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Be Part of Star FLOW - TheChange FestivalIndia’s only marketing festival — Star FLOW – The Change Festival — kicks off on Wednesday. Get ready for a deep dive into the ocean of marketing knowledge and learning…
INDIA’S ONLY MARKETING FESTIVAL KICKS OFF ON WED
VENUE: The Leela Ambience, GurgaonDATE: February 19 & 20, 2020
TO REGISTER: Visit www.flowfest.in
DISCUSSIONS AND CONVERSATIONSBrand Building vs Performance Marketing
Panellists: Tapan Singhel(MD & CEO, Bajaj Allianz GeneralInsurance), Hitesh Oberoi(Co-Promoter, MD and CEO at Info Edge India Ltd - Naukri/99acres/Shiksha/Jeevansathi), Rajeev Karwal (chairman of Milagrow Robots) and Shripad Nadkarni (founder chairman of Maverix Platforms)Moderator: Chandrasekar Radhakrishnan (vice president-strategy & insights, Coca-Cola India & South West Asia)
Sustainability and the Circular Economy
Panellists: Prabodha Acharya (chief sustainability officer, JSW Group), Ritesh Ghosal (chief of marketing and insights - Infiniti Retail, Croma) and Santosh Iyer (vice-president, sales & marketing, Mercedes-Benz India)
Moderator: Chandra Bhushan - CEO, International Forum for Environment, Sustainability & Technology (iFOREST)
What will take to succeed in a difficult economic scenario?
Panellists: Subodh Bhargava (independent director chairman at Tata Communications Ltd and Wartsila India Ltd), Girish Agarwaal (promoter director, Dainik Bhaskar Group & MD of DB Power Ltd) and Rohit Saran(managing editor of The Times of India)Lead Panellist: Hemant Malik (divisional chief executive, foods business, ITC Ltd)
How brands think about marketing on digital in Innovative ways
Panellists: Sunil Suresh (group chief marketing officer, MakeMyTrip Ltd), Meera Iyer (chief marketing officer at Medlife.com) and Praveen Sharma (senior vice president, ad business, Paytm)
Moderator: Shveta Singh (national head, Digital for Motivator, GroupM)
WORKSHOPS AND LEARNING EXPERIENCES
Neuroscience& Marketing
Persuasion in Marketing
By Dr. Elise Temple (vice president, Nielsen Consumer Neuroscience)
By Patrick Renvoise(co-founder & chief persuasion officer, SalesBrain)
Design Thinking and Customer ExperienceTransformation
By Ajay Aggarwal(Design Thinking - Practice Lead, KPMG India)
ParadigmShift of Rural Market
By Benjamin Mathew(partner, business strategy, MART)
Behavioural Science in Marketing
By Richard Shotton (author and behavioural science expert)
Blockchain in Marketing
By Jaspreet Bindra(entrepreneur, author, speaker, consultant at Digital Matters)
SOME UNMISSABLE SESSIONS AT STAR FLOW
How to manufacture desire
By Nir Eyal(bestselling author of ‘Hooked’ and ‘Indistractable’)
The new brand model – are you creating brands or consumers?
Simplicity delivers beyond-tech solutions
by Sonam Wangchuk(innovator education reformist & inspiration for the film ‘3 Idiots’)
By Marty Neumeier(author and leading expert on brand innovation)
The deadline for AGR payment looms large over not just telecom operators, but also ancillary players such as infraproviders. There’s some relief from ratings firms, though, which are not likely to term missed payments as ‘defaults’
may only be considered based on abroader sector outlook. Still, Voda-fone Idea is seen to be more vulne-rable for a rating cut, as its estima-ted cash balance of .̀ 12,000 crore isshort of meeting even immediatedebt obligations.
The joint venture between UK’s
Vodafone Group and India’s Adi-tya Birla Group has more than 1.26lakh crore of debt obligations.
DoT holds bank guarantees of anestimated `̀27,000-32,000 crore fromtelcos against their spectrum licen-ce fee, said a senior banker. If it deci-des to invoke the guarantees, banksthat have issued those will have topay the money on behalf of the tele-com companies. As per regulations,companies must then pay bankswithin 30 days. “Vodafone (Idea)may be most vulnerable to such a si-tuation while the rest two have mo-ney to pay,” said a market analyst.
While Bharti Airtel has funds rai-sed through capital market borro-wings to pay the arrears, Tata Tele-services is likely to have arrangedinternal or bank credit lines. Airteland Tata Teleservices are rated AAand AA-negative, respectively, witha stable outlook.
Licence Fee Default May Not Lead to Ratings CutAgencies CARE, Crisil, Icra, India Ratings to meet, review creditworthiness of stressed operators
reply till press time Sunday to ET'semails seeking comment. “The abili-ty to pay the government will likelyreflect what liquidity stress (the tel-cos are facing) in repaying other len-ders. Ratings companies will assessthat,” said one of the people.
Any revision on credit ratings
Mumbai: Ratings companies areunlikely to construe missing go-vernment payments by telecomcompanies as default for now, un-less Department of Telecommuni-cations (DoT) invokes the bank gua-rantees furnished by them, four pe-ople with the direct knowledge ofthe matter told ET.
Payment of licence fee is a “com-mercial obligation,” rather than a“financial obligation” where a de-fault would have warranted ratingcuts, they said. This could provideat least temporary relief for inves-tors of Vodafone Idea, Bharti Airteland Tata Teleservices.
Ratings companies CARE, Crisil,ICRA and India Ratings are meetingthis week to review the creditworthi-ness of telcos. Ratings firms did not
12�THE ECONOMIC TIMES | MUMBAI | MONDAY | 17 FEBRUARY 2020 | WWW.ECONOMICTIMES.COMCompanies: Pursuit of Profit
Question MarkThe Supreme Court ruling is a big blow to the struggling Vodafone Idea
COLLATERAL
CONSEQUENCES
`
`
`
MERGER
Vodafone
India and Idea
Cellular
merged August 31, ’18
VODAFONE IDEA’S TAKETelco assessing what it can pay to DoT, will pay in next few days, but
says risk to viability remains in absence of relief on AGR dues
Promoters infused `17,920 cr into company via `25,000-cr rights issue in May 2019
Market cap at time
of merger was `43,000 cr, largest telco by revenue, user market share
Promoters
are Vodafone Group & Aditya Birla Group
Posted `6,439 cr loss in Q3
`50,921.9 crloss in Q2, highest ever in corporate India
Hurt mainly by loss
of users, costs and provisions for AGR dues
HIGH LOSSES
`1,90,000 crequity investments by promoters less than `10,500 crore now
Market cap at Friday close:
`9,884 cr now no. 3 by revenue market share, lost nearly 120 m users since merger
VALUE EROSION
Company has
11,705employees
Employs
1,00,000 indirectly
`24,000 cr debt from banks and bond holders
Company owes over
`90,000 crto telecom dept
Gear makers Huawei, Ericsson, Nokia, ZTE also face costs
Tower cos such as Bharti Infratel, Indus Towers, ATC will feel the impact
For Vodafone IdeaVendors, .̀ 4,000crDues Are At Stake VIL’s collapse will meanend of road for somegear makers as sector’sneeds will shrink
structure, given that Jio is buil-ding its own towers and Airtel pri-marily has tenancies with BhartiInfratel and Indus,” ex-Bharti Air-tel CEO Sanjay Kapoor told ET.
Analysts said global network ven-dors will face bigger business con-tinuity risks and be forced to revi-ew their India plans if the telecommarket becomes a duopoly. SinceJio buys gear only from Samsung,future business and revenue stre-ams of the remaining four vendorscould be at a risk if solely depen-dent on Bharti Airtel. Kapoor saidthe vendors space would see conso-lidation in India as there won't beroom for five global network gearsuppliers in a two-telco market.
Rajiv Sharma, research head atSBICap Securities, backed this vi-ew, saying it may be “too complexfor Airtel to work with four diffe-rent vendors — Nokia, Ericsson,Huawei and ZTE – which could de-finitely reduce the business casefor some suppliers, driving them toshrink their India operations.”
Experts said VIL’s survival is un-likely unless there is fresh equityinfusion from co-promoters as thechances of any relief.
Kolkata: Vodafone Idea’s networkvendors could face challenges inrecovering nearly .̀ 4,000 crore($550 million) in dues if the loss-making telco fails to survive theadjusted gross revenue (AGR)shock and is forced to shut, ana-lysts and industry executives said.
They added that such a scenariocould even drive some top gear ma-kers to scale down or shut Indiaoperations as there wouldn’t be ro-om for five global vendors if thesector consolidates down to a pri-vate duopoly comprising BhartiAirtel and Reliance Jio Infocomm.
Chinese vendors Huawei andZTE may find it harder to get theirmoney back as it’s not backed byletters of credit (LCs). Money owedto European vendors Nokia andEricsson is backed by LCs, whichmeans they have a stronger chanceof recovering some, if VIL files forbankruptcy by moving the NCLT, aperson with knowledge of the mat-ter told ET. VIL owes over $300 mil-lion to Huawei and ZTE and aro-und $240 million collectively to No-kia and Ericsson.
An LC is a letter from a bank gua-ranteeing an equipment buyer’spayment to a vendor will be met. Ifthe buyer is unable to make a pay-ment, the bank will have to cover it.
Industry experts said any poten-tial VIL shutdown could also joltthe India operations of tower com-panies such as US-based AmericanTower Corp. (ATC), which boughtthe struggling telco’s 20,000-oddstandalone towers for over $1 bil-lion a few years ago.
“If VIL files for bankruptcy, thestandalone towers that ATC acqui-red from it for .̀ 7,850 crore could be-come a collateral damage that itmay have to write down going for-ward as the US tower company wo-uld have a tough time finding newtenants in a duopoly industry
TELECOMTRIALS
`̀4,500 crore from the sale of itsstake in the Bharti Infratel-In-dus Towers merged entity. Butthat depends on when the mer-ger will close, with the deal al-ready delayed pending govern-ment clearances. It also hopesto sell its optic fibre and datacentres but those deals may ta-ke a while to close as well.
The telcos have come under in-creasing pressure to pay theirdues urgently after the Supre-me Court on Friday rappedthem and the government fornon-payment by the January 23deadline. The court threatenedthe telcos with contempt procee-dings and personal appearanceof their top executives unlessdues were paid by the next hea-ring, which is set for March 17.This prompted Bharti Airtel tosay it would be paying `̀10,000crore by February 20 and the ba-lance--as per its own assessment— by March 16.
Vodafone Idea said it was as-sessing what it could pay aspart of its dues and plans to doso in the next few days. Howe-ver, in the same statement, thecompany once again warned ofthe continuing threat to its via-bility in the absence of judicialrelief in the dues.
On Friday, Vodafone Idea cha-irman Kumar Mangalam Birlamet telecom minister RaviShankar Prasad to discuss thesituation. The telco has beenhighlighting the negative im-pact on the telecom ecosystemand the jobs that will be lost iftelco is forced to shut.
Airtel, Vodafone idea and TataTeleservices have been trying toget relief from the Supreme Co-urt on the latter’s verdict of Oc-tober 24 that widened the defini-tion of AGR to include non-coreitems. This left 15 telcos facing`̀1.47 lakh crore in dues, withAirtel, Vodafone Idea and TataTeleservices the worst hit.
DoT to Decide onNext Step Today ��From Page 1
Lower principal will lead to areduction in interest and pe-nalties. Of the DoT estimateddues of more than ̀̀ 89,000 crorefor the two telcos, interest andpenalties account for 75%.
“This (the self-assessment) it-self is a very tedious process —it requires the companies toopen their records in a circle-wi-se manner for the last 16 yearsand add those items, the penaltyand interest thereof and so on,”said a telecom executive.
DoT may issue fresh noticesfor the balance dues if the tel-cos' estimates don't match the-ir own, or take other actionagainst them for not paying upon time, officials said. The co-urse of action will be decidedon Monday since the telcoshadn’t paid by the Friday mid-night deadline some of the cir-cle offices had set. Some othercircle offices had sought 'im-mediate' payment. Under therules, DoT can encash bank gu-arantees submitted by telcosfor unpaid dues and can evencancel licences as a final step.
Vodafone Idea and Bharti Air-tel didn’t respond to queries.Airtel sources said that the tel-co's self-assessment shows thedues to be “significantly lo-wer” than DoT's estimates.
Bharti Airtel has already rai-sed more than $3 billion thro-ugh a private placement of sha-res and an overseas bond issueto meet its AGR obligations.
Vodafone Idea can use `̀2,826from its ̀̀ 25,000 crore rights is-sue proceeds for AGR pay-ments. In addition, the compa-ny can call upon Vodafone UKto cough up `̀8,000 crore to-wards payment of AGR dues.The telco’s books show cashand cash equivalents of `̀23,114crore as of December 2019.
The telco also expects about
der the reverse-charge mech-anism. This means compa-nies cannot retrieve the costfrom consumers and cannotavail credit to offset it.
“Prior to introduction ofGST, service tax was payableunder reverse-charge mech-anism on such charges bytelecom companies,” saidRajat Bose, partner at lawfirm Shardul AmarchandMangaldas. “The levy of ser-vice tax at the rate of 15% on
AGR dues will bea cost outgo fortelcos since theymay not be eligi-ble to avail cenvat
credit of such service tax.”Carriers including Bharti
Airtel and Vodafone Idea,along with Tata Teleservic-es, Telenor, Aircel and Re-liance Communications,have to pay `̀1.47 lakh croreto the government at theearliest, after the SupremeCourt came down heavilyon the companies for notpaying by the deadline ithad imposed.
Notices Also to Cos Another official added thattax demand notices are alsobeing sent to carriers thathave shut and undergoinginsolvency.
The carriers confirmedthe development and saidthat they were seeking legaladvice on the next steps.
“Operators have receivednotices for service tax andGST on AGR,” said RajanMathews, director generalof the Cellular OperatorsAssociation of India(COAI), which representsall carriers including Bhar-ti Airtel, Vodafone Idea, Re-liance Jio Infocomm andothers.
“We are checking withcompetent counsel regard-ing service tax payments forprior years because it is notclear how these will be off-set under GST.”
Lawyers aware of the devel-opment however said that thetax payments are likely to becost outgo for the carriers un-
��From Page 1
Investors In a Spot��From Page 1
The Finance Bill proposesto remove DDT at the rate of15% at the level of the com-pany, making it taxable inthe hands of the recipient atthe applicable rate. Section10(23FD) of the Income-TaxAct, 1961, which earlier ex-empted dividend income re-ceived by a unit holder froma business trust, is also be-ing proposed to be amen-ded. Hence, dividend inco-mes received by unit hol-ders from business trustswill also be taxed in thehands of unit holders.
InvITs and REITs, unlikecompanies, are structured asbusiness trusts and are the-refore bound by law to distri-bute 90% of their cash flows.This puts them and their in-vestors in a spot, especiallyas the change comes after theframework for InvITs andREITs was rolled out and ha-ve begun to generate interestafter much effort. A numberof private equity and sovere-ign wealth funds have inves-ted in these instruments.The dividends will be taxedas income in their hands andtaxed at their marginal inco-me tax rate going up to 30%.
Experts said the taxationregime on REITs and InvITshad reached some level ofmaturity and acceptance af-
ter multiple rounds of deli-beration over the years andtherefore should be left un-changed.
“It is imperative that sta-tus quo is maintained on thesame to ensure investmentsflow into these, as numberof such investments/struc-tures are at different stagesof implementation, basedon the current understan-ding of the taxation sy-stem,” said Vikas Vasal, na-tional leader, tax, GrantThornton in India.
Vasal pointed that the go-vernment is also looking atusing these vehicles to mone-tise infrastructure assetsand said that the recent bud-get proposals should be loo-ked at from the investors’perspective.
InvITs and REITs were in-troduced in 2014 but they on-ly took off in 2017 after seve-ral tweaks were made follo-wing multiple stakeholderconsultations.
Also consistent with theglobal framework, they wereprovided a single level of tax-ation. Nearly $3.6 billion hasalready come through the ro-ute and another $5 billion ofInvIT transactions have alre-ady been announced. Theseflows are also crucial to thegovernment financing its`̀103 lakh crore investmentprogramme.
Telcos Likely to Pay Dues TodayNEW DELHI Airtel,Vodafone Idea andTata Teleservicesare likely to make
payment for adjusted grossrevenue (AGR) dues on Mondayto avoid stringent punitiveaction from the telecom depart-ment, according to an official
source. The three have informedDoT they will make only partialpayment, as per their represen-tatives. “Airtel, Vodafone Ideaand Tata Teleservices have saidthat they will make payments onMonday. DoT will take actionafter evaluating the amountpaid,” said an official. — PTI
CCI NG 3.7 Product: ETMumbaiBS PubDate: 17-02-2020 Zone: MumbaiCity Edition: 1 Page: ETMCMP12 User: sandesh.pingale Time: 02-17-2020 00:03 Color: CMYK
CDKiri Industries Limitedr ru,ee C . ....
(CIN-L24231 GJ1998PLC034094)Reg.Off: 7th Floor, Hasubhai Chambers , Opp. Town Hall , Ellisbridge , Ahmedabad - 380 006
Phone No. (0) 079-26574371/72/73 , (F) 079-26574374 , Email: info@kiriindustrie s.com website: www.kiriindustries ,comOperational Hlahllahts of the Quarter1 For th e q uarter end ed Decem ber 31 , 2019 , D ySta r tu r ne d i n a rob ust set of num bers , with PAT of USD 42 . 10 Mio. Ki ri holds 37 , 57% stake in Dystar,2 Kid has already won the minority oppression suit filed against Senda . Senda has been ordered by Hon ' ble Si ngapore Internat i onal Commerc i al Court ,
to buy out Kir i' s stake in DyStar. The hearings to determine valuation of Ki r i ' s stake in DyStar , are expected to commence by end-February, 2020 ,3 The standalone performance of Kid was affected by general low prices of the products.4 Despite this , th e company has mana ged to i mp rove i ts stan dalone EBIFDA mar gi n to 10 , 52% from 10.14% from the previous quarter.5 The Decem ber q uarter is a seasonally slow q uarter for th e bus i ness on account of annual mai ntenance of plant an d shorter Busi ness season on
account of holidays.6 Consolidated numbers have been encouraging with Lonsen Kid delivering decent performance.DyStar Results :
DyStar, the world's largest dyes company in which KIL owns 37.57% stake, continues to improve its global strength and product portfolio resultingin sustained per formance and profitability. For the quarter under review the DyStar has clocked revenue of US$ 228.30 Mio and Profit of USS42 , 10 Mio.
(US$ im Mn.)
Quarter ended Quarter ended Quarter endedParticulars 31.122019 30.09.2019 30.06.2019
Unaudited Unaudited UnauditedRevenue 228.30 246.80 298.70EBIT 11.80 38,00 33.70Profit After Tax 42.10 30,40 (10.27)
Unaudited Consolidated financial ti i i quarter ended Decernber 31, 2019(Rs. in lakhs)
QuarterSr. Particulars Unaudited UnauditedNo.
31.12.2019 31.12.2018
1 Income from operations(a) Revenue from Operations 31,511 , 28 30,177,36(b) Other Income 192 .68 19.19Total income from operations 31,703.96 30,196.55
2 Expenses(a) Cost of materials consumed 17,668.32 20,580.57(b) Purchase of stock-in-trade 1,477.15 1,866.45(c) Changes in the Inventories of finished goods, work- in- progress and 769,27 (2, 717.08)
stock- in trade(d) Employee benefits expense 1,256.69 1,204 ,85(e) other expenses (Manufa ctruing exenses (like power & fuel , labour charges), 6,174.41 4,865.21
Administrative expenses and Selling and Distribution expenses)Total Expenses 27,345.84 25,800.00
3 EBIDTA (1-2) 4,358.12 4,396.554 Depreciation and amortisation expenses 1 ,116.25 987,605 Finance costs 99,85 139.066 Profit Before Tax (3-4-5) 3,142.02 3,269.897 Tax expense 731 ,02 595,198 Profit after tax (6-7) 2,411 ,00 2 ,674 .709 Share of Profit of Associates 11,272 , 75 (3, 539.96 )10 Total Comprehensive income after minority interest and share of profit of 13,683.75 (865.26)
associates (8+9)By Kid Industries Ltd.
Sd/-Date: February 14, 2020 Manish KiriPlace: Ahmedabad This is Non Statutory Release Managing Director
