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Sunday, January 19, 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


Sitharaman may reveal the true state of India's finances on February 1

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NEW DELHI: The Centre could include a host of off-budget spending and other government liabilities on its books to give a clearer picture of finances though this could raise the fiscal deficit sharply.Top government officials have held discussions on the move amid budget preparations and there is a growing view that a full picture is needed. Finance minister Nirmala Sitharaman will present the budget on February 1."A clear account of real fiscal deficit should be presented...There have been discussions," said a government official. There have also been suggestions that the government switch to accrual-based accounting from cash, which means including payments it owes.The government has budgeted a fiscal deficit of 3.3% of GDP in the year to March. The fiscal deficit numbers have been criticised for excluding a number of items for which the general budget is liable.The move will mean the fiscal deficit for FY20 could get pushed to 4.5% or higher. Experts and others have repeatedly raised the issue of India's fiscal deficit numbers being understated. The Comptroller and Auditor General (CAG) had in July said in a presentation to the Finance Commission that the central government's key deficit figures may be considerably higher than those stated in the Union budget. In its assessment last month, the International Monetary Fund (IMF) also pointed to fiscal deficit suppression."Despite some improvement in reported fiscal deficits, debt as a share of GDP remains little changed over the past decade, partly due to increases in off-budget financing," it said, estimating public sector borrowings at 8.5% of GDP.In a blog post earlier this month, former finance secretary SC Garg had pointed to an understated fiscal deficit, pegging it at 4.66% and 4.39% in FY19 and FY18, respectively, rather than the 3.4% and 3.5% shown in the budget. Garg was in the finance ministry, heading the department of economic affairs, in those years. 73407409 The government has been providing an estimate of some off-budget items separately, but this is not included in the headline fiscal deficit.Such extra budgetary resources are pegged at 0.7% of GDP in FY20 and seen rising to 0.9% of GDP by FY22. The government defines these extra budgetary resources as those financial liabilities that are raised by public sector undertakings for which repayment of entire principal and interest is done from the union government budget.In effect, these fully serviced bonds are the Centre's liabilities, pegged at Rs 88,454 crore at the end of March 2019, or 0.5% of GDP. In addition, there is debt raised by entities such as the Food Corporation of India that is in effect a liability of the government and should be included in its debt and fiscal indicators.Experts said that since the government will anyway miss the 3.3% target for the year, it should look at cleaning up finances."It will make the budget process and budget numbers far more credible. Markets will find it much more credible," one of them said, arguing for a new glide path for the fiscal deficit after accounting for all off-budget borrowing.The fiscal responsibility law requires the government to attain a fiscal deficit target of 3% by FY21.State Bank of India group chief economic adviser Soumya Kanti Ghosh sees the fiscal deficit at 3.8% in the current fiscal.

It'll end soon: Oyo's top boss on layoffs

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Some parts of Oyo Hotels & Homes weren't probably ready for the pace of growth it has witnessed and the hospitality chain is trying to address such issues this year, says its new chief executive for India and South Asia, Rohit Kapoor in an exclusive interview to The Economic Times. While confirming reports of job cuts at the company, he tells Anumeha Chaturvedi that it is asking about 15-20% of its 12,000 employees to go in a "one-time exercise" that "is going to end very soon". There is no deadline from Japanese investor SoftBank to report operational profitability on some businesses, he says, and adds that the management is committed to improving relations with hotel partners. Edited excerpts:Oyo founder Ritesh Agarwal has reportedly said the company is asking some of its employees to move to a new career. What explains this?The question that whether some staff members are being asked to go is correct. Over the last one and a half years, there has been an increase in revenue to about 3x, and we had 1-million-plus rooms globally by the end of 2019. But I don't think we have any hesitation in admitting that growing at the pace that we did over the last three years, we did sometimes go ahead of ourselves … What we mean is that maybe all parts of the organisation were not ready for that pace of growth and that scale of operations, and 2020 is the year when we are taking active steps to address this. We have a clear roadmap for continuing to drive success for Oyo for this year and beyond based on factors like sustainable growth. The path to profitability for any company is the important question to be asked … in which quarter that happens is immaterial but there is no doubt in my mind that it needs to happen. We are addressing questions this year like what's the core business, which are the growth avenues we should rationalise, which are the profitable locations we should be in, what is the kind of growth that dilutes margins and how to reduce operating costs. A part of that is clearly looking at our people cost structures as we calibrate for growth.How many staff members are being asked to go as part of this restructuring and across which roles? When is this likely to be completed?Before this one-time exercise started, we stood at approximately 12,000 employees across our businesses. We have asked about 15-20% of the workforce to move to a different career. This is not easy for us, for the employees impacted and we completely recognise that. Yes, there are roles that will become redundant as the company drives tech-enabled synergies and enhanced efficiencies and these (that are being cut) are for example roles that lend themselves to centralisation and remote management using technology, such as partner support, customer support, analytics, reporting. Secondly, as we have combined some of our businesses like Oyo Home, Oyo Townhouse, Oyo Life, Collection O, Silver Key under one umbrella called Frontier businesses, the supervisory layer and leadership roles in the centre and field in these businesses are now consolidated … there will also be some excess capacity across multiple roles that may not be impacted just by technology but by other business decisions. Restructuring is a combination of all this. It is a complex one-time exercise and is going to end very soon. We are not talking months or even next month. After this there is no plan.What is being done in terms of severance packages for exiting employees and employee assistance?Let me step into the shoes of the employees and some of the concerns and disappointments they may have. I respect that because I can't expect anybody who is impacted by the exercise to fully understand the rationale as well as we will do it here. There are five principles on the basis of which we have done this: fairness, a humane approach, providing financial protection for a reasonable time, dealing with empathy and respect and fifth is continuous support.Can you share some details?On the financial side, we paid the employees an extra month or even more depending on tenure beyond whatever was their notice period, we gave leave encashment, variable pay for the cycle worked, gratuity paid as ex gratia. From a financial standpoint, we feel this was a reasonable package which was meant to protect the financial outcome for the affected employees. We realised there are uncertainties so we actually transferred a month's salary the very next day even before the full and final settlement. Outplacement agencies are offering support to 100% of the impacted workforce. They will get help for 90 days of reaching out for other opportunities including counselling for a period of time. The internal team that was set up is constantly monitoring the outreach to companies that are hiring including partner companies and companies in the start up eco system. There is on call 24/7 counselling available for employees if they want to discuss anything. We extended the medical insurance for immediate family members of employees if had they opted for that clause for a period of time. If any employee had a special situation which required an exception we made the exception. Personally a lot of effort was put in to help people. Right down from me to the last person in the organisation, if they can help the impacted employees in any way they will do it and they are doing it. There could be some cases where some process breakdown might have happened. But 99.9% of the time, this is the process followed. I don't think we have done anybody a favour. It's still not something that we feel happy about but at least when we had to do the restructuring we did it in a manner where we felt that we followed a good benchmarked approach to doing it.We are told that Oyo, on direction from SoftBank, has set internal deadlines for its self-operated hotels and ancillary businesses to turn operationally profitable. How are various businesses faring?I want to dispel the notion that SoftBank is directing us to do x or y or z. Of course, as any other shareholder, they have certain expectations. And Ritesh and the management team work along those. And they are not the only shareholders. This business is first and foremost run by the management team. And like any other normal company there is a dialogue with all stakeholders on targets for the business for the year or future years. We have no such deadlines. In businesses you have targets not deadlines. All our businesses are fairly large. Weddingz is India's largest wedding company, Oyo Life is India's largest co living company. These are by themselves sizeable businesses. There is nothing that has been disproportionately impacted because of this. At a portfolio level, there is no major restructuring where we are taking any decisions to close down any vertical completely. That's not happening.A recent article in the New York Times has alleged that the company's growth was fuelled by questionable business practices. How are you addressing this?The article has raised a few questionable claims. Rest assured that we are looking into each and every claim and stand committed to growing Oyo the right way and in a manner consistent with our values and code of conduct. The said article described behaviour that would violate our code of conduct. We will continue to improve our processes for governance and accountability.Are there any plans to raise more funds?We are well funded. Right now, the focus is on making sure the business is sustainable, well run and that it grows.How do things stand currently with the hotel partners? There have been police complaints and FIRs and allegations ranging from mismanagement of contracts to delayed payments and excessive commissions…Personally, building a strong and healthy relationship with partners is my top priority. Partner management, partner support and partner success are core to who we are. Absolutely core. If there is some angst because of financial issues, reconciliation or emotional connect, we are fully committed as the South Asia leadership to make a big change in that. It is a big agenda for us. We have always discussed any changes applicable to contracts with asset owners and have communicated timelines for complying with those changes. There is also a stream of communication that is shared with all hotel owners and there are multiple channels. But if they are saying that they are not able to reach us, then we need to get better at what we do. There are 2,000-plus asset owners who have multiple properties with us. Over 1,000 asset owners have been working consistently with us for three years. About 5,500 partners were introduced for the first time to OTAs by Oyo. These data points at this scale do not happen if the asset owner-Oyo relationship is not working. Is there scope for improvement? 100%. Can we do better? Yes, we will always try and do much better.There have also been customer complaints about quality of inventory and service…We are a company that is fairly self-critical internally. If there are things that we have not done well in some areas, we are more than eager to learn and improve. Last year, five Oyo rooms were booked every second, and there was a 2.7 times year on year jump in bookings. Our app globally has 77.5 million users. There is a lot of work that happens on customer metrics- net promoter scores, unhappy percentages… any cases of check ins denied are taken extremely seriously. I personally feel we can do a lot better. However, at the same time I do realise that a large percentage of India is our target client. It's a tremendous obligation, honour and responsibility and we will make sure we make changes everyday to get better and better.

How not to retire poor in India

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Retirement planning can be tricky. First there is inflation eating away at your savings. Then there are unscrupulous bankers and agents, out to missell unsuitable products. Add to this the tendency to invest in traditional avenues like gold and real estate and you have all the ingredients for an unstable future. However, the silver lining are the two dedicated retirement vehicles— the humble EPF and the more recent NPS. Both are now evolving— adding new features, granting more choices and introducing flexibility in investments and withdrawals.Though the plan to allow portability between the EPF and NPS has been junked, consider how you can leverage both while planning your retirement.In this week's cover story, we focus on the changing retirement landscape and find out how you can make the most of these two instruments to ensure that your golden years are secure.EPFFor salaried individuals, the monthly contribution towards the Employee's Provident Fund remains the only forced savings mechanism. Every month, 12% of your basic salary, along with a matching contribution by your employer, flows into the EPF account. From the employer's contribution, 8.33% goes into a pension vehicle—the Employee's Pension Scheme (EPS). Not only is the contribution eligible for tax benefits under Section 80C, both the interest earned and money received on superannuation is tax-free.The EPF ensures your contributions keep rising steadily, in line with rise in salary. Since the contribution is a fixed proportion of the basic, the outgo rises in step with your income. This facet is critical for building a sizeable retirement corpus. However, to really benefit from the EPF, you should consider the following points:Hold account till retirementMany dip into the EPF corpus to meet short-term needs. Recent changes in withdrawal rules have perhaps made matters easier. Partial early withdrawal from EPF is now permitted for a child's marriage, higher education and making a down payment for a house, subject to conditions (see table). Members are also allowed to withdraw the entire amount if they remain unemployed for more than two months.EPF now fetches a much higher rate relative to PPF and other avenues 73352746 While a certain degree of flexibility can be a relief in a genuine crisis, experts say you should not touch the EPF money until retirement. The essence of the EPF lies in letting compounding work its magic. The corpus, if allowed to build up with incremental contributions each year, can reap huge benefits in the long run. For instance, an individual with a basic salary of Rs 15,000 and 30 years left for retirement can attain a corpus of Rs 60.75 lakh at the age of 58, assuming a 5% yearly rise in contribution.If the corpus is withdrawn partially in the accumulation phase, it takes away the compounding benefits accrued over years. Suresh Sadagopan, Founder, Ladder 7 Financial Advisories, says, "EPF is a retirement vehicle. Abusing the withdrawal flexibility during the accumulation phase will hurt one's retirement phase." Even if your PF becomes dormant due to job loss, maintain the account as interest will be payable on the balance until the age of 58.Enhance contribution via VPFSome recommend enhancing the contribution beyond the mandatory 12% through the Voluntary Provident Fund (VPF). The VPF is an extension of the EPF that allows you to invest beyond the 12% threshold while providing the same tax benefits and return. While the PPF carries an investment limit of Rs 1.5 lakh per annum, there is no such restriction on VPF. Besides, unlike PPF returns that fluctuate in line with 10-year government bond yield, the interest rate on VPF is the same as that of the EPF. The current interest rate of 8.65% is much higher than that of PPF's 7.9%.Hiking PF contribution will obviously mean lesser take home pay. However, experts contend that having a little less spending power now could mean more financial stability later. Says Tanwir Alam, Founder & MD, Fincart, "If you are close to retirement, consider enhancing contribution through VPF. At this stage, don't take the risk of equities to achieve a bigger corpus." Younger contributors must remember that VPF comes with withdrawal restrictions. The money is locked in till retirement or until the time you leave the job. Besides, any ramp up in PF contribution should be done with broader portfolio asset allocation in mind. Sadagopan argues, "If you are over-exposed to debt as per your asset allocation, do not invest more in PF. Instead, opt for instruments with a greater wealth creating potential like equities." Young savers would be better off opting for a higher equity component through the NPS or equity funds rather than enhancing their debt allocation through VPF.Rollover account with jobsWhen changing jobs, transfer your existing EPF balance to the new employer. Withdrawing the accumulated balance is a strict no no. There are several downsides if the amount is not transferred or withdrawn and is kept idle. First, it could increase your tax liability. Even after you leave the job, the account continues to fetch interest until it becomes inoperative upon retirement. This accrued interest component becomes taxable, even if you do not withdraw money from the account.Further, if the balance is not transferred, the five year continuous service clause for tax exemption is reset to the starting date of the new account, points out Kuldip Kumar, ED, Tax & Regulatory Services, PWC. Any withdrawal within a few years of job change may become taxable even if you have completed five years of continued service spread over the two employers. Failure to transfer EPF balance also means that previous employment stints will not be counted towards pension eligibility upon retirement under the EPS. An individual is eligible for pension benefit once he has completed 10 years in service.Also read: How to transfer your EPF account onlineMoreover, the EPF account transfer, if not done within 3 years after leaving a job, becomes a tedious process. Therefore, ensure the accounts are clubbed for continued capital appreciation. Rohit Shah, Founder and CEO, Getting You Rich, says, "Be meticulous in following up with your previous employer and the EPFO about the transfer." While the Universal Account Number (UAN) remains the same across EPF accounts, it is not the same as balance transfer.The National Pension System (NPS)When the NPS first became available to the general public more than 10 years ago, it was plagued by rigid rules and a tax- unfriendly structure. In recent years, this dedicated pension offering has evolved to become more tax efficient, offering more flexibility and options. At the same time, it continues to be the lowest cost offering, despite multiple layers of charges. The NPS now permits deployment of up to 75% of the corpus in equities, giving it the potential for faster wealth creation over the longterm. The EPF on the other hand currently invests only 15% of the incremental corpus into equities. Here is how you can make the most of the NPS:Get multiple tax benefitsWhile capital gains from equity funds now face 10% tax above the Rs 1 lakh threshold, taxability of NPS is gradually moving in the opposite direction. Earlier, only 40% of the 60% accumulated corpus allowed to be withdrawn as lumpsum at the time of retirement was tax free. The remaining 20% was taxed at normal rates. Now, the entire 60% is tax free. The balance 40% still has to be compulsorily put into an annuity, which is subjected to tax. NPS thus falls somewhere between the EEE and EET (exempt-exempt-taxable) regime. While some find the mandatory annuity restrictive, it may be a blessing. By putting the subscriber onto a forced annuity, it ensures that people don't dip into the retirement corpus for other goals or spend it recklessly. Sumit Shukla, CEO, HDFC Pension Funds, argues, "The annuity component actually takes care of longevity risk by making sure retirees don't eat into the corpus quickly."NPS Auto choice option sharply cuts equity allocation from early on 73352824 NPS subscribers can claim tax benefits under different heads (see chart). Investments are eligible for deduction under Section 80CCD(1) with an overall ceiling of Rs 1.5 lakh under Section 80C. Self-employed persons can claim deduction on contribution up to 20% of their gross income, subject to the maximum limit of Rs 1.5 lakh. This apart, both salaried and self-employed can claim additional deduction of up to Rs 50,000 under Section 80CCD (1B). In the 30% tax bracket, this means additional tax savings of Rs 15,600. Together, subscribers can claim deduction up to Rs 2 lakh for contributions towards NPS.There is more. Subscribers can bring down tax liability further if their employer puts up to 10% of their basic in the NPS under Section 80CCD(2). There is no upper limit for this deduction. If your basic is Rs 50,000 per month and you are in the 30% bracket, you can cut your tax outgo by almost Rs 18,720 if your company contributes 10% of basic in the NPS. Planners say if the employer offers NPS as part of the package, salaried persons should not miss out on the opportunity. Shah suggests, "If you are not disciplined in savings, avail of the multiple windows afforded by the NPS."NPS Active choice allows for higher equity exposure until later years 73352831 Beyond tax savingsDon't invest in NPS for tax benefits alone. For instance, putting aside Rs 50,000 per year in NPS for the additional tax benefit may not add much to your retirement corpus. Placing a limit creates an artificial ceiling for your savings. Besides, it will deprive you of adequate pension benefits.A 30 year old putting aside Rs 50,000 per year—in monthly installments—into NPS would effectively accumulate a corpus of around Rs 93 lakh at 60, assuming 10% annualised returns. However, you cannot deploy the entire Rs 93 lakh upon retirement. About 40% of this— Rs 37 lakh— will go towards compulsory annuity. At current annuity rates of 6%, this corpus would fetch a monthly pension of around Rs 18,600. In all likelihood, annuity rates at that time will be much lower, implying even lower pension. This will hardly suffice for most individuals. Experts say make NPS one of the cornerstones of your retirement planning, along with other avenues like EPF and equity funds. Says Shah, "Instead of opting for NPS purely for tax benefits, take a holistic view of your portfolio for a better sense of your requirement."Multiple benefits under NPS allow sizeable tax savings 73352838 At times, your requirement may even be much lower than what you are putting aside. Persons with an already beefed up retirement portfolio may not need to put aside put a large sum in NPS. You may end up unnecessarily locking up money for a long time purely for tax considerations.Use switches judiciouslyIn a previous avatar, the NPS only allowed fund managers to take pure passive exposure to equities via index funds. Now, however, the NPS permits active fund management. This is to potentially deliver market beating returns to the subscriber. However, with active investment comes the element of human bias and judgment. Your investment experience would depend on the execution capabilities of the fund manager, apart from the vagaries of the market itself.Given this added variable, it is critical that NPS subscribers choose the fund manager carefully and keep monitoring the performance. If the selected fund manager lags behind others, you can switch to another fund manager. NPS now allows two switches in a year, without any tax incidence. However, subscribers should not abuse this flexibility by constantly changing fund managers, says Alam. Shift only if underperformance persists over three or more years. Likewise, NPS also permits subscribers up to two switches in asset allocation in a year. Use this flexibility in moderation. Avoid shifting asset mix in response to market fluctuations. Remember that the NPS automatically rebalances the portfolio according to your chosen asset mix.Opt for active choice for greater controlThe NPS offers subscribers the choice of two investing modes—Active choice and Auto choice (see table). Under Active choice, you can choose your own asset mix, deciding the split between equity, corporate bonds and government bonds. Otherwise, you can opt for lifecycle funds where the asset mix changes automatically as the individual grows older. Three life cycle funds—aggressive, moderate and conservative—cater to investors with different risk appetites. The gradual decline in equity exposure protects the corpus against volatility as retirement nears.However, auto choice can get restrictive as this moderation in equity exposure begins too early. Whatever your risk profile, the exposure starts coming down from age 36. Even for a subscriber who opts for 'aggressive' option for higher equity exposure, the allocation reduces sharply from 75% up to age 35 to 55% by the time he hits 40 and further to 35% by age 45. With 15-20 years still to go for retirement, experts feel this could be a missed opportunity for the subscriber. A common rule of thumb suggests that individuals should hold a percentage of stocks equal to 100 minus their age. So, for a typical 45-year-old, roughly 55% of the portfolio should ideally be in equities.Investors who have a fair understanding of the market should opt for the Active choice model, planners say. "Auto choice is for lazy investors. Those who are planning their finances carefully should take the Active route," suggests Harsh Roongta, a Sebi registered investment adviser. Assuming you are already contributing to EPF, your NPS asset mix should have a high-equity bias initially. Only those who are adequately invested in equity funds as part of their retirement portfolio may consider a more conservative approach.Reduced PF contributionReports suggest the government is considering giving employees the flexibility to reduce their PF contribution, currently pegged at 12%. Allowing lower PF contribution is aimed at enhancing your take home pay. However, experts feel such a move will dilute the forced savings nature of the vehicle and compromise your nest egg. For instance, for a 30-year-old earning a basic salary of Rs 30,000 a month, if the contribution is reduced from 12% to 10%, the retirement corpus will shrink from a potential Rs 92 lakh to Rs 76 lakh by the time he retires. Besides, lower contribution to EPF will mean less tax benefit. Financial planners say you should maintain the contribution at 12% at the very least.SWP in place of annuityAt present, NPS subscribers on retirement have to compulsorily buy taxable annuities from insurance companies using 40% of the accumulated corpus. However, the high cost and low yield of these annuities is perceived as a hindrance. Reports suggest the government is considering a proposal to introduce systematic withdrawal plans (SWP) as a more efficient alternative to annuities. In mutual funds, a SWP allows the investor to define a fixed sum to be withdrawn from the scheme at regular intervals for a defined period of time or until the amount gets depleted. The amount in the scheme continues to fetch return till it is completely withdrawn. All retirement oriented products launched by mutual funds offer the SWP facility. Experts say this benefit should be extended to NPS subscribers. Subscribers should be allowed to hold on to the NPS even after the retirement (currently allowed until age 70) and then permit SWPs. This will allow subscribers the freedom to pull out money in a staggered manner as per their needs rather than being locked on to interest rates offered by an insurer. At the same time, it will prevent them from squandering the corpus. Investors may also be able to limit tax incidence under the SWP, as tax may only be levied on the interest component.

Your mobile bill may rise up to 30%

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KOLKATA: The country's billionplus mobile users may have to brace for more sharp jumps in phone bills by end-2020 itself with telcos likely to raise prices by another 25-30% with average revenue per user (ARPU) still low and overall telecom-related consumer spends in India amongst the lowest globally, industry executives and analysts said.Vodafone Idea and Bharti Airtel, staring at huge payouts after they got no relief from the Supreme Court on their adjusted gross revenue (AGR) dues, would need to raise prices in a bid to rebuild financial strength. And, if Vodafone Idea were to collapse, as feared by some, analysts expect big price hikes from Bharti Airtel and Reliance Jio Infocomm in a private duopoly structure."With Arpus still well below the Rs 180-200 pre-Jio levels and a reduction in overall telecom-related consumer spending (as a percentage of GDP) over the past three years, there's adequate scope for telcos to raise tariffs by another 30% later this year," Sanjiv Bhasin, director at IIFL Securities, told ET.Analysts expect private telcos to leverage the fall in consumer-level telecom spends to 0.73% of GDP in the September quarter of FY20 from 1.25% just over three years ago, saying the scenario offers adequate headroom to push through a second round of price hikes.Just over a month ago, Bharti Airtel, Vodafone Idea and Reliance Jio had increased bundled prepaid tariffs by 14-33% for the first time in three years. That is estimated to boost monthly APRU from the present Rs 120 level to around Rs 160, over a few quarters. But with Vodafone Idea's survival now in the balance if it fails to also secure any meaningful relief from the government, analysts expect the tariff hikes to happen quicker.73411052 "Even after the recent tariff hike (in December 2019), consumers are still paying a paltry 0.86% of per capita income for their communication needs, which is much lower than what it was four years ago," said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents Airtel, Jio and Vodafone Idea.Analysts said consumer spends on communications in India are well below Singapore, Malaysia, China/Hong Kong, the Philippines, Japan, Australia, the US, the UK, Germany and France.Given that mobile internet consumption has soared over the past three years since Jio's entry, mobile users, Bhasin said, also "won't mind paying a little extra as data is now the new gold".Kotak Institutional Equities said that aggregate annualised consumer-level telecom spends for the September 2019 quarter at Rs 1.45 lakh crore was 21% below June 2016 levels of Rs 1.84 lakh crore. It added that during the same period, the telecom industry's "voice traffic was up 2.1x times and data traffic 43x since Jio's entry".Experts say the actual timing of the next round of price hikes will hinge on Vodafone Idea's survival. The struggling telco has said it is exploring further options, including filing of a curative petition in the top court.Vodafone Idea faces AGR dues of Rs 53,039 crore in the aftermath of the Supreme Court's October 24 order, and its subsequent rejection of the telco's review petition. It needs to pay the government by January 23. The nation's top court has backed the government's wider definition of AGR.Rajiv Sharma, research head at SBICap Securities, though said any upward revision in tariffs beyond 15% in the next 6-to-9 months could lead to some user losses, given that half of India's population have an annual income level under ?60,000 as per recent findings of the World Inequality Database.

Used-car business does well for Audi in bad year for auto

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MUMBAI: Luxury-vehicle maker Audi's sales in India may have fallen in 2019, but the German brand's performance in the used-car market in the past year has been the best ever with growth of 11%.The Audi Approved Plus — its used-car division that also sells the vehicles of other luxury brands — is eyeing 50% growth in 2020, even as the head of the company, Balbir Singh Dhillon, expects the market for new luxury cars to stay flat.Speaking on the sidelines of an event to launch the new Q8 in Mumbai, Dhillon said: "While the mainstream luxury-car market is facing a challenge, there is strong traction in the usedcar segment. Our used car division, Audi Approved Plus, has registered growth of over 30% in 2019 (for Audi brand alone, it was 11%); we expect this strong growth momentum to sustain in 2020."The division sold about 2,000 cars in 2019 and Dhillon sees this growing to 3,000 units this year. This will come on the back of a near doubling in the number of dealers under the division, to 15 by the end of 2020.Through the used-car division, Audi is securing a lot of first-time buyers and many of them are young, Dhillon said. The company hopes to convert them into prospective buyers for the new car division."Not only the Audi Approved Plus offers new leads for future customers, but it is also a profitable business for our dealers, so it is a win-win for us. It will be a key pillar for us to deliver sustainable business," Dhillon said.Audi India closed 2019 with sales of 4,594 new units, a decline of 28% from the previous year.

Telecom companies starved for funds, your mobile bill may rise up to 30%

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KOLKATA: The country's billionplus mobile users may have to brace for more sharp jumps in phone bills by end-2020 itself with telcos likely to raise prices by another 25-30% with average revenue per user (ARPU) still low and overall telecom-related consumer spends in India amongst the lowest globally, industry executives and analysts said.Vodafone Idea and Bharti Airtel, staring at huge payouts after they got no relief from the Supreme Court on their adjusted gross revenue (AGR) dues, would need to raise prices in a bid to rebuild financial strength. And, if Vodafone Idea were to collapse, as feared by some, analysts expect big price hikes from Bharti Airtel and Reliance Jio Infocomm in a private duopoly structure."With Arpus still well below the Rs 180-200 pre-Jio levels and a reduction in overall telecom-related consumer spending (as a percentage of GDP) over the past three years, there's adequate scope for telcos to raise tariffs by another 30% later this year," Sanjiv Bhasin, director at IIFL Securities, told ET.Analysts expect private telcos to leverage the fall in consumer-level telecom spends to 0.73% of GDP in the September quarter of FY20 from 1.25% just over three years ago, saying the scenario offers adequate headroom to push through a second round of price hikes.Just over a month ago, Bharti Airtel, Vodafone Idea and Reliance Jio had increased bundled prepaid tariffs by 14-33% for the first time in three years. That is estimated to boost monthly APRU from the present Rs 120 level to around Rs 160, over a few quarters. But with Vodafone Idea's survival now in the balance if it fails to also secure any meaningful relief from the government, analysts expect the tariff hikes to happen quicker.73411052 "Even after the recent tariff hike (in December 2019), consumers are still paying a paltry 0.86% of per capita income for their communication needs, which is much lower than what it was four years ago," said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents Airtel, Jio and Vodafone Idea.Analysts said consumer spends on communications in India are well below Singapore, Malaysia, China/Hong Kong, the Philippines, Japan, Australia, the US, the UK, Germany and France.Given that mobile internet consumption has soared over the past three years since Jio's entry, mobile users, Bhasin said, also "won't mind paying a little extra as data is now the new gold".Kotak Institutional Equities said that aggregate annualised consumer-level telecom spends for the September 2019 quarter at Rs 1.45 lakh crore was 21% below June 2016 levels of Rs 1.84 lakh crore. It added that during the same period, the telecom industry's "voice traffic was up 2.1x times and data traffic 43x since Jio's entry".Experts say the actual timing of the next round of price hikes will hinge on Vodafone Idea's survival. The struggling telco has said it is exploring further options, including filing of a curative petition in the top court.Vodafone Idea faces AGR dues of Rs 53,039 crore in the aftermath of the Supreme Court's October 24 order, and its subsequent rejection of the telco's review petition. It needs to pay the government by January 23. The nation's top court has backed the government's wider definition of AGR.Rajiv Sharma, research head at SBICap Securities, though said any upward revision in tariffs beyond 15% in the next 6-to-9 months could lead to some user losses, given that half of India's population have an annual income level under ?60,000 as per recent findings of the World Inequality Database.

Q3 trend shows weak sales, but double-digit net profit growth

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MUMBAI: The initial trend in the third-quarter results of a sample of 70 companies so far shows a double-digit growth in the aggregate net profit but a weaker single-digit growth in net sales, thereby reflecting the tax cut benefit at the bottom line amid poor demand.Aggregate net sales of the sample grew by 3.9 per cent whereas net profit increased by 15 per cent year-on-year in the December quarter.The growth numbers are likely to vary significantly with more companies reporting numbers in the coming weeks. The current trend is influenced by the performance of Reliance Industries (RIL), the country's largest company by revenue, and companies in the information technology (IT) sector. Together, they contributed more than three out of every four rupees of the sample's net sales and net profit.Amid a rally in the stock market, economic commentary looks sombre and corporates are likely to reel under the pressure of slowing demand for yet another quarter. "The third-quarter earnings-report season will be more of the same with financials driving the quarter and commodities dragging it," said Motilal Oswal Financial Services (MOFSL) in a preview report.While overall trend in the topline is expected to remain weak, some analysts expect a marginal improvement in the third quarter over the previous one. "The fact that nearly half of the companies under our coverage are expected to show an improvement in yearon-year growth trajectory over Q2 (34 per cent companies showed improvement in Q2 over Q1) suggests that the improvement is broad-based," said Emkay Global in a report while estimating 0.3 per cent aggregate revenue growth for the companies it covers. 73409998 At Rs 1,56,802 crore of revenue from operations, RIL contributed nearly 47 per cent to the sample's topline. Its net profit of Rs 11,841 crore was 28 per cent of the aggregate profit. The nine IT companies that have declared results so far contributed 46 per cent to the net profit and 32 per cent to the revenue of the sample.The performance by four banks and 11 finance companies that have reported numbers so far supported the sample's growth. After excluding them from the sample, net sales shrank to just 2 per cent while profit growth decelerated to 10 per cent.Any signs of demand revival and the government's stance in the upcoming Union Budget will be crucial indicators for investors. "Corporate commentary on the underlying demand scenario and any sequential improvement post government announcements will be the key monitorables," mentioned MOFSL in the report.

Nifty likely to move higher if it sustains above 12,400

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By Rohit Singre Senior Technical Analyst, LKP SecuritiesWhere are we: Nifty closed a week on fresh highs at 12,352 with gains of 0.78 per cent and formed a small bullish candle on the weekly chart. In contrast, Bank Nifty failed to make fresh highs and closed the week at 31,591 zone with a loss of 1.58 per cent, forming a bearish candle on weekly chart.What is in store: Technically, Nifty touched its upper band of the channel on the weekly chart hinting that 12,400 will act as stiff resistance. If the index manages to sustain above 12,400 zone, the current up move could extend further towards 12,600 zone in the near term but if it fails to sustain, we may see some cuts towards 12,200 zone which is a strong support for the Nifty. On the options front, the highest open interest (OI) concentration is seen at 12,000 PE followed by 12,200 PE creating strong support near 12,200-12,200 zone. Any dip near these levels will be a good buying opportunity and on the higher side, the highest OI is at 12,500 CE followed by 12,400 CE hinting that 12,400-12,500 will still act as a strong hurdle for coming sessions.What could traders do: Current chart structure suggesting index has stiff resistance near 12,400 zone. If it manages to hold above 12,400 zone, we may see good move upwardsand if fails to hold it, then we may see some profit booking in the index. Some of the technical picks where traders can catch dips for 10-15 per cent in the short term and keeping stop loss levels below 5-7 per cent from the current close are Alembic Pharma, Dr Reddy's, GSPL, Sudarshan Chemical.

Samsung to set up India’s 1st mobile display plant

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KOLKATA: Samsung is setting up India's first smartphone display manufacturing unit on the outskirts of Delhi.The South Korean company is investing more than Rs 3,500 crore in this facility in Noida, as per a regulatory filing with the Registrar of Companies (RoC). It could later be expanded to manufacture displays of other devices as well.The chaebol's flagship India entity, Samsung India Electronics, has transferred a plot to a group company, Samsung Display, in its existing manufacturing plant area and has given a loan of Rs 3,500 crore to meet the investment and working capital requirement for establishing the production unit.As per the regulatory disclosures, sourced from business intelligence platform Veratech Intelligence, Samsung India said it had incorporated a group entity, Samsung Display Noida, "with the principal business of manufacturing, assembling, processing and sales of displays (including their parts, components and accessories) for all types and sizes of electronic devices." 73410209 Samsung said the plant would produce displays of mobile phones and IT display. However, an industry executive aware of the plans said the plant would initially produce displays for mobile phones, but could later extend it to laptops and televisions. The current investment will be enhanced as the capacities increase and Samsung Display sells the component to other brands like it does globally, he said. The first phase will become operational this year itself.An email sent to Samsung India seeking comment remained unanswered till Friday press time.This fresh investment will expand Samsung's play in the component segment, with display panel being one of the largest components by value used in the manufacturing of mobile phones and televisions.It has recently started the world's largest mobile phone manufacturing unit in India, at a total outlay of Rs 4,915 crore. This enhanced investment comes at a time when the government wants to impose duties on imported displays for both smartphones and televisions to help boost its make in India efforts.Veratech Intelligence founder Mohit Yadav said Samsung's decision to invest heavily to build cellphone displays in India was a significant boost to make in India. This highlights that Samsung is confident that consumption will increase in India, he said.ET had written last year that Samsung Display wanted to set up a manufacturing unit in India and that another group entity, Samsung SDI India, was looking to start local production of smartphone batteries.Samsung India has allotted the plot to Samsung Display for a consideration of Rs 92.02 crore as per the RoC disclosures. The Rs 3,500 crore loan is for three years.

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