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

Monday, October 28, 2019

Diwali sales give retailers relief, finally - economic news of india - world economic news - economics news for students - indian economy news

Diwali sales give retailers relief, finally
KOLKATA | MUMBAI: Sales of apparel, smartphones, electronics and consumer products grew about 7-9% during Diwali thanks to last minute shopping, giving brick and mortar retailers a strong finish to their make-or-break festive season.Most consumer goods makers and offline retailers had been cautious about business during this year’s festive season due to a slowing economy and poor consumer sentiment in both urban and rural India over the past three quarters.While purchase of entry-level products expanded at a slower pace, most retailers reported higher demand for mid-to-premium products, indicating lower-income buyers may have either postponed shopping or shifted to discount-led online portals. Also, wide availability and penetration of consumer finance boosted average transaction size.Consumption patterns have shifted, said Kishore Biyani, founder of Future Group, which runs chains such as Big Bazaar, Central and Brand Factory. Average Billing upFrequent shoppers were outnumbered by those seen as more conservative and typically don’t splurge as much.“Fashion did really well with Central exceeding our expectations,” he said. “Having a loyal customer base, which was supported by Future Pay and cashbacks was a huge advantage to us which helped us immensely this time. Even within packaged consumer goods, gifting segment did brisk business especially at smaller stores such as Easy Day.”Retailers and companies had reported better demand even during the Navratri-Durga Puja-Dussehra period with sales growing 7-8% over last year while Onam sales had reported 3-4% growth on a lower base due to floods in Kerala last year. As a result, overall festive sales grew 5-7% this year.71798714 Diwali and overall festive season sales were much better than initially anticipated, said Brian Bade, CEO of Reliance Digital, India’s largest smartphone and consumer electronics retailer.“There was some pessimism, but at the end we are very happy,” he said. “Performance was much better than last year — same-store sales went up in double digits, average billing went up with brisk demand across categories.”Puma India managing director Abhishek Ganguly said Diwali pointed to possible recovery in retail considering traffic in malls was better than in August and early September despite record sales by ecommerce marketplaces.While footfalls were similar to those last year, sales rose as the average shopping basket was bigger, some retailers said.“There was a high single-digit growth on a like-to-like basis compared to last year Diwali period. We have not seen slowdown in apparel sales yet. Also, the growth was largely driven by an increase in average billing size while the walk-ins were similar to last year,” said Vasanth Kumar, managing director at Lifestyle International, the country's biggest department store chain. “Post Diwali, there is a seasonal change and stores will (get) winter stock, which allows us to liquidate autumn collection at discounted prices.”While OnePlus clocked Rs 1,500 crore in sales from Navratri to Dhanteras, Xiaomi had said it sold more than 500,000 smart televisions in the same period apart from a record number of smartphones. Realme said it sold over two million smartphones.Diwali was a crucial period since sales of most categories had been flat or had declined this year due to poor consumer sentiment. A fortnight ago, the International Monetary Fund (IMF) slashed its economic growth forecast for India to 6.1% for the current fiscal from its July projection of 7%, citing weaker-than-expected outlook for domestic demand.Arvind Fashions managing director J Suresh said Diwali sales grew more than 9% while the overall festive season growth stood at 5-6%. Arvind Fashions sells brands such as Gap, Arrow, Tommy Hilfiger and US Polo Assn.In smartphones and electronics, retailers and brands said sales have grown 6-8% from last year. The relatively lower pricing of Apple’s new iPhone 11 and up to 30% price cuts in televisions boosted demand, with consumer finance schemes adding to the buoyancy. The latter’s contribution to overall sales went up to 75% compared with the usual 55-60%.“There was no doubt some impact of negative sentiments since the number of shoppers who bought this year was lower than last year. However, those who purchased did of a higher value, boosting overall sales,” said Vijay Sales director Nilesh Gupta, adding that sales grew 8%.Overall appliance sales went up by 6-7% with a clear shift toward premium products with little traction for entry-level products, said Vishal Mewani, director of Mumbai’s leading chain Kohinoor Electronics. The festive season — from Onam in Kerala to Navratri-Durga Puja-Dussehra, Karva Chauth, Dhanteras and Diwali — is the biggest shopping period in the country accounting for almost 35-40% of annual sales of most consumer facing companies.
Source: ET

E-shoppers load festive carts with affordable goods - economic news of india - world economic news - economics news for students - indian economy news

E-shoppers load festive carts with affordable goods
BENGALURU: The value of merchandise sold by Flipkart and Amazon during the recent month-long festival sales may have fallen short of analysts’ estimates, marginally, while the number of units sold were in line with industry expectations, according to multiple people aware of the specifics.The slight dip in this year’s projected gross value of sales from the crucial festive sale, which was spread across September and October, at India’s two largest online marketplaces is largely due to consumers’ preference for more affordable products dragging down order value in the midst of a general slowdown in consumer sentiment, said company executives who briefed ET on the matter. On an overall basis though both companies grew sales and units sold when compared to 2018.Flipkart and Amazon were expected to rake in a cumulative $5 billion (Rs 36,000 crore) in sales, or gross merchandise value (GMV), during the festival sale season as reported by ET. Non-metro Areas Drive SalesBoth ecommerce firms were aiming to clock a 30% increase in GMV compared to last year. GMV is overall sales clocked by an online marketplace and does not include discounts, returns, cancellations and cashbacks on products sold, and it is different from the revenue generated by a marketplace. People in the know, however, said, the two companies clocked 10-15% less in terms of overall GMV on the back of lower-priced items selling better this year.71798740 Further, customers from India’s non-metropolitan areas accounted for over two-thirds of the online festive sales, with low-priced items across fashion, home and electronics emerging as top categories, company executives said. Brands and logistics companies that ET spoke to concurred.While Flipkart missed sales targets by value for mobile phones, it did well in categories like large appliances, fashion, home, beauty and lifestyle, sources said.“On the other hand, Amazon India missed estimates on general merchandise and lifestyle, and did well on mobiles and new prime membership,” said a person cited above.Replying to ET’s queries on the matter, a representative for Flipkart said the company does not comment on “category specific metrics,” adding that the company “exceeded all customer metrics we measure ourselves against.”Amazon India said top categories included smartphones, consumer electronics, large appliances, fashion, grocery, and home & kitchen. 83% of customers who shopped were from small towns, the company said.Flipkart did not share sale numbers.Separately, Delhi based Snapdeal said its sales volumes were 52% higher this year fuelled largely by demand from non-metros.“Units shipped in October on average saw a 60% spike for all ecommerce companies,” said a logistics company founder.In the first leg of the six-day sale that ran from September 29 to October 2, Amazon and Flipkart clocked gross merchandise value estimated at $3 billion, or about Rs 21,380 crore, according to Redseer Consulting, missing analysts’ estimate of $3.7-3.8-billion.Analysts are of the view that bank partnerships, luring customers towards flat discounts as high as 10%, along with EMI plans, exclusive launches, private labels, and introduction of features like games and Hindi interface helped ecommerce firms overcome a challenging macro environment.Marketplaces track multiple targets internally to gauge sales including units sold, returns, total value of items sold, delivery time, cancellations, among others. And these vary for different categories.“For instance, for smartphones and large appliances the metric is largely order value and delivery time,” said one person directly aware of the matter.“For long-tail merchandise like home items, that metric is primarily units sold, selection, and return,” the person added RBC Capital Markets in a recent report said that in 2018, Amazon accounted for 30% of India’s ecommerce market, second to Walmart-owned Flipkart, which held 44%.
Source: ET

Diwali sales give retailers relief, finally - economic news of india - world economic news - economics news for students - indian economy news

Diwali sales give retailers relief, finally
KOLKATA | MUMBAI: Sales of apparel, smartphones, electronics and consumer products grew about 7-9% during Diwali thanks to last minute shopping, giving brick and mortar retailers a strong finish to their make-or-break festive season.Most consumer goods makers and offline retailers had been cautious about business during this year’s festive season due to a slowing economy and poor consumer sentiment in both urban and rural India over the past three quarters.While purchase of entry-level products expanded at a slower pace, most retailers reported higher demand for mid-to-premium products, indicating lower-income buyers may have either postponed shopping or shifted to discount-led online portals. Also, wide availability and penetration of consumer finance boosted average transaction size.Consumption patterns have shifted, said Kishore Biyani, founder of Future Group, which runs chains such as Big Bazaar, Central and Brand Factory. Average Billing upFrequent shoppers were outnumbered by those seen as more conservative and typically don’t splurge as much.“Fashion did really well with Central exceeding our expectations,” he said. “Having a loyal customer base, which was supported by Future Pay and cashbacks was a huge advantage to us which helped us immensely this time. Even within packaged consumer goods, gifting segment did brisk business especially at smaller stores such as Easy Day.”Retailers and companies had reported better demand even during the Navratri-Durga Puja-Dussehra period with sales growing 7-8% over last year while Onam sales had reported 3-4% growth on a lower base due to floods in Kerala last year. As a result, overall festive sales grew 5-7% this year.71798714 Diwali and overall festive season sales were much better than initially anticipated, said Brian Bade, CEO of Reliance Digital, India’s largest smartphone and consumer electronics retailer.“There was some pessimism, but at the end we are very happy,” he said. “Performance was much better than last year — same-store sales went up in double digits, average billing went up with brisk demand across categories.”Puma India managing director Abhishek Ganguly said Diwali pointed to possible recovery in retail considering traffic in malls was better than in August and early September despite record sales by ecommerce marketplaces.While footfalls were similar to those last year, sales rose as the average shopping basket was bigger, some retailers said.“There was a high single-digit growth on a like-to-like basis compared to last year Diwali period. We have not seen slowdown in apparel sales yet. Also, the growth was largely driven by an increase in average billing size while the walk-ins were similar to last year,” said Vasanth Kumar, managing director at Lifestyle International, the country's biggest department store chain. “Post Diwali, there is a seasonal change and stores will (get) winter stock, which allows us to liquidate autumn collection at discounted prices.”While OnePlus clocked Rs 1,500 crore in sales from Navratri to Dhanteras, Xiaomi had said it sold more than 500,000 smart televisions in the same period apart from a record number of smartphones. Realme said it sold over two million smartphones.Diwali was a crucial period since sales of most categories had been flat or had declined this year due to poor consumer sentiment. A fortnight ago, the International Monetary Fund (IMF) slashed its economic growth forecast for India to 6.1% for the current fiscal from its July projection of 7%, citing weaker-than-expected outlook for domestic demand.Arvind Fashions managing director J Suresh said Diwali sales grew more than 9% while the overall festive season growth stood at 5-6%. Arvind Fashions sells brands such as Gap, Arrow, Tommy Hilfiger and US Polo Assn.In smartphones and electronics, retailers and brands said sales have grown 6-8% from last year. The relatively lower pricing of Apple’s new iPhone 11 and up to 30% price cuts in televisions boosted demand, with consumer finance schemes adding to the buoyancy. The latter’s contribution to overall sales went up to 75% compared with the usual 55-60%.“There was no doubt some impact of negative sentiments since the number of shoppers who bought this year was lower than last year. However, those who purchased did of a higher value, boosting overall sales,” said Vijay Sales director Nilesh Gupta, adding that sales grew 8%.Overall appliance sales went up by 6-7% with a clear shift toward premium products with little traction for entry-level products, said Vishal Mewani, director of Mumbai’s leading chain Kohinoor Electronics. The festive season — from Onam in Kerala to Navratri-Durga Puja-Dussehra, Karva Chauth, Dhanteras and Diwali — is the biggest shopping period in the country accounting for almost 35-40% of annual sales of most consumer facing companies.
Source: ET

Niti Aayog proposes separate regulator for medical devices - economic news of india - world economic news - economics news for students - indian economy news

Niti Aayog proposes separate regulator for medical devices
NEW DELHI: Government think tank Niti Aayog has rejected the health ministry’s proposal to bring medical devices under the Central Drugs Standard Control Organisation (CDSCO), saying the body does not have the required expertise. People aware of the matter said the Aayog has instead moved a draft Bill proposing that medical devices be governed by a separate regulator.Earlier this month, the ministry had issued a draft notification saying that all medical devices would come under the category of drugs from December 1 and would be regulated under the Drugs & Cosmetics Act.A senior official confirmed to ET that there is some support for Niti Aayog’s view in the government that it is inappropriate to allow CDSCO to regulate medical devices as they have expertise in pharmacy/chemicals and not in devices.People familiar with the development told ET that the Aayog has floated a draft Bill to regulate over 6,000 bio medical devices in the country.“The Bill proposes a separate regulator for medical devices on the lines of the Food Safety and Standards Authority of India (FSSAI), an autonomous body under the health ministry,” one of the persons cited earlier said, requesting not to be named.71798654 In India, only 23 categories of medical devices are regulated under the Drugs and Cosmetics (D&C) Act. The ministry’s notification said all medical devices will be brought under regulation in a phased manner.It has proposed seven categories of devices intended for use in human beings or animals as drugs with effect from December 1, 2019, while ultrasound equipment would be treated as drugs from November 1, 2020.“Ministry of health should clearly define that its current regulations to define devices as drugs and their regulation by CDSCO is a temporary measure till a separate medical devices law and a competent regulatory authority is formed as devices are not drugs,” Rajiv Nath, forum coordinator of the Association of Indian Medical Devices Industry said.India’s medical devices market is the fourth largest in Asia–after Japan, China and South Korea–at over $10 billion and is projected to grow to $50 billion by 2025.
Source: ET

Wednesday, October 16, 2019

India-bound FDI may face thorough frisking - economic news of india - world economic news - economics news for students - indian economy news

India-bound FDI may face thorough frisking
NEW DELHI: India is taking a fresh look at security protocols to be followed by foreign direct investors as concerns rise over money coming in from countries that New Delhi has sensitive ties with and monitors closely.The Department for Promotion of Industry and Internal Trade (DPIIT), the finance ministry’s department of revenue and the home ministry are holding discussions on the matter, said people with knowledge of the matter.The review comes amid the rising trend of FDI being screened worldwide. The EU recently adopted a screening framework on the grounds of security and public order. The US has stepped up scrutiny of Chinese investments in the country amid a trade war over concerns about acquisition of American assets.Under the heightened oversight, the framework for disclosures made to the RBI could be enhanced for better capturing FDI inflow data and source of funds, especially in sectors on the automatic route. The DPIIT is also in talks with security agencies to determine whether existing safeguards need to be stepped up. ‘Some Concerns’“There are some concerns,” said a senior official aware of the deliberations. “We are looking at the constituents of the security protocol… What needs to be done.”India has widened the opening for FDI, allowing overseas money into most sectors through the automatic route, having abolished the Foreign Investment Promotion Board (FIPB) in 2017.71623853 The government relaxed FDI norms on August 28, allowing automatic approvals for 100% FDI in mining and sale of coal, among other relaxations. Barring some sensitive sectors or select ones such as real estate, cigarettes and lotteries, the FDI policy has been substantially liberalised.FDI rose 28% to $16.3 billion in the June quarter from $12.8 billion in the year earlier. The government didn’t provide a breakup of the source countries.The current security module, worked out after discussions with concerned agencies, specifies the distance at which a facility can be set up from the international border or a military establishment. There are also restrictions on investments in certain sensitive states.In the wake of fresh concerns, the government is evaluating if these components need to be revisited or new ones need to be introduced.“The idea is to see if some more elements are needed,” the official said.Every company has to furnish a return to the RBI prior to bringing FDI into the country and after the money has flowed in under FEMA guidelines.“We could request the RBI to seek more information in line with requirement of agencies on security front,” the official said.A large amount of data is already captured by the RBI, he added.Countries such as the US have a committee on foreign investment with representation from key departments such as defence, homeland security and commerce.
Source: ET

Restaurant bodies want Zomato to tweak ‘gold’ further - economic news of india - world economic news - economics news for students - indian economy news

Restaurant bodies want Zomato to tweak ‘gold’ further
MUMBAI: Two restaurant and hotel associations have once again asked food aggregator Zomato to further amend its Gold membership programme, which offers one dish or drink free with each order. The National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Association of India (FHRAI), which held a press conference in Mumbai on Wednesday, have also protested against the food delivery company’s high commissions.The two associations said they were putting out guidelines that the Gurugram-based restaurant aggregator needed to follow, and one of these is to reduce discounts even further, because “discounts funded by restaurants are not acceptable.”The two bodies have called Zomato for a meeting to solve the differences. “These aggregators, who are heavily funded by private equity, have to recognise that their role is that of a marketplace… they cannot decide or dictate commercial terms to and on behalf of the industry,” said Gurbaxish Sigh Kohli, president, hotel and restaurant association of India (HRAWI) and vice president, FHRAI.“All of these are baseless allegations, and we would only classify them as false propaganda,” a Zomato spokesperson said.Zomato recently claimed that the number of restaurants adopting its Gold programme have gone up after the #log out movement by the restaurant associations, instead of decreasing. NRAI dismissed that out of hand. “Almost 3,000 restaurants have logged out because all of the top restaurants have left. And others are on notice period,” said Jimmy Shaw, member, FHRAI.Originally, Zomato said it had 6,100 restaurants registered on Gold. Shaw said the associations have started targeting micro markets like malls and were talking to restaurants about Gold.“We have done this in two micro markets in Gurugram and Mumbai and we’ll take it all over the country,” he said.“They’re asking us to go to particular labs to test food or they would give us a lower rating,” Shaw said. Anurag Katriar, president, NRAI said, “We don’t want to fight with any aggregator but if they want to, we’ll be happy to.”
Source: ET

Air India buyer may be allowed to retrench staff in a year - economic news of india - world economic news - economics news for students - indian economy news

Air India buyer may be allowed to retrench staff in a year
NEW DELHI: The government is considering a plan to make Air India more attractive for potential buyers by allowing employees to be retrenched a year after divestment, said people aware of the matter.“There are the two proposals being discussed — one is to allow them to retrench after one year and the other is to give three years,” said one of them. “It would make sense to allow future owners to retrench staff after a year’s time.”Another person said the government will ensure that the interests of employees are protected.“There would be conditions like employees can only be retrenched through the government’s voluntary retirement scheme (VRS),” he said.Under VRS, an employee gets an amount that’s equivalent to monthly salary multiplied by either the years of service completed or those left, whichever is less, along with other compensation that the person is eligible for, said the people cited above. 71623800 Any move to allow future promoters to terminate the jobs of employees will mark a key change in last year’s failed divestment process, when the government had promised job protection.All proposals are being discussed and will be put before the committee led by home minister Amit Shah for consideration, said the people cited above.The government’s attempt to divest a 76% stake in Air India drew a blank last year due to various reasons. These included staffing levels, employee medical benefits as well as flying privileges for workers and their families even after retirement, alongside its towering working capital debt. The government is now looking to fully exit the carrier.Unlike last time, the government is open to suggestions from industry to ensure that the national carrier finds a buyer this time, said the people cited above.“The government is also likely to provide clarity on these terms around the time bidding process begins,” said one of them. “The expression of interest (EoI) is likely to be issued (in) middle or late November.”The government is also working on a plan that will shield any buyer from having to bear the cost of health coverage for current and past employees.
Source: ET

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