ECONOMY, P2 Sow agri reforms to realise Aatmanirbhar Bharat vision SHOBHANA SUBRAMANIAN CLARITY ON NPAs IN FULL SWING India Inc must raise capital to survive, and must usher in good corporate governance Finmin may review capital requirement of PSBs after Q2 Large projects to augment India's border infrastructure NEW DELHI, MONDAY, JULY 6, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 108, 12 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 DHFL defaults on NCD repayments of `50 crore DHFL HAS defaulted on payment of `50 crore on bonds, saying that the company is not in a position to make payments to the lenders as it is under moratorium since last November, reports PTI. The payments to the lenders or NCD holders remain in abeyance and will be subject to the outcome of the CIRP process, DHFL said. ■ eFE, P8 Booster dose for medtech startups Indian startups leverage GE Healthcare's AI platform Edison X to develop modern healthcare solutions ■ PERSONAL FINANCE, P9 Stay invested in gold Continued on Page 2 ■ INFRASTRUCTURE, P11 FY18 -52.87 FY17 FY16 -64.98 FY20 152.08 FY19 134.85 30.40 FY17 FY16 -418.50 CHINA IMPORTS India may hike customs duties Substitution plan 773 436 Bike parts Refrigerator compressors AC compressors Split AC machines Certain steel/iron items* Select aluminium foils *Used in ships & boats 197 226 266 181 171 BANIKINKAR PATTANAYAK New Delhi, July 5 AS INDIA CONSIDERS steps to curtail cheap and substandard imports from China, it is set to startwithraisingbasiccustoms duties on dozens of products. This would be followed up with non-tariff measures, such as standardspecificationsforhundreds of items, in the medium term,sources told FE. Though the move is not patentlyChina-specificandwill applytoimportsofthespecified items from any country, the 17 2.3 Total (1,173 selected items) 11,980 Share in imports from China (%) Share in total goods imports (%) Source: Ministry of commerce brunt of the decisions will be borne byChina. Thegovernmentisconsideringalistof1,173items—ranging from auto parts, compressors for AC and refrigerators to selectsteelandaluminiumproducts and electrical machinery — to zero in on products/ subproducts on which the import dutiescanbehiked.Theseitems aremostlyimportedfromChina and can be substituted with local productionwithout much hassles,one of the sources said. ● RECOVERY IN JUNE Continued on Page 2 E-way bills surge, near pre-Covid levels Sailing into uncharted waters India’s ports will need to boost their institutional capacity and leverage technology to thrive in the post-Covid scenario FE BUREAU New Delhi, July 5 ■ SCIENCE & TECH, P12 AT 4.27 CRORE, e-way bills generated in June suggest business activity may be close to pre-lockdown levels when the average was 5.3 crore per month.The average value of Nudging success Aarogya Setu is losing relevance; the government needs to be more innovative to push it through. A nudge can work consignments in June was `12.4 lakh crore, a shade smaller than the pre-Covid19 average of `15 lakh crore per month. Within June, the number of billsgeneratedacceleratedeach week.This was reflected in the 18.3 lakh forms generated on June 30 against a consignment value of `54,500 crore — both being the highest single-day numbers since the lockdown was enforced. On June 7, only 5.8lakhe-waybillsweregenerated,the lowest in the month. Continued on Page 2 LOSING BRAND EQUITY Chinese products battle boycott sentiment VENKATA SUSMITA BISWAS Mumbai, July 5 RISING TENSIONS AND clashes at the India-China border have resulted in the emergence of a strong antiChina sentiment in India directed at Chinese brands. The situation has been exacerbated with the central government imposing an interim ban on 59 apps About 81% of smartphone users in India own a phone from a Chinese brand MADE IN CHINA Xiaomi is the market leader in the smartphone category with 30% market share belonging to Chinese companies. The list of apps, banned on June 29, included TikTok, Vivo is the title sponsor ofthe Indian Premier League Shein, Club Factory and UC Browser, and according to Counterpoint, Chinese app India is the largest market for TikTok and accounts for more than 61 crore downloads ofthe app makers could lose $70-$100 million annually. Before the ban, the Indian Premier League’s governing council has decided to review IPL’s sponsorship deals. In 2018, Chinese company BBK Electronics-owned Vivo bagged the five-year sponsorship rights for the IPL at `2,200 crore. However, reports suggest it is highly unlikely that BCCI would drop Vivo as a sponsor. Continued on Page 2 COVID COUNT Rising ‘positivity’ means infections yet to peak India beats Russia to reach the third spot in total infections ISHAAN GERA New Delhi, July 5 WITH ‘POSITIVITY’ LEVELS — newinfectionsasashareofnew tests—continuingtorise,India isfarfromitspeak,apointmade by ICMR scientist Nivedita Gupta more than a month ago atapressconference.OnJune3, when Gupta made her statement,Indiahadapositivityrate of 6.5% — itself a jump over 3.8% on May 3 — and that has nowgone up to 9.1%. And this is when India is testing over 2.3 lakh persons today compared with 1.4 lakh onJune3and70,000onMay3. Indeed, in Covid-19 hotspots like Delhi and Mumbai — they account for, respectively, 15% and 13% of infections — positivity rates are even higher at 12% and 24%. That India’s positivity should be rising, though, is no surprise since actual infection levels are far greater than what On a rising curve Total infections As of July 2 25 (Positivity rate, %) 6,04,641 18.21 FY19 -78.07 -1.54 FY20 -198.71 98.08 0.72 FY20 FY19 FY19 FY18 FY20 -36.02 5.46 18.66 30.24 FY17 -9.58 As equity market is volatile and debt market yield low, invest in gold via Sovereign Gold Bonds or ETFs for higher returns FY18 11.00 FY18 FY17 Continued on Page 2 (Imports from China in FY19, $ million) Lithium-ion SEVERAL STATE-OWNED banks would have reported poorer numbers for Q4FY20 were it not forthe benefit from the restructuring scheme for micro, small and medium enterprises (MSMEs). Some lendersmayhavepostedlosses in its absence, data compiled by FE show. Atleasttwoprofitablebanks — Bank of Maharashtra (BoM) andIndianOverseasBank(IOB) — may have made losses in Q4FY20 in the absence of the restructuring scheme as there has been little growth in business, sources told FE. BoM posted a profit of just `58 crore and restructured 3,083 accountsworth`283.83crore.IOB’s net profitwas `144 crore and it restructured 19,043 MSME accountsworth `694.21 crore. Beauty brands vow to play fair 19.29 9.06 -5.57 FY16 -1.54 FY20 FY20 -36.77 3.13 expected to be a good one. Ideally, with real interest ratesslippingintothenegative territoryforthefirsttimeinsix years,this would have been an ideal time for businesses to expand. But most companies will see a contraction in revenues in 2020-21,causing the country’s GDP to shrink by 55.5%. In aggregate, corporate profits crashed 38% in 2019- SHRITAMA BOSE Mumbai, July 5 Two global brands have dropped the words ‘fair’, ‘light’ and ‘white’ from their packaging Continued on Page 2 Source: Capitaline Restructuring of MSMEs benefits PSB bottomlines ■ BRANDWAGON, P10 20 partly due to inventory lossesatoilmarketers,butthey could shrink again 2019-20. Whiletherehasbeenarecovery in both manufacturing and services in June — auto sales for instance—companieshaveattributedthistopent-updemand and are notyetwilling to accept the trendwill continue. (bps, chg y-o-y) Sample of 1,691 companies (excluding banks & financials ) ● Q4FY20 FE SPECIALS SURYA SARATHI RAY New Delhi, July 5 OPM RM to sales (% chg y-o-y) FY19 FY18 THE LAST FIVE years have not been easy for corporate India but 2020-21 will be the most challenging time yet. Companies need to brace for three or fourbigchallenges.Thebiggest one is decelerating demand withconsumerslikelytospend a lot less and also resort to down-trading. Next, they will need to deal with the disruptioninsupplychainspartlydue totheproblemswithChinaand partlydue to local issues. Togetherwithinputs,labour too could be in short supply if the pandemic isn’t contained soon. Moreover, companies could also be short of staff for front-lineoperations.Again,ata timewhen cash flows areweak, it will become harder to access additional credit facilities as lenders turn even more riskaverse. The two pluses: commodity prices are likely to stay benign and the monsoon is 13.31 FE BUREAU New Delhi, July 5 (bps, chg y-o-y) EPFO base shrank a fifth in April, recovers a little in June WORKERS WHO CONTRIBUTED to the Employees’ Provident Fund Organisation (EPFO) in April were about a crore or a fifth less than those that did so in March. The drop in the number of firms which deposited provident fund monies with the retirement fund body during the lockdown month was a steeper 36% or 1.9 lakh. A deferment of the due date for EPF deposits for April wages to May 15 and later to June 15 may be part of the reason for the drop. But the steepness of the fall, coupled with the fact that even in June, “contributing members” of EPFO were 35 lakh less than in March and 50 lakh less than the January peak of five crore, demonstrates the extent of non-payment of wages and job losses during the lockdown period. It also lays bare the high vulnerability of the country’s workforce to the short-term vicissitudes of businesses. Tax (% chg y-o-y) FY16 10.32 18.21 FY19 FY18 FY17 FY16 -4.38 10.31 (% chg y-o-y) PBT ● WAGE WOES 108.13 Total expenditure (% chg y-o-y) 25.09 EDELWEISS FINANCIAL Services has reported a consolidated net loss of `2,281.5 crore in the March quarter due to 1,277% y-o-y rise in impairments, reports fe Bureau in Mumbai. The total impairments stood at `2,549 crore, compared with `185.11 crore in the same quarter last year. June saw some recovery,but firms say it may be pent-up demand and are unsure if the trend will hold Net sales 2.99 Edelweiss posts Q4 net loss of `2,281.5 crore It’s a rough road ahead for India Inc FY17 ICICI BANK will hold a board meeting on July 8 to consider a fund-raising proposal, reports fe Bureau in Mumbai. The lender will choose from various options, including the issue of equity shares and other equity-linked securities. CRUNCH TIME FY16 IN THE NEWS Fund-raising plan: ICICI Bank board to meet on July 8 20 15 7.6 India Russia US 0 On July 6, India will have 6.9 lakh infections, while Russia will have 6.8 lakh Day 83 India: 9.1 US: 7.0 10 5 26,86,480 ASHOK GULATI NATION, P4 6,54,405 OPINION, P6 4.3 Russia: 2.4 1.3 Day 1 Day 85 the tests show; so each time there is more testing, it throws upmoreinfections.Anall-India sero-survey done in May, for instance, showed 0.7% of the population—that’saroundone crore persons — had Covid-19 atsomepoint;withtheconventional RT-PCR tests showing just 6 lakh infections so far, there’s a longwayto go. This part of the survey, as it happens, was not done in hotspot areas like Delhi and Mumbai which, at that point, accounted for 31% of India’s infections.Unconfirmedreports of the ongoing sero-survey in Kolkata indicated much higher infection levels of around 14%. Continued on Page 2 Day 115 Is the recovery rate correct? ISHAAN GERA New Delhi, July 5 IN INDIA, AS in most parts oftheworld,itseemstotake anywhere between 14 and 21 days to recover from a Covidinfection.Butinstates likeDelhi,itseemstobetaking just 8 days,going bythe data the government puts out daily. So, are the infectionsinDelhidifferentfrom thoseinMaharashtra,whereittakes19daystorecover? Continued on Page 2 Internet firms see slower fund flows ASMITA DEY New Delhi, July 5 IT’SBEENAdullthreemonths for India’s internet consumer companies with just $480 million of capital coming in; that’s a fall of 60% over the $1.27billionseenintheJune, 2019 quarter. Data sourced from researcher Tracxn showed the amount is also considerably lower than the over$2billionthatcompanies raised in the March quarter. Funding amount ($ bn) Q1 ‘19 2.43 Q2 ’19 10.4 8.6 10.5 1.27 Q1 ‘20 2.14 Q2 ’20 0.48 20172018 2019 Source: Tracxn Investors appear to have put fresh commitments on hold while assessing the impact of the pandemic whilemakingsurefirmshave enough money to survive. The next round of big infusions would depend on how deftly companies are able to tweak their business models in the new challenging environment,Atit Danak, principal at Zinnov Management Consulting, said. After all, eventhebestoftheplayers— in spaces such as food delivery, mobility and hospitality — have been hit badly. Continued on Page 2