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Friday, January 10, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


A bogus tourist list leads ED sleuths to Edelweiss' doors

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By Rashmi Rajput & Jaikishan YadavMUMBAI: Edelweiss Group chairman Rashesh Shah was asked to join an Enforcement Directorate probe into alleged violations of foreign exchange rules amounting to more than. Rs 2,000 crore but he did not turn up for questioning and sought to appear at a later date, officials said on Friday. The agency is likely to issue fresh summons next week, they said.Shah's Mumbai-based financial services group is part of a probe involving a Thane-based firm, Capstone Forex, according to officials. The role of a major Indian movie production and distribution company is also under probe, they said without naming the entity.Edelweiss Group issued a statement on Friday saying none of its companies had any transactions with Capstone Forex.It also dismissed reports in a section of the media in this regard. "The summons was issued under certain sections of the Foreign Exchange Management Act (FEMA) on January 3 and Rashesh Shah was asked to join the probe on January 9, but he has sought a later date," an official in the know of the development told ET on condition of anonymity. "We are starting with him to understand why Edelweiss was involved in these transactions. The other firms related to these transactions will also be called in due course." 73197896 Capstone Forex allegedly created bogus tourist lists and illegally remitted foreign exchange overseas, according to officials. "In order to provide credit balance to this company, Edelweiss Group companies and another firm under probe allegedly issued cheques to this Thane-based company for buying dollars and transferring under current account. These dollars were remitted to shell companies, which subsequently withdrew the money mostly through cash," said a second official."There has been fraud at two levels – one, foreign exchange was illegally remitted by creating a bogus list of travellers and, second, a corporate like Edelweiss Group helped in illegal procurement of foreign exchange," said the official. "While the major player in this looks to be the Edelweiss Group, the other entities which also helped provide credit balance to the Thane-based firm will be called in due course."The role of each party in the transaction is being ascertained, as are complex layers of transactions involved, said the official. "We want to probe who is the ultimate beneficiary of these shell entities and who floated them in the first place. Was this done with the dual intention of evading taxes and hoarding funds offshore?" said the official.In its press statement, Edelweiss Group said, "We have received a communication from the Enforcement Directorate to appear and provide information about Edelweiss Group companies' dealings with a company called Capstone Forex Pvt Ltd. We would like to state that none of our companies have any transactions with this company….""We further deny wild and baseless allegations contained in the news items which are apparently attributed to unidentified sources. We are in fact shocked at the spread of unauthenticated allegations and the inference being drawn from it," it said.According to people aware of the matter, Sanjay Nathalal Shah, an independent director in certain entities linked to Edelweiss Group, is alleged to be a close associate of the owners of Capstone Forex. Shah is an independent director in entities including Edelweiss Finvest and Edelweiss Fund Advisors, which was amalgamated in February last year along with four other entities with Edelweiss Agri Value Chain Limited, as per a filing with the stock exchange.The financial statement and director's report of Capstone Forex, reviewed by ET, show that the company reported revenue of Rs 314.41crore from operations in March 2018, a whopping increase of nearly 1,800% from Rs 16.69 crore a year earlier. In March 2016, the company had reported a total income of Rs 4.89 crore.

Infosys results: What worked and what didn't

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ET INTELLIGENCE GROUP: The December quarter performance of Infosys was a mixed bag. While revenue and profit growth was broadly on expected lines, the operating margin was below the Street's expectations and there was no visible revival in the major verticals of financial services and retail, which together contributed 47% to the total revenue in the quarter.The favourable outcome of the internal audit committee regarding the whistle blower allegations will be a near-term positive for the stock. The audit committee assisted by an independent legal counsel has concluded that there was no evidence of financial impropriety or misconduct by the company's executives.While this would settle the doubts in the minds of investors for the time being, it would be prudent for them to know that the Securities Exchange Commission (SEC) in the US where the company's depository receipts are listed, continues to investigate the matter. Infosys also faces class action lawsuits by stockholders in the US. In addition, Indian regulatory authorities have sought information from the company on the matter.On the operating front, the company reported a strong $1.8 billion worth of large deals for the December quarter. The employee attrition rate at 19.6% fell for the second consecutive quarter.Revenue from the fast growing digital offerings rose by 40% year-on-year. It formed 40.6% of the total revenue of $3,243 million compared with 31.5% in the yearago quarter.An analysis of the trailing 12-month (TTM) incremental revenue in dollar terms in each of the past few quarters reveals that the company has shown a sustained momentum since the September 2017 quarter when it had hit a low of $558 million.Over the next two years, it gradually grew to $1.1 billion in the December 2019 quarter. The year-onyear growth rate of the TTM revenue also improved to 9.5% from 5.6% in the said period.What may cause some concern is the continued weakness in the finance vertical, which constituted 31.5% of the total revenue in the third quarter. It revenue grew at a slower pace of 6.2% year-on-year compared with the 10.3% growth in the previous quarter. Against this backdrop, the marginal upward revision in the company's FY20 revenue guidance at constant currency to 10-10.5% growth from the earlier 9-10% growth may not prompt analysts to make major revisions to earnings estimates.The stock recovered to Rs 738.3 on Friday from Rs 643.3 on October 22 in a reaction to the whistle blower complaints. It was trading above Rs 770 before the allegations. The audit committee's report on Friday denying any wrongdoing by the executives and the robust new business may help the stock to reclaim this level in the short term.Whether it is able to sustain it will depend upon measures taken by the company to improve operating profitability and revive the growth of finance and retail verticals.

The JNU story that protests won't tell you

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NEW DELHI: Protests, masked mobs, police 'inaction', Right vs Left, vice-chancellor vs students… and one of India's best institutes for higher education and research — that's Jawaharlal Nehru University.Headlines on JNU may frequently centre around agitation and student politics, but the big story is that it's currently one of India's top-ranked academic institutes and has been so in recent annual rankings.JNU is the only central university, in fact the only varsity, among top eight Indian institutes in the 2019 National Institutional Ranking Framework (NIRF). This HRD ministry ranking system, widely followed in the country, had IIT-Madras at the top spot in 2019, and the Indian Institute of Science, Bengaluru, in second position. JNU is at the seventh spot. The other five places in the top eight were occupied by the IITs.The NIRF, launched in September 2015 by the HRD ministry, ranks institutional performance on the parameters of "teaching, learning and resources", "research and professional practices", "graduation outcomes", "outreach and inclusivity", and "perception". It assigns scores to every institute (see graphic).The ranking methodology assesses an institute's student strength (including at doctoral levels), teacher-student ratio, published and granted patents, number of PhDs, percentage of students who are from other states and disadvantaged sections and who are women, besides perception of academic peers. 73197593 JNU's academic performance has improved as the frequency and intensity of student agitations gathered pace in recent years. The university has been rocked by protests since 2016, and it has improved its overall score in the NIRF from 61.53 in 2017 to 68.8 in 2019.In 2017, JNU also won the President's Visitor's Award for the best university.Interestingly, other universities that have seen student protests and agitations recently — Jamia Millia Islamia, Aligarh Muslim University, Hyderabad University and Jadavpur University — also score well in rankings.In the NIRF's university rankings — a smaller subset that exclude institutes such as IITs — JNU came second in 2019, Hyderabad University stood fourth and Jadavpur University was sixth. Aligarh Muslim University and Jamia Millia were at the 11th and 12th spots, respectively.Since 2016, JNU academics have been conferred with various Visitor's Awards. And in 2015, still fresh from the student agitation over Rohit Vemula's suicide, Hyderabad University won the Visitor's Award for best university. Academics from both Jamia and AMU have also won the Visitor's Awards since 2015, when these awards were introduced.

IL&FS board proposes distribution framework

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MUMBAI: Offering relief to operational and unsecured creditors as well as provident funds, the new Infrastructure Leasing & Financial Services Ltd (IL&FS) board has decided to revise the distribution framework for group resolution.It has proposed to release 55 companies from the moratorium. Some of these companies are under the corporate insolvency process or facing liquidation, and a few entities have limited business operations, the board told the National Company Law Appellate Tribunal (NCLAT).The board has proposed a mechanism for distribution of the financial bid, or liquidation, amounts for considering interest of each set of creditors. After distribution of net sale proceeds to creditors under the Insolvency and Bankruptcy Code's (IBC) 'waterfall' mechanism, the remaining amount will be distributed to each class of creditors on prorata basis.Once approved, this will set a precedent for group resolution."Based on analysis of the current position and challenges, the assessment of the new board is that the revised distribution framework is a fair and equitable manner of distribution of relevant sale proceeds, and is in the best interest of all stakeholders and creditors," noted a board report sent to the NCLAT through the ministry of corporate affairs, a copy of which has been seen by ET.An IL&FS spokesperson declined to comment on the story.IL&FS defaulted on its debt obligations in August 2018, triggering a financial sector meltdown in India. The government-appointed board took over IL&FS in October that year, and made Uday Kotak its chairman. The board is addressing a total outstanding debt of Rs 94,000 crore, of which IL&FS Transportation Networks Ltd, IL&FS Energy Development Company Ltd, IL&FS Financial Services Ltd and IL&FS together holds Rs 48,000 crore.Provident funds of companies such as Philips India, SAS Employees Provident Fund Trust, British Airways' Cabin Crew Pension Fund, PLC Staff Fund and superannuation fund are estimated to have invested Rs 15,000-20,000 crore in IL&FS group entities.Distribution of proceeds from sale of wind energy assets is pending, and will be based on the revised distribution framework. Orix has bought seven special purpose vehicles from IL&FS for Rs 5,920 crore.Sale of wind, road and education assets is likely to fetch around Rs 18,000 crore. The board is actively considering alternatives such as infrastructure investment trusts for value maximisation of assets with debt of Rs 10,300 crore.The company has received a binding bid for Chongqing Yuhe Expressway Company, which has debt of Rs 1,600 crore. It is considering the Swiss challenge process for sale of its technology, environment and BPO assets. The board also expects recovery of Rs 3,000-3,500 crore from sale of real estate assets, including the IL&FS headquarters in Bandra Kurla Complex, Mumbai.Parent company IL&FS took equity ownership in roads, power companies and educational institutions, which led to it promoting hundreds of companies. Much of its debt is equity in operating companies — difficult to recover as other assets are yet to generate cash. Six entities are already under the Corporate Insolvency Resolution Process. Resolution has been passed for seven entities, while eight are green entities with no debt and are under monetisation. Six are trusts with no operations and five have insignificant assets.The board observed that creditors are concerned about maximising recovery at individual entity level, without regard to its adverse impact on other creditors.

Offline traders warn of Xiaomi, Samsung boycott over online discounting

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NEW DELHI: More than 20,000 offline retailers have told India's top smartphone makers — Xiaomi and Samsung — that they will boycott the two brands if there's no stop to deep discounting and aligning with ecommerce players.In similar but separate letters dated January 10, the All India Mobile Retailers' Association (AIMRA) also said that if deep discounting continued online, brick-and-mortar retailers could also "simply deduct the difference and sell at online prices."ET has seen a copy of the letters, which were addressed to Mohandeep Singh, senior vicepresident, mobile business, Samsung India and Sunil Baby, director, offline sales operations, Xiaomi."When brands can control offline MOP (market operating price), it is only imperative and fair that they should control the deep discounting," the letter said.73197806 Offline mobile traders are fighting against exclusive deals between brands and ecommerce platforms such as Flipkart and Amazon, and demanding simultaneous offline launch of products at the same price."We feel the time has come for brands to take our issues seriously, else retailers and associations will not fear to boycott the brands. We are not in favour of force, but if the current scenario demands it, we shall not withdraw," the letter said.Both Samsung and Xiaomi declined to comment on ET's queries.Retailer associations have been relentlessly campaigning against exclusive deals, cashback offers and 15-20 day prior online launches by mobile brands. After grievances were submitted to mobile manufacturers many times, Vivo, Oppo and Realme assured their retail partners that they would launch products and variant at the same time and at the same price across channels."Apple does not have any exclusivity among their sales channels, while OnePlus has just entered the offline channel. AIMRA has written to OnePlus as well to end exclusivity completely," said Arvinder Khurana, president, AIMRA. He added that among the top selling brands, Xiaomi and Samsung have been pain points for long."Xiaomi especially does preferential sales by launching its products online an average 21 days beforehand. After robust online sales, it becomes difficult for offline retailers to push Xiaomi products, as their attractiveness has diminished," Khurana said. He claimed that around 30 smartphone models were enjoying exclusivity and preferential sales during the festive season.

Auto sales at 20-year nadir in 2019: SIAM

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NEW DELHI: Automobile sales in India last year fell the most in more than two decades, as slowing economic activity, high vehicle prices and stricter lending rules damped demand.In passenger vehicles, an easing in the pace of decline in December, though on a low base, and an improvement in the rolling average in the last three months of the year led the industry to suggest that the worst may be over.Sales across the automobile sector, from passenger vehicles and commercial vehicles to two- and three-wheelers, fell 13.77% to 23.07 million units in 2019, as per data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday. Passenger vehicle and two-wheeler sales fell the most since the industry started reporting numbers, by 12.75% to 2.96 million and 14.19% to 18.57 million units, respectively, last year. The fall in commercial vehicles was the most in six years at 15%, to 854,759 units.73197766 In December, sales of passenger vehicles such as cars, utility vehicles and vans fell 1.24% to 235,786 units. Sales of commercial vehicles and two-wheelers declined by 12.23% to 66,622 and 16.6% to 1.05 million, respectively, while overall, sales dropped 13.08% to 1.41 million. "In passenger vehicles, the three-month rolling average is indicating a trend reversal," SIAM president Rajan Wadhera said. "Enquiries have started going up, but sentiments have not improved to a level where we can see growth. That will take some more time."Slowdown in the broader economy and weak consumer sentiment continue to impact fundamental demand, he added.New launches in the utility vehicle segment did help draw some buyers. For the year, while sales of passenger cars fell 18.91%, those of utility vehicles rose 4.78%. Utility vehicles accounted for 34% of sales of passenger vehicles in the Indian market during April-December, the first nine months of the ongoing fiscal year, compared with 13% in fiscal 2011.A sharp increase in acquisition costs due to higher insurance premium and implementation of stringent safety rules hit two-wheeler sales. While sales of scooters dropped 16.03%, those of motorcycles fell 12.92%.SIAM president Wadhera cited farm out, which he said was "not good" last year, along with high vehicle prices for the steep fall in motorcycles sales in rural areas.Wadhera expects demand to increase in the coming months ahead of the switchover to BS-VI emission standards on April 1, when prices are set to go up."BS-VI will add 8-10% to vehicle costs. Individual organisation will not be able to wholly absorb this cost and will have to pass it on to customers. This will have an impact on demand," he said. "We expect some pre-buying this quarter. If the government announces the vehicle scrappage policy, it will help the industry."

IIP turns positive: Don’t interpret this as green shoots in economy

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After contracting for three consecutive months, Index of Industrial Production (IIP) grew at 1.8 per cent in November on the back of improving manufacturing sector. The IIP growth in November 2018 was at 0.2 per cent. According to the National Statistical Office (NSO) data, the growth in the manufacturing sector was 2.7 per cent as against a contraction of 0.7 per cent in the same month last year, PTI reported. The IIP growth during April-November came in at 0.6 per cent, down from 5 per cent in the same period of 2018-19. As per the NSO data, 13 out of the 23 industry groups in the manufacturing sector showed positive growth during November 2019 as compared to the corresponding month of the previous year. Here's how economists reacted to the IIP data.Deepthi Mathew, Economist, Geojit Financial ServicesIt is a good sign for the economy as IIP turned positive after three months of contraction. From the consumption point of view, it is welcoming that the consumer non-durables has turned positive. However, consumer durables are still in the negative territory, contracting for the last six months. Sunil Kumar Sinha, Principal Economist, India RatingsWe believe turnaround in factory output growth from degrowth to growth though is a welcome sign, it still cannot be interpreted as some kind of a green shoot on the industrial front as a number of key use-based sectors such as consumer durables, capital goods, basic goods and infrastructure goods are still showing degrowth. Unless and until the majority of the use-based sectors show positive growth on a sustained basis, it would be difficult to believe that Indian industrial sector has come out of the woods. Rumki Majumdar, Economist, Deloitte IndiaThe latest IIP numbers come as a relief to the market and policymakers, as the activity in the industry sector showed some traction. On a month-on-month basis, growth has been broad-based with capital and durable goods showing considerable improvement. Relative to the previous year, growth in manufacturing has been impressive, although it could not build on the past month's growth momentum. Karan Mehrishi, Lead Economist, Acuité RatingsMinor recovery in the IIP is a function of a favourable base effect, which will continue to benefit until the end of the financial year. On these lines, manufacturing, which was contracting continuously for the previous three months has received a fillip from the contraction in November 2018 (base year). Segments without such benefit are maintaining their negative outlook, baring consumer non-durables (use based).

OMCs and upstream firms may see re-rating in 2020, says UBS

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Mumbai: Oil marketing companies and upstream companies are likely to re-rate in 2020 as privatization theme picks up and there is sustained strength in marketing business performance, said foreign brokerage UBS. Moreover, refining margins are likely to recover due to International Maritime Organisation norms 2020 and Bharat Stage VI norms, it said. Gas transmission businesses could recover with higher availability of domestic gas and liquefied natural gas, said UBS. The brokerage has upgraded GAIL India to buy and downgraded Gujarat Gas and Mahanagar Gas to sell. UBS has retained buy ratings on Reliance Industries, oil marketing companies and Oil & Natural Gas Corporation. The brokerage said RIL, BPCL, ONGC, and GAIL are its most favoured stocks:Reliance IndustriesCMP: Rs 1,547.70Rating/Target Price: Buy/1,750Refining complex upgrades were completed ahead of schedule for IMO 2020, with the petcoke gasifier also under stablisation, said UBS. Petrochemical margins face near-term headwinds; however, feedstock flexibility and integration are providing some respite, it said. The brokerage expects re-organization of Jio and the digital platform strategy to be a compelling investment proposition. UBS expects retail segment performance to remain strong with robust margins. Thecompany remains on track towards deleveraging and right-sizing the balance sheet, said UBS. BPCLCMP: Rs 470.25Rating/Target Price: Buy/600BPCL has prepared ahead of schedule for IMO 2020 and will benefit from higher complexity and widening light-heavy differentials, said UBS. The brokerage said its superior marketing performance is reflected in its stable market share and highest throughput per outlet among state-owned oil marketing companies. Strategic privatization could providea significant upside case, said UBS. ONGCCMP: Rs 124.10Rating/Target Price: Buy/200The brokerage estimates that ONGC is discounting nearly $50 per barrel Brent and has been trading significantly below long-term valuation multiples. The fundamentals remain strong, driven by a stable oil price outlook, no cooking fuelsubsidy burden and diversification of earnings from downstream investments, said UBS. GAILCMP: Rs 125.40Rating/Target Price: Buy/160The brokerage expects GAIL's earnings tol rebound with increased volume from the gas transmission and marketing segments, as well as a recovery of the commodity segment. Major pipeline projects, including the Urja Ganga project and the Kochi-Mangalore pipeline, are coming online in FY21-22, said UBS. The brokerage expects the petchem and LPG segments to return to higher profitability as of FY21-22, as commodity prices seem to have bottomed out.

Mobile phone retailers threaten brands of boycott unless online discounting is stopped

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Mobile phone retailers have reached out to leading cellphone manufacturers on Friday that brands need to control online deep discounting as they work closely with the online channel and since they already control the market operating price for offline stores.Cellphone retailers under the umbrella of their apex national body, All India Mobile Retailers Association (AIMRA) has informed brands like Xiaomi, Samsung and OnePlus that unless online discounting is controlled, retailers will deduct the difference and sell at online prices and may even consider boycotting the brand altogether. "We feel the time has come for brands to take our issues seriously, else retailers/associations will not fear to boycott the brands. We are not in favour of force but if the current scenario demands it, we shall not withdraw," said the letter written by AIMRA president Arvinder Khurana.Last month too, AIMRA had shot a letter to the brands warning them that they would sell at online prices if online discounting is not controlled and recover the balance from distributors and may even boycott the brands. Oppo and Vivo subsequently shot a trade advisory assuring retailers of launching similar products at the same time in both online and offline stores and at same price. Realme too has assured the same. AIMRA executives said Xiaomi, Samsung and OnePlus are yet to communicate any decision in this regard. Earlier this week, AIMRA held a national convention in New Delhi where more than 20,000 retailers and distributors from across India participated to push the brands to meet its demand. Mobile phone retailers had also downed shutters for a day across the country as protest."This only goes to show the abysmal state of business across the country…November and December 2019 registered the worst business seen in 15 years," the letter said.Khurana told ET that thousands of cellphone stores have shut shop in the last one year. "The existing e-commerce policy prohibits exclusivity, but the brands have worked around it by continuing to roll out exclusive models. We are pressing the government to plug these loopholes, stop online predatory pricing and set up a regulatory body to ensure the policy is complied," he said. As per US-based market tracker International Data Corporation, online accounts for more than 45% of total smartphone sales in India. It said smartphone sales in India during July to September period were driven by e-commerce with offline sales declining by 2.6% year-on-year. AIMRA, along with traders' body Confederation of All India Traders, has been protesting against e-commerce discounts since Diwali. These two organisations have made multiple representations to the government, whereby commerce minister Piyush Goyal had even warned of strict action against e-commerce marketplaces if the e-commerce policy was violated.

Hiring activity rises 10% YoY in December 2019: Naukri JobSpeak

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Hiring activity has shown a 10% rise in December 2019 as compared to December 2018, says the Naukri JobSpeakThe major contributors to this growth were industries like BPO (27%) Pharma (18%) and IT – Software (18%). Demand for job roles in ITES/ BPO (31%) and Accounts (16%) also led to this overall uptick in hiring.Amongst cities, Hyderabad (27%), Pune (14%) and Delhi (11%) led the way in terms of growth in hiring. Demand for entry-level professionals (0-3 years exp.) and senior-level executives (4-7 years exp.) grew by 16% and 12% respectively."The year ended on a positive note, with a 10% increase in overall hiring. Hyderabad and Bangalore have been posting consistent growth in hiring over the last six months and if we look at the year as a whole IT – Software has seen a growth of 28 % compared to the year before. The year gone by has seen growth in jobs and we are cautiously optimistic going forward," said Pawan Goyal, Chief Business Officer, Naukri.com in a statement.