the pound, which had boosted the market’s attractiveness to foreign buyers. Grosvenor House is set to be completed at the end of 2019, and Lodha hopes to sell 75 per cent of its apartments by then too. He said that concerns about businesses leaving London — including in the financial sector — in the wake of Brexit did not decrease the attractiveness of investments here, with families seeking accommodation for children studying in the
capital, lawyers, and others in business. Mature market
He said that while Britain was a more mature market than India, there were great opportunities particularly for the company, which operated its business as an entirely local one. “We are as British as Cadbury’s,” he said drawing a parallel with the confectioner now owned by US-based Mondelez International (formerly Kraft), but which is run as a British business. “Ours is a local business thought and run locally and we are committed to delivering what is needed by the community and local population and we will continue to focus on where there are gaps in in the market.”
Greaves Cotton inks pact with US co to launch BS VI engines for 3-wheelers OUR BUREAU Mumbai, June 14
Greaves Cotton has signed an agreement with US-based Pinnacle Engines Inc to launch BS VI-compliant engine for threewheelers in India. The technology partnership with the US company will help Greaves to introduce a revolutionary Opposed Piston Petrol/ CNG lean- burn engine with lower maintenance cost that results in more savings to the end customer. The tie-up will also allow Greaves, a leading engineering company with core competencies in diesel, petrol engines, farm equipment and Gensets, access export markets where three-wheeler vehicle are popular. The partnership enables Greaves, the market leader in
diesel engine for three-wheeler, to cater to the larger threewheeler market for petrol and CNG space, with a powerful customer value proposition. The agreement between both companies was signed in California. Pinnacle’s unique leanburn four stroke engine is protected by over 170 patents. Nagesh Basavanhalli, Managing Director, Greaves Cotton, said the opposed piston technology has been designed, developed and evolved by Pinnacle team to give fuel economy at the right cost, enabling best-in-class total cost of ownership for the end customer. “With this introduction, we will be able to ofer an extremely competitive engine in the Petrol-CNG segment of the market,” he added.
Wipro to unveil liquid dishwash, kids toiletries brands Carrie Junior brand of kids soaps to be available online; Giffy to be pitted against HUL’s Vim PURVITA CHATTERJEE Mumbai, June 14
Wipro Consumer Care is entering new categories such as liquid dishwash and kids toiletries under two new brands with separate online and ofline strategies. For instance, it is bringing in the Carrie Junior brand of kids soaps from its acquired portfolio from Unza, which will have an exclusive online presence. On the other hand, an indigenous liquid dishwash brand has been created by the name of Gify, which will get launched in the traditional trade. Gify is being pitted against HUL’s Vim and Jyothy Labs’ Pril in the ₹400-crore dishwash category. It is currently being test marketed in Kerala and has been created by Wipro unlike most of its acquired
Anil Chugh, Chief Executive, Consumer Care Business, Wipro Consumer Care
brands which includes its flagship brand of Santoor and others like Yardley. Anil Chugh, Chief Executive, Consumer Care Business, Wipro Consumer Care & Lighting, said: “We have created our own dishwash brand which will have parity pricing with the market leader Vim. Liquid dishwash is an urban cleaning category. Gify has been launched in Kerala and will eventually be made available through more than 10 lakh retailers across the country.’’ Currently, HUL’s Vim is the market leader with a 60 per
cent share in the dishwash category. In kids toiletries, however, Wipro is bringing in more brands under Unza with Carrie Junior being its latest brand. Singapore-based Unza was acquired in 2007, yet Wipro has been slow in bringing its brands to India. “We are targeting kids in the 3-11 age group with a range of toiletries from Unza in Malaysia which will be only sold through the e-commerce sites. There are not many kids’ brands, addressing the 3-11 age group so we hope to create a niche in this segment,’’ added Chugh. Wipro is making sure it does not bring in brands from the Unza stable which are likely to clash with its own. “There are almost 40 brands with Unza but we are not planning to bring in all of them. “For instance, there is a brand by the name of Romano in male grooming, but we already have our own brands like Yardley and Aramusk range with soaps and shaving creams,’’ he said.
To help Smart Cities, Bosch India launches climate monitoring system IPSA JAISWAL New Delhi, June 14
Hoping to use technology to assist the flagship Smart Cities scheme, Bosch India has launched the Micro Climate Monitoring System (MCMS) on Wednesday. As the name suggests, MCMS collects climate and air quality data and displays information on particulate matter, NOx, carbon monoxide, and other critical environmental parameters that can help improve the health of citizens. “The fundamental idea is to bring MCMS under Smart Cities. The product is also targeted towards industries, real estate and mining industries as well to measure the quality of air and monitor pollution,” Sou-
mitra Bhattacharya, President of Bosch Group India, and Managing Director of Bosch Ltd, told BusinessLine. MCMS is a locally developed product and is powered using IoT, which helps in remote monitoring. “Climate risk is pertinent irrespective of where you are. When almost all aspects of daily life are connected and compatible, it makes sense to have an accurate indicator of environmental quality levels to devise the best living and working conditions,” said Vijay Ratnaparkhe, Managing Director and President of Robert Bosch Engineering and Business Solutions. Bhattacharya also said, “We have been investing in the re-
gion consistently and we will invest over ₹900 crore in 2017-18.” The region accounts for over 30 per cent of the Group’s R&D engineer pool, making Bosch India the largest centre outside Germany with 18,500 engineers. Bosch has said that across all regions, it roughly files 18 patents per working day. In India, they have filed over 1,000 patents since 2006, which it attributes to its vast R&D base. The firm has also launched vehicle solutions and IoT-enabled digital agriculture solutions, which aim to double the farmer income. (Ipsa Jaiswal is interning with BusinessLine)
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BusinessLine THURSDAY • JUNE 15 • 2017
Tractor makers’ body seeks GST rate cut for all components to 18% The proposed 28% rate will hike input cost by ₹25,000 per tractor, says TMA OUR BUREAU Chennai, June 14
The Tractor Manufacturers’ Association (TMA) has said that the proposed GST rate of 28 per cent for components will lead to an increase in input costs by ₹25,000 per vehicle. The Association has requested the government to reduce the duty for all tractor components to 18 per cent from 28 per cent. Downward revision of GST is limited to token components of a tractor while major aggregates and components such as engines, transmissions and other parts will continue to sufer 28 per cent levy. Tractors, which so far attracted nil final duty, will now have a GST of 12 per cent. The TMA has requested changing component duties in tractors from the proposed 28 per cent to 18 per cent.
The relief provided is marginal and the input cost per tractor would go up and the industry working capital to the extent of ₹1,600 crore
Some components were included in the list of 66 items on which the Finance Minister cut the GST rate; for some tractor parts, the rate got reduced to 18 per cent. However, it is observed that in implementation, with the inverted duty structure of input tax of 28 per
What helped retail inflation to ease in May 2017 to its lowest ANALYSIS TINA EDWIN New Delhi, June 14
Items that pushed consumer price inflation to its highest in 21 months in May 2016 are among the very ones that has caused its slowest rise in May 2017 since the launch of the new nationwide series in January 2012. Of the nearly 300 items, the retail price of which are tracked for consumer price index, a handful of items and mostly farm produce, were seen to have significant impact on retail inflation in May. Principally, food items such as arhar dal, urad dal and moong dal among pulses and potato, tomato, peas and cauliflower among vegetables and mango, oranges and grape among fruits, helped consumer price inflation to ease to 2.2 per cent in May 2017, compared to a year ago. It also pushed consumer food price inflation to decline by more than one per cent in the same month compared to a high of 7.5 per cent recorded in May 2016. Last May, inflation for arhar dal, known also as tur dal and pigeon pea, recorded 49.1 per cent year-on-year rise. In May 2017, arhar dal prices had cooled significantly thanks to good monsoon in 2016-17 and government intervention and recorded a 36.9 per cent decline in inflation. Similarly, urad dal (black gram) inflation that climbed 49.6 per cent in May 2016, on a year-on-year basis, declined 25.6 per cent in May this year. Moong dal (green gram) prices were less volatile, and so its inflation climbed 9.3 per cent in May 2016 and declined 19.2 per cent in the same month of 2017. Masoor dal (red
lentil) too contributed to easing of food price inflation last month – against a 16.9 per cent year-on-year rise in May 2016, it declined 10.4 per cent in May this year. Potato price inflation too showed dramatic swing between May 2016 and May 2017. Last year, potato prices rose 36.9 per cent and this year in the same month it had declined 32.6 per cent. Tomatoes, another staple in Indian kitchens, too are much cheaper this year. Last May, tomato price inflation was recorded at 10 per cent and the latest reading show a decline of 31.7 per cent.Cauliflower, the availability of which shrinks in summer, too was cheaper this year. As the result, cauliflower price inflation declined 6.8 per cent in the latest reading compared to a rise of 7.8 per cent reported last May. Peas, another winter produce, recorded 12.4 per cent drop in inflation this year compared to a 20 per cent rise recorded last year. Seasonal fruits too were much cheaper. Mango price inflation, for instance, declined to 17.3 per cent in May 2017 due to bumper crop this year. In comparison, last year when the mango crop was afected by poor monsoon in 2015-16, its prices rose by 18.9 per cent. Inflation for citrus fruits like oranges and sweet lime too recorded similar pattern – up 17.4 per cent in May 2016 and down 14.4 per cent this May. Similar trend was seen for grapes too – up 7.1 per cent in last May and down 11.3 per cent this year. Items that put upward pressure on inflation during the month include coconut oil (up 41.4 per cent in May 2017 compared to -31.5 per cent a year ago), air fare (up 33.2 per cent compared to -14.9 per cent a year ago) and pears (up 32.8 per cent vs -13.1 per cent).
Shopmatic raises $5.7 m in Series A funding OUR BUREAU Ahmedabad, June 14
E-commerce enabler Shopmatic on Wednesday said it has raised $5.7 million in Series A funding aimed at expansion in Indonesia, the Philippines and the Middle East. The Singaporeheadquartered company with oices in Bengaluru and Gurugram has raised the fund from ACP Private Ltd, a technology-focussed venture capital firm, Spring Seeds Capital Private Ltd, an investment subsidiary of Spring, Singapore, and other investors for allocation towards expansion of its global footprint, according to a company statement. As part of this round of CM YK
funding, Sameer Narula, Managing Partner, ACP, will be joining the Board of Directors of Shopmatic. Founded in December 2014, Shopmatic enables Small and Medium-sized Enterprises (SMEs) and entrepreneurs to take their business online. Data analytics and insights have also been built into the platform to help sellers be more efective in reaching out to their target audience. Last year, Shopmatic launched Shopmatic Go, a mobile-centric product with more than 130,000 downloads, and acquired Taiwan-based 5xRuby, a leading technology development house, said Anurag Avula, CEO, Shopmatic.
cent and output of 18 per cent, the relief provided is marginal, and the rise in the input cost per tractor could have an impact on the industry’s working capital to the extent of ₹1,600 crore, according to a TMA statement. “We are requesting the Revenue Department to re-
duce duty on all components that go into the manufacture of tractors from 28 per cent to 18 per cent, upholding the statement of the Finance Minister in letter and spirit,” Mallika Srinivasan, Chairman and CEO of TAFE, said in a statement. In addition to the above, while the transitional provisions in respect of stocks held at depots and dealerships are extended to all industries, the tractor industry, despite having an embedded tax rate of 8 per cent, is not eligible for this relief because tractors were in the exempted category till now. Tractors, like automobiles, can be identified by serial numbers and hence the exact duty paid can be arrived at. Hence, tractors should be treated at par with other products of such nature and should not be discriminated. The industry always holds more than 1.5 lakh tractors in stock in depots and dealerships, and denial of this relief will severely impact the farming community, the statement said.
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Mytrah Energy revenues jump near-5 times in 2016
SWAL’s crop protection range
OUR BUREAU
SWAL Corporation, a crop protection and nutrition products company, has launched four new products to tackle diseases, pests and weed in paddy, chilli, cotton and vegetables for farmers in Andhra Pradesh and Telangana.Of the four, two are fungicides (Delma and Devona),
Hyderabad, June 14
Renewables player Mytrah Energy Limited posted revenues of $362.23 million for the year ended December 31, 2016, an increase of 385 per cent over last year’s $74.72 million. The increase was due to a combination of higher income from power generation as well as the inclusion of construction revenue. The AIM-listed company reached 1 GW of wind power generation capacity by adding 417 MW projects in one year. During 2016, the company entered into power purchase agreements for 140 MW of solar capacity, bringing the total to 422 MW in Telangana, Punjab and Karnataka. The new solar business entered the construction phase in Telangana and Punjab having secured close to $1 billion of finance during the year. Ravi Kailas, Chairman, in a statement, said: “The results clearly reflect the growth Mytrah has seen in a span of six years. “In 2016, we commissioned more wind capacity
Ravi Kailas, Chairman, Mytrah
than ever before. This additional capacity helped drive our EBITDA up 70 per cent from last year on a directly comparable basis.” New projects In the current year, Mytrah has won a 250 MW wind power project in an auction held by the Ministry of New and Renewable Energy in February. In addition to the projects under construction, Mytrah has a pipeline of wind projects exceeding 4000 MW. Mytrah is also looking at further developing its solar business, including more large-scale government contracted plants as well as direct sales to private business customers.
OUR BUREAU Hyderabad, June 14
one is an insecticide (DSP99) and a herbicide (Ricebac). “We ofer both protection and nutrition products, making us a crop wellness company,” said C Sreenivasa Reddy, Head (Field Marketing) of SWAL. “The fungicide Devona comes with ‘disperse technology’ to help the farmers in disease management,” he said.
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BusinessLine THURSDAY • JUNE 15 • 2017
Cheaper food drives wholesale inflation to 5-month low in May
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Will raise clamour for rate cut Wage squeeze Pedestrians walk past the Bank of England in the City of London. The squeeze on UK households intensified in the three months through April as weaker wage growth inflicted the biggest loss of purchasing power in almost three years BLOOMBERG
Duty on Chinese kitchenware New Delhi, June 14
The Finance Ministry has imposed provisional anti dumping duty on Ceramic Tableware and Kitchenware products (excluding Knives and toilet items) from China. The petition seeking anti-dumping duty on ceramic tableware and kitchenware products from China was filed by All India Pottery Manufacturers’ Association and the Indian Ceramic Society. Based on the recommendation of the Designated Authority in the Commerce Ministry, the revenue department has imposed provisional antidumping duty of $1.04 per kg on ceramic tableware and Kitchenware from China. This provisional anti-dumping duty is valid for a period of six months. KR SRIVATS
X W Analysts said they expect headline inflation to moderate further in coming months unless there is an uptick in the global oil prices.
OUR BUREAU New Delhi, June 14
With food items such as vegetables becoming cheaper, wholesale price index (WPI) based inflation eased to a five-month low of 2.17 per cent in May. It was much higher at 3.85 per cent in April and had contracted by 0.9 per cent in May last year. Oicial data released on Wednesday revealed that the WPI inflation in food articles contracted at an even sharper pace by 2.27 per cent in May this year as against an increase of 1.16 per cent in April. The data is likely to increase calls for a cut in policy rates by the Reserve Bank of India to help boost investments, even though it does not target WPI inflation but instead benchmarks rates to retail price rise.
According to the WPI data, potato prices at the farm gate fell by over 44 per cent in May as compared to a year ago while pulses became cheaper by 19.7 per cent in the same period. Vegetable prices also contracted by 18.5 per cent between May 2017 and May 2016 while onion became cheaper by 12.86 per cent in the period under review. The Monetary Policy Committee in the second bi-monthly monetary policy review on June 6 and 7 had left lending rates unchanged while reducing the statutory liquidity ratio by 0.5 per cent.
Food index eases Even the new food index cooled from 2.9 per cent in April to 0.15 per cent in May. Released as part of the updated series of WPI, the food index consists of food articles from primary articles group
and food product from manufactured products group. Meanwhile, WPI inflation in fuel and power increased by 11.69 per cent in May although it was lower than the 18.52 per cent rise in April. It had dipped by over 14 per cent in May last year. Manufactured products also continued to witness weaker inflation at 2.55 per cent in May as against 2.66 per cent in April. Analysts said they expect headline inflation to moderate further in coming months unless there is an uptick in the global oil prices. “We are expecting the WPI inflation to remain in the range of 3 per cent for next couple of months,” said CARE Ratings. “The case for supporting growth is getting stronger and we hope that the RBI will take a relook into its monetary policy stance in the light of these new numbers,” said Pankaj Patel, President, FICCI .
FinMin allows carry forward of unavailed Cenvat credit by telcos into GST regime OUR BUREAU New Delhi, June 14
In a major relief for telecom firms, the Finance Ministry has allowed them to carry forward unavailed credit for Central Value Added Tax or Cenvat to the goods and services tax (GST) regime. “Cenvat credit for such services which remains unavailed on the day immediately preceding the ‘appointed day’ may be availed of in full on that very day,” said the Finance Ministry on Wednesday, adding that the appointed day would be the day when GST kicks in. The Central Board of Excise and Customs has already made the required amendments to the Cenvat Credit Rules. “The amendment would enable service recipients to carry forward such unavailed credit of service tax under the GST regime,” said the Finance Ministry. This would mean that telecom service providers who were allotted spectrum in the auctions
X W The Central Board of Excise and Customs has already made the required amendments to the Cenvat Credit Rules.
conducted in 2016 and have already made use of one-third of the credit for service tax in 201617 would be able to take the remaining credit in the GST regime that rolls-out from July 1. Under the rules, credit of service tax paid in a financial year, on the one-time charges payable in full upfront or in installments, for the service of assignment of the right to use any natural resource by the Government, local authority or any other person, shall be spread evenly over a period of three years. The government had in October 2016 allocated 965 Megahertz spectrum through auction to firms including Bharti Airtel, Vodafone and RJio and received bids worth ₹65,789 crore.
Centre extends interest subsidy on farm loans Petrol, diesel price will be revised Only extension of existing scheme; no additional succour for farmers OUR BUREAU New Delhi, June 14
Farmers will continue to get short-term farm loans up to ₹3 lakh at an interest rate of 4 per cent as the Union Cabinet on Wednesday approved an interest subvention scheme, and earmarked a sum of ₹20,339 crore for it. Under the scheme, which has been in place since 2006, the Centre will provide an interest subvention of 5 per cent per annum to those farmers who repay the short-term crop loan up to one year for a maximum of ₹3 lakh, an oicial statement said. The interest subsidy, however, would be only 2 per cent for farmers who do not repay on time, it said. The scheme, however, would not give any additional succour to farmers who are in distress as it is just a continuation of an existing scheme.
This scheme comes at a time when farmers in many States are clamouring for farm loan waiver, on the lines announced by Uttar Pradesh and Maharashtra governments, The government said the interest subvention scheme will continue for a year and will be implemented jointly by Nabard and the RBI. The interest subvention will be given to public sector banks (PSBs), private sector banks, cooperative banks and regional rural banks (RRBs) on use of own funds and to Nabard for refinance to RRBs and cooperative banks, the release added. Similarly, small and marginal farmers who borrow at 9 per cent for the post harvest storage of their produce will get an interest subvention of 2 per cent, bringing down the interest burden to 7 per cent per annum, the statement said. A similar 2 per cent in-
Farmer organisations have been demanding higher loans under the interest subsidy scheme
terest waiver will be available to farmers afected by natural calamities. Farmer organisations, however, have been demanding higher loans under the interest subsidy scheme. “The interest subsidy should extend to loans up to ₹10 lakh taken by farmers of small and medium holdings so that they do not have to borrow from traders and money lenders at very high interest rates,” said Sukhwinder Singh Sekhon, Secretary of Punjab Kisan Sabha, a farmers’ union associ-
London high-rise blaze leaves at least 6 dead
ated to the Communist Party of India-Marxist. According to Rajender Singh, a recently retired agricultural extension officer in Haryana, farmers are finding it increasingly diicult to meet their farm-related expenses with ₹3-lakh loans given at discounted interest rates by the government as the input and labour costs have been mounting over the years. “The situation has really worsened during the last three years of the NDA government,” Singh told BusinessLine. Farmers are also getting less
Were spending cuts responsible for the tragedy? VIDYA RAM London, June 14
VIDYA RAM London, June 14
At least six people have died and 64 injured, 20 critically, following a devastating fire at Grenfell Tower, a 24-story residential block in west London, home to 120 apartments, close to Notting Hill. Smoke continued to billow out of the tower, left a dark shell of itself by Wednesday afternoon, following the fire that took hold dramatically and swiftly raged through the building in the early hours of the morning, despite a swift response from London’s fire services. Police and fire services said they expected the death toll to rise following the complex recovery operation that would take place in coming days The fire brigade responded to multiple reports of the fire at 00.54 am local time and were on the scene within six minutes, with over 250 fire fighters tackling the blaze, but the fire firmly took hold of the building from its first floor to the top, leaving residents trapped inside. There were horrific eye witness accounts from the scene, and video footage captured people still trapped in the building at the windows pleading to be rescued, with some resorting to throwing young family members out of the window in an attempt to rescue them. They urged those who had lived at the block to make themselves known at a reception centre that had been set up to deal with the tragedy, to help police account for the blocks residents. While the fire brigade has said it’s too early to assess the cause of the fire that has led to a number of casualties, attention has begun to focus on the state of the building, which had recently been refurbished, and in CM YK
This handout image shows flames and smoke coming from Grenfell Tower, a 27-storey block of flats, after a fire broke out in west London. AFP PHOTO/NATALIE OXFORD
particular to a new exterior cladding system to improve insulation and its appearance. One resident who had escaped told Channel 4 news that looking out from the window the cladding had appeared to be on fire. Rydon, the company responsible for the refurbishment, said its work had met all required building control, fire regulation and health and safety standards. Attention has also focused on the fire safety advice provided to residents of the tower block in signs in the building, recommending that they stay in their apartments in the wake of a fire outside the apartment.
The apartment block lies within the London borough of Kensington and Chelsea, which like most central boroughs is one of sharp contrasts where affluence and poverty exist side by side. It stands on the Lancaster West Estate, home to a largely working class, multi cultural community. It was built in 1974 and is managed by the Kensington and Chelsea Tenant Management Organisation on behalf of the Council. Once the fire is put out and and Britain begins to count the dreadful human cost of the tragedy, questions will arise about how such a fire started, and how it spread so quickly, in 21st century Britain.
and less as traders rarely purchase their produce at rates determined by the authorities, said Jaswant Singh, a farmer in Shahpur village, 11 km from Karnal. “Invariably, a farmer who has a loan of ₹3 lakh one year, will have to increase his loan amount to ₹4 lakh if he has to avail the loan subsidy by repaying the crop loan on time and also to prepare for the next crop. And this cycle goes on and on and thus breaks his back,” said Singh. Ajay Kakra, Director of agriculture and natural resources at PricewaterCoopers India, said loan waiver, although a burden on the exchequer, can serve as a good stop-gap arrangement for supporting the farming community. “However, the real relief to farmers can only come through systematic structural reforms in the sector , focussed on achieving greater incomes specially for the small and the marginal farmers,” Kakra said in a statement.
The political dimension to the Grenfell Tower catastrophe became apparent on Wednesday as the government came under scrutiny over a failure to commission a review of fire safety regulations following a past inquest, which had raised questions about existing rules, while Labour leader Jeremy Corbyn questioned whether cuts to local funding contributed to the tragedy. “If you deny local authorities the funding they need then there is a price paid by a lack of safety facilities across the country. I think there needs to be some very searching questions as quickly as possible in the aftermath of the fire,” he told LBC Radio on Wednesday. The Labour party has called for a government statement on the tragedy, as a senior government figure, Gavin Barwell, faced criticism for failing to give the go ahead to the review that many had been urging was essential following previous tower block fires. Barwelll is the newly appointed chief of staf to Prime Minister Theresa May, and was the Minister of State for Housing and Planning from July 2016 to June 2017, when he lost his seat in the general election, London Mayor Sadiq Khan told the BBC that while the immediate priority was on recovery and accommodating and helping the 120 families that had seen their homes and possessions destroyed, there were questions that needed to be answered about the fire. Ronnie King, the Honorary Administrative Secret-
ary of the House of Commons All Party Parliamentary Group Fire Safety and Rescue Group, told LBC Radio that the government had failed to take up recommendations of the group and others of the need to review these regulations for tower blocks following a 2009 fire in South East London in which six people had been killed. “Successive ministers since 2013 have said they are still looking at it,” he told LBC on Wednesday morning. “Our group recommended that due to the speed that the fire spread in Lakanal House, that building regulations should be reviewed. It's nearly 11 years since it has been reviewed,” said King. Attention has focused on the concerns long raised about fire safety by the Grenfell Tower Action Group established seven years ago, and which had chronicled their concerns and eforts to bring about changes on a blog. “All our warnings fell on deaf ears and we predicted that a catastrophe like this was inevitable and just a matter of time,” the group said on the blog on Wednesday afternoon. Some residents who spoke to gathered media noted that there was no central fire alarm system and that having alarms was up to individual residents. Just as the recent terror attacks focused attention on cuts to police services, the tragedy at Grenfell is likely to put the spotlight on the London Fire Brigade, including the closure of 10 fire stations and the removal of 500 firefighters to make savings of £100 million.
at 6 a.m. every day from Friday
Petrol pump dealers call off June 16 strike
Prabhakar Reddy said, “We are in favour of the initiatives to increase penetration of automated outlets and support the move to implement a daily pricing of fuel.” The decision to roll out a nationwide dynamic pricing regime was taken after a successful pilot project in five cities — Puducherry, Visakhapatnam, Chandigarh, Jamshedpur and Udaipur.
OUR BUREAU New Delhi, June 14
From June 16, petrol and diesel prices will be revised every morning. The prices till now were being revised fortnightly at midnight. Briefing reporters after a meeting with pump dealers association, Minister of State (Independent Charge) for Petroleum & Natural Gas, Dharmendra Pradhan said, “There were some concerns of dealer associations with regard to the daily pricing mechanism. It was decided that the price of petrol and diesel will be revised from 6 a.m. every day.” Petrol pump dealers, who had called for a ‘No purchase, no sale’ stir on June 16 to protest against the decision of public sector oil marketing
Oil Minister Dharmendra Pradhan
companies to implement a daily revision of prices, have now called of their stir. The dealers allege that there are only 10,000 out of 56,000 retail outlets where prices can be changed automatically. For the remaining outlets, the price change had to be implemented manually at midnight, every night. All India Petroleum Dealers Association Chairman,
Control rooms In an oicial statement, Indian Oil said that it will be setting up 87 control rooms across the country for addressing the technical glitches and system issues that may be arising at the dealers’ end. These control rooms will operate round the clock till the system to establish an appropriate mechanism for Daily Price Revision stabilises.
Defence Ministry gets one month to trace CAG files on old scams AM JIGEESH New Delhi, June 11
Defence Secretary Sanjay Mitra appeared before a subcommittee of Public Accounts Committee of Parliament and said his Ministry is making all eforts to trace the files that deal with the auditing of corrupt deals, including the Bofors case. The sub-committee, irked over the Defence Ministry Joint Secretary AN Das’s written statement to the panel that crucial records were missing from the Ministry’s records, had summoned Mitra to explain his junior’s letter. The members in the panel urged Mitra to explain how Das came to a conclusion that the files were missing. The panel has asked Mitra to submit all related files that led to the conclusion and the written statement by Das that the files are missing. “It is a serious issue. Members asked Mitra how
his Ministry came to a conclusion that files of such serious cases are missing,” a senior member said. He added that Mitra assured the panel that his Ministry will submit all the files related to the auditing of 21 cases pointed out by the PAC soon. “He said his Ministry has uploaded some of the action taken notes in the Audit Para Monitoring System (APMS) on Wednesday. “He also agreed to create two separate files for the records before 1999 and after 1999,” the member added. Das said in his letter that
eight audit paras, some being as old as more than 25 years, are being shown pending at the end of Defence Ministry. “However, no records of these paras are available in the Ministry to prepare a reply on the same for want of details/files on the subject. “It is, therefore, not possible to initiate action taken notes (ATNs) by any division of the Ministry on these old paras,” Das said in the letter. The reports had suggested recoveries worth crores of rupees from the defence equipment suppliers.
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QUICKLY Toyota to look at mergers, buys Toyota City, June 14
Toyota Motor Corp may consider mergers or acquisitions to procure new automotive technologies, including self-driving technologies, the company’s President said on Wednesday, adding that it had to compete more aggressively against its rivals. At an annual shareholders meeting President Akio Toyoda said the world's second-biggest automaker, which took longer to warm to self-driving cars and electric vehicles (EVs) than its rivals, would be more aggressive in expanding in these areas, conceding he may have focused too much on preserving the status quo at the firm until now. REUTERS
Elara Tech, REA Group tie up New Delhi, June 14
Singapore-based Elara Technologies Pte Ltd, which owns Housing.com, has tied up with global property consultant REA Group offering buyers access to international properties in 72 countries. The collaboration will bring together Elara Technologies’ group companies from India and REA Group-owned and partner sites across countries, including China, the US, Australia, Singapore and Thailand, the company said in a statement. Customers looking for properties will now have access to over 4.5 million listings from 72 countries, it added. Housing.com CEO Dhruv Agarwala said there has been a growing appetite for overseas property investment into the Asian market. PTI
USFDA nod for Lupin’s painkiller New Delhi, June 14
Drug firm Lupin has received final approval from the US health regulator for its Oxycodone Hydrochloride tablets used in case of severe pain. The company has received final approval from the United States Food and Drug Administration to market its Oxycodone Hydrochloride tablets USP, in the strengths of 5 mg, 10 mg, 15 mg, 20 mg and 30 mg, Lupin said in a statement. The company’s tablets are generic version of Mallinckrodt Inc’s Roxicodone tablets, it added. PTI
‘We are looking at the next order for submarines from the Indian Navy’ French shipbuilder DCNS India MD speaks on the growing opportunities in the Defence space
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programme. How will you ensure this will not happen again?
also achieved eiciently.
NAYANIMA BASU New Delhi, June 14
DCNS India Managing Director Bernard Buisson said the French shipbuilder is now looking at the next order from the Indian Navy to build at least three more submarines in India. In an interview with BusinessLine, he said the company is on track to deliver the remaining five Scorpene submarines even as the first one —INS Kalvari — is ready to be inducted into the Navy’s submarine fleet next month. Excerpts:
When will INS Khanderi, the second submarine, be delivered?
The sea trials have started last week. But now the tests will slow down because of the monsoon. But our target is to have this delivered by the year-end. But, these submarines are defenceless as the contract to procure the Black Shark torpedoes was cancelled and Navy is now looking at German SeaHake …
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The first Scorpeneclass submarine, INS Kalvari, is finally going to be inducted in Navy’s fleet next month. What has been your experience?
Mazagon Dock Ltd (MDL) built the submarines with DCNS as a technology partner. The program has been a major success given the extreme complexities and technical challenges of building a submarine. The inevitable teething problems and other diiculties which MDL had to face, as there was a gap of several years since it had first produced submarines, were tackled successfully. Further, challenges of sourcing and inducting complex material were
We have successfully test fired a torpedo from the Navy’s current inventory. If the Navy has a requirement for additional torpedoes, DCNS will be ofering the new generation French F21 torpedo. But DCNS is also fully prepared to help in integrating any other heavy weight torpedo if the Navy so chooses. When do you plan to deliver the remaining four submarines?
Those will come at an interval of eight to nine months. The third one will be launched very soon. The remaining ones are all under diferent stages of construction.
We are working for four years with Reliance for the LPD project due to which we have known their shipyard and their capability. BERNARD BUISSON DCNS India Managing Director
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What about the maintenance of these submarines?
We are in discussion with the Navy for maintenance through technical assistance and provision of additional tools and infrastructure specific to this modern submarine.
The information that got leaked is not sensitive. The final performance data of the Kalvari, which is the actual data, is securely maintained by the Navy. Even we do not possess it. The leak is now being looked at the highest levels of both governments of India and France. In addition, we are now re-enforcing our existing cyber security measures to put in place best in class data and more advanced security at base and on naval platforms. P75(I) is going to the first project under the Strategic Partnership policy …
We are now looking forward to the next order after P75 from the Navy for three or more submarines. Those will be the upgraded version of Scorpene submarine, which is more evolved and has enhanced features.
The government wants two lines of submarines. The second line is expected to be with a private shipyard. Now under the SP, we have understood that within the submarine segment two partners will be selected, L&T and Reliance, because today only these two companies can build submarines. Then the potential OEMs will be selected, which can be the French, German or Russian. Then after final selection, it will be up to the SP to select and tie-up with the OEMs.
DNCS faced a massive data leak last year that almost jeopardised the Scorpene
But if Reliance is selected then it will obviously select DCNS as you are already collaborating
So what next now on the P75 programme?
on the LPD (Landing Platform Docks) project …
We are working for four years with Reliance for the LPD project due to which we have known their shipyard and their capability. So it seems natural that when the RFP for P75(I) will be issued, they will consult us. But we will be the Navy’s and MoD’s guide, as they are our customers. The LPD programme has again been revived by the government after it faced initial hiccups. How are you viewing the opportunity?
Well, DCNS along with Reliance is going to submit its bid on June 22. We are ofering the Mistral solution. We hope to win the programme and emerge as the L1. What happened to your FDI proposal to bring the Air Independent Propulsion (AIP) technology for submarines to India?
The proposal has been deferred by the government. We have tried to explain it to MoD and Navy that we wanted to have a subsidiary to have at least 51 per cent in order to have control over it as far as intellectual property is concerned. The government told us we are bringing a technology which is already with the DRDO. The idea is not to compete with the DRDO at all but to bring the knowledge here.
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Reliance, Dassault working on executing offset obligations OUR BUREAU Mumbai, June 14
French aerospace major Dassault Aviation and Reliance Defence have got down to the business of executing the ofset obligations arising out of the €7.87-billion deal for Rafale fighter jets. Aiming to promote business to business (B2B) interactions between the French and Indian aerospace manufacturers, Dassault Aviation, along with key partners, connected with several corporate entities and MSMEs at a recent meet. Anil Ambani's Reliance Group’s joint venture with Dassault Aviation is targeting businesses worth ₹30,000 crore as part of the ofsets for the contract. In a bid to position India as an international supplier in the global aerospace domain, Dassault Aviation, along with many Rafale industrial partners like Thales, Safran and MBDA, reached out to French and domestic Indian entrepreneurs at the meet, looking to create new opportunities of collaboration and work towards establishing a full-fledged defence manufacturing eco-system in India. Last year, Dassault and Reliance Aerospace had announced the formation of Dassault Reliance Aerospace, and had finalised the infrastructure requirements at the Dhirubhai Aerospace Park at Mihan, Nagpur. Reliance Aerostructure entered into a 51:49 joint venture with Dassault Aviation, with the aim of becoming a key player in executing the ofset obligations.
Uncertainty looms as GST roll-out just a fortnight away While some sectors oppose the new tax regime, most see confusion in implementation OUR BUREAUS
Almost every one believes that the Goods and Services Tax, all set to come into force nation-wide from July 1, is a welcome tax reform. But given the complexities involved, they are not sure how things will pan out. Most agree there is bound to be confusion, which they hope will get sorted out quickly, even as there are those who are vehemently opposed to the new tax regime. BusinessLine puts together reports from its correspondents across the country on what various players think of the switch-over to a single, nation-wide tax system that will replace a myriad number of State-level taxes and levies. Auto parts supply chain “There is no major change of our parts supply to OEMs. However, some of the OEMs want to make invoices till June 25 only due to concerns over credit as a consequence of transition to GST,” said the CEO of a tier-2 supplier to Tata Motors. As of now, he said, there wasn’t any rescheduling of parts supply to OEMs, but he felt that there would be some slow down in stock movements in the last week of June. “Our stock movements will be based to OEMs’ requirements and we are not seeing any major signs of slowdown in stock movements due to GST transitional reasons,” said a senior oicial at a tier-1
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Big discounts A shop woos customers during a pre-GST sale in New Delhi KAMAL NARANG
supplier to OEMs. Though the GST Council has provided some respite for inventories stocked up till the month-end by raising the limit on input tax credit to 60 per cent from the earlier proposed 40 per cent, some suppliers still are concerned whether they will get any input tax credit for the stock they are holding. Top oicials of a leading passenger car maker and a commercial vehicle manufacturer confirmed that their companies and supply chain were fully geared for GST regime and pointed out there was no change in supplies from parts makers due to the transition. Short-term slowdown The packaging industry is bra-
X W There is likely to be delays in capital good purchases for manufacturing units especially excise exempted areas such as Assam, Himachal Pradesh and Uttarakhand as companies will want to claim input credit on such purchases, once GST is rolled out.
cing for a short-term slowdown in manufacturing activity as companies look to stagger their production due to drop in primary sales. This is largely because dealers and distributors across industries
are focusing on selling out their pre-GST inventory to start with a clean slate from July 1. With the GST Council announcing the new GST rate fitments, dealers and distributors have restricted new purchases of stocks from companies. For instance, the consumer durables industry, where retailers are running discounts and special promotional schemes to dispose their existing stocks. Similar sales are doing the rounds for branded apparel and cars. Packaging companies anticipate there will be a complete stop in primary sales in the run-up to the GST kick-of deadline. Vimal Kedia, MD, Manjushree Technopack, “We anticipate a slowdown in manufacturing from June 20 as companies prepare for GST roll out. We believe once the dust settles, we will see a pick up again from first-second week of July.” He said there is likely to be delays in capital good purchases for manufacturing units especially excise exempted areas such as Assam, Himachal Pradesh and Uttarakhand as companies will want to claim input credit on such purchases, once GST is rolled out. RK Jain, President (Corporate Finance and Accounts), Uflex, added that the bigger companies had started preparing for the GST roll-out in terms of inventory management and production. Large volume businesses such as paper and cement trade are going slow ahead of
Keeping fingers crossed Tobacco farmers in Ongole, Andhra Pradesh KOMMURI SRINIVAS
the shift to the GST regime. Traditional business practice of dealing in cash by small traders, uncertainty over systems and processes and worry over possible losses in compensation in the transition from VAT and excise duty to the new tax regime are worrying the trade. Traders prefer to keep stocks low to avoid confusion when the GST kicks in. Keeping stocks low According to a leading importer of paper, printers are going slow on paper purchases. They want to familiarise themselves on the new systems and procedures. Paper typically changes hands a couple of times and there are worries over online filing and claiming input credit. Also, there is the issue of small traders who have dealt primarily in cash so far. While the large paper mills are relatively more organised, the smaller mills have an issue. A leading paper trader said in the transition from VAT and excise regime, traders are allowed to take credit for just 60 per cent of excise paid. "Supply chain is choked as nobody is taking stocks in the last 15 days," said the trader. Even organised players who take over 500 tonnes stocks a month have cut back to about 300 tonnes as they do not want carry over stocks. The
X W Large volume businesses such as paper and cement trade are going slow ahead of the shift to the GST regime. Traditional business practice of dealing in cash by small traders, uncertainty over systems and processes and worry over possible losses in compensation in the transition from VAT and excise duty to the new tax regime are worrying the trade.
number of traders coming into the tax net will increase as the limit of ₹50 lakh is low in the paper business. With the price of paper ranging around ₹70,000 a tonne, even those handling a couple of lorry loads a month will be covered. A senior executive in a cement company acknowledged that dealers prefer to “finish the account this month”. While there are no issues in intra-State sales, interState sales could be a little more complicated. Also, small dealers who had earlier dealt in cash are worried over the new systems and processes. Big buyers stay away “Confusion over GST rates has kept big buyers away from the market,” said Inderjit Singh, a trader in Khanna new grain
market. Only when buyers from outside come there will be a spurt in demand which will, in turn, push up the prices. Tobacco body unhappy Logistics and shipping companies have welcome GST. According to G Sambasiva Rao, Managing Director, Sravan Shipping, a major logistics company in Visakhapatnam, GST will make life easier for the industry, as multiple taxation is avoided. “Most of the tax travails will be gone and we can now focus on productive work,” he says. The Guntur-based Indian Tobacco Association (ITA) feels GST will hit tobacco cultivation, processing and exports as well as cigarette manufacture. GST is to be levied at 5 per cent on leaf tobacco and at 28 per cent on unmanufactured (raw) tobacco sold to domestic cigarette manufacturers as well as exporters. “Former Prime Minister Charan Singh encouraged tobacco cultivation by abolishing the Central excise duty on it but this Government wants to stifle the industry, on which millions are dependent, by imposing GST,” says M Umamaheswara Rao, President. The organisations of tobacco farmers have also condemned the GST and urged the Government to roll it back. Fertiliser sector The fertiliser sector is quite apprehensive of GST, as the proposed 12 per cent rate applicable would afect the sales.
At present, there is no tax on fertilisers in Kerala and Tamil Nadu while it is 5 per cent in Andhra Pradesh and 5.5 per cent in Karnataka. The insistence on Aadhaar, finger print and PoS etc for fertiliser sales also have an adverse impact on the sale as most of the farmers are illiterate/semi-literate. Senior oicials in the public sector FACT said that the company would get a small relief by way of slight increase in the Factamfos subsidy – per tonne subsidy being hiked to ₹6,488 from ₹6,085. The sale of Factamfos gradually picks up momentum following good rain in Kerala and will take a couple of weeks to reach peak sale. By that time, the monsoon will be active in Andhra Pradesh and Karnataka. The expected sale for June is 70,000 tonnes and the company has a stock of 65,000 tonnes of Factamfos and 8,200 tonnes of Ammonium Sulphate as of June 1. Fall in rubber prices The sharp fall in rubber price will have its impact on fertiliser sales in Kerala, the oicials added. (With inputs from Abhishek Law, Kolkata; Ch RS Sarma, Visakhapatnam; V Rishi Kumar and KV Kurmanath, Hyderabad; R Balaji, Swathi Moorthy and G Balachandar, Chennai; Meenakshi Verma Ambwani and TV Jayan, New Delhi; Rahul Wadke, Suresh P Iyengar and Tanya Thomas, Mumbai; Vinson Kurian, Thiruvananthapuram; V Sajeev Kumar, Kochi)
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Young and fit Staff of Bangko Sentral ng Pilipinas, the central bank of the Philippines, take part in a physical training session on the rooftop of the bank’s headquarters in Manila. Some 44 per cent of its staff belong to the Millennial generation, broadly defined as age 37 or lower BLOOMBERG
Rupee rises marginally to 64.30/$ Mumbai, June 14
The rupee extended its gains for the second straight session on Wednesday, moving up by another three paise to close at 64.30 a dollar on persistent selling of the American currency by exporters and also helped by falling inflation. Inflation based on wholesale price index fell to a five-month low of 2.17 per cent in May, which boosted investors’ expectations that the Reserve Bank of India may finally snip rates. The rupee has now gained 14 paise, or 0.22 per cent, in two days. PTI
Bond yields dip, call rate up Mumbai, June 14
Government bonds (G-Secs) firmed up on rising buying support from banks and corporates. The 6.79 per cent G-Sec maturing in 2029 climbed to ₹100.78 from ₹100.59 on Tuesday, while its yield edged down to 6.70 per cent from 6.72 per cent. The overnight call money rate ended higher at 6.25 per cent from Tuesday’s level of 5 per cent. It resumed higher at 6.22 per cent and moved in the 6.10-6.40 per cent range. PTI
BusinessLine THURSDAY • JUNE 15 • 2017
RBI identifying defaulters for insolvency can hurt banks’ balance sheets
Bharat Financial to set up 2 lakh customer service points
Banks will have to take huge haircuts if these cases go into liquidation
Mumbai, June 14
COMMENT RADHIKA MERWIN BL Research Bureau
Empowered by the new NPA ordinance, the RBI on Tuesday went into fire-fighting mode, identifying 12 big defaulters for insolvency. The RBI’s Internal Advisory Council (IAC) recommending these accounts — constituting a fourth of the system’s bad loans — for immediate resolution is no doubt welcome. But given that these are large accounts and failure of a resolution plan could result in huge haircuts for banks, the plan still sounds good only on paper. Banks may end up taking a 8090 per cent haircut in some cases, if the company goes into liquidation (on failure of resolution), according to bankers and market players. The process Banks will appoint lawyers to oversee the insolvency process, who in turn will hire insolvency resolution professionals to initi-
ate the process through an application filed with the authorities. The authority, in this case, is the National Company Law Tribunal (NCLT). The resolution professional would call upon all the creditors to submit their claims. Subsequently, the professional would assess the financials of the borrower, claims, and the amount of assets available to settle the claims. “The resolution plan is then drafted, which could include a turnaround fund investing money in the company if there is still some potential. Or, it could be in the form of an ARC investing in the company or a strategic buyout, wherein a competitor steps in to buy the assets of the company,” says Neha Malhotra, Executive Director, Nangia & Co, a tax advisory and tax consulting firm. On failure of the resolution plan or if majority of the creditors do not agree with the resolution, the company would go into liquidation and banks could end X W While resolution is time-bound — 180 days with 90 days extension — liquidation could take even two to five years. The value of the underlying assets by then could come down significantly
Success of a resolution plan will be critical for banks to ensure they recover a reasonable amount from the account SHUTTERSTOCK
around, adds Gangwal. The downsizing of loans could attract potential buyers for these stressed entities. Many, however, believe that the 12 accounts being referred to for insolvency may have already gone through various restructuring schemes such as CDR, SDR or S4A. Failure under these schemes could have nudged the RBI to refer them to the Insolvency and Bankruptcy Code 2016. Hence, resolution could once again hit a roadblock, triggering the liquidation process.
up recovering only a small amount. Some bankers believe that the assets could be obsolete and not in working condition, and so the realisation would not be much. Also, given the huge supply of assets and few takers, sale may not happen that quickly. “The assets will be sold and the realised amount will be distributed to stakeholders — liquidators and insolvency professionals (fees), secured creditors and workmen, employees, government dues, etc., in that order,” says Neha. Also, while resolution is timebound — 180 days with 90 days extension — liquidation could take even two to five years. The value of the underlying assets by then
More pain for banks Banks with high levels of bad loans and weak capital may see some more pain in the coming quarters, given the high level of provisioning requirement on account of huge haircuts. As of March 2017, IOB, IDBI Bank, Central Bank and UCO Bank have the highest levels of gross non-performing assets. IOB, for instance, has a GNPA of 22.3 per cent while IDBI Bank’s bad loans are 21 per cent of its total loans. These banks also have a weak capital position, with Tier I capital around the 8-8.5 per cent mark. Unless the RBI ofers some leeway in provisioning, such as apportioning it across several quarters, banks’ capital could weaken further.
For quicker settlement, Bajaj Allianz rolls out three new digital services The turnaround time for settling claims could come down from days to minutes, says MD Tapan Singhel OUR BUREAU Mumbai, June 14
Bajaj Allianz General Insurance Company launched three digital initiatives on Wednesday aimed at simplifying the customer experience and changing the perception about delays in claims settlement. With this objective, the company aims to quicken the settlement process and initiate the process of payment before a customer even lodges a claim, Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance, said. The turnaround time for settling claims could come down to twenty minutes from seven days now, he added. Flight delays The company has introduced a new product called Travel Ezee, which will proactively notify customers on their pay-
out eligibility in the event of a flight delay, as soon as the customer clicks on the app notification to invoke the application and fills in the account details. The customer will have to register flight details online. Using blockchain technology, the company will work out the delay and pay the claim within minutes of receipt of account details from the customer. Currently, customers have to register the claim and submit a certificate of delay from the airline with the claim form. Buying the policy is also easy with the customer needing to just scan his/her boarding pass and passport using the app, while the interface captures the details automatically. Once the plan is selected and the customer makes the premium payment, the policy
Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance
copy is sent to a registered email id instantly. The policy is now available only for international travel but will be introduced for domestic travel also soon, Singhel said. Motor claims The company launched a ‘Motor on the spot’ product that enables customers to register as well as self-inspect their motor claims of up to ₹20,000 using a self-service mobile app — ‘Insurance wallet’. The claim will be settled
within 30 minutes against seven days it takes now. All that the policyholder has to do is to upload the pictures of the damaged vehicle along with the requisite claim documents on the mobile app. Using data analytics, the company will recommend immediate liability to the customer and suggest a repair workshop within 20 minutes. After customer consent, the company will approve the claim payment which will get credited to the customer’s account within 30 minutes. Chatbot service The company also launched an artificial intelligencedriven chatbot service platform called ‘Boing’ on its website, mobile app and on the company’s Facebook page. This will ofer 24/7 customer assistance and respond to queries relating to registering a claim, getting policy copy, checking policy and claim status, locating branch, hospitals or workshops (for motor claims).
CBI conducts searches in ₹184-cr bank fraud case PRESS TRUST OF INDIA New Delhi, June 14
The CBI on Wednesday carried out searches at 10 locations in a multi-city operation after registering a case against a general manager of IDBI Bank and seven others for allegedly cheating Union Bank of India to the tune of ₹184 crore.
The agency has registered the case on the complaint of Union Bank against private individuals Ashish Jhunjhunwala, Naveen Gupta, Ayush Lohia, Lalit Mohan Chatterjee, and Bimal K Jhunjhunwala, who were all directors of Ramsarup Industries. The then independent directors of the company, in-
cluding Debashish Sarkar, presently General Manager of IDBI Bank, former executive director of Vijaya Bank Mohammed Shahid and retired IAS oicer Murari Lal have also been booked by the CBI. “They allegedly cheated UBI, Kolkata, to the tune of ₹184.43 crore through the
Karnataka Bank chalks out strategy to double business by 2020 AJ VINAYAK Mangaluru, June 14
Karnataka Bank , which achieved business of ₹93,737 crore in 2016-17, is looking to double that to ₹1.80 lakh crore in three years. Mahabaleshwara MS, Managing Director and Chief Executive Oicer of the bank, told BusinessLine that he has worked out a growth schedule for the next three years with a 20:30:40 formula. This envisages achieving an incremental business of ₹20,000 crore, ₹30,000 crore and ₹40,000 crore in 2017-18, 2018-19 and 2019-20, respectively. “This will help us to reach a business turnover of ₹1.80 lakh crore by 2020,” he said. For this, the bank has already identified potential growth areas and sectors. CM YK
Mahabaleshwara MS, MD & CEO, Karnataka Bank
Agreeing that it is a challenging target to achieve, he said: “If your eforts are really good, success follows.” Highlighting the role of growth facilitators to achieve the target, Mahabaleshwara said the Goods and Services Tax (GST) will be a major facilitator as also recent developments such as the non-performing asset (NPA) resolution ordin-
ance, bankruptcy code, and prompt corrective action (PCA) by Reserve Bank of India. Added to this, inflation is set to come down. “All these indicate that we are definitely moving towards a healthy economic condition. In a couple of quarters there will be positive growth sentiments,” he said. On the bank’s initiatives for growth, he said Karnataka Bank has already located its branches in strategically important centres. It has opened 350 such branches across the country in the last one decade. These are giving good business. Add to this, the bank has also recruited, trained and placed around 100 marketing oicers in strategically important centres. That will definitely add to the business, he said.
loan amount of Ramsarup Utpadak (Unit-II) of Ramsarup Industries by diverting a sum of ₹130.95 crore to a group company RAV Dravya Pvt Ltd,” CBI spokesperson RK Gaur said. The searches were spread across Kolkata, Gurgaon, Jamshedpur, Nagpur and Kanpur.
could come down significantly. Hence, the success of a resolution plan (or avoiding going into liquidation) will be critical for banks, to ensure that they recover some reasonable amount from the account. This should nudge banks to right-size their debt, says Nirmal Gangwal, Managing Director, Brescon Corporate Advisors, a corporate debt restructuring advisory firm. In finding ready takers for businesses or selling bad loans to asset reconstruction companies, lack of concurrence of the serviceable portion of debt has impeded resolution. A time-bound approach, along with the pressure to resolve these accounts, can hasten the process this time
OUR BUREAU
Bharat Financial Inclusion (earlier known as SKS Microfinance) on Wednesday said it is planning to roll out two lakh kirana points across its network in 16 States, in partnership with leading banks. With the introduction of kirana points, the microfinance company’s borrowers can now walk into the nearest kirana/merchant store to make basic financial transactions. As a Banking Correspondent partner, Bharat Financial said it will appoint agents to set up customer service points (kirana points). “Existing kirana stores/ cloth stores and other such merchants from local villages fit in the profile of a kirana point. These merchants are from the existing borrower family of Bharat Financial, who have availed microfinance from the company to set up or expand business,” it said. The company claimed that with this innovation it has become the first entity in India to launch 100 per cent digital financial inclusion. MR Rao, CEO and Managing Director, said: “Kirana points will eliminate, for rural borrowers, the past insurmountable obstacles like PINs, and usher in the most convenient cash-in, cash-out points featuring biometric authentication and friendly neighbourhood guide.”
Stressed steel sector loans easier to resolve: bankers Thanks to revival in demand and prices OUR BUREAU Mumbai, June 14
Stressed companies in the steel sector stand a better chance of getting resolved under the Insolvency and Bankruptcy Code (IBC) in the backdrop of revival in steel demand and pick up in prices, say bankers. This observation comes in the context of Reserve Bank of India’s internal advisory committee recommending for immediate reference under the IBC 12 accounts totalling about 25 per cent of the current gross non-performing assets (GNPAs) of the banking system. GNPAs of the banking system are estimated at about ₹8 lakh crore.
RBI invokes PCA on Central Bank OUR BUREAU Mumbai, June 14
The Reserve Bank of India has put Central Bank of India under prompt corrective action (PCA) in view of high net non-performing assets and negative return on assets. In a statement to the stock exchanges, the public sector bank said: “We believe that corrective measures arising out of the PCA will help in improving the overall performance of the bank.” Central Bank of India’s net non-performing assets as a percentage of net advances increased to 10.20 per cent as at March-end 2017 from 7.36 per cent as at March-end 2016. Return on assets was negative in both FY17 (0.80 per cent) and FY16 (0.48 per cent).
A public sector banker clued in to the development observed that the insolvency professional, who is appointed by the National Company Law Tribunal (NCLT) under the IBC for drawing up a resolution plan and managing the afairs of a stressed steel company, may be able to find buyers for the asset under his charge. “Stressed steel companies are relatively low-hanging fruit for resolution under IBC. I am sure healthy steel companies would like to expand their capacities via the acquisition route. If no private sector player is interested in acquiring these productive assets, State-owned companies may throw their hat in the ring,” he said. Liquidation of assets is not an option as huge investments have gone into the cre-
ation of these assets, said another banker. In the case of stressed holding companies in the infrastructure sector, the resolution process could take longer as they typically float special purpose vehicles for individual projects and the insolvency professional may need to simplify complex holding structures. Further, the government will have a big role to play in the case of distressed core sector projects, which have stalled for want of inputs such as gas and coal and have seen huge cost and time overruns, he added. An important step Credit rating agency ICRA said with identification of 12 borrowers against whom the RBI will direct banks to initiate proceedings under IBC an im-
portant step towards resolution of stressed assets has been taken. The RBI is expected to direct the banks shortly, upon which the latter will have to file cases against these borrowers with the NCLT which will decide on the admission on these cases under IBC within a period of 14 days. According to Karthik Srinivasan, Group Head – Financial Sector Ratings, ICRA, a key imponderable is the extent to which the decisions could be challenged in courts, thus delaying the process. However, while there is a precedent of a borrower challenging in the High Court the invocation of IBC by its lenders and its reference to NCLT, the same was not stayed and the proceedings under IBC continued.
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BusinessLine THURSDAY • JUNE 15 • 2017
QUICKLY ‘Amazon will continue to invest in India’
Dell-EMC eyes big play in Digital India projects
New Delhi, June 14
VARUN AGGARWAL
Amazon will continue to invest in India in expanding infrastructure and bringing in solutions that enhance consumer and seller experience as the US-based e-commerce major looks to Amit Agarwal overtake its rival, Flipkart. “Last year, half the capital deployed was in infrastructure. This year too, we will continue to invest in infrastructure, innovation and technology,” Amazon Senior Vice-President and Country Manager (India) Amit Agarwal told PTI. PTI
Mumbai, June 14
Dell-EMC combination has created over a combined entity that in India alone is over $3 billion in revenue. The acquisition, which took a long time to complete, is now helping Dell India to grow faster than ever and enter new markets with a larger portfolio of products. Alok Ohrie, President and MD, India Commercial, Dell EMC, talked to BusinessLine to discuss how the company is now expanding its reach to 45 small towns to expand its business further. Edited excerpts:
In the wake of the recent cyber attacks including ‘WannaCrpyt”, Microsoft has issued a “highly unusual” patch for Windows XP users to help governments and enterprises minimise future malware attacks. “In reviewing the updates for this month, some vulnerabilities were identified that pose elevated risk of cyberattacks by government organisations, sometimes referred to as nation-state actors, or other copycat organisations,” said Adrienne Hall, General Manager, Cyber Defense Operations Centre, Microsoft, in a blog post on Tuesday. IANS
driving the agenda of Digital India under that umbrella they have smart cities, Make in India, Startup India, Skill India, you will agree with me that all of that is going to fuel the growth for the IT industry. Are we prepared for that, that’s a question that you can ask. Are we prepared for that, the answer is yes. And why do I say that because we are investing specifically in resources that are going out to the market and engaging with the key stakeholders.
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New patches for Windows XP San Francisco, June 14
How has the transition towards Dell-EMC consolidation impacted business in India?
We have had 17 consecutive quarters of growth. Last year, calendar 2016 our market share on the clients’ business in the non-consumer side has grown 494 basis points. If you were to take the total market including consumer, it is 221 basis points. I am hopeful with the kind of importance that government is giving to digitisation per se and
A lot of PC market growth in India has been driven by government projects. Now that elections are over in most of the States, how do you expect the sales to get impacted?
I think most of the governments are very serious about it, we are seeing some early work happening in RFP…So, RFPs are getting built and some of the States have. Early engagement shows that there is significantly large volume of laptop purchases that will take place this year on account of education buy. One that is already out
is from Tamil Nadu for 550,000 units. There are few smaller ones in the range of 50-100,000 units from a couple of other States that are currently being evaluated and assessed. The bids have been submitted. There are some large ones that are also expected. Michael Dell recently spoke about PC-as-a-service. What kind of opportunity do you see for that in India?
I think there is a great value for that in India, especially for a product. So, today most of the businesses look at this part of their purchase as a depreciation benefit. Three years, 5 years depending on which company you talk to, they will have their own depreciation cycles. There is going to
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Is Reliance Jio losing steam in terms of subscriber additions? Going by the number of new active users added by the operator in April it seems like there is loss in momentum. According to an analysis done by Goldman Sachs Equity Research, for the first time since Jio’s launch (in September 2016), Bharti added more (active) subscribers than Jio. “Jio added 0.4 million active subscribers in April, its fourth straight month of deceleration and with Jio starting to charge from April, we believe deceleration in subscriber additions is likely to continue,” Gold-
Analysis of the active subscriber data shows that only 0.4 million active users came on RJio’s network. This means that the operator may have given out 3.9 million connections in April but 3.5 million of those were inactive.
man Sachs said. Reliance Jio had started services in September and had ofered free voice and data to subscribers till March 2017. April was the first month when the operator started charging for data usage. According to TRAI, Reliance Jio added 3.9 million telecom
wireless subscribers in April, which is the highest in the industry. However, analysis of the active subscriber data shows that only 0.4 million active users came on RJio’s network. This means that the operator may have given out 3.9 million connections in April but 3.5 million of those were inactive. The total subscriber base for RJio as of April stood at 112 million but active subscriber base was lower at 71.2 per cent in April vs. 73.4 per cent in March. “Despite marginal pricing (3 months complimentary services on Prime Membership with recharge of ₹303 or higher), RJio’s active subscribers as percentage of total subscribers is constantly falling with only 71 per cent in April’17 which is disappointing, and particularly so in Mumbai and Kolkata circles where it is just 63.1 per cent and 62.8 per cent, respectively. The top-3 operators’ active subscribers as percentage of total subscribers stood at 97.6 per cent,” said analysts at ICICI Securities. Industry experts said the dip in addition of new active users by RJio could be because the operator was focussed on converting its user base with free connections to paying ones. “ If you look at the total number of paying subscribers on RJio’s network, it has actually gone up,” said an industry analyst. Analysts at Morgan Stanley said they were positive about RJio. “We assume RIL achieves 106 million active subscribers by Mar-18 with an average ARPU of ₹175/month and expect the telecom business to be EBIDTA breakeven by end F18. We believe the company can achieve our subscriber target even if its subscriber monthly net adds were to reduce by half,” Morgan Stanley said.
be a bigger compelling reason wherein the refresh cycles of these products will go down dramatically. And as I said it is to, it is going to do with the features. Imagine if virtual reality and augmented reality features start getting included into the desktops and PCs, right. When it becomes as a service, then you can keep asking for a refresh at a shorter period of time. It’s in the process of getting defined for India as you could imagine there is a financing angle to this. So, we are working with back lining it with couple of financing
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On the non-consumer front, we are investing to play big in the government space, government and public sector. We have invested big time on Banking, Finance, Security, Insurance. ALOK OHRIE, President and MD, India Commercial, Dell-EMC
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companies. We have a financial arm. We call it Dell Financial Services, DFS. Does the competition splitting into different companies kind of help you in some way?
I will say that the competition is distracted. I won’t go and make a comment about a specific competition here. I will say overall competition is distracted. And you see that across all of the competition friends that we have in the market at diferent kind of challenges, diferent kind issues that they are grappling with. The best thing that could have happened to Dell is Michael taking a decision to take the company private, 3 years back. So, October, 2013, when he took the company private, he set the stage for the company to be on a very, very diferent flight path. A flight path that has helped the company deliver much, much more than the market. Four years back, client business in India was 10.8 per cent. Last year, we
OUR BUREAU Bengaluru, June 14
Anil Ambani to take zero pay from RCom this fiscal OUR BUREAU Mumbai, June 14
Chairman of Reliance Group Anil D. Ambani has voluntarily decided to draw no salary or commission from Reliance Communications in the current financial year. “Decision is part of company promoters’ commitment to Strategic Transformation Program. RCom management also steps up, follows Chairman’s lead to ensure time-bound execution,” said a press statement. “RCom management team on-board has also decided to defer personal pay by up to 21 days. Measures will remain in place till December 2017,’ the statement added. The move comes amid a major exercise by the company to cut down its overall debt after an agreement with lenders allowed RCom time till December 2017 to undertake asset sale. The debt-laden company has assured the lenders that it would move swiftly on the tower asset sale and merger with Aircel. Several credit-rating agencies, including Fitch, had downgraded RCom’s debt rating on concerns that the company would default on loan repayment. The company’s share price was punished by investors as questions were being raised about mounting debt of nearly ₹45,000 crore. The company is looking to repay 60 per cent of the debt through two transactions.
Technology giant Intel will invest ₹1,100 crore in its upcoming R&D centre, which can create 3,000 jobs. This fresh round of investment is on top of the $2-billion the chip maker has invested in the country till 2016. “This investment is a part of our India expansion plans,” said Intel India General Manager and Vice-President of Data Center Group Nivruti Rai. The proposed facility will be located at Intel’s 44 acre campus on Sarjapur Ring Road (SRR) in Bengaluru, which hosts other tech giants such as Oracle, HP and others. Company oicials said this new facility will work on design and verification purposes and in the next year and half has the potential to create 3,000 jobs. Intel does not disclose company-specific data on number of people working in India but said that its workforce develops software and hardware applications used in server computers, smartphones and other devices. Intel’s decision to invest in India is coming at a time when tech giants are going through a drought when it comes to investing in their business. “Such investments will bring tremendous job opportunities and strengthen the IT sector in the country,” said Siddaramaiah, Chief Minister of Karnataka.
Priyank Kharge, IT, BT Minister, told BusinessLine that Intel’s investments will encourage innovation and bring in more job opportunities, especially at a time when job creation has reduced to a trickle. Industry watchers believe that tech multinationals have been holding on to their investment plans despite the government sounding out its Digital India policy.
“The intent (to invest) exists, it is just a question of when,” said Sanchit Vir Gogia, Founder, Greyhound Research. Tie-up with DST Intel has partnered with Department of Science and Technology (DST) to work on technologies that can benefit large cross sections of under privileged people.
KR SRIVATS New Delhi, June 14
South Korean electronics major Samsung has brought its flagship mobile payments service ‘Samsung Pay’ to a larger audience in India by introducing it in its best selling midrange of Galaxy J series smartphones. Samsung Pay service — which was launched in India in March this year—is now available on Galaxy J7 Pro, a new mid-market product launched by Samsung on Wednesday and targeted at millennials. Simultaneously, Samsung on Wednesday also launched ‘Samsung Pay Mini’ — a new sub-set service of Samsung Pay service — to cater to the unique requirements of Indian midsegment consumers. While Samsung Pay gives CM YK
one the option of paying through credit cards, debit cards, UPI and wallets, the Samsung Pay Mini gives option to pay through wallets and UPI. The move to bring Samsung Pay and its sub-set Samsung Pay Mini under the Galaxy J series is part of the eforts toward “massifying” the Samsung Pay service in India, Sumit Walia, Director, Mobile Business, Samsung India, told BusinessLine. Samsung Pay Mini has been first made available on Galaxy J7 Max, another mid-segment smartphone launched on Wednesday. While Samsung Galaxy J7 Pro has been priced at ₹20,900, the Samsung Galaxy J7 Max (non-Magnetic Secure Transaction (MST) hardware device) has been priced at ₹17,900.
“We plan to take the Samsung Pay Mini version and roll it across the select J Series as software upgrade. Consumers
What do you see as the big opportunity areas for Dell in India?
So, on the consumer business side, we will continue to expand our reach in the market. We are already present in 600 towns. We will continue to see how we can improve our availability of our products there. On the non-consumer front, we are investing to play big in the government space, government and public sector. We have invested big time on BFSI — Banking Finance Security Insurance. And we are investing big what we internally call as Geo expansion, Geography expansion. Geography expansion for us means the next set of 45 cities that we are going behind. These are typically tier-2 and tier-3 cities.
who are already using Paytm and other wallets can now take advantage of the Samsung Pay Mini and port their wallets, UPI
The India development centre will also work on emerging technologies like IoT where its latest Atom processor A3900 series, which has been designed for some of the IoT-related applications. IoT is expected to be a multi-trillion-dollar market, with 50 billion devices are expected to create 44 trillion gigabytes of data annually by 2020.
Karnataka Chief Minister Siddaramaiah with Nivruti Rai, Intel India General Manager and Vice-President of Data Center Group, during the announcement of the Intel’s expansion plans in Bengaluru PTI
‘Mobile data traffic to reach 11 GB per month by 2022’ OUR BUREAU New Delhi, June 14
Mobile data traic per smartphone user in India is projected to increase to 11GB by 2022, according to the Ericsson Mobility Report. The report, which was released on Wednesday, said that total mobile data traic in India is expected to grow
at a compounded rate of 40 per cent to 8 Exabytes (EB) of data per month as against a mere 1 EB by the end of 2016. “By 2022, 97 per cent of the mobile data traic will be smartphone traic,” it said. The report estimates that the smartphone subscriptions in India would repres-
ent 30 per cent of all mobile subscriptions this year. “GSM remained the dominant technology in 2016, accounting for over 70 per cent of total mobile subscriptions,” it said. But by 2022, LTE and WCDMA/ HSPA technologies are projected to together represent 85 per cent of all Indian subscrip-
Samsung brings flagship payment service to mid-range phones Company launches two smartphones, J7 Max and J7 Pro, with Samsung Pay
ended the client business and when I say client business, I mean the non-consumer business. We ended the non-consumer business at 26.5 per cent. Four years back our server by revenue market share was in the range of 16-17 percent. Last year, we had ended it at 29 per cent.
Intel to invest ₹1,100 crore in R&D centre
RJio’s new active user addition dips in April Mumbai, June 14
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within Samsung Pay and take advantage of the whole security that Samsung Pay provides,” Walia said.
Sumit Walia, Director, Mobile Business, Samsung India, with Ken Kang, MD and Head ,Mobile business, Samsung India, during the launch of Galaxy J7 Max and Galaxy J7 Pro in New Delhi KAMAL NARANG
Samsung Pay has a threelayer security (including fingerprint, knox) that provides added comfort to users, the company said. Asim Warsi, Senior Vice President-Product Planning Team, Samsung India, said that this (Samsung Pay in a Galaxy J series device and devise new service of Samsung Pay Mini) was the first big iteration to the Samsung Pay service that was launched in March. “We will be taking Samsung Pay on to more devices in future as we launch with MST as well as Samsung Pay Mini with those future devices launched without MST, which will have the basic stack of Knox and fingerprint security to be able to deliver the Samsung Pay experience,” Warsi said. Some of the existing devices that are already in the market will get upgrades as well. In the coming few weeks, Samsung Pay Mini will be available to consumers who already own
Samsung devices but did not have Samsung Pay as yet. Social camera Both the smartphones launched on Wednesday have a social camera, which helps instant sharing, instant editing and instant discovery. Users can now pin their favourite contacts and social media within the camera and share their moments as they click. The instant editing reduces dependency on third party image editing apps.
tions. By then 5G subscriptions are also likely to be available and would represent 0.2 per cent of three million total mobile subscriptions. The report further added that VoLTE subscriptions base would reach 4.6 billion from the current 370 million by the end of 2022.
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Casting the net wider
BusinessLine THURSDAY • JUNE 15 • 2017
Coping with the China factor in Myanmar India cannot match China in developing infrastructure in Myanmar. But health and education initiatives can create goodwill is forcing Myanmar into a tight Chinese bear hug.
The anti-BEPS initiative brings greater clarity and standardisation to tax dealings with MNCs
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eing highly dependent on foreign investors for its prodigious capital needs, India has always been on the back foot when it comes to enforcing its tax laws on multinational corporations (MNCs) and foreign investors. Ambiguities in law and public faceofs between the taxman and global corporations have also sullied India’s image as a friendly place to do business. It is therefore welcome that India has become a signatory to the OECD’s Convention on Base Erosion and Profit Shifting (BEPS). By standardising tax and compliance rules across countries and over-riding more than 3,000 bilateral tax treaties, the anti-BEPS framework arms governments with the tools to crack down on MNCs which exploit tax arbitrage to shift profits to low or zero-tax regimes. By “looking through” fictitious holding structures to tax firms in the country where the bulk of their value creation originates, the anti-BEPS initiative is broadly expected to improve tax revenues for large consumer economies such as India. Specific action points of the agreement that are likely to have a high impact on India-based enterprises are those that plug treaty abuse, tax digital transactions and intangibles, and expand the ambit of permanent establishment and transfer pricing rules. Pharma, consumer and chemical MNCs in India which vest their patents and marketing operations with overseas arms in an efort to redirect revenues to low-tax regimes may fall foul of the new rules. So will e-commerce players with a substantial domestic presence. Nor is the antiBEPS initiative a one-way street which only impacts MNCs. Indian companies with cross-border operations must also expect enhanced scrutiny of their web of foreign subsidiaries, treasury operations and royalty/dividend transactions. Countryby-country reporting, which requires all global companies with over €750 million in revenues to share a geography-wise breakup of operations, is expected to afect over 150 Indian companies. With a significant proportion of FDI, private equity and FII flows routed via low-tax regimes, there is the possibility of interrupted flows to India. The Centre has taken many preparatory steps to reduce the shock value of this transition. It has renegotiated tax treaties with Mauritius and Cyprus, started taxing online transactions and implemented the General Anti Avoidance Rules. As a signatory to the multilateral agreement, India is obligated to ensure seamless tax information sharing with other signatories. This may pose challenges for the tax administration which is under-stafed and under-invested in ICT. By sweeping more cross-border transactions into the tax ambit, the regime is bound to escalate disputes on issues such as transfer pricing. Resolving these will require India’s dispute resolution mechanism to function efectively. But this is sorely lacking. Building skills and capacity in the tax department may ultimately hold the key to India reaping large payofs from this landmark agreement.
OTHER VOICES
Qatar, cut off Qatar is rich, ambitious and vulnerable — a dangerous combination. It is discovering just how dangerous that combination is in the wake of the June 5 decision by Saudi Arabia, Bahrain, the United Arab Emirates and Egypt to cut relations with Qatar. They complain that Qatar supports dialogue with Shiite Iran and backs groups like the Muslim Brotherhood and Hamas. That latter charge is rich, given Saudi Arabia’s support for Wahhabism. Qatar counters that it is not sponsoring terrorism but is instead backing popular manifestations of political Islam. TOKYO, 14 JUNE 2017
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hen Aung San Suu Kyi emerged victorious in national elections in Myanmar, there were widespread expectations that given her iconic image in the west, her Government would receive substantial economic assistance from the US and the European Union. Suu Kyi had two priorities on assuming oice. The first was to establish ethnic peace in Myanmar, where minority groups have resorted to armed insurrection. President Thein Sein, who headed the Government earlier, had negotiated cease-fire agreements with a number of these groups. But, a number of influential and powerful groups continued with their revolts. Suu Kyi’s second priority was to create conditions for accelerated economic growth. Illusions that she may have entertained about receiving substantial western aid were not fulfilled. Myanmar has, however, done well on her second priority, by diversification of agricultural production, while achieving a growth rate of around 8 per cent. Rather than appreciating Suu Kyi’s eforts to seek ethnic peace, western powers and Islamic busybodies such as Turkey and Malaysia chose to pressurise Myanmar for alleged violation of the human rights of its Rohingya Muslim population. Japan and India have shown understanding of Myanmar’s internal problems. China embarrassed its Southern neighbour by ofering to “mediate” in the Rohingya issue. It is, however, China’s approach to Myanmar’s ethnic problems which
John Major, the former Conservative prime minister, warns in the strongest terms against a deal with the Democratic Unionists, and calls for “facts, not idle hopes” on Brexit. Inflation surges to a four-year high as sterling continues its post-referendum fall. The European commission reveals rule changes likely to hit the City. The thoughtful and cogent case against any kind of formal relationship with the DUP should resonate throughout the Tory party. LONDON, 13 JUNE 2017
Tax reform is sorely needed The survey by Melbourne-based policy research organisation Per Capita also indicates most of our citizens reckon high income earners and companies do not pay their fair share of tax. As recent elections in Britain, the US and France show, people are rejecting the status quo, largely out of disenchantment over policies that are disproportionately beneficial to the rich. In Australia, such laws include tax concessions on speculation on property. MELBOURNE, 13 JUNE 2017
Looking forward India should reach out to the people of Myanmar REUTERS
mining projects in Myanmar have come up since the early 1990s, with scant regard for environmental degradation and displacement. Myanmar’s first Constitutional President, Thein Sein, was compelled to suspend a $3.6-billion hydroelectric project called the Myitsone dam because of public protests. Apart from displacement of thousands, this project involved the transmission of 90 per cent of the power generated to China. Suu Kyi, however, personally and controversially approved, amidst widespread local protests, a Chinesebacked copper mine project, giving the Chinese partner a 30 per cent share of profits. Another controversial Chinese project is the development of the Bay of Bengal port of Kyauk Pyu, involving an estimated Chinese investment of $7.3 billion. Beijing is looking at a 70-85 per cent equity stake in this project. Alongside the port is a proposed 4,289-acre Kyauk Pyu Economic Zone, where China has sought a 51 per cent stake, with an investment of $2.1 billion. China
is reportedly agreeing to not press its demands for the Myitsone hydroelectric project if Myanmar agrees to its terms for projects in Kyauk Pyu. China could, thereafter, assume control of the Kyauk Pyu port and use it for berthing its naval vessels, as it has done in Gwadar. Its navy recently held joint exercises along Myanmar’s shores. India has continued its engagement with Myanmar, with both Army Chief General B. P. Rawat and Foreign Secretary Jaishankar visiting Myanmar recently. The Indian Armed Forces have traditionally had friendly relations with their Myanmar counterparts. Both countries face problems of armed separatist groups using each other’s soil. Problems for India have now increased, because of covert Chinese support for India’s north-eastern separatist groups. India at a disadvantage India has to recognise the reality that it cannot match China in weapons supply, or in a range of infrastructure and industrial pro-
The writer is a former High Commissioner to Pakistan
Light at the end of the NPA tunnel The involvement of RBI in cleaning up balance sheets will resolve many issues. Professionalism can help banks to bounce back SUBIR ROY
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hree years after coming to power, the Narendra Modi government has at last taken a key step which has a chance of making a reasonably quick impact on the critical problem of unbearably high levels of non-performing assets of public sector banks. These (gross non performing assets) have gone up from 3.6 per cent in 2013 to a colossal 9.3 per cent of advances for 2016 on repeated central bank prodding to stop hiding things. Under an ordinance, the government may now authorise the Reserve Bank of India to direct banks to initiate insolvency proceedings against defaulters under the bankruptcy code. Indeed, the RBI on Tuesday listed 12 NPA accounts for insolvency proceedings. Government authorisation means the highest political backing for the insolvency proceedings. This takes care of two reasons why, instead of slowly declining, the NPA problem has only gotten worse. One is that political connections have a lot to do with large corporate loans going
sour. So for resolution the issue has to be addressed on the say-so of the political authority of the day. This the ordinance does. Long and winding road It also addresses the second reason for lack of progress. Senior bank officials so far simply did not risk their necks structuring deals which involved writing of a part of the loan. Now they will be acting under RBI directives. Once bank balance sheets are lightened of the load of very high NPAs, there can be a return to normal business activity of sanctioning fresh loans. In this, the earlier government action to set up a Banks Board Bureau, which is tasked to identify capable senior executives to run the banks eiciently and improve governance levels, can play a key facilitating role. After all, part of the problem was created by the wrong kind of people getting into leadership positions in banks. Any optimism on this score must however be tempered by the sudden resignation and subsequent withdrawal of it by a non-oicial member of the board on it being re-
LET TERS TO THE EDITOR GST launch needs more work
Coalition of chaos
How China prevails The long-running ethnic insurgencies in Myanmar now involve the dominant majority Bamars facing 22 armed groups, comprising ethnic minorities. Amongst the strongest of these groups are the United WA State Army (UWSA) with 25,000 well-armed cadres and the 5,000-strong Kachin Independence Army (KIA), which operate across the India-China-Myanmar tri-junction. These groups receive weapons and logistical support from China. The KIA has backed India’s northeastern separatist groups such as ULFA and the NSCN (Khaplang), in consultation with government oicials in China’s neighbouring Yunnan province. The Chinese have equipped the UWSA with sophisticated weapons, used in Myanmar’s insurgency-ridden Shan State. Cross-border attacks by the UWSA are a major instrument of China to pressurise Myanmar. China also regards Myanmar as a land bridge to the Indian Ocean. It was initially concerned about the reportedly pro-western Suu Kyi’s election victory. However, Beijing skillfully used its security and economic leverage to ‘persuade’ Suu Kyi to give it a significant say in her quest for peace agreements with armed separatist groups. China shielded Myanmar from western criticism in the UN, on the issue of Rohingya Muslims. It also used short-sighted western aid policies to acquire considerable leverage within Myanmar. It reportedly persuaded the UWSA recently to accept a ceasefire. It is acting similarly with the Kachin Independence Organisation (KIO). China’s envoy to Myanmar has “facilitated” talks with the KIO – a development India should closely monitor. China now has an ability to significantly influence Myanmar insurgent groups. Large Chinese infrastructure and
jects. India, for example, cannot match Chinese supply of JF 17 fighters manufactured in Pakistan, as our much-touted Light Combat Aircraft has not yet been operationalised. Likewise, our public sector infrastructure projects such as the Sittwe Port, the Kaladan Corridor linking our landlocked north-eastern States to the Bay of Bengal at Sittwe, or the proposed 1800 MW hydroelectric project, have either been delayed or abandoned. While diplomatic eforts enabled us to get a stake in successful ofshore gas exploration, we lost access to the gas because of our inability – and indeed ineiciency – in devising measures to transport/ transfer and utilise the gas, which is now transshipped to China by a pipeline. Private sector projects to use Myanmar’s vast bamboo resources for the paper industry, or investment in the agricultural sector have similarly been delayed, or failed. The main area which has won us gratitude is vocational training and education facilities for Myanmar personnel. We need to review and restructure our economic cooperation with Myanmar, with an increasing focus on assisting the populations living close to our borders through imaginative schemes for education, health, communications and small/ village industries. The rupee could be made legal tender for such cross-border projects. This could be undertaken in close cooperation with Japan and the Asian Development Bank and duly integrated with new measures now being considered for giving momentum to Regional Cooperation through BIMSTEC. Larger industrial and agricultural projects in Myanmar are best left to market competition, and not undertaken through monopolistic public sector involvement.
This refers to the article, “Rushing to get last mile delivery right” by Paran Balakrishnan (June 14). In its concluding observations in 2016, the Committee headed by Chief Economic Adviser Arvind Subramanian on possible tax rates under the Goods and Services Tax described the tax as a game-changing reform that would facilitate “Make in India by Making One India”. The Goods and Services Tax can not only help improve governance and strengthen tax institutions but also impart buoyancy to the tax base. However, the tax rates arrived at by the GST Council are higher than the current service tax rates for certain goods and services. This would lead to an increase in cash outflow and constrain liquidity in the business. Also, in the new tax regime, credit of input tax will be available
The road ahead It’s not so clear
portedly bypassed by the government while shifting a couple of bank chief executives to lesser banks. Clearly, certain habits die hard. But if all goes well hereafter, then the ruling NDA should be able to go into the next elections due in a couple of years touting the achievement of having set right the balance sheets of public sector banks. This will enable these to continue as public sector entities. But what if this does not happen and the next government (it does not matter which outfit it is because in some respects most Indian politicians are similar) begins with
Privatisation prospects To find a way out, what if post-2019, the government of the day decides to look at privatisation also because of the huge cost to the exchequer in write-ofs and recapitalisation ? The prospects of privatisation do not look bright either because of the banks’ inadequate capitalisation and non-existent (in fact negative) brand value. About their only asset, a large branch network, is also currently devalued with the onward
The writer is a senior journalist and the author of Made in India: A Study of Emerging Competitiveness
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on the basis of matching concept. If there is a mismatch in details as provided by the supplier/ vendor vis-a-vis those provided by recipient, then input tax credit would be disallowed and the latter might have to pay tax (equal to input tax credit) along with interest. There might also be an increase in the compliance cost due to decentralised registrations which will afect the working capital needs of small businesses. Further, the GST Council is yet to provide clarification on certain place of supply and time of supply rules and the anti-profiteering framework which might further afect the ease of doing business. The impact of GST cannot be realised fully unless a robust communication and logistics infrastructure is in place. It is time the Government reassessed its preparedness for its transition.
Loan waivers futile
Shreyans Jain
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the same set of problem-ridden public sector banks whose condition has only gotten worse?
march of digital banking. And when it comes to the little woman taking a small loan, the representative of a small finance bank will probably readily come to her doorstep. The government is trying to get around all this by seeking to merge the weak with the not-soweak but this is likely to be counter productive as it will only result in the not-so-weak becoming weaker. The full road ahead is not visible but an intermediate key step has been outlined. In this scenario, with the merger of the small weak banks with a few large ones we will have maybe five large strong public sector banks without going in for the politically unpopular agenda of privatisation. Will these few large healthy public sector banks be able to run successfully with professional managements chosen by the Banks Board Bureau? This is theoretically possible but quite unlikely given India’s current political culture which cuts across party lines.
This refers to your editorial ‘Double standards (June 14). The nationwide loan waiver announced by the Janata Dal government headed by VP Singh in 1990 has become a precedent. The concept was picked up by the UPA in 2008; these bounties proved an exercise in futility. Loan waiver is just a quick fix and does not address the root cause of agrarian distress alicting the country even a wee bit. Waiving loans will have a cascading efect with demands pouring from other States as well. With most States’ financial situation not in the pink of health, they are forced to fall back on the Centre to help tide over the crisis. HP Murali Bengaluru
Rejoinder
With reference to the report, “New broadcasting norms set to
lower your monthly bill” (June 7) please note : The impact and implications (both long- and shortterm) of the TRAI Tarif Order & Interconnection Regulations has not been analysed and discussed in a holistic manner insofar as the industry and the consumers are concerned. Accordingly, the title of the report is false and misleading and conveys exactly the opposite of the actual consequences that will arise once the Tarif Order and Interconnection regulations come into efect. The said article lacks elementary research as the various aspects of the TRAI Tarif Order and Interconnection Regulations were not even adverted to nor the prevailing dynamics in the pay TV market even addressed. All the relevant stakeholders in the broadcasting ecosystem were not consulted; instead, a single entity’s views have only been chosen to be articulated and an isolated
investor advisory has been relied upon. K Aravamudhan VP (Regulatory Affairs), Star India, Gurgaon
Bindu Menon responds: Star’s outrage seems to be prompted by the fact that TRAI has taken a stance not to its liking. The story clearly states Star TV and Vijay TV were opposed to TRAI’s new framework. Star even legally challenged TRAI’s jurisdiction. A final verdict is pending. What is mentioned in the story is a part of TRAI’s new framework. The story indicates a general trend following TRAI’s recommendations. It was not to favour any one side but to say that subscribers may benefit from it. We had reached out to several players including Parul Sharma of Star TV, who was not available. Editor’s note: We stand by our story. We strongly deny Star TV’s allegations of bias, which are unfounded.
Published by N. Ram at Kasturi Buildings, 859 & 860, Anna Salai, Chennai-600002 on behalf of KASTURI & SONS LTD., and Printed by D. Rajkumar at Plot B-6 & B-7, CMDA Industrial Complex, Maraimalai Nagar, Chengleput Taluk, Kancheepuram Dist., Pin: 603209. Editor: Raghavan Srinivasan (Editor responsible for selection of news under the PRB Act).
CM YK
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Value for money GST helps cut taxes by its focus on value added AJAY SRIVASTAV
GST MASTERCLASS
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ow will GST reduce prices through taxing only the value added? Let us first understand how the current system works. A manufacturer pays central excise at 20 per cent on a shirt of value ₹100. At the time of sale, another tax VAT is to be paid at 15 per cent to the State government, which should be ₹15 in this case. But the State government charges VAT not on the ₹100 but on ₹120 which is the value of shirt plus the central excise tax that was already paid. So, the VAT rate of 15 per cent in efect becomes 18 per cent, leading to a higher price of the shirt. The current system has many such inconsistencies. GST resolves the issue by integrating tax systems of central and State governments by introducing a facility to set of taxes paid across the value chain. Consider a simple three-stage operation of a small shirt-making unit owned by a person called Ria. She buys fabric from John, makes shirts and sells them to Vijay, the retailer who finally sells shirts to the end consumers. The GST rate for fabric is 5 per cent and garments is at 18 per cent. If John, Ria and Vijay are located in the same State, the transactions among them will be considered under the intra-State sale provisions and GST payable would be the total of CGST and SGST. If one of them is located in a different State, the transaction will be considered inter-State and GST payable would be the IGST, which would be the total of CGST and SGST. The tax liability would remain same in both cases. Let us see the how the GST is paid at each stage of business operation. Stage 1: Raw material Purchase.
John sells fabric of value ₹1,000 to Ria. He pays GST of ₹50 at 5 per cent on the fabric value of ₹1,000. The total price of fabric shown by John in the invoice given to Ria would be ₹1,050. This includes the basic value of the fabric at ₹1000 and the GST paid of ₹50. Stage 2: Manufacturing and sale. Ria manufactures shirt using fabric bought from John. Here, she adds ₹100 as value during the conversion of fabric to shirts. Ria pays GST of ₹18 on the value added ₹100. The total price of the shirt shown by Ria in the invoice given to the retailer would be ₹1,168. This includes the basic value of the shirt at ₹1,100 ( ₹1000+100) and GST paid of ₹68 ( ₹50+₹18). Stage 3: Retail sale. Vijay adds his margin of ₹200 in the price of the shirt. He pays GST of ₹36 on this value (GST at 18per cent on ₹200). The total price of the shirt shown by Vijay in the invoice given to a customer would be ₹1,404. This includes the basic value of the goods at ₹1,300 ( ₹1,000+₹100+₹200) and GST paid of ₹104(₹50+₹18+₹36). The end consumer pays ₹1,404 for the shirt. This includes the GST of ₹104. What stands out here? The supplier, manufacturer and retailer, each pays GST only on the value added by them. No one pays GST on the value that includes the tax paid earlier as it happens in the current system. This feature makes GST superior to the current system and reduces the tax burden on the consumer. The writer is from the Indian Trade Service. The views are personal. Adapted from his book, ‘The GST Nation: A Guide for Business Transformation’ This is part three of a series to introduce readers to GST’s intricacies. The last part appeared on June 13.
Powering up India’s medtech industry Partnerships between industry, academia and government are required to boost research in neglected areas MOHANASANKAR SIVAPRAKASAM JAYARAJ JOSEPH
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edical technology is a nearly ₹40,000 crore market in India, growing at over 12 per cent. Of this, imported products account for about 70 per cent. The domestic industry mostly focuses on consumables, test kits and lower-value equipment. As a result, most local medtech companies are medium and small enterprises; only a few have an annual revenue of over ₹100 crore. The opportunity for indigenous solutions and domestic medtech production is huge. The market can grow into an estimated over ₹1 lakh crore in seven to 10 years. But it needs eforts on multiple fronts to realise the potential. Right products, models and partnerships can do the job. The low-cost model Can the low-cost manufacturing model that has been successful in India’s growth in vaccines and generic drugs, leading to global leadership, be replicated in medtech? Economies of scale, and volume-price dynamics that has made this model successful in vaccines and generics, is absent in medtech. Here, the cost of manufacturing is typically 15-35 per cent of the selling price. A large part of this is components (typically imported), with a small share of that being domestic components, assembly, packaging, etc. For a typical hospital equipment, the domestic manufacturing value added would not be more than 5-10 per cent of the final value of the product. As a result, pure-play ‘low cost manufacturing’ alone cannot give impetus to indigenous medtech development, given India’s weak manufacturing ecosystem for technology-driven hardware. So, what contributes the rest of value? The key activities that retain the bulk of the value are in-
novation/IP, design, engineering, and commercialisation. While cost is a well-known parameter, there are other key factors that existing medtech products are not tailored for. To list a few, limited availability of trained and skilled personnel, space, infrastructure and operational constraints in hospitals and clinics, maintenance and servicing burden of equipment, growing aspirations of smaller institutions and doctors to earn higher revenues, option to add features in a modular manner over time as business grows, travel distance and time for patient and caretaker, paying capacity of patients and families, are some of the contextual elements that today’s imported medtech products do not cater to. This is an untapped opportunity and requires innovation and R&D driven product development. Time factor While, medtech doesn’t have the scale and homogeneous nature of vaccines and drugs, it has an advantage that makes it more amenable for R&D, innovation and entrepreneurship in a practical and afordable manner. Compared to larger investments required in drugs and vaccines to support discovery based research that need extensive clinical trials, majority of medtech products take a problem-solving R&D approach using engineering techniques. Development budget and time of a mid-value medtech equipment at a price point of, say, ₹5 lakh, with a potential market of around 1,000 pieces annually, is typically less than three years and ₹5 crore. To fill in the funding gap, government agencies such as BIRAC are supporting startups in this area at various stages towards commercial products. The long gestation period in medtech projects, from concept to market success, is often cited as a barrier for developing new products. While it is indeed true
Ready to serve Medical technology could become a multi-billion industry in India in a few years
More complex platforms and products such as active implants, minimally invasive surgery systems, high-end equipment need long-term R&D at the level of 5-7 years. Development of such complex technologies should be led by our R&D institutions with government support, in partnership with industry with goal of market-ready products.
that medtech product development takes five to seven steps, from concept to manufacturing, including animal and human trials in certain cases, this technical complexity of medtech product development is still much lower (and less expensive) than drug or vaccine development. Market success and scale takes longer than developed markets, and is a function of product fit with market needs, access to early adopters and thought-leaders, and a viable business model involving hospitals and doctors to encourage uptake of the product. To mitigate these gaps, R&D and product development should be done through partnerships with as many stakeholders as possible. These partnerships should include collaborations with R&D institutions, hospitals, government health agencies, component vendors, OEMs, and, even other medtech companies. With the current ecosystem, one could target such products at a 3-5-year time frame in hospital instruments, diagnostic devices, health monitors, and surgical equipment. R&D, engineering and manufacturing for such products is possible as established companies and startups in this area have demonstrated in recent years, albeit in small number.
Lack of awareness One of the weaknesses in our industry, R&D and innovation efforts, is lack of deep knowledge of the healthcare process and detailed mapping of interplay between the medtech product, user, support personnel, beneficiary, revenue earner, associated processes and infrastructure. This is a crucial exercise and should be one of the core elements of product development. Medtech being only 5 per cent of overall healthcare market, industry needs to articulate its position and demonstrate value to the healthcare provider in order to create space and appetite for new products. Another key missing piece for strong R&D-driven medtech is lack of high quality medical research. This is constrained by the limited number of research and teaching hospitals. Current clin-
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The Telecom Regulatory Authority of India has asked the chief executive oicers of all the companies in the sector to attend a meeting on Thursday to discuss their financial crisis. The CEOs will also meet Minister of Communication Manoj Sinha later in the month, to provide information on the problems in the sector. The Supreme Court is to hear today a plea challenging the Centre’s notification prohibiting sale and purchase of cattle at animal markets for slaughter on the grounds that it violates the right to free trade. A three-member government panel comprising three senior ministers — Rajnath Singh, Arun Jaitley and M Venkaiah Naidu — is slated to meet Congress President Sonia Gandhi on the issue of selection of a candidate for President on Thursday. The All India Kisan Sabha will stage a nation-wide strike in Andra Pradesh today in support of the farmers who lost their lives in Madhya Pradesh. The agitation would be held in all 13 districts of the State by the farming community condemning the highhandedness of the Madhya Pradesh government An expert group led by T Haque is to assess the quantum of agriculture debt in Punjab, will meet farmers’ bodies and bankers on Thursday to give final shape to its report. The report will be submitted to Chief Minister Captain Amarinder Singh who will then take a final call on farm debt waiver. CM YK
THE CHEAT SHEET The champion runner who is to retire in August? The same. The flamboyant Jamaican sprinter is arguably one of the greatest athletes of all time, and the fastest human in history. ‘Lightning Bolt’ is also the only sprinter ever to win the ‘triple double’: gold medals in 100m and 200m in three consecutive Olympics.
billion people, which has participated in the Olympics since 1900, has won a grand total of 28 Olympic medals; eight of its nine gold medals were won in field hockey, and in athletics, it has won only two silver medals in all these years. So, what’s your point? To understand why India underperforms in athletics (as in many sports), it helps to know what makes Jamaica an athletic outperformer.
Sure, but what’s he got to do with Swachh Bharat? We’ll get to that in a bit. To connect the dots, you have to understand the ecosystem in Jamaica, a country of 2.8 million people, that produced not just one Usain Bolt, but an army of prodigiously gifted athletes who have performed way above their league at the Olympics. Indicatively, since 1948, Jamaicans have won a total of 77 Olympic medals, all but one of which were in athletics.
Is there something in the Jamaican air? There are many theories, including some fanciful ones, to account for Jamaica’s record in churning out super sprinters. One of them claimed Jamaicans are endowed with a ‘speed gene’, but DNA studies have debunked notions of a genetic predisposition. In any case, Jamaicans trace their ancestry to West Africa, which isn’t exactly an athletic superpower. Then there’s the ‘yam’ theory.
What’s India’s record like? Pretty dismal. Our country of 1.2
The what? Errol Morrison, former president
easy
of the University of Technology in Kingston, who has studied Jamaican sporting prowess, says the country’s staple diet of yams and green bananas accounts in some measure for the excellence. But that too stands disproved: many other countries where people eat these tubers don’t produce champs. Among other reasons cited by researchers at the University of West Indies is the aluminium-rich soil; evidently, aluminiun absorbed through a pregnant woman’s diet helps the foetus develop muscle fibers that are used in sprinting. So what’s the secret sauce? Jamaican-born Harvard sociologist Orlando Patterson has pointed to arguably the most convincing explanation: a public health campaign in Jamaica since the 1920s, which focussed on hygiene, clean water and fecal and mosquito control. Think of it as a ‘Swachh Jamaica’ campaign. The success of the efort, spearheaded by Rockefeller Foundation specialists, yiel-
‘Capital formation in agriculture must improve’
The Union Finance Minister, Mr. P. Chidambaram, on Saturday regretted that capital formation in agriculture, particularly from the public sector, had sufered. Inaugurating the Agri Development Finance (Tamil Nadu) Ltd (ADFTL), a non-banking financing company floated to fund hitech agriculture, he referred to this trend that had emerged in the last few years. The focus instead was on increasing credit flow. He said private sector investments had shown an 8.43 per cent annual increase, while investments from the public sector had shown a negative growth rate during the same period.
Certainly sounds plausible. Data backs it up well. As historical demographer James Riley notes in Poverty and Life Expectancy: The Jamaican Paradox, even on a low per-capita income, the country dramatically improved its life expectancy, from 36 in 1920 to 75 today. Currently, Jamaica’s child mortality rate is 16; India’s is 48. Jamaica ranks 94th on the Human Development Index; India is at a lowly 131.
ITC net up, to pay 40%
The ITC board, at its meeting today, has recommended a higher dividend of 40 per cent for the year ended March 31, 1997. This is against 25 per cent paid for 1995-96 (on a share capital of Rs. 245.41 crores). For the year under review, the company has recorded a 33 per cent increase in its profit after tax (PAT) at Rs. 347 crores from the Rs. 261 crores achieved in 1995-96. Significantly, the ITC board has recommended the creation of a contingency reserve of Rs. 190 crores (nil in 1995- 96) out of unappropriated profits, leaving an undistributed surplus of Rs. 128.46 crores (Rs. 156.62 crores).
And Swachh Bharat is the key? A public health campaign may or may not yield us Olympic champs as a spinof. But an earnest campaign, as opposed to the photoop-driven one we saw in India, can certainly save millions of young lives and raise them to good health. And that’s worth a lot more than an Olympic gold medal.
SBI officers to go on nation-wide stir from June 23
The All-India SBI Oicers’ Federation has decided to go on an indefinite strike from June 23, to protest the suspension of three SBI oicers for their alleged role in the CRB fiasco. The Federation will meet in Calcutta on June 17 to discuss the issue and to seek the support of oicers in other banks. The strike in the SBI branches here continued for the third day today. The situation is expected to take a turn for the worse next week.
A weekly column that helps you ask the right questions
not so easy
ACROSS
DOWN
ACROSS
01. Push with finger (5) 04. Ancient Egyptian wire rattle (7) 08. Books, periodicals etc (7,6) 10. System of beliefs (L : I believe) (5) 11. Resolve knot (4) 12. Vocalised (4) 16. Parent’s brother (5) 17. Lack of likelihood (13) 19. Sign the back (7) 20. Person who accepts bet (5)
01. Mention the details of (13) 02. Age, important date (3) 03. Suture (6) 04. Autographed (6) 05. Dark part of a picture (6) 06. Repay in kind (9) 07. Matins (7-6) 09. Seized for ransom (9) 13. Hearsay (6) 14. Draw blade across (6) 15. Paint carefully, make likeness of (6) 18. To weary, distress (3)
01. Push the papers in the cupboard (5) 04. Must Sir be shaken? It got the Egyptians rattled! (7) 08. Printed material daring me to treat it so (7,6) 10. I believe it’s Latin for a part of the service (5) 11. Loosen nut to solve a problem (4) 12. Was a tenor, and was an informer (4) 16. He’s related how North Carolina got involved in rubber (5) 17. Unlikelihood of limbo: pity a rib has to get broken (13) 19. To give it one’s backing needs possible holding of gold (7) 20. He accepts bet that could put Kate right (5)
SOLUTION: BL Two-way Crossword 871 ACROSS 1. Curve 4. Squalid 8. Embracing 9. Owl 10. Initial 12. Rang 14. Termite 17. Oboe 18. Twisted 20. Ink 21. Castigate 23. Garbage 24. Guess DOWN 1. Credit scoring 2. Rabbit 3. Examiner 4. Sei 5. Urge 6. Loofah 7. Delightedness 11. Limit 13. Striding 15. Conker 16. Strake 19. Acta 22. She
Sivaprakasam is head of Healthcare Technology Innovation Centre (HTIC), a joint initiative of IIT Madras and Department of Biotechnology, Ministry of Science and Technology. Joseph is Chief Technologist, HTIC
junr 15, 1997
ded successive generations of healthy children who took to running, the ‘cheapest’ sport, and which was nurtured by a sporting culture.
bl two-way crossword 872
ical workload and patient care priorities in both public and private institutions do not lend space for technology oriented medical research. Preclinical testing, animal labs, and requisite knowledge, skills, facilities to ofer such services are very few in number. These would require longer-term eforts from the Government and will gain attention as medtech industry gains traction. Overall, we should set out a short- to medium-term goal of developing products in chosen categories that are afordable and targeted at specific problems. This should be done through partnerships between industry, academia and the Government. As the ecosystem and support structures mature, we should aim to develop products that have a large-scale impact and higher value products. On a longer term, we should aim to shape and position medtech as a strategic tool and industry that would help improve Indian healthcare and serve as a global innovation engine for medtech for emerging markets.
BusinessLine TWENTY YEARS AGO TODAY
How Swachh Bharat can yield us an Usain Bolt VENKY VEMBU
9
awkwardly starts (3) 03. Sew the least scrap of clothing (6) 04. Communicated with the unhearing as one put one’s name to it (6) 05. Go after one cast by the Sun (6) 06. Make a comeback later, a tie resulting from it (9) 07. Soundly grieving, might repay the Right at matins (7-6) 09. Child had a snooze with Stevenson’s book (9) 13. The whisper is, it’s curious with your and my half (6) 14. Predicament one gets into with a thin layer of butter (6) 15. Show how it is to be put inside picture (6) 18. Prove wearisome for one king to take in another (3)
DOWN
01. Rail is up : react so as to enumerate it in detail (13) 02. A period educationist rather
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BusinessLine THURSDAY • JUNE 15 • 2017
OK brain, you can stop thinking now How much assistance is too much? Are the tech big five going to make sure we do and think nothing? MALA BHARGAVA
R
ecently, Apple had its Siri join the battle with Amazon’s Alexa and the Google Assistant by showcasing the HomePod speaker with Siri built-in. For now, it’s a little behind the others and is a music-first speaker, but it’s probably a matter of time before everything we do is ably assisted by a ‘personal assistant’ that gets more personal by the minute. Smart reply by Gmail A few weeks ago, Google slipped in some smartness into Gmail. Unsuspecting users suddenly noticed three reply options sitting at the end of every email coming to them. Got it! Thanks for the mail. What is this? That’s a good one. And more of the kind. For those who have been on Google’s messenger, Allo, these canned answers aren’t altogether new, but for anyone who hasn’t had that experience, welcome to smart replies. You can stop wasting time over how to start your mail and say thanks to Google’s machine learning, which will keep supplying better and more intelligent answers for you to start of with — or use as the only reply if you have a mind to. And oh yes, Google is reading
your mail — but it already was, so let’s not worry over that now. If you look at these smart replies, you’ll notice that they’re quite impressive. Spam and promotional mail doesn’t include the reply options and that’s a good thing because spam can easily be scam to which you are not meant to reply. Amazingly, I find that “it” is distinguishing between diferent types of mail I tend to get from PR
agencies. If a press release is written too over-the-top, I see no options to reply. If it’s written informatively, I get an option that says Thanks for the information or Thanks for the heads up. Smart replies aren’t really meant to stop you thinking at all, but if you’ll just take a look at them on Google’s Allo messenger, you’ll do exactly that sometimes. It takes a blink of an eye to tap the appropriate reply presented to you and much longer to form one in your head. Google may not take smart replies so far as to write your entire mail for you, but the way artificial intelligence, machine learning and the understanding of natural language is progressing, it wouldn’t be wrong to wonder what it’s Speak(er) for me Google, Amazon and Apple are all focusing on making smart speakers that have assistants built inside
doing to our own capacity to think, work out, increase our own learning, and form our own responses to the world. Tech changing the species With all the tech majors — Google, Amazon, Microsoft, Apple, Facebook — and hundreds of startups and companies working on steroids on the area of neural networks and machine learning, it is alarming to even imagine what this is going to do to change humanity in the long term. Will we need to think at all? And by the predictions of how robots endowed with as much if not more
Value-for-money Bluetooth speaker JINOY JOSE P
Bluetooth speakers are undergoing a curious transformation. They now take all kinds of form factor. Bar, ball, curvy, bulgy and in some instances the changes are gravity-defying, literally (surprised? check those levitating, wireless speakers). On that cue, Genius SP-925BT bluetooth speaker is a simple being. It’s cube-like and arguably cute. Genius is a leading global brand in peripherals and the product keeps an international appearance. The body is strong and can withstand regular falls. Its edges are curvy and slightly slippery, but the flat top, where control buttons are placed, ofers strong grip. Connecting Genius to the PC or phone is hassle-free and the bluetooth connectivity works seamlessly. Audio quality is clear and crisp and loud enough to fill your home. It’s not jarring or jamming. The surprise element is the battery. Once fully charged, the device keeps playing for hours without any glitches. If you are not a non-stop user, you may use it for days thanks to its energy eicient functionalities. The device supports auxiliary input as well, but it lacks slots for USB, SD card playback, which one finds in most bluetooth speakers these days. Why Genius?
Price: ₹3,999 Pros: Clear audio, good battery life Cons: Slippery exterior, no USB/SDHC audio player
TECH DIGEST WHICH DEVICES WILL GET IOS? Apple recently showed off the next upgrade to its operating system for iPhones, iPads and iPods — and it’s a big one. Lots of new features are to come, including easy drag and drop for better file handling including with email attachments, a Files app where you can finally see your data in one place, interesting stuff to do with photos including professional editing and more. But some older devices will not be getting the upgrade. Any iPhones that came before the iPhone 5S, for example. All iPad Pros will get the upgrade because the Pro is a recent release, not even into its second generation yet. Any regular iPads that are 4th gen or before will not be upgraded to iOS 11. The iPad Air models will and so will the Mini 2, 3 and 4 versions. As for the iPod, it’s the 6th gen, which will get the upgrade. Roughly, it’s the devices that are currently on iOS 10 that will be able to move to 11. The beta version of the OS is actually available for those who want it, but unless you’re a developer, it’s a terrible idea to try to upgrade to that.
AI WILL PREDICT WHEN YOU’LL DIE Is Machine Learning and Artificial Intelligence going too far? Some would certainly say so. Others are going ahead with full-fledged research and exploration. At the University of Adelaide, researchers are feeding an AI system images of the organs of 48 patients to analyse. Combining that with a storehouse of other information given to it, the system seems to have reached an accuracy of 69 per cent on whether a person is likely to die soon — say within the next five years, at any rate. Many of the medical tests we do and the opinions of doctors may reach the same conclusions — and they do, on an everyday basis — but doing it the AI way lends a whole new meaning to such a prognosis. While it sounds unnecessary and no less than playing God, such technology could obviously help reverse a problem or treat it well in time. All the same, if the AI could just see the shiver than runs down our spines...
Meizu M5: Two economy variants The 2GB RAM variant falls short of competition in the segment SALMANUL FARISY
Chinese smartphone maker Meizu is one of the players in the budget segment. The M5 is Meizu’s latest entrant and the phone comes in two variants — 2GB RAM and 16GB of internal memory, and 3GB RAM with 32GB of memory that can be expanded up to 128GB. The test mule I got was the 16GB variant, which is priced at roughly ₹7,490. At this price, it competes with the 2GB version of Xiaomi’s Redmi 4. The M5 feels plasticky and doesn’t have a very striking design. Its rounded edges and 2.5D curved-edge glass still ofers a comfortable grip. The bottom part of the phone hosts the fingerprint sensor that doubles up as a home button. However, you have to wake up the phone before using the scanner, so you can’t simply place your thumb on the button and wait. The 5.2-inch screen was bright enough to use outdoors on a sunny day, which is all you can ask for at this price. The 720 x 1,280-pixel resolution is fine for the size and price. There aren’t any navigation keys at all as Meizu has its own navigation scheme – you have to tap/swipe the home button to go back. If you are used to the convenient back button that comes on most other phones,
CM YK
intelligence than us taking over peoples’ jobs in every area, the alarm bells are certainly ringing. And it isn’t just thinking, but practically every kind of physical activity that technology is taking over. Robots can now milk cows on farms while the farmer watches Netflix, robots can run an entire hotel, make decisions for managers, write corporate reports and compose music. Their artificial intelligence is getting alarmingly less artificial by the minute. And as is obvious from even the little bits of smart stuf they do for you already, are only poised to grow exponentially. It’s only a matter
you will find this irritating. The volume and power buttons are placed on the right, and they’re easy to use. The hybrid dual-SIM tray is placed on the left. The speakers and headphone jack are on the bottom rim. The M5 is powered by a MediaTek MT6750 chipset with an octa-core 1.5GHz Cortex A53 processor and Mali-T860 MP2 graphics processor. It runs on Meizu’s own Flyme operating system, which sits atop Android 6.0.1 that seems archaic, now that the latest Nougat is finding its way to other phones. The phone comes with Flyme’s own app store, which contains a good number of apps. There’s no app drawer and your homescreen may fill with apps that you may not even use regularly. The M5 gets a 3,070mAh battery, which I was able to squeeze to just about a day with regular use, so battery performance is average. The M5 sports a 13MP, f/2.2 aperture rear camera and clicked decent pictures during the day and does well with good lighting. There is nothing wrong with it considering its price. However, much like other budget phones, low light images are prone to noise and blurring. The front camera, with 5MP, clicks decent selfies. The Meizu M5 is a decent budget phone,
but it fails to stand out in any area. It faces competition from similarly priced phones from Xiaomi, Lenovo and Motorola, which are betterdesigned, ofer a longer battery life and a superior camera too.
Price: ₹7,490 (2GB RAM & 16GB) & ₹9,499 (3GB & 32GB) Pros: Cheap, decent performance Cons: Outdated Android, average camera
ADOBE SCAN LETS YOU EDIT TEXT Adobe, maker of the Acrobat Reader found on every device and of many other software packages people can’t do without, has come up with a document scanning app for use on a smartphone — iOS or Android. Now there’s no shortage of scanning apps to begin with, but Adobe Scan also recognises text. That means, the text, when captured, isn’t just an image but actually selectable and editable. Holding the phone, with the app installed over a document will lead to an automatic recognition of the boundaries around the text so that the document is captured in a box. Automatic recognition of the page can allow the user to capture page after page, re-order them and create a PDF file quickly enough. The app is free but be mindful that you will need to sign up for Adobe’s cloud account, also free, because this is not only required but needed for storage and sharing too.
of time before everything connected in one’s home begins to talk, make decisions, take action thanks to built-in assistants. Scientists are worried that we are outsourcing our very memory to Google and the internet. Rather than bothering to remember something, we index where and how we can retrieve the information instead. Rather than bothering to work out something, we look it up. What kind of repository our brains will become given all of this, is anybody’s guess. Meanwhile, assistants are going to be second guessing us at everything and getting better at it every day.
Cool and compact JINOY JOSE P
Convertibles are shaking up the laptoptablet market for good. Their success, thanks to the fact that they are powerful, flexible and easy to carry around, has prompted almost all PC players to channel their precious money to this segment. Acer, for one, is trying hard to make its presence felt in the hybrid market, ofering a range of afordable, yet high-quality products. Acer Spin 5 is one the latest convertibles from Acer’s stable. Acer Spin 5 sports a 13.3inch touchscreen display, which is super-responsive, and a backlit, neatly placed and suitably spaced-out keyboard. The body feels plasticky but strong. But if you are decently butterfingered, you’d need an extra grip to make sure you don’t drop the gadget. The Spin 5 runs on Windows 10 Home 64-bit version and is powered by Intel Core i3-7100U processor and 4GB of DDR4 system memory, which doesn’t look so impressive on paper, but when it comes to performance, it delivers a surprise. One can easily multitask with Acer Spin 5. The RAM is upgradeable to 16GB. The full HD (1920 x 1080) IPS display is crisp and sharp. Viewing angles are just kosher, at up to 170 degrees. The device renders images and video reasonably well, thanks to Intel HD Graphics 520. The audio is not loud enough, but if you look for quality, low-decibel audio, Spin 5 is your best bet in town today. Acer claims Spin 5 has Audio Certified for Skype for Business, which could come in handy for
business meetings. It worked well and seamless when tested. The device has an HDMI port and three USB sockets, of which one is dedicated for USB3. There is a microSD slot, but no room for SDHC camera cards. The volume control buttons, placed on the side ridge, are a pain to fiddle with. So is the power button, which would demand quite a lot of probing from your side to be found. The 256GB solid state drive is just enough for professionals, who, we guess, this laptop is intended for. The SSD system helps improve performance considerably. The HD webcam, like many of its ilk, is not a great performer in spite of its claimed 1280 x 720 resolution (photo) and 720p HD audio/video recording. Acer Spin 5’s battery life of up to 10 hours is mighty impressive. It lasted for about six to eight hours when tested (always on-WiFi, good amount of video play and graphics use). The device comes with a one-year international travelers warranty. If you are looking for a compact, cool hybrid laptop that can satisfy your PC needs as well as tablet requirements, Acer Spin 5 is your value for money buy. It’s sleek, stylish and sustainable.
Price: ₹48,000 Pros: Size, display, performance, battery Cons: Slippery body, poor camera
On this budget phone, battery is the best The iVoomi Me 1+ is a good looker too, but what about the rest? MIRZA MOHAMMED ALI KHAN
Another day, and another Chinese smartphone maker releases its latest wares in the country. Just scrolling through online retailers should give you an idea of just how many companies have mushroomed, ofering you smartphones in all sizes and prices. But it’s a good thing. With so much competition, companies are pushed to provide more value for money. iVoomi is one such Chinese smartphone maker, ofering budget Android phones, starting at ₹2,799. It recently launched the Me 1 and the Me 1+, seemingly aimed at entry-level smartphone buyers. The Me 1+, which is reviewed here, is the better powered of the lot, with a 2GB RAM and 16GB of internal storage (expandable) as opposed to the Me 1’s 1GB and 8GB. The first thing that strikes you on unboxing the phone is how light it is, but that changes once you insert the removable 3,000mAh battery. The back panel is plastic, tinted rose gold, and it’s a decent looker. The volume rockers and the power button are on the left side, and this took me a while getting used to, as most phones have them on the right. The bottom bezel houses the back, home, and menu buttons and the top has the earpiece and front camera. The phone has a 2.5D curved glass display with HD IPS and a pixel density of 1280 x 720, but I found it average,
with the icons and the background wallpaper looking chalky. It runs Android 6.0, upgradable to the latest Nougat, according to the company. The 2GB RAM and quad-core processor ensure a decent performance, until you bring on multitasking and extended gaming; that’s when you notice a lag. I also
found the touch quite unresponsive at times and the back button and home button had to be pressed considerably hard to execute those functions. The 8MP rear camera turns in a decent performance, given the phone’s price, with colours well pronounced and sharp images under well-lit conditions. However, as is the case with budget phones, don’t expect too much at night or under low light. The 5MP selfie shooter does okay with Snapchat selfies and video calling. The loudspeaker is underwhelming, hardly making itself heard even at full volume, so keep an external audio enhancement handy. But the earpiece is exceptionally loud even at the lowest possible volume. Battery is where the phone does well. It lasted me well over a day even with regular use of calling and multiple apps. The Me 1+ makes no pretences about what it is — a budget phone, and for its price, it’s decent enough.
Price: ₹4,999 Pros: Battery, looks for its price point Cons: Touch lags in response, loudspeaker not loud at all
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CHENNAI
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BusinessLine THURSDAY • JUNE 15 • 2017
11
PRESIDENTIAL ELECTIONS
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Will the new President be a unanimous choice? Rajnath and Venkaiah to meet Sonia and Yechury on Friday to drive consensus OUR BUREAU New Delhi, June 14
Takes the cake Hindu Sena chief Vishnu Gupta offering cake to a photo of US President Donald Trump, in celebration of the latter’s birthday, in New Delhi on Wednesday PTI
Ruckus in Uttarakhand Assembly Dehradun, June 14
The Congress on Wednesday created an uproar in the Uttarakhand Assembly, demanding a loan waiver for farmers on the lines of Uttar Pradesh, saying if it is not done it will be a breach of a pre-poll promise made by the Prime Minister. Leader of Opposition Indira Hridayesh said if Uttar Pradesh CM Yogi Adityanath can announce a loan waiver why can’t the same be done for farmers in Uttarakhand. PTI
Why the silence, Vishwas asked New Delhi, June 14
Tensions in the AAP continued on Wednesday, with party leader Dilip Pandey questioning colleague and Rajasthan in-charge Kumar Vishwas for remaining silent on Chief Minister Vasundhara Raje of the BJP. “Brother, you launch fervent attacks on the Congress but say that you will not attack Vasundhara. Why?” Pandey tweeted. Vishwas had earlier said he would attack the Raje government, but not make any comments on her personal life. PTI
Puducherry CM challenges Bedi Puducherry, June 14
Puducherry Chief Minister V Narayanasamy on Wednesday dared Lt Governor Kiran Bedi to prove her charges of “corruption and malpractices” in admission to post graduate courses in private medical colleges here. Making a suo moto statement after question hour in the Assembly, he said: “Kiran Bedi should establish her allegations that malpractices were committed in finalising the list of students and that 71 seats were bartered away to private colleges.” PTI
Senior Union Ministers and BJP leaders Rajnath Singh and M Venkaiah Naidu will meet Congress president Sonia Gandhi and CPI(M) general secretary Sitaram Yechury on Friday in connection with the Presidential elections. The meetings are part of the consultation process initiated by the ruling BJP through a committee comprising Home Minister Singh, Urban Development Minister Naidu and Finance Minister Arun Jaitley. The committee was appointed by BJP president Amit Shah on June 12 to hold talks with Opposition parties and allies in a bid to select a consensus candidate for the poll. Although the BJP is busy trying to evolve a consensus, the composition of the electoral college for the President is such that the ruling party is certain to get a candidate of its choice elected to the top post. The Opposition is ready for a symbolic fight, but if the BJP comes up with a name that is acceptable to a majority of the parties, there may not be an election at all. If there are divergent views on the choice of candidate by the BJP, then the election is scheduled to take place on July 17. It is estimated that in the absence of a consensus, the NDA candidate can file nomination by June 23; the date is between the return of Jaitley from his travels abroad (June 17) and the departure of Prime Minister Narendra Modi to the US, on June 24. The BJP’s core group met on Wednesday, when the PM was briefed by Venkaiah and Rajnath
about the steps being taken to evolve a consensus candidate. Venkaiah has reportedly already spoken with Praful Patel (NCP) and Satish Chandra Misra (BSP) in this regard. Patel and Misra, who are expected to meet the panel shortly, are said to have assured Venkaiah their parties would take a call on a candidate after talks with the BJP panel. The notification for the July 17 poll was issued on Wednesday, beginning the nomination process. The last date for filing papers is June 28. After prolonged silence on the issue, Shah constituted the three-member committee for consultations with NDA allies and Opposition on the issue. The President is chosen by the
elected members of both Houses of Parliament and Assemblies of States and Union Territories. Number crunching Each MP carries a weight of 708 votes while the value of an MLA’s vote varies in line with the population of the State that he/she represents. The total pool is about 10.99 lakh votes, with nearly half coming from the 4,120 MLAs and the other half from 776 MPs of both Houses. With its victory in UP and additional seats won in other States, the BJP and its allies now hold over 47.5 per cent of the entire pool. The YSR Congress Party has nearly 2 per cent and the TRS, 1.6 per cent — these have been added to the BJP’s kitty. Favourable noises have also been heard from the AIADMK, which holds about 5.4 per cent of the value of votes.
Chennai, June 14
DMK, the main opposition in the Tamil Nadu Assembly, stalled the proceedings of the House for over 45 minutes on Wednesday, demanding a discussion on allegations of the ruling faction of the AIADMK bribing its MLAs to retain their support. Immediately after the question hour on the first day of the session today, MK Stalin, Leader of Opposition and DMK working president, was on his feet, requesting Speaker P Dhanapal to allow the House take up the issue. The strife-ridden AIADMK has been finding itself at the centre of a controversy over the past two days following a sting operation by a private television channel. The channel had captured videos of SS Saravanan, an AI-
DMK leader MK Stalin (centre) and other party MLAs staging a dharna on in front of the Tamil Nadu Assembly, in Chennai on Wednesday B JOTHI RAMALINGAM
ADMK MLA, speaking of the ruling faction of the AIADMK bribing MLAs to retain their support. However, Saravanan, now a member of the splinter faction led by former Chief Minister O Panneerselvam, categorically denied that he
had made such a statement. He maintained that it was not his voice on the video which had been filmed on some other occasion and doctored. The DMK has taken the issue to court, demanding a CBI probe.
No names yet from Opposition camp; all eyes on BJP’s nominee But Left parties, RJD firm on fielding candidate for ‘ideological’ reasons OUR BUREAU New Delhi, June 14
As the BJP continues to keep its rivals guessing on its nominee for the post of President, diferences of opinion have started emerging from the Opposition camp. While all other Opposition parties want to wait for the BJP’s candidate, the Left parties and the Rashtriya Janata Dal of Lalu Prasad have said they should put up a candidate for “ideological” reasons. At a meeting of the core committee of 10 parties, representing the 17 Opposition parties, Lalu said the fight is ideological. CPI(M) general secretary Sitaram Yechury said at the meeting that the Left parties are for fielding a joint Opposition candidate. He reminded the leaders that the Left had put up freedom fighter Lakshmi Sahgal against APJ Andul Kalam —
DMK demands debate on sting video, legislators evicted from TN Assembly OUR BUREAU
Opposition leaders, representing 17 political parties, holding a meeting to discuss the strategy for the upcoming Presidential elections, in New Delhi on Wednesday PTI
In the Assembly today, DMK members shouted slogans, waved handwritten pamphlets stating “MLAs for sale” and demanded that the House discuss the issue. But the Speaker pointed out that the issue is sub judice and cannot be discussed. He pointed out that this was a precedence set when the DMK was in power earlier. However, the DMK members insisted they be heard. The Assembly proceedings continued after the Speaker ordered the eviction of DMK MLAs. The DMK’s allies, the Congress and the IUML, also staged a walkout. PTI reports that after being removed from the House, Stalin and fellow MLAs resorted to a road blockade outside the Secretariat, leading to their brief detention by the police.
when all the other parties supported Kalam — in the 2002 Presidential elections. No names, however, were discussed at the meeting. To meet again Opposition leader in Rajya Sabha Ghulam Nabi Azad said the 10-member Opposi-
tion panel will meet again to decide on a suitable presidential nominee. Indications from the Opposition camp are that the BJP may field a candidate acceptable to both the DMK and the AIADMK so that the Opposition unity can be disrupted. If the DMK and the AIADMK support the BJP candidate, the BJP may not have to worry about even its own allies like the Shiv Sena.
Among the probables... AGENCIES New Delhi, June 14
While the ruling party is holding its cards close to its chest, the Opposition has already mooted the names of possible candidates and has even held talks with one — former West Bengal Governor Gopalkrishna Gandhi. A retired bureaucrat and a scholar, he is Mahatma Gandhi’s grandson. Earlier
in the day, the Shiv Sena asserted that RSS chief Mohan Bhagwat is the ideal candidate. RJD leader Lalu Prasad vetoed it. “Bhagwat’s views on democracy, backward classes, Constitution of India are known to all,” he said. Former Lok Sabha Speaker Meira Kumar and NCP leader Sharad Pawar are among other names being discussed.
Irked by TDP leaders, Silpa Mohan Reddy quits Joins YSR CP, adding to recurrent trend of party-hopping in Andhra Pradesh M SOMASEKHAR Hyderabad, June 14
The ruling TDP in Andhra Pradesh got a minor jolt on Wednesday as Silpa Mohan Reddy, a former minister and party in charge of Nandyal, quit and joined rival YSR Congress Party (YSR CP). A formidable force in the faction-ridden district, the Silpa brothers, Mohan Reddy and Chakrapani Reddy, have been strong TDP loyalists. Mohan Reddy joined the YSR CP here in the presence of party chief YS Jagan Mohan Reddy. Party hopping has been rampant in the State since 2014, when the TDP came to power in alliance with the BJP (106 seats), and the YSR CP emerged the main opposition with 67 seats in the 175-member Legislative Assembly. The two sides were evenly
matched in the Rayalseema region, which consists of Kurnool, Kadapa, Chittoor and Anantapur districts. The first major shift was by the Bhuma family, with Nagi Reddy, representing Nandyal, and his daughter Akhila Priya of Allagadda, moving from YSR CP to TDP in 2016. In response, the rival Gangula family — Pratap and Prabhakar Reddy — moved to YSR CP from TDP. The latter was rewarded with an MLC seat. Periodically, several MLAs and MLCs of YSR CP moved to the ruling TDP. Mohan Reddy’s quitting was on the cards ever since Chief Minister N Chandrababu Naidu gave Bhuma Akhila Priya a cabinet berth in April. He is aspiring for the Nandyal Assembly seat, which fell vacant due to the demise of
TDP leader Silpa Mohan Reddy joining the YSR Congress Party in the presence of YSR CP president YS Jagan Mohan Reddy, in Hyderabad on Wednesday PTI
Bhuma Nagi Reddy in March. His eforts to win Naidu's favour through repeated meetings in Vijayawada and discussions seem to have failed, precipitating the decision to leave the party. A couple of days ago, Mohan Reddy alleged that the TDP leadership — from the CM downwards — were side-lin-
ing him in the afairs of the district and party. It’s no secret that he and his brother Chakrapani, an MLC and district president of TDP, have been unhappy ever since Naidu admitted the Bhuma family in despite their reservations. There is much speculation about what Chakrapani will do now.
With wary eye on Vaghela, Gujarat Chouhan meets deceased farmers’ kin, gives ₹1 cr each in aid Congress parades 13 ‘loyal’ MLAs PRESS TRUST OF INDIA Mandsaur (M.P.), June 14
with the Congress, and accused the BJP of spreading rumours about their alleged switch-over.
OUR BUREAU Gandhinagar, June 14
Even as the Gujarat Congress is struggling to keep ‘rebel’ leader Shankersinh Vaghela in check, it extracted an oath of fealty from 13 of its 57 MLAs and paraded them before the media on Tuesday evening. The faction-ridden Opposition party is set to launch an agitation on Friday in support of farmers and the Patidars, among others. Change in leadership Reports, meanwhile, suggested that Rahul Gandhi might replace the party’s Gujarat unit chief Bharatsinh Solanki on Friday to keep a lid on simmering rebellion among different factions. Vaghela, an ex-Chief Minister and former RSS-BJP strongman, was reported to have given an ‘ultimatum’ to the party leadership to replace Solanki by June 15. Amid intense speculation that 26 out of 57 Congress legislators might join the ruling BJP any time along with CM YK
X W There is intense speculation that 26 out of 57 Congress MLAs in Gujarat might join the ruling BJP along with Shankersinh Vaghela.
the 77-year-old Vaghela, even before voting takes place for the Presidential election, an apparently panicked party leadership scrambled 13 MLAs from the “Bapu (as Vaghela is known) faction” and paraded them before the media. The 13 legislators insisted they were ‘whole-heartedly’
Defection rumours “The BJP has failed on all fronts and is trying to spread rumours about our defection as part of its strategy to win the polls,” said Balwantsinh Rajput, Congress chief whip in Gujarat the Assembly and Vaghela’s relative. Interestingly, Vaghela’s son Mahendrasinh, MLA, and his loyalist Raghavji Patel, who had openly expressed dissatisfaction over party afairs, were not present at this parade-meeting. Old-timers recall the Vaghela style of functioning in 1995-96 when, as a top BJP rebel, he had scrambled 47 out of 121 BJP MLAs and airlifted them from Gandhinagar to Khajuraho — his own party did not have the foggiest idea of what he was up to. Little wonder that both the BJP and Congress are now keeping their eyes peeled.
Madhya Pradesh CM Shivraj Singh Chouhan consoling the kin of a farmer killed in the recent police firing, in Mandsaur district’s Lodh village on Wednesday PTI
Madhya Pradesh Chief Minister Shivraj Singh Chouhan on Wednesday visited Mandsaur, where five farmers were allegedly killed in police firing during a protest, and handed over ₹1 crore each as aid to the kin of the deceased. Chouhan, along with wife Sadhna, reached Mandsaur on a special plane and first went to Badwan village to meet the kin of Ghanshyam Dhakad, who was among the
six killed in police firing last week. Five of them were allegedly killed in police firing, while another farmer, who was allegedly beaten up by the police, succumbed to his injuries later. The aid was sanctioned from the CM’s discretionary fund. Chouhan assured the family members that strict action will be taken against those guilty of killing the farmers. He later visited the family members of deceased farmers
Satyanarayan and Chainram Patidar. On the demand of Chainram’s father Ganpat, he announced a tarred road from Kuchlod to Nayakheda, a community centre in the village and a memorial for the deceased farmer. Meanwhile, Congress heavyweight Jyotiraditya Scindia, who was prevented from going to Mandsaur yesterday, is slated to sit on a ‘satyagraha’ at the Dusserah maidan in Bhopal, to protest the killing of farmers.
Gurung threatens to intensify Gorkhaland movement PRESS TRUST OF INDIA Darjeeling, June 14
Gorkha Janmukti Morcha (GJM) chief Bimal Gurung on Wednesday threatened to intensify the movement for a separate Gorkhaland and urged tourists not to visit Darjeeling as they might be inconvenienced. “An indefinite bandh of the government and Gorkhaland Territorial Administration (GTA) oices has been called.
The movement for Gorkhaland will be intensified,” he said. Gurung also said he would resign from the post of GTA chief executive shortly. He, however, added that GJM MLAs will not resign from the West Bengal Assembly. “I will not welcome the tourists as they may face problems. There will be protests and strikes in the hills,” he added.
State Tourism Minister Gautam Deb slammed the GJM chief for his statement. “Darjeeling is not a property of anybody. He (Gurung) should not make such statements. No one is above the law,” he said. Meanwhile, the GJM-led shutdown in the Darjeeling hills entered day three today with rallies being taken out to demand a separate Gorkhaland State and police
patrolling troubled areas to quell any violence. Most shops in and around Chowkbazar and Mall Road in the hill town were closed. Police was on high alert with patrolling under way in several areas. No untoward incident was reported till afternoon. GJM supporters had turned violent and pelted stones at the police when they were stopped yesterday.
GJM head Bimal Gurung at a news confierence n Darjeeling on Wednesday AFP
. ...... . . ...CH-X
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MARKET WATCH
12
BusinessLine THURSDAY • JUNE 15 • 2017
‘Staples, energy likely to support earnings recovery’
QUICKLY
PRIYA KANSARA Mumbai, June 14
All eyes on Fed Asian stocks were mostly lower on Wednesday as investors remained cautious ahead of the US Federal Reserve meet and Wall Street’s tech-driven rise of Tuesday failed to cut ice AFP
Proposal for 26% stake-sale in SCI New Delhi, June 14
NITI Aayog has proposed strategic sale of about 26 per cent stake in Shipping Corporation of India, which could fetch about ₹960 crore to the exchequer. According to sources, the core group of secretaries on disinvestment headed by the Cabinet Secretary, discussed the proposal and has mandated the Shipping Ministry to find out legal hassles, if any, in the process. The government, at present, holds 63.75 per cent stake in Navratna PSU Shipping Corporation of India. After the sale of 26 per cent stake, government holding in the company will come down to 37.75 per cent. PTI
Weak retail sales drag US stocks New York, June 14
US stocks opened mixed on Wednesday as investors looked for safety following a drop in retail sales last month. It was the first decline in more than a year, and investors are buying high-dividend stocks, government bonds and gold and selling bank stocks. The Federal Reserve is expected to raise interest rates later in the day. The S&P 500 added 1 point, or 0.1 per cent, to 2,441 as of 10 a.m. Eastern Time. The Dow Jones industrial average picked up 9 points to 21,337. The Nasdaq composite added 9 points, or 0.1 per cent, to 6,229. AP
Axis Mutual floats Nifty ETF Mumbai, June 14
Axis Mutual Fund on Tuesday launched the Axis Nifty ETF, according to a notice on the fund house’s website. The open-ended equity scheme will close for subscription on June 21. Axis Nifty ETF will invest at least 95 per cent of the corpus in equity and equity-related instruments of the Nifty 50 index and the rest in debt and money market instruments with residual maturity of not more than 91 days. Minimum application size is ₹5,000 and in multiples of ₹1 thereafter. There is no exit load. COGENCIS
Investors can take advantage of the recent selling pressure at higher levels in the Indian equity markets as they are not expensive yet, according to Sudhakar Shanbhag, Chief Investment Officer, Kotak Mahindra Old Mutual Life Insurance. He estimates allocation to equity in his unit-linked funds to move higher
R1
R2
9600
9550
9660
9705
The price-to-book band of the equity market over the last 15 years has remained in the range of 2.1 to 6.4 times. We are currently at about 3.6 times. With earnings bottoming out and velocity of flows on the domestic side, markets can give returns in line with earnings growth over the medium term. How much earnings growth do you expect in FY18?
The March 2017 quarter saw an
S2
R1
R2
1655
1680
1690
OUR BUREAU Mumbai, June 14
Capital market regulator SEBI has reviewed margin trading facility guidelines to enable greater participation. The facility will be available for all Group 1 securities and those that meet the conditions for inclusion in the derivatives segment of the stock exchanges. Bringing in more transparency, SEBI has also prescribed norms for brokers to provide the margin trading facility to clients and its disclosure to stock exchanges. Leveraging exposure By availing this facility an investor can leverage exposure in a particular stock with borrowed
COMMENT
Consider initiating fresh long positions with a fixed stop-loss if the contract moves beyond 9660
money or securities besides pumping in his own resources. Corporate brokers with net worth of at least ₹3 crore will be eligible to provide MTF to their clients. They would have to submit a half-yearly certificate from an auditor confirming the net worth to the exchange, said SEBI in a circular on Tuesday. At any point in time, the total indebtedness of a broker should not exceed five times his net worth, it added. No to swapping For providing MTF, a broker may use his own funds or borrow only from banks or RBI-regulated NBFCs. Brokers are not allowed to
COMMENT
Initiate short positions with a tight stop-loss only if the stock slips below ₹1667 levels
S1
S2
R1
R2
940
970
980
COMMENT
Initiate fresh long positions with a tight stop-loss only if the stock climbs above ₹970 levels
₹299 • ITC S1
S2
R1
R2
297
293
303
306
COMMENT
Consider short positions with a stiff stop-loss if the stock of ITC reverses down from ₹303 levels
₹169 • ONGC S1
S2
R1
R2
167
165
171
174
COMMENT
Consider initiating fresh long positions with a tight stop-loss only if the stock advances above ₹171
₹1355 • Reliance Ind. S1
S2
R1
R2
1340
1325
1365
1380
COMMENT
Make use of intraday declines to go long while maintaining a fixed stop-loss at ₹1340 levels
₹284 • SBI S1
S2
R1
R2
281
279
286
289
COMMENT
Initiate fresh long positions with a fixed stop-loss only if the stock of SBI rallies above ₹286 levels
₹2470 • TCS S1
S2
R1
R2
2450
2430
2490
2510
COMMENT
Consider short positions with a tight stop-loss only if the stock declines below ₹2450 levels
OUR BUREAU
GTPL Hathway plans to raise up to ₹485 crore, comprising a mix of ₹240 crore via fresh issue of shares and the remaining through an oferfor-sale of up to 1.44 crore shares in the price band of ₹167-170 a share. The IPO will remain open
from June 21 to 23. The oferfor-sale is being made by promoters Aniruddhasinhji Jadeja, Kanaksinh Rana, Amit Shah, Gujarat Digi Com and Hathway Cable and Datacom. Bids can be made for a minimum of 88 equity shares and in multiples of 88 thereafter. The book-running lead
YOGANAND D BL Research Bureau
The stock of Tata Cofee jumped almost 4 per cent with good volume on Wednesday, breaking above a key resistance level of ₹132. Since taking support at ₹85 in May 2016, the stock has been on a long-term uptrend. Following a corrective decline, the stock found support at around ₹110 in December 2016 and resumed its uptrend. Within this uptrend, the stock witnessed a prolonged sideways consolidation phase. But the recent break above the key resistance at ₹132 has strengthened the CM YK
The insurance industry witnessed a growth of 18 per cent in individual regular premium over the last three years on account of shift to financial assets (more post-demonetisation). The premium growth is expected to continue to be in the 2025 per cent range during FY18. This estimate has an upward
uptrend and the stock has moved out of its consolidation phase. The stock now trades well above its 50- and 200-day moving averages. Moreover, buying interest is being seen as the price rate of change indicator is featuring in the positive territory. The outlook for the stock is bullish. It can continue the uptrend and reach the price targets of ₹140 and ₹143. Traders can buy the stock with stop-loss at ₹131.5. (Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
VLCC plans IPO by February ₹400 crore, with an option to retain oversubscription of ₹200 crore. The Luthra family currently holds about 83 per cent in the company. The company is also in talks for both domestic and international acquisitions. VLCC recently acquired doorstep beauty treatment service provider VanityCube, and directselling dietary-supplements and nutraceuticals company WellScience Health.
ABHISHEK LAW Kolkata June 14
Home-grown beauty and wellness company VLCC is planning its IPO by February next year. Its previous plan of an IPO was delayed because of demonetisation. According to Vandana Luthra, Founder & Mentor, VLCC, the company is likely to file its draft red herring prospectus by September. “By February (2018), the IPO should hit the market. We had plans for an IPO last year but our (merchant) bankers advised us against it due to demonetisation. We are going to file a fresh draft red herring prospectus (DRHP) with the regulator soon,” she told BusinessLine during an interview. The previous DRHP (which was valid till December 2016) said the company would look to raise
New focus areas According to Luthra, the FMCG business which accounts for 30 per cent of its ₹1,000-crore revenue is expected to exceed the services businesses in the next three to five years. Beauty and wellness services account for ₹600 crore (approximate 60 per cent) of its total turnover.
Gokaldas Exports open offer price is ‘fair’ Offer opens tomorrow
Advisory LLP, Westex InfoTech Pvt Ltd and Gautham Madhavan (persons acting in concert), have made an open offer to the shareholders of Gokaldas Exports for acquisition of 91.80 lakh shares, representing 26 per cent of the expanded voting share capital of the company. The open ofer, which opens for subscription on Friday, will close on June 30. The members of IDC further said that as the closing market
OUR BUREAU
managers to the ofer are JM Financial Institutional Securities, BNP Paribas, Motilal Oswal Investment Advisors and YES Securities. GTPL Hathway is India’s leading cable TV distribution company reaching an estimated eight million households in over 169 cities across 10 States.
Chennai, June 14
The Committee of Independent Directors (IDC) of Gokaldas Exports has said the ofer price of ₹63.25 a share ofered to public shareholders by the acquirer is fair and reasonable, and in accordance with SEBI regulations. Clear Wealth Consultancy Services LLP (acquirer) along with Mathew Cyriac, Gazania
price of the shares as on June 12 was ₹79.15, which was higher than the price ofered, shareholders are recommended to do an independent evaluation of the ofer price. The open ofer was mandatory after the acquirer, along with PACs, agreed to acquire 1.395 crore shares, representing 39.94 per cent of the current voting share capital, at a price of ₹42 a share from its current promoter Blackstone FP Capital Partners.
NSE Futures Type-Exp-Stk.Pr
Open
Banknifty-Jun 23511.00 Banknifty-Jul 23560.00 Nifty-Jun 9618.60 Nifty-Jul 9641.20 ACC-Jun 1615.15 Adanient-Jun 133.05 Adaniports-Jun 360.00 Adanipower-Jun 27.45 ALBK-Jun 67.75 Ambujacem-Jun 231.65 Andhrabank-Jun 58.30 Apollotyre-Jun 252.10 Arvind-Jun 378.05 Ashokley-Jun 95.25 Asianpaint-Jun 1140.15 Auropharma-Jun 607.60 Axisbank-Jun 509.65 Bajaj-Auto-Jun 2835.60 Bajfinance-Jun 1360.00 Bankbaroda-Jun 171.30 Bankindia-Jun 137.35 BEL-Jun 165.45 BEML-Jun 1316.60 Bharatfin-Jun 675.05 Bharatforg-Jun 1145.25 Bhartiartl-Jun 363.75 BHEL-Jun 140.40 Biocon-Jun 1015.15 BPCL-Jun 698.05 Cadilahc-Jun 544.85 Canbk-Jun 349.20 CAPF-Jun 679.10 Ceatltd-Jun 1836.15 Centurytex-Jun 1064.25 Cholafin-Jun 1109.00
High
23525.00 23560.00 9647.00 9664.40 1615.15 134.10 362.30 28.10 73.00 235.50 61.35 257.00 380.20 95.50 1144.90 609.50 511.35 2848.05 1375.35 174.60 139.50 169.25 1357.15 700.90 1189.30 369.70 140.85 1020.45 702.50 544.85 355.25 700.85 1863.90 1066.40 1113.90
Low
23361.85 23385.10 9598.25 9618.00 1586.40 130.75 356.80 26.90 66.85 229.80 57.65 249.60 374.95 93.25 1123.50 596.80 501.85 2822.00 1355.10 169.25 134.30 165.45 1315.25 665.95 1145.25 362.00 138.05 1005.25 692.10 530.10 344.45 672.50 1818.20 1041.55 1087.60
Close
23486.40 23511.20 9637.60 9656.10 1605.40 131.90 361.25 27.85 72.20 234.95 61.05 256.00 377.65 94.90 1143.50 604.00 509.60 2833.95 1367.30 172.45 138.90 166.90 1350.75 697.85 1178.70 367.80 139.15 1010.55 695.45 531.60 354.25 694.05 1851.85 1055.60 1096.65
Qty Vol
50441 1471 78573 3798 2391 1909 2553 1097 4746 1809 2021 6860 1796 2731 2095 4052 9072 1155 2700 9957 5821 1546 3961 10520 2384 1843 1896 3066 2532 1416 6733 1294 8299 2875 1306
OI
2616.28 110.16 21426.53 1566.53 1446.00 24312.00 8907.50 127420.00 23250.00 16365.00 23160.00 14913.00 6336.00 53781.00 3087.00 13892.20 37196.40 1486.50 3676.50 44296.00 32550.00 27859.50 2798.40 16745.00 2850.60 33416.90 38050.00 3930.00 10459.20 2995.20 15336.73 3609.60 1738.10 7646.65 383.00
Type-Exp-Stk.Pr
Open
Cipla-Jun 552.55 Coalindia-Jun 259.15 Dabur-Jun 294.20 Dcbbank-Jun 207.50 DHFL-Jun 443.30 Divislab-Jun 647.85 DLF-Jun 185.85 Drreddy-Jun 2683.95 Eichermot-Jun 29201.05 Enginersin-Jun 153.20 Escorts-Jun 747.35 Federalbnk-Jun 115.05 Fortis-Jun 189.20 GAIL-Jun 382.65 Glenmark-Jun 635.20 Gmrinfra-Jun 18.85 Godrejind-Jun 624.95 Grasim-Jun 1126.05 Hcltech-Jun 849.35 HDFC-Jun 1667.45 Hdfcbank-Jun 1665.35 HDIL-Jun 86.35 Heromotoco-Jun 3753.45 Hexaware-Jun 229.15 Hindalco-Jun 201.00 Hindpetro-Jun 538.20 Hindunilvr-Jun 1092.00 Ibrealest-Jun 182.55 Ibulhsgfin-Jun 1159.60 Icicibank-Jun 318.70 IDBI-Jun 57.60 IDEA-Jun 78.95 IFCI-Jun 24.80 Indiacem-Jun 209.70 Indianb-Jun 302.00
High
554.20 259.45 294.80 208.60 450.70 650.75 190.45 2707.65 29279.90 157.10 747.45 117.35 191.75 385.25 637.80 19.90 649.10 1130.35 857.20 1670.25 1668.80 90.45 3819.00 238.40 201.50 548.75 1109.60 187.75 1166.00 321.40 60.90 79.30 26.00 211.70 308.85
Low
539.05 257.10 289.05 205.15 442.05 643.40 183.65 2655.05 29041.25 152.35 715.50 114.40 187.15 380.60 630.25 18.20 621.10 1109.30 843.05 1651.65 1659.20 85.75 3753.45 227.40 196.30 537.35 1085.50 180.40 1146.75 314.25 57.10 76.60 24.65 207.45 297.00
Close
542.45 257.90 291.10 207.10 447.55 644.70 189.00 2675.50 29167.85 156.45 720.75 116.65 188.05 382.80 635.45 19.40 647.60 1118.80 856.00 1658.85 1665.85 89.85 3807.10 236.30 200.50 547.40 1105.35 186.35 1163.00 317.70 60.30 77.45 25.65 210.45 307.30
Qty Vol
2320 1727 1101 1095 7695 1867 7000 6419 1099 2660 4150 3678 1397 1750 1672 4120 2701 1746 2054 4960 6122 1550 2042 5584 7147 2998 2708 1293 2415 14361 2483 1819 1317 2487 1712
OI
6616.00 20780.80 11860.00 6093.00 21084.00 7262.40 41320.00 2464.20 121.73 15428.00 3004.10 50699.00 23830.20 12566.00 7217.70 244530.00 1861.50 5724.00 6869.80 8895.00 23404.50 26304.00 1137.40 3999.00 36284.50 18040.05 9287.40 24480.00 12096.00 102687.50 38992.00 74942.00 82632.00 26278.00 3292.00
Type-Exp-Stk.Pr
Open
Indusindbk-Jun 1495.00 INFY-Jun 961.30 IOC-Jun 419.55 IRB-Jun 226.65 ITC-Jun 306.15 Jetairways-Jun 532.85 Jindalstel-Jun 122.75 Jisljaleqs-Jun 106.40 Jswsteel-Jun 197.75 Jublfood-Jun 963.00 Justdial-Jun 402.50 Kotakbank-Jun 973.75 Ktkbank-Jun 174.20 L&Tfh-Jun 132.00 Lichsgfin-Jun 781.15 LT-Jun 1746.85 Lupin-Jun 1184.00 M&M-Jun 1431.70 M&Mfin-Jun 347.00 Maruti-Jun 7366.35 Mcdowell-N-Jun 2379.75 MCX-Jun 1065.45 Mindtree-Jun 534.60 Mothersumi-Jun 478.00 MRF-Jun 71902.45 Muthootfin-Jun 465.80 NCC-Jun 91.10 ONGC-Jun 169.85 PEL-Jun 3027.45 Petronet-Jun 429.95 PFC-Jun 131.20 PNB-Jun 147.25 Powergrid-Jun 211.00 Raymond-Jun 715.35 Rblbank-Jun 512.55
High
1506.10 965.95 425.00 229.80 306.50 539.55 123.70 108.90 200.60 965.00 415.70 974.10 175.70 138.00 781.45 1774.00 1193.50 1436.95 353.40 7416.00 2394.65 1088.00 538.30 486.75 72129.95 479.40 92.05 170.75 3027.45 434.00 131.50 152.25 213.25 731.80 516.40
Low
1489.25 955.40 419.40 226.00 300.60 526.60 120.20 105.70 196.35 945.65 398.55 966.55 172.10 131.60 771.55 1735.70 1177.00 1409.00 342.65 7353.00 2362.15 1053.50 517.95 477.55 71000.00 460.25 89.90 168.75 2970.50 428.20 128.80 146.05 210.35 705.70 503.15
Close
1501.75 963.25 421.85 228.65 301.20 535.55 123.00 108.25 198.65 960.10 410.15 971.30 174.65 137.60 777.00 1766.40 1186.10 1411.65 351.95 7384.75 2372.85 1071.65 524.55 480.40 71465.10 477.35 91.00 170.15 2997.45 430.45 130.45 151.45 211.00 725.00 511.65
Qty Vol
2456 7127 2954 1369 4292 3356 2635 2183 2880 1612 3573 2208 1768 3396 3656 5673 4324 3392 3694 3918 1337 2653 1575 2644 2426 1692 1319 2256 1378 1090 2036 9539 1766 2303 2749
OI
5080.20 33640.00 28236.00 17162.50 42957.60 4130.00 42421.50 40221.00 59349.00 2676.50 4171.20 9254.40 24920.13 16753.50 4847.70 6799.00 8132.80 5256.00 11797.50 1657.50 2427.00 1675.50 3690.00 7560.00 37.80 1618.50 22904.00 54225.00 778.50 8916.00 43968.00 50715.00 21980.00 1588.00 9749.00
Type-Exp-Stk.Pr
Recltd-Jun Relcapital-Jun Reliance-Jun Relinfra-Jun SAIL-Jun SBIN-Jun Southbank-Jun Srtransfin-Jun Sunpharma-Jun Suntv-Jun Suzlon-Jun Syndibank-Jun Tatacomm-Jun Tataelxsi-Jun Tataglobal-Jun Tatamotors-Jun Tatamtrdvr-Jun Tatasteel-Jun TCS-Jun Techm-Jun Titan-Jun Torntpower-Jun Tvsmotor-Jun Ultracemco-Jun Unionbank-Jun UPL-Jun VEDL-Jun Voltas-Jun Wipro-Jun Wockpharma-Jun Yesbank-Jun ZEEL-Jun
Open
189.40 585.40 1318.15 467.00 55.65 286.65 28.85 967.50 538.80 815.00 19.00 78.00 748.20 1540.15 157.25 452.15 279.30 507.00 2464.90 395.10 521.80 183.05 552.55 4085.80 151.00 848.10 238.95 493.05 260.95 632.50 1497.85 511.00
High
189.50 608.75 1361.80 478.40 56.60 287.65 29.30 968.00 542.05 832.20 19.05 81.70 756.65 1583.65 161.25 454.20 279.35 512.00 2484.00 400.70 525.45 186.50 553.95 4093.45 155.50 851.00 239.45 495.25 260.95 632.50 1502.05 515.70
Low
Close
184.20 584.10 1317.75 463.85 55.55 283.55 28.50 947.55 533.05 807.05 18.65 77.60 742.05 1537.30 155.60 448.15 275.10 502.20 2457.85 392.50 516.55 179.50 544.05 4004.55 148.25 834.40 234.55 484.05 253.50 622.00 1452.10 508.00
185.85 599.10 1358.90 475.45 56.15 285.70 29.25 953.65 540.85 828.60 18.85 81.00 745.85 1556.45 159.20 453.30 276.50 505.05 2476.40 397.80 523.90 185.05 547.45 4071.90 154.65 844.10 237.05 493.40 257.40 628.15 1456.30 514.60
Qty Vol
OI
3749 10690 29467 6380 1416 10927 1245 1094 6024 4425 1953 3645 2430 2580 4296 5863 1683 10393 3975 2202 1699 1549 1859 3031 5020 1555 9421 1851 2059 1270 19962 1699
43152.00 12337.50 15437.00 11137.10 76932.00 76494.00 98594.48 3110.40 36739.50 7447.00 357870.00 18234.00 7921.90 1166.00 29488.50 36156.00 20015.10 29346.00 6457.75 12019.70 5551.50 4068.00 5992.00 1925.40 22368.00 7323.60 58824.50 6394.00 27645.60 3383.40 8474.55 9014.20
Qty: No of Contracts; Vol: Volumes; OI: Open Interest(in 000s)
NSE Options Type-Exp-Stk.Pr
Tata Coffee (₹134.6)
Kotak Life Insurance’s total AUM is currently about ₹21,200 crore. The ratio of unit-linked to traditional funds is 55:45. I expect the AUM to grow in the range of 30-35 per cent during FY18. We hold about 14 per cent equity in our traditional policyholders’ funds and the same in unit-linked is about 55 per cent. Allocation to equity in unitlinked is expected to move higher than the current 55 per cent due to the stellar performance of equity as an asset class.
What is the outlook on growth in the life insurance industry and Kotak Life?
the client to the broker, should be in the form of cash or cash equivalent, it said. “The stocks deposited as collateral and the stocks purchased using the margin facility shall be identifiable separately and no co-mingling will be allowed for computing the funded amount,” SEBI said. Brokers have to maintain separate client-wise ledgers for funds and securities of clients availing margin trading facility. “Any disputes arising between the client and the stock broker in margin trading should be covered under the investor grievance redressal and arbitration mechanism of the stock exchange,” SEBI said.
GTPL Hathway plans to raise ₹485 cr via public issue
S1, S2: Support 1 & 2; R1, R2: Resistance 1 & 2.
TODAY'S PICK
use the margin facility of one client to another, even if it is authorised by the client. In addition, brokers have to provide the stock exchange with details on gross exposure, including name of the clients and the PAN, category of holding, name of the scrips (collateral and funded) and if they have borrowed funds for the facility, name of the lenders and the amount borrowed. The “total exposure” of the broker towards MTF should not exceed the borrowed funds and 50 per cent of his net worth. Brokers have to ensure that the exposure to a single client does not exceed 10 per cent of the “total exposure” of the broker. The initial margin, payable by
What is your current portfolio size? What is the distribution between debt and equity? How will size and distribution look like in FY18?
I am underweight on PSU banks (selective approach), utilities, upstream companies, metals, telecom and information technology and pharmaceuticals.
We have not had any material changes in the portfolio, since the economy is still consumption- and government spending-dependent at this stage. From a sector perspective, the portfolio is more focussed on the consumption than the in-
Z Y
bias as early signs during Q1 are very encouraging. Kotak Life Insurance has seen a substantial growth of 38 per cent over the same period and maintained fifth position among private players.
What are you underweight on?
Margin trading facility: Regulator prescribes norms for stock brokers
₹958 • Infosys 950
What have you churned in the last six months? Why?
CIO, Kotak Mahindra Old Mutual Life Insurance
₹1670 • HDFC Bank S1
What are the positive and negative triggers?
What will be the impact of GST on GDP and earnings growth?
SUDHAKAR SHANBHAG,
Mumbai, June 14
1667
GDP growth and earnings are likely to be adversely impacted by GST. But, the impact would be temporary. We expect real GDP growth to be in the range of 7-7.5 per cent in FY18.
vestment side of the economy. Within consumption, I prefer discretionary consumption, cement, private sector banks, automobiles and media (in that order). On the investment side, I like capital goods, gas and downstream companies.
O
I prefer discretionary consumption, cement, private sector banks, automobiles and media (in that order). On the investment side, I like capital goods, gas and downstream companies
9637 • Nifty 50 Futures S2
What is your view on the Indian equity markets?
Besides the trend of movement to financial savings, earnings recovery, GST implementation and normal monsoon are positives. India’s cost of capital will progressively reduce, especially as seen from bond yields. The consequent expansion in the ROCE-COC (return on capital employed to cost of capital) spread could be one of the drivers of the next leg of re-rating in Indian equities. De-globalisation can be a worry in addition to fasterthan-expected rate hikes in the US.
early sign of earnings recovery against expectations. We are expecting earnings to be in the mid-teens during FY18. From an earnings perspective, staples and energy are expected to support the recovery compared to previous periods.
Z Y
DAY TRADING GUIDE S1
than the current 55 per cent due to the stellar performance of equity as an asset class. Excerpts:
Open
High
S&P CNX NIFTY [75] CE-Jun-9400 235.40 259.15 CE-Jun-9500 156.40 172.00 CE-Jun-9600 88.40 99.90 CE-Jun-9650 65.00 70.25 CE-Jun-9700 39.60 48.15 CE-Jun-9750 24.10 30.45 CE-Jun-9800 15.10 18.95 CE-Jun-9850 9.10 11.40 CE-Jun-9900 5.65 6.85 CE-Jun-10000 2.55 2.85 CE-Jun-10300 0.40 0.45 CE-Jul-9600 152.25 164.00 CE-Jul-9700 101.55 109.20 CE-Jul-9800 61.70 67.95 CE-Jul-9900 35.20 39.25 CE-Jul-10000 19.85 22.05 PE-Jun-8900 3.25 3.40 PE-Jun-9000 4.45 4.65 PE-Jun-9100 5.35 5.70 PE-Jun-9200 7.45 8.70 PE-Jun-9300 11.45 14.60 PE-Jun-9350 17.10 19.25 PE-Jun-9400 20.90 25.80 PE-Jun-9450 28.60 33.65 PE-Jun-9500 38.95 45.35 PE-Jun-9550 50.95 59.65 PE-Jun-9600 67.30 79.55 PE-Jun-9650 85.50 103.20 PE-Jun-9700 118.40 133.95 PE-Jun-9800 192.90 210.45 PE-Jul-9000 17.10 17.80 PE-Jul-9200 30.85 32.45 PE-Jul-9300 42.95 45.50 PE-Jul-9400 60.00 63.80 PE-Jul-9500 82.85 89.00 PE-Jul-9600 114.00 123.00 PE-Jul-9700 160.05 170.25 AXIS BANK LIMITED [1200] CE-Jun-510 10.40 11.25 CNX BANK INDEX [40]
Low
Close
Qty Vol
OI
219.40 140.05 75.10 50.75 33.30 20.00 12.35 7.40 4.55 2.05 0.30 138.75 90.15 54.95 31.30 17.00 2.85 3.55 4.25 5.90 9.35 12.90 17.10 21.75 29.45 40.15 55.00 74.20 93.40 168.60 14.40 25.50 36.25 51.25 71.95 100.80 142.60
251.45 165.90 94.80 66.50 45.20 28.20 17.50 10.60 6.30 2.70 0.35 159.20 104.70 64.95 37.45 20.90 2.95 3.70 4.45 6.45 10.50 13.95 18.65 23.95 33.05 43.85 59.70 79.10 105.85 176.65 14.80 26.65 37.60 53.30 75.45 105.20 146.95
4447 19001 136703 42057 181322 26286 107075 8056 47952 34581 1507 2336 6025 5763 4586 10300 4597 13980 12396 27648 45997 3247 88728 19888 144359 29801 191054 11376 54488 5557 3300 4216 4937 3958 3998 3519 3071
1020225 2139225 4657950 953925 5953125 680250 4464225 512025 2681325 3115275 47325 621000 808575 830925 574200 1230375 763050 3424725 1481625 2774350 3701775 251775 5336250 1164075 7251600 744300 6144150 467625 1868325 409275 861450 912600 1125150 819300 996450 752175 476025
7.55
10.35
1217
739200
Type-Exp-Stk.Pr
CE-Jun-23300 CE-Jun-23400 CE-Jun-23500 CE-Jun-23600 CE-Jun-23700 CE-Jun-23800 CE-Jun-23900 CE-Jun-24000 CE-Jun-24100 CE-Jun-24200 CE-Jun-23500 CE-Jun-23600 CE-Jun-23700 CE-Jun-23800 CE-Jun-24000 CE-Jun-23000 CE-Jun-23500 CE-Jun-23600 CE-Jun-23700 CE-Jun-23800 CE-Jun-24000 CE-Jun-24500 PE-Jun-21000 PE-Jun-22600 PE-Jun-22700 PE-Jun-22800 PE-Jun-22900 PE-Jun-23000 PE-Jun-23100 PE-Jun-23200 PE-Jun-23300 PE-Jun-23400 PE-Jun-23500 PE-Jun-23600 PE-Jun-23700 PE-Jun-23000 PE-Jun-23200 PE-Jun-23300 PE-Jun-23400 PE-Jun-23500 PE-Jun-22000
Open
249.45 188.00 110.60 65.00 34.95 13.95 6.10 4.35 2.65 0.90 168.00 120.80 98.30 58.00 25.10 575.05 228.55 185.00 130.95 105.00 60.00 11.00 0.25 0.95 1.25 1.50 3.50 3.05 8.00 16.00 30.00 55.00 85.00 132.10 192.00 33.75 71.95 94.70 127.75 169.15 17.00
High
258.15 188.00 116.35 66.00 41.70 17.95 8.00 4.35 2.65 0.90 185.00 135.55 98.30 64.00 27.55 601.90 250.00 196.30 152.60 116.00 62.45 11.00 0.30 1.55 2.35 3.60 6.10 12.00 19.75 34.45 59.15 95.00 145.00 210.00 288.00 50.05 95.30 133.65 170.00 221.60 17.00
Low
157.45 99.40 57.35 28.95 14.20 6.35 2.90 1.25 0.55 0.35 128.00 90.00 60.70 40.00 16.55 485.00 185.00 142.35 108.25 80.00 43.00 7.15 0.15 0.30 0.35 0.50 0.75 2.00 3.80 7.20 15.10 30.00 56.75 101.40 165.80 25.40 51.70 71.85 101.30 135.60 11.10
Close
229.70 151.70 89.70 46.65 20.45 7.75 3.25 1.45 0.75 0.45 170.90 120.60 83.05 55.00 22.80 574.80 231.95 181.40 139.10 105.85 56.45 8.80 0.15 0.45 0.55 0.70 1.10 2.90 5.50 10.10 19.95 37.35 68.40 118.40 186.15 28.55 55.95 76.55 106.15 146.80 12.75
Qty Vol
8512 57045 176304 214475 179313 162350 98968 87475 19746 8489 4429 2600 3899 3582 3492 1745 10594 3493 3612 2695 14525 3510 42344 7303 13369 41038 54855 146007 130096 182290 195961 218148 147412 24747 5851 5237 1894 2498 3156 3757 3936
OI
48400 131640 398800 680520 783600 771320 463800 1022600 167520 124920 46400 40880 45800 48880 69480 373480 543000 81320 55360 55240 470840 203360 37280 36760 106160 347800 411440 822880 314320 579560 621480 386360 359880 105080 64120 91720 25440 38320 31280 43360 529960
Type-Exp-Stk.Pr
Open
High
Low
PE-Jun-22500 37.90 46.00 27.05 PE-Jun-22800 67.70 79.00 44.05 PE-Jun-23000 108.80 122.40 81.80 PE-Jun-23200 136.70 179.00 123.00 PE-Jun-23300 172.05 213.85 150.85 PE-Jun-23400 218.10 256.70 182.35 PE-Jun-23500 240.05 305.50 217.50 SKS MICROFINANCE LTD [1000] CE-Jun-700 18.50 24.85 13.80 CE-Jun-750 5.65 7.95 4.20 DEWAN HOUSING FIN CORP LT [1500] CE-Jun-450 8.05 11.20 7.65 DLF LIMITED [5000] CE-Jun-190 5.30 6.70 4.00 DR. REDDYS LABORATORIES [200] CE-Jun-2700 44.80 64.35 39.50 CE-Jun-2800 24.00 26.35 14.25 GMR INFRASTRUCTURE LTD. [45000] CE-Jun-20 0.70 1.05 0.45 HINDALCO INDUSTRIES LTD [3500] CE-Jun-200 6.25 6.75 4.50 ICICI BANK LTD. [2500] CE-Jun-320 5.35 7.90 4.80 CE-Jun-330 3.05 3.85 2.20 PE-Jun-310 4.20 5.10 2.95 MARUTI SUZUKI INDIA LTD. [150] CE-Jun-7500 68.70 79.85 58.10 RELIANCE CAPITAL LTD [1500] CE-Jun-600 14.50 23.65 13.60 RELIANCE INDUSTRIES LTD [500] CE-Jun-1320 23.50 50.00 23.50 CE-Jun-1340 16.10 36.50 16.10 CE-Jun-1360 11.00 25.50 10.65 CE-Jun-1380 7.00 17.35 6.75 CE-Jun-1400 4.75 11.40 4.35 CE-Jun-1420 3.15 7.25 2.80 CE-Jun-1440 2.05 4.65 1.80 PE-Jun-1280 8.20 8.20 2.80 PE-Jun-1300 16.70 16.70 5.35
Close
Qty Vol
OI
30.95 54.85 89.00 132.75 160.15 194.40 233.10
9297 2404 19714 1581 4510 3134 10556
636880 75640 1110680 98960 59840 81960 1065080
23.55 7.45
2103 1219
452000 1065000
9.45
1780
666000
6.10
1522
4205000
47.25 16.85
2244 1323
142800 103400
0.85
1744 30285000
6.15
1348
6.15 2.90 3.85
2676 1496 1643
1858500 3215000 3762500 1972500
64.95
1278
177900
17.85
1668
900000
47.50 35.20 24.60 16.55 10.90 6.95 4.45 3.10 5.75
2657 7684 9709 6139 7057 1683 1279 1817 3270
247500 629500 1121500 809000 1411500 379500 450500 326500 626500
Type-Exp-Stk.Pr
Open
High
Low
PE-Jun-1320 21.60 23.05 9.30 PE-Jun-1340 34.65 34.65 15.60 STATE BANK OF INDIA [3000] CE-Jun-290 4.60 4.95 3.75 CE-Jun-300 1.75 1.95 1.45 SUN PHARMACEUTICALS IND. [700] CE-Jun-540 12.55 13.25 9.40 TATA GLOBAL BEVERAGES LTD [4500] CE-Jun-160 2.70 4.70 2.05 TATA MOTORS LIMITED [1500] CE-Jun-460 6.45 7.65 5.55 TATA STEEL LIMITED [2000] CE-Jun-510 11.20 13.35 8.90 CE-Jun-520 7.10 8.80 5.65 PE-Jun-500 9.45 11.15 7.40 TATA CONSULTANCY SERV LT [250] CE-Jun-2500 28.00 35.50 28.00 VEDANTA LIMITED [3500] CE-Jun-240 7.30 7.30 5.15 YES BANK LIMITED [350] CE-Jun-1460 55.05 55.05 30.65 CE-Jun-1480 41.80 42.15 22.70 CE-Jun-1500 32.30 32.30 16.45 CE-Jun-1520 24.10 24.10 11.60 CE-Jun-1540 16.75 16.85 8.30 CE-Jun-1560 13.00 13.00 5.85 PE-Jun-1400 6.35 15.10 6.35 PE-Jun-1420 9.00 20.95 8.95 PE-Jun-1440 12.20 28.40 12.20 PE-Jun-1460 17.05 38.00 17.05 PE-Jun-1480 23.85 49.20 23.85
Close
Qty Vol
OI
10.10 16.75
3097 3478
468500 592000
4.25 1.75
1628 1550
4878000 8751000
12.25
1786
1417500
3.60
1175
1395000
7.00
2242
1467000
9.90 6.40 9.70
1397 1409 1353
1350000 2428000 1332000
31.55
1924
286250
6.00
1347
3755500
32.50 24.10 17.50 12.50 8.95 6.45 13.95 19.60 26.90 36.00 47.45
1268 1904 3481 1978 1535 1380 2061 1301 1793 1961 1311
172550 233450 666750 325850 372400 347200 294700 106400 162400 217350 122850
CE: Call European, PE:Put European,CA: Call American PA:Put American,Vol: Volumes OI: Open Interest
. . . . . .. ...CH-X
https://telegram.me/TheHindu_Zone
https://telegram.me/PDF4EXAMS CHENNAI
16
COMMODITIES
0 Commodity Watch
QUICKLY Sugar prices rule stable Mumbai, June 14
Sugar prices rule stable with thin volatility at Vashi tracking steady trend upper mill level amid ease supply. On Tuesday evening about mills sold 48,000-50,000 bags at ₹3,660-3,700 for S-grade and ₹3,700-3,760 for M-grade. Naka delivery rates were:(in ₹) S-grade 3,800-3,840 and M-grade 3,830-3,900. OUR CORRESPONDENT
Turmeric arrivals on the wane Erode, June 14
The arrival of turmeric for sale is decreasing every day. At the Erode Turmeric Merchants Association Sales yard, finger turmeric sold at ₹5,606 to ₹7,591 a quintal and the root variety sold at ₹5,158 to ₹6,274 a quintal. At the Regulated Marketing Committee, finger turmeric sold at ₹5,974 to ₹7,169, root variety sold at ₹5,009 to ₹6,019. OUR CORRESPONDENT
Imports weigh down pepper Kochi, June 14
Availability of cheap imported pepper coupled with offer by Karnataka sellers at ₹475 a kg has pulled down the spot prices further on Wednesday. Aggressive selling by Karnataka sellers at ₹475 kg has added fuel to the fire, they said. Spot prices fell ₹200 a quintal to close at ₹49,200 (ungarbled) and ₹51,200 (garbled). Indian export prices slipped to $8,200 a tonne c&f for Europe and $8,450 for the US. OUR CORRESPONDENT
Bearish sentiment in pulses Indore, June 14
With traders not heeding to the state government's call on purchasing pulse seeds strictly on the minimum support prices, trading in Indore mandis continued to remained paralyzed. Tur (Maharashtra) quoted at ₹3,900, while tur (Madhya Pradesh) ruled at ₹3,600-3,650. Tur dal (sawa no.) quoted at ₹5,350-5,450, while tur dal (full) ruled at ₹5,750-6,150. . OUR CORRESPONDENT
Gold
BusinessLine THURSDAY • JUNE 15 • 2017
Silver
Copper
Brent Crude
Crude Palm Oil
Sugar
$1278.60 13.80왖 $17.21 0.43왖
$5717 55왔
$48.33 0.30왖
$577.07 6.31왖
¢13.75 0.37왔
per ounce
per tonne
per barrel
per tonne
per pound
per ounce
Maharashtra, Gujarat APMC traders plan bandh today against GST Unsettled by confusion in GST rates, burden of liability by pre-sellers RUTAM VORA/ RAHUL WADKE Ahmedabad/Mumbai. June 14
Faced with uncertainty in the proposed Goods and Services Tax (GST) structure, bulk traders and commission agents at Agriculture Produce Marketing Committees (APMCs) in Maharashtra and Gujarat have called for a day's shutdown on Thursday. The traders’ concerns relate to the complex tax structure, disparity in the tax rates on raw and packaged agriculture produces, multiple tax incidence under mandi tax and fears of rising financial liability in case of a default by the pre-seller. “Most raw agro produces are exempt from GST, but the same
commodity, when cleaned and labeled, attracts 5 per cent or even 12 per cent GST. There is a lot of ambiguity in the tax structure,” said a leading trader from Vashi APMC in Mumbai, seeking anonymity. Similarly, loose groundnut will be GST-exempt, but packed and labelled groundnut will be taxed at 5 per cent. Confused, traders have decided to scale back their trading as the July 1 date for GST implementation draws near, fearing a disruption in the movement of goods after June 25. Traders and merchants at mandis in Maharashtra’s Vidarbha region, Mumbai and Pune joined their counterparts in Saurashtra,
Gujarat, in calling for a ‘mandi bandh’ on Thursday, which will bringtrading in commodities to a halt. Traders in other parts of the country are unlikely to join the bandh call. The Navi Mumbai Merchants’ Association wrote to 14 ailiate APMCs and markets to observe the bandh. Association chairman Kirit Rana claimed that nearly all 300 APMCs in Maharashtra will observe the bandh. “The ‘one-nation, one-tax’ claim isn’t being realised by the GST, and even after July 1 we will have to pay mandi tax. Second, the liability of a pre-seller default will prove disastrous for traders,” said Rana. Bombay Sugar Merchants’ Association Secretary Mukesh Kuwadia told BusinessLine that the GST implementation modalities place a
VINSON KURIAN Thiruvananthapuram, June 14
The monsoon covered Coastal Andhra Pradesh, and parts of South Chhattisgarh and Odisha on Wednesday, braving signs of fatigue after misdirecting a rainladen deep depression into Bangladesh a couple of days ago. The Bay of Bengal is expected to take time to organise the flows after the ‘flash’ deep depression churned its waters to a scale rarely witnessed at this time of the year and laying to waste a lot of kinetic energy in the process. The deep depression had swung away from North India a major monsoon enabler, a
Kochi, June 14
trough that links North-West India with the Bay of Bengal through which easterlies bring monsoon rains to East, Central and North-West India. Ideally, one end (South-East) of the trough should be anchored in the Bay waters so that moisture-laden easterlies can fan out onto land to precipitate rains. The tip of the trough is now over land, which means it is cut of from moisture in the Bay. This has led to a reduction in the quantum of rainfall over East India. The monsoon has not been able to enter Gujarat, Madhya Pradesh, Chhattisgarh and
Spices Board Chairman A Jayathilak.
most exported spice, registering a volume of 1,19,000 tonnes valued at ₹1,963.20 crore. With this, India has surpassed earlier export records and has fulfilled the increasing international demand for its quality spices in the face of tough competition in global markets. More satisfying was the fact that the appreciable increase in exports came in the face of strict food safety
regulations that now define and determine the international commodity trade, said Spices Board Chairman A Jayathilak. The increased global demand for turmeric, especially in the pharmaceutical sector, drove exports to 1,16,500 tonnes in volume terms and ₹1,241 crore in value terms. According to Jayathilak, the eforts of the Spices Board to promote production of large cardamom, especially in the country’s North-Eastern region, which is the organic area by default, led to a rise in exports by 30 per cent in volume terms and 9 per cent in value terms. A shift in dietary preferences from conventional spices to processed and value-added spices was evident in the spice export statistics, he added.
Odisha. These areas should normally get covered by June 15, but indications are that they will need to wait for a few days more. Revival in a week The India Met Department (IMD) said on Wednesday that conditions are favourable for the advance of the monsoon into parts of Gujarat, Madhya Maharashtra, Vidarbha, Chhattisgarh, Odisha and Bengal over the next four days. For any organised revival of the monsoon, the trough over North India has to re-align itself in such a manner that one of its extremities gets anchored in the
Oil supply growth to outpace rise in consumption in 2018 REUTERS London, June 14
Growth in oil supply next year is expected to outpace an anticipated pick-up in demand that will push global consumption above 100 million barrels per day (bpd) for the first time, the International Energy Agency said on Wednesday. The Paris-based IEA said production outside the Organization of the Petroleum Exporting Countries would grow twice as quickly in 2018 as it will do this year, when OPEC and 11 partner nations have restrained output. “For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” the IEA said.
Ghosts of Centre’s muddled farm policies will come back to haunt it G CHANDRASHEKHAR
Policymakers at the highest levels of the government seem to be clueless about judiciously reconciling the apparent conflict arising out of surplus production and falling prices on the one hand, and inflation targeting and remunerative returns to growers, on the other. The options before the government to fight shortages have been well-practised over the years. These include a prohibition on export, storage restrictions on trade, suspension of futures trading, asking State parastatal agencies to organise imports and so on. These have often not been efective, though. After 2014-15 and 2015-16 exposed New Delhi’s inadequate skills at fire-fighting when shortages raged and food inflation was high, the past one year CM YK
lot of liabilities on traders who purchase sugar from the mills. The association had wanted sugar used for domestic consumption to be kept out of GST ambit as it accounted for only 35 per cent of total sale. The rest is used by pharmaceutical, confectionery and other industrial users. The association noted that the one-time tarif of ₹71 per 100 kg of sugar charged at mill gates as excise duty works out to 2 per cent of the price of sugar. “The proposed 5 per cent GST on sugar may increase the landed price, which may impact household consumption,” it said. “Secondly, it will be disastrous for the fraternity to take the liability of the pre-seller defaulting on payment of GST as the margins are hair-thin,” the association said in a letter to the Finance Minister.
BL Research Bureau
The nickel futures contract on the Multi Commodity Exchange (MCX) has been trading in volatile fashion since last week. The contract touched a high of ₹581.9 a kg on Monday and fell sharply to make a low of ₹558.6 on Tuesday. It has reversed again from this low and is currently trading at ₹570. The near-term view is not clear. The immediate resistance level is at ₹574. A break above it can take the contract higher to test the ₹582-584 resistance region. An inability to break above this resistance zone may trigger a pull-back move once again to ₹558. In such a scenario, a rangebound move between ₹568 and ₹584 is possible for some time. A breakout on either side of ₹558
and ₹584 will then decide the next leg of the move for the contract. A strong break and a decisive close above ₹584 will ease the downside pressure. Such a break will pave the way for a fresh rally to ₹605 or ₹610 thereafter. It will also signal a reversal of the downtrend that has been in place since April. On the other hand, if the MCXNickel futures contract breaks below ₹558, it will come under more pressure. It will also keep the downtrend that has been in place since April intact. Such a break will increase the likelihood of the contract falling to ₹550 or even lower thereafter. Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
Monsoon shows signs of fatigue, slows down
SAJEEV KUMAR
COMMENTARY
MCX-Nickel futures to stay volatile but range-bound GURUMURTHY K
Spices exports shatter record Indian spices and spice products posted record exports of ₹17,664.61 crore ($2,633 million) and 9,47,790 tonnes in volume terms in 2016-17, sustaining its robust demand in international markets in the face of stif competition. The buoyancy in exports of spices and related products, both in volume and value terms, compares favourably with figures of 8,43,255 tonnes valued at ₹16,238.23 crore ($2,482 million) in 2015-16; they mark an increase of 12 per cent in volume terms, 9 per cent in rupee terms and 6 per cent in dollar terms. Chilli continued to be the most in demand in FY 17 with exports of 4,00,250 tonnes amounting to ₹5,070.75 crore. Cumin was the second-
WEEKLY OUTLOOK
has demonstrated the ineptitude of the government in handling surpluses. As far back as in October 2016, kharif crop production estimates were a clear signal of the emerging market situation. A near-normal SouthWest monsoon, combined with high open market prices, motivated growers, who ensured a rebound in agricultural output, especially in pulses and oilseeds. After the growers rose harvested record crops, they were left in the lurch, as it were. Their price expectations were belied because New Delhi failed to act to stem the price collapse. Despite prices falling below the minimum support price (tur/arhar or pigeon pea) or coming close to it (soybean), the procurement mechanism was inefective. The government failed to deploy trade and tarif policy instruments to arrest falling domestic
prices and support growers. For instance, why are pulse exports still prohibited despite massive harvests (22.4 mt ) and massive imports (6.6 mt) in 2016-17? Why were storage restrictions not lifted in time to improve the marketability of the crop? What support mechanism was put in place to assuage soybean growers aggrieved by declining prices? It is unclear what prevented the government from taking these important steps to arrest a fall in prices. It can only be interpreted as ineptitude or failure to read advance signals for proactive policymaking. It reflects poorly on the ‘commercial intelligence’ within policymaking circles. For sure, our domestic market is integrating with the global market through the trade and investment route. In addition to domestic factors, several global factors drive our domestic prices. But there seems to be no organised
mechanism within the government to research global and domestic market developments and formulate a ‘price and market outlook’. New Delhi needs to hone its ‘commercial intelligence’ capability to track and interpret global and domestic market dynamics; without this, it will keep groping in the dark and betray kneejerk reaction. The ongoing ‘tur-moil’ in the agricultural markets—farmers’ agitation, demand for farm loan waiver—has its roots in the government’s failure to read advance signals and take steps to support growers. Surely, the pride of the farmer is hurt and he will respond in the only way he knows: move to more remunerative crops. It has the potential to compromise our food security over time. The writer is a global agribusiness and commodities market specialist. Views are personal
Bay of Bengal. The European Centre for Medium-Range Weather Forecasts says it will take a few days for this to happen. It says the monsoon flows over the Arabian Sea would strengthen around June 20, indicating that the trough would have found its elusive moorings in the Bay by that time. Possibility of more rain The US National Centre for Environmental Prediction seems to agree, by signalling the possibility of enhanced rain along the West Coast and East and parts of East India and adjoining Central India from June 21 to 29.
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BusinessLine THURSDAY • JUNE 15 • 2017
QUICKLY GST Bill introduced in TN Assembly Chennai, June 14
The Tamil Nadu Goods and Services Tax Bill, 2017 was introduced in the Assembly on Wednesday. The Minister for Commercial Taxes, KC Veeramani, introduced the Bill paving the way for the shift to the Goods and Services Tax regime. The GST will replace the entire range of State and Central taxes on goods and services, including VAT, entry tax on goods and motor vehicles, entertainment tax, purchase tax and advertisement tax, and the Central levies like excise, service tax and Central Sales Tax. OUR BUREAU
Suresh elected President of ANMI Chennai June 14
K Suresh has been elected as National President of Association of National Exchanges Members of India (ANMI) for 2017-18. Suresh, who is a Chartered Accountant, Company Secretary and Fellow Member of Insurance Institute of India, has vast experience in the field of stock market, finance, accounts, internal audit and marketing. He also holds the post of Vice-President of Hindustan Chamber of Commerce and Member of The Management Committee of Madras Management Association, according to a statement. OUR BUREAU
Tata Global to take premium route to make Tetley a billion-dollar brand Looks to enter new markets, tea segments
three main elements — base business, white space and NBD (new business developments).”
PRIYANKA PANI
Largest overseas buy Founded in the UK about 180 years ago, Tetley was acquired by the Tata Group in early 2000 for about £271 million making it one of the largest overseas acquisitions by an Indian company during that time and also helping the group to enter the global black tea market, a market that is witnessing a slow growth. To tackle this, TGBL is slowly getting aggressive as competition from brands like Twinings, Lipton and PG Tips in the nonblack tea market is heating up. Globally, Twinings and Lipton play in the green-tea segment, herbals and Ayurveda infusions among others, which are catching up fast with the younger generation. Ahmad said the company is aggressively tapping the non-black tea and the functional tea (those with health benefits) segment
Mumbai, June 14
Tea and beverage maker Tata Global Beverages Ltd (TGBL), a part of the diversified conglomerate the Tata Group, is on a premiumisation drive and expects the strategy to brew some good results for its tea brand Tetley. The company expects Tetley to become a billion-dollar brand in the next three years, a top oicial said. Tetley will be the first brand from TGBL’s portfolio to achieve that feat through a slew of measures, including getting into newer markets and new segments through the premium route. TGBL’s Global Marketing Officer, Adil Ahmad, told BusinessLine,: “The idea for Tetley is to become a billion-dollar brand by 2020. That’s the vision and we want to achieve that through
Sathyam Cinemas to have 25 more screens in South by March next Looks to go beyond metros, expand in tier-II cities SWATHI MOORTHY Chennai, June 14
Sathyam Cinemas is expanding its chain across the South with an additional 25 screens by March 2018. Sathyam Cinemas currently has 50 screens across Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, Telangana and Maharashtra. Swaroop Reddy, President, said the company is looking to strengthen its presence in the South with new launches planned in Puducherry, Hyderabad, Bengaluru and Mumbai in the next 9-12 months. The company is also looking to grow beyond metros and will look at tier-II cities in Telangana, Andhra Pradesh and Tamil Nadu. “We
see strong movie-going population in these regions,” Reddy said. Places under consideration are Guntur, Tirupati, Nizamabad, Madurai, Salem, Tiruchi and Vellore. The company already has presence in Coimbatore and Warangal. “Till date metros contribute to chunk of the business,” he said. But that does not mean tier-II towns do not have the potential,” Reddy added. The company, which sees close to 8 lakh bookings on average per month, has been expanding rapidly for the past one year beyond its
FICCI State Council voices concern over political climate OUR BUREAU Chennai, June 14
Industry is concerned over the uncertain political climate in the State, said Ar Rm Arun, Chairman, FICCI - Tamil Nadu State Council. The State has earned a reputation for political stability but recent developments have given the industry cause for concern “on the way forward,” he said referring to the infighting in the ruling AIADMK party and the popular perception of instability in the government and the impact on industrial investments. Industrial areas such as Sri City and Krishnapatnam port in neighbouring Andhra Pradesh are gaining and ports in Chennai and Ennore are losing out, he said. Solutions to issues Tamil Nadu faces more issues relating to water and trans-
portation apart from communication and power. Ideally, basic necessities like water and transportation should not be an issue. Modern solutions like desalination, recycling and user charge should be utilised to tackle the shortage. Traic issues can also be addressed through measures like congestion surcharge and improved public transport systems, he said addressing the State Council’s 2nd Executive Committee meeting. Shilpa Prabhakar, Executive Vice-Chairman, Tamil Nadu Industrial Guidance and Export Promotion Bureau, said the industrial investment momentum was sustained. Since January, the Bureau which is the first point of call for investment applications, has processed over ₹2,000 crore worth investment proposals, including a ₹500crore investment by Yamaha Musicals.
‘Hyderabad top realty investment destination in Asia Pacific’ PRESS TRUST OF INDIA New Delhi, June14
Led by Hyderabad, six Indian cities, including the national capital and Mumbai are among top 10 investment destinations in the realty sector in the Asia Pacific region, owing to growth prospects in commercial oice activity, says property consultant Cushman & Wakefield. While Hyderabad emerged as the number one destination in the region, Bengaluru and Mumbai were ranked sixth and seventh respectively, as per the report ‘Betting on Asia Pacific’s Next Core Cities’. Pune, Chennai and New Delhi were at the eighth, ninth and tenth positions. Most of the global investments for this year will be made in commercial office assets as markets in Bengaluru, Chennai, DelhiNCR, Hyderabad, Mumbai and CM YK
Pune are well placed to outperform other cities from emerging economies in Asia Pacific, the report said. Cushman & Wakefield Senior Director, Research Services, Siddhart Goel said that having learnt many valuable lessons from 2005-08, global investors are now well equipped to take advantage of the potential that Indian real estate markets ofer. “The country is firmly on track to becoming an economic powerhouse with strengthening GDP, better business environment and investor-friendly policies by the Union government,” he added. The Cushman & Wakefield report analysed markets that will ofer investors the opportunity to tap into their long-term growth fundamentals, which will become increasingly viable due to sustained reforms.
home ground Chennai. After launching a single screen in Mumbai last year, it expanded to Kerala, Karnataka and Telangana in the last few months. While the player is a household name in Chennai, others are a new territory. Reddy agrees that market dynamics is diferent compared to Tamil Nadu, which has a pricing cap of ₹120. “We have flexible prices and create a diferent dynamics based on that, especially in Mumbai,” he said. The screens have diferent prices ranging from ₹100 to ₹350, which is attractive. “So far we have been doing well,” he added. With more in the pipeline, Reddy said the expansion is not sudden rather the company had wanted to go beyond Chennai as long as 10 years ago. “It is only now everything is falling in place,” he added.
Adil Ahmad
and is in various stages of ideation to launch new segments to improve sales globally and garner maximum market share. Global market The company had recently launched a few premium tea (mostly herbal and functional) and within a year of launch has garnered one per cent of the total tea market in the UK and about 5 per cent of the tea market in Canada through its Ayurveda range. Tetley Signature, another premium tea, launched in France, is also doing well, said
Ticket system: Thales extends tie up with DMRC PRESS TRUST OF INDIA New Delhi, June 14
French technology major Thales has extended its collaboration with the Delhi Metro by delivering the Automatic Fare Collection (AFC) systems also for the Phase-III operations that began recently. “After the successful deployment of the AFC system for Phase-I and -II, the company has been working on the project to provide AFC systems for Phase-III (79 stations) of the network. Ushering in a new innovation in fare collection to India, Thales has installed its new-generation ticket gates Dream Gates on two stations of the Delhi Metro Heritage Line: Lal Quila (Red Fort) and Jama Masjid,” it said in a statement. The four Dream Gates (two entries in Lal Quila station, two exits in Jama Masjid) from Thales allow passengers to travel using QR code on their mobile phones — a first in India.
Ahmad. It has also entered large tea drinking markets such as China via the e-commerce route in partnership with Alibaba. “Tetley is 31 per cent of the Canadian market. It is 19 per cent of the UK market. So, we are very strong number two brand in the UK, with very good momentum we should be the number one soon,” Ahmad said adding that focus on innovation in the health and wellness segment is leading the growth. Despite such measures, the company has miles to go before it can become a real global player. Of the $40-billion (₹2,40,000 crore) tea market globally, Tetley was at a mere ₹2,676 crore in 2015-16, according to TGBL’s annual report. Twinings is already a billion dollar brand at ₹9,726 crore globally, as per 2016 annual report of its parent company Associated British Foods Plc. Unilever’s 2016 mentions that its tea brand Lipton has sales worth €1billion (₹ 7,227 crore).
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Interest-free loan soon for women to buy, operate cabs PRESS TRUST OF INDIA New Delhi, June 14
The Centre will launch a new scheme to provide interestfree loan to women self-help groups in rural areas for purchase of small commercial vehicles, to boost public transport and generate employment. The new scheme is likely to be called ‘Pradhan Mantri Gram Parivahan Yojana’ and launched on August 15. Revolutionary move “The scheme will be a revolutionary move as it will not only revamp the public transport system in rural areas but will also generate enough employment options, especially for women,” Union Rural Development Minister Narendra Singh Tomar said. Roads have already been constructed in these areas, so by providing more and easily available modes of public transport, the government wants to bridge the gap
between villages and cities, Tomar added. To begin with, it will be implemented in 250 blocks across the country and the Centre will provide interestfree loan for at least 1,500 commercial vehicles with a seating capacity of 10 each, according to sources in the Ministry. There will be a ceiling of ₹6 lakh on the loan amount and the repayment period will be of about six months, they added. According to the sources, after loan instalment is paid, an individual can earn up to ₹6,000-9,000 per month. Feasibility survey A survey was carried out in the rural areas of Bilaspur in Chhattisgarh. As per its findings, it would be remunerative to provide 1012 seater commercial vehicles at subsidised rates on a stretch of 20-22 km which connects at least 10-14 small villages, the sources added.
US healthcare co arm IHO gets 6 lakh subscribers in 6 months In the first year of operations, expects ₹50-cr turnover G NAGA SRIDHAR Hyderabad, June 14
Indian Health Organisation (IHO), an arm of the US-based diversified healthcare company Aetna, has bagged nearly six lakh subscribers since the launch of its operations. IHO, which calls itself as a healthcare benefits company, provides a range of healthcare services, including medical consultation over telephone and face to face meetings with doctors and other experts. “Since our soft launch of the operations in December last year, we have reached 1,000 consultations per month from 5.7 lakh subscriber base,’’ Manasije Mishra, Man-
aging Director, IHO and Aetna India told BusinessLine here. IHO, a wholly-owned subsidiary of Aetna, has begun its journey last year with an investment of ₹100 crore and is confident about its breakeven. “We still have some funds out of the first round of funding and are actually close to break-even,’’ Mishra said. Packages In the first year of its operations, by end of December 2017, it expects to achieve a turnover of ₹50 crore. The revenue stream is subscription income from members under its diferent packages including ‘vHealth’ and classic consultation packages. These packages ofer consultation with medical professionals for a family of four at a subscription of fee of ₹2,400 per annum. The fee, however, varies depending on the
range of services under diferent plans. “We already have 16,500 medical professionals as our partners who can be accessed by our subscribers by fixing an appointment on web or through a toll-free dial-in,’’ Mishra said. When asked on the likely reservations in some patients for consulting doctors over phone, Mishra said IHO hopes to harness market potential in primary health care infrastructure in India. The eco system being ofered will result in reduction in healthcare expenditure for patients. It, however, also ofers physical consultations and facilitates diagnostic and pharmacy services. On the viability of the model, he said Indian population has been showing plasticity and adaptability for technological upgradation and
remote healthcare and diagnostics with sound clinical protocols. These augur well for the Indian market. IHO hopes to reach 4 million customer base by 2020 and a turnover of ₹300 crore. Replication Encouraged by the response, Aetna is in the process of replicating the model in London, Dubai and Singapore with the help of IHO.
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POLL POURI GST regime Will the Government be able to meet the July 1 deadline for GST implementation ?
BusinessLine THURSDAY • JUNE 15 • 2017
‘Paris climate deal’s ‘beauty’ is its holistic approach’ M RAMESH Chennai, June 14
60%
32%
8%
Yes
No
Can't say
TODAY’S POLL Turbulence Should the government divest its entire stake in Air India ? Cast your vote at: www.thehindubusinessline.com
As the Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) between 2010 and 2016, Christiana Figueres was tasked with getting all countries onboard the Paris Agreement. Though the accord was of the governments, the Costa Rican is credited with forging a collaborative diplomacy that finally delivered the Agreement. Costa Rica has issued a commemorative postage stamp in her honour. Figueres is currently the Convenor of Mission 2020, a global initiative to cut greenhouse gas emissions by 2020. BusinessLine caught up with Figueres in Beijing, at the 8th Clean Energy Ministerial, where she was a speaker, just days after US President Donald Trump announced that the US would pull out of the Paris Agreement. In an informal chat ahead of the interview, Figueres observed that the American corporate sector and various State governments would fill the shoes vacated by Trump, which is what really matters for “Miss Atmosphere”. Excerpts from the interview:
Determined Contributions, the globe would be warmer by 3 degrees, not two...
No. Only if all the countries do their NDCs fully over several decades. The first collective efort of all these countries is not going to be enough. We knew that. That is why, the way the Paris Agreement is constructed — it is not static, but a dynamic agreement (that will spread) over several decades. We have this first accord signed by 189 nations and many countries, like India, are actually ahead of schedule. In any event, every five years the countries will come together and see how much we have done, how much more we need to do, and will increase the ambition until we get to the point where we can guarantee to the next generation that we are well below two degrees.
O
QUICKLY Cabinet nod for MoU with Palestine New Delhi, June 14
An MoU signed between India and Palestine for cooperation in agricultural research, irrigation, veterinary field and climate change, got the Union Cabinet’s ex post facto nod on Wednesday.The MoU was signed in May during Palestinian Foreign Affairs Minister Riyad Al Maliki’s India visit, a government statement said.“An Agricultural Steering Committee will be constituted under the MoU to determine the action plans for achieving the stated objectives,” it said. IANS
‘Humsafar’ coaches upgraded New Delhi, June 14
Aiming to enhance the train travel experience, the Railways are launching new ‘Humsafar’ coaches equipped with facilities like GPS-based passenger information system, and fire and smoke detectors. The coaches will also have mobile charging points and reading lights for each passenger. The upgraded coaches also have facilities like baby nappy changing pads, and tea and coffeemakers. PTI
If all the countries fully met their nationally determined contributions, would ‘Miss Atmosphere’ turn pretty? The UNEP, in its Emissions Gap Report 2016, said even if all the countries met their Nationally
Are we being over-euphoric about the Paris Agreement? Unlike the WTO, if any country breaches the agreement, the others can do nothing about it...
I don’t think we were over-euphoric because I do think it is absolutely critical and necessary to have a global framework that everybody agrees to. Now, it is necessary but not suicient. The Paris Agreement was absolutely necessary but it is not suicient because what it does is, it points to the direction, gives the blueprint, but a blueprint is a plan
and a plan doesn’t have an impact until you do the work. The beauty of the Paris Agreement is it takes a lot of work that was already underway, it crystallises it with the agreement of everyone, it points to the direction, it gives the timelines, gives the process, but doesn’t exempt any of us from doubling up the efort. I remember, when we adopted the Paris Agreement many of us went to bed at 5 in the morning and at 10, I jumped out of my bed and called several colleagues and said, “Oh, my God, now we have to get to work”. All these were people who hadn’t slept in weeks, I call them after they have slept a few hours for the first time and say, ‘get to work, get to work’ because of the realisation that the agreement was not suicient. Would you say there is equal amount of attention and effort spread over mitigation, adaptation and loss and damage?
No. We are being mitigation-
centric, whereas countries like India need more ‘adaptation’, right...
Yes, we are mitigation-centric and all developing countries need ‘adaptation’. We are mitigation-centric for a couple of reasons. First, because it is easier — to identify where mitigation opportunities are, than ‘adaptation’. But then, we have been doing ‘mitigation’ since 1992, so we have much more collective experience with mitigation than we do with adaptation. ‘Adaptation’, in the history of the Convention (the UNFCCC), is relatively new. It is urgent, but it is relatively new. You don’t find anything about ‘adaptation’ even in the Kyoto Protocol: it was all about mitigation. But, yes, there is not equal attention to it as to mitigation. The GCF
Z Y
I am absolutely happy about what India is doing, because it is doing in its own interests... Everybody is doing for their own interest and that... will do common good...
(Green Climate Fund), to its credit, did take on the commitment of doing 50 per cent mitigation and 50 per cent adaptation. The GCF is not getting enough money into it. It was supposed to rise to $100 billion a year by 2020…
No, that is not true. The GCF was never conceived to hold $100 billion. It is a component of the $100 billion, and the $100 billion itself would come from various sources. Actually, this transformation is not about billions, it is about trillions. I am more concerned about the trilliondollars-ayear that is needed and that is going to come from a blend of diferent sources. The GCF is one small source, but there will also be other money coming from both public funds,
How do you view what India is doing in terms of climate change?
I am absolutely happy about what India is doing, because India is doing in its own interests. I do not know anyone here who is doing anything on this (climate change) because they want to save the planet. Everybody is doing for their own interest and that is a good thing. In addition to that, collectively they will do common good which is necessary. The wonderful thing is that we can do both at the same time. We can do things that are good for the growth of the economy, for the health of the people, energy, safety, protection of the vulnerable, and do well for the planet. We don’t have to choose one or the other. Remember, the Paris Agreement was two years ago. And in those two years, technology has advanced incredibly, India being the best example. Who would have said two years ago that you would have solar cheaper than coal? Two years ago, we didn’t have it, now we have it. The writer was at the Beijing Clean Energy Ministerial at the invitation of the Global Strategic Communications Council, a network of communications professionals in the field of climate and energy
CHRISTIANA FIGUERES, former Executive Secretary, UNFCCC
in general, and also from the private sector.
Z Y
Cattle slaughter rules drive Dharavi’s leather businesses to cheaper options URVASHI VALECHA Mumbai, June 14
Dharavi, the second largest slum in Asia, is also home to as many as 20,000 smallscale units manufacturing garments, leather goodsand plastic items. As the debate on cattle slaughter rages on TV channels,, small businesses here sufer silently. The tough new rules that also ban trading of cattle for slaughter have turned the process of getting hide an arduous exercise. The many leather ‘boutiques’ that line Dharavi’s main road seem to be reeling under the slaughter ban imposed under the Prevention of Cruelty to Animals Act, 1960, in May. PVC and China foam Enter GK Leathers, a small boutique, and owner Satyendra Yadav is all smiles and ready to showcase his collec-
Ethical standards in workplaces yet to improve: EY survey PRESS TRUST OF INDIA New Delhi, June 14
Inconsistency and ambiguity in encouraging high ethical standards and insuicient understanding of compliance programmes have increasingly led employees to justify unethical behaviour at workplace, says a report. According to EY’s Asia-Pacific (APAC) Fraud survey, 78 per cent of Indian respondents said bribery and corrupt practices occur widely. Besides, 57 per cent respondents said that senior management would ignore unethical behaviour of employees to attain revenue targets. Moreover, one in every five respondents said breaches related to ethical standards and regulations are not investigated by organisations. Further, 15 per cent of people surveyed said organisations have not taken action against employees for breaching ethical standards or regulations. Besides, 58 per cent of respondents are still willing to work for organisations involved in major bribery or fraud case, lower than China (66 per cent) but higher than the average of other APAC nations (49 per cent). “The prevalence of fraud and corrupt practices and gaps in demonstrating principled leadership by senior management can become a hindrance in organisations’ quest to build compliant workplaces and retain talent. Businesses in...India will need to rethink their approach toward corporate governance,” said Arpinder Singh, Partner and National Leader, Fraud Investigation and Dispute Services at EY India. CM YK
Leather ‘boutiques’ that line Dharavi’s main road are reeling under the impact of the cattle slaughter ban imposed in May VIVEK BENDRE
tion of bags and belts. As you get talking, he tells you about his family, originally from Bihar, which had a humble beginning in the leather business almost 30 years ago. “Bufalo hide is the only leather apt for making best
quality leather bags and goat leather can only be used to make good quality jackets or gloves,” he explains. But his enthusiasm ebbs when you turn the topic to the new slaughter rules. He rues that the rule extends to
all animals under the cattle category, including ox, bufaloes, camels, cows, steers and heifers, afecting the supply of leather in the market. Most manufacturers in Dharavi, like Yadav, source leather from Kanpur, Agra, Hyderabad, Ambur and Ranipet to produce bags, belts and apparels. But with rising leather prices and falling demand, most of these units have been forced to rethink their business model. “We will have to shift to manufacturing bags using synthetic PVC leather and China foam... We have no other option.” Yadav adds. He, however, doesn’t think he would lose out much since he believes PVC would make his goods cheaper and attract more customers. Soaib from High Design, a boutique that is into exports, has already shifted the focus of the business. “We have
already started searching for orders and manufacturing PVC bags.” Some units had ventured into making PVC products even before the new rules were introduced and are now concen- trating on growing that segment. Raju Khade of Rank
Leather, a materials supplier, says: “Had we been only in the leather business, our profits would have halved because of the fall in the demand and supply of leather. The new rules did not afect our business much because we also manufactured PVC products.” Walk down the 90-feet road and you reach a dingy
lane. The area is called Chamda Bazaar, literally leather market. There are more leather units here. On the impact of the new slaughter rules, Mehbooba, brand manager of Najma Leathers, says: “We use goat and sheep leather to manufacture jackets. We barely use bufalo hide. If need be, we will substitute it with other materials.” But generally the mood is
sombre as traditional leather manufacturers are left exploring alternatives in the light of the cattle slaughter ban. For many, shifting to PVC or China foam is the only viable option left, but there is stif competition in this segment market from Chinese exporters and local outfits, alike. (The writer is an intern at BusinessLine Mumbai bureau)
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