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Friday, February 7, 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


The brother of India's richest man is now worth nothing

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By Jonathan BrowningThe brother of Asia's richest man was ordered to set aside $100 million in his dispute with three Chinese banks, even as he pleaded poverty."The value of my investments has collapsed," Anil Ambani said, according to a London court filing by banks seeking around $700 million in defaulted loans. "My net worth is zero after taking into account my liabilities. In summary, I do not hold any meaningful assets which can be liquidated for the purposes of these proceedings."The lawsuit was filed by three state-controlled Chinese banks, which argue that they provided a loan of $925 million to Ambani's Reliance Communications Ltd. in 2012 with the condition that he personally guarantee the debt. Ambani's comments were disclosed as he tried to avoid depositing hundreds of millions of dollars with the court ahead of a trial.On Friday evening, Judge David Waksman ordered Ambani to put up $100 million into the court's account within six weeks. Ambani plans to appeal.The embattled Indian tycoon says that while he agreed to give a non-binding "personal comfort letter," he never gave a guarantee tied to his personal assets -- an "extraordinary potential personal liability."The 60-year-old is the brother of Mukesh Ambani, who's worth $56.5 billion and is the wealthiest man in Asia. Anil, on the other hand, has seen his personal fortune dwindle over recent years, losing his billionaire status. His Reliance Communications filed for bankruptcy last year.Anil has "clearly got more assets and income than he's letting on," the judge said. "What I'm dealing with is an extraordinarily wealthy family who have helped each other in the past." Waksman said he didn't believe that Ambani's family "have firmly and irrevocably brought the shutters down."Ambani's lawyer, Robert Howe, had argued that the court shouldn't order his client to make a payment he can't cover. The tycoon argues that that an order requiring him to do so would hinder his ability to defend himself in the case, Howe said."Mr. Ambani is reviewing the order of the U.K court and will take legal advice as to further remedies in appeal," representatives for Ambani's Reliance Group said.'Opportunistic Attempt'Bankim Thanki, an attorney representing Industrial & Commercial Bank of China Ltd., China Development Bank and the Export-Import Bank of China, said in a filing that Ambani's statements are "plainly a yet further opportunistic attempt to evade his financial obligations to the lenders.""We hope that Mr. Ambani will comply with the court's order and look forward to the swift resolution of the case at trial," the banks said in a statement.Ambani was caught up in another legal wrangle last year, when India's Supreme Court threatened him with prison after Reliance Communications failed to pay to pay 5.5 billion rupees ($77 million) to Ericsson AB's Indian unit. The judges gave him a month to find the funds, and his brother, Mukesh, stepped in just in time to make the payment.The brothers' relationship has been fraught since their father's death left behind a vast empire that was split between them. While Mukesh's oil and petrochemicals businesses have flourished, Anil's assets dwindled.Anil said in a filing that he recognized that the judge would want to know if he could satisfy any order to put up funds from outside resources, including his family."I can confirm that I have made enquiries but I am unable to raise any finance from external sources," he said.Waksman had said in an earlier ruling that he believed Ambani's defense would be shown to be "opportunistic and false."Ambani's lawyer told the judge that as a result of the comments the tycoon's relatives were unlikely to lend any funds.There is a "very substantial risk they will never get it back," Howe said."The order pertains to an alleged personal liability of Mr. Ambani and will have no bearing on the operations of the Reliance Infrastructure Ltd., Reliance Power Ltd. and Reliance Capital Ltd.," Ambani's representatives said.

Women CEOs make 45% less than male peers

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MUMBAI: Women executive directors (EDs) earned 45% less than their male counterparts in the last fiscal year as male CEOs and CXOs took home bigger salary increments. Salaries of women EDs remained near stagnant, data revealed.An analysis of PrimeDatabase numbers showed the gender pay gap between male and female directors doubled in FY19 from what it was a year ago as the average salary of male EDs rose 8% while it fell marginally (-0.12%) for women. The findings are based on the latest annual reports of 1,747 companies listed on the NSE and compiled by nseinfobase.com, run by PrimeDatabase.Experts attribute this to the strong bias against women CXOs in the corporate world, affecting career growth and promotions. Simply put, men choose more men."As you rise up the corporate ladder, particularly as one reaches the middle-management level, there is an unfavourable bias against women in promotion," said Kiran Mazumdar-Shaw, chairperson, Biocon. "There is a natural selection of more men because the people deciding are also mostly men. The pay parity problem starts at that stage."Data also suggest that wage inequalities become more blatant as the years of work experience rise. According to the Monster India Wage Index Report 2018, men and women with 0-2 years of tenure earned almost identical median wages (Rs 121.25 and Rs 120.28, respectively). In the tenure group of 3-5 years of experience, the pay gap was a moderate 3%. However, in the tenure group of 6-10 years, men earned a 13% higher median wage than women, while men with 11 or more years of tenure earned 10% more than women.This needs to change, said Harsh Goenka, chairman, RPG Enterprises. "I always thought one does not pay salary based on gender," he said. The pay disparity "shows the mindset and that needs to change. Companies need to have multidimensional approach in hiring, retention and development of women".According to nseinfobase.com data, the median salary comparison of male and female executive directors showed that in FY19 women earned 45% less, which was double the pay gap in FY18 when women directors took home 22.5% less than men. Comparison of the average salaries of executive directors showed that women earned 30% less than men in FY19, compared with a pay gap of 24% and 20% in FY18 and FY17, respectively. 74020036 THE FUNNEL EFFECT & TENUREExperts cited the dwindling representation of women in the management hierarchy as one of the contributing factors. "The funnel effect is a bigger worry," said Mazumdar-Shaw. "Talent pool of women leaders is so small as you go up the cadre. Companies need to get more women in middle-management levels."The data reveals the underrepresentation of women in leadership and corner rooms, where 90% of EDs are male.Also, more women are needed in revenue-generating roles that are more remunerative such as sales, finance, etc."We need to see more women in P&L roles. That could be a factor in the pay parity problem," said Mazumdar-Shaw. But men are preferred for such roles, she pointed out. Male directors in the majority of the cases have a longer tenure as promotions kick in earlier and faster, said experts. "If there is a male director, the number of years in the director position will be much higher than a woman CEO or CXO and this also leads to higher payouts to men," said Debabrat Mishra, partner and leadership expert at Deloitte India.UPSKILLING/RESKILLING EFFORTSSome feel factors such as career intention, efforts to upskill and lack of clear orientation toward money also come into play."Reasons for a gap between the incomes earned by men and women, also include factors such as the socialising of women in a manner that they do not place their careers as priority, poor economic centeredness of women, causing them to look for name/fame as against money as a key motivator and low upskilling/reskilling efforts by women," said Saundarya Rajesh, founder of diversity and inclusion consulting firm Avtar Group.Avtar's research on women's workforce participation conducted in 2013, 2015 and 2019 revealed that only 9% of women attributed their careers to being raised in an environment that encouraged them to pursue a vocation. For 68% of men, meeting financial goals for themselves and the family was the top career driver, while for women it was to self-actualise their talents. A majority of men (55%) invest in selfdevelopment enablers such as upskilling themselves while women focus on family-based enablers for the same purpose, as per Avtar's research.Navnit Singh, chairman of India for Korn Ferry, said there could be other reasons for the pay gap."There could be factors that are not intentional," he said. "One of the reasons is the career break that women often take during key life stage such as maternity and when they come back sometimes the pay is not leveled and as a result the gap continues."Suresh Tripathi, vice president of human resources management at Tata Steel, is of the view that good organisations don't deliberately pay female employees less."It could be more due to factors such as career breaks and sabbaticals that female employees might take due to maternity or childcare-related reasons that leads to missing out on several increment cycles," he said. "For instance, if one is away for 4-5-6 years, when the person gets back they will be assessed at the same level and on a cumulative scale this may lower the salary as the number of years increase in the long term too."But experts said that's when the organisation should step in and provide a support system with flexible policies for women to continue work.

Flipkart struggles to keep its flock together

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NEW DELHI: Nishant Verman and Anurag Verma join the list of senior exits at Walmart-owned Flipkart in the past six months. Verman was vice president and Verma was senior director. Kirti Varun Avasarala, Vikash Jalan and Samrat Dogra, all of whom were directors, have also quit. At Flipkart-run Myntra, Bindu Mendonsa has stepped down as senior vice president.After having been on an aggressive hiring spree for some time, Flipkart is going slow on recruitment, especially at the leadership level despite the exits."The hiring at Flipkart is on a freeze since December now. The company wants to go slow on leadership hiring and for very critical and key roles the company is looking internally," said a person with knowledge of the matter.The company didn't comment directly on the matter."At Flipkart, we believe that our success as a company depends on our people, and we are proud of our strong talent pool who form the backbone of our organisation," a Flipkart spokesperson told ET in an email. "Many of our leaders have grown with Flipkart and have been nurtured to take on larger roles and responsibilities within the organisation."Unicorns Going Slow on HiringSeveral other unicorns are slowing down on recruitment, said BTI Consultants managing director James Agrawal."Most of these companies are putting a cap on hiring as of now," he said.Flipkart CXOs are eager to move out and have been exploring options outside the company in the past three months, according to recruitment experts. Other recent exits at Flipkart, as reported earlier by ET, include Rishi Vasudev, group head of fashion, human resources head Smriti Singh and CTO Ravi Garikipati."The top talent in the big ecommerce companies is willing to explore options in upcoming new startups. This is primarily as a younger company offers more room for growth," Agrawal said.At Transearch India, the number of resumes from top talent at the unicorns has doubled, while for Insist, a boutique search and consulting firm, the number has gone up by 40% in the past few months.To be sure, "the jump in CVs is not in line with the supply of new job opportunities, hence many executives are waiting for the right opportunities," said Ashish Sanganeria, partner at Transearch India.Some of this rush could be on account of funds getting harder to come by."Flow of queries from senior executives from unicorns has increased in the last few weeks. This could be due to the fact that this year is going to be tough to raise follow-on funds with a lot of pressure on profitability and positive unit economics," said R Suresh, managing director, Insist.Flipkart CFO Dipanjan Basu and Myntra CEO Ananth Narayanan left in the past year. Flipkart had earlier confirmed Vasudev's departure and said he will stay with the group until March 2020.

UAE banks headed for India to recover Rs 50,000 crore

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MUMBAI: At least nine banks from the UAE are in the process of initiating legal action against Indian defaulters to recover around Rs 50,000 crore, after New Delhi made the rulings of Emirati courts in civil cases enforceable here.While most of the cases involve corporate loans taken by Dubaior Abu Dhabi-based subsidiaries of Indian companies, action is also being planned against individuals, two people with direct knowledge of the matter said.These banks include UAE-based Emirates NBD, Mashreq Bank and Abu Dhabi Commercial Bank. A few other lenders such as Doha Bank, National Bank of Oman and National Bank of Bahrain, which have exposure to Indian entities or citizens through their branches in Dubai or Abu Dhabi, also have either already moved courts in the UAE or are in the process of doing so in the coming weeks, the people said."Most of the cases are of corporate loans and that is also the priority for the banks as the amounts involved are huge. But some banks also have retail loan exposure to India," said one of the people. Most of the loans were taken in the past 10-15 years.The Indian government on January 17 issued a notification allowing the decrees of certain UAE courts in civil cases to be enforceable in India. This means a UAE bank, if it has a court order in its favour against a defaulter who has fled to India or no more has operations in the Emirates, can seek to enforce it here like any local lender to recover the money.74020246 "Earlier UAE-based banks had no recourse to enforce judgements directly to recover their corporate or retail loans given to Indians in the UAE, but now they can take action in India. So, now UAE banks can initiate execution proceedings in India after they take a decree from a UAE court and may also explore initiating proceedings under the IBC (India's Insolvency and Bankruptcy Code)," said Ajay Monga, a partner at law firm SNG & Partners.According to the people in the know, these banks have approached Indian law firms to assist them in completing the legal process here, such as serving notices on the defaulters or approaching the National Company Law Tribunal (NCLT), which deals with IBC cases.Emails sent to Emirates NBD, Abu Dhabi Commercial Bank, Doha Bank, Mashreq Bank, National Bank of Oman and National Bank of Bahrain did not elicit any response till press time Friday."The banks could first issue notices and see the response of the defaulter," said a senior lawyer advising one of the banks in a Rs 300 crore corporate loan default. "The banks could also approach the NCLT or even invoke personal guarantees," he said. Besides, they could look at filing criminal cases in India against the individuals involved.In its notification, the Ministry of Law and Justice said the UAE would be a reciprocating territory under section 44A of Civil Procedure Code.The section essentially says that any decree passed by the superior courts of any "reciprocating territory" may be executed in India, as if it has been passed by Indian courts. Similarly, the UAE will allow the rulings of Indian courts in civil cases. The government notification allows the ruling of two UAE-based federal courts and five other courts to be enforceable in India."This notification ends confusion as to whether UAE is a reciprocating territory or not. Earlier, the bilateral agreement between the two nations to provide for the recognition of foreign judgements was not acceptable by Indian courts for want of a notification," said Ateev Mathur, a partner at law firm SNG & Partners.According to people in the know, while corporate loans form a large chunk of UAE's exposure, even retail loans are quite substantial. "The average ticket size of retail loans is around Rs 2 crore. Many Indians had taken loans and it seems with sole purpose of not returning it," said one of the people.Many individuals had given personal guarantees to UAE banks before taking the loans. These personal guarantees could be invoked and criminal cases filed against the individuals, said legal experts.

How coronavirus is crushing the oil and gas market

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The coronavirus outbreak in China and its spread around the world is crushing the oil and gas market. Oil is down a fifth and liquefied natural gas has fallen to record lows, putting producers in a jam while bringing price relief and buying opportunities for many consumers such as India. Sanjeev Choudhary delves deeper.CRUDE TAKES A KNOCKCrude oil is at $55 a barrel, down 20% ($13) since Jan 7, when Chinese authorities announced the coronavirus outbreak. 74021515 NATURAL GAS AT NEW LOWSLNG prices in Asia have sunk to below $3/mmBtu as China rejects shipments, forcing traders to look for other markets. 74021540 WHAT'S AHEADJP Morgan sees crude at average $60.40 per barrel in 2020, down $4.1 from its previous forecast. OPEC, Russia and allies discussing production cut of 600,000 barrels per day. Prices have stabilised for now.DOMESTIC FUEL PRICES DOWN RS 3 PER LITRE SINCE JAN 7; LIKELY TO FALL FURTHERPetrol Prices In Delhi (Rs/litre)Domestic rates are the 15-day moving average of international rates. 74021589 Diesel Prices In Delhi (Rs/litre)Prices may fall further to fully reflect current decline in international rates. 74021600 GAINS FOR INDIA1. Cheaper crude will help current account deficit, rupee & inflation.2. Consumer spends on fuel to fall, leaving more money in hand.3. Refiners can quietly raise fuel prices to recover the investments made for BS-VI upgrade.4. Fuel subsidies expected to decline.5. Govt can raise duties to boost revenue.6. LNG terminal operators can store cheap gas now and sell later.7. Marketers can look for more customers as gas becomes cheaper.

Significant new customer category: More women in the driver’s seat, literally

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NEW DELHI: As more women join the workforce and become financially empowered, car sales to women have nearly doubled over the past five years.At Maruti Suzuki, the country's largest carmaker, the share of women buyers has jumped to 12% from 7% five years back, while its rival Hyundai Motor has seen it growing fourfold to 12% since 2014.The share of women buyers among those who purchase luxury cars such as Mercedes Benz and Audi is even higher, at 15-20% — growing faster in a declining market."Women buyers are going to be an important segment. We are trying to figure out how to make it easier for them, and make Maruti their choice," said Shashank Srivastava, executive director (marketing and sales), Maruti Suzuki.74020533 Women account for 10-12% of sales in the 2.96 million passenger vehicle market in India, according to industry data. Executives, however, say the share of women car users is much higher, since many vehicles are still registered in the name of their male family members.Car makers are now going all out and introducing features that appeal to women buyers."Women buyers prefer hatchbacks. We have a significant share of women buyers for the Grand i10, NIOS and Santro. We have also seen many women buyers opting for SUVs, like Creta, because of its functionality and safety features," said Tarun Garg, director (sales and marketing) at Hyundai Motor India.For Maruti Suzuki, its Celerio, Alto and DZire models are top draws for women buyers.Along with the higher share of women car buyers, their age profile is getting younger, said Vivek Srivatsa, head (marketing), passenger vehicle business unit at Tata Motors.For instance, the average age of a female car buyer has reduced to 31-34 years at Maruti Suzuki. Most of these are salaried professionals, with the company recording the highest sales to women buyers in Kerala, followed by Tamil Nadu."Inspired by the increasing number of our women customers, we have decided to hire more women sales staff across our dealerships and also curate brand experiential initiatives like 'She's Mercedes' ," said Martin Schwenk, managing director, Mercedes Benz India. The company has seen 50% growth in this category and their share triple over the last five years, with growth coming in faster in tier II-III cities.

LIC looks to offload IDBI stake ahead of RBI timeline

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MUMBAI: Life Insurance Corp (LIC) is looking to sell down its 51% stake in IDBI Bank well ahead of the RBI mandated 12 year time line as it believes that the valuation of the lender could rise with the government's sale of stake leading to a possible entry of a private equity investors.In an interaction with the media after presenting key parameters of the life insurer as of January 31 chairman MR Kumar also touched upon the insurance behemoth's plans for its stake in the debt laden IDBI Bank."The Reserve Bank of India has given us a timeline of 12 years to bring our stakes down in IDBI Bank. However, we don't want to wait this long since we will be listing before that," Kumar said.Loss making IDBI Bank has been picked as the first public sector lender in which the government will divest its stake, finance minister Nirmala Sitharaman announced in her budget speech last week. LIC owns 51% in the lender after acquiring shares from the government in January last year. The government still owns 47% stake which it plans to divest in the secondary market.Kumar said that once the government divests its stake in the bank it will make it easier for LIC to find better valuations. "We are also waiting for government to divest its stake in IDBI. This we expect will bring private equity players into the bank which will help us get more on the script. Currently we don't have any float amount," Kumar said.IDBI is also among the five public sector banks under RBI restrictions under the so called prompt corrective action (PCA) framework with a loss of Rs 3,459 crore in the quarter ended September as it increased provisions for NPAs. Gross NPAs were at 29.43%.Kumar expressed hope that the bank will be out of PCA soon. "Once the bank is put out of PCA, there will be a positive impact on profitability. We expect the RBI to bring the bank out of PCA at the end of this quarter because it below the threshold limits on all parameters except profitability," he said.LIC has collected Rs 500 crore through new business premiums collected through the bank this fiscal. "Our objective was Rs.2000 crore, but we will finish the year with around Rs.1000 crore which would still be the biggest sales through bank insurance in LIC history," Kumar said. LIC follows the October to September financial year.

Yes Bank gets shareholder nod to raise Rs 10,000 crore

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Mumbai: Shareholders of Yes Bank on Friday approved raising the private-sector lender's authorised capital to Rs 1,100 crore at an extraordinary general meeting held in Mumbai, the bank said in a customary filing with local exchanges.A special resolution to allow capital raising through issuance of equity shares or other convertible securities of Rs 10,000 crore was also passed at the meeting.The move comes even as the Mumbai-based bank is seeking to raise funds to enhance its growth capital. The funds would also buttress Yes Bank's core capital, which is already above the threshold prescribed by the regulator.Earlier this week, ET reported that Yes Bank picked Cantor Fitzgerald, led by former Deutsche Bank global co-CEO Anshu Jain, and local investment banks IDFC Securities and Ambit Capital to raise funds that would help the lender expand its loan book. Yes Bank plans to raise up to $2 billion to shore up its capital base.Shareholders met to discuss increasing the lender's authorised share capital and to alter Clause V of the Memorandum of Association.Yes Bank shares climbed 0.4% to Rs 38.70 at the Bombay Stock Exchange on Friday.

Xiaomi pips Samsung to become India's first choice in handsets

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NEW DELHI: Xiaomi has emerged the country's top handset maker in the December quarter, outselling Samsung in the smartphone plus featurephone market for the first time, data from market intelligence provider International Data Corporation shows.The Chinese phonemaker topped the overall handset market with 16% share in the quarter, trailed by Samsung and Reliance Retail, IDC said on Friday. It didn't give the figures for the second and third players.The Korean brand also slipped behind Apple's iPhone in the premium segment of $500 and more.Xiaomi India head and global vice president Manu Jain claimed the brand's smartphone sales have surpassed Samsung and Reliance Retail's feature phones and smartphones put together.74019642 Samsung declined to comment to ET's emailed queries.For the whole of 2019, Xiaomi sold 43.6 million units, the highest smartphone shipments made by any brand in a year so far, with a growth of 9.2% on year, even as the overall Indian mobile phone market shrank by 12.5% with annual shipment of 282.9 million units, IDC said.The smartphone segment grew a modest 8%, shipping 152.5 million units in 2019, though it was enough for India to become its second largest market, surpassing the US and trailing China.Samsung's smartphone shipments fell 2.8% on year — leaving it with 20.3% market share versus Xiaomi's 28.6% for 2019 — as other Chinese brands, too, grew share. Vivo, Oppo and Realme followed the top two with shares of 10%, 7.2% and 3.2%, respectively.Average selling price of smartphones grew 2.8% year on year at $163 in the country, IDC said.The mid-range segment of $200-500 accounted for the strongest on year growth at 55.2%, and accounted for 19.3% of the overall smartphone market. Vivo is the leader in this segment with market share of 28% in 2019, followed by OnePlus at 20.2%.In the $500+ segment, Apple took leadership position with 47.4% market share in 2019, driven by aggressive price drops on previous generation models and a lower iPhone 11 launch price compared to the XR, IDC said."IDC expects the India smartphone market to see modest single digit growth in 2020 as well," said Navkendar Singh, research director, client devices & IPDS, at IDC India. "As organic growth becomes challenging with increasing replacement cycles, it is imperative for the smartphone ecosystem to put its energy and focus on enabling migration of the massive feature phone user base in India in addition to continue offering compelling propositions at the mid-premium segment to boost faster upgrades," he said.