OPINION, P6 ECONOMY, P2 SUNIL JAIN Modi can actually spend less and help farmers much more NATION, P3 MADAN SABNAVIS JAITLEYSPEAK AMID IL&FS DEBT CRISIS Without addressing the main challenges, bank mergers that are being planned make no sense Hollande contradicted himself, no question of scrapping Rafale deal No concern over liquidity of NBFCs, says SBI chief NEW DELHI, MONDAY, SEPTEMBER 24, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.XLIV NO. 176, 16 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E (as % of GDP) 15 (` crore) Change in financial liabilities TFL as % of GDP 12.7 12.2 11.4 11.2 11.2 11.7 12.0 12.8 13.7 14.5 15.7 20 26.2 10 36,57,500 32,66,400 5 0 FY08 Source: RBI, Macquarie Macro Strategy. Data as of July 2018; E- Estimated SHUBHRATANDON Mumbai, September 23 WITH SEVERALOPERATORS windingdowntheirbusinesses, job losses in the beleaguered telecomsectorhavebeenheavy. Telcos are expected to let go of around 50,000-75,000 employees in 2018, according to one estimate by Randstad India. Others like TeamLease Services peg the number at an even higher90,000. Kamal Karanth, co-founder Xpheno, a specialist staffing firm based out of Bengaluru reckons that since 2016,about 50,000-70,000jobswouldhave been lost in the telecom sector followingmanagements’efforts tooptimiseworkforcesandsave FE SPECIALS Sharp decline in headcounts in Indian telecom companies Scoring‘plus’points in fashion High prices coupled with a must-have offline requirement, limits the category to urban areas, but players are hopeful ■ eFE, P8 Focus on high-end photography With its EOS R system, Canon is optimistic about maintaining leadership in the combined DSLR and mirrorless market ■ INVESTOR, P9 Rupee fall to help margins Medium-term concerns persist for Bajaj Auto; earnings for FY19-21e up 5-8%; TP raised to `2,700; ‘Sell’ retained ■ INFRASTRUCTURE, P11 Segment is getting sunnier 2018 has witnessed a surge in rooftop solar capacity creation, with new players entering the fray to tap demand ■ SCIENCE & TECH, P12 Sweeping the oceans A teenager’s plan to trawl for plastic in the Pacific becomes reality—System 001 is the first of a fleet to clean the ocean QuickPicks OVL faces `7.7k-cr service tax THE TAX department has slapped a service tax demand of `7,666.10 crore on ONGC Videsh (OVL) over remittance it made to its overseas subsidiaries for the last one decade, sources told PTI. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has stakes in 41 projects in 20 countries spanning from Venezuela to New Zealand. PAGE 5 55 3,038 6,796 8,708 Vodafone 2018 RCom *Permanent employees count; ^Idea Cellular's annual report for 2017-2018 is not out yet Source: Company annual reports n 50,000-75,000 job losses expected in CY2018 in telecom, says Randstad India n Similar number in 2019 n Job losses in customer support, sales and support functions on salaries.“If you add the indirectjobswhichweredependent on the business provided by some of the telecom operators, thenumberwouldbe1.25-1.50 lakh,”Karanth said.Among the departments where companies are trimming workforces includesales,customersupport, human resources and finance. 2014-15 2015-16 2016-17 n In contrast, RJio plans to hire 75,000-80,000 in FY19 n RJio had 1.57 lakh employees on rolls as of April 2018 While fewer people are expected to be laid off in 2019, the number could be sizeable said HR consultants FE spoke to. Paul Dupuis, managing director and CEO, Randstad India believes the sectorcould shrink byanother5-10% over the next 12 months. Moreover,those doingwork specific to the industry such as running tower operations would find it difficult to get employment elsewhere.Typically, super-specialised skills account for about 30% of the jobsintelecom.Whilenoteveryone will lose their job immediately since the businesses are running,opportunities are limited since growth in general is stunted,consultantsexplained. Also, companies could increasingly resort to more automation, so there will be fewer customer-support kind of roles on offer,Karanthsaid.Heobserved that while the drastic one-time surgery had been done, telcos wouldshedafewmorejobsand maintainabarebonesstructure to run the operations. The good news is that Reliance Jio continues to hire. SanjayJog,chief HRO,Reliance JiosaidinApril,onthesidelines of an HR event, the company plans to recruit 75,00080,000 persons in 2018-19.It already has about 1,57,000 people on the rolls. Continued on Page 2 STATE OF FINANCES Populist promises to push up govt expenses by `38,000 cr PRASANTA SAHU New Delhi, September 23 ■ BRANDWAGON, P10 2017 16 11,086 NA^ Idea Cellular* 2016 13,187 12,491 11,784 17,263 18,683 Bharti Airtel 6 13,346 As on March 31 8 WITH NEW SPENDING obligations of at least `38,000 crore having arisen,the Centre could find it even more difficult to meet the fiscal deficit target for the year. On February 1, the government had unveiled the Union Budget 2018-19 with an expenditure estimate of `24.42 lakh crore. TheIndianbasketofcrudeat the current level (it ruled at $78/barrelovertheweekend)as againstthebudgetprojectionof around$60/barrelcoupledwith the rupee’s fall would necessitate extra oil (LPG/kerosene) subsidyofatleast`12,500crore over the budgeted `25,000 crore,officials reckon.(Moody’s hasestimatedIndia’sfuelsubsidies could total `34,00053,000 crore in FY19,the highest since FY15with Brent crude oil price range of $60-$8/bar- Spending obligations that have arisen/undertaken after Budget (` crore) 8,000 Price support package for crops 12,000 From higher MSP for paddy 3,500 For the Pradhan Mantri Jan Arogya Yojana 2,000 More to Air India 12,500 Additional fuel subsidy if crude hovers around current levels, Budget had factored in crude at $60/barrel rel).The price support package for farmers for the 2018-19 crop year has an estimated cost of `15,053 crore; since the amount is meant for kharif 2018andrabi2019,alittleover half could be expected to be spent in the current financial year(itisanothermatterthecost of the scheme could turn out to 40,33,200 3,74,700 Shutdowns, M&As lead to heavy job losses in telecom Extra budgetary resources to be tapped over and above the earlier plan (` crore) 22,000 For higher education funding agency 15,000 For Nabard to fund Swachh Bharat Mission bemuchhigherthanestimated iftheentiredemandforthesupport is met). TohelpAirIndiameetworking capital needs, an extra `2,000 crore (over and above `1,630croreprovidedalready) would be allocated this year. Continued on Page 2 28 26.4 37,6830 3,91,000 FY18E MORE PINK SLIPS Telcos estimated to let go of around 50,000-75,000 employees in 2018, but Jio continues to hire in big numbers 26.5 « OPEC'S LEADER Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out on Sunday any immediate, additional increase in crude output, effectively rebuffing US President Donald Trump's calls for action to cool the market, reports Reuters. "I don’t influence prices," Saudi energy minister Khalid al-Falih said as Opec and non-Opec energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost. Total financial liabilities « Opec, Russia rebuff Trump’s call on oil output Increasing household debt « THE RESERVE Bank of India on Sunday said it, along with Sebi, is "closely monitoring" recent developments in financial markets and "ready" to take actions, if necessary, as domestic bourses witnessed a sudden mid-session plunge last Friday, reports PTI. On Friday the Sensex, which opened strong, suddenly tanked 1,127.58 points, or 3.03%, to hit 35,993.64 in afternoon trade, before staging an equally sharp recovery within minutes. WITH CONSUMERS BORROWING to buy everything from cars to cell phones,India’s household debt is estimated to have risen to 15.7% of GDP in March 2018, research by Macquarie shows. In 2012-13, the ratiowasjust11.7%.Withmore credit history at their disposal, both banks and non-banking financial companies (NBFCs) have been pushing through loans more easily. The total household debt at the end of March 2018, Macquarie estimates,was `26.61 lakh crore. Theattitudinalshifttowards spending,coupledwiththeEMI (equated monthly instalment) culture, experts say, will keep consumption spends intact even when interest rates rise. What’s interesting is that the average ticket size of loans is fallingsuggestinganincreasing inclusiveness. A recent CIBIL study — which has a databases « RBI, Sebi closely monitoring markets FE BUREAU New Delhi, September 23 « THE TRUMP administration may deny green cards to immigrants who have availed or may avail government benefits including food and cash assistance under new rules which could negatively affect hundreds of thousands of Indians living in the US, reports PTI. The urge to splurge, easy loans take household debt to new heights 19,523 IN THE NEWS Trump admin may deny green cards to aid recipients READ TO LEAD 47,06,200 6,73,900 2017-18 of close to 250 million unique borrowers — noted that retail loans in Q1grew 25% but the average balance fell by 6%. It attributed the decline to the changeintheloan-mixtowards short duration consumer loans like credit cards,personal loans and consumer durable loans. Personal loans are the fastestgrowing segment and together with credit cards dominatevolumes while mortgages dominate the outstandingvalue.The averageretaillendingbalance,at the end of March 2018, was `4.02 lakh. While the availability of credit histories has made life easier for bankers,they are also better utilising in-house information to target retail customers. It’s not surprising that the outstanding personal loans in March 2018 at `19.08 lakh crore,wereupasharp18%over the previous year, as data from Reserve Bank of India reveal. Continued on Page 2 MODICARE PM rolls out Ayushman Bharat scheme, says will serve the poor PRESS TRUST OF INDIA Ranchi, September 23 PRIME MINISTER NARENDRA MODI rolled out the Pradhan Mantri Jan Arogya YojanaAyushman Bharat from here on Sunday, and termed it a “game-changer initiative to serve the poor”. He said the scheme would come into effect from Sunday. “PMJAY-Ayushman Bharat is the biggest governmentsponsored healthcare scheme in the world. The number of beneficiaries is almost equal to thepopulationofCanada,Mexico and the US taken together,” Modi said. In an apparent reference to the Congress, he said without empoweringthepoor,previous governments had indulged in “vote bank politics”. “It is the BJPgovernmentthatisfocused on empowering them (poor people),”he said. The magnitude of the scheme could be gauged from the fact that more than 1,300 ailments are covered under it, including heart diseases, kidney and liver disorders and diabetes,the PM said. “People are calling the Prime Minister Narendra Modi with Jharkhand governor Droupadi Murmu (far right) and CM Raghubar Das at an exhibition on Ayushman Bharat in Ranchi on Sunday scheme Modicare and by other names,butformeitisanopportunity to serve the poor. Even the ones living in the lowest strata of the societywill benefit from the scheme,”he said. Congratulating the team that was instrumental in the programme’s implementation, he said the officials would receivetheblessingsof50crore beneficiaries.“I hope and pray that the poor don’t have to visit hospitals, but, if they do, the Ayushman coverwill be at their service.The poor of my country PTI must get all facilities that the rich enjoy,” he said. Reiterating the slogan ‘Sabka saath, sabka vikas’ (together for all, development for all), Modi said the Ayushman scheme is not based on any communal or caste lines. “The programme will not differentiate between people, based on religion, caste, location. Every eligible person will be able to avail of the benefits,” he said. Continued on Page 2 MUTUAL FUNDS Bearish market sentiment sees small-cap schemes lose steam CHIRAG MADIA Mumbai, September 23 WITH MORETHAN 70% of all stocks in the red since the start of 2018, most mid-cap and small-capequityschemeshave posted poor returns. For instance,between Januaryand August, just seven of 21 midcap schemes had outperformed their category average while most small-cap schemes posted negative returns. AstudybyFE shows close to three-fourths of all stockswith a market capitalisation of `1,000 crore ormore have lost value since January. The poor market sentiment has clearly affected flows into equity schemes with August reporting the smallest inflows in 18 months at `5,923 crore. Analysis from Value Research shows large-cap schemes did fairly well between January and August The top 12 Axis Bluechip Edelweiss Large Cap Canara Robeco Bluechip Equity Sundaram Select Focus Axis Midcap Taurus Discovery (Midcap) Invesco India Mid Cap -0.29 Motilal Oswal Midcap 30 -0.41 HDFC Small Cap L&T Emerging Businesses -5.0 IDBI Small Cap -5.73 -5.75 Reliance Small Cap Source: Value Research 14.43 12.99 2.83 2.12 11.76 10.57 11.12 R R R R Returns (%) data from January to August 2018 with the average return coming in at a good 9.4%. But of a universeof32large-capequity schemes onlyfourmanaged to outperform the average. Mid-cap schemes turned in a return of a negative 3.48% whichisnotsurprisingsincethe Nifty MidCap Index has given up about 13.2% since the start of theyear,and close 70% of its constituents have lost value. Small-caps as a category returned a negative10.03% with the Nifty Small Cap Index havingshed24.1%%sinceJanuaryandwith 85% of its members having seen a fall in prices. Continued on Page 2 TELEVISION Doordarshan runs away with viewers, DTH subscriptions stand still ANUSHREE BHATTACHARYYA New Delhi, September 23 DTH OPERATORS HAVE seen their subscriber bases stagnate over the last three quarters at around 67 million, data from Trai show. The big culprit, say industry watchers, is Doordarshan’s Free Dish which, thanks to its bouquet of free-to-air channels,hasmoppedupsome 30 million subscribers. Dish TV’s plans come cheap at `85 per month and viewers canalsochoosetopickupchannels available a-la-carte. Of the country’s total cable and satel- lite (C&S) subscriber base of 183 million in 2017-18, DTH’s share including Doordarshan’sFreeDish,wasaround 72 million households or 40%,according to KPMG. But with local digital cable services more affordable in many markets, the growth in DTH subscriber bases, which had already tapered off in 2017-18, could slow further. Cable services,industrywatchers say, come for around `250-400 a month whereas even a no-frills DTH connection costs Apr-Jun 2017 DTH net active 65 subscriber Jul-Sept base (in m) 66 Oct-Dec 67 Total unique viewers (in m) Jun ‘17 YouTube 67 Apr-Jun 67 35 Hotstar Amazon 4 PrimeVideo 9 Jan-Mar 2018 Netflix JioTV Source: Trai quarterly report, comScore MMX MP Jun ‘18 146 2 19 8 68 94 257 upwards of `400 per month. ”When compared with DTH, cable is more affordable. So in many smaller markets where Free Dish subscribers are migratingtopayTV,theyoptfor cable which comes for as low as`250-`400permonth,”Jehil Thakkar, partner, Deloitte, pointed out. Tocounterthecompetition, DTH players are coming up with more affordable options for viewers. Girish Menon, Partner, KPMG, believes these slim packs could lure households to DTH platforms especially in smaller markets where bulk of subscribers still use DD Free Dish.“Where the average DTH ARPU is around `200-250, these packs cost around `100,” Menon said. Total television revenues from subscriptions in 201718 were `42,800 crore, a growth of 9.1% overthe previous year.For Airtel Digital, the DTH arm of Bharti Airtel, the ARPU remained flat at `229 in Q1FY2019, against `228 in the corresponding quarter a year ago. Continued on Page 2
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