Over previous close; ## At 9 pm IST; RBI goes off …...Emami Cement for an enterprise value of ~5,500 crore. Emami Cement has a debt of ~2,000-2,200 crore and loans against shar es

ECONOMY & PUBLIC AFFAIRS 22

All China evacuees testnegative for coronavirusAll 645 people evacuated from Wuhan, whowere kept in isolation at an Army base andIndo-Tibetan Border Police camps, testednegative for coronavirus, the Union healthministry said on Thursday. India has so farreported three confirmed cases from Kerala.

Quarter ended Dec 31, 2019; common sampleof 864 companies (results available of 1000)

SALESDec 31, ’18 21.8% ~12.81 trillion �

Dec 31, ’19 1.6% ~13.02 trillion �

PROFIT BEFORE TAXDec 31, ’18 -24.9% ~1,05 trillion �

Dec 31, ’19 54.3% ~1.63 trillion �

NET PROFITDec 31, ’18 -35.4% ~65,860 cr �

Dec 31, ’19 81.1% ~1.19 trillion �

Companies with zero sales excluded; Given the change in corporatetax rates, to give a fair comparison the profit before tax has beenconsidered; Compiled by BS Research Bureau; Source: Capitaline

BANK LENDING RATESMAY SEE 30-BP CUTBanks will have the incentive to give loans of almost ~2 trillion and cut interest rates by up to 30 basispoints (bps) because of micro, smalland medium enterprises coming out of the purview of the cash reserve ratio. 4 >

Nirma arm to buyEmami Cement for ~5,500 croreEmami inks deal withNuvoco Vistas for sale of 100% stake ISHITA AYAN DUTT

Kolkata, 6 February

Kolkata-based diversified conglomerateEmami Group announced on Thursday thatit had entered into a binding agreement withNuvoco Vistas Corp, part of the Nirma group,for divesting its 100 per cent equity stake inEmami Cement for an enterprise value of~5,500 crore.

Emami Cement has a debt of ~2,000-2,200crore and loans against shares of ~1,000 crore.The net gain for Emami from the deal, there-fore, will be around ~2,500 crore.

The move is part of Emami’s efforts toreduce debt at the group level. A clutch ofcompanies — Shree Cement, Dalmia BharatCement, UltraTech, and Ambuja Cement —and private equity investors were understoodto have evinced an interest in acquiring Em-ami Cement. The company operates an inte-grated cement plant and three grinding unitswith a cement grinding capacity of around 8.3million tonnes per annum. Turn to Page 21 >

8.3 mtpaEmami Cement's totalproduction capacity

~2,000-2,200 crDebt

~1,000 cr Loan againstshares

~2,500 crEstimated netgain for Emami from the dealMtpa: Million tonnes per annumSource: Company

KEY NUMBERS

0.8 mtpa

Bhabua (Bihar)

2 mtpa Jajpur(Odisha)

2.5 mtpa

Panagarh (WB)

3 mtpa Rishda(Chhattisgarh)

“WE HAVE POLICY SPACE (TO CUT RATES), BUT ITWILL DEPEND ON THE EVOLVING SITUATION. ANDAS THE MONETARY POLICY COMMITTEE WASPROACTIVE IN 2019, IT WILL BE VERY, VERYPROACTIVE EVEN IN 2020”

SHAKTIKANTADAS, RBI GOVERNOR

RBI goes off the beatentrack on cheaper loans

ANUP ROY

Mumbai, 6 February

The Reserve Bank ofIndia (RBI), in its sixthbi-monthly monetary

policy of 2019-20 on Thursday,kept its policy rates and stanceunchanged but adoptedunconventional measures tolower banks’ cost of funds sothat they could reduce theirlending rates further and boostretail advances to revive con-sumption demand.

The six-membermonetary policy com-mittee (MPC) votedunanimously to keepthe rates unchangedbecause the inflationoutlook remained “highlyuncertain.”

While the repo rateremained at 5.15 per cent andthe stance “accommodative”,the central bank said therewould be rate cuts as and whenopportunity came.

Right now, with inflationbeing 7.4 per cent, the rate cutscope was not there.

“Definitely. We have thepolicy space, but it will dependon the evolving situation andas the MPC was proactive in2019, it will be very, very proac-

tive even in 2020,” RBIGovernor Shaktikanta Das saidduring his post-policy pressconference.

In his opening remarks, thegovernor cautioned that whilethe status quo policy wasexpected, the RBI’s ability tosteer growth should not bedoubted.

“While this decision may beon expected lines and perhapswidely discounted, it is impor-

tant not to discountthe RBI! It has to bekept in mind that thecentral bank has sev-eral instruments at itscommand that it candeploy to address the

challenges that the Indianeconomy currently faces interms of sluggishness in thegrowth momentum,” Das said.

“Consequently, eventhough the present monetarypolicy decision is constrainedby elevated inflation pressures,there are other ways in whichthe RBI can strive to revivegrowth.”

Accordingly, the RBI intro-duced novel concepts, whichanalysts hailed as noteworthyexperimentations.

Turn to Page 21 >

Adani will be in a second partnership with French oil majorTotal SA — this time for its solarenergybusiness. Total will

invest $510 million for a 50 per cent stake in a 2,148 megawatt solarcapacity, owned by Adani Green Energy . In an announcement, AGEL

said it had entered into a binding arrangement with Total Gas & PowerBusiness Services SAS for an investment of approximately $510 millionfor acquiring 50 per cent and other instruments in the JV. 2 >

TOTAL SA TO INVEST $510 MN IN JV WITH ADANI GREEN

MONETARY POLICY REVIEW

MSMEs, REALTORS GET A HELPING HAND P6

Current architecture of GSTmy brainchild, says Modi

ARCHIS MOHAN

New Delhi, 6 February

Prime Minister Narendra Modi onThursday told Parliament that the cur-rent architecture of goods and servicestax (GST), including greater weightingto manufacturing states, was his brain-child, which he had suggested as chiefminister of Gujarat to then financeminister Pranab Mukherjee, but even-tually Arun Jaitley, the finance minis-ter during his government’s previousterm, included it into the law.

Replying to the discussion on themotion of thanks to the President’saddress, the PM sought to defend thenumerous amendments to GST, andsaid any reform of such magnitudeshould have space for a correctivemechanism. He said even the

Constitution had been amended sever-al times.

On the National Population Register(NPR), the PM defended the extendedquestionnaire. Contrary to recent state-ments by other ministers on the issuethat the extended NPR questionnairewas voluntary, Modi said “small

changes” were part of any normaladministrative exercise of a government.The PM said data was needed, includingon the contentious question on place of

birth of the father of a respondent, totrack increased migration and deter-mine the respondent’s mother tongue.

Congress leader Jairam Ramesh saidthe PM was “misleading the House”.Later, Ramesh said the “cat was now outof the bag” with the PM himself indi-cating that none of the new NPR ques-tions was “voluntary”.

The PM underlined the need forworking together to make India a $5trillion economy. He said the government had been able to main-tain macroeconomic stability amidtough global environment. He alsoexhorted all members to give sugges-tions on ways to take advantage ofopportunities thrown up by the cur-rent global economic situation.

Turn to Page 21 >

Prime Minister Narendra Modi duringthe ongoing Budget Session ofParliament PHOTO: PTI

DBS, Capri Globalamong suitors forLakshmi Vilas BankHAMSINI KARTHIK

Mumbai, 6 February

Capital-starved private sector lenderLakshmi Vilas Bank (LVB) may soonhave a suitor willing to pump moneyinto it. According to sources, top executives at the Chennai-basedbank submitted a list of potentialinvestors to the Reserve Bank of India(RBI) on Wednesday. The list includedSingapore-based DBS Bank and Capri Global.

At a 6.46 per cent capital adequacyratio and the gross non-performingassets (NPA) ratio at 17.3 per cent as ofJune 30, 2019, LVB was placed underprompt corrective action (PCA) by theRBI in September 2019. The followingmonth, the RBI declined its proposal tomerge with Indiabulls HousingFinance, and the bank has been func-tioning on thin capital since then.

A source aware of the developmentsaid the bank had been in talks withCapri Global and DBS Bank India inearly 2019, though these were aban-doned when Indiabulls Housing cameknocking at the bank's door for a merg-

er. “The bank wouldn’t have undergoneso much of capital strain had the dealwith either of these names fructified,”said the person.

Turn to Page 21 >

IN NEED OF CAPITAL| LVB placed under prompt corrective

action in September last year

| Weeks later, RBI rejected its plan tomerge with Indiabulls Housing

| At 5.56% capital adequacy ratioand 21.25% gross NPA ratio, LVB’sfinancials are weakest amongprivate lenders

THE MARKETS ON THURSDAY CChhgg##

Sensex 41,306.0� 163.4Nifty 12,138.0� 48.8Nifty futures* 12,136.3� 1.6Dollar ~71.2 ~71.2**Euro ~78.3 ~78.5**Brent crude ($/bbl)## 54.5## 55.0**Gold (10 gm)### ~40,336.0� ~287.0

COMPANIES P2

PRODUCT PRICES INCH UP IN WEAK FMCG MARKET

BACK PAGE P24

www.business-standard.com

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

TRUMP ACQUITTED OF ALLIMPEACHMENT CHARGES

FRIDAY, 7 FEBRUARY202024 pages in 1 sectionMUMBAI (CITY)~9.00VOLUME XXIV NUMBER 125

‘POLICYHAS FOCUSED ONIMPROVING TRANSMISSION’P4

LIQUIDITY MANAGEMENTFRAMEWORK RECAST P4

PM defends extendedquestionnaire for NPR

ALL DISTRACTIONS ARE BEHIND US, SAYS CEO BRIAN HUMPHRIES 3 >

REPO RATE REMAINS AT 5.15%,THE STANCE 'ACCOMMODATIVE'

CENTRAL BANK TAKES UNCONVENTIONALROUTE TO LOWER BANKS’ COST OF FUNDS

PAGE 11EDIT: BEYONDRATE CUTS

COGNIZANT'S LAST CO-FOUNDER STEPS DOWN FROM BOARDAfter spending nearly two and a halfdecades in the company he co-foundedwith three others, Francisco D’Souza,vice-chairman, has decided tosign off. The companyannounced his departurefrom the board effectiveMarch 31. The company alsoannounced the appoi-ntment of Vinita Bali to itsboard as a new independentdirector, effectiveFebruary 24. 3 >

Gadkari lauds automakerson BSVI progress“I would like to thank the industry forits efforts in leapfrogging to BSVI inrecord time. I can see you are about tosucceed in a very challengingmission,” he said.

‘Tata Motors will change customer mindset on EVs’

AUTO EXPO2020 PAGE 2

Voda Idea to drop ‘Idea’from postpaid services Telecom operator Vodafone Idea will dropbrand name ‘Idea’ from its postpaidservices, according to an announcementmade by the company on Thursday.The company's prepaid customers will,however, continue to get services underboth Vodafone and Idea brands.

Sebi issues guidelines for benchmarking AIFsThe Securities and Exchange Board of Indiahas issued guidelines for benchmarkingperformance of alternative investmentfunds with a view to streamline disclosurestandards and help investors in assessingscheme performance. 12 >

> RESULTS RECKONER

Toughonyou,butyoudidit:Gadkari laudsautomakers

DoT approvesBharti Airtel, TataTeleservices mergerTata Teleservices said theDepartmentof Telecom(DoT)hasapproved themergerofits consumermobilebusinesswithBharti Airtel. TataTeleservices said theDoThasconveyedapprovalof theauthority for takingondemergerof consumermobilebusinessundertakingintoBharti Airtel (BAL). PTI

SoftBank's KirthigaReddy joinsWeWork boardOffice sharing start-upWeWork said thatKirthigaReddy,partnerat SoftBankInvestmentAdvisers since2018,would join itsboard.Reddy's appointment comesnearlyaweekafterWeWorknamedSandeepMathranichief executiveofficer. Reddywaspreviouslymanagingdirectorof Facebook'soperations in IndiaandSouthAsia. REUTERS

AB InBev gets reliefagainst sales banin New DelhiA tribunal inNewDelhihasputonholda salesbanimposed last yearonAnheuser-Busch InBev,allowing theworld's largestbrewer to resumesalesof itsbeerproducts in the city fornow.Authorities inNewDelhibarredAB InBev in July fromselling itsbeerproducts forthreeyears. REUTERS

PhonePe goes liveacross 1 mn offlineshops in the eastPhonePehasemergedasalivepaymentoptionacrossonemillionofflineshops intheeasternregion.PhonePeisalsocreatingtheworld'sbiggestATMnetworkof2million in Indiabytheendoftheyear. Thiswouldhelp it totakeonrivals suchasAlibaba-backedPaytm,GooglePayandAmazonPaytodominatethedigitalpaymentsspace.

BSREPORTER

IN BRIEFPayments in high-value dealsnot a bribe, says Mahathir

2 COMPANIES

>

STOCKSIN THE NEWS

*OVER PREVIOUS CLOSE

> Indiabulls Housing FinanceRBIeasesCRRtoboostlendingtoauto,housingandMSMEs

~319.00 CLOSE

p15.27% UP*

> Ajanta PharmaQ3profitbeforetaxup88percentat~175crore;YoY

~1,305.60 CLOSE

p9.31% UP*

>Bharti AirtelMarketcapitalisationcrosses~3trillion

~546.75 CLOSE

p2.48% UP*

> Avenue SupermartsLaunchedQIPissuetoraiseat least~4,000crore

~2,294.45 CLOSE

p2.01% UP*

>Granules IndiaSubsidiaryreceivedUSFDAapproval forColchicinetablets

~161.25 CLOSE

p4.84% UP*

MUMBAI | FRIDAY, 7 FEBRUARY 2020

Total to invest $510 mnin JV with Adani GreenAMRITHAPILLAYMumbai,6February

Energy conglomerateAdani will be in a sec-ond partnership with

French oil major Total — thistime for its solar energy busi-ness.Totalwill invest$510mil-lion for a 50 per cent stake in2,148 megawatt (Mw) solarcapacity, owned by AdaniGreenEnergy (AGEL).

AGEL said it had enteredinto a binding arrangementwith Total Gas & PowerBusiness Services SAS for aninvestment of approximately$510 million for acquisition of50 per cent stake and otherinstruments in a joint venture(JV) company. The JV, thestatement said, would house2,148 Mw of operating solarprojects — presently 100 percent owned by Adani Green.The balance in the JV will beheld by AGEL. The solar port-folio is spread across 11 statesin India.

The deal is expected to becomplete before the end ofFY20.AGELlooks toutilise thefunds generated from the dealforequity fundingofnewproj-ects. “We are delighted toextend our long-term partner-ship with Total to our renew-

able energy business inAGEL.The investment reinforces theimmense potential in India’srenewable energy sector, aswell asAdaniGroup’scommit-ment towards sustainabledevelopment,” said GautamAdani,chairman,AdaniGroup.

The 2,148-Mw portfolio is

AGEL’s total operating portfo-lio in solar. The company hasanother475Mwofsolarcapac-ity under construction.

In the wind energy space,AGELhas anoperational port-folio of 347Mw. The companyaims to operate 15 gigawatt(Gw)ofrenewableenergyport-

folio by 2025. People in theknow said therewere no plansto move the under-construc-tion portfolio to the newlyformedJVwithTotalasofnow.

This is Total’s second part-nershipwiththeGujarat-basedconglomerate. In October lastyear, Total signed a definitiveagreement to acquire 37.4 percent stake in Gautam Adani-led Adani Gas for ~5,700 crore.The deal is to be executed intwo parts — an open offer topublicshareholdersandastakepurchase from the promotersof the company. Adani Gas ishopefulofcompletingthisdealbyMarch this year.

ForTotal, the investment isa step towardsmeeting itsowngoal of 25 Gw as a renewableenergyportfolioby2025. “Thisinterest in over 2 Gw of solarprojects represents a realchangeofscaleofourpresencein India’s renewable energysector, which has very signifi-cant growth potential in thecomingyears. Itwillcontributeto our ambition to deploy 25Gw of renewable energy by2025,” said Patrick Pouyanné,chiefexecutiveofficerforTotal.

According to Total’s web-site, the group’s interest inoperation renewable powergeneration stands at 3Gw.

Productpricesrise inaweakFMCGmarketVIVEAT SUSAN PINTOMumbai,6February

A slow-moving consumergoods market will have tocontend with price hikes inthe next fewmonths as inputcost pressures steadilyincrease. The first to see pricehikeswillbesoaps, sayexecu-tives at Godrej Consumer(GCPL) and HindustanUnilever (HUL), two of thecountry’s top soapmakers.

Sunil Kataria, GCPL’s chiefexecutiveofficer for India andSAARC regions, said onThursday the firm had intro-duced a 5 per cent price hikeinsoapsrecentlyandwill lookatmoreinthecomingmonths.

“Inflationary pressureshavebeenhighwithin soaps,”he said. “One round of pricehikes has just happened.Further price hikes will bedone, but we will take a cali-brated approach to it.”

Lastweek,SrinivasPathak,HUL’s chief financial officer,said a 5-6 per cent price hikeinsoapswouldbeundertakenby March to mitigate inputcost pressures.

In the past six months,domestic palmoil prices haveincreasedby46percent.Palmoil is a key input for soaps.While crude oil prices haveeased in the past one monthby 20 per cent, it still hasn’tbrought much relief, Pathaksaid. “Commodities and cur-rencyremainvolatile.Theyarethekeyfactors towatchoutforat a timewhenmarket growthis sluggish.”

On Thursday, the ReserveBank of India raised its retailinflation projection for theJanuary-March 2020 periodto 6.5 per cent amid volatilityin thepriceof crude,milkandpulses. It also said the overalloutlook on price riseremained ‘highly uncertain’in the months ahead, sayingthatconsumerswouldhave todeal with inflated productprices as a result.

Already, the fast-moving

consumergoods (FMCG)mar-ket has been grappling withits slowest growth in sixquarters for the October-December2019period, touch-ing 6.6 per cent only. In July-September 2018, the FMCGmarket had seen its highestgrowth rate of 16.2 per cent,implying that sentimentremainsweak, experts say.

WhileNielsenaswellasrat-ings agency CRISIL had indi-cated that there would be arebound in FMCG marketgrowth rates going ahead,company executives remainsceptical.“Therearestructuraldemandissuesandarecoverywill show up with a lag, start-ingwith urban and then ruralareas,”Kataria says.

AccordingtoNielsen, ruralgrowth rates slipped to 5.2 percent in the December quarterfrom 18 per cent a year ago.Urban growth rates were alsofalling, it says, touching7.4percent in the December quarterversus 14 per cent a year ago.

AdaniElectricityMumbai(AEML)hascompletedissuanceof$1billionbondswithanover-subscriptionof5.9times.Theorder-bookat$5.9billionwasthelargesteverforaprivateinfrastructuretransactioninIndia, thecompanysaid.Thebondsweresubscribedbyinvestors fromacrosstheglobe.ThecompanyinsaidUSaccountspickedup29percentofbonds,alongside43percentallocationtoAsiaand28percenttoEurope,theMiddleEastandAfrica. BSREPORTER

N AUTO EXPO N

SHALLY SETH MOHILE &ARINDAM MAJUMDERNewDelhi,6February

Kia Motors India is confi-dent of strong volumegrowth in the Indianmarketdespite the slowdown andonset of competition in theSUVmarket, a top official ofthe company said.

The late entrant inIndia’s passenger vehiclemarket has been encour-aged by the strong orderbook of the Seltos and ofthe recently launchedCarnival, a premiummulti-purpose vehicle,which is priced between~24-33.94 lakh.

Bookings for theCarnival have risen to about3,500 units, up from 1,410units on January 21, whenthe company opened book-ings, said Manohar Bhatt,head sales andmarketing atKiaMotors India.

Kia confident ofvolume growthdespite slump

Autoshowsarelosingsheenglobally.Companiesfinditlucrativetodotheirown

launches.Butyouhaveagrandstandhere.Whatdrovethat?The global discussion is moti-vatedbydifferent considerations—budgetandthe impactoncon-sumers that it can’t attractenougheyeballs compared to theinvestmentmade.Doesitactuallyfit in today’s context where cus-tomers expect solutions?

IthinktherearereasonswhycompanieskeptawayfromthiseditionoftheAutoExpo—the

underlyingindustryslowdownandasluggisheconomicenvironment.We,too,hadasimilardialogue:Shouldweparticipateornot?India is our homemarket. As an industry, itis our duty to simulate themarket. The expoisaperfect forumforthat.Ourpavilioncatersto both the product and the solution, withgreater emphasis on electrification.

When the slowdown started, we thoughtit tobecyclic; that itwouldn’t last long. Ithasbeen 18 months since. It largely stemmedfromsubduedeconomicactivity.Thestimu-lusneedstocomefromthegovernment.TheCentredid take steps—starting frominfras-tructure booster shot to steps in the recent

Budget todrive economic revival.

Doyouthinkthesestepsaresufficienttotriggerdemand?I am not the right person to make a judge-ment. The government has its constraints. Ithinkthegovernmentdidafine jobstriketheright balance between the wish list and theconstraints. The steps announced in theBudget will not yield results overnight. Weare in the midst of a major transition fromBS-IV to BS-VI. By April 1, a big confusionwhich held back customers will get cleared.

MarketleaderMarutihassaidthatitwillgoslowonEVsasthereisnocustomerappetite.Youhavetakenacontrastingstand.IsthereadifferentperspectivethatyouareseeingthemarketEVwith?I think there is a difference between Marutiandus. This player always thinks about how

tomeet a certain price point to stay relevantto his customer base, which is largely budg-et-driven.Ours isdifferent:WethinkweneedEVs to drive investment in the ecosystemwhich will finally determine the speed ofadoptiontoelectrification.That’swhywearedifferent as a group.

DoestheIndiancustomerthinkaboutacleanplanetortheprice?I can take the customer thinking for grantedor I can embark on a journey to change thecustomer thinking.

YouareoneoftheprimecogsinthewheelofTataSonsGroup.Butcurrently,youarehavingaroughride.Thepromotergroupishavingtoinvestcash.Whendoyouthinkyoucangiveitback?When I joined four years back, we initiallythought that in three years we will be future

ready.Allissueswereeffectivelysortedinthreeyears.Stepsweretakentolowercost, improveefficiencyortodrivenewproducts.Thencame2016-17— goods and services tax, demoneti-sation, transition fromBS-IVtoVIbroughtusto ground zero again. With Chandra as thechairman,wedecidedtochangetheplanfromtransformation to turnaround.

Whathasbeentheresult?Everythingisunderourcontrol.Productivity,efficiency, cost, and reduction of supplierbaseto300fromover450.Wehavebeenabletoincreasedealerprofitability,maintainopti-mum stock levels. That’s the reasonwhyweperformed quite well in the third quarter.What we didn’t do was put unreasonablemetals into the system for a higher marketshare, increasingpainof dealers.

Moreonbusiness-standard.com

‘WeplantoembarkonajourneytochangecustomermindsetonEVs’

1.Martin Schwenk,CEO,Mercedes-Benz India,poseswith theV-ClassMarcoPolo

2.ShahrukhKhanat theunveilingof thenewCretabyHyundaiMotors

3.TheRenaultFutureElectricVehicleSYMBIOZ

PHOTOS: SANJAY K SHARMA,

PTI

12

3

RURAL vs URBANFMCG GROWTHnOct-Dec2018 nOct-Dec2019(In%)

Rural 18.05.2

Urban 14.07.4

Source: Nielsen

RISING PRICE TRENDnAug19 nFeb19 Growth

Palmoil* 526768 46%

Palm 375fattyacid# 667 78%

*In ~per 10 kg; # In $ per tonne

Market leader Maruti on Day 1 of the AutoExpo 2020 had made it clear it doesn’t believe in thefeasibility of electric vehicles (EVs) for the India market just yet. On Day 2, Tata Motors ManagingDirector and Chief Executive Officer GUENTER BUTSCHEK in conversation with Arindam Majumdersaid there is a difference between his company and the market leader. Edited excerpts:

MCAordersSFIOprobeintoCastexTechaffairsRUCHIKA CHITRAVANSHINew Delhi, 6 February

The Ministry of Corporate Affairs(MCA)hasordered theSeriousFraudInvestigation Office (SFIO) to lookinto theaffairs ofCastexTechnology,a subsidiary of automotive compo-nent maker Amtek Auto, currentlyundergoing a corporate insolvencyresolution process.

A senior government official toldBusiness Standard the investigationhadbeen ordered on the basis of thefindings of an audit report of CastexTechnology during the resolutionprocess. The details of the report

could not be accessed. SFIO is in theprocess of constituting a team tostart the probe into thematter.

Manufacturer of iron cast auto-motive components in India, CastexTechnology started its resolutionprocess in December 2017 with adebt of ~6,000 crore.

StateBankof India, the leadbankwith a total exposure of ~1,191 croretowardsCastex, had told the tribunalit had tried to revive the companyby putting in place a correctiveaction plan in March 2016. TheNational Company Law Tribunal(NCLT), while admitting Castex toinsolvency, had said evenafter being

granted sufficient time, the corpo-rate debtor (Castex) had not repliedor objected to the notice issued bythe lender.

According to the dis-closures made by thecompany, declaredDeccan Value Investorsas the preferred bidder.The resolutionprocess ofthe companywasdelayedas potential bidderswanted to submit a plan for AmtekAuto and Castex together.

Amtek Auto was among the top12 non-performing assets (NPAs)referredby theReserveBankof India

for insolvency resolution under theInsolvency and Bankruptcy Code.

Granting more time for the res-olution, the appellate tribunal in its

order had noted: “It isstated thatAmtekAuto isthe holding company ofthe present corporatedebtor (Castex) and theprospective resolutionapplicantswant to bid forboth the companies as

both the companies are undergoingthe CIRP albeit, separately.”

A statutory audit report of Castextechnology by Raj Gupta & Co said:“The company has been continu-

ously making losses, consequentlyits net worth is negative and thefirm’s total liabilities exceeded itstotal assets. This indicates the exis-tence of material uncertainty thatmay cast significant doubt on thecompany’s ability to continue as agoing concern.”

For 2018-19, the annual reportmentioned that Castex Technologyearned revenue of ~460.7 crore andmade a net loss of ~749.4 crore.

The firm’s product portfolio con-sists of a range of components fortwo and three wheelers, cars, trac-tors, light and heavy commercialvehicles and stationary engines.

SHALLY SETH MOHILE & ARINDAM MAJUMDERNewDelhi,6February

Four years ago, a tweet by Minister of RoadTransportandHighwaysNitinGadkarihadset thecatamongthepigeonsinIndia’sautomobile indus-try. “My colleagues — Prakash Javadekar, AnantGeete, Dharmendra Pradhan — and I have takenthe unanimous decision to leapfrog from BharatStage (BS)-IV to BS-VI directly fromApril 1, 2020,”read thepost.

Four years since, a lot has changed.Automakers in India have nearly completed theonerous taskGadkari had chalked up.

In his address to industry leaders at theAutoExpo in Greater Noida, Gadkari, who hasoftenpulledupautomakers for showingresistancein complying with the government’s regulationson emission and sustainable mobility solution,was all praise for the industry. “I would like tothank the industry for its efforts in leapfroggingto BSVI in record time. I was tough on you.Manyofyouhadreservations.Butall of youcooperated.I can see you are about to succeed in a very chal-lengingmission,” he said.

Amidadawdlingeconomythathasput India’sauto sales in reverse gear, automakers are readyto take the leap fromApril 1 and transition to thestrict emission regime.

Over thepast fouryears, automakers and theirsuppliers have made a combined investment of

~27,000crore in the switchover. The switchover isset to increasepricesofautomobilesacrossall seg-ments andmount furtherpressureon thealreadyslothful sales.

Gadkari said thegovernment is fully cognizantof the industry’s contribution in India’smanufac-turinggrowthand the fact it’s thebiggest employ-ment generator. He said electric vehicles (EVs)havestronggrowthpotential. “I amconfident thatin times tocome, India’s automobile industrywillbe the No. 1 exporter and manufacturer of EVs,”he said.

Theconfidence reposed in the industrywas instark contrast to his remarks in September 2017.“Switch tocleanvehiclesorgetbulldozed,”hehadwarned the industry.

His comments on Thursday come against thebackdrop of the Centre’s consistent policy pushfor EVs. After initial resistance, two-wheelermakersandpassengervehiclemakersare firmingup plans and ready to launch EVs — many ofwhich are on display at the Expo.

Updating on the scrappage policy, Gadkarisaid, “Ihavecleared it,” adding itwill beablessingfor the industry, as all the copper and aluminiumimportedcanbesubstitutedbysmelting thescrap.

As the Expo opens to the general public fromSaturday, onequestionhangsheavy:Will thenewlaunches be able lift sagging customer mood,essential to recovery from the slowdown’s vice-like grip?

MalaysianPrimeMinisterMahathirMohamadsaidonThursdaypayments received tooffset the costsof ahigh-valueorder couldnotbe constitutedasabribe.Mahathirwasreplying toquestionsby reporterson thecontroversialsponsorshipdeal thatexecutivesofMalaysia's AirAsiaGroupBhdstruckwith thebudget carrier's soleplane supplierAirbus. REUTERS

Adani Electricity concludes bond issuance

Castex Tech startedits resolutionprocess inDecember 2017with a debt of~6,000 crore

MUMBAI | FRIDAY, 7 FEBRUARY 2020 COMPANIES 3. <

DEBASIS MOHAPATRA

Bengaluru, 6 February

IT services major Cognizantbeat Street estimates withbetter-than-expected rev-

enue growth numbers for thequarter ended December 2019(the firm follows January-Dec-ember cycle). However, rev-enue guidance for 2020 rem-ained tepid as it is estimated togrow the top line by 2-4 per centin the current year.

The estimates took intoaccount an impact of 110 basispoints owing to the IT firm’sdecision to exit the contentservices business, the Teaneck,New Jersey-based IT firm said.This revenue growth projectioncould also be the lowest com-pared to TCS, Infosys, Wiproand HCL Technologies, thoughthese firms are yet to give theirestimates for financial year2020-21 (FY21). The firm’s netprofit declined 39 per cent at$395 million for the fourthquarter (Q4) compared to $648million a year ago. The fall innet profit was attributed toincrease in restructuring cha-rges, which rose to $101 millionfrom $7 million a year earlier.

Revenues stood at $4.3 bil-lion, an increase of 4.2 per cent

in constant currency term(YoY) in Q4. Operating marginremained flat at 17 per cent dur-ing this period. The company isprojected to grow its revenuesin the range of 2.8-3.8 per centin constant currency terms dur-ing Q1 2020. The subdued rev-enue growth estimates arebecause of its exit from contentservices business, which is like-ly to have a 60 basis pointsimpact in the quarter.

“Our steady progress aga-inst key initiatives is increas-ingly evident in our commerc-ial and financial performance,”said Brian Humphries, CEO atCognizant. “We enter 2020 withrenewed vigour and opti-mism.” In calendar year 2019,Cognizant’s net profit declined12 per cent YoY to $1.8 billion,while its revenues rose 5.2 percent to $16.8 billion in constantcurrency terms.

Firm projected to grow 2-4% as exitfrom content business hits top line

DEBASIS MOHAPATRA

Bengaluru, 6 February

After spending nearly twoand a half decades in thecompany he had co-foun-ded with two others, Fran-cisco D’Souza, currently thevice-chairman at Cognizant,has decided to sign off. TheNasdaq-listed firm onThursday announced hisdeparture from the boardeffective from March 31.

D’Souza was the last of thethree Indian and Indian ori-gin co-founders of Cognizant,which initially started as acaptive unit of Dun & Brad-street-back in 1994 through ajoint venture with SatyamComputers. It became anindependent company afterbeing spun off from the par-ent two years later. The otherfounder, Kumar Mahadeva,who served as the CEO for thefirst five years, retired fromthe board in 2003.

Lakshmi Narayanan whosucceeded him as the CEObefore handing over thebaton to D’Souza who was inhis late 30’s that time, one ofthe youngest professional tohold any global tech firm at

that time. Narayanan, whocontinued in the board,resigned from the companyin 2017. When D’Souzaassumed the role of CEO in2007, Cognizant’s revenuestood at $2.1 billion, whichgrew to $14.8 billion in 2017.

“Frank has been an extra-ordinary leader. He deservesenormous recognition for hisachievements at Cognizant.On a personal level, I am for-tunate to have him as a trust-ed confidant and soundingboard,” said Brian Hum-phries, CEO at Cognizant.

The Teaneck, New Jersey-based IT services firm alsoannounced the appointmentof Vinita Bali to its board as anew independent director,effective 24 February.

Last co-founderD’Souza to quit

Cognizant beats Street with 4.2% rise in revenues‘All distractions behind us’

Cognizant has once againgiven a conservative outlookfor 2020 with a revenue gro-wth guidance of 2-4%. Whysuch pessimism? We are committed to acceler-ate our revenue growth but thereality is, we have exited thecontent servicing business,which impacts the revenuegrowth by one per cent (100basis points). So, without exit-ing that business, the growthcould have been around 5 percent. But we are optimisticabout growth as there is a lot ofmomentum.

Will there be any new revenuestream to compensate for theloss arising from the exit ofcontent servicing business?We always try to achieve what-ever we guide as you have seenin this quarter. That is ess-ential for the shareholders aswe deliver what wepromise to them. Wehave deliberately builtour strategy to focus onhigh growth areas like digitalspace and international mar-ket. That will give us a better

canvas in which we play.

Cognizant’s operating marginwhich used to be in the rangeof 18-19%, now hovers around17 per cent. For 2020, you areexpecting this to be 16-17%.Will this help you in winningmore deals?In an increasingly digital world,it is less about large deals and

more about projects.The world is evolvingmore towards digital,which is project-based.

We have seen increase in ourwin rates (as compared to lastyear) and the pipeline is build-

ing (up). So, I feel confident thatwe are on the right path.

So, the concern regardinglosing business to compe-titors is kind of over now?We didn’t have any strategy tolose momentum to competi-tors. Our strategy has alwaysbeen to focus on our clients andto reinvest into our portfolio togrow both organically and ininorganic way. This week, wehave announced our intent toacquire a firm with Salesforcepractice. All the distractions of2019 is behind us and our 100per cent focus is on clients now.

Is the cost optimisation stra-tegy on track for the firm? Yes, that is on track. But, wedon’t pursue cost as a strategyas our focus is on growth. Wecontinue to reinvest our costsavings into growth. As youhave seen, we continue togrow our headcount. We willadd around 20,000 fresh grad-uates in the coming yearalone. It is about making theinvestment needed to facili-tate our growth.

After undergoing leadership transition and portfolio restructuring last year, Cognizant is optimistic about itsgrowth prospects in 2020. While the company plans to add 20,000 graduates, it is focusing on high-growth areas such as digital technologies and the international market. BRIAN HUMPHRIES, CEO of the Nasdaq-listed ITservices firm, told Debasis Mohapatra that the firm didn’t face any client-specific issue. Edited excerpts:

Hero MotoCorp has posted a declineof 9.14 per cent in profit before tax(PBT) for the quarter ended Dec-ember, at ~1,044.4 crore comparedto ~1,149.6 crore reported in thecorresponding period last year. Thecompany said there are early indi-cators for growth of rural economyhelping the industry to grow andexpectations are to see a turn-around in second half of FY20-21.

Niranjan Gupta, CFO, Hero Mo-toCorp, said the two-wheeler in-dustry continues to face challe-nges amid economic slowdown.Early indicators like the positiveRabi crop augur well for the ruraleconomy, which, in turn, is likelyto help the industry. “The slew ofmeasures announced by thefinance minister in the UnionBudget this week would also go along way in reviving the economy.However, it will take sometime forthe two-wheeler industry to see asustained recovery. We expect tosee positive turn in the second halfof the new financial year (FY21),”said Gupta. T E NARASIMHAN

Hero Moto pre-taxprofit skids 9.14%

SOHINI DAS

Mumbai, 6 February

The country’s largest drugfirm Sun Pharma posted a 22per cent year-on-year (YoY)dip in profit before tax (PBT)for the third quarter of thefinancial year to ~1,351.3crore even as sales came in at~8,039 crore, a growth of 5per cent over the same quar-ter last year.

While the company’sdomestic sales posted 13 percent growth, the US marketremained tough, witnessinga fall of 3 per cent YoY.

The net profit for thequarter was ~914 crore down26 per cent YoY due to otherexpenses, reduction in forexgains and higher taxes, thecompany clarified. The earn-ings before interest, tax,depreciation and amortisa-tion came in at ~1,725 crores,with resulting Ebitda mar-gin of 21.5 per cent.

Expenses were up mainlydue to increase in R&Dspend, consolidation of PolaPharma as well as increasedmarketing costs for the spe-ciality business in the US.There is an increase in staffcosts (around 3.6 per centYoY) due to inflation andaddition of the Pola Pharmabusiness in Japan.

Sun Q3 PBTdrops 22%

DLF Q3 PBTrises 55%

ISHITA AYAN DUTT

Kolkata, 6 February

ArcelorMittal’s equity con-tribution for the acquisitionof Essar Steel India (nowAM/NS India) is $1.6 billion,the company said whileannouncing its 2019 finan-cial results. Described as itsbiggest achievement in2019, ArcelorMittal said theacquisition of Essar formeda fifth steel pillar for it.

Even with its equity con-tribution to the acquisitionof Essar, Arcelor’s net spend-ing on merger and acquisi-tion (M&A) in2019 was offsetby portfolio opt-imisation,including for-mation of ashipping jointventure. Shortlyafter comple-tion of the $5.7-billion Essardeal, it hadsigned a deal forsale of 50 percent of its shipping businessstake, to pare debt.

The company said onThursday its past two years’net M&A spending was $0.2billion. Arcelor holds 60 percent in AM/NS India; the restis with Nippon Steel.

The two are financingAM/NS India through a com-bination of one-third part-

nership equity and two-thirds debt. The debt is heldby the JV.

On Thursday, Arcelor-Mittal reported its lowest lev-el of debt at $9.3 billion as ofDecember 31, 2019, since itsmerger (of Arcelor withMittal Steel, in 2006).

“Our target of $7 billionnet debt is now within sight,assuming working capitalrelease at current marketconditions and we makemore progress on portfoliooptimisation. Then, we areoptimistic that we canachieve this target by year-

end 2020,” thefirm said.

Gross debtremained stableat $14.3 billionas of December31, compared toSeptember 30; itincreased com-pared to the$12.6 billion atDecember 31,2018.

For thequarter ended December, ithas reported a net loss of$1.9 bn, compared to a netincome of $1.2 billion in theyear-ago period. However,the global steel major beatStreet expectations on earn-ings before interest, taxes,depreciation and amortisa-tion (Ebitda), at $925 mil-lion for the quarter.

Arcelor made $1.6-bnequity contribution for Essar acquisition

FACT FILE

7.4 mn tonnesProduction running annually

$0.6 billionEbitda run rate

Cash flowpositive

(January 2020 estimatesannualised)

ARNAB DUTTA


Realty major DLF on Thu-rsday reported 55 per centyear-on-year growth in pro-fit before tax in the thirdquarter of FY20 at ~368.6crore, compared to ~237.5crore posted in the corre-sponding period last year.

Its net profit stood at~335.15 crore in the year-ago period. The totalincome fell 36 per cent to~1,533.34 crore in the thirdquarter of 2019-20 from~2,405.89 crore in the cor-responding period previ-ous year, DLF said.

Despite the fall in in-come, the company's netprofit increased due to anexceptional gain of ~231crore during the Dece-mber quarter. DLF decla-red an interim dividend of~1.20 per share.

“The company receivedgood response for its readyto occupy premium project— The Ultima in Guru-gram. It clocked sales ofabout ~800 crore from thePhase-II launch; the proj-ect now is 90 per cent soldout. The firm continues toremain focussed on mon-etisation of its completedinventory,” DLF said.

4 BI-MONTHLY MONETARY POLICY REVIEW MUMBAI | FRIDAY, 7 FEBRUARY 2020 1>

DAS DOES A DRAGHITaking a cue from the European Central Bank(ECB), RBI GovernorShaktikanta Das said the centralbankwould inject ~1 trillion into the banking system through one- and three-yearrepurchaseagreements (repos). Years ago, then ECB chief Mario Draghi had announced similarlong-term repos

MONETARYPOLICY

COMMENT

There has rarely been a Reserve Bank of India (RBI)policy that has maintained the status quo on ratesbut delivered much beyond expectations. In aconstrained optimisation environment, wherespace for policy rate cut was limited, the RBI hasbeen able to maximise its support for growththrough a series of unconventional monetary policymeasures. While the focus has been on improvingboth the cost and availability of credit, thecredibility of the inflation targeting framework hasbeen preserved by keeping the policy rateunchanged.

The thrust of the announcements was towardsaltering the liquidity and macro-prudentialframeworks to ensure better monetary policytransmission. The weighted average lending rate

(WALR) on fresh rupee loans hasdeclined 69 basis points (bps)and on 10-year G-sec by 76 bpsin the last one year againstpolicy rate cut of 135 bps despiteseveral attempts, includingexternal benchmarking oflending rates. Two changes inthe liquidity framework shouldbe emphasised. First, it appearsthat the earlier stance ofbanking system liquidity to beusually kept in deficit for better

transmission has been abandoned. This impliesthat the banking system liquidity can remain insurplus mode much longer even if the economiccycle turns.

Second, to provide durable liquidity at acommitted low cost, the RBI will be offering to lend1-year and 3-year money to banks worth ~1 trillionat the policy repo rate. These announcements willbuttress the RBI’s commitment of keeping theaccommodative stance for longer and has alreadyled to a 15-20 bp drop in interest rates at the shortend of the curve.

To incentivise credit flow the RBI has alsoannounced that banks will be exempt from CRRrequirement on incremental loans to MSMEs, autosand residential housing for a period till July 31, 2020.It is likely to reduce the borrowing costs for thesetroubled segments of the economy and improve flowof credit too. The decision to delay the classificationof commercial real estate loans as NPA by one yearand extend the restructuring of stressed MSMEs loanswould also provide much needed respite.

While we remain fully supportive of thesemeasures, the following financial stability risks willhave to be closely watched. Extremely surplusliquidity conditions, maintained over a sustainedperiod, could potentially lead to asset price bubbles,particularly if the liquidity cannot find its way intothe real economy. Also, if the banks have to movedown the credit quality ladder in sectors wherethere is already competition for providing creditthen the consequent asset quality impact has to bemonitored, particularly in a slow growthenvironment.

The RBI has kept the door open for more easingbut, in our view, any future rate cut can happenonly after consumer price index (CPI) comes down toaround 5 per cent and transmission of past rate cutsis in place. This provides only limited room whennear-term inflation outlook is so uncertain.However, the policy has clearly underlined RBI’sgrowth focus and willingness to resort tounconventional steps to cap any up move in yields.

Delivering beyondexpectations

SAMIRAN CHAKRABORTYChief Economist, India,Citigroup

RBI has kept thedoor open formore easing, buta future rate cutcan happen onlyafter CPI comesdown to around5 per cent andtransmission ofpast rate cuts is in place

ANUP ROY

Mumbai, 6 February

The Reserve Bank of India (RBI)on Thursday adopted a new liq-uidity management frameworkin which there would be nofixed daily liquidity injectionoperations, but the central bankwould act whenever the bank-ing system requires money.

The weighted average callrate (WACR) will remain theoperating target of the mone-tary policy, the RBI said, whichmeans it will ensure enough liq-uidity to anchor the call rate ataround the repo rate. Thismeans if the call rate inchesabove the repo rate, it wouldsignal liquidity deficit and theRBI will bring its tools to infuseliquidity. Similarly, the call ratebelow the repo rate would meanthe banking system has surplusliquidity. In that case, the RBIcan operate to suck out the liq-uidity through its operations.

The liquidity managementcorridor will be retained at 50basis points, which means theRBI can allow call rates to riseup to the marginal standingfacility rate (currently at 5.40per cent) and reverse repo rate(currently at 4.90 per cent),while the repo rate remains inthe middle at 5.25 per cent.

“With the WACR being thesingle operating target, theneed for specifying a one-sidedtarget for liquidity provision of1 per cent of net demand andtime liabilities does not arise.Accordingly, the daily fixed raterepo and four 14-day term reposevery fortnight being conduct-ed, at present, are being with-drawn,” the RBI said.

“However, the RBI willensure adequate provision/absorption of liquidity as war-ranted by underlying and evolv-ing market conditions — unre-stricted by quantitative ceilings— at or around the policy rate.”

Instruments of liquiditymanagement will include “fixedand variable rate repo/reverserepo auctions, outright openmarket operations (OMOs),forex swaps and other instru-ments as may be deployed fromtime to time to ensure that thesystem has adequate liquidityat all times,” the RBI said in itsstatement on Developmentaland Regulatory Policies.

While getting rid of the 14-day fixed repo, the RBI said it

will operate a 14-day termrepo/reverse repo operation at avariable rate that would be con-ducted to coincide with the CRRmaintenance cycle. This wouldbe the “main liquidity manage-ment tool for managing fric-tional liquidity requirements”.

Considering the bankingsystem has a liquidity surplus ofabout ~4 trillion, the RBI willcontinue with the fixed ratereverse repo daily. But the 14-day variable-rate repo and

reverse repo auction will hap-pen every reporting Friday.

The main liquidity opera-tion would be supported byfine-tuning operations,overnight or longer, to tide overany unanticipated liquiditychanges during the reservemaintenance period.

In addition, the RBI willconduct, if needed, longer-termvariable rate repo/reverse repooperations of more than 14days. It also introduced Long-Term Repo Operations forimproving monetary transmis-sion. These would be two repowindows for one year and threeyears, which can be used toraise up to ~1 trillion from thebanking system.

Using this window, bankscan borrow at the repo rate, andlend to customers. The newfacility will be available from thefortnight beginning February 15.

Deputy Governor MichaelPatra clarified that the long-term repo operations are notintended to replace OMOs.

Liquidity management framework recastEXPERTSPEAK

“The crowning glory of allmeasures is the provision oflong-term repos at the repo rate that is intendedtowards facilitating bettertransmission in the bond and loan markets”

B PRASANNA,Head-Global Markets Group, ICICI Bank

“While keeping rates on holdwas anticipated, thebouquet of developmentaland regulatory steps is apositive surprise for thefinancial ecosystem”

RAJNISH KUMAR,Chairman, SBI

“We anticipate that thestance will be maintained asaccommodative as long asRBI perceives the output gapto be negative, regardless ofthe level of inflation. So weno longer expect the stanceto be changed to neutral inthe next few policies”

ADITI NAYAR,Economist, ICRA

“We believe that all thepolicy decisions along withpro-consumption Budgetcorroborates that therewould be better demandfrom the consumption side. Once that increases,automatically there will bebetter credit demand”

UMESH REVANKAR,MD & CEO, Shriram TransportFinance

Loans may become cheaper by 30 bpsABHIJIT LELE & NAMRATA ACHARYA

Mumbai/Kolkata, 6 February

Banks will have the incentive togive loans of almost ~2 trillionand cut interest rates by up to

30 basis points (bps) because of micro,small and medium enterprises com-ing out of the purview of the cashreserve ratio (CRR).

Lenders said the movewould make banks focusmore on retail and SMEsegments at a time whendemand from corporateand infrastructure is tepid.These measures are alsoexpected to propel banks toput in extra efforts to fill inthe space vacated byfinance companies and hous-ing finance firms facing liquiditychallenge.

The Reserve Bank of India(RBI) said commercial bankscan deduct the equivalentof incremental credit inretail and MSMEs segmentover and above the outstanding loans atthe end January 2020 from depositsfor maintenance of CRR. This exemp-tion will be available for incrementalcredit extended up to July 31.

The RBI also announced stepsunder long-term repo operations(LTROs) for improving monetary trans-mission to assure banks about the avail-ability of durable liquidity at reasonablecost, relative to prevailing market con-ditions. The RBI will conduct termrepos of one- and three-year tenors ofappropriate sizes for an amount of ~1trillion at the policy repo rate. At pres-ent, policy repo rate is 5.15 per cent.

A banking sector analyst said the

CRR cut could help banks save up to~5,000 crore for the entire system,which can be passed on to customers.This is not much, considering the hous-ing loan portfolio of banks is at ~13 tril-lion and vehicle loans at ~2 trillion.These sectors are also growing at 17.6per cent and 7.2 per cent, respectively.

Karthik Srinivasan, group head offinancial sector ratings, ICRA, saidbanks may be in a position to give addi-tional loans worth ~2 trillion in retailand MSME space due to CRR exemp-tion and liquidity tools. The relief due toCRR exemption could be ~4,000 crore.

“CRR frees us some amount of cash,

and if that can be deployed gainfully, itwill add to bank’s profitability,” saidMrutyunjay Mahapatra, MD and CEO,Syndicate Bank. Ashok Kumar Pradhan,MD and CEO, United Bank of India, saidforeign banks are likely to benefit more.“Those banks, which have low CASAmobilisation, will benefit from thismove. Banks will be able to pass on up to15 bps benefit to borrowers on reduc-tion in cost of funds,” he said.

RBI Governor Shaktikanta Das saidtransmission of 135 bps cut in repo rateto the credit market is gradually improv-

ing. RBI’s Monetary Policy Committeehas cumulatively reduced the policyrepo rate by 135 bps since February 2019.

Banks have passed on the bene-fits of policy rate cuts to customers,especially retail and small enterpris-es. Marginal cost of funds-based lend-ing rate (MCLR) for one-year tenordeclined by 55 bps during February2019 and January 2020. The weightedaverage lending rate (WALR) on freshrupee loans declined by 69 bps andthe WALR on outstanding rupeeloans declined by 13 bps during

February-December 2019. Also, most banks have linked their

lending rates for housing, personal andMSEs to the policy repo rate of the RBI.

During October-December 2019, thelending rate of domestic (public andprivate sector) banks on fresh rupeeloans declined by 18 bps for housingloans. The cut was much higher at 87bps for vehicle loans, and 23 bps forloans to MSMEs.

20

15

10

5

0

-5FY13 FY20*

12.6

-1.9

20

15

10

5

0

-5FY13 FY20*

15.1

-3.2

20

16

12

8

4

0FY13 FY20*

2.5

7.9

AGRICULTURE INDUSTRY SERVICES

30

20

10

0

-10FY13 FY20*

24.7

5.7

20

18

16

14

12

10FY13 FY20*

15.0

11.2

22

18

14

10

6FY13 FY20*

14.7

9.6

RETAIL HOUSING VEHICLE

*FY20 is till Dec 2019; housing loans and vehicle loans are key components of retail loan Source: RBI; compiled by BS Research Bureau

Move to exempt banks from maintaining CRR in select areas may free up to ~2 trn for lending to retail and MSMEs: ICRA

CREDIT GROWTHTRAJECTORY ACROSSMAJOR SECTORS% Change over previous FY

ILLUSTRATION: BINAY SINHA

RBI abolishes daily repo window

You have come up withLTROs of ~1 trillion andhave exempted cash reserveratio (CRR) for banks forincremental retail credit. Is

this a kind of hidden interest rate cut?Shaktikanta Das: Basically, it is an effort forbetter monetary policy transmission becausewe are giving it at the policy rate. So, the ~1 tril-lion we want to inject into the banking systemwill enable banks to reduce their lending rates.

Will LTRO replace OMOs? Also, any detail onthe inclusion of Indian bonds on indices?Das: The LTROs are not intended to replacethe OMOs. So, the idea is to somehow reduce thecost of funds for the banks for on-lending. Thatis why it is at the repo rate. Also, it gives them anassurance of durable liquidity in their hands

and this shouldencourage thebanks, especiallywhen they are

seeing that deposit rates are rigid downwards. The Budget announcement that certain gov-

ernment bonds will have no limit with respectto non-resident participation reflects the robust-ness of the Indian economy now that we canaccept higher foreign investment, mobilisehigher foreign capital to meet our domesticrequirement but that will flow in terms of rupeesand not dollars. To considerable extent, foreignsavings are being mobilised to meet our domes-tic requirement. Therefore, the pressure ondomestic savings to meet the requirements ofthe government is also minimised.

You are saying you can’t reduce rates due toinflationary pressure. But liquidity is inextreme surplus and continues to be so andbetween December and February you haveintroduced Operation Twist. So, what is the

broader framework you are operatingin and what were you trying to

achieve with Operation Twist?Das: The surplus liquidity is thereto ensure better monetary policytransmission as notwithstandingour 135 basis points, there has to beadequate liquidity. So, it’s onlyfrom June that the system became

adequate in liquidity.Operation Twist is an

instrument used toensure bettermonetary policytransmission.The corporatebonds arebenchmarkedto the lendingrates in the gov-

ernment securities segment. So, throughOperation Twist if we are able to soften the yieldson government securities at the longer end, thenthat acts as a benchmark for corporate loan rates.So, the effort was to ensure better transmissionto the corporate bond market, not so much tomanage the yield on government securities.

The three-year repo is supposed to improvetransmission. What happens if a bankborrows at 5.15 per cent and one year later, youincrease interest rates? Will banks be obligedto pass on the rates? Under the FRBM Act, oncethe trigger clause is exercised, the governmentcan also monetise their deficit.Is that a concern for you?Das: At the moment, there is nosuch plan of monetising the gov-ernment deficit. The increase inborrowing in the current fiscalyear, despite the fiscal deficitgoing to 3.8 per cent, remains thesame and in the next year theincrease is only by ~70,000 crore.And, if it is calculated as a per-centage of GDP, then it is lowerthan the current year borrowing.N S Vishwanathan: This is aliquidity management thingthat we are getting into. Thebanks will have to take a call as to what they seeas the three-year interest rate scenario. Butcurrently, what we are looking at is if the banksare just borrowing overnight then it comesback to us overnight into the reverse repo. So,we want them to borrow for a longer tenurewhich will move in the form of lending. Michael Patra: These three-year repos will begiven at the current policy rate of 5.15 per cent.

So, repo locks that in. If we change the policyrate and undertake repos at that time, they willbe at different rates. So, banks will get funds at5.15 per cent, whereas the average cost of fundstaking into account the deposits is higher. Das: Banks will take in whatever they require.It’s an option that we are giving to the banks.

Will the hike in deposit insurance increasecost of funds for banks?B P Kanungo: The deposit insurance cover hasbeen increased from ~1 lakh to ~5 lakh. The pre-miums will increase 10 paise to 12 paise per ~100for the time being. The impact on bank’s balance

sheet is not likely to be much.

The government is converting~2.7 trillion from short to longbonds. Does that mean the RBIwill be supporting thegovernment borrowingprogramme throughOperation Twist?Das: The objective of OperationTwist is to facilitate the transmis-sion to the corporate bond seg-ment and not to manage the yieldfor the government or support-ing its borrowing programme.But, as the debt manager of the

government, the RBI always has to ensure thatthe government borrowing programme goesthrough in a non-disruptive manner.

Is there space to cut rates?Das: We have policy space, but it will depend on the evolving situation and as theMPC was proactive in 2019, it will be very,very proactive even in 2020.

‘Policy focused on improving rate transmission’

“THE DEPOSITINSURANCE COVERHAS BEEN HIKEDTO ~5 LAKH. THEPREMIUMS WILLINCREASE BY10-12 PAISE PER~100 FOR THETIME BEING”

After the policy meet, RBI GovernorSHAKTIKANTA DAS, deputygovernors N S VISHWANATHAN,MICHAELDEBABRATA PATRA,B P KANUNGO, MAHESH KUMAR JAINand Executive Director JANAKRAJspoke to the media on severalissues, including the introductionof LTRO and possibility of rate cutsgoing ahead. Das also clarified thatat the moment there is no plan tomonetise government deficit.Edited excerpts:

(From left)Mahesh Kumar Jain, Janak Raj,N S Vishwanathan, B P Kanungo,Shaktikanta Das and MichaelDebabrata Patra PHOTO: KAMLESH PEDNEKAR

Considering the banking system has a liquidity surplus of ~4 trn, RBI will continue with the fixed rate reverse repo daily

RBI PLAYS ITS PART,LENDERS GET A BREATHER P12

6 BI-MONTHLY MONETARY POLICY REVIEW MUMBAI | FRIDAY, 7 FEBRUARY 2020 1>

| CPI projectionrevised upwardsto 5.4-5.0% forH1FY21 from 4-3.8%in December policy

| GDP growthforecast forH1FY21 reducedto 5.5-6%from 5.9-6.3%in the earlierpolicy

| Revises liquiditymanagementframework;keeps weightedaverage call rateas operatingtarget

| Long-term repo operations to beconducted fortnightly to improvemonetary transmission

| Incentivises banks to lend toproductive sectorsby allowing someexemptions in cash reserve ratio

| Extends external benchmarking offloating-rate loansby banks tomedium enterprises

| Extends one-timerestructuringscheme for GST-registeredMSMEs

| Permits delayofcommencementof commercialoperationsofproject loans byone year

| Allows regional rural banks to act asmerchant acquiring bankusingAadhaar Pay–BHIM app, PoS terminals

| Draft revised regulations on housingfinance companies likely by the end of February

| Decides to issue directions forexchangeof variation margin for OTC derivatives

| Proposes establishment of self-regulatoryorganisation for digital payment

| Cheque truncation system will bemade available by September

| Proposes toaccount forallrupee interestratederivatetransactionincludingforeign relatedentities, in India

| Digitalpayments indexto capturedetails relatedto digitalpayments willbe availablefrom July

POLICY IN2 MINS

Platform to track reach of digitisation of payments by JulyNEHAALAWADHI


The Reserve Bank of India onThursday said it would launch by July a Digital Payments Index(DPI) to capture the extent of digitisation of payments in the country.

“The DPI would be based onmultiple parameters and shallreflect accurately the penetrationand deepening of various digitalpayment modes. The DPI will be

made available from July,” thebanking regulator said in its statement on developmental andregulatory policies.

The index, according to peoplein the know, will help the regulatorunderstand the impact and spreadof digital payments in rural, urban,and semi-urban areas, as well asunderstanding the impact of pol-icy decisions made by the RBI.

For instance, the apex bankrecently scrapped merchant dis-count rate (MDR) on Unified

Payments Interface (UPI) transactions. MDR is the fees paidby a merchant to a bank for accepting payment from their customers via cards or UPI.

Finance Minister NirmalaSitharaman had said in her Budgetspeech that no charge would belevied on UPI and RuPay transac-tions. There have been reports thatMDR may be scrapped on all debit card transactions.

It also said a self-regulatoryorganisation (SRO) would be set

up for “orderly operations in thepayment system”. And SRO willbe set up by April for digital pay-ment system for “fostering bestpractices on security, customerprotection and pricing, amongothers. The SRO will serve as a two-way communication channelbetween the players and the regu-lator/supervisor,” the RBI said in astatement.

To promote digital banking inrural areas, regional rural banks(RRBs) will now be allowed to act

as merchant acquiring banksusing Aadhaar Pay, the BHIM appand point of sale (PoS) terminals.

The RRBs will be allowed todeploy their own devices if theyhave permission for mobile banking from the RBI, and shouldfulfill other criteria specified bythe regulator.

“The bank’s IT systems andCBS (core banking system) shouldhave been subjected to an IS (infor-mation system) audit not earlierthan six months from the date of

application to confirm that the sys-tem is adequately secure,” it said.

In addition, the RRB mustensure necessary infrastructurefor application development, safety and security of the transactions and handling of customer grievance, and a cus-tomer grievance redressal shouldbe in place. The RRB should havehad a net worth of ~100 crore ormore as of March 31 of the preced-ing financial year, and other criteria specified by the RBI.

MSMEs, realtors getRBI’s helping handSUBRATA PANDA & NAMRATA ACHARYA

Mumbai/Kolkata, 6 February

The Reserve Bank of India (RBI) onThursday extended the window forone-time restructuring of loans

given to micro, small and medium enterprises (MSMEs) to December 31.Earlier, it was on March 31.

Under this plan, lenders can essentially restructure the loans to MSMEswithout reclassifying their asset class.

Also, in a major relief to the real estatesector, the RBI allowed extending the dateof commencement of commercial operations (DCCO) of project loans forcommercial real estate by a year withoutdowngrading the asset.

The extension of restructuring window for MSME loans by the RBI comesafter the Budget announcement, whereinFinance Minister Nirmala Sitharamanhad urged the central bank to extend thewindow until March 31, 2021. She in herBudget speech had said the restructuringwindow provided by the RBI helped morethan 500,000 MSMEs in the last one year.

“…It has been decided to extend thebenefit of one-time restructuring withoutan asset classification downgrade to standard accounts of GST registeredMSMEs that were in default as on January1, 2020. The restructuring under thescheme has to be implemented latest byDecember 31, 2020”, the RBI said.

This window given by the RBI willenable lenders to restructure MSME loanswithout re-classification of the accounts,which were in default as of January 1,

2020. Earlier, the RBI had allowed a one-time restructuring of MSME loansthat were in default but “standard” as ofJanuary 1, 2019, without an asset classification downgrade. But the RBI hasadded a caveat — the restructuring win-dow will only apply to good services tax(GST)-registered MSMEs. Experts believehad the restructuring scheme came with-out the GST caveat, the quantum of loans restructured under the scheme wouldhave been much higher.

“Those MSMEs which are on the vergeof becoming NPAs will be saved,” saidAshok Kumar Pradhan, MD and CEO ofUnited Bank of India.

According to Rajnish Kumar, chairman, State Bank of India: “Extending

the date of restructuring of MSMEadvances will also help the sector navigate the current business downturnand is a logical corollary of the Budgetannouncement”.

The RBI data suggests in the microand small segment, credit growth hasbeen negative (-3.4 per cent) in the firsteight months of the current fiscal year(until November end). For medium enter-prises, it was -3.6 per cent. On a year-on-year basis, credit growth until Novemberend in micro and small, as well as mediumenterprises, has been negative 0.1 per centand 2.4 per cent, respectively. Also, theTransUnion Cibil data shows non-per-forming assets (NPAs) in the MSME seg-ment rose from 11.7 per cent in September

2018 to 12.2 per cent in September 2019.According to experts, the MSME sector

has been grappling with issues likedelayed repayments and muted demandin the current economic environment.Meanwhile, the RBI also said to furtherstrengthen monetary transmission; it hasdecided to link pricing of loans by scheduled commercial banks for medium enterprises to an external benchmark, effective April 1, 2020.

“The move will accelerate the transmission of interest rate movement tothe (MSME) sector and lighten interestburden on them (MSMEs). Further, theextension of the one-time restructuringwindow for MSMEs will bring some reliefto the sector and keep sectoral NPAs

under control,” said Krishnan Sitaraman,senior director, CRISIL Ratings.

As far as extending the DCCO of project loans for commercial real estate bya year without downgrading the asset isconcerned, the experts believe this willnudge developers to complete the stuckprojects, rather than focus on their liquidity issues. “The extension of DCCOof project loans for commercial real estateby another year will allow the real estate sector to focus on project completion,”Kumar said.

This move will come in handy for bothdevelopers and housing finance companies (HFCs), which have a consid-erable wholesale portfolio. Shares of HFCsrallied sharply after the RBI’s relief to thereal estate sector. Shares of IndiabullsHousing Finance gained the most (15.3 percent), followed by LIC Housing Financeand PNB Housing Finance which rose 8.2per cent and 4.9 per cent, respectively.

The RBI has said this move will complement the steps the governmenthas taken to ease the stress in the sector.The government last year had announcedthe setting up of an alternative investment fund to give a cushion todevelopers for their unfinished projects.SBICAP Ventures, a fund managementarm of SBI, is managing the realty fund.

Shishir Baijal, chairman and managingdirector, Knight Frank, said: The RBI hastaken note of the concerns of the realestate sector. The long-standing industrydemand for asset classification has beenaddressed. This will augment the liquidity situation for developers, too.

Companies Feb 6 Chg (%) over2020 previous day

Indiabulls 319.0 15.3Housing Finance LICHousing Finance 437.7 8.2

PNB Housing Finance 444.5 4.9

Dewan Housing Finance 11.1 5.0

Repco Home Finance 350.8 4.7

Can Fin Homes 489.6 2.1

Housing & Urban 38.7 2.4DevelopmentCo Housing Development

2,435.5 1.8Finance Co GICHousing Finance 147.9 1.6

Filtered for BSE500 companiesSource: Exchange BSE price in ~

TAKING STOCK OFHOUSING FIN FIRMS

EXTENDS RESTRUCTURING WINDOW FOR MSME LOANS ALLOWS EXTENSION OF DCCO OF PROJECT LOANS FOR COMMERCIAL REALTORS

The Reserve Bank of India’s (RBI)latest monetary policy rushed in where the Union Budget

feared to tread. On the expected lines,it refrained from a rate cut butunleashed a stimulus package with amission to support growth through astring of actions that should bringdown the cost of money for banks andencourage them to lend to the stressedsectors such as real estate, automobileand macro, small and medium enter-prises (MSMEs).

In some sense, it is an extension ofthe Budget. But, unlike the Budget,both the bond and equity marketslapped up the status-quo and yetaction-packed policy. They could nothave asked for more. It is one of the rarepolicies where the Indian central bankhas demonstrated that without cuttingthe policy rate, it can try out otherunconventional instruments to boosteconomic growth which is its top mostpriority now.

For the records, the policy rateremains unchanged at 5.15 per cent.There is no change in the stance of thepolicy too — it continues to be accom-modative and will remain so, as long asit is necessary to revive growth. The

monetary policy committee (MPC), thecentral bank’ rate setting body, has opt-ed for no change in the policy rate witha 6-0 voting but recognised that thepolicy space is available for futureaction. So a rate cut is not off the tableas yet.

It will happen, if the growth doesnot pick up and inflation is tamed. Butthe RBI does not want to wait for that.Making use of the abundant liquidityin the system, Governor ShaktikantaDas has been continuing with hisexperiments on the policy turf. It started with dollar-rupee swap auctions in March 2019 and continuedwith the Operation Twist, launched in December.

So, what has the RBI done to kick-start growth which the Budget couldnot do?

There are four pillars on which thelatest policy rests:nFirst, the RBI is closing its window forthe fixed-rate daily and 14-day repo.Beginning February 15, it opens a newrepo window for long-term one-yearand three-year tenures as part of itslong-term repo operations (LTRO).Commercial banks borrow money fromthe central bank’s repo window, offer-ing government bonds as collateral.Instead of overnight and fortnightmoney, they will now be able to borrowone- to three-year money at 5.15 percent. This will bring down the cost ofmoney for them and push down thebond yields in the short term.

The limit for such a facility is cappedat ~1 trillion.

The bond market instantly reactedto this move, pushing down short-termbond yield by 15 basis points (bps) andlong-term 6 bps. One bps is hundredthof a percentage point.

The European Central Bank hadsome time back used LTRO to bringdown the yields of German bonds.Later, it made it TLTRO or targetedlong-term repo operations, linked tobanks’ lending.

The Bank of England too had afunding for lending scheme (FLS).nSecond, for six months, betweenJanuary 31 and July 31, banks are freedfrom maintaining the so-called cashreserve ratio (CRR) from their netdemand and time liabilities or NDTL— a loose proxy for deposits — used togive fresh retail loans for automobiles,residential housing and MSMEs.

Under the norms, banks arerequired to keep 4 per cent of theirNDTL in the form of CRR with the RBIon which they do not earn any interest.

By freeing them from this obligation,the RBI is boosting their income as theycan lend and earn on this 4 per centresources which otherwise would havebeen kept with the regulator.

They could even pass on the benefitto the borrowers.nThird, banks were allowed a one-timerestructuring of loans given to MSMEsthat were in default but did not turnbad as on January 1, 2019. For suchrestructured loans, the banks were notrequired to set aside money for provi-sion as they continue to remain “stan-dard”. The restructuring of the borrow-er account was to be implemented byMarch 31, 2020.

This one-time regulatory dispensa-tion has now been extended to the loanaccounts of those MSMEs that pay the

goods and services tax (GST) and werein default as on January 1, 2020. Therestructuring under the scheme has tobe implemented latest by December 31,2020.nFinally, the RBI has allowed anextension of the date of commence-ment of commercial operations(DCCO) of project loans for commer-cial real estate, delayed for reasonsbeyond the control of promoters, byanother year without downgrading theassets. This, in sync with the treatmentaccorded to other project loans fornon-infrastructure sector, is some-thing which the real estate sector hasbeen crying for long.

For the records, retail inflation roseto 7.4 per cent in December 2019, thehighest since July 2014, and it couldrise further. The December policy hadprojected the retail inflation at 5.1-4.7per cent for the second quarter of thecurrent fiscal year that ends in Marchand 4-3.8 per cent for the first half of2021. The latest policy raised it to 6.5per cent for the fourth quarter of thecurrent year; 5.4-5 per cent for the firsthalf and 3.2 per cent for the third quarter of 2021, with risks “broadly balanced”.

The GDP growth for 2020-21 is pro-jected at 6.0 per cent – in the range of5.5-6 per cent in the first half of the year(down from 5.9-6.3 per cent, estimatedin December) and 6.2 per cent in thethird quarter.

The message of the latest policy isclear: It’s a credit policy and not a mon-etary policy. The MPC has nothingmuch to do with it. It is the policy of agovernor who is not shy of experimentswhen the space for monetary easing isextremely limited.

The writer, a consulting editor with Business Standard, is an author and senioradviser to Jana Small Finance Bank Ltd.Twitter: TamalBandyo

10 ISSUES AND INSIGHTS>


> CHINESE WHISPERS

> LETTERS

Trust political parties topromise the moon to vot-ers during election time.

Just two days after a 24-year-oldsanitation worker died whilecleaning a deep sewer in NorthEast Delhi, the Aam Aadmi

Party’s (AAP) election manifestopromised financial assistance ofRs 1 crore to the families of sani-tation workers who die whileperforming their duties.

The AAP leadership perhapsdoesn’t know that just about halfof the number of the workerswho have died cleaning sewersin the country have received theSupreme Court-mandated com-pensation of ~10 lakh. Beforepromising ~1 crore, why notmake sure that all pending com-pensation of ~10 lakh is paidimmediately to the families ofworkers who died in Delhi?

The central government has-n’t done any better. Budget2020-21 has set aside the sameamount allocated last year forrehabilitating manual scav-engers, although 2019 recordedthe highest number of fatalities

among sewerage workers inrecent years, prompting expertsto question if the governmentwas serious about addressingthe scourge.

It’s impossible to get the actu-al number of people dying andnot getting compensation butthe number is obviously muchmore than stingy official esti-mates. In any case, nowhere inthe world are people sent insidegas chambers without oxygencylinders and masks. Unofficialestimates suggest that on anaverage, one sanitation workerdies every five days all over thecountry. For example, one ofMumbai’s civic authoritiesdirectly employs around 30,000people to keep the city clean, butthe more difficult and dangerousjob of unblocking sewer lines isusually done by casual workers

who scoop out sludge with barehands and are hired on a day-to-day basis through contractors. Sothey are not eligible for medicaland life insurance benefits andhardly anybody keeps track ofcompensation in case of deaths.

It is inconceivable how eventhe country’s top two metropoli-tan cities have little to show interms of scientific sewerage andsewage disposal systems andtheir regular maintenance.Sewage disposal is in effect leftto abjectly poor individualsexploited by contractors, with noofficial monitoring or regulation.

People’s Union forDemocratic Rights (PUDR) did astudy last year on deaths of sew-er/septic tank workers in thenational capital. The report,which details the findings ofinvestigations into six incidentsof deaths of sanitation workers,draws attention to the lack ofprovision in urban planning formaintenance of sewerage sys-tems; the lack of provision ofsafety gear and safety equipmentor training for sewer/septic tankcleaners; and the lack of criminal

prosecution of those guilty ofsending them to do this haz-ardous work manually.

The biggest drawback of theProhibition of Employment asManual Scavengers and theirRehabilitation Act, passed in2013, is this: while it definescleaning of the sewers as haz-ardous only when done withoutsafety gear and without safetyprecautions, it does not definewhat necessary measures wouldcount as "safety precautions"and what "safety gear" is.Besides, it allows for manualcleaning of sewers if theserequirements are met obliviousof the fact that in most cases thereason for death happens to beasphyxiation due to exposure topoisonous gases which cannotbe helped with precautions.

The PUDR report also quotesa study conducted by theSanitation Workers Projectwhich says there are almost fivemillion workers in the countryemployed to perform thesetasks. The main reason fordeaths in the process of sewagecleaning is the depletion of oxy-

gen and presence of toxic gases,mostly hydrogen sulphide.

It is also widely known thatmost sewage cleaners sufferfrom tuberculosis.

This explains why manysewer workers die as young as40, falling prey to multiplehealth issues. Repeated han-dling of human excreta withoutany safety equipment leads toseveral respiratory and skin dis-eases, anaemia, jaundice, tra-choma and carbon monoxidepoisoning. This affects womenmore as up to 90 per cent of san-itation workers are women.Households with dry latrinesprefer women to clean excretainstead of men as they are locat-ed inside the house. There isalso a huge gap in the wages ofmen and women workers.

A year ago, Prime MinisterNarendra Modi washed the feetof safai karamcharis at Prayagrajand hailed them as “karmayogis”. It will be better if he canat least ensure that the familiesof the karma yogis who die onduty get the compensation dueto them.

Death in a deep sewerOne sanitation worker dies every five days, butcompensation is mostly denied

Cost of informationSeeking information under the Right toInformation (RTI) Act may soon becomeexpensive in Madhya Pradesh. Accordingto sources, a proposal to increase the fee10 times has been mooted by thedepartment concerned. The stategovernment is examining the viability ofthe proposal. If passed, people may haveto pay ~100 instead of ~10 they arepaying now. The idea, say sources, wasto put Madhya Pradesh on a par withsome other states that have imposed bigfees to process RTI applications. But RTIactivists in the state say the governmentis taking the step to restrict the growingnumber of RTI applications.

Perfect fit for Parliament

Prime Minister Narendra Modi’s replyto the motion of thanks to thePresident’s address in the Lok Sabhawas marked by ideological sparring aswell as wit and humour. As the PMentered the Lok Sabha around 12.30pm, the Bharatiya Janata Party MPsstood up to welcome him, shouting“Jai shri Ram” and “Bharat Mata kijai”, to which the Congress MPsresponded with “Mahatma Gandhi kijai”. Congress leader Adhir RanjanChowdhury said, “It is just a trailer”.Never at a loss for words, the PMresponded, “Mahatma Gandhi may betrailer for you, but he is life for us”.Later, Modi, took a dig at Chowdhuryfor frequently rising from his seat andinterrupting him, saying that he ispublicising the government’s 'Fit India'campaign in the Parliament.

Comic timing During the address, responding toCongress leader Adhir Ranjan Chowdhuryon the issue of unemployment, PM Modisaid he will resolve the problem ofjoblessness in the country, but not his orthat of his party's. On one occasion,without naming Rahul Gandhi, Modireferred to the Congress leader'scomments he had reportedly made about"youth beating up Modi with sticks overthe lack of jobs", and said he wouldincrease the number of Surya Namaskars(a yoga exercise) so that his back can bearthe sticks. When Gandhi questioned Modiabout unemployment, the prime ministersaid he was waiting for the Congressleader's reaction, but it took him 30-40minutes. "I have been speaking for 30-40minutes, but it took this long for thecurrent to reach. Many tube lights are likethis," Modi said, prompting the ruling NDAmembers to burst into laughter. Later,Congress leader Manish Tewari said the PMindulged in “stand-up comedy, half-truths and rank communalism” inhis speech.

Well done, Kerala

The Kerala health department underminister K K Shailaja has to be laudedfor the exemplary and stupendouswork done to contain the dangerousnovel coronavirus, with three patientsunder treatment in isolated wards ofhospitals in Trichur, Alappuzha andKasaragod districts. The health min-ister who boldly led the medical teamto encounter the deadly Nipah virusepidemic two years back is again backin action to fight yet another deadlyvirus.

Kerala’s preparedness and responseto coronavirus has been so comprehen-sive and swift that other states havestarted to take lessons from it. Twoyears ago, health officials and volun-teers, police, panchayats and otherlocal bodies, politicians, press and eventhe common people alerted and sup-ported one another to contain theNipah virus and now the same is beingrepeated for the coronavirus scare.Around 2,239 individuals are undersurveillance and 84 are in hospitals. Atracking system monitors everyonecoming to the state from high-risk des-tinations and also those who have

come in contact with suspected cases.The five international airports in thestate, seaports and railway stationshave been put on alert and medicalteams are ready 24x7 to trace, track andtransport doubtful cases for check-upand treatment. Awareness, confidence,grit and determination undoubtedlyhelp to overcome such health crisis.Half the battle is won when there is nopanic and unnecessary pressure.

M Pradyu Kannur

Not a prudent decision While the revenue secretary has justi-fied making dividends taxable in thehands of recipients, the move willbenefit foreign portfolio investmentsonly. Most senior citizens/retireeswith moderate taxable income of Rs10-15 lakh would end up paying tax ondividends at the highest slab. It ishighly unlikely that companies willfully pass on the entire 20.5 per centdividend distribution tax not payableby them now to the shareholders asdividend and increase the dividendpayout commensurately. With theinclusion of the dividend income, thetotal taxable income of many taxpay-ers will get pushed to higher slabs. Itwill disincentivise equity investment.

A K Gupta Ludhiana

160 mins, 1,325 words!This refers to the editorial “Beyondnumbers” (February 5). A Budget

speech could be terrible or terrific. Itis believed that a speech should belimited to 45 words as this is “what amind can handle in one sitting”. So acomment on the duration of theBudget speech will be relevant.Considering that this speech address-es different classes of people —Members of Parliament, experts, busi-ness community and masses — it is achallenge to stitch together a shortspeech, which holds the attention ofall. Yet a speech lasting for about 160minutes and with 1,325 words isbound to fatigue the listeners, if notthe speaker.

One way to curtail the durationcould be by changing the structure ofthe speech. The FM can briefly men-tion the main provisions of theBudget with short explanations inabout 45-60 minutes and request theHouse to treat the entire Budget asread. The document could be upload-ed immediately on the governmentportal. The main Budget speech, how-ever, should be clear (fewer jargons),concise (yet covering all key points),complete (supported by reliable dataand information) and if possible,interesting (using quotes).

Y G Chouksey Pune

Letters can be mailed, faxed or e-mailed to: The Editor, Business StandardNehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 Fax: (011) 23720201 · E-mail: [email protected] letters must have a postal address and telephonenumber

> HAMBONE

BHASKAR CHAKRAVORTI

The news about the Wuhan coron-avirus is bad and is getting worse.In terms of its potential for devas-

tation, the current virus is in close com-petition with its 2003 cousin, the SARScoronavirus. China’s economy is farmore essential to the global economynow than it was in 2003, giving newmeaning to the old nostrum, whenChina sneezes, the world catches a cold.And this time the world’s capacity tocatch that cold is far worse, in part dueto the rise of social media.

Seventeen years ago, during the SARSscare, the world wasn’t hooked to socialmedia. Today, we can expect digital viru -ses — the re-tweets, likeable posts, share-able memes — to rideshare with the coro-navirus. Viral misinformation couldworsen the global public health emergen-cy. No doubt, social media can help as apowerful tool for public health messag-ing, educating and debunking myths.Unfortunately, the myth-makers tend tobeat the educators and debunkers;according to a recent MIT study, falsenews is 70 per cent more likely to beretweeted than true stories, with truthtravelling six times slower than falsehood.

But during this outbreak, the socialmedia industry has performed betterthan it’s gotten credit for.

But it can do more.Rumours have gone into hyper-drive

across platforms: they have stoked wavesof Sinophobia and racism, blaming theoutbreak on false claims that the Chinesehave a regular habit of eating bats. Theshort-video sharing app, TikTok, hasbeen particularly active, with numerousposts spreading misinformation. Onemisleading video was viewed 2.4 million

times before it was removed and yetvideo duets — reactions to the original— lingered on, showing how difficult itis to kill digital falsehoods. Other postsbaselessly claimed that the virus was cre-ated by the government for populationcontrol. The conspiracy group QAnonfalsely claimed in a video that the virus’creation was backed by Bill Gates.

Alarmist statistics have also beenspreading — a tweet with over 140,000“likes” predicted 65 million deaths, adebunked claim — along with falseremedies, prophylactics and cures.Virality is assured when the misinfor-mation jumps platforms.

The problem of containment getsworse when power users, such as politi-cians, give viral misinformation a boost.In the US, President Donald Trumphelped amplify tweets from supportersof QAnon, the conspiracy group activein spreading coronavirus rumours.

Meanwhile, in China, doctors andfrontline workers have been censoredby authorities and some frontlinereports were reportedly being takendown on WeChat. The Chinese statemedia even circulated a fake image of abuilding that it claimed was a hospitalbuilt in 16 hours.

Despite my healthy respect for thescale of the disinformation problem, Ihave to say that the lamest responseshave come from Twitter and Google.Twitter prompts users searching forcoronavirus to first visit authoritative

sources, such as the CDC. A correspond-ing search on Google-owned YouTube,reportedly, links to a New York Timesarticle. Neither seems ready to just takedown patently false content.

Fortunately, other platforms havebeen more proactive. TikTok hasremoved some coronavirus misinforma-tion and WeChat claims to have done thesame. (They may find this easier becausethey have a history of censorship.)

The biggest and most pleasant sur-prise is Facebook. Its past strategyfavoured labelling content as misleadingrather than removing it. This time, it islimiting the distribution of posts ratedfalse by third-party fact-checkers andusing the News Feed to steer users toauthoritative sites. It is giving free adver-tising credits to organisations runningcoronavirus education campaigns andhas added a resource page for spottingfalsehoods. However, the biggest changeat Facebook is its announcement that itwould remove content and block orrestrict hashtags on Instagram thatspread coronavirus misinformation.

I would quote Facebook’s Head ofHealth: “We are doing this as an exten-sion of our existing policies to removecontent that could cause physical harm.”

This elevated “physical harm” stan-dard is one that all other social mediaplatforms, including Twitter andGoogle/YouTube, ought to adopt. Ofcourse, this requires establishing reliablefact-checking partnerships. There are195 fact-checking organisations; so, thatisn’t impossible. YouTube has launcheda limited fact-checking initiative, buturgently needs to expand it. Twitterneeds to launch one.

Social media’s response to this viruscould not only slow the speed of viralfalsehood, but also slow the rate at whichthe public is losing trust in the industry.

© Bloomberg 2020

As coronavirus spreads, so does fake newsINSIGHT

RBI does what Budget could notIt’s not a monetary policy; it’s a credit policy of a governor who is not shy of experimentation whenthe space for monetary easing is limited

Facebook's new “physical harm” standard is onethat Twitter and Google ought to adopt

HUMAN FACTORSHYAMAL MAJUMDAR

BANKER’S TRUST TAMAL BANDYOPADHYAY

Today, we can expect digital viruses— the re-tweets, likeable posts,shareable memes — to ridesharewith the coronavirus. Viralmisinformation could worsen theglobal public health emergency

(From left) RBI deputy governors Mahesh Kumar Jain and N S Vishwanathan,executive director Janak Raj, governor Shaktikanta Das and deputy governors B P Kanungo and MD Patra during a press conference in Mumbai on Thursday

KAMLESH PEDNEKAR

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

The decision of the monetary policy committee (MPC) of the ReserveBank of India (RBI) to leave the policy rates unchanged is in line withmarket expectations. The evolving inflation dynamics played a keyinfluencing role. Inflation based on the consumer price index jumped

sharply to 7.4 per cent in December. While the vegetable prices, especially thoseof onions, have come down from their December highs, the decline in theinflation rate could be restricted in the near term by higher prices of pulses andother protein items. The adjustment in telecom prices is also putting cost-pushpressure on core inflation, though it remains close to the 4 per cent mark.

The MPC has noted there is policy space available for future action. Thecentral bank expects the inflation rate to come down to 3.2 per cent in the thirdquarter of the next fiscal year. Although there is significant uncertainty, if infla-tion moderates in line with the RBI’s projection, it may be able to reduce policyrates by another 25 basis points, taking the repo rate to 4.9 per cent, whichcould become the floor. Supporting growth through monetary policy beyondthat would become extremely tricky. More space can perhaps open up in thecase of larger than expected disinflation, partly because of deceleration inglobal growth on account of coronavirus. The central bank expects the Indianeconomy to grow at 6 per cent in the next fiscal year.

Since the space for further monetary easing is fairly limited, the centralbank is now focusing on transmission and increasing lending. For instance,it has given relief to banks in maintaining the cash reserve ratio against loansfor automobiles, residential housing, and micro, small and medium enter-prises (MSMEs) till July 31 this year. The central bank has also extended theone-time restructuring scheme for MSMEs and relaxed the rule for asset clas-sification in commercial real estate. The RBI further decided to introduceexternal benchmarking of loans by scheduled commercial banks to mediumenterprises from the beginning of the next fiscal year. Apart from these inter-ventions, the central bank will conduct long-term repo of one-year and three-year tenor worth ~1 trillion to infuse more money into the banking systemand bring down the lending rates. Policy transmission has been slow in thecase of long-duration bonds and bank-lending rates. Yields on 10-year gov-ernment bonds, for instance, came down by 76 basis points till January 31,compared with the policy rate reduction of 135 basis points.

On balance, the set of policy interventions announced by the central bankon Thursday is intended to improve transmission and incentivise the bankingsystem to lend. But whether these measures would improve lending remainsto be seen. For instance, extending the external benchmarking could affectinterest margins of banks because the deposit rates are sticky. Also, thoughyields came down after the announcement, it is not clear as to what extent thelong-term repo will help the banking system when the liquidity is surplus tothe tune of over ~3 trillion. The longer-term rates are proving to be stickierbecause of higher government borrowings and declining household financialsavings. The government now wants to import more savings by issuing specialsecurities to non-resident investors. While this will potentially help reducethe cost of money, it can increase challenges for the central bank in currencyand liquidity management.

A dangerous path

The Bharatiya Janata Party (BJP) is in power not just at the Centre andin several states; it also dominates India’s electoral politics throughits mastery of narrative, its outsized purse, and the popularity of itsleader, Prime Minister Narendra Modi. Such a position brings with it

certain responsibilities. In particular, it must not seize on every possible methodthat appears available in order to win state elections. The behaviour of an insur-gent opposition, with little to lose, cannot be adopted by a party that has takenon the burden of steering the ship of the state. Yet, the BJP’s attitude in recentweeks, particularly following the growth of protests against the CitizenshipAmendment Act and the National Register of Citizens, and leading up to theAssembly elections in the National Capital Territory of Delhi, suggests that ithas forgotten this basic responsibility.

Certainly, the Delhi election is a high-stakes endeavour, and it is under-standable if the BJP wants to pull out all the stops to win such an importantcontest. The BJP’s mystique in recent years has been built on its desire forvictory, and its ability to convince voters in the final weeks of a campaign. Butthis has now taken a dangerous turn, and is infecting national politics. Recently,two senior BJP politicians were banned from campaigning because of hatespeech. Instead of accepting the Election Commission’s strictures in the rightspirit, the party instead chose to undermine them by allowing the two membersto lead the discussion on the vote of thanks to the President’s Address inParliament. Parliament is the highest institution in India’s democracy, and thevote of thanks has enormous symbolic power in that it is the highest level dis-cussion about the direction the government seeks to give the country. Whatsignal does it send when those who have been censured for hate speech aregiven responsibility in that context?

Even in the trenches of the political battle, there are lines that have beencrossed. One Union minister called the chief minister of Delhi a terrorist —which is surely beyond the pale for acceptable political debate, particularlyfrom a member of the Cabinet. A chief minister from the BJP, campaigningin Delhi, talked of feeding protesters “bullets, not biryani”. The popularity ofchants related to “bullets” has now expressed itself in lone wolf attackersfiring guns in proximity at unarmed protest rallies in Delhi. No party of gov-ernment should be satisfied by a situation in which its own rhetoric is givingrise to turbulence of this sort. It should seek to clamp down on violence whilecontinuing to fight the rhetorical battles with protestors and official oppositionthat it has previously so easily won. India’s stability, its self-image, and itsprofile overseas depend upon how the BJP manages these tensions. Theprime minister himself has sought to portray India as a stable, growingcountry on the cusp of leading power status. But such behaviour by the partyundermines these ambitions and imposes severe injuries upon the bodypolitic. This is not the direction in which India should be going, and the BJPmust draw back from the brink before it is too late.

Volume XXIV Number 125


India has reversed its long-held and multipartyposition that Kashmir not be internationalised andthat the world be kept out of our internal affairs.

This much is clear and visible, given the triggering ofglobal interest in condemning our recent actions. Whatis unclear is whether this is deliberate and thoughtthrough. We will examine that another time.

First, let’s consider in what ways the issues ofKashmir and of citizenship stand internationalised.On December 6, a US Congresswoman of Indian ori-gin, Pramila Jayapal, moved resolution745 in the House of Representatives. Itwas titled “Urging the Republic of Indiato end the restrictions on communica-tions and mass detentions in Jammuand Kashmir as swiftly as possible andpreserve religious freedom for all resi-dents.” The resolution summarises thehistory of violence in Kashmir andacknowledges that the government ofIndia faces challenges in countering ter-rorist violence. However, it asks thatIndia: (a) lift restrictions on communi-cation and restore internet access; (b)refrain from the use of threats and excessive forceagainst detained people and peaceful protesters; (c)swiftly release arbitrarily detained people in Jammuand Kashmir; (d) refrain from conditioning therelease of detained people on their willingness tosign bonds prohibiting any political activities andspeeches; (e) allow international human rightsobservers and journalists to access Jammu andKashmir and operate freely throughout India, with-out threats; (f) condemn, at the highest levels, all

religiously motivated violence, including that vio-lence which targets religious minorities.

It could hardly be more damning because itaccurately nails all of India’s atrocities in Kashmir.On December 20, days after Jayapal moved thisresolution, India’s Foreign Minister S Jaishankarcancelled a meeting he had with the top leadershipof the US House Foreign Affairs Committeebecause he didn’t want to face Jayapal.

For decades, India has fought hard for our issuesand especially for Kashmir tonever come up in internationalfora. Now we are not onlyencouraging that it happenswith our actions, but we areavoiding those who are raisingthe issue, which is astonishing.Diplomats are paid to defendIndia (as the saying goes, they“lie abroad for the country”),not to run away from problems.

India’s view on this resolu-tion is that it is not binding onus and so we can ignore it. The

first part is true, the second is not. On December 6, the resolution had two backers

(the other one was a Republican from Kansas). Bythe time Jaishankar had decided to run away fromhis meeting it had 25. Today, it has 54, meaningmore than 10 per cent of the total strength of theHouse of Representatives. The backers includeAdam Schiff of California (prominent in theimpeachment of Donald Trump) and MaxineWaters. India has had no response to this other than

to wheel out the Howdy Modi lobby of mostlyGujarati Americans to unsuccessfully tell their rep-resentatives that this is “India’s internal matter.”

This week, the Seattle City Council voted unan-imously to oppose the National Register of Citizens(NRC) and asked that India repeal the CitizenshipAmendment Act (CAA). Of course, this is not bindingand we may not care what the city, which is hometo Microsoft, thinks. But the fact is that this is whatinternationalisation means — other countries, otherpeople, in different fora, talking about our laws andour practices negatively.

Last week, the members of Europe’s Parliamenttabled a resolution to condemn the Citizenship Act.The joint motion of five different coalitions of MEPssaid that “NRC marks a dangerous shift in the waycitizenship will be determined in India, and maycreate a large-scale statelessness crisis and causeimmense human suffering.” It “condemns the vio-lence and brutality that broke out in different regionsof India following the adoption of the CAA; recallsthe special responsibility of law enforcement ser-vices to show restraint and allow peaceful protest;calls for a prompt and impartial investigation intothe events; calls on the Indian authorities to imme-diately and unconditionally release the protestersand human rights defenders currently held underarrest; it condemns the decision of the Indianauthorities to shut down internet access to globalnetworks”. The vote on the resolution was delayedby six weeks, leading India to declare a great victory,but more trouble lies ahead.

We can call it our internal issue but the fact isthat the CAA violates not just India’s constitution,especially Article 14 (‘The State shall not deny toany person equality before the law or the equal pro-tection of the laws within the territory of IndiaProhibition of discrimination on grounds of religion,race, caste, sex or place of birth”) and Article 21 onthe deprivation of life and liberty to all persons (notjust citizens). It also violates two charters we havesigned. The Universal Declaration of Human Rightsand the International Convention on Civil andPolitical Rights. Again, here India’s position is thatwe may have signed these but nobody can enforcethem if we choose to deliberately violate them. Isthat the sort of thing we want the world to thinkabout India?

Also, in the same period, Malaysia’s prime min-ister criticised India’s actions in Kashmir and on cit-izenship. India’s response was to issue an officialfatwa to its importers not to buy palm oil fromMalaysia (we purchase a little over $1 billion wortha year) and instead to choose other nations, raisingthe price for Indian consumers. This is not maturebehaviour and we will regret conducting foreignaffairs in this sort of knee-jerk and petulant manner.

It is the reflection of the way our politics is runtoday — that our diplomacy has been sucked in.But as events in the US, Europe and elsewhere show,what India has done and is doing will have long-term repercussions and ramifications. And it is dif-ficult to look at them and see them as being good orbeneficial for India.

At a time when Jeff Bezos has announced thatAmazon would invest $1 billion in “digitisingsmall and medium businesses” in India, the

e-commerce sector has come under the spotlightonce again: The Competition Commission of India(CCI) conducted a market study on goods, food ser-vices and accommodation segments and startedinvestigation against Amazon and Flipkart overalleged anti-competitive practices. With increasingfootprint of e-commerce in the consumer market,the recent cases against the two companies haveevoked a lot of interest.

As e-commerce becomes a growing and com-monly used model for distributionand allegations of anti-competitivepractices like vertical restraints bye-commerce companies becomemore frequent, the CCI’s “lighttouch” decision-making approachfor this sector is likely to change.

As a relatively new regulator inIndia, the exposure of CCI to e-commerce is less compared to oth-er progressive jurisdictions such asthe US. Owing to the lack of ade-quate data on e-commerce sector,the CCI has not intervened stronglyin the past. A recent e-commercestudy by CCI is the first attempt at systematic marketstudy-based regulation. It has recognised the bene-fits brought by these platforms to the industry, andhas also identified several problematic issues likeplatform neutrality, deep discounting, platform-to-business contract terms, platform price parity clauseand exclusive agreements. The CCI’s recommenda-tion for self-regulation indicates that it is notopposed to the existence of these platforms, butonly seeks to reduce the information asymmetryand correct anti-competitive practices prevailing inthe sector, as opposed to the more stringent idea ofbreaking up the tech giants being talked of in otherparts of the world.

Light regulatory touch is evident in the e-com-merce cases adjudicated by the CCI over the pastdecade. In the online shopping segment, in MohitManglani v. M/s Flipkart India Ltd. & Ors, the CCIconcluded that the exclusive agreements did notlead to any appreciable adverse effect on competi-tion and it seemed unlikely that an exclusive agree-ment between a manufacturer and an e-portal wouldcreate any entry barrier or adversely affect the exist-ing players in the retail market. Similar judgmentswere passed in other cases.

App-based cab aggregators have also comeunder the scrutiny of CCI. In the two cases as yet

decided, the CCI took a liberalapproach, declaring innovation tobe the key in developing new mar-kets and noting that these practicesdid not restrict expansion or entryinto the market.

However, in 2019 the SupremeCourt directed a fresh investigationin the Meru Travel Solutions v/sUber case with allegations of anti-competitive practices and abuse ofdominance by Uber.

The CCI has also started lookingclosely at hotels, restaurants andhospitality service providers. A case

filed against Oyo in 2019 was dismissed as not beingviolative of the competition law. However, theFederation of Hotel And Restaurant Associationsof India filed another case against both Oyo and Go-MakeMyTrip alleging predatory pricing, denial ofmarket access, charging exorbitant commissionsetc, in which prima facie Go-MakeMyTrip has beenfound to be dominant in the online travel market,while Oyo in the market for franchising services forbudget hotels.

Big data has been in the news for several reasons.In the case of Vinod Kumar Gupta v. WhatsApp Incit was alleged that WhatsApp is involved in preda-tory pricing by providing free services to its cus-

tomers backed by Facebook (parent company’s)funding, and compels the users to allow access totheir personal data, which is, in turn, exploited formarket dominance. However, the CCI noted thatWhatsApp may be dominant in the “instant mes-saging services through smartphones” but it is notabusing it as they have not restricted the entry ofother similar service providers in this segment.

Market dominance is established largely throughmergers of rival players. The CCI has been lookingclosely at mergers, but so far all have been approved.A few major deals included Walmart acquiring acontrolling stake of 51-77 per cent in Flipkart, andeBay Singapore acquiring 6.2 per cent shares ofFlipkart. In these mergers, the CCI noted that thetransactions did not raise any competition concerndue to insignificant market shares of the mergingparties and the presence of several other players.

It is interesting to note that merger regulation isbased on certain asset and turnover thresholds spec-ified under the Act. As digital markets are asset lightand may not generate significant revenue for someyears, the deals can easily escape scrutiny.Facebook’s acquisition of WhatsApp was one notableinstance that had a huge impact on the consumerbase globally, but the transaction, falling short ofthe threshold, escaped CCI scrutiny. TheCompetition Law Review Committee, in its 2019report, has recommended that government beempowered to introduce necessary thresholdsincluding the deal-value threshold for combinations.

With rapid increase in the internet and smart-phone penetration, the Indian e-commerce market,which was worth $38.5 billion in 2017, is likely to growto $200 billion by 2026. It will be interesting to watchhow the CCI increases its regulatory oversight overthis segment of the market in the coming years.

The writer is former finance secretary & chairman, CUTSInstitute of Regulation & Competition (CIRC). GarimaSodhi, senior fellow, and Siddhant Puri, intern, CIRC,contributed to this column

This is not, strictly, a book that shouldbe reviewed by a journalist. Yet Stop

Reading the News: A Manifesto for aHappier, Calmer Life can by no meansbe described as irrelevant for anypractitioner in the information industry,even if its premise is flawed. Rolf Dobelliis part of that growing breed of businessprofessionals: A self-help guru.

The reason Stop Reading the Newsgave me pause for thought is that it wasendorsed —sort of —by AlanRusbridger, former editor of TheGuardian, a journalist I admire. In theopening chapter, Mr Dobelli describeshow he arrived to speak, at MrRusbridger’s invitation, to Guardian

journalists about his 2013 book, The Artof Thinking Clearly — or so he thought.Instead, Mr Rusbridger, then editor, askedhim speak on an essay he had found onMr Dobelli’s website, titled “The News isBad For You”.

“The article Rusbridger had found onmy website listed the most importantarguments against consuming preciselywhat these internationally respectedprofessionals spent their days producing:the news. …After twenty minutes, I’dreached the end of my argument,concluding with the words, ‘Let’s behonest: what you’re doing here, ladies andgentlemen, is basically entertainment’.

“Silence, You could have heard a pindrop.”

At Mr Rusbridger’s direction, acondensed version of the essay waspublished on the newspaper’s website,and it maxed out the 450-comment limit.The clear-thinking Mr Dobelli saw this asan opportunity to write a book-lengthexposition of that essay.

I get why Mr Rusbridger thought thetopic worth discussing. It provokes

journalists and editors responsible for thedaily news on any medium to think aboutwhat they do, why they do it and whothey’re doing it for.

The problem is that Mr Dobelli iswriting from the point of view of a newsjunkie (he uses theterm news news-aholic) and speakswith the fervour of areformed rake. Butmost people aren’tobsessive aboutnews, and, anyway,what’s wrong withbeing wellinformed, even ifthe informationdoesn’t impact youdirectly?

So why did he decide to go cold turkeyon the news? A creeping recognition ofsomething akin to attention deficitdisorder and growing anxiety (true, anevening spent watching our homeminister fulminate in Parliament — herarely speaks normally — gave me

nightmares). Also, when he asked himselfwhether he understood the world bettertoday and took better decisions from tensor thousands of hours spent consumingthe news, the answer was no.

Then he describes the rehabprogramme he created on the fly andreports the results: “Today I’m ‘clean’.Since 2010 I’ve been entirely news-free,and I can see, feel and report first-hand

the effects of thisfreedom: improvedquality of life,clearer thinking,more valuableinsights and vastlymore time.”

Mr Dobelli doesnot prescribeinformationabstinence. He sayshe relies on otherpeople to keep him

up to date — friends, family andassociates. This system failed him justonce, when he arrived at the airport onlyto discover that all flights had beencancelled because Eyjafjallajökull inIceland had erupted. He alsorecommends you read the quality weeklyjournals to get up to speed. The Economist

is a favourite, and he says you can Googlefor stuff you want to know (but avoid allhyperlinks).

There is some validity to Mr Dobelli’sargument. Information overload is anacknowledged psychological problemthat has grown in direct proportion to theexplosion of the internet. He is right todeplore the disintegration of mediacorporation ethics, but fails to spot theproblem embedded in the emergence ofthe profit motive (Rupert Murdoch’ssingular legacy to global journalism) inplace of the earlier free-spendingmillionaire owners.

He also deplores the fact that newscorporations focus on “facts, facts andmore facts”. Why this should be“marginalising” or a problem at all is amystery. He says most journalists cannotexplain “causal relationships that shapecultural, intellectual, military, politicaland environmental events are mostlyinvisible”. True; if they could they’d bechampions of academia.

Most egregiously, he says this is why“news corporations focus on the easystuff: anecdotes, scandals, celebritygossip and natural disasters”. This is abreath-taking generalisation and it makesyou wonder what just what Mr Dobelli

was reading in his junkie days. Yoususpect it was exclusively the mass-circulation tabloids. Even if he had readThe Guardian, he could have seen thatthis observation is untrue, as much as it isfor Financial Times, The New York Timesor The Wall Street Journal. I would evenencourage him to read BusinessStandard. The real crisis in the mediaappears to have escaped Mr Dobelli,perhaps because he no longer reads thenews. This is the rise of social media, fakenews and the rank amorality of theentrepreneurs who own these platforms.There is an oblique reference to this in thepenultimate chapter but it’s mostlylinked to the dastardly money-makingproclivities of the media giants.

Fake news can be created by any kookor gook — such as the President of theUnited States and trolls and bhakts— onsocial media platforms in a matter ofminutes. The explosion of Twitter,WhatsApp and their ilk has raised anewthe challenge for ethical mediaorganisations to produce credible,authentic information and analyses. If MrDobelli had devoted himself to socialmedia abstinence, this would have beenan unexceptionable book. Maybe, that’sthe next subject on his to-do list.

Is e-commerce really hurting competition?

Abstinence from the news

BOOK REVIEWKANIKA DATTA

RBI’s focus now is on improving transmission and lending

Beyond rate cuts

By not engaging with those who condemn its actions, India isunwittingly putting Kashmir on the global stage

Kashmir policy, atcross-purposes

Political rhetoric has taken an unwarranted turn

STOP READING THENEWS: A ManifestoForaHappier,CalmerAndWiserLifeAuthor:Rolf DobelliPublisher:HachettePrice: ~399Pages: 160

ILLUSTRATION: BINAY SINHA

AAKAR PATEL

ARVIND MAYARAM

Probe holds up SBI Cards IPO

THE COMPASS

MUMBAI | FRIDAY, 7 FEBRUARY 2020 InvestorWWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING <

The Smart Maize has declined 10% in one month on weakdemand from the poultry sector and profit-bookingby stockists. While the short-term outlook remainsbearish, prices are expected to bounce back in themedium term on account of higher minimumsupport price and expectations of a demand recovery

QUICK TAKE: REVIVAL HOPES FOR MAIZE “When you've an emergency fund worth twoyears of expenses, you'll be less afraid of your boss. You'll have sufficient time to look for a suitable job. This is the first milestone in the journey of financial independence.”

D MUTHUKRISHNAN, Certified financial planner

Central bank plays its part, lenders get a breather Easing of CRR onselect loans couldhelp improvemargins by 50 basis points

HAMSINI KARTHIK

The Reserve Bank of India’s (RBI) mon-etary policy seems to have played its partto push growth, at least in select impor-tant pockets like loans to retail, micro-small and medium enterprises (MSMEs)and real estate.

The Nifty Bank gained over 1 per cent,with IndusInd Bank, SBI, and Axis Bankamong big gainers (up 1.8-4.9 per cent),while non-banking financial companies(NBFCs) like Indiabulls Housing, LICHousing and PNB Housing surged 5-15per cent.

To ensure retail loans remain growthdrivers for banks, the RBI has incentivisedcredit to segments such as automobile,housing and MSMEs. Consequently, banksneed not set aside 4 per cent of the loanoutstanding as CRR (cash reserve ratio)for these loans.

Though this facility is available till July2020, Pankaj Pandey, head (research) atICICI Securities, says this presents anopportunity to earn more without havingto increase the interest rate.

“This money was kept idle earlier,” headds. That said, in sync with the practice

of benchmarking retail loans to externalrates, loans to MSMEs will also have to belinked to external benchmarks, makingthem more affordable.

However, at a time when most bankshave turned cautious on this segment,pricing the risks appropriately could be achallenge.

The realty sector also got a breather, asthe date of commencement of commercialoperations (DCCO) of project loans forcommercial real estate — delayed for rea-sons beyond the control of promoters —was extended by a year without down-grading the borrower’s asset classification.

In effect, these loans get another yearfor restructuring, taking the pressure offdevelopers. For banks and NBFCs, real

estate exposure may not cause asset qual-ity problems just yet. However, SureshGanapathy of Macquarie Capital says thisis at best a marginal dispensation.

“The real challenge is where projectsare operational and residential sales aren’thappening and developers sitting on hugeamount of inventory,” he points out.

Among all, the one that stands out isthe interest rate transmission under LongTerm Repo Operations (LTRO). Under this,banks can access up to ~1 trillion at reporate at one- or three-year tenors fromFebruary 15, thereby capping interest ratevolatility.

While finer details of the LTRO will beout soon, Pandey says such an optionwould give banks the leeway to curb theircost of funds.

In all, Edelweiss analysts estimate therate transmission benefit to auto, housingand MSME loans at 25-30 bps besidescredit push. For Ganapathy, the largerunaddressed question is that of risk-aver-sion. “Banks are unwilling to lend andare sitting on ~3.4 trillion of excess liq-uidity,” he says. Whether Thursday’smonetary policy will move the needle,only time will tell.

Eicher may face speed breaker on margin frontHike in rawmaterial costsadds to pressure

RAM PRASAD SAHU

The Eicher Motors stock rose4 per cent on Thursday, fol-lowing a steady performancein the December quarter (Q3).It gained market share despitea 6 per cent year-on-year (YoY)fall in two-wheeler volumes,given the fall in peer volumeswas sharper.

Growth was strong on asequential basis, led by expan-sion of its network both in thelarge format as well as studiostores. The firm launched vari-ants and offered customisedoptions to improve volumes.

From a small base, export

volumes jumped YoY, led bynew products such as the650cc twins and theHimalayan.

The firm is expandingexports to markets such asBrazil, thereby boosting theoverall touch points to over600 outside India.

While future volumegrowth depends on the abilityof customers to absorb higherprices, analysts are scepticalon the company passing onthe entire rise in costs acrossmodels.

A sharp rise in price of pre-cious metals, used in the cat-

alytic convertors, could putadditional pressure. This iseven as the firm looks to bal-ance volume growth whilemaintaining margins.

The Volvo EicherCommercial Vehicle businesscontinues to be weak, withrevenues falling 23 per cent inthe quarter, on the back of a27 per cent fall in volumes.This was largely in the medi-um-to-heavy truck segment.

Even though volumes havebeen weak, the firm gainedmarket share as the sector’svolumes fell 37 per cent.

Eicher indicated there has

been some pre-buying aheadof the BS-VI roll-out deadline.However, given the transitionand higher prices of BS-VIproducts, analysts believe vol-ume growth in commercialvehicles will be tepid.

The company, however,has indicated it has an edgeover competitors as it has beenmaking Euro VI engines forVolvo’s global operations.Analysts say Royal Enfield isbetter positioned than peers,given its smaller BS-IV inven-tory, an affluent customerbase, and lighter competitionin its product segments.

ASHLEY COUTINHO

Mumbai, 6 February

Aregulatory guidelineintroduced more than adecade ago has resulted

in an inadvertent delay in oneof the most eagerly awaited pub-lic share sales.

The Securities andExchange Board of India (Sebi)has held back from giving itsobservations on the draftprospectus of SBI Cards andPayment Services, the creditcard arm of State Bank of India(SBI). The offer document wasfiled with the regulator inNovember, and the companycompleted its global roadshowsby early January, expecting tohit the market the same month.

However, the regulator keptthe share sale in abeyancebecause of an ongoing probeagainst group company SBIMutual Fund, said two peoplefamiliar with the matter.

The latter is contesting insid-

er trading charges levelledagainst it for trading in theManappuram Finance scrip. SBIMF was reportedly among fiveasset managers to whom Sebihad issued show cause noticeslast year for alleged use of price-sensitive information for trad-ing in the scrip in March 2013.

“One of our group compa-nies, SBI Funds ManagementPrivate Limited, is involved inproceedings initiated against itby Sebi… While Sebi had issuedshow cause notices, which havebeen responded to by SBIFunds, no order has yet been

passed by Sebi in relation tosuch show cause notices,” SBICards’ draft offer noted.

According to a general orderput out by Sebi in 2006, obser-vations on draft offer docu-ments would be kept inabeyance for a period of 90 daysfrom the date of the show causenotice, or filing of the draft offerdocument — whichever is later.

The appropriate authorityshall — in a fit case — pass anappropriate interim or finalorder after hearing the personaffected, within the period of 90days. Sebi tweaked the norms

for holding back approvals forproposed share sales onWednesday — putting in placea broader framework but doingaway with the abeyance periodin cases where show causenotices were issued to entitiesin an adjudication proceeding.

It is unclear if the latest mod-ification will hasten SBI Cards’approval timeline.

An email sent to SBI Cards,SBI MF, and Sebi did not elicit aresponse. People in the knowsaid the observations may comethis month.

Investment bankers say the

delay will have no bearing onIPO prospects, which has got astellar response from institu-tional investors.

SBI Cards is targeting a mop-up of ~9,500 crore from theshare sale, with a fresh issue sizeof around ~500 crore. SBI andCarlyle Group are both divestingtheir holdings.

“This is the only stand-alonecard business that is going to belisted and has the potential togenerate superior RoE (returnon equity). The market is under-penetrated and we expect sig-nificant growth in the business.With the backing of SBI, thereis a strong case for reaching outto the untapped segment,” saidan investment banker.

According to brokeragereports, the share sale couldcommand premium valua-tions, given the firm is a strongplay on the consumption anddigitisation story.

Ambit Capital considersstrong parentage and a gooddistribution network as itsstrengths and over-depen-dence on co-branded partnersand an unsecured portfolio asweaknesses.

More on business-standard.com

Latest rule changemay, however,clear decks for~9,500-cr offering

Sebi issues norms for AIF benchmarking

Indices continue to rally,thanks to policy fillipSUNDAR SETHURAMAN

Mumbai, 6 February

The markets rose for a fourthconsecutive day after theReserve Bank of India (RBI)stepped up efforts to supportcredit growth while keepinginterest rates unchanged. TheSensex gained 0.4 per cent, or164 points, to end at 41,306 —the highest since January 24.The Nifty rose 45 points, or 0.4per cent, to close at 12,134.

The RBI kept policy ratessteady for a second straightmeeting, but left the optionopen for further easing.Surging inflation and falteringeconomic growth have mademonetary policy action a toughbalancing act for the regulator.

Investor sentiment was lift-ed by RBI’s measures toimprove monetary policytransmission and boost creditgrowth. The relaxation provid-ed to housing finance compa-nies for their commercial realestate exposure also helped.The regulator exempted banksfrom cash reserve ratio (CRR)requirements on incrementalcredit disbursed on automo-bile retail loans, housing mort-gages, and loans to micro,small, and medium enterpris-es. The central bank also eased

guidelines on project loans tothe commercial real estate sec-tor by allowing a one-yearextension to the date of com-mencement of project loansthat have been delayed for rea-sons beyond the control ofpromoters, without attractinga downgrade of asset clarification.

Market sentiment was alsoboosted from a global rally inrisk assets, on speculation thatthe fallout from the coron-avirus will be contained.China’s tariff cuts on $75 billionworth US imports kept themood buoyant.

News reports of possiblemedical advances to combatthe coronavirus outbreak in

China also helped in improvinginvestor sentiments.

The domestic economicdata released this week alsocheered investors. Datareleased on Wednesdayshowed the servicesPurchasing Managers’ Index(PMI) rising to a seven-yearhigh at 55.5 in January.

Drop in crude oil prices alsohelped domestic marketsrecover. Brent crude hit a 52-week low on Tuesday at $53 perbarrel. Markets have gainednearly 4 per cent this week,after dropping nearly 2.5 percent on Saturday on account ofBudget disappointment.

(With inputs from Bloomberg)

ASHLEY COUTINHO

Mumbai, 6 February

The Securities and ExchangeBoard of India (Sebi) has issuedguidelines for benchmarkingthe performance of alternativeinvestment funds (AIFs) with aview to streamliningdisclosure standards andhelping investors in assessingscheme performance.

The guidelines come twomonths after a consultationpaper to this effect was floatedby the regulator.

“As the industry needsflexibility to showcase itsperformance based ondifferent criteria,benchmarking performancewill help investors in assessingthe performance of the AIFindustry,” the regulator said ina note put out on Thursday.

The regulator has proposedthat an association of AIFswith representation from atleast 51 per cent of the industryselect one or morebenchmarking agencies.

The agreement betweenthe benchmarking agenciesand the AIFs should cover themode and manner of datareporting, specific data thatneeds to be reported, andterms of confidentiality.

Benchmarking will applyto all schemes that havecompleted at least one yearfrom the date of “First Close”.Funds incorporated overseaswith India track record willalso provide the data to theagencies when they seekregistration as AIFs.Performance benchmarkingwill be done on a half-yearlybasis, based on data as ofSeptember 30 and March 31 ofeach year. The performanceand benchmark reports are tobe available by July 1, 2020, onthe outside for performanceup to September 30, 2019.

“The introduction ofperformance benchmarkingwill enhance transparencyamong AIF investors, who cancompare the performance ofsimilar strategy schemes

having the same vintage andthereby assess the relativeperformance of themanagement team whileconsidering makinginvestments,” saidSubramaniam Krishnan,partner, EY India.

The regulator has alsointroduced a template for a

private placementmemorandum (PPM) toensure minimum disclosurein a simple and comparableformat. The PPM is a primarydocument in which necessaryinformation about AIFs isdisclosed to prospectiveinvestors. Further, in order toensure compliance with the

terms of the PPM, it will bemandatory for AIFs to carryout an annual audit of suchcompliance. The audit will bedone by either an internal orexternal auditor/legalprofessional. Angel funds andAIFs/schemes, in which eachinvestor commits to aminimum capital of ~70 croreor $10 million, will be exemptfrom the requirement of thePPM and audit.

“The introduction ofperformance benchmarkingfor AIFs will bring greatertransparency to this growingasset class,” said VaneesaAgrawal, founder, ThinkingLegal. “The exclusion of angelfunds from performancebenchmarking is the rightapproach since decisionmaking in an angel fund iswith the investorsthemselves.”

Investments in AIFs haverisen to ~1.25 trillion as ofSeptember 30 last year, with 65per cent of the assets comingfrom category II funds.

ASSETS MANAGED in ~ crore

Category Commitments Funds Investments raised raised made

I 36,140 15,733 12,418

II 238,500 102,117 82,427

III 42,223 36,912 30,961

Total 316,864 154,762 125,805Net figures at the end of September 2019 Source: Sebi

SWIPING RIGHTSBI Card is the second-largest credit card company

HDFC SBI ICICI Axis CitibankBank Card Bank BankSource: DRHP — SBI Cards and Payment Services

12.5 8.3 6.6 6.0 2.7Top 5 players have issued over 36 mn cards (FY19)

Market share in % (FY19)

27(19)

18 (24)14 (16) 13 (34)

6 (2)

Figures in bracket5-year CAGR (%)

NSE FINANCIALINDEX

4th RISE IN A ROWSensex gets a lift

COMMODITIES>

Lupin faces regulatory challengesUJJVAL JAUHARIMumbai, 6 February

Muted sales in its coremarkets of India andNorth America led to

poor performance by Lupin inthe December quarter. Sales inNorth America, its biggest mar-ket that accounts for 37 per centof sales was down about 3 percent. Domestic business, theother key geography, grew 9 percent year-on-year (YoY).

Analysts at Motilal OswalFinancial Services were expect-ing 12 per cent YoY growth inIndia. Lupin indicated that ten-der sales from India declinedand, adjusted for this, growthstood at 10.6 per cent. Onsequential basis, India saleswere down 3.4 per cent.

US sales were expected to bein the $190-200 million range inthe quarter, helped by highercontributions from thryroidtreatment drug levothyroxine.Sales missed this target comingin at $186 million. However, oth-er geographies — such as AsiaPacific, Latin America, and restof the world — grew about 15-26per cent. Thus, at ~3,716 crore,sales were lower than consensusestimates of ~4,278 crore.

The major disappointmentwas on the margin front.

Earnings before interest taxdepreciation and amortization(Ebitda) were ~522.7 crore, compared tostreet’s estimate of~706 crore.

Higher remedi-ation costs per-taining to compa-ny’s Somersetplant, uptick inR&D (research anddevelopment)spends and higherother sellingexpenses led tothe fall. Operatingprofit margins came in at 14.1per cent, compared to 18 percent estimated by the street.

Lupin’s Q3 net profit wasimpacted by a number of excep-

tional items. In view of changes in the

pipeline value of Gavis portfolio,which it acquired,the companydecided to take animpairment hit oncertain intangibleassets, leading toan exceptional lossof ~1,580 crore.

Further, taxesalso includedadditional tax of~294.1 crore ondivestment ofJapan operations

(Kyowa) and deferred tax assetsof ~405.4 crore. The companyreported losses of ~868.5 crorefrom continuing operations.

The company had completed

the divestment of its entire stakein Kyowa PharmaceuticalIndustry in December 2019.

The transaction resulted in apre-tax gain of ~1,291.1 crore,which the firm said would leadto significant reduction in leverage and improvement inreturn ratios.

Lupin will continue suppliesof certain products from its Goaplant as part of its sale agree-ment for Kyowa.

Moving forward, while thecompany expects profitability torebound and hit the 18 per centlevel on an annual basis, thestreet remains watchful as thiswould require its plants to becleared. At least five of compa-ny’s manufacturing facilitiesremain under USFDA scanner.

The growth in US sales is cur-rently dependant mostly onramping up levothyroxinebrand Solosec (amoebic treat-ment drug). Progress inapproval for respiratory productAlbuterol will also be key.However, for a better productapproval rate the clearance of itsplants remains crucial.

Analysts at ICICI Securitiessaid after the results wereannounced that resolution ofWarning Letters and clearanceof Official Action Indicated(OAIs) status on plants could be the near-term overhangalong with progress on the mar-gins front.

Growth in India remains consistent but lumpy for AsiaPacific.

High costs have hit Q3 margins, while multiple one-offs have impacted firm’s bottom line

FMCG on course for Nifty inclusion hat-trick

SAMIE MODAKMumbai, 6 February

Dabur India is the front runnerto replace YES Bank in the Nifty,say analysts tracking indexinclusion criteria. If the movematerialises, the Ayurveda-focused firm will become thethird straight fast-movingconsumer goods (FMCG) stockto be added to the index.

Dabur, Godrej ConsumerProducts (GSPL), and ShreeCement are the front runnersfor inclusion in the Nifty basedon their free-float marketcapitalisation.

“On the basis of the averagesix-month free float marketcapitalisation, Dabur, GCPL,and Shree Cement havemarginal difference. However,Dabur is most likely to replaceYES Bank in the Nifty50 in theforthcoming index constituentschange on March 27,” wroteVinod Karki, head (strategy) at

ICICI Securities, in a note.During the previous

reshuffle in August,multinational FMCG firmNestlé India had replaced non-banking financial company(NBFC) Indiabulls HousingFinance. A year ago, BritanniaIndustries had replaced oilmarketing company HindustanPetroleum Corporation (HPCL)in the index.

The inclusion of consumerstocks comes at a time whenvaluations in the space havereached record levels. Over thepast two years, investors havepiled on to FMCG stocks, giventheir relative safety and highreturn ratios.

Analysts say inclusion ofFMCG stocks will reducevolatility but increasevaluations. Most FMCG stockstrade at a high price-to-earnings (P/E) ratio.

“On a FY20 P/E basis, Nifty islikely to become expensive

from 17 times to 17.1 times, as thelikely new entrant has a muchhigher FY20 P/E (46 times)relative to the likely exitingstock (14 times),” said Karki.

Over the year, the weight ofconsumer stocks in the Niftyhas been on the rise. At present,the sector has the third-highestweight in the index, after banks(including financials) andinformation technology (IT).Following the likely inclusionof Dabur, the sector could pipthe IT sector’s weight.

The Nifty reshuffle couldhave a bearing on investor

flows too.“Index fund-related buying

is ~520 crore for Dabur, and thatof selling is ~160 crore for YESBank. Active funds seeking toalign their holdings withbenchmark indices couldfurther add to the buy/sellmomentum,” the report states.

Interestingly, life insurancestocks such as HDFC Life andSBI Life have a much higherfree-float than the threepotential entrants. However,these recently listed stocksdon’t qualify for indexinclusion.

One of the key criteria forindex inclusion is that thestocks should trade in thederivatives segment. Currently,both HDFC Life and SBI Life arenot part of the list of stocks onwhich futures and options areavailable.

“HDFC Life and SBI Lifehave higher free float marketcaps, but are ineligible as theyare not available for derivativestrading. In case this changes,both of these enter the index,replacing YES Bank and Zee,” states the ICICI Securities report.

DILIP KUMAR JHAMumbai, 6 February

Rumours on social media regardingthe spread of coronavirus throughbirds have beaten down poultryprices, which have declined 10 percent over the past two days, owing toa sudden plunge in demand for theproduct in the country.

Broiler chicken per kg is nowbeing sold to consumers at ~65 inPune and ~72 inDelhi, against ~73and ~80 a kg,respectively, lastweek. Similarly, egg

prices havedeclined andare trading at~3.75 perpiece.

Since theepidemicbroke out ina few cities inChina and acouple ofcases were

reported in India aswell, there wererumours that birds were the vector.Normally mammals are the likely ori-gin of this virus, which spreads tohumans. Coronavirus is feared tohave originated from bats in China.

“Poultry demand has fallen by 10-15 per cent in the past two days.Rumours surrounding the spread ofcoronavirus through animals andchicken could be a reason. Prices ofbroiler chicken have declined by 10per cent across all categories,” saidBalram Yadav, managing director,Godrej Agrovet.

He added coronavirus was differ-ent from avian influenza (H5N1), forwhich there was not even theremotest possibility of the virusspreading to birds.

Meanwhile, egg prices are facingsqueezed profit margins.

The benchmark broiler chickencontinues to trade below the estimat-ed cost of its production of ~80 a kgfor a sustained period of more than ayear now.

Many farmers in major producingstates like Punjab, Andhra Pradesh,and Bihar are protesting intermit-tently, seeking the government’s sup-port on minimum support price and

feed at a discount-ed price. But, therehas been nofavourableresponse yet.

While smallfarmers havestopped farmingand are now seek-ing other means oflivelihood, largecompanies withdeep pockets continue to incurlosses in poultryfarming.

“Poultrydemand is veryweek due to a lean

season. Normally, the six weeksbetween February 1 and March 15,demand for poultry productsremains seasonally down due pri-marily to a slowdown in consump-tion during school examination peri-od. Rumours of coronavirusworsened poultry demand. We hopepoultry prices to decline further tilldemand resumes possibly by March-end,” said K G Anand, general man-ager, Venkatashwara Hatcheries, theproducer of Venky’s brand raw andready-to-eat chicken products.

Meanwhile, feed prices havejumped significantly over the last oneyear. The prices of maize, bajra, andoilmeal have gone up by about 60 percent since January last year.

LONG AND SHORT OF ITReshuffle could make Nifty expensive but reduce volatility

Free-float m-cap P/E P/B Beta

Potential exclusionYES Bank 7,866 14.0 0.4 1.4

Potential entrantsDabur 28,819 46.4 16.0 0.7

Godrej Consumer 24,615 37.8 9.0 1.1

Shree Cement 31,571 40.8 9.0 1.1Note: P/E for FY21; P/B for FY19 and Beta 3-year average Source: ICICI Securities

IN BETTER HEALTHUS REMAINS PAIN POINT

* Sales from continuing operations including APISource: Company

Q3FY20 % change (~ cr) YoY QoQ

North America 1,377 -2.9 3.9India 1,297 9.0 -3.4Asia Pacific 172 25.8 8.6Emerging markets 291 4.0 -8.8Latin America 180 15.4 24.3Rest of the world 82 20.4 0.2Total sales* 3,716 -2.8 -2.7

THE SMART INVESTOR 13>


Dabur tipped to replace YES Bank in index;Nestlé, Britannia the last two entrants

US sales were expectedto be in the $190-200million range in thequarter, which thefirm missed. Salesstood at $186 million.However, other regionslike Asia Pacific, LatinAmerica, and rest ofthe world grew at 15-26 per cent

BINDISHA SARANG

Financial frauds are not new.They are a hydra-headed problem— cut one off, more spring in theirplace. For instance, a 73-year-oldPaytm customer from Mumbailost ~1.7 lakh recently via know-your-customer (KYC) fraud.

Mandar Aagashe, founder,Sarvatra Technologies, a bankingtechnology solutions provider,says, “Fraudsters are glib talkers.And senior citizens are the mostvulnerable.”

The latest type of fraud to hite-wallets is the KYC fraud.

Modus operandi: The ReserveBank of India has made KYCmandatory for mobile walletusers. Scammers have used KYCas an entry point. Usually, the vic-tim gets a text message stating hise-wallet needs to be KYC compli-ant; he is asked to call the tele-phone number provided in themessage. To update the KYC, he isasked to download an app, usual-ly TeamViewer Quick Support orAnyDesk — these are remoteaccess control mobile apps.

The phishers ask you to trans-fer ~1 to check the status of the e-wallet. While the customer isentering a password or PIN for hise-wallet, the scammers are col-lecting details being enteredalongside. They now have accessto your mobile wallet ID and pass-word. Soon, your bank account islinked to the mobile. The wallet isdebited to other accounts usingdifferent transactions.

What to do: The KYCfraud has become so ram-pant that Delhi Police’sTwitter account hasissued a word of warning.Says Aagashe, “The KYCupdate will never happenvia a third-party app. If ithas to happen on anyapp, it will happen withinthe original e-wallet app itself.”

Some e-wallets like Paytmhave blocked its users from usingthe platform if they have apps likeTeamViewer and AnyDesk ontheir smartphones. Users get apop-up message on Paytm, askingthem to uninstall these remoteaccess apps before they startusing the wallet.

Tips to prevent other types offrauds: Unified payments inter-face (UPI) has a feature where youor the merchant can send the usera request to collect money.

Rajesh Mirjankar, managingdirector (MD) and chief executiveofficer, InfrasoftTech, says, “Use

digital payment modes only ontrusted and verified websites.Remember that for UPI transac-tions, the PIN is never asked on

the merchant site. It isalways entered on yourPSP app. Also, note thatthe credit transactiondoes not need the clientto provide a mobile PIN.”

Remember you don’tneed to authorise a trans-action if the money isbeing transferred to youraccount, but the fraudstermakes you believe you do

and you end up sharing the PIN,and your hard-earned money getsre-routed.

Sanjay Katkar, joint MD andchief technology officer, QuickHeal Technologies, says, “Themobile app claiming to speed upyour smartphone actually wantsto wrest control of your phoneand sniff out all the stored pass-words.”

Another method fraudstersuse is by spreading fake customercare numbers for banks or UPIplatforms online. And when yourun a search online, you often endup calling these numbers. Visit abank or type out the whole URL toavoid being scammed.

Essential precautionsfor e-wallet usersSince RBI has made KYC mandatory, manyfraudsters use this as entry point

YOURMONEY

nPoultry prices declined 10%in one month on rumours ofvirus spreading through birds

nDemand for chicken and eggshas slumped 10-15% in 2 days

nFarmers say poultry demandwill revive by March-end

nPrices continue to tradebelowcost of production

nSmall farmers shut farms,migrate to alternative means of livelihood

CAUGHT BY FEAR

DELHI POLICE TIPS nNo payment appverifies KYCover a phone call

nA call for e-wallet KYCverification could be a potentialfraud call

nDon’t share any financialdetailswith such callers

nDon’t install any Appon caller’sadvice

nDon’t do even a~1 transaction

nDon’t call on the number givenin KYC SMS

n Immediately reportonhttps://cybercrime.gov.in

Rice exports set to declineVIRENDRA SINGH RAWATLucknow, 6 February

The US-Iran standoffand the recent coron-avirus outbreak in

China are among factorswhich, it is thought, couldpull down Indian rice exportsby about a fifth this year.

Export of rice, especiallybasmati, to Iran was valuedat $1.5 billion (about ~10,500crore) in 2018-19. It accountsfor 25-30 per cent of annualIndian rice shipment. Indianrice exports had a compoundannual growth rate (CAGR)of nearly 14 per cent between2010 and 2019. We accountfor a fourth of global riceexport; it contributes two percent to the overall Indianexports basket.

However, goes a report byUS-based trade finance com-pany Drip Capital, riceexports this year have fallenacross the globe, with a majordip emerging from WestAsia, due to geopolitical ten-sions. The report is based onanalysis of proprietary dataand on-ground conversationwith exporters.

“YTD (year-to-date)export is so far looking bleak,with Iran, the biggest exportmarket, seeing a 22 per centfall in shipment,” said DripCapital co-founder and co-chief executive, PushkarMukewar. Devendra Vora, aMumbai-based rice traderand exporter, said shipmentto Iran had been tepid sinceOctober 2019 on account ofthe US-Iran crisis, with norespite in sight.

“Annual rice export toIran is to the tune of morethan 10 million tonnes (mt).

There is a strong possibilityof these falling by almost 2million tonnes,” he toldBusiness Standard, adding

traders holding stocks werestaring at a loss.

Kohinoor Foods jointmanaging director Gurnam

Arora said since Iran was themajor destination for Indianrice exports, the situationwould certainly reflect inlower shipment, stating: “Isee a 20 per cent dip thisyear, given the adverse globalmarket sentiments, accentu-ated now by the coronavirusoutbreak and reflecting inslowing international trade.”Many other internationalmarkets for Indian rice, headded, had been down overseveral months.

Haryana is India’s topbasmati rice exporting state,with a CAGR of 3 per centduring 2016-19, shipping $2.4billion in FY19. Gujaratwas second in FY19,with $1.1 billion and aCAGR of 47 per centduring 2016-19. Othermajor contributors areDelhi, West Bengal andAndhra Pradesh.

Arora suggests thecentral governmentdiscuss rice exportwith Brazil. “If it push-es the matter properly, thereis a possibility of almost 1 mtof rice shipment; Brazil is abig consumer of food grain,including rice and wheat,”he said.

Around 40 per cent ofthe export takes place in thefour months fromDecember to March. TheUAE, Nepal, Yemen,Senegal and Bang la desh areother major destinations forIndian rice but have showeda dip in shipment this finan-cial year. Export to somecountries has seen somegrowth — Saudi Arabia (4 per cent), Iraq (10 percent), Benin (8 per cent) andAmerica (4 per cent).

With the Chinese markets continuing to shut down amidst theoutbreak of coronavirus, commodity export from Gujaratespecially of cumin, sesame seed and groundnut, is expected totake a 10-15 per cent hit in a month or two. Traders say Chinaannually takes 20-30 per cent of export from India for some keycommodities. Each of these could fall 10-15 per cent.

Typically, Chinese markets were shut in January on accountof their lunar new year holidays. Since the outbreak ofcoronavirus from Wuhan, precautionary measures have meant

that markets are yet toreopen. With the Chineseauthorities choosing toprolong this shutdown ina bid to control theoutbreak, export ofcommodities from Indiahas already beenaffected. "Usually, theseholidays last for five days.But, it is now almost afortnight since those

markets closed. People are also choosing to stay home, wearingmasks and not venturing out. We are in touch with fellowcommodity traders in China via video calls. The situation couldimpact export by 10-15 per cent," said Vijay Joshi, president,Unjha Commodity Association. VINAY UMARJI

Cumin, sesame, groundnutexports on the backfoot

TOP 5 PURCHASING DESTINATIONS

nPrice: $ million

Figures in brackets: Quantity in Apr-Oct FY20 (in ‘000 tonnes)

Iran Saudi Arabia Iraq Kuwait YemenRepublic Compiled by BS Research Bureau Source: Apeda (DGCIS)

575

(522)

(430)

(219)

(110) (101)

460 226 116 106

CORONAVIRUSOUTBREAK

Poultry prices fall onsocial media rumour

> PRICE CARD

As on Feb 6 International Domestic ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------

Price %Chg# Price %Chg#

METALS ($/tonne)

Aluminium 1,688.0 -7.1 1,980.3 4.9

Copper 5,714.0 -3.4 6,334.3 2.9

Zinc 2,222.5 -12.1 2,486.0 -9.0

Gold ($/ounce) 1,565.3* 5.0 1,762.1 5.1

Silver ($/ounce) 17.8* 0.8 20.2 1.0

ENERGY

Crude Oil ($/bbl) 54.8* -11.7 53.9 -13.1

Natural Gas ($/mmBtu) 1.8* -35.0 1.9 -34.8

AGRI COMMODITIES ($/tonne)

Wheat 196.6 8.1 291.4 -4.7

Maize 184.2* 1.5 264.5 -9.3

Sugar 415.8* 22.7 491.9 0.1

Palm oil 690.0 11.7 1,165.7 21.7

Cotton 1,502.7 7.0 1,597.8 -0.4* As on Feb 06, 20 1800 hrs IST, # Change Over 3 MonthsConversion rate 1 USD = 71.2& 1 Ounce = 31.1032316 grams.

Notes:

1) International metals, Indian basket crude, Malaysia Palm oil, Wheat LIFFE and CoffeeKarnataka robusta pertains to previous days price.

2) International metal are LME Spot prices and domestic metal are Mumbai local spotprices except for Steel.

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

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

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

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

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

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

MUMBAI | FRIDAY, 7 FEBRUARY 2020 BRAND WORLD 21. <

T E NARASIMHANChennai, 6 February

More than two centuriessince an albatross inthe skies inspired

Samuel Taylor Coleridge’s trag-ic ballad, ‘Rime of the AncientMariner,’ the bird is whirring upthe wheels of imagination in anIndian auto company. The new-ly launched hatchback Altrozfrom Tata Motors, the companysaid, draws its name from themajestic sea bird.

Its doors opening as wide asthe bird’s wingspan, the nameticked several boxes—it metwith the company’s newlydevised bird-influenced nam-ing convention for passengervehicles, its character mappedinto that of Altroz and perhaps,also sparked the hope that thecar, like the bird, would be a har-binger of good fortune in themidst of a storm.

The brand is being reimag-ined at Tata Motors to create anentity that stands apart not onlyfrom the rest in the market butalso from the way it was per-

ceived in the past. Be it thename, the design and commu-nication campaign and theengagement processes beingimagined between the brandand its buyers, the company iscasting its cars in a new mould.

While it has not been anaggressive spender on brandbuilding in the past and rankedseventh in terms of marketingspend in 2019, the companyplans to invest heavily in the lastquarter of this fis-cal (January-March 2020).Vivek Srivatsa,head of Mark-eting, PassengerVehicles BusinessUnit, Tata Motorsestimates thatthey will spend asmuch in threemonths as theyhave in the past nine. A robustpersonality goes a long way,much further than the starappeal of brand ambassadors,the company believes.

“It is a tougher route, but theright route. We have still not

established a clear personalityfor Tata Motors PassengerVehicle and this is the right timeto do it,” Srivatsa says. Here iswhere birds come into theframe. The obvious connectionsbetween flight and speed apart,fowl-inspired nomenclatureallows for great flexibility. Thereis something for every car, “fastbirds, economically flying birds,big birds, small birds, so it is avery good fit,” he adds.

Harrier, thecompact SUVlaunched lastJanuary is namedafter a bird of prey,the newlylaunched SUVGravitas, likeAltroz, is inspiredby a sea birdGravis. New namesand an aggressive

advertising strategy have beentied into the new campaignunder the 'New Forever' tagline.Ranojoy Mukerji, automotivewriter and analyst believes thatthe campaign is the need of thehour. “Tata Motors has managed

to somewhat rid itself of its oldimage of bad quality cars andindifferent manufacturing. Thebrand is well entrenched in theIndian psyche, has multipleservice centres all over the coun-try and is known for honouringits warranty plans. (But) chal-lenges come from well-estab-lished players that are posi-tioned better in the Indianconsumer’s mind.”

The new campaign must beseen in the context of the indus-try slowdown and the manda-tory implementation of BS VIemission norms from April2020. All auto majors have hadto revamp their entire range andthe showrooms are full of newcars. How does one stand apart?It is here that perceptions andbrand image matter.

For Tata Motors the BS VIupgradation has been com-bined with defining a newdesign language for its passen-ger cars. A common designtheme helps develop a unifiedpersonality and state what TataMotors Passenger Vehiclestands for, says Srivatsa, besidesidentifying it as a premiumlabel. “It is important to havenewer and newer models daz-zling consumers. It is the surestsign of life,” says Harish Bijoor,founder, Harish Bijoor Consults.

Srivatsa adds more nuanceto the design and brand think-ing process. From being a singlebrand company (Indica), TataMotors now has five. Tiago,Nexon, Harrier and now Altrozin the premium hatchback cat-egory with Gravitas in SUVs. It istime to tell buyers what they arebuying into and “that’s why wewanted to start this brand per-sonality communication,” headds. The campaign is aimed atcreating a brand that is tunedin to buyer needs. Altroz, forinstance, comes with the possi-bility of factory-fitted customi-sation. Customers can cus-tomise their vehicle using a tool‘Imaginator’ on the auto com-pany’s website. The companywould rather have buyers payfor what they want, instead offorking out more for higher endvariants that don’t meet theirneeds, Srivatsa explains.

Tata Motors powers a brand faceliftThe auto major is driving an ambitious image makeover

“We have still notestablished a clearpersonality for TataMotors PassengerVehicle and this is theright time to do it”

VIVEK SRIVATSAHead-Marketing, PassengerVehicles Business Unit, Tata Motors

The recently launched Altroz and Gravitas are named after sea birds, while Harrier that waslaunched last year, takes its name from a bird of prey

> FROM PAGE 1

RBI goes off...“The policy is extremely dovish. Withoutdoing a rate cut, the RBI has achieved morethan that,” said Ananth Narayan, associateprofessor at S P Jain Institute ofManagement and Research.

The RBI told banks they could keeploans to automobiles, residential housing,and micro, small and medium enterprises(MSMEs) outside the purview of the cashreserve ratio, which is 4 per cent of theirdeposits. What’s given to these sectors canbe deducted from their deposits, and thebanks will not have to maintain the CRR onit. The window of opportunity wouldremain active between the fortnight endedJanuary 31 and July 31.

The RBI will not buy bonds directly fromthe government to finance the deficit, thegovernor said. The government exercisedthe trigger clause in the Budget to adopt afiscal deficit of 3.8 per cent for the presentfiscal, instead of 3.3 per cent estimated ear-lier. However, the rules also allow the gov-ernment to tap the RBI to monetise itsdeficits by buying bonds and printing mon-ey. “At the moment there is no plan of mon-etising the government deficit,” Das said.

The central bank also rejigged how itinjected and absorbed liquidity in the bank-ing system and did away with the daily liq-uidity window in favour of liquidity infu-sion on a variable rate basis every 14 days.

However, if the banking system is shortof money, the RBI won’t hesitate to under-take its traditional tools of liquidity man-agement such as fixed and variable raterepo/reverse repo auctions, outright openmarket operations (OMOs), forex swaps andother instruments.

As part of the new framework, the cen-tral bank also introduced ultra-long termrepo operations (LTRO). These will be twoliquidity instruments that can be used by

banks to borrow money for one year andthree years at the existing repo rate.However, this instrument can be used toborrow up to ~1 trillion of liquidity only, indifferent sizes. RBI Deputy Governor N SVishwanathan said the idea was that banksshould not sit on cash. After the policy, thegovernment one-year bond yield fell 8 basispoints (bps), the three-year bond 19 bps,and the five-year bond 15 bps. The 10-yearbond yield fell 6 bps to 6.449 per cent fromits previous close. SBI Chairman RajnishKumar said the special CRR dispensation aswell as LTRO would bring down cost offunds for banks and “facilitate better trans-mission within the current constraints ofdownward rigidity of deposit rates”.

The RBI said it was satisfied with thetransmission so far. While the RBI loweredrates by 135 basis points between Februaryand December last year, transmission tovarious money and corporate debt marketsegments up to January 31 ranged from 146basis points (bps) to 190 bps. The 10-yeargovernment bond yields came down 76 bpsand banks’ MCLR came down between 55bps to 69 bps. While onion prices wouldmoderate going forward, pulses and proteinprices may go up, it said. RBI, therefore,revised its inflation projection to 5.4-5.0 percent for the first half of fiscal 2020-21 from4-3.8 per cent in December policy.

“The MPC will remain vigilant aboutthe potential generalisation of inflationarypressures as several of the underlying fac-tors cited earlier appear to be operating inconcert,” the RBI’s policy statement said.

The RBI also lowered the GDP growthforecasts for the first half of fiscal 2020-21 to5.5-6 per cent from 5.9-6.3 per cent in theearlier policy. “Looking ahead, the pick-upin GDP growth in 2020-21 is likely to be ledby private consumption, which should ben-efit from higher spending power on accountof the reduction in GST rates and income

tax rate reductions for middle-income slabs,” Das said in hisopening remarks.

Nirma arm...Manish Goenka, director, EmamiGroup, said the transaction was animportant step in the group’s stat-ed objective of becoming debt-free.

Aditya Agarwal, director,Emami Group, said with this deal,the promoters' pledged shareswould come down.

After adjusting for EmamiCement, the promoter-level debtwill approximately be ~600 crore.

The group has been trying var-ious options to pare its debt. InJune last year, the promoters hadsold 10 per cent of their stake inEmami for around ~1,230 crore topartially bring down the promoter-level debt. The debt then was~3,300 crore, which was broughtdown to about ~2,200 crore.

Agarwal said Emami Cementhad successfully established a verystrong brand equity in the marketfor its highest standards of opera-tion and high-quality products,which helped in getting a good val-ue. "We strongly believe thatNuvoco and the Nirma group will

continue from here and strengthen the busi-ness further,” he said.

With the completion of the acquisitionand the merger of the Nirma business inRajasthan, Nuvoco would become one ofthe leading cement players in the country,and specifically in the East. This will bringits total cement capacity in eastern, north-ern and western India to 23.5 mtpa (whichincludes the ongoing capacity expansionproject in its Jojobera plant) and over 60ready-mix plants. The transaction is subjectto customary approvals, including from theCompetition Commission, and is expectedto be consummated in the next 3-4 months.

DBS, Capri Global...LVB’s financials deteriorated to 5.56 percent capital adequacy and 21.25 per centgross NPA ratio in the September 2019 quar-ter. The bank has been suffering losses sinceFY18 and its market capitalisation has erod-ed by 83 per cent to ~482 crore since April 5,2019, when the deal with IndiabullsHousing was announced.

Another highly placed source said theinvestor’s name could be announced bythe end of FY20, and capital infused intoLVB immediately. “There are more loanlosses to be provided for and the bank needscapital to clean up its books,” a source said.

It is learnt that DBS Bank and CapriGlobal are in the fray only to acquire amajority stake in the bank.

In 2016, the RBI eased the ownershipnorms for private banks which permitted aforeign bank to acquire up to a 10 per centstake in an Indian private bank. "As in thecase of CSB Bank, we expect some dispen-sation to come through for DBS Bank India,"said another person closely associated withthe deal. Prem Watsa-promoted FairfaxIndia acquired a 51 per cent stake in CSBBank (Catholic Syrian Bank earlier) in 2018.

Modi...In the Rajya Sabha, the Congress and mostother opposition parties walked out toprotest the PM using an “unparliamentaryword” against them. Speaking in Hindi, thePM said the Opposition was indulging infalsehoods on the NPR issue. He said it wasunconstitutional for state governments topass resolutions against the CitizenshipAmendment Act (CAA) and the NPR.

While ignoring the Opposition’s initialprotests, Chairman M Venkaiah Naidu saidat the end of the PM’s speech that no unpar-liamentary word would go on the House’srecords. Leader of Opposition Ghulam NabiAzad said the PM was resorting to false-hoods to malign the Opposition on the CAAissue. He said no Opposition party wasagainst Hindus from Pakistan, Afghanistanand Bangladesh being given citizenship ofIndia. Congress MP Kumari Selja protestedagainst the PM using a casteist slur in thecontext of the Opposition and the CAA.

With voting for the Delhi Assemblypolls on Saturday, the PM spoke of his gov-ernment legalising the national capital’sunauthorised colonies and construct itsinfrastructure. On economy, the PM soughtthe opposition’s suggestions on how bestIndia can take advantage of the global eco-nomic situation.

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22 ECONOMY & PUBLIC AFFAIRS MUMBAI | FRIDAY, 7 FEBRUARY 2020 1>

SHREYA JAI


Around 50 per cent of the pop-ulation of Delhi have had sub-sidised electricity bills in the

current financial year, which is arecord of sorts.

Half the subsidised populationreceived zero electricity bills duringthe past five months. This is the highest number receiving subsidy inthe last five years of the Aam AadmiParty’s (AAP’s) governance in Delhi.

In 2014-15, the number of peopleavailing of subsidy was close to 2.5 million. In the current year, thenumber has doubled.

Since it came to power, AAP hasconsistently pushed for reduction inelectricity rates every year.

There were three consecutivereductions in energy charges by 50per cent every year during 2015-18.

In July this year, the DelhiElectricity Regulatory Commission(DERC) approved a new model ofsubsidy over and above the existingscheme. Under it, the fixed chargewas cut by more than half. The fixedcharge for up to 2 kilowatts (kW) wasdecreased to ~20 from ~125. For themore than 2 kW and less than 5 kWbracket, it was reduced to ~50 from~140. The fixed charge for the morethan 5 kW and less than 15 kW was

reduced to ~100 from ~175. The DERCalso gave 100 per cent subsidy to theconsumption bracket of 0-200 units.

An electricity bill comes with twocomponents — a fixed charge, whichremains the same every month, and

energy charge, which is calculated inaccordance with consumption.

As a result of this, the number ofpeople coming under the subsidy netalso doubled in the current financialyear alone. The highest number of

subsidised consumers was inDecember, touching 4.8 million.Delhi’s population is 19 million,according to the Census of 2011.

For low-consuming households,these decisions came as a boon. So

much so that during off-peakdemand months (October toDecember), an estimated 2 millionpeople got zero power bills. However,this did not ensure that low-incomehouseholds received the benefit.

Experts have said this is an ineffi-cient method of offering subsidy.Before the fixed charge reduction,the subsidy was in percentage but ithas now worsened with such a lowthreshold for availing of subsidy, saidRahul Tongia, Fellow, BrookingsIndia. “There are two problems withthis model. First, the threshold forsubsidy is very generous. So in someoff-peak months it covers close to 90per cent of consumers. This includesnot just lower- and middle-class con-sumers but the rich. The secondproblem is that it gives zero incen-tive to a consumer to save energy.”

AAP in its manifesto has declaredit will continue with the “pro-people”policies of 200 units of free electrici-ty if it comes to power after Saturday’spoll but the economics of it wouldplay up with rising demand. TheDelhi power demand peaked above7,000 Mw in July and December. Thiswas higher than that of Bihar,Jharkhand and Kerala. Unlike thesestates, Delhi has primarily urban consumers.

In the 2019-20 Budget, the Delhigovernment set aside ~1,720 crore for50 per cent subsidy in power bills. Itpassed a supplementary demand forgrants, including ~535 crore to coverthe additional subsidy announced inJuly. Industry executives estimate thecost of subsidy to be around ~2,250crore, which is likely to increase asconsumption goes up every year.

AAP’s power play: 50% received subsidy in FY20

AIIB plans to extend $3-billion loan to Andhra Pradesh The Asian InfrastructureInvestment Bank (AIIB) iswilling to extend $3 billionloan to Andhra Pradesh fordevelopment projects, itsrepresentatives said after ameeting with Chief Minister Y SJagan Mohan Reddy onThursday. The CM told the AIIBofficials his governmentplanned to utilise these fundsto construct ports in Srik-akulam and Krishna districts,respectively. BS REPORTER<

EC notice to UP CMover ‘biryani toterrorists’ remark

The ElectionCommission onThursday issueda show-causenotice to UttarPradesh Chief

Minister Yogi Adityanath forhis alleged 'biryani forterrorist' remarks. The pollpanel has asked him torespond to the notice before 5pm on Friday. Adityanath hadmade this remark during aspeech here on February 1. PTI<

UCO Bank reports~960-cr loss beforetax in third quarter

UCO Bank onThursdayreported aloss beforetax of ~960crore for Q3of FY20,

against loss before tax of ~1,018crore in the year-ago period.Gross non-performing assetsas a percentage of lendingstood at 19.45 per cent at theend of Q3FY20, against 27.39per cent in the year-agoperiod. BS REPORTER<

United Bank of Indiaposts pre-before taxof ~129 crore in Q3 United Bank of India onThursday reported a profitbefore tax of ~129 crore in Q3 ofFY20, against loss before tax of~1,585 crore in the year-agoperiod. The gross NPA as apercentage of lending stood at15.48 per cent, against 21.27 percent in the same period lastfinancial year. Net NPA stoodat 8.56 per cent, against 12.08per cent in the same periodlast fiscal year. BS REPORTER<

IL&FS gets ~707-cr claimaward for Fagne Songadh

The IL&FS group has receivedapprovals for a claim worth ~707crore, for its ILFS- Fagne SongadhExpressway project. With this, totalclaim approvals for the group nowstands at ~2,700 crore. "The NHAIConciliation Committee has approveda claim worth Rs 707 crore for the

expressway," said a person with direct knowledge of thedevelopment. The person added the approval was given coupleof weeks back. The Union ministry of road transport andhighways in March 2019 formulated a new set of guidelines forresolution of projects, which were incomplete or stalled forvarious reasons. The guidelines provided authorities to foreclosethe project's concession agreement and pay a compensationbased on value of work done or 90 per cent of debt due,whichever is lower. "The project claim has been resolved underthese guidelines," the person said. BS REPORTER<

IN BRIEF

Indians evacuatedfrom Wuhan testnegative for nCoVAGENCIES

New Delhi/ Beijing, 6 February

All 645 people evacuated fromChina’s Wuhan city, who werelodged at the quarantine facil-ities set up by the Army andIndo Tibetan Border Police(ITBP) in and around Delhi,have tested negative for coron-avirus, the Union health min-istry said on Thursday.

It said as of February 6,138,750 from 1,265 flights hadbeen screened for the nCoV ill-ness but no new case has beendetected. India has reportedthree confirmed cases fromKerala. Ten other Indians whowanted to return were unableto do so as they could not clearthe health screening, the external affairs ministry said.

India ‘can look into’evacuating PakistanisThe ministry also said Indiacan consider evacuatingPakistani students from thecoronavirus-hit Hubei province“if such a situation arises” andresources are available.

Death toll climbs to 564The Chinese mainland, so far,has seen 563 deaths because ofcoronavirus infection, and28,018 confirmed cases. In

addition, Hong Kong has had22 cases, including one death.

In Japan, 10 more people ona cruise ship off its coast havetested positive for the new coro-navirus, local media said, raising the number of infec-tions detected on the boat to20. Japanese authorities havetested 273 people among theapproximately 3,700 passen-gers and crew on the ship aftera man who got off the boat lastmonth in Hong Kong testedpositive for the new strain.

Whistle-blower doctor dead Also, the Chinese doctor, repri-manded by police after warn-ing colleagues about the diseaseemerging in Wuhan, has diedafter falling ill, said a personfamiliar with the matter.

China’s diplomatic protestsMeanwhile, China has lodgeddiplomatic protests with coun-tries whose airlines have can-celled flights to its cities allegingthat they are spreading panic inthe wake of deadly coronavirus.Several international airlines,including Air India and IndiGo,have cancelled flights to Chinaover fears of the virus spreadingacross the world, a move whichBeijing described against theWHO guidelines.

Patients at a temporary hospital in Wuhan. China on Thursdayfinished building a second hospital to isolate and treat patients of coronavirus in the city PHOTO: AP/PTI

ED identifies ~3K-cr assetsof Wadhawan in DHFL caseSHRIMI CHOUDHARY


The Enforcement Directorate (ED) has identified about 20 assets worth ~3,000 crorebelonging to Dewan Housing Finance(DHFL) promoter Kapil Wadhawan in Indiaand abroad. It is assessing these propertiesfor possible attachment in a few weeks.

The assets include a 12,000 square footparcel of land in Melbourne, Australia,worth around ~1,000 crore; a villa inKoshamui in Thailand worth ~50 crore; flatsand offices in the UK and US.

There are several properties in India aswell — including four flats in Khar,Mumbai, valued at ~125 crore, and a restau-rant valued at ~30 crore in the same area; aflat at Pali Hills and a villa in Juhu, mort-gaged by a housing finance firm worth ~10 crore and ~15 crore, respectively; 570 unsold flats in Kurla worth ~1,000crore; and the Dreams The Mall inBhandup worth ~150 crore.

During questioning, ED found thatDHFL rigged its share prices on manyoccasions with the help of some dummyfirms. The firm sanctioned loan to somefront entities on paper, which later bought

the company shares in bulk, to rig theshare price, a source said. ED may seekmarket regulator assistance to understandthe rigging. Sources say that some direc-tors of these front entities are being ques-tioned.

Meanwhile, the probe agency is believedto be examining some private sector banks’exposure in DHFL firms as it suspects thelatter’s promoters were involved in somedeals to get rid of bank loans.

The ongoing investigation has foundthat DHFL diverted ~12,773 crore worth ofloans to 79 shadow companies, allegedlyassociated with its promoters, in the garb ofretail loans to about 100,000 fictitious cus-tomers between 2010 and 2015.

Former chairman and managing direc-tor Kapil Wadhawan has been in ED cus-tody in connection with a money launder-ing probe involving gangster Iqbal Memonalias Iqbal Mirchi. ED is trying to identifymore such assets allegedly created out ofproceeds of crime.

DELHIITES GETTING SUBSIDY(million)

Data pertains to three private power distributioncompanies of Delhi — Tata Power Delhi DistributionCompany, BSES Yamuna Power, and BSES Rajdhani Power

Source: Discoms

Sept ‘19 Oct ‘19 Nov ‘19 Dec ’19 Jan ‘20

3.28

3.934.52

4.79 3.76

Saudi Arabia evaluates Kalyani Group’s artillery gunsAJAI SHUKLA

Lucknow, 6 February

The Pune-based Kalyani Group, whichhas made a major foray into the field ofartillery gun systems, has made strongpitching for supplying these heavyweapons to the Saudi Arabian military.

It has been learnt that two types ofgun systems — both designed anddeveloped by Kalyani Group — arebeing sent later this year to Saudi Arabiafor trial evaluation by the Royal SaudiArmy in the forbidding Arabian desert.

The guns include the Bharat 52, a 155mm, 52 calibre towed howitzer — thefirst gun that Kalyani Group produced.Saudi Arabia will also evaluate theGaruda V2, a 105 mm gun mounted on alight vehicle chassis for added mobility.

Saudi Arabia, so far, has notexpressed interest in the flagshipartillery gun that Kalyani Group isworking on: The Advanced TowedArtillery Gun System (ATAGS). Thisfuturistic Defence Research andDevelopment Organisation (DRDO)-designed gun is being built by twoprivate firms in parallel — KalyaniGroup and Tata Advanced Systems(TASL). Kalyani Group, by virtue of itsorganic skills in metal castings andforgings, is playing the larger role,including producing barrels for its own,as well as TASL’s gun.

Baba Kalyani, chief of KalyaniGroup, makes no secret of his intentionto sink whatever money it takes fordominating the artillery gunproduction in India. In this, his flagshipcompany — Bharat Forge, the world’slargest producer of forgings andcastings — will play a leading role.

“Kalyani Group is well along inmastering gun production. We are theequal of the world’s top two-three firmsin artillery systems,” Kalyani said.

Kalyani praised the government’sinitiative to boost defence exports,which have already multiplied over thelast two years, to a total of ~10,700 crore.The Defence Production Policy of 2018has set an annual defence exports targetof $5 billion by 2024. “Real efforts inexport promotion started five-six yearsago and to be fair to the system, we havemade significant headway. We had aconference about six months ago onways to boost exports. That wasattended by India’s military attachesposted in embassies abroad. Now, theyare at the front end of export promotionin the countries to which they areposted,” said Kalyani.

The hard-driving Kalyani Groupchief is launching the development ofnew guns without waiting for the

ministry of defence's orders. After theArmy launched a programme toprocure 145 ultralight howitzers fromthe international market — a $700million contract that BAE Systemseventually won with its M777 gunsystem — Kalyani Group hasunilaterally designed and built twodifferent ultralight howitzers, which itintends to offer the Army. “We areoffering the guns suo moto, under the“Make-2” category,” said Kalyani. Underthis procurement category, companiescan offer the MoD defence productsthey have developed at their own cost.

Of these ultralight howitzers, one is a155 mm, 39-calibre titanium gun thatweighs a mere 4.8 tonnes. KalyaniGroup has dubbed it mountain artillerygun Titanium (MArG-T). Its rangematches the BAE Systems M777 gun,with conventional ammunition fired toa range of 25 km.

The other gun is a larger, cheaper, all-

steel 155 mm, 52 calibre gun that weighs7.8 tonnes and fires conventionalammunition to a range of 30 km. “TheArmy can choose what it wants: Lessweight and higher cost; or more weightand lower cost. We are offering bothoptions,” said a Kalyani engineer.

Kalyani said: “Both these guns aretruly indigenous, having been designedby our R&D centre in Pune. WhileBharat Forge’s metalworking skills areacknowledged worldwide, our PuneR&D centre develops the command andcontrol systems, central computers, andautomation that go into gun systems.”

Kalyani Group’s growing skillsprovide the military with options itcould earlier only dream of. InDecember 2018, with the China-Indiaborder roiled by the recent Doklamconfrontation, the then Army chief,General Bipin Rawat, visited KalyaniGroup and asked whether it could builda truck-mounted 155 mm, 39 calibre gunthat could move around on the narrowroads of northern Sikkim. The gun thatthe Group developed in response is ondisplay at Defexpo. Based on a 4x4vehicle produced by Bharat EarthMovers, the “Go Anywhere Vehicle”offers unparalleled mobility. It is goinginto firing trials after DefExpo 2020.

Kalyani Group has a growingrelationship with BAE Systems andpurchased the British company’s barrelproduction unit located in the UK. Thisfacility has been physically relocatedfrom the UK to Pune. For any futureartillery order BAE Systems gets fromthe international market —including apossible follow-on order from India formore M777 ultralight howitzers — it islikely to source barrels from the group.

AJAI SHUKLA

Lucknow, 6 February

The British minister for defence procurement,James Heappey, has affirmed the UK’s eager-ness to assist the Indian Navy with designingand building its second indigenous aircraftcarrier, INS Vishal.

Asked whether the UK had offered carrierdesign cooperation at the political level,Heappey affirmed: “Very much so! At the veryhighest level.” Cooperation on aircraft carrierdesign was also discussed on November 28 inan India-UK meeting in New Delhi.

Terming aircraft carrier design “the mosttotemic” of UK-India cooperation opportuni-ties, Heappey told Business Standard: “TheRoyal Navy has world-beating electricalpropulsion and operational experience ofmanaging electrical propulsion. That is a realopportunity to develop capability and under-standing together.”

The Indian Navy wants INS Vishal to be a65,000-tonne carrier with an all-electricpropulsion system — both features that arecommon with the Royal Navy’s two new air-craft carriers: Her Majesty’s Ship (HMS) QueenElizabeth and HMS Prince of Wales.

For several years, New Delhi has sought todesign INS Vishal in partnership with the USNavy, the world’s pre-eminent builder andoperator of aircraft carriers. The US operates 11of the world’s 21 carriers and, by far, the mostpotent ones.

Towards this end, the Indian and Americannavies established a joint working group (JWG)

on aircraft carrier cooperation in January 2015.India was considering a nuclear-powered car-rier like the American vessels. It is also planninga state-of-the-art American “electromagneticaircraft launch system (EMALS)" that canlaunch not just fighter aircraft, but also thegame-changing E2D Hawkeye airborne earlywarning (AEW) aircraft.

However, with nuclear propulsion ruledout because India does not have a suitablenuclear reactor, and severe budget con-straints casting a shadow over the EMALS,INS Vishal is increasingly looking like theBritish carriers.

But one feature that is being considered forINS Vishal would differentiate it from Britishcarriers. Both HMS Queen Elizabeth and HMSPrince of Wales incorporate “short take-off butvertical landing” (STOVL) systems to operatetheir aircraft. Their on-board F-35B fighterstake off from a ski-jump and land back by hov-ering like a helicopter and lowering itself ontothe deck.

In contrast, fighters on INS Vishal wouldtake off with the help of a catapult and land bysnagging their tail hooks on arrester wires laidacross the deck, which then unspool, drag-ging the fighter to a halt. This is called “cata-pult assisted takeoff but arrested landing(CATOBAR)”.

Heappey argued India does not need toincur the expense of catapult launch systems.Meanwhile, the British carriers are being fittedwith arrestor wires.

More on business-standard.com

UK eager to help Indiadesign aircraft carrier

DHFL promoter’s assets include a ~1,000-crore 12,000 sq ft parcel of land inAustralia, a ~50-crore villa in Thailand,and flats and offices in the UK and US

SOHINI DAS

Mumbai, 6 February

In the wake of the debatearound unethical marketingpractices allegedly adopted bypharmaceutical companies, theDepartment of Pharmaceuticals(DoP) has sent a directive toleading pharma associations inIndia to ensure that their mem-bers adhere to the UniformCode for PharmaceuticalMarketing Practices (UCPMP).

The DoP has said it hasreceived grievances that firmsorganise five-star hotel accom-modation, local sightseeing, etc,in conferences that are con-ducted by doctors. It has, thus,requested associations to ensurethat companies adhere to theUCPMP and that no “unethical”promotion of products is done

during such conferences. Theletter has been sent to leadingindustry bodies.

The DoP drafted the UCPMPhas been voluntarily followedby drug firms since 2015.However, the code is notmandatory and thereis no legislationthat lays downnorms for mar-keting practices.

IndianPharmaceuticalAlliance (IPA),which represents bigdomestic pharmaceuticalfirms, said it has asked all itsmembers to abide by theUCPMP. Sudarshan Jain, IPAsecretary general, said members(24 companies) wanted the gov-ernment to make the codemandatory. “We only support

science-driven activities andnothing else,” he said.

He, however, said there werearound 10,000 pharma firms inIndia and unless the code wasmade mandatory, it wouldn’t be

possible to ensure that allfirms stick to it.

Meanwhile, theOrganisation ofPharmaceuticalProducers of India,which represents

multinational drugfirms in India, said it

had a procedure toensure that members stick to

ethical practices. A Vaidheesh,OPPI president and managingdirector of GSK India, said OPPImembers (25 firms) were signa-tories to the InternationalFederation of PharmaceuticalManufacturers and

Associations (IFPMA)’s code.Vaidheesh said the code was

very stringent. “Every compa-ny has compliance officers.Besides, if we get any complaintabout any of our members notfollowing the code, OPPI takes itup immediately. There is a five-member committee that meetsto discuss the issue and there isalso an appeal process,”Vaidheesh said. There are levelsof disciplinary matrix, he said.

IFPMA code mandates atotal ban on gifts, promotionalitems for prescription drugs.

Vaidheesh felt a quasi judi-cial panel on the lines of theAdvertising Standards Councilof India should be formed tooversee the matter. It could haveeminent personalities, includ-ing retired judges, apart fromindustry representatives.

Govt asks pharma groups to ensurecompanies follow ethical practices

Defence Minister Rajnath Singh chairs the first India-Africa Defence MinistersConclave 2020 on the sidelines of DefExpo 2020 in Lucknow on Thursday PHOTO: PTI

Subsidy grant rises with increasing demand,net population availing free power in Delhi

24 MUMBAI | FRIDAY, 7 FEBRUARY 2020 1>

Trump is acquittedAP/PTI

Washington, 6 February

US President DonaldTrump launched apost-impeachment vic-

tory lap on Thursday, brandish-ing a newspaper with the giantheadline “ACQUITTAL” on tele-vision, ahead of a White Houseaddress on his “terrible ordeal.”Cleared in the Senate of abusinghis office and obstructingCongress, Trump now hopes toseize the momentum to pushhis reelection campaign againsta divided Democratic party.

He began early with anappearance at the annualNational Prayer Breakfast, amulti-faith gathering forWashington power brokers,business leaders and, especially,conservative evangelicals.

The theme of the breakfastwas “love your enemy.” Butfrom the moment he entered tothe strains of “Hail to the Chief,”Trump made his feelings clearby holding up a copy of USATodaywith the banner headlinereporting his victory — with abroad grin on his face.

Then, in a tired, raspy voice,Trump indicated he was in nomood for forgiveness, sayinghe’d been “put through a terribleordeal by some very dishonestand corrupt people.” “They havedone everything possible todestroy us and by so doing verybadly hurt our nation,” he said.

Trump noted that he wouldbe giving a statement at theWhite House later and said he’ddiscuss his determination thatwhat happened during theimpeachment cannot beallowed to “go on.” He alsoappeared to rip into Democratic

leader Nancy Pelosi, who asspeaker of the House led hisimpeachment, and MittRomney, the lone Republicansenator to support the charges.

“I don’t like people who usetheir faith as justification fordoing what they know is wrong,”he said in a clear reference toRomney, a devout Mormon whocited his faith as a reason forbreaking ranks with Trump.

“Nor do I like people who say‘I pray for you’ when they knowthat’s not so,” he added in a jab atPelosi, who has often spoken ofpraying for Trump, and who wasseated an arm’s length away.

Right before Trump spoke,Harvard professor ArthurPatterson called on the audi-ence to address the “contemptand polarization that is tearingour societies apart.” Trump wasimpeached in the Democratic-led House last December overhis attempts to push Ukraineinto opening what would havebeen a politically damaging cor-

ruption probe into election rivalJoe Biden.

But the Senate, whereTrump’s Republicans hold amajority, cleared himWednesday in a party line voteillustrating the divisions run-ning through the country aheadof the November polls.

Even though several con-ceded Trump’s behaviour waswrong, Republicans ultimate-ly stayed loyal, voting to clearthe president of charges ofabuse of power, by 52 to 48, andof obstruction of Congress, by53 to 47 — far from the two-thirds supermajority requiredfor conviction.

Romney, a longtime Trumpfoe, risked White House wrathto vote alongside Democrats onthe first count, saying Trumpwas “guilty of an appallingabuse of public trust.” He votednot guilty on the second charge.

Trump’s impeachment andtrial will leave a permanent stainon his record, as it did for the

only two presidents to haveencountered the same fate,Andrew Johnson in 1868 andBill Clinton in 1998.

While the White Houseimmediately declared thatTrump had obtained “full vin-dication and exoneration,”Pelosi warned that by clearingTrump Republicans had “nor-malized lawlessness.” “Therecan be no acquittal without atrial, and there is no trial with-out witnesses, documents andevidence,” said the topDemocrat in Congress — who aday earlier ripped up her copy ofTrump’s State of the Unionaddress on live television.

“Sadly, because of theRepublican Senate’s betrayal ofthe Constitution, the presidentremains an ongoing threat.” Butas he wound down the Senateproceedings, Republican major-ity leader Mitch McConnell said he was confident impeach-ment would ultimately damagethe Democrats.

China to halvetariffs on $75-bnAmerican goodsBLOOMBERG

Beijing, 6 February

China will halve tariffs on some$75 billion of imports from theUS later this month, recipro-cating a US action and likelysatisfying part of the interimtrade deal.

The cut will be effectivefrom 1.01 pm. on February 14in Beijing, according to aMinistry of Finance statementon Thursday, the same time aswhen the US will implementreductions in tariffson Chinese products.Punitive Chineseduties on Americangoods that wereadopted fromSeptember 1 last yearwill be lowered, withthe rate on somedropping to 5 per centfrom 10 per cent, and the othersto 2.5 per cent from 5 per cent.

Both nations agreed to cuttariffs on each others’ goods aspart of the phase-one deal sign-ed last month. Even with theworld’s two biggest economiespausing their trade war, dutiesremain on large parts of theirbilateral trade.

The ongoing coronavirusthat has claimed more than500 lives in China and sickenedthousands is raising concernsthat the Asian nation mighthave to cancel orders if the sit-uation worsens.

China National Offshore Oiltold some suppliers it won’ttake delivery of liquefied natu-ral gas cargoes it has agreed to,invoking what’s called forcemajeure to get out of the con-tracts. The January 15 deal has

a clause that states the US andChina will consult “in the eventthat a natural disaster or otherunforeseeable event” delayseither from complying.Chinese officials are hoping theUS will agree to some flexibili-ty on pledges in their phase-one trade deal, people familiarwith the situation said, thoughit is unclear if such a requesthas been formally raised.

The US is monitoring devel-opments on the virus carefullyand will have “a much better

idea over the next twoweeks,” TreasurySecretary StevenMnuchin saidThursday on FoxBusiness Network.“Based on currentinformation, I don’texpect there will beany issues in them

fulfilling their commitments.”Other retaliatory tariffs

China has imposed on USgoods will remain, accordingto the statement. In the mean-time, the Asian nation will con-tinue processing applicationsfor tariff exemptions, it said.

“We don’t see any impactfrom this tariff cut — themeasures are in line with whatthe US side is doing,” said LiQiang, head of Shanghai JCIntelligence While China willcontinue to process waiverson farm product imports, itwon’t remove its punitive tar-iffs if the US maintains itsduties, he said.

The yuan extended gainsafter news of the tariff reduc-tion, with the offshore rateadvancing as much as 0.3 percent to 6.9573 per dollar.

“IT WAS EVIL, IT WAS CORRUPT, ITWAS DIRTYCOPS, IT WAS LEAKERSAND LIARS”

Donald Trump, US PresidentDonald Trump, US President

REUTERS

Washington, 6 February

In a first-of-its-kind approvalby US. regulators, a federalagency on Thursday gave per-mission for autonomousvehicle startup Nuro Inc overthe next two years to deployup to 5,000 low-speed electricdelivery vehicles withouthuman controls like mirrorsand steering wheels.

The rollout of the R2 vehi-cle will take place in Houston,with plans for it to deliveritems like pizza and groceries.It is about half the width of aregular car, has no steeringwheel or seating positions andboasts gull-wing cargo doorsreminiscent of the time-trav-eling car in the Back to theFuture films.

Nuro, a privately heldrobotics company based inMountain View, California,said it will begin public roadtesting to prepare deliveriesin Houston in the comingweeks. Nuro called the regu-latory approval by theNational Highway TrafficSafety Administration “a mile-stone for the industry”.Americans “waste a lot of timerunning errands,” Nuro said,adding it envisions “a futurewhere everything comes toyou, on-demand, for free.”

The agency’s approval ofNuro’s petition will allow thefirm to deploy the R2, a vehicledesigned to have no humanoccupants and operate exclu-sively with an automated driv-ing system, as part of a deliv-ery service for restaurants,grocery stores and others.

RECORD-SETTING ASTRONAUT RETURNS TO EARTH

Nasa’s Christina Koch reacts after landing safely on Earth after shattering the spaceflightrecord for female astronauts with a stay of 328 days aboard the International Space Station.The Soyuz capsule carrying Koch parachuted down to the grasslands of Kazakhstan ataround 2:42 pm IST. Her stay was 12 days short of the all-time US record set by Scott Kelly

US tariffreduction inChina phaseone to Takeeffect fromFebruary 14

Pizza-totingrobots: US nodto driverlessdeliveryvehicles

Documents

Over previous close; ## At 9 pm IST; RBI goes off …...Emami Cement for an enterprise value of ~5,500 crore. Emami Cement has a debt of ~2,000-2,200 crore and loans against shar es