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Showing posts with label Economic Times. Show all posts
Showing posts with label Economic Times. Show all posts

Friday, May 31, 2019

Amit Shah as finance minister? The subtle message in Modi 2.0 - economic news of india - world economic news - economics news for students - indian economy news

Amit Shah as finance minister? The subtle message in Modi 2.0
Two big recusals, Arun Jaitley and Sushma Swaraj, both for reasons of health, paved the way for major changes in portfolios in Narendra Modi’s Cabinet. The irony lies in the fact that both Jaitley and Sushma were seen as potential rivals and claimants to the top job in case the BJP fell short on numbers in 2014. But Modi made sure that didn’t happen. The verdict of 2019 has put paid to any BJP politician harbouring hopes of a hung verdict, where someone other than Modi could have had a shot at No 1.Team Modi 2.0 marks a clear power-shift below the level of Prime Minister, with Amit Shah, who is expected to replace Jaitley in the finance ministry, now likely to position himself as No 2. Shah is clearly a claimant to the top job if and when Modi moves aside. He will be hoping to show that his capabilities are not restricted to the ballot box and panna pramukhs.The oath-taking order, which put Rajnath Singh ahead of Shah, and Nitin Gadkari just after him, indicates the broader hierarchy after the exit of Jaitley and Swaraj. Modi and Shah represent the force that built BJP into the central pole of Indian politics; the other two, Singh and Gadkari, represent the backroom power of the Sangh Parivar, which steps in if and when a power vacuum arises.A big caveat: Given the exit of two big names in Jaitley and Swaraj, one wonders if there has been any net gain in talent beyond Shah and former Foreign Secretary S Jaishankar. Suresh Prabhu has been inexplicably dropped. Quite clearly, Modi evaluates his worth differently from Vajpayee. And one minister who was not known for achieving anything in particular, Sadananda Gowda, remains in the cabinet.The inclusion of Jaishankar indicates that when Modi looks for lateral inductions, he prefers to go with tried and tested bureaucrats. Hardeep Puri and RK Singh, two other former bureaucrats who were inducted in Team Modi 1.0, have been retained, and so has former army chief, Gen VK Singh. Jaishankar played a key role along with NSA Ajit Doval in ending the eyeball-to-eyeball with China over Doklam in 2017. As a former ambassador to the US, Jaishankar, if he comes in as External Affairs Minister, is well-placed to deal with the uncertainties that came bundled with Donald Trump.The big change – the induction of Shah -- has the potential to up-end many power equations, both within the Modi government, and outside. Unlike his predecessor, Jaitley, who did not have much of a finance or business background, Shah has actually run a (cooperative) bank and turned it around; he has an acute understanding of the markets, and the capacity to focus on several things at the same time. So, one thing one can expect is a budget that makes waves. Another crucial difference between Jaitley and Shah is that the latter has an eye for detail, while the former was happy to leave it to the bureaucracy to fill in the blanks after the broad policy was enunciated. Shah is likely to be more hands-on at the finance ministry than Jaitley, and given his double clout – in the party and government, and standing as Modi’s closest confidant – the bureaucracy will know that they can’t run rings around him.If the rest of the cabinet picks sound underwhelming, the answers are not far to seek. Consider first the supply side of ministerial aspirants, given the nature of the verdict, where the BJP alone has 303 Lok Sabha MPs and its allies the remaining 50. These numbers rule out too many lateral inductions, for every lateral induction means one less berth to offer to party hopefuls and allies. One ally, the Janata Dal (U) has already opted out of the first stage of cabinetformation as it was not given enough posts by Modi and Shah.Consider also the geographical spread of the BJP’s new political footprint, where it has grown eastwards (West Bengal, Odisha and the North-East), and made an exceptionally strong showing in north and west India, apart from Karnataka in the south. No Prime Minister can afford to ignore specific demands for higher representation from the states where the BJP has won big.In sum, the two big take-outs of Team Modi 2.0 are these: one, the cabinet is no longer unipolar, despite Modi’s supremo status. Shah adds new ballast to the team, both from the party angle and governance capabilities. Two, if Shah gets finance, one can expect him to use his heft to revive animal spirits in the economy. He did that in politics, and one cannot presume he can’t repeat the trick with economics.(The author is Editorial Director of Swarajya)
Source: ET

Deloitte, KPMG in 1st IL&FS chargesheet - economic news of india - world economic news - economics news for students - indian economy news

Deloitte, KPMG in 1st IL&FS chargesheet
MUMBAI: The Serious Fraud Investigation Office filed its first chargesheet in the IL&FS case against 30 individuals and entities, including businessman C Sivasankaran and nine former directors of unit IL&FS Financial Services (IFIN) on Thursday. It accused auditors BSR & Co LLP and Deloitte Haskins & Sells (DHS) LLP along with others of concealing information and falsifying accounts. SFIO said loans were given to the Siva Group without adequate collateral.Those charged include former IL&FS vice chairman Hari Sankaran and former IFIN MD Ramesh Bawa, both of whom are under arrest. BSR and Deloitte were charged along with audit partners Udayan Sen, Kalpesh Mehta and Sampath Ganesh. Others on the list were audit committee members, independent directors and the Siva Group chairman and his group companies. The other directors charged include Ravi Parthasarthy, Vibhav Kapoor and K Ramchand.‘SENIOR EXECS COVERED UP INFORMATION’The charges are under sections of the Companies Act and the Indian Penal Code, including those for cheating and criminal conspiracy. 69590261 Infrastructure financier IL&FS unexpectedly defaulted on repayments in September last year, triggering a crisis in the market and a liquidity squeeze that has gripped nonbanking financial companies (NBFCs). The government replaced the board of IL&FS as part of a cleanup and the SFIO has been seeking to uncover the reasons why the seemingly sound company was forced to default.SFIO said the IL&FS unit’s management knew that a crisis was building.“IFIN extended loans to companies of Siva, ABG, A2Z, Parsvnath Group and other companies,” said the SFIO in its 840-page chargesheet, which ET has seen. “A number of these borrowers were not servicing their debt obligation… The top management was aware of the potential problematic accounts which were getting stressed in the succeeding month from the reports generated through the Management Information System (MIS) of IFIN.”Senior executives covered up the information, SFIO said.“The management of IFIN adopted fraudulent practices in order not to let aforesaid loan/ credit facility be classified as NPA (nonperforming assets),” the chargesheet said. “They started lending to other companies belonging to the borrowers for repaying the principal and/or interest of the aforesaid defaulting borrowers.”SFIO said the auditors didn’t raise any red flags.“The auditors, despite having knowledge of funding of the defaulting borrowers for principal and interest which was prejudicial to the interest of the company and its creditors besides having awareness of the impact of the same on financial statements, failed to report in the report for FY13-14 to FY17-18,” SFIO said.HARSH VIEW OF AUDITORSThe investigative unit of the corporate affairs ministry was harsh in its view of the auditors.“The auditors colluded with the coterie to conceal material information and in fraudulently falsified the books of accounts and thereby financial statements from FY13-14 to FY17-18... They knowingly did not report the true state of affairs of the company particularly the negative NOF (net owned funds) and negative CRAR (capital to risk asset ratio), which have resulted in causing loss to the creditors of the company who had lent and invested in the NCDs (non-convertible debentures),” it said.Audit partners Sen and Ganesh had cited reliance on the Reserve Bank of India (RBI) inspection report rather than stating whether they had obtained the details necessary for the purpose of their audit, SFIO said.“The auditor relied on the oral discussion of the company officials with RBI for reporting NOP and CRAR rather than RBI guidelines in FY17-18 and not disclosed this material departure from regulatory requirements and thus caused loss to the creditors of IFIN,” SFIO said. “Auditors with their engagement teams did not use professional skepticism to ensure true and fair disclosure of state of affairs of the companies. They in fact colluded with official of the companies in order to conceal their fraudulent activities and this they failed to perform their duties.”The SFIO pointed to the close ties between Sivasankaran and the erstwhile IFIN directors, citing email exchanges that revealed he allegedly arranged hospitality for Parthasarthy, Kapoor and Sankaran, including private jets, helicopter rides, resort bookings and redecorating the interiors of their apartments in Brussels, besides foreign trips.“IFIN had entered into 15 transactions of advancing loans to or investing in debentures of different Siva Group companies,” SFIO said. “Out of the 15 lending transactions, repayment of loans pertaining to only first four transactions were done.”LOANS INVOLVING SIVA GROUPThe SFIO detailed various loan transactions involving Siva Group companies, including the lack of collateral.“In 2014, while lending to Siva India Commercial Traders Pvt Ltd, an additional security in the form of stock of Emerald Stone valued at Rs 59.26 crore was taken,” the charge-sheet said. “As on 31March 2015, the aggregate exposure to Siva Group companies stood at Rs 182.45 crore… The said exposure continued as loan from March 2015 to December 2015, with no security cover as so-called security of Emerald stock was existing only on paper without any physical verification.”The SFIO pointed to emails directing IFIN employees not to securitise outstanding dues while entering into a fresh lending exercise with the Siva Group companies. “It was observed from an email (of) February 1, 2018, (from) Parthasarathy to Sivasankaran that instead of protecting the interest of the company, Parthasarthy is found being apologetic to Sivasankaran for taking time for finalising the loan transaction of Rs 175 crore.”Calling the independent directors “mute spectators,” the SFIO said they ignored all warnings and failed to serve the interest of the company and its stakeholders by not raising the issue in board meetings.“Investigation revealed that the audit committee members, independent director and CFO, IFIN, and group CFO of IL&FS were aware of the stressed asset portfolio, the modus operandi used for granting loans to group companies of existing defaulting borrowers to prevent them being classified as NPA,” SFIO said. “They connived with the management… they being part of the board were aware of the various RBI reports and overlooked the numerous impairment indicators in contravention of the accounting standard and principals.”Counsel Sachin Midha, who was appearing for Bawa, told ET he will apply for bail shortly. “Since the chargesheet has been filed, the SFIO’s contention that Bawa could influence the witness or tamper with the evidence and hence shouldn’t be granted bail, won’t hold ground.”
Source: ET

How Modi picked his team for second innings - economic news of india - world economic news - economics news for students - indian economy news

How Modi picked his team for second innings
New Delhi: The composition of the new Cabinet shows that PM Modi has ensured a regional balance, with a focus on states where BJP did well in the Lok Sabha polls.UP, the most populous state, is represented by eight ministers apart from the PM, from east, west, Bundelkhand and Awadh regions. BJP won 62 seats in UP, and the Cabinet reflects that. From western UP, the party gave ministerial berths to four MPs.Muzaffarnagar MP Sanjeev Balyan, who defeated RLD leader Ajit Singh, has been rewarded for keeping Jat voters intact with the party. Mukhtar Abbas Naqvi, a Rajya Sabha member, is the only Muslim face in Modi’s Cabinet. From Awadh region, the party has once again relied on the familiar faces of Rajnath Singh, Smriti Irani, who defeated Congress president Rahul Gandhi in Amethi, and Niranjan Jyoti. Purvanchal has got one ministerial berth in UP BJP president Mahendra Nath Pandey. With no inclusions from Apna Dal, a BJP ally in the state, the party has given a strong message of strengthening its own organisation rather than focusing on allies.Three states — Maharashtra, Haryana and Jharkhand — are scheduled to go to the polls later this year and together the three states have got 11 ministerial berths. From Maharashtra, there are seven faces in the new Cabinet. While five are from BJP, one each is from the Shiv Sena and RPI. From Jharkhand, the party chose former CM Arjun Munda for representation in the Cabinet. Munda was a CM candidate in 2014, but he lost the assembly election and Raghubar Das became the CM. The rivalry between the two leaders is well known and by shifting Munda to Delhi, the PM has resolved the leadership issue in the state. Munda is also a strong tribal face from Jharkhand. From Haryana, three out of 10 party MPs have got ministerial berths. BJP’s focus in Haryana is on non-Jat voters and the party has given positions to a Yadav (Rao Inderjeet), a Gurjar (Krishan Pal Gurjar) and a Dalit (Ratan Lal Kataria).Rajasthan, Gujarat, Himachal, Delhi and Uttarakhand recorded 100% results for BJP, with the party winning all the seats in these states. Rajasthan and Gujarat have been given three ministerial positions each while Uttarakhand, Delhi and Himachal have got one each. In Bihar, NDA won 39 out of 40 seats. There are six ministers from the state, including LJP’s Ram Vilas Paswan. Five BJP ministers come from Bhumihar, Brahmin, Rajput, Kayastha and Yadav communities, in line with the BJP’s vote base.From southern India, BJP has given ministerial positions to six leaders. In Karnataka, where BJP did exceedingly well, the party has given positions to four leaders. These include Nirmala Sitharaman, who is currently a Rajya Sabha member from Karnataka. DV Sadanand Gowda has also been inducted and is likely to get a key portfolio.Four-time MP from Dharwad, Pralhad Joshi, and four-time MP from Belgaun, Suresh Angadi, have also been inducted into the new Cabinet. One ministerial position has got to Kerala and Telangana each. Rajya Sabha member from Kerala, V Murleedharan, has been inducted into the Cabinet while G Kishan Reddy has been inducted from Telangana. From West Bengal, Babul Supriyo and Debasree Chaudhary have been inducted as ministers of state.From Odisha, Dharmendra Pradhan and Pratap Sarangi have been included in the Cabinet.
Source: ET

Cooling economy set to be Modi's first big test - economic news of india - world economic news - economics news for students - indian economy news

Cooling economy set to be Modi's first big test
by Anirban NagNarendra Modi’s biggest economic challenge as he starts his second term will be how to boost flagging growth to hold onto the crown of the world’s fastest-expanding major nation.Gross domestic product data later today is expected to show the economy grew 6.3% in the first three months of the year, the fourth straight quarter of cooling. The annual expansion in the 12 months to March 2019 likely slowed to 6.9%, the lowest level in five years.The economy has been on a steady slowdown since last year on the back of weaker consumption, waning global growth and an escalating U.S.-China trade war. Growth is now almost neck-to-neck with expansion in China, where authorities are already ramping up efforts to spur subdued activity. After securing a bigger election victory than in 2014, Modi is now under pressure to unveil measures to bolster growth.“Arresting the slowdown and reviving the economy will be the first challenge for the new government," said Sunil Sinha, principal economist at Fitch Ratings Ltd. in New Delhi. Reviving investments, easing a credit crunch among shadow banks and taking steps to cushion India from a global slowdown will be key, he said.Budget ConstraintsFiscally, Modi has little room to stimulate the economy, having already pledged cash handouts of more than $10 billion to farmers from April this year. He is due to announce his cabinet later on Friday, including a finance minister to help implement economic policies.The government has already deviated from its budget deficit goals, and with revenue collections trailing targets there’s a risk the shortfall for the fiscal year that ended in March could be higher than the estimated 3.4% of GDP. A miss will make India vulnerable to a credit-rating downgrade and push borrowing costs higher for local companies.“Many of the policy choices to stimulate growth, like GST rate cuts, fiscal stimulus, monetary easing, also entail rising macro stability risks like inflation and current account deficit ahead,” UBS Group AG analysts, led by head of India research, Gautam Chhaochharia, wrote in a note.The Reserve Bank of India may play its part to support the economy on June 6, with analysts betting on another interest rate cut to spur lending. Inflation remains well below the RBI’s 4% medium-term target, giving policy makers room to ease.Prachi Mishra, chief economist at Goldman Sachs Group Inc. in Mumbai, expects one more rate cut — though not in June — and the RBI injecting more liquidity into the financial system.“Going forward, we anticipate the banking system liquidity situation to normalize as currency in circulation reduces from its high post elections, and with potential liquidity operations by the RBI,” she said.
Source: ET

HC asks J&J to pay Rs 25 L to 67 patients who had revision surgery for faulty hip implants - economic news of india - world economic news - economics news for students - indian economy news

HC asks J&J to pay Rs 25 L to 67 patients who had revision surgery for faulty hip implants
New Delhi: The Delhi High Court Thursday directed Johnson and Johnson to make interim payment of Rs 25 lakh each to 67 patients who have undergone revision surgeries for alleged faulty hip implants made by the company. The court's direction came after the company said it has verified that these patients have undergone revision surgery and it was voluntarily paying them Rs 25 lakh as compensation. Justice Vibhu Bakhru asked the company to disburse the cheques to the claimants within two weeks and listed the matter for further hearing in August 8. The company, through senior advocate Amit Sibal, clarified that the payment should not be considered as an admission of liability or a precedent. The court made it clear that the court has not examined the controversy involved and this payment will not prejudice the rights of patients from seeking any further sum of compensation from the company. It also said that in case any other judicial forum awards a compensation higher than Rs 25 lakh to the patients, the company would pay the balance amount only. The court further said that in case the affected patients do not succeed in their claims before any other forum, the company would not be entitled for any refund of its voluntary payment of Rs 25 lakh. The Central Drugs Standard Control Organisation (CDSCO) had earlier asked the company to pay Rs 65 lakh, Rs 74 lakh, Rs 1 crore and Rs 90.26 lakh respectively to four patients. As an interim, the court had asked the company pay Rs 25 lakh to these four patients for whom CDSCO has already issued orders, after verification of their documents. The court was hearing the company's plea challenging a press release issued by the Ministry of Health and Family Welfare asking it to pay compensation to all the affected patients, as determined by the reports of the Committees formed to examine the issues relating to its faulty hip implants. The company also challenged the orders by which it was directed to pay compensation to patients. It contended that the Centre has no jurisdiction under the Drugs and Cosmetics Act to fix and enforce the compensation. It said the Centre's orders fixing the compensation was based on a formula and reports by a set of expert committees and recommendations which have already been challenged by the company and are pending in the high court. It maintained that the Drugs and Cosmetics Act does not have any provisions that provide for a formula for payment of compensation in the matters pertaining to medical devices. In the earlier petition filed in December last year, the company sought quashing of a government's press release informing the general public about the formula worked out by an expert committee to compensate patients who received the faulty hip implants produced by the pharma major's subsidiary, DePuy Orthopaedics Inc (USA). It has also challenged the report of the expert committee -- headed by R K Arya, Director, Sports Injury Centre -- which worked out the compensation formula. Besides, it has sought quashing of the report of another committee -- headed by Arun Agarwal, Professor of ENT, Maulana Azad Medical College -- which was appointed by the Health Ministry for looking into the allegations of faulty hip replacement implants. According to the Arya committee report, compensation payable to patients would be determined in terms of the disability by the faulty hip implants in relation to their age. The pharma major had earlier told the court that as a result of the press release, people are "landing at its doorstep" for compensation and contended that the government's public announcement was made without any legal basis. A public interest litigation (PIL), which was earlier before the Supreme Court, has alleged that "faulty" and "deadly" hip implants have been fitted into the bodies of 4,525 Indian patients. The plea has contended that DePuy makes, sells and exports medical implants, including articular surface replacements (ASR) hip implants which have been withdrawn by the firms on their own in 2010 on the ground that they were defective. According to the PIL, the firms "illegally sold DePuy ASR Hip Implants in India from 2005 to 2006". SKV URD HMP SA
Source: ET

Adani wins one of last two permits it needs for Australia coal mine - economic news of india - world economic news - economics news for students - indian economy news

Adani wins one of last two permits it needs for Australia coal mine
The Australian state of Queensland on Friday approved Adani Enterprise's management plan for an endangered bird at the site for a controversial coal mine, leaving only one more permit before construction can start on the project. India's Adani has been working for a decade to obtain approvals to develop the Carmichael mine in the remote Galilee Basin, but the process has been slow as the project has become a touchstone for concerns about climate change. "The Department of Environment and Science (DES) approved Adani's black-throated finch management plan," the Queensland regulator said. "DES has met regularly with Adani to ensure that the plan is robust and is well-placed to deliver the best outcomes for the protection of the black-throated finch." Adani said it had received notice that its plan had been approved. The approval leaves just one permit outstanding, which relates to management of a sensitive groundwater source. That is expected to be issued by June 13. Adani has faced difficulties obtaining finance for the mine and accompanying rail project as climate change concerns have discouraged lenders from backing new thermal coal developments, while falling prices have also raised doubts about the mine's economics. But voters worried about jobs in the downtrodden region returned the ruling Liberal-National coalition to power in an Australian election this month, renewing momentum for the project. A local conservation group condemned Friday's approval, saying in a statement that "Australians should be alarmed by this decision."
Source: ET

Top hedge funds bank on India, show little love for China - economic news of india - world economic news - economics news for students - indian economy news

Top hedge funds bank on India, show little love for China
By Bei Hu, David Ramli and Tom RedmondAnyone looking for evidence that the China-U.S. trade war has chilled investors on Asia’s largest economy need go no further than the picks from some of the world’s top hedge fund managers at this year’s Hong Kong Sohn Conference.Just two picked a China stock, and one was to short it. Blue Orca Capital’s Soren Aandahl questioned Anta Sports Products Ltd.’s accounting and corporate governance, saying its Hong Kong-listed stock may fall as much as 34 per cent. His blistering attack sent Anta down as much as 13 per cent within minutes. It rebounded on Friday, up as much as 6 per cent.Even China specialist Tongshu Wang, the founder of long-short fund WT Asset Management, noticed the lack of China selections.“Today it seems like the China topic is not that hot, and it’s a real challenge,’’ said Wang, who was the second-to-last presenter.Wang did however stand by the opportunities coming out of his country, saying China will be “the best alpha market in the world for the next five to 10 years.” He settled on Pinduoduo Inc. for his pick, because of its growth potential as e-commerce takes off.Instead, the conference was dominated by bullish calls on Japanese oil refiners and Indian banks, and some other savage short bets, including one on Casio Computer Co., which Interlink Asia Pacific Fund Chief Investment Officer Sean Debow said was fading into insignificance as consumers shift to smartwatches.Here’s a selection of other notable calls:No WrinklesRenowned short-seller Gabriel Grego from Quintessential Capital Management had a surprise in store with his long call on Botox maker Allergan Plc. Botox has become a brand-name product like Kleenex, he said, yet Allergan’s shares are at least 50 per cent undervalued on both an absolute basis and compared to peers. Grego said there’s a lot of upside to be had, if only the company’s management would quit.Watch Out CasioInterlink’s Debow launched a stinging attack on Casio, saying the watchmaker is out of time with changing fashions. “If you just have a plain old watch, it’s not going to cut it,” he said. The Japanese company has missed the move to smartwatches and doesn’t have a strong presence on social media where younger consumers shop these days. Casio “haven’t changed for a long time. And I don’t think they can change.” Shareholder reaction Friday was muted, however, with the stock down 0.5 per cent.Ice Ice BabyOasis Management Co.’s Seth Fischer closed the conference by unveiling a new activist campaign in Japan targeting a scandal-hit commercial refrigeration-equipment maker. Hoshizaki Corp. has a “great business” despite its recent difficulties, and its stock is worth at least 52 per cent more, he said. The 2020 Summer Olympics are a growth driver for Hoshizaki because people in the stands will want food and beer, naturally.Bank on IndiaTybourne Capital Management’s Eashwar Krishnan and Flowering Tree Investment’s Rajesh Sachdeva both touted bullish bets on Indian banks, as a growing middle class use more financial services. Krishnan has high hopes for Axis Bank Ltd., backing new CEO Amitabh Chaudhry to lead a transformation from “a reckless, corporate-focused lender to a meticulous, process-driven retail and SME-focused institution.”Sachdeva picked IndusInd Bank Ltd., saying its pending merger with a microfinance company will drive up return on assets.The Good OilJapan’s two major oil refiners got some loving from York Capital Management’s Masahiko Yamaguchi and Asia Research & Capital Management’s Alp Ercil. A series of mergers has seen the two companies snare about 80 per cent of the market, in what Yamaguchi called “basically a government-sanctioned duopoly.” He plumped for JXTG Holdings Inc., saying the shares may gain at least 70 per cent. Ercil picked the other half of the duopoly, Idemitsu Kosan Co., saying the shares may surge more than 50 per cent in the coming year, and lauding the company’s planned dividend and buybacks as among the most generous in Japan.Roger ThatYunqi Capital’s Chris Wang picked a company that’s been squarely impacted by the trade war. Unfairly, he says. Rogers Corp. makes specialty materials for the telecoms and automobile sectors. Its shares can “easily double” in three years on rising demand from the construction of 5G mobile phone networks and technological advances in cars. The Trump administration’s attack on Chinese tech companies isn’t too much of a problem for Rogers: Huawei Technologies Co. and ZTE Corp. each account for less than 10 per cent of its sales.
Source: ET

Fear to recede, greed take over in next 2 wks: Abhimanyu Sofat - economic news of india - world economic news - economics news for students - indian economy news

Fear to recede, greed take over in next 2 wks: Abhimanyu Sofat
There are three pockets where we are seeing continuous interest from HNI investors and even FIIs, said Abhimanyu Sofat, VP-Research, IIFL, in an interview with ETNOW. The three themes are PSU banks, capital goods and the smallcaps and midcaps.Edited excerpts: What are you telling your clients? Is it time to cash out or time to just ride the good trend?After the election, there are three broader themes that customers are clearly looking at; one is obviously the PSU banks side, where there is a clear thought that liquidity is going to improve going forward. There is also an expectation that because of the Bimal Jalan Committee recommendation, some money could come in and that could be used for the recapitalisation of PSU banks. Second, on the midcap, smallcap side, there were a lot of stocks. Since they have corrected a lot, there is a lot of expectation of rebound there. Third, on the capital goods side, one is clearly seeing a good amount of traction. These are the three pockets where we are seeing continuous interest, especially from HNI investors. From the FIIs side also, one can see a positive bias in the flows that one is seeing in the markets. Add to that, the crude price going down is an icing on the cake for the Indian markets over the last 10 days. Crude is down. Should we start celebrating or realise that the slowdown in crude is largely because of demand constraints?For a country like India, it helps even if it is because of a slowdown in demand. We are oil importers and with the kind of constraint that we are seeing on the fiscal front, when the crude prices go to higher levels, like for example, $100 in 2009-10, Pranab Mukherjee had to come out with a stimulus that hurt the economy a lot. So from that perspective, even if some amount of slowdown occurs, net-net, it is positive for India. I do not at all see that as a big negative unless crude price goes to $25 which is unlikely. That is likely to happen only when you see a real slowdown happening in the global economy. From my perspective, if the crude price stays at the current level that is still good. See there is some amount of inflation which is always required in the economy. For India if you need a nominal GDP growth of between 13% and 16%, so that there are some amount of corporate earnings, a decent amount of crude is always good but if it is very high, then also it affects negatively.At the current price, things look quite sanguine to us. A lot of companies within India are facing challenges because of higher commodity prices. Once you see this fall, ultimately impacting the prices of raw material, they can easily pass it on stimulating demand for the domestic market. What is your best idea from the midcap space? Where is a six-eight month positioning warranted?Gujarat Gas is one of the stocks which going forward could see significant improvement in terms of earnings. In Morbi, there has been an order by the National Green Tribunal and as a result of that everyone is shifting to gas from other conventional fuels and as a result of that, we clearly see that the volumes from Morbi doubling for Gujarat Gas. For that reason, we believe that the stock should do pretty well going forward irrespective of what happens on the market, they have a clear advantage over other companies like GAIL in Morbi and for that reason this is one stock one can buy for the next six months and it is a high conviction pick from our side. What would be your strategy within the financials?When you have banks like ICICI Bank, Axis Bank and SBI, those would be the favourites in terms of going forward, in terms of what takes this rally up within the space. However, one can look at some of the smaller banks like Federal Bank which came out with very good set of numbers. On the PSU side, BoB is likely to do pretty well over the next couple of quarters, as we see a significant reduction in slippages. Going forward, a lot of the issues with regard to funding, growth capital required for the PSU banks would be taken care of at least partly by the government because that is one major overhang. The cost of income ratio of most of the PSU banks is coming down. Going forward, clearly with the mergers within the PSU banks, you can clearly see structurally the opex per branch coming down for most of the banks and that could add significantly to the ROA of these banks going forward. I feel that financials is the right one to look at if you want to go on the non-banking space. Clearly, the macro finance companies or even the gold loan companies will continue to lead the rally going forward within the space.Do you believe that all the positives are already in the price on a headline index level and may be now time has come to shift focus to hunting within mid and small caps?Just four days back, we had an investor event where I asked around 80 people if they believed that the market could go up 15% from current levels over next one year and not even 1% was ready to put his hand up. So, there is this still a little bit of concern among retail investors whose hands have clearly been burnt in the last couple of quarters.There is some positivity but that is largely happening on more of the HNI money which has started to come in. Going forward, we see recovery in some of the stocks, like we have seen in last one week. Most of the midcap, smallcap stocks are up 7% to 10%. Going forward, we do see that the fear would come down and greed would probably take over in the next couple of weeks.
Source: ET

TCS revenue from Tata firms grows over 13% in FY19 - economic news of india - world economic news - economics news for students - indian economy news

TCS revenue from Tata firms grows over 13% in FY19
BENGALURU: Tata Consultancy Services’ revenue from other Tata companies grew more than 13% in FY19 to nearly Rs 2,600 crore, as the Mumbai-based software services exporter doubles down on capturing more IT spending by group entities.Companies typically spend 1-2% of total revenue on information technology, making the $100 billion Tata Group a significant source of business for IT companies in India.When Tata Group chairman N Chandrasekaran led TCS, he had put in place a strategy to gain a significant portion of the group’s IT spending.In FY19, TCS earned Rs 27 crore in revenue from Tata Sons, Rs 298 crore from subsidiaries of Tata Sons and Rs 2,241 crore from affiliates and joint ventures of Tata Sons and its subsidiaries.In FY18, revenue from group companies stood at Rs 2,266 crore, according to TCS’ annual report.In rupee terms, TCS' FY19 revenue grew about 19%.As IT firms look to the private sector for growth in India, TCS has made strong headway in the market, analysts say. 69590410 “They are the preferred candidate for the Tata Group. Under Chandra, the group is increasing its technology focus and TCS will be first in line to benefit,” an analyst with a Mumbai-headquartered company said.TCS, with its experience in retail and manufacturing, was capitalizing on the group’s plans to spend in those areas, he said.For instance, the group plans to increase presence in the ecommerce sector, with Chandrasekaran telling ET earlier that it was registering a new company for online retailing.TCS had helped build the group’s current ecommerce platform, Tata Cliq.Tata Sons is also tapping TCS’ talent to drive its digital push.ET reported earlier that Pratik Pal, who headed TCS’ $3.4 billion retail business, moved to Tata Sons to head its overall digital play.Sarthak Banerjee, who was previously global head of strategic automation and AI consulting at TCS, has moved as vice president of group digital in May, his profile on professional networking site LinkedIn showed.
Source: ET

With new hiring, Bengaluru to engineer global Goldman - economic news of india - world economic news - economics news for students - indian economy news

With new hiring, Bengaluru to engineer global Goldman
BENGALURU: Goldman Sachs is planning to increase India engineering headcount in Bengaluru, as the multinational investment bank looks to make the country a major hub for clients globally.Goldman, which set up offices here in 2004 with about 290 employees, now has more than 5,000 people. “We have grown by 24% year on year, and increased our campus hiring by 20% in the last five years. Lateral hiring has increased by 30%,” said Gunjan Samtani, head of Goldman Sachs Services India. “Our hiring trajectory is more aligned with the (business) growth.”The company has invested $250 million to develop a new 10.5-acre hub, its third largest in the world. The company’s headcount includes 2,500 engineers and it is expected to add more at the 7,300-seater Bengaluru innovation hub. Goldman Sachs is also consolidating all employees from various locations in the city to its sprawling 1.2 million square-foot hub.The investment bank has seen significant technology value-addition from Bengaluru during the past one-and-a-half decades, and software solutions developed in the city have been used in many business verticals. It has also undertaken automation of key services such as client onboarding, the company said.“Client onboarding is a very cumbersome process. We have now achieved nimbler ways to onboard clients,” Samtani said.“In Bengaluru, our engineers are embedded in each of our businesses, whether it is securities business, investment banking, asset management, investment research or compliance,” he said.Bengaluru has become an innovation centre for the company, not just in engineering but also in transforming its businesses through automation and digitisation, through re-engineering its business processes.The company also has dedicated teams for platform development in India and has started work on sophisticated functions, adding more value.“The sophistication and the maturity of the functions that we now have built in Bengaluru are providing the firm true transformation across our businesses,” Samtani pointed out.
Source: ET

Thursday, May 30, 2019

How the analyst who had caught IL&FS was snubbed - economic news of india - world economic news - economics news for students - indian economy news

How the analyst who had caught IL&FS was snubbed
The Ministry of Corporate Affairs (MCA) and the new board at IL&FS are investigating why questions raised by a junior analyst at a rating agency about financial irregularities at the infrastructure financier were ignored by the top management at the creditworthiness evaluator.The junior executive has allegedly told probe officials that when he brought his concerns to the notice of the senior management at the rating agency, the decision makers refused to act upon his findings, claiming the books of IL&FS and related companies were good.The crisis at IL&FS came to light in July 2018, when its roads unit faced difficulty in making repayments due on bonds. Credit rating agencies then started to cut the rating for the group parent, IL&FS, beginning August.“In March, one of the four agencies raised a red flag about the group’s elevated leverage but citing the company’s track record in the infrastructure sector, it retained the investment grade,” said a government official who didn’t wish to be named. “In another case, a junior analyst did alert his seniors about the situation in IL&FS Financial Services, but the seniors overlooked and trusted the rosy projection given by the management.”The Serious Fraud Investigation Office (SFIO), the investigation arm of the MCA, had questioned officials of rating agencies earlier this year. SFIO is investigating whether rating agencies, entrusted with the responsibility of qualifying and grading the creditworthiness of borrowers, have knowingly suppressed information.Four credit rating agencies --- Care Ratings, ICRA, India Ratings and Brickwork Ratings --- are being probed by the SFIO and the new IL&FS board on the rating action at IL&FS Financial Services Ltd (IFIN).Emails sent to ICRA, CARE Ratings, India Ratings and Brickwork Ratings remained unanswered until the publication of this report. IL&FS group chief communication officer Sharad Goel declined to comment on the matter.“Because of the credit ratings given by rating agencies, EPFO (Employees’ Provident Fund Organisation) invested huge provident fund amounts in IL&FS and their subsidiaries," said a person close to the development.According to sources, the four credit rating agencies have been found to be in violation of the provisions of Section 36 of the Companies Act, which pertains to penalties for fraudulently inducing people to invest.Sources said relying on the credit ratings, many companies invested their provident funds and pension money in IL&FS, totalling more than Rs 9,000 crore, affecting debt funds. This amount is part of the Rs 94,000 crore of unresolved debt at the embattled infrastructure financier.“The auditor and credit rating agencies are a part of the IL&FS crisis,” said an official associated with the investigations (said a government official privy to the probe details). “The probe has revealed that they have violated certain provisions of the Companies Act. The government is of the view that stringent action be taken against all those who contributed in the IL&FS crisis.”Credit rating agencies had derived comfort from the institutional parentage of IFIN without doing an independent assessment of the company as a standalone entity, sources said.Market regulator Sebi also examined the rating assigned to the nonconvertible debentures (NCDs) of IL&FS, and it pointed out procedural lapses in due diligence by credit rating agencies. These included over-reliance on management submissions in the absence of disclosures by the company to the stock exchange.The regulator observed that rating agencies maintained the rating outlook as 'Stable' in spite of writing in their press releases about multinotch downgrades in the event of significant deviation from the management’s deleveraging plan.Sebi has initiated adjudication proceedings against the three rating agencies -- ICRA, CARE Ratings and India Ratings --for their failure to exercise proper skill, care and due diligence while rating the securities of IL&FS.IL&FS is being probed by multiple agencies. The SFIO is probing the parent and its subsidiaries for violating the provision of the Companies Act. The Enforcement Directorate (ED) has registered a money laundering case against entities and former key management personnel. The Income Tax (IT) department is also probing the infrastructure financier for alleged tax-rule violations.“The board, based on the forensic and internal assessment reports, found that based on the rating given by these agencies, PFs and pension funds were invested as late as August, 2018 and in some cases there were also instance of rollovers. The board had sought explanation from these agencies to explain their case,” said another official. “The PFs invested include those by Army and companies like Mother Dairy.” One of the affected parties in this would be the companies which have invested in standalone PFs,” the official added.
Source: ET

What a Cabinet sans Jaitley means for India - economic news of india - world economic news - economics news for students - indian economy news

What a Cabinet sans Jaitley means for India
A recurrent allegation against the Modi 1.0 government is that it did not deliver on economic reforms. The noise on need to ‘reform’ is only getting louder as he gets ready to run the world’s fastest-expanding major economy for the next five years – with a bigger mandate.To be sure, reform means many things to many people.For equity investors, reforms are decisions leading to higher corporate earnings essential for driving stock prices up. If investment activity is muted, they would call for government spending even if doing so is imprudent. This is a crowd that doesn’t bother about inflation. In fact, it would celebrate price rise even without productivity gains. Inflation means higher profits, more dividend and ever rising equity valuations.For bond investors, reform is government being prudent. If it borrows more, it would crowd out private investments. It hates inflation because it lowers the value of bonds. If yields spike, it is bad even for the government because it ends up paying more for its own debt. It also hurts future generations as they end up paying the debt the current generation accumulates.For the corporate world, the burden of compliance should be lesser. Industry chambers forever want lower tax rates on everything from the Audi Q7 to an Atlas bicycle. Curiously, in the name of uniform GST rate, they are demanding the same treatment for goods of essential consumption and those of conspicuous consumption. They always look for concessions for investment and ‘tax-holidays’. During ET’s first Global Business Summit, Prime Minister Modi summed up the attitude well. “If you give something to the poor, it is a subsidy that is bad. If you give something to industry, it is incentive.”For wealthy individuals, it is low or even nil taxation on their investments because they are contributing to nation building. All the investments they make should be tax exempt — be it mutual funds, private equity or start-ups. Unless you do it, the entrepreneurial eco-system wouldn’t flourish.For giant corporations, government rules must ensure that entry barriers are high. Their argument is that customer service is so important that small companies would lack economies of scale and consumers end up paying higher prices. But the opposite is true. Industries which are dominated by duopoly or oligopoly structure end up squeezing consumers in the long run and the economy loses out.For non-banking finance companies, the Reserve Bank of India is a heartless beast that fails to acknowledge their role in providing livelihood for millions of families. They provide credit to a bunch of less creditworthy borrowers risking their capital; so they should be treated kindly. They are not open to the prudential norms that guide banks but want the regulator to be their lender of first resort.If the administration panders to the demand of all, public policy would end up encouraging crony capitalism rather than creating a level playing field for long run benefits. While fans of John Maynard Keynes would be quick to point out that “in the long run we are all dead”, policy makers have to be mindful of that.The Oxford Dictionary defines reform in these words: “Make changes in (something, especially an institution or practice) in order to improve it.”Going by this definition, what did Modi 1.0 do? Three institutional changes come to mind:1) Independence of monetary policy, with the formation of a Monetary Policy Committee that decides on interest rates. The structure frees decision-making even from the Governor, who is appointed by the government.2) Legislation on bankruptcy. For decades, lenders were at the mercy of borrowers. Now, however, someone who has lent money can take away the assets. That bankers, who were earlier complaining about the lack of such policy support, are not using the mechanism willingly is a signal that the way they do business is changing.3) Goods and Services Tax. It was a Herculean task that someone as diplomatic as Arun Jaitley (who is out of the race for finance minister now) alone could achieve it. He gave up half his powers by surrendering taxation to the GST Council for a greater good.Structural changes would not reflect in improvements overnight. These take years to sink into the system and the benefits would be reaped over the years. Like it was when Prime Minister Narasimha Rao opened up the economy in 1991, with local industry complaining about competition. The fruits are there for everyone to see.A finance minister can give direction to an economy and not drive it. Meddling with banks to bring down interest rates and pushing them to lend to projects can give a feeling the government is active, but it would backfire like it did with the UPA government. Jaitley resisted the temptation.Modi-Jaitley combo rarely indulged in headline grabbing stuff that was routine with P Chidambaram as finance minister. Headlines can be numerous, but what matters is delivering on structural change. The economy may be better off with a Jaitley-like character in the North Block than Chidambaram.
Source: ET

Ramdev prepares for biggest bid of his life - economic news of india - world economic news - economics news for students - indian economy news

Ramdev prepares for biggest bid of his life
MUMBAI: Patanjali Ayurveda has approached state-run banks to help fund its Rs 4,350 crore acquisition of Ruchi Soya Industries, said people with knowledge of the matter.The company is looking to raise debt with a maturity of five years and above from State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank and Jammu & Kashmir Bank, they said. The homegrown consumer goods company is tying up with the banks to raise more than Rs 3,700 crore while Rs 600 crore will be generated through internal accruals.“The funding is in the final stages of negotiation and the interest rates will be finalised soon,” said one of the persons. “Patanjali had earlier approached several nonbanking channels but it backtracked after these investors sought high level of disclosures.”Patanjali, SBI, PNB, Bank of Baroda, Union Bank and J&K Bank did not respond to queries. 69570254 CO INCREASED BID VALUE IN APRILPatanjali acquired Ruchi Soya in an insolvency auction held by lenders seeking to recover more than Rs 9,300 crore. Among financial creditors, SBI had the maximum exposure of Rs 1,800 crore, followed by Central Bank of India (Rs 816 crore) and PNB (Rs 743 crore).Adani Wilmar, which emerged as the highest bidder in August last year after a longdrawn battle with Patanjali, had in December 2018 written to the resolution professional regarding significant delays in the insolvency process that led to the deterioration of Ruchi Soya's assets.Patanjali, the lone bidder in contention after the exit of Adani Wilmar, had in April increased its bid value by around Rs 200 crore to Rs 4,350 crore. This excluded a capital infusion of Rs 1,700 crore into the company.With the acquisition of Ruchi Soya, Patanjali will become a key producer of soyabean oils and other products. The deal is expected to help Patanjali maintain its earlier growth momentum.
Source: ET

Govt plans road bumps for pre-2000 vehicles - economic news of india - world economic news - economics news for students - indian economy news

Govt plans road bumps for pre-2000 vehicles
NEW DELHI: Running an older vehicle of pre-2000 make, particularly commercial ones, will soon become more taxing. Such vehicles will have to undergo frequent fitness tests and there will also be about 15-20 fold increase in the fees for both first time registration of diesel/ petrol vehicles and for renewal of their registration. These are some of the disincentives that the government has finalised in its blueprint to push the phasing out of older polluting vehicles. According to different studies, older vehicles are 25 times more polluting as compared to new ones. Sources said old commercial vehicles will be the main focus of voluntary scrapping scheme, which the government is likely to launch in the next three to four months.69572467 Government’s think tank Niti Aayog, which is taking the lead in fast-tracking the policy, has held rounds of consultations. Sources said there will be a carrot and stick policy to give incentive to those who scrap their old vehicles to buy a new one while making it difficult for owners of older vehicles. TOI has learnt that there is a proposal to waive off the registration fee for new vehicles, if the buyer shows a certificate of scrapping his old vehicle. The government will also convince the vehicle manufacturers to offer discounts for new vehicles bought against scrapping certificate.
Source: ET

Flying with less fuel fine, but don’t go full throttle on plan: Experts - economic news of india - world economic news - economics news for students - indian economy news

Flying with less fuel fine, but don’t go full throttle on plan: Experts
MUMBAI: In the past one month, over thirty flights operated by Air India, IndiGo and SpiceJet, most of them flying to Hyderabad, carried lower amount of fuel as compared to the other flights operating similar aircraft on similar routes.Currently, fuel calculation for a flight takes into account fuel needed to fly to the destination, taxiing, contingency, reserve and most importantly, the amount needed to fly from the scheduled destination to an alternate airport in case it’s not possible to land at the destination due to some emergency.But the flights mentioned above operated on a progressive, environment-friendly, fuel conservation initiative: if the destination airport has at least two independent, usable runways; if the weather is good, then with certain new practices in place, experienced pilots can be allowed to operate flights that do not carry fuel to fly from the destination airport to an alternate airport. Instead the aircraft carries an additional fuel for fifteen minutes worth of low-flying. With the initiative, IndiGo said it could save 2,100 tonnes of fuel while reducing carbon emissions by 6615 tonnes per year. Air India would save 140kgs per B777 Delhi-Hyderabad flight.But experts caution against certain ground realities. Capt M Ranganathan, an air safety expert, said India’s airport infrastructure is too poor so airlines and the regulator shouldn’t go full throttle on this initiative yet. A senior B777 examiner pointed out that since India has only a few airports that can handle wide-bodied aircraft, it’s a tight-rope walk. 69572678 “If Nagpur airport is shut down for some unforeseen reason, and if at that time a Boeing 787 flying from Delhi to Hyderabad, without carrying fuel to fly from Hyderabad to Bengaluru develops a problem with its hydraulic system about an hour into the flight, then it would be a stressful situation for the commander. But that wouldn’t be the case with such flights flying, say in the United States , or even in the Middle East where airports have many operational runways. It’s a progressive idea, nevertheless. One that is here to stay,’’ said the examiner.“My concern is whether the airlines have carried out adequate risk mitigation. Then again, pilot training for such flights cannot just be in the form of documentation. In the future, if more and more flights are allowed to fly without fuel to alternate destination, will airlines themselves ensure that all the conditions are met before such fuel-saving, moneysaving flights are released,” stated a senior A320 commander.
Source: ET

Nearly 600 passengers stranded at Heathrow after two Air India flights to Mumbai fail to take off - economic news of india - world economic news - economics news for students - indian economy news

Nearly 600 passengers stranded at Heathrow after two Air India flights to Mumbai fail to take off
LONDON: The Metropolitan Police had to be called to Heathrow Airport late Wednesday after nearly 300 furious passengers were left stranded airside after their Air India flight which was already 32 hours delayed failed to take off.One of the passengers, British group HR director Heather Gupta, told TOI there was "utter chaos" when passengers cleared customs and security only to be given no gate and no details of any airplane to board. Small children and the elderly, some in wheelchairs, were among them, with passengers left furious as some had already missed weddings, cremations and important business meetings back in India.Gupta, 49, who was travelling with her two sons, Jake, 8 and Noah, 6, told TOI at 23.30 local time Wednesday: "There was one Air India rep and she has disappeared now. Passengers are going crazy. This flight was supposed to go yesterday [Tuesday] and so there is a bunch of really irate people and just one Air India lady who is absolutely clueless. It is mental and no one has any idea what is going on."A video shared with TOI shows passengers shouting at a lone member of staff from Heathrow and a group of firearms officers then arriving.A Met Police spokeswoman told TOI at midnight local time Wednesday: "Officers are on scene as a precautionary measure and to prevent any breach of the peace. There has been no disorder and no arrests." Around midnight the passengers were ushered back through immigration and taken to another hotel with no information as to when they could fly.Nearly 600 passengers travelling between London and Mumbai had been stranded in an airport hotel all day on Wednesday, leaving them exhausted and angry.A total of 293 passengers from the 13.15 Air India Flight on Tuesday, 28 May had been forced to spend the night at the hotel after their flight was grounded because of a fuel leak. They had spent all day Wednesday in the room at the hotel, provided by Air India, but said they were given no information from Air India as to when they could fly and no refund.Then the 13.15 Air India flight on Wednesday also did not take off and those passengers were sent to the same hotel room. One Air India woman spoke at them through a megaphone on Wednesday and said: "The engineers are working on the aircraft. I will update you whatever update they give me." The passengers were later told that a team of aircraft engineers were due in London on a flight from Mumbai on Wednesday - itself delayed - due to land at 19.00. This team was bringing parts to repair the 28 May aircraft so those passengers could depart at 22.00. But that never happened.The delayed 29 May flight however eventually departed at 21.30 Wednesday eight hours late.Passengers complained to TOI there was no information from Air India staff throughout the ordeal.Albashi Baig, 24, a student in London, was flying home to be in a hospital in Thane for his 60-year-old father’s cardio-surgery, taking place Wednesday night.But he was on the Tuesday flight which was grounded.Almost in tears he told TOI how had begged Air India to get him on another flight but they did not. “Noone in Air India was picking up the phone and we went to the airport and they told me to buy a new ticket costing up to £1,800 (Rs 1.5 lakh) one way. I am so upset as I wanted to be with my father to give support.”Baig said another passenger was desperate to get to his sister on a ventilator, one's father had died and he could not get to the cremation and one had missed a connecting flight to Australia where his wife had had an accident.Passengers were informed at 12.30 pm on Tuesday that the 13.14 AI130 flight was just delayed, but then at 18.30 were told to collect their luggage. Indian passengers were then caught in a long queue at UK arrivals immigration despite having not flown anywhere. “It was chaos trying to get luggage on to the hotel bus”, said Gupta, who lives in Mumbai and missed an important work meeting. "One family had 10 suitcases and one elderly woman in a wheelchair could not get on it."Gupta had flown to London last Friday to collect her children who had spent two weeks with her UK relatives. She had spent Rs 6 lakh in total on tickets for the trip since Rs 2.5 lakh had gone on Jet Airways tickets which were cancelled. “Passengers are really angry. I met one Indian whose father is in a coma in India and another who has missed a wedding," she said. "Another who is on a two-day business trip. Some passengers flying from US and Canada are worried as their 24-hour transit visas have expired."Speaking to TOI earlier in the day, Debashis Golder, regional Manager UK & Europe, Air India said: ”AI130 of 28th May is declared AOG (grounded) due to a fuel leak and expected to go today [Wednesday] by 2200 hours. "But by midnight the flight had not departed."AI130 of 29th is delayed and will go at 2000 hours," Golder had said. That flight left at 21.30. "If not atravelling and seeking refunds they will get a full refund. Our team is with passengers in the hotel and updating them regularly," he added.
Source: ET

Five ways pharmaceutical and healthcare can be ‘Modified’ - economic news of india - world economic news - economics news for students - indian economy news

Five ways pharmaceutical and healthcare can be ‘Modified’
The Lok Sabha election results did not affect the pharma stocks but the Modi government can impact the pharma and healthcare sectors in several ways.GDP spend on healthcare: Increasing the expenditure on healthcare can be the most impactful measure that the government can undertake. The additional funds would be required for spending on strengthening the primary healthcare infrastructure and building upon the secondary and tertiary public healthcare setup. India spends 1.15 per cent of its GDP on healthcare and the government has targeted to increase it to 2.5 per cent by 2025.Ayushman Bharat: The ambitious insurance scheme slated to provide secondary and tertiary care to the poor (constituting nearly 40 per cent of the country’s population) was Modi government’s first step towards aiming universal healthcare for India. However, economic sustainability of the scheme and provision of quality healthcare services to the poor in remote areas are challenges that must be overcome. The scheme requires sustained funding, proactive participation from the private sector and diligent execution to succeed.Institutional reforms: The pharma, medical and healthcare sectors are awaiting urgent reforms in terms of governance. For instance, there is no exclusive ministry governing these sectors. The pharma sector is regulated partly by ministry of chemicals and fertilisers and partly by the ministry of health and family welfare. The Medical Council of India needs to give way to an institution that better regulates the medical practice and education in India.Improving the regulatory oversight: Regulatory oversight on drug makers (pharma companies), drug sellers (pharmacies) and drug prescribers (doctors) needs to increase. While the US drug regulator pulls up Indian pharma companies for discrepancies in their manufacturing — India needs to strengthen its drug regulatory mechanism to ensure the quality of drugs sold locally is as good as the ones that are exported. A legally binding directive to regulate marketing practices needs to be promulgated since the voluntary Uniform Code for Pharmaceutical Marketing Practices has proved to be ineffective.Clarity on the policy front: The sectors would benefit getting clarity on the government’s stance on issues like promotion of generic drugs, extent of price control on drugs and devices, legality of fixed drug combinations, induction of Ayush doctors to meet the healthcare staff shortage and policy incentives for research and development as well as drug exports.
Source: ET

Reforms is the theme for investing under Modi 2.0 : Mark Mobius - economic news of india - world economic news - economics news for students - indian economy news

Reforms is the theme for investing under Modi 2.0 : Mark Mobius
“Reforms, reforms, and reforms,” is the theme for investing under Narendra Modi-led government’s second term, says Mark Mobius, founding partner of Mobius Capital Partners, In a phone interview from Singapore with ETMarkets.com, the 81-year-old emerging markets guru said a majority for Bharatiya Janata Party (BJP) at the hustings augurs well for the economy. Reforms related to labour, infrastructure and ease of doing business were at the top of Mobius’ reforms wishlist for the government. Edited excerpts: How do you view Mr Modi’s win and what does it mean for the Indian market?It means a lot because this first thing which is really important to recognise is that we are in a situation now where everyone was predicting that Modi would in no way be able to garner the kind of mandate that he has now achieved. What that means is that we are really in an amazing situation where he has got the mandate to move ahead with his reforms programme and that to me is quite exciting. Now, would he be able to take advantage of that? We must realise that there are all kinds of bureaucratic and political barriers which prevent him from doing absolutely everything that he wants to do and if he can do 20% of what he is planning, that is very, very good. It is a good opportunity and so I am quite excited about the result. In light of the results, where does India stand in your emerging market preference list?Very high, because we are in a situation now where we can see immense growth in India. Of course, we have already seen that growth. This country is growing at a fast rate and in addition, we are in a situation where the Chinese market is not doing that well, not only because of the trade dispute with the US but also because it is very difficult for them to maintain the kind of growth that we have seen in the last 10 years. So, India is really looking very bright. Among all the emerging markets performances, India stands out. It is really jumping ahead of the others. That is very important. If you were to rank India according to preferences, where would India stand?Number one. Absolutely, number one yes. What is your reforms wish list from the new government?I would say the first one would be employment regulation because you’ve got millions -- in fact, the latest number I read is there about 100 million migrant workers moving around India looking for work. So, there needs to be a reform of the labour laws so that we can see much higher employment. I would say that is number one because the Indian workers are as good, if not better than any workers in the world because they got the language abilities. There is no reason why you can have total employment in India and if you could release that tremendous labour force power, you can see an incredible boom in the Indian economy. After the election results, which are the sectors that you would prefer to buy into in India?We like companies that can take advantage of the infrastructure building that is taking place. By the way, that is the second point I want to make about Modi’s programme. That is getting him to have a much bigger infrastructure programme. He started a lot of infrastructure projects but they have not moved ahead at the pace that they should. Here again it is quite puzzling when you consider the fact that people are looking for work and they got all these infrastructure projects which are not really moving ahead at the pace at which they should really. This is a big challenge and something that we have to look at very carefully. Infrastructure should be the next item on the list. Which are the other sectors that you like apart from infrastructure?The other sector I like is the non-bank financials companies (NBFCs) because of the greater degree of bankable population as result of identity card programme. The fact is that the government is making direct transfers to people and that these people have become much more bankable. The non-bank financials-- as long as they can garner the lowest segment of the obvious group which is growing at a pretty fast pace, would be another one. That said, they are going through liquidity crisis as we speak. What are your thoughts on that? Yes, some of the companies are going through that crisis, which is good in the sense that either there will be consolidation or at least fewer competitors, so that you have better opportunities for those companies that have been running quite efficiently and quite well. Which are the sectors you would stay away from at that point of time? Usually, the bigcap stocks is not what we are interested in. How much has Mobius Capital Partners raised already in terms of funds? How much of this is in India already?We have raised about $180 million. In India, we have about roughly 8% of the portfolio. We would like to have more but as you know, it took us a while to get permission. By the way, that is the other area that needs reforms. There has to be a greater realisation that if an investor wants to put money into the market, the process should be made easy for them. What are your thoughts on the Indian economy now that it has slowed down a bit? High frequency data such as auto sales, air traffic everything have come down significantly. The air traffic number is mainly because of Jet Airways failure. I would not worry about it. In my experience, travelling in India has changed a whole lot and the airports are packed with people. So, there is an incredible growth opportunity there.The problem is that there is a race at the bottom on pricing which is not healthy for the industry and resulted in near bankruptcies as we have seen. People got to wake up to the fact that you cannot continue to try to get market share by lowering prices. I would like to see them get market share by way of better service, more comfortable seating etc. That is where you can really shine, but the way it is done now it is not very healthy. RBI policy is due on June 6th. What are your expectations from RBI?For quite some time, I have believed that the Reserve Bank should lower rates because the gap between inflation and the interest rates in India is just too wide and they should not be so bearish with regards to that. I really feel that they have got to change and hopefully this new guy in the driver’s seat will be able to do that. A lot of economists have questioned the economic data that came out in recent times and there have been a lot of question marks raised on its validity. What are your thoughts there? You have this problem on a global basis. Everybody questions the numbers, in fact, I have a new book coming out about inflation. What we are doing is that there is no inflation. There is deflation globally, because the inflation numbers are constantly changed as the basket is constantly changed. So, you are getting very short term erroneous numbers and that is probably true for other governments statistics as well.But, you do not have to look at the government numbers for growth in the economy. You just have to look at how some companies are growing, how consumption is growing in various categories, the number of cell phones being sold, etc, etc. From these kinds of information, you can get a pretty good idea what is happening in the economy. So I would not be too critical of the government statistics because you are in a situation where a few percentage points one way or the other is not going to make a hell of a big difference. What people talk about 1.2 versus 1.3 this does not make any sense because you cannot be that precise, there is no way you can do that. What would be the theme for investing under Modi 2.0? if you were to name one theme for investing under the government’s second term, what would it be? It will be reforms, reforms, and reforms. I mean all of the changes that are taking place augur very well for changes in the Indian economy and releasing its incredible energy that you can get from what is happening. So I would say it is all about reforms. How difficult is it to find ideas in the midcap and smallcap categories, considering that a lot of smallcap companies have been pretty volatile?It is very difficult to find the right stocks. It is a constant struggle to find companies where you are getting a positive trend in the share price. Number one, where you get growing earnings, where you have a strong balance sheet etc, etc. So there are a lot of dangers to put it that way in stock markets. India is just one of the many markets I look at and you have the same problem everywhere. So, wherever you go, you got to be careful and take your time to study very carefully what is happening. What is the biggest threat to the Indian markets at this point of time? I think the biggest threat would be whether if Modi is not able to move ahead quickly on the reforms because that will give a signal to the market that things are not as good as they thought. That is one thing you have got to be very much aware of. So everybody will be looking at this very, very carefully. We keep talking about the consumption story in India but are you buying consumption stocks in India or are they too expensive to touch? They are a little expensive and it is difficult to find consumption stocks that are really cheap but we continue to look. We are looking at some things now and it is not easy because of the popularity of that sector but nevertheless we want to find something in that sector if at all possible. The opportunities in India to invest in the listed space are pretty less compared to the huge consumption theme that we have. For example, for a middle class urban consumer -- if his or her salary were to go up, he or she would spend it on a better phone which will be a Chinese smartphone or an American smartphone or buy more on Amazon, Myntra, Flipkart. Again, none of these are in the listed space. Does that impede having more options? What are your thoughts?Well I think that is a big issue that we have with consumer sector now and it is not true for India but it is also true for consumer companies around the world. They have been confronted with the internet revolution with more and more companies coming into the internet and people doing internet shopping. The problem is that in order to garner market share, these companies are continuing to lose money. They continue to sell products at low cost in order to get market share, and these companies are being funded by wealthy investors who are willing to accept these kinds of losses. We are not willing to do that unless we see a very strong argument for a turnaround in these companies. You have the traditional retailers who are really under fire because if they do not have an internet strategy, they can be really killed by these companies that are confronting them with crazy low prices.
Source: ET

Setting minimum broadband speed not possible: Rajan Mathews - economic news of india - world economic news - economics news for students - indian economy news

Setting minimum broadband speed not possible: Rajan Mathews
NEW DELHI: Consumers may continue to clamour for faster, buffering-free experience while watching their favourite web series, but are unlikely to get any assurance on it even if they pay more.The government is unable to change the current rule for mobile broadband, delivering up to 512 Kbps speeds, because, telecom companies and experts say, setting a minimum speed isn’t possible technically, not just in India but anywhere in the world.“In a point to multi-point mobile network, no network operator, in India or globally, can guarantee a certain minimum download speed,” said Rajan Mathews, director general of the Cellular Operators Association of India, which represents all carriers including Vodafone-Idea, Bharti Airtel and Reliance Jio.The actual network speed that the consumer experiences depends on various factors such as coverage, network load, usage, location of user in the cell, application being used and the kind of device being used among other factors, Mathews explained.Third-party speed-testing agencies such as Opensignal and Ookla agree with telcos and say that guaranteed data speeds remain a persistent issue among telcos, in India and overseas.“No operator has managed to provide LTE (4G) connections to users 100% of the time, even in the most mature mobile markets. This alone means it's near-impossible to guarantee network speeds," said Opensignal chief executive Brendan Gill, attributing the findings to its data measuring 4G availability and speeds.Many other issues such as latency and quality of smartphones play a critical role in mobile user experience, especially as video streaming, online gaming, live messaging and video calling become more popular.But consumers feel telcos aren't delivering their promised Internet speeds, let alone a bare minimum level of speed.“They can do (provide a basic minimum speed), but they don’t want to. When there’s load on a system or number of subscribers are more, the speeds are low and vice versa. That should not be the case — we want constant speeds, 24x7, because we’re paying for it as per the telco’s plans,” said Arun Kumar, head of a Delhi-based consumer advocacy group.Ookla’s speed testing data showed mobile Internet speeds in India to have increased by more than 20% in 2019 from a year earlier to 10.71 Mbps, but it fell in the speed rankings — to 121 from 112 — as other countries saw a faster increase in their speeds.
Source: ET

Tuesday, May 28, 2019

Why Modi ji needs to resist the urge to become Modi Xi - economic news of india - world economic news - economics news for students - indian economy news

Why Modi ji needs to resist the urge to become Modi Xi
By Andy MukherjeeAt the time of his first bid to become India’s prime minister five years ago, Narendra Modi was seen by many in Mumbai as a reformer rising to slay crony capitalism, corruption and policy paralysis. It was the bureaucracy in New Delhi that had misgivings about the then chief minister of Gujarat state, known for his highly centralized style of working.By now, the political capital has accepted Modi as the boss man. By contrast, the financial capital of Mumbai is anxious about further centralization of power. He’s already being referred to as India’s Xi Jinping. Given the difficulties that have beset China’s private sector under the president’s muscular leadership, that comparison isn’t exactly flattering.Mumbai’s trepidation, based on my recent conversations, arises from not knowing whether Modi will double down on his strongman image and chest-thumping nationalism in his second term, or give India’s institutions the freedom to tackle the economy’s central challenge: a lack of risk capital. In 2014, it was only the balance sheets of the banking system and some large business groups that were toast. Now the problem has spread to smaller companies, shadow banks, and property developers. Even consumers are being singed by debt as income growth in rural areas slows. Private investment turned anemic long ago.Addressing this challenge will require Modi to acknowledge a simple truth: Countering economic worries with propaganda, jingoism and dubious GDP statistics will have diminishing returns. India’s “mini-Lehman moment,” as I’ve called it since September, is still reverberating. The solution is simple. Let entrenched business families fend for themselves. Don’t give them new contracts or sweetheart deals, or let them hold on to bankrupt firms. That should be done not out of moral compunction but because local businessmen or financiers can’t save the economy. Only North American, European, Australian and East Asian money can.After Modi’s 2014 election victory, he did make an overture to foreign investors. But his finance minister, Arun Jaitley, didn’t keep the promise of making India’s tax regime more predictable and less adversarial. In the name of protecting mom-and-pop retailers and the sovereignty of Indian consumers’ data, the e-commerce policy now appears to favor tycoon Mukesh Ambani over Amazon.comInc.’s Jeff Bezos. Protectionism has gone up. The Donald Trump administration is far from amused.It’s not too late. Unlike in 2014, institutional structures now exist for large-scale asset monetization. Infrastructure Investment Trusts took years to become reality, but can now be used to pass cash-generating assets to foreign buyers such as Canada’s Brookfield Asset Management Inc., relieving pressure on stretched government finances and stressed private-sector balance sheets.Australia’s Macquarie Group Ltd. paid 97 billion rupees ($1.4 billion) last year to acquire a bunch of highways under a toll-operate-transfer model – another new structure in India. Singaporean sovereign wealth fund GIC Pte, recently given S$45 billion ($33 billion) by its central bank to earn more for the aging city-state, has announced an investment platform to hunt for hospitality assets together with the Tata Group, which owns the Taj hotel chain.A lot of good work from Modi’s first term has been hijacked by vested interests. A 2016 bankruptcy law put off overseas participants by throwing out a successful Bain Capital-backed bid for a cement maker, and by giving the runaround to ArcelorMittal’s $6 billion acquisition of Essar Steel India Ltd. It can still be salvaged to reduce the $200 billion-plus bad loan burden of banks. Meanwhile, only an empowered and autonomous Reserve Bank of India can deal with troubled shadow lenders and restore trust in wholesale funding markets. Modi should nurture the credibility of the new National Investment and Infrastructure Fund, which can attract billions of dollars as long as the 51% private-owned fund isn’t used to bail out dud assets like the grounded Jet Airways India Ltd.Strongmen find it hard to tolerate dissent and independent-minded central bankers – Modi lost two of them. They surround themselves with bad advisers. A disastrous ban on 86% of the country’s cash, halfway through Modi’s first term, marked a wrong turn in economic policy-making. To demonstrate a renewed commitment to truth and trust with the rest of the world, the new administration must rebuild the credibility of India’s official statistics. Market participants in Mumbai yearned for a leader who could deliver Chinese-style rapid growth. Questionable claims of 7% GDP expansion weren’t what they had in mind.This isn’t the time for economic nationalism. Xi’s Made in China 2025 roadmap for global technological domination raised U.S. ire. Modi’s opportunity lies in filling the gap created by a spent domestic business class with eager global investors looking for returns as well as a refuge from the U.S.-China conflict. To grab this chance, Modi needs to rein in his strongman instincts, embrace the world, and allow India’s economic institutions space to breathe.
Source: ET