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‘Mondelez to be Most-loved Biscuit Brand in India’ BRANDS: CREATING DESIRE5
Inside story PM Modi to Seek Policy Inputs from Industry Captains Today PM Narendra Modi will meet industry captains on Monday for policy inputs to build a ‘New India’. They include Rajiv Bajaj of Bajaj Auto, Nikhil Nanda of Escorts, Avni Biyani of Future Retail, Sangita Reddy of Apollo Hospitals, Bunty Bohra of Goldman Sachs, Sanjay Nayar of KKR, Priya Nair of Hindustan Unilever and Sanjeev Bikhchandani of Naukri.com. Economy: Macro, Miceo & More 13 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
Karti Chidambaram Gets I-T Notice for ‘Undisclosed’ Property in UK The Income Tax Department has issued Karti P Chidambaram a notice under the Black Money Act, seeking details of an “undisclosed” property that it said he acquired in the UK. Chidambaram, however, rejected the charge. Pure Politics 2 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
Essar Announcing Closure of $13-billion Deal with Rosneft Ending months of negotiations with various stakeholders, Essar Group is announcing the closure of its $13-billion deal to sell flagship Essar Oil to a consortium led by Russian energy major OAO Rosneft on Monday morning. Economy & Companies 19 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
Operations in Delhi Airport Disrupted by Drone Flying Nearby About 15 flights were diverted and several delayed as operations at Delhi airport were suspended for over thirty minutes after a drone was spotted flying in the vicinity of the airport. Economy & Companies 19
Do founders find it difficult to let go of their companies?
90%
9%
1%
YES
NO
CAN’T SAY
TODAY’S QUESTION
Should Indian firms learn from global peers about succession planning? www.economictimes.com
Mnuchin Defends Decision to Stay On as Treasury Secy
Axar, Shikhar Help India Thrash Lanka in 1st ODI
AROUND THE WORLD17
SPORTS: THE GREAT GAMES 20
Infy may Miss FY18 Growth Target, Lose Ground to Rivals Analysts anticipate further turbulence, see senior-level departures over next six months Tough Times Ahead Holding on to Clients, Jochelle.Mendonca Analysts say co will be focussed on internal issues, and client mining and relationships could suffer
@timesgroup.com
Bengaluru: Infosys, rocked by internal turmoil and without a permanent chief executive at the helm, is in danger of losing ground to rivals and missing growth targets for the fiscal, say analysts who anticipate further turbulence at India’s secondlargest software MORE REPORTS services company following the PAGE 8, 9 sudden exit of its CEO Vishal Sikka on Friday. Battered by charges of poor “corporate governance” by its founder NR Narayana Murthy who launched a series of public broadsides against the company beginning February, Infosys has struggled to keep pace in an industry beset by multiple threats from automation of IT services to rising protectionism in the US — its largest market.
Rivals will also sense opportunity to try and lure away business
Top Execs Major Test Infosys’ major challenge will be to hold on to its clients and top executives, several of whom may be spooked by Vishal Sikka’s resignation, reports Jochelle Mendonca.8
Infy’s relative underperformance could last till FY19 Executives leaving is a key risk
Experts and fund managers are split on the Infosys board’s decisions to announce Sikka’s resignation, share buyback and its price over a span of three days, report Megha Mandavia & Sanam Mirchandani.8
Illustration: ARINDAM
“We expect significant senior-level departures over the next six months till a new CEO is found. This is likely to put fiscal 2018 guidance at risk,” said Ankur Rudra, analyst at CLSA, in a note. Infosys had estimated it would grow at 6.5-8.5% in the current fiscal year after providing for fluctuations in exchange rates. The
target, announced in April, came after the company changed its estimate for growth in fiscal 2017 three times in a row. “Infosys has underperformed Sikka’s lofty goals set in 2015 and has seen a sharp slowdown in growth,” said Rudra.
‘TIMELY ACTION COULD HAVE STOPPED SIKKA EXIT’8
‘Co may Lose Mkt Share’8
Seeks feedback from exchanges on brokers’ preparedness to get clients’ IDs by December 31 Mumbai: The Securities and Exchange Board of India has set the ball rolling for making Aadhaar compulsory for stock trading. The markets regulator has asked exchanges for their feedback on brokers’ preparedness to get their clients to submit the biometric IDs before December 31. ET reported first on August 10 that Aadhaar would become mandatory for buying shares and mutual funds. The BSE, in a recent circular, asked brokers for their comments on the matter by August 23. It said existing clients will have to submit Aadhaar numbers to their
brokers by December 31. New clients should do so within six months of opening demat account. “In case of failure to submit the documents within the aforesaid time limit, the account shall cease to be operational till the time Aadhaar number is submitted by the client,” the circular said. The government and Sebi are making Aadhaar must as part of the Prevention of Money Laundering rules, which aim to curb illegitimate money. Sebi, in recent years, has cracked down on individuals and entities for using the stock exchange platform to convert illegal money into legal money. ‘Tedious Task’18
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Aadhaar May Become the Gatekeeper to D Street Soon Govt, Sebi planning to link unique ID to fin market transactions to curb malpractices Nishanth.Vasudevan @timesgroup.com
Mumbai: Aadhaar may soon become mandatory for buying shares and mutual funds. The govern-
ment and the Securities and Exchange Board of India (Sebi) are planning to link Aadhaar to financial market transactions to try and curb sharp practices such as conversion of black money into white through the stock market. Two people familiar with the development said the government has realised that the permanent account number (PAN) may not be enough to plug tax leaks. Top Sebi officials have informally sounded out select market intermediaries about the possibility of linking Aadhaar to financial
1 Aadhaar card is
currently not mandatory for financial market transactions
2 Move aimed at
curbing fraudulent stock market activities
3 Currently, it is
used for online KYC in mutual fund investments
4 But there’s a lack
of clarity whether Aadhaar Card will replace PAN
5 The government recently
mandated Aadhaar be linked to PAN, bank accounts and mobile phone numbers Illustrations: ANIRBAN BORA
market transactions, a top official with a financial services firm familiar with the development said. “We have been told that making Aadhaar compulsory is in the of-
fing,” the official said. The timing of the move is still unclear. It is also not clear whether Aadhaar will replace PAN as the sole identification number for financial market
India is On Right Track, Growth Rate Reflects It: Lloyd Blankfein
transactions. The government recently mandated that Aadhaar, launched in 2009 by the UPA government, be linked to PAN, bank accounts and
mobile phone numbers. The deadline for existing bank account holders to provide their Aadhaar details is December 31. The unique ID can be used for conducting the mandatory knowyour-client (KYC) check for mutual fund transactions online. In online KYC — known as e-KYC — done with Aadhaar, MF investors do not need to go to fund houses to submit their forms and get their signatures identified in person. Multiple PANs Still Being Used22 ‘Examine Tax Returns of Shell Cos’13
75th ANNIVERSARY OF QUIT INDIA MOVEMENT
PM’s Call: ET was the first to report on August 10 about the impending moveKarenge G ld
CEO
Ib
kt
i
t
t l
lf
ET STARTUP AWARDS
Startups Focus on Value System, Laud Govt Steps WINNERS TAKE IT ALL
Experts Split Over Timing of Decisions
Infosys had estimated it would grow at 6.5-8.5% in the current fiscal year after providing for fluctuations in exchange rates
Sebi Takes Stock of Aadhaar Linkage Our Bureau
MONDAY, 21 AUGUST 2017
hi
(L-R) Harikrishnan AS, Vivek Rajkumar, Karthik R, Jitendra Jagadev, Daniel David, Falguni Nayar, Ravi Shankar Prasad, Piyush Goyal, Arun Chandru, Amarendra Sahu, Deepak Gaur (on behalf of Ravi Adusumalli), Anand Anandkumar, Sriharsha Majety, Nandan Reddy, Rahul Jaimini
Star panellists put premium on values and perseverance, ambition and vision Our Bureau
Bengaluru: Values and perseverance, ambition and vision are attributes that entrepreneurs must possess in plenty, according to a galaxy of stalwarts who gathered to celebrate the spirit of enterprise at India’s de facto startup summit in Bengaluru on Friday. Even as they lauded the role the central government has played in boosting startup activity, top entrepreneurs were emphatic that companies seeking spectac-
ular growth must also prize culture within the workplace. “Building a company is a marathon, not a sprint,” said Nandan Nilekani, the architect of Aadhaar, India’s unique identification number for citizens. “People should have a common value system and the same sense of deferred gratification. You must be willing to forgo rewards for many years, if required, to get rewards 10-15 years down the line,” he said. The brightest stars of the startup firmament, government leaders, investors and senior business executives gathered in the country’s tech capital to pay tribute to the winners of the ET Startup Awards 2017. ‘Capital will Follow Talent’18
FULL COVERAGE14, 15
Aur Karke Rahenge
Fresh Push to PSU Bank Mergers Keen to push consolidation in public sector banking space, the Centre is looking to set up a new mechanism to speed up decisions on possible mergers among PSBs, reports Dheeraj Tiwari.7
An Evening with Murthy Infosys was on every attendee’s lips on an evening that had NR Narayana Murthy in its midst. The 71-year-old looked dapper, was relaxed and congratulated the young gathering.14
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2 Pure Politics
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017 *
‘UNIFORMLY AIM AT REACHING OUT TO ALL SECTIONS OF POPULATION’ After Cabinet meeting last Wednesday, Prime Minister Narendra Modi asked ministers to ensure maximum productivity of their departments and ministries
PM’s Delivery Mantra for Mantris
Modi and Shah to meet CMs and dy CMs of all NDA-ruled states to take stock of issues
[email protected]
New Delhi: Prime Minister Narendra Modi has asked all ministers to focus on delivery and “full and proper implementation” of the Centre’s flagship schemes, and ensure that government officials do not avail benefits from corporates and state-run companies. After a Cabinet meeting last Wednesday, the prime minister asked ministers to ensure maximum productivity of their departments and ministries and said they should uniformly aim at reaching out to all sections of the Indian population, especially the poor. “Now with about two years left for the next elections, more than caste combinations and other equations, the focus needs to be on delivery and delivery alone. The PM is making that clear to ministers,” a senior gov-
FOCUS AREA
SPECIFIC TASK
Now with about He asked them two years left to choose their medium of comfor next elecmunication but ensure work tions...the focus needs to reached every person be on delivery alone ernment official said. “He said the ministers were doing good work but unless the poorest of poor, the last person in the societal structure, felt a difference, the job was incomplete,” the official said. “He asked them to choose their medium of communication but ensure the government’s work reached every person in the country.” A minister that ET spoke with said the prime minister’s tone was
“firm and optimistic”. According to the official quoted earlier, Modi has also told minister “probity of the highest order is on and nobody indulging in unlawful activity will be spared”. A comprehensive report of ministers and their staff members from all ministries and departments using cab, chartered flight and hotel facilities provided by PSUs was reportedly sent to the PM a few days ago, after a
question on it was raised in Parliament. Modi has now asked minister to strictly avoid taking favours from PSUs, especially for hotel and commute facilities, an official said. In a meeting two months ago, the PM had reminded the ministers to use only government guest houses and circuit houses while on official visits and not book five-star hotels. He had earlier asked ministers to take only Air India flights and avoid taking chartered flights offered by corporates during events. Modi also said he was unhappy with reports of family members and staff of some of them using vehicles from PSUs coming under their ministries. The PM is now expected to tell lawmakers to increase their interest in governance, policy-making and administration. Last month, he is learnt to have warned MPs to increase their attendance in Parliament. Modi and BJP chief Amit Shah will meet CMs and deputy CMs of all NDAruled states on Monday to take stock of governance-related issues. This will be Modi’s third meeting with NDA chief ministers after the BJP-led alliance swept to power in 2014.
PHOTO FOR REPRESENTATION PURPOSE ONLY
KEEPING CLOSE WATCH
A comprehensive report of ministers and their staff members from all ministries and departments using cab, chartered flight and hotel facilities provided by PSUs was reportedly sent to the PM a few days ago, after a question on it was raised in Parliament
Prime minister is now expected to tell lawmakers to increase their interest in governance, policy making and administration
Last month, he is learnt to have warned party MPs to increase their attendance in Parliament
India’s Economy Became Fastest Growing Under Modi Rule: Shah Bhopal: BJP chief Amit Shah said India’s economy become the fastest growing in the world since Prime Minister Narendra Modi took over and that it was in a state of paralysis during the previous UPA rule. He said that recognising the potential of the youth of the country, the government has launched schemes like Start-Up India, Stand-Up India and Skill India to provide forum to them. After Modi came to power in 2014, the country started developing rapidly, while in the 10 years prior to the NDA rule, it was stranded and the economic system had got paralysed, Shah said addressing a function here to distribute certificates to meritorious students. — PTI ARINDAM
Yogi Adityanath’s Big Air-Connectivity Plan for Three Prominent Centres Incentives to also apply to any airline offering new flight from Lucknow, Varanasi or Gorakhpur to airports in other states
Big reason behind the incentives is to boost tourism numbers to UP: State official
Lucknow
[email protected]
New Delhi: The Yogi Adityanath government has decided to roll out the red carpet for airline operators, proposing a mega incentive policy for any airline that is ready to offer direct air connectivity between the state’s three prominent centres — Lucknow, Varanasi and Gorakhpur. At present, there is no flight from the state capital Lucknow to PM Modi’s Lok Sabha constituency Varanasi or Gorakhpur — CM Adityanath’s constituency — or vice versa. Any person wishing to fly between these three destinations, which incidentally have fully functional airports, has to fly first to Delhi. Varanasi and Lucknow are even international airports. The BJPled government in UP is now set to correct this regional anomaly in the state’s air connectivity by offering incentives to attract airlines. As per the draft State Civil Aviation Promotion Policy of UP 2017, reviewed by ET, the state has proposed to reimburse its state GST share on tickets to the first airline which offers inter-connectivity on a route between these centres. The VAT on air turbine fuel (ATF) for these routes will also be waived off by UP. The airline will also get compensation equivalent to the state’s viability gap funding (VGF) share of `400 per seat on half of the seats in the flight and UP will be under-
THIRD EYE
ZAHID
UP proposes to reimburse its state GST share on tickets to first airline which offers inter-connectivity between these centres; VAT on ATF to also be waived off
Gorakhpur Rolling out the red carpet for airline operators
UP will be underwriting `2,500 per vacant seat up to total 15% of seats on the flight; incentives will be initially offered for a year: Draft policy; UP will also offer free parking & night halts to aircraft
UP CM for Meeting Between NIA, State Agencies Every Six Months LUCKNOW: For ef-
fective coordination between NIA and state agencies, there should be a meeting between them every six months to exchange information and fill gaps, if any, Yogi Adityanath said on Sunday. The chief minister was addressing a gathering after inauguration of the National Investigation Agency’s office and residential campus here. “There should be a meeting of NIA with state agencies every six months for exchange of information and fill the gap, if any. There should be better coordination among agencies,” he said. — PTI
Varanasi
writing `2,500 per vacant seat up to total 15% of seats on the flight. These incentives will be “initially” offered for a year, the draft policy has proposed. The first two incentives— SGST reimbursement and VAT waiver — will also apply to any airline offering a new direct flight from Lucknow, Varanasi or Gorakhpur to major airports in other states. Right now, there is a flight from Lucknow to Mumbai, Kolkata, Patna, Delhi, Dehradun, Bengaluru and Bhopal and from Varanasi to some of these centres. UP wants more centres to be connected and is bringing a new policy as there is no comprehensive state civil aviation policy in UP so far. The state government has found that while passenger air traffic in UP grew in 2016-17 by 26% to 4.2 million passengers, it was still a pittance compared to its nearly 20 crore population. UP has also recently got clearance from the Centre for development of an international airport at Jewar in Greater NOIDA on the PPP mode. The new policy is proposing incentives of similar nature but for bigger duration to airlines ready to connect its unserved and under-served airstrips like Agra, Allahabad, Meerut, Jhansi, Kanpur, Faizabad, Bareilly and Aligarh, which may be included by the Centre in its Regional Connectivity Scheme. UP also proposes to waive off its SGST share and underwrite 50% of vacant seats for three years on RCS connecting flights.
NEW DELHI: A metal statue of Sri Devi from the Chola period and a terracotta female figure dating back to the Mauryan era are among the 24 antiquities the Modi government has brought home from abroad since 2014 when it came to power. Of the 24, including a statue of Bahubali and a Nataraja, 16 were brought back from the US, five from Australia and one each from Canada, Germany and Singapore, the Archaeological Survey of India (ASI) said in reply to an RTI query filed by a PTI correspondent. The antiquities were “voluntarily returned” by the countries between 2014 and 2017, it said. — PTI
NOTICE UNDER BLACK MONEY ACT Dept seeks copies of all documents in respect of investments made by Karti including agreement, sale deed & possession letter
Tax Dept asks Karti for Details of ‘Undisclosed’ UK Property Former FM’s son says he disclosed details in I-T returns
[email protected]
Airline to get compensation equivalent to UP’s VGF share of `400/seat on half of seats in flight
Coming Home: Sri Devi, Bahubali & Other Antiques
New Delhi: The Income-Tax Department has issued Karti P Chidambaram a notice under the Black Money Act, seeking details of an “undisclosed” property that it said he acquired in the UK. The son of former finance minister P Chidambaram rubbished the charge, and said he had disclosed the details of the asset in his tax returns. The department has issued similar notices to Karti’s mother and wife as well under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015. Karti and others have also been asked to provide details of all their assets in India and abroad. The UK property is based in Barton, Cambridge. In the notice, the department said Karti had paid `77,66,797 for the property in fiscal year 2015-16. “Also you have not disclosed the said foreign assets/financial interests fully” in the returns filed for the assessment year 2016-17, as well as a payment of `1 crore made in the name of Karti’s minor daughter, the notice read. ET has seen the notice as well as Karti’s response to the I-T department, filed last week.
DEPT SHOULD WITHDRAW NOTICE, SAYS KARTI In his response, Karti says dept could issue such a notice under the Black Money Act only when foreign asset is “undisclosed”, and so should withdraw it in this case Jurisdiction is “totally absent” here since “there is no foreign asset which has not been disclosed” in the returns, Karti said in the reply filed through his lawyer The department has sought copies of all documents in respect of investments made by Karti in the property, including the agreement, sale deed and possession letter. He has also been asked to furnish details of the money paid and his share in the property, along with details of the co-owners, if any. In his response, Karti said the department could issue such a notice under the Black Money Act only
NOTICES TO MOTHER, WIFE
Income-Tax Department has issued similar notices to Karti’s mother and wife as well
According to reply, the department got the very details of the UK property from Karti’s income tax returns
when the foreign asset is an “undisclosed” one, and so should withdraw it in this case. The jurisdiction is “totally absent” here since “there is no foreign asset which has not been disclosed” in the returns, Karti said in the reply filed through his lawyer. According to it, the department got the very details of the UK property from Karti’s income tax returns. Karti has submitted that the “foreign remittance for purchase of the said foreign asset was through normal banking channels as per RBI guidelines”. The property also reflected in his father’s disclosures before the EC, Karti said. Questioning the veracity of I-T department’s claims, Karti submitted that it had not disclosed the source of information on the basis of which the notice had been issued to him. In a short affidavit filed in the SC re-
SEEKING DETAILS
FILE PHOTO
Karti and family have been asked to provide details of all their assets in India & abroad cently, Karti had alleged attempts by government agencies to “embarrass, humiliate and harass” him and his family. Karti claimed he was being repeatedly pursued with the intent of using him to implicate his father, Congress leader P Chidambaram. Karti is also being investigated by CBI in a cheating and corruption case. As per SC directions, he is slated to appear before CBI on August 23.
‘NEW INDIA PLEDGE’ FUNCTION ‘J&K police, central forces, Army dominating terrorists’
DeMo Starved Maoists And Separatists: Jaitley TARGETING CONGRESS
Our Political Bureau
Mumbai: Demonetisation has starved Maoists and separatists in Jammu & Kashmir of funds, weakening their activities, finance minister Arun Jaitley said on Sunday. “Earlier, before demonetisation, stone pelters used to gather in the thousands on the streets of Kashmir, but now not even 25 gather for such agitations… Separatists in Jammu & Kashmir
The earlier govt did not solve Kashmir issue, then what right do they have to question us? ARUN JAITLEY FILE PHOTO
UNION FINANCE MINISTER
and Maoists in Chhattisgarh have been starved of funds,” Jaitley said at the ‘New India Pledge’ function organised by the Mumbai BJP. Demonetisation helped bring currency, which was being circulated outside the formal banking system, back to the system, he said. He took on the Congress for its criticism on the government’s handling of the Kashmir issue. “The earlier government did not solve the Kashmir issue, then what right do they have to question us?”
Only in Solidarity
‘Sita-Ram’, ‘Ram-ai-Ram’
Using Space for a Purpose
All the World’s a Stage
Unlike most Samajwadi leaders, JDU rebel Sharad Yadav’s children have so far stayed away from politics. However, his only son Shantanu — a PG student of international affairs at a London university — was standing among the delegates in the back row on stage at the Yadav-anchored Opposition meeting. “Only in solidarity for Nitish-battling father,” claim insiders.
Suspended JDU MP Ali Anwar was in form while moderating Opposition meet. “Next, a Comrade who carries both Ram and Sita with him,” said Anwar while inviting Sitaram Yechury to speak. “Now, the one who has two ‘Rams’ with him,” Anwar invited, and came JDU rebel Ramai Ram to take the mike.
Siddique Ahmed, a minister in the erstwhile Tarun Gogoi government, has devised a novel way to use the long veranda at his house which is mostly empty as not many visitors can be seen outside his Karimganj residence. The Congress heavyweight from Barak Valley now uses the space to make thala (handpulled cart) and gives it to the needy workers.
Buoyed by international recognition for Kanyashree, ‘Safe Drive, Save Life’ is Mamata Banerjee’s latest muse (read flagship scheme). She has expressed her wish to take the scheme to the international platform like Kanyashree. Initially, ‘Safe Drive, Save Life’ looked like a slogan for road safety adopted by the city police. Now, the CM’s core team is on an overdrive to get international acclaim for Banerjee’s dream scheme.
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Plan to Replace UGC, AICTE With HEERA on Hold HRD minister says it is better to ‘re-invent’ current system as HEERA’s introduction will need new rules
[email protected]
New Delhi: The central government seems to have put on hold its ambitious plan to replace the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE) with a single regulator for higher education. Union human resource development minister Prakash Javadekar told ET
that it is better to “re-invent” the current system as the introduction of a Higher Education Empowerment Regulation Agency (HEERA) will require change in legislation and introduction of a new set of rules. “We are already working out a mechanism of graded autonomy in which the top 20% institutes graded will enjoy greater freedom from the regulatory authorities, the next 40% will enjoy about 50%
Tripura, 2 Cong States in Shah’s Crosshairs Bikash.Singh @timesgroup.com
Guwahati: BJP president Amit Shah is out to capture Congress-ruled Meghalaya and Mizoram and Left Front-ruled Tripura. Four north-eastern states Nagaland, Tripura, Mizoram and Meghalaya are going to assembly polls next year. BJP is part of the ruling coalition in Nagaland. BJP had registered a spectacular electoral victory in Assam in assembly polls last year. In Manipur polls early this year, the party had managed to cobble up grand coalition and form the government. In Meghalaya and Tripura, the saffron party is rerunning its winning formula of boothlevel committee management and roping in disgruntled MLAs of opposition parties. It has managed to get six MLAs of Trinamool Congress in Tripura and has emerged as the main opposition party. Left Front has been ruling Tripura for the last 24 years. In the dissident-ridden Congress in Meghalaya, some party MLAs are in touch with BJP leaders and are likely are join the party in and around October. However, in both Meghalaya
and Tripura, the BJP is not likely to project a chief ministerial face. Congress is ruling Meghalaya for the second consecutive term. Meghalaya unit president, Shibun Lyngdoh told ET, “Some Congress MLAs have expressed their willingness to meet Amit Shah who was scheduled to visit on August 12, which was cancelled due to vice-presidential elections and other engagements. We are expecting his visit in September.” In the Christian-dominated Mizoram, which is ruled by Congress, BJP is relying on the livery of opposition Mizo National Front (MNF) to contest the polls. MNF is a member of NEDA.
freedom and the remaining will be under continual regulation,” Javadekar said. These institutes will be graded as per the scoring system put in place by the National Assessment and Accreditation Council (NAAC) and will be granted autonomy apart from the 20 ‘Institutions of Eminence’ that will enjoy 100% autonomy, the minister said. The ministry is also looking at clearly segregating the ambit of both the AIC-
IIT Entrance to Go Online From 2018 Press Trust of India
Chennai: The entrance examination for the prestigious Indian Institute of Technology (IIT) will go completely online from 2018, the Joint Admission Board (JAB) decided on Sunday. The JAB, which is the policy-making body on IIT admissions, took the decision at a meeting here. In a statement, Director, Indian Institute of Technology-Madras, and Chairman JAB 2017, Prof Bhaskar Ramamurthi said, “It has been decided that the JEE (Advanced) will be conducted in online mode from 2018 onwards.”
TE and the UGC by ensuring that all technical institutes are monitored by the AICTE and the rest by the UGC. Javadekar said any mechanism, like HEERA, will require a similar change in rules. “It is better to re-invent the current system which is in place than wait for a new law to come in,” he said. HEERA was aimed at putting an end to the ‘inspector raj’ and harassment that the UGC regime is often associated with.
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THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
WHAT STARTED AS NITISH-LALU FIGHT HAS EVOLVED INTO A DELHI BATTLE BETWEEN JDU CHIEF AND SHARAD YADAV WHO IS FINDING INCREASING SUPPORT FROM OPPN PARTIES
Oppn to Make Sharad Anti-BJP Drive In NDA Now, Nitish Shifts Convenor Amid JDU’s Expulsion Threat Focus to Action in Delhi QUICK ACTION
[email protected]
Joint committee of Opposition is likely to be formed in two days and will have reps from 14 parties
Shivanand Tiwari returns to RJD
Patna Shivanand Tiwari on Sunday returned to RJD, a party he had left in 2006 to join the Janata Dal (United). Tiwari, a former Rajya Sabha member, was seen at a press conference of party chief Lalu Prasad here. Prasad announced that Tiwari would be party's national vice president along with Raghuvansh Prasad Singh. Tiwari resigned from the primary membership of RJD in November 2006. He then joined JD(U) but was expelled from it in February 2014 for “anti-party activities”. —PTI
DEVELOPMENT AGENDA
[email protected]
New Delhi: With Janata Dal (United) formally becoming a part of NDA, Bihar chief minister Nitish Kumar now faces a new challenge to make his presence felt in national politics. In the new political equation, Kumar may have to make an aggressive push to advance his position within the NDA to ensure that his state gets a good share of central resources to fund his development agenda. Although he runs his government with BJP’s support in the state, his party has only two members in the Lok Sabha and nine in the Rajya Sabha, including two rebels –– Sharad Yadav and Ali Anwar. The two RS members have already gone against the party line on tie-up with BJP. As things stand today, his party may get two ministerial
Kumar may have to advance his position within NDA to get a good share of central resources
LALU’S NEW VEHICLE FOR ‘BHAJPA BHAGAO DESH BACHAO’ CAMPAIGN Nitish Kumar
FILE PHOTO
Sharad Yadav
FILE PHOTO
New Delhi: Opposition parties are rallying behind Sharad Yadav by planning to name him the convenor of a committee that they are working on to coordinate campaigns against the BJP-led National Democratic Alliance, even as Janata Dal(U) president Nitish Kumar threatened to unseat the dissident leader from the Rajya Sabha. Senior opposition leaders including Ahmed Patel, Ghulam Nabi Azad, Sitaram Yechuri and Yadav are learnt to have held talks over the weekend to constitute the joint committee. Their plan is to hold meetings in several parts of the country on the lines of the ‘Save Composite Culture of India’ they held in Delhi last Thursday. An announcement on the formation of the committee is expected within two days, sources in the know of the discussions said. It will have representations from all the 14 parties that attended the Delhi conference and Yadav will be its convenor, the sources said. This is a follow-up action on Congress leader Ahmed Patel’s suggestion to come out with an action plan to take forward the theme of protecting India’s composite culture. On its part, the Sharad Yadav group is also intensifying its confrontationist attitude within the JDU, unmindful of party chief Nitish Kumar’s recent threat about unseating the veteran leader from the upper house. The Yadav camp held a parallel conference in Patna on Sunday around the same time when the CM addressed a JDU executive meeting, which formally decided that the party would join the NDA. The
Yadav group is readying a petition, to be filed with the Election Commission, to stake a claim for the JDU symbol by arguing that the party was originally founded by Yadav and his colleagues. Responding to Nitish Kumar’s threat of unseating Yadav from Rajya Sabha, dissident party MP Ali Anwar said; “Nitish ji obviously thinks since he is in the company of the BJP and RSS, he can threaten all of us. But, we suggest instead of wasting his time in threatening us, the CM focus on doing at least something for the lakhs of people affected by the floods in Bihar and have been left to languish both by the central and the Bihar governments”. The JDU has already removed Yadav as its parliamentary party leader and threatened further disciplinary action if he attends an opposition rally called by RJD chief Lalu Yadav later this month. “We will cross the bridge when we get to it,” said a dissident leader.
berths in the union ministry. His speech, delivered at the national executive meeting in Patna on Saturday, clearly indicated that he has an inkling about the difficult tasks in store for him. So, he did not miss the opportunity to thank the NDA-led central government for offering quick assistance to tackle the flood crisis in Bihar. This was a clear message to the Centre that his state should get adequate financial support to help flood victims in future. A section of JDU leaders felt that he might be offered the post of convener within the NDA in the new situation. “Kumar is considered to be a liberal face within the NDA camp. As convener, he would be in a better position to deal with regional forces in different states,” a source in JDU told ET. Moreover, Kumar is one leader who has direct access to the BJP’s top leaders and thus, he can easily handle all the union ministers who are from Bihar. A source in JDU said the BJP has brought Kumar into the NDA camp with an eye on the 2019 LS polls. Thus, Kumar has the responsibility to ensure that the NDA puts up a good show in Bihar in the coming LS polls. As an NDA ally, Kumar is expected to extract maximum help from the central government to expedite his development agenda in the state. “If he becomes convener of NDA, he would get the opportunity to frequently meet BJP national president Amit Shah to discuss the NDA’s political strategies. It would be an advantage for him to seek his help in case there is any delay in centrally-sponsored schemes meant for Bihar,” the source further added.
JUST-IN-TIME COMPLETION By March 2019, just two months ahead of parliamentary elections, 19 new sections in nine cities would be commissioned
In Pace Change, Govt to Double Network in 18 Months, Add 4 Cities on Metro Map
[email protected]
Oct, 2017
Length (km)
38.2
Apr, 2018
28.4
Aug, 2017
8.5
30.2
28
Dec, 2017 Sept, 2017
June, 2018
29.7
28
Mar, 2018
16.3
15.5
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June, 2018
15.5
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Delhi Lucknow Ahmedabad Hyderabad
Noida Chennai Delhi
Lucknow Hyderabad
Ahmedabad
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Sept, 2017
New Delhi: In a major fillip to urban transport, the Union government is all set to double the metro rail network over the next 18 months, adding four new cities to the metro map. The biggest gainers would be cities in BJP-ruled states, viz. Lucknow, Ahmedabad and Nagpur. Lucknow Metro would be the first off the block as it has received safety clearance and would be inaugurated within this month. Election-bound Gujarat would get its first 6.3 km stretch in the
capital city Ahmedabad next month. These two stretches would be followed by 28.4 km stretch in Delhi and 28 km in Hyderabad in September. By March 2019, just two months ahead of parliamentary elections, 19 new sections in nine cities would be commissioned, adding 313 kms to the 370-km metro network. This translates to 313 kms made operational in 19 months as compared to 370 kms made operational over 33 years in eight cities since the first metro service began in Kolkata in 1984. This is expected to be a major election pitch in urban centres. A senior
ministry of housing and urban affairs official told ET, “Our cities are grappling with traffic jams and people are spending a lot of time on the roads. At such a time an expansion of comfortable metro network comes as a fillip to public transport. This has been aided by an The top increase in budgetary gainers provision for metro would rail projects.” be cities, As per statistics proincluding vided by ministry of Lucknow, Ahmedabad housing and urban and Nagpur, affairs (MHUA), there in BJP states has been a 158%hike
in budgetary provision for metro projects during the last three years over the previous three years under Congress-led UPA government. The budgetary provision between 2012 and 2015 for metro projects was `16,565 cr, which has been increased to `42,696 crore during 2015-18. At present, metro services are available in Delhi (217 kms), Bengaluru (42.3 kms), Kolkata (27.39 kms), Chennai (27.36 kms), Jaipur (9 kms), Kochi (13.3 kms), Mumbai Metro Line 1 (11.4 kms), Mumbai Mono Rail Phase 1 (9 kms) and Gurugram Rapid Metro (11.60 kms).
Real Enemy is Islamic Terrorism, The Rest Mere Smear Campaigns Write of Centre
R SRIRAM
T
error revisited Spain with tragic results last week as a bunch of madmen ran amok in the heart of Barcelona killing half-a-dozen people and injuring many more. The scale of the terror and destruction bears little resemblance to the carnage visited upon another Spanish city thirteen years ago but that does not make it any less criminal and cowardly. In 2004, as the attention of much of Spain was focused on the general election a few days away, serial bomb blasts ripped through the heart of Madrid’s commuter train system in morning rush hour killing nearly 200 people. The attacks ignited public anger, unseated the centre-right government in the elections that immediately followed and led to the exit of Spanish troops from Iraq. In terms of scale, devastation and implications for Spain’s relationship with its important partners, the Madrid attacks were a terrible, unforgettable tragedy. It seemed to reinforce the view that Western aggression was the root of cause of Muslim anger with transgressions like the Iraq war (Spain initially sent troops) only fanning the flames of AlQaeda-style radicalism. Conservatives, academics and researchers who believed otherwise, who believed that this rise of Islamic fundamentalism/terrorism had nothing to do with justice but was instead, an attempt to seek global domination for one demented worldview with its roots in Salafism, a belief in return to the Caliphate and a contempt for other religions, were unfortunately on the backfoot. Events thereafter appear to prove this Leftist worldview. George W Bush’s muscular war on terror foundered due to inept handling and a lost campaign in Iraq; Barack Obama’s ascendancy and Cairo speech of 2009 seemed to suggest that the US would deemphasise combat as a way to counter the spread of Salafism/fundamentalism. In India, the setbacks to the BJP and the ascendancy of the Congress/Left style of politics dealt a blow to the belief that the vile terrorist ideology can be countered by aggressive policing at home and a no-nonsense approach towards truculent neigh-
ZAHID
Putting Projects on the Fast Track
bours. Appeasement, lackadaisical approach and the bogey of ‘Hindu terror’ were the ‘weapons’ in Congress-UPA government’s arsenal against Islamic terror! Scale and destruction apart, there is one more crucial difference in the response to the Barcelona attack. And that difference is important because it just shows how the liberal/Leftist worldview on Islamic terror has changed dramatically in light of the Islamist terror rampage across countries. Madrid was Spain’s fault, Aznar (former Spain PM, Jose Maria Aznar) fault just like 9/11, which was blamed on everything from CIA activities to American troops in Saudi Arabia and support for Israel. In India, this manifested itself in a ‘hateModi’ campaign which looked at every ter-
DENIALS AND DEFLECTIONS
The modern day liberals & Leftists will cry ‘wolf’ at non-existent threats from white nationalists in US and allegedly militant Hindus in India rorist attack on home soil through the prism of Gujarat. Attempt was made to link every atrocity to what happened in Gujarat so as to suggest that somehow that Narendra Modi was responsible for all the tragedies. The bottom started falling out of this insidious campaign when the terrorists refused to play ball. Far from being freedom fighters interested only in Kashmir/ Palestine liberation, they showed their true colours with the rise of ISIS and the campaign of terror unleashed on the heart of Europe. For liberals, it was a painful decision. Difficult to blame western imperialism when innocent Germans, Belgians and
Spaniards are being slaughtered. Difficult also to blame ISIS atrocities on Iraq war when France, which had nothing to do with it, is attacked. The silence on Barcelona from the usual ‘blame-the-west’ gang exemplifies this confusion. The latest liberal smear effort is to equate the thugs of Charlottesville with terrorist scumbags of ISIS and AlQaeda. Make no mistake, there is a lot of difference between ISIS and the white nationalist/supremacist gangs or groups in the US. The former is a disaster for civilisation as we know it. The latter are a localised danger to parts of American society if allowed to grow and become big, especially with their vile, racist rhetoric. That’s it. They are not a national or an international security threat on the scale of ISIS. A similar effort is underway in India to link fringe Hindu groups with Taliban in Afghanistan. There is an even more sinister effort to paint Hindu/Indian society as intolerant and anti-Muslim and out to deny minority rights. Recent articles in international publications point to a larger effort in this direction. India we are told is seeing aggressive Hindutva, rising Hindu intolerance. This will be used at next available opportunity to smear Indian society, to wash off the sins of Islamic radical preachers and extremists and whitewash the depredations of Islamic terrorists from across the border. We have seen this movie before and know how it is going to play out. Liberals in India and the west are no different when it comes to smear tactics or acting as apologists for Islamic terror. They know the real villain is Islamic terrorism. But much like their forefathers who whitewashed the sins of Soviet communism in the name of the fight of justice or equality, the modern day liberals and Leftists in the west and India will cry ‘wolf ’ at non-existent threats from white nationalist groups in the US and or allegedly militant Hindus in India to hide the real problem of Islamic fundamentalism. The game has just begun.
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Brands: Creating Desire 5
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Everstone Puts on Block 45% in Pind Balluchi Co Co bought stake for $20 m in 2012, expects to make 2.5 times its investment now
The Food Habit
SOME IMPORTANT DEALS IN THE SEGMENT INCLUDE
Everstone owns Burger King India & Indonesia, Modern Foods, Harry’s, the Disgruntled Chef, Blue Foods, Massive Restaurants, Domino’s Indonesia
} True North’s $30 m investment in deGustibus Hospitality } Goldman Sachs’ $10 m investment in Azure Hospitality } Mayfield Capital has backed BTB Marketing
Co has exited its investment from Sula Wines and Capital Foods
} Matrix Partners-backed Moods Hospitality runs multiple formats such as The Wine Company
India’s restaurant industry has been growing 20-30% compounded annually
Sneha Shah & Baiju Kalesh
Mumbai: Home-grown private equity fund Everstone Capital is looking at selling its 45% stake in JS Hospitality, the company that runs Pind Balluchi chain of restaurants. The fund is expected to make 2-2.5 times its five yearold investment, said three people with direct knowledge of the deal. In January 2012, Everstone picked up 45% stake in JS Chadha-run JS Hospitality for $20 million. The company runs 35 Pind Balluchi restaurants, mostly in the National Capital Region. The restaurant that serves north Indian cuisine has a quick service restaurant model. JS Hospitality also owns the Vatika Grand Group of Hotels. “The initial work on the exit has just begun. The fund will reach out to prospective financial as well as strategic partners to sell stake,” said one of the persons with direct knowledge of the deal. Under its flagship F&B investment vehicle, F&B Asia, Everstone Capital has been investing in the fast growing F&B sector. It owns Burger King India and Indonesia, Modern Foods that it acquired from FMCG major Unilever India, Harry’s, the Disgruntled Chef, Pan India Food Solutions (also known as Blue Foods), Massive Restaurants, besides the franchise of Domino’s in Indonesia. Through its F&B vehicle, the fund has invested more than `1,300 crore in the sector so far. The company has already exited its investment from Sula Wines and Capital Foods, making 3.1x and 2.4x re-
Fast-food segment is projected to grow 16.6% annually, followed by casual dining at 10.1%
} PE-backed Massive Restaurants has diversified into Farzi Café, Masala Bar } CX Partners have invested `110 cr in Barbeque Nation in 2013
Data from Grant Thornton India-Ficci report
turns on the investment. “Since the investment into JS Hospitality is almost five years old, the fund is now looking at cashing out. It is expected to make around 2-2.5 times returns on its investment in the company,” said another person with direct knowledge of the deal. An email query sent to JS Chadha and the spokesperson of Everstone Capital did not elicit any response.
BIG INVESTMENTS
PE investors have pumped more than $700 million into fine, casual dining formats, pubs in the past four years The company has been looking at expanding at a faster pace across India and in some overseas locations such as the Middle East. “However, the expansion plans could not be implemented as envisaged. The company would now look at a bigger and deep pocketed investor to help it achieve its expansion strategy,” said another person with knowledge of the company’s plans. Private equity investors have been bullish on the fragmented restaurant industry in India that has been growing at 20-30% compounded annually. Some of the important deals in the segment include True North (formerly IVFA)’s $30 million in deGustibus Ho-
spitality, the company that owns and operates restaurant brands such as Indigo, Indigo Deli, Neel, Tote on the Turf and Moveable Feast; Goldman Sachs’ $10 million investment in Azure Hospitality, which runs the Mamagoto chain of restaurants; Mayfield Capital has backed BTB Marketing, which runs The Beer Café chain of microbreweries. Matrix Partners-backed Moods Hospitality runs multiple formats such as The Wine Company, Yo! China and Dimsum Bros; PE-backed Massive Restaurants run by Zorawar Kalra has diversified into Farzi Café, Masala Bar and Made in Punjab after the runaway success of Masala Library. CX Partners has bankrolled Bengaluru-headquartered Barbeque Nation with a `110 crore investment in 2013 while the year before that Aditya Birla PE put $10 million into AD Singh’s Olive Bar & Kitchen. PE investors have pumped more than $700 million into quick service restaurants, fine and casual dining formats and pubs in the past four years, as per Grant Thornton India’s estimates. F&B sales are estimated to have grown 24% to `3.8 lakh crore in sales in the year to March with about half of Indians’ total consumption expenditure going towards food, as per a report by Grant Thornton and the Federation of Indian Chambers of Commerce and Industry. The fast-food segment, which has the largest market share at 45%, is projected to grow 16.6% annually, followed by casual dining, which has a market share of 32%, at 10.1%, according to the report.
Indian Hotels Plans to Raise `1,000 crore Co to use funds raised through rights issue for expansion of its Sea Rock and Taj Lands End properties in Mumbai Anumeha Chaturvedi & Baiju Kalesh
Mumbai | New Delhi: Indian Hotels Company (IHCL), which runs the Taj Group of hotels, plans to raise about `1,000 crore through a rights issue to fund the expansion of its Sea Rock and Taj Lands End properties in Mumbai, people familiar with the development said. The fund-raising plan may be discussed at IHCL’s planned board meeting on Monday, the persons cited earlier told ET. IHCL declined to comment on the matter. According to people in the know, the company is planning to add 400-500 keys to these two properties. The capital raised from the rights issue will be used for this development and to expand to other cities. In a statement issued to the Bombay Stock Exchange (BSE) on August 16, IHCL had stated that a meeting of the board of directors of the company will be convened on Monday, August 21, for considering various options for raising funds as the board may deem appropriate. According to industry insiders, the Taj Group has been looking to expand the Sea Rock and Taj Lands End properties for a few years now, but nothing had been formalised so far. “The plan is to convert Sea Rock hotel into an ultra-luxury hotel and Lands End will operate as an upscale property,” said Siddharth Thaker, managing partner, Prognosis Global Consulting. “The additional floor space index at Lands End could be utilised for building luxury serviced
Room for More IHCL owns hotels like z
Taj Mahal Palace, Mumbai
z
Taj Lands End, Mumbai
z
Taj Exotica, Goa
z
Vivanta by Taj-Fort Aguada, Goa
z
Vivanta by Taj-Connemara Chennai
z
Vivanta by Taj- President, Mumbai
z
Vivanta by Taj-Gomti Nagar, Lucknow
Q4 revenue from operations
`524 cr
Stock closed at `123.65 on BSE on Friday
Q4 consolidated gross debt
`3,383 cr
apartments on the lines of Taj Wellington Mews at Colaba. So Lands End, Sea Rock and the serviced apartments could become one consolidated block and could consolidate IHCL’s leadership in the north and central Mumbai commercial district.” The company has been looking for a new managing director, chief executive to replace Rakesh Sarna, who resigned in May and is expected to continue in the same role till September 30.
Pitch Report Honda Cars Gets Green Nod
for `1,577 cr Expansion Project NEW DELHI: Honda Cars has received
the environment clearance for a `1,577 crore expansion project at its Tapukara plant in Rajasthan. The clearance has been given subject to the compliance of certain specific and general conditions, the ministry said in a letter issued to HCIL. It has informed that it has a total land area of about 17.7 lakh square metre .
Monte Carlo Looking to
Become an All-season Player NEW DELHI: Monte Carlo Fashions, known mostly as a winter-wear brand, is looking to expand the product range to be recognised as an all-season apparel brand and increase footprint across the country. The company said it plans to diversify its pan-India presence by penetrating into the southern and western regions.
Q&A
DEEPAK IYER MANAGING DIRECTOR, MONDELEZ INDIA
‘Though Focused on Chocolates... Our Goal is to be a Snacking Products Co’ International snacking giant Mondelez has rejigged its distribution business in India by dividing its sales team into two – both handling different products depending on where they are stocked – shelf or visi-coolers. “There are two different products and two different salesmen calling on the same retailer every day but one truck delivering both the orders next day. So, we optimise the cost of delivery,” said Deepak Iyer in his first interview after joining as Mondelez’s India managing director a year ago. “We significantly expand the bandwidth of our salesmen because it is only half the portfolio and can sell two times better,” Iyer told Sagar Malviya. Edited excerpts:
Despite being the market leader with around 70 years of presence here, the country’s contribution to your global sales remains small? One is to determine how important the country is to the global portfolio and second, your contribution in terms of size of the business. You could have a smaller contribution but a significantly higher growth rate in that country. You could have a country that boasts of the highest market share and hence it churns out innovations, it churns out earnings, it churns out best practices, which you can easily scale and replicate. In the past five years, we have held our market share at 65% here, which is a great point for us. So, going by the country’s contribution to our top line, India is an important market for us. You have added newer brands yet market share is stagnant. Does that mean cannibalisation within the portfolio? We have seen a lot of global entrants, many new local players,
COMPANY PHOTO
ON CHOCOLATE
Chocolate is our bread and butter, so it will stay in the centre — not just in the past, not just today, but even in the future and also fierce competition from existing players. In such a scenario, holding on to a large market share has been a commendable effort from our side. We rather get our brands cannibalised by our own brands than by competition. The way we have been launching innovations, big bold moves, large investments, all of which are mostly successful, I think we have a very strong way of growing and building categories. So, in that sense we are prepared to take on all kinds of direct or indirect competition.
You were historically very weak in rural markets. Has that changed now? Rural market is close to 20% of our business now. A few years ago, it was just 10-11%. We are now present in 40,000 villages against 20,000 a year ago. Our investment in visi-coolers was nearly two lakh sometime ago but today it is at around three lakh. These are significant investments we have made. And, it’s not just that. We are doing cutting-edge work to expand our outer market bandwidth. While you are present in biscuits and beverages, the
perception of Mondelez as a just chocolate company hasn’t changed? Chocolate is our bread and butter, so it will stay in the centre — not just in the past, not just today, but even in the future. And that’s something we don’t want to dilute our focus on. However, that does not mean we have not built capacity to manage our other categories. Worldwide our ambition is to become a snacking products company and India is part of that global plan. We believe, in a very short period of time — of around
five years or even less — Mondelez will become one of the best known, most loved brands in the biscuit category. A year ago we launched our cookies, Bournvita biscuit, which is a healthy offering from us. We have also made significant progress with Tang, a great refreshment beverage. So, though we stay focused on chocolates, we are adding capacity to build other categories to achieve our goal of being a snacking products company. Why haven’t the per capita consumption of chocolates grown in India? Chocolates in developed markets are a part of regular household consumption and come under snacking. In India, the way it started, it was meant only for kids. But, over time, with some great marketing efforts in the last two decades, we have made this category appealing to all age groups. We are nowhere near saturation in terms of per capita consumption. Whichever way you dissect the market, rural, urban, etc, India will be the growth engine. It is one of the top ten priority markets for us.
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6 Companies: Pursuit of Profit ET’s weekly roundup of the wackiest whispers and murmurs in corporate corridors & policy parlours
ARINDAM
SUITS & SAYINGS
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
Info on Infy Will the Vishal war breaking out in Infosys now spill over to the US? No, we’re not talking Valleyside volleys, but the threat of class action lawsuits. But with one of the Infy founding fathers flying off to the US Mayflower-style for the next few weeks, will one of his key assignments be to control the damage? Meanwhile, the chatterati here at home are busy betting on the heads that will roll next from the board of directors. This may soon become a case of shooting the messenger. Or should we say the match-maker?
PEs Want a Taste
Get Shorty
With blood flowing at Infosys, private equity funds have been spotted circling round the bellwether tech company like old turkey buzzards. PE funds have just one rule: buy cheap, sell at a heavy profit. It turns out that three global PE funds, which had their peckful with heavy profits by investing in software companies recently, are circling seriously. Infy stocks have tanked, so surf’s up for these guys.
Is it true that hedgies across Asia were a $100 million short on Infy, days before the resignation drama played out on prime time? Eyebrows have been suitably raised after there was a buzz about a group making a killing – and thereby hinting at them having prior information about the implosion. FIIs have indeed been cashing their chips on the Infosys counter. But this is serious insinuation. Watch this space.
Board Games
OYO Gets the Dekko
Corporate coups these days are fought as much on social media as in the boardroom. So no surprise to see ‘investigative’ articles popping up that poke holes in NR Narayana Murthy’s ‘high ethical standards’. One such attack involves some of the biggest names in media and banking. Written by a group that claims to be a motley of focused, factual, accurate and unbiased individuals, all the parties concerned have been in the spotlight recently. Expect clarifications to fly thick and fast soon.
Piyush Goyal wasn’t the only one caught talking to Ritesh Agarwal. Over dinner at the ET Startup Awards, Agarwal recounted to Goyal how even the minister’s boss had noticed OYO. “This government is very observant,” said Agarwal, referring to a conversation he had with the Prime Minister the previous day at a Niti Aayog event. “The PM saw OYO’s signs at the airport and told me, ‘We saw that all your signs were pointing in one direction, while only one looked different. Why so? You should fix it.’ And that’s when I realised much attention is being given to details,” said Agarwal, suitably impressed.
More Power to Power
Dam-ed If You Don’t
Power minister Piyush Goyal knows how to make an impression. Addressing a waiter at the ET Startup Awards, he said: “Yaar, I can drink regular water. I don’t need an Evian bottle. Desi aadmi hoon, yaar!” When OYO founder Ritesh Agarwal congratulated the minister for resolving shortage of power, Goyal laughed it off saying, “The problem now is that we have lots of power supply. So please use as much as you can. I’m now finding it tough to sell the power.” Pat came Agarwal’s reply: “But sir, ten of our properties are now solar powered. So we are giving [power] back to you.” Power flows both ways, it seems.
With NRN-style austere living suddenly out of fashion, if you want to flaunt your stuff now, go ahead — but puh-leez don’t say Alibaug is your Hamptons. The latest superbling if you’re from the Mumbai jet set is having your weekend villa near the Pavana Dam. At least two heads of conglomerates have invested heavily and breaking news on the Zuper Rich Times has it that a former banking boss with a passion for penthouses is also sniffing around for some lakeside splendour. Overlooking the Ghats and just three hours from the city and an hour from Pune, you will be damned if you’re not seen with your picnic hampers and 1907 Diamant Bleu Cuvee there.
And Then There’s Always BKC As for the less loaded who don’t want a total loss of face, there’s always the Bandra Kurla Complex. As BKC develops into a heavy commercial club with expensive residential apartments, it’s getting its ‘play hard’ part of the ‘work hard, play hard’ routine organised. The former owner of NEO sports has now ventured into a new arena by setting up a club in a 25,000 sq ft area in BKC. It also now has a 32-seater theatre where you can watch the Hindi or English release while being plied with the good stuff. One big advantage over the Pavana Dam getaway — it’s not next to Pavana Dam
Bad Beat Jackpot And while on the subject of high rollers, the millennial millionaires have been upping the stakes when it comes to putting their money in the new poker league. But we now hear that that’s creating some unwanted repercussions — especially for those in the financial sector. One team owner has apparently taken a severe knock on his bottom line ever since it became public that he’s, well, a team owner. Some of his clients have not taken to his risky passion too kindly, worrying about him being tempted to mix business with pleasure – with their money used in that mix. Hmm. Now where have we heard things like this before? Privy to the whispers in power corridors or juicy tips on India Inc? Do share with us at
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ANOTHER BANKER LIKELY ON BOARD
Sumit Dhingra may Join Tatas as Retail Strategist Baiju Kalesh & Sneha Shah
Mumbai: Tata Group may hire Sumit Dhingra, a senior banker from private equity fund Everstone Capital who specialises in the consumer and F&B sector, to help strategise its consumer and retail facing businesses, sources said. Several investment bankers have joined the Tata Group after N Chandrasekaran took over its reins earlier this year. They have been helping the group realign its businesses and sell the noncore ventures for a leaner organisation to emerge. “The group plans to merge retail and consumer businesses and hence is putting in place a team that could execute the transition seamlessly,” said a person familiar with the development. Spokespersons for Everstone and Tata Group did not
respond to emailed queries as of press time Sunday. Dhingra declined comment. The salt-to-telecom conglomerate had earlier hired former investment banker Saurabh Agrawal as chief financial officer, and Shardul Amarchand Mangaldas Mumbai partner Shuva Mandal as the group’s legal counsel. The group also hired Ankur Verma, former Bank of America Corp’s India head who specialises in deals in technology, media, telecommunications, oil and gas, and Nipun Aggarwal from Standard Chartered Bank who is a specialist in metals and mining deals. Media reports indicate that around one-third of the 100 plus entities of the 149year-old group could go as part of the group’s realignment and for that the group needs hands that are trained at financial reengineering and reorganisation.
McD’s Likely to Challenge NCLT Order New Delhi: US fast food chain McDonald's is likely to move NCLAT this week against a National Company Law Tribunal’s (NCLT) order that reinstated Vikram Bakshi as managing director of its Indian joint venture Connaught Plaza Restaurants (CPRL). With no signs of resolution of the conflict between the company and its JV partner in sight, 43 outlets of the fast food chain in the Capital remain closed. CPRL is a 50:50 joint venture between McDonald's India and Bakshi. – PTI
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Companies: Pursuit of Profit
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PSBs’ Mergers May be Put on Fast Track IN THE WORKS A new process similar to alternative mechanism for strategic disinvestments to take quick decisions under consideration
[email protected]
New Delhi: Keen to push consolidation in the public sector banking space, the government is looking to set up a new mechanism to speed up decisions on possible mergers among state-run lenders. The new process will be along the lines of the alternative mechanism that’s been adopted for strategic disinvestments, which involves a small group of cabinet ministers. “We are discussing various combinations for merger in public sector banks. The basic premise remains the same, that is to put the process on a fast track,” said a government official aware of the deliberations, adding that this option may also be explored for the IDBI Bank stake sale. The government announced its intention of reducing its stake in IDBI Bank to below 51% last year but this hasn’t taken place yet on account of the lender’s bad loans and as the valuation exercise hadn’t included its real Alternative estate assets. The government mechanism has already announced its intent involves a to press for consolidation in the small group banking sector. of cabinet Finance minister Arun Jaitley ministers that take key said in June that the government decisions on was “actively working” toward stake sale consolidation but did not share any details, stating this was price-sensitive information. He was speaking after reviewing the quarterly performance of India’s 21 state-run banks. Earlier this year, four state-run banks — Syndicate Bank, Canara Bank, Vijaya Bank and Dena Bank — made presentations to the finance ministry on likely consolidation plans. State Bank of India absorbed five of its associate lenders and the Bharatiya Mahila Bank in April, creating a larger bank that accounts for a quarter of all outstanding loans. IDEA UNDER DELIBERATION
The idea is in the early stages of deliberation, according to another government official.
In Fast Lane ALTERNATIVE DECISION-MAKING mechanism may be used to speed up the process for mergers among 21 PSBs CABINET NOD WON’T BE needed at every stage with this mechanism in place
IDBI STAKE SALE can also be taken up via this process THE GOVT IS KEEN to reduce its stake in IDBI Bank to below
51%
BUT LENDER’S bad loans and the valuation exercise have held up the process
FOUR BANKS THAT HAVE ALREADY MADE PRESENTATIONS ON CONSOLIDATION PLANS TO FINMIN
Syndicate Bank, Canara Bank, Vijaya Bank and Dena Bank The government has adopted the alternative decision-making mechanism to expedite stake sales in government-run companies. Cabinet approval won’t be needed at every stage with this mechanism in place, making the process faster. This process is being employed to pursue a stake sale in national carrier Air India as well. The cabinet committee on economic affairs (CCEA) on Wednesday expanded the scope of the alternative mechanism for pursuing the government’s strategic sale disinvestment programme. It comprises finance minister Arun Jaitley, roads minister Nitin Gadkari and the minister of the relevant administrative department. This mechanism can now decide on matters relating to terms and conditions of the sale from the stage at which expressions of interest are invited to that of seeking financial bids.
PSU Banks’ Unions Threaten Strike Tomorrow New Delhi: Services at public sector banks may take a hit on Tuesday as all unions under the aegis of UFBU have threatened to go on strike against the government’s proposed consolidation move besides raising a host of other demands. Most banks have already informed their customers that functioning of branches and offices will be impacted. Operations at private lenders like ICICI Bank, HDFC Bank and Axis Bank are expected to be normal. The United Forum of Bank Unions (UFBU) is an umbrella body of nine unions. “As the conciliation meeting before the Chief Labour Commissioner failed, unions are left with no other option but to go on strike. There was no assurance from the government and the management of banks,” AIBOC General Secretary D T Franco said. All attempts to hammer out solutions to the demands raised by the unions bore no fruit and hence, UFBU decided to proceed with the proposed strike on August 22, he said. —PTI
MERGER PROPOSAL ADMITTED, LENDERS’ MEET DISMISSED
RCom and Aircel Creditors may Challenge NCLT Order Ericsson, GTL Infrastructure & Bharti Infratel to move NCLAT
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Mumbai: Three creditors of Reliance Communications and Aircel could challenge the dismissal of their right to call for a lenders’ meeting by the National Company Law Tribunal (NCLT) in the National Company Law Appellate Tribunal (NCLAT), people familiar with the matter said. The key operational creditors — those who have dues because they provide a service, not because they lent money — are Ericsson, GTL Infrastructure and Bharti Infratel. The NCLT last Monday admitted the RCom-Aircel merger proposal, dismissing the operational creditors’ contention that a lenders’ meeting be called to clarify how the outstandings will be settled before the merger petition is heard by the tribunal. The NCLT order suggested that any creditor accounting for less than 5% of the companies’ total debt cannot oppose the merger even in the final hearing. “The order is clear that any of our objections can be made at any time during the process. But it also dismisses all claimants, saying none of us account for 5% of debt exposure,” said a lawyer involved on behalf of the creditors of Reliance and Aircel. Telecom tower company GTL Infra had earlier argued that it alone accounted for over 5% of the exposure between current receivables and future commitments. The argument has been dismissed by the NCLT and the company is likely to challenge it, said a person close to developments.
Two lawyers said all three were readying applications to challenge the order in the Appellate court . Sources close to Bharti Infratel said they were “keeping options open” while another source close to Ericsson said it was reviewing the order. The NCLT order said since none of these companies were owed more than 5% of total outstandings of the companies in the last disclosed balance sheet, they would not be considered eligible to call for a lenders’ meeting. But “the order doesn’t say these companies can’t challenge again,” said another The NCLT senior lawyer, not involved order said in the case. The order also any creditor says that since the net with less than worth of the Reliance Com5% of cos’ munications and Aircel total debt combine is positive, their can’t oppose debt holders remain unafthe merger fected by a company rejig. “That isn’t true, we don’t know who will underwrite our liability,” said one of the companies objecting to the merger. Late last week, RCom filed a caveat in the NCLAT that it should be heard if any one appeals against the NCLT order or asks for an ex-parte order. Ericsson, GTL Infra and Bharti Infratel didn’t respond to emailed queries. The three companies, besides lenders such as China Development Bank (CDB), Standard Chartered Bank and HSBC had previously objected to the merger plea being admitted by the NCLT. The three lenders withdrew their objections, but retained their right to object at a later stage.
7
Jio Tower Tenancies to Help Bharti Infratel Kalyan.Parbat @timesgroup.com
Kolkata: Bharti Infratel is expected to be a big beneficiary of likely incremental tenancy additions by Reliance Jio Infocomm over the next nine months, which, in turn, could offset the impact of possible tenancy losses triggered by the merger of Idea Cellular and Vodafone India, analysts and sector experts said. Incremental business given by Jio to Bharti Infratel “is likely to offset any (negative) impact of a potential 40,000-odd tenancy cancellations” on the latter triggered by the Idea-Vodafone India merger, Bank of America-Merrill Lynch said in a note seen by ET. The global brokerage, in fact, expects “Idea and Vodafone to pay tenancy cancellation penalties,” post-merger,
to Bharti Infratel, which would further minimise any negative impact for Bharti’s tower arm. Analysts expect Bharti Infratel to gain 50% of the incremental market share if Jio expands its countrywide base of 4G cell sites from the present 1.2 lakh to 1.5 lakh in the next nine months, and eventually achieves its 2 lakh cell-sites target quickly. After slumping soon after the Vodafone-Idea merger announcement, the Infratel stock has risen over 20%. According to the US brokerage, Jio has 1.2 lakh cell sites on its network, and “it has indicated that all incremental sites are being leased out to third-party tower companies”. At a recent earnings call, Bharti Infratel managing director DS Rawat said, “Jio had become a meaningful part of the tower company’s new (tenancy) additions.”
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8 Turbulence@Infosys
Sikka may have Stayed had Board Taken on NRN Earlier
HOW INFY GOT HERE
‘Continuous Drumbeats of Distraction’
OCT 2014
Jochelle Mendonca & Megha Mandavia
Bengaluru: Vishal Sikka’s exit from Infosys may not have happened if the board of the Bengaluruheadquartered company hadn’t waited this long to take the same hard stance it has now taken against the company’s founder N R Narayana Murthy, people familiar with the matter told ET. Sikka, a former senior executive at German multinational software company SAP, resigned on Friday, citing continuous distractions and disruptions over recent months as key impediments in his efforts to transform the 36 year old company. Sikka
NR Narayana Murthy steps down as non-executive chairman
FEB 2015
Infosys declares a 13% year-on-year growth in net profit and 26.7% rise in operating margins. The company also acquires Israeli company Panaya for $200 million
APRIL 2015
The company announces the acquisition of e-commerce services provider Skava for $120 million Sikka announces his ‘vision 2020’, targets $20 billion revenue for Infosys by the year 2020
JUNE 2015
R Seshasayee, vice-chairman of Ashok Leyland and board member of Infosys, is appointed new non-executive chairman
OCT 2015
Rajiv Bansal, CFO, resigns. He later joins Ola as CFO in December
UNDER THE THUMB
DAGGERS OUT
Pressure has been mounting ever since Murthy in an interview with ET blasted board for ‘drop in governance standards’
After Sikka’s exit, board attacked Murthy, blaming him for making inappropriate demands & threatening them with media attacks
was the first non-founder to take the reins of the company in August 2014. “Sikka and cochairman Ravi Venkatesan met in June for a long discussion where Ravi told Sikka that he would resolve the situation but that didn’t happen,” said a source close to Sikka. “He had to take this extreme step (resignation) for the board to come out explicitly in support.” A former independent director with Infosys, on condition of anonymity, said that the company lost Sikka because the board took too long to take a strong public stand against Murthy. “The company will not comment on rumours and speculation,” an Infosys spokesperson told ET. Pressure has been increasing on Sikka ever since Murthy in an interview with ET this February lambasted the board of
Infosys for what he described as a “concerning drop in governance standards” at Infosys and labelled outsized severance payments to former employees as hush money. In a press conference that month, the board had come together in a show of strength to back Sikka but still shied away from attacking Murthy. That changed when after Sikka’s resignation, the board attacked Murthy in an unprecedented move, blaming him for Sikka’s resignation, making inappropriate demands and threatening them with media attacks. In the past, the board had adopted a placatory stance in public with Murthy often saying that Murthy holds an important role in the company and his inputs would be valued. And it was more than words. For instance, DN Prahlad, a former Infosys veteran, was first inducted into the board in October 2016 and subsequently to the Nominations and Remunerations committee of Infosys explicitly on Murthy’s recommendation. The head of a leading proxy advisory had described Prahlad’s appointment to the boardas “a set of eyesand-ears of the founders on the board” to ET. This kind of scrutiny and pressure did
not sit well with Sikka. Then, Infosys formed a new committee of directors (CoD) —with cochairmen R Seshasayee and Ravi Venkatesan and Prahlad on it —to ensure strategy execution. “The CoD job was to look into the minutiae of execution and to see if it kept up pace with Sikka’s lofty goals,” said a source with knowledge of the happenings at Infosys. “As we have clarified previously, the role of the Committee of Directors is to support and advise the Management in executing the Company’s strategy,” the Infosys spokesperson said. The formation of the panel did not go down well with SAP executives who were brought in by Sikka to help him achieve his $20-billion revenue target by March 2021. “A lot of those SAP executives came a big salaries are were effectively given a free hand. That was definitely going to end,” the source said. He said Sikka’s employment contract precluded the appointment of an executive chairman or executive vice chairman, but that the CoD’s actions came close to meeting those job descriptions. “His target of that $80,000-revenue per employee. They weren’t even measuring that with any rigour. If you have a target, you have to focus on measuring it and achieving it. After the CoD came, they started monitoring it at a project level. Only when you monitor at a project level can you tell when automation and all that jargon is working or isn’t,” added the source. Several executives Sikka brought with him from SAP have already quit —the latest being executive vice-president of corporate development Ritika Suri, Infosys’ venture fund head Yusuf Bashir and Anirban Dey, the chief business officer at Edge Products. Head of architecture Navin Budhiraja and head of platforms Abdul Razack are some of the high-ranking SAP executives still at the company.
Inducts D N Prahlad as independent director FEB 2016
APRIL 2016
Board raises Sikka’s compensation by 55% to $11 million Only 23.57% promoter votes in favour of reappointing Sikka as MD & CEO with the revised pay
Sikka’s Exit on Eve of Buyback Baffles Experts, Managers
Insiders say crisis could have been avoided had board taken a public stance against NRN in Feb
Infosys appoints Vishal Sikka as its first non-founding CEO since the company’s founding
FILE PHOTO
JUNE 2014
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
Murthy writes a letter, asking board to make reports of all its probe public
OCTOBER 2016 Infosys declares that it paid out `23.02 crore severance pay to Bansal. Proxy firms criticise the move MAY 2016
Infosys stops paying the balance of `17.38 cr Bansal was to receive as some founders express reservations
In an interview with ET, Murthy questions the corporate governance practice at Infosys. NRN says “drop in governance standards “
SEPT 2016
FEB 2017
JULY 2017
Infosys scraps Sikka’s target of $20 billion in revenue by 2020.
Infosys declines a request from Murthy to make public report of Gibson Dunn & Crutcher
JUNE 2017
AUG 2017 SIKKA RESIGNS
Big Challenge will now be Retaining Clients who Signed up because of Sikka’s Connect BUMPY ROAD AHEAD Sikka’s personal connections with top execs across the world was a big factor in Infy’s strategy
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Bengaluru: Infosys’ major challenge will be to hold on to its clients and its top executives, several of whom are expected to be spooked by CEO Vishal Sikka’s abrupt resignation, analysts said. Sikka’s personal connections with high-ranking corporate executives across the world were a key factor in his appointment as Infosys CEO. He had made his office directly responsible for handling top clients and talked to fiveto-ten customers every week. He also charted the company’s strategy. “Vishal is there until March, so that’s good. But I think this is what Infosys is going to have to address —how are clients going to work with the team once Vishal has left because a lot of these were personal sales. This is something they will have to work at,” R Ray Wang, principal analyst and founder at Constellation Research, told ET. Even if Infosys is able to replicate some of Sikka’s personal contacts, the fact remains that the lack of stability at the company will give clients a pause. This is the second time in four years that Infosys is going to see a tumultuous management change. The last time was just before Sikka took over and saw founder NR Narayana Murthy return to the company. “Clients under macro/business uncertainty would prefer more business partners that provide continuity of thought process. We believe this event may benefit TCS and Cognizant in the short term,” Rahul Jain, analyst with Emkay Securities, said in a note. To ensure continuity, Infosys needs to reta-
in its top executives – especially those charting the company’s digital strategy all of whom came in under the tenure of Sikka. Analysts have said that the loss of executives will put Infosys’ FY18 guidance at risk. Unlike in the past, where the centre of power was very clearly Bengaluru, Sikka had built a significant executive stronghold in Palo Alto. The centre saw numerous clients visit and Sikka, in his farewell letter, said the company saw a faster conversion to revenue from clients who had visited the centre. Infosys has long struggled with the reputation that only Indians could scale to the upper echelons of power, it is currently being sued in the US for that reason, and any sign that the role of the US executives is being cut down would likely cause them to bolt. “Vishal’s resigna-
tion is likely to complete the power shift back to Bengaluru. Many of the Californiabased executives will either jump ship or be pushed out very quickly,” said Phil Fersht, CEO of IT consultancy HfS Research. Several executives Sikka brought with him from SAP have already quit —the latest being executive vice-president of corporate development Ritika Suri, Infosys’ venture fund head Yusuf Bashir and Anirban Dey, the chief business officer at Edge Products. Head of Architecture Navin Budhiraja and Head of Platforms Abdul Razack are some of the high-ranking SAP executives still at the company. Analysts expect it to take well over a year for Infosys to return to any kind of stability. “I expect it will take 18-24 months for them to get back,” Constellation’s Wang said. He said the company would likely take as long to make the sort of acquisitions its rivals are in order to stay ahead of digital disruption. THINKSTOCK
Clients would prefer business partners that provide continuity of thought process. We believe this event may benefit TCS and Cognizant in the short term RAHUL JAIN,
Analyst, Emkay Securities
Vishal’s resignation is likely to complete the power shift back to Bengaluru. Many of the California-based executives will either jump ship or be pushed out very quickly PHIL FERSHT,
CEO, HfS Research
‘Co may Lose Mkt Share Within Digital Services’ From Page 1
“We expect the already declining growth trajectory to worsen in the next 12 months, as the focus stays internal,” Rudra added. Sikka, the former chief technology officer of German business software maker SAP, had joined Infosys in 2014 in a blaze of glory laced with the expectation that he would drive the celebrated IT services company onto a journey of transformation. He had said that by 2021, Infosys would reach $20 billion in revenue but the company has already shelved that target. Analysts are of the view that Infosys’ turmoil is a self-inflicted wound at a time when the company should be firing on all cylinders, and are factoring an anticipated loss in market share into valuation models.
“We believe Infosys may lose market share in the near term within digital services which may have a positive impact for large-cap IT vendors like TCS and Wipro specifically due to their similar exposure towards various verticals and geographies,” Karan Taurani, analyst at Dolat Capital, said in a note. “Infosys may underperform peers as it would require transition time post the appointment of a new CEO, as uncertainty prevails over the friction between founders and the current board,” he wrote. He estimates that growth rates in fiscal 2019 could fall to 5-7%. In reply to email queries from ET, Infosys in a statement said, “The company will not comment on rumours or speculation.” Sikka’s departure will also likely
embolden rivals to make a play for clients rattled by the top management turmoil. Experts are of the view that while the US-based executive will stay on until the company finds a new CEO, clients will expect to see proof that the business path scripted by him remains unchanged. NEED TO MOVE FAST
“Infosys will have to move quickly to establish a new governance mechanism for its top clients and reassure them it is still committed to the vision Sikka had articulated,” Peter Bendor-Samuel, CEO of IT consultancy Everest Group, told ET. On Friday, following Sikka’s shock announcement, the board of the over company launched an unprecedented attack on founder Murthy for causing his departure. At the heart of
Corporate governance experts split on the wisdom of board’s announcement timing
Testing Times
Megha Mandavia & Sanam Mirchandani
Mumbai: Corporate governance experts and fund managers are split on the wisdom of Infosys board’s decision to announce CEO Vishal Sikka’s resignation, and the `. 13,000-crore share buyback and its price over a span of three days — developments that have sent the company’s stock into a tizzy. The board is already under fire from founders for alleged corporate governance lapses regarding former CFO Rajiv Bansal’s severance pay and the controversial Panaya deal. Shares of Infosys have been on a seesaw since the announcement of buyback late Wednesday evening and Sikka’s resignation on Friday. Sikka’s resignation drove down the stock of the Bengaluru-based software giant as much as 13% before finally closing at `. 923.10 apiece. On Monday, analysts expect the stock to rise again with Infosys announcing a steep 24.57% premium to Friday’s closing price. “I don’t see the great hurry to time the resignation just a day before announcing the buyback price. This adds a new dimension to the saga. It could turn out to be a serious corporate governance issue. Something is wrong somewhere,” said JN Gupta, managing director, Stakeholders Empowerment Services, a proxy advisory firm. An Infosys spokesperson said any speculation on the course of events from August 16 to August 18 is misplaced. “As the company required exemptive relief from the SEC on certain aspects of the share buyback due to conflicting regulatory requirements between Indian and US laws for tender offer buybacks, the company engaged with the SEC for seeking such relief. In the course of such interaction, the company also required interaction with SEBI,” the spokesperson wrote in an emailed reply. She said the company received exemptive relief from SEC late evening on August 16, and within a few hours of receiving the relief, a critical step in the buyback process, the company intimated the stock exchanges about a board meeting for taking up the proposal of the buyback as at least two-day notice is required for a board meeting to consider a proposal of buyback.
`13,000-crore Infy’s share buyback offer
24.57% premium Over 13% slump in shares of Infosys
They should not have timed it together... this may be seen as a way to assuage a bad situation Shriram Subramanian, MD, InGovern Research Services
There has been a build-up of short activity in Infosys stock over the last few weeks. “If we witness open interest activity of Infosys stock for the last few weeks, one can hardly see any meaningful buying interest; in fact, majority of the positions formed are on the short side,” Sneha Seth, derivative analyst at Angel Broking, said on Thursday, a day before Sikka’s resignation. Shriram Subramanian, managing director at InGovern Research Services, called the timing of the announcements “definitely strange.” “They should not have timed it together. They didn’t take into consideration the fact that this may be seen as a way to assuage a bad situation.” Not everyone finds the decision ill-timed. “I see the buyback and Sikka’s resignation as parallel decisions. They are sending a message that it is business as usual. We should not read much into it,” said Amit Tandon, managing director of IiAS, a proxy shareholder advisory firm. A fund manager with a foreign brokerage said Sikka’s resignation was expected with all the issues building up over the last one year. “Sikka’s exit was not surprising as the issue was there between the founders and the management for some time. The buyback should give a temporary leg up to stocks on Monday,” he said.
INFY WILL WEATHER THE STORM
LIC Confident Sunny Days will be Back Again
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Mumbai: Life Insurance Corporation of India is confident that the boardroom battle at Infosys would lead to better days as it moves on with a new chief executive who could carry both the promoters and staff along with a vision to overcome technological challenges. LIC is the second-largest stakeholder in the company. It had acquired an additional 2% stake in Infosys over three years ending February 2017, taking its total shareholding in the firm to 7.03%. “We are watching the situation and at the same time we have confidence in the company’s leadership,” said a senior executive of LIC on conditions of anonymity. The executive added that it was unfortunate that an individual (an outsider) was exerting so much influence on the company. “No individual should try to become bigger than the organisation,” he said. LIC did not respond to an email seeking comments. On Saturday, Infosys announced buyback of 11.3 crore shares or 4.92% of equity capital at `. 1,150 a piece. “We are not yet decided whether to tender our shares in the buyback,” said the official. Infosys will be spending `. 13,000 crore for buyback. Infosys was on LIC’s buying list for this month and bought additional shares late last week. “We have been buying Infosys this the dispute between the board and Murthy are a set of issues including the severance package for former CFO Rajiv Bansal as well as the compensation for Sikka and senior executives including chief operating officer UB Pravin Rao. Also a critical point of conflict has been the acquisition cost of Israeli software company Panaya, which was bought by Infosys in 2015, months after Sikka’s ascension to the top post. In February, complaints by a whistleblower prompted Infosys to authorise a forensic investigation by law firm Gibson Dunn, which in its report exonerated the IT services company from any wrongdoing. Murthy has since been demanding the findings of the report be made public. The Bengaluru-headquartered company had cheered the market in July by maintaining its growth guidance of 6.5-8.5% in its second quarter-results. Earlier this month, rival
CHANGE ON CARDS
LIC, the second-largest stakeholder in the company, feels the IT giant will move on under a new CEO month and will continue to buy more,” said the executive. After Vishal Sikka stepped down as chief executive, Infosys tanked 9.6% to `. 923.10 on the Bombay Stock Exchange. The fall wiped out `. 22,480 crore in investor wealth on Friday. The company has a market capitalisation of `. 2,12,033 crore at the end of Friday. “It has come to the attention of the board that a letter authored by Narayana Murthy, the founder of Infosys, has been released to media houses attacking the integrity of the board alleging falling corporate governance standards in the company,” said Infosys in a filing to the exchange.
Cognizant raised the lower end of its 2017 guidance – raising hopes that Infosys could meet or possibly exceed its target. However, analysts now reckon Infosys’ growth will take a hit for a while as attrition in the management team lowers employee morale and furthers doubts among clients about future strategy. All of this may result in the company scaling back its full-year guidance, according to analysts. Infosys internal woes come at a time Indian IT companies are already struggling to retain clients as automation eats away the technology outsourcing model they once thrived on. “This is just such a bad time to go through such a strategic leadership nightmare, when competition is at its most severe, with too many suppliers chasing too few contracts and margins under extreme pressure,” Phil Fersht, CEO of IT consultancy HfS Research, said.
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HIGH PREMIUM and better acceptance ratio make the offer attractive for retail investors
Infosys Buyback Offer Likely to Receive Good Response on Street For starters, its offer price is at nearly 25% premium to the Friday’s closing price of `923 on the BSE. Offers by the peers were at a premium of 17-19%. The higher premium of Infosys offer reflects the 9.6% crash in its share price on Friday following the resignation of its CEO Vishal Sikka. The acceptance ratio of the offer at nearly 5% is also greater compared with nearly 3% for TCS and HCL Tech’s buyback offers. The acceptance ratio indicates how many shares the company will be able to accept in a buyback offer for every 100 shares tendered by shareholders. Higher the ratio, the better it is. For retail or small investors, the acceptance ratio for Infosys offer works out to be 59% considering the shareholding pattern at the
ANALYSIS
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ET Intelligence Group: Investors worried about the leadership crisis at Infosys may find its latest buyback offer timely considering a significantly higher premium with greater probability of acceptance. On Saturday, the company said it would purchase 11.3 crore shares back from investors at `1,150 per share amounting to not more than `13,000 crore. When compared with the recent buyback offers of peers including Tata Consulting Services (TCS), Wipro and HCL Technologies, the offer by Infosys looks lucrative.
Top IT buyback offers: Infosys offer is relatively more lucrative TCS
Infosys
Wipro
HCL Tech
Feb 20, ’17
Aug 19, ’17
Jul 20, ’17
Mar 20, ’17
16,000
13,000
11,000
3,500
2,850
1,150
320
1,000
18.4
24.6
19
17
Acceptance ratio (%)~
2.9
4.9
7.2
2.5
Retail acceptance ratio (%)**
45
59^
-#
37.5
Announcement date
Size (` crore) Buyback price (`) Premium (%)*
*Difference between buyback price and stock price prior to the announcement day. **Acceptance ratio for small investors. ~Ratio of maxium shares to be accpeted under buyback and total paidup shares. ^Based on the number of shares held by small investors as on March 31, 2017 #Letter of offer is awaited; Wipro may be able to buy the entire smal investor portion given the large offer size Source: Company data, BSE, ETIG
end of FY17. This is also much better when compared with the ratio of 45% for TCS and 37.5% for HCL Tech. According to the Buyback Regulations in the Companies Act, a small shareholder is the one who holds not more than `2 lakh worth of shares of a company as on the Record Date. Even though the generous buyback offer is likely to support the performance of Infosys on the bourses in the days to come, it may continue to underperform the broader market and even the sector index in the near and medium term given the uncertainty surrounding its leadership. This may prompt investors to tender their shares in the buyback offer to secure a decent return on a portion of their holding in the company.
ET in the Classroom
EXIT OF VISHAL SIKKA has cast a shadow on company’s performance in the nearto medium-term and may even put the guidance for FY18 at risk, caution brokers
Learn Options with Infosys
Brokerages Downgrade Infy, Say Stock Likely to Underperform
given to Sikka would be a big challenge for the board and even a share buyback or higher dividend payout are unlikely to support the stock.
Our Bureau
Mumbai: Several brokerages downgraded shares of Infosys after the resignation of chief executive officer Vishal Sikka. With Sikka no longer at the helm, brokerages said the exit has cast a shadow on the company’s performance in the near to medium term and may even put the guidance for FY18 at risk. The company has guided for constant currency growth of 6.5-8.5% in FY18. The bigger worry will be the search for a new CEO given the lack of options internally. In the interim, the stock is likely to underperform its peers. Here’s what brokerages are saying: CLSA
Retains Underperform rating. CLSA said significant senior level departures are likely over the next six months till a new CEO is found, which may put guidance
Weak June Quarter may Point to More Pain Ahead
The weaker-than-expected earnings by companies in the June quarter may be a harbinger of further earnings downgrades in the foreseeable future. Companies have warned investors and analysts of more weakness in earnings as the impact of demonetisation and GST may defer earnings recovery by a few more quarters. Several companies in the materials, consumer discretionary and consumer staple sectors were weighed down by the impact of GST in the June quarter results. XX ON SMART INVESTING
Downgrades rating to reduce from hold. The brokerage said Sikka’s resignation is a severe dent in brand reputation, client conversation, investor confidence, employee morale and business transformation which would affect Infosys’ financial performance in the short- to medium-term. As a result, the stock may command lower valuation and the event may benefit competitors such as TCS and Cognizant at least in the short term. Given the exits of several key personnel in the last three years, the bigger dilemma will be to get a replacement as there are not many choices internally and finding an external candidate will be a challenge.
Options are a tool to indicate the range a stock or an index underlying the option would move in future. They give a trader an option to bet on a stock or index’s upside or downside. ET illustrates how it works in the case of Infy, which is in the eye of a storm after its CEO’s exit and US law firms investigating the crash in its price surrounding the resignation.
Continued on XX SMART INVESTING
XX Money Matters
EMKAY GLOBAL
for FY18 at risk. As a result of CEO Vishal Sikka’s exit, Infosys’ deal wins, client mining and execution are likely to be under pressure as the focus will remain internal and the company’s strategy will remain undecided. The brokerage said that the board’s belligerence with the founder could also impact the search for a new CEO. CLSA has a target price of `940 on Infosys shares.
DOLAT CAPITAL
Downgrades rating to sell from accumulate. Dolat, which has a target price of `850 on Infosys’ shares, said the company may lose market share in digital services to vendors like TCS and Wipro in the near term. Sikka’s exit may put a cloud over Infosys’ performance in FY19. Dolat said finding a new CEO externally posts the kind of a treatment that was
Deposit Rate Cuts to Lift Banks’ Net Interest Margins by 15-18 bps Reduction in savings rates could spur competition, giving PSU lenders an advantage: analysts
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Mumbai: The recent spate of cuts in savings rates will help Indian banks improve their net interest margins (NIMs) by 15 to 18 basis points(bps), although there is no indication just yet of a corresponding decrease in lending rates. All large banks have taken a cue from the country’s biggest lender
State Bank of India and reduced their minimum savings bank rate to 3.5% in the last two weeks. The spell of reduction is the first since the rates were deregulated in October 2011. One basis point is 0.01 percentage point. Analysts said the savings bank cuts will also have to be reflected in the bank lending rates under the marginal cost of lending rate (MCLR) calculation, which is closely linked to bank deposits rates. In a report earlier this month, India Ratings & Research Analyst Soumyajit Niyogi said the reductions in savings rates could spur competition among banks, giving public sector lenders an advantage. “PSBs, with a stable, large and granular savings deposit base, will have additional manoeuvrability over private peers to cut MCLR. The maximum cut in MCLR for
Investing at Market Highs PSBs can be 35 basis points. For private banks, the threshold is 25 basis points. This could intensify competition among large lenders with strong savings deposit franchise and capitalisation towards gaining credit market share,” Niyogi said. SBI has 36% savings deposits, and Punjab National Bank has 34%. Private sector lenders such as ICICI (35%), HDFC Bank and Axis (around 30%) will also benefit from the competition.
“All banks with savings deposits of 30% will benefit. But not everyone will pass it on to their borrowers. For example, SBI has already said that the merger of associate banks has led to 60 to 80 bps erosion in margins and hence they cannot lower lending rates. But lenders like HDFC Bank who want to gain market share especially on the corporate lending side will be more aggressive in cutting lending rates,” said Asutosh Mishra, analyst at Reliance Securities. The savings rate cuts came just after RBI expressed unhappiness over the transmission of policy rates under the MCLR regime. The central bank has constituted a study group to explore linking bank lending rates directly to market determined benchmarks. The transmission of this round of savings bank rate-cuts will also likely be scrutinised.
CAPITAL CONTROLS have brought stability. But they haven’t fixed anything
Why China Can’t Free the Yuan Christopher Balding
New York: By some measures, China has braved the storms buffeting its currency. The yuan is up 4% so far this year, and foreign-exchange reserves are up by $70 billion. State media has even called for relaxing capital and exchange-rate controls. But that would be like a sick person who stops taking his medicine when he feels better: The underlying conditions haven’t really changed. After China’s surprise currency devaluation in 2015, it was reasonable to expect significant pressure on its reserves and the yuan for the foreseeable future. As recently as January — with the Federal Reserve tightening monetary policy, and China’s re-
serves hitting their lowest level since 2011 — it seemed safe to assume that a rising dollar would hit China hard. But a funny thing happened on the way to the yuan’s collapse. Even though the Fed has raised interest rates three times since December, the dollar has fallen by 8.4%. This has in turn propped up the value of the PBOC’s reserves while allowing the yuan — which has a soft peg to the dollar — to rise. The dollar falling faster against global currencies than the yuan gently pushed the yuan up against the dollar. China’s government also stepped in aggressively. Regulators cracked down on all types of capital outflows, threatening penalties on property investors and blocking companies from making foreign acquisi-
tions. The PBOC is widely thought to have intervened in currency markets to keep the yuan priced within a predetermined range. It also introduced a new “counter-cyclical” pricing measure designed to reduce the yuan’s volatility against the dollar. The much-touted effort to
make the yuan a major global currency has been all but shelved. The result of all this is higher reserves and a stronger yuan -even though the underlying dynamics haven’t changed at all. China’s citizens still want to move their money overseas.
TECH VIEWS
Weakness Likely to Continue, Nifty has Key Support at 9700-9680 Investors can expect the Nifty to show further weakness by the end of the week, with key support levels around 9,700-9,680. However, if the index does manage to close above the 9,950 levels, then it could head back to 10,20010,300 levels. Cement, metal, auto and banking sectors are expected to show strength in the coming weeks. NAGARAJ SHETTI TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
What is in Store? The recent bounce in the market seems to have completed as Nifty reversed down sharply. We observe a formation of lower tops and bottoms in smaller degree as per daily time frame and the recent swing high of 9947 (Aug 17) could be considered as a new lower top in the sequence. Nifty as per weekly time frame had formed a significant top reversal pattern of ‘bearish engulfing’ during week before last but has formed consolidation type pattern with positive bias during last week. The formation of large negative candle on weekly charts is an exceptional reversal formation of the uptrend of last few months. Hence this could be considered as an important top reversal pattern near the all-time high of 10137 levels. Immediate weekly support of uptrend line (at 9850) has been broken down and that broken support area is currently acting as a resistance. The theory of Fibonacci retracement are suggesting that this down move could extend down to 50% Fibonacci retracement (around 9,000
levels) of the previous large rise over a period of time. This expected action of Nifty is in line with the presence of ascending larger support line, strong valuation area and the equality of prior down moves (as per monthly time frame). What Could Investors Do?
There is a possibility of Nifty showing further weakness and it is likely to retest the key lower support of around 9700-9680 levels possibly by this week. The support area of 9700 could offer minor buying interest again from the lows, but that support could eventually be broken on the downside in the next 1-2 weeks. The overall negative chart pattern with other negative technical aspects as per larger time frame is now opening up the downside target for Nifty of around
9000 levels in the next couple of months. Banking, realty, auto, capital goods, metal and mid & small cap sectors could underperform. However, FMCG, healthcare and oil & gas could be resilient during a broader market down trend.
SWAPNEEL MANTRI TECHNICAL ANALYST- INSTITUTIONS, SUSHIL FINANCE
Where are We? The week gone by saw bouts of volatility. Nifty largely traded below 10,000 levels closing the week at 9837 levels. What is in Store? Expect range bound trading to continue on the index, with 9920-9950 resistance zone on the upside and 9820-9790 support zone on the downside. A close above 9950 levels may see Nifty heading back above 10000 levels to 10200-10300. What Could Investors Do? The much needed cool-off in markets has presented a good buying opportunity in some of the quality frontline and midcap stocks. Investors can make
the most of the current market lull by accumulating quality scrips at lower levels and consolidating their portfolio holdings. Among the frontline counters ITC offers a good buying
range and one can accumulate the scrip at current level for higher target of `302-320. Container Corp is another such counter which has given a good breakout and can be accumulated at current levels for higher targets of `1420 in the medium term. Among the PSU counters, GAIL and Dredging Corp offer good accumulating opportunity at current levels for higher targets of `410, `690, respectively. Some of the midcaps like Alkem Labs, Aegis Logistics, Crompton Greaves, CDSL, HUDCO, RCF offer good entry points at current levels for a good short to medium term appreciation. Sector specific, Nifty Pharma has formed positive RSI on daily charts and is showing signs of trend reversal. Investors can look at accumulating the beaten-down counters like DRL, Sun Pharma, Lupin for good appreciation from a long-term point of view.
RAJESH PALVIYA HEAD – TECHNICAL & DERIVATIVES ANALYST, AXIS SECURITIES
They’re buying up property from Bangkok to London. With a lack of promising domestic investment opportunities and some of the most expensive real estate in the world, that’s not surprising. Corporations still want to get their money out, too. Whether by repatriating profits, going on acquisition sprees, or investing in the government’s “Belt and Road” infrastructure plan, they’re taking China-based capital and investing it in other markets. Although official foreign investment has fallen by 67% thanks to stricter regulation, the ratio of bank payments for imports to customs-recorded imports — which bottomed out last year — has been inching back upward, indicating disguised outflows. — Bloomberg
What is in Store? Last week, Nifty has witnessed strong buying momentum. It has formed bullish gap 9825-9855 on daily chart, which is likely to act as immediate support for any minor corrective action in near term. Pharma, cement and banking sectors have shown good buying interest. The chart pattern suggests that Nifty is likely to continue its uptrend in near term and
it can scale up towards 995010100 level in near term; any weekly close above 10100 would initiate euphoric buying which would lead the index towards 10250-10400 levels in short /medium term. However, any minor profit booking would get support around 9825-9730 levels. If the Nifty breaks below 9730, then it may drift down towards 9650-9500 in short term.
It is expected to trade in 970010100 range in forthcoming weeks with a positive bias. What Should Investors Do? Nifty continues to exhibit bullishness and is exhibiting strength to scale up toward 9950-10050 in coming weeks as it is sustaining above 9800 level. On the down side, 9730 is likely to act as strong support for any corrective action; any breakdown below this level will accelerate the selling pressure and Nifty may drift down towards the levels of 9650-9500 in short term. We advise buying stocks, if Nifty corrects in near/short term to 9730-9650 which is a strong support zone. Cement, metal, automobile
and banking are expected to show strength in the coming weeks.
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10 Smart Investing
EARNINGS DOWNGRADES are likely in the near future the as cos expect the twin impact of demonetisation and GST to delay prospects of recovery by several quarters
What to Buy, Sell and Hold Symphony 1600
1400
Price on BSE (`)
1213.1 1171.2
1200
1000
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
India Inc’s Weak June Quarter may Point to More Pain Ahead
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Aug 22, 2016
Aug 18, 2017
Geojit Financial Services has a buy on Symphony with a target price of `1,418. The brokerage said the company has maintained a healthy balance sheet over the years given huge cash flow from operations and zero debt on its books. It expects cash flows to strengthen going ahead led by strong profitability and minimal capex and working capital requirement. The stock fell 2.42% to `1,213.10 on Friday. HDFC Securities has a buy on PI Industries with a target price of `950. The brokerage said FY18 has started on a good note, with a normal monsoon, pick-up in sowing and moderate increases in minimum support prices. It said in the long term, better farm income, improved irrigation facilities and lower penetration will drive growth. The stock rose 2.88% to `760.85 on Friday. Anand Rathi Share and Stock Brokers has a buy rating on Alkem Laboratories with a target price of `2,157. The brokerage said it believes Alkem’s Q1 result is an aberration and it expects earnings growth to be back on track, driven by the company’s focus on brand leadership in the acute segment, rising contribution from the chronic segment and a ramp-up in its US business with 93 Abbreviated New Drug Application (ANDA) filings, including one NDA. The stock fell 1.49% to `1,792.35 on Friday. Emkay Global Financial Services has a hold on Bayer CropScience with a target price of `4,625. The brokerage said the company will launch three new products during the current year. It said with smooth transition of GST, the restocking has begun at an encouraging pace. However, it said due to delay in receipt of input credit under GST, the company has indicated that working capital requirement is likely to elongate somewhat while the weak monsoon in south India continues to pose challenges to growth in that region. The stock rose 0.93% to `4,299.55 on Friday.
Smallcap Mantra KNR Constructions CMP (`) 1-M Return (%) 52-week H/L FY18E P/E (x)
218.40 1.65 229/125 20.6
KNR Constructions is a multidomain infrastructure project development company. Order intake remains muted with no new orders during Q1. The company has submitted bids for Telangana irrigation orders and is evaluating upcoming hybrid annuity model (HAM) projects. While NHAI has slowed new awards during Q1 on account of GST/land acquisition issues, bidding is expected to pick up from the second half of FY18 earnings. The company has maintained `2,000–2,500 crore of new order inflows during FY18E. Debtor’s days remain the best in the industry at 35 days. However it lacks near-term triggers, with new orders key to further re-rating. Strong balance sheet augurs well for new EPC/HAM orders win. We remain positive on the company’s prospects. We have a neutral rating on the stock with a target price of `228. By HDFC Securities
Mumbai: The weaker-than-expected earnings by companies in the June quarter may be a harbinger of further earnings downgrades in the foreseeable future. Companies have warned investors and analysts of more weakness in earnings as the impact of demonetisation and Goods and Service Tax (GST) may defer earnings recovery by a few more quarters. “Earnings recovery has been delayed to few quarters by demonetisation and GST. Now it could take 3-4 quarters for companies to cope with these changes,” said Raamdeo Agrawal, managing director, Motilal Oswal Financial Services. “Till then, the pain and downgrades will continue, but market will discount the recovery atleast two quarters in advance.” Several companies in the materials, consumer discretionary and consumer staple sectors were weighed down by the impact of GST in the June quarter results. These companies have warned further weakness is likely in the coming quarters. Zee Entertainment, in its commentary after the June quarter results said, “The GST rollout has affected growth in the month of June and also in July, thus Q2 could also reflect
Nifty EPS Growth in June Quarter SECTOR EPS GROWTH (%) 64.6 Consumer Discretionary 62.0 Telecommunication Services 49.2 Health Care 13.2 Energy 9.9 Nifty Utilities 6.9 0.3 IT 6.9 Financials 8.7 Consumer Staples 29.8 Industrials Materials 37.1
Source: JM Financial
some softness.” Coal India said its working capital requirement might increase on GST implementation. Analysts said it has become clearer after the June quarter that earnings recovery in FY18 would be a challenging. Aggregate sales of Nifty 50 companies in the June quarter grew by 9% over June 2016 quarter, but net profit fell by 10% during the same period. Across the broader market, revenue growth of 1,000 companies accelerated to 10% year-on-year (YoY) while the net profit fell by 11% YoY. Margin compression was seen across sectors mainly in healthcare and consumer
discretionary. Bulk of the net profit decline has come from telecoms and consumer discretionary sectors. “GST execution weakens profit growth even as revenue growth continues to remain strong” said Ridham Desai, equity strategist, Morgan Stanley India. “Companies in the materials, consumer discretionary and consumer staple sectors reported GST impact caused by channel destocking and dealer incentivisation which probably explains why both revenue growth and particular margin performance was weak in the quarter.” For a broader sample of 2,600 com-
PUSH FACTORS Domestic volume growth is likely to improve on
Apollo Tyres Just a Corner Away from a Turnaround ANALYSIS
New Delhi: The combined market capitalisation (m-cap) of eight of the 10 most valued firms surged by `54,968.17 crore last week, with ITC and Hindustan Unilever (HUL) emerging as the biggest gainers. Infosys and State Bank of India (SBI), however, suffered losses in their m-cap for the week ended Friday. The eight firms including Reliance Industries (RIL), Tata Consultancy Services (TCS) and HDFC Bank saw addition to their m-cap. The valuation of ITC The top gain- soared by `12,559.75 ers were ITC c r o r e , t o r e a c h and HUL, `3,43,120.21 crore. while the top HUL’s m-cap jumped losers were `10,140.52 crore to Infosys and `2,59,670.81 crore and State Bank of that of RIL advanced India by `9,381.74 crore to `5,12,304.52 crore. Indian Oil Corp, the new entrant in the top-10 list, added `7,042.02 crore to `2,07,250.02 crore in its market valuation. The m-cap of HDFC soared by `6,579.77 crore to `2,76,439.84 crore and that of Maruti Suzuki India surged `5,050.78 crore to `2,30,186.52 crore. TCS’ valuation went up by `3,608.43 crore to `4,81,031.76 crore and that of HDFC Bank rose by `605.16 crore to `4,51,602.81 crore. On the other hand, Infosys saw its mcap erode by `14,847.69 crore to `2,12,033.02 crore. SBI’s valuation slumped `1,726.41 crore to `2,40,532.08 crore. Over the last week, the BSE’s 30-share benchmark recorded gains of 311.09 points, or 0.99%.
Segmental revenues
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Fig in ` cr
2QFY17 3QFY17 4QFY17 1QFY18
2,139
2,247
2,427
2,329
Europe & America
994
1,261
988
1,016
Others
367
315
498
701
3,084
3,457
3,325
3,282
Asia Pacific
Total Revenue Source: KIE
three years after remaining in a range 1.9-6.6% in the past five years. There are a few reasons for volume growth to improve in the domestic market. Firstly, inventory restocking by dealers has begun from the current quarter. This could normalise the pace of volume growth. Demand for MHCV is improving and so is that in the replacement market with dealers restocking inventory, the company’s management said in a post earnings conference call. Secondly, Apollo plans to increase market share in the passenger car segment to 20% in the next two years from 18% now. The recently launched Amazer 4G tyre in the replacement market received quite an encouraging response. In the twowheeler space, it is planning to double volumes to 2 million units in the current fiscal year, which too is expected to boost performance. Profitability of European operations remained subdued in the June quarter as the company didn’t
increase prices despite raw material costs moving up and it incurring startup expenses on a new plant. These compressed the operating profit margin by 210 basis points sequentially. Revenue growth will now be supported by the company’s efforts to expand its presence in Europe by adding headcount. Profitability of the Netherlands plant may improve due to the benefit of lower raw material prices. This is likely to offset an increase in the startup cost associated with its Hungary plant. Operations at the Hungary plant is likely to stabilise by the end of FY18. It already has orders from two leading automakers. The Street is expecting revenue growth of 6-8% and 2028% for FY18 and FY19, respectively, for Apollo’s European operations. The stock is trading at 11 times its projected FY19 earnings, which is a 25% discount to its peers. Improving earnings growth could lower the valuation discount.
STRATEGY 1 Writing against Cash / Fut Holding Sell LUPIN 960 31AUG CE at `15.35 Target level : `0.05 Stop Loss level : `19.5 Gross Monthly Yield : 3.69% ROI :10.67% Margin : `57,500 Days to expiry : 10 Writing with Hedging: Leg 1: Sell LUPIN 960 31AUG CE at `15.35 Leg 2: Buy LUPIN 980 31AUG CE at `10.10 Target level : `0.05 Stop Loss (Spread) level : `7.50 Gross Monthly Yield : 1.67% ROI : 4.10% Margin : `51,000 Days to expiry : 10
In the last week, Nifty moved up by 1.30% but traded within the previous week’s range. Volatility index (India VIX) fell 4.14% during the week, but overall higher volatility is causing the high wave swing with restricted upside in the market. On the options front, maximum Put OI is at 9,800 followed by 9,500 strike while maximum Call OI is at 10,000 followed by 10,100 strike. We have seen fresh Call writing in all the strike from 9,800 to 10,000 strike which may continue to restrict is upside movement while Put unwinding in all the strike from 9,600 to 10,000 strike is giving a negative stance on immediate basis. Option band signifies immediate trading range between 9,700 to 10,000 zones for next couple of sessions. CHANDAN TAPARIA,
Tech Picks
Derivatives & Technical Analyst
BHARAT FINANCIAL
STRATEGY 2 Writing against Fut Holding: Sell JSWSTEEL 31AUG 235 PE at `4.10 Target Level : `0.05 Stop Loss level : `6 Gross Monthly Yield : 4.03% ROI : 11.45% Margin : `1,07,000 Days to expiry : 10 Writing with Hedging: Leg 1: Sell JSWSTEEL 31AUG 235 PE at `4.10 Leg 2: Buy JSWSTEEL 31AUG 230 PE at `2.45 Target Level : `0.05 Stop Loss (Spread) level : `2.25 Gross Monthly Yield : 2.07% ROI : 5.16% Margin : `95,850 Days to expiry : 10
Pair Trading STRATEGY 1 Leg 1: Buy MARICO 1 Lot 31AUG at `321 and 1,900 shares in cash Leg 2: Sell HINDUNILEVER 2 Lots 31AUG at `1,199 Tenure : 3 days Target Profit : 3.0% Stop Loss : 1.25%
STRATEGY 2 Leg 1: Buy BOSCH 2 Lot 31AUG at `22,089 and 5 shares in cash Leg 2: Sell MOTHERSUMI 1 Lot 31AUG at `510 Tenure : 3 days Target Profit : 3.50 % Stop Loss : 1.50%
BUY
Formed positive price pattern and momentum could drive it to 52-week high of `939 zones. LAST CLOSE X ` 876
TARGET `
STOP LOSS X ` 847
BPCL LAST CLOSE X ` 503
TARGET
535
`
STOP LOSS X ` 488
HAVELLS
BUY
It has retested its triangle breakout zone thus giving a fresh buying opportunity. LAST CLOSE X ` 478
TARGET
502
`
STOP LOSS X ` 466
PNB
SELL
A hold below `140 could attract fresh shorts to drag it to lower levels. LAST CLOSE X `142
TARGET
134
`
STOP LOSS X `146
F&O Strategy
939
BUY
Price has moved up from its support at `480 and the rally could head towards `535.
CHANDAN TAPARIA, Derivatives & Technical Analyst
Tata Steel Bull Call Spread
BUY 1 LOT OF 630 CALL
SELL 1 LOT OF 640 CALL
BEP : ` 633.50 MAX RISK : 3.50 POINTS (`7,000) MAX REWARD : 6.50 POINTS (`13,000)
1. Positive sector outlook with sustained buying at every small decline 2. It has been making higher top – higher bottom on weekly chart and given a decent weekly close 3. A hold above ` 630 could take the stock towards ` 640-645 zones 4. Fresh Put writing at 620 strike suggests limited downside 5. Call unwinding in 620 and 640 strike suggests an up move 6. Thus low risk Bull Call Spread is recommended
KISHORE NARNE
Fx Technical
Head – Currency & Commodities
USD/INR Status: Bias remains sideways-to-positive as long as `63.80 is held as support. CMP: `64.21 Target: `64.60 Stop Loss: `63.80 Trade: The pair will be trading in a higher range as long as `63.80 is held as strong support. Buying is still advised targeting `64.60 level in short-term.
RESISTANCE SUPPORT
64.40 64.00
64.55 63.80
64.70 63.60
GBP/USD Status: The pair remains in negative territory as long as $1.3050 is capped as strong resistance. CMP: $1.2860, Target: $1.2625, Stop Loss: $1.3050 Trade: Short-covering could be seen for the pair, but major bias remains weak and selling on rise around $1.2950 is still advised. It is likely to target $1.2625 levels in short-term.
RESISTANCE SUPPORT
1.2950 1.2775
Commodity Calls COMMODITY
EXCHANGE
1.30 1.27
1.3050 1.2625
AMIT SAJEJA AVP – Commodities
STRATEGY
Gold (Oct)
MCX
Buy around `28,900 Stop Loss `28,250 Target `29,950
Silver (Sep)
MCX
Buy around `38,750, Stop Loss `37,900, Target `40,200
Crude Oil (Sep)
MCX
Sell around `3,150, Stop Loss `3,250, Target `2,950
Guar Seed (Oct)
NCDEX
Buy around `3,870, Stop Loss `3,790, Target `4,050
By Shubham Agarwal, Head of Quantitative Research, MOSL
Option Writing
Motilal Oswal Securities
RATIONALE:
Press Trust of India
Apollo Tyres: Financial picture
ET Intelligence Group: Pressure on the volume growth of Apollo Tyres, India’s leading tyre manufacturer, appears to be entering its final spell. The company’s operating profit declined 49% in the June 2017 quarter, owing to lower domestic volumes and higher fixed costs at its European operations. However, both these factors could gradually reverse from the current quarter and are, in fact, likely to support earnings growth going forward. In the domestic market, which accounts for more than two-thirds of revenue and operating profit, volume dropped 4% to 1,14,188 tonnes in the April-June quarter. This was due to a 10% decline in the medium and heavy commercial vehicle (MHCV) segment as well as inventory destocking by dealers ahead of the GST transition. With a market share of over 25%, the company is one of the largest players in supplying tyres to the MHCV segment. Despite the challenging times for the industry, Apollo’s margin of 8.3% for the domestic operations in the June quarter was better than that of its peers, thanks to moderate volume growth in the passenger car segment and a robust increase in the farm equipment space. Domestic volumes are expected to grow in low double digits in the next
panies, revenue grew 9% and net profit fell 11% in the quarter from the same period a year ago. Earnings of Dr. Reddy’s Labs, Tata Motors, Sun Pharmaceuticals, Ashok Leyland, Lupin, SBI, Emami, United Spirits, ONGC and LIC Housing Finance disappointed the market in the quarter, while Tata Steel, UltraTech, JSW Steel, Tech Mahindra, United Breweries, Titan, Shree Cement, InterGlobe Aviation and Bharat Electronics sprang a surprise. Investors have been betting on an earnings recovery since the previous financial year. The Nifty is currently trading at 21 times FY18 estimated earnings and 17 times FY19 earnings. Some analysts said there is little evidence of a strong turnaround in the economy and do not rule out further downgrades. “We now expect FY18 net profits of the Nifty 50 Index to grow 1.5%, following the earnings downgrades in several sectors such as banks, metals & mining and pharmaceuticals through the Q1 results season” said Sanjeev Prasad, co-head, Kotak Institutional Equities. “However, we have limited confidence in our FY19 estimates, given little evidence of a strong turnaround in the economy, which can drive volume growth, margin and profitability assumptions in several sectors, which may be at risk.”
Eight of Top 10 Firms add `54,968 cr in Market Cap
MHCV demand, while European ops may stabilise by end-FY18
Quantitative Strategies
Statistical reversion is expected in the pair based on our mean-reversion model. The pair is co-integrated and passes the stationary test. The distribution is around normal.
Brokerages Downgrade Infy
The pair is well co-integrated. The distribution is not normal and skewed to the left and has evidence of a reversion within its own distribution.
Maintains hold Cutting target price on Infosys to `975 from `1,040, the retail brokerage has advised investors not to accumulate fresh positions in the stock till there is a clarity on the new management. In light of the recent developments, ICICIdirect said it will be closely watching out for the company’s revenue growth guidance of 6.5-8.5% in constant currency terms for the current financial year.
IDBI CAPITAL XX From ET Markets Page 1 ICICIDIRECT
Downgrade to hold from buy IDBI Capital believes that Sikka’s resignation is a negative for Infosys at a time when it is gearing up to get back to industry-leading growth amid the sector’s transition to new technologies. The brokerage has trimmed revenue forecast for FY18 and FY19 by 1.1% and 3.6% respectively. The vision and strategy of the new CEO towards technologies such as digital, artificial intelligence, and automation would be the key for Infosys’ ability to get back to industry-leading growth, it said.
National Pension System (NPS) helps you to save tax in several ways. There are only seven NPS fund managers at present and the table below compares their performance. The data has been provided exclusively to ET.
NPS Scorecard TIER I: Equity Plans Fund
Earnings recovery has been delayed to few quarters by demonetisation and GST. Now it could take 3-4 quarters for companies to cope... Till then, the pain and downgrades will continue, but market will discount the recovery atleast two quarters in advance RAAMDEO AGRAWAL MD, Motilal Oswal Financial Services
Day Trading Guide
TIER I: Government Bond Plans NAV
Returns(%) 3-Month
6-Month
1-Year
Assets (` cr)
Fund
3-Month
6-Month
Birla Sun Life Pension
10.59
7.16
–
Birla Sun Life Pension
10.53
5.20
—
HDFC Pension Fund
19.02
5.06
12.64
16.53
620.17
HDFC Pension Fund
15.60
4.48
6.52
ICICI Prudential Pension
25.54
3.47
9.30
12.23
663.89
ICICI Prudential Pension
21.07
4.80
21.02
5.04
–
0.41
NAV
TIER I: Corporate Debt Plans Returns(%) 1-Year
—
Assets (` cr)
0.22
Fund
NAV
Returns(%) 3-Month
6-Month
1-Year
Birla Sun Life Pension
10.48
4.52
—
8.19 490.90
HDFC Pension Fund
15.78
3.65
5.59
10.29 367.27
6.54
8.25 506.35
ICICI Prudential Pension
24.27
3.68
5.44
10.28
6.98
8.68
Kotak Pension Fund
24.22
3.85
5.72
10.52
81.01
0.19 —
Kotak Pension Fund
24.34
4.08
13.92
16.64
116.46
Kotak Pension Fund
LIC Pension Fund
17.06
3.58
9.52
12.61
264.37
LIC Pension Fund
16.45
4.76
7.42
11.01 214.90
LIC Pension Fund
15.82
3.76
5.57
9.84
161.83
Reliance Capital Pension
20.50
5.00
6.76
8.63
Reliance Capital Pension
21.86
3.90
5.61
10.59
44.20
22.70
4.69
6.67
8.79
SBI Pension Fund
24.34
3.74
5.62
10.08 812.80
20.57
4.19
6.37
8.14 148.23
UTI Retirement Solutions
22.06
3.63
5.52
9.96
—
4.44
6.22
8.34
Nifty 50 Index
—
3.31
5.27
8.74
Reliance Capital Pension
24.06
3.30
11.01
13.59
67.26
SBI Pension Fund
21.89
3.47
10.12
12.99 1,224.57
SBI Pension Fund
UTI Retirement Solutions
25.50
3.80
10.12
13.01
UTI Retirement Solutions
–
4.33
11.51
13.42
Nifty 50 Index
159.06
Nifty 50 Index
– ANIRBAN
107.86
—
Assets (` cr)
64.79 — —
96.73 —
Returns as on Aug 18, 2017. Assets as on Jul 31, 2017 Source: Value Research
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Money Matters 11
WWW.ECONOMICTIMES.COM
Q&A
KRISHNA MEMANI
Stock Queries
Chief Investment Officer, OppenheimerFunds
‘It’s Prudent to Book Some Profits’
I
ndian markets could see a bigger correction than other markets in case flows into emerging markets suffer due to lack of earnings growth support, said Krishna Memani, chief investment officer at OppenheimerFunds. In an interview to Sanam Mirchandani, New Yorkbased Memani said that given the challenges that India faces with respect to economic growth after the rollout of Goods and Services Tax, it would be prudent to take some profits off the table. Edited excerpts: Emerging markets are staring at the possibility of the US Federal Reserve trimming its balance sheet soon. Should emerging market investors be worried? As far as trimming of the balance sheet is concerned, that is something that they need to get going at some point and that is more likely to happen than not sometime in the September meeting. They have laid the groundwork. If it doesn’t happen in September it will probably happen in December. If it happens in December, then they are not raising rates by December and may just trim the balance sheet this year. The pace of the balance sheet tightening is going to be really, really slow. When Janet Yellen said it would be like watching paint dry she was not kidding. So the pace is really going to be slow and any real substantial effect in economic terms will probably be felt earliest in the second half of 2018. So there’s not a whole lot to worry about at the moment and because growth in emerging markets is accelerating rather than slowing down, they are not panicking. The challenge for emerging markets is probably not going to come as much from the Fed balance sheet unwinding as it will come from whether the Fed gets back on to its path of tightening in 2018. If it
does, the dollar will strengthen and that will raise issues about emerging markets. At the moment that is looking less and less likely.
ON FED TIGHTENING
The pace is really going to be slow and any real substantial effect... will probably be felt earliest in the second half of 2018
What is your outlook for the dollar? As long as the US economy remains at around 2% growth, inflation remains subdued, the markets continue to question Fed’s rate path in 2018, the dollar will remain stable at worst and slightly lower at best and that would be really supportive of emerging market equities. In that scenario, would you be looking at allocating more funds to emerging markets? We are overweight international equities in general, and emerging markets in particular. Our philosophy with respect equity investing is more at a company level rather than at a geography level. That being said, the valuation case for emerging markets now is getting weaker. Emerging markets have had one heck of a run and while they are still cheaper than let’s say the US market, the level of cheapness is not what it used to be in 2015 or even early part of 2017. What is helping emerging markets is actually not the cheapness as much as it is the growth trajectory. In all likelihood it will probably continue. Emerging market growth is the largest contributor to global growth.
ON INDIAN MARKETS
India will have a bigger correction... because the primary support mechanism right now is really investor flows rather than better company performance
vestors. It is getting its fair share of emerging market flows not because it is such an attractive emerging market. It is getting its fair share because it is an emerging market.
Second, because of lowering trend in inflation they have now new found interest rate flexibility, something they didn’t have three or five years ago when inflation was picking up. Will flows into emerging markets continue at the same pace? As valuations get full, flows may taper off but it will only be a slight taper. Emerging markets will probably remain a good destination for developed market investors in 2017 and perhaps even in the first half of 2018. Indian markets have had a recordsetting run this year. Do you see the trend continuing? The impact of demonetisation
turned out to be quite modest. Now, with GST, the impact of that may be more significant. So if there are economic issues and very India-specific economic issues that are created because of policy in India, you may see a correction, but overall from a global flow perspective, emerging markets continue to look attractive to developed market investors and as long as those flows continue, the correction, if any, will be modest. Given the challenges that India faces with respect to economic growth after GST, it is still probably prudent to take some profits. It doesn’t mean you sell your entire position but taking some profits is not a bad thing today either. India as a story still has a lot of traction with international in-
Earnings recovery has been missing in this rally. What are your thoughts on it? That is really the biggest challenge for the Indian market. While overall growth is decent, it is not accelerating, it is actually trending lower while markets are going higher and that’s an odd mix. If at some point, emerging market flows stop in India, India will have a bigger correction than other markets because the primary support mechanism right now is really investor flows rather than better company performance. You have exposure to India’s financial services segment through HDFC and ICICI Bank. With these stocks having run up sharply, what is your strategy here? We believe these companies are the best financial services companies in India. We continue to have a great deal of faith in their management capabilities. The larger problem for India is the non-performing assets problem and it will take a long time to solve that. It is more in the public sector banks than it is in the private banks.
CONNECTING THE DOTS IN GLOBAL MARKETS
Trump’s Dollar Sending Some Worrisome Signals Robert Burgess
New York: In a matter of only a few hours, foreign-exchange traders went from talking about how the worst may be over for the dollar to talking about how the worst may be yet to come. America’s currency was looking like it was starting to gain some traction this month after falling 9 percent this year through July as measured by the Bloomberg Dollar Spot Index. Then came Wednesday afternoon. The gauge gave up its gains and fell the most since July 28 on news that more business leaders were leaving strategy and manufacturing advisory groups set up by Donald Trump as the president faced blowback for failing to sufficiently condemn white supremacists. The selling picked up steam as Trump announced on Twitter that he was disbanding the two groups. And if that wasn’t enough for one day, minutes of the Federal Reserve’s last policy meeting then showed that “many” saw some likelihood that “inflation might re-
Greenbank’s Slide 1320 1280
1266.96
1240
New York: These stocks are no dogs. With Americans spending like never before on their animal companions, stock watchers have been betting on big returns from pet stocks. The Pet Passion index, a tracker created by Motif Investing that follows pet-related companies, has returned 19% over the past year as of Thursday’s stockmarket close, sprinting well ahead of the rest of the stock-market pack. The S&P 500 Index has only marked an 8.5% gain so far this year. Among the best in show is pet phar macy PetMed Express, which has seen its shares nearly double over the past year. Trupanion Inc., which offers pet health insurance, is up about 44% in that span, while IDEXX Laboratories, a veterinarydiagnostics company, has gained about 30%. An improving economy has encouraged pet adoptions and loosened up the wallets of people who already have one, analysts say. Another factor: Younger Americans are putting off having kids but are making room for a dog or a cat. “Americans sometimes take care of their pets better than they take care of their own health,” said Mark Massaro, an analyst at Canaccord Genuity Inc. “Americans just
1157.99
1200 1160 1120
Jan 2, 2017
main below 2% for longer than they currently expected.” Taken together, the currency market is signaling that the U.S. economic outlook is suddenly very uncertain. Disbanding the White House advisory groups may make it tougher for the Trump administration to fulfill its pro-business, progrowth agenda. That could weigh on the economy. As Carlos Gutierrez, the former secretary of commerce under President George W. Bush, put it to Bloomberg Television’s David Westin, “The
Pet Stocks are Beating the Market Bloomberg
TOO MUCH OF A GOOD (EMERGING MARKET) THING
love their pets.” Pet-related spending in the US is estimated to exceed $69 billion this year, up from about $60 billion in 2015 and nearly double its level in 2005, says the American Pets Products Association, an industry trade association. About 90%of the estimated 2017 spending is on food, supplies and pet health care. Walking a friend’s dog through Central Park on a recent Wednesday, Lisa A l o n s o Ve a r, 3 9 , o f Brooklyn, quickly whipped out her smartphone to show pictures of her 12-year-old dachshund, Rochester, the way a young mother would normally show off her newborn. Vear works at an animal hospital in Brooklyn and said she’s seen an uptick in vet visits — especially routine checkups — when the economy is strong. “You’re going to spend money on yourself, but people care a lot about their pets and care for them and make sure they’re healthy,” she said. About three in five millennials own pets, according to APPA research, compared to about 50 percent of the general population. Meanwhile, bir thrates among women in their 20s have dropped more than 15%, according to the most recent data from the Urban Institute, a Washingtonbased think tank.
Aug 18, 2017
honeymoon is over” for Trump. FED HIKE ODDS EASE BACK
The bond market certainly agrees with that assessment, as demand for Treasuries only got stronger throughout the day even though the Fed’s minutes suggested the central bank is still on track to start shrinking its $4.5 trillion balance sheet this year. The odds of another rate hike before year-end dropped to 36% from 40.4% Tuesday, according to data compiled by Bloomberg. Growing dissent among
Republicans and tumbling support from the business community provide strong evidence that Trump will find it increasingly difficult to advance his economic agenda, according to Bloomberg Intelligence chief economist Michael McDonough. A post-election surge in enthusiasm by US consumers has already begun to fade, McDonough wrote in a research note. Republicans and Democrats can both agree that the U.S. economy is in dire need of infrastructure investment.
Citigroup is very worried about the massive inflows into emergingmarket exchange-traded funds. After attracting almost $47 billion of new cash this year, Citigroup is concerned that ETFs have made developing nations more vulnerable to sudden outflows, according to Bloomberg News’s Natasha Doff. The “ETF-ization” of emerging markets has made ETF flows themselves “increasingly representative of asset class sentiment as a whole,” Citi analysts Luis Costa and Toller Hao wrote in a research note. “If the tide turns, this strong positive directionality towards passive investments and ETFs can turn into a negative directionality.” The analysts’ unease echoes similar warnings from Bank of America Merrill Lynch and Schroder Investment Management, which cautioned last month that a pullback from emerging markets similar to the “taper tantrum” of 2013 would be exacerbated by the increased share of ETFs in the market. — Bloomberg
G. Chokkalingam
MD, Equinomics Research & Advisory
Buy Small Caps Only When Confident of Fundamentals I have 5000 shares of Noida Toll Bridge company purchased a year back from `22 to `12, average cost `15.What is your suggestion on hold or sell ? —KARTIK
Never aggressively chase the small cap stocks for the sake of averaging unless you are absolutely confident of its fundamentals. It is very difficult to take a call for an analyst in this case as the company is involved in a major legal issue and the risk or reward is tied to the final judgement on its toll bridge. If it loses the case, a major part of its intangible asset can vanish. If it wins the case, it can more than recover your costs. Having lost a major portion of your investments, you may consider taking the risk of holding it further. I have 110 shares of Transport Corporation India. Please advise whether to continue holding or exit out of it?
Transport Corporation trades at stretched valuation of around 29 PE on current year earnings. Hence, book profits. Please suggest me I am holding 500 shares of Mandhana Industry at `27. What should I do? —VINAYAK JOSHI
Book loss – annual net loss, total borrowings and inventories & receivables together independently exceed annual sales. Therefore, risk is very high
even at current market price. I hold KarurVysya Bank at `100, BEL at `160, Albert David at `320. Please advise if I need to hold ,sell or add more. — NABHIRAJ VERMAL
Sell Karur Vysya Bank and shift to Karnataka Bank — while both have more or less similar business size and Net NPA levels, Karnataka Bank is the cheapest stock in the old private sector banking space trading at 1.2x trailing adjusted book value as compared to 2.5x valuation enjoyed by Karur Vysya Bank. BEL trades at around 24 PE on FY19 expected earnings – sell it if it moves more than 5%. Hold Albert David — a small niche pharmaceutical company with net cash, trading at attractive valuation of around 11 PE on FY19 estimated earnings. Please send your queries on Stocks to
[email protected]; Mutual Funds to
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[email protected] Insurance to
[email protected] Realty to
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Every week, an expert selected by ET answers queries from our readers on investments in stocks
ET in the Classroom
Learn Options with Infosys Options are a tool to indicate the range a stock or an index underlying the option would move in future. They give a trader an option to bet on a stock or index’s upside or downside. ET illustrates how it works in the case of Infy, which is in the eye of a storm after its CEO’s exit and US law firms investigating the crash in its price surrounding the resignation.
1. What are options? They are of two types — call and put options. A call option allows a buyer to buy an underlier T a preset price for delivery in future . A put allows a buyer to sell an underlier at a preset price in future. In the first case, the seller, unlike the buyer, is under obligation to sell the shares in case the buyer calls for delivery. In case of a put, the seller is obliged to buy the shares from the put buyer at a determined price.
2. How does it work? Say you buy a call on Infy expiring on Aug 31 at, say, `900 and Infy closes at `1,000 a share (500 shares make a lot), the buyer can purchase the share at `900 from the seller and sell it for `1,000 in the market making a gross profit of `100 or `50,000 per lot. Since he pays the seller per share for the option, that has to be deducted from the price. On Friday the 900 call closed at `50 a share. Deducting that, a call buyer makes `25,000 ex brokerage and taxes. Now say you purchased a 900 put instead of a call at `20 a share. If Infy put expires at `800, the put buyer can sell the Infy shares at `900 to the put seller even though it expired at `800. So the seller earns a net profit of `40,000 ex brokerage and taxes. In actuality only the difference is settled between call and put buyer and seller. Also in case the price goes the other way, the put and call buyer could forfeit their premia to the seller.
3. What do options expiring Aug 31 indicate for Infy?
TEXT: Ram Sahgal
Resistance is at `1,012 a share basis the call of 1000 which has highest outstanding positions and support is at `880 basis the 900 put with highest outstanding positions.
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12 Finance & Commodities
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
`
`54,968.17CRORE RISE IN COMBINED MARKET VALUATION OF EIGHT OF THE 10 MOST VALUED FIRMS LAST WEEK
Did You Know
In a Good Year for Asia FX, Philippine Peso is Unloved Asian emerging market currencies have been having their best year since before the 2013 taper tantrum, bolstered by pace-setting growth rates and attractive yields. But the Philippine peso has been left out of the party — ironically after it held up better than peers including Indonesia’s rupiah back in 2013. Unless things change, it’ll be a fifth straight year of declines for the peso, which is down 3.4% so far in 2017 versus a 7.9% rise for Thailand’s baht. For now, that slide may be set to deepen as traders test the tolerance levels of Philippine policy-makers, who have so far refrained from actions to prop up the exchange rate. Philippine Finance Secretary Carlos Dominguez said last week that the peso’s slump is mainly due to a deteriorating trade outlook because of rising imports of capital goods, which is “normal for a country that is growing very fast.” On Thursday, GMA News reported that Economic Planning Secretary Ernesto Pernia had said an exchange rate of 52 to the dollar would be acceptable. — Bloomberg
became the latest fund manager to announce it is cutting holdings of junk bonds, saying yields near a three-year low are no longer enough to compensate for risk. Investors overseeing about $1.1 trillion have cut exposure to the asset class in the past two months.
Stability Concerns Focus at Fed Ahead of Yellen Speech Reuters Washington: The stock market’s steady rise, still low long-term bond yields and a sagging dollar are girding the Fed’s intent to raise interest rates again this year despite concerns about weak inflation, according to comments this week from Fed officials and analysts anticipating remarks next week by Chair Janet Yellen. Minutes of the July Federal Open Market Committee meeting released this week flagged a division among policymakers focussed on weak inflation as a reason to stall further rate increases and those who feel still loose financial conditions pose a risk the Fed needs to counter. Two officials this week, including vice-chair William Dudley who has in the past taken a more dovish approach to policymaking, said the fact that financial conditions have recently eased despite Fed rate increases is a reason to keep plans to tighten policy in place. When the Fed said on Thursday that Yellen next week would use a keynote speech at Jackson Hole to address “financial stability,” it was a clue to some that she may agree. “I would not be surprised to see Chair Yellen outline a similar argument at Jackson Hole — namely, that financial conditions are a piece of the puzzle that currently support maintaining a gradual pace of tightening,” analysts from NatWest Markets Strategy wrote in a morning note. TD Securities ana-
We’re not targeting financial conditions...We’re trying to generate paths for employment and inflation that meet our mandated objectives JANET YELLEN, Federal Reserve Chair
Fed has Good Reason to Expect Faster Wage Growth
lysts said they expect Yellen’s comments to be more neutral, but that her speech could yield a “hawkish” surprise if “she elevates concern about financial stability as a factor that would warrant a more aggressive path of rate hikes.” Yellen spoke on the issue in June and did not sound overly concerned. Asked directly about whether the easing of financial conditions might warrant faster rate increases, she noted that the state of financial markets was only one factor in the set of information the Fed used in determining policy. “We have certainly noticed the stock market is up considerably over the past year,” she said. But “we’re not targeting financial conditions... We’re trying to generate paths for employment and inflation that meet our mandated objectives.” The most recent forecasts by Fed officials showed policymakers expect to raise rates once more this year, likely in December, while in the meantime beginning to reduce the size of the asset holdings accumulated during the economic crisis. Taken together, the steps would add upward pressure on both short-term borrowing costs and the longer-term rates critical to business and household investment decisions.
Federal Reserve officials must think that something soon has to give in this economy. The current equilibrium, characterised by low inflation, low unemployment, low wage growth and high corporate profit margins, isn’t sustainable indefinitely, but they don’t know how or when it will crack. The July consumer price inflation data did not exactly support the Fed’s position that another interest rate hike this year and three in 2018 are necessary to keep the economy from overheating. It becomes increasingly difficult to argue that inflation is being held down by transitory factors when each month’s data delivers another new factor. The Fed can always fall back on the unemployment rate to claim that although inflation is low now, it will creep back up to its 2% target with the economy operating at full employment. The minutes of the July FOMC meeting made clear that central bankers remain committed to this Phillips curve framework. Although persistently low wage growth calls that claim into question, the Fed has good reason to believe wage growth will soon accelerate. - Bloomberg
Pulses Rise 20% Post Import Curbs
NEW DELHI India's forex reserves are expected to hit $400 billion by September, driven by robust capital inflow and weak credit offtake, says a Morgan Stanley report. According to the global financial services major, Indian forex reserves are at an all-time high and have risen at the fastest pace since 2015.
After Aluminum, Zinc’s Supply Surge is Coming After aluminum, zinc has been the best performing of the LME’s six main contracts so far this year. Over the past week, the price chart has gone vertical – busting through the $3,000 a metric tonne level for the first time in a decade with a 5.4% jump on Wednesday.
3 Insurers File for IPO in 3 Weeks, may Fetch `. 20k cr NEW DELHI In less than three weeks, three insurance firms, including HDFC Standard Life, have filed draft papers for IPOs that together are estimated to be worth nearly `. 20,000 crore. With the IPO market bustling with activity, two government-owned entities — New India Assurance and General Insurance Corporation of India — have joined the bandwagon this month.
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New Delhi: The government’s import restriction on arhar/tur seems to have paid off with pulses prices rising by 20% in the Mumbai wholesale markets. Traders, farmers and companies feel this is a positive trend ahead of the harvest of urad and moong pulses in Madhya Pradesh and Maharashtra, as prices have been ruling below the minimum support price fixed by the government. A fortnight ago, arhar prices in Mumbai wholesale market was `. 34/kg. It has now touched `. 42/kg. Similarly, urad and moong price in Mumbai has seen a 10% hike and was being quoted at `. 54/kg and `. 40/kg. Masur was being traded at `. 36/kg, which is 20% higher than what it was last fortnight. Weak and uneven rains in key pulses growing states were a concern for the trade which had led to the rise in prices, said Pravin Dongre, chairman, India Pulses and Grains Association. “Pulses’ planting is at the fag end. Rains have not been good in Maharashtra, Madhya Pradesh and Karnataka and we will have a clear idea of the crop in the next 1520 days,” he said. India’s acreage of pulses fell by 3.5% this season to cover 13.07 million hectares. However, it was above the target of 10.56 million hectares set by state governments to plant the crop. Analysts said that for the next one month, prices of pulses will continue to be high after
Price Swings 24% higher
Arhar Urad
10% higher
Moong
10% higher
Masur
20% higher
(*PRICES COMPARED TO LAST FORTNIGHT)
PULSES ACREAGE
Current size:
13.07 m hectares Target by state governments:
10.56 m hectares
Size: Down
3.5%
105 100 95 90
2015
2016
2017
MMTC Venture Finds Refining at Swiss Unit Cheaper Co moved 4 tonnes of dore since last week of July
Industry experts call it good news ahead of harvest as prices were below MSP a fortnight ago
Forex Reserves may Hit $400b by September
Agriwatch Index
110
Aug
already buckling under uncertainty over likely success of the domestic policy agenda of the Trump administration,” said Jeroen van den Broek, ING Groep NV’s Amsterdam-based head of debt strategy and research. Guggenheim Partners this week
WPI (2014-100)
115
Jun
confidence in the White House’s ability to push through a fiscaleasing agenda wobbled further after controversial remarks by United States President Donald Trump on the recent Virginia violence. “Equity markets Stateside were
BLOOMBERG
120
Apr
WEEK TO AUG. 16
HY Bonds
Feb
EM Stocks
Dec
Equities
Oct
Govt/ Treasuries
Aug
Precious Metals
Jun
-2 IG Bonds
Apr
2
Feb
Quarts & Ounces
$6 billion
Standoff over nuclear weapons and racial violence triggered outflows from high-yield bond funds and emerging markets saw first outflow in 22 weeks
Dec
Jim Rickards @JamesGRickards Best performing assets classes of the twenty-first century. Gold outperforming stocks.
Risk Off Investors shunned junk bonds, stocks and emerging markets last week
The Agriwatch Agri Commodities Index gained 0.67% to 107.55 during the week ended August 19, 2017 from 106.83 during the previous week, led by jump in pulses prices, particularly tur, urad and masoor. Onion paused after surging for two successive weeks. The base for the Index and all sub-Indices is 2014 (= 100). Five of the 9 commodity group sub-indices and 21 of the 29 individual commodity sub-Indices gained during the week. The commodity group sub-Index values and their weekly changes are: Cereals: 105.35 (+0.23%), Pulses: 135.51 (+6.90%), Vegetables (Onion & Potato): 94.63 (-0.14%), Edible Oils: 100.22 (-0.50%), Oilseeds: 90.15 (+1.67%), Spices: 103.09 (-1.34%), Sweeteners: 121.20 (-0.29%), Fibres: 106.74 (+0.75%) and Other Non-Food Articles: 88.77 (+4.26%). Further details can be viewed on the ET website and on Agriwatch.com.
Oct
Tweet of the Day
An exodus from risk assets started in earnest as investors pulled billions of dollars from junk bonds and emerging markets. A standoff over nuclear weapons between the US and North Korea and racial violence in the American south triggered the biggest outflows from high-yield bond funds in almost six months and emerging markets saw their first outflow in 22 weeks, Bank of America Merrill Lynch strategists wrote in a note, citing EPFR Global data for the week ending August 16. Political chaos gave investors all the reason they needed to pare risk after lamenting for months that valuations were stretched in bond and stock markets. Waning
INVESTORS PULL OUT
Pulses Trigger Jump
Aug
Bloomberg
AGRI COMMODITIES INDEX UP 0.67%
INDEX
Risk Exodus Gets Real with Biggest Fund Redemptions in Six Months
the government put imports of arhar/tur under the restricted category and fixed a quota of two lakh tonne for its inbound shipments. “Another reason for high rates of pulses for the next one month is that monsoon rains have been erratic and the festive demand has picked up,” said Anuj Gupta, head of commodity research, Angel Commodities Broking. Gupta said that even after importing 5.67 million tonnes of pulses, which was 19.9% higher than what was imported in the Weak and same period (April to August) uneven rains last year, the trade was conin key pulses cerned about the kharif crop. growing Traders expect farmers to states were a get the minimum support concern for price of `. 5,575 a quintal for the trade moong and `. 5,400 a quintal for which had led urad. Sunil Baldeva, a Delhito the rise in based pulses trader, said the prices hike in prices could also push planting of short duration (60 days) moong crop in Rajasthan and Gujarat. “If the government allows export of pulses for the entire trade rather than only giving importers the benefit to export, prices can further increase. Further, if the government procures pulses which are soon going to be harvested at MSP rate, it will support the price. Also, the decision of the government to offload its 1.9 million tonnes of pulses buffer stock will have an impact on the market,” said Baldeva.
COST MATTERS
guard charges for gold that is entering the country under FTA (free trade agreeKolkata: MMTCment),” he said. PAMP India, a pre14 TONNES There are about 30 cious metals processDore gold refined by precious metals refining joint venture MMTC-PAMP every eries in the country. between state-owned month They all import gold MMTC and Swiss buldore for being refined lion major PAMP, has into gold bullion. started diverting unRefining margin of refined gold to Refining margin 0.65% is derived from PAMP’s refinery in from duty differential the customs duty difbetween dore gold Switzerland because ferential between and pure gold cheap gold imports dore gold and pure from South Korea has gold — 9.35% import made its refining acduty on the former tivities unviable. Duty on DORE gold and 10% duty on the The company has latter. diverted four tonnes The slim margin of of dore gold since the Duty on PURE gold 0.65% enables the dolast week of July to its mestic refining inSwiss refinery and dustry to deal with the convenmay increase the volume if the tional market-related gold price government does not take step to movement. put a check on imports from South However, import of gold coins Korea under the Free Trade and medallion from South Korea Agreement (FTA), officials said. has resulted in gold being availa“We will review the situation ble in the local market at a disnext Monday and take a call count. whether to divert larger volumes “As a result, it is becoming into our Swiss refinery,” said Rajesh creasingly difficult for the domesKhosla, managing director at tic refining industry to compete MMTC-PAMP. “It is not being poswith discounted gold that is being sible for us to compete against disimported into the country from counted gold that is available in South Korea at no duty under the the market. Our margins are unFree Trade Agreement (FTA),” der pressure,” said Surendra Mehta, national The company, which operates secretary at India Bullion & the only London Bullion Market Jewellers Association. Association (LBMA)-accredited He said gold dore imports by the precious metals refinery in the refiners have come down drasticountry, refines 14 tonnes of dore cally because of cheap imports of gold every month. gold coins from South Korea. Khosla said the government “Bullion dealers and jewellers are should come up with some notifigetting gold at a cheaper price and cation to protect the interest of the therefore they are not keen to buy domestic refining industry. “The gold from refineries,” Mehta said. government can impose safeSutanuka.Ghosal @timesgroup.com
4 TONNES
of dore gold has been diverted since last week of July
0.65% 9.35% 10%
Gold Recovers on Jewellers’ Buying New Delhi Gold prices recovered by `90 to `29,950 per 10 grams, largely on the back of increased buying by jewellers at the domestic spot market. Traders said pick up in buying by jewellers at existing levels led to recovery in gold prices but a weak trend in precious metal squeezed the gain. Globally, gold fell 0.26% to
$1,284.20 an ounce in New York. In the national capital, gold of 99.9% and 99.5% purity edged up by `90 each to `29,950 and `29,800 per 10 grams, respectively. The metal had lost `190 in the previous session. Sovereign, however, remained steady at `24,500 per piece of eight grams in scattered deals. — PTI
Summer Rumblings can Herald a Stormy Fall for US Stocks Investors are worried that in September, typically the worst month for stocks, the cracks seen in equities bull run will turn into a steeper selloff Reuters
New York: The Trump-fed rally in stocks, lately showing signs of faltering as the long Wall Street summer nears its end, faces a key test in the weeks ahead with the approach of a historically unkind season for equities and a clutch of issues – such as raising the debt ceiling – awaiting the return of lawmakers to Washington. With September, typically the worst month in the year for stocks, on the doorstep, investors are likely to be nervous that cracks seen in the more thaneight year bull run in equities will turn into a steeper selloff. “September is historically one of the most volatile months of the
year,” said Michael Purves, chief global strategist at Weeden & Co in New York. “Why do you want to chase the S&P right now if there’s a good shot that September can be an ugly, volatile month.” On Thursday, the S&P 500 recorded its biggest daily percentage drop in three months, hurt by speculation about White House Economic Adviser Gary Cohn’s possible departure, and failed to reverse course even after the White House said he was not leaving. Stocks edged higher on Friday. The weakness came just as stocks were recovering from last week’s swoon on worries linked to escalating tensions between North Korea and the United States. The market is up more than 8%
officer, North Star Investment Management Corp, Chicago. BUY THE DIP?
so far this year, fuelled by hopes of bumper corporate earnings and expectations that the Trump administration’s policies will spur growth. Yet the catalysts could be over. “This wave of good news coming
in the form of this double-digit earnings growth is in the rearview window now and I think it’s kind of hard to look out and see what’s the catalyst to get buyers to jump back in aggressively,” said Eric Kuby, chief investment
Cracks have started appearing in the market’s relentless rally. Thursday marked the seventh straight day in which NYSE and Nasdaq had more stocks making new 52-week lows than highs, the longest stretch since Trump’s election. At Thursday’s close, for a rolling period of one month, 509 more stocks had fallen each day on average than risen, the largest skew to the downside since Trump took office. When the market closed at a record high on August 7, more stocks ended the day lower than higher. “There are some cracks in market breadth,” said Peter Cecchini,
chief market strategist at Cantor Fitzgerald in New York, who said he has grown more cautious in recent weeks. The S&P 500 is trading at 17.7 times expected earnings – down marginally from March, when it hit a high not seen since 2004 - a level many investors consider expensive and increasing the risk of a market selloff. “When you’re at these valuation levels in a lot of these names, it doesn't take much,” said Stephen Massocca, senior vice president, Wedbush Securities. History is against stocks: September ranks as the worst month for stocks, according to the Stock Trader’s Almanac, producing an average price return for the S&P 500 of negative 0.5%.
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Normal rainfall likely over the country till Thursday
Monsoon Watch
1% excess rainfall recorded over the country on Saturday
5% deficit in normal rainfall over the country till Saturday
Short Takes Finished Steel Exports
Rose by 64% in July NEW DELHI: Finished steel exports
jumped by 64.2% to 0.770 million tonne (MT) in July compared to 0.469 MT in the same month last year, says a report. Import of finished steel also shot up by 42.2% at 0.798 MT in July this year compared to 0.561MT in the same month last year, said the report by Joint Plant Committee. “India was a net importer of total finished steel in July 2017 but maintained its net exporter status for the cumulative period, i.e. during April-July 2017,” it said.
Coal Imports Declined to
192 MT Last Fiscal NEW DELHI: Import of coal saw a
decline of 6.37% to 191.95 million tonnes (MT) in 2016-17 on higher production by CIL that saw the country move to a regime of surplus coal. Comparatively, in 2015-16 fiscal, coal imports stood at 203.95 MT, as per official data by the government. “On enhanced production by Coal India (CIL), the country has moved from a regime of coal scarcity to a coal surplus situation,” the document said.
East & northeast India recorded excess rainfall till Saturday
CURRENT WEATHER & FORECAST
Heavy rainfall likely over parts of south peninsula over next 4 days Rainfall activity
MEETING TODAY Industry captains to make presentations on building ‘New India’ by 2022 THE GUEST LIST
New Delhi: After lending an ear to startups and upcoming entrepreneurs, Prime Minister Narendra Modi will meet more experienced hands from the industry on Monday for their policy inputs to build a “New India”. The list includes Rajiv Bajaj of Bajaj Auto, Nikhil Nanda of Escorts, Avni Biyani of Future Retail, Sangita Reddy of Apollo Hospitals, Bunty Bohra of Goldman Sachs, Sanjay Nayar of KKR, Priya Nair of Hindustan Unilever and Sanjeev Bikhchandani of Naukri.com. The industry leaders will make presentations to the Prime Minister on policy initiatives for doubling farmer incomes, creating cities of tomorrow, taking forward Make in India, reforming financial sector and buil-
Rajiv Bajaj, Nikhil Nanda, Sanjay Nayar, Bunty Bohra, Sangita Reddy and Sanjeev Bikhchandani are among the invitees ding world-class infrastructure under the aegis of ‘Champions of Change’ initiative of government think tank Niti Aayog. “There is a thinking that this process should be institutionalised,” a top government official told ET. The industry leaders have been divided into six groups and tasked with formulating strategies on these topics. These gro-
ups may be attached to the ministries concerned as part of the instutionalisation process to ensure that they act as guiding lights to crucial issues. Sixteen cabinet ministers and secretaries of various ministries and departments will also be present at the presentations. The Prime Minister last week met 212 startup founders and young entrepreneurs.
After Monday’s meeting, the PM would have interacted with 425 CEOs in a week’s time seeking policy inputs. The last group of CEOs worked on six themes — New India 2022, Digital India, Emerging a Sustainable Tomorrow, Health and Nutrition, Education and Skill Development, and Soft Power and gave their suggestions to the Prime Minister and other senior ministers. The subject common to both groups is New India-2022, something that the PM is keen to get policy inputs on. Niti Aayog has been working closely with the groups to document their suggestions and will also look at how these are carried forward. The initiative aims at bringing fresh, innovative and practical thinking in the policy-making space.
Coming Up: An App to Help Update 2011 SECC Data Ruchika.Chitravanshi @timesgroup.com
New Delhi: The country’s statistics collectors will now wield a mobile phone app as they go eliciting information on social and economic indicators. The government is developing a mobile application to ensure that the Socio Economic and Caste Census (SECC), which forms the basis of selection of beneficiaries under various schemes, is updated regularly and expeditiously to ensure that all deserving are covered. “The mobile app is being developed by the NIC team… the authorised person will upload data following all safeguards and laws,” a senior government official said. The government is working on a
For Latest Updates MOBILE APP FOR UPDATING SECC 2011 DATA NIC developing the app Data to be uploaded on app with safeguards
HOW UPDATING THE DATA WILL HELP WEED OUT NONdeprived household MAP HOUSEHOLD progress
CABINET NOTE SOON TO USE SECC FOR ALL SCHEMES SECC TO FORM basis of subsidy transfers
IS USED TO form social registry of citizens
GET REALISTIC picture of eprivation
cabinet note to use the SECC 2011 data for all schemes, but wants it to remain relevant. The rural development ministry would conduct a pilot programme using the mobile application in some of the rural or urban districts soon. The data will be used to formulate a social re-
gistry for citizens. The government has already set up a committee of secretaries to look into the process to be followed for updating the SECC data. The panel of secretaries, including finance, statistics, rural development and Unique Identifica-
tion Authority of India, will decide the frequency at which the SECC data needs to be revised. “It will be too expensive to conduct a fresh census exercise. Also, the data is authentic since purpose of data collection was not shared with public beforehand,” the official added. Before the availability of SECC data, correct identification of eligible beneficiaries was a major challenge. Accusation of bias in the below poverty list affected coverage of poorest of the poor. SECC allows ranking of households based on their socio economic status. SECC 2011 provides the government the names and number of families in each panchayat and details their status on seven deprivation parameters.
The advantage of SECC is that it provides for programme-specific customised priority list to suit programme objective and budget space to address specific deprivation. The Sumit Bose Committee formed to study validity and efficiency of the SECC 2011 data in identifying the poor in its report spoke in favour of using the data for rural development schemes coming up with a formula to use some of the deprivation parameters to identify the beneficiaries for specific schemes. The World Bank is providing technical assistance to the government for this project. In July, the Cabinet Committee on Economic Affairs approved an increased cost of SECC 2011 to `4,893 crore from `3,543 crore.
Maximum temperatures in Delhi to stay around 31 degrees Celsius through this week
Parts of northwest India to receive scanty rains over next 3 days
over Delhi, adjoining states to pick up by Thursday
PM to Take Policy Inputs from India Inc Leaders Our Bureau
Most parts of Central India to receive widespread rainfall
Coal Stocks Fall at Power Plants as Floods Hit Supply Current inventory can only support 11 days of power generation unlike 22 last year Debjoy.Sengupta @timesgroup.com
Kolkata: Coal inventory at thermal power plants has plunged to a level that can support only 11days of power generation, down from 22 days a year ago, as rain-drenched mines and flooded railway tracks and roads impede offtake and delivery. According to officials, coal stocks are at ‘super-critical’ level, or enough for less than four days, at two of the 110 power stations monitored by the Central Electricity Authority (CEA). There are other plants that have low stock of coal, but the CEA does not count them in its list of super critical units because of reasons such as non-payment of dues or not lifting the coal offered. “Power plants having less coal stock due to outstanding dues/ supply more than committed quantity/ not lifting offered coal are not shown as having critical /supercritical coal stock,” the CEA said in its report on coal stocks of thermal plants. However, Ashok Khurana, director-general at the Association of Power Producers, said many firms have complained that Coal India has failed to meet its supply obligations, leading to plant closures. As of August 16, two plants had no coal, five had enough to run for only a day, eight had only two days’ stock, and another 13 had stock for just three days. A dozen more had stocks that would last for four or five days. A GMR Group spokesperson said one unit each of GMR Warora Energy Ltd and GMR Kamalanga Energy Ltd are shut due to
Crisis Looming Coal inventory plunges at thermal power plants Stock at ‘supercritical’ level at 2 plants: CEA
Supply fall linked to flooded rail tracks, mines
Two units of GMR Energy shut due to coal shortage CEA monitors 110 thermal power plants Power producers say Coal India not meeting supply obligations
Coal loading down to 108110 rakes a day from 123 due to floods
coal shortage. Further, supplies of coal bought at e-auctions was also erratic, he said. “There is no coal in the open market as well. Under the situation we are forced to declare less availability to the longterm power purchase agreements we have with discoms at both the units,” he said. A senior Coal India executive said loading had fallen to 108-110 rakes a day from 123 because of floods, and many plants had not ordered any rake for weeks. “Now with power demand on the rise, almost all plants have started to ask for coal at a time when supplies are hit,” he said, adding that supplies can increase after floods recede. Coal India supplies 90% of the fuel needed to run the plants at 85% capacity for units set up before 2009; and 70% of such requirement for newer plants.
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PHOTOGRAPHS: MD Asad, Ashwin Albert, Durgesh Kumar, Jinto George, N Narasimha Murthy and K Sunil Prasad
2017
THE ECONOMIC TIMES
THE ECONOMIC TIMES | NEW DELHI / GURGAON MONDAY | 21 AUGUST 2017
A QUICK HUDDLE BEFORE THE SHOW (From left) Infosys cofounders Nandan Nilekani and NR Narayana Murthy
LEADING LIGHTS (Clockwise from left) Ravi Shankar Prasad and Piyush Goyal; Ganesh Nayak and Klaas Oskam; Manu Kumar Jain and Anurag Jain; Manish Sharma and Lizzie Chapman; Naveen Tewari and Ritesh Agarwal
Startups Should Adopt 10-20 Villages: Prasad
STARTUPS WERE THE STARS, BUT...
All Eyes were on Murthy Infosys was on everyone’s lips on an evening that had NR Narayana Murthy in its midst Our Bureau
Bengaluru: All eyes were on India’s most-storied tech entrepreneur, Infosys cofounder NR Narayana Murthy, at The Economic Times Startup Awards. The day had been rocky with Infosys’ first external chief executive, Vishal Sikka, quitting amid unceasing tensions with the ‘promoter’ camp. Murthy didn’t betray any anxiety over it. The 71-year-old looked dapper, was relaxed and congratulated the young gathering. He and another Infosys cofounder, Nandan Nilekani, were exchanging notes with the Union minister for Information Technology, Ravi Shankar Prasad. The three, along with select investors and startup founders, caught up at the exclusive winners’ lounge, minutes before the curtains went up for the third edition of the Awards at The Leela Palace. Inside the lounge, it was all bonhomie and camaraderie with Prasad, one of the chief guests, enveloping Murthy in a warm bear hug as soon he entered. Moments before, Murthy commended Nilekani’s memory as the for mer chairman of UIDAI reeled off figures while introducing him to Ajit Isaac, chairman of Quess Corp, which had a blockbuster IPO last year, and V Vaidyanathan, the chairman of Capital First, which has a loan book of `20,000 crore. In the room, there wasn’t a hint of Murthy’s fallout with the Infosys board. That didn’t stop the entrepreneurs, investment bankers and investors present outside from discussing the hot subject through the evening.
Digital India is designed to bridge the digital divide between the digital haves and the have nots. Therefore, the govt always says that digital inclusion is very important
Like this dilemma we posed to the cofounder of a former ET Startup Awardwinner: do you empathise with the Infosys founder or the chief executive who resigned. “I know I am a cofounder, and Murthy is an icon. But in this case, I think the CEO got a raw deal,” he said on the condition of anonymity. Another consultant also added: there is a board, which the promoter must trust instead of washing dirty linen in public.
DIVIDED HOUSE While one cofounder felt that the former CEO Vishal Sikka got a raw deal, another consultant said the promoters must trust the board instead of washing dirty linen in public The investment bankers present were tied. One bunch felt Sikka had been agg ressive, even rash, considering Infosys was a services company. The other side pointed to the merits of such an approach if the company has to be transformed in the long term. There were questions, many at the event wanted to ask Murthy on the contentious subject. Only one person did, and Murthy had the last laugh when the evening’s moderator came forward to ask him this: Who is the better actor? Dee pika Padukone or Priyanka Chopra? In a heartbeat, the Infosys cofounder said Deepika, because “she is a Bangalore girl”, as everybody burst into laughter.
While the government is taking the lead on creating the digital infrastructure for the country to leapfrog, it also requires industry, especially the young innovative startups, to pitch in — this was the sentiment echoed at a panel discussion at the ET Startup Awards function where Ravi Shankar Prasad, the minister for electronics and IT, law and justice; and Piyush Goyal, the minister for power, coal, renewable energy and mines explained the government’s position while also taking questions from startup founders. While Prasad urged startups to come up with innovative ideas for virtual health and education for villages, Goyal asked them to help the government design its Skill India mission in line with the industry’s requirements. ET NOW’s chief editor Supriya Shrinate moderated the discussion. Excerpts:
You spoke about innovation going to lead India into the next century. Is the government’s idea also to bridge the social equitable divide through startups?
LOOKING FOR ANSWERS (Left) Accel Partners’ Prashanth Prakash (Right) FreeCharge’s Kunal Shah
...the Winners in the Limelight
STARTUP OF THE YEAR Sriharsha Majety, Rahul Jaimini and Nandan Reddy of Swiggy get served their award from Ravi Shankar Prasad
TOP INNOVATOR Arun Chandru of Pandorum Technologies receives an award boost from Ravi Shankar Prasad
Goyal: I think a very important dimension came out in yesterday’s (August 17) interaction (of the prime minister with startups) that government does not have a monopoly on ideas. In fact, the government certainly has restrictions on their ability to come up with good ideas and to implement good ideas as well. And we believe that the more the youngsters in this country are given an opportunity to engage with the government, business, masses, they will be able to truly connect new ideas with the needs of the society. The youth of India have the ability to bring about the change that we all want in our country, and we can, at best, play the role of a facilitator.
My request to all of you is that if the optical fibre is already there, I want new startups to come up with new ideas… RAVI SHANKAR PRASAD
Minister for Electronics and IT, Law and Justice
Prasad: Digital India is designed to bridge the digital divide between the digital haves and the have nots. Therefore, we always say that digital inclusion is very important. Mukesh Bansal (Myntra cofounder): You talked about Digital India and how important the whole digital infrastructure is. A lot of people have access to 3G, 4G, but in many pockets of the country, data connection is still not very good. So from the government side, what all things are you working on so in 2022 we will be ready with hopefully 10 times or more bandwidth — not only in big cities but all of India? Prasad: For two years, I was handling the communication portfolio also. Let me give you one straightaway statistics. The National Optical Fibre Network was a programme started in 2011, called as NOFN, designed to link 2,50,000 gram panchayats with an optical fibre network. When our government came to power in May 2014, only 358 kilometres of optical fibre had been laid in three years. You know how much we have laid in three years? It is 2,10,000 kilometres. That is the speed and the scale on which we work. About 1,00,000 gram panchayats have been linked, I would say by the middle of 2018,
I would urge each one of you to come up with ideas, help us design training programmes, skill development programmes suited to the requirements of the industry PIYUSH GOYAL
Minister for Power, Coal, Renewable Energy and Mines
we are going to link (the rest). But my request to all of you is that if the optical fibre is already there, I want new startups to come up with new ideas, pick up 10-20 villages for digital education, for digital health. I would urge all the big startups sitting here to think on that line. By this year-end, we are going to launch 1,000 digital villages which will be smart villages powered by a dynamic collector. And the idea is to have solar power, where I have requested Piyush to work closely with me. Then virtual classroom, virtual health room. That is how we are changing the whole digital infrastructure. Ritesh Agarwal (OYO founder): Companies like ours, like OLA and so on, which are online-to-offline companies, need a large volume of people who get trained and then recruited through our platforms. How can the government help us source a lot of these people who need employment? While we are willing to fund the training of it, how can the government help us train them so that they can eventually get recruited and become a part of the financial economy? Goyal: Our government’s understanding of the global shift in employment is that with more and more artificial intelligence, new technologies coming in, the nation will have to move away from organised labour or large-scale factories giving you proper jobs or government jobs to job creation by startups and newer businesses, new ideas. In fact, through the Mudra Scheme (to of-
TOP INNOVATOR Anand Anandkumar of Bugworks Research humbly accepts his award from Ravi Shankar Prasad
fer loans to small businesses), we believe we will be able to promote more and more people to become entrepreneurs and become job creators rather than job seekers. The point is very well taken that even today you try to get somebody for a job, maybe a carpenter or a mason, we find it very difficult to get a trained, competent person. Therefore, Skill India has been one of the pivotal movements that Prime Minister (Narendra) Modi has focussed on. We are trying to give it scale and we are trying to improve the facilities that are provided for skill development. But frankly, I feel we will not be able to do it alone. I would urge each one of you to come up with ideas, help us design training programmes, help us design skill development programmes suited to the requirements of the industry or business. Singapore does that. They actually map out how many people are required in every profession, right down to the last digit. So they may calculate that they will need 2,118 sales boys for the retail stores and that is how they then do the training programme for that. We really invite you to participate in the Skill India mission.
(From left) Binny Bansal and Rajan Anandan
ET FACEBOOK WOMAN AHEAD Falguni Nayar of Nykaa receives her prize from Ankhi Das and Piyush Goyal
We just turned three (years old) a few days ago, so this award is a great birthday present
This award has strengthened our resolve to develop high-end innovations for the benefit of masses
The business narrative is predominantly For years, women have allowed themdominated by tech. So, it is heartening to selves to be the support system of the see ET giving a platform for science family. I now want women to dream big
SRIHARSHA MAJETY, CEO
ARUN CHANDRU, cofounder
ANAND ANANDKUMAR, CEO
FALGUNI NAYAR, founder
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Women need to ‘lean in’. I feel there is no glass ceiling and women can do more. I come from that philosophy
I think the Startup of the Year Award has come of age and has become a big badge of honour for startups
2017
THE ECONOMIC TIMES
FALGUNI NAYAR
MUKESH BANSAL
PHOTOS: N NARASIMHA MURTHY, SYED ASIF, RAKESH RAVINDRAN, DURGESH KUMAR, JINTO GEORGE, SABU THOMAS & CHANDRU KM
THE FRONTBENCHERS (LEFT) Rajan Anandan, Sachin Bansal, Nandan Nilekani, Falguni Nayar and Naveen Tewari. (RIGHT) Pranay Chulet, Priya & Sachin Bansal
Digitally-rich Before Economically Wealthy, India will See Trickle-up Growth India’s leading entrepreneurs agree that doing business has become much easier now and entrepreneurs need to take advantage of the favourable environment that allows for the easy creation of wealth for all As India’s startup sector pads up for its next phase of growth, some of the country’s top entrepreneurs and investors took the dais at The Economic Times Startup Awards to discuss a burning issue—‘Growing Pains: Managing Culture, Scale and Returns.’ The panel comprised Nandan Nilekani, cofounder of Infosys and the architect of Aadhaar; Naveen Tewari, CEO, InMobi; Falguni Nayar, CEO, Nykaa; Sachin Bansal, executive chairman, Flipkart; and Rajan Anandan, vice-president, South-East Asia and India, Google. The discussion was moderated by Archana Rai, Editor-South, The Economic Times. Excerpts:
From being one of India’s most celebrated entrepreneurs, Nandan, you are now also a very influential investor. What are you telling your investee companies about what it takes to scale a company? Nandan Nilekani: I go back to the lessons we learnt at Infosys with (NR Narayana) Murthy and my other colleagues. It is important to have a great team, a team of people with complementary skills at the same time. All the people should have a common value system and need to have the same sense of deferred gratification. Because building a company is, as Murthy said, a marathon. It is not a sprint. You must be willing to forgo rewards for many years, if required, to get the rewards 10-15 years down the line. Then, of course, you need to have wonderful vision and execution. How receptive are entrepreneurs when you speak of culture, especially when speed is of the essence? Nilekani: I do not think anybody is implying that you sacrifice speed. They are not opposing things, and that is why I prefer to work with entrepreneurs who want to run marathons, who want to build big companies. If they really have a vision to do something great and transformational, they are the kind of people I support. Sachin, you have spoken constantly of the need for regulation that supports businesses launched in India. Do you think this is an important part of building scale? Sachin Bansal: If India has to become a developed country and we have to become leaders in innovation and technology, entrepreneurship is the way to go. There are multiple examples of countries using entrepreneurship as the engine of growth or job creation, and coming out of poverty. That
There are multiple examples of countries using entrepreneurship as the engine of growth or job creation, and coming out of poverty. That engine needs to be nurtured SACHIN BANSAL Executive Chairman, Flipkart
engine needs to be nurtured. There are, sometimes, areas where Indian entrepreneurs and companies tend to be at a bit of a disadvantage compared to their global counterparts. What we need to do is, create a level-playing field for Indian entrepreneurs so they will be able to use their capabilities and investments to the maximum extent and create impact for customers.
Falguni, what do you think a founder has to do to scale a company? Falguni Nayar: I think the Nykaa story has been one of a huge consumer connect. We are really proud of the fact that we connect with our consumers not just at their need level of wanting to buy beauty products but also how they think of themselves, how they would like to see the society, and what matters to them.
building something that is sustainable and scale is clearly one of the big metrics of sustainability. (Building companies) is an ultra marathon. The other way to think of it is like a test match. You cannot play a test match with T20 batting. (Entrepreneurship) is about building something sustainable. You need to do things systematically, whether it is the vision, which may evolve as time goes on, your strategy, which needs to go along with the very basics of execution, having financial prudence, or being able to generate capital. There is no shortcut to (making profits). You have to work session by session. We (InMobi) are probably in day one still (of a five-day cricket test match), third session, and I think we are doing well...
When you look at countries like China or Ireland, there is a lot of effort there to support growth-stage companies. In India, the government has done a lot but seems focussed on providing early-stage support... Anandan: In the last two or three years, I do not think any government anywhere else in the world has done what this government has for startups. We used to be able to hire the top 1% at universities in India and now it is a challenge because the top 1% wants to be like Sachin, Binny (Bansal, Flipkart cofounder) or Naveen. They do not want to work for a Google or another big brand. I think that is because of the success of Flipkart and InMobi and other startups in India. This year, we are seeing money come in but mostly from large overseas investors, and therein lies a risk. Is there a
problem for Indian startups because we do not have sufficient domestic capital? Nilekani: The fact that global capital is coming is very refreshing because they are able to take these big bets. I am not sure if Indian capital has the appetite for this approach because, in some sense, this capital-spending is based on a winner-take-all kind of model where you rapidly get market share and then go towards profitability. There is a certain mental model not historically practiced in businesses in India. But I can see that certainly at the startup and scaleup level, there is a lot of Indian capital now willing to invest. I want to add one thing. We have all been talking about this, that we will get more business as per-capita GDP grows. That is in some sense saying that as people become
BOOTSTRAP CHAMP Paras Chopra of Wingify lands an honour from Capital First executive chairman V Vaidyanathan & Piyush Goyal
In the last two or three years, I do not think any government anywhere else in the world has done what this government has for startups RAJAN ANANDAN VP, South-East Asia & India, Google
Business models emerging from India will be those that allow people to take their digital wealth and convert that into economic wealth, and that is the trickle-up. It is not trickle-down NANDAN NILEKANI Cofounder, Infosys
richer, they will be able to purchase more. But there is something happening in India that we need to recognise— that Indians will be data-rich before they are economically rich, thanks to everybody having smartphones, sensors and so on. So, suddenly, an individual has a digital footprint that is far more than the wealth he has. Therefore, the business models that will emerge in India will be those that allow people to take their digital wealth and convert that into economic wealth, and that is the trickle-up. It is not trickle-down. The big story is not just replicating a trickle-down kind of business model but using data to raise the quality of life for a billion people. For full transcript log on to www.economictimes.com
When Sachin Bansal, the cofounder of Flipkart walked off the stage, Ritesh Agarwal, the founder of OYO Rooms got up to greet him, shook his hand and said: “Great talk and advice! I need to call you.” Bansal smiled politely. Agarwal followed him out for a quick word. The two entrepreneurs share SoftBank as a common investor.
The Cradle Gets its Due FACEBOOK DIRECTOR Anand Chandrasekaran was also overheard extolling Dr Ashok Jhunjhunwala’s role in making IIT Madras a cradle for new-age technology companies. Jhunjhunwala is currently the advisor to the ministry of power, coal, new and renewable energy to chart India’s roadmap to being a 100% electrical vehicle nation by 2030. Companies nurtured at IITMadras have featured strongly at the ET Startup Awards.
Aadhaar a Big Boost for Financial Services Firms
Rajan, as one of India’s most prolific angel investors what do you consider a metric of startup success? Rajan Anandan: The success of a startup depends on the life-stage. Success happens when you get three things right. You need to have a team built out... that can take care of the company for several years. Second, you need to have found a product-market fit. That is quite hard. It takes several years to get the product-market fit right. Third, there should be enough traction to give the company sufficient runway to go for several years or to get to the next level of funding. Naveen Tiwari: Companies are all about
COMEBACK KID Amarendra Sahu and Jitendra Jagadev of NestAway get their trophy from Piyush Goyal
NOTHING OFFICIAL ABOUT THESE... SoftBank Bonding
The Narendra Modi-led government is having substantial impact on startups, particularly with Aadhaar boosting growth for financial services companies, Capital First chairman V Vaidyanathan said in closing remarks at The Economic Times Startup Awards on Friday. “The penetration of Aadhaar among the country’s population coupled with the
SOCIAL ENTERPRISE Vivek Rajkumar of Aibono reaps the harvest as he receives the award from Ravi Shankar Prasad
use of artificial intelligence has created a system where it is now possible to evaluate a customer within seconds and give him or her a loan,” he said. “This has been a major factor in driving the quick growth of organisations like ours.” Capital First is a nonbanking financial institution that specialises in providing debt financing to small and
medium entrepreneurs. India has firmly stepped up to the plate for the startup revolution, Vaidyanathan said, adding that factors such as ease for doing business, quality of labour, technologyreadiness, availability of venture capital, and quality of life are differentiating factors for cities seeking to project themselves as startupfriendly.
BEST ON CAMPUS Karthik R, Harikrishnan AS & Daniel David of DeTect beam with pride as they take their prize from Piyush Goyal
The glitter of hope never dies. An entrepreneur never fails. An entrepreneur just tries and re-tries
We really want to win startup of the year I’d like to thank ET for bringing award, and not just in bootstrapped cat- agri businesses to the limelight and egory. Hopefully that day will come soon to make agriculture cool
This wouldn’t be possible without support from IIT-Madras...this ecosystem must prevail to nurture startups
JITENDRA JAGADEV, cofounder
PARAS CHOPRA, founder
DANIEL DAVID, CEO
VIVEK RAJKUMAR, founder
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If not directly, by projects such as DMIC What explains the incredible run up in the country’s equity market — which has gained nearly 13% in value in one year — as the economy struggles? Optimism about bright long-term prospects, sustained by reforms such as the goods and services tax, is one explanation. It could be a part of a global bubble, as well. The MSCI Asia Pacific Index is up nearly 14%, led by Japan with a near-18% year-on-year gain; America’s Dow Jones has climbed more than 18% and western Europe as a whole has shot up more than 16%, in one year. There is a lot of liquidity looking for returns and lifting stock values worldwide. But India’s corporate and macroeconomic fundamentals hardly merit this kind of market exuberance. For the US, Europe and the Asia Pacific, the grinding pain of 2008’s global crisis seems to be getting over. The International Monetary Fund reckons the world economy will grow ahealthy 3.5% this year. In India, the Sensex price-to-earnings ratio, at nearly 24, shows that stock prices have run up faster than corporate earnings. For the first quarter this year, which ended in June, corporate revenues have inched up, but profit margins have fallen sharply. Only a part of this is attributable to the liquidity crunch affecting all sectors after demonetisation. India’s banks, loaded with unprecedented amounts of bad debt, are now so risk-averse, they would rather not lend for new projects. This has caused private investment to dry up: in the first half of 2016-17, the net fixed assets of all listed companies tracked by CMIE saw assets contract by 9%, the first time this has happened. The government has boosted investment within its fiscal deficit constraints, but this has not prevented contraction of the investment rate, at its lowest level since 2004-05. Projects like the Delhi-Mumbai Industrial Corridor (DMIC), which would build cities, highways, rail corridors and ports, are needed to step up investment and growth. DMIC has not progressed much. The government must clear up the banking mess, and invest aggressively to give private players the cue to follow suit. Vigorous investment must underpin a market boom.
N R Narayana Murthy is a role model for India Inc. He should repose confidence in new leadership
Why Can’t We Let Go? edhim unquestioningly and believed in his dream and leadership implicitly. Nandan Nilekani, Kris Gopalakrishnan, S D Shibulal, K Dinesh, N S Raghavan, Ashok Arora — along with T V Mohandas Pai later — were all good leaders in their own right. Though Murthy appeared gentle and unassuming to the point of selfG R Gopinath effacement and was an embodiment of humility, within Infosys, he was R Narayana Murthy is a known to be an autocrat and ruled legend in his own lifetime, with an iron fist. Mohandas Pai had told me how an icon whose leadership qualities are hard to emu- Murthy once called him late at night late for the best among us. and asked him to bring down the watHe led through personal example with erconsumption in the Infosys training an austere lifestyle and built a great campus he had built at Mysore, which information technology (IT) compa- could house 10,000 people at a time. ny. He remains a role model for so Pai tried to argue him out of it, but many like him coming from middle- Murthy had all the data. “Mohan, the and lower-middle-class backgrounds. water consumption per head is in exI once asked his wife, Sudha, what cess of 50 litres per day, and you showas it about Murthy that she found uld bring it down to 20 litres. In fact, I extraordinary. She said he is a great use only 15 litres. I use a bucket.” According to Pai, everyone acquivisionary. As writer Jonathan Swift had noted, vision is the art of seeing esced because Murthy’s integrity and the invisible. The future, the shape of commitment were beyond reproach things to come, is invisible. Murthy and he was a much-loved father fig- But, but, Uncle… saw a great future for Indian IT when ure. He demanded the same rigour IT didn’t exist in India, when it took from others and he did not spare shareholders, bring to bear his influence or express his dissent in board years to get a licence to import a com- himself either. One day, however, we all have to meetings and annual general meetputer, when the licence raj reigned. hand over the reins and make way for ings (AGMs). If he has no confidence Murthy and Infosys, v1.0 a new generation. The original foun- in the board, he must work with othHe created and scripted the future of ders cannot be replaced or replicated. ershareholders and try to replace the India’s IT industry by steadfastly Vishal Sikka cannot become Naraya- board through democratic means. holding on to his dream without los- na Murthy. To the Infosys board and When you are a minority shareholding hope or enthusiasm. Murthy was its shareholders, Sikka had acquitted er — which Murthy is — you cannot not only a leader but he groomed a himself creditably. Murthy and a few run a company like a family-controlgalaxy of leaders who were his foun- of his erstwhile colleagues argued led listed firm. that the Infosys CEO-MD who resignder partners. Most businesses fail because of dif- ed this weekend, fell short of the ethi- Murthy and Infosys, v2.0 Murthy invited himself back from ferences of opinion and, often, becau- cal standards they envisioned. Murthy relinquished his post of retirement to lead Infosys once again se of ego and personality clashes between partners. My financial adviser executive chairman three years ago. in 2013 when Infosys’ performance once told me, “Remember, it’s easier He chose Sikka as his successor. The was relatively lacklustre, especially to divorce your wife than your part- Infosys board was also hand-picked in comparison to TCS. Shibulal was ner in business.” It’s to his extraordi- and appointed by Murthy. And there- then the CEO, and graciously accepted the decision. nary credit that Murthy chose prud- in rests the matter. Sikka, on the other hand, is a profMurthy must let go and, like other ently and his seven partners followessional of the ‘new generation’ with a differing worldview. Murthy did an outstanding job on his return to InfoIt is about encouraging the new leadership to discover sys, but he handed over the mantle to amid murmurs and unsavouits vision and blaze a new trail and learn how to build Sikka ry comments that were sadly unchaenduring institutions with changing times ritable to him. The robust leadership
Interactive content has its allure — but also its limitations
Not Knowing Whodunit or Why is Half the Fun It is indeed frustrating when a character in a movie or TV serial does something that the viewer knows is foolhardy or just plain wrong. But is the solution to those moments of extreme irritation and anxiety an app that lets the viewer decide what happens next? At least in some types of storylines, the mystery of not knowing is most of the fun, unless the viewer or reader is in the habit of going to the end to learn what happens — or whodunit — and then work backwards. Deciding the way a character will react has elements of a video game, no doubt, but frustration, anger, disappointment and exhilaration (when the character’s actions are deemed correct) are all as much intended by the writers of potboilers as the twists and turns of the plot. Interactive content with “branching narratives” has its allure but also its limitations. Given that all readers and viewers do not display the same perspicacity when it comes to foreseeing where certain storylines may lead — to a dead end, perhaps — current technology only provides them with a series of options to choose from at every step, not really decide something new. Once the latter becomes possible, though, with a feature to give instant solutions to the changes wrought by viewers’ original interventions, successors to nail-biters like the Game of Thrones may encounter competition.
SANT RAJINDER SINGH
N
R&D Investment in e-Cars, Not Imports The Centre has invited global bids for 10,000 electric cars for use by government departments in the national capital region. We certainly need to accelerate usage of electric vehicles. However, the best way to spend money to this end is in solid research in battery technology, new materials to make car bodies lighter and stronger, self-driving technology and other subsystems, with the aim of securing for Indian industry a sizeable presence in the new breed of automobiles that would replace the traditional car. Policy is needed to speedily replace the internal combustion engine, given to energy-wasting environmental damage, besides to breakdowns. For India, the petroleum fuel in such engines is mostly imported, at huge and rising costs. Their replacement with electricity, even if generated with coal, would both save foreign exchange and use up less energy overall. However, e-vehicles would mean massive societal and business dislocation, and total transformation of the huge auto ancillary sector. What’s required is proactive policy that enables the thriving auto ancillary clusters pan-India to have the chance to reconfigure their products and services for e-vehicles, or find entirely new niches of demand. The conventional automobile engine has umpteen parts and ancillaries, which need to be regularly serviced, overhauled and repaired, providing a large employment opportunity. e-Vehicles, with far fewer parts, would disrupt today’s auto sector. The projection is that e-vehicle usage will see exponential growth early in the next decade. Already, one global auto major has announced that two-thirds of its cars would be electric or hybrids by 2020. The auto industry here needs gearing up as well. And the change must be driven by indigenous capacity, built through research.
Burglar-Proof Your Home
PTI
Government Must Step Up Investment
THE ECONOMIC TIMES | BENGALURU | MONDAY | 21 AUGUST 2017
he had created, however, was strong enough to weather the storm. This is not an attempt to analyse who was at fault: Sikka, or the Infosys board, which was perceived as lax in enforcing corporate governance by the old guard, or Murthy himself. This is about letting go and abdicating gracefully. It’s about reposing confidence and trusting the new generation. It’s about allowing it to make its own mistakes and learn from them. It is about encouraging the new leadership to discover its vision and blaze a new trail and learn how to build enduring institutions with changing times. It’s about realising that we can’t be there forever and that one’s time is over at the helm. We will all do well to remember what essayist Ralph Waldo Emerson said, “Is the acorn better than the oak which is its fullness and completion? Is the parent better than the child into whom he has cast his ripened being? Whence then this worship of the past?” The writer is founder, Air Deccan
MEME’S THE WORD
Top Global Threats “If you aren’t fired with enthusiasm, you will be fired with enthusiasm.” Vince Lombardi Football coach
No Option But to Build More
ISIS & climate change seen as top threats worldwide
Apropos the Edit, ‘How to Help Bankrupt Realtor’s Customers’ (Aug 18), lenders of a housing project do not derive any comfort by holding the project land as collateral. The usage of project land is restricted as per the sale agreements with home buyers, and this contractual obligation is binding on the interim resolution professional appointed by the NCLT. Sale of land with incomplete construction is not commercially feasible and recovery of bank loans seems doubtful. The only way out is to raise the floor space index and allow construction of additional flats, as suggested in the editorial.
…is a major threat to our country Islamic militant group ISIS
62.0%
Global climate change
60.5%
Cyberattacks from other countries
51.0%
Condition of the global economy
50.5%
Large no. of refugees (from Iraq & Syria)
38.5%
US power and influence
35.0%
Russia’s power and influence
31.0%
China’s power and influence
30.5%
Figures represent global medians across 38 countries, ISIS not asked in Turkey; similarly, questions regarding US, Russia and China not asked in those countries
Citings
OPPOSITIONAL POLITICS
He Who Holds the Strings Neerja Chowdhury Sharad Yadav’s convention last week, ‘Sanjhi Virasat’, to preserve the ‘composite culture of India’, was better attended than expected. Interestingly, many opposition leaders who attended the meeting referred to Yadav as the new ‘sutradhar’ (the one who holds the threads) of opposition unity. Looking at his long-standing experience in public life, understanding of caste politics and of Machiavellian back-room manoeuvres, he is probably best-suited to play that role. It was Yadav who had nudged V P Singh in 1990 to suggest the implementation of the Mandal Commission’s report, giving 27% reservation to OBCs in government jobs, thereby bringing about a paradigm shift in north Indian politics. Today, the Opposition is looking at Yadav once again to catalyse a new front to take on Narendra Modi in 2019. It is going to be a long haul. The BJP has already rubbished Yadav’s convention as an effort by scared men. While there were 16 parties present, none came from the Dravida Munnetra Kazhagam (DMK). Lalu Yadav, who has otherwise championed Opposition unity, sent a spokesperson. Surprisingly, the Aam Aadmi Party (AAP) was not invited. But the meeting saw new terminologies come to the fore. For starters, speakers at the convention avoided words such as ‘secularism’ that created a backlash in the past from among a section of Hindus, which had otherwise brought Opposition parties together before. Second, speakers made a distinction between ‘Hindutva’ and ‘Manuvad’.
Grandson of B R Ambedkar and Bharipa Bahujan Mahasangh leader Prakash Ambedkar emphasised that their battle was against the imposition of ‘Manuvad’, which the BJP wants to impose, ultimately giving primacy to the upper castes. Third, and taking this theme forward, Yadav said it was not a question about ‘minorities, but about the majority’, which was made up of Dalits, tribals, the backward classes, all the ‘vanchit’ (deprived classes) “who add up to 80% of the country’s population”. It was about their share in the power set-up. Interestingly, the only picture at the entrance of the convention and inside the hall was that of B R Ambedkar. Yadav especially lauded Chhotubhai Vasava, the six times JD(U) tribal MLA from Gujarat, who despite allurements, voted for Ahmed Patel in the recent Rajya Sabha elections, his vote ensuring the Congress leader’s victory. Yadav also applauded the ‘moral fibre’ of the tribals who were taking care of “our jal, jungal, zameen”. Vasava has recently launched his own party with a view to fighting the Gujarat elections in December. There was also a subtle change in the language used by opposition leaders at the meeting. Ali Anwar, JD(U) Rajya Sabha MP, who has been suspended by Nitish Kumar and was anchoring the
Is that Nitish in the second row?
Mystics and saints through the ages have stressed the importance of leading an ethical life. We want to protect our homes from intruders. But how many of us worry about the intruders that enter our real home, our body and mind? We have inadvertently allowed some thieves to enter, and they are causing havoc. These are the thieves of anger, greed, attachment and ego. They have snuck into our very being and are causing chaos within us. We are so careful about keeping thieves out of our homes. Have we ever taken the same amount of care to keep the thieves of negative qualities from our inner home? They have silently and sneakily crept into our being. They cause us to be angry. They make us tell lies and be deceitful. They incite impure thoughts within us. They make us greedy and selfish. They cause us to be intolerant and filled with hatred towards others. They make us egotistical. The result is that they are robbing us of our true gifts: our spirituality. Our soul is a drop of the Lord. The soul is filled with goodness and noble virtues such as nonviolence, truthfulness, purity, humility, love for all and selfless service. In the presence of the police, the thieves would run away on their own. Who is the police officer who can help rid us of the thieves who have taken possession of our being? The Masters have given us the police officer of meditation. When we meditate, the thieves who want to rob us of our union with God fly away and we reach our spiritual goal of reuniting the soul with God.
Chat Room
People around the globe identify ISIS and climate change as the leading threats to national security, according to a Pew Research Center survey. ISIS is named as the top threat in as many as 18 countries (including India) of the total 38 surveyed. Many of these countries have endured deadly attacks claimed by the Islamic militant group…
Source: Pew Research Center
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meeting, repeatedly referred to CPI (M) leader Sitaram Yechury as ‘Sita and Ram rolled into one’, and Bihar leader Ramai Ram as a fusion of ‘two Rams’. Sharad Yadav’s eyes are now set on moving towards Mandal 2.0 to bring together tribals, Dalits, OBCs and minorities, even though he did not mention anything about Muslims. But this is not going to be easy going. The BJP under Modi and Amit Shah has assiduously wooed — and won over — large sections of Dalits, tribals, OBCs, extremely backward castes and a section of the poor. The attempt has been to marry caste identity with Hindutva. The ‘Kamandal versus Mandal’ conundrum of the 1990s, which spawned backward-class leaders like Lalu Yadav, Nitish Kumar and Mulayam Singh Yadav — and also led to the rise of the BJP — is now giving way to a ‘Mandal plus Kamandal’ politics pursued by the ‘new BJP’ under Modi-Shah. Even as many a leader, including the Congress’ Rahul Gandhi, spoke of the need to forge an opposition unity, the real challenge for Sharad Yadav will not just be to get the opposition parties on a common platform but to create oneon-one contests between the NDA and the Opposition in constituency after constituency in states where the Opposition parties have a presence. The wheel has come full circle for Sharad Yadav personally. He started off as being the United Janata candidate from Jabalpur in 1974, the first test of Opposition unity, which prefaced the popular movements in Bihar and Gujarat, leading to an upsurge led by Jayaprakash Narayan, which had dethroned Indira Gandhi in 1977. Will he choose to be 2017’s Harkishen Singh Surjeet, the late CPI(M) leader who brought the opposition together time and again? Like Surjeet, it is Yadav’s strength that he has the potential of being the sutradhar without becoming the Opposition’s face, leaving it to popular sentiment — or events — to determine the choice of the leader.
Building Smartly ABHISHEK LODHA
India is among the fastest-growing major economies, but organised real estate has a small base. Any projections on India’s population and likely GDP growth over the next10-15 years imply growth for real estate. No major economy has grown without this happening. Real estate is a feeder to the consumption cycle because it allows wealth to grow on the asset side. As people become affluent, one of the most important things they want to upgrade is where they live and work. Though residential and commercial are the largest segments now, I see growth across sectors because we lack good supply everywhere. Retail, hospitality, education and healthcare are all growing fast.… A smart city is not just about technology. This misinterpretation has often led cities to make investments that are doomed to fail. Cities can be governedusing technology but have to be designed with vision. I say that to make a place good to live, you need “CCTV” to work: citizens, community, technologyand vision. Probably because technology is more tangible than community or vision.… When we started building Palava, we began with the classical definition of 5-10-15, which means everything you require daily should be within five minutes of walking, what you need every three to four days should be within a 10-minute walk, and things you use within a week to a month should be within a 15- to 20-minute walk. From “Creating a ‘Smart City’ From the Ground Up in India”
PRAMOD PATIL Nashik
Secure Online Transactions This refers to ‘Digits Before Going Digital’ by Kala S Sridhar and V Sridhar (Aug 19). Lack of digital infrastructure with limited spread in urban areas together with security concerns such as ATM frauds, cyber hacking, ransomware attacks and Dark Web can undermine the gains of digital transactions. The solution lies in creating a robust digital ecosystem. Early diagnosis, safety measures, financial literacy and mandatory security guidelines to be followed by service providers are panacea for the long run. MOLISHREE By email
Unite Against Global Terror Apropos the Edit, ‘Terror Calls for Coordinated Combat’ (Aug 19), the ideology of terrorists is based on the misinterpretation of holy religious scriptures. They are brainwashed and the venom of hatred, bigotry and communalism is injected in their minds. They have just one mission: kill everyone who doesn’t think alike and the gates of heaven are wide open for you. The expanding links of terror outfits must be effectively combated and wiped out at the grassroot level through united action across the world. RAAJASH KULMI Ujjain Letters to the editor may be addressed to
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CONTRAPUNTO I have never met a man so ignorant that I couldn’t learn something from him GALILEO GALILEI
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QUICK HITS Bangladesh Sentences 10 to Death for Plot to Assassinate PM Hasina Dhaka: Ten HuJI militants were sentenced to death while nine terrorists of the banned outfit jailed for 20 years each by a Bangladeshi court on Sunday over a failed attempt to assassinate Prime Minister Sheikh Hasina by detonating bombs at one of her rallies in 2000. The convicts had hatched the plot to kill Hasina, who was serving her first term as prime minister in 2000, by planting two 76-kg bombs at an open ground at her village home in southwestern Gopalganj where she was scheduled to address a public rally. Security officials, however, detected the bomb ahead of the rally. On further investigation, outlawed Harkatul Jihad-e- Islami Bangladesh (HuJI) chief Mufti Hannan, who was executed earlier this year in another case involving attempted assassination of the then Bangladeshi-origin British High Commissioner, was found to be the mastermind of the plot. PTI
Mugabe Returns Home After Getting Diplomatic Immunity Harare: Granted diplomatic immunity by South Africa, the wife of Zimbabwean President Robert Mugabe returned home from Johannesburg on Sunday despite calls that she be prosecuted for allegedly assaulting a young model at a luxury hotel there. Zimbabwean state broadcaster ZBC showed Grace Mugabe greeting government and military officials at the Harare airport after returning on an Air Zimbabwe plane with her husband, who had attended a summit of southern African leaders in Pretoria. The Mugabe couple did not attend a state funeral for a senior ruling party official later in the day in the Zimbabwean capital; the president usually presides over such events. South Africa’s foreign minister, Maite NkoanaMashabane, granted immunity to Grace Mugabe in a government gazette notice that was published Sunday. AP
Russia Steps Up Probe Into Attack Claimed by IS Moscow: Russia said on Sunday on that a stabbing which injured seven people and was claimed by the Islamic State is being probed by top investigators in Moscow, as new details emerged. IS claimed responsibility for the attack in the remote city of Surgut along with the attacks in Spain that killed 14 through its Amaq propaganda agency, calling the attacker “a soldier of the Islamic State”. A black-clad attacker in a balaclava ranged through central streets of the city around 2,100 kilometres northeast of Moscow on Saturday morning, stabbing people apparently at random before being shot by police. AFP
Around the World 17
Mnuchin Defends Decision to Stay On as Trump Sees Healing Ahead Rejects calls from fellow graduates of Yale University for him to resign in protest against President Donald Trump’s Charlottesville comments Washington: Treasury Secretary Steven Mnuchin pushed back against suggestions from his former classmates at Yale University that he resign from Donald Trump’s cabinet, and defended the president’s response to last weekend’s deadly protests in Charlottesville, Virginia. Trump, meanwhile, extended an olive branch to demonstrators, saying that protests can be cathartic as thousands swarmed into downtown Boston on Saturday to speak out against white nationalists. “Our great country has been divided for decades. Sometimes you need protest in order to heal, & we will heal, & be stronger than ever before!” the president said in a pair of tweets. “I want to applaud the many protesters in Boston who are speaking out against bigotry and hate. Our country will soon come together as one!” Mnuchin, 54, was urged to quit his Treasury post in a letter from more than 300 fellow graduates of Yale University’s Class of 1985, who said it was his “moral obligation” to step
US President Donald Trump with Treasury Secretary Steven Mnuchin
down in protest for Trump’s “support of Nazism and white supremacy”. I n a st atement on Sat u rd ay, Mnuchin, who is Jewish, said he understands “the long history of violence and hatred against the Jews (and other minorities), and circumstances that give rise to these sentiments.” “I feel compelled to let you know that the president in no way, shape or form, believes that neo-Nazi and
other hate groups who endorse violence are equivalent to groups that demonstrate in peaceful and lawful ways,” the former banker and film producer said in the statement. Wall Street was rattled last week by talk that another top Jewish member of the administration, economic adviser Gary Cohn, was upset by Trump’s remarks and thinking about quitting. Bloomberg
Sebastian Gorka Could Be Next to Leave After Bannon
Thousands March Against Hate Speech in Boston
Washington: Sebastian Gorka could be next to leave Trump’s administration after his ally Steve Bannon was fired, it has been claimed. Gorka, who previously worked with Bannon at Breitbart News, is another key figure of the Trump’s administration populist stance. Two sources with knowledge of the situation told Bloomberg he could be removed from his counter-terrorsim advisory role to Trump in a move which could suggest White House Chief of Staff John Kelly is looking to root out Mr Bannon’s allies and any officials prone to sparking public controversies. The Independent
Boston: Tens of thousands of people took to the streets of Boston on Saturday to protest a “free speech” rally featuring far-right speakers a week after a woman was killed at a Virginia white-supremacist demonstration. Rally organisers had invited several far-right speakers who were confined to a small pen that police set up in the historic Boston Common park to keep the two sides separate. The city avoided a repeat of last weekend’s bloody street battles in Charlottesville. Police estimated that as many as 40,000 people packed into the streets around the nation’s oldest park. Reuters
Barcelona Van Attack Suspect May Have Crossed Into France: Police B a rc elon a : Spanish police hunting for a suspect after the Barcelona van attack that killed 13 people said on Sunday they could not rule out that he had slipped over the border into France. Spanish police said security operations were under way in Catalonia and on the French border as they try to find Moroccanborn Younes Abouyaaqoub, 22, who they believe is the only one of 12 suspects still at large. Others have been arrested, shot by police or killed in an explosion at a house in Catalonia a day before Thursday’s van attack on Las Ramblas, Barcelona’s most famous boulevard. “We don’t have any specific information on this but it cannot be ruled out,” Catalan police chief Josep Lluis Trapero told a news conference in Barcelona when asked if Abouyaaqoub could have crossed into France. S p a n i sh me d i a h ave s a id Abouyaaqoub was suspected of being the driver, who fled after the attack. Trapero said he could not confirm who was driving, but said
TIPS, TRIVIA & TRENDS Indian-Origin Boy Wins UK Child Genius Show A 12-year-old Indian-origin boy from London has won the Child Genius show broadcast by UK’s Channel 4, the media reported on Sunday. Rahul beat his nineyear-old opponent, Ronan, 10-4 in the programme’s finale on Saturday night, the BBC reported. Rahul, who has an IQ high enough to be a member of Mensa – the world’s largest and oldest high IQ society – fought off competition from 19 children aged eight to 12 in the week-long show. He clinched the title by answering a question on 19th century artists William Holman Hunt and John Everett Millais. In the final, Rahul’s chosen subject was Edward Jenner’s medical innovation and methodology in 18th century England. He and Ronan both scored 15 in their specialist fields. Rahul said he was “extremely delighted to win” and congratulated Ronan and the other contestants, the BBC reported. IANS
Briton Hailed as Hero for Comforting Spain Attack Victim
investigators believed only one person was in the van. Islamic State has claimed responsibility for the attack, in which a van travelling at high-speed drove through crowds of tourists and local people walking along Las Ramblas, leaving a trail of dead and 120 injured from 34 countries. Hours later, police shot dead five men wearing fake explosive belts in the Catalan seaside resort of Cambrils after they rammed holidaymakers with a car and stabbed others, killing one woman. A police source in France told Reuters on Friday that police there had been looking for the driver of a white Renault Kangoo van that may be connected to the attacks. Reuters
London: A 44-year-old Briton, believed to be of Indian-origin, is being hailed as a hero after he risked his life to comfort a young victim of the terror attack in Spain, media reports said. Harry Athwal, from Birmingham, had been holidaying in Spain last week when the attackers drove down Las Ramblas, Barcelona, at speed, killing 13 people and injuring more than 100 other. Without considering his own safety, Athwal ran from the first floor restaurant where he was dining to the pavement and cradled a young boy who had been struck by the van, The Mirror reported. He was seen comforting the boy at the site of the attack with a photo of them going viral as a terrible symbol of the destruction wrought by extremists on the city’s freedom. PTI
Washington: Donald Trump and his wife Melania will skip the annual Kennedy Center Honours in December after some of the honorees said they would boycott a White House reception traditionally part of the weekend of festivities. “The President and First Lady have decided not to participate in this year’s activities to allow the honorees to celebrate without any political distraction,’’ White House press secretary Sarah Huckabee Sanders said in a statement on Saturday. Three of the five artists beThe Dec ing honoured White House reception had said they won’t may not attend take place the White but other House reception weekend planned for Deevents will cember 3, the go ahead as latest in a string planned, the of public reKennedy bukes of the Center said president over his handling of a white supremacists rally in Charlottesville, Virginia, a week ago. It’s also the latest sign that Trump is abstaining from many of the ceremonial aspects of the presidency, and that he’s cutting a much smaller figure on Washington’s social scene than his predecessors. The December White House reception won’t take place but other weekend events will go ahead as planned, the Kennedy Center said. Bloomberg
Crowds Rally in Hong Kong After Activists Jailed Hong Kong: Thousands of supporters of three jailed young democracy activists took to the streets in Hong Kong to protest their sentences. Joshua Wong, Nathan Law and Alex Chow, leaders of the 2014 Umbrella Movement rallies, were sentenced to six to eight months in jail Thursday for their role in a protest that sparked the months-long demonstrations calling for democratic reforms. People took on the summer heat to stream from the eastern district of Wan Chai to the Court of Final appeal in the heart of Hong Kong Island, protesting the jail terms. They held signs including: “Give back hope to my children” and “One prisoner of conscience is one too many” as they gathered in one of the biggest recent rallies the city has seen. William Cheung, an engineer in his 40s, described the ruling as “the beginning of white terror” in Hong Kong. “These young people are our hope for the future. We shouldn’t treat them like this,” Jackson Wai, a retired teacher in his 70s, told AFP as he teared up. AFP
Crossword
YOUR DAILY DIET OF FUN AND FACTS
Seoul: North Korea warned on Sunday that the United States will be “pouring gasoline on fire” by conducting an annual war game in the South next week amid heightened tensions between Pyongyang and Washington. Combative rhetoric between the nations spiked after Pyongyang tested two intercontinental ballistic missiles (ICBM) last month that appeared to bring much of the US within range, sparking an intense warning by President Donald Trump that Washington could rain “fire and fury” on the North. Pyongyang then threatened to fire a salvo of missiles towards the US territory of Guam — a plan that leader Kim Jong-Un last week delayed, but warned could go ahead depending on Washington’s next move. Amid the fiery volley of threats, Seoul and Washington will begin Monday the “Ulchi Freedom Guardian” (UFG) joint military exercises involving tens of thousands of troops that Pyongyang views as a highly provocative rehearsal for invasion. “The joint exercise is the most explicit expression of hostility against us, and no one can guar-
antee that the exercise won’t evolve into actual fighting,” said an editorial carried by the North’s official Rodong Sinmun newspaper. “The Ulchi Freedom Guardian joint military exercises will be like pouring gasoline on fire and worsen the state of the peninsula,” the paper said. Warning of an “uncontrollable phase of a nuclear war” on the peninsula, it added: “If the United States is lost in a fantasy that war on the peninsula is at somebody else’s doorstep far away from them across the Pacific, it is far more mistaken than ever.” AFP Seoul and Washington will begin on Monday the “Ulchi Freedom Guardian” joint military exercises
Britain to Release Tranche of Brexit Position Papers London: UK will issue a cluster of new papers this week to outline its strategy positions in divorce talks with the European Union, ranging from regulation of goods to data protection, the UK’s Brexit department said on Sunday. Prime Minister Theresa May’s government wants to push discussions with the EU beyond a focus on settling divorce arrangements to its future relationship with the bloc to bring clarity to anxious businesses, citizens and
investors. Last week, Britain issued proposals for a future customs agreement with the EU and a solution for Northern Ireland to avoid a return of border posts with the Republic of Ireland which might inflame tensions. UK’s Brexit department said it would issue two formal position papers this week along with a batch of proposals for discussions on future relations ahead of the next round of negotiations scheduled for later this month. Reuters
Nestle Accused of ‘Colossal Fraud’ in Poland Spring Suit Manhattan: Nestle SA’s Poland Spring Water unit has duped American consumers into paying premium prices for ordinary ground water that’s pumped from some of Maine’s most populated areas, rather than from natural springs as the company advertises, according to a lawsuit. While Poland Springs says its water bottles contain “10 0 percent natur a l spr i n g wat er ” from a source deep i n Mai ne’s woods, the complaint filed August 15 in federal court in Connecticut claims that Nestle Waters North America has bottled well water that doesn’t meet the US Food and Dr ug Ad minist ration’s definition of spring water. The suit, which includes claims for breach of contract and fraud, also seeks unspecified damages
for violations of state laws including New Jersey, New York and Massachusetts. None of Poland Spring Water’s ei g ht p u r p o r t e d “ n at u r a l spring” sites contains a genuine spring under FDA rules, according to the suit. “One or more” of the company’s largest volume groundwater collection sites — which the suit says sup plies up to 99% of the water in Poland Spring Water products — are near a current or former refuse pit, landfill or petroleum dump site, the plaintiffs say. Even the historic Poland Spring site in western Maine, which displays a stream of mineral water shielded behind glass, is no longer natural but instead generated by a machine that pumps it out of the ground, according to the complaint. Bloomber
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Princes William, Harry have Cameos in Star Wars Actor John Boyega, who will reprise his role as Finn in Star Wars: The Last Jedi, has confirmed that Prince William and Prince Harry have cameo appearances in the upcoming movie. Boyega spilled the beans after he was asked whether the royals were given lines in the movie while filming their cameos as Stormtroopers, reports aceshowbiz.com. Boyega told a radio station: “I think they took that scene out. I’ve had enough with those secrets. They came on set. They were there. I’m sick of hiding it. I think it was leaked, anyway. There were images. Every time I get asked, I have to dodge it. I’m tired of dodging it. They were there. Tom Hardy was there too.” The Last Jedi has completed production and is scheduled to open in theatres in the US on December 15. IANS
Drunk Law Tutor Thrown Off Plane in UK A 30-year-old drunk law tutor was thrown off a plane at Heathrow airport in the UK after she hurled abuses at the flight staff, according to a media report. Meghna Kumar was arrested and escorted out of the British Airways aircraft before it took off as she had downed too much vodka and abused the flight staff, the Mirror reported. “The defendant was booked on a flight from London Heathrow to Montreal on April 9, 2017,” prosecutor James O’Connell told Isleworth Crown Court. She was ordered by the court to pay £4,500 in fines and costs, and banned from flying British Airways for two years after admitting being drunk on entering an aircraft. The court was told that the cabin service director was so alarmed at Kumar’s behaviour, that he made the “rare” decision to reverse the plane back to the departure gate so she could be offloaded. She fell asleep as the plane was being taken back to the airport then thought she had arrived in Canada when she was woken up 20 minutes later and booted off the flight. Kumar reportedly became “abusive” when cabin crew told her she was sitting on part of her unfastened seat belt, the paper said. PTI
Trump to Skip Annual Kennedy Centre Honours
North Korea Slams Joint US-South Military Exercises
FB Group Helps Rescue Woman Stuck in Pool China Installs HD Cameras along Great Wall China has installed over 300 high-definition cameras along the Great Wall after growing incidents of vandalism, including by foreigners, who scratch their names or messages onto the masonry of one of the world’s seven wonders. The move is part of a two-pronged approach to tackle the problem which also involves teams patrolling the historic landmark to catch or warn off perpetrators, state-run China Radio International reported. It follows recent publicity after Chinese characters, along with English and Korean words, were found on parts of the Great Wall’s popular Badaling section, causing a public outcry, it said. However, the practice is nothing new. NBA player Bobby Brown aroused public anger after scribbling his name and number on the Great Wall in October 2016, the report said. The newly installed cameras will provide a record of events as evidence. If anyone is found to be vandalising the wall, they will be banned from visiting again, reported to the police and fined, the report said. PTI
A 61-year-old woman stuck in a swimming pool was rescued by members of a Facebook community after she posted a help message on the social media network, according to a media report. Leslie Kahn, from the US state of New Hampshire, was stuck in the pool last Friday. She was at the end of a swim in her backyard pool when the step ladder broke, and she had no other way to hoist herself up and out of the water. Without neighbours within earshot or her cell phone, she could not call for help. Kahn struggled for nearly three hours before she used her swimming pool pole and technology to get help. She reached for the pole and used it to drag a chair, where her iPad sat, to where she could reach it. She logged onto Facebook and posted an SOS message on the “Epping Squawks” group page. “I started off with 911 and an exclamation point,” Kahn said. Her virtual community responded within minutes. PTI
Dilbert
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18 Companies: Pursuit of Profit
‘Capital will Follow Great Talents’ From Page 1
About 400 guests were present at the glittering ceremony to applaud winners in 8 categories. Nilekani, cofounder of Infosys, India’s second largest software services company, was speaking at a panel discussion titled, “Growing Pains: Managing Culture, Scale and Returns.” Other participants in the discussion were Sachin Bansal, executive chairman of Flipkart; Rajan Anandan, Google’s vice-president for South-East Asia and India; Naveen Tewari, chief executive of InMobi; and Falguni Nayar, CEO of online beauty portal Nykaa. “I do not think anybody is implying that you sacrifice speed for this (values), they are not opposing things. If they (founders) really have a vision to do something great and transformational that’s the kind of people that I support,” said Nilekani, who has set up a $100 million venture capital fund that will invest in fast-growing startups with proven business model. Bansal, who has been arguing in recent months for regulation that supports Indian startups, was of the view that in certain areas Indian companies tend to be at a disadvantage compared to global counterparts. “We need to create a level playing field for them so that they are able to use their best capabilities to make an impact on customers and reap the best advantages of the investments they are getting,” said Bansal whose company attracted a mammoth round of funding from Japanese internet and telecom major SoftBank last week. Indian startups, which weathered a funding drought in 2016, are once again the object of interest from investors keen to invest in Asia’s third largest economy. Apart from the $2.5 billion round for Flipkart, others to clinch big-ticket deals include payments major Paytm which received $1.4 billion from SoftBank, while the country’s largest ride-hailing app Ola has snagged $400 million from multiple investors in last 9 months. This shower of capital follows a barren period when cautious inves-
tors withheld fresh capital while seeking greater economy and profitability from companies. Naveen Tewari, chief executive of InMobi, the first Indian startup to be valued at over a billion dollar, said it is during such times of need that entrepreneurs are called upon to adapt the most. “Drying up of capital has different consequences in different environments… Capital will follow where great talents go,” he said. GOVT MEASURES
The panelists agreed that the government’s proactive approach, while in its infancy, has begun to take effect. “I do not think any government, anywhere else in the world, has done what this government has done for startups in such a short period of time,” Anandan said. The panellists also addressed a burning issue in startup circles, both global and local — the need for more women in entrepreneurship. At a time when Silicon Valley, the Mecca of startups, has been under the scanner for the paucity in female representation in the startup ecosystem, the calls for greater gender diversity have only become louder. “Starting from the top, one has to show that they care for the consumer, for the business, and for the employee. Maybe that comes more naturally to women. Once you show that, it becomes the culture of the company,” pointed out Nayar. Among those listening with rapt attention to the discussion were Union minister for electronics & information technology, law & justice Ravi Shankar Prasad and the minister of state for Power, coal, new and renewable energy and mines Piyush Goyal. “In such a short span of time, the ET Startup Awards have become a defining milestone on our startup ecosystem's calendar. It’s fascinating the way they have started bringing together the entrepreneurs, the investors, and very importantly, the government as well,” said Pranay Chulet, founder of online portal Quikr.
THE ECONOMIC TIMES NEW DELHI / GURGAON MONDAY | 21 AUGUST 2017
IndianOil, Odisha Reach Compromise on Paradip Refinery Tax Incentives State will give `. 700 crore per annum interest-free loan for 15 years, co will in exchange pay taxes Our Bureau
New Delhi: Indian Oil Corp and Odisha have thrashed out a compromise over tax incentives to Paradip refinery under which the company will begin paying state taxes in exchange for the state government giving `. 700 crore as interest-free loan annually for 15 years as viability gap funding. Odisha withdrew the incentive this year and sought to recover value-added tax (VAT) from Indian Oil, which obtained a stay from the Cuttack High Court. The two parties will jointly apprise the court of their compromise formula soon. The panel comprising officials from the oil ministry and state government as well as executives of Indian Oil has now finalised the terms of a deal that followed a meeting between oil minister Dharmendra Pradhan and Odisha chief minister Naveen Patnaik on Friday in Delhi. “It is agreed that state government will give `. 700 crore per annum interest free loan for 15 years; earlier state head agreed to provide total deferment of VAT,” Pradhan tweeted. Under the original agreement Odisha signed in 2004 to attract IOC to set up a refinery in Paradip, the state government had agreed to defer payment of VAT by the company on all products produced by the refinery and sold in the state for the first 11 years of commercial production. IOC will have to immediately deposit all applicable VAT and goods and services tax (GST) on Paradip products for the period the refinery has been operating, accor-
ding to oil ministry officials. The refinery began production in late 2015. For future, taxes will be paid as they come due. In return, Odisha will pay `. 700 crore annually, as viability gap funding, in four equal instalments in each quarter in the form of interest free loan for 15 years starting 2016-17, officials said. The repayment of the amount will start in the 16th year. Odisha will give the interest-free loan for 2016-17 and three quarters of 2017-18 by January 2018. For 2016-17, IOC would pay about `. 1,900 crore in VAT to the state government, which would in turn give the company`. 700 crore in interestfree loan, officials said. Under the original incentive, the company could have paid nothing to the state in 2016-17 and deposited `. 1,900 crore 11years later without interest. As part of the compromise, the Odisha government has agreed to waive interest or penalty for VAT so far not deposited by IOC. By offering tax sops to Paradip refinery, Odisha had earlier claimed to lose`. 22,745 crore on the net present value basis. Indian Oil put the figure much lower at`. 8,00010,000 crore. Odisha had cited deregulation of fuel prices, capacity expansion at Paradip to 15 million tonnes, delay of six years in setting up facility, and the rising profitability of Indian Oil to withdraw tax incentive. IOC had responded by citing provision in the original contract that said if such tax waiver weren’t possible, the state shall accept interest-free unsecured bonds of the company payable at par without interest after 99 years in full settlement of taxes.
‘Tedious Task’ From Page 1
Currently, the income tax permanent account number (PAN) is considered the most important document for share transactions. But the government has realised that PAN, though unique for every individual for income tax assessment, may not be enough to plug money laundering through the stock market. Market participants said multiple PANs and fake demat accounts are being used to push illegal money into the stock market. The government recently mandated that Aadhaar be linked to PAN, bank accounts and mobile phone numbers. Brokers said they are gearing up for implementing Aadhaar but it would be a tedious task. “It adds to additional cost for brokers
but they have no choice but to comply with it,” said Alok Churiwala, managing director at Churiwala Securities. “This is triplication of efforts as without demat, bank account and PAN, one cannot trade and these three are already mandated to be linked to Aadhaar.” For large retail broking firms like Angel, it would be a logistical nightmare. “The issue is that clients don't respond to SMSes, emails, etc. So, it takes a lot of effort to get this done,” Angel Broking chief executive Vinay Agrawal said. “Customers have already linked Aadhaar with PAN and bank account but due to privacy or confidentiality issues these agencies don’t share the details and we have to approach the customers. As brokers, we don’t have a choice but the regulator has given us enough time.”
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Companies: Pursuit of Profit 19
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Operations Disrupted at IGI Airport After Drone Sighting
Essar Oil to Announce Closure of $13b Sale Deal with Rosneft Today
About 15 flights were diverted, several delayed for half an hour New Delhi: About 15 flights were diverted and several delayed as operations at Indira Gandhi International Airport were suspended for over 30 minutes after a pilot spotted a drone flying in the vicinity. The drone was spotted at about 7.09 pm by an AirAsia pilot. “At 7.09 pm, the pilot of AirAsia flight I5-799 reported that he had seen a dronelike object near IGI Airport. Operations on all three runways were suspended as a precautionary measure. At about 7.55 pm, operation of all the three runways resumed normally after clearance from Delhi police,” said a senior executive working at the airport. “A detailed report is awaited.” When operations at Delhi airport was suspended briefly, the flights were quickly diverted to Jaipur. Operations resumed after the CISF and the Delhi Police declared it safe for flights to land and take off. However, it could not be confirmed, till the time of going to press, whether the drone was found or not.
Russia Connection Rosneft, United Capital Partners and Trafigura are together buying 98% in Essar Oil Rachita Prasad & Arijit Barman
THE ECONOMIC TIMES WWW.ECONOMICTIMES.COM
Mumbai: Ending months of negotiations with various stakeholders, Essar Group will be announcing the closure of its $13-billion deal to sell flagship Essar Oil to a consortium led by Russian energy major OAO Rosneft on Monday morning. Rosneft, along with Russian private fund United Capital Partners (UCP) and Swiss commodity trading firm Trafigura, are buying 98% in Essar Oil that includes India's second largest refinery at Vadinar and nearly 3,000 fuel retail outlets. The transaction, announced by Indian Prime Minister Narendra Modi and Russian President Vladimir Putin last October during the BRICS Summit has been much delayed over haggles by Essar's creditors and India's intelligence establishment raising several red flags. Essar declined to comment. The transaction will help Essar deleverage its balance sheet by half in one shot and will also enable the promo-
DEAL STREET Russian co to acquire 49%, Trafigura 24% at around $6-billion equity valuation; 3rd investor likely; announcement expected at BRICS meet
Rosneft Deal: Ruia Stake in Essar Oil may Fall Below 10% Arijit Barman & Baiju Kalesh
Kremlin Comes Calling
Equity value of Essar Oil: $6 billion Mumbai: Billionaire brothers DEAL CONSTRUCT Debt: $4.5 billion Shashi and Ravi Ruia are likely to end up owning less than 10% of Rosneft 49% Phase I of Deal: Stake sale in refinery their flagship Essarto Oil refineryon October 13,Trafi ET was the first report 2016, deal of 2,000 oil retail gura about Phasethe II: Demerger after selling a controlling stake to 24% Vadinar Terminal from outlets also part of Russian energy giant Rosneft Essar Ports and sale to deal plan to hike
ter holding company to retire debt. The conglomerate has been grappling with debt after an $18-billion spending spree to build power, steel plants and oil refineries. The group has been struggling to maintain sales and profitability amid commodity price volatility and slowing demand. Proceeds from the stake sale will be
used for repaying Standard Chartered Bank (SCB), ICICI Bank and Axis Bank, which have lent to the group’s offshore holding company, Essar Global Holdings, now renamed Essar Global Fund, said officials aware of the matter. The three banks together have over $4 billion exposure to Essar. While SCB will be paid out $2.1 bil-
lion after a $800-million write off, Axis and ICICI — who together have a $1.6 billion exposure — are getting partially paid even as they continue to hold part of the exposure. Part of their exposure are also getting restructured and getting transferred to operating port entities that are also part of the mega transaction. Once closed, Russian bank VTB is expected to increase their exposure to the Essar group to close to $3.5 billion, since they are taking out existing lenders like SCB. Analysts expect the Ruia family to also pay at least partially, the $2.5 billion outstanding they have with the Iranian government During its AGM in Sochi, earlier this June, Rosneft Chairman Igor Sechin had informed his shareholders that the company had received legal approvals which gauranteed the entry of the Russian energy giant in Essar Oil's capital. In its October 13 edition, ET was the first to report that Ruia family will be selling out of Essar Oil, just days before the announcement in Goa.
OUR BUREAU
NCLT has now appointed Anuj Jain as the IRP to carry out the proceedings under the Insolvency and Bankruptcy Code, while the board of directors of the company will remain suspended. In an FAQ released on Thursday, Jain requested home buyers to at least submit the form by August 24, while the supporting documents
But says efforts are being made to ensure continuation of project development
[email protected]
New Delhi: The insolvency resolution professional (IRP) handling the Jaypee Infratech case has ruled out possibility of home buyers getting refunds, but has assured efforts are being made to ensure continuation of project development. The Allahabad bench of the National Company Law Tribunal (NCLT) on August 9 classified Jaypee Infratech as insolvent on the petition filed by IDBI Bank under Section 7 of Insolvency and Bankruptcy Code 2016. According to the order, Jaypee Infratech has defaulted on Rs 526.11-crore loan outstanding to IDBI Bank. The latest move by NCLT against Jaypee Infratech has left around 32,000 home buyers in the lurch.
EMPTY CUPBOARD
Insolvency resolution professional has made no commitment to authorities or media representative suggesting refund... can be provided subsequently, but before a resolution plan is filed. IRP also clarified that the August 24 deadline for submitting of claims by home buyers will not be extended. “The IRP has made no statement or commitment to any authorities or media representative suggesting that refund can be made
Haryana Tax Dept Turns Lens on Shell Cos Experts warn that intrusive methods of GST verification may hurt smaller cos
Feeling the Pressure
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Mumbai: Haryana excise and taxation department has asked its officers to find out whether premises companies from the state have mentioned in goods and services tax network registration are authentic, a move that seems to be aimed at identifying shell companies. Experts, however, warn that this could create problems for several genuine companies, mainly smaller ones, and may even prompt them to deregister from the GST network. “Success of GST depends on smaller entities as their non-inclusion in the GST value chain will significantly impair the reform,” said MS Mani, partner at Deloitte India. “Usage of intrusive methods for verification of their registration would, at this initial stage, impact their acceptance of the reform. It is expected that all tax authorities would go all out to encourage smaller businesses to embrace GST without any concerns of a heavy handed approach from authorities.” The Haryana excise and taxation department issued a circular on August 10 that mentions eight points tax officers have to follow. At the end, timeline for each process is mentioned. The whole process has to be completed by November 15, as per the circular. “Physical verification shall be done in every case as in the initial stage maximum registration certificates have been auto approved,” reads one of the guidelines in the circular. “He (tax officer) shall verify documents related to solvency, credentials, genuineness of the person and his business,” reads another. Several experts fear that
Haryana tax dept will verify GSTN registration co address
Circular issued on August 10 mentions 8 points officials have to follow
Process must end by Nov 15 Experts fear other states may follow suit, hitting SMEs already under pressure for GST compliance but insiders say many have been trying take advantage of GST
some other states may just follow Haryana’s example and this could lead to problems for small and medium enterprises that are already reeling under GST compliance pressure. While the Haryana tax department’s step may create problems for many SMEs, insiders said many companies have been trying take advantage of GST by creating shell entities. ET first reported on July 13 that indirect tax officials are scrutinising sudden spurt of activity in old companies and formation of new companies and fear that these are specifically created to game the GST. Many companies, especially those with a turnover of between `. 50 crore to `. 200 crore, are creating shells specifically to take advantage of GST, said insiders. These shell companies would be used to take credit in interstate transactions. “Many dormant companies have become active and are trading in various product categories they never used to deal with earlier. In many cases these companies seem to be deliberately registered in prominent business area,” a tax official based in Mumbai had told ET.
to certain categories of flat buyers/ projects," Jain clarified on Friday on some of the media reports. IRP made it clear it is not a proceeding for Jaypee Infratech’s liquidation. "This is a process during which steps are explored for restructuring of the company," he said. The professional also clarified that the company’s operations are being continued as a going concern and there would not be any disruption in its day-to-day operations. A total of 27 projects in three Noida land parcels of Jaypee Infratech will come under the purview of the Corporate Insolvency Resolution Process (CIRP), according to another FAQ released on Friday. IRP will now come up with a resolution plan, which will have to be approved by the committee of creditors (CoC), including financial institutions, public sector banks and other lenders. The CoC is likely to be set up by September 9. IRP will get 270 days to turn around the company's finances and see if a resolution of the company’s debt is possible. In case this is not possible, the company's asset will be liquidated.
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IRP Rules out Refund Possibility for Home Buyers in Jaypee Case
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20 Sports: The Great Games
THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 21 AUGUST 2017
LANKA KEEP THE
Gunners Slip, Down the League
LOSING HABIT
Despite a promising start with the bat, a collapse resulted in a poor total that Shikhar Dhawan devoured with ease
The same lapses as the past few years resulted in another early setback for Wenger and Arsenal Mark Critchley
Shikhar Dhawan was uncontrollable as he added an easy century to his record book
Roshan Thyagarajan
O
71 8 1997
Shikhar Dhawan scored his quickest century yesterday, off 71 balls
Sri Lanka lost eight wickets for the loss of 77 runs - from 2/139 to 216 all out The last time Sri Lanka beat India in a bilateral series PTI
ne hundred and ten minutes – that’s how long Sri Lanka were competitive against India in the opening ODI of the fivematch series. It was not good enough, certainly not when they were looking to revive the fortunes of a side in a slump of unprecedented lows. The outcome of a show that meek was a nine-wicket rout. India responded to Sri Lanka’s 216 all out with 220 for 1 from 28.5 overs. After Axar Patel and the rest of the bowling unit broke Sri Lanka’s spine, Shikhar Dhawan led the way with the bat with a brutal unbeaten 132 from 90 balls and Virat Kohli marked his return to the venue of his international debut with an 82 not out from 70 balls. Though it was a onesided drubbing, unlike in The leader of the Test series that India the wrecking swept 3-0, Sri Lanka had crew was Axar something to offer their (3/34), while fans on this occasion. Bumrah, ChaThat period – at the hal and Kedar beginning of the Sri picked up two Lankan innings – was wickets each t he on ly r e si s t a nc e India faced all day. At the start of the game, the tempo was slipping out of India’s usually firm grip, but they didn’t panic and switched to Plan B. Keeping cool, courtesy Kohli and MS Dhoni, they made the necessary bowling changes along the way and set the field to the batsmen. Niroshan Dickwella and Danushka Gunathilaka, the Lankan openers, rode the wave but Kohli worked his options without showing his displeasure with the situation. He knew that the soft underbelly that is Sri Lanka’s middle order wasn’t far from the sword. The ride lasted until Gunathilaka attempted a reverse sweep and ended up toe-ending the ball to KL Rahul at cover off Yuzvendra Chahal for 35. The crowd cheered the arrival of Kusal Mendis, and the right-hander repaid with some stunning strokes to reach 36 from
37 balls. At the other end, Dickwella remained a picture of calm, not going out of the way to create shots. Sri Lanka’s cause was helped along by India’s bowlers straying with their lines and lengths for the first half of the innings. They were either short and wide or they drifted into the stumps far too often. Despite that, neither Kohli nor Dhoni hit out in anger. While MS worked out the field with minute adjustments for each batsman, Kohli kept an eye on rotating the bowlers. After going through Bhuvneshwar Kumar, Hardik Pandya, Jasprit Bumrah and Chahal without the desired results, Kohli brought on Kedar Jadhav and Axar from either end. Jadhav got Dickwella, trapping the left-hander in front of the stumps as he premeditated and went through with the scoop sweep. Axar was next to strike as fired in a slider to squeeze between the charging feet and clueless bat of Mendis. Two wickets within 11 runs wasn’t ideal, but with 150 runs on the board by the 28th over, Sri Lanka knew that a good stand could see them near the 300-run mark. What happened after, how-
Axar Patel was the wrecker-in-chief -AP
A Futures Tour Stuck in Time Once a proving ground, it is now a charade of mediocre athletes playacting as tennis pros, vulnerable to corruption David Waldstein
K Srikanth is in good form going to the Worlds TOI
A G er man of Chi lean descent, an American with Russian parentage, a Pole and a Dutchman were arguing in English on a red clay tennis court on the outskirts of Prague. As much as that may sound like the setup to a joke, it was just a moment in time on the International Tennis Federation’s Futures Tour, the lowest level of professional men’s tennis, where thousands toil in relative obscurity with little hope of ever joining the sport’s elite. The four men had disputed several previous calls in a contentious doubles match, and the German player, Laslo Urrutia Fuentes, fumed when Sander Groen, his Dutch opponent, fired an overhead slam directly at him as he stood defenceless at the net. Urrutia called Groen arrogant and cocky, and the argument raged for several minutes, with Groen cartoonishly aping Urrutia’s movements. “Another day on the tour,” Urrutia said with a shrug a few hours later. The scene was made even more absurd because Groen is 49, a curious age for a player on a tour named Futures. The tour was established to help young players navigate their way from the juniors to the top level of the professional ranks, the ATP Tour. Theoretically, players should know by their mid-20s whether they can make it as pros. But many just seem to keep playing. With professional tournaments aplenty in roughly 75 countries, and no age restrictions, thousands of players enter hundreds of tournaments each year, despite the offer of very little prize money. Such conditions create fertile grounds for stagnation, frustration, petulant behaviour and match fixing. “It’s a complete free-for-all at the lower levels of tennis,” Kris Dent, the ITF’s senior executive director of professional tennis, said in an interview this summer. At best, the Futures Tour is a proving ground for elite prospects, a costly but potentially rewarding journey to fame. At worst, it is a cynical charade of mediocre athletes playacting as tennis pros, vulnerable to corruption. That is why the ITF has decided to radically restructure the tour, beginning in 2019. It hopes to re-categorise about 90 percent of the players into a more streamlined amateur structure, leaving players like Urrutia with some hope that they can soldier on, at least until the Darwinism of the rankings system spits them out. According to a recent ITF study, there were 14,000 nominally professional tennis players entering tournaments around the globe in 2013. But 6,000 of them, including many juniors, did not
Laslo Urrutia has played in Tunisia, Egypt, Turkey and Thailand, but tries to enter tournaments near his home in Germany to keep travel costs at a minimum -NYT
earn even $1. Given the costs of travel, coaching, conditioning, medical care and equipment, only 336 men and 253 women broke even; forget making a profit. “That’s quite astonishing for a sport that has almost $ 300 million in prize money,” Dent said. “These smaller tournaments have no TV, no sponsorships and no one paying any money to go see them, and they never will.” The plan is to funnel the top 750 men and 750 women into the Challenger Tour, where the total prize money at each tournament would equal $25,000 or more. Those would be the true professionals. The remainder would play on the new Transition Tour, which would be restructured to favour promising young players through a new ranking system and to make it less costly. The ITF would continue to assess and possibly tweak the system to establish a major league and a minor league with a clear link between them. The balancing act for the ITF is to continue to promote the sport globally so that there are still avenues to the top in places like Africa, Southeast Asia and South America. “It is not up to me to determine who makes it and who doesn’t,” Dent said. “But we want a distinct majors and minors with a clear pathway to the top, a realistic transition from the juniors to the ATP and WTA tours. There is a large group that are semiprofessional, and I don’t expect them to stay on the transition tour.” The New York Times
Sindhu, Srikanth Lead Gold Hunt Kidambi Srikanth and PV Sindhu will headline India’s 21-member contingent as they play for the elusive gold medal at the World Badminton Championships starting tomorrow in Glasgow, Scotland. Srikanth goes to the Worlds having won successive titles in Indonesia and Australia, while Sindhu, who won the 2017 India Open last, will look to better the bronze medals she had won in 2013 and 2014. Her form has been hurt with a couple of quarterfinal finishes in her previous Super Series events. Saina Nehwal and Sindhu will go straight to the second round having been given byes in the first. It is the Indian men who have dominated the season so far, winning six titles, including a maiden Super Series win for B Sai Praneeth in Singapore and Sameer Verma’s win at the Syed Modi Grand Prix. Rio Olympians Manu Attri and B Sumeeth Reddy, young duo of Chirag Sen and Satwiksairaj Rankireddy and Arjun MR and Ramchandran Shlok will compete in men’s doubles. Sumeeth and Ashwini Ponnappa will pair up to for the best bet in the mixed doubles, the other two dous being Pranaav Jerry Chopra with N Sikki Reddy and Satwik with Maneesha K. T he women’s doubles tea ms a re Ashwini-Sikki, Meghana Jakkampudi with Poorvisha S Ram and Sanjana Santosh with Arathi Sara Sunil. PTI PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co. Ltd. by Rajeev Yadav at Times House, 7, Bahadur Shah Zafar Marg, New Delhi-110 002, Phone: 011-23302000, Fax: 011-23323346 and printed by him at Times of India Press, 13 & 15/1, Site IV, Industrial Area, Sahibabad (UP). REGD. OFFICE: Dr Dadabhai Naoroji Road, Mumbai-400 001. EDITOR (DELHI MARKET): Javed Sayed (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights reserved. RNI NO. 26749/74 | MADE IN New Delhi | VOLUME 45 NO. 166 AIR CHARGE Raipur, Ahmedabad, Srinagar, Leh & via `. 2.00 | PRICE IN NEPAL: NEP `. 15.00 except Saturday & Sunday : NEP `. 25.00
ever, was hara-kiri. Sri Lanka lost their next seven wickets for 66 runs. Those numbers would have looked far worse had Angelo Mathews not decided to take matters into his own hands and get them past 200 with an unbeaten 36. However, within an hour it was evident that Mathews’s innings would be a footnote at best. From the time Rohit Sharma and Dhawan laid bat to ball, the Indian batsmen operated on a different dimension. With the pitch behaving cordially, they got in position well in advance and played the ball under their eyes. The only way either of them could have been dismissed was a run out, and Rohit gifted it to Sri Lanka – his leg hovering in the air well over the line after his bat got stuck in the pitch and fell out of his hand. That error brought Kohli to the crease, and things weren’t quite as silly after that. Wisden India
SCORECARD SRI LANKA 216 all out (43.2 overs) N Dickwella 64, K Mendis 36; Axar Patel 3/34, J Bumrah 2/22 INDIA 220/1 (28.5 overs) S Dhawan 132*, V Kohli 82*
While previewing the start of the new season two weeks ago, pundits and punters alike would have picked the same top six as each other, only in different positions. Save a few optimistic Evertonians, it is safe to say that most expect the champions Chelsea, the Manchester clubs, Tottenham, Liverpool and Arsenal to take up the six berths at the top of the league table. Ordering them is more difficult. City are favourites, but Chelsea’s pedigree and United’s summer business make them hard to ignore. The Spurs have been there or thereabouts for two years now and Liverpool looked like Chelsea’s closest challengers last season until absences affected them in the New Year. All five were thought to be contenders this time around but hardly anybody considered Arsenal. The defeat to Stoke City on Saturday showed why. Arsène Wenger cried foul in his post-match comments, claiming that Alexandre Lacazette’s disallowed goal should have stood and that overall, his side were victims of some close refereeing calls. It was not an unreasonable defence but even then, he only made it after criticising his players for making the same mistakes he has criticised them for in the past. Most damning of all, Wenger himself admitted that the defeat, which came courtesy of a debut goal for Stoke loanee Jesé Rodriguez, was a “big three points” to lose because it was a fixture that their rivals would typically take something from. Stoke deserved their victory. The Potters failed to beat a single top six side last term, taking just three points from a potential 36. Now, they are three from three. Though Arsenal cannot help how their fixtures fall, on Saturday’s evidence, you wonder whether their 4-1 victory at the bet365 Stadium back in May would have come so easily if their opponents had still needed to fight for their survival. The most frustrating aspect of it all for Arsenal
supporters though will be that clear weaknesses have not been addressed. Wenger blamed “stupid mistakes centrally” for the defeat but perhaps the biggest mistake was not to strengthen centrally in the months since May’s FA Cup triumph. Instead of reinforcements in the middle of the park, namely in both defence and midfield, a left-back and a striker arrived. Both Sead Kolasinac and Lacazette promise much, but neither will solve the problems Arsenal fans have put up with for several years now. They still lack a reliable presence in midfield without the indefinitelysidelined Santi Cazorla. Granit Xhaka is particularly erratic and it was the Swiss midfielder’s sloppiness in possession that led directly to Jesé’s pivotal strike. Still, the goal could have been prevented with greater organisation but Wenger’s three-man defence, two-thirds of which was made up by left-backs, were dragged from pillar to post. The system was first used by Wenger at the tail end of the last campaign and could well now be ditched for another, which in turn will be used until the same underlying weaknesses
Wenger blamed “stupid mistakes centrally”, but these areas were not addressed in the transfer market
render it a failure too. With the same squad of players, save those two additions, and the same set of problems as ever, it is hard to see how Wenger improves on last year’s fifth-place finish, but it is too early to make any definitive calls. Only one of the other top clubs needs to falter and Arsenal will still be the best placed to take advantage. At this point, however, the likeliest outcome is that those five are the top five and all prove to be stronger than Wenger’s side. The Independent
