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Monday, September 27, 2021

Sebi may let PE firms own Lenders tie up with fintech

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Monday, September 27, 2021

livemint.com

mint primer QUICK EDIT

What the rise in Quad’s

foodgrain output relevance
After the surprise announce-
means for India ment this month of a tripartite
security pact formed by the US,
UK, and Australia, or Aukus, the
JAGADISH SHETTIGAR & POOJA MISRA spotlight fell on the Quad’s first
With the farm sector seeing a growth of 4.5% in the first quarter of FY22 in-person summit-like meeting
and a record foodgrain production of 150.5 million tonnes (mt) during last week amid questions over
the kharif season, the hard work of farmers, proficiency of scientists, its domains of relevance. The
and near normal monsoons have given positive returns. meeting yielded a joint state-
ment, signalling a clear advance
Record yield on the India-US-Australia-Ja-
The first advance Annual kharif crop production (in million tonnes) pan grouping’s informal bond,
estimates of the FY17-21* 2021-22** which covered an array of issues
production of 100.4 Foodgrains on its agenda, including a “free
major kharif crops Rice
107 and open” Indo-Pacific, coordi-
for FY22 show a 33.6
record foodgrain Coarse cereals 142.7 150.5 nation on economic, diplomatic
34
production of and human-rights policies, and
150.5 mt, which is 8.7
Pulses
9.5
action on climate change. On
7.8 mt higher than the pandemic, the Quad Vac-
the average 21.9
Oilseeds cine Partnership is to finance a
foodgrain 23.4
production for the # 33.0 capacity ramp-up at Hydera-
Cotton
past five years 36.2 bad-based Biological E Ltd.
(FY17-21). 372.2 Though America has clearly
Sugarcane
*FY17-FY21 figure are annual average;
419.3 assigned the geostrategic focus
**First adavance estimates; #million bales of 170 Kg each Source: Agriculture ministry of its China-containment game
to Aukus, after Australia was
How important is How has the kharif pushed by Beijing to seek cover,
1 foodgrain production?
Agriculture and its allied activities
2 output been this time?
The Indian farm sector exhibited a
the Quad is still very much in
play as a group. This is good
in FY21 contributed 20.2% to the robust growth of 3.4% in FY21 and news for India, even if American
GVA of India. Foodgrain 4.5% in Q1FY22, and the exports of security arrangements in the
production being the primary farm and allied products saw an East don’t envision too big a role
livelihood source for nearly 55% of increase of 21.8% in April-August. for it. On vaccine diplomacy,
the population also contributes to With a target of 307.3 mt of New Delhi has an opportunity
the supply base of agri-based foodgrain production for FY22,
for goodwill creation and the
industries such as cotton, sugar, the first advance estimates of the
vegetable oil, tea etc. It provides production of major kharif crops Quad initiative offers a vehicle.
market support to agri-dependent for FY22 show a record foodgrain The world is starved of jabs and
industries like fertilizers, tractors production of 150.5 mt, 7.8 mt a country that responds well is
etc. India is amongst the 15 leading higher than the average foodgrain one that stands to gain globally.
exporters of agricultural products production of the past five years
worldwide. The agricultural (FY17-FY21). Production of kharif
sector helps provide employment, rice in FY22 has been 9.21 mt higher
leads to mitigation of poverty than previous five years. Rice
and reducing inequalities by
providing income generation
exports recorded a growth of 13.7%,
while processed food products saw
MINT METRIC
and means of livelihood. a growth of 41.9% in April-August. by Bibek Debroy
BLOOMBERG

There will be a rate

3 What are the key reasons
for the rise in production?
A close to normal monsoon, irrigation,
To validate a vaccination certificate.
aggressive implementation of MGNREGA,
A person who is a shopkeeper
crop insurance availability, uninterrupted Will be a revenue reaper,
supply of fertilizers and efficient sowing
activities are some of the key reasons.
Why not blurt it out straight?
While June-August had a (-9.22%)
departure from normal rainfall, the
prediction is that September will be above
110% of the long-period average of 170mm. QUOTE OF THE DAY
What do the latest Can rural economy
The economy is shifting to a
4 estimates signal? 5 consolidation happen? different plane altogether. Even
A resurgent rural economy will Consolidation of rural economy before the pandemic, the
help insulate the Indian economy can be achieved through structural
and drive the country back onto reforms, especially without driving force for amalgamation
the economic recovery track. dithering over the implementation (of banks) was that India needs
Improving rural prospects will of farm reform laws. The
stimulate consumer demand for strengthening of rural supply a lot more banks, but a lot more
FMCG products, light motor chains such as cold chains and big banks
vehicles, telecom products etc. refrigerated transportation,
Increased income in the hands of building of warehousing facilities,
the rural population will lead to promoting of agro-based
higher consumption resulting in industries such as food processing NIRMALA SITHARAMAN,
increased production levels and industries, etc. will help build UNION FINANCE MINISTER
higher capacity utilization. In momentum, leading to increased
terms of inflation, rising foodgrain investments and production.
production will help bring down Jagadish Shettigar and Pooja Misra
consumer price inflation. are faculty members at BIMTECH.

S TO C K TA L K DOWNLOAD THE
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Nirmal Bang Securities (on Sep 25) Centrum Broking (on 22 Sep)

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tive on the long-term outlook and nationwide vaccination drive, which
recommend a HOLD rating. is chugging along at full steam.
Axis Securities (on 22 Sep) Motilal Oswal Financial Services (on 23 Sep)

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
 PLAIN FACTS

Numbers to watch for:

India PMI, US & UK GDP
BY NITI KIRAN AND TAUSEEF SHAHIDI

E
very Monday, Mint’s Plain Facts section features five key data releases to keep an eye on during the week. India’s core
sector output data for August and the crucial purchasing managers’ index (PMI) for the manufacturing sector for Sep-
tember will be out this week. Investors will also keep a close eye on the capital expenditure figures for the September-
ended quarter. The euro area’s latest inflation estimates and updated GDP figures for the US and the UK will also be released
this week. Here are the big numbers to track:

Input costs, subdued demand

weighing on manufacturing revival 1 India PMI
Purchasing managers' index (PMI) for manufacturing, India THE SEPTEMBER PMI reading for India’s manufacturing
60 sector is due on Friday. The sector had continued to expand in
August but had lost momentum somewhat, with the PMI falling
to 52.3 from 55.3 in July. Rising input price pressures and
weakness in demand were to blame. Input prices were elevated
due to the scarcity of raw materials and logistical bottlenecks,
52.3 but producers only partly passed them on to consumers. The
50
demand was subdued due to uncertainty around growth
prospects and a potential third wave. Employment was stagnant
as firms were operating with sufficient workforce.
The economic gains have continued in September, with an
uptick in key high-frequency indicators such as mobility and
labour participation. The Nomura business resumption index
40
has reported a slight dip but stays above pre-pandemic levels.
Jul 2020 Jan 2021 Aug
A reading above 50 denotes an expansion,
The PMI reading will further tell whether the manufacturing
and below 50 denotes contraction Source: IHS Markit, Bloomberg sector managed to grow out of stagnancy in September.

2 Core Output India's core industries yet to

get fully back on their feet
INDIA WILL release data on core sector output in August on Two-year growth (CAGR, %) in index of
Thursday. The index, released by the ministry of commerce and eight core infrastructure industries
2
industry, measures the performance of eight core industries:
coal, crude oil, natural gas, refinery products, fertilizers, steel, 1
0.5
cement, and electricity. The data is available with a month’s lag. 0
In July, the combined output of these sectors rose by 9.4%
over the depressed base of the same month last year. The 1
sectors in the index showed divergent trends: while cement, 2
natural gas and coal sectors grew by 18-22%, crude oil reported a
decline, and fertilizers output was stagnant. All sectors regained 3
the July 2019 levels, except crude oil and refiner products. 4
In August, the manufacturing sector recorded a slight
slowdown in momentum as measured by the PMI, but the Aug 2020 Jan 2021 Jul
overall business outlook was brighter. This could help the core CAGR: Compounded annual growth rate. Data for May, June and July 2021
are provisional.
sector report growth in August. Source: Office of the Economic Advisor, DPIIT

3 Capex Growth Capex growth in June quarter despite

second wave gives reason for hope
CAPITAL EXPENDITURE plans got a severe blow New project announcements ( trillion)
last year when the nationwide lockdown sapped
7 Private sector
investors’ confidence. The second covid-19 wave was
Government
far less disastrous. Projects worth ₹2.7 trillion were 6
announced in the first quarter, 29% higher
sequentially and the highest since the pandemic 5
began. A growing number of analysts see India 4
entering a capex growth cycle, though the pick-up
may not be broad-based yet. 3
The September-quarter figures will be released on 2.3
Friday. A further surge would spell better days ahead, 2
while any weakness would mean the sentiment is still 1
tentative. Business mood has improved since June,
0.5
and low lending rates keep investors enthused. 0
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
However, uncertainties have not gone yet, and 2018 2019 2020 2021
companies may like to keep some powder dry for now. Source: CMIE Capex

The Delta variant risk could stall

growth boom in top economies 4 US & UK GDP
Real GDP growth rate compared to the AN ECONOMIC rebound led by consumer spending lifted US
preceding quarter (in %) GDP by a sequential 6.6% in the June-ended quarter. The UK,
40 too, basking under easing covid-19 rules, reported a 4.8%
growth. Both countries will issue updates to these estimates on
20 US
Thursday.
There are multiple challenges to this growth. Even as the US
6.6
4.8 prepares to open up for travellers, a covid-19 spike is a major
0 risk. Jobs are not picking up, and raw material shortages and
supply chain issues are choking businesses. Consumer
-20 UK confidence in the US dropped to a six-month low in August,
while the UK grew slower than expected, at 0.1%, in July.
The Organization for Economic Co-operation and
-40 Development (OECD) has pared its 2021 growth forecast
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021 significantly—the US’ to 6% and the UK’s to 6.7%, partly due to
Calendar years used for quarter labels. the Delta variant risk. Sustaining growth and averting a
Source: Office for National Statistics (UK), Bureau of Economic Analysis (US) slowdown is becoming a challenge.

5 Euro Area Inflation ECB’s woes deepen as euro area

records decade-high inflation rate
HIGH INFLATION in 2021 was not unexpected, but for the Inflation year-on-year (in %), euro area
euro area, the price rise may have paced up far too much for
3
comfort. In August, the headline print soared to a decade high
of 3%, from 2.2% in July. The provisional data for September is
due on Friday. 2.2
2
Spiralling natural gas and electricity prices and supply 1.9
bottlenecks are keeping the pressure up. Policymakers have so 1.6
far kept a benign view on prices, but may now start to get
1.3
worried as inflation has stayed above the European Central
Bank’s (ECB) mid-point target of 2% for two straight months. 0.9 0.9
ECB’s President Christine Lagarde expects inflation to rise
further but hopes it will ease next year.
In the longer run, Europe’s green transition is also likely to
put the heat on inflation. Temperature changes and more
frequent adverse weather events, rising carbon prices and Jan 2021 Feb Mar Apr May Jun Jul Aug
higher production costs could have an upward impact on retail Inflation refers to the change in ECB's harmonised
index of consumer prices (HICP).
inflation, said a Danske Bank report dated 16 September. Source: Eurostat
AHMED RAZA KHAN/MINT
niti.k@livemint.com

PEANUTS by Charles M. Schulz

 NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 15 NO. 230 Rs 5.00 IN DELHI-NCR; Rs 6.00 OUTSIDE DELHI-NCR. PRICE WITH HINDUSTAN TIMES Rs 9.50 (FOR DELHI & NCR) 20 PAGES

Monday, September 27, 2021

30 firms may float IPOs in Oct- How China’s crackdown may

livemint.com Nov to raise ₹45,000 cr uP3 help Indian tech sector uP12

SENSEX 60,048.47 0.00 NIFTY 17,853.20 0.00 DOLLAR ₹73.69 ₹0.00 EURO ₹86.48 ₹0.00 OIL $78.09 $0.00 GOLD ₹46177 ₹0.00

Sebi may let PE firms Lenders tie up with

fintechs to grow biz
Finolex board
appointments
DON’T MISS

draw flak from

own asset managers Shayan Ghosh
shayan.g@livemint.com
MINT
proxy advisers
Swaraj Singh Dhanjal
MUMBAI
New rules will pave the way for global PE firms to acquire AMCs swaraj.d@livemint.com

A
growing number of small MUMBAI
and mid-sized banks in Air passenger traffic picks up
Anirudh Laskar

A
India are partnering with fter InGovern Research, pace in August as demand returns
anirudh.l@livemint.com
MUMBAI
EASING CURBS fintech companies to expand
their reach and tap new custom-
another proxy advisory
firm, Stakeholders
Indian airports catered to about 14.26 million
passengers in August, a 35% increase
ers, saving on costs and time to Empowerment Services (SES), sequentially, highlighting a sustained

I
ndia’s markets regulator is
likely to allow private equity
funds to own local asset man-
agement companies (AMCs)
amid the growing popularity of
mutual funds and soaring stock
markets, two people aware of the
plan said.
“Private equity (PE) funds will be
allowed to be sponsors of mutual
funds, subject to certain conditions.
Many existing sponsors and trus-
tees are facing a cash crisis due to
the inability of their core businesses
to generate enough capital in the
wake of the pandemic,” said one of
the two people cited above.
“PEs have the cash the MF indus-
try needs for growth, but the money
managed by PE funds has a limited
life cycle as they are obliged to pay
returns to their investors, which
poses a risk to mutual funds in
which the general public invests.”
An entity with a stake of 40% or
more in an asset manager is its
sponsor. Currently, only banks,
non-bank lenders, or those with
more than five years of experience
in managing a public pool of funds
are allowed to be mutual fund spon-
sors.
CASH CRUNCH
AN entity with a stake of PEs may be allowed to MANY existing sponsors
40% or more in an asset be sponsors of MFs, are facing a cash crisis in
manager is its sponsor but conditions apply the wake of the pandemic
The new rules will potentially to fulfil a certain net-worth crite-
clear the way for global PE giants to rion, size, experience and adhere to
acquire local AMCs. Mint reported certain lock-in norms to be eligible
in October that Blackstone was in to be sponsors or buy control of any
talks to acquire L&T Investment AMC,” said the first person.
Management Ltd, the mutual funds In addition, any PE wanting to be
business of L&T. a mutual fund sponsor may be
The Securities and Exchange required by Sebi to commit capital
Board of India’s (Sebi’s) proposed worth over ₹100 crore, as long as
regulations will give conditional they intend to be the sponsor or the
approvals to PE funds seeking to owner in control of the mutual fund
buy a majority stake in AMCs.
“The new norms will require PEs TURN TO PAGE 6
ramp up their retail network.
While large public sector
banks are better placed in terms
of branches, smaller private len-
ders are taking this route to
onboard new customers.
Traditionally, banks have
relied on their network of bran-
ches, especially in semi-urban
and rural areas. However, the
smartphone boom and ultra-low
data cost have given banks an
avenue to expand their business
without building new branches.
“Physical branch expansions
are a costly affair and involve
long-term planning. The chal-
lenge with physical branches is
that you would be operating in a
specific catchment area, and if
you get it wrong in terms of
identifying it, branch profitabil-
ity may be hit,” said Parijat Garg,
an independent fintech expert.
Garg said fintech partnerships
also offer regional lenders the
ability to reach customers across
the country. “Lenders that are rel-
atively new or have limited branch
presence are more aggressively
taking this approach,” he said.
A slew of banks has inked
Ultra-low data cost has given
banks an avenue to expand biz
without building new branches.
deals with fintech companies to
augment their reach. For
instance, SBM Bank India, a unit
of State Bank of Mauritius; Equi-
tas Small Finance Bank; and
even large lenders such as HDFC
Bank and Bank of Baroda have
partnered with fintech firms.
Kochi-based Federal Bank,
which has tied up with some fin-
tech companies, plans to partner
with more such firms. The bank
has 1,272 branches, most of them
in Kerala. In a recent interview,
the bank’s chief executive, Shyam
Srinivasan, said for about five
years the bank’s incremental
business growth from Kerala has
been about 20%, with the rest of
India contributing the remainder.
“The next three-four years we
think distribution will be mani-
fold but not necessarily branch
TURN TO PAGE 6
has advised shareholders of
Finolex Cables Ltd to vote
against the appointment of cer-
tain directors at the company’s
29 September annual meeting.
Finolex has sought share-
holders’ approval for the
appointment of Padmanabh R.
Barpande, Avinash S. Khare
and Firoza F. Kapadia as
directors who will retire by
rotation as well as independ-
ent directors, SES said, adding
that the resolutions are contra-
dictory to one another as the
companies law states that
independent directors do not
have to retire by rotation.
“If both resolutions are
treated as valid, there is an
inherent conflict between the
two. Firstly, an independent
director cannot be appointed
on a retiring basis; it is against
the law. Secondly, as per the
first resolution, a director is
appointed on a rotation basis,
whereas in another resolution,
on a non-rotation basis. Which
resolution will prevail?” SES
TURN TO PAGE 11
recovery in air travel demand in line with
economic recovery and the progress on
vaccinations. >P7
Centre pulls out all stops in bid to
record 150GW RE capacity by 2 Oct
The government is pulling out all stops to achieve
renewable energy capacity of 150GW by 2 October.
India‘s installed renewable energy capacity is
currently at 147.05GW. The initiative comes in the
run-up to the 2021 UN Climate Change Conference,
COP-26 in Glasgow on 31 October. >P6
ChrysCapital plans to raise up to
$1 billion corpus for ninth fund
ChrysCapital is set to raise about $1 bn for its
ninth fund. The homegrown private equity firm is
looking to make a final close in December.
ChrysCapital raised $850 million for its eighth
fund in 2019. The latest round may grow its total
assets under management to nearly $5 billion.>P8
Accenture’s Q4 shows strong IT
demand, but concerns remain
Global IT firm Accenture’s impressive Q4FY21
earnings have positive takeaways for the Indian
tech sector. Accenture reported revenues of
$13.4 billion in Q4, which was at the upper end of
its guidance. For FY22, the firm foresees revenue
growth of 12-15% despite acquisitions. >P4

Database of informal Amazon, Flipkart

workers adds 17 mn face off on 3 Oct
MINT MINT
Prashant K. Nanda Madhurima Nandy
prashant.n@livemint.com madhurima.n@livemint.com
NEW DELHI BENGALURU

A T
bout half of the 17.1 mil-
lion informal sector
workers, including gig
workers, registered on the
unorganized sector database
are women, the labour minis-
try said on Sunday, a month
after the database was
launched on 26 August.
Workers from Bihar, Uttar
Pradesh, Madhya Pradesh,
Odisha, West Bengal and
Andhra Pradesh made up most
of those registered on the data-
base. Around 78% of registra-
tions were facilitated by the
government-run common ser-
vice centres, while individual
workers did the rest.
The database, a first such
exercise, is crucial to tracking
the flow of informal workers to
the formal sector and offer
About half of the 17.1 mn informal
sector workers registered are
women, the labour ministry said.
social security benefits in
times of need.
The initiative follows the
massive reverse migration
triggered by the sudden
announcement of a nation-
wide lockdown last year. “The
completion of one month of
the launch of e-Shram portal
TURN TO PAGE 6
he coming online festive
sales season is turning into
an unusual battle between
India’s top two e-commerce
companies to reach discount
shoppers first.
Amazon India on Sunday
advanced its flagship Great
Indian Festival sale to 3 Octo-
ber, the same as rival Flipkart,
which on Saturday advanced its Amazon advanced its ‘Great
own Big Billion Days sale from Indian Festival’ sale to 3 Oct,
7 October to 3 October. The the same day as rival Flipkart.
Flipkart move itself was
prompted by Amazon setting Saturday promptly moved its
its sale to begin from 4 October, launch date to match Amazon.
three days ahead of Flipkart’s Flipkart will be running its
initial date of 7 October. Big Billion Days sale for eight
The Amazon sale will see days, instead of six, with the
over 850,000 sellers partici- event ending on 10 October.
pate and 1,000 product Amazon hasn’t specified the
launches across categories.
Walmart-owned Flipkart on TURN TO PAGE 6

Most consumers keen to buy booze online

Suneera Tandon accepted across product cate-
suneera.t@livemint.com gories.
NEW DELHI YouGov’s survey indicates
that consumer preference for

N
early six out of every 10
liquor consumers in
India are willing to pur-
chase alcoholic beverages
online if they are given the
option, a survey by market
research and data analytics firm
YouGov found.
The survey of 2,000 indi-
viduals, with 70% men and
30% women, was conducted
across Haryana, Uttar Pradesh,
Maharashtra, Telangana and
Karnataka. The respondents
were those who purchased
alcohol for at-home consump-
tion.
Wider choice of products,
ability to browse and explore
options and prices and compar-
ison across platforms were
among reasons cited by the
respondents for their online
preference.
India lacks policies that per-
Local liquor stores get the least ratings in terms of experience across
states.
mit the sale of liquor online.
However, some states have
allowed home delivery of alco-
hol after the outbreak of the
coronavirus pandemic.
The experience of buying
alcoholic beverages also varies
from state to state, from upmar-
ket modern stores to small gov-
ernment-run outlets.
However, as younger con-
REUTERS
sumers join the permissible
drinking age group, current
social mores governing the sale
and purchase of liquor are
likely to become outdated.
Fresh policies could find favour
among consumers.
The pandemic has also trig-
gered a change in consumer
behaviour, making online
shopping more widely
online shopping could also
benefit those planning to buy
liquor online.
India’s market for alcoholic
beverages is highly regulated as
licences are required to pro-
duce, bottle, store, distribute
and retail them. Also, the sale of
alcohol is a state subject, and as
a result, distribution is highly
controlled, both at the whole-
sale and retail levels, according
to industry reports.
Most consumers tend to pro-
cure alcohol from local outlets,
an experience that most
respondents said is riddled
with challenges. As many as
97% of those surveyed by You-
Gov reported a range of chal-
lenges when buying alcohol,
including the non-availability
of discounts and offers fol-
TURN TO PAGE 11
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02 MONDAY, 27 SEPTEMBER 2021
NEW DELHI ECONOMY & POLICY LIVEMINT.COM

STRAIGHT
F O R WA R D
PM highlights importance of ₹7,270 cr
scheme for
SHASHI SHEKHAR

Respond to this column at

feedback@livemint.com
fintech, warns against covid road safety
in 14 states
PTI
MANY POLITICIANS He also spoke about the advances the Namami Gange programme is making in Mann Ki Baat
feedback@livemint.com
NEW DELHI

ARE PERFORMING
T
he Union ministry of
Staff Writer your attention…especially that of the road transport and high-

WELL IN POLITICS feedback@livemint.com youth. These days, a special e-auction is

being held. This electronic auction per-
ways (MoRTH) is all set to
roll out a new ₹7,270 crore state

P
rime Minister Narendra Modi tains to gifts presented to me by people support programme for
on Sunday highlighted the from time to time. The money that strengthening road safety to

T
he case of Akhil Bharatiya Akhara Parishad president importance of fintech and accrues through this is dedicated to the help realize the vision of ‘zero
Mahant Narendra Giri’s death has been handed over to the Unified Payments Interface Namami Gange Campaign,” he said. road fatalities on Indian roads’.
CBI. For those in power, it’s the easiest way to pour water (UPI) in the 81st edition of his Modi also spoke about the Azadi ka The centrally-sponsored six-
on the flame of any controversy. Most of the time, after the monthly radio programme Mann ki Amrit Mahotsav, commemorating 75 year programme will be imple-
announcement of a CBI probe, public outcry starts to cool down. Baat. There were 355 crore UPI transac- years of India’s independence. The five mented in 14 states that are now
The so-called suicide note found in the mahant’s room has trig- tions in August alone, with ₹2 trillion in pillars of the 75 week long celebrations contributing to 85% of the total
gered some interesting questions. The mahant was a celibate, so digital payments on an average happen- are the freedom struggle, ideas, achieve- road fatalities in the country.
who was trying to blackmail him in the name of an obscene video ing through UPI, he said. ments, actions, and resolve. While MoRTH will lend a
clip? His disciple Anand Giri, who has been arrested, claimed that “The way building of toilets enhanced “Friends, in this period of Amrit budgetary support of ₹3,635
the mahant could not read or write, so who wrote the long suicide the dignity of poor, similarly, economic Mahotsav, a campaign to disseminate to crore, an amount of ₹1,818 crore
note? How much truth is there in this claim? It will certainly be cleanliness ensures the rights of the everyone the untold stories of the his- will be secured as loan each
probed, but I would like to quote a former IPS officer and colum- poor and eases their life. You are aware tory of freedom is also going on… and for from the World Bank and the
nist for Hindustan, Vibhuti Narayan Rai. He said it’s a false claim of the campaign that the country started this, upcoming writers, youth of the Asian Development Bank.
that the mahant was not educated. In 1989, when Rai was posted regarding Jan Dhan accounts. Today, Prime Minister Narendra Modi said there were 355 crore UPI transactions totalling country and the world were called upon. Of the total cost, ₹6,725 crore
as senior superintendent of police at the Kumbh Mela, the because of this, the rightful money of the ₹2 trillion payments in August alone. PTI For this, more than 13,000 people have will be disbursed to the 14 states
mahant often came to him with many applications. If necessary, poor is getting credited directly into registered till now and that too in 14 dif- based on their performance,
amendments were made right there by the mahant himself. their accounts and because of this, “Last August, 355 crore UPI transac- the advances the Namami Gange pro- ferent languages. A thing of joy also is while MoRTH will use ₹545
Questions are also being raised about Giri’s flashy lifestyle. obstacles such as corruption have tions took place in one month... Today, gramme is making. The government’s that non-resident Indians from more crore for capacity building
Why is it that whenever a saint dies under mysterious circum- reduced very significantly. It is true that on an average, digital payments of more flagship ₹20,000 crore Namami Gange than 20 countries have expressed their activities.
stances, controversies related to fame, fortune and power arise? technology can help a lot in economic than ₹2 lakh crore is happening through programme was approved by the Union wish to join this campaign,” Modi said. The scheme will incentivise
I used to be a correspondent for a daily in Allahabad in the early cleanliness,” Modi said. UPI. Through this, the economy of the cabinet in 2014 for making river Ganga Modi also urged people to stay vigi- state governments to drive
1980s. Once a year, Prabhudutt Brahmachari used to call journal- “It is matter of delight pollution-free and con- lant about the coronavirus pandemic, road safety interventions at the
ists to his Jhusi ashram, which he called Pratishthan Puri. We for us that even in villages, SILVER LINING serving and restoring it. even as India has been administering a grassroots level with the main
would be served puris, kachoris, potato curry and kheer. He the common person is get- “We can very well record number of vaccine doses. objective of curbing road acci-
spoke impeccably. He was the one who actively led the move- ting connected in the PM Modi said NRIs HE spoke about how THE PM urged the undertake the endeavour “The time to come is of festivals. The dents and achieving a reduc-
ments for cow protection and the Hindu Code Bill. In 1952, he direction of digital trans- from more than
20 countries wish
the economy is
becoming clean
people of the country of cleaning rivers and
to stay vigilant about
whole country is also going to celebrate tion in fatalities, the MoRTH
contested against Prime Minister Jawaharlal Nehru from Phul- actions through fintech, to join Amrit and transparent the coronavirus freeing them of pollution the festival of the victory over untruth by said in a concept note circu-
pur. His words and personality created international interest dur- UPI… its prevalence has Mahotsav through UPI pandemic with collective effort and Maryada Purushottam Shri Ram. But lated to the target states.
ing the election. Nehru won by thousands of votes, but swamiji’s begun increasing,” he said. support. The Namami we have to remember about one more The target states under the
purpose had been fulfilled. By the time Also, the National Pay- Gange Mission too is mak- fight, which is the country’s fight against scheme are Uttar Pradesh,
The problem I met him, a long time had passed. He ments Corp. of India, which oversees the country is acquiring cleanliness and ing advances…collective efforts of all, in Corona. Team India is making new Maharashtra, Madhya Pradesh,
is that politics regretted that the new generation was digital payments ecosystem in the coun- transparency and we all know that now a way mass awareness has a major role to records every day in this fight. With Karnataka, Rajasthan, Tamil
unaware of this ‘struggle’. try has launched e-RUPI, a voucher- the importance of fintech is increasing play in that,” Modi said. regards to vaccination, the country has Nadu, Andhra Pradesh, Gujarat,
has become a In swamiji’s words, the anger based payments system to promote a lot,” Modi said. “When Namami Gange is being made many such records that are being Bihar, Telangana, West Bengal,
means to fulfil towards the Nehru family’s western cashless transactions. The prime minister also spoke about referred to, one thing is certain to draw talked about the world over,” he said. Odisha, Haryana, and Assam.
unfulfilled lifestyle was obvious, but he was also
ambitions angry with the Jan Sangh leaders. He
believed that the Hindu Code Bill and
cow protection movements did not get
their adequate support. Once, when I sought his opinion regard-
ing an abbot and his statement, what I got was an interesting
India needs 4-5 more banks like SBI: FM Industry bodies need
answer. He said there are two types of saints—those who don’t
mind donating their loincloth for the welfare of the people and
those who even rob others’ loincloths for their own welfare.
Shayan Ghosh
shayan.g@livemint.com
to protect minority the fast changes in technology.
“What we think is latest today
In another instance, my parents took the three of us—my MUMBAI will be outdated in a year or so;
brother, sister and I—to meet Swami Karpatriji Maharaj. We sat
shareholders: MCA we have to thus acquire resour-

I
at his feet and listened to what he said. He was a wonderful blend ndia needs more banks that ces to constantly update our-
of simplicity, scholarship and experience. The swamiji had also can match the scale of its selves,” she said.
tried his hand in politics. To fight for the issues of the Hindu Code largest lender State Bank of Such nimbleness and agility Staff Writer awareness in the investor com-
Bill and cow protection, he had formed a political party called India (SBI), Union finance min- are especially important for us feedback@livemint.com munity in this regard.
Akhil Bharatiya Ram-Rajya Parishad in 1948. While Prabhuduttji ister Nirmala Sitharaman said to achieve the ambitious export NEW DELHI The emphasis on the protec-
and Karpatriji had similarities, there were some differences. If on Sunday. targets we have set, she said. tion of minority interests

P
they were part of the crowd, how can we call them saints? Sitharaman also highlighted Sitharaman also highlighted rofessional institutes comes at a time the country has
I referred to these two saints because as a teenager or a young the need to scale up banking to the needs for homegrown pay- such as the Institute of seen a boom in the participa-
professional, I had simultaneously experienced the grandeur and meet the changing require- ment network unified pay- Chartered Accountants tion of households in the equity
simplicity of their personalities. Their attempt to interfere in the ments of the economy and ments interface (UPI) be of India (ICAI) and the Institute markets, especially during the
politics of independent India on the basis of religious issues industry, according to a state- strengthened. “In the payment of Company Secretaries of pandemic. The ministry is
paved the way for the likes of Dhirendra Brahmachari and Chan- ment released by the Press world today, Indian UPI has India (ICSI), as well as industry emphasising on the protection
draswami. Perhaps even they had never imagined such an out- Information Bureau (PIB). The Union finance minister Nirmala Sitharaman. PTI actually made a very big bodies, need to play a key role of the interests of minority
come. Today, by playing an indirect or active part in politics, finance minister was in Mum- impression. A RuPay card in protecting the interests of shareholder as it depends on
many saints have sharpened their ambitions, but have bypassed bai to attend the 74th annual She said there are wide dis- 750,000 panchayats have opti- which was not as glamorous as minority shareholders, the the safeguards built into the
the sacrifices and tenacity of their predecessors. general meeting of the Indian parities in access to financial cal fibre. The IBA should con- a foreign card is now accepted ministry of corporate affairs law and on how independent
To elaborate further, I would like to go back a few years. The Banks’ Association (IBA). services and there are parts of sider this and conduct an exer- in so many different parts of the (MCA) said in a review of the directors perform in board’s
TV news medium was in its infancy when I saw a video in which “The way in which the econ- our country where brick-and- cise and decide where banks world, symbolic of India’s corporate sector. decision-making. The law
Atal Bihari Vajpayee was holding a meeting in the presence of omy is shifting to a different mortar banks are necessary. should have a physical pres- futuristic digital payment One of the most essential mandates inclusion of inde-
Sant Asaram. In his excellent vocabulary, Atalji did not forget to plane altogether, the way in The minister ence and where intentions,” she said. requirements of a sound corpo- pendent directors on various
mention the importance of Hinduism as well as the tremendous which industry is adapting, so asked IBA to Sitharaman asked we are able to She said that the National rate governance system is effec- committees of the board of
contribution of ‘Bapu’ (Asaram) towards it. Certainly, back then, many new challenges keep improve banking the IBA to serve customers Asset Reconstruction Co. Ltd tive protection of the rights of directors, including audit com-
Atalji could not have predicted Asaram’s fate, but he did know arising. To address these chal- access in every improve banking even without it. (NARCL) is not a bad bank. “It is shareholders so that they can mittees and stakeholder rela-
that with this initiative, he was wooing a large section of voters. lenges, we need not just more, district through a access in every IBA should take a formulation which is actively participate and con- tionship committees. To take
If politicians tend to use religion and religious people, then why but bigger banks,” she said. rationalized
district through a the initiative and intended to clean up banks’ structively influence corporate legal action against the man-
should the saints lag behind? Today, many saints do not enter Sitharaman said that indus- approach and complement gov- assets and dispose of non-per- decision-making, said Rajesh agement of a company for
politics directly, yet they have no qualms about using politicians. try should imagine how Indian optimal utiliza- rationalized ernment’s efforts forming assets (NPAs) in a Verma, secretary, MCA. alleged mismanagement and
If this combination of politics and sainthood was used for banking has to be in the imme- tion of digital approach for financial inclu- speedy manner. Banks are now “The Investor Education and oppression, 10% of the share-
uplifting society, then it would not be a bad thing. But the prob- diate and long-term future. “If technologies. sion and enhanc- able to raise money from the Protection Fund (IEPF), profes- holders need to come together.
lem is that it has become a means to fulfil some unfulfilled ambi- we look at the post-covid sce- To achieve this, ing access to market; hence, the burden on sional institutes, industry Company secretaries, char-
tions. If those who donate their own loincloth are dominated by nario, India’s banking contour she advised IBA to carry out financial services, especially in the government to recapitalize chambers, and investor associ- tered accountants, and cost
those who rob loincloths, then what will happen to the saintliness will have to be very unique to digitized location-wise map- unserved and under-served banks will be less, this is how we ations all need to play an impor- accountants are also covered by
that has been deep-rooted in our beliefs for centuries? India, where there has been an ping of all bank branches for areas,” she said. want banks to function—a lot tant role in this direction,” the disciplinary mecahnisms of
Shashi Shekhar is editor-in-chief, Hindustan. The views extremely successful adoption every district of the nation. That apart, the minister also more professional, with a Verma said in the review. The their respective self-regulatory
expressed are personal. of digitization,” she said. “Almost two-thirds of nearly said banks need to adapt with changed mindset,” she added. official also argued for creating bodies.

Dentists go missing during the pandemic as states fail to furnish data CORRECTIONS AND
CLARIFICATIONS
Mint welcomes comments,
Neetu Chandra Sharma DCI, states have different rules post dentists on covid-19 duty, guidelines for dentists, initially ness, which was valued at suggestions or complaints
neetu.s@livemint.com to renew registrations, which leaving many dentists jobless suspending all but emergency roughly $1.36 billion, employ- about errors.
NEW DELHI are mostly done every five years, leading to data missing on avail- procedures, and later shifting ing almost 2 million people
Readers can alert the
or in some states, every year. able dentists,” said Chandna. to protective measures. “Den- directly or indirectly.
newsroom to any errors in the

W
hen the coronavirus
outbreak shuttered
nearly everything
except essential services last
year, data on an important cate-
gory of medical professionals
vanished altogether: Dentists.
After most states stopped
providing data on practising
dentists, the Dental Council of
India (DCI), recently wrote to
health secretaries of states to
furnish it as soon as possible.
Dental college graduates with
BDS degree are eligible to regis-
ter as dentists. According to the
“The majority of states have
not furnished data of registered
dentists for the year 2020-21,
which is ideally updated every
April despite reminders by the
DCI. Therefore, the govern-
ment has written to the health
secretaries to ask their respec-
tive state dental councils to
immediately send data to the
DCI to maintain the Indian
Dental Register,” said Dr. Anil
Kumar Chandna, executive
member of the DCI, which is a
statutory body under the Union
health ministry.
According to the National
Health Profile 2018, the num-
ber of dentists registered with
DCI is over 270,000. Of this,
only 7,239, accounting for a
mere 2.7%, serves the govern-
ment sector. According to data
from the dental register, there
The Dental Council of India has written to state health secretaries are 81,000 under-graduate stu-
to furnish data on registered dentists as soon as possible. MINT dents, including students in
third and fourth years, and
“While the majority of dental pandemic, leading to many not interns, and 18,000 dental
surgeons are into private prac- registering for practice and postgraduates involved in
tice, several didn’t renew their choosing something else for patient care.
registrations. Dental education earning bread. Despite During the pandemic, the
degrees also got delayed due to requests, the government didn’t government issued regular
tistry came to a sudden stop on
22nd of March 2020 as the
lockdown brought the realiza-
tion that there was a serious
issue at hand. All clinics were
shut, institutions closed and
advisories abounded highlight-
ing the risks of dental care,”
said Dr. Anmol S. Kalha, associ-
ate director, orthodontics and
dentofacial orthopaedics at
Max Healthcare.
According to practising den-
tists, new technology, materi-
als, and techniques have
expanded India’s dental busi-
“The place was crowded as paper by emailing us, with your
such before the pandemic and full name and address to
alarm bells had been rung feedback@livemint.com.
regarding the lack of job oppor-
tunities. Less than 50% of grad- It is our policy to promptly
respond to all complaints.
uating dentists were register- Readers dissatisfied with the
ing with dental councils for response or concerned about
clinical practices. Rising costs Mint’s journalistic integrity may
of infrastructure and equip- write directly to the editor by
ment, and concentration of sending an email to
dental practices in metros had asktheeditor@livemint.com
begun to create a negative aura Mint’s journalistic Code of
to this profession, which was at Conduct that governs our
one hand being grudgingly newsroom is available at
accepted as a part of main- www.livemint.com
stream healthcare,” said Kalha.

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First published in February 2007 to serve as an unbiased and clear-minded chronicler of the Indian Dream.
SRUTHIJITH KURUPICHANKANDY (EDITOR); PUBLISHED/PRINTED BY DINESH MITTAL ON BEHALF OF HT MEDIA LTD, 18-20 Kasturba Gandhi Marg, New Delhi 110001
Printed at HT Media Ltd presses at •Plot No. 8, Udyog Vihar, Greater Noida, Distt Gautam Budh Nagar, Uttar Pradesh 201306; •MNSPrinters Pvt. Ltd, 345/4, Bhatrahalli, Near KR Puram RTO, Old Madras Road, Bangalore 560049; •Saraswati Print Factory Pvt. Ltd, 789, Chowbhaga (W), Near China Mandir, Kolkata 700 105; •MNSPrinters Pvt. Ltd, 76/1, Poonamallee High Road, Velappanchavadi, Chennai 600077; •
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LIVEMINT.COM
HDFC Bank
set to hire
2,500 in
rural push
Staff Writer
feedback@livemint.com
MUMBAI
H H
DFC Bank Ltd on Sun-
day said it aims to dou-
ble its reach to
200,000 villages in the next
18-24 months through a com-
bination of opening physical
branches, hiring business cor-
respondents and digital out-
reach. The private sector len-
der will hire 2,500 people in
the next six months to increase
its rural outreach to about a
third of the country’s villages.
HDFC Bank currently offers
its products and services to
micro, small and medium
enterprises (MSMEs) in more
than 550 districts, and its rural
banking services extend to
100,000 Indian villages.
“India’s rural and semi-ur-
ban markets are under-served
in credit extension. They
present sustainable long-term
growth opportunities for the
Indian banking system,” said
Rahul Shukla, group head
(commercial and rural bank-
ing) at HDFC Bank. “HDFC
Bank remains committed to
extending credit responsibly
in service of the nation. Going
forward, we dream of making
ourselves accessible in every
pin code,” said Shukla.
The bank said it will offer its
traditional products and servi-
ces as well as new ones.
The bank said in a statement
that it already offers custom-
ized offerings such as pre- and
post-harvest crop loans, two-
wheeler and auto loans, loans
against gold jewellery, and
other curated loan products in
unbanked and under-banked
areas. The lender will now
offer its products and services
keeping in mind the fast-
changing rural ecosystem.
CORPORATE MONDAY, 27 SEPTEMBER 2021
NEW DELHI 03
Banks’ spread on loans falls 30 firms may float
IPOs in Oct-Nov to
amid intense competition raise ₹45,000 cr
PTI (₹6,017 crore), Emcure Phar-
feedback@livemint.com maceuticals (₹4,500 crore),
State-run companies have had an upper hand in loan pricing, but other firms are catching up NEW DELHI Nykaa (₹4,000 crore), CMS
Info Systems (₹2,000 crore)
ectic fundraising and MobiKwik Systems (₹1,900
Shayan Ghosh & Gopika Gopakumar through initial public crore), the bankers said.
MUMBAI offerings (IPOs) is In addition, Northern Arc
expected in October-Novem- Capital (₹1,800 crore), Ixigo
F
lush with liquidity and ber, with at least 30 companies (₹1,600 crore), Sapphire Foods
increased competition, len- are looking to collectively raise (₹1,500 crore), Fincare Small
ders are witnessing reduced over ₹45,000 crore through Finance Bank (₹1,330 crore),
spreads across their loan port- public issues, merchant bank- Sterlite Power (₹1,250 crore),
folios. A loan spread is the dif- ers close to the matter said. RateGain Travel Technologies
ference between the base lending rate Of the total fundraising, a (₹1,200 crore) and Supriya Life-
and the final interest rate charged to large chunk would be garnered science (₹1,200 crore) may float
the borrower. by technology-driven compa- their IPOs during the period
While spreads on retail loans, espe- nies. under review, they added.
cially mortgages, have been falling, The successful IPO of food Angel One’s Roy attributed
there is intense competition among delivery company Zomato, the impressive IPO pipeline in
banks to woo top-rated corporate cus- which was overwhelmingly the coming month to several
tomers. Though bulk of the incremental subscribed by over 38 times, factors, including a stronger-
lending is in retail, which offers better encouraged new-age tech com- than-expected recovery in the
margins, some top-rated state-run com- panies to come out with their economy after the second
panies are raising funds at the repo rate primary share sales. covid wave, continued FPI and
of 4%, without any spread, said experts. Historically, companies like domestic flows in the markets
To be sure, state-run firms have had an Zomato have raised funds from and an increase in retail partici-
upper hand in loan pricing, but this time private equity players and the pation in the stock market in
round, other borrowers are also not far Some top-rated state-run firms are raising funds at the repo rate of 4%, without any spread, said experts. MINT IPO has opened up a new the past one year.
behind. “Clearly, banks are facing sig- source of funding for new-age Going forward, the IPO
nificant margin pressures,” said Soumya from the banking system. The VRRR The central bank has said it will sup- reverse repo window. However, banks tech companies, said Jyoti Roy, boom is expected to extend in
Kanti Ghosh, chief economic adviser, has ensured that the cost of short-term port growth as long as it is required and are also seeing good growth of current deputy vice-president (equity the coming year if the prevail-
State Bank of India, in a note on 21 Sep- borrowings does not fall below the floor has retained its monetary policy stance account and savings account (CASA) strategist) of Angel One. ing market situation remains
tember. He said weak credit demand rate, which is currently at 3.35%. to accommodative. In the aftermath of deposits, which is even higher than the The firms that are expected constant or doesn’t change
and excess liquidity is evident with “Because of the lack of a multitude of the pandemic, it has lowered its repo term deposit growth, giving them to raise funds through their much, said Kaushlendra Singh
banks parking more than ₹7 trillion instruments, liquidity surplus reached rate by 115 basis points to 4%. Reverse access to cheaper funds,” Anil Gupta, IPOs during October-Novem- Sengar, founder and chief exec-
every day on average since April under to the tune of more than ₹10 trillion. repo, the rate at which banks park vice-president and sector head, finan- ber include Policybazaar utive officer at Invest19.
the reverse repo operations of the We have to bring it down in phases to excess funds with RBI, is at 3.35%. cial sector ratings, Icra, said.
Reserve Bank of India (RBI), while the ₹5 trillion as early as possible and then A section of industry executives said Some others are of the opinion that
government’s cash balance with the lax underwriting is a bigger risk to
central bank is at ₹3.4 trillion. EXCESS LIQUIDITY margins than the rate war, as banks
At current rates, three-year term have been able to manage their cost
loans are being priced at close to 4% BANKS have been THE government’s BANKERS are also VRRR auctions will of funds well. “There has been mar-
and seven-year term loans for bor- parking over ₹7 tn
daily on an average
cash balance with
the Reserve Bank
calling for a reduction remain key for
in liquidity due to absorbing excess
gin pressure, but it has not been
rowers below AAA are quoting a under the reverse of India stands at fewer opportunities liquidity from the material. The reason is that banks
risk premium of 15-20 basis points repo operations ₹3.4 trillion for credit deployment banking system are predominantly lending to
over the 10-year rates, Ghosh said. retail, a relatively high-yielding
Bankers are also calling for a segment. The margin pressure is
reduction in liquidity as there are fewer bring it further down to ₹3 trillion, irre- while banks have been facing margin limited to 5-10 basis points for the
opportunities for credit deployment, spective of the view on inflation. To pressures due to the liquidity build-up, entire system, according to our esti-
leading to mispricing of loans. On 1 Sep- suck out liquidity, RBI can look at long- the central bank must raise the reverse mates, and that is probably because of
tember, RBI governor Shaktikanta Das term reverse repo may be in 28 days or repo rate. “Margin pressure has been consistently declining loan-to-deposit
clarified that variable rate reverse repo 56 days,” said Jayesh Mehta, managing happening since the build up of liquid- ratios,” said Saswata Guha, senior
(VRRR) auctions will remain the main director and India country treasurer, ity in the system and banks are parking director, banks, Fitch Ratings.
instrument to absorb excess liquidity Bank of America. significant sums of money under the shayan.g@livemint.com
04 MONDAY, 27 SEPTEMBER 2021
NEW DELHI MARK TO MARKET LIVEMINT.COM

S&P BSE Sensex Nifty 50 Nifty 500 Nifty Next 50 Nifty 100 S&P BSE Mid-cap S&P BSE Small Cap
CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%)

60,048.47 1.75 17,853.20 1.52 15,191.95 1.10 43,071.65 -0.20 18,090.20 1.26 25,194.84 0.59 28,023.34 0.06
1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%)

7.31 13.95 7.39 13.06 8.03 12.80 8.76 12.34 7.63 12.98 10.42 12.88 8.67 12.56
6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%)

22.10 64.28 22.71 65.22 24.55 69.84 25.54 67.62 23.15 65.63 25.41 80.83 37.09 97.79

m MINT SHORTS
Crypto-derivatives exchange
Aditya Birla Sun Life AMC’s IPO has a
FTX moves to the Bahamas
Crypto-derivatives exchange FTX is now headquartered
in the Bahamas. The move, confirmed via email by an
FTX spokeswoman, followed an announcement on Mon-
growth advantage with entry load
day that FTX Trading’s Bahamian subsidiary FTX Digital Aparna Iyer band, the company would be valued at “Our approach is that of scaling up also keeps cost ratios under check. The
Markets has been registered by the Securities Commis- aparna.i@livemint.com ₹20,505 crore. What will investors get
for benefit. Our revenue growth would
Going steady fund house’s cost-to-income ratio has
sion of the Bahamas as a digital assets business, and that at this valuation? be good going ahead also,” said A. Bal- Aditya Birla Sun Life AMC has managed reduced sharply to 46.69% in FY21 but

B
Ryan Salame, former head of over-the-counter at Alam- uoyant markets, a quick asubramanian, managing director and
Mutual funds are conduits or inter- to bring down its costs and maintain compares poorly to peers such as Nip-
eda Research, had been appointed as the chief executive recovery from the second chief executive officer, ABSL AMC.
mediaries that help individuals and revenues despite the pandemic. pon AMC having lower ratios.
officer of FTX Digital Markets. The proactive stance wave of the covid-19 pan- “Fixed income always gives more reve-
institutions invest in the debt and (as a % of QAAUM) Further ABSL AMC has been losing
taken by the Bahamas and its regulatory bodies on cryp- demic and build-up of big nue as it generates high volume,” he
equity markets. Fund houses, there- Total revenue QAAUM (in ₹ trillion) market share in the past few years. The
(right-hand scale)
tocurrencies was one of the primary reasons for the move savings by Indian house- said.
fore, make money through fees, com- Total cost market share loss has been across big
to the Bahamas from Hong Kong, Blockworks reported holds have come as a boon for the mission and other charges. Thus, On a quarterly average basis, AUM 0.6 3 players as smaller fund houses have
on Thursday, citing comments from FTX founder and mutual fund industry. Would Indian growth was 9% for FY21 for the com-
building scale is one of the most impor- been able to increase their share. The
0.5 2.5
chief executive officer Sam Bankman-Fried. BLOOMBERG households and institutions venture tant ways to increase revenue. pany. This compares with 19% growth fund house will deliver on growth, but
further and park their savings in the of HDFC Asset Management Co. Ltd
In that, the ABSL fund house is so far 0.4 2 market share could be volatile, Balasu-
equity of a fund house and 12% of Nippon Life bramanian said.
besides its funds? REAPING GAINS India Asset Management 0.3 1.5 “There are new and interesting play-
Aditya Birla Sun Life Ltd. That said, growth ers coming up. Existing small players
0.2 1
(ABSL) Asset Manage- WITH an AUM of THE fund house’s THE fund house has has been driven by sys- are upping their ante. It is not going to
ment Company Ltd ₹2.94 trillion, Aditya
Birla Sun Life AMC
₹2,700-crore IPO
will open on 29 Sep
seen robust growth in tematic investment plan
the past few years, 0.1 0.5 be easy to keep up the scale,” said an
would be the fourth fund is India’s fourth at a price band of supported by fixed (SIP) flows, which lend analyst requesting anonymity. Valua-
house to list, and judging largest fund house ₹695-712 per share income products stability. 0 0 tion leaves room for a decent listing
FY19 FY20 FY21 Q1FY22
by the reception its peers Another factor that pop and grey market premium indi-
Note: QAAUM refers to quarterly average assets
have received, the helps ABSL AMC is the under management. cates the same, according to analysts.
mutual fund will not find it difficult to winning. With assets under manage- growth in equity fund AUM. The fund Source: Company’s draft red herring prospectus.
The upshot is that the fund house
get a strong response. ment (AUM) of ₹2.94 trillion, ABSL house has shown the second highest has given enough reasons for investors
The fund house’s conscientious AMC is the fourth largest fund house in growth rate in the equity mix of its SATISH KUMAR/MINT
to take a hard look at its offering. How-
approach to growth may win points the country. Its growth over the past AUM among peers in the industry. One basis point is one-hundredth of a ever, as far as the disclaimer in mutual
with potential investors. four years, notwithstanding the pan- Equity AUM is now 38.1% of the total percentage point. funds goes, past performance is no
China’s equity markets held firm last week despite fears The initial public offering (IPO) demic, has been a robust 18% on a com- AUM on a monthly average basis. There are some factors, though, that guarantee of future growth.
around a ‘Lehman moment’ in the economy. REUTERS
through which the fund house aims to pound annual growth rate (CAGR) Scale has buttressed profitability investors need to focus on. At an abso- ABSL AMC needs to deliver on its
raise roughly ₹2,700 crore will open on basis. The dominance of fixed income metrics. Net revenues as a percentage lute level, revenue from operations growth promises or else investors may
29 September at a price band of ₹695- products in the overall AUM also of average AUM has increased by 2 showed an 18% decline over two years. view the valuation as an entry load that
712 per share. At the upper end of the helped. basis points for FY21 to 45 basis points. As much as scale boosts revenues, it is too stiff.
China funds relying on Beijing
to handle Evergrande crisis
The closer investors are to Beijing, the less they fear that
China Evergrande Group’s debt crisis will cascade into
a wider financial meltdown. That’s the lesson from
China’s equity markets last week, which held firm in the
Jio, Airtel leave Vi far behind CSTL’s expansions, innovation
face of concern about whether the world’s second-big-
gest economy was headed for a “Lehman moment”.
That’s reinforced by Chinese firms continuing to sell dol-
in fight for active subscribers may keep investors interested
lar bonds and the yuan riding through this month little
changed. “There’s never been a precedent of letting a Harsha Jethmalani Ujjval Jauhari pany also uses non-toxic raw dends than other firms that may
Neck and neck
mega corporation go bankrupt” in China, said Niu Chun- harsha.j@livemint.com ujjval.j@livemint.com materials with lower effluents, enter the space, going ahead.
July data shows that Reliance Jio shares the top spot with Bharti
bao, a fund manager at Shanghai Wanji Asset Manage- Airtel when it comes to the market share of active subscribers.
leading to cost efficiencies. The first line of production

T I
ment Co. The government will not let the situation spiral he telecom sector has nvestors who bought shares of Unlike competitors that are dedicated to the HALS series
Bharti Airtel Vodafone Idea Reliance Jio Market share of active subscribers (in %)
out of control, he added. That kind of confidence was seen its visit location Clean Science and Technol- either dependent on China for will be at Unit 3 in Maharashtra
conspicuously absent on Monday, with mainland China register (VLR) improve 40 ogy Ltd (CSTL), the specialty raw materials or face competi- and the company is making capi-
closed for a two-day holiday and equity markets from by 4.6 million in July after two chemicals manufacturer, at its tion from Chinese companies, tal investments towards existing
Hong Kong to New York swooning amid concerns that consecutive months of 30 initial public offering (IPO) are a CSTL is a seller of products to and new products. Additional
Evergrande would default on its debts. BLOOMBERG decline, providing relief for happy lot. After listing at a pre- China. China con- production lines
investors in telecom stocks. 20
mium of 98% in July, the shares tributes more than According to will also be installed
This comes on the back of a have climbed a further 30% a third to the com- analysts, the at Unit 4.
Turkey to inspect price hikes gradual reopening of the
10
since then. pany’s revenues. HALS business The HALS busi-
economy across the country. True, the general buoyancy in Meanwhile, the ness can potentially
at top five grocery chains VLR is a metric that reflects the equity markets has rubbed company has for-
can potentially
add 30-40% to
add 30-40% to
Turkish trade ministry officials will inspect price the number of active subscrib- 0 off on the company’s shares too. ayed into hindered CSTL’s expected
increases at five of the country’s biggest grocery chains, ers on a mobile network.
Jan Feb Mar Apr May Jun Jul
But, a decent June-quarter per- amine light stabiliz- CSTL’s expected profits by FY25,
Source: Telecom Regulatory Authority of India, Motilal Oswal Financial Services Ltd profits by FY25
days after Turkish President Recep Tayyip Erdogan There were 989 million formance, expansion plans and ers (HALS) range of according to ana-
blamed the nation’s top supermarkets for a surge in food active subscribers in July, SATISH KUMAR/MINT
new forays have also helped. products. These are lysts at Axis Capital
prices. Trade minister Mehmet Mus ordered officials to showed data from the Tele- shares market leadership posi- performance was somewhat Analysts expected a 10.5% used in various Ltd.
inspect the prices of goods including eggs, milk, vegeta- com Regulatory Authority of tion with Bharti (Airtel),” ana- mixed as it gained market CAGR (compound annual industries such as water treat- As such, the company’s capac-
bles and cleaning supplies at the five chains, state news India (Trai). lysts at Motilal Oswal Financial share in seven circles and growth rate) in global demand ment, paints and coatings. The ities have doubled between FY17
agency Anadolu reported, citing a trade ministry state- Reliance Jio had the highest Services Ltd said in a report. broadly maintained its posi- for green chemicals over estimated global market size for and FY21 to 30,000 tonnes.
ment. The price hikes at the five chains “disrupt entire additions of 6.1 million active One basis point is one-hun- tion in four circles, while los- CY19-25 led by rising awareness the HALS series stands at $1 bil- With the first phase of Unit 3
markets”, Erdogan said last week. He also said that his subscribers among the three dredth of a percentage point. ing in the remaining 11”, they about the ill-effects of certain lion per annum. expected to start in the Decem-
government would bring surging prices under control telecom companies. This is a Close competitor Bharti Air- added. chemicals. Being the first Indian manu- ber quarter and the second
and blamed “opportunists” for rampant cost increases. significant jump from June tel Ltd saw its active subscriber Vodafone Idea Ltd (Vi) CSTL’s key business is green facturer of HALS products, phase of Unit 3 to be commis-
The share prices of Turkey’s biggest public grocery when 2.4 million base growing by remained a laggard with a chemicals. Further, the com- CSTL is set to receive more divi- sioned by FY23, capacities are
chains fell sharply on Friday. BIM Birlesik Magazalar AS, active subscrib- Of the 989 million 2.3 million in July. decline of 3.3 million in its set to rise to 50,000 tonnes by
the nation’s biggest grocery chain in terms of market cap, ers were added, active subscribers The company has active subscriber base in July. Robust outlook then. Unit 4 expansions will add
dropped 2%, while Sok Marketler Ticaret AS sank 3.2% taking Jio’s active in July, Reliance returned to the The pace of deceleration has more later on.
on Friday. BLOOMBERG subscriber base trend of active reduced from June, but there Clean Science and Technology has gained significantly from Ergo, CSTL’s revenues may
Jio had the backward integrations, exports and capacity expansions.
to 346 million.
highest additions s u b s c r i b e r s is little hope to restrict sub- grow at a CAGR of 23% over
“This was exceeding total scriber loss unless the com- (in ₹ crore) Ebitda margin (in %) FY21-24 on the back of phased
mainly sup- of 6.1 million subscriber addi- pany ramps up network Ebitda Profit after tax
(right-hand scale)
capacity additions at Unit 3,
p o r t e d b y a active subscribers tions, after two investments by raising funds. 300 60 point out analysts at Motilal
strong perform- months, analysts As far as Bharti Airtel and Oswal Financial Services Ltd.
ance in the rural noted. Vodafone Idea are concerned, 200 40 The Ebitda (earnings before
market, with 3.5 million sub- “Bharti (Airtel) and Jio are subscriber trends from now on income, tax, depreciation and
scriber additions, estimated to now tied at 35% market share will be a key factor to watch, 100 20 amortization) margin is also
be from JioPhone. 4G addi- on the VLR front, gaining at a with the tariff hike in mini- likely to remain robust at
tions too were strong at 6.9 similar pace over the past one mum recharge plans from 0 0 49%.The company reported
million. RJio gained 40 basis year,” analysts at Kotak Institu- July-end, analysts at Emkay FY18 FY19 FY20 FY21 30% year-on-year revenue
Note: Ebitda is earnings before interest, tax, depreciation
points (bps) in active sub- tional Equities said in a report. Global Financial Services Ltd and amortization. Source: Axis Capital Ltd
growth during Q1FY22, with the
scriber market share and now However, “Bharti Airtel’s noted. Ebitda margin at 49.3%.
SATISH KUMAR/MINT

Malaysian palm oil stockpiles may swell further after

surging 25% in August from a month earlier. REUTERS
Accenture’s Q4 shows strong IT demand, but concerns remain
Palm oil likely to touch $1,050 Harsha Jethmalani often seen as an indicator for the ture were weak at $7.1 billion, a term average, analysts noted.
Order flow
per tonne amid tight supplies harsha.j@livemint.com sector’s overall future prospects.
Accenture’s strong order bookings bode well for IT demand.
year-on-year decline of 5.6%. They see some more upside in IT
Palm oil futures will stay strong at least until March on an “The company’s 4QFY21 per- Secondly, Accenture’s attri- stocks on buoyant demand sce-

G
increase in export levies by top grower Indonesia, with lobal IT company Accen-
supplies seen tight during the first two months of 2022, ture’s impressive
according to veteran trader Dorab Mistry. The most-used Q4FY21 earnings have
vegetable oil is expected to trade between 4,000 ringgit positive takeaways for the Indian
($955) to 4,400 ringgit ($1,050) per tonne during the technology sector.
October-February period, before slightly dropping in Accenture reported revenues
March, Mistry, director at Godrej International Ltd, said of $13.4 billion in Q4, which was
at the Globoil conference on Saturday. Futures have at the upper end of its guidance.
averaged 3,908 ringgit so far this year, according to data For FY22, the firm foresees reve-
compiled by Bloomberg. Higher benchmark prices may nue growth of 12-15% despite
potentially curb purchases by top importer India in the acquisitions. This is impressive
coming months as the festive-season buying by the coun- and indicates that the demand
try will almost be over by next month. Malaysian stock- momentum for Indian IT servi-
piles may swell further, after surging 25% in August from ces would remain strong,
a month ago. Last month, Indonesia had raised its palm according to analysts. This bodes
oil export duty for September to $166 a tonne from $93 a well especially for tier-1 technol-
month earlier. Any move by Indonesia to increase its ogy firms such as TCS Ltd, Info-
export tax generally boosts demand for Malaysian palm sys Ltd and Wipro Ltd since
oil and supports futures in Kuala Lumpur. BLOOMBERG Accenture’s performance is
formance alongside revenue
outlook continues to confirm the
overall demand momentum,”
analysts at JM Financial Institu-
tional Securities Ltd said. “In
addition, strong net hiring of
around 55,500 employees, the
highest quarterly additions ever,
continues to reinforce the trend
of strong offshore-led hiring
with the strong hiring expected
to continue in the upcoming
quarter as well,” they said.
The domestic brokerage
house expects Indian IT firms to
report strong revenue growth in
the Q2FY22 earnings season.
However, the IT sector could
face some short-term challen-
Consulting Outsourcing Order bookings (in $ billion) tion increased to 19% on annual- nario, but supply side pressures
9 ized quarterly attrition from 17% could cap any further rally. That
7.5
in May 2021 quarter and 7% in said, valuations may remain
August 2020 quarter. Analysts at expensive.
6
Kotak Institutional Equities said “(Accenture’s) 20% growth in
4.5 they expect a similar trend for IT order inflow in FY21 at $59 bil-
3
stocks under their coverage uni- lion and commentary that the
verse. They feel the talent pipeline continues to be strong
1.5
crunch is severe and will remain indicate that the low teen growth
0 substantial for a few quarters. expectation that the Street has
Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21
Source: Emkay Global Financial Services Ltd
What does this mean for built in for Indian IT players for
Indian IT stocks and their valua- FY23 is realistic,” analysts at Nir-
SATISH KUMAR/MINT
tions? mal Bang Securities Ltd said in a
ges. Accenture’s outsourcing pointed out. This hints at decel- The Nifty IT index has been report on 24 September.
revenue, which is more relevant eration in the outsourcing seg- one of the best-performing indi- It could help sustain the high
for the Indian IT industry, is ment versus the current year’s ces in the past one year, surging price-to-earnings multiples that
guided to grow in high single annual growth of 13% in constant 97%. This index is now trading at they are trading at, but may not
digits to low double digits, ana- currency terms, the report said. a valuation premium of around help much in expanding them
lysts at ICICI Securities Ltd Outsourcing bookings of Accen- 80 times compared to its long- further, the report added.

Mark to Market writers do not have positions in the companies they have discussed here
LIVEMINT.COM
MONDAY, 27 SEPTEMBER 2021
NEW DELHI 05

www.caii.in

CEO’s CHOICE AWARD

PROFESSIONALS
FROM CORPORATE SECTOR WHO
RISE FROM THE RANKS AND BUILD INDIA WHILE
BUILDING A CAREER, MAKING AN HONEST LIVING WITHOUT
BECOMING BUSINESS TYCOONS OR POLITICAL LEADERS, HAVE BROUGHT
ABOUT THE NEW INDIA.
INDIA – THE WAY IT IS TODAY IS TAKEN FOR GRANTED. INFRASTRUCTURE – DIGITAL OR
PHYSICAL BOTH HAVE TAKEN SEVERAL DECADES TO COME UP.
THE ROLE OF THE STATE HAS REDUCED AND
CONTRIBUTIONS FROM THE CORPORATE SECTOR HAVE INCREASED.
IN THE GLAMOUR AND THE GLITZ OF CELEBRATING BUSINESSMEN AND LEADERS, THE ROLE OF PROFESSIONALS
IS FORGOTTEN. THEY DO NOT MAKE AWARD LISTS OR EVEN NATIONAL HONOURS.
CEO’S ASSOCIATION FOR INCLUSIVE INDIA (CAII) AND SKOCH GROUP PRESENT SKOCH CEO’S CHOICE AWARD.
IT IS A VOTE OF THANKS - A TOKEN OF GRATITUDE FROM A NATION TO ITS PROFESSIONALS.
THE AWARD IS DECIDED THROUGH PEER EVALUATION AND DOMAIN EXPERT CONSULTATION.
THE INTRODUCTORY THEME IS DIGITAL INDIA AND THE CATEGORIES ARE

Awards would be conferred on 30th October 2021 during the CAII Annual Day
info@skoch.in skochgroup skochconsultancy @skochgroup @skochsameer
06 MONDAY, 27 SEPTEMBER 2021
NEW DELHI CORPORATE LIVEMINT.COM

Govt pulling out all stops for Amazon advances

festive sales blitz to
150 GW RE capacity by 2 Oct align with Flipkart’s
FROM PAGE 1

closing date for the sale event.

Global PEs are eyeing a slice of the
MF business in India as the equity
investment culture emerges. PTI
Sebi may allow
private equity
firms to soon
become asset
managers
FROM PAGE 1
business, the two people said,
requesting anonymity.
“Also, the PE fund will be
required to create a com-
pletely separate and inde-
pendent AMC subsidiary and a
trustee to be the sponsor or
owner in control of a mutual
fund house,” the first person
said.
Furthermore, the PE firm
may have to adhere to differ-
ent regulations for launching
open-ended and close-ended
equity-oriented schemes.
“Sebi will hold a meeting
this week and put out the draft
norms for enabling PEs to be
sponsors or owners in control
of mutual funds,” said the first
person.
Global fund managers,
including PEs, are eyeing a
slice of the mutual fund busi-
ness in India, with the equity
investment culture emerging
fast in the country.
“The problem is that many
AMCs are promoted by NBFCs
and manufacturing compa-
nies, which are the worst-af-
fected by the pandemic. It’s
time that Sebi allows PEs to be
sponsors of AMCs if the regu-
lator wants to help the MF
industry grow,” said the sec-
ond person.
Against the backdrop of a
prolonged liquidity crisis in
the NBFC space since the
Infrastructure Leasing and
Financial Services Ltd col-
lapse in 2018, and a cash
crunch in manufacturing sec-
tor companies with AMC busi-
nesses, several entities have
been looking to sell off their
mutual fund business.
The mutual fund industry is
estimated to grow from ₹34
As part of the efforts, 2.2 GW is to be commissioned by 2 Oct and another 2.32 GW by 31 Oct In 2020, Flipkart launched its
festive season sale on 16 October,
while Amazon India started its
Utpal Bhaskar sale on 17 October.
utpal.b@livemint.com
NEW DELHI
To be sure, the first week of
the festive season sale has a lot
riding on it.
T
he Indian government is RedSeer Consulting estimates
pulling out all the stops to e-commerce firms will clock
achieve renewable energy
(RE) capacity of 150 giga-
sales worth $4.8 billion in the
first week of festive sales, a 30% E-commerce firms may clock sales
watts (GW) by 2 October,
said two people aware of the develop-
increase from 2020. E-com- worth $4.8 bn in the first week of
merce firms clocked almost $3.7 festive sales, said analysts. MINT
ment, seeking anonymity. billion in GMV in the first week
As part of the efforts, 2.2 GW is to be
commissioned by Gandhi Jayanti and
of festive sales last year. “Based on consumer behav-
RedSeer expects overall sales iour, we have been observing, we
another 2.32 GW by 31 October. The to rise 23% to $9 billion this know today they are focused on
initiative comes in the run up to the year from the $7.4 billion in value and quality, and we are
2021 UN Climate Change Conference, total gross merchandise value determined to deliver on this
COP-26, to start in Glasgow on 31 Octo- (GMV) of goods sold on e-com- front. The Big Billion Days is our
ber. merce platforms during the fes- commitment to meet these
India‘s installed renewable energy tive period in 2020. The pro- requirements safely and effi-
capacity is 147.05 GW, including jected gains are, however, ciently. There are lakhs of sellers
hydropower projects of 46.37 GW. The slower than the record 48% who have joined us on this jour-
country has installed solar and wind growth witnessed last year, ney this year, and for many of
energy capacity of 100.68 GW. when offline establishments them, the Big Billion Days is crit-
“Of the 2.95 GW to be commissioned saw sales plummet because of ical as they continue to strive to
within this time period to reach 150 fear of covid and pandemic-re- revitalize their businesses that
GW, 410 megawatts has been reached, lated restrictions. have been adversely affected by
leaving 2.54 GW to be commissioned,” “Our top prior- this unprece-
said one of the two people mentioned India‘s installed renewable energy capacity is 147.05 GW, including hydropower projects of 46.37 GW. BLOOMBERG ity remains cus- Flipkart may have dented pan-
above. tomer trust and the 420,000 sellers on demic,” Krishna-
“Projects have been identified for 2030, according to the government. lowing the dip during the second wave 200.57 GW on 7 July, reflecting the interest of our sell- its platform by Dec, murthy said in the
achieving this 150 GW renewable The country has also reduced its emis- of the covid-19 pandemic. revival of economic activity. ers, especially the while Amazon has memo to employ-
energy capacity by 2 October. Also, sions by 28%. Union power and new and renewa- Singh has been vocal about urging lakhs of small sell- ees.
said the event will
suggestions have been sought from Queries emailed to the spokesperson ble energy minister Raj Kumar Singh the group of 20 nations (G-20) having ers and the tens of Flipkart is
developers for projects that can be of the ministry of power and new and on Thursday said India’s demand for per capita greenhouse gas (GHG) emis- thousands of local see over 850,000 expected to have
commissioned by 2 October and 31 renewable energy on Friday morning electricity is growing, which denotes a sions above the global average to bring shop owners sellers participate 420,000 sellers on
October,” said the second person. were not answered till press time. healthy growth of the economy. India’s it down to the world average, thereby across India. We its platform by
India, the biggest emitter of vacating some carbon space for continue to inno- December, while
greenhouse gases after the US and CLEAN ENERGY GOALS developing nations. The developed vate for our partners, small busi- Amazon has said the event will
China, plans to reduce its carbon world occupies about 67-75% of the nesses and customers, as they see over 850,000 sellers partici-
footprint by 33-35% of its 2005 lev- INDIA plans to IT has committed to ACCORDING to govt, IT seeks to reach 175 total carbon space. gear up for the upcoming festive pate.
els by 2030, as part of its commit- reduce its carbon
footprint by 33-35%
have 40% of its total
installed power
38.5% of India’s power GW of clean energy
capacity comes from capacity by 2022 as
India is the only major economy season. The Amazon Great “Let’s also not forget the scale
ment to the UN Framework Con- of its 2005 levels capacity from non-fossil fuels and it part of its climate with actions in line to keep global Indian Festival will now start of employment that this event
vention on Climate Change by 2030 renewables by 2030 will touch 66% by 2030 commitments warming below 2°C of pre-indus- from 3 October, and as always, drives through an extensive sup-
adopted by 195 countries in Paris in trial levels, according to Singh. The Prime members will have early ply chain that will help make the
2015. minister has also called out nations access,” said an Amazon spokes- festivities a reality for numerous
The country has also committed to India is running what will become electricity demand was 124 billion units on their carbon neutral intent person on Sunday. households. To enable this, we
have 40% of its total installed power the world’s largest clean energy pro- in August, compared to 106 billion announcements with India’s per capita Meanwhile, Flipkart group are going to make some changes
generation capacity from renewables gramme of achieving 175 GW of clean units recorded in the corresponding emissions being just about one-third of chief executive officer Kalyan to our plans. We are now kick-
by 2030. energy capacity by 2022 as part of its month of 2019 before the covid-19 pan- the global average. Krishnamurthy told employees starting this event on 3 October
India has reached 38.5% of its global climate change commitments. demic led to a drastic reduction in He has also termed the announce- on Saturday in an internal memo and making it an eight-day
installed power capacity from non-fos- The country’s electricity demand has power demand. India’s peak electricity ments on carbon neutrality by some about the change in the launch event, ending on 10 October,”
sil fuels and this will go up to 66% by also been on an upward trajectory fol- demand reached an all-time high of countries as “meaningless”. date of the Big Billion Days sale. added Krishnamurthy.
Invesco writes to Zee again, Lenders tie up 17 mn join workers’ database
with fintech cos
demands Goenka’s removal to expand biz FROM PAGE 1 37% in the first week to almost
50% in the latest week,” the
marks with the registration of labour ministry said.
Lata Jha board on 23 September, and chief executive officer of FROM PAGE 1 more than 17.1 million workers The government’s target is
lata.j@livemint.com Invesco reiterated its EGM call, Zee, the company said in a from the unorganized sector to enrol more than 380 million
NEW DELHI citing a Zee disclosure to stock stock exchange filing last week. network. It requires us to work and in unorganized employ- workers in the unorganized
exchanges about a non-binding In its letter, Invesco said with fintechs. It gives you access ment,” it added. sector.

trillion to ₹92 trillion by
FY29-30 in terms of assets,
according to a report by bro-
kerage Elara Capital.
According to the report,
mutual funds are attracting a
higher share of money flowing
into financial assets.
Gross household invest-
ments in MFs have grown at a
compound annual growth rate
(CAGR) of 27.3% over FY13-20.
In comparison, gross house-
hold investments in financial
assets grew at a CAGR of 11.5%
over FY12-20.
MF assets in India as a per-
centage of GDP are merely 12%
versus the world average of
63%, which implies a huge
headroom for growth, says the
report.
Some fund houses and con-
sultants have projected that
the industry will hit the ₹100-
trillion assets under manage-
ment mark much earlier.
I
nvesco Developing Mar-
kets Fund and OFI Global
China Fund Llc, the largest
shareholders of Zee Enter-
tainment Enterprises Ltd,
renewed their call for an
extraordinary general meeting
(EGM) to remove Zee’s chief
executive and managing
director Punit Goenka from the
board.
On 13 September, the two
institutional investors, with a
17.88% stake in Zee, also called
for the removal of independent
directors, Ashok Kurien and
Manish Chokhani, and
appointing six independent
directors—Surendra Singh Sir-
ohi, Naina Krishna Murthy,
Rohan Dhamija, Aruna
Sharma, Srinivasa Rao Adde-
palli and Gaurav Mehta. Soon
after both Chokhani and
Kurien resigned from the
board.
In its second letter to the
term sheet that was signed with “decisions of material strategic to a different profile of clients, The government seeks to The labour ministry said
Sony. import must follow and not and if you are getting people digi- ensure the benefits of social analysis based on last week’s
Last week, Zee’s board sub- precede actions towards estab- tally, chances are you are getting welfare schemes reach vulner- data showed significant num-
mitted an in-principle nod for lishment of a proper and inde- a lot more data,” Srinivasan said. able people by enlisting unor- bers of women engaged in
the merger with pendent govern- For big banks, the value propo- ganized sector workers on the domestic work are getting
Sony Pictures ance structure as sition is different from smaller database. themselves registered on the
Networks India In its second determined by peers, and it also differs based on The labour ministry said the website. This is an occupation
(SPNI). The two letter to the the company’s product offerings. registration of workers gained where women outnumber
firms have board on 23 Sep, shareholders”. Some banks have teams momentum week on week as Union labour minister men by a wide margin.
entered a non- Invesco reiterated The investor working on artificial intelli- authorities reached out to con- Bhupender Yadav MINT Besides, women from sec-
binding term
its EGM call, citing added that the gence (AI) and machine learn- stituents and beneficiaries. tors such as agriculture, food
sheet that offers m e r g e r ing (ML) to harness data, but it Government data showed worker, including those who industries, apparel industry,
90 days for Zee a Zee disclosure announcement is easier to have a fintech firm that while 1.35 million people perform a very small job, is “small scale units of tobacco/
and SPNI to con- to bourses with Sony “is that exclusively works on such registered on the website in the able to avail the benefits of beedi rolling”, as well as gov-
duct due dili- symptomatic of tech. For instance, in August, first week of the programme, at government schemes. More- ernment scheme workers in
gence and finalize the erratic man- Kotak Mahindra Bank least 6.95 million workers were over, those who register on the the healthcare industry are
the definitive agreements to ner in which important and deployed a do-it-yourself plat- registered on the database in portal are eligible to get insur- coming on the database.
combine their linear networks, serious decisions have been form for missed loan repay- the week ended 26 September, ance up to ₹2 lakh,” Union D.P.S. Negi, director-gen-
digital assets, production oper- handled” by the company. ments in a tie-up with fintech indicating the pace of enrol- labour minister Bhupender eral of the Labour Bureau, said
ations and programme librar- “Precisely to protect share- firm Creditas Solutions. Kotak ment is accelerating. Yadav said. state governments, local self-
ies. holder value and in exercise of said the platform, powered by “Registration is necessary so “There has been week-on- governments, state-owned
The merged entity will be a our statutory rights as an ordi- AI and ML, delivers a personal- that we know how many work- week improvement in the per- companies, app-based services
publicly listed company in nary shareholder, we have ized and non-intrusive experi- ers are there in each trade. centage of the female work- employing gig workers and
India with Essel Group founder called upon the company to ence. In July, HDFC Bank part- More than 400 trades have force registering themselves employers belonging to the
and chairman Subhash Chan- hold an EGM and it is your duty nered with Creditas to offer a already been represented on on the e-Shram portal. The unorganized sector would also
dra’s son Punit Goenka contin- under company law to now do guided and customized debt the portal. We want everyone share of women workers dras- have to play a big role in mak-
uing as the managing director so.” management solution. to register so that every tically improved from around ing the programme a success.

NTPC wins 1.9 GW solar power

m MINT SHORTS
PM Modi to launch Ayushman
Bharat Digital Mission today
New Delhi: Prime Minister Narendra Modi will launch the
PTI nationwide roll out of Ayush-
man Bharat Digital Mission on
Monday, which is currently
running in select states.The
pilot project had been
announced by the Primer Min-
ister from the ramparts of the
Red Fort on 15 August, 2020.
The nationwide roll-out of
Ayushman Bharat Digital Mis-
sion coincides with NHA cele-
brating the third anniversary of
Ayushman Bharat Pradhan Mantri Jan Arogya Yojana. PTI
Yogi Adityanath expands cabinet
ahead of UP assembly polls
Lucknow: Jitin Prasada, who switched from the Congress to the
Bharatiya Janata Party (BJP) recently, was on Sunday inducted
in the Yogi Adityanath cabinet, while six others took oath as min-
isters of state (MoS). The expansion of the council of ministers has
‘Monetary policy tightening by
RBI is several quarters away’ project in bids floated by IREDA
taken place as the BJP prepares for the assembly elections in the HT New Delhi: Government-
crucial state early next year. The new MoS are Paltu Ram, Chhat- owned NTPC Ltd has won 1.9
arpal Gangwar, Sangeeta Balwant Bind, Dharamveer Prajapati, gigawatts (GW) solar power
Sanjeev Kumar Gaur and Dinesh Khatik. PTI project contract in the bids
floated by Indian Renewable
Energy Development Agency
IECs not updated since Jan 2005 Ltd (IREDA). This assumes sig-
nificance given that NTPC
to be deactivated from 6 October recently bid a record low solar
New Delhi: The commerce ministry has decided to deactivate tariff of ₹1.99 per unit setting a AFP
all importer-exporter codes (IECs) that have not been updated new benchmark in the sector. STAFF WRITER
after January 2005 with effect from 6 October this year, a move
which would help in knowing the actual number of real traders
in the country. The IEC is a key business identification number Punjab CM inducts 15 ministers,
that is mandatory for exports or imports. No person shall make Kolkata: The Reserve Bank of India (RBI) is expected to
BLOOMBERG any import or export except continue with its current accommodative stance to main-
including seven new entrants
under an IEC number granted tain sufficient liquidity in the system and monetary policy Chandigarh: Punjab chief minister Charanjit Singh Channi car-
by the Directorate General of tightening is several quarters away as the economic revival ried out his first cabinet expansion on Sunday, inducting 15 cabi-
Foreign Trade (DGFT). On 8 has not reached the pre-covid level, the apex bank’s former net ministers which included seven new entrants, as the Con-
August, the DGFT mandated all deputy governor R. Gandhi claimed. He said the low-inter- gress gears up to face assembly elections that are barely five
IEC holders to ensure that est rate regime will continue to support the economic months away. The new faces in the Channi ministry include Ran-
details in their IEC are updated activities.“RBI will do (monetary policy tightening) when deep Singh Nabha, Raj Kumar Verka, Sangat Singh Gilzian, Par-
electronically every year during the economy will be growing sustainably,” he said. PTI gat Singh, Amarinder Singh Raja Warring and Gurkirat Singh
the April-June period. PTI Kotli. PTI
LIVEMINT.COM CORPORATE MONDAY, 27 SEPTEMBER 2021
NEW DELHI 07

Bouncing back
Airports in India catered to around 14.26 million passengers in
August, highlighting a sustained recovery in air travel demand.
TOP INDIAN AIRPORTS FOR
DOMESTIC TRAFFIC (in mn)
TOP INDIAN AIRPORTS FOR
INTERNATIONAL TRAFFIC
Proceedings in Cairn case paused
2.6
(August 2021) New Delhi 3,98,722

Mumbai 1,84,787 A New York court has postponed the tax suit to 18 Nov following a joint request from Cairn Energy and Air India
1.4
1.2 Kochi 1,55,322
0.93 PTI The British company had won an which Cairn has said should be con-
0.8
Hyderabad 87,645 feedback@livemint.com international arbitration award sidered the alter ego of the Indian
NEW DELHI against levy of such taxes and sought government. “The implementing
Chennai 83,232 to take over Air India’s assets when regulations are in the rulemaking

A
New
Delhi
Mumbai Bengaluru Hyderabad Kolkata
Source: AAI
New York court has the government refused to honour process and will take some time,” the
paused Cairn Energy’s the award and refund $1.2 billion plus two had said in the petition seeking
SARVESH KUMAR SHARMA/MINT
pursuit of US assets of Air interest and penalty. extension of the 21 October deadline

Airports in India India for the recovery of

$1.2 billion arbitral
award, so as to allow the British com-
Cairn has indicated
that the refund, without
interest and penalty, was IN SIGHT
for the presentation of
SOLUTION case papers and initial
pretrial conference on 28

record 35% more pany to reach a settlement with the

Indian government on the long-
drawn dispute.
The New York district court
passengers in Aug delayed the tax suit to 18 November,
according to court documents
reviewed by PTI.
Rhik Kundu
Hyderabad’s Rajiv Gandhi This follows Cairn Energy and Air
rhik.k@livemint.com International Airport regis- India jointly asking the court to stay
NEW DELHI tered 1.18 million and 934,676 further proceedings in view of the
domestic passengers, respec- government enacting a fresh law to
Cairn had won an arbitration award against the levy of taxes and sought to
take over Air India’s assets when the government refused to honour the award.
framing rules that will lead to with-
drawal of the retrospective tax
demand on Cairn and 16 other com-
ing that the companies will have to
furnish committing to withdraw liti-
gations is under finalization and
acceptable to it—opening
an avenue to settle the IN all, India has to
seven-year-old dispute. return about
₹8,100 crore, of
October.
They had requested the
court to “stay any further
Cairn and Air India in a which ₹7,900 crore is proceedings in this matter
joint request to US Dis- due only to Cairn
trict Judge Paul Garde-
phe on 13 September POST settlement,
through 31 October and
reschedule the initial pre-
trial conference and,
Cairn would drop
stated that a stay on pro- lawsuits threatening respectively, the deadline
ceedings would give them seizures of Indian for the parties to submit
“additional time to evalu- property abroad their joint pretrial letter
ate the effects and impli- and proposed case man-

I
ndian airports catered to tively, in August, up from scrap retrospective taxation in the panies, including Vodafone Group of should be released in the coming cations” of legislation that agement plan, for new
about 14.26 million passen- 878,823 and 687,636 passen- country. UK. days, they said. repealed the retroactive tax. dates in November 2021,” they said.
gers in August, a 35% gers in the previous month. The new law will result in with- These rules require the companies Companies will have to use that In return for the ₹7,900 crore, “The parties have conferred and
increase sequentially, high- Scheduled airlines in India drawal of the ₹10,247 crore tax to withdraw all litigations against the format to give an undertaking, post Cairn would drop lawsuits threaten- agreed that the stay will facilitate the
lighting a sustained recovery were in August allowed to sell demand that the government had government in return for being which the money will be refunded. ing court-ordered seizures of Indian efficient resolution of the dispute,
in air travel demand in line up to 72.5% of their pre-covid sought from Cairn. refunded any money that was col- In all, the government has to return government property abroad. conserve the court’s and parties’
with economic recovery and capacity on domestic flights. Sources with direct knowledge of lected to force the retrospective tax about ₹8,100 crore, of which ₹7,900 One of those suits was filed in May resources, and is not intended to
the progress on vaccinations. This has been increased to the matter said the finance ministry is demand. A format for the undertak- crore is due only to Cairn. against state-owned Air India Ltd, obstruct or delay,” they added.
The airports had catered to 85% in September.
around 10.53 million passen- In terms of international
gers in July, according to data passenger traffic, the New
from the Airports Authority of Delhi airport recorded
India (AAI), the state-run oper- 398,722 passengers in August,
ator of most airports in the up from 266,533 in July, while
country. Mumbai recorded 184,787 pas-
The number of interna- sengers during the month, up
tional passengers in August from 101,203 in July.
rose to 1.29 million from 0.80 Kochi and Hyderabad air-
million in July, while domestic ports registered 155,322 and
traffic grew to 87,645 interna-
12.97 million Scheduled tional passengers
from 9.73 million international respectively in
in that period. flights remain August. These
New Delhi, suspended at airports had
Mumbai, Benga- reported 84,587
least till the end
luru and Hydera- and 54,375 inter-
bad were the top of September due national passen-
airports in terms to the pandemic gers, respectively
of domestic traf- in July.
fic, while New Scheduled
Delhi, Mumbai, Kochi and international flights remain
Hyderabad were the busiest suspended at least till Septem-
airports for international traf- ber-end because of the pan-
fic during August, the data demic, which is likely to be
showed. extended. Only flights under
New Delhi’s Indira Gandhi bilateral air bubbles, which is a
International Airport saw mechanism to resume flights
more than 2.6 million domes- between India and other
tic passengers in August, up nations with preconditions
from about 2 million in July. during the pandemic, special,
Mumbai’s Chhatrapati Shivaji and cargo flights are allowed to
International Airport operate. India has bilateral air
recorded about 1.4 million bubble agreements with 28
domestic passengers in countries, including Bangla-
August, up from about 1 mil- desh, Canada, France, Ger-
lion in the previous month. many, Japan, Maldives, the
Bengaluru’s Kempegowda Netherlands, the UAE, the UK,
International Airport and and the US.

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#1 Business News
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08 MONDAY, 27 SEPTEMBER 2021
NEW DELHI DEALS, TECH & STARTUPS LIVEMINT.COM

m MINT SHORTS
Crypto exchange giants cut back
ChrysCapital plans to raise Antler eyes
portfolio of
on China users as ban widens
New Delhi: Two of the world’s largest Bitcoin exchanges have
halted new registrations for Chinese users and one will retire cur-
rent accounts, taking actions to comply with Beijing’s latest
$1 bn corpus for ninth fund 100 startups
in 2.5 years
crypto ban. Exchange operators Huobi and Binance have stopped
letting traders use mainland China mobile numbers to register PTI
new accounts, after the People’s Bank of China said on Friday all feedback@livemint.com
crypto-related transactions will be considered illicit financial The homegrown private equity firm is looking to make a final close of the fund in December NEW DELHI
activity. New sign-ups are still available for Hong Kong users on

E
both platforms, but mainland China is no longer an option for arly-stage venture capital
new-account creation. Huobi Global has also ceased account Debjyoti Roy firm Antler is looking at
registration for new users in Mainland China effective debjyoti.roy@livemint.com building a portfolio of 100
24 September. BLOOMBERG NEW DELHI startups in the next two-and-a-
half years in the country, work-

C
hrysCapital is set to raise ing with these new businesses
US-based realty firm Hines eyes about $1 billion for its through the first 12 months of
ninth fund, two people their operations and help them
business expansion in India familiar with the develop- build in India for the world.
BLOOMBERG
ment said. Antler India Partner Rajiv
The homegrown private equity (PE) Srivatsa said Antler was set up
firm is looking to make a final close of with the vision of being an insti-
the fund in December, the people said, tution that impacts the first 12
requesting anonymity. months of the founder’s jour-
“It’s likely to be a single close,” one of ney, and stay along as the
the two people said. startup becomes a unicorn or
A spokesperson for New Delhi-based even a decacorn.
ChrysCapital declined to comment. “We still have a portfolio of
ChrysCapital raised $850 million for only 12-13 companies (in India),
its eighth fund in 2019. The latest the idea is to do this with 100
round may grow its total assets under companies over the next two-
management to nearly $5 billion, and-a-half years...the idea is to
New Delhi: Bullish on demand for premium housing and according to an analysis by the two peo- create a truly global venture
office spaces, US-based realty firm Hines plans to expand ple cited above. capital firm that helps the
its India business and is targeting to form at least three local The average ticket size of an invest- founders in the first 12 months
partnerships for projects across major cities. Hines, a pri- ment in the new fund would be $100 Last October, ChrysCapital exited its five-year-old investment in South Indian Bank, incurring a loss. MINT institutionally,” he said.
vately-owned global real estate investment firm, entered million, the second person said. Founded in Singapore in
India in 2006 and has so far invested over $400 million The sectors where the capital would from its last fund as well. Last October, ChrysCapital exited its get corpus of $550 million. Kedaara 2017, Antler has invested in
equity for development of projects across major cities. be deployed wasn’t immediately clear, In April, ChrysCapital took a 27% five-year-old investment in South Capital was eyeing nearly $1 billion for over 300 companies globally
Hines India managing director and country head Amit but the PE firm may be targeting new- stake for an undisclosed Indian Bank, incurring a loss. its third fund and made its first close across 30 different industries.
Diwan said the company is in an advance stage of talks with age technology and consumer compa- amount in pharmaceuticals Other exits over the past year recently, according to a media report. Of these companies, 40% have
a few local builders and landowners for acquiring new pro- nies, the second person said. firm Corona Remedies Pvt. include Ipca Laboratories Ltd. In September last year, mid-market PE at least one female co-founder,
jects through development management (DM) fee model The PE fund has traditionally pre- Ltd in a secondary transaction. The turmoil caused by the firm Carpediem Capital hit the road for and the founders represent 70
or joint ventures. The company is also evaluating proposals ferred financial services, healthcare, In March, the fund invested in New Del- covid outbreak hit the fundraising its second fund. nationalities. The firm has offi-
of acquiring projects in Bengaluru, Mumbai, and Pune. PTI business services and consumer sectors hi-based Safex Chemicals India Ltd in a efforts of private equity and venture In May last year, VCCircle reported ces across five continents, cov-
for making its bets. secondary transaction. At the same time, capital firms in India. Consequently, that homegrown PE firm Gaja Capital ering most major entrepre-
ChrysCapital boasts of a wide portfo- it made a foray into the personal care not too many PE firms were keen to tap started raising money for its third fund. neurial hubs, including Lon-
Mechaniks TV plans to raise $1 mn lio of publicly-traded companies in The same month, VCCircle don, Berlin, Stockholm, New
for expansion of its offerings addition to private firms. It claims BIGGER BETS reported that Sixth Sense Ventures York, Singapore and Sydney.
to have made more than 90 invest- was floating a new venture capital Srivatsa explained that most
Mumbai: Independent skill-tech platform for automotive ments across sectors and realized THE latest round THE average ticket THE fund has usually IT claims to have fund. However, on the fundraising venture capitalists usually
mechanics, Mechaniks TV, is in the process of raising funds to the more than $5.6 billion from more may grow the PE
firm’s total assets
size of an investment bet on sectors such
in ChrysCapital’s as financial services,
made more than 90
investments across
side, local venture capital funds come into the mix after the
tune of around $1 million for expansion of its offering and tech- than 70 full exits. under management ninth fund would healthcare, business sectors and realized have a different story to tell. product has been launched
nology enhancement, its co-founder Rajeev Radhakrishnan has The PE fund’s investment ranges to nearly $5 billion be $100 million services, consumer $5.6 bn from exits Several venture capital firms and after the founder has some
said. Launched in April 2020 by T7E Aftermarket Connect from minority to control deals. It either announced fundraising kind of traction. “Antler’s
Pvt. Ltd, the startup provides video-based technical training usually contributes $25-250 mil- milestones or floated new funds. sweetspot is to significantly
in Hindi for servicing, majorly two-wheelers. The platform lion in a portfolio firm. segment through Wow Skin Sciences. the market to raise capital. Also with unicorns such as Dream 11 impact the first 12 months of
claims that as many as 50,000 mechanics pan-India have The PE firm has continued to make The company had also backed gam- In July, homegrown Motilal Oswal raising a sizeable corpus for startup the founder’s journey, to be a
downloaded its mobile application, which is at present in Hindi a deeper presence in the pharmaceuti- ing unicorn Dream11 last year. Private Equity (MOPE) launched its investment, early-stage deals are more true partner in that first 12
and English. PTI cals space where it made investments The PE firm has also made a few exits. fourth sector-agnostic fund with a tar- likely to happen. months,” he said.

Big hauls bulk up total deal value AI-powered platforms help investors pick the right deal
Overall deal value grew by a fifth during the week to $1.96 billion as data connectivity startup
Fivetran and consumer electronics brand Eureka Forbes hauled in more than $500 million each. Beena Parmar
The deal value would have ballooned further had numbers been announced for the two
facilitates recoveries of more partner and head of deal advi-
headline-grabbing deals of Zee-Sony Pictures and Razorpay-Salesforce Ventures.
beena.parmar@livemint.com than ₹500 crore per month, sory services, BDO India.
The funding deal value stood at $1.58 billion and mergers and acquistions (M&As) at $385 MUMBAI will soon enter the retail credit “The ability to interpret and
million. M&As more than doubled from 7 to 16 and private financing came down to 44 from 49 in and property segments to col- question the dataset appropri-

H
the preceding period. undreds of potential lapse the diligence timeline ately is the key to successful
By Ankit Agarwal targets are clamouring taken for loan issuance, said diligence,” he said.
ankit.agarwal@livemint.com for the attention of co-founder Vishal Sharma. The likes of Karza, AdvaR-
investors. This is prompting The plan to foray into new isk, IDfy, Cubic Tree, Prop A
Top M&As
investors to turn to smart, arti- segments followed ICICI Bank and Save Risk have attracted
The biggest weekly merger of India's Zee and a domestic unit of Japan's Sony Group Corp.
will challenge rival Walt Disney Co. ficial intelligence (AI)-pow- picking up a minority stake in funding from investors want-
Target Buyers Deal value ($ mn)
ered platforms that can pro- the fraud detection and pre- ing to cash in on the rapidly
vide them with enough data to vention-based fintech startup mushrooming sector. Karza
Zee Sony Pictures Networks India - check the financials, tax fil- last year. In 2019, AdvaRisk got raised about $713,101 (around
RDC Concrete Infra.Market (Sold by True North) 100* ings, litigations, regulatory a seed investment from early- ₹5 crore) in a pre-Series A
Blink Interactive Mphasis 94 compliance and credibility of a stage VC firm funding in 2019
ZestMoney Zip 50 potential target in minutes. Some platforms not only help investors detect what a target firm Sprout Venture Rising investor from Singapore
Surya Vidyut Torrent Power (sold by CESC, Haldia Energy) 42.76 Karza Technologies can get may be concealing but also help banks identify risky loans. ISTOCK Partners. interest Angel Network
KFin Technologies Kotak Mahindra Bank 42 complete access to the profile Rising investor underscores and others.
of a target firm in a minute, of search engines to glean books do not throw up any interest in the the importance Hyderabad-
Top funding deals which can offer a perspective information from government hidden surprises later. segment under- based SignalX, an
of third-party
In the biggest weekly funding deal, US private equity firm Advent International will buy on the credibility of a business, databases, including judicial Some platforms not only scores the impor- AI-based risk
a controlling stake in Eureka Forbes, its parent Shapoorji Pallonji Group said. according to its co-founder and real estate records. Agen- help investors detect what a tance of third- analysis in management and
Deal value ($ mn) Investors FrontRow and CEO Omkar Shirhatti. cies such as Karza can sniff out target firm may be concealing party data analy- dealmaking compliance
Design Café  Eight Roads
Eureka Forbes  WestBridge Ventures, GSV*
Karza uses tech- litigations, if any, but also extend services to sis in today’s fast- startup, also
 Advent International Delhivery Capital* nologies such as loan defaults, banks at a time when they have paced world of raised seed fund-
Deep Vision LifeCell
 Addition* 14 optical character rec- encumbrances, gone cautious in the wake of a dealmaking. ing last year in a round led by
 Tiger Global*  OrbiMed 15
25 ognition text detec- money laundering or slump and bad loan crisis. “Rather than waiting for US-based 3Lines Venture Cap-
27 tion and text-recognition algo- benami transactions the target AdvaRisk offers early detec- ready dataset results from the ital. Inc42 reported this month
35 31 30.5 Wow! Momo
rithms that are trained on hun- firm is involved in by analysing tion of risk across loans worth seller, which could be window that online fraud detection
125 60 Premier  Tree Line
598.1** 565 dreds of various font families data that is accessible and pub- ₹50 crore to ₹1,000 crore to dressed and may take time, dil- and background verifier IDfy
Energies Investment
FloBiz  GEF Management* and background sounds. licly available, according to foreign and Indian banks, igence teams are requesting will raise funds from early-
Medikabazaar  Sequoia Capital The startup also uses face Rajesh Narain Gupta, manag- including ICICI Bank and access to core systems (not stage venture capital firm
 CDC Group* Capital India, Partners recognition models and sour- ing partner of SNG and Part- State Bank of India, as well as only financial but also operat- Blume Ventures and TransUn-
Think Investments,
FiveTran Elevation Capital, *Lead investors ces government data to per- ners. Investors are seeking funds and non-bank lenders. ing systems) and are analysing ion International, which is a
 Andreessen Beenext*
**According to media reports form verification in real time. such information to ensure The startup, which moni- raw data using business intelli- global information and
Horowitz* Source: VCCircle, VCCEdge
The platforms use a variety that the target company’s tors five lakh accounts and gence tools,” said Samir Sheth, insights company.

KEY STEPS FOR IT FIRMS TO TRANSFORM BIZ MODELS FROM STAFFING TO SOLUTIONS
sell both models, but the prominent brands have strong solutions
capabilities.
EXPERT The staffing model is facing three existential threats. One,
commoditization of traditional application development, main-
VIEW tenance and enterprise platforms are putting margins under
pressure. Staffing margins are often in the high teens, leading to
ABHISEK MUKHERJEE single-digit Ebitda (earnings before interest, tax, depreciation
and amortization.) Two, low-end work that provide volumes are
Respond to this column at
feedback@livemint.com
being replaced by automation or software-as-a-service products.
Three, in the premium market focusing on niche digital skills, the
talent is limited, expensive and prefer established brands. Conse-
sitating the old leadership (that ironically desires to transform)
to create space. Second, transformation requires investments: To
create new offerings, build pilots, attract new leadership and tal-
ent. Shareholders (often past staffing leaders) must forgo short-
term cash for potential long-term value. Third, transformation
requires time. In our experience, transformation that creates
meaningful shareholder value takes three to five years. Share-
holders must invest and trust the new
Staffing cos are leadership over this protracted period.
like recruitment Sadly, many transformation initia-
tives fail because shareholders do not
agencies, while internalize these principles. Even if
ing relationships, though exceptions exist. Also, existing relation-
ships determine the focus industries. Transformation starts with
the effective identification of these intersections between what
the clients need and what the firm can effectively offer.
Execution involves building the trinity of practice, sales and
delivery. Practice builds the solutions and associated capabilities;
sales take these offerings to market and delivery ensures client
satisfaction, leading to repeat work. This is an iterative process
that is fine-tuned over multiple cycles. A big portion of the invest-
ments, both time and money, is spent in this cyclical fine-tuning.
It starts slow, but if done well, builds momentum over time.

C
ognizant was founded in 1994. Its current revenue and
valuation are approximately $17 billion and $40 billion,
respectively. Driven by Y2K (the software bug scare in the
year 2000), hundreds of Indian IT services firms were started in
the 1990s. Unlike Cognizant, many of the survivors have reve-
nues below half a billion dollars.
One reason for this disparity is that many firms failed to trans-
form their business models from staffing to solutions. In staffing,
IT firms place engineers directly under the supervision of client
managers, who scope and control their deliverables. Solutions
firms sell specific technology offerings and not engineers.
Staffing companies are like recruitment agencies, while solu-
tions companies resemble consulting firms. Most Indian IT firms
quently, while solutions firms may command revenue multiples
of 2+, staffing firms are often valued at or below revenue.
Having directly observed multiple efforts to evolve from staff-
ing to solutions, we have identified three philosophical impera-
tives underpinning a successful transformation.
First, leaders must acknowledge that staffing and solutions,
though related to technology, are fundamentally different busi-
nesses. Staffing relationships are typically with procurement and
human resources, whereas solutions require business and CIO-
level relationships. Staffing relationships with clients do not eas-
ily translate to solutions opportunities. Offering development
and delivery capabilities are necessary for solutions, but not staff-
ing. Transforming to solutions requires a new leadership, neces-
solutions firms they bring in new leadership, they do
resemble not invest enough time and money.
consulting cos However, once these philosophical
underpinnings are in place, the focus
can shift to building a transformation
strategy and its execution.
While a transformation strategy has multiple elements, the key
is identifying the right combination of solutions and associated
clients. Themes drive valuation: Identifying a manageable set of
solutions that will be in demand in the medium term is important,
as is identifying trusted client relationships that will provide the
platform to build track records. These clients are typically exist-
Given these complexities, transforming from staffing to solu-
tions is complex, like rebuilding an aircraft mid-air. One way to
do this effectively is to separate the staffing business under the
existing leadership and use it as a source of cash to drive the trans-
formation under a new leadership.
While this can be done under the existing brand, our experi-
ence is that a new brand helps to position the solutions business
independent of the staffing legacy.
Finally, like any effective transformation, having a coach who
has been there and done that helps. The staffing model is under
threat, and the transformation to solutions is not only a choice for
higher value, but also for survival.
Abhisek Mukherjee is co-founder and director of Auctus Advisors.
LIVEMINT.COM CORPORATE MONDAY, 27 SEPTEMBER 2021
NEW DELHI 09

Top 10 listed realty firms cut Bollywood gears up for the

upcoming festive quarter
debt by 37% post pandemic Lata Jha
lata.j@livemint.com
NEW DELHI

T
he clearance by the
Maharashtra govern-
With leaner balance sheets, they are in a strong position to invest for growth in medium term ment for reopening of
cinema theatres from 22 Octo-
ber has instilled hope in Bolly-
Nasrin Sultana wood for the upcoming festive
nasrin.s@livemint.com quarter, which is usually one of
MUMBAI the most lucrative periods for
film business in India.

I
ndia’s top 10 listed property devel- All eyes are on Akshay
opers have trimmed their consoli- Kumar’s Sooryavanshi, which
dated net debt levels by 37% to announced a release for Diwali
₹27,400 crore between March 2020 within minutes of the govern-
and June 2021, according to ICICI ment announcement. The fes- Sports drama ’83 is set to release during the Christmas weekend
Securities. tival, however, will see a huge in December.
This was achieved by cutting the cost box office clash as Rajinikanth’s
of debt by 80-160 basis points (bps), low- Tamil film Annatthe and Mar- for 21 January 2022, family ugu industries have also been
ering corporate overheads by 20-40% vel’s superhero film Eternals entertainer Jayeshbhai Jordaar finalizing dates. Bengali film
from pre-covid levels, improving oper- are set to release then. starring Ranveer Singh for 25 Baazi will release during Durga
ating cash surpluses, undertaking asset Other holidays such as Gan- February and Ranbir Kapoor- Puja, as will Tamil crime thriller
sales, and equity capital raises either dhi Jayanti and Dussehra will starrer Shamshera for 18 March. Doctor, followed by horror
through the qualified institutional be big for regional movie Shahid Kapoor’s sports drama comedy Aranmanai 3 the week
placement (QIP) route or through dilu- industries, such as those in Jersey has been slated for 31 after that. The Christmas week-
tion at the special purpose vehicle (SPV) West Bengal and in the south of December. There is plenty of end will see sports drama ’83
level, said Adhidev Chattopadhyay, ana- the country. Some big-ticket evidence that people are com- clash with Telugu star Allu
lyst, ICICI Securities. Hollywood titles are also likely ing back to theatres, even not Arjun’s multilingual action
“While the overall real estate sector in to be released then and could counting the Hindi-speaking flick Pushpa: The Rise - Part
India, especially the unlisted space, con- aid recovery. The last quarter of market, given the numbers One, while Aamir Khan’s Laal
tinues to grapple with high cost and Analysts believe that economic revival, falling covid cases, low home loan rates, and new residential launches in the festive the year usually brings in box notched up by Punjabi films Singh Chadha has been pushed
quantum of debt, listed developers’ bal- season are expected to keep the sector attractive. MINT office collections of more than Qismat 2 and Chal Mera Putt 2 to February.
ance sheets have become leaner and ₹1,000 crore with ₹200 crore recently, as well as According to
puts them in a strong position to invest BSE Realty index rising nearly 25% last tember and garner a strong response, Securities and commentary from devel- coming during Diwali alone. Telugu romantic According to Devang Sampat,
for growth in the medium term and is week. Economic revival, falling covid said ICICI Securities. opers in its coverage universe, most “This decision has brought a film Love Story, BookMyShow, chief executive
likely to accelerate the pace of consoli- cases, low home loan rates and new resi- Chattopadhyay said the momentum launches in September have seen strong lot of cheer, not just for the said Kamal Gian- there is a massive officer of Cinepo-
dation in the sector,” he said. dential launches in the festive season are in real estate is expected to be carried customer response with developers entire film industry and its chandani, chief pent-up demand lis India, the fes-
Favourable factors such as healthy expected to keep the sector attractive, forward into the December quarter, keeping pricing discipline with price audiences but also for the executive officer,
balance sheets, access to capital and said analysts. which coincides with the key festivals of hikes of 4-5% on a like-to-like basis in employees of the cinema exhi- PVR Pictures.
as audiences are tive season this
year is expected to
with several unlisted, weaker develop- While initial expectations were for Dusshera and Diwali, and estimates new phases of ongoing projects and bition sector,” said Alok Tan- Hollywood has waiting to return be much better
ers being shunted out of the market, record low mortgage rates of don, chief executive officer, an exciting to the cinemas than last year.
the market share of large organized BOUNCING BACK 6.5-6.7% for housing loans. INOX Leisure Ltd. line-up starting “There is no
developers is set to grow further in Residential projects are also “We are confident that with with the new doubt that there is
the next two-three years, according MOST developers in AFTER a slump in THE momentum in RESIDENTIAL becoming more affordable due to this much-awaited announce- James Bond film No Time To massive pent-up consumer
to the brokerage firm. the listed space have real estate stocks, real estate is projects are also low mortgage rates and stable pri- ment, content producers Die on 1 October. This will demand as audiences are wait-
aggressive launch BSE Realty Index expected to be becoming more
Most developers in the listed plans from the 2nd surged nearly 25% carried forward into affordable due to ces. Mortgage rates offered by most would plan their releases, include The Boss Baby: Family ing to return to cinemas to
space have aggressive launch plans half of this fiscal year in the past week the December quarter low mortgage rate large lenders are in the 6.5-7.0% which should strengthen the Business on 8 October, Venom 2 watch films on the big screen.
from the second half of this financial range for 20-year housing loans, the Hindi film pipeline,” he said. - Let There Be Carnage on 15 We witnessed this during the
year and are targeting double-digit lowest ever since 2005. Apart from Sooryavanshi October, action adventure limited period that cinemas
in sales value compound annual growth residential launches to being from Octo- developers to post record sales bookings “Even assuming that mortgage rates that has been locked for Diwali, drama Dune on 22 October, were open between October
rate (CAGR) over the next two-three ber to coincide with the start of the fes- in second half of FY22 led by launches. may inch up over H2FY22-23E, we Yash Raj Films has said that its Steven Spielberg’s West Side 2020 and February 2021 dur-
years, which will lead to market share tive season, the waning of the second He predicts pan-India residential mar- believe that mortgage rates of 7.5- 8.0% comedy Bunty Aur Babli 2 will Story on 10 December and Spi- ing the first Unlock leading to a
gains assuming that the industry size covid wave, record low mortgage rates ket share for companies under the bro- (assuming 100 basis points increase) are release on 19 November. The der-Man: No Way Home on 17 sharp start to recovery,” said
remains stagnant. and strong hiring/salary growth in the kerage firm’s coverage growing from still affordable and would not signifi- studio’s big-budget period December, besides Eternals for Ashish Saksena, chief operat-
After a slump in real estate stocks, the IT/ITeS sector led developers to 25% in FY21 to 29% in FY24. cantly dent buying decisions,” Chatto- drama Prithviraj starring the Diwali weekend. ing officer, cinemas, at ticket-
sector is regaining strength with the advance many launches to August-Sep- Based on channel checks by ICICI padhyay said. Akshay Kumar has been slated The Bengali, Tamil and Tel- ing site BookMyShow.

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10 MONDAY, 27 SEPTEMBER 2021
NEW DELHI GLOBAL LIVEMINT.COM

Credit investors
China deploys new legal tactic follow the workers
to neutralize claims of IP theft Julia-Ambra Verlaine
feedback@livemint.com

L
abour shortages and sup-
ply-chain disruptions
have become make-or-
break factors for some inves-
US company preparing to sue Xiaomi for patent infringement was beaten to the punch with anti-suit injunction tors weighing bets on corpo-
rate debt.
Tom Murphy, portfolio
Josh Zumbrun which has U.S. and international manager and head of global
feedback@livemint.com wireless patents, blocking Conver- investment-grade credit at
sant from pursuing a suit in Germany. Columbia Threadneedle, said

C
hinese technology giants
have seized on a new
legal tactic to fight claims
of intellectual property
theft, raising concerns in
the U.S. that Beijing’s promises to
strictly enforce patent and copyright
laws will be undermined by Chinese
courts.
In four major cases since 2020,
Chinese courts granted so-called
anti-suit injunctions blocking foreign
companies from taking legal action
anywhere in the world to protect
their trade secrets.
Three of the rulings were in favor
of Chinese telecom companies—
Huawei Technologies Co., Xiaomi
Inc. and BBK Electronics. The fourth
supported South Korea’s Samsung
Electronics Corp. in a dispute with
Swedish telecom giant Ericsson AB.
In the Xiaomi case, the Beijing-
based company was granted an anti-
suit injunction against InterDigital
Inc., a Delaware firm that holds pat-
ents on wireless and digital technol-
ogy used in smartphones.
Xiaomi, the world’s biggest smart-
phone maker, has sold millions of
handsets using InterDigital patents
since 2013, under industry practice
that allows companies to do so while
licensing fees are being negotiated.
When talks broke down after seven
years, InterDigital decided last year to
sue Xiaomi for patent infringement—
but found itself beaten to the punch.
At Xiaomi’s request, a Chinese
court in Wuhan issued an injunction
barring InterDigital from pursuing its
case against Xiaomi—in China or any-
where else. If InterDigital persisted,
the Chinese court said, it would face
fines equivalent to roughly $1 million
a week.
To trade lawyers and others who
have tangled with Chinese compa-
nies over intellectual property, the
InterDigital case is the latest sign of
how China disregards the patents,
copyrights and trade secrets of for-
eign companies. They say the situa-
tion hasn’t improved in key respects
despite Beijing’s promises, including
pledges made in the 2020 U.S.-China
trade deal.
“China’s growth and development
strategy is contingent upon IP theft
and forced technology transfer,” said
Charles Boustany, a former Republi-
can congressman from Louisiana and
member of the Commission on the
Theft of Intellectual Property, an
independent advocacy group.
The Chinese Embassy in the U.S.
didn’t respond to requests for com-
A Chinese court issued an injunction barring InterDigital from pursuing its case against Xiaomi in China or abroad. REUTERS
ment. In the past, China has said it has
taken many concrete steps to
improve its environment for protect-
ing intellectual property, including
changes to its patent and copyright
laws in response to the Phase One
trade deal signed with the U.S.
In the U.S. and
U.K., anti-suit
injunctions are
typically issued by
courts to prevent identical cases from
playing out in multiple legal venues
simultaneously. In one well-known
case, a federal-district court in Wash-
ington state issued an anti-suit
injunction blocking Motorola Inc.
from bringing a parallel lawsuit
against Microsoft Corp. in Germany.
The Chinese injunctions take that
a step further by barring legal action
globally, according to lawyers and
others who track the Chinese courts.
The Chinese courts also asserted jur-
isdiction over patent licensing fees
globally, in what attorneys say is a
break from standard practice in the
West.
“What the Chinese are doing is
using this legal tool, the anti-suit
injunction, to make it so Chinese
courts—really the Chinese govern-
ment—and nobody else decides how
valuable intellectual property is,” said
Brian Pomper, a partner at Akin
Gump, and an expert on international
trade and IP disputes.
The U.S. Trade Representative
addressed the matter in an April
report, saying that “worrying devel-
opments such as broad anti-suit
injunctions issued by Chinese courts
have emerged.”
U.S. companies have long com-
plained about intellectual property
theft by Chinese companies. When
the Trump administration initiated
the U.S.-China
trade war in 2018,
it used a report on
China’s intellec-
tual property theft as the initial legal
justification for the tariffs. It esti-
mated that theft or underpayment
was harming U.S. companies by about
$50 billion annually.
As part of the U.S. trade deal, Bei-
jing increased financial penalties for
violations and made it easier for for-
eign companies to file complaints
directly with the Chinese govern-
ment.
Court filings by U.S. companies
against Chinese enterprises for IP
theft have fallen dramatically in
recent years, but legal analysts say
that isn’t a sign of progress. Just the
opposite, they say: companies have
either concluded they will lose in
court, or don’t want to risk reprisals
from China.
China’s emerging use of the anti-
suit injunction is an example of how
China’s global ambitions affect even
its courts, said Jorge Contreras, a Uni-
versity of Utah law professor and
leading authority on anti-suit injunc-
tions.
“It’s a scary prospect for these
international companies absolutely,“
Mr. Contreras said. “This is totally the
Wild West.”
One case played out between the
Chinese mobile phone brand Oppo, a
unit of BBK Electronics, and Japan’s
Sharp Corp., which is majority-
owned by Taiwan-based Foxconn
Technology.
Sharp sued Oppo in Japan for
infringing some of its patents for the
technology behind wireless local area
networks in January 2020.
Oppo countersued in a Chinese
court in Shenzhen, which took juris-
diction and said it would determine
the price that Oppo should pay to use
Sharp’s patents.
When Sharp fought back in Japa-
nese and German courts, the Shenz-
hen court in December issued an
anti-suit injunction, and said it would
penalize Sharp roughly $1 million a
week if it didn’t drop its lawsuits.
The German court in Munich
objected and sought to block the anti-
suit injunction with an anti-anti-suit
injunction.
The case is ongoing, but the
Supreme People’s Court of China
praised the case in a report highlight-
ing significant intellectual property
cases, citing it as an example of how
China is changing from a “follower of
property rights rules” to a leader in
the field.
The Supreme People’s Court of
China issued an anti-suit injunction
last year in a dispute between Huawei
and Conversant Wireless Licensing
(now MOSAID Technologies Inc.),
The companies settled with terms
undisclosed.
In the case, Ericsson owned the
patents that Samsung was negotiat-
ing to use. Samsung sued Ericsson in
the Wuhan court, which issued an
anti-suit injunction against Ericsson
with a $1 million weekly penalty. The
companies settled for undisclosed
terms.
The InterDigital case was the first
use of an anti-suit injunction against
a U.S. company.
In court filings, Xiaomi didn’t dis-
pute that it used InterDigital’s tech-
nology, contending instead that
InterDigital was demanding too
much money.
“Going to court is one way—
though not the preferred way—to
resolve IP disputes and, in this case,
litigation was under way in several
jurisdictions,” said Paul Lin, vice
president of global business develop-
ment and IP strategy at Xiaomi.
At Xiaomi’s request, the Wuhan
court issued a global injunction
against InterDigital and said it would
set the royalty rate. A Xiaomi spokes-
man said the Chinese court had the
expertise and ability to move quickly
on the case.
InterDigital’s then-chief executive
William Merritt had a different view.
“As we have seen on so many fronts,
the Chinese manufacturers want to
play by their own rules,” Mr. Merritt
said shortly after the Chinese courts
slapped his company with the injunc-
tion.
InterDigital went to courts in both
India and Germany seeking to over-
turn the Wuhan ruling. InterDigital
never took its case to a U.S. court
because Xiaomi doesn’t have a signif-
icant presence here.
Both the Indian and German
courts sided with InterDigital. Inter-
Digital and Xiaomi reached a settle-
ment in August, dropping all their
legal actions in exchange for undis-
closed licensing terms.
InterDigital and Xiaomi both
issued statements expressing satis-
faction with the resolution, and said
they couldn’t comment on terms.
Derek Soderberg, an analyst at Col-
liers Securities that covers InterDigi-
tal, was skeptical about the upbeat
assessments.
“Strong-arming is certainly a possi-
bility,” said Mr. Soderberg. “I think
the Chinese are using the Wuhan
court as a way to try to invalidate pat-
ents and push these IP companies
into signing a less favorable deal.”
©2021 DOW JONES & COMPANY, INC
the asset manager is placing
companies in two buckets:
those that can offset increased
wages, bottlenecks, and shorta-
ges with higher prices, and
those that can’t without losing
business. That has him avoid-
ing packaged-goods makers
and department stores.
“There is a labour shortage
and companies are now paying
more for wages. So we think
about investing from a margin
standpoint as opposed to ‘Is
there inflation, yes or no,” he
said. “The wage piece is a big
part of it.”
Debt investors tend to have a
different perspective on busi-
nesses than stock investors.
They typically care more about
whether a business will gener-
ate enough cash to make its
interest
and princi-
pal pay-
ments than
they do about its growth poten-
tial. That is because their
returns are more or less
capped, even if the business
keeps expanding or increasing
its profits, but they can still lose
money if the business fails.
Rick Rieder, head of fixed
income at BlackRock, the
world’s largest asset manager,
said labour and supply dynam-
ics are now the biggest risks on
his radar before selecting
which companies to invest in or
not. Recent reports from FedEx
have even changed his more
moderate view on inflation.
On 21 September, FedEx
Corp. cut its financial outlook,
saying labour shortages and
supply-chain disruptions lifted
expenses and slowed demand
for shipping in the latest quar-
ter.
The delivery giant said it is
raising wages to attract more
workers and announced ship-
ping rates would go up an aver-
age of 5.9% next year across
most of its services, garnering
attention from Wall Street.
“My opinion is evolving. I
was pretty much in the camp
that most inflation is transitory
except for shelter, and still
believe that on the major
reopening shocks,” said Rieder.
“But now supply-chain disrup-
tions, labour issues, input costs
and wages are slowing the
While US employment has
recovered since last April, it
remains below pre-covid
levels. BLOOMBERG
economy, not demand.”
Swings in the labour market
and the pandemic’s unprece-
dented complications have
made analyzing broader trends
difficult, muddling data, some
analysts said. Changes in pay-
rolls, a labor department metric
Wall Street uses to predict hir-
ing trends, have been erratic,
compounding uncertainty.
Hiring slowed sharply in
August, and while US employ-
ment has recovered since last
April when the pandemic shut
down businesses across the
country, it remains below pre-
covid levels.
“The out-
look for
l a b o u r
demand is
murky if covid continues to
drag on activity and the recov-
ery in services spending and
employment remains incom-
plete,” said JPMorgan analysts
in a recent note to clients.
That leaves some investors
looking at smaller scale. Joseph
Lind, senior portfolio manager
at Neuberger Berman, said a
group of 25 internal analysts
put together a survey of around
100 companies in June and
July to compile forecasts
around costs and margins.
The asset manager, which
has $433 billion in assets under
management as of June 30, is
buying debt from junk-rated
companies in sectors like natu-
ral gas, where prices have
nearly doubled over the course
of six months.
Lind said price increases in
commodities are attractive to
bond investors because they
strengthen balance sheets and
can prompt upgrades by rating
agencies.
“We were pretty concerned
about inflation prior to that, but
the study moderated our view
that it was going to be bad,” said
Mr. Lind.
“Because even in sectors
where we anticipate labor sup-
ply issues, the reason behind
the shortages is to meet robust
consumer demand.”
©2021 DOW JONES & COMPANY, INC

Huawei CFO returns Corporate-buyout loans near highs of 2007 as tax hike looms
to China after US deal Matt Wirz
feedback@livemint.com
of the mid-2000s, when inno- Holdings Inc. disclosed in
vations in derivative markets August it would sell itself for
the horizon and sellers want to
maximize what they can
and a flood of easy money from $7.3 billion to private-equity make,” said Kearney Posner, a
Reuters

that Canadians across the
feedback@livemint.com country will continue to be
SHENZHEN/TORONTO here for you, just as they have
been.”
A
buyout boom fueled by banks and insurers stoked a firms. portfolio manager specializing
easy money and a flurry of ever-larger buyouts. About $3 billion of the pur- in leveraged loans at Lord
looming hike in the The debt loads private-equity chase price would be paid for Abbett & Co. That motivated
capital-gains tax is sweeping firms are using to buy compa- with loans from debt investors some to cut prices to consum-

H
uawei chief financial
officer Meng Wanzhou
arrived in China on Sat-
urday, ending her near three-
year US extradition fight, the
same day two Canadians
detained by Beijing for more
than 1,000 days returned
home, potentially paving the
way for improved ties between
China and the two western
allies.
Meng, the daughter of Hua-
wei Technologies founder Ren
Zhengfei, was allowed to go
home after reaching an agree-
ment with US prosecutors on
Friday to end a bank fraud case
against her. The extradition
drama has been a central
source of discord between Bei-
jing and Washington, with Chi-
nese officials signalling that the
case had to be dropped to help
end a diplomatic stalemate.
Two Canadians detained by
Chinese authorities just days
after Meng’s arrest—Michael
Kovrig and Michael Spavor—
were embraced on the tarmac
by Canadian Prime Minister
Justin Trudeau after they
landed in Calgary.
“You’ve shown incredible
strength, resilience and perse-
verance,” Trudeau said in a
Twitter post with photos of him
welcoming them home. “Know
In the southern Chinese city
of Shenzhen, Meng wore a
patriotic red-coloured dress as
she exited a plane to be greeted
by well-wishers. “I’m finally
back home,” Meng was quoted
as saying by the Global Times
tabloid backed by the ruling
Communist Party. “The wait-
ing in a foreign country was full
of suffering. I was speechless
the moment my feet touched
Chinese soil.”
Chinese state media wel-
comed Meng back but were
silent about Kovrig and Spavor,
who were released hours after
Meng on Friday.
Huawei said in a statement
that it “looked forward to see-
ing Meng returning home
safely to be reunited with her
family”. It said it would con-
tinue to defend itself against US
charges.
The agreement opened US
President Joe Biden to criti-
cism from Washington’s China
hawks who argue his adminis-
tration is capitulating to China
and one of its top companies at
the centre of a global technol-
ogy rivalry between the two
countries. Some Republican
senators swiftly condemned
Meng’s release and urged the
White House to address the US
Congress on the issue.
Wall Street deal making to
highs not seen since before the
2008 financial crisis.
Companies have issued
$120 billion of “leveraged
loans” this year through 23
September to finance corpo-
rate buyouts by private-equity
firms—just shy of the $124 bil-
lion record for the first nine
months of the year set in 2007,
according to data from S&P
Global Market Intelligence’s
LCD.
Most deals have also gotten
bigger. The average leveraged
buyout cost about $2.5 billion
in debt and equity this year,
eclipsing the mean of roughly
$2 billion in 2007, according
to S&P.
The wave has swept up
household names like satel-
lite-TV operator DirecTV and
a unit of cybersecurity firm
McAfee Corp., and it has rein-
troduced megadeals to the
market. Goldman Sachs Group
Inc. recently started market-
ing $7 billion of loans to inves-
tors that will be used by a trio
of private-equity firms to
finance part of their roughly
$34 billion takeover of Med-
line Industries Inc., the largest
leveraged buyout in more than
a decade.
A mix of government poli-
Companies have issued $120 billion of leveraged loans so far this
year to finance corporate buyouts by PE firms.
cies have primed the LBO
frenzy. Easy money and low
interest rates have pushed
investors towards the high
yields that leveraged loans pay.
Meanwhile, company owners
are trying to cut deals ahead of
anticipated tax overhauls.
“ I ’ v e
signed
eight deals
since June
and in a typical summer I aver-
age one per month,” said Eliza-
beth Cooper, a partner at
Simpson Thacher & Bartlett
LLP who frequently advises on
leveraged buyout deals for pri-
vate-equity firms like Black-
stone Group. “I don’t think I’ve
taken a day off—a full day off—
since Christmas of last year,”
she said.
Purchase prices and debt
loads are climbing amid the
boom, raising concerns that
when economic growth slows,
the companies being bought
won’t be able to repay the
REUTERS
loans private-equity firms use
to buy them, bankers and
credit investors say.
Still, the rebound from the
Covid-19 pandemic continues
and S&P Global Ratings fore-
casts the default rate on lever-
aged loans will hover around
1% for the
next year.
That com-
pares with
the historical average of
2.68%.
Competition for new buy-
outs is so hot that when soft-
ware company Cornerstone
OnDemand Inc. went up for
sale this summer, private-eq-
uity firm Clearlake Capital
Group negotiated a roughly
$2.2 billion loan from JPMor-
gan Chase & Co. and submit-
ted an early bid, sealing the
deal before the auction could
get under way, a person famil-
iar with the matter said.
In some ways, this LBO
surge resembles the bonanza
nies have climbed back to Blackstone Credit, Owl Rock mate deals, she said.
near-record levels. But the risk Capital Advisors and Apollo For now, regulators are rela-
has shifted from large banks Capital Management. tively sanguine about rising
sidelined by postcrisis regula- Still, more deals translated debt loads the deals are plac-
tions to investment firms that to more pay for many invest- ing on companies being
specialize in ment bankers on acquired, perhaps because the
credit and pri- Some large loan Wall Street. Jef- banking system is now less
vate-equity. investors are feries Financial exposed.
I n v e s t m e n t cutting banks out, Group Inc. did The Federal Reserve
banks are cur- writing billion- the same amount warned banks in 2013 against
rently carrying
dollar cheques to of leveraged
arranging deals involving debt
about $130 billion finance business in excess of six times a com-
of buyout loans finance buyouts in the first half of pany’s earnings before inter-
on their balance on their own 2021 as it did in all est, taxes, depreciation and
sheets, compared of 2020, a year in amortization, or Ebitda, but
with $480 billion which volume has issued no such guidance
in 2007, said Kevin Foley, grew by 40% compared with this year.
head of global debt capital 2019, a person close to the The average debt on LBOs
markets at JPMorgan. bank said. Compensation for in 2021 has been 5.67 times
Wall Street firms still bankers in the group rose by Ebitda, compared with 5.41
arrange loans for most buyouts more than 40% in 2020 and times in 2013, according to
and collect a fee, but regula- should increase again this data from S&P.
tions make holding them on year, he said. Fed officials this year have
the balance sheet for more LBO specialists have been focused their attention on
than a few weeks prohibitively waiting for this swell of activ- concerns over asset valuations
expensive. Instead, the banks ity. Private-equity firms rather than on specific corners
quickly sell the debt to invest- amassed a roughly $1.5 trillion of debt markets. Staff econo-
ment firms, insurers, pensions cash pile in recent years but, mists recently characterized
and, increasingly, to complex until recently, they struggled vulnerabilities in the US finan-
investment funds called collat- to find enough targets at an cial system as “notable,” an
eralized loan obligations, or attractive cost. That changed unusually explicit signal of
CLOs. after the Democrats took con- concern. Economists judged
Some large loan investors trol of the White House and asset valuations as “elevated,”
are cutting the banks out Congress in November, according to minutes of that
entirely, writing billion-dollar increasing the likelihood of a meeting released last month.
checks to finance buyouts on rise in the capital-gains tax Nick Timiraos contributed to
their own. Cloud-based tech- rate. this article.
nology company Inovalon “The tax hike is looming on ©2021 DOW JONES & COMPANY, INC
LIVEMINT.COM NEWS WRAP MONDAY, 27 SEPTEMBER 2021
NEW DELHI 11

TWEETS & QUOTES Gita Gopinath Hiten Shah N R Bhanumurthy

Narendra Modi Chief economist, IMF Co-founder and chief Economist
Prime Minister New @IMFNews research: executive officer, Nira Going by the recent trends in
It is matter of delight for Fossil fuel subsidies were Self-awareness is a some of the leading indica-
us that even in villages, $5.9 trillion in 2020, primarily trait that can extend tors, there are clear positive
the common person is reflecting undercharging for to entire organiza- signs and the Indian economy
getting connected in environmental costs. Efficient tions, communities may be clearly moving out of
the direction of digital fuel pricing will keep global and sub-cultures. the dark clouds covered by
transactions via UPI warming to 1.5 degrees... the pandemic

FPIs net buyers at IN THE EYE OF A STORM Govt picks legal

₹21,875 cr in Sep adviser for LIC IPO

R T
emaining positive about the long-term he government has shortlisted Cyril
outlook of Indian markets, foreign Amarchand Mangaldas for giving legal
portfolio investors (FPI) were net buyers advice on the upcoming mega IPO of
so far in September with an investment of insurance company LIC, an official said.
₹21,875 crore. Four law firms—Crawford Bayley, Cyril
According to data from depositories, FPIs Amarchand Mangaldas, Link Legal and
pumped in ₹13,536 crore into equities and Shardul Amarchand Mangaldas & Co.—had
₹8,339 crore into the debt segment during 1-23 made presentations before the department of
September, taking the total net investment to investment and public asset management
₹21,875 crore. FPIs were net buyers at ₹16,459 (Dipam) on 24 September. Dipam had first
crore in August. floated a request for proposal (RFP) on 15 July,
“Rally in the Indian equity markets, positive inviting bids from legal advisers for the mega
long-term outlook, the expectation of IPO and the last date for bidding was 6 August.
economic rebound and improvement in However, the RFP did not receive sufficient
corporate earnings has led foreign investors to response. Following that, on 2 September, it
re-invest in Indian equities,” said Himanshu issued a fresh RFP and set 16 September as the
Srivastava, associate director (research), last date for bidding.Those who put in bids
Morningstar India. The turmoil in China has made their presentations before Dipam on 24
also benefited India, making it an attractive September. Ten merchant bankers have
investment destination among foreign already been selected for managing the IPO. PTI
investors, he added. PTI

National Disaster Response Force personnel arrive in Ganjam, eastern Odisha, on Sunday to prepare for the landfall of Cyclone Gulab. AP

SpiceJet introduces interim The total expenditure incurred on these projects

Balbir Singh Dhillon, Audi India head.

Audi seeks cut in

MINT
fixed pay system; pilots flag cuts till August is ₹12.52 trillion.

470 infra projects

MINT

hit by cost overruns

import tax on EVs
A
s many as 470 infrastructure projects,

G
erman luxury carmaker Audi has
termed high taxation on imported cars
in India an impediment for growth of
the electric segment, while noting that even
some relief in terms of duties could help it sell
more vehicles and convince its headquarters to
re-invest in the country for local
manufacturing of such models.
each worth ₹150 crore or more, have
The airline said pilots’ salaries will ‘increase significantly’ under the new pay structure been hit by cost overruns totalling more
than ₹4.37 trillion, according to a report. The
ministry of statistics and programme
PTI 85% on passenger flights and being among the the spokesperson said. implementation monitors infrastructure
feedback@livemint.com largest air cargo carriers during the pandemic. An interim “fixed salary system” effective 1 Sep- projects worth ₹150 crore and above. Of the
MUMBAI The Gurugram-headquartered airline said it tember has now been implemented to provide 1,718 such projects, 470 reported cost overruns
had adopted a “block hour payment system” after better payout, said SpiceJet two days after it sent and 560 were delayed.

B
The company, which now sells five electric
vehicles (EVs) in the country, noted that lower
taxes would help in lowering the price tag of
the imported models, which would help it in
achieving certain minimum volumes in the
market. With a certain scale, the company can
then try to convince its global headquarters to
re-invest in the country for setting up local
manufacturing for models that are currently
being imported.
“The first set of e-trons brought into the
country are all sold off. It gives us confidence
that people are ready, India is ready for electric
mobility. All this is helping us to introduce
more and more such cars,” Audi India head
Balbir Singh Dhillon noted. The company last
week added two new EVs to its portfolio. PTI
udget carrier SpiceJet, which had
resorted to hourly-basis pay for pilots
amid the pandemic, on Sunday said it
has introduced a new “interim fixed
salary system” for captains and first
officers.
The airline said not only will pilots’ salaries
“increase significantly” under the new pay struc-
ture, but those who fly more than the stipulated
minimum hours will be paid overtime.
However, some pilots contested the assurance
given by SpiceJet and claimed “stress” due to the
continued reduction in their salaries imple-
mented in April last year.
The pilots claimed that they were being paid a
third or a half of their pre-covid-19 salaries despite
the company achieving an occupancy rate of over
the covid-19 outbreak effective 1 April 2020, out an email to all pilots announcing the change. “Total original cost of implementation of the
wherein pilots were paid based on the hourly fly- The objectives of the new system, it said, are 1,718 projects was ₹21,99,181.52 crore and their
ing rate without having a pay struc- anticipated completion cost is likely to be
having to send any- ture that reflects ₹26,36,710.50 crore, which reflects overall cost
one on ‘leave with- However, some pilots contested the fixed salary compo- overruns of ₹437,528.98 crore (19.9% of the
out pay’. assurance given by SpiceJet and nents and other rel- original cost),” the ministry’s latest report for
“While many evant components. August said.
other airlines and claimed ‘stress’ due to the continued It will also enable According to the report, the expenditure
organizations reduction in their salaries payment of a fixed incurred on these projects till August is
severed employee minimum salary to ₹12,52,298.40 crore, which is 47.49% of the
contracts during all available pilots anticipated cost of the projects. PTI
the pandemic, there was no retrenchment in Spi- and those who fly more than the stipulated mini-
ceJet,” a SpiceJet spokesperson said. mum hours will be paid overtime, it added.
“The migration to the block hour payment “The company will be paying higher amount
model was expected to be short-lived. However, under the interim fixed salary system and this has
the second wave of covid-19 has delayed the been done keeping in mind the welfare of the
Yamaha gauges EV
implementation of our ‘normal’ salary structure,” greater pilot community,” SpiceJet said.
infra before foray

J
apanese two-wheeler major Yamaha is
90% Indian biz leaders feel need for better crisis management Managerial services closely looking at the development of
enabling factors like charging
to attract 18% GST infrastructure and battery production

O
ver 90% of Indian business leaders opined that the covid-19 before entering the electric vehicle (EV)
pandemic has highlighted the need to improve crisis management segment in India, said a top company official.

M
capabilities, says a survey by consultancy firm PwC India. About 59% anagerial and leadership services by The company noted that the success of EVs
of Indian business admitted having adversely impacted by the coronavirus corporate office to its group solely depends on the acceptance of customers
pandemic, said the PwC’s Global Crisis Survey 2021 - India Insights. companies/construction sites at large, which is only possible with the proper
The survey also revealed that over 80% of India’s business leaders have registered in different states would attract 18% availability of infrastructure.
already invested in technology in the aftermath of the pandemic. In India, it goods and services tax (GST), the Maharashtra “While we welcome and appreciate the new
added, business leaders were substantially more confident than global bench of AAR has ruled. EV policies being introduced by state
leaders about their ability to evaluate the lessons of the pandemic and put BG Shirke Construction Technology Pvt. Ltd governments to strengthen the demand for
them into action. “92% of India organizations said they were ‘confident’ vs approached the Authority for Advance Ruling EVs via attractive subsidy and incentive
just 75% of global leaders,” the survey said. (AAR) seeking to know whether these services schemes, there are bigger challenges related to
The responses of India’s business leaders were largely in line with the would be considered as ‘supply of service’. investments. We are contemplating on factors
overall results, showing only minor areas of significant divergence in views Passing its ruling, the Maharashtra AAR held like pricing, performance and infrastructure
and insights. About the survey, PwC said more than 2,800 business leaders that managerial and leadership services by before we roll out any products for the Indian
around the world shared company data and personal insights into the impact Indian business leaders were substantially more confident than their corporate is ‘supply of service’ and would be market,” Yamaha Motor India chairman
of the covid-19 pandemic and the future of enterprise resilience. PTI global peers in learning lessons from the pandemic. ISTOCK taxable under GST. PTI Motofumi Shitara said. PTI

Tipplers keen to buy booze online Finolex investors express concerns over board decisions
FROM PAGE 1
lowed by issues such as
cramped and crowded stores,
general inconvenience in
terms of time and effort, and a
lack of variety.
“In addition to the availabil-
ity of discounts and promo-
tional offers and access to dif-
ferent varieties of alcohol, con-
sumers also place high value in
the possibility of comparing
prices across different online
platforms,” YouGov said.
Moreover, consumers also see
themselves being more adventur-
ous when it comes to trials—58%
of respondents said the availabil-
ity of liquor online would prompt
them to try new flavours, brands
and types of alcohol.
More than half of those sur-
veyed expect their monthly
liquor spends to rise if online
purchases were available.
Online liquor sales will also
increase sales volumes of beer
and hard liquor, YouGov said.
As covid-19 shuttered liquor
stores, states such as Chhattis-
garh and Maharashtra permit-
ted home deliveries. Delhi’s
new liquor policy, too, has pro-
visions to pave the way for
home deliveries.
In Maharashtra, close to one
in five people said home deliv-
ery has been their most-used
mode to buy alcohol. Even in
terms of experience, online
mode outperforms other chan-
nels in Maharashtra, according
to YouGov’s findings.
Evidently, local alcohol
stores—the most common
source for liquor now—get the
lowest ratings in terms of experi-
ence across all states, suggesting
the need for a change.
“The pandemic has affected
how consumers buy different
products. With e-commerce
platforms, consumers now have
a more convenient way to shop,”
said Deepa Bhatia, general man-
ager, YouGov India.
Bhatia said this could bode
well for alcohol as a category.
Online deliveries are set to
make the booze buying experi-
ence more convenient.
“Not only do people recog-
nize it for being a safer delivery
option in the current times, but
consumers also appreciate it for
making the buying process
more convenient and econom-
ical,” Bhatia said.
FROM PAGE 1
noted in its report.
According to SES, these res-
olutions cast doubt on the
independence of these direct-
ors, whose appointments are
being sought.
If the appointments of Bar-
pande, Khare and Kapadia as
directors are confirmed, it will
create a situation where they
would continue as directors
despite their stint as inde-
pendent directors being com-
pleted, SES said.
“If the independent director
is already aware that he/she
would continue as a director
even after the completion of
tenure as independent
director, this would impact
independence right now itself
since the term is not specific,”
the SES report said.
The proxy advisory firm
noted that at the AGM held in
2020, Finolex had proposed a
similar resolution for the
appointment of Devender
Kumar Vasal, Jayaram Rajase-
kara Reddy and Kavita Bhaskar
Upadhyay as directors liable to
retire by rotation as well as inde-
pendent directors in two sepa-
rate resolutions. The resolutions
were rejected by shareholders.
The resolutions may have
been proposed because of a
conflict between the promot-
ers over control of the flagship
company of the $3 billion
Finolex Group.
“It was due to two major cor-
porate shareholders, namely:
Orbit Electricals Pvt. Ltd hold-
ing 30.7% and Finolex Indus- those companies,” Finolex non-executive non-independ-
tries Ltd holding 14.5%, aggre- Cables said in its 2021 annual ent director.
gating to 45.2% of the paid-up report. “The company has not dis-
share capital of the company “A contention has been closed the reason or process
who voted against each of the raised that the votes cast by the through which the status of
resolutions for their respective aforesaid two companies were Mr. Shishir Lall has changed
reappoint- contrary to the from ID to non-independent
ments. Both the According to SES, the mandate under director (NID) liable to retire
aforesaid major resolutions cast their constitu- by rotation. This kind of con-
corporate share- doubt on the tional documents/ version/transfer from ID to
holders are independence of contractual com- NID raised serious questions
under the man- mitments, and over the independent direct-
these directors,
agement control these are the sub- ors on the board,” SES said.
of Mr. Prakash whose appointments ject matter of chal- InGovern, in its report,
Chhabria, one of are being sought lenge before the noted that the composition of
the promoters of court(s) and the the board of Finolex Cables,
the company matter is thus sub when considered for the past
against whom Mr. D.K. Chha- judice,” the annual report year, or even the past three
bria, another promoter who is added. years, may have violated the
in management control of the Proxy advisory firms have Companies Act, 2013, and the
company, is in dispute, which also raised concerns over the Securities and Exchange
explains the reasons for such change of status of Shishir Lall Board of India’s listing regula-
negative votes being cast by from independent director to tions.
12 MONDAY, 27 SEPTEMBER 2021
NEW DELHI LONG STORY LIVEMINT.COM

REPORTAGE | TALKING POINTS | IDEAS | INSIGHT | THE BOTTOMLINE

HOW CHINA’S CRACKDOWN

COULD BENEFIT INDIAN TECH
Beijing’s recent regulatory actions have spooked many tech investors. Will China’s loss be India’s gain?

Several overseas IPOs of Chinese firms have been paused as an anti-monopoly and data security drive in Beijing targets some of the world’s biggest e-commerce, edtech, fintech and ride-hailing brands. BLOOMBERG

Reshma Patil digital economy, with an estimated 750 decoupling of Sino-US ties will remain join the country’s current group of four. down to the intensifying factional strug-
mint
feedback@livemint.com million Indians already online, which bigger factors, they say, behind the great SHORT As chief strategy officer, Kishore is a global gles within the party in the run-up to a
PUNE includes about 360 million online gold rush for Indian startups and tech STORY dealmaker at the $16.5 billion edtech firm ‘grand finale’ in 2022. “Xi’s goal is to have
learners. stocks. “Owing to these recent crack- that acquired nine firms this year. There’s his own candidates in all party positions

A
t Connexdoor, a Mumbai- Xi’s retaliation against the “disorderly downs, foreigners are wary of investing in liquidity in the market, she noted, and next year,” said Kondapalli. “He’s moving
based digital platform for expansion of capital” has steadily Chinese companies,’’ said Rajeev Suri, a WHAT pointed to the “global capital flowing into on from his anti-corruption campaign
promoting entrepreneur- expanded since the Communist Party of managing partner at Orios Venture Part- the country” that will act as a “catalyst” to towards regulatory crackdowns to silence
ship, co-founder Pankaj China (CPC) silenced Alibaba founder ners in Mumbai. “But it’s uncertain The Mandarin-speaking world create more edtech unicorns or privately- his critics in the business lobbies and in
Singh is a busy man these Jack Ma last year, fined his company over whether that represents a direct opportu- of venture capital in India is held companies valued at $1 billion. the culture industry.”
days. As a partner in a fund that invests in $2 billion and scuttled his Ant Financial nity for India. Opportunities emerge from abuzz with speculations about Since last year, Byju’s has raised more Whatever the outcome of the leader-
fintech startups, he has to keep a close Group’s $34 billion initial public offer our own innate strengths and don’t need a potential shift in certain than any other edtech firm in India and ship succession next year, the Chinese
watch on Western investments in India’s (IPO) in January. a fillip from China, but it does help.” foreign investments from plans to raise another $400-600 million, economy is not likely to recover easily. “Xi
tech ecosystem. And he has been observ- Several overseas IPOs of Chinese firms “We will have the business opportunity China towards India. according to a Bloomberg report. Its IPO is has potentially pushed the country
ing a significant uptick off late. have been paused as an anti-monopoly to benefit from China’s loss, no doubt,’’ expected to hit the market next year. towards a destabilizing succession crisis…
“Tiger Global (alone) invested in more and data security drive in Beijing targets said Santosh Pai, a partner at law firm Link Kishore emphasized that covid-19 was one with profound implications for the
than 25 Indian startups between January some of the world’s biggest e-commerce, Legal Law India Services, whose global WHY the Indian edtech industry’s main inflec- international order and global com-
and August this year (compared to invest- edtech, fintech and ride-hailing brands. clients include several firms from China. tion point. “Indian companies today have merce,” wrote journalist Richard Mcgre-
ments in 18 startups in 2020),’’ said Singh, Meanwhile in India, the IPO market has “But the China effect will take a year or Chinese President Xi Jinping’s the opportunity to take the edtech indus- gor and academic Jude Blanchett in a
who is also a partner at Yatra Angel Net- been on fire, with blockbuster listings two to become evident. Indian edtech retaliation against the “disorderly try to the global level,” said Kishore, while Lowy Institute paper earlier this year.
work Fund, which has invested in 11 Indian such as that of Zomato Ltd raising as much firms will gain acceptance in more West- expansion of capital” has steadily adding that “the future looks promising, In July, Xi declared that the $15 trillion
fintech startups over the past two years. as $1.26 billion. ern countries. And American funds will expanded since the Communist especially with the wide acceptance of the economy has achieved the status of a
Connexdoor’s proprietary research invest less in China and more in India, Party of China silenced Alibaba medium in the past one-and-a-half years.” “moderately prosperous society” as the
indicates that at least 104 of the 168 global TECH TITANS while also diversifying to Southeast Asia founder Jack Ma last year. Following their path are firms such as party had planned. The ‘China Dream’ slo-
investors in Indian fintechs this year were
from the US and 40 were from Asia. In the “T his crackdown (on digital econ-
omy firms) now appears to be a
past three years, US investor participation case of China’s tech titans becoming too
and the Middle East. Sino-US tensions will
remain the biggest reason for such a shift.”
MOREOVER
Unacademy Group, an edtech firm that
recently raised $440 million.
gan of Xi’s early days as president is being
overtaken by ‘common prosperity’ as a
“key feature of Chinese-style moderniza-
in Indian fintech startups went up by powerful,’’ suggested Rebecca Fannin INVEST INDIA CHINESE CAPITALISM tion”. Alibaba and Tencent have signalled
India in July surpassed China in
nearly 60%, with massive deals led by over an email. Fannin’s book Tech Titans
Tiger Global, Sequoia Capital, Ribbit Cap- of China narrates the economic and politi-
ital and others, the data indicated. Asian cal rise of Chinese tech superpowers such
I nvestments made in Indian startups in
the first half of 2021 exceeded invest-
ments made in 2020, according to a state
monthly venture capital deals for
the first time since 2013,
A troubled Chinese entrepreneur acquiescence to the state by leading the
asked Hu Xijin, the editor of Global donation drive, with pledges of $15.5 bil-
Times in Beijing, for business advice last lion and $7.7 billion, respectively. China
investor participation rose by 53%. as e-commerce giant Alibaba and software of Indian markets report released in according to Preqin data, which month. “No matter how successful they has announced a new stock exchange in
“Currently, the market to go to is India,’’ giant Tencent, who represent the trans- August by the Indian Private Equity and said India received investments are, entrepreneurs must remain humble, Beijing to expand fund raising and indi-
said Singh, who spent a few months as a formation of China’s tech sector from cop- Venture Capital Association (IVCA) and worth $7.9 billion in July this year. firmly support the leadership of the Com- cated that the party promotes entrepre-
student in Chinese cities prior to the pan- iers to originators that are now trying to Ernst & Young. Indian startups attracted munist Party of China, abide by (the) laws neurship and innovation.
demic. He studied Mandarin and the outpace the innovation of Western Big $17.2 billion in investments from January and regulations and resolutely be a posi- “I expect this to continue because
‘unstructured’ ways of the middle king- Tech. These titans and more Chinese to July this year, the report stated, com- lion. Over two dozen new Indian unicorns tive energy in promoting the CPC’s lines, between now and November next year, Xi
dom’s capital market. “Investors are reluc- firms have lost over $1 trillion in valuations pared to $11.1 billion in the previous year. were created this year. Estimates say India principles, and policies,” Hu wrote in the will drum up as much nationalist fervour
tant to go to China (at the moment) and are within months. Tencent alone lost $388 The tech centres of 8% of global unicorns has created 65 unicorns. China has 170, party’s mouthpiece after the conversa- as possible to consolidate his position,”
betting big on India, which is a more pre- billion in market value, Bloomberg are based in India, it said. according to data compiled by analyst-led tion. Compared to the West, “capital can- said Orios Venture Partners’ Suri. “The
dictable market.” reported, as Chinese firms have disap- Startups have already clinched 443 platform Tracxn. not dominate the country” and it “must common prosperity campaign is being
Singh is not alone. The Mandarin- peared from the world’s top 10 stocks. deals this year. “It’s already happening in Several fund-raising announcements not influence politics” in China, he added. well received by China’s public.”
speaking world of venture capital in India Ride-hailing giant Didi is banned from the market,’’ said Sanjay Mehta, founder made this year would, however, also Observers of China’s domestic politics Investors will avoid China until there is
is abuzz with speculation of a potential app stores and is currently reeling under of 100X.VC in Mumbai. Mehta gave an reflect deals that have been in the works believe that the economic turmoil will “clarity and transparency”, reckoned
shift in certain foreign investments from a cybersecurity review. example of the Silicon Valley-based for many months, much before Beijing continue at least for the next one year. Bei- 100X.VC’s Mehta. “China’s reputation is
China towards India. At the same time, but Andreessen Horowitz (a16z) fund, which moved to bring the Chinese tech sector jing will hold its five-year in trouble with investors
Since late last year, unrelated to the tech is now looking at investing in India for the under political control. change of guard for party worldwide. While China
China’s President Xi Jin- In the past three years, US sector, China’s real first time, he said. “India is being seen as a positions at the 20th Chinese firms have lost over is underplaying the
ping has been tighten- investor participation in estate sector has sparked more stable economy compared to BEST OF TIMES AT BYJU’S National Party Congress $1 trillion in valuations within crackdown, funds are
ing the state’s grip on the
Chinese private sector,
which contributes over
talks of a likely ‘conta-
Indian fintech startups went gion’ in the economy as
the country’s largest
China,’’ Mehta said, “and it has a large
alternative consumer base. There will be
more funding opportunities in Indian fin-
B eijing has been especially hard on
China’s $100 billion edtech sector.
The CPC is determined to make education
slated for October-No-
vember 2022. Xi has
named no successor can-
well aware that it’s get-
months, with Tencent alone ting tough to do business
in China.”
up by nearly 60%, with losing $388 billion in market
60% to the gross domes- property developer tech and edtech. We are bullish for the more affordable and inclusive. Online didates, not even for his Chinese executives
tic product (GDP) of the massive investments from Evergrande grapples next five to seven years.” tutoring firms are no longer allowed to position as the party’s value, according to a are a bit more unflus-
world’s second-largest with a $300 billion debt India in July surpassed China in make a profit, list overseas or receive for- general secretary, tered for now, as they lie
economy. The ongoing Tiger Global, Sequoia Capital crisis. monthly venture capital deals for the first eign investments. It is no accident then although the term will Bloomberg report low and bide their time
game of Chinese che- Will China’s loss be time since 2013, according to Preqin data that India’s edtech sector has been boom- technically end next while waiting for the
quers between the state and China’s pow- India’s gain? Insiders predict that there reported in the media, which said India ing recently. In edtech, Indian startups year. There are signs that Xi wants to con- political storm to calm down. Asked about
erful tech firms inevitably raise questions will be greater investment opportunities received investments worth $7.9 billion in clocked over $2 billion in 2020 compared tinue as the party supremo for another the potential for venture capital flows get-
about whether Xi’s gambit will end up giv- for India over the coming years but July this year compared to $4.8 billion to $553 million in 2019, according to an term and is clearing the road to power off ting diverted away from China towards
ing India an advantage in garnering emphasize that it’s too soon to make a investments made in China. IVCA-PGA Labs report released last his critics. India, one executive in Beijing texted:
greater foreign investment inflows, at definitive link between the investment E-commerce giant Flipkart, for exam- December. At the Jawaharlal Nehru University’s “Nothing will happen”.
least until the dust settles. India is not only trends of the two disparate tech worlds. ple, raised $3.6 billion in July, taking its Inside India’s most valued startup, Centre for East Asian Studies, professor of Reshma Patil is the author of Strangers
a relatively more stable alternative, but The accelerated digitization of the Indian value to $37.6 billion. Now, Ola electric Byju’s in Bengaluru, Anita Kishore now Chinese studies Srikanth Kondapalli across the Border: Indian Encounters in
the country is also home to a fast-growing economy post-covid and the ongoing mobility is reportedly busy raising $1 bil- predicts that more edtech unicorns will linked the timing of the capitalist crack- Boomtown China
LIVEMINT.COM MINT MONEY MONDAY, 27 SEPTEMBER 2021
NEW DELHI 13

Should you opt for customized life POWER

POINT
insurance cover with policy riders? RAJ KHOSLA

Respond to this column at

mintmoney@livemint.com

INSTANT, APP-BASED
The riders offered by insurers provide benefits that are tailored to meet the needs of different people differently
ISTOCKPHOTO
LOANS COULD LEAD
Navneet Dubey
navneet.dubey@livemint.com
The policyholder can get regular pay
for the next 5-10 years after the acci-
dent in a specific percentage of the
YOU TO DEBT TRAPS

L
ife insurers offer a range of sum insured. This steady income may

riders that you can buy with
your life insurance policy by
paying an additional pre-
mium. Sometimes, insurers
provide riders in bundled plans to
lure customers. Many riders may suit
your needs. But, should you increase
the life insurance element by buying
these bundled plans?
Let us look at the types of riders
available, and who should ideally buy
these riders along with life insurance.
A rider is a voluntary add-on that
you can typically buy with life insur-
ance. Some familiar riders are acci-
dental death benefit rider, waiver of
premium rider, income benefit rider,
special exit value rider, premium
break rider, guaranteed insurability
option rider and critical illness bene-
fit rider.
Accidental death benefit rider:
Accidental death benefit riders prom-
ise an additional sum insured to poli-
cyholders upon their death in an acci-
dent. Suppose a base policy offers a
sum insured of ₹50 lakh, and the poli-
cyholder has availed accidental death
benefit rider for ₹10 lakh. Upon the
policyholder’s death, the insurer pays
₹60 lakh to the beneficial nominee.
This rider is essential in today’s life,
as almost everyone needs to travel for
their jobs, business or other work.
“Probably, you are careful when driv-
ing. However, you can’t be sure about
others driving on the road; hence, this
rider is essential for people travelling
inter-city, outside the city or abroad,”
said Naval Goel, founder and chief
executive officer, PolicyX.com.
Waiver of premium rider: Gen-
erally, a policy automatically lapses
when an insured discontinues pre-
mium payment due to job loss or disa-
T
work as a regular income for the poli- he adoption of technology amid covid-19 in the Indian finan-
cyholder. People involved in travel- cial ecosystem is on an overdrive. Over the past 18 months,
ling, driving or riding bikes can opt banks and NBFCs have been quick to adapt to this change.
for this to ensure that no accident-led In tandem, we also saw a record surge in the launch of fintech apps
event makes their family suffer. Triv- in India. A recent study by apps analytics firm AppsFlyer revealed
edi said, “Again, this rider can be that India has registered highest number of installs in the world for
taken by all age groups between 18 finance apps from January 2019 to March 2021. With 1.49 billion
and 50 years, along with the other downloads, India dominated the universe of fintech apps, followed
riders taken.” by Brazil and Indonesia at 500 million and 400 million, respec-
Special exit value rider: This tively. The promise of real-time access to loans makes instant app
rider allows the policyholder the free- loans more attractive (on the surface) than personal loans from
dom to choose a time to exit a policy established banks, especially for urgent requirements. However,
and receive all premiums paid for the borrowing in haste could be your first step towards a potential debt
base protection benefit. This rider trap and a ruined credit score.
can be availed when the policyholder Recently the ministry of electronics and information technology
does not take the return of premium. (MeitY) blocked 27 lending apps that were flouting RBI guidelines.
According to Goel, people who You should always watch out for the red flags and opt for lenders
think their financial responsibilities associated with RBI-registered banks and NBFCs. Let us list out
towards their family will be over by some of the red flags to watch out for in availing instant loans.
the age of retirement and their family Loan sharks: Regulators in advanced economies such as the
will not depend on them for finances UK and the US have issued strict guidelines against loan sharks
can use this rider. “This rider is for the offering instant payday loans. For app-based lenders in India, there
masses as it comes free of cost,” he is still a fair bit of regulatory ground to cover. Accordingly, it can be
bility. However, this rider helps a pol- of the family that may include aged of age. If we still need to identify a seg- said. difficult for customers to identify unscrupulous apps at the outset.
icyholder to keep the policy active parents, children and spouse with no ment, any individual 30 years and Premium break rider: This rider Always enquire about effective interest rate, tenor and penalty. Do
despite non-payment of premium in income source. It helps sustain the above should have this cover.” allows you to take freedom from the not overlook terms and conditions on default. High processing fee
such cases. It keeps the insured enti- policyholder’s family, said Goel. Return of premium rider: This premium payment twice during the and per day penalty on default can turn the borrowing experience
tled to their policy and provides Critical illness benefit rider: rider helps a policyholder get a policy by taking breaks and still have into a veritable nightmare.
access to all its promised benefits. This rider pays a lump sum upon valid refund of the total premium paid for the policy active. It helps policyhold- Credit check: Credit check by your lender is good for you. By
According to industry diagnosis of a critical ill- the term insurance if he survives the ers skip paying a premium for a year, peeking into your credit history, the lender ensures an affordable
experts, this rider helps The accidental ness covered in the plan policy tenure. But if the policyholder during which their policy will still rate of interest for the loan. However,
people working in vul- death benefit that can be useful to pol- dies during the policy tenure, the sum cover them. The first break can be Do not get borrowing when there is no credit his-
nerable environments rider offers an icyholders or their fam- assured is paid to the nominee. availed only after 10 policy years, if swayed by too- tory can lead to usurious rates and you
and who require fre- ily in dire times. Most people feel term insurance is
quent hospitalization
additional sum
Anyone who has a his- a waste if they survive the policy ten-
the policy is in force. The policy-
holder can exercise the second pre- good-to-be-true may be entering a dangerous zone.
Therefore, in the absence of an appro-
insured to the offers. Stick to
that affects their income. tory of critical illness in ure. Thus, people looking for some mium break only after a minimum of priate credit history, curtail borrow-
Income benefit policyholder in the family or is likely to return on their survival can buy this 10 years from the first premium your repayment ings.
rider: This rider pro- case of death get one in the future due rider. An industry expert said a con- break. capacity Conservative borrowings: Do not
vides the policyholder’s to lifestyle can take this servative investor looking for finan- According to industry experts, this get swayed by too-good-to-be-true
family with additional rider. Piyush Trivedi, cial security and protection could buy premium can help policy buyers in offers. Stick to your repayment capacity
income annually besides the sum joint president, Kotak Life Insurance, this rider. the 30-35 years age group who would and borrow only as much as you can repay from own funds. Never
insured. “The breadwinners with said, “Given the incidence rates of Accidental disability benefit like to take a break from insurance should you borrow to repay past loans, except for a strategically
large and extended families can go for critical illness and the impact of lifes- rider: If the policyholder faces a per- premium payment to fulfil their other planned debt consolidation loan from a registered bank or NBFC.
this option as at times only the sum tyle-related illness, this benefit is rel- manent or partial disability due to an responsibilities such as children’s Verify lender’s credentials: A mobile app lender does not
insured is inadequate for the survival evant for all individuals irrespective accident, this rider comes into play. education fees or surgery in future. come under the direct purview of RBI. They source their loans
through registered banks and NBFCs. A legitimate lender will
communicate the terms transparently and share a sanction letter,
loan agreement and EMI amortization schedule prior to disbursal.

No rollover exemption is given on short-term capital gains
Parizad Sirwalla
In 2019, I sold a residential
plot that I had purchased in
2006. The entire gains from
the sale were reinvested in a
residential flat I purchased
in 2020. I want to sell this
flat as soon as possible.
What will be the tax on capi-
tal gains, and can I save tax
by reinvesting profits again
in a different property?
—Name withheld on request
We have assumed that capi-
tal gains arising from the sale of
the residential plot was claimed
exempt from tax under Section
ASK MINT
m TA X AT I O N
54F of the Income Tax Act.
As per provisions of Section
54F, where the new asset, i.e.
flat purchased in 2020, is trans-
ferred by you after a period of
two years from the date of its
purchase, the amount of capital
gain will be chargeable to tax as
long-term capital gains (LTCG)
in the tax year in which it is
transferred, and you would
need to discharge the applica-
ble income tax on the same
accordingly. Tax exemption on
capital gains can be sought in
ISTOCKPHOTO
any of the following ways: by
investing the LTCG in a new
residential house situated in
India; by investing LTCG in
specified bonds or by investing
net consideration in equity
shares of an eligible startup. If
the flat is sold within 24 months
from the acquisition date, capi-
tal gains from the sale would be
taxable as short-term capital
gains at applicable slab rates (as
increased by surcharge, if
applicable, and education cess).
No rollover exemption is avail-
able against STCG.
I have a public provident
fund (PPF) account with the
Central Bank of India since
2000. I extended it for five
years, which ended in
March 2020. Due to covid
restrictions, I could not
extend it for another five
years before March, but
want to do it now. Can I
extend this PPF account for
another five years? If yes,
what is the process? If no,
can I keep the accumulated
surplus in my existing PPF
account and earn interest
without contributing? Or
will I have to close and with-
draw all the money?
—Ingrid Ferrao
Considering the covid-19 sit-
uation, we advise that you
check with your bank for any
waivers or extensions on term
of PPF accounts. Further, as per
the provisions of the PPF
scheme, on completion of any
block period of five years, the
PPF account holder may con-
tinue to hold the account with-
out further deposits and the
account shall continue to earn
interest till it is closed.
Parizad Sirwalla is partner
and head, global mobility servi-
ces, tax, KPMG in India.
Do you have a personal
finance query? Send in your
queries at
mintmoney@livemint.com
and get them answered by
industry experts.
However, a scammer will have all the reasons to not share their
licence and policy documents.
Advance payments and push for quick decision: An online
app asking for advance payment or fees prior to disbursing loans
is another red flag. Do not play into the hands of a pushy lender.
Protect your data: A lending app will always ask for your per-
mission and share the details of the action it desires to take with
your data. Your smartphone is a storehouse of your personal
details, pictures and other sensitive information. Do take a minute
to review the kind of permission you are granting. An app that
doesn’t share details is better not dealt with.
Seek professional help: In a universe where you have thou-
sands of lenders, it is best to seek professional assistance. You can
sign up at a loan marketplace website or app and compare different
offers. The loan marketplaces also do not come under the direct
regulation of RBI. But they follow due diligence in choosing their
lending partners. A loan expert will guide you on eligibility, inter-
est rate, and terms and conditions of the loan without extra fees.
The perils of online fraud are unlimited. Whether you are
exposed to an online scam or locate one, file a complaint on
www.cybercrime.gov.in or visit nearest cybercrime police station.
Raj Khosla is the founder and managing director of MyMoney-
Mantra.com

What a personal loan costs you ‘MFU has all services MF Central is offering’
P ersonal loans are a way to use tomorrow’s income today, and the process involved
is simple. But you must note that the interest rates are much higher than, say, for a
car loan. This is because personal loans are unsecured loans. This means that the loan
Neil Borate
neil.b@livemint.com
completing an eKYC process.
Finally, we have launched a
is not backed by any asset. The loan amount and interest rate depend on parameters bank module and two major

M
such as your income, existing credit, repayment capacity, and others. As personal loans utual Fund Utilities PSU banks have joined MFU as
come with high interest rates, continuous default will put you on a downward spiral. (MFU), a company distributors. We are also work-
Here are some of the lowest personal loan interest rates offered by various banks. funded by mutual ing to on-board cooperative
fund houses, is widely used by banks.
Loan amount: ₹1 lakh; tenure: 5 years distributors and investors for How will the MF Central
their transactions. The indus- portal compare with MFU?
try funding keeps the MFU por- All services offered by the
Interest EMI
Lender Processing fee tal free of cost. However, a new new portal are already available
rate (%) (₹) MF transaction portal created on MFU. The only exceptions
by CAMS and Karvy called MF Ganesh Ram, chief executive officer, Mutual Fund Utilities. are the eCAS statement and
Bank of Maharashtra 8.55–12.90 2,054–2,270 1% of the loan amount + GST (min. ₹1,000); nil for BPCL employees
Central has challenged MFU’s unclaimed dividend details,
dominance. Ganesh Ram, chief physical cheque. with that. We are also introduc- although we have our own con-
Punjab National Bank 8.70–13.55 2,061–2,304 Waived till 31 December 2021
executive of MFU explained What features are you ing risk profiling for investors, solidated account statement.
Indian Bank 9.05–13.65 2,078–2,309 1% of loan what MFU has been doing to launching? which is behaviour-based Note that they are only offering
improve its own offering. We are launching a back rather than just income-based. non-financial transactions
Union Bank of India 9.30–13.40 2,090–2,296 Up to 0.5% of loan (min. ₹500) + GST Excerpts from the interview: office software for RIAs (regis- Finally, we are simplifying whereas MFU already has
Punjab & Sind Bank 9.50–11.50 2,100–2,199 0.5% to 1% of loan + GST tered investment advisers) and on-boarding on to MFU and financial transactions as well as
What is the relevance of MFDs (mutual fund distribu- that simpler process will be non-financial. Also read the
IDBI Bank Limited 9.50–14.00 2,100–2,327 1% of loan (min. ₹2,500) MFU for today’s mutual tors) on 15 October. It has been launched on 1 October. Cur- Sebi circular setting up the new
State Bank of India 9.60–13.85 2,105–2,319 1.5% of loan (min. ₹1,000 and max. ₹15,000) + GST fund investors? built in-house. rently we ask for a self-attested portal. It says that whatever ser-
We have close Intermediaries copy of the PAN card and vices will be available on it, they
Central Bank of India 9.85–10.05 2,117–2,149 ₹500 + taxes to 1 million inves- m INTERVIEW currently buy scanned cheque copy. After 1 must also make available to
Kotak Mahindra Bank 10.25–24.00 2,137–2,877 Min. ₹2,999 (special offer)–up to 2% of loan + GST tors. They can do third-party soft- October, we will just ask for the other digital platforms. So if
financial and ware that present PAN number and fetch the transmission of units (on the
UCO Bank 10.30–10.55 2,139–2,152 Up to 1% of loan amount (min. ₹750) non-financial transactions and certain issues. For instance, details from the KYC Registra- demise of a unit holder), which
Indian Overseas Bank 10.30–12.05 2,139–2,227 0.40% to 0.75% of loan track the status of their transac- data security. This tool will tion Agency (KRA) database. A is currently offline, is made
tions. They can view their com- have a revenue reconciliation scanned cheque will still be available on MF Central, they
Bank of India 10.35–12.35 2,142–2,242 Up to 2% of loan (min. ₹1,000 and max. ₹10,000) plete unit holdings. They can feature for distributors as well required though. Currently it will also have to enable other
Federal Bank 10.49–17.99 2,149–2,539 Up to 3%
invest in direct or regular as portfolio rebalancing. This takes some time to generate a digital platforms. Also note that
schemes and view their capital will be offered at a very subsi- common account number currently there is no standardi-
IDFC First Bank 10.49–18.00 2,149–2,539 Up to 2% of loan gains statement. They can get a dized rate. (CAN) and allow investors to zation between RTAs (registrar
consolidated statement which For investors, we will launch transact. After 1 October, an and transfer agents). For
Bank of Baroda 10.50–16.15 2,149–2,440 2% of loan (min. ₹1,000 and max. ₹10,000)
we call COTS. We also allow a multi-feature portfolio analy- existing MF investor will instance, even their rejection
Data as on 23 September 2021, as per banks’ websites. The EMI range is indicative and calculated on the basis of interest rate range. In an actual investors to use the physical ser that will be particularly use- immediately get a CAN and will reasons are different for trans-
situation, it may include other fees and charges. The interest rates are for salaried individuals and pensioners for unsecured personal loan. Actual MFU form for transactions ful for new fund offers (NFOs). be able to transact. If the inves- actions they reject. I’m curious
applicable interest rate may vary based on the credit profile, loan amount, tenure, company you work for and as per bank’s discretion.
across AMCs (asset manage- As you know, NFOs do not have tor is new to mutual funds, we to see how this platform, MF
PARAS JAIN/MINT MyMoneyMantra.com & bank websites
ment companies) along with a a track record; our tool will help will direct him or her towards Central, will pan out.
14 MONDAY, 27 SEPTEMBER 2021
NEW DELHI VIEWS LIVEMINT.COM

OUR VIEW MY VIEW | THE INTERSECTION

AFP

India should invest in ever more

sophisticated cyber armaments
Our offensive cyber capability appears to have increased but we should aim to achieve deterrence

that India cannot consider itself a cyber
power merely because it has a big tech
industry, and that the country must
develop its own cyber weapons to
defend its information space. It is there-
fore encouraging to see media reports
suggesting that Indian government-
connected entities have demonstrated
some capabilities of this nature.
NITIN PAI Citing studies by a Russian cyber secu-
is co-founder and director of The rity firm, Forbes magazine’s Thomas
Takshashila Institution, an independent Brewster reported last week that hackers
centre for research and education in associated with the Indian government
public policy (designated ‘Bitter APT’ by the industry)
to have been built indigenously and
went unnoticed for several months
before being detected in February 2021.
From the information that is publicly
available, the Bitter APT hack was used
for cyber espionage, not for disruption.
Even so, it is a clear public indication
of the level of India’s offensive cyber
capability.
Credible offensive cyber capability is
necessary for at least two reasons. First,
India presents attackers with a vast,
sprawling target sphere, large parts of
which are unguarded and perhaps even

The great covid bull run:

used commercially available zero-day unguardable. It is thus not feasible to
exploits to break into Chinese and Paki- rely solely on perimeter security—the

A
century ago, the declaration of stani government-linked computers. equivalent of stationing troops all along
war was a formal exercise. Diplo- According to an Indian private cyber- the border—as a strategy for cyber
mats in frock coats would turn security expert I spoke to, these hackers defence. It becomes necessary to deter

Investors must stay alert up at chancellories to first serve ultima-

tums and subsequently to hand-deliver
notices of war. Some would even insist
on reading them out aloud for the bene-
most likely used indigenously-devel-
oped tools to exfiltrate data from target
devices. The American firm that sold the
zero-day exploits has indignantly cut off
adversaries from attacking in the first
place. Deterrence in information war-
fare is a multi-layered concept, but
requires the possession of effective
fit of bemused recipients, who would the Indian government entity from its cyber weapons to be credible.
then make arrangements for the safe customer list for misusing its services. The other reason to possess—and be
While our equity markets have had cause for cheer of late, asset inflation is evident and the departure of the enemy’s embassy. Dispassionate observers will not fail to seen to possess—cyber weapons is to
These age-old courtesies were abridged notice that this righteous indignation is ensure a place at the high table as a
easy-money policies behind it have also spelt risks of unprecedented complexity. Be watchful by the time of World War II and terse coming from a company that provides ‘cyber have’ should countries eventu-
telegrams replaced frock coats. The zero-day exploits to the US government ally get down to negotiate digital arms
advent of the Cold War, nuclear weap- and its allies, which presumably use control. The cyber generation must
ons and proxy wars of the 20th century it only for the anodyne business of learn from its nuclear predecessor,

T
here has been much in India’s air
lately that qualifies as music to the
ears of investors, serving notes
sharp and swift for our BSE Sensex
to waltz past 60,000 last week.
Our count of daily covid cases has
stayed subdued, with no sign yet of a third
wave. The Centre finally tugged two policy
knots apart in ways worthy of some cheer. It
resolved the issue of retro-slapped taxes, late
but about as well as it could, and also sought to
sort out our telecom tangle at long last. India’s
economic pulse has picked up, and the govern-
ment has pushed ahead with plans to recycle
its assets and clean-up the loan books of our
lenders, even as exports look up, fiscal outlays
slowly take effect and the central bank keeps
our economy flush with liquidity. Private
investment remains in a slump, but the gallop
of unicorns headed for public offers and gains
made by a swelling crowd of retail investors,
ever since big buyers got access to ultra-cheap
money, globally, have served as drum-beats for
a pandemic bull run. Discordant sounds from
and given the volume of US dollar creation, put an end to the custom of formal war updating their anti-virus software. when India was designated a non-nu-
even modest inflows were sure to inflate declarations. In recent times, an incom- The hypocrisy of commercial cyber clear weapon state in perpetuity for the
ing missile or fighter aircraft announces weapon vendors apart, the reports only reason that it had held off testing a
Indian shares. For the most part, this is what war. Even so, we are used to wars that about Bitter APT’s exploits tells us of nuclear device before an arbitrary date.
explains the Sensex’s price-to-earnings (PE) have a starting point and an end date. two important developments. First, that If Bitter APT is indeed an Indian
ratio of over 30, an eye-popper going by its Not anymore. Information warfare is Indian cyber actors have moved up state-actor, then its actions are a step in
past record. Sure, big companies might be an ongoing affair. Cyber warfare, its from using phishing methods to gain the right direction. The episode shows
poised for a profit upshoot on the back of a technical aspect, has already been mili- footholds in target devices to exploiting the importance of adopting both ‘make’
tarized. It is global and continues zero-day vulnerabilities. In other words, and ‘buy’ tactics for zero-day exploits.
business upswing, but signs of it are not yet regardless of whether or not states are instead of relying on someone to click Remember, though, that any advance
clear, and while the young can afford to go in armed conflict. We cannot pinpoint on a malware-loaded website or docu- in the cyber realm has an expiry date.
long, the entire market’s horizon for returns the date, month or even the year it ment, they are exploiting unknown Unlike conventional and nuclear
could not have got stretched by a whole decade started. And, unfortunately, we also software bugs to gain entry into target weapons, the need for continuous
to justify a 30-plus PE ratio. At such dizzy cannot say when it will end, if ever. computers. Zero-days sell for upwards investment in talent and technology in
States have no choice but to wage it. of a million dollars in the international offensive cyber capability is acute and
heights, prices can easily get skittish. Under Gloomy as this sounds, at least so far the market, but the Bitter APT hackers relentless. There is a lot of urgent work
shock-watch right now are two things. One is pursuit of politics through these other allegedly got them off a $250,000-a- that India must do at a doctrinal level to
the likely bankruptcy of Evergrande, a Chinese means has avoided large scale blood- year subscription service and developed craft a national strategy for information
mega-builder that looks unlikely to be bailed shed that characterized armed conflicts them further. warfare, no doubt, but the development
out, even as China’s cushion for its knock-on of the Industrial Age. Second, the highly-sophisticated of more advanced cyber weapons must
In previous columns, I have argued software used to exfiltrate data appears take place in parallel.
effects may not extend beyond its borders.
Another is a reversal of capital flows as the US
Fed reverses its stimulus, for which it signalled
a faster but firmer path last week. An orderly
reversal would make a ‘taper tantrum’ less
likely, but global markets could still go into
spasms if it exposes mis-priced assets and www.livemint.com New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Hyderabad, Chandigarh*, Pune* Tuesday, September 27, 2011 Vol.5 No.230 `3.00 32
24 PAGES
+ 4 MARKETS PAGES

the West and East have had minimal impact so financial fissures. What if the Fed’s largesse Q&A:GE’s Jeffrey Immelt
on the global economy >8
MARK TO MARKET: Subbarao’s
view of the crisis >14
My concern is that we’re
far, despite our index exposure to the wider turns out too profligate for the globe’s good? NATION: Chidambaram, Mukherjee
meet Sonia Gandhi >4

in a debt trap. When

EXCLUSIVE PARTNER
IN THE MONEY: Understanding the
global depository receipts scam >17

world. So long as the music plays, one has to Such a crisis is not a trivial risk. It could even
SENSEX 16,051.10 æ 110.96 NIFTY 4,835.4 æ 32.35 DOLLAR `49.45 Æ `0.02 EURO `66.68 æ `0.16 GOLD `26,225 æ `635 OIL $104.28 Æ $0.31

QUICK EDIT
SPOTTING OPPORTUNITY
Math behind

central banks... phase out

METALS HAMMERED Europe in
Buy-backs, the 2G scam
An increasingly bleak demand outlook has weighed on prices of industrial metals
such as copper and zinc in the past few days. Gold has fallen as investors
rescue mode
get up and dance—thus spake Citigroup’s then manifest itself in a flare-up of general inflation
scrambled for cash in the face of mounting uncertainties in the financial markets,
primarily fears of a Greek debt default and a global recession.
gets curiouser
Silver
% change (since 19 Sep)
F inally, Europe is

delistings
Gold ($/ounce) ($/ounce) taking the steps
1,850
10.2% 45
24.04% B Y A PPU E STHOSE S URESH
appu.s@livemint.com
needed to calm financial
markets and prevent its
························· economy, and that of the
1,800 NEW DELHI

unconventional monetary
40 world, from tipping over.
1,597.5*
T he story of how the gov- It’s a mixed bag of

chief Charles Prince in 2007, on the eve of a that proves hard to quell, as economist Nouriel
1,750 39.16 29.75* ernment’s auditor arrived

on the rise
1,778.9 initiatives. The European
35 at its `1.76 trillion loss figure
1,700
Financial Stability
in the so-called 2G (second- Facility (EFSF) is being
30 generation) scam and how the expanded massively from
1,650
report featuring this number the current €440 billion.
was prepared becomes curi- Greece may also be
1,600 25
ouser and curiouser. allowed not to fully repay
19 Nov 26 Sep 19 Nov 26 Sep Internal documents of the its debt. In other words,
FIIs sold Indian stocks delisting with an aim to relist ($/million ($/million Comptroller and Auditor Gen- debtors may be asked to

crash that tipped global finance into crisis, Roubini has warned, forcing a rate-raising
Copper Zinc
worth `2,595 crore when the markets turn bullish 18.14% tonnes) 12.33% tonnes) eral of India (CAG) viewed by

policy, given the debt ratios,

since Jan, mainly to
the promoters through
primary market deals
B Y A NIRUDH L ASKAR,
V YAS M OHAN &
take a “haircut”. This
again. 8,500 2,100 Mint indicate that R.P. Singh, could be as high as 50%
“There is a significant rise in director general (post and tele- of the debt. Many feel
2,104.5
the number of open offers,
8,479
2,050 communications) at CAG, and Greece simply is not in a
buy-backs and delistings. FIIs 1,845* the man who signed off on the
are offloading their stakes
6,941*
2,000 body’s report on the issue
position to repay its debt.
The decision to expand
through these non-secondary 7,500 didn’t actually have a hand in EFSF could not have
offers,” said U.R. Bhat, manag- 1,950 compiling the final report. In- come sooner. Every
ing director of Dalton Capital stead, he was asked to sign off passing day has the

revealing hidden risks and mis-priced credit. response by the Fed that may cause stagflation.
A SHWIN R AMARATHINAM Advisors (India) Pvt. Ltd, an 1,900 on a report prepared by CAG International Monetary
························· FII. headquarters. Fund or some other
MUMBAI “There is an arbitrage be- 6,500 1,850 Mint reported in a 6 Septem- institution issuing dire

T
he bear market has
come as a blessing for
some companies and
promoters. Foreign institu-
tional investors (FIIs) have
sold Indian stocks worth at
tween secondary market and
buy-backs and delisting. Pro-
moters are capitalizing on the
fall in share prices by buying
shares back from investors,”
he added.
there is the risk of a crash in
19 Nov 26 Sep 19 Nov 26 Sep ber story, based on internal warnings of imminent
*Monday’s prices as of 9pm IST
CAG documents, that Singh doom. There are doubts
Metal producers and metal-linked stocks were among the biggest losers had articulated the impossibil- on how EFSF’s expansion
in Indian markets on Monday % change
ity of quantifying losses arising will take place, but once
Hindalco Sterlite Hindustan Titan from the allegedly irregular al- a political consensus is
lotment of licences and spec- at hand, this is just a

Tragedy or farce, history need not repeat, The Fed has softened its aim of 2% inflation
least `2,595 crore since Janu-
ary, mainly to the promoters of
these companies who are look-
ing to buy shares cheap before
the new takeover code kicks in
Zinc Industries
According to Bhat, compa- 3.80% 4.40% trum to some telcos in 2008. matter of detail.
nies with 75-90% promoter
holding will most likely in-
5.90% 7.27%
The story added that he had
been asked to send his draft
A bigger blow will be
Source: Comex, London Metal Exchange and BSE if Greece is allowed to
crease their stake and delist. report, with several alternative take it easy. If that
AHMED RAZA KHAN/MINT
They can relist again when the methodologies, none of which happens, it can unleash

the bond market, the credit

from the last week of October, markets rise. ALSO SEE he was satisfied with, of calcu- moral hazard on a scale
making such purchases dearer. There are 214 such listed >MARK TO MARKET: Will the fall in copper >WSJ: Investors lose faith in stocks >P19 never seen before.
According to the Securities companies. persist? >P14 >Investor focus goes to new hazards >P19 TURN TO PAGE 3®
and Exchange Board of India In 2011, 30 companies ap-

but risk awareness must heighten as equity into an average over an extended period, and
(Sebi), FIIs, the key drivers of plied for delisting with stock
Indian markets, have sold exchanges in the first eight
shares worth `2,595 crore till
23 September through primary
months of the year, 64 firms
applied for open offers with
Patent tribunal’s IN LIMBO
market deals such
delistings, buy-backs and open
as

offers net of buying in initial

public offerings and other
transactions.
Sebi and at least 42 firms fol-
lowed the buy-back route, ac-
cording to Prime Database, a
admission places
question mark
Aadhaar alone isn’t enough for
a full-fledged bank account
market, the stock market,
Delhi-based primary market
tracker. against tribunals

prices go higher. Stock values show asset infla- the chance of a monetary mishap is looking
In the corresponding period
last year, they had invested
`38,925.5 crore in primary
market deals.
The 30-share bellwether eq-
uity index of BSE, the Sensex,
has lost 21.74% since January,
mirroring the fall in global
Eight firms have already
delisted their shares valued at
a total `3,057.62 crore and
there have been 17 buy-backs
valued at `5,283.96 crore, ac-
cording to Prime Databse.
Nirma Ltd (`379.84 crore),
Binani Cement Ltd (`81.7
B Y C .H . U NNIKRISHNAN B Y S URABHI A GARWAL, LACKING CONSENSUS through Aadhaar.
ch.unni@livemint.com R EMYA N AIR & A NUP R OY Aadhaar is the government’s
························· ························· THE NEWS flagship project to give a unique
MUMBAI NEW DELHI/MUMBAI UIDAI is in talks with the ministry of identity number to each resi-
finance and the Reserve Bank of India
A n admission by the chair-
person of the Intellectual I s a unique ID number or Aad-
haar number issued by the
(RBI) to clarify the scope of Aadhaar as
a sole know-your-customer (KYC)
dent of the country.
UIDAI, which has major am-

tion caused by too much cash chasing too few less remote amid a US boom in demand. What
markets in the wake of a threat crore) and Atlas Copco (India) Property Appellate Board Unique Identification Authority norms for opening bank accounts. bitions to make Aadhaar a ro-

and in the economy.

of a double-dip in the world’s
affluent economies.
Indian companies and their
promoters are making the
most of this fall by buying
shares from FIIs at low prices.
While promoters are floating
open offers, companies are
Ltd (`502.6 crore) are some of
the companies that are in the
process of delisting their
shares.
In comparison, calendar
year 2010 saw nine delistings
valued at a total `948.26 crore,
while 12 companies bought
(Ipab) that the body isn’t fully
independent of its parent min-
istry because of the infrastruc-
tural and financial backing the
latter provides has raised a
question about the indepen-
dence of similar tribunals.
The admission by justice
of India (UIDAI) enough to sat- bust means of authentication for
THE BACKGROUND
isfy the so-called know-your- In January, RBI said all accounts opened
all kinds of financial transac-
customer (KYC) norms that exclusively with the use of an Aadhaar tions, has been in talks with the
banks have to ensure every ac- number would be treated as small or finance ministry and RBI to ad-
count they open meets? no-frills accounts. dress the issue.
The finance ministry may THE IMPLICATION “The central bank is funda-
have amended the Prevention of The lack of clarity on the issue is causing mentally conservative in nature
Money Laundering Rules, 2005, confusion among banks which have and Aadhaar has the potential to

options, a result of central banks using ultra- underlies all this is the unseen uncertainty of
opting for buy-backs and even their shares back worth
`1,229.40 crore.
Takeover code trigger
The market has turned bear-
ish at a time when the new
takeover code is set to be im-
plemented.
The code, effective 22 Octo-
Prabha Sridevan was made in a
report placed last week before
the Madras high court, which
is hearing a case on the work-
ings of Ipab. The appeals body,
which rules on intellectual
property (IP)-related issues, is
vested with the powers and ju-
risdiction of a high court.
to notify Aadhaar as adequate to been empanelled to open bring about radical changes in
meet KYC norms for opening Aadhaar-linked bank accounts. the system, which explains RBI’s
bank accounts, putting it along- move. They had some concerns,
side the passport, driving li- which are being addressed,”
cence, permanent account tional (though the deadline is added a government official fa-
number (PAN) card, and the extendable by a year). miliar with the issue, who did
voter’s identity card, but banks To open large bank accounts, not want to be identified.
are still confused. customers will have to satisfy Robin Roy, associate director
That’s because the finance another KYC norms in addition at audit and consulting firm

easy money for rescue acts across the world. what casino-esque impulses—stoked by easy
ber, will require an acquirer to
mandatorily buy at least 26%
shares in an open offer and the
trigger for such an offer will be
25%.
Mint has reviewed the re-
port, which the court asked to
be prepared. The ministry of
commerce and industry is cur-
rently responsible for recruit-
ministry notice came in Decem- to using their Aadhaar number. PricewaterhouseCoopers, said
ber, and in January, the Reserve “Aadhaar is one of the addition- that technically a UID number
Bank of India (RBI) said all ac- al means we are giving people to can serve both as an identity
counts opened exclusively with open bank accounts; however, proof and an address proof, but
the use of an Aadhaar number in itself not sufficient for large is not considered sufficient as

Currently, the trigger is 15%
and the mandatory open offer
is for at least 20%.
The new norms will also
ing Ipab members, paying
their salaries, and providing
infrastructure to the body.
Sridevan suggested in her
N OU R I E L ROU B I N I
would be treated as so-called bank accounts,” said a finance the regulator insists on more ro-
small or no-frills accounts. ministry official who did not bust KYC processes for opening
Small bank accounts are sub- want to be identified. savings and current accounts.
ject to various limitations: the Even though another govern- “For Aadhaar to be used as the

The need to calm covid seizures led central money—might have wrought across the world.
make it relatively difficult for report that this be changed. total amount deposited in them ment official pointed out that sole KYC, there is a need for
companies to opt for delisting. “The ministry of law and jus- in a fiscal cannot exceed `1 none of Aadhaar’s future plans convergence by all the regula-
Currently, if an acquirer’s tice must be made responsible lakh; the customers need to sat- are “premised on this”, the noti- tors such as RBI, Sebi (Securities
Mint is also available for R6 with isfy another KYC norms within a fication makes it less attractive
Hindustan Times under a combo offer TURN TO PAGE 3® TURN TO PAGE 2® year for the account to be opera- for banks to open accounts TURN TO PAGE 2®

bankers to weaken their vigil on price stability, All in all, investors must stay alert.

MY VIEW | MODERN TIMES

A prolonged wait for the promised decline of America

“I am so stoked.” And Indians who never read
MANU JOSEPH a single Indian newspaper but subscribe to
The New York Times.
It is so easy for the US to co-opt the most
refined, educated, talented and affluent sec-
tions (all of these are mutually exclusive) of
rily for domestic consumption, still enthralls to British literature. Among the big injustices make tech and films and TV series and music.
the world. A high proportion of the develop- of colonialism has to be the veneration of Even journalism. This need not be a good
ing world’s young wish to live there. The mediocre aristocratic writers and “thinkers”. thing, because they are inadvertent tools of
chief aim of upper middle-class Indian By the 1990s, the American hold over con- co-option. Upscale Indians try to imitate all
schooling is to deposit children and a chunk temporary culture was complete, but abstract that is good and American, and it just does not
of their parents’ wealth in America in the things were still influenced by the British, work so well here.

I
n the horror film Get Out, a secret fellow-
ship of Caucasians lures talented African-
Americans into their custody, often by say-
ing all the right things to them. And then they
transplant the brains of wealthy Whites into
their victims, who start behaving like affluent
Whites. While watching it, I thought this film
could be about how American newspapers
the developing world, and make them comi-
cal imitators of some American ideal. But for
many years now, we have been hearing that
the US is in decline. The recent fiasco of its
hasty withdrawal from Afghanistan has
served as further evidence of its decay. And
that it is not as influential politically, that not
many nations are scared of it, that it has its
name of higher education. And what is called like the moral supremacy of secularism, and Take one of America’s powerful exports:
‘global literature’ or ‘global the unhinged idea of social- modern activism. The singular evangelical
cinema’ is what America’s ism, and the intellectual idea of what is moral and that you can tor-
artistic establishment con- Its influence inferiority of nationalism. ment an elected government that does not
siders cutely foreign but Liberation from British cul- agree with you through anarchy is not dan-
still familiar. If anything, shows little sign tural torture freed the gerous for US activists because its human
America is growing more thinking of a new genera- rights movement is legally empowered. In
influential. Chiefly because
of decline even tion of influential Indians. India, given our grey zones of law, it is not the

is a journalist, and a novelist,

lure Indian opinion writers and transplant
America inside them, after which they start
most recently of ‘Miss Laila,
Armed And Dangerous’
writing like Americans.
Every Indian who watches Get Out may
think it is about how the minds of their peers
are rebooted to imitate Americans: The
startup guy who did engineering as his par-
ents insisted, married their pick of spouse,
and produced ‘we-two-ours-two’ kids, and
now suddenly want to “disrupt”, that venture
capitalist who indulges in a mission Asians
almost never used to have—saving the world.
That economist who knows the castes of his
friends and foes but now talks of “Clash of
Civilizations” as though it is some new
thought. That writer who has started saying,
own economic problems, that China has
eroded its clout, and that, all things consid-
ered, America is not the great place it used to
be. If US politics is ever united, it is in convey-
ing the dirge that the country is sinking.
But that is not the sense you get when you
are outside the US, and perhaps outside the
paywalls of its self-flagellating liberal media.
In all important ways, the US is an extraordi-
nary nation. They talk a lot about what is
wrong with them (because they talk a lot
about everything), but they identify and solve
their economic problems with exceptional
speed. Their science is stronger than before;
their financial industry thrives, their enter-
tainment, which is honest because it is prima-
of its flaws. All its bumbles
and wounds and all that
though it need That indeed is what it took
for many Indians to under-
same. Blind imitation of American activism,
thus, could easily ruin the lives of idealistic
chest-beating make it more
real and humbler than
not be such stand there was more than
one right ideology, more
youngsters. Think of what happened to fans
of democracy in Hong Kong.
Rambo’s America. a bad thing than one right way for a A decline of America will also reduce the
The decline of America is nation to be, and that many migration of Indians to that nation. I am not
more humanities lament if it happens virtuous ‘isms’ were merely concerned about the comically-conceited
than fact. But the decline thought experiments. idea of “brain drain”. In fact, the movement of
itself, if it happens, may not The decline of a global the privileged has given opportunities to
be a bad thing for the rest of the world. cultural force clears the minds of locals. And those from more modest families here. But if
Before American, there was British domi- the decline of America may free Indians from no Indian ever wants to flee India, that will
nance. I am not old enough to remember the overestimating American things at the cost of increase their stake in the country. When we
isles’ political dominance, but as a literature all that is Indian. But American colonialism know we cannot flee, we stop mouthing
student, I could not escape its cultural domi- does not derive most of its power from over- grand philosophies and ideologies about
nance. My first realization that books can be rated antics. Rather, its power comes from nationhood, and instead do banal things like
bad too was when I was formally introduced truly exquisite creations. Like the way they cleaning the air and water and the roads.
LIVEMINT.COM VIEWS MONDAY, 27 SEPTEMBER 2021
NEW DELHI 15

GUEST VIEW M I N T C U R AT O R

Health, infra and fiscal stimulus Evergrande got a free pass of

sorts from Chinese authorities
will act as our economic panacea It was coddled for long beyond the limits of regulatory prudence

These three are at the core of the government’s economic revival strategy as they hold significant potential to propel growth

MINT

SHULI REN
is a Bloomberg Opinion columnist covering
Asian markets.

MANISHA GIROTRA
is India chief executive officer, Moelis &
Company, a US-based global Investment Bank

M
any comparisons have been made
lately between the collapse of Leh-
man Brothers and the apocalypse

U
ndoubtedly, the most challenging
disruption of the recent past, the
covid pandemic and subsequent
restrictions, led to never-before
economic turmoil of unprecedented
proportions, sending most business
plans and strategies into near chaos. The worst, we
hope, is over. While ending the pandemic is every-
one’s first priority and a sure way for India to
improve its economy, the right public policies and a
zealous private intent are also key to future growth.
The health crisis presented an opportunity for
individuals and businesses to pause, reflect and
realign their lifestyle, priorities and perspectives.
Rapidly changing consumer behaviour, business
imperatives—both short- and long-term—and a
renewed zeal to shed ghosts of the past have only
helped accelerate the transformation.
Indicators of my optimism are already evident.
Over 800 million covid vaccine doses have been
administered. Active cases are coming down.
Deaths are fewer. Restrictions are being lifted
across the nation. The country’s workforce is
returning to work. A good monsoon amid the kharif
sowing season has brought on some cheer in rural
India as well. And, pent-up consumer demand is
unleashing itself slowly but surely.
Agriculture, forestry and fishing are already on
the path of positive growth. India produced a
bumper crop in the last kharif and rabi seasons,
despite pandemic blues. Financial and professional
services were less adversely affected and are well on
their way to recovery. The information technology
sector has breached many ceilings, posting stupen-
dous growth from work-from-home routines. Con-
struction is showing signs of a rebound. Electricity,
gas, water and public-utility services and public
administration, defence and other services are get-
ting back to normalcy sooner than other sectors.
The global economy is witnessing its strongest
growth in 80 years. Near-term concerns about the
Delta variant notwithstanding, global growth is
expected to remain much above trend for the next
couple of years, aided by increased vaccinations.
This augurs very well for India’s external sector,
given the strong elasticity we have between global
growth and exports. Unsurprisingly, manufacturing
exports are already 20% above pre-pandemic levels.
In any recessionary situation—as the country was
hurtling towards last year—money needs to be
directly pumped into the system, primarily to boost
immediate consumption. Accelerating economic
activities by investing public capital enhances the
purchasing power of people. That money is then
spent on consumption, which boosts demand and
enhances production, which creates even more
purchasing power in the economy. This cycle goes
into an upward spiral and takes the economy out of
recession. That is how the investment multiplier
works in any economy. Signs of this in India have
been heartening. To revive activities in specific sec-
tors with multiplier effects on growth, the Reserve
Bank of India (RBI) introduced on-tap targeted
long-term repo operations (TLTRO) with tenures of
up to three years for a total amount of up to ₹1 tril-
lion at a floating rate linked to its policy repo rate.
The liquidity availed under TLTROs can also be
used to extend bank loans to growth-oriented sec-
tors. This was done to ensure smooth bank credit
operations. On feedback from market participants,
the central bank also decided to increase its special
open market operations to ₹20,000 crore.
In addition, as recently as late June this year,
India’s finance ministry further announced an eco-
nomic package of ₹628,993 crore covering three
broad areas—pandemic relief, strengthening public
health, and growth and employment. While eight of
the 17 schemes announced are aimed at providing
economic relief to both people and businesses
affected by covid, the ministry also has a special
focus on health, travel and tourism.
Increasing credit supply has facilitated an
endemic economic revival. The idea is simple but
effective. The availability of low-cost loanable funds
increases credit offtake to be utilized in new eco-
nomic activities, which results in heightened revival
and growth.
Additionally, the government’s initiative of ‘One
Nation, One Ration Card’ can go a long way to revive
flagging consumer demand and ensure food secu-
rity for a majority of the population. After the
migrant workers’ crisis during the 2020 lockdown,
the focus shifted to reverse migration. The
Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) scheme has already
been used by almost 100 million people, its highest-
ever utilization since its launch in 2006. Expansion
of MGNREGA to urban area is also necessary to help
stabilize the economy.
Infrastructure is crucial to an economic revival.
Efforts to attract manufacturers to India from China
must be augmented with concomitant improve-
ments in domestic infrastructure. Not only will it
have a positive influence on future exports, it will
also create immediate employment and purchasing
power, infusing the system with demand. The
recent launch of a ₹100 trillion integrated infra-
structure scheme should help make India’s econ-
omy more competitive. This Gati Shakti initiative
aims at breaking the silos between road, rail, air and
waterways to reduce travel time, which is expected
to improve industrial productivity and raise global
competitiveness and generate employment. This is
a way to reduce companies’ logistics costs, which
presently account for about 13% of their expenses.
Strengthening and augmenting health infrastruc-
ture, urban planning, roads, rural infrastructure and
digital infrastructure are going to be key drivers of
economic growth in the long run.
This will call for sustained public investment,
which will eventually boost exports. The govern-
ment has clearly embarked on such a strategy, with
central capital expenditure growing robustly. Both
the Centre and states have budgeted 30% growth in
capital expenditure for 2021-22, and pulling this off
will play a significant role in an economic revival.
Physical and social infrastructure spending can
simultaneously create jobs, attract private invest-
ment and improve the economy’s competitiveness.
In the near term, stepping up the pace of vaccina-
tion is the most effective stimulus. But boosting
growth and jobs in a post-pandemic world is equally
crucial. Reforming the financial system with strong
resolution mechanisms under the Insolvency and
Bankruptcy Code to enable the creative destruction
of haemorrhaging companies is a viable way for-
ward.
Last but not least, cultivating an open trade envi-
ronment conducive to export-led, job-creating
growth can provide long-lasting succour for the
Indian economy.
at China Evergrande Group, the world’s
most indebted real estate developer. But
they are nowhere close. Lehman was a top-
tier investment bank that went from good
to bad during the 2007 subprime mortgage
crisis. On the other hand, Evergrande, a
well-known presence in Hong Kong’s capi-
tal markets for years, has always been bad.
For almost a decade, critics have been
calling Evergrande out, questioning the
asset quality of its unsold properties and
asking if its auditors were asleep. All those
warnings fell on deaf ears; the developer-
turned-conglomerate went on living out its
nine lives. Last week, however, Beijing
finally told local governments to prepare
for Evergrande’s potential demise. The
unanswered question is why China and its
often merciless regulators allowed it to go
on for so long.
Evergrande’s liquidity crisis came about
because all of its working capital is tied to
its inventory, mostly composed of $202 bil-
lion in unfinished housing projects. When
unpaid suppliers and employees came
knocking on its door, all Evergrande could
offer as repayment was unsold apartments,
store fronts and empty parking lots. Some
properties were offered to creditors at a
discount of as much as 52%, giving a sense
of their true market value.
Perhaps investors chose to look on the
bright side because the authorities were on
Evergrande’s side. In 2016, Hong Kong’s
financial markets regulator declared that
US-based short-seller Citron Research and
its founder Andrew Left were culpable of
market misconduct because of their nega-
tive assessment of Evergrande. “Left used
sensationalist language in his report that
Evergrande was insolvent and engaged in
accounting fraud,” it said. Left responded,
saying, “This court’s opinion simply stifles
negative commentary.” Evergrande is
among the most-often shorted stocks on
the Hong Kong bourse.
Short sellers may be feeling vindicated.
But if anything, the 2016 decision could
have emboldened Evergrande. Founder
Hui Ka Yan has relied on powerful tycoon
friends, and, over the years, they have short
squeezed naysayers, helped Hui raise bil-
lions in equity financing, and even solidi-
fied his control of a regional Chinese bank
listed in Hong Kong. Owning a bank can be
very useful for a developer whose balance
sheet is stretched to the limit.
Evergrande became Asia’s largest high-
yield dollar bond issuer. Its sheer size
Evergrande founder Hui Ka Yan was seen
as a model tycoon by China AFP
meant that the world’s big asset managers,
from Pimco to BlackRock, had holdings. It
had liabilities with 128 banks last year.
What kind of exposure might global banks
such as HSBC and JPMorgan Chase have?
If Hong Kong’s laissez-faire traditions
excuse its lax regulation of Evergrande,
Beijing’s inaction is baffling. Beijing had
vowed to cut down corporate leverage in
late 2017: It was during this period that
Evergrande’s debt pile ballooned. Were
Beijing’s iron-fisted regulators distracted?
In 2017, China was busy cracking its whip
at conglomerates for debt-fuelled global
shopping sprees. Evergrande was the good
stay-at-home citizen, expanding domesti-
cally, building projects in lower-tier cities.
But those virtues were piling up bad debt.
Between 2016 and 2020, Evergrande’s lia-
bilities almost doubled to about $300 bil-
lion. Its working capital became strained.
Unpaid bills owed to suppliers ballooned to
about 30% of total liabilities from 20% five
years earlier. Because of its large exposure
to lower-tier cities, it ended up with dead
‘dead assets’.
Hui persevered. He ticked all the right
boxes. He was ‘woke’, in Communist party
terms, even before Xi Jinping decided to
wake the country to its old socialist values.
A party member for more than 35 years, the
62-year-old Hui was already speaking of
“common prosperity” in 2018. In 2020,
with $465 million in donations, Hui ranked
as China’s most charitable person for the
fourth year in a row. He was proactive with
the covid pandemic, contributing cash to
Wuhan one day after its lockdown and
donating millions of dollars to medical
research. Hui was given a much coveted
spot at the Tiananmen Square gate tower at
the 70th anniversary of the People’s
Republic on 1 October 2019, and again, at
the Party’s 100th birthday party this July.
In that way, he was more enlightened than
other Chinese tycoons, such as Jack Ma.
It worked. Authorities from lower-tier
cities would be intoxicated by Hui and his
visible political correctness and connec-
tions—welcoming his development pro-
jects and proposals with open arms.
“Everything Evergrande and I have belong
to the party, the country and the people,”
he said in a much-cited 2018 speech. If it
sounded grand and charitable then, it feels
ominous now. ©BLOOMBERG

MY VIEW | GENERAL DISEQUILIBRIUM

Code Red: Weak investment demand has got entrenched

for the period. Disaggregated data shows
RAJRISHI SINGHAL industrial credit registered a CAGR of 19.6%
and non-industrial 14.6%. Cut to the subse-
quent period of 2014-15 to 2020-21: while
credit offtake exhibited a sharply lower
CAGR of 8.3%, industrial credit growth has
Some of the reasons can be found in the
second paper (bit.ly/3kBD6zJ) by RBI staffers,
titled ‘Private Corporate Investment: Growth
in 2020-21 and Outlook for 2021-22.’ The
investment climate has been challenging for
some time now, with the paper showing a
repercussions. Longer completion time
implies cost escalation and uneconomic
returns on the asset, as well as second-round
effects for the financing sector.
The situation has, predictably, worsened
during the pandemic and recovery seems like
It is by now clear that government must
avoid unilateral policy measures which
impart medium-to-long term structural
shocks to the system. Implicit in the pro-
tracted completion rates of new projects is
the assumption that industry probably has to

T
he catchphrase “Houston, we have a
problem” is the harbinger of a serious
crisis, or even a life-threatening set-
back. The phrase is actually a version of the
original distress call made by Apollo-13 astro-
naut Jack Swigert (“Okay Houston, we’ve had
a problem here”), but it has become a popular
way of conveying impending disaster. In the
plummeted to 1.6%.
To be fair, there can be valid arguments for
this sharply lower industrial credit growth.
Companies may have replaced bank credit
with alternative funding sources (such as,
equity or overseas borrowings, among oth-
ers). For example, foreign direct investment
in private-sector manufacturing and service
sharp fall in new private-sector projects being a long-drawn-out affair, despite sentiment- contend with myriad obstacles and sudden
taken up every year and a defying noises from sundry rule changes, whether in the states or at the
sharper fall in the number cheerleaders. RBI’s Sep- Centre. This has a direct bearing on the gov-
of projects getting com- India is yet to tember state-of-the-econ- ernment’s ambitious National Monetisation
pleted each year. This omy report, while gushing Pipeline (NMP, which plans to raise ₹6 trillion
implies that, apart from the emerge from a about future prospects, slips over next four years), because a large propor-
shrinking private sector in a candid admission: tion of the new private projects being
bandwidth for new invest-
slump in private “Exports outstripped pre- announced or financed over the past few

is a policy consultant, journalist

spirit of indigeneity, it is perhaps time to
devise an Indian distress call because key
and author. His Twitter handle
is @rajrishisinghal.
economic indicators are flashing red.
Two papers by Reserve Bank of India (RBI)
staffers, published in the September issue of
its bulletin, read with the central bank’s latest
Handbook of Statistics, provide an unflatter-
ing view of the economic landscape.
The first paper (bit.ly/3AIZ9d4), titled
‘Changes in Sectoral Bank Credit Allocation:
Developments Since 2007-08’, provides a
dire snapshot of the industrial stagnation
that has gripped the Indian economy. The
paper shows bank credit offtake boomed
from 2007-08 to 2013-14, posting a com-
pound annual growth rate (CAGR) of 16.8%
companies grew by almost 140% between
2013-14 and 2019-20. Also, the indiscrimi-
nate credit boom of 2007-14 begat a pile of
non-performing assets, leading to risk aver-
sion among banks. Yet, despite these com-
pelling factors, data shows that the Indian
private sector’s appetite for fresh invest-
ments has diminished over the years.
For example, World Bank data shows
gross capital formation in India has slipped
from its 2007 peak of 41.9% of gross domestic
product (GDP) to just 28.4% in 2020. Seen
differently, the growth rate of absolute
amounts invested in gross capital formation
has not kept pace with the growth rate of
nominal gross domestic product (GDP).
ments, challenging eco-
nomic conditions are
investment that
extending the gestation
period for each project.
has kept capital
Data also reveals a clear bias formation too
in favour of large projects:
the larger the project, the low for too long
longer it takes to complete.
A strategy note from JM
Financial uses granular data to show that the
completion time for projects between ₹1,000
crore to ₹5,000 crore has stretched from 7
years in 2016-17 to 11 years in 2020-21. In
addition, there are many projects either
stalled at the gates, initiated but delayed, or
worse, even abandoned. This has its own
pandemic levels and
imports are poised to catch
up, but private consump-
tion and fixed investment
are still “work in progress.”
The last two mentioned
economic indicators are
pivotal if India wants GDP
to grow upwards of 6-7%
consistently in the near future. Reports show
that while low interest rates have helped the
corporate sector refinance and reduce its
debt overhang, it is still some distance away
from taking fresh investment decisions; this
invariably means an entrenched sluggish
investment climate for some more time.
years were in the infrastructure sector. Early
readings indicate that Indian industry is still
wary of wading in, uncertain of how to insu-
late itself from the unpredictable regulatory
and legal flux that is commonplace in India.
In addition, there are still many grey areas in
the NMP framework.
But signals from government finances till
July are instructive: Buoyant tax receipts
(34.2% of 2021-22 budget estimates) have
raised hopes, but tepid capital expenditure
figures (23.2%) dampened spirits. With the
Union finance ministry now lifting spending
curbs on various ministries and departments,
some of the chronic despondency will hope-
fully be reversed.
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